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


Government puts GST rate revisions on hold till inflation eases

The planned rate rationalization of the goods and services tax to boost revenue of the Centre and states has been put on hold due to a spike in inflation, and the central government is examining ways to tame prices, including by improving logistics for commodities such as cement.

Why it’s important: Even if the GST Council accepts the recommendations of a ministerial panel for rate revision, the federal body might not take a decision because the current inflation situation leaves them with practically no elbow room.

No change in government’s 2022-23 borrowing target despite revenue hit 

The central government will stick to its gross borrowing target of Rs 14.31 trillion for the current financial year despite a hit on revenues due to reduction in excise duty on petroleum products and higher subsidy burden owing to food and fertilizer.

Why it’s important: The government might pull out money from the Consolidated Fund of India to ensure its capital expenditure commitments are met. Meeting the fiscal deficit target of 6.4 percent of gross domestic product will be difficult in 2022-23.

Sale of residual stake in Hindustan Zinc to fetch Rs 38,000 crore

The government has decided to sell its residual stake in Hindustan Zinc and monetize the assets of defunct Bharat Gold Mines. The two decisions were cleared at a meeting of the cabinet committee on economic affairs. After its sale to Vedanta, the government continues to hold a 29.5 percent stake in Hindustan Zinc.

Why it’s important: It will sell its stake through the open market in a staggered format. The government is looking to raise resources for further economic and social infrastructure investments.

Top corporate executives earned 184 times their employees wages in 2020-21

Managing directors, chief executive officers, and other top earners in India’s largest companies saw a faster rise in compensation after the Covid pandemic although median employee salary declined. The median CEO salary in India’s top listed companies rose 2.6 percent in the past two years but the median employee salary in these companies was still down 0.5 percent from its pre-pandemic levels.

Why it’s important: The analysis based on a sample of 76 companies from the Nifty 100 index showed that income inequality widened in the corporate sector during the pandemic.

Singtel to sell part of its stake in Bharti Telecom to Mittal family

Singapore Telecommunications has initiated talks with Bharti Airtel chairman Sunil Mittal to sell a small part of its holding in the Indian telco to the Mittal family. Singtel and the Mittal family are shareholders in Bharti Telecom, a promoter company of Bharti Airtel. It could sell stake worth $ 1-2 billion to the Indian promoter through a mix of Bharti Telecom and Bharti Airtel share sales.

Why it’s important: Singtel is keen to book some profit by selling Bharti shares as part of its portfolio management strategy and redeploy some capital in new investment opportunities.

Huawei India CEO moves high court against lookout notice

Huawei Telecommunications India chief executive officer Li Xiongwei has challenged a look out circular that prevented him from flying out of India earlier this month for a business meeting. The Delhi High Court has asked the income-tax department why the circular shouldn’t be quashed.

Why it’s important: Many Chinese companies operating in India, including Huawei, have been under the tax scanner for evasion and financial irregularities. The income-tax department has, however, not disclosed why it does not want Li Xiongwei, a Chinese national, to leave the country.

Economy might have grown just 3.5-5.5% in fiscal fourth quarter

India’s economy is likely to have grown 3.5-5.5 per cent in the fourth quarter of 2021-22 as higher commodity prices hit margins and the third Covid-19 wave disrupted the recovery, an Economic Times poll of 11 economists showed. The estimated median growth in the fourth quarter was 4.4 percent. The economy had grown 2.5 percent in the fourth quarter of the preceding financial year.

Why it’s important: The final three months of 2021-22 was a challenging quarter as commodity prices rose significantly after Russia invaded Ukraine. The widespread Omicron wave also disrupted economic activity.

The long decline of the Nifty index might not be over yet

The Nifty’s 14 percent decline from the lifetime highs hit in October last year may not qualify as a bear market, but it is one of its longest corrections. The index could decline another 10 percent, going by historical trends. The Nifty ended down 0.6 percent at 16,025.80 points on Wednesday.

Why it’s important: The dream rally of Indian equities for the past two years has ended due to concerns over inflation, rate hikes by the US Federal Reserve, and recession fears, resulting in overseas investors pulling out of stocks. They are likely to decline even further.

India’s banks are staring at bad loans worth Rs 18,500 crore

Banks are facing a fresh spike in bad loans, with close to 9 percent of the debt restructured under the Reserve Bank of India’s pandemic relief plan turning sour in the past six months of 2021-22, according to data compiled by Mint. Over Rs 18,500 crore of such loans has slipped into the non-performing asset category after borrowers were unable to repay despite extension of repayment periods and easier payment terms.

Why it’s important: A significant growth in retail loans and exposure to small businesses and vulnerable corporate sectors have created risks that remain masked by regulatory forbearance.

Startup unicorn Good Glamm plans to raise funds worth $ 250 million

Good Glamm Group, previously known as MyGlamm, is in talks with new and existing investors to raise as much as $ 250 million at a valuation of nearly $ 2 billion. Good Glamm became a unicorn when it raised $ 150 million in November last year.

Why it’s important: Investment activity is likely to slow down in India’s startup sector due to multiple factors. It would be interesting to see if the beauty and personal care platform is able to garner sufficient investor interest.

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