QBiz: States’ Fiscal Deficit Will Fall to 2.6% in FY18 and More

Here are the important business stories from the previous day.

Image used for representational purpose. (Photo: iStock)

1. States’ Fiscal Deficit Will Fall to 2.6% in FY18

The combined fiscal position of India’s states is likely to improve in fiscal 2017-18, an RBI report said on Friday. The central bank noted that the increase in the debt burden of the states in recent years, notwithstanding, the overall fiscal position is found to be sustainable in the long run.

The ratio of states’ gross fiscal deficit (GFD) to gross state domestic product (GSDP) is budgeted at 2.6 per cent for 2017-18, according to data available for 25 states. This is lower than the 3.4 per cent in 2016-17 as per revised estimates, the central bank said. The number is also lower than the centre’s fiscal deficit target of 3.2 per cent for 2017-18.

(Source: The Indian Express)

2. April Wholesale Inflation Rises 3.85%

India's wholesale prices rose 3.85 percent year-on-year in April, government data showed on Friday. The data compares with a 4.79 percent annual rise forecast by economists in a Reuters poll.

The government also released a new series of wholesale inflation and industrial output data, revising the base year to 2011/12 from 2004/05.

(Source: Economic Times)

3. Revised Industrial Output Index Shows Pickup In Activity In March

Industrial output rose 2.7 percent in March compared to 1.9 percent in February, according to the revised Index of Industrial Production (IIP) released by the government on Friday.

The new index changes the base year to 2011-12 and adjusts the basket of goods to reflect changes in the economy. It also tries to reduce swings in the notoriously volatile capital goods sub-index by capturing data at different stages of the project rather than in one single shot at the time of completion of production.

Based on the revised index, industrial output remained positive and showed an uptick between February and March. However, the 2.7 percent growth in industrial output in March this year was lower than the 5.5 percent seen in March 2016. The Central Statistical Office (CSO) has provided back-data based on the new index from 2012-13.

(Source: BloombergQuint)

4. State-Run Companies May Be Asked to Take Over Stressed Assets

The government is looking at preemptive policy action to take on the issue of stressed assets and may consider roping in state-run companies to take over or manage them.

Senior officials from the finance ministry met Reserve Bank of India Governor Urjit Patel on Friday and discussed ways to tackle stressed assets. The meeting was also attended by officials from the Prime Minister’s Office and the Cabinet Secretariat.“We are looking at all mechanisms to resolve this issue, which also involves roping in state-run companies,” said a senior official aware of the deliberations.

As per government data, gross bad loans with public sector banks increased to Rs. 6.07 lakh crore in December from Rs. 5.02 lakh crore at the end of March 2016.

(Source: Economic Times)

5. YES Bank Under-Reported FY16 Bad Loan, Finds RBI Audit

Though the Reserve Bank of India (RBI) has mandated banks to disclose the full extent of asset quality stress in their books, some private banks, it seems, continue to under-report their bad loan data.

On Friday, YES Bank’s stock price fell six per cent to Rs 1,483.85 on the BSE after a disclosure in its 2016-17 annual report, which said the RBI audit had pegged its total gross non-performing assets (NPAs) at five per cent for financial year 2015-16 (FY16), against the bank’s own assessment of only 0.76 per cent for the same year.

(Source: Business Standard)

6. No Mass Layoffs, Nasscom Says After Wipro, Infosys, Others to Weed out Non-Performers

Industry body Nasscom today sought to allay fears of mass layoffs in the Indian IT sector and claimed the industry continues to be a “net hirer” with over 1.5 lakh people being employed on net basis every year. Stating that the reports of mass layoffs were incorrect, it said workforce realignment, linked to performance appraisal processes, is a regular feature every year.

“Skilling and workforce realignment are essential to remain competitive in international markets. It needs to be appreciated that such workforce realignment is a normal part of the internal process of companies based on their own operational imperatives,” Nasscom said in a statement.

It pointed out that no significant changes have been reported or observed this year.

(Source: Financial Express)

7. Rising Costs Limit Nestle India’s Bottomline Growth in Q4

Nestle India Ltd.’s net profit in the March quarter grew 6.9 percent, year-on-year, to Rs 306.7 crore, missing analyst estimates. Rising costs weighed in on the bottomline.

The food and beverage major’s sales rose 9.5 percent to Rs 2,592 crore, which the company attributed to the a rise in domestic volumes in the first quarter and its instant noodles Maggi catching up on lost momentum, after being banned for some time last year.

Exports remained largely flat growing by just 0.6 percent to Rs 166.4 crore as sales dropped in Nepal and Bhutan, said the company in its stock exchange filing.

Nestle India’s operating margins contracted to 20.3 percent from 23.1 percent in the corresponding quarter last year, as a rise in raw material and employee costs weighed on margins.

(Source: BloombergQuint)

8. Kotak Mahindra Bank Raises Rs 5,800 Crore Through India’s Second Largest QIP

Private sector lender Kotak Mahindra Bank on Friday raised over Rs5,800 crore through a qualified institutional placement (QIP) at Rs936 a share, people privy to development said.

The issue, which involves sale of 6.2 crore shares will help reduce the promoter holding by 3.37%, is the second biggest share sale in India after SBI’s Rs8,000 crore issue in January 2014, they said.

There was high interest among investors in the offering and book was closed at Rs936 a share as against a floor price of Rs913.24 it had decided before launching the issue, they said.

(Source: Livemint)

9. I-T Returns: Quoting Aadhaar Exempted for Certain Individuals

The Central Board of Direct Taxes (CBDT) has exempted certain individuals from mandatory quoting of Aadhaar number/Enrolment ID in their income tax returns or application of Permanent Account Number (PAN).

The individuals who have been exempted are those residing in Assam, Jammu and Kashmir and Meghalaya; an individual who is a non-resident as per the income-tax law; an individual of over 80 years of age; and any individual who is not a citizen of India.

(Source: The Hindu BusinessLine)