QBiz: Forecasters See Bleak Outlook for FY21; Trouble for FMCG Cos

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1. Forecasters Predict a Bleak Outlook for FY21 as Coronavirus Crisis Hits Growth

The Indian economy is set to slow down sharply as companies face the prospect of going weeks or even months with virtually no revenue and consumer demand likely to remain soft even after the coronavirus crisis blows over because of bankruptcies, job losses and the resulting psychological scars.

Forecasters are slashing India’s economic growth estimates for the financial year starting 1 April, with most expecting a severe contraction in June quarter output.

On Monday, S&P Global Ratings cut its estimate for India’s gross domestic product (GDP) growth to 3.5% from its earlier estimate of 5.2%, as it expects the damages to the economy from the covid-19 pandemic for the Asia-Pacific region to be as severe as the one during the Asian financial crisis of 1997-98.

(Source: Mint)

2. Current Fiscal Year Will End as Scheduled on 31 March, No Extension: Govt

The government has not extended the current 2019-20 fiscal year and it will end as scheduled on Tuesday, 31 March, the finance ministry said Monday.

PTI erroneously reported that the new financial year will start from 1 July. The news alert and the related story have been withdrawn.

"There is no extension of the financial year," the finance ministry said.

Officials said a gazette notification issued late on Monday evening pertained to date of applicability of stamp duty which has been changed from 1 April to1 July.

Industry has been demanding extension of fiscal year by three months in view of the economic impact caused by outbreak of COVID-19.

(Source: Business Standard)

3. Implementation of Stamp Act Changes Deferred by 3 Months Till 1 July

The Revenue Department on Monday, 30 March said the provisions of the amended Indian Stamp Act, which was to come into force from 1 April, will now be effective from 1 July.

To rationalise and harmonise the system of levying stamp duty and help curb tax evasion, the government had through Finance Act 2019 amended theIndian Stamp Act, 1899. Certain changes were to be effective from 1 April 2020.

Through a notification the Revenue Department said these amended provisions will come into effect from 1 April 2020.

(Source: Business Standard)

4. FMCG Companies Run Into Logistics Troubles

Fast-moving consumer goods (FMCG) companies on Monday, 30 March said they have received approvals for some of their facilities, and are in the process of resuming production, albeit at very limited capacities, even as the government moved to ease the supply of personal hygiene products.

However, the supply of packaged essential goods could take a few more days to stabilize as the availability of manpower, and goods transport to the market, remain major challenges.

On Sunday, the Union home ministry clarified that groceries, which are considered essential commodities, also include hygiene products

(Source: Mint)

5. Direct Tax Shortfall Likely to Touch a 20-Year High

India’s direct tax collection for the current fiscal year ending 31 March is likely to see a whopping shortfall of about Rs 1.5 trillion compared to the revised estimates (RE). This is set to take place for the first time in at least two decades, derailing the government’s fiscal deficit goals.

According to senior officials, the income tax department estimates total collection to be between Rs 10.5 trillion and Rs 10.7 trillion against the revised target of Rs 11.7 trillion. However, the exact figures may come by 1 April.

Tax officials attributed the acute shortfall to the global pandemic. But even the earlier months of the year had turned out to be bad for direct tax collection.

(Source: Business Standard)

6. Brent Tumbles to Lowest Since 2002

Global oil benchmark Brent crude plunged to its cheapest in almost 18 years on Monday, 30 March and US crude briefly tumbled below $20 per barrel on growing fears the global coronavirus shutdown could last months and demand for fuel will decline further.

With Saudi Arabia and Russia set to flood the market with oil next month, producers and shippers have been scrambling to lock oil up in storage as demand falls.

Brent futures fell $2.17, or 8.7%, to settle at $22.76 a barrel, their lowest close since November 2002, while US West Texas Intermediate (WTI) crude fell $1.42, or 6.6%, to $20.09, the lowest close since February 2002.

(Source: Business Standard)

7. TCS Partners With CSIR to Find Cure for COVID-19

The life sciences division of Tata Consultancy Services (TCS) Ltd on Monday said that it is collaborating with the Council of Scientific and Industrial Research (CSIR) to design new chemical entities using artificial intelligence (AI) for treating the novel ‘Severe acute respiratory syndrome Coronavirus 2’ (SARS-CoV-2), the source of covid-19, which has severely affected the people and economy across the globe.

“The TCS life sciences research area is engaged in cutting-edge application oriented research in synthetic biology. De-novo drug candidate design is the first step in a long sequence of steps to find a cure to Covid-19. The collaboration between TCS and CSIR is a standing example of public private partnership in tackling a problem of national importance," said Ananth Krishnan, chief technology officer, TCS.

(Source: Mint)

8. RBI Notifies Special Series of G-Secs Under ‘Fully Accessible Route’

The Reserve Bank of India (RBI) on Monday, 30 March said it will issue certain series of government securities (G-secs) under the “fully accessible route”. These special securities will attract no foreign portfolio investor (FPI) limits until maturity and are the first step towards Indian G-Secs being listed on global bond indices as the Centre looks to attract access cheap liquidity in the overseas markets.

The RBI also raised upwards the FPI limits for corporate bonds to 15 per cent, from 9 per cent, for 2020-21. However, the overall FPI limit in G-secs of 6 per cent has not been changed as yet.

“The revised limits for FPI investment in G-Secs and state development loans for 2020-21 (FY21) will be advised separately,” the RBI said. “The RBI shall notify the G-secs that shall be eligible for investment under the fully accessible route for non-resident investors. These securities will continue to be eligible for investment by residents,” the central bank said in a circular.

(Source: Business Standard)

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