General economy India (Photographer: Dhiraj Singh/Bloomberg)

BQuick On Jan. 31: Top 10 Stories In Under 10 Minutes

This is a roundup of the top stories of the day.

1) Ahead Of Budget, Comes Upward Revision To GDP...

The Indian economy grew faster than earlier projected over the last two years despite the twin shocks of demonetisation and the implementation of GST. The first revised estimates of national income for 2017-18, which also include second and third revisions to growth estimates for previous years, were released by the government’s statistical office on Thursday and present a sharply different picture of the economy over the last few years.

  • For 2017-18, the first revised estimate for GDP growth now stands at 7.2 percent, compared with the 6.7 percent estimated earlier. Gross Value Added, a preferred measure of economic activity, has been revised to 6.9 percent for 2017-18, compared to 6.5 percent as per the provisional estimates.
  • For 2016-17, the year demonetisation was announced, GDP growth has been revised higher to 8.2 percent, compared with the earlier estimate of 7.1 percent. This is the second revised estimate for this year.

That pushes growth in the Modi-term even higher.

2)...And Higher GST Collections Too

The government’s goods and services tax collections for December crossed the Rs 1 lakh crore-mark only the second time since it was introduced.

  • “The total Gross GST Revenue collected in the month of January, 2019 has today crossed Rs 1 lakh crore,” the Finance Ministry said in a tweet. “This has been a significant improvement over collection of Rs 94,725 crore during last month and Rs 89,825 crore during the same month last year.”
  • The finance ministry said that final figures will be published on Feb. 2, 2019, a day after the Union Budget presentation.

This comes as relief for a government whose finances are stretched.

3) NITI Aayog Joins The Jobs Debate

The NITI Aayog defended Prime Minister Narendra Modi’s record of creating jobs even as a controversy rages after two members of statistical panel quit and a leaked draft report showed unemployment rose to a four-decade high after the note ban.

  • The report published in the Business Standard newspaper, showed joblessness was at its highest in 45 years in 2017-18 was a draft and has not been finalised by the government, Rajiv Kumar, vice chairman of the government’s think tank, said at a press conference today.
  • The government decided to hold its release as it doesn’t have data for the comparable period and is still being processed, he said.
  • That may not suffice to calm the debate about the credibility of India’s data.

4) One Eye On Government Borrowings

When the government presents its final budget on Friday, economists will not only be watching planned market borrowings by the central government but also those likely to be undertaken by central public-sector enterprises.

  • Over the past five years, the burden of capital expenditure, which supports economic growth, has slowly been passed onto the balance sheets of states and public-sector firms.
  • This means that while the central government’s market borrowings alone may seem reasonable, total public sector borrowings have risen significantly.
  • Data from budget documents shows that CPSE borrowings have nearly tripled over the last five years.

Capital expenditure trends also present a telling picture.

5) Earnings: Bharti Airtel, Hero MotoCorp, Vedanta, Power Grid Corporation

Bharti Airtel Ltd.’s average revenue per user rose, suggesting a recovery may finally be in sight even as a one-time gain helped India’s second-largest telecom operator report a surprise profit.

  • Net profit declined 27.4 percent sequentially to Rs 86.2 crore.
  • The profit was due to an exceptional gain of Rs 1,413.7 crore and a deferred tax asset of Rs 716 crore during the quarter without which Airtel would've reported a loss.
  • Average revenue per user rose 4 percent to Rs 104 per month.

Here’s how Airtel plans to navigate through the Jio onslaught.

Hero MotoCorp Ltd.’s profit met estimates even as it fell the most in seven quarters.

  • Net profit declined 5 percent from the year-ago period to Rs 769.1 crore.
  • Revenue of the company rose 7.5 percent on a yearly basis to Rs 7,864.82 crore, led by higher sales volume.

The company expects the market to improve in the coming months.

Vedanta Ltd.’s profit for the December-ended quarter fell as its copper smelter plant in Thoothukudi, Tamil Nadu, remained shut in the third quarter.

  • Net profit of the miner fell 21 percent year-on-year to Rs 1,574 crore.
  • Net sales fell nearly 3 percent on a yearly basis to Rs 23,669 crore.

Copper production due to the Thoothukudi shutdown fell 77 percent.

Power Grid Corporation of India Ltd.’s profit for the December quarter met analyst estimates as the utility registered steady growth in all its segments.

  • Net profit rose 14 percent year-on-year to Rs 2,331.17 crore.
  • Revenue rose 12.8 percent to Rs 8,471.17 crore.

Operating profitability rose to a record.

6) Indian Markets’ Sharp Rise Ahead Of Budget

Indian equity benchmarks posted their best single-day gains of 2019 a day ahead of Union Budget after the U.S. Federal Reserve's dovish outlook boosted risk appetite.

  • The S&P BSE Sensex rose 1.87 percent, or 665 points, to 36,257.
  • The NSE Nifty 50 Index climbed 1.68 percent, or 179 points, to 10,831.
  • Indian markets mirrored their rally in other Asian and European markets after the Fed signalled it’s done raising interest rates for a while and will be flexible in reducing its bond holdings, a sweeping pivot from its bias toward tighter monetary policy just last month.

Follow the day’s trading action here.

U.S. stocks were mixed as investors took a pause from the biggest monthly stock rally in almost three years to digest corporate earnings and the Fed’s dovish turn.

  • The S&P 500 Index was little changed as of 9:33 a.m. in New York.
  • The Stoxx Europe 600 Index decreased 0.5 percent.
  • The MSCI Emerging Market Index jumped 1.2 percent to a four-month high.
  • The Nikkei-225 Stock Average rose 1.1 percent.

Get your fix of global market updates here.

7) How Zee Entertainment’s 37% Plunge Played Out

Shares of Zee Entertainment Enterprises Ltd. saw their worst single-day rout as they tumbled as much as 37 percent on Jan. 25.

  • The immediate trigger was said to be a report in news website The Wire that its controlling shareholder Essel Group’s name emerged in a probe linked to large deposits made after demonetisation—which the company denied.
  • But there had been an overhang on the stock because of promoter debt.
  • All of that played a part in the Jan. 25 crash, when the stock declined 27 percent.

Three trends explain what went wrong and how.

8) LTCG Only On A Fifth

Selling shares of only a fifth of Indian companies in the broader market will attract the long-term capital gains tax introduced last year as majority of scrips are trading below the cut-off price.

  • In the last budget, Finance Minister Arun Jaitley announced a 10 percent tax on gains exceeding Rs 1 lakh on shares sold after a holding period of one year.
  • The gains will be calculated from the high of Jan. 31 last year.
  • Of the 501 stocks in the Nifty 500 Index, 94 are trading above their price on Jan. 31, 2018.
  • Investors holding these shares will have to pay the levy on the gains above Rs 1 lakh.

More than 80 percent of the stocks are trading below the cut-off price.

9) Three Banks Out Of PCA

Three public sector lenders have been permitted to exit the Reserve Bank of India’s prompt corrective action framework, the central bank said on Thursday.

  • Bank of India, Bank of Maharashtra and Oriental Bank of Commerce have been allowed to exit the framework fully.
  • The three lenders were part of eleven government owned banks put under the framework in 2017 and 2018.
  • Of the three banks where lending restrictions have been lifted, two -- Bank of India and Bank of Maharashtra -- have managed to bring down their net non-performing asset ratio to below the RBI’s threshold and improve their capital adequacy.

The banks have given a written commitment to RBI to comply with norms.

10) Even ICICI Bank Is Answerable

India’s ICICI Bank Ltd. is seeking to claw back bonuses and stock options paid to departed Chief Executive Officer Chanda Kochhar. That gives shareholders of the nation’s second-biggest private sector lender some justice.

But the board should be made to hang its head in shame, writes Andy Mukherjee.

  • For more than a year, the board of directors sat on a whistleblower’s complaint.
  • Worse still, when the media started asking questions, Chairman Mahendra Kumar Sharma gave Kochhar a hasty vote of confidence in March last year.
  • Finally, when it became clear to everyone except the board that her continuing at the bank was a problem, it ordered an inquiry by a retired judge.

ICICI directors shouldn’t get a free pass from regulators.