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 Twenty Seventh Edition of The First Forum we would be covering the following:
1. Business
2. Economics
3. Finance

(By Ankita Punjani, Mehak Gupta and Divyansh Gupta)

Business

Reliance Jio connects with Facebook for $5.7-billion equity deal
Facebook and Reliance Jio hit the headlines early Wednesday morning, in a break from the daily lockdown news. Mark Zuckerberg announced in a Facebook post that the technology giant will acquire a 9.99 per cent stake in Jio Platforms Ltd (JPL) through a fresh issue of shares worth Rs 43,574 crore.Read More The deal values JPL—the holding company of Reliance Jio — at an enterprise value Rs 4.62 trillion. JPL’s equity value works out to Rs 4.36 trillion after Facebook’s investment, making it the fifth most valuable company in the country, behind its parent Reliance Industries (RIL), Tata Consultancy Services, Hindustan Unilever, and HDFC Bank. A stake in JPL is also likely to give it a strong toehold in the digital sweepstakes in India where it competes with the big boys like Google. Facebook India Online Services revenues were at Rs 892 crore in FY19 against Google India’s Rs 4,147 crore.

DHFL Lenders Extend Deadline for Resolution Plans
Lenders to Dewan Housing Finance Corporation Ltd. have decided to extend the deadline for submission of resolution plans to the last week of May from the earlier deadline of May 7. The extension in the deadline is to accommodate the delays caused by the national lockdown imposed to curb the spread of Covid-19. Read MoreThe company said in a regulatory filing that the draft resolution plan is no longer valid following commencement of insolvency proceedings against it in November last year under the Insolvency and Bankruptcy Code (IBC). The resolution plan envisaged lenders converting a part of the debt into equity and take a 51% stake in the mortgage lender. DHFL’s assets under management are at ₹1.19 trillion, of which ₹63,690 crore is in retail loans and the remaining in wholesale. On 20 November last year, RBI superseded DHFL’s board and later referred the mortgage lender to the National Company Law Tribunal (NCLT), citing governance concerns and payment defaults by the firm as reasons for superseding the board.

Amazon India to provide Broader Online Exposure To over 5000 local shops
Amazon.com Inc’s Indian arm will soon add small local shops as sellers on its platform to provide them broader online exposure and offer consumers a greater selection of merchandise. The program is called “Local Shops on Amazon” and was piloted for six months with more than 5,000 local shops and retailers from over 100 cities across India. Read MoreAmazon said it would spend up to 100 million rupees to expand the pilot to on-board and train shopkeepers and retailers, calling this program ‘first for Amazon anywhere in the world’. The broader push into small neighbourhood stores in India will pit Amazon against Walmart’s Flipkart and Alibaba backed BigBasket.

Indigo takes a U-turn, reverses salary cut decision
InterGlobe Aviation Ltd. operated Asia’s biggest budget airline by market value, Indigo announced to reverse the decision to slash employees’ salaries which it had announced earlier. The airline had proposed pay cuts upto 15% for most staff but will no longer go through with them. Read MoreHowever, top management has volunteered to take a pay cut as much as 25% and will forego their salaries till the situation improves. While the pandemic has brought the industry to its knees and airlines across the globe are furloughing staff, cutting operations and even collapsing, this move by Indigo stands out.

Government to set up Rs. 1 trillion-fund to clear pending MSME payments
The Union Minister Nitin Gadkari said that the government will set up a Rs 1 trillion fund to repay outstanding payments to MSMEs owned by the central and state government undertakings and major industries. The minister said he has devised a scheme to set up the fund, and the proposal may be placed before the Cabinet for approval once the finance ministry gives its go-ahead. Read MoreThe fund will provide relief to the micro, small and medium enterprises (MSMEs) sectors to a certain level. Gadkari also suggested the industry body to compile investment data regarding companies from the US, the UK and other nations present in China and invite them to set up businesses in India.

Economics

Government, RBI seized of Franklin Templeton matter, examining liquidity issues
Franklin Templeton India, one of the largest fund houses in the country, said it will shut six debt funds – Franklin India Low Duration Fund (FILDF), Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund (FIIOF) – that carried credit risk. Read MoreThe winding up of these credit funds effective from April 23. India’s financial sector is under intense strain, grappling with a crushing liquidity crisis. Due to the uncertainty, investors began to panic and took to redemption, especially in credit risk funds such as the ones run by Franklin Templeton. To meet redemptions, a fund house typically dips into cash reserves or sells underlying scrips. Even that wasn’t enough, according to Templeton, which forced it to take the decision to wind up the six funds. Total assets under management of the six funds are estimated to be around Rs 25,000 crore.

Government employees, Pensioners will not get a hike in DA
As government’s finances come under pressure during the Covid-19 pandemic and lockdown, the finance ministry today announced that it has put on hold a hike in dearness allowance (DA) for central government employees and dearness relief (DR) for central government pensioners till July next year. Read MoreAs and when the decision to release the future installment of DA and DR due from July 2021 is taken by the government, the rates will be restored prospectively and will be subsumed in the cumulative revised rate effective 1st July 2021. The government will not pay any arrears for the period in between 1st January 2020 and 30th June 2021. The Union Cabinet had last month hiked the DA and DR by 4%, from 17% of basic pay/pension to 21% of basic pay/pension for central government employees and pensioners. There are at least 50 lakh government employees and 65 lakh pensioners. The DA and DR hike would have cost the exchequer ₹37,530 crore in the current financial year and 2021-22.

PM Modi launches Swamitva Yojana to boost Rural economy
Prime Minister Narendra Modi on Panchayati Raj Diwas launched e-Gram Swaraj Portal and ‘Swamitva Scheme’ to map residential land ownership in the rural sector using modern technology like the use of drones. E-Gram Swaraj helps prepare and execute Gram Panchayat Development Plans. Read MoreThe portal will ensure real time monitoring, accountability and aims to revolutionise property record maintenance. The portal is a major step towards digitization down to the Gram Panchayat level. PM said that the Government is working hard to provide self-sufficiency to villages and making e-gram Panchayat stronger. This is going to be a major step towards boosting the rural economy.

India’s GDP likely to grow between -0.9% and 1.5% in FY21: CII
The Confederation of India Industry has said that India’s gross domestic product (GDP) will like shrink by 0.9% in the current financial year in a worst-case scenario marked by a prolonged coronavirus crisis that results in an extension of restrictions placed in Covid-19 hotspots, and may grow by as much as 1.5% in a best-case framework, calling for a big dose of government stimulus. Read MoreCII suggested additional working capital to be provided by banks, equivalent to the April-June wage bill of the borrowers, backed by a government guarantee, at 4-5% interest rate.

Finance

Sri Lanka’s Central Bank gets $400 million swap from RBI
Sri Lanka’s Central Bank has announced that the Reserve Bank of India (RBI) has agreed to provide USD 400 million under a swap arrangement to boost the island nation’s reserves. Further, a request to the RBI for another SWAP arrangement of USD 1 billion is “under consideration”. Read MoreThese are to be made available under the SAARC SWAP facility. The RBI has agreed to provide the funds under its SAARC (South Asian Association for Regional Cooperation) Swap Facility. Available Central Bank data showed that in 2018, foreign investors had pulled out net Rupees 22.8 billion out of stocks, and Rupees 159.8 billion from government securities. The Sri Lankan rupee ended at an all-time low of 183 against the US dollar last week.

RBI’s TLTRO 2.0 gets cold-shoulder from banks
Reserve Bank of India (RBI) has received bids for only about half the Rs 25,000 crore it offered under its revised Targeted Long-Term Repo Operations (TLTRO), indicating that banks are reluctant to lend to non-banking financial companies (NBFCs). Banks put in 14 bids worth Rs 12,850 crore for the three-year money offered. Read More18 bids were received for Rs 1.14 trillion as against the Rs 25,000 crore on offer. In the first version of the TLTRO, there were no conditions attached, except that the money had to be deployed within 30 days. It was later increased to 45 days. The latest auction was part of the TLTRO 2.0, through which the RBI planned to infuse liquidity up to Rs 50,000 crore, to begin with. The central bank had said half the money in the TLTRO 2.0 should go to small NBFCs. This was necessitated after it was found that banks used the first lot of TLTRO money worth Rs 1 trillion to buy bonds of AAA-rated companies, including those issued by public sector units.

RBI increases Ways and Means Advances limit to Rs 2 lakh crore
The Reserve Bank of India revised the Ways and Means Advances (WMA) limit to Rs 2,00,000 crore for the remaining part of first half of the financial year 2020-21(April 2020 to September 2020) from 1.2 lakh crore. WMA is a short-term borrowing arrangement between the RBI and central and state governments. Read MoreThe massive increase in WMA comes at a time when the government is expected to announce further relief measures to fight against coronavirus pandemic. This decision is made with a view to providing greater comfort to the States to undertake COVID-19 containment and mitigation efforts and enable them to better plan their market borrowings.

Remittances to South Asia to dip by 22% in 2020: World Bank
The World Bank expects remittances to South Asia will drop sharply by about 22% this year, underscoring the economic distress stemming from the Covid-19 pandemic and the ensuing lockdown aimed at curbing the disease. This reflects loss of income for expatriate Indians working in the Gulf and elsewhere who support families back home. Read MoreGlobally, remittances are projected to decline by a record 20% this year. South Asia gets 22% of global remittances. Studies show that remittances are spend on education, reducing child labour, nutritional outcomes in disadvantaged households. A fall in remittances affect families’ ability to spend on these as more will be directed to solve food shortages and livelihoods needs.

Rupee set to recover the fastest in Asia as oil prices weaken, dollar eases
India’s rupee, among Asia’s worst performing currencies this year, could be the fastest in the region to rally as the world restarts economic activities, oil prices have weakened and the U.S. dollar eases broadly. The partially convertible Indian rupee has lost nearly 7% against the dollar so far this year, despite heavy dollar supplying intervention by the central bank. Read MoreHowever, due to the collapse in oil price could be a turnaround as it is a major import for the country. But a prolonged drop in oil prices from the virus-induced falloff in demand will not benefit even heavy importers such as India.

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