| News Announcement |
Impact Analysis |
| Real GDP growth comes in sharply lower at 5% for June quarter |
- This is the lowest quarterly GDP growth in the last 7 years and was led lower by agriculture and manufacturing
- The weak GDP growth in June quarter also raises doubts over the RBI’s full year projected target of 6.9% growth
|
| Nominal GDP growth falls to 16 year low of just 7.99% |
- Nominal GDP is the real GDP growth gross of inflation and it needs to grow at 12% if India has to touch $5 trillion GDP
- The week growth in nominal GDP is indicative of another weak quarter for Indian companies after a fairly disappointing Q1
|
| China and the US finally manage to tone down their war rhetoric |
- US first hinted that they may be open to further trade talks with China to ease the global growth situation
- China has also eased its stand and has now decided to postpone the tariff hike it had threatened the US with
|
| `Finance Minister announces mega bank merger plan on Friday |
- The FM announced the merger of smaller banks into larger banks like PNB, Canara Bank and Union Bank
- This will reduce the total number of PSU banks in India from 27 in 2017 to just 10 in the current market scenario
|
| Bank unions oppose the plan to merge PSU banks across India |
- Bank unions have raised serious reservations over the likely manpower rationalization that may be required for merger
- Unions have also stated that the merger will not, in any way, impact the bad loan recovery efforts of the banks
|
| RBI transfers Rs.176,000 crore to the government of India as payout |
- This includes dividend of Rs.123,000 crore and return of excess capital to the tune of Rs.53,000 crore
- The total dividend transfer alone this year is twice the transfer done in the previous year by the RBI
|
| Bank NPAs in March 2019 fall from 11.2% to just 9.1% |
- The RBI annual report revealed that this sharp fall was due to lower slippages on loans and better recoveries
- However, the RBI also reported that bank frauds in 2018-19 had grown almost five-fold to Rs.71,543 crore
|
| Currency in circulation increases 17% to Rs.21 trillion in March 2019 |
- This sharp rise in currency levels takes it well past the pre demonetization levels making liquidity easy
- This also indicates that the use of currency continues to be rampant in the Indian context despite digital shift
|
| Canara Bank to merge with Syndicate Bank to create a Southern power house |
- This will give the two Karnataka based banks a virtual hold over the lucrative southern banking market
- This merger also helps them to tide over the cost issues by sharing common resources and expanding treasury
|
| PNB gets the lion’s share of the bank recapitalization allocation |
- Out of the Rs.70,000 crore allocation, PNB got the highest allocation of Rs.16,500 crore this year
- Union Bank also get Rrs.11,500 crore and these two banks accounted for 40% of the total allocation made
|
| Governance issues results in a number of top level changes |
- Naresh Thakkar has been removed from the post of CEO of ICRA after he was found complicit on ratings to IL&FS
- Gautam Thapar became the latest victim to be ousted from the top post after the fraud discovered at CG Power
|
| Boris Johnson gets Queen’s approval to suspend Parliament |
- The intent was to ensure that the BREXIT does not get sabotaged in the last minute due to absence of a deal
- The opposition Labour Party will now call for an Emergency session of Parliament to force the debate
|
| SBI Caps red flags the sharply higher debt exposure of NHAI |
- Total debt of NHAI has crossed Rs.250,000 crore with its annual interest outgo at nearly Rs.25,000 crore
- The worry is also that NHAI may have contingent liabilities to the tune of Rs.65,000 crore as per ICRA
|
| Forex reserves dip below the $430 billion mark last week |
- This fall of $1.5 billion during the week was largely on the back of RBI supporting the rupee around the 72/$ levels
- With consistent FPI selling and weak trade numbers, the RBI had been defending the rupee around the 72/$ levels
|
| US GDP takes a fall but consumer data remains robust |
- US GDP for the June quarter came in at 2%, lower than the 2.1% that the markets were estimating
- However, consumer numbers were extremely robust, reducing the recession worries in the US
|
| FPIs ask for exempting debt capital gains also from surcharge |
- After FPIs pulled out nearly $4.5 billion, the finance minister exempted all equity capital gains from the surcharge
- However, this would only be relevant for FPIs structured as trusts and debt would still remain out of purview
|
| AMFI expects the mutual fund AUM to touch Rs.100 trillion in a decade |
- That would translate into a near 4-fold jump in AUM for the Indian mutual fund industry after a 3-fold jump in 5 years
- However, the MF industry has some challenges in the form of getting out of the FMP crisis and rewarding equity SIPs
|
| Government eases foreign ownership norms for global investments |
- The government has allowed 100% FDI in coal mining and 26% FDI in the area of digital media
- Even the norms for single brand retail have been substantially simplified and that could also give a boost
|
| Government to give Rs.6286 crore subsidy for sugar exports |
- This subsidy is to compensate the Indian sugar producers for their higher cost of production relative to global norms
- Global sugar majors like Brazil and Australia have already complained to the WTO about these measures
|
| SEBI warns of hidden costs in direct plans of mutual funds |
- Direct plans were intended to lower the TER off the MF investors and hidden costs were distorting it
- SEBI has warned the mutual funds against such back door charges and has also talked of strict penalties
|
| Downstream oil gets a boost from passing investment costs |
- Downstream oil companies will pass on their BS-VI capital cost of Rs.30,000 crore to consumers through higher fuel prices
- That does raise concerns over billing consumers for the capital spending by these downstream oil companies
|
