Reserve Bank to rein in inflation without shocking market
Inflation in India is persistent and here to stay, but the Reserve Bank of India will not use excessively harsh measures to restrain prices, central bank governor Shaktikanta Das said. Rate hikes need not necessarily be endless as recent reduction in fuel taxes and ban on exports of some commodities may have a positive impact in bringing down price pressures and the geopolitical situation may also turn helpful.
Why it’s important:
The central bank has indicated it will increase interest rates to contain inflation, but its objective was to ensure that the market doesn’t get any shocks and growth revival is not derailed.
Government cancels sale of Bharat Petroleum stake as buyers exit:
The central government has called off the privatization of Bharat Petroleum Corporation for now after two of the three companies that had shown interest in acquiring the state-owned firm withdrew their bids. It had invited bids to sell its 52.98 percent stake in Bharat Petroleum in 2020.
Why it’s important:
The energy market has been roiled by the Ukraine war and buyers see unacceptable risks in acquiring an oil firm right now. This will adversely impact the government’s asset sale plans.
Germany, US energy partnership includes agreements on off-shore wind and hydrogen: German minister
Why it’s important: The energy market has been roiled by the Ukraine war and buyers see unacceptable risks in acquiring an oil firm right now. This will adversely impact the government’s asset sale plans.
Tax board warns inspectors of stern action on coercive behaviour
Responding to increasing complaints on alleged coercive action by tax inspectors, the Central Board of Indirect Taxes and Customs has warned of disciplinary action against officials facing complaints of high-handed behavior. In an instruction issued to officials, the board said recovery of tax dues can be made only after issuing a notice and an adjudication order.
Why it’s important: The development comes after complaints by taxpayers against coercion by taxmen during searches, some of which have reached courts. The latest instructions will reassure taxpayers.
Consumer firms pare down output targets on slowing demand
Companies that make mobile phones, televisions and refrigerators have started cutting production targets till July by 10 percent on slowing demand due to repeated price increases. Almost all mobile phone makers have altered production plans, while consumer electronic companies are finalizing plans depending on inventory.
Why it’s important:
Higher input costs have forced many of these firms to repeatedly hike prices of their products, which has now started impacting demand. There is little hope of a demand revival unless inflation is tamed somewhat.
Standards for shared economy in the offing as consumer complaints rise:
India will soon introduce with standards for shared-economy services players as the number of complaints from consumers rise and the reach of digital players across the consumer ecosystem increase. The Bureau of Indian Standards is taking an initiative in this regard. It held a meeting on this on April 25.
Why it’s important: India’s effort in is line with initiatives undertaken by the International Organization for Standardization. Shared-economy services standards are part of the bigger action plan to create benchmarks for services.
Broadcom to acquire VMware for $61 billion in record tech deal
Broadcom will buy cloud-computing company VMware for about $61 billion in one of the largest technology deals of all time, turning the chipmaker into a bigger force in software. VMware shareholders can choose to receive either $142.50 in cash or 0.2520 shares of Broadcom stock for each VMware share. The offer represents about a 44 percent premium to VMware’s closing price on May 20.
Why it’s important: The deal is the biggest takeover ever for a chipmaker and extends an acquisition spree for Broadcom. The purchase adds to a run of deals for the global tech industry this year.
Top Indian firms show interest in buying bankrupt JBF Petrochemicals:
Reliance Industries, an HPCL-Lakshmi Mittal joint venture and two Jindal group companies are among seven entities that have shown interest in buying bankrupt JBF Petrochemicals that has outstanding debt of Rs 47 billion. Others the running are a consortium of ONGC and Indian Oil, GAIL and MCPI. The two Jindal group companies include one run by Naveen Jindal and the second by his uncle BC Jindal.
Why it’s important: The list of those interested to acquire the company could expand to 12 by May 30, when the final tally is compiled. The high interest is because it makes PTA, which is used for manufacturing textiles, food-grade plastics, and bottles, which is a growing business.
Cheaper steel likely to halt rise in automobile prices, but no cuts expected
Recent government measures to rein in steel prices might delay planned price hikes for automobiles, but will not lead to lower prices, as input cost pressures remain elevated. The finance ministry has imposed 15 percent export duty on steel. With enough steel stocks available in the domestic market, automakers expect to get a better deal from steel manufacturers in the next quarter.
Why it’s important: Vehicle prices, which rose by up to 15 percent in the past one year, may not soften. Sales of four-wheelers have been subdued in recent years and that might not change soon.
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