Daily Financial News Analysis – 29th May’20

Table of Contents

May 2020

Business activity improved slightly in May from a near stall in April.
The 17.3 million e-way bills generated so far this month are about twice the 8.6 million filed in April.
The e-way bill is a document that’s required under the GST regime to transport goods.
However, the e-way bill number for May is at about a fourth of the pre-Covid monthly average.
CII survey: factories are now operational in large parts of the country
It signifies pent-up demand across sectors
The rise in consumption of power and fuel also pointed to an improvement in economic activity.
The government expects the situation to improve in the July-September period as more curbs are likely to be eased after May 31.
Second quarter could be better as activity picks up.
Air quality index, the harvest and other indicators are telling us that economic activity is beginning.
Challenge: lack of public transport

Flights across India will return to pre-Covid levels by Diwali.
Hardeep Singh Puri: extending the lockdown could be “more devastating than Covid” for the country
Country’s recovery rate from Covid-19 was higher than those of other nations.
Domestic flights are operating at 20% of pre-Covid capacity, which was 2,700 daily flights with 650 planes.
Revival of hospitality industry will depend on aviation coming back.
On restarting flights, the central government had to face some resistance from states as they are struggling to curb disease numbers.
Puri said that Air India divestment’s programme may have been delayed further but he expects the national carrier to become more attractive for suitors.

Two govt panels, tasked with managing medical emergency and availability of hospitals, isolation and quarantine facilities, have called for no further extension of the lockdown.
These two panels have submitted an exit strategy for Covid lockdown 4.0.
Continuation and even scaling up of containment measures in the worst-hit areas while allowing other places to open up.
Except keeping schools, colleges, movie halls and religious places closed, the panels have recommended lifting all other lockdown curbs.
Allowing international travel has not been proposed.
The home ministry had, in March, set up 11 empowered groups for planning and implementing Covid-19 response activities.
The group on managing medical emergency is chaired by __________.
The group on availability of hospitals, isolation and quarantine facilities, disease surveillance, testing and critical care is chaired by _________.

The Survey was conducted by Skoch Consultancy Services in association with Federation of Indian Micro and Small & Medium Enterprises (FISME), Bhartiya Vitta Salahkar Samiti and Tax Law Educare Society.
Over three-fourths of MSMEs in the national capital region have cut employee salaries.
Nearly two-third are resorting to layoffs after seeing no rise in demand.
Most immediate challenge for MSMEs: paying salaries, discharging vendor bills, and meeting other fixed expenses.

44% of respondents said the relief measures announced by the government did not meet expectations.
86% wanted direct cash support from the government.
77% of the surveyed businesses citing need for emergency funds.
32% respondents found it useful, 44% did not, the survey revealed.
In May 2020, the number of MSMEs cutting all jobs rose to 6% from 4% in April. Another 30% are planning to cut half the jobs and 26% are planning to reduce a quarter of the jobs.

S&P Indian economy will contract 5% this fiscal.
Covid-19 outbreak in India and the two months of lockdown, which is longer in some areas, has led to a sudden jolt to the economy, which will result in growth contracting sharply this fiscal.
Economic activity will face ongoing disruption over the next year as the country transitions to a post-Covid-19 world.
S&P expects the outbreak to peak by the third quarter of this calendar year.
Banks in India have been unwilling to extend credit.

FinMin: The facility for instant allotment of Permanent Account Number (PAN) has been formally launched.
This facility has been rolled out on near to real time basis.
The PAN applicants who has a valid Aadhaar number and have a mobile number registered with Aadhaar will be able to avail the recently launched facility.
The allotment process is paperless and an electronic PAN (e-PAN) will be issued to the applicants free of cost.

After contracting for a year, foreign direct investment (FDI) inflows into India picked up in FY20 to grow at 13%.
Cayman Islands emerged as a major source of foreign investment into the country.
DPIIT: India’s FDI equity inflows jumped to $50 billion in FY20 from $44.4 billion a year ago.
Including reinvested earnings, FDI in FY20 grew 18% to $73.4 billion.
Total FDI has doubled from 13-14 when it was only $36 billion.
British overseas territory the Cayman Islands, the United States and Switzerland do most to help the globe’s richest citizens hide and launder money.
Cayman Islands: hosts more than 100,000 companies, a number that outstrips the local population.
While services sector ($7.8 billion) continued to attract the highest FDI inflows into India in FY20 with computer hardware and software sector ($7.7 billion) coming a close second, FDI into the services sector saw a dip during the year compared to $9.2 billion a year ago.
Surprisingly, FDI into the hotel and tourism sector almost tripled jumping to $2.9 billion in FY20 from $1 billion a year ago.