Coronavirus: RBI’s monetary statement, impact on business, households :

 

 Business enterprises devise their strategy based on optimism and economic conditions. Although these decisions and actions have to be pragmatic, there is always a hope for achieving more. In pursuit of these goals, many enterprises would have committed to make large investments, recruited workforce, spent on automation and offered attractive buying terms to its customers. Under normal conditions these are appreciated as aggressive strategies. However, today world is faced with two significant challenges, a health concern and economic downturn.

The scale of health concern is an unprecedented one. Coronavirus (COVID–19) presents an extremely challenging situation to Governments around the world. In order to contain the spread of disease, the first phase would be a lockdown which most Governments have already implemented. The spread of disease can be contained only through contact tracing, testing, isolation and enabling recovery of effected patients. These are steps that will follow the lockdown.

The lockdown has resulted in nearly one-third of the global population being in some way or other being confined to their homes. This includes the 1.3 billion persons in India as well. All business enterprises are under closure except for very essential goods and services. In such case, it is imperative that some economic decisions including changes in monetary policy have to be taken to reduce the economic costs and to mitigate hardship to business and citizens.

Indian businesses have traditionally relied on bank borrowings. Irrespective of scale of business operations – small MSMEs to Listed Enterprises have found it easy to go with bank finance rather than to raise money from other sources. Therefore, the Reserve Bank of India issued a monetary statement on 27-3-2020 to ease the situation arising out of this global health crisis that has led to a lockdown.

 

Here are some of the highlights of the statement:

1. RBI will also do a repo operation to Infuse Rs 1 lac crore (Repo is the rate at which RBI lends money to Commercial Banks). The rate has been also slashed by 75 basis points making it cheaper for banks to borrow.

2. Reverse Repo rate has been cut by 90 basis points – this makes it unattractive for banks to deposit excess funds with RBI. So banks will have more funds with them which can be used for lending to commercial borrowers rather than parking it with RBI.

3. The Cash Reserve Ratio – which is a certain percentage of bank deposits which banks are required to keep with RBI in the form of balance – is also reduced to 3%. This is expected to release Rs 1.37 lac crore rupees into the system.

4. The GDP forecast of 5%, as per RBI, is already at risk and therefore to overcome the challenge, the liquidity in financial system is being increased to infuse at least Rs 3.74 lac crore.

However, there is some upside that is also going to be complementary to ease the situation that is arising out of the current economic scenario.

• The crude oil prices have been reducing and this is an upside for the country which imports more than 80% of its oil requirement.

• Food prices are expected to soften in the backdrop of record food grain production.

These things alone would not help the ordinary citizens or businesses from the immediate cash flow crunch arising from unexpected slowdown of economic activity. Businesses have to pay for the salary, the employee benefit schemes like EPF/ESI, pay the taxes, rent and also to pay their creditors. The most important of all being salary. When businesses have loans coupled with these payments, it becomes nearly impossible to satisfy all the things at once. So, the RBI has announced that there will be a 3-month moratorium on payment of instalments of term loans and deferring of interest on working capital.

These steps have the dual advantage of – bank loans not being classified as NPA due to non-payment of interest or instalments and businesses having sufficient liquidity to pay the priority outflows like salary and vendor payments to keep the supply channel open.

 

Relaxation on term loan instalments and interest:

All term loans, including agricultural term loans, retail and crop loans will be having a 3 month moratorium period. Working capital interest will also have a moratorium period. Banks will have the discretion in deciding limits the limits on working capital. Any miss in payments will not be considered as a default and not reported to credit information companies. This will be a relief to all sections of society, public and businesses. This applies to banks and NBFC’s as well as all-India Financial Institutions. This will provide relief to all borrowers who have instalments falling between 1-March-2020 and 31-May-2020.

It is also important to note that RBI has specifically clarified that the repayment schedule and residual tenor of such loans will be shifted across the board by three months after the moratorium period.

Further, it is also to be noted that this is an option that will be given to borrowers who have genuine financial difficulties and they will have to approach bank with a request for the moratorium period.

This concession would be most required for businesses operating in the hospitality, tourism and other sectors like service providers where the business lost during this period of lockdown will not be recouped after the end of lockdown. Manufacturing and export entities may also face loss of orders/sales but the hit on service sector, transport including cabs and buses and entertainment sector could be large as these businesses have time utility factor.

 

Personal and housing loan repayment, credit card dues

The RBI has clarified that the moratorium benefits are available for personal and housing loans, car loans etc. It is applicable for instalments or interest, credit card dues, EMI’s and bullet repayments (one time repayment or large single payment).

 

Working capital loan interest condition

For working capital loans sanctioned in the form of overdraft or cash credit, lenders are permitted to defer the recovery of interest applied on such loans. The accumulated interest accrued interest shall be recovered immediately after completion of this period.

 

Economic package announced by the government:

The central government has also announced earlier in the week economic package of Rs 1.7 lac crore for relief of the poor. This includes both cash and non-cash benefit transfer. Some of these measures are strengthening of existing schemes and some are additional schemes. This is likely to address some of problems that arise from both demand and supply factors. Cash benefit transfer will give the benefit for demand side of economy and the supply will be taken care of Public Distribution System thus minimizing the effect of the poor section of society.

 

The road ahead:

The events of the last few days are some of most challenging and taking us to certain uncharted future. A global action coupled with economic package will help a quicker recovery.

It is time to think of new action and decisions in business. A careful and thoughtful act is the need of the hour.

How Pilots Use Air Navigation to Fly - By Manohar Bhat

 How Pilots Use Air Navigation to Fly

Air navigation is accomplished by various methods. The method or system that a pilot uses for navigating through today's airspace system will depend on the type of flight that will occur (VFR or IFR), which navigation systems are installed on the aircraft, and which navigation systems are available in a certain area.


Dead Reckoning and Pilotage
At the most simple level, navigation is accomplished through ideas known as dead reckoning and pilotage. Pilotage is a term that refers to the sole use of visual ground references. The pilot identifies landmarks, such as rivers, towns, airports, and buildings and navigates among them. The trouble with pilotage is that, often, references aren't easily seen and can't be easily identified in low visibility conditions or if the pilot gets off track even slightly. Therefore, the idea of dead reckoning was introduced.


Dead reckoning involves the use of visual checkpoints along with time and distance calculations. The pilot chooses checkpoints that are easily seen from the air and also identified on the map and then calculates the time it will take to fly from one point to the next based on distance, airspeed, and wind calculations. A flight computer aids pilots in computing the time and distance calculations and the pilot typically uses a flight planning log to keep track of the calculations during flight.

Radio Navigation
With aircraft equipped with radio navigation aids (NAVAIDS), pilots can navigate more accurately than with dead reckoning alone. Radio NAVAIDS come in handy in low visibility conditions and act as a suitable backup method for general aviation pilots that prefer dead reckoning. They are also more precise. Instead of flying from checkpoint to checkpoint, pilots can fly a straight line to a "fix" or an airport. Specific radio NAVAIDS are also required for IFR operations.

There are different types of radio NAVAIDS used in aviation:

ADF/NDB:
The most elementary form of radio navigation is the ADF/NDB pair. An NDB is a nondirectional radio beacon that is stationed on the ground and emits an electrical signal in all directions. If an aircraft is equipped with an automatic direction finder (ADF), it will display the aircraft's position in relation to the NDB station on the ground. The ADF instrument is basically an arrow pointer placed over a compass card-type display. The arrow always points in the direction of the NDB station, which means that if the pilot points the aircraft in the direction of the arrow in a no-wind situation, they will fly directly to the station. The ADF/NDB is an outdated NAVAID, and it's a system prone to errors. Since its range is line-of-sight, a pilot can get erroneous readings while flying in mountainous terrain or too far from the station. The system is also subject to electrical interference and can only accommodate limited aircraft at once. Many are being decommissioned as GPS becomes the primary navigation source.

VOR:
Next to GPS, the VOR system is probably the most commonly used NAVAIDS in the world. VOR, short for VHF Omnidirectional Range, is a radio-based NAVAID that operates in the very-high-frequency range. VOR stations are located on the ground and transmit two signals—one continuous 360-degree reference signal and another sweeping directional signal.

The aircraft instrument (OBI) interprets the phase difference between the two signals and displays the results as a radial on the OBI (omni-bearing indicator) or HSI (horizontal situation indicator), depending on which instrument the aircraft uses. In its most basic form, the OBI or HSI depicts which radial from the station the aircraft is located on and whether the aircraft is flying toward or away from the station.
VORs are more accurate than NDBs and are less prone to errors, although the reception is still susceptible to line-of-sight only.

DME:
Distance Measuring Equipment is one of the most simple and valuable NAVAIDS to date. It's a basic method using a transponder in the aircraft to determine the time it takes for a signal to travel to and from a DME station. DME transmits on UHF frequencies and computes slant-range distance. The transponder in the aircraft displays the distance in tenths of a nautical mile.
A single DME station can handle up to 100 aircraft at one time, and they usually co-exist with VOR ground stations.

ILS:
An instrument landing system (ILS) is an instrument approach system used to guide aircraft down to the runway from the approach phase of flight. It uses both horizontal and vertical radio signals emitted from a point along the runway. These signals intercept to give the pilot precise location information in the form of a glideslope—a constant-angle, stabilized descent path all the way down to the approach end of the runway. ILS systems are widely in use today as one of the most accurate approach systems available.

GPS
The global positioning system has become the most valuable method of navigation in the modern aviation world. GPS has proven to be tremendously reliable and precise and is probably the most common NAVAID in use today.

The global positioning system uses 24 U.S. Department of Defense satellites to provide precise location data, such as aircraft position, track, and speed to pilots. The GPS system uses triangulation to determine the aircraft's exact position over the earth. To be accurate, a GPS system must have the ability to gather data from at least three satellites for 2-D positioning, and four satellites for 3-D positioning.

GPS has become a preferred method of navigating due to the accuracy and ease of use. Though there are errors associated with GPS, they are rare. GPS systems can be used anywhere in the world, even in mountainous terrain, and they aren't prone to the errors of radio NAVAIDS, such as line-of-sight and electrical interference.

Practical Use of NAVAIDS
Pilots will fly under visual flight rules (VFR) or instrument flight rules (IFR), depending on the weather conditions. During visual meteorological conditions (VMC), a pilot might fly by using pilotage and dead reckoning alone, or they might use radio navigation or GPS navigation techniques. Basic navigation is taught in the early stages of flight training.

In instrument meteorological conditions (IMC) or while flying IFR, a pilot will need to rely on cockpit instruments, such as a VOR or GPS system. Because flying in the clouds and navigating with these instruments can be tricky, a pilot must earn an FAA Instrument Rating to fly in IMC conditions legally.

Currently, the FAA is emphasizing new training for general aviation pilots in technologically advanced aircraft (TAA). TAA are aircraft that have advanced highly technical systems onboard, such as GPS. Even light sport aircraft are coming out of the factory with advanced equipment these days. It can be confusing and dangerous for a pilot to attempt to use these modern cockpit systems in-flight without additional training, and current FAA training standards haven't kept up with this issue.