Current Affairs May 2020 - Economic

1 - Task Force on NIP submits final report to Finance Minister

The Task Force on National Infrastructure Pipeline (NIP) submitted its final report for FY 2019-25 to Finance Minister Nirmala Sitharaman. It has projected a total infrastructure investment of above Rs 111 lakh crore during the period FY 2019-25 to make India a $5 trillion economy. The task force was headed by the Economic Affairs Secretary.

NIP is a first-of-its-kind, whole-of-government exercise to provide world-class infrastructure across the country and improve the quality of life for all citizens.

2 - India's Gold demand falls 36% between January-March

According to Quarter-1 Gold Demand Trends report by World Gold Council, gold demand in India fell 36% in the January to March quarter of 2020, to 101.9 ton. The fall in demand is mainly due to volatile prices, economic uncertainties and corona-virus induced nationwide lock down towards the end of the quarter.

India's the first quarter gold demand, in terms of value, fell 20%, to Rs 37,580 crore. Jewellery demand saw a drop of 27% to Rs 27,230 crore. However, total investment demand in value terms, in the first quarter of 2020, rose 4%, to Rs 10,350 crore.

3 - CRISIL projects 10% revenue decline and 15% profits erosion in FY 21 for India Inc

Domestic rating agency CRISIL has projected a 10% fall in revenues and at least 15% erosion in profits for India Inc. due to the COVID-19 pandemic. The rating agency estimated banks' non-performing assets to rise by up to 2% points to 11.5% and credit growth to slow down to 2%.

CRISIL also estimated that the lockdown will bring down the gross domestic product (GDP) by 3% points. It also warned that its base case of 1.8% growth for FY21 may fall to zero if the lockdown continues.

4 - Index of Eight Core Industries for March, 2020

The output of eight core sectors of the Indian industry – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity stood at 137.0 in March, 2020 which declined by 6.5% compared to the index of March, 2019. Its cumulative growth during April to March 2019-20 was 0.6%.

The data on production of eight core industries of India is published monthly by the Ministry of Commerce and Industry. The current base year for the index of the series is 2011-12=100. These eight industries comprise 40.27% of the weight of the items included in the Index of Industrial Production.

5 - CRISIL cuts India's GDP growth forecast to 1.8% for FY21

Domestic rating agency CRISIL has cut its GDP forecast for India to 1.8% for 2020-21 as against 3.5% projected in March. It has projected total losses of Rs 10 lakh crore or Rs 7,000 per person due to "disastrous" lockdowns to control COVID-19 pandemic.

According to CRISIL, the economic disruption amid novel coronavirus pandemic is likely to result in a permanent loss of 4% GDP for India. India Ratings and Research (Ind-Ra) has also revised the FY2021 economic growth forecast for the country further down to 1.9%, the lowest in the last 29 years.

6 - Moody’s cut India’s GDP growth to `zero' in FY21

Global rating agency Moody's has cut India's GDP growth rate at Zero for the current fiscal -- 2020-21 owing to Covid-19 pandemic. Moody's also forecast India's GDP growth rate to bounce back to 6.6% in 2021-22.

The forecast by Moody's is lower than Fitch's forecast of 0.8%, IMF's 1.9%, World Bank's 1.5-2.8% and ADB's estimate of 4%. However, it is slightly better than contraction estimate up to 2% by ICRA and 0.4% by Nomura.

7 - NTPC achieved 100% PLF at three of its power stations

NTPC Limited achieved 100% Plant Load Factor, PLF at three of its thermal power stations - NTPC Vindhyachal in Madhya Pradesh, NTPC Talcher Kaniha in Odisha and NTPC Sipat in Chhattisgarh. This demonstrates exceptional operational efficiency and optimum capacity utilisation despite lockdown on account of COVID-19 pandemic.

NTPC Koldam in Himachal Pradesh has emerged as one of the best hydropower stations in the country for financial year 2020-21. NTPC, India’s largest power generator, has 70 Power stations comprising of 24 Coal, 7 combined cycle gas/liquid fuel, 1 Hydro, 13 renewables along with 25 JV Power Stations.

8 - Foreign exchange reserves surged to USD 485.31 bn

India's foreign exchange reserves jumped by 4.235 million dollars to reach billion 485.313 dollars in the week ended 8th May. Foreign currency assets rose by 4.233 billion dollars to 447.548 billion dollars. In the previous week, the reserves had increased by 1.622 billion dollars to end at 481.078 billion dollars. Gold reserves rose by 13 million dollars to end at 32.291 billion dollars.

India's special drawing rights with the International Monetary Fund declined by three million dollars to 1.423 billion dollars, while the country's reserve position also dipped by 8 million dollars to 4.051 billion dollars.

9 - Tata Power SED bagged Rs. 1200 crore contract from the Ministry of Defence

Tata Power Strategic Engineering Division (Tata Power SED) signed a contract with Ministry of Defence, Government of India, for modernisation of infrastructure of 37 Airfields of Indian Airforce, Indian Navy and Indian Coast Guard. The contract needs to be executed over a period of next 4 years.

The contract is at an estimated value of about Rs. 1,200 crore. Tata Power is in the process of selling its defence business (Tata Power SED) to Tata Advanced Systems Limited (TASL) through a Scheme of Arrangement.

10 - Fitch Ratings project India economy to shrink by 5% in FY21

Fitch Ratings has projected the Indian economy to contract 5% from their earlier estimates of the economic growth at 0.8%. In its Global Economic Outlook (GEO) for May, Fitch projected growth to rebound to 9.5% in 2021-22.

The sharp cut in India forecast is due to slump in economic activities and very stringent lockdown policy. Fitch has predicted world GDP to fall by 4.6% in 2020.

11 - India's unemployment rate drops to 23.97%

According to the Centre for Monitoring of Indian Economy (CMIE), India's unemployment rate dropped to 23.97% in the week ended 10 May from 27.11% in the week ended 3 May. The decline was due to the ease in lockdown restrictions by the government on economic activity.

The urban unemployment declined to 27.83%, which is higher than the national job loss rate of 23.91%, while rural job loss rate was 22.35%. In week ended 3 May, urban unemployment was 29.22%.

12 - Mahindra launched its digital sales platform ‘Own-Online’

Mahindra has launched ‘Own-Online’, a digital sales platform that enables customers to purchase any of its vehicles without the need for physically visiting a dealership. Own-Online is a one-stop, 24X7 destination where the customer can finance, insure, exchange, accessorize and own a Mahindra vehicle in 4 simple steps, from the comfort of their homes.

The launch of Mahindra’s digital sales platform comes after manufacturers like Hyundai, Tata, Honda and Volkswagen all introduced their respective online sales platforms.

13 - CCI proposed amendments to combination regulations

Competition Commission of India (CCI) has proposed changes to combination regulations to do away with the requirement for disclosing certain non-compete restrictions while seeking the watchdog's approval. Combinations -- generally mergers and acquisitions -- beyond a certain threshold need clearance from the regulator under the Competition Act.

The CCI plans to omit part of the combination regulation that seeks information regarding non-compete restrictions agreed between the parties to combination and justification for the same. This would allow the parties flexibility in determining non-compete restrictions, while also reducing the information burden on them.

14 - India's crude steel output slips 65%

According to the World Steel Association, India's crude steel output declined over 65% to 3.13 million tonnes (MT) during April. India had produced 9.02 MT of crude steel during the same month a year ago. India had posted a 14% in steel output at 8.65 MT in March as compared with 10.04 MT in March 2019.

Global steel output also declined 13% to 137.09 MT as compared with 157.67 MT in April 2019. China produced 85.03 MT steel in April, a marginal rise of 0.2%. US produced 4.96 MT of crude steel in April, 32% lower than 7.35 MT in the year-ago month.

15 - WPI food inflation declined in April to 3.60%

Union Government released truncated data for April wholesale price-based inflation as there was limited transaction of products in the market due to the outbreak of COVID-19. Wholesale Price Index (WPI) deflation in primary articles was 0.79% in April, as against an inflation of 3.72% in March.

The fuel and power basket saw a deflation of 10.12% in April, against 1.76% deflation in the previous month. The rate of inflation based on WPI Food Index decreased from 5.49% in March, 2020 to 3.60% in April, 2020.

16 - India’s Foreign Trade: April 2020

India’s overall exports (Merchandise and Services combined) in April-March 2019-20 are estimated to be USD 528.45 billion, exhibiting a negative growth of -1.36% over the same period last year. Overall imports in April-March 2019-20 are estimated to be USD 598.61 billion, exhibiting a negative growth of -6.33% over the same period last year.

Merchandise: Total exports was USD 10.36 billion down 60.28% while total imports was USD 17.12 billion down 58.65%. The trade deficit was USD 6.76 billion.

Services: Total estimated exports is USD 17.60 billion down by 2.54% while total imports was USD 10.68 billion downn by by 6.37%. The net of services was USD 6.93 billion.

Overall Trade: Total exports was USD 27.96 billion down by 36.65% while total imports was USD 27.80 billion down by 47.36%. The trade surplus was USD 0.16 billion.

17 - NRAI collaborated with DotPe to build tech platform

National Restaurants Association of India (NRAI) partnered with Gurgaon-based O2O fintech commerce startup DotPe to launch a digital platform that can support members and employees. The platform will ensure minimal human touch while ordering and settling the bill by enabling social media platforms such as WhatsApp, Facebook, and Instagram to provide and ordering facilities and visibility for restaurant partners who could potentially be its members.

The initiative is a move to overcome severely impacted restaurants due to the country-wide lockdown announced to contain the spread of covid-19.

18 - Flipkart collaborated with Bajaj Allianz for digital motor cover

Flipkart, India’s homegrown e-commerce marketplace, and Bajaj Allianz General Insurance Company tied-up to offer a digital motor insurance policy to Flipkart’s customers. Consumers can buy this motor-insurance policy using their Flipkart app. Bajaj Allianz motor insurance policies for privately owned 4-wheelers and 2-wheelers come with unique benefits to ensure their peace of mind and make them worry-free.

The unique benefits of insurance are motor inspection on the spot, hastle free renewal, 24*7 roadside instant assistance, transfer of no claim bonus etc.

19 - NTPC and ONGC to set up joint venture company for Renewable Energy business

National Thermal Power Corporation, NTPC and Oil and Natural Gas Corporation Limited, ONGC, have signed a Memorandum of Understanding, MoU to set up a joint venture company for Renewable Energy business. The MoU will enable both companies to accelerate their footprint in renewable energy sector and setting up of offshore wind and other renewable energy projects in India and overseas.

NTPC and ONGC will explore the setting up of offshore wind and other Renewable Energy Projects in India and overseas. They shall also explore opportunities in the fields of sustainability, storage, E-mobility and ESG (Environmental, Social and Governance) compliant projects.

20 - Airtel selected IBM and Red Hat to build Open Hybrid Cloud Network

Bharti Airtel selected IBM and Red Hat to build its new telco network cloud, designed to make it more efficient, flexible and future-ready to support core operations and enable new digital services.

Using IBM and Red Hat's portfolio of hybrid cloud, Airtel plans to adopt open cloud architecture. The network cloud will also position ecosystem partners, including B2B and B2C application developers, to create value-added services, including new edge offerings.

21 - 9^th Edition of the Status Paper on Government Debt

The Government released the Ninth Edition of the Status Paper on the Government Debt, which provides a detailed analysis of the Overall Debt Position of the Government of India.

• The central government’s debt as a percentage of GDP dropped marginally by 0.1% from 45.8% in fiscal 2017-18 to 45.7% or Rs 86.73 lakh crore in FY19.
• The general government debt to GDP ratio, which includes the combined debt of the Centre and states, declined by 0.1% from 68.7% in March 2018 to 68.6% or Rs 1.3 crore crore (Rs 130 trillion) in March last year.
• External debt stood at 2.7% of GDP or Rs 5.12 lakh crore in FY19.
• Around 94.1% of the Centre’s liabilities consisted of domestic debt in FY19, of which 84.4% or Rs 59.68 lakh crore was made up of marketable securities.