The Signal: The Week Highlights

1. Economy Plane Takes Flight; FIIs Are Early Boarders

The virality of the virus’ has finally met its match in economy unlocking and ‘Aatmanirbhar Bharat’ package as green-shoots of economy emerge turn from roots to shoots. The rise in GST, PMI, export sales and business confidence figures are a sign of us coming to terms with ‘New-Normal

India reinstates its position as the apple of the (investor) eyes, by doctoring itself out of current cry-sis. Govt.’s marquee policies and packages, in support with RBI’s financially prudent intervention has India kick-start its economy in the higher gears. When peers are entering lock-downs, India looks to lock-in monies across borders, ready to become the fastest growing economy in the coming times. 

2. States Review State Of Their Health & Wealth

States continue post-covid trend of striking budgetary spending with focus on heavy borrowing to sustain state macro health and wealth. A capex increase of 30% in promises has resulted in 23% cuts in payments with borrowings increasing 50%+ vs 2.6% increase on YoY comparison.

The aftermath of the viral virus comes with stern economic shocks across domestic borders. The gain in spending is impeded by pain in being spent, as govt’s look to feed higher wallet share to fill the need of the times. However, the issue may meet its tissue in coming times as unlockings pick pace.

3. Tax Tyre Gets Tired

Centre got 1st increase in non-debt receipts (50%+ MoM) since lockdown in October, as overall receipts rose 46.6% on YoY basis. Next tax receipts reversed trend of contraction as taxes from incomes, corporations and GST show signs of vitality amidst the viral virus.

The unlockings of economy, supportive actions from Govt. and it’s banker (RBI), and green shoots in economic indicators are changing trends seen in recent past. Cleaning of supply shocks and rejuvenated business confidence brings back business which indirectly line up govt. pockets. Higher collections can augur higher spending, as India looks draws itself as economic hotspot in the post-covid world

4. 26 Sectors Go From Vacation To Stay-Cation

RBI to kick-start credit support to 26 sectors identified under Kamath committee by encouraging banks to synergize TLTRO with ECLGS 2.0. Under ECLGS, entities get additional outstanding credit of 5-year for up to 20%, including 1-year moratorium on principal repayment. Live till March 2021.

RBI has been at the forefront in tackling the virus and teasing and testing the economy. As Covid breaks the long-standing economic shackles, so does RBI, by adopting a foot-loose approach. In bidding adieu to the old, RBI has donned a 2020 Meme, “Modern times require modern solutions”.

5. The Need For Banks & NBFCs Is The Feed For Country’s Growth

Brining efficiency to country’s finances will require new entrants and newer tech to mould old systems. While planning expenditure is a good 1st step, prioritizing it is the next needed step as spending levels were akin to H1FY20 levels, owing to curbs applied to many departments. 

Covid 19, now in rhe last month of 2020, continues to carry coughs-&-toughs. Causing shockwaves across the world, India’s GDP correction reflects economic infections. Like before, reforms are being merited as economical vaccine, with individuals and institutions awaiting govt.’s possible Relief package 2.0 announcement between October-November 2020.