Economy This Week (28th Jan to 3rd Feb 2023)

Economy is an important part of the UPSC prelims and mains exams; this series titled ‘Economy This Week’ has been initiated to address the need to read and analyse economic articles in various business-related newspapers. The round-up of the Economy/Business section news for 28th Jan to 3rd Feb 2023 is given below. Business news is essential for IAS exam preparation.

TABLE OF CONTENTS

1. AGC scraps FPO (IE 2/2/23)
2. Inflation in Pakistan hits 48 year high (BS 3/2/23)
3. Angel Tax on for startups (LM 3/2/23)
4. Paris Club to have debt hit Lanka’s back (IE 3/2/23)
5. Strikes in Britain (IE 2/2/23)

1. AGC scraps FPO (IE 2/2/23)

• Stock prices of Adani Enterprises Limited plunged by 28.4% 
  • Since the Hindenburg Report was published the Adani Group of Companies have lost over ₹ 7 lakh Cr market capitalisation  
• The group announced on the late night that it would be calling off the ₹ 20000 Cr FPO (Follow on Public Offering) and return the money to the investors 
• The FPO was fully subscribed with the HNIs (High Net worth Individuals) and institutional investors subscribing for it 
  • FPO was oversubscribed 112% on the last day – 31st January 2023 
• The Credit Suisse Group AG has stopped accepting the bonds of Adani Group companies as collateral for making loans to its private banking clients 

2. Inflation in Pakistan hits 48 year high (BS 3/2/23)

• The inflation has reached to 48 year high in January 2023 (since May 1975) 
• Thousands of containers of food items, raw materials etc are stuck in ports after cash strapped govt has curtailed imports 
  • 6000 containers are stranded consisting thousands of tons of poultry feed ingredients that has pushed up chicken prices to a record levels 
  • The logjam has aggravated inflation which has risen to over 20% since June as the govt limited imports amid scarce funds 
• The retail inflation or consumer prices rose by 27.55% from a year earlier 
• The govt is scrambling to fulfil the IMFs aid conditions to secure much needed funds 
• In the coming days the inflation would be higher on account of rupee depreciation and hikes in fuel prices and electricity tariffs 
• Govt could raise additional taxes on account of IMFs conditions 
• Forex have dwindled to a nine year low of $3.68 bn (import cover is less than a month) 

3. Angel Tax on for startups (LM 3/2/23)

• The foreign private equity and venture capital investments in Indian startups fell to $54 bn in 2022 from $77 bn in the previous year 
• Under section 56.2 of IT Act, there was a preferential treatment for the foreign investors and this has been done away with 
• DPIIT recognised startups will not attract angel tax if the investment is made into that 
  • 84000 startups are registered with DPIIT 
• AIFs registered with SEBI will remain exempt from tax and domestic investors not registered with SEBI must pay this tax 

4. Paris Club to have debt hit Lanka’s back (IE 3/2/23)

• The Paris Club is ready to provide credit assurances to Sri Lanka
• This will help in unlocking the $2.9 bn bailout by the IMF 
• Sri Lanka is facing issues such as soaring inflation, recession, currency depreciation. Last September it entered into a staff level agreement with IMF but for this assistance to be provided, there is a requirement of assurances to be provided by a key bilateral lenders 
  • SLs public debt stood at 122% of GDP and of this 70% is denominated in foreign currency

5. Strikes in Britain (IE 2/2/23)

• Up to half a million British teachers, civil servants, train drivers and university lecturers have walked out over pay and  conditions on 1st February 2023 
• This is the largest ever coordinated strike in Britain in a generation 
• Over last couple of months there have been disruptions as disputes between trade unions and the government have continued 
• The average public sector worker earns 203 pounds (or $250) a month and when inflation is accounted for the, they are worse off 
• Government has stated that if the wages are increased then it will fuel inflation 
• In the coming weeks nurses, ambulance staff, paramedics, emergency call handlers and other healthcare workers are set to stage more walkouts 
• Those staging walkout are demanding pay rise above the inflation to cover for rising food and fuel expenses 
• The unions are also angry with government trying to introduce a new law which would aim at curbing the disruptions by strike by enforcing minimum service levels in key sectors – healthcare, transportation etc 
• Inflation 
  • In UK it stands at 10.5% – highest in 40 years and has been driven by rising food and energy prices 
  • It is difficult to navigate this if the pay rises are 5% as proposed for teachers 

Economy This Week (28th Jan to 3rd Feb 2023):- Download PPT Here

ETW (28th Jan to 3rd Feb 2023):- Download PDF Here