The year 2020-21, hit by the pandemic, was also unusual as the economy recorded sharp increase in inflation (CPI) even as MPC persisted with ultra-loose monetary policy. As per the provisional data, average CPI inflation for FY21 rose to 6.2%, outside the mandated price band, from 4.8% in the previous year. While WPI was relatively … Continue reading FY21 Inflation Trend Analysis
Bankruptcy process under IBC (insolvency & bankruptcy code) restarted late last month, is facing another challenge with resurgence of the pandemic and call for suspension of IBC. The code had been suspended in March last year to protect the companies who were facing issues due to the pandemic. The code has faced several challenges after … Continue reading Insolvency & Bankruptcy Code (IBC) – Analyzing the Performance
The release of periodic labor force survey (PLFS) data for April-June’20 quarter, the peak lockdown months, gives a comprehensive view of the extent of job losses. As per the survey, urban unemployment rate reached a level of 20.9% during the quarter. The dis-aggregated figures reveal that stress was as high as 59% for specific segment at state level. Here is a look at some of the details. Continue reading Analyzing Jobs Lost During Covid-19 – PLFS Survey
Even after recording GVA growth of 1.0% during Dec’20 quarter (GDP growth – 0.4%), the uncertainty regarding continued momentum in recovery remains high. The available high-frequency data for Jan-Feb’21 reinforces the fear with slight moderation in growth in some of the segments. Another cause of worry is the sharp increase in WPI inflation which touched 4.2% in Feb’21, the highest in over two years. Here is a look at the performance of some of the key indicators. Continue reading State of the Economy – Tracking the Uneven Recovery
Bond market has been moving up since the budget, much to the displeasure of RBI. Yield on 10-year government bond has crossed 6.2% from 5.9% just before the budget. Not only India, even globally, bond markets have been behaving much the same despite all the assurance being given by the central banks. As a side-effect … Continue reading Curious Case of Bond Market Movement!
Reliance Industries’ (RIL) announcement last week hiving-off its Oil to chemicals business into a separate subsidiary is the third and final stage of company’s restructuring. The hiving-off is important not only from a re-alignment perspective but also because Oil & Petrochemicals sector is facing considerable uncertainty because of environmental issues, shifting energy consumption pattern etc. … Continue reading RIL O2C Hive-off – Understanding the Restructuring
GDP (Gross Domestic Product) for quarter ended Dec’20 (Q3’FY21) recorded a marginal growth of 0.4% as per the data released by MOSPI (Ministry of Statistics and Programme Implementation) today. Even though the growth, after two quarters of decline of 24.4% and 7.3%, is a relief, it looks quite tentative. For one, this is lower than the general estimates of clocking 1-1.5%. Second, it was propped up by increase in government spending, without which, it would have again contracted. And most importantly, some important sectors continue to remain in the negative zone – leading to K shaped recovery – which can pull down other sectors if persists for long. The highlight of the quarter is strong pickup in financial & other services and construction, both of which grew at 6%+ after decline of over 7% in Q2’21. Here is a brief analysis of GDP and its constituents. Continue reading GDP, Dec’20 Quarter – Too Little To Celebrate…
Chairman of the Fifteen Finance Commission called state distribution companies (discoms), “The Elephant in the room”, in an interview recently. Indeed, discoms are in a dire state, operating with AT&C (aggregate transmission & commercial) losses of over 22% and accumulated losses of close to Rs 4 lakh crore. To improve their viability, the Finance Minister … Continue reading Power Distribution Companies – The Elephant In The Room
FCI (Food Corporation of India) must be heaving a sigh of relief with revised allocation of Rs 3.44 lakh crore during FY21 as subsidy against initial allocation of Rs 78,000 crore made in Feb’20. This would not only help it meet this year’s revenue gap but also clear part of its past overdues. The financial … Continue reading Food Corporation of India – Managing Inefficiencies
The Finance Commission has expressed concern about the low tax/GDP ratio in India and has discussed in detail, ways to reduce this. Other than low tax base, significant amount of tax revenue is lost through invocation of large number of tax exemptions companies receive. (As an effort to plug this, the Finance Minister added an … Continue reading Corporate Tax Exemptions – Desirable or Not?