Reserve Bank keep rates unchanged to spur growth
The Reserve Bank of India has sprung a surprise by keeping benchmark rates unchanged and maintained its loose monetary stance to support economic growth, even as most global central banks are on a path to raise lending rates. The monetary policy committee of the central bank decided to hold the reverse repo rate at 3.35 percent and repo rate at 4 percent.
Why it’s important: The Reserve Bank’s decision has caught economists by surprise. Most expected a rise in the reserve repo rate, or the rate at which it squeezes liquidity. It remains to be seen the effect of the ultra-loose policy on inflation, which has been high, although within the central bank’s tolerance band.
LIC to submit draft documents for stock market listing today
Investment bankers have given final touches to the Life Insurance Corporation of India’s draft red herring prospectus. The country’s largest insurer is expected to be filed the draft documents with the Securities and Exchange Board of India today. LIC could be valued between Rs 11 trillion and Rs 12 trillion, which will be decided closer to its IPO that is expected to raise between Rs 600 and Rs 650 billion.
Why it’s important: The initial public offering of LIC will be India’s largest-ever share sale, more than Paytm that raised Rs 183 billion in November. The offering will entirely be a share sale by the government, which holds 100 per cent in the life insurer.
Households expect inflation to remain persistently higher
The perception on inflation in Indian households moderated a bit to 9.7 percent in January, according to the Reserve Bank’s monthly survey. However, the perception was still higher than a year earlier. It continued to be at double digits for the three-month and year-ahead periods.
Why it’s important: Price rise in the years since the coronavirus pandemic has remained high even as incomes have shrunk for most households in India. The inflationary perceptions survey has captured this, but the regulator has decided not to raise interest rates as it might hinder the economic recovery.
Central government kept inflation under control
The central government has managed the economy well and has kept inflation under control despite the COVID pandemic, finance minister Nirmala Sitharaman said in Parliament. The government was taking additional actions to keep consumer inflation under control by importing more edible oils, and removing the restriction on the import of lentils, she said.
Why it’s important: The federal government has kept its focus on helping India’s economic recovery by increasing capital expenditure and it has been supported by the Reserve Bank, which continues its easy monetary policy despite inflationary concerns.
Social media firms face tax on broad digital assets definition
India’s proposed tax on all cryptocurrency transactions is all set to affect reward points and other in-app purchases offered by social media companies, dating and gaming apps, tax experts said. Social media giants like Facebook and dating and gaming apps could face a 1 percent tax deducted at source as these would be covered under the government’s broad definition of virtual digital assets, they said.
Why it’s important: Since the government has used the phrase digital assets instead of cryptocurrencies in its new tax proposals on transactions and gains, it would impact the points, coins or any other purchases made within an application. These in-app purchases or reward points, some of them hosted on blockchain, would face 1 percent TDS but the burden to comply will be on the buyer, experts said.
Zomato’s revenue rises 82 percent in third quarter, losses shrink
Zomato’s revenue from operations in the three months to December quarter rose from both a year earlier and sequentially, even as its loss reduced. Revenue from operations for the fiscal third quarter rose to Rs 11.12 billion from Rs 10.24 billion in the September quarter and Rs60.94 billion a year earlier. Losses narrowed dramatically to Rs 672 million, compared with Rs 43.49 billion a quarter earlier and Rs 35.13 billion a year ago.
Why it’s important: The food delivery sector is expanding at a fast clip as more people are ordering food online amid COVID restrictions. Zomato’s dining out business is also seeing an uptick as customers return to restaurants as curbs are eased.
Swiggy’s sales declined 27 percent in 2020-21 on COVID curbs
Food-delivery firm Swiggy’s revenue from operations dropped an annual 26.6 percent to Rs 25.47 billion in the 2020-21 financial year although the company diversified beyond food to promote its quick commerce business. The restaurant aggregator’s net losses declined almost 59 percent from the previous financial year to Rs 16.17 billion.
Why it’s important: The COVID-19 lockdowns, restrictions and multiple emergencies impacted the online food delivery company. It was coupled with a general fear of contracting the disease, leading to a sharp fall in the demand for food delivery in the first year of the pandemic.
Reliance has big plans to grow its drone business
Reliance Industries has detailed out a bold plan to expand its drone business, which includes expanding manufacturing capacity by five times, participating in the new drone production-linked incentive scheme, and experimenting with limited logistics payloads to deliver goods.
Why it’s important: India’s drone market is expected to touch at least $ 5 billion by the end of this decade. With its financial muscle and management expertise, Reliance is looking to become a key player in the sector.
People rush to open demat accounts to avail LIC’s discount offer
A record 3.4 million demat accounts were opened in January, and there might be another record in February as brokers are racing to get LIC policyholders on board. One-tenth of LIC’s IPO issue size will be reserved for policyholders, who are likely to avail the offer in large numbers.
Why it’s important: The initial public offering of LIC will be India’s largest ever and retail customers want a share of the pie. Since the insurer will offer discounts to existing policyholders, many of them will seek to buy shares in the widely trusted insurance company.
Women executives continue to be paid lower than men
Senior women executives earn an average of just Rs 85 for every Rs 100 earned by their male counterparts, a study on gender balance in top firms by the Indian Institute of Management Ahmedabad has found. The study has found that the average compensation paid to senior women executives was Rs 19.1 million that compares unfavorably with the average annual compensation of men as Rs 22.4 million.
Why it’s important: women in India are breaking the corporate class ceiling by being appointed to company boards and senior management positions. However, it does not automatically translate in pay parity. More work needs to be done on this front.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
