The benchmark stock indices opened the day on a negative note as RBI note on bad loans weighed on banking stocks.
Join us as we follow the top business news through the day.
Budget 2021-22: Govt should provide additional funds, incentives for agri sector, say experts
The budgetary allocation for agriculture will be under focus amid farmer protests.
PTI reports: “The government should provide additional funds as well as incentives in the upcoming Budget to promote indigenous farm research, oilseeds production, food processing and organic farming for the overall growth of the agriculture sector, according to industry experts.
The direct benefit transfer (DBT) scheme should be utilised more to support farmers instead of giving subsidies, they added.
“Food processing industry has played an important role in better price realisation for the farmer and reducing the cost of intermediaries. The budget must provide special incentives to food processing through incentives such as interest subvention, lower taxes, access to technology and so on,” DCM Shriram Chairman and Senior MD Ajay Shriram said.
Referring to the successful PM-KISAN scheme under which Rs 6,000 is paid annually directly into farmers bank accounts, he said the DBT mechanism should be fine-tuned and gradually should be utilized to support farmers in lieu of other subsidies.
“Let the farmer decide how to judicially use the money. With the benefit of DBT, farmers can then buy better seed, use new-age fertilizers, optimize water usage and so on,” Shriram said.
Stating that many Indian startups have invested in the agri-technology space, he advocated for a policy that encourages growth of these companies and adoption of latest techniques.
He said there has not been any significant breakthrough in recent years from indigenous agricultural research and development (R&D) and this could be partly on account of resource crunch.
“Two areas that need immediate attention are firstly linking agricultural research with industry requirements and secondly avoiding ideological resistance to new-age technologies such GM crops,” Shriram said.
Consulting firm Deloitte India suggested that more funds should be allocated for research and development as well as for increasing the domestic production of oilseeds to reduce imports of cooking oils.
Stating that livestock farming is one of the key pillars for augmenting farmers’ income, the consulting firm said one of the big impediments for development of this sector is the prevalence of various diseases that affect mortality, productivity, and overall production.
“Supply of vaccines is not adequate to address the increasing demand. Funding for developing vaccines and creating necessary infrastructure would be required in this budget,” Deloitte said.
Chirag Arora, Founder, Organisch Overseas, said the government must encourage farmers to adopt organic farming.
“The need of the hour is to encourage the private sector into the space by offering tax incentives to startups venturing into this domain. It also needs to augment investment on creation of cold-chains and increase storage capabilities,” Arora said.
Last month, in a virtual pre-budget consultation with the finance ministry, Bharat Krishak Samaj (BKS) had said that the government should incentivise balanced use of fertilisers by increasing urea price and lowering rates of phosphatic and potassic (P&K) nutrients in the upcoming Budget.
BKS Chairman Ajay Vir Jakhar had also sought reduction in taxes on diesel and transport subsidy on fruits and vegetables, but demanded tax on unhealthy foods. He had pitched for tripling investment for micro-irrigation and solar pumps for individual farmers as well as funding for distribution of soil moisture measuring sensors.
“Prioritize investment in human resources over infrastructure. There are about 50 per cent vacancies in agriculture research institutions across India. Target 2 per cent expenditure on agri R&D of agriculture GDP over the next few years,” BKS had said.”
Govt rejects demand for further extension of returns filing date beyond Feb 15
No more extension of the deadline for filing tax returns.
PTI reports: “The finance ministry has rejected the demand for further extension of the last date for filing returns where audit is required beyond February 15.
Last month, the government had extended the income tax return (ITR) filing deadline for individuals till January 10, and for companies till February 15.
“CBDT passes order u/s 119 of Income-tax Act, 1961 in F No. 370153/39/2020-TPL dt 11th January, 2021, disposing off the representations for extension of due date for filing of Audit Report u/s 44AB, in compliance with the order of hon’ble Gujarat High Court dt 8th January, 2021,” the income tax department said in a tweet on Monday.
This was in response to the Gujarat High Court order dated January 8, 2021 in the case of The All India Gujarat Federation of Tax Consultants versus Union of India directing the finance ministry to look into the issue of extension of due dates for filing of audit reports under Section 44AB of the Income Tax Act.
As per the provisions of the Act, the due date for filing of the audit report under Section 44AB is one month prior to the due date of filing of income tax return, it said.
The due dates for payment of self-assessment tax for taxpayers whose amount due does not exceed Rs 1 lakh also coincide with the due dates for filing of ITR, it said.
On December 30, 2020, the government had announced extension of the last dates for filing of returns by individuals to January 10, 2021 from December 31, 2020.
In case of return for tax audit cases, the date was extended to February 15, from the earlier January 31. It was for the third time the tax department extended the dates.”
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Rupee slips 4 paise to 73.44 against US dollar in early trade
The rupee mirror’s stocks once again this morning.
PTI reports: “The rupee depreciated 4 paise to 73.44 against the US dollar in opening trade on Tuesday, tracking the rebound in the American currency and muted opening of domestic equities.
At the interbank forex market, the domestic unit opened at 73.42 against the US dollar and fell to 73.44 against the greenback, registering a decline of 4 paise over its previous close.
On Monday, the rupee had finished at 73.40 against the American currency.
“Weak Asian currencies could continue to weigh on sentiment. However, foreign portfolio investor (FPI) flows into the domestic equity markets could cap losses,” Reliance Securities said in a research note.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.12 per cent to 90.57.
“US dollar index extended gains this Tuesday morning in Asian trade against major peers as the prospect of massive fiscal stimulus pushed US yields higher,” the note added.
The euro, sterling and Japanese yen were flat against the US dollar this morning in Asian trade.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 81.23 points lower at 49,188.09, and the broader NSE Nifty was trading higher by 0.05 points at 14,484.80.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,138.90 crore on a net basis on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, declined 0.13 per cent to USD 55.59 per barrel.”
Stretched valuations threaten stability: Shaktikanta Das
Reserve Bank of India (RBI) Governor Shaktikanta Das has flagged the growing disconnect between exuberant equity markets and real economic activity and warned that the ‘stretched valuations of financial assets’ threaten overall financial stability.
“The disconnect between certain segments of financial markets and the real economy has been accentuating in recent times, both globally and in India,” Mr. Das wrote in his foreword to the RBI’s biannual Financial Stability Report (FSR), which was released on Monday.
“Stretched valuations of financial assets pose risks to financial stability,” he cautioned.
Pointing to the interconnected nature of the financial system, the RBI Governor urged banks and financial intermediaries to be cognisant of the risk. India’s stock markets have been on a tear since plunging to their lowest levels in more than three years in March in the wake of the COVID-19 pandemic’s outbreak and ensuing lockdowns.
Indian shares edge lower as central bank report weighs on banks
The bad loan threat is back.
Reuters reports: “Indian shares inched lower on Tuesday, dragged down by banking stocks after the central bank said domestic lenders might see bad loans double, while investors awaited retail inflation data due later in the day.
The blue-chip NSE Nifty 50 index fell 0.2% to 14,462 and the benchmark S&P BSE Sensex was down 0.17% to 49,184.21 by 0346 GMT.
The gross non-performing assets of Indian banks may increase from 7.5% in September 2020 to 14.8% under a severe stress scenario, a report from the Financial Stability and Development Council said on Monday.
The Nifty bank index was down 0.74%, while the public sector bank index fell 0.94%.
Shares of Gail (India) Ltd rose 4.4% after the company said it would consider a proposal to buy back shares.”
Ford announces closing of Brazil manufacturing operations
Ford Motor has said it will close three plants in Brazil and stop producing automobiles in the South American country.
The company said in a statement on January 11 it will cease production immediately at the factories “as the COVID-19 pandemic amplifies persistent industry idle capacity and slow sales that have resulted in years of significant losses”.
The automaker also said it will keep its South America headquarters, product development centre and proving grounds in Brazil.
“With more than a century in South America and Brazil, we know these are very difficult, but necessary, actions to create a healthy and sustainable business,” said Jim Farley, Ford president and CEO. “We are moving to a lean, asset-light business model by ceasing production in Brazil and serving customers with some of the best and most exciting vehicles in our global portfolio.”