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Reserve Bank Leaves Lending Rates Unchanged, Industry Disappointed



CII director general Chandrajit BanerjeeNew Delhi/Mumbai: Indian industry Monday expressed disappointment over the Reserve Bank of India’s (RBI) decision to keep key lending rates unchanged to control inflation while the economy is facing a slow-down. “CII (Confederation of Indian Industry) and industry are disappointed by the monetary stance taken by the RBI in today’s (Monday’s) policy announcement,” CII director general Chandrajit Banerjee said, adding, “It needs to be understood that with a steadily declining GDP (gross domestic product) growth millions of livelihoods are under threat, and therefore a very inflation-centric policy measure appears to have missed the bigger picture.”

The re-purchase rate remains unchanged at eight percent, which automatically keeps the reverse re-purchase rate at seven percent. The re-purchase rate is the interest the central bank levies on short-term borrowings by commercial banks. The reverse re-purchase rate is the interest on short-term lending.
The RBI declared, however, that it was ready to provide relief in situations arising out of the on-going turbulence in the global economy. “Recognising that the global situation is turbulent, the Reserve Bank stands ready to use all available instruments and measures to respond rapidly and appropriately to any adverse developments,” the apex bank said in a statement.
The apex bank said that since the last rate cut, global macroeconomic indicators had deteriorated and that headline inflation numbers were far above comfort range.
The Federation of Indian Chambers of Commerce and Industry (FICCI) said a cut in key lending rates would have been timely as the capital-intensive mining and manufacturing sectors were slowing down. “A cut in the repo rate would have been very timely and may have provided some boost to already flagging growth”, said Rajiv Kumar, FICCI secretary general.
Recent data from the Central Statistics Office showed India’s industrial output grew marginally by 0.1 percent in April.
The stock markets will now have to depend on government action and a good monsoon to sustain upward trends, according to Dipen Shah, head of fundamental research at Kotak Securities. “From the market’s perspective, this is disappointing, and it will now have to wait for government action and the monsoon’s progress to see any sustained uptrend,” Shah said.
Simon Rubinsohn, chief economist at Royal Institution of Chartered Surveyors, said that the RBI’s statement about providing liquidity relief, as and when required, was an indication of a possible cut in the near future. “Our suspicion is that a further interest rate cut is likely over the coming months with the prospect of a stronger response from the RBI – if the headline inflation picture does begin to reflect the more benign core trend,” Rubinsohn said.
On sectoral basis, rate sensitive industries such as banks, realty and auto stocks were hit by the news on the Bombay Stock Exchange (BSE).
The bank index at the BSE fell 365.78 points. Realty sector stocks too took a hit with the sectoral index at BSE down 45.08 points at 1,577.78. Automobile index too fell by 58.75 points and stood at 9,155.05.
On the realty sector front, Sanjay Dutt, executive managing director, south Asia, for Cushman & Wakefield said that the outlook for the industry remained cautious. “Our outlook for the sector remains cautious, but still positive as there are transactions still taking place at a sustainable pace and volume,” Dutt said.
Meanwhile industrialist in Kolkata reacted sharply and said that the RBI’s reluctance to cut key lending rates may lead to a further slowdown in the economy.
“Certain sectors can slow down because of this, as negative sentiment persists,” A. Mahendran, managing director, Godrej Consumer Products, said in Kolkata.
Kolkata-based Emami Group’s chief executive officer N.H. Bhansali said “the bank’s move is certainly a disappointment”.
The country’s second largest car maker, Hyundai Motor said it was expecting a rate cut, boosting demand in the automobile sector, which was going through a tough time. “We have been expecting a rate cut. Auto industry has been going through a rough weather. Sentiments are negative. But the apex bank did not go ahead with the rate cut considering high inflation,” said R. Sethuraman, vice president, Hyundai Motor India.

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Canadian business News

COVID-19: Canadian Entrepreneurs less pessimistic in April



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  

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



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



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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