QBiz: RBI Likely to Hold Rates; Govt May Defer New GST System

Here are the top business stories of the day.

4 min read
Reserve Bank of India (RBI). 

1. RBI May Hold Rates, Focus on Liquidity

The Reserve Bank of India is likely to hold the benchmark interest rate after two increases this year and a cash squeeze even as economic growth eased in the June-September quarter to a less-than-expected pace.

Increasing the cost of funding could cloud the country’s growth prospects.

The central bank may instead focus on greater liquidity, or cash availability, in the system, according to an ET poll of 23 market participants, who do not expect any rate action in the fifth bi-monthly monetary policy meeting to be held on Tuesday, 4 December, and Wednesday, 5 December.

(Source: The Economic Times)

2. Playing Safe, Govt May Defer Rollout of New GST Returns System

In what could well turn into a pre-poll relief for traders and businesses, the Centre may opt to delay the rollout of the new format of simplified monthly returns for the Goods and Services Tax (GST).

“This will have to be a decision by the GST Council. But given that businesses have struggled significantly with GST returns in the past, it may not be right to upset them, with State elections and more importantly, general elections just around the corner,” said two persons familiar with the development.

(Source: The Hindu Business Line)

3. Gujarat to Raise Tariffs of Power Units Hit by Coal Price Hike

The Gujarat government has directed its power distribution company to raise tariffs of the three imported coal-based power plants owned by Tata Power, Adani Power and Essar Power by amending their power purchase agreements (PPAs) and approaching the power regulators for approval.

This comes as a big relief for the three plants which together can generate about 10,000 mw but have been making heavy losses after an abrupt jump in the price of Indonesian coal and the refusal of various states to pay higher tariffs as they said the power producers were bound by the PPAs.

The matter has lingered for years as it was put up to various regulators, courts, committees, appellate authorities and governments.

(Source: The Economic Times)

4. Singapore Firm may Grab $100-million Ride to Oyo

Singapore ride-hailing company Grab is in advanced discussions to invest $100 million (₹697.7 crore) in Oyo Hotels & Homes as part of the Indian hospitality chain’s ongoing $1-billion funding round.

Grab, which acquired rival Uber’s south-east Asian business in March, is expected to close the deal over the next few days, according to two people briefed on the matter.

Grab and Oyo, both of which count SoftBank as one of their primary investors, have identified Indonesia as a key market.

(Source: The Economic Times)

5. Big Turbulence in Aviation Sector! All Big Players Except IndiGo Suffer Losses

Unable to cope with falling yields, all airlines except IndiGo are slowing down. While IndiGo topped up capacity by 30 percent year-on-year in October, the increase for the rest of the sector was a shade above nine percent year-on-year. This was way slower than the 18.9 percent y-o-y rise seen in June and 12.3 percent y-o-y in August.

Analysts say IndiGo is leveraging a strong balance sheet to gain market share and remains unfazed by falling yields. The low cost carrier’s share rose to an enviable 42.8 percent in October 2018.

In contrast, SpiceJet reported a share of 11.7 percent, its lowest in more than two years. GoAir had just 8.8 percent compared with an average of nine percent for 2018. Jet Airways and its low-cost subsidiary JetLite commanded a share of 14.9 percent and national carrier Air India had 12.2 percent.

(Source: The Financial Express)

6. Farm Stress: Agri Portfolios See Spike in NPAs

Delinquencies in the agri loan portfolios of some banks are seeing a spike. At State Bank of India (SBI), the gross non-performing asset (NPA) ratio for its agri loan book shot up to 11.43 percent at the September-end this year from 9.93 percent on 30 September 2017; slippages or accretion of fresh bad loans were Rs 2,700 crore.

The largest private bank by assets, HDFC Bank, too, admitted to facing repayment pressure in agri loans, even as it didn’t disclose the quantum of slippages.

Paresh Sukthankar, deputy MD, had told analysts after the June quarter results, the value of agri NPAs had moved up by about 40 percent year-on-year (y-o-y) to Rs 2,100 crore.

(Source: The Financial Express)

7. Jet Airways Cancels 14 Flights as Pilots Report 'Sick' Over Non-Payment of Salaries

Jet Airways cancelled at least 14 flights to various destinations on Sunday, 2 December, after some of its pilots reported "sick" over non-payment of their dues, sources said.

The loss-making private carrier has been defaulting on salary disbursement to its senior management along with pilots and engineer since August due to severe cash crunch.

The airline has partially paid to these staff for September while the full salaries of October and November also remain unpaid.

Source: (PTI)

8. Trump, Xi Agree to Temporary Truce in Bid to Contain Trade War

US President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to halt the imposition of new tariffs for 90 days as the world’s two largest economies negotiate a lasting agreement.

The truce between the US and China emerged after a highly anticipated dinner between Trump and Xi on the sidelines of the Group of 20 summit in Argentina.

The leaders agreed to pause the introduction of new tariffs and intensify their trade talks, Chinese Foreign Minister Wang Yi told reporters hours later in Buenos Aires.

(Source: Bloomberg Quint)

9. Govt Confident of Meeting Fiscal Deficit Target Despite GST Shortfall

The Narendra Modi government expects direct tax collections to exceed the budgeted target by at least Rs 300 billion. This, along with the portion the Centre can pick up from the goods and services tax (GST) compensation kitty, will help it meet the fiscal deficit target of 3.3 percent of gross domestic product (GDP) for 2018-19, top government sources told Business Standard.

The fiscal deficit for April-October has come in at Rs 6.49 trillion, breaching the full-year target of Rs 6.24 trillion.

(Source: Business Standard)

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