Mr. Suresh Prabhu has committed that the new Industrial Policy could be out in a few months and that the intent is to get $100 billion of annual FDI into India. Currently, India already receives $60 billion of FDI each year and is the world’s largest recipient of FDI. The new policy is intended the completely revamp the original industrial that was first brought out in 1991. Apart from attracting $100 billion in the form of annual FDI, the new industrial policy will also focus on creating millions of jobs across India and will also encourage a spirit of entrepreneurship with special incentives for start-ups.
For the 9 months ended December 2017 the direct collections are up by 18.2% compared to the year ago period. While the sharp growth can be partly attributed to the low base last year in the aftermath of demonetization, it is also true that the government’s digital focus has substantially plugged loopholes in the direct tax structure leading to buoyancy in tax revenues. The government has already collected 67% of the total annual direct tax collection targets and the last quarter is normally the most active quarter. Apart from improving compliance, the government has also been successful in widening the tax base.
The stock of Coal India has been rallying for the last couple of days after the company raised the price of non-coking coal by 5.6%. This hike in prices will help Coal India rake in Rs.1956 crore extra in the last quarter of the current fiscal year. This price hike is significant as it is likely to largely balance out the wage hike impact on the income statement. The stock of Coal India had been lacklustre in the last year due to a lack of growth triggers and lower e-auction realizations on the back of weak international prices. The only downside risk is that this move may marginally increase the input cost for power units.
Four buyers have emerged for the beleaguered Electrosteel Castings, which has already been referred to NCLT for a resolution of the loan problem. Tata Steel, Vedanta, Renaissance Steel and a fund backed by Edelweiss are in the fray for the assets of Electrosteel Castings. The deal will be taken up for discussion later this month and will be an important template on the required haircuts and the process flow to get out of insolvency. Electrosteel owes more than Rs.13,000 core to lenders of which SBI alone is owed Rs.5000 crore. The highest bid at Rs.4500 crore has come from Vedanta.
Just a couple of days ahead of the Infosys third quarter results, the company may have received a sentimental boost from two distinct quarters. The company has signed an advance pricing agreement with the US Internal Revenue Service (IRS), which will result in a $225 million write back of provisions made in the previous years. This agreement will be instrumental in reducing Infosys’ effective tax rate by 100 basis points. A the same time there is a sentimental booster for Infosys after the US authorities confirmed that there was no plan to force H1-B visa holders to leave the US. For now, this at least lays the fears of deportation of Indian software professionals to rest. However, the bigger challenge for Infosys will be bringing back growth in the light of weak tech spending. Guidance will be the key!
The big outperforming asset class after the Fed rate hike in December has been gold. In fact, since the time the Fed announced the rate hike last month, gold has outperformed all other asset classes including Bitcoins. Gold has already gained nearly $100/oz since the rate hike in December. Both gold and Bitcoin attracted a lot of interest in the last few years as non-fiat currencies where the central bank did not have control over the supply. However, with Bitcoins being caught in a massive speculative bubble in the last few months, a lot of non-fiat money is returning back to good old gold.
