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December 2019 - Economy

  • GST revenue collection crosses Rs 1 lakh crore in November. GST revenue collection crossed the Rs 1 lakh crore mark after a gap of three months in November with the revenue growing by 6 per cent to Rs 1.03 lakh crore in the month. The GST collection was Rs 95,380 crore in October while it was Rs 97,637 crore November 2018.

    Of gross Rs 1,03,492 crore in November, CGST is Rs 19,592 crore, SGST is Rs 27,144 crore, IGST is Rs 49,028 crore (including Rs 20,948 crore collected on imports) and Cess is Rs 7,727 crore (including Rs 869 crore collected on imports), an official statement said. After two months of negative growth, the GST revenue witnessed recovery with a growth of 6 per cent in November 2019 over the November 2018 collections, it said.

  • MSME sector has contributed over 29 percent of GDP. Ministry of Micro, Small and Medium Enterprises reported that Micro, Small and Medium Enterprises sector has contributed over 29% of Gross domestic product (GDP) and over 49% of Indian exports. The report was submitted by the Union MSME Minister Nitin Gadkari.
    Government's measure:
    • The Indian government has taken many initiatives to enhance the competitiveness of MSMEs.
    • Government has introduced various schemes like Micro and Small Enterprises–Cluster Development Programme, Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS), Procurement and Marketing Support and support for MSMEs to participate in international exhibitions and trade fairs.
    • It has also conducted many conferences, summits, workshops, etc, to enhance the sector.

  • The 15th Finance Commission submitted the report of the Commission for the financial year 2020-21 for further action. It was submitted by Chairman Shri N.K. Singh, members S/Shri Ajay Narayan Jha, Ashok Lahiri, Ramesh Chand, Anoop Singh and Secretary Shri Arvind Mehta of the commission. The final report for the period 1 April 2021 to 31 March 2026 will be submitted by 30 October 2020.

  • IFC to invest USE 200 million to support MSME. International Finance Corporation (IFC), an arm of World Bank Group, has anchored an investment round of $200 million in Mahindra and Mahindra Financial Services. Among the investment, IFC has invested $75 million from its own account and is mobilizing another $125 million as parallel loans.
    • The investment aims to create a dedicated pool of financing for the Ministry of Micro, Small and Medium Enterprises (MSMEs) in low-income states.
    IFC's investment:
    • Among the total of $200 million, a sum of $100 million will be earmarked for women-owned micro, small and medium enterprises (MSMEs). This amount will be supported by blended finance from the IFC-Goldman Sachs' Women Entrepreneurs Opportunity Facility.
    • In the financial year 2018-19, IFC lends more than $19 billion in long-term financing for developing countries to boost the private sector to end extreme poverty.

  • Rates remained unchanged in RBIs 5th Monetary Policy. Reserve Bank of India (RBI), the apex body, released the fifth bi-monthly monetary policy statement for 2019-20. The policy was prepared by the Monetary Policy Committee (MPC)-led by Governor Shaktikanta Das. Both the RBI and government are working in coordination to achieve growth.
    Monetary Policy for 2019-20:
    • The repo rate remains the same as 5.15%. It was not changed due to inflation pressure.
    • The regulator did not reduce the MPC rate but wait for maximum impact.
    • RBI stated the initial discussions to launch its own digital currency.
    • RBI is discussion to find out the directions in the case of HDFC Bank's technical glitch
    • RBI lowered its real GDP growth forecast for 2019-20 from 6.1% in the October policy to 5%.
    • The next meeting of the MPC is scheduled for 4-6 February 2020.

  • Saudi oil giant Aramco has announced its initial public offering (IPO) at $25.6 billion, which is the world’s largest ever. The gulf nation’s state oil company made the announcement on December 5, 2019. Saudi Aramco has set a share price that will value its much-awaited IPO at $25.6 billion. The sum announced by the company is the largest ever, as it even surpassed the $25 billion raised by Chinese online retail giant Alibaba in 2014 when it entered Wall Street. The IPO, comprising 3 billion shares or 1.5 percent of the company, will be offered for 32 riyals ($ 8.00 to $8.53 per share). This would give the company a total valuation of $1.7 trillion. The objective behind putting its shares for sale is a part of the country’s plan to diversify its economy, away from its dependence on oil and increase its sovereign wealth fund for investment in other projects.

  • The Lok Sabha passed the International Financial Services Centres Authority Bill, 2019 on December 11, 2019. The bill proposes setting of an authority to develop and regulate the financial services market in the International Financial Services Centres (IFSCs) in India. The bill will be applicable to all the International Financial Services Centres in India, which were set up under the Special Economic Zones Act, 2005. The International Financial Services Centres Authority will regulate all financial products including securities, deposits and contracts of insurance, financial services and financial institutions that were approved previously by appropriate regulators such as RBI or SEBI in an IFSC. 

  • Union Cabinet approved Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 on December 11, 2019. The cabinet was chaired by Prime Minister Narendra Modi. The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 proposes to make amendments in the Insolvency and Bankruptcy Code, 2016. The second amendment bill seeks to amend sections 5(12), 5(15), 7, 11, 14, 16(1), 21(2), 23(1), 29A, 227, 239, 240 in the Insolvency and Bankruptcy Code, 2016 and insert new section 32A in the code.

    The new amendments will remove the difficulties faced during insolvency resolution, to further ease doing of business. The amendments aim to remove the bottlenecks in insolvency resolution, streamline Corporate Insolvency Resolution Process and protect last-mile funding to boost investment in the financially distressed sectors.

    The amendments also introduce additional thresholds to prevent frivolous triggering of the Corporate Insolvency Resolution Process. They also ensure that the foundation of a corporate debtor's business is not lost and it can continue as a going concern by clarifying that the concessions, licenses, permits and clearances could not be terminated or suspended and their renewal denied also cannot be denied during the moratorium period. The amendments could also lead to "ring-fencing corporate debtor resolved under the IBC in favour of a successful resolution applicant from criminal proceedings against offences committed by previous management.

  • World Economic Forum (WEF) has recently released Gender Gap Index-2019 that shows India has slipped to 112th position. India has moved downwards four places in terms of gender equality amid increasing disparity in terms of women’s participation in the development of the country. The country is ranked in the bottom five on health and economic fronts. Last year, in 2018, India was on the 108th position on the World Economic Forum’s Gender Gap Report. The report also highlights that as per the present scenario, workplace inequality will not be erased until the year 2276.

    World Economic Forum is a non-profit organization based in Switzerland. It is headquartered in Geneva. The Forum was established in 1971 by Professor Klaus M. Schwab, working at the University of Geneva, in the name of European Management. It was renamed as World Economic Forum in the year 1949 and since then, it organizes an annual meeting every year in the month of January called Davos.

    Global Findings : • World Economic Forum (WEF) Report said that Nordic countries are on the top of the list.
    • Iceland (1st) is ranked as the most appropriate country for women representation followed by Norway (2nd) Finland (3rd) and Sweden (4th).
    • In the top-10 list, these countries are followed by Nicaragua, New Zealand, Ireland, Spain, Rwanda, and Germany.
    • Apart from that, China ranked 106th, Bangladesh - 50th, Brazil - 92nd, Nepal - 101st, Indonesia - 85th and Sri Lanka – 102nd.
    • The report suggests that it will take 95 years to close the political gender gap as women hold 25.2 per cent of parliamentary seats worldwide.

    India Specific Findings : • The first WEF Gender Gap Index was published in 2006 when India was ranked at 98th position.
    • WEF uses four metrics to give overall ranking that worsened India’s ranking from very next year.
    • Now, India has slipped to 150th place on health and survival, 112th on educational attainment and 149th in economic participation.
    • It was said in the report that there are very few economic opportunities for women in India. It is 34.5 per cent in India, 32.7 per cent in Pakistan, 27.3 per cent in Yemen and 22.7 in Iraq.
    • The Report also highlights that India has a very low (13.8 percent) women representation on company boards.

  • The central government has decided to remove the Merchant Discount Rate (MDR) to promote digital payments. Finance Minister Nirmala Sitharaman recently said that all digital transactions using RuPay or UPI will not face additional charges from January 1, 2020. Earlier, the central government amended two acts, Payments and Settlement Systems Act and the Income Tax Act. Now, the Department of Revenue (DoR) will notify UPI and RuPay as the approved mode of payment for digital transactions without any Merchant Discount Rate (MDR).

    What is MDR ?
    • When a person swaps his card at a shop, the fee that the shopkeeper has to pay to his service provider is called MDR Charge. The MDR charges can range from 0% to 2% of the transaction amount.
    • MDR charge also has to be paid for online transactions based on QR Code.
    • The amount paid by the shopkeeper on every transaction is divided into three parts – Bank, Point of Sale (PoS) and third part goes to VISA or MasterCard companies.
    • The MDR charge on credit cards can be up to 2% of the transaction amount even after the announcement by Finance Minister.

  • The Reliance Industries Ltd (RIL) launched JioMart, a new online grocery platform on December 31, 2019. JioMart brings Reliance industries in direct competition with other major e-commerce players such as Flipkart and Amazon. The new e-commerce platform has been initially launched for customers in Navi Mumbai, Thane and Kalyan. The service will be extended to people across India gradually. It will be operated by Reliance Retail. Reliance Retail has already started begun taking pre-registrations. The Mukesh Ambani-led Reliance industries will connect over 3 crore offline retailers with over 20 crore households in India through Reliance JioMart.

    JioMart is expected to link producers, traders, small merchants and others through technology. The online platform is expected to function alongside the company’s existing lineup of businesses including supermarkets, hypermarkets, wholesale stores and online stores. JioMart is expected to increase competition for e-commerce platforms such as Flipkart and Amazon, especially amazon prime that offers express delivery (delivery within two hours for grocery products).It will also take on existing grocery platforms such as Bigbasket and Grofers.

  • India has extended a line of credit of USD 75 million to Cuba for financing solar parks. An agreement signed between Export-Import Bank of India and Banco Exterior De Cuba in July 2019 came into effect from December 12, 2019. As per it, financing of export of eligible goods and services from India would be allowed subject to their being eligible for export under the Foreign Trade Policy.

  • India has extended a line of credit of USD 75 million to Cuba for financing solar parks. An agreement signed between Export-Import Bank of India and Banco Exterior De Cuba in July 2019 came into effect from December 12, 2019. As per it, financing of export of eligible goods and services from India would be allowed subject to their being eligible for export under the Foreign Trade Policy.



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