Good morning… Did you hear the murmerings of Twitter considering a subscription model? Would you still be caught tweeting or turn your attention to other mediums? On that thought, let’s bring in hopefully a week of gradual but progressive economic and coronavirus receding developments.
Indian now exports financial fraud to the US
For a long time Indians have seen US as a land of opportunity. Now, it seems as though this is the case when it comes to financial scams as well. Introducing Mukund Mohan and his intricate web of shell companies with an intention to milk the crisis and the federal stimulus.
What did he do? Mukund Mohan, an Indian-origin tech executive in Seattle with an impressive corporate experience has been arrested on the allegation of fraudulently applying to the tune of $5.5 Million in the PPP or Paycheck Protection Program, of which $2.57 million was approved. PPP was instituted by the US 2020 Federal Governmet CARES Act with an intent to enable small businesses with low-interest private loans. Mohan applied for eight loans through six shell companies. The most outrageous detail? He claimed to have paid $2.9 million dollar in payroll for 2019 in one of the companies, whereas he acquired it in May 2020. He also supposedly transferred some of the amount that he got as part of the program, to Robinhood trading app to make a quick buck.
PPP is used to courting controversy This though is a much smaller instance of the controversies that PPP has been mired in. Be it public outrage at big food chains like Shake Shack getting millions of dollars sanctioned in loans meant for small businesses. Or questioning the basis of the program itself at being aimed at keeping employees on payroll and not small business survival. And then there were businesses where sales boomed during this crisis, yet they availed themselves of this facility.
Coronavirus spurring innovation in India
With track paints becoming the choice work wear thanks to work from home, the apparel industry has taken quite a hit. A hit to the extent of 40% drop in consumption as per Rajat Wahi, partner at Deloitte. Anti-microbial fabric or clothes that prevent growth of bacteria and virus seems to be an antidote that the industry is hanging on to. Some of the big names in the industry like Arvind Fashions, Mayur Suiting, Peter England, Grasim Industries and Donear Suiting are betting on this trend.
Does it really work? Now that is a point where the jury is still out. On one hand, there are enthusiastic industry experts pointing out how our clothing can often be a surface for viral particles and anti-microbial clothing will help to nullify the damage. Although others in the science fraternity had their doubts on many angles like does the virus even survive on fabric to the fact that transmission happens from the exposed parts like face and hands. While the antimicrobial clothes will do nothing to reduce the precautions we need to take, there may still be a market amongst those who need added inputs for peace of mind.
That’s not all: At a time when we are still struggling with the idea of accurate testing, Muse wearables, an IIT Madras incubated start-up has raised Rs. 22 Crores for a new invention. The invention? A wrist band tracker which will be used for early stage coronavirus detection taking some body vitals as inputs.
Developing nation debt trap
Remember the refrain for coronavirus being a global pandemic to the tune of “we are all in the same boat”? Part of a tweet by UN Secretary General Antonio Guterres ripped apart through that statement saying – We are all floating on the same sea, but some are in superyachts & others clinging to drifting debris.
Demand to cancel developing countries debt: Seven influential, mostly political individuals from across developing countries have come together to make a call for cancellation of $11 Trillion collective debt. The main grudge voiced by the group points to the fact that the repaid dollar only makes the rich richer, whereas in this pandemic it could be used to save lives. Led by former Brazil president Dilma Roussef, the signatories also includes Kerala finance minister T.M. Thomas Isaac.
Developing country debt woes: In 2018, public debt in low and middle income groups had gone up to 51% of GDP. As of 2016, 55% of the loans were raised in the market rather than from the low-interest options like World Bank and IMF. As an immediate measure, the IMF suspended debt repayment for 25 of the poorest countries till October 2020 and G-20 countries followed suit suspending it for 73 of the poorest countries till December 2020. What happens thereafter only time and the ravaging path of coronavirus will tell. Although one thing is for certain. The virus has effectively wiped the last few decades of human progress, with a UN Human Development Report showing that on some dimensions we are already at mid-1980s levels.
Neighbouring countries to get restricted access to public procurement business: The Indian government has upped the ante on Vocal for Local by imposing restrictions on tender bidders from countries sharing a border with India. This applies to central and state government undertakings. It also includes private public partnerships where a government undertaking is providing financial support.
Indian pharma companies recall diabetes drug in the US: Lupin and Granules India are recalling almost 9.7 lakh bottles of their diabetes drug from the US market due to a higher than acceptable limit of possible carcinogenic NDMA impurity.
IPL to go full steam ahead: Coronavirus may have dashed all hopes for any of the four tennis grand slams this year or even the Olympics but it proved no match for the might of IPL. Running for almost 7.5 weeks, IPL 2020 will be held in Dubai from September 19 to November 8. Will it be empty stadiums or not? That is yet to be confirmed and probably depends on the corona situation in Dubai closer to the date.
Tata steel contemplating various options for Port Talbot plant: Tata Steel is in talks with the UK government for the steel plant at Port Talbot which employs about 4000 people. Some options being discussed are a 900 million GBP infusion by the UK government for an almost 50% stake in Tata Steel and would also require the company to write off a similar amount owed by the UK subsidiary. Another option being discussed is shutting down of the blast furnace operations for greener alternatives.
Private jet market set to expand: As things start opening and most rational people remain cautious, people who can may end up choosing private jets over commercial flights. As per this article, a recent McKinsey article observed that 90% of the people who could afford the luxury of flying private chose not to do so. If June flight numbers are anything to go by for most private charter operators, then coronavirus may well change that habit.
To say that the market indices moved much on Friday would be like to say that the snail has quite a pace. However, overall last week was the sixth consecutive week when the market rallied, considering a glimmer of resilience as seen through the results announced by India Inc. All major indices were on the green over last week. BSE Sensex closed last week with a 3% gain, Nifty 50 with 2.7%, BSE Small cap with 1.4% and BSE Mid Cap with 1.2%.
Oddly enough, at the same time gold too continued it’s spike to cross the Rs. 50,000 per 10 gram price watermark.
Indian rupee strengthened against the dollar to end the week at 74.83 per dollar on July 24 as compared to 75.02 a week back.
The Forbes new list of world’s billionaires’ slots India at Number 4 in countries with most number of billionaires at 102. The medal positions are taken by USA, China and Germany. Although the country slips to Number 5 when considering the total net worth of the billionaires. Pretty sure the number would be far lower if we were to look at a rate akin to number of billionaires per million.