1. Reserve Bank builds gold reserves in the face of global economic uncertainty
The Reserve Bank of India bought about 10 tons of gold in the March quarter, making it one of the top five gold buyers in the three months central banks seek to diversify reserves amid economic uncertainties, bullion market experts said. The recent purchases have swelled the central bank’s total gold reserves to around 800 tons, a new record. It had earlier acquired about 27 tons between April and December 2022.
Why it’s important: The Reserve Bank has consistently bolstered its gold reserves in the past five financial years. The trend is expected to continue as the global macroeconomic situation remains uncertain.
2. Services exports at $322 billion increased a record 27 percent in 2022-23
India’s services exports shot up by a record 26.6 percent in 2022-23 to $322 billion, according to Reserve Bank data, helping close the gap with goods exports, which grew only 6 percent to $447 billion. Services imports grew 22.2 percent to $179.7 billion, resulting in a services trade surplus of $142.5 billion. With a $267 billion goods trade deficit, India ended up with a cumulative trade deficit of $124.5 billion in 2022-23.
Why it’s important: The growth of business services exports is expected to grow significantly and would help India to contain its overall trade deficit. Efforts are required for a pickup in goods exports.
3. Valuation criterion for angel tax may follow foreign exchange management law
The government may accept the valuation criterion followed under the foreign exchange management law for the angel tax on investments by overseas investors in startups. The Foreign Exchange Management Act administered by the Reserve Bank of India accepts valuation by a merchant banker registered with the market regulator using any internationally accepted pricing methodology applied on an arm’s length basis. Tax authorities may adopt a similar way to calculate and levy angle tax.
Why it’s important: The government needs to provide clarity on how it intends to determine the fair value of an enterprise that would mostly impact local start-ups. The idea of an angel tax is to prevent money laundering and should not end up as a burden to new businesses.
4. Persistent Pratt & Whitney engine troubles force Go First to file for bankruptcy
The Wadia Group has referred its budget airline Go First to a bankruptcy court in Delhi, citing increasing issues with aircraft engines made by Pratt & Whitney. The airline has halted operations for the next three days, asking the National Company Law Tribunal to decide its future course of action. Go First informed its travel partners of the shutdown, confirming the filing of an insolvency process later in the day.
Why it’s important: The development, not entirely unexpected, could mark the Wadia Group’s exit from the airline business. The insolvency process will allow it a moratorium on payments to lenders, aircraft lessors, fuel suppliers and ground handlers, among others.
5. Amazon and Samara look to offload 20 percent stake in More Retail
More Retail, owned by Amazon and private equity firm Samara Capital, is looking to divest around a fifth of its equity to external investors at a valuation of around $2 billion. The Amazon-Samara combine has approached family offices and domestic capital investors. The retail chain, the earlier part of the Aditya Birla Group, was bought by Amazon-Samara in 2019 at an estimated value of under $600 million.
Why it’s important: Amazon is integrating More Retail stores with its online grocery offering under the Amazon Fresh brand. The planned share sale comes ahead of a potential public listing of More Retail in the next year and a half.
6. State-run banks to consider consolidating overseas business at Gift City
The central government has asked public sector banks to explore consolidating their overseas business currently done through foreign branches in the International Financial Services Centre housed in the Gujarat International Financial Tech (Gift) City. The State Bank of India, Punjab National Bank, Bank of Baroda, and Indian Bank have been directed to share their detailed inputs and strategies in this regard.
Why it’s important: The need to open multiple foreign branches can be done away with if the state-owned lenders consolidated their international treasury operations in Gift City, which would potentially result in higher efficiency and cost savings.
7. Tata Steel swings to profit in March quarter, net profit declines 82 per cent
Tata Steel turned a profit in the March quarter from a consolidated loss in the three months to December as sales volumes rose both in India and Europe amid higher domestic prices. The steelmaker’s profit stood at Rs 1,566 crore compared with a loss of Rs 2,502 crore in the December quarter. Profits were, however, significantly lower compared with Rs 9,835 crore in the year-ago period. A Bloomberg consensus estimate had pegged revenues at Rs 60,629.9 crore and net income at Rs 480.4 crore.
Why it’s important: The Indian business of Asia’s oldest steelmaker has seen an improvement in margins on firmer prices. Business is likely to improve in subsequent quarters as well.
8. Foreign funds invested in Adani declined to reveal names of beneficial owners
Some overseas funds that have invested in Adani group companies have refused to identify their beneficial owners, citing client confidentiality and foreign privacy laws. The Securities and Exchange Board of India has sought ownership information from these funds as it checks for breaches of securities market rules. The regulator has requested six more months from the Supreme Court to complete its investigation into the Adani-Hindenburg matter.
Why it’s important: The market regulator may have to seek government help in ferreting out information from overseas jurisdictions. Establishing charges of wrongdoing could prove to be an uphill task.
9. Private firms to get limited access to Gati Shakti national master plan data
The Department for Promotion of Industry and Internal Trade has finalized a draft framework for sharing the Gati Shakti national master plan data with the private sector. The framework will entail details of the extent of viewing rights, as well as access rights to social and economic infrastructure-related data with a private entity. Currently, only government authorities can access the portal for detailed planning and implementation of infrastructure connectivity projects in a time-bound manner.
Why it’s important: The private sector would welcome access to the wealth of data, but the government has to consider national security and data privacy.
10. Government planning to develop a model contract for real estate transactions
The government would develop a model contract for real estate transactions that aims to standardize sale agreements, narrow expectation gaps, and boost transparency, consumer affairs secretary Rohit Kumar Singh has said. The model contract is expected to lessen the burden on Indian consumer courts, where approximately 550,000 cases are pending, many of them linked to the country’s real estate sector.
Why it’s important: In addition to streamlining real estate transactions, a model contract would allow consumers to make informed decisions.