Global Markets come under the grip of coronavirus

March 9, 2020. The Indian stock markets were in for a rude shock. The benchmark BSE Sensex recording its biggest-ever plunge- at over 2,200 points.

March 12, 2020. The Sensex tanked another 2,919 points. Equity indices witnessed worst ever intra-day fall.

The stock market has now subscribed to the bear territory – a condition when an index falls more than 20 per cent from recent highs – as the World Health Organization (WHO) announced coronavirus (Covid-19) a pandemic.

The 30-share benchmark BSE Sensex has lost more than 9,000 points since 20 January 2020. Rupee against Dollar is now @ 74.50! It is an all-time high.

But what led to this sudden slump, the erosion of investor wealth worth Rs 11,27,160.65 crore?

It all started with the fright carried on by the spread of Covid-19 (coronavirus disease). It already has made an atom-bomb like impact. Since the disease outbreak on the last day of the last decade, more than 4,400 deaths have been reported worldwide. More than 122,000 people in 120 nations have been infected till date.


The sudden slump in oil prices.

Global crude oil prices have crashed 30 per cent, with Brent crude prices falling to $32 a barrel.

The tremors are being felt in markets all over the world.

Also Read: Airline Flybe May become a Coronavirus Casualty

Under the shadow of the pandemic, people have stopped travelling. Airlines have discontinued their services. A few airlines went bankrupt while others are not able to make any reasonable profits. All such events have led to a major adverse impact on the global economy. The outbreak of Covid-19 has shaken the airline industry fundamentals, discouraging the growth prospects of the sector along with a sharp decline in the fossil-fuel burn.

The Organization of Petroleum Exporting Countries (OPEC) held an urgency meeting in February 2020 in order to recalibrate its production cuts for the rest of 2020. The plan was to cut production. Thus, it reduced global supplies by 3.6 per cent. When Russia refused to align with the deal, Saudi Arabia slashed oil prices enormously.


Markets have come under the clutch of coronavirus

Even a Morgan Stanley report does not give a pleasant picture as the coronavirus will likely amplify the problems.

Lower oil prices may translate to lower retail prices, but this positive benefit may not be necessarily realized, because the consumers will stay away from higher spendings amid an overall pessimism in the economy and the financial businesses.

India may be a significant gainer from the current oil prices slump. India imports 85 per cent of its oil requirement. Clearly, there would be a significant reduction in India’s import bill and easing of the current account deficit and inflation. This will also check the growing inflation and promote the next round of rate cuts by the Reserve Bank of India. Governments will continue to profit from the crude price fall, as they are not likely to pass on the influence of the soft crude prices exclusively to the consumer. The blessing gains for the government can be used to connect the fiscal deficit or spend on well-being projects and infrastructure.

Maldives seeks India’s support in improving civil-military ties

The Maldives, whose relations with India have been on an upswing since Ibu Solih took over as its President last September, has sought Delhi’s assistance in improving the civil-military ties in the archipelago nation.

Maldives defence chief Abdullah Shamaal has discussed the issue with Indian officials during a visit to Delhi last week. The Maldives is seeking to replicate the Indian model in improving the relations between its defence forces and the civilian leadership.

During a visit of the Maldivian defence minister to Delhi earlier this year, Shamaal had taken a back seat, enabling the minister to engage with his interlocutors on all issues, the people said. Even during the Yameen regime, when the Maldives’ ties with India were lukewarm, its military had maintained a cordial relationship with Delhi and the armed forces here.

Shamaal, an alumnus of the Indian Defence Staff College, also explored new dimensions of counter-terror partnership, including close monitoring of the movement of citizens between the two countries. Since the April 21 Easter bombings in Sri Lanka, India and the Maldives are partnering closely to track down the radicals, monitor their movements and launch de-radicalisation initiatives. Southern Indian states are vulnerable to the presence of radicals in Sri Lanka and the Maldives.

During his visit to Delhi, Shamaal also delivered a lecture on ‘National Security Vulnerabilities: Issues for the Small States’.

India has been providing swift help to its neighbours at times of natural calamities and security threats, and it is all set to play the key role of a “security guarantor” for peace and stability within the greater Indian Ocean region, Shamaal said on Friday amid China’s growing presence in the region.

“India has been (providing) customary security guaranteeing architecture for decades if not centuries. This is quite evident by the prompt and swift response of Indian Army services on various occasions,” he said.

Calling the Indo-Pacific region an economically and socially dynamic area, Shamaal said India is set to play the key role of a “security guarantor” for peace and stability within the greater Indian Ocean region.

On Thursday, Shamaal met defence minister Rajnath Singh and Indian Air Force chief BS Dhanoa and discussed ways to step up military and security cooperation through more structured and planned programmes. During his trip to Male on June 8, the first foreign visit in his second term, Prime Minister Narendra Modi and Solih expanded defence partnerships by jointly inaugurating a coastal surveillance radar system and a composite training centre for the Maldives defence forces — both supported by India.

Air India sale: Government to prepare a fresh proposal

The Finance Ministry is preparing a fresh proposal for sale of Air India, incorporating issues like crude oil prices and exchange rate volatility, flagged by analysts last year on possible reasons of the government failing to attract bidders for the national carrier.

The ministry’s proposal, to be placed before Air India Specific Alternative Mechanism (AISAM), will also include option of selling either 100 per cent or 76 per cent government stake in Air India.

The AISAM, which is basically a Group of Ministers, have to be reconstituted as Arun Jaitley and Suresh Prabhu are no longer ministers in the new government. They will be replaced by Finance Minister Nirmala Sitharaman and Civil Aviation Minister Hardeep Singh Puri. Transport Minister Nitin Gadkari is likely to continue in the panel when it is reconstituted.

The government last year invited bids to sell 76 per cent stake in Air India, along with transfer of management control. However, it did not attract any bidder. Following that transaction advisor EY prepared a report citing probable reasons that led to failure of the sale process.

The reasons cited include 24 per cent government stake and corresponding rights, high debt, volatile crude oil prices, fluctuations in exchange rate, changes in macro environment, profitability track record of bidders and restriction on bidding by individuals.

During the meeting, which was presided over by the then Finance Minister Jaitley, it was also decided to infuse more funds into the carrier and take steps to lower debt of Air India by selling its subsidiaries and non-core assets.

“We will present a fresh proposal for Air India sale to AISAM. It would include updates on the issues raised when Air India disinvestment failed last year. It would be left to the AISAM to decide whether the government should go in for 100 per cent or 76 per cent stake sale,” an official told .

The government has already asked Air India to finalise its accounts for 2018-19 by June 30.

Once the updated accounts are available and AISAM gives a go-ahead for Air India sale, the Department of Investment and Public Asset Management (DIPAM) and Ministry of Civil Aviation will draft the Preliminary Information Memorandum (PIM) giving details of about the company and stipulating conditions for eligibility of bidders.

In 2018, AISAM had earlier decided to sale 76 per cent in Air India and the buyer was required to take over Rs 24,000 crore debt of the carrier along with over Rs 8,000 crore of liabilities. However, the stake sale failed to attract any bidder when the auction process completed on May 31, 2018. At that time, Air India’s total debt burden stood at Rs 55,000 crore.

As precursor to the strategic disinvestment of Air India, the Cabinet in February approved setting up of a special purpose vehicle (SPV) – Air India Assets Holding Company – to transfer Rs 29,464 crore worth loans of the national carrier and its four subsidiaries.

The official said that the process of transfer of Rs 29,464 crore to the SPV is not yet complete.

“The Department of Economic Affairs, Civil Aviation Ministry and the banks are still working out the modalities of debt transfer. The process is likely to take some time,” the official added. JD CS BAL

Jet Airways pays December salary partially, pilots unhappy

Jet Airways on Saturday cleared the pending salaries for December, but pilots maintain they would stop flying from April 1 if full dues are not settled. The pilots’ union has called for a meeting on Sunday to decide further steps.

The airline is yet to pay full salaries for January and February to its pilots, engineers and senior management. So far, only 12.5 per cent of December salary was paid and on Saturday the airline credited the remaining 87.5 per cent for the month.

“The board of directors and the management team are working as fast as possible to implement the resolution plan agreed with the consortium of Indian lenders to quickly restore the much-needed stability to our operations and build a sustainable future for the airline,’’ chief executive officer Vinay Dube said in an email to staff. Stating that these are complex processes and that it has taken longer than expected, Dube wrote, “We are only able to remit your remaining salary for December 2018”.

Founder Naresh Goyal stepped down as chairman of Jet Airways on March 25 as lenders agreed to provide Rs 1,500 crore in emergency funding as part of a resolution plan. His wife, Anita, too, resigned as director on the Jet board.

“We realise that this remittance does not lift the financial hardship that each of you are facing and we do not take your sacrifices for granted. We continue to work on additional funding on an urgent basis and shall advise you about the release of the remaining salary arrears as the funds come in,” Dube has told the Jet staff in his latest email communication.

The pilots’ union has made it clear that the partial payout is not acceptable. “There will be no flying unless the company pays us substantial salaries and provides a road map,” the National Aviators Guild, the pilots’ union, said in a message to its members.

ALSO READ | Over 1,000 Jet Airways pilots to go ahead with no flying call from April 1

Just a day ago, around 200 pilots had individually written to the airline CEO, threatening to go on leave of absence and warning of legal action for non-payment of dues. Engineers too have threatened to stop work if salaries are not paid.

Cash-strapped Jet Airways has grounded many planes and also defaulted on repayment of debt, including ECBs.

Lenders’ consortium is preparing for an open auction for Jet, which has a debt of around Rs 8,500 crore. The expression of interest for the auction is likely by April 9 and final bids are expected by end of May. Goyal, whose stake has been halved from 51 to 25.5 per cent is learnt to be scouting for strategic partners for the airline he had founded more than 25 years ago. Abu Dhabi-based Etihad, which owned 24 per cent in Jet and now is left with 12 per cent, is expected to decide at a board meeting on Sunday, whether it wants to exit the airline completely or not.

Opinion | When it comes to energy, the weeds is a good place to be

March 15

David Toscano, a Democrat, represents Charlottesville in the Virginia House of Delegates.

We hear a lot today about the Green New Deal, a great aspirational statement that tells us much about where we want and where we need to go but often lacks specifics. The real deal on energy policy is in the details, the weeds of social and economic policy. In Virginia, that means understanding the State Corporation Commission and how it works to support or frustrate the intent of the legislature and sound energy policy.

At the end of January, a key subcommittee in the General Assembly considered legislation to cap Virginia’s carbon pollution through a program called the Regional Greenhouse Gas Initiative. In the hearing, a representative from the SCC testified that the costs to Virginia’s consumers from our participation in the program would be much higher than any other previous estimate or study that had been discussed much less seen.

For context, the RGGI is a market-based partnership of nine neighboring states designed to take action to lower energy costs, reduce pollution and bolster a clean-energy economy.

The SCC staffer provided no supporting evidence or details to justify the cost estimates, which were then used as justification to oppose Virginia’s involvement with the RGGI.

The SCC is supposedly apolitical, but you could have fooled many in the room that day. No one had seen the cost model the SCC cited. The SCC, because of a quirk in Virginia law, is exempt from Freedom of Information Act requests, so it cannot be compelled to provide the model to the public.

After substantial pressure, the SCC disclosed limited information in the form of a two-page letter provided to the committee chairman — not to the entire committee — and it was not considered by the members as they voted on this significant legislation. Only after the legislative session ended did the SCC provide its modeling to the Department of Environmental Quality.

The model and letter provide some insight into the staff’s presentation. First, SCC staff apparently asked Dominion Energy to develop numbers using a proprietary model that is known to favor utilities and uses an artificially low price for gas.

Further, the SCC assumes that most coal plants will keep running even if the commodity is no longer competitive with gas, even projecting coal generation through 2051. Few, if any, believe this, but the SCC built this into its analysis. There are other basic mistakes in the SCC staff analysis; for instance, the SCC builds new gas capacity into its analysis to replace coal but charges all of those costs to RGGI, when it is not clear that that capacity will be needed or that Dominion would build it or procure it from an independent power producer.

The SCC model also assumed that the mandates for renewable energy and energy efficiency in the Grid Transformation and Security Act would not be fully implemented or approved by the commission, despite that these are legislative requirements the SCC must follow.

Finally, the SCC analysis incorrectly assigns an allowance price within the RGGI program that is simply wrong. The allowance price in the RGGI is the price a polluter will have to pay per ton of carbon emitted. The SCC used a price that is significantly higher than RGGI’s historical price or a forward-looking modeled price.

Even if you agree with the SCC, its analyses should be public information designed to inform the public debate. The SCC, however, has chosen a less transparent route, disadvantaging the public and the legislature from having all the necessary information to determine energy policy in the commonwealth.

All allies from 2014 will stay with BJP for 2019 polls: Keshav Prasad Maurya

Barely a week after the BJP placated its ally, Om Prakash Rajbhar of the Suheldev Bharatiya Samaj Party, political circles are abuzz about Anupriya Patel of Apna Dal (S) meeting Congress’ Priyanka Gandhi. But Keshav Prasad Maurya, deputy chief minister of Uttar Pradesh, told ET in New Delhi that the BJP will soon sort out differences with its partners. Edited excerpts:

Now that Samajwadi Party and Bahujan Samaj Party have come together, how big is the challenge for the BJP in Uttar Pradesh?
The lotus will bloom in all the places where the SP or the BSP will field candidates. We will win more than 73 seats in UP.

But the BJP does not seem to be able to take along smaller allies. Om Prakash Rajbhar relinquished one of his ministries citing displeasure with Chief Minister Yogi Adityanath.
We are confident that all our allies who were with us in 2014 will stay with us in 2019 and 2022 (assembly polls). There may be some differences with allies but they will be heard and the differences will be sorted out soon.

But Anupriya Patel is said to be in talks with Priyanka Gandhi.
Those who were with us will remain with us. As a politician, any leader can meet anyone else. Even if there are differences — be it on the number of seats or anything else — they can be sorted out. I’m confident Apna Dal and other allies will stay with us.

Now that Priyanka Gandhi has come in as general secretary, there are talks that the Congress may eat into the BJP’s core votes.
In the 2014 Lok Sabha elections, Priyanka campaigned in more than 40 constituencies (out of 80 in UP). But the Congress was restricted to two pocket boroughs where the SP didn’t field candidates. The BJP’s wave is still there because of the popularity of Modiji.

But what about anti-incumbency against sitting BJP MLAs & MPs?
These Lok Sabha elections are not about making someone an MP but about making Modiji the prime minister.

2014 Lok Sabha elections and the 2017 assembly polls were fought keeping Other Backward Classes in the front. But OBCs now feel they have been let down.
Our PM himself comes from an OBC community. He hasn’t taken a holiday, has worked 18 hours, has celebrated Holi-Diwali with the armed forces. No other party has such a leader. Baki parties ke paas dulhe hai, baraati nahi hai (Other parties only have bridegrooms, no followers). OBCs are determined to make Modiji the PM again.

Centre’s 10% reservation for the poor in general category seems to have angered the backward classes. What steps has the government taken for them?
OBCs have found place in most posts in organisations and ministries. Apart from this, giving constitutional status to the OBC Commission is not a small move by Modiji. The demand was there since Independence but the BJP took the step. How large the OBC population is needs to be ascertained. To get the right figure, a decision was taken for a caste-based census and the next census will have the actual figures. Reservation for the economically poor in the general category is a good step. As far as OBCs are concerned, based on the figures we get from the next census, necessary steps will be taken for their uplift.

What about the allegations that Thakurs are getting most of the plum posts in UP?
Yogiji is our chief minister and a sanyasi as well. A sanyasi has no caste. The Opposition has no issue. They rake up this issue for political gains but they will not be successful.

What about law & order in the state?
There has been a remarkable improvement in law & order. Bringing down crime rate is one thing and bringing in a feeling of security among common people is another.

But even police officers do not seem safe after an inspector was killed while controlling protests against cow slaughter in Bulandshahr.
It is sad that a cow was slaughtered and it is equally sad that a policeman was killed while trying to control the mob. For bringing back rule of law, we have come to power. Good governance is another name for the BJP. Having said that, if there is any discrepancy or wrongdoing, we will take action as and when required.

Talking about the UP economy, despite the much-publicised investor summit, the conversion rate into actual investment remains low.
It’s not like that. After the last investor summit, we have got actual investments to the tune of Rs 1 lakh crore. Based on those MoUs, all investors are in touch with the government. The process takes time. We have rolled out a red carpet for the industry. An enabling environment has been created for willing investors.

What steps is the state taking for families of jawans killed in the Pulwama terrorist attack?
Twelve jawans who lost their lives in Pulwama were from UP. The government, the party and the society are all standing together with their families. We have announced compensation of Rs 25 lakh and a government job for the kin of each martyr.

Politics in UP invariably revolves around caste. How does the BJP plan to maintain the right balance between caste and vikas (development)?
Either during Vidhan Sabha elections or gram sabha polls, there is no denying the fact that caste is the main factor. But gradually, especially after Gujarat saw development under Narendra Modi, the trend has changed. Polls are being fought based on development. People assess parties on the basis of their capability to bring development and security. Other parties have a history of corruption and have come together to join this contest to stop Modi from returning to power.