GDP of India Likely to Grow at Around 7% in FY20, Paytm Mall Detects Cashback Fraud Worth c. INR10cr, Trump to Propose Merit-Based Immigration et al.

GDP of India likely to grow at around 7% in FY20, as per CEA Krishnamurthy Subramanian. IndiGo headed for NCLT as differences arise between promoters. Jet Airways lenders and Etihad offer Hinduja Group stake in the grounded airline. ED expands probe in Chanda Kochhar-Videocon-ICICI loan case. Paytm Mall detects cashback fraud worth c. INR10cr. Kerala lists masala bonds on London Stock Exchange's International Securities Market. Amazon invests in British food delivery startup Deliveroo. Donald Trump set to overhaul immigration system, to propose merit-based immigration; to replace Green Card with 'Build America' visa. China plans to increase levies on $60bn in US imports. 

 

Moving on to the top Business news of the week.

 

 ECONOMY 
 

Retail inflation hits six-month high of 2.92% in April. WPI inflation slips to 3.07% in April. GDP likely to grow at around 7% in FY20, as per CEA Krishnamurthy Subramanian.
 

 

Invest in Inflation..It’s the Only Thing Going Up!: India's inflation based on Consumer Price Index (CPI) or retail inflation touched a six-month high in April to 2.92% vs 2.86% in March on back of spike in food prices, including vegetables, meat, fish and eggs. This is below the RBI target of 4 (+/-2) per cent.

 

The previous spike was recorded in October 2018, when the rate was 3.38%. 
 

 

Chart: India Consumer Price Index (CPI) trend here.
 

 

Some Highs, Some Lows: India’s wholesale price-based (WPI) inflation slipped to 3.07% in April vs 3.18% in March and 3.62% in April 2018 on cheaper fuel and manufactured items, even as prices of food articles remained high.
 

 

Vegetables inflation was at 40.65% in April, up from 28.13% in the previous month. Inflation in food articles basket was 7.37%, up from 5.68% in the previous month. Inflation in ‘fuel and power’ category cooled to 3.84%, from 5.41% in March. Manufactured items too saw easing of prices with inflation at 1.72% in April, against 2.16% in March.
 

 

Chart: India Wholesale Price Index change here.

 

Candid: In an interview with Business Standard, CEA Krishnamurthy Subramanian projects India’s gross domestic product (GDP) growth for 2019-20 to be around 7%. He adds that the next government should focus on capital, labour and land reforms, and that the debate on the accuracy of the official data is misinformed.
 

 
Read the excerpts from the interview here.
 
 
  

 AVIATION 

 
IndiGo headed for NCLT as differences arise between promoters. To introduce low cost business class, one-stop flights to Europe. Jet Airways lenders and Etihad offer Hinduja Group stake in the grounded airline. 
 
 
We Need to Talk: Private carrier IndiGo is likely to approach the National Company Law Tribunal (NCLT) for resolving differences that have arisen between major shareholders Rahul Bhatia and Rakesh Gangwal regarding clauses in the shareholders’ agreement and the airline's expansion strategies, amongst others. 
 
 
FYI: Rahul Bhatia and Rakesh Gangwal, along with other promoter entities hold about 75% in InterGlobe Aviation Ltd., the listed company that runs IndiGo.
 
 
Bhatia and Gangwal have hired law firms JSA Law and Khaitan & Co, respectively, for dispute resolution.
 
 
Keep Calm: Amidst this confusion, Ronojoy Dutta, CEO, InterGlobe Aviation, in an email to his employees on Thursday wrote that the growth strategy of IndiGo remains unchanged and the airline's management has full backing of the company's board of directors to implement it.

 
 
Laying the Net: Budget airlines, Indigo is planning to introduce a low-cost business class to lure more travelers, especially for the
Europe- Asia market.
 
 
One-Stop Shop: IndiGo which now flies to Istanbul in its longest route, is aiming to start one-stop destinations to Europe within six Months.
 
 
IndiGo currently flies to 53 domestic and 18 international destinations and plans to deploy about half of its new capacity on international routes. It wants to operate one-stop flights to cities like London from New Delhi, while flying non-stop to countries like China, Vietnam, Myanmar and Russia.
 
 
A Share of the Pie: Lenders to Jet Airways and its second-largest shareholder Etihad Airways have approached the Hinduja Group offering a stake in the grounded airline.
 
 
The Hinduja Group which runs businesses in sectors ranging across automotive, oil & specialty chemicals, media, IT, power, healthcare and real estate is non-committal on Jet, but will keep its options open.
 
 

 FRAUD 

ED expands probe in Chanda Kochhar-Videocon-ICICI loan case. Paytm Mall detects cashback fraud worth c. INR10cr.

Expansion: ED has expanded its probe into a total of 24 loans, against Chanda Kochhar, aggregating to INR7,862cr, which are believed to be “illegally and criminally” loaned by the bank to the conglomerate when she was in charge between 2009 and 2018.
 
 
As per the ED, fresh loans or renewal of loans, guarantees — worth INR7,862.20 crore were sanctioned by the private bank to Videocon Group companies between May 2009 and June 2017.
 
 
Some of these loans were as high as INR2,870cr.
 
 
Fraud: Following an audit conducted by E&Y, Paytm Mall has reportedly unearthed a cashback fraud of INR10cr. Subsequently, it has fired 10 employees and delisted 100 vendors.

 

 

 DEALS 

Kerala lists masala bonds on London Stock Exchange's International Securities Market. Amazon invests in British food delivery startup Deliveroo.

 

In a First: Kerala has become the first sub-sovereign entity to access the international market by listing masala bonds issued through its off-budget mechanism, the Kerala Infrastructure Investment Fund Board (KIIFB). 
 
 
The bond, with a five-year tenor and a 9.723% coupon, has been admitted to London Stock Exchange's International Securities Market (ISM).
 
 
Leading the Pack: Online retail giant, Amazon is leading a $575m investment in fast-growing food delivery service Deliveroo, taking the total amount that Deliveroo has raised thus far to $1.53bn.
 
 
Other participants include existing Deliveroo investors T Rowe Price, Fidelity Management and Research Company, and Greenoaks.
 
 
What’s the Plan?: This new investment will help Deliveroo to grow and to offer customers even more choice, tailored to their personal tastes, offer restaurants greater opportunities to grow and expand their businesses, and to create more flexible, well-paid work for riders.
 
 
Previously: Since its London launch in 2013, Deliveroo has expanded into 500 towns and cities across Europe, Asia, Australia and the Middle East.
 
 
 
 US 
 
China plans to increase levies on $60bn in US imports. US escalates battle against Huawei Technologies. Places Huawei and 70 affiliates on US trade blacklist. Donald Trump set to overhaul immigration system, to propose merit-based immigration; to replace Green Card with 'Build America' visa.
 
 
Cat Fight: China plans to increase tariffs on $60bn in US goods already subject to levies, increasing most of them to 10%, 20% and 25% from levels now at 5% and 10%, starting June 1.Higher tariffs would be imposed on a range of US goods including frozen vegetables and liquefied natural gas. 


The news comes shortly after US President Donald Trump ordered his top officials to begin the process to raise tariffs on almost all the imports from China, amounting to about $300bn. This is in addition to the Chinese imports worth $200bn on which Trump increased the import duty from 10% to 25%.
 
 
Escalating: The Trump administration has escalated its battle against Huawei Technologies with a pair of actions that threatens to both cut the Chinese telecommunications giant off from American suppliers and ban it from doing business in the US.
 
 
US President Donald Trump has signed an executive order that enables the US to ban telecommunications network gear and services from “foreign adversaries.” 
 
 
While the order does not name any countries or companies, officials and industry executives believe that its targets likely included Huawei and its Chinese rival ZTE Corp., whom US officials believe are beholden to the Chinese government.
 
 
Shortly afterward, the Department of Commerce said it had put Huawei and 70 affiliates to its so-called “Entity List” - a move that bans the telecom giant from buying parts and components from US companies without US government approval, essentially forbidding it from doing business with American companies.
 
 
The dramatic move comes as the Trump administration has aggressively lobbied other countries not to use Huawei equipment in next-generation 5G networks fearing Huawei’s collusion with the Chinese government and amidst concern of national security threat to the US. 
 
 
Merit Over Rank: In a major policy speech Thursday, US President Donald Trump is all set to announce a new proposal to overhaul the country's immigration policy that would give preference to foreigners based on merit rather than the existing system that gives preference to family ties.
 
 
The new plan would focus on reducing family-based immigration to the US in favor of employment-skill-based immigration.
 
 
As of now, about 66% of the green cards are given to those with family ties and only 12% are based on skills.
 
 
Such a move is likely to benefit hundreds and thousands of Indian professionals on H-1B visa whose current Green Card wait, on an average, is more than a decade.
 
 
Crystal Clear: As part of the plan to transform the nation’s green card system to ‘pro-American, pro-immigrant and pro-worker’, Trump has said that he will replace the existing green cards with 'Build America' visa.
 
 
Every year, the US issues nearly 1.1 million green cards, which gives foreign nationals life-time permission to live and work in the US and a path to citizenship in five years.
 
 
A Surefire Failure: However, many vehemently voiced their dissatisfaction with the proposal commenting that the White House has repackaged the worst of its past failed immigration plans. 
 
 
“This is not designed to be a serious policy proposal – it’s a message document that’s a misguided attempt at political posturing. To say it’s dead on arrival would be generous”, warned Pili Tobar, the Deputy Director of America’s Voice, a group that advocates for immigrants’ rights.
 
 
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