Daily Financial News Analysis – 20th Oct’20 – Free PDF Download

Nomura India Business Resumption Index

  • The Nomura India Business Resumption Index (NIBRI) – a weekly tracker of the pace of normalisation of economic activity.
  • Economic activity in India has returned almost to pre-Covid levels.
  • Economic activity picked up to a post-lockdown high of 82.2 for the week ended October 18
  • The index is just short of its pre-lockdown reading of 82.9 for the week ended March 22.
  • Caution: this could just be a ‘faux recovery’, limited to increased consumption during the festive season.
  • Various indicators such as purchasing managers’ indices, goods and services tax collections, e-way bills, railway freight loading, highway toll collections, power demand and exports are also pointing to an economy on the mend.

FAME-II Scheme

  • Faster Adoption and Manufacturing of Electric Vehicles – FAME
  • The central government’s scheme to promote electric vehicles (EVs) through direct subsidies has attained just a tiny portion of its target half way through the three-year programme.
  • The number of vehicles subsidised from April 2019 till the end of last month was fewer than 2% of the target for the scheme period.
  • The Phase II of FAME in India scheme has a budget of ₹8,596 crore for giving subsidies alone, but just ₹77.3 crore, or less than 1%, of that was spent till the end of September.
  • Industry insiders blamed stringent conditions, including high localisation and performance criteria for vehicles to qualify for the subsidies, for the poor response towards the scheme.
  • The scheme has a total budget allocation of ₹10,000 crore, including towards developing charging infrastructure and administrative expenses besides subsidies on the vehicles.
  • The funds given out till the end of September went towards subsidising 21,727 two-wheelers, 6,836 three-wheelers and 1,295 four-wheelers, data provided by the Department of Heavy Industries.
  • The scheme’s stated target is to support the purchase of 1 million two-wheelers, 500,000 three-wheelers, 55,000 cars and 7,090 buses with electric powertrain during the three-year period.
  • Meanwhile, several states led by Delhi are considering extending their own subsidies on top of the Centre’s scheme to make EVs cheaper.

Festive Demand Outstrips Supply

  • Indian consumers face a shortage of entry-level laptops, premium refrigerators and microwave ovens, televisions and dishwashers due to robust festive season demand and low supplies.
  • Amazon, Flipkart and even leading retail chains have run out of stock of these appliances amid a successful launch to festive season discount sales.
  • The reasons range from a global shortage of components for televisions, laptops and dishwashers.
  • Meanwhile, following India’s clampdown on TV imports, consignments are stuck at ports as companies haven’t been able to get import licences in time.
  • All companies said they are trying to rush more stock before Diwali to partly make up for lost sales.

Open to more Stimulus Measures

  • Finance minister Nirmala Sitharaman is open to considering further measures to stimulate the economy, following on from various booster programmes that have been announced since March.
  • The finance ministry may also issue an assessment of the economic situation along the lines of the Reserve Bank of India (RBI), she said.
  • The RBI forecast last week that GDP will contract 9.5% in FY21.
  • The government would regard discarding “socialistic baggage” and opening up more segments to the private sector as a flagship reform, she said during a discussion to mark the launch of the autobiography of NK Singh, chairman of the 15th Finance Commission.
  • While non-strategic sectors will be left to the private sector, only four public sector enterprises will be allowed in the strategic sector under the policy.
  • “We need to have greater robustness in our federal debate, federal engagements, so that India can become roaring on all the four-five engines—four engines from the point of view of the economy, the fifth, which I add, is a robust federalist structure,” she said.
  • “I want education to have a magical input coming from somewhere so that we become one of those best places for students to come and study and for Indian students to have all the opportunities to be ready for the world,” Sitharaman said.
  • Singapore senior minister Tharman Shanmugaratnam said the new world that’s emerging from the Covid crisis spells a huge opportunity for India.
  • “Global supply chains are changing, global technologies are evolving,” he said.
  • “There’s a real opportunity now for India in the context of China plus one strategies as well as in the context of India’s own inherent potential be unleashed to become a major producer of the world in both goods and services.” – Shanmugaratnam

CPSEs – Capex Target

  • Finance Minister Nirmala Sitharaman has asked large central public sector enterprises (CPSEs) to achieve 75% of their planned capex target of ₹1.15 lakh crore for FY21, by December.
  • To provide impetus to economic growth.
  • In a virtual meeting with 14 CPSEs in the coal, petroleum and natural gas sectors on Monday, the minister stressed that close monitoring of the performance of the CPSEs and appropriate planning was needed to meet the target.
  • In 2019-20, against the capex target of ₹1,11,672 crore for these 14 CPSEs, the achievement was ₹1,16,323 crore that is 104%.




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