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Jan 1, 1970 12:00 AM 2 min read
Editorial

AUTO

Bajaj Auto MD blames overproduction and stocking for auto crisis, no need for GST cut.

A Twist in the Tale: Rajiv Bajaj, Managing Director, Bajaj Auto recently opined that the slowdown in the auto sector was largely due to “overproduction and stocking” by companies. Economic slowdown, which was considered the primary driver, in fact, has a very small factor to play. Subsequently, he goes on to say, that there is no need for a cut in GST rates.
 
Bajaj goes on to say that the industry is now rapidly correcting the stock levels for Bharat Stage-VI emission norms and the problem will be sorted by November. 
 
The statement comes days before the GST Council is scheduled to meet on September 20 when it is expected to take a call on the industry’s demand for a cut in goods and service tax on automobiles.
 
Automobile sales have declined by over 30% in certain categories during July and August.
 
Nodding in Agreement?: Along similar lines, a report by Swarajya argues why GST cut may not be the answer for the slump in the auto sector. Read the report here know wherein lie the real problem and what can be done to boost growth.

 

HOUSING

HDFC mulls linking loans and liabilities to external benchmarks.

The What: India’s largest mortgage lender, Housing Development Finance Corp (HDFC) is considering linking its loans and liabilities to external benchmarks
 
The Why: The move is likely to protect interest margins, noted Vice Chairman Keki Mistry. For liabilities, it may engage in aggressive trades in interest-rate swaps, a market mechanism in which a trader exchanges fixed-rate payments for floating rates.
 
Zooming Out: The development comes shortly after the Central Bank last week mandated that banks should link home, auto and micro, small and medium enterprise (MSME) loans to external benchmarks such as the repo rate. Interestingly, however, the RBI has made no such announcement for housing finance companies. 
 
The RBI recently released a Committee report on recommendations for enhancing efficiency and transparency of securitisation transactions. Read the document here