India

The Indian economy’s recovery is likely to be shaped like a K rather than a V, as rising inequality is poised to hit consumption and growth prospects, the country’s former central bank governor said, Bloomberg News reported. “An important consequence of the pandemic has been the sharpening of inequalities,” Duvvuri Subbarao said in an April 9 interview. “Growing inequalities are not just a moral issue.
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Retailers, restaurants and theatres in India’s richest state are reeling under the impact of harsh restrictions imposed last week by authorities scrambling to curb a resurgence in COVID-19 cases, Reuters reported. The western state of Maharashtra, home to India’s financial capital Mumbai, has been the worst hit in the pandemic, accounting for about a quarter of the country’s 13.5 million case load. Last week, the local government shut down restaurants, bars, gyms, theatres and non-essential stores in a blow to businesses that had barely recovered from the nationwide lockdown last year.
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The Insolvency and Bankruptcy Board of India has notified the pre-packaged insolvency resolution process regulations for micro, small and medium enterprises (MSMEs) on Friday, the Economic Times reported. The norms, effective from Friday, enable the operationalisation of the prepack process, according to a statement from the ministry of corporate affairs. The move comes on the back of the ordinance amending the Insolvency and Bankruptcy Code to establish the framework for prepacks, promulgated on Wednesday.
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Individual investors in India are rushing to buy corporate bonds from weaker borrowers, taking bigger risks to boost returns in a debt market dominated by institutional investors, Bloomberg News reported. Company note sales to retail investors have more than doubled from a year earlier to 67.2 billion rupees ($899 million) so far in 2021. A further 31 billion rupees of bonds that individuals can buy into are being marketed right now, and another 50 billion rupees of such debt is in the pipeline including a deal from India Grid Trust announced late last week.
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The Indian government does not expect a rush of insolvency cases from micro, small and medium enterprises (MSMEs) after it promulgated an ordinance to open a special fast track window for them, the Times of India reported. The ministry of corporate affairs — which will set the floor for initiating cases under “pre-packaged” insolvency — and the Insolvency & Bankruptcy Board of India (IBBI) are expected the notify the regulations for initiating insolvency resolution under the new scheme.
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India’s move to allow smaller firms to use a more efficient bankruptcy filing system opens the door for the broader adoption of a process that may help the country to tackle one the world’s worst bad debt problems, Bloomberg News reported. An executive order by the federal government on Sunday means that SMEs can now work out a resolution with creditors before they reach court. Market participants are pressuring authorities to allow larger companies to use this prepackaged system in order to speed up the process in India, where cases often languish for years.

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An Indian court on Tuesday said that China’s ByteDance must deposit around $11 million that federal authorities believe the company owes in an alleged case of tax evasion, a setback for the firm which wanted to unblock its bank accounts to pay salaries, Reuters reported. An Indian tax intelligence agency in mid-March ordered HSBC and Citibank in Mumbai to freeze accounts of ByteDance India as it probed some of the firm’s financial dealings. ByteDance challenged the move in court saying the freeze amounted to harassment and was done illegally.
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The Central Government has promulgated Insolvency and Bankruptcy Code (Amendment) Ordinance 2021 to allow pre-packaged insolvency process for MSMEs, the Economic Times of India reported. The Ordinance, in essence, has amended the Insolvency and Bankruptcy Code 2016 and allows the Central Government to notify such pre packaged process for defaults of not more than Rs 1 crore. The government had been looking to offer a pre-packaged resolution framework for stressed companies under the IBC.
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A record jump in coronavirus cases in India is leading the nation’s bond traders to pare bets that the central bank will shift to a tighter policy stance as early as this year, Bloomberg News reported. Shorter-maturity rupee debt rallied, with yields on the 5.22% 2025 bond and the 5.15% 2025 debt sliding 12 basis points to 5.47% and 5.59%, respectively. The rally was also aided by a government borrowing plan for the new fiscal first half, with issuances tilted toward longer-end bonds.
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