For India Inc, 2015 has been ‘action-packed’. Expectations were high on economic reforms front. Some made headway, some remained grounded. The Indian economy did extremely well than global counterparts. Bad loans did not move an inch lower, but ways to reduce were put in place. The government tightened noose and freed up control, wherever it had to. The Sunday Standard gives you a rundown of 2015, that’s just about to bid goodbye.
India in ‘Sweet-Spot’
Asia’s third-largest economy topped the growth chart with its world-beating 7.5 per cent GDP growth in March, 2015. Though the Economic Survey pegged GDP growth at 8-8.3 per cent for FY16, owing to global cues, the target was revised downwards to 7-7.5 per cent. IMF, ADB, Moody’s, Fitch too cut growth projections, for India and other nations. Even with revised estimates, India is likely to retain its numero uno spot for some more time.
Rajan Plays Santa
Call him James Bond or Santa. But RBI Governor Raghuram Rajan being Raja, in his inimitable style, surprised markets throughout 2015. When everyone was looking the other side, he announced an out-of-turn rate cut, in fact, twice. And when all of us knew he would trim policy rates, retaining the surprise element, he gave a more than anticipated reduction. In all, the central bank slashed 125 bps, or 1.25 per cent, in just nine months, effectively putting the ball in government and banks’ court for further action
Call Drops Menace
The year saw telcos and sector watchdog Trai locking horns over the rising call drops issue. After due consideration, Trai ordered telcos to compensate consumers Rs 1 for every call drop. This is music to consumers’ ears, but opened a fault line between telcos and Trai, with the former questioning the jurisdiction of the latter. Telcos are demanding a roll-back of the regulation, citing a 3-5 per cent impact on revenue, failing which they want to take a legal recourse.
Check-’MAT’
After months of wobbling, the government accepted Justice A P Shah Panel’s recommendations on the controversial Minimum Alternate Tax (MAT), which suggested that FIIs need not pay MAT prior to April, 2015. With just one pen stroke, all 8,000-odd FIIs/FPIs were exempted from paying MAT. Besides, I-T notices sent to foreign investors were also withdrawn.
Yuan Spooks Markets
China devalued its currency yuan by 1.9 per cent, rattling global markets. Rupee plunged to a 2-year-low, while benchmark Sensex crashed 1,600 points in a single day. The state-run Indian Oil Corporation’s FPO, which incidentally happened the same day, sailed through mopping up Rs 9,379 crore with government, insurers and banks bailing it out.
Kirana Stores-cum-Banks
The RBI worked over time to shortlist over 100 applications to grant in-principle approval to 11 entities, including the Department of Posts, to open Payments Banks and 10 players to set up Small Banks. This is the first bulk licensing after banking sector was opened up for 10 private players in the 1990s and could well change the banking landscape as we know it. Payments Banks’ licences are ‘on-tap’ meaning, the window for granting licences is open throughout the year and not every 10th year.
Maggi Row Boils
In a first, FMCG major Nestle witnessed a nation-wide bag on its popular Maggi noodles in May, when food inspectors found lead content higher than the prescribed limits. The move forced Nestle to destroy over 30,000 tonnes of Maggi, shaving off a neat Rs 450 crore. However, the ban was lifted in November, and the 2-minute instant noodles are back on the retail shelves.
Changing Debt Guard
The proposed Public Debt Management Agency floated in February, favoured shifting of powers from RBI—the government’s debt manager—to the Finance Ministry. Owing to criticism, in May, the proposal was withdrawn only to crop up a few months later. The Ministry now wants to prepare a road map in consultation with the RBI to set up the agency through an executive order modelled a la the US and the UK to sell government debt after taking away such powers from the RBI.
Net Neutrality
It all started in March, when the DoT floated a consultation paper to regulate over-the-top services including net neutrality. In April, the Airtel Zero platform offering free access to certain apps, gained severe backlash from netizens prompting players like Flipkart to withdraw support. Much recently, Reliance’s offering Free Basics too came under Trai scanner and is being put on hold. Free Basics is the renamed version of Facebook’s Internet.org, which raked up quite a controversy.
Volkswagen Dieselgate
German automaker Volkswagen made a sensational admission for having fixed a ‘cheat device’ in millions of cars sold worldwide. Following a government enquiry, VW initiated a voluntary recall of 3.23 lakh vehicles from Indian roads -- the highest ever in the country. As a precautionary measure, the government is gearing up to test all diesel vehicles across India .
Cabbies Get Govt Googly
Following the allegation against a Uber cabbie for raping a female customer, there was a crack down on cabs operated by taxi-hailing firms. Weeks later, some of the state governments banned Ola, Uber and Taxi For Sure from offering services as they don’t have licences under Modified Radio Taxi Scheme, 2006 .
IndiGo IPO Feat
Low-cost carrier IndiGo’s maiden Rs 3,018-crore IPO ended up as the sought-after IPO and the biggest in nearly three years. The offer was oversubscribed even as the company had a negative net worth of Rs 139.39 crore, days ahead of its IPO. A negative net worth implies higher liabilities than assets. But the consistent profits weighed over and investors flocked to the stock making the IPO a runway success.
Readying for Takeoff
The revised draft of the National Civil Aviation Policy, released in October, proposes to limit fares to Rs 2,500 for flights lasting an hour or less. It also seeks clarity on the much-talked about ‛5/20 rule’ that sets the norms for airlines to fly abroad. A viability gap funding for regional routes, liberal bilateral traffic rights, opening up foreign direct investment (FDI) in aviation, self-handling airport operations and retaining the route dispersal guidelines are some other highlights.
Thumbs Up to Free Speech
The Supreme Court striked down a much-criticised provision in the Information Technology Act that allowed police to arrest anyone posting annoying or offensive content on social media platforms. Section 66A of the Act is unconstitutional in its entirety, the apex court said in a ruling issued in March.
India’s Own Chapter 11
The proposed Insolvency and Bankruptcy Code, 2015, tabled in the Lok Sabha and referred to the joint select committee, could revive our ailing banks from going broke. It will help wind up businesses quickly and resolve insolvency issues in about 180 days from an average four years currently.
Glittering Schemes
Indian’s love for gold is well known with the country’s households sitting on 20,000 tonnes worth over Rs 52 lakh crore. To monetize this, the government launched three schemes — Gold Monetization, Sovereign Gold Bond and Gold coins. Though the initial response has been lukewarm, officials hope it will gain momentum.
Hefty Pay Packet
Seventh Pay Commission proposed an attractive 16 per cent increase in pay, 63 per cent rise in allowances, 24 per cent increase in pensions, though such a move cost the government exchequer Rs 102,100 crore in FY17. States too may have to scramble for resources to make similar pay hikes.
Too-big-to-fail banks
For the first time, RBI designated two banks — SBI, ICICI Bank — as two Domestic Systemically Important Banks (D-SIBs) or in simple words ‘too-big-to-fail’ banks. D-SIBs collapse could have a cascading effect on the country’s entire financial system and the economy. Interestingly, out of the 93 commercial banks, only two banks met RBI’s D-SIBs criteria.
Kamath @BRICS
Seasoned banker K V Kamath was appointed the first President of $100-billion New Development Bank, promoted by BRICS. Based in Shanghai, Kamath will steer the bank for five years. India hopes to get more funds for infrastructure development from the bank.
E-tail wars
E-commerce emerged as the star performer in 2015 as more consumers shopped online. However, players like Snapdeal and Flipkart witnessed sharp criticism for burning huge cash yet posting successive losses. They are also accused of following a marketplace model to circumvent taxes, with the Enforcement Directorate probing into the issue
Moneybags for Insurers
Rajya Sabha approves raising FDI ceiling in insurance to 49 per cent from 26 per cent. The proposed move will aid cash-starved insurance companies achieve break even in the coming quarters. Currently, of the 24 life insurance companies and 28 non-life insurers, only a handful including state-run Life Insurance Corporation make profits.
MNP Rollout
The year also saw telcos rolling out full mobile number portability (MNP) across the country. The move allows customers to retain their numbers throughout India.
EU Drags GVK Bio
GVK Biosciences’ ill-fate continued with the European Medical Agency refusing to lift the ban on the company. It was in late 2014, that GVK was pulled up for alleged violation of norms and subsequently banned 700 generic drugs it had conducted tests on behalf of generic drug companies. Analysts say the move could result in a business loss of $1-1.2 billion worth pharma exports.
NEWS MAKERS
Govt Loses GST Plot
The most-ambitious Goods and Service Tax (GST) reform remained a non-starter and will likely miss its April, 2016 deadline. The proposed unified indirect tax regime was long-awaited by investors and the passing of the Bill would have improved the country’s ease of doing business. Expected to fetch investments back into the country.
Mint Street vs FinMin To Veto or Not
Dissent between Mint Street and the North Block deepened when the latter proposed removal of veto powers from the RBI Governor in February. Months later, the draft Indian Financial Code moots Monetary Panel Commission with higher government representation sans governor’s veto power. While Raghuram Rajan hinted he was OK with no veto, the FinMin is yet to seek Cabinet nod for IFC.
Sundar on Top, But Google (I) in the Dock
In a significant announcement, Google names Chennai-based Sundar Pichai as CEO to lead internet-focused Google Inc. Back home, the internet search giant is under the fair-trade regulator Competition Commission of India scanner allegedly for abusing its dominant position.
Zuckerburg Meets Modi @ Silicon Valley
PM Narendra Modi paid a visit to the Silicon Valley in September to catch up with tech titans, including Tim Cook, Apple, Adobe’s Shantanu Narayen, Qualcomm’s Paul Jacobs, Cisco’s John Chambers, Google’s Sundar Pichai, Tesla CEO, Elon Musk Microsoft’s Satya Nadella and even held a town hall meeting alongside Facebook’s Mark Zuckerburg. The visits is expected to fetch investments back into the country.