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News In Numbers: July 14

A very visible rap on the knuckles sometimes work better than the invisible hand of the market. There are two numbers that relate to the role of regulators today. Have a look at them and let us know what you think.

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30 days

What is it? The time period within which airlines have to refund cancelled ticket money to customers, irrespective of the mode of purchase.

Why is it important? Brings uniformity in the sector where airlines are known to have levied refund charges in excess of fare excluding taxes. In addition, the maximum cancellation charge is capped at sum of basic fare plus fuel surcharge.

Tell me more: Refund processing fee is also banned as per the new policy aimed at tilting the balance in favour of consumers.

 8.37% – 8.38%

What is it? The likely coupon rate for HDFC’s masala bond, a rupee-denominated bond sold overseas.

Why is it important? The coupon rate is lower than HDFC’s cost of borrowing of 8.93% during last financial year ended March 2016. HDFC is raising Rs 2,000 crore through the masala bond, which eliminated currency risk in overseas borrowing.

Tell me more: HDFC’s masala bond is the first such offering and it’s success will propel other Indian companies to tap overseas market for borrowing.

 Rs 12,000 crore

What is it? The amount of money government plans to spend on skilling 10 million people over the next four years. Out of which, 6 million will be provided fresh skill training and the rest (4 million) will be to certify prior learning.

Why is it important? The initiative addresses the twin problem of not having adequate number of skilled persons, and unemployability of trained individuals. Certification will be uniform and are drafted in consultation with the industry.

Tell me more: State governments have to borne 25% of expenses under this scheme, the rest sponsored by the centre.

 10 lakhs

What is it?  The number of bank employees who plan to go strike on29th July to protest against banking reforms, such as privatisation.

Why is it important? This comes at a time when Indian banking sector is trying to clean up the bad loans in the system. The process also involves capital infusion, not all of which would come from the government, which in effect would reduce the government stake in the state owned banks. Bank staff are protesting against such dilution. However, their buy in is key to execute some of the reforms – especially those related to recovery of bad loans.

Tell me more: The strike was called for by United Forum of Bank Unions (UFBU) which is  an association of nine trade unions – across the banking system including state owned banks and private banks.

500

What is it? The number of listed firms – the top 500 by market capitalisation – that have to disclose their dividend distribution policy, according to stock market regulator.

Why is it important? The transparency would help investors and analysts to take a considered view on the dividends that large firms pay out. There has been complaints from the investors about firms hoarding cash. Infosys for example came under that criticism a few years ago. Now, top 500 firms will have be more open about dividend policy and the potential use of cash. This could nudge the smaller firms to be more transparent too.

Tell me more: Regulators in some countries, such as Chile andBrazil, have made dividend payments mandatory, without making it too difficult for companies to re-invest.

 

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News in Numbers, June 8, 2016: India closer to its NSG aspirations, Amazon’s India push…

$21.3 billion

What is it? The estimated cost of delay and additional fuel consumption due to freight vehicles being stopped at check posts and/or state borders, long queues at check posts, poor road conditions etc., according to a study.

Why is it important? Underscores the need for Goods and Services Tax – which would bring in a single tax rate in place of the myriad existing ones, and reduce paperwork at checkposts and state borders. This would cut some costs. However, it would also need better infrastructure – wider roads and focus on multi-modal transportation – and action against unnecessary police intervention.

Tell me more: The study by IIM-Calcutta and logistics firm Transport Corporation of India gave the break up of the cost incurred due to delays and cost of fuel consumption due to such delays: $6.6 billion and $14.7 billion respectively.

 

35

What is it? The total number of member-nations of the Missile Technology Control Regime, an international anti-proliferation grouping, with the latest addition being India.

Why is it important? This would help India to buy high-end missile technology and also bring it closer to becoming a member of the Nuclear Suppliers Group (NSG), a body that controls global nuclear trade. Though India has received support from the US for India’s entry into this coveted group, China has been against this and favouring Pakistan’s membership.

Tell me more: India has the capabilities of exporting nuclear fuel such as thorium and supply nuclear technology in the future but it cannot do so until it is a member of the NSG. India’s entry into this group will also give it a strategic victory over Pakistan as it can block it from joining the NSG.

 

6.5%

What is it? The present Repo rate – the rate at which the central bank lends to the banks.  It was kept unchanged by the Reserve Bank of India (RBI) on Tuesday.

Why is it important?  RBI holding the rates was expected, but it comes at time when there is debate – fuelled primarily by Rajya Sabha member Subramanian Swamy – on whether the central bank is too reluctant to bring down rates, which might help small and medium industries.

Tell me more: The RBI has cited concerns about an upside in inflation risks mainly due to increase in international commodity prices, especially oil, and the implementation of the Seventh Central Pay Commission. The central bank may not go for any interest rate cuts this year as RBI’s survey of professional forecasters have assigned the highest probability of 49% for average inflation to be 5-5.9% in 2016-17 against its target of containing it within 5%. The RBI also left the cash reserve ratio, the portion of their deposits that banks have to keep with the central bank, at 4%.

 

Rs 404

What is it? The amount a passenger would have typically got as refund, if they had cancelled a Delhi-Mumbai ticket costing Rs 2,419 (base fare: Rs 1,559) booked on June 7.

Why is it important? Highlights how cancellation charges can sometimes exceed the base fare amount (in this case, it is 1.29 times the base fare). India’s aviation regulator will reportedly announce new rules barring airliners from levying cancellation charges exceeding the base fares.

Tell me more: A couple of months ago, airlines in India offered discounts and brought down airfares but increased the cancellation charges up by 50-100%.

 

$3 billion

What is it? Additional investment commitment by Amazon in India.

Why is it important? This is likely hit Indian e-commerce firms such as Flipkart and Snapdeal, which have been struggling to raise funds to keep up in the race as competition intensifies. It also shows how badly Amazon needs to win in India, after losing out to Alibaba Group Holding in China. In July 2014, the company had announced a $2 billion investment in the country, which it spent in less than two years.

Tell me more: With the additional funds coming in, Amazon’s total pledged amount would exceed $5 billion (over Rs 33,000 crore) in India.

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