India’s GDP growth falls to 5% in Q1. Govt announces mega merger plan for PSBs. Fiscal deficit crosses 77% of budgeted target in first four months.
Moving on to the top Business news of the day:
RBI’s contingency funds have fallen by 15%. PMO asks NHAI to stop constructing highways.
Constricted Contingency: The RBI’s contingency fund has fallen by 15% following the excess payout to the government. The rainy day fund was INR2.32L crore in June 2018. Al year later, it stands at INR.96L crore. At the same time, in its annual report – released yesterday – the RBI affirmed that it "stands as a central bank with one of the highest levels of financial resilience globally”.
Highway to Hell: The PMO has asked the National Highways Authority of India to stop constructing highways. The reason? The road builder’s debt has exploded seven-fold in the past five years. Saying road infrastructure has become financially unviable, the PMO proposed transforming the NHAI to a road-asset management company.
India’s telecom companies hold almost INR4 lakh crore in debt. Reliance Jio could command 45% of market by 2022.
Death by Debt: As per a report by India Ratings, the total debt of the Big Three of Indian telecom – Vodafone Idea, Reliance Jio and Bharti Airtel – is a jaw-dropping INR3.9 lakh crore. That’s half of India’s fiscal deficit and twice the amount the RBI gave the government recently.
Furthermore, as the telecom wars show no sign of slowing down, the burden of investments and deep discounting will continue to mount, further weakening the liquidity profiles of these telecom operators.
Jio-h My God!: The same report also stated that Jio is slated to continue eating into the subscriber base of its rivals Vodafone Idea and Bharti Airtel. It could command almost half the market by March 2022.
India’s telecom sector was severely disrupted in September 2016 since the arrival of Jio, whose dirt-cheap data rates attracted millions of customers and forced competitors to slash their own rates in turn. Today, as it adds on average 10mn users each month, the operator is poised to control 45% of the market within the next three years.
US economic expansion reaches 10th anniversary. Q2 numbers are strong, but threats remain. Saudi Aramco eyeing Tokyo for its international listing.
Trumpian Rhapsody: The White House has likely scheduled celebratory parties all day long today. The US economic expansion has reached its 10thanniversary and growth yet again offset slowdown and recession fears. US GDP rose at a seasonally adjusted annual rate of 2% in Q2. Consumer spending and corporate profits experienced an uptick and an improving labour market has continued to bring good news for economic growth.
To be fair, however, while 2% is a solid number for a developed country, it is still down from Q1’s 3.1% and 2018’s 2.9%. Dim global growth, a slump in employment and continued trade frictions could impact US growth adversely in coming quarters.
Oil Be Right Here Waiting For You: Saudi Armaco is reportedly zeroing in on Tokyo to list its shares. London and Hong Kong were previously considered for the international listing but political uncertainties in these cities put them out of the running.
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