The calendar year 2019 faced several roadblocks in the economic front, starting from massive decline in gross domestic product (GDP) growth to an unprecedented surge in onion price. While the non-banking financial companies (NBFC) crisis started with IL&FS going belly up in September the previous year got worse, the aviation sector witnessed a major setback with cash-strapped Jet Airways suspending flights.
Event that took toll on lives of common man, was when Punjab and Maharashtra Bank left customers’ deposits locked up following a restriction on withdrawals.
India’s start-up sector also had an eventful year, with global retail major Walmart buying a stake in home-grown e-commerce firm Flipkart, and the government setting up FDI norms to protect 70 million shopkeepers.
Several public sector units (PSUs) including banks underwent crisis that halted countries economic growth.
Here’s a look at the biggest news developments from the world of business that shaped the year:
1. Government Revised FDI Norms
Amazon and Walmart ’s grand plans for India were thrown into chaos as the country implemented new e-commerce regulations, which could cap their growth in the market. Tightening rules amid strident complaints from small shops and domestic sellers, the government banned retail giants’ exclusive arrangements with sellers to offer deep discounts. They were also barred from holding business interest in online merchants on their websites.
2. Jet Airways Shutdown, Headed for Bankruptcy
On April 17, 2019, as many as 20,000 employees and passengers were hit hard as Jet Airways announced temporary suspension of all flight services as it failed to secure interim funding for maintaining even bare minimum operations. Deaths of employees and their family members due to heart attacks and other reasons were also reported during this time.
Thousands of staff across department came out on roads to appeal the government to do ‘something’ to revive the carrier. Most of the agitating staff said they were asked to take leave without pay. For some, Jet Airways was their first choice of travel, and for some it felt like a “home” in the sky.
3. GDP Growth Decline
In 2019, India witnessed as many as six successive quarters of declining GDP growth making it the longest slowdown over the past 23 years. The last time India had witnessed six straight quarters of slowdown was between March quarter of FY 2011 and June quarter of FY 2013.
The GDP growth in second quarter of the 2019 fiscal tanked to 4.5 per cent from 5 per cent in the previous quarter. This was sixth straight drop in India’s quarterly GDP growth.
The major factor in the GDP fall was manufacturing contracting by 1 per cent. A separate data showed core infrastructure industries’ output declining 5.8 per cent in October, the biggest contraction since at least 2005.
4. NCLAT Reinstates Cyrus Mistry As Tata Sons Chairman
More than three years after the dramatic boardroom sacking of Cyrus Mistry, the National Company Law Appellate Tribunal reinstated him as the executive chairman of the Tata group. The 172-page order, while upholding Mistry’s charges that he was ousted without due process, said the action taken by Ratan Tata and others against the former Tata Sons chairman was oppressive and illegal. The order also held the appointment of N Chandrasekaran as Tata Sons executive chairman as “illegal”.
5. PMC Bank Collapse
On September 24, 2019, the crisis at Punjab and Maharashtra Cooperative Bank (PMC Bank) first came to light when the Reserve Bank of India (RBI) placed curbs on the activities of the Mumbai-based banks for six months. The central bank also limited the amount a customer could withdraw from their account during the next six months — to Rs 1,000 at first, and later to Rs 25,000. RBI had initially allowed depositors to withdraw a paltry Rs 1,000, followed by Rs 25,000 to Rs 40,000 and to Rs 50,000, but the customers demanded full access to all their accounts.
The PMC Bank crisis has claimed several lives till date and has resulted in high voltage protests in Mumbai. The scam broke after Housing Development and Infrastructure Limited (HDIL), a single borrower which accounted for 73 per cent of PMC’s loan book, went bankrupt.
6. Govt’s Corporation Tax Rate Cut
In a major move, Finance Minister Nirmala Sitharaman in September announced sharp cuts in the corporation tax rate. The government decided to slash domestic corporation tax rate to an effective 25.17 per cent, inclusive of surcharge and cess, in a bid to promote growth and investments amid an economic slowdown. The government proposed to reduce the rate from the existing 30-25 per cent to 22 per cent for all domestic companies.
7. Onion Price Hike
In November, price of onion, a quintessential vegetable for cooking food across the country, really made the citizens of the country shed tears as it has become difficult to afford it. The prices of onion which were hovering around Rs 80 per kg in the month of August and September have suddenly shot to Rs 100 to 120 per kilo as the end of November month is fast approaching.
There has been a four-fold rise in the onion prices during the last three months in the wholesale markets due to which the retail market has seen relative jump in the prices.