Central government will bear entire burden of auto fuel excise cut
Finance minister Nirmala Sitharaman said the reduction in central taxes on petrol and diesel has been in road and infrastructure cess that is not shared with states, rebutting opposition’s criticism that the move will impact states’ share in central revenues. The Centre has slashed excise duty on petrol and diesel by Rs 8 and Rs 6, respectively.
Why it’s important: Opposition leaders including former finance minister P Chidambaram had alleged that the duty cuts would reduce the share of states in central taxes. Chidambaram later retracted his statement.
Reduced fuel levy to cool retail inflation by 40 basis points in 2022-23
The central government’s move to cut excise duty on petrol and diesel is likely to ease retail inflation by up to 25 basis points from June. Its indirect impact on other items, including food prices, could lead to a reduction of 40 basis points in the current fiscal year.
Why it’s important: Retail inflation has been over 6 percent for the past few months, leading to the government taking action to bring down fuel costs. Experts have called for other fiscal measures to bring down the rate of price rise.
Government may reduce revenue spending, borrow more
The government may borrow more than budgeted for in this financial year, or reduce revenue expenditure, or do both, as the recent duty cuts and subsidy hikes threaten to upset its fiscal math. There will be a Rs 1 trillion revenue loss because of excise duty cut on auto fuels, besides an extra Rs 1.1 trillion in fertilizer subsidy outgo in addition to the Rs 1.05 trillion subsidy already announced in the budget.
Why it’s important: Growth projections has been lowered by various agencies, including the Reserve Bank. The reduced revenue collections and increased subsidy outgo are expected to drive India’s 2022-23 fiscal deficit beyond the budgeted Rs 1.6 trillion.
Market regulator to tighten disclosure norms for asset managers
The Securities and Exchange Board of India will soon announce stricter disclosure norms for asset management companies. Something like norms applicable to listed companies would be made mandatory for fund houses if fund managers are asked to exit, or the fund house or specific schemes go through some major management changes.
Why it’s important: SEBI is said to be annoyed with the way Axis Mutual Fund handled the suspension and termination of two fund managers allegedly involved in front-running.
Larsen & Toubro plans to exit road and power concessions
Engineering giant Larsen & Toubro is looking to divest its exposure to road and power concessions and incubate digital and e-commerce businesses as part of its new five-year plan ending 2025-26. The divestment will include the sale of the Nabha Power project in Punjab, an exit from L&T Infrastructure Development Projects, which includes road concessions and where the company has 51 percent stake, and de-risking from the Hyderabad Metro venture.
Why it’s important: L&T’s Lakshya 2026 plan is aimed at helping the company exit subscale businesses, concentrate on high-technology manufacturing, construction, and green energy projects, and increase its share from information technology and digital services.
Demand exceeds supply for summer products on high temperatures, resumption of normal life
Consumers are facing an unprecedented shortage of summer products from soft drinks an ice-cream to air-conditioners, amid a surge in demand, the resumption of travel, holidays, offices, schools and dining out, and an intense heatwave across large parts of the country.
Why it’s important: Companies have underestimated the surge in pent-up demand after the two-year pandemic-induced gap. They are ramping up manufacturing capacities, but the new capacities will be operational only in the next summer season.
New reporting and audit rulebook soon for special purpose acquisition companies
The government may soon prescribe a reporting and audit mechanism for special purpose acquisition companies as it looks to legalize them and allow their listing on stock exchanges. This follows several rounds of consultations and stakeholders' suggestions that the corporate affairs ministry has received on the fresh set of amendments to the Companies Act, particularly on the regulatory framework of SPACs and fractional shares.
Why it’s important: Currently, the Companies Act does not support SPAC structures as it mandatorily requires a company to be incorporated with a business object. The draft legislation to amend the law is expected to be ready by the second quarter of the current fiscal year.
Steelmaker Jindal plans defence foray, to make armoured vehicles
JSL Lifestyle, a unit of India’s largest integrated stainless-steel producer, plans to build armored and bullet-proof vehicles for the armed forces. The company is testing the prototype of the new vehicle. Once the product is approved, it will start manufacturing parts of it at a new plant near its Gurugram facility.
Why it’s important: The government is aggressively promoting self-reliance in defense and has allocated large sums and incentives to that end. The private sector is expected to step up in supplying defense products.
Salil Parekh to be Infosys chief executive for five more years
Infosys has announced that its chief executive Salil Parekh has been reappointed for a further term of five years, subject to shareholder approval. The 57-year-old will extend his run as the longest serving non-founder chief executive of India’s second-largest software exporter, which clocked $16. 3 billion in revenue in 2021-22 financial year.
Why it’s important: Parekh’s tenure has marked a return to stability and high-powered performance for Infosys, which saw revenue growth of 38 percent in dollar terms in the past three fiscal years, outshining larger rival TCS.
Battery defects, insufficient testing caused electric scooter fires: Report
The electric scooter fires that made news in recent weeks were caused by defects in their batteries, including in the designs of the battery packs and modules, according to a report by the Defence Research and Development Organisation. The report says the defects may have crept in because electric two-wheeler companies intentionally used lower-grade materials to cut costs.
Why it’s important: India aims to increase the share of electric scooters and motorcycles in total two-wheeler sales to 80 percent by 2030. However, consumer sentiment has been impacted by the nine reported incidents since last year of electric two-wheelers catching fire, including those by Ola, Okinawa, Pure EV, Boom Motor and Jitendra Electric Vehicles.