QBiz: Fiscal Rules Relaxed, SunEdison Delays PM Modi’s Solar Plan
Top business stories of the day.
1. SunEdison Setback May Delay PM Modi’s “Ultra Mega” Solar Drive in India: ET
The likely collapse of SunEdison’s solar project in India, the first of 32 planned
“ultra mega” complexes, could delay Prime Minister Narendra Modi’s goal to increase
renewable energy five-fold by several years and probably cost consumers more.
According to The Economic Times, as the US solar giant fights to stave off bankruptcy, the 500-megawatt project in Andhra Pradesh it won last November lies idle with ground yet to be broken. The other projects are still to be bid on.
2. LIC May Invest Rs 2.7 Trillion in Capital Markets This Fiscal Year: Livemint
State-run Life Insurance Corporation of India (LIC), the country’s largest life insurer, is likely to invest close to Rs 2.7 trillion in the capital markets during the year to March 2017, two people familiar with the plans were quoted in this Livemint report.
Of this, about Rs 68,000 crore is likely to be invested in the equity markets in keeping with the insurer’s investment pattern under which it allocates 25-30 percent of its investible surplus to equity, they said.
According to a 9 March Livemint report, prolonged market lows allowed LIC to invest at least Rs 60,000 crore on a gross basis during the past financial year that ended on 31 March. This was one of the highest investments by LIC in equities in the past 10 years.
3. RBI Hopes Banks Are More Effective in Passing on Rate Cut This Time: ET
The Reserve Bank of India (RBI) has expressed hope that transmission of lower interest rate through banks will be more effective this time, reports The Economic Times. RBI had cut repo rate, the key policy rate, a day earlier by 25 basis points or 0.25 percentage points to 6.5 percent, the lowest in the past five years.
There is a holistic view this time, there is a rate cut, there is liquidity framework, and Marginal Cost of Funds based Lending Rate ( MCLR) has also become operational from 1 April. We are quite confident that with the combination of all these factors transmission would be much more effective.SS Mundra, Deputy Governor, RBI
4. Fiscal Rules Relaxed for Some States: Livemint
States committing to greater fiscal discipline have been accorded
more freedom to borrow from the markets, according to Livemint.
Formally signing off on the recommendations of the 14th Finance Commission (FFC), the Union Cabinet has allowed conforming states to relax the existing cap on fiscal deficit of 3 percent of gross state domestic product (GSDP) by half a percentage point, the report adds.
Not only does this incentivise fiscal discipline, it also empowers states to prioritize their development spending—consistent with the implicit thinking of the FFC that one size does not fit all and that states are mature enough to competently manage their own fiscal needs.
5. Tax Collection Estimate for FY16 Crossed: BS
The government says it surpassed the revised (higher) tax collection target for
2015-16 by Rs 5,000 crore, at Rs 14.6 lakh crore.
According to Business Standard, the revised estimate (RE) was Rs 14.55 lakh crore, higher than the original budget estimate (BE) of Rs 14.45 lakh crore. Indirect tax collections have exceeded the RE by Rs 9,885 crore and direct tax realisations were short by Rs 4,000 crore over the revised estimate, the finance ministry was quoted here.
The total collection, it said, was 17.6 percent more than in FY15. Indirect tax revenues are Rs 7.11 lakh crore and direct tax collection Rs 7.48 lakh crore. The former exceeded the (original) BE for 2015-16 by Rs 65,618 crore and the RE by Rs 9,885 crore.
6. NITI Aayog Moots Tax Breaks for Electronics Manufacturing: ET
The government’s key body on policy formulation has suggested a series of reforms to
kick-start electronics manufacturing under the Make In India initiative, including tax
breaks for big investors and a special coastal zone for production,
seeking to capture world electronics markets with China vacating some space in the sector.
And now, in a new policy paper on electronics manufacturing, NITI Aayog has suggested that with a policy shift, India is poised to make a dent in the global market with high input costs in China but warns that this is ‘perhaps India’s last such opportunity’, reports The Economic Times.
It argues that the strategy should be export oriented with import substitution to expand production of electronic goods in the short run.
7. Banks in No Hurry to Cut Lending Rates: BS
The Reserve Bank of India (RBI) cut its key policy rate by 25 basis points and
vowed to improve liquidity in the market but banks are not going to reduce
lending rates any time soon, reports Business Standard.
Bankers said the new lending rates (under the Marginal Cost of funds-based Lending Rates, or MCLR) have been announced just at the start of the month. The first priority is to review rates on resources (deposits). Only a further fall in cost of funds would create room to pass on benefits to borrowers in the form of cheaper loans.
The effect of the policy rate cut would be felt first in the money market, where the companies and financial institutions raise short-term funds.
8. Another Forgettable Quarter for Corporate Earnings?: Livemint
As the fourth-quarter earnings season kicks off this week, stock investors are
braced for another quarter of muted profit growth, according to a Livemint report.
That’s a continuation of a three-year streak in which earnings have either fallen or been flat,
yet investors are optimistic about prospects in the current fiscal.
January-March quarterly earnings are likely to disappoint investors as demand is recovering at a slow pace in Asia’s third-largest economy.
Higher provisioning by state-run banks to cover bad loans and lower commodity prices for metals and energy firms will also contribute to a grim earnings season.
9. Commerce Ministry Wants Priority Sector Status for Export Credit: FE
The commerce ministry will seek priority sector status for export credit and focus on a revival of special economic zones (SEZs), reports Financial Express. The ministry has identified six areas to prop up outbound shipments in goods, which contracted for a 15th straight month through February.
Following the first meeting of a reconstituted board of trade as per the report, chaired by commerce and industry minister Nirmala Sitharaman, the ministry has also decided to lay even greater stress on promoting exports by small and medium enterprises, involving missions and embassies to boost trade.
It will also sort out issues of EXIM Bank and Export Credit Guarantee Corporation (ECGC) for the smooth availability of credit, apart from promoting exports of organic products.
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