Business Standard Podcast

The companies, which approach the exchanges with the objective of raising capital, utilise the net proceeds for expansion, repayment of debts, or other corporate purposes. But before applying for an IPO, an investor should assess his or her category as investor. The first category is that of retail investors where individuals can invest up to Rs 2 lakh. Second are non-institutional investors who wish to apply for amount greater than Rs 2 lakh. These include high networth individuals, Non-Resident Indians, Hindu Undivided Families, companies, trusts, scientific institutions, and societies. Third are qualified institutional buyers or QIBs that encompass commercial banks, mutual fund houses, and foreign portfolio investors. A limit of 50 per cent of the bid is reserved for QIBs. They are not allowed to bid at cut off the price and cannot withdraw their offers after the closing of the IPO. Fourth are anchor investors who are QIBs and wish to invest Rs 10 crore or more through the book-building process. Investors can apply for the minimum bid, through online as well as offline method, specified in the company’s red herring prospectus. While investors need to fill an application form in the offline mode and submit it to their respective banker or broker; online IPO gives investors freedom to upload data through demat account or via a trading interface. A demat account allows investors to trade financial securities in a digital format. Then, investors can bid for a particular issue when it is open for subscription. Once they select their preferred lot size, the amount gets blocked through a process called ASBA -- application supported by blocked amount -- from investors’ bank account. This amount does not get debited instantly.  Once the shares are allotted by the company, which usually takes up to 10 days, the blocked amount is debited depending on the number of shares allotted to an investor. However, once the issue gets oversubscribed, that is, the demand for the issue is higher than available shares; the allotment is done through proportional basis or lottery system. Now, let us understand how to check the share allotment. Investors can check their allotment status on the BSE website or through their online brokerage platform. In order to check the allotment status on the BSE website, investors have to select their respective issue name and enter an application or PAN card number. Once allotted, investors can buy more or sell those shares after the company gets listed in the secondary market.   

The government recently proposed to dilute the penal provisions in three laws governing environmental protection, and air and water pollution. The environment ministry says in the draft that it wants to “weed out” the fear of imprisonment for simple violations. It has reignited the growth vs environment debate. If it passes through, will this proposal end up sacrificing environmental protection at the altar of business interests?  The government also imposes green tax on goods and activities that cause pollution. Between October 2015 and December 2021, Delhi collected over ₹1,298 crore as green tax from vehicles entering the city. Meanwhile, the last date for filing income tax is drawing close. In our next segment, we explain a few things which you should keep in mind before filing the tax return. Meanwhile, India Inc. will kick-start Q1FY23 earnings this week with the results of IT major TCS on Friday. As corporate profits take a beating globally, on rising input and borrowing costs, investors back home will assess Indian businesses’ earnings growth amid a difficult environment. Let's take stock of which sectors may emerge as winners and which ones might lose. Good returns in the last few years brought a lot of new investors to the markets. But most of them were left disappointed due to the ongoing volatile phase. So to make sure that your money is safe, choosing a right online brokerage is the key. In this episode of the podcast, we list out the qualities of a good online broker and more.  Watch Video

Pollution extracts a heavy toll on the economy and on people’s health. Last year, 63 of the world’s 100 most air-polluted cities were in India. And a recent study by a US research group was an eye-opener. It claimed that all 1.3 billion residents of India live in areas where the “annual average particulate pollution level” exceeds the WHO safe limit.   At current levels, the average Indian life expectancy is shortened by five years.  According to a study published by The Lancet, pollution led to 2.3 million premature deaths in India in 2019, the highest in the world. Around 1.6 million of these were due to air pollution whereas 500,000 were caused by water pollution. And against this backdrop, the Ministry of Environment, Forest and Climate Change’s proposal to dilute the penal provisions in three laws dealing with pollution has triggered a debate. According to the ministry, the idea is to decriminalise the provisions to remove fear of imprisonment for “simple” violations.  The government plans to scrap the provision for imprisonment for the first default, which is currently up to five years, but raise the penalty from Rs 1 lakh to Rs 5 lakh, extended up to Rs 5 crore. For repeat offence, the penalty amount would be equivalent to the damage caused. Imprisonment would follow if the defaulter failed to pay both the original and additional penalty The amendment also proposes the creation of three funds which will be used for remittance to the affected parties. Parth Kumar, Programme Manager, Industrial Pollution Unit, CSE, says, proposal will allow industries to avoid courts and closures. Big players will be beneficiaries, he says adding that we cannot completely decriminalise these acts.    According to Greenpeace, the economic cost of air pollution caused by burning fossil fuels is estimated to exceed $150 billion dollars annually. A 2013 World Bank report puts the total cost of environmental degradation in India at about $80 billion annually, with outdoor air pollution accounting for the highest share.  It is estimated that the health costs of water pollution in India amounted to about $6.7–8.7 billion per year. Text on screen: Conservative estimates place the impact of air pollution on Indian businesses at $95 billion or ~3.3% of GDP A major study by CII, Dalberg and Clean Air Fund Air conservatively also estimated the impact of air pollution on Indian businesses at $95 billion or 3% of the country’s GDP as a result of lost productivity due to absenteeism, reduced consumer footfall and premature mortalities.  The government’s proposal to amend the three laws comes in the backdrop of a NITI Aayog-funded study which estimated that from mid-2018 to mid-2021, the government lost revenue worth Rs 8,000 crore, the industry Rs 15,000 crore and workers around Rs 500 crore of income, due to five major enviroment-related judgements passed by the Supreme Court and National Green Tribunal.  The verdicts led to 16,000 job losses while adversely impacting 75,000 persons in total. The report recommended the need to equip judiciary well to balance economic and ecological interests of the country. The judgments analysed in the study include cases relating to the shutting down Vedanta’s copper smelter in Tamil Nadu, stopping the construction of Mopa Airport in Goa and halting iron ore mining in the state. Notably the conviction rate for violations under the three laws where changes are planned to be carried out has been low. While the number of cases reported under the three acts were 1,581 and 647, convictions were 42 and 25, respectively, in 2020 and 2019. Speaking to Business Standard, Chandra Bhushan, CEO, iFOREST, says it is impossible to prosecute and jail over environmental degradation. Current laws don't have credible deterrence, he says. Change needed as such laws are civil in nature across the world. Since it came to power in 2014, the National Democratic Alliance g

If you are an earning individual, 31st of July is the last date for filing income tax return (ITR) for the financial year 2021-22 and assessment year 2022-23. Early filing is advisable, and it will save you from last minute hassles. The Income-Tax (I-T) Department provides pre-filled forms to make the filing of tax returns hassle free. But taxpayers should keep all the documents handy while filing the return and cross-check every field in the pre-filled form. For instance, individuals with multiple bank deposit accounts or small investments may miss reporting such sources of income. And to avoid any penal provisions, one has to ensure all the information is captured while filing the return.   [Byte of Preeti Khurana, Director of Advocacy and Regulation at Clear.] Form 16 is a certificate under section 203 of the I-T Act, 1961. It shows all the salary components of an employee and the tax deducted at source (TDS) by an employer in a financial year. The TDS that your employer deducts is submitted with the IT department. The Form-26AS gives you all the details of your tax submitted with the department. And one of the most important steps in filing an income tax return is to compare tax deducted in both Form 16 with 26AS. Inconsistencies in details of a taxpayer in both forms is quite common. For instance, it might be a case where the TDS amount in Form 16 and 26AS are different. In this scenario, the taxpayer can reach out to the employer and get it rectified or ask them to file revised TDS returns. Always move forward to file a return after ensuring that pre-filled values in Form 26AS are updated with the actual computations that you have made. If an individual has missed declaring investment or rental proofs to the employer, and a tax has already been deducted, he or she can claim refunds under the old tax regime by submitting all the valid documents. So, it is important to verify all the information on deductions. According to the new income tax rules, the interest earned on provident fund contributions are taxable if the amount exceeds Rs 2.5 lakh. [Byte of Alok Agrawal, Partner, Deloitte India] So the taxpayers must ensure they assess all the information while calculating the final tax payable and make sure to e-verify the return after filing it.

The January-March quarter coincided with the beginning of the Russia-Ukraine war. The June quarter, however, assumes more importance as it is expected to showcase the full impact of the Russian offensive in Ukraine.  From here on, investors are set to gauge the trajectory of India’s corporate profitability, as domestic and global macroeconomic cues continue to remain unsupportive. Against this backdrop, analysts expect the June quarter earnings to be a mixed bag. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, Financials to outshine in Q1FY23. Credit growth impressive, will sustain, ge says. IT revenue expected to be healthy. IT margins may be pressured due to high employee costs. Analysts are also bullish on the auto sector, in particular, which they say, has benefitted from the sharp decline in input costs. According to Narendra Solanki, Head-Fundamental Research, Anand Rathi, esing semiconductor shortage, price hikes to improve auto margins. Valuation of IT, specialty chemicals, manufacturing attractive. Consumer space may post muted volumes. Recent pass through in prices could stabilise margins. That said, experts expect metals to deliver disappointing numbers as they digest the correction in prices along with the export duties on steel and iron ore that the government imposed at the end of May. Kotak Institutional Equities says that most of its recent earnings downgrades for the Nifty50 index have stemmed from the government’s export taxes on metals, and oil fuels. The brokerage’s Nifty FY23 net profit growth estimate now stands reduced at 9.9% from 17.1% before the government’s duty hikes. According to the brokerage "The new taxes are deleterious since they are on revenues and, thus, have a disproportionate impact on earnings. Moreover, the levying of new taxes may raise concerns among direct and portfolio investors about the overall investment climate in India”  Domestically, market action will be stock-specific today. Investors will also closely track US Fed’s recent meeting minutes due to be released later in the night.

First time investors, who flocked the markets during the 2020 crash, are seeing their first meaningful correction. In order to make sure that the wealth is created for the long-term, selecting the right online brokerage is the first step to success. An online broker is optimised for different types of clients -- from long-term buy-and-hold investors to short-term day traders. Step 1 is to understand what your investment goal is. That is, whether you plan to execute day and swing trades or find few solid investments to hold for the long haul. Based on this, investors need to choose a broker that has a diverse source of fundamental and technical data to generate higher returns.   Step 2 is to figure out what type of broker fits your investment profile. Investors can choose three types of brokers – full-service brokers who provide stock recommendations tailored to a brokerage plan; discount brokers who carry out only buy or sell orders for the client without any additional services; and robo-advisors which are automated digital platforms providing online financial services. That apart, investors must also make sure that the brokerage firm is backed by regulatory authority and offers protection against any fraudulent activities. Step 3 is to understand the broker account fees. A smaller premium may justify if you want to lose as little as possible of your investment returns to accounting fees or trading commissions. For experienced investors, margin rates are applicable as they borrow funds on behalf of the broker to take bigger positions in the market. If you plan to trade more than equities, make sure you know the fees to trade options, bonds, futures or other securities. Step 4 is to check the brokers’ platform and whether it educates you profusely about the market or stock that you wish to invest in. Investors must explore the technical and fundamental tools. Check if the technical charts allow you to plot basic indicators like volumes, simple moving averages, RSI and MACD. If any of these indicators are missing, it is better to move on. Lastly, step 5 is the ease with which an investor can deposit or withdraw funds once invested. It is prudent to review the deposit, withdrawal, and fund settlement terms of the brokerage that you consider. Most brokerage do not charge deposit fees – make sure this is a must in your checklist. That apart, check how long does it take for deposited funds to settle and how swiftly can you withdraw the funds once deposited. Do note that most brokerage houses charge a fee for withdrawal dependent on the type of investment.

There’s a race for talent in the Indian IT sector, which is facing a talent crunch for niche digital skills. Services sectors like hospitality and travel and tourism are also dealing with manpower challenges. The services sector’s importance cannot be stressed enough because it contributes to more than 50% of the country’s GDP. Could the skill shortage run up against recovery in these sectors?  While India Inc is focused on re-skilling and upskilling its workforce to deal with manpower challenges, the startup ecosystem is staring at a painful slowdown for a different reason - fundings have died down! Leading funds and venture capitalists are stepping up scrutiny. With global uncertainties in the backdrop, they are delaying funding rounds for several startups. How are Indian startups going to manoeuvre the slowdown?         VC funds and tech investors are likely to be hawkish on Indian startups in the near term. Meanwhile, IndiGo airlines posted one of its worst on-time performance over the weekend. While 30% of its flights got delayed on Sunday, nearly 55% got delayed on Saturday due to the non-availability of cabin crew members. Reports suggest, the missing cabin crew members had gone for interviews at rival airlines. So, is another storm set to hit the Indian aviation sector? Should investors be worried?   Last month, the Monetary Policy Committee of the RBI increased the repo rate by 50 basis points to 4.90% in an attempt to contain rising inflation. What are the tasks of this six-member monetary policy committee? Who are its members and what are the processes? Let’s introduce you to this high-level body of the central bank in this episode of the podcast. 

On Saturday, more than 50% of India’s biggest airline IndiGo’s flights were delayed after a large number of cabin crew members reportedly called in sick. They queued up for interviews at Tata Group-owned Air India, as well as Jet Airways and Akasa who are in the midst of a massive recruitment drive.  Aviation across the world has been suffering because of a shortage of trained manpower. People laid off by airlines during the pandemic moved to other sectors, especially hospitality. But the shortage of skilled labour is haunting India Inc, particularly the services sector that contributes to more than 50% of GDP. There’s high unemployment. Yet companies are struggling to fill in open positions. It’s a conundrum created by an acute skill shortage. Workers with experience related to a particular job are hard to come by nowadays.     According to a recent ManpowerGroup Employment Outlook Survey, IT and technology employers are exhibiting the strongest hiring intent across 11 sectors for the July-September 2022 quarter. Overall, at 51%, the net employment outlook is at a record high in eight years. At the same time, organisations are finding it difficult to get the right candidates with the required skillsets for professions, ranging from IT and data, sales and marketing, operations and logistics, manufacturing and production, administration and office support skills. ManpowerGroup India Managing Director said re-skilling and upskilling the workforce should be the highest priority for employers. Similarly, Rajan Bahadur, CEO of Tourism and Hospitality Skill Council, recently told a business daily that the industry is facing a shortage of around 3,50,000 workers as the business has boomed post the third wave of Covid-19 and operations and working hours have normalised. With new hotels, outlets, restaurant chains, and cloud kitchens opening and expanding aggressively, he says the demand for skilled talent is going up.  Further, workers who lost their jobs in the pandemic found work in other sectors and are now reluctant to come back. Ajoy Thomas, VP & Business Head, TeamLease Services says, tourism, hospitality, aviation, IT and media and entertainment facing the shortages. India is trapped in a vicious cycle, he says, adding that greater workforce informality leads to low incentive for skill acquisition. Rituparna Chakraborty, co-founder & executive director, TeamLease Services, says India is suffering from low productivity levels. Skill shortage won't impact big or small firms as long as demand is there, she says, addiing that they may have to pay more for bridging the gap. Inadequate talent is constraining the recovery of the services sector. According to CII’s Decoding Job report 2022, one of the key reasons for this gap is the insufficient collaboration between the industry and the academia. Educational institutes often fail to provide industry-relevant skills to students.   Companies, sector skill councils and other industry stakeholders should ramp up the development of new talent to fill the skilling gap. Having just emerged from Covid and witnessing green shoots of recovery, India Inc’s full potential should not be limited by the unavailability of skilled workers. 

India saw an unprecedented surge in VC investments over the last few years with 2021 leading the record-breaking funding rounds. However, the ongoing Russia-Ukraine war, interest rate hikes and recession fears led to a funding crunch as investors turned cautious on spending.  Indian startups raised a total of $18 billion in the first half of this calendar year. Even though the amount raised is higher than the corresponding period last year, there is a clear slowdown on a quarter-on-quarter basis. In the second quarter of 2022, VC investments in startups stood at $6.9 billion, down nearly 60% from $11 billion in the first quarter, according to data from Venture Intelligence. The mega deals --- investments over $100 million --- were also down on both year-on-year and sequential basis. Interestingly, even as late and growth-stage startup funding dried up, early-stage funding proved to be resilient.  Early stage startups raised $856 million in the first quarter of this year, while second-quarter funding stood firm at $839 million. When it came to the late-stage startup funding rounds, the second quarter funding nearly halved to just $1.7 billion, compared with $3.3 billion in the first quarter of 2022. With capital flow expected to be muted in the many more months to come, Indian startups have tightened their belts and resorted to layoffs. According to the Inc42 layoff tracker, over 11,000 employees were fired in the first six months of this year.  Even as ed-tech firms faced the heat for the sheer scale and number of layoffs, several unicorn startups like Ola, Blinkit, Vedantu, Cars24 were part of the firing list as well. Able Joseph, founder & CEO, Aisle, says startups should first spend on manpower than on marketing. Marketing expenses should produce results, cannot spend indiscriminately, he says adding that there has been overhiring for absolutely no reason. Don’t see the need for software startups to hire hundreds from top-tier colleges.  Rashmi Daga, founder & CEO, FreshMenu, says companies should stick to their core business. They should work towards fulfilling business milestones. Firms will reduce vanity marketing spends.  Meanwhile, VC funds and tech investors are urging startups to focus on durable growth and profitability. Sequoia Capital recently made a presentation to its portfolio companies stressing on generating sustainable cash flows, consistent growth and disciplined financial management.  Another investment firm Y Combinator had also sent advisory notes to the founders of its portfolio firms on how to navigate through the current crisis. Able Joseph, founder and CEO of dating apps maker Aisle which was recently acquired by InfoEdge, says founders should particularly focus on employee morale as startups downsize their workforce and freeze hiring plans.  Nevertheless, startups will have to turn conscious about their marketing spends and hiring practices and learn to live with greater scrutiny going forward. Will the need for being circumspect take the sheen off India’s startup story or only enhance it going forward?

Aviation watchdog Directorate General of Civil Aviation has reportedly launched a probe into flight delays faced by budget carrier IndiGo last Saturday. More than half of its flights ran behind schedule.  Following the development, shares of the airline fell 4% intra-day as investors sensed a possible staff crunch. And IndiGo may not be alone. Three new players – Air India under its new management, Rakesh Jhunjhunwala’s Akasa Air and Jet Airways – are vying for pilots and cabin crew staff. This comes at a time when the incumbent players were trying to gain ground post the coronavirus pandemic. Speaking to Business Standard, Deven Choksey, Managing Director, KR Choksey Investment Managers says, its beginning of the most competitive, hostile environment for Indian aviation sector. Air India, under Tata, may become dominant player, while Jet Airways, Akasa Air are also threats to IndiGo, SpiceJet and Go Air. Increased cost, margin pressure are a given in this situation. And this situation is inevitable.  Airline crews, especially pilots, need years of training. Besides, a single aircraft needs an average of 15 crew member. Therefore, even if incumbents or newer airlines decide to hire new crew members, analysts feel ease in talent crunch pressure may be some time away. That apart, the attrition pressure has come at a time when the sector is reeling under record high aviation fuel prices and a weaker rupee. According to G Chokkalingam, founder and chief investment officer, Equinomics Research, similar to Indian IT, aviation may see a sudden spike in attrition rates. Near-record high ATF prices, stretched balance sheets, and falling rupee other tailwinds, he says.  As per latest financial statements fuel expenses accounted for nearly 33% of IndiGo’s total cost while it was over 37% for SpiceJet. Employee costs, meanwhile, accounted for up to 9.4% of total expenses.  Given this, analysts believe the troika of these factors will lead to aggravated margin pressure for airlines in the near-term, some of which may not have been priced in yet. On Tuesday, investors will eye India Services PMI data for June, along with other global cues for market direction.

The monetary policy committee of Reserve Bank of India, which met early last month, voted unanimously to hike rates by half a percentage point. The aim was to bring down the soaring inflation which has been above the central bank’s tolerance level for quite some time. The monetary policy committee is a six-member panel which sets the repo rate. Repo rate acts as a benchmark for all other interest rates in the economy. Out of the six members, three are external. They are appointed for a fixed four year term. Among the three internal members, one is the RBI Governor who chairs the committee. RBI’s deputy governor in charge of the monetary policy is the second internal member. The third member is one RBI official who is nominated by the central board of RBI. The executive director in charge of monetary policy is typically the third member. The three external members notified by the Centre on October 5, 2020 are Jayanth Varma, professor IIM-Ahmedabad, Ashima Goyal, professor at the Indira Gandhi Institute of Development Research and Dr Shashanka Bhide, senior advisor at the National Council of Applied Economic Research. According to the amended RBI Act, the MPC is required to meet at least four times in a year. The quorum for the meeting of the MPC is four members. Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote. On the 14th day, the minutes of the proceedings of the MPC are published which includes the resolution adopted by the MPC; the vote of each member on the resolution and the statement of each member on the resolution adopted. Once in every six months, the RBI is required to publish a document called the Monetary Policy Report to explain the sources of inflation and the forecast of inflation for 6-18 months ahead. The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth. In May 2016, the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework. The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years. Accordingly, the Central Government notified 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent. On March 31, 2021, the Central Government retained the inflation target and the tolerance band for the next 5-year period -- April 1, 2021 to March 31, 2026.

In the summer of 2019, when Nirmala Sitharaman took over as the country’s finance minister, little did she know that she would have to steer the economy through one of its worst phases. One after another, three waves of Covid-19 ravaged the country over the next two years. And now, a war in Eastern Europe has set the commodity prices on the boil. The finance minister can be forgiven for thinking that she just cannot seem to catch a break. In a freewheeling interview with Business Standard, the FM spoke on an array of topics, including why she sees better days ahead, and why spend on capital assets may be a better bet than sector-specific fiscal steps.  In the interview, finance minister Sitharaman called her experience as the chairperson of GST Council humbling. After the initial teething troubles, Goods and Services Tax (GST) completed five years last week. Our next report offers a peek into the journey so far.   Revenue secretary Tarun Bajaj told Business Standard last week that recent tweaks in the GST regime might add Rs 15,000cr to government exchequer every year. Meanwhile, in another move to boost revenue, the government imposed windfall tax on gains made by domestic refiners. Index heavyweight RIL dropped over 7%, while other oil upstream and exploration-linked stocks slumped up to 15%. But should you buy these stocks on dips?  Ever wondered how difficult trading would have been before the advent of the internet? The internet, on its part, too has come a long way. Web 1.0 or the first generation of World Wide Web was like one-way traffic-- a read only format. Then came the current format called Web 2.0, in which we can read and communicate too. The upcoming web 3.0 -- which is still in making -- boasts of decentralisation as its bedrock. And now, former Twitter CEO Jack Dorsey has announced Web 5.0. Let us find out more about it in this episode of the podcast.  Watch video

Finance Minister Nirmala Sitharaman says, present growth momentum to continue in medium-term. Citizens are working with Centre and states towards recovery This cooperation will put India on growth trajectory, she says.  Speaking to Business Standard’s Shrimi Choudhary and Arup Roychoudhury, Union Finance Minister Nirmala Sitharaman on Friday showed confidence in the robustness of the Indian economy. It is despite the upheaval caused by pandemic, which, the FM said, even forced the government to consider presenting five “mini budgets” in 2020. She said that the government has turned to a public capital expenditure programme to revive the demand during the tough period. The FM said that spending on capital assets was chosen since the government had adopted that route for economic revival during the pandemic too. Capital expenditure is the money spent by the government on the development of machinery, equipment, building, health facilities, education, etc. The Centre’s capex outlay is estimated at 7.5 trillion rupees in FY23. According to the FM, of that, 1 trillion rupees will go to states as a long-term, interest-free loan for their capex needs. In comparison, the government’s capital expenditure through budget was Rs 3.35 trillion in 2019-20. The entire 1 trillion rupees could be given to states in the July-September quarter itself. The FM said that the rules for distributing the loan had been framed. Many states were ready as they have already submitted their projects -- both greenfield and brownfield-- for evaluation. Sitharaman was confident that the amount would be picked up by states before the end of the second quarter. The FM also tried to assuage the concerns around the fiscal deficit, saying that despite continuing external headwinds, they are under control.   Finance Minister Nirmala Sitharaman says revenue buoyancy provides bit of comfort and will continue sourcing materials from specific places to cut cost. Strong centre-state synergy to continue, she says.  Speaking on the soaring inflation, which is giving a tough time to policymakers, FM Sitharaman said it is still nowhere close to what other countries are seeing. But, at the same time, she conceded that it is “burdensome” for people, especially those with low income. From 3.4% in FY19, retail inflation showed a continuous rise to 4.8% in FY20 and 6.2% in FY21, before easing moderately to 5.5% in FY22.  Headline retail inflation for May 2022 cooled down from the 8-year high of the previous month to settle at 7.04 per cent. The Reserve Bank of India expects inflation to average above the 6 per cent mark till the October-December quarter. The FM also said that the bank privatisation plans were almost ready and the government would bring amendments to the Banking Regulation Act soon. She added that while the Centre would continue owning some banks, in the banks which it does decide to exit, it could do so completely. While there has been no official confirmation from the government, Central Bank of India and Indian Overseas Bank are said to be the candidates for privatisation.  On the compensation to states after the recent GST Council meeting, the FM said that the government was “conscious” of Covid-affected revenue growth. And those two years cannot be taken to measure any kind of growth percentage. But she said that the government is yet to take a call on rate rejig. Cost overruns and delays are perennial problems that hamper infrastructure projects in India. With its ambitious capex plans hanging in the balance, will the government be able to overcome such challenges and spur the economy on?

In his budget speech of 2006-07, the then Finance Minister P Chidambaram had floated the idea of moving towards the Goods and Services Tax or GST regime. And the next decade was spent in thrashing out its final contours, and mustering the courage to usher in the reform in indirect taxation.  Amid much fanfare, the GST was finally rolled out on the midnight of first of July, 2017 by Prime Minister Narendra Modi. The nationwide reform subsumed 17 large taxes and 13 cesses. And after initial hiccups and tepid collection, the GST revenue has picked up pace over the last two years.  The average monthly gross GST collection for the first quarter of FY23 has been ₹1.51 lakh crore against ₹1.1 lakh crore in the first quarter of the last fiscal-- showing an increase of 37%. Economic recovery from the pandemic, high inflation, anti-evasion measures especially against fake billers and gradual improvement in compliance have helped. But as Business Standard’s AK Bhattacharya pointed out, the total GST collections in FY22 were about 6.26% of GDP compared to 6.22% in FY19 -- which was both a pre-Covid year and the first full year after the new tax was rolled out. The growth is nowhere near what was expected. Rajat Bose, Partner, Shardul Amarchand Mangaldas says GST fulfilled basic objectives it set out to achieve. Petroleum products should be brought under GST. He says, GST appellate tribunal should be set up as soon as possible. Process that GST intelligence officers follow should be outlined. A common complaint is also that the GST system is yet to stabilise even after five years because of the rate structure and constant tweaks. It still suffers from bottlenecks.   But, at the same time, GST is said to be one of the finest examples of cooperative federalism as the Centre and states come together in the GST Council, and almost all decisions are taken with consensus in the larger interest of the country and its people. But some states are unhappy as they stare at a stoppage of compensation for revenue loss from the cess fund due to GST implementation. Pronab Sen, Former Chief Statistician of India, says so far, GST has worked out reasonably well. There were many glitches, but they are not unusual. Political issues on GST will continue as government change in states. Businesses say the government should work further on simplifying the tax system to boost the ease of doing business. Taxpayers have struggled with the demands of GST compliance and return filing although this burden has been progressively reduced. Mahesh Jaising, Partner and National Indirect Tax Leader, Deloitte India says, industry has welcomed GST’s technology platform. Govt has been taking a consultative approach with GST, he says. Industry expects measures on unlocking working capital, EoDB and ITC restrictions.  The government has been proactive in addressing any major pain points, but there is still a long way to go before GST can achieve its full potential and become a truly ‘good and simple tax’ as envisaged. Meanwhile, the immediate priority of the government will be tax rate rationalisation as the Centre and states need higher revenues and lesser slabs would mean a simplified tax regime. 

Last Friday, the government took investors by surprise. It announced levy of export duty on petrol, diesel and aviation turbine fuel. Besides taxing exports, the government also announced the imposition of windfall tax on gains made by domestic refineries.  A cess of Rs 23,250 per tonne on domestic crude production was also imposed. The move clipped wings of upstream oil companies with shares of Reliance Industries declining over 7%. Other related stocks fell in the range of 3.5-15%. According to independent market analyst, Ambareesh Baliga, “The measure will set the precedence for such taxes going ahead and is surely negative for refiners as well as explorers. A question which arises is that how will the industry get compensated when the prices are not remunerative?”  While he suggests investors avoid buying these stocks in the dip as the upside in profits are dented, Gaurang Shah has a contrarian view.  Gaurang Shah, Head - Investment Strategy, Geojit Financial Services says, the move aimed at getting domestic supply in domestic market. RIL, ONGC and Gail India can be bought on dips, he says. Other than dividend no charm in OMCs.  Last Friday’s fall in benchmark indices brought them dangerously close to the bear zone territory.   April-June quarter earnings season will begin this week with TCS kick-starting the earnings season. The IT firm is set to report its Q1FY23 results on Friday, July 8.