"Around afternoon on Tuesday, the Sensex was up by around 650 points or 1.3 percent and was trading at 50,240. Between Monday and Tuesday it has gained 1,500 points or 3.1 percent," wrote Sandeep Singh. The refusal by the central government to lockdown, falling number of coronavirus infections and strong performance by some companies are the reasons. Large companies have benefited at the cost of smaller ones in the unorganised sector. Foreign portfolio investors sold a net Rs 96.59 billion worth of Indian equities in April and a net of Rs 89.09 billion in May, while domestic investors bought a net of Rs 110.88 billion in April and a net of Rs 28.39 billion to date in May, The Indian Express (TIE). 2021 is much worse than 2020, wrote Andy Mukherjee. "Global investors who kept faith in China and India last year, aren't waiting for equity analysts to change their minds. They sold India in April and bought South Korea and Taiwan," Mint. "India has a base of around 6.33 crore (63.3 million) MSMEs out of which 6.30 crore (over 99 percent) are micro-enterprises, according to the MSME Ministry's annual report 2020-21. Small enterprises are 3.31 lakh (331 thousand) and 0.05 lakh are medium enterprises accounting for 0.52 percent and 0.01 percent of total estimated MSMEs," The Financial Express. "Over 82 percent of more than 250 small businesses in India said that they had a negative Covid impact while 70 percent believed their pre-Covid level recovery to take nearly a year, according to a survey by Dun and Bradstreet. "With seven million job losses in April, India's unemployment rate rose to 8% in April," according to the Centre for Monitoring Indian Economy (CMIE), The Wire. "With 73.5 lakh (7.35 million) job losses, the number of employees, both salaried and non-salaried, fell from 39.81 crore (398.1 million) in March to 39.08 crore in April, for the third straight month." A report by CMIE and Centre for Economic Data and Analysis (CEDA) at Ashoka University analysed "employment data across seven sectors, viz agriculture, mines, manufacturing, real estate and construction, financial services, non-financial services, and public administrative services. Between them, these sectors account for 99% of total employment in India," wrote Udit Misra. They showed that since 2016, "The number of people employed in the manufacturing sector of the economy has come down from 51 million to 27 million" while jobs in low-paying agriculture have gone up. Manufacturing businesses have been shedding jobs since well before Covid. "While estimates on the likely impact on poverty vary, a permanent loss of income for most people at the lower end of our income distribution is beyond dispute," wrote Prof Himanshu. "The pandemic has not only disrupted the economy, but also contributed to a disruption in access to education, one of the most effective contributors to inter-generational mobility. Most children in rural areas and also from poorer households in urban areas have had their studies badly disrupted," Mint. "In 2020-21, 61 companies offered to buy back shares worth Rs 39,295 crore (Rs 392.95 billion) according to data from Prime Database. This compares to 52 and 63 firms that made similar offers totaling Rs 19,972 crore and Rs 55,587 crore in 2019-20 and 2018-19 respectively," Hindustan Times (HT). This indicates lack of investment opportunities. "Over the past few years, the government has tried unsuccessfully to get the private sector to invest, even acceding to its multiple demands and offering it many incentives. Yet the Indian private sector has refused to increase investments in additional brownfield or greenfield capacity," wrote Rajrishi Singhal. Gross fixed capital formation reached a high of 27.2% of GDP in 2011-12 and has hovered at 21-22% from 2015-16 to 2018-19, Mint. Why should industries invest in new projects when the government is killing demand through high taxes and negative real interest rates despite high inflation? If you push on a string, you end up putting your cart before the horse. Common sense.
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