QBiz: Budget & the Fisc, Modi’s Gift to Farmers, Telcos in Trouble

Top business stories for the day.

A man talks on a mobile phone in front of advisements of Bharti Airtel in the eastern Indian city of Siliguri. (Photo: Reuters)

1. Budget 2016: Economists Back Easing Fiscal Targets to Push Public Spending: ET

The government should focus more on public spending to push growth and if required change the goalpost for the fiscal deficit target, some economists have suggested in their customary pre-budget interaction with finance minister Arun Jaitley, reports The Economic Times.

There has been rising support for relaxing fiscal consolidation targets to step up public spending on infrastructure after the mid-year review of the economy authored by chief economic advisor Arvind Subramanian mooted the idea.

The fiscal consolidation roadmap sees fiscal deficit falling to 3.5 percent of GDP in FY17 from 3.9 percent in the current fiscal. This compression along with 0.65 percent of GDP impact due to the 7th Pay Commission award, it is feared, will adversely impact public spending on infrastructure.

2. $70-Billion Spectrum Sale in March to Deal a Financial Blow to Airtel, Vodafone & Idea: ET

India’s largest telcos Bharti Airtel, Vodafone India and Idea Cellular will be hit hard if the up to $70-billion (Rs 469,000 crore) spectrum sale likely around March 2016 is even a partial success, warns brokerage Credit Suisse, reports The Economic Times report. It added that the auctions are among the two major negative events for the sector in 2016, the other being the entry of Reliance Jio Infocomm.

<p>This is likely to be the largest quantum of spectrum to be sold at once, with an estimated value of $60-to-70-billion, and even a partial sale (say: $10-15 billion) could be a serious hit on operator returns, that is not reflected in stock prices.</p>

<b>Credit Suisse note to clients</b>

3. NDA Moves to Derisk Farming: Livemint

The Union Cabinet on Wednesday signed off on a revamped crop insurance scheme designed to mitigate risks associated with contemporary Indian farming.

It will substantially reduce the premium paid by farmers—1.5 percent on rabi crops, 2 percent on kharif crops and 5 percent on commercial/horticultural crops—and reduce delays and leakages in payment of compensation through direct transfers into the bank accounts of farmers. This is expected to drive up enrolment under the scheme.

The farmer-friendly move comes at a time when the country is experiencing a protracted period of rural distress after below-average monsoon rainfall in 2014 and 2015.

Read the full report here.

4. Road Ministry Seeks Rs 80K Cr from Centre to Fund Highway Expansion Plan: ET

The road transport and highways ministry has sought over Rs 80,000 crore from the finance ministry to fuel its highway expansion plan in the fiscal year beginning 1 April according to an Economic Times report.

The amount is almost double of what the ministry had received in the Budget for 2015-16. A senior official was quoted saying that the ministry plans to use most of the funds sought for the government’s ambitious Bharat Mala project, which envisages construction of 25,000 km of roads along India’s borders, coastal areas, ports, religious and tourist places to be completed by 2022.

5. Earnings Watch: Infosys and Hindustan Unilever Report Q3 Results Today

Infosys will likely report that dollar revenue growth was little changed in the quarter ended 31 December when it declares earnings on Thursday. Larger rival Mumbai-based Tata Consultancy Services (TCS) reported a 0.3 percent sequential decline in revenue in dollar terms in the October-December period. Still, for more reasons than one, the software services firm will grab headlines when it declares its numbers. Here are five things to watch from these numbers, as reported by Livemint.

Hindustan Unilever too reports third quarter numbers today. The December quarter characterised by festive demand has historically been the company’s best quarter of the calendar year. A good show will also shape expectations for the rest of the FMCG pack. Here are five important things to watch out for in HUL’s results, according to The Economic Times.

6. Govt May Announce New Interest Rates on Small Savings Schemes Soon: BS

The government is soon likely to announce rationalised interest rates on small savings schemes, enabling banks transmit the policy rate reduction by the Reserve Bank of India to borrowers, according to a Business Standard report.

According to sources quoted in the report, the finance ministry is seriously considering the suggestions made by various stakeholders, including banks and other ministries, and brought up during the pre-budget meetings with leading economists and experts, suggesting lower small savings rate.

7. Suzlon Makes Solar Foray, to Set up 210 MW Capacity in Telangana: FE

Wind turbine maker Suzlon Group has bagged orders for 210 MW of solar projects from the Southern Power Distribution Company of Telangana, marking its foray into the sector.

According to a Financial Express report, the company has received Letters of Intent (LoI) from the Southern Power Distribution Company of Telangana (TSSPDCL) for setting up total 210 MW in six different capacities across the state. Suzlon won the projects through a competitive bidding process.

Under the contract, it will set up one project of 100 MW, one of 50 MW and four of 15 MW each, all expected to be commissioned in 2016-17

8. HDFC’s New Fund Plans to Enter Logistics, Targets Raising $500 Million: Livemint

A new private equity fund of Indian mortgage lender Housing Development Finance Corp. will target raising $500 million from offshore investors for domestic property projects, including in warehousing and logistics, as per a senior company executive was quoted saying in a Livemint report.

Asset manager HDFC Property Fund has mainly invested in housing projects through earlier funds but, for the first time, plans to invest in logistics and warehousing with the new fund, becoming the latest investor seeking to cash in on India’s e-commerce boom.

9. Baidu Says in Talks to Invest in Indian E-commerce Startups: Livemint

Baidu is in talks to invest in Indian e-commerce start-ups, including Zomato, BookMyShow and BigBasket, a spokesperson for China’s top online search provider said on Wednesday, reports the Livemint.

“The Indian market represents an enormous opportunity for us to connect more people with services, and we plan to put more resources there in the future,” the spokesman said in an email.

Baidu declined to comment on possible investment amounts or time frames.

India’s technology start-up market is booming as more and more people shop online in a country where about 20 percent of a population of 1.3 billion are connected to the Internet.