Daily Financial News Analysis – 3rd Oct’20 – Free PDF Download


Tesla’s India Plan

  • CEO Elon Musk: Tesla will enter India next year
  • Tesla at present is the world’s most valuable car maker
  • ET had reported on September 21 that Tesla has shown initial interest to invest in a research and innovation centre in Karnataka and that talks were at a preliminary stage.
  • Gaurav Gupta, principal secretary of Karnataka’s commerce and industries department: “We have offered them (Tesla) all support. Bengaluru has a favourable ecosystem for electric vehicles and Tesla can leverage on that”
  • Analysts said expectations of a big-bang entry by Tesla into India should be muted as it offers only premium vehicles, even in the popular Model 3 range.
  • The charismatic entrepreneur has in the past blamed India’s tax regulations and tariffs for delaying Tesla’s foray into the country
  • India has set a target for 30% adoption of electric vehicles by 2030
  • The country’s EV market is expected to touch ₹50,000 crore by 2025

Railways on CAG report

  • The Railway Board has asked the Comptroller and Auditor General (CAG) to drop the phrase “window dressing” from its assessment of Indian Railways’ accounts for FY19.
  • CAG said the railways resorted to “window dressing” to put its working expenses and operating ratio in a “better light.”
  • Operating ratio is the amount of money the national transporter spends to earn each rupee.
  • The lower the ratio, the healthier its finances.
  • A railway official said such a characterisation was unwarranted as this has been standard accounting practice.
  • The policy allows large freight customers to get tariffs fixed for a year by making payment in advance to the Indian Railways.
  • Senior rail ministry officials said that the CAG’s comment was not justified, given the railways’ social service obligations apart from its large salary and pension bill.
  • State-owned Indian Railways is one of the country’s largest employers, serving the world’s second-largest population and covering the seventh-biggest country by area.
  • Passenger fares are subsidised, partly by freight.
  • The official said efficiency had started improving in the past few years, but implementation of the Seventh Pay Commission’s awards led to a steep rise in salaries and pensions.

Loan Moratorium

  • Government agreed in the Supreme Court to waive compound interest on loans of up to Rs 2 crore for the six-month (March-August) moratorium period.
  • It will benefit – most individual borrowers of housing, educational and personal loans as well a sizeable section of MSMEs
  • The waiver of interest on interest will also be given to all such loans by such categories of borrowers, whether or not they availed themselves of the moratorium facility.
  • Cost to exchequer – could be anywhere between Rs 10,000 crore and Rs 20,000 crore, depending on the guidelines for implementation.
  • However, the government argued strongly against extending such relief “for all types of loans for all categories of borrowers”, saying “such a blanket decision would cause a huge burden of Rs 6 lakh crore on banks, likely wiping out a major part of their net worth and even rendering most of them unviable”.
  • The government’s decision follows a firm stand taken by the court that moratorium would be meaningless unless at least the interest on interest is waived for the period.

Subsidies won’t help boost exports

  • Commerce and Industry Minister Piyush Goyal said quality, technology and scale of production will help India take its annual exports to USD 1 trillion and not government subsidies.
  • He exhorted exporters and the industry as a whole to target USD 1 trillion worth of shipments.
  • “Why can’t we aim for USD 1 trillion exports from India. We certainly can. I see no reason, (why) we cannot. For that we need to be clear on actionable items (and) subsidies are never going to get us there, I am very very clear about that,” he said.
  • He said there is a need to identify areas where sensible policies can help take exports to USD 1 trillion.
  • “At least in my six years of engagement, I have not found subsidies to be the solution for India’s problems. I think it’s quality, technology, growth, scale; and sometimes for a short period you may need to give a little thrust or support. But if they are looking at literally running a long term engagement with the world on subsidy, it is not going to work,” he said.




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