Updates on Indian Economy

1. The gross tax revenues of the government for the period between April-September are down 21.6% to ₹7.21 trillion. 

2. Of the total disinvestment target of ₹2.1 trillion for 2020-21, the government has earned only around ₹5,781 crore or just 2.75% of the entire target. 

3. Dividends given by the central public sector enterprises (PSEs) peaked at 0.33% of the gross domestic product (GDP) in 2009-10 and have largely been falling since 2011-12. A decade later in 2019-20, the dividends stood at 0.24% of GDP. The reason behind this is the overall net profit of PSEs has fallen from 1.45% of the GDP in 2009-10 to 0.75% of the GDP in 2018-19, the last year for which data is available. In 2018-19, 70 out of the 249 operating PSEs incurred losses. 

4. According to reports by the Press Trust of India, Indian markets have seen investments worth Rs 35,109 crore from Foreign portfolio investors (FPIs) so far in November. According to the depositories data, overseas investors invested a net sum of Rs 29,436 crore into equities and Rs 5,673 crore into debt segment between November 2-13.

5. October’s retail inflation print is the ninth monthly one above the flexible inflation target of 2-6% given to the Reserve Bank of India (RBI) by law. In 2020 so far, inflation has been below 6% only in March. India’s economy is a rare spot in the world where inflation is rising despite a recession. It not only complicates policy but also threatens potential growth.

6. The labour participation rate (LPR) or the ratio of the labour force to the population above 15 years of age, has been falling since February. On 23 February, the labour participation rate stood at 43.2%, and fell to a low of 35.37% on 26 April, before rising to 39.54% on 15 November. 

7. India’s unemployment rate started climbing, peaking at 27.11% on 3 May. It has fallen since then to 5.45% on 15 November, even lower than the pre-covid levels. 

Notes:

*Gross tax revenue is the total amount of levy collected by the Government in the form of direct and indirect taxes from public.

*Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. Absent the sale of an asset, disinvestment also refers to capital expenditure (CapEx) reductions, which can facilitate the re-allocation of resources to more productive areas within an organization or government-funded project.

*A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings). 

*A state-owned enterprise in India is called a Public Sector Undertaking (PSU) or a Public Sector Enterprise. These companies are owned by the union government of India or one of the many state or territorial governments or both together in parts. The company stock is majority-owned by the government in a PSU. PSUs are classified as central public sector enterprises (CPSUs, CPSEs) or state level public enterprises (SLPEs). In 1951, there were just 5 enterprises in the public sector in India, but in March 2019 this had increased to 348.

*Foreign portfolio investment (FPI) consists of securities and other financial assets held by investors in another country. It does not provide the investor with direct ownership of a company's assets and is relatively liquid depending on the volatility of the market. Along with foreign direct investment (FDI), FPI is one of the common ways to invest in an overseas economy. FDI and FPI are both important sources of funding for most economies.

A foreign portfolio investment is a grouping of assets such as stocks, bonds, and cash equivalents. Portfolio investments are held directly by an investor or managed by financial professionals. In economics, foreign portfolio investment is the entry of funds into a country where foreigners deposit money in a country's bank or make purchases in the country's stock and bond markets, sometimes for speculation.

*The labor force is the number of people who are employed plus the unemployed who are looking for work. The labor pool does not include the jobless who aren't looking for work.

For example, stay-at-home moms, retirees, and students are not part of the labor force. Discouraged workers who would like a job but have given up looking are not in the labor force either. To be considered part of the labor force, you must be available, willing to work, and have looked for a job recently. The official unemployment rate measures the jobless who are still in the labor force.

*Labour force participation rate is defined as the section of working population in the age group of 16-64 in the economy currently employed or seeking employment. People who are still undergoing studies, housewives and persons above the age of 64 are not reckoned in the labour force.

The labour force participation rate is the measure to evaluate working-age population in an economy. The participation rate refers to the total number of people or individuals who are currently employed or in search of a job. People who are not looking for a job such as full-time students, homemakers, individuals above the age of 64 etc. will not be a part of the data set. This is an important metric when the economy is not growing or is in the phase of recession.

*The unemployment rate is the percent of the labor force that is jobless. To calculate the unemployment rate, the number of unemployed people is divided by the number of people in the labor force, which consists of all employed and unemployed people. The ratio is expressed as a percentage.