Do it yourself

The 4QFY20 economic data has again highlighted the points, I have been emphasizing for past many quarters, which is- (i)     The economic growth in India has been declining structurally since the global financial crisis (GFC) of 2008-09. For couple of year, monetary and fiscal stimulus given by the extant government to mitigate the impact of global crisis supported the growth. However, post FY13, the growth trajectory never looked like retracing to pre GFC levels. A strong number in FY22 would be purely a base effect.   (ii)    The long term growth curve in India has shifted down. The potential growth in India is no longer 8% plus. The pivot is somewhere close to 6%. (iii)   The global deflationary pressures are causing the nominal growth curve to shift down even more than the real growth. It is pertinent to note that a sustained fal...

Most brokerages and rating agencies have highlighted the severe impact of the 21 days total lock down announced by the Government of India. For example consider the following: 1.     JP Morgan estimates that the lock down will significantly impact 60% of GDP, though the post lock down rebound could be equally sharp. There will some permanent loss, depending on the length of the lock down. It expects global economy to enter into recession in H1'20, and since the India is fiscally constrained, the recovery will mostly depend upon the monetary easing and regulatory forbearance for stressed debt. 2.     Deutsche Bank feels that the total lock down has pushed India into uncharted territory. We may see an unprecedented negative GDP growth print in 4QFY20 and/or 1QFY21. The government must announce a coordinated & front-loaded fiscal/monetary stimulus to mitigate the impact of lock down. 3.     Jefferies highlights that th...