IAICC South Carolina Chapter Launched To Foster Economic Development Of US, India, Rest Of The World

The Governor of South Carolina, Henry McMaster declared March 24 as the “IAICC-South Carolina Chapter Day,” in a proclamation, at the inauguration of the IAICC South Carolina Chapter on March 24 at the Governor’s Mansion in Columbia, South Carolina.

Governor McMaster presented the proclamation to KV Kumar, President & CEO of IAICC at the inauguration and appreciated the work of IAICC. While speaking at the event, Governor McMaster welcomed IAICC to South Carolina and said his administration will work with IAICC and support its initiatives in the State.

He also said that South Carolina and India enjoy great relations, and the State has been playing a significant role in promoting India-US trade relations for so many years now. He added that relations between these two countries have continued to flourish even during the pandemic, and announced that South Carolina was the first State in the SE Region to establish an Office of the Trade Representative in New Delhi.

Welcoming the gathering, KV Kumar appreciated Governor McMaster’s efforts in the State and thanked him and the First Lady Peggy McMaster for graciously hosting the IAICC inauguration and the reception at the Governor’s Mansion. He also thanked the Indian Ambassador to the US, Mr. Taranjit Singh Sandhu, and the Consul General of India in Atlanta, Dr. Swati Kulkarni for their continued support to IAICC. Kumar said he missed the Ambassador at the event, and congratulated him for bringing several key initiatives to strengthen India-US relations. During her address,

Dr. Kulkarni praised Governor McMaster and Mr. Kumar for their work in India-US Relations. She commended IAICC’s role in enhancing the trade partnership between US and India, and said IAICC will play as a catalyst in bringing more business opportunities to South Carolina. She also presented a communique on the present status of India to Governor McMaster.

At the inauguration, Secretary of Commerce, Mr. Robert Hitt III, and IAICC officials signed an MoU. One of the objectives in the MoU stated that the signatories will establish and promote a new era of South Carolina – India Relations.

IAICC SE Regional Chairman, Dr. Narasimhulu Neelagaru also thanked Governor McMaster for his support and said he looked forward to working him and the State of South Carolina. At the event, Mr. Kumar introduced Ms. Bhavna Vasudeva, President of IAICC-SC Chapter.

Ms. Vasudeva delivered the vote and thanks and thanked Governor McMaster for hosting the event and other guests for their valued presence. IAICC Executive Committee members and officials Mr. Appen Menon, Mr. Achyut Allady, Dr. Anu Bhat, Mr. Kinesh Doshi, and Dr. Subrahmanya Bhat were also present and participated in the event.

Members of the Governor’s Cabinet, Ms. Jeanette Prenger, Chair of The Latino Coalition, Ms. Cici Rojas, President of The Latino Coalition, and other local business leaders also attended the event.

India Now Holds World Record For Fastest Road Construction

Union minister Nitin Gadkari said on Friday that India holds the world record for fastest road construction. “We made three world records in March. India now holds world record for fastest road construction. We made it to Guinness World Records by building a 2.5 km 4-lane concrete road within 24 hours. We also built 1-lane 25-km bitumen Solapur-Bijapur road within 24 hours,” the minister said, reported ANI.

In February, Patel Infrastructure Limited, an contractor of National Highway Authority of India (NHAI) created a world record by laying the highest quantity of concrete on a four-lane highway in 24 hours. The record was set for laying of Pavement Quality Concrete (PQC) for a four-lane highway of 2,580 meters length within 24 hours. Starting at 8 am on 1 February, 2021, they finished the job, totalling 2,580 meters X 4 lanes i.e. approximately 10.32 lane kilometres by 8 am next morning. With a width of 18.75 meters, as much an area as 48,711 square meters of concrete was laid for the expressway in 24 hours. The highest quantity of concrete laid in 24 hours – 14,613 cubic meter was achieved. It was part of the greenfield Delhi-Vadodara-Mumbai 8-lane Expressway project.

Another NHAI contractor completed single lane of the four-lane stretch of 25.54 km being developed between Solapur-Vijapur (NH 52) in 18 hours. Hyderabad-based construction company IJM India carried out the construction work, according to media reports. “About 500 contractual workers worked hard for the project,” Gadkari said earlier.

The ministry of road transport and highways has constructed 13,394 km of highways in fiscal year 2020-21. Gadkari said that the pace of highways construction in the country has touched a record 37 km per day in financial year 2020-21.

“Tremendous progress has been achieved in building national highways across the country… These achievements are unprecedented and have no parallel in any other country in the world,” the minister mentioned. The achievement was remarkable as it was achieved despite constraints posed by the COVID-19 pandemic, he further added.

“Cumulative cost of ongoing project works has increased by 54 per cent at the end of the financial year 2020-21, compared to the financial year 2019-20 (as on March 31),” the minister said.

Strengthening US Dollar Leads To Rupee Losing In Value

A strengthening US dollar as well as rising bond yields depreciated the Indian rupee to a month’s low level. The rupee closed at 73.38 per dollar, down from 72.51 on Friday. The broad strength in the dollar has hit almost all emerging market currencies, while the India rupee looks to be hit the most, as confluence of internal factors exaggerated the extreme move in the Indian currency, said Madhavi Arora, Lead Economist, Emkay Global.

She added that in all likelihood, the rupee will start following suit of its emerging market peers by early April. “We anyway believe policymakers are getting more tolerant about the idea of a structurally weaker rupee in the medium term and CY21 will see rupee being in the middle of the EMFX pack and not an outlier on either side on spot returns,” she said. (IANS)

Investments made by non-resident Indians (NRIs) on a non-repatriation basis will not be considered for calculation of indirect foreign investment. The Department for Promotion of Internal Policy and Trade (DPIIT) under the Ministry of Commerce and Industry has reviewed the policy on downstream investments made by non-resident Indians (NRIs).

This means an addition to the Consolidated FDI Policy Circular 2020 effective from October 15, 2020 which is amended from time to time. It has been clarified that investments made by NRIs on non-repatriation basis under Schedule IV of the Foreign Exchange Management (Non-debt instruments) Rules 2019 are deemed to be domestic investments at par with investments by residents.

“Accordingly, an investment made by an Indian entity which is owned and controlled by NRIs on a non-repatriation basis shall not be considered for calculation of indirect foreign investment,” DPIIT said in a circular.

Meanwhile, a mega US infrastructure creation program along with likely retention of key lending rates and an accommodative stance by the Reserve Bank are expected to boost the rupee’s prospects during the upcoming week.

Accordingly, US President Joe Biden recently announced a ‘$2 trillion plus job plan’, including $621 billion to rebuild infrastructure. If passed by the US Congress, the plan will add pressure on the dollar against all the EM currencies including the rupee.

“Another US stimulus may keep equities buoyant and the rupee strong,” Sajal Gupta, Head, Forex and Rates at Edelweiss Securities told IANS. “Expect the rupee to trade between 72.90 to 73.60 during next week.”

“The last trade week was very volatile for the forex market, especially on speculating trading ahead of Biden’s additional stimulus,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.

“Biden announced his long-awaited $2 trillion-plus job plan, including $621 billion to rebuild infrastructure. This new package would certainly be a big positive for the US economy if passed by Congress.”

Furthermore, Gupta cited that some profit-booking has led to a fall in dollar gains. “For next week, we expect USDINR spot to trade in between 72.50-73.50.” Besides, the Reserve Bank’s MPC is expected to retain key lending rates and an accommodative stance during the first monetary policy review of 2021-22.

“Next week, market participants will be keeping an eye on the RBI policy statement; expectation is that the central bank could keep rates unchanged and wait for some more time before taking any action to spur growth,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“The RBI is likely to continue with the accommodative monetary policy stance and wait for an opportune time to announce monetary action with a view to ensure the best possible outcome in terms of pushing growth without sacrificing the main objective of containing inflation.”

On the other hand, rising Covid cases will add pressure on the rupee. Lately, a new wave of Covid-19 infections has hit several states. This comes at a time when India is trying to ramp up the vaccination drive.

“RBI’s interventions in currency markets and spread of virus and pace of inoculations and global risk appetite will determine fate of the currency this week,” said Devarsh Vakil- Deputy Head of Retail Research at HDFC Securities.

“We expect it to gradually depreciate compared to greenback over the next few weeks.” The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit. (IANS)

US Retaliates Against India’s Equalization Levy

The United States Trade Representative has announced initiation of investigation against the taxation on digital services adopted or under consideration by countries including the equalization levy applied by India. The other counties under investigation included Italy, Turkey, UK, Spain and Austria.

A statement from the office of the USTR said that in January it was found that digital service taxes (DST) adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom were subject to action under Section 301 because they discriminated against US digital companies, were inconsistent with the principles of international taxation, and burdened US companies.

USTR is proceeding with the public notice and comment process on possible trade actions to preserve procedural options before the conclusion of the statutory one-year time period for completing the investigations.

“The United States is committed to working with its trading partners to resolve its concerns with digital services taxes, and to addressing broader issues of international taxation,” said Ambassador Katherine Tai.

“The United States remains committed to reaching an international consensus through the OECD process on international tax issues. However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.”

Among the proposed actions, the Joe Biden administration has proposed to impose retaliatory tariffs up to 25 per cent on around 40 Indian products including shrimps, basmati rice, gold and silver items.

The Government of India will examine the proposed action with the stakeholders concerned and would take suitable measures keeping its trade and commercial interest of the country and overall interest of its people, according to official sources.

With regard to India, the investigation was targeted on the 2 per cent equalisation levy (EL)levied by India on e-commerce supply of services. The investigation included whether the EL discriminated against US companies, was applied retrospectively, and diverged from U.S or international tax norms due to its applicability on entities not resident in India.

The U.S. requested for bilateral consultations in this matter, and India submitted its comments to the USTR on 15 July 2020, participated in the bilateral consultation held on 5 Nov 2020.

India made a strong case that the levy is not discriminatory and only seeks to ensure a level-playing field with respect to e-commerce activities undertaken by entities with permanent establishment in India.

It also clarified that the equalisation levy was applied only prospectively, and has no extra-territorial application, since it is based on sales occurring in the territory of India through digital means.

India based e-commerce operators are already subject to taxes in India for revenue generated from Indian market. However, in the absence of the levy, non-resident e-commerce operators, not having any permanent establishment in India but with significant economic presence, are not required to pay taxes in respect of the consideration received in the e-commerce supply or services made in the Indian market. (IANS)

Biden Unveils $2 Trillion Modern Sustainable Infrastructure Plans

President Biden has unveiled a sprawling, ambitious infrastructure proposal that, if enacted, would overhaul how Americans get from Point A to Point B, how their electricity is generated, the speed of their Internet connections, the quality of their water and the physical makeup of their children’s schools. Under the Plan, Biden aims to tackle some of the nation’s most pressing problems – from climate change to decaying water systems to the nation’s crumbling infrastructure.

The measure, called the American Jobs Plan, includes big infrastructure fixes that both major parties — as well as a majority of Americans — consistently say they want to see, including upgrades to bridges, broadband and buildings.

Biden’s plan would devote more than $600 billion to rebuilding the United States’ infrastructure, such as its ports, railways, bridges and highways; about $300 billion to support domestic manufacturing; and more than $200 billion in housing infrastructure. Other major measures include at least $100 billion for a variety of priorities, including creating national broadband system, modernizing the electric power grid, upgrading school and educational facilities, investing in research and development projects, and ensuring America’s drinking water is safe.

Biden’s plan includes measures unrelated to either infrastructure or the climate, such as an approximately $400 billion investment in home-based care for the elderly and disabled that was a top demand of some union groups. Additionally, the plan calls for passage of the Protecting the Right to Organize Act, or PRO Act, a bill aimed at significantly strengthening workers’ rights to organize.

Biden’s plan lays out a large investment in clean-energy and environmental priorities. The programs include $100 billion to bolster the country’s electricity grid and phase out fossil fuels, in part by extending a production tax credit for 10 years that supports renewable energy.

The mega plan has met a chorus of opposition, with Republicans panning it as a partisan wish list, some liberals challenging it as not sufficient to combat climate change, and business groups rejecting its proposed tax hikes.

In a speech Tuesday afternoon at the United Brotherhood of Carpenters and Joiners of America Pittsburgh Training Center, Biden pitched his plan as a transformative effort to change the nation’s economy. He called it the most significant federal jobs investment since the World War II era, saying it would put hundreds of thousands of electricians and laborers to work laying miles of electrical grid and capping hundreds of oil wells. He said the plan’s research funding would make the United States the global leader in emerging sectors such as battery technology, biotechnology and clean energy.

“This is not a plan that tinkers around the edges. It is a once-in-a-generation investment in America, unlike anything we’ve done since we built the interstate highway system and the space race,” in the 1950s and 1960s, Biden said. “We have to move now. I’m convinced that if we act now in 50 years people will look back and say, ‘This was the moment America won the future.’ ”

The administration’s promises are vast and may prove difficult to enact, even if the effort can get through Democrats’ extremely narrow majority in Congress. The immediate rejection of the plan by leading Republicans suggested that the path toward a bipartisan compromise on infrastructure would be very difficult to achieve, leaving the White House’s next move unclear.

The White House said the plan would enable drivers across the country to find electric charging stations for their vehicles on the road. Lead pipes throughout the country would be replaced. All Americans would have access to high-speed Internet connections by the end of the decade.

Biden released the spending plan with a slew of tax hikes on businesses, which could be the most contentious part of his proposal. The White House said the proposal would pay for itself over 15 years because many of the tax increases would remain even as the spending proposals only last for eight years. Biden said on Wednesday that the plan would reduce the federal debt “over the long haul.” Legislation in Washington is typically evaluated on a 10-year budget window, and it is unclear precisely what the plan would cost over a decade.

On the tax side, Biden’s plan includes raising the corporate tax rate from 21% to 28%; increasing the global minimum tax paid from about 13% to 21%, ending federal tax breaks for fossil fuel companies, and increasing tax enforcement against corporations. The White House is also proposing as much as $400 billion in clean energy credits for firms, though the cost of the tax credit provisions is not detailed in what the administration has released.

The tax measures help Biden address concerns that his spending package would add to an already large federal deficit, but they provoked a torrent of opposition from GOP lawmakers and business groups. Congressional Republicans have also panned the tax increases as damaging to U.S. investment and competitiveness, and they have pledged to oppose them. Senate Minority Leader Mitch McConnell, R-Ky., denounced the measure. John Barrasso, R-Wyo., chair of the Senate Republican Conference, said it amounted to an “out-of-control socialist spending spree” that reflected “the left’s radical agenda.”

“There is virtually no path to getting Republican votes. It’s too big, too expensive, and chock full of tax increases that are nonstarters among Republicans,” said Brian Riedl, a former aide to Sen. Rob Portman, R-Ohio, who works at the Manhattan Institute, a libertarian-leaning think tank.

Among Democrats, the plan has been met by objections from lawmakers in the Congressional Progressive Caucus, who say it is insufficient to meet the scale of the threat posed by climate change. Centrist Democrats are balking at another large spending package. Three House Democrats have vowed to oppose the package because it would not reverse a cap on state and local tax deductions from Trump’s tax law.

And a number of priorities critical to congressional Democrats, including an extension on the expanded child credit, a major expansion in health insurance coverage, subsidies for child care and free access to community colleges, are being left to a second White House package to be unveiled in coming weeks.

The U.S. Chamber of Commerce criticized the proposed tax hikes in a statement on Wednesday, arguing that while infrastructure spending is necessary, “the users who benefit from the investment” should pay for it.

Biden, who has pledged to make the power sector carbon-free by 2035, will also ask Congress to adopt an “Energy Efficiency and Clean Electricity Standard” that would set targets to cut how much coal- and gas-fired electricity power companies use.

Investing in electric vehicles ranks among Biden’s top climate-spending priorities, with $174 billion designated for that market alone. White House officials predicted that the federal incentives, paired with spending by state and local governments and private companies, would establish a national network of 500,000 charging stations by 2030, while spurring a domestic supply chain that will support union jobs and American-built cars and trucks. The plan will also replace 50,000 diesel transit vehicles while switching about 20% of school buses to electric engines.

The president will also ask Congress to provide $45 billion to replace lead pipes across the country, while reducing lead exposure in 400,000 schools and child-care facilities. Some $56 billion would go to grants and low-interest loans, for state, local and tribal governments to upgrade aging water systems. Another $10 billion would be spent on addressing polyfluoroalkyl and perfluoroalkyl (PFAS) chemicals that have contaminated drinking-water supplies across the country.

The proposal includes more than $200 billion for housing programs, including $40 billion in public housing, although housing advocates say they worry that may be insufficient to meet the nation’s decaying housing stock.

On its own terms, the proposal would not resolve all of the nation’s infrastructure woes, which have been growing for decades. The plan, for example, cites a trillion-dollar backlog of road, bridge, rail and transit repairs, but it proposes less than that.

The Biden plan, if it passes Congress, would spur far-reaching changes that could begin shifting the trajectory of the nation’s transportation system. It calls for a doubling of federal funding for public transit. Biden’s plan would also modernize 20,000 miles of streets and highways out of the total of 173,000 miles Biden says are in poor condition.

Democrats have a slim House majority and control the Senate only because of Vice President Harris’ tiebreaking vote. With Republicans already voicing concerns about the proposal’s cost and corporate tax hikes, Democrats may once again have to force major legislation through complicated Senate procedures that could drastically narrow its scope. The party would also have to stick together on a historically expensive effort that has some moderates balking, while some high-profile progressives call for even higher spending levels.

What Biden is introducing in Pittsburgh on Wednesday is the first part of a larger plan to overhaul the economy. Additional proposals for spending on education, child care and other social programs the administration calls “human infrastructure” are expected in the coming weeks.

India’s GDP Growth Will Be 10% In 2022, World Bank Says

The World Bank has scaled up its projections for India’s economic growth by a massive 4.7 percentage points to 10.1 per cent for 2021-22 due to strong rebound in private consumption and investment growth. The Bank had pegged the GDP growth at 5.4 per cent for the country in its January report.

“India, which comprises almost 80 percent of the region’s (south Asia) GDP, had a substantial revision to growth of 4.7 percentage points since January 2021, due to a strong rebound in private consumption and investment growth in the second and third quarters (July-December, 2020) of FY21,” the Bank said in a report, titled South Asia Economic Focus Spring 2021-South Asia Vaccinates.

Considering the uncertainty caused by Covid cases in 2021-22, the Bank also gave a range of economic growth for India, at 7.5 per cent to 12.5 per cent, for FY22. “Given the significant uncertainty pertaining to both epidemiological and policy developments, real GDP growth for FY’22 can range from 7.5 to 12.5 percent, depending on how the ongoing vaccination campaign proceeds, whether new restrictions to mobility are required, and how quickly the world economy

Private consumption and public investment will see the Indian economy likely growing by 10.1% in 2021-22 (FY22), the World Bank said, although, in a sign of all-around uncertainty caused by the Covid-19 pandemic, it said India’s economic growth in FY22 would be in the broad range from 7.5% to 12.5%.

The 10.1% is 4.7 percentage points higher than the World Bank’s previous estimate for India’s growth in 2021, and reflects the pace of the country’s recovery. However the Bank also expects the Indian economy to contract by 8.5% in FY21, higher than the government’s own estimate of 8%. The International Monetary Fund (IMF) has projected India’s economy will grow by 11.5% over 2021 and 6.8% over 2022, painting a rosier picture.

“Given the significant uncertainty pertaining to both epidemiological and policy developments, real GDP (gross domestic product) growth for FY21/22 can range from 7.5 to 12.5%, depending on how the ongoing vaccination campaign proceeds, whether new restrictions to mobility are required, and how quickly the world economy recovers,” the World Bank said in a report titled “South Asia Vaccinates”.

Going forward, the report said, “the main risks to the outlook include the materialisation of financial sector risks, that could compromise a recovery in private investment, and new waves of Covid-19 infections.” It saw growth in the country at 6-7% in the medium term.

The Indian economy was already slowing ahead of the pandemic, but the disease and mitigation measures such as lockdowns deepened the crisis several times over, contracting output and shrinking spending and investments.

“In response to the Covid-19 outbreak, the authorities implemented a nationwide lockdown, which brought economic activity to a near standstill between April and June 2020 (Q1FY21),” the report said. Aviation and tourism, hospitality, trade, and construction, were the worst hit as well and industrial activity, overall, was also deeply disrupted. Agriculture, however, was mostly unaffected, it noted.

Acknowledging it is “not normal” to cite growth forecast in a range of numbers, World Bank’s Chief Economist for South Asia, Hans Timmer, told reporters: “We are in an unprecedented circumstance. Not just the hits (were) unprecedented, but also the character of the crisis was as we had never seen before.”

He added that certain sectors of the economy hat were hit were normally much more resilient, especially the services sector, domestic services. “It’s the informal sector. And as a result, we can’t rely really on the past on how this recovery will shape up.” The report forecast growth for the South Asia region at 7.2% in 2021 and 4.4% in 2022.

Timmer said the second wave of infections in India “does not mean we go back to the situation a year ago.” “The next few months will be marked by the speed of the vaccine roll-out and the optimism it may bring to consumer spending and investments,” he added. The report estimated “general government deficit to remain above 10%” till the end of FY22, numbers that are in sync with India’s estimate of fiscal deficit.

Global Currency Reserves of US Dollar Sinks To Lowest Since 1995

The US Dollar’s share of global currency reserves dropped in the fourth quarter to around 59%, the lowest in 25 years, according to International Monetary Fund data. The slide came in a quarter when a gauge of the greenback fell the most since 2010, and amid questions about how long the dollar can maintain its status as the pre-eminent reserve currency. The Chinese renminbi is transforming into a force to be reckoned with in currency markets, with more yuan changing hands than ever before in London, the world’s leading foreign-exchange center.

“This is a slow burn theme, but we are of the view that we’re eventually headed into a ‘multiple reserve currency’ framework over time,” Bipan Rai, a strategist at CIBC, said via email. In the fourth quarter, the euro’s share of official foreign-exchange reserves climbed to 21.2% from 20.5%, while the yuan’s rose to almost 2.3% from 2.1%. The renminbi accounted for 1.94% in the final three months of 2019.

For Marc Chandler, chief market strategist at Bannockburn Global, the drop in the dollar’s share of global reserves is temporary and was driven by its slide against most currencies in the fourth quarter. He’s focusing on data that shows dollar holdings among central banks climbed to $7 trillion, a record, noting that the percentage changes are “distorted” by short-term valuation changes.

“The 59% is a statistical noise generated by a combination of valuation and material changes” in demand for the euro in the fourth quarter, he said in an email. “The dollar’s recovery in Q1 21 will reverse the valuation adjustment and will see the dollar share of reserves increase.”
With its rebound this year, the dollar is heading for its best quarterly performance in a year, up by 2.8%. The greenback is still the most dominant currency used, with data from the Bank for International Settlements showing it’s on one side of 88% of all trades.

IMF, World Bank Must Urgently Help Finance Developing Countries

(IPS) – COVID-19 has set back the uneven progress of recent decades, directly causing more than two million deaths. The slowdown, due to the pandemic and policy responses, has pushed hundreds of millions more into poverty, hunger and worse, also deepening many inequalities.

The outlook for developing countries is grim, with output losses of 5.7% in 2020. Compared to pre-pandemic trends, the expected 8.1% loss by end-2021 will be much worse than advanced countries dropping 4.7%.

COVID-19 has further set back progress towards the Sustainable Development Goals (SDGs). As progress was largely ‘not on track’ even before the pandemic, developing countries will need much support to mitigate the new setbacks, let alone get back on track.The extremely poor, defined by the World Bank as those with incomes under US$1.90/day, increased by 119–124 million in 2020, and are expected to rise by another 143-163 million in 2021.Fiscal response constrainedGlobal fiscal efforts of close to US$14tn, plus low interest rates, liquidity injections and asset purchases by central banks, have helped. Nonetheless, the world economy will lose over US$22 trillion during 2020–2025 due to the pandemic.

Government responses have been much influenced by access to finance. Developed countries have accounted for four-fifths of total pandemic fiscal responses costing US$14tn. Rich countries have deployed the equivalent of a fifth of national income for fiscal efforts.
Meanwhile, emerging market economies spent only 5%, and low-income countries (LICs) a paltry 1.3% by mid-2020. In 2020, increased spending, despite reduced revenue, raised fiscal deficits of emerging market and middle-income countries (MICs) to 10.3%, and of LICs to 5.7%.

Government revenue has fallen due to lower output, commodity prices and longstanding Bank advice to cut taxes. Worse, they already face heavy debt burdens and onerous borrowing costs. Meanwhile, private finance dropped US$700bn in 2020.
Developing countries lost portfolio outflows of US$103bn in the first five months. Foreign direct investment (FDI) flows to emerging and developing countries also fell 30–45% in 2020. Meanwhile, bilateral donors cut aid commitments by 36% between 2019 and 2020.
Meanwhile, the liquidity support, debt relief and finance available are woefully inadequate. These constrain LICs’ fiscal efforts, with many even cutting spending, worsening medium-term recovery prospects!Debt burdens

In 2019, the International Monetary Fund (IMF) assessed half the LICs as being at high risk of, or already in debt distress – more than double the 2013 share. Debt in LICs rose to 65% of GDP in 2019 from 47% in 2010.Thus, LICs began the pandemic with more debt relative to government revenue, larger deficits and higher borrowing costs than high-income countries. And now, greater fiscal deficits of US$2–3tn projected for 2021 imply more debt.

Debt composition has become riskier with more commercial borrowing, particularly with foreign currency bond issues far outpacing other financing sources, especially official development assistance (ODA) and multilateral lending.More than half of LIC government debt is non-concessional, worsening its implications. External debt maturity periods have also decreased. Also, interest payments cost more than 12% of government revenue in 2018, compared to under 7% in 2010.

Riskier financial flow developing economies have increasingly had to borrow on commercial terms in transnational financial markets as international public finance flows and access to concessional resources have declined.Low interest rates, due to unconventional monetary policies in developed countries, encouraged borrowing by developing countries, especially by upper MICs. But despite generally low interest rates internationally, LIC external debt rates have been rising.

Overall ODA flows – net of repayments of principal – from OECD countries fell in 2017 and 2018. Such flows have long fallen short of the financing needs of Agenda 2030 for the SDGs. Instead of giving 0.7% of their national income as ODA to developing countries, as long promised, actual ODA disbursed has yet to even reach half this level.Although total financial resource flows (ODA, FDI, remittances) to least developed countries (LDCs) increased slightly, ODA remained well short of their needs, falling from 9.4% of LDCs’ GNI in 2003 to 4.3% in 2018. Meanwhile, FDI to LDCs dropped from 4.1% of their GNI in 2003 to 2.3% in 2018.

There has also been a shift away from ‘traditional’ creditors, including multilateral financial institutions and rich country Paris Club members. Some donor governments increasingly use aid to promote private business interests. ‘Blended finance’ was supposed to turn billions of aid dollars into trillions in development finance.

But the private finance actually mobilised has been modest, about US$20bn a year – well below the urgent spending needs of LICs and MICs, and less than a quarter of ODA in 2017. Such changes have further reduced recipient government policy discretion.Inadequate support
The 2020 IMF cancellation of US$213.5m in debt service payments due from 25 eligible LICs was welcome. But the G20 debt service suspension initiative (DSSI) was grossly inadequate, merely kicking the can down the road. It did not cancel any debt, with interest continuing to accrue during the all-too-brief suspension period.

The G20 initiative hardly addressed urgent needs, while private creditors refused to cooperate. Only meant for LICs, it did not address problems facing MICs. Many MICs also face huge debt, with upper MICs alone having US$2.0–2.3tn in 2020–2021.World Bank President David Malpass has expressed concerns that any change to normal debt servicing would negatively impact the Bank’s standing in financial markets, where it issues bonds to finance loans to MICs.

The Bank Group has made available US$160bn for the period April 2020 to June 2021, but moved too slowly with its Pandemic Emergency Financing Facility (PEF). By the time it paid out US$196m, the amount was deemed too small and contagion had spread.Special Drawing RightsIssuing US$650bn worth of new special drawing rights (SDRs) will augment the IMF’s US$1tn lending capacity, already inadequate before the pandemic. But US$650bn in SDRs is only half the new SDR1tn (US$1.37tn) The Financial Times considers necessary given the scale of the problem.

To help, rich countries could transfer unused SDRs to IMF special funds for LICs, such as the Poverty Reduction and Growth Trust (PRGT) and the Catastrophe Containment and Relief Trust (CCRT), or for development finance.Similar arrangements can be made for the Bank. A World Bank version of the IMF’s CCRT could ensure uninterrupted debt servicing while providing relief to countries in need. Investors in Bank bonds would appreciate the distinction.

Hence, issuing SDRs and making other institutional reforms at the Spring meetings in April could enable much more Fund and Bank financial intermediation. These can greatly help finance urgently needed pandemic relief, recovery and reforms in developing countries.

Ship Stuck In Egypt’s Suez Canal Rescued, Reopening Waterway Trade

The colossal cargo ship that became stuck on the banks of Egypt’s Suez Canal last week, blocking traffic through the crucial waterway, was finally freed from the shoreline by engineers on Monday afternoon.

The so-called Ever Given, a 224,000-ton, 1,300-foot-long container ship registered in Panama, was “successfully refloated” and its course straightened at around 3 p.m. local time, after engineers spent days trying to pull the fully laden vessel with tugboats, according to statements from Egypt’s Suez Canal Authority and stakeholders.

Some 30,000 cubic-meters of sand was dredged to help dislodge the Ever Given, along with the deployment of 11 harbor tugs and two seagoing tugs. The Suez Canal was no longer jammed as the massive vessel was towed to a location outside the channel for further inspection, according to Boskalis Westminster, the parent company of the Dutch salvage firm hired to extract the ship.

“I’m extremely proud of the outstanding job done by the team on site as well as the many SMIT Salvage and Boskalis colleagues back home to complete this challenging operation under the watchful eye of the world,” Peter Berdowski, CEO of Boskalis Westminster, said in a statement Monday. “The time pressure to complete this operation was evident and unprecedented.”

The Ever Given “will be repositioned to the Great Bitter Lake,” located halfway between the northern and southern ends of the Suez Canal, “for an inspection of its seaworthiness,” according to Evergreen Marine Corp., the Taiwanese firm that is leasing the chartered vessel.
“The outcome of that inspection will determine whether the ship can resume its scheduled service,” Evergreen Marine Corp. said in a statement Monday. “Once the inspection is finalized, decisions will be made regarding arrangements for cargo currently on board.”

Suez Canal Authority Chairman Osama Rabie was expected to announce the resumption of navigation through the canal on Monday evening.
The Ever Given, which is almost the size of the Empire State Building, was on its way from China to the Netherlands when it ran aground last Tuesday morning near the southern end of the 120-mile-long artificial waterway that slices through Egypt’s northeast corner. The Suez Canal Authority said a sandstorm and high winds had caused poor navigation and low visibility.

Shipping traffic came to a complete halt while the vessel remained stuck sideways across the Suez Canal, one of the world’s busiest trade routes that provides the shortest maritime link for goods traveling from Asia to Europe by connecting the Mediterranean Sea to the Red Sea.
Shoei Kisen Kaisha, the Japanese company that owns the Ever Given, said in a statement last Thursday that it was working with local authorities in the North African country to resolve the situation, which was proving “extremely difficult.”

“We sincerely apologize for causing a great deal of worry to ships in the Suez Canal and those planning to go through the canal,” the company added. As the blockage neared the one-week mark, there were growing concerns over how it could impact the global economy and supply chains. About 12% of the world’s trade volume passes through the Suez Canal, including approximately 1.9 billion barrels of oil per day.

AAPI Urges Government To Proactively Prevent Attacks on Asian Americans

(Chicago, IL: March 23, 2021) “AAPI wants to express our deep concerns and anguish about the violence the nation has witnessed against people of Asian origin,” Dr. Sudhakar Jonnalagadda, President of American Association of Physicians of India Origin (AAPI) said here today. In a statement issued here Dr. Jonnalagadda condemned the incidents of growing violence, and said, “We at AAPI, the largest ethnic medical organization in the nation, urge the federal, state and local Governments to make all the efforts possible to prevent violence against Asian Americans and all those innocent people around the nation who continue to suffer due to violence, harassment and discrimination.”

A coalition tracking reports of racism and discrimination against Asian Americans says it has received at least 3,795 firsthand complaints since last year.  Stop AAPI Hate began tracking violence and harassment against Asian Americans and Pacific Islanders in March last year.

From then through the end of 2020, Stop AAPI Hate received a total of 3,292 complaints from all 50 states and Washington, DC, according to a Stop AAPI Hate news release. There were at least 503 anti-Asian hate incidents reported between January 1 and February 28 according to the group’s latest report, released last week.

Quoting the United Nations Universal Declaration of Human Rights, Dr. Sajani Shah, Chair of AAPI BOT, said, “AAPI recognizes that all human beings are born free and equal in dignity and rights and that everyone is entitled to all the rights and freedoms set out therein, without distinction of any kind, in particular as to race, color or national origin. All human beings are equal before the law and are entitled to equal protection of the law against any discrimination and against any incitement to discrimination.”

While recognizing the pain and sufferings of the people impacted by the increasing violence and harassment against Asians and Asians Americans, especially in the past few months, Dr. Anupama Gotimukula, President-Elect  of AAPI stressed on the need for education. She said, “We commit to educating ourselves about racism that manifests in our own community. We will work to address racism and health disparities through policy and by working with affected communities and the healthcare providers who serve them. Our fate is linked to the fate of our fellow citizens, and our work must include lifting up and supporting all the communities so we can all thrive.”

“We stand in solidarity with peaceful protestors across the nation condemning the increasing violence and harassment against some minority groups,” said Dr. Ravi Kolli, Vice President of AAPI. “As immigrants to the U.S., our families may not always understand this history, but we join in solidarity with the minority communities and call for justice and peace.”

“We are saddened by the divisive rhetoric and racial tensions that seem to be getting worse each day. AAPI supports the Bills introduced by two Democratic lawmakers in the House and the Senate calling for the expedited review of hate crimes related to the pandemic,” ,” said Dr. Amit Chakrabarty, Secretary of AAPI.

 Rep. Grace Meng of New York, who sponsored the bill in the House, said she hopes the legislation tackles the “disgusting pattern of hate” that Asian Americans are facing since the start of the pandemic.

 “We thank and applaud President Joe Biden for condemning the hate and discrimination that Asian Americans have faced.  We support his call to do what we all as a nation can do to save lives, working with each other, preventing vicious hate crimes against Asian Americans, who have been attacked, harassed, blamed and scapegoated,” said Dr. Satheesh Kathula, Treasurer of AAPI

 President Biden had said, “At this very moment, so many of them, our fellow Americans, they’re on the front lines of this pandemic trying to save lives, and still, still they’re forced to live in fear for their lives just walking down streets in America. It’s wrong. It’s un-American. And it must stop,” he added.

 The members of the American Association of Physicians of Indian Origin (AAPI), an umbrella organization which has nearly 110 local chapters, specialty societies and alumni organizations, with over 37 years of history of dedicated services to their motherland and the adopted land, are appalled at the growing violence against our fellow citizens, Dr. Jonnalagadda said. “We strongly condemn this ongoing violence. And we want immediate action against the culprits, who have been carrying on these criminal acts.” For more information on AAPI, please visit: www.aapiusa.org

At GOPIO-CT Interactive Meeting Business Leaders Express Optimism

(Stamford, CT: March 26, 2021) COVID has impacted all aspects of our lives, and every community in the US and around the world has suffered immense losses due to the deadly virus, taking a toll on our emotional, physical and economic wellbeing. Indian American businesses, especially in the hospitality, travel & tour groups, restaurants and some professional practices, have suffered huge losses.  The Federal and state agencies have been helping many businesses and professional practitioners to get back to their normal business. However, much more help is needed to get back to normal.

 In this context, a virtual conference on the Zoom “Current and Post Covid: Getting Back to Normal Business – An Indian American Perspective in Connecticut” with Connecticut Lawmakers on Thursday, March 18th, was organized on by the GOPIO-CT Chapter, considered one of the most active chapters of GOPIO in cooperation with Milan Cultural Association of Hartford. Participants included state lawmakers and Indian American business leaders and professionals and was timely which provided an opportunity to share their perspectives on the impact of the Covid and how perceived the future. Connecticut lawmakers included Speaker of the Assembly Mitt Ritter, Minority Leader Rep. Vincent Candelora and Rep. Harry Arora. The session was moderated by former Assemblyman Dr. Prasad Srinivasan

In his opening remarks, Dr. Thomas Abraham, Trustee and Chairman of Seminar Series, GOPIO-CT, set the tone for a lengthy discussion with sharing the context and the need for such a timely topic. “This is the first time the Indian American community in Connecticut is doing such a program, bringing together lawmakers and business leaders to come together and share their perspectives on Covid and its impact on the business community in CT. This webinar will also provide the participants to hear the personal experiences. As we come out of the pandemic, we also like to see how Connecticut can take new initiatives to reach out those businesses in India who may be candidates to set up shops in America as Infosys did successfully in Hartford about two years back.”

Cecil Nazareth, Managing Partner, Nazareth CPAs & Member of the Global Tax Policy Committee, Norwalk, CT, shared her experiences during the past year as her firm struggled with the lack of cash flow. “Demand plummeted, reducing cash flow,” Nazareth was appreciative of the Federal Government stepping in with remedial measures that have “immensely helped” especially with PPP loans, “which have been a big blessing.” With Covid impacting the businesses, they have learnt to do new ways of doing business. Nazareth sought additional funding from the state and federal governments in order for the economy to move on in a healthy manner, Nazareth expressed “optimism” in the outlook for the economy.

Representing the most impacted Hotel/Hospitality, Shelly Nichani, President, Infinity Hospitality Group, Stamford, CT, said, while the industry has been severely affected by the pandemic, “financial help from the Federal government has helped much, without which it would have been catastrophic.” While stating that the hospitality industry in CT has been doing overall very well, but the pandemic has halted the path to progress. He was optimistic that with the vaccines and state help, the industry will return to normal soon.

Puneet Ramchandani, Owner of Taprock Beer Bar & Refuge (Farmington. CT) and other restaurants, while acknowledging that “Our industry has suffered much,” he said, the most challenging task was to have his “staff come back to work after we had to lay of several of them due to the pandemic. Many preferred to stay home due to unemployment benefits, and not wanting to risk their health. We did adapt to new guidelines, which were sometimes more a roadblock. So many restrictions on staff and seating. If one staff is infected others needed to be quarantined.” While the state has allowed 100% capacity in restaurants, he lamented, “People are still hesitant to go to restaurants because of the stigma and fear of being infected.”

Speaking about the impact on the Engineering/Manufacturing industry, Rakesh Narang, Founder and President of the Wire and Plastic Machinery Corp., Bristol, CT expressed gratitude to the CT government “for all the help during the worst year. My business of fiber optics was classified as an essential business and therefore we did not have to shut down and the business ran without restrictions. Federal loans helped us a lot, and we are able to make part time employees into permanent employees. Our business has picked up with travel restrictions being lifted. Hope this year will be a great year,” he added.

Prasad Chintalapudi, Vice President, Panzer Solutions, Norwalk, CT, provided a worldwide view of the growth and expansion of the IT industry in the US and around the world, since the 1990s. While there have been several ups and downs faced by the IT industry, he said, “Never has it been affected as much as due to the Covid pandemic. 2020 was a devastating year, with 30 percent revenue lost in April alone. Many consultants were let go both in US and India and most nations. PPP was came as a big rescue plan, and we have slowly recovered and after the 3rd quarter things stabilized. While expressing concern that in the past year, “No new technologies came in,” he is confident, “cloud computing, working from home and AI, contributing to be optimistic in 2021.”

Ramya Subramanian, Founder and CEO, Arka Information System Intl, Stamford, CT, shared with the audience about how she has turned the pandemic into an opportunity by starting three new companies in 2020. “We have accepted the new normal with their safety measures with masking, reconfiguring the office.” Thanking the state of CT for responding well, the young pioneer, said, “the past year’s productivity has been really higher as people working from home.” What Covid taught us is to be able to stay healthy, cleaner environment, she said. “Greener planet will make it more sustainable.”

Dr. Susheel Gupta, President, Connecticut Association of Physicians of Indian Origin (CAPI), Woodridge, CT, provided a broader perspective on how medicine has changed Healthcare Delivery has changed forever. While describing it to be a “challenging year,” Dr. Gupta said, “Government assistance through Medicaid and Medicare and the PPP loans was a huge help. When we reopened offices, patients were able to reach us, and now through telemedicine, we are able to communicate with our patients.”  He agreed that “Things are normalizing slowly. However, the biggest challenge is that now more and more people are depressed needing medications to manage their mood, sleep. Vaccines will help normalize life and more visit to the offices and we will be able to serve them better,” he said.

Dr. Anil R. Diwan, President and Chairman, NanoVirisides, Inc., Shelton, CT, shared with the audience about his perspectives on Research and Development. His suggestion to the community is that “If vaccines is available, please take it. Even if you get sick, the impact will be far less.” In his opinion, “Vaccines and anti-bodies keep changing. We have gone through many types of viruses. Many had minimized the spread of Covid initially. We need to create a broad spectrum of antibody hat could attack the viruses.” He expressed confidence that his company is hopeful of finding treatment for the Covid virus.

In his keynote address, Speaker of CT House, Matt Ritter described 2020 as “strange year. Nothing we had ever anticipated, unprecedented. No state did perfectly. Our residents take seriously the advice of the government and scientific leaders. In CT, the vaccinations rates very high. It’s unfortunate that we had higher number of deaths. We will find ourselves, being able to reopen the state by Memorial Day.” While expressing gratitude for the contributions of the Indian Americans, Ritter said, “You make it diverse and successful. Collegiality and coordination between the two parties is highly appreciated.” Acknowledging that if things get worse, he said, “We will change the policy depending on the needs. By April 5th, all above 16 and up can get vaccines. That will make all the difference.”

In his response, CT Minority Leader Rep. Vincent Candelora, praised the state of Connecticut, saying “Globally overall CT has done very well. Hospitals are competing for quality care. “Discoveries of treatment for Covid had started in CT, which is understated.  We need to work on the need for children. They are most impacted by our decisions. Kids got isolated more than others. We need to be focusing on the wellbeing of the kids.”

 Rep. Harry Arora, stated, “GOPIO is a great organization.” While admitting that the past one year has been a period of learning in almost all areas, testing for Covid, shutting down businesses and schools, Arora said, “No rule could be followed from the past. Looking back, we had shortcomings, but we did our best. I am an advocate of vaccines and need to have more available to those most vulnerable. If we have had more seniors vaccinated and mortality could be reduced. The objective is to keep it as flu status.”

Travel’s Dramatic Losses in 2020

The decline in travel due to COVID-19 has devastated our economy and torn at the very fabric of our society. Our economy suffered shocking impact—nearly $500 billion in lost travel spending, resulting in $64 billion in missed federal, state, and local tax revenue since the beginning of March.
Around the world, international arrivals are estimated to have dropped to 381 million in 2020, down from 1.461 billion in 2019 — a 74 percent decline. In countries whose economies are heavily reliant on tourism, the precipitous drop in visitors was, and remains, devastating.
According to recent figures from the United Nations World Tourism Organization, the decline in international travel in 2020 resulted in an estimated loss of $1.3 trillion in global export revenues. As the agency notes, this figure is more than 11 times the loss that occurred in 2009 as a result of the global economic crisis.
Before the pandemic, tourism accounted for one out of every 10 jobs around the world. In many places, though, travel plays an even greater role in the local economy.
Consider the Maldives, where in recent years international tourism has accounted for around two-thirds of the country’s G.D.P., when considering direct and indirect contributions.
As lockdowns fell into place worldwide, international arrivals in the Maldives plunged; from April through September of 2020, they were down 97 percent compared to the same period in 2019. Throughout all of 2020, arrivals were down by more than 67 percent compared with 2019. (Arrival numbers slowly improved after the country reopened in July; the government, eager to promote tourism and mitigate losses, lured travelers with marketing campaigns and even courted influencers with paid junkets.)
This Fact Sheet provides key travel data, which showcases the dramatic losses suffered by the travel industry in 2020.
For more details, read: https://www.ustravel.org/research/fact-sheet-travels-dramatic-losses-2020

COVID Relief Bill Could Permanently Alter Social Safety Net

The $1.9 trillion COVID-19 relief package is being hailed as a generational expansion of the social safety net, providing food and housing, health care and is a broad-based attack on the cycle of poverty.

 

With more than $6 billion for food security-related programs, more than $25 billion in emergency rental assistance, nearly $10 billion in emergency mortgage aid for homeowners, and extensions of already-expanded unemployment payments through early September, the package is full of provisions designed to help families and individuals survive and recover from pandemic-induced economic hardships.

“When you stand back and look at it, that’s when you really can appreciate the sheer scope of it,” said Ellen Vollinger, legal director for the Food Research & Action Center, a food-security advocacy group. “The scope is both impressive and much needed.”

Several aspects seem targeted at restructuring the country’s social safety net and actually lifting people out of poverty. It’s the kind of ambition and somewhat old school Democratic Party ideal that has observers referencing former President Franklin Delano Roosevelt and the New Deal.

“We haven’t seen a shift like this seen since FDR. It’s saying families are too big to fail, children are too big to fail, the elderly are too big to fail,” said Andre Perry, senior fellow in the Metropolitan Policy Program at the Brookings Institution. “It’s a recognition that the social safety net is not working and was not working prior to the pandemic.”

Biden himself, when signing the package into law Thursday, referenced it as an overt attempt to redraw the country’s economic fault lines in a way that’s bigger than the pandemic. “This historic legislation is about rebuilding the backbone of this country and giving people in this nation, working people and middle-class folks, the people who built the country — a fighting chance,” Biden said.

And House Speaker Nancy Pelosi, D-Calif., called it “one of the most transformative and historic bills any of us will ever have the opportunity to support.”

Perry in particular pointed to the expansion of the child tax credit system as a potentially foundational change. The legislation provides families with up to $3,600 this year for each child and also expands the credit to millions of families currently making too little to qualify for the full benefits. “That is really going to put a dent in child poverty,” Perry said.

In promoting the child tax credit expansion, Democrats rallied around an analysis that predicted it would cut nationwide child poverty by 45%.

The legislation extends through September last year’s 15% increase in benefits offered by the Supplemental Nutrition Assistance Program (SNAP) program, commonly known as food stamps. It also provides extra funds to administer the expanded SNAP program and to expand access to SNAP online purchasing.

The package also includes what amounts to the biggest expansion of federal help for health insurance since the Obama-era Affordable Care Act more than 10 years ago. Several million people could see their health insurance costs reduced, and there’s also an incentive for states to expand Medicaid coverage, if they haven’t already done so. Those changes, however, won’t be as immediate as the direct cash injections in other areas.

Housing advocates give generally positive reviews, saying the massive relief packages for both renters and home owners should be enough to stave off the debts incurred so far. “This is an appropriate response for an unprecedented time. Clearly there’s a tremendous need to avoid an eviction tsunami,” said Diane Yentel, president of the National Low Income Housing Coalition.

But she also warned that the economic hardships, and need for assistance, will extend past the end of the pandemic. “Many of the jobs that low-income workers have lost won’t come back right away,” she said.

Yentel called on Biden to extend the national moratorium on evictions via executive order. The current moratorium, imposed by the Centers for Disease Control as part of the national health emergency, is being challenged in multiple court cases and expires at the end of March.

Many of the legislation’s changes are temporary, but advocates and Democratic legislators are talking openly about making some of them permanent. “Getting something out of the code is often times harder than getting something into the code,” House Ways and Means Committee Chairman Richard Neal, D-Mass., told reporters Tuesday, referring to the relief bill’s expansion of the child tax credit. He added, “What we did is unlikely to go away.”

At this point, the child tax credit expansion would expire at the end of the year without some sort of congressional intervention. But permanently enshrining those changes into law could be a battle. Congress’ nonpartisan Joint Committee on Taxation has estimated the child tax credit’s cost at $110 billion, making it one of the single most expensive items in the whole package. Extending that over multiple years would be extremely costly, and would likely draw serious opposition, especially from Republicans.

Senate Minority Leader Mitch McConnell, R-Ky, called Democrats’ expansion of those credits “sweeping new government benefits with no work requirements whatsoever,” suggesting the shape of the GOP opposition strategy ahead. But the provision is projected to lift millions of families out of poverty, and progressives believe there will be tremendous pressure on Republicans to allow the change.

Many also want to preserve the bill’s temporarily beefed up earned income tax credit, and its improved tax breaks for caring for children and dependents and for paid sick and family leave. A study by the Tax Policy Center concluded that the relief package would reduce federal taxes in 2021 by an average of $3,000 per household. Low- and moderate-income households (making $91,000 or less) would receive nearly 70 percent of the tax benefits, the study concluded.

“The question will be do they want child poverty to go back up again” by letting that credit expire, said Steve Wamhoff, director of federal tax policy for the liberal Institute on Taxation and Economic Policy.

(Associated Press writer Josh Boak contributed to this report.)

India’s FinTech valuation estimated at $150-160 billion by 2025

The Federation of Indian Chambers of Commerce & Industry (FICCI) and Boston Consulting Group (BCG) on Saturday, March 14th unveiled ‘India FinTech: A USD 100 Billion Opportunity’ report. The report details the findings from the study that BCG and FICCI undertook to size the value-creation potential and identify imperatives for India’s FinTech growth.

Dilip Chenoy, Secretary General, FICCI said, “The FinTech industry in India has been growing at a fast clip. FinTech players are redefining the business models across different segments of financial services industry, helping improve service delivery and contributing to digital financial inclusion. This is a clear area of focus for us in FICCI and through our multiple initiatives, we will continue to promote this industry both in India and abroad.”

India’s dynamic FinTech industry has 2100+ FinTechs of which 67% have been set up over the last 5 years alone. The total valuation of the industry is estimated at $50-$60 billion. The industry’s growth has been undeterred by the pandemic, as it has seen the emergence of 3 new Unicorns and 5 new Soonicorns (USD 500Mn+ valuation) since January 2020.

The Fintech industry’s strong growth is due to India’s deep-rooted customer demand, diverse capital flows, strong tech talent and enabling policy framework. Over the next 5 years, India’s FinTech industry is expected to continue its strong upward trajectory.

Prateek Roongta, Managing Director and Partner, Boston Consulting Group India said, “We believe India’s FinTechs are at the precipice of significant value-creation of USD 100 billion over the next five years. To actualize this potential, the industry would require investments to the tune of USD 20-25 billion till 2025. Consequently, the number of Indian FinTech Unicorns will more than double over the next few years.”

Ruchin Goyal, Managing Director & Senior Partner, Boston Consulting Group India said, “The landscape will be defined by FinTechs that pursue their strategic play with deep, relentless discipline. Tomorrow’s FinTech winners are expected to ‘master the core’ — by innovating on product, user-experience or through deep-tech capabilities. India will also see the emergence of ecosystem orchestrators and multinational FinTechs, as it evolves into a global FinTech powerhouse.”

Another theme covered in this report is internationalization of Indian FinTechs. To develop a close understanding of the FinTech industry’s multinational ambitions, BCG and FICCI conducted the BCG-FICCI FinTech survey 2021. The survey reveals that 39% of Indian FinTechs surveyed have a presence outside India and 73% of FinTechs surveyed are actively considering international expansion opportunities. South-East Asia was the most sought-after destination for international expansion, followed by North America.

Several Indian FinTechs are well-positioned to establish a global footprint owing to their transplantable business models and proven track record of success. To ensure that Indian FinTechs achieve their potential, all stakeholders — FinTechs, Financial Institutions and policymakers — have a role to play. The imperatives for stakeholders have been identified in the report. (IANS)

Mortgage Raise Above 3% For The First Time In Recent Times

Americans who purchased new homes or refinanced their mortgages over the past few months may have done so at just the right moment. The average rate on a 30-year fixed-rate mortgage rose to 3.02%, mortgage-finance giant Freddie Mac said Thursday. It is the first time the rate on America’s most popular home loan has risen above 3% since July and the fifth consecutive week it has increased or held steady.

Mortgage rates fell throughout most of 2020 after the Covid-19 pandemic ravaged the economy. That helped power the biggest boom in mortgage lending since before the financial crisis, fueled by refinancings. When rates hit 2.98% in July, it was their first time under the 3% mark in about 50 years of record-keeping.

The recent upward moves paint a clear contrast: More vaccinations in the U.S. and recent progress on the latest coronavirus relief bill have brightened investors’ outlook on the economy, a key variable in determining borrowing rates.

Mortgage rates tend to move in the same direction as the yield on the 10-year Treasury, which has been rising. Treasury yields rise when investors feel confident enough in the economy to forgo safe-haven assets such as bonds for riskier ones including stocks. Last week, the yield hit its highest level in a year.

Freddie Mac chief economist Sam Khater said he expects a strong sales season, partly because he thinks “the uptrend in rates from here will be more muted than the past few weeks.” The Federal Reserve has said it would maintain ultralow interest rates until the economy improves.

The rate on the 30-year fixed mortgage increased to 3.02% this week, up from 2.97% the previous week, according to Freddie Mac, a government-sponsored agency that backs millions of mortgages. That was the first time the rate exceeded 3% since the third week in July and the highest level since the first full week in July, when the rate was 3.03%.

The average rate on 30-year fixed mortgages surged over 3% this week, hitting that benchmark for the first time in seven months.

The rise in rates isn’t a surprise. With expectations that the economy will start to recover and the potential for increasing inflation, many experts see mortgage rates rising in 2021.

However, it’s important to note that even with the recent rate growth, both mortgage and refinance rates remain historically low. As recently as May 2019, rates were over 4%, so many homeowners still have the opportunity to save with a mortgage refinance or purchase a new home at a low rate.

Here’s what rising rates might mean for you.

Rates have surged 0.37% from an all-time low of 2.65% in early January and now sit at 3.02%, according to Freddie Mac. For someone taking out a $250,000 30-year mortgage, this increase in rates would add about $49 to your monthly payment and cost roughly $17,800 more in interest over the life of the loan.

Mortgage interest rates aren’t expected to continue to rise at this rate. “The rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks,”  Freddie Mac chief economist Sam Khater said in a statement released yesterday. So don’t expect to see the real estate market turn into a buyers market anytime soon.

This rapid increase in rates has been driven, in part, by rising long-term Treasury bond yields, which topped 1.5%. “Interest rates have been volatile recently, with the benchmark 10-year Treasury increasing about 50 basis points from where it was at the start of the year,” Freddie Mac deputy chief economist Len Kiefer wrote in an email. And that has put pressure on mortgage rates, which historically have moved in tandem with 10-year Treasury bond yields.

For now, however, the message remains the same: If you’re financially ready to buy or refinance a home, today’s mortgage interest rates are historically low.

Massachusetts and Connecticut Hold 8 Out of the Top 10 Best Places to Live

Expertise.com, a resource that evaluates and publishes the best local experts, has published a comprehensive report on the safest cities and towns in the U.S. The study ranks the safest to most dangerous cities and towns with a population of 10,000 or more. Research experts collected data from the FBI Crime Database and used a detailed methodology to assess each municipality.

The top five safest cities are Wayland, Massachusetts, Frederick, Colorado, Weston, Connecticut, Clinton, Massachusetts, and Sagamore Hills, Ohio. Massachusetts and Connecticut held 8 out of the top 10 best places to live, three cities from Connecticut and five from Massachusetts.

In contrast, the five most dangerous cities and towns are spread across various states. The lowest ranking areas on the list are Muskegon Heights, Michigan, Tukwila, Washington, Myrtle Beach, South Carolina, Memphis, Tennessee, and Little Rock, Arkansas.

“The pandemic has created more opportunities to work remotely, and people now have the flexibility to explore other cities,” says David Franklin, General Manager of Expertise.com. “This study was conducted to help Americans assess different relocation options and address public safety concerns.”

Researchers at Expertise.com accessed crucial data from the FBI’s 2019 National Incident-Based Reporting System. Each city was evaluated based on the number of violent crimes, other crimes to persons, and other crimes to property per 1,000 residents. The report highlights 1,434 cities and towns and the final scores were generated using a percentile rank formula.

Top 10 Safest Cities and Towns in America

  1. Wayland, MA
  2. Frederick, CO
  3. Weston, CT
  4. Clinton, MA
  5. Sagamore Hills, OH
  6. Newtown, CT
  7. Madison, CT
  8. Franklin, MA
  9. Medway, MA
  10. Hopkinton, MA.

US Suspends Tariffs On Single Malt Scotch Whisky

The US has agreed to suspend tariffs on UK goods including single malt whiskies that were imposed in retaliation over subsidies to the aircraft maker Airbus.  Tariffs will also be lifted on UK cheese, cashmere and machinery.

The duties will be suspended for four months while the two sides seek a long-term settlement. On 1 January, the UK dropped its own tariffs on some US goods, put in place over a related dispute about US subsidies to Boeing.

It is the latest twist in a decades-old trade row that has seen the EU and the US target billions of dollars worth of each other’s exports with taxes.

The UK is part of the dispute as a former EU member. Airbus makes wings and other parts in the UK, but assembles its commercial aircraft in the EU. It has hit Scotch whisky producers particularly hard as the US is a key export market. Distilleries have reported £500m of losses since 2019 due to the tariffs.

Prime Minister Boris Johnson said the trade truce, due to come into force on Monday, would boost British business. “From Scotch whisky distillers to Stilton-makers, the US decision to suspend tariffs on some UK exports today will benefit businesses right across the UK,” he tweeted.

“Fantastic news as we strengthen the UK-US trading relationship and work to build back better from the pandemic.” Simon Cotton, boss of Speyside-based textiles firm Johnston’s of Elgin, says he’s “absolutely delighted” the tariffs have been suspended.

The company, which employs 850 people, has been taking a “25% hit” on every knitwear product it exports to the US – “a significant cost” at a time when Covid and Brexit also pose challenges.

In Speyside many other businesses have felt the impact of the US tariffs, including whisky distilleries and shortbread makers.

“This has been a particularly difficult tax for the businesses here, so it’s a huge relief for the region,” says Mr Cotton. “We’re hoping this paves the way for a permanent removal of these tariffs.”

Karen Betts, head of the Scotch Whisky Association, called the suspension “fabulous news”. “The tariff on single malt Scotch whisky exports to the US has been doing real damage to Scotch whisky in the 16 months it has been in place, with exports to the US falling by 35%,” she said.

“So today, everyone in our industry – from small companies to large – is breathing a sigh of relief.” For more than a decade, the EU and US accused each other of propping up their home aviation markets with tax breaks, research grants and other aid.

But tensions flared in 2019, when former US president Donald Trump retaliated by putting tariffs on $7.5bn (£5.4bn) of EU goods, including UK products such as whisky.

Since it left the EU, the UK has been lobbying Washington to drop the duties on its goods as it seeks a wide-ranging trade deal with the US. Talks with Washington abruptly broke off in January but resumed after Joe Biden became US president.

Biden’s top trade nominee, Katherine Tai, has said she will make it a priority to resolve the row with the EU and Britain – although for now US tariffs continue to apply to EU goods. In a joint statement on Thursday, the UK and the US said that the suspension would “ease the burden on industry and take a bold, joint step towards resolving the longest-running disputes at the World Trade Organization”.

The two countries added that it would also allow time to focus on negotiating “a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China”.

Airbus welcomed the removal of “lose-lose tariffs” and urged the UK and US governments to reach a long-term settlement.  More than £500m-worth of whisky sales have been lost since October 2019, when the 25% tariff was introduced on single malt Scotch. Smaller distillers were hit hardest.

The US is the biggest single-nation export market by value. President Trump’s US Trade Representative reckoned it was a good source of political leverage in the 17-year trade dispute over aircraft manufacturing.

Scottish cashmere sweaters were also targeted. In the political calculation of trade disputes, the US did not include Irish whiskey or Italian cashmere, giving them the opportunity to exploit the rift and grow market share.

It was not until last autumn that the European Union and the UK won the right, at the World Trade Organisation, to hit back over Boeing subsidies by US governments. That levelled the field on which to negotiate a resolution.

Donald Trump used trade tariffs as a bludgeon intended to protect American jobs, and although Joe Biden is not noted as an enthusiast for globalisation and free trade, this suspension of tariffs signals his administration is in the business of negotiated deals between partners.

It acknowledges the trans-Atlantic partners should perhaps focus more on manufacturing competition from China. But there is work to be done: the EU, UK and US have not only the Boeing/Airbus dispute to resolve, but another one over steel and aluminium, which explains the 25% tariff currently on imported American whiskey.

For Liz Truss and the UK government’s attempts to secure post-Brexit trade deals, this is a significant step forward. It seems the Biden administration is not prioritising the European Union ahead of Britain. However, a UK-US free trade deal is a long way from here.

What Is In For You In The $1.9 Trillion COVID-19 Relief Bill Congress Passed?

The Democrat controlled US House of Representatives approved a massive $1.9 trillion coronavirus relief package, advancing President Joe Biden’s top agenda item and providing more resources to schools and businesses, boost funding for vaccinations and testing, and grant financial relief to Americans across the country.

Democrats passed the measure early Saturday morning, Feb. 27th in a party-line vote, with Republicans united against the bill calling for slimmer, more-targeted relief. All but two Democrats supported the bill in the 219-212 vote, and no Republicans backed the package.

Democrats have advanced the coronavirus legislation using the budget reconciliation process, in a bid to avoid the Senate’s 60-vote threshold and pass their package with a simple majority of votes, given the slim 50-50 divide in the upper chamber.

The Senate is expected to take up the legislation next week, after the chamber’s parliamentarian ruled that Democrats could not include a $15 minimum wage in the proposal over budgetary concerns. “This started almost a year ago,” House Majority Leader Steny Hoyer, D-Md., said of the pandemic ahead of the House vote. “Today’s vote is a crucial step in our fight to defeat COVID-19.”

The American Rescue Plan would provide $1,400 stimulus checks to millions of Americans across the country and extend federal unemployment benefits through the summer. It would also provide hundreds of millions of dollars in aid to state and local governments, schools and vaccine and COVID-19 testing efforts — in addition to nutritional and child care assistance.

While Democrats and the White House have touted public polls showing broad bipartisan support for the measure, and the endorsements of state and local GOP leaders, House Republicans are expected to vote against the bill as a bloc. For weeks, they have argued that Democrats’ proposal is too expensive and ignores the $4 trillion in coronavirus relief approved by Congress last year, some of which remains unspent.

“This isn’t a relief bill,” House Minority Leader Kevin McCarthy said Friday. “It takes care of Democrats’ political allies while it fails to deliver for American families.” Americans “want us to actually work together, to come together and solve the problems in a bipartisan way,” Rep. Anthony Gonzalez, R-Ohio, said on the House floor. “I think that message was clear. And the more the majority ignores it, the shorter their majority will be.”

Biden had briefly engaged with a group of 10 Senate Republicans pushing an alternative to his plan, but rejected their $600 billion counteroffer as too meager, arguing it did not meet the moment and would cut spending on key programs included in his legislation.

Senate Budget Committee Chairman Bernie Sanders, I-Vt., and Finance Committee Chairman Ron Wyden, D-Ore., announced they would offer an amendment to the budget bill, once it comes over from the House, that would penalize “large, profitable corporations” through the elimination of tax deductions” if those companies do not raise the minimum wage for their workers to “at least $15 an hour.” The two chairmen also said that measure would offer incentives to small businesses to raise worker wages.

House Speaker Nancy Pelosi said Democrats would still “absolutely” pass the package without the minimum wage increase, and members of the caucus reaffirmed their commitment to the issue on Friday. “I’m not going to stop till we get it,” Rep. Debbie Dingell, D-Mich., said Friday.

Look at some highlights of the legislation:

  • The legislation provides a rebate that amounts to $1,400 for a single taxpayer, or $2,800 for a married couple that files jointly, plus $1,400 per dependent. Individuals earning up to $75,000 would get the full amount as would married couples with incomes up to $150,000.
  • The size of the check would shrink for those making slightly more with a hard cut-off at $100,000 for individuals and $200,000 for married couples.
  • Some Republicans want to cut the size of the rebate as well as the pool of Americans eligible for it, but Biden has insisted on $1,400 checks, saying “that’s what the American people were promised.” The new round of checks will cost the government an estimated $422 billion.
  • Under current law, most taxpayers can reduce their federal income tax bill by up to $2,000 per child. The package moving through the House would increase the tax break to $3,000 for every child age 6 to 17 and $3,600 for every child under the age of 6.
  • The legislation also calls for the payments to be delivered monthly instead of in one lump sum. If the secretary of the Treasury determines that isn’t feasible, then the payments are to be made as frequently as possible.
  • Also, families would get the full credit regardless of how little they make in a year, even just a few hundred dollars, leading to criticism that the changes would serve as a disincentive to work. Add in the $1,400 per individual checks and other items in the proposal, and the legislation would reduce the number of children living in poverty by more than half, according to an analysis from the Center on Poverty and Social Policy at Columbia University.
  • The legislation would send $350 billion to state and local governments and tribal governments. While Republicans in Congress have largely objected to this initiative, Biden’s push has some GOP support among governors and mayors.
  • Many communities have taken hits to their tax base as millions of people have lost their jobs and as people stay home and avoid restaurants and stores to prevent getting COVID-19. Many areas have also seen expenses rise as they work to treat the sick and ramp up vaccinations.
  • But the impact varies from state to state and from town to town. Critics say the funding is not appropriately targeted and is far more than necessary with billions of dollars allocated last spring to states and communities still unspent.
  • The bill calls for $130 billion in additional help to schools for students in kindergarten through 12th grade. The money would be used to reduce class sizes and modify classrooms to enhance social distancing, install ventilation systems and purchase personal protective equipment. The money could also be used to increase the hiring of nurses, counselors and to provide summer school.
  • Spending for colleges and universities would be boosted by $40 billion, with the money used to defray an institution’s pandemic-related expenses and to provide emergency aid to students to cover expenses such as food and housing and computer equipment.
  • The bill provides another round of relief for airlines and eligible contractors, $15 billion, so long as they refrain from furloughing workers or cutting pay through September. It’s the third round of support for airlines.
  • A new program for restaurants and bars hurt by the pandemic would receive $25 billion. The grants provide up to $10 million per entity with a limit of $5 million per physical location. The grants can be used to cover payroll, rent, utilities and other operational expenses.
  • The bill also provides another $7.25 billion for the Paycheck Protection Program, a tiny fraction of what was allocated in previous legislation. The loans are designed to help borrowers meet their payroll and operating costs and can potentially be forgiven.
  • Expanded unemployment benefits from the federal government would be extended, with an increase from $300 a week to $400 a week. That’s on top of what beneficiaries are getting through their state unemployment insurance program.
  • The bill provides money for key elements of the Biden administration’s COVID-19 response, while also trying to advance longstanding Democratic priorities like increasing coverage under the Obama-era Affordable Care Act.
  • On “Obamacare,” it dangles a fiscal carrot in front of a dozen states, mainly in the South, that have not yet taken up the law’s Medicaid expansion to cover more low-income adults. Whether such a sweetener would be enough to start wearing down longstanding Republican opposition to Medicaid expansion is uncertain.
  • The bill provides $46 billion to expand federal, state and local testing for COVID-19 and to enhance contract tracing capabilities with new investments to expand laboratory capacity and set up mobile testing units. It also contains about $14 billion to speed up the distribution and administration of COVID-19 vaccines across the country.

RAISING THE MINIMUM WAGE

  • The bill would gradually raise the federal minimum wage to $15 per hour by June 2025 and then adjust it to increase at the same rate as median hourly wages. However, that provision is not expected to survive in the final bill. The Senate parliamentarian ruled that it cannot be included in the COVID-19 economic relief package under the process Democrats chose to undertake to get a bill passed with a simple majority.

Biden had predicted such a result. Still, the ruling was a stinging setback for most Democratic lawmakers who had said the higher minimum wage would increase the pay for millions of Americans. The nonpartisan Congressional Budget Office had projected the new federal minimum wage would lift some 900,000 people out of poverty once it was fully in place. But Republicans said the mandatory wage hikes would make it harder for small businesses to survive and they pointed to the CBO’s projection that about 1.4 million jobs would be lost as employers looked for ways to offset their higher personnel costs.

US Debt Soars To $29 Trillion, Owes India $216 Billion

The US, the world’s largest economy, owes India USD 216 billion in loan as the country’s debt grows to a record USD 29 trillion, an American lawmaker has said, cautioning the leadership against galloping foreign debt, the largest of which comes from China and Japan.

In 2020, the US national debt was USD 23.4 trillion, that was USD 72,309 in debt per person. “We are going to grow our debt to USD 29 trillion. That is even more debt owed per citizen. There is a lot of misinformation about where the debt is going. The top two countries we owe the debt to are China and Japan, not actually our friends,” Congressman Alex Mooney said.

“We are at global competition with China all the time. They are holding a lot of the debt. We owe China over USD 1 trillion and we owe Japan over USD 1 trillion,” the Republican Senator from West Virginia said on the floor of the US House of Representatives as he and others opposed the latest stimulus package of USD 2 trillion.

In January, US President Joe Biden announced a USD 1.9 trillion coronavirus relief package to tackle the economic fallout from the pandemic, including direct financial aid to average Americans, support to businesses and to provide a boost to the national vaccination programme.

“The people who are loaning us the money we have to pay back are not necessarily people who have our best interest at heart. Brazil, we owe USD 258 billion. India, we owe USD 216 billion. And the list goes on the debt that is owed to foreign countries,” Congressman Mooney said.

America’s national debt was USD5.6 trillion in 2000. During the Obama administration, it actually doubled.

“Since the eight years Obama was President, we doubled our national debt. And we are adding another—projected here—a completely out of control debt-to-GDP ratio,” he said urging his Congressional colleagues to consider this national debt issue before approving the stimulus package.

“So I urge my colleagues to consider the future. Don’t buy into the—the government has no money it doesn’t take from you that you are going to have to pay back. We need to be judicious with these dollars, and most of this is not going to coronavirus relief anyway,” he said.

Congressmen Mooney said that things have gone completely out of control. The Congressional Budget Office estimates an additional USD 104 trillion will be added by 2050. The Congressional Budget Office forecasted debt would rise 200 per cent.

“Today, as I stand here right now, we have USD 27.9 trillion in national debt…That is actually a little more than USD 84,000 of debt to every American citizen right here today,” Mooney said.

Gasoline Could Be Around The Corner — Unless OPEC And Russia Start Pumping More Oil

OPEC and Russia’s unprecedented production cuts last spring lifted oil prices out of a death spiral. Nearly a year later, the group is under pressure to cool off the red-hot market. US crude has raced back above $60 a barrel. That’s a far cry from the depths it reached last April when oil crashed below zero (negative $40.32 a barrel, to be exact) for the first time in history. Prices at the pump are starting to creep higher, too. The national average hit $2.70 a gallon Friday, according to AAA. That’s well above the April low of $1.76 per gallon.

Investors are betting the pandemic will soon be under control — and that in turn will unleash pent-up demand for road trips, cruises, flights and other oil-consuming activities.

Against this backdrop, OPEC and its allies, known as OPEC+, are scheduled to meet Thursday to deliberate whether to add more barrels into to the hungry market. They’ve certainly got the firepower, and the price incentive, to do just that.

Last year, OPEC+ slashed output by a record-shattering 9.7 million barrels per day. The emergency steps, along with production cuts by US and other producers, drove a strong rebound in prices. That recovery has accelerated in recent months as millions of people around the world have gotten vaccinated against Covid.

OPEC+ could soon announce the market is now healthy enough to step up production this spring.  “Given the allure of higher prices, there should be more supply coming onto the market,” said Ryan Fitzmaurice, energy strategist at Rabobank.

Indeed, sources within OPEC+ told Reuters last week that an output increase of half a million barrels per day beginning in April is possible without building up inventories, although a final decision had not been made.

“Given where prices are, how will anyone tell Russia that they need to curtail production?” said Jim Mitchell, head of Americas oil analysts at Refinitiv. There are several good reasons for OPEC+ to release more barrels.

First, higher prices mean countries like Saudi Arabia that rely on oil to balance their budgets can bring in badly-needed revenue.  Second, if OPEC+ doesn’t start producing more, other countries will. That includes frackers in Texas who were sidelined by the oil crash.

Bank of America strategists told clients in a recent note that OPEC+ will “preserve market share” by pumping more soon. During the second quarter alone, Bank of America expects OPEC+ to add more than 1.3 million barrels per day of supply.

There’s another reason OPEC+ will want to act before it’s too late: self-preservation.  If gasoline prices keep rising and hit $3 a gallon — and beyond — it will only accelerate clean energy investments and persuade more drivers to dump their gas-guzzling SUVs for electric vehicles.  “If oil shoots up to extreme levels,” said Rabobank’s Fitzmaurice, “that only helps the renewables story and eats away at oil demand.”

The switch to electric means more costly recalls

Hyundai is recalling 82,000 electric cars globally to replace their batteries after 15 reports of fires involving the vehicles. Despite the relatively small number of cars involved, the recall is one of the most expensive in history.

The numbers: The recall will cost Hyundai 1 trillion Korean won, or $900 million. On a per-vehicle basis, the average cost is $11,000 — an astronomically high number for a recall.

The episode signals how electric car defects could create hefty costs for automakers — at least in the near future, report my colleagues Chris Isidore and Peter Valdes-Dapena.

The recall is another indication of just how expensive EV batteries are relative to the cost of the entire car. Until the cost of batteries comes down, through greater production worldwide and economies of scale, the cost of making electric vehicles will remain higher than comparable gasoline cars.

Once batteries do become less expensive, as is expected in the coming years, electric cars could become much cheaper to build because they have fewer moving parts and require as much as 30% fewer hours of labor for assembly compared to traditional vehicles.

Fewer parts on electric vehicles could also mean that auto recalls become less common in the future. But for now, there could be significant costs if battery fire problems require battery replacements.

Fishermen in Sothern Indian State Ask Govt To Scrap Fishing Project

Traditional fishermen are opposing a multimillion-dollar overseas deep-sea fishing project in Kerala that they say threatens the livelihood of ordinary fisher people in the southern Indian coastal state. Permitting overseas firms to join deep-sea fishing will further impoverish Kerala’s traditional fishermen, they say.

Following criticism from opposition leaders and rights groups, the communist-led state government withdrew two memoranda of understanding it signed with a US-based firm that allegedly violated the state’s fishing policy and the rights of poor fisher people.

The goverment on Feb. 24 withdrew from the MoU signed with EMCC International India Pvt Limited, a US-based firm, for a US$680 million project that purportedly aims to revamp and modernize the state’s fishing industry.

The government also canceled another MoU with the same firm for manufacturing 400 deep-sea fishing vessels and developing the state’s fishing harbors at a cost of some $400 million.

“But still we are not sure if it has scrapped the entire project. We want an assurance from the government that it will not move ahead with the project,” said Father Jacob G. Palackappilly, deputy secretary-general of the Kerala Catholic Bishops’ Council. Many suspect the government quickly pulled out of the MoU a week after criticism began to surface in the media in the state, where elections are due in April-May.

Christian leaders like Father Palackappilly say the project would push Kerala’s fishermen further into poverty as the multinational operation would take away the lion’s share of an already dwindling catch.

Further, deep-sea fishing would eventually reduce fish wealth in the littoral zone on which thousands of Kerala fishermen on country craft depend for their daily sustenance.

“The government claims the projects will ensure the welfare of all, but our past experience shows that such government promises are seldom translated into reality,” Father Palakappilly told UCA News on Feb. 25.

The state of 33 million people has some 200,000 fishermen active on the Arabian Sea, at least half of them Catholics, mostly in the coastal districts of Trivandrum, Kollam, Alappuzha and Kozhikode.

“Our fishermen are so traditional that they are unable to cope with challenges from the multinational companies (MNCs) entering into the field with highly mechanized boats and trawlers,” said Father Kudiamssery, public relations officer of Alappuzha Diocese.

“If MNCs venture into their traditional work, the poor will be left jobless,” Father Kudiamssery, who was supporting the fishermen’s protest against the project, told UCA News on Feb. 25.

Father Thomas Tharayil, general secretary of the Kerala Region Latin Catholic Council, said traditional fishing using motorized boats is restricted within 12 nautical miles distance from the shore.

“Climate change has substantially reduced their catch within the permissible distance. Now, many of them step into deep-sea fishing as well,” said the priest.

Overseas firms coming for deep-sea fishing “will automatically lead to fighting between them and traditional fishermen. Instead, the state should empower the local fishermen for deep-sea fishing,” Father Tharayil added.

“The Catholic bishops want the government to clarify whether it has scrapped the project entirely or only canceled the MoU.”

Work on the project began in 2018. “So much work has been done in two years. Therefore, church leaders and fishermen suspect the government will continue with the project after the election,” Father Tharayil said.

Kerala’s communist-led government is hoping to be re-elected to power in the 140-member state assembly before the five-year term of this government ends on June 1.

Universal Health Coverage Is Within Our Reach

A rare opportunity has presented itself: physicians, hospitals, insurers and employers have come together to agree on a common path forward to cover the uninsured through an Affordable Coverage Coalition that is the first of its kind. As a group, we recognize that universal health coverage is a goal we all must support, especially during a public health crisis with the magnitude of COVID-19.

 

Our AMA strongly believes that everyone should have access to meaningful and affordable health insurance coverage. We and our partners in the newly formed coalition also believe we can achieve universal health coverage by offering increased financial help to patients to help them afford their coverage, incentivizing states that have not yet done so to expand Medicaid, taking steps to automatically enroll low-income patients in no-cost health insurance coverage, and minimizing the loss of health insurance coverage resulting from pandemic-related unemployment.

 

Major consensus

These and other steps can help achieve universal coverage, a goal that has eluded our nation for decades, as outlined by the Affordable Coverage Coalition. This new partnership is notable for several reasons, but perhaps the most important is the fact it represents a consensus by all the major players in health care about the best way ahead.

 

That path aligns with AMA’s plan to cover the uninsured, which is based on longstanding AMA policy in support of expanding access to and choice of affordable, quality health insurance coverage. The AMA plan recognizes that affordable coverage options available due to the Affordable Care Act (ACA)—subsidized ACA marketplace coverage and the Medicaid expansion—are more critical than ever, serving as a needed safety net for those who have lost their employer-sponsored health insurance coverage due to job losses resulting from the COVID-19 pandemic.

 

Covering the uninsured also is a key component in any strategy to eliminate longstanding inequities in our health care system that have yielded devastating health outcomes for Black, Latino and Indigenous communities, members of the LGBTQ community, and other historically marginalized groups.

 

The steps we and our partners in the Affordable Coverage Coalition recommend include:

Expanding eligibility for and increasing the size of premium tax credits and cost-sharing reductions to help more people afford their premiums and cost-sharing responsibilities in the ACA marketplaces.

 

Establishing an “insurance affordability fund” to provide support for reinsurance programs to offset the costs of covering higher-risk patients, or otherwise lower premiums and cost-sharing for ACA marketplace enrollees.

Automatically enrolling—and renewing—those who are eligible for Medicaid and no-premium ACA marketplace plans.

 

Adequately funding navigator, outreach and enrollment programs to increase public awareness of and enrollment in ACA marketplace coverage and Medicaid/CHIP.

Providing incentives for additional states to expand Medicaid in order to close the low-income coverage gap.

 

Taking steps to prevent people who have lost or are at risk of losing employer-provided health coverage from becoming uninsured.

 

Physicians know that patients who are uninsured delay or skip the care they need, and often live sicker and die younger. While millions of Americans have gained coverage resulting from the ACA, our work to cover the uninsured is not done. The AMA believes that now is the time to invest not only in fixing the law, but also in enhancing it.

The agreement of the Affordable Coverage Coalition outlined above will further that mission. Our AMA remains firmly committed to improving health insurance coverage and health care access so that patients receive timely, high-quality care, preventive services, medications and other necessary treatments. We now have an opportunity to help make that happen.

A Full Year Of Americans’ Life Expectancy Lost Due To Covid

Life expectancy in the United States fell by a full year in the first six months of 2020, the federal government reported on Thursday, the largest drop since World War II and a grim measure of the deadly consequences of the coronavirus pandemic.

 

Life expectancy is the most basic measure of the health of a population, and the stark decline over such a short period is highly unusual and a signal of deep distress. The drop comes after a troubling series of smaller declines driven largely by a surge in drug overdose deaths. A fragile recovery over the past two years has now been wiped out.

 

The data gives the first full picture of the pandemic’s effect on American expected life spans, which dropped to 77.8 years from 78.8 years in 2019. It also showed a deepening of racial and ethnic disparities: Life expectancy of the Black population declined by 2.7 years in the first half of 2020, slicing away 20 years of gains. The life expectancy gap between Black and white Americans, which had been narrowing, is now at six years, the widest it has been since 1998.

 

“I knew it was going to be large but when I saw those numbers, I was like, ‘Oh my God,’” Elizabeth Arias, the federal researcher who produced the report, said of the racial disparity. Of the drop for the full population, she said, “We haven’t seen a decline of that magnitude in decades.”

 

Still, unlike the drop in life expectancy caused by the long-running, complex problem of drug overdoses, this one, driven largely by Covid-19, is not likely to last as long because deaths from the virus are easing and the population is slowly getting vaccinated. The last time a pandemic caused a major decline in life expectancy was 1918, when hundreds of thousands of Americans died from the flu pandemic. Life expectancy declined by a whopping 11.8 years from 1917 to 1918, Dr. Arias said, bringing average life spans down to 39 years. But it fully rebounded the following year as deaths eased.

 

Data released by the US Centres for Disease Control and Prevention (US CDC) has revealed that the Covid-19 pandemic has caused a decline of one year in the life expectancy of Americans during the first half of 2020 as the first wave of novel coronavirus hit the country. This is the biggest fall in life expectancy in the US since World War 2.

 

Life expectancy at birth is defined as the number of years a baby born today can expect to live. A baby born between January-June 2020 in the US had a life expectancy of 77.8 years, which is a full year shorter than the 78.8 years a baby born in 2019 is expected to live. In terms of gender divide, it was 75.1 years for males and 80.5 years for females.

The hardest hit has been the Black community, which saw a drop of 2.7 years in their life expectancy, to 72, followed by the Hispanics whose life expectancy declined 1.9 years to 79.9 years and Whites, who saw a drop of 0.8 years in their life expectancy to 78. The 6 year glaring chasm between the life expectancy of the Blacks and the Whites reverses a trend of narrowing the gap since 1993. There was no preliminary data for Asians and Native Americans

U.S. Chamber of Commerce To Have New Leadership

The U.S. Chamber of Commerce is beginning one of its most consequential transitions in decades. In mid-March, CEO Tom Donohue will step down after 24 years leading the largest and most impactful business advocacy organization in the world, which serves as the voice for thousands of businesses operating across 45 countries.

Incoming Chamber President & CEO Suzanne Clark brings a wealth of experience to the role, having worked at the Chamber for 16 years and in the private sector for decades. Through a uniquely tumultuous year, Suzanne has served as a “trusted partner, leading the team and designing the strategy for the Chamber’s bright future.” You can read some of her initial thoughts on U.S. global engagement and our responsibility to advance the greater good.

USIBC President Nisha Biswal will also take on an expanded role at the Chamber as Senior Vice President for International Strategy and Global Initiatives, encompassing global security, sustainability and climate. The portfolio addition comes at a crucial time as the Chamber expands its cross-cutting work.

 

This week, the pivotal organization hosted ‘The State of U.S.-India Business’ with Indian Minister of Commerce & Industry Piyush Goyal, Ambassador Taranjit Singh Sandhu and USIBC’s recently announced Global Board Vice Chairs. In remarks on the road ahead for U.S.-India commercial and strategic ties, Ambassador Sandhu and Minister Goyal laid out their vision for a more ambitious bilateral trade agenda. In his keynote, Minister Goyal made headlines by suggesting that the previously negotiated mini trade deal was off the table, but pledged to engage with the new U.S. Trade Representative on a broader agreement. He also emphasized the need for collaboration to address emerging challenges on intellectual property rights (IPR) protection and healthcare access tied to India’s COVID-19 vaccine manufacturing and distribution. The public session was preceded by a closed-door roundtable with Minister Goyal and senior executives from the USIBC membership.

It continued conversations on the U.S.-India partnership with the launch of our new ‘Accelerate to 500’ series, which focuses on trade opportunities generated at the city and state level. Accelerate to 500, presented in collaboration with law firms, investment agencies and professional services firms, helps chart a path towards the goal of $500 billion in two-way trade. During the session, which featured remarks by Invest India MD & CEO Deepak Bagla and Acting Under Secretary for International Trade Diane Farrell, we also launched a ‘Doing Business in India’ report developed in collaboration with Nishith Desai Associates and Sannam S4.
This week also saw the first meeting of the ‘Quad’ since the Biden administration took office, and the 3rd since the grouping was established. The session focused on cooperation on COVID-19 response and recovery and climate change. Secretary of State Tony Blinken, External Affairs Minister Dr. S Jaishankar and counterparts from Australia and Japan also discussed countering disinformation, counter-terrorism, maritime security, and democratic resilience. The Indian Ministry of External Affairs readout of the session focused on “rules-based international order, underpinned by respect for territorial integrity and sovereignty,” noteworthy given the recent drawdown of troops from the disputed India-China border region.

The week ended with cheers from the global community as the United States formally rejoined the Paris Agreement. While a return to the Agreement has long been a priority for President Biden, his administration will now face the more challenging task of convincing skeptics at home and abroad that it is serious about its emissions-cutting commitments.

Looking ahead, USIBC will continue its high level engagements next week with a post-budget conversation featuring Secretary of Economic Affairs Tarun Bajaj, focused on maximizing the impact of the FY21-22 Union Budget.

Is India Moving Towards A Four-Day Work Week?

The proposed new labor codes could provide companies with the flexibility of four working days in a week, even as the working hours limit of 48 hours for a week will remain “sacrosanct”, Labor and Employment Secretary Apurva Chandra said

As the government finalizes the rules for the new labour codes, the Labour Ministry is now considering giving flexibility to companies to have four working days instead of five or six.

The proposal: The proposed new labor codes could provide companies with the flexibility of four working days in a week, even as the working hours limit of 48 hours for a week will remain “sacrosanct”, Labour and Employment Secretary Apurva Chandra said on Monday.

This implies that there will be longer working hours if the working days are reduced. For instance, a four working day week will have to meet the 48-hour weekly work hours, resulting in daily shifts of 12 hours, which will correspondingly reduce if there is five-day or six-day working week.

When and how will this be rolled out: The Ministry of Labour and Employment is likely to complete the process to finalise the rules for four labour codes soon. The provision of flexibility to have reduced working days of four days in the labour code rules will mean that companies will not require prior government nod to enact it.

The Labor Secretary, however, clarified that having a reduced number of working days does not mean a cut in paid holidays. Therefore, when the new rules will provide flexibility of four working days, it would imply three paid holidays.

“It (working days) could come down below five. If it is four, then you have to provide three paid holidays…so if it has to be a seven day week, then it has to be divided into 4, 5 or 6 working days,” Chandra said.

The rulemaking process is already underway and likely to be completed in the coming week. “All stakeholders are also consulted in framing of rules. This ministry would soon be in a position to bring into force the four Codes, viz., Code on Wages, Industrial Relations, Occupational Safety, Health and Working Conditions (OSH) and Social Security Codes,” Chandra had said.

The labour ministry had envisaged implementing the four labour codes from April 1 this year in one go. The ministry is in the final leg of amalgamating 44 central labour laws into four broad codes on wages, industrial relations, social security and OSH. The ministry wants to implement all four codes in one go.

 

Living Paycheck to Paycheck? 7 Tips for Avoiding Extra Fees

Living paycheck to paycheck is exhausting. As soon as your paycheck comes in, you have to spend it all on necessities like rent, utilities, insurance, and paying off debt. There’s usually little, if anything, left for savings or recreational activities.

 

Then, something even worse happens: you’re hit with a fee. You might have missed a payment deadline, overdrawn your account, lost your credit card, or encountered a different situation that decided your wallet needed another gut-punch. It might only sound like $12, the cost of a cheap meal out, but it’s $12 you don’t have and desperately need for something else.

You might feel dread toward these impending fees when you pay a bill, or they come at you from out of nowhere. If you live paycheck to paycheck and want to make sure as much of your hard-earned money goes where it should, follow these seven tips for avoiding unnecessary fees.

Avoid Banks that Charge Maintenance Fees

Bank “maintenance fees” are particularly sinister. Financial institutions charge them if you don’t meet specific requirements, such as holding a minimum balance in your account ($1,500 in the case of many big banks) or making frequent direct deposits over a specified amount. You might not even be aware of them unless you check your billing statement.

It’s not fair that banks charge you money for not having enough money. Maintenance fees are often monthly and can accumulate over time — Americans paid $3.5 billion in maintenance fees in 2017. These fees perpetuate the poverty cycle because if you live paycheck to paycheck or have irregular income (like freelancers), of course you don’t have $1,500 in your account at all times.

Don’t use banks that charge maintenance fees. Many big banks do, but examples of financial institutions that don’t include Ally Bank, Capital One Bank 360, and FNBO Direct.

Deposit Money the Long Way

Deposit money into your account the long way, if possible. This process means being patient when getting paid, especially if you’re a contractor or freelancer that relies on services like PayPal.

PayPal offers multiple bank transfer options, including Standard Transfer and Instant Transfer. The former is free and takes one to three business days, but the latter costs 1% of the transaction up to $10. Opt for the Instant Transfer option when you can, or use mobile deposit with a physical check.

Use Apps that Don’t Charge Minimum Fees

However, the pay cycle is notorious for delays that make living paycheck to paycheck even more difficult. It’s entirely possible that you need your money now, not later — but what can you do about it? You can’t exactly force direct deposit to go faster.

One solution is to use financial apps that allow you to access your paycheck without having to wait weeks for it. One such app is Earnin, which you can use to access up to $100 of your paycheck per day, up to $500 per pay period. The app deducts the amount you took out on payday without mandatory fees or interest. Earnin is community-driven, so you can pay however much you think is fair as a thank you for its service.

Set Up Auto Pay

Are late fees the bane of your existence because you regularly forget to pay a bill on time? Apps like Earnin can help you avoid late fees, but consider setting up auto-pay on your credit card and other if you can afford to do so. This way, you never have to remember payment deadlines; your account will pay what you owe automatically.

Sign Up for Low-Balance Alerts

If you cannot risk auto-pay because you’re worried about insufficient funds, then sign up for low-balance alerts with an app or through your bank. Low-balance alerts will notify you when your account balance has dipped below a certain number — possibly of your choosing, depending on the service — so that you know when it’s time to replenish your account with additional funds or to watch your budget before bills are due.

These alerts aren’t perfect because banks can be slow to share information with external apps. However, they can help avoid bank overdraft fees, which financial institutions charge if you opt-in to its overdraft protection service. While the ability to overdraw your checking account and complete transactions regardless of funds seems convenient, there are other pros and cons to consider (you can also open a checking account with no overdraft fees).

Use Your Bank’s ATMs

ATM fees are one of the most-hated fees in the U.S. You incur these fees if you want to access your money from a machine that’s not in your bank or credit union’s network.

Only use ATMs within your financial institution’s network when possible. If none are around, you can obtain cash at a supermarket that offers cash back options with a small purchase (which sounds like a fee in itself, so only buy something you need!).

Opt-Out of Paper Communications

Your bank is going to communicate with you, and you would be wise to pay attention. Unfortunately, many banks default to mailing paper communications instead of using digital means — and then charge you for it. Log into your online account or call your bank’s customer service line to opt-out of paper notifications and save yourself some cash.

Unnecessary fees make it extra challenging for people living paycheck to paycheck to save money. If you want to lose as little of your money as possible to predatory financial institutions, research what fees your bank (or prospective bank) charges and which they are most likely to make you pay, depending on your situation.

(This article originally appeared on Earnin.)

As Biden Reopens ACA Enrollment, Are You Eligible To Sign Up Or Switch Health Plans?

For people who’ve been without health insurance during the pandemic, relief is in sight.

In January, President Biden signed an executive order to open up the federal health insurance marketplace for three months starting Monday so uninsured people can buy a plan and those who want to change their marketplace coverage can do so.

Consumer advocates applauded the directive. Since 2016, the number of Americans without health insurance has been on the rise, reaching 30 million in 2019. The economic upheaval caused by the novel coronavirus has made a bad situation worse, throwing millions off their insurance plans.

 

Biden’s move is in stark contrast to the Trump administration’s approach. As COVID-19 took hold last spring and the economy imploded, health experts pleaded with the Trump administration to open up the federal marketplace so people could buy insurance to protect themselves during the worst public health emergency in a century. The administration declined, noting that people who suddenly found themselves without coverage because they lost their jobs were able to sign up on the marketplace under ordinary rules. They also cited concerns that sick people who had resisted buying insurance before would buy coverage and drive up premiums.

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The Biden administration is promising to spend $50 million on outreach and education to get the word out about the new special enrollment period. That’s critical, experts say. Though the number of people signing up for Affordable Care Act plans has generally remained robust, the number of new consumers enrolling in the federal marketplace has dropped every year since 2016, according to KFF, corresponding to funding cuts in marketing and outreach. (KHN is an editorially independent program of KFF.)

“There are a lot of uninsured people who even before COVID were eligible for either hefty marketplace subsidies or for Medicaid and not aware of it,” says Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. A marketing blitz can reach a broad swath of people and hopefully draw them in, regardless of whether they’re uninsured because of COVID or not, she says.

Here are answers to questions about the new enrollment option.

Q: When can consumers sign up, and in which states?

The sign-up window will be open for three months, from Monday through May 15. Uninsured residents of any of the 36 states that use the federal healthcare.gov platform can look for plans during that time and enroll.

Nearly all of the states and the District of Columbia that operate their own marketplaces are establishing special enrollment periods similar to the new federal one, though they may have somewhat different time frames or eligibility rules. In Massachusetts, for example, the sign-up window remains open until May 23, while in Connecticut, it closes March 15. Meanwhile, Colorado has reopened enrollment in its marketplace for residents who lack insurance, but most people already enrolled in one of the state’s marketplace plans won’t be allowed to switch to a different plan until the regular open enrollment period in the fall.

At this point, only Idaho has not announced plans to reopen its marketplace for enrollment, says Corlette. It may yet do so, however.

Q: Can people who lost their jobs and health insurance many months ago sign up during the new enrollment period?

Yes. The enrollment window for people in states that use the federal marketplace is open to anyone who is uninsured and would normally be eligible to buy coverage on the exchange (people who are serving prison or jail terms and those who are in the country without legal permission aren’t allowed to enroll).

People with incomes up to 400% of the federal poverty level (about $51,500 for one person or $106,000 for a family of four) are eligible for premium tax credits that may substantially reduce their costs

Typically, people can buy a marketplace plan only during the annual open enrollment period in the fall or if a major life event gives them another opportunity to sign up, in what’s called a special enrollment period. Losing job-based health coverage is one event that creates a special sign-up opportunity; so is getting married or having a baby. But usually people must sign up with the marketplace within 60 days of the event.

With the new special enrollment period, how long someone has been uninsured isn’t relevant, nor do people have to provide documentation that they’ve lost job-based coverage.

“The message is quite simple: Come and apply,” says Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities.

Q: What about people who are already enrolled in a marketplace plan? Can they switch their coverage during this new enrollment period?

Yes, as long as their coverage is through the federal marketplace. If, for example, someone is enrolled in a gold plan now on HealthCare.gov, but wants to switch to a cheaper bronze plan with a higher deductible, that’s allowed. As mentioned above, however, some state-operated marketplaces may not make that option available, so check your state’s website. You can find a list of the websites for state exchanges here.

 

Q: Many people have lost significant income during the pandemic. How do they decide whether a marketplace plan with premium subsidies is a better buy for them than Medicaid?

They don’t have to decide. During the application process, the marketplace asks people for income information. If their annual income is below the Medicaid threshold (for many adults in most states, that’s 138% of the federal poverty level –which works out to be about $18,000 for an individual), they will be directed to the state’s Medicaid program for coverage. If people are eligible for Medicaid, they can’t get subsidized coverage on an ACA exchange.

 

People can sign up for Medicaid anytime; there’s no need to wait for an annual or special enrollment period.

Those already enrolled in a marketplace plan whose income changes should go back into the marketplace and update their income information as soon as possible. They may be eligible for larger premium subsidies for their marketplace plan or, if their income has dropped significantly, newly eligible for Medicaid. (Likewise, if their income has increased and they don’t adjust their marketplace income estimates, they could be on the hook for overpayments of their subsidies when they file their taxes.)

Q: What about people who signed up under the federal COBRA law to continue their employer coverage after losing their job? Can they drop it and sign up for a marketplace plan?

Yes, people in federal marketplace states can take that step, health experts say. Under COBRA, people can be required to pay the full amount of the premium plus a 2% administrative fee. Marketplace coverage is almost certainly cheaper.

Normally, if people have COBRA coverage and they drop it midyear, they can’t sign up for a marketplace plan until the annual fall open enrollment period. But this special enrollment period will give people that option.

(Kaiser Health News is a nonprofit, editorially independent program of the Kaiser Family Foundation, and is not affiliated with Kaiser Permanente)

 

Elon Musk, The World’s Richest Man, Gets A Whole Lot Richer

For a CEO who receives no salary, Elon Musk’s 2020 payday reached sky-high levels. He received four grants to buy 8.4 million Tesla shares in 2020. After paying the exercise price, those blocks of stock options were each worth $6.2 billion at Wednesday’s closing price. The combined $24.8 billion value of those options alone is more than Musk was worth a year ago when Forbes calculated its billionaire’s list, when he was ranked as the world’s 31st richest person.

2021 and 2022 could be nearly as lucrative for him.

The company’s annual financial filing this week disclosed that Musk will probably receive three additional options grants this year, each as large and as lucrative as those he received in 2020.

At current values, those three options tranches would be worth $18.6 billion.

Analysts are now forecasting that Tesla’s 2022 financial results will likewise reach heights that would bring Musk three additional blocks of options. Tesla could hit one of those profit targets in 2021, which would mean Musk could match the four tranches of options he received last year.

 

Few investors are complaining about Musk’s pay.

The stock’s 743% rise in 2020 made it the stock market’s biggest winner, as well as one of the most valuable companies in the world. That has quieted most of the criticism he might have faced.

“The cachet of Tesla is Musk,” said Daniel Ives, tech analyst for Wedbush Securities. “The reason investors have not batted an eyelash is that due to Musk’s strategic direction, Tesla is on top of the EV [electric vehicles] mountain going to the golden age of EVs. And he’s put Tesla on the cusp of being a trillion-dollar market cap company.”

The rise in Tesla’s stock price, and his options to buy new shares, has made Musk the richest person on the planet, according to Bloomberg, surpassing Amazon (AMZN) founder Jeff Bezos.

Unlike Musk, Bezos doesn’t receive stock options from Amazon, and he collected relatively modest salary of $81,840 in 2019, plus security services valued at $1.6 million a year. But rather than benefit from stock options or grants as do most CEOs, he benefits primarily from the rise of his Amazon shares.

Musk similarly owns 170 million Tesla shares outright, worth about $137.2 billion, in addition to those existing shares he has options to buy new ones. In fact, the nearly $123 billion gain in 2020 in the value of shares Musk already owns dwarfs the value of the additional options he received.

Musk, who bought a controlling stake in Tesla in 2004 when it was an upstart private company years from building its first car, takes no salary. Before his current lucrative compensation package he had an earlier version that paid him with options to buy 22.9 million split-adjusted Tesla shares for a price of $6.24 each. Those options are worth $18.3 billion today.

The options he received last year came from a second compensation package that was overwhelmingly approved by Tesla shareholders in 2018. It allows him to receive options to buy as many as 101 million split-adjusted shares of stock for $70 each. Those options can come in 12 separate, equally sized tranches.

If Tesla’s share price keeps climbing, so will the value of the options. In late May, when Tesla confirmed Musk received the first block of options for 2020, they were valued at “only” $770 million after the exercise price. Today they’re worth $6.2 billion.

Musk has not exercised any of his options. Executives typically exercise them when they are due to expire, or to free up cash. Musk has never sold Tesla shares.

Those options come at a cost to Tesla, although it’s a non-cash expense.

Stock-based compensation accounted for a $1.7 billion hit to Tesla’s bottom line last year. The company doesn’t break out how much of that was Musk’s or how much was stock for its other 70,750 employees.

The company makes stock widely available to its employees. Its filing said that “our compensation philosophy for all of our personnel reflects our startup origins, with an emphasis on equity-based awards.”

But the same filing says that the company does not match employees’ contributions to its 401(k) plans, in cash or in company stock.

When Musk was recently asked on Twitter about the lack of company match into 401(k) plans in the face of his own compensation package, he responded, “Everyone at Tesla receives stock. My comp is all stock/options, which I do not take off the table. That’s what you’re missing.”

Tesla said that Musk got so many options, so much sooner than expected, that it caused the spike in stock-based compensation expense. In 2019, stock-based compensation was about $900 million.

Musk received no options in 2019, but some of that $900 million was an expense Tesla booked because it believed that Musk would receive options in early 2020.

While the stock-based compensation doesn’t drain cash from Tesla’s coffers, it does change the company’s profit picture.

The company reported positive net income for the first time in 2020, earning $721 million. Critics point out that its profit was far less than the $1.6 billion Tesla received from the sale of regulatory credits to other automakers. They claim the company actually lost money on car sales, and it can’t depend on the revenue from the sale of those credits in the long term.

Without the $1.7 billion in stock based compensation, Tesla’s net income would exceed the gains from the sale of those regulatory credits. And Telsa critics would not have been able to claim it lost money selling cars.

Oil Prices Climb Back To Pre-Pandemic Levels

The price of oil has recovered to its pre-pandemic levels having hit an all-time low last year. While demand for oil is still lower than normal, there are hopes of a speedier than expected economic recovery as vaccines are rolled out.

Oil prices are often seen as a barometer for economic activity, still struggling with the virus downturn. “Black gold” has now reached $60 a barrel having risen more than 50% in the last few months.

Brent crude, the major benchmark for oil, has seen strong growth recently. Futures contracts, which are based on the price of future delivery, have jumped 59% since November.

West Texas Intermediate (WTI), the benchmark for US oil, last week rose above $55 a barrel for the first time in over a year.

“The biggest driver for the latest surge in prices seen through last week was a sharp upturn in expectations for economic and oil demand recovery on signs that the coronavirus may finally be in retreat,” Vandana Hari, founder of Singapore-based oil markets data firm Vanda Insights told the BBC.

Demand has been rising in parts of the world, particularly Asia. “We are quite optimistic about what it is that we are seeing in China,” Royal Dutch Shell chief executive Ben van Beurden said last week.

Other factors have also played their part to push up prices such as efforts by oil-producing nations, particularly Saudi Arabia, to limit output.

Since agreeing to the cut in production last April, producers have held back a cumulative 2.1 billion barrels of oil, leading to decreasing stockpiles.

The coronavirus crisis has been devastating for the petroleum industry, and last year prices slumped below zero with more than one billion surplus barrels.

Demand for fuel from airlines has seen the most dramatic fall as travel curbs remain in place. Air passenger traffic is 70% below year-ago levels, according to the International Air Transport Association.

But demand has picked up in other areas, thanks in part to the shift to working and consuming more from home.

As consumers are buying more online, this has spurred demand for fuel to power delivery trucks and vans, along with cargo ships and and freight trains.

The e-commerce boom has also caused a spike for plastic packaging, which is made using oil products.

However, oil demand is still lower than pre-pandemic levels and a slow economic recovery would delay a full rebound in world energy demand for years to come, the International Energy Agency warned last month.

“There could be more setbacks in the spread of the virus or the vaccinations, causing a pullback in prices, though short of another crisis,” added Ms Hari.

(Picture: Business Focus)

Who Will Replace Jeff Bezos After He Steps Down As Amazon Chief Executive

Amazon founder Jeff Bezos has announced that he will step down as chief executive of the e-commerce giant that he started in his garage nearly 30 years ago. He will become executive chairman, a move he said would give him “time and energy” to focus on his other ventures.

Mr Bezos, who has a fortune of almost $200bn, will be replaced by Andy Jassy, who currently leads Amazon’s cloud computing business. The change will take place in the second half of 2021, the company said.

“Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else,” Mr Bezos said in a letter to Amazon staff on Tuesday.

“As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have,” he added.

Mr Bezos, 57, has led Amazon since its start as an online bookshop in 1994. The firm now employs 1.3 million people globally and has its hand in everything from package delivery and streaming video to cloud services and advertising.

He’s amassed a fortune of $196.2bn, according to Forbes’ list of billionaires., making him the world’s richest man. However, Bloomberg’s billionaire index puts Tesla boss Elon Musk just ahead of him.

Amazon saw its already explosive growth skyrocket last year, as the pandemic prompted a surge in online shopping. The firm reported $386bn (£283bn) in sales in 2020, up 38% from 2019. Profits almost doubled, rising to $21.3bn.

In announcing the plans, Mr Bezos said he would continue to focus on new products and initiatives. “When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention,” he said. “Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”

The shake-up comes as Mr Bezos has developed an increasingly public profile.  He has endured a public divorce, become a target for labour and inequality activists, and poured his wealth into other businesses, such as space exploration firm Blue Origin and the Washington Post newspaper.

‘Not leaving’

Amazon also faces increasing scrutiny from regulators, who have questioned its monopoly power. And its dominance in cloud computing is being increasingly challenged by other tech firms, such as Microsoft and Alphabet, parent company of Google and YouTube.

Mr Bezos’s decision to hand over the day-to-day operation of the company came as a surprise. But investors appeared unfazed, with little change in the firm’s share price in after-hours trade.

In a call with analysts to discuss the firm’s financial results, Amazon chief financial officer Brian Olsavsky said: “Jeff is not leaving, he is getting a new job… The board is super active and important in Amazon’s success story.”

Mr Jassy, a Harvard graduate, has been with Amazon since 1997 and helped develop Amazon Web Services, which has long been seen as the profit engine of the company.

The division provides cloud computing and storage for governments and companies including McDonald’s and Netflix.

“Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence,” Mr Bezos said.

Sophie Lund-Yates, analyst at Hargreaves Lansdown, said it was “no accident” that Amazon is tapping the head of the cloud business to lead the company.

This is a real surprise. But you have to remember that Jeff Bezos himself is worth nearly $200bn.

And when you’re that rich imagine what you can do. Jeff Bezos has some pretty lofty ambitions outside of Amazon.

His Blue Origin company wants to “build a road to space”. He’s also sunk $10bn into Earth Fund, designed to help combat the effects of climate change.

Oh, and he also owns the Washington Post.

How will Amazon cope? Well, importantly, he’s not leaving. As executive chair and founder he’ll still exercise huge power over the company.  However, stepping back will inevitably mean less influence.

His replacement – Andy Jassy – has been running Amazon Web Services, Amazon’s booming cloud business division.  His rise to the top underscores how important this business has become to Amazon.

(Picture: Geek Wire)

Democrats Want To Give $3,000 Child Benefit As Part Of Biden Relief Package

House Democratic leaders planned to unveil legislation that would give millions of families at least $3,000 per child, advancing a key provision in President Joe Biden’s $1.9 trillion Covid-19 relief package.

Chairman of the Ways and Means Committee Richard Neal, who is leading the crafting of the legislation for the stimulus package, will introduce the enhanced Child Tax Credit bill, according to a committee spokesperson.

“The pandemic is driving families deeper and deeper into poverty, and it’s devastating. We are making the Child Tax Credit more generous, more accessible, and by paying it out monthly, this money is going to be the difference in a roof over someone’s head or food on their table,” Neal said in a statement provided to CNN.

The legislation would provide $3,600 per child under the age of six and $3,000 per child age six through 17 for a single year. The full benefit is available to single parents earning up to $75,000 annually and for couples earning up to $150,000. Payments would phase out after those thresholds.

Families can receive the Child Tax Credit payments on a monthly basis, which advocates say will make it easier to pay their obligations compared to getting a lump sum at tax time. If this particular legislation is passed by Congress, the payments would begin in July for one year.

Another big change: The credit would become fully refundable for the year. Some 27 million children currently live in low-income families who receive a partial or no tax credit because they earn too little, according to the left-leaning Center on Budget and Policy Priorities.

The current Child Tax Credit provides up to $2,000 per child under the age of 17. The credit phases out for single parents with a modified adjusted gross income over $200,000, and $400,000 for married couples. Families receive a single payment.

Some 90% of families with children will receive an average credit of $2,380 in 2020, according to a non-partisan Tax Policy Center estimate. Reps. Rosa DeLauro of Connecticut, Suzan DelBene of Washington and Ritchie Torres of New York are also set to introduce on Monday standalone legislation that would continue the expanded benefit permanently.

Congress should pass the enhancement permanently while there’s a chance, DeLauro, who has been working on bolstering the child tax credit since 2003, said in a statement. “We cannot stop here. We must use this moment to pass the American Family Act and permanently expand and improve the child tax credit. One year is not enough for the children and families battling not just the coronavirus, but poverty, too,” the Connecticut Democrat said in the statement.

Some Republicans also support increasing the Child Tax Credit. Utah Sen. Mitt Romney last week unveiled a proposal to provide a monthly cash benefit of $350 for each young child ($4,200 annually) and $250 for each school-aged child ($3,000 annually).

However, his measure would also eliminate several existing government assistance programs — including Temporary Assistance for Needy Families — and tax provisions, including the deduction for state and local taxes.

Romney said his plan would lift nearly 3 million children out of poverty, while not adding to the federal deficit. It would cost about $66 billion, including accompanying changes to the Earned Income Tax Credit.

Biden’s proposal to give relief to low-income families

Biden’s relief package, which he unveiled last month, called for augmenting the Child Tax Credit for one year to help fight against poverty.

The President’s proposal also includes an expansion of the Earned Income Tax Credit to more low-income workers, along with $1,400 stimulus checks and increased unemployment, nutrition and housing aid, among other measures.

“All told, the American Rescue Plan would lift 12 million Americans out of poverty and cut child poverty in half. That’s 5 million children lifted out of poverty,” Biden said last month before signing two executive orders that would augment nutrition assistance and strengthen federal worker protections.

Biden also noted that the proposal would reduce poverty among Black families by one third and among Hispanic households by almost 40%. A one-year expansion would cost about $120 billion, according to the Committee for a Responsible Federal Budget, a non-partisan fiscal watchdog.

(Picture: Chicago Tribune)

Biden Wants $1.9 Trillion Covid Relief With Or Without GOP Support

President Joe Biden gave his strongest indication yet that he’ll push for swift action on coronavirus relief for the U.S. economy without Republican support, as House lawmakers cleared the way for passing his $1.9 trillion stimulus plan with only Democratic votes.

Highlighting his emphasis on speed, Biden signaled he was resigned to his minimum-wage hike not being a part of the bill. “Apparently, that’s not going to occur because of the rules of the United States Senate,” he said in a CBS interview. The $15 an hour proposal was panned by Republicans, who sought to block it in the Senate.

“If I have to choose between getting help right now to Americans who are hurting so badly and getting bogged down in a lengthy negotiation — or compromising on a bill that’s up to the crisis — that’s an easy choice,” Biden said in remarks Friday at the White House. “I’m going to act and I’m going to act fast.”

Both chambers of Congress have now passed a budget resolution, a key procedural step that sets up the ability for Democrats to pass President Joe Biden’s sweeping $1.9 trillion Covid-19 relief package without the threat of a filibuster from Republicans who oppose it.

The Senate passed the budget resolution early Friday morning 51-50 on a party line vote after Vice President Kamala Harris showed up at the Capitol to break the tie. The House passed the resolution later in the day Friday. The House had already passed the budget measure earlier in the week, but because it was amended in the Senate it needed to go back to the House for a final vote.

Passage in the Senate followed hours of voting on amendments in an exhausting ritual known as a “vote-a-rama,” when senators can theoretically offer as many amendments to the budget resolution as they desire.

The budget resolution that passed is not the Covid relief bill. It simply sets the stage for Democrats to be able to use a process known as “budget reconciliation” to pass the relief bill on a party-line vote, possibly in late February or March, after the impeachment trial of former President Donald Trump is complete in the Senate.

Embedded in the budget resolution are reconciliation instructions for multiple congressional committees to formally draft and approve legislation on things like funds for vaccine production and distribution, unemployment insurance, stimulus checks and more.

The House already passed the budget measure earlier in the week. But because it was amended in the Senate, the House had to revote on it Friday.

House Speaker Nancy Pelosi said Friday that next week, they will begin working on the specifics of the bill, and predicted that the House will send a bill to the Senate “hopefully in a two week period of time,” so that “this will be done long before the due date” of the expiration of unemployment insurance in March.

Biden has said he is willing to go forward without the support of Republicans, but he’s also stressed that he’s willing to make certain concessions if it will earn bipartisan support.

Republicans are unhappy Democrats are resorting to the aggressive tactic, though, arguing it will set a partisan tone for the rest of Biden’s presidency and that he’s not operating as the political unifier he pledged to be.

The 10 Senate Republicans who met with the President to discuss his relief package are pushing for talks to continue, sending a letter to the White House. “We remain committed to working in a bipartisan fashion and hope that you will take into account our views as the legislative process moves forward,” the group, led by Maine Sen. Susan Collins, said.

 

(picture: ABC 7)

Chinese Economy To Overtake US ‘By 2028’ Due To Covid

China will overtake the US to become the world’s largest economy by 2028, five years earlier than previously forecast, a report by the UK-based Centre for Economics and Business Research (CEBR) said. China’s “skilful” management of Covid-19 would boost its relative growth compared to the US and Europe in coming years, the report stated. Meanwhile India is tipped to become the third largest economy by 2030.
The CEBR releases its economic league table every year on 26 December. Although China was the first country hit by Covid-19, it controlled the disease through swift and extremely strict action, meaning it did not need to repeat economically paralysing lockdowns as European countries have done.
As a result, unlike other major economies, it has avoided an economic recession in 2020 and is in fact estimated to see growth of 2% this year.
‘China is a hard rock. It won’t be beaten by virus’ The US economy, by contrast, has been hit hard by the world’s worst coronavirus epidemic in terms of sheer numbers. More than 330,000 people have died in the US and there have been some 18.5 million confirmed cases.
The economic damage has been cushioned by monetary policy and a huge fiscal stimulus, but political disagreements over a new stimulus package could leave around 14 million Americans without unemployment benefit payments in the new year.
“For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China,” says the CEBR report. “The Covid-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favor.”
The report says that after “a strong post-pandemic rebound in 2021”, the US economy will grow by about 1.9% annually from 2022-24 and then slow to 1.6% in the years after that.
By contrast the Chinese economy is tipped to grow by 5.7% annually until 2025, and 4.5% annually from 2026-2030.
China’s share of the world economy has risen from just 3.6% in 2000 to 17.8% now and the country will become a “high-income economy” by 2023, the report says.
The Chinese economy is not only benefitting from having controlled Covid-19 early, but also aggressive policymaking targeting industries like advanced manufacturing, said CEBR deputy chairman Douglas McWilliams.
“They seem to be trying to have centralised control at one level, but quite a free market economy in other areas,” he told the BBC. “And it’s the free market bit that’s helping them move forward particularly in areas like tech.”
But the average Chinese person will remain far poorer in financial terms than the average American even after China becomes the world’s biggest economy, given that China’s population is four times bigger.
In other predictions:
The post-Brexit UK economy will grow by 4% annually from 2021-25 and 1.8% annually from 2026-30 (after shrinking in 2020)
India had overtaken the UK as the fifth-biggest economy in 2019 but has slipped behind it again due to the pandemic’s impact. It won’t take over again until 2024, the CEBR says. India’s economy will go on to overtake Germany in 2027 and Japan in 2030

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