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<ul><li>Over the years, India has changed from a cash-led economy to a smartphone-led payment economy, says SBI Ecowrap. </li><li>Lower currency in circulation results in less leakage of deposits and it will impact monetary transmission positively, it adds. </li><li>In FY16, the share of currency in circulation (CIC) in payment systems was at 88%. This has come down to 20% in FY22. </li></ul> For the first time since 2002 – that’s 20 years – currency in circulation has declined during the Diwali week, says a report by SBI Ecowrap. This is, however, barring a marginal decline seen in the same period in 2009 because of economic slowdown. “Indian economy is undergoing a structural transformation. The innovations in technology have changed the Indian payment system. Over the years, the Indian cash-led economy now has changed to (a) smartphone-led payment economy,” the report said, calling it a remarkable development. This coincides with a record high in terms of value of UPI transactions in October 2022 – 7.3 billion transactions to the tune of ₹12.11 trillion – growing by 73% year-on-year <a href="https://www.business-standard.com/article/finance/upi-processes-over-7-bn-transactions-in-oct-record-high-since-inception-122110100569_1.html"> in volume terms</a>. Digital transactions turn faster, cheaper and easier Over the years, digital payments have become cheaper and easier and even brought those without bank accounts into the system. Moreover, the interoperable payment systems like UPI, wallets and prepaid payment instruments or PPIs have made the process simpler. As per the report, small retail payments done through UPI/e-wallets account for around 11-12% of the payment industry. Moreover, the share of cash in payment systems has reduced drastically in the last six years. In FY16, the share of currency in circulation (CIC) or cash transactions in payment systems was at 88% - this was prior to the launch of UPI in 2016. This share has come down to 20% in FY22. Moreso, it’s estimated to go down to 11.5% by FY27. Subsequently, the share of digital transactions that have been defined as IMPS, UPI and PPI by the report – have increased substantially. These transactions were at 11.26% in FY16 - and went up to 80.4% in FY22. It is expected to touch 88% in FY27. Clearly, digital transactions are taking the place that cash once held. “The success of the digital journey is primarily due to the relentless push by the Government to formalise and digitalise the economy. Over the years, the system has expanded rapidly with new innovations like QR code, NFC etc and has also seen the swift entry of big tech firms in this industry,” the report said. Less cash to print India has always been an economy with high cash in circulation. It comes next only to Japan and Hong Kong in terms of currency <a href="https://timesofindia.indiatimes.com/business/india-business/high-cash-in-circulation-aids-current-rbi-policy/articleshow/92641909.cms">in circulation (CIC) as a percentage </a>of GDP, which was at 14.2% in FY22, as per RBI data. As this percentage reduces and the economy is formalised, it can aid the banking system. “In simple terms, it implies that the RBI has to print less of currency given that UPI transactions impact currency in circulation with a lag. This is a win-win for both RBI and government, as it results in saving of seigniorage costs and also a less cash economy,” the report said. Currently, liquidity estimation of the country is impacted by a high amount of cash in the system, which is not easy to account for. Without a currency leakage, this estimation can now see a fundamental reorientation, the report says. “A lower currency in circulation also is akin to a CRR cut for the banking system, as it results in less leakage of deposits and it will impact monetary transmission positively,” the report said. CRR or cash reserve ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. Apart from encouraging digital payments via UPI, the RBI is also currently working on piloting a Central Bank Digital Currency (CBDC) or the digital rupee. The RBI governor Shaktikanta Das said that it can transform the way the business is done. “It was indeed a landmark moment in the history of money, in the history of currency in our country. Going forward, it will be a landmark achievement so far as the functioning of the entire economy is concerned,” Das said on November 2.

Diwali week cash circulation declines for the first time in 20 years: SBI Ecowrap

Many countries across the globe has been surreptitiously searching for non traditional payment and settlement mechanisms that points to 'Dollar Distancing' finally happening. Meanwhile, an interesting development is taking place in the global currency market. There has been a significant jump in the demand for Yuan arising from short-circuiting the sanctions in place by corporates in select jurisdictions who have been utilizing multitude of non-dollar currencies to procure crude and other commodities viz. coal through striking deals in Renminbi/HKD/AED pairs at discounted rates, SBI <keyword id="3504824" type="General" weightage="100" keywordseo="ecowrap" source="Orion">Ecowrap</keyword> report said. On a related note, on August 5, Turkish President Recep Tayyip Erdogan announced that one of the key takeaways from his meeting with Russian President <keyword id="43440" type="General" weightage="50" keywordseo="vladimir-putin" source="Orion">Vladimir Putin</keyword> in Sochi was bilateral agreement to use Rouble as a monetary unit in trade. The high level talks touched upon gas exports to Turkey with both Central Banks agreeing to partially pay for them in Roubles, and that <keyword id="6358826" type="General" weightage="50" keywordseo="russia" source="Orion">Russia</keyword> and Turkey were moving forward to a gradual transition to paying in national currencies only. Russian-Turkey bilateral trade is currently running at about $23.5 billion with both sides committing to increasing this to $100 billion by 2030. With China vowing to anchor the bonhomie with Russia, there seems a certainty that 'Dollar Distancing' could be a reality in coming days. Similarly, according to some media reports, <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword>n companies are also using Asian currencies more often to pay for Russian coal imports. India has been aggressively purchasing coal and oil from Russia since the beginning of Russia-Ukraine war, which allowed then to procure this items at lower cost. The local currency which was under pressure last month has seen appreciating in last few days after FII inflows turned positive since July-end pouring in $3.3 billion into the country. Notably, FII inflows remained in the negative territory for 9 months since October 2021 and only reversed in July. Oil has also moved down below $100/bbl and moving around $96/bbl after the increase in US stockpiles indicated low demand. On the external data front, the recent trade deficit data shows an increase to record high in July 2022, annualizing the current deficit numbers gives annual deficit of 8.5 per cent of our GDP projections for FY23 which is much lower than the peak deficit of 10.7 per cent of GDP achieved in FY13. Thus, the current situation is much better than that in 2012-13. Moreover, the market has already priced in higher CAD i.e. higher than 3 per cent of GDP for FY23. On the inflation front, going forward, SBI Ecowrap report expect inflation trajectory for India to be benign. CPI numbers for March 23 could be even lower than 5 per cent, if July CPI numbers are closer to 6.5 per cent-6.6 per cent, a likely possibility. "We believe inflation in FY23 is likely to come around 6.4-6.5 per cent (below <keyword id="30067" type="General" weightage="50" keywordseo="rbi" source="Orion">RBI</keyword> projection of 6.7 per cent) with inflation moving below 6 per cent only in November 22. For FY24, it should come at 4.8 per cent," the report said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/apps/news/snapchat-comes-to-india-with-exclusive-features-heres-how-much-it-costs-and-how-to-sign-up/articleshow/93513880.cms">Snapchat+ comes to India with exclusive features — here's how much it costs and how to sign up</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/xiaomis-cyberone-humanoid-robot-can-detect-human-emotions-and-costs-as-much-as-a-ford-mustang/articleshow/93513924.cms">Xiaomi’s CyberOne humanoid robot can detect human emotions and costs as much as a Ford Mustang</a>

India must pitch for Rupee as dollar distancing might be finally happening: SBI Ecowrap

New Delhi [<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>], February 5 (ANI): The Monetary Policy Committee of the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) in its February review meeting is expected to again put a pause on the repo rate, according to <keyword id="20112035" type="General" weightage="20" keywordseo="sbi-research" source="keywords">SBI Research</keyword>. In its December meeting, the RBI unanimously decided to keep the policy repo rate unchanged at 6.5 per cent, thus maintaining the status quo for the fifth straight time. The repo rate is the rate of interest at which RBI lends to other banks. "We expect the RBI to continue pause stance in upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts," said the research report Ecowrap as a prelude before the three-day RBI meeting that starts Tuesday. The reports said that the first repo rate rate cut could be on the table from June 2024. "Aug'24 looks the best bet now...," it said. The RBI typically conducts six bimonthly meetings in a financial year, where it deliberates interest rates, money supply, inflation outlook, and various macroeconomic indicators. A relative decline in inflation, barring the latest spike, and its potential for further decline may have prompted the central bank to put the brake on the key interest rate. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. Barring the latest pauses, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. The retail inflation in India though is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario. In December, it was 5.69 per cent. The <keyword id="19901377" type="General" weightage="20" keywordseo="us-federal-reserve" source="keywords">US Federal Reserve</keyword> in its January meeting voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged for the fourth straight time on a trot. The US monetary policy committee in its statement said that the recent indicators suggested that economic activity has been expanding at a solid pace. <keyword id="19951097" type="General" weightage="20" keywordseo="us-fed" source="keywords">US Fed</keyword> had raised interest rates from near zero to now 5.25-5.50 per cent in the fight against inflation, post-COVID. US inflation in December was 3.4 per cent. US Federal Reserve's commitment has been to bring down consumer inflation to its target of 2 per cent. (ANI)

Expect RBI to again pause repo rate in February policy meeting: SBI Research

New Delhi, Aug 17 (IANS) India's FY21 GDP contraction has already crossed the (-) 6.8 per cent mark for 2020-21, SBI Ecowrap report said on Monday. An earlier Ecowrap report had estimated GDP for FY21 was 2.6 per cent when India had first imposed lockdown. Since then, the GDP forecast has been progressively reduced to a negative 6. 8 per cent in FY21. "Now the situation has changed drastically and India has climbed to 3rd position in overall Covid-19 cases in the world with more than 26 lakh total cases (12 per cent of global tally)," the report said. "During Unlock-1 since June 1 the spread of pandemic has increased significantly and almost 93 per cent of total cases have come post June 1. Owing to this, various states have again imposed partial lockdown (like West Bengal, Bihar, Maharashtra, Rajasthan, etc.) in staggered manner." Accordingly, using the bottom-up approach the report estimated total GSDP loss due to Covid-19 is at 16.8 per cent of GSDP. "State-wise analysis indicates that top 10 states accounted for 73.8 per cent of total GDP loss with Maharashtra contributing 14.2 per cent of total loss followed by Tamil Nadu (9.2 per cent) and Uttar Pradesh (8.2 per cent)," the report said. "Subsequently, the per capita loss for all India is around Rs 27,000 with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana, Goa, etc. exhibiting loss of more than Rs 40,000 per person in FY21." --IANS rv/sn/rs/

FY21 GDP contraction already crosses 6.8%: SBI Ecowrap

Country's largest commercial lender <keyword id="6354731" type="General" weightage="50" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> (<keyword id="13222" type="General" weightage="100" keywordseo="sbi" source="Orion">SBI</keyword>) said that domestic GDP growth is now on firm footing with urban demand showing good traction, while the lagging rural demand is a cause of concern. The <keyword id="371573" type="General" weightage="80" keywordseo="apex-bank" source="Orion">apex bank</keyword> has also revised GDP growth marginally upwards from 6.4 per cent to 6.5 per cent for the current financial year. In its 'Ecowrap' research report, SBI said that the GDP growth forecast of the apex bank <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> for the current fiscal has undergone some change since April 2023. While RBI had projected GDP growth at 6.4 per cent in April, this has been slightly revised upwards to 6.5 per cent for the current fiscal, as announced in the latest Monetary Policy Committee (MPC) meeting which concluded on June eight. Inflation for the current financial year has been pegged by 5.1 per cent by the apex bank, perceived to be above the tolerance band of RBI at four per cent. The report said that the series of rate hikes in the recent past had resulted in a falling unemployment rate, signifying that the apex bank had been able to trim the excess labour demand in the market without contraction in employment. It further said that the declining current inflation as well as falling inflationary expectations for the next financial year gives a clear signal that the apex bank will be able to control the rate of the price rise by a series of previous rate hikes having its lagged impact, within the tolerance band. The inflation trajectory is now conditional on the spatial variation of the monsoon and possible development to EL Nino effect. The headline inflation trajectory, a measure of the total inflation of an economy, is likely to be shaped by food price dynamics, the report said. According to the report, the "outlook on the global economy is clouded in sideways movement in most of the indicators even when a slowdown in advanced economies, weak external demand, tight financial conditions and elevated debt levels pose risks to growth prospects. On Thursday, the MPC under the chairmanship of RBI governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> pressed the pause button on repo rates for the second time after April which is now at 6.5 per cent. The report said that supply-side factors contributed more than 50 per cent of the inflation in January 2023, plunged to 46 per cent due to ease in supply-side restrictions. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/bmw-m2-launched-in-india-here-are-some-of-the-top-sports-cars-available-in-the-country/slidelist/100874746.cms">BMW M2 comes to India: Here’s how it compares with top sports cars available here</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/list-of-some-indias-most-brutal-murders/slidelist/100872813.cms">India’s most gruesome murders and their deadly modus operandi</a>

Domestic GDP growth on firm footing, growth slightly revised upwards: SBI study

New Delhi, India's <keyword id="6365485" type="DEFINITION" weightage="20" keywordseo="Fiscal-Deficit">fiscal deficit</keyword> in the current financial year is likely to reach 7.4% of the <keyword id="35050" type="CITY" weightage="20" keywordseo="gdp">GDP</keyword> on the back of enhanced government <keyword id="53105" type="PERSON" weightage="20" keywordseo="Expenditure">expenditure</keyword> amid the pandemic, said the <keyword id="13222" type="DOMAIN" weightage="20" keywordseo="SBI">SBI</keyword> Ecowrap report. The report noted that as per the first advanced estimate of the GDP, real GDP will contract by 7.7% in <keyword id="7822862" type="LOCATION" weightage="20" keywordseo="FY21">FY21</keyword>, and nominal GDP growth is expected at (-) 4.2%. Accordingly, the nominal GDP for <keyword id="5027223" type="COMPANY" weightage="20" keywordseo="FY22">FY22</keyword> would grow by 15% to ₹224.04 lakh crore. "Current trends in the GDP for FY21 will translate into ₹3.2 lakh crore net revenue shortfall for the <keyword id="6356303" type="COMPANY" weightage="20" keywordseo="Centre">Centre</keyword> this fiscal and at the same time, expenditure is higher by around ₹3.3 lakh crore, thus taking the fiscal deficit to ₹14.46 lakh crore and with new revised nominal GDP estimate for FY21, it will be around 7.4% of GDP," it said. For FY22, assuming the government keeps the expenditure growth at 6% over FY21 estimates and overall receipts, excluding borrowing and other liabilities, expected at 25%, it would result in fiscal deficit of around ₹11.67 lakh crore or 5.2% of GDP. The net market borrowing of the Centre will be around ₹8.8 lakh crore and with repayments of ₹2.7 lakh crore, gross borrowings are expected at ₹11.5 lakh crore, according to the report. "With states' gross borrowing around ₹9.4 lakh crore, total gross market borrowing would be around ₹20.9 lakh crore, but could have a clear downward bias," it said. SEE ALSO: <a href="https://www.businessinsider.in/tech/apps/how-to/how-to-backup-and-restore-messages-in-signal-app/articleshow/80226649.cms">How to backup and restore messages in Signal app</a> <a href="https://www.businessinsider.in/tech/apps/news/whatsapp-says-your-privacy-wont-be-affected-if-you-dont-use-these-features/articleshow/80225748.cms">WhatsApp says your privacy won't be affected if you don't use these two optional features</a> <a href="https://www.businessinsider.in/india/news/supreme-court-puts-indias-three-farm-laws-on-hold-forms-a-five-member-panel-to-resolve-the-deadlock/articleshow/80229881.cms">India's top court puts three new farm laws on hold — forms a five-member panel to resolve the deadlock</a>

SBI pegs India's fiscal deficit at 7.4% of GDP

New Delhi, Jun 2 () The downgrade of India's sovereign rating by Moody's has not come as a surprise as global rating agencies have lowered ratings and outlook of about 21 emerging economies following COVID-19 outbreak, SBI said in a report on Tuesday. India's sovereign rating was downgraded by Moody's to Baa3 with a negative outlook on the pretext of prolonged period of slower growth, rising debt and stress in financial system. Apart from sovereign rating downgrade, Moody's has taken rating actions on 11 Indian banks. "...It seems that the downgrade was not completely unexpected. This is clearly visible in the data that market is not yet impacted by the rating downgrade. BSE Sensex and NSE Nifty rose and even Rupee appreciated against the US Dollar. "...India has not been alone to witness rating downgrade. So far around 21 emerging and developing countries have registered either a rating and/ or outlook downgrade by the agency. This does not come as a total surprise as emerging markets are always more susceptible to rating downgrades compared to developed economies in times of stress even if some of them have very low debt to GDP ratio," SBI in its research report 'Ecowrap' said. The rating action, the report said, was no reflection on the ability of the Indian government to service its debt obligations. "The sovereign external debt comprises around 20 per cent of the total external debt. The current level of foreign exchange reserves are sufficient to meet any debt obligations," the report added. The downgrade was unlikely to result in any immediate repercussions on exchange rates and bond spreads immediately on India offshore bonds, the report said, adding "...we need to be careful that we remain in investment grade and continue to give growth a big push through policy measures". It further said that in the current situation in India both the key interest rate and GDP are expected to fall further. "Our nominal GDP growth is likely to contract and based on this our interest-growth differential may turn positive also. Further, if interest rates are higher than expected, then the cost of rolling over a given debt increases," the report said. There have been studies which show that if the difference between interest rate and nominal growth rate is negative then there is no level of debt which is unsustainable, i.e. the government can borrow easily. The report also suggested that the government should only think of such interest-growth differential and not slippage in fiscal deficit. NKD CS BAL

Moody's rating downgrade not surprising: SBI report

New Delhi, May 30 () India needs to implement an intelligent lockdown exit strategy to prevent irreversible growth collapse, SBI said in a research report on Saturday. India's economic growth slipped to an 11-year low of 4.2 per cent in 2019-20 and to 3.1 per cent in January-March, the lowest in the last 40 quarters. The nation-wide lockdown to prevent spread of coranavirus with effect from March 25 has hit economic activities. The fourth phase of the lockdown is set to expire on Sunday. "We now believe that we should implement an intelligent lockdown exit strategy as the discussion has moved from debate between lives and livelihood to also between lives and lives as an elongated lockdown will only prolong irreversible growth collapse," SBI's research report 'Ecowrap' said. Going by past experience, recovery from recession often tends to be slow and takes five to ten years to reach the former peak levels of economic activity, it said. Commenting on the GDP data released on Friday, the report said loss of economic activity due to the lockdown in the last few days of March has dragged GDP growth to a 40-quarter low of 3.1 per cent in the fourth quarter of 2019-20. With this, the full year 2019-20 GDP growth comes to 4.2 per cent (11-year low) compared to 6.1 per cent in the preceding financial year. In terms of sectors, the only silver lining was agriculture, it said. 'Agriculture and allied activities' grew at 4 per cent in the fiscal ended March 2020, compared to the year-ago growth of 2.4 per cent. However, the Central Statistical Office (CSO) has significantly revised the previous quarters' growth rates (compared to third quarter release) which is "quite puzzling and raises questions about data quality and remarkable volatility in the new series and we believe that a methodological note from CSO explaining the frequent revisions will be very useful", it added. In fact, in February the quarterly numbers underwent significant upward revisions and such numbers have now been steeply revised downwards by an almost equal amount, within a span of three months, the report said. While it is customary to change the quarterly numbers in May when the third estimate is released, the extent of such revision shows that the loss in fourth quarter because of the lockdown may have possibly been evenly distributed across quarters, that is Rs 1.18 lakh crore loss estimated and distributed across quarters in 2019-20, it said. "On an unchanged Q1, Q2 and Q3 numbers, the Q4 growth comes at 1.2 per cent. As per our calculation only 18 per cent of GVA is exempted from the lockdown and CSO may release data for that segment only for a large part of Q1FY21, and hence we cannot rule out data issues even for Q1," the report said. "We would like CSO to come out with a methodological note" explaining the reasons of why the data has become so volatile in last two-three years, it added. "Is it because the economy is undergoing a structural change that CSO is not able to capture? These are questions that CSO can only provide an answer," it said. The report noted that as the government has extended statutory timelines for submitting the requisite financial returns, these estimates are thus based on whatever data is available. It expects significant revisions in both quarterly as well as annual numbers in August when the data on first quarter of the current fiscal would be released. NKD CS ABM ABM

India needs intelligent lockdown exit strategy: SBI report

Mumbai, May 8 () With government borrowings likely to increase in the current fiscal, there is a need to increase the demand for bonds and conduct reverse repo as well as term reverse repo operations without placing any collateral with the Reserve Bank of India, says a report. For conducting such reverse repo operations, the Reserve Bank of India Act needs to be amended, the research report by State Bank of India (SBI) - Ecowrap noted. "Given that 2020 is going to be an exceptional year with government borrowings set to jump, we believe the time has now come for increasing the demand for bonds by having the necessary amendment in the RBI Act used effectively so that conduct of reverse repo and term reverse repo operations are completely non-collateralized," it said. Reverse repo is lending of funds against buying of securities with an agreement to resell the said securities on a mutually agreed future date at an agreed price which includes interest for the funds lent. Under reverse repo operations, banks deposit excess funds with the Reserve Bank of India (RBI) and earn interest on it. As lending to the central bank has no credit risk, there is no need to provide government securities as collateral when a market participant places its funds with the RBI, the report said. "Additionally, since securities obtained under reverse repo are eligible for statutory liquidity ratio (SLR), it will thus ensure an overall increase in the demand for bonds," the report said. With the continuous liquidity support by RBI, the system surplus liquidity position has increased significantly and banks have parked an average of Rs 6 lakh crore in May, compared to Rs 4.8 lakh crore in April and Rs 2.9 lakh crore in March under the reverse repo window of RBI. The report said in order to absorb surplus liquidity from the system without the need for providing collateral in exchange, RBI has been planning to introduce a (low) remunerated standing deposit facility (SDF). The Urjit Patel Monetary Policy Committee had recommended this instrument and indicated that this would be done with the discretion to set the interest rate without reference to the policy target rate. The committee recommended that the introduction of the standing deposit facility will require amendment to the RBI Act and may replace reverse repo in the long-run. "We believe that such uncollateralised absorption of liquidity by the central bank will pave the way for the government to suck out additional liquidity at lower cost through SDF," the report said. The report also recommended that there should not be any cap on the amount of funds placed at the RBI window for reverse repo, rather it should be abandoned and SDF should be introduced. "Capping the quantum of funds in reverse repo as was done in 2007 creates significant market distortions in the onshore rate pricing metric as well as the knock on impact on the FX pricing metric," it said. HV DRRDRR

Need for non-collateralized reverse repo operations: SBI Report

Mumbai, Jan 13 () The economic slowdown has adversely impacted employment generation in the country as nearly 16 lakh less jobs are projected to be created in FY20 compared to 89.7 lakh fresh jobs in FY19, a report said.
 According to the SBI research report- Ecowrap, there is a decline in remittances in a few states like Assam and Rajasthan, reflecting downsizing of contractual labourers.
 "In FY19, India had created 89.7 lakh new payrolls as per the EPFO data. In FY20, as per current projected this number could be at least 15.8 lakh lower," the report said.
 The EPFO data primarily covers low paid jobs as the salary is capped at Rs 15,000 per month. As per the calculation done by the report, during April-October 2019, the actual net new payroll was 43.1 lakh which annualised comes out to be 73.9 lakh for FY20.
 The EPFO data does not cover government jobs, state government jobs and private jobs as such data have moved to National Pension Scheme (NPS), beginning 2004.
 "Interestingly, even in the NPS category, state and central government are supposed to create close to 39,000 jobs less in FY20 as per current trends," the report said.
 It said a sample of data on remittances by migrant labourers to selected states in the last one year showed that there is a decline in remittances in states like Assam, Bihar, Rajasthan, Odisha and UP.
 "The delay in resolution of cases under bankruptcy proceedings may have prompted companies to downsize their contractual labourers," it said.
 Over the years, migration has been an important livelihood option for both the poor and the non-poor in the country.
 As a result of unequal growth, people from agriculturally and industrially less-developed states migrate to more developed states in search of job opportunities - for example from Uttar Pradesh, Bihar, the southern part of Madhya Pradesh, Odisha, and Rajasthan to states like Punjab, Gujarat, and Maharashtra.
 For a large number of migrants, New Delhi is a much-favoured destination due to the abundance of job opportunities, the report said.
 "These migrants have been making significant financial contributions to their families in their places of origin," it said.
 The report further said in the last five years, the overall productivity growth has remained relatively stagnant between 9.4 per cent to 9.9 per cent.
 This slow growth in productivity manifests in low wage growth, it said. 
 The report also cautioned the policymakers of such slower productivity growth as it could encourage over-borrowing by corporations and households, which can create a big risk to economies and fiscal systems. HV ANS
ANS

Economic slowdown hits jobs sector: SBI report

Mumbai, Jun 10 () The government should come out with a policy for gainful employment of migrant labourers in their home states, especially in Uttar Pradesh, Bihar, Jharkhand and West Bengal, an SBI report suggested on Wednesday. The report further said that the government can create a comprehensive data base on migrant workers on the basis of travel history on Shramik special trains, call detail records and record of social sector schemes. "With approximately 58 lakh migrants having gone back to home states like Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal and more expected, we need a properly crafted policy of gainfully employing such migrant labourers in home states," said SBI Ecowrap. After the government imposed nation-wide lockdown on March 25, 2020 to curb the spread of coronavirus, lakhs of migrant workers returned to their home states. "...we need to build up a comprehensive database of migrant workers and formulate a policy for unorganised sector workers. Tracking the call detail records (CDRs) juxtaposed with travel history of the migrant labourers from Shramik Trains could be the first starting point of constructing such database," suggested the SBI report. The CDRs could give a clear idea of out-migration intensity into districts in states that exhibit a high level of migrant labour movements, the report said, adding these districts could then be the starting point for providing gainful employment to migrant labourers. The report further said that Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal has accounted for close to 90 per cent of the total migrants and hence it is imperative that tailored policies are crafted to absorb such labourers. The report further said that with increasing number of migrant labourers back in home town, it will now be extremely difficult for state governments to provide employment. Against such a background, extending livelihood jobs to job card holders by banks could lead to more money in the hands of the poor and marginalised, it said. "The banks can advance say 40 per cent of the eligible amount to the MGNREGA cardholders based on a simplified application form with the caveat that the interest on such livelihood loans can be guaranteed by the government, the cost of which is minimal at around Rs 4,000 crore," said Ecowrap. ' Effectively, this loan will be self-liquidated when the MGNREGA cardholder contributes labour and pays off debt. It further said that MGNREGA is no longer linked to the Minimum Wages Act and as a result, for a number of instances MGNREGA wage is lower than the state's minimum agricultural wage. It has suggested a relook at such norms even for a temporary period. NKD CS MR

Frame policy for employment of migrants in home states, suggests SBI report

Mumbai, Jun 23 () Post COVID-19 pandemic, the inequality gap in the country will narrow down, as income of rich states is likely to decline more than the poor states, according to an SBI research report- Ecowrap. At all India level, per capita income (PCI), which is a measure of the earnings per person in a nation or geographic region, will decline by 5.4 per cent in FY21 to Rs 1.43 lakh, the report said. "We expect that the inequality gap in India will narrow down post-COVID pandemic as decline in income of rich states will be much greater than the decline in income of poor states," the SBI's research report said. A similar type of experience of decline in inequality was witnessed in Germany after the collapse of the Berlin war (1989), it said. The report said this decline in PCI is higher than the nominal GDP decline of 3.8 per cent. Globally also, the fall in per capita GDP of 6.2 per cent in 2020 is significantly greater than the 5.2 per cent decline in the world GDP. The rich states (whose per capita income is greater than all India average) will be most affected in per capita income terms. "In Delhi (-15.4 per cent) and Chandigarh (-13.9 per cent), the decline in PCI is almost thrice than the decline at all India levels (-5.4 per cent)," it said. A total of eight states and Union Territories are supposed to witness a decline in PCI in double digits in FY21 and that is most alarming, the report said. These states constitute as much as 47 per cent of the country's GDP. "This is due to the fact that these are the urban areas (and red zones also) where lockdown was implemented most severely. The closure of markets, shopping complexes and malls adversely affected income of these areas," it said. Even after opening of markets (in staggered manner), the number of customers is still 70-80 per cent less than the normal times, the report said. In the current fiscal, states like Maharashtra, Gujarat, Telangana, and Tamil Nadu are expected to witness a decline of 10-12 per cent in PCI. However, in the relatively less well off states like Madhya Pradesh, Uttar Pradesh, Bihar, Odisha (where per capita income is below the national average) the decline in PCI is less than 8 per cent, the report said. "The possible reasons are a larger number of green zones, prominence of agricultural activity and already low levels of income," it added. The report projects a GDP decline of 6.8 per cent for FY21. "We believe that the country will clearly have a 'statistical V-shaped recovery / Swoosh' in FY22 primarily due to the favourable base effect," it said. Beyond such base effect, it would, however, take at least till FY24, if the country replicates the best case example in history, if not more before it gets back to the pre-pandemic level growth rate, the report noted. HV BAL BAL

Inequality gap in India to narrow down post COVID-19: SBI report

Mumbai, Jun 8 () The prolonged period of growth slowdown is likely to adversely impact India's external sector which currently is comfortably placed on account of subdued prices of crude oil in the international market, said a SBI report on Monday. As per SBI's research Ecowrap report, India is likely to end the current fiscal with current account surplus, if the oil prices in the international market remain subdued and do not show volatility during the course of the financial year. "We should be mindful of our external sector in 2020-21 as a prolonged period of growth slowdown could impact the external sector metrics, specifically the rupee," it said. In 2020-21, the report maintains that India is going to achieve a current account surplus owing to lower oil prices, although the magnitude might shrink if oil prices show undue volatility and stay at over USD 40 /bbl for a sufficiently longer period of time, it said. Noting that the gross domestic product (GDP) growth has declined from 8.3 per cent in 2016-17 to 4.2 per cent in 2019-20, the report said, the FY21 median growth contraction is currently at 5 per cent, indicating a growth collapse of at least 9 per cent from FY20 levels because of COVID-19. The only saving grace is that our external debt position is sustainable with the external debt to GDP ratio at 19.8 per cent at end-June 2019, it said. On COVID-19, the report said India was testing less than 1 lakh samples per day till May 18. This has consistently topped 1 lakh testings per day since then with minor exceptions. For the first seven days of June, India has tested on an average 1.32 lakh samples, with the number crossing 1.4 lakhs on June 6 and June 7. "This is perhaps the reason why the cases have started increasing at a much faster rate," it said. Indian states and the centre have formally decided to open up the economy beginning Monday. It may be noted that during the first 4 phases of the lockdown, the daily positivity rate (number of cases turning positive as a percentage of total tests during the day) has now moved up to 7 per cent in the first 7 days of June from an average of 4.7 per cent during March 27 till May 31, it said. "Clearly, the increased positivity rate is a reflection of more number of tests and if we look at the accompanying graph, the positivity rate clearly shows a decisive uptrend from May 2 onwards. "At this rate, if India doubles the number of tests, the number of positive cases on a daily basis will remain in double digits from now on and this should not come as a surprise," the report said. Meanwhile, based on the current 7-days moving average of new cases witnessed in India, we now believe that peak of new cases will get pushed back further from earlier estimates towards the end of June and is likely to peak somewhere anytime in the period after July 7, it said. Following that the new cases are expected to witness steep fall till the end of August after which it is expected to flatten only by mid-September, it said. However, these are purely based on an assessment of current trends that can rapidly change, it added. NKD CS ANS ANS

Prolonged growth slowdown likely to hit India's external sector: SBI report

Mumbai, Apr 16 () India's GDP growth may slide to 1.1 per cent in the current financial year, on account of the impact of coronavirus outbreak on the economy, a research report by SBI said on Thursday.The economic growth rate during 2019-20 is estimated to come down to 4.1 per cent from 5 per cent projected by several agencies before the outbreak of deadly virus, which affected more than 20 lakh persons around the world and took lives of over 1.3 lakh people.In order to check the spread of COVID-19, the government has decided to extend the lockdown to May 3, with some relaxations for specified sectors.According to the SBI Ecowrap report, the extension of the lockdown would result in economic loss of Rs 21.1 lakh crore or 6 per cent of the nominal Gross Value Added (GVA)."With the lockdown now being extended till May 3 and simultaneously Government providing some relaxations from April 20, we estimate the overall loss for FY21 around Rs 12.1 lakh crore/6 per cent of nominal GVA taking the nominal GVA growth for entire year to be around 4.2 per cent."Nominal GDP for FY21 could be lower/closer to 4.2 per cent, as there is a strong possibility of subsidies outstripping tax collections. However, taking nominal GDP growth at 4.2 per cent, the real GDP growth for FY21 would be around 1.1 per cent," said the report.The lockdown, the report said, will have a significant impact on several macroeconomic parameters.Quoting PLFS survey 2017-18, the report said, there are 37.3 crore workers engaged as self-employed, regular and casual workers, with share of self employed at 52 per cent, casual worker at 25 per cent and the rest engaged as regular wage earners and others."We estimate the income loss per day of these 37.3 crore workers due to lockdown is around Rs 10,000 crore, which translates into a loss of Rs 4.05 lakh crore for the entire lockdown period. For causal labourers, this income loss it at least Rs 1 lakh crore. Thus any fiscal package should at least strive to more than make up for this Rs 4 lakh crore income loss," it added.Secondly, "as our GDP forecasts change, fiscal estimates will also change accordingly. Net Tax Revenue will have a shortfall of at least around Rs 4.12 lakh crores, and Revenue shortfall for states will be Rs 1.32 lakh crores. The revised fiscal deficit would be at 5.7 per cent of GDP and after taking into account only the current EBR the deficit rises to 6.6 per cent of GDP," it noted.The fiscal deficit of the states is expected to rise to 3.5 per cent of GDP from the budgeted 2 per cent in FY21."We estimate that the EBR number will rise significantly as Government will try to mobilise resources more through unconventional means like COVID Bonds, monetisation of deficit and others," as per the report.The consolidated fiscal deficit might rise to 10 per cent of GDP on an unchanged EBR, it said, adding a 4 per cent slippage in nominal GDP tantamount to Rs 8 lakh crore of fiscal support. NKD CS BAL

Economic growth may fall to 1.1 pc this fiscal: SBI report

Mumbai, May 26 () The country's GDP is estimated to have grown at 1.2 per cent in the last quarter of the previous fiscal as economic activity came to a standstill in the last week of March due to the nationwide lockdown to contain spread of COVID-19, a report said. According to the SBI's research report – Ecowrap - the gross domestic product (GDP) growth is likely to be 4.2 per cent for FY20 and (-) 6.8 per cent for FY21. The fourth quarter GDP growth number for FY20 will be announced by the National Statistical Office (NSO) on May 29. In the third quarter of FY20, GDP growth slipped to a nearly seven-year low of 4.7 per cent. In Q1 and Q2 of FY20, GDP growth was 5.1 per cent and 5.6 per cent, respectively. "We believe that Q4 (FY20) GDP growth would be around 1.2 per cent as the economic activity in the last seven days of March month was completely suspended due to the nationwide lockdown," the research report said. The report sees a loss of at least Rs 1.4 lakh crore during those seven days of lockdown. "Subsequently, the annual FY20 GDP growth would be around 4.2 per cent as compared to 5 per cent as it was projected earlier," the report said. It estimates FY21 GDP growth to be around (-) 6.8 per cent and gross value added (GVA) growth would be nearly (-) 3.1 per cent. The loss is maximum (around 50 per cent) in red zones and where almost all the big districts of the country are located. The combined loss of orange and red zones is around 90 per cent of total loss. State-wise analysis indicates that top 10 states accounted for 75 per cent of total GDP loss with Maharashtra contributing 15.6 per cent of total loss followed by Tamil Nadu (9.4 per cent) and Gujarat (8.6 per cent). These three states also have the largest number of confirmed COVID-19 cases in the country. The report further said COVID-19 cases in the country could peak anytime in the last week of June. "Based on the current 7-day moving average of new cases witnessed in the country, we believe that new cases are likely to peak somewhere in the last week of June, beginning June 20," the report said. Following that, the new cases are expected to witness steep fall till the beginning of August after which it is expected to gradually reduce to flatten by mid-September. The report, however, said the estimates are purely based on an assessment of current trends that can quickly change given the cyclonic disaster in West Bengal and the continued return of migrant labourers. The number of COVID-19 cases in the country stood at 1,45,380, as per health ministry data. HV ANS ANS

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