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

S&P Global pares India’s 2022-23 GDP growth to 7 per cent

S&P Global Ratings has cut India’s 2022-23 gross domestic product forecast to 7 per cent from 7.3 per cent estimated in September. The rating agency expects the economy to grow at a slower pace of 6 per cent in 2023-24 against 6.5 per cent forecast earlier. In its quarterly economic update for Asia-Pacific, S&P said in some nations domestic demand recovery from the pandemic has further to go and it should support growth next financial year in India.

Why it’s important: Despite the lowered estimate, economic growth in India is projected to remain the highest among major economies as it is dependent more on robust domestic demand than on the adverse external circumstances.

India allows Sri Lankans to hold $10,000 worth of rupees in cash

Sri Lankans can now hold $10,000 worth of the Indian rupee in physical form, though the currency will not be legal tender in the island nation, after the Indian government approved a Sri Lankan request to designate the rupee as a foreign currency. The decision is in line with India’s efforts to popularize the rupee among Asian nations and reduce the dependence on dollars. Sri Lankans will now be able to convert the Indian rupee into another currency.

Why it’s important: The move by India will provide Sri Lanka a much-needed liquidity support to help it tide over its economic crisis amid inadequate dollar liquidity.

Five potential investors have sought information on IDBI Bank stake sale

Japan’s Sumitomo Mitsui Financial Group and one other global bank are among five potential investors that have sought information from the central government about the sale of state equity in IDBI Bank through a formal query process that closed on November 10. The other entities that also sought information through the query process include a non-bank finance company and global investment firms.

Why it’s important: The queries indicate there is investor interest in the proposed stake sale by the government. Divesting stake in IDBI Bank will help the government towards meeting its asset sale targets.

Aditya Birla’s TMRW invests Rs 289 crore in eight consumer fashion brands

Aditya Birla Group’s TMRW unit has invested Rs 289 crore in buying majority stakes in eight direct-to-consumer brands in the fashion space. The brands that have received investments from TMRW include Berrylush, Bewakoof, Natilene, Juneberry, Nauti Nati, Nobero, Urbano and Veirdo. Some of these transactions are subject to closing conditions and signing of definitive agreements, the company has said. More such investments are underway, a top company executive said.

Why it’s important: The bulk purchase of majority stakes in fashion brands signals a consolidation in the direct-to-consumer space in the country.

Flipkart may facilitate $700 million staff stock buyback to finance PhonePe

Walmart-owned Flipkart is likely to facilitate a $700 million employee stock buyback as part of digital payments platform PhonePe’s new financing round. The buyback, which could be the largest in India’s new-age internet economy, is part of PhonePe’s latest $1.5-2 billion funding round led by Walmart, where the US retailing giant and private equity fund General Atlantic will infuse primary capital of about $1 billion, with the rest comprising a secondary share sale.

Why it’s important: The buyback is significant not only because of its size but also because it comes at a time when the tech start-up ecosystem in India is facing a funding crunch in line with global trends.

Crude oil import basket sinks to 10-month low but pump prices to remain high

The price of the Indian basket of crude oil has hit a 10-month low of $88.6 a barrel in November, according to government data. This may not translate into an immediate reduction in rates at pumps as state-owned retailers might need time to recoup losses incurred earlier, officials said. A fresh Covid-19 outbreak in China has compounded fears of economic slowdown intensifying in major economies. As a result, Brent crude spot prices have fallen to their lowest since January 4, touching a low of $79.92 a barrel. For India, every $1 per barrel dip in crude oil prices has an impact on its current account of about $1 billion.

Why it’s important: Lower crude oil prices is good news for India as it depends heavily on imports. Consumers of transport fuels will have to wait longer for softer prices as the government wants to allow oil retailers to recoup earlier losses.

Mobile phone exports from India more than double between April and October

Cellphone exports from India have gone past $5 billion within seven months of 2022-23, more than double the $2.2 billion clocked in the same period last year, as makers like Apple and Samsung stepped up outward shipments. At the current pace, exports from the world’s second-largest smartphone market will surpass the entire 2021-22 figure by early December and end the current financial year in the $8.5-9 billion range.

Why it’s important: The rapid rise in cellphone shipments from India can be ascribed to the government’s production-linked incentive scheme that has encouraged global manufacturers to ramp up production in the country.

Encouraging taxpayers to update returns has raised government revenues

The central government has increases revenue by encouraging taxpayers to file updated tax returns where the income tax department has intelligence about unreported income, revenue secretary Tarun Bajaj has said. Efforts to widen India’s tax base will continue, he said. Given the comparatively low tax-to-GDP ratio in India (10.7 per cent as per the 2022-23 budget estimate), the tax base has to continue widening before the government could think of lowering personal income tax rates, Bajaj said in an interview.

Why it’s important: The government’s stance of widening the tax base in relation to the country’s GDP nixes the chances of lower personal taxes in the upcoming budget.

Central government intent of fixing gaps in airlines’ supply chain

The federal government is open to easing rules to help Indian airlines boost capacity amid supply chain disruptions that have delayed deliveries of aircraft, engines, and other parts, civil aviation minister Jyotiraditya Scindia has said in an interview. The government is now open to approving a wet lease on an aircraft for a year from the current six months, Scindia said, adding the measures are being implemented as an exception, and will be approved on a case-by-case basis.

Why it’s important: After the disruption caused by the pandemic, Indian aviation is seeing a renewed surge in demand. A smoother supply chain will hasten the recovery.