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


GST collections in October rise 16.6 percent to Rs 1.52 lakh crore

The government collected Rs 1.52 lakh crore as goods and services tax in October, a 16.6 percent increased on an annualized basis. It was the second highest monthly collection since the GST regime was introduced in July 2017. Collections had touched a record Rs 1.67 lakh crore in April. This is the eighth month in a row that monthly collections have exceeded Rs 1.4 lakh crore.

Why it’s important: The higher GST revenue was driven by festive spending, higher tax rates and better compliance. The collections are now expected to be higher than budget estimates, providing the government with some fiscal headroom.

Manufacturing activity accelerates in October, indicating sustained demand

India’s manufacturing activity rose in October due to strong growth in factory orders and production, according to the S&P Global India Manufacturing Purchasing Managers Index. Manufacturing PMI rose marginally to 55.3 in October from a three-month-low of 55.1 in September as price pressures eased. Job creation grew at the fastest pace in three years because manufacturers are now optimistic of continued demand.

Why it’s important: The country’s manufacturing sector is showing resilience despite global headwinds. The increased activity signals improving outlook and higher business confidence.

First day of digital rupee sees Rs 275 crore of sovereign bond trading

Government securities worth Rs 275 crore were traded using the Reserve Bank of India’s digital currency on the first day of the pilot project in the wholesale segment. A total of 48 trades were settled using the central bank digital currency, data by the Clearing Corporation of India showed. Banks can still sell or buy securities at the available price on the normal NDS-OM platform, where secondary market transactions are conducted.

Why it’s important: The benefit of transacting in digital rupees is that there is no intermediatory risk. The central bank expects digital rupee to make interbank transactions more efficient.

Equity markets continue to rise, Sensex 1 percent away from lifetime high

India’s benchmark indices rose for a fourth consecutive trading session. The benchmark Sensex ended above 61,000 for the first time since January 17 at 61,121 points, an increase of 0.6 percent. It has posted gains in 11 of the past 12 trading sessions and is only about 1 percent short of hitting a new lifetime high. In the past 12 sessions, the index has added 3,886 points, nearly 7 percent. The 50-share Nifty closed at 18,145, up 0.7 percent.

Why it’s important: The rise in the stock market is supported by positive global cues and sustained buying by foreign portfolio investors. Higher manufacturing activity also boosted sentiment. However, further volatility cannot yet be ruled out.

Google halts mandatory use of billing system in India after regulatory directive

Google has stopped enforcing its policy to force Indian app developers to use its proprietary Play store billing system a week after India’s antitrust regulator said that the move stifles competition. The billing policy, under which app developers were required to use Google’s built-in payment methods, was to be enforced from 31 October. The Competition Commission of India on 25 October ruled that Google cannot force developers to use its payment system and imposed a penalty of Rs 936.44 crore for abusing its dominant position.

Why it’s important: It would be difficult for Google to bring back the mandatory usage of its billing system and may also be the first step towards normalizing transaction fees that other payment merchants charge.

India may allow Chinese firms in high-tech electronics through joint ventures

The central government is open to allowing entry to Chinese companies into the high-tech electronics sector if they establish manufacturing factories in the country in partnership with domestic companies. The government is trying to identify Indian companies that may want to get into electronics joint ventures not just with companies in China, but also with those from South Korea, Taiwan, and Vietnam.

Why it’s important: The Indian government has been wary of Chinese corporation doing business in India due to security concerns. These fears might be allayed if an Indian partner holds majority stake.

Russia becomes top crude oil supplier to India in October

Russia has become India’s top oil supplier, overtaking dominant suppliers Saudi Arabia and Iraq, according to energy cargo tracker Vortexa. Russia supplied 946,000 barrels per day of crude oil to India in October, the highest ever in a month. It accounted for 22 percent of India’s total crude imports, ahead of Iraq’s 20.5 percent and Saudi Arabia’s 16 percent. Compared to September, overall crude import went up 5 percent in October. Imports from Russia rose 8 percent in October.

Why it’s important: India has continued to trade with Russia despite Western sanctions in the wake of the Ukraine conflict. The remarkable rise in Russia’s share of the Indian market from less than 1 percent in 2021 has been triggered by deep discounts that has helped India keep its crude oil bills low.

Government may raise capex target to Rs 10 lakh crore in next budget

India may continue to increase capital spending by allocating as much as Rs 10 lakh crore to build ports, roads, and other infrastructure in the next financial year. Finance minister Nirmala Sitharaman had announced a 35 percent increase in the capital expenditure target to a record Rs 7.5 lakh crore in 2022-23.

Why it’s important: The increased capital spending is to encourage private investments that remain low despite record government spending. Persistently high inflation, monetary tightening, geopolitical risks and an uncertain global economic outlook have led to companies to delay new projects, expect a few large conglomerates.

Fintech firms are shadow banks of present times, but remain fragile, says economics Nobel laureate

The new fintech companies have the same fragility that banks used to have, and banks still have that to some extent, according to Douglas W Diamond, professor at the University of Chicago’s Booth School of Business, who received the Nobel prize in economics this year along with Philip Dybvig and former Fed chair Ben Bernanke. “I would say fintechs are the shadow banks of the current time; they do banking activities without being called a bank,” he said in an interview.

Why it’s important: Top economists are wary of new age fintech platforms, pointing to their fragility. They are not yet big enough to pose systemic risks but that might change in the coming years.

Rising interest rates starts hurting corporate margins in India

Higher interest cost on borrowings has begun to hurt corporate profits. The combined interest expenses of listed companies were higher by 18.5 percent on an annualized basis in the fiscal second quarter against 8.8 percent decline in combined operating profits during the period. This is the fastest expansion in interest expenses in at least three years. The interest coverage ratio has declined sharply to 7.2X in the second quarter from a high of 10.1X in the third quarter of 2021-22.

Why it’s important: The gains to corporate earnings from lower interest rates is over and borrowing costs are likely to remain high in the medium term, which is expected to impact corporate profits.