QBiz: Sensex Dives 840 pts, Govt to Wrap-up Air India Sale by Dec
Here is a roundup of the top business stories of the day.
1. Modicare to Cost Rs 100 Bn, States May Baulk at New Health Insurance Scheme
A day after Finance Minister Arun Jaitley announced the world’s so-called largest health insurance scheme covering 500 million people in the country, the NITI Aayog and the Union Health Ministry indicated that the government’s new flagship scheme was likely to cost the exchequer anywhere between Rs 100 billion and Rs 120 billion.
The Union government said it would provide 60 percent funds, and the state governments are expected to pool in the remaining 40 percent.
The NITI Aayog estimated that the new health insurance scheme would cost around Rs 60 billion in the first year. The government’s calculation was based on the assumption that the premium per family would be between Rs 1,000 and Rs 1,200.
The state governments, however, are yet to provide their consent for implementing this scheme. Experts believe that states will be in a predicament because of their tight fiscal position and reluctance to replace their own health schemes with this newly announced National Health Protection Scheme (NHPS).
About 24 states provide some sort of health scheme to their residents.
(Source: Business Standard)
2. Govt Plans to Wrap-up Air India Sale by Dec: Jayant Sinha
The government will allow a private bidder to pick up a stake of 51% or more in Air India Ltd and plans to complete the sale of the airline by December, Minister of State for Aviation Jayant Sinha said on Friday.
A group of ministers led by Finance minister Arun Jaitley will decide on whether the government will retain a stake and its extent, but management control will be handed over to the new owner, he said at a CNBC-TV18 Mint Budget Verdict conclave in New Delhi. Sinha added that the disinvestment of state-owned helicopter services firm Pawan Hans Ltd was also on track.
The airline will be put up for sale as “four different entities” for which interested parties will be allowed to bid separately, Sinha had said earlier in the day, adding that the information memorandum for the proposed disinvestment would be issued in the next few weeks.
(Source: Mint)
3. Aditya Birla Fashion Swings to Quarterly Profit in Q3
Aditya Birla Fashion and Retail Ltd (ABFRL), which sells apparel under brands like Van Heusen and Pantaloons, swung to a profit in the fiscal third quarter as revenue grew due to the wedding season, a strong winter and end-of-season sales.
For the October-December quarter, ABFRL’s standalone profit after tax was Rs 35 crore, compared with a loss of Rs 12 crore a year ago. Revenue rose 8.57% to Rs 1,862 crore from Rs 1,715 crore in the previous year.
Even though October sales were impacted by a shift in the festive season to the previous quarter, they bounced back during the rest of the period, ABFRL said in a filing with BSE on Friday.
Going ahead, the company plans to restructure its fast-fashion business for more effective growth and will continue to invest in the athleisure and innerwear categories and build on its global brand portfolio.
(Source: Mint)
4. RBI Once Again Cancels Rs 110 Bn-Worth Bond Auction as Yields Shoot Up
The Reserve Bank of India (RBI) on Friday once again cancelled its scheduled auction of dated securities, signalling its discomfort with yields.
The cancellation of Rs 110 billion worth of bonds was a good enough reason for the 10-year bond yields to cool down by a steep 17 basis points from its day's highs. The yields topped 7.67 percent at noon and then corrected to 7.50 percent by the afternoon after rumours of potential secondary market bond purchases by the RBI, but the yields rose again to close at 7.56 percent.
With the three auctions cancelled, the total stock not sold yet amounts to Rs 260 billion (Rs 110 billion on December 29, Rs 40 billion on January 19 and Rs 110 billion on February 2).
(Source: Business Standard)
5. Sacked Employees Paid off a Lump Sum Will Now Have to Pay Tax on Compensation Received
Sacked employees receiving compensation, business tycoons collecting fat no-compete fee, and trade partners who were paid off a lump sum after their contracts were scrapped often ended up having spats with the tax office over the taxability of such payments.
Several disputes boiled over to tax tribunals and higher courts, where men and women who were compensated argued that the amount should not be taxed as they have lost their source of earnings. However, assessing officers found grounds to contest the claim.
They said earnings were not entirely or permanently extinguished as many took up new jobs and some pursued related activities after an interval. Situations differing from case to case.
(Source: Economic Times)
6. Rupee Weakens, Slips 47 Paise Against US Dollar as Sensex Sinks 947 Points in 2 Days
The Indian rupee weakened against the US dollar slipping 47 paise as the benchmark Sensex sank 947 points in two days after Finance Minister taxed the LTCG (Long-Term Capital Gain) on equities over Rs 1 lakh at 10% in Budget 2018.
FM Jaitley’s move to bring the LTCG under the tax net has severely affected the stock and currency markets over the last two days. The domestic currency had lost 47 paise in the two-day session on February 1 & 2. The rupee had lost as much as 47 paise at 64.06 against the US dollar at the interbank foreign exchange market in two days. In today’s trade, rupee witnessed a decline of 3 paise after shedding 17 paise in the intraday trades.
During the day, the rupee hovered in a range of between 63.74 and 64.20. The Reserve Bank of India fixed the reference rate of the rupee at 64.0781 against the US dollar on Friday. On the other hand, Indian equities came under heavy selling pressure following the introduction of LTCG. The S&P BSE Sensex saw a vertical decline of 946.8 points or 2.63% in the last two days while the Nifty 50 index had fallen 291.1 points or 2.64% in the corresponding period. Earlier yesterday, the domestic currency slumped 44 paise at 64.03 apiece US dollar.
(Source: Financial Express)
7. Centre, States Need to Work Together to Implement Modicare: Jaitley
To effectively implement the government’s ambitious health insurance scheme, touted as ‘Modicare’, the central and state governments need to work together under federal institutions like the Goods and Services Tax (GST) Council, Finance Minister Arun Jaitley said on Friday.
Speaking at a post-Budget event organised by Open magazine, Jaitley said there is no statutory mechanism at present like the GST Council wherein the centre and the states can coordinate when it comes to expenditure on health, agriculture and social sector, which fall in the concurrent list with both states and the centre having legislative powers over them.
“It (the scheme) will be run either as a trust or an insurance model, but not on a reimbursement model. The date of implementation will be sometime next financial year beginning 1 April. This will be entirely state-funded. I have already provided Rs 2,000 crore for this,” he added.
Jaitley said the proposed mega merger of three general insurance companies to create one big insurance company, as announced in the Budget, will be timely, especially as India is launching schemes such as crop insurance and the health insurance scheme.
(Source: Mint)
8. Experts Raise Concerns over Lack of Targeted SC/ST Schemes in Budget
Even as the government has allocated an unprecedented Rs 95,000 crore for the welfare of Scheduled Castes and Scheduled Tribes in the Budget, experts have raised concerns over the lack of targeted schemes. They also have punched holes in the new schemes planned for financial year 2018-19.
The government has earmarked Rs 95,754 crore (Rs 39,135 crore for STs and Rs 56,619 crore for SCs) in Budget 2018-19. The outlay, which is a 12.35% increase over Rs 85,227 crore earmarked in 2017-18, is for 305 schemes for STs and 279 schemes for SCs. However, experts said the fine print of the Budget is not so encouraging.
A study by National Campaign on Dalit Human Rights (NCDHR) reveals that 50% of the earmarked funds are either not relevant to the community or not accessible. Speaking to ET, Dalit rights activist and NCDHR general secretary Paul Divakar said: "Out of the allocated amount, only Rs 48,321 crore are for targeted schemes, the rest have no relevance nor are accessible to the community. The design of the schemes is a matter of grave concern as they are not designed to address the needs of the community.”
(Source: Economic Times)
9. Govt Plans Framework to Regulate Cryptocurrencies by Fiscal Year-End
The government will come out with a framework to regulate cryptocurrencies by the end of this financial year, as it looks to clamp down on rapidly growing virtual currencies such as bitcoin.
“We hope that within this year, the committee would finalize its recommendations and then it would require legal changes, regulatory assignments, but certainly there will be regulations by the end of this financial year,” Subhash Chandra Garg, secretary, department of economic affairs, said at a CNBC TV18-Mint event on Budget 2018.
Finance minister Arun Jaitley said in his Budget speech on Thursday that the government was opposed to cryptocurrencies, given that they could be a channel for money laundering and terrorist financing.
“The government will take all measures to eliminate use of these crypto assets in financing illegitimate activities or as part of the payment system,” Jaitley said.
(Source: Mint)
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