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FDI snapshot 2020 and green shoots in the Indian economy

FDI in 2020

Basic economics will tell you that for each rupee that is injected into the economy, the economy grows by multiple rupees. This is known as the multiplier effect. The total number of projects that were announced in India in 2020 was 455. Most of these were announced from the USA.

The total amount of investment that could come in, based on estimates and disclosures wherever available, is upwards of around $ 21.9 Bn. The key sectors contributing to this rally are Manufacturing, Data Centre, and Logistics. They make up 54.5 per cent, 15.1 per cent, and 9.6 per cent respectively, of the total investments announced to the country. 

A major global shift, that was US-China relations in the backdrop of Covid-19, was visible. If we look at the total number of projects announced from US-based companies towards India and compare that with those in China, we see 191 projects for India compared to 241 for China.

To put it in perspective, the total number of projects announced in Vietnam (17), Malaysia (17), Thailand (15), and Indonesia (6) combined were only 55. A closer inspection of the ticket size of 48.97 Million $ would indicate that it is the supply chains that are moving. 

Each anchor investor over time would move their suppliers. This could be due to economics, inspiration, or awareness of the India opportunity. 

Green shoots in Indian economy:

GST Collection ↑

•    January 2020: $ 15.54 billion
•    January 2021: $ 16.38 billion

 
Vaccine doses (till 31st January): 3.74 million

Railway Freight ↑

•    January 2020: 110.20 million tonnes
•    January 2021: 119.79 million tonnes

Railway Freight Earnings ↑

•    January 2020: $ 1.56 billion
•    January 2021: $ 1.61 billion

Trade Deficit

 •    January 2020: $ 15.3 billion
•    January 2021: $ 14.8 billion

CPI Inflation 

•    November 2020: 6.93
•    December 2020: 4.59

Toll collection

•    Record Highest Daily Toll Collection: $ 11.7 million
•    Record Highest Daily Toll Collection via FASTags: $ 6.83 million

UPI payment transactions ↑ 

•    January 2020: $ 30.86 billion 
•    January 2020: 1.31 billion transactions
•    January 2021: $ 57.40 billion
•    January 2021: 2.3 billion transactions (all-time high)

Transactions breached the 2 billion (volume) mark for the fourth straight month.

Tractor Registration ↑

•    January 2020: 54,662
•    January 2021: 60,754

India's power consumption ↑ 

•    January 2020: 105.15 billion units (BU)
•    January 2021: 111.43 billion units (BU)

WEO Growth Projections

•    2021-22: 11.5 percent 
•    2022-23: 6.8 percent