The Indian Government is taking a number of steps to reduce fiscal deficit to the tune of 4.1% of GDP in the ongoing financial year and one of them is to initiate an austerity programme. There is expected to be a reduction of 10% in case of all non-plan expenditure. Senior officials have now been restricted from travelling in the first class by air or even touring outside India. They will also be barred from organising meetings at 5-star hotels or even from buying new cars other than ones that are to be used strictly for operational purposes. The Finance Ministry has also revealed that as of now there will be no further recruitment in various offices of the Government.
The Government posts that have been lying vacant will remain so. During 2012 and 2013 the previous Government headed by the United Progressive Alliance too had made similar reductions in order to reduce their expenses. Under normal circumstances, the officers – based on their seniority – are considered eligible for higher class of air travel.
However, as the budget is limited, the Government has advised that utmost restraint be exercised in this case. It has gone so far as to say that the least expensive tickets should be purchased. The Finance Ministry has also championed the use of video conferences as a viable alternative in this case.
Indian stock exchange does well
Both NSE Nifty and BSE Sensex have, on the final day of October 2014, hit their best figures in trading. While BSE Sensex reached 27,493.59 points, for NSE Nifty the high watermark was measured at 8,214.65 points. The major reasons for this have been the continued inflow of funds and a number of economic reforms that have been announced by the Government. There is also a lot of hope that the corporate sector will be doing well in the period. In fact, the BSE’s performance stands testament to the performance it has delivered over four days keeping all its investors happy.
In fact, on 30 October last as well the BSE Sensex had performed well at various sessions and gained 593.43 points in the bargain. This helped the gauge to end at 27,346.33 points, which was the best till that day. At present, stocks of IT companies were ruling the roost followed by the shares of companies dealing in healthcare products and capital goods. In all, these shares saw profits of 1.49%. The NSE Nifty also crossed the 8,200 mark for the first time ever. It saw an increase of 45.45 points and gained by 0.55%.
Adani Power allowed to purchase power plant
Adani Power was permitted by the Competition Commission of India to purchase a power plant from Lanco Infotech. The said power plant has a capacity of 1,200 MW and uses imported coal as fuel. It is located at Udupi, Karnataka and the whole agreement has been finalized at an amount in excess of INR 6,000 crore. It is being touted as the biggest acquisition in the industry for thermal power sector in India. This success has also contributed to the positive weekend performance of the company’s share – this was especially evident in the way its share performed in the early hours of trading on 31 October.
In the permission granted to the said deal, the CCI has noted that even with the acquisition the aggregate market share of Adani in terms of generating electricity and installed capacity will not be sufficient to raise any serious concerns as such. The monitoring body has also noted that this deal will not have any ill-effect on the competitors of Adani in India.
IDFC’s financial unit becomes a bank
The members of IDFC’s board provided the necessary approval to demerge its financial unit and make it the IDFC Bank, which will function as a subsidiary organisation, wholly owned by IDFC. This has also prompted the organisation to indulge in more purchases. It is being said that the IDFC Bank will be selling each equity share for 10 rupees.
However, this benefit will only apply to each share of similar value held in the parent company. This will be done primarily for the benefit of people who may be affected by the demerger. When the said process is completed, 53% of the newly formed entity’s shares will be held by IDFC Financial Holding.
IDFC Financial Holding is a wholly owned IDFC subsidiary. The shareholders of IDFC will hold the remaining shares of the bank. This demerger has also contributed positively to the performance of IDFC’s stocks.
Idea Cellular performing better than Bharti Airtel in equities market
Sanjeev Prasad, who works for Kotak Institutional Equities, feels that at the moment Idea Cellular is a better bet compared to Bharti Airtel with regards to the equities market. He stated the value of Bharti Airtel has been fair and its business in India has been doing well too. However, according to him, its business in African markets are not doing so well in comparison.
He has reiterated that the problems with Bharti Airtel’s overseas business have been evident in the organization’s financial results for the second quarter for the 2014-15 fiscal. This is the reason that Idea Cellular seems to be a better option, at least at this point in time. The levels of price competition in the last few years in the Indian market have lacked any proper rhyme or reason, according to him.
However, he feels that things will be better this time around and the three major companies will have greater room to play with in terms of pricing power. Sanjeev also expects that this will have a positive effect on their revenue in the ongoing fiscal.
Sanjeev has also stated that on the basis of quarterly results there has been an increase in the volume of data being handled by these companies. He has stated that this trend will be going on in the next few quarters as well.
(As per media reports)