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Monday, March 16, 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


Samples tested for Covid nightmare, India keeps fingers crossed

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NEW DELHI: India will know very soon if it is experiencing "community transmission" of Covid-19, as the Indian Council of Medical Research (ICMR) has intensified random sampling of people who display flu-like symptoms but don't have any history of travel to the affected countries. The preliminary result of the samples is likely to come on Wednesday, ICMR chief epidemiologist RR Gangakhedkar told ET.As reported by ET, each of the 51 ICMR laboratories has started testing random samples. The ICMR has picked up random samples of people with severe acute respiratory illness (SARI) from the intensive care units of various hospitals. "The data will become available in a couple of days. You will get some flavour … and we will have to speculate the situation based on the results of the samples," he said, adding: "We are already doing surveillance for SARI cases."Samples are being collected from people who are suffering from breathlessness and those admitted to ICUs where their cause of infection is unknown. "Our immediate worry is to find out an evidence if we have landed into community transmission," Gangakhedkar said.The ICMR has sent 20 samples each to its 51 laboratories. The exercise started on March 15.The ICMR director-general, Balram Bhargava, on Friday said India had a 30-day window to halt the beginning of community transmission. "If we manage 30 days, if community transmission doesn't happen in the next 30 days, we may be at a good wicket," he had told ET.Community transmission happens when a patient who is not exposed to anyone known to be infected and has not travelled to countries in which the virus is circulating tests positive for infection.Experts at the ICMR said there were four states of the disease. Stage-1 is getting imported cases, stage-2 is local transmission, stage-3 is community transmission and stage-4 is when it turns into an epidemic.While, India is at stage-2 now, experts said stern precautions were being taken so that going to stage-3 (community transmission) could be halted."It is still not an infection which has gone into community infection. There is still no evidence of a case that acquired an infection from domestic sources where there is no travel history," Gangakhedkar said.While Indian experts said they would revise the testing protocol depending on the situation, efforts are on to further intensify random sampling. Gangakhedkar on Monday said the ICMR had ordered 1 million reagents required for testing samples.

Virus has top bosses at Tata in tense huddle

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Mumbai: Tata Group CEOs will review the 2021 business strategies of their companies with the Covid-19 pandemic having significantly impacted the group's key markets in Europe, the US, UK, China, Singapore, and United Arab Emirates, said people with knowledge of the matter. Tata Sons chairman N Chandrasekaran outlined plans to deal with the coronavirus-fuelled crisis at a conference call held recently with the CEOs of Tata Power, Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Global Beverages Ltd (TGBL), Jaguar Land Rover (JLR) and Tata Chemicals among others, said top executives. The group has also asked CEOs to form support groups within their companies to help face the challenge. Employee welfare and minimising business risks have been given top priority, they said.Some employees of JLR and Tata Steel are said to have been quarantined. CEOs have been given the freedom to take independent financial decisions to ensure employee safety.Tata International, TCS, Tata Steel, TGBL and JLR have employees in Europe, the US, UK and China, among the regions worst hit by the outbreak. Tata Motors, Tata Realty, Tata Communication and Indian Hotels Co. Ltd (IHCL) have adopted work-from-home policies. Others are expected to follow suit as the situation develops, officials said. Tata Sons did not comment on ET's queries.Chandrasekaran was cited as saying that business travel needs to be curbed as this posed the risk of the disease spreading. All leaders have been asked to avoid face-to-face meetings for some time. Chandrasekaran also asked CEOs to ensure that employees maintain social distancing at all times. All employees need to be provided the same level of care, regardless of their designation, he said. 74665241 Leaders should use this period to draw up plans to step up productivity, focus on resilience and getting work done in the best possible manner, the chairman was cited as saying.Tata Sons has infused Rs 20,000 crore of growth capital in group companies over the last three years even as legacy issues in sectors such as telecom and power with a highly challenging global business environment are keeping Chandrasekaran on his toes. He's been balancing capital allocation to chase growth against writeoffs in the three years since he took charge in February 2017. Consumer-focused group companies such as Titan, Trent, IHCL and TGBL grew faster than flagship companies such as Tata Steel, Tata Motors and Tata Power, which continue to battle an economic downturn. Total group debt has remained flat in the past three years at about Rs 3 lakh crore thanks to rising cash with the group's largest company TCS. Tata Sons will undertake some portfolio restructuring including tough decisions in terms of exiting businesses once immediate issues relating to Tata Steel Europe and Tata Power are resolved.

For India, Covid is an 800-pound gorilla

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NEW DELHI: India's economic growth could take a hit of up to half a percentage point in FY21 because of the disruptions caused by the Covid-19 outbreak, early estimates by the government suggest. But independent economists see a deeper cut of up to one percentage point."There will be a hit of 0.3-0.5% on the GDP in the next fiscal year," said one of the officials aware of the estimate."Growth in the first two quarters of the next fiscal could be as low as 4-4.5%," another official added.The economy is forecast to grow 5% in current fiscal, the slowest in 11 years. The Economic Survey had forecast 6-6.5% rise in FY21, but Covid-19 has hurt recovery prospects.Prime Minister Narendra Modi has asked top verticals within the government, including the Niti Aayog, the Economic Advisory Council to the PM and finance ministry to assess the economic impact of the novel coronavirus."India is relatively insulated from the global value chain and to that extent impact on India will be less," Reserve Bank of India governor Shaktikanta Das said on Monday. "But India is integrated into the global economy, so there will be some impact." Independent experts have called for fiscal and monetary stimuli.FIRST HIT ON SERVICESSectors such as tourism, aviation, hospitality and trade will face the first brunt of the severe travel, assembly and activity curbs imposed by the governments across the world, followed by a wider impact on other sectors as economic activity stalls.Moody's has downgraded India's growth to 5.3% in 2020 due to downside risks of Covid-19. "By first quarter in the next fiscal, we can definitely see a shaving off of at least half a per cent of GDP, which could go up to 1% depending on how much it permeates through the economy," said Madan Sabnavis, chief economist at CARE Ratings, pencilling in 5.5% growth for FY21.DK Srivastava, chief policy adviser at EY, said the impact would be limited to a 0.5 percentage point downward revision in the current and next quarter if the situation was contained within a month. However, if it dragged on till May, then GDP growth in FY21 could dip to 4%, he said.The "supply side contagion effect" will impact manufacturing, agriculture and the pharmaceutical industry, said Bornali Bhandari, an economist at the National Council of Applied Economic Research.Sectors such as consumer durables, automobiles and pharmaceuticals will feel the brunt of supply constraints."On top of the likely consumption slowdown, production is also going to be hit," said DK Pant, chief economist at India Ratings and Research. In the current situation, "no one is going to pile up inventories".According to Sabnavis, banks will also have to be wary of a rise in non-performing assets (NPAs). If the shutdown on travel and malls continues for a month or more, a zero-revenue situation will definitely impact the ability to service loans, he said. 74665168 SOME PROTECTIONChina, where the coronavirus began, is likely to see a contraction in GDP in the first quarter of 2020 — the first contraction since 1998. The US and Europe are expected to slip into recession by July, dragging down overall growth.India may not suffer as much, given that it has a smaller exposure to the global economy — exports of services and goods are only a fifth of the total economy. Lower oil prices will provide a cushion, boosting government revenue and creating room in household budgets."The correction in the CPI inflation in January 2020 has anyway opened the door for a rate cut in the next policy meeting," said Aditi Nayar, principal economist at ICRA, adding that modest transmission could weaken its impact.Monetary and fiscal policy will both be unable to arrest the slowdown but could reduce its intensity, said Sabnavis, citing the muted impact the Federal Reserve's rate cut had on the US and global markets.Srivastava suggested a 25-basis-point reduction in the repo rate. "The government should relax the fiscal deficit by another 25 basis points of GDP and direct the funds towards the health sector, since it is beneficial in the long run," he added.

IT staff working onsite worry as Covid-19 cases rise

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BENGALURU: Indian IT professionals working on client projects onsite are a worried lot. The reason: their employers are finding it tough to send replacements due to global travel restrictions following the Covid-19 outbreak.Two employees working onsite, including at client locations, in two different European countries told ET that they were "scared" to travel to work locations due to the virus and they cannot opt to work from home because the nature of their jobs requires commuting to work.Indian firms such as Infosys, TCS, Wipro, HCL Technologies and Mindtree have encouraged their onsite staff to work from home, but some critical projects need employees at client offices. "I am stuck in uncertainty as we do not see our replacement coming anytime soon. Also, we have to go to work since everyone is not allowed to work from home," an employee at one of the top five Indian tech services companies based in a European country told ET, requesting anonymity. "What worries me is the increasing number of Covid-19 cases in a small country (such as this)," he said. Another Indian IT employee in another European country which is seeing an increased number of infected people said he was supposed to come back to India after having completed his project but is "at the mercy of" the virus now. Managers at technology services companies are dealing with not only employees' concerns, but also over how to bill clients based on the work delivered.74665384 "For some critical projects, they (employees) have to deliver and cannot work from home because the infrastructure is not yet ready," said Kamal Karanth, cofounder of Xpheno, a Bengaluru-headquartered staffing agency.Some tech services companies say only about one-fourth of their employees are in a position to work from home, he added."...over the past several weeks we have taken a series of preventive measures to protect our employees from the coronavirus outbreak," a Wipro spokesperson told ET."Given the evolving situation, beginning Monday, March 16, we have advised our employees across the globe to work from home wherever feasible and if their role allows them to do so. We had already enabled work for home in several infected regions," the spokesperson added. HCL Tech said it was ensuring social distancing practices for employees across geographies, wherever it is essential for them to work from an office or client site."Most of the Mindtree Minds are working from home already... Further, we are working with our customers to enable alternate work options," said a company spokesperson.

Banks urged govt to save Voda Idea from going bust

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New Delhi: The government's application to the Supreme Court over adjusted gross revenue (AGR) dues on Monday has cited calls it received from banks to save Vodafone Idea from bankruptcy, as they feared their capital position would otherwise come under immense strain."As on 31.12.2019, SBI had NPAs of around ₹12,165 crore in the telecom space and many other banks are saddled with telecom NPAs. Any further provisions for bad debts arising out of this sector will put a huge strain on the capital position of banks having substantial exposure to major telecom companies," the Indian Banks' Association (IBA) wrote in a letter to the secretary of the Department of Telecommunications.The letter from the IBA and another from State Bank of India chairman Rajnish Kumar were part of the government's application in court.The IBA's letter was sent a day after the SC, on February 14, lashed out at telecom companies for not paying up their AGR dues on time while hearing their plea to be allowed to negotiate with the telecom department on longer timelines for payment. The court had at the time ordered the telcos to pay their dues by the next date of hearing, or March 17.State Bank of India chairman Rajnish Kumar, in his letter to the Department of Financial Services, said the bank had an exposure of ₹17,650 crore to Vodafone Idea. The telco owes another ₹6,965 crore to other public sector banks and ₹21,788 crore to private sector banks.While urging the government to step in and save the telco to avoid the ripple effects, especially on the banking sector, the IBA made a string of suggestions to put the battered telecom sector back on track.These included removal, or at least reduction, of the spectrum usage charge as telcos are already buying airwaves through auctions, and ensuring minimum tariffs that are above the cost of the most competitive operator. It also suggested reducing the contribution of telecom companies to the universal services obligation fund, until the current corpus of ₹50,000 crore is fully utilised.The association further proposed requesting the Reserve Bank of India to treat spectrum as a tangible asset and classify it as a "property" under the Insolvency and Bankruptcy Code. Classifying spectrum as a tangible asset, the IBA said, would go a long way in providing relief to banks in terms of provisioning, considering the stress on the profitability of banks.Urging the government to address the concerns of the banking sector, the SBI chairman, in his letter, said if Vodafone Idea field for bankruptcy, it would strain the banking sector.

Fundraising Plans of REITs May Take a Hit

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MUMBAI | BENGALURU: The impact of the Covid-19 virus outbreak globally may prove to be a key challenge for planned and proposed fundraising exercises through Real Estate Investment Trusts (REITs) and are expected to be either delayed or put on hold until the situation improves.The upcoming and planned REITs proposed by K Raheja Corp, Blackstone Group, Prestige Estates and Brookfield Asset Management were already expected to face difficulties in attracting global investors owing to the proposed tax framework in the Budget.The government has proposed to tax dividends in the hands of unit holders or investors of infrastructure and real estate investment trusts, which were otherwise not taxable.Key meetings related to crucial decision making and road shows are expected to be postponed due to the current global travel restrictions. In addition, institutional investors would like to assess the impact of Covid-19 on the global economy and commercial real estate before finalizing any major investment calls. All these factors are expected to push the timelines of these issues further."The external environment is increasingly getting difficult. One cannot expect a series of major decisions with regard to the entire fundraising exercise to be finalized over a video conference. As of now, everyone is adopting a wait-and-watch approach and this would lead to delays for sure," said a top executive of a company planning to list its REIT.The worldwide spread of the virus is expected to delay commercial real estate deals across India due to travel restrictions and lack of clarity on its impact on global economic growth.After hitting a record high of over 60 million sq ft in 2019, demand was expected to be robust this year too. However, deals could be pushed back by three to six months as key decision makers may not visit India in the backdrop of travel restrictions.A final assessment of the impact of the pandemic on the global economy may lead to changes in expansion plans and therefore space requirements. This will eventually impact the likely valuation of these proposed REITs.K Raheja Corp, Prestige Estates and Brookfield Asset Management did not respond to ET's emails till press time on Monday. Blackstone Group declined to comment.With regard to taxation, a consortium of leaders from international institutional funds and industry associations have already made their representation across multiple levels, including the Finance Ministry, revenue secretary and top officials of the Central Board of Direct Taxes (CBDT) in two successive meetings."The increasing fear and impact of Coronavirus is making things difficult. The government needs to take a relook at the tax structure as no foreign investors would pay high taxes. We will rather offload stake privately to a foreign fund than opting for a REIT," said a real estate developer.Over the last several Union Budgets, the government has been incentivising Infrastructure Investments Trusts (InvITs) and REITs, while acknowledging the need to rationalise the tax regime for it and developing a new investment asset class.The Finance Bill proposes to levy tax on the dividend distributed by InvITs and REITs in the hands of the unitholders, which was exempt from tax.The earlier tax structure supported the listing of two public InvITs in 2017, two privately placed - listed InvITs and India's first REIT in April 2019, attracting investments from both domestic investors as well as large global institutional investors. The commercial real estate market in the country is likely to provide 294 million sq ft of space that can be listed under REITs, valued at $35 billion, from the existing office stock, according to a recent JLL India report.It took more than a decade, after the capital markets regulator Securities & Exchange Board of India initiated REIT regulations in 2008, for the first REIT to list in the country.

HUL, Godrej, DMart to gain as virus spreads

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ET Intelligence Group: Amid the clampdown on public gathering by shutting off malls, cinema halls, and pubs to curtail the spread of Covid-19, investors bullish on India's consumption story are shifting away from companies dependent on discretionary spending such as dining out, watches, jewellery and fast food to those whose mainstay are daily essentials.The stocks of Hindustan Unilever, Dabur India, Godrej Consumer Products, Marico and Avenue Supermarts are likely to continue their better performance compared with Jubilant Foodworks, Titan, Page Industries and Westlife Development.The benchmark indices S&P BSE Sensex and the NSE Nifty 50 have fallen more than the stocks in the consumption basket since January 20, the day the virus outbreak was reported in China. This has increased the premium of the consumption index to 75% over the benchmarks compared with 69% before the outbreak.The outperformance was more due to relative resilience of the stocks in the daily essentials category, which on average fell by 9.4% since January 20. The non-essential category stocks dropped more sharply by 20.7%.The consumer stocks have a weight of 11.8% in the BSE 200 index. Domestic mutual funds retained a lower weight of these stocks in their portfolios at around 8% at the end of 2019 given their high valuations. This has increased to 8.4% since then. 74665841 The lockdown of public places is likely to have lesser impact on the earnings of companies focussed on the grocery and related retail operations. In addition, the tendency of customers to maintain a higher than usual stock of such products in the wake of possibility of a longer lockdown period may support the revenue growth of these companies.The extended lockdown of malls in metros augurs well for Avenue Supermarts since its outlets are not present in malls unlike some of its peers including Future Retail which runs Big Bazaar.Food sales accounted for 51% of Avenue Supermarts' revenue in the first nine months of FY20. A reduction in discount on hygiene products given rising demand may help the company's profitability in the coming quarters.

Trade setup: Nifty oversold, but sustainable pullback unlikely

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In yet another disappointing session on Dalal Street, Indian equity market succumbed to the global rout on Monday. NSE Nifty opened with a deep cut and continued trading in a sideways trajectory, while showing no signs of recovery from the lower levels. The index finally settled with a deep cut of 757.80 points or 7.61 per cent at 9,197.40. After market hours, the Reserve Bank of India's Governor Shaktikanta Das announced a couple of liquidity measures. The expectation was that of a rate cut, which was in line with global central banks. The market is likely to react to this on Tuesday. In Monday's session, volatility index or India Vix surged 14.38 per cent to 58.88. Dalal Street will continue to see volatility remaining ingrained in trade even if the market attempts a feeble pullback. Tuesday's session is likely to see 9,255 and 9,390 levels act as resistance. Support may come in at 9,100 and 9,015. The trading range is expected to stay wider-than-normal over the next couple of sessions.74660603 The Relative Strength Index (RSI) on the daily chart was at 18.87 and stayed in the oversold territory. The indicator also showed a mild bullish divergence, as it did not make a fresh 14-period low, while Nifty did so. The daily MACD remained bearish and traded below its signal line. As per pattern analysis, Nifty is showing a dismal picture, as the pullback, which was witnessed on Friday, halted exactly near the gap that the index has formed. Besides this, despite trading oversold on the short-term charts, the index is showing signs of vulnerability at current levels, even if it attempts a technical pullback. The market will continue to remain dominated by global developments going ahead. At 9.45 pm IST, Dow Jones was trading 1,660.43 points or 7.16 per cent lower at 21,525.19. If we analyse Indian market in isolation, it is due for some technical pullback. However, a rebound will not happen if global markets continue to remain weak. No doubt, there will be some tempting levels that would trigger an urge to make bargain purchases. Even though the traders may consider making small purchases at lower levels, any aggressive purchases should be avoided entirely unless the market consolidates and shows a few signs of a potential bottom formation. (Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

IT staff working onsite caught between coronavirus and a hard place

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BENGALURU: Indian IT professionals working on client projects onsite are a worried lot. The reason: their employers are finding it tough to send replacements due to global travel restrictions following the Covid-19 outbreak.Two employees working onsite, including at client locations, in two different European countries told ET that they were "scared" to travel to work locations due to the virus and they cannot opt to work from home because the nature of their jobs requires commuting to work.Indian firms such as Infosys, TCS, Wipro, HCL Technologies and Mindtree have encouraged their onsite staff to work from home, but some critical projects need employees at client offices. "I am stuck in uncertainty as we do not see our replacement coming anytime soon. Also, we have to go to work since everyone is not allowed to work from home," an employee at one of the top five Indian tech services companies based in a European country told ET, requesting anonymity. "What worries me is the increasing number of Covid-19 cases in a small country (such as this)," he said. Another Indian IT employee in another European country which is seeing an increased number of infected people said he was supposed to come back to India after having completed his project but is "at the mercy of" the virus now. Managers at technology services companies are dealing with not only employees' concerns, but also over how to bill clients based on the work delivered.74665384 "For some critical projects, they (employees) have to deliver and cannot work from home because the infrastructure is not yet ready," said Kamal Karanth, cofounder of Xpheno, a Bengaluru-headquartered staffing agency.Some tech services companies say only about one-fourth of their employees are in a position to work from home, he added."...over the past several weeks we have taken a series of preventive measures to protect our employees from the coronavirus outbreak," a Wipro spokesperson told ET."Given the evolving situation, beginning Monday, March 16, we have advised our employees across the globe to work from home wherever feasible and if their role allows them to do so. We had already enabled work for home in several infected regions," the spokesperson added. HCL Tech said it was ensuring social distancing practices for employees across geographies, wherever it is essential for them to work from an office or client site."Most of the Mindtree Minds are working from home already... Further, we are working with our customers to enable alternate work options," said a company spokesperson.

Marginal decline in number of jobseekers between 2015 and 2017

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The number of job seekers in the country marginally declined between 2015 and 2017 from 4.35 crore in 2015 to 4.24 crore in 2017, labour minister Santosh Kumar Gangwar informed Parliament on Monday."As per the information received from the states/UTs, the number of job seekers, all of whom may not necessarily be unemployed, registered on live register of employment exchanges in the country to the extent available were 4.35 crore, 4.34 crore and 4.24 crore during 2015, 2016 and 2017 respectively," the minister said in reply to a question in Lok Sabha on Monday."There has been a total positive change in employment from April 2016 to October, 2017 to the tune of 6.16 lakh workers in the selected eight sectors of the economy," he said.According to the minister, labour bureau has initiated revamped quarterly employment survey (QES) in April, 2016 by extending scope and coverage with the objective to measure relative change in employment situation over successive quarters in sizeable segment of non-farm industrial economy covering eight major sectors viz. manufacturing, construction, trade, transport, education, health, accommodation & restaurants and IT/BPO having 10 or more workers.

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