Business News at 09:30 am on 22nd March 2023

The government may consider taxing the return on debt capital distributed by Infrastructure Investment Trusts as capital gains, rather than as income from other sources, as proposed in the Finance Bill 2023. The change could lower the tax incidence on unitholders of InvITS, as capital gains are typically taxed at much lower rates, compared with income tax at marginal rates for domestic and foreign investors. The rethink is prompted by the concerns expressed by various stakeholders, including government bodies like NHAI and PowerGrid, that the tax proposed in the Budget, could discourage future issuance of InvITs, increasingly a key instrument for infrastructure financing. According to sources, the Finance Bill, 2023 may be changed to soften the tax blow to InVITs, before it is put to vote in Parliament next week. Over to industry. In what can be termed as government’s continuing tough stance on granting any further bilaterals to foreign airlines, the civil aviation ministry has rejected Dubai-based carrier Emirates’ demand for an additional 50,000 seats per week. Under the India-UAE bilateral, airlines based in Dubai, can currently carry 66,000 passengers to and from Indian airports per week. Countries like Abu Dhabi and Sharjah have separate quotas. Similarly, Indian carriers can carry equal number of passengers to Dubai per week. This bilateral arrangement is a pre-2014 pact, which the current government sees as lopsided. Confirming the rejection of additional 50,000 seats by Emirates, civil aviation minister, Jyotiraditya Scindia told Reuters, that at this point they’re not looking at increasing it. Meanwhile, Lok Sabha member and standing committee on finance chairman Jayant Sinha on Tuesday said the Digital Competition Bill he proposes to introduce as a private member’s bill would be a “helpful input” to the proposed legislation on digital competition regulation. On the sidelines of the International Conference on Competition and Big Tech, Sinha said, quote, “The idea of this private member’s bill was always just to provide helpful input to the government. Because we have done a very elaborate and thorough examination of digital competition bills around the world… we thought it would be helpful to actually package it all together, and put together a private member’s bill that could then be an input for the government’s deliberation,” unquote. Sinha expressed confidence that the Competition Amendment Bill will be passed in the ongoing Budget session of Parliament despite the proceedings being disrupted. Next up, economy. Notwithstanding the global slowdown and the bank collapses in the US, a Reserve Bank of India article on Tuesday took the sanguine view that Indian economy might maintain the current year’s pace of expansion in the next financial year. Referring to the forecasts between 6-6.5% for the country’s GDP growth for 2023-24, the authors said the real GDP can go up from Rs 159.7 trillion in 2022-23 to not just Rs 169.7 trillion in 2023-24, as is being projected, but to Rs 170.9 trillion, if Budget proposals to boost consumption and investments are implemented. The optimistic prediction is based on the assumptions that at least 50% of the Rs 35,000 crore of tax relief proposed in the Budget is used by taxpayers for consumption and at least a third of the additional allocation of Rs 3.2 trillion budgeted for effective capital expenditure materialses. Moving on. Untimely rains in the last four days has resulted in lodging of the rabi crops, such as wheat and mustard, in Punjab, Haryana, Uttar Pradesh, Rajasthan and Madhya Pradesh which is likely to adversely impact yield and quality of crops. Experts say that harvesting of wheat and mustard is likely to be delayed because of recent rains. Rains accompanied by gusty winds and hailstorm hit several districts across the north, west, central and southern regions of the country, impacting crops which will be ready for harvest in the next 10 days or so. According to Gurvinder Singh, director, agriculture, Punjab, 0.4 million hectare out of total wheat sown area of 3.4 MH in the state has been adversely impacted by the recent rains and there is likelihood of drop in output by around 2 – 5%. Some areas under mustard cultivation have also been impacted. Lastly, some more bad news. Credit Suisse employs about 7,000 people across three Indian cities, including Pune, in technology back offices, according to reports. The merger with UBS may lead to some layoffs in these back offices in a bid to rationalise staff at Credit Suisse, one of the most influential banks in global history. In India, Credit Suisse offers wealth management, investment banking and brokerage services. Credit Suisse’s equity strategists Neelkanth Mishra and Ashish Gupta recently quit the bank to join the Axis Bank group. These posts are likely to be filled up by UBS analysts.