QBiz: IMF Cuts India’s FY20 GDP Forecast; Exports Decline 6.5%
Top business stories of the day.
1. Cut Rates, Reform More to Revive Economy: IMF’s Advice to India
India should opt for further monetary policy easing and broad-based structural reforms to reverse a cyclical demand slowdown, the International Monetary Fund (IMF) said on Tuesday while slashing its growth projection for the country to 6.1% for the current fiscal from its July forecast of 7%.
“In India, growth softened in 2019 as corporate and environmental regulatory uncertainty, together with concerns about the health of the non-bank financial sector, weighed on demand," IMF said in its biannual World Economic Outlook (WEO).
IMF chief economist Gita Gopinath told reporters that the government has taken appropriate steps but it needs to do a lot more, including cleaning up the balance sheets of commercial banks to ward off the negative impact on growth from financial vulnerabilities.
2. September Trade Deficit at Seven-Month Low as Exports Decline 6.5%
India’s merchandise exports as well as imports contracted the most in more than three years in September, reflecting a slump in global demand as well as in India.
Merchandise exports shrank 6.57% to $26 billion, while imports dropped 13.9% to $36.9 billion, narrowing India’s trade deficit to a seven-month low of $10.9 billion, showed data released by the commerce department on Tuesday.
Out of the 30 major items in India’s export and import baskets, 22 export items and 25 that are imported saw a contraction.
3. Google Pixel 4, Pixel 4 Xl Will Not Be Sold in India
The Google Pixel 4 smartphone, launched at an event in the US today, is not coming to India. The company confirmed the same in a statement to the press on Tuesday, 15 October.
“Google has a wide range of products that we make available in different regions around the world. We determine availability based on a variety of factors, including local trends, and product features. We decided not to make Pixel 4 available in India. We remain committed to our current Pixel phones and look forward to bringing future Pixel devices to India," Google said in its statement.
4. RBI Governor Assesses Liquidity Situation, Calls for Quicker Transmission
Heads of state-run banks met Reserve Bank of India (RBI) governor Shaktikanta Das on Tuesday over the state of liquidity in the banking system, particularly with regard to non-banking financial companies (NBFCs), the chief of a state-owned bank said.
According to the banker, who spoke on condition of anonymity, the conversation with Das was around the five broad themes of liquidity, credit offtake, small and medium businesses, stressed loans and transmission of rates. “This was largely a follow-up of Monday’s meeting with Finance Minister Nirmala Sitharaman," he said. “It was a review meeting in which the governor wanted to assess the current situation in these five segments."
5. Tariff at Current Level Not Sustainable, Must Go Up, Says Airtel CEO
Making a pitch for higher tariffs, Bharti Airtel Chief Executive Officer Gopal Vittal on Tuesday said that the rates at the current level were “unsustainable” and should go up. Speaking on the interconnect usage charges (IUC) he said that the industry is awaiting the outcome on the consultation paper floated by the Telecom Regulatory Authority of India (TRAI) on the subject.
“Over the last 20 years IUC has been absorbed in the cost of business and tariff is what it is and we feel that the tariff is unsustainable and should go up,” Vittal said on the sidelines of India Mobile Congress.
Vittal refused to comment on whether the company was planning to increase tariffs, “I will not speculate on our future plans,” he said.
6. Air India Stake Sale: Buyer to Get Only Rs 10,000 Crore of Airline Debt
The government is likely to transfer about Rs 20,000 crore of additional debt from Air India’s books in order to make it lucrative for buyers. The move will leave Air India with about Rs 10,000 crore of debt.
This is a third of Rs 33,992 crore debt that was to be passed on to the new owner during last year’s failed disinvestment process. Potential bidders had expressed inability to take over the debt-laden airline.
As of 31 March, Air India had a debt of Rs 58,351 crore.
While the Air India Alternative Special Mechanism (AIASM) headed by Home Minister Amit Shah is yet to take call on it, it has been proposed to the ministerial group that the move is necessary to make it attractive for buyers.
7. PMC Bank Case: Praful Patel Used Wadhawans' Aircraft Eight Times, Says ED
Trouble is mounting for former Union minister Praful Patel, with the Enforcement Directorate (ED) finding his name on the passenger manifest of an aircraft that belongs to the Wadhawans, HDIL promoters.
The documents examined by the ED, which is probing the Rs 4,355-crore Punjab & Maharashtra Co-operative (PMC) Bank loan case, show that Patel used the aircraft multiple times in 2012 when he was civil aviation minister.
The probe agency, in this case, has seized two aircraft — Bombardier Challenger-300 VT and Falcon 2000 VT, owned by Privilege Airways. Rakesh Wadhawan and son Sarang Wadhawan of Housing Development & Infrastructure (HDIL) are directors of Privilege Airways.
8. Digital Tech to Contribute 20 PC in India's USD 5 Trillion Economy Target by 2025: EY
Digital technologies are expected to generate USD 1 trillion in economic value by 2025, accounting for 20 percent of India's USD 5 trillion economy ambition, consultancy firm EY said.
"Digital economy has the potential to sustain 60-65 million employment opportunities for women, differently-abled people, skilled and semi-skilled workers across digitally enabled businesses in urban, semi-urban, and rural areas. This transformation is expected to create a thriving market for digital services, content, solutions, platforms and applications," EY said in a statement that coincided with the ongoing India Mobile Congress 2019.
Digital technologies have the potential to create USD 1 trillion economic value, contributing 20 percent to the country's nominal GDP, the statement added.
9. India Asks OPEC Not to Cut Oil Production; Seeks Better Commercial Terms
Battling a slowing economy, India on Tuesday implored oil cartel OPEC to not undertake deeper crude oil production cuts as it renewed its pitch for reasonable pricing of oil and stability in supplies. In a meeting with OPEC Secretary-General Mohammad Sanusi Barkindo, Oil Minister Dharmendra Pradhan also pitched for better commercial terms for crude oil imports including reduction in official selling price, extension of credit period from existing 30 days to 90 days from bill of lading, freight discount and open credit based on creditworthiness of Indian state-run refineries.
“We discussed the present oil availability scenario,” he told reporters here. “Organization of the Petroleum Exporting Countries (OPEC) is now taking cognisance of consumer interest in deciding on its policies.”
(Source: The Financial Express)
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