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Old 2nd December 2020, 09:37   #31
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I feel all the industrial activities catering to the domestic market will recover in the next year or so. The industries which cater to exports will fall hard (example body shopping IT companies or those which have too many overseas clients). Somewhere the government is right in looking inward and focusing on swadeshi for now.
As many forum members said, it's a time to reduce non essential spending and save for the future. A bit of precaution will help during uncertain times.
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Old 2nd December 2020, 09:48   #32
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I feel all the industrial activities catering to the domestic market will recover in the next year or so. The industries which cater to exports will fall hard (example body shopping IT companies or those which have too many overseas clients). Somewhere the government is right in looking inward and focusing on swadeshi for now.
As many forum members said, it's a time to reduce non essential spending and save for the future. A bit of precaution will help during uncertain times.

See, this is where the problem is!

The majority of us really don't want to spend but economic growth will only happen if there is cash flow. Our economic growth is completely dependent on consumers especially in the domestic market. My dad runs a business and I know what it literally means when people stop spending.

Unless there is an incentive to spend, nothing is going to change. The govt is fooling itself into thinking that everything will automatically fall into place without moving a finger ( apart from their official press release stating that everything is fine). AFAIK, the large majority of us Indians are conservative in our spending and can really live a miserly life if required.

What a situation to be in for the people and the govt!
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Old 2nd December 2020, 09:49   #33
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Default Re: India is now officially in recession

The ripple effects of the initial lockdown worldwide is now being felt everywhere.

But I do feel this too will pass. The world has seen such events in the past. Wars, Calamities, Natural disasters etc. It is human nature to pick ourselves up and move forward. Yes, losses have happened financially along with human lives too in this Covid pandemic.

People have started getting back to their old routines slowly. There are certain sectors like Theatres, Tourism and Air travel which might take some more time to get back to normal. But with vaccines being introduced we can all go back to a fully functioning world
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Old 2nd December 2020, 09:51   #34
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While the ground reality is stark, indicators like the stock market say otherwise. I understand that stocks are speculative but to see such a difference between reality and speculation is eye opening. Sensex is at an all time high while entire sectors and industries have been ripped apart.
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Old 2nd December 2020, 10:05   #35
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See, this is where the problem is!

The majority of us really don't want to spend but economic growth will only happen if there is cash flow. Our economic growth is completely dependent on consumers especially in the domestic market. My dad runs a business and I know what it literally means when people stop spending.

Unless there is an incentive to spend, nothing is going to change. The govt is fooling itself into thinking that everything will automatically fall into place without moving a finger ( apart from their official press release stating that everything is fine). AFAIK, the large majority of us Indians are conservative in our spending and can really live a miserly life if required.

What a situation to be in for the people and the govt!
I had said the same when the government introduced this foolish and unnecessary lockdown. Except, not many could understand this fact and were endlessly praising the government's "wise" move.
When you shut down a productive economy overnight you can't expect it to restart the moment you say "friends unlock". The real shock people faced when our jobs were lost, salaries cut to half and zero government support told us that we are on our own. Now if this government expects people to spend their money to help the others, it will not happen. The only way they can restart is to give incentive to people to spend. Start a scheme to reduce upto Rs 10 lakh of spending from your taxable income and watch people spend. But will "I don't eat onions" kind of ministers have the brains to think laterally, I wonder!!

Last edited by Aditya : 2nd December 2020 at 20:08. Reason: Let's keep it civil
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Old 2nd December 2020, 10:44   #36
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Covid is a convenient excuse for the government but the fact of the matter is
1. DeMo was useless and created a huge impact to the economy, rural specially

2. GST implementation: In my previous role I was part of a company (Big4) which had solutions for GST. My experience has been pathetic. The confusion, non-clarity, system being down, forms being changed, the way tax is levied was just plain crazy. One of our customers was a Auto company and the tax team was stretched with the non-sense.
All rule changes will be abruptly announced or withdrawn, Deadline extended randomly. There is very little thought on the rules esp. the e-invoicing.
People who made policy have no clue on how the ground level works. They do not understand how an invoice is generated across many industries. This was simply blindly copied from multiple countries without much thought on localizing.

3. There is a specific push to reduce small and medium enterprises and more benefits for large corporations. Informal economy is neglected completely and they are the worst hit.

I have enough funds to pay off my home loan just that I am scared for the future and holding my finances closely. My expenses have gone down. In the last 8 months I have bought 1 new phone (company paid 25K) and I headphones which was also partially paid.
I am holding on to cash dearly despite Double income no kid situation
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Old 2nd December 2020, 11:10   #37
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There are 5 determinants of consumer spending:
1) disposable income. This has halved due covid and covid imposed lockdown. People simply have less money to spend
2) per capita income/standard of living: this lockdown has pushed millions of lower middle class into poverty. There is a general pessimism among those who are relatively less affected which is making them tighten their belts
3) income inequality: this lockdown has ensured the rich become richer and the poor, poorer. It doesn't help when the rich make more money, they simply tend to invest the extra, doesn't trickle down into spending.
4) household debt: covid has pushed overall household debts to new highs. Add the increasing interest component due moratorium and the increased cost of health care, leaving lesser money to spend.
5) consumer expectation: if consumer expect inflation to be high, they will buy more to avoid paying higher prices later. When they see the market stagnant, they tend to avoid purchase.

In short, even a small downturn in consumer spending damages the economy. As spending drops off, economic growth slows. Prices drop, creating deflation. If slow consumer spending continues, the economy contracts. Considering the above,
India is in the middle of a perfect storm, not only that we are becalmed but with our sails in tatters.

Article link here : https://www.thebalance.com/consumer-...my%20contracts.

Last edited by AirbusCapt : 2nd December 2020 at 11:25.
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Old 2nd December 2020, 11:28   #38
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My fear is irreparable damage to the economy or trajectory,

India has a very young population, Every country, in history, has flourished when majority of their population was young. Eg. Japan, China..
Where a task force was available for businesses.

India was seeing that kind of growth till 2016, then we had demonetization, GST & now this.

Now, hypothetically, even if we recover the economy by 2026 -2030, will we get the same growth? Has India lost it's big opportunity ?

- Slick
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Old 2nd December 2020, 11:59   #39
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I think for most common men like me the view are mostly formed by what is seen in their own workplace.
The industry I’m working in is flourishing (construction equipment manufacturing) and the we are seeing record sales post COVID (not only in terms of YoY, in terms of long term sales as well).

All said and done I believe that the post COVID economy is going to be permanently different in comparison to pre COVID economy.

Personally I’ve not been holding back on any expenses post COVID, I know for sure that it is indeed imprudent to spend like this now but deep down in my mind panic has not set yet.

My take is that the govt has limited opportunities to fiddle with economy. Classic economic dictates tax cuts - more borrowing - more liquidity - more consumption cycle, however what govt can actually do is improve the efficiency in economy even if it means more short term pain. The new guidelines for Ola /Uber is highly regressive and not thought through. Acts like these are exactly what should not be done.

Last edited by gauravanekar : 2nd December 2020 at 12:02.
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Old 2nd December 2020, 12:29   #40
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Covid 19 started making changes in the mind of the people who value life, time and money and who also pause and think . Changes are at the atomic level. Their thought processes , habits , their behaviour, tendancies whatever you call are all re evaluated. Collectively this will impact the monetary decisions of all consumers and the economic cycle will adjust accordingly , even if it is degrowth. How to be happy without impulsive consuming is revealed by covid 19. God is Great. New normal suitable to humanity will evolve . India can lead due to solid basic values based on vedanta followed by generations though they are in the declining scale. For the time being recession is ok. acceptable. we are going to see more.
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Old 2nd December 2020, 12:52   #41
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Second guessing with the benefit of hindsight is not something a government faced with an unprecedented global pandemic can do.

Giving time to impose a lockdown would have been counterproductive as interstate movement might have accelerated, accelerating the spread of COVID. If anything giving a say 1 month notice would have meant we didn't even need a lockdown following it.

On economics,

The spurt we saw in 80-81 was just low base effect without any of the reforms that would have sustained it. Like it or not but this Govt has been the most reform minded we have had,

1) Rera

2) IBC act which is definitely working as intended, if a bit slower than planned

3) Agri reform (which mind you, every major political party has been wanting to do, including the Congress which had it in its 2019 manifesto),

4) PLI's, focus on electronics manufacturing, the NIP (unprecedented rate of infra building, as witnessed often in TBHP travelogues also) - Electronics exports from India was around $ 5bn in 2014, it is now at around $ 12 bn, straight up doubled in 6 years. Pharma exports have gone from $ 9bn to $18bn in this same period.

5) labour law rationalisation

6) Digitalisation of economy and reduction in informal economy (which was and is a bane on our productivity)

7) Corp tax rationalisation

8) Push on defense manufacturing - Defense exports in 2012 was Rs 800cr, 1,600 crores in 2016, It is 8,000 crores in 2019-20.

9) Easing of FDI norms in almost all sectors

10) Big PSU bank mergers and rationalisation of PSU banks

11) GST - While not perfect it is leagues above the khichidi that came before it, and also has unleashed the logistics sector. Growing at a CAGR of some 9%, it is expected to hit $ 200Bn by 2021 (delayed by a year due to COVID). It was at barely $ 90Bn in 2012-13. Currently at around $ 180-190bn.

In addition to this, deploying the JAM trinity to direct subsidies is plugging 10's of thousands of crores in 'leakages' aka corruption every year.

Yes there is a lot more that needs to be done, esp on privatisation or sale of PSU's, judicial reform, police reform, 100% FDI in single brand retail, maybe induce more demand by providing demand side sops but broadly the stage is set for a period of sustained 7-8% growth for the coming decade.

To ignore all these (and more) reforms and say "govt has done nothing" is imo either based in ignorance or political ideology driven.

And it is even more foolhardy to believe or say that companies and investors are not interested in the India story.

FDI as percentage of GDP has been at or above 1.5% from 2014 on, the longest such period we have had thus far. FPI's in Nov alone have pumped in $ 7.5 Bn into the Indian bourses. In 12 months India is the only major emerging economy outside of China that has gotten FPI inflows. For comparision, India has had $ 14bn in FPI inflows in the period Jan-Nov 2020, Brazil has had outflow (negative) of $ 15bn, South Africa - negative $ 8bn, Russia negative $ 5bn, even the likes of SK and Taiwan are bleeding. Our FDI has doubled from $ 14bn YoY in the period July-Sept 2019/2020 and we are on track to possibly closing the year with the higest ever FDI inflow.

Even accounting for the JIO investments, this is an unprecedented high.

SO no, not everything is doom and gloom, if anything in my limited view, we are set for a decade long boom / growth spurt.

Jai Hind always!
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Old 2nd December 2020, 13:27   #42
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Just one example = after seeing how well work-from-home is working, I am thinking of making it permanent for all my team members. I know a lot of other companies are as well. Rental income will drop.
How much of these will work out in the long run? I agree that now many people or accustomed to work from home and companies may want to review their work place real estate costs and drop them. So in cities, real estate may take a hit but how much of it will take a sustained hit in long run?

I think we have to look at international impacts, other sectors, and then taxation. Costs to governments. If a vaccine comes and even if it takes an year, I think it wont get that worst. Automobile manufacturing definitely took a hit but other sectors would go normally. I think the effects will not be that severe wrt pre-covid vs post-covid.
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Old 2nd December 2020, 13:39   #43
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A friend who works in a major IT company told me employees on the bench are being cut. Among Big 4's no appraisal happened (unless you got promoted) and bonus was below last year. People are definitely spending less or rather being more cautious about spending.
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Old 2nd December 2020, 14:03   #44
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Second guessing with the benefit of hindsight is not something a government faced with an unprecedented global pandemic can do.

Giving time to impose a lockdown would have been counterproductive as interstate movement might have accelerated, accelerating the spread of COVID. If anything giving a say 1 month notice would have meant we didn't even need a lockdown following it.
Thanks for justifying the deaths of a few hundreds who walked home from other states to their homes in UP and Bihar. It is just a coincidence that every other country with similar population density managed it better. Of course, maths and numbers and logic don't matter in the new India. Scientists, economists, folks with some training in epidemiology etc also don't matter as long as we have our daily dose of propaganda to calm our nerves . Good day to you. India is booming and on the path to become the next vishwaguru. People talking about the destroyed jobs etc are living in a fool's paradise.

Please delete if inappropriate.

Last edited by Cessna182 : 2nd December 2020 at 14:05.
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Old 2nd December 2020, 14:29   #45
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2. GST implementation: In my previous role I was part of a company (Big4) which had solutions for GST. My experience has been pathetic. .....There is very little thought on the rules esp. the e-invoicing.
Agree on the GST implementation in 2017. Disagree on eInvoicing implementation in Oct 2020. I work with an IT MNC in the GST solutions area for our customers. In fact, during e-Invoice we had reached out multiple times to GSTN/NIC giving suggestions on the implementation and these were accommodated. Yes, there were last minute changes till September end but the one-month concession helped.
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