US Federal Reserve hikes rates sharply to counter soaring inflation
The US Federal Reserve raised its target interest rate by 0.75 percentage point to stem a disruptive surge in inflation in that country and projected a slowing economy and rising unemployment in the months to come. The rate hike was the biggest made by the US central bank since 1994.
Why it’s important: The US rate hike could spook Indian markets. The benchmark Sensex has slid about 1,800 points in the past three days amid looming fears of stagflation and volatility. Some analysts have said the rate hike is already priced in and the negative surprise would have minimal impact.
Cabinet approves 5G spectrum auction, retains high floor price
The Union Cabinet has cleared 5G spectrum auction, while retaining the reserve price recommended by the Telecom Regulatory Authority of India in April and accepted by the Digital Communications Commission. It also reserved a portion of the spectrum for private networks. The auction could start by end of July.
Why it’s important: The government has disregarded the demand by Bharti Airtel, Reliance Jio and Vodafone Idea for 90-95 percent cut in base prices to make 5G services more affordable. The telcos have also strongly opposed the idea of private networks, saying they could make business unviable for traditional operators.
WTO meet extended to attempt consensus on IPR, food security, and fishing
The World Trade Organization has extended its ministerial meeting in Geneva by another day to try and build consensus on the key issues of fishing subsidies, food security and measures to combat the coronavirus pandemic. The four-day meet was to conclude on Wednesday, but director-general Ngozi Okonjo-Iweala decided to extend it by a day to reach some agreement.
Why it’s important: India says its demands of demand of waiving trade-related intellectual property rights on vaccines and extending fishing subsidies for 25 years for developing nations are non-negotiable. The wealthy nations are resisting.
Lenders have to file more information on defaults with bankruptcy watchdog
The Insolvency Bankruptcy Board of India has amended insolvency regulations, which now require creditors to file information regarding the assets and liabilities of their corporate debtors, along with other relevant financial information while initiating a corporate insolvency process.
Why it’s important: The additional information could make insolvency proceedings smoother and also enable them to make a request to the resolution professional regarding the appointment of a third valuer.
India’s trade deficit widens to a record $24 billion in May
India’s merchandise trade deficit skyrocketed to highest-ever $24.29 billion in May, driven by a surge in gold imports during the Akshaya Tritiya festival, adding to the already high crude oil import bill amid the Ukraine war. Surging commodity prices kept merchandise imports above $60 billion for the third straight month.
Why it’s important: The high trade deficit will exert pressure in the rupee, which has already weakened to a record low against the dollar. The deficit is expected to become wider in the coming months.
Ather Energy in discussions with investment banks to explore IPO options
Ather Energy, one of India’s largest electric two-wheeler makers, has started talks with investment banks to explore the possibility of an initial public offering. It might launch a public offer at the end of the year or the beginning of the next, depending on market conditions.
Why it’s important: Market conditions are not friendly to IPOs right now. However, firms with a clear path to profitability can still pull off a successful public offer, as seen in the IPO of logistics firm Delhivery.
Tough road ahead for IPL media rights owners to recover investment and return profit
It could take four years for the winners of media rights of the Indian Premier League to bridge the gap between price and revenue. The price per match is Rs 1.18 billion if the total is divided by 410 matches to be played in five years. It goes up to Rs 1.4 billion a match if the amount paid for every package is divided by the number of matches under each.
Why it’s important: It will have to be a steep revenue chase for the rights owners and predictions of steady growth in audience numbers will have to hold true.
India seeks global action on VPNs, encryption, and cryptocurrencies
India has urged the United Nations to collectively counter the use of a slew of technologies like virtual private networks, end-to-end encrypted messaging services and blockchain-based technologies such as cryptocurrency by terrorists. The anonymity, scale, speed and scope offered to terrorists, and increasing possibility of their remaining untraceable to law enforcement agencies by using these technologies is one of the major challenges before the world, Indian officials said.
Why it’s important: The urging mirrors New Delhi’s domestic stance on the issue. In regard to cryptocurrencies in particular, The Reserve Bank has expressed strong reservations against legalizing and regulating virtual digital assets.
Home workers in India fear location bias in performance appraisals
As companies started on their first performance appraisal season with employees with different roles such as work from home, hybrid or fully work from office, those performing duties from home are concerned they might lose out on increments and promotions due to proximity bias.
Why it’s important: Although companies said they are taking stepping to proactively counter the proximity bias, human resources experts said it’s a grey area. The future of remote work in India will depend a lot on how this issue is resolved.
Blackstone overtakes Saudi fund in 2021 India-focused investments
US private equity firm Blackstone has overtaken Saudi Arabia’s sovereign wealth fund, Public Investment Fund, to claim the top slot among private equity and sovereign funds in terms of investment in India in 2021. Blackstone invested $4.9 billion in India in 2021, compared with the $3.3 billion invested by PIF, according to the 2022 India Private Equity Report by Bain Capital. In 2020, with investments of $1.6 billion, Blackstone was eighth in the pecking order.
Why it’s important: India has been a favored destination for high-risk investments in new enterprises and Blackstone wanted a piece of the pie. It seems to have succeeded.