A round-up of the biggest articles from newspapers
1. Direct tax collections likely to see 14-17% increase in 2023-24
The Finance Ministry, which is working on revised estimates for the current fiscal year and Union Budget estimates for 2023-24 as part of the budget-making exercise, is looking at pegging 14-17 percent growth in Direct Taxes for the year starting March over Rs 14.2 lakh crore in 2022-23, according to a preliminary internal assessment. For 2022-23, the government expects Direct Taxes to be revised upward as it is likely to substantially exceed the budget target by at least Rs 1-1.5 lakh crore.
Why it’s important: The government is keeping its ambition for expansion in Direct Taxes moderate for 2023-24, with inflation likely to ease substantially in the next financial year amid buoyant tax receipts in the current financial year.
2. India’s exports may see a sharp decline in October, preliminary estimates show
A preliminary estimation of India’s exports in October has shown a 19 percent decline from a year earlier. The preliminary monthly trade data, typically released in the first week of the following month, excludes data from a few segments and is revised upwards when final estimates are released two weeks later. This month, the central government has not released the preliminary data. The final estimates for October will likely be released this week and are expected to show a narrower year-on-year (YoY) contraction in growth compared with the preliminary data.
Why it’s important: There is some discomfort within the government that the preliminary data gets reported prominently, while the revised data, usually a stronger figure, gets relatively less publicity, creating confusion in the public mind.
3. Tata Sons starts process to bring all airlines under the Air India umbrella
Tata Sons has begun an expected consolidation of its airlines — Vistara, AirAsia India and Air India Express— under Air India, following a series of discussions with Singapore Airlines, its joint venture partner in Vistara. The group will have a low-cost carrier and a full-service airline under Air India, which will be the only airline brand in the group after the merger. The Vistara brand may be dropped. An announcement is expected within a week.
Why it’s important: The move to consolidate the airline business will make Air India the second-largest carrier in the country in terms of fleet and market share, after market leader IndiGo.
4. Adani Group considering buying a significant stake in Bengaluru airport
The Adani group is evaluating a plan to pick up a stake in Bangalore International Airport (BIAL). Discussions have taken place with Fairfax, which owns 54 percent stake, and the conglomerate is keen to participate in the bidding for Airports Authority of India’s (AAI) 13 percent stake. BIAL owns and operates the Kempegowda International Airport in Bengaluru under a 30-year concession agreement with the central government. It has the option to renew the agreement for another 30 years.
Why it’s important: The Adani group has in recent times become as large airport operator in India. It already runs eight airports, handling nearly 20 percent of air passengers in the country. It has bigger plans of an engagement in the sector.
5. Central government to continue capital spending support to states
The Centre may continue with the Scheme for Financial Assistance to States for Capital Investment in the next financial year of 2023-24, with a possible allocation of Rs 1 lakh crore. This could be announced by Finance Minister Nirmala Sitharaman in her 2023 Budget speech. During informal discussions between central government officials and their state counterparts, it was conveyed by the latter that many states would like the capex support to continue. The scheme for 2022-23 consists of Rs 1 lakh crore, 50-year, interest-free capex loans to states. It is part of the Centre’s capex budget of Rs 7.5 lakh crore.
Why it’s important: The capex program has been a success this year and the states have asked the Centre to continue the scheme. Increased capital spending by the government is providing a boost to the growth momentum.
6. India’s bad bank swings into action after nudge by Finance Minister
The National Asset Reconstruction Company and India Debt Resolution Company, two key constituents of India’s bad bank, have set up a weekly review mechanism to monitor progress of the proposed bad loan sale exercise along with banks, following direct intervention by Finance Minister Nirmala Sitharaman.
Why it’s important: Operational activity has picked up pace significantly after the finance minister held a review meeting in September. This is a welcome move to swiftly curb the bad debt menace.
7. Consumer firm Capital Goods put up for sale by three main shareholders
The three major shareholders of Capital Foods, which makes food products under the Ching’s Secret and Smith & Jones brands, have decided to put the firm up for sale in what could be one of the largest acquisitions of a homegrown consumer company. The firm’s owners are General Atlantic (35 percent), Invus Group (40 percent) and founder chairman Ajay Gupta (25 percent). They have asked Goldman Sachs to find a buyer for the entire company at a valuation of $ 1.5-2 billion and then take the company public. An auction process is due to begin in the coming weeks.
Why it’s important: There is substantial buyer interest in Capital Goods. Food and beverage majors like Nestle, Kraft Heinz, Hindustan Unilever, Orkla, Nissin Foods, McCormick, ITC, and Tata Consumer Products have earlier separately approached the owners for a possible transaction.
8. Apax, TA and Carlyle shortlisted for likely Quest Global deal worth $ 1 billion
Apax Partners, TA Associates and the Carlyle Group are the three private equity buyers shortlisted after a screening of non-binding bids to buy a minority stake in Singapore-based engineering outsourcing firm Quest Global. The deal value could be around $ 1 billion. One more private equity fund might also make the cut as investors Advent International and Bain Capital, which own around 33 percent, are looking to monetize their five-year-old investment.
Why it’s important: Quest has made 14 acquisitions in the past 25 years, and it is growing rapidly by taking the inorganic route, especially in adjacent businesses. It had a manufacturing arm that was hived off so that it could focus on tech services.
9. There might soon be a pricing mechanism for off-patent drugs
The central government and the pharma industry are working together on a pricing mechanism for drugs that are going off patent. The move is significant against the backdrop of the recent patent expiries of key diabetes drugs. A stakeholders’ meeting was held last week between industry representatives and the department of pharmaceuticals.
Why it’s important: A predictable pricing regime is likely to benefit both consumers and manufacturers. A pricing mechanism is necessary is because while many patients who can afford may prefer to stay with the innovator brand, a patent expiry may generate fresh prescriptions.
10. Government considering early oversight of highway projects
The Ministry of Road Transport and Highways has proposed to include construction of flyovers and underpasses early on in the life of a highway project rather than tagging them on later. It is also looking to make installation of CCTVs mandatory at the construction stage itself to monitor the progress of highway projects as per specifications and terms of agreement.Why it’s important: These moves could make dangerous Indian roads safer for users. It would add to the project cost that could mean longer periods of collecting tolls or higher government compensation.
