IB Economists

Facebook invested $5.7 Billion for a 9.9% stake in Reliance subsidiary Jio, this will help Jio Mart users to make payments through Whatsapp, which is the most widely used messaging app in India. Jio Mart helps local grocery stores to connect with consumers nearby with the help of e-commerce. Jio Mart is seen as a competition to ‘Local Stores by Amazon’ which also allows local grocery stores to connect with consumers in their locality. The service was launched six months ago on a trial basis. However, Local Stores, the stores themselves are responsible for delivering the goods, while in Jio Mart goods use its own delivery system to deliver the goods, this includes employees of Jio Mart to pick up goods from the store and deliver it to the consumer. During the coronavirus pandemic the need to deliver essential goods such as groceries at the doorstep is paramount and consumers may also be willing to pay extra for this service. Facebook and Amazon are among the largest corpora

O ne of the recent articles stated that the USA has demanded India to supply them with HCQ for the rising corona  malaria, and it is also recommended by the scientists and doctors that HCQ can to certain extent cure virus victims in the USA. Nonetheless the USA is not the only country demanding India for the HCQ drug, there are multiple other countries which are demanding India for HCQ suppliers. This signifies the shortage in the world market for the HCQ drug.  The HCQ drug is a drug used to combat and help victims or patients of coronavirus recover. Knowingly, as the cases of coronavirus in the USA are rising exponentially, which is leading to an economic instability (Exchange rates are becoming more volatile), and this is one of the main reasons why the demand for the HCQ drug is more than the supply for it leading to a shortage in the market. According to one of the recent news articles there is a shortage of the HCQ drug in Rajasthan. The shortage in the world market will cont

The People's Bank of China increased its stake in India's largest private sector bank HDFC to more than 1%, this move has been seen by the authorities as a risk of an opportunistic investment by the Chinese. The share prices for the Bank were above Rs.1200 throughout February but due to coronavirus have fluctuated at around Rs.800. The bank also showed a 15.5% profit in the 4th Quarter of the financial year. Many government owned Chinese banks have been investing in countries around South Asia as a part of the One Belt One Road initiative. India has stayed out of the One Belt One Road initiative however, this move by the Chinese Central Bank seemed to worry the authorities. Taking note of the situation, the government decided to amend the Foreign Direct Investment (FDI) policy in order to discourage opportunistic investment in India. The new FDI policy requires Investors from the neighbouring countries, sharing land borders will require investment through a government r

The Organisation of Petroleum Exporting Countries(OPEC) along with other major oil producers such as Russia and the United States decided to reduce the global oil supply. The decision came due to the coronavirus reducing demand for oil worldwide, leading to a fall in oil prices . However the OPEC+ decided to cut the oil supply by around 9.7 million barrels per day(bpd) which is about 10% of the global oil supply. The consumption of oil has been said to be reduced by 30% globally. The reduction in oil supply was taken in order to maintain the profits. The cut in supply will lead to a fall in employment levels since workers will be made redundant. These workers will lose their main source of income and hence will not be able to demand other consumer goods, hence the aggregate demand in the economy will be reduced and the GDP may also fall. Since a lot of the revenue for oil dependent economies like Saudi Arabia and UAE comes from oil, the government revenue will also reduce, and th

On Thursday, 9th April, the Supreme Court of India asked the government to ensure that testing for the coronavirus should be made free by all private labs. The reason for this being that private labs are charging nearly Rs.4500, which many Indian may not be able to afford. Government labs which do the tests for free can do around 15,000 tests a day. By taking this decision the supreme court is making the tests widely available and reducing the chances of spreading the virus. This was an important step because the poor people are more likely to get Coronavirus since they live closely and they should be able to afford these tests. Since these tests become free it will lead to India getting rid of Coronavirus faster which is good for the economy. However, the private labs may not be able to bear the cost of providing everyone with free tests and may have to shut down. Hence the government will have provided them with some other source of support. The court also announced that the g

Due to the Covid-19 pandemic trade between countries have reduced, the threat of the virus spreading has led to countries shutting down borders and imposing lockdowns. Due to this Hong Kong which imports 98% of their vegetables has seen an increase in demand for its homegrown fresh foods. An article shows that the farmers are failing to meet the demands for the local products. This leads to shortage of goods and hence requires the farmers to raise prices to the point where demand meets supply. However, since food items are a necessity and everyone should be able to afford it, the government and farmers should work on further increasing the supply of food products. If this does not happen then the poor people may not be able to afford this necessity. In order to overcome this situation the government should also try using rationing so that the maximum number of people can get food. The government could also impose a price ceiling in order to make the good more affordable to th

The government put a curb on diagnostic kits on Saturday, April 4th. The decision was announced by the directorate general of foreign trade. The curb only allows those with a license to export diagnostic kits, earlier there were no restrictions on the export of this good. This measure was put into effect immediately. This measure comes after the number of coronavirus cases have been growing at a very fast rate in the world's second largest populated country, even though the country has been under a complete lockdown for more than a week, the rise in cases have been massive.Testing kits are very important for any nation and demand is nearly inelastic for these kits, these kits are needed to test patients for coronavirus. As spoken about in our post earlier, these kits are a necessity. Exporting these kits are helpful for the economy, however only if they are in excess. If India continues to export these kits without meeting the demand in its home country, the situati