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Coronavirus impact: India's external sector to be hit due to growth slowdown

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India's external sector is expected to be adversely impacted due to prolonged growth slowdown, a report said. As of now, the sector is comfortably placed owing to muted crude oil prices in the international market, the SBI research Ecowrap report said on Monday. The external sector of a country's economy refers to all international economic transactions between residents of the country (private and public sector) and the rest of the world.

India may end FY21 with a current account surplus if the international oil prices remain weak and don't show volatility in the remaining part of the fiscal. "We are facing similar growth challenges now, with GDP growth declining from 8.3% in FY17 to 4.2% in FY20.

The FY21 median growth contraction is currently at 5%, indicating a growth collapse of at least 9% from FY20 levels because of COVID. The only saving grace is that our external debt position is sustainable with the external debt to GDP ratio at 19.8% at end-June 2019," it added.

The report said that India should be mindful of its external sector in FY21 as a prolonged period of growth slowdown may hit the external sector metrics, specifically the rupee.

"In FY21, we maintain that India is going to achieve a current account surplus owing to lower oil prices, although the magnitude might shrink if oil prices show undue volatility and stay at over $40 /bbl for a sufficiently longer period of time," the report also said.

Noting that the gross domestic product (GDP) growth has declined from 8.3 per cent in 2016-17 to 4.2 per cent in 2019-20, the report said, the FY21 median growth contraction is currently at 5 per cent, indicating a growth collapse of at least 9 per cent from FY20 levels because of coronavirus.

On coronavirus, the report said that for the first seven days of June, India has tested on an average 1.32 lakh samples, with the number crossing 1.4 lakhs on June 6 and June 7. "This is perhaps the reason why the cases have started increasing at a much faster rate," it said.

21.8% of SBI customers avail moratorium facility on loan EMIs

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State Bank of India (SBI) on Friday said that the moratorium facility on loan EMIs was availed by nearly 21.8 per cent customers. It stood at 23 per cent in terms of the loan value. The country's largest lender also said that it has seen a robust growth in retail deposits so far.

"Robustness of our retail portfolio is established as only about ~21% of borrowers availed moratorium," SBI said in a regulatory filing. In terms of financial support to the customers, SBI said that Rs 17,116 crore coronavirus related loans have so far been sanctioned.

The RBI had recently said that an estimated Rs 38.68 lakh crore of the total Rs 100 lakh crore worth of loan outstanding in the banking system are now under the six month moratorium as part of the coronavirus relief package.

The Reserve Bank of India (RBI)  last month extended the moratorium on loan EMIs by three months, or till August 31, 2020. The earlier three-month moratorium was ending on May 31. This makes it a six-month moratorium on term loan EMIs starting from March 1, 2020 to August 31, 2020.

SBI had thereafter said that it has "proactively reached out to all of its eligible loan customers to obtain their consent to stop their Standing Instructions (SIs) / NACH mandate for the EMIs falling due in June, July and August 2020."

Meanwhile, reported a net profit at Rs 3,580.81 crore for the March quarter compared with Rs 838.40 crore in the same quarter last year. "Exposure to severely stressed sectors by Covid-19 is less than 4 per cent of the book," it also said in the regulatory filing.

Coronavirus impact: Govt may soon allow home delivery of petrol, CNG

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The government may soon allow oil companies start home delivery of petrol and CNG. After delivery of diesel, the government plans to start home delivery of petrol and CNG for the greater convenience of customers, said Oil Minister Dharmendra Pradhan on Friday.

The move will ensure delivery of essential fuels at doorstep amid the ongoing coronavirus lockdown announced by PM Modi in March this year.

Largest oil marketing company Indian Oil Corporation commenced home delivery of diesel in 2018 through mobile dispensers at select cities in India. The country is third biggest buyer of oil. However, fuel consumption has crashed by nearly 70% in April.

Demand for petrol is down 47% below the same time last year, while diesel consumption has dipped 35%.  On the other hand, Repos Energy, a start-up backed by Tata Group plans to launch mobile petrol pumps to provide fuel at home. The Pune-based company is aiming to produce 3,200 such mobile petrol pumps in the current financial year.

The minister also said government is planning to make all types of fuels - petrol, diesel, CNG, LNG and LPG at a single place for the customers.

Pradhan was speaking on the occasion of inauguration of 56 new CNG stations in 11 states - Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, New Delhi, Punjab, Rajasthan, Telangana and Uttar Pradesh.

According to a statement issued by the government, "Completion of work at these stations was affected due to the countrywide lockdown imposed to prevent the spread of coronavirus. However, after easing of restrictions last month, the work gathered pace and was carried out ensuring all safety and social distancing norms. This ensured minimum delay in commissioning of these stations as against the original schedule."

SBI cuts fixed deposit rates by 40 bps; check out new rates

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State bank of India (SBI) has cut interest rates on fixed deposits (FDs) by up to 40 basis points (bps) across all tenors. The new rates on retail term deposits are applicable from May 27, according to data available on the bank's website. The investors will now earn 5.1 per cent interest on 1 year to less than 2 year deposits. Similarly, deposits of 3 years to less than 5 years will get 5.3 per cent and 5 years and up to 10 years will earn 5.4 per cent interest.  The SBI had earlier slashed rates on May 12. The SBI had lowered rates by 20 bps applicable for FDs of up to three years effective May 12.

The senior citizens will get 5.6 per cent interest on 1 year to less than 2 year deposits. Also, 5.8 per cent will be available on the deposits of 3 years to less than 5 years. The investors will get 6.2 per cent interest on deposits of 5 years and up to 10 years.

The country's largest public sector lender also cut rates on bulk deposits of Rs 2 crore or more by up to 50 bps. The revised rates under this category are also applicable from Wednesday.

On May 22, Reserve Bank of India (RBI) lowered its repo rate by 40 bps to 4 per cent. The reverse repo rate was also reduced by 40 bps to 3.35 per cent.

"The RBI policy announcement in response to the fallout of COVID pandemic is timely. The reduction in policy rate by 40 bps under the assumption that growth in FY21 will be negative is an appropriate move to support economic activity. Uncertainty associated with pandemic, normalisation of economic activity and relaxation made in social distance makes it imperative that policy response is calibrated and swift," Rajnish Kumar, Chairman, SBI, had then said.

India's GDP to contract 6.8% in FY21 due to coronavirus lockdown: SBI

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India's gross domestic product (GDP) is estimated to have grown at 1.2 per cent in the fourth quarter of the last fiscal hit by economic shutdown due to the coronavirus crisis, a report said. The GDP growth is expected to be 4.2 per cent for FY20 and (-) 6.8 per cent for fiscal year 2020-21, SBI's Ecowrap report said. "Q4 (FY20) GDP growth would be around 1.2 per cent as the economic activity in the last seven days of March month was completely suspended due to the nationwide lockdown," it added. The report has pegged a loss of nearly Rs 1.4 lakh crore in the given period. The fourth quarter GDP growth data is scheduled to be announced by the government on May 29.

The report said that India's economy could contract by more than 40 per cent in the April-June quarter of 2020-21 owing to nearly two months of countrywide lockdown. "Q1GDP FY21 loss will be humongous and could even exceed 40%. However, Q2GDP numbers could witness a smart recovery and clock 7.1%, if we are able to sustain the demand. Q3 and Q4 growth numbers could also look much better, with an average of 6%, but the Q2 bump could come down with the immediate bust in pent up demand in Q2 subsiding subsequently," it said.

However, things are expected to change fast as the income and job loss could "again propel us towards a lower equilibrium after the initial bump up". The government is expected to come up with another targeted package later in the year, SBI report noted.

The coronavirus cases could peak anytime in June's last week, the report also said."Based on the current 7-day moving average of new cases witnessed in the country, we believe that new cases are likely to peak somewhere in the last week of June, beginning June 20," the report said.

Meanwhile, Goldman Sachs recently said that India's economy may contract by 45 per cent in the June quarter. It also projected a 5 per cent decline in GDP for 2020-21 and said that the fall will be deeper compared to all "recessions" India has ever experienced.

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