1. New Aviation Policy Caps Fares for 1-Hour Flights at Rs 2,500
In a bid to boost regional connectivity, the Cabinet on Wednesday cleared the much-awaited National Civil Aviation Policy.
The policy which also aims to tap the sector’s high-growth potential, has come as a relief for frequent flyers.
Under the new guidelines, airfares have been fixed at Rs 2,500 for one-hour long flights and Rs 1,200 for a 30-minute flight.
The other key announcement was the easing of a rule that required Indian carriers to complete 5 years of domestic operations and have a fleet of 20 planes to be considered for international operations. Now an airline has to scale its fleet up to 20 planes or deploy 20 percent of capacity on domestic operations, whichever is higher, to qualify for overseas flying. This will make is easier for new airline entrants to operate overseas flights.
The biggest beneficiaries of the rule change will be the two joint ventures of salt-to-software conglomerate Tata Sons: AirAsia India with the eponymous Malaysian budget airline and Vistara with Singapore Airlines, reports The Economic Times.
Read The Quint’s report here.
2. Fed Keeps Interest Rates Unchanged, Signals Fewer Future Hikes: Reuters
The US Federal Reserve kept interest rates unchanged on Wednesday and signalled it still planned to raise rates twice in 2016, though it said slower economic growth would crimp the pace of monetary policy tightening in future years.
The central bank’s decision to stick with its 2016 rate path, however, appeared shakier, with six of its 17 policymakers projecting just one increase this year. Only one Fed policymaker had done so when economic forecasts were last issued in March.
A sharp slowdown in US hiring in May had fuelled doubts about the strength of the labor market going into the Fed’s two-day policy meeting. Fed Chair Janet Yellen acknowledged the need to see clear signs of economic strength before lifting rates.
“We do need to make sure that there’s sufficient momentum,” Yellen told a news conference.
The Fed also said the economy would grow only 2 percent this year and in 2017, 0.1 percentage point lower than previously forecast for each year.
Read more here.
3. SBI’s Merger with Subsidiaries Cleared by Union Cabinet: Livemint
As the Indian banking system moves into a phase of consolidation, the cabinet has given its approval to the merger of the subsidiaries of State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore with its parent, State Bank of India.
The merger of State Bank of India and its subsidiaries will make the state-owned lender a global-sized bank with an asset base of Rs 37 lakh crore, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.
The approval which has been expected for a while comes as the government’s encourages consolidation among state-owned banks even as it looks to address the issues of rising bad debts in the banking system and, at the same time, ensure efficient utilisation of capital.
Read The Quint’s report here.
4. Monsoon Likely to Hit Bihar in Next Three Days: IMD
Monsoon is likely to reach Bihar in the next 48-72 hours and will hit the state’s northeastern parts first, the Met department said on Wednesday. The remaining parts of the state will experience rainfall in the coming week.
Monsoon is progressing in its normal course. It reached north Bengal and Sikkim two days back. It is expected that monsoon will hit north-east part of Bihar first by 17-18 June while the remaining parts of the state will witness monsoon rains in next three days thereafter i.e. by 20-21 June.Ashish Sen, Director, Patna Met
Read more here.
5. RBI Governor Raghuram Rajan Faces Ghosts of Rupee’s Past
The looming expiration of an emergency liquidity measure introduced during India’s 2013 currency crisis comes at a risky time for the rupee, with about $20 billion in deposits expected to leave the country.
The outflows, though widely anticipated by both markets and policymakers, will present a near-term currency challenge for RBI Governor Raghuram Rajan, whose position is also up for renewal in September.
With about $28 billion in deposits maturing in September through to November, the RBI must provide dollars to the banks so they can pay back those depositors. Rajan said last week he expected $20 billion in outflows in September to November, more than three times the outflow volumes typically seen over a three-month period.
Read more here.
6. GST Bill: Has NDA Government Yielded Too Much Ground to States?: Livemint
Trying to reach consensus on the goods and services tax (GST), the Finance Ministry has made several key changes to the draft of the GST Bill following demand by states.
Among the key changes is the government’s proposal that the average turnover threshold of traders who will have to pay GST should be Rs 10 lakh for all states with the exception of North Eastern states where the threshold is lower at Rs 5 lakh. This is significantly less than the Rs 25 lakh that the Centre was proposing. A report in the Livemint explores if the Centre has not given away too much leverage to the states.
..not all of the concessions given by the Centre may be good in the overall scheme of achieving a near-perfect GST which benefits the economy as well as lowers the cost for businesses and improves the ease of doing business. Analysts point out that lowering the threshold level to as low as Rs.10 lakh will increase revenue collection costs drastically for the governments.Livemint Report
7. Telcos Seek Clarity on Intranet, Say It Violates Licence Norms: ET
Demanding an urgent review of Telecom Regulatory Authority of India’s (TRAI) order barring discriminatory pricing of data services, telecom operators have spoken in unision, claiming that a clause that exempts products offered over closed electronic communication networks (CECNs), or intranet, violates licence conditions, reports The Economic Times.
The body representing top telcos such as Bharti Airtel, Vodafone India and Idea Cellular has also alleged that the regulator by exempting services being offered through closed networks, has allowed a “backdoor entry” of differential pricing through them.
The industry body has highlighted that ‘differential pricing’ has played a key role in the evolution of mobile telephony in the country. “Special tariff vouchers, on-net calling, STD, roaming, toll-free etc are all examples of differential voice pricing that has worked well in the voice domain,” the body has said.
8. Amazon India Moves High Court Against Gujarat Entry Tax: ET
Challenging an entry tax that it deems unjust, Amazon India has moved the Gujarat High Court against the state to contest a tax which has been levied on goods purchased through e-commerce portals and delivered from outside the state, reports The Economic Times.
Gujarat is not the only state which levies such a tax. Flipkart has challenged two such taxes in Uttarakhand and West Bengal.
Gujarat passed a bill to levy entry tax on e-commerce purchases from outside the state, saying it would ensure level-playing field between online and offline retailers.
9. Some of India’s Top Firms Face Debt Trap: BS
India’s top 10 business houses are the biggest borrowers from banks but it’s the next 10 ranked 11 to 20 which are giving a bigger headache to lenders, as many of these firms are running out of ammunition to service their debt, reports the Business Standard.
In FY16, for the first time in a decade, the combined operating profit of the country’s top 11 to 20 borrowers fell short of their interest obligations, leading to potential loan default by some of them.
These firms reported a combined operating profit of Rs 26,077 crore in FY16, lower than their interest obligation of Rs 30,351 crore. Their operating profit was down 21 percent in the past two years, against 58 percent jump in interest obligations.
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