A 1 Trillion Rupee Windfall, Debates on Free Data and Other News From India

Pay dirt: About 10 million former and current government employees are readying to take home 1 trillion rupees more as pay or pension after the Cabinet approved the recommendations of a Seventh Pay Commission in an attempt to boost consumer spending. The hope is that they will use this unexpected bonanza to spend more on homes, cars and consumer goods, which as one financial analyst said, will have a “snowball effect” on the economy. A big part of last year’s growth (which pushed India ahead of China), came from private spending and the government hopes to extend the trend for another year. Stock markets cheered, naturally, with auto companies leading the charge. A word of caution though: Pumping money into the system is almost inevitably followed by inflation. And there will also be taxes to pay on the 1 trillion so not all of it will go into spending. But, here’s the breakup:

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Retail push: Along with the 7th pay commission, the cabinet yesterday also approved a change in law, allowing malls and shops to remain open for 365 days a year, in the hope that it will boost employment. (PM Modi alluded to this in his TV interview earlier this week). It also allows women to work all hours, mandating the companies to provide safe transportation.

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Telecom operators, or telcos, want to TRAI to withdraw a consultation paper it has floated to discuss free data plans. Trying to find a middle route to bring in more unconnected users to the internet via mobile without violating the terms of net neutrality, TRAI had suggested three models that can be used to provide users with free data. Telcos believe this discussion is premature, considering the TRAI’s stance on net neutrality is still ambiguous.

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#qotd

“Twelve operators per circle was never planned. It is not there anywhere in the world. It resulted in fragmented and expensive spectrum. Consolidation is finally happening.” Airtel chairman Sunil Mittal’s view of the telecom industry

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Brexit (no) effect: Tata Steel’s plan to sell its UK steel business won’t be affected by the Brexit vote, according to its senior officials. There were questions raised as potential buyers will consider the trade treaty with the EU as an important part of the company’s valuation. However, with the pound’s slump, it does look like local made steel will be cheaper than Chinese imports.

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Meru Fund Raise: Meru Cabs, the oldest cab hailing company in India, has raised $25 million from Brand Capital, the investment arm of Bennet Coleman and Co. which owns Times of India, Economic Times and other publications. Brand Capital is an ad-for-equity investment company, which means Meru can now get free ads in BCCL’s publications, which also includes Times Now and ET Now. Coincidentally, BCCL itself is an investor in Uber.

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Cover Image: World Bank President Jim Kim is in India to review the progress of its funded projects. Click here to read his conversation with PM Modi on LinkedIn

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