I am not aware of any demand from the government for payment of interim dividend, says the RBI Governor
Reserve Bank of India(RBI) Governor Shaktikanta Das discussed a wide range issues during the post-policy interaction with the media. Edited excerpts:
Did the MPC deliberate on the impact of corporate tax rate cut on fiscal deficit and if yes, what was the outcome?
The government has made a statement that they will adhere to the fiscal deficit target of the current year. So, we have no reason to doubt the commitment of the government to maintain fiscal deficit number as given in the Budget. [The] government has several sources of revenue. So, whatever shortfall is expected because of the announcement of the corporate tax rate cut, the government has the option of making it up through other sources.
Are the open market operations of the RBI only to ensure adequate liquidity or are they used to enable further transmission ?
OMO [open market operations] is basically a liquidity instrument. In our internal working group report, it has been stated that the RBI has several instruments to infuse liquidity. OMO remains in our toolkit. Then, we have forex swaps which we had introduced last year. Term repo is also something which has been added. So far as the RBI is concerned, OMO will be done to deal with the liquidity situation, either to infuse or suck out liquidity. [The] RBI does not manage yields. Yields are market driven.
Is there a lower bound for policy rates?
We have not said anything on the lower bound of policy rates. What we have said is that as long as the growth momentum remains as it is, and till the growth is revived, the RBI will continue to remain in an accommodative mode. At this point, it is not possible to comment where the RBI will take a pause.
There are reports that the government is asking for ₹30,000 crore in interim dividend. But the Bimal Jalan Committee report suggested that there will be no interim dividend. Can you please clarify?
I also saw it in the media. I am not aware of any such demand from the government for payment of interim dividend.
Was there a discussion in the MPC about the ongoing crisis in the PMC Bank?
This is not within the purview of the MPC. But I would like to say that so far as the RBI is concerned, we would like to make it very clear that the Indian banking sector remains sound and stable. And there is no reason for any unnecessary panic. As soon as this issue came to our notice, the RBI acted very swiftly and promptly. One incident should not be used as generalised health of the cooperative banking sector.
Do you think imposing prompt corrective action (PCA) would have been a better option?
Where PCA is appropriate, the RBI will use that framework. We have placed a private sector bank under PCA recently.
Imposing PCA is nothing new. In the past also, the RBI has put banks under PCA. This is to ensure timely steps are taken to bring the bank [back on track].
The RBI has reduced GDP forecast for FY20 sharply, by 80 bps. But why did you cut the rate only by 25 bps?
You have to see it at the back of 110 bps rate [cut] which has been done. It is 135 bps rate cut now between February to October.
PMC Bank was hiding NPAs for the last eight years. Why was the RBI unable to spot that?
The RBI is looking into all aspects of this particular bank. The matter is under investigation by the Economic Offences Wing.
So, at this point in time, I would not like to go into further details.
Will the RBI prefer cooperative banks to be completely regulated by it?
Every such incident is an experience. Based on that experience, we will obviously give a fresh look at the regulatory framework that is in existence. And, if any changes are required, we will take it up with the government.
RBI lowering GDP growth outlook dampens investor sentiment
Equity benchmarks lost ground for the fifth straight session on Friday after the Reserve Bank of India (RBI) lowered the country’s growth outlook while cutting key rates by 25 basis points.
Rate sensitive sectors such as banking, automobiles and real estate were the worst hit. The 30-share Sensex declined 433.56 points or 1.14% to 37,673.31. In the last five sessions, the index has lost nearly 1,320 points. The broader Nifty fell 139.25 points or 1.23% to close at 11,174.75.
According to analysts, a 25 basis points cut in key rates was already factored in by the market and investors turned bearish after the central bank sharply cut its economic growth projection.
“Today’s market fall was mainly because of RBI slashing FY20’s GDP growth target to 6.1% from its earlier forecast of 6.9% on the back of weakening domestic demand conditions,” said Shrikant Chouhan, senior vice-president, Kotak Securities.
This was the fifth straight cut in key rates by the central bank as part of its attempts to revive growth. The cut in key rates and lowering of the growth outlook comes close on the heels of growth falling to a six-year low of 5% in the June quarter.
Subdued investor sentiment led to weak market breadth with more than 1,600 stocks losing ground against only 953 gainers.
Banking stocks bore the brunt as Kotak Mahindra Bank, ICICI Bank, HDFC Bank, Axis Bank and State Bank of India were among the top losers in the Sensex pack. The BSE Bankex lost nearly 785 points, or 2.45%, to end the day as the worst performer among all sectoral indices. Sector heavyweights, and those largely dependent on domestic growth and consumption such as Tata Motors, ITC, HUL and Maruti Suzuki were also among the top losers.
FPIs, net sellers
Foreign portfolio investors were net sellers at ₹683 crore while their domestic counterparts were net buyers at ₹606 crore.
Muted trends in the global markets also acted as a catalyst on Friday as the Hang Seng and Kospi fell as did the benchmarks of China, Malaysia and Singapore.
Both Amazon and Flipkart say their sales for the season are the highest-ever in India’s e-com history
Amazon says 62% of users who placed orders for appliances had them delivered and installed in 36 hours. AFPMANJUNATH KIRAN
E-commerce major Amazon and its arch rival, Walmart-owned Flipkart, have independently claimed that their sales for this season — Great India Festival and The Big Billion Days, respectively — were the highest-ever in India’s e-commerce history.
Flipkart on Friday said it had clocked 70 billion views in six days of The Big Billion Days (TBBDs). It also said there was almost 50% growth in the number of new customers, as compared to last year. Also, more than 50% of Flipkart Plus shoppers were from tier 2 cities while units from tier 3 cities grew by 100% over last year, it said.
Interestingly, September 30, 2019, was the single largest day for e-commerce in the country. This year’s festive seasons sales begun with a big bang with both e-tailers claiming record sales and overwhelming responses.
Amazon, too, on Friday said that in its Great Indian Festival celebration, sellers witnessed record sales across popular categories in Wave 1 of the fest that ran between September 29 and October 4, preceded by a 12-hour Prime Early Access. OnePlus reported 80% growth over last year, with sales crossing ₹700 crore.
As per research agency Nielsen, Amazon.in witnessed the highest share of transacting customers and purchases across all online shopping platforms in the first five days of the Great Indian Festival 2019.
As per data from Amazon India, customers from 99.4% of India’s postal codes placed an order during the Great Indian Festival. Some 62% of customers who placed orders for appliances had them delivered and installed within 36 hours. On the busiest day, there were more than 600 flights delivering packages to its customers, said Amazon.
Big sales in a slowdown?
“There is also postponing of discretionary (or not-urgent) buying and hence it is not a surprise that the big online/e-commerce sales are still where bargain seekers are active. It is very difficult with these trends to gauge whether there is a slowdown or not. We need to look at other economic and consumption markers which are more long term,” commented Pawan Kumar S, partner and leader — Technology, Media and Telecom sector and Technology Consulting at PwC India.
Phones rule the roost
Smart phones seem to have led the sales, in terms of value and volumes, followed by discounted products such as laptops, home appliances, electronic items including TVs, fashion accessories, beauty products, travel and even groceries.
This has been the biggest festive season for mobiles till date, with brands achieving more than twofold growth over last year. More than 20 models sold over 100,000 units each this year, which was a first for any event, said Flipkart.
Amazon reported a 15-fold sales growth among brands such as Samsung, OnePlus, Apple, Xiaomi and Vivo. New
Financial stress in sector triggers request; govt. demurs
Fight it out: The Minister had refused to intervene on pricing as tariffs are to be market-driven. V.V. KrishnanV_V_Krishnan
Bharti Enterprises Chairman Sunil Bharti Mittal on Friday met Telecom Minister Ravi Shankar Prasad seeking measures to help the telecom sector reeling under financial stress.
During the meeting, Mr. Mittal sought government intervention to help increase telecom tariffs in the country, which have nosedived in recent years due to intense competition following the entry of Reliance Jio, a senior government official told The Hindu, on condition of anonymity.
This comes close on the heels of a similar request by Vodafone-Idea. While Mr. Prasad confirmed his meeting with Mr. Mittal, he did not elaborate on what was discussed.
The official, however, added that the Minister had refused any sort of government intervention to increase prices in the telecom sector, stating that tariffs will continue to be market-driven and that the companies need to work out how to deal with competition.
One charging station in 3x3 km grid in all cities mandated
Under the new guidelines for the electric vehicle charging infrastructure approved by Power Minister R.K. Singh on Friday, there must be at least one charging station in a grid of 3 x 3 km in all megacities and one charging station every 25 km on both sides of highways.
“In order to address the range of issues of electric vehicle owners, a phase-wise installation of an appropriate network of charging infrastructure throughout the country has been envisaged in the guidelines, ensuring that at least one charging station should be available in a grid of 3 km X 3 km in the cities and one charging station at every 25 km on both sides of highways/roads,” the government said in a release.
First phase is 1-3 years
The first phase of the plan (1-3 years) will cover all megacities with a population of more than four million as per the 2011 Census, and all expressways and highways connected to these megacities. The second phase (3-5 years) will cover other big cities such as State capitals.
“To address concerns in inter-city travel and long range and heavy duty EVs, fast-charging stations for [vehicles] like buses/trucks shall be installed every 100 km,” the release said.
“Assuming that most of the charging of EVs would take place at homes or offices where the decision of using fast or slow chargers would rest with consumers, private charging at residences/offices shall be permitted.”