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file:: [Indus_valley_annual_report_2024_1710452956882_0.pdf](../assets/Indus_valley_annual_report_2024_1710452956882_0.pdf) file-path:: ../assets/Indus_valley_annual_report_2024_1710452956882_0.pdf - [:span] ls-type:: annotation hl-page:: 6 hl-color:: yellow id:: 65f370f5-37d6-46b6-a802-3504ae9bd2e7 hl-type:: area hl-stamp:: 1710452980530 - Damn! Dude made it @debarghya_das - - India’s economy has long been characterized by high Private Consumption, i.e., spends by households, private sector and government, as a high share of the GDP. The key reason for this is Gross Fixed Capital Formation (GFCF, essentially creation of productive assets such as machinery, infrastructure) has a far lower share than it should; primarily because of underinvestment. ls-type:: annotation hl-page:: 11 hl-color:: yellow id:: 65f37161-87ae-4d3a-a303-f8dccbe2c6da - Gross Fixed Capital Formation is the creation of productive assets such as infrastructure (roads, bridges etc.) or manufacturing facilities. It is a long-term investment, and it can be undertaken by the government (state and central), but also by private sector ls-type:: annotation hl-page:: 13 hl-color:: red id:: 65f3716b-c9c4-475b-a3b7-71aac3704031 hl-stamp:: 1710453103787 - A key reason is that private corporates punch well below their weight in India. Their shares are reducing, and one factor seems to be that they are borrowing less, unlike before. This means they can’t invest as much into GFCF ls-type:: annotation hl-page:: 14 hl-color:: yellow id:: 65f371b6-3706-48d4-9205-33b5f24edeac hl-stamp:: 1710453178444 - For one, spurred by the NPA crisis of 2015-18, as well as the uncertainties around COVID, the private sector has been cautious to borrow and has been deleveraging by retiring debt. Secondly, a relatively low capacity utilisation of assets implies they haven't felt the need to ramp up investments in fixed assets ls-type:: annotation hl-page:: 15 hl-color:: yellow id:: 65f376b1-2783-451a-aa3a-6eb809158215 - [:span] ls-type:: annotation hl-page:: 16 hl-color:: yellow id:: 65f376d7-ff45-4e50-a6b8-8583beeb4045 hl-type:: area hl-stamp:: 1710454487546 - The private sector’s underinvestment in GFCF and its low leverage is not a recent trend, though it has accentuated of late. In recent times, the Central Government has stepped in to drive investments in capital formation ls-type:: annotation hl-page:: 16 hl-color:: yellow id:: 6622cda6-fe3d-4307-9bb8-059e953e9b67 - However, India’s tax collection growth has not been buoyant enough to support its ambitious capex investments ls-type:: annotation hl-page:: 17 hl-color:: yellow id:: 65f376ff-0602-490a-ae65-311fecd8182e - India’s tax to GDP ratio hasn’t moved in the past 7 years; it collects far less tax than its peers ls-type:: annotation hl-page:: 17 hl-color:: red id:: 65f37706-7a22-4361-bf48-fc20199c4baf hl-stamp:: 1710454536414 - 1.5% of Indians (22m) pay India’s income tax in entirety ls-type:: annotation hl-page:: 19 hl-color:: red id:: 65f37743-fd23-4e7b-8452-7dff117da1f3 - And a fifth of those taxpayers pay four-fifths of income tax ls-type:: annotation hl-page:: 19 hl-color:: yellow id:: 65f37749-2a25-4672-8c5f-c499fe25ecb1 hl-stamp:: 1710454602965 - [:span] ls-type:: annotation hl-page:: 19 hl-color:: yellow id:: 65f37798-cbc4-41a8-81cc-b6a9a9d81497 hl-type:: area hl-stamp:: 1710454680341 - Due to low tax collections, the government relies on borrowings ls-type:: annotation hl-page:: 20 hl-color:: yellow id:: 65f378ee-24a4-411f-a110-be98b38ae4d4 - [:span] ls-type:: annotation hl-page:: 20 hl-color:: yellow id:: 65f378f5-3149-4aa5-8a3c-381c1d1da075 hl-type:: area hl-stamp:: 1710455029551 - - [:span] ls-type:: annotation hl-page:: 23 hl-color:: yellow id:: 6622ced8-70e4-480a-82b6-1084d4f4e61b hl-type:: area hl-stamp:: 1713557206981 - - That said, the Indian consumption class is growing steadily ls-type:: annotation hl-page:: 31 hl-color:: yellow id:: 6622d02e-b463-4e09-a259-9034e02604cd - [:span] ls-type:: annotation hl-page:: 31 hl-color:: yellow id:: 6622d03c-69dc-4c07-8a9a-926211c98969 hl-type:: area hl-stamp:: 1713557562713 - Indians abroad send back a lot of money, the highest in fact This remittance has been growing steadily ls-type:: annotation hl-page:: 54 hl-color:: yellow id:: 6622d132-fb1d-42f3-9840-175e0dbfccca - India is the largest exporter of human capital in the world… ls-type:: annotation hl-page:: 54 hl-color:: yellow id:: 6622d161-22d8-4b5c-9da8-5e6da671a879 - Migrant transfers to India are deemed to be a more stable form of foreign inflows vis-a-vis those like foreign direct investment (FDI) due to their relative stability even during macroeconomic downturns. Remittances account for over 20% of the total foreign exchange reserves in the country and has helped prop up the INR54 India is the largest migrant country in the world Indians abroad send back a lot of money, the highest in fact This remittance has been growing steadily India is the largest exporter of human capital in the world… India - India’s Exports ls-type:: annotation hl-page:: 54 hl-color:: yellow id:: 6622d1be-217e-4cb5-ade7-922226de3542 - ndia lags its peers in research and innovation ls-type:: annotation hl-page:: 109 hl-color:: yellow id:: 6622d3da-5c21-4063-8270-658ec146dda3 - Unlike our peers where private sector shoulders the burden of R&D, in India they step back, which means the Govt has to step in to keep R&D going ls-type:: annotation hl-page:: 109 hl-color:: yellow id:: 6622d5bb-4471-435e-956a-108626ca3bed - SRO’s (Indian Space Research Organisation = India’s NASA) initiatives and government policies supporting privatisation of space has led to ambitious founders signing up, making SpaceTech attractive to VCs as well as strategic investors ls-type:: annotation hl-page:: 111 hl-color:: yellow id:: 6622d624-ff68-48ed-8fe1-91473195eb40