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A lot of uncertainty over India’s sovereign rating has been cleared by S&P which has retained the BBB– grade with stable outlook. After Moody’s had lowered India’s rating to a similar level earlier with negative outlook there was debate on how the other agencies would react. The view taken by S&P appears to be more balanced as it has factored in the challenges and opportunities that the country faces but takes a different view that the economy will regain poise in FY22 and grow by 8.5 per cent after falling by 5 per cent this year. It is certainly more sanguine about the prospects given the strong fundamentals which can help to withstand the Covid-19 impact. Lets us see the positives that have been highlighted by the rating agency. Three things stand out. First growth prospects appear to be above average post Covid-19 which is realistic. Second, the external situation is very good. Contrary to expectations in FY20 and the shutdown, the forex reserves have been moving upward

The government on Sunday provided little immediate relief except increasing allocation to its flagship rural job scheme by 66 per cent, but used the pandemic to usher in bold public sector reforms in its last leg of its announcements on the Rs 20-trillion package. State-owned units will remain only in strategic areas, which, however, are yet to be defined, while those in other areas will be privatised, according to public sector enterprise policy, which the government will detail later. Union Finance Minister (FM) Nirmala Sitharaman also gave leeway to states in terms of market borrowing, but much of it is conditional on reforms, such as the one-nation-one-ration card. This, if fully tapped, will release Rs 4.28 trillion for states, but will widen the fiscal deficit to 5 per cent of state gross domestic product for each. This, together with the Centre’s additional borrowing of Rs 4.20 trillion, will take the combined fiscal deficit of the country to well over 10 per cent of gross d

The Securities and Exchange Board of India (Sebi) on Monday proposed to relax the requirement of the mandatory six-month gap between two successive Qualified Institutional Placement (QIP) issues. The regulator said it has received requests from companies seeking a waiver on this requirement of a six-month cooling off period between two successive QIP issues. “The reasons for such exemption, as informed by the issuer companies, are urgent needs of funds and the fact that other fund raising mechanisms, such as a public issue or rights issue, are time-taking in comparison to a QIP issue,” Sebi said in a discussion paper that seeks public comments by April 15. The proposal was discussed by Sebi’s expert committee on primary markets. To address concerns of companies and to support fundraising, relaxation may be provided for successive QIPs within six months of previous QIP issues, in cases where terms of placement for the subsequent issues are disclosed upfront in the special resolutions.

Karnataka, Uttar Pradesh, and West Bengal witnessed a significant increase in GST collections Of the top 10 states in terms of goods and services tax (GST) collections from domestic activities, six saw a fall in year-on-year growth in February. While three states — Karnataka, Uttar Pradesh, and West Bengal — witnessed a significant increase in GST collections, Rajasthan saw a tad one percentage point rise. Business Standard, 03rd March 2020

Business Standard Opinion pieces for the day talk about government finances in the context of GST, along with other policy issues. According to an estimate by a foreign brokerage, India’s gross domestic product growth could be impacted by 0.20 per cent in the March quarter because of coronavirus. The Indian economy is battling a severe slowdown and the spread of coronavirus could affect the chances of recovery.  Slower than expected growth will also affect government finances.  Business Standard Opinion pieces for the day talk about government finances in the context of GST, along with other policy issues. It is important to realise that the idea of compensating states for 14 per cent growth in GST collection was unrealistic from the beginning, argues our lead editorial.  An implosion of the telecom sector with economy-wide ramifications is the last thing India needs right now, writes former TRAI chairman Rahul Khullar.  The combined effect of a relatively stable or tending-to-ri

Bank credit growth declined to 8.5 per cent in January from 13.5 per cent in the year-ago period In a meeting between the chiefs of public sector banks (PSB) and the Reserve Bank of India (RBI) officials, the RBI pointed out the muted credit growth in the economy and asked them to take steps to increase credit growth.  “The moot point was why the credit growth is still muted and there was exchange of views between the bankers and the governor. Since, the private sector banks are seeing credit growth the public sector will also have to make sure that credit growth picks up”, said a senior banker with a public sector bank. Another public sector bank executive who was part of the meeting said, state owned banks informed the RBI that after the asset quality review, their staff has been spending considerable time on recoveries and resolutions and there was less emphasis on sales and business development across regions. But now the situation is changing and banks have put more teams on

Market regulator Sebi on Tuesday said foreign investors from Mauritius will continue to be eligible for FPI registration with increased monitoring as per international norms. The announcement comes after the tax haven was put on the “grey list” of Financial Action Task Force (FATF) — an inter-governmental policy making body that sets anti-money laundering standards. A significant percentage of foreign portfolio investors (FPIs) investing in the Indian market is registered in Mauritius. The island nation is the second largest source after the US from which foreign portfolio investments come into the country. As per January NSDL data, assets under custody of US FPIs are worth Rs 11,62,579 crore and those from Mauritius stood at Rs 4,36,745 crore. Following the FATF notice, some fund managers knocked on Securities and Exchange Board of India’s (Sebi) door overnight, raising concerns over validity of FPI registration done through the tax haven. The regulator on Tuesday said, “Foreign i