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Tuesday, March 24, 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


India's virus-stricken economy is in a dire need of a vaccine

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By Gurbaksh Chahal With Covid-19, we are dealing with two viruses:   a viral infection and a financial infection. Both must be addressed concurrently. The latter will have a long-term effect on the financial and mental health for generations to come. Consumer confidence is at an all-time low, with the average investor losing much of his or her wealth over the last month.Then there's massive layoffs, especially in the travel, food and beverage, and hospitality industries, looming. This will, in all likelihood, be further exemplified in the US government's department of labour's weekly 'jobless claims' report this Thursday. Unemployment claims are reportedly expected to rise 10-fold in one week — after last week saw a surge to 281,000 from 211,000 the previous week, this 70,000 week-to-week spike being sharper than anything during the 2008 financial crisis or since.The US needs to front-load much more than the initial $1 trillion stimulus. The domino effect is going to be felt quickly, and badly. The next 90 days will dictate whether or not the US heads toward a depression-like era where unemployment rose towards 25%-plus. Many companies will go bankrupt. Small-to-midsize startups and businesses will be the biggest victims in the short term. Unemployment will have a circular effect with cost of living, with real estate in the US likely to take the next hit.India, on its part, has its own acute concerns. A nationwide lockdown for at least two weeks as announced by Prime Minister Narendra Modi on Tuesday evening to contain the spread is welcome and necessary. Now to up Covid-19 testing. The numbers the country has been testing so far has been one of the lowest per one million compared to other countries. One can only contain what one can 'see'.While Modi's address on Tuesday was welcome, GoI now needs to immediately and simultaneously also focus on a financial stimulus. Denmark and Britain have already 'frozen' their economies and agreed to pay up to 80% of every citizen's salary for the next three months and provide immediate working capital to small businesses.The US has put forth an Economic Injury Disaster Loan programme for small businesses, capped at $2 million for each business. These loans will be forgiven as long as employers do not terminate their employees. India should adopt similar policies. The need for immediate capital has never been more dire.If India still has the appetite and wherewithal to be a $5-trillion economy, capital measures need to be put in place immediately to provide a runway to businesses and citizens.As for startups, they should conserve cash, cut salaries and expenses. Unfortunately, this means layoffs are inevitable. Outside of payroll, the biggest expense is the office. Renegotiate your lease, or ask for relief during this quarter. Cut costs everywhere if you want to keep the lights on. Figure out what it is minimally required to do so, and expect the toughest Q2 of your life.Startups shouldn't expect to be able to raise capital. Venture capitalists (VCs) will say they are open for business, but they are the most risk-averse class in town. I actually believe many investors who have invested in sky-high valuations will start asking for their money back.Focus only on a path toward profitability, or change your business model to focus on how it can operate in a downturn economy. Think who your business and customers would have been in 2008 during the economic downturn, and operate accordingly.Startups that are likely to suffer the most are direct-to-consumer (DTC) brands, and fintech — unless the model shows positive growth margins. Expect investors to push for companies to shut down and return capital.Startup and small business owners should check their business insurance policies and see if they have any 'business interruption insurance'. 'Act of God' or 'Force Majeure' clauses should apply to the coronavirus crisis. File a claim immediately, even as insurance companies will, in all likelihood, reject the claim at first.In the last one week, the world has changed. If there was a time for 'extreme' measures, it is now. Keep the curfew intact. We are at war. You can clap your hands and bang on plates when you have won the war, not when you're in it — and don't even know the size of your enemy forces yet. The real test is the next 90 days. It will define how India can come out as a warrior by taking on both viral and financial infections head on.P.S. We are seeing a lot of abuse, outrage and hatred in the form of racism and xenophobia on how the Chinese are to be blamed for this pandemic. I fear that a new era of 'closet racists' is forming, which will not be healthy in the short or long term when this crisis is over. This is not about race, but about humanity.The writer is CEO, RedLotus

Modi's 'stay at home' order: What's allowed?

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Exempted (Central government):Defence, central armed police forces, treasury, public utilities (Including petroleum, CNG, LPG, PNG), disaster management, power generation and transmission units, post offices, National lnformatics Centre, and Early Warning AgenciesExempted in States:Police, home guards, civil defence, fire and emergency services, disaster management, and prisons, District administration and Treasury, Electricity, water, sanitation, Municipal bodies, but only staff required for essential services like sanitation, personnel related to water supply etc.Hospitals and all related medical establishments, including their manufacturing and distribution units, both in public and private sector such as dispensaries, chemist and medical equipment shops.Laboratories, clinics. nursing homes, ambulance etc will continue to remain functional. The transportation for all medical personnel. nurses, para-medical staff, other hospital support services be permitted.Shops, including ration shops (under PDS), dealing with food, groceries, fruits and vegetables, dairy and milk booths, meat and fish, animal fodder.District authorities to encourage and facilitate home delivery to minimize the movement of individuals outside their homes.Banks, insurance offices and ATMs.Print and electronic media, Telecommunications, Internet services, broadcasting and cable services.IT and IT enabled Services only (for essential services) and, as far as possible, work from home.Delivery of all essential goods including food, pharmaceuticals, medical equipment through E-commerce.Petrol pumps, LPG, Petroleum and gas retail and storage outlets.Power generation, transmission and distribution units and services.Capital and debt market services as notified by the Securities and Exchange Board of India.Cold storage and warehousing services.Private security services Manufacturing units of essential commodities.Production units, which require continuous process, after obtaining required permission from the State Government.Hotels, homestays, lodges and motels which are accommodating tourists and persons stranded due to lockdown, medical and emergency staff, air and sea crew.Establishments earmarked for quarantine facilities.Not exempted in States:Offices of the Government of India, its Autonomous/ Subordinate Offices and Public Corporations shall remain closed.Offices of the States Union Terrltory Governments, their Autonomous Bodies, Corporations, etc shall remain closed.Commercial and private establishments shall be closed down.All other establishments may work from home only.Industrial Establishments will remain closed.All transport services air, rail, roadways will remain suspended.Hospitality Services to remain suspendedAll educational, training, research, coaching institutions etc. shall remain closed.All places of worship shall be closed for public. No religious congregations will be permitted, without any exception.All social/political/sports, entertainment, academic, cultural, religious functions/ gatherings shall be barred.In case of funerals, congregation of not more than twenty persons will be permitted.To implement these containment measures, the DM will deploy Executive Magistrates as Incident Commanders in the respective local jurisdictions. The Incident Commander will be responsible for the overall implementation of these measures in their respective jurisdictions. All other line department officials in the specified area will work under the directions of such incident commander. The Incident Commander will issue passes for enabling essential movements as explained.

Indian jewellers brace for coronavirus-hit

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By Swansy AfonsoIndia's jewellery sales are set to plunge to the lowest in a quarter of a century as a lockdown to combat the rapidly spreading coronavirus brings the industry to a standstill.Demand in the world's second-biggest gold consumer has already tumbled, slammed by record high domestic prices and as the economy heads for the slowest pace of growth in 11 years. That pain is set to deepen as the virus spooks buyers and jewellery stores shutter their stores after Prime Minister Narendra Modi and state leaders imposed an almost-complete lockdown across much of the country.Purchases are estimated to plummet 30% in 2020 from the 690 tons last year, N. Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council, said in a phone interview from Chennai. That would make it the smallest annual purchase since the 477 tons bought in 1995, according to data compiled by Bloomberg based on World Gold Council reports."2019 itself was a very bad year after July and this year we have already lost this month," as a majority of stores across of the country will be closed for most of this week at least until further advisories from the government, he said, adding that 11 of his own stores in the southern Indian state of Tamil Nadu will be shut till March 26. "April is going to be the same, with May-June also expected to be weak," for demand, he said. 74787566 Concerns about the virus have seen the local gem and jewellery sector come to a halt with virtually no footfall in stores and many jewelers shutting shops located in malls and shopping complexes. Titan Co., the nation's biggest jeweler by market value, has shut stores and manufacturing units until March 29, and will review the situation at the end of the period, it said.Mumbai's Zaveri Bazaar, the largest bullion market in the country, will also be closed until further notice and that could cut demand by as much as 40% in the coming weeks, according to Prithviraj Kothari, president of the India Bullion and Jewellers Association Ltd.Muted DemandThe trade body along with the Gem & Jewellery Export Promotion Council are exploring ways to help the thousands of small workers employed in the industry who earn daily or weekly wages as many of them would lose jobs if the current situation is prolonged, Padmanaban said. The industry is seeking an extension for repayment of loans and a reduction in the import tax on gold to 4% from the current 12.5% to help jewelers, the trade group said."This is something that none of us in our generation have experienced and none of us know when this is going to end," Chirag Sheth, a consultant at the London-based Metals Focus Ltd., said by phone from Mumbai. Demand in the next two quarters will remain muted, he said. "So essentially the savior for demand will be the fourth quarter -- and how much is that quarter going to save?"India's stock indexes posted their worst losses on record Monday, as the world's second-most populous nation went into a lockdown after the number of coronavirus cases in the country surpassed 400."A lot of people will be scarred, a lot of people will be scared," Sheth said. "Look at the wealth destruction that has happened in the stock market and everybody is badly bruised. So will I buy gold? No."

Facebook eyes multi billion dollar stake in Reliance Jio

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Facebook Inc is in talks to buy a multi billion dollar stake in Reliance Industries Ltd's telecom unit, the Financial Times reported on Tuesday, citing two people with knowledge of the matter.The report https://on.ft.com/2wyFwc1 said the social media giant was in talks for a 10% stake in Jio, controlled by India's wealthiest man Mukesh Ambani, but the talks were halted due to global travel bans amid the coronavirus outbreak.Facebook declined to comment.

Plant closures over coronavirus to lead to a loss of over Rs 2,300 cr per day: SIAM

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NEW DELHI: Auto industry body SIAM on Tuesday said the closure of manufacturing plants by various automakers and component manufacturers due to coronavirus pandemic would lead to a revenue loss of over Rs 2,300 crore per day."As per quick estimates by SIAM, it is expected that plant closure of auto OEMs and components will lead to loss of more than Rs 2,300 crore in turnover for each day of closure," Society of Indian Automobile Manufacturers (SIAM) President Rajan Wadhera said in a statement.All major automakers like Maruti Suzuki India, Hyundai, Honda, Mahindra, Toyota Kirloskar Motor, Tata Motors, Kia Motors and MG Motor India have announced temporary shutdown of plants.Two-wheeler makers like Hero MotoCorp, Honda Motorcycle and Scooter India, TVS Motor Company, Bajaj Auto, Yamaha and Suzuki Motorcycle have also suspended production.Besides, tyre makers and other major auto component makers too have shut down manufacturing activities due to the coronavirus outbreak.

F&B companies want ‘essential’ pass to clear checkposts, reach you

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New Delhi: Large foods and beverages companies including Britannia, Parle, PepsiCo, Dabur, Hindustan Unilever, Coca-Cola, ITC, Nestle, Mondelez and Perfetti Van Melle have written to the government on Tuesday through three separate industry bodies, asking for immediate exemption from movement restrictions. They also want the sector to be termed as an "essential service", to avoid shortages on retail shelves and prevent consumer panic. "Central and state authorities are issuing different advisories and notifications on a daily basis, local administrations are enforcing shutdowns of factories and creating ambiguity at the ground level and leading to unnecessary enforcement," the companies said in one of the letters to the government. The letters, addressed to the consumer affairs and food processing ministries, have been sent through the Federation of Indian Chambers of Commerce and Industry (Ficci), All India Foods Processors' Association and the US India Strategic Partnership Forum (USISPF). The companies have sought clear guidelines to enforcement officials and a mechanism to balance essential and non-essential items. "To maintain regular supplies, it is necessary that this sector is not put under any work and movement restrictions. Along with the food and beverage sector, food ingredients companies should also be allowed to operate smoothly," the Ficci letter said. It said many companies are facing challenges from local administrations who are asking them to shut down operations. It also warned that these restrictions would have a direct impact on farmers and their produce. The companies said they were restricting entry of visitors to all plants, monitoring hygiene conditions at warehouses and distributors,undertaking extensive sanitisation in factory premises and cutting done on shifts. The foods market is estimated to be worth about `2.3 lakh crore, or roughly 55% of the country's FMCG industry. Following the lockdown across the country in the wake of the Covid-19 outbreak, only essential services are being allowed to operate, bringing the economy to a grinding halt. The USISPF, whose members include ITC, Deloitte, Adobe Systems, APCO, Cognizant and FedEx said in a letter addressed to consumer affairs secretary Pawan Aggarwal that the food processing industry and nutraceuticals be classified under essential services. "Supply chains for food are highly integrated; disruption to any one part will have a ripple effect and the impact would be felt back to the agriculture sector," it said. The letter called for all transport vehicles, refrigerated trucks, and those carrying raw material including that meant for packaging be permitted interstate movement and also within cities.

Trade setup: Wait until a directional bias is established

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In an extremely volatile session, Indian stock market attempted to stabilise, while trading in a broad 500-point range. The market made a stronger-than-expected start, but failed to sustain at higher levels, as NSE Nifty slipped nearly 500 points from the opening highs. However, the index started to inch higher in late morning trade and finally ended with a gain of 190.80 points or 2.51 per cent at 7,801.05.The market is trying hard to find a temporary bottom. The trend for Wednesday will depend on the price action of Nifty against 7,850. If the headline index manages to open or move past this level, it will then enter a broad consolidation zone. If it fails to do so, or struggles near 7,850, it is likely to turn weaker again.Volatility index or India Vix surged another 16.15 per cent to 83.61, and now trades at its highest levels.Wednesday's session is likely to see 7,850 and 7,980 levels act as immediate resistance. Support may come in at 7,665 and 7,500.The Relative Strength Index (RSI) on the daily chart stood at 22.46 and stayed neutral, showing no divergence against the price. The indicator remained in the oversold zone. The daily MACD was bearish and traded below its signal line. A Doji was formed on the candles. This shows a lack of consensus and indecisiveness among the market participants.74798574 As per pattern analysis, after initially marking a low near 7,850, Nifty violated those levels a couple of days after that. At present, it has just closed a notch below that level. If the index manages to crawl above 7,850, we will see it entering in a broad consolidation zone. The lead indicators remain in the oversold territory.The market is still witnessing rallies that are just fuelled by short covering. Currently, the market remains devoid of any fresh buying from lower levels. There are possibilities of the market seeing a positive start. However, as it happened over the previous session, the sustainability of such pullbacks will be key. While keeping the analysis on similar lines, we reiterate not to chase pullbacks and wait until a directional bias is firmly established.(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)

Reduce market hours, cut futures & derivative segments: Rashesh

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Let us start by understanding how are you guys at Edelweiss doing.. I hope everything is safe. How are you guys operating? It is a large organisation.Fortunately, like everybody else, we started work from home a couple of weeks ago and made it very technology-enabled. So a large part of our colleagues are all working from home now. The markets are open, so the trading team and some of the critical operations related to that still have to be in the office. But a large part of our other colleagues are being able to work from home. Technology is a big enabler, and it has made things a lot more efficient. The first few days was not easy, but since last week it is almost like normal office work and we are doing meetings and video calls and all that. I think it was a good time to test your business continuity planning, so we kicked off the BCP. We have also divided the critical teams into A, B and C and made sure that the A team is in office, the B team is at a remote location and C team is working from home. Thus, we have enough redundancy for critical operations. What is important is the while activity comes down, critical operations have to go on. One of the other things we have done is, we have pre-paid our employees for March, basically pre-paid the payroll which usually happens on 28th. We are expedited it so that people have some leeway in managing their cash flow. Because how cash flow gets managed for individuals, for businesses and for organizations is going to be one of the biggest challenges.Where do you stand on whether markets should remain open or not? We all know how difficult back operations guys are finding it. Some states have enforced complete lockdown. Volumes are low. Several markets across the world have taken the decision of electronic-only trade. But our regulators and exchanges have so far decided to continue the operations. Where do you stand on this particular issue?You have to keep the markets open, because closing the markets has a lot more other consequences, and it can increase volatility. One of the basic promise of the market is that whenever you are going to buy and sell at a price, liquidity should be available. So first thing is markets have to be open. One thing we can do is try and keep markets open for maybe one hour every day, so that there is not a lot of load and only essential buying and selling happens. Because this is not the time you want people to trade and speculate and do other things. I think F&O and the equity derivative segments can be curtailed and market hours can be curtailed, so that the load on the system is not there.At the same time you do have a price print every day that the markets are open. If it goes on for another three-four weeks, then we should have a longer game plan on how to reduce the burden on the system as a whole.The government is taking a lot of steps. Some of them are having consultations with the industry. You must have also interacted with the various sections of the government. How are you looking at the way our system is tackling this issue?I think India being a large country, very dense and with a democratic system and all, I am positive about the actions that the governments – state governments and central government – have taken. They have been very proactive. Some of the European governments were going slow, because they were worried about the economic impact. One of the good things the governments have done is not worry too much about the short-term economic impact, and have closed down borders, enforced curfews and all. So that is a good thing, because this is the only option you have to curtail this. This is a big humanitarian crisis, and we have to make sure that we first tackle the health crisis. It will obviously result in some economic pain, and that is inevitable all over the world. Recession and all is becoming more and more reality globally.Once you curb the health crisis, then you can work on the economic crisis. I think the government has been very focused on how to manage the health issue and stop the spread of the virus. I do think the government, the Reserve Bank of India and others will come out with a package even to alleviate the economic crisis, because there is no point in just alleviating the health crisis, if the economic crisis goes on for a long term. Because that can result in unemployment, income loss and other pain.I think it will follow, and I do think the government is working on it. They have been talking to a lot of people and they are trying to work out which areas, which sectors to address and what kind of stimulus or intervention to do. I do think it will come, because we will have to alleviate the economic pain also.We understand that all these preparations are going on right now, and we are expecting that to cushion the blow to the economy. But where do you stand right now on your assessment of how bad could things get? A lot of your clients in the lending business are directly getting impacted? How are you assessing the damage so far, and what do you think can will help forbearance by lenders? What is your analysis of all that?The first and foremost impact is going to be on cash flows and liquidity. Because in last 8-10 days, we talked to a lot of our SME customers, everybody's cash flows have been coming down. So that itself is the first area. We have to infuse liquidity, and make sure the cash flow cycle starts out, because once the cash flow cycle stops, it has a cascading effect on everybody else. After the cash flow issue is managed, we have to go towards NPAs and forbearance and all. Because, a lot of technical default can happen as people may not able to pay either because of liquidity or because of the cash flow crunch. We should have some forbearance, especially for a lot of businesses and all who need more time to play.So I think they key requirements are NPA forbearance, ensuring cash flow, liquidity infusion and making sure that the cash flow cycle is not stalled at all. Thirdly, I think we need to ease compliance requirement, because this is also the end of the financial year. Thus, we need to extend the compliance requirements and give a lot more breathing space, because everybody is working on multiple fronts. Businesses are busy planning things, taking care of employees, taking care of customers . So, some kind of compliance forbearance and in filing things will also come. I think these are the three areas where I would expect help: on liquidity, on NPAs and on compliance.The fear in the market is that now even retail borrowers will start coming under pressure, and possible defaults may happen. What are your thoughts on that section of the borrowers? Also on the real estate side, do you think there could be a lot more pain because they are completely starved of cash now and further defaults will start coming in on that side?On the first one, I think we have to be very careful on the retail side. The idea is not to spread panic, but as I said cash flows will get crunched. We do expect some intervention and the measures; going by what we have seen during other events. If it lasts for three-four weeks, it can be managed, because people have enough cushion, enough ability to manoeuvre and manage a cash flow disruption for three-four weeks. If it goes longer than that, then we will need a lot more other active interventions from the government and from RBI. That will be a function of what the government and RBI do to alleviate the cash flow and keep the cash flow going.On the real estate side, if they have already gone through a huge stress test in last three years and there has been a big slowdown there. It is the same thing: if it lasts for next three-four weeks, there may be a little bit of slowdown, but if it goes on longer than that, then we will have to make sure that the projects keep going on and houses get built.The good news is that people will not stop buying homes. In fact, if people have to stay at home more then they people will need more homes. So I do think home buying will not get impacted in the long term, especially if interest rates come down and the government and RBI do a big push to get people to spend.Because demand contraction is what you do not want after this. As I said in the short term we have to manage liquidity, we have to manage NPA forbearance, we have to manage compliance requirement, but in the medium term, governments will have to stimulate the economy. We will have to make sure demand and consumption slowdown do not happen. I do hope it will not happen because India is still a growing country and we have a lot of young population and urbanisation and all is going on. If you look at China and other places, four, five, six weeks after this kind of measures, things have started to come back to some sort of normalcy. If you look at Korea, if you look at Singapore, a lot of things are coming back to normal. So given the strong measure our government has taken, I do feel by end of April we should see some normalcy come back.

Joint parliamentary committee wants more time to submit data bill note

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New Delhi: The joint parliamentary committee (JPC) studying the Personal Data Protection Bill, 2019 has sought an extension till the second week of the monsoon session of Parliament to submit its report on the landmark legislation. The committee, headed by BJP MP Meenakshi Lekhi, was supposed to submit the report by end of the budget session, which concluded on Monday.After the bill was introduced in Parliament in December last year, it was referred to the joint parliamentary committee, which had asked stakeholders to send their feedback by February 25. The committee had also expressed its willingness to allow stakeholders to express their concerns in person. However, the process to do so has yet to begin.The legislation will require Indian as well as overseas companies operating in India to completely overhaul their data practices to ensure protection of personal data of individuals. ET had reported earlier this month that more than a dozen technology and business trade groupings from the US, Europe and Japan had joined the panel examining the bill to reconsider some of its clauses to protect the "privacy of Indian citizens" and "remove barriers" to the growth of the country's economy.

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