The OPEC meet in Vienna later this week is likely to be critical for the future of oil and for the future of global financial markets. Ironically, what are driving oil prices higher are not the supply cuts from OPEC and Russia but the sanctions on Iran. Iran was a key producer within the OPEC and any sanctions will lead to a major supply disruption in the global markets. This comes at a time when supplies from Venezuela, Nigeria and Libya are already facing disruptions. Trump has asked OPEC and Russia to reduce their daily quota cuts from 1.8 million bpd to 0.8 million bpd to temper oil prices.
Nirav Modi who is absconding after duping PNB of $2 billion, is now facing fresh charges for use of multiple Indian passports. According to an FIR filed against Modi, he is alleged to possess at least 6 passports and that is a serious criminal offence. Ironically, while the CBI has tracked him down to Belgium, it is surprising how he continues to travel on his impounded passport. Apparently, in the absence of uniform regulations, the blocking of passports has not been effective in many countries. The government can move for his extradition only after his exactly location is ascertained.
According to Moody’s every Rs.1 cut in excise duty on oil will result in revenue loss of Rs.13,000 crore for the Indian government. Moody’s has already warned that fiscal consolidation will be closely watched before taking a call on whether the upgrade last year was really warranted or not. Any fall in revenues will compromise India’s fiscal situation and that is something rating agencies are likely to take a serious note of. The government has already overstepped the fiscal deficit target by 30 basis points for the next 2 years. The steep rise in the price of the oil basket is only worsening matters for India.
While the contract between NSE and SGX is likely to be extended beyond August this year, NSE is quite confident that it will be able to consolidate its offshore business in the GIFT City in Gujarat. The big challenge is to build the liquidity in the IFSC at GIFT City since the SGX volumes have been built over period of time. Also, the SGX comes with the added advantage of zero-STT and being denominated in dollars. This eliminates the currency risk for global hedgers. It may be recollected that in a bid to develop the offshore market in India, NSE and BSE stopped giving data feeds to other exchanges.
The New National Auto Policy is likely to be finalized in 3 months time. One of the key announcements expected in the policy is the emission-linked taxation for automobiles. In addition, the sector will also have single nodal agency to regulate the auto sector on the lines of what the telecom sector already has in the form of TRAI. A draft cabinet note on the policy will be shortly circulated to the relevant departments. The policy will also cover the faster adoption of alternative energy vehicles in India. Even the policy towards the auto ancillary industry is likely to be standardized. Most auto companies have welcomed the new policy but are apprehensive of the long term emission targets and the tax on emission as it could become too draconian in an industry that is still growing in India.
The total dues of wilful defaulters of PNB has risen to Rs.15,490 crore. Wilful defaulters refer to companies that have the capacity to pay but are not willing to pay back the loans. Some of the major defaulters include Kudos Chemicals, Kingfisher Airlines, ICSA India, Arvind Remedies and Indu Projects. The bank already took the largest ever loss in a single quarter in March and its gross NPAs have already crossed perilous levels. In the last year, loan write-offs by PSBs stood at Rs.120,000 crore with SBI, Canara Bank and PNB taking the chunk of the hit in rupee terms.
