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

A round-up of the biggest articles from newspapers

June 14, 2021 / 08:15 AM IST

Below is a shortlist of all the important articles from newspapers.

Users stuck as glitches plague new I-T portal

The new income-tax (I-T) portal launched on June 7, which promised to be a gamechanger, continues to be plagued by glitches, says The Times of India report.

What the issues are: Taxpayers and tax professionals find that they are unable to log in.

If at all they do manage to log in, they are unable to carry out their transactions.


Uploading a relevant form or replying to a notice from the income tax department are really tough.

What the experts say: One of the most common and immediate complaints is that overseas remittances are held up because Forms 15CA and 15CB cannot be uploaded.

Because of that, corporates are being treated by the overseas party as defaulters and they are being subject to penalties for late payment and their reputation is at stake.

Taxpayers cannot reply to notices received from the I-T department. In some instances, if the reply is not received within a certain period of time, the case can become time-barred.

Owing to the non-functionality of the I-T portal, many such taxpayers will suffer penal consequences.

Newly incorporated companies or firms are not able to register themselves on the I-T portal.

It is not possible to register the TAN number for filing tax deducted at source returns, digital signature certificate is not getting registered or updated.

Regulator in talks with govt for NPS overhaul

The pension regulator is in talks with the government for an overhaul of the National Pension System (NPS), PFRDA Chairman Supratim Bandyopadhyay told The Times of India in an interview.

What the changes are: Changes to the tax regime, allowing insurance agents to hawk the scheme and launching systematic withdrawal plans as well as annuities indexed to inflation to offer higher returns

While implementation of some of the changes has already begun, others such as allowing investors to park their entire corpus into systematic withdrawal plans will require amendments to the law.

PFRDA has also suggested to the government that the annual tax benefit of Rs 50,000 for NPS investment should be doubled.

How it is important: The changes come at a time when several individuals are looking to park a part of their provident fund contribution in other long-term saving instruments after the government changed the tax rules to make the interest on employee contribution over Rs 2.5 lakh taxable.

While NPS was introduced for the private sector nearly 12 years ago, its assets under management are under Rs 1 lakh crore, compared to a Rs 7.5-lakh crore corpus with insurance companies.

Govt wants social media firms’ statutory officers on HQ roll

According to the new IT rules, social media giants will need to appoint statutory officers on the payroll of the global headquarters, and not hire them as part of the Indian subsidiaries, says The Times of India.

How it is important: This important as content handling, processing and moderation is a domain of the headquarters in the US for these companies, while their subsidiaries — such as in India — are mainly tasked with advertising, marketing and promotional activities.

The officers also need to be residents of India, and have to have a local postal address.

The new rules have ordered the companies to appoint three statutory officers in India for coordinating the gamut of content-related activities, and liaison with the government and their users/subscribers.

The government believes that having representatives of the HQs in India will help in better coordination on content-related queries and demands, as previously there have been numerous cases of “inordinate delays” due to lack of direct coordination with the team in-charge of content.

Accounts of 3 FPIs owning Adani shares frozen

Freeze could be due to insufficient disclosure of info on beneficial ownership as per PMLA

National Securities Depository Ltd has frozen the accounts of three foreign funds — Albula Investment Fund, Cresta Fund and APMS Investment Fund — which together own over ₹43,500 crore worth of shares in four Adani Group companies, The Economic Times reports. These accounts were frozen on or before May 31, as per the depository’s website.

Why it is frozen: The freeze could be because of insufficient disclosure of information regarding beneficial ownership as per the Prevention of Money Laundering Act.

An account freeze means the funds would not be able to sell any of the existing securities nor buy any new securities.

The capital markets regulator had revamped the know your customer documentation for FPIs in line with PMLA in 2019.

Funds were given time till 2020 to comply with the new norms, failing which their demat accounts would be frozen.

Under the new rules, FPIs were required to submit few additional details including disclosures on common ownership and personal details of key employees of the fund such as fund managers.

Long-range drones for deliveries to be tested soon

The first experimental long-range drone flights in India are due to take off later this month in parts of Karnataka, Tamil Nadu, Rajasthan and Punjab, The Economic Times said quoting government officials and company executives.

How it is important: The successful trials to pave the way for drone-based deliveries of medicines, e-commerce orders and food.

These drones are permitted to fly up to around 20 kms at one stretch, mark a first for the country which currently permits only drone flights within the visual line of sight or 450 metres from the operator.

A consortium of companies led by global drone services provider ANRA Technologies will pilot deliveries of medicines in tie-up with the Indian Institute of Technology Ropar.

To experiment with the delivery of food orders along with Swiggy in Jawra, Rajasthan.

Separately, teams led by Throttle Aerospace and Daksha Unmanned Systems will pilot deliveries of medicines in Gauribidanur in Karnataka and Thiruvalluvar outside Chennai, respectively.

No big labour crunch at auto, consumer goods firms in second wave

Large consumer goods and auto manufacturers said the second Covid wave has not impacted the availability of migrant workers as much as last year, says The Economic Times.

How it is important: Most of the migrant labourers are returning as lockdowns were lifted in their native districts, helping companies scale up faster this time around.

The availability of casual workers will help them expand production capacities as now that markets are opening up and pent-up demand is buoyant in some categories.

Most restarted or raised output earlier this month after voluntarily closing or cutting production for over a fortnight due to lack of demand and fewer workers.

Carmakers have scaled up production from 30-40% of capacity at the beginning of June to 60-80%.

The sector had seen some shortage of workers at the peak of the second wave due to people falling ill and lockdown restrictions.

Smartphone and electronics companies had restarted production in early June with 20-30% capacity and plan to scale it up to 50-60% in next one-two weeks with more markets opening up and states extending store opening times.

While output during the second wave did get hit due to workers and their families falling ill, orders have strengthened for the coming weeks as curbs are being lifted.

Covid may not have serious impact: Union Bank CEO

Union Bank of India chief executive Rajkiran Rai in an interview with The Economic Times said that the lender has a definite plan on what it would look like five years down the line as after its merger with Corporation Bank and Andhra Bank, Union Bank of India has become the fifth-largest public sector bank by assets.

Key takeaways: Pandemic disruption is short this time.

If businesses take three months, it will have an impact but if we can get back to normal in June-end or July, things can recover quickly.

High-contact sectors like hotels would be impacted.

Banks always factor in a small percentage as defaults even in normal times, so it may not have a serious impact and will be within the appetite.

This time the stress is not in the corporate book, which is nearly 50% of loans for any big bank, and that book is pretty stable.

The maximum impact has been in the MSME sector, which is about 18-20% of the banking system, around ₹20 lakh crore.

Even if10% fall behind in the worst-case scenario, it is just ₹2 lakh crore, which can be absorbed very easily.

Then there will be restructuring, and some may recover, so the final numbers will come down.

The growth will be much stronger in the second half.

LIC eyes up to ₹25,000 crore from anchor investors

The government plans to bring in a clutch of anchor investors to invest up to ₹25,000 crore in the shares of LIC in its planned mega IPO, Mint said citing sources.

What the plans are: The country’s largest insurer will also undergo a change in its board structure and adopt new accounting norms before the IPO.

There may be more than two dozen anchor investors in LIC’s IPO.

Having anchor investors may be critical for LIC because of the size of the state-run insurer and the changes being adopted by it, which may make IPO investors concerned about the ability of the insurer to sustain its growth under the restructured avatar of LIC.

A mere 10% stake in the company is estimated to be worth at least ₹1 trillion, which is unconventionally high for the Indian equity market.

RBI explores buying highly-rated foreign corporate bonds

The RBI, currently holding record forex reserves of more than $600 billion, is exploring the possibility of investing in top-rated foreign corporate bonds to generate higher yields, Mint reports.

How it is important: An approval of the plan will mark a shift from RBI’s current strategy of investing only in gold and sovereign debt.

The central bank used to hire investment managers from global institutions and professional managers to manage a small portion of its corpus.

Steady exports help small business weather covid’s second wave

A steady flow of export orders and the rebound in automobile sales after last year’s lockdown helped small and medium auto component makers emerge relatively unscathed from the disruptions caused by the second wave of the pandemic Mint reports.

How it is important: Decisions by several state governments to let factories run with limited capacity allowed auto parts makers weather the crisis much better than last year when there was a strict nationwide lockdown.

MSMEs form the bulk of India’s auto component industry and have been among the worst hit by the pandemic due to disruptions that include a shortage of raw materials, manpower as well as finances.

Broader market will be fairly directionless and sideways: Mark Matthews

With more economies across the globe opening up as the Covid pandemic recedes, Mark Matthews, head of research for Asia at Julius Baer, tells Business Standard in an interview that if there is a market correction, his first port of call in deploying more cash would be the structural stories in Asia.

Major takeaways: The world stock market has doubled in value from its low in March last year, and it now reflects 90 per cent of the post-pandemic economic recovery.

At the same time, there is no reason to expect a recession.

The broader market will be fairly directionless and sideways.

Developed and emerging markets have had the same returns since the beginning of last year and there is no reason to think that should change for the remainder of this year.

If there is a correction, our first port of call in deploying more cash would be in the structural stories we like in Asia.

It is clear that Fed would like to acclimatise the market with the idea that tapering is coming.

Not tapering could also create larger distortions that cause social inequity, for example, in the property market.

In India, the risks are to the upside with an economic recovery forecast for this year and the next, which will be accompanied by earnings growth of over 20 per cent in both years.

Expect 25-30 per cent earnings growth in FY22 in India, with the key drivers being financials, metals and one-offs, such as Tata Motors.

And expect another 20 per cent in FY23.

Overweight on banking and other financial services, consumer discretionary, autos, telecoms and utilities; structurally positive but neutral on information technology (IT) and healthcare; underweight on energy and consumer staples.

Tweak in IMD forecasts may help monsoon preparation

The India Meteorological Department (IMD) is embarking on a new experiment to disseminate month-wise long-range forecast (LRF) for the June-September period of this year´s monsoon season, says Business Standard.

How it is important: LRF is defined as the forecast from 30 days up to one season´s description of averaged weather parameters.

What was lacking was a month-wise and region-wise LRF for all the four monsoon months of June, July, August, and September, with greater frequency and clarity, and coming closer to the start of the monsoon month.

Also, the forecast for the main rainfed regions of the country comprising states such as Gujarat, Maharashtra, Madhya Pradesh, Rajasthan, Chhattisgarh, Odisha, and Jharkhand wasn´t provided separately.

This left a lacuna in the planning and administrative capabilities, given farm output and the livelihood of millions are crucially dependent on the monsoon in the rainfed regions of the country.

All this might change henceforth.

From this year onwards, the IMD will not only provide spatial and regionwise LRF for all four months of the southwest monsoon season, it will also release a separate forecast for the rainfed regions of the country.

ICICI Venture eyes digital start-ups, real estate fund of $ 300-400 million

ICICI Venture has decided to invest in digital start-ups and is considering setting up a separate fund for this purpose, says Business Standard.

How it is important: It is also looking at setting up a new fund in real estate of around $ 300-400 million to leverage the post-Covid-19 requirements in the commercial space.

ICICI Venture is re-entering the start-up space after around two decades.

ICICI Venture did not invest in domestic start-ups which have grown phenomenally in the last decade.

Direct tax mop-up zooms 85% y-o-y

Direct tax collection has nearly doubled this fiscal year so far over the equivalent period in 202021 in spite of economic disruption due to the second pandemic wave, says Business Standard.

Direct tax collection, net of refunds, stood at ₹1.62 trillion up to June 11 this year against ₹ 87,700 crore in the same period last year, posting 85 per cent growth.

The collection is also 33 per cent higher than seen in 2019-20, a normal year, during this period.

Collection this year is rather closer to the realisation seen after the first advance tax installment (June 15) last year, which stood at ₹ 1.68 trillion.

How it is important: Strong growth is visible as part of the first installment of advance tax flows in.

Also, the trend is in contrast to the moderation in goods and services tax collection seen last month.

While some have attributed it partly to payments from the Vivad se Vishwas Direct Tax Dispute Resolution Scheme and lower issuance of refunds, others have put it down to increased compliance and enforcement due to the sharing of GST data with the CBDT.
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