Morning Scan: All the big stories to get you started for the day

A round-up of top newspaper stories.

Bulk borrowing rates for the government and businesses are set to shrink in the short term as the central bank’s move to withdraw Rs 2,000 from circulation is expected to boost system liquidity. On March 31, the value of high-value banknotes in circulation was Rs 3.62 lakh crore. While the entire sum may not flow to banks, treasury executives expect around Rs 50,000 crore to Rs 1 lakh crore to enter the banking system.

Why it’s important: The anticipated increase in bank deposits and higher liquidity would pull down yields on short-term money market instruments like certificates of deposits and treasury bills. Short tenure bond yields would decline sharply as banks have to mandatorily park a portion of deposits in sovereign debt.

The central government may withdraw the legal tender status of the Rs 2,000 denomination notes by the end of December after the Reserve Bank of India decided to withdraw them from circulation by September. Since many citizens and Indian missions abroad keep Indian currencies, a window has been kept open beyond September to avoid any inconvenience like the 2016 demonetization when the legal tender status of then Rs 500 and Rs 1,000 notes was ended immediately.

Why it’s important: After the central bank’s decision to withdraw Rs 2,000 banknotes from circulation, the government will be keen to avoid the panic triggered by the 2016 demonetization exercise. The cancellation of legal status for Rs 2,000 note would take place only after end of September.

India’s banks will not demand any identity proof for the exchange of Rs 2,000 banknotes and there is no cap on the number of times one could get this done in a day. Banks will start the exchange facility from Tuesday, as mandated by the Reserve Bank of India.

Why it’s important: The central bank has restricted the swap at Rs 20,000 at each transaction. There is no such ceiling on the amount if the high-value notes are deposited in bank accounts provided regular KYC norms are followed.

Following the Reserve Bank of India’s decision to withdraw the Rs 2,000 banknotes, many jewelry retailers are insisting that customers paying through these high-value notes furnish a copy of their PAN or Aadhaar cards as a precautionary measure against potential tax scrutiny.

Why it’s important: Jewelers are being cautious this time as they faced tax scrutiny heat after the 2016 demonetization exercise. The authorities would naturally like to prevent money laundering.

Led by cash cows TCS and Tata Motors, the combined revenue of the Tata Group’s listed firms crossed Rs 10 lakh crore for the first time in 2022-23. The group’s 14 key listed companies in which Tata Sons holds a equity stake reported a combined revenue of Rs 10.07 lakh crore in the year ended March 31, up 15.3 percent from Rs 8.73 lakh crore in 2021-22.

Why it’s important: The Tata Group remains India’s biggest business house in terms of revenues, ahead of Reliance. If it is seen as a single business entity, it would be the world’s 64th largest corporation.

The JSW Group is looking to acquire two coking coal mines from Australia’s BHP Group in a potential $1.5-2 billion deal, as the Indian steelmaker looks for resources to fire its blast furnaces. The Daunia and Faunus mines, with 20 million tons per annum capacity, are being sold by BHP following a 32 percent drop in half-year profit and dissatisfaction with the state’s coal royalty hike.

Why it’s important: JSW is the only Indian company in the acquisition race, competing with global corporations like Nippon Steel, Posco and Glencore.

A range of businesses from fast food eateries and clothes retailers to biscuit makers and edible oil producers are halting price rises, with some even cutting them as commodity costs cool and high prices dampen demand. The Ukraine war last year led to a surge in input prices and companies passed on higher prices to consumers. However, certain commodities are showing signs of cooling down significantly.

Why it’s important: The reining in of price rises will offer consumers some respite from soaring inflation, which remains high although seen to be coming down to stay within the central bank’s tolerance band.

Preliminary talks on a possible rescue of grounded carrier Go First through the insolvency process have been initiated with a few financial investors, including a leading global private equity fund. Those approached as potential bidders include several large global structured credit and special situations funds that typically invest in distressed debt via a convertible structure with a potential equity upside.

Why it’s important: All stakeholders including promoter Wadia Group are keen that Go First, which voluntarily filed for insolvency, should be revived. It is unlikely there would be many bidders.

Blackstone has purchased International Gemological Institute from China's Fosun and Roland Lorie for an undisclosed sum. It is reportedly paying $570 million as enterprise value for the company, inclusive of debt. Founded in 1975 in Antwerp, the institute is a global leader in certification of diamonds, gemstones, and jewelry, with a global footprint of 29 laboratories and 18 schools of gemology across 10 countries.

Why it’s important: The acquisition comes on the heels of a trend of increased demand for lab grown diamonds, which would expand the business of certification.

India is believed to have placed a funding request of around $55 million in its first call with the Pandemic Fund of the World Bank. The fund has been set up to finance critical investments to strengthen pandemic prevention, preparedness, and response capacities at national, regional, and global levels, with a focus on low- and middle-income countries. It was created in the aftermath of the Covid-19 global pandemic.

Why it’s important: The governing board of the fund has approved an envelope of $300 million for its first round of funding to help developing countries better prepare for and respond to future pandemics.