Image used for representative purpose only.
| Photo Credit: AP

The government on Friday hiked special additional excise duty (SAED) on crude petroleum to ₹10,000 per tonne with effect from September 16.

In the last fortnightly review on September 1, windfall tax on domestically produced crude oil was set at ₹6,700/tonne. Besides, the SAED or duty on export of diesel will be cut to ₹5.50/litre, from ₹6/litre currently.

The duty on jet fuel or ATF will be reduced to ₹3.5/litre effective Saturday, from ₹4/litre currently.

SAED on petrol will continue at nil. India first imposed windfall profit taxes on July 1, 2022. 

A man walks past the logo of Vedanta outside its headquarters in Mumbai. File
| Photo Credit: Reuters

Mining magnate Anil Agarwal’s Vedanta Ltd has won an arbitration against a demand for a higher payout from its prolific Rajasthan oil and gas fields after disallowance of ₹9,545 crore ($1.16 billion) in certain costs incurred, the company said.

The government has sought additional profit petroleum (or its share from the oil and gas fields) after it reallocated certain costs between the fields in the block and disallowed a portion of the cost incurred on laying a pipeline to evacuate oil produced from the Rajasthan block.

Also Read | Vedanta chairman mulls to split different businesses into separate companies

As per the contract, companies are allowed to recover all costs incurred before splitting profit in a predetermined ratio with the government. If a certain portion of cost is disallowed, it would result in higher profits and a resultant higher share to the government. Vedanta had challenged such a demand before an arbitration tribunal.

“The company has received an arbitration award dated August 23, 2023… upholding the contention of the company that additional profit petroleum, on account of Director General of Hydrocarbon (DGH) audit exceptions in relation to allocation of common development costs across Development Areas and certain other matters, is not payable as per terms of the Production Sharing Contract for Rajasthan Block,” it said in a stock exchange filing.

It however did not give details of the arbitration award. “The company is in the process of reviewing the award in detail and evaluating its financial impact,” it said.

In its latest annual report, Vedanta had put the number at ₹9,545 crore.

“DGH, in September 2022, has trued up the earlier demand raised till 31 March 2018 up to 14 May 2020 for Government’s additional share of profit oil based on its computation of disallowance of cost incurred over retrospective re-allocation of certain common costs between Development Areas (DAs) of Rajasthan Block and certain other matters aggregating to ₹9,545 crore applicable interest thereon representing share of the company and its subsidiary,” it said.

The firm said it disputed the demand and the other audit exceptions as it believed these were not in accordance with the PSC and are entirely unsustainable.

“In accordance with PSC terms, the group had commenced arbitration proceedings. The final hearing and arguments were concluded in September 2022. Post hearing briefs were filed by both the parties and award is awaited,” the annual report released last month said.

The award has now come.

Sources said DGH, which is the upstream nodal agency of the Ministry of Petroleum and Natural Gas, had way back in May 2018 raised a demand for additional share of profit oil for the government after disallowing ₹1,508 crore out of the cost incurred on laying a heated-pipeline to transport Barmer crude and ₹2,723 crore in the reallocation of certain common costs.

The numbers were revised in subsequent years. These costs pertain to only Vedanta’s share in the Rajasthan block as state-owned Oil and Natural Gas Corporation (ONGC), which holds 30% interest in the block, had agreed to pay the government if these costs are disallowed.

It was not immediately known if the government will abide by the arbitration award. The government had previously challenged all arbitration awards it had lost.

Image used for representational purpose only.
| Photo Credit: Reuters

The wholesale price based inflation remained in the negative territory for the fourth straight month in July at (-)1.36% on easing prices of fuel, even though food articles turned costlier.

The wholesale price index (WPI) based inflation rate has been in the negative since April and was (-)4.12% in June. In July last year it was 14.07%.

Inflation in food articles skyrocketed 14.2% in July against 1.32% in June.

“Decline in the rate of inflation in July, 2023 is primarily contributed by fall in prices of mineral oils, basic metals, chemical & chemical products, textiles and food products,” the commerce and industry ministry said on August 14.

Fuel and power basket inflation eased to (-)12.79% in July from (-)12.63% in June.

In manufactured products, the inflation rate was (-)2.51% as against (-)2.71% in June.

The RBI last week kept interest rates unchanged at 6.5% for the third straight meeting but signalled tighter policy if food prices drive inflation higher.

“The job on inflation is still not done,” RBI Governor Shaktikanta Das had said.

“Inflationary risks persist amidst volatile international food and energy prices, lingering geopolitical tensions and weather-related uncertainties.”

The RBI raised its inflation forecast for the current financial year ending March 2024 to 5.4% from 5.1% earlier, citing pressures from food prices.

The Central bank takes into account retail or consumer price index based inflation for formulating monetary policy. Retail inflation data for July is scheduled to be released later in the day.

The Monetary Policy Committee has unanimously decided to keep the policy repo rate unchanged, RBI Governor Shaktikanta Das said in Mumbai on August 10, 2023.
| Photo Credit: Emmanual Yogini

The Monetary Policy Committee (MPC) of the Reserve Bank of India on August 10 decided unanimously to keep the policy repo rate unchanged at 6.50%. 

Consequently, the standing deposit facility (SDF) rate remains at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%. 

The MPC also decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

Explaining the MPC’s rationale for these decisions on the policy rate and the stance, RBI governor Shaktikanta Das in his statement said, “Headline inflation, after reaching a low of 4.3% in May 2023, rose in June and is expected to surge during July-August led by vegetable prices.”

“While the vegetable price shock may reverse quickly, possible El Niño weather conditions along with global food prices need to be watched closely against the backdrop of a skewed south-west monsoon so far. These developments warrant a heightened vigil on the evolving inflation trajectory,” he said. 

“The cumulative rate hike of 250 basis points undertaken by the MPC is working its way into the economy. Nonetheless, domestic economic activity is holding up well and is likely to retain its momentum, despite weak external demand. Considering this confluence of factors, the MPC decided to remain watchful and evaluate the emerging situation,” he added. 

Consequently, the MPC decided to keep the policy repo rate unchanged at 6.50% with preparedness to act, should the situation so warrant, Mr. Das said. 

He said the MPC remained resolute in its commitment to aligning inflation to the 4 per cent target and anchoring inflation expectations.

Taking all various factors into consideration, the Governor said the real GDP growth for 2023-24 is projected at 6.5% with Q1 at 8.0%; Q2 at 6.5%; Q3 at 6.0%; and Q4 at 5.7%. Real GDP growth for Q1:2024-25 is projected at 6.6%. The risks are evenly balanced.

Given the continuing external uncertainties, the latest CPI inflation projection for 2023-24, assuming a normal monsoon, has been revised to 5.4%, with Q2 at 6.2%, Q3 at 5.7% and Q4 at 5.2%. CPI inflation for Q1:2024-25 is projected at 5.2%. The risks are evenly balanced.

The Governor said considering the difficulties in major economies, the Indian economy is better placed. “India can become the new growth engine of the world,” he said. 

The senior DGCA official said that in view of the observations made in the past concerning inadequate maintenance and in view of the incidents during the monsoon season last year, SpiceJet was placed under enhanced surveillance.
| Photo Credit: Reuters

Aviation watchdog DGCA has taken off SpiceJet from its enhanced surveillance regime, a senior official said on Tuesday.

The airline, which has been facing multiple headwinds, was placed under enhanced surveillance recently.

The senior DGCA official said that in view of the observations made in the past concerning inadequate maintenance and in view of the incidents during the monsoon season last year, SpiceJet was placed under enhanced surveillance.

“Accordingly 51 spot checks were conducted across 11 locations pan India, on the Boeing 737 and Bombardier DHC Q-400 fleet of aircraft, where in a total 23 aircraft were inspected and 95 observations were made by the DGCA teams,” the official said.

Also Read | DGCA scales down SpiceJet flights by half

The findings were of routine nature and were not considered significant by the Directorate General of Civil Aviation (DGCA).

“Suitable maintenance action was taken by the airline to address the findings in accordance with DGCA guidelines. As a consequence, SpiceJet has been taken off the enhanced surveillance regime by DGCA,” the official said.

On July 11, PTI had reported about DGCA placing SpiceJet under the enhanced surveillance regime and on that day, the airline refuted any such development.

Read more | SpiceJet places 90 pilots on leave without pay

When contacted, a SpiceJet spokesperson had said, “the information is absolutely incorrect and is strongly denied”.

No such communication has been received by the airline from the DGCA, the spokesperson had said in a statement on July 11.

A view of the ICICI bank head office in Mumbai. File
| Photo Credit: Reuters

Private lender ICICI Bank on July 22 reported a 40% rise in standalone net profit to ₹9,648 crore for the June 2023 quarter, helped by a decline in bad loans and an improvement in interest income.

The Mumbai-based private sector lender had posted a net profit of ₹6,905 crore on a standalone basis in the year-ago period.

Its total income in the first quarter of the current fiscal rose to ₹38,763 crore from ₹28,337 crore a year ago, ICICI Bank said in a regulatory filing.

Interest earned by the bank improved to ₹33,328 crore over ₹23,672 crore in June 2022.

The bank’s net interest income (NII) increased by 38% year-on-year to ₹18,227 crore in Q1 FY24 from ₹13,210 crore in the year-ago period.

At the same time, the net interest margin improved to 4.7% compared to 4.01% a year earlier.

The bank’s asset quality showed improvement as gross non-performing assets (NPAs) declined to 2.7% of gross advances at the end of the June quarter from 3.4% a year ago.

Similarly, net NPAs or bad loans declined to 0.4 per cent against 0.7 per cent in the same period of the preceding fiscal.

Its capital adequacy ratio fell to 16.71 per cent from 18.04 per cent at the end of June 2022.

Union Law Minister Kiren Rijiju said Phase III of eCourts Project will build on the gains made by the earlier two phases that proved crucial in the delivery of justice during the COVID-19 pandemic when courts were under lockdown protocol. File
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on Wednesday allocated ₹7,000 crore for the launch of Phase III of the eCourts Project that seeks efficient administration of justice.

Union Law Minister Kiren Rijiju, in a series of tweets, thanked Prime Minister Narendra Modi, the Finance Minister as well as Chief Justice of India D.Y. Chandrachud, who headed the eCommittee of the Supreme Court.

Track Budget 2023 latest updates here

“This will ensure “Ease of Justice” and further improves the justice delivery system that the Hon’ble PM @narendramodi ji has always envisioned,” Mr. Rijiju tweeted.

“I also compliment the Hon’ble Chief Justice of India, Dr D.Y. Chandrachud ji who as the Chairperson of the eCommittee of the Supreme Court of India has been instrumental in the success of the earlier phases of the eCourts Project and who personally supervised and mentored the formulation of the DPR [Detailed Project Report] of the Phase-III of the Project,” he added.

The Minister said Phase III of eCourts Project will build on the gains made by the earlier two phases that proved crucial in the delivery of justice during the COVID-19 pandemic when courts were under lockdown protocol.

“The project envisages various path breaking initiatives like: Digital & Paperless Courts that aim to bring court proceedings under a digital format in a court, thereby, limiting the use of paper and speeding up the disposal of cases, Online Court that focus on eliminating the presence of litigants or lawyers in the court, Expansion of scope of Virtual Courts beyond adjudication of Traffic Violations,” Mr. Rijiju said in the tweets.

The Minister noted that the use of Artificial Intelligence and Machine Learning would allow for data analysis to work towards reduction in pendency and understanding litigation patterns and forecasting future needs.

While 4,400 fully functional eSewa Kendras will provide assistance to all lawyers and litigants, live streaming of court hearings would allow for further transparency in judicial proceedings, he said.

Digitisation of all court records will further pave the way for a completely paperless environment in future. “An Online Dispute Resolution platform will encourage alternate dispute resolution and a robust video conferencing system will create seamless connectivity between the jails & courts, allowing for all bail appearances over VC,” Mr. Rijiju said.

Equity benchmarks Sensex and Nifty ended on a mixed note on Wednesday as the euphoria about the Union Budget fizzled out, with investors going for profit-taking ahead of the Fed interest rate decision.

The 30-share BSE benchmark Sensex climbed 158.18 points or 0.27% to settle at 59,708.08 after it trimmed most of the intra-day gains. During the day, it had zoomed 1,223.54 points or 2% to 60,773.44.

In contrast, the broader NSE Nifty declined 45.85 points or 0.26% to end at 17,616.30.

“A well-tuned Budget with strong emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting.

“Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool,” said Vinod Nair, Head of Research at Geojit Financial Services.

Stock markets have reacted well to the provisions immediately due to absence of any major unexpected negatives and adherence to fiscal prudence, said Dhiraj Relli, MD and CEO, HDFC Securities.

The markets will now look forward to the other triggers — the U.S. Fed meet outcome, RBI’s next MPC meeting and the balance Q3 corporate results, he added.

“In a nutshell, I would state this Budget to be prudent, progressive and pragmatic,” Mr. Relli noted.

From the Sensex pack, ITC, Tata Steel, ICICI Bank, Tata Consultancy Services, HDFC, HDFC Bank and Kotak Mahindra Bank were the major gainers.

On the other hand, Bajaj Finserv, State Bank of India, IndusInd Bank and Mahindra & Mahindra were the prominent laggards.

“Overall, the Budget is excellent. The absence of negative news is a tremendous source of optimism. And the stock market has been ecstatic about this budget,” said Sunil Damania, Chief Investment Officer, MarketsMojo.

Finance Minister Nirmala Sitharaman on Wednesday tweaked the slabs to provide some relief to the middle class by announcing that no tax would be levied on annual income of up to ₹7 lakh under the new tax regime.

She also allowed a ₹50,000 standard deduction to taxpayers under the new regime, where assessees cannot claim deductions or exemptions on their investments.

“The government’s relief on personal income tax by providing rebate upto Rs 7 lakh and making changes in the slab rate under the new income-tax regime comes as a major boost to the Indian markets. The FM did not tinker with the capital gains which has cheered the markets,” said Sanjay Moorjani, Research Analyst, SAMCO Securities.

Meanwhile, an overall positive trend in the global markets also cheered investors.

Elsewhere in Asia, equity markets in Seoul, Tokyo, Shanghai and Hong Kong ended in the positive territory.

Equities in Europe were trading in the green during mid-session deals. Markets in the U.S. had ended with gains on Tuesday.

“India Budget 2023 has offered a multi-dimensional view. The 3 Cs which stand out are — capex increase, consumption boost, capital gains tax status quo. Mindful of the fact that there is hardly any space for fiscal expansion, FY24 fiscal deficit is pegged at 5.9% and expected to see progressive reduction by FY 2026.

“Clearly a bull’s-eye budget satisfying most strata of the society and of course a thumbs up from the market as well,” said Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors Ltd.

Ms. Sitharaman on Wednesday announced hiking the capital expenditure by 33% to ₹10 lakh crore for infrastructure development for 2023-24, which will be at 3.3% of the GDP.

“A 33% increase in capital expenditure to ₹10 lakh crore, the highest ever, will go a long way in building roads, ports, and airports — crucial for making India a reliable investment destination. Investment of ₹2.4 lac crore in Railways is commendable,” said Anand Rathi, Founder & Chairman, Anand Rathi Group.

Ms. Sitharaman on Wednesday listed seven priorities of Union Budget 2023-24, including infrastructure, green growth, financial sector and youth power.

She said four transformative opportunities can be used in Amrit Kaal for enhancing economic empowerment.

“In keeping with its focus on inclusive growth, the Union Budget has hiked outlays on infrastructure and agriculture which in our view would have a force multiplier impact on the economy,” S. Ranganathan, Head of Research at LKP Securities, said.

International oil benchmark Brent crude dipped 0.05% to $85.42 per barrel.

Foreign Institutional Investors (FIIs) offloaded shares worth a net ₹5,439.64 crore on Tuesday, according to exchange data.

India’s domestic sugar consumption is estimated at around 27.5 million tonnes

India is poised to allow 5 million tonnes of sugar exports in the first tranche for the new marketing year beginning October, two government sources said on Wednesday.

“The permission to export 5 million tonnes of sugar is expected in the coming weeks and once we have a better sense about next sugar year’s production, we could allow another 3 to 5 million tonnes for exports,” said one of the sources who did not wish to be named in line with official rules.

“Although it is a little early to get a clear idea about next year’s production, early estimates suggest sugar output in 2022-23 would hover around this year’s record 36 million tonnes, the official said.

On Oct. 1, 2022, when the new season begins, mills’ carryover stocks from the previous season are expected at 6 million tonnes against 8 million tonnes a year earlier.

“After factoring in local demand, the need for ethanol production and mills’ requirement for their yearly carryover stocks, we believe that India will have a large exportable surplus in the 2022-23 year,” said the second source.

“But given the erratic weather patterns impacting crops and agricultural production, we do not want to allow exports of 8 or 9 million tonnes in just one go,” the second source said. “We’ll be rather cautious.”

India banned wheat exports earlier this year and last week imposed curbs on rice shipments as adverse climatic conditions hit output and planting.

India’s domestic sugar consumption is estimated at around 27.5 million tonnes and mills are expected to divert 4.5 million tonnes of sugar for ethanol production in the 2022-23 season. Mills will also set aside at least 6 million tonnes of sugar as their annual carryover stocks.

Cashing in on attractive global prices, traders have already signed deals to export 4,00,000 tonnes of raw sugar for the 2022/23 season.