The First Forum is an initiative that 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 Fifty-Seventh Edition of The First Forum we would be covering the following:
1. Business
2. Economics
3. Finance

(By Mehak Gupta, Nikunj Gulati, and Kanika Meena)

Business

Domestic solar gear makers seek level-playing field for units in SEZs
Domestic solar cell and module manufacturers have urged the government to impose an equalization levy so that units located in special economic zones (SEZs) are not affected by the government’s decision to impose basic Customs duty (BCD) on solar imports. The industry said domestic manufacturers in SEZs would have to shut shops if there was no level-playing field for SEZ units and “may see job losses in the tune of 15,000 people”. Read MoreSEZ units are considered on a par with foreign companies and, hence, Customs duty is imposed on them too. The Centre is considering imposing a 2 percent equalization levy to incentivize SEZ manufacturers for transactions with domestic customers. The ministry of new and renewable energy has proposed 20 percent BCD on imports of solar cells and modules as part of the country’s recent efforts to ban imports from China. Close to 80 percent of India’s solar capacity is built on Chinese solar gears. 

UK-based private investor Actis acquires 400 MW solar projects from Acm
UK based private investor Actis acquired 400 MW solar power projects of ACME Solar Holdings Ltd. The projects are located in Andhra Pradesh and Madhya Pradesh. Both Acme and Actis did not disclose the deal size. Market experts estimated the deal value to be close to Rs 2,000 crore. ReadMoreIn a public statement, Actis said the investment in Indian renewables through Actis Long Life Infrastructure Fund (ALLIF) and Actis Energy Funds. ALLIF’s investment strategy targets large operating renewable assets for the long-term, maximizing yield through value creation, the company said. Gurugram based Acme is a leading renewable energy player in the country with 5GW of projects across the country.

Wipro partners Intel to enable remote IT support, provide enhanced security
IT services major Wipro on Thursday said it has partnered Intel to enable its LIVE Workspace solution with the latter’s vPro platform that will help customers drive business continuity by enabling remote IT support and solutions. ReadMoreWipro integrated the Intel vPro platform into LIVE Workspace, a suite of digital workplace services to provide remote manageability of devices, a statement said. This extends to users at home or in the office and provides enhanced protection and security against firmware-level attacks, it added. The combined solution provides practical business continuity services to enable enterprises to rapidly design, deploy, and manage a true remote work experience. Intel recently introduced its 10th Gen Intel Core vPro processors that are built for business to power next-generation business computing needs.

Telcos defy Covid-19, see strong revenue growth on higher data usage
Two Indian telecom operators reported strong revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) growth in the three months ending June (Q1 FY21) due to tariff growth and higher data usage, defying the economic slowdown from the countrywide lockdown of 68 days up to May-end. According to Fitch Ratings, revenue market share continues to consolidate with market leader Reliance Jio and Bharti Airtel as the third-largest telco Vodafone Idea is losing 10 million to 15 million users per quarter. Read MoreData traffic surged by 20 to 30% as the lockdown increased demand for data connectivity and remote access which more than offset the slower migration of feature-phone users to 4G as smartphone sales declined by 48% in Q1 FY21. Jio’s revenue and EBITDA grew by 34 percent and 55% respectively while Bharti reported Q1 FY21 Indian mobile revenue and EBITDA growth of 19% and 35% year-on-year.

Start-ups to get priority sector tag as RBI revises lending norms
The Reserve Bank of India (RBI) is revising the Priority Sector Lending (PSL) norms to enable higher lending to start-ups and renewable energy firms, as well as to correct regional disparities. It intends to align them with emerging national priorities and bring a sharper focus to inclusive development. Read MoreThe revised guidelines also aim to encourage and support environment-friendly lending policies to achieve Sustainable Development Goals (SDGs), the RBI said in a statement. Detailed guidelines in this regard will be issued shortly. PSL guidelines were last reviewed in April 2015. An incentive framework has been established to help banks address regional disparities, with respect to the flow of priority sector credit.

 

Economics

Inflation to remain high in September quarter, warns RBI Governor
Reserve Bank of India (RBI) Governor Shaktikanta Das warned that India’s headline inflation is expected to remain elevated during the second quarter (July-September) of the current fiscal year and may subside thereafter. The MPC of the central bank left the repo rate and other key policy rates unchanged at existing levels taking stock of a recent rise in consumer inflation. Read MoreAs per RBI’s statement, inflation is expected to rise in the food items category due to the supply chain disruptions amid coronavirus pandemic. Other reasons such as “relatively moderate increases in minimum support prices (MSP) for the Kharif crops and monsoon are also supportive of being inflation reason.  Mr. Das, however, did not give any range on inflation expectations. RBI has set the medium-term target for consumer price index (CPI) inflation or retail inflation of 4% within a band of +/- 2% while supporting growth. 

Raghuram Rajan says to focus on protecting the economy, don’t worry about credit ratings
India’s policymakers should focus on protecting the economy as businesses struggle amid the coronavirus pandemic instead of being overly focused on what ratings agencies think, Former Reserve Bank of India governor Raghuram Rajan said. Given the limited resources in India, he further said that the RBI needs to focus on whether the credit is reaching the stressed areas of the economy and also if the viable firms were able to access credit and not the unviable ones. Read MoreReferring to the relief packages rolled out by the center, he said that the government has announced several initiatives to help the poor and MSMEs, but actual cash outgo from the government’s measures has been estimated at just about 1% of GDP. Several attributes the fiscal prudence to fear of a downgrade after Moody’s cut India’s rating and outlook in early June followed closely by a change in outlook from Fitch. “What India should focus on at this point is protecting its economic capabilities, so that when it has dealt with the virus it can go resume activity in a reasonable way. That should be the focus,” Rajan said.

Govt to soon bring in taxpayers’ charter, says Nirmala Sitharaman
The government will soon introduce a taxpayers’ charter in the Income Tax Act with statutory backing, which will contain their rights as well as obligations, to ensure fairness for all assesses, finance minister Nirmala Sitharaman said. Highlighting several steps taken by the government to protect honest taxpayers from unnecessary harassment, the minister said only a very few countries, such as Australia and the US, currently have such charters in place. Read MoreThis is part of Prime Minister Narendra Modi’s broader Atmanirbhar Bharat initiatives and listed the five pillars, economy, infrastructure, governance systems, vibrant demography, and supply changes as cornerstones of a strong economy. The charter will clearly state the obligation of taxpayers towards the nation as much as pronounce their rights.

RBI notifies Kamath-led panel to work out loan recast details
Reserve Bank of India (RBI) has formed a five-member committee under the chairmanship of former ICICI Bank CEO KV Kamath to make recommendations on the financial parameters to be considered in the restructuring of loans impacted by the COVID 19 pandemic. REad MoreAs announced the committee will vet restructuring of loans above Rs 1500 crore. The parameters will include aspects related to leverage, liquidity, debt serviceability, etc. The expert committee shall submit a list of financial parameters and the sector-specific desirable ranges for such parameters to the Reserve Bank, which, in turn, will notify the same, along with modifications, within 30 days. The committee has been given the freedom to devise its procedures for its functioning.

Trump order boosts US drug industry, no-hit on India exports in the short term: Experts
US President Donald Trump signed an order that aims to boost domestic production of “essential medicines” and “critical” drug inputs in the country. While India’s pharmaceutical industry has a major stake in the American drugs market and is among the biggest overseas suppliers to that market, experts said the Trump administration’s attempt to localize the supply chain for drugs is unlikely to have a significant impact on supplies from India to the US in the short term. Read MoreSeveral experts tracking India’s pharmaceuticals industry, however, said the move appeared to be either posturing by Trump before the presidential election in November or to be targeted essentially at China which, unlike India, is a larger exporter of key drug ingredients. India, on the other hand, is known for exports of its generic finished formulations, for which the US is the largest market.

 

Finance

RBI enhances gold loan-to-value ratio to 90%
In a bid to increase liquidity in the hands of individuals, the central bank has said that it will increase lending limits for gold for non-agricultural purposes. So now gold loan customers will be able to borrow up to 90% of the value of the yellow metal compared to the existing 75%.Read More This will be in force till March 2021. The move comes as a relief to cash-strapped borrowers looking for such loans. It has been decided to increase the permissible loan to value ratio (LTV) for loans against pledge of gold ornaments and jewellery. The increased loan-to-value (LTV) ratio—the proportion of the collateral’s value a lender can give out as loan. This move will allow households to borrow more against existing gold holding than before. Households will be able to get more funds by taking a loan and not be forced to sell it to get more liquidity.

Special liquidity facility of Rs 10,000 cr for Nabard, NHB announced by RBI
The Reserve Bank on Thursday announced an additional special liquidity facility (ASLF) of Rs 10,000 cr equally split between National Bank for Agriculture and Rural Development (Nabard) and National Housing Bank (NHB). The amount will be equally divided between NHB and NBFC and will be charged at policy repo rate for a period of 1 year. Read MoreUnder this, small non-bank finance companies and micro-lenders, which extend small-sized loans to the poor, and housing finance companies focused on affordable lending are going to get liquidity assistance via Nabard and the NHB, respectively. It can be noted that higher share of moratoriums are being availed by the retail borrowers which has created the need for such liquidity support to lenders in order to meet their repayment commitments. The RBI has announced similar moves in the past as well.

RBI asks banks not to open current accounts for customers having cash credit, overdraft facilities
With a view to improve credit discipline, the Reserve Bank has barred banks from opening current accounts for customers who have availed cash credit or overdraft facilities, stressing that there is a “need for discipline” on this front. The central bank said that rather than opening a new current account, all transactions should be routed through Cash Credit (CC) or OverDraft (OD) account. Read MoreIt can be noted that in recent instances of fraud like the over Rs 4,000 crore PMC co-operative Bank scam, it was discovered that multiple accounts were opened even thought the RBI did not specify the exact reasons for this move. RBI governor said that it is necessary to take appropriate measures for strengthening credit discipline and there are concerns emanating from the use of multiple accounts by borrowers which calls for the need for safeguards for opening of such accounts by borrowers availing credit facilities from multiple banks.

Forex reserves climb $11.9 billion to all-time high of $534
The country’s foreign exchange reserves hit an all-time high of $534.568 billion after surging by massive $11.938 billion in the week ended July 31, RBI data showed. While announcing the monetary policy, Reserve Bank of India Governor Shaktikanta Das said the reserves at $534.6 billion are equivalent to 13.4 months of imports. Read MoreExpressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. Gold reserves were up by $1.525 billion in the reporting week to $37.625 billion. The special drawing rights with the International Monetary Fund (IMF) rose by $12 million to $1.475 billion. The country’s reserve position with the IMF also increased by $54 million to $4.639 billion during the reporting week, the data showed.

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