BENGALURU: As we bid adieu to the year 2022, we look back at some of the significant developments in the business and economy space that shaped the overall economic performance of the country. Here are a list of some of the big events that took place in 2022:
Equity markets end in green
Despite a tumultuous year that saw war, inflation and high-interest rates, Indian equity markets showed resilience and managed to close the calendar year with a gain. Benchmark index Sensex, which fell 293.14 points, or 0.48% on the last trading day on Friday (December 30) ended 2022 at 60,840.74, gaining over 4.4% in 2022. The broader NSE Nifty ended at 18,105.30, making a gain of 4.3% in 2022.
Rupee’s worst performance
The Indian currency ended 2022 with a 10.14% fall against the US dollar, becoming the worst-performing Asian currency of the year. The 10.14% decline is the biggest ever since 2013 when the local currency slid 15% against the US dollar. In the last trading session of 2022, the rupee ended the year at 82.86, closing in on the 83-mark again, which it breached in October.
RBI’s dollar sale to support rupee
The rupee remained under pressure from a strengthening dollar and the outflow of investment from foreign portfolio investors. The Foreign portfolio investors (FPIs) had so far taken out a net USD 18 billion in 2022.
As the rupee continued to fall, the RBI used its might to check the fall and in doing so saw the forex reserve falling to the lowest level of USD 524 billion in late October from the peak of USD 642 billion in November 2021. It ended the year at nearly USD 560 billion.
India’s digital currency
To reduce dependency on paper currency, the Reserve Bank of India (RBI) this year launched India’s Central Bank Digital Currency (CBDC), a sort of official cryptocurrency. This is touted as the big thing after the UPI (unified payment interface) in facilitating payments.
The RBI defines the digital Rupee as a form of digital token that represents legal tender. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency, unlike cryptocurrencies, where the value is highly volatile.
Disinvestment push of government
After much anticipation, the government finally offloaded a 3.5% stake in the country’s largest life insurer – Life Insurance Corporation of India – through an initial public offer (IPO) raising Rs 20,557 crore. Though the amount raised was much lower than was expected (Rs 60,000-70,000 crore), it remains the biggest IPO ever in terms of the amount raised. LIC’s IPO came after the government successfully transferred the government control over Air India to Tatas in 2021. Encouraged by the success of Air India and LIC, the government is now pushing for more strategic sales PSUs like IDBI Bank, Concor, BEML, etc.
Taxing the cryptos
After dilly-dallying on the issue of the legality of cryptocurrencies (private digital currencies), the government did take a stand on the issue, when the finance minister in her budget speech on 1 February 2022, imposed a tax of 30% on capital gains made on cryptos. It also levied 1% TDS on every transfer of crypto assets.
The move to levy a hefty 30% tax on cryptos while leaving investors shell-shocked, they were relieved in a way that the government had not gone for an outright ban, as was expected by many. The RBI has been advocating an outright ban on private cryptocurrencies terming them as a big financial risk, but the government has maintained that the legality of cryptocurrencies is a global issue and that there should be a global response to the issue.
Inflation and unprecedented rate hike
An out-of-turn, hurriedly called Monetary Policy Committee (MPC) in May 2022 saw the RBI hiking repo rate by 40 basis points as retail Inflation in April (at 7.8%) came precariously close to 8%, forcing the central bank to change its view on inflation and the RBI’s response to it.
Till then RBI maintained that the nature of Indian inflation was different from that of the other developed economies and that the RBI was not behind the curve in dealing with the problem. But with April retail inflation at an 8-year high, the central bank corrected course and followed it up with four more hikes during the year raising the repo rate by 225 basis points to 6.25%.
India successfully launches 5G in 2022
In 2022, India successfully conducted a 5G spectrum auction and garnered a whopping Rs 1,50,173 crore from it. Among the bidders, Reliance Jio was the most aggressive bidder, followed by Bharti Airtel and Vodafone Idea. In October 2022, India officially ushered in the era of 5G technology on Saturday as Prime Minister Narendra Modi launched the technology in Delhi.
The 5G technology, which will give ultra-high-speed Internet connectivity, was first launched in eight cities, including Delhi, Varanasi, Bengaluru and Mumbai. The government believes the cumulative economic impact of 5G on India is estimated to reach $450 billion by 2035. So far, RJio and Bharti Airtel had set up 5G base stations in almost 14 States. The telcos have deployed 20,980 base stations for 5G services as of November 26.
The rise and rise of Gautam Adani
No one in the world added more billions to their wealth than Gautam Adani, the head of the port-to-power conglomerate Adani Group. Gautam Adani added a staggering $33.8 billion to his fortune in 2022, according to the latest Bloomberg Billionaire Index.
For the most part of this year, Adani remained Asia’s richest billionaire and for a brief period of time, he became the world’s second richest billionaire. In business, Adani Group became the country’s second-largest cement maker in one go, committed billions in ramping up renewables, expanded its port business on foreign shores and recently acquired media outlet NDTV.
Funding winter for start-ups, layoffs in the technology sector
2022 was the year of funding winter for start-ups. One of the main reasons for the massive firing is the funding crunch and global funding slowdown. The funding in the edtech sector alone witnessed a significant drop, about 39%, in 2022 compared to 2021.
This triggered a flurry of layoffs in the tech startup sectors with companies like Byju’s and Unacademy announcing major job cuts. Even employees in tech giants like Google, Meta, Twitter and Amazon could not escape the fate of job loss. Indian IT sector may follow suit in 2023. According to the report, over 2 million IT employees are expected to leave their jobs by 2025.
The mega collapse of new-age tech stocks
After a high-profile IPO in 2021, it was a dreadful year for new-age technology companies on the stock exchanges. While Paytm share prices have been falling since it got listed in November 2021, two other biggies- Nykaa and Zomato- wiped out billions of dollars of investors' wealth this year.
In the Calendar year 2022 so far, Paytm stock has plunged 60%, Nykaa 55% and Zomato 58%. Besides the big 3, PB Fintech (down 53%), Cartrade Tech (down 44%) and Delhivery (down 38%) disappointed the street. Investors continue to keep a distance from these stocks owing to the high losses they report, rich IPO valuation and competition from established players.
Electric vehicle fires
Owing to the poor battery management systems in electric scooters there was a series of fire incidents and in a few instances, individuals lost their lives. When the summer of 2022 began, safety associated with EVs became a hot topic as the e-scooter of almost every company, be it Ola Electric or Okinawa, was in flames.
Following these incidents, the government took note and introduced a set of EV battery safety standards, phase 1 of which came into effect on December 1, 2022. This year is also the year for increased EV adoption as sales of two-wheelers and e-rickshaws witnessed big growth.