BQuick On June 11: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Virtual AGM Season Kicks Off
In any other year, India’s largest software services provider would have booked a large venue like in the past. Maybe the Birla Matoshri Sabhaghar, one of Mumbai’s oldest and largest auditoriums. And Tata Group Chairman N Chandrasekaran and senior executives of Tata Consultancy Services Ltd. would have been in the spotlight, fielding queries.
- As the pandemic warrants distancing, this time the management and shareholders logged in virtually, kicking off the year’s annual general meeting season.
- The usual atmosphere was missing. The regulars weren’t reciting poetry, waxing eloquent or taking jibes. And screens went blank and came back alive, causing frequent interruptions.
- TCS’ meet, conducted via WebEx, began at 3:30 p.m. and the management logged in from TCS House, the Mumbai headquarters of the company.
- After the chairman’s address and Chief Executive Officer Rajesh Gopinathan’s presentation, the platform was opened for shareholder for queries.
It sets the tone for how this season of AGMs will go.
2. A Tip For Mr. Modi
The Narendra Modi-led government should use the Covid-19 crisis to seriously deal with the huge challenges India faces in sectors such as education and health. The fiscal cost attached to this could be partly monetised by the central bank.
- That’s according to Jim O’Neill, currently chair of the Chatham House and former chief economist at Goldman Sachs, who coined the term BRIC in 2001, grouping India among a set of developing economies with potential to lead global economic growth.
If they [Modi government] try to seriously deal with the huge educational challenges in India and the huge systematic health challenges in India, and if the fiscal costs of that would end up being the reason the central bank would end up doing some more ambitious monetisation, I think that would be an incredibly smart thing to do. And I think markets around the world would be forgiving.Jim O’Neill, Chair, Chatham House
“I would go out of my way to publicly embrace such an initiative if they did,” O’Neill said.
3. Supreme Court Says Telecom Ruling Doesn't Apply To PSUs
The Supreme Court said the government can’t use its verdict ordering wireless carriers to pay pending statutory dues to raise similar demands from public sector companies that have internal telecom or internet infrastructure.
- The court on Thursday sought an explanation from the government and asked it to consider withdrawal of these demands.
- The 2019 verdict could not be the basis of asking state-owned operators to also pay up, it said.
- Meanwhile, the Supreme Court asked private telecom operators to explain how they plan to pay the pending dues.
- The government proposed allowing payment of dues in a staggered manner over 20 years.
The Supreme Court will now take up the AGR dues case on June 18.
4. Nifty Cracks, Dow Slumps
Indian equity markets were not insulated from the sell-off in global equities as benchmark indices posted their biggest single-day drop in three weeks.
- Both the S&P BSE Sensex and the NSE Nifty 50 index ended 2.1% lower at 33,538 and 9,902 respectively.
- All sectoral indices ended with losses led by the Nifty PSU Bank index that ended with cuts of nearly 4%.
Follow the day’s trading action here.
U.S. stocks tumbled the most in almost six weeks as the torrid surge in equities came to a screeching halt amid economic jitters.
- The S&P 500 careened toward a third day of losses following one of the fastest rallies on record, with almost 490 shares dropping.
- Treasury 10-year yields fell to as low as 0.67%, while the dollar jumped.
- U.S. jobless claims remained high, underscoring the longer-term challenges caused by the pandemic. The report came out a day after the Federal Reserve provided a dour outlook for the economy.
- West Texas Intermediate crude sank 6.7% to $36.94 a barrel.
Get your daily fix of global markets here.
5. Aggressive Recovery Tactics Return
Imagine this. You are fast asleep after a long day of work from home and at 2 a.m. your mobile phone rings. The caller is loud, abusive and refuses to listen to anything you have to say. What do they want? Make a Rs 5,000 worth repayment by tomorrow afternoon to avoid further phone calls.
- That’s just one example of the recovery practices being employed by non-bank lenders, many of whom have aggressively given out unsecured credit under products such as ‘payday loans’, among others.
- With the economy deteriorating, the proportion of defaults has risen for these lenders, many of whom operate digitally.
- Aggressive recovery practices in the Indian retail loan market were last seen during the 2008-09 crisis.
- More than a decade later, defaulting borrowers are once again complaining about harassment, this time from digital lenders.
Fake legal notices, abusive messages on Whatsapp and calls to relatives are some of the tactics being used by recovery agents.
6. NBFCs: More Headwinds
Liquidity pressures will remain elevated for India’s non-bank lenders even though regulatory measures have helped ease market conditions considerably.
- A paper authored by Reserve Bank of India staffers, published in its June 2020 bulletin, said despite interventions by the central bank and the government, there is still stress in the NBFC system.
- “This appears to suggest that the problem is not just of liquidity but, possibly, of expectations of deterioration in credit quality on account of Covid-19 related disruptions,” the paper said.
- As such, NBFCs may continue to face headwinds in terms of meeting funding requirements through market borrowings, even though these companies have shifted towards bank borrowings.
The paper said there is a need for a credit risk transfer mechanism to build a sustainable environment for NBFCs.
7. Easier GST Refunds For Exporters
The government has said pending goods and service tax refunds for exporters will be processed for the supplies that they import, as authorities were rejecting such claims based on an incorrect interpretation of an earlier circular.
- Tax authorities are rejecting refund claims of unutilised input tax credit as the invoices for them weren’t uploaded by their sellers in GSTR-2A forms.
- Under the reverse-charge mechanism, liability to pay GST is on the recipient instead of the supplier of goods and services.
- This was based on interpretation of an earlier government circular that mandated taxpayers to file GSTR-2A to claim refund.
This will help provide significant relief to exports who were finding it hard to avail refunds.
8. Auto Sales Revival? Not So Soon
Automobile dealers don’t expect demand to recover anytime soon, especially in urban regions, despite lockdown curbs being eased.
- The first 10 days of June witnessed extremely low demand despite most dealerships resuming operations, according to Ashish Kale, president at the Federation of Automobile Dealers Associations.
- “Weak consumer confidence, especially in urban areas, continues to haunt as buyers stayed away from concluding their purchase due to threat of community spread [of virus] and return of the complete lockdown,” Kale said.
- Vehicle registrations, a measure of sales at dealerships, tumbled 89% year-on-year in May after a washout in April.
The dealers’ lobby didn’t disclose inventory data due to Covid-19-related disruptions.
9. Over 9,900 New Covid-19 Cases For Fifth Straight Day
Covid-19 infections neared the 2.9-lakh mark, as India continued to ease restrictions imposed during the two-month lockdown.
- India added 9,996 fresh cases in the 24 hours preceding the Health Ministry’s 8 a.m. update on June 11, taking the total tally to 2,86,579.
- This includes 8,102 deaths and 1,41,029 patients who have recovered.
- Authorities reported 357 deaths and 5,823 recoveries during the same 24 hours. This is India’s deadliest day so far.
- Even then, authorities continued to assert that there is no community transmission in the country.
- Indian Council of Medical Research also said that a sero-survey was conducted in the country that showed that lockdown measures prevented a rapid rise in cases, but a large population still remains susceptible.
Track news and developments around the Covid-19 pandemic in India here.
Globally, the number of coronavirus cases passed 74 lakh, with deaths exceeding 4.17 lakh.
- U.S. Treasury Secretary Steven Mnuchin said the government shouldn’t shut down the economy again even if there’s another surge in coronavirus cases.
- Meanwhile, a second wave of infections in America is raising alarm after the overall count passed 20 lakh.
- In Britain, Prime Minister Boris Johnson is battling to contain a public split with his own top scientific advisers, after they warned the government must learn from the catalog of failures it made during the coronavirus crisis.
Track virus updates from around the world here.
10. The Math Behind Reservation In Government Jobs
There are two kinds of roster systems which are now prevalent for recruiting government employees, writes Abhinav Chandrachud.
- In the 200-point roster, all the reserved categories get seats by the 14th post.
- The problem with the 13-point roster is that reserved categories have to wait a long time in order to get their turn.
- There has recently been some controversy over the application of the 13-point roster system in teaching departments at universities run by the central government.