QBiz: Farm Fresh Ideas Likely to Dominate Interim Budget & More

Here are the top business stories of the day.

All eyes would be glued to the Union Budget due to be tabled on 29 February, as Finance Minister Arun Jaitley will present his third budget. 

(Photo: iStock)

1. Farm Fresh Ideas Likely to Dominate Interim Budget

The upcoming interim budget — the last of the current government — that’s set to be presented on 1 February is likely to focus heavily on rural and farm sector spending.

The losses sustained by the ruling Bharatiya Janata Party (BJP) in three crucial Hindi heartland states — Madhya Pradesh, Rajasthan and Chhattisgarh — are expected to cast a shadow on the budget-making process, which is already underway, said people with knowledge of the matter.

Pre-election budgets are interim exercises in which new tax measures are usually not announced but spending is presented for the whole year, giving the outgoing government a chance to present its vision for the future.

Higher social sector spending and a focus on lifting rural incomes are likely to dominate the February budget, said the people cited above.

(Source: The Economic Times)

2. Mutual Funds Get SEBI Nod for Side-Pocketing

The mutual fund industry, which has been stuck with illiquid debt instruments following the recent debt crises and the IL&FS fiasco, can now heave a sigh of relief with SEBI allowing domestic funds to segregate the bad assets. Announcing the move on Wednesday, 12 December, Ajay Tyagi, Chairman of SEBI, said the facility — known as side-pocketing — will be available to mutual funds based on credit events.

The development should soothe the nerves of industry players who were worried over the fact that the illiquid bad assets were overshadowing the returns generated by their liquid portfolio.

To give a boost to start-ups, the market regulator has also made the listing process less cumbersome and has renamed the Institutional Trading Platform as Innovators Growth Platform.

3. RBI Governor Shaktikanta Das Says It’s Government That Runs Country

Hours after taking charge as the new Reserve Bank of India (RBI) governor, Shaktikanta Das gave a glimpse of what his immediate focus would be, while making it absolutely clear that it’s the government that runs the country and the contentious issues between the central bank and the finance ministry can be resolved through dialogue.

“The government is not just a stakeholder. But the government of the day runs the economy, runs the country; manages major policy decisions. There has to be free, fair, objective and very frank discussion between the government and the RBI. I would like to believe all issues, howsoever contentious, can be resolved through discussions,” Das said.

Das was appointed the RBI governor on Tuesday, 11 December, a day after Urjit Patel stepped down from the position following the simmering tension with the government on several issues such as lending restrictions on weaker banks and central bank’s reserves.

(Source: The Financial Express)

4. India Needs to Have a Good Oil Hedging Policy: Raghuram Rajan

With geo-political factors impacting crude prices, India needs to have a good oil hedging policy as the volatility will continue to rise, former Reserve Bank of India (RBI) governor, Raghuram Rajan said on Wednesday, 12 December.

Rajan said the issue has been discussed in the past and it began with a strategic petroleum reserve, but beyond that there is a need to think about hedging oil prices especially when it comes to levels such as now.

“There is a very strong need for an oil hedging mechanism for a country like ours which is so dependent on oil,” Rajan said in a pre-recorded interview being telecast at Times Network’s India Economic Conclave.

The problem is many who are entrusted with this, fear the chance of oil prices falling even further if you hedge it, but that has to be taken as a national consequence of the hedging programme. “We, as a country, must think about whether we should start this process,” he said.

(Source: Livemint)

5. Kotak Mahindra Bank Petition Challenges RBI’s Power To Curtail Promoter Shareholding

Earlier this week, private sector lender Kotak Mahindra Bank Ltd moved Bombay High Court after the Reserve Bank of India restricted it from reducing promoter holding using preference shares.

The petition came ahead of a 31 December deadline given to the bank to reduce promoter shareholding from the current 29.7 percent to 20 percent. The bank was hoping to meet this requirement by issuing preference shares but the regulator said no. And so the lender took the unusual step of going to court and filing a petition against the regulator’s decision.

However, Kotak is not just challenging the RBI’s disapproval of the use of preference shares in reducing promoter shareholding. The petition, a copy of which has been seen by BloombergQuint, shows that the lender is challenging whether the RBI has the powers to dictate promoter shareholding.

(Source: Bloomberg Quint)

6. Vijay Singh, Venu Srinivasan Appointed VCs of Tata Trusts

Vijay Singh, former Tata Sons director and a Tata trustee, and Venu Srinivasan, a Tata Sons director, have been appointed vice chairmen of all Tata trusts. The move points to detailed succession planning at the trusts, led by chairman Ratan Tata, who took the decision in a meeting held on Wednesday, 12 December.

The trusts include Sir Dorabji Tata Trust (SDTT), Sir Ratan Tata Trust (SRTT), JRD Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, and Sarvajanik Seva Trust.

“The idea of the planning is that there should be no vacuum at the top in case the post of the chairman of Tata Trusts suddenly falls vacant. This will ensure that there is someone who can immediately take charge,” a top official close to the development told ET.

(Source: The Economic Times)

7. GDP Estimates of Committee on Real Sector Statistics Not Comparable With CSO’s: Gowda

The Centre on Wednesday, 12 December, said the GDP growth rates estimated for the period 2005-06 to 2013-14 by the NSC-appointed Committee on Real Sector Statistics are not comparable with those put out by the Central Statistics Office (CSO) for the 2014-15 to 2017-18 period.

“The methodology adopted by the Committee on Real Sector Statistics is different from that used by the CSO in its releases and thus the growth rates are not comparable,” DV Sadananda Gowda, Union Statistics Minister, said in a written reply to a Lok Sabha question.

The Committee on Real Sector Statistics had undertaken an exercise as per which the average growth rate was estimated using the production shift approach under certain assumptions.

(Source: The Hindu Business Line)

8. Centre Seeks to Boost Public Health Spending to 2.5% of GDP by 2025

Indicating that all upcoming health policies will remain focussed on women, children and youth, Prime Minister Narendra Modi on Wednesday, 12 December, said the government will increase its public health spending to 2.5% of gross domestic product (GDP) by 2025 from 1.15% at present. The Prime Minister was addressing the 2018 Partners’ Forum in New Delhi.

“We are committed to increasing India’s health spending to 2.5% of GDP by 2025, reaching to more than $100 billion,” Modi said. “We will continue to work for the betterment of people. Women, children and youth will continue to remain at the heart of every policy, programme or initiative.”

Currently, India spends 1.15% of the GDP on health. The Partners’ Forum meet this year focuses on improving multi-sectoral action for results, sharing country solutions and capturing the best practices and knowledge within the health sector, and among other related sectors.

(Source: Livemint)

9. Linking of Aadhaar & Voter ID May Be Made Mandatory

The Election Commission of India is preparing to pitch for the mandatory, legally backed, linking of voter IDs with the Aadhaar number, ET has learnt.

The commission will propose amendments to the Representation of the People Act, 1951, that will require citizens to link their Electoral Photo ID Card (EPIC) with the 12-digit Aadhaar, while ensuring privacy protection, said people with knowledge of the matter. The move is aimed at improving the accuracy of the electoral rolls, they said, adding that the commission will be sending its suggestion to the law ministry shortly.

This marks a shift in the position of the commission, which had embarked on voluntary Aadhaar linking in 2015 until court cases stalled the process over privacy concerns. By that time it had covered nearly 380 million voters. India currently has more than 750 million registered voters.

(Source: The Economic Times)