The stimulus-driven economic recovery and massive vaccination campaigns in the U.S. could generate herd immunity a little earlier than anticipated. Every household digs into its savings account to indulge in the leisure activities it has neglected for most of the year, itching to go out and celebrate with friends and family. In 2021, consumption spending will be 8.3% higher than in 2021 and 4.9% greater than in the baseline for the year following. Future economic conditions predict more sales and happy days in-store, which prompts business owners to open bank accounts. The equipment sector spends 14.9% more and 3.4% more in 2018 and 2022, respectively, as confidence increases. If we assume the upside scenario, the U.S. economy will grow at a faster rate of 4.5% versus 4.1% in 2022, versus 6.0% in 2021. The higher the growth rate, the lower the unemployment rate will be by mid-2022. As the labor force participation rate rises, more people are returning to the work force. Midway through next year, core C.P.I. inflation actual and expectations begin to slow down, proving the current supply shock to be transitory and giving the Fed more breathing room before raising the policy rate. With the economy having run hotter for longer than previously anticipated, the Fed raises interest rates for a first time in this recovery in early 2023 compared with late 2022 in the baseline.

The massive Chinese property developer, Evergrande, was unknown to most people outside China a few weeks ago. But now it’s all the rage in financial markets worldwide. Since the summer of this year, Evergrande’s bond yields have risen from about 12% to almost 60%. As a result of its large debts, the company has a massive risk premium. Hong Kong stocks fell sharply last week because of concerns over what is going to happen next. Chinese residential construction has grown rapidly during the past few decades. In spite of this, most of the properties constructed have remained empty, retained by relatively wealthy investors as speculative investments. Approximately 90 million people could be housed in vacant properties, more than Germany’s entire population.

Following the severe second wave of COVID-19 pandemic in India, the International Monetary Fund downgraded India’s fiscal 2021-22 growth forecast from 12.5% to 9.5%, a drop of three percentage points. Despite the fact that the global economic growth rate remained at six percent, India’s fiscal 2022 GDP growth has been revised up to 9% according to ICRA’s revisions to its outlook. However, for the next fiscal 2022-23, I.M.F. revised the economic growth for India up from 6.9% (projected in April 2021) to 8.5 % now higher by 1.6 percentage points.

The gross G.S.T. revenue collected in September 2021  in India came at Rs. 1,17,010 crore, up by 23% year on year. Of this, C.G.S.T. is Rs 20,578 crore, S.G.S.T. is Rs. 26,767 crore, I.G.S.T. is Rs 60,911 crore, including Rs. 29,555 crore collected on import of goods, and Cess is Rs. 8,754 crore, including Rs. 623 crore collected on import of goods.

At the end of August, the government’s fiscal deficit stood at Rs 4.68 lakh crore, or 31.1% of the budget estimates, according to data released by the Controller General of Accounts (C.G.A.) Net tax receipts were Rs 6.45 lakh crore while total expenditure was Rs. 12.77 lakh crore.

Further, the seasonally adjusted I.H.S. Markit India Manufacturing Purchasing Managers’ Index (PMI) rose to 53.7 in September, from 52.3 in August, highlighting a more robust expansion in overall business conditions across the sectors.

The widening coverage of COVID-19 vaccines in India is likely to boost confidence, which will, in turn, re-energize demand for contact-intensive services, helping to revive the portions of the economy affected most by the pandemic.

Despite fears of a worldwide contagion triggered by the likely default by debt-ridden Chinese company, Evergrande, as well as Fed’s tapering stance and interest rate timelines, Indian bourses displayed whipsaw movements in tandem with foreign securities. As each story thread unraveled, the pressure on bourses eased towards the end. U.S. junk bonds appeared unaffected by the debacle while yields on their Chinese counterparts soared. Concerns about China’s Lehman moment and global links were dispelled. As a result of China’s central bank injecting $18.6 billion of liquidity into the banking system, some anxiety was also quelled. In fact, the Fed’s forecasts of tapering toward the end of this year were already factored in by the markets in the first place.

In India, both major indexes have risen over 1.5% in the last fortnight. Sensex and Nifty scaled record highs. The Nifty managed to see a peak above 17,800 level while the Sensex ended above the 60,000 mark. Positive global cues and receding pandemic fears boosted sentiment. As of the close of markets on 1^st September 2021, the S&P BSE Sensex declined 360.78 points, or 0.61%, to 58,765.58. The Nifty 50 index fell 86.10 points or 0.49% to 17,532.05. The comeback of the F.I.I.s after a hiatus of 5 months and the support garnered by market at every dip also hint at the continuation of this optimism in Indian indices.

(The author is a   Post-doctorate in   Economics and   Ph. D   in law and public policy.   A passionate Financial Economist and Law Expert)