1. At 7%, Third Quarter GDP Growth Defies Demonetisation Fears
Growth in the Indian economy slowed marginally to 7 percent during the October-December quarter, defying expectations of a sharper hit to economic activity due to the currency exchange program announced in November. A Bloomberg poll had pegged growth for the quarter at 6.1 percent.
The 7 percent growth in the third quarter of the current fiscal is only marginally lower than the 7.4 percent growth reported in the previous quarter. In terms of Gross Value Added (GVA), growth was at 6.6 percent during the December-ended quarter.
A slowdown in growth in the December quarter was widely anticipated by economists. The government’s decision to withdraw notes of Rs 500 and Rs 1,000 on 8 November had led to a currency shortage which impacted activity in cash driven sectors.
(Source: BloombergQuint)
2. Government Looking at Selling 51% Stake in Air India to Strategic Partner
India is planning to sell a majority stake in Air India, the country’s national carrier, to a strategic partner in a bid to turn around the loss making airline, people with knowledge of the matter said.
The proposal includes reviving Air India within five years of selling a 51 percent stake, the sources said, asking not to be identified as the information isn’t public. Talks are at an initial stage and presentations have been made to the Finance Ministry and the Prime Minister’s Office, they added.
Intense competition from non-state domestic airlines has added to the woes of the former monopoly carrier, which is saddled with about $7 billion in debt and has been unprofitable since 2007. Indian taxpayers have given Air India $3.6 billion in the past six years as part of an earlier bailout plan.
(Source: Economic Times)
3. Modi Govt Plans ‘Buy Indian’ Policy
To promote its flagship Make In India programme, the government is proposing its own version of the US’s Buy American policy through a national government procurement policy, according to a government official familiar with the plan.
The policy being considered involves purchases of Rs 2 trillion a year but doesn’t include defence equipment.
Under the proposed policy, the central government will provide special preference to companies producing in India; this could be in the form of a relaxation in turnover and experience conditions as well as price preference in products and services it is buying for its own use.
The US follows a similar policy under the Buy American Act, 1933, under which it prefers US-made products for government purchases.
(Source: Livemint)
4. Hyperloop One Pitches Elon Musk's Dream Idea to India
Hyperloop Technologies Inc, which is building a super-fast transportation solution based on an idea by billionaire Elon Musk, is in initial talks with the Indian government and companies to partially build and operate the vehicle on some routes, its chief executive officer said.
The Los Angeles-based company, known as Hyperloop One, will decide by the end of this year whether its feasible to run the vehicle in India after studying the market, Rob Lloyd said in an interview in New Delhi.
Lloyd, who’s in the country for discussions with the government, said:
We want to align the stakeholders to actually find a route that makes sense, to do the detailed engineering, do the work on financing that route, think about a public-private partnership
"India turns out to be a massive opportunity obviously for the concept of Hyperloop, which is why there’s so much interest," he added.
(Source: BloombergQuint)
5. Tata Sons, Docomo Settle Legal Dispute
Tata Sons and NTT Docomo Inc told the Delhi high court on Tuesday that they have reached a settlement agreement concerning enforcement of an arbitration award on the Tata DoCoMo issue. Darius Khambatta, senior advocate representing Tata told the court:
Tata Sons withdraws objections to enforcement of the arbitration award in favour of NTT Docomo.
He also said that NTT Docomo, as per the agreement, would not enforce the award within the next six months in any jurisdiction.
Both Tata Sons and NTT Docomo have objected to the Reserve Bank of India’s (RBI) statement before the court terming the exit agreement as illegal.
However, the high court will have to adjudicate RBI’s objections to Tata’s application to buy back Docomo’s stake at Rs 58.5 a share.
(Source: Livemint)
6. Non-food Credit Growth Continues to Languish at 4.87%
Non-food credit growth continued to languish in the region of multi-year lows at 4.87 percent in the fortnight ended 17 February, even as it improved from the previous fortnight’s figure of 4.76 percent.
According to data released by the Reserve Bank of India, non-food credit grew to Rs 73.8 lakh crore during the fortnight. Growth in food credit remained in negative territory for the second straight fortnight. Food credit as on 17 February stood at Rs 1.05 lakh crore, 2.08 percent lower than in the year-ago period.
Deposits with the banking system fell to their lowest since 11 November, which was the first day banks began to receive deposits of demonetised Rs 500 and Rs 1,000 currency notes.
(Source: Financial Express)
7. India Breaches FY17 Fiscal Deficit Target In January
India’s fiscal deficit target for financial year 2017 has been breached, as of the latest data released by the Comptroller and Auditor General of India on Tuesday, covering the April-January period.
The total figure stood at Rs 5.64 lakh crore at 105.7 percent of the budget estimate of Rs 5.34 lakh crore for the full financial year, or 3.5 percent of the country’s gross domestic product. The fiscal deficit had reached 95.8 percent of the budget estimate in the corresponding period in the previous financial year.
Revenue deficit reached 114.4 percent of the budget estimate at Rs 4.04 lakh crore.
Non-tax receipts generated by the end of January 2017 stood at Rs 1.9 lakh crore, around 59.8 percent of the budget estimate of Rs 3.2 lakh crore, data showed.
(Source: BloombergQuint)
8. Domestic Demand to Boost Sugar Prices, Says Icra
Domestic sugar consumption will outpace production for the second successive year in SY2017 (sugar season), given the lower production in the major states such as Maharashtra and Karnataka.
While this decline will be offset to some extent by increased production from Uttar Pradesh, the overall production is expected to decline by 9 percent and fall short by 2.5-2.8 million tonne from domestic consumption, which continues to grow at 2-3 percent per annum.
Sabyasachi Majumdar, head, corporate ratings, ICRA, said:
The expected decline in the sugar production during SY2017, coupled with the decline in the domestic sugar stocks during SY2016 and the impact of the global sugar deficit scenario has firmed up domestic sugar prices to Rs 36,200/tonne in October 2016, although there was a dip in November following the demonetisation and the arrival of the new crop.(Source: Financial Express)
9. Why The Time May be Ripe For Consolidation in Indian Banking
The merger and acquisition arena in Indian banking has been rather dry due to peculiarities of ownership. But that may be about to change, though at a snail’s pace, as reality begins to bite.
The dominant position of the government and community ownership of small private lenders made even the most daring of rainmakers to temper their aggression. Regulatory conservatism has been a stumbling block too.
The system will be better off if they are consolidated into fewer but healthier banks. Banks that experienced the worst outcomes received the most capital in a relative sense to get back to the regulatory capital norms. We must not allocate capital so poorly, recreate ‘Heads I win, tails the taxpayer loses’ incentives, and sow the seeds of another lending excess.Viral Acharya, Deputy Governor, Reserve Bank of India
(Source: Economic Times)
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