Task-7

CRUDE OIL
IMPACT OF CRUDE OIL FLUCTUATIONS IN DIFFERENT SECTORS
REFINERS AND OIL MARKETING COMPANIES:-
Ideally the refineries should not be affected by the fall in crude oil prices because what matters
for them is the gross refining margin (GRM). GRM is measured as the margin they generate for
refining one barrel of oil. Since crude oil prices and the product prices move in tandem, the
GRM remains stable.

However, thing may change because of the entry of the US into the oil export market. This is
because the US exports will hit the global market in the form of oil distillates and not as per
crude.

UPSTREAM OIL COMPANIES:-

Indian private upstream oil companies have reacted negatively to the fall in international crude
oil prices. Cairn India stock prices have fallen 37% in the last 7 months and are trading close to a
52-week low.
This is because the equities have a multiplier effect and therefore, the losses of commodity
stocks are usually higher than the actual cut in commodity prices. However, the cut in Indian
upstream oil companies, as of now, are less compared to the cut in international crude oil prices.

UPSTREAM SERVICE PROVIDERS:-

Service providers to the upstream oil companies, like Aban Offshore, is another segment that has
been affected badly by the crude oil price crash. Aban has fallen by 45% in the last 6 months.
While Aban’s Indian operation may not get affected much because it caters mainly to ONGC, its
international operation may take a major hit in the long term if the oil prices don’t stage a
comeback. This is because the new exploration may get postponed or the drilling rigs will be
forced to settle for a lower yield Sectors that will benefit

Paints

Since most of the players here are following the b2c model, paint companies should be able to
show significant net profit growth in the coming years if crude prices remain low. “Paint
companies will have some inventory already with them that are bought or contracted at higher
prices. So the benefit of this crude fall will accrue to them only with a 3-4 months lag,” says
Harsha Upadhyaya, CIO Equity, Kotak Mahindra Mutual Fund.

Tyres

Increased automobile usage due to lower petrol and diesel prices should increase demand for
tyres in the replacement segment. Synthetic rubber can be produced from petroleum waste and
price of natural rubber, its main raw material, is also linked to crude oil prices. However, most
stocks from this sector have already rallied by more than 100% and therefore, investors need to
enter here only after a decent correction.

Auto

The benefit to this sector will come in the form of increased demand due to fall in fuel prices.
However, the government has spoiled the show by increasing excise duties at a time when the
sector is going through tough times and not able to increase its sales.
Higher crude oil prices will adversely impact the twin deficits of current account and fiscal,
which will have spillover effects on monetary policy, consumption and investment
 India, the world’s seventh-largest economy, was a key beneficiary of falling crude oil
prices between 2013 and 2015. An analysis by this newspaper, more than a year ago, had
indicated that almost the entire reduction of about 0.6% of the gross domestic product
(GDP) in India’s fiscal deficit between FY14 and FY16 could be attributed to the sharp
fall in crude prices. Lower crude prices also contributed to the narrower current account
deficit. The biggest benefit of the fall in oil prices was evident in narrower twin deficits.
Since the pass-through of the fall in crude prices to retail consumers was limited (the
government retained a large part of the benefits by hiking excise duty on retail fuel
products), the direct impact on inflation—measured by consumer price index (CPI)—was
muted.
 Things, however, started reversing about two years ago and have gathered pace in the
past few months. As against an average price of $46.2/barrel for the Indian basket of
crude oil in FY16, it rose to $56.4/barrel in FY18 and averaged $65/barrel in the fourth
quarter of FY18. With the US’ decision to walk away from the Iran nuclear deal and to
re-impose sanctions on Iran, upside risks to crude prices cannot be ruled out. It is then
worth understanding the impact of higher crude prices on the Indian economy. higher
crude prices will adversely affect the twin deficits—fiscal and current account deficit—of
the economy, which will have spillover impact on the monetary policy, and consumption
and investment behaviour in the economy. 

CURRENT CRUDE PRICE DROP ON OUR ECONOMY:-

 the oil price drop is possibly the only positive news for India’s economy at this juncture.
The country’s current account balance is barely negative according to the Reserve Bank
of India (RBI) data, at 0.2 per cent of gross domestic product (GDP) in the December
quarter of 2019-20. India had a current account deficit (CAD) of 2.7 per cent in the same
quarter the previous year. On a sequential basis, it shrank from 0.9 per cent of GDP in the
September quarter.
  The present CAD situation will help the finance ministry, should the import of medical
equipment surge. Though the Indian rupee’s depreciation — it has dropped 3.34 per cent
against the US dollar since March 7 — will hurt CAD, one must consider that the RBI
held $475.6 billion in forex reserve as on March 27, 2020. India’s forex reserve has
increased by $62.7 billion since March 2019 — that is no small comfort for an emerging
economy often hit hard by oil prices. The total foreign portfolio investments (FPIs) in
India are about $300 billion, so the present level of reserves provide an adequate buffer.
On the flip side, a low CAD means the economy’s capacity to draw foreign investment is
also limited.

Inflation: Low oil prices help cool inflation. The RBI on Monday released its quarterly data on
household inflation expectations and the 'Industrial Outlook Survey of the Manufacturing
Sector'. The first report said, “median inflation expectations have declined by 10 basis points and
20 basis points, respectively, in comparison with the previous survey round”. Earlier surveys had
pointed to rising inflation exceptions, so the reversal is significant.

Fiscal impact: Cheaper oil can hurt the government’s purse, too. Close to 90 per cent of the total
excise duty the government generates comes from oil. Excluding customs, oil revenue accounted
for Rs 2,63,812 crore in 2018-19. While the government on March 14 raised excise duty on
petrol and diesel by Rs 3 a litre each, the receipts for 2019-20 would still possibly be about Rs
14,000 crore lower than last year. As demand falls further, the government’s receipts in 2020-21
could decline more and fall way short of the estimated Rs 2.4 trillion.

 Impact on India’s oil companies: Markets indicate that the fortunes of downstream oil
marketing companies in India are unlikely to improve anytime soon. On the National Stock
Exchange (NSE), the stock of Indian Oil Corporation Ltd (IOCL) has shed close to 53 per cent of
its value since its 52-week high of Rs 170.75, hit on June 3 last year. IOCL’s decision to declare
a force majeure on its supplies from Saudi Arabia has only added to the perceived agony of the
company.
 GEOPOLITICAL RISK:-

US,CHINA TRADEWAR WITH REGARD TO US TRADE DEFICIT

The U.S. trade deficit with China in 2019 was $345.6 billion.1 That's 18% less than 2018's
$419.5 billion deficit. The trade deficit exists because U.S. exports to China were only $106.6
billion while imports from China were $452.2 billion

 In an effort to manage the large U.S. trade deficit with China, President Donald Trump
began imposing import tariffs on Chinese imports in 2018.
 Low-priced consumer goods produced in China has been dominating American
importation over the years.
 China can manufacture many goods at competitive prices because of two comparative
advantages: lower standards of living and a partial pegging of the yuan to the dollar. 
 To keep export prices low, China buys a large volume of Treasurys. It has become one of
the largest lender nations to the United States, currently second only to Japan.

Causes

China produces many consumer goods at lower costs than other countries, and buyers, including
those in the United States, are drawn to low prices. Most economists agree that China's
competitive pricing is a result of two factors:

 A lower standard of living, which allows companies in China to pay lower wages to

workers
 An exchange rate that is partially fixed to the dollar
Effect

China must buy so many U.S. Treasury notes that, up until June 2019, it was the largest lender to
the U.S. government. Japan is currently the largest. As of November 2019, the U.S. debt to
China was $1.09 trillion. That's 16% of the total public debt owned by foreign countries.

They are concerned that this gives China political leverage over U.S. fiscal policy and worry
about what would happen if China started selling its Treasury holdings. It also would be
disastrous if China merely cut back on its Treasury purchases.
TOP 10 TRADING PARTNERS US HAS IN TERMS OF TRADE DEFICIT

1. Canada: US$292.4 billion (17.8% of total US exports)

2. Mexico: $256.4 billion (15.6%)
3. China: $106.6 billion (6.5%)
4. Japan: $74.7 billion (4.5%)
5. United Kingdom: $69.2 billion (4.2%)
6. Germany: $60.3 billion (3.7%)
7. South Korea: $56.9 billion (3.5%)
8. Netherlands: $51.2 billion (3.1%)
9. Brazil: $43.1 billion (2.6%)
10. France: $38.8 billion (2.4%)
 US TRADE DEFICIT WITH INDIA IN PAST 15 YEARS

India's trade deficit narrowed sharply to USD 3.15 billion in May 2020 from USD 15.36 billion
in the same month last year and below market expectations of USD 7.0 billion. It was the
smallest trade gap since February 2009, as the coronavirus pandemic hit global demand. Exports
plunged 36.47 percent, mainly due to lower sales of gems & jewelry (-68.83 percent), petroleum
products (-68.46 percent), engineering goods (-24.25 percent), electronic goods (-45.35 percent),
and organic & inorganic chemicals (-12.71 percent). Imports slumped 51.05 percent, due to
lower purchases of gold (-98.40 percent); petroleum, crude & products (-71.98 percent); coal,
coke & briquettes (-44.93 percent); electronic goods (-40.32 percent); and machinery, electrical
& non-electrical (-34.37 percent). Considering the first two months of the 2020-21 fiscal year,
the trade gap shrank to USD 9.91 billion from USD 30.69 billion in the same period of the
previous year.
US TRADE DEFICIT WITH CHINA:-

China's trade surplus widened sharply to USD 62.93 billion in May 2020 from USD 41.20 billion
in the same month the previous year and far above market expectations of a USD 39 billion
surplus. It was the largest trade surplus since the series began in January 1981, as exports
dropped less imports, amid growing tensions with the US. Exports dropped by 3.3 percent year-
on-year to USD 206.81 billion, after a 3.5 percent rise in the previous month and better than
market expectations of a 7 percent decline, as the coronavirus health crisis ravaged business
activity and global demand. Meanwhile, Imports slumped 16.7 percent year-on-year USD 143.89
billion, following a 14.2 percent fall in the prior month and compared to market expectations of a
9.7 percent drop. China's trade surplus with the US stood at USD 27.89 billion in May.
Considering the first five months of the year, the trade surplus narrowed to USD 121.36 billion
from USD 127.09 billion in the corresponding period of 2019.

IMPACT ON INDIA WITH REGARD TO US,CHINA TRADE WAR

 India gained about $755 million in additional exports, mainly of chemicals, metals and
ore, to the US in the first half of 2019 due to the trade diversion effects of Washington's
tariff war with China
 The study puts the trade diversion effects of the US-China tariff war for the first half of
2019 at about $21 billion, implying that the amount of net trade losses corresponds to
about $14 billion. The US tariffs on China have made other players more competitive in
the US market and led to a trade diversion effect. These trade diversion effects have
brought substantial benefits for Taiwan (province of China), Mexico, and the European
Union.
  Trade diversion benefits to Korea, Canada and India were smaller but still substantial,
ranging from $0.9 billion to $1.5 billion," it said. The remainder of the benefits were
largely to the advantage of other South East Asian countries.
 The US tariffs on China resulted in India gaining $755 million in additional exports to the
US in the first half of 2019 by selling more chemicals ($243 million), metals and ore
($181 million), electrical machinery ($83 million) and various machinery ($68 million) as
well as increased exports in areas such as agri-food, furniture, office machinery, precision
instruments, textiles and apparel and transport equipment

SECTORS WHICH COULD BENEFIT FROM ADDITIONAL EXPORTS BY INDIA

medical textiles, electronics, plastics and toys are some sectors whose exports can be promoted
in the next three months of phase one while phase two exports include gems and jewellery,
pharmaceuticals and steel, in the next six months.

GOODS THAT COULD ENJOY TARIFF ADVANTAGES

 151 domestic products including diesel, X-ray tubes and certain chemicals have an
outright advantage to displace the US exports to China.

Similarly, 203 Indian goods like rubber and graphite electrodes have the advantage to
displace Chinese exports to the US.

 The Indian products which can tap the Chinese market include copper ores, rubber,
paper/paperboard, equipment for transmission voice/data in a wired network, tunes and
pipes.

Similarly, domestic goods which can grab exports opportunities in the US market include
industrial valves, vulcanised rubber, carbon or graphite electrodes and natural honey.

Increasing exports would help India narrow the widening trade deficit with China, which
stood at USD 50.12 billion during April
COMPARATIVE STUDY OF INDIAN RUPEE CORRELATION WITH CHINESE
YUAN AND US DOLLAR

Indian rupee meanwhile is more correlated with Chinese yuan than the dollar right now. The
chart below shows correlation between the Indian unit and the dollar Index.

Even though dollar Index is appreciating, the rupee has gained during the recent sessions.
China recently announced a 50 basis point cut in reserve requirements so banks would be able to
lend more. However, Chinese bank has been on a credit binge since 2009 and have created $21
trillion of new money, which is twice than the US, euro zone and Japan combined during that
period.

This enormous money creation by chinese banks out of thin air will exacerbate China’s credit
bubble. The rapidly expanding money supply will produce growing devaluation pressure on
renminbi.

The above chart shows an hourly price action of USD/CNY and USD/INR. As we can see it is
mirror image where if Chinese renminbi appreciates, our currency appreciates regardless of our
equity inflow or market and vice versa.

The rupee after being in overbought condition has once again appreciated. There was negative
divergence in RSI 14 and the unit was expected to appreciate. We expect rupee to test levels till
71.15-71.30 which comes to 61.8% retracement and maximum correction till 70.72On the
upside, target of 73.50 continues to hold which is 123.6 per cent retracement, as we don’t see
Chinese Yuan appreciating too much unless real trade talks happen between US and China.

CHART FOR PAST 10 YEARS

Indian rupee and chinese yuan
.indian rupee and us dollar

BREXIT AND ITS IMPACT ON INDIA’S EXPORT BUSINESS TO UK

Brexit will lead to fundamental changes in the trade relations between the UK and other nations.
It would pose a challenge to countries such as India that use the UK as a gateway into the EU.
The loss of the Single Market would also pose a challenge to the UK and the EU. It is too early
to tell how the economic rivalry between the UK and the EU will play out in the long run.
Developing economies that depended on the EU are bound to be affected by the rivalry. India is
one of the countries that would be affected by the economic rivalry. The paper uses a review
method to determine the impact of Brexit on Indian companies both at the local and international
level. It undertakes a review of Mirza International, Tata Motors, Sun Pharmaceutical Industries,
Rajesh Exports Limited, and Reliance Industries limited (RIL), which are some of the largest
companies in India. These companies operate in industries that are bound to be affected by
Brexit. Therefore, an analysis of the impact of Brexit on these companies would depict the
impact of Brexit on India as a case study. The results of the paper show that India would have a
positive net effect from Brexit regardless of the fact that Brexit may lead to losses in trade
between the UK and India. As India is the source of FDI of the UK, Brexit would result in
making other countries in the EU attractive destinations of the FDI. To avoid losing out, the UK
would try harder to ensure that more capital comes from India. The UK may do this by wooing
Indian companies to ensure they invest in the UK It may provide tax breaks and other incentives.
Nevertheless, it is vital for India to form stronger ties with the EU since the UK has been India’s
gateway to the EU. This will provide India with a wider access to the EU market. Loss of
subsidies for EU students to study in the UK would necessitate the country to look for an
alternative source of students. India is one of the markets that the UK would explore in the
aftermath of Brexit.
INDIAN COMPANIES IN SECTORS THAT INVESTED IN BRITAIN
 Indian companies doing business in Britain has increased from 800 in 2018 to 842 in
2019, with a combined turnover of 48 billion pounds.
 Tata Motors Limited was named the Top Employer in the UK, employing over 43,000
people, and Union Bank of India was named the Fastest Growing Financial Services
Company.

As in the previous years, technology and telecoms companies dominate the Tracker,
accounting for 35 per cent of the fastest-growing companies. Engineering and
manufacturing companies are the next in line, accounting for 16 per cent, followed by
pharmaceutical and chemical companies at 15 percent
INFLATION,CAD UNDER US IRAN TENSIONS
 India which imports nearly 90 per cent of its oil is also slated to see its import bill
ballooning putting pressure on current account deficit and in turn putting pressure on the
rupee also.Market benchmark Sensex tumbled 162 points on Friday as global investors
turned risk-averse after the killing of a top Iranian general by the US fuelled fears of a
geopolitical conflict. Brent crude futures surged 4.4 per cent to USD 69.16 per barrel as
investors turned jittery on supply concerns.
 Indian rupee (INR) fell sharply at 4 per cent against the US dollar (USD), spooked by a
surge in global oil prices to 71.77 at day's low against the US dollar.
India's current account deficit had narrowed in the September quarter of the fiscal year as
the trade deficit shrank, central bank data showed earlier. The CAD had declined to 0.9
per cent of GDP in Q2 fiscal year ending March 2020 from 2.9 per cent in the same
period a year ago on lower trade deficit. CAD occurs when the value of goods and
services a country imports exceeds the value of exports. A large CAD can cause the
domestic currency to depreciate.
 The most prominent fallout -- petrol, diesel prices likely to rise sharply on Iran-US
tensions. As per revised prices, petrol rates stand at Rs 75.35 per litre in Delhi, Rs 80.94
per litre in Mumbai, Rs 77.94 per litre in Kolkata, and Rs 78.28 per litre in Chennai,
respectively.
 domestic fuel prices are directly dependent on international crude oil prices, petrol and
diesel prices are likely to jump sharply in the next few days over increasing tensions in
the oil-rich Middle East countries.
 Iran-US crisis leads to oil supply crisis, and petrol prices after a while start rising in India
then the inflationary pressure would aggravate. Retail inflation has already shot up to
over 3-year high of 5.54 per cent in November breaching the Reserve Bank's medium-
term target of 4 per cent, justifying the central bank's decision to keep the benchmark
interest rate unchanged in its monetary policy

HOW DO GEOPOLITICAL TENSIONS IMPACT GOLD PRICES

This happens as gold is considered a ‘safe haven’ asset and the price rises when investors dump
risky assets like equities and move money to gold. A safe haven asset is an investment like gold
that is expected to retain its value or even increase its value in times of chaos. A classic example
was the sub-prime mortgage crisis in the US, after which gold prices saw a dramatic rally. In
fact, rates in India have quadrupled since the global economic crisis of 2008.
Understanding correlation with other assets

 It is well-known that when two assets have a positive correlation (closer to a value of 1),
their prices tend to move in the same direction. Equities and real estate may move in the
same direction over a short period of time, when market conditions are not volatile. When
assets have a negative correlation (negative 1), they tend to move in opposite directions.
A correlation close to zero means two assets move independently.
 Several studies have proven that gold does not have a positive correlation to risky asset
classes. This is why many individuals across the globe keep gold in their portfolio as it
provides a hedge against declining equities or dropping bond yields. There are days when
they may move in tandem as well, but that is when everything is very quiet and there is
an absence of any major developments on the global front.
 Geopolitical tensions apart, investors have often been urged to buy gold, also because it
has held its value and beaten inflation in the medium to long-term.

HOW GOVERNMENT CAN TACKLE THE ECONOMIC SHOCK CAUSED BY

CORONA VIRUS

 It is almost certain that the government will not be able to adhere to its fiscal target for
2020-21 and will most likely breach it by a big margin.

All efforts to flatten the Corona curve would steepen the yield curve.

 India is working on a set of policy measures to combat the economic impact of the fast-
spreading coronavirus and that may include some cash transfers to workers in the
informal sector
 India anticipates possible disruptions to the supply chain and a decrease in demand that
could, in turn, affect businesses. As such, the government is working on both fiscal and
monetary measures. 

 “India has a very large informal sector and the informal sector may be particularly
impacted by the lockdown because there are people who don’t necessarily have a
permanent job.” 
  Some experts have estimated that India’s informal sectors account for roughly 94% of
total employment in the country and contribute about 45% of output.
 Government wants to ensure there is no additional impact of the coronavirus on India’s
lenders due to a potential slowdown in demand. The Reserve Bank of India this week
introduced measures to pump more rupee liquidity into the banking system. What could
work in India’s favor is the fact that oil prices have plummeted recently, which
is expected to lessen the country’s oil import bill. 

GOVERNMENT POLICIES
ANNUAL BUDGET FROM WHICH VARIOUS MEASURES HAD BEEN PUT DOWN
BY GOVERNMENT
 To simplify the tax system and lower tax rates, around 70 of more than 100 income tax
deductions and exemptions have been removed.

* Dividend Distribution Tax (DDT) abolished; Companies will not be required to pay
DDT; dividend to be taxed only at the hands of recipients, at applicable rates.

* Cash reward system envisaged to incentivise customers to seek invoice.

15% concessional tax rate for new power generation companies.

* Tax on cooperative societies reduced to 22% without exemptions.

* 100% tax concession to sovereign wealth funds on investment in infrastructure projects.

* Tax on Cooperative societies to be reduced to 22 per cent plus surcharge and cess ,as
against 30 per cent at present.

* To end tax harassment, new taxpayer charter to be instituted

 To launch new direct tax dispute settlement scheme -- Vivaad se Vishwaas scheme.

* Interest and penalty will be waived for those who wish to pay the disputed amount till
March 31.
 * Government to look at ensuring that contracts are honoured.

* Proposes new National Policy on Official Statistics to improve data collection and

dissemination with the help of technology.
 Rules of origin requirements in Customs Act to be reviewed, to ensure FTAs are aligned
with the conscious direction of our policy: FM

* Aadhaar-based verification of taxpayers is being introduced to weed out dummy or

non-existent units; instant online allotment of PAN on the basis of Aadhaar.

* Registration of charity institutions to be made completely electronic, donations made to

be pre-filled in IT return form to claim exemptions for donations
 Rs 2.83 lakh crore to be allocated for the 16 Action Points; Rs 1.6 lakh crore allocated
to agriculture and irrigation; Rs 1.23 lakh crore for Rural development and Panchayti
Raj.
 To help bank depositors, government increases depositor insurance to Rs 5 lakh from
current Rs 1 lakh.
 Rs 6,000 crore for BharatNet programme; Fibre to Home connections under BharatNet
will be provided to 1 lakh gram panchayats this year itself
 Rs 22,000 crore allocated to to power and renewable energy.
Rs 99,300 crore allocated for education sector, Rs 3,000 crore rupees for skill
development
 69,000 crore allocated to healthcare sector
SECTORS THAT ARE EXPECTED TO BENEFIT FROM THESE POLICIES
LIFE INSURANCE SECTOR AND AMCS
The life insurance companies have done extremely well in the last one year as they have
managed to increase market share. However, the big thrust to insurance could come from an
expanded Section 80C as the limits are expected to be increased from Rs1,50,000 to
Rs2,50,000 or more. The budget is also expected to extend the NPS tax benefits to pension
plans of insurance companies and mutual funds. Mutual fund AMCs have benefited from the
increased financialization of savings. In addition, AMCs are also expecting positive cues in
the form of rationalization of DDT and LTCG, possible introduction of tax breaks on debt
schemes and reducing the equity component to 51% for equity classification. All these should
favour the insurance and the AMCs in India.
REALTY SECTOR AND HFCS
The two sectors are closely related and they have both been under pressure post the NBFC
crisis of 2018. Union Budget 2020 is expected to announce a higher limit for Section 24
(interest on home loans) from the current Rs2 lakhs. That would be more in tune with realty
rates in most cities. In addition, the big challenge for the HFCs is making adequate funding
available at reasonable rates. The budget is expected to make the NBFC liquidity program
more robust and flexible.
DOMESTIC AND FOREIGN COMPANIES:-
In September 2019, when the corporate tax rates were slashed, there was a lot of confusion
over the 15% tax rate on new manufacturing projects. The budget could extend this 15% tax
even to new projects by existing companies to make it more effective. In addition, the
September tax rate cut was only for domestic companies. Most MNCs have also demanded a
proportionate tax cut since most of these MNCs are high tax paying entities. This could have a
positive macro impact on manufacturers across the board.
TELECOM SECTOR
The AGR debate is becoming more academic as most of the companies where the DOT
imposed AGR, are already dissolved or merged out. Of the 3 large players, the AGR charges
could push Vodafone Idea into the danger zone with respect to financial solvency. The
government is expected to adopt a more business-friendly approach to AGR to ensure that the
telecom sector does not become a duopoly. In addition, the budget is also expected to
announce a more flexible dispute resolution mechanism, which could substantially benefit
sectors like telecom with a long history of disputes.
MANUFACTURING SECTOR
The domestic manufacturing sector is likely to benefit from a plethora of benefits. The
government is expected to announce big infrastructure measures to boost domestic growth and
spending. That will benefit the manufacturing sector. The budget may also look at the idea of
a border adjustment tax (BAT) to offset the international price cuts aided by weak currencies.
In addition, the budget could give another boost to domestic manufacturing through tax and
fiscal incentives and, in a way, reviving the Make in India program that has remained in cold
storage.
CONSUMPTION
The budget is anticipating a number of serious measures to tackle the slowdown in
consumption. For example, the tax breaks and the likely relaxation of taxable limits will be
positive for consumption sectors like FMCG, food products, consumer durables, airlines, etc.
While competition and margin pressures may still be there, a series of macro boosters will at
least make the valuations of these sectors look reasonable.
COVID 29 RELIEF PACKAGE WORTH 1.7 LAKH CRORE
 under PM Kisan Samman Nidhi, Rs 2000 will be immediately front-leaded in the account
of 8.7 crores farmers.
 announced free of cost 5 kg rice or wheat, and 1 kg pulse under PM Garib Kalyan
Package, while LPG cylinders will also be given free of cost to the beneficiaries of
Ujjwala Yojana for the next three months.
  government announced 20 crore woman Jan Dhan account holders to get an ex-gratia
amount of Rs 500 per month for the next three months, it also doubled collateral-free
loans to Rs 20 lakhs for Self Help Group women, helping 7 crore women.

IMPACT ON OUR ECONOMY

 Pradhan Mantri Gareeb Kalyan Ann Yojna (PMGKY) which is a part of the relief
package, at least 80 crore poor people will be covered.
 ward-boys, nurses, paramedics, technicians, doctors and specialists and other health
would be covered by a special insurance scheme. 
 Increase in MNREGA wage to Rs 202 a day from Rs 182 to benefit 5 crore families
 20 crore women Jan Dhan Account holders to get Rs 500 per month for next three
months to help them run their households
 Ujjwala beneficiaries to get free cooking gas (LPG) cylinders in next three months; this
will benefit 8.3 crore BPL families
 Workers to be allowed to draw non-refundable advance of 75 pc from credit in PF a/c or
3 months salary, whichever is lower