QBiz: GST Council Slashes Rates of Items; Factory Output Slows

A roundup of top business stories of the day.

5 min read
 GST is slated to come into effect from 1 July.

1. GST Council Slashes Tax Rates on 177 Items From 28% to 18%

The Goods and Services Tax (GST)) Council on Friday slashed rates across the board, for a range of daily items of consumption, relaxed penalties and tweaked rules to make it easier for businesses, especially small and medium enterprises, to comply.

The feel-good package from the council, which comes into effect from 15 November, is likely to boost consumer demand, reduce disquiet over compliance costs and also lend fresh momentum to the tax reform initiative.

Prime Minister Narendra Modi took to Twitter and said, “All our decisions are people-inspired, people-friendly and people-centric. We are working tirelessly for India’s economic integration through GST.”

It is one of the biggest packages concessions announced after the new indirect tax system took effect on 1 July.

(Source: Livemint)

2. SBI's Financials Improve, but Mirror Weakness in Economy

How the country’s largest lender performs speaks volumes about the health of the overall economy. To that effect, State Bank of India (SBI’s) second quarter results had some good news and a lot of bad omens.

The banking behemoth reported a welcome drop in its bad loan ratios and a sharp fall in fresh slippages sequentially, which suggests the economy is on the mend, with corporate de-leveraging under way. SBI’s gross non-performing assets (NPAs) slipped to 9.83 percent for the second quarter from 9.97 percent in the previous quarter.

More importantly, fresh slippages fell to Rs 9,026 crore from a massive Rs 26,249 crore in the previous quarter. Recall that the bank merged its five associates effective 1 April and the previous quarter’s results bore the brunt of the mergers.

(Source: Livemint)

3. Factory Output Slows in September to 3.8%

India’s factory output growth slowed to 3.8 percent in September from an upwardly revised 4.5 percent a month ago, but a sector-wide break-up showed stability gradually returning to the industrial sector after the disruptions caused by demonetization and the goods and services tax (GST).

In anticipation of GST implementation starting 1 July, producers reduced their output and inventories, bringing down the index of industrial production (IIP) in June (-0.3%) and July (0.9%).

Economists say the gradual recovery will only lead to a tepid improvement in economic growth in the second quarter (July-September), after gross domestic product (GDP) growth decelerated to 5.7 percent in the quarter ended June, the slowest pace in three years.

(Source: Livemint)

4. Modi's Economic Advisory Panel Suggests Incentives to States for Achieving Results

The Economic Advisory Council to the Prime Minister on Friday made a case for incentivising states for achieving results in sectors like health and education, an official statement said.

The EAC-PM, headed by Niti Aayog Member Bibek Debroy, at its meeting took stock of the prevailing economic situation and spelt out "a clear road map" for stepping up skill development, job creation and enhanced resource investment in the social sector—including for health and education and boosting infrastructure financing.

The council came up with suggestions to guide the evolving framework for the Fifteenth Finance Commission, including incentivising states for achieving health, education and social inclusion outcomes.

(Source: PTI)

5. Axis Bank To Raise Rs 11,625 Crore From Bain Capital, Others

Private sector lender Axis Bank Ltd. today approved raising Rs 11,625.8 crore by issuing shares and warrants to Bain Capital Private Equity and other investors as the private lender strengthens its capital base amid rising bad loans.

The bank will issue shares at Rs 525 apiece and warrants at Rs 565. The fundraise, after issuing new stock and conversion of warrants, will dilute its equity by 8.3 percent, according to BloombergQuint’s calculations. Warrants will be converted within 18 months, while shares will have a one-year lock-in period, Axis Bank said in a statement to exchanges.

Bain Capital will invest close to $1.05 billion (Rs 6,853.8 crore) for a 4.8 percent stake in one of the largest private equity investments in the Indian banking sector. Capital International will pump in about $489.4 million (Rs 3,188.7 crore) to own 2.3 percent on conversion of warrants.

(Source: BloombergQuint)

6. Passenger Vehicle, Cars Sales Drop As Festive Cheer Fades

Total vehicle sales fell in October as dealers held back on adding to their inventory as festive sales in the previous month were not as robust as expected.

Domestic passenger vehicle sales declined marginally to 2,79,837 units in last month from 2,80,677 units in October 2016, according to the data released by the Society of Indian Automobile Manufacturers today.

Dealers had built up their stock in September anticipating higher sales as the festive season kicked in early, Vishnu Mathur, Director General of SIAM told BloombergQuint. But sales, at the retail level, fell short of expectations and dealerships bought vehicles in October to compensate for the stock buildup, he added.

(Source: BloombergQuint)

7. 18 Firms in Race for Jaypee Infra Assets

Jaypee Infratech, a subsidiary of Jaiprakash Associates that is undergoing insolvency proceedings at the behest of IDBI Bank, has received interest from 18 potential bidders. A number of prominent corporate groups, including banks, asset restructuring companies and industry players, have taken part in the bidding process for the builder’s assets.

Amid a wider debate on weather promoters should or should not be allowed to take part in bidding for toxic firms, it is learnt that the promoters of Jaypee Infratech are keen to present a resolution plan.

A source said that these parties might not be interested in Jaypee Infratech as a whole, but might be keen on certain portions like the Yamuna Expressway, etc.

8. After Hitting All-Time High, Bitcoin Slides by Over $1,000 in 48 Hours

Bitcoin dropped below $7,000 on Friday to trade more than 5 percent down on the day, having fallen by well over $1,000 since hitting an all-time high on Wednesday.

Bitcoin dropped to $6,800 on the Luxembourg-based Bitstamp exchange by 1200 GMT, before recovering a little to $6,870 just over 20 minutes later.

On Wednesday around 1800 GMT, it had touched $7,888 after a software upgrade planned for next week that could have split the cryptocurrency in two was suspended.

(Source: Reuters)

9. Rupee Dives 22 Paise to Hit One-Month Low of 65.16

Reversing its two-session rise, the rupee today took a steep plunge of 22 paise to end at a fresh one-month low of 65.16 against the US dollar due to frantic demand for the American unit from importers and corporates.

This is the lowest closing for the home currency since October 10.Imminent higher interest rate environment arising out of the US Federal Reserve's hawkish tone along with rapidly surging crude oil prices worldwide largely kept forex market undertone more nervous.

Besides, the overall sentiment turned little uneasy on concern over a lack of progress on tax reform in the US.

(Source: Economic Times)

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