India doing a better economic balancing act
Or so seemed to be the gist of Ernst & Young’s Chief Policy Advisor D K Srivastava, speaking at an EY webinar yesterday. He made the point of how the more recent the forecast for Indian GDP, the grimmer it was when it came from international agencies. But, EY itself felt more optimistic about Indian prospects.
2-year window with a twin policy: One quote from his speech seemed to sum up this point very well. “We are now using both monetary and fiscal weapons of our armour in a much proper combination giving proper emphasis to growth, reemphasising growth a little bit more than inflation right now. And this, we can continue for 2 years at least until we come out of this and until we are able to create additional fiscal space”, he said.
Yeh dil maange more: Although, he did say that there was room for additional rate cut and fiscal stimulus in the latter part of the year. Never hurts to ask for more.
Cipremi is almost here!
On Wednesday, Cipla announced that they are almost ready to launch their generic version of the Remdisivir drug, named Cipremi. The drug will retail for around Rs. 4000 a vial and the outsourced company, Sovereign pharma has said production capacity may go up to 95,000 vials a month.
Why the fuss? Gilead’s (a US-based pharmaceutical company) patented drug Remdisivir has been approved for emergency use in Covid-19 cases. In this special circumstance, even with human trials still under progress, the drug is shown to reduce viral load in Covid-19 critical patients. Cipla, Hetero, Mylan, Jubilant, Zydus and Syngene are some of the companies now allowed to manufacture and sell the drug in about 127 countries.
So does Cipla have a monopoly in India? No, and neither is it the first company to start serving the country for it’s Remdisivir supply. Earlier Hetero pharmaceuticals launched the generic drug at a price of about Rs. 5400 per vial and is looking to deliver 1 lakh doses in a space of 3-4 weeks. Considering the supply-demand chasm and developing black market, these are surely welcome developments.
Big stimulus package for UK
UK finance minister Rishi Sunak unveiled another $30 Billion GBP stimulus package for the economy. If you thought our single digit contraction estimates for the GDP were bad, think about UK staring at their biggest recession in 300 years with the economic growth set to shrink by 14%!
3 main pillars: The extensively laid out plan uses three main strategies – tax breaks, restaurant discounts and jobs programs. Some notable policies are – 1000 GBP to businesses for every job brought back till January, slashing of sales tax from 20% to 5% for the next six months in the most-hit industries of food, accommodation and tourist attractions, zero stamp duty for maximum house purchase value of 500,000 GBP up from 125,000 till March and surprisingly enough a 50% discount up to a maximum 10 GBP per session to patrons who brave it and go out to eat on select days of the week in August.
Who’s footing the bill? While most people have been praise for young Rishi Sunak’s targeted stimulus package, clearly not everyone is amused or believes it is a very sustainable plan. Considering this stimulus comes on top of a nearly 180 Billion GBP already promised, concerns of funding this scheme are pretty valid.
Amazon India unit gets pocket money: As one of the few beneficiaries of the crisis, the surge in ecommerce orders has meant a need for hiring of more temporary labour. Amazon.com Inc has now invested an additional $308.02 million to take care of rising demand and entrench themselves more firmly on Indian soil.
Low net inflows to mutual funds in June 2020: From the recent AMFI data, we can see massive outflows from debt funds attributed to quarterly advance tax payments by corporates and from equity funds on the back of profit booking in the June rally.
Air Asia in the red: Auditor Ernst & Young has raised major red flags of warning for the continuing existence of Air Asia considering the heavy losses and liabilities exceeding assets by a high margin which are all now compounded by the coronavirus crisis.
Project digital yuan on Didi: In probably the first real world trial, the digital yuan (a project of People’s Bank of China) will be tested in the widespread network of the ride hailing platform Didi Chuxing. Currently, Alibaba and Tencent lead the $27 trillion payments business in the market.
Germany’s Economic Stabilisation Fund approved: Yesterday, European Union approved the key framework for the 600 billion euros Economic Stabilisation fund.
While Nifty managed to hold on to the 10,700 mark, equity markets ended in the red and prospects remain volatile for the short run. Some of this development was also attributed to profit booking amid global markets giving very confusing trends and signals!
In some buoyant, uplifting news (literally!), Google’s Project Loon and Telekom Kenya partnered to launch the first balloon-powered internet in Kenya, bringing hope of getting the technology to the most internet-dark parts of the world. While balloons have powered internet in case of emergencies like Hurricane in Puerto Rico, this is the first commercial deployment. Even with the coronavirus raging around us, there are good things happening in the world!