BQuick On Feb. 19: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. The Jet Airways Resolution Math
As lenders to Jet Airways Ltd. embark upon an effort to resolve another large troubled asset, they are hoping to do it in a way that allows them to minimise the hit to their balance sheets over a period of time.
- The attempt to restructure loans given to the airline outside the purview of the Insolvency and Bankruptcy Code comes against the backdrop of delays in resolution of large stressed assets and a fear that the company would see limited interest from investors at this stage.
- On February 14, Jet Airways said that the board of the company had approved a provisional bank led resolution plan. As part of this plan, the company would issue 11.4 crore shares to lenders at an aggregate value of Re 1.
- According to two senior bankers in the know, the consortium of lenders are now engaged in discussions on how exactly to implement the plan.
- The key question in all of this is how much debt will be converted into cumulative redeemable preference shares to allow the company significant relief on interest payments.
Here’s how lenders are hoping the resolution plan will work.
2. Angel Tax Relief!
India eased angel tax norms in a big relief for startups that feared tax demands on investments could deter early-stage investors from making bets on new ventures.
- Registered startups will be exempt from tax on funding of up to Rs 25 crore compared with the existing limit of Rs 10 crore, Suresh Prabhu, minister of commerce and industry and civil aviation, tweeted on Tuesday.
- A company will be considered a startup for 10 years from the date of incorporation instead of seven, and the maximum turnover to be called a startup has been raised to Rs 100 crore from Rs 25 crore.
- The best thing about this is that there is something for everyone, Nakul Saxena, director, public policy at think tank iSPIRT, said.
There’s a clear move towards sharpening the definition of what constitutes a startup while simultaneously broadening the scope of that definition.Nakul Saxena, Director - Public Policy, iSPIRT
The relief is pretty much in-line with what startups had been asking for.
3. Dearness Allowance Hiked
The Union Cabinet on Tuesday hiked the dearness allowance for central government employees to 12 percent from the existing 9 percent rate.
- Increasing the dearness allowance for central government will cost the exchequer Rs 9,168 crore, Finance Minister Arun Jaitley briefed after the cabinet meeting.
- Over 48 lakh central government employees and 62 lakh pensioners are expected to benefit from the hike, Jaitley added.
- Dearness allowance is a cost of living adjustment paid to government and public sector employees and pensioners in India and other neighbouring countries.
4. Tax Department Seeks To ‘Examine’ Tribunal Orders Against It
A recent office memorandum issued by the Central Board of Direct Taxes has perturbed tax practitioners across the country.
- The CBDT has set up a committee of five commissioners who will examine cases where the Income Tax Appellate Tribunal has passed ‘perverse or irregular orders’.
- The committee will also examine cases where the submissions of the revenue department have not been recorded by ITAT.
- Both these issues will then be taken up with the ITAT president and Ministry of Law, as per the CBDT memorandum.
- All ITAT orders which are against the tax department are anyway examined by the chief commissioner concerned and if the outcome is not acceptable, an appeal is filed before the high court, SR Wadhwa, former chief commissioner, said.
This is tantamount to interference with the judiciary, says Wadhwa.
5. Sensex Slides For Ninth Session
Indian equity benchmark S&P BSE Sensex ended lower for the ninth consecutive trading session, registering its longest losing streak since May 2011. The 31-share index fell over 400 points from day’s high and ended 0.41 percent lower today at 35,352.
- The NSE Nifty 50 Index ended at 10,604, down 0.34 percent. The 50-stock index ended lower for the eighth day, clocking its longest losing streak since March 2015.
- The market breadth, however, was tilted in favour of buyers.
- Nine out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty Realty Index’s 1.7 percent gain.
- On the flipside, the NSE Nifty IT Index was the top sectoral loser, down 2.08 percent.
Follow the day’s trading action here.
6. GST Cut On Under-Construction Properties?
The GST Council will discuss the proposal to lower goods and services tax on under-construction properties when it meets tomorrow.
- The proposal is from a suggestion by a ministerial panel that recommended reducing the indirect tax on under-construction properties to 5 percent without allowing the benefit of input tax credit.
- A group of ministers headed by Gujarat Deputy Chief Minister Nitin Patel also suggested reducing GST on affordable housing projects to 3 percent.
- Both these proposals will be taken up at the meeting, which will be held through video conferencing.
The move will be key to wooing the electorate months before the elections.
7. Slowdown In Pharma? Not For These Drugmakers
As generic drugmakers face pricing pressure in the U.S., a crackdown on polluting industries by China has helped a breed of Indian pharma companies: the manufacturers of main ingredients that go into making a medicine.
- Most makers of active pharma ingredients—or the central compound of a drug—have seen revenues rise and margins expand in the past few quarters, according to their quarterly filings.
- That’s because prices of the key raw materials rose as China shut toxic-spewing factories, causing a supply crunch.
- Also, hypertension drug Valsartan was recalled globally because of contaminated APIs supplied from China. The developments led global pharma companies to look to diversify sourcing away from China, which may benefit Indian API firms, according to a Jefferies note.
The Indian active ingredient makers have plans to take advantage of it.
8. Pulwama Attack: Pakistan Denies, India Not Surprised
Pakistan’s Prime Minister Imran Khan said his nation would retaliate if attacked by India, following New Delhi’s strongest accusations yet that its nuclear-armed neighbor was responsible for a major terrorist attack in Kashmir.
- Khan, who has called for peace talks with New Delhi since his election victory last year, also said India was blaming Pakistan without having any evidence and promised to take action if they could hand over actionable intelligence.
- India, on the other hand, said it is not surprised that the Pakistani PM has not acknowledged the attack or condemned the "heinous act".
- It added that Pakistan’s offer to investigate the matter is a "lame excuse".
While Pakistan said it hoped "better sense prevails", India demanded its neighbour to stop misleading the international community.
9. Ruchir Sharma Identifies Biggest Risk For India
Ruchir Sharma’s new book is a high-speed, breezy drive through two decades of electoral politics. Over 25 trips, the global investor, with a motley group of journalists and some politicians, has played election tourist...to understand why India votes the way it does.
- Sharma comes away with an insight that, while not new to some, is worth the 364-page reiteration. That “India’s political DNA is fundamentally socialist and statist”.
- Expressing surprise that even a centre - right party such as the BJP has resorted to dole outs, Sharma said, in an interview with BloombergQuint, that competitive populism was the biggest threat facing the Indian economy.
If even the Modi government is doing that, a government which was supposed to be more right-of-center as far as economics is concerned, then you can imagine as to what a slippery path that could be. Because a lot of parties in the opposition, the Congress included, are pretty sort of spendthrift and quite happy to promise one thing after another.Ruchir Sharma, Author - Democracy on the Road
Here’s what Sharma thinks of the Modi government and the upcoming elections.
10. Rahul And Priyanka’s Uphill Battle In Five Charts
While Rahul Gandhi is closing the gap with PM Modi in opinion polls' leadership ratings, Amitabh Tiwari shows why Congress faces at least five serious hurdles in dislodging BJP from power. Sample a few:
- Total Congress votes have remained stagnant over three decades.
- Congress' vote share-to-seats conversion is much lower than BJP’s.
Get more of that data-rich analysis, here.