MACRO-ECONOMIC THEORY & POLICY

TERM PAPER (GROUP 13): COMPARISON OF BRAZIL & INDIA ON THE BASIS
OF MACRO ECONOMICS PARAMETER & IMPACT OF COVID 19 AND RUSSIA
UKRAINE WAR.

Submitted to: Prof. Ramakrushna Panigrahi

Submitted by:

Ashutosh Dhal 22PGDM-BHU075

Aditya Kumar Yadav 22PGDM-BHU065
Namrata Sethi 22PGDM-BHU088
Tamomoy Roy 22PGDM-BHU119
Rahber Riaz Azmer 22PGDM-BHU098
Shiva Patnaik 22PGDM-BHU109
 INFLATION
INDIA
The urban poor were hardest harmed by inflation during Covid:
Because it erodes income, inflation—often referred to as the cruellest tax—has been

According to two recent studies, although prices have recently been dropping, the average
price increases during and after the pandemic's peak were larger and more widespread than in
prior years, disproportionately hurting the urban poor.
The prices of goods other than food and fuel have changed in the opposite directions from
each other, as has core inflation. From approximately 5% at the beginning of the current
fiscal year to barely 0.7% in September, food inflation has decreased. During the same time
span, fuel inflation rose from 8% to 13.6%. The core rate of inflation, which excludes volatile
goods like food and gasoline, stayed constant atroughly 6% "In addition to diverging, they
(inflation in various components) also differed in severity by income group, principally due
to the proportion of consumption on each of these commodities.
groups differ according to income levels, "said Dharmakirti Joshi, chief economist of Crisil.
The essential point is that while everyone experienced the same rates of inflation, some
groups—particularly the urban poor—felt the heat of inflation more as a result of spending a
larger percentage of their budgets on more expensive goods, like fuel.

India's central bank during Covid concentrated on accelerating economic growth, but
what about inflation?
India's central bank has been concentrating on recovering growth in a post-Covid economy
for more than a year. However, it is likely that the regulator should change its emphasis to a
more

crucial topic
Consumer price inflation—increases in prices that consumers pay—has exceeded the Reserve
Bank of India's (RBI) tolerance level of 2–6% for eight out of the past twelve months.
Consumer price inflation in June was 6.26 percent, essentially unchanged from the 6.30
percent in May.
While the Covid-19 lockdowns, which created supply delays, have been blamed for the price
increase, experts are growing increasingly concerned that other factors are contributing to the
trend, making it harder for the RBI to manage.

"It's a temporary phenomenon, inflation. The Reserve Bank of India (RBI) and other central
bank officials are asserting this. Covid is not entirely to blame, though. There are certain
long-term drivers of increased inflation, therefore they (the RBI) would need to act quickly,
perhaps following the

July policy, "said Kotak Mahindra Bank economist Upasna Bhardwaj.

Inflation may become a significant issue in the upcoming months as a result of the current
trend of rising global crude oil prices and the Indian government's declaration of an increase
in the excise charge on gasoline and diesel in March of last year. The combined weight of the
two automobile fuels in India's calculations of consumer price inflation is 2.3 percent.

Along with high prices, patchy monsoon rainfall may increase inflationary pressures.On
August 6, the RBI will hold its monetary policy meeting, and many anticipate that officials
will talk about managing inflation. But considering the RBI's inability to, that won't be
easy.A single growth-related accomplishment in the previous year.
In India, balancing inflation and growth is difficult:
India's economic prospects have been dimmed in the wake of the devastating second Covid
wave in March–May, and a gradual increase in confidence is anticipated. As long as some
segments of the population are susceptible to the virus and its mutations, widespread recovery
is not assured. The recovery process has been significantly hampered in nations that have
experienced further waves, such as India.While the RBI has been attempting to support
economic growth during the pandemic, economists point out that Covid-19 has increased
inflation and as a result calls for attention.One of the current high levels of inflation is the rise
in health spending brought on by the pandemic.

Brazil
Brazil experienced hyperinflation during the first three months of 1990. Between January and
March 1990, the monthly inflation rates were 71.9%, 71.7%, and 81.3%, respectively. [1]
According to the International Monetary Fund (IMF), hyperinflation is recognised as a period
when average monthly price increases for products and services exceed 50%.
Prior to the hyperinflationary period, Brazil suffered almost a decade of extremely high
inflation, which was frequently double-digit monthly inflation. Less than six months were
spent with hyperinflation in the country. This economic crisis was the result of several
structural elements of the Brazilian economy, such as, but not limited to, low levels of
exports and large levels of external public debt, as well as ineffective preventive actions. To
artificially control inflation, the Brazilian government repeatedly froze prices as a response to
hyperinflation. For a few months, this was effective in controlling hyperinflation. Price
controls were removed in July 1990, and hyperinflation resumed.
After the Plano Real was put into effect, the hyperinflationary period ended (1994). The
financial capacity of the Brazilian economy was insufficient to finance a costly expansionary
fiscal policy. [4] With the Plano Real, the cruzeiro, which served as the currency, was
replaced with a different unit of account called the Unidade Real de Valor (URV). The URV,
which became the real, subsequently took over the role of payment. Short- and long-term
inflation was successfully curbed by the separation and reintegration of the role of money.

Causes
The institution of money is forced to become overly flexible and unstable by hyperinflation.
Brazil's hyperinflation and the country's capacity to recover through the division and ultimate
reunification of its two duties are both influenced by money.
Theory of inflation
Brazil saw the popularisation of a new inflation hypothesis in the 1980s.
This was the concept of inertial inflation, which sought to explain the many causes of
inflation's acceleration and maintenance. The theory of distributive conflict, which holds that
an economic agent would utilise the pricing mechanism to maintain or increase their market
share, provides the basis for the concept of inertial inflation. According to the new
hypothesis, inflation should start at a selected base time period. To account for both
acceleration and maintenance, analysts try to understand what caused the current level of
inflation and the subsequent adjustments. Distributive conflict identifies a lack of
cooperation between various economic players as the fundamental cause of inflation's
persistence.

extensive endogenous economy

Brazil's economy is more vulnerable to domestic price shocks because of its lack of trade.
Prices are more erratic and likely to be inflated when domestic supply is heavily reliant, as is
the case with rising food prices brought on by weather-related shocks. When compared to the
average inflation of consumer goods, the industry for durable goods has experienced less
inflation.

high external governmental debt

According to economist Pereira, Brazil's hyperinflation may have been caused by the public
sector's asymmetrical balance sheet since excessive foreign public debt might be indirectly
connected to inflationary pressures. Higher taxes were imposed by the government to pay the
principle and interest on this substantial foreign debt. These higher taxes were then countered
by higher producer prices, which helped to fuel inflation. Tax revenue was insufficient to
offset the significant fiscal burden of servicing foreign debt. The process of the fiscal
accounts deteriorating indicated a significant structural problem in the economy, which the
Brazilian government tried to address on several occasions using various methods.

For the month of October 2022, the Federative Republic of Brazil's CPI is 6407.93. Inflation
is now 6.47 percent higher than it was a year ago (down from 7.17 percent the month before).
From September to October 2022, inflation was 0.59%. What precipitated Brazil's inflation?
High prices for food and fuel in Brazil in 2022 have largely been a result of the conflict in
Ukraine, which has also contributed to rising global energy and commodity prices. Brazil's
economy, like many others around the world, is battling high inflation. Fortunately, when it
comes to monetary policy, Brazil's central bank, the Banco Central do Brazil (BCB), has been
among the most aggressive, initially raising rates in early 2021.

EMPLOYMENT
INDIA
The Indian economy is on its way to achieving the Prime Minister's goal of having a GDP of
$5 trillion by 2024 and 2025.The creation of new jobs is aided by economic expansion. The
previous budget, for the years 2021 and 2022, included a significant increase in funding for
public investment to stimulate economic activity. The country's economic recovery is
continuing to benefit from the multiplier effect with Prime Minister Narendra Modi directing
its implementation.1 Budget 2022-23 has further provided a strong impetus for growth, with
capital expenditure increasing sharply by 35.40 percent to Rs 7.50 crore from Rs 5.54 crore in
the current fiscal year. This expenditure, which is about 2.9% of GDP, will not only boost
economic activity but also improve employment conditions in the nation.
Current Macroeconomic Trends Despite the significant setbacks and disruptions brought on
by the COVID-19 pandemic over the past two years, the Government's persistent push to
inject funds and give the country's economy a boost has begun to bear fruit. A few economic
indicators, such as the number of people applying for jobs in the organized sector, the rise in
the number of new businesses that are registered, the rise in start-ups and the rapid rise in the
number of unicorns in the country, and the rise in employment opportunities in new
industries like artificial intelligence, cloud computing, data analytics, automation under
IT/ITES, etc. Clearly indicate an increase in the number of jobs created in the nation.
Expansion of EPFO subscriptions: The EPFO data suggest that formalization of the job
market will significantly accelerate in 2021.In November, 2021, the month to month net extra
EPF membership topped with 13.95 lakh new supporters, the most noteworthy in any given
month starting around 2017.As a result, EPF subscriptions will rise by 109.21% beginning in
November 2020.According to the Economic Survey, the monthly net addition to EPF
subscriptions in 2021 was not only higher than the corresponding monthly values in 2020, but
it was also higher than the corresponding monthly levels in the months prior to the pandemic
in 2019.
According to the Economic Survey, employment under the Mahatma Gandhi National Rural
Employment Guarantee Scheme reached its highest point in 2020, during the nationwide
lockdown. In addition, it demonstrates that the demand for MGNREGS employment has
stabilized following the second Covid wave, indicating that the pandemic's disruption is less
severe and that employment opportunities are opening up in other sectors. In June 2021,
demand for MGNREGS employment reached its highest level ever during the second Covid
wave.
PLFS data's most important takeaway: The estimates of the Worker Population Ratio (WPR)
for people over the age of 15—defined as the ratio of employed people to the total population
on a usual status basis—have shown an upward trend from 2017-18 to 2019-20, while the
estimated Unemployment Rate for people over the age of 15 has shown a downward trend.
On a normal status basis, the Labour Force Participation Rate (LFPR) for male and female
individuals over the age of 15 is expected to be 30.0 percent and 76.7 percent, respectively, in
2019 and 2020.

EMPLOYEMENT RATE IN INDIA IS 43.90 PER CENT IN YEAR 2022.

 BRAZIL
Major industries in Brazil
• agriculture.
• banking.
• oil and gas.
• Hospitality

Brazil's Terms and Conditions of Employment

Equal opportunity, equal pay
According to Brazilian labour law, businesses must pay all employees fairly, including
foreign workers, who do comparable tasks in equivalent settings. Two-thirds of the
company's personnel must also be set aside for Brazilian workers.
Contact outside working hours
Employees who are contacted by their employers through text message or phone call outside
of working hours are entitled to one-third of their hourly wage if they participate in work,
even though this law is rarely implemented.
Notice period
Employees have a responsibility to request and provide a notice period. If they are fired
without cause, employees have the right to get a notice, and they are likewise required to
receive a notice if they resign. Notice periods start at 30 days and increase by 3 days for each
year of employment up to a maximum of 90 days. The company is required to compensate
the employee in lieu of working during the notice period if they don't want them to. The
employer has the authority to withhold the amount from the employee's wages if they choose
not to work through their notice period.
Work history record book
Every working person in Brazil is required to keep a work history book, known as a Carteira
de Trabalho e Previdência Social (CTPS), with them always. This book serves as a
foundation for employment rights and preserves all the details of every job the employee has
ever held (such as FGTS, unemployment benefit). Every employee has the right to have their
work history booklet, which includes all the details about the position, properly signed by
their employer when they are hired. The paperwork must be given back to the employee by
the employer within 48 hours.
Intellectual Rights
In Brazil, the ownership of an invention might vary based on the situation as follows:
The employer is the exclusive owner of the rights to an invention that was created while the
inventor (employee) was employed in Brazil and resulted from the tasks for which the
employee was engaged. Both the employer and the employee will hold the rights equally if
the innovation was made using just the employee's own efforts but while utilising the
employer's property or equipment (unless the contract says differently). The employee should
receive just recompense if the employer uses the invention (no rules apply on how to make
the calculation).
Restriction of activities
The responsibilities or penalties connected to activity restrictions are not explicitly covered
by the law. Therefore, if an employer wishes to impose them, it must do so in the
employment contract.

The following guidelines apply:

(a) Non-compete clauses must have a predetermined duration, often no more than two (two)
years.
b) Non-compete agreements must include a territorial description (country or region).
(c) Non-compete agreements must also distinctly specify the business or pursuits that the
employee is prohibited from engaging in.
(d) More crucially, non-compete clauses need to include a payment clause. Local courts often
see that compensation as permissible if it ranges from 50% to 100% of basic pay for the
duration of the non-compete agreement.

High-skilled people are primarily needed for many international occupations in Brazil,
particularly in the engineering sector. The need for infrastructure and energy is at an all-time
high as the nation expands. People with experience in these fields can earn quite well,
especially when working for large corporations. Brazil's employment rate ranged from a
record high of 57.30 percent in November 2013 to a record low of 46.80 percent in August
2020, with an average of 54.59 percent between 2012 and 2022. Brazil Employment Rate
actual values, historical data, forecast, chart, statistics, economic calendar, and news are
provided on this page. The results of the causality test show that the Brazilian unemployment
rate is caused by the national product, inflation, and exports. The analysis of the ARDL
cointegration models supported these findings. Pay Explorer reports that the typical salary in
Brazil for this year is 8,220 Brazilian Real (BRL). The minimum salary is BRL 1,212
according to legislation. The top salary currently hovers around BRL 38,200.
 EMPLOYMENT RATE IN BARZIL IS 57.28 PER CENT IN YEAR 2022.

INTERNATIONAL TRADE
INDIA
India was a protectionist nation for a long time, but it has gradually opened up to
international trade. At the moment, trade makes up 40% of the country's GDP. Petroleum oils
are 21.3 percent, gold is 6.5 percent, coal and other solid fuels are 4.7 percent, diamonds are
4.6 percent, petroleum gas and other gaseous hydrocarbons are 4.6 percent, and petroleum
gas and other gaseous hydrocarbons are 4.6 percent. Petroleum oils are 21.3 percent, gold is
6.5 percent, medications are 4.5 percent, jewellery is 4.2 percent, and automobiles are 2.2
percent. The volume of goods and services exported by the IMF in 2020 is expected to rise by
12% in 2021, while the volume of goods and services imported is expected to rise by 17.1%
in 2021, according to the IMF's Foreign Trade Forecasts. Imports plummeted as the COVID-
19 pandemic reduced domestic demand for crude oil, gold, and other industrial products,
while exports fell due to lower demand for textiles, clothing, transportation, and jewellery.
This unprecedented drop in imports and exports occurred in 2020.
The United States, China, the United Arab Emirates, Saudi Arabia, Iraq, Hong Kong, and
Singapore are India's primary trading partners. Free trade agreements have been signed
between South Korea and ASEAN recently, and the government is also in talks with the EU,
MERCOSUR, Australia, New Zealand, and South Africa. India and Brazil concurred in
January 2020 to build exchange and speculation each other's nations across various regions,
and they are hopeful that a reciprocal exchange focus of USD 15 billion might be set by
2022.India is the largest economy in the world that is expanding at the fastest rate and the
eighth- and tenth-largest importer and exporter of commercial services, respectively. On the
other hand, the regulatory and trading framework in India are still quite restrictive.
BRAZIL
Even though foreign trade only made up 29% of Brazil's GDP in 2019, the country is one of
the top 25 exporters and importers in the world and has a lot of potential economically.
Petroleum oils (9.9 percent), parts and accessories for tractors and motor vehicles (2.6
percent), electrical apparatus for line telephony (2.5 percent), floating vessels (2.5 percent),
and electronic integrated circuits and micro assemblies (2.5 percent) are the most common
imports (2.3 percent).The volume of goods and services imported decreased by 12.1% in
2020, while the volume of goods and services exported remained the same in 2020 and is
predicted to rise 7.8% in 2021, according to the IMF's Foreign Trade Forecasts. The
unprecedented drop in import volume, primarily in fuels and lubricants, was caused by lower
domestic demand amid the pandemic-induced economic crisis, despite the fact that Brazilian
exports remained relatively stable in the face of the pandemic due to increased demand for
agricultural goods from Asian nations and a weakening real.
The country's largest trading partners include Mercosur, the EU, China, the United States, the
Netherlands, Germany, Argentina, Japan, and Mercosur. The economy has been a hot topic in
political debates since Brazil's 2013-2017 economic crisis, particularly in relation to
globalization and how trade liberalization might affect economic growth. Brazil's economy is
the largest in Latin America and the world, but it is still relatively closed to other large
economies due to its low trade penetration and small exporter population. Brazil's outright
number of exporters is generally equivalent to Norway's, a country with a populace of around
5 million contrasted with Brazil's 210 million. The nation, on the other hand, has been
making enhancements to boost commerce, such as upgrading its electronic data interchange
system to speed up document compliance for exporting and importing. Additionally, as
Brazil's second-largest trading partner, the EU is negotiating a free trade agreement with
Mercosur as part of the EU's negotiations for an Association Agreement.
 GDP GROWTH
INDIA
GDP of India during the COVID-19 pandemic In India, the COVID-19 pandemic has
primarily had an adverse effect on the country's economy. In the fourth quarter of fiscal year
2020, India's growth slowed to 3.1%, as reported by the Ministry of Statistics. The reduction
is primarily attributable, according to India's Chief Economic Adviser, to the impact of the
coronavirus pandemic on the Indian economy. Notably, India had been going through a
downturn prior to the pandemic, and the World Bank claims that the current pandemic has
"magnified pre-existing threats to India's economic outlook."
The World Bank and rating agencies initially revised down India's FY2021 growth, resulting
in the lowest numbers India has seen in three decades since its economic liberalization in the
1990s.However, India's GDP forecasts were revised even further downward after the
economic package was announced in mid-May, indicating a severe recession. Nearly 30
nations' ratings have been lowered during this time.)On May 26, CRISIL predicted that India
would experience its worst recession since independence. Concurring
to State Bank of India examination, the Gross domestic product shrunk by over 40% in Q1.
There won't be a consistent contraction; instead, it will fluctuate based on a variety of
variables, including sector and state. On September 1, 2020, the Ministry of Statistics
released GDP figures for Q1 (April to June) of FY21. These numbers showed a decrease of
24% compared to the same time last year.
The Nomura India Business Resumption Index shows that on April 26, economic activity
decreased from 82.9 on March 22 to 44.7. On September 13, 2020, economic activity had
nearly returned to pre-lockdown levels. On March 15, unemployment rose to 26% on April
19, before returning to pre-lockdown levels by the middle of June.
During the lockdown, an estimated 140 million people lost their jobs and saw their incomes
decrease for many more. More than 45% of households across the nation reported a decrease
in income from the previous year. The Indian economy was estimated to lose over 32,000
crore (US$4.2 billion) per day during the initial 21 days of complete lockdown, which was
declared in response to the coronavirus outbreak. During India's complete lockdown, less
than a fourth of the country's $2.8 trillion economic movement was operational. Up to 53% of
the country's businesses, according to estimates, would be significantly affected.
Major Indian companies like Larsen & Toubro, Bharat Forge, UltraTech Cement, Grasim
Industries, Aditya Birla Group, BHEL, and Tata Motors have temporarily halted or restricted
their operations. Young businesses have suffered as funding has decreased.
The country's fast-moving consumer goods companies have drastically reduced their
operations and are focusing on the necessities. India’s stock markets experienced their
greatest losses ever on March 23, 2020.On the other hand, on March 25, one day after the
Prime Minister announced a comprehensive 21-day lockdown, the SENSEX and NIFTY
recorded their largest gains in 11 years.
The Prime Minister proposed an economic stimulus package worth 270 billion rupees, or $20
lakh crore, on May 12. Two days later, the Cabinet approved a number of ideas in the
economic package, including a package that provided free food grains. In December 2020, a
Right to Information request revealed that less than 10% of the stimulus funds had been
utilized. By July 2020, a few economic indices showed signs of revival and recovery. On
October 12 and November 12, the government announced two additional packages of
economic stimulus, bringing the total amount of stimulus to Rs.400 billion dollars (29.87
lakh crore) By December 2021, India's growth had returned to levels prior to COVID 19.

BRAZIL
Gross domestic product
The most by and large utilized proportion of an economy's size is GDP (Gross domestic
product). GDP can be determined for a single nation, a region (like Tuscany in Italy or
Burgundy in France), or a group of nations (like the European Union, or EU).The total
amount of value added in an economy is referred to as the GDP. The difference between the
value of the goods and services produced and the value of the goods and services required to
produce them—also referred to as intermediate consumption—is referred to as the value
added. The subsequent article will discuss this further.
Gross domestic product Yearly development Pace of Brazil
In the second from last quarter of 2021, the Brazilian economy developed by 4% year on
year, slipping from a reconsidered record 12.3% extension in the past 90 days and missing
the mark regarding market evaluations of a 4.2 percent increment. The economy had
expanded for the third consecutive quarter. The industrial sector saw an increase of 1.3%,
while the services sector saw an increase of 5.8%.As a result of lower production of coffee (-
22.4%), cotton (17.5%), corn (160%), oranges (13.8%), and sugar cane (-13.8%), agricultural
output decreased by 9%.-7.6 percent Government spending went up by 3.5%, household
consumption went up by 4.2%, and fixed investment went up by 18.8%.Due to the fact that
exports grew at a slower rate (4%) than imports, net trade had a negative impact on GDP.
After an upwardly revised 0.4% drop in the preceding quarter, GDP fell 0.1% on a quarterly
basis, in contrast to market expectations of no growth.
Reuters, BRASILIA, Nov 17 - Brazil's economy service dropped its Gross domestic product
development expectations for this and one year from now on Wednesday, while raising its
expansion standpoint, showing that the country's economy is decaying.
GDP is expected to grow by 5.1% this year and 2.1% in 2022, down from 5.3% and 2.5% in
previous forecasts, according to the government. The IPCA consumer price index predicts
inflation of 9.7% this year, up from 7.9% the previous year, and 4.7% in 2022, up from 3.75
percent.
Due to rising interest rates, the economy ministry decided to lower the GDP forecast,
according to a statement. To combat double-digit inflation, Brazil's central bank raised its
benchmark interest rate by 150 basis points to 7.75 percent in November. The Selic rate is
expected to be raised again soon.
Brazil's government is more optimistic than the rest of the world, despite lower GDP
forecasts.
GDP growth rate expressed as a percentage at market prices using the same local currency.
The amounts are constant in US dollars from 2010.GDP is the total gross value added by all
of the economy's resident producers, minus any product taxes or subsidies that aren't included
in the product value. It is estimated without considering the depreciation of manufactured
assets or the depletion and degradation of natural resources.
• Brazil's 2020 Gross domestic product development rate was - 4.06 percent, down 5.47
percent from 2019.
• Brazil's GDP grew at 1.41 percent in 2019, down 0.37 percent from 2018.
• Brazil's GDP grew at a rate of 1.78 percent in 2018, up 0.46 percent from 2017.
• Brazil's GDP grew by 1.32 percent in 2017, a 4.6% increase from 2016.
 IMPACT OF COVID-19
INDIA
The Effect of COVID-19 on Family Income: The following two questions were used to
examine the impact of COVID-19 on household income:1) "How has the effect of
Coronavirus on your family's month to month pay changed?" with three options for
responses, (a) decreased; b) an increase; c) remained unchanged;2) "Please estimate the
percentage change in your family's income from the month prior to the first appearance of
COVID-19 in Vietnam? “with six possibilities: a) 0%; b) 20%;c) 20–40%;d) 40–60%;e) 60–
80%;f) From 80% to 100%, individuals were considered to have "changed income" if they
reported that their income had increased or decreased. “No income change" was assigned to
respondents who stated that COVID-19 had not affected their income.
The Effect of COVID-19 on the Participant's Employment: In addition, four categories of
respondents were asked about the impact of the pandemic on their jobs:1) fired; (2) shorter
shifts and working hours;3) required extra work;(4) There is no effect. The person's health
and the services they use: Four criteria were used to evaluate the health of the participants:
having undergone 14 outpatient examinations recently; having been tested for COVID-19
within the past 14 days; and having been tested for COVID-19 within the past 14 days.
Isolation within the last 14 days; chronic conditions.
Life Quality in Relation to Health: They assessed HRQOL in the general population with the
help of the EuroQoL 5 Dimensions 5 Levels, a brief, basic, and validated questionnaire that is
widely used in Vietnam. On a five-point scale from no problems to major problems, mobility,
self-care, regular activities, pain/discomfort, and anxiety/depression are among the five areas
evaluated. The responses from each component were combined to determine the individuals'
health status, with 11111 representing the best health and 55555 representing the worst.Using
the EQ-5D-5L interim scoring system, a single "utility" score can be changed for each health
state. The Vietnamese value set, which has a score range of -0.5115 to 1, was used in this
investigation.

BRAZIL
The COVID-19 pandemic presented Brazil with a significant health, social, and financial
challenge, resulting in a 4.1% decrease in GDP in 2020 and a recovery in 2021.Due to rising
commodity prices and increased demand within and outside the home, the GDP is anticipated
to expand by 5.3% in 2021.The rising prices of immunizations also have an impact on the
anticipated rises in the boom fee. The medium-term path to a full recovery remains steep due
to Brazil's structural and monetary vulnerabilities and the impact of inflationary pressures on
the economy.
Brazil has moved up to second place worldwide in absolute mortality caused by COVID-19,
just behind the United States, and eighth in deaths per capita. As of September 2021, Brazil
had recorded more than 21 million COVID-19-related incidents and more than 590,000
deaths.0.33 worldwide (behind the United States and India). Even though the number of
deaths and incidents has decreased significantly since the peak in April 2021, Brazil still
accounts for 16% of all known deaths linked to COVID-19 worldwide. Concerns have been
raised regarding a potential new wave of infections, like the one that occurred in 20 of the 27
states between March and May 2021, when ICU bed occupancy rates exceeded 90 percent
and critical supplies like oxygen and sedatives were severely lacking. Immunization
endeavours have expanded as of late; About 70% of people will have received their first shot
by September 2021, but only 40% will have received all three.
Demand for household and outdoor goods fell dramatically as a result of the pandemic and
financial regulations that followed. It has made the macroeconomic policy framework more
uncertain, especially in the financial sector. This uncertainty has led to negative risks, which
means that structural reforms must be implemented quickly, and monetary consolidation must
be strong.
The COVID-19 pandemic has put years of progress toward reducing poverty and building
human capital in jeopardy. Brazil, one of the LCR countries with the longest period of public
school closures to date, is expected to see an increase in learning poverty from 48 to 70
percent. This is expected to have a disproportionate impact on the poor (less than half of
college students in less developed regions benefited from far-flung education, compared to
ninety-two percent in richer regions of the United States).Consequently, strong remedial
acceleration programs are required as the impact of COVID-19 is expected to reverse a
decade of consistent growth in the Human Capital Index (from 0.52 to 0.58 between 2007
and 2019).The government recommends a substantial, immediate, focused, and time-bound
financial package that focuses on health spending (tests, vaccines, transfers to municipalities
to strengthen health response and attend acute emergencies), social assistance (the generous
social emergency transfers (Auxilio Emergencies) to 66 million people, and the expansion of
the Bolsa Familia Conditional Cash Transfer (CCT) program), education spending to protect
the weakest and most inclined individuals, and support for businesses including layoffs. This
package was anticipated to cost BRL 815.5 billion (US$156.8 billion) in 2020, or 11.4% of
GDP. The annual financial boom decline in 2020 was kept to 4.1 percentage points as a
result of the substantial monetary stimulus. In addition, it provided a quick and beneficial
temporary respite, resulting in a drop in poverty from 19.6% in 2019 to 12.8% in 2020 (the
poverty rate is entirely based on the US$ 5.50/day (PPP) line).However, poverty is still
anticipated to rise to 15.7% in 2021, even with the most recent round of emergency Auxlio
Emergencies financial aid approved in April 2021.,because the COVID-19 pandemic
disproportionately weakened the weak and inclined while making the labor market vulnerable
by raising unemployment levels above those prior to the pandemic.
In 2021, achieving the right balance between protecting the vulnerable and ensuring
sustainable public finances may be a major policy challenge.
Supporting the transition to a boom that is more durable and friendly to the environment
remains an important goal. Brazil has a high percentage of renewable energy in its energy
matrix and is home to more than 60% of the Amazon rainforest, the largest tropical wooded
area in the world. However, its high exposure to weather risks and deforestation necessitates
a robust reform timetable to address these issues. Brazil will need to intensify a long-term
national strategy to meet its climate goals because of the increase in deforestation emissions.
This means that Brazil is not on track to meet its NDC targets (a reduction in GHG emissions
of 37% by 2025 and 43% by 2030, compared to 2005). Promising prospects for Brazil's
inexperienced recovery and the emancipation of hundreds of thousands of Brazilians from
poverty are provided by recent infrastructure reforms and the administration's renewed
interest in the weather schedule.
Brazil's federal, state, and municipal governments enacted a variety of regulations regarding
business establishment and the number of people permitted in a given space based on the
development of COVID-19.These regulations govern the entire territory, which covers more
than 8.5 million km2 and has a population of 2 billion people and an urbanization rate of 87.5
percent. The implementation of these measures has had the greatest impact on the business
and service industries, which are major employers and revenue generators in the regional
(formal and informal) market.
The federal government then implemented space moves and programs to safeguard corporate
and private wealth and ensure business continuity. The COVID-19 emergency assistance
program has distributed cash to 66 million people, totalling 280 billion reais, or close to 3.9%
of GDP. Through November, the federal government spent over 615 billion reals, or
approximately 8.6% of GDP (including tax relief and additional costs).The main bank's
support for the economy's credit expansion supported a rise in lending to micro, small, and
medium-sized businesses of over 37%, or 1.7% of GDP, from 2019 to 2020.Approximately
12% of financial and lending metrics are made up of assets. Congress passed a constitutional
amendment in the first few months of the year to delay the implementation of financial
regulations until 2020 to support public regulations to address the COVID-19 crisis. Some of
the restrictions include the restriction of allowing no actual increase in top spending and the
modification of some mechanisms so that the central bank could, if necessary, support the
economy, businesses, and the Treasury through direct loans or safekeeping. Subsequently, the
Depository burned through 494.4% of its complete financial plan till the finish of November
(6.4% PIB), and it is guessed that it would reach 574.6% of its all-out financial plan before
the year's over (7.4% PIB).This expense covered an additional transfer to states and
municipalities totalling 79.2 billion reais (1.0% of GDP) to partially offset the decline in tax
revenue in addition to providing emergency assistance;50 billion reais for increased
expenditures by the Ministry of Health and various businesses to combat COVID-19,
including the acquisition of medical supplies, medications, and assistance with the
development of vaccines. A home loan ensure store for miniature and independent ventures
was likewise settled with 40 billion reais accessible from the Depository.

IMPACT OF RUSSIA AND UKRAINE WAR

BRAZIL
Fitch Ratings says that Brazilian debtors' cash flow will be impacted by Russia's armed
insurgency in Ukraine in a variety of businesses. The duration and extent of Russia's
sanctions will determine the impact's severity, which will vary by business. Businesses that
rely on gas supplies, agriculture, and producers of grain-processed food may suffer. Based on
their success in 2021, all issuers should be able to tolerate some profit pressure without
immediate rating action because they all have solid liquidity profiles and solid capital
architectures.
While bilateral trade with Ukraine is negligible, Brazil appears to be in a trade deficit with
Russia, particularly in the fertilizer sector. Russian is the Europe's most noteworthy nitrogen
supplier and a minimal expense potassium maker. Wheat and corn account for 30 percent and
20 percent of global exports, respectively, and Ukraine and Russia are major producers. Even
though Brazil does not rely excessively on grain and corn imports from Russia and Ukraine, a
rise in global prices could hurt Brazilian producers of packaged food, protein, and cereals for
biofuels.
In the 11 months that ended in November 2021, Brazil used 43 million tonnes of fertilizer. Of
that, international raw materials made up about 84%, or 38 million tonnes, and Russian
imports made up the other 8 million tonnes. The second crop of maize that is expected to be
harvested.
Wheat flour's ability to pass on rising costs to sales prices is dependent on competition and
domestic demand for Brazilian processed food manufacturers like M Dias Branco &
Pontificia Selmy, which account for 45 to 50 percent of total costs. Brazil would manage 2.1
million metric tons of wheat during the fiscal years 2021 and 2022, with 6.5 million metric
tons coming from imports. Even though supply constraints have already pushed up global
prices, Argentina is Brazil's primary wheat supplier. After increasing by 21% in 2021, wheat
prices increased by 45% between March 3 and March 3, 2022.

INDIA
Since the attack, which was a once-in-a-century occurrence, Russians are now the world’s
largest most reviled country. Because taking a part in the confrontation between the USA
And Russia would be bad to India, the country has opted to remain neutral.
Because of the sanctions imposed by various nations, certain procurements have been
delayed. Energy purchases from Russia make for a major share of Today's power needs,
which is 80% reliant on the foreign market. For security concerns and to comply with Us EU
restrictions, India's payment method to Russia is through the State Bank (SBI) (SBI). SBI, in
contrast hand, has already announced that it would not accept payment to Russia.
As a result of this trend, Indian oil producers would face substantial hurdles in the future. The
possibility of US Trying to counter America's Adversaries Through Penalties Act (CAATSA)
penalties against India is also notable. CAATSA sanctions might put sanctions on every
country that purchases key defence gear from Russia, including the presently operational S-
400 missile defence system.
Rising crude prices will cause a huge increase in inflation in India. For each rise in the price
for crude oil, the pricing of edible oil rises, which has a detrimental impact on the market as a
whole. In 2019, the Central Bank of India intends to hike interest rates by 90-100 basis
points.
The chips crisis has already had substantial impact on the worldwide electronics industry, and
it is being felt globally. Because of Russia's major engagement in this business, sanctions will
further exacerbate the issue. The price of electronic goods will skyrocket if the world
economy continues to collapse and global supply networks are more stretched. This will have
a tremendous impact on Indian homes.
Metals, which play an important role in our everyday lives, are also being impacted by the
war, as the majority of metals are produced or processed in Russian or Ukraine, and are
seeing significant price increases internationally. As a result, the car industry's operational
profitability have dropped significantly.
To make matters worse, travel prices are anticipated to grow in the coming years, making the
situation much more tough. Airlines are planning to boost ticket prices if the price of oil
continues to climb since it is having a detrimental impact on operational costs.
Pharmaceutical businesses will be obliged to boost prices in the coming days as a
consequence of the Russian invasion. Given that the epidemic is still running, this might
result in the breakdown of the Indian nuclear family.
Because of the multiple restrictions imposed upon Russia and also the given fact Russia is
indeed a close partner of India, India must exercise caution at this time. Internally, India
could be playing things safe.

PUBLIC FINANCE IN INDIA

As India approaches its 100th year of independence, the Budget objectives for FY2022-23
seek to advance Amrit Kaal aspirations for the country. Focus on growth and all-inclusive
welfare
• Supporting the transition to a clean energy economy, technology-enabled
development, and climate action.
 • Virtuous cycle beginning Supporting the transition to a clean energy economy,
technology-enabled development, and climate action.

The Union Budget for FY 2022–23 this year focuses on four priorities in order to strengthen
the infrastructure:
• PM GatiShakti
• Inclusive Development
• Productivity Enhancement & Investment, Sunrise opportunities, Energy
Transition, and Climate Action
• Financing of investments

The highlights of the budget for FY 2022–23 is listed on the Union Budget website. A summary
of the Budget is available on the Press Information Bureau (PIB) website. With the potential
to generate 60 lakh new jobs and an additional Rs 30 lakh crore in production over the next
five years, the Productivity Linked Incentive in 14 sectors for realising the vision of
AtmaNirbhar Bharat has received excellent response.

KEY FEATURES
With the last two pandemic waves, India's GDP twice experienced strong recoveries,
demonstrating the country's resilience in the face of economic hardship.

India's GDP
• Providing Greater Fiscal Space to States
▪ An increase in expenditure for the "Scheme for Financial Assistance
to States for Capital Investment," from Rs. 10,000 crore in the budget
estimates to Rs. 15,000 crore in the revised estimates for the current
year.

• Agriculture and Allied Sectors

▪ Direct payments of Rs. 2.37 lakh crore to 1.63 crore farmers for the
purchase of wheat and paddy
 ▪ No chemicals To encourage organic farming throughout the county.
Farmers' fields in 5 km broad stretches along the Ganga are the initial
emphasis.

• MSMEs & Industry

• Interlinking of the Udyam, e-Shram, NCS, and ASEEM portals
• Additional credit was given to 130 lakh MSMEs under the Emergency
Credit Linked Guarantee Scheme.Education
▪ The PM eVIDYA programme " One class-One TV channel" will be
expanded to 200 TV channels.
• Public Capital Investment
o Public investment to continue to pump private investment and demand
in 2022-23
▪ capital expenditure stepped up sharply by 35.4% to Rs.7.50
lakh crore in 2022-23 from Rs.5.54 lakh crore in the current
year
▪ Outlay in 2022-23 to be 2.9% of GDP.

• Saksham Anganwadi
• Integrated advantages for women and children provided by Mission
Shakti, Mission Vatsalya, Saksham Anganwadi, and Poshan 2.0.

• Health

o An open platform for India, National Digital Health Ecosystem to be

rolled out
o National Tele Mental Health Programme’ for mental health
counselling and care services to be launched.

• Energy Transition & Climate Action

• To reach the target of 280 GW of installed solar power by 2030, an
additional Rs. 19,500 crore has been allocated for the Production
Linked Incentive for the development of high efficiency solar modules.

• Pellets of biomass that are five to seven percent will be co-fired for
thermal electricity annual CO2 savings of 38

• MMTSunrise Opportunities
o Government support for research and development in areas that are considered
to be "sunrise opportunities," such as artificial intelligence, geospatial systems
 and drones, semiconductors and their ecosystem, the space economy, genomics
and pharmaceuticals, green energy, and clean mobility systems.

PUBLIC FINANCE OF BRAZIL

The Brazilian fiscal year coincides with the calendar year. The budget, prepared under the
supervision of the Ministry of Planning and Economic Coordination, represents the
government's plans for financing administrative operations and capital expenditures.
Budgetary deficits increased considerably in the 1960s. The government's objective—to hold
total expenditures fairly constant while raising the share of capital outlays—was achieved by
an austerity policy. Although the federal budget deficit was reduced in real terms during the
late 1960s, fiscal problems continued to be a major source of inflationary pressure, with
revenues hovering between 14.5% and 16.5% of GNP and total government expenditures in
the range of 17.5% to 19%. Government revenue increased considerably, and each year the
real deficit was reduced below the previous year's level both absolutely and relatively. Public
spending was stepped up, particularly transfer payments; transfers of capital to decentralized
agencies increased, although direct investment by the central government fell off. Thus, more
capital was invested in basic infrastructural projects. Public spending was raised, mainly
transfer payments; capital transfers to decentralised agencies grew, but investment by the
national government decreased. As a result, more money was put into fundamental
infrastructure improvements.
Despite considerable increases in both receipts and spending during the 1970s, the pattern of
declining deficits persisted. Although the expenditures for 1972 and 1974 indicated a surplus,
the realised surpluses in 1974 fell considerably short of the anticipated surplus. There was a
debt crisis in 1975, but there were yearly surpluses from 1976 through 1980. The pace at
which government expenditure surpassed revenue was one of the primary reasons of Brazil's
economic uncertainty in the 1980s. A balanced budget of 1.4% of GDP was achieved
following another stabilisation package in 1990, however
According to the US the Central Intelligence Agency (CIA), Brazil's central government
earned around $100.6 billion and spent $91.6 billion in 2000. Overall, the government
recorded a surplus of almost $9 billion. External debt amounted to $251 billion.
The table below provides an itemised breakdown of government income and expenditures.
The percentages were computed using data from the World Bank. The financial figures
(millions) were based on the above-mentioned CIA estimations.