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Every company regardless of size, is important for India: FM Nirmala Sitharaman

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Finance Minister Nirmala Sitharaman (File Picture)

New Delhi, Sep 21 : Finance Minister Nirmala Sitharaman on Monday stated in the Lok Sabha that any company whether it is big, small, micro, medium or nano is important for the country.

Saying that “my friends are the companies”, the Minister said under the Companies Act even MSMEs are registered and anybody who is registered under this act and if, unfortunately, comes for a liquidation has to have a solution.

“Your friend, my friend does not matter. All are friends of this country. Unless business is run by small, medium or big that kind of a job which we are talking about will not happen. So, solution is required for everybody,” the Minister said while addressing the Lower House while pushing for the passage of the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020.

The Bill, which was passed by the Rajya Sabha on Saturday, seeks amendment in the Insolvency and Bankruptcy Code, 2016 and replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 which was promulgated by the President on June 5 this year.

The ordinance had prohibited the initiation of insolvency proceedings for defaults arising during the six months from March 25 this year (extendable up to one year).

Simply put, no insolvency proceedings can be initiated by either the corporate debtor or any of its creditors for defaults arising during this six-month period beginning March 25.

The ordinance came in response to the Covid-19 pandemic, which had created uncertainty and stress for businesses for reasons beyond their control. It was also felt that during the Covid-19-induced lockdown, it may be difficult to find an adequate number of resolution applicants to rescue the corporate debtors who may default in discharging their debt.

In parliament registry, Sitharaman said this is among one of those Bills, now an Act, which come very quickly each time when the ground situation requires changes so that this becomes a robust law.

Giving detailed reasons behind amendment in the law, the Minister said the need of such an ordinance has never been contextual in last 100 years. “Such kind of atmosphere cannot be in the coming 100 years too.”

Hinting at the Covid-19 pandemic, the Minister said the dimension and the scale of the pandemic was obvious and therefore the government had to come up with an ordinance which suspended the application of three sections–7,9 and 10– of the Insolvency and Bankruptcy Code.

“We had to prevent any company which is experiencing distress because of Covid being pushed into the insolvency proceedings. And therefore we had to suspend these sections.”

The Minister said the entire approach that the government has taken is to immediately help companies with some relief and then look at the way in which the second phase can go on.

She said this Bill is the part of the second approach. And the third phase, Sitharaman said, could have some kind of resolution mechanism for those who are not able to survive and hand-holding in particular incidences.

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“How To Destroy An Economy”: Rahul Gandhi’s Latest Swipe At Government

Kaushik Basu, who served as Chief Economic Adviser to the Finance Ministry, tweeted a warning to the centre: “Don’t be in data denial… take corrective action…”

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Rahul Gandhi Farmers

New Delhi: Congress MP Rahul Gandhi this afternoon cited figures collated by renowned economist Kaushik Basu – which project India’s GDP as contracting the most among a selection of 11 Asian nations, including China – to take yet another swipe at the government.

“How to completely destroy an economy and infect the maximum number of people really quickly,” Mr Gandhi tweeted, with a data table showing projected GDP growth (for 2020) for 11 Asian countries and the number of coronavirus-related deaths (per million) for each.

India, with a projected GDP contraction of 10.3 per cent (according to a IMF report released ealier last week) and 83 Covid-related deaths per million, is at the bottom of a list that includes China, Bangladesh, Pakistan, Nepal and Sri Lanka.

The International Monetary Fund (IMF), in a report released last Tuesday, said it expected India’s economy to shrink by 10.3 per cent – a huge downward revision from its June prediction for a government under pressure over its handling of the pandemic and the economic fallout.

Kaushik Basu, who served as Chief Economic Adviser to the Finance Ministry, tweeted another warning today: “Don’t be in data denial. Mistakes happen-admit & take corrective action…”

In August the government said India’s GDP had contracted by 23.9 per cent – much worse than expected – in April-June, as the pandemic brought key industries to a halt and left millions jobless.

Mr Gandhi tore into that revelation, accusing the government of ignoring repeated warnings from experts on the extent to which the coronavirus pandemic had affected the economy

The government has since claimed a recovery of sorts – on both fronts.

Earlier this month the Finance Ministry said “demand resurgence is palpable in many sectors” and yesterday a government-appointed committee said the country had crossed the coronavirus peak.

One of the points claimed by the committee was that the early lockdown, which triggered the economic problems – had significantly helped reduce the number of deaths due to the virus.

Meanwhile, apart from highlighting a potentially difficult 2020 for India’s GDP (something several economists and reports have already flagged), the IMF report triggered another row when it suggested that India’s per capita GDP is set to drop below that of Bangladesh.

Rahul Gandhi pounced on that as well, tweeting: “Solid achievement of 6 years of BJP’s hate-filled cultural nationalism. Bangladesh set to overtake India”.

Shortly after that government sources issued a clarification, claiming that in terms of purchasing power parity – a measure of GDP that accounts for relative differences between countries – India’s per capita GDP in 2019 was actually 11 times higher than that of Bangladesh.

China, which according to the data sheet shared first by Mr Basu and then Mr Gandhi, is projected to record positive GDP growth – 1.9 per cent – this year.

Bangladesh, meanwhile, is to record an impressive 3.8 per cent GDP growth for 2020.

This afternoon China released its July-September GDP figures and said its economy had grown by 4.9 per cent – the same as last year and only marginally below the expected 5.2 per cent.

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Adani, Piramal among bidders for bankrupt DHFL

In November last year, the Reserve Bank of India referred DHFL for bankruptcy under the Insolvency and Bankruptcy Code at the National Company Law Tribunal (NCLT).

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Mumbai, Oct 18 : Adani Group, Piramal Enterprises, US-based Oaktree and Hong Kong-headquartered SC Lowy have submitted their bids for the insolvent Dewan Housing Finance Corporation Ltd (DHFL), sources said.

The deadline to submit bids for DHFL ended on Saturday.

According to sources, Adani Group has bid for the wholesale and slum rehabilitation authority portfolio. Piramal Enterprises, on the other hand, has bid for its retail business.

Further, Oaktree has submitted a resolution proposal for the entire company with a bid value of Rs 20,000 crore.

The admitted debt of the insolvent NBFC is over Rs 90,000 crore.

In November last year, the Reserve Bank of India referred DHFL for bankruptcy under the Insolvency and Bankruptcy Code at the National Company Law Tribunal (NCLT). Its resolution is now underway at the Mumbai bench of NCLT.

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Weak institutional participation leading to consolidation of equity markets

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Mumbai, Oct 18 : Weak institutional investment from domestic institutional investors (DII) and foreign portfolio investors (FPI) since September have led the Indian equity markets into a consolidation phase, according to a report by ICICI Securities.

The report noted that the sharp bounce back by the market after the lows in March was in anticipation of normalising economic activity, which has shown up in terms of high frequency data in September including PMI, GST collection, electricity demand, improving exports, wholesale auto sales.

“Institutional flows both from DIIs and FPI’s have turned weak since Sep as sharp upside in stocks since March lows turns equity valuations expensive. Weak institutional participation is resulting in a consolidation phase for equity markets currently,” it said.

It noted that current market behaviour of muted flows by institutional investors and the resultant consolidation in stock prices imply economic activity may plateau going forward after normalising to pre-Covid levels.

Expecting economic activity to rise beyond pre-Covid level without large fiscal and monetary stimulus would be erroneous as aggregate demand in the economy was already weak before the impact of the pandemic, it said.

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