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Slow Pace of Private Investment, High Finance Costs Impact India’s Economy

"Sales might turn positive in August as the liquidity situation is expected to improve"

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A sovereign bond is a debt security issued by a national government and is either denominated in foreign or domestic currency. Pixabay

Consumption driven growth might become an unintended beneficiary of the government’s plans to raise a part of its gross borrowings from external markets. Presenting the Union Budget 2019-20 last Friday, India’s Finance Minister Nirmala Sitharaman proposed to raise a part of the government’s gross borrowings from abroad.

The budget proposal is expected to free-up additional liquidity in the domestic market and lower interest rates. Consequently, it will provide consumers and industry with cheaper access to finance.

According to Edelweiss Securities Lead Economist Madhavi Arora, lower interest rates wil aid consumer driven sectors which have been bogged down due to subdued demand.

Currently, the economy suffers from rural distress, slow pace of private investment and high finance costs. These together have subdued consumer sentiment and further impacted everything from car sales to air passenger traffic. This in turn has impacted production levels and further stalled hiring and wage levels.

india, sovereign bonds
“India’s sovereign external debt to GDP is among the lowest globally at less than 5 per cent,” Sitharaman said in her maiden Budget speech in Parliament. Flickr

The slowdown has impacted the automobile sector the hardest. The off-take data for May showed that domestic passenger car sales were down 26.03 per cent to 147,546 units. “Issuance of sovereign bonds should ideally free up resources available for production needs at a reduced cost,” explained Grant Thornton India Partner Sridhar V.

“Government’s move to issue sovereign bonds by itself is an indication of its confidence in the macro fundamentals and could boost economic activity.” However, Kavan Mukhtyar, Partner and Leader – Automotive, PwC India cited the need for further liquidity infusion.

“Cheaper interest rates (as an impact of government’s external borrowings) will aid in lowering the ownership cost. However, the need of the hour is to increase the availability of liquidity through NBFCs (non-banking finance companies) and banks,” Mukhtyar said.

“Sales might turn positive in August as the liquidity situation is expected to improve.” Off-loading sovereign bonds is a mechanism available to governments for raising cheaper funds from international markets.

india, sovereign bonds
“Sales might turn positive in August as the liquidity situation is expected to improve.” Pixabay

A sovereign bond is a debt security issued by a national government and is either denominated in foreign or domestic currency. “India’s sovereign external debt to GDP is among the lowest globally at less than 5 per cent,” Sitharaman said in her maiden Budget speech in Parliament.

“The government would start raising a part of its gross borrowing programme in external markets in external currencies. This will also have a beneficial impact on the demand situation for government securities in the domestic market,” she added.

This will be a first such bond issuance. In 2013, the government had considered the idea, but never implemented it. At that time, the country was faced with major fiscal and current account deficits.

Instead, the Reserve Bank of India at that time announced a scheme to incentivise foreign currency non-resident (FCNR) deposits, which brought in nearly $34 billion. As a result, most of India’s debt is rupee-denominated.

india, sovereign bonds
Instead, the Reserve Bank of India at that time announced a scheme to incentivise foreign currency non-resident (FCNR) deposits, which brought in nearly $34 billion. As a result, most of India’s debt is rupee-denominated. VOA

The government’s latest move is being seen as prudent in the face of limited options to raise funds as a slowing economy curtails tax revenue, while the borrowing target of a record Rs 7.1 trillion ($104 billion) this fiscal year remains a tough task.

ALSO READ: Is Budget 2019-20 a Hope for India’s Development?

“It will aid the sector to a limited extent. While the interest is low, transmission of cheap capital in the system is important, which takes time,” said Rahul Mishra, Principal, A.T. Kearney.

“Also, given the NBFC crisis, the overall availability of capital is very limited and whatever capital is available, it has strong checks and collateral requirement. A combination of low interest, eased out lending norms and better transmission of money will have a positive impact on consumption sectors over a 3-6 month period,” he added.  (IANS)

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Developers Can Now Start Building Hindi Skills for Alexa in India

Right now, Alexa can understand some Hinglish commands but these are few and far between

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Alexa, Amazon, Virtual Assistant
Amazon Echo led the Indian smart speakers market with 59 per cent share in 2018 (Representational image). Pixabay

Amazon on Tuesday announced that developers can now start building Alexa skills for customers in India with the new Hindi voice model available in Alexa Skills Kit (ASK).

Developers would get a headstart and submit skills for certification as the company prepare to offer engaging experiences for Alexa users in one of the most spoken languages in the country, the company said in a statement.

Commercial hardware manufacturers who want to develop Alexa Built-in products for Hindi-speaking customers in India can request early access to the invite-only Alexa Voice Service (AVS) developer preview.

The Alexa Skills Kit (ASK) is a collection of free, self-service APIs and tools that make it fast and easy for developers to create skills, or capabilities, for Alexa.

Amazon last year launched a new category of skill called “Cleo” that enables customers in India help Alexa learn Hindi and other languages. The idea was to improve Alexa’s language model and help her gradually speak in local languages.

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The lawsuit alleges Amazon of saving ‘voice prints’ of millions of children by unlawfully recording their conversations around Alexa-enabled smart devices. Pixabay

Apart from Hindi, users can respond to Alexa’s English statements in Tamil, Marathi, Kannada, Bengali, Telugu, Gujarati and other regional languages.

Alexa is currently available in over 80 countries and speaks more than 14 language variants.

One can sign up for the first webinar on Hindi skill building scheduled on July 24. Developers in India who have their Hindi-language skill certified for publication in India before July 31 would receive exclusive early bird Alexa merchandise.

Also Read: How to Speed up Torrent? Find it out Here

Rohit Prasad, Vice President and Head Scientist for Alexa, told IANS recently that the company is working on infusing regional languages capabilities in Alexa for the Indian market but these are early days.

Right now, Alexa can understand some Hinglish commands but these are few and far between. (IANS)