People School

India is reopening after more than 70-days now. Though the economy has restarted, revival is still months away. Generation of e-way bills for May touched 11.4 Lakh/day in the last week of the month. The daily average for the whole month was 8.2 Lakh which is thrice the figure generated in April. In April, the total number of e-way bills issued stood at 86 Lakh. E-way bills track the cargo movement under the GST. They give an approximation of inventory movements that might indicate wholesalers stocking up o inventory in anticipation of demand  Lot of stocks could not be delivered to the retail markets because of the nationwide lock down. The upcoming weeks could see unloading off perishable stock in books and clearance of old inventory. Increase in demand is also expected in the upcoming weeks. E-commerce is also a key contributor to the increased usage of e-way bills. According to reports, HDFC Bank expects normalcy to return within three months. Arvind Kapil, HDFC Bank: Demand for...

In short,  RBI’s first was March 27 th - cut interest rates by 75 bps and other relief was Moratorium. RBI’s second booster dose- cuts Reverse Repo rate by 25 bps to 3.75%. What is Reverse Repo rate? – Rate at which the RBI borrows money from banks. Expensive for banks not to lend. Positive move for corporates and borrowers To conduct TLTRO 2.0 for an aggregate amount of Rs. 50, 000 Crore to begin with. Liquidity booster for NBFCs and HFCs – At least 50% of amount must go to mid and small sized NBFCs and MFIs. Standard loans as of March 1, need not be classified as NPA till May 31. Banks required to maintain additional provisioning of 10% on standstill accounts. No monetization of deficit. No direct lending to NBFCs. No Repo against corporate bonds.   Now the jargon behind this move, the reverse repo rate is the rate at which banks when they have nothing to do with the money, give it to RBI and RBI gives them just 3.75%. Now unt...

v   Marrying Finance and Technology. v   Availability of data from many sources. i)         Data from Aadhaar ii)        Data from Credit Bureau iii)      Data from Fraud score card iv)      Data from Algorithmic score card v)        Duplication v   Given this data, putting altogether, decision taken. v   This is an infrastructure. v   Average of 10% of their loans was going digitally, without seeing their clients. v   Many new financial institutions, having no track record history, has become significant. v   Financial institutions, newly incepted have no customers. v   225 start-up companies in the lending business for 2 years now. v   This is alternative lending business. v   Next 5 years, see a growth of 30-40% of their loans going digitally. v   Aadhaar, Jandhan ...

Indian economy per Honeywell Headwinds v   The country’s bureaucracy is just stifling. v   Retail needs to be expanded and made more competitive. v   Protectionism needs to disappear. v   Last 20 years, India has grown at 5.5% and per capita GDP now at $1800. v   India needs to grow per capita GDP at 8% per year to reach China’s level. v   For the next 20 years, we must grow at 9% to reach the GDP level of China (per capita population). India’s Advantages v   Demography v   Rising income levels v   Consumer aspirations India’s challenges v   Jobs (world-wide issue) v   Environmental (world-wide issue) v   Aging population (world-wide issue) 90% of world’s diamonds comes to Surat for cutting and finishing.

Moody’s take on Indian economy Highlights: v   FY20 GDP Projection, lowered from 5.8% to 4.9%. v   Key concerns: §   Weakening consumption §   Rural financial stress §   Low job creation §   Liquidity constraints §   NBFC credit crunch has exacerbated slowdown §   Steps to stimulate demand will be limited in offsetting slowdown v   Measures unveiled by Government: §   Income support for farmers §   Monetary policy easing §   Broad corporate tax cut v   FY21 Projection: §   Modest recovery expected §   Growth will be weaker versus recent years §   Weak demand, tight liquidity to constrain auto earnings §   Slow growth will reduce debt servicing capabilities of households. Other Economists take on economy slowdown:-- v   Market’s assumption true; Fiscal deficit way higher than Govt.’s claims. v   Govt. roadmap for future Fiscal roadmap will be cru...

India is in a Darwinian mode, where it is called ‘Survival of the fittest’. How is India in a Darwinian mode?       1)       Consolidation: Sector after sector, more and more consolidation is happening and this is happening more of mortality, less of combinations. Like Airline sector, last many years Kingfisher, Deccan, Sahara, Jet go out of businesses and the fitter players have survived and prospered. Like Telecom sector, there use to be 13 players, excluding BSNL, MTNL, now down to 3. Like Wind Energy supply sector, there use to be 19 players, now down to 3 only. This is the speed of consolidation. This wave of consolidation playing out to two additional sectors, Real-estate and Finance.       2)       Cleaning system and Governance:  Clean business and high governance, is the way forward and present.       3 )       IBC:   ...

IS INDIA MOVING TO FINANCIAL ASSETS? How India saves? Wealth concentrated in Gold, physical assets. How to change Investment behaviour? Low inflation alone cannot bring change. Must improve provision of unsecured credit. Market rally despite FII sell-off For the calendar year 2019, Rs.78,000 Crore came into Mutual Funds. This flow into MFs is just a chip of an iceberg Expectation is that if inflation is kept low, then large part of this household wealth will move to financial assets? Inflation alone cannot bring change. Fascination for Gold, Real-estate is multifaceted. Some are inflation motivated, deep-rooted cultural factors drive gold holdings, matri-lineal transfer of wealth within families, and Gold is collateral for low-income households, tax evasion. How does India save? Traditional savings patterns are simultaneous investment in Housings and lack of savings in Pensions for traditional joint families. But things are changing with nucl...