Gujarat claims locust attack under control, assures compensation to farmers

Gujarathas claimed that it has been able to bring the locusts swarm attack under control barring a couple of isolated locations.
On a war footing now, the state government has deployed 100 tractor-mounted pesticide sprayer teams along with 16 from the Central government to tackle the locust menace, according to Punamchand Parmar, additional chief secretary for Agriculture, Farmers Welfare and Cooperation Department, Government of Gujarat. He claimed the operation was "overall successful".

"The spread of locusts has been controlled. A two-day operation on December 26 and 27 in Tharad taluka was successful. Now, only a few isolated locations are left. including one in Jorapura, Dhanera and another in Kuchavada of Deesa taluka, where the central and state teams are working. Another eight teams of the Government of India are working in Sanchor, Rajasthan, where the locusts of Tharad went yesterday," Parmar told Business Standard.
While a change in wind direction has reportedly turned the swarm towards Balochistan in Pakistan, Parmar said there are not too many left to go. The situation is likely to be brought fully under control by Sunday.
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However, the Gujarat government has now assured compensation to farmers in the northern parts of the state, who have been affected by the recent swarm attack.
Till Friday, the state government had said locusts in about 25 per cent of affected area had been controlled with pesticide spraying.
While Gujarat chief minister Vijay Rupani has assured compensation to aggrieved farmers in north Gujarat, their demand for electricity during the day has also been addressed. Farmers had sought power during the day to run water pumps and ward off the pests by playing loud music or making noises.
According to Parmar, large swarms of locusts has been found across 124 villages in 17 talukas of four districts. These include 114 villages from 13 talukas in Banaskantha district, five in one taluka of Mehsana, four in two talukas of Patan district, and one village in one taluka of Sabarkantha district.
However, 27 state survey teams, the Centre's 19 locust control teams and 25 local tractor-mounted sprayers have brought locusts covering 3,526 hectares under control.
State estimates put the total locust-affected area at 5,000 hectares in north Gujarat. "Based on wind patterns, it seems the swarms are no more likely to enter Gujarat but may move towards Pakistan," an official had stated on Friday.
However, ever since the first sighting a few weeks ago, farmers have been applying household solutions to combat the swarms. Some burnt tyres or dry straw, played drums and musical DJs, and operated large fans besides beating steel plates.
Meanwhile, Union Minister of State for Agriculture and Farmers' Welfare, Parshottam Rupala, ruled out use of helicopters for spraying pesticides to destroy the pests, stating that the practice posed a bigger health risk for animals and farmers alike. Instead, the government now plans to experiment with drones for spraying of the malathion pesticide, even as traditional methods like beating steel plates and playing loud music are being used to ward off locusts.

Gujarat tops e-way bill collection since April despite teething problems

Despite industries such as textiles and ceramics, among others facing teething problems, Gujarat has emerged as the leading state in generating e-way bills during April, May and the first week of June.
The state has generated over 10.72 million inter- and intra-state e-way bills, followed by Maharashtra (8.13 million), Karnataka (8.05 million), Uttar Pradesh (7.64 million) and Haryana (7.63 million), respectively.

Rolled out on April 1, the e-way bill system under the new Goods and Services Tax (GST) regime requires businesses and transporters moving goods worth more than Rs 50,000 from one state to another to generate and produce an e-way bill. The new regime mandates for e-way bills to be generated for intra-state movement of around 19 commodities as well.
For the period of April, May and first week of June, Gujarat recorded a collection of 4.9 million, 5.2 million, and 573,453 e-way bills, respectively.
According to R R Patel, joint secretary-checkposts in the commercial tax department of the Government of Gujarat, the state's strength in manufacturing played a major role in the high e-way bill collection. "Being a manufacturing state, Gujarat had a high frequency of inter-state as well as intra-state goods movement. This led to the state posting the highest number so far," Patel told Business Standard.
Among the goods, cement, chemicals & fertilisers, tobacco, cotton and yarn led the e-way bill collections for Gujarat.
Further, Patel also attributed the trend to around 23 mobile squads conducting surprise checks.
However, despite sectors like textiles and ceramics facing a decline in capacity utilisation due to impact from the GST regime, the state did not see much impact on goods movement, said Patel. "Only fabric sector which was out of value added tax (VAT) but was brought under tax regime under GST was new to the whole system of e-way bill. Hence, we saw some impact there but it was marginal," he added.
Earlier, a similar system had been implemented online during the VAT regime. "Under the VAT regime, we had already uploaded the 402 and 403 forms online with transporters and businesses being aware of generating such bills for transit electronically. Hence, when the tax regime changed, many of them had no trouble switching to the e-way bill system," said Patel.
According to another senior state government official, the high e-way bill collection is also a result of several district and taluka level awareness programmes conducted by the government. "Awareness programmes were held with various stakeholders including industry associations, chartered accountants, and bar associations, among others. This too helped pave way for smoother transition to the e-way bill system," the official added.
Among the other top e-way bill collecting states following Gujarat, Maharashtra collected 2.99 million, 4.18 million, and 964,778 bills in the months of April and May, and the first of week of June. On the other hand, Karnataka collected 3.73 million, 3.89 million, and 444,047 bills, respectively, for the said period, followed by Uttar Pradesh (2.73 million, 4.41 million and 500,095), and Haryana (2.62 million, 4.51 million and 506,837).

After Gujarat polls, these key events will drive markets in coming quarters

The Indian markets and avid political enthusiasts have largely digested the mandate given by the Gujarat and Himachal Pradesh election verdicts, as the actual numbers indicate the average of what most exit polls were predicting. Though volatility and knee-jerk reactions in the financial markets for potential election outcomes are expected, it has been witnessed historically that election verdicts do not alter the course of the financial market direction in the long run. Putting things into perspective, in the next few days, the markets shall move on, putting the election outcome behind it, and start focusing on core issues that actually justify the valuations the financial markets derive. Let me put through the chain of events that can drive market direction in the next few quarters:The Indian markets and avid political enthusiasts have largely digested the mandate given by the Gujarat and Himachal Pradesh election verdicts, as the actual numbers indicate the average of what most exit polls were predicting. Though volatility and knee-jerk reactions in the financial markets for potential election outcomes are expected, it has been witnessed historically that election verdicts do not alter the course of the financial market direction in the long run. Putting things into perspective, in the next few days, the markets shall move on, putting the election outcome behind it, and start focusing on core issues that actually justify the valuations the financial markets derive. Let me put through the chain of events that can drive market direction in the next few quarters:
Corporate earnings: With two major disruptive events -- the demonestisation effect and GST implementation behind us (though teething issue still persist), corporate earnings which ate the pivotal focal point for the re-rating of markets, should start showing signs of improvement. Two things that should work in favour of recovery of corporate earnings are a) on a  comparative year on year comparison they should reflect better numbers on a low base due to the Demo effect last fiscal and b) GST in the next few quarters should have incremental flow of business to the organized sector albeit in a gradual manner but which shall ultimately reflect in better earnings profile for India Inc. and ultimately this earnings rub-off should reflect in the Index earnings projections over the next few quarters. Our sense is that corporate earnings should compound at a 13-14% CAGR over the next two years and that should give the impetus of justification in forward multiples underpinning Index valuations.
Macro Data: A lot has been spoken and written on the various macroeconomic parameters and the sluggishness that persists in the economy. A) It is true that the government fiscal spending has reached 96% of the budgeted spend and that has raised valid concerns in terms of constraints of government spending going forward. But, it is equally true that the government has front-loaded the capex programme the benefits of which can be evident in the medium term. Again the entire argument of adhering to the fiscal deficit targets and the path of fiscal prudence is being carefully treaded upon and as disinvestments are occurring at a fast pace, it shall give that much-needed elbow room to the centre to meet the targets.
B) GST collections are looking stable and though some concerns are being raised that the direct tax collection kitty might grow on expected lines the indirect kitty might actually lag behind. Let me state that any country that implements GST has taken 15-18 months at least to show the validity in its implementation (through improved collection numbers) and for an economy like ours the benefits of more unorganised players coming in the structured and efficient tax process shall ensure the indirect tax collect ions improve reasonably over the next few fiscal’s. C) Private capex has clearly lagged and the same shall not show evident signs of improvement. It is absolutely true that the private capex to GDP stands at 29.5% for FY17 (which is a decade low). This is apparent due to large capacity expansion in the past few years and constrained demand environment that has affected utilisation levels and higher fixed costs for most corporate.
Our belief is that government spending on affordable housing, road transport, railways should spur order inflow for corporate, pushing up utilization levels and subsequent earnings recovery. D) Inflation, IIP and PMI date: Though recent core inflation numbers have looked sticky, they should cool off especially the food inflation factor. As far as IIP numbers are concerned the factors mentioned above should lend a gradual improvement in the numbers but the consistency in the numbers shall take few months to achieve.
Populist Budget: One of the other variables that the financial markets shall track over the next few weeks is the Budget and what to expect from it. Though a large part of the market is having perceptions of a populist budget being tabled, as it would be one of the last full fledged budgets before the next general elections, what the exchequer shall deliver would be an interesting affair. The Exchequer needs to balance that very thin line of being “too populist” and carrying on judiciously expending in areas where impetus is mandated spurring job creation, consumption patterns showing vital recovery signs with job creation going up leading to credit growth still languishing in mid single digits) picking up which would reflect in better and improved GDP numbers. Yes, a few social scheme announcements are on the cards spurring and incentivising rural and semi-rural areas but my opinion is that planned capital expenditure on the government’s balance sheet shall witness significant expansion and it ideally should not be a “too populist” budget that the apprehensions surrounding it might have.
Actions by the FED/ECB: It seems from the recent FED commentary and the ECB notes that the monetary tightening schedule is on expected lines (Bond market’s long term paper indication) and the ECB is having a stable approach in lending support to the fragile economic recovery of the Euro zone.
Crude Oil: This might be a joker in the pack. IN FY17, India’s import bill was close to $86bn with the presumption of crude prices hovering around that $55/barrel mark. With Oil prices around $60/barrel and if they stay this way for the better part of the remainder of this fiscal, the import bill might go up by $8bn assuming the currency movement against the dollar is not adverse. A general rule is that a $10 increase in oil prices can push up CPI inflation anywhere between 0.35 to 0.50%. A higher oil price scenario can thus negatively affect our trade, current and fiscal equations (due to more subsidies), create input cost inflation, affect corporate profits and put a wheel in the spanner for a recovering investment cycle. Though it is a outside risk for the markets, increase in prices shall lead to higher US Shale production (drawdown in US Inventories need to be closely monitored) offsetting the production cuts by OPEC countries and bring stability to prices. It thus should not be a risk factor until in crosses the $70 mark and stays above it.
So, where do all these factors place the Indian equity markets. Domestic liquidity remains extremely strong and buoyant leading to support for the markets but all the factors in their own weightage need to be played out for a meaningful re-rating of the markets. Political events have a bearing on the markets from a short term perspective but the markets revert to core fundamentals of the economy and we are on the cusp of a strong economic recovery, placing us in a better position compared to most of our emerging market peers. Will the recovery be gradual? Yes. And will it reflect positively on our economic landscape? Absolutely so. That said, we do look forward to “acchhe din” going ahead.