How is India's economic health.. in terms of recently released data
I have expressed concerns about the impact of COVID on the Indian economy. Globally inflation is on the rise, and crude prices are beyond India's comfort. With the economy partially locked down leading to slowing demand, how are we faring? Let's look at some of the recently released data.
The first is of course inflation. India's WPI or Wholesale Price Index rose 10.49% in April. CPI for the same period was 4.29%. CPI will follow WPI most likely. Last year the same number was negative (~ -1.5%). What a change one year has brought. The chart below will give details of what sectors are witnessing the sharpest rise.
Fuel has seen the sharpest rise, and that has been evident from the hue and cry about rising prices of petrol, diesel and gas.
The chart above clearly shows that everything is up double digits from last year. I mean even basic food items are up 10% or more. Vegetable prices are personally scary for me because I run a farming business. These numbers are not indicating hyperinflation but this is quite a serious matter.
Imagine the impact of such numbers on India's poor. Then with limited funds left, how does this bode for rural demand? Not well, of course.
The second data point is unemployment. India does not have any reliable measurement of employment levels. Our leaders think those becoming street vendors should also be considered employed. Those who do not understand the meaning of employment are in charge of making policies. A recent report by SBI research suggests that India lost 1.69 million jobs last financial year, FY21. In FY20, India lost 2.9 million jobs according to them. We are a young country, something we have been proud of in the past. India's young workforce is its biggest economic tailwind to prosperity. However, do we even have dignified jobs for them?
The third figure to come out this week is the government's financial management. With lockdowns in place, revenue has been hit bad, not only for companies and individuals but also central and state governments. So far this year, the government has increased borrowing by 55% compared to last year. link
It is not all bad, because borrowing tends to happen mostly during the second half of the year. However, lockdowns have to be lifted to bring the economy back on track. NYT vaccination tracker shows that India is way too slow in vaccinating its population (3% of India's population is fully vaccinated and 12% have received the first dose). India will see the dreaded third wave. Maybe we see more variants. This year too will go in locking and unlocking the country and with no vaccine strategy announced yet, I wonder if next year too will be like this. I wish there was better data in terms of how well major cities in India are doing in terms of vaccination. If someone has a link, please let me know.
Meanwhile, stocks are at all-time highs. NIFTY hit an all-time high on Friday and crossed $3 trillion in market cap. Even our central bank thinks that our stock market is a bubble.
Rising inflation, increasing unemployment, bankrupt government and rising equities - that is how sound our economy is.
In case you want to invest in something useful, dubaicoin went up 1000%. Please DO NOT. It is a scam promoting itself as Dubai's official CBDC.
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