by admin | May 25, 2021 | Economy, Finance, Markets, News
Mumbai : Ahead of the Union Budget 2018-19 presentation by Finance Minister Arun Jaitley in Parliament, the key Indian equity indices on Thursday traded with appreciable gains.
According to market observers, expectation of sops from the Union Budget, along with positive Asian markets and healthy buying in consumer durables, capital goods and banking stocks, lifted investors’ risk-taking appetite.
Around 10 a.m., the wider Nifty50 of the National Stock Exchange (NSE) traded higher by 63.35 points or 0.57 per cent at 11,091.05 points.
On the BSE, the barometer 30-scrip Sensitive Index (Sensex), which reclaimed the 36,000-mark at the opening, traded at 36,188.50 points — up 223.48 points or 0.62 per cent from its previous close.
The Sensex has so far touched a high of 36,226.97 points and a low of 36,021.88 points during intra-day trade.
The BSE market breadth was bullish with 1,495 advances and 636 declines.
“Indian indices opened in the green following Asian Indices which are trading in the positive territory,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
“Fertilisers, consumer durables, automobile, oil and gas, banking are among the key sectors which will be carefully watched ahead of Budget 2018-19 to be presented by Finance Minister Arun Jaitley later today,” he added.
On Wednesday, the benchmark indices closed in the negative territory on the back of negative global cues and heavy selling pressure in healthcare, consumer durables and capital goods stocks.
The Nifty50 fell by 21.95 points or 0.20 per cent to close at 11,027.70 points, while the Sensex closed lower by 68.71 points or 0.19 per cent at 35,965.02 points.
—IANS
by admin | May 25, 2021 | Economy, News, Politics
New Delhi : Finance Minister Arun Jaitley on Thursday said India is poised to become $5 trillion economy soon from $2.5 trillion now.
“We are now a $ 2.5 trillion economy, and we are firmly on path to achieve 8 per cent plus growth soon,” Jaitley said while delivering his Union Budget 2018-19 speech here.
“From ease of doing business, our govt has moved to ease of living for the poor and middle class,” he said.
“We hope to grow at 7.2% to 7.5% in the second half of 2017-18,” he added.
—IANS
by admin | May 25, 2021 | Corporate, Corporate Governance, Economy, Investing, News, Politics
By Arun Kumar Das,
New Delhi : Overriding concern for safety, improvement in passenger amenities and big investment in infrastructure are slated to be the focus for the railways with the Modi government expecting to loosen the purse strings in its last full budget ahead of the 2019 general elections.
There is unlikely to be any fare hike or announcement of new trains. The consolidation of all major initiatives in the last three years will be reflected in the Budget 2018-19 to be rolled out on February 1.
The operating ratio (OR) is slated to be 95 per cent for the next fiscal as against the 96 per cent in the current financial year.
The financial health of the railways is determined by its OR, which indicates how much the railways spend to earn a rupee. An OR of 90 per cent means 90 paisa is being spent to earn 100 paisa.
There will be provisions for manufacturing of electric locomotives at Diesel Locomotive Works (DLW) at Varanasi and Diesel Component Works (DCW) at Patiala to cater to the growing demand of electric locos in the coming years.
Since the railways has decided on electrification of the entire rail route and phasing out of diesel locos in a gradual manner, there is a need for manufacturing of electric locos in large numbers.
The railways have registered a growth of 1.4 per cent on passenger bookings and 6.9 per cent in goods loadings till December 2017 as against the previous year.
In a major thrust to modernisation, the budget is likely to earmark Rs 95,000 crore for overall upgradation in the rail infrastructure including signalling automation, replacement of age-old tracks and other assets.
Amid the rising global crude oil prices and dipping of the GST collections, Finance Minister Arun Jaitley is expected to do a tightrope walk while presenting the Budget.
Though there are widespread expectations of the middle class for lightening of the tax burdens, the government is likely stick to its fiscal consolidation measures to curb fiscal deficit.
It is learnt that Jaitley will not spell out the every detail of the allocation for the railways but read out only operating parts that focus on major expenditure on various heads, revenue earnings and projected growth in goods and passenger sectors.
The budget is likely to witness an increase in the plan allocation from Rs 1.31 lakh crorre to about Rs 1.46 lakh crore, while the gross budgetary support (GBS) is also expected to be around Rs 65,000 crore against Rs 55,000 crore in 2017-18.
Railway Minister Piyush Goyal has said time and again not to depend upon the GBS and emphasised the need to generate enough funds from internal resources and the market.
Monetisation of transmission assets, commercial exploitation of surplus land and creation of new avenues for ad revenue are some of the measures being undertaken to maximise earnings.
While borrowing was pegged at Rs 40,000 cr in the last budget, this time it will go up further to fund capacity enhancement plans of the railways.
The railways will make a provision of around Rs 3,000 crore in its budget for 2018-19 to install CCTV systems in all 11,000 trains — including premier and suburban services — and all the 8,500 stations in the Indian rail network.
Though the cross-subsidy for passenger service is more than Rs 30,000 crore a year now, the state-run transporter will still include many initiatives to upgrade amenities at rail premises, including Wi-Fi at all stations, SMS alerts for all trains and revamping of the ticketing website, among others.
Aiming to provide better amenities, there will make a provision for installing about 3,000 escalators and 1,000 lifts at all major urban and suburban stations across the country.
With safety getting top billing, complete automation of the entire signalling system is likely to get the nod among other safety related measures in the forthcoming budget.
The construction of new lines, gauge conversion and doublings besides massive electrification will continue to be part of the infrastructure development plan.
There is also expected to be adequate provision for capacity enhancement of the railways to step up the growth momentum as investment in the sector is crucial to continue the country’s growth trajectory.
With the volatile market at hand and the agri sector requiring special attention, Jaitley’s budget will be closely watched on Thursday.
(Arun Kumar Das is a senior Delhi-based freelance journalist. He can be contacted at akdas2005@gmail.com)
—IANS
by admin | May 25, 2021 | Economy, Markets, News
Mumbai : Caution ahead of the Union Budget 2018-19 presentation led the key Indian equity indices to close in the negative territory for the second consecutive session on Wednesday.
Market observers said negative global cues and heavy selling pressure in healthcare, consumer durables and capital goods stocks pulled the equity indices lower.
However, some late-hour buying helped the key indices to recover from their day’s lows and the Nifty50 reclaimed the psychologically important 11,000-level.
The wider Nifty50 of the National Stock Exchange (NSE) fell by 21.95 points or 0.20 per cent to close at 11,027.70 points.
However, the barometer 30-scrip Sensitive Index (Sensex) of the BSE closed below the 36,000-mark at 35,965.02 points — down 68.71 points or 0.19 per cent from its previous close.
The BSE market breadth was bearish as 1,776 stocks declined against 1,036 advances.
“Markets corrected on Wednesday ahead of the Union Budget 2018-19 on Thursday, February 1. Investors and traders were turning cautious ahead of the event,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.
“Some late hour recovery was seen in the indices post 2.30 p.m. Broad market indices like the BSE mid-cap and small-cap indices lost more, thereby underperforming the main indices,” said Jasani.
In the broader markets, the S&P BSE mid-cap index closed lower by 1.29 per cent and the small-cap index by 0.83 per cent.
Provisional data with the exchanges showed that both foreign institutional investors turned net sellers and sold scrips worth Rs 136.63 crore.
However, domestic institutional investors invested in stocks worth Rs 1,294.66 crore.
The Indian rupee strengthened by two paise to close at 63.58 against the US dollar from its previous close at 63.60.
Vinod Nair, Head of Research, Geojit Financial Services, said: “Selling extended in the market as investors were awaiting the big budget day while the expectation for this budget is muted compared to what was anticipated over the last 2-years. The main requirement is to have a good balance between fiscal discipline and growth reforms.”
“Rural economy will be the key in the budget but infrastructure development and reforms are also likely to be highlighted. Some tinkering can be expected on corporate and individual taxation. If these basic points are addressed in the budget, we feel that market will maintain it’s luminous in the short to long-term,” Nair added.
Sectorwise, the S&P BSE healthcare index declined by 240.39 points, followed by capital index by 231.32 points and consumer durables index by 221.90 points.
On the other hand, the S&P BSE banking index edged higher by 124.79 points, oil and gas index by 77.60 points and energy index by 25.97 points.
Major Sensex gainers on Wednesday were: Kotak Bank, up 1.85 per cent at Rs 1,109.75; Reliance Industries, up 1.25 per cent at Rs 961.15; HDFC, up 1.16 per cent at Rs 1,955.70; IndusInd Bank, up 1 per cent at Rs 1,754.15; and Tata Motors, up 0.77 per cent at Rs 399.25.
Major Sensex losers were: Dr Reddy’s Lab, down 3.75 per cent at Rs 2,225.25; Tata Steel, down 3.49 per cent at Rs 705.05; Coal India, down 2.32 per cent at Rs 298.60; Hindustan Unilever, down 2.13 per cent at Rs 1,369.65; and Sun Pharma, down 2.02 per cent at Rs 579.35.
—IANS
by admin | May 25, 2021 | Opinions
By Amit Kapoor,
In its own #MeToo moment, the Economic Survey this year was released with a symbolic pink cover and a dedicated chapter on India’s notorious gender issues.
The Survey, over the last few years under Arvind Subramanian, has provided a refreshing take on resolving the challenges facing the Indian economy. In the past, he has given quite a few out-of-the-box policy recommendations like the establishment of a bad bank for resolution of the problem of bad loans and implementation of a universal basic income to do away with the inefficiency of subsidies. The document this year is no less insightful.
The Survey places the GDP growth estimate for the current fiscal at 6.75 per cent. This figure is a tad higher than the Central Statistics Office’s projection at 6.5 percent, as in its own estimates, it has not incorporated the pick-up in growth in the latter half of the year. Moreover, the Survey estimates that, as a result of the reforms undertaken this year, real GDP growth will rise by 7 to 7.5 percent in the next fiscal. This would reinstate India’s position as the fastest-growing major economy in the world.
On India’s economic growth in the recent past, the Survey highlights an interesting aspect. Over the last 4-6 quarters, India’s growth has temporarily decoupled with that of the world economy. Until early 2016, economic growth in India was accelerating while that of other countries was decelerating. Since then the opposite has been true.
This was due to a combination of five factors. First, until mid-2016, real interest rates were following the downward global trend after which India’s rates deviated and started shifting upwards. This affected investment activity negatively and resulted in an appreciation of the rupee, which subdued export activity.
The second and third factors were the twin effects of demonetisation and the Goods and Services Tax (GST). The fourth was the twin balance sheet (TBS) challenge of banks and corporates while the final factor was the uptick in oil prices over the first three quarters of 2017-18.
However, of late, India is displaying a robust revival in growth along with the world economy, signalling an end of the temporary decoupling it witnessed. The story of revival in the Survey is also punctuated with warnings of risk factors within the economy. The biggest challenge in the upcoming fiscal arises from the rise in oil prices. The Indian economy always finds its growth story challenged by twin deficits within its fiscal and current accounts owing to variability in the global oil prices. The economy needs to find a sustainable solution to this historical macro-economic vulnerability by rapidly ramping up its strength on the export front, preferably in manufactured goods.
The second risk factor highlighted by the Survey, which could impact India’s growth in the near future, is a possible correction in the stock markets. As this column has previously highlighted, Indian stock markets have displayed a puzzling trend over the last few years. Since December 2015, the Sensex has risen 46 percent in rupee terms while economic growth and corporate profits have decelerated. This trend has largely been driven by expectations of a revival in growth and a sudden change in the savings pattern of households after demonetisation. However, as the Survey points out, a sharp correction cannot be ruled out in case future growth of the economy and corporate earnings do not remain in line with current expectations.
Such a correction in stock markets could trigger the classic emerging market “stall” in capital flows and force further hikes in interest rates, which will be quite inimical to economic growth. Hence the duality of growth and risk is the current saga of the India story.
So, what do the findings of the Economic Survey tell us about the focus of the upcoming Budget?
First, as expected, the agriculture sector will be in deserving focus on February 1. The Survey stresses on giving adequate support to the sector. However, in a major setback to Modi’s aim of doubling agricultural income, the Survey provides a key finding that, due to climate change, annual agricultural incomes could reduce by 15-18 percent on an average. In unirrigated areas, this figure could climb up as high as 20-25 percent.
This provides some crucial Budget recommendations. Higher investment needs to be made towards expanding irrigation with the implementation of efficient drip and sprinkler technologies. Moreover, a plan to provide direct income support to farmers can be put in motion to replace inefficient agricultural subsidies.
Second, the Budget needs to address the perpetual problem of employment. Although India’s unemployment rate is around 3.5 percent, the unemployment rate in the 15-24 age group stands at 10.5 percent, as per recent International Labour Organisation estimates. Therefore, India has an abysmally low capacity to provide jobs to first-time workers. The only solution for India is to strengthen its manufacturing sector.
Providing incentives to labour-intensive export sectors in the Budget can kill two birds with one stone. Apart from providing jobs, growth in the export sector will imply higher current account surplus for the Indian economy which can provide a cushion against swings in the global oil prices. Therefore, it would go a long way in reducing India’s historical macro-economic vulnerability that the Survey highlights.
There are various other aspects of the economy that will hopefully be addressed when Finance Minister Arun Jaitley stands up in Parliament on the fateful day. Reviving investment activity, stabilising the GST and, most importantly, the question of sticking to the fiscal deficit targets; quite a lot hangs in balance on the upcoming Budget. It will be interesting to see the course that the government decides to take.
(Amit Kapoor is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at amit.kapoor@competitiveness.in and tweets @kautiliya. Chirag Yadav, researcher at Institute for Competitiveness, has contributed to the article)
—IANS
