Reserve Bank to announce decision of policy rates today
The six-member monetary policy committee of the Reserve Bank will announce the review of policy today. It is to be seen whether the central bank will start unwinding the loose monetary policy by hiking the reverse repo rate, the rate at which RBI borrows from commercial banks. It is expected that the committee will raise the rate by 0.25 percentage point.
Why it’s important: The central bank may start normalizing the policy corridor, or the gap between the repo and reverse repo rate, which is currently at 0.65 percentage point to infuse liquidity during the pandemic, instead of the usual 0.25 percentage point. It might also hike the cash reserve ratio.
Government mulls tweaking capital gains tax regime
The government is open to changes in the capital gains tax regime to make it simpler, revenue secretary Tarun Bajaj has said. The government is expecting a ten-fold rise in capital gains tax in the current financial year compared over the previous year. Right now, the holding period is complicated at 24 months for real estate, 12 months for shares and 36 months for debt, Bajaj said.
Why it’s important: Gains from the sale of capital assets are liable for capital gains tax. There are currently separate rates of taxes for long-term and short-term capital gains, based on the period of holding an asset. A simplification will benefit both taxpayers and the tax administration.
Cerberus Capital top bidder for bad loans at Yes Bank
US-based Cerberus Capital Management has emerged as the top bidder to buy some Rs 550 billion of non-performing assets from Yes Bank, which will be housed in a jointly sponsored asset reconstruction company. Cerberus may also purchase a controlling stake in Blackstone’s International Asset Reconstruction Compan, which will be the investment vehicle for the transaction.
Why it’s important: The Reserve Bank has allowed Yes Bank to establish an asset reconstruction company, provided it is a minority investor. A successful sale of bad loans is crucial for the revival of the private lender, which wants to raise funds from foreign investors to restore its balance sheet. The bank’s board recently approved fundraising of Rs 100 billion.
Facebook raises concerns on India’s proposed data privacy law
Meta Platforms, the parent company of Facebook, has said that it is concerned about India’s upcoming data privacy legislation, which seeks local storage and in-house processing of data, according to the company’s filing with the US Securities and Exchange Commission. This follows similar concerns expressed by Google’s parent Alphabet in its filings made on February 2, without explicitly naming any country.
Why it’s important: India is the largest market for both Face and Google. Following the European Union’s General Data Protection Regulation, India is proposing companies store sensitive personal data in computer servers located within the country, which will raise compliance costs for multinational firms. Transfer of such data will be allowed only on stringent conditions.
Crypto mining and supply may come under GST net
The central government is seeing whether the goods and services tax is applicable on various cryptocurrency transactions, including mining and supply of the digital assets. The issue is being examined internally at the Central Board of Indirect Taxes and Customs and a proposal will be taken to the GST Council.
Why it’s important: India has proposed a flat 30 percent capital gains tax on cryptocurrencies from April. If it raises GST on other transactions as well, it will raise the overall incidence of tax on cryptos.
Xpressbees raises $ 300 million, becomes 8th unicorn in 2022
Pune-based logistics start-up Xpressbees has raised $ 300 million, making it the 8th startup in 2022 to become a unicorn. The latest fundraising values the firm at $ 1.2 billion. It was led by private equity funds Blackstone Growth, TPG Growth and ChrysCapital.
Why it’s important: The rate of unicorn funding has doubled in 2022. The first two months of 2021 saw three startups join the unicorn club, whereas eight firms have joined the exclusive club this year with 18 days still to go. In 2020-21, only 13 startups turned into unicorns, but the current financial year has seen 47 unicorns, with over a month remaining till March 31.
Shoppers return to markets as Omicron wave recedes
Business at mall, marketplaces and restaurants is getting back to normal as footfalls increase on the easing of curbs due the Omicron wave. Malls may have lost as much as 30-35 percent of business in December and January compared with the pre-pandemic level of January 2019. The custom at restaurants is increasing at a slower pace.
Why it’s important: There will be a swifter recovery in consumer goods companies, retailers, malls and restaurants if customers return to stores and eateries in cities as restrictions are being eased since the third pandemic wave is subsiding.
More employees are returning to office but work from home to stay
As the third wave of the Covid-19 pandemic recedes, Indian firms are gradually switching back to working from office. May firms such as ITC, Motilal Oswal Financial Services, Axis Bank, RPG Group, Deloitte, Cognizant and KPMG have asked employees to back to office or are planning to do so in the
Why it’s important: Most companies reverted to work from home for non-essential staff at the start of the Omicron wave. That will now be changing but remote working as a flexible policy is likely to remain for most companies as the pandemic has altered the way we work.
Government e-portal on business approvals off to a good start
Just five months since its soft launch, the government’s e-portal — the National Single Window System — has seen a significant rise in the number of investors using it to get approvals for their ventures. The first clearance was granted on 18 January. Since then, progress has been good as out of the 1,258 registered users on the website, 378 signed up in the past one week.
Why it’s important: Ease of doing business is a key aim of the government. Speedier online approvals is one of the best ways it can be achieved while starting an enterprise. The portal does away with the need for multiple applications and multiple visits to government offices so that approvals can be made faster and in a more systematic way.
Jio opposes Airtel and Vodafone on spectrum bundling
Reliance Jio is opposed to a move by Bharti Airtel and Vodafone Idea on mandatory bundling of the contentious E band with 5G spectrum in the upcoming auctions. Jio has said operators should be given the freedom to decide the quantum of E spectrum they want to buy, instead of being restricted by the government regulator bundling a fixed quantity linked to how much mid-band 5G spectrum they purchase.
Why it’s important: The 5G spectrum auctions to be held in India this year is important for all telecom operators because the proportion of mobile broadband traffic in total traffic is far higher in the country than in other nations. In India, mobile broadband traffic accounts for as much as 92 percent of the total traffic.
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