20 trillion and BaR

Mr. Modi announced a twenty lakh crore rupees relief package.

That is Rs. 20 trillion and $260 billion

Side note - The tool I build few weeks back has been getting a lot of traction and I personally have found it quite useful too! #ShamelessPlug

Indian GDP is ~$2.7 trillion that makes the package about 10% of the Indian economy. Comparable to the US’s stimulus of $2 trillion (US GDP is ~$20T).

That is a huge and necessary relief package, in my opinion. I also fear that since this is so big, the next package might have to wait for a while.

Yeah, I think there is a very high probability of another package later in the year. The US ran out of the stimulus money in less than two months and already working on the next relief bill. I would not be surprised if India decides to follow suit. It all depends on how fast the vaccine is developed, and one knows the answer to that. But I know that there will be a time when I won’t be worried about COVID-19.

Talking about Macro stuff, I have been following econ pi’s Baseline and Rate of Change (BaR) Analysis Grid for over a year now. It’s a great way to get a sense of the current business cycle.

The BaR analysis grid follows 19 economic indicators from different sectors and calculates its rate of change and plots them on a grid. Read more about the process here.

These are the indicators it tracks:

Abbreviations and Sources

And plots them on this grid:

BaR Overview r3

Each quadrant represents a stage in the business cycle. Current plot-

2020-5-12---100b.png

I like to focus on the MoC. The MoC entered the Contraction Quad this month! It was in Expansion Quat in Feb, Decline Quad in March and April. Recession conditions are present when the MoC is below the baseline.

Of course, this could be an outlier, and it will move back to Expansion Quat by next quarter. But if I were to assign a probability of that happening, it would be in single digits.