The IL&FS case appears to get murkier with the Corporate Affairs Secretary pointing at the role played by the IL&FS auditors in the recent fiasco. The CAS has confirmed that the IL&FS group auditors may have a lot of sticky questions to answer. IL&FS currently owes Rs.96,000 crore to creditors with little by way of cash flows to service the debt. Global audit firms Deloitte and BSR (part of KMPG) are under the scanner as per the report in Bloomberg. Auditors have denied lapses but the government is not satisfied as most of the investigations have pointed to a clear lapse of judgment by auditors.
With GST revenues faltering, the government has decided to roll out e-Invoices to curb GST evasion, effective September 2019. The proposal is that post-September all invoices above a certain threshold in case of B2B transactions will have to be necessarily generated on a central government portal only. The idea is to curb the menace of fake invoices and evasion of GST. It is also expected to make the e-filing process simpler as the invoices will already be available in a centralized database. There is a lot of revenue spillage due to fake GST invoices, improper input tax credit and simple evasion of GST.
Government seeks a relaxation of promoter holding norms for PSBs. The government has approached SEBI to relax the promoter holding not to exceed 75% for publicly listed companies in case of public sector banks. In some cases, the government holding is over 75% and once the recapitalization is done the government stake may go as high as 95% in many cases. SEBI listing norms mandate 25% public shareholding, from which exemption is sought by GOI. Recapitalization of banks is done against fresh equity issue and that will mean that the 75% mark will automatically get breached.
FPIs may be turning the corner in terms of India buying interest although it may still be early days to take a call. Foreign portfolio investors (FPIs) pulled out Rs.1255 crore in the first two trading sessions of May. This is in contrast to the total infusion of Rs.62,000 crore in the months of March and April this year. Of course, nearly 70% of the funds were pulled out from debt and only 30% from equities, which could be explained by pre-election concerns. Of late, there have been worries for FPIs on the volatile dollar, higher oil prices, election jitters and tepid growth in corporate profits in the fourth quarter.
As the oil turmoil continues, the EU and Britain have condemned American unilateral oil sanctions on Iran as well as the refusal by the US to extend waivers beyond May. The sanctions are aimed at stopping Iran’s Uranium enrichment program and to curb its rising regional power. It is a setback for countries like India, which relied on Iran as a cheap and more economical source of crude supplies. Most Indian refineries were relying on Iranian crude. Paradoxically, during this time, India’s dependence on oil imports touched a multi-year high of 84%. In 2014, oil dependence had touched 77%, and the Modi government had promised to bring the dependence down to 67% by 2022 and 50% by 2030. Domestic output has failed to keep pace with rising consumption and that expanded the dependence.
Demonetization reduced the number of direct tax e-filers in the last one year by over 6.6 lakhs in the fiscal year 2018-19. Demonetization may have had the intention of widening and broadening the tax base, but the number of filers has dropped sharply nearly 2 years after demonetization. This is despite the number of registered filers growing by 15% during the year. In fact, between 2013 and 2019 the registered filers have grown from 2.7 crores to 6.2 crores. However, filing ratio is down from 92% to 79%. That only means that most of the additions to the taxpayers list were actually the non-payers.
