Posted at 11:23 AM , on January 27, 2020
The telecom troubles are far from over and nothing really happened on the 23rd January, which was the deadline for AGR payments. The DOT has asked the courts to be lenient with the telecom firms but the telecom story is gradually becoming a case of the theater of the absurd. Here is why:
What happens to Vodafone?
The single largest AGR liability is on Vodafone as it needs to shell out Rs.53,000 crore. The amount is disputed and Vodafone has accepted only Rs.44,000 crore, but that is still a big amount. There is no way Vodafone can afford to pay that kind of money and stay solvent. It is time to bite the bullet. The DOT either gives them deferred payment options or the government must be willing for the insolvency of Vodafone Idea. That will be a big hit!! Continue reading
Posted at 11:17 AM , on January 27, 2020
No economist, policy maker or even CEO of an Indian company believes that the government would be able to hold 3.3% fiscal deficit in 2019-20. Some leeway is bound to be there in a year when outlays are growing and inflows have been tepid. But there are four key issues to tackle with the fiscal deficit.
Stay within the leeway
This year the government may not have much of a choice but to offer a counter cyclical approach to growth. It will have to give some leeway on the fiscal deficit front to propel growth but the question is how much? Ideally, the government should stick to the limits prescribed by the NK Singh Committee which permits a maximum deviation of 50 bps in an exceptional year. If the government can hold the fiscal deficit at less than 3.8%, it will be seen as a positive move. Continue reading
Posted at 11:07 AM , on January 27, 2020
The markets started off on a somber note during the week with the Sensex losing nearly 820 points in the first 3 days. The fall was significant for two reasons. Firstly, such sharp falls are not seen in the midst of a pre-budget rally. Secondly, the fall in Sensex happened with a sharp spike in the VIX. Here is what actually drove the indices lower.
A worrying quarter
The results are coming in thick and fast and there were some real concerns in a number of heavyweights. HDFC bank and Kotak Bank reported larger than expected NPAs. TCS had growth issues and RIL saw GRMs and petchem margin falling. Of course, there were smaller banks like RBL which saw a sharp fall in profits but the macro worry appears to be that the consumption slowdown is beginning to hit the private banks. Now PSU banks will be closely watched. Continue reading