No Fiscal Space for Sops in Budget 2019, Paytm in Talks to Acquire Coverfox, Crude Oil Prices Hold Steady Following Heavy Losses Last Week and Other Top Business News of the Day

No fiscal space for sops in Budget 2019. Government considers replacing fee subsidy with direct transfers, planning a national crowd-funding platform. Former partners and rivals race to fill the gap left by Jet Airways. SpiceJet receives several offers for stake in the airline. Crude oil prices hold steady following heavy losses last week. Paytm in talks to acquire Coverfox for around $120m. UPI clocks 733.54 million transactions in May 2019, down from 781.79 million in April. Blackstone to buy US warehouse assets from Singapore’s GLP in a record $18.7bn deal.

 

Moving on to the top Business news today:

 

 POLICY 

No fiscal space for sops in Budget 2019. Government considers replacing fee subsidy with direct transfers, planning a national crowd-funding platform.

 

No Space: Following a series of meetings, the Ministry of Finance has established that it does not expect tax or non-tax revenue to reach anywhere close to the targets set in the interim Budget.



Subsequently, it has concluded that there is no fiscal space for any sops in the forthcoming Budget 2019 to be announced on July 5.

Bad News: This is likely to pose a challenge to the re-elected Modi government which would perhaps have liked to reward some of its constituencies, particularly the salaried class in the first Budget of its second term.

 

The Proposal: Following recommendations by a group of experts constituted by the Ministry of Human Resource Development, formed to give shape to a five-year project - Education Quality Upgradation and Inclusion Programme (EQUIP) - to revamp higher education, the Union government is looking to replace fee subsidy across top educational institutes, like IITs, with direct transfers to students and is planning a national crowd-funding platform to assist students and institutions.

Each One, Teach One: A key proposal being considered is a nationwide movement - Each One, Teach One - urging each family to support at least one student. The donation movement will be operated on a national digital platform that will connect donors with students and institutions. The target is to raise over INR25,000cr and support over 10 lakh students.

 

 AVIATION 

 
Former partners and rivals race to fill the gap left by Jet Airways. SpiceJet receives several offers for stake in the airline.

 
Filling the Void: Former partners and rivals of Jet Airways are launching replacement routes and looking for codeshare agreements in a bid to fill the capacity void created in India due to its collapse.

 
With Jet having had a market share of around 12% on international flights to and from India in 2018, Air India is now the only Indian carrier that operates wide-body jets capable of non-stop flights to Europe and the United States.

 
Wasting No Time: Virgin Atlantic and Delta Air Lines, Jet’s former partners, have already announced new routes, with Virgin Atlantic launching Mumbai-London in October, and Delta flying from Mumbai to New York from December.

 
KLM and sister carrier Air France will boost their capacity in India by 25% in the upcoming winter, while other airlines, like Emirates, Qatar Airways and Turkish Airlines, will need the Modi government to loosen bilateral restrictions that cap flights at current levels.

 
Other former Jet partners are in talks with carriers like IndiGo and SpiceJet about new codeshare relationships. IndiGo already has in place an agreement with Turkish Airlines. SpiceJet has entered one
with Emirates.

 
Not Yet: Indian budget carrier SpiceJet has received many offers to buy into the company but will only evaluate them if they are strategic, according to Chairman and majority shareholder, Ajay Singh.
Meanwhile, he also stated that the airline has enough cash and that “now is probably not the time for a sale of stake for cash.”

 
The airline, which almost shut down in 2014, saw its shares jump over 64% this year, hovering near its all-time high on back of Jet Airways grounding, which led to an increase in capacity and market share.
 
 
 
 TRADE 
 
Crude oil prices hold steady following heavy losses last week.

 
Holding Steady: Crude oil prices held steady on Monday following last week’s heavy losses, on back of escalating US China trade war as Saudi Arabia indicated that OPEC, together with Russia would continue to manage global crude supplies to avoid a surplus.

 
Front-month Brent crude futures were at $62.02, up 3 cents, or 0.05%, above Friday’s close. Prices had dropped by more than 3% on Friday, with May recording the biggest monthly loss in six months.

 
US West Texas Intermediate (WTI) crude futures were at $53.74 per barrel, up 24 cents, or 0.45%.

 
Mounting Pressure: US President Donald Trump on Friday terminated India’s designation as a beneficiary developing nation under the key Generalized System of Preference (GSP) trade programme with effect from June 5, 2019.

 
“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets,” Trump said in a statement on Friday.

 
Gloomy Days Ahead: India is the US’s ninth-largest trading partner, and is a top beneficiary of the GSP program. The move is likely to add tariffs of as much as 7% on Indian exports of goods like chemicals, auto parts and tableware, which accounted for more than 11%, or $6.3bn of India’s total exports of goods valued at $54.4bn in 2018, according to the Congressional Research Service.

 
Read this article to know how US appears to be bullying India even as the latter is looking to raise its global profile through closer US ties and doesn’t want to be bunched together with China as trade tensions rise.
 
 
 PAYMENTS 

Paytm in talks to acquire Coverfox for around $120m. UPI clocks 733.54 million transactions in May 2019, down from 781.79 million in April.

 
Game On: Digital payments company Paytm is in talks to acquire Mumbai-based insurance marketplace Coverfox for $100-$120m in an all-cash deal.

 
The deal, if it goes through, will be the largest acquisition by Paytm, which is making inroads into the financial services segment through its subsidiary Paytm Money.

 
Gearing Up: The transaction will also see Paytm emerge as a direct competitor to the country’s largest online insurance marketplace PolicyBazaar.
 

Going Cashless: As per data released by the National Payments Corporation of India (NPCI), the government-backed real-time payment system Unified Payments Interface (UPI) has clocked in 733.54 million transactions in May 2019, 6.17% down from 781.79 million transactions in the previous month.

 
The Silver Lining: However, as per the data, while the number of transactions has reduced, the transaction value has increased from INR 1,42,034.39cr ($20.42bn) in April to INR 1,52,449.29cr ($21.91bn) in May 2019.

 
View some other important online transaction statistics released by the NPCIhere.
 
 
 ECOMMERCE 

Blackstone to buy US warehouse assets from Singapore’s GLP in a record $18.7bn deal

 
Bet on It: In what could perhaps be the biggest private-equity real estate deal, American multinational private equity firm, Blackstone Group has agreed to buy $18.7bn of US logistics assets from Singapore’s GLP.

 
The growth in the popularity of online shopping has led to an increase in the need for warehouse space by retailers seeking to expand their digital operations and cut delivery times. The sale comes amid record fundraising for private-equity real estate funds and a flurry of warehouse deals.
 

The move will help Blackstone gain 179 million square feet of warehouse assets, greatly expanding the size of its U.S. industrial footprint, the New York-based company said in a statement late Sunday.

 
Prediction: According to a new forecast released by Deloitte Center for Financial Services, the US warehousing market will cool down over the next three years on back of rising availability of real estate as as new construction outpaces demand growth.

 
In Data We Trust: In the next three years, the rate of annual demand growth likely will decline to a little below 0.9%, nearly half the level of 2018, with demand for distribution centers and other industrial real estate expected to grow by 850 million square feet from 2019-2023, as opposed to demand growth of 870 million square feet from 2014-2018. The availability of warehouse space is likely to rise 10.3% by 2023, as compared to 7% in 2018.

 
Though warehouse demand is still expected to expand as e-commerce sales grow and businesses stock up on inventory to meet consumer demand, the forecast shows the market loosening as industrial real-estate development catches up with demand.
 
 
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