India's credit profile to face further pressure due to Covid-19: Moody's

Moody's rating on the government of India is Baa2 with negative outlook.

India's credit profile will face further pressures amid the coronavirus outbreak, according to rating agency Moody’s.

The shock will exacerbate an already material slowdown in economic growth, which has significantly reduced prospects for durable fiscal consolidation, Moody’s said in credit opinion.

Moody’s rating on the government of India is Baa2 with negative outlook.
India’s credit profile is supported by its large and diverse economy, and stable domestic financing base. This is balanced against high government debt, weak social and physical infrastructure, and a fragile financial sector.

The negative outlook reflects increasing risks that economic growth will remain significantly lower than in the past. This is in light of the deep shock triggered by the coronavirus outbreak.

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"The negative outlook reflects increasing risks that economic growth will remain significantly lower than in the past. This is in light of the deep shock triggered by the coronavirus outbreak, and partly reflects lower government and policy effectiveness at addressing longstanding economic and institutional weaknesses, leading to a gradual rise in the debt burden from already high levels," the agency said in its note.

The government measures to support the economy should help to reduce the depth and duration of India’s growth slowdown. However, prolonged financial stress among rural households, weak job creation and, more recently, a credit crunch among non-bank financial institutions (NBFIs) have increased the probability of a more entrenched weakening

Covid-19: As govt offices reopen, here are guidelines by MoHFW for safety

It advised the authorities to ensure proper cleaning, sanitisation of the workplace, particularly the frequently touched surfaces.

As the central government allows partial relaxation of lockdown from Apri 20 the Parliament secretariat, and some other central government offices will start functioning from Monday while adhering to the guidelines on social distancing.

Ahead of the opening, the Ministry of Health and Family Welfare (MoHFW) issued guidelines on measures to be taken by various ministries and departments of the Union and state governments to contain the spread of Covid-19.

The government advised its employees to use reusable/cloth face masks, to cover nose and mouth while sneezing, to maintain personal hygiene and abide by physical distancing norms even in the sections or rooms.

It also advised the authorities to ensure proper cleaning, sanitisation of the workplace, particularly the frequently touched surfaces.

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MoHFW guidelines banned gathering of 5 or more people within the office premises, even in the canteens, and discouraged entry of visitors. Those with proper permission should be allowed after proper screening.

The official meetings have to be done through video conferencing, sending essential physical files and documents to other offices should be avoided, instead, the correspondence must be done through official emails.

All officials should take care of their health and leave the workplace immediately if there are symptoms like fever or respiratory trouble and should observe home-quarantine. As per the guidelines, the leave sanctioning authorities are requested to sanction leave whenever such a request comes up.

Govt appoints Rajiv Bansal as Air India CMD amid privatisation process

Bansal has served as CMD of Air India for around a year in 2017 before going back to the oil & gas ministry.

In between the privatisation process of Air India, the government appointed Rajiv Bansal, an additional secretary with the oil and gas ministry, as the new boss of the state-owned airline.

He will replace Ashwani Lohani, the current Chairman & Managing Director (CMD), who didn’t agree to extend his one-year contract, which expired on February 11.

Rajiv Bansal has served as CMD of Air India for around a year in 2017 before going back to the oil & gas ministry.

Lohani, who was reappointed Air India CMD in 2019, had earlier held the position for around two years from 2015. In August 2017, he was named the Chairman to the Railway Board. He retired on December 31, 2018.

Sources aware of the development said Lohani didn’t agree to extending his one-year contract as he didn’t see an opportunity for growth.

“He wasn’t very happy as there were cap on expansion and growth plans due to the ongoing disinvestment process, he didn't want to be remembered as the last CMD of Air India as it now exists,” the person said.

The government has undertaken for the third time the process to privatise Air India after a failed attempt in 2017. As part of the process, the Department of Private Assets and Management has put limits on any capex expansion plans of the airline.

Cyclone Fani: Odisha teaches the world how to prepare for disasters

The United Nations office for Disaster Risk Deduction (UNISDR) and other organisations have hailed government and volunteer for their efforts.

Fani, a rare summer cyclone in the Bay of Bengal, hit eastern India on May 3. It is one of the strongest cyclones to have hit India in the last 20 years, according to the Indian government’s meteorological department. Storm surges and powerful winds reaching 125mph blew off roofs, damaged power lines and uprooted countless trees.

But the worst-affected state, Odisha, has been successful in keeping the loss of life and numbers of affected people to a minimum. This is the result of a very effective strategy of disaster preparation and quick responding.

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The United Nations office for Disaster Risk Deduction (UNISDR) and other organisations have hailed government and volunteer efforts that have ensured the levels of destruction have been kept to a minimum. According to official estimates, 64 people lost their lives due to the devastating cyclone Fani. But considering the power of the cyclone, it is remarkable that more lives have not been lost.

To put the death toll in perspective, the 1999 Odisha cyclone (which had 155mph winds) killed 9,658 people and caused US$2.5 billion in damages in the state. It was this super cyclone in 1999 that led the state to become better prepared for future cyclones.

The government’s “zero casualty” policy for natural disasters and the near accuracy of the India meteorological department’s early warning system have helped reduce the possibility of deaths from cyclone Fani. A record 1.2m people (equal to the population of Mauritius) were evacuated in less than 48 hours, and almost 7,000 kitchens, catering to 9,000 shelters, were made functional overnight. This mammoth exercise involved more than 45,000 volunteers.

The statistics are striking when compared to the impact of recent big weather events around the world. When Hurricane Maria hit Puerto Rico in 2017 with wind speeds of 175mph, it caused a death toll of 2,975. The same year, Hurricane Harvey struck Texas with winds of 130mph and caused devastating flooding. There was US$125 billion in damage and at least 68 direct storm-related deaths reported in Texas. Most recently, cyclone Idai hit Mozambique on March 14 and ripped through Madagascar, Malawi and Zimbabwe, with more than 1,000 people feared dead.

So the Indian state of Odisha’s ability to put such an effective disaster management plan in place and save thousands of lives is a template that the world can learn from. This, after all, is a state where the average income is less than US$5 a day. We identify four key takeaways from Odisha.

Islamabad condemns Pulwama attack, rejects charge that Pakistan is involved

At least 37 CRPF personnel were killed and five injured on Thursday in one of the deadliest terror attacks in Jammu and Kashmir.

Business Standard : Pakistan has condemned the terrorist attack in Jammu and Kashmir's Pulwama district and said it is a matter of grave concern even as it rejected India pointing out Islamabad's link to the incident without investigations.

At least 37 CRPF personnel were killed and five injured on Thursday in one of the deadliest terror attacks in Jammu and Kashmir when a Jaish suicide bomber rammed a vehicle carrying over 100 kg of explosives into their bus in Pulwama district.

Pakistan's Foreign Office, after keeping quiet for hours, issued a statement after midnight.

The attack in Pulwama in Jammu and Kashmir "is a matter of grave concern," it said.

"We have always condemned heightened acts of violence in the Valley," the FO said.

Pakistan also rejected that it was in any way involved in the attack.

"We strongly reject any insinuation by elements in the Indian government and media circles that seek to link the attack to the State of Pakistan without investigations," the FO added.

India on Thursday slammed Pakistan over the Pulwama terror attack carried out by Jaish-e-Mohammed (JeM) and asked the neighbouring country to stop supporting terrorists and dismantle terror infrastructure operating from its soil.

India also strongly reiterated its appeal to all members of the international community to support the proposal to list terrorists, including JeM chief Masood Azhar, as a designated terrorist under the 1267 Sanctions Committee of the UN Security Council, and to ban terrorist organisations operating from territories controlled by Pakistan.

The White House asked Pakistan to immediately end "support" and "safe haven" to all terror groups as it strongly condemned the Pulwama terrorist attack.

"The United States calls on Pakistan to end immediately the support and safe haven provided to all terrorist groups operating on its soil, whose only goal is to sow chaos, violence, and terror in the region," White House Press Secretary Sarah Sanders said in a late night statement on Thursday.

Condemning the attack, the US State Department said in a statement that it was resolutely committed to working with the Indian government to combat terrorism in all its forms.

Bad news for India's bond mkt: Global funds see pain ahead on fiscal woes

Next trigger for bonds will come from the central bank's policy decision on Thursday, when it is expected to change its stance to neutral while keeping rates on hold.

Prime Minister Narendra Modi’s record $100 billion borrowing plan isn’t the only piece of bad news for India’s bond market, some money managers say.

Debt sales could still fail to bridge a forecast deficit as the government’s budget relies on ambitious revenue collections and one-off items that may not materialize, according to OppenheimerFunds Inc. And Europe’s largest asset manager, Amundi SA, says bonds of other Asian nations offer better value.

Modi on Friday handed out $13 billion of measures including payouts for farmers and relief for taxpayers to boost support before elections, moves that will end up widening deficits. That’s bad news for the market that has slumped in five of the past six weeks as foreigners sold 43.6 billion rupees of sovereign debt in January, after paring holdings by 179 billion rupees in 2018.

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“I suspect the slippage, in reality, would be far worse,” said Krishna Memani, head of fixed income at OppenheimerFunds. “It is an election budget and the government has concluded that higher rates is a cost it is willing to bear.”

The yield on the most-traded 2028 bonds surged 13 basis points on Friday -- the most since May -- after the budget documents showed widening in the deficit targets for this fiscal year and the next to 3.4 per cent of gross domestic product. The government had earlier targeted 3.3 per cent for this year and 3.1 per cent for 2019-2020.

“I will observe closely the developments in the next few months on the budget side before I consider increasing Indian local bonds,” said Esther Law, senior investment manager for emerging market debt at Amundi. There’s more value in other Asian markets with better fundamentals and valuations relative to rupee bonds, she said.

Next trigger for bonds will come from the central bank’s policy decision on Thursday, when it is expected to change its stance to neutral while keeping rates on hold. A dovish signal will help the market take a bit of fiscal slippage in its stride, according to BNP Paribas Asset Management.

“Given a dovish central bank and only slightly deteriorating fiscal situation, we expect a slightly negative impact on yields initially,” said Jean-Charles Sambor, deputy head of emerging-market debt at BNP. “Longer term, we think that the bad news is priced in.”

While global funds were net buyers of government debt on budget day, fiscal slippage and political uncertainty mean Indian bonds will compete with other developing markets that have lower economic and political risks, OppenheimerFunds’ Memani said.

“If the Indian government is looking to foreign investors to finance its deficit, there is nothing in the budget that gets them more comfortable,” he said.

How Indian Ocean may play a lead role in world affairs in the future

There is also a strong economic and political logic to spotlighting the Indian Ocean as a key emerging region in world affairs.

In recent days, Australia’s foreign minister Marise Payne announced efforts to strengthen Australia’s involvement in the Indian Ocean region, and the importance of working with India in defence and other activities. Speaking at the Raisina Dialogue in Delhi – a geopolitical conference co-hosted by the Indian government – Payne said:

Our respective futures are intertwined and heavily dependent on how well we cooperate on the challenges and opportunities in the Indian Ocean in the decades ahead.

Among Payne’s announcements was A$25 million for a four-year infrastructure program in South Asia (The South Asia Regional Infrastructure Connectivity initiative, or SARIC), which will primarily focus on the transport and energy sectors.

She also pointed to increasing defence activities in the Indian Ocean, noting that in 2014, Australia and India had conducted 11 defence activities together, with the figure reaching 38 in 2018.(Business Standard)

Payne’s speech highlights the emergent power of the Indian Ocean region in world affairs. The region comprises the ocean itself and the countries that border it. These include Australia, India, Indonesia, Bangladesh, Madagascar, Somalia, Tanzania, South Africa, the United Arab Emirates and Yemen.

In terms of global political significance, the Atlantic Ocean can be viewed as the ocean of our grandparents and parents; the Pacific Ocean as the ocean of us and our children; and the Indian Ocean as the ocean of our children and grandchildren.

There is an obvious sense in which the region is the future. The average age of people in the region’s countries is under 30, compared to 38 in the US and 46 in Japan. The countries bordering the Indian Ocean are home to 2.5 billion people, which is one-third of the world’s population.

But there is also a strong economic and political logic to spotlighting the Indian Ocean as a key emerging region in world affairs and strategic priority for Australia.

Some 80% of the world’s maritime oil trade flows through three narrow passages of water, known as choke points, in the Indian Ocean. This includes the Strait of Hormuz – located between the Persian Gulf and the Gulf of Oman – which provides the only sea passage from the Persian Gulf to the open ocean.

The economies of many Indian Ocean countries are expanding rapidly as investors seek new opportunities. Bangladesh, India, Malaysia and Tanzania witnessed economic growth in excess of 5% in 2017 – well above the global average of 3.2%.

India is the fastest growing major economy in the world. With a population expected to become the world’s largest in the coming decades, it is also the one with the most potential.

Zika outbreak under control, says govt even as 29 test positive in Jaipur

According to a Health Ministry official, 29 people have so far been tested positive for the disease in Rajasthan.

The Health Ministry Tuesday appealed to people not to panic and assured them that the Zika outbreak was under control, after 29 people were tested positive for the disease in Rajasthan's Jaipur.

According to a Health Ministry official, 29 people have so far been tested positive for the disease in Rajasthan.

There was no need to panic and everything was under control, the ministry said.

The Prime Minister's Office (PMO) on Monday sought a comprehensive report from the Health Ministry on the outbreak of Zika virus.

A seven-member high-level central team is in Jaipur to assist the state government in control and containment measures and a control room has been activated at the National Centre for Disease Control (NCDC) to undertake regular monitoring of the situation, according to the ministry.

The situation is being reviewed by Health Minister J P Nadda.

As one of those affected in Jaipur hailed from Bihar and visited his Siwan home recently, the eastern state has issued advisories to all its 38 districts to keep a close watch on people showing symptoms similar to Zika virus infection.

All suspected cases in the defined area of Jaipur and mosquito samples from this area are being tested. Additional testing kits are provided to viral research and diagnostic laboratories.

The state government has been supplied with information, education and communication (IEC) material prepared to create awareness about Zika virus and its prevention strategies.

All pregnant mothers in the area are being monitored through and extensive surveillance and vector-control measures are being taken up in the area as per protocol by the state government, the official said.

Symptoms of mosquito born Zika virus disease are similar to other viral infections such as dengue, and include fever, skin rashes, conjunctivitis, muscle and joint pain, malaise, and headache.

In India, the first outbreak was reported in Ahmedabad in January and February 2017 and second outbreak in July, 2017 from Krishnagiri Districtin Tamil Nadu. Both these outbreaks were successfully contained through intensive surveillance and vector management, the ministry said.

The disease continues to be on surveillance radars of the Union Health Ministry although it is no longer a Public Health Emergency of International Concern under WHO notification since November 18, 2016.

Business Standard