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Credit rating agency <keyword id="7148798" type="General" weightage="100" keywordseo="acuite-ratings" source="Orion">Acuite Ratings</keyword> and Research said the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>) will continue with monetary tightening and will hike the policy rate by 25 basis points (bps). In a report, Acuite Ratings expects the RBI to persist with monetary tightening to guard against the generalisation of core inflation pressures into a wage-price spiral. "After a hike of 25 bps in Apr-23, <keyword id="6369693" type="General" weightage="80" keywordseo="mpc" source="Orion">MPC</keyword> (<keyword id="6375120" type="General" weightage="50" keywordseo="monetary-policy-committee" source="Orion">Monetary Policy Committee</keyword>) could opt for a pause for impact assessment. The stance may change to 'neutral' only after core inflation witnesses a sustained decline to below 5 per cent," Acuite Ratings said. According to the report, over the last three months, inflation has begun to descend from peak levels across most economies in the world. The upshot from this development has been a step down in monetary policy aggression by most central banks despite the persistence of monetary tightening. The MPC on February 8, raised repo rate by 25 bps to 6.50 per cent. This takes the cumulative hike in repo rate to 250 bps since May-22. Although the average inflation forecast for FY23 saw a downward revision to 6.5 per cent and for Q4FY23 to 5.6 per cent, the central bank highlighted that core inflation continues to remain sticky around 6 per cent levels, Acuite Ratings said. "We continue to maintain our 10 year Government Securities yield call in the 7.10-7.50 per cent range for the near term. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/senior-citizen-fd-here-are-the-features-interest-rates-offered-by-various-banks/articleshow/98148773.cms">Senior citizen FD: Here are the features &amp; interest rates offered by various banks</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/mukesh-ambanis-jiocinema-to-take-on-disney-hotstar-and-amazon-prime-with-free-4k-ipl-streaming/articleshow/98150380.cms">Mukesh Ambani’s JioCinema to take on Disney+ Hotstar, and Amazon Prime with free 4K IPL streaming</a>

RBI-MPC may go for 25bps policy rate hike in April: Acuite Ratings

The unprecedented nationwide <keyword id="91743" type="PERSON" weightage="20" keywordseo="lockdown">lockdown</keyword> that shut businesses, suspended flights and stopped all modes of transport will cost the Indian economy almost USD 4.64 billion every day and the entire 21-day lockdown will result in a GDP loss of almost USD 98 billion, Acuite Ratings &amp; Research Ltd said on Thursday. The rapid spread of Covid-19 has not only disrupted the global economy but also triggered a partial shutdown in many parts of India from early March and an almost complete shutdown from March 25. "While the countrywide shutdown is scheduled to be lifted from April 15, 2020, the risks of prolonged disruption in economic activities exist depending on the intensity of the outbreak," the credit rating agency said in a statement. The ongoing disruption, it said, will have a significant economic consequence across the world and also in India. IMF has already forecast a recession for the global economy in 2020. Acuite Ratings believes there is a risk of a contraction of April-June (2020-21 fiscal) GDP to the extent of 5-6 per cent, with Q2 (July-September) also likely to post modest growth in a best-case scenario. It expects the overall GDP growth for FY21 (April 2020 to March 2021) to be in the band of 2-3 per cent which takes into account a significant economic revival in the second half of the financial year. Sankar Chakraborti, CEO, Acuite Ratings &amp; Research, said: "Acuite Ratings estimates that every single day of the nation-wide lockdown will cost the Indian economy almost USD 4.64 billion. Consequently, the 21-day lockdown will result in a loss of GDP of almost USD 98 billion." Stating that the ratings agency employed multiple methods to assess real GDP estimates for Q1 FY21, he said there is a significant risk that it may contract up to an extent of 5-6 per cent as compared to a pre-Covid growth estimate of 5 per cent. In such a lockdown scenario, the sectors that are most severely impacted are transport, hotel, restaurant, and real estate activities. "In our opinion, there would be at around 50 per cent GVA (gross value added) loss in these sectors, which account for around 22 per cent in overall GVA, in Q1 of FY21," it said. On the other hand, the services that are expected to see enhanced activities during this crisis are communication, broadcasting, and healthcare. But with a 3.5 per cent share, their contribution to the overall GVA is small. The impact of the lockdown is also fairly severe on industrial activities which is set to witness significant contraction in Q1 except in the pharmaceutical, gas and electricity and medical devices which account for around 5 per cent of GVA, it added. Unlike the services sector, the industry, however, can manage demand to some extent with inventory drawdowns until the resumption of production. Karan Mehrishi, Lead Economist, Acuite Ratings &amp; Research said: "The agricultural sector which accounts for 15 per cent of GVA, is nonetheless, expected to see continuing activity even in the lockdown period; however, the allied activities are partly impacted as livestock and fisheries are experiencing mute demand due to the Covid-19 concerns." The credit rating agency said it would take at least 2-3 months to restore the industry supply chain even if the lockdown is limited to 21 days. "There are also further risks of local lockdown in various regions of the country depending on the extent of the outbreak and partial disruption in economic activities till H1FY19 is a realistic scenario." Acuite estimated that the second quarter may show moderately positive growth of just under 3 per cent on the back of the expected normalisation process and some pent up demand although it is also linked to the intensity of the pandemic. On the positive side, quick recovery in domestic economic activities is likely in H2, which may, in turn, benefit from the increased fiscal and monetary measures along with lower global oil prices. "We, therefore, believe that the average H2 GDP expansion may be in the vicinity of 6.5 per cent. Overall, a likely contraction in Q1 followed by modest growth in Q2 will clearly have a severe impact on India's economic trajectory that has already been under the effect of a prolonged slowdown," it added. SEE ALSO:<a href="https://www.businessinsider.in/india/news/india-has-20-covid-19-hotspots-and-20-more-potential-ones/articleshow/74948300.cms" data-type="tilCustomLink"> India has 20 Covid-19 hotspots and 20 more potential ones</a>

Lockdown is costing India $4.6 billion every day says Acuite Ratings

Mumbai, Apr 29 () A repair and revival of the economy is essential to fight the impact of the COVID-19 pandemic, and the government should pump in Rs 11.2 lakh crore or 4.8 per cent of GDP through a stimulus package, a ratings agency advocated on Wednesday. Acuite Ratings pitched for the Reserve Bank to play a pivotal role in this aspect by financing the deficit which the government will be incurring, saying there is "adequate justification" for the central bank to step in. The government has already announced a Rs 1.7 lakh crore stimulus package, which was criticised for not being enough to fight the slowdown and also for more than half of the 'package' being already budgeted. Speculation of a second stimulus package has been rife for the last few days, and expectations have increased especially as the second phase of what would be a 40-day lockdown is scheduled to end. All the rating agencies and economists have been unanimous in cutting their GDP growth estimates for FY21, with some also expecting a contraction in the fiscal year. Acuite said the additional spending by the government will result in the fiscal deficit doubling to 7 per cent of the GDP as against the budgetary target of 3.5 per cent, and conceded that it will lead to spike in rates and end up harming the RBI's accommodative actions till now. It can be noted that usually rating agencies are the first to flag concerns on fiscal deficit as it is a key indicator of a country's macroeconomic stability. A wider deficit usually leads them to cut their rating on the sovereign. Acuite, however, advocated such a move and asked the central bank to finance it. "We believe there is adequate justification to finance the deficit directly from RBI at this juncture," its Chief Analytical Officer Suman Chowdhury said, adding that the RBI should issue special zero coupon securities. However, Chowdhury advised caution on this, saying the financing has to be "within moderate limits" as this will lead to an expansion in the RBI's balance sheet, and added that 60 per cent of the book will go to currency in circulation which may trigger inflationary pressures. The agency said the states should be asked by the Centre to do 50 per cent of the additional borrowing, saying a few fiscally strong states can raise Rs 3 lakh crore, while the rest will come from the others. From a deployment of the resources perspective, the agency said Rs 1.8 Lakh crore will be required as additional working capital funds for micro, small and medium enterprises, and Rs 1.2 lakh crore for corporates in relatively more vulnerable sectors, which will mean that the government should give a guarantee of Rs 3 lakh crore for borrowings by the two segments. "Timely funding support from banks or other sources may avoid permanent impairment of businesses and loss of employment particularly in the MSME segment, thereby arresting any longer term damage to the economy," the agency's chief executive Sankar Chakraborti said. AA ABMABM

COVID-19: Acuite Ratings pitches for Rs 11.2 lakh cr stimulus package to revive economy

<ul><li>According to a CARE Ratings report, film exhibitors in India will lose at least ₹3,500 crore as cinema halls shutdown. </li><li>Rating agency Acuite expects a precipitous drop of over 50% in multiplex footfalls in the next 2-3 months. </li><li>The multiplexes chain are now considering approaching the government to seek a relief package, including deferment of certain taxes. </li></ul>Cinema halls in India have had a bad start in 2020. First of all, it had few hits that enthused the public like Baaghi 3 or Angreji Medium. As <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">Coronavirus</keyword> spreads, halls across many cities shut down as per government orders. The management of theatres are now busy calculating the losses as 5,000 screens across the country are shut and even those that are open have nothing to bring people to as March and April releases like Rohit Shetty’s Sooryavanshi and Ranveer Singh’s 83 have been postponed indefinitely. The halls are losing ₹150 crore a week, <a href="https://www.exchange4media.com/marketing-news/coronavirus-bears-down-on-bollywood-with-no-ticket-sale-hiked-marketing-budget-103373.html">according to Shailesh Kapoor, CEO, Ormax Media. </a> The effect might be temporary says PVR Cinemas and Inox PVR cinemas, which has 822 screens in 69 cities, says the effect may be temporary and they look forward to better times. INOX, which has 624 screens in 68 cities too is confident about their growth as the lockdown lifts. But the investors do not share their confidence. PVR has witnessed a 43% decline in its decline in the last one month. Whereas the share price of INOX saw a 39% fall between February 18 and March 18. 
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 Rating agency expects 50% fall in multiplex footfalls 
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 Several rating agencies are convinced that there would be a ripple effect. Moreso, because scientists are yet to determine whether warm weather can reduce the spread of coronavirus in India or not. Even in that case, a possible social isolation is advised till June. Rating agency Acuite expects a precipitous drop of over 50% in multiplex footfalls in the next 2-3 months, particularly for those which are primarily located in retail malls at Tier I or Tier II cities. "Typically, the holiday season of April-June is the peak time for big movie releases. However, the latter may get postponed due to the Covid-19 crisis," said Suman Chowdhury, president (ratings) at Acuite Ratings and Research. This quarter is completely washed out says Carnival Cinemas 
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 A few multiplex chains however acknowledged the situation like Carnival Cinemas, a multiplex chain in India with 470 screens across 120 cities. “This quarter is completely washed out and shall be down at least 40-50% as compared to last year. One, because the movie line up was weak and then the Covid-19 impact in March. It is unfortunate that the business is affected so much, but human life is of most importance,” said Mohan Umrotkar, CEO Carnival Cinemas. Considering the losses, multiplexes chains might move to the government to seek a relief package, including deferment of certain taxes. Industry insiders contend that restricted cash flows and mounting incremental costs such as rentals and operational expenses have left the sector in an untenable financial position. According to a CARE Ratings report, film exhibitors in India will lose at least ₹3,500 crore every month. That is extra bad news for the industry which was already reeling from loss of revenue from CAA protests and riots in the last quarter. See also: <a href="https://www.businessinsider.in/finance/news/the-us-box-office-suffered-its-worst-weekend-in-more-than-20-years/articleshow/74657349.cms">The US box office suffered its worst weekend in more than 20 years</a> <a href="https://www.businessinsider.in/india/news/coronavirus-hits-akshay-kumars-sooryavanshi-and-ranveer-singh-starrer-83/articleshow/74593762.cms">Coronavirus hits box office — 83 release may be delayed and Sooryavanshi struggles</a>

Cinema halls lose ₹150 crore a week with lockdowns and delayed releases

Mumbai, Mar 6 () One of the biggest losers in case the RBI's restructuring scheme for Yes Bank goes through will be the additional tier-I bond holders who have bets totalling to Rs 10,800 crore on the lender. The investors in such instruments typically include mutual fund houses and bank treasuries, experts said. "The instruments qualifying as additional tier-1 capital, issued by Yes Bank under Basel-III framework, shall stand written down permanently, in full, with effect from the appointed date," the draft of the 'Yes Bank Ltd. Reconstruction Scheme, 2020', said. The draft, which is open for public comments, added that the same is in conformity with the RBI's regulations based on the Basel framework. "This is for the first time in the history of the Indian banking sector that a bank's T1 bonds are being written down at the 'point of non-viability' (PONV) i.e. the investors have to take a hit on both principal and the balance interest payments," Acuite Ratings President Suman Chowdhury said. Both Acuite and its larger peer Icra Ratings said the value of the debt which will be wiped off in full will stand at Rs 10,800 crore. Following the announcement and also a downgrade of Yes Bank's ratings by rating agencies, Baroda Mutual Fund segregated the portfolios in two schemes -- Baroda Treasury Advantage Fund and Baroda Credit Risk Fund -- and marked down the value of investments to zero. As part of the restructuring package, SBI is all set to invest up to Rs 2,450 crore to take a 49 per cent stake in the beleaguered lender and ensure that its holding does not go below 26 per cent for the first three years after entering. The RBI's draft also proposes a host of other requirements which may be seen as detrimental by the current promoters of the bank, and also vests greater powers in the appointment of the management. It proposes deletion of four articles of association from the appointed date of the transaction, which will include rights of Indian partners to appoint three independent representative directors, recommend the name of the chairman and the chief executive and appoint whole-time directors. The newly appointed board of directors of the reconstructed bank will, however, have the freedom to discontinue the services of the key managerial personnel at any point of time after following the due procedure, it said. AA HRS

Additional tier-I bond holders to be hit by Rs 10,800 cr if Yes Bank restructuring goes through

New Delhi, Nov 26 () With the leases of 232 merchant iron ore mines expiring in March next year, the country may face a short-term disruption in supply of the main ingredient used in making steel, Acuite Ratings &amp; Research Ltd said today.
 "The expiring leases can potentially curtail about 25-30 per cent of the country's iron ore production, taking into account the expiring leases of other states as well," Acuite Ratings &amp; Research Ltd said in its latest report.
 Iron ore is the main ingredient used in making steel.
 Consequently, any significant delay with respect to auctions and more specifically lease transfers will affect iron ore supply and prices, thereby putting further pressure on sector profitability.
 Non-integrated steel companies, which do not have access to captive iron ore mines, will be relatively more vulnerable in the event of such delay.
 Therefore, a smooth transition in the lease transfers through the upcoming auction process along with the expected increase in pellet availability will be critical to offset the near term profitability challenges in the steel sector.
 "Indian government has initiated the process to auction 329 mines including 232 iron ore mines where the leases are set to expire in March 2020. This is a part of its initiative to address the issue of lower mine productivity, lack of adequate investment for mine development along with the need to bring in higher transparency in mine allotment," it said.
 "It is pertinent to note that 208 such mines are currently non-operative and transfer of the leases can lead to fresh investment and development, thereby enhancing domestic iron ore production significantly beyond the current levels of 220 million tonnes," it said.
 Expediting the auctions and the subsequent approval processes for mining operations to be undertaken by new lessees will be critical to avoid any longer term supply shortages in the steel sector, it said.
 "Any tightening of ore prices in the currently moderate demand environment clearly may put further pressure on the margins of secondary steel players, which continue to have an overhang of debt," the report said. SID MKJ

Steel sector may face short-term disruption in iron ore supplies with 232 mines expiry: Report

Mumbai, Apr 15 () Amid the Covid-19 induced lockdown when farmers are struggling to sell their produce and get reasonable prices for them, online sale and trading of agricultural goods across the country can come across a possible solution, says a report. According to a report by credit rating agency Acuite Ratings and Research, the commencement of the rabi harvest season (winter crop) amidst the current lockdown presents a good opportunity for online sale and trading of agricultural goods across the country. While the Central and the state governments have a mechanism of minimum support price (MSP), farmers often are forced to sell their produce in the open market at a lower rate than MSP, given the procurement constraints of government agencies, the report said. It further noted that consumer prices of such commodities are uneven across the country with significant inter-regional disparities in availability. As per the report, a divergent food inflation landscape is a reflection of regional demand-supply imbalances and highlights the need for a pan India agricultural trading market in India. A comparison of the food inflation print among India's 23 states reveals that the February FY20 food CPI ranged between 3.46 per cent (Delhi) and 8.94 per cent (Telangana), this is despite the 7.3 per cent increase in food subsidy allocation to Rs 1.08 lakh crore for FY20, it noted. Further, the report said the primary factor behind supply and price distortions for farm produce in India is due the inherent inefficiency in Agricultural Produce Market Committee (APMC) structure for marketing of agricultural goods in our country. "Clearly, the APMC led market system has made India's agriculture trade highly region centric and discouraged the development of a national agricultural auction platform. In our opinion, this can be addressed by taking advantage of the electronic national agriculture market or eNAM, one of the digital initiatives of the government," Acuite Ratings and Research Chief Analytical Officer Suman Chowdhury said. This can bring significant efficiencies in the farm marketing mechanism, act as an effective tool for fighting inflation or price distortions and also reduce the procurement burden on the exchequer, he added. According to estimates, the share of eNAM in India's total food grain production (including oil seeds) is only 8.6 per cent on average since inception in April 2016. However, it is encouraging to note that both the Central and the state governments are currently urging farmers and traders to utilise eNAM and avoid physical presence at the auction site, the report added. SM DRRDRR

Covid-19 crisis opportunity for agri-marketing reforms: Report

<ul><li>The fall in retail inflation has been due to the quick drop in vegetable prices .</li><li>Cereals and milk inflation, the top two contributors to food inflation, are still elevated and on an upward trend.</li><li>The Central Banks' decision to go for another rate hike in the February meeting will be a close call.</li></ul> With core inflation continuing to be high, credit rating agencies like Acuite Ratings &amp; Research and <keyword id="6431877" type="General" weightage="80" keywordseo="care-ratings" source="Orion">CARE Ratings</keyword> do not expect any significant downtrend in the retail inflation for the next few months. "It is a pleasant surprise to see the headline CPI inflation print at 5.88 per cent in Nov-22 from 6.77 per cent in Oct-22 since most market participants estimated it to be above 6.0 per cent. This is an eleven-month low figure and is clearly driven by the faster-than-expected decline in food inflation which stood at 5.1 per cent in the previous month," Suman <keyword id="41544" type="General" weightage="80" keywordseo="chowdhury" source="Orion">Chowdhury</keyword>, Chief Analytical Officer said. According to Chowdhury, the fall in retail inflation has been due to the quick drop in vegetable prices which is a seasonal phenomenon apart from the continuing softness in edible oil prices. "Nevertheless, the core inflation figure remains high for <keyword id="30067" type="General" weightage="50" keywordseo="rbi" source="Orion">RBI</keyword>'s comfort and has in fact moved up further to 6.29 per cent in Nov-22 from 6.23 per cent in Oct-22; on an MoM basis, the core inflation went up by 0.43 per cent, highlighting the embedded nature of the current inflationary environment," Chowdhury said. The moderately healthy, if not strong, momentum in domestic demand is leading to the holding up of the core inflation. Also, the base factor was relatively an advantage for the Nov-22 print which may not be the case for Dec-22. Therefore, we don't expect any significant trend downward for the CPI inflation for the next few months, Chowdhury said. "Given the core inflation trajectory, we continue to forecast an average figure of 6.7 per cent for CPI inflation in FY23. We also continue to expect another round of modest hike in Feb-23 which will take the terminal rate to 6.5 per cent or higher," Chowdhury said. According to CARE Ratings, though the inflationary pressures are on a declining trend, the war against inflation is still not over. The moderation in food inflation is comforting, but it is mostly led by vegetables which are susceptible to weather fluctuations. Cereals and milk inflation, the top two contributors to food inflation, are still elevated and on an upward trend, CARE Ratings said. In this context, better <keyword id="6384972" type="General" weightage="50" keywordseo="rabi" source="Orion">Rabi</keyword> acreage in the current season is a comforting factor. The strengthening of services inflation has led to sticky core price pressures despite easing of goods inflation. Taking cue from the recent data, the RBI will remain cautious to prevent inflationary expectations from spiralling upwards. However, with disappointing data from the <keyword id="6362048" type="General" weightage="50" keywordseo="manufacturing" source="Orion">Manufacturing</keyword> sector, the Central Banks' decision to go for another rate hike in the February meeting will be a close call. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-declines-20-paise-to-82-71-against-us-dollar-in-early-trade/articleshow/96188516.cms">Rupee declines 20 paise to 82.71 against US dollar in early trade</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/online-education-company-and-unicorn-pluralsight-lays-off-400-employees/articleshow/96187396.cms">Online education company and unicorn Pluralsight lays off 400 employees</a>

November retail inflation may be down, but the war against inflation is on say experts

<keyword id="6354427" type="General" weightage="100" keywordseo="apple" source="Orion">Apple</keyword> is researching how to add a colour change function to the <keyword id="1577486" type="General" weightage="80" keywordseo="apple-watch" source="Orion">Apple Watch</keyword> band that matches the wearer's clothing and alerts the wearer to information. According to AppleInsider, a newly-granted patent appears to show it doing just that. Instead of purchasing multiple Watch bands to match different outfits, "Watch Band With Adjustable Colour" suggests that users purchase just one that changes colour. "Users may desire the ability to customise their watch bands to express variety and style," according to the newly-granted patent. "For example, a user may desire a watch band of a particular colour based on the user's selection of clothing, other wearable articles, environment, or another preference," it added. Apple's patent describes the idea by referring to Watch bands with "electrochromic features", meaning that "an applied voltage" can cause "a variety of colours and colour combinations to be displayed by a single band". Moreover, the report said, while the patent attempts to describe every possible use of its core idea, the central examples revolve around bands that are made from a fabric which is itself woven from filaments. "Some or all of the filaments can include electrochromic features. For example, one or more of the filaments can include a conductor and an electrochromic layer," Apple was quoted as saying. "The electrochromic layer can be electrically connected to the conductor so that voltage applied to the conductor is communicated to the electrochromic layer. The electrochromic layer can include a polymer layer... (which) can react, in the presence of an applied voltage, to change its colour, as described further herein," it added. The tech giant further stated that, "the colour selections can be made and adjusted without removing and exchanging the watch band. Accordingly, a variety of colours can be displayed at different times without requiring different watch bands for each colour or colour combination". The patent is credited to four inventors, three of whom previously worked on research for touch-sensitive fabrics for a future HomePod -- <keyword id="16607210" type="General" weightage="50" keywordseo="zhengyu-li" source="Orion">Zhengyu Li</keyword>, <keyword id="16607212" type="General" weightage="50" keywordseo="chia-chi-wu" source="Orion">Chia Chi Wu</keyword>, and <keyword id="16607211" type="General" weightage="50" keywordseo="qiliang-xu" source="Orion">Qiliang Xu</keyword>, the report mentioned. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rbi-mpc-may-go-for-25bps-policy-rate-hike-in-april-acuite-ratings/articleshow/98150931.cms">RBI-MPC may go for 25bps policy rate hike in April: Acuite Ratings</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/govt-asks-all-states-uts-to-make-6-years-minimum-age-for-class-1-admission/articleshow/98151694.cms">Govt asks all states, UTs to make 6 years minimum age for Class 1 admission</a>

Apple Watch band may change colour based on your outfit in future

Mumbai, Mar 16 () Air India pilots sought an urgent financial assistance from the government on Monday for the disinvestment-bound national carrier amid the coronavirus pandemic. With global travel bans due to the pandemic, many airlines across the world are staring at massive losses and fear going bust. Aviation think-tank Centre for Asia Aviation has already warned that most airlines across the world would go bankrupt if the governments do not take a coordinated action. In a joint letter to Civil Aviation Minister Hardeep Singh Puri, the two Air India pilots' unions -- Indian Aviation Guild and the Indian Commercial Pilots Association -- said the COVID-19 crisis was wrecking havoc across the globe. During this perilous time, Air India employees have gone above and beyond to get the people of the nation back from affected countries worldwide, the unions said. "Despite cases of infections on our aircraft and even quarantine for our crew, the employees continue to do their duty at considerable personal risk," according to the unions. "We urge you to provide urgent financial aid to Air India so that we, the airlines employees, can keep on doing our jobs and (continue) serving the nation," the letter stated. According to a recent report by Acuite ratings, the domestic air traffic would be impacted negatively by 50 per cent, which would in turn also impact the passenger load factor by 50-60 per cent till June on a year-on-year basis. Stating that the government had not infused any funds into Air India in the current financial year, the letter said: "This makes it almost impossible for Air India to meet it's monthly financial obligations." "Our salary is getting delayed for more than an year and even as of date, even January wages have not been paid in full," they said in the letter. "At present, essentially all flights Air India is operating are rescue missions at the cost of our own safety with escalating risk of contracting the virus," they said. "This repeated withholding of wages is straining us financially." IASHMB

COVID-19: Air India pilots seek urgent financial aid

Mumbai, Mar 27 () Analysts were unanimous in welcoming RBI's rate cuts, forbearance on loans and liquidity easing measures, saying the economy requires stimuli in the present circumstances. Some of them also said that the Reserve Bank of India (RBI) may have to deepen the rate cut if the COVID-19 crisis prolongs. The RBI, which advanced a meeting of the rate setting panel by a week, announced a 0.75 per cent cut in its policy rates, infusion of Rs 3.76 lakh crore of liquidity through moves like a cut in cash reserve ratio and also allowed banks to not treat any term loans as NPAs for three months if there is no repayment. "RBI, very correctly so, announced a comprehensive bazooka covering all aspects of the economy by taking measures system-wide both through liquidity, rates and regulatory forbearance (retail as well as for industry) and also targeted measures to manage the corporate bond markets," Kotak Mahindra Bank's senior economist Upasana Bharadwaj said. She said the measures should help in tiding issues which many banks/institutions were fearing and will go a long way in cushioning the dislocations in various markets. The bank expects additional scope for 0.40-0.50 per cent cut depending on the nature of spread of COVID-19, she added. Singaporean lender DBS's economist Radhika Rao said RBI has pulled out all stops with the aggressive rate cut and said the intention seems to be to reduce cost of funds while lowering incremental capital burden on banks. The central bank has also addressed banks' reticence in buying commercial paper by making it possible to hold them under the hold to maturity portfolio rather than mark to market, which affects their earnings, she said. "While India has limited fiscal space, monetary policy continues to do the heavy lifting at a time when growth is at a severe risk in the near term," SBI Mutual Fund's chief investment officer Navneet Muhnot said. He said we need to explore unconventional measures on fiscal, administrative and regulatory fronts on the lines of lead taken by RBI. Consulting firm Deloitte's partner Himanish Chaudhuri said the announcement is welcome and has allayed a lot of concerns which the industry was having. Industry lobby CII's director general Chandrajit Banerji welcomed the RBI moves but added that it expects the central bank to extend the repayment moratorium if the crisis prolongs. Domestic rating company Acuite's president Suman Chowdhury said while the rate cut of 75 bps is indeed sharp and goes beyond the market expectations, the extent of the transmission by the banking system will have to be seen. AA SHW DRR

Analysts welcome RBI stimulus measures

(Eds: Adding details) Mumbai, Apr 17 () Virtually doubling the timeframe for recognising a loan as a non-performing asset (NPA), the Reserve Bank announced an "asset classification standstill" for March-May, giving one more benefit to borrowers hurt by the impact of the COVID-19 pandemic. However, lenders will have to set aside 10 per cent of the loan amount as provisions in cases where there have been deferments of payments, the central bank said. The RBI had on March 27 announced a 90-day moratorium on loan repayments for all loans because of the economic impact of the pandemic, as part of a slew of announcements to help protect different sections from the reverses due to the pandemic. "It has been decided that in respect of all accounts for which lending institutions decide to grant moratorium or deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period, i.e., there would be an asset classification standstill for all such accounts from March 1 to May 31," Governor Shaktikanta Das said in a televised video message. In other words, it will be 90 days after May 31 that an asset will be recognised as an NPA, giving the borrower much needed time to regularise an account which will be very helpful if she is hit by the economic hardships. In the case of non-bank lenders, they have also been given the flexibility under the prescribed accounting standards to consider such relief to their borrowers, Das said. Domestic credit rating agency Acuite Ratings and Research said that this measure effectively is an extension of the NPA period from 90 days to 180 days, but comes at a cost of banks' profitability as they will have to set aside 10 per cent as provision. "The banks and NBFCs also need to take higher provisioning charges for March and the June quarter, which will obviously hit their profitability further," it said. Das suggested that the move to set aside more money is driven by systemic safety considerations. "We are cognizant of the risk build-up in banks' balance sheets on account of firm-level stress and delays in recoveries. With the objective of ensuring that banks maintain sufficient buffers and remain adequately provisioned to meet future challenges, they will have to maintain higher provision of 10 per cent on all such accounts under the standstill," he said. Economic activity has come to a standstill during the period of the lockdown, with consequential lingering effects which have unambiguously affected the cash flows of households and businesses, he said. In a late evening circular, RBI said banks will have to make the provision on such assets at 5 per cent for the March quarter and the remaining 5 per cent for the June quarter. The provisions shall not be reckoned for arriving at net NPAs till they are adjusted against the actual provisioning requirements, it said. AA RVK

RBI exempts accounts with moratorium benefits from asset recognition norms for 90 days

Chennai, With the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword>'s (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) Monetary Policy Committee (MPC) deciding to retain the repo rate at 6.5 per cent, economists are of the view that a rate cut may not happen any time soon or at least for next six months, said senior economists. In a 5:1 decision, the MPC which met on February 6-8, decided to hold the repo rate -- the rate at which the RBI lends to banks -- at 6.5 per cent. The RBI MPC also decided not to change its stance to 'neutral' from 'withdrawal of accommodation'. "It was no surprise that RBI MPC decided to keep the status quo on the interest rates for the sixth consecutive time. However, RBI continued to sound hawkish as against the market expectations and has not provided any indication of the timing of the change in monetary stance from withdrawal of accommodation," said <keyword id="20504468" type="General" weightage="20" keywordseo="suman-chowdhury" source="keywords">Suman Chowdhury</keyword>, Chief Economist and Head - Research, Acuite Ratings &amp; Research. "Given the tone of the MPC statement and the expectation of growth buoyancy, we believe that the likelihood of any rate cut by RBI has significantly reduced over the next six months," Chowdhury added. The RBI MPC will not cut the repo rate ahead of the US Federal Reserve, said Madhavi Arora, Lead Economist, Emkay Global Financial Services. "We understand that shifting debates on global narratives requires the RBI to be flexible as well. We have long maintained that the RBI's policy has been somewhat pegged to the Fed, specifically in the last two years, even as it formally targeted inflation. The swift turn of tone and action pivots of the RBI in the last two years have been influenced purely by global narrative. We do not see RBI preceding the Fed in rate cuts," Arora said. Predicting that RBI will remain cautious owing to high food inflation, CARE Ratings's Chief Economist Rajani Sinha said: "Healthy economic growth gives room to the Central Bank to maintain status quo for some more time." "However, in the second half of the year, as domestic inflationary concerns recede and the US Fed starts cutting rates, we can expect a shallow rate cut by RBI. On the liquidity front, RBI will continue to intervene through appropriate tools as required," Sinha said. <keyword id="20504469" type="General" weightage="20" keywordseo="sujan-hajra" source="keywords">Sujan Hajra</keyword>, Chief Economist &amp; Executive Director, Anand Rathi Shares and Stock Brokers, was also of view that rate cut may not happen any soon and RBI will be on wait and watch mode. "With RBI's inflation projection of 4.5% for FY25, any expectations of cuts coming in the current year become unlikely. We think the progress in food prices will be the key monitorable for RBI's tone in the upcoming policy. Like other central banks, higher growth for the current and next year gives RBI more headroom to be on a wait-and-watch mode," Hajra said. As to the 7% economic growth rate for FY25 stated by RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword>, Chowdhury said: "They have significantly upgraded their growth prospects for the next fiscal to 7.0%, reflecting that there are minimal concerns on economic growth at this time." "RBI's assessment on global growth also appears to be positive versus last year and it also believes that central banks are unlikely to resort to a pivot within a short period. Our outlook on the domestic growth prospects are moderate with a base forecast of 6.3% for FY25, given the visible weakness in the private consumption growth which is estimated at 4.4% in FY24 in the NSO estimates," Chowdhury said. "On the inflation front, the base forecast for headline CPI in FY25 is set at 4.5% which in our opinion has significant upside risks if the growth really maintains such a high level of momentum and if there are even moderate risks in the monsoon behavior," Chowdhury added.

RBI may not cut repo rate any soon or for six months: Economists

Mumbai, Jun 22 () Even though India relies sizeably on Chinese imports, there are 40 sectors where domestic substitutes do exist and switching part of the requirements to local alternatives can reduce the trade deficit with the northern neighbour by USD 8.5 billion in a single year, a report said on Monday. The trade deficit contraction estimate has been made for FY22, assuming for a fourth of the items in the 40 specified sectors being sourced locally, Acuite Ratings and Research said. Standoffs at the borders in Ladakh, which resulted in a brutal killing of 20 Indian army men including a colonel, have led to widespread calls of not buying items from China and isolating the northern neighbour commercially. A few government entities like BSNL, Indian Railways and town planning authority MMRDA have already walked out of contracts or stalled tender processes which were certain to be won by Chinese entities. In a dichotomy or sorts, Indian consumers have been making a beeline for Chinese mobile handsets at the height of the tensions with an expensive smartphone model getting sold in minutes. "We believe that Indian industry has the wherewithal to successfully safeguard its interests and reduce India's dependency on China albeit in phases," the rating agency's chief executive Sankar Chakraborti said. A strategic intent and highly calibrated approach from both the government and industry can not only reduce the trade deficit but also kickstart the long-awaited cycle of fresh private sector investments, he added. In FY20, India imported goods and services valued at USD 65.1 billion to China and could only garner USD 16.6 billion in exports resulting in a trade deficit of USD 48.5 billion, it said. Anti-dumping restrictions in certain sectors have led to a 15 per cent decline in the imports from China over the last two years, but the dependence of domestic economy on China is very high, its chief analytical officer Suman Chowdhury said. After an analysis, the agency found that there are nearly 40 sub-sectors that have the potential to lower their import dependency on China. These include chemicals, automotive components, bicycles parts, agro-based items, handicrafts, drug formulations, cosmetics, consumer electronics and leather-based goods, it said. Collectively, these specified sectors constitute USD 33.6 billion of imports, it said, adding that without any significant additional investments, the domestic manufacturing sector can substitute 25 per cent of the total imports from these specified sectors under consideration in the first . Such a move alone can in the first phase can alone enable India to reduce the trade deficit with China by USD 8.4 billion in a single year, it said. "This would have a positive cascading effect on the economy as equivalent quantum of revenues would not only be added to the turnover of domestic enterprises including MSMEs but is also likely to translate to benefits through forward and backward linkages, better economies of scale along with cost competitiveness and importantly, enhancing the scope of employment generation," the agency reasoned. It said the chemical industries alone can help reduce the Chinese import as by USD 3 billion as it is only in a few segments like speciality chemicals that there is no domestic capabilities. AA MKJ MKJ

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