Business Today 11-Aug-19

AT A DINNER that she hosted for financial journalists, post the presentation of Union Budget, Finance Minister Nirmala Sitharaman explained one of the reasons behind the government’s decision to issue foreign currency debt. Given the tight liquidity in the market, she pointed out, if the government did all its borrowing from the domestic market, it would leave little money for the private sector to borrow. At the same dinner, a senior finance ministry official held forth on the number of initiatives being taken by the government to bring in a flood of liquidity to the domestic debt markets. A week before the finance minister’s dinner, Niranjan Hiranandani, Co-founder and Managing Director of Hiranandani Group, the real estate giant headquartered in Mumbai, was expounding on the liquidity issues in the course…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India Split Wide Open on Shift to Electric Mobility The government says the auto industry is not doing enough, and the industry says the government is being unrealistic. Electric mobility has pitted both against each other businesstoday.in/autoindustry-government Make-in-India Flops for Medical Devices; Domestic Firms Shutting Shops to Import Failed policies cause domestic manufacturers to import medical devices, while the government wants India to list among top five medical device manufacturing hubs in the world under the ‘Make-in-India’ initiative businesstoday.in/makeinindia-medical.devices NEWS Employees Allege Venugopal Dhoot Duped Them Before Filing for Videocon Bankruptcy Over 500 employees of Kolkata-based facilities have not received their salaries for 22 months businesstoday.in/videocon-staffsalary Mukesh Ambani’s Reliance Industries May Bid for Anil’s RCom in Bankruptcy The acquisition is important for RIL, for two…

₹64,192 CRORE AMOUNT RAISED THROUGH EXTRA-BUDGET-ARY RESOURCES IN 2018/19 THE Securities and Exchange Board of India (Sebi) is miffed at the Budget proposal for transferring 25 per cent of its surplus funds to central government coffers. The government is desperate to augment revenues as it has been struggling to meet its fiscal deficit targets in recent years. The Centre’s fiscal deficit target for 2017/18 was budgeted at 3.2 per cent of GDP, but went up to 3.5 per cent. The target for 2018/19 was 3.3 per cent of GDP, but is expected to be 3.4 per cent now. The reason for the slippage was shortfall in revenues while expenses increased. The Budget document reveals that for 2018/19, fiscal deficit and revenue deficit are 103 per cent and 107 per cent…

WITH AN over 25 per cent share, petroleum products and gems & jewellery exports have always impacted the performance of India’s merchandise exports ($330 billion in 2018/19). That is why when exports in these two categories slid 32.85 per cent and 10.67 per cent, respectively, in June 2019 (compared to June 2018), India’s merchandise exports shrunk 9.71 per cent to $25.01 billion from $27 billion in the corresponding period of the previous year. Take these out, and the decline was statistically less severe, at 4.86 per cent. That is no solace, rather it only hides the bigger problem, as petroleum and gems & jewellery exports are entirely dependent on imported raw materials and their fortunes in value terms are merely a factor of price volatility in global raw material prices.…

THE ₹29 lakh crore troubled NBFC sector has got a lifeline from the government by way of generating ₹1 lakh crore of liquidity through sale of pooled assets to state-owned banks. The guarantee cover of first loss up to 10 per cent would encourage banks to buy the assets and the RBI is working on a framework or a set of conditions for this. Clearly, there is a need for due diligence of the pooled assets and also the NBFCs. The financially sound NBFCs – track record of profitability, low level of NPAs and leverage, etc – would be able to participate. But there is the risk of the asset quality risk getting transferred to banks. Banks would also have to devise their buying strategy based on the kind of…

THE UNION BUDGET has proposed a Model Tenancy Act to give a fillip to rental housing in India, where over 11 million houses were lying vacant as per the 2011 Census. The draft rent rules include capping the security deposit at just two months’ rent (against the norm of 10 months in most Tier 1 cities), heavy penalties for failure to vacate, and a notice of three months before the house owner revises the rent. While the measures are aimed at encouraging renting over ownership to utilise vacant houses, the proposed Act may meet with limited success as most such houses are in far flung areas where infrastructure is not well developed. Moreover, land is a state subject. So, if states decide to drastically modify proposals, the Act may be…