Category: Banking & Finance

Lufthansa India is looking for an out-of-court settlement with nearly 100 Indian staff who were laid off recently.

Over 103 Indian cabin crew members who were on fixed-term contracts had dragged the German airline to the Central Government Industrial Tribunal.

A petition was filed by Senior Advocate Mohan Bir Singh under Sections 2-A, 9 (A), 10 (1) and 33 of the Industrial Disputes Act. The matter is set to be heard on Friday. They have also represented to the Ministry of Labour.

In response to a notice sent by the employees to the company, Lufthansa’s legal team has said that it is reviewing the issues raised by the terminated employees, said a source close to the development.

The employees had alleged that they were terminated without prior notice, and were not given job security even after signing a leave-without-pay agreement for two years.

Sources added that Lufthansa’s legal team indicated that the airline is considering the offer of settlement discussions with employee representatives. An employee requesting anonymity said that because of the “terminated” stamp on their resume, none of the employees who were asked to leave were able to find a job in the aviation industry.

BusinessLine has learned that the employees have also made a presentation to the Ministry of Civil Aviation (MOCA) over the issue of termination.

When contacted, Lufthansa said: “We ask for your understanding that we cannot comment on the matter beyond what we have shared with you as a statement last week.”

India is on track for an economic recovery in the fiscal year ending March 2022, according to S&P Global Ratings.

In S&P’s view, the Indian banking system’s performance is likely to start improving materially in fiscal 2023, trailing an economic recovery of 10 per cent in fiscal 2022.

Consistently good agriculture performance, a flattening of the Covid-19 infection curve, and a pick-up in government spending are supporting the economy, the global credit agency said in a report, ‘Cross-Sector Outlook: India’s Escape From Covid.’

“India needs many things to be right for its recovery to continue. Most significantly, the country needs to quickly and thoroughly vaccinate most of its 1.4 billion (140 crore) people,” the report said.

The agency cautioned that the emergence of yet more contagious Covid-19 variants with the potential to evade vaccine-derived immunity presents a major risk to this recovery. As does the possibility of early withdrawal of global fiscal stimulus.

“Near-term prospects are positive. With a sustained decline in national confirmed Covid-19 cases allowing for a gradual relaxation of formerly stringent epidemic control measures, high-frequency economic indicators continue to show improvement,” the report said.

The agency opined that the Indian government’s recently released Budget will also support the recovery, with higher-than-previously-expected expenditures for fiscals 2021 and 2022.

India’s improving growth prospects are critical to its ability to sustain the higher deficits associated with its more aggressive fiscal stance, it added.

Transition risk

S&P believes the economy still faces important risks as it transitions from stabilisation to recovery.

“We estimate that India faces a permanent loss of output versus its pre-pandemic path, suggesting a long-term production deficit equivalent to about 10 per cent of GDP,” per its assessment.

The agency observed that localised containment measures in India are replacing nationwide lockdowns. This has rejuvenated demand and removed supply bottlenecks and labour shortages, supporting a sharp recovery in infrastructure use.

The pace of recovery varies widely. Airports are still struggling with most flights grounded, S&P said.

The agency assessed that utilities are faring better, bolstered by regulated, contracted or availability-based returns that protect their operating cash flows despite an earlier fall in unit demand.

“We believe counterparty credit risks and receivable delays pose the biggest risk for utilities (including renewables) while benign funding conditions assuage liquidity risk,” the report said.

Likewise, a faster-than-expected earnings recovery has lowered downside risk for rated corporates.

Commodity prices

S&P is of the view that an increase in commodity prices and a revival of domestic demand after lockdowns were eased have driven upside earnings surprises.

Changes in consumer choices, for example, a preference for personal transport for health-safety reasons, have helped sectors such as automobiles.

In S&P’s view, a sustained earnings rebound is key for ratings to stabilise; roughly one quarter of ratings are still on negative outlook.

On the other hand, proactive refinancing by speculative-grade corporates has materially reduced refinancing risk in 2021.

Banking front

On the banking front in India, the agency estimates the system’s weak loans ratio at 12 per cent of gross loans and credit cost to remain elevated at 2.2 per cent-2.7 per cent.

Faster economic recovery and steps taken by the Reserve Bank of India and the Indian government to cushion the effect of the economic crisis have helped ease the stress on bank balance sheets.

On a positive note, banks are building capital buffers and reserves to deal with the Covid crunch.

S&P observed that finance companies’ performance has been a mixed bag. It expects polarisation between Indian finance companies to persist.

Flipkart has partnered with ICICI Lombard General Insurance to offer Hospicash insurance, which allows consumers to avail a fixed amount for each day of hospitalisation.

“The fixed daily amount enables consumers to pay for incidental medical or emergency expenses. The insurance is affordable price, paperless, and flexible, covering both accidental hospitalisations or planned surgeries or treatment,” the two companies said in a statement on Wednesday.

The Hospicash insurance policy also provides consumers an extra allowance to cover emergency medical expenses as well as travel and post-discharge costs and compensation for loss of income during hospitalisation, the statement further said.