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Data shows improvement in the performance of agriculture and manufacturing sectors India’s GDP grew at 7.2% in 2018-19, according to the first advanced estimates released by the Central Statistical Office on Monday, the fastest rate of growth since 2016-17, marking a recovery in economic activity from the twin disruptions of demonetisation and Goods and Services Tax.  To be sure, these figures are forecasts, as the first advanced estimate figures are based on about two quarters of actual economic data. While the 2018-19 growth is 55 basis points more than the 2017-18 figure, it is 20 basis points less than the RBI’s forecast of 7.4% and 7 basis points less than the International Monetary Fund’s forecast of 7.3% for the current year. One basis point is one hundredth of a percentage point. India continues to be the fastest growing major economy in the world according to the latest figures.  These figures also show that India’s economic growth under the Narendra Modi govern...

Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday dealing with issues of liquidity was one of the central bank’s biggest priorities. However, any infusion would be strictly based on the need to ensure that it was not seen as “easy money” by the markets. This comes a day before Das meets the representatives of non-banking financial companies (NBFCs) in Mumbai. Addressing a media briefing, Das did not rule out the central bank paying interim dividend to the Centre, but said no decision had been taken yet on the amount to be given. “The situation is something the RBI is constantly monitoring and will take steps whenever a liquidity deficit is noticed. The RBI will not like a situation where liquidity becomes a kind of loose money. Any infusion of liquidity will have to be carefully considered and has to be need-based,” Das said. “Therefore, caution and care have to be exercised by the RBI so that excess liquidity, which sometimes has adverse consequences, is not crea...

Current norms in conflict with domestic laws of several countries The Securities and Exchange Board of India (Sebi) is working on new data privacy norms for foreign portfolio investors (FPIs). The move comes as the regulations are said to be in conflict with the domestic laws of several countries, especially European nations and Canada, which together account for 40% of total FPI flows into India. The concerns of FPIs relate mostly to the compatibility of Sebi’s new know-your-customer (KYC) requirements with data localisation norms applicable in their home countries. Exemptions for publicly pooled funds along with the creation of a high-end encrypted platform for data exchange and storage are some of the key measures under the regulator’s consideration, said two people aware of the development. The process assumes significance as Sebi had set a March 2019 deadline for FPIs to submit KYC documentation as per the revised rules. The Economic Times, 8th January 2019

Says liquidity infusion should be need-based, idle cash in the system won’t be encouraged Reserve Bank of India (RBI) governor Shaktikanta Das struck a note of caution on farm loan waivers, saying open-ended forgiveness would affect credit culture and the behaviour of borrowers. He also said the central bank is open to taking more steps to infuse liquidity if the need arises but it doesn’t want too much cash sloshing around in the banking system.  “Liquidity needs of the economy are regularly monitored and whatever steps are required will be taken,” Das said at a press briefing in Delhi. “RBI would not like a situation where liquidity becomes a kind of loose money.” Any infusion of liquidity will have to be based on requirements. Das met representatives of micro, small and medium enterprises (MSMEs) in the capital on Monday and will meet executives of nonbanking finance companies (NBFCs) in Mumbai on Tuesday to get a perspective on liquidity needs. He said MSME representative...

The Prime Minister’s Office has asked nodal ministries to speed up efforts to bring all states on board for the inclusion of oil, natural gas, electricity and coal under the ambit of the goods and service tax (GST). States have been reluctant because so far, they have the freedom to levy their own taxes — a significant part of the state revenue.  Niti Aayog had reached out to the PMO with a blueprint to make the energy sector more competitive and ensure uniform pricing across India, a senior government official told ET, requesting anonymity. “Nodal ministries have taken recognition of the directive from the top and have initiated discussions with all stakeholders and states,” the official added.  The next meeting of the GST Council will be held on January 10. Various stakeholders, including consumers, have demanded the power sector be brought in the ambit of GST, which may lower tariffs 10%.  NITI Aayog is of the view that such a variety of subsidies and taxes distort...

Days after issuing a circular that sought to clarify taxes on valuations, the Central Board of Direct Taxes (CBDT) withdrew it following a Congress party press conference at which it said the move would exonerate Rahul and Sonia Gandhi over income-tax liabilities in the Associated Journals Ltd (AJL) case.  The withdrawal means that the taxman will again start challenging valuations in cases where there was a fresh issuance of shares. Experts said the withdrawal of the circular has created confusion for several companies that had received tax demands on valuations. “I don’t know why the government is creating so much confusion in the investing space. Just a simple clarification was required so that genuine investments from listed companies, Sebi-registered AIFs (Alternative Investment Funds), holding companies into subsidiaries, angel funds into DIPP-registered startups, other similar investments should have been made exempt,” said Jeenendra Bhandari, partner, MGB, a chartered a...

Vijay Mallya, after a great run in building a liquor business, is now the poster boy of 21st century India’s Robber Barons, though more qualified men compete for that title.  If banks are to be blamed partly for the magnitude of the losses in Kingfisher Airlines default, the remaining lies at the doorsteps of the Reserve Bank of India.  Sometime in 2010, being kind trumped other obligations. The regulator abandoned its role of a referee and decided to play the saviour. It extended the muchabused Corporate Debt Restructuring scheme to the services sector too as it attempted to save an airline that was about to run aground instead of flying. Despite the noble intentions, it met its fate.  While the extension of that restructuring provision might be justified in the absence of a bankruptcy law then, it still exposes the regulatory weakness which let itself to be pulled in the direction that vested interests desire. That ultimately led to bloating up of Kingfisher Airline...

In 2017, the government announced a plan for an infusion of 2.11 trillion rupees ($30.06 billion) into 20 state banks by March 2019 to meet Basel-III global demands  A parliamentary panel on Thursday asked the Reserve Bank of India (RBI) to ease its rules on capital requirements for banks so that they can increase lending.  "Such stringent norms stipulated by the RBI for our banks ... is unrealistic and unwarranted," said a report tabled in parliament by the Parliamentary Committee on Finance.  The report comes after the government and some of the board members of the RBI have put pressure on the central bank to relax capital requirements for banks as they seek to boost credit and economic growth. Former RBI governor Urjit Patel, who quit last month, opposed the government's demand for lowering capital requirements and warned about the need for a cushion to offset unexpected risks.  Indian banks are required to maintain a minimum capital to risk weighted asset ra...

The Narendra Modi government could be staring at a shortfall in Goods and Service Tax (GST) collection of anywhere between Rs 500 billion and Rs 1 trillion this fiscal, according to estimates put out by analysts over the last month.  Any potential shortfall in GST revenues – a prospect that the Centre has tried to ignore – will have an impact on government spending, which in turns has implications for India’s economic growth. A report put out by the State Bank of India’s research wing this week expects a shortfall of “around Rs 900 billion in GST and excise collections”.  Out of this, Rs 105 billion is on account of recent reduction in petrol taxes.  The SBI report reckons that it could result in a federal spending cut of nearly Rs 700 billion, or one-fourth of projected capital expenditure for 2018-2019. This, it notes, would be twice the Rs 360 billion cut in capital spending that the Centre carried out in 2017-2018 in order to make sure the fiscal deficit didn’t ...

The fee for late filing of the returns is Rs 25 per day for Central GST and an equal amount under State GST.  The government has waived late fees for non-filers of summary and final sales returns for the July 2017-September 2018 period by businesses registered under the goods and services tax (GST).  However, these businesses would have to file their returns for the 15-month period by March 31, 2019, the Central Board of Indirect Taxes and Customs (CBIC) said. Giving effect to the decision of the GST Council in its December 22 meeting, CBIC has notified waiver of late fees for non filing of GSTR-3B, GSTR-1 and GSTR-4 and non-payment of taxes between July 2017 and September 2018.  While GSTR-3B is the summary sales return filed by businesses, GSTR-1 is the final sales return. GSTR-4 is filed by businesses who have opted for composition scheme, under which they have to file returns quarterly. The fee for late filing of the returns is Rs 25 per day for Central GST (CGS...

The volume of UPI transactions for December stood at 620 million. Transactions via the unified payments interface (UPI), the country’s flagship payments platform, crossed a value of Rs 1 trillion in December, according to the data released by the National Payments Corporation of India.  The value of UPI transactions in December stood at Rs 1.02 trillion, against Rs 82,232 crore in November — a rise of 25 per cent.  The volume of UPI transactions for December stood at 620 million, a growth of 18 per cent over the previous month. The UPI transaction volume for November stood at 525 million.  Mobile wallet transactions for the month of October stood at 368.45 million, with a value of Rs 18,786 crore. This was a rise of 25 per cent and 13.5 per cent, respectively, over the previous month. According to the latest set of data released by the Reserve Bank of India (RBI), card transactions in the month of October saw a rise of 9 per cent in volume to 1.4 trillion and 12 per c...