New Delhi: A series of economic and sectoral data has painted a mixed picture of the growth trajectory, highlighting challenges in investment, consumer spending and wage trends amid a broader economic slowdown as the GDP growth slowed to 5.4% in the July-September quarter.
SIP account growth slows
The mutual fund industry’s Systematic Investment Plan (SIP) account additions dropped for the fourth consecutive month in November, falling to 1.3 million – the lowest in six months – compared to 2.5 million in October. Data from the Association of Mutual Funds in India attributed the decline to fewer new registrations and a slowdown in new fund offerings, according to a Business Standard report.
Only 10 equity NFOs were launched in November, compared to 24 in October. Despite this, SIP inflows remained steady at Rs 25,320 crore, matching the previous month’s contribution. Overall active equity fund inflows, however, dropped 14% month-on-month to Rs 35,943 crore, with sectoral and thematic funds witnessing the steepest decline, from Rs 12,279 crore in October to Rs 7,658 crore in November.
Auto discounts soar as sales decline
The Federation of Automobile Dealers Association reported record-high discounts of up to Rs 3.7 lakh on passenger vehicles (PVs) in December, as the PV market faced a 14% year-on-year (YoY) sales drop in November. Retail sales slumped following the festive season in October, leaving dealers with an inventory of around 65 days, Business Standard reported.
Although automakers have announced price hikes for January, the significant discounts reflect efforts to clear stock amid muted consumer sentiment. Comparatively, post-festive sales last year had grown by 2.6% with lower discounts ranging from Rs 2 lakh to Rs 2.5 lakh.
E-Way bill generation drops
The issuance of e-way bills, a barometer for goods movement across India, fell to a five-month low of 101.8 million in November, down from a record 117.2 million in October. While still higher than November 2023’s 87.5 million, the decline signals a cooling-off period after the festive season’s inventory build-up, according to a Mint report.
GST collections, closely linked to e-way bill activity, reached Rs 1.82 trillion in November, an 8.5% YoY increase but slightly below October’s Rs 1.87 trillion.
Also read: Rupee at All-Time Low, Passenger Vehicles Unsold as ‘Top 100’ Make Rs 138 Lakh Crore in 5 Years
Wages show meagre growth amid rising inflation
A report by the Federation of Indian Chambers of Commerce & Industry and Quess Corp, presented to the government, revealed subdued wage growth across key sectors between 2019 and 2023. The compounded annual growth rate for wages ranged from 0.8% in the engineering, manufacturing, process, and infrastructure sectors to 5.4% in the fast-moving consumer goods (FMCG) sector, reported the Indian Express.
Retail inflation, which breached the RBI’s tolerance range at 6.21% in October, has exacerbated the issue, with real incomes declining in several sectors. The report highlighted stagnant wage growth in the corporate sector despite profits quadrupling over the past four years.
The average wage in 2023 was highest in the IT sector at Rs 49,076 and lowest in FMCG at Rs 19,023. Analysts warn that rising inequality could further dampen consumption and hinder sustainable growth.
Credit card delinquencies rise as issuances decline
The credit card segment reported higher delinquencies in October 2023, with accounts overdue by 91-180 days increasing to 7.6%, up from 6.5% in June. New card issuances also fell 34.4% YoY in Q1FY25 to 4.4 million, while the growth rate of cards in circulation slowed to 13.5%, down from 18.7% a year earlier, Business Standard reported.
Banks have tightened credit score requirements and spending limits to manage defaults. The RBI has attributed stress in unsecured loans, including credit cards, to over-leveraged clients and higher provisioning.