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In FY 21 Indian economy to contract 9% expects S&P.

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S&P Global Ratings said on September 14 that it was expecting India’s economy to shrink by 9% in the fiscal year ending March 31, 2021, larger than its previous estimate of a 5% contraction, as the country reels under the impact of the COVID-19 pandemic.

The ratings firm joins a host of major banks and ratings agencies, which have made deep cuts to their forecasts on India’s economy following a 23.9% contraction in April-June, as consumer spending, private investments and exports collapsed during one of the world’s strictest lock downs.

S&P’s latest revision comes three months after it made its projection on India’s real GDP for fiscal 2021.

“While India eased lock downs in June, we believe the pandemic will continue to restrain economic activity … As long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain,” S&P said in a note.”The potential for further support monetary support is curbed by India’s inflation worries,” said Vishrut Rana, Asia-Pacific economist for S&P Global Ratings. The Reserve Bank of India has cut policy rates by 115 basis points so far this year.

Retail inflation data, due later in the day, is likely to have stayed above the Reserve Bank of India’s medium-term target range in August for the fifth straight month, according to a Reuters poll.

India’s high deficit also limits the scope for further fiscal stimulus, S&P added. It expects GDP growth of 6% in fiscal 2022 and 6.2% in fiscal 2023.

Moody’s on Friday said it was expecting India’s real GDP to contract by 11.5% in fiscal 2020.

Automobile

Electric vehicle versus Fuel vehicle: Which is more affordable and cheap

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The electric vehicle industry is booming, but the biggest drawback for the consumer is that they are priced much higher than the traditional fuel vehicles. However, at a time when filling-up a full tank of petrol scooters and motorcycles is fast becoming a dream for many, the alternative to it — electric two-wheelers — seems to offer better running price realisation in the long term.

According to investment bank and financial services firm Morgan Stanley, battery-powered two-wheelers are cheaper to own and run than petrol and diesel equivalents. The running cost of electric vehicles is nearly 5% lower annually compared to a gasoline petrol vehicle, the report showed.

The maths of cheaper electric vehicles

The petrol and diesel prices across the country continued their northward march taking its retail rates to unprecedented levels and burning bigger holes in the consumer’s pockets. The electric vehicle as an option weighs heavy.

Although the fact that EVs are priced significantly higher than the vehicles running on fuel have kept people away from them. But once the infrastructure is in place, the cost really comes down to the electricity unit price, which is much lower than the fuel rates. No matter what the price of crude oil is around the world, in India, the average fuel rates have always remained at ₹70 and ₹80 per litre for diesel and petrol, respectively.

Under the bare minimum conditions, the math becomes even clearer — unit price of electricity multiplied by battery size is equivalent to the cost of running an EV. This also eradicates high fuel costs and provides cheaper maintenance and tax. Electric vehicles also hold their value for longer compared to fuel vehicles, according to a Europe based firm study.

 

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