INDIAN ECONOMY

updates
19-07-2021

Dr. Asit B. Acharya ©

27-07-2021 Dr. Asit B. Acharya 1
Covid-19 adversely impacts past efforts regarding
various issues: BRICS ministers
• Labour ministers of the five BRICS nations, comprising Brazil,
Russia, India, China and South Africa, stated that the
coronavirus (Covid-19) pandemic has negatively impacted the
efforts made in the past to address unemployment, decent
work deficits and inequality. The statement was made at the
BRICS Labour and Employment Ministers' Declaration,
organised by India on 15 July 2021. The meeting, chaired by
Union Labour and Employment Minister Bhupender Yadav, was
conducted with an aim to exchange views on Covid-19's impact
on the global labour market, along with enhancing information
sharing and agreeing upon specific areas of cooperation among
BRICS member countries. During the meet, the five countries
resolved to recover with stronger national economies, inclusive
of labour markets and social protection systems, reported
Economic Times.
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Exports up 48.3%, imports up 98.3% in June 2021
• India's merchandise exports rose year-on-year by
48.3% to USD 32.5 billion in June 2021, as against a
12.5% fall registered in the year-ago month.
Exports marked a 67.7% increase over the
preceding month. Point of Discharge (POL- port where
the goods are unloaded from the ship) exports rose y-o-y by
115.4% to USD 32.5 billion, and non-POL exports
rose by 42.1% to USD 28.5 billion in June 2021. At
USD 41.9 billion in June 2021, India's merchandise
imports were 98.3% higher than the year-ago level.
Imports rose by 68.6% over the preceding month.
POL imports rose by 116.5% to USD 32.5 billion
and non-POL imports rose by 92.8% to USD 31.2
billion in June 2021.
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 Pronab Sen calls for reducing govt control over
statistical system
• Stating that statistics has been politicised,
former chief statistician of India Pronab Sen has
called for reducing government control over the
statistical system, reported Economic Times. As
per Sen, the move would help in accurate and
timely release of data. He also suggested a
gradual increase in the spread of one year term
loan and long term rates and pushed for
skilling.

27-07-2021 Dr. Asit B. Acharya 4

 PFRDA pension subscriber base grows by
24% in June
• The Pension Fund Regulatory and Development
Authority (PFRDA) registered a 24% jump in its
subscriber base under its two flagship pension
schemes, Atal Pension Yojana (APY) and National
Pension System (NPS), in June 2021. The number
of subscribers under the NPS rose to 43.5 million
by end of June 2021 as compared to 35 million in
June 2020, as per PFRDA. Meanwhile, the total of
subscribers under the APY stood at 28.8 million as
of 30 June 2021, an increase of nearly 34% from
the year-ago period. The assets under
management (AUM) of these two schemes jumped
by 32.7% to Rs 6.2 trillion during the month.
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 India will achieve targeted reduction in
carbon emission by 2030: R K Singh
• The Union power and renewable energy
minister R K Singh said that India will exceed its
target of reducing carbon emission set for 2030
under the Paris agreement. India has to
produce 40% power generation from non-fossil
sources and reduce its carbon intensity to 33%
by 2030. The minister said that the country has
already achieved 39% power generation from
non-fossil sources and considering the
capacities under installation it's 48%.
27-07-2021 Dr. Asit B. Acharya 6
Govt banks wrote off Rs.1.3 trillion NPAs in
2020-21
• Reduction in non-performing assets (NPAs) due
to write-offs for public sector banks (PSBs)
stood at Rs.1,31,8.94 billion during 2020-21,
according to a response from RBI to an RTI
query filed by Nagpur-based Sanjay Thul.

27-07-2021 Dr. Asit B. Acharya 7

 India's economy to witness 6.5-7% GDP growth
from FY23 onwards: CEA
• Chief Economic Advisor (CEA) Krishnamurthy
Subramanian believes that India's economy will
start witnessing a growth of 6.5% to 7% from
fiscal 2023 onwards largely driven by various
government reforms and focus on vaccination.
Subramanian acknowledged that the
momentum in recovery that was seen in the
fourth quarter of 2020-21 and overall in the
second half of 2020-21 got impacted to some
extent by the second wave of Covid-19.
However, he added that the impact of the
second wave will not be very large.
27-07-2021 Dr. Asit B. Acharya 8
 79% consumers expect household earnings to dip in FY22:
Survey participants want Govt. to reduce duty on petrol, diesel
LocalCircles
• Rising prices of fuel and essential commodities amidst the
Covid-19 pandemic have hit the finances of the people, showed
a survey conducted by LocalCircles across 382 districts of India.
Of the total 70,500 consumers surveyed, nearly 79% foresee a
decline in their income in the current financial year, while 49%
expect a decline in their savings. 47% of the respondents now
expect an uncertainty with respect to household budget
planning to last six to 12 months.
• Participants of a survey conducted by community social media
platform LocalCirlces want the government to reduce duty on
petrol and diesel by as much as 20%. As many as 70,500
responses were received from participants across 382 districts
for this survey. About 76% of the consumers said they want the
government to reduce excise duty on petrol and diesel.
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 Amitabh Kant highlights key areas to enhance
ease of doing business in India
• NITI Aayog chief executive officer (CEO) Amitabh Kant is
of the view that single window clearances, timely
clearances and land acquisition are areas to focus on to
enhance ease of doing business in India. Kant further
stated that public-private-partnership in social
infrastructure such as healthcare is another avenue of
investment in India. According to him, partnerships with
the private sector in unlocking the potential of
innovative financing mechanisms such as asset
monetisation, and providing an impetus to green finance
are other potential areas, among others. The NITI Aayog
CEO also emphasised that India should focus on sunrise
areas for growth such as electric vehicles and battery
storage manufacturing, green hydrogen, artificial
intelligence (AI), data analytics, blockchain, cloud
computing and genomics.
27-07-2021 Dr. Asit B. Acharya 10
 Centre initiates process of LIC disinvestment
• The central government has initiated the process of Life
Insurance Corporation (LIC) disinvestment by inviting bids
from merchant bankers and legal advisors for advising it on
the proposed mega initial public offer (IPO). The Department
of Investment and Public Asset Management (DIPAM) would
appoint up to 10 merchant bankers and one legal firm for
assisting and advising on the stake sale. The last date for bids
submission is 6 August 2021. Last week, the Union Cabinet
approved the IPO of LIC and decided that the modalities such
as issue size, pricing and timing would be decided by a panel
headed by Finance Minister Nirmala Sitharaman. The Centre
has set a target of mopping up nearly Rs.1.8 trillion in the
current fiscal from minority stake sales and privatisation, of
which, Rs.1 trillion is to come from selling the government's
stakes in public sector banks (PSB) and financial institutions,
while the remaining Rs.750 billion would come as central
public sector enterprises (CPSE) disinvestment receipts.
27-07-2021 Dr. Asit B. Acharya 11
 Centre likely to gain more from asset
monetisation than expected
• The central government is expecting to gain over
30% more than the earlier estimates of Rs.2.5
trillion over the next four years under the National
Monetisation Pipeline (NMP).
• The NMP, which is being prepared by the NITI
Aayog, is in the advanced stages of finalisation and
is expected to be unveiled in August 2021. As per
sources, the Centre is looking to tap institutional
investors such as global pension funds and
sovereign wealth funds who have been keen to
invest in the country's infrastructure assets.
• Nearly 10 infrastructure ministries have submitted
a fresh list of their core infrastructure assets,
reported Business Standard.
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70% GenZ job applications rejected during
Covid-19 second wave
• During the second wave of Covid-19 in the country,
around 70% of the generation Z (Gen Z) job applications
were either rejected or cancelled, as per the 'Career
Aspirations Gen Z India' study.
• The survey covered the current sentiment, changing
perceptions and future outlook of the young generation
towards jobs, skilling and networking opportunities. It
also assessed how the pandemic affected careers &
education plans of youths across India and what
challenges they have to face when pursuing jobs &
skilling opportunities at present. Nearly 72% of
respondents claimed that internship opportunities had
greatly reduced during the second wave. Among those
employed, 32% of Gen Z Indians experienced a pay cut
while 25% lost their job openings.
27-07-2021 Dr. Asit B. Acharya 13
RBI purchases 5.8 billion US dollars in May 2021
• The Reserve Bank of India (RBI) made net
purchases of foreign currency worth USD 5.8
billion in May 2021, as compared to net
purchases of USD 4.2 billion in the preceding
month.
• The apex bank bought foreign currency worth
USD 7.1 billion and sold worth USD 1.3 billion.
Outstanding net forward purchases amounted
to USD 59.9 billion in May 2021, as compared
to purchases of USD 64.9 billion in April 2021.
27-07-2021 Dr. Asit B. Acharya 14
 Economic recovery gains momentum, but still
incomplete: ICRA
• India's real GDP in the June 2021 quarter will trail the
June 2019 quarter level, while recording a double-digit
year-on-year (y-o-y) expansion, ICRA stated in its latest
report. The rating agency noted that base normalisation
led to a flattening of the y-o-y expansion of 13 of the 15
high-frequency frequency indicators in June 2021,
relative to the previous month. However, several
indicators recorded a sequential improvement in June
2021, as the states started lifting restrictions with the
subsiding of the second wave of Covid-19. According to
ICRA's chief economist Aditi Nayar, while the economic
recovery is gaining momentum, it is still incomplete as
volumes for most non-financial indicators in June 2021
were weaker than both April 2021 and June 2019.
27-07-2021 Dr. Asit B. Acharya 15
 Shaktikanta Das cautions about downsides to
direct financing of govt deficit
• Reserve Bank of India (RBI) governor Shaktikanta
Das has warned of the downsides to direct
financing or monetisation of the government's
fiscal deficit by the central bank. In an interview to
Financial Express, Das said that the option of
printing more money was done away with as part
of the economic reforms and it was further
repudiated when the Fiscal Responsibility and
Budget Management Act, 2003 FRBM was enacted.
He added that the RBI's role as the government's
debt manager had helped quicken the pace of
monetary policy transmission during the pandemic
as lower funding rates co-existed with plenty of
liquidity.
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 Rising fuel prices to have negative impact on
automobile industry, says SIAM
• Rising fuel prices will have a negative impact on
the automobile industry, hitting vehicle
demand, while also adding to the overall
inflationary pressure, auto industry body
Society of Indian Automobile Manufacturers
(SIAM) said. It has also suggested to the
government a fitness-based scrappage policy
instead of policy based on demand stimulus.

27-07-2021 Dr. Asit B. Acharya 17

 India to produce 31 million tonnes of sugar in
2021-22 season: ISMA
• As per Indian Sugar Mills Association, India's sugar
production in 2021-2022 season that will start
from October is expected to be around 31 million
tonnes, almost similar to the current year's
production of 30.9 million tonnes, even after
accounting for 3.4 million tonnes of sugar diverted
for producing ethanol. ISMA said that opening
stock at the start of the 2021-22 sugar season from
October is expected to be around 8.7 million
tonnes, the lowest in the last four years. Though
this opening stock is around 2 million tonnes less
than the current year's opening stock, it is much
higher than the 4 - 4.5 million tonnes of ideal
opening stock, which is equivalent to two months
of consumption.
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 Banks to implement lockable casettes system in
ATMs by March 2022
• The Reserve Bank has extended the deadline till
March 2022 for banks to use only lockable
cassettes for replenishing cash in ATMs. The
earlier deadline as per the April 2018 circular
was March 2021 but the date was extended
following representations from Indian Banks'
Association on behalf of various banks
expressing difficulties in meeting this timeline.
At the end of May 2021, there were 1,10,623
ATMs on-site of banks and 1,04,031 off-site-
ATMs in the country.
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 Drug sales show the times are bad for mental
health
• Sales of neuro-psychiatry drugs have increased in the past
four quarters, an indication of the psychological impact of the
pandemic. Data sourced from market research firm AIOCD-
AWACS show a 13% year-on-year jump in sales of CNS
(central nervous system) drugs for the June 2021 quarter, the
sharpest increase since the beginning of the pandemic. The
sales were 8.4% higher than the sales posted in the pre-
pandemic quarter of January-March 2020.
• Psychiatrists confirm a surge in cases of generalised anxiety
disorders, obsessive compulsive disorders as well as phobia
and fear of contracting illnesses through the pandemic. There
have been new cases as well as increased symptoms in old
cases. The delirium in dementia patients has increased due
to lockdown, poor communication and over medication. The
post-Covid psychotic illnesses have also required patients'
admissions to rehab centres, said neuropsychiatrist Amar
Shinde.
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 Data Set Source
Foreign Exchange Reserves (17 Jul 2021) RBI
Money Supply (17 Jul 2021) RBI
Air Passenger and Cargo Traffic (T) DGCA
Electricity Generation (Final) (T) CEA
SCB Credit and Deposit (T) RBI
Electricity Generation (Provisional) (T) CEA
Cargo Traffic at Major Ports (T) Indian Ports Association
Automobiles Production and Sales (T) SIAM
FDI/FII Flows (T) RBI
WPI (T) Office of Economic Advisor
SCB Credit and Deposit (T) RBI
Foreign Trade (T) Ministry of Commerce
(T)=Date not known; release tentative

THANK YOU
27-07-2021 Dr. Asit B. Acharya 21