Current Affairs July 2020 - Economic

1 - Direct investment in India rose by 19 billion US dollar

According to the data on the International Investment Position, IIP, released by the Reserve Bank of India, direct investment into the country rose by 19 billion US dollar during 2019-20. International financial assets of Indian residents increased by 73.9 billion dollar, due to the rise in reserve assets and overseas direct investment by 64.9 billion dollar and 13.0 billion dollar, respectively.

Overall, net claims of non-residents on India declined by 57.6 billion dollar during the year. Despite a fall of 13.7 billion dollar in portfolio investment during the year, international financial liabilities increased by 16.3 billion dollar as direct investment and other investments rose by 19.0 billion dollar and 11.0 billion dollar, respectively.

2 - Output of eight crore-infrasture industries shrinks by 23.4% in May

According to the Commerce and Industry Ministry data, the output of eight core infrastructure industries shrank by 23.4% in May, due to the coronavirus-induced lockdown. Barring fertiliser, all seven sectors - coal, crude oil, natural gas, refinery products, steel, cement, and electricity - had recorded negative growth in May.

During April-May 2020-21, the sectors output dipped by 30% as compared to 4.5% in the same period previous year. The eight core sectors had expanded by 3.8% in May 2019. These eight industries accounts for 40.27% in the Index of Industrial Production (IIP).

3 - Bombardier Transport India bagged contract for Kanpur, Agra Metro projects

Bombardier Transport India has bagged the contract for supply of 201 metro coaches of Agra Metro and Kanpur Metro projects. The Uttar Pradesh Metro Rail Corporation has awarded the contract for Supply, Testing and Commissioning of 201 cars for 67 trains of three cars each along with Train Control and Signaling System.

The state-of-the-art modern stain-less steel trains will be manufactured by Bombardier company in Indian Plant at Savli in Gujarat. Four international firms participated in the tender submitted with UPMRC.

4 - Fitch slashed India's growth projection to 8% for FY22

Fitch Ratings has slashed India’s growth forecast from 9.5% to 8% for FY22. It retained its projection of the contraction in the Indian economy by 5% in the current fiscal. Fitch projected Indian economy to grow 5.5% in 2022-23.

S&P has forecast a 5% contraction in the current fiscal and the growth to recover to 8.5% in next fiscal. Similarly, Moody's expects India's real GDP to contract by 4% in the current fiscal followed by 8.7% growth in fiscal 2021.

5 - Care Ratings predict Indian economy to contract by 6.4% in FY21

Care Ratings revised India's GDP growth forecast for the current financial year to -6.4% on account of COVID-19 induced lockdown. It had earlier in May projected a decline in GDP growth of 1.5-1.6% in FY21.

The rating agency has predicted a GVA (de)growth to be around (-) 6.1%. In FY20, India's economy grew at an estimated 4.2%, almost a decade low. The agency has put across its assumption that two-third of the economic sectors would broadly be operating at 50-70% capacity by the end of third quarter.

6 - KKR to buy 54% controlling stake in JB Chemicals and Pharmaceuticals

Global investment firm KKR will buy a 54% equity stake in JB Chemicals and Pharmaceuticals, a Mumbai based pharmaceutical major for Rs. 3,109 crore. KKR will also make an open offer for an additional 26% stake in the company.

JB Chemicals has an international presence with exports to over 40 countries. The pharma major earns half of its revenue from international markets. This is the third deal sealed by KKR in 2020, after the buyout of five solar assets of Shapoorji Pallonji Infra and its minority stake buy in Reliance Jio.

7 - Reliance Jio received ₹1,894 crore investment from Intel Capital

Intel Capital has invested ₹ 1,894.50 crore in Jio Platforms at an equity value of ₹ 4.91 lakh crore and an enterprise value of ₹ 5.16 lakh crore. Intel Capital will hold 0.39% equity stake in Jio Platforms on a fully diluted basis.

This was 12^th such investment taking the total investment amount to ₹ 1,17,588.45 crore. Jio has sold 25.09% stake including this deal with Intel Capital. Intel Capital is an arm of Intel, the world's largest semiconductor manufacturer.

8 - India's trade deficit with China reduced to USD 48.66 bn in FY20

India's trade deficit with China reduced to USD 48.66 billion in FY20 due to decline in imports from China. According to the data by the government, while exports to China stood at USD 16.6 billion, imports were made worth USD 65.26 billion.

The trade deficit between the countries was at USD 53.56 billion in 2018-19 and USD 63 billion in 2017-18. Foreign Direct Investment (FDI) from China too has dipped to USD 163.78 million in 2019-20 from USD 229 million in the previous fiscal.

9 - Unemployment rate fell to 10.99% in June 2020

According to data released by the Centre for Monitoring Indian Economy (CMIE), the unemployment rate of India fell to 10.99% in June 2020 from 23.48% in May 2020. The decline was mainly on account of resumption in activities as India unlocked its economy from 1 June.

Job loss rate in rural India was 10.52% in June, down from 22.48% in May, while urban unemployment was 12.02% in the month as against 25.79% a month ago. The overall job loss rate was 8.75% in March and 7.76% in February.

10 - GST collection rises sharply in June

The Goods and Services Tax (GST) collection increased by 46% in June at Rs. 90,917 crore as compared to May 2020. However, it was less by 9% against Rs 99,939 crore collected in June 2019. The growth in June 2020 as compared May 2020 was mainly on account of resumption of business activities post 68-day nationwide Covid-19 lockdown.

The GST collection for April was Rs. 32,294 crore, while it was Rs. 62,009 crore in May 2020. In March 2020, the revenue collection dipped by 8% at Rs. 97,597 crore.

11 - Government released Rs. 6,195.08 crore to 14 states as Post Devolution Revenue Deficit Grant

Government released Rs. 6,195.08 crore to 14 states as fourth equated monthly installment of the Post Devolution Revenue Deficit Grant. Post devolution revenue deficit grants is about a third of the total revenue collected by the Centre, which is directly transferred to states as their share in the divisible pool.

After accounting for the projected tax devolution to the states of ₹8.55 trillion, 14 states garner post-tax devolution revenue surplus of ₹3.08 trillion, while the remaining 14 face a combined post-tax devolution revenue deficit of ₹74,340 crore. These states have been compensated by the 15^th Finance Commission.

12 - Google to invest Rs. 75,000 crores in India over next 5 to 7 years

Google CEO Sundar Pichai announced an investment of Rs. 75,000 crore ($10 billion dollars) in India over the next 5 to 7 years through Google for India Digitisation Fund. The investments will focus on four key areas of India's digitisation.

Enabling affordable access and information to every Indian in their own language.
Building new products and services that are deeply relevant to India's needs.
Empowering business as they continue to embark on their digital transformation.
Leveraging technology and AI for social good in areas like health, education, and agriculture.

13 - Retail inflation rises by 6.09% in June

According to the latest data released by the Ministry of Statistics & Programme Implementation (MoSPI), the retail inflation, which is measured by the Consumer Price Index (CPI) grew 6.09% in the month of June. Food price inflation in June stood at 7.87%.

The government, in April, had revised the CPI data for the month of March to 5.84% from 5.91%. The retail inflation has grown beyond the Reserve Bank of India’s (RBI) upper margin of 6%.

14 - India's foreign exchange reserves touched all time high of 513.25 billion dollars

India's foreign exchange reserves have surged by a massive 6.47 billion dollars to reach a fresh all-time high of 513.25 billion dollars in the week ended 3^rd July 2020. Foreign currency assets, a major part of the overall reserves, rose by 5.66 billion dollars to 473.26 billion dollars. Gold reserves went up by 495 million dollars to end at 34.02 billion dollars.

India's special drawing rights with the International Monetary Fund rose by 4 million dollars to reach 1.45 billion dollars, while the country's reserve position increased by 259 million dollars to 4.526 billion dollars.

15 - US remains India's top trading partner

The United States continued to remain India's top trading partner for a second year in a row. The bilateral trade between the US and India stood at $88.75 billion in 2019-20. It was valued at $87.96 billion in 2018-19. India has a trade surplus of $17.42 billion in 2019-20 with USA.

The bilateral trade between India and China has dipped to $81.87 billion in 2019-20 with a trade deficit of $48.66 billion.

16 - Qualcomm to invest Rs 730 crore in Jio Platforms

Qualcomm Ventures will invest Rs. 730 crore in Jio Platforms to buy 0.15% stake in it. Qualcomm Ventures is investment arm of US-based Qualcomm Incorporated. Jio Platforms is the digital services arm of Mukesh Ambani-led Reliance Industries.

The deal gives Jio Platforms an equity value of Rs. 4.91 lakh crore and an enterprise value of Rs. 5.16 lakh crore. Qualcomm is the 12^th investor to pick up a stake in Jio.

17 - India-Bhutan opened new trade route

India and Bhutan opened a new trade route between Jaigaon in West Bengal and Pasakha in Bhutan to facilitate ease of trade between our two countries in these COVID 19 times and decongestion of vehicular traffic along the Jaigaon-Phuentsholing route.

An additional land customs station has been opened at Ahllay, Pasakha by the Government of India. Bhutan's exports to India stood at Rs/Nu. 3217 cr and constituted 78 % of its total exports. The bilateral trade between the two countries allows 16 entry and exit points.

18 - Google to buy 7.73% stake in Jio Platforms

Google will buy a 7.73% stake in Reliance Industries (RIL)'s telecom and digital unit Jio Platforms for Rs. 33,737 crore on a fully-diluted basis. Google is investing in Jio Platforms at an equity valuation of Rs. 4.36 lakh crore.

With this, the total investment from financial and strategic investors into Jio Platforms stands at Rs. 1,52,056 crore for a combined 32.97% stake in Jio Platforms to about 13 investors in total. RIL has become first Indian company to cross annual EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) of Rs. 1 lakh crore.

19 - CCI approved acquisition by Aceso in HCG

The Competition Commission of India (CCI) has approved acquisition by Aceso Company Pte. Ltd. (Aceso) in HealthCare Global Enterprises Limited (HCG). The Proposed Combination relates to an acquisition of upto 58.92% stake in HCG by Aceso.

Aceso is an entity forming part of the CVC Network. HCG and its group are engaged in the business of providing services through cancer treatment clinics, multi-specialty hospitals, fertility treatment centres.

20 - India's foreign exchange reserves reached all-time high of 516.362 billion dollars

India's foreign exchange reserves increased by 3.108 billion dollars and reached an all-time high of 516.362 billion dollars in the week ended 10^th July 2020. Foreign currency assets rose by 2.372 billion dollars to 475.635 billion dollars.

Gold reserves surged by 712 million dollars to end at 34.729 billion dollars. India's special drawing rights with the International Monetary Fund rose by 5 million dollars to reach 1.453 billion dollars, while the country's reserve position also increased by 19 million dollars to 4.545 billion dollars.

21 - CCI approved Krishnapatnam port acquisition by Adani Ports, SEZL

The Competition Commission of India has approved the acquisition of Krishnapatnam Port Company Limited (KPCL) by Adani Ports and Special Economic Zone Limited. The proposed combination envisages acquisition of equity shareholding along with management control of Krishnapatnam Port Company Limited by Adani Ports and Special Economic Zone Limited.

Adani Ports is a customer-facing integrated port infrastructure services provider currently present across ten domestic ports in six maritime states of Gujarat, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha. KPCL is engaged as a developer and operator of the deep water port at Krishnapatnam, Andhra Pradesh.

22 - Ola rolled out 'Ola Corporate' to international markets

Ola has rolled out its enterprise offering 'Ola Corporate' to Australia, New Zealand, and the United Kingdom. Ola Corporate has over 10,000 corporate users in India. It has reportedly reduced travel expenses by up to 25%, due to the platform’s centralised billing system and paperless reimbursement.

Ola Corporate clients will operate the service through a new, personalised dashboard where they can add and manage employees. The Bengaluru-based company operates in more than 250 cities across India, Australia, New Zealand, and the UK.

23 - Indian Spices Exports increased by 23%

Spice exports from India rose by 23% in dollar terms and 34% in rupee terms in June, due to coronavirus pandemic. Exports increased to $359 million (Rs. 2,721 crore) in June 2020.

India had exported a total of 1,100,250 tonnes of spices and spice products worth Rs 19,505.81 crore ($2,805.50 million) in 2018-19. Major spices produced in India include pepper, cardamom, chilli, ginger, turmeric, coriander, cumin, celery, fennel, fenugreek, ajwain, dill seed, garlic, tamarind etc.

24 - Centre released GST Compensation of over Rs. 1.65 lakh crores

The Central Government has released GST Compensation of Rs. 13,806 crore to States for March, 2020. The total amount of compensation released for the year 2019-20 is Rs. 1,65,302 crore. The amount of cess collected during the same time was Rs. 95,444 crore.

Centre had transferred Rs. 33,412 crore from Consolidated Fund of India to the Compensation Fund as a part of an exercise to apportion balance of IGST pertaining to 2017-18. Maharashtra received the maximum Rs. 19,233 crore GST Compensation cess followed by Karnataka, Tamil Nadu and Punjab.

25 - India to setup its own Cotton Warehouse in Vietnam to boost Exports

In order to enhance exports of Cotton, Cotton Corporation of India has decided to set up its own warehouse in Việtnam. MoU signed with Bangladesh to export 1.5-2 million bales (of 170 kilograms each) of cotton, is among other initiative by Government to increase exports.

The Cotton Corporation of India Limited is a public sector agency, engaged in diverse activities related to trade, procurement, and export of cotton. The corporation had procured nearly a third of India’s 2019-20 cotton output.

26 - CCI approved proposed 49% acquisition of OPGC by APL

The Competition Commission of India (CCI) approved proposed acquisition of 49% of the total equity share capital of Odisha Power Generation Corporation Limited (OPGC) by Adani Power Limited (APL). APL is a part of the Adani Group, which is engaged in the business operations of generation, transmission and distribution of power in India. APL is primarily engaged in the business of power generation.

OPGC, incorporated in Odisha, is a joint venture between Government of Odisha, AES India Private Limited and AES OPGC Holding and operates as a state government company. OPGC is engaged in the business of power generation.