#1. Economic growth likely has been faster at 5.1 percent in March quarter
India’s economy likely grew better than expected in the March quarter, which could push full 2022-23 fiscal year growth higher than January’s 7 percent first advance estimate. An Economic Times survey of 20 economists pegged growth between January and March in the 4.1-5.7 percent range, with the median at 5.1 percent, higher than the 4.4 percent recorded in the preceding quarter. Reserve Bank governor Shaktikanta Das had indicated 2022-23 growth may have exceeded the official estimate of 7 percent.
Why it’s important: India will retain its position of the fastest-growing major economy. Growth is likely to moderate in the current financial year due to global headwinds.
#2. India exempts investors from 21 countries from ambit of angel tax
The government has notified a list of 21 nations, including the US, the UK, Australia, and Germany, which can claim immunity from the new angle tax on investments in domestic start-ups. Investments into closely held firms routed through jurisdictions not mentioned will undergo scrutiny under angel tax provisions for valuation, the Central Board of Direct Taxes has said. It has left out Mauritius, Singapore, and the United Arab Emirates, among others, which account for significant equity inflow into the country.
Why it’s important: The benefit of the exemption from the angel tax will be limited to a small pool of investors because India receives most of its foreign investment from nations left out of the list.
#3. Banks to alert income-tax department on large deposits of Rs 2,000 currency notes
Banks in the country will be required to notify the income-tax department about large cash deposits of Rs 2,000 currency notes above a threshold as part of the statement of financial transactions they are supposed to submit to the authority every year. The exact currency denomination of the deposits does not need to be specified, authorities have said. The reporting threshold is Rs 10 lakh for term and savings deposits and Rs 50 lakh for current account deposits.
Why it’s important: This would bring large amounts of cash deposited during the phaseout of Rs 2,000 banknotes under the scanner of tax officials, who regularly sift through data to uncover tax evasion.
#4. Regulator asks brokers to flag risks of trading in futures and option to retail investors
The Securities and Exchange Board of India has asked stockbrokers to alert investors on the risks of trading in futures and options on their websites and every time they place a derivatives order. Brokers must tell their customers that 90 percent of individual traders in equities F&O incurred net losses, they spent 28 percent more of net trading losses as transaction costs, and in the rare instances when they made net trading profits, they incurred 15-50 percent of such profits as transaction costs.
Why it’s important: The market regulator has intervened in this matter because hordes of inexperienced retail investors have faced substantial losses recently, lured by the promise of getting rich quickly by trading in equity derivatives.
#5. Vedanta pledges nearly all its Hindustan Zinc shares to raise funds to repay debt
Anil Agarwal’s Vedanta has pledged almost its entire 64.92 percent stake in Hindustan Zinc to raise funds, according to regulatory filings. The shares were pledged to JPMorgan Chase Bank on May 23. The company has been increasing the pledging of its shares in Hindustan Zinc over the past one year, with the latest 3.3 percent of the total equity pledged this week. Vedanta raised a new loan of about $850 million from JPMorgan Chase and Oaktree just days before Vedanta Resources, the London-based parent, was to repay a $500 million bond.
Why it’s important: Vedanta Resources needs to repay $4.1 billion in 2023-24 for which the company will have to rely heavily on raising funds worth at least $2 billion. Falling metal prices impacting cash flows is a worrying sign, analysts have said.
#6. Ola Electric may make market debut in early 2024 to boost growth
A few days after it raised $300 million in fresh funding, Ola Electric is said to be in discussions with financial and legal institutions to go for the much-awaited initial public offerings slated in early 2024. It has begun the process to prepare a draft prospectus, which will be filed latest by September to the regulator for clearance. The automaker is in talks with Kotak, Goldman Sachs, and Citibank as banking partners for the IPO. It has hired law firms Cyril Amarchand Mangaldas and Shardul Amarchand Mangaldas as legal advisors
Why it’s important: Ola has emerged as India’s largest electric vehicle company and is now planning to spur its next phase of growth. The electric vehicle market in India is expanding rapidly.
#7. Government will not give 5G spectrum to businesses for private networks
The Department of Telecommunications has decided against giving spectrum directly to enterprises for captive private networks, snubbing companies such as Infosys, Larsen & Toubro, Tata Power and GMR, which have been asking for allocation of airwaves without auctions. The department is of the view that it won’t be feasible to directly allot spectrum to enterprises for private networks under the present legal framework.
Why it’s important: The decision upends guidelines issued last year on private networks and firms may now have to lease spectrum from telecom operators instead of getting it directly from the government.
#8. Big global oil firms in race to invest in platform owned by Greenko founders
Oil major BP is competing with Petronas of Malaysia to invest $1.5-2 billion for a significant minority stake in a new platform owned by the two founders of Greenko, Anil Chalamalasetty and Mahesh Kolli. Discussions have advanced with both parties and Greenko is expected to select one of the two energy majors for now. The new platform is planning to produce 4-5 million tons per annum of green ammonia, green methanol and electrolyzers at Kakinada in Andhra Pradesh via a capital expenditure of $10 billion.
Why it’s important: The deal will be the biggest overseas investment in a green ammonia and hydrogen project till date in India. Investor interest is high in India’s ambitious energy transition program.
#9. Removal of tax sops unlikely to significantly impact growth in sales of life insurance policies
Life Insurance Corporation of India and other life insurers expect the impact of recent tax changes on high-value policies to be minimal. LIC has said that only 0.04 poercent of policies sold in 2022-23 had premiums exceeding Rs 5 lakh. The budget scrapped the tax exemption on maturity proceeds of non-unit linked insurance plan policies purchased after April 1 with annual premiums above Rs 5 lakh. It had led to a rise in pre-booking of high-ticket, non-linked policies in March.
Why it’s important: LIC says it can easily make up for the impact through sale of other products and other lines of business. The insurance market in India is still underpenetrated and there is lot of room to grow.
#10. Reserve Bank printing presses working round the clock to churn out Rs 500 notes
The four currency printing presses of the Reserve Bank of India are working 24/7 to print Rs 500 banknotes to replace Rs 2,000 notes worth the Rs 3.62 lakh crore being withdrawn from circulation. More customers are coming forward to exchange Rs 2,000 notes instead of depositing them in their accounts.
Why it’s important: These presses generally work two shifts to print currency notes. The higher demand for Rs 500 notes due to the withdrawal of Rs 2,000 banknotes have them working harder.