January 2017 Economic Affairs

  • Demonetisation will widen tax base: Finance Ministry to Par panel :
    Demonetisation will lead to a wider tax base and lower interest rates, thus paving the way for "sustainable faster economic growth", the Finance Ministry has said. 

    In a written response to the Parliament's Public Accounts Committee (PAC), the Revenue Department said that due to withdrawal of old high-value notes, the idle/hidden cash has come into the formal system which will be utilized for productive purposes. 

    Further, increased availability of funds with banks and "lowering of interest rates" are expected to enhance credit disbursal, promoting investments in productive economic activities and giving boost to growth. 


  • Indian economy projected to grow by 7.7% in FY 2017: UNWESP report : 
    According to the United Nations World Economic Situation and Prospects (WESP) 2017 report, India’s economy is projected to grow by 7.7% in fiscal 2017 and 7.6% in 2018 India will remain the fastest growing large developing economy due to its strong private consumption and gradual introduction of significant domestic reforms. 

    The UN flagship report has not mention of the withdrawal of the high-denomination Rs. 500 and Rs. 1,000 currency notes nor its impact on the country’s economic growth. However, in case of India, low capacity utilisation and stressed balance sheets of banks and businesses will prevent a strong investment revival in the short term. China’s growth is projected to remain stable at 6.5% for fiscal years 2017 and 2018. 


  • Abu Dhabi creates $125 billion fund in merger :
    Abu Dhabi's government on 21st January merged two of its top investment funds, Mubadala Development Co and International Petroleum Investment Co, to strengthen their financial clout in an era of low oil prices. 

    The new fund, Mubadala Investment Co, having asset value around $125 million will be run by chief executive Khaldoon al-Mubarak, United Arab Emirates state news agency WAM reported, adding that a board had been appointed. 


  • FRBM panel offers little spending space to govt
    The Fiscal Responsibility and Budget Management (FRBM) committee submitted its report to Union Finance Minister Arun Jaitley on 23rd June, is said to have provided only small wiggle room to the government to boost spending. 

    The panel is believed to have recommended a fiscal deficit target of closer to three per cent of gross domestic product (GDP) than to the 3.5 per cent as speculated earlier. 

    The current FRBM road map sets the fiscal deficit target for 2017-18 at three per cent of GDP. The existing 13-year-old FRBM Act is likely to be replaced with a new law, which will be based on the panel’s recommendations. 

    The panel has provided a model FRBM law along with the report. Former Member of Parliament N K Singh, who was also Union revenue and expenditure secretary, heads the panel. It was supposed to submit its report on October 30 but could not do so because it was told by the government to consider the recommendations of the 14th Finance Commission, seek the opinion of the Reserve Bank of India (RBI) and study the impact of demonetisation. 

    The other members of the panel are former Finance Secretary Sumit Bose, RBI Governor Urjit Patel, Chief Economic Advisor Arvind Subramanian, and Rathin Roy, who is director of the National Institute of Public Finance and Policy. 


  • Only 1% of R&D funds for HIV, TB, malaria: WHO
    Investments in health research and development (R&D) are poorly aligned with global public health needs, the World Health Organisation has said, highlighting that merely 1% of the total funding on health R&D was allocated towards neglected diseases like HIV, tuberculosis and malaria which account for over 12.5% of the global disease burden. 

    According to the Global TB Report-2016, India accounts for 24% of global TB cases. Six countries --India, China, Indonesia, Nigeria, Pakistan and South Africa account for 60% of the global total. India is also a hub of multi-drug resistant TB with nearly 480,000 contracting it in 2015. India is under international pressure to tackle the TB problem, as it accounts for 1,400 of the 5,000 TB deaths daily. 

    India also accounts for the highest malaria burden outside Africa. Around 7.5 lakh cases and 188 malaria deaths were recorded till September 2016. The HIV and malaria burden is also significantly high. In 2015, the number of people living with HIV in India was estimated at 21.17 lakh, with 86,000 new HIV cases in that year. 


  • Abolish of MDR: CM committee recommends 
    Chief Ministers' Committee on demonetization has recommended abolition of the Merchant Discount Rate charges (MDR) to incentivize the digital transactions. 

    It has also suggested putting a curb on large transaction and considers levying of banking cash transaction tax on transaction of 50 thousand rupees and above. Capping on maximum allowable cash limit in all types of large transactions is another key recommendation of the committee. 

    The Panel chaired by Andhra Pradesh Chief Minister Chandrababu Naidu in its interim report submitted to Prime Minister in New Delhi on 24th January, has suggested to bring all government insurance, educational institutes, fertilisers, PDS and petroleum sectors within the ambit of digital payments. 

    The Committee wants Aadhaar-enabled micro ATM infrastructure in all 1.54 lakh post offices. The non-income tax payers and small merchants should be given a subsidy of 1,000 rupees for purchasing smart phones. He also said there should be no retrospective taxation to merchants doing digital transactions. 


  • Varishtha Pension Bima Yojana wins Cabinet nod
    The Cabinet on 24th January gave its post-facto approval for introduction of the Varishtha Pension Bima Yojana 2017. The scheme will be implemented through Life Insurance Corporation of India (LIC) during the current financial year to provide social security to persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions. 

    The scheme will provide pension based on a guaranteed rate of return of 8% per annum for 10 years, with monthly/quarterly/half-yearly or annual basis options. The difference between the return generated by LIC and the assured return of 8% per annum would be borne by the government as a subsidy. 


  • Cabinet clears interest waiver for farm loans
    The Cabinet has given its ex-post facto approval for an interest waiver for the two months of November and December, 2016 for farmers accessing short-term crop loans from cooperative banks. It also approved an interest subvention to NABARD on the additional refinance by NABARD to cooperative banks. The Cabinet also approved NABARD to make short-term borrowings. 


  • SEBI bars Mallya from markets
    Markets regulator Sebi on 25th January barred beleaguered liquor baron Vijay Mallya from the stock market for fraudulently diverting about Rs 1,881 crore from United Spirits (USL) to various other entities within the UB Group, including now grounded Kingfisher Airlines (KFA). 

    Sebi also barred Mallya from holding the position of a director in any listed company in the country. The regulator also directed USL to initiate action against Mallya and UB Group companies to which funds were wrongfully diverted by him. Currently, Mallya is the chairman of United Breweries and United Breweries (Holdings). Following the Sebi order, he will have to relinquish these positions. 


  • India in red zone on transparency list
    A major international index of corruption and transparency has placed India on the watch list for its inability to curb mega corruption scandals and petty bribery. The annual index of Transparency International issued on 25th January for 2016 placed India with Brazil and China in the 40th position. India’s condition showed growth with inequality. India’s current ranking, putting it in the high corruption zone, has drawn critical observations from transparency campaigners. 

    South Asia had performed poorly. Bangladesh at 27th and Nepal at 29th positions were slotted in the highly corrupt section. Pakistan, at 32, also came in the red zone. Afghanistan ranked 15th was in the “highly corrupt” list with South Sudan, North Korea and Libya. 


  • Growth in India’s oil consumption to be fastest by 2035
    India’s oil consumption growth will be the fastest among all major economies by 2035, BP Statistical Review of World Energy said. India, Asia’s second-biggest energy consumer since 2008, had in 2015 overtaken Japan as the world’s third-largest oil consuming country behind US and China. 

    The energy consumption will grow by 4.2 per cent per annum faster than all major economies in the world. India’s consumption growth of fossil fuels would be the largest in the world. India, it said, will overtake China as the largest growth market for energy in volume terms by 2030. 

    Oil consumption will rise from 4.1 million barrels per day in 2015 to 9.2 million bpd in 2035. Natural gas consumption would jump from 4.9 billion cubic feet per day to 12.8 bcfd while coal consumption is project to more than double to 833 million tons. 

    India’s energy demand growth at 129 per cent is more than double the non OECD average of 52 per cent and also outpaces each of the BRIC countries as China (47 per cent), Brazil (41 per cent), and Russia (2 per cent) all expand slower. 


  • Demonetisation to dent MFI profitability: Report
    With demonetisation taking a toll on recoveries during November and December, micro finance institutions (MFIs) might report a substantial dip in profit for 2017-18. 

    The Rs 55,000 crores sector (MFIS and non-bank finance companies) had displayed strong asset quality till recently, said ICRA, with the share of overdue loans lower than one per cent as on September 30. That number for MFIs had increased to 19 per cent as on December 31. 

    ICRA said there is some link between the districts in the country reporting low collection efficiencies after the demonetisation, with inherent over-leveraging issues in some of the areas and the coming state assembly elections. 

    In its reporting in September, ICRA had estimated that MFIs would need aggregate capital of Rs 1,600-4,700 crore (40-120 per cent of the existing net worth) to grow 30-35 per cent over the next three years. 

    The rise in credit and operating costs are expected to bring down return on equity from 13-15 per cent to below 10 per cent for FY18, according to rating agency ICRA. Collection dived to 75-80 per cent in November-December, from 99 per cent prior to demonetisation of Rs 500 and Rs 1,000 currency notes on November 8. 


  • GAAR will be effective from April 1
    The General Anti Avoidance Rule will be effective from the 1st of April, 2018, with assessment year 2019. It seeks to prevent companies from routing transactions through other countries to avoid taxes. 

    Finance Ministry said the proposal to apply GAAR will be vetted first by the Principal Commissioner of Income Tax, Commissioner of Income Tax and at the second stage by an Approving Panel headed by a judge of High Court. 

    The Ministry also clarified that adoption of anti-abuse rules in tax treaties may not be sufficient to address all tax avoidance strategies and the same are required to be tackled through domestic anti-avoidance rules. 

    Allaying investors' apprehensions, the government said adequate procedural safeguards are in place to ensure that the General Anti Avoidance Rule or GAAR is invoked in a uniform, fair and rational manner. The Finance Ministry also clarified that GAAR will not apply if the jurisdiction of Foreign Portfolio Investor is finalized on the basis of non-tax commercial considerations and purpose is not to obtain tax benefit. 

    Besides, GAAR will not interplay with the right of the taxpayer to select or choose method of implementing a transaction. India will be the 17th nation in the world to have laws that aim to close tax loopholes. GAAR is in force in nations like Australia, Singapore, China and the UK. 


  • Hubballi to host India's biggest startup incubation
    Indian-American entrepreneur, philanthropist and venture capitalist Gururaj Deshpande is setting up India's biggest startup incubator in Hubballi, about 400km from Bengaluru. 

    The 82,000-sqft facility is expected to open in September. It will have the capacity to seat over 1,200 people, which means it can accommodate at least 200 startups. The startups will be mainly from Dharwad district, said Deshpande at a startup event at Infosys's new campus in Hubballi. India's current biggest incubator is T-Hub in Telangana, housed in a 70,000-sqft building. 

    The Hubballi programme is a significant expansion of an idea that the Deshpande Foundation - founded by Deshpande and his wife Jaishree - seeded in 2008 and which has grown to be successful in the region. Called the Sandbox, the objective was to encourage problem-solvers from the local community and allow them to come with solutions with help from the foundation in terms of management, a financial model and connections to global innovators. 


  • Gujarat, Telangana lead in digital deals
    With Telangana government promoting the digital transactions, the country’s 29th state has made it to the second rank among other states in terms of cash-less transactions after the demonetisation introduced by Prime Minister Narendra Modi on November 8, 2016. 

    Gujarat and Haryana emerged as the top one and three states respectively as they recorded highest growth in cashless deals in the country. N Chandrababu Naidu-led Andhra Pradesh has come at eighth position. Naidu is the convener of the 13-member central committee on demonetisation issues. 

    The study and ranking of states in terms of cash-less transactions has been done by Pune-based Walnut, India’s leading personal finance app. It has created a scorecard comparing how each state is moving towards a cashless economy post- demonetisation, based on an aggregate and anonymized analysis of its data comprising over 5 million users. 


  • Commerce Ministry launches 'SEZ India' app
    Commerce Ministry has launched a Mobile app named “SEZ India” under its broader e-Governance initiative. It will help the Special Economic Zone (SEZ) Units and Developers to find information easily and track their transactions on Online System. Now they can file all their transactions digitally through SEZ Online system and track the status on the go through the SEZ India mobile app. 


  • GST roll-out deferred to July 1: Arun Jaitley
    Finance Minister Arun Jaitley on 16th January said the GST roll-out has been deferred to 1st of July this year as it seems to be a more realistic date. Earlier, the government had set 1st of April 2017 as the deadline to roll out the new tax regime. 

    According to Jaitley, the Council has arrived at a decision on dual control and cross empowerment issue. The entire taxation base in the GST system will be shared between the assessment machinery of states and center. 

    He also said in case of assesses with GST turnover of 1.5 crore rupees or less, 90 per cent will be assessed by states and 10 per cent by administrative setup of centre. Mr. Jaitley said, GST turnover of above 1.5 crore rupees will be assessed in the ratio of 50:50 by States and Centre. 


  • Note ban impact: India loses fastest-growing economy tag
    The International Monetary Fund (IMF) has trimmed its GDP growth forecast for India by one percentage point in its latest report, citing the impact of demonetisation, and said the country would cede its position as the world’s fastest growing large economy in 2016, with China set to regain the top spot. 

    In its World Economic Outlook Update, the IMF has pegged India’s growth rate at 6.6 per cent for the ongoing financial year, and 7.2 per cent in 2017-18. It expects GDP growth to rise to 7.7 per cent in 2018-19. In October 2016, the IMF had projected a GDP growth of 7.6 per cent for India this fiscal year and the next. 

    In the recent first advance estimates, the Central Statistics Office has projected growth at a three-year low of 7.1 per cent this fiscal year. 


  • Eight men own half the world's wealth, says Oxfam
    Ahead of the World Economic Forum summit in Davos, Oxfam, the confederation of charitable organizations focused on the alleviation of global poverty said, the wealth of the world's poorest 3.6 billion people is the equivalent to the combined net worth of six American businessmen, one from Spain and another from Mexico. 

    Indicating signs of a rise in income inequality, India’s richest one per cent now hold 58 per cent of the country’s wealth. The figure is higher than its global equivalent of about 50 per cent, according to a study released by rights group Oxfam. 

    In India, women form 60 per cent of the lowest-paid wage labour but only 15 per cent of the highest wage earners. This means women are not only poorly represented in the top bracket of wage earners but also experience wide gender pay gap at the bottom. 


  • UN expects 2017 global growth to rise to 2.7%
    The United Nations expects global economic growth to rise to 2.7 per cent this year and 2.9 per cent in 2018, up from 2.2 per cent in 2016 and said Brexit and US. President-elect Donald Trump's tax policies could have adverse effects. 

    In its annual economic forecast published on 17th January, the UN said India's growth was expected to rise slightly to 7.7% in 2017, compared to 7.6% in 2016. Also said that there was uncertainty created by Britain's vote to leave the European Union and predicted the British economy would slow to 1.1 per cent in 2017 and 1.3 per cent in 2018 from an estimated 2.0 per cent in 2016. 

    Cutting corporation taxes might also generate a US budget deficit in the short term, "and that could bring us towards a challenge for the global economy

    The UN report, based on data with a cut-off date of November 11, just after the US presidential election, forecast US growth would rise to 1.9 per cent in 2017 and 2.0 per cent in 2018 from an estimated 1.5 per cent in 2016. 


  • IRDAI forms panel to review life insurance product norms
    The Insurance Regulatory and Development Authority of India (IRDAI) has constituted a committee to review life insurance product regulations. Amitabh Chaudhry, CEO, HDFC Standard Life Insurance Company, has been appointed chairman of the eight-member panel. 

    The members of the committee include KS Gopalakrishnan, CEO, Aegon Religare Life Insurance, Sai Srinivas, Appointed Actuary, Bajaj Allianz Life Insurance, and Sandeep Bakshi, CEO, ICICI Prudential Life. 

    The committee will review the existing regulatory framework of IRDA linked and non-linked insurance products, besides other key aspects, such as changing economic and insurance market environment, customer needs and expectations and insurance product flexibility and innovations. 

    It should submit its report to the regulator on or before March 15, 2017, according to a notification issued by the IRDAI. 


  • Rs 9.2 lakh crore remonetised till date: RBI Governor 
    RBI Governor Urjit Patel on 18th January appeared before the Parliamentary Standing Committee on Finance and briefed the panel about government's recent decision to demonetise high value currency. 

    Mr. Patel is believed to have informed the committee, headed by Congress leader Veerappa Moily that 9.2 lakh crore rupees in new currency has been introduced in the system after the decision. RBI Governor did not tell how much money has come back to the banks and when the system will be normalized. 


  • Construction of 78703 houses for urban poor approved
    Centre on 18th January approved construction of 78,703 affordable houses for the benefit of Economically Weaker Sections in the urban areas of Tamil Nadu, Kerala and West Bengal with an investment of around three thousand crore rupees. 

    Central assistance of over one thousand and one hundred eighty crore rupees has also been approved for construction of these houses. Of the total houses, over 52 thousand houses has been cleared for Tamil Nadu, over 21 thousand for West Bengal and five thousand in Kerala. 

    A decision in the regard was taken during the meeting of Central Screening and Monitoring Committee of Ministry of Housing and Urban Poverty Alleviation in New Delhi on 18th January. With this, the total number of houses approved for the benefit of urban poor under Pradhan Mantri Awas Yojana reached over 15.48 lakh. 


  • Cabinet approves Rs 10,000-cr incentive for electronic manufacturing
    Cabinet also approved 10,000-crore rupees incentive for electronic manufacturing by March 2018. According to the IT Minister Ravishankar Prasad, it will help moving towards the goal of 'Net Zero imports' in electronics by 2020. Under Modified Special Incentive Scheme, investors in electronics manufacturing can apply till March 2018. The scheme has boosted electronics manufacturing in India in last two years. The incentives will be available for investments made within 5 years from the date of approval of the project. 

    Approvals will normally be accorded to eligible applications within 120 days of submission of the complete application. A unit receiving incentives under the scheme, will provide an undertaking to remain in commercial production for a period of at least 3 years. 

    The Minister informed that 42 new mobile phone manufacturing units have come in India in last 2 years and investments have increased to 1.26 lakh Crore rupees. 


  • Centre to get more money from National Small Savings Fund
    The government’s move to exempt all but four States from mandatory investment norms for the National Small Savings Fund (NSSF) will not only help the Centre lower its dependence on market borrowings, it will also help keep the fiscal deficit in check, while possibly freeing up more funds for investment into public sector units. 

    The Cabinet announcement on 19th January followed recommendations by the 14th and 13th Finance Commissions. It will allow States to borrow from the market at more competitive rates. Economists believe that it will also increase the investible funds of NSSF with the Centre, and these could be used for other purposes. 

    According to the Cabinet decision, the Food Corporation of India will be given a one-time loan of Rs.45, 000 crore from the NSSF. The decision also allows the NSSF to invest in future items based on the approval of the Finance Minister, and its expenditure will be borne by the government. Repayment of the principal and interest will be from the Union Budget. 

    The NSSF consists of all collections from small savings, including deposits, certificates and PPF. Its funds are then invested in Central government securities and the interest from these is, in turn, are used to pay returns of 7 per cent to 8.5 per cent to small investors.


  • Sanofi among six FDI proposals worth Rs. 1,186.5 crore cleared
    The government has cleared six Foreign Direct Investment (FDI) proposals totaling Rs. 1,186.5 crore. It also deferred a decision on six proposals and rejected three. The decisions were taken by the Finance Ministry based on the recommendations of the Foreign Investment Promotion Board in its meeting on December 29. 

    Approval was given to Sanofi-Synthelabo (India) Private Ltd (SSIPL) to acquire the consumer health care business of Boehringer Ingelheim India Private Ltd (BI) as a going concern on a slump sale basis. 


  • Co-operative banks cannot take deposits under PMGKY
    The government has barred co-operative banks from accepting deposits under the Pradhan Mantri Garib Kalyan Yojana, 2016. Under the scheme, taxpayers have to deposit 25 per cent of the declared amount as interest-free deposits for four years. This is apart from the 50 per cent tax that has to pay by declarants under the scheme. The scheme is open till March 31. 

    The finance ministry did not give details on why it amended the rules to prevent cooperative banks from accepting deposits under the scheme. But, during the 50-day demonetisation period, the income tax department had found various irregularities in co-operative banks’ operations such as backdating of cash deposits, structuring deposits in multiple accounts to escape reporting norms, their management using the bank to launder personal unaccounted cash. 


  • General Anti-Avoidance Tax Rule to kick in from April 2017
    The General Anti-Avoidance Rule, GAAR, will kick in from April 1, 2017 said the Central Board for Direct Taxes on 8th January. GAAR was part of the 2012-13 Budget speech of the then Finance Minister Pranab Mukherjee to check tax evasion and avoidance. 

    During the 2015 Budget presentation, Finance Minister Arun Jaitley announced that its implementation will be delayed by 2 years. Its implementation was repeatedly postponed because of the apprehensions expressed by foreign investors as GAAR contains provision allowing the government to retrospectively tax overseas deals involving local assets.


  • PM Modi inaugurates India International exchange at GIFT city in Gujarat
    Prime Minister Narendra Modi has formally inaugurated the India International exchange at GIFT city near Gandhinagar in Gujarat. GIFT city and India International Exchange- the International Center of BSE were the dream projects of Prime Minister Narendra Modi.

    The trading at the new India International Exchange at GIFT city will commence from 16th January. Gujarat International Finance Tec-City known as GIFT city is an under-construction central business district between Ahmedabad and Gandhinagar. 

    The ‘India International Exchange’ will trade in all the products like the other exchanges in the world such as Singapore, Hong Kong, London and New York in currency, equities, commodities and derivatives. Derivatives products are not currently available at this exchange since Indian regulations prohibit Indian individuals from speculating or doing derivatives trading in foreign markets as of now.

    Currently, Indian companies have to contact foreign exchanges to raise funds in foreign currency. Now this procedure will become less expensive and faster. The companies in India that wants to go global will benefit from this move.


  • World Bank projects global growth at 2.7% in 2017
    In its latest report, 'Global Economic Prospects', the World Bank said, after a post-crisis low of 2.3 per cent in 2016, global economic growth is forecast to accelerate moderately to 2.7 per cent in 2017. 

    It mentioned that growth in advanced economies is expected to edge up to 1.8 per cent. It, however, observed that stagnant global trade, subdued investment and heightened policy uncertainty marked another difficult year for the world economy.

    The financial body said, investment growth fell to 3.4 per cent in 2015 from 10 per cent on an average in 2010, and likely declined another half percentage point last year.


  • World Bank projects GDP growth at 7% in FY17
    The World Bank has projected India’s economy to grow at 7% in the current financial year, even after taking into account the impact of demonetisation. Though the projection was 0.6 percentage points lower than its earlier estimate of 7.6 per cent.

    This is only differed by 0.1% from the advance Estimates put out by the Central Statistical Office (CSO). CSO estimated the growth to be at 7.1 per cent without considering the effect of demonetisation and will factor in the impact in its revised Advance Estimates to be put out by February-end. 

    India's economy grew at 7.6 per cent in 2015-16 and the World Bank expected the country to return to this growth rate by 2017-18. That way, it slightly cut growth projections for the next financial year by 0.1 percentage points from the 7.7 per cent forecast earlier. However, it raised growth forecasts by 0.1 percentage points for 2018-19 at 7.8 per cent, which it said the country would maintain in 2019-20.


  • First student startup fund has Rs 200 crore
    Gujarat government has come up with India's first student startup and innovation policy, which aims to provide Rs 200 crore in the form of grants to ideas developed by them. The policy aims to support over 1,000 innovations per year and create pre-incubation support in all universities of the state. 

    According to the government statement, the policy will support student-led startups and innovations as well as create an Innovation and Pre-incubation Ecosystem Support (IPIES) across all universities of the state. The Student Startup and Innovation Policy developed under the aegis of Education Department and was announced by the Chief Minister of Gujarat Vijaybhai Rupani.

    Earlier in 2015, Gujarat came out with startup-assistant scheme, a part of Gujarat Industrial Policy, and in 2016 the state came out with startup-assistant scheme, a part of Gujarat Industrial Policy, and in 2016 the state came up with its Information Technology Startup Policy. 


  • HDFC Bank Launches Humanoid Robot IRA
    India’s second largest private sector lender HDFC Bank has launched a human shaped robot named IRA at its Mumbai branch to help the assist the customers in banking activities. Initially the role of the robot will be limited to that of receptionist that will greet the customers entering the bank and display the services and banking facilities like withdrawal, deposit, forex, fixed deposits and demat.

    IRA which stands for Intelligent Robotic Assistant aims to provide smoother customer service, marketing, employee assistance and automate the banking process. 


  • 68% Indians want service charge to be optional: Survey
    Sixty-eight per cent of respondents in a country-wide survey said the service charge levied by hotels and restaurants should be optional, while 27 per cent opposed it. Five per cent of the 26,000 respondents did not respond in the survey by LocalCircles citizen engagement platform.

    The survey also found that 68 per cent people were willing to pay a tip for good service if it goes to the restaurant staff, 26 per cent were not willing to pay the tip, while 6 per cent chose can't say as their answer. This implies that a majority of people are in favour of paying tips.


  • Minimum monthly pension increased by 9,000 for central govt employees
    The Government has increased the minimum monthly pension to nine thousand per person, besides a two-fold hike in ex-gratia amount for central government employees. According to the Minister of State in Prime Minister's Office, Dr Jitendra Singh the ex-gratia amount for the employees has been increased from 10 -15 lakh to 25-35 lakh rupees. There are about 50-55 lakh pensioners in the country and almost 88 per cent of their accounts have been seeded to Aadhaar.


  • Economy stronger post-demonetisation
    Double Gain on the economic front post demonetization; inflation reaches a three year low of 3.41 in December; rate of industrial production also shows huge gains. Retail inflation eased further to nearly 3-year low of 3.41 per cent in December. A year ago, in December 2015, retail inflation was at 5.61 per cent. 

    Industrial production in November grew by 5.7 per cent compared to a contraction of 3.4 per cent in the same month a year ago. Manufacturing sector, which constitutes over 75 per cent of the index, grew at 5.5 per cent in November. Electricity generation grew at 8.9 per cent in November. Mining output grew 3.9 per cent in November.


  • Global unemployment to rise by 3.4 m in 2017: ILO
    Global unemployment is expected to rise by 3.4 million in 2017 despite a likely modest pick-up in economic growth at 3.4 per cent this year and 3.6 per cent in 2018, against a six-year low of 3.1 per cent in 2016, says a new report by the International Labour Organisation.

    Expressing concern over the “inability” of the economy to generate enough jobs following subdued private investments and trade flows, the report “World Employment Social Outlook: Trends 2017” also projected a growth in the number of workers in vulnerable forms of employment by 11 million a year.

    The ILO report had some praise for India, where, it said, the “majority of new employment was created” in 2016. South Asia had created most of the new employment, with employment expanding by 13.4 million in 2016, underpinned by population-driven labour force growth, it added.

    However, it projected unemployment levels to rise by 450,000 in 2017 in developing countries, with unemployment rates hovering at around 5.5 per cent in 2017 and 2018, while also pointing out that forecasts for growth for 2017 have “continually been revised downwards.”


  • Expert panel submits report on targeting beneficiaries for pro-poor schemes
    The expert group set up to study the criteria for allocation of resources to States and to identify beneficiaries under various pro-poor programme using the Socio Economic and Caste Census (SECC) data, presented its report to Rural Development Minister Narendra Singh Tomar on 13th January.

    The SECC, on the basis of which the government will identify beneficiaries of pro-poor schemes, has been concluded, said an official release, adding that the “expert group’s interim advice has been accepted by the Ministry.”

    Accordingly appropriate guidelines have been issued to make inter–State allocation based on SECC data to cover households under Pradhan Mantri Awas Yojana (PMAG) and Deendayal Antyodaya Yojana National Rural Livelihood Mission (DAY-NRLM).

    The group, headed by former Finance Secretary Sumit Bose, has concluded that the use of SECC data and its TIN (Temporary Identification Number) would enable the government to improve the efficacy of its interventions and will result in improved outcomes, the release stated.


  • Industrial production grows 5.7% in November
    Allaying fears of a slowdown following demonetisation, the country's industrial production grew 5.7 percent in November 2016, compared to a contraction of 3.4 percent in November of the previous year. According to data released by the Central Statistics Office on 13th January, the manufacturing sector, which constitutes over 75 percent of the index, grew 5.5 percent in November 2016. 

    Mining output rose 3.9 percent in November, and electricity generation increased 8.9 percent. Capital goods output surged 15 percent during the month. Consumer durable output jumped 9.8 percent in November, consumer non-durable production increased 2.9 percent, and overall growth in consumer goods output was 5.6 percent.


  • SEBI tightens unlisted firms' M&A rules
    Securities and Exchange Board of India (Sebi) has introduced more checks and balances for mergers and acquisitions (M&A) involving unlisted companies to curb manipulation. The move comes in the wake of instances where unlisted companies are merged with listed companies with ulterior motives.

    Sebi also announced a number of measures pertaining to the mutual fund sector, allowing it to invest in newer instruments, such as real estate investment trusts (ReITs) and permitting fund houses to use celebrities for industry-level advertisements. Besides these, Sebi also cut turnover fees by 25 per cent paid by brokers. It also eased the eligibility criteria for municipalities to issue municipal bonds and enabled digital payment to Sebi by intermediaries. 

    Under the new guidelines, the public shareholding of the resultant entity created by the merger of an unlisted and a listed company has to be more than 25 per cent. Further, the unlisted entity will only be allowed to merge with companies listed on exchanges that have a nationwide terminal, such as the National Stock Exchange (NSE) and BSE.


  • 26 crore accounts open under Jan Dhan Yojana across country till date
    Over 26 crore accounts have been opened under Pradhan Mantri Jan Dhan Yojana across the country till date. The Scheme was launched by the Prime Minister Narendra Modi on August, 2014 with the objective of covering all households with at least one bank account. 

    According to latest data released by Finance Ministry, 26 crore three lakh accounts have been opened under the scheme. Of the total, nearly 16 crore accounts are in rural areas and more than 10 crore in urban. 

    Zero balance accounts have come down to nearly 24 per cent. Around 20 crore RuPay Debit cards have also been issued under the scheme. 


  • Service Charges in restaurants not mandatory, says Consumer Affairs Ministry
    Government on 2nd January said that the service charge in restaurants is optional. Consumer Affairs Ministry said that consumer has discretion to pay service charge or not. The clarification came following consumer complaints that hotels and restaurants are charging service charge in the range of 5 to 20 per cent, in lieu of tips. 

    Following the complaint, the department of Consumer Affairs had called for clarification from the Hotel Association of India. The association replied that the service charge is completely discretionary and can be waived off if a customer is dissatisfied with the dining experience. 


  • States demand tax on high sea sales, higher compensation
    The Day 1 of the GST Council headed by the Finance Minister, states on 3rd January demanded taxation rights for sales in high seas and also increasing the number of items on which cess is to be levied to compensate the states to deal with revenue loss estimated at Rs. 90, 000 crore post demonetisation. 

    Initially a Rs 55,000 crore GST compensation fund was proposed to be created by levying cess on demerit or sin goods and luxury items, but post demonetisation the compensation amount is expected to go up to Rs 90,000 crore as most states have seen revenue decline of up to 40 per cent, non-BJP ruled states claimed. 

    Also, coastal states pressed for rights to levy GST on trade of goods within 12 nautical miles offshore, holding up finalising of the draft law for levy of Integrated-GST (IGST) on inter-state trade (Agency inputs). 


  • 97% of banned notes returned: Report
    Banks have received Rs 14.97 trillion rupees as of 30 December, as much as 97 percent of banned notes, according to Bloomberg report. 

    According to another report the Reserve Bank of India has likely received back Rs 14.5 lakh crore of the old Rs 500 and Rs 1,000 notes as of 30 December, which is about Rs 94 percent of the money put out of circulation. 

    These figures suggest that the one-time windfall gain accrued to the central bank will be closer to Rs 90,000 crore as of now, much less than RBI and the Modi government's initial estimates of as much as Rs3 lakh crore. 


  • Despite growth pangs, 41% MSMEs report surge in cheque, e-payments: Crisil survey
    Micro, small and medium enterprises (MSMEs), which are largely cash-dependent, have reported a substantial shift away from cash transactions following the government’s demonetisation move, with 41 per cent units saying their clients had shifted to cheque or electronic payments, says a recent survey by Crisil. 

    However, the note-ban had muted growth and dried up funds, with three out of four MSMEs saying they plan to approach banks for loans, the survey pointed out. The survey added that typically MSMEs perform better in the fiscal second half (October- March), which means annual growth will be muted. Terming the drying up of liquidity as “an opportunity for banks” 


  • Google introduces tools for small businesses in India
    In an effort to tap into the 51 million strong small and medium businesses in India, online search major Google launched a brand new tool My Business. Sundar Pichai, the CEO of Google who is in the Capital for a day made the announcement. He said that the brand new tool has been introduced in India and it would be taken to other countries from here. 

    Pichai said that it is an India first tool which would be introducing this year. Google My Business would help small businesses set up website from their mobile devices. All they need is a smart phone. 

    The company has also launched Digital Unlocked, an education programme in association with industry body FICCI and Indian School of Business. The programme will impart mobile and online courses to help small businesses. 


  • India's GDP growth estimated at 7.1% 
    The Gross Domestic Product (GDP) growth is estimated at 7.1 per cent in 2016-17 as compared to 7.6 per cent in 2015-16. Releasing the data, CSO’s Chief Statistician T C A Anant said in New Delhi that the per capita net national income during 2016-17 is estimated to be one lakh three thousand seven rupees showing a rise of 10.4 per cent as compared to 93 thousand two hundred ninety three during 2015-16 with the growth rate of 7.4 percent. 

    The agriculture, forestry and fishing sector is likely to show a growth of 4.1 per cent during 2016-17, as against the previous year’s growth rate of 1.2 per cent. 

    The manufacturing sector is estimated to grow by 7.4 percent in 2016-17 as compared to growth of 9.3 percent in 2015-16. The wholesale price index (WPI), of food articles has risen by 6.9 per cent, manufactured products 2.0 per cent, and electricity (-)1.4 per cent and all commodities 2.8 percent during April-November 2016-17. The consumer price index has shown a rise of 5.0 per cent during April-November, 2016-17. 


  • Govt comes out with relaxed norms for IFSC companies
    To attract more companies to set shop in the International Financial Services Centre (IFSC), a relaxed regulatory framework that exempts such entities from corporate social responsibility (CSR) norms for five years and various other requirements. 

    A first of its kind, IFSC is being set up in Gujarat as part of a Special Economic Zone (SEZ). Among others, any financial institution at the centre would be treated as a non-resident Indian entity located outside India. 

    The corporate affairs ministry has now come with notifications on exemptions to specified IFSC public and private companies. Under the Companies Act, 2013, public companies are those having a paid-up share capital of at least Rs 5 lakh while private ones are those with a minimum paid-up share capital of Rs 1 lakh. 

    The entities should have the suffix of ‘IFSC’ or ‘International Financial Service Company’ as part of their name. Certain class of companies established in the IFSC would not required to seek approval from the National Company Law Tribunal (NCLT) for following a different financial year than the April-March period. 


  • SC stays transfer and sale of 2G spectrum by Maxis
    The Supreme Court on 6th January stayed all transfer and sale by Malaysia-based Maxis group of companies of 2G spectrum, originally allocated to Aircel in November 2006. A three-judge Bench, headed by Chief Justice of India J.S. Khehar gave Maxis’s controlling owner, Ananda Krishnan Tatparanandam, and three others a two-week deadline to appear in court. 


  • Grahak Yojana, Digi Dhan Vyapar Yojana launched
    Government on 25th December launched Lucky Grahak Yojana for Consumers and Digi-Dhan Vyapar Yojana for Merchants to promote digital transaction. The schemes are aimed at encouraging people to move towards significantly higher usage of digital transactions through the offer of incentives. It is also an attempt to curb corruption and the black money menace. 

    In the presence of Finance Minister Arun Jaitley and IT Minister Ravi Shankar Prasad the first Lucky Grahak Yojana draw was held and name of 15 thousand lucky winners were announced. Each of them will get one thousand rupees and the amount will be transmitted in their account. Similar draw of lots will be held over next 100 days. 


  • KVGB launches ‘Bank Sakhi’ scheme
    To promote and popularise cashless transactions in rural areas, the Karnataka Vikas Grameen Bank (KVGB) has come out with an innovative method of employing women in villages. The bank would appoint women business correspondents called “Bank Sakhi” in select villages where this scheme would be implemented. 

    To start with, the bank had hired 11 “Bank Sakhis” and had plans to appoint a minimum of 50 such women in different districts. The bank launched this scheme at a programme held at Adavi Somapura village in Gadag district recently. 


  • Black money holders to bear taxes, penalties amounting to over 137% post raids
    Black money holders will have to bear taxes and penalties amounting to over 137 per cent if they do not admit to or fail to explain the source of undisclosed income after being raided said Income Tax department. The total levy can touch 107.25 per cent if the undisclosed income is admitted during search operations and that income substantiated. 

    Tax dodgers can come clean by paying 50 per cent on bank deposits till December 31st 2016. The Taxation Laws (Second Amendment) Act, 2016 has amended the penalty provisions in respect of search and seizure cases. 


  • Centre’s nod for apex corridor development body
    The Centre has approved the re-designation of the Delhi-Mumbai Industrial Corridor Project Implementation Trust Fund as National Industrial Corridor Development & Implementation Trust (NICDIT) — the apex body to oversee development of all industrial corridors across the country. 

    NICDIT will implement all the five proposed industrial corridors, together covering 15 States. The Delhi-Mumbai Industrial Corridor, the first of the planned corridors, is under development. The Chennai-Bengaluru Industrial Corridor, Bengaluru-Mumbai Economic Corridor, Amritsar-Kolkata Industrial Corridor and the Vizag-Chennai Industrial Corridor are in various stages of planning. 


  • First Digi Dhan mela held in Gurugram
    The government is putting in a lot of effort to motivate people to move towards cashless payments after demonetisation. The first Digi Dhan mela in the country was organised on 26th December in Gurugram. The fair also educated the people on how to use mobile phones or AADHAR for making payments online. 

    In order to promote cashless transaction, the first 'Digi Dhan' mela was organised in Gurugram where customers were able to purchase items only by making digital payment. This was the first such fair in the country since demonetisation for educating masses on how to use mobile phones or AADHAAR for making payments online. There are also Counters where AADHAAR Cards are being made for those who do not have AADHAAR Cards. 

    Only transactions made using RuPay cards, USSD, UPI and Aadhaar are eligible for these schemes. The winners are being identified through a random draw of the eligible Transaction IDs. The schemes will be implemented by National Payments Corporation of India. 


  • More than 10,000 hectare forest land diverted in 2016
    The Forest Advisory Committee (FAC) approved proposals to divert over 4,300 hectares of forest land mostly for mining purposes. With this the total area of forest land approved for diversion in 2016 is 10,000 hectare. Till August, the FAC had recommended diversion of 4,108 hectare. 

    In November it considered proposals to divert 7,419 hectare; while in the latest meeting it approved diversion of 4,377 hectare. The actual diversion of forests, however, is a much larger figure, as these are the projects involving more than 40 hectare of land. 


  • Panel bats for changing financial year to January-December
    A government-appointed panel, headed by former chief economic adviser Shankar Acharya, has recommended changing the financial year from the current April to March to the calendar year. 

    But, whether or not such an overhaul will be carried out depends on the comfort level of the government. No decision has been taken on it yet. The report was submitted to Union Finance Minister Arun Jaitley in fourth week of December, 2016

    The panel members have studied the government’s Budgets and accounting, and feel that a shift is feasible. Members of the panel said they would not be able to comment on the report till the Centre decided to make it public. 


  • 20,000 NGOs banned for FCRA violation
    Government has canceled the licenses of around 20,000 NGOs for violating the Foreign Contribution Regulation Act (FCRA) provisions. This means that these NGOs will be barred from receiving foreign funds. Now there are only 13,000 NGOs in the country are legally valid to receive foreign funds. 

    The cancellation of the FCRA licenses of the NGOs has been done over a period of one year. Among the 13,000 valid NGOs, around 3,000 have submitted applications for renewal while Home Ministry received 2,000 new applications for registration under the FCRA for the first time. 

    An additional 300 NGOs are currently under prior permission category but not registered under the FCRA. As per FCRA, if an NGO is put under prior permission category, it is barred to receive foreign funding from abroad without taking permission from the Home Ministry. 


  • Centre sets target of providing housing to all poor by 2022
    The Centre has set a target of providing housing to all the poor in the country by 2022. According to the Parliamentary Consultative Committee, the government will construct one crore pucca houses for the poor by 2019. 

    During this financial year, 44 lakh houses will be constructed which is more than the set target. Such housings will be spread over 25 square meter area instead of earlier provision of 20 square meter area. 


  • Finance Ministry seeks views from stakeholders over Watal panel report on digital payment
    Finance Ministry has invited comments from stakeholders on the Watal committee report on promoting digital payments, which has suggested a separate regulator to deal with issues concerning payment, among others. 

    The committee was set up in August this year to review medium term measures to promote digital payment, under the chairmanship of Ratan Watal, Principal Advisor of NITI Aayog. The Ministry said, people can send their comments and suggestions within 15 days. 

    The report suggested a host of fiscal incentives to promote digital transactions. It suggested withdrawal of all charges levied by government departments and utilities on digital payments and making it mandatory for government departments and agencies to provide option to consumers to pay digitally. 

    The report also suggested putting a special emphasis on digital payments for recurring low value transactions and reducing custom duties on payments acceptance equipment. The committee has also suggested instituting awards to promote digital transaction. 


  • PM launches Mobile App-BHIM for Aadhaar-based digital payment
    Prime Minister Narendra Modi on 30th December launched a mobile app Bharat Interface for Money; BHIM to facilitate digital cash transactions with only a thumb print after the bank account is linked with Aadhaar. The new indigenously developed payment app BHIM has been named after the main architect of Indian constitution, Dr. B. R. Ambedkar. 


  • Fiscal deficit touches 86% of full-year target
    The Centre’s fiscal deficit remained high in the first eight months of the financial year with gross tax revenues somewhat muted in November. This is the first set of official data on government finances since the decision to demonetise high-value currency on November 8. 

    The Centre’s fiscal deficit amounted to Rs. 4,57,996 crore, or 85.8 per cent of the Budget Estimate, between April and November 2016. It was slightly lower at 79.3 per cent of the full fiscal target in October 2016. The fiscal deficit was at 87 per cent of the Budget Estimate in November 2015. 

    The revenue deficit shot up to Rs. 3,48,211 crore, or 98.4 per cent of the full-year target by November 30. It stood at 87.5 per cent of the Budget Estimate a year ago but was 92.6 per cent of the target in October 2016. 


  • Note ban Ordinance comes into effect
    The Ordinance on demonetisation, cleared by the Cabinet in fourth week of December, was signed by President Pranab Mukherjee on 30th December, lays down penalties of Rs 50,000 or more for false declarations on the withdrawn Rs 500 and Rs 1,000 currency notes. And, at least Rs 10,000 or more for holding on to such notes after 30th December, with some exceptions. 

    These exceptions apply for all Indians who were outside the country from November 9 to December 30. They will be able to deposit old notes in specified branches of the Reserve Bank of India till March 31. For non-resident Indians (NRIs), such a facility will be available till June 30. Both subject to the Foreign Exchange Management Regulations mandated restriction of Rs 25,000 per person. 

    NRIs and other Indians will, at the time of returning to India, need to declare the amount they might be having in the banned notes to Customs officials. 


  • PM announces schemes for pregnant women, housing, tax incentives for traders
    In a special address on the eve of new year Prime Minister Narendra Modi has announced two housing schemes, tax incentives for small traders, interest rebate for farmers and monetary assistance for pregnant women. 

    Mr. Modi said, Under the Pradhan Mantri Awas Yojana 4 per cent interest waiver on housing loan up to 9 lakh rupees and 3 per cent on loan up to 12 lakh rupees will be provided in the urban areas. Three percent interest subvention on loan up to 2 lakh rupees for construction of houses in rural areas. 

    The centre will pay interest for 60 days on loan taken by them for rabi season from district cooperative banks and primary societies. The 3 crore 'Kisan Credit Cards' would be converted to RuPay Card within three months to help farmers purchase various inputs anywhere. 

    NABARD will be given an additional 20,000 crore rupees to finance district cooperative banks and societies. 

    All pregnant women will get an assistance of 6000 rupees to meet medical expenses. Senior citizens will get 8 per cent interest on deposits of upto 7.5 lakh rupees for 10 years. Banks have also been asked to raise cash credit limit to small business to 25 percent from 20 percent.

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