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QBiz: RBI Keep Policy Rate Unchanged; Government Redefines MSMEs 

Here are the top business stories of the day. 

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1. Monetary Policy Panel Keeps Rates On Hold Citing Inflation Risks

India’s Monetary Policy Committee kept interest rates unchanged and maintained a neutral stance, even as it raised its inflation forecasts and reiterated a commitment to maintaining the headline inflation at close to four percent.

The MPC, however, highlighted a number of upside risks to inflation, suggesting that a rate hike in the next financial year is now a real possibility. Five of the six MPC members voted for a status quo on rates. Michael Patra, executive director at the Reserve Bank of India, voted in favour of a 25-basis-point hike.

  • Following the review, the benchmark repo rate remains at six percent.
  • The reverse repo rate will be held at 5.75 percent.

The decision was in line with market expectations. All but one of the 33 economists polled by Bloomberg News expected a status quo on rates.

(Source: Bloomberg Quint)

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2. Suzuki to Invest $3 Billion in India Over 3 Years

Suzuki Motor Corp has lined up an investment of about $3 billion (Rs 20,000 crore) in the Indian market over the next three years as it aims to maintain its dominance of the Indian passenger vehicle market and ready itself for the next big leap into electric and hybrid vehicle technology.

Of the $3 billion, almost $2.3 billion will be pumped in by listed unit Maruti Suzuki BSE -0.72 % and the rest by manufacturing arm Suzuki Motor Gujarat for expansion of capacity.

Maruti Suzuki has exceeded the 50 percent mark.

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3. Govt Redefines MSMEs Based on Annual Revenue

The Union cabinet on Wednesday approved a proposal to redefine micro, small and medium enterprises, or MSMEs, based on their annual revenue, replacing the current definition that relies on self-declared investment on plant and machinery.

The move is expected to improve ease of doing business, avoid unnecessary inspections, and at the same time enable the authorities to verify claims of businesses using the sales data they have from the GST Network, the company that processes goods and services tax (GST) returns.

The move is, in addition to steps being taken to stimulate the MSME sector’s growth, including a cut in corporate tax from 30 percent to 25 percent, announced in the Union budget, and the Reserve Bank of India’s Wednesday decision to give a longer period to small businesses before classifying their loans as non-performing assets, or bad loans.

(Source: Livemint)

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4. Bitcoin Above $8,000 After Regulators Spare Toughest Reprisals

Bitcoin is marching toward its second day of gains as traders showed relief over comments on Tuesday by US securities regulators, who called for greater oversight of cryptocurrencies without proposing industry-killing measures.

The largest digital token headed to its first back-to-back increase in almost two weeks, adding 4.6 percent to $8,121 by 12:13 pm in New York, after earlier rising above $8,600 for the first time this week, according to prices compiled by Bloomberg. Rival coins Ripple, Ethereum and Litecoin held single-digit gains, even after a Goldman Sachs Group Inc report said most virtual currencies won’t survive a coming shake-out.

(Source: Bloomberg Quint)

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5. JSW Offer Rs 300 Bn For Bhushan Steel, Rs 50 bn More Than Tata's Bid

JSW Steel, one of India’s leading integrated steel manufacturers with a capacity of 18 million tonnes per annum (mtpa), has offered Rs 300 billion to take over debt-laden Bhushan Steel, Rs 50 billion more than rival bidder Tata Steel’s offer, according to a source close to the development.

The takeover, if successful, would boost JSW Steel’s capacity by 5.6 mtpa, even as the lenders would have to take a 50 percent haircut on their dues, totalling Rs 590 billion. JSW Steel, already set to acquire Monnet Ispat, is also planning to bid for Bhushan Power and Steel, for which the bids are closing on Thursday.

JSW Steel, already set to acquire Monnet Ispat, is also planning to bid for Bhushan Power and Steel, for which the bids are closing on Thursday.

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6. Auto Expo 2018: Carmakers Using Social Media This Time Like Never Before

The Indian automobile industry never used the social media the way it is doing at this edition of the Auto Expo. The organisers of the Expo, Siam and various participants have rolled out attractive teasers, campaigns and contests on social media platforms like Facebook, Twitter and YouTube. In fact, Siam claims this is the first auto show in the world where Twitter is itself a promotional partner.

Auto Expo’s Twitter handle (@AEMotorShow), with a follower base of 16,000, is abuzz with activity. There have been over 4,200 tweets on the handle. Siam is running contests by asking questions related to the automobile industry on Twitter and distributing free Expo passes to winners.

The Expo opens for the public from 9 February and ends on 14 February. Twitter is being used to spread information about the spots from where tickets can be purchased. Siam has also listed the names of the food majors that have set up counters at the Expo – the names include KFC, Domino’s, Pizza Hut, Burger King, Starbucks, Keventers and Haldiram’s.

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7. 52% Of The Notified SEZ Land Vacant: Commerce Ministry

As much as 52 percent of the notified special economic zones (SEZ) land is presently vacant in the country, Parliament was informed on Thursday.

Minister of State for Commerce and Industry CR Chaudhary in a written reply to the Rajya Sabha said that out of 423 zones approved after the SEZ Act, 2005 came into force, 357 have been notified and presently 221 are operational.

"Out of the 357 notified SEZs, 136 are non-operational," he said adding "52 percent of the notified SEZ land is presently vacant". The minister said that setting up of these zones is a long term process.

There are various reasons for delay in commencement of commercial operations of SEZs and that includes time taken in getting approvals from statutory/state government bodies, adverse business climate due to changed global economic situation and changes in fiscal incentives, he said.

(Source: Economic Times)

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8. Multiple Taxes on Capital Will Affect Savings, Investment Decisions: Urjit Patel

Reserve Bank of India governor Urjit Patel said that India’s taxation structure, with multiple taxes on capital, will impact savings and investment decisions, adding heft to the market chorus protesting the long-term capital gains tax.

“The taxation on capital in India is from several sources and I think that at the marginal rate it adds up,” said Patel, while answering a question on India’s investment rate during a post-monetary policy press conference.

Economic Survey data showed that the investment-to-gross domestic product ratio peaked at 35.6 percent in 2007 but fell subsequently. It was 26.4 percent in 2017. Similarly, domestic savings peaked at 38.3 percent of GDP in 2007 before falling to 29 percent in 2016.

The Union budget on 1 February re-introduced long-term capital gains tax on equities and equity-linked instruments. LTCG tax on sale of equities will be applicable on gains exceeding Rs 1 lakh. The tax rate is 10 percent. The tax roiled equity markets on budget day. The Sensex closed at 35,906.66, down 0.16 percent, its worst budget-day performance in the five years of this government.

(Source: Livemint)

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9. SpiceJet Records Highest Ever Quarterly Profit at Rs 2.4 Billion in Q3

Low-cost carrier SpiceJet on Wednesday reported a 32 percent rise in its net profit at Rs 2.4 billion for the three months ended December 2017, aided by higher passenger revenue, making it the 12th successive profitable quarter for the airline.

The company had reported a net profit of Rs 1.81 billion in the same period a year ago. "12 successive profitable quarters, record aircraft orders, industry's best load factor, high on-time performance and constantly exploring new growth avenues SpiceJet remains firmly on track on its long-term growth strategy," SpiceJet CMD Ajay Singh said.

The total income from operations of the company stood at Rs 20.8 billion for the December quarter of 2017, while in a year-ago period, it stood at Rs 16.4 billion, a company release said.

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