QBiz: India’s GDP Growth Rate Plummets; Petrol, Diesel Rates Go Up
The Quint’s roundup of the nation’s top business news of the day.
1. Demonetisation Pulls Down India’s GDP Growth to 6.1% in Q4 2016-17
India’s economic growth slowed for the fourth consecutive quarter in the three months ended March, mirroring the impact of demonetisation on key sectors including construction and financial services. Gross domestic product (GDP) growth slowed to 6.1 percent in the fiscal fourth quarter from 7 percent in the third, according to data released by the government on Wednesday.
The growth numbers reflected the lingering effects in the March quarter of the government’s demonetisation of high-value banknotes with effect from 9 November, which triggered a cash crunch and disrupted business, especially in the unorganized sector. The distinct downtrend in GDP growth over the four quarters of FY17 suggests that the slowdown in growth that had already set in had been intensified by the note ban, said Aditi Nayar, principal economist at rating company ICRA Ltd.
2. Fiscal Deficit Meets Government’s 3.5% Target
India’s fiscal deficit narrowed in March to meet the government’s revised target of 3.5 percent in financial year 2016-17. In value terms, the April-March fiscal deficit stood at Rs 5.35 lakh crore compared to the revised target of Rs 5.34 lakh crore for the full financial year, according to data released by the Comptroller and Auditor General of India.
The fiscal deficit target for FY17 had been set at 3.5 percent of the gross domestic product. India had breached the full-year target in January. Revenue deficit for the April-March period reached 99 percent of the revised estimate at Rs 3.10 lakh crore. Revenue from taxes surpassed the government's estimate and reached Rs 11 lakh crore. However, revenue from non-tax receipts reached just 81.9 percent of the revised full-year target.
3. Petrol Price Hiked by
Rs 1.23 per Litre, Diesel by 89 Paise
Petrol price was on Wednesday hiked by Rs 1.23 per litre and diesel by 89 paise a litre in sync with rising international crude oil prices. The petrol price hike, effective midnight, comes on the back of a Rs 2.16 per litre cut in petrol and Rs 2.10 a litre reduction in diesel prices effected from 16 May. Petrol in Delhi will cost Rs 66.91 per litre from Thursday as against Rs 65.32 a litre currently. Similarly, a litre of diesel will be priced at Rs 55.94, as compared to Rs 54.90 at present.
4. PM Modi Said to Be Considering Air India Privatisation
Indian Prime Minister Narendra Modi is actively considering a proposal to privatise state-run Air India Ltd, possibly asking the buyer to absorb loans of about Rs 20,000 crore ($3.1 billion) linked to aircraft purchases, a person with direct knowledge of the matter said.
The deliberations follow recommendations by a government panel for the sale of the money-losing carrier that has nearly $8 billion in debt, the person said, asking not to be identified because the discussions are private. As for the rest of the flag carrier’s debt, the government has yet to decide whether to write off or reorganise it, the person said.
5. India’s New Trade Envoy Faces Uphill Task of Resolving Food Security Issue at WTO
India’s new trade envoy JS Deepak faces an unenviable task in securing New Delhi’s core multilateral trade objectives – especially the mandated permanent solution for public stockholding programmes (PSH) for food security by the end of the year – as “some members” at the World Trade Organization (WTO) resort to diversionary tactics by not engaging in substantive discussions, according to a so-called non-paper seen by Mint.
Deepak, who takes over as new trade envoy on 1 June, assumes office in Geneva at a time when there is no clarity yet on what the WTO’s 164 members are going to accomplish at the eleventh ministerial meeting in just about seven months in Buenos Aires, Argentina.
6. Large Global Investment Funds Driving Consolidation in Telecom Tower Sector
With Brookfield Asset Management emerging as one of the key contenders to acquire the independent tower assets of Idea Cellular Ltd and Vodafone India Ltd, the Canadian alternative asset manager – which also signed a deal in December to acquire the towers of Reliance Communications Ltd is looking to control up to 20 percent of the market in India.
However, Brookfield is not the only large global fund looking to aggregate telecom tower assets in the country. In March, global private equity giant KKR and Canadian pension fund CPPIB picked up a 10.3 percent stake in Bharti Infratel Ltd, the telecom tower arm of Bharti Airtel Ltd. Though relatively small, the deal is likely part of a broader arrangement under which both KKR and CPPIB are expected to buy Idea Cellular’s stake in Indus Towers Ltd, India’s largest telecom tower company with close to 40 percent market share, as Mint reported in March.
7. Trouble Brews for OPEC as Expensive Deep-Sea Oil Turns Cheap
Reports of deep-sea drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritise drilling in core wells, according to Wood Mackenzie Ltd.
That means oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates. The tumbling costs present another challenge for the Organization of Petroleum Exporting Countries, which is currently curbing output to shrink a glut.
8. Hindalco Plans to Set up High-End Aluminium Plant for Defence Sector
Hindalco Industries Ltd, India’s biggest aluminium producer, hopes to set up a high-end alloy plate manufacturing unit for the country’s defence sector, Managing Director Satish Pai said in an interview on Tuesday. The project would need an overall investment of Rs 2,000 crore and Hindalco is in talks with the government to evaluate if it can start it as a public-private partnership (PPP), Pai said.
We are talking to the ministry of defence for setting up more high-end alloy plate manufacturing in India... We are hoping for a pick-up in the defence sector.Satish Pai, Managing Director, Hindalco Industries
9. Flipkart Investors Stay Divided over Valuation
Mutual fund investors such as Morgan Stanley, Fidelity Investments, Valic and Vanguard Group Inc – which together hold a small stake in Flipkart – are still divided over the valuation of India’s most valuable internet startup, which recently raised $1.4 billion in fresh capital. In the latest filings issued by mutual funds owned by the four banking and financial services firms, two – Morgan Stanley and Vanguard – have upped the valuation of their holdings in Flipkart, while two others have marked it down.
(The Quint is available on Telegram. For handpicked stories every day, subscribe to us on Telegram)
Subscribe To Our Daily Newsletter And Get News Delivered Straight To Your Inbox.