[V.Narayan]

E-way bills likely to fall to lowest in a year in May 2021

E-way bills likely to fall to lowest in a year in May 2021 - The Economic Times
https://m.economictimes.com/news/eco...w/82732271.cms

I expect the economic recovery in the JAS quarter this year to be a lot more tardy than what we saw in JAS last year. And with the disease spreading to rural areas especially in the North the rural economy, which held up the sky last year, might not be able to support demand. Also our biggest risk seems to be stagflation. Would love to hear the views of the experts.

Excerpts from the article in the box.

E-way bills generated in May are likely to be the lowest in the past year, said experts, with daily average having dropped to 1.2 million for the month, owing to lockdowns in various states in the wake of Covid second wave.

Going by the daily average, for the full month of May, about 37-38 million e-way bills are expected to be generated, which may well be the lowest since June 2020 when 43.4 million e-way bills were recorded. As of May 16, 19.4 million e-way bills have been issued, according to data from Goods and Service Tax Network.
Electronic bills generated for nationwide movement of goods of more than Rs 50,000 in value are one of the key economic indicators and relied upon to gauge the changes in demand and supply.

The lowest number of e-way bills recorded was in April 2020 at 8.6 million, when the country was under full lockdown, followed by 25.4 million in May 2020. Pre-lockdown monthly average last year was about 55 million, with daily average in January 2020 at about 1.83 million.

Unlock 1.0 began from June 2020 when numbers started to rise again, showing spurt in economic recovery which continued into 2021. More than 60 million e-way bills were recorded in January and February, and the highest ever was clocked in March with 71.2 million.

However, April data showed slowdown with 58.7 million bills were generated, according to data from Goods and Service Tax Network.

Daily average in May so far has reduced by more 50% compared to the peak of 2.29 million in March 2021, and lower than 1.9 million per day in April.

Several states including Delhi, Maharashtra, Punjab, Uttar Pradesh, Jammu and Kashmir, Kerala, West Bengal have either announced full lockdowns or lockdown-like curfews curbing movement of people, in order to control the spike in Covid cases.

Despite the fall in e-way bills, sector watchers are divided on the impact that is expected to show in June as a dip in GST collections from the bills generated in May.

[PGA]

https://www.business-standard.com/ar...2900142_1.html

Interview with the person who I feel knows more about the state of our economy than anyone else, in the present times atleast. The data doesn't lie and it is going to need huge collective effort, putting the voodoo politics behind, to bring back semblance of economic normalcy we had got used to. As of today I do not see the daybreak.

[V.Narayan]

Originally Posted by PGA

https://www.business-standard.com/ar...2900142_1.html

Interview with the person who I feel knows more about the state of our economy than anyone else, in the present times atleast. The data doesn't lie and it is going to need huge collective effort, putting the voodoo politics behind, to bring back semblance of economic normalcy we had got used to. As of today I do not see the daybreak.

Excellent article. Well written without spin or ideology. Just the facts. Maybe I liked the article because it tallied with my own reading that things now are a lot worse than July-September quarter last year when the economy started opening up after the lockdown. The Sensex does not make sense to me except as - (a) a flight to safety to the top, quality wise, 50 to 75 stocks on the market; and (b) FII liquidity pumped in - hot money that can just as easily flow out.

I firmly believe we are waiting to witness a rocky economic journey next 3 quarters because last time, in 2020, the rural areas drove the pick-up. This time some of the rural areas too are hit by the covid pandemic, people will be more cautious on consumer spending and the cities have been doubly hit by the pandemic.

Few actions since Nov'16 have indicated that the Govt understands what makes the economy tick and how much abuse it can take.

I hope I am wrong about my assessment but I suspect I am not.

[V.Narayan]

I don't know if this is an active much read thread any more but sharing here nevertheless. Below is an extract of a RTI on GST account closures for various reasons. And the bar graph indicates we have about 130 lakhs GST accounts as of 2 years ago. I believe the number is similar today {experts please share data if you have it}. The closures seem significant, in my opinion, relative to the denominator.

The SME sector has been hit worst by the events of the last one year. Many held out last year but the second economic slowdown of the past 2 months is more than what many could bear. Like I have mentioned earlier I expect the next 6 months to 9 months to be a worse period for the economy than what we saw same time last year. I hope I am wrong.

I hope we get to see true GDP growth (negative for FY2020-21) data soon sans any spin.

[VKumar]

Originally Posted by V.Narayan

The closures seem significant, in my opinion, relative to the denominator.

Many thanks for sharing sir, I can very well relate to this. Have a close friend, a budding budget hotelier with properties in Uttarakhand and Himanchal. Since he had been paying salaries throughout the rough phase, the current situation is actually critical. Although banks have helped with moratorium and restructuring, but since he isn't any more cash rich, even slight ups and down makes him call us up seeking some help for the time being, and that's actually not a situation one would want to see their friends in. The person is willing to sell off his newly acquired Hyundai Verna (for which we friends decided to not let happen, as it will further cause loss only accounting the depreciation), just because he can't risk his CIBIL taking a hit as he needs to take some more debt for an expansion; budding entrepreneur, huge debts, cash crunch - perfect recipe for disaster.

We know that the guy has potential, even the properties are also good and hence decided to help the guy sail through this period; that's what a friend can do in the time of need. But yes, the way things have been moving, it's no more the same. The kind of cash crunch the guy has got into in last 1 year is going to haunt for at least coming 3 years. While the plan initially was to keep himself cash rich, while expanding, now the 'cash rich' component has gone out of the window. And at the same time, best moment for expansion is now for anyone in this industry, multiple really good properties are in the market; probably because the owners of them don't have a friend or relative circle who are willing to help them sail out - but while the properties are in market, banks are not willing to support the buyers - the result is depreciation.

While we can see that recovery is happening, but the thing is; it's the expansion plans which have taken a massive hit. Many people are sitting with investments which look meaningless now, people have been pushed back by a few years, and that will haunt us for coming 2-3 years at least.

[SmartCat]

Originally Posted by V.Narayan

The SME sector has been hit worst by the events of the last one year. Many held out last year but the second economic slowdown of the past 2 months is more than what many could bear.

I think large companies are grabbing marketshare from SMEs in this pandemic. Only that can explain this metric:



The above also explains why GST collections are trending upwards.

That's because large companies in general have easier access to finance, cleaner balance sheet (can bounce back quickly) etc. Once the little guys are out of the way, larger companies can procure raw materials at lower price and raise prices when selling to consumers.

Generally, larger companies are more tax compliant - so Govt will not go out of its way to reverse this.

[tazmaan]

Originally Posted by SmartCat

I think large companies are grabbing marketshare from SMEs in this pandemic. Only that can explain this metric:

Attachment 2162692

The above also explains why GST collections are trending upwards.

That's because large companies in general have easier access to finance, cleaner balance sheet (can bounce back quickly) etc. Once the little guys are out of the way, larger companies can procure raw materials at lower price and raise prices when selling to consumers.

Generally, larger companies are more tax compliant - so Govt will not go out of its way to reverse this.

Capitalism is the word, not only in India but world over the big companies are only getting bigger during this pandemic and small fishes are being fried. Eventually all businesses will be monopolized and instead of a kings in the past, we will all be slaves of these companies. Most of these companies have become larger than the government and the elected government is just a puppet.

[V.Narayan]

Originally Posted by SmartCat

I think large companies are grabbing marketshare from SMEs in this pandemic. Only that can explain this metric:

Attachment 2162692

The above also explains why GST collections are trending upwards.

That's because large companies in general have easier access to finance, cleaner balance sheet (can bounce back quickly) etc. Once the little guys are out of the way, larger companies can procure raw materials at lower price and raise prices when selling to consumers.

Generally, larger companies are more tax compliant - so Govt will not go out of its way to reverse this.

Agree with your assessment in part. Not sure why aggregate profits of all listed companies are up 57% in FY2020-21. Personally I would look at the data and calculations behind this. Even if the economy were growing at 7% pa the aggregate profits of all listed companies would at best in a given year be up 10% or 14%. 57% seems too weird to believe. I cannot recall a single year since I started investing in 1982 where aggregate profits, of all listed companies, increased by more than 20%.

Also a company with revenues of say Rs 1500 or Rs 2000 crores or even Rs 500 crores is not competing with an SME with revenues in the Rs 1 to Rs 10 crore bracket.

Originally Posted by VKumar

Many thanks for sharing Many people are sitting with investments which look meaningless now, people have been pushed back by a few years, and that will haunt us for coming 2-3 years at least.

+1. Very true. The damage done since Nov'16 will take 2 or 3 years of sane economic policies to recover from. The key word is sane. I don't believe in miracles nor is hope a strategy. The past record of a sales manager over several years is a reasonable indicator of his expected performance in the coming three years. We should brace ourselves for slow growth and unemployment. I am no longer sure GDP of FY2021-22 will get beyond the GDP of FY2019-20. That will now take yet one more year.

[AZT]

Originally Posted by SmartCat

I think large companies are grabbing marketshare from SMEs in this pandemic. Only that can explain this metric:

You are correct. The below snippet explains this perfectly :

[Turbohead]

I'm confused right now.

If the smaller companies are closing down and the big companies are raking in the profits, will they invest more into the market or would they try to hold back since the overall economy is in a bad state?

Wouldn't these companies have to employ more and more people to circulate all the money they have in the market? Else who will buy the products these companies make it if there are no customers due to the cash crunch caused by rampant unemployment? Can this ideally go on? AFAIK, the govt favors the big business rather than the MSME sector which employs a lot of people.

How would the big businesses ideally react?

I'm a noob in economics.

[SmartCat]

Originally Posted by V.Narayan

Also a company with revenues of say Rs 1500 or Rs 2000 crores or even Rs 500 crores is not competing with an SME with revenues in the Rs 1 to Rs 10 crore bracket.

Turnover has nothing to do with this. Your neighborhood jewellery store with Rs. 1 cr turnover is competing with Kalyan Jewellers or Titan with Rs. 20,000 cr turnover.

What you have to do is - for each business/sector, check what is the marketshare between organized and unorganized sector. For eg: In Household paint sector, the organized sector (Asian Paints, Berger Paints etc) had a marketshare of 70%. Unorganized paint sector had a marketshare of 30% - all of these being SMEs, with turnover from Rs. 1 cr to Rs. 50 cr.

This pandemic would have taken sales from the unorganized household paint SMEs to larger brands.

Originally Posted by Turbohead

If the smaller companies are closing down and the big companies are raking in the profits, will they invest more into the market or would they try to hold back since the overall economy is in a bad state?

Big companies will look at their capacity utilization and their sales numbers. Not "overall economy". Eg: Kia will setup a new facility if their sales are booming. They won't look at India's GDP slowdown. Usually manufacturing companies will invest in new facility when their capacity utilization crosses 80% levels.

Wouldn't these companies have to employ more and more people

Jobs will be lost in one place and created elsewhere. But when it comes to manufacturing, larger companies will generally need lesser people than SMEs - since many of their production systems will be automated.

[Ragavsr]

Originally Posted by volkman10

March sales figures: Mega March 2021 sales

Not a big achievement. March 2020 was low not only due to the lockdown during the last week but also due to transition to BS6, inventory was at record lows impacting sales as BS6 versions of most vehicles were simply not available.

Originally Posted by VKumar

I can very well relate to this. Have a close friend, a budding budget hotelier with properties in Uttarakhand and Himanchal.

Surprisingly, the hill stations down south, Ooty, Kodaikanal or Coorg and also my sources in Manali tell me that the surge in revenge tourism has led to hotels being completely sold out. There is a cycle of lockdown- sold out hotels- lockdown cycle happening and my extended family (dad's siblings and cousins) are all investing massively in homestays , with constant attempts to drag my dad in. But then , they are not really dependent on income from these and have regular jobs and businesses to do.

Originally Posted by V.Narayan

The damage done since Nov'16 will take 2 or 3 years of sane economic policies to recover from. The key word is sane. I don't believe in miracles nor is hope a strategy. We should brace ourselves for slow growth and unemployment. I am no longer sure GDP of FY2021-22 will get beyond the GDP of FY2019-20. That will now take yet one more year.

Deservedly so , you can't continue implementing disastrous policies beginning with demonetization, corporate tax cuts and extremely high fuel prices (which were already high before 2014 ). Before someone points out fuel prices are higher in Europe , per capita incomes and GDP is on average 20-30 times higher and paying extra won't hurt.

There is a real risk of stagflation due to high fuel prices and disastrous implementation of lockdown. 10 days back, the government in TN gave a 2 day break between lockdown after which all shops would be shut completely. What it resulted in is massive profiteering. For example , tomato prices went up from 15 per kg to 70-100. Repeat that for every commodity.

[Venkatesh]

May 21 OEM dispatches to Dealers giving MOM & YOY comparisions. State Wise lockdown has effected the Manufacturing.



The second wave of the pandemic, and the resultant lockdown in almost 80% of the car market in India, resulted in a fall of 64% to 103,171 units in May.

Top Gainers and Losers of May 2021



Link

[am1m]

Got back home to Bangalore after almost 7 months. I live in one of those areas that developed mainly over the past 10-15 years because of proximity to the IT parks. Crowd and traffic definitely seems lesser. There are 'to-let' signs all over the place. Even a couple of our neighbors who owned their own houses have left to go back to their parents' states and those houses are standing empty. Some businesses that I had seen for the past few years have shut down, but new ones have taken those spaces.

[mvadg]

How likely are we to end up like Lebanon?

https://www.reuters.com/world/middle...ed-2021-06-17/

• Post-war reconstruction derailed by a corrupt elite
• Remittances had been vital to balance Lebanon's books
• Central bank "financial engineering" kept inflows going
• Gulf halted support as Iran's influence in Lebanon grew
• Unfettered spending finally brought nation to its knees