QBiz: NSSO Report Clouds GDP Data; Auto Sales Drop in April

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1. GDP Data Storm Intensifies, Government ‘Studying’ NSSO Report

Counting companies that merely reported their financials once in three years in GDP calculation would lead to an overestimation of economic activity, statisticians and economists warned, casting fresh doubts over the credibility of official statistics.

The government, however, claimed that the presence of ghost companies in the government database has no impact on economic data and a recent study was undertaken to understand the data gaps and take remedial steps.

The controversy surrounding the new series of GDP numbers based on the MCA-21 database intensified after Mint reported on Wednesday that 36% of companies that are part of the database could not be traced or were wrongly classified. The Mint report was based on a survey conducted by the National Sample Survey Office (NSSO), a government agency.

(Source: Livemint)


2. Homebuyers Can’t Choose Between Old, New GST Rates, CBIC Clarifies

Homebuyers will not have the option to choose between old and new goods and services tax (GST) rates as the choice only lies with builders, a clarification issued by the Central Board of Indirect Taxes and Customs (CBIC) clearly stated on Wednesday. It also said a real-estate project that started before 1 April but had not received any booking would be classified as ‘new project’ and subjected to revised GST rates.

Earlier this year, the GST Council had cut the tax rate for regular housing to 5% from 12% and for affordable housing to 1% from 5%. However, the builders can’t claim input tax credit (ITC) anymore after the concessional rates came into effect on 1 April.

“It is the builder who has to exercise the option to pay tax on construction of apartments at the old rate of 12% latest by 10 May 2019. If the builder doesn’t exercise his option to continue to pay tax at the old rate by the said date, the effective GST rate applicable on all your (homebuyers’) installments payable to the builder on or after 1 April 2019, as per the contract, shall be either 1% or 5%, depending on whether the apartment is an affordable or other than affordable residential apartment,” the department said.

(Source: Financial Express)


3. Government Offers Drug Firms ₹3,501 Crore Settlement for Price Cap Penalties

The government has offered a one-time waiver of interest charges if drug makers, including Sun Pharmaceuticals Industries Ltd, Pfizer Ltd and Lupin Ltd, agree to deposit more than ₹3,501 crore they collected by selling drugs at prices higher than those notified by the drug pricing regulator.

The department of pharmaceuticals (DoP) has offered to waive interest amounting to more than ₹1,325 crore out of the total outstanding amount of ₹4,827 crore on the condition that the companies drop lawsuits challenging the department’s order.

There are 666 cases where the department has asked drug makers to disgorge excess profits because of non-compliance with government orders since 1997.

(Source: Livemint)


4. ED Investigates Etihad Airways Investment in Jet Privilege

The finance ministry’s Enforcement Directorate (ED) has begun an initial probe into Etihad Airways PJSC’s investment in Jet Privilege Pvt Ltd (JPPL), the frequent-flyer programme of Jet Airways (India) Ltd.

The country’s top economic intelligence agency is seeking to ascertain whether certain foreign direct investment (FDI) norms were violated when the Abu Dhabi-based carrier took a stake in JPPL in 2014, a senior ED official said on condition of anonymity.

“ED is examining Etihad Airways’ investment in JPPL and whether there were any violations of FDI norms in the process," the official said, adding that the agency was also probing if Etihad secured the necessary approvals from the erstwhile Foreign Investment and Planning Board (FIPB) for making the investment. India abolished FIPB in May 2017.

(Source: Livemint)


5. Paytm Mall in Talks to Raise Around $500 Million, Looks to Compete with Amazon, Flipkart

As Paytm’s e-commerce unit struggles to compete against Amazon and Walmart-owned Flipkart that jointly commands close to 80% of the country’s e-commerce market, the former is understood to be in preliminary discussion with investors to raise around $500 million, an industry source told FE. The bulk of the funds would be spent on building Paytm Mall’s O2O (online-to-offline) strategy, the source said.

Although Paytm Mall’s revenue in FY18 increased to Rs 744.15 crore from Rs 7.16 crore in FY17, its losses ballooned to Rs 1,787.55 crore in the same year against a loss of Rs 13.63 crore in FY17, according to documents sourced from business intelligence platform Tofler. Amazon’s seller services FY18 revenue stood at a staggering Rs 4,928.4 crore, 57% higher than FY17. The company’s losses also widened by 30% in the same period.

“It is not our policy to comment on market speculation regarding investments. Paytm Mall is focused on executing its O2O commerce and online commerce plans with an objective of contributing positive economics and extracting promotional synergies with the payments ecosystem,” a Paytm Mall spokesperson said.

(Source: Financial Express)


6. Retail Autosales Sputter in April Amid Poll Worries

Retail sales of motor vehicles fell 8% to 1.64 million units in April from a year earlier as uncertainty over the outcome of general elections and a liquidity squeeze hurt demand, data released by the Federation of Automobile Dealers Associations (FADA) showed.

Retail sales of passenger vehicles, an indicator of urban demand, fell by 2% to 242,457 units from 247,278 units in the year earlier.

The drop in retail sales follows an even faster decline in wholesale dispatches reported by the companies in April. Maruti Suzuki India Ltd, the country’s largest automobile maker, reported a 19% drop in sales to 133,704 units, while the second-largest, Hyundai Motor India Ltd, posted a volume decline of 10%. The third largest carmaker, Mahindra & Mahindra, reported a 9% drop in vehicle dispatches in April.

(Source: Hindustan Times)


7. To Lure Investors, Centre Plans Rejig of ETF Baskets

Successful utilisation of exchange-traded funds (ETFs) to mop up more than half of its Rs 85,000-crore disinvestment receipts in FY19 has prompted the Centre to consider replacing half-a-dozen stocks from the Bharat 22 ETF and two from the CPSE ETF, and use them to mobilise a major chunk of the Rs 90,000-crore disinvestment planned for FY20. Stock rejig has become necessary as the Centre’s holding in many PSUs has reached the threshold limit of 52% (the minimum shareholding prescribed for the PSUs in the ETF baskets) in Bharat 22 ETF, a diversified index of 22 stocks. These include Indian Oil (4.05% weight in the index), Nalco (5.78%), GAIL (4.41%) and Engineers India (0.98%).

Besides, two more stocks in the index also need to be removed for some other reasons. The Centre’s holding in L&T (15.77% weight) via SUUTI has been exhausted in FY19, hence these have to be dropped. Similarly, the Centre has sold its 52.63% stake in REC (0.82% weight) to PFC, leaving no further scope to divest in the company. In February, Bharat 22 ETF had to buy three stocks, including REC from the market, to maintain their weight in the index as the government had no more headroom to divest in these companies.

(Source: Financial Express)


8. Sebi Allows FPI Investment in Municipal Bonds

Foreign portfolio investors can now invest in municipal bonds, markets regulator Sebi said in a circular Wednesday.

The circular comes almost two weeks after the Reserve Bank of India permitted FPIs to invest in municipal bonds as a measure to broaden access of non-resident investors to debt instruments in the country.

As per the RBI, foreign investment in municipal bonds should be within the limits set for FPI investment in State Development Loans (SDLs).

The limits for FPI investment in SDLs is 2 percent of outstanding stock of securities.

(Source: PTI)


9. US Objects to RBI’s New Credit Registry

The US administration has objected to the Reserve Bank of India’s (RBI) move to create a new public credit registry (PCR), on the grounds that the non-profit credit information firm will be anti-competitive for private credit bureaus (PCBs). The PCR is planned as a repository of loan information of individuals and corporate borrowers to curb bad loans.

A PCR will help banks distinguish between good and bad borrowers and accordingly offer attractive interest rates to good borrowers and lend to bad borrowers at higher interest rates.

The move is based on the recommendations of a task force set up in 2017, headed by Y.M. Deosthalee. The committee submitted its report in April 2018 and the central bank made it public in June last year.

(Source: Hindustan Times)

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