Episode 167

Business News at 05:30 pm on 30th September 2022

Listen to the latest news related to business, finance, and the economy in which we talk about RBI Monetary Policy Committee repo rate hike and India’ current account deficit. Also know about Airox Technologies IPO and Piyush Goyal’s announcement of a law to decriminalise certain provisions to promote ease of doing business. Don’t forget to get your daily dose of stock market.

Today’s Latest Business News at 5:30 pm on 30th September 2022.

[Disclaimer: This transcript is auto-generated]

Let’s begin with the headline of the day. The RBI Monetary Policy Committee today decided to hike the repo rate by 50 basis points to 5.9 per cent, in-line with expectations. In the current financial year, the RBI has raised the repo rate by 190 bps. In August, the RBI MPC increased the repo rate by 50 bps to 5.4 per cent from 4.9 per cent in June. RBI Governor Shaktikanta Das said in his post policy meet address that the standing deposit facility rate and the marginal standing facility (MSF) rate were also increased by the same quantum to 5.65% and 6.15%, respectively. He added that RBI will remain focused on ‘withdrawal of accommodation’. Das emphasised that the US dollar has reached a new high. He said that the emerging market economies are confronted with challenges of slowing global growth, elevated food and energy prices, spillovers from advanced economy policies, debt distress and sharp currency depreciation.

Speaking of RBI, the Reserve Bank today also clarified that it is not against the outsourcing of recovery activities by lenders, but expects them to be undertaken on the “right side of the law”. The central bank last week barred Mahindra and Mahindra Financial Services from engaging third party agents for loan recoveries, after a video of a 27-year-old pregnant lady from Jharkhand’s Hazaribagh district allegedly being crushed to death under a tractor driven by recovery agents emerged. Referring to the action taken against Mahindra Finance, RBI Deputy Governor M K Jain told reporters that it is not intended at taking away the right of regulated entities to pursue for their recovery. “What we expect is that it should be on the right side of the law,” he said at the post-policy press conference. He added that the central bank does not expect the action to have an impact on regulated entities and made it clear that the action was against a specific entity alone.

Moving on. India’ current account deficit is likely to rise to $115 billion in July-September quarter of FY23, on the back of the revival in domestic demand, high commodity prices, Rahul Bajoria, MD & Head of EM Asia, Barclays, said. Witnessing the current trends in commodity prices, the goods trade deficit is expected to cross $265 billion by the end of this year. Given the revival in the domestic demand and the elevation in commodity prices, primarily in the energy sector, the current account deficit is expected to increase. At 2.8 per cent of GDP, the current account deficit in the first quarter of FY23 was at $23.9 billion, much higher than the $13.4 billion in the fourth quarter of FY22. Underlying the current account deficit in first quarter of FY23 was the widening of the merchandise trade deficit to US$ 68.6 billion from US$ 54.5 billion in Q4FY22 and an increase in net outgo of investment income payments, RBI noted. The widening of the current account deficit in April-June 2022 was led by a steady yet continued increase in the goods trade deficit.

Next up, IPOs. Medical equipment manufacturer Airox Technologies has filed preliminary papers with capital markets regulator Sebi to raise Rs 750 crore through an initial public offering. The IPO is entirely an offer-for-sale of equity shares by promoters — Sanjay Bharatkumar Jaiswal and Ashima Sanjay Jaiswal, according to the draft red herring prospectus. Under the OFS, Sanjay and Ashima will offload equity shares worth Rs 525 crore and Rs 225 crore respectively. According to the draft papers, Airox Technologies, manufacturer of oxygen generator, has a market share of 50-55 per cent, in terms of operational private hospital PSA medical oxygen market, as of fiscal 2022, according to the draft papers.

In other development, Commerce and Industry Minister Piyush Goyal on Friday said the ministry is working on a law to decriminalise certain provisions to promote ease of doing business. A bill in this regard is expected to be introduced in the forthcoming winter session of Parliament, he added. The minister urged the industry to “quickly” give feedback on reducing compliances and decriminalising unnecessary sections. Goyal while addressing PHDCCI’s Annual Session 2022 said that the govt needs feedback quickly because, in the winter session, they are proposing to come out with a very holistic amendment to the laws related to businesses to ease the burden, and reduce compliances.

Lastly, the stock market. Domestic equity market benchmarks BSE Sensex and NSE Nifty 50 snapped their 7-day losing streak and ended nearly 2 per cent up on Friday, as investors cheered the RBI rate cut announcement. BSE Sensex ended at 57,427, up 1,017 points or 1.8 per cent. The NSE Nifty 50 ended at 17,094, up 276 points or 1.64 per cent.

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Business News at 05:30 pm on 30th September 2022