Business Today 27-Jan-2019

Automobile and Auto Components The Government has a clear agenda to make Chennai the automobile capital of this country. Chennai, one of top 10 global auto hubs, is known for its large-scale auto production infrastructure. It has an installed capacity to produce one car every 20 seconds and one commercial vehicle every 90 seconds. The state also has the largest auto-components industry base and accounts for 35% of India’s auto component production (USO 6.2 Billion). With presence of more than 100 marquee auto component manufacturers with an investment of USO 553.85 million and providing direct employment to about 45,000 people, Tamil Nadu is an auto export hub for South Asian and African markets. Tamil Nadu accounted for 45% of India’s motor vehicles/cars exports in 2017-18. State’s rise as an automobile…

THE BAJAJS are business royalty. The group founder, late Jamnalal Bajaj, was both an astute businessman and a social reformer. He was so close to Mahatma Gandhi that he was often called the fifth son. Apart from trading, Bajaj set up a sugar-making company in 1931, which would later become Bajaj Hindusthan. The automobile company came later, just before Independence, in 1945. Though the third generation of the family, nominally headed by Rahul Bajaj, also had interests in steel, sugar, electricals and others, it was known for Bajaj Auto, the maker of the ubiquitous Bajaj scooters (modelled on the old Vespa scooters of Italy), which had a waiting period of decades during the bad old days of controlled economy. After the economic reforms of 1991, when the animal spirits of…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India PERSPECTIVES Why the Parliamentary Panel Is Angry with Domestic Airlines The 41-member standing committee report carries a series of recommendations that highlight the problems with the current aviation ecosystem businesstoday.in/airlines-panel A Dark UP Seeks Light from Prime Minister Modi The state not only requires a massive ramp-up of the transmission facilities but also of the distribution companies businesstoday.in/up-power.transmission Government May Extend GST Compensation Period for States The current GST targets are too steep and almost unachievable businesstoday.in/gst-compensation.period RBI’s MSME Restructuring Scheme a Lesser Evil for Banks Than Taking Them to Bankruptcy Without such a relief, the MSMEs would have landed at the bankruptcy court businesstoday.in/rbi-msmes NEWS Time to Becoming a Unicorn Is Shrinking, Says Rajan Anandan The number of unicorns or companies with over…

AFTER DENYING IT stoutly for a couple of years, the government has finally gotten around to admitting, grudgingly, that many of the Micro, Small, and Medium sized Enterprises (MSMEs) are struggling to survive. The big problem now is that the government thinks that allowing the MSMEs to restructure their loans or giving them more time to pay, and also increasing loans to them will solve the problem. Former Reserve Bank of India governor Urjit Patel apparently did not agree with that view. He has resigned and been replaced by Shaktikanta Das who is more sympathetic to the financial woes of the MSMEs. He has allowed banks to do a one-time restructuring of small loans not exceeding ₹25 crore of MSMEs. Meanwhile, the government has tried to spur its own banks…

THE CENTRAL GOVERNMENT had long ago figured out that introducing a new cess was a great way to generate tax revenues while pretending that tax rates were being kept low. The great advantage of a cess was that unlike tax revenues, it did not need to be shared with states. A cess could always be introduced in the name of a worthy goal – like say, education, infra, and roads etc. Ostensibly, this money would be used for a specific purpose – for more public schools, for highways, etc – though in practice the central government has rarely given out details of how much money collected via cess was spent specifically for the purpose it was ostensibly collected, and what were the specific outcomes of that spending. Now states have caught on…

THE GOVERNMENT’S revenue shortage has begun to impact expenditure. Data shows that the Centre has tightened spending. Its expenditure as a percentage of Budget Estimate (₹24.42 lakh crore) has crossed just 66 per cent until November 2018 compared to 69 per cent last year. This may not appear substantial but the government has realised that meeting its revenue targets will be tough. After all, it could collect 50 per cent of the budgeted revenue target of ₹17.25 lakh crore, three per cent lower than before. The Centre is going slow on revenue expenses (including salary, pension, and other administration costs) than capital expenditure specifically in the Commerce, Corporate Affairs, North East Affairs, Housing and Urban Affairs ministries. It would be interesting, however, to see if it can keep its revenue…