Business News at 10:00 am on 21th February, 2024

Let’s begin – The corporate sector must “get its act together” and relieve the government of capex heavy lifting, Reserve Bank of India officials have said in the February bulletin. Private companies said the article titled ‘State of the Economy’, must leverage the government’s recent decision to lower the market borrowing target in the coming fiscal to their advantage. The easing of borrowing costs has already begun in response to the Interim Budget for 2024 – 2025, driven as it is by capex and consolidation, the officials said. The advantage refers to the increased space for companies to borrow from the market owing to the lower availability of sovereign debt papers.

Next up – The government’s plan to fast-track bilateral Advance Pricing Agreement negotiations is being thwarted by the lack of the requisite expertise and manpower to conclude the process, sources aware of the matter told FE. In the FY23, the Central Board of Direct Taxes signed 32 BAPAs, and this year, the number is unlikely to be any higher, the sources said. Launched in 2012, APAs are pacts signed by two parties – taxpayer and tax administration – to determine the transfer pricing methodology for pricing the taxpayer’s cross-border related party transactions for future years and to prevent any dispute arising from it. They are effective for a maximum period of five years.
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Moving on, Finance minister Nirmala Sitharaman will meet the heads of prominent fintech firms, including payment apps and loan apps, on Monday to address their concerns following the curbs imposed by the Reserve Bank of India on Paytm Payments Bank and urge them to comply with the relevant regulations. “The minister will likely meet not just (heads of) payments banks but the broader fintech sector players,” an official said. However, PPB is unlikely to be invited to the meeting. The minister would likely ask startups, including payments banks, to follow the norms prescribed by the RBI to safeguard customers’ interests. PPB violations were related to Know Your Customer compliance and other regulatory issues.

Meanwhile, Amid the International Monetary Fund’s warning that the India’s general government debt could exceed 100% of Gross Domestic Product in the medium term, a Reserve Bank of India paper said the ratio could fall to 73.4% by 2030-31. The debt reduction would be supported by the spending on social and physical infrastructure, climate mitigation, digitalization, and skilling of the labor force, the authors of the paper, led by deputy governor Michael Debabrata Patra argued. “… we reject the IMF’s contention that if historical shocks materialise, India’s general government debt would exceed 100% of GDP in the medium-term and hence further fiscal tightening is needed,” the authors wrote in the article, the views in which are not attributable to the RBI.
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“Moving head, The Telecom Regulatory Authority of India has expressed concerns over delay or partial acceptance and rejection of its recommendations on key subjects by Department of Telecommunications and Ministry of Information and Broadcasting. In its annual report for 2022-23, the regulator said, “many of the important recommendations are still pending for decision/implementation by DoT and MIB which, if implemented, would have significant positive impact on telecommunication and broadcasting sector.” Comments from Trai assume significance in the sense that owing to technological advancements and continuous changes in the telecom and broadcasting sector, if decisions are not taken in a reasonable time-frame, the recommendations lose their relevance and that in a way defeats the whole purpose of sending recommendations by Trai.

In other news, The incentive for farmers in Punjab and Haryana in the form of “assured” purchases of key pulses at MSP haven’t found favour with the agitating farmers in the state because these might not boost their incomes significantly. The government will have to boost productivity of maize and cotton through introduction of new varieties as average gross returns on paddy far outweigh growing other crops including pulses, sources from the farming community and experts said. “Growing paddy in Punjab and Haryana is financially rewarding compared to maize and cotton as all the marketable surplus of these grains is procured by the state agencies at minimum support price,” an official said.

GIFT Nifty indicated that Indian equity indices BSE Sensex and NSE Nifty 50 may see a positive opening on Wednesday. Stocks in Focus: GIFT Nifty traded up by 31 points or 0.14% at 22,265.50 indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex on Wednesday. Previously, on Tuesday, the NSE Nifty 50 ended up by 74.70 points or 0.34% to settle at 22,196.95, while the BSE Sensex gained by 349.24 points or 0.48% to 73,057.40. The key stocks to watch in trade are DLF, Hindalco Industries, TCS, Union Bank of India, Swan Energy, Thermax, Devyani International, Ashok Leyland, Varun Beverages, and NTPC among others.