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Most of the stimulus package done, nothing substantial: Analysts

The government announced 9 measures with focus on welfare measures for bottom-of-pyramid population. Most of these are extension of old schemes,

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Prachi Misha

New Delhi, May 15 : Only about 1 per cent of GDP or Rs 1.9 lakh crore of relief measures remain to be announced by the Centre in the coming days as calculations show that most of the allocated amount which added up to 10 per cent of GDP has already been exhausted.

“We expect the government to announce the remaining Rs 1.9 trillion of measures (1 per cent of GDP) over the next few days,” Prachi Misha of Goldman Sachs wrote in a research.

Goldman Sachs noted that including the measures announced on Thusday, Rs 8.4 trillion worth of relief measures have been announced during the last two days.

Taking into account the Phase 1 stimulus package of Rs 1.7 trillion announced in March, as well as the measures taken by the RBI to infuse liquidity into the system between February and April, which based on calculations amount to Rs 8 trillion and are likely to be included in the Rs 20 trillion figure, we expect the government to announce the remaining Rs 1.9 trillion of measures (1 per cent of GDP) over the next few days, Goldman Sachs said.

Following up on Wednesday’s announcement of Rs 5.9 trillion relief measures, the Finance Minister on Thursday unveiled another round of details on the Rs 20 trillion fiscal package, amounting to a total of Rs 2.5 trillion or 1.2 per cent of GDP. The measures particularly focused on migrant workers, small farmers, street vendors, and small traders.

Brokerage firm, Jefferies said in a research that the fiscal package 2 has nothing substantial. The Rs 3.2 trillion package announcement on Thursday was unexciting. The details for Rs 16-18 trilion (8-9 per cent of GDP) are now known and the net hit to the central government fiscal is 1 per cent of GDP.

Over the last week, G Sec yields have moved up by only 10 bps, implying that the market expects heavy RBI intervention. With the bulk of the fiscal announcements now behind, focus will likely shift to economic recovery indicators and lifting of the lockdown, which will be a gradual process.

The government announced 9 measures with focus on welfare measures for bottom-of-pyramid population. Most of these are extension of old schemes, Jefferies wrote.

Citi Research said in a note that liquidity windows might be inadequate to support economic recovery in then absence of demand stimulus.

The government and the RBI have now provided more than Rs 13 trillion (6.5 per cent of GDP) in liquidity and credit support to various segments of the economy which will help avert major demand decline from defaults in vulnerable entities. However, given lower demand and income visibility, some of the better positioned borrowers might not avail the various liquidity facilities. Moreover, easy credit amid low structural demand could accentuate the NPA issues plaguing the financial system. It is essential for remaining stimulus measures to ensure that the supply side shock does not morph into a demand side shock.

Citi said the government has reiterated commitment towards labour codes to protect workers. The government would continue to work on the four labour codes (one bill passed and others under different stages of parliamentary process) that would facilitate protection and formalization of the labour force. Moreover, to support urban migrant workers, the government would improve the availability of affordable rental housing particularly for migrant workers through the PPP route.

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Rs 1.20 lakh cr sanctioned for MSMEs under ECLGS

The scheme would help more than 30 lakh units of MSMEs and other businesses restart their businesses post the lockdown.

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MSMEs Sector

New Delhi, July 11 : The government is going all out to ensure that liquidity concerns of the MSME sector are addressed on priority under its Emergency Credit Line Guarantee Scheme (ECLGS).

As of July 9, 2020 public sector and private banks have sanctioned loans worth over Rs 1.20 lakh crore under the 100 per cent Emergency Credit Line Guarantee Scheme, of which close to Rs 62,000 crore has already been disbursed.

There has been a big jump in sanctions in the last couple of weeks and just in last five days up to July 9 sanctions have increased by close to Rs 5,500 crore while disbursement has increased by about Rs 6,000 crore.

In a tweet, office of finance minister Nirmala Sitharaman said: “As of 9 July 2020, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by #PSBs and private banks stands at Rs 1,20,099.37 crore, of which Rs 61,987.90 crore has already been disbursed.”

The ECLGS scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Finance Minister Nirmala Sitharaman in May.

To ensure that the scheme achieve its objective of providing adequate liquidity to the MSME segment during the current difficult period, the finance ministry has regularly held meetings with the banks.

A finance ministry statement said that banks from both public and private sectors have contributed to the success of the ECLGS. Loan amounts sanctioned by Public Sector Banks increased to Rs 68,145.40 crore, of which Rs 38,372.88 crore has been disbursed as of July 9.

Similarly, private banks sanctioned loans to the tune of Rs 51,953.97 crore while disbursed Rs 23,615.02 crore.

The scheme would help more than 30 lakh units of MSMEs and other businesses restart their businesses post the lockdown.

As part of the Aatmanirbhar package, the government had announced its plans for Rs 3 lakh Crore as additional credit to MSMEs and small businesses. Such enterprises were to be eligible to receive up to 20 per cent of their existing borrowing as additional loans at interest rates which were capped.

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Jio Platforms receive over Rs 30K cr from 4 investors

Investments of Rs 1.17 lakh crore into Jio Platforms have been announced in the past two months.

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Reliance Jio Platform

Mumbai, July 11 : Reliance Industries on Saturday said that Jio Platforms received subscription amounts of Rs 30,062.43 crore from four investors for 6.13 per cent stake in total.

Among the four investors, Interstellar Platform Holdings (L Catterton) has invested Rs 1,894.50 crore for 0.39 per cent, ThePublic Investment Fund has put in Rs 11,367.00 crore for 2.32 per cent.

SLP Redwood Holdings and SLP Redwood Co-Invest (DE), L.P. (Silver Lake) have invested Rs 10,202.55 for 2.08 per cent and General Atlantic Singapore JP Pte Ltd has put in Rs 6,598.38 crore picking up 1.34 per cent in Jio Platforms.

“We hereby inform that, after receipt of all requisite approvals, Jio Platforms Limited, a subsidiary of the Company, received the subscription amounts from the following investors and allotted equity shares to them,” RIL said in a regulatory filing.

The development comes just days after RIL announced that Jio Platforms has received the subscription amount of Rs 43,574 crore from Jaadhu Holdings, LLC, a wholly owned subsidiary of Facebook Inc, which now owns 9.99 per cent stake in Jio Platforms.

Investments of Rs 1.17 lakh crore into Jio Platforms have been announced in the past two months.

On July 3, RIL and Jio Platforms announced that Intel Capital will invest Rs 1,894.50 crore in Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore, which will translate into a 0.39 per cent equity stake in Jio Platforms on a fully diluted basis.

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Trump downplays chances of new China trade deal

In January, Trump had signed the phase one trade deal with China that focused on increasing US exports of agricultural, energy and other products.

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US-China-trade-war

Washington, July 11 : US President Donald Trump has downplayed chances of a new China trade deal as he slammed the Asian giants handling of the coronavirus pandemic, the media reported.

Addressing reporters aboard Air Force One on Friday, the President said that the US” relationship with China has been “severely damaged”, adding that he has “other things in mind” than a second trade agreement, known as phase two, Politico news reported.

“They could have stopped the plague, they could have stopped it, they didn”t stop it,” he said, referring to the pandemic, which had first emerged in China”s Wuhan city last December.

“They stopped it from going into the remaining portions of China from Wuhan… They could have stopped the plague, they didn”t,” the President was quoted as saying in the Politico news report.

In January, Trump had signed the phase one trade deal with China that focused on increasing US exports of agricultural, energy and other products.

This is not the first time Trump has slammed China over the pandemic.

In recent weeks, Trump has described COVID-19 “kung flu” and the “Chinese virus”.

Top administration officials like Secretary of State Mike Pompeo have called it the “Wuhan virus”.

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