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Fiscal Deficit Widens to 115% of Full-Year Target in November, JioCinema Ties Up with Disney, New Regulator for ECommerce Sector et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Dec 28, 2018 2:19 PM 5 min read
Editorial

Government considers appointment of a dedicated regulator for e-commerce sector. JioCinema ties up with Disney for content partnership. India’s fiscal deficit widens to 115% of full-year target in November. Govt plans INR1.25L crore direct benefit scheme for farmers ahead of General Elections 2019.

 

Now to today’s Top Business Stories through our End of Day Wrap Up:

 

Fiscal Deficit Widens to 115% of Full-Year Target in November, JioCinema Ties Up with Disney, New Regulator for ECommerce Sector et al.

 

CONTENT

Netflix, Hotstar and other streaming services may adopt self-censorship code. JioCinema ties up with Disney for content partnership. 

 

Code of conduct: According to an Economic Times report, streaming platforms including Netflix, Hotstar and Reliance Jio may soon adopt a voluntary censorship code that would restrict streaming of content that is banned by Indian courts, disrespects the national emblem and flag, outrages religious sentiments, promotes terrorism or violence against State etc. The code is likely to adopt a redressal mechanism that will allow viewers to send complaints in case of any violation.

 

The Why?: The development is considered to be a preemptive move against the Indian government imposing its own rules, which may be punitive in nature.

 

Zoom Out: Amazon, Facebook and Google are unlikely to opt in, fearing that the code might interfere with creative liberty and set a precarious precedent of regulating the internet. It is worthwhile to note here that the three speculated to be pushing against the code perhaps see content as secondary to their core business offering and more as a tool to augment their primary businesses. Furthermore, considering that Facebook and Google's Youtube are largely user-generated content platforms, any self-policing could be seen as counter-intuitive with meaningful ramifications to their business models.

 

Jio’s deal with Disney: JioCinema, Reliance Jio’s digital app has tied up with Disney to push content through a dedicated section on its platform from the likes of Disney, Pixar, Marvel, and Lucas film.

 

ECOMMERCE

New draft ecommerce policy to plug in loopholes that may favour giants such as Amazon and Flipkart. Govt considers appointment of a dedicated regulator for e-commerce sector. Flipkart, Amazon may consider franchise options to meet new FDI norms. 


What’s the new draft about?: As per a Business Standard report, the new draft ecommerce policy to be released next week will seek to plug in gaps in the policy released yesterday. As such, the policy released yesterday might have inadvertently favored retail giants such as Amazon and Flipkart.

 

Up Close: For instance, the new FDI rules state that an online marketplace cannot sell products from a vendor in which they have a stake. However, they do not say anything about selling goods from a subsidiary firm of a vendor. For example, Cloudtail is a joint venture between Amazon.com and Narayan Murthy’s family office Catamaran Ventures, which forms a majority of Amazon's sales. 

 

Also this: As per a Livemint article, the government is also debating the need for a dedicated regulator for the sector to ensure fair play for all.

 

What about Amazon and Flipkart?: Flipkart and Amazon may have to enter into re-seller agreements with multiple Indian companies to be able to sell their products as the new FDI guidelines prohibit platforms from purchasing more than 25% from a single vendor.

 

AUTO

Maruti Suzuki may sunset its diesel engine assembly plant in Gurgaon as it plans to leverage the growing market for eco-friendly hybrid and electric cars. 

 

Go Green: As per a Livemint report, Maruti Suzuki might either convert the diesel engine line in its Gurgaon plant to produce petrol engines or add an assembly line for petrol engines at its plant in Manesar as demand for diesel vehicles in India slumps.

 

What next?: The car manufacturer will instead tap into the ecofriendly hybrid and electric car segment, while expanding presence in the petrol and CNG segment.

 

Some perspective: It is widely believed that diesel car sales volume will witness a sharp fall with the onset of the Bharat Stage VI emission norms from 1 April 2020.

 

CONSUMER

TRAI extends deadline for migration to new framework on TV channel pricing and packaging plan. 
 

The What: TRAI has granted a month’s extension to consumers to opt for channels of their choice under there new framework (Read on to understand the details). There won't be a blackout till January 31st till February 1. The extension has been given due to the lack of awareness among consumers and a request from LCOs.

 

Perspective: The telecom regulator had recently brought about a new framework on TV channel pricing and packaging under which consumers will be able to select and pay for TV channels on an individual selection or "a-la-carte" basis (vs. a lump-sum bundled offering).

 

Up Close: A basic tier of 100 channels, hand-picked by viewers, mostly Free-to-Air (FTA) channels, at INR130 (plus taxes) will be offered, while additional pay channels can be individually picked or as part of Broadcaster's offered "bouquets", at Maximum Retail Price (MRP).

 

Fiscal Deficit Widens to 115% of Full-Year Target in November, JioCinema Ties Up with Disney, New Regulator for ECommerce Sector et al.

 

ECONOMY

India’s fiscal deficit widens to 115% of full-year target in November. Govt plans INR1.25L crore direct benefit scheme for farmers.  

 

Up Close: India’s fiscal deficit stood at INR7.16L crore at the end of November, according to data released by the Controller General of Accounts. This is 114.8% of the budgeted estimate of INR6.24L crore for 2018-19.

 

Expert opinion: The government is widely expected to miss its fiscal deficit target in the current fiscal year or else be forced to announce spending cuts in the last quarter, per a BloombergQuint report.

 

Farm woes: The government is considering relief programs for agriculture sector with special focus on a direct benefit scheme for farmers to help them meet expenses for seeds, fertilizers, pesticides and laborers.

 

Also this: Another option being deliberated by the government is “price deficiency payment”, under which subsidy would be provided in case the price falls below an MSP (minimum support price)-linked threshold.

 

The Bigger Picture: The move comes ahead of the 2019 general elections and shortly after the government lost in 3 states, primarily agrarian, in the recent elections. Implementation of these income support scheme could see the exchequer taking a hit of INR600-700bn a year, according to a Business Standard report.

 

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