Inside India’s Economy

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Indian banks are likely to see their profits improve further in the current fiscal year that started April 1, as they benefit from rising interest rates, declining nonperforming loans, and higher loan growth.

Financial Highlights of India’s Largest Private and Public Banks

Surging crude prices have prompted India to set an ambitious goal of achieving 20% ethanol blending in gasoline, a move analysts said could help to cut the ballooning oil import bill, although ensuring plentiful availability of the biofuel at viable prices would be a key challenge.

The recent pledge by New Delhi to advance the 20% blending target -- 20% ethanol and 80% gasoline -- by five years to fiscal year 2025-26 (April-March) from 2030 is the latest policy measure that India has announced to find ways to battle high oil prices that have pushed up the inflation rate to eight-year highs.

However, analysts said lifting the biofuel blending rate with gasoline from the current 10% to 20% in such a short span of time may be possible only in certain pockets of the country but not across the entire country.

"The major sugarcane and ethanol production regions of Uttar Pradesh, Maharashtra and Karnataka should be able to meet this new mandate," said Loren Puette, biofuels analyst at Platts Analytics of S&P Global Commodity Insights.

India’s Long-Term Gasoline Demand Outlook Positive Despite Energy Transition

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India is continuing to grapple with a severe and protracted power crisis after a sustained surge in global coal prices in late-2021 was further aggravated by Russia's invasion of Ukraine in February.

The global price pressure eroded India's import volumes and reduced its power plant stockpiles to critically low levels just as an unrelenting heat wave pushed demand to unprecedented levels. The country generates more than 75% of its power from coal, and is the world's third-largest producer of electricity at 1,383 TWh/year.

The crisis is so severe that government authorities in India – the world's second-largest coal producer, importer and consumer after China – are threatening to cut domestic coal supply to power plants that are reluctant to import coal at current elevated prices.

But how did it get to this?

The current deficit, the second such coal shortage since October 2021, was initially triggered by the sharp rise in global coal prices in mid-2021.

Indonesia and Australia Contributed Around Two-Thirds of Indian Coal Imports in 2021

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India is likely to allow wheat exports of up to 1 million mt within the next few days as part of exemptions to its ban on wheat shipments, multiple officials from the country's Ministry of Commerce and Industry told S&P Global Commodity Insights May 27.

India banned wheat exports on May 13 amid rising domestic inflation and a fall in output. The government had reduced the wheat output estimates for marketing year 2022-23 (April-May) by 5 million mt on May 19 from 111.4 million mt projected in February. The revised output would be around 3% lower on the year.

In its notification announcing the export ban, the government had also exempted shipments under contracts where letters of credit were issued on or before May 13. The soon-to-be-announced clearance for shipments is expected under this exemption, they added.

"Around half of the shipments are to go to Bangladesh largely by railways and roadways," an official with the trade ministry added.