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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 24, 2021 / 07:50 AM IST

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

‘Banks must tell borrowers before rate hikes’

Banks cannot change home loan interest rates without taking the consent of the borrowers, the Delhi consumer commission ruled in a judgment that further held that automatic change in interest rates amount to “unfair trade practice”, Hindustan Times reports.

How it is important: The commission said that even if a bank has been given the right to change the rate of interest charged on the loan, it did not automatically confer a power upon it to increase or decrease of interest without apprising the borrower about the change in interest charged or the number of EMIs.

“In simple terms, an opportunity must be afforded to the borrower before changing the floating rate of interest,” maintained the commission.


Social media cos to shut fake a/cs within 24 hrs of complaint

The Centre has mandated that top companies such as Twitter, Facebook, Instagram and YouTube have to remove accounts with fake profile pictures of known personalities and businesses, and even the general subscriber, within 24 hours of being notified of the same by the user or someone on his/her behalf, says The Times of India.

How it is important: This is likely to end the menace of impersonation on social media in India.

Impersonators are a major sore point for popular personalities, influencers, activists and even corporates/ businesses as they mimic a legitimate account for various reasons.

These may range from pure-play parody accounts, to those created for doing mischief or a crime, or to carry out a financial fraud.

The issue of fake accounts is a menace the world over and is believed to have caused losses to the tune of billions of dollars over the years, apart from leading to crimes of various types.

Govt frees BPOs as global rivals rise

The government has decided to unshackle the multi-billion-dollar Indian BPO industry, removing the need for a plethora of regulatory approvals and compliances, says The Times of India.

How it is important: It can withstand the growing competition from countries such as the Philippines, Mexico, Malaysia and Canada,

The move will also simplify the process of infrastructure and work sharing between different entities to build scale and speed.

The move, which primarily impacts voice-based BPOs, allows companies providing outsourcing services of various hues to share work between each other, take domestic and international assignments on the same infrastructure, apart from providing ease of work for the employees who may have relocated to remote areas after the pandemic.

The IT-BPM (business process management) industry in India is estimated to have generated revenues to the tune of $38.5 billion in FY21, and the government expects the liberalised norms will give a further impetus to the industry while being more agile to competition.

Sebi board to focus on independent directors next week

The Sebi board is set to discuss rules overhauling all aspects pertaining to the role an independent director plays at a listed company, The Economic Times reports.

How it is important: These include norms governing eligibility for appointment and reappointment, removal, resignation, remuneration and the participation of independent directors on board committees.

The Sebi board, which will meet on June 29, will also discuss a liberalised ownership framework to allow new entrants to set up stock exchanges and depositories.

Phone, appliance plants to go festive a month early

Leading smartphone and consumer electronics companies are advancing festive season production by a month to July, The Economic Times reports.

How it is important: They expect the market will boom during the crucial shopping period, surpassing last year’s record sales, as consumer sentiment improves, buoyed by greater vaccination coverage and no major layoffs or salary cuts this year due to the second Covid wave.

LG, Samsung, Godrej, Haier, Vivo, Realme, Apple, Panasonic and Xiaomi among others are scaling up production to full capacity from next month, especially that of premium products.

Demand for these has been strong as the second wave has receded and companies see this trend persisting.

Most have placed orders for components to ensure there is no shortage of products like last year.

But smartphone industry is facing a shortage of components.

The festive season begins with Onam in Kerala in August and will end with Diwali in November. This peak shopping period accounts for more than 40% of annual sales for consumer electronic and smartphone companies.

Companies aim to launch several new models before the festive season.

IT firms grapple with attrition and steady rise in wage costs

Indian IT services providers Tata Consultancy Services, Infosys and Wipro have seen wage costs rise consistently, The Economic Times reports.

What it means: Demand for skilled talent shoots up on account of increased investments by global companies in digitising their operations.

But metrics such as increased offshoring and reduction in discretionary spends were likely to offset headwinds in the short term.

Top Indian IT firms are giving salary increments twice this year to retain talent as rivals and multinational firms look for trained talent to implement digital solutions.

Firms in a tizzy as ecommerce rules spill over to most online sectors

The government’s proposed changes for the ecommerce sector will impact a wide range of online companies selling goods and services, The Economic Times reports.

How it is important: The main complaint is online platforms offering services say they have been clubbed together with platforms selling goods.

They have also expressed concern over multiple proposals — including the blanket ban on flash sales, promoting domestic alternatives at the pre-purchase stage and a ‘fallback liability’.

The Department of Consumer Affairs’ proposals will hit online travel company MakeMyTrip, food delivery firms Zomato and Swiggy, ride-hailing service providers Ola and Uber, besides home services company Urban Company.

These companies are currently reviewing the potential impact of the proposals, which go beyond big ecommerce marketplaces like Amazon India and Flipkart.

Centre looks to start work on delayed jobs and migrant surveys in July

The Union labour ministry will start two key surveys—one that will capture job creation at establishments and the second on the socio-economic condition of migrants—in July, Mint reports.

How it is important: The move that will determine the course of India’s policy response to joblessness and migrant welfare.

The massive reverse migration in 2020 spurred the central government’s plan to gather data.

The Supreme Court had also asked authorities to register migrants and informal workers so that their welfare measures reach beneficiaries smoothly.

Authorities believe that the labour bureau’s survey on migrants will help improve policymaking and execution.

Automakers ready new models to drive recovery

Maruti Suzuki India Ltd, Mahindra and Mahindra Ltd and Skoda Auto Volkswagen India are among carmakers gearing up to introduce new models this year, Mint reports.

How it is important: The move would restore consumer sentiment and swing a recovery in sales in the fiscal second half.

New launches may positively impact customer sentiment at a time when covid cases have been on a decline in most parts of the country.

Market leader Maruti Suzuki is expected to launch the full-model change of its popular hatchbacks Celerio, Alto, Swift, and Baleno this year. The Suzuki Motor Corp. unit could also launch a compact sport-utility vehicle model this year.

Second-ranked Hyundai Motor began selling last week the six- and seven-seater premium SUV, Alcazar, aimed at beefing up its market share.

Tata Motors is expected to grow its SUV portfolio with the launch of the Hornbill small SUV in the next few months.

Mahindra and Mahindra is also prepping for the launch of two new SUVs—XUV700 and a full model change of Scorpio—as part of its strategy to regain lost market share.

MG Motor India will line up its first mass-market SUV model in the December quarter.

Skoda Auto Volkswagen India will launch the mid-sized Kushaq SUV on 28 June. This will be followed by the Volkswagen Taigun SUV later this year.

Govt may delink disposal of land assets from closure of loss-making CPSEs

The cabinet may soon consider revised guidelines for time-bound closure of loss-making central public sector enterprises (CPSEs) and disposal of their assets, says Mint.

How it is important: These may include measures to simplify the process of closure under the Companies Act by delinking disposal of land assets from the closure process of such CPSEs.

The revised guidelines are likely to prioritize shutting down sick units where all efforts, including privatisation through strategic disinvestment, have failed.

The exchequer suffered a loss of ₹31,635 crore because of 70 CPSEs in FY19, as per data submitted in the Lok Sabha.

Excise duty helps fill Centre’s fiscal gap

Excise duty, mostly from petrol and diesel, helped the government bridge a major gap in its revenue in FY21, even as receipts from GST revenue moderated from the year before, Mint reports.

How it is important: In spite of a dramatic recovery in GST collections since last October, overall collection from this tax on consumption contracted by 7.6% in FY21 to ₹4.56 trillion.

But revenue receipts from excise duty, collected mostly from petrol and diesel, jumped almost 63% to ₹3.89 trillion in FY21 from the year-ago period.

Excise collections’ share in the Centre’s gross tax revenue grew from 11.9% in FY20 to 19.2% in FY21, while that of Central GST moderated from 24.6% to 22.5% in the same period.

On the direct tax side, the share of corporate tax collections in the Centre’s gross tax receipts too declined in FY21 from a year ago, while that of personal income tax remained more or less the same.

Global in-house centres in India expanding digital business

Global in-house centres (GICs) in India are hiring specialised talent to grow capabilities in emerging digital technologies, Mint says.

How it is important: GICs, also known as global capability centres (GCCs) or captives, emerged in the early 1990s as offshore units of large multinationals such as General Electric, Texas Instruments Inc., Citigroup Inc. and American Express Co., performing various technology operations.

The pandemic has spurred the growth of GICs as companies accelerated investments in digital transformation, data analytics and other emerging technologies.

According to ANSR research, over 100 GICs are expected to open in India this year compared to only about 40 in 2020.

Also, in the next three years, more than 200 new GICs are likely to be set up in the country.

New GICs and expansions by existing ones are expected to create additional 300,000-350,000 jobs.

The key growth segments are banking, financial services and insurance, retail/consumer packaged goods, manufacturing, healthcare and technology product companies.

MCA expands small firm definition

The ministry of corporate affairs has expanded the definition of small and medium companies (SMCs), raising their turnover and borrowing limits, Business Standard reports.

How it is important: This would enable a wider set of companies to avail of greater flexibility in the accounting standards.

The notification has defined small and medium companies as unlisted entities which are not banks, financial institutions or insurance firms and have a turnover of up to ₹250 crore and borrowings up to ₹50 crore in the immediately preceding accounting year.

The threshold has been ₹50 crore and ₹10 crore for turnover and borrowings under the general accounting standards.

‘Herd immunity is both mystical and mythical’

As India scales up its Covid vaccination drive with a target of immunising its entire adult population by the end of this year, N K Arora, chairperson, National Technical Advisory Group on Immunisation, tells Business Standard in an interview that herd immunity is a myth.

Arora explains why achieving 100 per cent immunisation is necessary to break the transmission cycle. He also assures that vaccines are working against the new strains.

What he says: The target of immunisation has to be 100 per cent, and only then can we achieve something worthwhile.

Herd immunity is not required for unlocking.

That is why adherence to Covid-appropriate behaviour is a must.

Road construction zooms 60%

Road construction witnessed a near 60 per cent year-on-year jump in the first two months of financial year 2021-22, despite restrictions being imposed in the wake of the second wave of Covid19, Business Standard reports.

How it is important: Around 1,470 km of roads were constructed during the first two months of the current fiscal, as against 847 km in the corresponding period last year, according to official figures.

Total highway construction in FY21 was around 13,298 km, as against around 10,240 km in FY20.

NHAI has taken a slew of measures to accelerate the pace of highway construction, which include reviving stalled projects, streamlining land acquisition, and acquiring a major portion of land before invitation bids.

Other measures were also introduced like awarding projects after adequate clearances, disposal of cases in respect of Change of Scope and Extension of Time in a timebound manner, and close coordination with other ministries and state governments.

The disputes resolution mechanism was revamped to avoid delays in the completion of projects.

Euphoric rise in many poor-quality small cap names a cause for concern: Vinit Sambre

The economy is likely to see a cyclical upturn from the second half of the current financial year and that bodes well for the broader markets, says Vinit Sambre, head equities and fund manager, DSP Investment Managers, in an interview with Business Standard.

What he says: While the valuation of the Nifty50 is expensive, there are pockets of value available in sectors, such as financials, health care, IT and agri inputs.

FY21 results from corporate India reflects a strong recovery in business after the first wave of the pandemic.

The pace of recovery, however, may fall short of expectations due to lack of pent-up demand, rising prices on account of inflation in costs of raw materials, Covid impact on rural India which supported demand last year, and the emotional drain as the pandemic affected many more households in the second wave.

These can potentially lead to earnings downgrades and hurt the market momentum.

The other risk stems from the tapering of global liquidity by central banks at some point in the future.

Lastly, the euphoric rise in many poor quality small-cap names is also a cause for concern.
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