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Base Effect: India’s FY22 GDP expected to grow 10.4%, says Ind-Ra




India’s gross domestic product (GDP) growth will bounce back to 10.4 per cent year-on-year (YoY) in FY22, primarily driven by the base effect, said India Ratings and Research (Ind-Ra).

Accordingly, the ratings agency’s estimates showed that after recording negative growth during 9MFY21, GDP growth will finally turn positive at 0.3 per cent YoY in 4QFY21.

“Although the recovery in FY22 on a YoY basis will be V-shaped, the size of the GDP will barely surpass the level attained in FY20 and will be 10.6 per cent lower than the trend value.”

“The impact of Covid-19 pandemic and lockdown on the economy, although subsiding, will continue to delay the normalisation of economic activities in the contact-intensive sectors till the mass vaccination or herd immunity becomes a reality.”

In the FY22 Union Budget, the Centre set aside its fiscal conservatism and decided to provide the much-needed support to the demand side of the economy, which had been missing in the ‘Atmanirbhar’ package announced earlier.

“As a result, Ind-Ra expects the government’s final consumption expenditure to grow 10.1 per cent YoY in FY22. Although the private final consumption expenditure was witnessing a slowdown even before the imposition of Covid-19 lockdown, it is expected to grow by 11.2 per cent in FY22, led by essentials, followed by non-discretionary consumer goods, infrastructure, industrial goods and cyclical sectors.”

“Yet, Ind-Ra’s estimates show that the private final consumption expenditure in FY22 will be 14.2 per cent less than the trend level.”

According to Ind-Ra estimates, investments as measured by gross fixed capital formation will grow at 9.4 per cent YoY in FY22, ably supported by government capex which is budgeted to grow at 26.2 per cent YoY in FY22.

“Despite this renewed focus by government on capex, the size of gross fixed capital formation in FY22 will still be 26.3 per cent lower than the trend level.”

Besides, Ind-Ra projected the agricultural gross value added to grow 3 per cent YoY in FY22.

“This is based on the expectation of normal and spatially well-distributed rainfall in 2021. Although the second advanced estimate of production of food grains for FY21 is still not out, Ind-Ra expects the Rabi harvest of 2021 to be good.”

“The area under Rabi sowing at 651.9 lakh hectares by January 15, 2021 is 1.6 per cent YoY higher. The industrial output as captured by Index of Industrial Production continues to be volatile, and select segments of services sector such as hotels, leisure/travel/tourism, sports, entertainment are still at some distance away from seeing any visible traction.”

“Ind-Ra believes them to still witness growth in FY22 mainly due to the base effect. Ind-Ra expects industrial and services sector to grow at 11.5 per cent and 11.4 per cent YoY, respectively, in FY22.”


TASMAC sold Rs 164 cr worth of liquor in just one day




The Tamil Nadu State Marketing Corporation (TASMAC) has sold liquor worth Rs 164 crore in the state in just one day.

All liquor outlets and bars opened in the state on Monday.

According to reports from the TASMAC, Madurai zone accounted for the maximum sales of Rs 49.54 crore followed by Chennai region with sales worth Rs 42.96 crore, Salem Rs 38.72 crore, and Trichy region accounting for the sale of Rs 33.65 crore worth of liquor.

However there was no sale in the Coimbatore region as the shops are closed in the area following the higher number of Covid-19 cases. Shops in Nilgiris, Erode, Salem, Tiruppur, Karur, Namakkal, Thanjavur, Tiruvavur, Nagapattinam, and Myladuthurai remain closed as the number of cases are high.

Of the 5,338 shops in Tamil Nadu, 2,900 reopened on Monday.

The founder president of Pattali Makkal Katchi(PMK), Dr S. Ramadoss has called upon the state government to rework its policy on liquor and to enforce a total prohibition in the state for the health of the people of the state. He has also said that the claims of Chief Minister Stalin that TASMAC shops were allowed to function following the brewing of illicit liquor in the state as well as to prevent smuggling of liquor from neighbouring states.

Ramadoss has in a statement said, “Stalin should work his way to enforce total prohibition in the state of Tamil Nadu for the sake of the health of the people of the state, both mental and physical.”

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Sensex, Nifty climb new record highs




The key Indian equity indices continued their record run on Tuesday.

The BSE Sensex touched a fresh high of 52,836.31 and the Nifty50 on the National Stock Exchange hit an all-time high of 15,889.60 points.

Healthy buying was witnessed in banking and realty stocks.

Around 9.40 a.m., Sensex was trading at 52,813.83, higher by 262.3 points or 0.50 per cent from its previous close of 52,551.53 points.

It opened at 52,751.83 and has touched an intra-day low of 52,671.29 points.

The Nifty50 on the National Stock Exchange was at 15,875.05, higher by 63.20 points or 0.4 per cent from its previous close.

The top gainers on the Sensex were Asian Paints, IndusInd Bank and Tata Steel, while the losers were Dr Reddy’s Laboratories, SBI, Titan Company and L&T.

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Fuel price hike paused: Petrol, diesel prices unchanged




The Oil marketing companies paused the hike in fuel prices on Tuesday providing respite to people already burdened with all time high petrol and diesel retail rates.

Accordingly, the price of petrol continues to remain at Rs 96.41 per litre and diesel at Rs 87.28 per litre in Delhi.

OMCs had raised the price of the two petroleum products on Monday to take retail levels at new highs across the country.

In the city of Mumbai, where petrol prices crossed Rs 100 mark for the first time ever on May 29, the fuel price reached new high of Rs 102.58 per litre on Monday. Diesel price also increased to reach Rs 94.70 a litre, the highest among metros. The price levels remain unchanged on Tuesday.

Across the country as well petrol and diesel price rise was paused on Tuesday but its retail prices varied depending on the level of local taxes in different states.

Petrol prices in three other metros apart from Mumbai has also already reached closer to Rs 100 per litre mark and OMC officials said that if international oil prices continue to firm up, this mark could also be breached in other places by month end.

With Tuesday’s price pause, fuel prices have now increased on 24 days and remained unchanged on 22 days since May 1. The 22 increases hasve taken the petrol prices up by Rs 6.01 per litre in Delhi. Similarly, diesel has increased by Rs 6.55 per litre in the national capital.

With global crude prices also rising on a pick up demand and depleting inventories of world’s largest fuel guzzler – the US, retail prices of fuel in India are expected to firm up further in coming days. The benchmark Brent crude is currently close to $74 on ICE or Intercontinental Exchange.

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