News reports that the government is on course to end this financial year with a Rs 2 lakh crore shortfall in tax collections is straightaway a dent in the hopes of a meaningful reduction in personal income-tax rates. Yet, to stem the economic slump, the root cause behind falling tax collections, the government has to address the demand side of the economy, which requires giving up on taxes and doling out sops. Will the government be looking for relief from AGR dues and spectrum sale? Will it seek to cash in on enemy property? Or will it revive the idea of a sovereign bond? Looks like, this Budget is all set to deliver a surprise on the asset monetisation side!
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded nearly 80 points down at 7 am (IST), signalling weakness ahead on Dalal Street. Stocks tumbled across Asia as investors grew increasingly anxious about the economic impact of China's spreading virus outbreak, with demand spiking for safe-haven assets such as the Japanese yen and Treasury notes.
HERE'S WHAT TO WATCH  | Japan's Nikkei fell 1.8%, on track for the biggest one-day fall in three weeks. MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.2%. Financial markets in China and Hong Kong were closed on Monday for the Lunar New Year holiday and Australian market for a different holiday |
| All three major Wall Street indices closed sharply lower on Friday, with the S&P500 seeing its biggest one-day percentage drop in over three months at 0.9%. The Dow fell 0.6% and the Nasdaq Composite 0.9% after the Centers for Disease Control and Prevention confirmed a second case of the virus on US soil. |
| Oil prices slumped a further 2% to multi-month lows on Monday as the rising number of cases of the new China virus and city lockdowns deepened concerns about demand for crude. Brent crude fell by $1.12 a barrel to $59.57, having earlier dropped to $58.68, while WTI crude slipped by $1.14, or 2.1%, to $53.05 |
| The rupee depreciated by 7 paise to close at 71.33 against the US dollar on Friday due to dollar demand from importers amid a correction in crude oil prices following outbreak of coronavirus in China |
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Bonds to Beat the Budget… Companies are rushing to raise debt ahead of the Union Budget expecting the government to expand its market borrowing plan that would push up their funding cost. HDFC, LIC Housing Finance, Bajaj Finance, L&T Infrastructure Finance and REC are among borrowers that seek to sell bonds worth up to Rs 23,100 crore on Monday on the electronic bidding platform, more than three times the daily average. They are seeking to take benefit of yields that are currently staying stable due to the central bank's market intervention, before any changes that Saturday's Budget could bring.
Read More New Face at Tata Trusts?... Pramit Jhaveri, the former Citi India boss, is being considered as a trustee in one of the main Tata Trusts, two people close to the development said. The proposal to enlist the former banker, who was Citi's longest serving India CEO from 2010 to 2019, is significant. The timing of the possible appointment comes as Tata Trusts are trying to secure their legacy even as they face a legal wrangle with the income tax department besides the battle over Cyrus Mistry's ouster in 2016.
Read More Big Import Duty Hike Ahead… India plans to increase import duties on more than 50 items including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere, reports Reuters, quoting officials and industry sources. Finance Minister Nirmala Sitharaman could make the announcement when she presents the Budget on February 1, along with other stimulus measures to revive the sagging economic growth.
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Voda Sidepocketing… Franklin Templeton Mutual Fund has decided to segregate the securities of Vodafone Idea held in its debt schemes, effective January 24, after the telecom company's rating was cut to below investment grade. On January 16, Franklin Templeton had marked down these securities to zero. That move came on a day when the Supreme Court rejected the company's plea to review of licence fee based on a wider definition of adjusted gross revenue. After the markdown, the net asset value of the schemes that held units of Vodafone Idea dropped 4-6%.
Read More Banerjee Warning... Nobel laureate and economist Abhijit Banerjee here on Sunday said the banking sector in the country is "stressed" and the government is in no position to bail it out. Speaking to the media on the sidelines of the 13th Jaipur Literature Festival, Banerjee said the demand slowdown in the automobile sector also shows that people are lacking confidence in the economy. The author of "Good Economics for Hard Times" added that the slowdown in the economy will also adversely impact poverty alleviation in the country as urban and rural sectors are interdependent.
Read More Meanwhile... Depressing News on Tax Front… Tax collections for this financial year may fall short of targets by as much as Rs 2 lakh crore on faltering economy, leaving a very little room for Finance Minister Nirmala Sitharaman for offering any meaningful reduction in personal income tax rates. PTI reports income and corporate tax collections are likely to miss FY2020 targets by as much as Rs 1.5 lakh crore while indirect taxes may fall short by about Rs 50,000 crore on drop in the Goods and Services Tax (GST) in a sluggish economy.
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