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January 2020 - Economy News

  • Impressed with the safety features of the blockchain technology, the National Payment Corporation of India has launched a blockchain-based payments platform called Vajra. According to NPCI, the Vajra platform can be accessed by various payment companies for providing secured transactions on their online platforms or mobile applications. For easy incorporation of Vajra in payments systems operated by banks, NPCI will provide an application programming interface (API).

  • India has been ranked very low at 76th place out of 82 countries on a new Social Mobility Index compiled by the World Economic Forum, while Denmark has topped the charts. The report, released ahead of the 50th Annual Meeting of the WEF, also lists India among the five countries that stand to gain the most from a better social mobility score that seeks to measure parameters necessary for creating societies where every person has the same opportunity to fulfil his potential in life irrespective of socioeconomic background.

  • The Union Minister of State for Shipping (I/C) and Chemical & Fertilizers Mansukh Mandaviya participated in the High-level roundtable of The Joint United Nations Programme on HIV/AIDS (UNAIDS) at World Economic Forum at Davos, Switzerland on 21 January 2020. The theme of the roundtable is "Access for all: Leveraging Innovations, Investments, and Partnerships for Health".

  • The India's richest 1 per cent of the population hold 42.5 per cent of national wealth while the bottom 50 per cent, the majority of the population, owns a mere 2.8 per cent. According to an Oxfam report, India's top 10 per cent of the population holds 74.3 per cent of the total national wealth while the bottom 90 percent holds 25.7 percent of national wealth.

  • India joined the World Economic Forum's (WEF) Reskilling Revolution on 22 January which is being held in Davos, Switzerland. The 50th WEF Annual Meeting is being held from 21-24 January 2020. The scheme aims to train workers from technological change and help economies by providing new skills for the Fourth Industrial Revolution. 

    Scheme highlights :
    1.) The scheme will act as a public-private platform to generate new employment opportunities.
    2.) The initiative plans to provide one billion people with better education, skills, and jobs by 2030.
    3.) WEF released a report titled Jobs of Tomorrow: Mapping Opportunity in the New Economy.
    4.) LinkedIn will act as a data partner for the Reskilling Revolution scheme.

  • Global Talent Competitive Index (GTCI) 2020 has been released at the annual meeting of the World Economic Forum (WEF) on January 22, 2020. INSEAD Business School released the GTCI report with the help of Google and Adecco Group. This year India climbed eight ranks and secured the 72nd rank in the index. Switzerland is in the first place while the USA and Singapore grabbed the second and third positions respectively. This index shows the ability of countries to make the world progress, retain and attract talent. They are ranked based on their abilities. GTCI gives ranking based on six indicators – attract, retain, enable, grow, vocational skills and global knowledge skills. The GTCI is an input-output based ranking system that takes ‘what does the country produce and acquires’ as input and ‘result from the skill’ as output.

  • Corruption Perception Index: Transparency International has launched this index on January 23, 2020, based on data collected in 2019. India slipped two positions to 80th in the index while it was at 78th in the previous year’s ranking. India’s total score was 40 and managed to secure 80th rank. Transparency International released the report of this index during the annual meeting of the World Economic Forum in Davos. Denmark and New Zealand topped the index as they are the most honest countries. 

    Global Findings :
    • The list of Corruption Perception Index has 180 countries. CPI provides them ranks according to the levels of public sector corruption.
    • The bottom countries are Syria, South Sudan and Somalia with scores 13, 12 and 9 respectively.
    • The top countries are Denmark and New Zealand (87), Finland (86), Sweden, Switzerland, and Singapore (85).
    • In this year’s CPI, more than two-thirds of countries have earned a score below 50.

  • The Reserve Bank of India has launched ‘MANI’ mobile app to help the visually challenged identify the denomination of currency notes. MANI is an acronym for Mobile Aided Note Identifier. The RBI mobile app will enable the visually disabled to identify the denomination of a currency note using the application. The MANI app will work offline as well after it is installed. The application was launched by RBI Governor Shaktikanta Das and other officials on January 1, 2020.

  • The State of Bank of India launched a 'residential builder finance with buyer guarantee' scheme to revive the Indian real estate sector on January 8, 2020. Under the scheme, the largest public sector bank will issue a guarantee for completion of select residential projects to customers availing home loans from it. According to SBI Chairman Rajnish Kumar, the scheme will create a win-win situation for builders, home buyers and the bank alike. 

    The buyer guarantee scheme will focus on affordable housing projects worth up to Rs 2.5 crore in 10 cities initially. Under the scheme, the SBI will refund the entire principal amount if the home developer fails to deliver the project within the assured deadline. The bank will issue the guarantee until the housing project gets the occupation certificate (OC). The refund scheme will only be valid until then. Further, the guarantee will only be available for RERA registered projects and they will be considered stuck only after they cross the RERA deadline. The developer fulfilling due diligence by the bank will also be able to avail loans between Rs 50 crores to Rs 400 crores under the scheme.

  • The Reserve Bank of India (RBI) has amended the Know Your Customer (KYC) norms for banks and other financial institutions. The new norm, after amendment, allows these financial institutions to use video-based Customer Identification Process (V-CIP). This step will help banks and lending institutions to identify customers remotely. RBI's notification said that it permits video-based Customer Identification Process (V-CIP) as an alternative method to recognize and identify a customer. RBI said that a decision has been taken to bring customers onboard with a view to leveraging the digital channels for customer Identification Process (CIP) by regulated entities (REs).

    According to the Reserve Bank of India’s notification, if offline verification is not possible due to the remote location, Digital KYC has been defined as an officially valid document or the proof of possession of Aadhaar under Section 3. It further said that such live photo or video will be taken by an authorized officer of the Reporting Entity (RE). RBI notification said that the proof of possession of Aadhaar number, where offline verification is not possible, will be submitted through the V-CIP method. Customers need to submit PAN, Aadhaar, proof of possession of Aadhaar and such other documents including respect of the nature of business and the financial status of the client.

  • The Reserve Bank of India said select banks in India can offer forex rates to Indian clients beyond the inter-bank market hours. These banks currently run from 9am to 5pm. In effect, this opens up the forex market in India round the clock, allowing Indians to hedge their foreign exchange risks at any time of the day.

  • Centre and States have come together to take necessary action to streamline the Goods and Services Tax (GST) system and plug revenue leakage. Several measures were discussed in this regard during the Second National GST Conference of the Commissioners of State Tax and Chief Commissioners of Central Tax in New Delhi on 7th January, 2020. They include curbing fraudulent refund claims, linking foreign exchange remittances with IGST refund, investigation of fraudulent Input Tax Credit (ITC) cases by the IT Department and a single bank account for foreign remittance receipt. The meeting held under the chairmanship of Revenue Secretary Dr Ajay Bhushan Pandey decided to constitute a Committee of Centre and State officers to examine and implement quick measures to curb fraudulent refund claims. 

    A Memorandum of Understanding will be signed among the Central Board of Direct Taxes (CBDT), the Central Board of Indirect Taxes and Customs (CBIC) and the GST Network to exchange data through application program interface, from CBDT to GSTN and CBIC and vice-versa. The conference was organized to build synergy between the Centre and States and to share their knowledge and best practices with intent to bring about uniformity in tax administrations.

  • The Central Board of Indirect Taxes and Customs (CBIC) in its drive to check fraudulent availment of IGST refunds, has extensively used data analytics and matched data with income tax, GST and customs to identify risky exporters. There are instances where an exporter with over 50 crore rupees of exports of ready made garments has taken a refund of 3.90 crores while the entity’s total GST payment in cash was a mere 1,650 rupees. The present ongoing exercise by CGST field formations has revealed serious issues in compliance behaviour in some cases. In two cases, the premises were also found sealed and seized by the banks as the exporters had been declared as Non Performing Assets.

  • The Cabinet Committee on Economic Affairs, CCEA has given in-principle approval for the sale of equity held by four Central Public Sector Enterprises and two-state PSUs in Neelachal Ispat Nigam Limited-NINL. It has approved strategic disinvestment of 49.78 per cent equity shareholding of Minerals and Metals Trading Corporation Limited and 10.10 per cent of National Mineral Development Corporation. 

    The CCEA gave approval for strategic disinvestment of 0.68 per cent of MECON and Bharat Heavy Electricals Limited each. 12 per cent disinvestment in Industrial Promotion and Investment Corporation of Odisha Limited and 20.47 per cent in Odisha Mining Corporation have also been approved. NINL is a Joint Venture company, in which these six companies are shareholders. The proposed strategic disinvestment of Neelachal Ispat Nigam Limited will unlock resources to be used to finance the social sector and developmental programmes of the Government benefiting the public.

  • The World Bank has forecast Sri Lanka’s economic growth at 3.3 per cent for 2020 saying the growth is likely to remain below four per cent in next three years. The bank said, in its latest report of World Bank’s January 2020 Global Economic Prospects, that for 2021 and 2022, it maintains the same forecast of 3.7 per cent of economic growth in SriLanka. Sri Lanka’s new government headed by President Gotabaya Rajapaksa said recently that one of its targets include achieving a 6.5 per cent economic growth per annum from 2020 and a GDP growth of 6,500 U.S. dollars per capita. Sri Lanka’s growth had dipped below 3 per cent last year which was attributed to Easter attacks and policy uncertainty during the previous government.

  • Reserve Bank of India has asked banks and other card-issuing companies to provide facility to customers to switch on and off their debit or credit cards, a move aimed at enhancing security for digital transactions. The RBI said that at the time of issue or re-issue, all cards (physical and virtual) should be enabled for use only at contact based points of usage ATMs and Point of Sale (PoS) devices within India. 

    The central Bank said issuers should provide cardholders a facility for enabling card not present (domestic and international) transactions, card present (international) transactions and contactless transactions. It said, the channels should include mobile application, internet banking, automated teller machines, or interactive voice response. The RBI further said that for existing cards, issuers may take a decision, based on their risk perception, whether to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights.

  • The government has constituted a five-member Advisory Board to vet all alleged frauds of a magnitude of at least Rs 50 crore in state-run banks and public financial institutions before these are referred to investigative agencies such as the Central Bureau of Investigation (CBI) in a move aimed at distinguishing honest business decisions of bankers from the not-so-honest ones. The formation of the board was announced in an order issued by the Central Vigilance Commission (CVC).

  • The GST revenue collection has crossed one lakh crore rupees in December last year, which is a growth of 16 per cent over the revenue collected in the same month in 2018. The total GST collected during last month was one lakh three thousand and 184 crore rupees. Finance Ministry said, a total of over 81 lakh GSTR 3B returns were filed for the month of November up to 31st December 2019.

  • Gujarat has received Rs.24,012-crore Foreign Direct Investment (FDI) during the first half of FY 2019-20. This is double the amount of Rs.12,612- crore FDI received during the entire previous FY 2018-19. This was revealed in a report of Department for Promotion of Industry and Internal Trade (DPIIT) under the Union Ministry of Commerce and Industry. According to official release, 734 major industrial estates had been set up in Gujarat as against 2,574 units in the entire country following the the progressive, transparent, pro-people and industries friendly policies of the state government. The incentives extended to the entrepreneurs include facilitating land and necessary permissions for setting up industrial units, in more liberal terms than extended in other states. The state earned recognition as Manufacturing and Auto Sector Hubs due to the State Government’s holistic policies of no pendency and good governance.

  • The Indian economy is estimated to grow at 5 per cent in 2019-20 as against 6.8 per cent in the previous fiscal. According to the first advanced estimates of the national income released by National Statistical Office (NSO), the decline has been mainly on account of deceleration in manufacturing sector growth, which is expected to come down to 2 per cent in 2019-20 from 6.2 per cent in the year-ago fiscal. The deceleration was also witnessed in sectors like agriculture, construction and electricity, gas and water supply. Whereas, some sector, including mining, public administration, and defence, showed minor improvement.

  • The 13th tranche of electoral bonds sale will take place from 13th to 22nd of January 2020. Electoral bonds have been pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding. Finance Ministry said, State Bank of India has been authorised to issue and encash electoral bonds through its 29 authorised branches. The sale of the first batch of electoral bonds took place in March 2018. According to provisions of the scheme, electoral bonds can be purchased by a person who is a citizen of India or incorporated or established in India. Registered political parties that have secured not less than 1 per cent of the votes polled in the last election of the Lok Sabha or Legislative Assembly will be eligible to receive electoral bonds. A person being an individual can buy electoral bonds, either singly or jointly, with other individuals. An electoral bond will be valid for 15 days from the date of issue. No payment would be made to any payee political party if the bond is deposited after expiry of the validity period. The bond deposited by any eligible political party into its account would be credited on the same day.

  • Retail inflation rose to about five-and-half year high of 7.35 per cent in December 2019, surpassing the RBI's comfort level, mainly due to rise in prices of vegetables as onions. As per the data released by National Statistical Office (NSO) on January 13, 2020, the spike in inflation in the vegetable segment was 60.5 per cent during the month compared to December 2018. The overall retail inflation based on Consumer Price Index (CPI) was 2.11 per cent in December 2018 and 5.54 per cent in November 2019. As per the data released by the NSO, the overall food inflation rose to 14.12 per cent in December as against (-) 2.65 per cent in the same month of 2018. The food inflation was 10.01 per cent in November 2019. The previous high in retail inflation was witnessed at 7.39 per cent in July 2014, the year Narendra Modi-led Government assumed office for the first term. 

    The inflation in 'pulses and products' was recorded at 15.44 per cent, while in case of meat and fish it was nearly 10 per cent. The Central Government has mandated the Reserve Bank of India to keep inflation in the range of four per cent with a margin of two per cent on the either side. The RBI, which mainly factors in the CPI-based inflation, is scheduled to announce its next bi-monthly monetary policy on 6th of February. In its December policy, the Central Bank, which had been reducing rates, had kept the repo rate unchanged citing inflationary concerns.

  • Wholesale prices based inflation surged to 2.59 per cent in December 2019, as against 0.58 per cent in November due to increase in prices of food articles like onion and potato. The annual inflation, based on the monthly wholesale price index (WPI), was at 3.46 per cent during December a year ago. According to the data released by the Ministry of Commerce and Industry, the rate of price rise for food articles rose to 13.12 per cent during December 2019 as against 11 per cent a month earlier, while for non-food articles it rose nearly four-fold to 7.72 per cent from 1.93 per cent in November. Among food articles, vegetable prices surged by 69.69 per cent mainly on account of onion, which witnessed around 456 per cent jump in prices, followed by potato at around 45 per cent. The consumer price index-based retail inflation, as per data released, spiked to over a 5-year high of 7.35 per cent in December 2019 due to costlier food products.

  • China registered 6.1 per cent GDP last year, which is the slowest pace of growth for the country in almost three decades. The government said, sluggish domestic demand and the bruising 18-month trade war with the US has seriously impacted the economy. The new GDP data released by the National Bureau of Statistics (NBS) comes a day after China and the US signed a long-awaited phase one deal. In 2018, China's economy sank to a 28-year low slowing down to 6.6 per cent, lower than the 6.8-per cent growth registered in 2017. After signing the phase one deal, US President Donald Trump said 25 per cent tariff hike on 360 billion US Dollar worth of Chinese products would continue until the phase-2 deal is worked out. China aims to double the per capita income of its urban and rural residents from 2010 levels By 2020. 

  • The 50th Annual Meeting of the World Economic Forum, a congregation of rich and powerful from across the world, opens in Davos, Switzerland on 21 January 2020. Commerce and Industry Minister Piyush Goyal will lead the Indian delegation to the WEF. Besides, over 100 CEOs, political leaders including Union Ministers and Chief Ministers will take part in the 50th edition of the annual event. WEF founder and executive chairman Klaus Schwab said in his welcome message last night that he is proud to have created a community of some great people, including young leaders, through this platform. 

    The welcome message was followed by the annual crystal awards and this year's recipients included celebrity film star Deepika Padukone. The awards are given to cultural leaders, who are improving the state of the world through their contributions to inclusive and sustainable change. Receiving the award, Padukone said that people must understand depression and anxiety are like any other illness and can be treated and her own experience has encouraged her to work for this cause. 

    This year's programme focuses on achieving maximum impact on the Forum's platform for public-private cooperation across six core areas of activity: ecology, economy, society, industry, technology, and geopolitics. Among the initiatives to be launched at the annual meeting is one that aims to plant one trillion trees over the next decade and to equip one billion people with the necessary skills in the age of the Fourth Industrial Revolution.



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