The Signal: The Week Highlights

1. India’s Domestic Discourse Attract Cautious Global Gauge

The sharpest economic contraction on record and across the world has investors worried about India’s promise as an investment-favorite destination. Economic agencies across borders slash GDP estimates to reflect current economic climate more correctly, and bank on more govt.-induced policies/reforms to clot bleeding economy!

Covid 19, now in 2020, and in 2021 in 3 months, continues to be bearer of bad news. 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. 

2. India’s PMI Number Resorts To Manufacturing Its Own Health

India’s manufacturing activity expanded for the 2nd time in row after 5 months of contraction between March and July, showing green shoots of economic revival. The manufacturing PMI came in at 56.8, compared with 52 in August, recording 2nd straight growth in last 5 months, and highest level since January 2012. This was also the 3rd quickest surge in the survey’s history.

As Covid 19 continues to press pain, Indian industries look to manufacturing a pain suppressant. PMI average for Q2FY21 is in stark contrast to what was seen in Q1FY21: a rise from 35.1 to 51.6. While uncertainty about the COVID-19 pandemic remains, producers can at least for now enjoy the recovery.

3. RBI Evolves From A Watch-Dog To A Guide-Dog

RBI has been creating new stones, for its left no stones unturned in generously applying oil onto India’s growth gears. Announcing moratoriums, declaring dividends, conducting OMO’s, standing accommodative, allowing loan restructuring and most recently identifying workarounds for 11 key matrices, the nation’s bank has been putting bite into its barks.

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. 

4. Here’s a 2017 Recap in 2020! Banks Recap Program Revives

The financiers of growth currently can neither finance nor grow they grapple with after-effect of Covid 19, finding themselves in similar waters with those they lend to. Even post policy support from the top, money flow is working like a malfunctioned pipe as stressed loans and write-offs increase. As NPA and credit costs increase, the profitability wound is sure to rupture, adding stress to current conservative credit climate 

All, but one voice, cheered when the moratorium was announced, and that was the banks. Knowing of the impending doom, in economic contractions, and bending will to satiate central govt. policies, those who lend money are themselves in dire need of it. 3 years later, and banks find themselves 4 years behind! But as is always, Banks will navigate through this crisis too, maybe limping more than ever before! 

5. Make In India Goes Global

After announcing Production-Linked Incentives for Pharmaceutical sector, Mobile & Electronics manufacturers, to adopt similar practice for more sectors to boost domestic manufacturing. Giving the ‘91 reforms a 2020 twist and reduced corporate tax rates will continue to attract attention of the world’s biggest makers. 

Finding new home in India, companies with market-cap bigger than country have situated its producers where its consumers are. The cash-rich entities continue to be cash-hungry, being interest-invoked by India’s make-&-take plans. The Make Local – Sell Global policy is here and alive!