RBI Surplus Reserve Transfer, TikTok App in Trouble, Indian Economy Slowdown News and More

RBI will release INR1.76L crore to the Union Government, which could use it to reduce fiscal deficit or provide stimulus to slowing economy.  Govt’s announcements last week brought the markets some cheer but to tackle structural slowdown, structural reforms are needed. Parle really wants you to eat more cookies. Rapido raises INR391cr in Series B funding round. Cred rakes up INR861.39cr in latest financing round. TikTok says it has exclusive rights over content on its platform, thereby bringing to question its earlier claim that it’s a social media “intermediary”. US Air Force space plane breaks previous record for longest orbital flight. Solar-powered space drones offer an alternative to satellites.

 

Moving on to the top Business news of the day:

 

 SURPLUS 
 
RBI will release INR1.76L crore to the Union Government. The government could use it to reduce fiscal deficit or provide stimulus to slowing economy.  
 

Reserve Thanks of India: The RBI has accepted the recommendation of the Bimal Jalan Panel to transfer INR1.76L crore to the Union Government. The decision could also be implemented immediately: this sum could be transferred to the government’s books as early as today itself.

 
The sum of INR1,76,051cr comprises INR1,23,414cr of surplus for 2018-19 and INR52,637cr of excess provisions identified as per the revised Economic Capital Framework.
 
 
Bridge the Gap: The decision could provide a significant breather for the Government, which could use the money to curb the fiscal deficit by 0.3pp or provide a stimulus package to reinvigorate the slowing economy.
 
 
 
 CONSUMPTION 
 
Govt’s announcements last week brought the markets some cheer but to tackle structural slowdown, structural reforms are needed. Parle really wants you to eat more cookies.
 
 
Euphoria, Come Back: The government’s announcements on Friday gave the markets a lot of cheer. Sensex and Nifty climbed to highs and NSE’s volatility index fell nearly 4%.
 
 
But the euphoria is likely to be short-lived. That’s because many economists opine the current slowdown is not cyclical but structural in nature. And to tackle structural slowdowns, structural reforms are needed, besides an uptick in global business sentiment as a whole. (Goes without saying that only one of these two things is in the government’s control.)
 
 
A Tale of Two Trends: The biscuit slowdown has been in the news of late, with Parle announcing 10,000+ job cuts and consumer demand on a downward trajectory. However, a closer look at the numbers reveals two divergent trends.
 

Parle Parlance: The first is a rural-urban divide. The reduced demand for biscuits is largely in rural areas while city dwellers are munching more these days. The second divergence is related to categories – small packs are seeing a decline while there is no such issue with premium sub-segments and bigger packs of biscuits.
 
 
 FUNDING 

Rapido raises INR391cr in Series B funding round. Cred rakes up INR861.39cr in latest financing round.
 
 
Go Go Rapido: Bengaluru-based bike taxi app, Rapido has raised INR391cr in a Series B funding round led by Westbridge Capital, making it the single largest shareholder in Rapido with 22.15% holding. 
 
 
The round also saw participation from Nexus Venture Partners, Ant Financial-backed BAce Fund, Astrend India Investment Limited, and a few others.
 
 
Fly High: Post the financing round, Rapido’s valuation soared by INR300cr with its post money valuation growing to INR1,000cr. 
 
 
Money Makes Money: Bengaluru-based fintech startup, Cred has raised c. INR861.39cr (c. $120mn) as a part of its Series B round led by fintech fund Ribbit Capital, Gemini Investments, as well as existing investor Sequoia Capital.
 
 
The total valuation of the fintech startup now stands at around $450mn.
 
 
 TECH 

TikTok says it has exclusive rights over content on its platform, thereby bringing to question its earlier claim that it’s a social media “intermediary”.
 
 
TikTok Does A Flip Flop: A few days ago, Indian social media platform ShareChat was forced to take down TikTok videos uploaded by its users after the Chinese company sent it notices claiming it had exclusive rights over its content. This has opened a can of worms for the ByteDance-owned social media platform.
 
 
Why Is This A Big Deal?: TikTok has been caught in a lot of controversy. Objectionable content on its platform, which includes child porn, have drawn the ire of officials and the judiciary (the Madras High Court even temporarily banned the app). Every time TikTok was interrogated about such content, it responded saying that since it was a social media “intermediary”, it had no control over the posted content.
 
 
But now, with claims of exclusivity, its stance as an intermediary is in jeopardy, thereby withering legal safe harbours and welcoming regulatory actions.
 
 
I Am Dis-Counting On You: The National Restaurant Association of India wrote to Swiggy, Zomato, Uber Eats and Food Panda asking them to do away with their deep discount policies, among other things.
 
 
 
 AIRBOUND 

US Air Force space plane breaks previous record for longest orbital flight. Solar-powered space drones offer an alternative to satellites.
 
 
Flying in Space: The US Air Force-operated Boeing-built X-37B space plane has spent 719 days in space as of Monday, thereby breaking its own record of 718 days.
 
 
The X-37B began its mission in September 2017. It is part of a secret programme by the US to test technologies relating to reusable spaceflight and more. There’s no crew aboard this spacecraft – it runs autonomously and can descend back to Earth and land on a runaway without pilots.
 
 
Drone Age: Speaking of non-satellites roaming above the stratosphere, solar-powered drones are really taking off. Stratospheric drones, which could unaided for months, are being developed by many private giants, including subsidiaries of Airbus, Boeing and SoftBank. These drones offer a low-cost, energy-efficient alternative to conventional spacecraft, to say nothing of easier operability and quicker deployment. But challenges remain.
 
 

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