July 2019 Economic Affairs

Sakshi Education

Government of India cuts interest rate on GPF
The government of India has lowered interest rate on General Provident Fund (GPF).

For the July-September, General Provident Fund and other similar funds will pay a 7.9% interest rate to its subscribers, as compared to 8% in the previous quarter.

This interest rate will be applicable on provident funds of central government employees, railways and defence forces.
Gujarat tops in MSME lending potential
As per TransUnion CIBIL- SIDBI’s MSME Pulse Report, Gujarat has emerged as the top state, in terms of performance and credit growth potential for MSME (micro, small and medium enterprises) Corporate Lending in India.

It is followed by Andhra Pradesh, Haryana, Karnataka and Delhi.

MSME corporate entities are borrowers with aggregate credit exposure of up to Rs.50 crore.
Supreme Court directs cancellation of Amrapalli group registration
The Supreme Court on July 23 directed the cancellation of the registration of Amrapali Group of companies and directed the National Buildings and Construction Corporation (NBCC) to complete unfinished housing projects, in a relief for over 40,000 investors.

It further directed the Enforcement Directorate to investigate the group under the money laundering law for allegedly diverting homebuyers’ hard-earned money.

The court pulled up lender banks and Noida authorities for breach of public trust for not acting in time while the homebuyers’ money was wiped out through the illegal activities of the group.

The judgment follows a green signal the court gave in February to arrest the directors of the Amrapali Group on the basis of allegations against them for diverting funds collected from homebuyers to its other companies.

The order had then come on the basis of an application filed by the Deputy Commissioner of Police, Economic Offences Wing, Delhi Police, for their arrest and custody.
Central Government favors it's 31.8% contribution to economic growth
MSME sector contributed significantly to the Indian economy in terms of Gross Domestic Product, exports and employment generation, it’s the contribution of the total Gross Value Added standing at 31.8 percent.

The share of MSME related products in total exports from India during the year 2018-19 was 48.10 percent.
IMF cuts India’s growth forecast for 2019-20 to 7%
The International Monetary Fund (IMF) has cut India’s growth forecast for 2019-20 to 7% from its forecast in April of 7.3% on poor demand conditions, it said on 23 July, 2019.

The IMF’s World Economic Outlook July update also cut India’s growth forecast in 2020-21 to 7.2% from the previous estimate of 7.5%.

In April, the IMF had cut India’s growth forecast for 2019-20 to 7.3%, which was 0.2 percentage points lower than the forecast made in January, which itself was 0.1 percentage points lower than the forecast made in October 2018.

The forecast of 7.2% growth for 2020-21 is 0.5 percentage points lower than what was forecast made in October and January. The 7% forecast for 2019-20, however, is in line with those made by the Reserve Bank of India, Chief Economic Adviser Krishnamurthy Subramanian and the Asian Development Bank.

The IMF has also cut its forecast for world GDP growth by 0.1 percentage point each in 2019 and 2020 to 3.2% and 3.5%, respectively.

The growth forecast for emerging markets and developing economies has also been cut by 0.3 percentage points for 2019 to 4.1% and by 0.1 percentage points for 2020 to 4.7%.
The World Bank to continue the support to Andhra Pradesh with over $1 Billion program
The World Bank dropped a loan proposal for Amaravati project continues to support Andhra Pradesh with an over one billion USD program.

The program mainly covers the health, agriculture, energy and disaster management sectors.

The main aim is to improve the living standards of citizens in tune with the Sustainable Development Goals.

This includes a new $328 million support to the state's health sector.

The World Bank's statement dropped a 300 million USD loan proposal for the Amaravati Sustainable Infrastructure and Institutional Development Project.

The Government of India (GoI) withdrew its request to the World Bank for financing the proposed Amaravati Sustainable Infrastructure and Institutional Development Project.

The World Bank's Board of Executive Directors informed that the proposed project is no longer under preparation following the government's decision.

The government seeks World Bank assistance for funding the flagship Navaratnalu program.
Income Tax Department to celebrate Aaykar Diwas 2019
Central Board of Direct Taxes (CBDT) will observe and celebrate the 159th Income Tax Day on 24th July, 2019. It was on 24th July, 1860.

The Income Tax introduced for the first time in India by Sir James Wilson to compensate for the losses incurred by the British regime.

This incident took place during the first war of independence against British Rule.

The week preceding the Aaykar Diwas 2019 marked by various activities undertaken by the regional offices of the department across the country.

Several field offices undertook a grievance redressal week to help redress pending grievances of the taxpayers.

Some field stations made free legal aid available to taxpayers in conjunction with the local Tax Bar Association.

Several field stations holding functions felicitating super senior tax payers for their contribution to nation building, while also recognizing the hard work put in by the officers and officials of the department in various designated areas of work.

The department will launch a “Kardaata e-SahyogAbhiyaan”

The main aim is to assist and support taxpayers and other stakeholders in enabling them to e-file their returns and discharge other tax related obligations.

The several outreach programmes organized to promote payment of taxes as a value norm and for sensitizing potential tax payers that payment of taxes was an ethical duty of all citizens.

The visits of tax officials to educational institutions, public interaction with members of Bar and Chartered Accountant Associations and other stakeholders. Tax officers and officials participated in blood donation camps .

They have conducted Swachhta drives in their offices as also public spaces and carried out plantation drives, both independently and in association with the forest department at several places, including planting of about one lakh seed pods on barren lands. Several others have adopted Lake/Village/School for cleanliness/plantation drive.

While field offices organize functions at local levels to celebrate Aaykar Diwas 2019

The main function at the national level will be held at New Delhi on 24th July.

The event will include release of departmental publications, e-journal, publicity kit for outreach programs among other things.
Maharashtra tops in ATM frauds, Delhi, Tamil Nadu, Karnataka follows
Maharashtra state-reported around 233 cases of ATM fraud in 2018-19. Reserve Bank of India (RBI) data revealed a data showed that Delhi grabbed the second spot with 179 cases this is followed by Tamil Nadu with 147 cases.

In Maharashtra, people lost Rs 4.8 crore to bank fraud in Delhi people around Rs 2.9 crore is involved in bank fraud Assam, Arunachal Pradesh and Tripura are the only three states a single incident. The money lost came down from Rs 65.3 crore in 2017-18.

The commonly used trick is installing skimmer devices on ATMs and point-of-sale machines. This data is then put on blank cards and illegal transactions.

Last year, customers were asked to replace their existing debit/credit cards with new ones.RBI mandated banks to replace all existing magnetic stripe-only cards with EMV chip cards. Chip-based cards use higher standards of data encryption and storage technology.

RBI insisted banks to upgrade their ATMs or else face action.

Last year, they implemented a host of security measures by August and upgrade all ATMs with a supported version of the operating system in a phased manner by June 2019.

Anti-skimming devices prevent the skimmer from functioning.

An ATM/Debit card, Credit card and Internet banking transactions of over Rs 1 lakh.

There were 1,367 frauds reported in FY 2016-17; 2,127 frauds in FY 2017-18 and 1,477 frauds in FY 2018-19.
Asian Infrastructure Investment Bank withdraws funding to Amaravati project
Beijing-based Asian Infrastructure Investment Bank (AIIB) withdrawn funding for the Amaravati capital city project in Andhra Pradesh (AP).

The AIIB is to finance the upcoming city by providing $200 million.

The World Bank to fund the Amaravati project with $300 million.

The World Bank issued the withdrawn proposed funding after the Indian government on 15 July.

The multilateral agency for financing the proposed 'Amaravati Sustainable Infrastructure and Institutional Development Project'.

The total cost required for the Amaravati project is $715 million.
NPCI ties up with JCB for global RuPay card
The National Payments Corporation of India (NPCI) and JCB International, along with domestic banks launched RuPay JCB Global Cards.

The Banks including State Bank of India, Punjab National Bank, Axis Bank, Union Bank of India, Central Bank of India, Andhra Bank, City Union Bank, and TJSB Bank issue these cards

These cards which will be accepted in India at all POS terminals and ATMs.

NPCI tied up with Discover for international cards.

They started its card business in 1961

They reached global in 1981.

The industry has certain concerns and these are being discussed in certain forums.
RIL became the top Indian company in the latest Fortune Global 500 list
Reliance Industries (RIL) has topped the Indian company to feature in the latest Fortune Global 500 list. RIL has moved 42 positions from its previous and has secured 106th ranking.

The Indian company that stands next to RIL is the state-run Indian Oil Corporation (IOC). It has secured 117th rank.

The profit of RIL has been increased from $62.3 billion to $82.3 billion in 2019. IOC has recorded a 17.7% growth in revenue from $65.9 billion to $77.6.

The other companies that are included in the Fortune Global 500 list are ONGC that ranked 160, State Bank of India that ranked 236, Tata Motors that ranked 265, Bharat Petroleum which ranked 275 and Rajesh Exports that ranked 495.

The World’s 500 largest companies have generated $2.15 trillion in profits. The companies are represented by 34 countries and have employees of 69.3 million people worldwide.
Over 37 lakh metric tonnes of fish produced in country in 2018-19
Over 37 lakh metric tonnes of fish was produced in the country in 2018-19.

The potential of marine fisheries resources in India’s jurisdictional waters is estimated at 53 lakh metric tonnes.

This information was given by Fisheries Minister Pratap Chandra Sarangi in a written reply in the Rajya Sabha on 26 July, 2019.

He denied that marine fisheries resources are over exploited. In fact, there is marginal scope for tapping more fish from the sea.
GST Council reduces rate on Electric Vehicles by 7%
The GST Council has decided to reduce GST Rate on Electrical Vehicles from 12 per cent to 5 per cent.

In its 36th meeting today in New Delhi, the Council also decided to reduce the rate on Electric Vehicle Chargers from 18 per cent to 5 per cent. The new rates will come into effect from the 1st of next month.

The Council also approved an exemption from GST on the hiring of Electric Buses by local authorities.

Finance Minister Nirmala Sitharaman held the meeting through video conferencing. This is the first GST Council meeting after the presentation of Union Budget in Parliament on 5th July, 2019.

In its last meeting, the GST Council had approved the use of Aadhaar by businesses to register under GST and the imposition of a penalty of up to 10 per cent on entities not passing on benefits of GST rate cuts to consumers.

The auto industry today welcomed the reduction in GST on Electric Vehicles (EVs) and chargers, it will help in creating an ecosystem that will encourage faster mass adoption of eco-friendly mobility.

While terming the step as yet another bold move, the manufacturers, specially electric two-wheeler makers, sought similar reduction of 18 per cent GST on spare batteries, claiming it would help maintain low running cost of EVs over their lifetime.

Society of Manufacturers of Electric Vehicles hailed the development, saying it is in line with the government's steps to promote eco-friendly mobility, even as it sought a similar cut in spare batteries.

With the reduction in GST, the gap between prices of EVs and internal combustion engine vehicles will also be reduced.

This will play a part in faster adoption of electric mobility.
Hindu Economic Forum launches its Nepal Chapter
Hindu Economic Forum (HEF) has launched its Nepal Chapter. Nepal's Minister of State for Health and Population Dr. Surendra Kumar Yadav inaugurated the Chapter in Kathmandu last evening.

Member of Parliament from Rajya Sabha and Former Union Minister Dr. CP Thakur also graced the event.

On this occasion Founder of World Hindu Economic Forum, Swami Vigyananand said economic empowerment is very necessary to get due respect and recognition in the modern world.

He said HEF brings together financially successful elements within Hindu society so that each group can share their business knowledge, expertise and resources with their fellow brethren to trigger the creation of surplus wealth and make society prosperous.

Swami Vigyananand said the basic objective of Nepal chapter is to increase economic cooperation between India and Nepal and to connect the Himalayan nation with a global network for its economic prosperity.

Indian Ambassador to Nepal Manjeev Singh Puri said economic relation is the base of longevity of any relationship. He said Nepal's two-third external trade is with India and India is the largest investor in the country.

Ambassador Puri also said that after opening of Integrated Check Post at Birgunj, India-Nepal trade has increased, cost of doing business has come down and ease of doing business has improved.

A large number of industrialists, business persons, traders, thinkers and other eminent personalities from Nepali society attended the event.
China GDP growth slows to 6.2%, 27-year low
China's economic growth slowed to 6.2% in the second quarter from a year earlier, the weakest in at least 27 years, as demand at home and abroad faltered as the United States ratcheted up trade pressure.

But stronger-than-expected gains in June factory output and retail sales offered some signs of stabilisation.

China's trading partners and financial markets are closely watching the health of the world's second-largest economy as the Sino-U.S. trade war gets longer and costlier, fuelling worries of a global recession.
RBI to launch a mobile app to identify currency notes for the visually-challenged population
The RBI will soon come out with a mobile app that will read out the denomination of currency notes for the visually-challenged population.

The mobile app will be able to identify the denomination of legal tender banknotes of Mahatma Gandhi Series and Mahatma Gandhi (New) series by scanning the image of the notes with the mobile phone camera.

It can also be used to count notes later on.
AIIB provides $100 million to L&T Finance arm for wind and solar infrastructure projects
Asian Infrastructure Investment Bank (AIIB) provide $100-million loan to L&T(Larsen & Toubro) Infrastructure Finance Company(LTIF) for wind and solar infrastructure projects. This is the first time AIIB is extending loan to a non-banking finance company(NBFC).

It is collaborated with AIIB to explore the international market for green finance.

The project mainly help to increase the supply of renewable energy in India .

It helps to reduce the carbon intensity by 30-35 percent of the 2005 levels by 2030 which was India’s commitment under the Paris agreement.

India set a target to install 175 Gigawatt (GW) of renewable energy capacity by 2022, of which a total of 80.04 GW of renewable energy capacity installed in the country till May 2019.
ADB cut India's GDP growth forecast to 7%
Asian Development Bank lowered India's GDP growth forecast to 7% for the current year on the back of fiscal shortfall concerns.

India is expected to grow by 7% in 2019 (FY20) and 7.2% in 2020 (FY21), slightly slower than projected in April because the fiscal 2018 outturn fell short.

For the south Asian region, the growth is projected at 6.6% in 2019 and 6.7% in 2020.
Bimal Jalan panel proposed nominal transfer of funds
The Bimal Jalan committee has proposed a nominal transfer of surplus to the central government in a phased manner.

The report has proposed a formula for a nominal transfer of a portion of the RBI’s reserves to the central government in a period of three-five years.

This is in line with the current practice being followed by the RBI for transferring dividend annually.
BSE, Haryana govt signed pact
BSE has inked a pact with Haryana government to encourage and support state’s micro, small and medium enterprises (MSMEs) to raise capital.

The Government of Haryana and BSE intend to facilitate SMEs in raising funds through BSE’s dedicated platform for SME’s 'BSE SME'.

By getting listed on the BSE's SME platform, the enterprises will get equity financing.
China allows more foreign investment in financial sector
China has lifted some restrictions on foreign investment in the financial sector.

China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020, a year earlier than originally planned.

The foreign investors will also be encouraged to set up wealth management firms, currency brokerages and pension management companies.

That foreign-owned credit rating agencies will also be allowed to evaluate a greater number of bond and debt types

Beijing has long promised to further open up its economy to foreign business participation and investment.

US President Donald Trump has launched a damaging tariff war in an attempt to force Beijing to further open up its economy and limit what he calls its unfair trade practices.

The US and China have hit each other with punitive tariffs covering more than USD 360 billion in two-way trade.

Donald Trump and Chinese President Xi Jinping agreed to revive fractious trade negotiations when they met on the sidelines of the G20 summit in Japan on 29th June and the top US and Chinese negotiators have held phone talks this month (July, 2019).
Punjab & Sind Bank sets up centralised hub 'Cen-MARG' to process retail and MSME loans
Punjab & Sind Bank set up a centralized hub named "Centralised MSME & Retail Group" (Cen-MARG) for processing retail and Micro, Small and Medium Enterprises (MSME) loans for better efficiency of branches in business acquisition. It is headquartered in New Delhi.

It will ensure qualitative improvement in credit appraisal, improved turnaround time, uniform documentation, and efficient monitoring.

Cen-MARG linked with pan-India branches of the bank in a phased manner.

The bank is main aim to bring about much-enhanced customer satisfaction through this initiative.

The launch of Cen-MARG and retail credit will be performed at the Cen-MARG,

They will help branches focus better on lead generation for retail lending and MSME and enhanced customer service.
Deutsche Bank exits from Equities Business
Deutsche Bank, the German bank, announced that it is to pull out of global equities sales andtrading, scale back investment banking.

The decision of the bank will cut down 18,000 jobs for a global headcount of around 74,000 employees by 2022.

The move comes after the departure of the chief Garth Ritchie by mutual agreement.
Indian government to introduce an Indian sovereign bond to the world
The government has a tentative plan to introduce an Indian sovereign bond to the world. It can be used to mop up at least $10 billion, or about Rs 70,000 crore.

The total sovereign debt at the end of March 2019 stood at $103.8 billion. It was a 3.8% of the GDP.

India external debt to gross domestic product (GDP) is among the lowest globally at less than 5%. This will also have beneficial impact on demand situation for the government securities in domestic market.

The Finance Bill showed that the net borrowing would be Rs.4.73 trillion, and the gross borrowing would be Rs.7.10 trillion. This is same as the interim budget. The bond yields climbed back.
RBI board finalises Utkarsh 2022
RBI board finalised the three-year medium-term strategy - Utkarsh 2022 during its meeting held in New Delhi.

The issues to be discussed were finalised by the committee headed by outgoing Deputy Governor Viral Acharya.

It is a roadmap to improve regulation and supervision, currency management and payment system etc. The board also finalised RBI's budget for July 2019-June 2020.
'Banning of Unregulated Deposit Bill' passed
The Cabinet has approved the banning of Unregulated Deposit Schemes Bill, 2019.

It will replace the banning of Unregulated Deposit Schemes Ordinance, 2019.

The Bill will help tackle the menace of illicit deposit taking activities in the country.

Illicit deposits, at present are exploiting regulatory gaps to dupe poor and gullible people of their hard-earned savings.
Deposits in PMJDY crosses Rs 1 lakh crore
Deposits in bank accounts opened under Jan Dhan scheme have crossed the Rs 1 lakh crore mark.

As per the latest finance ministry data, the total balance in over 36.06 crore Pradhan Mantri Jan Dhan Yojana accounts was at Rs 1,00,495.94 crore as on July 3.

The PMJDY was launched on August 28, 2014, with an aim to provide universal access to banking facilities to the people in the country.
One-time settlement scheme launched
On 1 July 2019, the Uttarakhand government launched a one-time settlement scheme for those who have taken a loan of up to Rs 60 lakh from co-operative banks.

The scheme has been launched to recover co-operative banks' Non-Performing Assets (NPAs)

worth Rs 391.50 crore which has piled up over the last 25 years.

The 100-day scheme will last until 7 October 2019.
Jaipur listed as UNESCO World Heritage Site
On 6 July 2019, Jaipur made an official entry in the list of the UNESCO World Heritage sites.

The decision was taken at the 43rd session of the UNESCO World Heritage Committee.

With Jaipur's inclusion, the number of heritage sites across India that are on the UNESCO World Heritage list has grown to 38, including 30 cultural properties, seven natural properties and one mixed site.
India's 1st Design Development Centre launched
India's first Design Development Center 'Fashionova' was launched in the Textile city Surat.

The aim of the centre is to promote the city in the field of the fashion design sector.

Fashionova has been named in the Start-up scheme of the Government.

The main objective of this studio is to provide a strong platform to all those who have a flair of the apparel business.
India's first highway corridors for e-vehicles
India's first highway corridors with charging stations for electric vehicles are expected to come up along the Delhi-Jaipur and Delhi-Agra highways by 2020.

The e-corridors are proposed to be the first under the Ease of Doing Business Programme (EODB) of the Advance Services for Social and Administrative Reforms (ASSAR).

Eighteen charging stations will be set up on the two routes.
Longest electrified tunnel commissioned
South Central Railway has commissioned the longest electrified tunnel between Cherlopalli and Rapuru stations in Andhra Pradesh.

The length of the tunnel is 6.6 km.

The construction of this tunnel paved the way to operate freight trains on Obulavaripalli - Venkatachalam - Krishnapatnam Port new railway line for a distance of 113 km.
Bank of Baroda to launch e-commerce platform
Bank of Baroda plans to launch an online marketplace to its customers offering banking services and farm-related products.

The state-owned lender has invited bids seeking a partner to supply 'digital commerce platform' to provide assistance to merchants.

The bank will offer various kinds of banking services and farm-related products on its e-commerce platform.
Government to introduce new return system for GST on trial basis today (01 July)
The second anniversary of Goods and Services Tax (GST) will be celebrated on 01 July 2019.

It was launched on the 1st of July, 2017 at a function held in the Central Hall of Parliament on the midnight of 30th June, 2017.

Minister of State for Finance and Corporate Affairs Anurag Thakur will preside over the function to be held in New Delhi to mark the occasion.

A book on GST for MSME will also be released to mark the occasion. Distinguished officers who have put in hard work in the implementation of GST will be awarded GST Commendation Certificates.

The introduction of GST played an important role in the Indian economy as it has replaced multi-layered, complex indirect tax structure with a simple, transparent and technology-driven tax regime.

It has integrated India into a single, common market by breaking barriers to inter-State trade and commerce.

By eliminating cascading of taxes and reducing transaction costs, it will enhance ease of doing business and provide an impetus to the Make in India campaign.

It will introduce the new return system on a trial basis from today and on a mandatory basis from 1st of October.

It has also proposed Sahaj and Sugam returns for small taxpayers. It said, with regards to single cash ledger, the government will rationalize the ledger in such a manner that earlier 20 heads are merged into 5 major heads. There is only one cash ledger for tax, interest, penalty, fee and others.
Fund transfer through RTGS, NEFT set to get cheaper from today (01 July)
Fund transfer through Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems is set to become cheaper after the Reserve Bank of India decided it will not impose any charges on such transactions.

After announcing its decision to waive all charges on fund transfer through RTGS and NEFT systems from 01 July, 2019, RBI has also asked banks to pass on the benefits to customers from the same day.

The transaction cost comprises two components-RBI’s charges plus banks’ services charges based on the infrastructure cost they incur.

While the share of RBI’s levy goes away, bank charges would continue to exist.

The Real-Time Gross Settlement system is meant for large-value instantaneous fund transfers, while the National Electronic Funds Transfer system is used for fund transfers of up to 2 lakh rupees.

According to Indian Banks' Association Chairman Sunil Mehta, with a view to push the digital transaction, the RBI has decided not to charge on RTGS and NEFT transactions. He stated that the move will help banks reduce the fees from customers for these transactions.
SBI, NIIF signs pact
The State Bank of India has signed a memorandum of understanding with National Investment and Infrastructure Fund to boost availability of capital for infrastructure projects.

The scope of the agreement includes equity investments, project funding, bond financing,renewable energy support and take-out finance for operating assets.

Rajnish Kumar is the Chairperson of SBI.
Money in Swiss banks: India slips to 74 place
According to the annual banking statistics report compelled by the Swiss National Bank, India slipped to 74th place in terms of money with Swiss banks.

United Kingdom remained top in the list of the survey.

The top-ranked countries in the list are the UK is followed by the US, West Indies, France and Hong Kong.
RBI imposed fine on 4 public sector banks
The RBI has imposed penalties ranging between Rs 25-50 lakhs on four banks for violating Know Your Customer (KYC) norms and anti-money laundering standards.

Punjab National Bank, Allahabad Bank, and UCO Bank were fined Rs 50 lakh each while Corporation Bank was fined Rs 25 lakh.

Notices were issued to the banks advising them to show cause as to why penalty should not be imposed.
Tax Treaty to be implemented
India has ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).

It was signed by the Finance Minister at Paris on 7th June 2017 on behalf of India, alongwith representatives of more than 65 countries

The Multilateral Convention/MLI is an outcome of the OECD / G20 Project to tackle Base Erosion and Profit Shifting.
IT returns can now be filed, using either Aadhaar card or Pan card
Infusion of 70 thousand crore rupees in the public sector banks proposed in the budget is aimed at giving impetus to growth.

The role of banking is important in making the country a 5 trillion dollar economy.

People who do not have PAN, can now file their income tax return, by simply quoting their Aadhaar number.

Over 120 crore people have Aadhaar card in the country.
Government started review of Foreign Trade Policy
The Ministry of Commerce and Industry started an exercise to review the current Foreign Trade Policy.

The objective is to boost exports and domestic manufacturing and reduce the trade deficit.

The present Foreign Trade Policy was brought out on 1 April 2015 and is valid for five years, which ends on 31st March 2020.

A mid-term review was held in December 2017 after the introduction of GST.