Banks have been scouting for a buyer for the Future group after Kishor Biyani had defaulted on his loans
to the banks. Biyani is the founder of the Future Group with its interests spread across different classes
of retail. In the last few years, the Future group has been gradually getting deeper into a debt morass
and the last straw came when the recent shutdown put a bar on malls and multiplexes across India.
Clearly, the cash flows were not enough to service the debt and the string of defaults started. Biyani is
often considered India’s answer to Sam Walton but too much debt and bad business model did them in.
In a move that could be substantially negative for the oil marketing companies (OMCs) in India, the
government has decided to impose an additional excise duty of Rs.10/litre on petrol and Rs.13/litre on
diesel. This is likely to be negative for the 3 major OMCs in India; IOCL, BPCL and HPCL. That is because,
this hike in excise duty will not be passed on to the end customer but will be absorbed by the OMCs and
that will directly hit their profit position. In the last five years, the government has been consistently
using excise duty on petrol and diesel to enhance its revenues in the midst of falling crude prices.
Even as the US continues to lead the COVID-19 tally in terms of afflictions and casualties, it is now UK at
the number 2 position. Till even a few days back, it was countries in Continental Europe like Italy, France
and Spain that were the worst affected by the pandemic after the US. In the last few days, UK death toll
has crossed the 32,000 mark making the UK, the second worst affected in terms of casualties. Unlike
most of Europe, the impact started showing late in UK and even the government was slow to react but
UK has had one of the slowest number of recoveries and the momentum of cases has been high.
Bank of America is now the latest bank to turn bearish on India banks, which is a major heavyweight in
the Indian indices. BOFA has downgraded ICICI Bank, SBI and IndusInd Bank with only HDFC Bank
remaining in its Buy list. While the first three banks have been downgraded to Neutral, HDFC Bank has
been retained as Buy with reduce d price target. BOFA believes that the biggest stress for Indian banks
could come from retail NPA and the cycle could last all the way through FY22. The Bank Nifty has already
been among the worst performers and has corrected much deeper than the Nifty index.
According to the estimates put out by the CMIE, the unemployment rate in the midst of the COVID-19
crisis may have soared all the way to 27.11%, the highest level of unemployment ever seen in history.
Mahesh Vyas has also warned that such a situation could not only be an economic time bomb, but it
could also be a social and behavioural time bomb in the Indian context. Before the start of the pandemic
this was at a level of under 7%. CMIE has pointed out that the joblessness is the maximum in the urban
areas which have the largest number of red zones and containment zones in India. In fact, the urban
joblessness is closer to 30%. The situation has worsened substantially since the country was put under
lockdown on March 25 and still continues. Stopping of economic has also led to large scale migration.
In one of its largest non-wartime evacuation, India may be poised to bring back nearly 250,000 Indians
stranded abroad using 64 special flights for the purpose. Most of these people will have to pay the
normal fares for their tickets. Scores of Indians were stuck in other countries after flights were grounded
in mid-March. However, most of them would be brought back only subject to their clearing the COVID-
19 test and mandatory 14-day quarantine. The last time India had done an evacuation of this scale was
in 1990 when it had moved 170,000 Indians back from Kuwait and Iraq in the midst of the Iraq war.