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Indian Government plan to hike Rs 22,000 crore from ITC, Axis stake sale

Published: May 6, 2020
  1. Indian Government plan to hike Rs 22,000 crore from ITC, Axis stake sale

New Delhi: The Indian government is planning to raise fund around to Rs 22,000 crore by selling its entire stake in FMCG–hospitality–cigarette major ITCNSE 6.35 % and Axis Bank NSE 1.41 %, one of the major private sector lenders.

“Given the current timeline, the government is hoping to complete the transaction by the end of this week or early next week,” a person familiar with the development told ET. The transaction will be done through a bulk deal on the Indian bourses, he added.

The Axis Bank stock has fallen 53 per cent in the last three months as investors expect a surge in bad loans. ITC has come down 19 per cent compared with the Sensex, which has lost about a quarter.

For the current fiscal, the government has sought to raise an ambitious Rs 2,10,000 crore from the sale of holdings in state-run companies. This includes Rs 90,000 crore to be raised from the sale of a minority stake in Life Insurance Corp (LIC) through an initial public offer and equity sale.
For 2019-20, the government lowered its disinvestment target to Rs 65,000 crore from the budget estimates of Rs 1.05 lakh crore.
Sources said that the various mutual funds and LIC are expected to participate in the proposed share sale. “The proposed transaction is expected at a marginal discount of 2-3 per cent to underlying trading price on the transaction date,” said a person quoted above.

2. Govt to acquire Rs 1.6 lakh cr this financial from record excise duty raise on petrol and  diesel

The Indian government will gain near about 1.6 lakh crore additional revenue this fiscal from record increases in excise duty on petrol and diesel and that will really help a lot to recover the slowdown economy and shutting down the business due to COVID-19.Tuesday evening only the government hiked excise duty on petrol by Rs 10 per litre and that on diesel by Rs 13 a litre.

This is the second hike in excise duty in less than two months and will help government garner over Rs 1.7 lakh crore in additional revenues annually at 2019-20 level of consumption, industry officials said.

Considering the slump in consumption due to travel restrictions imposed by coronavirus lockdown, the gains in the remaining 11 months of the current fiscal year (April 2020 to March 2021) will be close to Rs 1.6 lakh crore, they said. Together with Rs 39,000 crore in annual revenues gained from the March 14 excise duty hike of Rs 3 per litre each on petrol and diesel, the government stands to gain as much as Rs 2 lakh crore.

Officials said normally retail prices would have changed with any revision in taxes but like March 14, there is no change as the excise duty hike is being adjusted against the gains consumers should have got from Brent crude oil dipping to about USD 18 per barrel – the lowest since 1999.

  1. Jobless rate hikes to 27.1% in India

Due to COVID-19 near about 122vmillion people out of jobs last month in india according to estimates from leading private sector.

Employment plugged in April after the govt. imposed  a 40 days lockdown in a nation of 1.3 billion people,forcing business to shut and pushing up the jobless rate to 27.1% in the week ended may 3,survey by the Center for monitoring Indian economy(CMIE)showed.

Daily wages workers and those employees by small business took a massive blow, according to CMIE.These includes hawkers, roadside vendors workers employees in the construction industries and many who eke out a living by pushing handcarts to rickshaws.

  1. Indian cotton prices under pressure:

Indian cotton prices come down by 12-15% due to the current lockdown and fears that the country’s cotton usage will reduce, resulting in more carry-forward stocks by September 2020, said by officials of the Cotton Association of India (CAI) on Tuesday.

Indian cotton prices have come down by 12-15% due to the ongoing lockdown and fears that the country’s cotton consumption will reduce, resulting in more carry-forward stocks by September 2020, officials of the Cotton Association of India (CAI) said on Tuesday. Indian cotton prices are currently the lowest in the world at Rs 33,000-36,000 per candy, according to industry sources.

To overcome this issue and reduce stocks, CAI has written to Prime Minister Narendra Modi to reduce the duty drawback of 5-8% for export of cotton and cotton yarn, Atul Ganatra, president, CAI told FE. “If this relief is given, the country can do huge export of cotton so our carry-forward stocks for September will reduce and not pile up. Our cotton market will also stabilize and the benefit will go to India’s cotton-growing farmers and entire trade will get work. The government will earn foreign exchange if the export of cotton and cotton fiber picks up,” he observed.

  1. CIL’s supply to power sector falls in March

In 2019-20, the supply of fuel by Coal India Ltd (CIL) to the power sector dropped by six per cent to 463 MT as compared to 491.5 MT in 2018-19.

CIL, is the largest coal producing company in world, is a major supplier of the dry fuel to the power sector in India.

he supplies of coal to the power sector by state-owned CIL registered a decline of eight per cent to 42.30 million ton in March in the wake of slump in the fuel demand due to lockdown. CIL dispatched 45.84 million ton (MT) of coal in the corresponding month of 2018-19, the coal ministry said in its latest report to the Cabinet.

In 2019-20, SCCL dispatched 52.95 MT of coal as compared to 55.38 MT in the previous fiscal, registering a decline of 4.4 per cent.

With the power sector, a major consumer of the dry fuel, witnessing almost 30 per cent drop in fuel consumption amid the lockdown, CIL has shifted its focus to overburden removal — the process of removing the top soil and rock to expose coal seams in its open cast mines.

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