India’s TOP 500 Companies 2021

INDIA’S TOP 500 COMPANIES 2021 102 ECONOMY UPDATE The COVID-19 pandemic that infected millions and brought economic activity to a near-standstill globally has led to a larger economic shock in 2020-21. However, even before the COVID-19 got declared as a global pandemic in Mar 2020 and hit India in full force in terms of lost economic activity, Indian economy had set on a downward path in FY20. Global factors like weak external demand and trade apprehensions between China and the US along with moderation in the domestic consumption and investment demand put a drag on the growth of the Indian economy in FY20. Nonetheless, the government expenditure which grew by 7.9% in FY20, acted as a counter-cyclical force to some extent and avoided further deceleration in GDP. The real GDP moderated to 4% in FY20, the lowest level in the new 2011-12 series. Pvt. consumption& investment plunged in FY20, even before the pandemic Growth in global GDP and trade remained at lowest level since 2015 0 2 4 6 8 10 12 14 16 Q1 FY16 Q3 FY16 Q1 FY17 Q3 FY17 Q1 FY18 Q3 FY18 Q1 FY19 Q3 FY19 Q1 FY20 Q3 FY20 GDP Private consumption Investment 2.3 1.4 4.7 2.9 -0.1 2.8 2.4 3.1 2.9 2.3 -1 0 1 2 3 4 5 2015 2016 2017 2018 2019 World trade (% y-o-y) GDP (% y-o-y) Source: MOSPI, WTO The subdued consumption and investment demand was reflected in the broad-basedmoderation in industrial activity with 17 out of 23 industry groups in the manufacturing sector showing contraction in the Index of Industrial Production (IIP) during FY20. Other sectors like electricity and mining also witnessed moderation, leading to a contraction in the overall IIP to 0.8% in FY20 as against a growth of 3.8% in FY19. The weak domestic demand calmed down prices of industrial inputs and fuel group which was reflected in the low WPI inflation of 1.7% in FY20 as against 4.3% in FY19. The weak domestic and external demand was also underscored by a decline in India’s foreign trade in FY20. While exports dropped by 4.9%, imports showed a higher contraction of 7.7%, leading to narrowing of the trade deficit to US$ 158.5 bn in FY20. Despite the global and domestic economic slowdown, FDI inflows to India remained buoyant and grew by almost 40% to US$ 43 bn, making it the predominant source of external financing. Foreign portfolio investment also witnessed net inflows of US$ 1.4 bn in FY20 as against the net outflows of US$ 618 mn in FY19. Foreign capital inflows largely helped in offsetting the negative impact of economic slowdown on stock valuations of corporates. While Indian economy was on weakened footing in FY20, the COVID-19 pandemic hit the economy hard. The government imposed a stringent nationwide lockdown during the initial phase of the pandemic in March and April 2020 to flatten the disease curve. The contact-based, employment-intensive sectors like manufacturing, construction, hospitality, transport and tourism were hit hardest initially. Dun & Bradstreet