Business News at 10:00 am on 1st March, 2024

Let’s begin- The tax devolution share of states is decided by Finance Commission and no Finance Minister, not even the “wickedest” one, can tweak it in favour of one state or the other, Finance Minister Nirmala Sitharaman said at Express Adda organised by The Indian Express in Bengaluru on Wednesday. She also said more than domestic factors, external factors are a cause of worry for the economy. “The Central government has no role to play except for obeying the Finance Commission. The Finance Commission tells me ‘You give this much per month’, I have to do it. There is no way in which any Finance Minister, leave alone me, can tweak it in favour of one or the other.””
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Up next – The Securities and Exchange Board of India’s recent nudge to the mutual fund industry body, the Association of Mutual Fund in India, to sensitise fund houses to be cautious about mid and small-cap schemes comes at a time when stocks in both these segment have been rising steadily and valuations have also gone up significantly. For instance, the current price-to-earnings P/E ratio of the mid-cap index is 32.39x, higher than the ten-year trailing average of 31.05x. However, it is lower than the five-year average of 32.80x. The small-cap index’s P/E ratio, on the other hand, is at 28.41x, way below the 10-year average of 44.24x. But it is significantly higher than the five-year average of 19.29x
Moving on – In what could lead to the lower market borrowings by states in March, the Centre on Thursday released two instalments of tax devolution amounting Rs 1.42 trillion, boosting their liquidity to spend in the last month of the current financial year. “Two tax devolution instalments have been released to states on Thursday given the buoyant tax collections. One pertains to February 2024 and one instalment is in advance,” the finance ministry said. Based on the revised estimate, three instalments were expected to be released in March. With the latest release of funds, the Centre has released Rs 10.32 trillion, leaving just Rs 68,000 crore that would be released later in March.

“In other news – With the approval of three chip projects on Thursday, India is now present across the semiconductor value chain. Communications & IT minister, Ashwini Vaishnaw spoke to FE’s Jatin Grover & Rishi Raj on how the country is set to become a global hub in this area. Vaishnaw said, “Our combined capacity will be 80 million chips per day, which is quite significant. More importantly, we will now be present across the value chain – design, packaging, and fabrication. You can see that we have moved up the value chain and our learning curve have moved up. With these four, electronics manufacturing will jump from $105 billion to $300 billion in the coming years.”

“Meanwhile – The first helicopter emergency medical service accessible to common people is expected to be rolled out in March, sources told Fe. At present, though some private operators offer such services, they are prohibitively expensive and beyond the reach of the masses. HEMS Sanjeevani will be run by government agencies with direct access to the AIIMS’ helipad. The chopper will be based at AIIMS, Rishikesh. It will be used to transport patients from hilly and unaccessible areas in Uttarakhand. As per the sources, this scheme will be operational with the deployment of a single-engine helicopter fitted with one stretcher. The chopper equipped with lifesaving equipment will also ferry one medical personnel and a technical crew.

Moving ahead – Production of the food grains in the 2023-24 crop year (July-June) is estimated to decline by 6% to 309.34 million tonne, from 329 MT in previous crop year, because of decline in rice and pulses output, the agriculture ministry said on Friday. As per the second advance estimate of foodgrains production, rice output is projected to decline 123.8 MT from 125 MT in the previous crops year because of patchy monsoon rains last season.However, this projection of rice output does not include summer crop output, which will be reflected in the third advance estimate of food grains production to be released in June.

GIFT Nifty indicated that Indian equity indices BSE Sensex and NSE Nifty 50 may see a negative opening on Friday. GIFT Nifty traded lower as the index was down 20 points or 0.09% at 22,172.00 indicating a negative start for domestic indices NSE Nifty 50 and BSE Sensex on Friday. Previously, on Thursday, the NSE Nifty 50 gained nearly 31.65 points or 0.14% to settle at 21,982.80, while the BSE Sensex closed 195.42 points or 0.27% higher at 72,500.30. The key stocks to watch in trade are Adani, Tata, Paytm, Yes Bank, Adani Enterprises, Oil Companies, Dilip Buildcon, Aurobindo Pharma, One 97 Communications and Avantel among others.

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