1. World Bank raises India’s 2022-23 GDP growth forecast to 6.9%
The World Bank has raised its GDP growth forecast for India for the current financial year to 6.9 percent from 6.5 percent projected in October because of the economy’s relative resilience to external headwinds and the strong outturn in the September quarter. This is the first upgrade of India’s growth forecast by any multilateral agency in 2022-23. The World Bank number is close to the Reserve Bank of India’s projection of 7 percent GDP growth in the year to March.
Why it’s important: Despite global economic sluggishness, the upgrade in the GDP forecast for India stands out, mainly due to robust domestic demand that has rebounded well from the pandemic shock.
2. Carlyle, Fairfax, and DBS may bid for 10% each in IDBI Bank
The Carlyle Group, Fairfax Financial Holdings, and DBS Bank could bid for at least 10 percent each in IDBI Bank as part of the government’s share sale process. Private equity firms Carlyle and Fairfax and Singaporean lender DBS Bank have communicated with the department of investment and public asset management, finance ministry officials, and the investment banker hired for the largest privatization in India’s banking space regarding the sale process. KPMG is the adviser managing the privatization.
Why it’s important: Many other suitors have emerged to buy stake in the privatization process of IDBI Bank. The interest is already driving up its stock price from the lows in June.
3. Potential bidders for Concor look to safeguard shareholder rights
Potential buyers of Container Corporation of India have sought clarity over shareholder rights after the sale of a partial stake in the logistics firm by the government. They want to know if the government will enter into a shareholder agreement with them, documenting a mutual understanding over governance rights in the company. Such an understanding could cover areas such as nomination of directors, voting on key decisions like fundraising, mergers and amalgamations and the right of first refusal when the government eventually sells its remaining stake.
Why it’s important: These clarifications are important since the government is only selling a minority stake of around 30 percent. It is unlikely whether the government will agree as it has already turned down such requests in the divestment process of IDBI Bank.
4. Fundraising by Vodafone Idea on pause as government delays equity call
Vodafone Idea’s search for a funding lifeline has turned longer and tougher, even as it continues to lose customers and delay vendor payments. The telecom operator’s Rs 1,600 crore fundraising plan got stuck due to the government’s silence on picking up a proposed 33 percent equity in the financially stressed firm. This comes in the midst of a group-level crisis at Vodafone, the UK-headquartered partner of the Aditya Birla group in Vodafone Idea.
Why it’s important: The delay spells further trouble for the company, which has an overall debt pile of Rs 2.2 trillion, including hefty dues to the government. It might be soon reaching a point of no return.
5. Reliance Capital auction later this month at base bid of Rs 5,231 crore
Lenders of Reliance Capital will hold an electronic auction later this month. There will be multiple rounds of bidding among resolution applicants until the highest bidder is identified. The highest offer of Rs 5,231 crore from Piramal Enterprises-Cosmea Financial Holdings team for Reliance Capital and its units will be the base bid for the auction. The Hinduja Group, Torrent Investments and Oaktree Capital are among the other bidders that have offered to acquire Reliance Capital and its units. In the first round, bidders must offer at least Rs 1,000 crore more than the base price to remain in the fray.
Why it’s important: Lenders are in a quandary as the potential bids have been much lower than the projected liquidation value by independent evaluators. It remains to be see whether the insolvent firm and its units fetch a good prices.
6. Premium products drove sales in the run up to the Diwali season
Domestic consumers bought more premium cars, smartphones, televisions, and other appliances than ever before during the week leading up to Diwali. Cars priced Rs 10 lakh and above, 5G-enabled smartphones, large-screen televisions and double-door and side-by-side refrigerators saw a big spike in demand during Diwali, driving up their share in overall product sales hit new highs.
Why it’s important: Although there was a relatively minor surge in sales in entry level products as well, it is the premium products that is driving sales, indicating a K-shaped recovery. Sales at the bottom of the ladder must pick up for the economic growth to be sustainable.
7. Central government asks Google to stop displaying ads of betting firms
The central government has asked Google to stop displaying surrogate ads of overseas betting companies such as Fairplay, PariMatch, Betway and 1xBet in search results. A letter was sent last week to Google India, asking the internet company to immediately drop all advertising, direct or surrogate, from these betting platforms. The latest request comes two months after the government asked broadcasters and video streaming services to drop such advertisements.
Why it’s important: The development comes amid a crackdown on illegal online gambling. Although online betting is banned in many states, many Indians are becoming addicted to or losing money to betting firms operating on the technicality of not having servers or a physical presence in India.
8. Hefty pay packages for freshers from IITs come with strings attached
The high pay packages offered to India’s top tech graduates come with strings attached, with many employers maintaining the fixed salary component as before, while boosting elements such as variable pay, retention and joining bonuses, stock options, relocation benefits, hybrid working benefits and reimbursements for online learning. The annual placement season at the IITs kicked off on 1 December, with many companies, especially high frequency trading firms, offering salaries above Rs 1 crore.
Why it’s important: A large portion of variable pay means the actual take-home salary for the freshers would be much lower than the gross figure.
9. Authorities devise nation-specific plans for trade settlement in rupees
The central government and the RBI have devised a country-specific plan towards implementation of overseas trade in rupee. To start with, a small number of banks will be allowed to manage cross-border transactions in domestic currency with a particular country. There have been discussions regarding making the rupee trade mechanism bank and country specific. UCO Bank and IndusInd Bank may deal with Russia and Punjab National Bank may lead in trade with Myanmar.
Why it’s important: The development in trade settlement in rupees came after the Western sanctions against Russia post the Ukraine conflict. It has now been extended to other countries as well. No such settlement has yet taken place due to procedural issues and concerns raised by banks.
10. Government may soon lease out 11 more airports as air traffic picks up
India remains the fastest-growing aviation market in the world, aviation minister Jyotiraditya Scindia has said in an interview. The country’s air passenger number will touch about 400 million a year in the next five years, while the government is looking to lease out 11 more airports, he said.
Why it’s important: The aviation sector is showing signs of a revival after the COVID-19 pandemic, although airline firms are struggling to increase capacity amid a global supply constraint.
11. Drugs panel recommends approval for flu vaccine developed by Cadila
The subject expert committee of the Drugs Controller General of India (DCGI) has recommended granting manufacturing approval to Cadila Pharmaceutical for India’s first indigenously developed seasonal flu vaccine. The final nod is yet to be given by the regulator. The committee met in the last week of November and deliberated on the phase-3 clinical trials report submitted by the firm. The panel has asked Cadila to submit the data safety monitoring report for children.
Why it’s important: Doctors currently prescribe imported flu shots for children, the elderly, and patients with respiratory illnesses, which come at a high cost. A locally developed jab would help ease matters.
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