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1. Fitch ratings reduces India’s annual GDP growth estimates for FY21 to 0.8% from 2%

2.India’s GDP growth likely to grow at 1.5% in FY21: CII
3. 23% decline projected in Migrants Remittances to India in 2020 due to COVID-19: World Bank Report
4. IT firm Tech Mahindra joins hands with IBM to set up innovation centres
5. NIIT’s US arm signs agreement with US-based EdTech company
6. Federal Bank to acquire additional stake of up to 4% in IDBI Federal Life Insurance


1. Fitch ratings reduces India’s annual GDP growth estimates for FY21 to 0.8% from 2%

Fitch Ratings Inc, an American credit rating agency in its ‘Global Economic Outlook (GEO)’, has lowered India’s GDP (Gross Domestic Product) growth forecast to 0.8% for Fiscal year 2020-21 (FY 21) due to the
global economic downturn caused by the spread of coronavirus (COVID-19).

i.The Global GDP is projected to decline 3.9 % in 2020, which will have double the impact of the 2009 recession

Key Points:
i.Comparison: Prior to this, Fitch had predicted India’s economic growth for the financial year (FY 20) at 4.9 %. However, the agency expects the growth rate in 2021-22 (FY 22) at 6.7 %.
ii.Quarter estimates: The rating agency estimates that there will be negative growth in the current financial year for two consecutive quarters. In the first quarter of April to June 2020, economic growth fell to -0.2 % and to -0.1 % in July-September 2020.Growth is expected to rebound to 1.4 per cent in the last quarter of 2020 calendar year.
iii.Global GDP: As per the agency, the world GDP is projected to decline by 3.9 % in 2020, which will have double the impact of the 2009 recession.
iv.Reason for the decline: The main reason for India’s economic downturn is the decline in spending habits among consumers. This means that people will spend only 0.3 % of the current fiscal year (FY 21), compared to 5.5 % in FY 20.
v.Impact: The fall in global GDP will result in a loss of $ 2.8 trillion against the global income of 2019. Corona will incur a loss of $ 4.5 trillion against the earlier GDP estimate.

About Fitch Ratings:
President– Ian Linnell
Headquarters– New York, United States (US)

2.India’s GDP growth likely to grow at 1.5% in FY21: CII
i.The Confederation of Indian Industry (CII) in a paper- A plan for economic recovery has stated that India’s Gross Domestic Product(GDP) growth is likely to grow at 1.5% in the  Financial Year 21.
ii.Should include cash transfers of Rs 2 lakh crore to Jan Dhan-Aadhaar-Mobile (JAM) account holders in addition to Rs 1.7 lakh

Growth expectation under other scenarios

In case of baseline scenario, GDP is expected to grow at 0.6% on an annual basis as the economic activity is expected to remain in constraint due to the continuing restrictions on the free movement of goods and people beyond the lockdown period.

This will lead to disruption in supply chains, slow pick-up in investment activity, labour shortages in the short-run and muted consumption demand on account of reduced household incomes.
This will lead to disruption in supply chains, slow take on investment activities, short-term labor shortages and the need for disabled consumption due to reduced household income.
In case of a more prolonged outbreak, GDP will decline by -0.9% if restrictions in hot spots continue and newer spots get added to the list which lead to periodic stop & start in economic activity.

Suggested urgent fiscal interventions

i.Should include cash transfers of Rs 2 lakh crore to Jan Dhan-Aadhaar-Mobile (JAM) account holders in addition to  Rs 1.7 lakh already announced.
ii.To provide additional working capital limits to banks,  equivalent to the April-June wage bill of the borrowers, backed by a government guarantee, at 4-5% interest.
iii.The creation of  fund or Special Purpose Vehicle (SPV) with a corpus of Rs 1.5 lakh crore which will subscribe to Non- Convertible Debentures (NCDs)/Bonds of A rated corporates  and above.
iv.The fund can be raised by  a corpus contribute by the government of Rs 10,000-20,000 crore, with further investments from banks and financial institutions such as Life Insurance Corporation (LIC), Power Finance Corporation (PFC), Employees’ Provident Fund Organisation (EPF) among others, this will limit Government exposure while providing adequate liquidity to industry.
v.A credit protection scheme for Micro, Small & Medium Enterprises (MSMEs), where If the borrower defaults, RBI should buy the loan and repay the bank upto 75-80% of the loan, which limits the risk to the lender.
vi.Small Industries Development Bank of India (SIDBI) can provide the guarantee for loans to industry and trade while National Bank for Agriculture and Rural Development (NABARD) can provide the guarantee for loans to agro-processing sectors.

Key Points
In considering the extent of the damage to the economy from the disruption to business, the GDP growth in FY21 is likely to be the lowest in many decades.Without an increase in government spending in the near term for economic recovery, government’s revenue will decline and high deficits will be a problem in future.
As the capacity utilization levels may be minimum, any significant recovery in investment activities is unlikely. Consumption demand will be sluggish as people’s incomes are affected.

The economies across the world will continue to struggle with the pandemic & global trade may decline by 13 to 32% in 2020, as estimated by the World Trade Organisation(WTO) where government intervention becomes critical not only to sustain the economy but also to prevent any humanitarian crisis.

About CII:
Headquarters– New Delhi, India
President– Vikram S. Kirloskar

3. 23% decline projected in Migrants Remittances to India in 2020 due to COVID-19: World Bank Report

i.Remittances to India are likely to drop by 23% to USD 64 billion in 2020 from USD 83 billion in 2019 due to COVID-19 impact.
ii.On the global front, remittances by migrant workers are projected to decline sharply by about 20% due to the economic crisis induced by the COVID-19 pandemic and shutdown.
iii.The nationwide lockdown in India has impacted nearly 40 million internal migrants i.e. migrants within the nation which may result in loss of employment.
iv.Remittances to South Asia are projected to decline sharply by 22% to $109 billion in 2020.

What are Remittances?
A remittance is a transfer of money by a foreign worker to an individual in their home country. These are a vital source of income for developing countries as these help families to afford food, healthcare, and basic needs.

Migrant worker remittances to fall 20% amid virus
On the global front, remittances by migrant workers are projected to decline sharply by about 20% due to the economic crisis induced by the COVID-19 pandemic and shutdown. This would be the sharpest decline in recent history.

The global average cost of remittances declined to 6.8% in the Q1 of 2020, from 6.9% in 2019.

Key Points:
-Remittance flows are expected to fall across all regions, mostly in Europe and Central Asia (27.5%), followed by Sub-Saharan Africa (23.1%), South Asia (22.1%), the Middle East and North Africa (19.6%), Latin America and the Caribbean (19.3%), and East Asia and the Pacific (13%).
-Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7% to $445 billion from $554 billion in 2019.  In 2021, remittances to LMICs will recover and rise by 5.6% to $470 billion.

Lockdown in India has impacted 40 million internal migrants
The nationwide lockdown in India has impacted nearly 40 million internal migrants i.e. migrants within the nation which may result in loss of employment. Governments need to address the challenges facing internal migrants by including them in health services and cash transfer and other social programmes and protecting them from discrimination. In India, the number of low-skilled emigrants seeking mandatory clearance for emigration rose slightly by eight percent to 368,048 in 2019.
Remittances to South Asia to dip 22% in 2020 to $109 billion: World Bank
Remittances to South Asia are projected to decline sharply by 22% to $109 billion in 2020 in comparison to 2019 when it saw a growth of 6.1%. This deceleration in remittances is due to global economic slowdown driven by the coronavirus outbreak as well as oil price declines.

About World Bank:
Establishment– 1944
President– David R. Malpass
Headquarters– Washington, D.C., United States

Subsidiaries– International Bank for Reconstruction and Development (IBRD), International Development Association (IDA,) International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).

4. IT firm Tech Mahindra joins hands with IBM to set up innovation centres

Tech Mahindra Limited, an Indian multinational subsidiary of the Mahindra Group, has entered into the partnership with US (United States) based IBM (International Business Machines Corporation) to establish innovation centres with the aim to boost digital transformation & encourage adoption of more hybrid cloud-based technologies among its global customers.

Key Points:
i.Both the firms have decided to open a  1st such centre in Bengaluru (Karnataka) later in 2020, which showcases transformation solutions built with IBM Cloud Paks, enterprise-ready containerized software solutions running on Red Hat OpenShift.
ii.More such centres will be opened throughout North America and the United Kingdom(UK) sometime in 2020.
iii.The tie-up is in line with Tech Mahindra’s TechMNxt charter, which aims on providing solutions that enable digital transformation and meet the customer’s evolving and dynamic needs.

About Tech Mahindra Limited:
Headquarters– Pune, Maharashtra.
Managing Director & Chief Executive Officer– Chander Prakash Gurnani
About IBM (International Business Machines Corporation):
Headquarters– New York, U.S.
President– Jim Whitehurst

5. NIIT’s US arm signs agreement with US-based EdTech company

NIIT (National Institute of Information Technology) Limited announced that its US (United States) subsidiary has signed a managed service agreement with a US-based education technology (EdTech) company to provide virtual services to education providers. The term of the agreement is 5 years.

Key Points:
i.The demand for online courses has seen a quantum jump globally after the outbreak of COVID-19 and consequent of lockdowns.
ii.Both companies can provide innovative solutions in the testing and certification marketplace, through this significant partnership.
iii.About NIIT: NIIT is a leading skills and talent development corporation building manpower pool for global industry requirements.
iv.It has a footprint in over 30 countries offering training and development solutions to individuals, enterprises and institutions.

About NIIT Limited:
Headquarters– Gurugram, Haryana. CEO– Sapnesh Lalla

6. Federal Bank to acquire additional stake of up to 4% in IDBI Federal Life Insurance

The Federal Bank’s board has approved its purchase to acquire an additional stake of up to 4% in the equity capital of IDBI Federal Life Insurance Company Limited (IFLIC) from Industrial Development Bank of India(IDBI) Bank, increasing the total shareholding in the life insurance joint venture to 30% from 26%.

Key Points:
i.The IDBI Bank board has also approved a proposal to sell a 23-27% stake in its insurance arm IFLIC on April 3.
ii.IDBI Bank has 48%  stake in IFLIC. Since Life Insurance Corporation of India (LIC) has 51% majority stake in IDBI Bank, & looks to sell its entire stake in IFLIC.
iii.Current insurance regulations do not allow LIC to hold more than 10% stake in another insurer, either directly or indirectly.
The proposed stake hike is subject to price finalisation and all relevant regulatory approvals from the Reserve Bank of India and the Insurance Regulatory and Development Authority of India (IRDAI). The indicative time period for completion of the acquisition is 6 months.

About Federal Bank:
Headquarters– Aluva, Kerala
Managing Director (MD) & Chief Executive Officer (CEO)– Shyam Srinivasan

About IFLIC:
Headquarters– Mumbai, Maharashtra
MD & CEO– Vighnesh Shahane
About IDBI:

Headquarters– Mumbai, Maharashtra
Chairman– M R Kumar