Tag: economic recovery

The RBI’s monetary policy review is due on October 6. WPI inflation rose in August 2021 to 11.4 percent, from 11.2 percent the previous month. While that increase may seem marginal, it’s important to note that average WPI inflation in the last five months has been 11.6%. Retail inflation, at 5.3% in August, has not only spent two consecutive months below the RBI’s upper tolerance limit of 6%, but has also come down to below the level it was at before the second wave struck. Given the sheer amount of liquidity made available by the RBI over the last year and more, the fact that retail inflation is low while the Sensex has been scaling new heights suggests that investment activity so far has been restricted to equities rather than factories and that demand is still subdued. Read more

GST collection grew 23 percent in September compared to the same period last year and even surpassed the pre-covid year of 2019-20. The collection continues to exceed Rs 1 trillion mark for the third month showing clear signs of recovery for the Coronavirus (Covid-19) battered economy. “Coupled with economic growth, anti-evasion activities, especially action against fake billers, have also been contributing to the enhanced GST collections. It is expected that the positive trend in the revenues will continue and the second half of the year will post higher revenues," the finance ministry said today(1st Oct.2021). While the improvement in the collection is also evident month on month as in August the collection stood at Rs 1.12 trillion, in July, the collection stood at Rs 1.16 trillion. Read more

Today (9th September 2021) the Finance Ministry said that economic recovery, which was impacted during the second wave, will see faster revival in the next three quarters of the current financial year, even if the third wave hits the country. It is said that this confidence is mainly due to a rapid surge in the inoculation drive and a rebound in leading macroeconomic indicators. “Rapidly increasing vaccination coverage and richer experience with pandemic management provide the confidence that the recovery can continue even in the event of a third wave,” the finance ministry’s Department of Economic Affairs said in its monthly review for August. Read more

"Owing to the second wave, the Indian economy is likely to mirror a similar trend seen in FY21, where the first half of the financial year is weaker and the second half is significantly stronger,” according to HDFC Chairman Deepak Parekh. However, in terms of the overall macroeconomic environment, “the key challenge remains the unpredictability of the virus. The world is still susceptible to recurring waves of infections. Thus, economic recovery will remain uneven and patchy,” he said. There are a couple of factors working in favour of India. The foreign exchange reserves and foreign direct investment inflows are at a record high, agriculture growth is expected to remain strong with foodgrains estimated at over 305 million tonnes. RBI’s accommodative stance and government measures to alleviate covid-related stress would also help in the recovery, Parekh said.

The V-shaped economic recovery in 2020 won’t be repeated after this year’s Covid-19 carnage according to some analysts. Government statistics released 0n 31st May showed 1.6% growth in GDP from a year earlier in the March quarter, before a deadly second wave of infections. But this expansion, an improvement over the 0.5% rate in the previous three months, is a statistical artifact. A better metric is seasonally adjusted quarter-on-quarter growth, which Capital Economics calculates at 0.7%, a sharp slowdown from 9.5% in the December quarter. During the current surge in cases, there have been only local restrictions on physical activity. That’s making some analysts optimistic about the resumption of growth that will inevitably occur when the coronavirus fully recedes. Yet there are several crucial differences from last year that could make it harder for India to bounce back. Read more

The stock market’s passive reaction to the harrowing reality on the ground caused by a destructive wave of Covid-19 is a mystery for many. Last year in the US people was dismayed by the stocks rally amid the US Fed’s unprecedented intervention, even as the healthcare infrastructure collapsed in the city after city. This year in India in a similar way the participants and non-participants are equally baffled by the resilience shown by the market even in the face of rising infections, deaths, and localized lockdowns. It goes back to the old adage in the investing world: investors hate uncertainty; they hate fogginess when they look into the future, even though their track record in predicting it accurately is about as good as a flipped coin. Read more

Surpassing the previous high in March, GST collections in the month of April set another fresh record at Rs 1.41 trillion, according to the government data released today(1st May 2021). April month's GST revenues are about 14 percent higher when compared with the collections of the previous month. GST collections have consistently crossed Rs 1 trillion marks for the last seven months. "Despite the second wave of coronavirus pandemic affecting several parts of the country, Indian businesses have once again shown remarkable resilience by not only complying with the return filing requirements but also paying their GST dues in a timely manner during the month," the government said in an official statement. During April, the revenues from the domestic transactions (including import of services) are 21 percent higher than the revenues from these sources during the last month. Read more

Investors are now betting big on cyclical recovery after a sharp economic contraction with most of the related stocks doing well at the bourses after playing safe during the initial phase of the pandemic in 2020 and sticking to defensive plays such as pharmaceuticals, fast-moving consumer goods (FMCG) and information technology (IT). Till June-July, defensive sectors like pharma and FMCG were leaders, followed by IT, as investors wanted to play safe given the uncertainty around the pandemic, its impact on the economy, and the fortunes of India Inc, analysts say. From August – September, cyclical like auto and banking & financials picked up the pace. Post budget, infrastructure, industrials, and stocks of public sector undertakings (PSUs) have rallied. Read more

According to a Finance Ministry report India has been witnessing a 'V-shaped' recovery since June with the gradual easing of restrictions on economic activities." The sustained improvement in high-frequency indicators ignite optimism of improved performance in the second half of the year," it said. The Monthly Economic Recovery for December by the Department of Economic Affairs (DEA) also noted that the impending vaccination is set to spur the momentum in economic activity globally. "The effective management of Covid-19 spread despite the festive season and onset of the winter season, combined with sustained improvement in high-frequency indicators and V-shaped recovery along with easing of lockdown restrictions distinguish Indian economy as one riding against the Covid-wave," it said. Read more

Five Indian states contributing nearly 27% of the country’s gross domestic product are leading a recovery in the economy as it slowly emerges from the world’s biggest lockdown, a study shows. Kerala, Punjab, Tamil Nadu, Haryana, and Karnataka have seen a pickup in activity, based on an analysis of indicators such as power consumption, traffic movement, the arrival of farm products at wholesale markets and Google mobility data, etc. Some of the most industrialized states such as Maharashtra and Gujarat were trailing because of tough measures still in place to contain the Covid-19 pandemic, the study showed. India will begin a phased lifting of the nationwide lockdown from June 8, allowing shopping malls, restaurants, and places of worship to reopen in areas where virus infections are under control. Read more