Daily Financial News Analysis – 25th Nov’19

Table of Contents

FASTag

To make Singapore, Asia’s pre-eminent fintech hub, its government was mulling over the idea of taxing cash transactions.
anti-business
cash transactions are cheapest
even illegal
Government of India is planning to pull off a similar stunt on the national highways with FASTag.
Only a while ago, GoI had been handing out a 10% discount to vehicle-owners who agreed to pay through FASTag.
3 reasons why mandatory FASTag adoption may not really benefit the system’s end users.

Not every person needs to travel on a national highway regularly.
To expect them to invest in a tag, a security deposit, et al, may be painful.
Smaller fleet-owners manage their working capital requirements carefully.

When adopting a new technology, the minimum expectation is that the system will work seamlessly every time, all the time.
Radio-frequency identification (RFID) readers and stickers are best utilised in confined, controlled spaces.
Dirt, scratches, damage and frequency of use can impact readability of stickers.

GoI pays a discount rate for each transaction.
The consumer pays a convenience fee for each top-up.
The only ones benefiting from this are the payment intermediaries.
Penalising citizens because they wish to use cash at a public utility is excessive, and sets a dangerous precedent.

GoI is facing an uphill task
1. stimulate demand
2. reverse decelerating economic growth

Focus
1. Tackling persisting rural distress
2. Leaving more disposable income with individuals
3. Spending more on infrastructure
4. Improving the flow of liquidity

Steps taken by the government and lenders to address the stress in the power generation sector are starting to show results.
11 coal-based projects with combined capacity of 12.7 giga watt (GW) finding resolution and going on stream over the last six months.
Another six stuck projects (total capacity 7.8 GW) too, are seen coming out of the abyss soon.

To get the stressed projects assured customers through power purchase agreements with state distribution entities (discoms).
Shakti scheme to provide them with coal linkages

Negotiations outside the Insolvency and Bankruptcy Code framework, enabled by a favourable Supreme Court verdict

At least a third of India’s information technology workforce may be unqualified to cope with the rapid advancements in the field of software technology.
Industry experts caution that unless engineers are able to upgrade their skills, they might find themselves unemployed.
The most vulnerable section is that of mid-level employees, which by some estimates, accounts for 20% of the total IT workforce of roughly 3 million.
Sector experts say just a fraction of these six lakh employees may be able to acquire skills relevant to new and advanced technologies.
In 2018, 170,000 new jobs were generated by the industry and 600,000 people were reskilled in digital technology.

The Central Government plans to amend the Insolvency and Bankruptcy Code.
Aim: to provide immunity to companies taking over stressed assets from prosecution for financial crimes committed by erstwhile promoters.
This will help make the insolvency process more attractive for the bidders and instil confidence in them.

SEBI is looking to hire an agency to implement a “data analytics project”.
SEBI wants to track possible market manipulations such as insider trading and front running.
The move is part of Sebi’s effort to address and handle challenges arising out of technological advancements in the markets.
the regulator has invited expression of interest (EoI) from “reputed and reliable solution providers for implementation of data analytics project and building of data models at Sebi.
Recently, Sebi Chairman Ajay Tyagi announced that the regulator plans to spend Rs 500 crore on information technology in the next five years as well as have a “data lake project“.

IBBI Chairperson M S Sahoo: takes away excuses of parties to halt resolution process midway.
The Insolvency and Bankruptcy Code, 2016 envisages closure of a corporate insolvency resolution process (CIRP) in a time-bound manner.
With every court judgement, the insolvency law is developing deeper and stronger roots.
On November 15, the Supreme Court paved the way for ArcelorMittal’s takeover of Essar Steel for Rs 42,000 crore under the insolvency resolution process, which had been pending for long, mainly due to legal challenges.
Sahoo said the judgement provides clarity about the roles of resolution professional, resolution applicant, Committee of Creditors (CoC), adjudicating authority and appellate authority, qua a resolution plan.