“Even as tax collections have shown strong growth this fiscal with expectations that it would overshoot the Budget target by a wide margin, the Centre is expected to remain committed to fiscal prudence in the Union Budget 2023-24 and may look at fresh measures to boost tax revenue. While there is little scope for hiking the rates on the direct tax side, as it will go counter to the policy of keeping rates benign and the immediate requirement of boosting consumption, the government may choose to go for fewer tax handouts. In the pre-Budget meetings with finance minister Nirmala Sitharaman, the industry has called for tax rebates and concessions to help prop up domestic demand. The Centre could also take a harder look at weeding out any remaining exemptions and focus on improving compliance and plugging tax leakages.
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“On to economy. Easing global commodity prices and new kharif crop arrivals will dampen inflationary pressures in the coming months, and the pass-through of higher input prices to retail inflation is near complete, the finance ministry said in its latest monthly economic review report on Thursday. India is well placed to grow at a moderately brisk rate in the coming years on the back of macroeconomic stability, despite the global monetary tightening, it said. So far in the current year, India’s food security concerns have been addressed and will continue to receive the utmost priority from the government, according to the report. “A rapid deterioration in global growth prospects, coupled with high inflation and worsening financial conditions, has increased fears of an impending global recession. The global slowdown may dampen India’s exports businesses outlook; however, resilient domestic demand, a re-invigorated investment cycle, along with strengthened financial system and structural reforms, will provide impetus to economic growth going forward.”
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“Meanwhile, Chief economic adviser V Anantha Nageswaran has said that India’s private sector capital expenditure is expected at `6 trillion in the current financial year, which is a substantial improvement compared to the private capex in the past six to seven years. The private sector capex has crossed Rs 3 trillion in the first half of FY23, he said. The corporate sector has seen a reduction in its leverage ratio, which indicates balance sheets are capable of expanding again based on corporate profitability, he said, adding that the capacity utilisation is also reaching the levels which will trigger capex. The Union government has budgeted Rs 7.5 trillion for capital expenditure in FY23. Nageswaran at the 9th SBI Banking & Economics Conclave said that the private sector, motivated by reasonable tax rates, will definitely have to invest, as private sector investment leads to employment generation. He also said higher capex will raise household incomes and in turn consumption.
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“Moving on. Following increased scrutiny by the Centre on electric vehicles to ascertain their eligibility to qualify for subsidies, the process of getting FAME-II approval has stretched for all EV players. The government has held back subsidy disbursals totalling more than Rs 1,000 crore for most part of the year, claim EV makers. The disbursements are yet to resume. A few weeks ago, the ministry of heavy industries sent notices to a few electric two-wheeler makers, including top-sellers like Hero Electric, Okinawa and Ampere Vehicles to check if the components they use in their models are made in India or not. The entire electric two-wheeler industry has come under the government scanner after accusations surfaced of alleged violations of localisation rules under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles scheme. Some companies have been accused of claiming government benefits without meeting the mandatory 50% local sourcing rule.
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“And lastly, in some industry news, Zomato may be gaining an edge over rival Swiggy despite the latter’s more attractive discounts to customers. With a brisk growth rate of 55% in the six months to June, compared with a more sedate 40% for Swiggy, Zomato seems to be forging ahead. However, the chunky discounts have probably led to Swiggy making bigger losses. At over $315 million, it is meaningfully higher than Zomato’s standalone losses of $50 million and a combined (with Blinkit) loss of around $170 million. On Wednesday, Prosus released data which put Swiggy’s H1CY22 food delivery gross merchandise value at $1.3 billion or roughly Rs 10,500 crore compared with $1.6 billion or around Rs 13,000 crore for Zomato during the same period. Analysts at Jefferies peg the food delivery share of Zomato at around 55% in H1CY22, which it believes could be the highest for the food delivery player. The gain comes at the cost of a loss for Swiggy which is persisting with aggressive market tactics such as big discounts.
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