Headlines of the Day
Domestic start-ups may move court against Google’s in-app billing system
Reserve Bank likely to raise interest rate this week, may hit pause after that
The Reserve Bank is likely to raise the cost of funds by a quarter percentage point this week, perhaps for the last time in the current cycle of rate hardening. Nine of 10 economists polled by Economic Times ahead of Thursday’s policy announcement expect a 0.25 percentage point increase. Thirteen of the 15 economists polled by Mint expect the rate-setting panel to raise the repo rate to 6.75 per cent. Eight of the 10 respondents surveyed by Business Standard expect the monetary policy committee to raise rates in the first bimonthly review for 2023-24 financial year. A majority expect a pause after that.
Why it’s important: the central bank is likely to maintain its monetary stance as inflation remains above its comfort level. Economist are expecting a pause in the monetary tightening but that would depend on whether the rate of price rise is contained.
Indian companies plan to increase capital spending, boost recruitment in 2023-24
An overwhelming majority of Indian firms are planning to increase their capital expenditure and hire more in the new financial year, according to a dipstick survey of top executives by Business Standard. They said sales have crossed the pre-pandemic levels in 2022-23. Of the 29 CEOs surveyed, 86 per cent would expand capacity in 2023-24 as they expected better sales, which saw a slowdown in the Covid years. Around 93 per cent of them plan to hire more employees in the year to March 2024.
Why it’s important: Company brass are basing their positive outlook on observations that sales are increasing, and margins would expand. Time will tell whether their optimism is justified.
Consumption may moderate in short-term as sticky inflation bites hard
Automakers consumer goods companies, electronics retailers, fast food chains and apparel companies reported subdued demand in March. Many executives cited inflation as the key concern pulling consumers back from spending freely on discretionary items, while others said recent rains in parts of northern India have slowed demand for cooling appliances.
Why it’s important: Although companies felt the heat of moderating consumer demand in March, it is unlikely to persist as the upper section of the middle class has priced in inflation and continue their discretionary spending. Overall consumption will depend on how rural demand increases.
G20 close to consensus on most issues, India champions cause of Global South, Amitabh Kant says
As the world looks to India to champion the cause of the Global South, India’s sherpa Amitabh Kant said the country is advocating a comprehensive overhaul of the World Bank and International Monetary Fund. He expressed confidence that India will be able to get all countries together on contentious issues like the war in Europe.
Why it’s important: India has staked a lot on the success of the ongoing G20 summit under its presidency. While consensus on the Ukraine crisis is unlikely, the country could steer some significant reform in the elite grouping of the world’s major economies.
Big FMCG companies join race to buy Capital Foods for an estimated $1-1.25 billion
Nestle, Kraft Heinz, Hindustan Unilever, Tata, ITC, Orkla and Nissin Foods are among the contenders for an estimated $1-1.25 billion buyout of Capital Foods, the maker of condiments, food products and ingredients under the Ching’s Secret and Smith & Jones brands. The three main shareholders of Capital Foods decided to put the company up for sale late last year.
Why it’s important: The race to acquire Capital Foods seems to be warming up as FMCG majors see value in buying the firm that sells the increasing popular ramen noodles among younger consumers in India. The high valuation may not stand though.
Japan’s Mitsubishi set to acquire 20 per cent stake in DMI Finance for around $230 million
Mitsubishi UFJ Financial Group is in advanced talks to acquire 20 per cent in New Delhi-based shadow bank DMI Finance by investing $230-240 million. A formal announcement is expected early this week. Japan’s largest lender is also negotiating an option to buy an additional 10 per cent stake in the 14-year-old finance company started by former Citi bankers.
Why it’s important: DMI was mainly engaged in secured corporate lending to builders but has shifted focus to digital lending, a market that is expected to witness rapid growth in the coming years.
Income-tax authorities send multiple orders on black money law to bear March 31 deadline
Several orders for violating India’s black money law were released in the run-up to March 31 as the income-tax office rushed to beat the deadline. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act (BMA), which came into force from July 1, 2015, aims to tax hidden wealth of Indians stashed in tax havens, banks, properties, and other assets through individual names, closely held companies and discretionary trusts and foundations. A failure to disclose offshore assets puts an entity or an individual on the wrong side of the tough statute.
Why it’s important: The latest development may lead to increased litigation as some of these entities and individuals may contend that they were not given a fair chance to respond to the tax department’s notices that preceded the assessment orders.
India Inc reactivates Covid-19 protocols as cases start doubling in 4-5 days across country
Covid-19 infections in India are doubling every 4-5 days, a top epidemiologist has cautioned. New daily Covid-19 cases, which stood at 1,500 at the end of March, have since jumped to cross 3,000. Indian companies have started enforcing stricter measures in response to an increase in the number of cases across the country. Most large entities already have elaborate Covid protocols in place, which are expected to continue. Measures taken by companies include work-from-home protocols, regular testing at office and work sites, and regular temperature checks. Mask mandates are also being enforced.
Why it’s important: The latest surge indicates that the pandemic is still far from being under control despite the return of near normalcy across society and the economy.
Domestic start-ups may move court against Google’s in-app billing system
Several start-ups in India are preparing to appeal against Google’s revised policies of service fee on in-app purchases and subscriptions. They argue that the charges are exorbitant and make any alternative billing economically unviable for them. The development comes days after the National Company Law Appellate Tribunal granted partial relief to the tech giant, reversing four of the 10 key non-monetary directives that would have forced Google to allow uninstalling of its pre-installed apps on Android devices.
Why it’s important: The latest development shows that the scrutiny of Google’s code of conduct in the Indian Android ecosystem is far from over. The tech major may have to further moderate its policies.
High rates dissuade home buyers, realty market shows signs of slowdown
India’s home loan market is showing signs of a slowdown after the central bank’s steep policy rate hikes have caused potential borrowers to be cautious and made repayment harder for existing customers. The March quarter has been slower than before, as rising interest rates made potential borrowers wary, bankers and market experts have said. The Reserve Bank has raised its benchmark rate by 2.5 percentage points since May last year to tame inflation.
Why it’s important: India’s housing market was showing signs of revival after tepid growth for many years. Higher interest rates and costlier EMIs may have dealt it another blow. Moneycontrol
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