Connect with us

Economy & Market

Shifting gears from pandemic response to broader economy

Published

on

Shares

The good news is that India has stopped the spread of the new variant of the Covid-19, which is running havoc in the UK and would continue to maintain strictest of guidelines to be followed in days to come. This is one way India will remain ahead and that is the best news at the start of the new year 2021.

The pandemic response by and large has been exceeding expectations, almost every State government has done well and the Centre doing its part, although it is still early to celebrate anything; the case rate and death rate both are better than what it was a month back, therefore the actions on the vaccine is what everyone is looking at and this would ordain somewhat of a Centre-State coordination we have never seen in the past. First of all the procurement of the vaccine is the starting point and India is largely going to depend on domestic sources, which is a great story. All three sources have to now produce and the capacities must be combined to reach a sizeable number so that in 2021 we can reach the target set by the experts for India.

The vaccine distribution, if it mirrors the same universal immunisation programmes, we will have to improve on many areas, cold storage systems, maintenance, expertise of people and logistics of temperature sensitive movements will be key things to watch out, much of which needs collaboration among a range of constituents, some state, some central and some falling in the private domain, digital solutions actually help to make this work seamlessly.

The gears now need to be shifted to the broader economy and consumption remains the most vulnerable area; increasing consumption has not been an easy task although fiscal actions have been incessantly moving in that direction, the fiscal gap itself is now Rs 10.75 lakh crore for the period April-November, which is not a great denouement if one looks at the year on year consumption de-growth of 5.6 per cent so far. The fiscal multipliers therefore have shown a much moderated stance so far. The major reason for this can be found in the application of funds, of the Rs 4,280 crore of borrowings per day by the Centre and States, Rs 1,940 crore per day go in interest payments to the banks; these interest payments could have been much more had the weighted average cost of borrowing been at 7.5 per cent instead of the currently subdued 5.87 per cent.

The falling rates have never helped to increase consumption over a protracted period of time. The money multipliers have not worked either and the transmission channels have never been deep enough to reach the most vulnerable areas. The resultant hypothesis remains strange but true that the fall in rates exactly and equally opposed the desire to take in more debt for consumption and the punishment on savers made them save more to compensate, thus making consumption growth even more difficult; the job market returned with some cheers which is not broad based and this is where the attention needs to be diverted to.

The next budget must be seriously looking at a broad based consumption growth. But for now there are areas of immediate actions, like the emergency funding of the health and vaccine disbursements, it is still not clear how this funding will be done. The vaccine costs (Rs 57,200 crore) is a fraction of the total cost for the 130 crore population. The additional logistics, storage and distribution costs will be closer to this number. The Centre or State, whichever way we look at it, it will strain borrowing outlay for 2021.

ABOUT THE AUTHOR: Procyon Mukherjee is an ex-Chief Procurement Officer at LafargeHolcim India.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Concrete

Shree Cement reports 2025 financial year results

Published

on

By

Shares

Shree Cement posted revenue of US$2.38 billion for FY2025, marking a 5.5 per cent decline year-on-year. Operating costs rose 2.9 per cent to US$2.17 billion, resulting in an EBITDA of US$528 million—down 12 per cent from the previous year. Net profit fell 50 per cent to US$141 million. The company reported cement sales of 9.84Mt in Q4 FY2025, a 3.3 per cent increase from 9.53Mt in Q4 FY2024, with premium products making up 16 per cent of total sales.

Image source:https://newsmantra.in/

Continue Reading

Concrete

Rekha Onteddu to become director at Sagar Cements

Published

on

By

Shares

Sagar Cements has announced the appointment of Rekha Onteddu as a non-executive independent director, effective 30 June 2025. According to People in Business News, Rekha Onteddu is currently serving in a similar capacity at Andhra Cements, the parent company of Sagar Cements.

Image source:https://sagarcements.in/

Continue Reading

Concrete

India’s cement consumption set to rise

Published

on

By

Shares

According to a Moody’s report, India’s cement consumption is projected to rise by 50 per cent over the next five years, increasing from 445 million metric tons per annum (MMTPA) in FY24 to 670 MMTPA by 2030. This growth is expected to be driven by government infrastructure spending and rising housing demand, with an anticipated annual growth rate of 6-7 per cent. To meet this demand, major cement companies are likely to continue acquiring smaller, less profitable firms.

Image source:https://www.telegraphindia.com/

Continue Reading

Trending News