The Signal: The Week Highlights

1. The Worst Is Over, The Best Is Yet To Come

India’s GDP to fall by -7.9% in FY21 and grow by 7.7% in FY22, as 25 high-frequency economic indicators show adaption to “New Normal.” As India focuses on Channeling companies in-bound, is should expand export portfolio to broaden network of production, and customer countries. 

India’s economy has adorned the qualities of a phoenix, as it gears up to rise from the ashes. India’s potential and promises are just as alive as they were before the virus hit, albeit with few hiccups. Think of it as a race, in which India tripped cause of untied shoelaces. As the laces get tied and we less tired, the finishing line is about to come in sight. Its all Go from here. 

2. The Call To Spend Today Is The Call To Earn Tomorrow

After H1 capex target by PSU scored 33% success rate, PMO has asked entities to double annual Capex target to Rs.2 Lakh Cr in bid to revive economy. The Government has chartered plans for both itself and its companies to rein in money, not to retain it but to return it. The PSU companies are to step up borrowing programs to curb sluggishness in private investments. 

Amidst a corona- filled year, distraught with lockdowns and recessionary fears, govt. banks on expenses to make income. The public mood of cash conservatism can be directionally influenced per the actions and inactions of the governing bodies. Spending cash is best covid-19 antibody campaign.

3. Its Time For Carpe Diem – The Evolving Excitement In Exports

Indian exports send mixed signals, registering 4%/-6.1% growth/fall respectively on MoM and last-year QoQ basis. Global trade exports grew by limiting contraction to -5% vs -19% in Q3 & Q2 of CY20 respectively. Continuing resource mobilization and fiscal support will be key in future growth

India’s 2020 tactics to tackle 2020 virus is bearing fruit as magnetic macros maintain their growth orientation. shifting focus from Covid-19 noise to Recovery news, the globe opens its borders not only talking the talk, but also walking the walk of adapting to the “New Normal”.

4. Covid 19 – The Virus Which Shrunk The Economy But Widened Debts

Fiscal deficit rose to Rs.9.1 lakh Cr, at 114.8% of annual budget estimate (BE) in H1FY21 vs 92.6% in year-ago period. Govt. receipts stood at 25.2% and expenses at 48.6% of BE respectively. Pegging Deficit at 3.5% of GDP, it has soared to 7-year high of 4.6% of GDP due to poor revenue realization. 

Covid 19 has the country’s accounts all out of balance. The country is racking up debt at startling rates to refurbish the current broken economy. However, form troughs come peaks, although the journey uphill is 1 tough battle. As we chant Buzz lightyear’s golden words of “Onwards and Upwards”, 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

5. RBI Actions Bode Well For Institutions and Individuals

In a bid to welcome “New Normal”, RBI charts solutions in high multiplier capital projects. Keeping  alive infra projects is key to growth as low capital spending will lead to growth losses. Lastly, healthcare development and smarter revenue mobilization is will augur wealthier times at faster pace. 

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”.