Shape-up or Ship-out situation for suppliers !! The horrifying state of the covid-19 pandemic is going to frighten India by its staggering economy. AREAS EFFECTS #Core industries. (Coal, Crude Oil, Natural Gas, Refinery products,Fertilizers, Steel, Cement & Electricity) Shrank by 6.5% #Fuel revenue Rs 40000 crore losses #Job 27 million losses THE CONTRACTION IN MONEY FLOW IN ECONOMY DUE TO LOCKDOWN #India Is Facing Liquidity Crisis. Liquidity Crisis ” is a financial situation characterized by a lack of cash or easily convertible to cash assets across economy. #Low Inflation Rate. India’s retail inflation rate is on a decline slipping 170 basis points ( 1 bps = 0.01% ) to 5.91% in March due to low demand in the Indian economy. Retail inflation measures the average price change in a basket of commodities and services over time. Why Low Inflation (deflation ) Is DANGEROUS ? Many of us think that low price of product is good indicator of economic growth but it is not 100% right. Suppose a shopkeeper purchased the product A @ Rs. 100 to sell it in Rs. 120. Due to unavoidable reason deflation occurs and he has to sell it in Rs 80 i.e less than the cost. Now, the consumers are happy but what about suppliers, if this situation continues then supplier will even not be able to bear the fixed cost of their business and will collapse. In this situation, suppliers borrow money from the commercial banks. It’s favorable to the supplier, if Interest percentage on this loan is low or moderate . RBI’s some important decision after considering supplier’s worry. Repo rate cuts – Previously …
An Immense Stress To Reinvigorate (पुनर्जीवित) – The Floundering India Read More »