US Federal Reserve hikes overnight interest rate by a quarter percentage point
The US Federal Reserve has raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs amid recent turmoil in financial markets spurred by the collapse of two American banks. The benchmark overnight interest rate is now in the 4.75-5 per cent range. The American central bank’s latest policy statement no longer says ongoing increases in rates will likely be appropriate, a key shift driven by the failures of Silicon Valley Bank and Signature Bank.
Why it’s important: The collapse of banks in the West has raised concerns of a wider spillover in the global banking system, giving rise to speculation that the US Fed may moderate its stance. It has, however, held firm on its target to tame domestic inflation.
Finance minister calls meeting of state-run banks amid global banking crisis
Finance minister Nirmala Sitharaman has called a special meeting of state-run banks later this week to seek their views on heightened global concerns over the banking system’s vulnerability due to monetary tightening. Sitharaman will also assess the performance of public sector banks as 2022-23 draws to a close, as well discuss their capital requirements. The finance ministry has already asked all state-owned banks to draw up a strategic roadmap for three years starting 2023-24.
Why it’s important: There is no possibility of any spillover impact on domestic banks due to their strong balance sheets. The government perhaps wants to know whether any policy intervention is required.
Indian government plans to launch 6G wireless technology by 2030
India plans to design, develop, and deploy 6G network technologies that will offer secure connectivity at an affordable cost by 2030. “The vision document presented today will become a major basis for the 6G rollout in the next few years,” Prime Minister Narendra Modi has said while unveiling the Bharat 6G Vision document. India plans to develop standards for 6G tech in the first phase for two years starting in 2023, followed by the second phase building a 6G ecosystem in the following five years until 2030. The goal is to provide high-speed internet which is about 1,000 times faster than the 1 Gbps top speed of 5G.
Why it’s important: The 6G mission aims to position India as a global leader in tech innovation and foster development and digital inclusion for domestic consumers.
India may start exporting coal from 2025-26 financial year
India, the world’s second-largest coal producer and a net importer, is expected to begin exports by 2025-26 as the country expects output to exceed local demand over the next two years when supplies from new coal mines enter the market, coal secretary Amrit Lal Meena has said. India is expected to produce 1 billion tons of coal in the year starting April 1, up from an estimated 880 million tons in the current financial year, Meena said. The government is exploring supplying the surplus coal to neighboring countries like Bangladesh and Sri Lanka.
Why it’s important: The move to export coal gains significance as India remains a net coal importer despite having the fifth-largest reserves in the world.
Funding winter shows no signs of ending despite 231 deals this year
There have been 231 funding deals worth $2.14 billion for start-ups between January 1 and March 21, according to Tracxn data. This has failed to lift sentiment, with entrepreneurs and investors believing that the funding winter is here to stay. The funding this year pales in comparison to $10.5 billion poured into start-ups through 696 deals during the same three period last year.
Why it’s important: Funding flow has been very thin so far this year, which has created the highest level of uninvested venture capital in seven years as investors wait for corrections in the working and valuation of start-ups. Performance rather than promise would likely be key in the near term.
Consumer affairs ministry may make online retail platforms liable for seller fraud
The consumer affairs ministry is working on tightening e-commerce rules to make online retail platforms such as Amazon and Flipkart liable for fraud committed by sellers and attaching fallback liability to their role as intermediaries. The rules will be formulated after the platforms respond to queries related to the issue sent to them by the electronics and IT ministry.
Why it’s important: E-commerce platforms are currently protected by safe harbor rules as intermediaries that connect buyers and sellers. Attaching more responsibility to them could increase the cost of doing business.
Reliance Consumer expands FMCG play by launching home and personal care range
Reliance Consumer Products, the FMCG arm of Reliance Retail Ventures, is set to expand its packaged consumer goods portfolio to neighborhood grocery stores with the launch of home and personal care products that keeps real India’s consumer problems in mind. The launches bring Reliance in competition with Hindustan Unilever, as well as Godrej Consumer Products, Reckitt Benckiser India, and ITC.
Why it’s important: The development follows on the heels of the relaunch of iconic Campa brand. Reliance has already made its intention clear that it wants a sizable pie of India’s organized retail space.
DB Power buys back stake worth Rs 400 crore from Global Infrastructure
Dainik Bhaskar Group’s DB Power has repurchased Global Infrastructure Partners’ stake in its thermal power business for Rs 400 crore in a deal that has facilitated the investor’s exit. The buyback was funded through internal accruals. In January 2015, IDFC Private Equity acquired a 16.13 per cent stake in DB Power for some Rs 500 crore. In April 2018, it sold its infrastructure portfolio to Global Infrastructure.
Why it’s important: The buyback comes about a month after Adani Power cancelled its agreement to buy DB Power. The embattled conglomerate had earlier agreed to buy DB Power for Rs 7,017 crore in August 2022 through a mix of equity and debt.
Makers of packaged consumers goods still hurting from inflation despite recent cooling
Companies manufacturing packaged food, liquor, and cosmetics are still grappling with higher input costs seen before the onset of the pandemic although the pace of wholesale price gains has slowed. India’s wholesale inflation hit a 25-month low of 3.85 per cent in February. However, executives at packaged goods companies say prices of milk, glass bottles, wheat and packaging material are higher, precluding chances of any immediate price cut.
Why it’s important: The margin pressure on package consumer goods will start easing only if input costs decline, which might still be a few months away if the easing trend of wholesale prices continue.
Vistara’s entire personnel would be absorbed into Air India in merger plan
Air India will absorb all 5,100 Vistara employees as part of the merger plan to consolidate the number of airlines under the Tata group to two from four, Vistara’s chief executive Vinod Kannan has said. After acquiring the flag carrier, the Tata group announced plans to merge low-cost carriers AirAsia India with Air India Express and Vistara with Air India. Two airlines will operate under the Air India Group, in which Singapore Airlines will hold a 25.1 per cent stake.
Why it’s important: Air India is grappling with a severe staff shortage and the induction of Vistara employees may not make a material difference to that. The merged firm will have to scout for talent in a tight market as demand soars.
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