India posts record fiscal deficit as coronavirus hits economy

NEW DELHI: India’s fiscal deficit touched a record $88.5 billion in the April-June quarter, 83.2% of the target for the whole of the current fiscal year, reflecting the impact of the coronavirus pandemic on tax collections and as the government front-loaded its spending.
The deficit is predicted by private economists to cross 7.5% of GDP (gross domestic product) in the 2020-21 fiscal year beginning April, from initial government estimates of 3.5%, due to a sharp economic contraction caused by the COVID-19 outbreak.
The economy is forecast to shrink 5.1% in the current fiscal year, and 9.1% under a worst-case scenario, according to analysts in a Reuters poll, its weakest performance since 1979.
Government data released on Friday showed total net tax receipts in three months through June declined more than 46% year-on-year to Rs 1.35 lakh crore ($18.05 billion), compared with Rs 2.51 lakh crore a year ago, even though taxes on fuel products have been increased.
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The number of COVID-19 cases jumped to 1.64 million in India on Friday, while the death toll rose to 35,747.
Over three months, total expenditure rose 13% year-on-year to Rs 8.16 lakh crore, compared with Rs 7.22 lakh crore a year ago, as the government increased spending on free foodgrains and rural jobs programmes for millions of migrant workers.
Economists said a more than two months-long lockdown since late March has hurt economic activity in Asia’s third largest economy, impacting tax collections and the government’s plans to raise revenue through privatisations of state-run companies.
New Delhi has increased its market borrowings target to Rs 12 lakh crore for the current fiscal year, from earlier estimates of Rs 7.8 lakh crore, to fund the budgeted spending.

Apple tops Aramco as most valuable publicly listed co

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NEW DELHI: Apple Inc’s stock hit a record high on Friday after reporting blockbuster quarterly results, helping the iPhone maker briefly overtake Saudi Aramco to become the world’s most valuable publicly listed company.
Apple’s stock surged to as high as $412.22 a share, putting its market capitalization at $1.762 trillion, according to the share count provided by Apple in a regulatory filing on Friday.
Saudi Aramco, which has been the most valuable publicly listed company since going public last year, had a market capitalisation of $1.760 trillion as of its last close, according to Refinitiv data.
Last up 6.2% at $408.78 in mid-day trading, Apple’s market capitalisation stood at $1.748 trillion. After Apple bought back $16 billion worth of shares in the June quarter, it had 4,275,634,000 outstanding shares, as of July 17, according to the filing.
With Friday’s stock gain, Apple’s has surged about 40% year to date, with investors betting that it and other major US technology companies will emerge from the coronavirus pandemic stronger than smaller rivals.
In its quarterly report, Apple announced a four-for-one stock split, with trading on a split-adjusted basis starting on August 31. It will be Apple’s first share split since 2014.

Forex kitty swells to fresh high of $522.63 bn

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MUMBAI: India’s foreign exchange reserves climbed by $4.99 billion to touch a new lifetime high of $522.63 billion in the week to July 24, helped by currency accretion and increase in the value of gold reserves, RBI data showed on Friday.
The overall reserves had swelled by $1.275 billion to $517.637 billion in the previous reporting week.
The reserves, seen as a major asset as the country undergoes the impact of the COVID-19 pandemic, had first crossed the half-a-trillion mark for the first time in the week ended June 5.
For the reporting week ended July 24, the foreign currency assets (FCA), a major component of the overall reserves, increased by $3.60 billion to $480.48 billion, the Reserve Bank data showed.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the reserves.
Value of the gold reserves shot up by $1.357 billion to $36.10 billion, as per the central bank data.
The special drawing rights with the International Monetary Fund (IMF) rose $9 million to $1.464 billion.
The country’s reserve position with the IMF also increased by $25 million to $4.585 billion during the reporting week.

Coronavirus: Trudeau announces plans for end of CERB, transition to EI

The federal government plans to transition recipients of the Canada Emergency Response Benefit (CERB) to the Employment Insurance (EI) program as the $80-billion coronavirus aid program wraps up this fall, Prime Minister Justin Trudeau said Friday.

Ottawa will also create a “transitional, parallel benefit” that is similar to EI for people who don’t qualify for the unemployment benefit, such as contract and gig workers.

“It will include access to training, and being able to work more hours and earn more money while receiving the benefit,” Trudeau said.

“We intend to cover every Canadian who is looking for work with a better, 21st-century EI system.”

Read more: CERB, CESB applicants report weeks-long payment delays as CRA rolls out anti-fraud checks

The last scheduled CERB pay period is set to end on Sept. 26. The taxable, personal income benefit — launched in early April — provides $2,000 every four weeks to eligible applicants who lost work or their jobs due to the economic impacts of the COVID-19 pandemic as of mid-March.

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The federal government later extended the duration of the CERB program through the summer. Eligible applicants can claim the benefit for a maximum of six, four-week periods.

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According to the government’s website, Ottawa has transferred $62.75 billion to 8.46 million unique applicants as of July 26.

Trudeau said more details about “what will come after the CERB” will be released in the following weeks.

He added that the government will also set up a “sickness and caregivers benefit” for individuals who contract the virus — or have a family member who did — and don’t have coverage through their job.

EI system is ‘ready,’ employment minister says

Speaking at a news conference later on Friday, Employment Minister Carla Qualtrough said the EI system is equipped to take in around four million applications at the beginning of September.

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Qualtrough said the system wasn’t set up to handle that volume of applications in mid-March when the pandemic hit and unemployment surged. But officials have “worked tirelessly” since then to automate, streamline and simplify “intake procedures,” she said.

Coronavirus: ‘CERB has served its purpose’ says Employment Minister Qualtrough in explanation of planned move to EI

Coronavirus: ‘CERB has served its purpose’ says Employment Minister Qualtrough in explanation of planned move to EI

“We are very confident now the system is ready,” Qualtrough told reporters, adding the system has been “tested and tried.”

The prime minister on Friday pledged that EI premiums won’t be increased “during this challenging time.”

Read more: One quarter of Canada’s small businesses report staff refusing to return to work, survey suggests

Trudeau also announced that Ottawa is extending the Canada Emergency Commercial Rent Assistance program through the month of August.

As of July 30, the small-business rent support program has doled out $613 million in financial aid to 63,000 tenants, according to a news release from the finance department.

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-With a file from The Canadian Press

© 2020 Global News, a division of Corus Entertainment Inc.

Banks cannot refuse credit to MSMEs: Sitharaman

NEW DELHI: Finance minister Nirmala Sitharaman on Friday said banks cannot refuse credit to MSMEs under the emergency credit facility and any refusal should be reported.
As of July 23, 2020, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by public sector banks and private banks stands at Rs 1,30,491.79 crore, of which Rs 82,065.01 crore has already been disbursed.
“Banks cannot refuse credit to MSMEs covered under emergency credit facility. If refused, such instances must be reported. I will look into it,” Sitharaman said at a closed-door event of industry chamber Ficci.
As part of the Aatmanirbhar Bharat Package, the government had announced Rs 3 lakh crore Collateral-free Automatic Loans for businesses, including MSMEs.
The minister also said the finance ministry is working with the Reserve Bank of India (RBI) on the extension of loan moratorium or a restructuring scheme for the hospitality industry.
“I fully understand the requirements of the hospitality sector on extension of the moratorium or restructuring. We are working with RBI on this,” she said.
Sitharaman said every step which is being announced and taken to deal with the current situation is being done after exhaustive consultation with the stakeholders and industry experts.
“The focus is on restructuring. Finance ministry is actively engaged with RBI on this. In principle, the idea that there may be a restructuring required, is well taken,” a Ficci tweet quoted Sitharaman as saying.

To help borrowers deal with liquidity crunch during the pandemic, the Reserve Bank had announced a three-month loan moratorium in March, which was later extended by another three months till August 31. Borrowers opting for loan moratorium can defer payment of the interest and principal component of the loan during this period.
The minister also said that India is asking for reciprocal arrangements with countries with which we have opened up our markets.
“Reciprocity is a very critical point in our trade negotiations.”
In Video:FM Nirmala Sitharaman says, ‘Banks cannot refuse credit to MSMEs covered under emergency credit facility’

Eight core industries’ output contracts 15% in June

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NEW DELHI: Contracting for the fourth consecutive month, the output of eight core infrastructure industries shrank by 15 per cent in June due to fall in the production of coal, crude oil, natural gas, steel, cement and electricity.
The eight core sectors had expanded by 1.2 per cent in June 2019, data released by the commerce and industry ministry on Friday showed.
Barring fertiliser, all seven sectors – coal, crude oil, natural gas, refinery products, steel, cement, and electricity – had recorded negative growth in May.
The output of coal, crude oil, natural gas, refinery products, steel, cement and electricity declined by 15.5 per cent, 6 per cent, 12 per cent, 8.9 per cent, 33.8 per cent, 6.9 per cent, and 11 per cent, respectively.
During April-June 2020-21, the sector’s output dipped by 24.6 per cent as compared to a positive growth of 3.4 per cent in the same period previous year.
These eight industries account for 40.27 per cent in the Index of Industrial Production (IIP).
In May, the sectors’ output contracted by 22 per cent.

Scheduled int’l flights suspended till August 31

NEW DELHI: The government has extended suspension of scheduled international flights till August 31, 2020. However, travel will take place under the travel bubbles India has created with US, Germany and France. In the coming days, more countries like UK, Canada could also have these bubbles with India allowing people — as per government norms — to travel to and from there.
“The government has decided to extend the suspension on the scheduled international commercial passenger services to/from India up to 11.59 pm (IST) of August 31, 2020. However, this restriction shall not apply to international all-cargo operations and flights specifically approved by the Directorate General of Civil Aviation,” the DGCA said in a statement on Friday.
India had suspended scheduled international passenger flights on March 22 in wake of the corona pandemic. Since then, the DGCA said over “2,500 repatriation flights by foreign carriers to uplift stranded passengers to/from India have been approved. Under the Vande Bharat Mission, Air India and AI Express have uplifted 2,67,436 stranded passengers and other charters have uplifted 4,86,811 stranded passengers during the period from May 6 to July 30, 2020.”
“To allow gradual movement of passenger traffic during the Covid-19 situation, ‘transport bubble’ agreements have been signed with USA, France and Germany. Recently, ‘transport bubble’ agreement has also been signed with Kuwait to uplift stranded passengers both to/from India. More similar arrangements are likely to fructify and ease passenger movements from different countries,” it added.
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The aviation ministry has long maintained that resumption of schedule international flights will be considered once domestic flights reach the 50% mark of the originally approved summer schedule. Schedule domestic flights were allowed to resume after two-month suspension on May 25 and so far airlines are operating about 30% of the summer schedule. They have been allowed to raise the capacity to 45% till November 24 — something that may be relaxed depending on how the pandemic situation pans out and if states relax their caps on flight operations.
Aviation minister H S Puri had said on July 17: “Many international travellers from metros like Delhi and Mumbai need connecting domestic flights to and from these hubs. Domestic travel is steadily rising but we are still at 30% mark. There are restrictions in many places like Mumbai that have capped number of daily domestic flights. Once we reach the 50% domestic capacity mark, then resumption of schedule international flights will be considered.” Kolkata also imposed serious limitations and does not allow flights on lockdown days.
In a statement, Mumbai Airport said that it has seen 21 flights from July 22-31 under the bilateral “air bubbles” with the US, Germany and France. “CSMIA catered to a total of 3,059 passengers which include 1,185 from Newark (US), 660 from Paris and 1,214 from Frankfurt. Under this arrangement the airport saw airlines such as Air India, Air France, and Lufthansa operating on these routes. The first flight departed from Mumbai to Paris by Air France on July 22, 2020, while the first flight (under this arrangement) arrived from Frankfurt was Air India on July 23,” the Mumbai Airport statement added.
In Video:Government suspends international flights till August 31

Coronavirus: Ontario restaurants, bars now required to keep 30-day log of patrons

The province announced new measures for restaurants and bars across Ontario it says will help limit the spread of COVID-19.

The measures include forcing bars, restaurants and tour operators to keep client logs for 30 days.

Read more: Music, gym and COVID-19: How non-core classes will operate in Ontario schools

Medical officers of health or inspectors can demand to see the logs for contact tracing purposes.

In addition, all patrons who visit restaurants will need to remain seated at all times regardless of whether they are eating indoors or outdoors.

COVID-19: Doctors say wearing masks in crowded outdoor spaces helps prevent spread of coronavirus

COVID-19: Doctors say wearing masks in crowded outdoor spaces helps prevent spread of coronavirus

“These additional measures will help reduce close contact between individuals in these settings, and support case and contact tracing, thereby limiting the spread of COVID-19,” Health Minister Christine Elliott said in a statement.

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A provincial spokesperson told Global News that the measures were introduced after observing “outbreaks associated with these establishments in other jurisdictions, including in Alberta, Quebec, and British Columbia.”

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“There is typically close, prolonged, interpersonal contact with large numbers of people in a closed setting,” the spokesperson for the province said.

Global News has reached out for further information as to what information patrons will need to be provided, how it will be collected and how it will be stored.

Read more: Coronavirus: Toronto, Peel Region enter stage 3 of Ontario’s reopening plan

Many of the measures already in place at bars and restaurants are similar to those at other businesses though they were required to seat patrons at least two feet apart unless they were separated by an impermeable barrier.

© 2020 Global News, a division of Corus Entertainment Inc.

‘RBI may keep repo rate unchanged in August’

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MUMBAI: The Reserve Bank of India is likely to leave repo rate unchanged in the upcoming policy review meeting and the Monetary Policy Committee may look for “unconventional policy measures” to ensure financial stability, says a report.
The Monetary Policy Committee (MPC), headed by RBI governor, is scheduled to meet for three days beginning August 4 and will announce its decision on August 6.
“We believe an August rate cut is unlikely. We believe that the MPC could now well debate what further unconventional policy measures could be resorted to in the current circumstances to ensure financial stability is continued to be addressed,” an SBI research report- Ecowrap said.
With the 115 basis points (bps) reduction in repo rate beginning February, banks have already transmitted 72 basis points to the customers on fresh loans and some large banks have transmitted as much as 85 basis points, it said.
“This has happened because of a proactive RBI using liquidity among others as a tool to serve its policy objective,” the report said.
To reduce the cost of funds and rigidity in deposit structure of Indian banks (both public and private) have lowered the savings bank deposits rate, which has around 40 per cent weight in the deposits basket.
This has helped banks to reduce their one-year marginal cost of fund-based lending rate (MCLR) by 55 bps during March to May 2020, it said.
The report states that people’s preferences of financial assets during lockdown and in subsequent months will give a fillip to the financial savings in the country.
“We expect a jump in financial savings in FY21, also as a result of the precautionary motive,” it added.
The supply side constraints due to the lockdown have led to a spike in CPI inflation to 7.2 per cent in April, but eased marginally to 6.1 per cent in June, it said adding that the real returns for savers have turned negative.
“If we look the CPI inflation adjusted deposit rate (real interest rate), it has turned negative to (–) 0.8 per cent in December 2019, when inflation touched 7.4 per cent and deposits rate 6.6 per cent and thereafter continued in the negative zone due to the uptick in inflation and downward interest rate scenario,” the report said.
The report expects that inflation will remain at elevated levels for the next few months so the real interest rate will continue to be in the negative zone.
“We believe in the current scenario, this will be appropriate for financial markets as a negative real rate is unlikely to hurt household financial savings given the uncertainty surrounding pandemic,” it stated.

SBI reports 81% jump in quarterly profit

BENGALURU: Top Indian lender State Bank of India (SBI) reported an 81% jump in quarterly profit on Friday, helped by a one-time gain from selling a stake in its life insurance unit and a drop in provisions for bad loans.
The bank’s shares rose as much as 4.1% in a weak Mumbai market as investors cheered the numbers and looked past a provision of Rs 1,836 crore ($246 million) to cover for an expected wave of loan defaults stemming from the coronavirus pandemic.
Lenders are bracing for a surge in bad loans in a pandemic-ravaged economy, with the central bank’s relief measures including deferments of loan and interest payments as well as low interest rates expected to hurt the health of banks.
In the June quarter, however, SBI’s asset quality improved, with gross bad loans as a percentage of total loans easing to 5.44% from 6.15% in the previous quarter and 7.53% a year earlier.
Provisions for bad loans fell 19% to Rs 9,420 crore ($1.26 billion).
A gain of Rs 1,540 crore from selling a stake in unit SBI Life Insurance helped push SBI’s net profit to Rs 4,189 crore for the quarter from Rs 2,312 crore a year earlier.
In Video:SBI beats estimates, reports 81% jump in quarterly profit