Namaste! Aaj ka news roundup, Newswala style!

MARKET

Markets: During the Budget speech, the Sensex dropped over 1000 points due to an unexpected hike in LTCG and STCG rates and increased STT on F&O transactions. However, key indices nearly recovered their losses by closing slightly lower, as the government's emphasis on reducing the fiscal deficit, boosting infrastructure spending, and increasing rural expenditure reassured investors.

BUSINESS

Union Budget 2024: Highlights and Announcements

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 in Parliament on Tuesday, marking her seventh consecutive budget presentation. The Budget focused on various sectors, including the poor, women, youth, and farmers, with key announcements aimed at boosting the economy, creating jobs, and offering tax relief.

Tax Revisions and Changes

The Budget introduced several changes in tax slabs under the new tax regime, providing significant savings for taxpayers:

• New Tax Rates:

  • 0-3 lakh: Zero tax

  • 3-7 lakh: 5%

  • 7-10 lakh: 10%

  • 10-12 lakh: 15%

  • 12-15 lakh: 20%

  • 15 lakh & above: 30%

The standard deduction on the new tax regime was increased from ₹30,000 to ₹75,000.

Capital Gains Taxes

The Budget also brought changes to capital gains taxes:

• Short-term Gains: Tax on specified financial assets increased from 15% to 20%.

• Long-term Gains: Tax on all assets raised to 12.5% from the earlier 10%.

• Exemption Limit: Increased from ₹1 lakh to ₹1.25 lakh annually for certain listed financial assets.

• Classification: Long-term classification for listed financial assets is over one year; for unlisted and non-financial assets, it’s over two years.

• Unlisted Bonds: Unlisted bonds, debentures, debt mutual funds, and market-linked debentures will attract applicable capital gains tax rates, regardless of the holding period.

Notably, the Budget proposed to abolish the controversial angel tax for all investor classes to support startups and innovation.

Fiscal Deficit and Expenditure

The fiscal deficit for FY25 is projected at 4.9% of GDP, down from 5.1% in the Interim Budget, with a commitment to reduce it below 4.5% next year. The expenditure for FY25 is projected at ₹48.21 trillion, and receipts are projected at ₹32.07 trillion.

Customs Duty Reductions

Several customs duty reductions were announced:

• Metals: Duties on gold and silver reduced to 6%, platinum to 6.4%.

• Exemptions: Lithium, copper, and cobalt are exempt from customs duty.

• Manufacturing: Expanded list of exempted capital goods for solar cell and panel manufacturing. Basic customs duty on spandex yarn was reduced from 7.5% to 5%, and customs duty exempted on the manufacturing of connectors and oxygen-fused copper.

• Medicines and Mobile Phones: Customs duty fully exempted on three additional cancer medicines. Duty on mobile devices and accessories reduced to 15%, while customs duty on plastic products.
  

Allocations for Andhra Pradesh and Bihar

Significant funds were allocated for social and infrastructure development in Andhra Pradesh and Bihar:

• Andhra Pradesh: Social and infrastructure funds announced, with a backward region grant for three districts, a package for the Vizag-Chennai Industrial Corridor, and ₹15,000 crore financial assistance for Amaravati’s development.

• Bihar: ₹26,000 crore allocated for roads and expressways, with additional funds for temple development in Bihar and Odisha.

Other Essential Announcements

• India Post Payments Bank: 100 new branches to be established in the North East.

• Industrial Parks: Twelve new industrial parks to be created.

• Housing: ₹10 trillion allocated for providing 1 crore houses to the urban poor and middle class.

• Critical Mineral Mission: The auction of the first offshore mining blocks.

• Rental Housing Scheme: For industrial workers in PPP mode.

• Mudra Loan Limit: Increased from ₹10 lakh to ₹20 lakh for successful borrowers under the TARUN category.

• Employment Schemes: Three new employment-linked schemes with ₹2 trillion allocation for job creation over five years, targeting skills for 20 lakh youth and increased women’s participation.

• Agriculture: ₹1.52 trillion allocated for agriculture and allied sectors, with the release of 109 high-yielding and climate-resilient varieties of 32 field and cultivation crops.

• Women-centric Schemes: ₹3 trillion allocated for women-centric schemes.

The Union Budget 2024-25 promises a comprehensive approach to economic growth and societal support.

BIG MONEY MOVES

Wingreens Farms seeks $4.3 million in debt funding

Wingreens Farms is set to raise $4.3 million (INR 36.2 crore) by issuing 9.57 lakh compulsory convertible debentures (CCDs) to investors such as S Gupta Family Investments and Saket Agarwal. These CCDs will convert into Series C9 cumulative convertible preference shares at a 1:1 ratio.

Founded in 2011 by Anju and Arun Srivastava, Wingreens Farms sells packaged foods including snacks and protein shakes. It has previously raised $59 million from investors like Peak XV Partners. Despite a net loss of INR 180 crore in FY23, the startup continues to expand and innovate.

NeoGrowth raises $11.2 million in debt funding

Mumbai-based NBFC NeoGrowth has secured $11.2 million (INR 93.7 crore) in debt from Symbiotics Group. The funds, raised through 9,376 non-convertible debentures, come with a 12.15% annual interest rate and a 5-year repayment term.

Founded in 2013 by Dhruv and Piyush Khaitan, NeoGrowth provides tailored credit solutions to SMEs across 70+ sectors, partnering with fintechs like PineLabs and BharatPe. The company’s profit surged 313% to INR 71.7 crore in FY24 while operating revenue increased 57% to INR 599 crore.

BUSINESS

Angel Tax Axed: Startups Can Breathe Easy Again!

What happened

In a major win for startups and investors, Union Finance Minister Nirmala Sitharaman announced on Tuesday that the controversial angel tax will be abolished for all investors. The announcement was made during the Budget 2024-25 presentation in the Lok Sabha, promising significant relief to the startup ecosystem in India.

Why it matters

Angel tax, introduced in 2012 to curb money laundering through inflated valuations in unlisted companies, has been a thorn for startups. This tax was levied when the funding received from angel investors exceeded the fair market value of the startup's shares.

For many early-stage startups, whose valuations are often based on future potential rather than current metrics, justifying these valuations became a taxing problem (pun intended). The abolition of this tax removes a significant hurdle, potentially accelerating growth and attracting more investments.

Zoom out

The scrapping of the angel tax is set to turbocharge the startup ecosystem, freeing up domestic capital and boosting investor confidence. Alongside this, the Budget also announced an increase in the limit for Mudra loans from ₹10 lakh to ₹20 lakh, further supporting micro-enterprises.

IT Minister Ashwini Vaishnaw hailed the decision as a major win for deep tech startups, highlighting that this move will spur more investments.

BIG PICTURE

BBC to trim the fat: 500 jobs on the chopping block

The BBC is set to cut 500 jobs over the next 20 months, aiming to save £200 million ($258 million) and slim down into a more "agile" broadcaster. This latest move adds to the 10% headcount reduction over the past five years, which saw almost 2,000 roles disappear. With a squeeze on funding and a drop in licence fee income—£80 million less last year—the BBC is reshuffling roles to focus on digital growth.

German construction sector in a downward spiral

Germany’s construction sector is struggling, with building permits plummeting 24.2% in May from last year and nearly 40% from May 2022. Single-family home permits fell over 31% and multi-family permits dropped 21% from January to May this year. Carsten Brzeski of ING describes the situation as “dismal,” with no recovery in sight since April 2022.

Despite government promises of increased investment and support for affordable housing, these measures seem ineffective. High interest rates, soaring construction costs, and a labour shortage continue to hinder the sector, leaving it in a deep “confidence crisis.”

BUSINESS

SpiceJet Takes Off with ₹3,000 Crore Fundraising 

What Happened?

SpiceJet is gearing up for a financial takeoff. On Tuesday, the budget carrier's board gave the green light to raise up to ₹3,000 crore through a qualified institutional placement (QIP). This isn't their first rodeo. Back in December 2023, they aimed to drum up ₹2,250 crore from a mixed bag of investors, including financial institutions, foreign investors, and high-net-worth individuals.

Fast forward to February 2024, and they had bagged an additional ₹316 crore, bringing their total raised to ₹1,060 crore. Despite these efforts, SpiceJet reported a consolidated net loss of ₹423.7 crore for the financial year ending March 2024. But hey, that's a big improvement from last year’s ₹1,513 crore loss.

Why It Matters

Spicejet’s market share has plummeted faster than a plane in turbulence, dropping from 14.8% in May 2019 to just 4% in May 2024. The fleet has also slimmed down, going from 76 aircraft in 2019 to about 47 today. This shrinkage means fewer flights and fewer options for passengers.

Financially, they’re still carrying a heavy load with liabilities of ₹11,690.7 crore as of March 2024. On top of that, they’ve been tangled in legal webs over unpaid dues to aircraft lessors and suppliers, earning them some stern looks from the Delhi High Court and the National Company Law Tribunal.

Zoom out

SpiceJet’s journey from soaring high to navigating through stormy skies is quite the saga. While the approval to raise ₹3,000 crore through QIP is a much-needed lifeline, the airline’s path to recovery looks like it’ll need more than just a few patches here and there. They’ve made strides in reducing their net loss, but the road ahead is still bumpy. Can they climb back to cruising altitude? Only time will tell.

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