QBiz: Budget 2016 Today, Ringing Bells Refunds Customers
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1. Budget 2016: FM Jaitley Faces Tough Task: FE
Finance minister Arun Jaitley faces a tough task of balancing the needs of farm sector as well as the industry when he presents his third and challenging Budget on Monday as he seeks to garner resources to boost public spending for higher growth amid global headwinds.
On the income tax front, the Budget may continue with the status quo on the tax slabs while it may tinker with the exemptions. Rising rural distress because of back-to-back droughts have put considerable pressure on the finance minister to spend more on social schemes, while at the same time he has to win back foreign investors craving for faster reforms. His difficulties have been compounded by the huge payout of Rs 1.02 lakh crore that will become necessary on account of the 7th Pay Commission recommendations for government employees.
How much he does this without compromising on the previously-announced goal of lowering the fiscal deficit to 3.5 percent of the GDP next year is to be seen. Jaitley is also likely to fulfil his last year’s promise of gradual reduction of corporate tax from 30 percent to 25 percent over four years.
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2. Battered Markets Eye Budget Boost: BS
The stock market, which is expected to remain volatile on Monday, when the Union Budget for 2016-17 will be presented, could slip as much as 3 percent if the announcements disappoint participants.
The market is expecting fiscal prudence, a reduction in the corporation tax rate and positive measures on public-sector banks to lift sentiment. On the other hand, an increase in holding period for long-term capital gains tax on equities (from one year to three years) or an increase in direct tax or dividend distribution tax will prove a dampener.
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3. Jaypee Sells Cement Biz to UltraTech For Rs 16,500 Cr: BS
In one of the biggest transactions in the cement industry, the debt-laden Jaypee group signed a binding agreement on Sunday to sell its cement business, with a capacity of 18.4 million tonnes per annum (mtpa), to the Aditya Birla Group’s UltraTech Cement, for an enterprise value of Rs 16,500 crore.
Under the deal, UltraTech will pay an additional Rs 470 crore for completion of the grinding unit for 4 mtpa capacity under implementation.
Also, Sunday’s deal includes the two plants in Madhya Pradesh that were part of an earlier agreement scrapped on Friday. The deal had been cancelled as the Mines and Minerals Development and Regulation (MMDR) Act prohibits transfer of mines. The government is expected to allow the transfer by making changes to the Act in the Budget session.
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4. We Need to Recalibrate Expectations About India Says Arvind Subramanian: Livemint
Behind the Economic Survey that has received rave reviews from all quarters lies a warning: India’s economic growth may slow. The man at the helm, chief economic adviser in the finance ministry, Arvind Subramanian, argues for higher public investment to reverse the trend at a time private investment trails in the bid to drive domestic demand and ward off the global headwinds.
In an interview to Livemint, ahead of the Union Budget 2016, Subramanian talks about why a bad bank can wait and the difficulty of structuring employment-linked incentives to the industry.
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5. TRAI’s Tariff Order on Call Drop, Delhi HC Verdict Likely Today: Livemint
The Delhi High Court is likely to pronounce on Monday its verdict on pleas challenging tariff order of the Telecom Regulatory Authority of India (TRAI) making it mandatory for cellular operators to compensate subscribers for call drops from January onwards.
A bench of Chief Justice G Rohini and Justice Jayant Nath would pass the judgement on a bunch of petitions filed by the Cellular Operators’ Association of India, the association of Unified Telecom Service Providers of India and 21 telecom operators, including Vodafone Group and Bharti Airtel.
TRAI had earlier told the high court that consumers have a right to get compensated for call drops and this was different from the quality of service guidelines that cellular service providers have to follow under the licence conditions.
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6. Ringing Bells Begins Refunding Customers After Allegations of Fraud: ET
Ringing Bells, the company offering what it says is the world’s cheapest smartphone, has started refunding customers who paid upfront for the device called Freedom 251 after intense scrutiny of its business model and allegations of fraud.
CCAvenue, the payment gateway used by Ringing Bells on its website, told ET that it has started refunds worth Rs 84 lakh for 30,000 transactions made by about 14,800 unique customers.
Payment for the smartphone will now be accepted only on delivery for all the 25 lakh bookings the company received.
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7. Vijay Mallya’s USL Exit a Wakeup Call For Independent Directors: ET
The dramatic exit of former promoter Vijay Mallya from United Spirits is a wakeup call for independent directors in Indian companies and could prove a catalyst for many corporate governance related storylines in the country in coming years, industry trackers say.
Independent directors, who until recently were considered glorified yes men to the promoter, could see a lot of pressure in the coming days to maintain the precedent set in the USL case as well as added responsibilities of independent directors under the Companies Act, 2013 and other corporate governance regulations.
However, corporate governance experts said many companies continue to exploit loopholes in the laws and ensure independent directors mostly play along with the promoters.
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8. State Govts May Face Fiscal Shocks in Coming Months, Says Deutsche Bank: FE
State governments in the country are likely to see their fiscal health weaken in the coming months with six key states, Bihar, Uttar Pradesh, West Bengal, Rajasthan, Haryana and Kerala, particularly vulnerable to potential shocks, says a Deutsche Bank report.
According to the global financial services major, factors likely to affect state finances in the period ahead include narrow ‘own-source’ revenue, mandate to help clear debt of state owned enterprise (SoEs) in power sector and pressure to raise wages on the back of 7th Pay Commission recommendations.
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9. Indian Rupee One Of the Weakest Currencies in Asia Since Start of 2016: FE
Indian rupee touched a fresh all-time against the US dollar in the offshore market at 68.95 levels on spot reference but it failed to do so in the onshore, thanks to relentless intervention from the central bank.
In fact, now with rupee liquidity being tight in the money market, RBI has shifted from selling US dollars in the spot market, to selling dollars through OTC forward markets and exchange traded futures market. When you square the intervention with the fact that rupee has dropped to one of the weakest currency since New Year, you realise how sharp the cut could have been if RBI maintained a hands-off approach.
According to data on the NSDL website Indian debt and equity markets have seen a net outflow of $2.95 billion from the foreign investors. FIIs had invested $26.2 billion in debt and $16.1 billion in equity in 2014 and $7.4 billion in the debt market and $3.2 billion in the equity markets in 2015.
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