Daily Financial News Analysis – 3rd Oct’20

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

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.

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.

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.