The First Forum is an initiative which focuses on covering the latest happenings going around in the world in a brief format. This is in lieu with the importance of catching up with these events in this fast changing world.
In this Seventeenth Edition of The First Forum we would be covering the following:
1. Business
2. Economics
3. Finance

(By Shruti Jha, Nikunj Gulati, Kanika)

Business

India’s fuel demand drops 11% in March as coronavirus hits aviation, transport
India’s fuel demand has dropped by a steep 10-11 percent in the first two weeks of March as the outbreak of coronavirus (Covid-19) led to the cancellation of flights and a reduction in industrial activity. Restrictions and travel advisories, as well as a slowdown in industrial activity, has led to the fall in demand. Read MoreWhile diesel sales have dropped by over 13 percent, jet fuel sales have slumped by over 10 percent. Petrol sales have seen a decline of over 2 percent. The aviation industry accounts for 6-8 percent of total crude consumption. As more countries are implementing bans over Covid-19 in both international and domestic travel, the impact is likely to worsen. And if the pandemic is not contained over the next two-three months, the consequences will be severe. Hence, the consumption growth of petroleum products is expected to be low at 2-3 percent in fiscal 2021.

Corona hits Disney+, streaming service launch delayed in India
The Walt Disney Co. said on Friday that it will put on hold the launch of its streaming service Disney+ in India over the outbreak of the coronavirus. The official rollout of the service was slated to happen on March 29, coinciding with the start of the Indian Premier League (IPL). Read MoreDisney-owned Hotstar holds the streaming rights for the two-month-long league, which is a big draw with Indian audiences. In 2019, some 18.6 million users concurrently tuned into Hotstar’s website and mobile app to watch the final of the 12th edition of the IPL, highlighting the tournament’s importance to the broadcaster. Disney-owned Hotstar, which competes with Amazon Prime Video, Netflix, and a raft of other platforms, outdid the previous best of 10.3 million concurrent views for a live event, that was set in the previous edition of the IPL. The Indian market could be a bellwether for the company’s fortunes in emerging markets. Since its rollout on November 12, 2019, Disney has garnered 28 million paying subscribers in nearly a dozen countries.

Apollo Tyres leadership team takes pay cut due to coronavirus
Gurugram-based Apollo Tyres said its leadership team has announced a voluntary reduction in pay due to the impact of COVID-19 on the automotive industry. Chairman and Managing Director, Onkar S Kanwar and the Vice Chairman & MD, Neeraj Kanwar announced a 25% reduction in their salary. Read MoreFurthermore, the senior management has also taken a voluntary reduction in their salary by 15% in a show of solidarity due to the rapidly deteriorating market conditions caused by the COVID-19 pandemic. This is an incredibly difficult time for our employees and their families. We are in unchartered waters but as ‘One Family’ we will work together and make the necessary sacrifices to steer Apollo Tyres in the right direction, to overcome this period says the board in its press release building trust among the employees and public at the right time indeed.

Bajaj Auto board approves reappointment of Rajiv Bajaj as MD, CEO
Bajaj Auto said its board has approved the re-appointment of Rajiv Bajaj as Managing Director and CEO of the company. The approval was given in a board meeting held on Tuesday. “Rajiv Bajaj, Managing Director and CEO of the company, whose five-year term expires on March 31, 2020, has been re-appointed for a further period of five years with effect from April 1, 2020,” the company said in a filing to BSE. Read MoreHowever, the re-appointment of the subject to the approval of the shareholders of the company at the ensuing annual general meeting, it said. The board also approved the appointment of Gita Piramal as an independent director of the company, whose five-year term as independent director expires on March 31, 2020, as per the filing. The shares of Bajaj Auto were trading at Rs 2,220.25 apiece on BSE, down 2.37 percent from the previous close.

Prices of alcohols used in making hand sanitizers capped
The government on Thursday said prices of alcohols used in manufacturing hand sanitizers have been capped under the Essential Commodities Act on account of a coronavirus outbreak. The decision would empower the central government and states/union territories to regulate prices, production, sale, distribution, transport, movement, storage, information of alcohols used in manufacturing hand sanitizers, used as a preventive measure to avoid infection from COVID-19, Ministry of Consumer Affairs said in a statement. Read MoreIt will help manufacturers of hand sanitizers to keep prices of their product at a reasonable level and within the reach of the common people. In view the ongoing outbreak of COVID-19 and concern of the logistics for COVID 19 management particularly during the last couple of weeks and that prices of the alcohol used in manufacturing the hand sanitizers have been exorbitantly increased by the producers of such alcohol, the government has notified order under the Act to declare price cap prevailing as on 05.03.2020 on the above alcohols up to 30th June 2019

Economics

Consumer Goods revival hopes dashed
FMCG (Fast Moving Consumer Goods) companies and retailers demand have surged over the past few days in some of the major states where strict measures have been imposed to contain the virus. The impact on the consumer goods market is to be more nuanced, involving both demand and supply as the shift in consumer behaviour is leading to the growing demand for some product categories.Read More At the same time, producers need to access how to address the supply chain disruption and capacity limitations. The FMCG market grew 1% aiming January, a sharp fall from 2.4% of the same month as per the latest study. The latest number obtained from industry officials suggested that growth in several categories more than halved during the January and February, compared to a year ago. Despite sales soaring a week, especially for food items, due to panic buying, it will be difficult to reach the level of growth we had a year ago. Electronics industry predicts sales to be flat in Jan-Mar quarter and fear the same for April-Jun. Mobile phone trackers revise down sales and shipment. In 2019, the sales growth was the best in four years at 9%.

No decision to discontinue 2K notes
The government said no decision has been taken to discontinue printing of Rs. 2000 banknotes and state-owned SBI and Indian Bank are reconfiguring ATMs for Rs.200 and Rs.500 notes. The Rs.2000 was introduced after the demonstration which drove out 85% of the currency notes in circulation that time. Read MoreThe government has stopped the printing of high-value currency notes as it was being used for hoarding, tax evasion and money laundering. Anurag Singh Thakur said that printing of banknotes of a particular denomination is decided by the government in consultation with the RBI to maintain the desired denomination mix for facilitating demand of the public. Banknotes of Rs.2000 denomination worth Rs.7.40 lakh crore have been printed and supplied so far, he said. The total face value of the banknote of Rs.2000 denomination in circulation and in currency chests was Rs 5.49 lakh crore and Rs 0.93 lakh crore, respectively.

Covid-19 hits the sugar supply chain, global prices recovery likely soon
According to the Indian Sugar Mills Association (ISMA), the Covid-19 outbreak has pulled down sugar off-take from mills over the last 15 days. Even International sugar prices have also corrected from $15 per pound to below $12. The fresh sugar procurement from mills will start soon since the supply chain dried up. Read MoreThis should control sugar prices while the fresh buying should help the domestic miles. The Covid-19 outbreak has impacted global sugar prices, although the impact could be temporary and there is an indication of fresh export opportunities in Indonesia. ISMA also said that the shortfall in Thailand sugar production by 5MT and the decision of Indonesia to allow sugar at a concessional import duty from India. This season, 457 sugar mills had started crushing operations against 527 mills last year, a downfall of 70 units across India.

India mulls up to $1.6 billion rescue plan for the aviation sector after coronavirus
The rescue package, proposed by India’s civil aviation ministry is likely to worth up to 100-200 billion ($1.3b – $1.6b) as the coronavirus outbreak forced countries to close borders. The Finance Ministry is considering a proposal that includes the temporary suspension of most taxes levied on the sector, including a deferment of aviation fuel tax. Read MoreVistara, a joint venture of Singapore Airlines and India’s Tata Group, and budget carrier GoAir have suspended their international operations. IndiGo India’s biggest carrier, has cancelled several overseas flights and may be forced to park some planes as domestic air travel also falls. Global aviation consultancy CAPA’s India unit said that regardless of any fiscal concessions and support the government may offer, most airlines will have to shrink their operations and the more vulnerable carriers may shut down.

Government liabilities at Rs 93.89 lakh crore at December-end, up 3.2 per cent over Q2
Public debt accounted for 90.4 per cent of the total outstanding liabilities at the end of December 2019. The Public Debt Management Quarterly Report further said the proportion of debt maturing in less than one year was higher at 6.64 per cent at the end of Dec 2019 as compared to its previous quarter level of 5.41%. Read MoreAs per the report, the yields on G-secs moved in a narrow range during Oct-Nov 2019, before hardening in the first fortnight of Dec 2019. This reflected the impact of several developments, mainly reduction in the repo rate by RBI, contraction in IIP (Index of Industrial Production) for the month of October and simultaneous purchase and sale of Government securities in December 2019.

India is not obliged to accept the WTO panel’s report on export schemes
India is not obliged to accept recommendations made by the WTO dispute panel on the country’s export promotion schemes. The panel had ruled that India’s export-related schemes, including the Special Economic Zones (SEZs) scheme, are inconsistent with WTO norms. India appellate body after it was given 180 days to withdraw the SEZs scheme. Read More“Due to non-functioning of the appellate body (of the WTO’s dispute settlement mechanism), the appeal has been kept in suspension. Till the appeal is disposed of, India is under no obligation to implement the recommendations of the panel,” Commerce and Industry Minister Piyush Goyal said in a written reply to the Lok Sabha. In a separate reply, the minister informed Parliament that India is involved in 15 trade disputes, mostly against the US, at the WTO at present. “Currently, India is involved in 15 disputes at the WTO, in which it is the complainant in 4 and respondent in 11,” he said.

Finance

Covid-19: Banks brace for downing shutters in case cities go into lockdown
Some banks are bracing up for downing shutters on branches in case cities go into a lockdown with a possible explosion of the coronavirus disease (COVID-19) cases. “The number of customers visiting bank branches has come down in recent days. The banks may operate with a minimum number of branches and may close down some of them. But it will be done in a manner that the customers remain unaffected,” a chief executive of a Mumbai-based state-owned bank said. Read MorePrivate lenders such as Kotak Mahindra Bank have sent out advisories to customers, encouraging them to use mobile or internet banking as its offices “will operate with reduced staff due to COVID-19”. Some banks are going on an overdrive to secure employees who have to deal with the public at the branches on a daily basis with banking being one of the essential services. India’s largest bank State Bank of India “decided to pay all employees a reasonable amount along with the salary for March, for purchase of masks, sanitizers”. Banks have been taking precautions to protect both employees and customers from infection. The movement of customers inside the premises of Bank of India at a branch in Masangaon, Madhya Pradesh has been semi-prohibited and a cordon has been set up using ropes from the cash counter to the passbook printing counter. No more than five-six customers are allowed to enter the branch at a time. The corporate offices and head offices of all banks are working with reduced staff and on a rotational basis, as a part of the business continuity plan.

RBI extends curbs on PMC Bank by 3 months as it works on revival plan
The Reserve Bank of India has extended the restrictions on conducting business on fraud hit Punjab and Maharashtra Co-operative Bank (PMC Bank) by three months till June 22. The Mumbai-based urban cooperative bank was placed under moratorium from close of business on September 23, 2019 to protect depositor’s interest. RBI is trying to work out a scheme for revival of the bank in the interest of the depositors and the stability of the cooperative banking sector. Read MoreIn order to take this forward, it is considered necessary to extend the aforesaid moratorium, RBI said in a statement today. The Reserve Bank has also been, directly and through the Administrator, having discussions with various authorities on the expeditious sale of securities and recovery of loans. The tangible outcome of these measures is taking some time due to various factors including legal processes. Unlike in the case of commercial banks, the Reserve Bank has no powers to draw up an enforceable scheme of reconstruction of a cooperative bank. RBI has modified its directions from time to time, the last being on November 5, 2019, as a result of which 78 percent of PMC Bank depositors were able to withdraw all their account balances.

 Expanding COVID-19 pandemic may take rupee to 75 vs the dolla
In the past 20 days, it has been clear that the transmission of the coronavirus outbreak all across the world has been monumental. As more and more countries started detecting cases, the swift and ferocious COVID-19 has now become the world’s emergency. It is one of the biggest threats to the global economy and the financial markets are looking at it as a ‘black swan event’. Read MoreThe only respite to the market sentiment is stimulus measures that nations are implementing to counter the economic impact from the coronavirus. Taking cues from the Fed, Bank of Canada, Reserve Bank of Australia and Bank of England, too, cut their policy rates. To deal with the extreme selling pressure witnessed worldwide, RBI offered $2 billion swap to deal with the currency swings. The recent economic data – CPI and IIP – may push the Reserve Bank of India (RBI) to follow its global peers and lower benchmark policy rates anytime soon or at the next monetary policy statement on April 3. In the current situation, not only is an RBI rate cut seen imminent, there are speculations over 50-bps cut in the repo rate as against the earlier view that the central bank would use its remaining monetary policy ammunition sparingly. Along with RBI rate cut, market focus will also be on fiscal measures from the government. Going ahead, the rupee will continue to follow the path of other emerging market currencies. The widening local and global pandemic of coronavirus may take the rupee to a fresh record low of 75. However, the RBI should curb market volatility and arrest the rupee’s depreciation.

Dow Jones Industrial Average drops 913 points
The Dow dropped 913.21 points, or 4.55%, to 19,173.98. The S&P 500 slid 4.34% to 2,304.92. The Nasdaq Composite fell 3.79% to 6,879.52. Friday was another volatile session that ended one of Wall Street’s worst weeks since the financial crisis. The major averages swung wildly on Friday as California and New York adopted stricter measures to curb the coronavirus spread, raising even more concerns about the virus’ economic blow. Read MoreA swift reversal in oil prices also pressured stocks, as it led investors to sell assets in other markets. The Fed announced a new monetary stimulus on Friday, but that wasn’t enough to quell market volatility or assuage investors’ fears. Bottom line, the market remains fearful of the coronavirus and its ramifications on the economy.

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