BQuick On Sept. 25: Top 10 Stories In Under 10 Minutes
Top news, must-read stories and columns—all served up in less than 10 minutes.
This is a roundup of the day’s top stories in brief.
1. Vodafone Secures A Legal Victory
Vodafone Group Plc won an arbitration case against India’s tax demand stemming from a retrospective change in the nation’s tax law.
Vodafone International Holdings BV had initiated the proceedings in 2014, claiming that the tax liability imposed on it via retrospective amendments to the income tax law violated the principles of equitable and fair treatment under the India-Netherlands Bilateral Investment Treaty.
In an order passed on Friday, the Permanent Court of Arbitration in Netherlands found merit in the telecom operator’s arguments, and directed the Indian government to cease the tax demand, interest and penalty against the company.
Any failure to comply with these directions will engage the government’s international responsibility, the Permanent Court of Arbitration held.
The court also directed the government to reimburse 60% of Vodafone’s legal costs and 50% of the fees paid by the company to the appointing authority.
The union government said, in a media statement, that it will study the award and “consider all options".
2. RBI-Bond Markets Face-Off On Cost Of Government Debt
For the fourth consecutive time, the Reserve Bank of India failed to pull off an auction of benchmark 10-year bonds. So what’s going on? A few things, writes Ira Dugal.
These devolvements aren’t common. They typically signal stress of one kind or another.
The bids appear to be coming at a price/yield that the regulator is not comfortable accepting.
The market appears to believe that a 6% yield on the 10-year does not capture all the risks.
The RBI likely believes it does or at least wants the market to believe it does.
Hence the stand-off.
3. Sensex Recovers
India’s benchmark equity index rallied, trimming its worst weekly decline since May, even as foreign funds remained net sellers of local stocks amid a global risk-off mood.
The S&P BSE Sensex climbed 2.3% to 37,388.66, the biggest gain in two weeks, cutting its weekly loss to 3.8%.
The NSE Nifty 50 Index rose by a similar magnitude.
Infosys Ltd. contributed most to the index’s advance, adding 3.7%, while Bajaj Finserv Ltd. was the biggest winner with a 6.9% jump.
Follow the day’s trading action here.
U.S. Stocks Rise As Tech Rally Tempers Stimulus Concern
Stocks rebounded as a rally in tech shares tempered concern over an uncertain outlook for a U.S. stimulus package.
The S&P 500 rose, but was still on track for its fourth straight weekly decline -- the longest losing streak since August 2019.
The Nasdaq 100 outperformed major benchmarks.
West Texas Intermediate crude decreased 0.4% to $40.13 a barrel.
Get your daily fix of global markets.
4. S&P Affirms India's BBB- Rating
Standard & Poors affirmed India's long-term local currency debt rating at BBB-, the lowest investment grade score. The outlook remains stable.
Covid-19 crisis has exacerbated India's credit weaknesses, according to the rating agency.
The rating and stable outlook reflects India's relatively stronger long term growth, S&P added.
However, S&P foresees a permanent loss of approximately 13% of output compared with India's pre-pandemic trend.
5. Automatic FDI In Defence Is Anything But Automatic
India has allowed up to 74% foreign direct investment in the defence sector through the automatic route—without prior approval of the government. Yet, there’s nothing automatic about it.
The higher foreign investment cap requires end-to-end capabilities, starting from design and development to lifecycle support. That’s a continuation of earlier policy that allowed FDI of up to 49%.
The investments are now also subject to security clearance by the Ministry of Home Affairs.
Investments from neighbouring and unfriendly countries are unlikely to be allowed.
The new rules add one more layer of complexity for all companies.
6. Delay Tax At Source Provisions, Professionals Urge The Government
Come Oct. 1, certain businesses will have to collect an additional tax from a buyer if the value of goods sold to it exceeds Rs 50 lakh in a year.
This tax will come into play for those customers who buy goods from businesses having turnover or total sales above Rs 10 crore in the previous financial year.
The levy, however, will not apply on exports and sale of goods like alcoholic liquor, scrap, certain minerals, forest products and motor vehicles having value of Rs 10 lakh or more, along with certain items which are covered under other tax provisions.
With one week to go for this levy to be implemented, the Bombay Chartered Accountants Society has requested the Finance Ministry to delay it to April 2021 citing economic hardship caused due to Covid-19.
The BCAS has highlighted certain pitfalls arising from the new levy.
7. Farmers Across India Hit The Streets To Protest Farm Bills
Farmer bodies in numerous states came out in demonstration as part of the 'Bharat Bandh' called to protest farm bills passed by the Narendra Modi government.
In states like Uttar Pradesh, Punjab and Haryana, the farmers blocked states and national highways.
There were also rallies carried out on tractors to disrupt traffic in several districts.
Opposition including the Left front parties, Congress, Aam Aadmi Party and Samajwadi Party lent their solidarity to the farmers' agitation.
On Thursday, farmers began the three-day protest by blocking railway tracks at at least six different locations.
Follow updates from the protests here.
8. India’s Worrying Inflation Dynamics
Is the current high inflation transitory or structural?
What can we expect going forward?
What policy course should the Monetary Policy Committee set?
Rabobank’s Hugo Erken takes a deep dive to see what’s in store.
9. Bihar Heads To Polls Amid Covid-19
The Election Commission of India has announced the dates and schedule for the upcoming Bihar elections, polling for which will take place in three phases.
First phase: Oct. 28 — 71 seats
Second phase: Nov. 3 — 94 seats
Third phase: Nov. 7 — 78 seats
Counting of votes: Nov. 10
The number of phases have been reduced keeping in mind security arrangements and the festive season, among other factors.
Polling booths will be open for one extra hour so that Covid-19 positive patients too can cast their votes.
10. Signs Of Covid-19 Cases Slowing In India?
India’s total Covid-19 tally crossed 58 lakh at a time when the pace of the pandemic’s spread may be starting to slow down.
The country added over 86,000 new cases in a matter of 24 hours taking the total tally above 58.1 lakh, according to health ministry data.
After six day of authorities reporting more recoveries than fresh cases, the positive trend came to a halt today.
Track the latest updates on the Covid-19 pandemic in India, here.
The Real Death Toll
The world will officially record 10 lakh deaths from Covid-19 in the next few days, but the real tally might be almost double that.
Actual fatalities from the worst pandemic in a century may be closer to 18 lakh -- a toll that could grow to as high as 30 lakh by the end of the year, according to Alan Lopez, a laureate professor and director of the University of Melbourne’s global burden of disease group.
Even in countries with sophisticated health systems, mortality is difficult to accurately gauge.