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April 2019 - Economy News



  • Bank of Maharashtra (BoM) partnered with M1XChange Trade Receivables Discounting System (TReDS) platform for MSME bill discounting. TReDS is a digital platform to support micro, small and medium enterprises (MSMEs) to get their bills financed at a competitive rate through an auction where multiple registered financiers can participate. TReDS platform facilitates a smooth flow of liquidity.


  • The total deposits in bank accounts opened under the Jan Dhan scheme are set to cross Rs 1 lakh crore soon. The cumulative balance in 35.29 crore accounts under the flagship programme of the Modi government reached Rs 97,665.66 crore as on April 3, 2019. The Modi government launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) on August 28, 2014.


  • RBI swap auction got bid more than thrice. The second dollar-rupee buy/sell auction saw healthy demand with the RBI getting 255 bids worth $18.65 billion compared with the notified amount of $5 billion. The cut-off premium was 838 paisa compared with 776 paisa the last time. The liquidity injected in the first leg was Rs. 34,874 crore.


  • SEBI has reduced the minimum subscription requirement as well as defined trading lots for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). REITs have to offer their units in lots worth at least Rs. 50,000 in initial and follow-on public offers. The minimum value of a single lot should be Rs. 1 lakh in the case of InvITs.


  • HDFC to hold 9.9% stake in Bandhan Bank. The RBI has given its nod to HDFC Ltd. for acquiring up to 9.9% stake in Bandhan Bank following the Gruh Finance deal. Gruh Finance, the affordable housing finance arm of HDFC Ltd., was taken over by Bandhan Bank in a share-swap deal in January 2019. After the announcement of the deal, an application was made by HDFC to the RBI for holding shares in Bandhan Bank, HDFC Ltd.


  • SBI General Insurance launched its new product – cyber defence insurance to protect businesses from financial and reputational losses due to cyber-attacks. The main focus is on SMEs and mid-market businesses to larger businesses. This offers protection against the growing threat of cyber breaches like hacking attacks, identity theft, and business interruption.


  • Zest Money has raised $20 million in its Series B round led by Quona Capital, a venture capital firm focused on financial technology products. Australian fintech investor, Reinventure, and existing investors Ribbit Capital, Omidyar Network and PayU also participated in the round. The new funding will support the company’s expansion plans for 2019.


  • The Economist Intelligence Unit (EIU) has released the 2019 Index of Cancer Preparedness (ICP) in which India's overall rank is 19th out of 28 countries, with a score of 64.9. Australia topped the ICP, followed by the Netherlands and Germany. Saudi Arabia, Romania, and Egypt are at the bottom in Index.


  • RBI sold entire stake in National Housing Bank (NHB). RBI has exited the National Housing Bank (NHB) and the National Bank for Agriculture & Rural Development (NABARD), by selling its entire stakes to government for Rs 1,450 crore and Rs. 20 crore. With this divestment, the government now holds 100 percent stake in both these financial institutions.


  • RBI has Rs.3 lakh cr in excess reserve. Bank of America Merrill Lynch (BofAML) notified the excess reserves that RBI holds could be up to Rs.3 lakh crore ($43 billion) or 1.5% of the GDP (Gross Domestic Product). This also includes the excess capital in contingency reserves and revaluation reserves. The BofAML report stated that capping overall reserves at 20% from 25.5% will release Rs. 1.96 lakh crore.


  • The Meghalaya government will invest Rs 378 crore in fish production for meeting a supply deficit of 15,000 metric tonnes. The state has been able to produce 12,000 MT of fish annually against the demand of over 27,000 MT. An investment of Rs 161 crore was made in the first edition of the Meghalaya State Aquaculture Mission (MSAM) that had benefited 21,000 persons in 2012.


  • 'Plaints to RBI ombuds increased 25% in FY18. The number of complaints by bank customers to the RBI's banking ombudsman increased by 24.9% in the financial year 2017-18 as compared to the previous year. The major grounds of complaints received during the year were non-observance of fair practices code (22.1%), ATM and debit card issues (15.1%), credit card issues (7.7%), failure to meet commitments (6.8%).


  • Cholamandalam MS General Insurance Company Limited has been certified with ISO 31000:2018. ISO 31000:2018 is an international risk management standard. The standard provides guidelines, principles, framework, and a process for managing risk. It can be used by any organization regardless of its size, activity or sector. The Certificate is valid for a period of 3 years.


  • CRISIL Ltd, a diversified global analytics company, will transfer its rating business to its proposed new wholly-owned subsidiary. The board of CRISIL gave the nod for the transfer, which is being done to comply with SEBI norms of last year (2018). SEBI modified its regulations for credit rating agencies and mandated the segregation of rating and non-ratings businesses of credit-rating agencies.


  • Non-life insurers witness 13% rise in premium. According to data from IRDAI, Non-life insurance firms registered a rise of 13% in their collective premium income to Rs 1.70 lakh crore in March 2019. The 34 non-life insurers had a gross premium of Rs 1.51 lakh crore in 2017-18. Among these insurers, as many as 25 are categorized as general insurers, seven private sector insurers while the rest of the two are government- owned insurers.


  • TCS signed a deal with India Post. Tata Consultancy Services (TCS) has partnered with the Department of Posts in a bid to transform it into a multi-service digital hub. The Core System Integration (CSI) program has been designed and implemented by TCS for transformation. The integrated solution is built to cater to the Department’s immense scale and future needs.


  • Spicejet, Emirates signed MoU. Budget carrier Spicejet announced the signing of an initial pact for code share partnership with Gulf carrier Emirates on 22 April 2019. The partnership will allow the opening of new routes and destinations for passengers of the two airlines. Code-sharing allows an airline to book its passengers on its partner carriers and provide seamless travel to destinations where it has no presence.


  • My Healthcare, a digital integrated healthcare ecosystem has raised $3 million from Sixth Sense Ventures, as part of its ongoing Series A fundraise. My Healthcare works with hospitals, diagnostics, and specialty health institutions in building their digital health business. It had raised $2 million in 2018, led by Hunch Ventures and Ajay Nanavati.


  • The Indian government extended the ban on import of milk and its products, including chocolates, from China. Food regulator FSSAI had recommended extending the ban until all labs at ports are modernized to test the chemical. The ban was first imposed in September 2008 and extended subsequently from time to time.


  • Tata Global to acquire Dhunseri Tea. Tata Global Beverages Ltd (TGBL) has entered into a non-binding agreement to acquire the branded tea business of Dhunseri Tea and Industries Ltd, for up to Rs. 101 crore. The proposed acquisition will be subject to due- diligence, signing of definitive binding agreements and applicable approvals. Dhunseri's branded tea business includes 'Lalghoda' and 'Kalaghoda' brands in Rajasthan.


  • Leather exports rose 8% in FY19. India registered about 8% growth in export of leather, leather products and footwear during 2018-19 and is aiming to achieve 9% to 10% growth during the current fiscal. In rupee terms, exports during 2018-19 grew to Rs. 36,562.34 crore from Rs. 33,894.71 crore in the corresponding year-earlier period. For the current year, CLE is aiming to achieve 9% to 10% growth.


  • HDFC tops Forbes' list of best Indian banks. Forbes has compiled a first-ever list of the World's Best Bank 2019 in terms of customer services and technological advancements. The private lender, HDFC Bank, was ranked at the top of the list. After HDFC Bank, another private lender ICICI Bank took the second spot, while DBS was at the third rank in Forbes list of Indian banks.


  • Systematically important non-deposit taking NBFCs offering foreign exchange transactions on individual accounts will be eligible to obtain Authorized Dealer (AD) Category-II licence from it. AD-Cat II means entities that are authorized by the RBI to deal in foreign exchange for specified purposes. These include upgraded full-fledged money changers (FFMCs), and select regional rural banks.


  • IDBI Bank launched paperless account. The NRIs living in nearly 40 countries will now be able to open an account in IDBI Bank without submitting paper documents. IDBI Bank has launched 'NRI-Insta-Online' account opening process for NRIs residing in the Financial Action Task Force (FATF) member countries. The person will not be required to furnish physical documents as well as KYC proofs for opening an account with the bank.


  • ADB committed to provide $3 billion in sovereign loans to India in 2018, the highest level of assistance since sovereign operations began in the country in 1986. The Asian Development Bank (ADB), owned by 68 member countries, committed a total of USD 3.88 billion. New commitments included USD 21.6 billion in loans, grants and investments from ADB's own resources.


  • The RBI has put into circulation 50 rupees denomination banknotes signed by its Governor Shaktikanta Das. The design of these notes is similar in all respects to 50 banknotes in Mahatma Gandhi new series. All banknotes in the denomination of 50 issued by the Reserve Bank in the past will continue to be legal tender.


  • FB awarded Clement Model 2019 Award. Fincare Small Finance Bank (SFB) has been awarded the Celent Model Bank 2019 Award in the category of Financial Inclusion, for 'Redesigning Lending to Reach Small Businesses'. The award recognizes LAP (Loans against Property) D. Lite, a tab-based solution designed and developed in-house by Fincare SFB. LAP D. Lite is one of the 22 initiatives from around the world to receive this award.


  • IDRBT set up 5G lab for banking sector. The Institute for Development and Research in Banking Technology (IDRBT) has launched a 5G Use Cases Lab for banking and financial sector. The 5G technology, along with block chain, will be progressively adopted by banks. The use of 5G will change a range of technologies and applications including point of sale machines in the banking sector which were now using 2G.


  • Fintech startups to test regulatory sandbox. RBI proposed that fintech start-ups could set up a regulatory sandbox or live-testing of innovative products and services. This would be done in segments such as retail payments, money transfer, artificial intelligence and data analytics in the financial sector. A regulatory sandbox (RS) refers to live-testing of new products or services in a controlled and test regulatory environment.


  • Srei Equipment Finance Ltd. and Bank of Baroda will come together to offer joint loans for infrastructure equipment under a new agreement. The partners will be able to leverage each other’s customers and cross-sell their products. The offerings would include both business-to-business and business-to- customer propositions.


  • Exim Bank funded projects in Rawanda. The Reserve Bank of India (RBI) said Exim Bank has provided soft loans of USD 266.60 million to Rawanda for various projects. The funding is done in 3 separate tranches to support agricultural projects, development of special economic zones (SEZs) and for financing road projects. USD 66.60 million will be funded for the Base-Butaro-Kidaho Road Project.


  • Bandhan Bank to merge with Gruh Finance. Bandhan Bank has received approval from the Competition Commission of India (CCI) for the proposed scheme of acquiring of Gruh Finance. Bandhan Bank had, in January 2019, announced the merger of Gruh Finance with it. The move was taken to bring down promoter holding in the bank to 61%.


  • IMF and WB launched learning coins. The International Monetary Fund and the World Bank have together launched a private block chain with a pseudo-token. The new token, called 'Learning Coin' and only accessible within the IMF and World Bank, has a purpose to teach relevant individuals within the organizations about block chain. Though the coin has no real value, hence the description pseudo-token.


  • Canara Bank has successfully rolled out major new functionality to support EMV card acquiring across its ATM network and Aadhaar Authentication. It is the first public sector bank to shift to EMV chip and PIN for card. Present transactions across the country’s vast ATM network. The EMV shift is aimed at reducing lost and stolen card fraud and making counterfeit card fraud more difficult.


  • Union cabinet approved the sanction of Rs 4315.15 crore for the 158 Central Educational Institutions for implementation of reservation in admission to students belonging to Economically Weaker Section (EWS). Over 2 lakh additional seats will be created in 158 CEIs across the country to implement 10% reservation for the Economically Weaker Section (EWS).


  • India's steel export to the US in 2018 declined by 49% to USD 372 million, while that of aluminum increased by 58% to USD 221 million. The date was given by the independent Congressional Research Service (CRS) report. In 2018, the US imports of steel and aluminum products totaled USD 29.5 billion and USD 17.6 billion respectively.


  • Medical devices to get CDSCO certification. All imported, as well as locally manufactured medical devices sold in India will soon be required to clear specific safety and quality standards. The move is aimed at preventing fiascos such as the one involving Johnson and Johnson hip implants The import, manufacture, and sale of all medical devices will need to be certified by the Central Drugs Standard Control Organization (CDSCO).


  • On World Parkinson’s Day (11 April 2019), Apollo Hospitals launched an advanced centre for movement disorders. It will offer medical and surgical treatment for patients affected by various movement disorders including Parkinson’s Disease. The centre would offer Deep Brain Stimulation surgeries and other services to treat a wide spectrum of diseases such as Parkinson’s disease, cerebral palsy, and dystonia.


  • Volkswagen to expand corporate business. Volkswagen announced the expansion of its Corporate Business Centre (CBC) programme in India with the addition of 10 more such outlets across its sales network over the next three months. The company had first introduced CBC as a pilot project in Kochi. It was further introduced in Coimbatore.


  • Greenam Energy has set up its first floating solar power plant at Tuticorin. AM International Group Founder-Chairman Ashwin Muthiah laid the foundation stone for the power plant, which would lead to significant energy savings. The 24 MW floating solar power plant would be one of its kind and the first floating renewable energy initiative to optimize energy production in industrial plants.


  • Bus ticketing platform redBus has appointed cricketer icon MS Dhoni as its brand ambassador. He will drive all major campaigns for the brand across media platforms and will soon appear in his first promotional concept for the brand. The CEO of red Bus is Prakash Sangam. RedBus commands a strong foothold in the Indian online bus ticketing segment.


  • India’s exports rose to a five-month high of 11% in March on account of higher growth mainly in pharma, chemicals and engineering sectors. It marked the outbound shipments at $331 billion for FY 2018-19. Merchandise exports in March stood at $32.55 billion as against $29.32 billion last year (2018). This is the best growth rate for exports since October 2018, when shipments grew by 17.86%.


  • Former women's world no. 1 tennis player Arantxa Sanchez Vicariowas named the ambassador of the IAAF Gold Label TCS World 10K run. Vicario will encourage the 25,000 runners of the 10k run through her story of determination and never-say-die-attitude. The Spanish legend accumulated 14 Grand Slam titles, four singles, six doubles, and four mixed doubles.


  • India's fast moving consumer goods (FMCG) industry is likely to grow at a slower pace at 11-12% in 2019, almost 2% lower than that in 2018, as per a report. The industry is also expected to grow at 12-13% during the April to June quarter of the calendar year 2019, according to Nielsen. In line with the FMCG growth forecast for Q1 2019 at 13-14%, this sector grew at 13.6%.


  • Boeing has conducted a final test flight of a 737 MAX model with an updated anti-stall system prior to its certification by aviation authorities. Test pilots have completed 120 flights totaling more than 203 hours of airtime with the software fix for the Maneuvering Characteristics Augmentation System (MCAS).


  • The government is targeting to raise about Rs.1,500 crore from initial public offerings (IPOs) of two railway companies, IRCTC and IRFC, by September 2019. Earlier in April 2019, the government raised about Rs.480 crore by selling12.12% stake in Rail Vikas Nigam Ltd (RVNL). The government has budgeted to raise Rs.90,000 crore by way of CPSE disinvestment in the current financial year.


  • The income tax department proposed a change in the methodology for taxing multinational companies (MNCs). This includes digital firms, having permanent establishment in India by giving weightage to factors like domestic sales, employee strength, assets and user base. MNCs that are incurring global losses or a global profit margin of less than 2% will be deemed to have made a profit of 2%.


  • Toyota and Softbank Vision Fund unveiled an investment of $1 billion in U.S. Company Uber to drive forward the development of driverless ridesharing services. Toyota has already invested $500 million in Uber as the firm races Google-owned Waymo and a host of other companies, including major automakers, to develop self-driving vehicles.


  • Tata Technologies has inked a pact with China's Future Move Automotive to develop connected mobility solutions for automotive manufacturers in China and other markets. The companies signed a MoU on the sidelines of the Shanghai Motor Show 2019. Tata Technologies has strong capabilities in delivering end-to-end vehicle programmes.


  • Ravi Shastri appointed as corporate ambassador to the Indian Business Community. Former Cricketer Ravi Shastri was appointed as Ras Al Khaimah Economic Zone (RAKEZ) exclusive Corporate Ambassador to the Indian Business Community. As a brand Ambassador Ravi Shastri may attract more Indian business leaders to set up or expand their operations in UAE through RAKEZ.


  • Airtel Bank partnered with Bharti AXA. Airtel Payments Bank has teamed up with Bharti AXA General Insurance for a two-wheeler insurance product offering. The product is available on MyAirtel App and at over 40,000 Airtel Payments Bank points across India during the first phase of launch. The offering entails personal accident cover, protection against third-party liabilities and inspection-free renewal.


  • Amazon and Walmart kicked off a 2-year government pilot program allowing low-income shoppers on government food assistance in New York to shop and pay for their groceries online for the first time. ShopRite will join the 2 retailers on the program. The pilot program will test both online ordering and payment.


  • Fitch affirms India's rating at BBB. Fitch affirms India's rating at BBB Fitch Ratings kept India's sovereign rating unchanged at the lowest investment grade of BBB- with a stable outlook. Fitch expects growth of 6.8% in the fiscal year ending March 2020 (FY 20) and 7.1% in FY 21. Gross FDI inflows into India of 1.4% of GDP in the year through the third quarter of FY 18 were below 1.7% of GDP four years earlier.


  • SEBI has approved an ‘Airport’ specific fund of capital up to Rs 10,000 crore as a Category II AIF. Chennai-based ‘Taking off to the Future Investment Management LLP’ is the sponsor and the investment manager of the fund. The management and operation of ‘Sponsor/Investment Manager’ is led by its designated partner Gigi George.


  • India highest recipient of remittances. According to World Bank India retained its position as the world's top recipient of remittances with its diaspora sending a whopping USD 79 billion back home in 2018. India was followed by China. India has registered a significant flow of remittances from USD 62.7 billion in 2016 to USD 65.3 billion in 2017. The money transfer by an individual who is working in a foreign country to a person in his or her home country is called as remittance.

    In developing countries, remittances made by migrants compete as one among the largest financial inflows, with international aid. Workers’ remittances form a notable chunk of capital flows from foreign countries, chiefly with respect to the countries exporting labour.


  • The PNB's 13% stake sale in PNB Housing Finance for Rs.18.5 billion will strengthen the bank's capital, as per Moody's. The report said that it estimates the sale will increase PNB's Common Equity Tier 1 (CET1) ratio by about 40 basis points from the 6.9% reported in December 2018. The bank's pro forma CET1 ratio exceeds the Basel III March 2019 regulatory requirement of 7.375%.


  • Tata Motors on 08 April 2019 launched an initiative to promote driving profession in the trucking space. Under the Tata Motors Samarth initiative, the company plans to address four critical areas -- health and wellness, insurance, education and financial planning for the drivers' well-being. The auto major aims to reach to five lakh drivers every year under the programme.


  • Avaada Energy Pvt Ltd raised Rs.1, 000 crore from investors such as the Asian Development Bank on 9 April 2019. The equity raised is for financing Avaada Energy’s 2.4 gigawatt (GW) renewable energy portfolio. Avaada Group is targeting a 5 GW capacity and has executed 2 GW of renewable energy project in India. India has been working on the largest clean energy programme and has an installed renewable energy capacity of 74.79GW. Of this solar and wind power accounts for 25.21GW and 35.14GW respectively.


  • The International Monetary Fund has projected that global growth will be 3.3% in 2019, down from 3.6% in 2018 and 4%in 2017. This lower projection is due to lower global expansion in the second half of 2018 caused because of factors like U.S-China trade tensions. India’s growth is projected to pick up (from 7.1% in 2018) to 7.3% in 2019 and 7.5% in 2020.


  • Tata Trusts and Microsoft India signed a MoU to jointly rejuvenate the handloom clusters in the Eastern and North- Eastern parts of the country. Microsoft’s ReWeave initiative helps preserve traditional weaving forms by upskilling, design, marketing, and entrepreneurship. Tata Trusts’ initiative, ‘Antaran’, aims at rejuvenating ailing handloom clusters through an end-to-end programme.


  • GPF interest retained at 8% for April-June. The government has retained the interest rate for General Provident Fund (GPF) and other related schemes at 8% for the interest rate will be applicable on provident funds of central government employees, railways and defence forces. The rate is in line with that of the Public Provident Fund.


  • RBL Bank has partnered with CreditVidya to improve the lender's customer experience. Through this partnership, the private sector lender will be able to gain significant insights into its customer base. This, in turn, will allow it to improve user experience and build customized offerings for over 15 lakh customers.


  • Election Commission clears revised MGNREGA wage rates from April 1, 2019. Election Commission has approved a request of the Rural Development Ministry to revise the wages under the MGNREGA scheme from April 1. The wages paid under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) are linked with the Consumer Price Index for agricultural labourers (CPI-AL) and new wage rates are notified on April 1, the beginning of the new financial year.

    The ministry had approached the EC for approval as the model code for the coming Lok Sabha polls is in force. Different states have different wage rates so the increase in wages will also be different. The increase could be up to 5 per cent over and above the current wage.


  • NMDC surpasses 30 million tonnes production and sales for 3rd year. National Mineral Development Corporation (NMDC), the largest producer of iron ore in the country, has once again surpassed the 30 million tonnes figure of production and sales for the year 2018-19 for the 3rd year consecutively. Inspite of suspension of Donimalai Mine operations for 5 months, no exports upto August 2018, highest rainfall in Bailadila Sector and poor off take in Karnataka in Q1, NMDC has produced 32.44 MT and sales of 32.38 MT iron ore during FY-19.


  • RBI to unveil this fiscal’s first bi-monthly policy decision on 04 April 2019. The Reserve Bank of India (RBI) will unveil on 04 April 2019 its first bi-monthly monetary policy decision of this new fiscal. The RBI’s Monetary Policy Committee (MPC) will meet from April 2 to 4 for the first bi-monthly policy statement for 2019-20, the central bank said in a release on 01 April 2019. “The resolution of the MPC will be placed on the website at 11.45 AM on April 4, 2019,” it said.

    Industry and experts are expecting that the banking sector regulator may cut the key lending rate -- at which it lends to commercial banks -- by 0.25 per cent so as to boost the economic activities as fears loom large about global economic slowdown impacting India’s growth prospects. The RBI had cut the repo rate by 25 basis points (bps) or 0.25 per cent in February after a gap of one-and-a-half years.


  • Reserve Bank of India (RBI) to inject USD 5 billion more liquidity into banking system.  The Reserve Bank of India (RBI) on 01 April 2019 said it will inject long-term liquidity worth USD 5 billion into the banking system through a dollar-rupee buy-sell swap for tenure of three years on April 23, the second such auction within a month. Earlier on March 26, the central bank had bought USD 5 billion through similar swap auction in a bid to ease liquidity ahead of elections. The USD/INR Buy/Sell swap auction of USD 5 billion for the tenor of three years will be held on April 23, 2019, it said.

    The swap will be in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank's side. Under the swap, a bank would sell US dollars to the RBI and simultaneously agree to buy the same amount of US dollars at the end of the swap period.
    The US Dollar amount mobilized through this auction would also reflect in RBI's foreign exchange reserves for the tenor of the swap while also reflecting in RBI's forward liabilities, it added.

    It further said the market participants would be required to place their bids in terms of the premium that they are willing to pay to the RBI for the tenor of the swap, expressed in paisa terms up to two decimal places. The auction would be a multiple-price based auction -- successful bids will get accepted at their respective quoted premium. The minimum size of each bid should be USD 10 million and in multiples of USD 1 million thereafter. The swap will increase India's foreign exchange reserves while injecting liquidity into the financial system. The auction is meant to give RBI greater flexibility in managing banking system cash while helping absorb any potential large dollar inflows, which could make the rupee rise sharply.


  • India's growth is set to pick up and is expected to grow at 7.2 per cent in the current fiscal on strengthening consumption, Asian Development Bank said in its flagship report released on 03 April 2019. According to the Asian Development Outlook 2019, India's growth slowed from 7.2 per cent in fiscal 2017 to 7 per cent in 2018, with weaker agricultural output and consumption growth curtailed by higher global oil prices and lower government expenditure.

    It is expected to rebound to 7.2 per cent in 2019 and 7.3 per cent in 2020 as policy rates are cut and farmers receive income support, bolstering domestic demand. The report added that sub-region wise, Southeast Asia will sustain growth at close to 5 per cent this year (2019) and the next one.


  • India's exports are expected to reach 32.4 billion dollars in March, the highest in any month so far, on account of healthy growth in sectors such as pharmaceuticals. Commerce and Industry minister Suresh Prabhu on 03 April 2019 said that exports would cross 331 billion-dollar-mark in the 2018-19 fiscal year. The minister said that for the first time, India has crossed 19 billion-dollar-figure in pharma exports this fiscal. The Commerce Ministry will release the trade data on 15th April.


  • The 15th Finance Commission on 04 April 2019 held a high level roundtable on ‘Fiscal Relations across levels of government’. It was moderated by Shri N. K. Singh, Chairman of the Commission. The roundtable is being organized in partnership with the World Bank, OECD and ADB. This is the culmination of significant works that all the three organizations have undertaken for the FC.

    Addressing the gathering the Chairman set the tone of the discussions by briefly elaborating on the four technical sessions of the meeting:
    • Sub-national debt
    • Transfer design incentives and fiscal equalization.
    • Sub-national budget and Public financial management system, and
    • Finances of third-tier of Government

    Earlier, the Commission had held separate workshops with the OECD in April, 2018 and the World Bank in July, 2018 to discuss the initial thoughts and country experiences on the issues related to fiscal federalism and inter-governmental transfers.

    Sub-national debt, fiscal rules and sustainability :
    • One of the Terms of Reference made to this Finance Commission is to review the current level of debt of the Union and the States and recommend a fiscal consolidation roadmap for sound fiscal management.
    • As per the amended FRBM Act, the Central Government shall take appropriate steps to ensure that:
      • The general government debt does not exceed 60%.
      • The Central Government debt does not exceed 40% of GDP by the end of FY 2024-25.
    • The Central Government debt is estimated at 48.9 per cent as a percentage of GDP for 2018-19. It is expected that Central Government liabilities will come down to 47.3 per cent of GDP in 2019-20 (As per Budget 2019-2020).
    • The outstanding liabilities of the State Governments stands at 23.4 per cent of GSDP at end-March 2017, with a range of 46.3 per cent in Punjab and 15.1 per cent in Chhattisgarh (as the RBI Study on State Budgets).
    • These developments have posed an important and challenging task for the Commission to arrive at a roadmap for Commission’s award period from 2020 to 2025.
    • Discussions focused on
      • What should the distribution of this 60% be between centre and states, given the current trends in their debts.
      • How to arrive at the inter se distribution of aggregate state debt between states.

    Intergovernmental transfer design, incentives and fiscal equalization :
    • Addressing vertical and horizontal imbalance in the fiscal resources between Union and States is one of the major tasks of the Commission.
    • While designing formula-based transfers to sub-national governments, equalization is one of the important considerations.
    • In this context; the roundtable discussed the options available to design an equalization scheme for the Indian federation, given the constraints of data on unit cost of service delivery and on the taxable potential of the Centre States and
    • The Commission’s Terms of Reference requires it to recommend performance-based incentives to states. Some of the items in this indicative list are efforts on GST, population control, increasing capital expenditure, implementation of flagship programs, etc. The meeting discussed –
      • Whether it should be incentive for prospective performance or rewards for past accomplishments
      • The need for balance between equity and efficiency, considering that the better-off States will generally score better in efficiency consideration.
    • International experiences of related cases were also discussed.

    Public Financial Management :
    • Reforms in PFM systems are a continuous process. Previous Finance Commissions recommended on various aspects of PFM systems of both Union and States with focus on budgetary and accounting processes, financial reporting, etc.
    • Pace of implementation of such reforms have been slow. Possible causes may be lack of institutional framework to operationalize and implement these recommendations either at Union level or State level, and others likely reasons were discussed.

    Revenue generation in third-tier of government :
    The discussions centered around how to make the 3rd tier self-sufficient specially now when the GST has subsumed many taxes which earlier used to generate revenue for them.
    • Raising own revenue by the third tier of the government is a serious concern for India’s decentralized administrative structure.
    • One of the major sources of raising revenue is property taxation by local bodies.
    • Some local bodies have attempted different models to streamline and systematize property collection within their jurisdiction. However, very few have been successful in improving revenue collection through property taxes.
    • The reforms required in this field, global practices, ways to help local governments to raise their own revenue through the scheme of devolution, grants, and others were discussed.


  • David Malpass selected as President of World Bank. Senior US Treasury official David Malpass has been selected as President of the World Bank. The World Bank's executive board unanimously selected 63-year-old Malpass as the bank's 13th President for a five-year term on 05 April 2019. The World Bank President is Chair of Boards of Directors of the International Bank for Reconstruction and Development and International Development Association. Malpass has served on the boards of the Council of the Americas, Economic Club of New York, and the National Committee on US-China Relations.


  • RBI provided additional 2% liquidity window to the lenders by tweaking liquidity coverage ratio (LCR) norms. The LCR indicates the proportion of highly liquid assets held by banks to ensure their ability to meet short-term obligations. NBFCs-NDSI in the category of Investment and Credit Companies (ICCs) will be made eligible to apply for Authorised Dealer Category II licence.



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