Budget 2019 highlights. Sensex tanks 395 pts as it fails to cheer investors. Urijit Patel criticises RBI and government for not tackling NPAs pre-2014. Banking system performance improves as gross NPA ratio dips. Antitrust investigation launched against Maruti Suzuki over discount control practices. Yes Bank acquires 9% stake in Eveready. SoftBank plans to invest $2-4bn more in India. Telecom Minister says package being worked out for BSNL and MTNL. Samsung expects profits to plunge 56% for Q2. US government responds to Huawei’s lawsuit against it. As Christine Lagarde is poised to head the ECB, the race to succeed her at the IMF begins.
Moving on to the top Business news of the day.
Finance Minister Nirmala Sitharaman presents Budget 2019. Sensex tanks 395 pts as it fails to cheer investors.
Budget For New India: The Finance Minister of India, Nirmala Sitharaman presented the Budget 2019 in the parliament today. Here are some of the highlights of Budget 2019:
- An expenditure of INR70,000cr to be provided to Public Sector Banks (PSBs) in order to boost capital
- To resolve the issue of Angel Tax the startups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium.
- Additional Income Tax exemption Of`1.5 Lakh On Interest Paid On Loans for electric vehicles
- Government considering increase in FDI in aviation, media
- It proposed to enhance surcharge on individual income of INR2-5cr and over INR5cr by 3% and 7% respectively
- Custom duty on gold and other precious metals increased from 10% to 12%
- PAN, Aadhaar will now be interchangeable for filing of income tax returns
- To merge NRI portfolio with FPI route
- One nation, one card for seamless mobility
A deep dive into the Budget here.
Domestic indices plunged today as Union Budget 2019 failed to cheer investors. Even though the markets opened higher with the benchmark S&P BSE Sensex zooming past the 40,000 mark to hit 40,032, the index fell over 500 points from the highs.
The S&P BSE Sensex closed at 39,513.39 (-0.99%).
Urijit Patel criticises RBI and government for not tackling NPAs pre-2014. Banking system performance improves as gross NPA ratio dips.
Patel Lets Loose: Former RBI Governor Urijit Patel has come down heavily on the failure of the central bank and government to identify NPAs before 2014.
Patel remained tight-lipped during his tenure but let it all go in a recent presentation at Stanford University. He said the regulator failed to acknowledge and fix PSBs’ inability to deal with NPAs and also to restructure and cut losses in bank exposures to key sectors.
The RBI did not challenge existing assumptions and enact more rigorous tests to gauge the situation better, the former Governor alleged. He also condemned the then government for not fully playing its role as manager of the national economy and as principal shareholder in PSBs.
Finally Falling: Meanwhile, as per the Economic Survey that was tabled yesterday, the gross NPA ratio in PSBs decreased to 10.1% from 11.5% between March 2018 and December 2018.
The Finance Minister credited the Insolvency & Bankruptcy Code for this recovery and for resolution of distressed assets and improving business culture.
At the same time, however, the Survey raised concerns over tightening liquidity conditions and stress in the NBFC sector. Public equity-issued capital mobilisation declined by 81% in 2018-19 and year-on-year credit growth fell by 30%.
Antitrust investigation launched against Maruti Suzuki over discount control practices. Yes Bank acquires 9% stake in Eveready. SoftBank plans to invest $2-4bn more in India.
Shady Business: The Competition Commission of India has launched an investigation into what it describes as Maruti Suzuki’s dubious discount control practices.
The antitrust watchdog said it had received a complaint from a dealer who alleged that Maruti forces its dealers to limit the discounts they offer, effectively stifling competition among them and harming consumers. The car manufacturer, which commands a 51% market share in India, apparently also sent fake customers to probe if its dealers were offering extra discounts and if they were would penalise them.
Maruti denied the charges and said the complaint should be rescinded.
Eveready Has To Says Yes: Yes Bank reportedly bought 9.47% shares of battery maker Eveready by invoking pledged shares subsequent to loan default/breach of terms of credit facilities by the company.
Eveready is owned by McLeod Russel India Ltd. Yes Bank said this would be a one-time transaction.
Investments Galore: SoftBank Vision Fund, which has the largest pool of private capital globally, will invest $2-4bn in India over the next two years.
The Japanese group will reportedly invest in new sectors like financial services, a significant move away from its usual fund targets i.e. internet and tech companies.
SoftBank has already invested about $10bn in companies like Oyo, Paytm and Delhivery.
Telecom Minister says package being worked out for BSNL and MTNL. Samsung expects profits to plunge 56% for Q2.
US government responds to Huawei’s lawsuit against it. As Christine Lagarde is poised to head the ECB, the race to succeed her at the IMF begins.
Washington Responds: After US President Donald Trump signed a law barring American companies from selling equipment to Huawei and ZTE and stopping federal dollars flowing to the Chinese tech giants, Huawei filed a lawsuit against the US government alleging that the law was “unconstitutional”.
Now, the US government has issued its first public response in a filing in a Texas court. The government argued that the telecom companies’ was a national security risk since they could be used by Beijing to spy or disable telecom networks.
The law, the court filing stated, was the result of “years’-long analysis and a steady stream of government actions preceding it”.
The Trump administration’s statements come a week after Trump and Xi appeared to have broken an impasse and restarted trade talks. Trump had also agreed to ease restrictions on Huawei and allow American companies to sell equipment to it again – although there is still uncertainty over whether Washington will actually ease up on Huawei.
So Long, Christine: Christine Lagarde will probably soon pack her bags and head to Brussels to serve in her next stint as head of the European Central Bank. This leaves a gaping vacancy at the summit of the IMF.
There are many front-runners, and no clear favourite.
One thing that most observers are confident about is that the next IMF leader will be European. The unwritten agreement between the Washington and Brussels has always been to keep the World Bank Presidency for an American and the IMF Presidency for a European.