Category: Finance

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Finance

MSMEs Who Are Still Under Financial Stress May Get Another 6-Month Moratorium on Loan Principal Repayment

Currency (Photo Credits: Piklist)

Mumbai, September 2: Micro, small and medium enterprises (MSMEs) and Retail borrowers who are still under financial stress amid the coronavirus pandemic and are unable to repay their loans even after availing the 6-month moratorium provided by the Reserve Bank of India, may get another six-month moratorium only for principal repayments.

The news reported by Economic Times mentioned that Banks and NBFCs may give six-month moratorium on principal repayments for retail and MSME borrowers. The intention is to restructure loans for only those borrowers who really need restructuring, according to reports.

The six-month moratorium on loan repayments ended on August 31. However, borrowers who still feel that they can not start loan repayment now can approach their lenders for the restructuring of their loan.

The Reserve Bank of India recently extended the existing debt restructuring scheme for stressed MSMEs by three months to March 31, 2021, in view of the distress brought upon by the COVID-19 outbreak

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Finance

India’s GDP Contracts by 23.9% in Q1 of FY 2020-21, Worst in 4 Decades

GDP Contraction and Indian FM GDP Contraction- Nirmala Sitharaman.
GDP Contraction and Indian FM GDP Contraction- Nirmala Sitharaman.

New Delhi, September 1: The Ministry of Statistics and Programme Implementation (MoSPI) on Monday released India’s Gross Domestic Product growth for the first quarter of FY-2020-21 and it was found out that India’s GDP shrunk by 23.9 per cent. This is considered to the steepest fall in India’s GDP in the last four decades, which put India as the worst-performing nation amongst the highest several countries whose economies were sliced by the COVID-19 pandemic. In the previous quarter (January-march of FY 2019-20), India’s GDP growth rate was 3.1 per cent.

The data compiled by National Statistical Office (NSO) and published the Union Ministry, stated, “GDP at Constant (2011-12) Prices in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in Q1 of 2019-20, showing a contraction of 23.9 per cent as compared to 5.2 per cent growth in Q1 2019-20. Quarterly GVA at Basic Price at Constant (2011-12) Prices for Q1 of 2020-21 is estimated at Rs 25.53 lakh crore, as against Rs 33.08 lakh crore in Q1 of 2019-20, showing a contraction of 22.8 per cent.”

Adding more, the NSO stated that the GDP at current prices in the year Q1 2020-21 contracted by 22.6 per cent as compared to 8.1 per cent growth in Q1 Q1 2019-20. In the report, it added, “GDP at Current Prices in the year Q1 2020-21 is estimated at Rs 38.08 lakh crore, as against Rs 49.18 lakh crore in Q1 2019-20, showing a contraction of 22.6 per cent as compared to 8.1 per cent growth in Q1 2019-20.”

Earlier, the Union Finance Ministry rolled out Rs 20 lakh crore under ‘Atma Nirbhar Bharat’ stimulus package to compensate the loss due to COVID-19 lockdown. However, the overall GDP declined by 24 per cent, despite the government’s expenditure’s share in the GDP has gone up from 11 per cent to 18 per cent. Meanwhile, Moody’s Investors Service claimed that India, China and Indonesia will be the only G-20 emerging economies in the second half of 2020, post a strong enough pick up in real GDP.

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Finance Startup

PM Narendra Modi Urges Startups, Entrepreneurs to ‘Team Up’ Under ‘Vocal for Local’ Theme to Make India Atma Nirbhar in Toy Manufacturing Sector

PM Narendra Modi and toy shop in India. (Photo Credit: PIB/Facebook)
PM Narendra Modi and toy shop in India. (Photo Credit: PIB/Facebook)

New Delhi, August 30: Prime Minister Narendra Modi on Sunday during his Mann Ki Baat address urged the people of the country to become self-reliant in the toy manufacturing sector across the globe. He also urged the startups ‘team up for toys’ under ‘vocal for local’ theme to increase India’s share in the global market.

Highlighting the importance for making ‘toys for the world’, PM Modi said, “There has been a rich tradition of local toys in our country. Many talented and skilled artisans possess expertise in making good toys. We have given the focus on toys in the National Education Policy too. Learning while playing, making toys etc has been made a part of the curriculum.”

Urging the startups to be ‘vocal for local’ under the Atma Nirbhat Bharat initiative, PM Modi said, “I urge our start-up to team up for toys’, this also matches our call for a vocal for local. I urge our young brothers to make games in India and also on India. The global toy industry is over Rs 7 lakh crore but India’s share is very small; will have to work to increase it.”

Citing examples of the expansion of indigenous toy-making industries in India, PM Modi said Channapatna in Ramnagaram (Karnataka), Kondaplli in Krishna (Andhra Pradesh), Thanjavur in Tamil Nadu, Dhubri in Assam, Varanasi in Uttar Pradesh are recently developing as toy clusters. Apart from this, he said, “My appeal to the young talent of the country is Make Games Games in India and Make Games of India; it is said, Let the Game Begin…so come, let us play.”

On the issue of developing online games, the Premier said, “I call upon my start-up friends and new entrepreneurs to team up for toys; let us together make toys; it is time for local toys. You also come forward, innovate and implement something; your efforts in today’s small startups will transform into global conglomerates tomorrow and make a mark for India.”

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Finance

Mukesh Ambani’s RIL Announces Acquisition of Future Group’s Retail, Wholesale, Logistics and Warehousing Businesses for Rs 24,713 Crore

Reliance Market. (Photo Credit: Facebook)
Reliance Market. (Photo Credit: Facebook)

Mumbai, August 29: Reliance Retail Ventures Ltd. (RRVL), a subsidiary of Mukesh Ambani’s Reliance Industries Limited, on Saturday announced the decision to acquire Future Group’s retail, wholesale, logistics and warehousing businesses for Rs 24,713 crore. The latest deal between RRVL and Kishore Biyani’s Future Group has been carried on a slump sale basis.

Informing about the latest development, RIL said in a statement, “Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will acquire the retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of INR 24,713 crore.”

With the latest acquisition, Reliance Retail will now have the access of Future Group’s Big Bazaar, FBB, Easyday, Central, and Foodhall formats. The acquisition will enable RRVL to acquire Future Group’s over 1,800 stores spread over 420 cities in India. It is to be known that Future Group houses leading retail formats, including supermarket chain Big Bazaar, upmarket food stores Foodhall and bargain clothing chain Brand Factory.

Under the acquisition, Future Group would merge certain companies carrying on the aforesaid businesses into Future Enterprises Limited (FEL) of RRVL. Ahead of selling retail assets to the retail subsidiary of RIL, Future Retail Ltd, Future Consumer, Future Lifestyle Fashions, Future Supply Chain and Future Market Networks will be merged into FEL. Following this, all the retail and wholesale undertaking of Future Group will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL).

RRVL Director Isha Ambani said, “With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which has played an important role in the evolution of modern retail in India.”

Adding more, she said, “We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands. We are committed to continue providing value to our consumers across the country.”

Apart from the retail and wholesale transfer to RRFLL, the logistics and warehousing undertaking is also being transferred to RRVL under the deal. RRFLL is proposing to invest Rs 1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 per cent of post-merger equity holding and Rs 400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75 per cent of the issue price, adds the Reliance statement.

This is not the first time Future Group’s CEO Kishore Biyani sold his assets. Earlier on September 30, Future Group’s debt rose to Rs 12,778 crore. In 2012, Biyani sold his most valuable asset Pantaloons Retail to Aditya Birla group for Rs 1,600 crore after grappling with an equally heavy debt of Rs 12,000 crore. He had also sold Future Capital to Warburg Pincus for Rs 4,250 crore.

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Finance MSME Process & Business Expansion

Jio Mart, Facebook Tie-Up Aims to Bring 25 Million SMEs Online in Near Future

Facebook and JIO Mart (Photo Credit: pixabay and Facebook)
Facebook and JIO Mart (Photo Credit: pixabay and Facebook)

Mumbai, August 29: With an aim to help millions of COVID-19 affected Kirana stores in India, JIO Mart has tied up with Facebook to bring 20-25 million small businesses online in the near future. The two business giants have joined hands to help these small and medium enterprises digitise their product catalogues through the use of instant messaging app Whatsapp.

Speaking at an event organised by Internet and Mobile Association of India (IAMAI), Facebook India’s vice-president and managing director Ajit Mohan said, as quoted by Business Standard, “Our excitement is with connecting the dots between WhatsApp and Jio with the objective of helping millions of Kirana owners to digitise their product catalogues.”

Mohan was of the opinion that the move will fundamentally change the consumer behaviour in India and help in changing consumers change from opting to digital payments from physical cash. Citing a recent Boston Consulting Group-Facebook consumer behaviour study, Mohan stated that digitally-influenced purchases had gone up by 15-20 per cent for consumer goods brands like apparels, mobile phones and packaged goods. He added, as the daily quoted, “Video and virtual experiences will be at the heart of buying in the upcoming festive season.”

During the interaction, the Facebook-India MD said that the launch of Instagram’s Reels and WhatsApp video calls had reflected users’ changing consumer behaviour. It is to be known that Facebook recently acquired a 9.99 per cent stake in Jio Platforms, which houses many digital platforms like JioSaavn and Radisys. Also, Reliance’s fully-owned subsidiary is the biggest disruptor in the Indian telecom market as Jio.

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Finance

Open Digital Ecosystems Have Potential to Contribute Rs 35 Lakh Crore in India by 2030, Around 5.5% of the Projected GDP: Report

ODE (Representational Image) Photo Credits: mygov.in

Mumbai, August 28: Amid the coronavirus pandemic, Indian enterprises are increasingly working on their digital transformation. According to a joint report by investment firm Omidyar Network India and Boston Consulting Group, by 2030,  10 high potential national open digital ecosystems (NODEs) in sectors like health, agriculture and justice has the potential to create Rs 35 lakh crore in India by 2030.

This is expected to be around  5.5 per cent of the projected GDP in 2030, and also generate over Rs 15 lakh crore in savings.  Roopa Kudva, MD, Omidyar Network India said, “India has been a pioneer in the movement to build ‘digital highways.’ We were one of the first developing countries to have a population scale Digital ID initiative, and have built digital payments infrastructure such as UPI.”

The government was able to transfer Rs 37,000 crore directly to the bank accounts of 16 crore citizens using India’s digital infrastructure even during the pandemic. However, Kudva stressed that critical issues like privacy must be taken care of.  ODEs are defined as open and secure digital platforms that enable a community of actors to unlock transformative solutions for society, based on a robust governance framework.

The report envisioned three layers – digital platforms, community and governance – to transform service delivery through ‘Responsible ODEs’. The ODE approach suggests that the government should focus on creating the ‘digital commons’ and enable interoperability between siloed systems.

J Satyanarayana, Advisor, National Digital Health Mission and former chairperson, UIDAI said, “We need to raise the bar from systems-thinking to ecosystems-thinking. Digital ecosystems can evolve faster if we create the right environment, which includes open-standards-based architecture, data policies, collaborative design, and innovation.”

 

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Finance

GST Council Meet: Compensation Gap Stands at Rs 2.35 Lakh Crore for FY 2020-21 Amid COVID-19 Pandemic, Centre Places 2 Options Before States

41st GST council meeting. (Photo Credit: PIB)
41st GST council meeting. (Photo Credit: PIB)

New Delhi, August 27: Union Finance Minister Nirmala Sitharaman on Thursday chaired the 41st Goods and Services Tax Council Meeting. During the meeting, the council estimated the compensation gap at around Rs 2.35 lakh crore in GST collections due to COVID-19 pandemic.

Addressing the press conference, Revenue Secretary Ajay Bhushan Pandey stated that the total shortfall in collection of GST is estimated at Rs 2.35 lakh crore, out of which Rs 97,000 crore is on account of GST shortfall while the rest is due to COVID-19 pandemic.

Following this, the Union Finance Ministry gave the states seven days time to get back on filling the compensation gap of Rs 2.35 lakh crore and hinted brief GST Council meeting soon. The Union Ministry also gave two options for states to fill the compensation gap.

The first includes a special window which can be provided to the states, in consultation with the Reserve Bank of India, at a reasonable interest rate for the borrowing of Rs 97,000 crore. The amount can be repaid after five years (of GST implementation) ending 2022 from cess collection. While the second option is to borrow the entire Rs 2.35 lakh crore shortfall under the special window.

Apart from this, the Union Ministry stated that it will provide a further relaxation of 0.5 per cent in states’ borrowing limit under Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act, 2003). With this, states can choose to borrow more, beyond the expected compensation itself, since that is the injury caused by COVID-19.

Among other details, Union FM Revenue Secretary said that there was hardly any GST Collection in April and May. Adding more, he said, “Total GST compensation during April-July 2020 to be paid is Rs 1.5 lakh crores.” The Union Ministry informed that Centre released more than Rs 1.65 lakh crore as GST compensation to states for FY 2019-20, including Rs 13,806 crore for March.

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Finance Startup

Why Do Investors Invest in Startups? Here’s How Investors Add Value to Startups and Help Entrepreneurs

Startups and Investors (Photo Credits: Pexels)

For any business to flourish, there needs to be good investment and planning that will help the firm reach its target audience and go beyond! Here’s where the role of an investor comes into picture. An investor puts capital to use for long-term gains, while an entrepreneur seeks to generate profits by using those funds. Thus an investor is a crucial aspect for any startup, who typically generates returns by deploying capital. Investing in startups is a risky proposition. However, the low requirement for overhead capital along with high upside potential, makes it lucrative for the investors to put their bets on startups.

Basically, an investor is a person that allocates capital with the expectation of a future financial return or to gain an advantage. An investor can choose to invest in-equity, debt securities, real estate, currency, commodity, token, derivatives such as put and call options, futures, etc.

According to the official website of Startup India- startupindia.gov.in, investors particularly venture capitalists (VCs) add value to startups in a lot of ways. Some of them are listed below:

  1. Stakeholder Management: The investors are the ones who manage the company board and leadership to facilitate smooth operations of the startup. Moreover, their functional experience and domain knowledge of working and investing with startups imparts vision and direction to the company.
  2. Raise Funds: Investors are best guides for the startup as they help to raise subsequent rounds of funding on the basis of stage, maturity, sector focus etc. The investors aid in networking and connection for the founders to pitch their business to other investors.
  3. Recruiting The Best to Achieve Business Goals: Finding great talent and best-fit human capital is critical for startups, especially when it comes to recruiting senior executives to manage and drive business goals. The venture capitalists, with their extensive network can help bridge the talent gap by recruiting the right set of people at the right time.
  4. Proper Marketing of the product: The venture capitalists (VCs) assist with marketing strategy for your product/service.
  5. Merger and Acquisition (M&A) Activity: VCs have their eyes and ears open to merger and acquisition opportunities in the local entrepreneurial ecosystem to enable greater value addition to the business through inorganic growth.
  6. Organizational Restructuring:As a young startup grows to an established company, they help with the right organizational structuring and introduce processes to increase capital efficiency, lower costs and scale efficiently.
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Finance

Gold Price & Silver Rates Slip Ahead of Federal Reserve Chairman Jerome Powell’s Address

Gold jewellery (Photo Credits: Wallpaperflare)

Mumbai, August 27:Gold and silver rates slipped in the Indian market on Thursday. On MCX October gold futures were down 0.22 percent to Rs 51,665 per 10 gram. Silver futures fell to Rs 66,821 per kg.

The gold rate in the Indian market tracked a muted trend in the international spot prices as investors waited for Federal Reserve Chairman Jerome Powell’s address. The dollar index fell to a near one-week low against its rivals, making gold less expensive for holders of other currencies.

According to Good Returns website, the cost of 24 carat 10-gram was Rs 51,410 in Mumbai. The price of 10-gram 24-carat gold in Delhi, on the other hand, was at Rs 54,390. Customers can buy a 10-gram 24-carat gold in Kolkata at Rs 52,880.

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Finance

Delayed GST Payment: Govt Changes Interest Liability Rules, Interest to Be Charged on Net Tax Liability From September 1, 2020

GST Payment (Photo Credits: Unsplash)

New Delhi, August 26: The government on Wednesday changed the interest liability rules and said that the interest on delayed payment of Goods and Services Tax (GST) will be charged on net tax liability with effect from September 1. Reports inform that the industry had earlier this year raised concern over the directive of recovery of about Rs 46,000 crore of unpaid interest on delayed GST payment. The interest was charged on gross tax liability.

It was in March that the GST Council, which comprises of centre and state finance ministers, had decided in its 39th meeting that interest for delay in payment of GST to be charged on net tax liability with effect from July 1, 2017, and law would be amended retrospectively. However, on August 25, the Central Board of Indirect Taxes and Customs (CBIC) notified September 1, 2020, as the date from which interest would be charged on net tax liability.

Earlier, the CBIC had said that GST law permits interest calculation on delayed GST payment on the basis of gross tax liability. This position has been upheld in the Telangana High Court’s decision dated April 18, 2019. It must be noted that the net GST liability is arrived at after deducting input tax credit from gross GST liability. Therefore, calculating interest on gross GST liability increases the payout burden on businesses.

According to AMRG & Associates Senior Partner Rajat Mohan, this notification seems to be in disconnect with decisions of GST Council wherein it was assured to the taxpayers that the said benefit would be available retrospectively from July 1, 2017. “Prospective availability of this benefit would mean that millions of taxpayers may be looking at demand of interest for over 3 years from the date of GST implementation. Businesses are expected to approach the High Courts again on this unjustified and illegal demand of interest basis the ”principle of estoppel”, Mohan said.

Businesses, which are other than those under the composition scheme and quarterly return filers, registered under goods and services tax (GST) have to file returns (GSTR-1). They have to show tax liability by 11th of following month and pay taxes by filing GSTR-3B between 20-24 (due date varies according to the state in which businesses are registered). There have been cases where GST assessees have paid taxes after due date but did not pay the interest due on account of delayed payment.