MCA notifies insolvency rules for financial service providers. Govt says it won't release survey that reportedly showed consumer spending decline for the first time in four decades. Govt will ensure no company shuts operations, Nirmala Sitharaman says. RCom posts INR30,142cr loss. Twitter reveals details about its policy on banning political ads. Germany, UK and Japan narrowly avoid recession while Hong Kong's economy contracts by 3.2%. Global debt to reach record high of $255tr this year. Global oil demand more than doubled in Q3 of 2019.
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Rules-Based World: The Ministry of Corporate Affairs on Friday notified the rules for insolvency and liquidation proceedings of financial service providers. These rules, while not applicable to banks, would pave the way for the resolution of debt-laden entities like Dewan Housing Finance Ltd. (DHFL).
“The special framework provided under Section 227 of the Code for financial service providers is essentially aimed at serving as an interim mechanism to deal with any exigency pending introduction of a full-fledged enactment to deal with financial resolution of banks and other systemically important financial service providers,” Injeti Srinivas, Secretary, Corporate Affairs, said in a press statement.
More details here.
Here We Go Again: On Friday, Business Standard released leaked findings from the 2017-18 Consumer Expenditure Survey (CES). This showed that India’s inflation-adjusted average monthly per capita expenditure (MPCE) declined by 3.7% between 2011-12 and 2017-18. This number is significant because the decline was the first in four decades.
Now, it has emerged that the Ministry of Statistics and Programme Implementation (MOSPI) has decided “not to release the Consumer Expenditure Survey results of 2017-2018” in view of “data quality issues”. HT
Rewind: This is the second major National Statistical Office (NSO) report to run into such a controversy this year. Previously, two members of the National Statistical Commission resigned over delays in the release of the Periodic Labour Force Survey (PLFS) for 2017-18. This survey showed that the unemployment rate had reached 6.1% - a four-year high.
Keep the Faith: Seeking to allay mounting concerns regarding the health of the telecom sector, Nirmala Sitharaman said the government was intent on ensuring that no company shuts operations due to financial unsustainability.
"We want no company to shut their operations. We want everyone to flourish," the Finance Minister said at a press meet. NDTV
Highway to the Danger Zone: A few days ago, the CEO of Vodafone said the company’s India venture was facing possible liquidation. The Supreme Court’s recent verdict on AGR has added to Indian telcos’ already-serious mountain of debt.
The situation is indeed critical. Bharti Airtel, for example, has reportedly called lenders to raise capital to the tune of $3bn to clean its AGR dues. Its internal accruals are insufficient to clear its debts, and the mounting dues is no doubt putting huge pressure on the company’s resources. BS
Meanwhile, Reliance Communications posted a consolidated loss of INR30,142cr for July-September 2019 – again due to the implications of the apex court’s ruling. A year ago for the same period, the debt-ridden company, which is going through an insolvency process, reported a profit of INR1,141cr. ET Markets
Ban We Really Do This?: Weeks after its CEO Jack Dorsey announced that political ads on the platform would soon be banned, Twitter has finally released more details on the move, which is scheduled to go into effect from November 22.
Twitter says it defines political advertising as referencing “a candidate, political party, elected or appointed government official, election, referendum, ballot measure, legislation, regulation, directive or judicial outcome.” Ads that appeal for votes or financial support will be prohibited. The policy will also ban advocacy for or against any of those types of political content that will be prohibited in the policy. “Cause-based” ads will also be governed and restricted under the new rules. CNBC
Google Check: Google is knocking on the doors of financial services again. The tech giant will reportedly begin offering checking accounts to consumers next year as part of its push into financial services. The product – which is code-named “Cache” – will be run by Citigroup and Standford Federal Credit Union. Business Insider
Weekend Read: Speaking of Google, every minute, about 3.8mn search enquiries are typed into its search engine, prompting its empire of algorithms to shell out results on everything from the capital city of Indonesia to which celebrity is dating which other celebrity. How do these complex, impactful lines of code work, exactly? And does Google interfere in the process to control how you see your search results? Here’s an interesting deep-dive into these questions.
India’s July-September GDP numbers are eagerly awaited. With virtually all forecasts being slashed, the horizon does appear dark. But while we wait for the numbers to be released – it's scheduled for November 29 – we might want to take a step back and also learn how other major economies are faring in GDP growth – particularly the ones that reported quarterly numbers in the past week.
Germany: Europe’s (former?) growth engine narrowly avoided recession by growing at 0.1% in Q3. A second contraction in a row – which was expected to occur – was bypassed thanks to household consumption, government spending and exports. Guardian
The UK: Britain seems trapped in a rut. The good news is that, like Germany, it avoided a recession. After contracting by 0.2% last quarter, the UK’s GDP grew by 0.3% this time around. The bad news is that avoiding a recession is good news these days for London. Ah, well, Brexit means Brexit. Sky News
Japan: The world’s third-largest economy managed annualized economic growth of 0.2% for the past quarter. The numbers were positive for the fourth straight quarter, but are increasingly under strain from sluggish demand at home and abroad. Moreover, the US-China trade war and the Japan-South Korea trade war aren’t helping. Nikkei Asian Review
Hong Kong: Unlike the above three major economies, Hong Kong wasn’t as lucky. In its third-quarter, Hong Kong shrank by 3.2%, plunging the island into its first recession in a decade. The numbers – which are the worst since the Great Recession – were weighed down by the US-China trade war and the anti-government protests that have engulfed the island for months. ToI
Life and Debt: Global debt is on course to end this year at a record high of more than $255tr, as per the Institute of International Finance. This number was driven by a $7.5tr surge in the first half of 2019 – an acceleration that shows no sign of slowing, and which was driven largely by two countries – the US and China – which accounted for c. 60% of that jump.
To put these numbers in perspective, global debt will soon be more than three times the world’s annual economic output. And it will be equivalent to $32,500 for each of the 7.7bn people on the planet. Reuters
Well, Oil Be Damned!: Alongwith global debt, global oil demand has been sky-rocketing too. In Q3 of this year, global oil demand grew by 1.1mn barrels a day. In the previous quarter, this number was only 435,000 barrels a day – less than half of Q3’s number, as per the latest report by the International Energy Agency (IEA).
This surge was largely due to China, whose demand increased by 640,000 barrels a day Y-o-Y. And according to the IEA, a Y-o-Y acceleration in global growth of 1.9 million barrels per day can be expected for 2019’s final quarter. CNBC
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