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Home >Mint-lounge >Mint-on-sunday >Budget jitters, freight fright and rich list

1. All eyes are on Jaitley’s third budget

Despite high official growth figures, 2015-16 has been one of uncertainty and turbulence for Indian markets. The markets have gone down significantly in comparison to where they were when finance minister Arun Jaitley presented his 2015-16 budget. Whether or not Jaitley can inspire confidence is the question everybody would be asking when he presents his third budget on Monday. While the Economic Survey has laid down a target of 8-10% growth in the long term by a three-pronged focus on unleashing enterprise, investing in human capital and not ignoring agriculture, it remains to be seen how Jaitley will balance these tasks when he has to deal with a challenging fiscal outlook.

2. Economic Survey predicts 7.6% growth

In keeping with the government’s target of reaching a double-digit growth rate, the 2015-16 Economic Survey has recommended a long-term target of 8-10% for the Indian economy. The survey, usually seen as a tone-setter for the budget, has projected that the economy would grow at 7.6% in 2015-16. At a time when there is growing talk of the budget providing a big rural stimulus, the survey does not predict a fall in foodgrain production; although it would still be lower than 2013-14 levels. While the government is expected to meet its fiscal deficit target of 3.9%, one could expect a deviation from the fiscal consolidation plan in the budget, hints the survey.

3. Railways miss 2015-16 earnings target

The Indian Railways missed its earnings target set in the 2015-16 rail budget by 8.6 percentage points. Freight earnings, which provide for a bulk of the its earnings, were 8 percentage points less than the original target. Railway minister Suresh Prabhu has attributed this loss to a weak economic environment, especially in the core sectors. For the next fiscal year, the government expects passenger traffic to grow at a much faster rate than freight traffic. While the rail budget has struck the right notes among the people for leaving passenger fares unchanged and promising better facilities in trains and stations, experts remain sceptical about the prospects of addressing the larger structural and financial problems facing the transporter.

4. Rupee touches 30-month low

In yet another indication of weary confidence before the 2016-17 budget, the rupee closed at 68.71 against the US dollar on Thursday, down 0.21% from its previous close of 68.56 and just 14 paise away from its all-time low of 68.85. On Friday, the rupee rose 0.11% to close at 68.63. The local currency opened at 68.71 a dollar and touched a low of 68.79—a fresh 30-month low. Since the beginning of this year, the rupee has lost 3.6%, while foreign institutional investors have sold $2.54 billion from local equity and $757.30 million in debt markets.

5. Wilful defaulters owe Rs11,467 crore to PNB

In keeping with its practice of releasing the names of wilful defaulters, Punjab National Bank (PNB) released a list of 905 wilful defaulters owing it Rs11,467 crore in outstanding loans. The data is meant to capture the status till 5 February 2015. PNB’s list of wilful defaulters has increased both in terms of numbers and outstanding amount. On 30 September 2014, 306 wilful defaulters owed Rs6,638 crore to the bank. Wilful defaulters constitute those borrowers who default on loan payments even when they have the ability to meet their financial obligations.

6. StanChart registers $1.5 billion loss

Standard Chartered reported its first loss since 1989, as hefty lending losses and weak commodity prices hit the emerging market-focused lender. A $981 million loss from India operations played a major role in the lender’s overall performance, after loan impairments, including restructured loans, across its India portfolio increased sharply from $ 171 million in 2014 to $1.3 billion in 2015. Analysts have attributed the bank’s India losses to a larger exposure to the corporate segment, unlike other foreign banks operating in the country. In November, Bloomberg had reported that about $5 billion of the bank’s lending in India had been classified as being on risk of default, including a $2.5 billion loan to the Essar Group.

7. Mixed signals in bank credit growth

Bank credit growth is picking up, according to the latest figures. Year-on-year credit growth was 11.5% on 5 February in comparison to 9% on 30 October 2015. Analysts have suggested caution in interpreting the numbers as being suggestive of a strong economic recovery due to two reasons: credit growth was decelerating between October 2014 and February 2015, which might have created a base effect on the recent numbers; and credit growth to employment-generating sectors such as small and medium enterprises and construction seems to be slowing down, while items such as outstanding balances on credit cards have seen a huge increase.

8. Infosys wants to grow at 16%

Infosys Ltd gave a target of 16% revenue growth for 2016-17 to its employees at a strategy meeting last week. In addition to this, Infosys has also set itself the target of increasing operating profits by 27% in the next fiscal year. The targets, which were given by chief executive Vishal Sikka, are way above Infosys’s current performance, or even software industry lobby Nasscom’s predictions for overall industry growth. While official targets would only be announced when the company issues its guidance for 2016-17 in April, insider voices suggest that the general mood is buoyant after things have turned for better since Sikka’s arrival.

9. EPFO, LIC to buy UDAY bonds

In what seems to be a case of the state bailing out the state, the Life Insurance Corporation of India (LIC) and the Employees Provident Fund Organization (EPFO) are set to buy the bonds to be issued under the Ujwal Discom Assurance Yojana (UDAY). UDAY is an attempt to turn around debt-ridden state electricity boards and power distribution companies by converting their debts into bonds. The accumulated debt of power companies in 2013-14 was about Rs4.3 trillion. While the government might have allayed the fears of state governments taking over these loans for now, larger questions still remain about whether or not a bailout would revive power companies.

10. India ranked third on rich list

India retained its No. 3 position among countries with dollar billionaires in the world according to the 2016 Hurun Global Rich List. While Bill Gates tops the list of richest people with a net worth of $80 billion, Mukesh Ambani is the richest Indian on the list with a net worth of $26 billion. Dilip Shanghvi of Sun Pharma, Pallonji Mistry of Shapoorji Pallonji Group and HCL founder Shiv Nadar are the other Indian billionaires who are among the world’s 100 richest people. The number of dollar billionaires in India increased from 97 to 111 this year. China has the most dollar billionaires living in a country, while Beijing has the most living in a city.

Graphics by Prajakta Patil/Mint.

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