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Morning Scan: All the big stories to get you started for the day

A round-up of the biggest articles from newspapers

May 31, 2021 / 09:12 AM IST

Below is a shortlist of all the important articles from newspapers.

Nascent recovery disrupted; consumption needs a big push

After a rollercoaster ride up to February last fiscal in the wake of the pandemic, merchandise exports surged a record 196% year-on-year in April and RBI said GDP growth could jump to 26.2% in the first quarter of FY22, driven primarily by a conducive base, Financial Express says.

The real scenario: Two months into the fiscal FY22 and three months since the release of the second advance estimate of GDP for FY21, it is now apparent with the second Covid wave that the economy’s nascent, pigeonholed recovery from the trough seen in the first quarter of last fiscal has been disrupted again. The timing and extent of the pullback are still being unfolded — today’s data for Q4FY21 will provide more hints on it.

Why it is important: With labour wage growth lagging return on capital, consumption recovery is impeded. The policymakers seem to have erred in anticipating a broad-based investment-led recovery.

Other engines of the economy need to start firing sooner rather than later, but that has been wishful thinking for quite some time.
What needs to be done: A front-loading of budgetary expenditure and CPSE capex appears to be the government’s short-term plan to salvage the situation.

Messaging to be free, but calls may come under licensing

The government is contemplating bringing under regulation the call services part of apps such as WhatsApp, Skype, Facetime and Viber, etc, while leaving the messaging part to be covered under the intermediary rules, which came into force from May 26, Financial Express says quoting its government sources.

What it means: The companies will need to take licence from the government for providing local or national long-distance calls.

Under the licensing framework, such firms need to provide legal interception of calls to security agencies, which currently applies to telecom operators. They would also need to pay an annual licence fee to the government.

Till debt do us part: Centre’s soaring debt may curb productive spending

India’s elevated general government debt of about 90% of GDP in the wake of the Covid-19 outbreak can potentially inflate interest payments and impair the ability of the Centre as well as states to boost productive spending, economists and senior executives at global rating agencies told Financial Express.

Given the damage caused by the second wave, some economists expect the FY22 fiscal deficit to exceed the 6.8% target by as much as one percentage point.

The need of the hour: To rekindle growth impulses fast, which will bolster revenue mop-up and enable the country to pare down its debt, they stressed.

This must also be followed up with a credible road map, which should be more sacrosanct than the oft-relaxed FRBM rules, to reduce debt.

Expeditious containment of the second wave and effective implementation of structural reforms, especially in factors of production, are key to the country’s growth objectives.

Govt expands scope of emergency credit plan

MUMBAI: The government extended a sovereign-backed emergency lending programme to airlines and hospitals to help them overcome the disruptions caused by the pandemic.

How it is important: The loans under the Emergency Credit Line Guarantee Scheme (ECLGS), which was earlier provided to sectors such as textiles and auto components, can now be availed of by airlines and hospitals until September 30, or till guarantees for an amount of ₹3 trillion are issued, the finance ministry said in a statement. Disbursement under the scheme will be permitted till December 31, Mint reported.

The present scenario: Banks said they have sanctioned ₹2.5 trillion and have room for about ₹45,000 crore of loans for the aviation sector and medical institutions.

The government also allowed small businesses to borrow an additional 10% of their credit limit to tide over the crisis. Some borrowers can also extend the tenure of their loans.

RBI likely to keep rates on hold, extend GSAP

MUMBAI: The RBI’s monetary policy committee is expected to keep interest rates on hold in its upcoming review meeting on Friday amid fears of inflation adding to the impact of the second wave of covid infections, according to a Mint survey.

Revised GDP numbers soon: Alongside, market experts said RBI is also expected to revise gross domestic product (GDP) numbers while extending its government securities acquisition programme, or GSAP, announced in April.

Is it more accommodative policy? “We do not see any change in repo rate (the key rate) next week even with an elevated risk of input cost and output price inflation. The policy guidance has become more open-ended and state-based amid new uncertainties and the evolving nature of the economy, with the MPC stating that the policy stance will remain accommodative ‘as long as necessary’ until growth recovers on a durable basis while ensuring inflation remains within the flexible target," said Madhavi Arora, chief economist, Emkay Global.

Paytm on track for India’s biggest IPO, but beware of bumps ahead

Paytm is looking to float an IPO worth a staggering $3 billion (₹21,700 crore) by November. This would value the firm at $24 billion. In its previous funding round of $1 billion in November 2019, the firm was valued at $16 billion, Mint says.

The motivation: While the motivation behind the IPO is not known, it is likely to be not just for fund-raising but also to give a chance to the company’s long-term investors to monetise holdings. SoftBank, Alibaba Group and Berkshire Hathaway are some of the marquee investors in the firm.

What favours Paytm: It is an early mover in the fintech space and has achieved scale.

And given a full stack of products from payments to digital lending, getting a customer and keeping them loyal can be an advantage for the company.

Paytm’s strength lies in its merchant integration.

Paytm has also applied for a small finance bank licence after the regulator indicated payment banks can convert themselves into such.

Mid-tier IT shines in Q4, wage costs shrink margins

Mumbai: Software services firms saw robust revenue growth in the March quarter, driven by strong deal wins amid accelerated digitization, Mint reports.

Road ahead: However, analysts said, it does not signal growth moderation as the demand environment continues to be healthy. Management commentaries indicated a strong technology-spending environment, with a high focus on cloud migration.

But wage hikes, one-time bonuses and rupee appreciation impacted margins to some extent, which was partially offset by higher offshoring during the quarter.

Second wave likely to fuel NPAs at vehicle financiers

Mumbai: Vehicle financiers in India may see a 5-7% increase in non-performing loans as the second wave of the pandemic worsens the financial health of their customers, Mint citing industry experts reported.

But how: Incomes of fleet operators have taken a severe hit as strict lockdowns in the States have crimped economic activity.

An increase in operating costs also a dampener.

India and the Philippines look to boost cooperation in fisheries sector

New Delhi: India and the Philippines are considering investments and technology partnerships in fisheries in a bid to bolster cooperation in the blue economy, which deals with the sustainable use of marine resources, Mint says.

Tell me more: To start with, the Philippines may invest in India to open tuna fish processing units.

Alternatively, India could also export its tuna catch for processing in the Philippines, the person said, requesting anonymity.

With the Philippines having preferential duty privileges in the European Union for tuna exports, this could help both New Delhi and Manila.

We’re on right track in 7 years of govt: Modi

NEW DELHI: Prime Minister Narendra Modi highlighted his government’s achievements in the seven years in which it has been in power, saying that India was on the “right track” and that it did not work as per the “thoughts and pressures” of other nations, but according to its own “resolve”, Hindustan Times reports.

The Prime Minister said India has made strides in several areas -- from water and electricity connections in rural households to digital transactions.

PM Modi invoked national security -- which the BJP-led government says is one of the key areas it has taken a tough stand in -- and said that India has followed its "own conviction".

Monsoon onset to miss today’s date, will arrive on June 3: IMD

New Delhi: The monsoon is likely to begin its onset over Kerala around June 3, two days after its normal date of arrival, the India Meteorological Department (IMD) said in its revised forecast, says Hindustan Times.

The weather department previously said that the start of the monsoon would be on May 31, a day ahead of schedule.

How it is important: Monsoon rainfall is the lifeblood of Asia’s third-largest economy as nearly 60% of the country’s cropped area doesn’t have irrigation coverage. IMD said last month the country was expected to get average monsoon rainfall this year, raising expectations of higher farm output.

June’s vaccine quota to be 120mn after 79mn in May

New Delhi: Nearly 120 million vaccine doses will be available for the national Covid vaccination programme in June, the Union ministry of health and family welfare announced even as both companies supplying the jabs are looking at ramping up their production capacity to 110-120 million doses from the existing 75-80 million, Hindustan Times says.

How it is important: At least 60 million doses of Covid-19 vaccines will be supplied to the states and Union territories for vaccination of the priority groups, and people aged 45 years and above as free supply from the central government channel. Apart from that, close to 59 million doses will be available for direct procurement by the States and private hospitals.

Industries prepare to open with tests and vaccinations

New Delhi: With plans to open Covid-19 test camps, vaccinate workers, make staggered lunch hours, and, perhaps the most important, invest in efforts to bring back workers who had left for their villages, enterprises in industrial areas in Delhi and construction agencies are prepared to resume business from Monday after six weeks of lockdown that was imposed in the Capital in the light of an unprecedented Covid-19 surge, Hindustan Times reports.

What it is important: The government is going to assess the situation weekly. So, there is fear that if Covid-19 cases go up, the lockdown can be imposed again. Both employees and employers are treading with caution.

Several other factory owners across industrial areas in Delhi told HT that they will be vaccinating their employees and shared plans to periodically set up Covid-19 test centres.

Also, a large number of labourers and workers who left the city during the lockdown are unlikely to return soon with their savings depleted in treatment of their relatives infected by Covid-19, lack of job security and fear of another wave of the pandemic which may again lead to a lockdown.

Currently, only workers who have a house in slums are left in the city, which must be less than 20% of the total workforce.

Amid oil price rise, Centre to distribute free oilseeds

India’s policymakers, alarmed by the growing prices of edible oils due to high import costs of oilseeds, have decided to re-use a Green Revolution-era strategy of distributing free seed packets, Hindustan Times says.

Why it is important: The government hopes the move would raise domestic production of oilseeds and reduce extra reliance on imports.

They hope this would shoot up domestic production of oilseeds and reduce the over-reliance on imports.

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first published: May 31, 2021 08:16 am
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