Congress failed as Opposition, disconnected with people: Modi

Mar 21: India’s economy, already in the grip of a slowdown, is in for more pain after Prime Minister Narendra Modi appealed to citizens to stay at and work from home to curb the coronavirus outbreak.

The services sector, which accounts for about 55% of India’s gross domestic product, is poised to be the worst hit after Modi, in a late evening address on Thursday, urged citizens to go on a self-imposed curfew for a day and private companies to allow employees to work from home for longer. In the country’s vast informal sector, social-distancing measures could mean a dent to productivity and consumption because of job or pay losses.

“The impact of a partial lock-down or social distancing will be significant,” said Rahul Bajoria, a senior economist at Barclays Plc in Mumbai. “If there’s a widespread community outbreak, GDP could fall as low as 3.5% in the year starting April 1.”

Shrinking output may limit growth in an economy that’s already set to expand at an 11-year low of 5% in the current year to March 31. Before the virus outbreak, India had forecast growth to recover to 6%-6.5% in the next fiscal year. S&P Global Ratings and Fitch Ratings have already slashed their growth forecast by 50 basis points.

“The current social-distancing measures will severely impact airlines, hotels, malls, multiplexes, restaurants and retailers,” according to analysts at Crisil Ltd., the local unit of S&P Global. “Lower footfalls and occupancies, decline in business volume and sub-optimal operating efficiencies will impact cash flows of companies in these sectors,” wrote the analysts led by Chief Economist Dharmakirti Joshi.

The government will try to announce a relief package for virus-affected sectors as early as possible, Finance Minister Nirmala Sitharaman said Friday.

In a televised address, Modi advised all citizens to stay at home for a day on March 22, as he sought to stem the spread of the coronavirus -- cases of which are relatively low in India at about 200, compared with more than 200,000 infected people globally. His government also barred incoming flights for a week from that day, joining a growing list of countries effectively sealing their borders.

What Bloomberg’s Economists Say

We had only earlier this week lowered our GDP outlook to consider the direct impact of the local outbreak as confirmed virus cases exceeded 100 as of March 15 and the federal and state governments announced social distancing measures that have already started to crimp economic activity. We are now revising down our GDP estimate for 4Q fiscal 2020 to 3.3%, from our 3.5%.

-- Abhishek Gupta, India economist

For more, click here

“Consumption being the biggest component of GDP, a lock-down is bound to have a big impact on the economy,” said Devendra Kumar Pant, chief economist at India Ratings and Research, the local unit of Fitch. “Modeling uncertainty in any system will be very difficult, but one can say the slowdown could deepen or prolong further.”

Work From Home

While companies, including billionaire Mukesh Ambani-controlled Reliance Industries Ltd., are asking employees to work from home, the option isn’t feasible in India’s vast informal sector.

“The option to work remotely simply won’t exist for most,” said Shilan Shah, an economist with Capital Economics Pte. in Singapore.

As many households don’t have savings buffers, the government would probably have to back this up with large-scale cash handouts that reach the poorest, he said.

Work from home is posing implementation challenges for the manufacturing sector where workers are required to be physically present at the production sites. The services sector, such as banking and information technology, also needs employees to be present in offices as confidential data is used, according to industry group Federation of Indian Chambers of Commerce and Industry.

United Nations, Jun 6: The coronavirus disease has not "exploded" in India, but the risk of that happening remains as the country moves towards unlocking its nationwide lockdown that was imposed in March to contain the Covid-19, according to a top WHO expert.

WHO Health Emergencies Programme Executive Director Michael Ryan on Friday said the doubling time of the coronavirus cases in India is about three weeks at this stage.

“So the direction of travel of the epidemic is not exponential but it is still growing,” he said, adding that the impact of the pandemic is different in different parts of India and varies between urban and rural settings.

“In South Asia, not just in India but in Bangladesh and...in Pakistan, other countries in South Asia, with large dense populations, the disease has not exploded. But there is always the risk of that happening,” Ryan said in Geneva.

He stressed that as the disease generates and creates a foothold in communities, it can accelerate at any time as has been seen in a number of settings.

Ryan noted that measures taken in India such as the nationwide lockdown have had an impact in slowing transmission but the risk of an increase in cases looms as the country opens up.

“The measures taken in India certainly had an impact in dampening transmission and as India, as in other large countries, open up and as people begin to move again, there's always a risk of the disease bouncing back up,” he said.

He added that there are specific issues in India regarding the large amount of migration, the dense populations in the urban environment and the fact that many workers have no choice but to go to work every day.

India went past Italy to become the sixth worst-hit nation by the COVID-19 pandemic.

India saw a record single-day jump of 9,887 coronavirus cases and 294 deaths on Saturday, pushing the nationwide infection tally to 2,36,657 and the death toll to 6,642, according to the health ministry.

The lockdown in India, was first clamped on March 25 and spanned for 21 days, while the second phase of the curbs began on April 15 and stretched for 19 days till May 3. The third phase of the lockdown was in effect for 14 days and ended on May 17. The fourth phase ended on May 31.

The country had registered 512 coronavirus infection cases till March 24.

The nation-wide lockdown in containment zones will continue till June 30 in India but extensive relaxations in a phased manner from June 8 are listed in the Union home ministry's fresh guidelines on tackling the Covid-19 pandemic issued last week.

WHO Chief Scientist Soumya Swaminathan said the over 200,000 current coronavirus cases in India, a country of over 1.3 billion people, "look big but for a country of this size, it's still modest.”

She stressed that it is important for India to keep track of the growth rate, the doubling time of the virus and to make sure that that number doesn't get worse.

She said that India is a “heterogeneous and huge country” with very densely populated cities and much lower density in some rural areas and varying health systems in different states and these offer challenges to the control of Covid-19.

Swaminathan added that as the lockdown and restrictions are lifted, it must be ensured that all precautions are taken by people.

“We've been making this point repeatedly that really if you want behaviour change at a large level, people need to understand the rationale for asking them to do certain things (such as) wearing masks,” she said.

In many urban areas in India, it's impossible to maintain physical distancing, she said adding that it then becomes very important for people to wear appropriate face coverings when they are out, in office settings, in public transport and educational institutions.

“As some states are thinking about opening, every institution, organisation, industry and sector needs to think about what are the measures that need to be put in place before you can allow a functioning and it may never be back to normal.”

She said that in many professions working from home can be encouraged but in several jobs, people have to go to work and in such cases measures must be put in place that allow people to protect themselves and others.

“I think communication and behaviour change is a very large part of this whole exercise,” she added.

Financially troubled Yes Bank on Saturday reported a standalone net loss of ₹ 18,560.31 crore for the third quarter of the financial year 2019-20. This is amongst the biggest losses reported by the India Inc.

At present, the private lender is under a moratorium and is controlled by the office of the administrator appointed by the RBI.

The bank had reported a net profit of ₹1,001.85 crore during the corresponding period of the previous financial year.

Besides, the bank's total income fell to Rs 6,268.50 crore from Rs 8,849.81 crore earned during the October-December quarter of the previous fiscal.

On consolidated basis, Yes Bank reported a net loss of ₹18,564.24 crore for the December quarter from a net profit of Rs 1,000.57 crore in the corresponding period of the previous fiscal.

The independent auditor's review report on the consolidated results pointed out that there is a "material uncertainty related to going concern" of the bank.

"The said assumption of going concern is dependent upon the degree of success of the final reconstruction scheme, the quantum of capital infused into the bank and the bank's ability to stabalise its deposit balances post withdrawal of the moratorium by the RBI. Our conclusion is not modified in respect of this matter," the auditor said.

Furthermore, the bank recognised additional loans of ₹ 5,150.2 crore as NPAs and related provisioning requirements of ₹772.5 crore for the quarter ended December 31, 2019.

The bank has recognised an additional provisions of ₹15,422.0 crore in the quarter ended December 31, 2019.

Last week, the RBI placed Yes Bank under moratorium and capped the withdrawal limit at ₹50,000 till next Wednesday.

Additionally, the central bank also superseded Yes Bank's board of directors and appointed former SBI CFO Prashant Kumar as its administrator.

Meanwhile, Kumar has been appointed as the new Chief Executive Officer of the financially troubled lender. He will take over his new responsibilities once the moratorium on the stressed lender is lifted on Wednesday.

Apart from Kumar, Sunil Mehta, former non-executive Chairman of Punjab National Bank, will take over as the non-executive Chairman of Yes Bank.

Other board members include Mahesh Krishnamurthy and Atul Bheda, both as non-executive Directors.

Additionally, six private lenders have joined the SBI to rescue Yes Bank with Federal Bank committing ₹300 crore by subscribing to 30 crore shares of ₹2 each at a premium of ₹8 per equity share.

The six private lenders have now committed an investment of ₹3,700 crore in the cash-strapped private sector bank.

On Friday, ICICI Bank and Housing Development Finance Corporation (HDFC) Ltd had announced that they will be investing ₹1,000 crore each in Yes Bank's equity. Axis Bank and Kotak Mahindra Bank will be investing ₹ 600 crore and ₹500 crore, respectively, while Bandhan Bank will invest ₹300 crore.

The SBI board has already approved up to 49 per cent stake purchase in Yes Bank, as per the RBI's reconstruction scheme for the lender. It had said on Thursday that an investment of ₹7,250 crore would be made in Yes Bank to pick up₹ 725 crore equity shares.