Daily News - Tuesday, 3 September 2024

Financialisation a potential trap: CEA (Financial Express)

Chief Economic Adviser Anantha Nageswaran cautioned against India falling into a "financialisation trap," where the dominance of financial markets could lead to unprecedented levels of debt and increased inequality. Speaking at the CII Financing 3.0 Summit, he emphasized that the financial sector should serve the real economy, warning that an overemphasis on financial markets could skew policy and macroeconomic outcomes, as seen in developed countries. Nageswaran also highlighted the risks of rising retail participation in stock markets amid low household savings and advised against viewing crypto assets and derivatives as safe investments.

Kaynes’ ₹3,300-cr Gujarat plant is fifth chip unit to get approval (Financial Express)

Kaynes Semicon, a subsidiary of Kaynes Technology, received approval from the Union Cabinet for a ₹3,307-crore outsourced semiconductor assembly and test (OSAT) unit in Sanand, Gujarat, marking the fifth project approved under India's ₹76,000-crore semiconductor incentive scheme. The 46-acre facility, which will produce 6 million chips per day for various applications like electric vehicles and consumer electronics, is expected to create around 10,000 jobs and begin production by March next year, initially focusing on exports. The project aligns with the government's long-term semiconductor mission, which aims to build a foundational industry with significant economic and employment impacts.

Gadkari prods states to agree to 12% GST on flex-fuel vehicles (Financial Express)

Union Minister Nitin Gadkari urged states to support a proposal to reduce GST on flex-fuel vehicles to 12%, down from the current 28% plus additional cess, to promote the use of environmentally friendly vehicles. This reduction aims to encourage the adoption of flex-fuel vehicles, which can run on a blend of petrol and ethanol, with manufacturers like Tata, Suzuki, and Toyota already developing models. The push aligns with India's broader strategy to reduce fossil fuel imports and enhance the ethanol blending program, which has already saved significant foreign exchange and reduced carbon emissions. 

India eyes COP29 strategy ahead of the EU’s carbon tax (mint)

The Indian government is actively strategizing for the upcoming COP29 climate conference in Azerbaijan, focusing on representing the Global South and addressing issues faced by developing nations, particularly in response to the European Union's proposed carbon tax on exports, which could disrupt over $8 billion worth of Indian metal exports and impact 0.05% of India's GDP. With global warming nearing the 1.5°C threshold, COP29 is crucial for discussions on climate finance, including the much-delayed loss and damage fund, and India's stance on the EU's carbon border adjustment mechanism (CBAM). India remains committed to fulfilling financial commitments and technology transfer for developing nations, aiming to protect its economic interests while maintaining a constructive role in the negotiations. 

PMI signals manufacturing eased to 3-month low in Aug. (The Hindu)

Manufacturing activity in India declined to a three-month low in August, with the HSBC India Manufacturing PMI falling to 57.5 from July's 58.1, as new orders and exports saw their weakest growth in months. Inflation and competitive pressures dampened producers' optimism to the lowest level since April 2023, leading to slower output growth and softer job creation, with some firms even reducing headcounts. Despite cooling input costs, inflation remained high, with firms raising prices at the second-fastest rate in nearly 11 years, passing on additional costs to clients amid steady demand.