Current Affairs April 2020 - Economic

1 - India’s foreign exchange reserves rise by 5.65 billion

India’s foreign exchange reserves have surged by $5.65 billion to $475.56 billion in the week ended on 27^th of March. Foreign currency assets increased by $2.56 billion to $439.66 billion. In the previous week, the reserves had declined by $11.98 billion to $469.91 billion as the RBI was supplying dollars to contain fall in the rupee.

Gold reserves also increased by $3.03 billion to $30.89 billion. India's special drawing rights with the International Monetary Fund went up by $14 million to $1.42 billion, while the country's reserve position also increased by $44 million to $3.58 billion.

2 - CCI approved acquisition of 18.951% of the Religare Health Insurance by Trishikhar Ventures

The Competition Commission of India has approved acquisition of 18.95% stake in Religare Health Insurance Company by Trishikhar Ventures under the green channel route. Trishikhar is a part of the Kedaara Group which invests in a variety of companies through acquisitions and corporate restructurings.

Religare provides general insurance products relating to health segment, which comprises of health insurance, personal accident insurance and travel insurance. The green channel concept allows automatic system for speedy approval for certain categories of merger and acquisitions.

3 - IMF declared World in “Recession” state at present

International Monetary Fund Chief Kristalina Georgieva announced that the World has clearly entered a recession due to the coronavirus pandemic. Coronavirus disease 2019 (COVID-19) is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The disease spread globally, resulting in the 2019–20 coronavirus pandemic.

IMF discussed the unprecedented challenge posed to the world by COVID-19. It declared that recession is worse than in 2009 and a sizeable rebound is expected in 2021 only if world is able to contain the virus spread and prevent liquidity problems from becoming a solvency issue.

4 - Tata Power joint venture started Shuakhevi HPP in Georgia

Adjaristsqali Georgia LLC, a Joint Venture between Tata Power, Norway’s Clean Energy Invest (CEI), and International Financial Corporation (IFC) announced the start of commercial operation of the 178 MW Shuakhevi Hydro Power Project (HPP) located in southwest Georgia. Further, AGL will be soon commissioning 9 MW Skhalta Hydro Power Project which is also a component of the overall Shuakhevi Project scheme.

The project will generate around 450 GW of clean energy to reduce the emission of greenhouse gases by more than 200,000 tonnes a year.

5 - World Bank report predicted 11 million to enter poverty in Pacific and East Asia due to Covid19

According to a World Bank report, East Asia and the Pacific could see up to 11 million people driven into poverty, with low wage and informal sector workers becoming the most vulnerable due to the economic fallout in the wake of the coronavirus pandemic.

The report estimated that under the baseline growth scenario, 24 million fewer people will escape poverty across the region in 2020 than would have in the absence of the pandemic. If the economic situation were to deteriorate, then poverty is estimated to increase by about 11 million people.

6 - “Asian Development Outlook 2020” released by Asian Development Bank

The Asian Development Bank has released its annual economic publication “Asian Development Outlook 2020”.

Highlights

-Projected India’s growth to slow down to 4% in 2020-2021 and 6.2% for 2020-21,

-Downside risks to the outlook are severe due to COVID-19.

-Growth in the major industrial economies is expected to contract by 0.3% in 2020 before recovering to 1.8% in 2021.

-South Asia’s growth rate is forecast to slow from 5.1% in fiscal 2019 to 4.1% in 2020-21.

-Regional inflation is projected to increase to 3.2% in 2020 and to 2.3% in 2021.

7 - CCI approved Hitachi's proposed acquisition of 80.1% in power grid business of ABB Limited

The Competition Commission of India (CCI) approved proposed acquisition by Hitachi in the power grid business of ABB Limited. The proposed combination envisages acquisition of 80.1% share capital of ABB Management Holding AG (ABB Management) by Hitachi Limited (Hitachi) from ABB Limited (ABB).

Hitachi, headquartered in Japan, is the parent company of the Hitachi group of companies. It is active in a variety of business segments including IT Solution, Energy Solution, Industry Solution, Mobility Solution, and Smart Life Solution. ABB involves development, engineering, manufacturing and sale of products, systems and projects in the power grids sector.

8 - CCI approved acquisition of GMR Kamalanga Energy Limited by JSW Energy Limited

The Competition Commission of India (CCI) approved the acquisition of 100% shareholding by JSW Energy Limited of GMR Kamalanga Energy Limited.

JSW Energy is engaged in power generation, power transmission, power trading, coal mining and power equipment manufacturing. Presently, it has a power generation capacity of 4,541 MW comprising of portfolio of thermal (3,140 MW), hydro (1,391 MW) and solar (10 MW). GMR Kamalanga is engaged in generation of power through its coal based thermal power plant at Kamalanga village, Dhenkanal district, Odisha.

9 - Quick Estimates of Index of Industrial Production, February 2020

The Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of February 2020 stands at 133.3, which is 4.5% higher as compared to the level in the month of February 2019. The cumulative growth for the period April-February 2019-20 over the corresponding period of the previous year stands at 0.9%.

The IIP for the Mining, Manufacturing and Electricity sectors for the month stand at 123.7, 133.5 and 149.1 respectively with the corresponding growth rates of 10%, 3.2% and 8.1% as compared to February 2019. The cumulative growth in these three sectors during April-February 2019-20 over the corresponding period of 2018-19 has been 1.9 percent, 0.6 percent and 1.5 percent respectively.

10 - CPI inflation likely to ease from 4.8% in Q1 to 4.4% in Q2

According to the RBI, Consumer price index based inflation is tentatively projected to ease from 4.8% in Q1:2020-21 to 4.4% in Q2, 2.7% in Q3 and 2.4% in Q4. RBI had injected 50 billion USD of liquidity to the banks to support the economy.

Currently, RBI is following target inflation rate in the country. The inflation target has been set at 4% with +2% and -2% as target bands on either sides. This means that RBI will try to maintain the inflation rate between 2% and 6%. The Inflation Targeting was adopted by GoI in 2015.

11 - UN projected India's GDP at 4.8% in FY21

According to a UN report titled 'Economic and Social Survey of Asia and the Pacific (ESCAP) 2020: Towards sustainable economies', the COVID-19 pandemic is expected to impact the global economy including that of India. The report has projected India's GDP to slow down to 4.8%.

According to the report, COVID-19 is having far-reaching economic and social consequences in the Asia and Pacific region, with strong cross-border spillover effects through trade, tourism and financial linkages. Economic growth for the country could stand at 5.1 per cent for fiscal year 2021-22, the report said.

12 - India's unemployment rate increased to 23% due to Covid-19 lockdown

According to a survey conducted by the CMIE Center for Monitoring Indian Economy Pvt. Ltd. India’s unemployment rate might have gone to more than 20% as the economy lost jobs after a nationwide lockdown due to Covid-19 outbreak. Based on a sample size of 9,429 observations, the unemployment rate was 23.4% for the week ended April 5, 2020.

For the full month of March, CMIE estimated the jobless rate to be 8.7% compared with 7.8% in February 2020.

13 - Retail inflation eased to 5.91% in March 2020

Retail inflation slowed to 5.91% in March over February, mainly due to easing food prices. The retail inflation based on Consumer Price Index (CPI) was 6.58% in February 2020 and 2.86% in March 2019.

The inflation in the food basket was 8.76% in March 2020, lower from 10.81% in February 2020. The Reserve Bank of India mainly factors in the retail inflation while deciding its bi-monthly monetary policy. The government has mandated the central bank to keep inflation at around 4%.

14 - UN ESCAP projected India’s GDP for FY21 at 4.8%

The UN ‘Economic and Social Survey of Asia and the Pacific (ESCAP) 2020 predicted India’s GDP for FY21 at 4.8%. The title of the UN report was ‘Economic and Social Survey of Asia and the Pacific (ESCAP) 2020: Towards sustainable economies’.

Highlights

-Indian Economic growth predicted at 5.1% for fiscal year 2021-22.

-Exports to be affected by global trade tensions and extreme weather events.

-COVID-19 increased the downside risks to the Asia and Pacific region's near-term economic outlook.

-Global economy is forecast to slow to 2.0% in 2020.

15 - Facebook bought 9.9% stake in Reliance Jio

Facebook has bought a 9.9% stake in Reliance Jio for $5.7 billion (Rs 43,574 crore). Jio is the telecom unit of Reliance Industries Ltd (RIL). The deal values Jio at Rs 4.62 lakh crore ($65.95 billion).

It is the largest FDI in the technology sector in India and values Jio Platforms amongst the top 5 listed companies in India by market capitalization. The deal is also expected to accelerate Reliance Retail’s new commerce business on the JioMart platform.

16 - Fitch Ratings slashed India's economic growth projections to 0.8% in current fiscal

Fitch Ratings, in its Global Economic Outlook, has slashed India's Gross Domestic Product (GDP) growth to 0.8% for the year April 2020 to March 2021 as compared to an estimated 4.9% growth in the previous fiscal. The report has however projected the economy to rebound to 6.7% in 2021-22.

Fitch Ratings said that World GDP is now expected to fall by 3.9% in 2020, a recession twice as severe as the 2009 recession. The slump in growth was mainly due to a projected fall in consumer spending and contraction in fixed investment.

17 - Remittances to India likely to drop by 23% this year: World Bank

According to a World Bank report on the impact of the COVID-19 on migration and remittances, remittances to India are likely to drop by 23% from 83 billion US Dollars in 2019 to 64 billion US Dollars in 2020. The Corona virus pandemic has resulted in a global recession.

The report also projected remittances to plunge by about 20% globally in 2020. Total remittances are expected to fall to 445 billion dollar from 554 billion dollar in 2019.

18 - IMF predicts Asia to witness 0% growth in 2020

The International Monetary Fund in a blog titled 'COVID-19 Pandemic and the Asia-Pacific Region: Lowest Growth Since the 1960s', has projected Asia's growth at 0% in 2020 due to COVID-19 pandemic. This would be the worst growth performance in almost 60 years, including during the Global Financial Crisis, when the growth stood at 4.7%; and the Asian Financial Crisis when it stood at 1.3%.

IMF projected a GDP growth of 1.9% for India in 2020 while China's growth is projected to decline from 6.1% in 2019 to 1.2% in 2020.

19 - Airtel and Nokia signed multi-year deal to boost network capacity

Nokia and Bharti Airtel (“Airtel”) announced a multi-year agreement to deploy Nokia’s SRAN solution across 9 circles in India, helping Airtel to enhance the network capacity of its networks, in particular 4G, and improve customer experience.

The rollout, which will also lay the foundation for providing 5G connectivity in the future, will see approximately 300,000 radio units deployed across several spectrum bands, including 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz, and is expected to be completed by 2022.

20 - INDIA’S FOREIGN TRADE: March 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 292.91 billion down 1.50% while total imports was USD 436.03 billion down 7.30%. The trade deficit was USD 143.12 billion.
Services: Total exports was USD 198.73 billion up 7.98% while total imports were USD 123.42 billion up by 10.41%. The net of services was USD 75.31 billion.
Overall Trade: Total exports was USD 491.64 billion up by 2.13% while total imports was USD 559.45 billion down 3.90%. The trade deficit was USD 67.81 billion.

21 - Wholesale Price Inflation stands at 1% in March 2020

India's Inflation as measured by the Wholesale Price Index fell to 1% in March from 2.26% in February. It is the lowest since November 2019. The official Wholesale Price Index for 'All Commodities' (Base: 2011-12=100) for the month of March, 2020 declined by 0.90% to 121.1 (provisional) from 122.2 (provisional) for the previous month.

Also, retail inflation eased to 5.9% in March, falling below the Monetary Policy Committee’s upper target of 6% for the first time since November 2019.

22 - TVS acquired Britain's most iconic sporting motorcycle brand 'Norton'

TVS Motor Company has acquired the most iconic sporting motorcycle of the United Kingdom, ‘Norton’, in an all-cash deal, for £16 million (about ₹153 crore). TVS acquired certain assets of Norton Motorcycles (UK) (in administration), through one of its overseas arms.

Founded by James Lansdowne Norton, in Birmingham, in 1898, Norton Motorcycles is among the most popular British motorcycle brands of all time. Norton bikes are known for their classic models and eclectic range of luxury motorcycles.

23 - Electric vehicle sales up by 20% in FY20

According to the Society of Manufacturers of Electric Vehicles (SMEV), the electric vehicle sales in the country increased by 20%. The EV industry sold 156,000 electric vehicles in FY2019-20 from an off-take of 130,000 units in FY2018-19. Out of the 156,000 units, 152,000 were two-wheelers, 3,400 cars and 600 buses.

The sales figure is expected to surge to 2 million units in 2025 and 21 million units in 2030 with the cuts in production costs.

24 - India's foreign exchange reserves surge to $479.57 Billion

According to the latest data from the Reserve Bank of India, India's foreign exchange reserves increased by $3.09 billion to $479.57 billion in the week ended April 17. The reserves had increased by $1.81 billion to $476.47 billion in the previous week.

While the foreign currency assets (FCA), a major component of the overall reserves, rose $1.55 billion to $441.88 billion, the gold reserves increased $1.54 billion to $32.68 billion in the reporting week. Special drawing rights with the International Monetary Fund (IMF) were up by $3 million to $1.43 billion.

25 - CCI approved acquisition of majority shareholding in B.M.M Ispat Limited by JSW Projects Limited

The Competition Commission of India (CCI) approved proposed combination relating to acquisition of majority shareholding in B.M.M Ispat Limited (BMM) by JSW Projects Limited (JPL).

JPL, a part of the JSW group, is engaged in the business of manufacture of direct reduce iron/ sponge iron, coke dry quenching and captive power generation which are ultimately used in the manufacture of steel and steel products on a job work basis for JSW Steel Limited. BMM, incorporated India, is engaged in the manufacture and sale of steel products including iron ore pellets, sponge iron, TMT bars and semis.

26 - Chemicals, Petrochemicals industry becomes top exporting sector for first time

India's chemical exports rose by 7% to 2.68 lakh crore rupees during April-January period of the last fiscal, and became the top exporting sector in the country for the first time.

During April 2019-January 2020, the export of chemicals grew by 7.43% over the corresponding period of the previous fiscal. Total export of chemicals during this period reached 2.68 lakh crore rupees. This constitutes 14.35% of the total exports.

27 - India Ratings cuts FY21 GDP growth further to 1.9%

India Ratings and Research (Ind-Ra) has revised its FY21 gross domestic product (GDP) growth of India further down to 1.9% from its forecast of 3.6% published earlier. This will be the lowest GDP growth in the last 29 years (FY92: GDP grew 1.1%) and is based on the assumption that the partial lockdown will continue till mid-May 2020.

Ind-Ra’s estimate suggests that GDP may come back to the 4QFY20 level only by 3QFY21. However, if the lockdown continues beyond mid May 2020 and a gradual recovery takes root only from end-June 2020, GDP growth may slip further to negative 2.1%, lowest in the last 41 years and only the sixth instance of contraction since FY52.