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Thursday,20-January-2022

Business

Task force on Infra to hold final meet on Monday

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Air-India

The week starting Monday is set to be action-packed as the high-level task force on infrastructure and the inter-ministerial group (IMG) on Air India disinvestment are scheduled to hold their crucial meetings.

The task force headed by Department of Economic Affairs (DEA) Secretary with CEO (NITI Aayog), Secretary (Expenditure), Secretary of the Administrative Ministries, and Additional Secretary (Investments), DEA as members would hold its final meeting on Monday and decide projects worth nearly Rs 3 lakh crore to be taken up under National Infrastructure Pipeline (NIP).

Announcing Rs 102 lakh crore worth of infrastructure projects across various sectors, Finance Minister Nirmala Sitharaman had earlier said that projects worth Rs 3 lakh crore would be added shortly.

“Another set of projects would be finalised for taking up under the NIP. This will be the final meeting of the task force,” an official said.

During the fiscals 2020 to 2025, these projects the majority of which are in sectors such as energy (24 per cent), roads (19 per cent), urban (16 per cent), and railways (13 per cent) would be executed. These key sectors account for about 70 per cent of the projected capital expenditure in infrastructure in India.

The IMG on Air India would be chaired by Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey to resolve pending issues of airline disinvestment. The meeting is scheduled on January 15.

“Certain internal approvals are required before preliminary information memorandum for expression of interest (EoI) is issued. The IMG would take up pending issues related to sale process,” an official said.

The ministerial panel headed by Home Minister Amit Shah has already cleared the draft of EoI and share-purchase agreement for Air India. The government has indicated that it will remove a large portion of Rs 60,000 crore debt from Air India’s books before offering its 100 per cent stake to private companies.

The government officials have met some of the potential investors and are likely to address their concerns while making the offer for sale.

“Many private players including foreign airlines have been meeting us. Although the meetings were not specifically on Air India disinvestment but the issues have come up during the discussion,” said another official.

Asked if the airline would be successfully sold this time, the official said that the government was confident given the response so far from domestic and foreign investors.

The bid to sell Air India in May, 2018 failed completely with not a single private party showing interest in the airline.

The airline has a total debt of nearly Rs 60,000 crore and accumulated loss of over Rs 70,000 crore. It has been surviving on a bail-out package of about Rs 30,000 crore cleared in 2012 by the then UPA-II government.

Business

Toyota launches lifestyle utility vehicle Hilux

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Automaker Toyota Kirloskar Motor (TKM) on Thursday , launched “Hilux” lifestyle utility vehicle.

According to the company, the Ex-showroom prices of the new vehicle will be announced in March 2022 before the start of the deliveries in April 2022.

“Today, as India continues to make larger economic strides, many customers are seeking a sophisticated lifestyle vehicle that delivers exceptional on and off-road prowess and fulfil their daily urban mobility needs be it work or pleasure,” said Masakazu Yoshimura, Managing Director, TKM.

As per the company, the Hilux is loaded with features like a heavy-duty turbo engine and diamond-like carbon coating on the piston rings for maximised frictional efficiency.

“The result is a whopping 500Nm of Torque which is by far the best in the segment,” the company said.

“The Variable Flow Control’ to the power steering has boosted drivability making the steering lighter at low speed in city traffic condition and heavier at higher speeds cruising on a highway.”

Besides, the Hilux comes with an unmatched water wading capacity of 700mm.

It features the same platform (body-on frame chassis construction) that underpins the Innova Crysta and Fortuner.

Globally, the Hilux sales has surpassed 20 million units.

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Business

India’s FY23 GDP to witness ‘meaningful’ growth; to rise by 7.6%: Ind-Ra

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GDP

 India’s FY23 GDP is expected to grow 7.6 per cent year-on-year basis, said India Ratings and Research (Ind-Ra).

As per the ratings agency, after a gap of two years, the Indian economy will show a “meaningful expansion”, as the real GDP in FY23 will be 9.1 per cent higher than the FY20 (pre-Covid) GDP level.

“However, the size of the Indian economy in FY23 will be 10.2 per cent lower than the FY23 GDP trend value,” the agency said.

“A continued weakness in private consumption and investment demand is estimated to contribute 43.4 per cent and 21.0 per cent, respectively, to this shortfall.”

However, it pointed out that if the impact of Omicron on 4QFY22 growth turns out to be greater than the estimate then there could be some upside to the FY23 growth originating from the base effect.

“Nonetheless, there are risks to the ongoing recovery.”

Notably, the agency cited that National Statistical Organisation’s (NSO) advanced estimate (AE) of FY22 showed that private final consumption expenditure (PFCE), grew by only 6.9 per cent YoY in FY22, despite a low base and sales data of many consumer durables showing robust growth.

“This indicates that the consumption demand is still weak and not broad based. In fact, the slowdown in PFCE had begun even before the Covid-19 pandemic had hit the Indian economy.”

“Robust PFCE growth is a must for a sustained growth recovery.”

Besides, it said that wage growth both in the rural and urban areas is facing significant headwinds and has been declining since mid-2020.

“More importantly, real (inflation-adjusted) wages are indicating an erosion of household’s purchasing power. Another factor that has impaired the consumption demand lately is an abrupt rise in the health expenditure of households.”

“These trends may be cyclical in nature, but the picture even at the structural level is not healthy for households.”

Consequently, household savings have declined and their leverage has gone up significantly since FY12, the agency said.

In addition, it estimated that investments, as measured by gross fixed capital formation (GFCF), to grow 8.7 per cent YoY in FY23.

“However, private investments have been down and out over the past several years and Ind-Ra believes the revival of private investment demand will be a slow and drawn-out process.”

“The two developments that can, however, hasten this process are merchandise exports which have shown a surprise turnaround in FY22 and the Production-Linked Incentive Scheme announced by the union government in April 2020.”

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Higher standard deduction for salaried may be part of tinkering

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The Union Budget 2022 may include a higher standard deduction for salaried taxpayers and tax incentives related to affordable housing.

Emkay Global Financial Services said in a report that on the revenue front, gross tax/GDP ratio is expected to increase to 10.7 per cent amid healthy tax buoyancy across segments. Though we do not see any major changes in taxes, we do not rule out minor tinkering in the form of higher standard deduction for salaried taxpayers; tax incentives related to affordable housing; or marginally higher customs duties on PLI-related finished/semi-finished products. Separately, lower non-tax revenue will be led by lower RBI dividends.

The spending focus will likely be on welfare, rural, health and MSMEs. We will also watch for financial sector initiatives (resolutions, higher FPI limits to facilitate divestment in select PSBs on sale, etc.), which could improve the efficacy of the financial sector’s ability to fund the recovery better, the report said.

Amid various push and pull, FY22 GFD/GDP could just about balance at 6.8 per cent. Positive buffers such as bumper RBI surplus, robust tax collection, and higher nominal GDP could get offset by higher payouts than budgeted on food, fertiliser subsidy, health, NREGA, Air India SPV; and possible miss on ambitious divestment targets (despite possible mega LIC IPO in March 2022).

Asset-sale execution will undeniably become the key balancing aspect, especially with a healthy NMP pipeline. We pencil in a modest divestment of Rs 800 billion, and do not account for any major 5G spectrum windfall amid limited clarity on the reserve price, the report said.

The upcoming Budget faces acute policy trade-offs between nurturing a nascent growth recovery and diminishing fiscal space with challenging debt dynamics. The uneven recovery post the pandemic raises questions about the sustainability of demand, especially as the labour market is also potentially divided. For targeted policy responses, fiscal policy tends to be more effective than monetary policy. Thus, a delicate balance needs to be maintained, ensuring the fiscal impulse is maximized to boost potential growth, even as policy adherence to medium-term fiscal sustainability is signalled, the report said.

This would require the expenditure-to-GDP ratio remaining healthy, front-loaded investment-focused stimulus, especially amid its larger multiplier effect on growth and employment. This necessitates innovative reforms, better resource allocation, and possible fiscal funding by aggressive asset sales in the form of existing functional infrastructure monetisation, disinvestments, and strategic sales, among others.

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