Let’s begin. Liz Truss’ decision to quit as Britain’s Prime Minister became the latest in a series of setbacks for the proposed India-UK free trade agreement, which will, at the very least, delay negotiations substantially unless the scope of the deal is vastly truncated. Trade analysts told FE that persistent political and economic turmoil in England will consume much of policy-makers’ attention there at this juncture, leaving very little appetite for a fresh trade deal benefits of which are unlikely to accrue immediately. Moreover, if the turmoil continues, British negotiators’ hands will remain tied in the absence of credible policy directions, even though there is tacit, across-the-board support for such a pact with India. India, too, will get into the general election mode early next fiscal. So, the government here may not want to hammer out an FTA at that point and take the risk of upsetting domestic industry in any manner, some of the analysts said.
In some more economy news, the RBI Monetary Policy Committee is expected to further hike the interest rate by 35-50bps in the upcoming MPC meeting in a bid to maintain financial stability amid global policy shocks, according to analysts. The Reserve Bank of India is expected to be highly data-driven in its decisions regarding further rate hikes, focusing more on taming inflation rather than domestic growth concerns. In the RBI Monetary Policy Committee minutes released last week, the MPC members were tussling between inflation concerns and growth worries, while deciding the central bank’s course of action to maintain financial stability amid global policy shocks. Broadly, the outlook of the MPC remains hawkish.
Meanwhile, the country’s largest telecom operator by market share Reliance Jio has topped the wireless subscriber additions for the fifth straight month this week and even took a lead in the wireline segment, surpassing state-owned BSNL for the first time. In August, the telecom operator added 3.28 million new wireless subscribers on a net basis, compared to 0.33 million new users added by peer Bharti Airtel and loss of 1.98 million users lost by Vodafone Idea, according to Telecom Regulatory Authority of India data. In the wireline or fibre-based broadband subscribers, Reliance Jio added the highest 0.26 million subscribers that took its total base to 7.35 million, higher than 7.13 million user base of BSNL.
Moving on. The MSME ministry has allowed registered MSMEs to continue to avail non-tax benefits for three years, instead of earlier one year, in case of upward graduation in their category and consequent reclassification, for instance growing from a micro enterprise to a small enterprise or a small enterprise to a medium business. Non-tax benefits include benefits of various schemes of the government, including public procurement policy, delayed payments, etc. The announcement was made in a notification by the ministry on Tuesday. The decision has been taken after due deliberations with MSME stakeholders and is in line with the Atmanirbhar Bharat Abhiyan, the MSME Ministry said in a statement on Wednesday. MSME Minister Narayan Rane in April this year had said that he will take up MSMEs’ suggestion of increasing the current turnover limit of small enterprises with the Finance Ministry and Prime Minister Narendra Modi.
In other news, the Competition Commission of India this week imposed hefty penalties of more than Rs 392 crore on online travel aggregators MakeMyTrip, Goibibo and hospitality firm OYO for indulging in unfair and anti-competitive business practices. According to a 131-page order passed by the regulator on Wednesday, a penalty of Rs 223.48 crore was imposed on MakeMyTrip and Goibibo merged entities (MMT-Go) and an additional Rs 168.88 crore on OYO. The penalties were slapped on both the companies for indulging in anti-competitive practices by invoking their leadership position in the online hotel booking market. In a statement, OYO said it is currently “reviewing” the CCI order in detail and that it would continue to work with all online travel aggregators as distribution partners.
And lastly, with the finances of many state governments under stress, the Comptroller and Auditor General of India has decided to prepare state-specific fiscal sustainability report cards from the current fiscal, where the off-budget liabilities and hidden subsidies will be captured with precision, sources told FE. Normally, CAG finalises states’ annual financial accounts and appropriation accounts and examines whether they have followed the approved accounting standards and public expenditure management parameters. A senior official said that from this year, CAG will be analysing state finances in a more focused manner to check the veracity of their accounts. The top public finance auditor’s move comes in the wake of high indebtedness of some states and a rising tendency among some of them to resort to off-budget borrowings to fund government schemes and infrastructure. According to an RBI report in July, the most indebted states were Punjab, Rajasthan and Bihar.