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Indian Economy May Slow Down to 4% in FY21, Says ADB

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 4, 2020 4:29 AM 4 min read
Editorial

India’s economic growth may slow down to 4% in FY21, says ADB. World Bank approves $1bn emergency fund for India. RBI reduces trading hours for money markets, including that of foreign currency. Prices of gold and silver surge. Reliance Industries Ltd looking to raise long-term debt worth ₹25,000cr ($3,293m). Tesla delivers 88,400 electric vehicles, beating expectations. 10m Americans lost their jobs in the last two weeks. 

 

 

INDIA

India’s economic growth may slow down to 4% in FY21, says ADB.

A Dark Space

The Asian Development Bank (ADB) has said that India’s economic growth may further slow down to 4% in FY21, on the back of an already slowing economy getting hit by the coronavirus outbreak. 

 

ADB said measures to contain the virus and a weaker global environment will act as headwinds, offsetting support from corporate and personal income tax cuts as well as financial sector reforms meant to revive credit flows. [Hindu BusinessLine]

 

Banks stare at fresh NPAs despite financial measures by RBI. 

Missing the Point?

The RBI last week announced several measures to safeguard the economy, including liquidity injections. 

 

However, despite these measures the banks might be staring at a fresh bout of non-performing assets (NPAs). 

 

This is because, even if the lockdown is lifted on April 14th, operations of multiple business will not be able to get back to normal as the labour has moved out and the production may not be able to restart immediately.

 

In addition to this, sectors such as aviation, real estate, consumer durables and jewellery may take a long time before demand revives. [Indian Express]

 

MARKETS

RBI reduces trading hours for money markets, including that of foreign currency.

Preparing for the Worst

The Central Bank today cut market trading hours for both bonds and foreign exchange to four hours (10am-2pm), in light of the possible operational and logistical risks arising from the nationwide lockdown due to the COVID-19 outbreak.

 

The shortened hours will be in place from April 7th-17th (both days inclusive) and will apply to products that do not trade on recognised exchanges. [ET Markets]

 

Prices of gold and silver surge. 

All that Glitters

Gold and silver prices today jumped on the back of record high US unemployment claims. A weaker Rupee also helped the rise in gold prices. [Livemint

 

 

COMPANIES

RIL looking to raise long-term debt worth ₹25,000cr ($3,293m). 

Fund Raising

Reliance Industries has said that its Board has approved a proposal to raise ₹25,000cr ($3,293m) through non-convertible debentures (NCDs) in multiple tranches. The company did not disclose the purpose for the fund raising.

 

The announcement comes at a time when the company is expected to reduce its debt to zero by March 2021. [BS]

 

Double Whammy

A report by Motilal Oswal suggests that the telecom major Vodafone Idea may have to increase its average revenue per user (ARPU) by 39% to stay afloat in the backdrop of the AGR dues verdict. 

 

Now as per analysts, if other telecom operators such as Airtel and Reliance Jio were to follow suit, it would result in a substantial hike in their earnings. A deep dive into the matter here. [Business Insider]

 

TECH

Oyo suspends payments to hotels.

The End of Payments

Invoking “force majeure” rights that it says are guarenteed in its agreements, Oyo has told hotel owners it would be suspending payments of the monthly benchmark revenue or any other amounts payable to them. The hotel chain giant said hotel revenues have dwindled of late and are unlikely to improve in the next few months, even as restaurant owners are protesting saying the clause in question was never included in original agreements. [ET Tech]

 

Tesla delivers 88,400 electric vehicles, beating expectations.

Delivery Successful

Tesla beat most analysts’ expectations by delivering 88,400 vehicles in the first quarter. This comes despite a 21% decrease from the previous quarter as the pandemic puts pressures on demand and creates logistical challenges. Tesla shares jumped more than 10.4% in after hours trading. [TechCrunch]

 

Why Apple, SpaceX and NASA don’t allow their employees to use video-calling app Zoom.

Zooming Into Controversy

As millions embrace working from home, video-calling app Zoom has shot up the app charts to become one of the top business apps in the world. However, some companies and organisations like Apple, SpaceX and NASA have explicitly asked their employees to refrain from using the app, citing “significant privacy and security concerns”. [Gadgets Now]

 

Acknowledging the company's shortcomings recently, Zoom CEO Eric S Yuan issued an apology. He said the company will not launch any new features for the next 90 days to focus on privacy and security issues. [Moneycontrol]

 

COVID-19

World Bank approves $1bn emergency fund for India.

Monetary Aid

The World Bank has approved $1.9bn in emergency financial assistance to go to 25 countries to help them tackle the coronavirus pandemic. The largest chunk of this aid - $1bn - will go to India to “support better screening, contact tracing, and laboratory diagnostics; procure personal protective equipment; and set up new isolation wards”. [BS]

 

10m Americans lost their jobs in the last two weeks. 

Red Line, Spiking Up

Last week’s US jobs report showed 3.3m Americans filing for unemployment aid – the highest before that in the country’s history was a distant 695,000. Yesterday, the latest jobs report gave an even worse number – 6.6m. This means that nearly 10m Americans lost their jobs in the last two weeks alone as companies resort to mass layoffs amidst the coronavirus pandemic. [AP]

FIN.

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