The virus pandemic in China saw a sharp acceleration with most of the large global airlines cutting down or totally cancelling flights to China. The death toll in the Virus Pandemic has already touched 150 and it is expected that over 20 nations are already afflicted with this problem. The WHO has already identified this as a global health emergency and once it is declared an emergency it can further impact flights to and from China, capital flows into China and even trade volumes. It is already estimated that the Corona Virus could impact overall global GDP this year by close to $1.50 trillion.
The Enforcement Directorate (ED) has recently made a statement that Dewan Housing may have diverted close to Rs.12,700 crore to a total of 79 shady firms with a view to round tripping of funds. According to the ED, a total of more than 1 lakh fictitious borrowers were created for this purpose and the money was laundered out. The ED has already taken custody of the promoter, Mr. Wadhawan, for being the brain being such fund diversion. The company has already been referred as a special case to the NCLT by RBI and is currently undergoing evaluation to determine the amount to be distributed.
The Fed in its latest policy meet kept the Fed rates at status quo levels. This was along expected lines. That retains the Fed funds rate at the range of 1.50% to 1.75%. The Fed funds set the tone for interest rates in the US and also globally as it determines whether the global flows turn risk-off or not. In the past, whenever the Fed hiked rates the dollar strengthened and it made most of the US exports uncompetitive. Most technology companies with a large chunk of international revenues had objected to a strong dollar and even Trump had been in favour of tempering rate hikes in order to push growth.
The United Kingdom is all set to leave the EU on Friday, the 31st of January 2020. The BREXIT deal was cleared by the EU parliament by voting 621:49 in favour of BREXIT. Boris Johnson had already negotiated with the EU leaders before being re-elected with a thumping majority by the British electorate late last year. There will still be a one year cooling period for the EU and the UK to adjust to the new situation. The last 2 elections in Britain have been fought on the BREXIT issue and it has not only been an emotive issue of British sovereignty but also of having greater say in its own internal financial and macro issues.
The problems at IDFC First Bank appear to continue as it reported a huge net loss of Rs.1639 crore for the December quarter. This is lower than the loss of Rs.2511 crore reported for the December quarter in the previous year. The bank has made a huge provision of 50% of its legacy exposure to the telecom sector which the parent had participated in. However, the bank did report a rise in total income by 50% for the December 2020 quarter. The bank was originally supposed to get into a 3 way merger with the Shriram Group and the Piramals. However, that merger did not get through and later the bank had a merger with First Capital led by former ICICI veteran, V Vaidyanathan. However, IDFC Bank has found the going tough in a banking sector that has struggled to maintain growth and profits.
The oil ministry has been totally in favour of including natural gas under the ambit of GST. When GST was launched in India, alcoholic and petroleum products were kept out of the ambit of GST and they continue to attract the current system of state taxes and VAT. The advantage of shifting to GST is that it results in a uniform rate of tax at the point of consumption. It also is less distorting as it does away with excise and VAT. This has been the demand for quite some time and the plan is that the GST Council may start with natural gas and then extend it to ATF before extending it to petrol and diesel products.
