Daily Financial News Analysis – 31st Dec’19

Table of Contents

India & Huawei

The government has decided to allow all network equipment makers, including Huawei, to participate in 5G trials.
This is the first time that India, caught in a diplomatic and economic tussle between the US and China, has taken an official stance on the matter.
It boosts the Chinese company’s hopes in deployment of 5G technology.
Ravi Shankar Prasad: 5G trials will be done with all vendors and operators.
We have taken an in-principle decision to give 5G spectrum for trials.
A top government official cautioned that the clearance was only for the test phase.
The US has been pressuring its allies and friendly countries, including India, to bar Huawei from 5G deployments.
China has on its part warned India of economic consequences if Huawei was excluded from 5G development and deployments.
Countries such as Australia, New Zealand, Japan and Taiwan besides the US are keeping Huawei out of 5G deployments, while others including France, the Netherlands, Russia and South Korea have allowed the Chinese equipment maker to participate.

IndiGo and Etihad Airways have met government officials and evinced interest in ailing national carrier Air India.
The Tata Group, however, has not shown any interest yet.
The government, which could not sell 76% in Air India last year, is offering 100% stake this time.
There are these two companies and a couple of private equity investors who have shown some interest.
An airline as big as Air India is unlikely to receive any more interest said an
The Centre is likely to come up with the expression of interest (EoI) documents by next month.
Etihad can bid for 100% stake in Air India by tying up with either Abu Dhabi Investment Authority (ADIA) or National Investment and Infrastructure Fund.
The National Investment and Infrastructure Fund is an infrastructure investment company anchored by the Indian government, where ADIA is a key investor.

State Bank of India slashed its external benchmark rate by 25 basis points to 7.8%.
Cheer moment for mortgage borrowers and small businesses.
The rate cut takes effect on January 1 but will benefit borrowers who have taken loans after October 1.
Other banks typically follow the leader’s rate actions.

Centre’s decision: not levy Merchant Discount Rates for payments made through Ru-Pay debit cards and Unified Payment Interface (UPI) instruments.
It has drawn criticism from market stakeholders.
RuPay cards under competitive disadvantage over multinational rivals Visa and Mastercard.
There would be a significant negative impact on the payment ecosystem –innovation, job losses and a slowdown in the expansion of the digital payments in India.
Service providers will start withdrawing the existing deployed POS terminals from unviable small shops and establishments as continued maintenance, training and supply of printer rolls etc. will increase losses.

India will see record wheat output this year on higher acreage and conducive weather.
Production of the grain in the current crop year 2019-20 that runs from July to June will touch an all-time high of 105 million tonnes.
Bumper production in the rabi season should ease pressure on household budgets and boost consumer spending.
The cold wave conditions along with winter rains is very beneficial for the wheat crop.
It will help in increasing tillering (an increase in the number of flower bearing branches), which will lead to higher yield.
It will be the fourth consecutive year of record production, and will be about 3% increase in production over the previous year.

The oil ministry has proposed reducing goods and services tax on compressed natural gas (CNG)-driven vehicles to 5%.
Current rate is 28%
The ministry is seeking support from the finance ministry to cut GST rate on CNG vehicles to make them more affordable.
Natural gas emits 25% less Co2 than petrol on every unit of energy produced.
The government aims to raise the share of natural gas in country’s primary energy mix to 15% by 2030 from 6% now.
This would require current gas demand to rise five times by 2030, if India’s energy consumption were to grow 5.5% annually.
Factory-fitted CNG vehicles are dearer than petrol vehicles at the time of purchase but enjoy lower operating cost due to cheaper CNG fuel.
The oil ministry now wants the purchase price of CNG vehicles to go down to encourage more customers to buy them.
All vehicles, except EVs, attract 28% GST currently.

Kerala, Himachal Pradesh, Andhra Pradesh, Tamil Nadu and Telangana have topped the list of states on the sustainable development goals (SDG) index 2019-20.
Fourteen states have fallen in overall rankings compared to last year, with states like Bihar, Jharkhand and Arunachal Pradesh at the bottom of the index.

The SDG Index, launched last year, ranks states based on 16 goals across 54 targets spread among 100 nationally identified indicators.
The first report in 2018 only had 13 goals and 39 indicators.
The 2019-20 report also has a dedicated profile of all states and Union Territories.
Uttar Pradesh, Odisha and Sikkim have shown maximum improvement, while states like Gujarat have not shown any improvement vis-a-vis their first ranking in 2018.
Report shows remarkable success in goals like water, sanitation, power and industry.
However, nutrition and gender equality continue to be problem areas for India.

Army chief general Bipin Rawat was on Monday appointed the new Chief of Defence Staff (CDS).
Smooth coordination between the Army, Air Force and Navy is expected.
The government on Sunday amended the Army, Air Force and Navy rules to allow the CDS to serve till 65 years of age.

Narendra Modi will open the seven-day Indian Science Congress (107th ISC) on January 3 in Bengaluru.
The focal theme of the Congress is ‘Science and Technology: Rural Development‘.
They expect about 15,000 people including Nobel laureates, scientists, academicians, policy makers, researchers, students and delegates.