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Old 30th November 2020, 10:31   #1
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Default India is now officially in recession

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The Indian economy contracted by 7.5% in the July-September quarter of this fiscal, official data showed on Friday.

That was a partial recovery from the unprecedented 23.9% fall in the previous quarter, the first contraction in more than 40 years and the worst GDP data since India started reporting quarterly numbers in 1996.

With two consecutive quarters of contraction, the economy is technically in recession now. The latest results also make India the second worst performer (after the UK) among major economies in this quarter.
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In another set of data released on Friday, growth of eight core industries slipped into the red again in October declining 2.5% (up from -0.1% in September) raising concerns over the sustainability of recovery.

While the contraction has narrowed due to the impact of the festival demand and the lifting of the strict lockdown in June, experts warn that a second wave of infections, which can't be ruled out, would lead to partial re-establishment of lockdowns, weaken the tentative signs of demand and dampen confidence level of global investors.

Indian economy was already in trouble when the pandemic hit. The real GDP growth had moderated from 7% in 2017-18 to 6.1% in 2018-19 and to 4.2% in 2019-20, the lowest in a decade. For the current year global and domestic agencies have indicated a sharp contraction ranging from 3.2% to 9.5%, the first contraction in four decades.
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Old 30th November 2020, 11:19   #2
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Default Re: India is now officially in recession

I feel this is just headlines news and does not hold much meaning. There is hardly any country which hasn't witnessed negative growth due to Covid. The bigger problem is the increasing disparity between rich and poor. I am not an expert in economics but maybe it is because majority of the money being printed in the world is going to the richie riches of the world.

Yesterday I was at the Ambience mall Gurgaon, and the number of people out for Black Friday sale was staggering.
The stock market is an all time high in the middle of the global pandemic. All the money which can contribute to fueling and sustaining businesses is flowing into capital markets, maybe because of a lack of other growth avenues.
Overall a pretty bad scenario!

Last edited by warrioraks : 30th November 2020 at 11:24.
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Old 30th November 2020, 11:22   #3
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Default Re: India is now officially in recession

The current quarter is almost certain to see de-growth. JFM is uncertain; it will at best be between -2% and +1%. Politically the Govt has Covid19 to blame but without a doubt the sudden lockdown leaving no time for planning has given a shock to the system. It is likely that 2021-22 will show growth after the hole of 2020-21 which will then be spun by the spin doctors as the miracle growth - exactly the same thing happened in 1980-81 over 1979-80.

If Biden manages to get the US economy going then some of the surplus cash boosting our bourses will also flow out. In earlier patches of weak economic performance we had the informal economy to keep us going. That unfortunately is on a weak wicket since 2017 due to the hit of DeMo + Poor implementation of GST + Lockdown.

The biggest factor in economic investment is hope in the market and trust in the Govt. Each of us can decide for ourselves where potential investors - Indian & foreign stand on both counts. The last time our hope and trust was in short supply was 1989-1991.
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Old 30th November 2020, 11:46   #4
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Default Re: India is now officially in recession

And its officially, morning.

Where's the news? We went from a 8+ figure turnover to barely 20% of it this year, at this rate I'll be filing for closure as the fin-year ends, which is OK, better to down a sinking ship than plug the leaks and look for other viable opportunities in the same industry one year later while I help build some E-comm enterprises in the meantime and earn something monthly (I HATE tech though).

The OLA/UBER and autorickshaw drivers are really suffering, many maids have lost jobs and hotels are barely sustaining, its really bad the lower one gets and nothing has been done about it (keeping it simple and apolitical).

According to my CA, industries have been hit hard, small-scale manufacturing units are going under by the day. This article is too late, if anything.
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Old 30th November 2020, 12:47   #5
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Default Re: India is now officially in recession

Even without Covid, we would have been mostly in decline as the trend shows over previous quarters. It just gave an excuse of lack of ideas and implementation. Even in covid, there is nothing being done. Somehow as I wanted earlier the virus is managing itself better !

We might decline more than the latest quarter since it could have been pent up demand and running into the biggest festival season.

Unless we establish a moratorium on contentious issues and concentrate on economy, there is no light at the end of the tunnel

Last edited by srishiva : 30th November 2020 at 12:49.
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Old 30th November 2020, 13:12   #6
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Default Re: India is now officially in recession

Let's pray for a more competent cabinet. I was talking to a scientist and she said that 200 cr is now the limit for international procurement. Good luck getting the spares for those microscopes.

India is now ruled by a technically illiterate IAS most of whom graduated with history, pali, sanskrit like subjects. It is a shame that such an important economy is being led by folks without the competence to lead a 5 lakh private sector deal, but get a free hand for a 500 cr public sector one. Then we say psus are bad. Never blame the IAS leaders, always say PSU people don't work.

I was shocked by the recent vaccine cold storage contract being given to a Luxemborg company which is PE owned, has just 200 employees and 0 presence in Asia. Guess what, they got a contract to build plants in where else but Gujarat. Companies like Linde, Voltas which are experts at cold storage were not even contacted it seems. Oh well, new India.

Instead of following South Korea or Vietnam we are happy being compared to Pakistan. The establishment knows this hence they stop importing basic electronics, R and D components while dreaming of a 5 trillion economy without allowing anything more than screwdriver factories.

Sadly, majority in the north Indian states are happy. God bless India. And god help it.

Last edited by Cessna182 : 30th November 2020 at 13:20.
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Old 30th November 2020, 13:31   #7
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Default Re: India is now officially in recession

I am not really worried by -7.5% de growth when the 7.1% growth shown in 2019 itself was in question. GOI and world bank/IMF differed greatly in Growth percentages and it was plainly evident that GOI ( read Niti Ayog) was fiddling around with numbers.

But then what i am saying ?. its month end and its happy Salary time (at least for the first 15 days).

Last edited by srini1785 : 30th November 2020 at 13:33.
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Old 30th November 2020, 19:38   #8
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Default Re: India is now officially in recession

I wonder if there is a connection between this:

Quote:
Originally Posted by dark.knight View Post
The OLA/UBER and autorickshaw drivers are really suffering, many maids have lost jobs and hotels are barely sustaining, its really bad the lower one gets and nothing has been done about it (keeping it simple and apolitical). According to my CA, industries have been hit hard, small-scale manufacturing units are going under by the day.
and this:

https://www.team-bhp.com/forum/stree...int-india.html (Cars stolen at gunpoint in India)

It would be interesting to see nation-wide 2020 crime data, especially armed robbery, violent & petty crimes.
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Old 30th November 2020, 20:46   #9
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Default Re: India is now officially in recession

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Originally Posted by SmartCat View Post

It would be interesting to see nation-wide 2020 crime data, especially armed robbery, violent & petty crimes.
Maybe also relate to the increased number of delivery frauds from online shopping these days.

No offence meant to the profession or professionals but hearing more of such news (2 in close relatives).
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Old 30th November 2020, 21:02   #10
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Default Re: India is now officially in recession

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Originally Posted by SmartCat View Post

It would be interesting to see nation-wide 2020 crime data, especially armed robbery, violent & petty crimes.
Quote:
Originally Posted by KD007 View Post

Maybe also relate to the increased number of delivery frauds from online shopping these days.
This is definitely a big, big worry! Whenever the economy is growing steadily, it creates all kinds of jobs for people in all economic strata, especially blue collar workers. It keeps them occupied, gives them a purpose in life and hope for the future.

When their jobs vanish, it may tempt a few of them to earn money through illegal/unethical means. The suicide rate may also go up noticeably during such bleak economic times.

We have seen many examples for this during the past few decades in some Latin American countries that were growing smartly and then went through some economic shock.
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Old 1st December 2020, 05:48   #11
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Default Re: India is now officially in recession

The key questions are,

Is this a speed-bump or a detour for the country's progress?
Does the establishment acknowledge reality and have a plan-of-action to accelerate the progress to make up for the loss?
Where will India stand globally in 2030?
Is it time to reset expectations?

The answers to these questions depend upon the individual's appetite to accept reality.
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Old 1st December 2020, 06:41   #12
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Default Re: India is now officially in recession

Tough times. And the solutions are not easy. I did not expect any great news on economy front.

But with every crisis there is an opportunity. Goverment has a chance to spend its way out of this. Big ticket items which have been neglected since last 25 years is basic healthcare and basic education.

Going forward the maufacturing is going to be leaner and more and more efficient. It is not going to generate employment in great numbers. More number of companies will not mean more employment.

One way out I see is making investments on Agriculture side. There is a huge number of people which can be upskilled in that area and efficiency introduced.

Nirmala Sitaraman unfortunately has become a lightning rod for criticism. The problem has been there for far longer irrespective of party in power.

It is a misfortune of Democracy that the horizon of schemes is limited to 5 years of power which a goverment has. Long term thinking is simply not there.
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Old 1st December 2020, 09:15   #13
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Default Re: India is now officially in recession

I don't think the post-Covid world is ever going to be the same as pre-Covid. Not even after 3 years. That's going to change a lot of industries. 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.

Some sectors won't get back to normal levels for 3 years at the minimum. I would see home renovation as one of them, restaurants + theatres as another. My family isn't visiting any restaurant for 1 year minimum. Because we don't go out, we also shop less (impulse shopping, clothes), we pay less for parking, fuel etc.

When the consumer doesn't spend like this, it affects the foundations of the economy. Brace yourself guys, and tighten up your belts. I hope BHPians are being conservative with their finances.
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Old 1st December 2020, 09:39   #14
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Default Re: India is now officially in recession

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Originally Posted by GTO View Post

When the consumer doesn't spend like this, it affects the foundations of the economy. Brace yourself guys, and tighten up your belts. I hope BHPians are being conservative with their finances.
I have a different view on this (barring the individual decisions/views on personal safety matters) - assuming the vaccine is made available on a majority population basis, there will be a need for each one of us to consume a bit more than we have been doing the last ~7 months.

The economy needs a shot in the arm - just saying/hoping government spending will solve this won't work. Ours is an economy dependent on consumer spending. Atleast those with stable jobs (which should be a large % on this forum I assume) should be a bit more liberal.
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Old 1st December 2020, 10:10   #15
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Default Re: India is now officially in recession

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I don't think the post-Covid world is ever going to be the same as pre-Covid. Not even after 3 years.
I have a different take on this.

Even now when there is no vaccine in sight, look at our roads. They are full of people. The fear factor is already gone.

Yes, there are people with better awareness and understanding of the current situation and may not venture. However, that still does not stop them from buying things online.

I see this situation as a gateway for big corporates to cut down on various costs, including but not limited to head count. They will also play the pandemic card and absolve themselves of paying any increment, let alone bonus / one time payout.

As for the overall situation, I feel there are still quite a few discussion makers who are well qualified and know the internals of democracy way better than a common man can understand. They are also nation loyalists and if not take the decision will atleast be able to influence it in the betterment of the country. If you ask me who these people are? These are the people who are from the advisory board of the Prime minister, president, IAS's and other such high ranked individuals etc.

I would like to stay positive during such distressing times and find ways to over come the situation happily while learning something new out of it!
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