Oil above $75 a barrel raises concerns over macroeconomic indicators

The price of Brent crude saw a 40 per cent fall in Q3 FY19, followed by a 50 per cent rise in the subsequent quarter.
In the first month of FY20, crude oil crossed $75/bbl, raising concerns about the import bill, fear of rise in retail prices, and putting the two deficits, current account deficit and fiscal deficit, at a potential risk.

Chart 1 shows that oil price has been gradually rising since January 2019. However, what can be linked to the general elections, the retail prices are not rising that fast, as Chart 2 reveals. Petrol still costs Rs 73/litre in Delhi, quite less than Rs 76-79/litre when oil was hovering near $75/bbl in the last two instances.
Chart 3 shows that oil imports rose 40 per cent in rupee terms in FY19. About a fourth of it was due to depreciation in the Indian rupee. Further rally in prices could raise import bill. Fuel inflation has started inching up again, shows Chart 4.
Higher oil price also threatens contraction in revenues to states and Centre which had bulged during the low price phase. Chart 5 shows how Centre was a bigger beneficiary of fuel tax revenues.
Low price phase helped not just the government, profits of public oil companies surged as well. However, rising oil prices may compel the government to reduce taxes, and oil companies to reduce refining/ marketing margins, to maintain retail prices as they are, and quell inflation worries.
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines; Compiled by BS Research Bureau

Govt notifies new accounting standard, lease rule to impact airlines

The government has notified a new accounting standard Ind AS 116 that will bring in more transparency in recognition and disclosures about leases in companies' balance sheets, a senior official said Sunday.
The Indian Accounting Standard (Ind AS) 116 is expected to have a significant impact on various industries, including aviation where airlines mostly operate planes on lease.

Ind AS 116 -- to be effective from April 1 -- sets out the principles for recognition, presentation and disclosure of leases.

It has been notified by the corporate affairs ministry.
The official said the standard will help in ensuring more transparency when it comes to recognition of leases by companies and also prevent "window dressing" of accounts.
"Lessors will need to re-look at their accounting policy of recognising lease income on transition to Ind AS 116 and it may have significant impact on ongoing recognition and measurement of rental income in the financial statements," Sandip Khetan said.
Khetan is National Leader and Partner (Financial Accounting Advisory Services) at consultancy EY India.
Leasing of aircraft rather than outright purchase is a common practice in the airlines industry worldwide. With the Ind AS 116 in place, the carriers would have to show all such leases on their respective balance sheets.
Ind AS 116 is the equivalent of IFRS (International Financial Reporting Standards) 116.

IPL 2019 SRH vs KXIP Preview: Clash of Warner fury and Gaylestorm on cards

In match 48 of the VIVO Indian Premier League 2019 (IPL 2019), Sunrisers Hyderabad (SRH) will host Kings XI Punjab (KXIP) at the Rajiv Gandhi International Cricket Stadium in Hyderabad on Monday. Kane Williamson-led SRH are at the fourth spot in IPL 2019 Points Table while R Ashwin's KXIP are at the sixth position. Both Hyderabad and Punjab have lost their previous two matches and have 10 points each from 11 matches respectively. With playoffs looming, both the teams need to win all their remaining matches to press their chase. For Hyderabad, things will get even toughter as the leading run scorer of IPL 2019, David Warner, would be playing his last match of IPL 2019 on April 29 as he has to join Australia's camp for the ICC World Cup 2019. Hyderabad may replace warner with Martin Guptill. Punjab does not face any such issue and they would look to play without much changes.
ALSO READ: ICC World Cup 2019: Check the 15-player provisional squads of all the teams
Sunrisers Hyderabad Team News:
English batsman Jonny Bairstow has left for the national duty as preparation begins for the ICC World Cup 2019 and David Warner too would leave for the same after playing his last match tomorrow,.
For Hyderabad, the otherwise brilliant Kane Williamson has not been able to score runs and with both the openers gone, they would rely on Manish Pandey and Deepak Hooda to shoulder some resposibility.
Martin Guptill is likely to join the team and that will be a big booster.
The bowling department is well settled and Hyderabad should not touch that area but they may consider resting Siddarth Kaul who usually leaks runs.
Bhuvneshwar Kumar, Khaleel Ahmed, Rashid Khan and Shakib Al Hasan have the ability to turn any match in their team's favour.

Kings XI Punjab Team News:
The batting unit of Punjab is formidable and that's a relief for the team as most of the batsmen are in-form, especially openers KL Rahul and Chris Gyale.
Mayank Agrwal, David Miller and Mnadeep Singh form a good support in the middle.
All eyes will be on Nicholas Pooran, who almost snatched the victory from RCB in their previous clash as he hit 44 off 28 balls with a boundary and five sixes.
R Ashwin and Murugan Ashwin would be key bowlers on Hyderabad pitch whil Mohammad Shami and Harrus Viljoen would look to grab early wickets.

Here are the playing 11 prediction of SRH and KXIP:
SRH playing 11: David Warner, Kane Williamson(c), Manish Pandey, Vijay Shankar, Shakib Al Hasan, Wriddhiman Saha(w), Deepak Hooda, Rashid Khan, Bhuvneshwar Kumar, Siddarth Kaul, K Khaleel Ahmed

KXIP playing 11: K L Rahul(w), Chris Gayle, Mayank Agarwal, David Miller, Mandeep Singh, Nicholas Pooran, Ravichandran Ashwin(c), Hardus Viljoen, Murugan Ashwin, Ankit Rajpoot, Mohammed Shami

IPL 2019, Match 48: SRH vs KXIP Live streaming details
Date and Day: April 29, 2019, Monday
Place: Rajiv Gandhi Intl. Cricket Stadium, Hyderabad
Time: 8:00 pm IST
SRH vs KXIP match live streaming will be available live on Star Sports 1 HD, Star Sports 1 in English Commentary and Star Sports 1 Hindi, Star Sports 1 Hindi HD in Hindi Commentary. One can also live stream the SRH vs KXIP 2019 IPL match on Hotstar app and Tatasky app. The fans can also watch in-depth analysis of live match on Star Sports Select 1, Star Sports Select 1 HD.

Squads
Sunrisers Hyderabad: Shakib Al Hasan, Yusuf Pathan, Martin Guptill, Wriddhiman Saha (wk), Bhuvneshwar Kumar, David Warner, Shreevats Goswami, Siddarth Kaul, Manish Pandey, Mohammad Nabi, Kane Williamson (c), Shahbaz Nadeem, Vijay Shankar, Sandeep Sharma, Ricky Bhui, Deepak Hooda, Billy Stanlake, T Natarajan, Basil Thampi, Rashid Khan, K Khaleel Ahmed, Abhishek Sharma
Kings XI Punjab: Chris Gayle, Moises Henriques, Ravichandran Ashwin (c), Mayank Agarwal, Mandeep Singh, David Miller, Mohammed Shami, Karun Nair, Lokesh Rahul (wk), Murugan Ashwin, Ankit Rajpoot, Nicholas Pooran (wk), Sarfaraz Khan, Hardus Viljoen, Andrew Tye, Sam Curran, Mujeeb Ur Rahman, Agnivesh Ayachi, Darshan Nalkande, Varun Chakravarthy, Arshdeep Singh, Simran Singh, Harpreet Brar

Elections 2019: Pollution becomes an issue with promises made in manifestos

Promises to fight the world’s most toxic air have made it to the manifestos of major political parties for the first time in Indian elections. Major political parties such as the ruling Bharatiya Janata Party, the opposition Indian National Congress and the Aam Aadmi Party have pledged to combat the crisis by taking measures ranging from setting deadlines, introducing new emission standards to promoting electric vehicles in a bid to fight toxic air.
That is a change from the 2014 elections when none of the party manifestos had any mention of clean air or pollution.
India, home to world’s top ten cities with the worst air quality, has been struggling to contain a deadly haze that killed an estimated 1.24 million citizens in 2017. In the past, governments have pledged millions of dollars and deployed extra teams to enforce existing environmental laws that include banning farmers from burning their fields. But the sheer scale of India’s toxic skies has made progress difficult.

Air pollution on the agenda
The ruling BJP’s election manifesto promises to focus on 102 most polluted cities in the country. “We will reduce the level of pollution in each of the mission cities by at least 35 percent over the next five years,” it says, lauding itself for “effective steps” taken to reduce the level of pollution.
The Congress party manifesto calls air pollution a national public health emergency. It promises to strengthen the National Clean Air Program to tackle pollution. “All major sources of emission will be targeted, mitigated and reduced to acceptable levels,” it says.
The manifesto of the Aam Aadmi Party, which runs the government in the national capital of New Delhi, promises induction of electric buses and vacuum cleaning of roads, among other measures to address the pollution problem. In order to control smog in Delhi, the AAP implemented a program in 2015 to arrest vehicular emissions through traffic controls.
It is a ‘‘good sign’’ that political parties haven’t ignored air pollution, according to Anumita Roy Chowdhury, executive director of research at advocacy group Centre for Science and Environment. “The intent and the purpose have to get much clearer and sharper through strong political mandate for real action afterwards,” she said in a phone interview.
A recent study by The Lancet found 77 per cent of India’s 1.4 billion people exposed to air far dirtier than recommended limits. The poor are the worst hit by pollution, according to The Lancet.
The bigger political parties’ focus on pollution should eventually trickle down to manifestos and agendas of regional parties, according to Hem Himanshu Dholakia, senior research associate at the Council on Energy, Environment and Water. “Air pollution can be solved through action by both the center and states in terms of tackling local sources, for example, waste burning, which will require more action from local bodies,” Dholakia said.
The South Asian nation’s deadly air, especially in winter, is caused due to a combination of farm stubble burning, firecrackers, vehicular emissions and weather conditions.

What oil at $100 a barrel would mean for the world economy

Surging crude prices are posing another headwind for the world economy after President Donald Trump’s “zero” pledge on Iran oil sales.
Brent crude has risen about 33 percent this year and is close to the highest in six months. While higher prices due to strong demand typically reflects a robust world economy, a shock from constrained supply is a negative.
Much will depend on how sustained the spike proves to be. Exporting nations will enjoy a boost to corporate and government revenues, while consuming nations will bear the cost at the pump, potentially fanning inflation and hurting demand. Ultimately, there comes a point where higher prices may be damaging to everyone.
1. What does it mean for global growth?
The impact will vary. Rising oil prices will hurt household income and spending and it could accelerate inflation. As the world’s biggest importer of oil, China is vulnerable, and many countries in Europe also rely on imported energy. Seasonal effects will also impact. With the Northern Hemisphere summer approaching, consumers can switch energy sources and scale back usage. A slowing world economy will also hurt demand and by extension keep a lid on prices.

ALSO READ: Oil above $75 a barrel raises concerns over macroeconomic indicators
2. How can the world economy absorb oil at $100?
For a sustained hit to growth, economists say oil would need to hold above $100. It also depends on dollar strength or weakness, given crude is priced in greenbacks. Analysis by Oxford Economics found that Brent at $100 per barrel by the end of 2019 means the level of global gross domestic product would be 0.6 percent lower than currently projected by end-2020, with inflation on average 0.7 percentage points higher.
“We see increased risks of significantly higher oil prices,” Oxford economists John Payne and Gabriel Sterne wrote in a note. “In the short-run, it is likely the supply impact will be offset by higher production elsewhere, but the market is tightening and all it would take is one more shock to supply and oil could reach $100.”
3. How will Iran and Trump impact the market?
An upending of global oil trade around the Iran-Trump spat could continue to have a sizable impact on financial markets, as the affected supply is as much as 800,000 barrels a day. Uncertainties around availability have already whipsawed oil markets. And the political sensitivities of these developments have other markets bracing for volatility.
ALSO READ: As oil bulls on, hedge funds place bets for longest run in 13 years
Trump has pledged to help, alongside Saudi Arabia and the U.A.E., those needing to shift orders from Iran to another supplier. But U.S. claims that its domestic supply can help offset the loss are a high bar to meet, given that the daily American output for similar crude is about a quarter of Iran’s.
4. Who wins from higher oil prices?
Emerging economies dominate the list of oil-producing nations which is why they’re affected more than developed ones. The increase in revenues will help to repair budgets and current account deficits, allowing governments to increase spending that will spur investment. Winners include Saudi Arabia, Russia, Norway, Nigeria and Ecuador according to analysis by Nomura.
5. Who loses?
Those emerging economies nursing current account and fiscal deficits run the risk of large capital outflows and weaker currencies, which in turn would spark inflation. That in turn will force governments and central banks to weigh up their options: hike interest rates even as growth slows or ride it out and risk capital flight. Nomura’s losers list includes Turkey, Ukraine and India.
6. What does it mean for the the world’s biggest economy?
While U.S. oil producers try to take advantage of any sales boost from customers moving away from Iran, the broader U.S. economy won’t necessarily see benefits with oil price tags as high as $100 a barrel.
It would be a squeeze on American consumers that are the backbone of still-steady economic growth. Prices at the gas pump already have risen more than 7 percent this month to $2.89 a gallon, which could weigh on retail sales that jumped in March by the most since 2017.
ALSO READ: Donald Trump presses OPEC to boost output to bring down oil prices
And if things go awry in global oil markets, there’s risk that political blame shifts back to the U.S. for the sanctions, which could mean backlash via investment or other channels that threatens economic stability.
7. Will it lead to higher inflation around the world?
Because energy features prominently in consumer price gauges, policy makers look to core indexes that remove volatile components. If the run-up in prices proves to be substantial, and sustained, those costs will filter through to transportation and utilities.
8. What does it mean for central banks?
Led by the Federal Reserve, central banks around the world have taken a dovish tilt as the absence of inflation allows policy makers to shift their focus to slowing growth. That’s unlikely to quickly change. The International Monetary Fund this month lowered its global growth forecast and said the world is in a “delicate moment.”

If you are an H-1B visa holder, switching jobs in the US just got tougher

It is getting tougher for H-1B visa holders in the US to switch jobs even if the new job is similar to the old and requires the same exact skill sets.
According to a report in Times of India, the US citizenship and Immigration Services ( USCIS) has denied several applications by the new employer by citing that the new position does not constitute a 'specialty occupation.' Moreover, if the H-1B holders starts working elsewhere and the transfer is denied, the person could be 'out of status' with a bar on entry into the US for three to ten years, unless the old employer is willing to take back the worker.

“Typically, there is no grace period if the H-1B status has already expired by the time the denial intimation is received. If, however, there is time remaining on the original H-1B approval with the old employer, the beneficiary will have a 60-day grace period or the time remaining on the original approval, whichever is," Times of India quoted Rajiv S Khanna, managing attorney at Immigration.com, as saying.
So what exactly is a specialty occupation? H-1B visas are granted to persons trained and employed in specialty occupations. Many of the 'Requests for Evidence' received by over 25% of H-1B petitions involve the question as to whether or not the position meets the criteria of a specialty occupation.
The Code of Federal Regulation says a specialty occupation requires 'Theoretical and practical application of a highly specialized body of knowledge,and attainment of a bachelor’s or higher degree in a specific specialty as a minimum for entry into the occupation'. Examples include those professions involving science, technology, engineering, and mathematics or STEM.
The US tech sector predominately hires H-1B workers and a large chunk are from India.However, according to a recent analysis by the National Foundation for American Policy, the denial rate for applicants who are trying to extend their visas grew from 4 percent in 2016 to 12 percent in 2018. ( Read more here)
Moreover, more than half of the H-1B cases nowadays are stalled by 'requests for evidence', or RFEs, a complicated request for additional documents that can take months to resolve and often end in denials. ( Read more here)
Another study by VisaGuide.world found that the US immigration agency officials are more likely to issue a Request for Evidence (RFE) to Indian H1B visa applicants than to people from other countries, Business Standard reported on Sunday.
According to the data collected by the web portal, 72.4 per cent of Indian applicants and 61.2 per cent of applicants from the rest of the world received an RFE.
In 2018, 309,986 applications for H1B visa, or 73.9 per cent of the total H1B applications for the year, were from India.
The H1B work visa has been the preferred visa for Indian IT companies and has helped them keep costs down and gain a margin advantage over multinational players by sending engineers to the US. However, IT services firms have been accused of misusing the lottery-based system, which allows 65,000 visas for the general category and an additional 20,000 to those with a US Master’s degree from an accredited institution.
The portal expects Indians to continue to account for the highest number of applicants this year and the number of women applicants to increase because of the risks for H4 visa holders. A number of potential H4 visa holders may turn to the H1B visa programme, as a way to join their spouses working in the US, it said. ( You can read the entire Business Standard article here)

Vistara may induct some of Jet's Boeing 737s planes and its pilots: Report

The Singapore Airlines-Tata joint venture Vistara is likely to induct some of Jet Airways' Boeing 737s in its fleet and may offer jobs to a few B737 pilots of the crisis-ridden airline, reports said on Sunday. The airline is also conducting a walk-in interview for cabin crew on 29 and 30 April in Mumbai and Gurgaon, which will attract applications from Jet Airways' employees.
Vistara currently has Airbus A320 in its narrow-body fleet and for wide-body, the airline has placed an order for six Boeing 787 Dreamliner 787-9. These aircraft will primarily be used for long-haul routes and are expected to arrive by 2020.

Commenting on the same, the Tata Sons-Singapore Airlines joint venture airline told TOI “The recent reduction in capacity has inconvenienced travellers, especially in the full-service segment. We will continue to grow our network to meet market demand."
Jet Airways, on April 16, announced that it will suspend all operations, domestic and international, with immediate effect.
If Vistara inducts B737s, it will be the second Indian airline, after Air India, to have a mixed fleet of narrow-body Boeing and Airbus aircraft. Vistara could also get more slots at the constrained Delhi, Mumbai and Bangalore airports after Jet's suspension freed up slots there.
Jet's grounding has also had a big impact on air fares with inter-city air fares to major cities such as New Delhi, Mumbai, Bengaluru and Kolkata soaring more than 20 per cent in May and June, according to Yatra.com.
The spike in fares is expected to underpin strong earnings for IndiGo and SpiceJet Ltd, which are set to report results for the quarter ended March 31 in the coming weeks.
"Domestic Indian carriers are the main benefactors, but I suspect if Jet fails to be revived by May 10 then Vistara and other airlines that ply international routes, particularly the lucrative Gulf market, are the main winners," Shukor Yusof, the head of aviation consultancy Endau Analytics was quoted as saying by Reuters.