Page 89 - Tata_Chemicals_yearly-reports-2020-2021

Integrated Report Statutory Reports Financial Statements
1-59 Management Discussion and Analysis 147-300

Management Discussion and Analysis

1. Business Environment b. India Economic Outlook
a. Global Economic Outlook India was one of the most severely affected countries
The Covid-19 pandemic led to an economic contraction among the emerging economies. Its Gross Domestic
in the Calendar Year (‘CY’) 2020 that was both sudden and Product ('GDP') contracted by 8% in CY 2021. While
deep compared to the previous global crises. Government consumption was almost stable at (0.8)%,
private consumption declined by 9.1%. Exports and
The global economy contracted 3.3%, advanced economies imports of goods and services contracted by 9.3% and
contracted 4.7% whereas the emerging economies and 17% respectively. The agriculture sector was resilient to the
developing markets contracted by 2.2%. China was the effects of Covid-19. The industrial production contracted
only major economy that grew (by 2.3%) in CY 2020. by 11%.
World trade volume (goods and services) declined by 8.5%
and oil prices saw a sharp decline of 33% followed by a India’s recovery in FY 2021-22, with estimated GDP growth
recovery in the second half of the year. Consumer prices in of 11.5% at the beginning of CY 2021, has seen a downward
emerging economies increased by 5.1% whereas they were revision between 9.6% and 10.5% due to rising Covid-19
stable in the advanced economies. Global manufacturing infections at the beginning of FY 2021-22. Increasing
contracted sharply in mid-2020 however, sharply recovered unemployment, as reported by the Centre for Monitoring
in the latter part of the year. Lingering uncertainties around Indian Economy (CMIE) (7.9% in April 2021 against 6.9%
the pandemic hindered the recovery of private investment. in February 2021) and inflation (Wholesale Price Index –
With the consideration of broad vaccine availability in 7.4% highest in last 103 months) signal a risk to the
advanced economies and some emerging economies, the recovery. However, the outlook is expected to become
global economy is projected to grow at 6% in CY 2021. more positive by the middle of the year as vaccines
Growth in the advanced economies is projected at 5.1% become more widely available.
in CY 2021, whereas that in the Emerging Markets &
Developing Economies (‘EMDE’) is expected to be 6.7%. The Government spending is estimated to be higher than
the previous financial year with fiscal deficit at 7.2% of GDP
Growth in the United States (‘US’) is expected to be as against a budgeted 6.8%, mainly due to a higher food
4.3% in CY 2021, regaining the pre-covid activity levels. subsidy bill and lower asset sale revenue. The export outlook
The European Union and the United Kingdom (‘UK’) is cautious as exporters are focussing on domestic issues.
economies are expected to grow by 4.5% and 4.2% Monetary conditions are expected to remain accommodative
respectively in CY 2021. Among the EMDE, China is as inflation increases with an upside risk caused by rising
expected to grow by 8.5%, Russia and Brazil by 3% and global commodity prices.
3.6% respectively in CY 2021. Source: Various reports – IMF World Economic Outlook, Oxford
Downside risks to the outlook include resurgence of the Economics, RBI State of Economy
pandemic and vaccine delays, withdrawal of policy support
before recovery takes firm root and bankruptcies due to 2. Chemical Industry
illiquidity & high debt and geopolitical trade risks such as a. Global Chemical Industry
ongoing tensions between the US and China. Demand for chemical products hit a trough in Asia around
Source: IMF World Economic Outlook (WEO), January and April 2021, February/March 2020, in Europe around April 2020 and
OECD Interim Economic Assessment, March 2021 the Americas in May 2020, reflecting the peak of Covid-19

The agriculture sector was resilient to the effects of Covid-19

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