Petrol price had touched a record high of Rs 84 per litre in Delhi and Rs 91.34 in Mumbai on October 4.
As the year comes to a close, let us look back at the eventful year that 2018 has been for the Indian business world with the unearthing of scams, investments, store launches, the Centre-RBI tussle, among others. Here are some of the most important business news of the year:
Record-high fuel prices
Petrol price had touched a record high of Rs 84 per litre in Delhi and Rs 91.34 in Mumbai on October 4. Diesel on that day had peaked to an all-time high of Rs 75.45 a litre in Delhi and Rs 80.10 in Mumbai. Prices had started to climb from August 16. Petrol in Delhi was priced at Rs 77.14 per litre and in Mumbai it cost Rs 84.58 on August 15. Diesel on that day was priced at Rs 68.72 per litre in Delhi and at Rs 72.96 in Mumbai. Between August 16 and October 4, petrol price was hiked by Rs 6.86 per litre and diesel by Rs 6.73.
Urjit Patel’s resignation
The year-long power struggle between the Central government and the Reserve Bank of India (RBI) was already in the fore and on December 10, RBI Governor Urjit Patel announced his resignation citing personal reasons. On December 11, former finance secretary and current member of the finance commission Shaktikanta Das was appointed new governor of the RBI.
RBI vs government
The RBI had been at loggerheads with the Centre over the Finance Ministry’s use of Section 7 of the RBI Act, which granted special powers to the government to issue directions to the central bank. Union Finance Minister Arun Jaitely blamed the RBI for unmanageable figures of stressed assets saying that it failed to check indiscriminate lending between 2008 and 2014 causing NPA crisis in the banking industry. A new 180-day deadline was set for declaring a loan as AN NPA. It said that after 180 days, the stressed account must go to the bankruptcy courts for settlement. The government considered the new regulations as very harsh that left public sector banks in the red. As of now, 11 out of 21 PSU banks are under the RBI watch-list. Two of them, Dena Bank and Allahabad Bank, are also facing restrictions on the expansion of the business.
Depreciation of the rupee
The rupee witnessed its worst fall in 2018 in over five years. Breaking all records, the Indian rupee depreciated 13 per cent in 2018 and has touched a historic low of 72.32 against the US dollar. Currently, the Indian rupee is the worst performer among Asian currencies.
UK court orders Vijay Mallya’s extradition
Fugitive businessman Vijay Mallya, wanted in India on fraud and money laundering charges worth Rs 9,000 crore, has been out on bail in the UK. On December 10, a UK Court ordered that Mallya be extradited to India and referred the case to British Home Secretary Sajid Javid for signing the order.
Warren Buffet’s investment in Paytm
Berkshire Hathaway, founded by investor Warren Buffet, invested $300 million in One97 Communications, the parent company of Paytm. This valued the company at $10 billion. The funding would enable Paytm to bring Indians to the mainstream economy through financial inclusion.
Air India stake sale
The Central government’s attempts to sell the stakes of debt-ridden state carrier Air India was successful. Prospective buyers were mainly deterred by the humungous debt and salary arrears. The government’s stand of retaining 24 per cent of the stakes also seen as a deterrent as the winning bidder would not get total control. Hence, despite offering the best international slots and access to the domestic network, the ambitious plan failed. The government is now mulling upon other ways to pare the loan which is costing it millions in interest payments.
GST below 18% slab
The government on December 22 streamlined the Goods and Services Tax (GST) with a view to making it more people-friendly. The GST council reduced the rates of 23 items from 18 per cent to 12 per cent and 5 per cent. Many items including television, computers and various auto parts will be cheaper now. Some items in the 5 per cent bracket have been moved to 0 per cent.
Walmart-Flipkart deal, Filpkart founders Sachin and Binny Bansal’s exit
Walmart forayed into the Indian market this year by acquiring a majority stake in ecommerce major Flipkart. The mega-deal allowed Walmart to make inroads through Flipkart’s delivery infrastructure, its own stores, and millions of mom-and-pop shops. It would also gave Flipkart easy access to capital. However, the move also led to Sachin Bansal’s immediate exit as he was denied the opportunity of greater control on operations. Binny Bansal, who became the CEO, had to exit the company too eventually owing to charges of misconduct.
Bandhan Bank IPO
This was the biggest initial share sale by an Indian bank. Bandhan began as a microfinancing company in 2001 and gradually the Chandra Shekhar Ghosh-led entity transformed into a full-fledged bank in 2015 and since then has been making all the right noises. The IPO not just made it the eighth-most valued bank in the nation, but also millionaires of its early staff, who ploughed their savings back into the bank.
IKEA’s foray into India
The maiden store launch of the Swedish furniture giant in Hyderabad in August not just drew massive footfalls, but also immense media attention. With the government allowing 100 percent FDI in single brand retail via the automatic route early this year, IKEA’s path became clear. After the 4 lakh square foot store in Hyderabad, IKEA now plans to open stores in Mumbai and Bengaluru.
IL&FS Ltd, or Infrastructure Leasing & Finance Services, India’s leading infrastructure finance company, defaulted on payments to lenders triggering panic in the markets. The firm’s investors, i.e. the banks, insurance companies and mutual funds lost money as IL&FS defaulted on its loans, commercial papers and other payments. This triggered a selloff in stocks of the investors, and further aggravated the credit crunch facing businesses in the nation. The reason behind IL&FS accumulating unsurmountable debts is the inordinate delays in infra projects from becoming profitable.