At 4.7%, Q3 GDP growth is marginally better than the previous quarter's. Banks’ credit growth slips to 6.3%. Trump signs $3bn defence deal and three other agreements on safety of medical devices, energy cooperation and mental health upon India visit, no major trade deal announced. Disney CEO Bob Iger announces that he is stepping down effective immediately. PayPal to launch UPI payments service in India. BharatPe raises $75bn in Series C funding round. Cash in circulation approaching pre-demonetisation levels but digital payments rising, says RBI. Government notifies 100% FDI for insurance intermediaries. Vodafone Idea asks for GST refund, reduction in license fee and spectrum usage charges. Government considering allowing unlisted Indian firms to list abroad. US firm Hughes fears closure of its India unit over unpaid dues. China's factory output plunges to all-time low. Global markets touched record lows in the last few days.
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Grim Domestic Product
India's GDP grew by 4.7% in the December quarter, as per official data released by the Central Statistics Office (CSO) today. This is marginally better than the 4.5% growth in Q2, which was a six-year low.
4.7% is still low on a YoY basis - in Q3 last year, the economy grew by 6.6%. India’s GDP growth in FY19 had stood at 6.8%. [Livemint]
The GDP growth for the December quarter is in line with the estimates given by economists polled by Reuters recently.
India's economic growth is expected to pick up some steam in the coming fiscal. However, this trajectory could be derailed by macroeconomic factors and the coronavirus outbreak in China.
On the domestic front, there is some good news. The eight core industries have recorded better growth in January 2020 at 2.2%. And the infrastructure sectors had expanded by 1.5% in January 2019. The production of coal, refinery products and electricity grew by 8%, 1.9% and 2.8% respectively. [Hindu BusinessLine]
Good Night, Indiamerica
Donald Trump's first visit to India as US President has ended...without any major announcements. Besides a $3bn defence deal, no other major agreements were signed. [Hindu BusinessLine]
The visit began on Monday when Trump and Prime Minister Narendra Modi held a rally in Ahmedabad's Motera stadium. Later, the US delegation left for Agra to visit the Taj Mahal and the next day talks were held in New Delhi.
Hopes for the long-awaited trade deal between the two countries were quashed even before the visit, when Trump hinted that the deal was still being negotiated. During his visit, he added that the deal might not be signed before the US Presidential election in November. [Business Today]
Want to read up on the history of India-US ties? It's come a long way from Cold War-era distrust to today's "natural allies" claims. Read this article for a deep-dive.
You Have My Word
The $3bn defence deal signed with India’s military to purchase Apache and MH-60 Romeo helicopters was perhaps the biggest agreement the two countries signed.
Both parties also signed three other agreements, including those on the safety of medical devices, energy cooperation and mental health.
Trump also seemingly tried to nudge India to keep Chinese 5G network providers away. He said 5G should “be a tool for freedom, progress and prosperity” and “not a conduit for suppression and censorship”. [BS]
The Department for Promotion of Industry and Internal Trade (DPIIT) has notified the Government's decision to allow 100% foreign direct investment (FDI) in insurance intermediaries under the automatic approval route.
Intermediary services include insurance brokers, reinsurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors.
Up until now, FDI in the insurance sector was capped at 49% under the automatic route. [CNBC TV18]
According to a report in Business Standard, the Government could amend the Companies Act to allow unlisted Indian companies to list abroad. The Bill to push this particular amendment is expected to be tabled in the ongoing Parliament session. [BS]
According to the latest RBI data, banks’ credit growth slipped to 6.3% on a YoY basis to ?99.68Lcr ($1.39trn) till the fortnight ended February 14th.
In the similar fortnight last year, the advances stood at ?93.78Lcr ($1.3trn). In the previous fortnight ended January 31st, bank credit had grown by 7.1% on an annual basis to ?100.23Lcr ($1.39trn).
Recently, RBI Governor Shaktikanta Das had highlighted that domestic credit growth continues to be a challenge for the banking sector. [Livemint]
Cash is King
India continues to have a strong bias for cash payments, the RBI has noted in a report. While demonetisation in 2016 brought down the cash in circulation to 8.7% in 2016-17, in the next two years this number increased to 10.7% and 11.2%. The pre-demonetisation level was 12.1%.
The Central Bank, however, noted a discernible shift towards digital payments. The report said that India, “like in many parts of the world, cash is the well-established and widely used payment instrument. It is, however, reassuring that non-cash payments, especially those using electronic or digital modes, are rapidly increasing.” [BS]
New Delhi-based fintech platform BharatPe has raised $75m in a Series-C financing round led by New York-headquartered hedge fund Coatue Management and existing investor Ribbit Capital, valuing the company at $400m.
The round also saw participation from VC firm Amplo and existing investors Steadview Capital and Insight Partners.
Proceeds from the round would be used to facilitate working capital for its merchant partners. [TechCrunch]
Welcome to India
Global remittance services provider PayPal is now planning to enter UPI-based payments services in India - after more than two years of launching its operations in the country. PayPal currently offers Indians the facility of transferring money to international bank accounts and paying at select merchant sites within the country.
PayPal is reportedly in the last leg to roll out a peer-to-peer (P2P) digital payments service and it may go live in the coming months.
The move will pit PayPal against the likes of Paytm, Google Pay, PhonePe and WhatsApp Pay (which recently obtained the NPCI's approval for a phased roll-out). [BS]
The Gilded Age
The Hurun Global List is out and Amazon CEO Jeff Bezos has topped the list once again - for the third year in a row.
French billionaire and business magnate Bernard Arnault ranked second, with an estimated worth of $107bn, up $ 21bn from last year.
Reliance Industries Chairman Mukesh Ambani was the only Indian to make it to the top 10 rankings this year with a net worth of $67bn.
As per the report, the world added 480 billionaires in 2019, more than one a day, while China added more than three a week and India added more than three billionaires a month. [Business Today]
No Means No
Tata Group has told the government that its share in the AGR dues is ?2,197cr ($305m) only and not the ?13,823cr ($1,921m) that has been demanded by the Department of Telecommunications (DoT).
Sources said that top Tata executives have made their position clear and said that they “do not have to pay anything more towards AGR based on self-assessed calculations". [Firstpost]
Take My Pain Away
As per sources, ailing under the burden of AGR dues, Vodafone Idea has asked the Department of Telecommunications (DoT) for settlement of Goods and Services Tax refund to the tune of ?8,000cr ($1,113m).
It has also requested the DoT for a three year moratorium period to settle its dues and requested the Government to reduce the license fee to 3% from the current 8%. The telecommunications giant has also sought the reduction of spectrum usage charges to 1% from the current 3%. [BS]
End of the Road?
According to a Reuters report, US satellite broadband provider Hughes Network Systems says it could shut down its India operations due to unpaid dues it owes the Government. The company reportedly sent a letter to the Telecom Minister saying it faces bankruptcy and it can’t pay the $84m it owes.
The closure of the company could disrupt connectivity at more than 70,000 banking locations and many critical satellite networks in the Armed Forces. [Reuters]
Iger Iger Burning Bright
The Walt Disney Company has announced that Bob Iger will be stepping down as its CEO effective immediately and Bob Chapek, Chairman of Disney Parks, Experiences and Products, will succeed him. Iger will however stay on as Executive Chairman through the end of 2021.
Iger's departure comes at a unique point in Disney's history. His aggressive expansionism since he took the helm of the media giant in 2005 saw it push ambitiously into movies, theme parks and other entertainment verticals. This culminated last year in the $71.3bn acquisition of 21st Century Fox and the launch of streaming platform Disney+, which has already drawn almost 30m subscribers.
At the same time, even as Disney earnings and numbers have enjoyed ecstatic highs, Disney faces park shutdowns due to the coronavirus outbreak. And Iger is only 14 months into a 36-month contract expansion, which makes the timing unusual. [TechCrunch]
To read an overview of Bob Iger's achievements during his tenure as Disney's CEO, read this article.
Reeling from the effects of the coronavirus outbreak, factory output in China contracted at the fastest pace on record. China’s official Purchasing Managers’ Index (PMI) fell to a record low of 35.7 in February from 50.0 in January, the National Bureau of Statistics said on Saturday. This is well below the 50-point mark that separates monthly growth from contraction.
Analysts polled by Reuters expected the February PMI to come in at 46.0.
This number gives the first clear picture of how adversely the coronavirus outbreak has affected the Chinese economy, the world's second-largest. [Bloomberg ]
This week, global markets were in turmoil.
Friday was a bloodbath for Indian markets. Sensex and Nifty fell by 3.64% and 3.71% respectively. All sectoral indices on the Nifty ended deep in the red. On a weekly basis, Sensex slipped around 7% while Nifty declined 7.2%. This was the worst weekly fall for the indices in a decade.
The Dow Jones Industrial Average and S&P 500 each dropped 12% and 11% for the week, respectively, marking their worst weekly performance since the 2008 financial crisis. [CNBC]
Stock indices in Europe, Japan, South Korea and Australia plummeted to record their worst levels in years. The declines put those global benchmarks into corrections, or a decline of at least 10% from a recent peak. [WSJ ]
Why the Fall?
Why have domestic and international indices shed so much in numbers in the last few days? The main reason is the coronavirus outbreak in China, which has now spread to all six habitable continents. Even though China has seen a fall in the number of new cases, other countries are seeing a rapid growth in infections as well as deaths. Other factors include US indices seeing a record fall, expectations that GDP growth could remain flat in Q3 (it increased marginally from 4.5% in Q2 to 4.7% in Q3) and foreign portfolio investors offloading shares worth ?10,000cr ($1.39bn) in four days. [ET Markets]
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