Weekend reading links

1. Ananth points to Ed Yardeni's hugely informative website. Total assets of central banks in developed countries,

... as a share of GDP

2. On the global EV cars market

3. I have blogged earlier highlighting how corporates across developed countries have used Covid 19 to cut costs and deleverage. It may not be incorrect to argue that the monetary accommodation has had the biggest positive impact for the largest firms. The same appears to have happened in India. Livemint points to an SBI research which shows companies in the top 15 sectors, representing more than 1000 publicly trade firms, reduced debt by more than Rs 1.7 trillion in FY 21. The net debt to equity ratios of BSE 500 companies fell to 0.51 times in FY21.

The pandemic allowed firms to defer expansion plans and use the surplus to retire debt. It also lowered discretionary spends, travel costs, and other operational expenses. 

This comes on top of anecdotal evidence of large businesses cutting down on workers and squeezing suppliers by lowering prices. Even the largest IT companies have used the pandemic to cut employee costs, among other things, by laying off large numbers of engineers and hiring junior engineers at lower wages. 

4. On a related note, the Q4 corporate results continue to surprise on the positive side. This from the results of 1757 listed companies that have so far declared their Q4 results,

Revenues from operations rose 17 per cent, year-on-year, to Rs 26.04 trillion. Profits after tax (PAT) rose a whopping 523 per cent to Rs 2.38 trillion. Operating profits — or PBDIT (profits before tax, depreciation, and interest) — rose 64 per cent to Rs 7 trillion. The interest pay-out dropped 6 per cent, depreciation rose 7.4 per cent, and employee costs increased 9.5 per cent. The resurgence was across many sectors... If volatile sectors such as banking, finance, oil production, and refining are excluded, operational revenues rose 21.9 per cent for the rest. PBDIT and PAT rose 58.9 per cent and 179 per cent, respectively, while interest costs fell 11 per cent and employee-related expenses rose 7 per cent. Banks saw an extraordinary 629 per cent rise in PAT, despite minimal credit growth of 5.3 per cent. Easier provisioning contributed and a turnaround in Canara Bank, Axis Bank, Union Bank, and Bank of India saw this quartet register Rs 5,490 crore in combined PAT, versus combined losses of Rs 10,786 crore a year ago. The story was similar for 163 listed non-banking financial companies (NBFCs), which saw combined PAT rise to Rs 19,977 crore from combined losses of Rs 2,601 crore a year ago. Crude oil, refining, and marketing had combined extraordinary losses of Rs 19,241 crore a year ago, and combined PAT of Rs 45,203 crore this quarter.

5. Indian Express has a very good investigation which analysed the profile of independent directors in corporate Indian Boards. It does not paint a flattering picture. This about regulators going corporate boards, some even before their cooling-off periods were over, may be the most worrying. 

6. Highlighting the interest generated by the PLI scheme at least in mobile phone manufacturing, Taiwanese iPhone maker Wistron has met its five year investment target by investing Rs 1255 Cr in 2020-21. While Foxconn is already in India, Pegatron has not yet set up a factory in India. Apple, through its three vendors, Apple is planning mobile phone production of Rs 3.4 trillion value in five years. This would be 56% of the entire PLI target for global players of Rs 6 trillion. It is thought that 80% of this will be exported, higher than the PLI target of 60%. 

This is a status report on the PLI scheme.

7. Pratap Bhanu Mehta points to the latest Pew survey on religious attitudes,

Stopping religious intermarriage for both men and women is a very high priority for almost 70 per cent Hindus and Muslims... Opposition to caste intermarriage is only slightly less than religious intermarriage, but declines more with college education. It is higher amongst Muslims, 70 per cent of whom oppose inter-caste marriage for men, compared to 63 per cent Hindus.

This from the Pew Survey,

See also this.  

8. From another Pew survey, negative opinion about China reaches all time highs,

In the soft power race, China remains far behind the US.

9. Another health consequence of Covid 19, impact on patients with other medical conditions,

A study published in The Lancet journal in May, which covered 41 cancer treatment centres in India, showed a sharp reduction in oncology services between March and May 2020, compared with the corresponding period in 2019. The largest decrease was observed in the number of new patient registrations—which plummeted from 112,270 to 51,760 (a drop of 54%). A larger reduction in patient numbers was observed in the major cancer centres located in large metropolitan cities than in the smaller cities. The study, which was done by the National Cancer Grid, indicated that the decline in access will result in 83,600-111,500 missed diagnoses and as many patients will require treatment for a more advanced form of the disease in the next two years. It predicted the need for an additional 98,650-131,500 cancer deaths within the next five years.

10. Livemint analysis on the large corporate profits in India,

A broad-based analysis of the corporate results of over 1,100 companies (1,130 to be precise) shows that even as revenues, at the aggregate level, fell by 6%, the operating profit of this representative set of India Inc shot up by 30% and net profit climbed by 48%. In marked contrast, in the US, aggregate net profit decreased by 6% in 2020, according to the US Department of Commerce. The revenue-profit dichotomy within corporate India suggests that companies went on a massive cost-cutting spree, which was at an order of magnitude different from what unfolded in other countries...

One major area of cost-cutting was compensation to employees, whether in the form of laying off staff, employing contract labour for fewer days, or by pruning salaries. In aggregate terms, for our set of 1,130 companies, total employee expenses increased, but at a much slower pace. The year-on-year increase in employee expenses halved from 7.4% in 2019-20 to 3.8% in 2020-21. Within this, though, companies took very different approaches. About 51% of the companies cut employee expenses in 2020-21, with the aggregate decrease amounting to 10%. Among the firms whose net sales increased, about 28% still cut staff costs. This number increased to 74% among companies whose net sales fell. Firms in sectors that were most affected by the pandemic were also the most active in reducing employee costs. About 62% of firms under ‘other services’—mostly in the travel, leisure and hospitality sectors—cut staff costs. Notably, for 127 companies, both sales and profit after tax have risen, but employee expenses have fallen. In other words, these are firms that fared better during the pandemic year, yet they dialled down on compensation to employees. For example, steel major JSW reduced employee expenses by 12% even though it comprises merely 4% of its total expenditure. Others in this set included Reliance Jio, chemicals major BASF India, and tyre manufacturers JK Tyre & Industries and Apollo Tyres. Adani Green Energy reduced employee costs by 64% amid a 20% increase in net sales.

11. One more graphic highlighting TSMC's dominance of chip making,

Also highlights China's relative backwardness in chip manufacturing.

12. Finally, a friend forwards this excellent conversation with Lant Pritchett where he talks about the problems with international development discourse. It has to be experienced to believe the disconnect between the priorities of real-world governments and those of the theoretically focused funders and development opinion makers.