dfa-21-sep

Daily Financial News Analysis – 21st Sep’20 – Free PDF Download

 

Importance of Privatisation

  • AB Vajpayee government privatised a hotel – 18 years ago – privatisation
  • A special court has asked CBI to file cases against the then disinvestment minister Arun Shourie and some bureaucrats for alleged loss.
  • Privatisation is intrinsic to the reprioritisation needed to meet contemporary needs.
  • Exit from state ownership of business tricky.
  • Economic and social structures have changed
  • The single most important investment a government can make today is in people.
  • Investments in health and education will influence the future trajectory of the country.
  • Transfer resources from state holdings in commercial businesses to contemporary priorities.
  • There are practical reasons for the state to exit business enterprises.
  • It is ill-equipped both in terms of attitude and design to deal with the demands of running a business.
  • The political executive’s decision making is constrained by an atmosphere of suspicion.
  • Even when a government is convinced of the need to privatise, it does a shoddy job because of the atmosphere of distrust.
  • At a time when we are headed for our first annual recession in four decades, privatisation presents a sensible route to channel resources into raising the quality of India’s human capital.
  • We should get it right this time.

Tesla

  • September 10: Tesla + Karnataka government  held exploratory discussions
  • It was about research facility in Bengaluru
  • A follow-up meeting is expected later this month.
  • Elon Musk: company’s luxury electric cars will “hopefully” come soon to India.

  • Bengaluru already hosts local and global companies such as Daimler, Bosch and Mahindra Electric.
  • It is also home to promising EV startups such as Ola Electric, Sun Mobility and Ather.
  • Karnataka is the first state to come up with an electric vehicle policy, hoping to generate investments of ₹31,000 crore in EV R&D and manufacturing.
  • In January, the American carmaker opened a Gigafactorycar and battery factory-—in Shanghai. It sold 50,000 vehicles in the first half of the year emerging as the top seller of electric vehicles in China, Nikkei Asian Review reported on August 25.
  • Also, in January, Reuters reported that Tesla in a recruitment notice on its official WeChat account had said it plans to open a design and research centre in China.
  • In July, Musk had tweeted that Tesla will look at another Gigafactory in Asia, outside of China, “but first we need to finish Giga Berlin (for Europe) and a second US Giga to serve eastern half of North America”.
  • Tesla, which overtook Toyota in July as the most valuable automobile company in the world, sells its cars in several markets in Europe, Latin America, Japan, Singapore and Australia, besides China.

Oracle-TikTok

  • Donald Trump gave his blessing to Oracle’s bid for the American operations of TikTok.
  • “If they get it done, that’s great. If they don’t, that’s OK too.” – Trump
  • Oracle plans to take a 12.5% stake in the new TikTok Global, while Walmart said it has tentatively agreed to buy 7.5% of the entity.
  • The new company, which will be called TikTok Global, has agreed to funnel $5 billion in new tax dollars to the US and set up a new education fund, which Trump said would satisfy his demand that the government receive a payment from the deal.
  • Four of the five board seats will be filled by Americans.
  • TikTok confirmed Oracle will host all its US data and secure its computer systems.
  • Oracle’s Generation 2 Cloud fully isolates running applications and responds to security threats autonomously, according to the statement, which eliminates the risk of foreign governments spying on American users or trying to influence them with disinformation.
  • TikTok Global will likely be headquartered in Texas and will hire “at least25,000 people.

GST

  • Any state that does not choose one of the borrowing options offered by the Centre to compensate for the revenue loss on account of goods and services tax (GST) transition may have to wait till June 2022 to get compensation.
  • As many as 21 states have backed the first option, entailing ₹97,000 crore borrowing.
  • Principal and interest in the first option is to be serviced by the compensation cess.
  • This is bound to put pressure on the Opposition ruled states, which have rejected both the options.
  • Over ₹1.5 lakh crore as GST compensation is pending towards states for the period April-July, 2020, as the cess collected in the current financial year was insufficient to pay the dues.

 

 

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