January 2020 Economic Affairs

Sakshi Education

Numerous measures have been proposed in budget 2020 to promote digital payments further
More than three thousand one hundred crore rupees digital payment transaction took place in the current financial year so far. Finance Ministry said, numerous measures have been proposed in the budget 2019-20 to promote digital payments further.

Nearly 11 lakh BHIM Aadhar Pay point of sale devices are in India.

Government has taken several initiatives in the recent past for promotion of digital payment and less cash economy. Over the past three years, digital payment transactions have registered tremendous growth in India.

Presently there are more than 52 lakh physical or mobile point of sale (PoS) devices in the country. The number of monthly BHIM - UPI transactions have increased from over seven thousand 500 lakhs in June last year to over 13 thousand lakhs till December last year.

Digital transaction has brought transparency, significantly reduced corruption and improved public service delivery to benefit the poor.
2280 crore rupees projects financed under JKIDFC in this financial year in J&K
In a major push to development in Jammu and Kashmir, around 1,256 projects worth 2280 crore rupees financed under J&K Infrastructure Development Finance Corporation, are being completed by end of March this year.

All government departments have been asked to handover the completed infrastructure development projects under JKIDFC, before the commencement of the third week of March for their formal inauguration.

Among these 422 projects belong to PHE, 180 to R&B, 168 to PDD, 76 to I&FC department, 104 to School Education, 77 to Youth Services, 50 to Health and 48 each to Housing and Industries departments.
Economic Survey 2019-20 projects growth at 6 to 6.5 per cent for next fiscal
Economic Survey 2019-20 has projected economic growth at 6 to 6.5 per cent in the next fiscal. It calls for more reforms for making it easier to do business in the country.

The Survey, tabled by Finance Minister Nirmala Sitharaman in Parliament, emphasises on entrepreneurship and Wealth Creation at the Grassroots. It has suggested that industrial sector performance is a key to achieve the target of a five trillion dollar economy.

Chief Economic Advisor Krishnamurthy Subramanian said, the survey has given emphasis on wealth creation.

Economic Survey suggests that India’s aspiration of becoming a five trillion dollar economy depends on strengthening the invisible hand of the market.

India has been a dominant economy for three-quarters of recorded economic history and such dominance happens by giving emphasis on wealth creation.

The survey outlines a multi-faceted strategy to achieve a five trillion dollar economy through enterprise, exports, ease of doing business and more.

The Economic survey is a flagship annual document of the Finance Ministry which reviews developments in the Indian economy.
Commerce Ministry sets up National Startup Advisory Council to foster start-ups in India
The government has announced that it is to set up a National Startup Advisory Council on 21 January 2020.

The council will advise the Centre on measures needed to build a strong ecosystem for nurturing innovation and start-ups in India. It was set up by commerce and industry ministry.

Members:
- The Advisory Council will be chaired by the Commerce Minister Piyush Goyal. It consists of non-official members to be nominated by the Centre, founders of successful start-ups, veterans who have grown and scaled companies in India, persons capable to represent interests of investors into start-ups.
National Startup Advisory Council:
- The Council will suggest measures to foster a culture of innovation among students and others, the commerce and industry ministry.
- It will suggest measures to facilitate public organizations to protect and commercialization of intellectual property rights, to promote the creation, assimilate innovation, make it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs.
- The Council will also direct the companies to promote ease of access to capital for start-ups, mobilize global capital for investments, incentivize domestic capital for investments, and keep control of start-ups with original promoters.
India, Brazil MoU gets approved for cooperation in the oil and natural gas sector
The Union Cabinet led by the PM Narendra Modi approved the signing of the Memorandum of Understanding (MoU) between the Republic of India and the Federative Republic of Brazil.

The MoU on cooperation in the field of oil and natural gas. The MoU is expected to be signed during the visit of President of Brazil to India in January 2020.

MoU Provisions:
- The MoU will enhance cooperation between the two sides in the oil and natural gas sector.
- Both the countries will work towards establishing cooperation in the E&P initiatives in Brazil and India, research & development in this sector, explore collaboration in Liquefied Natural Gas projects in Brazil, India and third countries.
- It encourages collaboration in oil energy and environmental issues, including energy policies such as energy research development, energy efficiency, and expansion of the regional energy infrastructure networks.
India’s richest 1% holds over 40% of national wealth: Oxfam Report
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.
Cabinet committee approves the closure of Hindustan Fluorocarbons plant in Telangana
The Cabinet Committee on Economic Affairs, CCEA approved shutting down the operations of the plant and unit of Hindustan Fluorocarbons Limited, HFL and closure of the company.

HFL is a Central Public Sector Enterprise under Department of Chemicals and Petrochemicals. HFL has only one plant located at Rudraram, District Sangareddy in Telangana.

Government granted an interest free loan of over 77 crore rupees to HFL for expenditure exclusively on closure.
New broadcast sector tariffs empower consumers: TRAI to HC
Telecom Regulatory Authority of India (TRAI) has informed the Bombay High Court that its latest amendments to TV broadcast sector tariffs are aimed at ensuring transparency and non-discrimination in channel rates.

In an affidavit, TRAI counsel Venkatesh Dhond said it is a consumer-friendly measure. A division bench of Justices SC Dharmadhikari and R I Chagla was hearing a bunch of petitions filed by television broadcasters claiming that the new rules were unreasonable.

The regulatory authority claimed that the provisions of the previous regulatory framework are being misused by broadcasters and Distribution Platform Operators. The bench has posted the petitions for further hearing on 30th January.
CCI orders probe against Amazon, Flipkart over discount practices
Fair trade regulator Competition Commission of India, CCI has ordered a probe against Flipkart and Amazon for alleged malpractices, including deep discounting and tie-ups with preferred sellers.

The order follows a complaint filed by Delhi Vyapar Mahasangh, whose members comprise many traders dealing in smartphones and related accessories.

The traders' body accused the e-commerce firms of anti-competitive practices like preferential listing, exclusive tie-ups and private labels.

In its order, the Commission said, it needs to be investigated whether the alleged exclusive arrangements, deep discounting and preferential listing by the opposite parties are being used as an exclusionary tactic to foreclose competition.

The Competition Commission has asked the Director General to complete the investigation and submit a report within 60 days.
RBI asks issuers to provide facility to switch on, off cards to prevent frauds
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.
Amazon will invest $1 billion to digitise small Indian businesses
Amazon.com Inc will invest $1 billion in digitising small- and medium-businesses in India and expects to export $10 billion worth of India-made goods by 2025.

Amazon has committed $5.5 billion in India investments and sees the country as a key growth market.
Government sets up board to examine bank frauds of at least Rs 50 crore before agencies step in
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).
CBIC uses data analytics to identify 'risky' exporters'
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.

Ongoing investigations have thrown up at least 9-star export houses as ‘non-traceable’ at their premises declared on record.

All these star export houses have availed IGST refunds, which is now being questioned by the tax officers.

Sources in the Finance Ministry said the CBIC has referred the matter to Directorate General of Foreign Trade seeking a more robust accreditation process and taking further necessary actions as per law.

There are instances where an exporter with over 50 crore rupees of exports of readymade 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.
Exim Bank grants $75 million line of credit to Cuba
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.
UPI hits 1.3 billion transactions in December Month
Unified Payments Interface (UPI) raised 1.3 billion transactions in December at National Payments Corporation of India (NPCI).

These transactions were 7% higher than in October and 111% higher on a year-on-year basis, the data showed.The transactions were worth Rs.2.02 trillion in December compared to Rs.1.89 trillion a month ago.

Currently, 143 banks are live on UPI.

UPI allows users to transfer money any time across multiple bank accounts without revealing details of one’s bank account to the other party.

The simple, hassle-free three-year-old payment system is popular among the masses.

The businesses with more than Rs.50 crore sales will have to compulsorily offer electronic payment modes such as debit cards powered by RuPay and low-cost digital payment options such as UPI from 1 January 2020.

The Department of Revenue (DoR) will notify RuPay and UPI as the mode of payment for undertaking digital transactions without any MDR.
RBI buys three long-term securities worth Rs10,000 crore in 3rd special OMO
In the third special open market operation in many weeks, the Reserve Bank of India (RBI) bought three long-term securities worth 10,000 crore rupees while selling the same amount of three short-term bonds.

The RBI had announced to simultaneous purchase and sale of Government Securities (G-Secs) under Open Market Operations (OMOs) for 10,000 crore rupees each last week.

The RBI offered to purchase three securities including 10-year benchmark government bond, as against just one bond in the previous two auctions. It got bids worth 64,505 crore rupees for the three bonds but choose to accept only bids of 10,000 crore rupees under the OMO purchase auction.

In the previous two similar auctions, the RBI had purchased bonds of 20,000 crore rupees and sold bonds worth 15,326 crore rupees.

These special OMO auctions are similar to the US Federal Reserves' Operation Twist aimed at faster transmission of policy rates.
Piyush Goyal inaugurates NSE Knowledge Hub
Union Minister for Commerce and Industries Piyush Goyal has said that Artificial Intelligence and machine learning will contribute one trillion dollars by the year 2035.

Artificial intelligence-powered learning ecosystem will assist the banking, financial services and insurance sector.

The Minister inaugurated the National Stock Exchange (NSE) Knowledge Hub in New Delhi.
Centre and states agree to streamline GST to plug revenue leakage
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.

The committee will come out with detailed Standard Operating Procedure within a week, which may be implemented across the country by January end.

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.

Deliberations were held on a mechanism and machinery for disseminating inter-departmental data among various agencies like CBDT, CBIC and State Tax Administrations to achieve efficiency in curbing evasion.

Views were also presented on curbing fraud and evasion, checking fake or huge input tax credit claims and seeking bank account details of businesses totally with their filings.

Besides, the meeting also focused on bridging the compliance gap and enhancing revenue.
MSME sector has better adaptability to cater to export market: Piyush Goyal
Micro, Small and Medium Enterprises, MSME sector has better adaptability to cater to the export market due to its smaller size and can adapt to market change sooner.

Many issues pertaining to the MSME sector were put up for discussion with Minister by MSMEs through the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), the Associated Chambers of Commerce and Industry of India (ASSOCHAM), SME Chamber of India and PHD Chamber of Commerce and Industry.

The most important issues that were discussed in the meeting included the problem faced by SME units in accessing credit from banks, delay in payments from Public Sector Units and Government departments, the issue of GST refund, the dearth of skilled manpower in the SME sector and the issue of differing wages in States across the country.

The MSME sector in India employs over 100 million people and accounts for 45 per cent of manufacturing output and more than 40 per cent of the country’s exports.

With 63.4 million units throughout the country, MSMEs contribute around 6.11 per cent of the manufacturing GDP and 24.63 per cent of the GDP from service activities.
RBI allows 24x7 forex market options
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.
SBI announces 'residential builder finance with buyer guarantee' scheme
Country's largest public sector bank, State Bank of India has announced a 'residential builder finance with buyer guarantee' (RBBG) scheme. It aims at giving a push to residential sales and improve homebuyers' confidence.

Under this scheme announced, the SBI will issue a guarantee for completion of select residential projects to customers who have availed home loans from it. The scheme will focus on affordable housing projects priced up to 2.50 crore rupees in 10 cities initially. SBI Chairman said that this will be a win-win situation for homebuyers, builders and the bank. Under RBBG, the guarantee would be given by the bank till the project gets the occupation certificate (OC).

The guarantee will be available for RERA registered projects and a project will be considered stuck after it crosses the RERA deadline.
CCEA approves strategic disinvestment of 49.78 per cent equity shareholding of MMTC
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 in 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.
RBI amends KYC norms, allows banks to use V-CIP
The RBI has amended the KYC norms allowing banks and other lending institutions regulated by it to use Video based Customer Identification Process (V-CIP), a move which will help them onboard customers remotely.

The V-CIP, which will be consent-based, will make it easier for banks and other regulated entities to adhere to the RBI's Know Your Customer (KYC) norms by leveraging the digital technology.

It decided to permit video based Customer Identification Process (V-CIP) as a consent based alternate method of establishing the customer's identity, for customer onboarding with a view to leveraging the digital channels for Customer Identification Process (CIP) by regulated entities (REs).

The regulated entities will have to ensure that the video recording is stored in a safe and secure manner and bears the date and time stamp.

Last year (2019), the government had notified amendment to the Prevention of Money-laundering (Maintenance of Records) Rules, 2005.

As per the circular, the reporting entity should capture a clear image of PAN card to be displayed by the customer during the process.

The official of the reporting entity should ensure that the photograph and the identification details in Aadhaar/PAN should match with the details provided by the customer.

Live location of the customer (Geotagging) shall be captured to ensure that customer is physically present in India.
Shri Dharmendra Pradhan to launch ‘Purvodaya’: Accelerated development of Eastern India through an Integrated Steel Hub
Ministry of steel in partnership with CII and JPC is organizing the launch of Purvodaya-Accelerated Development of Eastern Region through an Integrated Steel hub, in line with Prime Minister's Vision for focused development of the Eastern States.

Shri Dharmendra Pradhan, Minster for Petroleum & Natural Gas and Steel will launch the Purvodaya on 11th January 2020 at The Oberoi Grand Kolkata. Prime Minister Shri Narendra Modi has highlighted the need for focused development of the Eastern states in order to unleash their untapped potential thereby ensuring the growth of the region as a whole and the country at large.
MDR charges will not be applicable on transactions through RuPay, UPI platforms from 1st of January
No Merchant Discount Rate (MDR) will be applicable on transactions through homegrown RuPay and UPI platforms beginning 1st January, 2020.

Ms Nirmala Sitharaman announced this in New Delhi after meeting Chiefs of Public Sector Banks (PSBs), Chief executive of Indian Banks’ Association and representatives of leading private sector banks to discuss banking issues.

Department of Revenue (DoR) will soon notify RuPay and UPI as the prescribed mode of payment for digital transactions without any MDR.

Now all companies with a turnover of 50 crore rupees or more will be mandated to provide the facility of payment through RuPay Debit card and UPI QR code to their customers.

All banks will also start a campaign to popularise RuPay Debit card and UPI.

MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. The merchant discount rate is expressed in percentage of the transaction amount.

Besides, the Finance Minister also launched a common e-auction platform to sell attached assets of defaulters for improved realisation of value.

The platform is equipped with property search features and navigational links to all PSB e-auction sites.

It provides a single-window access to information on properties for e-auction as well as facility for comparison of similar properties and also contains photographs and videos of uploaded properties.

Atotal of 35,000 properties have been uploaded on the platform by PSBs.

The Public Sector Banks have attached assets worth over 2.3 lakh crore rupees over the last three financial years.

To strengthen banks, in addition to the recent infusion of over 60 thousand crore rupees, additional infusion of 8,855 crore rupees has been approved and would be released shortly.

Of the total amount, 4,360 crore rupees will be released to Indian Overseas Bank, 2,153 crore rupees to Allahabad Bank, 2,142 crore rupees to UCO Bank and 200 crore rupees to Andhra Bank.
China to issue revised local GDP figures under new mechanism from 2020
China will revise its historical regional GDP data under a unified accounting mechanism from early next year.

The Chinese economy grew at an annual pace of 6.0 per cent in the July-September quarter, the slowest growth since 1992.

The National Bureau of Statistics new mechanism will unify the standards and procedures for calculating national and local GDP numbers which had been calculated under different accounting methods adopted by local and national statistics authorities since 1985.

The reform is expected to close the current discrepancy between national and regional figures, improving data quality while enhancing the credibility of the government statistics.
India likely to surpass Germany to become the fourth-largest economy in 2026: Report
India will overtake Germany to become fourth-largest economy in the world by the year 2026. According to a report by the UK-based Centre for Economics and Business Research (CEBR), India is all set to overtake Japan to become the third-largest economy by 2034.

The report titled 'World Economic League Table 2020' said that India is also set to become a 5 trillion dollar economy by 2026, 2 years later than the government's target of 2024.

India has decisively overtaken both France and the UK to become the world's fifth-largest economy in 2019. The report said that Japan, Germany and India will battle for third position over the next 15 years.

The World Economic League Table is an annual calculation by CEBR jointly published by CEBR and Global Construction Perspectives. The base data for 2019 is taken from the IMF World Economic Outlook.
SBI to deactivate magstripe debit cards
SBI has announced that magstripe debit card will be deactivated by 31 December 2019.

With effect from 1 January 2020, SBI customers will not be able to use their old magnetic stripe debit cards even if the validity of the card has not expired.

Chip-based cards, also called chip and PIN cards, use higher standards of data encryption and storage technology compared to magnetic stripe cards.
RBI buys Rs 10,000 crore worth long-term government securities in 2nd special OMO
In the second special open market operation (OMO), the Reserve Bank of India on 30 December, 2019 day bought 10,000 crore rupees of long-term government securities and sold 8,501 crore rupees of three short-term bonds.

The RBI had announced to purchase and sell simultaneously government securities under Open Market Operations (OMO) for 10,000 crore rupees each, last week.

Though RBI offered to sell four securities in the auction, it accepted bids for three bids only.
Government unveils Rs. 102 lakh crore 5 year plan for mega infrastructure push
Finance Minister Nirmala Sitharaman has unveiled infrastructure projects worth 102 lakh crore rupees that will be implemented in the next five years as a part of the government's spending push to the infrastructure sector.

Ms Sitharaman said that in his Independence Day speech the Prime Minister spoke about investing 100 lakh crore rupees in infrastructure.

Energy projects worth nearly 25 lakh crore rupees have been lined up and another 20 lakh crore rupees in road and about 14 lakh crore rupees in railway projects have also been lined up.
RBI launches mobile app for visually challenged to identify denomination of currency notes
RBI has launched a mobile app, MANI, Mobile Aided Note Identifier, to help visually challenged people to identify denomination of currency notes.

The app, which is available both on Android and iOS operating systems, was launched by RBI Governor Shaktikanta Das in Mumbai.

The visually challenged can identify the denomination of a note by using the application, which can also work offline once it is installed.

Through the downloaded app, users can scan the notes using the camera.
Government of India signed MoU with Flipkart
The Govt of India signed MoU with Flipkart for selling the products made by women self help group under Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM).

DAY-NULM consists of 44 lakh women across the country which aims to make women financially independent.

Government is likely to sign MoU with Amazon on January 7, 2020, for the same purpose.
India's Forex reserves touch all time high of 457.468 billion
India's foreign exchange reserves swelled by 2.520 billion USD to touch a record high of 457.468 billion USD in the week that ended on 27th December 2019.

An RBI has informed that foreign currency assets, a major part of the overall reserves rose by 2.203 billion USD to 424.936 billion USD.

In the previous week, the reserves had surged by 456 million USD to end at 454.948 billion USD. Gold reserves increased by 260 million USD to end at 27.392 billion USD.

India's special drawing rights with the International Monetary Fund, however dipped by 2 million USD to 1.441 billion USD, while the country's reserve position increased by 58 million USD to 3.7 billion USD.