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The Union Budget 2020-21 is likely to make a one-time provision for the procurement, storage, transportation and distribution of COVID-19 vaccines, and filling certain gaps in India’s public healthcare system which the pandemic has exposed.

A top government official told Moneycontrol that the provisioning could be as high as Rs 80,000 crore. This will just be from the centre, with states and the private sector also budgeting their own expenditure as India prepares for a vaccination drive that could be the largest in the world.

Additionally, the Modi government is learnt to have accepted the recommendations of the Fifteenth Finance Commission (15th FC) on the health sector. The recommendations, which will be made public along with the budget, likely include nearly doubling India’s combined public health expenditure as percentage of GDP, and creating a dedicated central cadre of medical professionals.

Finance Minister Nirmala Sitharaman is expected to present the Union Budget on February 1, 2021.

“There have been discussions over provisioning one-time expenditure in the coming year. We believe a bulk of spending on vaccines, from procuring to storing to transporting, distributing and inoculating, will happen in 2021-22,” said the official, who is aware of deliberations around the budget.

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The Union Cabinet on Wednesday approved Rs 22,810 crore outlay for a new employment scheme that aims at encouraging businesses to do fresh hiring.

Under the Atmanirbhar Bharat Rojgar Yojana, the government will for two years provide employee and employer contribution to the retirement fund for new hires by businesses and entities, Labour Minister Santosh Gangwar said.

The scheme would till 2023 entail an outgo of Rs 22,810 crore and would benefit around 58.5 lakh employees.

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The year 2020 was truly Annus Horribilis for people, governments and budgets. However, defence is probably one sector that didn’t get affected much. Buried in the year’s headlines of COVID-19, several defence deals and developments went unnoticed. Each of these was of long-term global and domestic significance.

Technologically the most important development was when Boeing Australia unveiled its ‘loyal wingman’ attack drone. Unlike current drones which have limited manoeuvrability, this is a full-fledged combat capable beast. Perhaps more importantly it thinks for itself in most situations.

The Achilles heel of the United States (and western) drone complex was that they require humans controlling them from ground stations. The problem with this is, that these drones are linked to their operators through satellite links, consuming huge amounts of incredibly expensive bandwidth for data, but also are highly vulnerable to an emerging generation of anti-satellite weapons.

The loyal wingman concept (and the similar but significantly less advanced Sukhoi S-70 Okhotnik-B) does away with this, accomplishing large parts of its mission autonomously through artificial intelligence, but is also directly controlled by the manned aircraft it flies with, adding significantly to that aircraft’s lethality, while significantly reducing vulnerability. In many ways this concept marks the first significant step towards completely autonomous combat not dependant on humans (leaving aside the moral, legal and technological implications).

Politically, the Turkish order of a second batch of S-400 missile systems from Russia was the highlight of 2020. In a sense this decision is a microcosm of not just the deteriorating quality of decision-making in Ankara, but also the widening rift within NATO over Syria and Mediterranean gas reserves.

The year 2020 was truly Annus Horribilis for people, governments and budgets. However, defence is probably one sector that didn’t get affected much. Buried in the year’s headlines of COVID-19, several defence deals and developments went unnoticed. Each of these was of long-term global and domestic significance.

Technologically the most important development was when Boeing Australia unveiled its ‘loyal wingman’ attack drone. Unlike current drones which have limited manoeuvrability, this is a full-fledged combat capable beast. Perhaps more importantly it thinks for itself in most situations.

The Achilles heel of the United States (and western) drone complex was that they require humans controlling them from ground stations. The problem with this is, that these drones are linked to their operators through satellite links, consuming huge amounts of incredibly expensive bandwidth for data, but also are highly vulnerable to an emerging generation of anti-satellite weapons.

The loyal wingman concept (and the similar but significantly less advanced Sukhoi S-70 Okhotnik-B) does away with this, accomplishing large parts of its mission autonomously through artificial intelligence, but is also directly controlled by the manned aircraft it flies with, adding significantly to that aircraft’s lethality, while significantly reducing vulnerability. In many ways this concept marks the first significant step towards completely autonomous combat not dependant on humans (leaving aside the moral, legal and technological implications).

Politically, the Turkish order of a second batch of S-400 missile systems from Russia was the highlight of 2020. In a sense this decision is a microcosm of not just the deteriorating quality of decision-making in Ankara, but also the widening rift within NATO over Syria and Mediterranean gas reserves.

Azerbaijan showed that the original intended purpose of drone — to attack tanks was still relevant but added a significant new paradigm of modern warfare — that drones operating in co-ordination with brigades of hired international terrorists (rather than against them) was a potent new battlefield equation.

Elsewhere Japan decided to operationalise its momentous decision to convert its ‘helicopter carrier’ into an aircraft carrier armed with F-35 fighters. Given Japan’s deep pockets, tenacity and technology, this will be the critical action that decides the balance of forces against China in this century.

Finally, there was India’s first ever lease of Reaper drones from the US. This marks the first break in the ‘buy foreign or buy Indian, but buy’ mentality of the forces. Taken to its logical conclusion, such leasing, could open up a whole new set of options in fixing India’s disturbingly deteriorating levels of combat equipment.

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Dear Reader,

Did Socrates really say, 'In the face of adversity, we have a choice. We can be bitter, or we can be better'? In his statement on the monetary policy, RBI governor Shaktikanta Das claimed the quote was attributed to Socrates. A quick Google search finds the quote, but no mention of the Greek philosopher ever having said that. But then, who knows, although it’s a bit tricky for an RBI governor to quote a guy whose most famous saying is, ‘All I know is that I know nothing’ or words to that effect.

Das also says, ‘it is never too late to seek a newer world’ and ‘to strive, to seek, to find and not to yield’, borrowing the words, of course, from Tennyson’s Ulysses.

Perhaps taking inspiration from these upbeat words in the governor's statement, the RBI’s Monetary Policy Committee decided to keep its policy rates and liquidity stance unchanged, in spite of revising its inflation projections higher. What’s more, it says, ‘inflation is likely to remain elevated, barring transient relief in the winter months from prices of perishables’. It also improved its growth projections from its earlier estimates. The PMI data for November show precisely this combination -- continuing expansion in both manufacturing and services, but higher inflation.

Other indicators too reflect the improving economy. Our recovery tracker shows a very healthy trend this week, with falling unemployment, higher retail car sales and increased power consumption. Bank lending has picked up sharply. The auto industry is cruising along comfortably, although there could be speed bumps along the way. Lumax Industries will capitalise on that recovery. Indeed, there are signs of a rebound in capital goods companies too, although government support is essential. Good luck with that.

Given the growth revival, we took a look at which mid-cap cement companies could benefit from the increase in infrastructure and housing activity. Railway engineering companies are seeing a sharp rise in business. Engineers India’s fundamentals are improving, as are those of JSW Energy. Laurus Labs’ new lever of growth looks so promising that it merited two stories, here and here. The supply situation has normalised for Sharda Cropchem. Business momentum in Transport Corporation of India looks good, while AU Small Finance Bank’s collection efficiency is now near normal. The icing on the cake is that, contrary to expectations, the smaller FMCG companies have done far better than the bigger ones.

What the RBI is essentially saying is that it will keep monetary policy accommodative as long as necessary – at least during the current financial year and into the next financial year---in spite of higher inflation and the economic recovery.

That is wonderful news for the markets. The party in equities is getting wilder and is fast developing into a first-class binge, aided and abetted by central banks across the world, including the RBI. After all, real bond yields in India are not only negative, but the lowest among major economies. Globally, the prospect of vaccines in a few months has led to, as this FT piece tells us, an ‘everything rally’.

The JP Morgan Global Composite PMI for November indicates that the recovery continues and the latest OECD growth projections show some light in the covid-19 gloom. At 57.5 in November, China’s Composite PMI signalled the steepest increase in total Chinese output since March 2010 -- small wonder that China’s voracious appetite for steel is benefiting India’s steel producers. All these optimistic signals have led Mark Matthews, Research Head (Asia) at Bank Julius Baer & Co Ltd, to predict earnings growth in India to be over 25 percent in the next two years.

Of course, everything is far from being back to normal, which is why the RBI is so keen to push growth, never mind its inflation target. The RBI’s consumer confidence survey in November showed that only 52 percent of respondents believed their employment prospects would improve over the next one year—a third said they expect their job prospects to get worse. Only 51 percent said they expect their income to increase in the next one year. And as for the consumption recovery that everybody is eagerly looking forward to, only 28.7 percent of those surveyed said they would increase discretionary spending in the next one year, while 34 percent said they would curb non-essential spending.

That is why we underlined two reasons why the banking sector is not yet out of trouble. Muthoot Finance’s MD says they will grow more than 15 percent this year, but what do all the gold loans tell us about financial conditions among the masses? And don’t forget that globally, food inflation has reared its ugly head. Add to that the possibility that the farmers’ agitation may stymie a bold attempt at reforms.

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India Inc and experts on Friday said the RBI''s decision to hold interest rates will support economic recovery in the aftermath of the COVID-19 pandemic and that they expect the central bank to maintain an accomodative stance in the near future.

The Reserve Bank of India (RBI) on Friday left interest rates unchanged for a third straight meeting as inflation stayed stubbornly high, and said the economy was recuperating fast and would return to positive growth in the current quarter itself.

The benchmark repurchase rate will be maintained at 4 per cent, RBI Governor Shaktikanta Das said.

The six-member Monetary Policy Committee (MPC) retained its accommodative stance, signalling its intentions to cut interest rates whenever the situation eases.

A spike in consumer prices forced RBI to pause after cutting rates by 115 basis points this year.

"There has been a substantial upgrade to the overall growth forecast for the second half of the current fiscal. This is encouraging but given the stress the economy had faced on account of COVID-19, we anticipate that policy support, both from the RBI and the government, will be required well into the next year," Ficci President Sangita Reddy said.

Chandrajit Banerjee, Director General, CII said it has been the right decision by RBI, given that adequate thrust on nurturing the growth impulse is required.

"Industry is also buoyed by RBI''s willingness to use all instruments at its disposal to ensure availability of adequate liquidity in the financial markets. This is a necessary pre-requisite for fostering the growth recovery," he added.

''''Given the inflationary challenges, it is no surprise that the RBI-MPC has kept the policy repo rate unchanged at four per cent. However, we must applaud the MPC for staying on course with regard to accommodative interest rate stance," Assocham Secretary General Deepak Sood said.

The growth projections by RBI, such as positive growth in second half of FY2021 and revised real GDP contraction at 7.5 per cent, are inspiring and will build confidence in the economic and business activities going forward, PHDCCI President Sanjay Aggarwal said.

"Going ahead, we expect accommodative stance to continue at least in next financial year and there is further cut in repo rate if inflation comes down," he added.

Nitin Sharma, Director Research Fidelity International India said the MPC''s pronouncement on continuing the accommodative stance for as long as needed and observation of an improving recovery path will give comfort to markets.

Ashish Shanker, Deputy MD and Head of Investment, Motilal Oswal Private Wealth Management said an accommodative liquidity stance will ensure access to liquidity will not be a challenge and the ongoing recovery continues to gather steam.

Ramesh Nair, CEO & Country Head (India), JLL, said the RBI''s decision augurs well for the economy.

Mayur Dwivedi, Head- Strategy, M&A, Investors Relations at Religare Enterprises, said the RBI''s decision underlines the central bank''s focus on reviving growth in the aftermath of COVID-19 pandemic.

The central bank, which had previously expected the economy to shrink 9.5 per cent in the year to March, revised its forecast after a shallower-than-expected decline in the gross domestic product (GDP) in the July-September quarter.

Das said high frequency indicators point to a recovery gaining traction, with double-digit growth in passenger vehicles and motorcycle sales, railway freight traffic, and electricity consumption in October.

The GDP, he said, will grow by 0.1 per cent in December quarter and by 0.7 per cent in the following three months. Overall, the 2020-21 fiscal will end with a 7.5 per cent de-growth.

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India's largest lender State Bank of India offers eight maturity options for retail fixed deposits, or fixed deposits up to Rs 2 crore. The maturity period starts at seven days and extends to as long as 10 years.

SBI offers interest rates of 2.9 percent to 5.4 percent to its general depositors and 3.4 percent to 6.2 percent to its senior citizens' customers on retail FDs.

SBI changes interest rates from time to time on the basis to align them with benchmark rates. These interest rates are effective from September 10.

Check out SBI fixed deposit rates:

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Government data released on Friday showed the economy shrank 7.5 percent in the July-September quarter, performing better than analysts' expectation of an 8.8 percent contraction as lockdowns were eased and some pent-up demand was met. In the April-June period, the economy shrank 23.9 percent.

Annual growth of 3.4 percent in farm sector and 0.6 percent in manufacturing during the September quarter has raised hopes of an early recovery and some service sectors such as trade, hotels and transport contracted at a much slower pace compared with the April-June period.

Trade, hotel, transport, communication & services related to broadcasting reported a contraction of 15.6 percent in the September quarter, against a contraction of 47 percent in the previous quarter.

Farmers, benefiting from a bumper crop, are lapping up tractors while demand for personal vehicles, due to a lack of public transport and the need for safer travel options, has boosted sales of cars and motorcycles.

Maruti Suzuki, India's biggest carmaker, had a 10 percent growth in rural sales between July and September versus a 4 percent rise overall, led by small, entry-level models, said Shashank Srivastava, executive director, marketing and sales. 

Since the end of May, when the government lifted a ban on flights, monthly domestic passenger traffic has more than doubled from 2 million in June to over 5 million in October. But that is still down from about 12 million a year ago. India's biggest carrier IndiGo and rival Vistara are seeing an uptick in business travel but to a much smaller extent than before. 

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• Indian shares reversed course to end higher on Tuesday on hopes of higher inflows after MSCI said it will make changes to its global indexes following revisions in the country's foreign ownership limits

  Market closing

  Indian benchmark share indices reversed early losses to settle higher on Tuesday on hopes of higher inflows after MSCI said it will make changes to its global indexes following revisions in the country's foreign ownership limits.

  Sensex settled at 40,522.10, up 376.60 or 0.94%, while Nifty closed 121.65 points or 1.03% higher at 11,889.40.

  Kotak Mahindra Bank, closing over 11% higher, was the top Sensex gainer followed by Nestle India, Asian Paints, Bajaj Finance and NTPC. TCS, HDFC, ONGC and Infosys were among the laggards. Of 30 Sensex shares, 19 closed in the green.

  Kotak Mahindra Bank shares continue to gain

  Shares of Kotak Mahindra Bank further gained nearly 12% in early trade on Tuesday after the company reported a 22 per cent growth in consolidated net profit for the July-September quarter. The stock jumped 12% to ₹1584.75 on the BSE.
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