Dear Readers,

On 4th April 2021 people celebrated all over the world Easter Day, marking the resurrection of Lord Jesus Christ and 21st April birthday of Lord Rama. Mother Durga is also worshipped with intense love as part of the Navaratri celebrations.

Jesus Christ said,

“Do not do or wish to others what ye do not wish done to yourself”.

“Thou shall love God above all things, and thy neighbour’s as thy self”.

“Blessed are they who do hunger and thirst for righteousness, for they shall be filled”.

Lord Rama was the ideal son and the King. He was the reincarnation of Lord Vishnu to establish the righteousness. The hearts of the devotees were filled with joy and ecstasy and a torrent of love and love rapture swelled out. Lord Rama grants righteous and loving prayers of his devotees/lovers. Lord Rama’s life portrays that life is full of adventures, pains, happiness and abundance. One must adapt to all changed circumstances and bravely face sailing on the ocean of joy and misery without depression. For keeping the promise of his father he went into exile for 14 years renouncing his right to be the king of Ayodhya, giving the message to all how to honour the parents’ words. Lord Hanuman Jayanti (birthday) was also celebrated on 27th April giving the message of loyalty and untoward faith and devotion to Lord Rama.

Father of the Nation, Mahatma Gandhi (Bapu) dreamt of Ram Rajya for Bharat.

Mother Durga incarnated as the destroyer of evil people and negative thoughts. She is grantor of happiness, health, prosperity and loving family. Mother Durga instils the fearlessness, righteousness, devotion, peace, harmony and oneness.

The Pandemic : The second wave of COVID-19 pandemic, which is more aggressive, will have a bigger impact on the economy of Bharat. Though very late, government is planning to increase the vaccine output ten times by September to combat the surging COVID-19 cases. Education is continued to be affected. School children have been denied the holistic development that they are used to in a classroom environment mixing with other children and sports. In urban areas they are marooned in small places.

Economy will further be disrupted due to Covid-19 Pandemic. Credit support is needed and restructuring of all stressed accounts must be carried out in an orderly manner. It is a war against COVID-19 and all strategic measures must be taken without wasting time.

Now the government has considered to providing `4500 crore as advance to vaccine makers (Serum Institute - ` 3000 crore and Bharat Biotech - `1500 crore) being given without bank guarantee. Citizens over age of 18 years will be eligible for vaccination from 1st May 2021. Centre is waiving custom duty on imported vaccine. There is acute shortage of oxygen, medicine, vaccine, test kits and hospital beds.

Prime Minister Modiji appealed to States to use lockdown only as a weapon of last resort to curb surging infection.

Health sector: Hospitals should be given financial stimulus and or restructuring to augment added facilities of beds and to ramp up health infrastructure.

Financial Sector: The so-called bad loans of the banks and Financial Institutions will be rising due to the second surge of COVID-19 pandemic and therefore the financial system needs strong support from the government and RBI to tide over this crisis. But, these so called bad loans/NPAs will be short lived; such accounts will not take much time to return to normalcy once the pandemic subsides and normal working. It will be good loan and return is started as the impact of epidemic is subsiding. Credit rating agencies should not create panic. The lenders should charge simple rate of interest keeping in mind the uncertain times and take every step to help the borrowers get through this difficult phase. Profit should not be the top priority now. Survival of the borrowers at this stage will pave the way for future growth.

MSMEs, medium and small contractors, hospitality (hotels, tourism), real estate, NBFCs continue to remain affected. Credit growth is lowest of last 5 years. Larger companies continue to remain in better position due to cut in cost, holding back payments to the MSMEs, mobilizing more funds from lenders. Central bank should extend the restructuring scheme at least for 3 years. Credit rating agencies should be more practical in giving adverse remarks. Need is to examine the assessed portfolio and borrowers at the micro and macro levels. The practical solution need to be given so that good assets do not become NPAs resulting in unemployment and destruction of capital through liquidation of firms. Lenders should not take large haircut by referring to Insolvency Process. They will sacrifice of higher rate and compound rate of interest in case of structuring.

Finance Industry Development Council (FIDC), an association for NBFCs, has requested Finance Minister Nirmala Sitharaman to include education as a sector under the ambit of Credit Guarantee Scheme. For better education and skill development in the year 1897 Swami Vivekananda said “Educate the people technically, intellectually and morally.

In view of COVID-19 epidemic how fast the government works with critical solution and practical strategy will be more beneficial for the nation and the people. Nobel laureate Abhijit Banerjee had called for lesser or limited government intervention towards uplifting the poor arguing such freebies makes them lazy. The fight against poverty has become complicated in the globalised world due to new forms of risk. Swami Vivekananda called for work, work and work”.  He said the entire wealth of the world will not remove the poverty of one village as people are not disciplined, not united and is mostly lazy.

FIDC has also requested Reserve Bank of India to extend the one-time restructuring scheme of MSME loans till March 31st 2022 as they are unable to revive their business and specially due to the surging COVID-19 second wave.

And consequently NBFCs should also be allowed restructuring of their debts by their lenders till March 2022 at least.

Economy: Domestic rating agency ICRA expects the economy to grow 10.0-10.5% in financial year 2021-22.

A higher fiscal deficit and the central government plans to mobilise market borrowings of `12 lakh crore in FY22, as announced in the last Union Budget, resulted in a surge in bond yields. Increased supply of government bonds in the market could lead to demand-supply mismatches, putting pressure on yields. With government bonds giving higher yields, the same will be expected from corporate bonds too. This can push up the borrowing costs for corporates, negatively impacting the investment sentiment. Similarly, higher bond yields could further complicate the transmission of rate cuts by RBI.

IMF (International Monetary Fund) has projected growth of 12.5% for India for the FY22. But the forecast has not factored in the severe risk arising from the second wave. RBI has cautioned of rise in uncertainties due to second surge in epidemic.

USA has three times more surface area than that of India. It has advantage of less population than that of India, but it reached the highest milestone in COVID-19 cases. India is now second in the global list with dailynewCOVID-19 cases having crossed 3.5 lakh now.

Automobile industry: The automobile industry has been affected by the COVID-19 epidemic. Second wave which has surged now is affecting much more. USAID report for country risk and research reported that a second wave of the COVID-19 outbreak would stall recovery in the global automotive sector.  According to CMIE report there was fall in sales of automobile sales in 2021 compared to previous year in both commercial and passenger vehicles.

The manufacturing cost of the vehicles has increased due to increase in various input costs. The industry has to raise the prices, but due to the cut in the salaries and employment the overall demand has fallen. Movement of the goods has been also restricted.

The rating agency ICRA has remained optimistic about the resurgence of the Indian automobile sector. It is expected that as the economy grows the demand which has been subdued will revive. People will not like to travel by the public transport. They will prefer to have their own vehicle. Small cars and 3 wheelers demand will surge up. The export has also been affected. Weekend curfew will affect the sales in many states as the showroom will remain shut. Even before the Covid-19 pandemic, Indian automobile industry was having set back due to less GDP growth in 2018-19.

Dr. H.P. Kanoria

Editor in chief