Business Today 19-Apr-20

We’re living through an extreme nightmare of human civilisation. This generation of humanity will retain the bragging rights to narrate coronavirus tales to children and grandchildren for decades to come. But no story will be complete without a tinge of regret over the economic fallout, death, destruction and social consequences that entail. Just as coronavirus ravages through countries, states, cities and villages around the world, India’s decision to go for a nationwide lockdown may have been the best case scenario to prevent a severe outbreak in densely populated areas, including among the most vulnerable citizens in villages. But most nations on Earth will pay an unimaginable social and economic price of the spread of virus. Depending on their reaction time – some more, some less. For instance, shrinking GDP is…

SHRINKING TOP LINE Revenue growth of corporate India (excluding BFSI) shrinks for sixth consecutive quarter REVENUE GROWTH (%, Y-o-Y) EBITDA ALSO IN NEGATIVE EBITDA slips 1-2% in Q3 – for the second quarter on the trot EBITDA GROWTH (%, Y-o-Y) NET MARGINS DIP SHARPLY Touch a 10-quarter low STEEL, PETROCHEM BADLY HIT Both sectors see revenue fall of more than 18% y-o-y. While poor demand ails the steel sector, fall in feedstock naphtha price has affected petrochem companies KEY SECTORS* (%, Y-o-Y) STEEL PRODUCTS (%, Y-o-Y) PETROCHEMICALS (%, Y-o-Y) AUTOMOBILES (%, Y-o-Y) POWER (%, Y-o-Y) *Airline services, aluminium, automobiles, auto components, capital goods, cement, petrochemicals, construction, FMCG, IT services, media and entertainment, pharmaceuticals, power, retail, steel products, sugar, cotton yarn, telecom services and tyres -40% Fall in telecom companies' net…

Almost 80 per cent of India’s ₹204 lakh crore economy has ground to a halt since the 21-day national lockdown began on March 25. At an average of ₹55,890 crore per day, India’s gross domestic product (GDP) will suffer a setback of at least ₹9.4 lakh crore. Hence, in FY2021, the Indian economy will in all likelihood shrink rather than grow. The lockdown, though necessary to break the chain of transmission of coronavirus, will leave destruction across industries such as travel and tourism, aviation, hotels and restaurants, malls, multiplexes, automobiles, among others. And, to a lesser degree, impact sectors such as consumer durables, fuel, electricity and petrochemicals. But, that is provided the lockdown lasts just the 21 days announced so far. Experience of coronavirus containment in South Korea and Japan…

₹7-8 lakh crore (3.5-4% of GDP) Conservative estimate of impact of Coronavirus outbreak on Indian economy ₹3-5 lakh crore The total value of the economic package that experts say will be needed 1.5-2% Likely increase in the Centre’s fiscal deficit to fund an economic package ₹15 lakh crore The monthly Gross Value Addition estimated for FY20, as per NSO ₹24.5 lakh crore The Gross Value Addition for FY20 from trade, hotels, transport, communication and services related to broadcasting, the sectors most affected by the coronavirus outbreak ₹30 lakh crore The central government’s expenditure budget for FY21 ₹40-50 lakh crore The aggregate annual spending of state governments ₹7.96 lakh crore The central government’s likely borrowings in FY21…

Construction ₹8,70,000 crore IMPACT Availability of workers to be hit; delay in awarding projects in Q4FY20 and Q1FY21 Gems & Jewellery ₹5,20,000 crore IMPACT 60% of India’s gold and rough diamond imports are from the top 15 affected countries. 50% of revenue is from exports and 84% of this comes from these countries Auto Ancillaries ₹3,59,000 crore IMPACT 20% dependency on imports for raw material. Of this, 70% imports are from top 15 coronavirus-affected countries Petrochemicals ₹2,30,000 crore IMPACT Imports — 20% of domestic consumption — to be hit. Prices to be under pressure because of low crude prices, fall in domestic demand Hotel Industry ₹1,10,000 crore IMPACT With near zero occupancy, experts say the informal segment will suffer more compared to the organised segment due to its sheer size…

₹1.7 lakh crore special package aimed at poor and underprivileged GST, I-T return filing and other tax-related compliance deadlines extended to June 30 Foodgrain for 3 months can be lifted by states and UTs on credit from Food Corporation of India Centre has released ₹2,570 crore — the pending instalment of grants to states under 14th Finance Commission that had been withheld as local elections were not conducted. Of this, ₹941 crore is for rural local bodies and ₹1,629 crore for urban local bodies Special open market operation purchase of government securities worth ₹1 lakh crore to improve liquidity Coronavirus outbreak declared Force Majeure event; suppliers to government departments asked to invoke Force Majeure clause if required Insolvency threshold triggering proceedings upped from ₹1 lakh to ₹1 crore New IBC…