Government may not provide personal tax rebates in 2023-24 budget
People hoping for personal tax incentives in the 2023-24 budget could be disappointed because the central government, confident of robust consumption and private investment growth, may avoid any steps that could hinder the central bank’s battle against high inflation. The finance ministry could draw its optimism about economic growth and revival in private investment from the healthy credit offtake and positive feedback from small businesses at a time global businesses are eyeing alternatives to China.
Why it’s important: Rebates in personal income tax is seen as a measure to boost consumption. But that may not happen as credit offtake remains robust, giving the Reserve Bank headroom to tame inflation.
Climate negotiators decide on loss and damage fund, questions over details
Extended negotiations during the 27th Conference of the Parties at Sharm el-Sheikh in Egypt have resulted in a landmark decision to create a loss and damage fund for the first time to compensate vulnerable nations for harm caused by climate change. Finer details of the fund need to be worked out, experts said, particularly on how the funding will work. There was, however, little progress on other key issues, such as India’s call for phasing down all fossil fuels, and not just coal.
Why it’s important: The establishment of a loss and damage fund will go a long way to restore faith in the multilateral system to battle the climate crisis. The summit could have done more the emphasize the phase down of all fossil fuels, putting the spotlight on oil and gas producing nations.
Fairfax will not sell its stake in Bangalore airport as it sees high growth
Prem Watsa, chairman of the $90 billion Fairfax Financial Holdings based out of Toronto, said there would be no sale of its stake in Bangalore International Airport. Fairfax has big plans for the airport. Its second terminal was inaugurated on November 11 by Prime Minister Narendra Modi. Fairfax is the controlling shareholder of the airport, which will continue to expand until 2029, by when it will cater to 90 million passengers every year.
Why it’s important: It was reported last week that Fairfax might sell its stakes in Bangalore airport, in which it holds majority stake. Fairfax was said to have expected a premium of up to 50 per cent.
Everything should not be hardcoded into data protection law, says minister
The central government has chosen the middle path while writing the draft digital data protection law by not going to the extremes of complete government control or a free hand to Big Tech companies, Ashwini Vaishnaw, communications and electronics and information technology minister, said in an interview.
Why it’s important: Although the government has eased earlier proposals that would have imposed a regulatory burden on businesses with demands like data localization, there are concerns that the draft law still reads like a regulatory bill for the private sector.
Ola electric to ramp up production capacity to 4 million, may launch e-car by 2024
Ola Electric has finalized its second phase of expansion to increase plant capacity fourfold from 1 million two-wheelers a year to 4 million. This will also include motorcycles. It will also build a plant with a 5 Gwh of battery storage capacity in the same factory on the outskirts of Bengaluru. Ola Electric is also planning to set up the initial phase of its passenger car manufacturing capacity from 2024.
Why it’s important: The market for electric two-wheelers is expanding rapidly in India so it makes sense to ramp up capacity. The sale of e-cars is also increasing, but at a small pace due to high costs.
Government to target fiscal deficit of 5.8 per cent in 2023-24 budget
Despite pressures of capital spending and an expected slowdown in growth, the central government may target a fiscal deficit of 5.7-5.8 per cent of GDP for 2023-24. Lower subsidy outgo and ending the free food grain scheme may help the government in this respect, as it aims to cut the deficit to 4.5 per cent by 2025-26. A final decision is yet to be taken.
Why it’s important: India’s fiscal deficit had shot up to 9.3 per cent in 2020-21 during the covid pandemic. Finance minister Nirmala Sitharaman had proposed a glide path in the 2021-22 budget to trim it to 4.5 percent by 2025-26 to boost medium-term economic growth. The government may yet succeed in its aims.
India’s crypto firms say system are in place to avoid a meltdown like FTX
Indian start-ups involved in crypto asset management, bitcoin stacking, and wallet management solutions have said they have systems and protocols in place to make sure that no FTX-like situation arises with their users. Leading crypto investment platform Mudrex, for instance, said it always keeps investors informed on all activities regarding their funds and its assets are stored securely and backed with real assets at an 1:1 ratio.
Why it’s important: The FTX meltdown continues to shake the foundations of the crypto ecosystem. Investors are worried about transparency, reserve levels, security and internal controls followed by crypto companies.
Higher input costs squeeze margins of Indian firm, but situation could improve
Persistent price pressures squeezed earnings of Indian companies in the September quarter, although revenue grew robustly, indicating demand, particularly in urban areas, remained intact. September quarter profit plummeted 25 per cent to levels not seen since the peak covid quarter of April-June 2021 as raw material costs surged 45 per cent from a year earlier, according to a Mint analysis of 2,923 companies. Net sales, however, increased 29 per cent from the previous year.
Why it’s important: As commodity costs softening, companies may see profits rebound in the coming quarters. Trends also indicate consumer demand remained strong despite inflation and geopolitical uncertainties.
FMCG companies localizing product lines to cater to regional preferences
FMCG firms in India are tweaking their products to serve changing preferences of consumers in different locations to take on local brands and increase market share. Hindustan Unilever, for instance, told analysts that under its tea brand Brooke Bond had different tastes across India and the perfume of Lux was also different across the country. The firm also has different formulations of Surf Excel for different parts of the country as the water differs across regions.
Why it’s important: Hindustan Unilever is not the only FMCG major localizing its products to suit changing consumer needs across geographical locations. It makes business sense in a big and diverse country like India.
Pharma pecking order changes in India as Dr Reddy’s Laboratories jumps to second spot
Dr. Reddy’s Laboratories and Cipla beat Aurobindo Pharma to become India’s second and third biggest drugmakers by sales in the three months ended September 30, the first change in the pecking order of the country’s $50 billion pharmaceutical industry in over seven years. Sun Pharmaceuticals retained pole position as India’s largest drugmaker, with sales of Rs 10,809 crore in the September quarter.
Why it’s important: As usual, generic versions of medicines drove sales at Indian pharma companies. Robust sales of oral cancer drug Revlimid by Dr Reddy’s have led to it increasing market share.
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