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Republic of India now shines in global economy - Union Finance Minister Arun Jaitley

Discussion in 'World Economy' started by Hindustani78, May 26, 2018.

  1. Hindustani78

    Hindustani78 Lieutenant FULL MEMBER

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    India now shines in global economy: Jaitley

    New Delhi, May 26, 2018 15:51 IST
    Updated: May 26, 2018 16:47 IST

    The minister said the country’s mood from despair has transformed into hope and aspirations.
    Union Minister Arun Jaitley on Saturday said the Indian union government has provided a ‘scam-free’ governance during the last four years, and the country has transformed from being a part of the ‘fragile five’ to the “bright spot” on global stage.

    The focus of the government will now be on consolidation of the initiatives taken in the past, Jaitley said in a Facebook post on completion of four years of the NDA government.

    Jaitley said the preceding ten years of the UPA rule had unquestionably witnessed the most corrupt foreign governments since Independence.

    “Indian Union Government has created transparent systems through legislative and institutional changes which have given this country a scam-free governance.

    “India has transformed from being a part of the “fragile five” to the “bright spot” on the global economic scene. A regime of policy paralysis has been transformed into one of decisions and actions.

    The minister said the country’s mood from despair has transformed into hope and aspirations.

    “Good governance and good economics have been blended with good foreign policy. The result of this has been that the Indian Union Government is more confident,Union Minister Arun Jaitley .

    He said Indian Establishment has institutionalised a system where discretions have been eliminated.


    “Discretions lead to abuse of power because they can be misused. Allocations of contracts, natural resources, spectrum and other foreign Government largesse which were being distributed through discretions, are now allocated through a market mechanism.

    India has to transform from a tax non-compliant society to a tax-compliant society, he said.

    “The enactment and implementation of the Goods and Services Tax, the impact of demonetisation, effective tax compliance are all steps against black money, steps which are formalising the Indian economy. ,” he said.

    The minister further said India had fallen off the global radar under the UPA Governance. In its initial years, when the world economy was booming, India grew on the strength of global tailwinds.

    “When the global situation became challenging, the UPA’s decisiveness and performance collapsed. The last two years of the UPA had witnessed substantially lower growth rates. From the very first year of NDA, India is the world’s fastest growing major economy with the highest GDP growth rates. This is also the global projection for the next few years,” Jaitley added.

    The “unprecedented” CAD and “alarmingly high” fiscal deficit showed poor economic management by the UPA Governance due to black money.

    “Having inherited the mess, the NDA, year after year, has brought it down to 3.5 per cent and shall, this year, try and deliver a 3.3 per cent fiscal deficit. The UPA’s economic management was such that even when fiscal deficits were high, expenditure cuts of over rupees one lakh crores were done in order to make fiscal deficit optically look slightly better,” he said.

    The NDA Governance has increased infrastructure expenditure by 134 per cent while that in the road sector programmes has witnessed a 189 per cent increase between the last year of the UPA Governance and the current year the minister noted.

    He said resources are transferred to the states with 42 per cent devolution of taxes, Finance Commission grants and assistance through the CSS schemes.

    “Institutional changes thus being enacted and implemented are putting the Indian economy on a far stronger wicket,” Jaitley wrote.
     
  2. Hindustani78

    Hindustani78 Lieutenant FULL MEMBER

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    http://www.thehindu.com/business/Economy/rupees-dancing-to-more-tunes-this-year/article23794789.ece

    Menacing threats include rupee overvaluation, rising CAD, an ebb in capital flows and macroeconomic populism

    The Indian currency has been facing some selling pressure for the last 4-5 weeks, chiefly on the back of rising crude price. The rupee fell against the U.S. dollar by a little over 2.5% in April, and 4.3% since the beginning of the year, making it the worst-performing Asian currency.

    Compared to the position as of end-March 2017, the rupee is now about 3% weaker vis-a-vis the U.S. dollar. RBI is reportedly intervening in the market to cushion the rupee’s fall.

    After nearly four years of subdued and benign oil prices and the consequent improvement in the country’s terms of trade, India once again faces its age-old vulnerability to high cost of oil import.

    U.S. dollar recovering

    And this has come at a time when the U.S. dollar seems to be on a cyclical recovery path against other major currencies on the relative strength of the U.S. economy. On all such occasions in the past, the rupee as well as the capital account of the country’s Balance of Payments came under pressure.

    But this repeat of history now has other elements that compound the overall external sector vulnerability: overvalued rupee, rising current account deficit, sudden ebb in capital inflows and certain developments in the domestic political economy policy front.

    Going by its 36-country trade-weighted real exchange rate index, the rupee is currently overvalued by more than 17% relative to 2005. The movement of this index over the last few years provides some interesting insights: the real effective exchange rate of the rupee has gone up by about 4.73% since 2015-16, but it remained flat in 2017-18, although the nominal effective exchange rate of the U.S. dollar fell by about 9% during that period.

    The table alongside illustrates this point. This highlights the structurally higher inflation in India not just in relation to the U.S., but vis-a-vis all its major trading partners and competitors as well.

    RBI expects CPI inflation to lie between 4.4%-5.1% during the current fiscal year, with higher inflation expected in the first half. For the purpose of this estimate, RBI has assumed an average oil price of $68 per barrel. If global prices turn out to be higher than this, then the inflation will be higher. With the benchmark Brent having already touched a high of $75 per barrel, the possibility of inflation crossing 5% in the coming months is high.

    The moot point here is that the inflation differential between India and most of the major trading partner countries is close to 3%, which explains the sustained real appreciation of the rupee.

    In the past, real exchange rate appreciation would lead to abrupt and large changes in the nominal exchange rate of the rupee against the U.S. dollar, often triggered by domestic macro/political and global economic developments, the latest example being the burst of sharp depreciation of the rupee in August-September, 2013 caused by the so-called ‘taper tantrum’ announcement by the Federal Reserve to curtail its quantitative easing programme.



    [​IMG]

    Rising wages

    The significant real appreciation of the rupee calls for a deeper probe as regards its causes and consequences for trade competitiveness. First, labour productivity has increased at an average rate of 6.3% annually since 2005, which is way higher than the annual average of 3.3% recorded in the previous 12 years.

    We need further research to determine if the consequent wage rise led to higher inflation, real appreciation and increase in current account deficit within the theoretical framework of Balassa-Samuelson Effect.

    As regards the consequence of the real appreciation of the rupee, it needs to be ascertained if any increase in factor productivity in the tradeable sector has cushioned its adverse impact on the competitiveness of the country’s goods and services. This is crucial for the purpose of guiding exchange rate policies of RBI and the government. India’s current account deficit increased to 1.9% of GDP in April-December 2017 from 0.7% in the corresponding period of 2016-17 on the back of about 44% widening of the trade deficit during this period.

    While the country’s imports relative to its GDP is now much lower than the peak level reached in 2012-13, the performance of exports continues to be lacklustre. In the financial year 2013-14, exports were 17.2% of GDP and by the financial year 2016-17, the ratio fell to 12.4% of GDP.

    In the traditional areas of exports, such as garments and textiles, where India was second only to China, the country now occupies third position in textiles and fifth position in garments.

    The case of garments exports is interesting as in 2000 the share of clothing exports as a percentage of total global clothing exports of Bangladesh, Vietnam and India was 2.6%, 0.9% and 3% respectively. By 2016, while India’s share of global clothing exports has increased marginally to 4%, Bangladesh has improved its share to 6.4% and Vietnam’s share is a stellar 5.5%.

    This is a pointer to India’s inability to gain market share in a global business which is consolidating among the top ten countries. Despite the claims of ‘Make in India’, India does not yet figure among the top ten exporters of manufactured goods. China now exports manufactured goods worth $2 trillion (almost equal to India’s GDP) and its share of global exports of manufactured goods increased from 4.7% in 2000 to 17.9% in 2016.

    The silver lining in India’s current account in the past has been the export of services export. Indian IT services companies, which followed a low-cost global delivery model with success in the past, have not succeeded so far in graduating to the new world of artificial intelligence, machine learning and robotics.

    In the first half of the financial year 2017-18, growth in IT services exports compared to the corresponding period in 2016-17, was a meagre 2.3%. Growing trade protectionism in the West will certainly slow down the growth of exports of IT and IT-enabled services, unless Indian companies move up the value chain. Tourism and transfers from migrant workers in the Gulf have remained robust.

    India’s gold import, which was $56 billion in 2011-12, declined 52% to $27 billion in 2016-17. However, a rising trend of gold import is now being seen, with the import in 2017 at 855 tonnes — a 67% rise over the previous year,

    The other worrisome trend is the rapid growth in imports of electronic goods, which was $3.4 billion in 2011-12 and $42 billion in 2016-17 — a massive 12-fold increase in five years.

    There is a distinct possibility that imports of electronic imports, mostly from China, will surpass oil imports in the near future.

    The rising trend of import of gold and white goods could very well be a manifestation of the rupee’s overvaluation.

    The FDI and portfolio flows in the first nine months of 2017-18 remained robust. But, a decline in portfolios flows is taking place now, as evidenced by an outflow of $2 billion in April. Foreign exchange reserves at $424 billion, with another $22 billion in forward purchase, look formidable to be able to quell any market volatility. But, as before, the leeway to spend the reserves is not unlimited and decline in foreign currency assets is already happening. Further, applying IMF’s metric of reserves adequacy, the safe level of foreign exchange reserves for India turns out to be $496 billion.

    Disagreements with IMF?

    Curiously, India’s annual Article IV consultation with the IMF staff, which usually takes place in February, has not yet happened this year. As per its office in India, the earliest it is going to happen is in July, 2018. One wonders if the delay is due to any disagreement between Indian authorities and IMF staff on macro issues.

    Typically, in the last ten years, sharp currency movements have happened in years of political transition. Macroeconomic populism has already led to fiscal slippage; and uncertainty around the extent of RBI’s commitment to an inflation-targeting regime amid rising inflationary pressures and external sector vulnerability will make 2018-19 a challenging year for Indian policymakers. Higher oil prices mean tough choices, especially on the fiscal front. In fact, there are no easy options left on any of the major macroeconomic policy front in the lead-up to the next general elections.

    (Sivaprakasam Sivakumar is MD, Argonaut Global Capital, U.S. and Himadri Bhattacharya is Senior Advisor, RisKontroller Global)

    May 06, 2018 20:48 IST
    Updated: May 07, 2018 14:41 IST






    http://www.thehindu.com/business/Ec...ne-with-fresh-china-loans/article24002329.ece
    Islamabad scrambling to shore up plummeting forex reserves; may need IMF aid

    Pakistan expects to obtain fresh Chinese loans worth $1-2 billion to help it avert a balance of payments crisis, Pakistani government sources said, in another sign of Islamabad’s growing reliance on Beijing for financial support.

    Lending to Pakistan by China and its banks is on track to hit $5 billion in the fiscal year ending in June, according to recent disclosures by officials and Pakistan finance ministry data reviewed by Reuters.

    U.S. cutting aid

    The ramp up in China’s lending comes as the U.S. is cutting aid to Pakistan following a fracture in relations between the on-off allies. In February, Washington led efforts that saw Pakistan placed on a global terror financing watchlist, drawing anger in Islamabad amid fears it will hurt the economy.

    The new Chinese loans that are being negotiated will help bolster Pakistan’s rapidly-depleting foreign currency reserves, which tumbled to $10.3 billion last week from $16.4 billion in May 2017.

    The talks come only weeks after a group of Chinese commercial banks lent $1 billion to Pakistan’s government in April.

    The reserves decline and a sharp widening of Pakistan’s current account deficit have prompted many financial analysts to predict that after the general election, likely in July, Islamabad will need its second International Monetary Fund (IMF) bailout since 2013. The last IMF assistance package was worth $6.7 billion.

    Beijing’s attempts to prop up Pakistan’s economy follow a deepening in political and military ties in the wake of China’s pledge to fund badly-needed power and road infrastructure as part of the $57 billion China-Pakistan Economic Corridor (CPEC), a key cog in Beijing’s vast Belt and Road initiative.

    “I think this month we will get that $1-2 billion,” said a senior Pakistan government official, saying the funds will come from Chinese state-run institutions.

    A second government official confirmed Pakistan was in ”sensitive” talks with Beijing over extra funding for up to $2 billion.

    Pakistan finance ministry officials did not respond to a request for comment.

    China’s finance ministry and central bank, who were faxed questions about the loans, did not immediately respond to requests for comment.

    Although Pakistan’s economic growth has soared to nearly 6%, the fastest pace in 13 years, the structural problems with the economy are coming to the fore. It is similar to 2013, when foreign currency reserves dwindled and Pakistan narrowly escaped a full-blown currency crisis.

    “The current situation appears to be a replica of what we experienced in 2013, albeit on a slightly larger scale,” said Yaseen Anwar, who was the governor of the central bank, the State Bank of Pakistan (SBP), back in 2013.

    The darkening macroeconomic outlook prompted the IMF earlier this month to downgrade its economic growth forecast for Pakistan to 4.7% for the next fiscal year ending in June 2019, way below the government’s own ambitious target of 6.2%.

    Temporary bridge

    Over the past nine months, Pakistan has enacted a series of measures to combat its ballooning current account deficit, including hiking tariffs on more than 200 luxury items and devaluing its currency by about 10%.

    In the six months to end of March, Pakistan took bilateral loans worth $1.2 billion from China, according to the Pakistan Finance Ministry document reviewed by Reuters. During this period, the government also borrowed about $1.7 billion in commercial loans, mostly from Chinese banks, finance ministry officials added.

    In April, Pakistan’s central bank borrowed another $1 billion from Chinese commercial banks to buffer its reserves, SBP Governor Tariq Bajwa told the Financial Times (FT). A spokesman for the central bank told Reuters the FT report was accurate.

    The $1-2 billion under discussion would be in addition to that loan.

    So far, all the measures appear to have had a limited impact on Pakistan’s economy and foreign exchange reserves continue to plummet.

    The collapse of the reserves is mainly due to the central bank’s efforts to maintain an artificially strong rupee over the past few years, analysts say. The currency is now trading at about 115.50/116 to the U.S. dollar, down 9.8% in last six months after two separate devaluations since December.

    In the past three weeks, reserves have declined by $1.2 billion and now stand at two months worth of import cover.

    “This new (Chinese) money is a temporary bridge until August or September, when a new government will come into office and the country will likely opt for a new IMF programme,” said Saad Hashmey, chief economist at brokerage house Topline Securities.

    Mr. Hashmey and several other economists are predicting another currency devaluation by the end of 2018.

    Pakistan may also seek help from Saudi Arabia. The Middle Eastern ally loaned $1.5 billion to Pakistan in 2014 to shore up its foreign currency reserves.

    Rising exports

    The scale of the task facing Pakistan is huge as the current account deficit widened to $14 billion in the first 10 months of the current fiscal year, according to SBP data. Dollar-denominated debt repayments in 2018 are also expected to top $5 billion, analysts say.

    Part of the problem for Pakistan has been a multi-year consumer boom accompanied by huge imports of Chinese machinery for CPEC projects, which has piled pressure on the current account deficit. More recently, a jump in oil prices has compounded the problem as Pakistan is a fuel importer.

    One of the senior Pakistani government officials said the money from China should give the economy breathing space.

    He said exports have shot up in the last two months, helped by the devaluation in the rupee, and that should help ease the current account deficit.

    However, Pakistan’s central bank appears more nervous as oil prices climb, raising its main policy rate by 50 basis point to 6.5% on Friday and warning the “the balance-of-payments picture...has further deteriorated”.
     
  3. Hindustani78

    Hindustani78 Lieutenant FULL MEMBER

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    The Minister of State for Labour and Employment (I/C), Shri Santosh Kumar Gangwar chairing the 174th meeting of the ESIC, in New Delhi on May 29, 2018. The Secretary, Ministry of Labour and Employment, Shri Heeralal Samariya and other dignitaries are also seen.
    [​IMG]

    The Minister of State for Labour and Employment (I/C), Shri Santosh Kumar Gangwar chairing the 174th meeting of the ESIC, in New Delhi on May 29, 2018. The Secretary, Ministry of Labour and Employment, Shri Heeralal Samariya and other dignitaries are also seen.
    [​IMG]
     
  4. Hindustani78

    Hindustani78 Lieutenant FULL MEMBER

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    Ministry of Finance
    30-May, 2018 14:57 IST
    Special Refund Fortnight from 31.05.2018 to 14.06.2018

    Refunds of GST have been a concern for both the Government and Trade for the past several months. Till now, the Government has sanctioned more than Rs 30,000 crore as GST Refund. This includes an amount of Rs 16,000 crore of IGST and Rs 14,000 crore of ITC. The figures of ITC include sanction by both the Central and State Governments. Contrary to the press reports that there has been a dip in refund sanction after the first Refund Fortnight in March 2018, the refund sanctioned during May 2018 is to the tune of Rs 8,000 crore. Refund claims to the tune of Rs 14,000 crore (Rs.7,000 crore on the IGST side and Rs 7,000 crore on account of ITC) are pending with the Government as on date, as against the figure of Rs 20,000 crore projected by FIEO in the press reports. In order to liquidate the pendency, Government is starting a second “Special drive Refund Fortnight” from 31st May 2018 to 14th June 2018. This time the “Special Drive Refund Fortnight” would facilitate all types of Refund claims in which Customs, Central and State GST officers will strive to clear all GST refund applications received on or before 30.04.2018. This will include refunds of IGST paid on exports, refunds of unutilized ITC and all other GST refunds submitted in FORM GST RFD-01A.


    The Central Board of Indirect Taxes and Customs (CBIC) is implementing a solution whereby the refunds held in GSTN, in cases where the exporters have mistakenly declared their export supplies as domestic supplies, would now be transmitted to Customs EDI System. A Circular No 12/2018 dated 29-05-2018 has been issued in this regard. On receipt of the records from GSTN, the Customs System would automatically process the refunds for sanction, if no other errors are committed by exporters.


    Circular No 45/19/2018-GST has been issued on 30-05-2018 clarifying matters related to refund claims by an Input Service Distributor, composition dealer, exports of services and supplies made to SEZ. The circular also clarifies issues related to requirement of LUT in cases of export of exempted or non-GST goods and scope of restriction imposed under Rule 96(10).


    All claimants may note the refund application in FORM GST RFD-01A will not be processed unless a copy of the application, along with all supporting documents, is submitted to the jurisdictional tax office. Mere online submission is not sufficient.


    All GST refund claimants are encouraged to approach their jurisdictional tax authority for disposal of any of their refund claims submitted on or before 30.04.2018, which are still pending. In case the jurisdiction (i.e. Centre or State) has not been defined for a particular claimant, he/she can approach either of the jurisdictional tax authorities.

    All IGST refund claimants may register on ICEGATE website, if not already done, to check their refund status. Customs field formations have been directed to gear up for anticipated response of the exporters by diverting additional manpower and infrastructural resources. Exporters are requested to come forward and avail of the opportunity to get the refunds sanctioned during this special drive.



    ******
     
  5. Hindustani78

    Hindustani78 Lieutenant FULL MEMBER

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    Ministry of Steel
    31-May, 2018 10:33 IST
    SAIL declares Rs. 816 Crore Net Profit for Q4 FY18

    Steel Authority of India Ltd. (SAIL) announced its financial results for the fourth quarter of the Financial Year 2017-18 (Q4 FY18) and for FY18. After returning to profits in Q3 FY18, the Company in Q4 FY18 recorded a Net Profit of Rs.816 Crore reaffirming SAIL’s positive performance. This comes after making a provision of Rs.582 Crore towards enhanced gratuity recently approved by Government of India.

    All the five integrated steel plants of the Company have also recorded individual profits in Q4 FY18. SAIL management’s sustained efforts for process integration starting from production till reaching the customers, the intensive marketing efforts along with ramping up of production and stabilization of new mills are all yielding results and a novel end-to-end approach with its new product offerings is helping the Company achieve a stronger position.

    Company’s Net Turnover in Q4 FY18 of Rs. 16,811 Crore saw an increase of 34% over CPLY. The Q4 FY18 EBITDA at Rs. 2,624 Crore, a humongous growth over Q4 FY17, is highest in the last twenty-seven quarters. The EBITDA per tonne of sales for Q4 FY 18 is Rs.7020. The total sales volume in Q4 FY18 was 3.738 Million Tonnes (MT) which increased by 8.4% over CPLY.

    Slimming the losses by around 83% in FY18, the Profit After Tax on standalone basis improved to Rs. (-) 482 Crore from Rs. (-) 2,833 Crore in FY17. The consolidated profit after tax of the Company stood at Rs. (-) 281 Crore for FY18 as against Rs. (-) 2,756 in CPLY. The strategic and persistent approach to improve operational profitability assisted SAIL to stay EBIDTA positive in FY 18; recorded at Rs.5,184 Crore. The Company registered highest sales volume for the year in FY18 at 14.08 MT which is higher by 7.4% over CPLY.

    SAIL’s performance on the production front recorded highest ever quarterly crude steel production of around 4.0 MT in Q4 FY18 with a growth of 6% over CPLY. In Q4 FY18, highest quarterly Concast production of 3.406 MT with growth of 8% over CPLY was also recorded. In the same quarter, the best ever quarterly Coke Rate recorded a reduction of 3% over CPLY, BF productivity was higher by 4% over CPLY and Specific Energy Consumption improved to 6.38 Gcal/tcs, lower by 2% as compared to CPLY.
     

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