India’s Fiscal Deficit Reaches $6.1 Billion, Telecom Tariff Hikes, Pharma Incentives, and More.

India’s Fiscal Deficit Reaches $6.1 Billion in April-May

India’s fiscal deficit for April-May hit 506.15 billion rupees ($6.07 billion), accounting for 3% of the annual estimate. The government’s net tax revenue was 3.19 trillion rupees, or 12% of the yearly target, up from 2.78 trillion rupees the previous year. Total expenditure stood at 6.23 trillion rupees, influenced by general elections. Despite speculation, Prime Minister Modi’s administration maintains its fiscal deficit goal at 5.1% of GDP for the year.

Fiscal Deficit

A fiscal deficit occurs when a government’s total expenditures exceed the revenue that it generates, excluding money from borrowings. It indicates the amount by which government spending surpasses its income. A high fiscal deficit can lead to increased borrowing and higher national debt, potentially impacting economic stability.

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Source: Reuters

Users to Spend ₹47,500 Crore More Annually Post-Tariff Hikes by Jio and Airtel

Recent tariff hikes by Reliance Jio and Bharti Airtel could increase consumer spending by ₹47,500 crore annually. These hikes aim to boost 5G monetization, raising entry-level 5G plan costs by up to 71%. Analysts project a 15-17% rise in ARPU for both companies as users trade up to higher data plans. Despite potential subscriber churn, these moves are essential for improving profitability and investment returns in the telecom sector.

Average Revenue Per User (ARPU)

ARPU, or Average Revenue Per User, is a key metric used by telecom companies to measure the average revenue generated per user or unit. It helps assess a company’s ability to generate income from its subscribers and is crucial for evaluating the financial health and performance of telecom operators.

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Source: Economic Times

India to Offer Incentives for Local Diabetes, Obesity Drug Makers in 2026

India plans to incentivize local manufacturing of GLP-1 drugs for diabetes and obesity by 2026. The move aims to capitalize on the upcoming patent expiry of Novo Nordisk’s semaglutide. With high obesity rates and a large diabetic population, India seeks to bolster its pharmaceutical sector. Domestic drugmakers like Biocon, Sun Pharma, and Dr. Reddy’s are poised to benefit from this production-linked incentive scheme.

GLP-1 Drugs

GLP-1 drugs are medications that mimic the action of the GLP-1 hormone, which helps regulate blood sugar levels and appetite. Originally developed to treat diabetes, these drugs are increasingly used for weight management as they slow digestion, leading to longer-lasting feelings of fullness.

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Source: Reuters

New NPS Contribution Rule: PFRDA Introduces Same-Day Investment from July 1

Starting July 1, 2024, the Pension Fund Regulatory and Development Authority (PFRDA) will implement a new timeline for National Pension System (NPS) contributions, allowing for same-day investment if received by 11 AM. This change aims to enhance investment efficiency and user experience. Contributions received after 11 AM will be processed the next day. This applies to all contribution modes, including PoPs, eNPS, D-Remit, and UPI.

Pension Fund Regulatory and Development Authority (PFRDA)

The Pension Fund Regulatory and Development Authority (PFRDA) is a statutory body that oversees and regulates pension schemes in India, including the National Pension System (NPS) and the Atal Pension Yojana (APY). It ensures the orderly growth and protection of subscribers’ interests in these pension funds.

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Source: Economic Times

RBI Data: Home Loans Surge by Rs 3.4 Lakh Crore in a Year

Recent RBI data reveals a significant rise in home loan outstanding by Rs 3.4 lakh crore, a 16.9% increase, reaching Rs 23.49 lakh crore in May 2024. Personal loan growth slowed to 17.8%, while credit card outstanding grew by 26.2% to Rs 2.67 lakh crore. Bank credit to industry rose by 8.9% to Rs 36.87 lakh crore. The central bank raised risk weights on consumer credit and NBFCs to mitigate potential risks.

Credit Growth

Credit growth refers to the increase in the amount of loans provided by banks to individuals and businesses. It’s a key indicator of economic activity and consumer confidence. Growth in home loans indicates a healthy housing market, while overall credit growth reflects economic expansion. However, managing risk is crucial to avoid potential financial instability.

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Source: Business Today

Jio, Airtel to Hike Tariffs on July 3: How to Save on Mobile Bills

Reliance Jio and Airtel will raise tariffs from July 3, 2024, with hikes ranging from 11% to 25%. Prepaid users can avoid these increases by recharging before the deadline, potentially saving up to Rs 600 on annual plans. Postpaid users will face immediate adjustments but can manage costs by switching to lower data plans. Explore alternatives from other providers to maximize savings.

Average Revenue per User (ARPU)

ARPU measures the average revenue generated per user and is crucial for assessing a telecom company’s financial health. A higher ARPU indicates better profitability and efficiency in extracting value from its subscriber base. ARPU is often used to compare performance across companies and markets within the telecom industry.

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Source: Economics Times

Sebi Increases Demat Account Limit to Rs 10 Lakh

Sebi has raised the threshold for basic service demat accounts (BSDA) to Rs 10 lakh to encourage retail investor participation in the securities market. Maintenance charges for holdings over Rs 4 lakh are nil, and Rs 100 for holdings up to Rs 10 lakh. Accounts exceeding this limit incur regular charges. This move aims to simplify investments and ease financial inclusion.

Demat Account

A demat account, short for “dematerialized account,” allows investors to hold securities electronically, eliminating the need for physical certificates. It facilitates easy transfer, monitoring, and management of shares and other securities. The BSDA version is designed to reduce costs for smaller investors, promoting financial inclusion.

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Source: Financial Express

Government Keeps Small Savings Scheme Rates Unchanged for July-September 2024

The government has announced that interest rates for small savings schemes will remain unchanged for the July-September 2024 quarter. Public Provident Fund (PPF) will continue at 7.1%, Senior Citizen Savings Scheme at 8.2%, and Sukanya Samriddhi Yojana at 8.2%. These stable rates ensure consistent returns for investors amid fluctuating market conditions, maintaining the competitiveness of these schemes.

Small Savings Scheme Interest Rates

Small savings scheme interest rates are set quarterly, based on the yields of government bonds with similar maturities. This ensures that the rates are competitive, offering 25 to 100 basis points above these yields. The approach helps attract investors by providing better returns than standard savings accounts.

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Source: Economic Times

RBI Alerts Banks on Heightened Cyberattack Threat, Calls for Vigilance

The Reserve Bank of India (RBI) has issued an advisory urging banks to enhance surveillance amid credible intelligence on potential cyberattacks. Banks must monitor systems like SWIFT, card networks, and local fund transfer frameworks such as RTGS, NEFT, and UPI. The advisory follows a social media threat from LulzSec. Banks are reminded to implement standard controls against DDoS attacks, restrict remote logins, and maintain strong offline backups. Over 20,000 cyber intrusions have caused $20 billion in losses over two decades.

DDoS Attacks

Distributed Denial of Service (DDoS) attacks overwhelm a target’s online services by flooding them with traffic from multiple sources. This disrupts normal operations, making websites and online services unavailable to users. Banks use various defense mechanisms, such as traffic filtering and rate limiting, to mitigate these attacks.

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Source: The Economic Times

BJP Women’s Wing Demands Probe into Foxconn India’s Hiring Practices

The women’s wing of Indian PM Modi’s BJP has called for an investigation into Foxconn’s hiring practices after reports of discrimination against married women. A Reuters investigation revealed that Foxconn systematically excludes married women from jobs at its Chennai iPhone plant. BJP’s Vanathi Srinivasan emphasized the need to protect women’s rights, while Foxconn and Apple have denied the allegations. The National Commission for Women is taking action.

National Commission for Women (NCW)

The National Commission for Women (NCW) is a statutory body in India established to protect and promote women’s rights. It has the authority to investigate issues related to the safeguards provided for women under the Constitution and other laws, and it operates with the powers of a civil court to summon individuals.

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Source: Reuters

Personal Loan Rates Increase Following RBI’s Risk Weight Adjustment

Private banks, including HDFC, ICICI, Kotak Mahindra, and Axis, have raised personal loan rates by 30-50 basis points after the RBI increased risk weights from 100% to 125% in November 2023. HDFC’s rates rose to 10.75%, while Kotak and Axis adjusted to 10.99%. ICICI set new loans at 10.80%. Banks are also tightening underwriting standards to manage risks effectively and maintain portfolio quality.

Risk Weighting

Risk weighting is a method used by banks to determine the minimum amount of capital that must be held against their assets. Higher risk weights mean banks must hold more capital, reflecting the increased risk of certain loans. This ensures stability and reduces the chance of insolvency during financial stress.

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Source: The Economic Times

India Becomes World’s Second Largest Market by Market Cap, Adding Over $1 Trillion

India’s equity market surged by $1 trillion in the past six months, reaching a market cap of $5.23 trillion and overtaking China. Reliance Industries leads with a market cap of $245.3 billion, followed by TCS at $167 billion. Foreign investments, especially from the US, have significantly boosted India’s market, contrasting with outflows in China and Japan. Despite the growth, experts caution about India’s high stock valuations compared to other emerging markets.

Market Capitalization

Market capitalization, or market cap, is the total value of a company’s outstanding shares of stock. It is calculated by multiplying the current share price by the total number of outstanding shares. This metric helps investors assess a company’s size and market value.

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Source: Financial Express