India stares at first fall in direct tax collections in two decades. Ahead of the Union Budget, RBI Governor calls for structural reforms. Tesla crosses $100bn in valuation. Zomato acquires Uber Eats India. India's richest 1% have four times more wealth than bottom 70%, says Oxfam report. Government seeks ?10,000cr ($1.4bn) interim dividend from RBI. Government might allow direct overseas listing of Indian companies. Netflix share price climbs despite lower-than-expected domestic subscriber numbers.
Table of Contents
Taxing Times: Amidst a sharp fall in economic growth and cut in corporate tax rates, India’s corporate and income tax collection is likely to fall for the first time in about two decades.
The Government was targeting direct tax collection of ?13.5trn ($189.36bn) for the year ending March 31st – a 17% increase over the prior fiscal year. But as of January 23rd, the Tax Department has managed to collect only ?7.3trn ($102.39bn). This is more than 5.5% below the amount collected by the same point last year, and tax officials expect tax collections to fall below the ?11.5trn ($161.3bn) collected in 2018-19. Financial Express
This Too Shall Pass: IMF chief Kristalina Georgieva has said that the economic slowdown in India appears to be temporary and she expects the momentum to improve going ahead.
While global growth appears to be at a brighter spot than last year, she said growth is still sluggish. “We want fiscal policies to be more aggressive and we want structural reforms and more dynamism...We had a downgrade in one large market, India, but we believe that's temporary. We expect momentum to improve further going ahead." ET
The Many Have Less: Ahead of the 50th Annual Meeting of the World Economic Forum (WEF), rights group Oxfam has released its study "Time to Care", which found that the world's 2,153 billionaires have more wealth than the 4.6bn people - or 60% of the planet's population.
Regarding India, the report said the richest 1% of Indians hold more than four times the wealth held by the bottom 70% of the country's population (953m people). And the combined total wealth of 63 Indian billionaires is higher than the total Union Budget of India for the fiscal year 2018-19. Livemint
We Need Money: The Central Government has reportedly demanded ?10,000cr ($1.4bn) as interim dividend from the RBI for FY19-20 to bridge the fiscal gap. The demand comes at a time when tax receipts are dwindling and disinvestment goals are floundering even as the economy struggles through a prolonged slowdown that has dragged the GDP growth rate down to 4.5%.
The RBI is likely to take a final call on the interim dividend during its Central Board meeting scheduled for February 15th. Before that, Finance Minister Nirmala Sitharaman is expected to address the RBI’s Central Board.
BTW: This is the third consecutive year when the government has demanded an interim dividend from the Central Bank. BS
Reform and Revamp: Ahead of the Union Budget and as the country struggles through dire economic straits, the RBI Governor has called for structural reforms and more fiscal measures to revive growth and consumption.
Monetary policy, Shaktikanta Das said in a speech at St Stephen’s College, has its own limits.
Das also listed out some of the priority areas where structural reforms are necessary – food processing industries, tourism, e-commerce and startups need to be prioritised, he argued.
He also urged states to play an important role by enhancing capex, which could boost the Centre’s focus on infrastructure spending. India Today
Done Deal: After been in the works for more than an year, online food delivery and restaurant discovery platform Zomato has acquired the India business of Uber Eats in a $350m deal. The all-stock transaction will give the US-based ride-hailing company about 10% shareholding in Zomato.
Uber Eats will cease to exist as a separate brand locally and users on its platform will be redirected to Zomato’s app. In addition to this, all delivery drivers, basic information about customers, including their phone numbers and order history, will be transferred to Zomato. ET Tech
Extra Crunch: We did a quick and dirty working to determine Zomato's customer acquisition cost (CAC) from the deal. View the Twitter thread here.
For the Greater Good: "Giving 10% stake for 20% more business is worth it." That's what Deepinder Goyal, Founder and CEO of Zomato had to say about his company's acquisition of Uber Eats India, a "win-win deal" for the food delivery giant, as he put it.
Goyal said Zomato will get about 20% new users on a monthly active basis and manage 25% extra orders. "This is because we expect 80% of their business will move to us...This was a strategic acquisition for us - to grow in cities we were not strong in."
Food Makes the Money Go Round: Zomato is also in the process of closing a $350m financing round in the next 30-45 days, Goyal said. "We already have $250m...but our burn rate continues to come down. Most of [the money we raise] will be our war chest in case competitive activity spikes up again."
You can read Goyal's interview with ET Tech here.
Going Places: In a bid to enable Indian companies to access a larger pool of capital and facilitate their movement towards fuller capital account convertibility, the government is expected to allow direct listing of Indian companies abroad.
Currently, Indian companies go for the depository receipts route to tap investors globally.
This, along with the decision to reduce the corporate tax rate to 15% for new manufacturing companies is expected to help Indian companies go global and also ensure that they do not register in foreign locations such as Singapore.
As per sources, the government is planning to allow listing only in select jurisdictions, which may include the US, the UK, China, Japan and Hong Kong. ET Tech
I Have A Stream...: Netflix reported its Q4 results on Tuesday where it beat on the top and bottom lines for the quarter but gave disappointing guidance for the first quarter.It beat revenue and international paid subscriber additions estimates but domestic paid subscriber additions fell short by 39,000.
The streaming giant reported $5.47bn in revenue (vs $5.45bn expected). It added 8.33m international paid subscribers (vs 7.17m expected) while in the US it saw its subscriber base rise by 550,000 (vs 589,000 expected).
Shares of Netflix climbed as much as 2.3% in after-hours trading. CNBC
Tes-la and Behold!: Tesla's stock rose by 4.1% to push the electric vehicle maker's value past $100bn. Tesla's market capitalisation now exceeds the value of Ford and General Motors combined.
The milestone also triggers a lucrative option for CEO Elon Musk, who can now buy 1.69m shares of Tesla stock for $350.02 per share. If he sells the shares, he would make just over $371m. ET Energy
The Spotify Effect: Spotify might be in "early" talks to acquire sports and pop culture outlet The Ringer. If a deal is reached, it would give Spotify control of 30 podcasts that rake in over 100m downloads per month. This would accelerate Spotify's efforts to conquer the podcasting world - The Ringer is believed to have made $15mn through its podcasts in 2018 alone. Endgadget
Fight Another Day: Chinese telecom giant Huawei has been fighting Western governments’ criticisms of its ties to the Communist Party and allegations of spying and anti-competitive practices. And now, it may have found itself the unlikeliest of allies – the US Defence Department and Treasury Department.
Commerce officials, who were pitching for tough regulations to make it difficult for US companies to sell equipment to Huawei, have withdrawn their proposals after the Pentagon interjected. The Pentagon is apparently concerned that if US firms don’t continue to ship to Huawei, they will lose a key source of revenue, which could deprive them of capital needed to boost research and maintain a technological edge. TechCrunch
How well do you know the top news of the last week? Have a go at our TheWeekThatWas Quiz and test your wits.