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February 2019 - Economy News

  • The Central Board of Indirect Taxes and Customs (CBIC) has constituted three Working Groups to study and recommend measures to facilitate trade, promote exports and improve compliance. The Working Groups will focus on:
    • Improving the legislative structure of customs tariff and update it to suit the emerging and future needs of the economy and industry.
    • Special focus would be given to create a comprehensive export tariff structure to enhance India’s export competitiveness.
    • Export promotion and facilitation with emphasis on boosting exports through e-commerce, addressing the trade facilitation barriers faced in India’s export markets and improving the quality of logistics services for exporters.
    • Enhancing compliance, plugging loopholes to improve revenue collection on customs and curb IGST refund frauds.

  • The ministry micro, small and medium enterprises organized a conclave on ‘Empowering women entrepreneurs 2019, financing and enabling women from Marginalized sections‘ in Mumbai on 25 February 2019. It was organized under the national SC-ST initiative of the MSME Ministry. Entrepreneurs and inspirational women achievers were awarded ‘Enterprising women of the year 2018 Awards’.

  • Reserve Bank of India and Bank of Japan have signed a Bilateral Swap Arrangement (BSA). It may be recalled that the BSA was negotiated between India and Japan during the visit of Prime Minister Narendra Modi to Tokyo in October 2018. The BSA provides for India to access 75 billion US dollars whereas the earlier BSA had provided for 50 billion dollars.

    The BSA was approved by the Union Cabinet in January 2019. The agreement for the BSA has become effective. India can access the agreed amount of 75 billion dollars for its domestic currency, for the purpose of maintaining an appropriate level of balance of payments or short-term liquidity. A part of the BSA can be accessed at the discretion of India. India has a comfortable level of foreign exchange reserves presently.

    The BSA provides India flexibility to use the reserves if at any point of time, in its judgment, there is a need to use the resources available under BSA. The government of India has welcomed BSA effectiveness and expressed its gratitude to Japan for agreeing to enter into this arrangement. In a statement, the Ministry of Finance said, it is in the spirit of strong partnership and carries out its strategic partnership further. It said the financial cooperation would further enhance the strong economic ties between India and Japan.

  • The Centre and the Asian Development Bank (ADB) have signed a 926 million dollar loan agreement to operationalize two lines of the Mumbai Metro Rail System. According to an official release, the project that will ease the distress of millions of commuters each day and help provide a cleaner and less congested city. It is the single largest infrastructure project loan in ADB history approved by the ADB Board on 26th March 2019.

    Once operational by the end of 2022, an estimated two million passengers a day will use the two new lines and will travel in improved safety and comfort. It will also reduce emissions from vehicles, with carbon dioxide emissions expected to fall by about 166,000 tons a year.

  • The country's goods and services exports will cross 500 billion dollars during the current fiscal despite challenges being faced on the global trade front. This was stated by the Commerce and Industry Minister Suresh Prabhu while speaking at the Rising India Summit 2019 in New Delhi on 25 February 2019.

    Mr Prabhu said that exports are recording healthy growth so far and this fiscal will record the highest-ever growth rate. He said the ministry is working on identifying new products and new markets to further push the shipments.

  • Commerce and Industry Minister Suresh Prabhu has said India and Italy should make a concerted effort to promote and expand bilateral trade between the countries. Addressing the 20th session of India-Italy Joint Commission for Economic Cooperation in New Delhi on 26-27 February 2019, Mr. Prabhu said India has an attractive foreign investment policy.

    He said India's trade with Italy has increased to 10.42 billion US dollars in 2017-18 from 8.80 billion US dollars in 2016-17. Michele Geraci, Deputy Minister of Economic Development of Italy, said Italian companies are keen to invest in India. Michele Geraci also said that Italy is looking to work in areas like financial services, renewable energy, infrastructure, and transport development. The two Sides agreed to hold 21th Meeting of the Joint Commission in Italy in 2021.

  • Indian economy is expected to grow at 7.3 per cent in calendar years 2019 and 2020, the US-based rating agency Moody's said on 01 March 2019. In its quarterly Global Macro Outlook for 2019 and 2020 released, the agency said the country is less exposed to a slowdown in global manufacturing trade growth than other major Asian economies and emerging markets and is poised to grow at a relatively stable pace in the two years.

    Moody's said the announcement in Interim Budget 2019-20 on direct cash transfer programme for farmers and the middle-class tax relief measures will contribute a fiscal stimulus of about 0.45 per cent of GDP. Moody's growth estimates are based on the calendar year. India, however, measures its economic growth on the basis of the fiscal year from April to March.

  • India has raised the basic customs duty to 200 per cent on all goods imported from Pakistan with immediate effect following withdrawal the Most Favoured Nation, MFN status in the aftermath of the Pulwama terror attack. Finance Minister Arun Jaitley said that, the main items which Pakistan exports to India include fresh fruits, cement petroleum products, bulk minerals and ores and finished leather.

  • The government has approved recapitalization of Rs 48,239 crore in 12 public sector banks in this fiscal to help them maintain regulatory capital requirements and finance growth plans. Financial Services Secretary Rajiv Kumar said the recapitalization will help these banks perform better. He said, the government will infuse over nine thousand crore rupees in Corporation Bank and six thousand 896 crore rupees in Allahabad Bank.

    They are better-performing banks currently under the Prompt Corrective Action (PCA) supervision of the RBI. Besides, four thousand 638 crore rupees will be provided Bank of India and 205 crore rupees to Bank of Maharashtra. These banks have recently come out of the regulatory supervisory framework PCA of the RBI. Mr Kumar also said, Punjab National Bank will get over 5,900 crore rupees, Union Bank of India 4,112 crore rupees, Andhra Bank 3,256 crore and Syndicate Bank will get over 1,600 crore rupees. The government will also pump in 12,535 crore rupees in Central Bank of India, United Bank, UCO Bank and Indian Overseas Bank.

  • The Reserve Bank of India has announced that it will transfer an interim surplus of 28,000 crore rupees to the central government for the half-year ended 31st December 2018. In a statement, the RBI said the decision has been based on a limited audit review and after applying the extant economic capital framework. The decision follows the RBI Board meeting held in New Delhi, Finance Minister Arun Jaitley addressed the board. Apart from RBI Governor Shaktikanta Das, all the four deputy governors and others attended the meeting.

  • The Cabinet Committee on Economic Affairs on 20th February 2019 approved Phase-II of the Grid Connected Rooftop Solar Programme that aims to achieve a cumulative capacity of 40,000 MW from rooftop solar projects by 2022. The programme will be implemented with a total central financial support of Rs.11,814 crore.

    The Phase II programme provides for central financial assistance (for residential rooftop solar installations) up to 40% for rooftop systems up to 3kW and 20% for those with a capacity of 3-10kW. The second phase will also focus on increasing the involvement of the distribution companies (DISCOM).

  • The Cabinet approved the launch of the Kisan Urja Suraksha evam Utthaan Mahabhiyan aimed at providing financial and water security to farmers. Through the scheme, farmers will be given financial assistance to set up solar panels in their unused or fallow land. “The scheme aims to add a solar capacity of 25,750 MW by 2022,” the government said. “The total central financial support provided under the scheme would be Rs.34,422 crore.”

  • RBI to announce its 6th bi-monthly monetary policy review. The Reserve Bank of India will announce the sixth bi-monthly monetary policy statement for 2018-19 on 07 February, 2019. The three-day policy review meeting by the Monetary Policy Committee (MPC) began in Mumbai on 05 February, 2019. The MPC is headed by RBI Governor Shaktikanta Das.

    "The RBI's Monetary Policy Committee (MPC) began its three-day meet to decide on key rates amid expectations that it would change stance to neutral on low inflation but may not cut rates due to fiscal challenges and rising oil prices. In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5 percent and the reverse repo rate at 6.25 percent. The central bank has maintained status quo on interest rate in its last three bi-monthly monetary policies after hiking the repo rate twice this fiscal by 25 basis points each.

  • Bankers have welcomed the 25 basis point rate cut announced by the RBI in the sixth bi-monthly monetary policy review on 07 February, 2019. SBI Chairman Rajnish Kumar said, the policy rightfully signals that rates may further soften going forward, with the headline inflation numbers consistently undershooting the RBI inflation mandate and inflation expectations materially down.

    Reserve Bank of India in its bi-monthly monetary policy reduced repo rate by 25 basis points to 6.25 per cent on 07 February, 2019. RBI's six-member Monetary Policy Committee also brought down reverse repo rate to 6 per cent.

  • Union Finance Minister Piyush Goyal on 28 January, 2019 met the CEOs of public sector banks in New Delhi to take stock of banking sector and discuss ways to improve their financial health. The meeting assumes significance as it comes just days ahead of the Budget 2019-20. Mr. Piyush Goyal has been given additional charge of the Finance Ministry as Arun Jaitley is away to the US for treatment.

  • Union Minister of Commerce and Industry Suresh Prabhu has said that country’s gold policy will be launched soon and the ministry is pursuing Niti Ayog and consulting stake holders for it. He was speaking at the launch of the Domestic Council for Gems and Jewellery in Mumbai on 29 January, 2019. He said that Indians are the biggest consumers of gold due to their various cultural activitiesHe assured that the council will help to boost the economic growth, generate employment opportunities. He stressed on artificial intelligence, internet of things and use of technology to boost the growth. He also underlined the need to connect domestic markets with international markets and expressed confidence that the council will play an important role in it.

  • The Reserve Bank of India on 29 January, 2019 said that it will inject Rs 37,500 crore into the system through purchase of government securities in February to increase liquidity. The RBI said it has been monitoring the evolving liquidity conditions and durable liquidity requirements of the system.

    In a release issued on 29 January, 2019 from Mumbai RBI stated that it has decided to conduct purchase of government securities under Open Market Operations (OMOs) for an aggregate amount of Rs 375 billion in the month of February 2019 through three auctions of Rs 125 billion each during the 2nd, 3rd and 4th week. The release stated that there will be no auction during the first week due to the scheduled MPC meeting. The apex bank said that it would inform about the auction dates in the due course.



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