Tag: coronavirus crisis

PNB buys 3 Audi cars for top management amid COVID-induced downturn

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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At a time when the financial sector is passing through a rough patch and looking at ways to conserve capital, country’s second largest lender Punjab National Bank (PNB) has bought three Audi cars to ferry its top management.

According to sources, the PNB took the delivery of these high-end luxury cars worth approximately Rs 1.34 crore last month, unmindful of the coronavirus outbreak, subsequent nation-wide lockdown and its crippling effect on the financial sector as well as the economy.

The annual depreciation on this purchase will be around about Rs 20 lakh, sources said.

These luxury cars, sources said, will be used by the managing director (MD) and two senior executive directors.

Besides the MD, there are four executive directors given the size and scale of operation of the bank.

These cars were purchased after the approval from the board and within the sanctioned limit for the whole-time directors, sources said, adding, this is a part of routine replacement and the unutilised Budget of the last year was carried forward for the purchase.

Interestingly, the secretaries in the union government and even Cabinet ministers use Maruti Suzuki Ciaz, much less expensive than German car Audi purchased by the PNB.

In protocol, the managing director of a public sector bank is equivalent to an additional secretary in the central government.

Even the chairman of the country’s largest lender State Bank of India who is considered a notch above the managing director of any nationalised bank uses Toyota Corolla Altis when in capital.

In the wake of COVID crisis, the finance ministry last week asked all ministries and departments not to initiate any new scheme in the current financial year and said that there is a need to use resources prudently in these difficult times.

Also, schemes that are already approved for the current financial year will remain suspended till March 31 next year or further orders.

This would also include those schemes for which in-principle approval has been given by the respective departments.

According to an office memorandum of the department of expenditure in the finance ministry, the changes have been made as there is a need to use resources prudently in accordance with emerging and changing priorities.

It is to be noted that Punjab National Bank suffered heavily due to the Rs 14,000 crore Nirav Modi scam, which was unearthed in 2018.

Nirav Modi and his uncle Mehul Choksi duped PNB of Rs 14,000 crore through issuance of fraudulent Letters of Undertaking (LoUs), in connivance with certain bank officials.

For the third quarter ended January 2020, the bank reported a loss of Rs 501.93 crore due to substantial increase in bad loan provisioning.

The bank had posted a net profit of Rs 249.75 crore for the same period a year ago.

The bank made a provisioning of Rs 4,445.36 crore for bad loans during the quarter under review as against Rs 2,565.77 crore parked aside for the year-ago period.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Thai hotels are offering luxury quarantine packages as an alternative to state-funded isolation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Thailand is allowing five Bangkok hotels to offer luxury isolation packages as an alternative to the government-funded 14-day quarantine for returning travelers.

International passenger flights have been banned from entering Thailand until the end of June, but the government has chartered flights to repatriate citizens who have been stranded abroad amid the coronavirus crisis.

Anyone returning to the country is required to spend 14 days in state-designated quarantine facilities, most of which are hotels, with local media reporting that around 80,000 people have been quarantined to date.

Now, the Thai government has approved five hotels in the capital to provide packages for anyone wanting to self-fund a more premium isolation period.

Ranging from 32,000 Thai baht ($1,016) to 60,000 baht ($1,904) for a two-week stay, the resorts are offering perks like doctors’ consultations and meals to Thai citizens and expat workers who return to the kingdom from overseas. It’s currently unclear whether the offer will be extended to regular tourists when, and if, international passenger flights resume.

Mövenpick BDMS Wellness Resort Bangkok
The 14-day “Health Watch” package offered by the Mövenpick BDMS Wellness Resort costs 50,000 baht and offers luxury accommodation in a single-occupancy “Wellness Suite.”

As well as being provided with three meals a day, guests will receive an initial consultation with a doctor, daily health monitoring under a nurse’s supervision, “immune system enhancing supplements” and a Covid-19 test at the end of their stay.

The package was initially only available until June 30, but has been extended until July 31.

Qiu Hotel
Bangkok’s Qiu Hotel is offering the most wallet-friendly package at 32,000 baht per person, which covers a 16-day, 15-night stay that includes three daily meals and a ride to and from the airport.

Qiu’s package also includes two Covid-19 tests and round-the-clock access to ambulance services, hospital visits and video consultations with local doctors.

The Idle Residence
A two-week quarantine in the Idle Residence ranges from 50,000 baht for a superior room to 60,000 baht for a junior suite.

The hotel has drafted in nurses from private health-care chain Samitivej Hospital to provide 24-hour care for guests in quarantine, and is also offering a “virtual hospital” to put them in touch with health-care professionals without going to a clinic.

Grand Richmond Hotel
The Grand Richmond is offering a 15-night quarantine package for 55,000 baht per person, with nurses from nearby Vibhavadi Hospital on 24-hour standby for guests.

Guests will be put up in executive deluxe rooms on the 29th to 34th floors of the hotel, and are provided with three meals a day and a free minibar on their day of arrival.

Royal Benja Hotel
Quarantining at the Royal Benja comes with a price tag of 45,000 baht per person for a two-week stay.

The hotel’s package includes three meals a day, discounted room service and a shuttle from the airport.

Nurses will be on hand to care for guests in quarantine at the hotel, and the package also includes two Covid-19 tests as well as an ambulance service and video calls with local doctors.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

WHO recommends on face masks: What kind of masks to wear, when to wear and who should wear

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The World Health Organization (WHO) updated its guidance on Friday to recommend that governments ask people wear fabric face masks in public places to curb the spread of the pandemic COVID-19 disease caused by the new coronavirus.

Here are some details on the new advice:

WHY THE CHANGE?

– The WHO says the widespread use of face masks or coverings by the general public is still not yet supported by high quality or direct scientific evidence.

– But it says a growing amount of observational evidence from several countries that have ordered or recommended the wearing of masks, as well as the difficulty of social distancing in many settings, is enough for it to change its advice.

WHEN SHOULD YOU WEAR A MASK?

The WHO recommends the wearing of non-medical masks by:

– Everyone in public settings such as stores, at work, social or mass gatherings, and in closed settings such as schools or places of worship.

– People living in cramped conditions, such as in refugee camps or slums.

– On public transport.

WHAT KIND OF MASK?

Because of the risk of diverting critical resources from health workers, the WHO says medical masks should be reserved for healthcare professionals and people in at-risk groups. Everyone else should use what it terms non-medical or fabric masks. Here is some of its advice on mask choice:

– Choose materials that capture droplets but remain easy to breathe through.

– Avoid stretchy materials, because stretching may increase pore sizes, and preferably use a fabric that can be washed at 60C (140F) or higher.

– A minimum of three layers is needed, including an absorbent inner layer, touching the mouth, and a synthetic outer layer that does not easily absorb water.

– Wash frequently, at the highest temperature possible, and don’t share.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

DCB Bank Q4 net slips 28% to Rs 69 cr

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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DCB Bank on Saturday reported a 28 per cent decline in net profit at Rs 69 crore for the March quarter, impacted by the coronavirus crisis.

The private sector lender had posted a net profit of Rs 96 crore in the same period of 2018-19.

Income during the January-March quarter of FY20 rose by 8.5 percent to Rs 434 crore, as against Rs 400 crore in the same period of the preceding fiscal, DCB Bank said in a release.

The bank’s profit after tax in FY20 stood at Rs 338 crore, up 4 percent from Rs 325 crore in 2018-19.

Income during the year grew 10.5 percent to Rs 1,656 crore as against Rs 1,499 crore in the preceding fiscal.

“Both FY 2020 and Q4 2020 Profit Before Tax was impacted by Rs 63 crore Covid-19 Regulatory Package Provision. The bank conservatively made more provision than required as per guidelines,” it said.

The bank’s asset quality weakened, with gross non-performing assets (NPAs) or bad loans rising to 2.46 percent of gross advances as on March 31, 2020, from 1.84 percent in the corresponding quarter of the previous fiscal.

Likewise, net NPA ratio rose to 1.16 percent from 0.65 percent.

DCB Bank’s Managing Director and CEO Murali M Natrajan said, “Our main aim in the next two quarters would be to carefully navigate through the difficult and uncertain environment focusing on handling potential portfolio stress, assisting loan customers within regulatory guidelines, effect cost reduction and maintain adequate liquidity.”

He said the bank is of the view that the second moratorium relief announced by the RBI has come at the right time.

“… because lock-down restrictions are being reduced so cash flows in the economy should start to pick up enabling customers to service their loan obligations more easily post the moratorium period,” Natrajan added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This is a challenging year, but no plan to cut govt spending, says expenditure secretary TV Somanathan

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Expenditure secretary TV Somanathan on Monday said this is a challenging year for the central government due to the serious revenue impact of the coronavirus crisis, but added that the Centre had no plan of carrying out poorly calibrated expenditure cuts.

“One of the problems with trying to estimate the cash outflow on the package is that we have given a large number of very substantial guarantee commitments, which are not completely without fiscal costs.”

There is a fiscal outgo on guarantees and many of the estimates miss that aspect, he added.

At this point it is very difficult to give a very precise estimate of fiscal consequences, he explained.

“I am not in a position to assess the fiscal cost of some of the guarantees and I think that not everyone has assessed all of them correctly but I would also say this that it is very difficult to assess them correctly because it is a matter of how the economy evolves over the next few month.”.

“Revenues are falling and have fallen substantially in the month of April. We gave out more in devolution to the states than the net revenue that we collected.”

“We gave out approximately 110 percent of what was collected. So yes, there is a serious revenue impact on the Centre and yes, that has fiscal consequences and yes, we will have to work with that and make sure that we end this year successfully. It is a challenging year, there is no doubt about it, we are all grappling with that challenge but yes, those are all very relevant,” he added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US economy will recover, could stretch through end of next year: Federal Reserve

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US economy, the world’s largest, which has been thrown into a recession due to the coronavirus pandemic, will rebound but the recovery could stretch through the end of next year, Federal Reserve Chairman Jerome Powell has said.

His statement came days after a top economic advisor to President Donald Trump favoured giving tax incentives to American companies to move their manufacturing units from China to the US, amidst a new rift in the bilateral relationship over Beijing’s handling of the coronavirus crisis.

The US has expressed disappointment over China’s handling of the COVID-19 which has claimed nearly 90,000 lives in America.

China, which is the world’s second largest economy, in the beginning of the year signed the Phase-1 of a trade deal with the US, ending a bitter two-year tariff war that had rattled the global economy.

Federal Reserve Chairman Powell, during a 60 Minutes programme on CBS News on Sunday, said that in the long run and even in the medium run, one would not want to bet against the American economy.

This economy will recover. And that means people will go back to work. Unemployment will get back down. We’ll get through this. It may take a while.

It may take a period of time. It could stretch through the end of next year. We really don’t know. We hope that it will be shorter than that, but no one really knows. What we can do is the part of it that we can control — is to be careful as businesses go back to work, he said.

And each of us individually and as a group take those measures that will protect ourselves and each other from the further spread of the virus, Powell said.

Observing that this is a time of great suffering and difficulty, Powell said that it has come on the Americans so quickly and with such force that one really cannot put into words the pain people are feeling and the uncertainty they are realising.

Also Read: US, European leaders weigh reopening risks without a vaccine

And it’s going to take a while for us to get back, he said.

Powell said there is a real risk that if people are out of work for long periods of time, their skills atrophy a little bit and they lose contact with the workforce.

This is something that shows up in the data — that longer and deeper recessions tend to leave behind damage to people’s careers. And that weighs on the economy going forward, he said.

You could say the same thing about businesses. The small and medium size businesses that are so important to this country, if they have to go through a wave of avoidable insolvencies, you’ve lost something there that’s more than just a few businesses.

It’s really the job creation machine. And if that happens, it will take some time to recover from it. I think the good news is that we have policies that can go some way toward minimising those effects. And that’s by keeping people and businesses out of insolvency just for maybe three or six more months while the health authorities do what they can do. We can buy time with that… that kind of support may be appropriate, he said.

Also Read: Japan slips into recession, worst yet to come as pandemic wreaks havoc

Responding to a question, Powell said nobody knows on the level of unemployment that the country is going to face.

It seems as a reasonable base case that there will be more layoffs probably this month and next month. Twenty million people have lost their jobs in a period of really two months, he said.

And it’s heartbreaking because just two months ago we had the lowest unemployment in 50 years, the lowest African-American unemployment ever since we began measuring it, he added.

We had low- and moderate-income communities telling us that this was the best labour market, that you can finally see the benefits of what a tight labour market actually means. More opportunity. And it looked like we would continue to see that going forward for some time and further and further benefits, he said.

Assuming that the economy does begin to reopen and we do that successfully, you’ll see people going back to work, he said.

According to Powell, the good news is that the 20 million people who have been laid off report themselves as having been laid off temporarily. They are considered temporarily unemployed. And that is because they expect to go back to their old job.

If those businesses can reopen and if we can do it in a way that doesn’t create further problems with the virus, then people can go back to work. I would say the peak unemployment might be in the next couple of months. And then you might see it coming down over the second half of the year, he added.

More than 300,000 people have died due to the coronavirus pandemic and over 4.7 million people infected around the world. The US is the worst-hit country with nearly 90,000 deaths and over 1.4 million confirmed COVID-19 cases.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan slips into recession, worst yet to come as pandemic wreaks havoc

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Japan’s economy slipped into recession for the first time in 4-1/2 years, GDP data showed on Monday, putting the nation on course for its deepest postwar slump as the coronavirus crisis takes a heavy toll on businesses and consumers.

The world’s third-largest economy shrank for the second consecutive quarter in the three months to March, intensifying the challenge for policymakers battling a once-in-a-century pandemic that has already caused widespread disruptions.

Gross domestic product (GDP) contracted an annualised 3.4 percent in the first quarter as private consumption, capital expenditure and exports fell, preliminary official data showed, following a revised 7.3 decline in the October-December period, meeting the technical definition of a recession.
The median market forecast was for a 4.6 percent contraction in the first quarter.

The last time Japan suffered recession was in the second half of 2015.
“It’s near certainty the economy suffered an even deeper decline in the current quarter,” said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute. “Japan has entered a full-blow recession.”

The coronavirus, which first emerged in China late last year, has ravaged the global economy as many nations went into strict lockdowns to curb the outbreak that has so far killed over 310,000 people worldwide. The pandemic has been massively disruptive on supply chains and businesses, particularly in trade-reliant nations such as Japan.

Private consumption, which accounts for more than half of Japan’s USD 5 trillion economy, slipped 0.7 percent, versus a 1.6 percent drop expected by economists.

That marked the second straight quarter of decline, as households were hit by the double-whammy of the coronavirus and a sales tax hike to 10 percent from 8 percent in October last year.

The virus’ impact on corporate Japan has been telling, with the GDP data showing exports contracted sharply by 6 percent in the first quarter.
The shakout in global trade was highlighted in the recent March data, with Japan’s exports slumping the most in nearly four years due to plunging US-bound shipments including cars.

Capital expenditure fell 0.5 percent in the fourth quarter, against a median forecast for a 1.5 percent drop and marked the second consecutive quarter of declines, the data showed.

Taken together, domestic demand knocked 0.7 percentage point off GDP growth, while external demand shed 0.2 point.

All of this has put a strain on labour market. The jobless rate in March rose to its highest in a year, while job availability slipped to a more than three-year low.

DEEPENING SLUMP

Conditions are expected to have worsened in Japan in the current quarter after Prime Minister Shinzo Abe in April declared a nationwide state of emergency amid a rise in coronavirus infections.

The emergency, which urged citizens to stay home and many businesses to close, was lifted for most regions on Thursday, but remained in effect for some big cities including Tokyo.

Analysts polled by Reuters expect Japan’s economy to shrink an annualised 22.0 percent in the current quarter, which would be the biggest decline on record and underscores the collapse in activity that is expected to see the worst global slump since the Great Depression of the 1930s.

The government has already announced a record USD 1.1 trillion stimulus package, and the Bank of Japan expanded stimulus for the second straight month in April. Abe has pledged a second supplementary budget later this month to fund fresh spending measures to cushion the economic blow from the outbreak.

The nation’s major globe-trotting manufacturers weren’t spared the pandemic’s sweeping impact either.

Toyota Motor Corp on Friday said it would reduce vehicle production in Japan by 122,000 units in June, as a lack of demand for new cars due to the coronavirus prompts the automaker to keep its plants running on limited operations. The automaker is bracing for an 80 percent drop in full-year operating profit, its lowest in nine years.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Toll collections to see 13% drop due to 57-day coronavirus lockdown, says CRISIL

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The 57-day nationwide lockdown due to COVID-19 will result in a sharp 13 per cent fall in toll collections and remittances, CRISIL Research said on Wednesday.

In case, the lockdown is extended by another two weeks, the decline will be even sharper at 17 per cent, it said.

“Traffic on highways set to de-grow 16.5 per cent this fiscal, which would cull toll collection by 13 per cent in base case,” a CRISIL Research statement said.

With the nationwide lockdown to fight the COVID-19 pandemic restricting inter- and intra-state traffic to essential services, toll collections from build-operate-transfer (BOT) highway projects, and remittances from publicly funded projects would decline sharply in the near term, it said.

The National Highways Authority of India (NHAI), the nodal agency for the roads sector, had stopped toll collections up to April 20, 2020, after the government imposed the nationwide lockdown on March 25.

Toll collection has restarted since, but there is unlikely to be a V-shaped revival in traffic after the lockdown ends, probably on May 17, the statement said adding, there will only be a gradual return to normalcy.

“Consequently, toll collections and remittances from existing roads will fall a sharp 13 per cent assuming there’s only a 57-day lockdown (from March 22 to May 17). That decline will be an even sharper 17 per cent if the lockdown is extended by another two weeks,” it said.

While construction of new highways is also affected, those constructed and commissioned over the past one year will help reduce the rate of decline in toll collections by more than half.

Over the long term – fiscals 2019-2024, CRISIL Research said it expects toll collections to bounce back to a healthier compound annual growth rate (CAGR) of 11-12 per cent on the back of new road construction.

“This, however, is lower than the 14.6 per cent clocked in the preceding five fiscals. New road executions will hold the key to both reducing the impact of the lockdown in the immediate term and boosting growth over the long term,” it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Lockdown distress: Karnataka govt announces Rs 1,610 cr package

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Karnataka government on Wednesday announced a Rs 1,610 crore relief package for the benefit of those in distress due to the COVID-19-induced lockdown.

The measures announced by the Chief Minister B S Yediyurappa would bring relief to farmers, flower-growers, washermen, auto rickshaw and taxi drivers, MSMEs, large industries, weavers, building workers and barbers.

The government also announced a 11 percent excise duty hike, which is in addition to the six percent announced in the budget.

People from all sections of society are facing financial difficulties due to lockdown of more than one and a half months, the Chief Minister noted.

Flower growers have destroyed their flowers following lack of demand for their produce due to the lockdown.

It is estimated that farmers cultivated flowers in about 11,687 hectares.

Realising the problems facing flower growers, the government announced a compensation of Rs 25,000 per hectare limited to a maximum extent of one hectare for the crop loss.

Farmers who have grown vegetables and fruits were not able to market their produce, and the government has decided to announce a relief package for them.

Also Read: Karnataka sees liquor sales worth Rs 45 crore on day 1 as wine shops open

Covid-19 has also affected service professionals such as barbers and washermen (dhobis) both in urban and rural areas, and it has been decided to provide a one time compensation of Rs 5,000 each to benefit about 60,000 washermen and about 2,30,000 barbers.

A decision has also been taken to help about 7,75,000 Auto & Taxi drivers by providing one time compensation of Rs 5,000 each.

MSMEs have also suffered huge production losses due to the lockdown.

It takes some time for them to revive, Yediyurappa said.

The monthly fixed charges of electricity bills of MSMEs will be waived for two months.

Payment of fixed charges in the electricity bills of the large industries would be deferred without penalty and interest for a period of two months.

The Chief Minister also announced certain benefits for electricity consumers of all categories.

The state government has already announced Rs 109 crore weavers loan Waiver scheme, of which Rs 29 crore has been released during 2019-20.

Balance amount of Rs 80.00 crore would be released immediately.

This would help weavers get fresh loans to continue their occupation.

The Chief Minister also announced a new scheme, Weaver Samman Yojana (Nekarara Sammana yojane) for the benefit of the suffering weavers.

Under this scheme, the government would deposit Rs 2,000 directly into the bank account of the handloom weaver through DBT.

This will benefit about 54,000 handloom weavers in the state.

There are 15.80 lakh registered building workers in the state.

The government has already transferred Rs 2,000 to the bank account of 11.80 lakh building workers through DBT.

Action has already been initiated to transfer Rs 2,000 to the accounts of the remaining four lakh construction workers soon after verifying beneficiaries bank account details.

In addition to this, the government has decided to transfer additional amount of Rs 3,000 to building workers through DBT.

The above compensation would be provided with an estimated cost of Rs 1,610.00 crore, which would help those who are in distress due to lockdown , the Chief Minister added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Govt likely to announce stimulus package on Friday

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The stimulus package for the industry hit by a lockdown of more than a month when economic activity has ground to a halt is expected to be announced soon.

The package has been in the works for a while and top government officials have indicated that rather than one big package, the government is rolling out packages specifically targeted at important constituencies.

Acuite Ratings estimates that the government should opt for a stimulus package of Rs 11.2 lakh crore ($150 billion), the economic loss that is already set to be recorded for the current lockdown period and that will tantamount to 4.8 percent of FY20 GDP.

Acuite Ratings has estimated that it may not be feasible for all states to share the debt burden of the stimulus given their respective fiscal position.

Therefore, a few relatively stronger states with lower fiscal deficit levels may volunteer to take up around Rs 3 lakh crore of additional borrowings.

“We suggest a group of six states i.e. Karnataka, Gujarat, Tamil Nadu, Maharashtra, Haryana and Telangana where the current fiscal position is relatively better vis-à-vis other states with an average state fiscal deficit of 2.4 per cent, it added.

Given the extraordinary nature of the global economic and health crisis sparked by Covid-19, Acuite Ratings said there is adequate justification to raise debt or finance the deficit directly from RBI at this juncture albeit within specified limits.

In order to ensure that the interest obligations on such additional off-market borrowings is not unsustainable, the feasibility of a special one-time issuance of special zero coupon securities by both the central and the state governments to RBI can be explored.

If the entire proposed stimulus amount of Rs 11.2 lakh crore is raised through this route, there will be a sharp growth in the balance sheet of RBI to the extent of 47 percent as compared to the average growth of 22 percent-24 percent.

Acuité Ratings estimates that an amount of Rs 1.8 lakh crore additional working capital funds will be required by MSMEs and another Rs 1.2 lakh crore by corporates in relatively more vulnerable sectors which aggregate to Rs 3.0 lakh crore. This funding can be provided to eligible companies by banks or NBFCs with a guarantee from the government sponsored fund or SPV.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow