Coronavirus update from CBI India - 17 April

The government is closely monitoring the situation and based on statistics, will decide whether to relax restrictions in areas where there are relatively no or very small numbers of cases. A second financial stimulus is also expected to be announced, geared to bring relief to the MSME sector which is with worst hit.

While stringent monitoring is on, the government is also looking to relax restrictions where it feels suitable. While businesses have been working hard to get movement passes for essential services, the central government has left it to the discretion of state and district level authorities to take a call on issuance of passes, depending on the safety levels on the ground. There is a fair amount of concern related to issues that will arise once the lockdown is lifted.  Low inventory, broken down supply chains, lack of migrant labour are some of the concerns. The corporate sector has been helping the situation with financial support, donation of equipment, repurposing production lines to manufacture hand sanitizers, ventilators, personal protection equipment.

It is expected some sectors will continue to receive relaxations after 20 April 2020. For all the latest government notifications related to the lockdown please click here.

The Reserve Bank of India today unexpectedly cut its key deposit rate for the second time in three weeks to discourage banks for parking idle funds with it and push them toward lending to revive the flagging economy amid the coronavirus lockdown. Banks have parked more than Rs 6 lakh crore ($78.44bn) with the RBI under the reverse repo in recent days, highlighting the extent of surplus rupee funds in the system.

The RBI Governor conducted a press conference to announce measures to improve liquidity situation in the economy. To discourage banks from parking money with the RBI, it has cut the reverse repo rate by 25 basis points to 3.75% and has directed scheduled commercial banks and co-op banks to not make any further dividend pay-outs for profits from FY20 until further notice.

He believes there is a silver lining and expects India will stage a sharp V-shaped recovery in 2021-22 as projected by the International Monetary Fund (IMF). Softening inflation, Das said would make available more policy space to the central bank to address risks to the growth going forward.

Meanwhile, the World Bank has revised the estimates of India’s growth rates to between 1.5% to 2.8%, down from an estimated 4.7% while the IMF has pegged its estimates to 1.9% as the global economy hits the worst recession since the Great Depression in the 1930s. The growth rate of the Asian continent also comes to a halt after 60 years.

For the corporates, especially in the manufacturing sector, it might be challenging to ‘covid-proof’ their infrastructure.

All states in India are coping with the pandemic. One state which stands out having flattened the curve early is the south western state of Kerala.

India exports around 60%-70% of the global supply of paracetamol and hydroxychloroquine (HCQ), two important drugs needed to treat COVID-19. On 3 March 2020, these two drugs were put under the licenced category- private exporters cannot freely export the drug unless they have a special licence. India partially lifted the ban when President Trump of the US asked for HCQ. India also provided around 3 million paracetamol tablets to the UK recently. All exports of these drugs are considered by the government on a case-by-case basis.