Market roundup: Indians keep just 14.5%of wealth in financial assets

Bimaru states’ utilities top AT&C loss list, Truck rentals skid on demonetization


Photo: iStockphoto
Photo: iStockphoto

Indians keep just 14.5% of wealth in financial assets

Households in India keep most of their wealth in physical assets such as land, houses, gold and small businesses. The share of financial assets in household wealth is therefore very small, as the chart shows. That is typical of developing countries. Note, however, how almost half of household assets in China are now in financial assets. For developed countries, more than half of household assets are usually in financial assets. The Credit Suisse Global Wealth report shows that financial assets as a percentage of gross household wealth in India peaked at 16.4% in 2011 and has been steadily falling since then.

Bimaru states’ utilities top AT&C loss list

The aggregate technical and commercial (AT&C) losses which reflect the billing and collection efficiency of state electricity utilities are highest in the so-called Bimaru states. AT&C loss is the difference between energy supplied at input points and billed by the utility. It is calculated as a percentage of energy volume supplied. Barring Madhya Pradesh, states that constitute the Bimaru acronym—Bihar, Rajasthan and Uttar Pradesh—figured high in the list of utilities that saw noticeable AT&C losses in the last fiscal year. The list is topped by north-eastern state Manipur but is followed by Bimaru group or states carved out from them, such as Jharkhand and Chhattisgarh, shows provisional data compiled by the ministry of power. The central government’s revival plan for utilities envisages a target of reducing AT&C losses to 15% by March 2019. While data shows Jharkhand and Chhattisgarh significantly reduced losses from 2014-15, larger states like Uttar Pradesh and Bihar made scant progress in the previous year.

Truck rentals skid on demonetization

The Indian Foundation of Transport Research and Training said rentals are down 20-25% for a 25-tonne truck on key routes after demonetization. This comes on the back of already low demand for transportation services, which had kept rentals sluggish in the last four-six months. Although there was some relief during the festive season, since April freight rates are up by only 3-4%, far lower than the 16% jump in diesel prices. As such, profitability of truck owners was under pressure even prior to demonetization, and is likely to get worse. Commercial vehicle sales have been slipping on account of low replacement demand, weak industrial activity and uncertainty related to the impact of the proposed goods and services tax regime on vehicle prices. Meanwhile, if the pain of low truck rentals lasts long, it could have a larger-than-foreseen impact on truck sales in the coming months.

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