Business News at 10:00 am on 16th January, 2024

The Build Operate Transfer model for highway construction is back, with the National Highways Authority of India calling bids for projects entailing combined investments of Rs 31,000 crore via this route. In all, 8 key highway stretches including a greenfield access-controlled expressway are proposed to be developed in the BOT model, which has been dormant for several years due to risk aversion among private investors. The total length of highways for which bids have been invited is 517.4 km and the total project cost is expected to be Rs 30,975 crore. These projects were part of the list of 15 highway stretches of 937 km that were to be awarded under BOT this financial year.

Next up – The Reserve Bank of India’s monetary policy action may be credited for reducing core Consumer Price Index inflation in the recent months, but a sub-4% core print also denotes weak demand conditions in the country at an aggregate level, say economists. Curiously, this is also a bit at odds with the RBI’s assesment in its November bulletin that “investment demand appears to be resilient given the government’s infrastructure spending, an uptick in private capex and digitalisation.” Data released on Friday showed core CPI inflation fell to a 48-month low of 3.9% in December from 4.1% in November, while CPI inflation rose to a four month high of 5.69% from 5.55%.

In another development – Hyundai Motor India, the country’s second-largest carmaker, will invest Rs 7,000 crore in the inoperative General Motors plant located near Pune, Maharashtra deputy chief minister Devendra Fadnavis announced. Fadnavis met managing director and chief executive officer of Hyundai Motor India, Kim Unsoo along with the company’s executive director JW Ryu and other senior officials of the company on Saturday. This will be the first investment in vehicle capacity creation by the South Korea-based company outside Tamil Nadu. The General Motors plant had a capacity of 130,000 units per annum and was one of the two plants set up by the US-based carmaker in India.

Meanwhile, among the recommendations for the Interim Budget echoing through the halls of financial ministry is a proposal that could significantly impact the lives of salaried individuals – a potential expansion of house rent allowance deductions. HRA”Lets begin – The consolidated net profit of Jio Financial Services, the NBFC arm of Reliance Industries, slumped 56% quarter-on-quarter to Rs 294 crore for the December quarter due to higher expenses and lower total income. Total expenses rose to Rs 98 crore from Rs 71 crore in the July-September period. Total income fell nearly 32% to Rs 414 crore. The provision for taxation rose to Rs 88 crore for the quarter under review from Rs 86 crore in the previous quarter. The consolidated results of Jio Financial Services include those of its subsidiaries, associates, and joint ventures. These include non-bank lender Jio Finance, Jio Insurance Broking, Jio Payments Bank, and payment aggregator Jio Payment Solutions.

Moving on – While the interim Budget on February 1 may steer clear of any major changes in the tax policy, it will likely extend the sunset clause for the concessional 15% corporate tax rate for new manufacturing units beyond March 2024, sources privy to the matter said. While industry bodies have sought an extension of the one-time tax relief to new units to be incorporated for another three years, the government might opt to keep the facility open for another year only, for the time being. This is because it is keen to encourage units to implement the investment decisions without any further delay, given that the government’s ability to pump-prime the economy with its capital expenditure is limited.

In another news – The government on Monday allowed large industrial users of electricity to have their transmission lines and grid connectivity without any requirement of licence and tweaked transmission tariff norms to make it more cost-reflective. The move is expected to further reduce the losses of electricity distribution utilities, and improve their financial viability, Union power minister RK Singh said. Through a series of amendments to the Electricity Rules 2005, the government also rationalised charges for open access to electricity, a step that would help expedite the adoption of renewable energy. As per the amendments, consumers having more than a specified quantum of load will be allowed to establish, and operate dedicated transmission lines without the requirement of license.

Meanwhile, The Reserve Bank of India on Monday proposed a phased transition towards tightening regulations for housing finance companies to ensure they are treated at par with non-banking financial companies . The RBI, in a draft circular, proposed all deposit-taking HFCs raise their total liquid assets, along with unencumbered approved securities, to 15% of public deposits, from 13% currently, by the end of March 2025. HFCs will do this in a phased manner, wherein the minimum percentage will be increased to 14% of deposits by September 2024, and 15% by March 2025. It has invited comments from stakeholders by February 29. Separately, RBI also proposed that housing finance companies be allowed to hedge the risks arising out of their operations.

Next up – Ahead of the Interim Budget next month, property developers are hoping for lower interest rates on affordable housing loans and lower taxes on such properties to boost demand in the segment. The realty sector also expects the government to increase the cap on affordable housing units from Rs 45 lakh to a higher bracket depending on city size. They also want the carpet area cap for such properties to be increased from the current 60 square metre in metro cities and 90 sq m in other cities to higher limits. The affordable housing segment has been facing a double whammy from last few years while sales have taken a hit due to high loan interest rates.

Moving Forward – The domestic IT firms may still not be out of the woods in terms of improvement in spending by clients across the globe as is evident from the muted numbers reported by at least three firms – TCS, Infosys, and Wipro – during the October-December quarter. Analysts say that companies worldwide are yet to revive their IT spending and budgets are not going to pick up going ahead. Still, the shares of the IT firms, led by bellweather TCS and Infosys have been rallying since last Thursday when the earning season kicked off. According to analysts, key reason for the same is the positive sentiment exhibited by the IT companies in pushing ahead with various initiatives.

Next on Stock Market – GIFT Nifty indicated that Indian equity indices BSE Sensex and NSE Nifty 50 may see a lackluster opening on Tuesday. GIFT Nifty traded up by 8 points or 0.04% at 22,151.50 indicating a lackluster opening for domestic indices NSE Nifty 50 and BSE Sensex on Tuesday. On Monday, NSE Nifty 50 gained 202.90 points or 0.93% to settle at 22,097.45, while the BSE Sensex ended higher by 759.49 points or 1.05% to 73,327.94. The Nifty bulls maintained their momentum, propelling the index to new highs beyond the 22,000 mark. Sustaining above these levels could potentially lead the index towards the 22,500 mark