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Friday, March 13, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Trump declares covid a national emergency as US shuts down

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U.S. President Donald Trump on Friday declared a national emergency over the fast-spreading coronavirus, opening the door to providing what he said was about $50 billion in federal aid to fight the disease.Trump made the announcement at a Rose Garden news conference as he battled to show Americans that he is aggressively addressing the virus after appearing to play down the threat for weeks.Trump said he was declaring the national emergency in order to "unleash the full power of the federal government." He urged every state to set up emergency centers to help fight the virus.Pressure has been mounting for Trump to declare an infectious disease emergency under the 1988 law that would allow the Federal Emergency Management Agency (FEMA) to provide disaster funds to state and local governments and to deploy support teams. The power is rarely used. Former President Bill Clinton in 2000 declared such an emergency for West Nile virus."To unleash the full power of the federal government in this effort today, I am officially declaring a national emergency. Two very big words. The action I am taking will open up access to up to $50 billion - a very important and a large amount for states and territories or localities in our shared fight against this disease," he said.Trump said the federal government was partnering with the private sector to accelerate production of test kits to make them more widely available to Americans.He said there will be about 5 million coronavirus tests available but doubted that many will be needed. He urged Americans to only seek out the test if they feel they need it."We don't want people to take a test if we feel that they shouldn't be doing it and we don't want everyone running out and taking - only if you have certain symptoms," he said.Alongside Trump was Anthony Fauci, the National Institutes of Health expert who is on Trump's coronavirus task force. "We still have a long way to go. There will be many more cases. But we'll take care of that," said Fauci.

Virus claims another life in India

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India reported its second casualty due to coronavirus on Friday with the health ministry saying a 68-year-old woman died in Delhi.The death was caused due to co-morbidity (diabetes and hypertension), it said, adding she had tested positive for COVID-19. The woman was admitted in Ram Manohar Lohia Hospital, officials said.She became the second person to die of coronavirus infection in the country. On Thursday, the first death was reported from Karnataka.

How Asia rose to the coronavirus challenge

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In a little over two months, the disease travelled from Wuhan, China to at least 125 countries, sickened over 100,000 and killed more than 4,000 people. Before that, China, Hong Kong and some Southeast Asian nations weathered the outbreak of SARS in 2003 and, more recently, the onset of MERS and swine fever. "They have accumulated knowledge and practices, so there's room for other countries to learn from these experiences," says Kenji Shibuya, a Prof at King's College London and former chief of health policy at the World Health Organization.This is how they're doing:Testing"No matter how your health systems or political systems are organised, the keys to epidemic control remain the same" — test, trace, isolate and inform, said Jessica Justman, a professor of medicine in epidemiology at Columbia University.South Korea, which has the highest infection tally in Asia outside of China, is testing more than 10,000 people a day, the fastest pace globally. Japan drew criticism for not testing enough people. There is rising concern that the US is facing a similar quandary. 74619226 Mass quarantineChina stunned the world when it put Hubei province, along with its capital Wuhan city, in a lockdown in late January, effectively quarantining 60 million people. This lockdown likely reduced overseas transmission of the virus by almost 80%, according to a paper in the journal Science on March 6 by a team led by researchers at Northeastern University.Italy went a step further, becoming the first country to attempt a nationwide lockdown. New York has ordered a containment around New Rochelle. On Friday, the Philippines locked down its capital Manila, restricting travel to and from the city of 12 million.Social distancingCancelling mass events and closing down places where people gather is often cited as one of the most effective measures of containing an outbreak by public health experts, with proven results that go as far back as the influenza pandemic of 1918. Hong Kong took the most drastic measures early on by shutting down schools in late January. Japan followed suit a few weeks later. Governments and companies across the region also called off trade conferences to film festivals, with some sporting events cancelled or held without spectators.Cover the costPotentially infected patients may be wary of seeking treatment fearing the cost or missed days at work, which could scuttle disease mitigation efforts. The best approach, experts say, is for governments or insurers to cover the testing costs. Such a measure has shown results: Thailand provided free testing and treatment of highrisk patients, which incentivised people to come forward. As of March 11, about 95% of over 4,800 patients under investigation came to hospital voluntarily, according to the country's health ministry.In Japan, the government had to issue several calls for companies to allow workers to take sick days instead of using vacation days. The US is also grappling with similar issues around paid sick leave.

In virus war, $10 bn fund-raising drive begins

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By James PatonAfter the coronavirus wiped $7.6 trillion off the world's stock markets in four days, global health groups are asking companies, governments and even the public for billions of dollars to fight the contagion.The World Health Organization set up a website seeking contributions from anyone in an attempt to raise at least $7 billion. Separately, a coalition backed by Bill Gates and Norway is considering a crowdfunding campaign as they seek to attract about $2 billion to speed up development of vaccines.Urgency is rising as coronavirus cases climb to about 135,000 in more than 100 nations and doctors and nurses around the world struggle to slow the spread of the illness, dubbed Covid-19. The WHO this week declared the emergency a pandemic, and some countries have already given up on containment efforts."In less than 90 days, Covid-19 has become a global pandemic of proportions we have not seen in a century," Elizabeth Cousens, the UN Foundation's chief executive officer, said on a call with reporters. "This is essentially about investing now or paying later."The WHO's solidarity-response fund will support efforts to track the spread of the virus, ensure sick patients get treated and raise defenses for countries around the world, especially those with the weakest health systems. It will also support the development of vaccines, treatments and tests. The organizers expect to start with donations from some of the world's biggest companies.Without fresh funds, the work on potential vaccines would slow down, making the ambitious goal of having products available within 12 to 18 months impossible, Richard Hatchett, head of the Coalition for Epidemic Preparedness Innovations, said in an interview.After the German government pledged an additional 140 million euros ($156 million), CEPI has received $186 million of the $2 billion it estimates is necessary to get Covid-19 vaccine candidates across the line. But the group will need a whole lot more and will even contemplate turning to individuals."The general public certainly has a strongly vested interest in seeing the success of these scientific efforts," Hatchett said.Earlier this year, CEPI said it would fund vaccine projects led by Moderna Inc., Inovio Pharmaceuticals Inc. and the University of Queensland in Australia. Last month, GlaxoSmithKline Plc agreed to share its technology to the effort.The WHO has appealed for about $675 million in emergency funds, and Director-General Tedros Adhanom Ghebreyesus said last month that the response was tepid. Now it's expecting it will need at least 10 times that much to fund its efforts through the end of the year, according to Scott Pendergast, director for strategic planning.Facebook Inc. will match as much as $10 million in donations, while Google will donate $5 million, the WHO said.Significant funds have been committed to helping countries respond. The World Bank last week unveiled a support package of as much as $12 billion to help poorer countries strengthen their health systems and lessen the damage, while the International Monetary Fund followed with a plan to make about $50 billion available."I'm stressed about my near-term capital needs," Hatchett said. "In another sense I'm quite confident the world will see this, relative to the costs that are being assumed, as a real bargain."

Automobile sales down ahead of BS-VI transition, virus woes

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NEW DELHI: Automobile sales across categories declined last month with carmakers aligning stocks ahead of the industry's transition to BS-VI emission standards in the new fiscal year beginning April 1 amid a slowdown in the broader economy. The outbreak of coronavirus additionally disrupted supply of components from China, affecting production at several automakers in February.Sales of passenger vehicles dropped 7.61% to 251,516 units in the month under review, shows data available with industry body Society of Indian Automobile Manufacturers (SIAM).While wholesale volumes of commercial vehicles fell 32.9% to 58,670 units in February, those of two wheelers declined 19.82% to 1,294,791 units. Demand for scooters dropped 14.27% to 422,310 units last month, that for motorcycles by 22% to 816,679 units."Automobile industry continues to face hardship due to steeper decline in production and wholesale dispatches in all segments in February 2020," said Rajesh Menon, director general, SIAM.Automakers in India report wholesale dispatches from factories and not retail sales made to customers.74621145 "The decline in wholesale dispatches is primarily due to economic slowdown and lower production of BSIV vehicles. Some upside on the registration numbers of VAHAN can be attributed to last minute purchase by customers trying to advance purchase of BSIV vehicles," SIAM president, Rajan Wadhera, said.Additionally, production at several automakers including Hero MotoCorp, TVS Motor Company, Tata Motors and MG Motor India was affected due to disruption is supply of components from China. "Supply chain disruptions from China are also a concern, which may impact the production plans for companies going forward. The auto industry is grateful to the government for issuing a notification of Force Majeure for Coronavirus and 24x7 clearance of shipments at all customs formations", added Wadhera.Vehicle sales across categories declined 19.08% to1,646,332 units in the month under consideration.

Lakshmi Vilas Bank bets on gold biz, MSMEs for business revival

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KOLKATA: Lakshmi Vilas Bank (LVB) has adopted a strategy to conserve whatever capital it has ahead of the fiscal-year end, even as the capital-starved lender continued its search for new investors.The bank has shifted its focus to zero-risk gold loan business, which require no capital to set aside. The micro, small and medium enterprises (MSME) sector remained another focus area, even as it stopped corporate lending, chief executive S Sundar said.LVB has made its top layer thinner by asking some senior executives to go. The Chennai-based lender has also gone back to branch-intensive banking for greater customer response and asked its sales team and relationship managers to report to branch heads instead of reporting to vertical heads directly.The lender is ready to give control to new investors as it is desperately looking to raise $250-300 million to augment capital and boost the adequacy ratio from a poor 3.46%, against the regulatory minimum of 9%.The bank, meanwhile, refuted market fears over safety of public deposits, saying that its liquidity coverage ratio is at a comfortable level more than what is prescribed by the regulator."We are in the process of recovering our NPAs and our quantum of NPA has in fact marginally come down in the last quarter. The bank would like to take this opportunity to assure customers that their deposits are safe in our bank," it said in a filing with stock exchanges.Its gross NPA in absolute terms came down marginally to Rs 4,081 crore at the end of December from Rs 4,091 crore three months prior, but the NPA ratio rose to 23.27% from 21.25%. This, Sundar said, was because the loan book had shrunk.LVB had Rs 17,500 crore of loans outstanding at the end of December 2019 as against Rs 27,000 crore in March 2018 around when the financials started turning bad as its stopped lending to corporates. The Reserve Bank of India placed the bank under the Prompt Corrective Action in September 2019 because of its weak health.

Recession inevitable, get money out to people now: Swaminathan

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You had warned of a virus triggered recession in your recent note. How severe could it get in your view? Are we looking at some sort of a full blown global recession and how do you see it compared to 2008?There are three scenarios; we have no idea how long it will take for the virus to play out. In the best case, it would be over in three months in which case there will definitely be a recession, but after the recession we may see a reasonably fast recovery. On the other hand, if it takes six months, then we are in very deep long term trouble and it may carry on for nine months which would make it as long as the Spanish flu of 1918-19 which at that time infected 200 million people and took 50 million lives. If it continues, at our population level, several billion people will be infected, tens of millions of people will die, the economic damage will be extremely deep. It will be of a different nature from 2008 which was a narrow financial crisis. But if we have this continuing for a full one year, then the financial sector will also be affected. There will be a very large number of bankruptcies, a large number of banks are going to be in bad shape because the corporate sector has been borrowing a lot. They have taken advantage of lower interest rates. They have been borrowing a lot and so debt is a problem. If we suddenly find companies are unable to have the cash to repay the loans, we can get another full blooded financial problem as we had in 2008 in the worst scenario of this coronavirus continuing for 12 months. How can the RBI and the government prepare for this recession? What steps could they take?There is a health issue and there is an economic issue. As far as the health issue is concerned, we can only do our best. The fact is there are no vaccines, there are no medicines. Our medical facilities are pathetic. We will not be able to do very much. Our capacity to do anything is not very much. There are attempts by the government to lock down movement and say let there be less tourism, less travel and up to a point, it may work. Let us also hope that the virus is not able to stand up to high Indian temperatures and that the coming Indian summer will reduce it. These are the positive things we can hope for. Beyond that, on the economic side, all the normal economic rules should go out of the window. There is a case for having a massive handout of cash through schemes like PM Kissan and MNREGA to get additional purchasing power into the hands of people. There is a case for the Reserve Bank of India to be very relaxed and monetise the entire fiscal deficit which in normal times, it is not supposed to do because it might be inflationary. In the current situation, inflation is the last problem. Your problem is everything except inflation. The RBI needs to be aggressive. The government can say forget about the fiscal deficit at 3.8%, let it go wherever it is going to go because this is such an exceptional year. Any normal rules, any FRBM rules do not apply now. So let us get money out to people. Whatever we do is not going to be enough. Whatever we do, there is going to be a recession. What should happen in order to cushion the fall? As I said, this is not determined by policy, this will be determined by the disease, this will be determined by how long the disease continues, how fast it spreads, whether it is checked by high temperatures in the summer. We do not know any of these things. As I said, in the best case, this will blow over in one quarter. We will have a very bad time to begin with but by the end of the year, we may have a substantial recovery. But for all we know, this will continue for six months, nine months. If you go back to the great Spanish flu of 1918-19, it continued for nine full months and that was at a time when there was much less international travel, much less international trade, medical facilities were less. But the fact is today we have no medical defence against the coronavirus. How would you assess the state of Indian economy versus the rest of the world? Are we relatively immune? How would you rate the global central bank commentary action so far? India is relatively well connected. Credit as a percentage of GDP is high. We will be affected. On the other hand India is not that urbanised. Indians do not travel abroad that much, the tourism, travel part of it is somewhat less, to that extent it is positive. The most important may turn out to be temperature. If it is true that the coronavirus will not be able to stand high temperatures very well, then India will certainly come out much better than other countries. However, as a note of caution Singapore which is a very hot country, is reporting a lot of coronavirus. So let us not just be complacent and say hot Indian temperatures will kill the virus. The example of Singapore right now is not very promising. What are you making of the oil collapse? Obviously, its aftermath will be an impact on the oil related sectors and economies around the world, shale gas in the US and obviously even in the Middle Eastern regions.The oil collapse is an unexpected consequence of the coronavirus. We had a problem earlier because of the rise in shale oil production. OPEC and Russia had agreed to cut production. But when there was such a collapse in demand, they are saying you have to fight for market share. All of us need to sell more and let the prices crash because if the prices crash, that in due course may kill the American shale oil industry and provide stability again. So, we have a deliberate attempt on the part of Saudi Arabia and Putin to increase oil production to the extent that we try and depress prices so much that the American shale oil industry gets substantially destroyed. That will be a huge negative for the American economy. For the Indian economy and the world economy, it means lower oil prices, which in itself is good. But the negative effect of collapsing world demand is going to be much worse than any positive effect of this oil price cut. Let us face it, in every single recession, oil prices fall sharply but the fact that the oil prices fall sharply in a recession does not make a recession a nice time. It does not mean we got a great deal out of it. The negatives are much more than the positives. So yes, the oil price has some special characteristics because of what Saudi Arabia and Russia have done but overall the fall in oil prices is part of the overall disaster. Please see it as a disaster and not as a blessing.

Coronavirus forces Buffett to cancel 'Woodstock for Capitalists'

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Warren Buffett on Friday said the coronavirus pandemic forced him to cancel Berkshire Hathaway Inc's annual shareholder weekend, the largest gathering in corporate America, because the safety of participants and the wider community was paramount.The weekend, which Berkshire's billionaire chairman calls "Woodstock for Capitalists" and normally attracts more than 40,000 people, had been scheduled for May 1-3 in several locations across Omaha, Nebraska, where Berkshire is based.Buffett said "events have moved very fast" since he discussed the weekend in his Feb. 22 shareholder letter.Berkshire's annual meeting will still be live-streamed on May 2 on Yahoo Finance, but shareholders cannot physically attend, and surrounding events have been canceled. Omaha has about 468,000 people."Large gatherings can pose a health threat to the participants and the greater community," Buffett said. "We won't ask this of our employees and we won't expose Omaha to the possibility of becoming a 'hot spot' in the current pandemic."Buffett's hand was forced after the World Health Organization on Wednesday declared the coronavirus outbreak a pandemic, countries and cities worldwide curbed large gatherings, and many companies canceled events or moved them online.Omaha this year also will not host the College World Series of baseball, which the NCAA canceled on Thursday, for the first time since it moved there in 1950.Berkshire's annual meeting normally lasts about 15 minutes, but is preceded by five hours in which Buffett, 89, and Vice Chairman Charlie Munger, 96, answer shareholder questions. Buffett said he and possibly Munger may still field some questions.Health experts consider elderly people the most at risk of dying from the coronavirus.The weekend has long been a high point for Buffett, who routinely mingles in close proximity to shareholders and fans, often with a horde of media nearby.Events this year were expected to include a cocktail reception filling a shopping mall, a 5-kilometer (3.1-mile) run, and shopping discounts that provide Berkshire with millions of dollars of revenue.Only about a dozen people attended Berkshire's annual meeting in 1965, the year Buffett took over the company.Attendance surged after Berkshire in 1996 introduced Class B shares, now worth 1/1500th of Class A shares, enabling more people to make pilgrimages to Omaha.By 2015, there were 42,000 attendees helping Buffett celebrate his 50th anniversary at the helm.The meeting and shareholder questions have since 2004 been conducted at the downtown CHI Health Center arena, which holds close to 19,000 people and normally fills to capacity.Buffett expressed hope the weekend will return in 2021."Charlie and I will miss you, but we will see many thousands of you next year," he told shareholders.

Phone companies diversify into accessories, services space to boost topline, margin

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NEW DELHI: As growth of smartphone sales taper off with the Indian smartphone market attaining a sizeable installed base of 500 million users, handset brands are now diversifying into accessories and services space to boost their toplines and margins.Market intelligence firms believe leading smartphone brands will increasingly focus on entertainment, gaming, payments, advertising and smart wearables to drive margins from existing users and retain a loyal customer base.Chinese phone makers Xiaomi, Oppo and Realme have launched their financial services apps called Mi Credit, Oppo Kash and Realme Paysa to offer small ticket loans to SMEs, credit score analysis and insurance cover. Home-bred phone brand Lava spun off its digital payments app to offer offline money transfer to its feature phone users. Analysts expect other brands including OnePlus and Vivo to follow suit."At present, smartphone brands are able to generate $0.5-$1.5 a month from users by offering services like advertising," said Faisal Kawoosa, founder and chief analyst at TechArc. "Even if a brand is able to generate $1 revenue per user per month, with a base of 50 million users to be there for average 3 years, this means a revenue potential of $1.8 billion from services alone," he added.Anshul Gupta, senior research director at global market research firm Gartner, added that services are add-ons that can really excite a company's existing user base, making it easier to retain them.US smartphone major Apple's third quarter results for FY20, where accessory and service revenue grew 36% and 17% respectively versus iPhone sales growth of 7%, are indicative of soaring demand for such add-ons globally, say analysts."To operate at a good profit margin, now brands really need to focus on the ecosystem which is going to exist around smartphones in the form of new wearables, like bluetooth earphones, smart watches, smart speakers along with services like music, video or movie content," Gupta said.According to a report by TechArc, Indians will buy connected devices worth $ 45.7 Billion in 2020, a growth of 11% over 2019."OEMs will look forward to design a service strategy by striking relevant partnerships in the startups space," said Tarun Pathak, associate director, Counterpoint Market Research.Pathak said entertainment, gaming, financial services and vernacular content are some of the areas where handset makers can invest further.The new trend comes even as the growth in smartphone sales has fallen consistently since 2017, when the market grew 13%, down to 10% in 2018 and sequentially to 7% in 2019. The rate is further expected to decline to 5% in 2020.

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