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Coronavirus pandemic | FICCI says economy needs a stimulus package of Rs 9-10 lakh crore

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Apex industry-body, Federation of Indian Chambers of Commerce and Industry (FICCI) has said that India may need an economic stimulus of as much as Rs 9-10 lakh crore to ensure that the economy wrestles through the challenges posed by the COVID-19 crisis.

Amid stymied economic activity due to a nationwide lockdown, several key sectors of the Indian economy are experiencing distress such as travel, tourism, entertainment, manufacturing, transport infrastructure, financial services, among others.

According to a Business Continuity Plan report by FICCI, there is an immediate need for a significant stimulus of Rs 9-10 lakh crores, this constitutes around 4-5% of the current GDP.

Other countries affected by the COVID-19 crisis have taken similar steps. For instance, the US has invested as much as 11 percent of its GDP to infuse liquidity into its economy.

The report recommends utilisation of funds for the rehabilitation of informal workers, MSMEs, and large corporates.

To ease the lack of liquidity that borrowers face amid the nationwide lockdown, the Reserve Bank of India on March 27 allowed banks and financial institutions to offer a three-month moratorium on term loans and credit card bills.

The FICCI report recommends extending a similar moratorium for loans taken from mutual funds and insurance companies.

In order to ensure workers resume jobs, the report recommends special transportation to get migration workers back to factories. The lockdown has caused a shortage of labour across sectors as migrant workers left for native places. The report also recommends engaging with trade unions to ensure a smooth transition.

Interest-free and collateral-free loans should be given to MSMEs for a period of upto 12 months to enable them to cover fixed costs, salaries and other operational expenses. This loan may be given with pre-conditions that businesses will continue to run and there would be no layoffs of workers.

Supply-side intervention recommendations

Provide greater regulatory forbearance including change in NPA definition and loan restructuring among other things. NPA recognition period to be extended from 90 days to a minimum of 360 days.

All tax payments including GST payments should be deferred by six months without inviting any penalty.

To ensure MSMEs are not forced to file for bankruptcy, the report recommends suspension of Sec 7, 9 and 10 of IBC with immediate effect instead of April 30. Between April 14-30, IBC may get triggered because of a lack of liquidity within the industry.

There is also a need to ensure all pending payments to the industry are cleared immediately by the government departments and PSUs.

There is a need to accelerate infrastructure spend of Rs 1.7 lakh crore allocated in Budget 2020 to provide immediate impetus to the economy. The report recommends directing the budget towards low cost housing and road construction.

COVID-19 war can't be won by clapping, lighting lamps: Shiv Sena

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The Shiv Sena on Tuesday said the war against coronavirus cannot be won by clapping, clanging of plates or lighting of lamps.

People "misconstrued" Prime Minister Narendra Modi's appeal, an editorial in Sena mouthpiece 'Saamana' said, adding that Modi should clearly spell out what it expected from citizens and those not obeying orders should be punished.

Modi last week appealed to people to defeat the coronavirus by switching off lights in their homes for nine minutes at 9 pm on Sunday amid the nationwide lockdown.

People across the country enthusiastically responded by lighting candles and diyas, and flashing lights of their mobile phones in balconies and in front of their houses.

Modi earlier urged people to observe 'Janta Curfew' on March 22, and come out briefly at their main doors and in balconies to show gratitude to health and other essential service providers, who at the forefront of the battle against coronavirus, with claps, sounds of bells and conches.

Taking a dim view of Modi's appeals, the Shiv Sena said, "Claps, thalis and lights...like this we will lose the war. There are many aspects to how people responded to these appeals. Citizens misconstrued the prime minister's

appeal...either the PM cannot communicate with citizens or he himself wants such a festive atmosphere."

It said Maharashtra Chief Minister Uddhav Thackeray has been urging people to maintain self-discipline, and communicating with them while ensuring there is no confusion.

"In the fight against coronavirus, you need such a commander. We lost the Panipat battle because of rumours and lack of planning. The war against coronavirus should not end up like that and people of the state shouldn't meet the fate of Sadashivrao bhau (Marathaarmy commander in Panipat

battle)," the Marathi daily said.

It said the prime minister should clearly tell people what is expected from them. "Those who don't obey should be punished. It is not that only Markaz (referring to Tablighi Jamaat's congregation in Delhi last month) breaks rules. Are those blaming the Markaz for the coronavirus spread themselves maintaining discipline and social distancing?" it asked.

The Sena cricitised incidents of people coming out on streets with candles, torches and mobile phones and dancing, and said due to bursting of crackers there was a fire incident in Solapur.

In Wardha, BJP MLA Dadarao Keche celebrated his birthday (during the lockdown) and more than 200 people gathered for the party, it noted.

The Sena also pointed out similar incidents in other parts of the country, including that of a BJP women's wing leader at Balrampur in Uttar Pradesh firing in the air to 'chase away' the coronavirus.

Fitch slashes India growth forecast to 30-year low of 2% for FY21

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Fitch Ratings on Friday said it has slashed India's growth forecast for the current fiscal to a 30-year low of 2 percent, from 5.1 percent projected earlier, as economic recession gripped global economy following the lockdown due to COVID-19 pandemic. "The initial disruptions to regional manufacturing supply chains from a lockdown in China as the coronavirus spread have now broadened to include local discretionary spending and exports even as parts of China return to work.

"Fitch now expects a global recession this year and recently cut our GDP growth forecast for India to 2 percent for the fiscal year ending March 2021 after lowering it to 5.1 percent previously, which would make it the slowest growth in India over the past 30 years," it said in a statement.

On March 20, Fitch had projected India's GDP growth for 2020-21 at 5.1 percent, lower than 5.6 percent estimated in December 2019.

Fitch also said micro, small and medium-sized enterprises and the services segment are likely to be among the most affected amid reduced consumer spending.

NBFCs' business borrowers are typically smaller with more limited cash buffers, and any material fall in earnings is likely to affect their ability to repay their loans directly, it said in the statement.

"The challenges for India's non-bank financial institutions (NBFI) will intensify as local measures to contain the spread of the coronavirus exert pressure on their operating performance and financial profiles. Government-imposed activity restrictions in India will raise operational complications for the NBFIs, while any escalation in local infections would deal a blow to economic sentiment.

"These developments threaten to derail the incipient recovery in India's credit environment following the NBFI crisis in 2018-2019, and Fitch has taken negative action on our rated Indian NBFI portfolio in light of these risks," the agency said.

The RWN (Rating Watch Negative) placed on the ratings of Fitch-rated Indian NBFIs reflects heightened uncertainty over their credit profiles due to the authorities' measures to contain the spread of COVID-19, it added.

Last week, Moody's Investors Service sharply cut India's growth forecast for calendar 2020 to 2.5 percent from 5.3 percent estimated earlier.

New income tax rules from April 1: Find out what changes from today

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April 1 marks the beginning of the new fiscal year, 2020-21. Many new I-T rules are also coming into effect with the start of the new fiscal year.

Due to the 21-day lockdown across the nation to prevent the spread of coronavirus, the government has extended the deadline of some rules or procedures so that it will remain intact even after the commencement of new fiscal year. Income tax returns filing for the year 2018-19 has been extended, similarly, linking of pan card with Aadhaar card has also been extended to June 30.

Here are the new income tax rules, announced by Finance Minister Nirmala Sitharaman in Budget 2020, which will come into effect from April 1:

From April 1, the new tax slab will be effective, however the old tax slab will also remain in existence, Finance Minister Nirmala Sitharaman announced on February 1. This will allow people to select any one out of the two slabs, new or old.

Dividends earned from mutual funds or domestic firms will be taxable. Investors in higher tax brackets will be put under higher burden the whereas less burdened will put on those with lower tax brackets.

For employees, it will be taxable if the contribution to the NPS, EPF and pension fund exceeds Rs 7.5 lakh in a year. This new income tax rule will be applicable to both the old, as well as the new, slab.

The government has extended the date of additional tax benefit for one year till March 31, 2021 for those who are buying a house for the first time and its price is up to 45 lakh rupees. The landlord will get an opportunity to claim additional tax exemption of 1.5 lakhs on interest in addition to the existing Rs 2lakh tax rebate if he takes a loan to buy a house up to 45 lakhs.

The employees of startups get exemption from paying tax on the shares allotted within the ESOPs or Employee Stock Ownership Plan in this new income tax rules.

Coronavirus pandemic | Now you may be allowed to defer date of journey beyond April 30 in your travel insurance

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Amidst the coronavirus (COVID-19) pandemic, the insurance regulator has asked companies to provide an option to defer date of journey in travel insurance products.

This will be for policies that were/are valid between March 22 and April 30.

Due to COVID-19 and the ensuing lockdown in India and across the globe, several travellers have been either stranded in another location domestically or abroad.

Travel restrictions will be applicable till April 14 for the time being. There was a fear among individuals with travel insurance products about the validity of the product due to cancellation of flights.

Policy holders can call up their insurers to check if this facility has been provided.

The total number of reported COVID-19 cases in India stands at 1,251. The Union Health Ministry has said that 102 patients have recovered so far, but 32 have died.

This decision by Insurance Regulatory and Development and Authority of India (IRDAI) was among a slew of other measures announced to help tide over the COVID-19 situation.

In the first week of March, IRDAI had asked insurance companies to expeditiously settle all COVID-19 claims and also handle quarantine-related claims on the basis of the terms and conditions of the health insurance policy.

Later, on March 23, IRDAI had also asked life insurers to give an additional grace period of 30 days for payment of renewal premiums.

Insurers were also asked to design products specifically for covering COVID-19 that would cover the costs of the treatment. Typically, if an individual is admitted to a state-run hospital the government bears the treatment costs. However, in the case of private hospitals and home quarantine-related charges, the costs are to be borne by the affected persons.

As far as policyholders are concerned, IRDAI said that insurers have to display on their website a dedicated help line number for policyholders and another help line number for other stakeholders including agents and intermediaries.

Though the normal response time for policyholder complaint redressal is 15 days, due to the prevailing lockdown situation, an additional 21 days will be allowed. This is for all complaints which are received on or after March 15, 2020 and up to April 30, 2020. However, this additional response time is not applicable to complaints pertaining to COVID-19 for which the extant timelines will continue to apply.

For insurers

IRDAI has said that while insurance has been exempted from the lockdown, companies should advise their offices to function with only absolutely necessary staff including those involved in claims settlement, authorisation for hospitalisation, renewal of insurance policies and such other activities.

“To the extent possible, work from home may be adopted by facilitating the same for the staff of insurers, intermediaries and agents,” said IRDAI.

Further, the regulator said companies have to put in place a Business Continuity Plan (BCP) which inter alia deals with processes, transactions, reporting and customer services to be handled in a seamless manner to take care of the present situation.

Insurers also have to set up a crisis management committee to evaluate all risks including strategic, operational, insurance, liquidity, credit, reputational, market, foreign exchange, reduction in new business, reduction in renewal business, asset liability mismatch, reduction in yield, capital erosion, and claims in the wake of present situation, and shall devise necessary mitigation measures.

Any severe impact on the operations or capital requirements or solvency margin has to be promptly communicated to IRDAI.

Since remote working will have to be facilitated, IRDAI said that it is possible that there could be an increase in the number of cyber-attacks on personal computer networks. Therefore, insurers need to take precautionary measures to address such cyber risks and mitigate them as soon as they are identified.

For new policy sales, IRDAI said that wherever email addresses of policyholders are available, policy documents will have to be issued through email.

The US weighs the grim math of death vs the economy

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Hollstadt Consulting CEO Molly Jungbauer has had to let go 30 of the 150 employees at her St. Paul, Minnesota firm to weather the drop in revenue from travel industry clients because of the coronavirus.

She's worried about her daughter, who lives in New York and has the disease. But she also worries that shutting the economy with open-ended stay-at-home orders could have an "irreversible" impact.

So she was relieved to hear Minnesota Governor Tim Walz's plan last week: clamp down on commerce and social activity now but then reopen the state for business by May 4. "It is nice to know that we have somewhat of an end date," she said.

Coronavirus shut-downs could lop 25 percent or more from US output, some economists forecast, throwing tens of millions of Americans out of work.  The US government and the Fed are mounting what could be a $6 trillion economic rescue.

And elected US politicians entrusted with public welfare are making calculations centered around the question: How many possibly preventable deaths are acceptable, as weighed against millions of jobs lost and trillions of dollars of economic output foregone?

Declaring the cure can't be worse than the disease, President Donald Trump has said that by April 12, he wanted churches all over the country to be "packed" with Easter celebrants. On Sunday, Trump backed away from that goal by extending social distancing guidelines to April 30.

More testing is critical, Trump advisor Stephen Moore told Reuters.

"Once you have testing you can open up the economy," he said. South Korea has tested a much bigger portion of its citizens than the United States has, allowing it to reduce infections and without stopping its economy. The US has ramped up its capacity in recent weeks, though some states are making bigger inroads than others.

Also key, Moore said, is understanding if new cases are rising as fast in the Midwest as on the coasts, and if more people can, like the hundreds of thousands of workers at FedEx still on the job, practice social distancing and still work.

"You kind of have to look at the businesses that are running," Moore said.

US state and local officials are doing their own calculus.

"We will not put a dollar figure on human lives," New York Governor Andrew Cuomo said. Almost half of the 130,000 US cases to date have appeared in New York, where some hospitals are overwhelmed with critically-ill patients.

Other governors in states with fewer cases are forging ahead with plans to try to limit both deaths and economic damage.

On Wednesday, Walz - who is self-quarantining after possible exposure - told Minnesotans that models project an eventual 2.4 million infections statewide.

If allowed to spread unchecked now, he said, as many as 74,000 Minnesotans could die because too few hospital beds and ventilators means patients won't get the medical care they need.

Economically, he said, the state can't afford to stay shut for a year or more until a vaccine is developed, an approach an influential Imperial College study recommends.

So Walz is imposing a strict "stay-at-home" order for two weeks and a more relaxed version for a few weeks after that, to give hospitals the time to prepare. Epidemiologists refer to this as "flattening the curve."

"I don't believe it's prudent to try to shelter in place until a vaccine is there," Walz said. "I'm asking you to buckle it up for a few more weeks here."

Even that will be painful: state officials estimate 28 percent of Minnesotans will be temporarily jobless for the next two weeks, with about 40 percent of those without any form of paid leave.

Once businesses and schools reopen, Walz hopes to use testing and targeted quarantines to keep new cases in check.

But he acknowledged there will be more deaths. "It's agonizing and I find it nearly unacceptable," he said. "My job is to reduce it down."

Coronavirus is about ten times deadlier than the flu, killing one of every hundred that get it, according to Anthony Fauci, the top US infectious disease expert. Given Walz's estimate of 2.4 million Minnesota residents infected, that means 24,000 dead.

So far there have been 503 cases and nine deaths in the state.

FALSE TRADEOFF

For a growing chorus of economists, the notion of weighing deaths against the economy is fundamentally flawed.

"One can do those types of quite gruesome calculations" said MIT economist Emil Verner. But evidence suggests "that in some sense, that's a false tradeoff," he said.

Verner last week co-authored a paper about the response to the 1918 flu epidemic and found that cities that restricted public gatherings sooner and longer had fewer deaths - and ultimately emerged from the pandemic with stronger economic growth.

"Saving lives and saving the economy are not in conflict right now," former Fed Chair Janet Yellen and more than 30 other current and former policymakers and economists wrote in a joint statement published earlier this week.

Paul Winfree, director of economic policy studies at the conservative Heritage Foundation, agrees that easing restrictions too early could be damaging. But, he said, allowing the downturn to deepen into a depression would ultimately negatively impact health.

"The White House is starting to weigh the long and short term health consequences of coronavirus and mitigation...(and) they are hearing from the business community that there needs to be some level of certainty," he said.

The question remains if the American consumer, who is responsible for about two-thirds of US GDP, will be confident enough to go to crowded malls and cozy restaurants if the death toll is still rising.

UCLA professor Andy Atkeson says that though lifting lockdowns may seem like an economic shot in the arm, doing so could let infections shoot right back up again.

Americans would lock themselves down, afraid to go out to shop and work given the illness and death around them," Atkeson wrote.

From rate cuts to liquidity measures, RBI goes all guns blazing: 8 key takeaways from RBI policy

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The Reserve Bank of India (RBI) announced a huge 75 basis points rate cut on March 27, bringing it to 4.40 percent from 5.15 percent.

Announcing a series of measures to ensure liquidity and stability in the country’s financial system as India battles coronavirus, the Reserve Bank of India (RBI) governor Shaktikanta Das said the monetary policy committee (MPC) met almost a week ahead of the scheduled date.

“This decision of the rate cut and the advancement of MPC have been warranted by the disruptive force of COVID-19. It is intended to mitigate the negative effects of the virus, to revive growth and to preserve financial stability,” Das said.

The RBI slashed repo rate by 75 bps to 4.40 percent while the reverse repo rate, which sets the floor of the liquidity adjustment facility (LAF), was reduced by 90 bps to 4 percent.

“The purpose of this measure, relating to reverse repo is to make it relatively unattractive for the banks to passively deposit the funds with the RBI and instead to use these funds to lending to the productive sectors of the economy,” Das said.

Growth outlook uncertain

The RBI said that the coronavirus pandemic will affect the growth of most sectors.

“Apart from continuing resilience from agriculture and allied sectors, most sectors of the economy will be adversely impacted by COVID-19, depending upon its intensity, spread and duration,” Das said, referring to the illness caused by the virus.

“Projections of growth and inflation would be heavily contingent on the intensity, spread and duration of COVID-19. The MPC has refrained from giving out specific growth and inflation numbers because the situation is changing and the outlook is uncertain.”

There is a rising probability that a large part of the global economy will slip into recession. Turning to growth in India, the 5 percent growth expectation is at risk, the RBI governor said.

Liquidity measures

“Large selloffs in markets have intensified redemption pressure. The RBI will conduct auctions of long-term repo operation (LTRO) of up to three-year tenure of appropriate sizes for a total amount up to Rs 1 lakh crore at a floating rate linked to the policy repo rate,” Das said.

The RBI governor emphasised that the liquidity availed by banks under the scheme has to be deployed in investment-grade corporate bonds, commercial papers and non-convertible debentures, over and above, the outstanding level of those investments in these bonds, as on March 25, 2020.

Eligible instruments comprise both primary market issuances as well as secondary market purchases, including from MFs and NBFCs.

“Investments made by the banks under this facility will be classified as held-to-maturity (HTM) even in excess of 25 percent of the total investment permitted to be included in HTM portfolio,” Das said.

Exposure under this facility will also be not recognised under the large-exposure framework.

The first auction of Rs 25,000 crore, under this arrangement, will be conducted later on March 27.

CRR reduced by 100 bps

The RBI said that despite ample liquidity in the system, its distribution was highly asymmetrical.

“To help banks tide over the disruption caused by COVID-19, it has been decided to reduce the cash-reserve-ratio (CRR) of all banks by 100 bps to 3 percent of net demand and time liabilities (NDTL) with effect from March 28 for a period of one year,” Das said.

This reduction would release primary liquidity of about Rs 1.37 lakh crore uniformly across the banking system in proportion to liabilities of the constituents rather than in relation to their holding of excess SLR.

The RBI also reduced the minimum daily CRR balance from 90 percent to 80 percent, effective March 28. This is a one-time dispensation available up to June 26, 2020.

The RBI increased the accommodation under the marginal standing facility (MSF) from 2 percent of the statutory liquidity ratio (SLR) to 3 percent with immediate effect. This measure will be applicable up to June 30, 2020 and it should provide comfort to the banking system by allowing it to avail an additional Rs 1.37 lakh crore of liquidity under the LAF window.

These measures will inject a liquidity of 3.74 lakh crore in the system.

Widening monetary policy rate corridor

The  RBI also decided to widen the monetary policy rate corridor.

"In view of persistent excess liquidity, it has been decided to widen the existing policy rate corridor from 50 bps to 65 bps. Under the new corridor, the reverse repo rate under the LAF would be 40 bps lower than the policy repo rate against the existing 25 bps. The marginal standing facility rate would continue to be 25 bps above the policy rates,” Das said.

Moratorium on term loans

All lending institutions have been permitted a three-month moratorium on payments of instalments of all term loans outstanding as of March 1, 2020.

Deferment of interest on working capital facilities

Lending institutions can defer by three months payment of interest outstanding as on March 1 on working capital facilities sanctioned in the form of cash-credit and overdraft and such. The accumulated interest for the period will be paid at the end of the deferment period.

The moratorium on term loans and the deferment of interest on working capital will not result in asset classification downgrade, the RBI governor said.

Easing of working capital financing

In respect of working capital facilities sanctioned in the form of cash credit, overdraft, lending institutions are allowed to recalculate drawing power by reducing margins or by reassessing the working capital cycle for borrowers.

More to come?

The RBI governor said the central bank was closely monitoring the situation and will step in whenever required.

“Let me assure you that the RBI is at work in mission mode. We have been monitoring the evolving financial market and the macroeconomic conditions and calibrating its operations to meet any need for additional liquidity support as well as to take other measures if warranted,” said the RBI governor.

First step in right direction: Rahul Gandhi on Centre's financial package

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Congress leader Rahul Gandhi welcomed the financial package announced by the Centre on Thursday, saying it was the first step in the right direction.

The comments come after the government unveiled a Rs 1.70-lakh-crore economic package involving free food grain and cooking gas to the poor for the next three months, one-time doles to women and poor senior citizens, higher wages to workers and measures to boost liquidity of employees, as it looked to contain the impact of unprecedented nationwide lockdown due to the novel coronavirus pandemic.

"The Govt announcement today of a financial assistance package, is the first step in the right direction," Gandhi tweeted.

"India owes a debt to its farmers, daily wage earners, labourers, women & the elderly who are bearing the brunt of the ongoing lockdown."

Coronavirus impact | Moody’s Analytics cautions about millions of job losses in coming weeks

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Things will get worse, indicates the latest report by Moody’s Analytics on the economic shock of the global coronavirus (COVID-19) pandemic.

“Millions of job losses are likely in the coming weeks, particularly for households that live paycheque to paycheque,” Moody's Analytics' Chief Economist Mark Zandi said.

“COVID-19 has created a worldwide economic tsunami. The global economy is engulfed in a serious downturn. The virus has caused significant parts of the Asian and now European and US economies to all but shut down. More financial pain is quickly coming as layoffs mount, businesses curtail investment, and retirement nest eggs evaporate,” he added.

In January Moody’s Analytics expected global real gross domestic product (GDP) growth of 2.6 percent in 2020, which they now expect to fall by 0.4 percent. For China, in particular, GDP decline is expected by 27 percent at an annualised rate in Q1.

On the jobs front, businesses in the United States have laid-off workers and initial claims for unemployment insurance spiked to 280,000 in the second week of March compared to 210,000 in the week prior. US claims of 240,000 per week are consistent with no job growth, it noted.

“Central banks have responded aggressively but are running out of room to maneuver as interest rates hit the zero lower bound. The onus is now on governments to quickly provide substantial financial support to hard-pressed households and businesses. How much economic damage COVID-19 ultimately does will depend on the trajectory of the virus—and how governments respond,” Zandi added.

A massive and mounting monetary and fiscal policy response will limit the economic damage in the US compared with much of the rest of the world, and Moody’s Analytics expects US lawmakers to provide $1.65 trillion in discretionary fiscal stimulus.

The Bank of England recently low­ered rates to the zero lower bound and the European Central Bank has maintained neg­ative rates since the crisis. Germany and the UK are implementing large fiscal stimulus packages, but the rest of Europe has little fiscal space to respond.

“Euro zone real GDP is expected to decline by nearly 3 percent in 2020,” it said, adding that emerging economies will be hammered given the collapse in oil and other commodity prices.

“Our baseline outlook for the global economy is increasingly pessimistic. Still, given how quickly events are moving and the high degree of uncertainty around the virus’ path, it may not be pessimistic enough,” Zandi added.

The report identifies three ‘critical unknowns’ that are crucial to understand and respond to the problem — the trajectory of the virus, the policy response, and what other problems may develop due to the extraordinary pressure on the economy and financial system.

“Our baseline outlook also depends on credit markets functioning reasonably well, albeit with significant support from the Federal Reserve. Liquidity in credit markets has become increasingly impaired, including the repo and commercial paper markets. If liquidity dries up, and short-term funding markets effectively close to large corporates that issue short-term debt and financial institutions that raise funds necessary for their own lending, the impact on the economy will be severe and immediate,” he added.

The high level of corporate debt is another threat, Zandi noted, adding that there are many large multinationals with strong balance sheets and little debt, but there are also many highly leveraged companies that will likely face a Hobson’s choice: make their debt payments in a timely way or cut payrolls and investment.

“Either way the economy will suffer. We assume these financial fault lines are not severe or persistent enough to materially weaken the economy. However, this is an increasingly tough assumption to make,” he stated.

As oil prices drop, India fills its strategic petroleum reserves: Report

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As crude oil prices hit fresh lows, India is building its strategic petroleum reserves of 5.33 million metric tons (MMT).

Around half of this capacity is full, a source told the paper. The total capacity is expected to meet the country’s requirements for about 9.5 days. However, with the coronavirus outbreak restricting the movement of men and material, the stock could last much longer. This stock will be in addition to the 64.5 days stock that domestic refiners typically maintain.

India recently purchased crude oil worth Rs 690 crore, an official told Hindustan Times.

“Average price of the contracted quantity of crude is around $30 per barrel,” another official told the publication. This is much lower than India’s average crude oil purchase price of $69.88 per barrel in 2018-19.

The report added that the government approved the construction of facilities at Chandikhol in Odisha (4 MMT) and Padur in Karnataka (2.5 MMT), which will provide additional crude oil storage for 11.57 days.

The government might also purchase oil from Saudi Arabia and Abu Dhabi, the report added.

“Talks are on with Saudi Arabia and we are awaiting a final nod from Riyadh,” the second official said.

India, which imports over 80 percent of its oil requirement, is trying to boost its capacity as it prepares to keep vehicles running during the coronavirus, or COVID-19, outbreak.

Moneycontrol could not independently verify the story.

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