Teji Mandi: Three things investors should know on November 24, 2020
Teji Mandi: Three things investors should know on November 24, 2020
Teji Mandi

Rising air traffic reveals a major trend:

India's air traffic continues to recover at a slow and steady pace. The daily departure count crossed 60% of pre-Covid levels for the first time.

Passenger numbers, at 2,25,097, were the highest since May 25, when airlines were allowed to re-start operations. October also brought in some cheer with 31% growth over September. The surge in air traffic in November is majorly being led by the festival season.

The airlines are opening up new routes, resulting in a larger number of passengers. A major activity is seen in tier-II cities. The airlines have opened 20 new routes in October between Tier I and II and 25 between Tier II and Tier II. The flights between Tier I to Tier I cities stand reduced.

We estimate that the rising number of flights from tier-II cities is due to corporates flying in their migrant employees as the activity level has picked up. This is evident from the fact that Patna saw the highest recovery, with over 80 percent of pre-Covid flight movements.

The trend of visiting friends and relatives in their hometowns is picking up among white-collar workers. This is further contributing to travel to Tier-II cities.

Sunny days ahead for the renewable energy sector:

As the economy moves on from the ill effects of Covid-19, the renewable sector is looking up again. The industry is looking at the resumption of delayed projects and new capacity additions from the next financial year onward. Capacity additions plunged 45% in the first half of the current financial year.

ICRA Ltd estimates the renewable energy capacity additions to improve from about 7.5 gigawatts (GW) to 11-12 GW next fiscal year. Execution of the delayed projects is expected to lift capacity additions in the next financial year. The industry expects it to be one of the best years for the sector.

The capacity additions are not being driven by the delayed projects alone. As we have learned, the government's active support to the sector makes the outlook very bright for the sector in the coming years.

The government has removed tariff caps, made amendments to bidding guidelines, and allowed the blending of renewable power with other forms of electricity. A strong project pipeline along with favourable policy backup should help the renewable energy sector to sustain momentum beyond FY22.

Unemployment eases to pre-covid levels in October

India’s unemployment rate eased to 6.98% in October after climbing as high as 23.5% in April, according to private research firm Centre for Monitoring Indian Economy.

Quess Corp, the leading staffing service provider, informed that a record 122 million people went jobless in April due to the lockdown. However, the unemployment rate has now come back to pre-covid levels with construction and industrial activities picking up. Unemployment is expected to stay in its normal range from 6-7%.

During the lockdown, government-funded projects and increased allocation to MGNREGA helped sustain livelihoods. A large number of migrant workers have returned to their jobs in metro cities. Companies have also started hiring and restoring pre-covid salaries.

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