5 Things You Probably Didn't Know About Coronavirus Pandemic Effect On Indian Economy.

Economists say that the country is facing a slowdown in consumer demand as household incomes and jobs decline and the government has limited space to stimulate growth owing to its growing debts. Between January to March, the GPS (GDP) and the ECI grew by 1.6% compared to the same period last year, driven by government expenditure and growth in the manufacturing sector, the Ministry of Statistics showed on Monday. Sakshi Gupta, the senior economist at the HDFC Bank, said that while the April-June quarters appear optimistic year on year, sequential growth is likely to contract on a lower basis. 

Moodys Investors Service lowered India's growth forecast for the current 2021-22 fiscal year to 9.6 percent, from a forecast of 13.9 percent a year ago, noting that faster import steps are crucial for India to mitigate the impact of COVID-19. The benchmark BSE SENSEX has reached another milestone, reaching an all-time high of 5,53,711 last week - almost double the level of March 2020 - With the Indian government and manufacturing losing orders in the second wave, it seems unrealistic to expect a large foreign capital inflow. 

Indian growth in the current fiscal year has been slashed by several international banks and rating agencies in the face of the devastation of the second wave of the pandemic. While the OECD's economic outlook for 2021 offers a positive outlook for the Indian economy, the new virus variants of the second wave pose a new growth risk. 

Official figures released on full-year growth released this week showed that India's economy contracted in FY21 by 7.3 percent, the sharpest contraction in the country's history. While India is expected to recover faster than the major economies in FY22, growth in the first quarter was hit hard by the second wave. 

In April, as the world began to understand the scale of India's second wave of economic growth, the International Monetary Fund (IMF) raised its forecast for India's economic growth in 2022 from 11.5% to 12.5%. Given that the figures are to be revised, the IMF's earlier forecast now appears unrealistic. 

Economists believe that the collapse of India's healthcare system and the rapid spread of the second wave of coronavirus infections will cause India's GDP growth rate to contract in 2021. On 27 March Moodys Investors Service (now Moodys) updated its estimate of India's GDP growth per capita for 2020 from 5.3% to 2.5%. On April 28, the former chief economic adviser to the Indian CEA said that the government should be prepared for a negative growth rate for FY21. 

Many credit rating agencies and banks have lowered their GDP forecasts for India in a matter of months. Economist Christophe Barraud has written an article about the downgrade of India's GDP growth rate from 11.8% to 10.2% in 2021 by global forecasting firm Oxford Economics. The collapse of the Indian health system, the rise in COVID-19 cases, India's poor vaccination rate, and the lack of an effective government strategy to combat the pandemic are cited as the main reasons for the downgrade of growth rate. 

On Tuesday, the State Bank of India (SBI) cut its 2019 year-long growth forecast to 7.9 percent from 10.4 percent previously forecast. The economic impact of the COVID-19 pandemic in India was devastating. India's March quarter (Q4FY21) saw a slight improvement in GDP growth, but economists believe this will slow in the second wave of the pandemic. 

India's growth slowed by 3.1% in the fourth quarter of the 2020 fiscal year, according to the ministry of statistics. India's top economic adviser said this was due to the impact of the coronavirus pandemic on the Indian economy. While India experienced a slowdown before the pandemic, according to the World Bank, the COVID-19 pandemic has increased existing risks to India's economic prospects. 

Emerging economies are expected to contribute 6.4 percent to global economic growth this year. The IMF's World Economic Outlook predicts that emerging markets, including India, will grow by 6.7 percent, while the global economy will grow by 6 percent in 2021. 

For example, the United States and China, India's largest trading partner, could experience supply-chain disruptions as a result of India's economic slowdown. This scenario is optimistic, but India's declining growth could have secondary effects that could have further implications for the global economy. A key medium-term risk to India’s economy remains a deepening employment crisis that could prevent India from taking full advantage of its favorable demographic situation. 

Of course, these problems existed before the COVID 19 pandemic struck in the first two waves, but the third will exacerbate the problems and have a lasting impact. The countryside, which was the saving grace of the first wave, will be affected this time.

The COVID 19 pandemic continues to affect lives and livelihoods and the Indian economy, with a devastating second wave wreaking havoc and a third wave looming. Investment and trade performance has been weak, as consumption caught fire in India during the first and second waves of the pandemic. This follows the economic slowdown in the three years prior to this pandemic. 

To understand the economic impact of the second wave, we should remember the first wave and its impact on the economy. We see the contrast between the effects of the first and second waves in the data on wage growth in agriculture. Average wage growth in the agricultural sector for the period November 2020 to March 2021 has been reduced from 8.5 percent in April-August 2020 in the first wave to 2.9 percent in the second. 

These results and the discussion on the economic impact assessment are summarized in Table 4. A summary of India's main economic indicators and forecasts can be viewed in a larger version: the biggest impact on GDP growth is expected at least for 2020-2021. 

 

As India's economy shifts from agriculture to services and manufacturing, the government must help workers transition away from agriculture, which employs a large share of the working population, especially in rural areas. The reports show that India's manufacturing and construction sectors will be the biggest drivers of growth, contributing between 9.6% and 8.5% to annual GDP growth and creating between 11 and 24 million jobs between 2023 and 2030. As India recovers from COVID-19, economists stress that large-scale investment in recovery and reforms to improve the financial health of the banking sector, if implemented, will generate stronger growth and allay concerns about a possible solvency crisis for state-owned banks.

You can read our blog  What Does A New Study Say About The Indian Financial Market In 2020-21?

Disclaimer: This information has been collected through secondary research and Chakde Credit is not responsible for any errors in the same.

You Will Never Thought That Knowing Credit Score In India Could Be So Beneficial!

 When you apply for a loan, the bank thoroughly checks the application to ensure creditworthiness and the ability to repay the loan on time. Banks and various regulated credit institutions check your credit rating before applying for a loan.

A credit score is a three-digit number between 300 and 900 and the higher the number, the better the score. Your credit score is compiled by TransUnion (CIBIL), one of the four credit reference agencies in India. The other office includes Experian and CRIF and the highest credit grade is Equifax, according to the website of credit information company TransUnion CIBILs the closer your score is to 900 the higher the chances that your credit application will be approved.

According to a Cibil survey, 62% of Indian respondents did not know that lenders check a consumer credit score to determine the terms of a loan while 63% knew that mobile operators use the CIBIL score to determine the credit limits on repaid loans. Whether a borrower will be able to meet credit requirements and loan repayment requirements of a financial institution depends on the credit rating given by the credit reference agencies.

A credit score is your financial report card and a numerical representation of your credit rating. A credit rating refers to a three-digit number between 300 and 900 that indicates your credit rating as a customer. The CIBIL score is between 300 and 900 and is considered good enough in India to accept a loan or credit card if the Cibil score is 700.

CIBIL, which is part of TransUnion, is one of the RBI-accredited credit rating agencies responsible for the creation of credit ratings for individuals and companies based on data from banks and credit institutions. A CIBIL score gives access to credit products such as loans and credit cards.

If you have a low CIBIL score, you can only take out secured loans or gold loans. In this case, your Cibil score is not required to take out a loan, as it is a security. A good CIBil, which is part of the TransUnion score, provides easy access to credit, while a low cibil (part of the TransUnion score) can make access to credit more difficult in times of distress.

Credit score and credit report are two of the most important factors influencing your lender. The credit score is one of the factors that influence the decision of a lender to approve or reject your application for a loan or credit card. A credit score measures your creditworthiness and is based on your past and present credit history.

The only reason is that the updated scoring algorithms have long monitored borrowers "behavior and have a comprehensive picture of their lending behavior. In order to maintain a healthy credit score, you must perform a check and maintain parameters to ensure that your credit score does not fall by mistake. Maintaining a good credit rating when looking for a loan will not only help you maintain general financial discipline.

In summary, the CIBIL report allows you to perform full financial checks and health checks to ensure that financial stress and adverse factors do not affect your creditworthiness. It is vital to check your score regularly if you are a good borrower and want to repay your loans on time. Please note that a drop in score will not affect customers and banks and credit institutions will be instructed to update their lending policies accordingly.

The Credit Information Bureau of India Limited (CIBIL - India's first credit information firm) collects and maintains records of loans and related transactions, such as loans and credit cards from individuals and non-individuals. These records are provided monthly by CIBIL to banks and other lenders. A credit report is a detailed record of your credit history that consists of credit card transactions, the total number of loans, employment data, and contact information.

Consumers who wish to obtain their credit reports may purchase them directly from credit reference agencies or directly from credit bureaus in some cases. Such lenders can also initiate loan reporting applications under the terms of tough investigations, which can reduce the creditworthiness of applicants by a few points.

Read the Blog about What does a new study say about the Indian financial market in 2020-21?

What Does A New Study Say About The Indian Financial Market In 2020-21?

According to some more recent reports from 2020 & Credit Bureaus Reports, India has a total of 622 million Internet users, out of which 500 million are smartphone users, which is the second-highest in the world.

Now let's take a look at the financial market.

Consumer credit markets are growing rapidly, equivalent to $ 612 billion in December 2020 at a three-year CAGR of 18 percent.

If you look at retail loans which have doubled since 2017, the increase in active retail loans is 1.7 times between 2017 and 2020.

Let's now compare different types of loans and their growth from 2017 to 2020.

Education loans remain at the same position from 2017 to 2020, which is $ 12 billion.

Home loans increase 20 to 25 percent, reaching more than $ 290 billion.

Auto loans increased by almost 50 percent, standing at $ 50 + billion.

Credit cards increase by almost 100 percent, standing at $ 22 billion.

Commercial vehicle loans increased a staggering 150 percent, which is now $ 37 billion. We can say this growth was due to the increase in demand for online taxis and buses.

Personal loans also saw 150 percent growth from 2017 to 2020, standing at $ 82 billion.

Business loans and LAPs have grown nearly 200 percent, to $ 19 billion and $ 68 billion.

Starting in 2020, Covid-19 affected credit markets and weakened consumer confidence; shows a 70% decrease in credit enquiries in the second quarter of 2020 compared to the first quarter of 2020. Consumer confidence fell 25% during the national lockdown. People in India are now more aware of credit reports and credit scores than before, a study shows a growth of almost 3 times the number of consumers checking their credit rating in 2020 compared to 2018. The consumer checks their credit scores more in 2020 than in the 2018 study that shows us that the number doubles and a person checks credit scores several times in a year. When we talk about growth in the average consumer loans taken per borrower since 2017, it has experienced a 45% jump.

This study shows us that from 2017 to 2020 the Indian market grew at a very good speed, but during the lockdown and now in 2021 it is recovering from that slowdown that occurred due to the lockdown. We can say that it will soon get back on track and will continue to grow in the future.

You can read our Blog Easy and Convenient Way to Get a Loan in India

Disclaimer: This information has been collected through secondary research and Chakde Credit is not responsible for any errors in the same.