India in historic technical recession, RBI 'nowcast' shows

[Ryzen_renoir]

NEW DELHI: India’s economy probably shrank for a second straight quarter, according to a team of economists including Michael Patra, the central bank’s deputy governor in charge of monetary policy, pushing the country into an unprecedented recession.

Gross domestic product contracted 8.6% in the quarter ended September, the Reserve Bank of India showed in its first ever published ‘nowcast,’ which is an estimate based on high-frequency data. The economy had slumped about 24% in April to June.

“India has entered a technical recession in the first half of 2020-21 for the first time in its history,” the authors wrote. The government is due to publish official statistics November 27. The median forecast in a Bloomberg survey of economists sees a contraction of 10.4% in the July-September quarter.

Rare contraction

The Reserve Bank’s number is buoyed by cost cuts at companies, which boosted operating profits even as sales dipped. The team of authors also used a range of indicators from vehicle sales to flush banking liquidity to signal brightening prospects for October. If this upturn is sustained, the Indian economy will return to growth in the October-December quarter, earlier than projected by governor Shaktikanta Das last month, when he pledged to keep monetary policy accommodative

However, “there is a grave risk of generalization of price pressures, unanchoring of inflation expectations feeding into a loss of credibility in policy interventions,” the team of economists wrote in the Reserve Bank’s bulletin. They also highlighted risks to global growth from a second wave of coronavirus infections.

Consumers cut back on spending as millions lost their jobs, preferring instead to squirrel away cash. Preliminary estimates presented in the central bank’s bulletin showed a jump in household financial savings to 21.4% of GDP in April-June, up from 7.9% in the same period a year ago and 10% in January-March. The bulk of these savings are bank deposits.

“The trend of higher than usual household financial savings can persist for some time till the pandemic recedes and consumption levels get normalized,” the RBI’s Sanjay Kumar Hansda, Anupam Prakash and Anand Prakash Ekka wrote, adding that this could taper as the virus curve flattens and economic activity revives.

[Ryzen_renoir]

Slowdown was expected , no use blaming government on that but nirmala sitharaman's refusal to spend deficit spending on capital expenditure is mind boggling dumb .

Even BJP favored economists are suggesting increase in spending temporarily like all other countries around the world but my god the dumb finance ministry is just juggling numbers and charts . 

Small example is polavaram project , it is in nation's interest to finish it as soon as possible but BJP's finance ministry is only looking at votes per rupee. 

I will repeat it again an efficient and corrupt official is far better than a inefficient and honest official .

For those idiots staying in america and crying about state debt in Telangana , Andhra , Maharashtra , tamil nadu ,etc just take a look at US deficit spending for last six months and compare it to indian state/ center . 

 

[Ryzen_renoir]

Twelve major state governments may have to undertake an aggregate cut of Rs 2.5-2.7 lakh crore in their budgeted capital spending in FY21, on account of the pandemic-induced strain to their revenue receipts, rating agency Icra cautioned on Wednesday. The agency has also projected the aggregate debt of these states to deteriorate sharply to 28.9% of the gross state domestic product (GSDP) in FY21 from 22.3% in FY20.

The Icra study covered Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal; the combined GSDPs of these states accounted for three-fourths of the India’s GDP in FY19.

 

According to review of the accounts of 14 state governments by FE, in April-September this year, their capex was down 22% on year. It may be noted that this slippage was despite a low base; in the last financial year, the states had to cut capital expenditure by a quarter from original budget estimate (BE) in order to stick to the fiscal targets.

“The pandemic has dealt a sharp revenue shock to the state governments in the current fiscal. While the gap in GST compensation is largely proposed to be financed through additional borrowings, the expected substantial shortfall in central tax devolution would severely restrict the ability of the states to undertake growth-reviving capital expenditure in FY21,” Jayanta Roy, group head – Corporate Sector Rating, Icra, wrote.

 

Given their limited flexibility to curtail or defer revenue spending, Icra’s projections reveal a sharp widening of the combined revenue deficit of the states in the sample to Rs 5.8 lakh crore or 3.9% of Icra’s estimate of GSDP in FY21, from the level of Rs 82,200 crore budgeted by these states

Funding a revenue deficit of this magnitude would absorb a huge part of the enhanced borrowing limit of the state governments, leaving many of them with little option other than substantially compressing capital expenditure. This would counteract the nascent economic recovery within their jurisdictions, and may further constrain a revival in revenues in the near term, Roy opined.

 

The disruption induced by the Covid-19 pandemic on state government finances, rendered the revenue and expenditure growth budgeted by the state governments for FY21 irrelevant. Led by large shortfalls in state GST collections, sales tax/VAT, as well as central tax devolution, Icra forecasts the revenue receipts of the 12 states to contract by a significant 19.3% in FY21, in stark contrast to the 14.3% y-o-y growth that had been budgeted for this year. Moreover, Icra expects the aggregate revenue expenditure growth of these states to be restricted to a muted 2.8% in FY21, compared to the budgeted expansion of 10.5%.

[bhaigan]

2022 varaku ee recession untundi antunaru

[bhaigan]

 

 

[Jambhalheart]

We don't care we will still vote for BJP 

 

[Killer66]

7 minutes ago, Jambhalheart said:

We don't care we will still vote for BJP 

 

Eee bodi gadhu emo ela tayaru iyadhu, aaaa Congi vallu veedi kanna worst ga tayaru iyaru saripoyinde India daridram ki veelu 

[Ryzen_renoir]

33 minutes ago, Killer66 said:

Eee bodi gadhu emo ela tayaru iyadhu, aaaa Congi vallu veedi kanna worst ga tayaru iyaru saripoyinde India daridram ki veelu 

Sonia gandhi /Rahul Gandhi single handedly carrying BJP to win after win . Ee badcow family congress ki eppudu dhooram avuthundho desaniki antha manchidhi .

Rahul Gandhi is the biggest Swayamsevak in BJP not modi 

[Ryzen_renoir]

A dog would make a better finance minister than nirmala sitharaman simply by doing nothing instead of actively harming the economy 

[timmy]

I think its worse than what they show, MSME growth rate usual ga sample survey chesi economy ki add chesthaaru, ee covid time lo they did not conduct survey so adhi exclude chesi chepthunnaru , unfortunately MSME's are the worst hit during covid 

[tom bhayya]

Anti nationals antha idhey thread lo unnaru antunna @batman2 @NiranjanGaaru and @ZoomNaidu

[Ryzen_renoir]

18 minutes ago, timmy said:

I think its worse than what they show, MSME growth rate usual ga sample survey chesi economy ki add chesthaaru, ee covid time lo they did not conduct survey so adhi exclude chesi chepthunnaru , unfortunately MSME's are the worst hit during covid 

I am just shocked that BJP state finance minister's are not speaking up. Even Gujarat is borrowing to pay salaries . Center must immediately extend capital grants to states or we may enter a prolonged period of stagnation 

[soldier]

Recession endi eppudu credit goes to duck chinaaaa. 
Great Recession ni escape ayina india corona debbaki padipoyindi. Bad 

[KaipuRaja]

Ee Covid valla except China many major nations are having the same issue kada? 

[ZoomNaidu]

14 minutes ago, KaipuRaja said:

Ee Covid valla except China many major nations are having the same issue kada? 

Yupp. It’s the time for anyone to show their best presentation skills - And, we must admit that Congress is the best master in this Art & BJP is no where can be matched to them in this aspect honestly 😰😰.