At JSW Steel Ltd., one of the country’s largest steel producers, Sajjan Jindal says the immediate impact on business has been marginal, but we “don’t know what will be the effect going forward”. He shared his views via text message. Currently, manufacturing facilities across sectors continue to work but that too will depend on the spread of the virus and government regulations on further lockdown of 21 days.

“We’re not seeing the light at the end of the tunnel,” says Harsh Mariwala as he describes the initial impact of the coronavirus-led disruptions on businesses, already hurting due to a slowing economy.

        1. World Economy is heading towards a recession with exception of India & China: UN

  • The world economy is headed towards a recession this year with a predicted loss of trillions of dollars of global income due to the Covid-19 pandemic, projecting serious trouble for developing countries with the exception of India and China, according to a latest UN trade report.
  • Two thirds of the global population living in developing countries are facing heavy economic damage from the COVID-19 crisis.

US has called upon for USD 2.5 trillion rescue package for the corresponding nations. UN trade body however did not provide a detailed explanation as to why and how India and china might be an exception as the world faces a recession, hence impacting developing countries.

      2. Business can now make a fresh start on compliance defaults: MCA

  • The measure has been taken in wake of the COVID-19 pandemic the ministry has initiated “Companies fresh start scheme, 2020” and revising an existing “LLP Settlement Scheme” wherein they can make fresh beginning by encouraging and reducing the compliance burden.
  • All the law-abiding companies and Limited Liability Partnerships (LLPs) fall under the umbrella of both schemes by not only providing immunity from penal provisions including the late submissions penalty but also further extending the duration for appeals against imposition of penalties, if already imposed.
  • One-time waiver of additional filing fees in the case of delayed filings, businesses with long standing defaults and the companies and LLPs set for business ventures which do not commence operations due to genuine economic reasons and have failed to make statutory filings or is wound up can all make use of the scheme from 1stApril till 30th September

    3. RBI’s Relaxations

  • On Monday RBI issued a statement claiming daily reverse repo and marginal standing facility (MSF) window has extended the timings for a period of one month, hence the operations can be conducted in daytime rather than opening after the banking hours in the evening.
  • Earlier the operation window for MSF & reverse repo operated between 1730 to 2359 Hrs however keeping the COVID-19 situation in mind, both windows will be open between 0900 am to 2350 hrs.
  • The central bank has provided a three-month grace period on repayments including credit card repayments and personal loans, however the interest on them would not be waived since the banks don’t have a security on the corresponding advances the interest rate might bother.
  • Choosing to opt in for the moratorium, will further result in further interest, hence leading to compounding according to RBL bank customers are advised to make the maximum possible payments on time rather than deferring payments, leading to interest charges being levied.
  • Industry experts have pointed out that the central bank relaxation guidelines only cover shelving of principal amounts and lenders may still opt to gather compounded interest rates in this period, leaving customers under huge repayment burden when the moratorium ends
  • As per RBI, other terms and conditions as applicable to liquidity adjustment facility reverse repo and MSF operations will remain the same.

    4. The Chinese Economy bounces back as anti-disease controls relaxed

    • China’s manufacturing sector starts to show strength after declaring victory on the COVID-19 pandemic regardless of the fact that all the governments including US have shutdown the businesses.
    • The purchasing manager index issued by the Chinese statistics bureau and official china federation of logistics and purchasing reflects growth to 52% from all-time low of February 35.7% however prevention of spike in infections is a challenge still facing as the employees get back to work.
    • The economy is still at risk as potential second wave of corona virus outbreak and plummeting oil prices may led to financial shock and global recession.

    State dominated industries are up and running however the operation in auto and other private sectors are operating below normal levels which is directly proportional to the restoration of global supply chain.

    5. Financial Impact of coronavirus might hinder 24 million people from escaping poverty: World Bank

    • Households depending on the industries are exposed to higher risks and will be the worst hit due to the impact. From tourism in Thailand to Asia pacific and manufacturing in Vietnam and Cambodia
    • In its worst-case scenario almost 35 million people would remain in poverty including 25 million in china which the government defines as living on $5.50 a day or less.
    • The World Bank estimates growth this year in the developing East Asia and Pacific region will slow to 2.1% in comparison to an estimated expansion of 5.8% for 2019.

    6. Industry experts are advising customers to pay off those loans where interest rates are high.

    • The central bank has provided a three-month grace period on repayments including credit card repayments and personal loans, however the interest on them would not be waived since the banks don’t have a security on the corresponding advances the interest rate might bother.
    • Choosing to opt in for the moratorium, will further result in further interest, hence leading to compounding according to RBL bank customers are advised to make the maximum possible payments on time rather than deferring payments, leading to interest charges being levied.

    Industry experts have pointed out that the central bank relaxation guidelines only cover shelving of principal amounts and lenders may still opt to gather compounded interest rates in this period, leaving customers under huge repayment burden when the moratorium ends