Wednesday, September 02, 2020

If it's an Act of God, replace ministers with priests?

"The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose to a six-month high of 52 in August from 46 in July. A reading above 50 indicates expansion." "The Nomura India Business Resumption Index (NIBRI) rose to a post-lockdown high of 75.7 for the week ended August 30 from 73.4 in the week before." Maruti Suzuki sold 124,624 units in August, 17.1% higher over last year. "Barring sales of second-hand vehicles and sales of tractors", on "sales, tax revenue, and movement, the auto sector is still far below pre-pandemic levels, according to monthly data from a government dashboard called Vahan". Sales of buses down 24%, motor cabs down 53% and cars and two-wheelers down 31%. "India's electricity generation fell for the sixth straight month in August, provisional government data showed, driven by a slump in power use in industrial western states such as Maharashtra and Gujarat in the second half of the month." India's gross domestic product GDP fell by 23.9% in the first quarter of 2020-21, ended 30 June, but the informal economy, which constitutes around 50% of the economy is very difficult to survey, so fall was probably much worse, wrote Vivek Kaul. The government is unable to spend on infrastructure projects to create jobs and stimulate the economy because, "For April-July, the Center's fiscal deficit stood at Rs 8.21 trillion, or 103 percent of 2020-21 of budget estimates of Rs 7.96 trillion," reported the Business Standard. Private consumption accounts for 56.4% of GDP, private sector business accounts for 32% and 11% is accounted for by government business, wrote Misra and Iqbal. Exports being less than imports exerts a negative effect. The total of private consumption and business has fallen by over Rs 10.65 trillion while government spending increased by just Rs 683.87 billion, leading to the precipitous fall in GDP. "Moody's Investors Service on Tuesday said India will be among the large emerging market sovereigns to have highest debt burden by 2021." India scores just 39 out of 100 in the Export Preparedness Index (EPI) 2020 despite great deal of improvement, wrote Kapoor and Ahmed. We need to improve infrastructure, trade support, R&D and digital technologies. "In the past five years, leather exports have declined from $6.2 billion to $4.8 billion, textiles and garments from $34.8 billion to $32.3 billion and gems and jewellery from $41.2 billion to $35.8 billion," wrote Rahul Jacob. Higher taxes on imports have made components and inputs much more expensive. The Center for Monitoring Indian Economy "CMIE, in August, reported that salaried jobs totalled 86 million in 2019-20. By July 2020, the number had shrunk to 67 million - a fall of 19 million," wrote Gautam Das. This is disastrous because so may people will be unable to spend and income tax collection will fall. The economy is rushing downhill without a brake. Act of God, claimed the FM. Replace the entire cabinet with priests?    

No comments: