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


Reserve Bank hikes repo rate by 35 basis points, fight against inflation not over

The battle against inflation is not over, Reserve Bank of India Shaktikanta Das said after the monetary policy committee raised the repo rate by 35 basis points. One basis point is a hundredth of a percentage point. With the latest hike, the policy rate has touched 6.25 per cent after three straight rate hikes of 50 basis points each in June, August, and September. Das flagged risks from high and sticky core inflation and exposure of food inflation to global factors, along with the impact of adverse weather conditions.

Why it’s important: The Reserve Bank has not softened its hawkish stance on monetary policy due to persistently high inflation. This indicates rates could rise further, although at a slower pace.

Government to invest 30 per cent more on infrastructure in upcoming budget

The central government plans to keep its focus on infrastructure growth in the upcoming budget by allocating 30 per cent more funds for the highways ministry to speed up construction to more than 50 km of highways every day. The budget allocation for the ministry is expected to reach a record Rs 2.5 lakh crore in the year starting March. The government’s budgetary allocation for 2023-24 will build on a record 52 per cent rise in the ministry’s budget during the current financial year to about Rs 2 lakh crore compared with the preceding fiscal year.

Why it’s important: Since the majority of the funds will be used to build highways, it will will have a positive impact on the economy by improving business transit, creating construction jobs, and increasing demand for raw materials like cement and steel.

Consumer multinationals plan big investments in India in 2023 despite global slowdown

Although the global economy is facing a demand slowdown, nearly a dozen multinationals, including Nestle, PepsiCo, Pernod Ricard, Mars-Wrigley, Coca-Cola, Mondelez, L’Oréal and Anheuser-Busch InBev are planning to increase investments in India, spend more in the country and continue hiring more staff in the operating plans for 2023 as they have identified India as among the few markets where demand if growing. The focus on India comes at a time when many companies have announced downsizing operations in Western markets to cut costs amid inflationary pressures.

Why it’s important: The plans to boost investment in India shows the country’s economic resilience. India continued growth amid global headwinds is an exception in emerging markets.

High interest in IDBI stake sale as 9-10 potential bidders raise queries

The Department of Investment and Public Asset Management has received as many as 167 queries from at least 9-10 potential serious bidders about the proposed stake sale and transfer of management control in IDBI Bank. At least three private equity firms, one foreign bank, and a couple of alternative investment funds have sought clarity, apart from some home-grown firms, on the proposed deal. The government had on October 7 invited bids to privatize IDBI Bank. The Centre and LIC will sell a cumulative 60.72 per cent stake in the state-owned bank.

Why it’s important: The high number of queries to seek clarity shows a strong interest in the proposed divestment. The government expects to invite financial bids by March and the deal is expected to be closed by the middle of the next financial year.

Byju’s looks for easier terms to repay $ 1.2 billion in loans as losses keep climbing

Indian online education provider Byju’s is looking to restructure its $ 1.2 billion loan as it struggles with steep losses and cost-reduction targets. India’s most valuable startup, currently valued at $ 22 billion, has appointed an adviser to discuss easier terms for its loans with creditors. Discussions on more lenient terms, including lower coupon and more time to repay, are continuing and no final decision has been reached.

Why it’s important: Excessive cash burn has cut short the high growth trajectory of Byju’s, which was among the clutch of startups that thrived on overseas investments. Growing losses is causing concerns among creditors on its ability to repay.

Reliance, Ashok Leyland in discussions for truck engines running on hydrogen

Reliance Industries is in advanced talks with Hinduja-owned truck and bus maker Ashok Leyland for the development and supply chain of hydrogen-powered engines. Leyland will retrofit an existing fleet of 45,000 trucks, which Reliance has contracted to ferry refined products and other marketing goods. Reliance is planning to produce green hydrogen at its Jamnagar refinery facility from 2025.

Why it’s important: The quest for hydrogen-powered engines is logical given the massive investments Reliance has planned to produce green hydrogen amid a strong push by the government. Expect further developments as the technology evolves.

BharatPe files criminal case against former managing director and his wife

Payments form BharatPe has filed a criminal case against its former managing director Ashneer Grover and his wife and former head of controls Madhuri Jain under Section 420 the Indian Penal Code that deals with cheating and fraud of. The matter will be heard in the Delhi high court. The development comes months after Grover, along with his wife, were ousted by the BharatPe board over misappropriation of funds.

Why it’s important: It is not usual for a co-founder of a start-up to be charged with misappropriation of funds at a company they helped establish. The BharatPe saga hold valuable lessions in the entrepreneurial ecosystem in India.

Digital rupee to be as anonymous as currency notes, says Reserve Bank

The central bank digital currency will be as anonymous as paper notes, and all relevant laws applicable to traditional cash will also apply to the new-age money that is now being tested, Reserve Bank of India has said. “So, in all respects, there is no difference in the eyes of the law; there is no difference in treatment between paper currency and digital currency,” governor Shaktikanta Das said. Deputy governor T Rabi Sankar said the regulator is looking at a technology solution to offer anonymity.

Why it’s important: The fundamental feature of cash is anonymity. The digital rupee could become popular if the authorities can ensure such transactions would maintain that basic condition.

Supreme Court asks for all relevant documents related to demonetization

The Supreme Court has reserved its judgment in a case challenging the government’s 2016 decision to ban Rs 500 and Rs 1,000 currency notes and asked the Reserve Bank of India and the central government to submit all documents on the demonetization move. The order by the apex court comes after some individuals filed a plea against the government and the central bank in regard to the decision of demonetizing from the midnight of November 8, 2016. A total of 58 petitions have been filed in the matter.

Why it’s important: The 2016 demonetization exercise was a significant economic decision that affected every citizen of the nation. Whether it stands up to the eye of the law remains to be seen.

India may prohibit import of private jets to plug a widening trade deficit

The Indian government has proposed restricting the import of private jets and helicopters, as it seeks to plug a widening trade deficit, according to a document from the aviation ministry. Any import of planes weighing more than 15,000 kg unladen as well as turbo jets are also non-essential and shouldn’t be brought in from abroad as much as is done now, according to a December 6 letter from the civil aviation ministry. The government will identify ways to “boost exports and contain a surge of non-essential imports so as to bring down the trade deficit,” the document said.

Why it’s important: The development could deliver a blow to plane makers that serve the ultrarich. Whether it would help limit the trade deficit is questionable.