The State of the Economy: India Inc's Profit Dips, Rupee Is Asia's Worst Performer
The Wire Staff
New Delhi: The India Inc’s operating profit has fell to 9.9% in FY25, a profit growth that is the slowest in the last four years, despite efforts of cost-cutting.
It also marks a second consecutive year of a single-digit topline growth with the subdued earnings performance and a meagre 6.2% rise in net sales, reported Financial Express.
The data related to 3,035 companies, banks and financials reveals that the topline growth has dropped to only 4.9% in 2024-25 if banks and financials are excluded from the sample.
On the other hand, employee expenses increased by just 7% in FY25, which is the slowest increase in four years.
An analysis of workforce trends indicates that several large corporations are paring their headcount and that hiring in the IT sector has moderated.
Economists also point to the poor performance of the country’s merchandise exports sector – especially segments such as gems and jewellery and leather – as a reason for slower job creation.
Experts say that the poor performance in the country’s merchandise exports sector including segments such as gems and jewellery and leather is one of the reasons for the slower job creation.
Rupee emerging as Asia's worst performer
Meanwhile, the Indian rupee is emerging as Asia’s worst performer in the current quarter and continues to lag behind peers even as the Reserve Bank of India (RBI) aims to avoid a depletion in its foreign-exchange reserves.
The RBI is expected to purchase sizeable amounts of the US currency to prevent its holdings from running down, reported Bloomberg.
According to IDFC First Bank Ltd., the potential dollar purchases may lead to the rupee falling to 86.50 per dollar by end-December.
India’s foreign-exchange reserves amounted to $693 billion as of May 23, lower than the all-time high of $705 billion reached in September last year.
The RBI, which has already pledged to sell billions of dollars via derivatives contracts at various points in the future, is expected to buy up sizeable amounts of the US currency to prevent its holdings from running down.
According to latest data from RBI, the central bank had dollar repayments of about $73 billion as of April as indicated by its net short forwards position, a measure of the amount of greenback it has agreed to sell at a future date. It has narrowed from an all-time high of $88.8 billion in February.
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