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Several urgent issues dominated the business headlines this year – from the successful rolling out of the Goods and services Tax, to the privatisation of Air India, to bank recapitalisation deemed essential to increase public spending on infrastructure.
The vexed long-standing issue of mandatory linking of Aadhaar with banking, mobile, mutual funds and a host of other essential services also found prominence in 2017.
Here’s a recap of what happened in the business world in 2017.
GST roll out
Reminiscent of India’s tryst with destiny at the midnight of 15 August 1947, Parliament’s historic Central Hall hosted a function on the intervening night of 30 June-1 July to ring in the nation’s biggest tax reform—the goods and services tax (GST).
The GST (comprising 4 tax slabs – 5 percent, 12 percent, 18 percent and 28 percent) has brought indirect taxes comprising numerous central and state levies such as value added tax, sales tax, octroi and luxury tax under one umbrella.
In a major revamp of the GST tax structure in November, the GST Council removed 178 items from the highest 28 percent category while cutting the tax on all restaurants outside starred-hotels to 5 percent.
Only 50 products, including luxury and sin items, white goods, cement and paints, automobiles, aeroplane and yacht parts have been retained in the top 28 percent slab.
Mandatory Aadhaar linking flip flop
After a series of extensions and re-extensions, the government has finally extending the deadline of linking Aadhaar with all services and welfare measures till March 31 next year. The host of essential services includes bank account, PAN card, mobile number, mutual fund, LIC, PPF and various social schemes.
Moreover, for opening new bank accounts, an applicant will not be required to provide Aadhaar number to the bank. Only a proof to the bank that the person has applied for the Aadhaar number, would be enough for now.
India joins select nations on dynamic fuel pricing
India joined the league of select countries like the US and Australia where fuel prices are revised on a daily basis in June.
The three state-owned oil marketing companies (OMCs) — Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — are since rolling-out the daily dynamic pricing mechanism for petrol and diesel.
Under the dynamic pricing scheme, petrol and diesel prices are being revised on a daily basis in sync with global crude oil prices.
India’s sovereign rating
Moody’s Investors Service in November raised India’s sovereign rating for the first time in over 13 years on growth prospects boosted by continued economic and institutional reforms.
However, Moody’s rating didn’t seem to influence the rating of other rating agencies. Standard Poor’s on Friday kept its sovereign rating for India unchanged at ‘BBB-minus’ with ‘stable’ outlook saying vulnerabilities stemming from low per capita income and high government debt balance strong GDP growth.
Reversing the five quarters of slowing GDP growth, Indian economy expanded by 6.3 percent in July-September on the back of a pick-up in manufacturing. The gross domestic product (GDP) growth had hit a three- year low of 5.7 percent in the first quarter of 2017-18. It was 7.5 percent in the September quarter of 2016-17.
Air India Privatisation
The Cabinet gave in-principle approval to divest a stake in Air India in June this year. Air India has a debt of Rs 52,000 crore, of which Rs 20,000 crore is aircraft-related and Rs 32,000 crore is working-capital based.
Government may take over half the working-capital debt as part of its divestment plan. The airline has a fleet of 105 aircraft. As of March 2017, its assets were worth about ₹40,000 crore.
A ministerial group headed by finance minister Arun Jaitley has been set up that will decide the demerger and strategic divestment of three profit making subsidiaries, the quantum of disinvestment and the universe of bidders.
Government unveiled an unprecedented Rs 2.11 lakh crore two-year road map for strengthening NPA-hit public sector banks, which includes re-capitalisation bonds, budgetary support, and equity dilution
The programme entails mobilisation of capital, with maximum allocation in the current year, to the tune of about Rs 2,11,000 crore over the next two years, through budgetary provisions of Rs 18,139 crore, and recapitalisation bonds to the tune of Rs 1.35 lakh crore
The balance will be raised by banks from the market by diluting government equity. The government’s equity dilution will help banks to raise about Rs 58,000 crore. The government equity, as per the current policy, can come down to 52 percent in state-owned banks.
Infosys gets its new CEO
Infosys finally got its new CEO in December. The I-T bellweather appointed Salil S Parekh as Chief Executive Officer and Managing Director of the company effective January 2, 2018.
The Bengaluru-headquartered company had been searching for a new CEO since August this year after Vishal Sikka quit amid turmoil in the company. It had formed a Nomination and Remuneration Committee chaired by Kiran Mazumdar-Shaw to search for the CEO.
Sikka resigned from Infosys after a prolonged battle between the Board and the company founders leading to the return of Nilekani, a company co-founder, at the helm in August.
Nilekani, himself one of Infosys` seven founders and a former CEO, was named chair in August in a victory for the founders, who led by Narayana Murthy have waged an acrimonious battle with the board for months over alleged corporate governance lapses.
The year 2017 could also be termed as the year of Bitcoin Mania for the followers of digital currency.
The biggest and best-known cryptocurrency has risen around twentyfold since the start of the year, climbing from less than $1,000 to as high as $19,666 on the Luxembourg-based Bitstamp exchange this month and to over $20,000 on other exchanges. But it has fallen each day since.
Bitcoin is known to go through wild swings. In November, it tumbled almost 30 percent in four days from $7,888 to $5,555. In September, it fell 40 percent from $4,979 to $2,972.
Though warnings about the risks of investing in the unregulated market have increased with constant worries about the security of exchanges on which cryptocurrencies are bought and sold, there has been a continued surge of crypto investors.
Shareholders of telecom operator Idea Cellular have approved the scheme relating to the merger of its mobile business with Vodafone India in October to create the country’s largest telecom operator worth of more than USD 23 billion with a 35 percent market share.
The merger deal is expected to be completed by March next year.
Both the companies are before National Company Law Tribunal (NCLT) for seeking its nod after which they will need final approval from the Department of Telecom.
The combined entity of Vodafone India and Idea Cellular, which are currently India’s number 2 and 3, respectively, would dislodge Bharti AirtelBSE 0.98 % to counter the fierce price war in the world’s second-largest telecom market.
The deal gives Vodafone India an implied enterprise value of Rs 82,800 crore and Idea Rs 72,200 crore.
Reliance Communication shuts down 2G biz
Reliance Communications, reeling under debt of around Rs 46,000 crore, shut down voice call service in December asking customers can move to other networks.
The company will however continue to offer 3G and 4G services. It has also asked a number of employees to quit as part of its winding up of the operations.
The move comes after the company failed to close the merger deal with telecom operator Aircel.