The Signal: The Week Highlights

1. India Paces Growth In Becoming New India

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, IIP 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. India Embodies, “Spending Money To Making Money” Mantra

Overall spending (including revenue expenditure) by Centre and states will rise ~15% on YoY basis to ~INR 33 lakh crore in H2. Surge in public capex will benefit fixed investment rate, giving strong support to gross capital formation. Govt. is cognizant of lacking economical spending support in Q2 as its consumption expenditure fell 22% on YoY basis. However, govt to step up investment regimen to pump country with credit and infra projects

Public-sector fixed capital formation has been go-to oven meals amidst times of no grocery shopping (pvt. Funding). Contribution of state govts have been vital in past as country looks to maximize on current macro-&-micro positions via packages  & policies to wish health-&-wealth in economy.

3. Bright Indicators Indicate Brighter Prospects

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.

Covid 19 has country racking up debt at startling rates to refurbish current broken economy. However, from troughs come peaks, although the journey uphill is 1 tough battle. In trying times, we must remember the merit debt financing brings! So, if the cards play out right, the current debt overhang can be a long-term blessing in disguise

4. IMF Endorses As Investment As Covid Antibody

Public investment will play a “central role” in recovery of both emerging and advanced economies from Covid-19. Increasing investments by 1% of GDP could raise private investment by 10%, employment by 1.2%, GDP by 2.7% along with overall confidence in the recovery.

Public’s health is country’s wealth’  is the motto emblazoned on every financial body today – global or domestic. Spurring demand-&supply will require Govt.’s to open their vault’s floodgates to tide over current credit crunch and breathe life inti economies everywhere.

5. Rising NPA Can Fracture India Growth Legs

Indian domestic banks carry highest NPA count in the world after getting Rs2.6 lk Cr. In past years which is now inflated, courtesy of Covid crisis. GNPA to touch 12.5% this fiscal – highest in 2 decades as banks are coerced into flushing economy with cheap liquidity to revive economy. 

As institutions grapple with the after-effect of Covid 19, those who lend find themselves in similar waters with those they lend to! As Covid-support policies come in from the top to stimulate money flow, the channel of distribution works like a malfunctioned pipe rather than a water-rich river.