1
The Himalayan Mail 8 JAMMU Q TUESDAY Q NOVEMBER 03, 2020 NEWS NEW DELHI, NOV 2: Manufacturers indicated that the ongoing relaxation of COVID-19 restrictions, better market conditions and improved demand helped them to secure new work in October. India's manufacturing sector activity improved for the third straight month in October with companies raising output to the greatest extent in 13 years amid ro- bust sales growth, a monthly survey said on Monday. The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose from 56.8 in September to 58.9 in October, and pointed to the strongest im- provement in the health of the sector in over a decade. In April, the index had slipped into contraction mode, after remaining in the growth territory for 32 consecutive months. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. "Levels of new orders and output at Indian manufac- turers continued to recover from the COVID-19 induced contractions seen earlier in the year, with the PMI re- sults for October highlight- ing historically-sharp monthly rates of expan- sion," said Pollyanna De Lima, Economics Associate Director at IHS Markit. Lima further noted that "companies were convinced that the resurgence in sales will be sustained in coming months, as indicated by a strong upturn in input buy- ing amid restocking ef- forts". Manufacturers indicated that the ongoing relaxation of COVID-19 restrictions, better market conditions and improved demand helped them to secure new work in October. On the employment front, the compliance of government guidelines re- lated to the COVID-19 pan- demic caused a further re- duction in employment. The fall was the seventh in consecutive months. "There was disappointing news on the employment front though, with October seeing another reduction in payroll numbers. “Survey participants that noted job shedding men- tioned having observed containment measures to halt the spread of the coron- avirus disease 2019," Lima said. Inflationary pressures, meanwhile, remained sub- dued as seen by a modest increase in input costs and only marginal rise in selling prices. Meanwhile, hopes of an end to COVID-19 cases and the reopening of other sec- tors in the economy under- pinned positive sentiment towards the year-ahead out- look for production. The level of confidence was at a 50-month high. "Also, confidence towards the year-ahead outlook for production improved as firms hoped that fewer COVID-19 cases and the re- opening of other businesses could boost output growth," Lima noted. Factory output rises at quickest pace since Oct 2007 NEW DELHI, NOV 02: Labour market statis- tics derived from CMIE's Consumer Pyramids Household Survey have been indicating a stagnation of India's economic recov- ery process from its April 2020 shock. The recovery was smart in May and spectacular in June. It continued well into July. Then, it stalled in August and September. Now, it appears that the stagnation could extend or worsen in October. We measure labour mar- ket conditions by the most apt summary measure for a developing country like In- dia -- the employment rate. This is the proportion of working age population that is employed. Fiscal 2019-2020 ended with an employment rate of 39.4 per cent. It fell to 27.2 per cent in April 2020 but, it recovered 300 basis points to reach 30.2 per cent in May. In June, the recovery was of a very impressive 600 ba- sis points to 36.2 per cent. In July, the employment rate climbed up another 140 basis points to 37.6 per cent. The fatigue set in in Au- gust when the rate fell to 37.5 per cent. Then, there was a small recovery to 38 per cent in September. Note that the fatigue set in well before recovering to the 2019-20 average em- ployment rate. October shows signs of continued stress. All the first three weeks ending in the month pen- cilled employment rates lower than the 38 per cent recorded in September. The rates, in sequence, were 37.6 per cent, 37.5 per cent and 37.9 per cent. Keeping the employment rate from slipping is chal- lenging. To merely keep the em- ployment rate unchanged, the economy has to gener- ate additional jobs. It needs to run to stay where it is. This is because the de- nominator -- the working age population -- keeps ris- ing naturally. Employment has to rise in tandem to ensure that the ratio, the employment rate, remains constant. In the past four years, the employment rate has fallen steadily in each year. This is because employment has been stagnant. Fall of the employment rate revealed in the first three weeks of October 2020 is entirely because of a fall in the employment rate in rural India. The employment rate in rural India was 39.8 per cent in September. This was its highest level since the lockdown and was not too far from the 40.7 per cent clocked in 2019-2020. However, it appears that rural India is not able to sustain an employment rate of 40 per cent or more. The weekly employment rate had touched 39.9 per cent in the week ended Sep- tember 6. But it has slid since then. In the week ended Octo- ber 4, the rate was down to 39 per cent and then it slipped further to 38.8 per cent in the week ended Octo- ber 11. It recovered to 39.5 per cent in the week ended Octo- ber 18. But, it was still lower than the September average. The average of the first three weeks of October was 39.1 per cent. The fall in the rural em- ployment rate in October is somewhat surprising be- cause this is the peak season for harvesting the kharif crop. While sowing is spread over four months, most of the crop is harvested in Oc- tober. Different crops have dif- ferent gestation periods but save for cotton and sugar- cane, most of the kharif crop is harvested in Octo- ber. It is possible that employ- ment under the MGNREGS has declined significantly in October. Till October 19 this year, the scheme had provided 58.5 million person-days of employment compared to 138 million person-days of employment provided dur- ing the entire month of Oc- tober 2019. These numbers do get re- vised very substantially and therefore, it may be haz- ardous to draw inferences at this stage. Yet, the fall evident so far is quite large. The average person-days of employment per day in October 2019 was 4.47 mil- lion. In the first 19 days of October 2020 it was 3.08 million, a fall of 31 per cent. Given that rural India has a much larger weight in all- India estimates, it is imper- ative that its employment rate stops falling any fur- ther. In contrast to the falling trend seen in rural India, urban India has shown an improvement in the em- ployment rate in October 2020. The employment rate in urban India in September was 34.4 per cent. The recovering trend in urban India in October is in contrast to the sharp fall in employment rate seen in September. The urban employment rate at 34.4 per cent was a substantial 254 basis points lower than the average 36.9 per cent rate in 2019-20. The average employment rate in urban India in the first three weeks of October was 34.8 per cent. Even this was over 200 basis points lower than the 2019-2020 level. The falling employment rate in rural India and the continued low employment rate in urban India are the weaknesses in India's labour market recovery process. The gap between the monthly employment rate in 2020-21 and the corre- sponding month of 2019-20 narrowed consistently till August 2020 when it was just 182 basis points. It then rose to 254 basis points in September. Jobs: October has some bad news NEW DELHI, NOV 02: After having stood its ground for four years from Reliance Jio’s sustained on- slaught, Bharti Airtel is now hitting back on many fronts: subscriber addi- tions, defending and ex- panding its postpaid cus- tomer base, taking on Jio in broadband fiber-to-the- home (FTTH), and develop- ing its own 5G open radio access network in collabo- ration with partners. Airtel announced its sec- ond quarter (Q2) 2020-21 (FY21) results last week, springing a surprise by de- claring a net subscriber ad- dition of 13.9 million, mostly in 4G. That’s nearly double that of Jio’s (7.3-million net addi- tions in the same quarter) - its lowest in two years. This is also the first time Airtel has surpassed Jio in terms of net additions since the latter launched 4G ser- vices. Airtel is also pleased that its churn was at an all-time low of 1.7 per cent (last quarter it was 2.2 per cent) and that Jio’s churn, which was low at 0.46 per cent in the April-June quarter, went up this quarter to the same levels as Airtel’s (1.7 per cent). Despite the increase in subscribers, Airtel’s average revenue per users (ARPU) are still up by 3 per cent, partly because of 4G sub- scriber net additions and also due to an increase in postpaid subscribers. All this, moreover, with- out an increase in tariffs (still a million-dollar ques- tion). Airtel says that, with a premium in tariffs over Jio of 20 per cent, it won’t be the first mover. However, SBI Caps pro- jects that Airtel will exit FY21 with an ARPU of Rs 171, going up to Rs 182 in 2021-22, with 65 per cent of its subscriber base becom- ing 4G in the next four to five quarters. Analysts say that Jio’s substantial slowing down in net additions is possibly be- cause the company has dra- matically reduced its bun- dled 4G feature phone offering, which contributed an average 30-40 per cent of its net additions. It attracted 2G customers to upgrade to 4G at a very low cost of sub-Rs 2,000. to JPMorgan, based on the IDC data, shipments of the Jio phone during this period were soft at only 1.1 million devices. The success of this over 18-month long strategy can be gauged by the fact that the 4G feature phone at- tracted more than 110 mil- lion customers to Jio, ac- counting for a fourth of its subscriber base. The company announced a few months ago that it will come out with low-cost, smart, Android phones in a tie-up with Google. But insiders say the launch might take another three to four months. Analysts argue that Airtel could leverage this time, when Jio does not have any killer bundled offer, to woo more customers away from Vodafone Idea, which has seen a consistent loss of cus- tomers month-on-month. And there is also nothing stopping Airtel from work- ing out a similar offering bundled with a smart- phone, even though they have not done it so long. They also argue that Air- tel is closing the wireless revenue growth gap, quar- ter-on-quarter with Jio. For instance, Airtel’s wireless revenues are up 7 per cent in Q2, compared to a fall of 1 per cent the previ- ous quarter. Jio revenues in Q2 are up 5.5 per cent, compared to 12 per cent the previous quar- ter. Airtel has also shown a growth spurt in postpaid customers, despite Jio ag- gressively offering new tariff offers bundled with over- the-top (OTT) platforms. Jio’s earlier tryst with postpaid was very luke- warm and its share of sub- scribers has been minimal - less than 1 per cent of its to- tal. In contrast, Airtel has added 0.8 million postpaid customers - the highest in 20 quarters. Their importance is evi- dent from the fact that their average ARPUs, based on past trends, are nearly 2-3x of that of prepaid cus- tomers. The full impact of Jio’s postpaid entry tariff of Rs 399 (up from Rs 199) launched in September-end and bundled with OTT plat- forms such as Netflix, Ama- zon Prime, and Hotstar, on VIP subscriptions will only be reflected in the third quarter FY21 results. Airtel executives are non- chalant. “They have substantially increased the postpaid tar- iffs and added OTT which you can, in any case, buy on your own. In postpaid, they have avoided getting into a price war. "Our experience is that postpaid customers are sticky to the service and don’t churn,” said an Airtel executive. Airtel is also moving ag- gressively in the FTTH space where, again, it faces Jio in the ring. For instance, in Q2, home broadband subscribers were up by 129,000 to 2.6 million as it increased roll- out of FTTH in 50 more cities, reaching 150 cities. While Jio does not give FTTH subscriber numbers separately in its Q2 results, based on the latest Telecom Regulatory Authority of In- dia data of July, Jio had 1.16-million wired broad- band customers, half that of Airtel. Jio’s offer and price are being matched by Airtel too. In the first week of Septem- ber, Jio launched an aggres- sive Rs 399 plan but with a killer deal: an offer of un- limited data across all tariffs for FTTH. Six days later, Airtel matched the unlimited data offer and reduced the price of its entry-level FTTH from Rs 799 to Rs 499. The even bigger play put in place by Airtel is to sub- stantially reduce the gap with Jio in the number of cities where FTTH services are available. To this end, it has tied up with local cable operators who will provide the last- mile connectivity. Airtel overtakes Jio for first time in new 4G subscriptions NEW DELHI, NOV 02: Finance secretary Ajay Bhushan Pandey on Sunday hinted that the government was working on another stimulus package but he refrained from giving a timeframe. "We keep monitoring the situation on the ground to assess which sector of the economy or segment of the pop- ulation needs what kind of help at which time and respond accordingly. We keep taking suggestions from in- dustry bodies, trade associations, var- ious ministries and after going through their suggestions and require- ments of the economy, we come out with timely measures," Ajay Bhushan Pandey said in an exclusive interview to Pandey said that he could not give a timeframe for the stimulus package, “but yes the government was on it and deliberations on further interventions were on”. Talking about the current state of the economy, Pandey said that the economy was recovering and moving towards sustained growth. The October GST collection has been Rs 105,155 crore which is 10 per cent higher year-on-year for the cor- responding month last year. This Sep- tember, the economy had also shown 4 per cent growth at Rs 95,480 crore in GST collections y-o-y. Further, the country has seen a growth in electricity consumption, exports, and imports, he said. "September and October data shows that we have reached pre-Covid-19 level and gone into positive territory. If we compare with the last year, the e- way bill in September has seen year on year growth of 10 per cent and in Octo- ber it has seen a growth of 21 per cent," he said. "If we are able to maintain this growth for the next five months, then we can say that we can transition from deep negative zone to near-zero growth zone by March 2021. Interna- tional Monetary Fund (IMF) has pro- jected India's GDP to contract 10.3 per cent this fiscal year, revised from its forecast of a 4.5 per cent decline in June," he added. The Reserve Bank of India had last month said that the economy is likely to contract by 9.5 per cent in the current fiscal. GDP contracted 23.9 per cent in the first quarter of the fiscal, as per the estimates of the Central Statistics Office (CSO). The finance secretary said the gov- ernment has started electronic in- voices from October 1. On an average 8 lakh invoices were being generated daily. It picked up quickly and on Octo- ber 30, in a single day 29 lakh elec- tronic invoices were generated. "If we see the growth of the FMCG, auto sec- tors, it shows that we are going in the direction of sustained growth," he said.Pandey said, "We are analysing every sector and this is a continuous process. Since the COVID-19 out- break, we have been continuously monitoring every sector. Whatever was required for helping migrants, vulnerable sections of the rural or ur- ban populations, we did. When the na- tion was in lockdown, we gave cash to women Jan Dhan account holders in their bank accounts through DBT. We provided early instalments to farmers under PM Kisan Yojana." "We helped employees and employ- ers in their EPF contribution. We ear- marked Rs 3 lakh crore for enhanced working capital to MSMEs, out of which Rs 2 lakh crore has been sanc- tioned and amounts are being dis- bursed. MSMEs were also given the benefits of loan moratorium. We have given income tax refunds of Rs 1.27 lakh crores in last seven months. We have given GST refunds of Rs 70,000 crore," he added. He said that a total refund of Rs 2 lakh crore has been given in the last seven months. During this period, rev- enue collections were impacted but the government did not stop or slow down the refunds. Ruling out the possibility of any cut in GST rates in near future during the COVID pandemic, he said that there is the wrong impression that rate cut boosts sales and growth. "One may see the example of mobile phones. Mobile phones are attracting an 18 per cent GST rate from April 1, 2020, up from the earlier rate of 12 per cent, after the GST Council corrected the inverted duty structure. Now see the current sales figures for mobile phones. Despite the increased tax rate, their sales are up," he said. "Frequent tinkering with the tax rates is not good for the economy. It also sends wrong signals to domestic industry and international investors. We have to provide stability and pre- dictability in our tax systems," he added. Another stimulus package in pipeline, says finance secretary Former HDFC Bank CEO Aditya Puri will be guiding global Carlyle on invest- ment opportunities across Asia as a senior advisor, the global private equity major said on Monday. The announcement has come within a week of Puri's retirement from HDFC Bank as the chief ex- ecutive and managing di- rector. Puri is widely credited for building HDFC Bank from scratch and making it the largest in the private sector space and the most valu- able one. Puri will advise the Car- lyle team on investment opportunities across Asia and provide guidance on the evolving market land- scape and new investment opportunities, Carlyle said in a statement. He will also be advising Carlyle's investment pro- fessionals and portfolio management teams on building differentiated high quality businesses, it said. Carlyle's financial sector lead for Asia and managing director Sunil Kaul said he has known Puri since his Citibank days. “To have someone of his stature join Carlyle as a se- nior advisor will add signif- icant value to our capabili- ties across the region, not only in financial services, but across sectors given Puri's unparalleled experi- ence in the business world,” Kaul said. Carlyle's investments in India include SBI Cards. It had recently announced in- vestments in Ajay Piramal's pharmaceutical business and also a stake in Bharti Airtel's datacentre arm. “I am very impressed with Carlyle's track record in a number of key industry sectors, including its lead- ership position in financial services, not just in India but across Asia,” Puri was quoted as saying in the statement. Carlyle Asia's Managing Director and Chairman X D Yang said the PE major will be leveraging Puri's “deep expertise and relation- ships” to source new in- vestment opportunities and to help the its portfolio companies build better businesses. HDFC Bank ex-CEO Aditya Puri joins Carlyle as senior advisor
