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

A round-up of the biggest articles from newspapers

A round-up of the biggest articles from newspapers

1. Nodal central counterparty may resolve impasse with European market regulator

A nodal central counterparty (CCP) could be a solution to the stalemate between the Reserve Bank of India (RBI) and the European Securities and Markets Authority (ESMA). Under the nodal model, an ESMA-approved body will act as a link between Indian CCPs and the European regulator. The nodal CCP will be set up in India and will oversee the domestic CCPs. A similar arrangement was followed in the case of the US Commodity Futures Trading Commission in 2014-15.

Why it’s important: Regulatory authorities in India and the European Union (EU) need to find a quick solution. European funds account for some 33 percent of the assets under management of foreign portfolio investors.

2. Reliance, HCL evaluating deals to purchase stake in proposed semiconductor factory

Reliance Industries (RIL) and software firm HCL Tech are independently evaluating deals to buy 30 percent equity stake each in semiconductor wafer fab applicant ISMC Analog. The two firms are likely to invest through subsidiaries. The total investment from both parties may be over Rs 4,000 crore. ISMC Analog is one among three applicants looking for subsidies under the Centre’s Rs 76,000 crore Semicon India program and will build a $ 3 billion fab.

Why it’s important: The discussions to buy stake indicate a heightened interest in India’s ambitious move to seed a semiconductor manufacturing ecosystem in the country.

3. Windfall tax on refiners and crude producers fails to recover lost government revenue

Nearly four months after introducing a windfall tax on refiners and local crude oil producers, the government has managed to garner only Rs 2,500-3,000 crore a month from the levy, far less than it needs to make up for the losses in revenue due to excise cuts. Controller General of Accounts (CAG) data show that the additional tax is not offsetting the cut in excise duty on petrol and diesel in May. Excise duty collections in September declined by nearly 25 percent to Rs 25,911 crore from a year earlier and is down by 18 percent in the first half of the current financial year.

Why it’s important: The government now expects excise mop up to be nearly 20 percent less than previously estimated despite an increase in the demand for auto and aviation fuels.

4. India’s GDP growth may not exceed 7 percent, chief economic advisor says

India’s GDP growth for the current financial year is expected to be between 6.5 and 7 percent, chief economic advisor V Anantha Nageswaran has said. It was for the first time a government official said real economic growth may not exceed 7 percent. A number of agencies, including the International Monetary Fund (IMF) and the RBI, have lowered their GDP forecast on the back of uneven pick-up in demand and global headwinds. The IMF sees GDP growth at 6.8 percent, while the central bank cut its forecast to 7 percent.

Why it’s important: Despite the lower expectations, India is still the fastest growing major economy. High inflation and tighter monetary policy are providing headwinds to expansion.

5. Oyo founder Ritesh Agarwal gets easier terms for 2019 share buyback

A Mizuho-Nomura-led consortium has restructured the terms of the financing arrangement worth about $ 2.2 billion through which Oyo founder Ritesh Agarwal bought back a 23 percent stake in 2019. The revised conditions include a reduced quasi-equity component of $ 950 million, down from $ 1.8 billion previously, due to an $ 850 million write-off. Under the new terms, the loan component of $ 383 million is now payable by 2027 instead of 2025.

Why it’s important: The revised terms indicate the end of exuberance in expecting high returns from investments in Indian start-ups. Investors are now falling back to a more sober approach.

6. Meta may fire thousands of staff, following suit after Twitter firings

Meta Platforms, the parent of Facebook and WhatsApp, is planning to begin layoffs that will affect thousands of workers from this week. The job cuts could come as early as November 9. Meta reported more than 87,000 employees at the end of September. The planned layoffs would be the first broad headcount reductions to occur in the company´s 18-year history. The development comes after Twitter laid of a large number of employees.

Why it’s important: Tech giants went on a hiring spree during the COVID-19 pandemic as businesses shifted online. As life returns to normal, the extra staff have been rendered redundant.

7. Supreme Court upholds quota for economically backward sections in 3-2 verdict

The Supreme Court has upheld the 10 percent reservation for the economically weaker sections (EWS) among upper castes in government jobs and colleges across India. A bench comprising Chief Justice of India UU Lalit and Justices Dinesh Maheshwari, S Ravindra Bhat, Bela M Trivedi, and J B Pardiwala delivered the verdict. Justices Bhat and Lalit gave dissenting judgments.

Why it’s important: With this verdict, the cap on 50 percent reservations have been removed. Many states are expected to revise rules to take advantage of the judgement. Other who have done so are vindicated.

8. Airfares skyrocket on peak December season amid a shortage of aircraft

Rising demand and problems around capacity deployment due to a shortage of parts are sending airfares soaring during the peak December travel season, travel websites and analysts have said. Online travel operator Cleartrip has seen around a 6 percent increase in fares. For the December 21-31 period, Ixigo has seen a 44 per cent rise in airfares for the Bengaluru-Kolkata route, a 40 percent rise in the New Delhi-Goa route and a 15 percent rise in the New Delhi-Bengaluru route.

Why it’s important: Airfares between October and December are usually higher as people plan for their winter breaks. As the COVID-19 pandemic recedes, more people are planning to travel. Fares are not declining anytime soon.

9. India’s IT firms press pause button on fresh recruitment after rapid expansion

Indian IT services companies are hitting the pause button after a period of rapid expansion since the COVID-19 pandemic. Five of the country’s 10 largest IT services firms reported a sequential decline in sales and support staff in the September quarter, as they let go of non-revenue generating people and put an informal freeze on hiring.

Why it’s important: IT firms went on a hiring spree amid the pandemic, adding nearly a third of their workforce in a year and a half. However, fears of an impending recession in the western countries and declining profitability have changed the mood and approach of some of them.

10. Gujarat and Rajasthan attract the most of corporate investments

Gujarat has topped the list of states in attracting fresh investments from companies, with new investments worth Rs 3.98 lakh crore announced in 2021-22, up 273 per cent compared with 2020-21. By attracting new investments worth Rs 2.37 lakh crore in 2021-22, Rajasthan was placed at second position, but was the highest gainer in percentage terms at 535 percent compared with 2020-21. Maharashtra with fresh investments announced at Rs 2.02 lakh crore and Odisha at Rs 1.03 lakh crore were in the third and fourth positions. Tamil Nadu joined the top five states by attracting new investments worth Rs 84,000 crore.

Why it’s important: Although the respective state governments have reason to cheer, the lopsided investment indicates uneven development across the country.