Business analysis: All eyes on IT Policy draft; festival sales likely to zoom

The Federal takes a look at news that matters in the world of economy and business, on Tuesday, September 27.

IT Policy draft to be rolled out

The Centre is likely to roll out its new draft IT Policy, after the previous one was withdrawn. It is likely to introduce a Bill in this regard in the Winter Session of Parliament.

What it means: The Centre is likely to stick to its stance of appointing an appellate grievance committee that will examine all user complaints and perhaps give its ruling as well on cases such as online child sexual abuse material and nudity. However, Twitter and Meta (parent company of Flipkart, Whatsapp and Instagram) have opposed the setting up such a panel, claiming that a self-regulated committee is a far better option and will meet compliance requirements. The government believes that an independent grievance appellate committee will act as a neutral body, and work better than a self-regulated one.

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RBI rate hike in the offing

According to analysts, the Reserve Bank of India will likely raise repo rates by 35-50 basis points this week.

What it means: According to experts, the RBI’s Monetary Policy Committee (MPC), which will meet on September 30, may again go for a 50 basis point (bps) increase in repo rates to a three-year high of 5.9%.

The RBI has, since May, raised the short-term lending rate (repo) by 140 bps. This will be the fourth consecutive time the central bank will increase the rates. A further increase of 50 bps will lead to a home loan interest rate hike to 8.6% (HDFC). The EMI will rise to ₹21,854 from ₹21,067 (@ 8.1%) on a home loan of ₹25 lakh for a 20-year tenure. The total payout at the end of the tenure will increase to ₹52,44,977 from ₹50,56,046.

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Festival  sales set to jump

E-commerce companies are witnessing an unprecedented spike in festival season sales.

What it means: Amazon, Flipkart and a few others are witnessing pent-up customer demand, especially in tier 2 and 3 cities. It doesn’t reflect the overall economic trend as income levels haven’t kept pace with inflation. Customers have chosen to wait till the festival season and use heavy discounting on e-commerce platforms.

Also read: How ONDC seeks to bring Amazon, Flipkart on even keel with kiranas

Slowdown in education loans

Banks are going slow on disbursing educational loans.

What it means: There has been an increase in non-performing assets (NPAs) in the educational loan category to around 7.82%. As of June-end, the outstanding educational loan was about ₹80,000 crore. This could delay clearing educational loan applications. The Finance Minister has called for a meeting with banks to discuss this issue.

Tata, SIA likely to form JV to merge Vistara and Air India

What it means: Air India recently rolled out Vihaan.AI, a roadmap to increase its aviation market share to 30%. There has been no clarity on whether it will include the other airlines in the Tata Sons portfolio — Vistara and AirAsia India. The Tata Group and Singapore Airlines (SIA) are now said to be working on merging Air India and Vistara under a new joint venture, paving the way to increase the market share of the combined airlines. If the merger does happen, Air India would return to its earlier version, when Air India and Indian Airlines were a single entity.

Survey predicts 10.4% average salary hike in 2023

According to consulting firm Aon, Indian employers are planning to increase salaries by 10.4% in 2023, even though economic growth seems slowing and high inflation is hurting profitability.  According to Aon’s 28th Salary Climb Survey, salaries are anticipated to increase by double digits for the second year in 2023, virtually matching the actual increase of 10.6% in 2018.

Also read: Salary hikes in India highest compared to US, UK, Germany in 2022: Survey

What it means: Employers who set aside more funds for salary increases in 2023 are confident of medium to average economic growth. Certain services sectors, including information technology, will likely witness pay rises, especially for recruits and mid-level employees.