TMS Ep174: Divestment, shrinkflation, Sanjiv Bajaj, total fertility rate

Shares of state-owned Life Insurance Corporation of India (LIC) kick-started their journey at secondary markets on a weak note on Tuesday. Against the IPO price of Rs 949 apiece, they opened at Rs 867 on BSE -- wiping off nearly Rs 43,000 crore worth of investor wealth. While analysts are unperturbed with the stock performance, the government may have more to worry about than just LIC’s stock. Take a dive into what LIC’s weak debut means for this year’s divestment target 

The weak listing has brought down the market valuation of LIC to around ₹5.57 lakh crore -- from the earlier six lakh crore. Unstable market conditions is one of the reasons for it. Meanwhile, FMCG companies too are struggling. They have now resorted to “shrinkflation” to cope with the increased input cost, without passing on the price burden to consumers. The low cost packets of biscuits, chips, juices, soaps etc have shed weight. So, the same Rs 10 chips packet will have lesser chips, and more air. 

Global headwinds and increased input costs are indeed taking a toll on India Inc. In an interview with Business Standard’s Nikunj Ohri and Arup Roychoudhury, the new CII president and Bajaj Finserv chairman Sanjiv Bajaj offered some suggestions to deal with it. He claimed that cutting petrol and diesel duties will spur consumption and demand. Bajaj also said that inflation will continue to hurt margins of companies. However, that will not disrupt private sector capex revival, which is getting stronger. 

Health and education are indeed the key to a nation’s growth, as recently pointed out by Sanjiv Bajaj -- who wants the government to substantially increase the outlay in these sectors. Meanwhile, the government’s efforts to tame the country’s population have started paying off. Indian women are giving birth to fewer children now than in the past. And it is irrespective of their religion. From 5.9 in the 1950s -- when the population control programmes were launched -- the total fertility rate has fallen below the replacement level now. What does it mean? Let us find in this episode of the podcast. 

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