Daily Financial News Analysis – 16th Apr’20

Table of Contents

Restart Industry Engine

Modi administration took an important step towards resumption of normal economic activity.
Govt from April 20 will partially lift restrictions on manufacturing and construction, and ease movement of goods.
India has 232 SEZs with almost 6,000 units. Around 1,000 units in SEZs could become operational.
Nearly 80% of India’s export units located in special economic zones, export oriented units (EOUs) and industrial townships and clusters could resume work in some form by April 20.
MHA has divided the nation into hotspot and non-hotspot districts.
The new permitted activities can begin in these green zones, subject to permission from state or district administration.
While the industry will be somewhat relieved, many restrictions will remain in place, especially on factories, establishments and service industries operating within city and municipal limits.
All industrial activity in rural areas and outside municipal and city limits has been allowed, including manufacturing of essentials such as drugs, medical supplies and equipment.
Food processing units in rural areas have been allowed to resume.
All cargo movement through road and railways has been permitted, including loading and unloading at major ports and land ports.
Highway dhabas and restaurants will be allowed to remain open and movement of trucks has been permitted.
The government has also allowed construction activity to resume in rural areas and outside city and municipal limits and industrial parks, including those under the MGNREGS in another major decision that will impact rural livelihood and incomes.
Restrictions have been lifted on construction of renewable projects, and construction firms and real estate companies have been asked to resume work in places where workers are available on site and don’t have to be brought in from elsewhere.
As per Federation of Indian Export Organisations, around 80-85% exporting units, mostly in engineering, pharmaceuticals, electronics and chemicals, are likely to become operational with the government allowing manufacturing and industrial establishments in SEZs and export oriented units (EOUs), industrial estates and industrial townships to resume operations after April 20.
“Since in exports, documents are extremely important to show proof of delivery and negotiation, exporting companies having IEC number may be allowed passes for two persons, once a week, to collect documents from the office for submission to banks, shipping lines, courier companies,” said Sharad Kumar Saraf, president, FIEO.
SEZs and EOUs provide direct employment to more than 25 lakh people with investment of more than Rs 5.5 lakh crore and contribute Rs 7.87 lakh crore to India’s export basket, which is one third of total national exports.
India’s exports in FY20 declined 4.8% to $314.3 billion, with a whopping 34.57% in March to $21.41 billion.
Road travel through buses and rail travel will not be permitted. Inter-district and inter-state movement of people will also be banned.
Restrictions have been lifted on all agriculture, horticulture and fisheries, providing a huge fillip to rural economy during the crucial harvest season. Work can also resume in plantations.
Production at coal mines, oil and gas sites, refineries and units which require continuous process will be allowed, the government said.

FM to meet PM

AIM: to finalise the stimulus and support measures to counter the severe economic impact of Covid-19.
The upcoming package is likely to focus on the MSME sector, which has been the worst hit, and could include an over Rs 15,000 crore credit guarantee fund.
Sitharaman had already announced a Rs 1.7 lakh crore relief package that includes direct cash transfers to the poor and free ration, among other measures.
She had also announced relaxations in mandatory compliances for businesses and individuals.
The finance ministry held several rounds of discussions with various ministries and departments on issues faced by sectors administered by them as also industry.
Upcoming measures would be based on inputs provided by them and a task force set up by the prime minister.
Service sectors such as hospitality & tourism, aviation and exports including textiles and gems & jewellery are in focus for some relief.

IMD on Rainfall

Monsoon rainfall will be normal this year.
Great news for farmers and the economy.
Two-thirds of the country depends on agriculture for livelihood and higher farm income boosts overall demand and business sentiment.
Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 100% of the long period average (LPA) with a model error of ± 5%.
Farmers suffered a bad monsoon last year because rainfall was very uneven, starting very late and causing floods towards the end of the season, which ravaged farms.
The new long period average monsoon rainfall is 88 cm based on data from 1961 to 2010.
Earlier, it was 89 cm, from data between 1951 to 2000.
IMD and international forecasters say El Nino conditions are likely to remain neutral this year.
The IMD said that it will give a detailed forecast for its 36 subdivisions in its second-stage forecast in the last week of May.

Super-App

Mukesh Ambani-led Reliance Industries and Facebook are exploring the possibility of creating a multipurpose app.
The two would bring in funding, technical knowhow and domain expertise for the project.
The idea is to create an app that is not just a communication platform but one where users would also be able to buy groceries through Reliance Retail stores, or shop at ajio.com, or make payments using JioMoney.
B2C engagement for its consumer businesses, and provide the group insights on users’ spending habits.