Welcome to Samosa Capital’s evening briefing — the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• Remembering former Indian Prime Minister Manmohan Singh,

• And, the RBI believes India can still hit 7 percent growth.

Finally, we’ll close with Gupshup, a round-up of the most important headlines.

If you have feedback on our newsletter or just want to chat about India, always feel free to reach out to me. You can also share criticism about the newsletter anonymously here.

—Shreyas, [email protected]

Market Update

Live Event

Seats are running out for our upcoming “Future of India” expert panel and networking event on Wednesday, February 12, 2025, in New York City. Buy now here, or earn a free ticket by sharing Samosa Capital with three friends.

Remembering Former Prime Minister Manmohan Singh

Former Prime Minister Manmohan Singh passed away yesterday at 92. Singh re-wrote India’s economic destiny through three pivotal roles: RBI Governor, Finance Minister, and finally, India’s 13th Prime Minister from 2004 to 2014. Through each role, he liberalized India’s markets, cut regulations, reformed industries, and opened the world to India’s businesses. An Oxford-trained economist, as prime minister he oversaw an annual 7-10 percent GDP growth.

His tenure as the Governor of the Reserve Bank of India (1982–1985) was marked by groundbreaking reforms, including the creation of the Urban Banks Department to regulate cooperative banks and the passage of the Banking Laws (Amendment) Act of 1983. This act expanded the scope of banking activities, introduced nomination facilities for account holders, and strengthened the RBI’s regulatory powers. 

Singh became Finance Minister during the 1991 economic crisis. He spearheaded a series of transformative reforms that liberalized India’s economy. Facing a dire balance of payments crisis, Singh dismantled the License Raj (a required business permit that gave the government strict control over industry), opened India to foreign direct investment, and devalued the rupee to make exports competitive. His 1991 budget cut import duties, abolished restrictive trade policies, and reduced subsidies, paving the way for a globally competitive economy. 

Singh was never supposed to be Prime Minister. In fact, he had never won an election. The Indian National Congress had won the national elections, and the party leader, Italian-born Sonia Gandhi, was expected to take the top job. However, in a bold decision that was some parts selfless and some parts avoiding opposition to her not being Indian-born, she handed the reigns to the esteemed, objective, and soft-spoken Manmohan Singh. Singh’s 10-year leadership — the first prime minister since Nehru to win re-election — emphasized inclusive growth and technological advancement. He implemented the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), providing livelihood security for millions. Infrastructure projects like the Golden Quadrilateral boosted connectivity and trade, while the Indo-US Civil Nuclear Deal signaled India’s strategic rise on the global stage. Singh also championed financial inclusion through initiatives like digital banking, ensuring access to banking services in rural areas.

Could India Still Hit 7 Percent Growth? Yes.

The good news. The Reserve Bank of India believes the previous quarter’s shockingly low 5.4 percent annualized GDP growth was not a result of an overall slowdown, and instead explained by a concentrated decline in industrial growth and subpar performance from manufacturing companies. Moreover, the RBI points to the manufacturing PMI holding strong at 56.5 in November, while supply chain pressures easing below historical averages in October-November, as evidence that India can still hit 7 percent GDP growth in 2024. The services sector maintained robust growth, with the PMI steady at 58.4, signaling ongoing expansion.

Given this, the RBI’s projected annualized GDP growth rate for the next quarter, Q3, is 6.8. The projection for Q4 is 7.2 percent, FY 2025-2026 Q1 is 6.9 percent, and Q2 is 7.3 percent.

Crops save the day: The recovery is bolstered by expanded rabi sowing (winter crop planting), expected to boost rural incomes and consumption. This agricultural revival comes as inflation limits disposable incomes and curbs urban demand. However, the report warns that rural recovery alone cannot offset broader inflationary pressures. With private consumption driving nearly 60 percent of India’s GDP, balanced growth across rural and urban markets is essential for long-term stability.

In response to the previous quarter’s surprising economic slowdown, the MPC has kept key rates steady to prioritize inflation control. It also reduced the cash reserve ratio for banks — the first such move in over four years — to ease lending conditions and stimulate growth.

The government is a little more cynical. The government partly blames the RBI for tight monetary policy which has restricted demand, in a new Economic Affairs report released on Thursday. The department expects growth to pick up when restrictive measures start to end with the cash reserve ratio falling, a good first step. Economic Affairs expects growth to be 6.5 percent in the next quarter with resilient rural demand (cited by tractor sales) and urban demand (increased air travel) even in the face of global uncertainty regarding tariffs. 

Gupshup

Macro

• The RBI sold $9.28 billion (₹792.5 billion) in the spot FX market in September. This was the net selling and buying amounts that the bank did with rupees. While the spot market is also huge, the nearly $50 billion (₹4.3 trillion) in forwards in October dwarfs that amount. Forwards are preferred by the RBI since they do not affect bank liquidity as much.  

• RBI study shows that rupee depreciation helps exporters more than appreciation helps importers. The real effective exchange rate (REER) indicates that the trade balance improved significantly with rupee depreciation versus the opposite. A limitation of the REER model is the assumption of all-else-equal. REER assumes that the price of imports and exports change one to one with currency, while goods would normally differ in price changes.

• India's current account deficit remained unchanged in Q3 compared to Q2 of 2024 with a shortfall of $11.2 billion (₹957.2 billion). Economists were predicting an export gap of $15 billion (₹1.3 trillion) which marks the quarter as more successful. Strong domestic demand over the last few months for gold will likely balloon Q4 deficits, but short-term positive numbers are still helpful. The rupee strengthened from 85.8 to 85.5 since currencies respond favorably to relatively higher exports and lower imports.

Equities

• Ola Electric wants to open 3,200 stores to expand its footprint now operating 4,000 stores across the country. After having a strong public listing in August, there has been a litany of complaints from customers, regulatory concerns, and public spats between management. Ola’s strategy with store expansion is going more direct to consumers with e-scooters to repair brand value.  

• Indian firms are targeting billions in exports amid American tariff threats to China. Exporters are looking at textiles, chemicals, and electronics with Trump tariffs which could go in place. Exporters are requesting funding from government initiatives to expand export policy and promotion in the US market.  

• JSW is buying Temasek-backed clean energy projects for $1.5 billion (₹128.2 billion). The deal is all-cash for purchase from O2 Power. JSW will be able to produce another 4.7 gigawatts of clean energy amid its goal of producing 20 gigawatts by 2030.     

Alts

• India is reviewing a $30 billion (₹2.6 trillion) sulphur-cutting program for coal plants. Government studies have shown that the measures have not been effective. Currently, plants have to buy FGD systems but only 8 percent of all plants have done so. The government wants to switch to precipitators that limit fine particles and only cost a fifth of the FGD cost.

• 30 companies are vying for India's homegrown satellite network construction. The country wants to build private-public partnerships in order to reduce foreign reliance on defense, infrastructure management, and other critical mapping needs. The market for satellite construction is expected to reach $45 billion (₹3.8 trillion) by 2030. 

• Expect M&A activity in the green energy sector in 2025 with consolidation required for Delhi’s lofty goals. The country wants half of all energy generation to be clean by 2030 but that requires around $200 billion (₹17.1 trillion) of additional investment. An issue has been lofty valuations: Brookfield, GIC, and Macquarie spent 2024 looking for buyers and haggling on entry prices.

Policy

• The government must adjust clean fuel plans for farmers. Government subsidies attempt to reduce field burning (a common practice to prepare land for farming) but are currently incapable of providing enough money to offset the benefit of burning. The government is now offering subsidies for turning the rice stubble into biogas and also providing compost to speed up harvesting times.  

• Net formal jobs under EPFO fell to a 5-month low of 1.34 million. EPFO is a form of payroll data that uses retirement pensions as an estimation. There was an 11.8 percent dip y-o-y even with the festive decline. Additionally, young first-time job seekers made up 40.5 percent of the new EPFO additions.

• The government partly blames RBI policy for the economic slowdown and believes that economic growth will strengthen when restrictive policy measures end. The Finance Ministry expects rates to come down next year which should lead to credit growth and demand increasing. An uncertainty for economic projections (which call for 6.6 percent growth through the next year) is global trade tariffs which would hurt companies now looking to increase exports.    

• External Affairs Minister Jaishankar is engaging with the Biden and Trump admins. Jaishankar is discussing the implementation of tariffs, partnerships on growing industries, and geopolitics amid global conflicts. Another point that Jaishankar is communicating is hosting the Quad 2025 (a meeting of the US, India, Australia, and Japan) in India and increasing Khalistani extremism in India and abroad. 

• Startups have created 1.6 million jobs across the country. DPIIT recognized these startups as employment generators. The prevalence of early-stage companies is due to affordable internet and young employees which has fueled growth in fintech, edtech, health-tech, and e-commerce. DPIIT says there are now 100 unicorns making it the 3rd largest startup hub globally with aspirations to be number one.

See you Monday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.