Business Today 20-May-2018

INTHREE, StoreKing, eHaat and RubanBridge. They are not household names like Amazon, Flipkart, Snapdeal or ShopClues, say. But these are e-commerce companies nonetheless, which are trying to build significant businesses by tapping rural demand in India. Some of them like RubanBridge are still small, while others like StoreKing are significant in size. StoreKing clocked revenues of ₹1,200 crore last year, and expects to double that this year. All these companies have figured out that the rural consumption story is quite robust, despite the vagaries of the monsoon, and sluggish growth of rural wages in the past four or five years. StoreKing estimates that the rural retail market (physical) constitutes over half of India’s total retail market, which is likely to be $650 billion, and growing at 13-14 per cent annually.…

The fact that Pay Commission recommendations, when implemented by the government, result in higher demand for goods and services has been known for a long time. It would also impact inflation, at least partially, because some goods and services would be part of the CPI basket. Shortly after the 7th Pay Commission came out with its recommendations, the Reserve Bank of India (RBI) estimated that these would directly impact the headline CPI by 150 basis points, and by another 40 basis points as a result of indirect impact. This impact would largely be because of housing and transportation sectors, and it would be spread over a period of time. Now a Mint Street Memo, authored by Praggya Das, Director of Monetary Policy Research, estimates that there has been a 35…

FINANCE MINISTRY officials are feeling the heat and not just because of the summer. India imported 18.7 million tonne (MT) of crude oil in March at an average price of $63.8 per barrel while it was $63.54 per barrel in February. On April 26, the average price stood at $70 per barrel. An internal calculation by the Ministry of Petroleum and Natural Gas predicted that the average crude oil price could be $65 a barrel, meaning India would have to spend an additional $30 billion. India’s demand for crude oil increased by 3 per cent in the last fiscal while domestic production dipped by 0.9 per cent. The Finance Ministry’s preparations for the FY2018/19 budget were based on an assumption that the average crude oil price would remain around $55/barrel.…

THE MEGA-consolidation in the telecom sector has started to unfold in the most gruesome way for fringe players who are finding it challenging even to wind up operations. According to reports, Norwegian telco Telenor may be forced to file for bankruptcy if it fails to secure regulatory approvals for acquisition by market leader Airtel. Telenor filing for bankruptcy could also jeopardise Airtel’s plans to strengthen its position in the three-player telecom fight. Earlier, Chennai-based Aircel filed for bankruptcy under NCLT after its failed attempts to settle the matter with lenders. Aircel and its units have an estimated debt of ₹50,000 crore that it owes to financial and operational lenders. As consumers shift to big operators, telcos such as Telenor and Aircel have been incurring heavy losses. The lenders, both unsecured…

THE GOVERNMENT has stepped up work on the draft Labour Code on Social Security. Once in force, the code will benefit at least 50 crore workers ranging from domestic helpers to factory employees. Currently, about six crore employees in the organised sector enjoy social security benefits such as PF and health insurance. The proposed code will amalgamate 15 labour laws that govern PF, state insurance schemes and social security for the unorganised sector. While the move will serve as an effective campaign tool in an election year, the corporate sector is likely to welcome it as the proposed restructuring provides more scope for private participation. For instance, the draft suggests allowing private insurance firms and the right to choose fixed-term contract hiring over permanent jobs. If it can keep both…

WHEN CIVIL Aviation Minister Jayant Sinha invited RSS affiliate Swadeshi Jagran Manch (SJM) to breakfast, he was hoping to allay concerns regarding the disinvestment of India’s national carrier. Sinha even offered to allow prospective buyers a flexible holding structure to permit clubbing of existing airlines’ operations – a move that is likely to interest the Tata group. SJM, however, opposed the sale and said the government should only divest a minority stake to raise capital. Last week, RSS chief Mohan Bhagwat had pushed for AI control remaining with Indian entities. “Our skies should not be controlled by someone else,” he said. A significant number of BJP parliamentarians also echo this line, lobbying in favour of the domestic industry. The Sangh’s trade union, the Bharatiya Mazdoor Sangh, has already spoken against…