IB Economists

  The Delhi government has announced an incentive on the purchase of electric vehicles, upto Rs. 30,000 on two wheelers and Rs. 150,000 on four wheelers. The incentive will come in the form of a subsidy which will allow producers to produce at lower costs and therefore are likely to reduce prices for consumers. This will funded by the pollution cess and road tax on fuels. India has very few electric vehicles due to high tariffs on importing electric vehicles and also lack of domestic production. Although Two wheelers have become famous in the country due to previous central government initiatives such as FAME, these initiatives have not been  very effective.  E- Vehicles are beneficial for the environment since they reduce the greenhouse emissions and are also considered to be on average low cost. One of the reasons for a lot of companies to not produce in India was the high cost and less availability of spare parts. This assistance gives the producer an incentive to...

The Asian Infrastructure Investment Bank (AIIB) approved a $750 million loan for India to fight the Covid-19 Pandemic. The bank also stated that the fund will help with ‘bolstering economic aid for businesses, including for the informal sector, expanding social safety nets for the needy, and strengthening the country’s health care systems’.  India currently has the third highest number of coronavirus cases and according to the world bank 270 million people in India live below the national poverty line. While 81 million live in densely populated settlements with limited access to health care.  This loan is one of the many, banks across the world have provided India with funds to combat the coronavirus. The world bank has provided a $1 Billion package and the AIIB has also helped India previously with the help of loans.  This loan focuses on the informal sector and strengthening the healthcare systems, which is the need of the hour, since those working in the informal secto...

India is said to be developing land of more than 450,000 acres, in order to attract Companies who would want to leave China. Tensions between the US and China have rised after the US blamed China for the development of the coronavirus disease. A rise in tension could include a trade war by both countries adding tariffs and hence making it worse for companies producing in China. This is the perfect opportunity for India to give shelter to the companies willing to leave China. If India makes the best of this then they could see companies setting up industries in India which will make products in India cheaper, improve the balance of trades, contribute to GDP growth, create employment and generate tax revenue. The industries setting up will make the goods cheaper since the goods will be produced in India and tariffs and quotas can be avoided. Some amount of goods will also be exported and the overall imports will be reduced, hence increasing the injection and reducing the leakage from the...

The Uttar Pradesh government announced that it would be suspending a few labour laws for the next three years. They did this to help reduce the impact of the Covid-19 Pandemic on the labours. The suspension of these laws can help increase employment. The labour laws are primarily used to protect labours and provide them with healthy and safe working conditions, equal and right pay and stop wrongful termination. However, there are more labour laws which ensure that the firms are working in good will. Sometimes laws may be very strict and lead to a rigidity in the labour market.  For example, if there are minimum wage laws which are higher than what the employers are willing to pay, it reduces the demand for labour and hence firms will hire less labours, resulting in structural unemployment; similarly, strict laws for firing labours can lead to firms being more harsher in hiring employees and end up hiring less employees. A deregulation of the labour market can usually help in reduci...

The confederation of All India Traders (CAIT) said in a statement that nearly 20% of Indian traders could run out of business in the upcoming months, According to CAIT nearly $72 Billion has been lost in revenue in the period between 25th March to 30th April. Out of the 70 million traders who have suffered, 15 million traders will have to close down permanently. The traders are mainly made up of small and medium sized retailers. CAIT claims that there is no synchronization between the central and state governments and the home ministry have not helped the situation on the ground. They are looking for intervention from the government in order to minimize the impact. Earlier, Nobel Prize winner - Abhijit Banerjee suggested that India needs a big stimulus package in order to recover from this economic crisis. The Indian government has failed to introduce any stimulus package in order to help the economy. A lack of any help from the government can lead to a rise in unemployment and push ma...

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 ...

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...

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...

T he United States government announced that they would be providing India with a $2.9 million assistance package in order to help the Indian government prepare laboratory systems, activate case-finding and event-based surveillance, and support technical experts for response and preparedness. This will help India combat the deadly virus which has taken thousands of lives around the world. As India is still in the initial stages and under a lockdown, the total cases in India stand a little above 1200 and have continued to grow, looking at other countries such as Italy and the United States, who have a smaller population and better health facilities compared to India and hence India poses a larger threat from this virus. According to experts the most effective way to stop the spread of this virus is to have social distancing because the virus can spread easily from person to person. However, the World Health Organisation believes that to contain the virus all countries need ...

On Friday, March 27, India’s Central Bank, The Reserve Bank of India reduced the Repo Rate and Reverse Repo Rate in order to tackle the economic slowdown India is facing due to the  coronavirus. India has been under a total lock down and only essential services are open to consumers, this has led to production of a lot of goods and services being put at a standstill since workers cannot travel to their workplace, leading to a shortage of goods and services  forcing many retailers to sell goods at higher prices. The repo rate is the rate at which the commercial banks borrow money from the central bank. The reverse repo rate is the rate at which the central banks borrow money from the commercial  banks, commercial banks may park their excess money there. Both the repo and reverse repo rate are a part of the monetary policy which controls the interest rate and money supply in the  country.  The new repo rate is set at 4.40% and this has been t...