The Signal: The Week Highlights

1. India’s Goes From Rumble To Recovery

Businesses are seeing a sharp recovery. India will be among the world’s economies to rise above pre-pandemic levels as covid vaccines and stimulus plans are rolled out.

As the economy gets back to pre-covid production output and business resumes to normalcy, a sustained earnings revival is on an anvil. India has witnessed shoots of recovery in tax collection. GST revenues in December 2020 have been the highest since the introduction of GST. PMI for both manufacturing and services were in the expansion zone.

2. We Went Local. Now We Go Global

Global companies were asked to take advantage of policy reforms initiated by his government in the areas of manufacturing, infrastructure, digital space, and healthcare. Atmanirbhar Bharat Abhiyan is committed towards global good and global supply chain.

It is necessary to identify sectors which has a competitive advantage. India is not as competitive as compared to countries bordering it. Non-financial and financial measures may help the identified sectors to get geared up. Commercialize the sector’s capacity, a step towards being an export-oriented nation.

3. India’s Innovation In Infrastructure

There is a need to consider innovative financing options, including backing the sector with risk capital, extending credit guarantee schemes, repurposing the existing funding modes, and creating a new Development Finance Institution.

The vital aspect is the need to monetize assets, particularly roads. The monetization will help churn the assets and provide funding for new projects. Existing guidelines do not allow pension and insurance funds the flexibility of funding infra projects.

4. IMF Claps As India Grasps

IMF upgraded its gross domestic product (GDP) projection for India to a contraction of 8% in FY21 from an earlier estimate of -10.3%, as there are encouraging signs of economic recovery in high frequency indicators.

The economy is showing good signs of improvement across segments. GST revenues in December 2020 have been the highest since the introduction of GST. Corporate net profit recorded multi-fold increase in September 2020 Quarter and similar momentum is expected to continue.

5. RBI Breathes New Life Into NBFCs

RBI’s proposed guidelines for non-bank lenders are not as stringent as feared and are expected to improve the funding conditions of the sector and provide more confidence to potential investors.

The proposed norms and guidelines are steps towards regulating NBFCs. Also, expectations built-up around the news of conversion of NBFCs to banks. The proposed norms and guidelines will nurture NBFCs risk management. Further, it will result into better transparency in operations of NBFCs.