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Centre not considering farm loan waiver: Arun Jaitley

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Centre not considering farm loan waiver: Arun Jaitley

Posted on 20 June 2017 by GGS News

New Delhi : The Centre is not considering any proposal for farm loan waiver, Finance Minister Arun Jaitley said on Tuesday, a day after Punjab approved waiving of loans for nearly 10 lakh farmers in the state.

“There is no such proposal. We have got FRBM Act and fiscal deficit target, we intend adhering to it,” he said here.

In Union Budget 2017-18, the fiscal deficit has been pegged at 3.2 per cent, lower than 3.5 per cent in the last financial year.

The Fiscal Responsibility and Budget Management (FRBM) committee, headed by former revenue secretary N K Singh, has recommended keeping budgetary deficit at 3 per cent of the GDP in three years to March 2020.

It also suggested progressively reducing it to 2.5 per cent by 2022-23.

Despite a bumper crop this rabi season, farmers in many states are in distress because of sharp fall in prices in both domestic and global market.

Farmers in various parts of the country have been agitating, seeking higher support prices for their produce as well as waiver of loans.

The central government stance assumes significance against the backdrop of farm loan waiver already announced by Maharashtra and Uttar Pradesh even as the country recently witnessed violent protests from farmers in Madhya Pradesh demanding debt relief.

Uttar Pradesh was the first state this year to announce Rs 36,359 crore farm debt waiver for small and marginal farmers.

Punjab yesterday announced total waiver of crop loans up to Rs 2 lakh of small and marginal farmers, and a flat Rs 2 lakh relief for all marginal farmers, irrespective of the loan amount.

Jaitley had stated earlier that the central government will not partake in states’ fiscal leverage in waiving farm loans, and made it clear that the cost has to be borne by the states.

Reserve Bank Governor Urjit Patel has already warned of fiscal situation likely to be going out of hands if states keep doling out funds and may stoke inflationary expectations.

RBI keeps a close tab on retail inflation to decide on its monetary policy tools such as the repo rate – at which it lends to banks.

PTI |

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Centre ropes in Amitabh Bachchan to promote GST

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Centre ropes in Amitabh Bachchan to promote GST

Posted on 19 June 2017 by GGS News

New Delhi : The government has roped in Bollywood megastar Amitabh Bachchan to promote Goods and Services Tax (GST), ahead of the sweeping tax reform’s implementation scheduled from July 1.
The Central Board of Excise and Customs will be making the 74-year-old Bachchan brand ambassador for GST. A 40-second video featuring him has already been shot and is being circulated.
“GST–An initiative to create a unified national market,” the finance ministry said in a tweet, attaching the video.In the video, Bachchan explains GST as a unifying force just like the three colours in the national flag. GST is an initiative to create ‘one nation, one tax, one market’, he says.
The megastar has been roped in just as the rollout of the biggest tax overhaul since Independence entered its final phase.
Ace badminton star PV Sindhu was previously the GST ambassador.
GST will simplify a web of taxes, regulations and border levies by subsuming an array of central and state levies, including excise duty, service tax and VAT.
It is being dubbed as the most significant economic reform since the BJP government came to power in 2014 and is expected to add as much as 2 percentage points to the GDP growth rate.
A four-rate structure that exempts or imposes a low rate of tax 5 per cent on essential items and top rate of 28 per cent on cars and consumer durables has been finalised. The other slabs of tax are 12 and 18 per cent.
GST also represents an unprecedented exercise in fiscal federalism. The GST Council, that brings together the central and state governments, has met 17 times to thrash out how the tax will work.

PTI

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Black money: Switzerland ratifies automatic account info sharing with India

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Black money: Switzerland ratifies automatic account info sharing with India

Posted on 16 June 2017 by GGS News

Berne/New Delhi : Switzerland on Friday ratified automatic exchange of financial account information with India and 40 other jurisdictions to facilitate immediate sharing of details about suspected black money, even as it sought strict adherence to confidentiality and data security.

Adopting the dispatch on introduction of the AEOI, a global convention for automatic information exchange on tax matters, the Swiss Federal Council said the implementation is planned for 2018 and the first set of data should be exchanged in 2019.

The council, which is the top governing body of the European nation, will soon notify the Indian Government about the date on which the automatic exchange would begin.

According to the draft notification approved by the council in its meeting on Friday, the decision is not subject to any referendum, which means there should be no further procedural delay in its implementation.

The issue of black money has been a matter of great debate in India and Switzerland has been long perceived as one of the safest havens for the illicit wealth allegedly stashed abroad by Indians.

Friday’s decision follows hectic parleys between India and Switzerland for introduction of the AEOI (Automatic Exchange of Information) on tax matters under the guidance of G20, OECD and other global organisations.

The council said the proposal to introduce AEOI with India and others “met with widespread approval from the interested parties who voiced their opinions in the consultations”.

“In concrete terms, the AEOI will be activated with each individual state or territory by means of a specific federal decree within the framework of this dispatch,” it added.

The exchange of information itself will be carried out based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information, which is in turn based on the international standard for the exchange of information developed by the Organisation for Economic Co-operation and Development (OECD).

The council said it would prepare a situation report before the first exchange of data, which is planned for autumn 2019.

“In the process, it will be checked whether the states and territories concerned effectively meet the requirements under the standard, especially those concerning confidentiality and data security. “It is important for the Federal Council that a level playing field be created among states and that all major financial centres, in particular, be included. This year, Switzerland has introduced the AEOI with 38 states and territories, including all EU member states, and data will start to be exchanged with them in 2018,” it added.

 PTI |

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Highlights and full text of RBI’s bi-monthly monetary policy

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Highlights and full text of RBI’s bi-monthly monetary policy

Posted on 07 June 2017 by GGS News

New Delhi : The Reserve Bank of India kept the repo rate unchanged at 6.25% in line with the expectations, as the Monetary Policy Committee did not want to take a ‘premature’ action, choosing to wait how inflation behaves later this year. Most experts had expected the RBI to soften its tone and sound less hawkish in its second bi-monthly monetary and credit policy statement for the fiscal year 2017-18, factoring in the reduced fears of inflationary pressures. Experts had also said that there would be no change in the key policy interest rates though, as the central bank could adopt a wait and watch policy to see how inflation plays out when GST, the nation’s biggest tax reform, is implemented from 1 July.
The government, for sure, is rooting for a rate cut to boost falling GDP growth rate, down to 7.1 percent for the Financial Year 2016-17 from 8 percent in the previous fiscal year. Finance Minister Arun Jaitley said earlier this week that based on available indicators such as low inflation, stable oil prices, and lagging growth and investments, the MPC should look to cut policy rates.
Here are live updates in the run-up to the policy:
3.36 pm: Here’s what the RBI said about growth-inflation dynamics which forced its hand to keep the repo rate unchanged and maintain the policy stance at ‘neutral’.
3.31 pm: Stock markets cheer RBI policy decision to keep repo rate unchanged at 6.25%, as was widely expected. Benchmark indices end in green after trading flat for most of the day ahead of the monetary and credit policy statement. BSE Sensex provisionally ends up 0.32% at 31,290.34 points, while NSE Nifty ends up 0.28% at 9,663.9 points.
3.25 pm: RBI’s new CPI inflation projections for the current fiscal year 2017-18 at 2%-3.5% the first half is lower than 4.5% earlier, and at 3.5%-4.5% in the second half is down from 5% earlier.
3.20 pm: RBI Governor Urjit Patel says all MPC members declined the government’s request to meet before the policy. Experts hail MPC’s move to preserve institutional autonomy.
3.12 pm: Stock markets turn marginally positive as RBI keeps repo rate steady. BSE Sensex is trading up 0.27% at 31,274.68 points, while NSE Nifty is up 0.27% at 9,663.6 points.
3.10 pm: RBI Deputy Governor B P Kanungo says it is not fair to say that there is cash shortage on longer term basis. Kanungo says 82.6% of economy has been remonetised as per latest data.
3.04 pm: RBI Governor Urjit Patel says GDP slowdown is more due to fundamental factors that the government and policymakers need to address urgently.
3.01 pm: RBI Governor Urjit Patel says that recent GDP data shows that economy started slowing before demonetisation, adding that new WPI, IIP series present much better picture of economy.
2.59 pm: RBI says effects of demonetisation are sector specific and transient, adding that the GDP estimates attest effects of demonetisation on economy.
2.54 pm: RBI says April inflation surprised on the downside but adds that the reading imparted ‘considerable uncertainty’.
2.52 pm: RBI sees inflation rising to 3.5%-4.5% in the second half of the current financial year 2017-18, and for it to remain in the range of 2%-3.5% in the first half.
2.45 pm: RBI says farm loan waivers have raised risk of slippages, adds that recapitalisation of banks must be stepped up for credit growth. It says farm loan waiver is a path that needs to be tread carefully.
2.42 pm: RBI says GST rollout may not have material impact on inflation.
2.40 pm: RBI says the Monetary Policy Committee is focused on keeping CPI inflation close to 4% on a durable basis keeping in mind output gap. It needs to closely monitor underlying inflation pressure.
2.38 pm: RBI says keen to avoid ‘premature’ action at this stage, as premature action will result in a loss of credibility. The central bank added that it will need to assess if low inflation momentum will endure.
2.35 pm: RBI cuts SLR (statutory liquidity ratio) by 50 bps to 20% with effect from June 24.
2.30 pm: RBI keeps repo rate unchanged at 6.25%. Five of the six Monetary Policy Committee (MPC) members voted for status quo on rates, while 1 was not in favour.
2.15 pm: DBS Bank says RBI’s forward-looking approach may keep it from cutting rates despite receding inflation fears, as the adverse base effect later this year may push inflation back up to about 4%.
1.30 pm: Stock markets trade flat as RBI policy statement, due at 2.30 pm, inches closer. BSE Sensex slips below yesterday’s close, down 3.49 points at 31,187.07 points while Nifty 50 edges down 4.6 points to 9,633.55 points.
1.00 pm: All eyes on RBI’s bi-monthly monetary and credit policy review, where it is expected to keep repo rate steady in favour of watching out for effect of GST’s implementation on inflation, but is also likely to turn more dovish in its statement as risks to inflation have receded.

FE |

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FM: Govt mulling exiting Air India

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FM: Govt mulling exiting Air India

Posted on 28 May 2017 by GGS News

New Delhi : Finance Minister Arun Jaitley on Saturday said the government was considering exiting Air India operations. “There are many private airlines like Jet Airways, IndiGo, GoAir. If 86 per cent of the aviation market can be handled by the private sector, then 100 per cent can also be handled by the private sector,” Jaitley told DD News.National passenger carrier Air India currently has a market share of 14 per cent and a debt of Rs 50,000 crore.
“Its valuation of aircraft will be at Rs 20,000-25,000 crore. The civil aviation ministry is exploring all possibilities,” Jaitley said.

IANS |

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EPFO may reduce PF contributions to 10%

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EPFO may reduce PF contributions to 10%

Posted on 26 May 2017 by GGS News

New Delhi : Trustees of retirement fund body EPFO may approve a proposal tomorrow to reduce the mandatory contributions toward social security schemes run by it to 10 per cent for workers as well as employers.

Presently, employees and employers contribute 12 per cent of basic wages each towards Employees Provident Fund Scheme (EPF), Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI).

The proposal to reduce the contributions by employers and employees to 10 per cent of basic wages, including basic pay and dearness allowance, is listed on the agenda for meeting of the Employees’ Provident Fund Organisation (EPFO) scheduled on May 27 in Pune, a source said.

The source said the labour ministry received several representations stating that the move will leave more money with workers for expenditure and reduce employers liability, which will eventually perk up economy.

However, trade unions have decided to oppose the proposal saying this will dilute these social security schemes.

An EPFO trustee and Bharatiya Mazdoor Sangh leader P J Banasure said, “We will oppose this proposal. This is not in workers interest.”

Another trustee and All India Trade Union Congress Secretary D L Sachdev said, “The reduction of contributions will reduce the benefits for workers by four percentage point. At present employer and employee contribute 24 per of basic wages. This will be reduced to 20 per cent.”

At present the employees’ entire 12 per cent contribution is deposited into his EPF account.

Besides, 3.67 per cent is also contributed to the EPF account by the employer who also contributes 8.33 per cent of basic wages to the EPS account.

That apart, the employer also contributes 0.5 per cent of basic wages towards the EDLI for insurance benefit. Thus the employer eventually contributed 12.5 per of basic wages. —PTI

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US revives two infra projects in Asia to counter China’s OBOR

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US revives two infra projects in Asia to counter China’s OBOR

Posted on 24 May 2017 by GGS News

Washington : The US has revived two major infrastructure projects in South and Southeast Asia in which India would be a vital player, a move that could potentially act as a counter to China’s ambitious One Belt and One Road (OBOR) initiative.The Trump administration has resuscitated the ‘New Silk Road’ initiative, first announced by then Secretary of State Hillary Clinton in July 2011 in a speech in Chennai, and the Indo-Pacific Economic Corridor linking South and Southeast Asia.

A brief outline of the two projects was made available in the administration’s maiden annual budget on Tuesday, which indicated that the ‘New Silk Road’ project would be a public- private initiative in which India would be an important player.

The state department said the budgetary request of its South and Central Asia will support the two initiatives: the New Silk Road (NSR) focused on Afghanistan and its neighbours, and the Indo-Pacific Economic Corridor linking South Asia with Southeast Asia.

This request will be leveraged through side-by-side collaboration with regional countries, other bilateral donors, multilateral development banks, and the private sector.

It said “the importance of…the NSR grows” as the transition in Afghanistan continues and the US “strives to help the Afghan people succeed and stand on their own.” The state department said it will deepen support for the objectives through “far-reaching” public diplomacy programmes.

According to James McBride of the Council on Foreign Relations, the NSR refers to a suite of joint investment projects and regional trade blocs that have the potential to bring economic growth and stability to Central Asia.

“Following the surge of 30,000 additional troops into Afghanistan in 2009, which President Barack Obama’s administration had hoped would lay the groundwork for complete withdrawal a few years later, Washington began to lay out a strategy for supporting these initiatives through diplomatic means,” McBride said.

Announcing her vision for a New Silk Road, Clinton had said in Chennai: “Turkmen gas fields could help meet both Pakistan’s and India’s growing energy needs and provide significant transit revenues for both Afghanistan and Pakistan. Tajik cotton could be turned into Indian linens.

Furniture and fruit from Afghanistan could find its way to the markets of Astana or Mumbai and beyond.”

But the NSR strategy took a back seat during Obama’s second term when John Kerry occupied the Foggy Bottom headquarters of the state department.

Simon Denyer, the China bureau chief of The Washington Post, recently wrote that Clinton’s idea never really got off the ground, and the Obama administration was criticised by experts for responding negatively to China-backed The New Development Bank.

Through the B&R initiative, China aims to link itself with markets in Europe and Africa through Asian countries and the Indian Ocean. India opposes one of the projects under the initiative as it runs through Gilgit and Baltistan in Pakistan-occupied Kashmir.

The $46 billion China-Pakistan Economic Corridor links China’s restive Xinjiang region to the southern Pakistani port Gwadar, built with Chinese funding. The port could potentially be used as a naval outpost for the Chinese military.

 PTI |

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Paytm starts payments bank; offers 4 per cent interest, cashbacks on deposits

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Paytm starts payments bank; offers 4 per cent interest, cashbacks on deposits

Posted on 23 May 2017 by GGS News

New Delhi : Targeting 500 million customers by 2020, digital payments firm Paytm on Tuesday launched its payments bank with 4 per cent interest rate and cashbacks on deposits, zero fees on online transactions and no minimum balance requirement.
Backed by Chinese firm Alibaba and Japanese conglomerate SoftBank, the company has earmarked initial investment of Rs 400 crore to build its banking network over two years.
Paytm is the third entity in the country to launch a payments bank after Airtel and India Post.
“The RBI has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation-building. None of our deposits will be converted into risky assets,” Paytm Payments Bank Chairman Vijay Shekhar Sharma said in a statement.
The company at present has many customers who use its digital wallet. The wallets will be shifted to the payments banks and users will have to comply with ‘know your customer’ (KYC) norms for opening accounts.
The company is setting up KYC centres across India to assist its customers in opening accounts.
“Our ambition is to become India’s most trusted and consumer-friendly bank. Leveraging power of technology, we aim to become the preferred bank for 500 million Indians by 2020.
We will invest over Rs 400 crore over the next two years to build banking network across the country,” Paytm Payments Bank CEO Renu Satti said.
Paytm Payments Bank accounts will initially be available on an invite-only basis. In the first phase, the company will roll out its beta banking app for its employees and associates.
Paytm customers can request an invite through the Paytm Payments Bank website or the Paytm application on Apple’s iOS platform.
“This will be a mobile-first product with first-of-its- kind feature of cashback on deposits. Every customer, to open a Payments Bank account, will get a cashback of Rs 250 as soon they bring deposits of a total of Rs 25,000 in their bank account.
“The account will have zero-balance requirement and every online transaction (such as IMPS, NEFT, RTGS) will be free of charge,” the statement said.
For savings accounts, the company would offer an interest of 4 per cent per annum. The company will also offer current accounts to its millions of merchants.
Paytm plans to roll out 31 branches and 3,000 customer service points of the bank in the first year.
Users will continue to be able to use their Paytm Wallet in the same manner as before, it added.
Paytm will offer virtual Rupay debit cards to customers immediately and physical card on request for withdrawing cash from any ATM in the country.

PTI |

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7th Pay Commission: Central government employees to soon get arrears on higher allowances

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7th Pay Commission: Central government employees to soon get arrears on higher allowances

Posted on 06 May 2017 by GGS News

New Delhi : The Union cabinet on Wednesday approved modifications on pay and pensioner benefits almost a week after the Ashok Lavasa-led Committee on Allowances submitted its review report on the 7th Pay Commission recommendations.

Earlier, in June, 2016, the Cabinet had approved implementation of the recommendations with an additional financial outgo of Rs84,933 crore for 2016-17 (including arrears for 2 months of 2015-16). The 7th Pay Commission recommended a 14.27% hike in basic pay, which was the lowest in 70 years.

The benefit of the proposed modifications will be available with effect from 1 January 2016, i.e., the date of implementation of 7th CPC recommendations. With the increase approved by the Cabinet, the annual pension bill alone of the Central Government is likely to be Rs1,76,071 crore.

Here are the major highlights of the important decisions made by the Cabinet:

■ The modified formulation of pension revision approved by the Cabinet will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs5,031 crore for 2016-17 over and above the expenditure already incurred in revision of pension as per the second formulation based on fitment factor. It will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners.

■ The government has decided to continue with an earlier system of disbursing disability pension and not to go ahead with a new regime recommended by the seventh pay commission. The armed forces personnel were demanding status quo on the percentage-based regime for disability pension and were strongly opposed to the slab-based system conceived by the CPC.

■ The decision which will benefit existing and future Defence pensioners would entail an additional expenditure of approximately Rs. 130 crore per annum.

■ The military personnel were upset as civilian pensioners were to be paid pension according to the earlier percentage system.

■ The government has also agreed in-principle to address three major grievances of the armed forces relating to their salary structure including providing pay protection to those getting promotion from the rank of brigadiers. The current system has certain anomalies and some of those promoted to higher ranks lose on the military service pay.

■ After a meeting of the Union Cabinet, defence minister Arun Jaitley also assured that the government was addressing the demand of extending pay matrix from 24 years to 40 years and carrying out rationalisation of pay Lt Colonels and Colonels.

■ The government also approved modification in recommendations of the seventh CPC relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on recommendations of a high-level panel.

■ The decision will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners. The modified formulation will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs 5,031 crore for 2016-17.

■ The benefit of the proposed modifications will be available with effect from January 1, 2016, the date of implementation of 7th CPC recommendations.

■ With the increase approved by the Cabinet, the annual pension bill alone of the central government is likely to be Rs 1,76,071 crore, the government said.

■ The armed forces felt the new system would result in reduction in the amount of disability pension for existing as well as future retirees compared to percentage-based disability pension.

■ The Ashok Lavasa Committee was set up in view of significant changes recommended by the Seventh Pay Commission in the allowances structure and a large number of representations received in this regard from various staff associations as well as the apprehensions conveyed by various ministries and departments.

■ The Seventh Pay Commission had recommended that of a total of 196 allowances, 52 be abolished altogether and 36 be abolished as separate identities by subsuming them in another allowance.

Live Mint |

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$770 bn black money entered India in 2005-2014: Report

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$770 bn black money entered India in 2005-2014: Report

Posted on 03 May 2017 by GGS News

New Delhi : An estimated US$ 770 billion in black money entered India during 2005-2014, US-based think tank Global Financial Integrity (GFI) has said in its latest report.

Nearly US$ 165 billion in illicit money exited the country during the same period, the global financial watchdog said.

During 2014 alone, about US$ 101 billion black money entered the country while US$ 23 billion exited, the report added.”Illicit financial flows (IFFs) from developing and emerging economies kept pace at nearly US$ one trillion in 2014,” it said.

Titled ‘Illicit Financial Flows to and from Developing Countries: 2005-2014’, the report is the first global study to place equal emphasis on illicit outflows and inflows.

The report said total illicit financial outflow was three per cent (about US$ 165 billion) of India’s total trade of US$ 5500.744 billion between 2005-2014.

The governments should establish public registries of verified beneficial ownership information on all legal entities to check black money, it suggested.

“All banks should know the true beneficial owner(s) of any account in their financial institution,” the report said.

PTI |

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