QBiz: India to Grow at 7.2%; RERA May Close Down 75% of Brokers

The Quint does a roundup of the top business news of the day.

Paytm will spend the next few years investing to transform its digital payments business into a payments bank. (Photo: The Quint)

1. World Bank Says India Will Grow 7.2% in FY18 – GST Will Deliver Substantial Gains

The World Bank on Monday said the government’s November decision to withdraw high-value currency notes may have a disproportionately high impact on the poor and vulnerable while its decision to implement the goods and services tax (GST) will be equitable without any negative impact on the poor.

The Bank has projected economic activity to accelerate to 7.2% in 2017-18 against the government’s estimate of 7.1%. The Central Statistics Office will release the revised GDP estimate for 2017-18 on Wednesday, including the new industrial production and wholesale price inflation series data.

Source: Live Mint

2. Paytm Willing to Take the Long Road To Profitability: Vijay Shekhar Sharma

Is it a wallet? Is it a bank? Is it a gold retailer? Vijay Shekhar Sharma says that Paytm is all that and plans to be more. 500 million customers by 2020 is the goal and, in reaching that goal, money is no object. Armed with a $1.4 billion investment from Softbank Group Corp, raised at valuation of $7 billion, Paytm will spend the next few years investing to transform its digital payments business into a payments bank.

The venture will involve an investment of Rs 10,000 crore, Sharma told BloombergQuint in an interview while dismissing all concerns about whether the payments bank model will be viable or not. Paytm Payments Bank launched last week, offering customers a 4 percent interest rate on savings deposits.

Source: BloombergQuint

3. Sebi Looks to Tighten the Screws on P-Notes

The Securities and Exchange Board of India (Sebi) proposes to levy a $1,000 fee on foreign portfolio investors (FPIs) for each participatory note (P-Note) issuance in an effort to cut down on speculative investments. In a consultation paper released on Monday, the markets regulator also proposed banning P-Notes that are based on derivatives used purely for speculative purposes.

P-Notes, or offshore derivative instruments (ODIs), are issued by registered FPIs to overseas investors who wish to invest in Indian stock markets without registering themselves with Sebi. The value of such instruments stood at Rs 1.68 trillion at the end of April, about 6% of total foreign investments in Indian stocks and equity derivatives.

Source: Live Mint

4. 5% GST on Solar Panels Not to Hurt Renewable Energy Sector: Report

A likely decision by the powerful federal indirect tax body, the Goods and Service Tax (GST) Council, to levy 5% tax on solar panels instead of 18% proposed earlier could mean only a marginal rise of 4% in solar power projects cost on account of bringing the item under taxation, said consulting firm Bridge to India (BTI) in a note on Monday.

Reducing tax exemptions is one of the underlying principles of GST. The 5% tax rate on solar panels would effectively mean that bringing panels under the tax net will not hurt the flourishing sector – something that the solar power industry feared last week. The solar industry had so far enjoyed tax exemption.

Source: Live Mint

5. RERA May Put Most Brokers out of Work

A large number of property brokers in the country may shut shop while bigger brokerages would be forced to consolidate under Real Estate (Regulation and Development) Act 2016 (RERA) – the new realty law that aims to bring transparency and accountability to the real estate market, according to property advisers and brokers’ associations.

According to real estate agent body National Association of Realtors-India (NRA), around 75% of total brokers may close down business in the next three years as regulatory reform sweeps over the real estate market.

Similarly, the Confederation of Real Estate Brokers Association of India (CREBAI) also predicted that almost 50% of local property agents may not exist as the sector becomes more competitive and compliances evolve. Under the Real Estate (Regulation and Development) Act 2016 (RERA), which came into force on 1 May, all property brokers must register with regulators in their states.

Source: Live Mint

6. How Does Indian Investment in Africa Compare with China's?

“India’s sustained effort is making an impact on Africa… India’s share of announced greenfield projects grew from 3.3% in 2003-08 to 6.1% in 2009-15. In the same period, the investment from China decreased from 4.9% to 3.3%,” said finance minister Arun Jaitley at the 52nd annual general meeting of the African Development Bank (AfDB) at Gandhinagar.

Jaitley’s statement suggests that India has become a dominant economic partner of Africa in comparison to China. A detailed look at FDI and trade related statistics does not support such a view.

Source: Live Mint

7. RCom Shares in Free Fall, Management Tries to Reassure Investors

Reliance Communication Ltd (RCom) is seeking approvals from its bankers to sell its telecom towers business and merge its wireless business with Aircel Ltd, steps which will allow the company to pare debt, its management said in an investor call on Monday.

These deals are likely to be completed by September, and RCom has sought refinancing for some of its debt in the interim, said Gurdeep Singh, chief executive officer of the wireless business. The management assurance came on a day the RCom stock fell 20.5% to Rs20.50, a record low, after investors grew jittery about its debt repayment ability.

Source: Live Mint

8. IDFC Alternatives Eyes Deals in Stressed Thermal Power Sector

IDFC Alternatives is looking to buy troubled thermal power plants as part of its strategy to aggregate small and medium-sized assets and sell them later to larger funds, a top official at the private equity fund said.

There is distress in power and steel sectors mainly, but power is more attractive because power business is not cyclical, compared to steel industry. Besides, no new coal-fired power plants are being conceived while many of the existing ones are in distress.

MK Sinha, managing partner and chief executive officer, IDFC Alternatives

The next five-to-10 years will be great for power plants that are commissioned but are not able to sell power commensurate with their installed capacities, Sinha said in an interview.

Source: Live Mint

9. Oil Rises For Second Day as OPEC Cuts Bring Stockpiles Lower

Oil rose on expectations OPEC will succeed in bringing down inventories as the summer driving season kicks off in the US.

Futures climbed for a second session in New York after an OPEC-led deal to extend output limits through March was initially met with a selloff last week as deeper cuts or a plan for the rest of 2018 weren’t proposed. But Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working and stockpiles will drop faster in the third quarter. Many expect the driving season that’s starting with the Memorial Day holiday to help ease the glut.

Source: BloombergQuint