Budget 2020: Markets brace for Rs 8-trillion gross borrowing in FY21

 The upcoming fiscal year, the bond market expects the government to announce heavy borrowing.but the numbers could be masked through off-balance sheet items, such as enabling public sector companies to raise government-serviced bonds.

 B Prasanna, head of global markets and proprietary trading group;ICICI Bank said that,"The broad consensus of this year budget affects the market participants for 2020-21 (FY21) fiscal deficit is at 3.5 per cent, which would converted  into gross borrowings of Rs 7.7-7.9 trillion. A reliable Budget which bring up anything below these numbers would be a positive surprise for the market". According to the Fiscal Responsibility and Budget Management Act,Bond traders say the market wouldn’t be bothered if the government is not able to keep the fiscal glide  and overshoots its targets by 0.5 percentage points.

The current situation is same as what it was in 2014-15, At that time,when the market was okay with the government they were breaching the target, and the government didn’t do that at that timr.creative accounting is the main cause for upsets of market and foreign investors.

Creative mode of accounting is allowing public sector undertakings to raise government serviced bonds. While the government pays for the principal and interest, the numbers don’t reflect in the total borrowing. Such a possibility has already taken assurance after the Nabard last Friday said it would be raising Rs 7,000 crore worth of government serviced bonds on Friday.

The repayment around Rs 2.35 trillion, gross borrowings of the Centre are expected to come at Rs 7.85 trillion. In addition, states are expected to borrow Rs 7 trillion, thus, taking the total borrowing for FY21 to be closer to Rs 15 trillion.the government is considering increasing the limit of foreign portfolio investments to 10 per cent of the outstanding, from the current 6 per cent. This may get announced in the Budget itself, say sources. But on an immediate basis, the market is gearing up for extra borrowing for the current fiscal year.

The expanding footprint of TikTok

Social media is a platform that never fails to surprise. The most you entertain your users, you will get succeed. While the giants like Facebook, Instagram, and Twitter remain relevant here -a new contender has entered the arena, especially among the young people- TikTok.This social media app allows the users to post short lip-synced, music, talent, or comedy videos, TikTok taking the social media world by storm.

Global time spent on TikTok grew 210% year-on-year in 2019. In a market dominated by American social media networks, ByteDance, the Chinese company that owns both TikTok and Helo, has cut itself a large slice of the Indian market, especially outside its metros. Both its short video sharing apps have ranked as the top two breakout social apps of 2019 in India (App Annie, State of the Mobile 2020), which also their largest market outside china. A spokesperson for ByteDance said that increased internet penetration and adoption of smartphones has fuelled its popularity. TikTok was the most downloaded app in the US in October 2018, the first Chinese app to achieve this. In February 2019, TikTok, together with Douyin, hit one billion downloads globally, excluding the Android installs in China. In 2019, TikTok was announced to be the 7^th most downloaded mobile app of the decade.

According to the App Annie report, TikTok has been inching its way up the charts in western markets too, it topped the list in Canada and was ranked number two in the US. TikTok’s explosion in India in the 18-month period since January 2018 has expanded its reach to 30% of all Indian smartphones as of august 2019, according to data provided by Delhi based market intelligence firm KalaGato. With the app’s rising popularity, Indian users have been spending more than 30 minutes a day on TikTok, ahead of both Instagram and Snapchat. The company spokesperson said that over the last two years, popular content creators, credible educational institutions and partners, and celebrities have joined TikTok making it a vibrant space.

India is priority market for ByteDance, being the second most popular market outside its home and the company has spent considerable time understanding its need and limitations. Multifunctional and multilingual, the platform attracts a wide spectrum of users who tap into the network for multiple reasons. This making the platform sticky and engaging, for users, and lucrative for brands.  

US Disappointed as Johnson Gives Huawei Partial 5G Role

US Disappointed as Johnson Gives Huawei Partial 5G Role

UK Prime minister Boris Johnson risked a rift with president trump as he gave Huawei technologies company the green light to help develop parts of Britain next generation broadband networks. While the UK Government announced it will keep what is called higg risk vendors such as Huawei out of the most sensitive core parts of its 5G mobile networks, the company are going to be ready to supply other equipment that's critical to the roll out of broadband like antenna’s and base stations.
Trump administration, which wanted Johnson to impose an outright ban on the Shenzhen- based tech giant, citing concerns that its gear might be susceptible to infiltration by Chinese spies. Initial reaction from Washington was muted. A senior US administration officially expressed disappointment as Johnson’s decision, but also hope that the US and therefore the UK could still find how to exclude component from untrusted vendors in 5G systems in future.
Republican Senator Ben Sasse of Nebraska said that, their special relationship is less special now that the UK has embraced the surveillance state commies at Huawei. The compromise between the outright ban on Huawei sought by the US and the access sought by the telecommunication companies. Under the UK’s policy, a cap of up to 35 percent will be imposed on Huawei’s share of the non-sensitive parts of the next generation networks, such as antennas, masts and even fixed-line fiber- to- the house components. The government said that 35 percent cap will be kept under review and could reduce over time. The phone carriers like BT Group Plc’s EE, Vodafone Group Plc and Three have to rejig their 5G plans to comply. Three a unit of hongkong based CK Hutchison Holdings Ltd. Has been depending on Huawei to deliver the entirety of its 5G radio access network, with Nokia Chosen to provide the core.
In a report the Huawei Vice president Victor Zhang said it was ”reassured” that the UK will let the company keep working with carriers on 5G. he also added that “this evidence-based decision will end in a more advanced,secured and more cost effective telecoms infrastructure that's fit the future”. The confideration of British Industry, the leading business lobby within the country said that, “this solution appears a wise compromise that provides the united kingdom access to cutting-edge technology, whilst building in appropriate checks and balances around security”. By curbing Huawei’s access but still allowing the supplier to play a role in 5G, the british officials are betting that they can manage any security risks at home and still maintain intelligence sharing ties with the US and other allies.

Fintech companies call for measures to ease liquidity

Financial technology, also known as fintech, is an economic industry composed of companies that use technology to make financial services more efficient. Fintech companies operating in the digital lending space are expecting measures in the Budget that will improve cash flow for Small and Medium Enterprises (SMEs).

The industry officials said that the steps to improve the liquidity position of the digital lenders, which have seen a significant rise in Cost of Capital in the past year will also activate the demand for credit in the digital lending space.

“Facilitating debt flow to SMEs through digital lending non banking financial companies (NBFCs) will help unlock capital for borrowers at the grass roots level,” said Gaurav Hinduja co-founder and managing director (MD) at Capital Float. The Amazon-backed NBFC, which tied up with Japan’s largest financial institutions Credit Saison. Online lenders which are betting big on the unsecured personal loan segment said deduction in income tax rates can improve the demand situation.

Increase in present income tax exemption limits should spur demand and consumption, providing a much needed stimulus. This year’s budget will continue with the momentum started with ‘Start-up India’ that enabled self-certification, income tax exemptions, rebate in filing patents for new companies. Post the Infrastructure Leasing and Financial Services (IL&FS) crisis, many digital lenders have seen an increase in their cost of capital in the past year by more than 150 basis points which has directly impacted the bottom line i.e. the net profits of the firms. Even many firms have seen a fall in debt flows from banks and traditional NBFCs.

Airtel Africa's net in Q3 down on higher tax outgo

Bharti Airtel’s Africa arm posted profit after tax of $103 million in the December quarter, down 21% year-on-year from of $133 million in the corresponding quarter of the previous year, due to higher tax outgo in the period.These are the company’s third quarterly financial results since raising $750 million through its initial public offering (IPO) in June last year. The shares were priced at 80 pence apiece, giving it a market capitalization of around $3.9 billion.

Airtel Africa posted revenue of $883 million, up 14.2% year-on-year from $783 million, largely driven by improved performance in the ‘Rest of Africa’ region, supported by solid results in Nigeria and East Africa, the company said.The revenue increase is significant for the African arm of Bharti Airtel, which battles a bruising tariff war with rival Reliance Jio Infocomm Ltd at home turf.
It also comes at a time when Bharti Airtel and other operators are emerging from an adverse court verdict which mandates telecom companies to pay dues totalling over ₹1 trillion to the Indian government.

The 24 October Supreme Court order that ended the 14-year legal battle between telcos and the department of telecommunication (DoT) has asked Bharti Airtel to cough up ₹35,586 crore in dues, straining its already precarious financial situation in India.The telecom company currently awaits Supreme Court’s hearing on its modification plea filed earlier this month which seeks that the operators be allowed to negotiate a sustainable payment schedule with the department.
Bharti Airtel will declare its December quarter earnings for India operations on 4 February.
Africa has proved to be a beacon of hope for the company, which is faced with a struggling India business.

SIT on black money for capping cash at home

Seized cash should be deposited in the consolidated fund in India

A special investigation team on black money has proposed a cap on keeping cash at home. They suggested that seized unaccounted cash by law and enforcement agencies be deposited in the consolidated fund of India. The proposed measures aims to bring norms to curb illegal and unaccounted cash. It is due to the fact that the unaccounted wealth is being held as cash. The law enforcement agency said that proper cash management can only succeed only if there is a limitation on cash holdings.

At present, federal agencies deposit unaccounted cash seized to the dedicated bank account of respective agency with state bank of India where challan has name and permanent account number of assesses in whose name the amount gets deposited. In the recent meeting held at Ahmadabad, this recommendation had made by the panel of retired judges and bureaucrats with the central agencies including income- tax, Directorate of revenue intelligence etc.

The panel raised concern s over cash economy and malpractices like bribe during seizure of unaccounted cash. In the first full financial year after demonetization (FY18), 67.91 per cent of unaccounted cash was made up of 2,000 Rs notes and it was bit lower at 65.93 per cent in FY 19. In 2017, the government had introduced a cash transaction limit of 2 lakh per day. There was no limitation on cash holding. The SIT was constituted to ensure that the government uncovers which Indians have hidden untaxed money in India and foreign bank accounts.

Tatas raise the EV game.

On Tuesday seven chief executive officers (CEOs)across firms at the tata came together for the launch of its first electric car the Nexon EV.they also said how the tata universe had gone about shairing resources to introduce the best possible product. Tata for the first are launching electric vehicle. At the lauch former Group Chairman Ratan Tata drove the car to the stage and was accompanied by Group Chairman N Chandrasekaran.  “As the tata group for the first time we were launching the electric vehicle ecosystem and all tata companies have played an important role since last months” said Chadrasekaran. 

The last few years have been uphill with the company’s passengers vehicle market share falling from almost 17% in 2007 to 55 in recent months based on Siam data. The cars is powered by Ziptron technology, the Nexon EV offers a range of 312 Km on a single charge and boost of an efficient high voltage system ,have features including fast charging capability and more than 30 connected features. The Nexon EV goes on sale from across 60 authorised dearlership in 22 cities,which starts from Tuesday. The MD of Tata Power said his company would be making EV charging station , there aim is to make 300 power station by end of the year and then 650 in the next 2 years. The price of the Nexon EV starts from Rs.1,399,000 to Rs.1,599,000.

Tata motors strategy of adopting a very competitive pricing startegy for EV will promt its rivals such as Maruti Suzuki India,Mahindra and Mahindra (M&M)to price their offers in manner that it attract buyers. Nexon isthe first EV offering in the mass sports utility vehicle segment. Mahindra & Mahindra is about to unveil its electric compact SUV version of XUV300, while Maruti is about to launch its EV model for Wagon R,earlier this month MG motors launched its EV vehicle the ZS. Tata is planning to introduce four more models in the next two years which include two SUVs, a sedan and a hatchback. The compettion of electric and SUV at a competitve price bodes well for Tata Motors and they will gain from the first mover advantage in the mass SUV segment said Puneet Gupta,associate director at IHS markit.