Of bad loans and insolvency

7.2%

 

What is it? The projected growth rate of the Indian economy in current financial year 2017-18, according to International Monetary Fund (IMF).

Why is it important? This represents reversal in growth slowdown following demonetisation introduced in November- December last year. World’s sixth largest economy grew at 8% in 2015-16, before slowing down to 7.1% in 2016-17. IMF has attributed growth revival to revision in national income accounting and government spending.

Tell me more: Global economy is expected to grow at 3.5% this year, as compared to 3.2% in 2016.

 

 

1.24%

 

What is it? The gross non-performing assets of HDFC Bank, India’s largest private sector bank in market capitalisation, for the three months ended June 2017.

Why is it important? This is the highest in seven years, and bad loans increased by 23% in one quarter. And 60% of the increase was from farm loans portfolio. Slew of farm loan waivers announced by state governments like Uttar Pradesh and Maharashtra is likely to impact farm loan repayment, and increase bad loans for banks.

Tell me more: Banks have disclosed weakening of microfinance asset quality following demonetisation during January- March 2017. HDFC Bank says microfinance loans have not deteriorated further.

 

 

56

 

What is it? The number of applications filed by debtors to declare insolvency.

Why is it important? This is more than a third of cases approved by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 in the last one year. It also shows companies are seeing insolvency proceedings as a chance to reset their business in a time bound manner.

Tell me more: Under the new bankruptcy code, cases have to be resolved within 6 months, with an extension for another 3 months. Alternatively, NCLT appoints an interim administrator who will try to sell the assets of the company to a new owner within 18 months.

 

 

770 mm

 

What is it? Rainfall received at Mount Abu, a hill station in Rajasthan, in 24 hours.

Why is it important? This is the highest ever rainfall received by Mount Abu ever since rainfall data was collected. Extreme rainfall events like these in a desert state is attributed to increase in temperature and its impact on monsoon.

Tell me more: Mumbai received 944 mm of rainfall in July 26, 2005 that killed 1,094 people. In 2015, Chennai and two adjoining districts received 1,049 mm of rainfall.

 

 

24

 

What is it? The number of protected monuments that have disappeared due to encroachment.

Why is it important? Shows laxity in protecting the historical monuments. Archaeological Survey of India is empowered to issue show cause notice to encroachers, and can also direct district authorities to remove encroachments.

Tell me more: 11 out of 24 lost monuments were from Uttar Pradesh. Government has spent Rs 301.7 crore in protecting monuments in 2016-17.

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A fund to beat them all

2%

What is it? The estimated drop in inflation once the goods and services tax (GST) is implemented.

Why is it important? Inflation concerns have been central to RBI’s monetary policy reviews, having set the target in 2015 of reducing the headline inflation to 4% in the medium term. The Revenue Secretary Hasmukh Adhia’s estimated of GST’s effect on inflation could finally encourage the central bank to cut the key rate (repo) that it had been keeping unchanged citing the risk of raising inflation.

Tell me more: Adhia insists the government has taken care to prevent the average taxation on commodities from going up. Regarding GST implementation, Adhia mentions the need to educate consumers about the new taxation to keep them from being cheated by unscrupulous traders.

 

$93 billion

What is it? The value of the initial commitment to SoftBank’s Vision fund, a private equity fund for cutting-edge tech companies.

Why is it important? The Vision Fund, engineered by SoftBank founder Masayoshi Son, is the world’s largest private equity fund that has a planned investment pool of $100 billion as tech venture capital. The current amount, raised from investors such as the Saudi Arabia’s Public Investment Fund, Abu Dhabi’s Mubadala Investment, Apple Inc, Qualcomm, Foxconn Technology and Sharp Corp, besides SoftBank, is the first round of fundraising.

Tell me more: The fund is targeting a $100 billion in the next six months from other investors. SoftBank led the world’s largest venture capital funding in April worth $5.5 billion in China’s Uber-rival Didi Chuxing.

 

Rs 20,000 crore

What is it? The amount Indian government will spend to acquire four landing platform docks (LPDs) or warfare amphibious ships under the ‘Make in India’ program.

Why is it important? This is the largest naval defence deal. Two ships would be made in partnership with private companies, and the winning private company will help the state-run Hindustan Shipyard Ltd. make the remaining two.

Tell me more: Make in India is a government program to promote domestic manufacturing in 25 sectors including defence.

 

11.3%

What is it? Percentage of total budgeted amount spent in April 2017 – the first month of the current financial year.

Why is it important? This represents a marked improvement compared to 8.2% of annual spending estimates in previous financial year. Central government spending used to spike in March, the last month of a fiscal, and drops sharply in the next month.

Tell me more: The move to advance the budget from February 28th to February 1st has helped to spread out expenditure evenly.

 

600

What is it? The number of jobs cut by Cathay Pacific, the biggest in two decades.

Why is it important? The move comes after the Hong Kong based airline reported loss in 2016 for the first time since 2008. One-fourth of managerial staff and 18% of non-managerial positions were cut at its Hong Kong head office. The move will save 6% of staff costs.

Tell me more: Air India, India’s national carrier which operates on 64 international and 118 national routes, is struggling to make profits with debt of Rs 50,357 crore and 21,000 employees.

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News in Numbers, Dec 8, 2016: The surprise decision…

6.25%

What is it? The repo rate, the rate at which the central bank lends to commercial banks.

Why is it important? It has been left unchanged by the Reserve Bank of India’s monetary policy committee, a unanimous decision by the six-member team. This decision has been widely perceived to be a surprise even as many analysts had predicted a rate cut after the cash crunch brought on by the government’s move to replace high-value currency notes, which threatens to slow down the economy. The rates were held steady amidst concerns about the re-emergence of food inflation pressures, a likely increase in crude oil prices and the expected increase in interest rates by the US Federal Reserve.

Tell me more: The central bank has lowered its growth forecast to 7.1% from the earlier projection of 7.6% due to demonetisation.

 

Rs 35,170 crore

What is it? The increase in net spending for which Finance Minister Arun Jaitley has sought Parliamentary approval in the current fiscal.

Why is it important? This is the second time that additional funding is being sought. In August, extra funds of $3.1 billion was approved for spending in 2016-17. The recent request comes after the Indian economy grew by 7.3% in the July-September quarter, mainly driven by government spending as private investment activity showed no signs of gaining pace.

Tell me more: The additional spending includes Rs 4,000 crore for a rural jobs programme, Rs 3,100 crore for the farm ministry and Rs 1,100 crore to cover a higher pensions bill.

 

5.5%

What is it? The percentage of customer acquisition forms (of a total of 7.84 crore audited) that were found to be non-compliant as of September 2016 during verification of such forms used to enrol customers by telecom operators.

Why is it important? Indicates that a significant share of users are not verified (as mandated) before providing them with mobile connections. A total of Rs 2,335.9 crore penalty has been levied on telecom service providers as on the last day of September. It remains to be seen if the telecom ministry’s recent circular notifying the use of Aadhaar e-KYC (know your customer) service of the Unique Identity Authority of India for issuing mobile connections to users is likely to bring down the number of such violations.

Tell me more: The Telecom Enforcement, Resource and Monitoring Cells carry out the verification exercise of customer acquisition forms of 0.1% of users at the end of every month.

 

£1 billion

What is it? The amount Tata Steel plans to invest in UK over the next 10 years.

Why is it important? This is part of the deal that Britain’s largest steelmaker has offered to unions and in return, it expects them to move to a defined contribution scheme from the existing expensive pension scheme. This deal brings Tata Steel a step closer to merging its European assets with Germany’s Thyssenkrupp, which does not want to take on the former’s pension liabilities in case a merger happens. The unions would decide on the deal in January next year.

Tell me more: The deal also includes Tata Steel offering to keep both the furnaces operational at Port Talbot in South Wales for five years at least with no compulsory redundancies during that period. Tata Steel employs 4,000 people at the Welsh plant and 11,000 in the UK.

 

36

What is it? The number of cases where the baby cannot fit down the birth canal per 1,000 births compared to 30 in 1,000 in the 1960s, according to a research.

Why is it important? The research suggests that the regular use of caesarean sections is affecting human evolution. Increasingly, more mothers require surgery to deliver babies due to their narrow pelvis size. Earlier, women with a very narrow pelvis would not have survived birth but now due to medical interventions, they do and pass on their genes to their girl children. The question of why the human pelvis has not grown wider over the years despite the fact that the head of a human baby is larger than that of other primates, still remains unanswered.

Tell me more: The research published in the journal ‘Proceedings of the National Academy of Sciences’ says that the study points towards the trend of larger newborns (which are more healthy) and that the trend towards smaller newborns has disappeared.

 

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India’s latest GDP Numbers: Five things you must know

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Growth has slowed down: Asia’s third largest economy grew at 7.1% in quarter ended June 2016. This is the slowest in five quarters, and much lower compared to 7.9% recorded in the preceding three months.

Manufacturing picks up, but corporate investment still down: Manufacturing registered 9.1% growth in first quarter of current fiscal, as compared to 7.3% in same quarter last year. So this alone contributed one-fifth of India’s GDP growth.
However, corporate investment dipped by 3% (or by Rs 21,009 crore as measured in 2011-12 prices).
What does this say? Demand might have picked up resulting in higher manufacturing output. But not enough for the companies to see the invest in additional capacity.
When Indian economy was growing at 9% plus for five years in 2000-10, investment demand accounted for nearly half of the growth.

Government spending spurts: Nearly a fifth of GDP growth in latest quarter is due to government spending. This is clearly not sustainable as it would lead to widening fiscal deficit. Higher fiscal deficit will increase cost of borrowing for all others in the economy.

Exports finally showing growth: After many quarters of decline, exports reported a 3% increase. This is a positive as many export oriented industries are manpower-intensive sectors. This will create more jobs.

Mining, hotel, construction industries have slowed down

 

The positives: stable private consumption, growth in exports, pick up in manufacturing output.

The negatives: higher government spending not sustainable, key industries like mining and construction still sluggish, and corporate investment yet to pick up.

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