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A round-up of top newspaper stories to keep you ahead of others.
1. Downside risks weigh on economic growth, macro stability to help
Increased macroeconomic stability has made India’s growth rate sustainable, the finance ministry has said in its monthly economic review for March but flagged for vigilance downside against risks from El Nino-triggered drought, geopolitical developments, and global financial turmoil. Although the 6.5 percent growth projection for 2023-24 is in line with the estimates of the World Bank and the Asian Development Bank, the report said factors beyond India’s control could affect the favorable combination of growth and inflation outcomes currently anticipated.
Why it’s important: Multilateral agencies have predicted global growth to slow down which will have an impact in India as well, which has been frequently termed as a bright spot among major economies since it is expected to expand more than the global average.
2. Block deals top record as private investors safeguard profits in choppy markets
At a time when new listings slowed sharply in the just-concluded financial year, the value of block deals hit a record because private investors booked exits to protect returns when interest rates are rising on recessionary fears. The combined value of block deals hit a record Rs 1.87 lakh crore in 2022-23, an increase of as much as 63 percent from the preceding fiscal year, according to Prime Database. The December quarter saw block deals worth Rs 80,006 crore, the highest in any quarter.
Why it’s important: Some leveraged private equity investors have sold shares to protect expected returns from rising interest rates, among other reasons. Block deals will continue to take place in the current financial year as well till the tightening monetary cycle ends.
3. Market regulator forbids stockbrokers from getting bank guarantees with client firms
The Securities and Exchange Board of India has put a halt to the practice of brokers creating bank guarantees using client funds. Such practices will be barred from May 1 and all existing bank guarantees have to be terminated by September 30. The latest stance of the regulator is part of a series of steps to safeguard clients’ funds and securities from misuse by brokers.
Why it’s important: There have been concerns that some brokers were taking on excessive debt by showing client funds. The latest ban would put an end to that and ensure greater investor safety.
4. GST authorities probe fake invoicing by auto dealers after an investigation into insurers
Expanding the investigation into allegedly wrongful claims of input tax credit by insurers, indirect tax authorities are probing automobile dealers who have supposedly generated fake invoices without providing any service, a punishable offence under GST law. The authorities are learnt to have questioned the car dealers to explain the services they provided general insurance companies. Investigators suspect car dealers pitched for insurance schemes that give them commissions in excess of those insurance regulations permit. Fake invoices were being raised and insurance firms claimed input tax credit.
Why it’s important: The development widens the investigation launched last September against 16 insurance companies. If proven true, it would attract penalties and even prison time.
5. Reserve Bank may examine the proposal to reappoint Uday Kotak as non-executive director
The Reserve Bank of India may look into the proposal to reappoint banker Uday Kotak as a non-executive director on the board of Kotak Mahindra Bank after his term ends in December. On 21 April, 99 percent of the shareholders voted in favor of naming Uday Kotak as the non-executive, non-independent director of the bank after he steps down as managing director and chief executive officer.
Why it’s important: It is not mandatory for the central bank to approve the appointment of non-executive directors on a bank’s board. But the regulator can intervene if it believes the appointment fails to meet its fit-and-proper criteria.
6. Concerns over Vedanta’s debt position misplaced, says group chairman
Vedanta Group chairman Anil Agarwal has said that Vedanta Resources, the holding company of the mining and metals conglomerate, is well-positioned to meet its debt obligations, and concerns about the group being overleveraged are misplaced. “We are very, very comfortable,” he said. “In the last 25 years, we have not defaulted even once. There has been disproportionate talk about our debt.” Vedanta will repay its debt through a combination of dividend and royalty payments, he said.
Why it’s important: The business house this week repaid debt worth $1 billion out of a total of $7.8 billion at the end of March. Experts have said successive dividend payouts could leave the conglomerate with less cash, which could potentially impact capital expenditure as well as creditworthiness.
7. IndiGo is in discussions to buy 20 wide-body aircraft for international operations
India’s largest domestic carrier IndiGo is in talks with aircraft makers to buy up to 20 wide-body planes as it seeks to expand its international operations. This will be the first time Interglobe Aviation will be ordering wide-body aircraft. The airline operates a fleet of Airbus 320 family aircraft and smaller ATR aircraft. It also operates a fleet of Boeing 777 aircraft. Air India has recently ordered 70 aide-body aircraft.
Why it’s important: This order would please the government, which has been asking airlines to order wide-body aircraft and connect India directly with destinations in Europe and the Americas.
8. Government for effective control to prevent corporate fraud as the economy prospers
Corporate frauds will persist as the economy flourishes, the government said in reference to various scams involving mobile apps while asking companies to implement effective controls and governance frameworks in their organizations. The Serious Fraud Investigation Office, which increased its capacity in 2022-23, completed 23 investigations during the year, up from 13 in the year before, the ministry of corporate affairs said.
Why it’s important: the government’s commitment to combat fraud would be insufficient if businesses themselves do not pitch in by instituting effective supervisory mechanisms to contain wrongdoing.
9. Airtel bested storms over the years to become a strong institution, says Sunil Mittal
Bharti Airtel has overcome several crises in 2003 (heightened competition) and 2020 (Supreme Court’s verdict on government dues0) as well as 2016 (launch of Reliance Jio) to emerge as an institution that is a national asset, chairman Sunil Mittal said in an interview. India’s digital story rides on the back of telcos, who must be supported, he said. The telecom reforms package of 2021 would bring about a regulatory regime that was fair and forward-looking, Mittal said.
Why it’s important: The Airtel chairman’s remarks come at a time there could be another round of intense competition over 5G services. India’s second-largest telco looks well-placed to tackle it, although the same cannot be said of weaker rival Vodafone Idea.
10. Oil major ONGC to invest Rs1 lakh crore by 2030 to enhance capacity
Oil and Natural Gas Corp is planning to invest Rs 1 lakh crore by 2030 to expand its petrochemicals manufacturing capacity, which will include new facilities to produce chemicals directly from crude oil. The plan is part of the larger government thrust to help India emerge as a major petrochemical hub in the world. ONGC’s plans are likely to be implemented by its subsidiary Mangalore Refinery and Petrochemicals and its joint venture ONGC Petro Additions. Hindustan Petroleum Corp, ONGC’s other subsidiary, has separate petrochemical plans.
Why it’s important: This is a massive expansion of petrochemicals capacity by any measure. It would have to set its house in order in regard to ONGC Petro Additions for the plan to succeed.
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