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Fitch Downgrades India’s Outlook To Negative

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            Fitch Downgrades India's Outlook To Negative      New Delhi: Fitch Ratings Monday downgraded India’s economic outlook to negative from stable, saying the country’s growth outlook could deteriorate if policy-making and governance do not improve.

The rating agency affirmed the economy’s long-term foreign- and local-currency issuer default ratings (IDRs) at ‘BBB-‘, the lowest investment grade.
Fitch said the outlook revision reflected heightened risks that India’s medium- to long-term growth potential will gradually deteriorate if further structural reforms were not hastened, including measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments. “India faces an awkward combination of slowing growth and still-elevated inflation. India also faces structural challenges surrounding its investment climate in the form of corruption and inadequate economic reforms,” Fitch said in a statement.
The “negative” outlook also reflected India’s limited progress on fiscal consolidation and, in particular, on reducing the central government deficit despite improvement in the financial health of state governments, it said.
In response, Finance Minister Pranab Mukherjee said Fitch had not taken note of recent structural reforms in the economy, including the strengthening of public finances. “The concerns expressed by Fitch on the economic growth potential, inflationary pressures, and weak public finances are based on earlier data. The Government has already taken note of such concerns,” Mukherjee said in a statement.
Fitch’s assessment came a week after Standard & Poor’s said India could become the first of the BRIC economies to lose its investment-grade status, citing slowing GDP growth and political roadblocks to economic policymaking as some of the factors that could lead to such an action.
Chief Economic Adviser Kaushik Basu saw a “herd mentality” of ratings agencies that was behind Fitch’s revision of India’s rating outlook.
He, however, found the whole statement of Fitch “pretty positive”. “There is a lot to be done and the next six months will be crucial,” Basu said, addressing journalists at the Foreign Correspondents’ Club in New Delhi.
In its statement, Fitch mentioned various positive factors about the economy, such as India’s strong credit fundamentals, diversified economy, high domestic savings, very low net external debt, high foreign exchange reserves, a fast growing pool of educated workers and innovative private service sector. “Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic environment and underpin confidence in the long-run growth potential of the Indian economy,” said Art Woo, a director at Fitch in a statement.
The rating agency forecast a GDP growth of 6.5 percent in the current fiscal, down from a previous projection of 7.5 percent.
Headline inflation will be at an average of 7.5 percent in 2012-13 which though being lower than the 8.8 percent rise in 2011-12, is higher that what Fitch had previously expected. This, the rating agency said, diminishes scope for monetary policy flexibility.

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COVID-19: Canadian Entrepreneurs less pessimistic in April

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BC entrepreneurs less pessimistic in April

THE monthly Business Barometer index for British Columbia rose 8.2 points reaching an index of 46, according to the latest survey results from the Canadian Federation of Independent Business (CFIB). The low index continues to reflect the significant stress and challenges entrepreneurs face as the navigate the COVID-19 pandemic. As British ColumbIa looks ahead in developing an economic relaunch strategy, a small business lens is necessary to streamline the transition.

“The month’s barometer results indicate small business owners are feeling less pessimistic than they did in March,” said Muriel Protzer, Senior Policy Analyst, BC and the North, on Wednesday. “While ongoing financial support from government is helping keep many businesses afloat, those receiving the benefits cannot rely on them indefinitely and some continue to fall through the cracks.”

Additional survey data from CFIB finds that 83 per cent of businesses believe it is critical they make more sales soon to survive and become less reliant on government subsides (13 per cent disagree, 4 per cent unsure).

“The province of BC will play an integral part in transitioning businesses and workers off of government support programs as we look to reopen parts of the economy,” added Protzer. “Early preparation for a recovery phase is important to ensure businesses and residents are provided clear messaging on guidelines.”

Furthermore, 75 per cent of BC businesses are confident they could reopen quickly if current restrictions were lifted (19 per cent disagree, 6 per cent unsure). As the province looks to develop its economic recovery strategy, small business owners see the following initiatives to take priority:

  • Keeping taxes on small businesses at an acceptable level (88 per cent agree);
  • Reduce red tape affecting businesses (65 per cent agree);
  • Introducing campaigns encouraging consumers to shop at local businesses (62 per cent agree);
  • Continued financial help (57 per cent agree); and
  • Ensuring the availability of personal protective equipment and mass testing to help people feel safe (54 per cent agree).

Measured on a scale between 0 and 100, an index level above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. An index level of between 65 and 75 means that the economy is growing at its potential. This month, it is notable to see no provincial index above 50 points.

To view the full report, visit http://www.cfib.ca/barometer  

The provincial numbers for April were: Quebec (32.1), Newfoundland (32.1), New Brunswick (39.2), PEI (43.1), Manitoba (45.0), Nova Scotia (45.3), BC (46.0), Alberta (46.7), Saskatchewan (50.8), Ontario (52.6).

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BC Hits Back At Alberta Over Wine Ban Saying It’s Unconstitutional Under Trade Rules

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VICTORIA – The B.C. government is challenging Alberta’s ban on B.C. wines through the Canadian Free Trade Agreement’s (CFTA) dispute settlement process.

According to a release, the province has notified the Alberta government that it is formally requesting consultations under the CFTA regarding Alberta’s embargo on the sale of B.C. wine, reported CBC News.

“Alberta’s actions threaten the livelihood of the families that have worked so hard to build B.C.’s world-class wine industry,” Minister of Jobs, Trade and Technology Bruce Ralston said in the release.

“These actions are inconsistent with Alberta’s obligations under the CFTA, and we will protect our reputation and the interests of British Columbians.”

At a press conference on Monday afternoon, Ralston said that Alberta’s ban is a “clear violation” of the CFTA.

“It’s our view that this dispute engages questions that should be considered by every jurisdiction in the federation,” he said. “We’re standing up for the B.C. wine business, B.C. industry, B.C. businesses and B.C. jobs.”

Ralston said the process allows for 120 days of consultation. If no decision is made, the matter then goes to a tribunal.

“I think that what’s good about this process is it’s a process of dialogue, it’s a process of engagement in discussion and consultation. So I’m optimistic that there will be fruitful discussion and there may be a resolution,” he said.

 

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Walmart In Talks To Buy Large Stake In Flipkart At $20-23 Billion Valuation

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NEW DELHI – American retailer Walmart Inc may end up taking a large stake in Flipkart Ltd at a price that could value India’s largest e-commerce firm between $20 billion and $23 billion, three people close to the development said. If it goes through the deal will pit Walmart against Amazon in India, mirroring the fight between the two companies in the US.

Walmart has expressed an interest in buying Flipkart Ltd but a buyout is unlikely to go through as a key Flipkart investor SoftBank Group is opposed to a sale, the three people added on condition of anonymity. “Softbank is not willing to cash out this early as they see themselves as a long term investor in Flipkart,” one of the three people mentioned above said.

The talks are in the early stages and the companies haven’t finalized the final details, the people said. Walmart is expected to invest fresh capital in Flipkart as well as buy shares from existing investors including Accel Partners and Naspers, they added.

Any deal is likely to make Walmart the largest shareholder in Flipkart, they said.

Walmart is not the only suitor pursuing Flipkart. Search giant Google has also offered to invest in the e-retailer at a valuation of $15-$16 billion, said a fourth person close to the development. Flipkart is also talking to other investors, this person said, without naming the investors.

Flipkart’s biggest backer and key board member Lee Fixel of Tiger Global was in Walmart’s headquarters last week helping put together the deal, this person said.

Flipkart and Walmart declined to comment. Google and Softbank did not respond to emails seeking comment.

The Economic Times newspaper reported on 31 January that Walmart is in talks to buy 15-20% of Flipkart.

In August 2017, Flipkart received a commitment of $1.4 billion in fresh capital from Japan’s Softbank Group valuing the company at about $14 billion.

Launched in 2007, Flipkart has thus far raised more than $6 billion.

The current valuation offered by Walmart includes Flipkart’s fashion businesses Myntra and Jabong, ebay India, as well as mobile payments firm PhonePe.

Walmart has eyed India’s retail sector for years but the existing foreign direct investment (FDI) policy does not allow the retailer to serve have a meaningful presence in the country.

It does operate in India’s B2B (business to business) retail and e-retail segment but has stayed away from direct retail. Walmart has stayed away from joining hands with any other Indian retailer since it’s partnership with Bharti Enterprises ended in 2013.

New potential investors are willing to value the company at a much higher price partly because Flipkart has shown that it is holding its own against Amazon, which has been unable to unseat its local rival as the country’s largest online retailer despite outspending Flipkart, say analysts. Additionally, Flipkart is seen as the one of the most attractive assets in the global Internet economy, benefitting from the long-term potential ascribed to India’s internet market by investors.

Walmart and Google held funding talks with Flipkart in late 2016 but those discussions didn’t lead to deals.

 

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