November 2019 Economic Affairs

Sakshi Education

Fifteenth Finance Commission Chairman N K Singh calls for major changes in GST structure
The 15th Finance Commission Chairman N K Singh for significant changes in the GST structure, including reducing the complicated procedures with frequent rate changes, to improve collection.

He pitched for rationalization of Centrally- sponsored schemes. Ther commission has visited nearly all the states in the run-up to the preparation of its report and that many of them have complained that GST has circumscribed the fiscal autonomy.
Saudi Arabia, UAE plans refinery in Maharashtra
The United Arab Emirates and Saudi Arabia is planning to set up a refinery in Maharashtra, India.

The minimum estimated cost to set up the refinery is $70 billion. It exceeds the initial $44 billion estimate that was previously announced.

The meeting was held between the Saudi Crown Prince Mohammed bin Salman and Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan.
Refinery in Maharashtra:
The initiative was first announced in 2018. The aim is to develop the petrochemicals complex and refinery which would secure the supply of 600,000 barrels per day of Saudi and Emirati crude oil for India's market.

It has been decided that the project would be run by a consortium that includes Saudi Aramco and Abu Dhabi National Oil Company (ADNOC).
Hallmarking to be mandatory for gold jewellery from 2021: Ram Vilas Paswan
Hallmarking for Gold jewellery and artefacts will be mandatory from 15th January 2021.Consumer Affairs Minister Ram Vilas Paswan said, notification in this regard will be issued by 15 of January, 2020, giving a period of one year for implementation. He said, Jewellers and Retailers will get one year time for clearing their old or existing stock. Mr Paswan said, more than 26 thousand jewellers have taken the Bureau of Indian Standards, BIS (Hallmarking) registration till now.

Our correspondent reports that if anyone is found violating the set rules after 15th January 2021, they may attract a fine of minimum one lakh rupees or five times the value of the items or a jail term of one year.
Narendra Singh Tomar inaugurates SARAS at IITF 2019 in New Delhi
Union Minister for Rural Development Narendra Singh Tomar inaugurated the SARAS India International Trade Fair at Pragati Maidan in New Delhi.

Empowering rural women through Self-Help Groups is one of the top priorities of the government.

More than seven crore women have joined Self-Help Groups so far and the Ministry is making all efforts to take this number to 10 crore.
SEBI approves stricter disclosure norms for listed companies
The Securities and Exchange Board of India, SEBI, has approved stricter disclosure norms for listed companies.

Accordingly, in case of default in repayment of loans beyond 30 days, listed companies will have to disclose the fact of such default within 24 hours.

Secondly, SEBI has amended Portfolio Managers (PM) Regulations, 2019 following which net worth requirement of portfolio managers has been enhanced from two crore to five crore rupees.

The regulator has informed that existing portfolio managers will have to meet the enhanced requirement within 36 months.

SEBI announced that it has approved a proposal to reduce the overall time taken for a rights issue from 55 days to 31 days.

Besides, SEBI has also extended the Business Responsibility Report requirement to top 1,000 companies, from 500 currently.

This move was taken after a whistle-blower approached the US watchdog, Securities and Exchange Commission with a complaint against IT major Infosys instead of SEBI.

Stating that SEBI is looking into the whistle-blower’s complaint of alleged lapses at Infosys, Mr. Tyagi said the regulator’s approach has always been prudent.
NCAER forecasts India’s GDP growth at 4.9%
The National Council of Applied Economic Research (NCAER) forecasted India’s GDP growth for 2019-20 at 4.9% as against 6.8 % in 2018 (or FY-19).

It is the lowest among the recent forecasts by rating agencies, multilateral institutions, research firms, and government institutions.

Earlier, Moody’s cut its calendar year 2019 GDP forecast for India to 5.6 per cent from 6.2 per cent.
Conclave of Accountants General held
PM Narendra Modi addressed the conclave of Accountants General in New Delhi.

Mr Modi also unveiled a statue of Mahatma Gandhi, before his address.

The theme of the conclave is Transforming Audit and Assurance in a Digital World.

It is being held to consolidate experience and learning and chart out the path of Indian Audit and Accounts Department for the next few years.
Cabinet approves 2019 Taxation Laws Amendment Bill
The PM Narendra Modi-led Union Cabinet approved the proposal for introducing the Taxation Laws (Amendment) Bill, 2019.

The Bill replaces the Ordinance that was promulgated in September 2019. The Ordinance made certain amendments in the Income-Tax (IT) Act 1961 and the Finance (No.2) Act 2019.

The reduction of the rate of corporate income tax by many countries world over necessitated the provision of additional fiscal stimulus to attract investment, generate employment, and boost the economy.

A new provision was inserted in the IT Act to promote growth and investment with effect from the current financial year 2019-20.

Under this provision, an existing domestic company can opt to pay tax at 22% plus surcharge at 10% and cess at 4%, if the firm does not claim any incentive or deduction. The effective tax rate for the companies was reduced to 25.17% and will not be subjected to Minimum Alternate Tax (MAT).

Another provision was inserted in the IT Act to attract fresh investment in manufacturing. It aims to provide a boost to Make in India initiative of the Government.

Under the amendment, a domestic manufacturing company that is set up on or after 1 October 2019 and which commences manufacturing by 31 March 2023 should pay tax at 15%, surcharge at 10%, and cess at 4% if it does not claim any incentive or deduction. The effective rate of tax has been fixed at 17.16% and is not subjected to MAT.

A company that does not opt for the concessional tax regime and avails the tax exemption and incentive shall continue to pay tax at the pre-amended rate.

These companies can avail of the concessional tax regime after the expiry of their tax holiday and exemption period. After the exercise, these companies shall be liable to pay tax at the rate of 22%.

The rate of MAT was reduced from existing 18.5% to 15%.
IOCL gets environmental clearance to set up 2G ethanol plant in Panipat
Furthering government's commitment in promoting the use of environmentally friendly products, Ministry of Environment, Forest and Climate Change has given environment clearance to Indian Oil Corporation Limited to set up new 2G Ethanol plant at Panipat.

Minister of Environment, Forest & Climate Change Prakash Javadekar announced this on 10 November, 2019.

This project not only promotes use of environmentally friendly fuel but also aids in fulfilment of government's goal of doubling farmers’ income.

Mr Javadekar added that Ministry has revised the Environmental Standards for Tanneries, Iron & Steel Industries and Coffee industries after due stakeholder consultations and expert advice.

The new Standards aim at commitment of government to ensure clean and green environment.
Income Tax Department busts Rs 3300 crore hawala racket
Income Tax Department has busted a major racket of bogus billing and hawala transactions worth 3300 crore rupees.

The Department carried out searches in the first week of this month on a group of persons indulging in issuing bogus bills and carrying on hawala transactions.

The search operations covered 42 premises across Delhi, Mumbai, Hyderabad, Pune, Agra and Goa.

The search operations resulted in busting of a major racket of cash generation by leading corporate houses in the infrastructure sector through bogus bills.

The CBDT in a statement said, funds meant for public infrastructure projects were siphoned off through entry operators, lobbyists and hawala dealers.

The projects involved in bogus billings are a major infrastructure and EWS projects located in Southern India. Evidence of cash payment of more than 150 crore rupees to a prominent person in Andhra Pradesh has also been unearthed during the search.

The search action was successful in unearthing incriminating evidence and establishing the nexus between big corporates, hawala operators and identification of an entire chain of delivery.
Banks cannot charge on NEFT from Jan 2020
From January 2020, banks can no longer charge savings bank account holders for online transactions in the NEFT system.

The Reserve Bank of India (RBI) has now mandated banks to do this. NEFT is a payment system facilitating funds transfers from one bank account to another.

One can access this service either by using Internet banking or by visiting the bank branch.
India becomes most favoured destination for energy investments: Dharmendra Pradhan
In the last 5-6 years, India has become the most favoured destination for energy investments.

India received 286 US dollars billion FDI in the last 5 years. This is almost half of the total FDI in India in the last 20 years.

Addressing the investors in Abu Dhabi at the roadshow organized by the Directorate General of Hydrocarbons (DGH) to promote India as a favorable investment destination in the oil and gas sector,India is among the top 10 FDI destinations in the world.

India presently being the 3rd largest energy consumer in the world is poised to drive the global energy demand in the coming decades.

The oil and gas industry will continue to play a crucial role in meeting India’s energy requirement despite system-wide energy transition measures.

That oil demand is projected to rise at the fastest pace in the world and is expected to reach 10 million barrels per day by 2030.
39th India International Trade Fair began
39th India International Trade Fair will begin today at Pragati Maidan in New Delhi. The fair will be inaugurated by Union Minister of Micro, Small and Medium Enterprises Nitin Gadkari. First five days will be reserved for business and the Fair will be open to the general public from the 19th of this month. People can visit the Fair from 9:30 AM to 7:30 PM.

Several countries, including Australia, Iran, the UK, Vietnam, Bahrain, Bangladesh, Bhutan, China, Egypt, Hong Kong, Indonesia are participating in the 14-day Trade Fair.

What is the theme India International Trade Fair?
Ease of Doing Business

Which country is given the status of 'Partner Country' in this fair?
Afghanistan, and South Korea will be the Focus Country.

Which states are focus states in this fair?
Bihar and Jharkhand will be the focus states.
Retail inflation jumps to 4.62 per cent in Oct on higher food prices
Retail inflation surged to 4.62 per cent in October this year mainly on account of higher food prices.

According to government data released, the inflation in the food basket spiked to 7.89 per cent in October this year as against 5.11 per cent the preceding month.

The inflation based on the Consumer Price Index (CPI) was 3.99 per cent in September and 3.38 per cent in October last year.

The Reserve Bank mainly factors in the CPI-based inflation to arrive at its bi-monthly monetary policy.

The RBI has been asked to keep the retail inflation at around four per cent.
UP govt to felicitate GST payers
Uttar Pradesh government will felicitate the top ten GST payers in each district and at the state level.

Government has also decided to provide insurance of 10 lakh rupees to the registered GST payers in state and very soon there will be provision of pension for them.

State's Target of GST collection this financial year is around 77640 crore rupees.
China's economy shows further signs of strain
China's economy showed further signs of strain on 14 November, 2019. Data showed a sharp slowdown in consumer spending and factory production, while investment growth also hit a record low following the trade war with the US.

Beijing is battling a tariffs row with the United States, as well as a weak global outlook. At the same time, it is trying to control a high level of debt at home.

A National Bureau of Statistics official warned China was facing a "complex international economic situation" with downward pressure on the domestic economy.

Analysts also warned of more headwinds for the world's number two economy. China expanded six per cent in the third quarter, its worst reading in almost three decades.

Authorities have unveiled a series of measures to kickstart growth including major tax and rate cuts, and scrapping foreign investment restrictions in its stock market.
Wholesale inflation eases to 0.16 per cent in October
Wholesale prices based inflation eased further to 0.16 per cent in October, as against 0.33 per cent in September.

Government data showed subdued prices of non-food articles and fall in prices of manufactured items.

Annual inflation, based on monthly wholesale price index (WPI), was at 5.54 per cent in October, 2018.

For manufactured products, the wholesale inflation was at (-)0.84 per cent in October 2019.

However, retail inflation for the month hit a 16-month high of 4.62 per cent due to soaring prices of food articles, including fruits and vegetables.
FM Nirmala Sitharaman holds meeting to ease process of filling GST forms
Finance Minister Nirmala Sitharaman has chaired a meeting on simplification of GST forms and returns.

As a part of the ongoing efforts to address the concern raised on the process of filing GST forms, Mrs Sitharaman met Rajasthan Tax Consultants' Association, the Institute of Chartered Accountants of India, Confederation Of All India Traders and Laghu Udyog Bharti in New Delhi.

The aim of the exercise was to further simplify GST forms and make the filling process more user-friendly.

The Finance Minister directed that extensive nation-wide consultations should be held on the new GST return system to be launched from the next financial year.
Saudi Aramco to float initial public offering
Saudi Aramco, world’s largest integrated oil and gas company, will float initial public offering (IPO). Saudi Arabia’s Aramco is considered one of the world’s most profitable oil producing enterprise.

It has decided to sell an unspecified percentage of its shares on the Saudi stock exchange, the Tadawul.

Trading is expected to begin next month, although it did not specify a date.

President of the Board of Directors Yasir bin Othman Al-Rumayyan expressed happiness that Aramco obtained the approval of the Capital Market Authority to float its shares with initial public offering.
RBI issues compensation norms for foreign, private banks
The Reserve Bank of India has issued compensation guidelines for whole-time directors and chief executives of foreign, private, small finance, payments banks and local area banks, mandating the cash component of variable pay at 67 per cent.

If the variable pay is up to 200 per cent of the fixed pay, at least 50 percent of it should be in non-cash. If the variable pay is above 200 per cent, 67 per cent of it should be paid via non-cash instruments.

The RBI said that banks should continue to formulate and adopt a comprehensive compensation policy covering all their employees and conduct annual reviews. It added that the new guidelines will be effective from April, 2020.

Foreign banks operating under the branch mode will have to continue to submit a declaration to RBI annually from their head offices confirming that the compensation structure of those working in the country are in conformity with principles and standards set by the Financial Stability Board.
Finance Minister launches IT initiatives ICEDASH, ATITHI for improved customs clearance
Finance Minister Nirmala Sitharaman on 04 November, 2019 unveiled two new IT Initiatives - ICEDASH and ATITHI for improved monitoring and pace of customs clearance of imported goods and facilitating arriving international passengers.

ICEDASH is an Ease of Doing Business monitoring dashboard of the Indian Customs helping the public see the daily Customs clearance times of import cargo at various ports and airports.

The ATITHI app will facilitate hassle-free and faster clearance by Customs at the airports and enhance the experience of international tourists and other visitors at the airports.

Speaking on the occasion, Ms Sitharaman expressed hope that both these initiatives will be key drivers for further improvement especially as they reduce interface and increase the transparency of Customs functioning. She said that ATITHI will create a tech-savvy image of India Customs and would encourage tourism and business travel to India.
Government working with Reserve Bank to resolve the issues being faced by realty sector: Nirmala Sitharaman
The government and Reserve Bank are working to resolve the issues being faced by realty sector, said Nirmala Sitharaman.

At a special NSE event in Mumbai, she admitted that the realty sector has been left out of the booster measures announced earlier.

Many funds are ready to invest but want more policy support, she said.

The special event was organized in Mumbai to mark the Silver Jubilee of National Stock Exchange.
Steel consumption in India set for quantum jump: Dharmendra Pradhan
Union Minister for Steel Dharmendra Pradhan on 06 November, 2019 said that India’s economic growth will be driven by heavy investment in infrastructure, digital economy and job creation in small and medium firms.

There is a strong positive correlation between steel usage and a nation’s economic growth. He said, the government has been making concerted efforts to make India an attractive investment destination for businesses by providing investment-friendly governance.

The Minister added that India is on a steady path to become a five trillion dollar economy, with emphasis on both the ease of doing business as well as on ease of living.

Structural reforms in the areas of insolvency and bankruptcy, indirect tax structure and recent major reduction in corporate taxation are aimed to boost investment and growth.

70 per cent of total chrome produced is used in production of stainless steel. He said, steel consumption in the country is set for a quantum jump.
Documentation Identification Number (DIN) System of CBIC comes into existence from today (08th November)
The Documentation Identification Number (DIN) system of Central Board of Indirect Taxes (CBIC) will come into existence from today (08 November, 2019).

This path breaking system in indirect tax administration has been created as per the direction of Finance Minister Nirmala Sitharaman.

Now, any CBIC communication will have to have a Documentation Identification Number.

The step is aimed at bringing transparency and accountability in the indirect tax administration through widespread use of information technology.

The Government has already executed the DIN system in the direct tax administration.

The DIN would be used for search authorisation, summons, arrest memo, inspection notices and letters issued in the course of any enquiry.

Any communication from GST or Custom or Central Excise department without a computer-generated DIN, would be treated as invalid and shall be non-est in law or deemed to be as if it has never been issued.

It will provide the taxpayer a digital facility to verify any communications.
Fundamentals of economy quite robust, says government after Moody’s lowers outlook
The fundamentals of the economy remain quite robust with inflation under check and bond yields low. It said, India continues to offer strong prospects of growth in near and medium term.

The Government of India has noted that the Moody’s Investors Service has changed the outlook on India’s ratings to negative from stable while keeping the foreign-currency and local-currency long-term issuers rating unchanged.

India continues to be among the fastest growing major economies in the world and its relative standing remains unaffected.

IMF in their latest World Economic Outlook has stated that Indian Economy is set to grow at 6.1% in 2019, picking up to 7 % in 2020.

As India’s potential growth rate remains unchanged, assessment by IMF and other multilateral organizations continue to underline a positive outlook on India.

The Government has undertaken series of financial sector and other reforms to strengthen the economy as a whole. Government of India has also proactively taken policy decisions in response to the global slowdown. These measures would lead to a positive outlook on India and would attract capital flows and stimulate investments.
GeM partnered with Central Bank of India
Government e-Marketplace (GeM) signed MoU with Central Bank of India.

Through this partnership, Central Bank of India will be able to offer an array of services including transfer of funds through GeM Pool Accounts (GPA), etc. to the registered users on the portal.

GeM has already signed MoU with 18 Public Sector and Private Banks to enable this.
RBI imposes Rs 5 lakh fine on Oxigen Services
The RBI has imposed a fine of Rs 5 lakh on prepaid payment instrument Oxigen Services.

The move was taken in exercise of powers vested under Section 30 of the Payment and Settlement Systems Act, 2007, for non- compliance of regulatory guidelines.

The fine comes through a speaking order dated September 17, 2019.

Oxigen Services facilitates payment processing and money transfer services.
Asian Development Bank (ADB) approved $ 300 million for power transmission expansion in Bangladesh
The Asian Development Bank (ADB) approved a 300 million dollar loan for a project to expand power transmission lines in Greater Dhaka and the western zone of Bangladesh.

The Asian Infrastructure Investment Bank has 200 million dollars in co-financing to fund transmission lines, substations, and an enterprise resource planning system. The assistance also comprises a 750,000 dollar grant from China's Poverty Reduction and Regional Cooperation Fund.

The project construct 40 km of transmission lines and 4,450 megavolt-ampere (MVA) of substations in Greater Dhaka as well as 368 km of transmission lines, 3,070 MVA of substations and 20 bay extensions in the western zone.

It will also establish an enterprise resource planning system, a drone inspection centre to improve operational efficiency and enhance workspace safety in the executing agency, the Power Grid Company of Bangladesh Ltd.

The government and executing agency will contribute 249 million dollars equivalent toward the 750 million dollars total cost of the project which is due for completion by June 2024.