GDP advance estimates see GDP growth for FY19-20 at 5%. India plans to cut spending to curb fiscal deficit. Hyundai teams up with Uber to develop electric air taxis. Xerox secures $24bn funding for the hostile takeover bid of HP. Facebook says it will remove deepfake videos as US election approaches.
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We Don't Spend Anymore: The government will reportedly reduce spending for the current fiscal to curb the deficit as it battles a major tax shortfall, decreasing private investment, and the slowest GDP growth in six years.
The spending squeeze could be as much as ?2tr ($27.82bn), which would be a c. 7% cut in total spending planned for the year.
Meanwhile, the revenue shortfall stands at around ?2.5tr ($34.71bn). As of November 2019, the gap between the government's revenue and spending was already 13% higher than the full-year target.
And the initial fiscal deficit target was 3.3% of GDP; this was missed and now the government is looking to keep it under 3.8% for the year. Additional borrowing of ?3,000-5000cr could also be announced to match the revised fiscal deficit. ET Indicators
Lock Your Wallets: Last month, the Department of Economic Affairs asked government departments to spend only 25% of their yearly allotted amount in the January-March quarter. The norm is 33%. The difference between these two percentage figures amounts to ?2.23tr ($30.96bn), which is what the government is seeking to compress with its spending cuts.
What does this mean? Maintaining deficit targets will be a squeeze on individual departments and ministries. This is particularly bad news for those that haven't yet spent much of their initial allocations.
The Agriculture Ministry, for example, had spent 49% of its budgeted expenditure as of November-end (last time, this figure was 70%). Assuming it spent 60% of its budget till December-end, it won't be able to utilise all of the remaining 40% till March because of the Finance Ministry's 25% cap. BS
This Just In: The first advance GDP growth estimates for the 2019-20 fiscal were released by the Statistics Ministry today. As per the data released, India’s GDP growth during FY19-20 is expected to be 5% as compared to 6.8% a year ago. Click here to read details.
The RBI may not extend the relaxation given to banks last year to comply with its capital conservation buffer (CCB) norm of 2.5% by the end of FY20.
Good to Know: CCB is the amount banks have to set aside to absorb losses during times of stress.
The deferment of the CCB’s last tranche of an additional 0.625% from 1.875% in March 2019 to 2.5% in March 2020 had left banks with ?37,000cr of extra capital, on the back of which they could have increased lending by ?3.5trn. This headroom will not be available in FY21 unless PSBs are adequately recapitalised. BS
The RBI has granted ‘in-principle’ approval to Saharanpur-based Shivalik Mercantile Cooperative Bank to convert into a Small Finance Bank (SFB) on January 6th, making it the first such lender to have opted for the transition.
"On being satisfied that the applicant has complied with the requisite conditions laid down by it as part of “in-principle” approval, the RBI would consider granting it a licence for the commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949 as an SFB,” the regulator said. Moneycontrol
Trading Day and Night: The RBI has permitted category–I banks to offer foreign exchange prices to users at all times, out of their Indian books, either by a domestic sales team or through their overseas branches.
The move is likely to help traders hedge their bets on the domestic front. ET Markets Forex
I Challenge Your Order: The SC on Tuesday rejected the government's plea challenging a refund of ?104cr to Reliance Communications (RCom).
Hit Refresh: The Telecom Disputes Settlement and Appellate Tribunal (TDSAT), had in December 2018, asked the government to return ?104cr ($14m) to the then telecom arm of the Anil Ambani-led Reliance Group after encashing bank guarantee of ?908cr ($126m) against spectrum charges of ?774cr ($107m). The tribunal's order however, was challenged by the government. NDTV Profit
Beyond All Expectations: The government could possibly surpass its budgetary target for revenues from the telecom sector for 2019-20 by anything between ?13,000cr and ?50,000cr, depending on the review petition with the SC, which had imposed a ?1.47tr bill on telcos in the form of licence fees and spectrum user charges (SUCs).
Zooming Out: In its July Budget, the government had targeted more than ?50,500cr in revenue in 2019-20 from the telecom sector, a 28% increase Y-o-Y. An increase in revenue was expected to come from licence fees, SUCs, and deferred payment for spectrum bought earlier. BS
Your Uber is Ready to Take Off: Joining the race to develop air taxis, South Korean carmaker Hyundai has teamed up with ride-hailing firm Uber to make electric air taxis for the latter's Uber Elevate program, which aims to expand the ride-hailing giant’s reach by linking urban centers and their suburbs. Hyundai will produce and deploy the vehicles while Uber will provide aerial ride-share services.
For Some Perspective: The development comes at a time when global players like Germany's Daimler, China's Geely Automobile and Japan's Toyota have already made investments in air taxi tech.
Hyundai will unveil a concept electric aircraft developed with Uber at the Consumer Electronics Show in Las Vegas this week. The electrically powered personal air vehicle (PAV) will have the capability of carrying up to four passengers on trips of up to 60 miles at speeds reaching 180 mph.
Uber Elevate has already signed up more traditional aerospace partners such as Embraer, Bell and Boeing subsidiary Aurora for the project. CNBC
Tested by Fire: Xerox has reported that it has secured $24bn funding for its $33bn takeover bid of larger rival HP, despite HP's attempt to block the deal. Citi, Mizuho and Bank of America have agreed to back Xerox.
Blast From the Past: Xerox on November 5th made a cash-and-stock bid for HP, whose market value has since risen to almost $30bn, which is nearly four times Xerox’s size. HP rejected the bid as too low and not in the best interests of its shareholders. It also cast doubt on whether Xerox would be able to raise the cash portion and whether the combined company could handle the amount of debt it would likely require. Forbes
Extra Bite: Former Chairman and CEO of Nissan Carlos Ghosn recently pulled off the seemingly impossible. He somehow evaded round-the-clock manned and video surveillance and heavy restrictions on his freedom of movement to flee Japan for Lebanon. And he did all this with the help of a box! Click here for the entire scoop.
Fighting Fakes: Facebook has said that it will remove deepfakes and other manipulated/edited videos from its social media platform.
This will include media by technologies like AI that “merges, replaces or superimposes content on to a video, making it appear to be authentic”. However, it will "not extend to content that is parody or satire, or video that has been edited solely to omit or change the order of words”.
The California-based company's announcement comes ahead of the US Presidential election, which will be held this November. Reuters
Background: Facebook has been consistently under fire by both major political parties in the US over the issues of fake news, fact-checking political ads, and online censorship. As election season heats up, it will likely find itself under Congressional and regulatory fire more often.
On the Other Side of the Planet: US and European regulators have been frequently at odds with Big Tech firms like Facebook, Google and Amazon in recent months. Chinese regulators are no different - except that the firms they're targeting are domestic players like Alibaba, Tencent and ByteDance, among others.
A Little Bit of History: China's Anti-Monopoly Law was enacted in 2008. But Beijing had been frequently accused of implementing it unevenly to the detriment of foreign companies. As the Trump administration has rallied against the Communist Party's selective practices, the latter has sought to pacify American complaints in order to secure a trade deal to end the ongoing trade war.
And Now, This: China has published proposed revisions to its Anti-Monopoly Law. These revisions have for the first time included the internet industry under the antitrust ambit, giving regulators the power to rein in the country's dominant internet giants. The proposed new rules say companies could be fined as much as 10% of their revenue or a maximum of $7.2m if found in violation of the law. BBG
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