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January 2018 Economy

  • ONGC acquires 51 pc share of Government in HPCL
    The government has entered into an agreement with Oil and Natural Gas Corporation (ONGC) Limited for the strategic sale of its 51.11 per cent equity share-holding in Hindustan Petroleum Corporation limited for 36,915 crore rupees. 

    The Finance Ministry in a release said, during the review in February 2016, the Prime Minister had underlined the need of efficient management of government investments in Central Public Sector Enterprises. It said, an announcement in this regard was also made by the Finance Minister Arun Jaitley in his last Budget Speech. 

    The Ministry said, through this acquisition, ONGC will become India's first vertically integrated oil major company, having presence across the entire value chain. 

    The integrated entity will have advantage of having enhanced capacity to bear higher risks, take higher investment decisions and neutralizing the impact of volatility of global crude oil prices. 

  • Govt reduces minimum export price of onion by 150 dollars to 700 dollars per tonne
    The government has reduced the minimum export price (MEP) of onion by 150 dollars to 700 dollars per tonne. Directorate General of Foreign Trade in a notification issued that this rate will remain in force till 20th of next month. 

    An MEP is the floor price below which exports are not allowed. Onion MEP was scrapped in December 2015 but brought back in November 2017 with an aim to check rising prices of onion. The government reduced the MEP as the prices have now started moderating. 

  • WEF ranks India at 62nd place among emerging economies
    India is ranked at 62nd place among emerging economies on the Inclusive Development Index released by the World Economic Forum before the start of its 48th annual meeting. 

    The report said, Norway remains the world’s most inclusive advanced economy, while Lithuania again tops the list of emerging economies. 

    According to the report, there is a huge decline in corruption rate in the index due to Indian Government's efforts of bringing transparency in the system. 

    The Inclusive Development Index is an annual assessment economic performance of 103 countries that measures how countries perform on eleven dimensions of economic progress in addition to GDP. 

    It has three pillars including 12 indicators and gives a more comprehensive indication of inclusive growth. 

    These pillars are growth and development; inclusion and intergenerational equity - sustainable stewardship of natural and financial resources. 

  • India to grow at 7.4 per cent in 2018: IMF
    International Monetary Fund (IMF) said India is projected to grow at 7.4 per cent in 2018 as against China's 6.8 per cent, making it the fastest growing country among emerging economies following last year's slowdown due to demonetisation and the implementation of the GST. 

    In its latest World Economic Outlook (WEO) update released on 22nd January in Davos, Switzerland on the sidelines of the World Economic Forum, the IMF has projected a 7.8 per cent growth rate for India in 2019. Growth rate projections for both 2018 and 2019 remains unchanged since its October 2017 WEO projections. 

    China, during the same period is expected to grow at 6.6 per cent and 6.4 per cent, the IMF said. With a growth rate of 7.1 per cent, India was the fastest growing country among emerging economies in the year 2016. 

    But due to the demonetisation and implementation of the Goods and Services Tax (GST), India’s economy slowed down a little bit to 6.7 per cent in 2016. In 2017, India’s growth rate dropped to 6.7 per cent. 

  • India's richest 1% grabbed 73% of wealth generation in 2017: Survey
    The richest 1 per cent in India cornered 73 per cent of the wealth generated in the country last year, a new survey showed on 21st January, presenting a worrying picture of rising income inequality. Besides, 67 crore Indians comprising the population's poorest half saw their wealth rise by just 1 per cent, as per the survey released by the international rights group Oxfam hours before the start of the annual congregation of the rich and powerful from across the world in this resort town. 

    The situation appears even grimmer globally, where 82 per cent of the wealth generated last year worldwide went to the 1 per cent, while 3.7 billion people that account for the poorest half of population saw no increase in their wealth. 

    The annual Oxfam survey is keenly watched and is discussed in detail at the World Economic Forum Annual Meeting where rising income and gender inequality is among the key talking points for the world leaders. 

    Last year's survey had showed that India's richest 1 per cent held a huge 58 per cent of the country's total wealth -- higher than the global figure of about 50 per cent. 

    This year's survey also showed that the wealth of India's richest 1 per cent increased by over Rs 20.9 lakh crore during 2017 -- an amount equivalent to total budget of the central government in 2017-18, Oxfam India said. The report titled 'Reward Work, Not Wealth', Oxfam said, reveals how the global economy enables wealthy elite to accumulate vast wealth even as hundreds of millions of people struggle to survive on poverty pay."2017 saw an unprecedented increase in the number of billionaires, at a rate of one every two days. Billionaire wealth has risen by an average of 13 per cent a year since 2010 -- six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2 per cent," it said. 

    In India, it will take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment firm earns in a year, the study found. 

    In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year, it added. 

    Citing results of the global survey of 120,000 people surveyed in 10 countries, Oxfam said it demonstrates a groundswell of support for action on inequality and nearly two-thirds of all respondents think the gap between the rich and the poor needs to be urgently addressed. 

  • India to become fastest growing large economy in 2018
    India will become the fastest growing large economy in the world, eclipsing China, in 2018 and the country's equity market will jump to become the fifth largest in the world

    According to a Sanctum Wealth Management report, when the rest of the world offers low growth and insufficient structural change, India, by contrast, is seen as a reforming economy with the prospect of strong long-term growth. 

    Sanctum is a Delhi-based professional wealth management company. At a time when developed economies are cheering 2-3 percent growth, India is focused on breaching 7.5 per cent Moreover, India also benefits from a favourable contrast to other emerging markets. In particular, the fact that China is down-shifting to a slower pace of growth. 

    However, if inflation or rates rise, markets are not likely to register further gains. Muted earning could also impact market performance. 

    As per the report, a major factor that has changed is that the domestic buyer now sets market prices. Domestic mutual funds bought equities worth 15.3 billion US Dollar against 8 billion US Dollar by foreign investors in 2017. 

    The report that identifies various big-picture trends at play this year in the domestic and global economy, noted that Aadhaar, Jan Dhan, Demonetisation, GST, are working to create a new inclusive infrastructure in India. 

  • India ranks ninth in terms of market performance; Brazil tops
    Despite gaining over six per cent, India is not among the top five best-performing global markets in 2018. BRIC peers Brazil and China are among top performing markets, with a gain of 10.3 per cent and nine per cent, respectively, in dollar terms. 

    Even developed markets, including Japan and Germany, have gained more than India, gains in the US and other European markets are in line with the gains in the domestic market. Experts say the on-going exuberance in the domestic market is on account of a rising risk appetite among global investors. The key drivers are improving global growth, strengthening commodities prices and weakening of the dollar. 

    Global liquidity conditions also remain supportive, thanks to the ongoing bond-buying programme by the European Central Bank (ECB) and the Bank of Japan. 

    In a note on 22nd January, US-based Goldman Sachs said the risk appetite currently is at its “highest level on record” and is fuelling a rise in risky assets, with world market capitalisation gaining over $4 trillion this year. Foreign institutional investor (FII) inflows into the Indian markets are nearing $1.5 billion. Asian peers such as Taiwan and South Korea are attracting more FII flows than India Asian peers such as Taiwan and South Korea are attracting more FII flows than India. 

  • UDAN-II to link 109 locations
    A total of 109 airports and heliports around the country have been awarded to various airlines and helicopter operators under the second round of bidding for the government’s Regional Connectivity Scheme (RCS), UDAN. 

    The locations being linked include Kargil in Jammu & Kashmir, which will be on the air map for the first time, Tezu (Arunachal Pradesh), Darbhanga (Bihar), Hubli (Karnataka), Hissar (Haryana), Thanjavur and Vellore (Tamil Nadu), Gaucher (Uttarakhand), Jalgaon and Ozar (Nashik) in Maharashtra, and Bathinda in Punjab. Arunachal Pradesh, Assam, Himachal Pradesh, Manipur and Uttarakhand will also have cities being connected by helicopter operations. Helicopter operations have been allowed under UDAN for the first time. 

    This increase in domestic air connectivity will not place any additional burden on existing fliers as the Finance Ministry has allowed the Ministry of Civil Aviation to retain a portion of the dividend the Airports Authority pays the Centre to meet the financial needs of providing viability gap funding (VGF) for regional flights

    To get airlines interested in operating to smaller cities, the government is offering VGF if the operators are willing to price at least 50 per cent of the seats on these flights under Rs. 2,500 for one hour of flying, subject to a maximum of 40 seats. The rest of the seats can be priced at market rates. 

    While the government’s annual allocation of funds due to VGF was in the region of Rs. 620 crore during the first round of UDAN, it is likely to be around Rs. 213 crore in the second round

    The existing proposal of levying a fee of Rs. 5,000 on a flight operated by an Airbus A-320 variety of aircraft to fund the scheme will remain

  • GST relief for low-cost homes, 1st-time buyers
    The GST rate has been reduced to 8% from the existing 12% on purchase of houses availing of the credit-linked subsidy scheme (CLSS) under Pradhan Mantri Awas Yojna, and of those houses that are constructed in a project that has got infrastructure status. 

    Under the CLSS scheme, a first-house buyer with a household income of up to Rs 18 lakh per annum can avail a benefit of up to Rs 2.7 lakh while buying a house or apartment of up to 150 square metres (1,615 sq ft) carpet area

    Those who do not qualify for credit linked subsidy scheme (CLSS) will continue to pay GST at 12% for the same house. The tax benefit will also be extended to an affordable housing project, which has been given infrastructure status, in case the maximum unit size in the project is a carpet area of 646sq ft. The first-house condition on the buyer will not be applied in this case. Whether or not the buyer gets the CLSS benefit under PM Awas Yojna, GST will be levied at 8%

  • 73 new airports and helipads to be set up under regional connectivity scheme UDAN
    Civil Aviation Minister Ashok Gajapathi Raju has announced the name of 73 new airports and helipads to be set-up under the Regional Connectivity Scheme UDAN at a press conference in New Delhi. 

    The ambitious scheme Ude Desh Ka Aam Nagrik-UDAN seeks to boost regional air connectivity and provides various incentives to airlines. He said, out of 73, forty-three will be constructed in North-East and the hill states and will add 29 lakh seats annually. 

    He said, under the scheme, Uttarakhand will get 15 airports and helipads, 9 in Uttar Pradesh, eight in Arunachal Pradesh and 6 in Himachal Pradesh and five each in Assam and Manipur. The Minister said, for the first time, Kargil will also have air connectivity. 

  • India to become self-sufficient in pulses in FY19, on record rabi output
    India is set to achieve self sufficiency in pulses in FY 2018-19, wth a high kharif output and likelihood of record rabi season production due to an all-time high acreage and favourable agro climatic condition. 

    Until last year, that is 2016-17, India remained heavily dependent on import of pulses of different varieties, including chick peas from Australia, Tur from Myanmar and other varieties from Canada and a number of non-consuming but large-growing African countries. Apex industry body, India Pulses and Grains Association (IPGA), puts India’s import at around 5.7 million tonnes of pulses during FY2017, almost similar to 5.8 million tonnes imported during the previous financial year. 

    According to the Directorate General of Commercial Intelligence and Statistics (DGCIS), India has imported pulses worth $2.47 billion for the period between April and November 2017 to meet its growing consumer demand. During financial year 2016-17, India had set a record in imported pulses at $4.24 billion, up from $3.90 billion the previous year. 

    This means total pulses availability in India would be around 24-25 million tonnes, over and above nearly two million tonnes of buffer stock available with the Food Corporation of India (FCI). So, India does not need to import pulses. 

    With a steady growth of 4-5 per cent, India requires around 24 million tonnes of pulses a year to fulfill its demand.Data compiled by the Ministry of Agriculture showed total acreage under rabi pulses jumped by nearly 5 per cent to hit the highest ever at 16.31 million ha which works out to about 15 per cent more than the average of the past five years. 

  • IMF, World Bank laud Reserve Bank of India for 'strengthening' supervision
    The IMF and the World Bank have commended the Reserve Bank of India for its "remarkable progress in strengthening banking supervision" saying the regulation by the central bank has improved in recent years.The International Monetary Fund (IMF) and the World Bank had released two separate main Reports of the 2017 India Financial Sector Assessment Programme (FSAP) in December 2017.In continuation, the IMF and the World Bank released two detailed assessment reports (DARs) relating to the 2017 India FSAP. 

    The report providing 'Detailed Assessment of Observance Basel Core Principles for Effective Banking Supervision' has been released by the IMF and the World Bank. 

    The report providing 'Detailed Assessment of Observance of Clearing Corporation of India Limited (CCIL) Central Counter Party (CCP) and Trade Repository (TR)' was released by the World Bank. 

    Market regulator Sebi in a statement noted that the DAR on the observance of Basel Core Principles commends the Reserve Bank for the remarkable progress in strengthening banking supervision since the last FSAP." 

  • NCDEX starts first agri-options trading in guar seed
    The National Commodity and Derivatives Exchange Ltd (NCDEX) on 14th January unveiled India's first agri-commodity options in guar seed designed as a hedge for farmers to safeguard against price risks. 

    The agri-options trading have been launched by Finance Minister Arun Jaitley at a time when data shows a dip in agriculture growth and the sector is under stress. 

    Lauding farmers for taking the country out from a situation of shortages in the past, Jaitley, who sounded the opening gong for guar seed trading, said the NCDEX initiative will help farmers get more income from produce. 

    Options are trading derivatives which give the buyer a right, but not the obligation, to buy or sell a security or other financial asset at a specific price on or before a certain date. 

    The exchange said in a statement that a large number of informal trading centers in some communities of Rajasthan already practice some form of informal options trading while the guar seed is one of the most liquid contracts on the NCDEX platform. 

    NCDEX is the second exchange after MCX to launch option trading in commodities following markets regulator Securities and Exchange Board of India's (SEBI) approval for such trade last year. 

    There are already 59 Farmer Producer Organizations (FPOs) trading on the NCDEX, the exchange said. 

  • WEF ranks India 30th on global manufacturing index
    The World Economic Forum (WEF) has ranked India at 30th position on a global manufacturing index. In its first "Readiness for the future of production" report, Japan has been found to have the best structure of production and is followed by South Korea, Germany, Switzerland, China, Czech Republic, the US, Sweden, Austria and Ireland. Among BRICS nations, Russia is ranked 35th, Brazil 41st and South Africa at 45th place. 

    The report has placed India in the Legacy group along with Hungary, Mexico, Philippines, Russia, Thailand and Turkey, among others. China figures among 'leading countries while Brazil and South Africa are in nascent ones. 

    The report which was published ahead of its annual meeting in Davos, Switzerland said the 25 leading countries are in the best position to gain as production systems stand on the brink of exponential change. 

    In the India context the report said, the country's manufacturing sector has grown by over 7 per cent per year on average in the past three decades and accounts for 16-20 per cent of India's GDP. It said, India has room for improvement across the drivers of production, except for demand environment where is ranks in the top 5. 

    The report also mentioned that the human capital and sustainable resources as the two key challenges for India and said the country needs to continue to raise the capabilities of its relatively young and fast-growing labour force. 

    It also took note of the government's 'Make in India' initiative to make the country a global manufacturing hub and of a significant push to improve key enablers and move towards a more connected economy with announcement of a 59 billion dollars investment in infrastructure in 2017. 

  • India’s exports grow by 12.36 in December to USD 27.03 billion
    The Country's exports grew by 12.36 per cent in December, 2017 to 27.03 billion US dollars on account of strong performance by sectors like engineering goods and petroleum products. 

    According to data released by Ministry of Commerce and Industry, exports have been on a positive trajectory since August 2016 to December 2017 with a dip of 1.1 per cent in the month of October last year. Exports of engineering goods as well as petroleum products showed an increase of over 25 per cent in December. However, shipments of ready-made garments declined by 8 per cent last month. The imports surged significantly to 41.91 billion, up 21.12 per cent, on increased inbound shipments of crude oil and gold. Gold imports surged by 71.5 per cent last month. It said, the trade deficit or difference between imports and exports was 14.88 billion US dollar in December last year. 

  • Centre abolishes Haj Subsidy from this year
    The Centre has abolished Haj subsidy from this year. According to Minority Affairs Minister Mukhtar Abbas Naqvi, a record number of one lakh 75 thousand Muslims will undertake the Haj pilgrimage from India without any subsidy this year

    He said the subsidy will now be utilized for educational empowerment of girls and women from the minority community. The government will start Haj pilgrimage through ships in the coming days. 

    In 2012, the Supreme Court had ordered the government to do away with the subsidy in a phased manner in ten years. The Court had also asked the government to see that the money is used for the upliftment of the community in education and other indices of social development. 

  • Exports rise 12.36% in December
    Increase in exports of engineering goods and petroleum products helped the country register a 12.36 per cent rise in overall goods exports (year-on-year) to $27.03 billion in December, 2017. 

    This is the 16th month of growth over the last 17 months (exports fell in October 2017 mostly due to a decline in duty drawback rates) and exporters are hopeful of touching the $300-billion mark in the current fiscal. 

    Imports during the month, posted a sharper rise of 21.12 per cent to $41.91 billion led by gold, silver, precious stones, petroleum and electronic goods. This widened the trade deficit to $14.88 billion in December 2017 compared to $10.54 billion in December 2016. 

    Other sectors which registered a growth in exports include pharmaceuticals, gems and jewellery and organic and inorganic chemicals. Sectors which have suffered a decline in exports include readymade garments, iron ore and oilseeds. Total exports for the period April-December 2017-18 were $223.51 billion, which was 12.05 per cent higher than exports in the comparable period of the previous fiscal. 

    Overall imports for the period April-December 2017-18 were valued at $338.36 billion which was 21.76 per cent higher than imports in the same period of the previous fiscal. 

  • GST e-way Bill System rolled out on trial basis
    The Finance Ministry has rolled out the nationwide e-way Bill System for inter-state movement of goods on trial basis from 16th January 

    The GST provision requiring transporters to carry an electronic waybill will be implemented from February 1 for inter-state movements. 

    The e-way bill system eliminates the need for transit passes for inter-State movements of goods and works on the self-declaration model

    The e-way bills can be generated through the portal by giving details such as invoice related to the consignment, vehicle details, tax value, GST rates, among others. A copy of the bill will be sent as an SMS to the registered mobile number. 

    When such an e-way bill is generated, a unique e-way bill number (EBN) is allocated and is available to the supplier, recipient, and the transporter. 

    A pilot of the e-way bill has been successfully run in Karnataka. Besides checking rampant tax evasion, the government expects an increase in revenue up to 20 per cent after the nationwide launch

    An e-way bill is mandatory for movements of goods valued at 50,000 and above. The GST Council had decided to implement the entire e-way bill mechanism, covering intra-state movements too, throughout the country by June 1. 

    After the implementation of the Goods and Services Tax (GST) from July 1 last year, the requirement of carrying e-way bill was postponed pending IT network readiness. 

    The rules for the implementation of nationwide e-way bill system for inter-state movement of goods on a compulsory basis is expected to be finalised in the GST Council meet on 17th January and will be notified with effect from February 1, 2018. 

  • Group of Ministers appointed to look into IT issues of GST holds 6th meeting
    Group of Ministers appointed to look into IT issues of Goods and Services Tax had their sixth meeting in Bengaluru on 17th January. 

    The Group headed by Bihar Deputy Chief Minister Sushil Modi informed media persons that dip in revenue during the last few months is a matter of concern. He informed that revenue collection dipped from 92,283 crore rupees in July to 80,806 crore rupees in November. 

    There are 7.5 lakh dealers coming under GST Composition scheme who had paid just 310 crore rupees in taxes. 

    The figures indicate that there are attempts to evade or suppress taxes. Mr.Modi said a GST Council meeting to be held in New Delhi on 18th January will discuss measures to prevent tax evasion and suppression. Sushil Kumar Modi has informed that the GST Council meeting on 18th January in New Delhi will take up GST on Handicrafts. This sector has been demanding for an exemption from GST. 

    He also added that the issue of GST for Petroleum products will not come up for discussion on 18th January in the meeting. He said that existing items under GST must stabilise only then new items could be included under this regime. 

    He felt that revenues will improve once E-way bill comes into existence from first of February. He also said National Informatics Centre will set up help desks to resolve any issues pertaining to E-way bill. 

  • Central Government lowers additional borrowings to Rs 20,000 crore this fiscal
    The government on 17th January lowered the additional borrowing requirement for the current fiscal to Rs 20,000 crore from Rs 50,000 crore estimated earlier. 

    Government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern. 

    After consultation with the RBI the government had said that it would make additional borrowing of Rs 50,000 crore this fiscal through dated securities. However, there will be no change in the net borrowings as envisaged in the Budget for 2017-18. 

    The reduced borrowing would help contain fiscal deficit within the target. The government in the 2017-18 budget had estimated borrowings at Rs 43,000 crore through dated securities in current fiscal. 

    A decline in revenue collections from the Goods and Services Tax (GST), and lower non-tax revenue have led to worry about government meeting the fiscal deficit target. 

    The government has budgeted gross and net market borrowings at Rs 5.8 lakh crore and Rs 4.23 lakh crore, respectively in 2017-18. 

    As per the latest figure, in November 2017 the fiscal deficit target had breached budget target and touched 112 per cent of the budget estimate for 2017-18 mainly due to lower GST collections and higher expenditure. 

  • GST Council reduces tax rate on 29 goods and 53 categories of services
    Goods and Services Tax Council has reduced the tax rate on 29 goods and 53 categories of services by bringing them in lower category. The new rates will be effective from 25th of January. 

    The GST rate on tailoring service has been reduced from 18 to 5 percent and tax on entry services to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet from 28 percent to 18. 

    The tax rate on construction of metro and monorail projects has been brought down from 18 percent to 12 percent. Besides, the rate on job work services for manufacture of leather goods and footwear has been reduced to 5 percent. 

    The GST rate on transportation of petroleum crude and petroleum products including ATF has bee cut down from 18 percent to 5 percent without input tax credit and 12 percent with it. The GST rate on Common Effluent Treatment Plant services of treatment of effluents from 18 per cent to 12 per cent. 

    The GST rate on the Works Contract Services provided by sub-contractor to the main contractor to governments and local bodies has been lowered. The GST Council has also given tax exception to services provided by and to FIFA and its subsidiaries related to any of the events under FIFA U-20 World Cup to be hosted by India. 

  • India Ratings projects economic growth at 7.1% next fiscal
    India Ratings and Research on 18th January projected the country's economic growth to improve to 7.1 per cent next fiscal from 6.5 per cent this year, buoyed by robust consumption demand and low commodity prices. In its outlook for 2018-19, the agency said there will be a gradual pickup in growth momentum owing to structural reforms like GST and Insolvency and Bankruptcy Code in place. 

    India Ratings, a subsidiary of Fitch Ratings, further said GDP is expected to grow 7.1 per cent year-on-year in 2018-19. The projection is a tad lower than 7.4 per cent growth estimated by Asian Development Bank and International Monetary Fund for next fiscal. 

  • Central Govt announces name of nine new smart cities
    Urban Development Minister Hardeep Singh Puri on 19th January announced the name of nine more smart cities, taking the total to 99. Silvassa in Union Territory of Dadra and Nagar Haveli has topped the list of winning cities in this round of competition. 

    The other cities include Erode in Tamil Nadu, Diu in Union Territory of Daman and Diu, Biharsharif in Bihar, Bareilly, Saharanpur and Moradabad in Uttar Pradesh, Itanagar in Arunachal Pradesh and Kavaratti in Lakshadweep. 

    The nine cities have proposed an investment of 12 thousand 824 crore rupees to develop 409 projects. With the selection of these nine cities, the total proposed investment in 99 Smart Cities will be two lakh three thousand 979 crore rupees. 

    Smart City Centers have become operational in Pune, Surat, Vadodara and Kakinada and work is in progress in another 18 cities. Nearly three thousand projects worth over one lakh 38 thousand crore rupees are in various stages of implementation. He also said, 189 projects have been completed so far. The mission of hundred Smart Cities was announced by Prime Minister Narendra Modi in June 2015. 

  • Agriculture sector likely to grow higher than CSO estimate of 2.1%: Govt. 
    The country's agriculture sector is expected to grow higher than projected 2.1 per cent growth by the CSO for the current fiscal, following better rabi crop prospects, the agriculture ministry said on 7th January. Last week, Central Statistics Office (CSO) had pegged farm and allied sector growth at 2.1 per cent for 2017-18, much lower than 4.9 per cent achieved in the 2016-17. 

    The farm sector growth comprises GVA (gross value added) of crops at 60 per cent, livestock 20 per cent and forestry 8.5 per cent and fishing and aquaculture at 5.5 per cent. 

    The agriculture sector can, therefore, be expected to register a much higher GVA for the year 2017-18, when final estimate figures are released, it added. 

    MOSPI Justifying the reasons for possible higher growth, the ministry said it is of the opinion that the lower coverage of area by August 2017 on account of delayed onset of monsoons has caused a poor reflection compared to the actual positive field situation by December 2017. 

    However, good rainfall thereafter helped increase in area coverage in accordance with the with kharif targets. 

    The GVA estimate is bound to get corrected upwards, if increased area coverage by December 2017 and concomitant production estimate in case of food grains, oilseeds and commercial crops, in particular, are taken into account, it said. 

    These three accounts for higher percentage of share than horticulture in the GVA computation and horticulture is showing a higher productivity estimate, it added. 

    The ministry further said the livestock and fishery sector was very positive till August 2017 and by December the dominant crop sector has "bounced back".

    The ministry also observed that CSO estimates of farm sector growth this fiscal comes on the back of a very robust GVA of 4.9 per cent in the previous year. 

    Crops in particular and agriculture in general are highly dependent on monsoons and overall status of weather, the ministry said, adding that even small variations in weather tend to influence agriculture adversely, as seen for example, in the area coverage by August 2017. 

  • Gujarat tops logistics performance index chart: Commerce Ministry 
    Gujarat has topped the logistics index chart, an indicator of the efficiency of logistical services necessary for promoting exports in particular and economic growth in general. Union Minister for Commerce & Industry Suresh Prabhu released the report in New Delhi on 8th January

    According to the report by the Commerce Ministry Logistics Ease Across Different States- LEADS, would help in identifying the right problem areas in the sector and prepare policy responses to deal with them. 

    Among 22 states, Gujarat is followed by Punjab, Andhra Pradesh, Karnataka and Maharashtra on the index. The ranking is based on the analysis of perception with regard to eight parameters, including infrastructure, services, regulatory process and safety of cargo. 

    Among the Union Territories, Daman & Diu occupied the top slot followed by Delhi and Chandigarh. As regards the hilly states, Tripura was on top followed by Mizoram and Meghalaya. 

  • Direct tax collection rises 18.2% in Apr-Dec 
    Direct tax collection has increased by 18 (point) 2 percent during April to December, last year as compared to the corresponding period of 2016. 

    The government has collected over 6 lakh 50,000 crore rupees during the first nine months of the current fiscal. The collection, which includes personal income tax and corporate tax, represents 67 per cent of the total budget estimates in direct taxes for 2017-18. 

    In a statement, the Finance Ministry said the gross collections have increased by 12.6 per cent to over 7 lakh 60,000 crores during April to December. Refunds amounting to over 1 lakh crores were issued during the period. 

    Nearly 3 lakh crore rupees have been received as Advance Tax up to last month reflecting a growth of 12.7 per cent over the Advance Tax payments of the corresponding period of last year. 

    The growth in Corporate Income Tax Advance Tax is 10.9 per cent and that in Personal Income Tax Advance Tax is 21.6 per cent. 

  • World Bank projects India's growth rate at 7.3 per cent in 2018
    World Bank has projected India's growth rate at 7(point) 3 per cent in 2018 and 7(point) 5 for the next two years. In its 2018 Global Economics Prospect released in Washington, the World Bank said, India has enormous growth potential compared to other emerging economies as an ambitious government undertakes comprehensive reforms. 

    It said, despite initial setbacks from demonetisation and Goods and Services Tax (GST), India's economy is estimated to have grown at 6.7 per cent in 2017. 

    For global economy, World Bank's outlook, for the first time in many years, is better than expected with all regions seeing improved growth. However, it has warned that countries must make investments to improve their growth prospects, and the time to do that is before the next crisis hits, as it inevitably will. 

  • Cabinet clears 100% FDI in single-brand retail via automatic route
    The Union cabinet on 10th January cleared a proposal allowing 100 per cent foreign direct investment (FDI) in single-brand retail via automatic route. The cabinet also eased FDI rules for aviation and the construction sectors. 

    In the construction sector, the government has allowed 100 per cent FDI under automatic route. 

    The existing policy FDI policy on Single Brand Retail Trading (SBRT) allows 49 per cent FDI under automatic route, and FDI beyond 49 per cent and up to 100 per cent through government approval route. It has now been decided to permit 100 per cent FDI under automatic route for SBRT. 

    In civil aviation, the existing policy allows foreign airlines to invest under government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 per cent of their paid-up capital. 

    This provision, however, was not applicable to Air India. The Union cabinet has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India subject to the conditions that: Foreign investment(s) in Air India including that of foreign Airline(s) shall not exceed 49 per cent either directly or indirectly and that (b) substantial ownership and effective control of Air India shall continue to be vested in Indian national. 

    The government has also decided to do away with the provision that restricted FII/FPI purchases to secondary market only, thereby allowing FIIs/FPIs to invest in Power Exchanges through primary market as well. The existing policy provided for 49 per cent FDI under automatic route in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010. 

    Definition of ‘medical devices’ amended in the FDI Policy: The definition of ‘medical devices’ has been amended in the FDI policy on pharmaceuticals. 

  • UIDAI introduces 'Virtual ID' to address privacy concerns
    In an attempt to address security and privacy concerns around leakage of Aadhaar numbers and data, the Unique Identification Authority of India on 10th January introduced two new measures - virtual ID and limited KYC. 

    The virtual identity or virtual ID will be a random 16-digit number mapped to the Aadhaar number of a citizen, and will come with an expiration date. 

    The VID will not be duplicable by agencies performing authentication of Aadhaar number, and hence will ensure safety of the Aadhaar number. 

    According to a statement by UIDAI, which administers Aadhaar, the VID can be generated and revoked only by the Aadhaar number holder through channels such as the Aadhaar portal and the mAadhaar mobile app. The older VID gets canceled each time the Aadhaar number holder issues a new one. 

    The issue of privacy of citizen data has picked up steam in the last week after The Tribune reported that an anonymous WhatsApp number was selling access to the entire Aadhaar database for as low as Rs 500. The UIDAI has further introduced limited KYC (know your customer) process wherein only some entities, categorised as global authentication user agency (global AUA) will be allowed to store a citizen's Aadhaar number, while others, known as local AUAs will not be allowed to store Aadhaar numbers. 

    These agencies will be given a UIDAI token specific to them, to enable them to uniquely identify their customers. 

    The UID token, a unique character for system usage, will be unique to every authentication request made by a global or local AUA. 

    Currently, every agency that uses Aadhaar for KYC authenticates a user and often stores a person's Aadhaar number. 

    In the absence of strong data protection and privacy laws, the issue of what can be done with stored citizen information is a grey area. 

    The new measures do not specify what happens to the Aadhaar numbers that have already been stored by public or private entities. It also does not mention which AUAs would qualify as global or local. 

  • India tops domestic air traffic demand at 16.4% in November: IATA
    Global aviation body the International Air Transport Association has said that India's domestic air passenger traffic grew by 16.4 per cent in November last year, topping the growth chart worldwide. 

    The IATA, comprising major air carriers, said India continued to witness double-digit growth for the 39th consecutive month. 

    Globally, the total revenue passenger kilometers increased 8 per cent compared to November 2016, the fastest growth rate in five months. 

    The available seat kilometers (ASKs) grew by 6.3 per cent. The ASKs for India was at 10.4 per cent, second only to China where capacity grew by 12.9 per cent. 

  • SEBI ban on PW may hit audit of 77 firms, including Tata Steel, Hindalco
    SEBI’s order banning the Price Waterhouse network of audit firms (PW firms) from auditing listed clients for two years will affect 77 NSE-listed firms, according to data compiled by Prime Database. 

    For the current financial year, PW firms — including Dalal & Shah and Lovelock & Lewes — are statutory auditors to 77 firms listed on the NSE. This includes heavyweights such as Hindalco Industries, Tata Steel, Ashok Leyland, IDFC, IndusInd Bank and Reliance Capital. 

    While the revenue impact the ban will have on PW firms’ India operations is uncertain, data shows that in FY17, the audit firm network earned upwards of Rs. 81 crore in audit fees from its roster of listed clients. 

    India was among the fastest-growing markets for audit and advisory giant PricewaterhouseCoopers (PwC), recording almost 20 per cent growth in revenue in FY16. PW network firms in India are either members of or connected with the UK-based PwC. The global firm does not reveal revenue by country. PwC reported over $37 billion in global revenue in FY17. 

  • India’s factory production in November rises by 8%
    Industrial production growth rose to 8 point 4 per cent in November 2017 on the back of robust performance of manufacturing and capital goods sectors. 

    The factory output, measured in terms of Index of Industrial Production (IIP) grew 5.1 per cent in November 2016. 

    According to data released by Ministry of Statistics and Programme Implementation, Manufacturing sector, which constitutes 77.63 per cent of the IIP, recorded an impressive growth of 10.2 per cent in November as compared to 4 per cent a year ago. However, the growth of mining sector production was 1.1 per cent and Electricity generation growth was 3.9 per cent in November. 

    Among the sectors, pharmaceuticals clocked the highest growth of 39.5 per cent, followed by 29.1 per cent in computer, electronic and optical products and 22.6 per cent in the automobile segment. 

    In terms of industries, 15 of the 23 industry groups in the manufacturing sector have shown positive growth during November 2017 as compared to the same month a year ago. 

  • Retail inflation rises to 5.21% in December
    Retail inflation crossed the RBI's comfort level and rose to 5 point 21 percent in December on rise in prices of food items, egg and vegetables, dashing hopes of interest rate cut in the near future. 

    The retail inflation, based on Consumer Price Index (CPI), was 4.88 percent in November. In December 2015, it was 3.41 percent. 

    The Reserve Bank has been asked by the government to keep inflation at 4 percent, plus or minus 2 percent, and its rise beyond the comfort zone will put pressure on the central bank not cut interest rate (repo rate). 

    As per the data released by the Central Statistics Office, CSO, inflation for the food basket increased to 4.96 percent in December from 4.42 percent in the preceding month. 

    The data revealed that eggs, vegetables and fruits became costlier, while inflation moderated in case of cereals and pulses. 

  • GST: E-way bill system to be implemented from 1 February, 2018
    The goods and services tax (GST) provision requiring transporters to carry an electronic way bill or e-way bill when moving goods between states will be implemented from February 1, to check evasion and boost revenue by up to 20 per cent. 

    After GST implementation from July 1, the requirement was postponed due to an unready network. This was done even in the 17 states which in the pre-GST era had an established electronic challan or e-way bill system

    Once the e-way bill system is implemented, tax avoidance would become difficult, as the government would have details of all goods in transit above the value of Rs 50,000 and could spot a mismatch if either supplier or purchaser does not file tax returns

    The e-way bill for inter-state movement will be implemented from February 1 and for intra-state movement from June 1. The official said states had been given the option of choosing when they want to implement the intra-state e-way bill between February 1 and June 1. 

    States had also been given the option to exempt movement of goods within 10 km radius, he said, adding all essential goods have been exempted from the requirement of carrying e-way bill. 

    Besides plugging tax evasion, the e-way bill will boost revenues by 15-20 per cent, he said. The official said a pilot of e-way bill has been successfully run in Karnataka and the IT system is fully geared to meet any requirement. E-way bill is an electronic way bill for movement of goods which can be generated on the GSTN (common portal). 

    Movement of goods of more than Rs 50,000 in value cannot be made by a registered person without an e-way bill. The e-way bill can also be generated or cancelled through SMS, he said. When an e-way bill is generated, a unique e-way bill number (EBN) is allocated and is available to the supplier, recipient, and the transporter, he added. 

  • Telangana: Govt rolls out 24-hour free-electricity supply for farming sector
    In Telangana, the government rolled out 24-hour free-electricity supply for farming sector on 1st January. About 23 lakh agricultural pumpsets across 31 districts of the state began getting uninterrupted electricity supply from zero hours on 1st January. 

    With this, one of the assurances, to provide round the clock free electricity to farming sector, given by Chief Minister Chandrasekhar Rao during last elections has been fulfilled. 

    This initiative of the state government has provided an assured source of irrigation to the agriculture land, out of which 84 per cent depend on tube wells and bore wells. The state Government has kept 7500 MW electricity ready to meet the demand. 

    The free power supply to agriculture sector in the state confined to a few hours in a day and now the agricultural pumpsets will operate at the press of the button and also without any interruptions. 

  • Eight core sectors grow 6.8% in November 2017 
    Eight core sectors growth hits at a fastest pace in more than a year at 6.8 percent in November 2017 on account of robust performance in segments like refinery, steel and cement. 

    According to the data released by the commerce and industry ministry, eight industries coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity had witnessed a growth of 3.2 percent in November 2016. A healthy growth in key sectors will have positive implications on the Index of Industrial Production (IIP) as these eight segments account for about 41 percent of the total factory output. 

    Commenting on the data, Economic Affairs Secretary S C Garg described 6.8 percent rise in core sector output as an impressively growth. 

  • Parliament passes Insolvency and Bankruptcy Code Amendment Bill
    Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2017 with approval by Rajya Sabha on 2nd January. 

    The Bill prohibits certain persons from submitting a resolution plan in case of defaults. They include willful defaulters, promoters or management of the company having an outstanding non-performing debt for over a year. 

    It also has provisions to bar the sale of property of a defaulter to such persons during liquidation. The bill was passed by the Lok Sabha last week. 

    Replying to the debate, Finance Minister Arun Jaitley said, the process of declaring companies is cumbersome. 

    This is why amendments are made to simplify the process from time to time. Earlier, initiating a discussion P Chidambaram of Congress described the clauses of the Bill as overinclusive. 

    He apprehended that the Bill will enhance the risk of Indian companies going into foreign hands. Bhupendra Yadav of BJP welcomed the Bill. 

  • Parliament passes National Bank for Agriculture and Rural Development (Amendment) Bill
    Parliament has passed the National Bank for Agriculture and Rural Development (Amendment) Bill, 2017 with the Rajya Sabha approving it on 2nd January

    The Bill seeks to amend the National Bank for Agriculture and Rural Development Act, 1981. The Bill allows the central government to increase the authorised capital of the Bank from 5 thousand crore rupees to 30 thousand crore rupees. 

    The capital can be increased further by the government in consultation with the RBI. Currently, the Central government is holding 99.6 per cent share of the bank and the rest is with RBI. NABARD is responsible for providing and regulating facilities like credit for agricultural and industrial development in the rural areas. NABARD will concentrate on providing loan to small-scale industries related to agriculture and rural infrastructure. 

  • CCEA nod for implementation of Jal Marg Vikas Project
    The Cabinet Committee on Economic Affairs, CCEA has given its nod for implementation of the Jal Marg Vikas Project, JMVP for capacity augmentation of navigation on National Waterway-1 at a cost of over 5 thousand 370 crore rupees with the technical assistance and investment support of the World Bank. The Project is expected to be completed by March, 2023. 

    The alternative mode of transport will be environment-friendly and cost-effective and the project will contribute in bringing down the logistics cost in the country. 

    National Waterway-1 development and operations will lead to direct employment generation to the tune of 46 thousand and indirect employment of 84 thousand will be generated by vessel construction industry. 

  • Cabinet sanctions extension of Jute packing mandatory norms
    The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the mandatory packaging of foodgrains and sugar in the jute material for the Jute Year 2017-18. The decision, the Committee claimed, would sustain the core demand for the jute sector and support the livelihood of the workers and farmers dependent on the sector. 

    The CCEA has extended the mandatory packaging norms under the Jute Packaging Material (JPM) Act, 1987. The approval mandates that 90 percent of the food grains and 20 percent of the sugar products shall be mandatorily packed in jute bags. 

    The decision also mandates, in the first instance, the entire requirement for packing of foodgrains would be placed in jute bags thus, making a provision for 100 percent packing of food grains in jute bags subject to the ability of the jute industry to meet the requirement. 

    The decision is expected to benefit farmers and workers located in the Eastern and North Eastern regions of the country particularly in West Bengal, Bihar, Orissa, Assam, Andhra Pradesh, Meghalaya, and Tripura. 

    Jute industry is predominantly dependent on Government sector which purchases jute products more than Rs. 5,500 crore every year. 

    Considering that nearly 3.7 lakh workers and approximately 40 lakh farmers are dependent for their livelihood on the jute sectors, the government has been making concerted efforts for the development of jute sector; increasing the quality and productivity of raw jute, diversification of jute sector and also boosting and sustaining demand for jute products. 

    With a view to boosting demand in the jute sector, the Government of India imposed Definitive Anti Dumping Duty on the import of jute goods from Bangladesh and Nepal with effect from January 5, 2017. As a result of these measures, 13 twine mills in Andhra Pradesh had resumed operation, benefitting 20000 workers. Further, the imposition of Definitive Anti Dumping Duty has provided scope for an additional demand of 2 lakh MT of jute goods in the domestic market for the Indian jute industry. 

  • Finance Ministry clears FDI proposals worth Rs 532 crore of Metaffinity Private Limited
    The Finance Ministry has approved FDI proposals worth 532 crore rupees of Metaffinity Private Limited. The company had sought approval for foreign investment of up to 49 percent by two foreign investors - M/S Canada pension plan investment board and Pantheon - HK project universe. It will make downstream investment in Religare Health Insurance company, an Indian company engaged in health insurance business. 

    The ministry also approved FDI proposal of M/s - SMAS auto leasing India Pvt Ltd to undertake financial lease business in addition to the existing operating lease business. 

  • GDP growth during current fiscal to be 6.5%: Govt
    The Growth in GDP during 2017-18 has been estimated at 6.5 per cent as compared to 7.1 per cent in 2016-17. Addressing a press conference on first Advance Estimates of National Income 2017-18 in New Delhi on 5th January, Chief Statistician T C A Anant said, agriculture, forestry and fishing is likely to slow to 2.1 per cent in the current fiscal from 4.9 per cent in the preceding year. 

    He said, The growth in manufacturing sector too is expected to decelerate to 4.6 per cent this fiscal, down from 7.9 per cent in 2016-17. 

    He said, electricity, gas, water supply and other utility services sector is expected to grow by 7.5 per cent as compared to growth of 7.2 per cent in 2016-17. 

    The Chief Statistician said, Construction sector is also expected to grow by 3.6 per cent as compared to growth of 1.7 per cent in 2016-17. 

    He said, the estimated growth in Gross Value Added, GVA for the trade, hotels, transport and communication and services related to broadcasting services during 2017-18 is placed at 8.7 per cent as against growth of 7.8 per cent in the previous year. 

    The data shows, the per capita income in real terms (at 2011-12 prices) during 2017-18 is likely to attain a level of `86660 as compared to `82269 for the year 2016-17. 

    The growth rate in per capita income is estimated at 5.3 per cent during 2017-18, as against 5.7 per cent in the previous year. 

  • Defence Ministry clears arms procurement contracts worth 2,420 crore rupees for Navy and Army
    Defence Ministry has cleared contracts worth 2,420 crore rupees for Navy and Army which includes the procurement of P-8I Training Solution and Low Intensity Conflict Electronic Warfare System (LICEWS). 

    Defence Ministry said, the P-8I Training Solution, along with 10-year comprehensive maintenance service, will be bought from Boeing for around one thousand 950 crore rupees. This training solution accurately simulates P-8I aircraft and mission systems. It will help Indian Navy train and realistically rehearse for sophisticated missions involving P-8I aircraft, at a fraction of the cost of live aircraft training. 

    The P-8I aircraft is equipped for long range anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance in support of broad area, maritime and littoral operations. The aircraft is capable of thrusting a punitive response and maintaining a watch over India’s immediate and extended areas of interest. 

    The procurement of LICEWS will be done from Bharat Electronics Limited for 470 crore rupees. This system will equip Indian Army with upgraded communications infrastructure to effectively deal with advanced communications systems being used by terrorist groups. 

  • 10% gender gap in Jan Dhan accounts: study
    A World Bank paper has noted a 10% gender gap in opening accounts under the country’s flagship financial inclusion programme — Jan Dhan Yojana — with 73% men applying for the accounts against 63% women. Madhya Pradesh recorded the largest gender gap of 21%. The paper titled, ‘Making It Easier to Apply for a Bank Account: A Study of the Indian Market’ by Asli Demirguc-Kunt, Leora Klapper, Saniya Ansar and Aditya Jagati also noted an income gap — 64% being poorer adults and 71% richer adults — in applying for an account. 

    The share of wage earners (72%) was higher than the share of adults who are out of the workforce and applied for an account (64%). Among adults with primary school education, 62% applied as compared with 70% of adults who had completed secondary school education (and 84 % of adults with a graduate degree). 

    The survey was carried out between January and March of 2016 in 12 States — Andhra Pradesh (including Telangana), Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthann and Uttar Pradesh — which make up about 70% of the country’s population. 

    The research said that despite initial successes, people who wished to apply for an account continued to incur a range of costs, including the cost of travelling to bank branches, the cost of collecting documentation and various other monetary costs. The confluence of these factors makes account opening a tedious task. 

    It also pointed out that 40% of adults cited lack of trust in financial institutions for not opening an account.
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