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Indian Factories Woo Back Migrant Workers With Food, Air Tickets

A mass exodus of workers that followed India’s harsh lockdown is forcing businesses to review their labor policies as they try to lure the people back with incentives as the economy reopens.

While some companies are promising benefits such as free travel tickets, housing and food to draw workers to urban areas, others are managing by hiring new faces from nearby locations. Some are trying a mix of both.

“We have offered food and other incentives to woo them back to sites,” said V.V. Benugopal, country manager with Linfox Logistics India Ltd., a unit of Australia’s Linfox Group. The company is also skilling a new workforce to mitigate potential delays in return of the migrant labor and arranging buses for workers’ transportation, he said.

India tried to stop the migration of labor in the initial weeks of its stringent stay-at-home restrictions. However, the daily wage laborers started heading back to their rural homes after running out of food and cash in cities.

Disturbing scenes of workers and their families walking for miles, reminiscent of days after India’s partition of 1947, forced Prime Minister Narendra Modi to facilitate their return. Later, the nation’s administration allowed businesses to reopen after growth forecasts suggested the economy was heading for its worst performance in decades.

The result is a shortage of labor. It’s adding to challenges for companies and pushing up their labor costs as they try to match incentives that are being provided by the government back in their rural homes.

Counteroffers

“The shortage of labor has affected the construction projects which will slightly delay the completion,” said Rajan Bandelkar, president of the National Real Estate Development Council’s Maharashtra unit. The realty body is trying to bring back the workers, including by air, he said.

Finance Minister Nirmala Sitharaman in March announced free food, fuel and cash transfers to workers and farmers, in addition to providing jobs to the poor in rural areas, for three months. Modi last week extended the free food program until November.

Freebies from the government aren’t the only factor keeping workers from returning to their previous jobs in cities. By staying in their villages, they are saving big on rent, which makes a sizable dent on their earnings in urban centers.

In the absence of those benefits, they will eventually return to work, said Sudeep Sen, business head for industrial manufacturing and engineering at TeamLease Services Ltd., one of India’s largest staffing companies.

Easy-paying Jobs

For now, the efforts of companies to bring them back seem to be yielding some results. Indian Railways’ train services to various cities from Uttar Pradesh and Bihar — home to the bulk of migrant workers’ population — are running full, according to a report in the Times of India.

India’s jobless rate dropped to 11% in June after hovering above 23% in the previous two months, according to data from the Centre for Monitoring Indian Economy Pvt. That’s in part due to the return of some workers after factories reopened, and partly because of the government stepping up spending on its jobs program, the research firm’s Managing Director Mahesh Vyas wrote in Business Standard.

Workers get paid 202 rupees ($2.71) for a day’s labor under the rural jobs program and they are guaranteed at least 100 days of employment in a year. Modi’s government increased this year’s allocation for the scheme by 400 billion rupees.

“I had more than 500 migrant laborers working in various plants,” said M.K. Hamsa, founder of Southern Plywood Group company in the state of Kerala, one of Asia’s biggest plywood manufacturing hubs. “I am willing to offer food and other incentives for those wanting to return.”

Rising Costs

Protocols related to social distancing and higher spend on getting and retaining talent are worrying companies about the costs of doing business when consumption, which is the bedrock of the economy, has already taken a hit.

“Focus is also on hiring and training local talent available,” said TeamLease’s Sen. There’s an increase of as much as 10% in hiring costs, which would push up operating costs in the coming months. “Reset and restart came at an additional cost with facilitation of safety, social distancing preparation.”

The impact is so severe on some companies that they had to scale down their business plans.

“All migrant laborers left from our international ship repair facility and dry dock site,” said Jose V.J., director of finance at state-run Cochin Shipyard Ltd. “The delay has forced us to slash our capital expenditure plans by half.”

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World News

Amazon, Google Face Tough Rules in India’s E-Commerce Draft

India’s latest e-commerce policy draft includes steps that could help local startups and impose government oversight on how companies handle data.

The government has been working on the policy for at least two years amid calls to reduce the dominance of global tech giants like Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc.

Under rules laid out in a 15-page draft seen by Bloomberg, the government would appoint an e-commerce regulator to ensure the industry is competitive with broad access to information resources. The policy draft was prepared by the Ministry of Commerce’s Department for Promotion of Industry & Internal Trade.

The proposed rules would also mandate government access to online companies’ source codes and algorithms, which the ministry says would help ensure against “digitally induced biases” by competitors. The draft also talks of ascertaining whether e-commerce businesses have “explainable AI,” referring to the use of artificial intelligence.

India’s roaring digital economy, with half a billion users and growing, is witnessing pitched battles in everything from online retail and content streaming to messaging and digital payments. Global corporations lead in each of these segments, while local startups have sought help from a sympathetic government that recently banned dozens of apps backed by Chinese technology giants.

The ministry will offer the draft policy for stakeholder comments on a government website.

There’s a tendency among some of the leading companies to exercise control over most of the information repository, the draft said.

“It is in the interest of the Indian consumer and the local ecosystem that there are more service providers” and that “the network effects do not lead to creation of digital monopolies misusing their dominant market position,” it said.

For more on e-commerce in India:
TikTok Among 59 Chinese Apps India Bans on Security Fears
Amazon Will Show Made-in-China Labels for India as Tensions Rise
India Needs Policy Certainty to Woo Investors, U.S. Group Says

On the issue of where data is stored, the draft leaves open the question of which e-commerce platforms would have to keep information locally.

“Government, in consultation with relevant stakeholders, will define the categories of e-commerce that would require mirroring or localization,” the draft said.

Hosting data overseas has been a sticking point in previous drafts, which sparked criticism for being heavy-handed in helping local startups at the expense of others.

E-commerce companies will be required to make data available to the government within 72 hours, which could include information related to national security, taxation and law and order, it said.

The draft policy also said e-commerce platforms would be required to provide to consumers the details of sellers, including phone numbers, customer complaint contacts, email and addresses. For imported goods, the country of origin and value of work done in India should be clearly specified, the policy said.

Also, foreign e-commerce companies providing live streaming services that use payment tokens should be regulated to ensure that users route such transactions through formal and regulated payment channels, it said.

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Business

India Seeks to Halt $2.8 Billion of Power Gear Import From China

India will stop power equipment imports from China, power minister Raj Kumar Singh said, amid simmering border tensions between the two neighbors.

The South Asian nation has the capability to manufacture all kinds of electricity equipment, Singh said at a meeting with energy officials of states, encouraging them to promote local procurement. China accounted for 210 billion rupees ($2.8 billion) of the total 710 billion rupees of equipment for non-renewable power projects imported in the year ended March 2019, according to Singh. Shares of state-run Bharat Heavy ELectricals Ltd., the country’s largest power-equipment maker, surged as much as 5.3% after Singh’s comments.

India’s Prime Minister Narendra Modi is asking companies to look for Indian suppliers to spur economic recovery and create jobs after restrictions to contain the coronavirus halted businesses and disrupted global supply chains. The border tensions with China, India’s biggest source of imports, have accelerated those efforts.

“You have a country which transgresses into our territory, which kills our soldiers and yet we create jobs in that country and not in our country,” Singh said, in reference to deadly border skirmishes between the two countries last month. “This can’t happen.”

To check imports of renewable power equipment, the country plans tariff barriers instead of a complete ban on any country, Singh said. China accounts for about 80% of India’s solar module supplies.

Cyber threats are another reason why the country is choosing its suppliers carefully.

“Imports from other countries will be inspected for malware.” Singh said. “Power systems are sensitive systems and they’re vulnerable to cyber attacks.”

In October, a malware struck one of India’s nuclear power plants, infecting a computer network used for administrative functions, according to its operator Nuclear Power Corp. of India. A few months later the country introduced draft guidelines for operating power grids, asking operators to adopt cyber security measures.

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Economy

India bans TikTok, other Chinese apps amid border clashes

Indian TikTok users awoke Tuesday to a notice from the popular short-video app saying their data would be transferred to an Irish subsidiary, a response to India’s ban on dozens of Chinese apps amid a military standoff between the two countries.

The quick workaround showed the ban was largely symbolic since the apps can’t be automatically erased from devices where they are already downloaded, and is a response to a border clash with China where 20 Indian soldiers died earlier this month, digital experts said.

“They want to send a message. This is a decision based on a geopolitical situation,” said digital rights activist Nikhil Pahwa.

Indian protesters have been calling for a boycott of Chinese goods since the June 15 confrontation in the remote Karakoram mountain border region.

Late Monday, the government said that it was banning 59 Chinese-owned apps, including TikTok, which is operated by Chinese internet firm Bytedance. It cited privacy concerns that it said pose a threat to India’s sovereignty and security.

The banned apps include some that enable TikTok users to add visual effects and music to their posts, as well as dating apps, privacy apps and multiplayer games.

India’s information technology ministry issued a statement saying it had received reports that mobile apps were “stealing and surreptitiously transmitting users’ data.”

The compilation of such data, and its mining and profiling by elements hostile to India is “a matter of very deep and immediate concern which requires emergency measures,” the statement said.

TikTok’s countermove, shifting data to Ireland, shows how integrated the two economies have become. Chinese products are ubiquitous in India, from toys to smartphones to Made-in-China Hindu idols. Two-way trade grew from $3 billion in 2000 to $95 billion in 2018, according to Indian government data, with the balance strongly favoring China.

“There is too much of Chinese presence in the everyday life of the average Indian,” said Alka Acharya, professor of Chinese Studies at Jawaharlal Nehru University in New Delhi. The soldiers’ deaths meant the Indian government had to hit back, Acharya said.

The ban on Chinese apps, signed by India’s powerful Home Minister Amit Shah, asked phone companies to begin blocking the applications Tuesday, as top Army officers from India and China were set to meet for a third time to try to quell tensions and rein back on military build-ups in the disputed border area.

Supporters of the ban hailed it as a way to curtail China’s growing influence.

“They are earning from us and then bullying us,” 30-year-old Sonu Mishra said in New Delhi.

Others bemoaned the potential loss of jobs at the app companies’ Indian offices. Some slammed it as an encroachment on free speech.

TikTok “continues to comply with all data privacy and security requirements under Indian law and has not shared any information of our users in India with any foreign government, including the Chinese government,” the company’s India chief, Nikhil Gandhi, said in a statement.

This isn’t the first time TikTok has been banned in India — the Madras High Court in the south Indian state of Tamil Nadu banned it last year over hate speech concerns, but quickly vacated its order.

Chinese-owned apps have found a fast-growing market in India, with some companies creating India-specific apps that have exploded in popularity.

Prime Minister Narendra Modi’s government has used the country’s 500 million internet users — second only to China — as a lure in getting tech giants including Twitter to localize Indians’ data. It is expected to sponsor data localization legislation later this year.

Among the list of newly banned apps, Alibaba’s UC Browser, Meitu’s Beauty Plus camera app and Bigo’s Likee video editing app are among the top 100 most downloaded apps in India, according to app intelligence firm App Annie.

India is one of TikTok’s largest markets. As of April, 30 percent of TikTok’s 2 billion downloads were from India, according to app data analytics firm Sensor Tower.

Bytedance also operates the now-banned Helo social networking app, which was created for the Indian market and has over 50 million users.

Chinese foreign ministry spokesperson Zhao Lijian said China was very concerned about the Indian move and seeking more information. The Indian government has the responsibility to uphold the legitimate rights of foreign investors, while Chinese companies should abide by local laws, he said.

The Karakoram clash fanned already growing anti-Chinese sentiment amid the coronavirus pandemic, which emerged in China in December. India is the fourth worst affected, with nearly 570,000 cases and more than 16,000 deaths. In response to the crisis, a movement has emerged to promote India as an alternative to China for Western markets and to shun Chinese goods.

TikTok has sought to cultivate goodwill: In April it said on Twitter that it had donated 30 crore rupees (about $40 million) to PM Cares, a fund set up by Modi’s office to battle the coronavirus.

The antagonisms carry risks for India: A broader boycott could backfire if China were to retaliate by banning exports of raw materials used by India’s pharmaceutical industry. So far, it has not.

In the longer term, Chinese companies might avoid investing in India’s technology sector and Indian start-ups might be reluctant to accept Chinese investments for fear of repercussions, said Shaun Rein, managing director of market intelligence firm China Market Research Group.

“Chinese investors are going to become very wary of investing in India. They’ll be worried that they might invest billions of dollars into the country and either Indian consumers will boycott and protest against them, or the government will just ban them because they’re backed by Chinese,” Rein said.

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Business

China Shipments Stuck at India Ports Show Casualties of Standoff

Imports from China have been piling up at Indian ports pending government clearances, causing concern that a recent border standoff between the two nations could have an economic fallout that will disrupt supply chains.

From active pharmaceutical ingredients that go into the world’s most-consumed drugs to the innards of popular mobile phones, Indian companies purchase Chinese raw materials that feed their finished products. These consignments are now being delayed and firms aren’t sure why.

“Customs authorities have not been clearing consignments coming from China, and they haven’t been offering any reasons,” Dinesh Dua, chairman of India’s Pharmaceutical Export Promotion Council, said by phone. “It has been five days now. We have no source apart from China.”

Dua, who’s also chief executive officer of Nectar Lifesciences Ltd., said he has written to the ministries responsible for pharmaceuticals and trade to seek help as companies are spending about 350,000 rupees ($4,630) a day in demurrage charges. Similar concerns are being voiced by electronics manufacturers, along with anxiety about how they will run their factories, only recently reopened after India’s lockdown to contain the coronavirus.

“Five consignments of mine are stuck,” said Sudhir Hasija, chairman and founder of Karbonn Mobiles, which builds smartphones, chargers and set top boxes. “The government collected customs duty and GST on them. 100% of the inspections are done. Now I’m told they are waiting for release instructions, from whom I don’t know. I haven’t received any communication.”

Key Numbers:
  • India imports almost 70% of its bulk drugs and intermediates — the chemicals that make a finished drug work — from China
  • It buys 37% of electronic components, 45% of consumer electronics, and 44% of air conditioner and refrigerator parts from China
  • India has its largest trade deficit with China; imported about $69 billion worth of goods last year from China and exported $18 billion, according to data compiled by Bloomberg

Businesses worry that they may end up becoming the casualty of a brewing trade war between the Asian giants sparked off by a border clash that killed 20 Indian soldiers and left an undisclosed number of Chinese dead. India plans to impose stringent quality control measures and higher tariffs on imports from China, people with the knowledge of the matter have said. India on Monday banned 59 Chinese apps, citing threats to its sovereignty and security.

Stopping imports from China at domestic ports will lead to losses for those Indian businesses that placed orders before the border clashes, Nitin Gadkari, Indian minister for Micro Small and Medium Enterprises, told Quintillion Media on Sunday. Gadkari said his ministry is actively working with the finance and commerce ministries to resolve this issue.

Yogesh Baweja, a spokesman for the commerce ministry, declined to comment when called by Bloomberg News while Rajesh Malhotra, who represents India’s Finance Ministry, didn’t answer a call outside office hours in New Delhi on Monday.

At least six companies from across India have been affected by the delays, according to Daara Patel, secretary general of the Indian Drug Manufacturers Association that represents small- and medium-sized Indian pharmaceutical manufacturers. Firms are “quite anxious and concerned about the attitude of the clearing agencies across the country,” he said.

The Society of Indian Automobile Manufacturers warned in a statement that the congestion at ports could hurt manufacturers. Karbonn’s Hasija said freight forwarders are refusing to lift more material from China because they don’t have space to store the shipments.

Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, which represents companies such as Apple Inc. and Micromax Informatics Ltd., said the industry body is in talks with the government to resolve the situation.

“We have been assured that the government does not want any disruption in these trying times,” he said, “and all actions will be taken in the interest of the industry and nation.”

— With assistance by P R Sanjai, and Ari Altstedter

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World News

Goldman India CEO Tells Clients Liquidity is the ‘Biggest Theme’

Goldman Sachs Group Inc. is telling clients in India to fortify their balance sheets to prepare for the uncertainty brought by the coronavirus pandemic.

“Currently, liquidity is the biggest theme among Indian businesses, and we are advising our clients to raise capital,” Sonjoy Chatterjee, the bank’s chairman and chief executive officer for India, said in a phone interview.

The Wall Street bank has arranged some of India’s biggest equity offerings this year, according to data compiled by Bloomberg. The share sales include telecommunications carrier Bharti Airtel Ltd. as well as lender Kotak Mahindra Ltd., controlled by Asia’s richest banker Uday Kotak.

Some of those funds will be needed to outlast the inevitable downturn. The International Monetary Fund is forecasting that India’s economy will contract by 4.5% in the fiscal year through March 2021 as one of the world’s biggest and strictest lockdowns from the end of March takes its toll.

The longer-term question is how companies should think about investing for growth, when it returns.

The impact of the pandemic is pressuring India’s sprawling corporates to refine their priorities, Chatterjee said.

“Covid-19 is driving Indian conglomerate structures to optimize and monetize by identifying what is core and non-core,” he said.

In that light, Mukesh Ambani’s campaign to transform Reliance Industries Ltd. into a dominant player in e-commerce, with technical expertise from Facebook Inc. and $15.2 billion in external funding, arguably looks like the future.

“The biggest challenge is capital allocation, and hence, more than before, they may be willing to unlock value through partnerships,” he said.

The string of deals tied up by Ambani to sell stakes in Reliance’s digital unit accounts for almost 50% of global investments into telecom companies this year, according to data compiled by Bloomberg.

Private equity funds and strategic investors are keen to buy into India, specifically in sectors including consumer and technology, Chatterjee said.

A long-term shift is underway in the country toward emerging dominant “omnichannel” digital platforms, driving digital transactions and shifting consumer buying behavior online, he said.

“To emerge as the victor, technology companies will push to consolidate,” he said.

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Business

Millions of Workers Fled India’s Cities and Don’t Want to Return

From March through May, around 10 million migrant workers fled India’s megacities, afraid to be unemployed, hungry and far from family during the world’s biggest anti-Covid lockdown.

Now, as Asia’s third-largest economy slowly reopens, the effects of that massive relocation are rippling across the country. Urban industries don’t have enough workers to get back to capacity, and rural states worry that without the flow of remittances from the city, already poor families will be even worse off — and a bigger strain on state coffers.

Meanwhile, migrant workers aren’t expected to return to the cities as long as the virus is spreading and work is uncertain. States are rolling out stimulus programs, but India’s economy is hurtling for its first contraction in more than 40 years, and without enough jobs, a volatile political climate gets more so.

“This will be a huge economic shock, especially for households of short-term, cyclical migrants, who tend to come from vulnerable, poor and low-caste and tribal backgrounds,” said Varun Aggarwal, a founder of India Migration Now, a research and advocacy group based in Mumbai.

In the first 15 days of India’s lockdown, domestic remittances dropped by 90%, according to Rishi Gupta, chief executive officer of Mumbai-based Fino Paytech Ltd., which operates the country’s biggest payments bank.

By the end of May, remittances were back to around 1750 rupees ($23), about half the pre-Covid average. Gupta’s not sure how soon it’ll fully recover. “Migrants are in no hurry to come back,” Gupta said. “They’re saying that they’re not thinking of going back at all.”

Read More:
  • Anger Grows Against Modi Among Workers Hit Hardest by Lockdown
  • New Virus Hotspots Are Emerging in Rural Villages Across India
  • Modi, Migrants, Monsoon Make Rural India Top Consumer Equity Bet
  • ‘We Will Starve Here’: India’s Poor Flee Cities in Mass Exodus

If workers stay in their home states long term, policymakers will have more than remittances to worry about. If consumption falls and the new surplus of labor drives wages down, Agarwal said, “there will also be a second-order shock to the local economy. Overall, not looking good.”

India announced a $277 billion stimulus package in May and followed it up with a $7 billion program aimed at creating jobs for 125 days for migrants in villages across 116 districts. Separately, local authorities are also looking for solutions.

Officials in Bihar have identified 2,500 acres of land that could be made available to investors, said Sushil Modi, deputy chief minister of Bihar, a state in east India. “We can use this crisis as an opportunity to speed up reforms,” he said.

The investors haven’t materialized yet, and in the meanwhile, state governments are relying on the national cash-for-work program that guarantees 100 days worth of wages per household.

Skilled workers don’t want to do manual labor offered through the program, and even if they did, says Amitabh Kundu of RIS, many think of it as beneath their station. “There will be an increase in social tensions,” he predicts. “Caste may again start playing a role. It’s absolute chaos.”

For skilled workers, initiatives vary:

* Uttar Pradesh, which received 3.2 million people, is compiling lists of skilled workers who need employment and trying to place them with local manufacturing and real estate industry associations. So far, the government says, it’s placed 300,000 people with construction and real estate firms.

* Bihar has placed returners in state-run infrastructure projects and hired others to stitch uniforms and make furniture for government-run schools, even as they waited in quarantine centers, said Pratyay Amrit, head of the state’s disaster management department.

* The eastern state of Odisha announced an urban wage employment program aimed at putting as many as 450,000 day laborers to work through September. Some 25,000 people have been employed, so far, under the scheme, G. Mathivathanan, principal secretary for housing and urban development said.

Attracting Investments

It’s not clear any of this will be enough to make a dent, says Ravi Srivastava, professor at New Delhi-based Institute of Human Development, adding that the states don’t have much of a track record on economic development.

“It was the failure of these states to improve governance and put development plans in place that led to the out-migration in the first place,” he said.

But officials and workers’ rights advocates see opportunity. Uttar Pradesh has established liaisons to encourage companies from the U.S., Japan and South Korea to establish manufacturing in the state. There and in Madhya Pradesh and Rajasthan, the government has made labor laws more friendly to employers, making it easier to hire and fire workers.

Modi, the minister from Bihar, said the migration may also give workers–historically a disenfranchised group–new power, particularly as urban centers struggle. “The way industries treated workers during the lockdown — didn’t pay them, the living conditions were poor — now these industries will realize the value of this force,” Modi said.

“In the days to come, labor will emerge as a force that can’t be ignored anymore,” he added. “That’s the new normal. We will work out how to ensure dignity, rights to our people who are going to work in other states.”

Bihar is due for elections by November, a vote that could be an early test of the mass migration’s political consequences. The state is currently governed by a coalition that includes Prime Minister Narendra Modi’s Bharatiya Janata Party. Amitabh Kundu, a fellow at the Research and Information System for Developing Countries, a New Delhi-based government think-tank, said migrant workers are likely to be angry voters.

“Chief ministers are telling these migrants that they will not have to go back for work,” he said. “But their capacity to do something miraculous in next four to five months is doubtful. If they can retain even one-fourth of the migrants, I would call it a success.”

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Markets

India Gets Biggest GDP Downgrade by IMF as Lockdown Hurts

The International Monetary Fund’s forecast for India’s economy swung from expansion to contraction, marking the sharpest downgrade in projections of the world’s main economies.

The Washington-based lender now sees India’s gross domestic product declining 4.5% in the fiscal year through March 2021, compared with an April projection of 1.9% growth. The 6.4 percentage-point downgrade in the forecast is due to “a longer period of lockdown and slower recovery than anticipated in April,” the IMF said in an update of its World Economic Outlook report, released Wednesday in Washington.

India imposed one of the world’s biggest and strictest stay-at-home rules from the end of March to curb the coronavirus pandemic, easing some of the restrictions recently even though infections continue to surge.

The IMF’s projection for India’s first full-year contraction in more than four decade is still milder than those of some analysts. Goldman Sachs Group Inc. is forecasting a 5% decline this year, while Bloomberg Economics’ Abhishek Gupta is projecting a 10.6% plunge. The Asian Development Bank also earlier this month downgraded its growth outlook for India, estimating a 4% contraction compared with an expansion previously.

The IMF forecasts the $2.7 trillion economy will recover next year, growing at 6% — lower than April’s forecast of 7.4% expansion.

Weaker growth will also weigh on the government’s budget. The IMF is forecasting the combined fiscal shortfall of the federal government and states will reach 12.1% of GDP in the year through March 2021, up from 7.9% in the previous financial year. Overall debt is projected to rocket to 84% of GDP and then rise further to 85.7% next year.

— With assistance by Eric Martin

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Industries

AES Corp. To Sell Stake In Indian Coal-fired Power Plants; Backs FY20 Adj. EPS Outlook

AES Corp. (AES) said Tuesday that it has agreed to sell its entire equity interest in the 1,740 MW OPGC 1&2 coal-fired power plants in Odisha, India to Adani Power Limited. Through this sale, AES’ generation in MWh from coal will be reduced to 35 percent of total generation, from 45 percent.

“Today’s announcement is a very significant step toward achieving our ambitious short- and longer-term decarbonization goals. By continuing to sell and decommission coal plants, while building 2-3 GW of renewables per year, and creating and implementing new technologies, we are fulfilling AES’ mission to accelerate the transformation to a greener and more sustainable world,” said Andrés Gluski, AES President and Chief Executive Officer.

AES had previously said it plans to reduce its generation from coal to below 30 percent by the end of this year, and to less than 10 percent by the end of 2030.

AES owns a 49 percent equity interest in OPGC 1&2, while the Government of the State of Odisha owns the remaining 51 percent stake. This transaction is subject to customary approvals and the consent of the Government of the State of Odisha.

AES said it had previously assumed the sale of these power plants in its 2020 guidance and longer-term expectations.

Accordingly, the company reaffirmed its outlook for 2020 adjusted earnings per share of $1.32 to $1.42, its 2020 Parent Free Cash Flow expectation of $725 million to $775 million, and its expectation for average annual growth of 7 percent to 9 percent in adjusted earnings per share and Parent Free Cash Flow through 2022.

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Markets

India’s Adviser Sees V-Shaped Recovery If Virus Is Contained

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India’s top economic adviser said a V-shaped recovery for the economy is possible this year, provided a vaccine is found to contain the Covid-19 pandemic.

“The recovery will happen after that uncertainty from the health side is taken care of,” Krishnamurthy Subramanian, the chief economic adviser to the finance minister, said in an interview with Haslinda Amin at the Bloomberg Invest Global virtual conference. “If it so happens that in the latter half of the year we have the vaccine, then one can anticipate V-shape recovery starting in the second half.”

In the absence of a vaccine, the economic recovery will have to wait until next year, although that too is likely to be V-shaped given the experience after the Spanish flu of 1918, he said.

With a coronavirus vaccine still months or may be even years away, economists outside the government don’t see a sustained recovery anytime soon.

“We expect the economy to recover in the next fiscal year to 8.5%, which is largely due to base effect,” Dharmakirti Joshi, chief economist at Crisil Ltd., said. “Vaccine is not coming this year. Our assumption is it will only be available in mid of 2021.”

India’s manufacturing and services activity took a heavy knock in the quarter started April owing to a nationwide lockdown to stem the coronavirus pandemic. That’s put Asia’s third-largest economy on course for its first annual contraction in more than four decades this year, with some economists seeing a return to 8%-plus growth rates taking as long as a decade.

But Subramanian is confident that support measures unveiled by the government, in addition to a low-base effect, will help lift economic growth next year.

What Bloomberg’s Economists Say

“The extended lockdown, cratering production, still-rising Covid-19 cases, inadequate fiscal policy support and limited space for further conventional monetary easing mean the recession will be more pronounced than anticipated and a V-shaped recovery out of reach.”

— Abhishek Gupta, India economist

For the full report, click here

India’s government unveiled a 21 trillion-rupee ($276 billion) package to support the economy, including easing access to credit for small businesses and offering cheap loans to workers and farmers.

“Because of the measures we have taken on productivity, we do anticipate growth to be back actually to the high level of 7% and 8% for sure,” Subramanian said.

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