Indian Economy : News,Discussions & Updates
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Very informative, objective and detailed + overall assessment of the Indian Economy's strong + consistent recovery, imo, perhaps the best in the world.
@randomradio, @Nilgiri, @Gautam, @Ashwin your thoughts?
India’s Economy: The Pandemic And Its Paradoxes
The narrative surrounding India’s recovery is getting increasingly schizophrenic and paradoxical. Sajjid Chinoy explains why.
One thing I really admired about our Prime Minister and his team is that whatever challenges they are facing during their activity , they are somehow able to convert that in to opportunities .
Challenges always makes them stronger.
During Covid they homeworked very well and converted that time for implements innovative policies.
Privatizing Air India itself was one such decision.
Around 13 billion$ can be saved yearly with that single decision.
Arcelor-Nippon to invest ₹1 trillion in India over 10 years | Mint
ArcelorMittal and Nippon Steel Corp.’s joint venture steel company in India plans to invest about ₹1 trillion over 10 years to expand its operations in the country, a senior executive said
www.livemint.com
Nothing new here for me, this is summary of earlier stuff in the year (some old, some recent).
While its good stuff overall, how it deploys + actions + grabs more (to start next cycle) is what ultimately matters.
Much like putting potential and waiting for kinetic.....fuel in gas tank....but how fast and far car goes in end comes later to see....depends on lot of less sexy moving parts and thought process in between.
Right now I am watching what actual capital flows materialise specifically from PRC to India. That stuff is way past overdue....and a disappointment for me w.r.t modi term 1.
I am busy doing my bit in my capacity w.r.t folks I know in both HK-PRC-TW and India for getting things rolling there a bit better in one of these "unicorns" that are popping up in India lately. I hope to do lot more of it with time.
But larger sense, a study or two doesnt cut it:
China-Plus-One to push Indian textile exports to $65 bn by 2026: Study
Surge is likely to generate 7.5-10 million new jobs
.... because there are older studies that say same thing...
Though at least these studies seem to be getting better (in actually getting to the meat of the matter).
We need to watch and analyse for at least rest of Modi term 2 first...rather than be too optimistic...forget being celebratory.
Always felt good sending sachin out (potential wooooo!), he got out a lot too early sometimes though. Think of potential vs action (realisation) that way.
India’s Economy: The Pandemic And Its Paradoxes
The narrative surrounding India’s recovery is getting increasingly schizophrenic and paradoxical. Sajjid Chinoy explains why.www.bloombergquint.com
Much better article to read for me.... I'd buy the author a beer.
I am illiterate in economic maters. But the article here cites numbers from a recent SBI research report. It is probably pretty accurate. Here is the article :
Digitisation, GST Drives Rapid Formalisation Of India's Economy; Informal Economy Shrinks To Just 15-20% From 52% In 3 Years
by Swarajya Staff - Nov 1, 2021 10:57 AM
Labour reforms. (Representative Image)
Snapshot:
- India’s informal economy has shrunk to around 15-20 per cent of the formal GDP as against 52 per cent three years ago following the implementation of GST, accelerated digitalisation, and demonetisation driven changes, a report by the State Bank of India’s (SBI) economic research department has said.
- The SBI report noted that government's recently launched E-Shram portal, India’s first national database of unorganised workers through which social security schemes are facilitated, is a big step towards the formalisation of employment. The report calculates the rate of formalisation of unorganised labour due to E-Shram at around 17% (Rs 6.8 lakh crore / 3% of GDP) in just 2 months.
'For India, post 2016 plethora of measures which accelerated digitisation of the economy, emergence of gig economy have facilitated higher formalisation of the Indian economy - at rates possibly much faster than most other nations." the report noted.
Over the last couple of years, the government has made many efforts for formalisation, the SBI report added. At least Rs 13 lakh crore of economic activity has come under the formal economy through various channels over the last few years, the report stated
Using the monthly EPFO payroll report [which provides data on establishments remitting first ECR (Electronic Challan-cum-Return) in a particular month] as one measure of the extent of formalisation, SBI researach estimated that almost 36.6 lakh jobs have been formalised till Aug’21
The SBI report noted that government's recently launched E-Shram portal, ,India’s first national database of unorganised workers through which social security schemes are facilitated, is a big step towards the formalisation of employment. The report calculates the rate of formalisation of unorganised labour due to E-Shram at around 17% (Rs 6.8 lakh crore / 3% of GDP) in just 2 months
Over 5.7 crore workers have registered in the E-Shram portal until October 30. Sixty-two per cent of workers are in the 18-40 age group, and 92 per cent have a monthly income of less than Rs 10,000, the report said.
According to the SBI report, workers from the agriculture sector account for 55 per cent of registration, followed by the construction sector (13 per cent). Of the 5.7 crore registered workers, 81.2 per cent — or 4.6 crore — have bank accounts, but only 24 per cent of them (1.1 crore workers) have Aadhaar-linked bank accounts.
"The E-Shram is a big step towards the formalisation of employment as our calculation indicates that till date the rate of formalisation of unorganised labour due to E-Shram is around 17% / Rs 6.8 lakh crore / 3% of GDP in just 2 months." Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor, said.
"Even in Agriculture, the usage of KCC cards has increased significantly and we estimate Rs 4.6 lakh crore formalisation only through KCC route, with more marginalized farmers coming under the banking sector ambit through such usage. The total number of insurance and pension accounts that have been opened across several schemes for the unorganised as well as organised is as much as 68.9 crore." he added.
The SBI report said that formalisation of an economy is a positive outcome from a policy perspective. As per IMF estimates, even Europe informal economy is estimated at 20% of GDP, the report pointed out
The SBI report estimated 11.4 crore tax paying households. It noted that 8.5% of the total population contributes to Rs 75 lakh crore or 65% of the private final consumption expenditure and cross subsidises 91.5% of the population.
"It is important and ethical that even as we formalise, we must support honest tax paying households through a better designed tax structure, particularly indirect taxes on items like fuel !" report recommended.
Digitisation, GST Drives Rapid Formalisation Of India's Economy; Informal Economy Shrinks To Just 15-20% From 52% In 3 Years
There is serious issue of fake/phony accounts, data is simply unreliable for any meaningful interpretation.
Jan Dhan 1-rupee trick: Opposition wants answers and an inquiry
The Indian Express spoke to nearly 60 savings bank account holders, who had opened zero-balance accounts under Jan Dhan, in 12 branches of eight different banks and their subsidiaries across six states to find the story repeating itself.
indianexpress.com
From the SBI report:
Some very large amount of financial transactions coming in from the informal economy. SBI being the largest bank probably supported most of these transactions. I find it difficult to believe the SBI was transferring these quantities of money to "phony" accounts. Just my 2 paisa.
The article you posted in very interesting. It raises a lot of questions too. Here is one question from me, how many of the people who opened their bank accounts under he Jan Dhan program even know how to use the formal banking system ? Not a lot I recon. So what do we do about this vast section of our people ? Leave them at the mercy of informal bankers, zamindars, loan sharks etc. ? Or bring in some financial education though awareness campaigns/community meetings etc. ?
Financial education isn't something that is easily available to the uneducated. What these bankers & their political masters should've done is to hold community meetings with the people that made their bank accounts under the Jan Dhan program. That's what the bankers are doing in our state. If there were directives to hold such meetings in NE states, you don't think thee would be similar directives for other states ? I understand that this a more difficult thing to do in larger states. But the shortcut these bank officials chose is self serving.
Be that as it may I still believe the Jan Dhan is a pretty good program. All social welfare schemes in India has had massive implementation oversights, financial leakages etc. On a personal note, until recently I had my name in my aunt's family ration card. She was living alone at that time & I was visiting. So they added my name as having multiple names made it look like a "family". They govt could add us to the total number of families they gave ration cards to. So I my name was present in 2 ration cards.
It is an obvious oversight. Does that mean ration cards haven't helped people ? Or the govt. was wrong in pushing for greater coverage of ration cards ? Most central direct benefits today are serviced by the Jan Dhan accounts. That alone significantly reduces the financial leakages in many social welfare schemes. It is not perfect as evidenced by the article but it is certainly a part of the solution, not a part of the problem.
As for the opposition, they are grasping at straws. That has been their political mantra for a while now. Govt. projects today are being implemented by the same bureaucrats that implemented the UPA era schemes. Many of the programs run by the UPA had massive implementation gaps, corruption & financial irregularities. Now they pretend like that never happened. If they have a better way of bringing financial inclusion they should lead the way in the states that they run. I doubt they have any better plans though. They just found some new straws to grasp at.
I'd say its fairly spot on. This was clear trend from a few years ago actually.
Aadhar and its branching out is a big boon for India.
India should also be very protective about this data....dont let any foreign big tech get into it.
It needs large domestic corporates to be involved this decade...i.e first and second dibs to them.
From the SBI report:
Some very large amount of financial transactions coming in from the informal economy. SBI being the largest bank probably supported most of these transactions. I find it difficult to believe the SBI was transferring these quantities of money to "phony" accounts. Just my 2 paisa.
The article you posted in very interesting. It raises a lot of questions too. Here is one question from me, how many of the people who opened their bank accounts under he Jan Dhan program even know how to use the formal banking system ? Not a lot I recon. So what do we do about this vast section of our people ? Leave them at the mercy of informal bankers, zamindars, loan sharks etc. ? Or bring in some financial education though awareness campaigns/community meetings etc. ?
Financial education isn't something that is easily available to the uneducated. What these bankers & their political masters should've done is to hold community meetings with the people that made their bank accounts under the Jan Dhan program. That's what the bankers are doing in our state. If there were directives to hold such meetings in NE states, you don't think thee would be similar directives for other states ? I understand that this a more difficult thing to do in larger states. But the shortcut these bank officials chose is self serving.
Be that as it may I still believe the Jan Dhan is a pretty good program. All social welfare schemes in India has had massive implementation oversights, financial leakages etc. On a personal note, until recently I had my name in my aunt's family ration card. She was living alone at that time & I was visiting. So they added my name as having multiple names made it look like a "family". They govt could add us to the total number of families they gave ration cards to. So I my name was present in 2 ration cards.
It is an obvious oversight. Does that mean ration cards haven't helped people ? Or the govt. was wrong in pushing for greater coverage of ration cards ? Most central direct benefits today are serviced by the Jan Dhan accounts. That alone significantly reduces the financial leakages in many social welfare schemes. It is not perfect as evidenced by the article but it is certainly a part of the solution, not a part of the problem.
As for the opposition, they are grasping at straws. That has been their political mantra for a while now. Govt. projects today are being implemented by the same bureaucrats that implemented the UPA era schemes. Many of the programs run by the UPA had massive implementation gaps, corruption & financial irregularities. Now they pretend like that never happened. If they have a better way of bringing financial inclusion they should lead the way in the states that they run. I doubt they have any better plans though. They just found some new straws to grasp at.
I'd agree, it works by tiers in the end.
You have to give the basic saturation tier base before you evolve the improvement in further tiers above it.
Very much like swaach bharat.....gotta create the actual basic infra as first basis, do the best you can with education on habits etc... and then better infra to branch. Then grow that more with time.
Why it was not done for decades before is a big blot on India even now....but at least being done now.
Services grow fastest in over 10 years in Oct - Times of India
India Business News: Activity in the country’s crucial services sector rose at its fastest pace in more than a decade in October on the back of new orders and robust deman
timesofindia.indiatimes.com
India's economy takes 'formal' leap as informal shrinks drastically
The share of the informal sector in India’s economy fell drastically to 15-20 per cent in 2020-21 from 52.4 per cent in 2017-18 due to digitisation and the rapidly expanding gig economy, according to a study by SBI Research. “Currently, the informal economy is possibly at maximum 15-20 per cent of gross value added (GVA)," said Soumya Kanti Ghosh, group chief economic advisor, SBI. The share stood at 53.9 per cent in 2011-12.
India's economy takes 'formal' leap as informal shrinks drastically: Study
15-20% of economy informal now as against 52% in FY18; digitisation, gig economy key drivers: Study
India's manufacturing PMI rises to 55.9 in October
India’s manufacturing activity continued to improve in October after setting off on the path to recovery from September onwards as strengthening demand conditions amid the easing of COVID-19 restrictions boosted sales.According to the monthly IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) survey released on November 1, manufacturing PMI stood at 55.9 in October, up from 53.7 in September and 52.3 in August. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
Amid reports of improved market confidence, rising requirements among clients and successful marketing, new orders continued to expand in October. The upturn was sharp and the fastest in seven months. Similarly, factory output increased at a sharp pace that was the strongest since March.
This would come as good news for policymakers as the PMI had hit a slowdown bump in its road towards growth back in July, when the index had fallen below the critical 50.0 mark for the first time in a year.
After starting 2021 on a stronger footing than it ended 2020, the manufacturing sector has continued to see-saw between rising and suddenly losing growth momentum. As a result, PMI has been volatile throughout 2021. The latest rise offers hope as output, new orders, exports, quantity of purchases and input stocks all strengthened.
While strong growth of both sales and production were noted in each of the three broad areas of the manufacturing sector, it was in intermediate goods that the sharpest rates of expansion were recorded. Back in September, consumer goods had been the brightest spot.
Wherever growth was reported, panel members cited favourable market conditions and improved sales volumes.
Export demand rises
In addition to reporting a substantial increase in total new orders, Indian companies observed a notable pick-up in international demand for their goods, the PMI survey said. New export work rose at a solid pace that was the quickest in three months.
"With companies gearing up for further improvements in demand by building up their stocks, it looks like manufacturing activity will continue to expand throughout the third quarter of fiscal year 2021/22 should the pandemic remain under control. Upbeat business confidence and projects in the pipeline should also support production in the coming months," Pollyanna De Lima, Economics Associate Director at IHS Markit and author of the report, said.
Should the pandemic continue to recede, IHS Markit expects a 9.7 percent annual increase in industrial production for calendar year 2021.
However, after subsiding earlier in 2021, cost inflationary pressures continued to intensify in October. Strong demand for scarce products contributed to the increase in input costs, as did rising fuel and transportation rates.
"Of concern, input cost inflation accelerated substantially in October — to a near eight-year high — as strong global demand for scarce raw materials continued to push up prices for these items. Some manufacturers hiked their fees in response, but for now the overall rate of charge inflation was moderate," De Lima said.
The overall rate of input cost inflation surged to a 92-month high. Anecdotal evidence highlighted higher chemical, fabric, metal, electronic components, oil, plastic and transportation costs.
Output prices, however, increased at a slower and only moderate rate. This was due to the vast majority of manufacturers leaving their fees unchanged.
Also, the survey noted that despite the overall improvement in operating conditions, jobs failed to increase. This was often linked to sufficient capacity to deal with current workloads and government norms surrounding shift work.
This lack of pressure on capacity, besides government guidelines surrounding shift work, meant that employment continued to decline. That said, the rate of job shedding was marginal.
India's manufacturing PMI rises to 55.9 in October
India’s manufacturing PMI stood at 55.9 in October, up from 53.7 in September and 52.3 in August.
www.moneycontrol.com
India's domestic savings to reach $3 trillion next decade, says Manisha Girotra of Moelis
An improved purchasing power, strong capital inflows, and the emergence of a dynamic entrepreneurial class will make sure that India’s growth momentum sustains itself for the next decade, believes Manisha Girotra, India Chief Executive Officer at Moelis & Company, a US-based global Investment Bank.“India is really into a strong bull run,” she says. A deeper and wider pool of capital is entering the country and domestic savings are being channelled into the stock market, instead of going into gold, real estate and physical assets. Today, domestic savings stand at $1 trillion and are expected to reach $3 trillion in the next decade, the veteran investment banking professional, with extensive cross-border M&A expertise across a broad range of industries, shares with Moneycontrol during an interview. Excerpts from the interview:
Do you expect India’s economic growth to be higher than its global peers in the coming years?
Yes, I expect India to grow very robustly in the next decade. The difficult structural reforms implemented in the last five-seven years, including demonetisation, implementation of the Real Estate Regulatory Authority (RERA) and the Insolvency and Bankruptcy Code (IBC) rules, deleveraging of balance sheets, the Goods and Services Tax (GST), JAM implementation and digitisation of the economy have all laid the basis for a wider, more inclusive growth, which includes both Bharat and India.
The improved purchasing power, strong capital inflows and the dynamic new entrepreneurial class will make sure India’s growth momentum sustains itself for the next decade. Reforms to agriculture, power, mining and labour will further unshackle the economy.
Why do you think that the Indian equity market is in a strong bull phase?
Yes, I believe that the market is in a strong run. I think there are two reasons for this.
First, deeper and wider pools of capital are entering India. Not just classical financial investors, but sovereign wealth funds, pension funds, endowment funds and sector specialist funds are all investing in the country in size and scale.
Second, domestic savings are being channelled into the stock market as opposed to going into gold, real estate and physical assets. Today, domestic savings stand at $1 trillion and are expected to increase to $3 trillion in the next decade.
Do you foresee a slowdown in primary market after the LIC public issue expected around last quarter of FY22?
No, I don’t think so, although I expect investors to become more discerning about the quality of companies that are going to IPOs, the quality of their existing investors and founders, corporate governance standards, quality of growth and earnings.
What are the sectors that can boost your portfolio returns in coming years?
Pharma, software services, consumer and technology are the key sectors for growth. Pharma and software services will stand out, driven by strong exports. Indian IT companies are crucial partners for global companies in their digital transformation journey while Indian pharma becoming the supplier of pharmaceuticals to the world.
Indian tech companies and consumer companies, which are playing on the strong and rapidly growing incomes and spending power of the Indian consumer, will also come out winners. Agri tech, education tech and health tech will gain critical mass and emerge winners.
Do you think the expected inflationary pressure, Fed tapering, increase in interest rates globally, and slow job creation could dampen the market sentiment?
Yes, global risks remain a concern. Supply-side constraints are getting worse which will lead to inevitable inflationary pressures. However, I believe the Fed tapering will be systematically implemented and markets globally should be able to absorb the changes. Also, if the pandemic can be suppressed going forward, global economies should recover and compensate for the tightening monetary situation.
Do you expect M&A activities to increase significantly in the coming years as India is expected to show strong growth going ahead?
Yes, M&A activity is and will continue to be robust. Domestic large-cap companies are very well capitalised and will continue to accelerate their footprint with inorganic acquisitions which will help them gain market share, acquire customers and expand geographies.
Global financial investors will continue to acquire businesses which play on the strong domestic consumer market. Pharma and IT companies will look globally for assets that give them access to markets, skills and technology. The IBC process will continue to generate opportunities for special situation funds, distressed funds and corporates, which will fuel deal making.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Daily Voice | India's Domestic Savings To Reach $3 Trillion Next Decade, Says Manisha Girotra Of Moelis
Domestic large-cap companies will continue to accelerate their footprint with inorganic acquisitions going ahead.
Indonesia, India beckon as Fed tapers without tantrums
SINGAPORE, Nov 5 (Reuters) - Last time the Federal Reserve moved toward reducing bond buying, it triggered a rush of funds out of emerging markets. This time is different, investors say, as they lay bets on sparkling returns extending in some of Asia's biggest developing economies.Indonesia, in particular, has stood out with equity inflows, a steady currency and even its notoriously volatile bond market calm through months of taper talk leading up to Wednesday's announcement the Fed would begin paring purchases. read more
It is a far cry from the "tantrum" that walloped bonds and emerging markets' currencies in 2013 - sending the rupiah down about 17% in five months - after then Fed Chair Ben Bernanke surprised markets by mentioning tapering to Congress.
This time the move was far better telegraphed, and few were surprised on Wednesday. But fundamentals in Asia, where inflation is less pressing and exporters stand to benefit from high energy prices, are also markedly changed, and investors are increasingly willing to bet that 2013 will not be repeated.
"We've been through 2013 and 2018, and I don't think it's the same thing in this rate hiking cycle," said Howe Chung Wan, head of Asia fixed income at Principal Global Investors in Singapore, who has a selective exposure to emerging markets.
"Sitting out here in Asia, there are other things that are more top of mind for us than the Fed," he said, such as China's economy and credit markets and volatile commodity prices, as well as the equities flows supporting Indonesia's currency.
Enthusiasm for upcoming listings have pulled cash into Indonesia's stock markets, and the benchmark Jakarta bourse (.JKSE) is heading for its best year since 2017, with indexes in Thailand, Vietnam and India eying similar milestones.
Sky-rocketing coal and palm oil prices - Indonesia is the world's largest exporter of both - have also swung Indonesia's trade surplus to record levels and promise a tax windfall that has soothed sovereign bond investors. read more
"Indonesia has benefited a lot from this energy crunch," said Jessica Tea, investment specialist for Asia Pacific and greater China equities at BNP Paribas Wealth Management in Hong Kong.
"We are also seeing a growing middle class and rising household incomes - Indonesia is probably one of our favourite exposures in the region."
Indonesia's stock and bond markets rally on, even as taper begins
FORMERLY FRAGILE
Market mechanics are also a favourable tailwind in a region where small investors' money keeps pouring into equities.
Retail account numbers have surged by roughly a third since the end of 2019 in Vietnam to top three million, according to UBS analysts, helping drive the benchmark index (.VNI) up 50% this year, twice as much as the S&P 500 (.SPX).
In Indonesia, data from the Indonesia Central Securities Depository shows the number of investors in stocks is up more than 70% over the year to Oct. 19 at 6.7 million.
Global investors are also circling with investors spooked by regulatory crack-downs in China looking for ways to put their money to work in other emerging markets.
To be sure, destinations such as Indonesia remain risky and vulnerable to capital flight if low-risk U.S. interest rates rise sharply. Dwindling foreign ownership of sovereign bonds highlights particular caution on the growth outlook, especially as the government is legally bound to reduce its deficit.
"I am worried about the growth prospects because even before the country could recover from the pandemic...Indonesia is entering into a period of strong fiscal consolidation," said Societe Generale economist Kunal Kundu.
Nevertheless, the prospect of a tantrum-free taper is still drawing bets on currencies and stocks especially as Chinese markets are weighed down by cautious sentiment.
"The Fed has navigated taper communication without a major upset," Deutsche Bank analysts wrote in late September.
"Asia's former fragile five members are also far less fragile," they added, referring to Indonesia and India, which along with Brazil, South Africa and Turkey were seen in 2013 as especially vulnerable to fickle foreign money flows.
"Our favoured Asian FX trade into year-end is to stay long INR and IDR, against shorts in CNH."
Analysis: Indonesia, India beckon as Fed tapers without tantrums
Last time the Federal Reserve moved toward reducing bond buying, it triggered a rush of funds out of emerging markets. This time is different, investors say, as they lay bets on sparkling returns extending in some of Asia's biggest developing economies.