TMS Ep249: Q1 GDP estimates, EV adoption, RIL stock, Sec-194R of IT Act

At a time when several developed nations -- including the US -- are staring at recession, India remains an island of stability. Backed by a strong rebound in consumption, India’s economy is forecast to have clocked double-digit GDP growth in the April-June quarter. But, a closer look reveals that the good numbers are riding on the back of the weak base of last year-- when the nation was reeling under the pandemic. And, the external sector is also facing serious challenges. So, what are the likely implications of the forecasts that have been released so far? 

The automobile sector contributes to 49 per cent of the manufacturing GDP. And high demand for cars and long waiting periods are also pointing towards economic revival. But there is churn going on in the sector. In its quest to turn back the clock on environmental damage, the world is slowly but steadily turning its back on polluting machines. Transition to EVs is one big step towards it. But how will this transition affect the huge automobile component sector which depends on the traditional internal combustion engines? 

Reliance Industries is also hugely invested in green energy. According to reports, it is likely to double investment in clean energy hardware manufacturing soon. Meanwhile, the company’s shares eked out modest gains on Tuesday, a day after the 45th annual general meeting. Analysts believe that though the investments across verticals will set the company on a decadal growth path, they may weigh on the stock in the near-term. Technical charts, however, suggest otherwise.

After the markets, let us move on to a new provision in the income tax which mandates a person giving any benefit to another person for their business or profession to deduct 10% of the value of the benefit at source. Section 194R was recently introduced in the Income-tax Act, 1961. But it also created confusion as a somewhat similar section was already there. Let us know more about it in this episode of the podcast.