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India’s Retail inflation decelerates to 2.99%

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New Delhi, May 12 : India’s retail inflation decelerated to 2.99 per cent last month from 3.89 per cent for March as food prices reported a massive plunge, official data showed on Friday.

According to data furnished by the Ministry of Statistics and Programme Implementation, last month’s retail inflation rate, based on the Consumer Price Index (CPI), was lower from 5.47 per cent recorded during April last year.

The Consumer Food Price Index (CFPI) during the month under review plunged to 0.61 per cent, as compared to 2.01 per cent in March.

The Central Statistics Office data revealed that the annual retail inflation for rural India was 3.02 per cent, while that for the urban centres was 3.03 per cent.

(IANS)

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Crude price worsens on Covid-19 concerns, reaches closer to $20 per barrel

Brent crude oil is at $22.84 a barrel, falling 8.4 per cent from its previous closing level after earlier dropping to $22.58, the lowest since November 2002.

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oil refinery

New Delhi, March 30 : Crude oil prices continued their freefall on Monday with the WTI crude of US falling below the $20 per barrel mark briefly and benchmark Brent crude price touching its 18-year-low on fears that coronavirus-related shutdowns may continue for few more months, resulting in further decline in fuel demand.

Currently, the West Texas Intermediate (WTI) crude is trading at $20.40 per barrel, lower by nearly 5.2 per cent from its previous close. Earlier in the session, WTI fell as low as $19.92.

Brent crude oil is at $22.84 a barrel, falling 8.4 per cent from its previous closing level after earlier dropping to $22.58, the lowest since November 2002.

The persistent fall can be attributed to both rise in supplies and declining demand. The coronavirus pandemic has almost brought the global travel industry to a halt, limiting demand for the commodity. Analysts now expect demand to slump considerably during the coming months which could put crude prices closer to $15 mark soon as the pandemic is expected to continue for a longer period.

Further, the surge in supply by Saudi Arabia, after the OPEC’s talks on deeper production cut with Russia failed, has added to the pressure on oil prices. The current market is oversupplied on shrinking demand, creating a situation of free fall for crude.

Soon after the talks failed earlier this month, crude had fallen by more than 25 per cent, the largest fall since the 1991 Gulf War, to $34 per barrel on March 9. During the week, crude again lost about 10 per cent to touch a new low of $30 a barrel.

The price of oil has now reached a point that it is increasingly becoming difficult for higher cost producers to remain in operation and are rather looking at declaring bankruptcy. A lot of US shale producers are in deep trouble and analysts expect that low oil price for few more months will result in a spate of bankruptcies in US.

With world demand now forecast to plunge 15 million or 20 million barrels per day, a 20 per cent drop from last year, analysts say massive production cuts will be needed beyond just the Organization of the Petroleum Exporting Countries (OPEC). So if Russia and other producers in South America and Africa do not sit together and decide on production cuts, the oil market is headed for a further blood bath.

Global markets have been on a bear run, including the financial markets for the past few weeks owing to the concerns of a significant impairing of the world economy due to the coronavirus crisis.

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Banks branches remain open, ATMs filled up: FM

The CMDs were also asked to provide authorisation to bank staff and coordinate with the district administration for smooth travel of bank staff.

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Nirmala Sitharaman

New Delhi, March 30 : Banks are ensuring that their branches remain open and ATMs (automated teller machines) functional with adequate cash amid the nationwide lockdown, according to the Union Finance Minister, here on Monday.

Taking to Twitter, Finance Minister Nirmala Sitharaman also said banking correspondents were active.

“All banks are ensuring that their branches are kept open, ATMs filled up & working. Banking correspondents are active. Social distancing is respected & sanitisers are provided where necessary. Just in case, any assistance/clarification is required contact [email protected],” she tweeted.

On Saturday, the Finance Minister spoke to the chiefs and representatives of public and private sector banks and asked them to ensure uninterrupted banking operations and flow of liquidity.

She asked them to make sure there was adequate liquidity at the branches, ATMs and banking correspondent level. The CMDs were also asked to provide authorisation to bank staff and coordinate with the district administration for smooth travel of bank staff.

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FY21 GDP growth revised downwards to 3.6%: India Ratings

A stop on the construction activities will accelerate the problems of the real estate sector which is still struggling to access funding in the middle of a meltdown in the NBFC and banking sectors.

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Auto sector slowdown

New Delhi, March 30 : India Ratings and Research has revised its FY21 gross domestic product (GDP) growth for India down to 3.6% from 5.5%.

The key reasons for this downgrade are the spread of COVID-19 and the resultant nation-wide lockdown imposed till 14 April 2020, crippling most economic and commercial activities.

The revision is based on the assumption of lockdown continuing till end-April 2020 (full or partial) and gradual restoration of economic activities May 2020 onwards.

In view of the lockdown, India Ratings and Research has even revised the FY20 GDP forecast downward to 4.7% (9MFY20: 5.1%) from The National Statistical Office’s advance estimate of 5.0%.

The rating agency expects the GDP growth to come in at 3.6% in 4QFY20 and 2.3% in 1QFY21. Average growth is forecast to decelerate to 2.8% in 1HFY21 (1HFY20: 5.3%) and recover to 4.3% in 2HFY21 (2HFY20: 4.2%), due to a) the base effect and b) a gradual recovery and restoration of supply chain, it said.

Some of the initial and visible impact of the spread of COVID-19 on the Indian economy has been the disruption in the production of select manufacturing sectors due to the breakdown of supply chain, near collapse of the tourism, hospitality and aviation sectors and a rise in the work load of the healthcare sector. Also micro, small and medium enterprises, irrespective of the sector they operate in, have begun to witness cash flow disruptions. This is not to say that other sectors were not impacted or are not likely to be impacted. However, some the services sectors such as financial services, IT and IT enabled services have greater flexibility in their operations and they quickly readjusted and/or are readjusting their operations by allowing employees to work from home.

Yet, the panic has gripped the Indian capital markets like elsewhere in the world. A changed outlook of investors has led to a huge outflow of capital and the rupee has come under intense pressure, India Ratings said. Also, significant wealth erosion would impact the consumption levels.

With the rabi crop maturing, disruption in harvesting and inability of agricultural markets to timely procure them could be a blow to the farmers’ income and rural demand.

A stop on the construction activities will accelerate the problems of the real estate sector which is still struggling to access funding in the middle of a meltdown in the NBFC and banking sectors.

After agriculture, construction is the largest employment generator in the Indian economy. Closure of non-essential commercial establishment and multiplexes will have a ripple effect on many sectors. Demand for consumer durables, entertainment, sports, wholesale trade, transport, tourism, hospitality etc. will decline, it said in its report.

Its is now expected, the agency said that several manufacturing activities will de-risk their operations by locating themselves outside China. Also, the disruption in supply chain especially in sectors such as automobiles, pharmaceuticals, electronics and chemical products could be an incentive for the Indian manufacturing sector to become part of the supply chain.

India Ratings and Research believes this will require significant government and policy support and will play out only in the medium- to long-term. One of the near-term advantages of the spread of COVID-19 for the Indian economy would be lower global commodity prices especially crude oil. However, to what extent this could benefit the Indian economy would depend on the pace of restoration of normalcy and the ability and nimbleness of the Indian businesses to take advantage of this opportunity. However, converting this advantage to an opportunity would not easy, because the Indian economy is reeling under low consumption and low investment growth, coupled with rupture in the financial system, the report said.

India Ratings and Research expects the government to announce more measures in the coming days/weeks to mitigate the pains and concerns of the other segments/sectors of the society/economy, since the role of the government is crucial in terms of containing the spread of COVID-19 and simultaneously mitigating the adverse impact of the lockdown on the economy.

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