Daily Financial News Analysis – 13th May’20

Table of Contents

Stimulus Package

Aimed at making the country self-reliant and reviving the stalled economy.
Atmanirbhar Bharat Abhiyaan will be unveiled by finance minister Nirmala Sitharaman starting Wednesday.
Modi: bold reforms are needed to make the country self-reliant.
Five Pillars for Self-Reliance: economy, infrastructure, technology, demography and demand

Lockdown 4.0: contours of this will be different from those seen so far and new rules will be framed on the basis of recommendations by the states.
Modi also focussed on the importance of local manufacturing, local markets and local supply chains, saying the Covid-19 crisis had taught India the importance of these key elements.
“All our demands during the crisis were met locally. Now, it is time to be ‘vocal about local’ products and help them become global,” he said.
“India’s culture considers the world as one family, and progress in India is part of, and also contributes to, progress in the whole world,” he said. “The world trusts that India has a lot to contribute towards the development of entire humanity.”

India’s factory output contracted a record 16.7% in March 2020.
Economic activity coming to a standstill.
The first phase of the lockdown began March 25, a loss of one week of production.
Industrial production had risen 4.62% in February.
For all of FY20, industrial production contracted 0.7% against 3.8% expansion in FY19.
April could be worse because that was a complete month of lockdown.
The Purchasing Managers’ Index (PMI) for manufacturing and services slumped to record lows in April.
Capital goods and consumer durables saw the steepest fall in output at 35.6% and 33.1%, respectively.
Capital goods production is an indicator of investment activity.
Consumer durables output is a reflection of urban demand.

If not for the Covid-19 crisis, big ticket systemic reforms may have been politically difficult to navigate.
Major reforms can be expected in agriculture marketing, enhancing competitiveness of PSUs and simplifying laws to help the private sector make their businesses globally competitive.
Emphasis will be to ensure nationwide compliance and replicate this in other areas such as easier land availability for industry.
This is not just a financial package but a reforms stimulus, and governance and mindset overhaul.