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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 government has

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 representatives ma

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 distorts the market a

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 accou

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 Airlines’ debt and de