UNCTAD stated that FDI inflows dropped by 15 percent due to CoronaVirus outbreak
Context : The UN Conference on Trade and Development (UNCTAD) has issued a warning that global foreign direct investment (FDI) could drop by up to 15% on previous estimates due to the Coronavirus outbreak.
Highlights :
- The downward pressure on FDI will be -5% to -15%, as compared to previous forecasts that projects marginal growth in the FDI trend for 2020-2021.
- UNCTAD stated that the impact on FDI would be concentrated in the countries that are most severely hit by the Coronavirus outbreak. The economic impact of supply chain disruptions will affect investment prospects in other countries.
- It also projected a stable level of global FDI inflows in 2020-2021 with a potential increase of +5%, which is relatively marginal for FDI.
- UNCTAD highlighted that the top 5000 MNEs, which accounts for a significant share of global FDI, have shown downward revisions of 9% due to Covid-19. Also, the automotive industry with -44%, airlines with -42% and energy and basic materials industries with -13%. The developing country multinational enterprises (MNE) profit guidance has been revised downwards by 16%.
UNSC passes resolution to endorse US Taliban peace agreement
Context :
United Nations Security Council (UNSC) has unanimously adopted a United States’ resolution that supports a recent deal between the US and the Afghan Taliban, which is a rare endorsement of an agreement with a militant group. The US military has started to withdraw its troops per the agreement signed in the 29 February pact with the Taliban.
Highlights :
- In the resolution, UNSC has urged the Government of Afghanistan to advance the peace process by participating in intra-Afghan negotiations through a diverse and inclusive negotiating team composed of Afghan political and civil society leaders, including women.
- The United States is to end its longest-ever conflict and under the terms of a deal signed in Doha in February 2019.
- Under the pact, all foreign forces would quit Afghanistan within 14 months.
- It also will provide the Taliban to stick to their security commitments.
Attukal Pongala Festival
Context :
The annual “Attukal Pongala”, one of the largest all-women religious congregations began recently amid the Coronavirus threat.
Why in news :
- Tens of thousands of women offered Pongala at Attukal Bhagavathy Temple here on Monday under the grim shadow of Coronavirus and amid heightened disease surveillance by the government apparatus.
- Many devotees were seen sporting masks, ominous reminders of the outbreak which has assumed global proportions.
- News of the sixth Coronavirus case in Kerala in two days broke from Kochi even as devotees were engaged in last-minute preparations for the annual ritual, described as ‘Women’s Sabarimala’ and the largest assemblage of women.
Attukal Pongala Festival :
- Pongala is a ten-day- long festival of Attukal Bhagavathy Temple.
- The festival commences with the musical rendering of the story of the Goddess (Kannaki Charitam) during the “Kappu Kettu ceremony”.
- The story invokes the presence of Kodungallur Bhagavathy and the slaying of the Pandyan King. This festival commemorates the victory of Good over Evil, by the slaying of Pandyan King.
- The event of the Goddess annihilating the Pandyan King is accompanied by much sound and fury of the temple drums and “Vaykurava” by devotees, immediately followed by the lighting of the hearths for the preparation of the offering for the Goddess.
Pongala :
- Pongala, which means ‘to boil over’, is the ritual in which women prepare sweet payasam (a pudding made from rice, jaggery, coconut and plantains cooked together) and offer it to the Goddess or ‘Bhagavathy’.
- The pongala is cooked in pots – preferably earthen.
Impact of Coronavirus Outbreak
Context :
Stock markets in India crashed on 9th March, 2020 as Sensex and Nifty indices saw their biggest ever fall in absolute terms.
Perceived Economic Fallout From Coronavirus :
- Fall in economic activities globally: Falling Chinese exports, faster than expected pace of shrinking of the Japanese economy, increasing cases of Coronavirus outside China, and disruption of global supply chains, have contributed to the panic in the financial markets worldwide.
- Investment Outflow: Selling of securities by foreign institutional investors have contributed to the sharp selloff in Indian markets.
- A sell-off occurs when a large volume of securities are sold in a short period of time. This leads to decline in the price of the security.
- Foreign Institutional Investors (FIIs) refer to outside companies investing in the financial markets of India.
Fall in Global Crude Prices :
- Top crude oil producers Saudi Arabia and Russia have begun a price war. Saudi Arabia slashed its oil prices after it failed to convince Russia to support sharp crude oil production cuts.
- A three-year supply pact between members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia collapsed after Russia refused to support deeper oil cuts to cope with the substantial fall in demand caused by the impact of coronavirus on travel and economic activity.
- Immediate Impact
- In the Sensex pack, the Oil and Natural Gas Corporation Limited (ONGC) was the worst performer, losing over 16%.
- State-owned Oil Marketing Companies (OMCs) have reduced the prices of sensitive petroleum products such as petrol and diesel by 30 paise and 25 paise a litre respectively across major cities.
- Long-Term Impact
- The fall in the prices of crude oil goes well for the Indian economy as India imports more than 80% of its oil requirements.
- The savings on oil imports is estimated to be around US $30 billion in the Financial Year 2021 if there is no significant uptick in global demand. This will help in arresting the rising inflation in the country.
- However, according to some experts, very low prices imply less growth for emerging countries like India, thus impacting negatively.
Source : the hindu
Long Term Repo Operations(LTROs)
In News :
- Repo rate is the rate at which Banks borrow from RBI. Generally, these loans are for short durations up to 2 weeks.
- Also, loans with higher maturity period (here like 1 year and 3 year) will have higher interest rate compared to short term (repo) loans
- The LTRO is a tool under which the RBI provides one-year to three-year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral
- RBI has announced injection of Rs. 1 Lakh Crore into the system through LTRO auctions.
- Therefore, LTRO supplies Banking system with liquidity for their 1- to 3-year needs.
- LTRO operations are also intended to prevent short-term interest rates in the market from drifting a long way away from the policy rate (i.e. repo rate)
- The LTRO will also help bring down the yields for shorter-term securities (in the 1-3-year tenor) in the bond market.