All things Money Thread

Big Daddy

Super User
Buses are different things altogether.
There are many routes, where only Govt Buses ply.

Railway is PROFITABLE venture.
Govt selling only good routes.

Limit of fare will not be there.

Only trains and routes are sold not Rail or network.
The profit margins were lower with nationalized railways and the costs of pensions were mounting up. Besides what exactly does it mean when the government owns it? It is people's money. If the government wants then it can charge private trains cess for using public tracks. The problem really is not privatization, but it is those entitled Indians who want a government job so that their fathers can go and ask for substantial dowry. Those greedy people are upset with ever thining pool of government jobs that come with pension benefits. Otherwise, privatization is a no brainer. It improves the quality of service for trains, the government does not have to pay pensions, private trains generate a lot of employment and the government gets taxes. Anyone who wants to cut government spending and increase government revenue will support privatization. People who are against it are really putting their self-interest ahead of the nation's interest.


Govt halts merger of 3 PSU general insurers
Source: PTI
July 08, 2020 20:33 IST

The Rs 12,450 crore capital infusion will enable the three public sector general insurance companies to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources and improve risk management.


Illustration: Uttam Ghosh/

The Union Cabinet on Wednesday decided to halt the merger process of three state-owned general insurance companies, National Insurance, Oriental Insurance and United India Insurance, for the moment and approved fund infusion of Rs 12,450 crore to improve their financial health.
The cabinet headed by Prime Minister Narendra Modi also decided to increase the authorised share capital of National Insurance Company Limited (NICL) to Rs 7,500 crore and that of United India Insurance Company Limited (UIICL) and Oriental Insurance Company Limited (OICL) to Rs 5,000 crore each to give effect to the capital infusion decision.

"Further, the process of merger has been ceased so far in view of the current scenario and instead, the focus shall be on their profitable growth," an official statement said.
The Rs 12,450 crore capital infusion approved by the Cabinet includes Rs 2,500 crore provided to these companies during 2019-20, it said, adding Rs 3,475 crore will be released immediately, while the balance Rs 6,475 crore will be infused later in one or more tranches.
The government in Budget 2020-21 had made a provision of Rs 6,950 crore for capital infusion in these three insurance companies in order to maintain the requisite minimum solvency ratio.
Briefing reporters about the Cabinet meeting, Minister of Information and Broadcasting Prakash Javadekar said that recapitalisation will make the government-owned insurance companies more stable.
"To ensure optimum utilisation of the capital being provided, the government has issued guidelines in the form of KPIs (key performance indicators) aimed at bringing business efficiency and profitable growth," the statement said.
The capital infusion, it added, will enable the three public sector general insurance companies to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources and improve risk management.

In the Budget 2018-19 speech, the then finance minister Arun Jaitley had announced that the three companies would be merged into a single insurance entity.
However, the process of merger could not be completed due to various reasons, including poor financial health of these companies.
In 2017, state-owned companies New India Assurance Company and General Insurance Corporation of India went public.

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Source: PTI

Govt halts merger of 3 PSU general insurers


India will beat China to become world's largest employer
By Ashish Ray
July 22, 2020 17:38 IST

A report published in British journal The Lancet reckons India’s working population will surpass China’s in the mid-2020s.


Illustration: Uttam Ghosh/

India’s gross domestic product (GDP) growth rate could slow in the second half of this century as its population declines from a peak in 2048 to a 32 per cent lower level by 2100.
The number of its working-age adults (aged 20-64) could fall from about 762 million in 2017 to around 578 million in 2100.

These are among the projections in an analysis published by The Lancet, an internationally respected British publication on health affairs.
The journal’s Editor-In-Chief Richard Horton said: “This important research charts a future we need to be planning for urgently.
"It offers a vision for radical shifts in geopolitical power, challenges myths about immigration, and underlines the importance of protecting and strengthening the sexual and reproductive rights of women.”

He added: “The 21st century will see a revolution in the story of our human civilisation.
"Africa and the Arab World will shape our future, while Europe and Asia will recede in their influence. By the end of the century, the world will be multipolar, with India, Nigeria, China, and the US the dominant powers.”
The report contradicts an earlier forecast by the United Nations Population Division of “continuing global growth”.
A shrinking workforce, and therefore, lower tax revenues together with an ageing population, will put enormous pressure on health and social care systems.
India’s population is pitched to rise to 1.6 billion in 2048 - up from 1.38 billion in 2017 - followed by a diminution to 1.09 billion by 2100.
The country’s total fertility rate (TFR) fell to 2.1 in 2019 or slightly above replacement level. It is envisioned this will continue to fall, reaching a TFR of 1.29 in 2100.
Despite the prognosis of shrinkage in working-age adults, it is estimated India will still have the largest workforce in the world in 2100.
The report reckons India’s working population will surpass China’s in the mid-2020s.
The Chinese working people numbered 950 million in 2017; this could diminish to 357 million in 2100.
India, ranked 7th among nations with the largest total GDP in 2017, is computed to be 3rd in 2100.
India is expected to have the second-largest net immigration in 2100, with half a million more people immigrating than emigrating.
It is also estimated to have one of the lowest life expectancies in 2100 - 79.3 years, albeit up from 69.1 years in 2017.
Seattle-based Institute for Health Metrics and Evaluation Professor, Stein Emil Vollset, first author of the paper, stated: “The societal, economic, and geopolitical implications of our predictions are substantial.”
He warned: “Responding to population decline is likely to become an overriding policy concern in many nations, but must not compromise efforts to enhance women’s reproductive health or progress on women’s rights.”
The global population is predicted to reach its height in 2064 at approximately 9.7 billion people and then descend to 8.8 billion by the end of the century.
Twenty-three countries could experience a downsizing of 50 per cent in their population, including Japan, Italy, and Spain. Only liberal immigration policies would, thus, maintain optimum population levels and economic growth.
TFR worldwide will steadily decrease from 2.37 in 2017 to 1.66 in 2100.
In Niger, which has the highest fertility rate on earth and where women on average give birth to seven children, the TFR is calculated to dwindle to 1.8 by 2100.
North Africa and West Asia are the only two regions forecast to have a larger population in 2100, compared to 2017.
Population sizes in several parts of Asia are portrayed to wane.
Japan - from 128 million in 2017 to 60 million in 2100.
Thailand - from 71 million to 35 million. South Korea - from 53 million to 27 million. China - from 1.4 billion to 732 million.
The number of children under five years of age could decline 41 per cent by the turn of the century, while there could be sixfold increase in above 80s.

The population contraction, though, is potentially good news to reduce carbon emissions and pressure on food security.
China is set to replace the US in 2035 as the country with the largest total GDP, but the rapid fall in the former’s population from 2050 could mean the US will reclaim the top spot by 2098.

India will beat China to become world's largest employer


COVID-19: Need to think of economic revival, says Sharad Pawar
2 days ago
1 minute read

New Delhi: NCP chief Sharad Pawar calls on Prime Minister Narendra Modi, in New Delhi on Sep 14, 2015. (Photo: IANS/PIB)

Nashik, Jul 24 (PTI) Amid the coronavirus-induced lockdown, there is need to look into economic revival by resuming activities in Maharashtra’s industrial centres, NCP chief and former Union minister Sharad Pawar said on Friday.
He added that a decision on extension of lockdown, in force till July 31, must be made after assessing the ground situation and taking people into confidence, adding that care must be taken to ensure cases don’t rise.
“Like the health crisis prevailing now, the country and the state may face a financial crisis too. Pune, Nashik, Aurangabad and Nagpur are important centres of industries in the state. Revival of industries needs to be thought about,” Pawar told reporters here after reviewing the outbreak situation in the district.
He said migrant workers, who had returned to their native states during the lockdown, are desirous of coming back to Maharashtra, and how they can return must be given a thought.
“There is a need to take care of reviving the state’s economy by resuming industrial activities in full capacity in the time to come. We are trying to understand these issues,” Pawar said.
The NCP supremo said Chief Minister Uddhav Thackeray had concentrated for the past few months on tackling the COVID-19 situation.
Pawar said Thackeray paid attention to the situation in Mumbai in particular, which he added, was necessary as it is a big city, and noted the situation has improved in the metropolis.
However, Thackeray will come to Nashik and also wants to visit other parts of the state, Pawar added.
Queried on whether Maharashtra had got benefits from the Centre’s Rs 20 lakh crore economic package to fight the downturn due to the outbreak, Pawar said ventilators and PPE kits had been received by the state to some extent.
“But nothing has been added to our knowledge as yet with regard to the package,” Pawar said.
He attributed the rise in cases to increase in tests, and added the state health department would increase beds for COVID-19 patients in the days to come.
Pawar said minorities cooperated with the authorities during Ramzan Eid amid the lockdown.
“Malegaon is a good example of it. Hence, I am sure they will continue to cooperate in the time to come too,” Pawar tweeted later with a hashtag ‘letsfightcoronatogether’.

COVID-19: Need to think of economic revival, says Sharad Pawar | The Rahnuma Daily


Modi and the problem of 2 minute presentations
July 24, 2020 11:45 IST

'It won't be easy to undo the damage that has been done to the economy by the lockdown and the solution will not come from two minute presentations,' observes Aakar Patel.

Illustration: Dominic Xavier/

The news agency ANI reported a story with the headline: 'PM Modi taking input from top 50 officials to revive economy.'
The meeting was 90 minutes long and would have finance and commerce ministry officials making presentations on the situation.
What would such a meeting have looked like?
If all 50 got a chance to give an input and nobody else spoke or asked questions, they would get less than two minutes each.
But it is likely that there would have been someone doing some sort of introduction to the meeting and setting up the agenda so it's unlikely that the per person time was two minutes.
Perhaps many of them did not get the opportunity to speak at all.
The headline says that the PM was looking to receive input from them so many would have said their piece.
What can be communicated in a couple of minutes?

Modi likes this sort of meeting.
The first time I met him, with Dileep Padgaonkar (who was then editor of The Times of India) and B G Verghese (once editor of the Hindustan Times), both now dead, for an Editors Guild report on the violence in 2002.
At that meeting, Modi called in all his secretaries, there were two dozen and perhaps more men sitting in rows to respond to us.
There were no ministers. That was and apparently still is Modi's style.
The question is what happens at such large meetings for input and what is taken away from them.
You would have a series of men saying extremely concise things.
And they would have to be prescriptive.
The problem is already known: The ANI story says that the meeting would find means of a 'speedy recovery of the economy which has witnessed a slowdown in recent quarters due to falling consumer demand.'
What would a two minute prescription be? It would be something like: 'The black money problem can be permanently solved by eliminating high value currency notes. We can force everyone to exchange their notes for smaller denominations and identify the black money sources. This will also end counterfeiting and reduce terrorism.'
Such a presentation would lack nuance and it would not contain detail.
It may or may not get into the problems that could come about because of such an action and it may or may not list the things that could go wrong in execution.
There would not be enough time for this.
It would merely present some sort of solution, and if the solution looked like a permanent fix and particularly if it sounded original and innovative, it would meet approval.
This is the problem of decision making that is done on the basis of short and rapid input.
But when one asks 50 people to gather and give a series of short and sharp inputs it is clear that this is the preferred style of functioning.
I have written before about this manner of Modi's governance.
He has said in a very fine interview with Madhu Kishwar that he doesn't read files because he cannot govern through academic studies.
He wants his people to reduce the substance of issues to a two minute synopsis which he will digest and then decide.
The problem here is that some things cannot be reduced to a short presentation because they are very complex.
Many things are not clear. They are grey. Many details are not precise because there is not enough information or data.
Many times what the possible consequences of decisions will be cannot be understood without very thorough analysis.
The issue of black money was such a matter.
China relations is another as is Covid.
The effect of a two-month lockdown is also complex.
What it could do to the economy needs to be examined with great care and caution must be exercised before using such a blunt weapon as demonetisation or a total lockdown.
My intent here is not to be needlessly critical or to be contemptuous.
What Modi decides affects all of us and we must see what can be done in the best interest of our nation and its people at this time.
However, the decision making style needs to be examined and there is no running away from that.
Let me quote another report, this time from Saturday, July 18, in the Indian Express.
The headline 'Manufacturers fret as sudden lockdown hits logistics of production'.
The story tells of the problems.
One is that at 8 pm on July 13, Karnataka ordered a lockdown from the following day and told industries to shut.
Companies including automobile manufacturers like Toyota told their workers to go home, informed vendors and issued a statement.
But the next evening, the government sent another circular saying manufacturers were exempt from the lockdown.
But the workers had already gone by then. One week's production has been lost.
Another problem was supply chains. Auto manufacturing does not all happen in one place.
It is only assembled at the main factory, but the components come from around the country.
There was a lockdown in some of the states meaning that even if the main assembly plant was exempt from lockdown or in a state with no lockdown, production would slow or stop.
There are lockdowns in Tamil Nadu, Maharashtra, Bihar, Bengal, Karnataka, Uttar Pradesh, Odisha, Assam and elsewhere.
There was no coordination to ensure that supply chains be kept going.
Similarly, companies could not access warehouses some of which were in lockdown.
Another problem was workers who were reluctant to return given the problems that they had faced during the first lockdown.
These are issues of detail and complexity.
They do not require decision making.
They require governance, meaning the hard work of making the state function efficiently.
It is true that India has always been a hard place to govern because it is chaotic and anarchic.
The government doesn't follow its own rules often.

It will not be easy for us to undo the damage that has been done to the economy by the lockdown and the solution will not come from two minute presentations.

Aakar Patel is a columnist and writer.
You can read Aakar's columns here
Production: Aslam Hunani/

Modi and the problem of 2 minute presentations


Economy will determine Modi's political future
By TCA Srinivasa-Raghavan
July 23, 2020 10:23 IST

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'Mr Modi has a huge opportunity before him.'
'Whether he grabs it the way Mrs Gandhi did in 1969 or squanders it as he did in 2014 will determine his economic legacy,' notes T C A Srinivasa-Raghavan.


Illustration: Dominic Xavier/

People are blaming the Modi government for the state of the economy.
That's fair enough. It's been in charge, after all, for six years.
But we must also remember that the Indian economy stumbles in style. It's a short step for it to go from hero to zero.
This has happened once before in the 1960s when the Indian economy went into a decade-long coma. Just as it has now.
Thus, in November 1962, India was defeated by the PLA in a short war in the Himalayas.
October 1963, then prime minister Jawaharlal Nehru suffered a stroke and in May 1964, he died.

So till 1969, the Congress and the country were run by a small group of regional bosses.
To succeed Nehru, they first appointed Lal Bahadur Shastri as prime minister.
But he too died very suddenly in January 1966. Then they appointed Indira Gandhi and lived to rue the day.
Earlier, in June 1965, Pakistan -- stupid as ever -- had attacked India.
It attacked once again in September. It lost both times. But these two wars cost India a lot of money.
As if this was not bad enough, in both 1965 and 1966, the monsoons failed and food ran short.
India became a basket case, depending on the United States of America for food, which made us literally beg for it. That's where anti-Americanism began.
By the end of the summer of 1966, the treasury was also almost empty.
To add salt to these wounds, the World Bank forced India to devalue the rupee by a whopping 36.5 per cent.
Naturally, investment came to a virtual halt for the next five years. It was called 'Plan Holiday', a lost decade, gone with the wind. Poof!
Growth, which was at a reasonably robust 5.5 per cent in 1960-1961, slowed drastically in the subsequent years.
The economy contracted 3 per cent in 1965-1966 and saw 0 per cent growth the next year. Till 1970 it stayed below 2 per cent.
But Indira Gandhi was a fighter. She went for broke with two parallel and simultaneous solutions in July 1969, demonstrating extraordinary courage. Oklahoma or bust.
One was political, to wrest control of the Congress party, which she actually split.
The other was economic, to wrest control of the banks, 14 of which she nationalised.

Modi's options
Unlike Mrs Gandhi, Mr Modi doesn't have to worry about his party, not yet. But he does have to worry a little bit about a war with China.
And he has to worry a lot about the economy. It will determine his political future.
To revive growth in the 1970s, Indira Gandhi had nationalised everything in sight -- even for three months, the grain trade in 1973.
And she turned India into a near autarky.
The theory was that since we have no dollars, we won't have imports. The thought that we could export to earn dollars occurred only to Jagdish Bhagwati and T N Srinivasan, two distinguished economists.
Now Mr Modi must do the exact opposite of what Mrs Gandhi did: He must denationalise whatever is left to be denationalised.
And he must explain to the country that 'atmanirbhar' doesn't mean autarky because, thanks to the Congress policies since 1992, we have enough dollars now.
Indeed, he has already announced a beginning to this denationalisation programme.
It must be hugely accelerated, to what amounts to a garage sale -- buy one, get two free. And he must announce a steep increase in import tariffs on things that don't immediately need much capital to be produced locally.
Denationalisation will have no great meaning for industry because in manufacturing, the public sector has virtually ceased to exist anyway.
However, it will have a huge impact on banks and the financial sector. It seems a bank privatisation programme is currently being finalised.
The underlying principle is easy to enunciate: Governments should only monopolise the supply of money, not the demand for it.
Equally, or even more importantly, this reversal of the Indira Gandhi formula will change the mood in the country just as its adoption did in 1969.

It will also finally lay to rest the ghost of vacuous Socialism that's been haunting India since 1991.
Mr Modi thus has a huge opportunity before him. Whether he grabs it the way Mrs Gandhi did in 1969 or squanders it as he did in 2014 will determine his economic legacy.
But unlike other Indian prime ministers, he has been given a second chance. It's up to him now.
As they say, fortune favours the brave.

Feature Production: Aslam Hunani/

Economy will determine Modi's political future


We have managed to put economies into a coma: Raghuram Rajan
Source: PTI
July 23, 2020 22:52 IST

...but when they awaken, it's going to be overly optimistic to assume everybody will walk off the sleeping bed and come back to full life, Rajan noted.

Former RBI Governor Raghuram Rajan on Thursday said the central bank has been expanding its balance sheet and buying government debt on the back of excess liquidity amid the economic slowdown but cautioned that this comes at a cost and cannot be a lasting solution.

He said central banks in many emerging markets are resorting to such strategies and disagreed with votaries of the "modern monetary theory" who support this, making it clear that there are no free lunches.

"The RBI has been expanding its balance sheet and it has been buying government debt.
“But effectively, in that process, what it is doing is borrowing from the banks at the reverse repo rate and lending on to the government," Rajan said speaking at a conference organised by Singaporean lender DBS Bank.

It can be noted that at present there is excess liquidity in the system as people get more risk averse and save more and the demand for credit is sluggish.
Banks are parking the money with the RBI in the reverse repo window, earning very less.
It can be noted that monetisation of the fiscal deficit is one of the suggestions put forth by a slew of economists and analysts as a prescription to tackle the current environment.
Rajan said there are limits to monetisation and the process can go long only for a limited period of time.
"When does this process end? When people start fearing the extent of monetisation that is going on, when they start worrying about inflation, when they start worrying about whether the debt that has been accumulated will be paid back.
“Or, once growth starts picking up and banks find other uses for the money than passively holding on to central bank reserves," he explained.
For now, when there isn't much lending going on, central banks can do the monetisation and it "leads to cooperation between the central bank and the government”, the renowned economist said, making it clear that there are "limits" till when such arrangements can work.
Meanwhile, Rajan said once economies like India open up fully, a lot of damage wrecked on the corporate sector by the lockdowns will be uncovered.
Gradually, these costs will be transferred to the financial sector and the government has to ensure that lenders are adequately capitalised to tackle the situation and not let this slip into becoming a financial sector problem, he said.
"We have managed to put economies into a coma, but when they awaken, it's going to be overly optimistic to assume everybody will walk off the sleeping bed and come back to full life," Rajan noted.

He also said that many countries like India will see a skyrocketing of the debt to GDP ratio in this time which is marred by a dip in GDP and pushed for an open trade and investment climate, saying help has to come from outside in such a climate.
The US and China will eventually have to take on leadership and smaller democracies can persuade the two big powers of the world to come together, Rajan said, hoping that the upcoming Presidential election in the US can change the course of things.

Photograph: Reuters

We have managed to put economies into a coma: Raghuram Rajan


Respite for automakers: Tractor, two-wheeler sales rebound
By Shally Seth Mohile & T E Narasimhan
July 23, 2020 18:35 IST

A good agricultural harvest and a timely arrival of monsoon, besides a slew of government schemes, have also come as a bounty.

A quick year-on-year recovery in sales for tractors and a month-on-month rebound for two-wheelers are offering a much-needed respite to pandemic-bruised automakers.
A pent-up demand, coupled with these segments’ high dependence on rural markets, where the spread of the infection is relatively low, have aided recovery.

Also, a good agricultural harvest and a timely arrival of monsoon, besides a slew of government schemes, have also come as a bounty.
Tractor sales in India rose 20 per cent year-on-year in June, even as production increased at an 18-month-high rate, according to the Tractor Manufacturers Association (TMA).
Encouraged by the trend, TMA has pegged 5 per cent year-on-year sales growth for the financial year that will end on March 31, 2021.
Hemant Sikka, the president for tractor and farm equipment sector at market leader Mahindra & Mahindra, seems jubilant. His company had a record sales output last month of 36,000 units – almost 95 per cent of its pre-Covid-19 volumes.

But he stops short of making any projections for the industry. “A lot depends on Covid-19-related factors,” he says, adding “the struggle is on the supply side as there are localised lockdowns”.
While cash registers are ringing at tractor companies, two-wheelers are not left far behind.
This segment, too, is seeing a consistent month-on-month recovery, paving the way for sales coming firmly back on the growth path.
The demand is largely fuelled by people’s preference of personal transportation and aversion to use public transport amid pandemic-related fears.
Take for instance the case of Satnam, who works at a Mumbai-based restaurant.
When he went to his native place in Rewa, Madhya Pradesh, for a 15-day break last month, he was forced to pawn his wife’s jewellery to buy a Hero Passion Pro 110 (priced Rs 65470, ex-showroom).
“With no bus or auto rickshaw plying in our area due to the lockdown, I had to buy a motorcycle,” says Satnam, adding that a salary cut by his employer and dearth of cash in hand left him with no option other than to pawn the jewellery for this purchase.
The plight of those like Satnam might have come as a blessing in disguise for two-wheeler makers, who are seeing a rise in demand, mostly in rural markets.
At present, most two-wheeler firms are selling 90-95 per cent of what they used to in the pre-Covid phase, according to company executives.
Rakesh Sharma, executive director at Bajaj Auto, says if it had not been for localised lockdowns in several districts, the recovery would have been much quicker.
“The demand is coming to normal levels wherever there are no Covid-19-related disruptions,” he says, adding that localised lockdowns are hurting both production and demand.
Market leader Hero MotoCorp, which draws half of its sales from rural markets, has been one of the biggest beneficiaries of a sales upturn. Leading the revival in the domestic two-wheeler sector, Hero in June sold 450,744 units, registering record sequential growth of more than four times over the previous month, during which it had dispatched 112,682 units.
“In a sign of positive sentiment and a revival in consumer demand, our present sales have reached 90 per cent of our pre-Covid volumes,” says a spokesperson for the company.
Customer demand has been positive across almost the entire country - only the markets badly hit by Covid-19, such as Maharashtra and Gujarat, have been an exception - the spokesperson points out.
“A combination of factors, including the forecast of a normal monsoon, a bumper rabi crop, and the upcoming festive season should keep the momentum going over the next few months,” he adds.
Even as Hero remains bullish, its dealers are cautious.
“This month we are not seeing the same traction that we saw last month, and we expect sales to taper off a bit,” says a dealer.
The marriage season in states like Uttar Pradesh, Rajasthan and Bihar have also supported volumes, he adds.
The factors that boosted two-wheeler sales were also behind a revival for tractor firms.
TMA president T R Kesavan points out that a combination of improvement in agricultural harvest and procurement, disbursements under the Pradhan Mantri Kisan Vikas Yojna (PMKVY) and utilisation of Mahatma Gandhi National Rural Employement Guarantee Scheme (MGNREGS) funds, and deployment of workers in capacity-building activities, have boosted agriculture prospects, and rural sentiment thereby.
“All these have resulted in positive trends for all kinds of agriculture input businesses – tractors, equipment, fertilisers, and agriculture tyres, among other things,” says Kesavan.
The inventory levels at the factory of Escorts Agri Machinery and its channels have been the lowest ever, says a spokesperson for the company.
It was able to run its factories in multiple shifts to manufacture at about 90 per cent of its capacity.
“But the supply-chain situation, though better than before, continues to be volatile," adds the spokesperson.

An improved crop realisation - up 12 per cent year-on-year - and government-aided measures have added to the disposable income, says Mahindra’s Sikka.
As a result, tractor buyers are willingly to pay a higher margin money of 30 per cent, against 10-15 per cent earlier.
This, in turn, has encouraged the finance companies to disburse more, he explains.

Photograph: Courtesy, Mahindra & Mahindra

Respite for automakers: Tractor, two-wheeler sales rebound


'Don't be a cowboy'
By Samie Modak
March 23, 2020 11:32 IST

'The only thing that is safe right now are government securities.'

IMAGE: Medics screen patients for covid-19 at an ITBP quarantine facility at Chhawla in New Delhi. Photograph: PTI Photo
The Indian markets have plunged into bear territory with the Nifty coming off 22 per cent from its record level in January.

Shankar Sharma, co-founder and vice-chairman, First Global, tells Samie Modak that the scale of economic disruption, because of coronavirus, is unprecedented and will impact all.
Are you surprised by the extent of correction we have seen?
Benchmark indices touched record highs in January, but it was just a handful of stocks that were driving the market.
Such a thing can last for some time, but when it ends, it ends brutally.

There will be some trigger for it to end.
Coronavirus has come as a reason for this massive fall.
But the situation was problematic even before the spread of the virus.
In 2000, only the technology stocks were driving up the market.
When they collapsed, it pulled the whole market down.
In 2007, financials were running up and they collapsed.
This time also, there were only 8, 9 stocks that were driving the market.

I don't think we should be in a hurry to buy.
Every significant bear market that has happened in the past two decades has not gotten over in one month.
This qualifies as a serious bear market.
This isn't a routine correction. It is happening globally; it is happening in India.
The scale of economic disruption that is happening because of the virus is probably not seen in a long time.
So there shouldn't be a rush to go out blindly and become a cowboy.
One should let the dust settle, let some positive data points to emerge.
It is alright to buy 20 per cent higher rather than buy something that falls 30 per cent in the next few days.

Do you think overleveraged companies will be in more trouble?
Companies that require external capital always run into trouble in situations like this.
Leveraged companies fall more than ones with low debt.
But the impact of the economy getting disrupted will be felt by everyone. Nobody will be completely insulated.
The scale of hurt will depend on your financial structure.
It is a significant macro problem, not specific to a company or industry.
There will be some people who will survive better, but everyone will be hit.

What should the investor buy now?
I think the only thing that is safe right now are government securities.

Is there anything the government can do to revive sentiment?
The government can do a lot of things, but the problem is the fiscal situation isn't great.
In order to do anything, you need fiscal space.
The crash in global oil prices has provided some relief.
We will have to wait and see how the government reacts.

Will a rate cut help?
Rate cut take some time. It is a blunt instrument, not a sharp instrument.
As it is, the recent rate cuts have not translated into economic growth.



Niti VC says, India may post 6% growth next fiscal
Source: PTI
July 24, 2020 23:46 IST

The Niti Aayog vice chairman noted that green shoots of recovery are already visible in multiple sectors. In 15-16 sectors, businesses are coming back to pre-COVID levels," he said.


Illustration: Dominic Xavier/

The Indian economy will start recovering completely by the fourth quarter of the current fiscal and could grow by 6 per cent in the next financial year as green shoots are visible in many sectors where business is back to pre-COVID levels, Niti Aayog vice chairman Rajiv Kumar said on Friday.
Kumar also expressed hope that COVID-19 will begin to taper off from the metros and their economic activity will be normal in the coming quarter.

"I expect the economy to start recovering completely by the fourth quarter.... and achieve a positive growth.
"And next (fiscal) year, it will be about 6 per cent on a low base," he said in a Twitter live session.

Several economists, brokerages and multilateral agencies have forecast a deep contraction in India's economic growth, triggered by the COVID-19 outbreak and subsequent lockdowns.
The Niti Aayog vice chairman noted that green shoots of recovery are already visible in multiple sectors.
"If you notice, in 15-16 sectors, businesses are coming back to pre-COVID levels," he said.
Kumar pointed out that for India, the timing of the COVID-19 pandemic was very unfortunate as the economy was bottoming out in the last quarter of 2019-20.
"Our economy was bottoming out in the fourth quarter of 2019-20 after seeing a low of 4.5 per cent growth but the outbreak of COVID-19 resulted in significant negative impact in the first quarter of this fiscal.
“And that downward momentum could not be reversed because of COVID-19," he observed.
Quoting the finance minister, Kumar said there is always a possibility of another stimulus from the government to boost demand.
"The finance minister has said there is always the possibility of the government coming up with another round of stimulus. Problem is going to be on the demand side.
“The government may look at a stimulus again to revive investment spirit and boost demand," he said.
Kumar also pitched for asset monetisation of public sector undertakings (PSUs) as a large number of them are either under-utilised or unutilised.
"Government holding in land can be brought in as equity and private players can be roped in to do projects in PPP (public private partnership) mode," he noted.
Kumar also said states can mobilise resources by either borrowing from international agencies or internally through effective tax collection.
He said the RBI has done a commendable job by providing liquidity and regulatory support to banks and other financial institutions.
"The problem is now in demand and the private sector will have to expand capacity," Kumar emphasised.
Responding to a query about the challenges before India in the post-COVID-19 period, Kumar said the country will have to design and implement necessary structural reforms to ensure recovery is as sharp and sustained as possible.
Besides, India will have to collaborate with the rest of the world to redesign some global institutions and regulations as some of them have reached the expiry date, he said.

India will also have to collaborate on the technological front as post-COVID technology turbulence can have major unforeseen impact on many countries, he added.
Kumar further said a portable health card is very much called for and the Niti Aayog is working towards that.
He said the think-tank is also working on a 15-year vision document.

Niti VC says, India may post 6% growth next fiscal