Daily Financial News Analysis – 27th Dec’19

Table of Contents

FM to meet heads of PSBs

December 28
A. To discuss the credit flow to micro, small and medium enterprises (MSMEs)
B. The status of IBC cases
In September, Sitharaman asked banks not to declare stressed MSME loans as NPAs till March 2020.
The government wants to review the progress following various steps taken by it in recent past.
This meeting is taking place at a time when banks have been referring unresolved stressed companies to the National Company Law Tribunal (NCLT).
The successful resolution of Essar Steel has encouraged banks to take the IBC route.
Banks have also come under regulatory scanner due to lapses in corporate governance.

Food Corporation of India’s (FCI) grain stocks level is now close to its capacity of 76 million tonne (MT).
Given the expected pace of off-take under PDS and other schemes, it might face a storage crisis over the next two-three months and be compelled to sell a large surplus in the open market.
This could potentially inflate the food subsidy bill, as open market sales would likely be below the economic cost of grains and loss-making.

It may be noted that FCI is facing a storage problem when its stock levels are far higher than the buffer levels.
Its rice stocks, for instance, is now a little over 21 MT whereas the buffer requirement as on January 1 is 7.6 MT.
Economic cost of wheat is about Rs 25/kg and rice is Rs 36/kg for the current year, and storage accounts for 15% of this.

Operation Twist: simultaneous purchase and sale of long-tenor and short-tenor government securities respectively worth Rs 10,000 crore each.
The open market operations (OMOs) will be the second in the series as was expected by market participants who anticipate at least Rs 50,000 crore of OMOs.
The central bank is again targeting the 10-year benchmark bonds or the 6.45% yielding notes maturing in 2029 by deciding to purchase Rs 10,000 crore of the papers thereby reducing their supply in the market.
The RBI is looking to sell short-dated securities maturing in 2020 worth Rs 10,000 crore.

India is all set to cross the 100-GW renewable energy capacity mark in 2020.
It can make rapid strides towards the ambitious 175-GW clean energy target by 2022.
Provided the government keeps a close eye on key issues and deals with those well in time.
The government however needs to promote storage to ensure 24×7 clean energy supply as coal-fired thermal power still remains the base load in the country.

Overdue amount of discoms toward generators
1. Conventional: Rs 65,000 crore
2. Non-conventional: Rs 5,590 crore
Earlier this year, several new programs such as PM-KUSUM, solar rooftop Phase-2, development of ultra mega renewable energy power parks (UMREPPs), etc have been introduced to promote renewable energy sector in India.

Food & Agriculture Organisation:
Select agri and agri-based commodities like meat, milk and fruits, among others, present export opportunity worth over USD 97 billion (about Rs 6.9 lakh crore) for India.
India’s export share in agri items such as bananas, oranges, chicken, meat, and milk products like cheese and butter milk is miniscule at present.
World Trade Centre: in 2017 the country’s share in the global market for
19 commodities was a miniscule 1.5 per cent, or around USD 1.5 billion (about Rs 10,650 crore).
Potential: USD 97 billion
It can be noted that nearly a third of Indian farm produce is wasted due to lack storage/proper transport facilities.

GGI was launched by the central government to assess the state of governance in the country.
The objectives of GGI are to provide quantifiable data to compare the state of governance in all states and Union territories.
Enable them to formulate and implement suitable strategies for improving governance and shift to result oriented approaches and administration.
Various principles have been kept in mind while selecting the indicators, i.e. it should be easy to understand and calculate, citizen-centric and result driven, leading to improved results and applicable to all states and UTs, among others, it said.
The GGI takes into consideration 10 sectors — agriculture and allied sectors, commerce and industries, human resource development, public health, public infrastructure and utilities, economic governance, social welfare & development, judicial and public security, environment and citizen-centric governance.
The states and UTs are divided into three groups — big states, north-east and hill states, and Union territories.
Minister of State for Personnel Jitendra Singh launched the ‘good governance index’ at an event organised by the Ministry of Personnel, Public Grievances & Pensions on the occasion of good governance day here.
The good governance day is observed on the birth anniversary of former prime minister Atal Bihari Vajpayee.