1. Ahead of Budget 2020, Shaktikanta Das Stresses on Need for Structural Reforms
In comments that assume significance a week to budget day, Reserve Bank of India governor Shaktikanta Das on Friday, 24 January, said monetary policy alone cannot do all the heavy lifting to stimulate growth – fiscal policy and structural reforms will have to pitch in equally to revive India’s sagging economy.
Das’s comments are important for two reasons.
First, Das appears to be pointing to widespread expectations that finance minister Nirmala Sitharaman’s 1 February budget will include tax and reform proposals to stimulate economic growth.
Second, he may be hinting that the pause in RBI’s interest rate cuts is likely to remain in place. The central bank, which has cut interest rates by a combined 135 basis points in five moves since February last year, kept rates on hold at its last review in December.
2. Excessive Tax Results in Social Injustice: CJI
Chief Justice of India SA Bobde on Friday, 24 January, sounded a note of caution against imposing too much tax, saying “arbitrary and excessive tax results in social injustice by the government”.
Justice Bobde had a word of advice for tax officials. “The method of taxation is you draw taxes like a honeybee draws nectar without harming the comb,” he said on the occasion of Foundation Day of the Income Tax Appellate Tribunal (ITAT).
The CJI went on to quote from the Manusmriti to drive home his point that a government should strike the right balance when it comes to addressing different aspects of taxation. “(The) King should not cut his own roots by imposing no tax at all, nor should he cut the roots of his subjects by imposing excessive taxation.”
(Source: The Economic Times)
3. Not Received Any Request From Sebi for Conducting Audit, Says Infosys
IT services major Infosys on Friday, 24 January, dismissed reports that the Securities and Exchange Board of India (Sebi) had ordered a forensic audit of company’s books. In an exchange filing, the firm said it had not received any such order from the market regulator.
“The company continues to cooperate with regulatory authorities. It has not received any request from Sebi to conduct further audits as reported by media on 23 January,” Infosys said in the filing.
Earlier, some media reports suggested that Sebi was set to order a forensic audit into Infosys’ books following whistleblowers’ allegations after the company’s internal audit committee gave a clean chit to the management, including chief executive officer and chief financial officer, on 10 January.
(Source: Business Standard)
4. Air India Trims Losses by 40 Percent in Run-Up to Disinvestment
Air India Ltd narrowed its operational losses between April and December by over 40 percent, ahead of the planned sale of the state-run carrier, which is expected to kick off next week, two senior airline officials said on Friday, 24 January.
The reduction in losses was the outcome of a lower interest burden after half of Air India’s debt was transferred to a Special Purpose Vehicle (SPV), as well as better operational performance, one of the officials said.
Operational losses in the April-December 2019 period stood at Rs 1,045 crore, down from Rs 1,960 crore in the same period of the previous year, the first official said.
5. Sebi Urges SC to Allow IHH Open Offer for Fortis
The Securities and Exchange Board of India (Sebi) has urged the Supreme Court to allow Malaysian healthcare provider IHH Healthcare to proceed with an open offer for Fortis Healthcare Ltd (FHL).
The regulator said in its special leave petition (SLP) that this is mandatory under India’s takeover code as the investor holds a 31.17 percent stake after having subscribed to a preferential allotment of shares in November 2018. ET has seen a copy of the SLP.
The regulator said IHH Healthcare had completed the transaction before a Supreme Court decision freezing the Fortis-IHH deal in December 2018. The open offer threshold is 25 percent.
(Source: The Economic Times)
6. Trai’s Amendment to Its Original Tariff Regime Has Broadcasters Worried
Less than one year after introducing a new tariff order (NTO) for the broadcaster fraternity, which led to chaos, the Telecom Regulatory Authority of India (TRAI) has sought to amend it.
The amendment caps discounts that can be offered on bouquet pricing to 33 percent (vis-à-vis à la carte prices, from the existing average discount of 40-54 percent). This will reduce the bouquet price of a channel to Rs 12 from Rs 19.
It has also introduced two conditions of capping the MRP of an à la carte channel in a bouquet: it may be up to three times the average price of a pay channel of that bouquet, and the monthly price of a pay channel may not exceed the price of the bouquet containing that pay channel.
Indian broadcasters have termed TRAI’s amendment to last year’s tariff regime as “micro-management” and “restrictive”. The Indian Broadcasting Federation recently filed a petition in the Bombay High Court seeking relief against TRAI’s amendment.
(Source: Financial Express)
7. Bank of Baroda Reports Rs 1,407 Crore Net Loss in Third Quarter
Public sector lender Bank of Baroda (BoB) on Friday, 24 January, reported a net loss of Rs 1,407 crore for the three months to December, owing to higher provisions for bad assets.
The bank’s loss came as a surprise to the market as a Bloomberg poll of 18 analysts had predicted a profit of Rs 683.4 crore.
On 1 April 2019, Bank of Baroda merged itself with two other state-owned banks, Dena Bank and Vijaya Bank. The bank provided comparable numbers for FY19’s December quarter by adding up the individual numbers for the three banks. The profit for the amalgamated entity stood at Rs 436 crore in Q3 FY20.
8. Tamil Nadu Set to Settle Rs 2,900-Crore Tax Dispute With Nissan Motor
Tamil Nadu is set to settle the Rs 2,900-crore tax dispute with Japanese automaker Nissan Motor in the next few months.
The development comes two months after the state revived Nokia’s mobile-manufacturing facility, once the world’s largest, which it closed down in 2014 owing to a Rs 21,000-crore tax dispute. Salcomp, Foxconn, and other companies have acquired the 210-acre facility in parcels.
The agreement with Nissan has got the Cabinet’s nod, said sources, adding it would be signed soon.
After taking office three years ago, Chief Minister K Palaniswami said his government would work on sorting out issues with both Nokia and Nissan, two high-profile tax cases.
(Source: Business Standard)
9. Indian Growth Slowdown Temporary, Expect Momentum to Improve: IMF Chief
IMF chief Kristalina Georgieva on Friday said growth slowdown in India appears to be temporary and that she expects the momentum to improve going ahead.
The world appears a better place in January 2020 compared to what it was when IMF announced its World Economic Outlook in October 2019, she said at the World Economic Forum (WEF) 2020 here.
She said the factors driving this positive momentum include receding trade tension after the US-China first phase trade deal and synchronised tax cuts, among others.
She, however, said 3.3 percent is not a fantastic growth rate for the world economy.
"It is still sluggish growth. We want fiscal policies to be more aggressive and we want structural reforms and more dynamism," the Managing Director of the International Monetary Fund (IMF) said.
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