Coronavirus Impacts Businesses In India, Travel Industry Also Affected
A usually crowded Yaara market in South Mumbai today is largely deserted. This market specializes in selling Chinese products but supplies are now running low.
Aslam Malkani is in the mobile accessories business for last 10 years. He said, "prices are rising and all because of coronavirus."
"Due to coronavirus, the prices have gone up by 15-20% in past February and whatever is remaining, people are selling it at any price," said Aslam Malkani.
Jin Chin Sin is a Chinese business based out of Guangdong province in China and has his factory in Asia market of Guangzhou province.
"My business has suffered 50% losses because of coronavirus. There are a large group of people like businessmen and manufacturers who suffered big loss," Jin Chin Sin said.
Kantilal Purohit has his toy store in Manish market in Mumbai. He is seeing a 75% drop in sales. This is because factories in China are under closed down and there's no labour there. He's stocking Indian made products but these are costlier.
"My entire business is about Chinese products and it is not coming in..factories are closed there , there are no workers there and hence the entire business is down, " Kantilal Purohit said.
The sentiment is echoed by Ahmed Raza who sells general items mostly made in China.
"Difference between Made in China and Made in India products is that the profit margin is very low. There I could earn 50% but with Indian products, margin is just 10%. This has impacted my business a lot," Ahmed Raza said.
Even travel and hotel industries have been badly impacted with many cancellations amid coronavirus spread across the globe.
"Few airlines are not flying. Cathay Pacific is not flying, Air China not flying, hardly any flights here and there...This will impact the tourism industry very badly. Hotels have less occupancy. New bookings to southeast Asia has gone down to 50%," Shilesh Patil, CEO of Kesari Tours and travels said.
The deadly novel coronavirus is slowing catching up and is also impacting businesses across the country. Although the priority is treating patients at the moment but the effect on businesses can also not be neglected as it will have impact on the already slowing economy. According to a UN report, India figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade.
With the number of deaths crossing 3,000 and over 80,000 confirmed cases, China remains the worst-hit country in the world.
Banks' Merger To Come Into Effect From April 1, Says Nirmala Sitharaman
Finance Minister Nirmala Sitharaman on Wednesday said the exercise of consolidation of 10 public sector banks (PSBs) into four is on course and the merger will come into effect from April 1, 2020.
The Union Cabinet, she said, has given a go-ahead for the merger proposal and the government has been in regular touch with these banks.
There will be no regulatory issues, she said.
"The banks' merger is on course and decisions have already been taken by the respective bank boards," she told reporters here.
The mergers are aimed at creating global sized banks in India.
In the biggest consolidation exercise in the banking space, the government in August 2019 had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.
United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank; Syndicate Bank will be merged with Canara Bank; Allahabad Bank will be amalgamated with Indian Bank; and Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.
Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.
Ajay Bhushan Pandey appointed as new Finance Secretary
The Appointments Committee of the Cabinet (ACC) has approved the designation of Ajay Bhushan Pandey as the new Finance Secretary. Pandey currently is the Revenue Secretary under the Union Finance Ministry. He will replace the incumbent Finance Secretary Rajiv Kumar.
Pandey, a 1984 batch IAS officer from the Maharashtra cadre, is known for his work with the Unique Identification Authority of India (UIDAI). He joined the Aadhaar-issuing authority on September 1, 2010, before the biometric identification framework was even launched. The first Aadhaar number was issued a few weeks after his appointment. He spent nine years with UIDAI.
Pandey holds a BTech degree from IIT Kanpur. He also has MS and PhD degrees in Computer Science from the University of Minnesota.
Slowdown Blues: Fitch cuts India's FY20 GDP forecast to 4.9%
Fitch Solutions on Monday said it has lowered its 2019-2020 (FY20) GDP growth forecast for India to 4.9 per cent, citing weak domestic demand and supply chain disruptions due to the coronavirus outbreak. The agency expects economic growth to pick up to 5.4 per cent in financial year 2020-21.
"We at Fitch Solutions are revising down our forecast for India's real GDP growth to 4.9 per cent in FY20, from 5.1 per cent previously, and 5.4 per cent in FY21, from 5.9 per cent previously," the agency said in its outlook for the country.
The global rating agency warned that India's export manufacturing sector may be impacted by disruption in the automotive and electronics supply chain from the ongoing COVID-19 outbreak in China, which took the death toll in China to 2,912, and worldwide to more than 3,000.
The manufacturing sector, which constitutes 14 per cent of GDP growth, remained weak over the near term. The contraction in manufacturing eased slightly to 0.2 per cent in Q3, from 0.4 per cent in Q2.
"Our revision is due to our view for disruption in the automotive and electronics supply chain from the ongoing Covid-19 outbreak in China to weigh on India's export manufacturing sector, and for this to have negative knock-on effects on the broad services sector," Fitch Solutions said.
The development comes days after India's real GDP growth decelerated to 4.7 per cent in third quarter ended December 31, 2019, due to weak consumption, a contraction in gross fixed capital formation and a smaller net exports contribution. While the gross fixed capital growth fell by 4.5 per cent, the government consumption growth slipped to 11.8 per cent from 13.2 per cent in the second quarter.
The government has also revised the GDP figures for first and second quarters of this fiscal to 5.6 and 5.1, respectively. It expects GDP growth during the entire financial year 2019-20 to be at 5 per cent. This pegs GDP estimates for the fourth quarter of FY20 to 4.6 per cent.
"A failure of the FY21 Union Budget to provide support to the industry will also bring little reprieve for a sluggish industry already coming under heavy pressure from a credit squeeze following the collapse of several key Non-Bank Financial Companies (NBFCs)," it said.
Fitch expects a slight pick-up in growth in the next fiscal, assuming that the virus spread would come down from June, which may lead to a broad-based improvement in economic activity.
"We expect manufacturing activity to come under further pressure from weak domestic demand and also supply chain disruptions due to the Covid-19 outbreak, which started in China. Weak manufacturing activity would also have a knock-on impact on slowing services growth," it said.
The agency expects manufacturing and services to pick up in FY21. "We also expect economic activity to be supported by an improvement in the agriculture sector through better harvest prospects and fiscal support announced in the FY2020-21 Union Budget."
Slowdown over? GDP growth rises 4.7% in December quarter
Indian economy finally had a breather as GDP growth showed a slight uptick in December quarter, after falling for six quarters in a row. India's Gross Domestic Product (GDP) grew at 4.7 per cent in quarter ended December 31, 2019, showed data released by National Statistical Office on Friday.
"GDP at Constant (2011-12) prices in Q3 of 2019-20 is estimated at Rs 36.65 lakh crore, as against Rs 35 lakh crore in Q3 of 2018-19, showing a growth of 4.7 per cent," Ministry of Statistics and Programme Implementation said in a statement.
Economic growth has been falling since March quarter of FY18 when it was pegged at 8.13 per cent. Last quarter, GDP growth rate reached 4.5 per cent, the lowest in six and a half years, due to subdued expansion in agriculture, manufacturing, and government expenditure. India's economic growth had plunged 2.2 per cent in FY19 alone - from 8 per cent in the first quarter to 5.8 per cent in the last.
Analysts were expecting Indian economy to start on the path to recovery in December quarter, owing to rise in rural demand, government spending in welfare schemes and private consumption.
Although signs are good, Indian economy is not out of the woods yet. GDP growth has to increase a great deal if India is to realise its dream of becoming a $5 trillion economy by 2024.
Moreover, economists believe Indian economy will remain under strain due to the coronavirus outbreak in China, which has crippled the global supply chain. The crisis is expected to have a major impact on several Indian industries, including pharmaceuticals, electronics, consumer durables, automobile, among others.