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Wednesday, March 18, 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


What India can learn from China, South Korea to ward off virus

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By Soham D BhaduriCovid-19 cases have well entered the triple-digit territory in India. Our approach has grown from scrutinising airport arrivals and evacuating citizens from affected areas to sizeable shutdowns of public space and mass activities. So far, we haven't witnessed the kind of viral rampage that Italy or Iran is experiencing. But experts have warned about deficient testing of suspects, thus advising greater deployment of testing machinery along the lines of South Korea.For India, still in the initial stages of the scourge, it is not much of a question as to whether community spread will happen or not, but rather, to what extent. There is little room for laxity when it comes to measures like social distancing. However, sooner or later, Covid-19 could dare India's frail capacity to handle severe cases.In Italy, where cases spiralled from tens to tens of thousands in less than three weeks, surging influx of patients has already begun overwhelming hospital capacity. This has resulted in guidelines calling for rationing beds and ventilators, prioritising those with better chances of survival.In the US, it has been estimated that a moderate outbreak will result in more than six critically ill patient competing for every hospital bed (assuming all beds are empty). Even in Wuhan, China, doctors had to take hard decisions related to rationing beds and ventilators. Italy, US and China have 3.2, 2.8 and 4.3 hospital beds per 1,000 people respectively.Clearly, with a bed-population ratio of nearly 1:1,000, and with around one million hospital beds and less than100,000 intensive care unit (ICU) beds, India is hardly prepared to confront amoderate surge. This is compounded by two sets of challenges. The first includes the typical aspects of the disease itself — its propensity to produce severe illness in those with comorbid conditions, thus complicating the management; the protracted course of illness, with 3-6 weeks to recovery and up to 21 days of ventilator support needed for critical cases; and its infectious nature precluding useof general ward beds for admission.Healing Touch for HospitalsThe second set encompasses weak public sector hospital capacity, which further suffers from stark maldistribution between, and within, regions and states. Nearly three-fourths of private corporate hospitals are located in less than 40 districts, and over four-fifths of hospitals have less than 30 beds. Standards for isolation and infection control remain dubious in such small establishments.Inadequacies pertaining to manpower and supplies follow similar lines. While roping in the private sector for widespread Covid-19 testing has been suggested, it could to be particularly challenging to get the private sector on board for widespread management of severe cases.Without doubt, an under-preparedness in dealing with a possible surge in Covid-19 cases needing hospital care can have nightmarish consequences.It becomes imperative to grow wary of a potential situation in which patients are needed to be unfeelingly triaged — prioritised in order of treatment required — particularly given the murky standards and ethics followed in rationing medical care in India.The crisis also affords an opportunity to reflect on the policy failures behind India's weak public sector hospital capacity. While a disproportionate share of public health spending going into urban-based curative care vis-à-vis primary care has been criticised over decades, the public hospital sector has not received even a fraction of its due. Since the 1980s, policy deliberations have sought to shift the larger responsibility of inpatient care provisioning to the private sector, often under the pretext of focusing on primary care.The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), a scheme announced in 2003 to strengthen tertiary care, was closely followed by the National Rural Health Mission (NRHM) in 2005, a primary care programme. While NRHM has arguably been successful in many respects, PMSSY has been sluggish and afflicted with poor planning. Establishment of new All India Institutes of Medical Sciences (Aiims) and upgradation of medical colleges under the scheme have recorded time-overruns of the order of 4-6 years, not to mention glaring shortages of faculty, non-functional departments, and idle or uninstalled medical equipment.There is an urgent need of ramping up control measures to avert a possible ugly onslaught of Covid-19 on the health system. A middle path between China's lockdown and South Korea's mass-testing approaches can be considered. However, the need for advance planning and preparedness to buttress our institutional capacity to deal with excesses mustn't be overlooked.This would involve effective mobilisation of a wide range of stakeholders, including the private sector. Makeshift arrangements for hospital beds, health manpower, and sourcing in supplies would need to be planned for tackling a possible future deluge of severe and critical Covid-19 cases. The role of innovative indigenous solutions to fill gaps would also be crucial.Proactivity as InsuranceFor the long run, however, the pandemic serves as an eye-opener in delivering two important messages. One, health systems cannot pursue an exclusionary approach to universal healthcare by neglecting hospital care.The acute encephalitis syndrome (AES) outbreak in Bihar in 2019 locally overwhelmed hospital systems. The consequences can be much more baleful with a highly contagious disease agent.Two, the State cannot afford to transfer responsibility improvidently to the private health sector. These times are a testimony to how a massive insurance scheme can be no answer to a problem like Covid-19, which respects no eligibility barriers. The writer, a Mumbai-based doctor, is editor, The Indian Practitioner

YES, private banks are feeling the pinch

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MUMBAI: The crisis at Yes Bank has shaken the trust of a few state governments and large depositors who are pulling out large amounts from other private sector banks as well.The panic comes as the Yes Bank crisis happened within six months of one of the largest cooperative banks, Punjab & Maharashtra Cooperative Bank, going belly up last September after discovery of massive corruption at the bank and around 73 per cent of its assets turning dud with just one customer, HDIL.The current near run-like situation on private banks comes despite repeated assurance from the government and regulator Reserve Bank of India to depositors about the safety of their money and also of the system.Ironically, other banks were caught in a crisis even as Yes Bank made a dramatic turnaround with its resolution and returning to normal operation from Wednesday evening.The panic among the public and some states like Maharashtra was such that the RBI was forced to write to all chief secretaries last week informing them of the sound health of private banks and asked them to reconsider their decision to shift deposits to public sector banks.But, despite all these, there was near run-like situation on other banks like IndusInd Bank, Karur Vasya Bank and Lakshmi Vilas Bank, which had also taken a huge beating in their market value.IndusInd counter tanked nearly 50 per cent on Wednesday in intra-day trade and closed with a loss of 24 per cent at Rs 459.85 on the BSE whose benchmark continued to bleed and lost another 5.6 per cent, while RBL closed in the green after a massive rout on Tuesday.Yes Bank's deposit base eroded by Rs 72,000 crore to Rs 1.37 lakh crore as of March 5, from Rs 2.09 lakh crore as at the end of December 2019, according to data shared by the lender last Friday while announcing the third quarter earnings.Private sector lenders have been communicating to their customers about their strong capital positions but it has not put depositors at ease.In a statement late night on Tuesday, IndusInd Bank said its deposits, both retail and corporate segments, are steady."However, a couple of state government entities have made withdrawals amounting to less than 2 per cent of our total deposits," it said.Its smaller peer RBL Bank also said it saw deposit withdrawals by large depositors and a few state government entities."While there has been no material impact on our retail deposits, there have been some withdrawals from institutional depositors and a couple of state organisations constituting about 3 per cent of our total deposits in the last one week," RBL Bank said in a statement.Both the banks said they are actively engaging with these depositors and the respective states to address their concerns.Earlier, four private sector lenders Kotak Mahindra Bank, Karnataka Bank, RBL Bank and Karur Vysya Bank had assured customers about the safety of their money and their strong fundamentals.On Monday, RBI Governor Shaktikanta Das had said there was no instance in the nation's banking history where bank depositors had lost their money.Speaking on the decision of a few states to shift their deposits from private banks to state-run banks, Das had said, "The health of the banking sector, including private banks, is safe and, therefore, there is no reason for the state authorities to take away deposits from private banks."In a letter to chief secretaries of all states late last week, the RBI had said the apprehension on safety of deposits in private sector banks is highly misplaced and any action on pulling out of funds from private sector banks may impact the stability of financial system."We strongly believe that such a move can have banking and financial stability implications," the RBI said in the letter.The Indian Banks Association Chief Executive Sunil Mehta has also said there is no threat to depositors' money in any bank.

Digital India gets renewed push due to virus

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The government has asked banks to encourage customers to use digital payment methods like UPI, NEFT, mobile banking and debit and credit cards instead of cash as a precautionary measure against the coronavirus outbreak.The notification, released on Wednesday by the ministry of finance, said that cash could be a potential medium through which the virus propagates.The notification advised banks to run campaigns in the media, social media and via email and SMS to highlight the health benefits of adopting digital payments given the prevailing situation. Customers can also be educated on these matters through banners and posters at branches, business correspondent outlets and ATMs, the notification said.Additionally, the government has also asked that business correspondents, customer service providers and banking agents provide sanitation facilities to customers while using commonly used equipment such as biometric readers for Aadhaar enabled payment systems and ATM machines.

SC slams DoT & telcos over AGR self-assessment

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New Delhi: The Supreme Court on Wednesday banned any further reassessment or self-assessment of telcos' adjusted gross revenue (AGR) dues, dubbing attempts to reopen the issue as tantamount to fraud and contempt of court, and ordering that operators pay interest and penalties in full. The directive sent shares of Vodafone Idea and Bharti Airtel tumbling.A three-judge bench, headed by Justice Arun Mishra, said the court had completed the exercise, fleshed out the dues that would have to be paid once and for all, and ordered that no such exercise shall be attempted again.The court, however, agreed to consider the government's plea on allowing affected telcos to stagger payments over 20 years or less. The matter will be taken up at the next hearing, scheduled after two weeks.'DoT Must Withdraw Self-Assessment Notice'"…we see an attempt has been made to scuttle the effect of the order… This is a gross violation of the order of this court by entering into a process of self-assessment or reassessment that is virtually reopening of entire dues… that kind of exercise is not at all permissible and is tantamount to sitting over the order of the court," the bench said.74702127 "We order that no exercise of selfassessment/reassessment (is) to be done and dues that were placed before us have to be paid as we have affirmed these dues, including interest and penalty. It is shocking and surprising that companies are not paying a fraction of revenue earned by them and they are keeping it with them so long," it said.The bench, which also comprises Justices S Abdul Nazeer and MR Shah, asked the department of telecommunications (DoT) to withdraw the self-assessment notice sent to telcos. "There is no authority with any company to enter into self-assessment/reassessment and to reopen dues which have been settled by this court."The bench slammed DoT officials and telcos for reopening the entire exercise. "This is sheer fraud taking place in the face of this court. Grossest contempt has already been committed," Justice Mishra observed during the hearing. "We will summon the DoT officials responsible for self-assessment. We would neither spare DoT, nor telecom companies."However, in its written orders, the court did not haul any individual or entity for contempt. The bench only warned against any such attempt by the telcos in future."We do not appreciate at all the way in which they are acting. In case, they indulge in it any further, their MD shall be personally responsible for further violation of the court's orders," it said.After the October 24 order, which backed the Centre and widened the definition of AGR to include noncore items, 15 telcos were left facing dues of over Rs 1.43 lakh crore.The DoT, soon after, asked telcos to self-assess their dues and pay, adding that it would subsequently raise demand notices if it found the liabilities were more than what the carriers had paid.The worst-affected telcos Vodafone Idea, Bharti Airtel and Tata Teleservices, with combined dues of Rs 1.19 lakh crore as per the DoT's latest estimates filed in court on Monday, have calculated their liabilities at Rs 36,734 crore.While Bharti Airtel and Tata Teleservices have paid self-assessed dues in full, Vodafone Idea has paid partially. But the apex court was in no mood to accept any selfassessment.'EXERCISE CAN'T BE PERMITTED'"This exercise cannot be permitted even in their wildest dreams," the court said. The bench threatened to go after officials of the telcos and DoT for daring to initiate such an exercise."… if you want, we can call the managing directors of the companies and send them to jail from here," Justice Mishra warned."Are we fools? Do the DoT officers think they are superior to us? Can't these companies be touched? Everyone has been trying to influence us...," Justice Mishra said in court.Justice Mishra expressed surprise that the DoT, which had fought tooth and nail to recover its dues, was now dragging its feet.Shares of Vodafone Idea plunged 34.85% to Rs 3.16, while those of Bharti Airtel fell 6.1% to Rs 426.20 on the BSE Wednesday.The court's observations came during the hearing on the AGR matter, including the government's proposal to allow telcos to stagger their payments over a maximum of 20 years, at a reduced interest rate of 8%, to prevent an "adverse impact" on the economy, jobs and millions of consumers. The proposal also includes freezing interest and penalty components as of October 24, and said the net present value will be "protected using the discount rate".

KVIC seeks ban on silk imports from China

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NEW DELHI: The Khadi and Village Industries Commission (KVIC) has reached out to the commerce ministry seeking a ban on import of silk and silk products from China, alleging that it is hurting the local silk industry in India. "Despite being the world's second largest producer of silk and the largest consumer of raw silk and silk fabrics, the import of low cost and low quality Chinese silk including artificial silk products negatively impacts the demand of Indian silk in its own markets," KVIC chairman VK Saxena wrote in a letter to commerce and industry minister Piyush Goyal.

Supreme Court slams DoT & telcos over AGR self-assessment

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New Delhi: The Supreme Court on Wednesday banned any further reassessment or self-assessment of telcos' adjusted gross revenue (AGR) dues, dubbing attempts to reopen the issue as tantamount to fraud and contempt of court, and ordering that operators pay interest and penalties in full. The directive sent shares of Vodafone Idea and Bharti Airtel tumbling.A three-judge bench, headed by Justice Arun Mishra, said the court had completed the exercise, fleshed out the dues that would have to be paid once and for all, and ordered that no such exercise shall be attempted again.The court, however, agreed to consider the government's plea on allowing affected telcos to stagger payments over 20 years or less. The matter will be taken up at the next hearing, scheduled after two weeks.'DoT Must Withdraw Self-Assessment Notice'"…we see an attempt has been made to scuttle the effect of the order… This is a gross violation of the order of this court by entering into a process of self-assessment or reassessment that is virtually reopening of entire dues… that kind of exercise is not at all permissible and is tantamount to sitting over the order of the court," the bench said.74702127 "We order that no exercise of selfassessment/reassessment (is) to be done and dues that were placed before us have to be paid as we have affirmed these dues, including interest and penalty. It is shocking and surprising that companies are not paying a fraction of revenue earned by them and they are keeping it with them so long," it said.The bench, which also comprises Justices S Abdul Nazeer and MR Shah, asked the department of telecommunications (DoT) to withdraw the self-assessment notice sent to telcos. "There is no authority with any company to enter into self-assessment/reassessment and to reopen dues which have been settled by this court."The bench slammed DoT officials and telcos for reopening the entire exercise. "This is sheer fraud taking place in the face of this court. Grossest contempt has already been committed," Justice Mishra observed during the hearing. "We will summon the DoT officials responsible for self-assessment. We would neither spare DoT, nor telecom companies."However, in its written orders, the court did not haul any individual or entity for contempt. The bench only warned against any such attempt by the telcos in future."We do not appreciate at all the way in which they are acting. In case, they indulge in it any further, their MD shall be personally responsible for further violation of the court's orders," it said.After the October 24 order, which backed the Centre and widened the definition of AGR to include noncore items, 15 telcos were left facing dues of over Rs 1.43 lakh crore.The DoT, soon after, asked telcos to self-assess their dues and pay, adding that it would subsequently raise demand notices if it found the liabilities were more than what the carriers had paid.The worst-affected telcos Vodafone Idea, Bharti Airtel and Tata Teleservices, with combined dues of Rs 1.19 lakh crore as per the DoT's latest estimates filed in court on Monday, have calculated their liabilities at Rs 36,734 crore.While Bharti Airtel and Tata Teleservices have paid self-assessed dues in full, Vodafone Idea has paid partially. But the apex court was in no mood to accept any selfassessment.'EXERCISE CAN'T BE PERMITTED'"This exercise cannot be permitted even in their wildest dreams," the court said. The bench threatened to go after officials of the telcos and DoT for daring to initiate such an exercise."… if you want, we can call the managing directors of the companies and send them to jail from here," Justice Mishra warned."Are we fools? Do the DoT officers think they are superior to us? Can't these companies be touched? Everyone has been trying to influence us...," Justice Mishra said in court.Justice Mishra expressed surprise that the DoT, which had fought tooth and nail to recover its dues, was now dragging its feet.Shares of Vodafone Idea plunged 34.85% to Rs 3.16, while those of Bharti Airtel fell 6.1% to Rs 426.20 on the BSE Wednesday.The court's observations came during the hearing on the AGR matter, including the government's proposal to allow telcos to stagger their payments over a maximum of 20 years, at a reduced interest rate of 8%, to prevent an "adverse impact" on the economy, jobs and millions of consumers. The proposal also includes freezing interest and penalty components as of October 24, and said the net present value will be "protected using the discount rate".

YES stock turns an outlier. Will gravity-defying rally continue?

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MUMBAI: State Bank of India (SBI) and its eight lending partners driving an unprecedented reconstruction in the country's banking history saw their investments more than double in a matter of days, with the Yes Bank stock soaring amid the smouldering ruins of the broader equity markets charred by the Covid-19 outbreak.Yes Bank shares closed at Rs 60.80 apiece Wednesday versus Rs 25.8 last Friday.Although these are paper profits with a three-year lock-in, the mark-to-market gains will likely put a lid on the swirling skepticism over banks' decision to bail out the new-generation lender, which was desperately seeking new funding lines."In the present circumstances, Yes Bank seems to be the best recapitalised lender," said Sanjiv Bhasin, Director at IIFL Securities. "RBI is strongly backing the bank. All collateral risks are mitigated. The pessimism over quarterly earnings is also overdone while the limited float of stocks will likely add to its demand."In the December quarter, Yes Bank posted a record loss of Rs 18,564 crore due to provisions and contingencies of Rs 24,567 crore. But its provision coverage ratio pegged at about 73 per cent is among the highest in the industry, analysts said."Sooner or later, foreign players too are likely to enter the fray as the market stabilises," said Bhasin.Axis Bank, Bandhan Bank, Federal Bank, Housing Development Finance Corporation (HDFC), ICICI Bank, IDFC First Bank and Kotak Mahindra Bank Bank have joined the SBI-led consortium and invested in Yes Bank, once controlled by Rana Kapoor. However, the lock-in period for SBI would be for 26 per cent of its shareholding. It would be 75 per cent in case of other investors."All banks who are invested expect a decent IRR (Internal Rate of Return) in three years, which is precisely the reason this allocation has been kept for the domestic banks," said SBI Chairman Rajnish Kumar."I am also free to sell shares because my compulsion is 26 percent but let me assure you for three years not a single share will be sold."The full market capitalisation of the bank is nearly Rs 15,000 crore with the stock gaining momentum in the past few days. But experts said that the future valuations of the bank would depend on how quickly the new management was able to turn its fortunes around."Three years is a very long time in the stock markets so shouldn't read too much into these prices," said Ajay Bodke, CEO, PMS - PL. "The prices just reflect that constricted supply of almost 75% of the paid-up equity shares in the market. The business fundamentals of the bank are not pristine, the valuations are fluctuating and the market interest factors are weak ... so it's a long way to go before you decide on the gains made by the current investors."The Reserve Bank of India Governor on Monday threw his weight behind Yes Bank and requested depositors to not act in haste. Global rating company Moody's Monday upgraded Yes Bank's creditworthiness by two notches within the junk category. It changed its outlook to 'positive' from 'stable' triggering optimism among investors.SBI has invested Rs 6,050 crore in the crisis-ridden Yes Bank to own over 48% while mortgage lender HDFC will pick up 7.97% for an infusion of Rs 1,000 crore. ICICI Bank is also infusing a similar amount, while Axis Bank will invest Rs 600 crore and Kotak Mahindra Bank will infuse Rs 500 crore.

Trade setup: Nifty has key support at 8,310 and 8,235 levels

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In an extremely bearish session on Wednesday, NSE Nifty ended below the previous low of 8,555, which it had formed a couple of days back. The domestic stock market made a stable opening, however, the index soon pared all its gains. After establishing a firm downtrend, the 50-stock pack came off over 500 points from the day's high to end with a deep cut of 498.25 points or 5.56 per cent at 8,468.80. If we read the present technical setup in isolation, a probability of a mild technical pullback cannot be ruled out. However, analysing the domestic situation in isolation and preempting a rebound will not help. The market will continue to remain affected by global weakness. An overnight weakness in the US stocks will weigh on Indian markets too. The volatility index, or India Vix, rose marginally by 1.64 per cent to the 63.96 level. On Thursday's session, the 8,510 and 8,635 levels will act as resistance, while support may come in much lower at 8,310 and 8,235. Just like in the past couple of sessions, the day's range will continue to remain wider than usual. 74697355 The Relative Strength Index (RSI) on the daily chart was at 15.15 and it continued to remain deeply oversold. The indicator showed a bullish divergence, as it did not make a fresh 14-period low in line with Nifty. The daily MACD stayed deeply bearish, while trading below and much away from the signal line. Again, the technical indicators on the charts are deeply oversold. However, it would be dangerous to attempt to find a bottom without keeping the global markets scenario in perspective. We would recommend trading on either side with great caution. There are chances of some technical pullback, but again, the sustainability of such rebounds will be a big question mark. We recommend continuing to approach the market with utmost caution. Bargain buying should be attempted after at least a couple of faint signals of potential bottoms are in place. (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)

National Broadband Mission investment estimated at Rs 7 lakh cr: Ravi Shankar Prasad

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The government's plan to provide broadband services in all villages of the country is likely to see an investment of Rs 7 lakh crore with 90 per cent of the contribution coming from industry players, Parliament was informed on Wednesday."The likely investment under the National Broadband Mission is around Rs 7 Lakh crore which is to be catalysed largely by the industry out of which contribution by the government through Universal Service Obligation Fund (USOF) is envisaged to be around 10 per cent, that is, approximately Rs 70,000 crore which will cover all the states in the country including the states of Gujarat and Madhya Pradesh," Telecom Minister Ravi Shankar Prasad said in a written reply to the Lok Sabha.Under the National Broadband Mission (NBM), the government envisages providing broadband access to all villages in the country, including those in Gujarat and Madhya Pradesh, by 2022.The NBM is seen as an extension of the BharatNet project under which the government is working to provide broadband connectivity to all gram panchayats (GPs).In a separate reply, Prasad said that as of February 2020, a total of 1,36,693 GPs (including block headquarters) have been made service ready."Public wi-fi hotspots at 25,000 rural telephone exchanges of BSNL are being provided. As of February 2020, a total of 24,289 Wi-Fi hotspots are installed and out of them, 23,787 are providing services," the minister said.

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