EXIM Bank Overseas Bond Issuance

EXIM Bank has successfully raised $1 billion (approximately Rs 8,570 crore) through an overseas bond issuance. This issuance was done at very competitive rates to fund its global initiatives.

Key Highlights

• Competitive Pricing: Achieved at "the tightest spread ever achieved from India," with a final pricing of US treasury plus 1% and a negative new issue concession of 0.05%.
• Investor Distribution:
  • 50% from Asia
  • Approximately 33% from Europe, the Middle East, and Africa
  • 18% from the US
• Investor Types:
  • Nearly two-thirds are asset and fund managers
  • 18% are banks
  • 16% are insurance, pension funds, and public sector entities
  • Private banks and others follow
• Order Book: Peaked at $2.7 billion, supported by the bank's quasi-sovereign status, strong credit profile, and India's inclusion in the JP Morgan emerging bond index.

Credit Ratings

• Moody's: Baa3 (Stable)
• S&P: BBB- (Positive)
• Fitch: BBB- (Stable)

Significance and Impact

The Department of Financial Services (DFS) praised this as a "fantastic start" to the year for Indian issuers in global capital markets. The transaction reflects the confidence of overseas investors in the India story.

EXIM Bank's Role

EXIM Bank provides financial assistance to exporters and importers, serving as a principal financial institution for coordinating financing of export and import activities to promote India's international trade.

Fiscal Deficit and Economic Projections for FY25

The fiscal deficit for the financial year 2024-25 (FY25) is expected to remain within target, despite a lower-than-budgeted nominal GDP growth rate of 9.7%, as per the First Advance Estimates by the National Statistics Office (NSO).

Key Points

• The government aims to manage the fiscal deficit at Rs 16.13 trillion, representing 4.9% of GDP for FY25.
• The capital expenditure (capex) target for FY25 was set at Rs 11.1 trillion, but experts anticipate it will be missed by Rs 1–1.5 trillion.

GDP Projections

• The Budget assumed a nominal GDP growth of 10.5% for FY25.
• According to NSO, the nominal GDP is expected to reach Rs 324.11 trillion in FY25, up from Rs 295.36 trillion in 2023-24.

Fiscal Performance and Capex

• Data from the Controller General of Accounts (CGA) indicates that the government utilized 52.5% of the fiscal deficit target by November FY25, which is 6.6% lower than the previous year.
• Capex declined by 12.3% year-on-year for April–November FY25, with only 46.2% of the target utilized, compared to 58.5% in the previous year.

Revenue Collection

• Net tax revenue collections reached 56% of the Budget Estimates (BE) for April–November FY25, compared to 62% in the previous year.
• Income tax collections rose by 24% year-on-year, while corporate tax collections decreased by 1%.

Overall Economic Outlook

• The absolute GDP is estimated at Rs 324.11 trillion, slightly below the BE of Rs 326.37 trillion.
• This deficit is unlikely to significantly impact fiscal consolidation in FY25, given current revenue and expenditure trends.

Additional Insights

• There is an expected consumption increase and slower capex for FY25.
• India's GDP is anticipated to grow by 6.4% in 2024-25.

First Advance Estimates of National Income 2024-25

The National Statistics Office (NSO) has released the First Advance Estimates (FAE) of national income for the financial year 2024-25.

Economic Growth Projections

• The Indian economy is projected to grow at 6.4 per cent in 2024-25.
• This is a decrease from the 8.2 per cent growth rate in 2023-24.
• The new estimate is slightly below the Reserve Bank of India's projection of 6.6 per cent.
• This growth rate is the lowest since the contraction during the Covid year (2020-21).

Nominal Growth Rate

• In nominal terms, the economy is set to expand by 9.7 per cent, which is a slight increase from 9.6 per cent in the previous financial year.

The First Advance Estimates were anticipated after the observed growth rate in the second quarter of the financial year.