Cotlook A Index - Cents/lb (Change from previous day)

15-05-2020 66.30 (+0.40)

10-05-2019 80.70

10-05-2018 94.35

New York Cotton Futures (Cents/lb) As on 19.05.2020 (Change from

previous day)

July 2020 58.24 (+0.44)

Oct 2020 58.00 (+0.54)

Dec 2020 57.66 (-0.51)

19th May

2020

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

May 2020 15770 (-60)

Cotton 11260 (+25) June 2020 15980 (-50)

Yarn 18145 (+245) July 2020 16200 (-20)

IMF chief Kristalina Georgieva warns full global economic

recovery unlikely in 2021

Govt withdraws order on compulsory wage payment by

firms during lockdown

With no immediate support in package, apparel industry

reacts strongly

Raymond plans to raise Rs 100 crore through NCDs

www.citiindia.com

2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- Road To Revival! Liquidity boost to create jobs, pep up demand: Nitin Gadkari

Govt withdraws order on compulsory wage payment by firms during lockdown

India should abandon budget gap aim this year, PM Modi's adviser says

Japan concerned over fate of its companies in India

Covid-19: Kant-led empowered group discusses way forward with industry leaders, UN officials

Indian economy to contract 5-7% in FY21: Bernstein, Goldman Sachs

Govt accounts for nearly 94% of Rs 1,819 cr dues payable to MSMEs: CII poll

Economy to shrink despite stimulus: Economists

Nabard frontloads Rs 20,500 crore financial assistance for pre-monsoon & Kharif operations

Stimulus dent to fiscal deficit at 1-2% of GDP: Experts

‘Stimulus to cost only about 1% of GDP’

Covid-19: Tirupur expects $500 million additional revenue from mask exports

With no immediate support in package, apparel industry reacts strongly

Apparel export industry should be treated at par with MSME sector: AEPC

Markets tank as India Inc deeply disappointed with Covid relief package

Atmanirbharta and WTO: India needs to look at larger picture

Maharashtra farmers in dilemma what to sow or not?

Locust attack: Rajasthan’s new worry | India Today Insight

Why states are not liking Centre’s extra borrowing limit conditions

Raymond plans to raise Rs 100 crore through NCDs

----------------------------------------------------------------------------- IMF chief Kristalina Georgieva warns full global economic recovery unlikely in 2021

Over 100 Million In China's Northeast Face Renewed Lockdown

UK: Fashion SMEs awarded 1.2 million pounds to support sustainable growth

JCPenney approved to spend cash on new merchandise

Pakistan: Textiles urge govt to help revive exports

Does steaming your clothes really sanitize them? We find out

-------------------- --- ---------------------------------------------

NATIONAL

---------------------

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

Road To Revival! Liquidity boost to create jobs, pep up demand:

Nitin Gadkari

(Source: Financial Express, May 19, 2020)

Gadkari on Monday said the recent steps announced by the government to boost liquidity

and credit flows would also bolster “the purchasing power of the people via employment

creation.

Minister for MSMEs and road transport and highways Nitin Gadkari on Monday said the

recent steps announced by the government to boost liquidity and credit flows would also

bolster “the purchasing power of the people via employment creation and help accelerate

the wheels of the economy”. The minister’s comments came at a time when there is a

widespread notion that the economic stimulus package unveiled by the government is

skewed towards supply-side steps, while measures to augment people’s incomes via tax

cuts or transfers of money would have been more opportune.

Given the ambitious target to award national highway projects worth Rs 15 lakh crore over

the next couple of years, the minister said renewed attempts were being made to raise

money from abroad to execute the massive projects. “We have decided to tap more FDI

(for highway construction). Also, foreign pension funds and insurance funds are being

approached, apart from multilateral bodies like ADB, World Bank and others,” the

minister said.

Speaking at an e-Adda, on online interaction hosted by The Indian Express, Gadkari said

that he has recently asked a former senior LIC official to draw up a specific road map on

accessing foreign insurance funds. “The NHAI is AAA-rated, it collected Rs 28,000 crore

as toll receipts in FY20 and would likely have annual toll revenues to the tune of Rs 1 lakh

crore in five years,” he said.

Stating that infrastructure works halted due to the lockdown needed to be commenced

immediately, the minister said: “We need maximum public private investment and

foreign investment in infrastructure – roads, railway, aviation and even power sector.

There are the big projects, we need to finance them. And by increasing liquidity into the

market, we will create more employment potential”. “My view is that when you pump

money into the economy, it is going to create demand. If 45 lakh MSMEs will get

additional 20% credit (Rs 3 lakh crore collateral-free credit, jobs are indeed going to be

created.”

The minister added that the facility offered in the stimulus package for stressed MSME

accounts was going to trigger restructuring of assets. “Already we have restructured six

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4 CITI-NEWS LETTER

lakh MSMEs till March 2020. We have decided to extend the date to December 31. So, by

this way our expectation is that 25 lakh MSME accounts will be restructured.”

The minister reiterated that one of the problems faced by MSMEs was that they were not

getting their payments in time – not just from the Central government and ministries or

PSEs, but from states and their agencies, departments and from the private sector also.

“Now, we have taken a decision that their payments (from the Central government and

its agencies) would be made within 45 days.”

As part of the economic stimulus package, the government said recently it would offer full

guarantee to banks to provide Rs 3 lakh crore as automatic collateral-free loans to micro,

small and medium enterprises (MSMEs) whose accounts are still standard. The idea is to

bring cash-starved small businesses back from the brink of collapse in the wake of the

Covid-19 outbreak. The government hopes that as many as 45 lakh units could resume

business activity and safeguard jobs, thanks to the succour.

Additionally, the Centre will also facilitate an equity infusion of Rs 50,000 crore into these

businesses that are viable and need some handholding, by leveraging a fund of funds with

a corpus of Rs 10,000 crore. Similarly, the government will provide a separate scheme for

stressed MSMEs, which will benefit 2 lakh of them. It will provide Rs 4,000 crore as its

share to set up a credit guarantee trust, which will then give its guarantee to the banks. A

total subordinated debt of Rs 20,000 could be extend under this to such stressed

businesses.

While these measures will help ease the liquidity woes of MSMEs, some industry

executives say the absence of any fiscal support to tide over the immediate, nagging issues

of payment of wages and interest on existing loans comes as a disappointment.

Home

Govt withdraws order on compulsory wage payment by firms during

lockdown

(Source: Somesh Jha, Business Standard, May 19, 2020)

Trade unions slam decision, employers welcome it, saying it was absolutely necessary

especially in absence of grants from govt to industry for wage payment

In what may come as a major relief to businesses, the Union government has withdrawn

its order directing employers to pay wages to workers, even with units remaining shut

during lockdown.

On Sunday, the Ministry of Home Affairs (MHA) had issued a fresh set of guidelines which

will be applicable from Monday. It has repealed the order dated March 29, 2020 which

had talked about compulsory wage payment to workers during lockdown.

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5 CITI-NEWS LETTER

“Save as otherwise provided in the guidelines annexed to this order, all order issued by

the NEC [national executive committee] under Section 10(2)(I) of the Disaster

Management (DM) Act, 2005, shall cease to have effect from 18.05.2020.”

The annexure attached to the order mentions six sets of standard operating procedures –

mostly related to movement of persons – that will continue to remain in force. But it does

not include the March 29 order.

The MHA had on March 29 issued an order under Section 10(2)(I) of the DM Act asking

all employers to pay wages to workers on due date without any deduction even if the

establishment was closed during the lockdown period.

“All employers, be it in the industry or in the shops and commercial establishments, shall

make payment of wages of their workers, at their workplaces, on the due date, without

any deduction, for the period their establishments are under closure during the

lockdown,” the March 29 order had said.

Over the past few days, the industry had petitioned the government to withdraw its order

on compulsory wage payment as they were themselves facing cash crunch issues. Some

industrial bodies had also asked the government to foot the wage bills of companies

through payment of grants but it was not agreed to due to fiscal constraints.

The constitutional validity of the government’s order on wages was challenged by several

companies who had moved the Supreme Court. On Friday, the apex court asked the

government not to take any coercive action against private companies who were unable

to pay wages to workers. The SC was to hear the petition this week. The court, terming it

as an “omnibus order”, had asked the government to re-examine it.

The trade union leaders have criticised the government’s step to withdraw the order. “The

order for lockdown 4.0, by a slight of hand, allows employers to get away without paying

wages during the lockdown. So no payment of wages and no wage subsidy just where do

workers go? Who is responsible for a worker in a containment or red zone or for that

matter even in an orange or green zone where full public transport has not been

resumed?” Gautam Mody, General Secretary, New Trade Union Initiative said.

But employers have welcome the step, saying it was absolutely necessary especially in

absence of grants from the government to the industry towards wage payment. "We have

to work on the principles of 'no work no pay'. Our opinion is that organisations should be

considerate towards employees and in a difficult situation like this, minimum sustenance

pay should be given but where will they get the income to pay? In many countries, the

government have shared the wage bill but it didn't happen in India," M.S. Unnikrishnan,

chairman of Confederation of Indian Industry's committee for industrial relations said.

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6 CITI-NEWS LETTER

In its petition to the SC, Nagareeka Exports Limited had said that the payment of full

salary to workers during the lockdown period when production was zero or “very

minimal” would lead to closure of many micro, small and medium scale enterprises and

“permanent unemployment of many people, directly affecting the economy.”

Before the MHA’s March 29 directive, the labour and employment ministry had issued

multiple advisories to the industry to not lay-off or retrench workers during the lockdown

and asking them to deter from deducting wages. Notably, the MHA order, which was

issued under the DM Act, had said the state governments have to issue their separate

orders to implement the diktat. Any contravention of the order was punishable under the

DM Act.

Home

India should abandon budget gap aim this year, PM Modi's adviser says

(Source: Shruti Srivastava, Economic Times, May 18, 2020)

India should refrain from setting a budget deficit target for the year ending March because

the coronavirus outbreak is forcing the government to undertake unscheduled spending,

an adviser to Prime Minister Narendra Modi said. The South Asian nation pledged 21

trillion rupees ($278 billion) spending to help the economy battle the fallout of the

pandemic along with higher borrowings to bridge the steep fall in revenue collections. The

government had planned to rein in the deficit at 3.5% of gross domestic product in

February’s budget.

“Fixing any fiscal deficit target is not possible this year because there are so many

unknowns,” Rajiv Kumar, vice chairman of the government think tank, Niti Aayog, said

in an interview last week. “Therefore we now have to take a dynamic view of the fiscal

deficit rather than get bogged down by any specific number.” Asia’s third-largest economy

is on the brink of its first contraction in four decades as consumer demand collapsed after

Prime Minister Modi enforced the world’s most stringent stay-at-home rules locking up

1.3 billion people in their homes since March 25. Goldman Sachs Group Inc. expects the

economy to shrink by 5% in the year ending March, deeper than any other recession India

has ever experienced since independence in 1947. Reforms announced in the past few

days to accelerate growth are likely to have an impact over the medium-term but may not

revive growth in the short term, Goldman economists Prachi Mishra and Andrew Tilton

wrote in a note dated May 17. While restrictions have been eased, millions have lost their

jobs prompting the administration to announce a spending plan of nearly 10% of GDP.

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7 CITI-NEWS LETTER

Meanwhile, the spread of the infection has been

relentless and there could be a need to spend more to

contain its fallout. The country has seen over 95,000

infections and 3,000 deaths so far. Nomura Holdings

Inc. estimates India’s budget deficit will widen to 7%

of gross domestic product, with output shrinking by

5.2%. “If we constraint policy in a straitjacket on

some fixed fiscal deficit numbers, we lose our degree of freedom for necessary and

appropriate action,” Kumar said in an interview conducted via video conference. A

downgrade of country’s sovereign ratings was unlikely as the situation was unprecedented

crisis and no country had been spared, Kumar said. Moody’s Investors Service currently

rates India at Baa2, in line with Colombia, Indonesia and the Philippines. S&P Global

Ratings and Fitch Ratings have a BBB- assessment, the lowest investment-grade level.

“To use old norms for judging is neither rational nor called for,” Kumar said.

Home

Japan concerned over fate of its companies in India

(Source: Amiti Sen, The Hindu Business Line, May 18, 2020)

Asks New Delhi to ease labour laws, lower import duties

The Japanese government has expressed concern over the fate of its companies in India,

especially in the automobile sector, due to disruptions caused by the lockdown. It has

asked New Delhi to make labour laws “less stringent’’, improve logistics and lower

customs duties on specific products.

Representatives from Japan’s Ministry of Economy, Trade and Investment (METI) met

representatives from the Department for Promotion of Investments and Internal Trade

(DPIIT) and the Ministry of External Affairs in a video conference recently to discuss

problems being faced by Japanese companies in India and how it could be mitigated.

“The Japanese government is not only concerned about the restrictions in place due to

the on-going lockdown, but is also worried about the falling demand, especially for

automobiles, and wanted to discuss measures for supporting its companies,” a person

familiar with the meeting told BusinessLine.

One big problem, according to Japanese companies in India, is the strict labour law that

makes it difficult to lay off workers, even when production is low. “The Japanese pointed

out that the difficulty in reducing workforce when the COVID-19 situation had hit

business and also the necessity to maintain wages was making operations unsustainable,”

the official said.

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8 CITI-NEWS LETTER

As several States such as Maharashtra, Gujarat, Uttar Pradesh and Madhya Pradesh, have

decided to offer some concessions in existing labour laws, and some others are working

on it, DPIIT assured the Japanese delegation that it would continue engaging with it on

the matter.

The restrictions in movement of workers, especially the inter-State movement of

employees, were posing another challenge, the delegation pointed out. With companies

such as Maruti-Suzuki starting operations in more than one plant, such movements are

essential. “The Japanese officials were assured that with the easing in movement of people

and goods in the latest phase of opening-up of the economy, things would get smoother,”

the official said.

Lowering of customs duties on products of interest to Japan, including inputs for its

plants in India, is another demand made by the country.

“India has to be very careful in its decision to lower customs duties as the domestic

producers also need to be protected with their profits in doldrums due to the lockdown,”

the official said.

Japanese investments

In the last two decades, cumulative Japanese investments in India have been at $30.746

billion making it the third major investor in the country. Japanese FDI into India has

mainly been in automobile, electrical equipment, telecommunications, chemical,

financial (insurance) and pharmaceutical sectors. There are as many as 1,441 Japanese

companies registered here.

As India tries to totter back to normalcy with the gradual opening of restrictions, Japan

was assured that the government will continue to hold meetings and ensure that most

problems are sorted out, the official said.

Japan is India’s 12th largest trade partner accounting for $12.77 billion of imports and

$4.86 billion of exports in 2018-19.

Home

Covid-19: Kant-led empowered group discusses way forward with industry

leaders, UN officials

(Source: Economic Times, May 18, 2020)

Aviation industry captains on Monday presented their business resumption plans and

discussed contemporary challenges facing the sector due to COVID-19 with Amitabh

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9 CITI-NEWS LETTER

Kant-led empowered group and Civil Aviation Secretary Pradeep Singh Kharola. Kant,

who heads the empowered group on coordinating with private sector NGOs and

international organisations, also interacted with United Nations India resident

coordinator Renata Desallien, and country heads of UNICEF, United Nations

Development Programme (UNDP) and the World Health Organization (WHO) and

discussed the way forward in preparing for a social-economic new normal.

As the economy is opened up further with lockdown relaxations, contact tracing and

testing intensity in containment zones will hold the key, the Niti Aayog CEO said during

the Empowered Group 6 interaction with WHO and UN officials. "Industry captains from

the aviation sector presented their business resumption plans, contemporary challenges

& discussed the requisite #COVID management protocols for safe passenger movement

in the future, to the Empowered Group 6, led by CEO @amitabhk87 & Secretary

@MoCA_GoI," the Aayog said in a tweet.

Like other countries, India resorted to a country-wide lockdown on March 25, with

stringent measures to limit movement of people to curb coronavirus spread in the

country. With three phases of lockdown over, the government on Sunday extended the

curbs, though with some more relaxations, for two more weeks till May 31.

Home

Indian economy to contract 5-7% in FY21: Bernstein, Goldman Sachs

(Source: Puneet Wadhwa & Indivjal Dhasmana, Business Standard, May 19, 2020)

Analysts say the Rs 20-trn stimulus package by govt a lost opportunity

Bernstein, the US-based investment management firm, has estimated contraction in

the Indian economy at 7 per cent during 2020-21, while Goldman Sachs projected it to be

5 per cent.

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10 CITI-NEWS LETTER

The forecasts came even as the

government announced a stimulus

package, spread over five days, last

week.

While Bernstein, which has nearly

$623 billion in assets under

management globally, kept its

projections unchanged after the

stimulus, Goldman Sachs now

expects a bigger contraction than its

earlier estimate of 0.4 per

cent. Nomura retained its projection

of 5 per cent contraction in FY21

despite the stimulus.

BofA Securities pegged it at 0.1 per cent for FY21 and 12 per cent in the first quarter of the

fiscal year. CARE Ratings has projected growth of 1.1-1.2 per cent.

However, its chief economist, Madan Sabnavis, said the forecast would be lowered and

the economy was likely to see a fall in GDP. ICRA stuck to its projection of 1-2 per cent

contraction. Its principal economist, Aditi Nayar, said the support provided by the

government would be offset by a longer lockdown. The government has extended

the lockdown by a further two weeks to May 31 with some relaxation.

The stimulus package of the government is a lost opportunity, said analysts at Bernstein.

The desire to show the world that they care about the economy and are willing to match

global stimulus numbers was perhaps the driver behind the claim of a large package,

Bernstein said.

“While the package started on important aspects, the need to announce measures that

add up to this top down number made the entire package aimless, with several generic

announcements which should ideally have been a part of a normal economic agenda.

Overall, we see it as a lost opportunity,” wrote Venugopal Garre, Ankit Agrawal and

Ranjeet Jaiswal of Bernstein in the report.

India, they said, does not have fiscal buffers and hence a large fiscal stimulus would have

been a bold bet. That could have impacted ratings and currency if not executed properly.

The government, Bernstein believes, has hence taken an easier path. Over the past few

days, the government has sought to alleviate economy-related issues triggered by the

rampant spread of Covid-19.

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11 CITI-NEWS LETTER

While guarantees for fresh credit to micro small, and medium enterprises (MSMEs),

supporting the poor and migrants via an expanded employment guarantee programme,

and the provision of food for the poor and migrants got a thumbs-up from Bernstein, it

cautioned that the expansion of the Mahatma Gandhi National Rural Employment

Guarantee Scheme could impact labour availability, as rural migrants may not rush back

for jobs. As a result, construction and transport will be affected the most.

“The focus should have been on urban, corporates, consumption, infra and impacted

sectors, but it was on rural and strange-end markets such as space program. Rural is in

control, as farm incomes are protected (good harvest season and good start to summer

crop sowing). Yet, several measures (in the form of loans) were announced for agri, some

of which are already existing programmes,” analysts at Bernstein wrote.

The overall plan, in their view, was a general economic agenda and lacked substantive

decisions to support consumption and promote manufacturing. “Even the broader

reforms lacked the spark while urban and corporates (irrespective of impacts) were

ignored. We believe that equity markets are likely to be less enthused, with the package,

as it is less likely to support the economy in the near/medium term,” Bernstein analysts

said.

Andrew Tilton, Goldman Sachs’ chief Asia-Pacific economist, in a co-authored note with

Prachi Mishra, said: “There have been a series of structural reform announcements across

several sectors over the past few days. These reforms are more medium-term in nature,

and we therefore do not expect these to have an immediate impact on reviving growth.”

The financial services firm estimated the fall in GDP to 45 per cent in the first quarter of

the current financial year over the fourth quarter of the previous financial year

(annualised) compared to a 20 per cent decline projected earlier.

However, it expects a sharper rebound in the second quarter of FY21 than forecast earlier.

It pegged GDP growth in the quarter at 20 per cent over the previous quarter (annualised)

compared to the earlier projection of 10 per cent. For the next two quarters, the estimates

remained unchanged at 14 per cent (Q3) and 6.5 per cent (Q4).

Nomura said the government would need to step in again in the coming quarters for

reviving growth through a demand stimulus, as well as measures to support the financial

sector. It said of the 10 per cent of GDP package announced, the bulk of the support

emanates from higher contingent liabilities (guarantees) at 2.15 per cent of GDP, while

the net cash outgo from the central government’s budget (aggregating the fiscal impact of

all packages) amounts to only 0.8 per cent of GDP.

Home

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12 CITI-NEWS LETTER

Govt accounts for nearly 94% of Rs 1,819 cr dues payable to MSMEs: CII poll

(Source: Subhayan Chakraborty, Business Standard, May 19, 2020)

A study of 450 MSME members revealed that govt departments including state depts owe

them Rs 1,709 Cr, while private sector also owes about RS 110 crore

After a public controversy about the quantum of funds owed by the government to Micro

Small and Medium Enterprises (MSMEs) nationwide, the Confederation of Indian

Industry (CII) has now said its members are owed upwards of Rs 1,819 crore.

"While there are several estimates of

amounts due to MSMEs from the

Government and Public Sector

Undertakings (PSUs), a quick poll

by CII of MSMEs indicated that about

450 firms reported delayed payments

worth Rs 1,819 crore. Of this, public

sector or government departments

including state departments owe MSMEs Rs 1,709 Crore, while the private sector also

owes about RS 110 crore to MSMEs," said Chandrajit Banerjee, Director General, CII.

Last week, MSME Minister Nitin Gadkari had hinted at a television interview last week

that all state and government departments along with the private sector owe MSMEs an

estimated Rs 5 trillion. The figure given by Gadkari was circulated widely on social media

and touted by critics as the government's own admission of massive pending dues. Later,

Expenditure Secretary TV Somanathan clarified on Friday that dues from 26 top

Central PSUs to MSMEs was Rs 773 crore as on March 31.

Now, the sample CII poll has revealed that pending claims remain a massive burden on

an industry struggling with acute lack of liquidity. Thirty-two per cent of the outstanding

to MSMEs have been delayed for more than two years and about Rs 895 crore is stuck in

disputes.

These need to be resolved soon to save the MSMEs from solvency, Banerjee, added.

Out of the total delayed payments, manufacturing and services contracts account for Rs

153 crore and Rs 723 crore respectively, while those for multiple sectors account for Rs

930 crore. Among services, engineering, procurement and construction (Rs 92 crore),

Information Technology & ITES (47 crore) and Engineering contracts (35 crore) figure

among top pending categories.

The Micro and Small Enterprises Facilitation Council on Saturday warned that the delay

in payments for supplies received from MSMEs would invite heavy penalty against

defaulting buyers. “In case the buyer fails to make payment as required under Section 15

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13 CITI-NEWS LETTER

of the Micro Small and Medium Enterprises Development Act, the buyer is liable to pay

compound interest with monthly rests to the supplier for delayed period beyond 45 days,

on the on the amount, payable at three times the bank rate notified by Reserve Bank of

India as provided under Section 16 of the MSMED Act, 2006,” a circular issued by MSEFC

Chairperson Anoo Malhotra said on Saturday.

Way Forward

CII has suggested that government monitor payment delays by Central PSUs closely

through a portal for complaints and ensure necessary funds are provided for this purpose.

This is currently done through the MSME Samadhaan portal which acts as the platform

for settlement of disputes after MSMEs affected by delayed payments file applications for

redressal. As of Monday showed Rs 11,014 crore accruing to MSMEs.

The industry body also wants all PSUs and government departments, across the country

must be encouraged or mandated to register themselves on the Trade Receivables

Electronic Discounting System (TReDS), the online electronic institutional mechanism

for facilitating the financing of trade receivables of MSMEs through multiple

financiers.platform.

CII has also pushed for the immediate clearance of all pending GST refunds as well as all

incentives under various central and state schemes that remain due to MSMEs, should be

released immediately. Banks should provide additional reconstruction term loans to

MSMEs impacted by the lockdown, with the government offering a guarantee upto 20 per

cent of the default.

Home

Economy to shrink despite stimulus: Economists

(Source: Gayatri Nayak, Economic Times, May 18, 2020)

Economists are slashing their forecasts to factor in at least five percent shrinkage in the

economy after the fiscal stimulus that is unlikely to boost demand to offset for lost growth

as well as give a fresh impetus. While Nomura has forecast recession-three consecutive

quarters of recession, Goldman Sachs, Bank of America, UBS and HSBC have been less

harsh with economy contraction forecast ranging from 0.1 per cent and 3.5 per cent. Ever

since COVID-19 assumed pandemic proportion and the lockdown in the economy since

end March, economists have had several rounds of revisions in their growth forecast with

every successive forecast projecting lower growth than the previous one.

The latest revision is after the last tranche of the Rs 20 lakh crore stimulus package

announced by the finance minister on Sunday. " The government has aimed for maximum

bang for minimum buck, with most of the relief either regulatory in nature or reflected in

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14 CITI-NEWS LETTER

its contingent liabilities rather than explicit budgetary support" said Sonal Varma, chief

India economist, Noura Securities, in a report "the package may fall short of mitigating

the nearterm challenges for some businesses, but it is better designed to improve India’s

mediumterm growth potential and attract long-term risk capital. As a consequence, we

maintain our GDP growth projection for 2020 at -5% y-o-y" Nomura cut its projection for

real GDP growth in 2020 to -5.0% y-o-y from -0.5% just before the finance minister's

stimulus package. "We now expect year-on-year growth to remain negative for three

consecutive quarters, with growth faltering to 1.5% y-o-y in JanuaryMarch'20 before

plunging to -14.5% in April-June'20 and then weakly recovering to -6.0% in July-

September'20 and -1.5% in OctoberDecember'20. Goldman Sachs which forecast a steep

45 per cent contraction in the April-June quarter, expects the economy to contract by 5

per cent on FY'21 " The deeper trough in our Q2 forecasts reflects extremely poor

economic data so far for March, April and the continued lockdown measures, which are

amongst the most stringent across the world" said the American investment bank in a

report.

"The overall 10%-of-GDP package focused more on medium-term supply-side measures,

and funding via future public-sector liabilities" said Pranjul Bhandari, India economist at

HSBC . "We forecast the general government fiscal deficit at 10%-of-GDP; and growth to

contract 3% y-o-y in 2020" UBS expects its downside risks to its growth forecast of -0.4per

cent , in a report released after the final tranche of government's stimulus package. Even

the country's largest lender State Bank of India has that its GDP numbers forecast could

now have a downward bias from current stress estimate of–4.7% in FY21. Bank of

America Securities expects the economy to contract by 0.1 per cent in FY'21, assuming the

lockdown is extended till end June.

Home

Nabard frontloads Rs 20,500 crore financial assistance for pre-monsoon &

Kharif operations

(Source: Economic Times, May 18, 2020)

In an attempt to augment the resources of Cooperative banks and RRBs, Nabard has

frontloaded financial assistance to these entities for their pre-monsoon Kharif operations.

Of the Rs 20,500 crores that Nabard is providing the farmers, Rs 15,200 crore will be

through cooperative banks and the balance Rs 5,300 crore will be through RRBs as special

liquidity facility in various states. The fund is given as a means of front loading the

resources of these banks so as to ensure adequate liquidity with them for financing

farmers. This is against Rs 5,000 crore lent during the first quarter of the last fiscal year.

The banks have also initiated a programme of saturation of Kisan credit cards-KCC- and

about 12 lakh new KCC cards have been issued by Cooperative banks and RRBs during

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15 CITI-NEWS LETTER

the last two months. A total of 4.2 crore KCCs have been issued by Cooperative banks &

RRBs as on 31 March 2020.

Home

Stimulus dent to fiscal deficit at 1-2% of GDP: Experts

(Source: Gaurav Noronha, Economic Times, May 18, 2020)

The impact of the Atmanirbhar Bharat package on fiscal deficit is unlikely to be over 1-2%

of gross domestic products (GDP), say experts. FM Nirmala Sitharaman Sunday

announced the fifth and final tranche of the Rs 20 lakh crore relief package. Experts

agreed that most of the expenditure was contingent and the measures were largely

regulatory and the government’s immediate additional expenditure would be minimal.

State Bank of India chief economist Soumyakanti Ghosh and EY’s chief policy advisor DK

Srivastava pegged it at 1.01% of GDP or Rs 2.02 lakh crore. A Nomura report pegged the

dent at 0.8% of GDP. “We expect the overall fiscal deficit for FY21 to be 7% of GDP,” the

report said. Accounting for certain ambiguities on where certain expenditures would

come from, like the Rs 1.5 lakh crore package for the farm sector and other outlays that

were not mentioned in the final presentation, Madan Sabnavis, chief economist at Care

Ratings put Centre’s additional expenditure at Rs 80,000 crore. Adding this to the Rs 1.93

lakh crore expenditure announcement in March and April, it would come to 1.2-1.3% of

GDP, Sabnavis said.

On whether this would be enough, Nomura

said: “The package may fall short of mitigating

the near-term existential crisis for businesses

and workers, but is better designed to improve

India’s medium-term growth potential and

attract long-term risk capital.” Barclays said it

expects the government to end FY21 with a

fiscal deficit of close to 6% of GDP. “We

estimate that the actual fiscal impact on the budget will be only Rs 1.5 trillion (0.75% of

GDP),” said a report by Rahul Bajoria, chief India economist at Barclays.

Home

‘Stimulus to cost only about 1% of GDP’

(Source: The Hindu, May 18, 2020)

Package may fall short of mitigating near-term existential crisis for

businesses, workers: Nomura

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16 CITI-NEWS LETTER

The much-hyped ₹20-lakh crore economic package announced by Prime Minister

Narendra Modi will have a minimum impact on the fiscal cost…

Home

Covid-19: Tirupur expects $500 million additional revenue from

mask exports

(Source: R Ravichandran, Financial Express, May 19, 2020)

Tirupur garment\knitwear cluster is upbeat on the directorate general of foreign trade’s

(DGFT’s) Saturday decision to allow export of non-medical, non-surgical masks

Tirupur garment\knitwear cluster is upbeat on the directorate general of foreign trade’s

(DGFT’s) Saturday decision to allow export of non-medical, non-surgical masks. India’s

largest garment hub expects an additional revenue generation of anywhere between $500

million and $1 billion annually going forward as wearing mask is set to become a universal

norm globally, following the Covid-19 pandemic attack.

Infusing cheer into the industry, the government has allowed the exports of non-medical

and non-surgical masks of cotton, silk, wool and knitted while continuing to prohibit all

other types such as N-95 and surgical masks. The Tirupur Exporters’ Association (TEA)

has been pressing the Union textile and commerce ministries to allow mask exports for a

few months.

TEA president Raja M Shanmugham said: “We are happy to have been allowed to export

the non-surgial and non-medical masks, which came at a time when the garment industry

is under stress with the exports due to Covid-19 across the world. We have been getting

enquiries for masks for some time now but could not do so as the government prohibited

export of such masks till Saturday. The decision to allow not only brought immense

prospects to the textile industry but also will help generate additional revenue for the

1,500-odd export units.”

“We (the cluster) are expecting an additional revenue generation to the tune of $500

million in the immediate future, and has the potential to generate $1 billion over the next

few years as the world, particularly the US and the European Union will witness `new

normal’ going forward. Even countries across the world have started demanding masks

for their regular usage.

Even big retail customers of Tirupur have already made enquiries for sampling masks and

all the units here will start sending samples soon and then comes the order for exports,”

Shanmugham said.

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17 CITI-NEWS LETTER

He said: “Interestingly, majority of the buyers are expected to source masks in design and

fabrics to match that of readymade garments. It’s going to be a colourful and a permanent

export opportunity for Tirupur cluster, at least for next few years.”

According to TEA president, hundreds of MSME units, engaged in garment exports, are

set to benefit immensely, which, in turn, will help the adjacencies (ancillary units). All

these units have been making masks and PPEs in lakhs for domestic purposes over the

last two months and with the export opportunity, they look forward to a great future, he

said adding, “A new prospect has come to the cluster in the form of exports.”

Home

With no immediate support in package, apparel industry reacts strongly

(Source: Apparel Resources, May 18, 2020)

While the package has something for everyone belonging to various sectors, there is

nothing specific for the textile and apparel industry. Strong reactions were bound to

happen!

Finally, after five press conferences by the Union Finance Minister Nirmala Sitharaman

and the Minister of State for Finance Anurag Thakur, on Sunday (18 May), things were

clear about the historic package of Rs. 20 lakh crore. The package has something for

everyone belonging to various sectors like infrastructure, defence, mining, education,

DISCOMs (electricity distribution companies), agriculture, and health amongst many

others. Apart from the monetary relief, changes at policy level were also the attraction of

these announcements.

However, there was nothing specific for textile and apparel sector, and major associations

of the industry – who had many brainstorming sessions with the Government regarding

the package – shared in their press release on the very first day of the FM’s press

conference, “We felt that the Government would soon announce a special package for

boosting exports for all the textiles & clothing products including cotton yarn and fabric

to grab the emerging opportunities and also consuming the surplus cotton that might

significantly affect the cotton farmers in the country.”

Raja M. Shanmugam, President, TEA shares with Apparel Resources, “The real

issues still pertaining to the industries, and particularly to our textile industry, are

looming large threatening its existence. Because of the sudden closure of operations

across the globe, the circular economic chain got crippled. In this situation, liquidity got

thoroughly damaged for which our Government has declared a supportive gesture for

MSMEs by granting 20 per cent additional working capital, but the RBI declared the

moratorium of 3-month period is going to get over by 31 May, and then by 1 June, the

industries would need to pay the compounded interest. Here the point is whatever

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18 CITI-NEWS LETTER

liquidity support given for the MSMEs is again going to be drained systematically by the

banks as the collection of pending dues without helping it out to use it for the business

revival aspects.”

He further adds, “Moreover, the closedown period has been extended till 31 May. Imagine

industries have not been allowed to run for the last 2 months fully (3 months if we take

the global market closure date)! Hence, our request is the moratorium period be extended

for at least the next 9 months to ensure the intended revival of industries, particularly

MSMEs.”

“Even for the large industries, the economic package support is much required to get back

to the previous normal. But this was missing in the announced economic package.

Moreover, the moratorium for them must be extended for at least next 3 months. The

banks need to be advised or allowed to restructure the stressed accounts, if needed,

without downgrading that account as NPA. I hope our Government would pay attention

to these realities and take up a positive step to ensure the real intended revival to happen

after this COVID-19 debacle,” Raja M. further asserts.

Rajeev Bansal, MD, Celestial Knits & Fabs, Noida and Secretary, Indian

Industries Association (IIA), has an interesting point to make, “This is not a relief or

support package; it is just a liquidity package as MSME can get the loan, but have to return

it with interest, as usual. And getting a loan in the current condition is a very difficult as

well as time-taking task.” Celestial Knits & Fabs is one of the well-known apparel export

companies of Noida.

Many other apparel manufacturers too raised the issue of loan process, including Vivek

Saxena, Director, Moissanite Apparels, Noida, who says, “The process regarding

loan is very cumbersome. Though the Government has said that the loans will be given

without collateral, there are too many ifs and buts in every announcement. Even for PF

relaxation, there are so many terms and conditions that anyone can barely get any

advantage,”

Running a medium-size apparel factory and working with good buyers of domestic and

the Middle East markets, Murtaza Lokhandwala, Director, Bubble Bee Export

House, Ahmedabad, believes, “The need of the hour is to provide direct cash benefits

for at least 3 months to the bottom 60 per cent of the society in order to spin the wheel of

the economy. Giving loans to the industry will not create demand in the market. Even if a

factory owner gets a loan, he may not pay previous wages and salaries, and even going

forward, he will be able to do so only after a month of receiving an order, in case he

manages to receive one that is. In the domestic market, there will be orders only if

customers will have money in their pockets to purchase things. What will one do of the

loan when there is no business?”

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19 CITI-NEWS LETTER

Many apparel manufacturers shared that they were expecting direct help, as that, and not

loans, is the need of the hour. “Relief packages by the Government may be music to ears,

but the fact is it is thin dust. Top-level export houses may benefit, but the bottom of the

pyramid industry (MSME) will not get any immediate support. We need straight help, as

in 2+2 = 4,” says a medium level apparel manufacturer on the request of anonymity.

Several other apparel manufacturers across India also maintained the same spirit

regarding this issue. Apparel Resources has also approached major associations like

AEPC, CITI, SIMA to share their opinion on this issue. As responses from these are

awaited, we request you to stay tuned to the website to know the same.

Home

Apparel export industry should be treated at par with MSME sector: AEPC

(Source: Economic Times, May 18, 2020)

Reeling under the impact of COVID-19 pandemic, apparel exporters on Monday urged

the government to treat the labour-intensive sector at par with MSMEs. In a letter to

Prime Minister Narendra Modi, Apparel Export Promotion Council of India (AEPC)

Chairman A Sakthivel said the sector is facing huge losses due to nonpayment of export

bills and cancellation of orders. "We would request that the apparel exporting industry

may be treated at par with the MSME sector as we work on wafer-thin margins of 4-5 per

cent," Sakthivel said. Domestic exporters have a huge pile-up of inventories because of

lockdown in several countries, he said adding the industry is one of the largest employers

of the country employing 12.9 million people directly.

He also said the benefits related with Employees' Provident Fund (EPF) should be

extended to the sector, irrespective of the number of workers employed and more

specifically to cover all the apparel exporting units, since they are highly labour intensive

with a huge women workforce. "A large number of our exporters lost huge money by

booking forward contracts and we feel that the loss can be converted into a working

capital-term loan with repayment in three years with a 6 per cent interest rate," he added.

Sakthivel further suggested that the facility of granting additional working capital to all

MSMEs without collateral may also be granted to all apparel exporting industries

irrespective of their size. "The benefit of interest equalisation scheme extended earlier this

week by one year may kindly be extended by at least two years and the benefit of 5 per

cent may kindly be extended to all units at par with the MSME sector," he said.

Further, he said that to encourage AEPC members to export man-made fibre garments,

the government should consider sanctioning 6 per cent of the COVID-19 fund as it would

help in significantly increasing outbound shipments. Citing a study, he said China,

Cambodia, Vietnam and Indonesia are exporting 80 per cent man-made fibre garments

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20 CITI-NEWS LETTER

globally, whereas India exports 90 per cent cotton garments only. He added that

permitting exports of all types of non-medical and non-surgical masks will boost the

production and exports of masks. "There is a huge opportunity for export of such masks.

There is a huge demand for the export of these products and AEPC has already identified

the international markets for these masks. The council assures the government that it will

ensure exports of these items to the tune of USD 1 billion within the next three months,"

Sakthivel said.

Home

Markets tank as India Inc deeply disappointed with Covid relief package

(Source: Financial Express, May 19, 2020)

The Bank Nifty crashed 1260.80 points on heightened concerns about rising defaults as

more units become insolvent in a weakening economy.

India’s stock markets capitulated on Monday despite strong global cues reflecting India

Inc’s deep disappointment with the Rs 20-lakh-crore economic package rolled out by the

government. The extension of the lockdown across several states till May-end, albeit with

relaxations, also dampened the sentiment.

The Sensex lost 1,068.75 points to close at 30,028.98, the lowest levels since early April.

The Bank Nifty crashed 1260.80 points on heightened concerns about rising defaults as

more units become insolvent in a weakening economy; bank stocks lost anywhere

between 5 and 10%.

Corporate earnings for the March quarter, so far, have been lacklustre despite tempered

expectations. There is apprehension corporate India’s performance could deteriorate

sharply in 2020-21 as demand for both goods and services remains muted; so far barely

five of the 18Nifty stocks have beaten analysts expectations.

Foreign portfolio investors (FPIs) continue to sell Indian equities and offloaded stocks

worth $331.02 million on Monday. They have remained sellers of stocks since March this

year; in March they sold $8.4 billion while in April they were marginal sellers. In May so

far, they have been buyers but primarily because of a large block deal in shares

of Hindustan Unilever. Foreign investors have also sold $2 billion worth of bonds in May

so far, following sales of $10.1 billion between January and April. The sales by FPIs of

bonds and stocks have pressured the rupee which depreciated to 75.9150 on Monday,

losing 0.4% to the dollar, the most in two weeks.

Investors have been concerned with experts expecting a deeper recession in the Indian

economy. Goldman Sachs said on Monday India’s GDP would contract 45% in the June

quarter. Economists have pointed out the fiscal impulse from the package is relatively

small at around 0.8% of GDP and that the measures largely address structural and supply-

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21 CITI-NEWS LETTER

side issues. Industry has been asking for measures that can boost demand meaningfully.

The prolonged slowdown also dampened the sentiment as it implies many big consumer

catchments would remain closed.

The stock markets saw thin volumes in the F&O segment on the NSE on Monday with a

turnover worth Rs 9.03 lakh crore against the six month average of Rs 14.21 lakh crore.

The cash market saw volumes worth Rs 52,063.71 crore against the six month average of

Rs 40,898 crore.

Home

Atmanirbharta and WTO: India needs to look at larger picture

(Source: RV Anuradha, Financial Express, May 19, 2020)

India needs to revisit its recalcitrance and play a far more proactive role in addressing the

WTO dispute settlement crisis.

A virus that has connected the world as no other is also responsible for increasingly

inward-looking policies. Over the coming months, India, as is the case with many other

countries, will be confronted with crucial policy choices in achieving ‘atmanirbharta’, or

self-resilience and self-reliance, while at the same time not giving in to protectionism. In

doing so, while some rules of trade may inevitably have to be rewritten, it is also important

to uphold existing rights and obligations. As an original multilateralist and a founding

member of the GATT (General Agreement on Tariffs and Trade) and the WTO (World

Trade Organisation), India has a crucial role to play in ensuring that Covid-19 does not

render the WTO and its framework of rules redundant.

The WTO’s dispute settlement system, often referred to as its crown jewel, has been

rendered dysfunctional since December 11, 2019, as a result of the US blocking the

appointment of any new members to the WTO’s standing Appellate Body. On April 30,

2020, a group of members comprising of the European Union (including its 27 members),

and 18 other countries—Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica,

Guatemala, Hong Kong (China), Iceland, Mexico, New Zealand, Norway, Pakistan,

Singapore, Switzerland, Ukraine and Uruguay—submitted to the WTO a Multi-Party

Interim Appeal Arbitration Arrangement Pursuant to Article 25 of the DSU. The MPIA

brings temporary relief to the crisis at the WTO caused by the absence of an Appellate

Body. India has so far stayed away from the MPIA. This article argues why it cannot afford

to hover on the sidelines.

The MPIA signatories have emphasised in their Statement to the WTO that the MPIA is a

‘contingency measure’ whose purpose is to “preserve the essential principles and features

of the WTO dispute settlement system which include its binding character and two levels

of adjudication through an independent and impartial appellate review of panel reports,

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22 CITI-NEWS LETTER

and thereby to preserve their rights and obligations under the WTO Agreement.” The

reason why this ‘interim’ mechanism is a significant development lies in the role of

‘appellate review’ in the WTO’s dispute settlement system. Central to this system is the

two-tier resolution of trade disputes—first the hearing of disputes by a specially

constituted ad hoc ‘panel’ comprising of three members, and next an appellate level for

appeals on questions of law.

The rulings by a WTO panel or that of the Appellate Body (in situations where panel

rulings are appealed) have to be necessarily adopted by WTO members (through the

Dispute Settlement Body, or the DSB), and can only be rejected by ‘reverse’ or ‘negative’

consensus, meaning that for a ruling to remain unadopted all of the 164 members of the

WTO have to reject the same. In a span of 24 years (1995-2018), 595 disputes have been

initiated at the WTO. While several disputes were settled by mutual settlement, WTO

members adopted close to 400 reports (ranging from original panel reports, to appellate

body reports, and reports of the compliance panel). The US’s criticism of the Appellate

Body primarily stemmed from a few of Appellate Body’s rulings against the US.

The WTO agreements and the dispute settlement mechanism are not without flaws.

However, they represent one of the most effective instruments of international law

enforcement. Finding a resolution to the Appellate Body crisis is, therefore, of crucial

importance. Professor Peter Van den Bossche, former member of the Appellate Body, in

his farewell speech in May 2019 succinctly explained that: “One can predict with

confidence that, once the Appellate Body is paralysed, the losing party will in most cases

appeal the panel report and thus prevent it from becoming legally binding. Why would

WTO members still engage in panel proceedings if panel reports are likely to remain

unadopted and thus not legally binding?

As from 11 December 2019, it is therefore not only appellate review but also the entire

WTO dispute settlement system that will no longer be fully operational and may

progressively shut down.”

This is where the EU-led MPIA has a valuable role to play. India is faced with several

sensitive disputes, and perhaps its short-term interest is to have a status quo position that

would ensure that no adverse ruling from a WTO panel would need to be implemented

through legislative reform. Since the WTO’s DSU has not been amended, the ‘right to

appeal’, though on paper only, can be used as a reason to not implement any rulings. For

instance, India has taken a view that it need not implement a recent adverse panel ruling

against its export subsidies, since an appeal has been filed against the panel decision.

Similarly, India is faced with several sensitive disputes, including against its sugar

subsidies (against which disputes have been initiated by Australia, Brazil and Guatemala),

and its tariffs on IT products (against which the EU and Chinese Taipei have both asked

for panels to be established). India is also a complainant in two pending disputes against

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23 CITI-NEWS LETTER

the US, and is at the receiving end of US WTO-inconsistent withdrawal of its developing

country status for the purposes of GSP, as well as in trade remedy actions.

With most of India’s currently pending disputes being against the US, an MPIA to which

the US is not a party has little value for the effective resolution of those disputes. On the

other hand, several disputes against India have been initiated by other countries (such as

the sugar and IT sector disputes). Not being party to the MPIA would essentially negate

the possibility for any effective dispute resolution in the absence of an appellate process.

This limited strategic advantage, however, is of little value.

Instead, India needs to have a look at the larger picture. The most obvious fall-out of a

dysfunctional WTO dispute settlement will be increasing use of unilateral measures. It is

not in the interest of India or any other country to be faced with such an eventuality. The

world today is in the midst of a global pandemic and economic crisis, and also one where

countries are increasingly implementing trade restrictive measures. To ensure that this

does not result in anarchy, the rules relating to trade obligations and use of the exceptions

to trade rules to address the pandemic need to be considered in letter and spirit of the

rules-based system. The relevance and need to preserve the WTO system is perhaps much

more crucial now than ever before.

A common sense approach would be to be part of the MPIA, while working out clear

strategies to address both the Appellate Body crisis as well as other systemic issues of the

WTO. In a world that is interdependent, a strong system of multilaterally agreed rules lies

at the foundation of a stable and predictable system. And in a world during and after

Covid-19 where economic challenges seem inevitable, such rules will have an even more

crucial role to play.

India needs to revisit its recalcitrance, and play a far more proactive role in addressing

the WTO dispute settlement crisis.

The author is partner, Clarus Law Associates, Delhi, and specialises in international

economic law and policy

Home

Maharashtra farmers in dilemma what to sow or not?

(Source: Sudhir Suryawanshi, The New Indian Express, May 18, 2020)

As the agriculture produces rates have plummeted drastically because the supply chain

has completely broken down.

As the agriculture produces rates have plummeted drastically because the supply chain

has completely broken down. As a result, the farmers are worried about the upcoming

Kharif season what to sow and what no?

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24 CITI-NEWS LETTER

Vijay Jawandia, agri experts said that the farmers who had not yet sold their cotton and

corn due to the lockdown will not even recover their expenses also.

“These crops prices are crashed. The cotton was sold at Rs 3500 to Rs 4000 per quintal

against previous year Rs 5500 to Rs 6000 per quintal, in the same time while the corn

rates are also crashed from Rs 1900 per quintal to Rs 1000. Due to the zoning system of

COVID 19, most of the Agriculture Produce Market Committee (APMC) has been shut

down. Farmers have no storage system while untimely rain has also started that will spoil

the crops in badly,” Jawandia.

He said that some of the farmers and traders are holding the crops stock because of falling

rates. “If they sell the same product next year so there will be again the bumper supply

and major chances of rate again falling down or this current trend will continue. If the

government really wants to help, they should buy all crops of the farmers and like

Haryana, Maharashtra government should also offer Rs 8000 per acre for all cotton

growing farmers. Otherwise, farmers are facing huge losses,” farmer leader and agri

expert said.

Sanjay Chaudhari, a farmer from Marathwada said that North Maharashtra, Marathwada

and Vidarbha are cotton belt. “We have got cotton as an only cash crop. If we stop sowing

cotton and corn, what should be sown that’s the biggest question. If the situation

continued like this, then difficult for us to survive,” said Chaudhari.

Another corn growing farmer Atul Nemade said that per acre he spends around Rs 20,000

on buying seeds, fertilizers, labor, etc. “I got 25 quintals so with Rs 1000 per quintal rate,

I am barely earning anything after working hard from several months in the field. The

government should improve its buying mechanism, then only the farmers will survive,”

said Nemade.

Home

Locust attack: Rajasthan’s new worry | India Today Insight

(Source: Rohit Parihar, India Today, May 18, 2020)

Reeling under the impact of the lockdown, the state’s farmers now battle the invading pests

Rajasthan’s farmers have been banging plates and lighting fires these days. It is their

desperate attempt to scare away the swarms of migratory locusts invading their fields and

eating away crops. The pest attack has come as a double blow for farmers already reeling

under the impact of the Covid lockdown.

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25 CITI-NEWS LETTER

Millions of locusts, covering 1-4 sq km of the skyline, have reached 10 of the state’s 33

districts within three weeks of being first spotted on April 30. Last year, yellow locusts

had entered India from Pakistan in the second half of May. The attack had originated from

Yemen, coming all the way to West Asia and Pakistan and then India, creating havoc in

17 countries en route.

With the harvest nearly over in Rajasthan, the invading population of grasshoppers this

May is feeding mainly on sprouting cotton crop sown last month, vegetables and fodder.

State officials, though, fear damage to the young millet and moong dal crops due in July

and August if the locusts breed.

Flying in through the Pakistan border near Jaisalmer, the locust swarms have infiltrated

as deep as Kishangarh in Ajmer district. In the past one week, they have been spotted in

parts of Jaisalmer, Barmer, Sirohi, Jalore, Bhilwara, Sri Ganganagar, Bikaner, Ajmer,

Nagaur and Jodhpur. Locusts can cover 200-250 km in a day if they get wind support.

Officials say the dust storms sweeping parts of Rajasthan are aiding their flight.

Chief Minister Ashok Gehlot, on May14, appealed for central assistance, reminding Prime

Minister Narendra Modi how a similar attack in Rajasthan last year had destroyed crops

worth a few hundred crores over 12 districts.

A day later, Union minister of state for agriculture Kailash Choudhary, who represents

Barmer in the Lok Sabha, told the media that but for the lockdown, India would have

acquired five insecticide-spraying helicopters from Britain to combat the locust attack.

Officials said the Union agriculture ministry’s Locusts Warning Organisation (LWO) is in

the process of acquiring 60 vehicles with mounted insecticide sprayers from abroad by

July. Ten such vehicles were purchased this January.

“Immature (pink) locusts are very active, which is why they have reached the interiors of

Rajasthan [from Pakistan] so quickly,” says K.L. Gurjar, deputy director, LWO. Their

metabolism slows down during winters, but in summers, they can fly from 4 am to 8 pm,

covering long distances and consuming more crops along the way than mature locusts

would.

The LWO, which suffers from both staff and equipment shortage, has put 10 insecticide-

spraying vehicles on the job in Rajasthan. The LWO has eight offices in Rajasthan and

two in Gujarat, all in the desert, but it may have to extend its operations to Punjab and

Haryana if the pests enter these states. The Rajasthan government has provided rented

tractors, on which insecticide sprayers are mounted, and manpower. The Centre-state

joint operation has so far cleared a few hundred sq km of fields of the locusts. Preliminary

estimates put the loss to crops at a few crore rupees.

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26 CITI-NEWS LETTER

State officials say there is an urgent need to contain the pink locusts before they start

breeding in the next few weeks. In the attack last year, mature locusts had laid eggs in

May before they could be eliminated. This young locust population is believed to have

added to the severity of the attack this time.

Officials say standard containment plans for such pest attacks have undergone a rethink

as better irrigation facilities have increased the green cover in Rajasthan. Indiscriminate

aerial spraying of insecticides is ill-advised as this can damage crops as well as affect

human settlements.

One of the strategies being considered now is to use fixed-wing aircraft for ultra-low

volume spraying of chemicals. The state government may request for such aerial sorties

by the air force. Drones have limited capabilities as they can carry only about 20 litres of

insecticide at a time, making them effective only over small areas.

The Indian government holds weekly video conferences with representatives in Pakistan,

Iran and Afghanistan to ensure regional cooperation in tackling the locust attacks. The

next few months will be crucial in this pest war.

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Why states are not liking Centre’s extra borrowing limit conditions

(Source: Prasanta Sahu, Financial Express, May 19, 2020)

At least three Opposition-ruled state governments - Tamil Nadu, West Bengal and Kerala

- have come up against the Centre’s decision to link 75% of the extra borrowing space

accorded to them, to how they work on and achieve specified reforms.

At least three Opposition-ruled state governments – Tamil Nadu, West Bengal and Kerala

– have come up against the Centre’s decision to link 75% of the extra borrowing space

accorded to them, to how they work on and achieve specified reforms. In a scathing letter

to Prime Minister Narendra Modi, Tamil Nadu chief Edappadi K. Palaniswami said the

state is opposed to the Centre’s move, which inter alia asked for stopping free power

supply to farmers.

Calling the conditions put forth by the Centre for the states to fully use the higher

borrowing limit as ‘needlessly onerous’, Palaniswami said: “While in some of the four

major areas of reform required by the government of India to avail of the additional

borrowing, the state government has already undertaken the reforms without expecting

any financial assistance, there are some areas, most specifically in the area of power

distribution reforms, which are politically sensitive.”

Protest making of additional loans conditional. Most of these conditions can easily be

implemented through dialogue. Centre has set a bad precedent. In future severe

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27 CITI-NEWS LETTER

conditions may be imposed on even normal loans,” Kerala finance minister Thomas Isaac

tweeted.

“This is crushing federalist polity of India in steady and strategic manner where the diktat

of the Centre will be the order of the day and the elective representatives of the people in

the states will have no choices,” Telegraph quoted West Bengal finance minister Amit

Mitra, as saying.

Union expenditure secretary TV Somanathan defended the conditions citing

constitutional provisions in this regard. “In order to borrow, states need the Centre’s nod

under Article 293,” Somanathan told CNBC TV18.

Union finance minister Nirmala Sitharaman on Sunday raised the net borrowing limit for

state governments from 3% of G-SDP to 5% to make available an additional Rs 4.28 lakh

crore to all the states combined. While 0.5 percentage point of the extra borrowing

window will be available to all states unconditionally, 1 pps will be made available in four

equal tranches with each to clearly “specified, measurable and feasible reform actions”.

The balance 0.5 pps can be accessed if milestones are ‘completely achieved’ in at least

three out of four reform areas. The reform linkage will be in four areas -universalisation

of ‘One Nation One Ration Card’, ease of doing business, power distribution and

augmentation of urban local body revenues.

The raising of the borrowing limit would mean the states could borrow an additional Rs

4.28 lakh crore from the market on a net basis if all the conditions are adhered to. States

have been demanding the hike in borrowing limit given that there revenues have been

squeezed and Covid-19 pandemic has dramatically increased their short-term

expenditure on healthcare and welfare schemes.

The Finance Commission had already recommended the implementation of direct cash

transfers by states to provide subsidy to eligible power consumers. The release of the Rs

90,000 crore loan through PFC-REC to discoms will also be contingent on the respective

state government undertaking to put in place a credible mechanism to release the

subsidies – meant for the consumers but routed through the discoms – in advance.

Aggressively pushing a reform agenda on which a consensus is yet to be developed at a

time when states have approached the Centre for additional borrowing out of sheer

desperation, is not in keeping with the spirit of co-operative federalism, Palaniswami said.

“Ideally, the proposed reforms ought to have been discussed in detail with the states, a

consensus developed depending on the specific conditions in each state and the reforms

linked to special Central Covid grants, and not to additional borrowing by the state.

Linking the Central government’s power under Article 293(3) of the Constitution to

permit additional borrowing by the states to conditionalities is unprecedented,” he added.

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28 CITI-NEWS LETTER

However, BJP-ruled states and some non-BJP states like Odisha (ruled by the BJD) were

not so critical of the Centre’s move to put conditions. Bihar (BJP is part of the state

government) deputy chief minister Sushil Kumar Modi in fact welcomed the higher

borrowing limit, which could give an additional Rs 12,922 crore debt window for the state.

Officials from over half a dozen states told FE that their states’ own tax revenues in April

were less than a fourth of the usual (estimated) level, with some putting the figure at even

10%. This had prompted several state chief ministers to demand that the FRBM-

mandated fiscal deficit ceiling be raised from 3% of GSDP to 5% for FY21 to enable them

to borrow more funds.

Home

Raymond plans to raise Rs 100 crore through NCDs

(Source: Deccan Herald, May 18, 2020)

Textiles major Raymond Ltd on Monday said the company plans to raise up to Rs 100

crore through non-convertible debentures (NCDs) on a private placement basis.

The company's board will meet on May 21 "to consider and approve the issue of non-

convertible debentures aggregating up to an amount not exceeding Rs 100 crore on a

private placement basis," Raymond said in a regulatory filing. The NCDs are proposed to

be listed on the National Stock Exchange, it added. Shares of Raymond Ltd on Monday

settled at Rs 215.75 on the BSE, down 2.57 per cent from the previous close.

Home

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29 CITI-NEWS LETTER

GLOBAL

IMF chief Kristalina Georgieva warns full global economic recovery unlikely

in 2021

(Source: Reuters/ Economic Times, May 18, 2020)

The global economy will take much longer to recover fully from the shock caused by the

new coronavirus than initially expected, the head of the International Monetary Fund

said, and she stressed the danger of protectionism. Managing Director Kristalina

Georgieva said the Fund was likely to revise downward its forecast for a 3% contraction

in GDP in 2020, but gave no details. That would likely also trigger changes in the Fund's

forecast of a partial recovery of 5.8% in 2021. In an interview with Reuters, she said data

from around the world was worse than expected. "Obviously that means it will take us

much longer to have a full recovery from this crisis," Georgieva said in an interview. She

gave no specific target date for the rebound.

In April, the global lender forecast that business closures and lockdowns to slow the

spread of the virus would throw the world into the deepest recession since the 1930s Great

Depression. But data reported since then points to "more bad news," Georgieva said

earlier this month. The IMF is due to release new global projections in June. The global

outlook remains a huge focus for finance ministers from the Group of Seven advanced

economies, who will meet remotely on Tuesday, according to the U.S. Treasury. Georgieva

told Reuters the Fund was focused on risks such as high debt levels, increased deficits,

unemployment, bankruptcies, increased poverty and inequality during the recovery

period. But she said the crisis was also boosting the digital economy, offering a chance to

boost transparency and e-learning, and give even small firms access to markets.

Asked about renewed tensions between the United States and China - the world's two

largest economies, Georgieva said she was urging member countries to maintain open

communication and trade flows that had underpinned global growth for decades. "We do

need to keep trade flows open, especially for medical supplies, food, and longer-term to

find a pathway to overcome what is happening now with this crisis," Georgieva said. "We

want to continue to build this more prosperous future for all by overcoming the scarring

that may come from this crisis." Tensions between the United States and China have

spiked in recent weeks, with officials on both sides suggesting a hard-won deal that

defused a bitter 18-month trade war could be abandoned months after it was signed.

Georgieva warned against retreating into protectionism as a result of the crisis. "We

should not turn away from what has worked for people everywhere: a division of labor

and collaboration and trade, which allows the costs of goods and services to go down,

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30 CITI-NEWS LETTER

allows incomes to go up, and allows poverty within countries and across countries to

retreat," she told Reuters. The IMF was created after World War Two to foster financial

stability, facilitate trade and reduce poverty around the world. It has provided emergency

financing to 56 countries since the crisis began and will decide on 47 additional requests

as quickly as possible, Georgieva said. An IMF spokesman said some $21 billion in

emergency financing, which carries very low interest rates, had been disbursed thus far.

Georgieva said the Fund could also provide grants to help the poorest countries cover

their debt service payments to the IMF through the end of the year, after raising new

lending commitments from its members.

Home

Over 100 Million In China's Northeast Face Renewed Lockdown

(Source: NDTV, May 18, 2020)

China's swift and powerful reaction reflects its fear of a second wave after it curbed the

virus's spread at great economic and social cost.

Some 108 million people in China's northeast region are being plunged back under

lockdown conditions as a new and growing cluster of infections causes a backslide in the

nation's return to normal.

In an abrupt reversal of the re-opening taking place across the nation, cities in Jilin

province have cut off trains and buses, shut schools and quarantined tens of thousands of

people. The strict measures have dismayed many residents who had thought the worst of

the nation's epidemic was over.

People "are feeling more cautious again," said Fan Pai, who works at a trading company

in Shenyang, a city in nearby Liaoning province that's also facing renewed restrictions.

"Children playing outside are wearing masks again" and health care workers are walking

around in protective gear, she said. "It's frustrating because you don't know when it will

end."

While the cluster of 34 infections isn't growing as quickly the outbreak in Wuhan which

started the global pandemic last December, China's swift and powerful reaction reflects

its fear of a second wave after it curbed the virus's spread at great economic and social

cost. It's also a sign of how fragile the re-opening process will be in China and elsewhere

as even the slightest hint of a resurgence of infections could prompt a return to strict

lockdown.

The government of Shulan, a city in Jilin, said on WeChat Monday it would put in place

its strictest measures yet to contain the virus. Residential compounds with confirmed or

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31 CITI-NEWS LETTER

suspected cases will be closed off, with only one person from each family allowed to leave

to purchase essentials for two hours every two days.

Shen Jia, a Shenyang-based salesman at a life sciences company, canceled a three-day

business trip to Jilin city last week because he would have been quarantined for as long

as 21 days on his return. A state-owned restaurant he visited last week separated his party

of three because only two people are allowed at each table, a restriction that had been

eased weeks ago before being re-instated.

"You can feel that control is stricter," he said. People "have been more careful and reduced

outdoor activities."

A sense of deja vu is permeating Jilin city, which underwent the same strict lockdown

implemented in most of China in February and March despite only reporting daily cases

in the single digits then. Overall, Jilin province's total cases stand at 127; Hubei province

had 68,000.

Still, delivery services have been mostly halted and anti-fever medication is banned at

drugstores to prevent people from hiding their symptoms. The tension has spread to

nearby areas, even if no cases have been reported officially in those places yet.

"Everyone is jittery," said Wang Yuemei, a pharmaceutical factory worker in neighboring

Tonghua. "I never ever expected Jilin province to be a hard-hit area when the whole

country is getting back to normal now."

After facing global criticism for its delayed response to Wuhan's outbreak, President Xi

Jinping's administration is taking visible steps to stop the spread of the virus in the

northeast. Vice Premier Sun Chunlan, who led the central government's virus task force

in Wuhan, arrived in Jilin city on May 13. The highest-ranking Communist Party official

of Shulan, where the new cluster's first infection emerged, was removed on Saturday

along with five other cadres.

Pressure to contain the infections is even greater with China's annual political meetings

scheduled to commence this week in Beijing after being delayed from their usual March

date. Thousands of political delegates will gather in the capital to endorse the

government's agenda from Friday and the central leadership is determined to project

stability and calm during this period.

Health officials do not yet know how the new cluster started, but suspect that the patients

may have come into contact with infected returnees from Russia, which has one of the

worst outbreaks in Europe.

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32 CITI-NEWS LETTER

Those in charge of transporting potentially infected arrivals from abroad to centralized

quarantine centers need to do a better job, said Wang Bin, a National Health Commission

official, during a briefing on Sunday.

"Imported cases from overseas and clustered infections domestically have created dual

pressure on us in containing the virus," she said.

The new cluster is also a reminder that much of China still remains vulnerable to the virus

because its first wave of infection was largely confined to Hubei province, where Wuhan

is located, thanks to a lockdown that sealed the region off from the rest of the country in

January.

"The majority of Chinese at the moment are still susceptible to the Covid-19 infection"

because of a lack of herd immunity, top Chinese epidemiologist Zhong Nanshan told CNN

over the weekend. The nation is facing a "big challenge," he said, adding that the situation

in China is "not better than foreign countries."

Videos circulating on Chinese social media showed some senior high school students in

tears when they were told to leave their campus because they'd lose precious time to

prepare for their college entrance exams due in two months.

"It's really unfortunate for us to encounter the epidemic at this point of time," said Zhou

Han, an 18-year-old student in Jilin. "I'm anxious because I can't prepare for the exam

well without last-minute instruction and supervision by my teachers."

Home

UK: Fashion SMEs awarded 1.2 million pounds to support sustainable

growth

(Source: Danielle Wightman-Stone, Fashion United, May 18, 2020)

Ten of the UK fashion industry’s innovative and sustainable small to medium enterprises,

including Ananas Anam, the company that has created an innovative natural textile made

from pineapple leaf fibre, and accessories brand Elvis and Kresse, have been awarded

more than 1.2 million pounds by the Business of Fashion, Textiles and Technology

(BFTT).

The funding initiative is led by University of the Arts London, including London College

of Fashion, Central Saint Martins, and Chelsea College of Arts, alongside Queen Mary

University and Loughborough University as part of the AHRC Creative Industries

Clusters Programme (CICP), funded by the UK Industrial Strategy Challenge Fund and

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33 CITI-NEWS LETTER

offers a comprehensive support package that enables SMEs to drive forward

sustainability-driven innovation and represents a new model of investment for the sector.

The aim of the Creative Industries Clusters Programme is to boost productivity via

creative research and development, backing businesses to “create good jobs and increase

the earning power of people throughout the UK with investment in skills, industries and

infrastructure” and the latest round of funding worth 1.2 million pounds was specifically

to help fashion SMEs support sustainable growth and innovation.

Funding will be given to 10 businesses: Ananas Anam, Anna Glover, AwayToMars,

Blackhorse Lane Ateliers, Chip[S] Board, Doppelhaus, Elvis and Kresse, Segura, Tengri,

and Tibor.

The 10 were selected from more than 80 applications, with 13 making the shortlist and

provided with one-to-one mentoring, business workshops and training to help develop

their initial concepts into fully-fledged business plans. The shortlisted businesses then

had to pitch their idea to a panel of industry and academic experts, who then selected the

final with ten businesses.

In addition to funding, each fashion SME will receive a comprehensive package of

support, including mentoring from leading academics across the partnership, hands-on

specialist creative and technical support as well as ongoing project management and

strategic business support from across the Business of Fashion, Textiles and Technology

team.

Fashion brands including AwayToMars, Elvis and Kresse and Ananas Anam

awarded crucial funding to explore sustainable innovations

The awarded projects cover a range of sub-sectors and research and development areas:

bio-material development to non-woven textiles; a global design crowdsourcing platform;

sustainable surface finishing processes; on-shoring of state-of-the-art sustainable

manufacturing; novel digital solutions to increase transparency and improve

sustainability in the sector.

The projects, which all focus on specific research and development challenges, with each

running for 12 - 18 months depending on the complexity of the proposition.

The funding will allow Ananas Anam, the company behind Piñatex, an innovative natural

textile made from pineapple leaf fibre to work with the Centre for Circular Design at

Chelsea College of Arts (UAL) to expand potential applications for the bio-based non-

woven material by developing new sustainable embellishments and other value-added

processes to improve its functionality and aesthetic qualities, while AwayToMars, the

innovative collaboration platform that utilises crowdsource creativity and helps designers

introduce their work to the world and lets them hear what the world has to say will work

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34 CITI-NEWS LETTER

with the Digital Anthropology Lab at London College of Fashion (UAL) to explore new

technologies to enhance the experience and brand value delivered by AwayToMar’s co-

creation platform to its growing global community of over 15,000 members.

Other projects will include Blackhorse Lane Ateliers, the innovative community-based

manufacturer producing high end crafted denim garments in East London, working on

setting up a state-of-the-art research and development facility to develop sustainable

laundering and finishing techniques and enable the emergence of a new and unique

‘London’ denim-washing aesthetic inspired by the principles of the circular economy.

While Elvis and Kresse, which utilises materials that would otherwise go to landfill into

luxury accessories, will work with the Materials Engineering Department at Queen Mary

University of London to develop a circular business model for metal hardware in the

luxury sector by hacking the industrial aluminium recycling process through the design

and open-sourcing of a small scale and environmentally sound alternative, and London-

based design house Tengri, which specialising in rare cloths, clothing and home interiors

will work with the London College of Fashion to explore and codify existing UK heritage

manufacturing techniques and new technologies that could be applicable to the creation

of non-wovens out of yarn bio-waste.

Professor Jane Harris, Business of Fashion, Textiles and Technology programme director

said in a statement: “Small to Medium Enterprises (SMEs) are critical to the economy and

critical to the creative sector in particular, making up over 95 percent of creative

businesses in the UK. The Business of Fashion, Textiles and Technology SME Research

and Development Programme seeks to highlight the value and impact SMEs can have in

our sector and on the economy, when provided with the right type of financial support

and research expertise.

“This initiative is intended to creatively and technically address the challenge of

maintaining growth in the crucial early years of business, whilst also providing support

for much-needed innovation, and sustainable growth, especially in these challenging and

rapidly changing times. The diversity of projects selected are indicative of the breadth of

innovation potential in the fashion sector. The dynamism they naturally bring as SMEs,

and the bespoke academic expertise provided by BFTT is a perfect mix to deliver industry-

changing innovation which cements a vision for a more sustainable fashion system which

supports growth here in the UK and around the world.”

The Business of Fashion, Textiles and Technology is a five-year industry-led project,

which focusses on delivering innovation within the entire fashion and textile supply chain.

Home

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35 CITI-NEWS LETTER

JCPenney approved to spend cash on new merchandise

(Source: Jennifer Marks, Home Textiles Today, May 18, 2020)

Plans to reduce billions in debt under Ch. 11 bankruptcy

Armed with $500 million, JCPenney said it plans to kick into action today on its

turnaround under bankruptcy protection.

Over the weekend, the retailer received approvals from the U.S. Bankruptcy Court for the

Southern District of Texas to access and use its approximately $500 million in cash

collateral. The company filed for Ch. 11 bankruptcy on May 15.

JCPenney said it will use the cash to pay vendors for goods and services provided on or

after May 15.

“By entering this restructuring support agreement with our lenders, we expect to reduce

several billion dollars of indebtedness, provide increased financial flexibility to help

navigate through the Coronavirus (COVID-19) pandemic, and better position JCPenney

for the long-term,” said CEO Jill Soltau.

In a statement released Saturday, she said the retailer plans to “hit the ground running”

and will continue to implement it Plan for Renewal, which involves merchandising

around key occasions and strengthening key categories in the home department, among

other things.

The company’s 50 largest unsecured creditors roster does not include big names from the

home furnishings industry. The top four unsecureds consist of financial creditors, which

collectively are owed roughly $1.3 billion. The trade creditors are primarily apparel and

footwear companies.

The company secured $900 million in Debtor-in-Possession financing and said it has

entered into a restructuring support agreement with the lenders holding approximately

70% of its first lien debt.

JCPenney had earlier this year announced it would close six stores as part of its

turnaround initiative. Upon filing for bankruptcy protection, the retailer said it will

reduce its store footprint in phases as it proceeds through the bankruptcy process but did

not specify how many units in the 850-store chain will go dark.

The first phase of closures, including specific store details and timing, will be disclosed in

the coming weeks, the company said.

Home

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36 CITI-NEWS LETTER

Pakistan: Textiles urge govt to help revive exports

(Source: The News, May 18, 2020)

Citing severe liquidity crunch following the COVD-19 outbreak-led lockdown, due in part

to different refunds worth Rs120 billion stuck with authorities, textile sector needed

immediate government help to regain export markets, stakeholders said on Monday.

A request to this effect was made my Shahid Sattar, executive director All Pakistan Textile

Mills Association (APTMA) has said, in a letter to Abdul Razzak Dawood, Advisor for

Commerce, Textile Industry and Production, and Investment.

“Textile exports fell 64 percent in April 2020 as compared to the same month of last year.

This means the textile industry was able to export 36 percent of its capacity even during

the lockdown, when supplies to markets and inter-provincial transport services were

shut,” Sattar wrote in the letter.

The APTMA official said it was their target and objective to rapidly increase export-

oriented industrial activity to achieve 45 percent exports in May and 55 percent in June.

“These are difficult targets as demand in USA and Europe has been limited to online sales

with a very slow opening of the retail stores,” he said and added, “The market dynamics

are changing rapidly and we as Pakistanis need to be fleet footed to capture an increasing

share of the developing market niches”.

Despite serious cash flow problems and in the light of industry's commitment to the

government and its workers the great majority of APTMA members paid April wages and

salaries without layoffs.

“Other than demand, another serious hurdle in the path of exports recovery is the

complete lack of liquidity in the market,” he wrote in the letter.

Federal Board of Revenue (FBR) had collected Sales Tax on all inputs but had refunded

Sales Tax on goods that were exported and those also only till January 2020, he said

adding that the FASTER system had failed to account for the full amount of the claim in

the Sales Tax return.

Sattar said a very reasonable estimate of refundable amount stuck as sales tax paid and

awaiting refund in the form of amounts deferred, amounts disappeared, goods not yet

exported, or exported but funds not received, was at least Rs120 billion.

Home

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37 CITI-NEWS LETTER

Does steaming your clothes really sanitize them? We find out

(Source: CNN International, May 18, 2020)

Cleaning and disinfecting are on people's minds these days. We've been told to disinfect

hard surfaces like doorknobs and countertops, and to wash our hands frequently, but less

information is available about how, and how often, to clean textiles like clothing, bedding

and upholstered furniture to prevent the transmission of coronavirus.

"The coronavirus is mainly transmitted through droplets generated when an infected

person coughs, sneezes or speaks. You can be infected by breathing in the virus if you are

within 3 feet of a person who has covid-19, or by touching a contaminated surface and

then touching your eyes, nose or mouth before washing your hands," Christian Lindmeier,

a spokesman for the World Health Organization, says.

While the novel coronavirus that causes covid-19 is very different from the flu virus, and

experts are still learning what preventive measures are effective, we can extrapolate some

lessons from what we know of the flu virus when it comes to washing fabric. According to

the Centers for Disease Control and Prevention, flu viruses are killed by heat above 167

degrees F (75 C). Steam, which is produced at 212 F, is known to kill the flu virus and has

long been an alternative to cleaning textiles with detergent and water.

Patric Richardson, a laundry expert who runs the website The Laundry Evangelist,

explains that steam works to disinfect and clean in two ways. (Disinfecting involves killing

bacteria, while cleaning is the removal of dirt.) The first is through heat, which serves to

disinfect, and the second is through moisture, which performs the cleaning function.

"What moisture does is it causes the fibers to sort of open up," he says. Using a wool-blend

work uniform as an example, he explains the effect of steam on the fibers: "That wool

actually opens up with steam, it causes the fibers to kind of relax. Steam doesn't really

force [the dirt] out, it just allows it to fall out."

f traditional laundering with detergent and water is an option, Richardson said that it is

superior to steaming, because it's easy to miss swaths of fabric when using a steamer,

while washing by machine or by hand, when done correctly, cleans every square inch of

fabric. You should just wash clothes using the hottest water the garment can tolerate;

check the care tag for that information. As for drying, just put it on the highest heat setting

as well. "If I had to put my money on it, I'd put my money on soap and water," he says.

But when it comes to fabrics that cannot be washed, or items that are too bulky to wash

by hand or in a machine, like a duvet or even a couch, steaming is an excellent alternative.

Richardson offers a tip for those bulky items: "If you can throw it over anything so that

you don't have to work on it flat, it's easier." He suggests putting the item in need of

steaming over the shower rod, a bannister or a handrail — "even if you have to drag the

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38 CITI-NEWS LETTER

sofa into the middle of the floor and throw it over the sofa so you can work on it vertically,"

he says.

When it comes to choosing a steam-generating iron or a steamer, Richardson

recommends an iron. "I'd rather they bought a steam-generating iron, because it gives

them a benefit of both." He adds, "if you feel that you need a steamer and you have $35,

a $35 steamer will do it. I don't want anyone to feel like they have to buy a $500 iron to

be safe."

Richardson recommends a steam-generating iron from Rowenta. For those looking for an

upgrade, he suggests the Laurastar steam-generating iron or a Jiffy Steamer, which is a

commercial-grade steamer used in boutiques and department stores. We've also included

some of our own picks for steam irons, handheld or travel steamers and upright steamers

that customers love.

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