IGI Logo

THIS WEEK'S HIGHLIGHTS

This week, the Centre launched the National Monetisation Pipeline worth INR 6trn expected during FY22-25 with a focus on roads and railways. However, former Finance Secretary Subhash Chandra Garg has stated the same to be too ambitious a plan which was unlikely to materialise due to absence of institutional mechanisms. On the COVID-19 front, developments on vaccines and unlocking remained in the limelight- i) the Centre clarified there being no proposal for a change in the dose gap of vaccines (Covishield, Covaxin, Sputnik V), ii) rollout of Zydus Cadila’s needle-free vaccine (for children above 12 years) is expected from the first week of Oct’21, iii) Delhi announced phased opening of schools from 1 Sep’21, while the Centre suggested night curfews in the worst-affected areas of Maharashtra and Kerala, and iv) the National Institute of Disaster Management has concluded in its report that the paediatric facilities in India remain inadequate to tackle the third wave.

Other highlights of the week included- i) a likely relief package for the telecom sector along with the possibility to raise the time for repayment of AGR dues, ii) the govt. being in the final stages to announce the PLI scheme for auto sector, iii) cut in VAT rate on petrol by Puducherry (2nd after Tamil Nadu) and iv) govt. consideration to permit FDI in LIC.

On the external front- i) FED Chairman, J. Powell gave no clear hint of the timing of tapering at the Jackson Hole symposium, ii) ECB’s monetary policy meeting minutes revealed no rush in tapering and dissent on the new policy guidance of understating the risk of rising inflation, and iii) the Bank of Korea hiked interest rate by 25bps to 0.75%. Meanwhile, i) forex reserves fell to USD 616.9bn on 20 Aug’21 vs. USD 619.4bn on 13 Aug’21, ii) the INR closed at INR 73.7/USD vs. 74.4/USD last week, and iii) Brent Crude rose to USD 70.9/bbl vs. USD 64.8/bbl last week. In the coming week we look forward to data releases on- i) India’s GDP Q1FY22, ii) Centre’s fiscal, iii) GST, iv) Core industries index, v) Trade in goods, and vi) Manufacturing PMI.

MACROECONOMIC INDICATORS

* Fitch Solutions has trimmed its 2021 India household spending forecast to 8.9% from 9.1% estimated in June, citing tepid vaccination pace in the country.

* Rainfall recorded was 10% lower than LPA in week ended 27 Aug’21 as per IMD. Skymet has lowered its 2021 forecast to 'below normal', from its earlier forecast of 'normal' monsoon.

* India’s total coronavirus cases rose to 3,26,02,332 on 27 Aug’21 vs. 3,23,58,218 on 20 Aug’21. About 612mn Covid-19 vaccine doses have been administered in India as on 27 Aug’21 (34% of population with atleast 1 st dose).

* Brent Crude rose to USD 70.9/bbl vs. USD 64.8/bbl last week.

* The INR closed at INR 73.7/USD vs. 74.4/USD last week.

* Forex reserves fell to USD 616.9bn on 20 Aug’21 vs. USD 619.4bn on 13 Aug’21.

* Net market borrowings of the Centre and States stood at INR 3,872bn and INR 1,721bn respectively as on 20 Aug’21 (vs. INR 4,534bn and INR 2,160bn respectively, last year)

POLICY AND REFORMS

* Finance Minister Nirmala Sitharaman has launched the National Monetisation Pipeline (NMP) of INR 6trn for the next four years ending Mar’25 (INR 881.9bn in 2021-22, INR 1.6trn in 2022-23, INR 1.8trn in 2023-24, INR 1.7trn in 2024-25). The largest contributors to this would be roads and railways with share of 27% and 25% respectively. (Source: PIB)

* On the AGR issue- i) the govt. is working on a relief package for the telecom sector, aimed at helping firms like Vodafone and Airtel, ii) the govt. is also discussing the possibility of increasing the timeline for the repayment of AGR dues to 20 years (from 10 years currently), and iii) the Supreme Court has directed DoT not to invoke the bank guarantees of Bharti Airtel for three weeks for recovering INR 13.76bn in AGR-related dues of Videocon Telecom which had sold its spectrum to the Bharti group. (Source: IT)

* Chief economic advisor (CEA) Krishnamurthy V Subramanian has said that India is well-poised to face the ripple effect of taper tantrums if the US Fed begins to scale back its USD 120bn-a-month quantitative easing later this year. (Source: FE)

* Governor Shaktikanta Das has said that the RBI is in no hurry to reverse course on record low interest rates in spite of mounting worries around inflation. (Source: CNBC)

* The Centre has asked Maharashtra and Kerala to consider night curfews in regions with high COVID-19 case load. (Source: IE)

* The Delhi government has allowed phased resumption of Schools (starting from classes 9-12), Colleges and coaching institutes from 1 Sep’21 with parents consent. (Source: NDTV)

* The government has clarified there is no proposal for a change in the dose gap of Covishield, Covaxin and Sputnik V vaccines. (TOI)

* The Centre is expecting Zydus Cadila’s needle-free Covid-19 vaccine ZyCoV-D to be available from the first week of Oct’21. A decision on whether all children or only those with co-morbidities will be administered the vaccine on priority has not yet been taken.(ET)

* The rollout of Pfizer's Covid-19 vaccine in India is facing another hiccup over the indemnity issue. The company is insisting that the government bear the liability for all its vaccines administered in India even if an adverse event claim is made outside the country. (ET)

* In its recent report to the Prime Minister’s Office (PMO), the National Institute of Disaster Management (NIDM), under the Ministry of Home Affairs (MHA) has concluded that the third wave of COVID-19 could peak around October. The report noted that pediatric facilities, equipment are nowhere close to what may be needed if a large number of children contract the virus. (Source: India.com)

* The department of heavy industries is in the final stage of announcing the PLI scheme for automobile sector with the highest budget allocation of INR 570bn. (Source: ET)

* Former RBI governor Raghuram Rajan has said that the responsibility of promoting sustainable investments should lie with the governments and not with the central banks who already have other significant policy commitments. (Source: ET)

* Puducherry Chief Minister N Rangasamy presented the INR 99bn tax-free budget for FY22. Highlights of the budget included a 3% cut in VAT on petrol, education and crop loan waivers. (Source: TOI)

* The Cabinet Committee on Economic Affairs has approved the highest ever fair and remunerative price (FRP) for sugarcane farmers at INR 290 per quintal, at a basic recovery rate of 10% for the sugar season 2021-22 (Oct- Sep). (Source: PIB)

* According to Revenue Secretary Tarun Bajaj, edible oil and pulses are major contributors to inflation in the country, and to boost their availability in the market, the supply side has been addressed through duty cuts. (Source: BS)

* Aviation minister Jyotiraditya Scindia has written to 22 states/UTs asking them to keep VAT in the range of 1-4% on jet fuel. (ET)

* Transport Minister Nitin Gadkari has asked vehicle manufacturers to discourage production and sale of diesel engine vehicles, and urged them to promote other technologies. (Source: ET)

* The government is considering permitting foreign direct investment (FDI) in LIC. (Source: ET)

* Finance secretary TV Somanathan has said that the govt. is considering introducing insurance bonds as an alternative to bank guarantees. (Source: ET)

* The Expert Committee on Primary (Urban) Co-operative Banks, headed by former RBI deputy governor N S Vishwanathan, has suggested a four-tiered structure to regulate these entities based on size of deposits. (Source: RBI)

* The Ministry of Commerce has set up a steering group to coordinate with various state govts. and other central ministries & departments to formulate a strategy for the growth and diversification of services exports from India. (Source: HinduBL)

* India and Australia are aiming to conclude an early harvest trade deal by Dec’21. An early harvest agreement will be the way forward for an early conclusion of a bilateral Comprehensive Economic Cooperation Agreement (CECA) between both the countries. (BS)

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.jmfl.com/disclaimer

CIN Number : L67120MH1986PLC038784

Above views are of the author and not of the website kindly read disclaimer