Daily News - Tuesday, 30 July 2024
Spike in freight costs to hit exporters (The Hindu)
A recent four-fold increase in container freight costs could severely impact Indian exporters' profit margins and working capital requirements through 2024-25, with smaller players likely to face the worst effects, according to India Ratings and Research (Ind-Ra). Despite a significant correction in freight rates post-2022, the reduction for Indian corporates has been less pronounced than the global average, and rates are expected to rise further due to factors such as increased fuel usage, rising insurance premiums, and port congestion. Ind-Ra warns that sustained high freight rates could negatively affect exporters' business operations, EBITDA margins, and working capital, particularly for medium and small entities with thin margins.
India terms EU carbon tax proposal as unfair (mint)
India has rejected the European Union's proposal to levy higher taxes on its carbon-producing industries, arguing that the suggested carbon border adjustment mechanism (CBAM) is impractical and unfair for a developing economy. Ajay Seth, India's Economic Affairs Secretary, conveyed this stance to the EU delegation, emphasizing that the proposed solution would be detrimental to domestic market costs. The EU's plan, approved last year, aims to impose tariffs on high-carbon imports like steel, aluminium, and cement to achieve net-zero greenhouse emissions by 2050.
Govt outlets sell tomatoes at ₹60 per kg as prices soar (mint)
The Indian government has launched a subsidy initiative to sell tomatoes at ₹60 per kg through National Cooperative Consumers' Federation of India Limited (NCCF) vans in Delhi, Noida, and Gurgaon, amid soaring vegetable prices that have driven consumer price inflation to 5.1% in June. This measure, initiated by Union food and consumer affairs minister Pralhad Joshi, aims to mitigate the impact of rising food inflation, particularly in high footfall areas and will expand to more cities. Additionally, the government has procured 5 lakh tonnes of onions to stabilize market prices, selling subsidized onions at ₹25/kg in 19 cities to counter retail prices that have surged to ₹60/kg.
Govt debt-GDP ratio rises to 58.2% in FY24 (Financial Express)
The Centre's debt-to-GDP ratio rose to 58.2% in 2023-24, surpassing both the budget and revised estimates, with the total debt increasing by 10.02% to ₹171.78 trillion as nominal GDP grew by 9.6%. Despite plans to reduce the debt-to-GDP ratio to 56.8% in FY25, the debt is projected to rise to ₹185.27 trillion, with interest expenses growing by 9.3%. The government announced a shift from fiscal deficit targeting to an annual debt-to-GDP reduction from FY27, aiming to keep the fiscal deficit below 4.5% of GDP, though the goal to reduce the Centre's debt to 40% by FY25 appears challenging.
Govt to spend more on rural connectivity (Financial Express)
The Indian government plans to spend ₹19,000 crore from the Universal Services Obligation Fund (USOF) in FY25, a 21% increase from FY24, primarily on rural connectivity and telecom R&D. This increase is driven by a significant corpus in the USOF fund and pressure from telecom operators to abolish the USOF levy until the existing funds are exhausted. Key allocations include ₹10,100 crore for rural connectivity, ₹8,500 crore for the BharatNet project, and ₹400 crore for telecom research, with spending expected to rise to ₹70,000 crore over the next three years due to major projects like BharatNet phase-3 and BSNL 4G saturation.
