Morning Scan: All the big stories to get you started for the day


Economy to grow at 8.5 percent in financial year 2022-23

The Economic Survey 2021-22 estimated that the Indian economy would grow by 8.5 percent in 2022-23. It will continue to top the world’s growth chart after an estimated 9.2 percent expansion in the current fiscal year to March, said the survey tabled in Parliament.

Why it’s important: Although growth is seen to be high, the government still faces challenges because of tighter global liquidity, higher inflation from rising commodity prices and uncertainties related to the new variants of Covid-19.

India has fiscal headroom to ramp up capital spending

The Economic Survey 2021-22 said the government had the fiscal space to boost capital expenditure due to strong revival in revenue collections. However, private investment recovery was still at a nascent stage, the annual report card on the Indian economy said a day ahead of the national budget.

Why it’s important: The Indian economy is on the path to recovery from the disruption caused by the coronavirus pandemic. The government would like to be big spenders, particularly in infrastructure, to further stimulate it despite a higher fiscal deficit.

Wealth tax of 2 percent could fetch nearly Rs 1.1 trillion

A small annual wealth tax on the country’s billionaires could provide a new source of direct tax for the government. Charging a 2 percent wealth tax on promoters of listed companies with a net worth of $ 1 billion or more would garner the Indian government nearly Rs 1.1 trillion ($ 14.6 billion) in taxes every year.

Why it’s important: The number of businessmen with a net worth of $ 1 billion (about Rs 75 billion) reached a record 126 at the end of December, up from 85 a year ago. However, many economists doubt the feasibility and desirability of a wealth tax in the current economic environment.

Tata Steel buys state stake in Neelachal Ispat for Rs 121 billion

In its second acquisition of a public sector unit within a week, the Tata group has acquired a majority stake in Neelachal Ispat Nigam. The government approved the divestment of the 93.7 percent stake held in Neelachal Ispat by four central public sector undertakings and two companies of the Odisha government to Tata Steel Long Products at an enterprise value of Rs 121 billion.

Why it’s important: The acquisition provides a strong push to the government’s privatization drive, showcasing the interest of private investors in the central government’s assets. However, since the government does not directly own any stake in Neelachal Ispat, the sale will not lead to any divestment receipts for the exchequer.

PwC to look in financial irregularities at BharatPe

The extent of the investigation into alleged financial irregularities at BharatPe broadened on Monday after the fintech firm decided to onboard accounting firm PwC to investigate the company’s transactions. The hiring of PwC is in addition to an external probe by Alvarez and Marsal.

Why it’s important: The decision to hire PwC as an external investigator is based on a preliminary internal investigation that threw up indications of financial fraud. The board of BharatPe terminated the services of co-founder and managing director Ashneer Grover a few days ago.

Private insurers snatch market share from LIC ahead of IPO

Life Insurance Corporation of India has been losing market share to private insurers, especially those owned by banks. LIC lost nearly 10 percentage points in market share to rivals since October 2020, according to Insurance Regulatory Authority of India. Its market share fell 13 percentage points since June 2020, when it controlled nearly three-fourths of the market.

Why it’s important: The insurance behemoth is likely to publicly list its shares soon. The state-run insurer failed to attract enough new retail customers, especially after announcing its IPO in February 2021. A major part of the fall may have been triggered by the pandemic as premium collection by agents declined sharply.

IT sector drives exports growth of 18.4 percent to $ 178 billion

India reported strong growth in world services trade in the post Covid-19 period, led by strong performance by the computer services firms, the Economic Survey said. Computer services comprised 49 percent of total services export in the first half of the current financial year and continued to be the largest exported service.

Why it’s important: After posting a fall in the first quarter of 2020-21, services export and increased consistently to touch $ 60 billion in the third quarter of 2021-22, it said. One of the main reasons was that the government removed telecom regulations in the IT-BPO sector, allowing a large part of its workforce to work from home.

Adani Wilmar’s initial public offer garners 17.37 times bids

Investors responded enthusiastically to the Rs 36 billion IPO of Adani Wilmar, which was subscribed 17. 37 times on Monday, the final day of bidding. The wealthy investor category was subscribed 56. 30 times, while institutional investors put in bids for 5. 73 times of the shares reserved for them. The retail investor category was subscribed 3. 92 times.

Why it’s important: Last year was extremely lucrative to companies listing their shares for the first time. The Adani Wilmar IPO has started 2022 on a positive note, with many more initial offerings to come, especially that of LIC.

Uptick in retail and recreation visits, power generation increases

weekly indicators of economic activity showed some signs of improvement amid a drop in Covid-19 cases in the big cities in India. Retail and recreation visits were closer to levels last seen before the pandemic, according to mobility data from Google. Power generation perked up last week as winter receded and temperatures rose in most parts of the country.

Why it’s important: The economy had shown signs of recovery before the third wave of the coronavirus pandemic. The renewed restrictions due to the spread of the Omicron variant placed a hurdle that seems to be lifting.

Private consumption continues its decline in India

Private consumption as a share of nominal gross domestic product slumped further to 57.5 percent in 2021-22 from 58.6 percent in 2020-21 and 60.5 percent in 2019-20, pointing to a sustained slowdown in household consumption since the onset of the Covid-19 pandemic.

Why it’s important: Private consumption, or the money spent by consumers on buying goods and services, constitutes the biggest chunk of India’s annual gross domestic product. The country’s economic revival will face an uphill struggle if consumer sentiment and spending does not increase soon.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.