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QBiz: RBI Meet Makes No Noise; Govt to Stick to Fiscal Target FY18

Here are the top business stories of the day. 

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1. RBI Board Takes Stock of All Issues on Agenda, but Makes No Announcement

The first meeting of the central board of the Reserve Bank of India under new governor Shaktikanta Das was mostly concerned with stock-taking at the regulator that has been facing pressure from the government on various issues.

Although no decision was announced by the board following the meeting on Friday, 14 December, some measures to ease stress in the financial system and increase the flow of funds to small and medium enterprises could be on the way in the next few days, said people familiar with the matter.

The meeting held at RBI headquarters in Mumbai debated various issues ranging from liquidity to credit delivery to industries, but stopped short of announcing specific measures. One of the key issues – the RBI’s governance framework – was also discussed but it was inconclusive on the future shape of the board.

(Source: The Economic Times)

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2. Government Will Stick to Fiscal Target This Year: Arun Jaitley

The government will stick to the 3.3 percent fiscal deficit target in the current financial year, Finance Minister Arun Jaitley said on Friday, 14 December.

He also said India will clock a growth rate of 7-8 percent despite global uncertainties and will retain the tag of the world’s fastest growing major economy.

“Our ability to be within that 7-8 percent range is fairly certain though I see comments to the contrary but I am fairly certain.

“Even in this year, despite all the odds, we will be able to maintain our fiscal targets because when current account deficits are impacted by oil prices and strengthening dollar, the last thing that India can afford is to run itself into a twin deficit situation because a fallout of that is very serious,” Jaitley said while addressing the annual general meeting of industry body FICCI here.

“In course of the next few years, we intend to overtake the UK in terms of GDP and come close to Japan in terms of GDP not per capita income,” he added.

(Source: The Financial Express)

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3. Two Tea Grades Create New Price Record at Coonoor Sales

Two grades of teas have created new price records in the annals of tea auctions in South India.

“The orthodox speciality Silver Tips tea manufactured by Pachamalai Estate, Anamallai hills, of Tata Coffee Ltd, fetched ₹4,601 a kg at Kochi auctions on Wednesday,” M Ravichandran Broos, General Manager, Paramount Tea Marketing (SI), who auctioned the teas, told Business Line in Coonoor.

“The orthodox speciality Black Twirl tea from the same producer, auctioned by us, fetched ₹556 a kg,” he said.

“These are the all-time high prices for their respective grades in a regular public auction in South India,” Broos said.

(Source: The Hindu Business Line)

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4. SBI Orders Forensic Audit of Jet Airways’ Books

The State Bank of India (SBI) has ordered a forensic audit of the books of Jet Airways (India) Ltd to examine the feasibility of restructuring its debts and identify potential red flags in accounts.

The audit has been awarded to EY LLP, which will probe the troubled airlines’ books between 1 April 2014 and 31 March 2018, a person with direct knowledge of the matter said.

Forensic audits are also conducted when there is a proposal to restructure loans of the company and when extra funding is required, particularly in companies where there are cash-flow challenges, said a banker who is part of the consortium of lenders to Jet Airways.

“In this case, we are looking at a debt restructuring proposal for Jet Airways and, therefore, a thorough audit is necessary,” the banker said, requesting not to be named. Lenders also conduct such forensic audits when they get credible complaints against a company, said a second banker.

(Source: Livemint)

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5. NBFCs Receive Highest Foreign Fund Inflow in Eight Months

Non-banking financial companies received the highest foreign inflows in eight months as overseas investors turned net buyers into Indian equities after a two-month selloff.

The foreign portfolio investors pumped in $352 million last month in NBFCs, the highest in eight months, according to the National Securities Depository Ltd data.

The NBFCs received boost from the Reserve Bank of India’s decision to ease liquidity. The central bank allowed banks to offer partial credit enhancement or backing to bonds issued by some of these firms to improve their creditworthiness. It also reduced by half the minimum time for which non-bank lenders have to hold loans on their books before they are allowed to sell them.

FPIs sold Indian equities in September and October as the rupee weakened and defaults by IL&FS group entities triggered a liquidity crunch.

(Source: BloombergQuint)

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6. Jio in Talks with US Handset Co to Flex Smartphone Muscles

Reliance Jio Infocomm is in talks with US contract manufacturer Flex for locally producing about 100 million mobile phone handsets as the Mukesh Ambani-owned telco seeks to rapidly enhance its market share by signing on the majority of those users now using feature phones.

“Jio is in advanced discussions for a large order and that has caused a stir in the market, even prompting Flex to negotiate some tax benefits with the government in the SEZ where its factory is located,” a person familiar with matter told ET.

Both Flex and Jio didn’t respond to ET’s emailed queries.

(Source: The Economic Times)

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7. Aviation Will Grow in Double Digits in India for Many Years to Come: IATA

India is set to become the third largest aviation market by 2025, after the US and China, says the International Air Transport Association (IATA). The global airline industry body also expects Indian aviation to grow in double digits for the next few years, while most developed global economies are expected to see slower aviation growth.

India will, however, need to address several challenges that could delay its aviation growth story, including quickly building second airports and addressing related infrastructure needs at major cities, bringing down the high tax structure on jet fuel, MRO (maintenance, repair and overhaul) services, and other bottlenecks, IATA’s director general Alexandre de Juniac told Mint on the sidelines of a Global Media Day event recently.

You can read the full interview here.

(Source: Livemint)

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8. Allow LTCG on Stocks Held for 3 Yrs, Brokers Urge FM

Stock brokers have sought exemption of long-term capital gains tax (LTCG) on securities held for three years or more, withdrawal of dividend distribution tax (DDT), abolition of stamp duty on stock exchange transactions and a higher limit for investment under Section 54EC of the Income Tax Act.

The Association of National Exchanges Members of India and the Bombay Stock Exchange Brokers Forum listed these demands in a joint letter addressed to markets regulator Securities and Exchange Board of India, to be included in the regulator’s budget recommendations to the finance ministry.

The first demand is for rationalisation of the securities transaction tax (STT) on exercise of options with introduction of delivery-based derivatives contracts. At present, the STT on delivery-based settlement of futures contract is at the same rate applicable on delivery-based purchase or sale of equity shares. Brokers want removal of this additional tax.

(Source: The Economic Times)

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9. Raghuram Rajan Seeks Abolition of Farm Loan Waivers From Election Manifestos

Farm loan waivers should not form part of poll promises as has been the trend of late, former Reserve Bank of India (RBI) governor Raghuram Rajan said on Friday, 14 December, at a press briefing organised by the University of Chicago Center in Delhi.

Rajan is among 13 independent economists of international repute who have come out with an economic strategy to spur public debate and build political consensus around economic reforms that India needs to carry out in the next five years.

The intervention comes ahead of 2019 Lok Sabha elections. Raghuram Rajan said he has written to the Election Commission that such issues should be taken off the table.

Other than Rajan, the 13 economists, working at various institutions around the world and in India, are: Abhijit Banerjee, Pranjul Bhandari, Sajjid Chinoy, Maitreesh Ghatak, Gita Gopinath, Amartya Lahiri, Neelkanth Mishra, Prachi Mishra, Karthik Muralidharan, Rohini Pande, Eswar Prasad and E. Somanathan.

(Source: Livemint)

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Topics:  Arun Jaitley   Reserve Bank of India   QBiz 

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