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Showing posts with label indian economy news. Show all posts
Showing posts with label indian economy news. Show all posts

Friday, May 24, 2019

A new GST for India, more tax breaks for you in Modi 2.024 - economic news of india - world economic news - economics news for students - indian economy news

A new GST for India, more tax breaks for you in Modi 2.024
NEW DELHI: The new government will hit the ground running as it looks to get economic growth back on track by simplifying taxes, easing compliance and spurring demand. A plan to kickstart private investment and stimulate demand has already been drawn up as the incoming administration gets ready to present a full budget in July. Government officials said there is concern that any delays will intensify the current slowdown.“There is no time to be lost,” said one of the officials.The finance ministry and other departments have already prepared measures aimed at stimulating the economy that need to be taken by the new government.India’s economic growth is likely to have slowed to 6.5% in the fourth quarter of FY19 based on the annual forecast of 7% for the full year. A decline in car sales in recent months and a slowdown in the consumer goods sector suggests waning demand amid still-elusive private investment.The first challenge would be to revive demand, said the officials. The budget is likely to be presented in early July and could, as was promised in the interim budget, cut personal taxes to put more money in the hands of the middle class, thus persuading people to spend more and drive up demand.The draft of a new industrial policy is ready for rollout, said the officials.Public Investment PushIt seeks to encourage the Make in India manufacturing initiative as well as the development of industrial infrastructure.Other measures could include a big push to public investment in infrastructure as private sector investment may take time to kick in.Some internal discussions have already taken place within the government on goods and services tax (GST) 2.0. This will include easing compliance, a review of the rate structure to simplify it and a plan to bring items such as petroleum under GST’s ambit. GST four slabs of 5%, 12%, 18% and 28% could be converged to two main rates.Cement continues to be in the highest 28% bracket along with automobiles and rates on these items could be looked at with GST revenues stabilising. The measures also include giving an impetus to exports, which has been a laggard thus far.Another official said the government will build upon what has been achieved so far. Measures for improvement in the ease of doing business and the startup framework have also been drawn up to make it easier for entrepreneurs to set up businesses.
Source: ET

Team Modi likely to have many new faces - economic news of india - world economic news - economics news for students - indian economy news

Team Modi likely to have many new faces
New Delhi:The shape of the council of ministers of the next Narendra Modi government is likely to be different from the outgoing team with some of the old faces either retiring from politics due to health and other factors or being replaced by a younger lot.Despite being a very key and important part of the Modi cabinet, finance minister Arun Jaitley may opt out as he is not in the best of health. If he hangs his boots, railways minister Piyush Goyal, who served as the interim finance minister when Jaitley was undergoing treatment, may step into his shoes. However, other names are also doing the rounds for this post.It is not clear if external affairs minister Sushma Swaraj will want to continue in office as she too is not in the best of health. She will have to become a Rajya Sabha member to become a minister in the new government. BJP chief Amit Shah is likely to join the Modi cabinet in this term. He may become the home minister while Rajnath Singh may move to the defence ministry.Defence minister Nirmala Sitharaman would continue to be a key member of the Modi cabinet due to her work in the outgoing team. She may replace Swaraj. With Smriti Irani defeating Rahul Gandhi in Amethi, her promotion in the cabinet is almost a certainty.Law minister Ravi Shankar Prasad may be moved to a more prominent ministry after his win in Patna Sahib. He was a minister in the Atal Bihari Vajpayee government and became a cabinet minister under Modi. Nitin Gadkari had a number of ministries under him and has the credit of most tangible work being done in those departments. He may continue with the work assigned to him.Minority affairs minister Mukhtar Abbas Naqvi may get a cabinet rank this time. He is the most prominent Muslim face in the Modi team. Dharmendra Pradhan, Prakash Javadekar and Jagat Prakash Nadda are also important leaders in the Modi cabinet and are likely to continue.
Source: ET

So, who lost? It's the economy, stupid - economic news of india - world economic news - economics news for students - indian economy news

So, who lost? It's the economy, stupid
By Chaitanya KalbagNarendra Modi's pulverising victory has wiped out every semblance of opposition in parliament's lower house. The Congress party's humiliation is so total that it will fail to be recognised as the main opposition party in the Lok Sabha for the second time in a row. What does this mean for the economy?The 2019 campaign was distinguished by the near-absence of economic debate and by a submersion in nationalism and slander. Is it possible for voters to ignore economic reality and choose emotional rhetoric? It appears that India's voters still hope that a strong central government will bring them security, and security will subsume well-being. Some Bharatiya Janata Party leaders flipped the argument around that notebandi was an act of whimsical recklessness: demonetization, as much as Balakot, demonstrated decisive leadership, they said; and this is what voters endorsed.If the economy grew by a modest 7.0% in 2018/19, it does not seem to matter. The latest data show GDP growth slowing steadily, from 8 to 7 to 6.6% in the first three quarters, and a predicted 6.4% in the January-March quarter. To be sure, consumption will be boosted in 2019/20 by the ginormous spending on the elections, especially in the south - Jagan Reddy's YSR Congress has erased Chandrababu Naidu and the Telugu Desam party in both the state assembly and parliament with more money as much as a better message. The Election Commission's seizures of cash and contraband nationwide totalled about Rs 3,400 crore, so you can safely assume parties spent at least twenty times that on the mother of all election campaigns.Inflation has started ticking up; private investment continues to languish; industrial production shrank in March for the first time in two years; the current-account deficit is rising, and the trade deficit widened to $96 billion in 2018/19 from $86 billion a year earlier. Farmers' distress is steadily growing, fuelled by low crop prices, and mounting indebtedness. Worst of all, the unemployment rate rose to 7.35% in April, according to the Centre for Monitoring Indian Economy. CMIE Managing Director and CEO Mahesh Vyas said the government will have to spend more, but more strategically. "It will have to run the economy in a more deliberate way, not on auto-pilot," he told me. "Private investment is low because demand is low. Plant-load factors (in electricity generation) are at just 60%, and capacity utilisation in industry is at 75%." Some economists have suggested the government ought to expand the Mahatma Gandhi National Rural Employment Guarantee Scheme to urban areas to generate more jobs. Modi 2.0 will have to create millions of 'quality' jobs - jobs that are secured by contracts and carry with them benefits like health-care and insurance and above all, security. Over the past two years, and especially after the devastation unleashed by demonetization, Prime Minister Modi swerved decisively towards the kind of welfare-state populism that he derided the Congress party for when he was a candidate in 2013-14. The difference now is that he can no longer lean on the misgovernment of the past. The past five years have been his, and he has promised to usher in a New India by 2022. "Together we will build a strong and inclusive India," he promised on Thursday as the results came in.The Economist Intelligence Unit, which predicted a coalition government, said earlier this month that Modi might not accelerate the pace of economic reforms in his second term. "Notably, we do not expect significant progress on the reform of India's notoriously difficult labour laws," it said. Modi also needs to leverage his new mandate to bite the bullet on land acquisition laws. Some reforms will continue to be difficult because the NDA does not have a majority (yet) in the Rajya Sabha, but that is only a matter of time.Interestingly, a recent Pew Research survey said that 68% of Indians polled said the current economic situation is bad. A significant 52% said their rights to express their views in public are not protected, against 24% who said they are. A good 45% of Indians said elected officials do not care about what ordinary people think, against 27% who said they do.The same Pew survey across 27 countries found people were dissatisfied with the way democracy was working in their countries: 60% felt no matter who wins an election, things do not change very much, and 54% thought most politicians were corrupt.However much of a shock this Modi landslide might deliver to India's political system, a 66% voter turnout is a thumping reaffirmation of democracy - and opposition politicians, especially in the Congress party, would have to be brainless lemmings not to effect drastic changes in their party leaderships and goals. There is a long list of things that need to be fixed in the economy. This is the first time since the 1970s that a government has won a strong majority for the second time running. Modi needs to resist the temptation to reach for band-aids, or hyped-up populism. He has been handed a blank cheque for tough decisions that could put India firmly on track for middle-class stability. He must make sure it does not bounce.
Source: ET

Rule to rescind H-1B spouse’s right to work coming in May - economic news of india - world economic news - economics news for students - indian economy news

Rule to rescind H-1B spouse’s right to work coming in May
The Trump administration’s ‘Unified Regulatory Agenda’ unveiled late night on Wednesday has two key takeaways for the Indian diaspora.After a long delay, the US government has stated that it will publish by this month end, a rule that will rescind the right available to certain categories of H-1B spouses to work. This will impact nearly 80,000 plus Indian families, many of whom have a plan B ready – such as migrating to another country or returning home to India, as was covered by TOI in its edition of March 29. The second major take away relates to the strengthening of the H-1B work visa program, by revising the definition of ‘speciality occupation’, so as to obtain the ‘best and brightest workers’. It also includes revising the definition of employment and employer-employee relationship to better protect US workers. In addition, the US Department of Homeland Security (DHS) will propose additional requirements designed to ensure employers pay appropriate wages to H-1B visa holders. These agenda items are largely a repeat of the earlier fall agenda announcements, which was analysed by TOI, in-depth in its edition of October 19.In those cases, where the H-1B holder is on track for a green card, the spouse (who holds an H-4 or dependent visa) can apply for an employment authorisation document (EAD), which is work permit. The draft rule to rescind the EAD program was sent for review to the Office of Management and Budget (OMB) on Feb 21, which has a 90-day time frame to approve it. A case filed by Save Jobs USA against the EAD program is also being heard by a Federal court. Many immigration attorneys are sceptical of the month-end timeline that has been announced. Greg Siskind, the founding partner at Siskind Susser, has tweeted “Doubting that will happen that fast. On the other hand, it is a Memorial Day weekend so a 5 pm release on Friday wouldn't surprise me. It's still got a long way to go (including the court).” Once the draft is made public, comments will be invited within a 30-60 day time frame and litigation cannot be ruled out.An H-1B, is a work visa for professional workers, in ‘speciality occupations’ that normally require a bachelor’s degree or equivalent as a minimum requirement.“The term speciality occupation is defined in the Immigration and Nationality Act, so a definition change cannot be brought about by mere agency regulation,” Rajiv S. Khanna, managing attorney at Immigration.com told TOI.Several lawsuits have been filed by companies or H-1B holders, where an application such as for visa extension or H-1B transfer on change of employment was denied on the ground that the position is not a speciality occupation. “Unfortunately, the definitions of employment and employer-employee relationship are not provided in the statute. That definition can be tinkered with. But to what degree it can be redefined remains to be seen,” he adds.Siskind views that a change in the employee-employer definition will target Indian staffing companies, it could also impact larger IT consultancy companies that place their H-1B employees at third-party client sites.“The US government does have more latitude in trying to force the H-1B employers to pay higher level wages, but regulations cannot be revised without rational foundations and consideration,” sums up Khanna.
Source: ET

US T20 league to be launched in partnership with the Times Group - economic news of india - world economic news - economics news for students - indian economy news

US T20 league to be launched in partnership with the Times Group
NEW DELHI: USA Cricket has selected American Cricket Enterprises (ACE), an entity backed by The Times of India’s Satyan Gajwani and Vineet Jain and Willow TV founders Sameer Mehta and Vijay Srinivasan, as its strategic partner for the development of a world class professional T20 cricket league.The selection of ACE as the strategic partner furthers USA Cricket’s vision to bring professional cricket to the world’s largest sports market, concluding a multi-stage evaluation process that began in November 2018 with a public invitation for proposals for building a US-based T20 professional league. USA Cricket’s long-term agreement with ACE marks the most ambitious and transformational venture ever undertaken in the American cricket landscape, that will result in over $1 billion invested into the development of cricket domestically. The $1 billion investment will happen over a 10 year period, according to people familiar with the matter.“Times acquired Willow in 2016, with a vision to make cricket a mainstream sport in America. With a world-class T20 league, we will make cricket a prominent sport in the country and a competitive force in global cricket,” said Satyan Gajwani of The Times of India Group. “We want to develop a lasting institution that brings to the US the excitement and passion of cricket, enjoyed by billions of people globally. True grassroots development of any sport takes decades and we are excited and committed to play a role in developing world-class cricket in America.”Willow TV is a subsidiary of the Times Internet Ltd. It is the main US broadcaster for major international cricket events.The launch of the new professional league is slated for 2021. ACE has begun major infrastructure investment towards international grade cricket venues in several US metropolitan markets and is also working to develop additional turf cricket pitches and auxiliary facilities in more than a dozen locations. Based on a major / minor professional league model, the new facilities will for the first time provide the ability to stage and support major domestic and international cricket at all levels in the US. In addition, ACE will provide support for USA Cricket’s men’s and women’s national teams to ensure they can capitalize on their recent successes at the ICC World Cricket League Division 2 and the ICC Women’s Americas Qualifier, respectively.Focused on staging the highest quality T20 cricket for US cricket fans, the league will feature top international players from the US and around the world, combined with a focus on pathways to develop a homegrown player pool for USA Cricket and the league. A major component of ACE’s plans are the developmental academies around the country that will be aligned to the league teams and will help foster and develop talent at the youth levels to ensure a strong pipeline of cricket players of the highest caliber.“USA Cricket is excited to partner with ACE to launch a professional cricket league in the United States. We were thoroughly impressed by their comprehensive proposal,” said Paraag Marathe, USA Cricket Board Chairman.
Source: ET

Bridge NBFC-bank divide, get credit to flow - economic news of india - world economic news - economics news for students - indian economy news

Bridge NBFC-bank divide, get credit to flow
Non-banking finance companies (NBFCs), which have helped credit reach last-mile borrowers, would likely be priority for the new administration that needs to ease access to funds for NBFCs so that India’s consumption demand and financial stability remain unaffected.The sector has faced a credit squeeze ever since IL&FS and its units defaulted on repayment commitments, the strain being visible in the latest monthly sales charts of cars, two-wheelers and trucks.Over-leveraging, excessive concentration, and massive mismatch between assets and liabilities have exacerbated problems for a sector that has otherwise been at the vanguard of taking formal financing to homes that remain unbanked. The sector constitutes about 15% of the balance sheet of the formal banking sector. 69473549 “A clear majority of NBFCs are in ICCU. I will be surprised if in June, the central bank and the government do not come out strongly to support the sector on a fair basis,” said Anil Ambani, chairman ADAG. “A lot of us in the sector have been asking RBI to allow us to take fixed deposits. RBI’s response has been: No.”The government, which is returning with an even stronger mandate than that of 2014, is likely to work on enhancing the trust between banks and NBFCs. The central bank and the government could work together to improve system level liquidity, relax the rules of securitisation across asset classes, accelerate the co-origination model, and reduce the risk weight across sectors.In February, RBI had reduced the minimum holding period for housing finance companies to 6 months from 12 months so that more assets can be securitised. Today, risk weight for a bank lending to AAA rated NBFC is 35%. It can be brought down temporarily.Nomura said that the new government would review the regulatory framework, work with the central bank to ensure sufficient liquidity, and look to avoid grey swan events in the NBFC sector.The government will have to take a call on converting large NBFCs into banks and giving banking/deposit-taking licenses to small, innovative NBFCs. A stable system is possible only if asset liability mismatches are lower. In the short-term, amendments in securitisation guidelines will help the sector, which has been seeking the quashing of the prescribed minimum holding period of six months and minimum retention thresholds on securitisation.The sector wants a minimum holding period for loans with maturity of 2-5 years to be reduced from 6 months to 3 months.While NBFCs are working toward readjusting to the new reality, most of them will take a few quarters to come out of the crisis. Financial performance of NBFCs in the March quarter has deteriorated, with cost of funds going up and loan growth slowing down.
Source: ET

As election mania settles, Dalal Street gets a reality check - economic news of india - world economic news - economics news for students - indian economy news

As election mania settles, Dalal Street gets a reality check
By Kartik GoyalThe first reaction of investors to Indian Prime Minister Narendra Modi’s landslide election win was to bid up local assets. The euphoria didn’t last long.Stocks fell after rallying to records and the rupee slid as investors refocused on domestic realities, and posted modest gains Friday. While Modi’s sweeping victory allayed fears of a group of diverse parties forming the government, his return coincides with a slowing economy, wider budget deficit, volatile oil prices and global trade tensions.“Slowing growth, tricky inflation dynamics and the fact that the external environment has worsened with escalation in trade tensions are all potentially negative factors” affecting India, said Anders Faergemann, a fund manager in London at PineBridge Investments.Markets had partially priced in the election outcome after exit polls this week pointed to Modi’s return to power, which explains Thursday’s buy-the-rumor, sell-the-fact reaction. Also, this week’s rally has pushed up equity valuations to levels that are questionable in a country struggling to deal with a deteriorating macro environment.“Forward multiples are demanding and when viewed against the backdrop of a slowing economy and earnings undershoot, they limit upside,” said Sriyan Pietersz, an investment strategist at Matthews Asia in Singapore. A strong mandate from the rural sector may prompt Modi to deliver on promises of cash income transfers to poor, which may widen the fiscal deficit, he said.The government is already borrowing a record $100 billion, a key reason behind why a big rally has eluded local bonds despite two rate cuts in 2019. The yield on benchmark 10-year debt declined two basis points to 7.22 per cent at 9:22 a.m. in Mumbai.India’s rupee rallied 1.6 per cent in the past three months, the most in Asia, amid wagers of Modi returning to power. Further appreciation may trigger purchases by the central bank, according to Amundi SA.“The rupee has significantly outperformed its peers and further relative appreciation would act as a drag on India’s trade competitiveness,” said Abbas Ameli-Renani, a London-based portfolio manager at Amundi. “Whilst we have a positive bias on the rupee, we are not inclined to add to exposure at these levels.”While Modi’s party in its second term is expected to wield more political strength, the stock market’s elevation will depend on the measures he takes to hasten growth, said Nilesh Shah, chief executive at Kotak Asset Management Co. in Mumbai.“Markets are pricing in double-digit earnings growth over next few years. From a risk reward point of view, it is delicately balanced,” Shah said.Here are views from other investors and analysts:Morgan Stanley (Ridham Desai)Sees the S&P BSE Sensex touching 45,000 and the NSE Nifty 50 Index reaching 13,500 by June 2020; it previously had a target of 42,000 for Sensex by end of 2019Nikko Asset (Edward Ng)Indian bonds are set to outperform their Asian emerging-market peers due to their attractive yieldsAberdeen Standard Investments (Lin Jing Leong)Likes the highly rated corporate papers, and is overweight rupee sovereign and company bonds in India, especially in the short end of the curve
Source: ET

Low earnings, high valuations may cap the upside this time - economic news of india - world economic news - economics news for students - indian economy news

Low earnings, high valuations may cap the upside this time
The post election phase for the stock market has been mostly cheerful in the past. A study of the Sensex performance for the previous four elections shows there is a higher chance of making money by staying invested. For instance, in 2014, the Sensex rallied 13 per cent in the year post the elections, 38 per cent in the year after the 2009 elections and 19 per cent in the year after 2004 polls. The year after the 2009 elections, which was won by the Congress-led UPA, proved to be the best period for the markets. Stocks had tumbled in 2008 and early 2009 because of the global financial crisis. Analysts are divided over whether the markets would be able to repeat their past performances this time. While the economy is slowing and corporate earnings are yet to revive, share valuations are near record highs. Analysts said the combination of factors could put a lid on the gains in the coming months.69473816
Source: ET

Tech policy to be predictable; privacy bills, focus on local internet and hardware ecosystem - economic news of india - world economic news - economics news for students - indian economy news

Tech policy to be predictable; privacy bills, focus on local internet and hardware ecosystem
With the return of National Democratic Alliance (NDA) to power, technology policy making is expected to gather speed with focus on personal data protection bill, regulating technology platforms, and support local internet and hardware companies as part of its digital India initiative.Personal data protection bill which regulates the processing of personal data of individuals and the proposed amendment to Information Technology Act’s intermediary guidelines that weaken legal protections provided to technology companies against content hosted on their platforms are expected to impact Facebook, Google, Twitter and ByteDance.“It’s going to be predictable 5 years on where the technology policy is moving,” said Nikhil Narendran, Partner at Trilegal. “The government wants more companies to be incorporated in India, so it can have more regulatory control. It also has tax, content and data localisation angle to it. They will act with brute force on it.”The debate around technology policy making in India has been highly charged for the last two years with the government forms laws around controlling Internet content, storing critical data within the country and compulsory local incorporation of foreign firms. The government's aim is to increase liability to Indian laws and push foreign Internet firms to pay more taxes locally.“The good thing is predictability - we've seen what their policies/politics in the previous term were, so no real surprises I imagine. What we would like to see is better policy making processes, with stakeholders' inputs constantly, and not having different ministries and regulators take different approaches to the same issue,” said Anirudh Rastogi, Managing Partner at Ikigai Law.He added that apart from the imminent introduction of the personal data protection bill in the parliament there will be government action on regulating online content and platform governance.Indian technology lobby powered by Reliance Jio and PayTM have supported government’s push on local incorporation and data storage while Facebook and Google have opposed it. The government is also pushing WhatsApp to help law enforcement trace messages to senders despite encryption.“As the same government has come to power, there is likely to be an impetus to create a level playing field for Indian businesses in the data driven economy. The government will push forward on national security from technology point of view,” said Gowree Gokhale, Partner at Nishith Desai Associates. “It is clear that the focus on digital infrastructure building will continue.”In February, the government unveiled its new electronic policy to boost local manufacturing for the domestic market as well as exports. It includes providing special incentive package for large tech projects including setting up semiconductor manufacturing facilities in India. The policy aims at the sector generating $ 400 billion revenue and over 10 million jobs by 2025. The government could also take advantage of the US China trade war to woo global firms to manufacture electronics goods out of India.“There is pressure by the US on China, which may push many US, Korean and Taiwanese companies to set up electronic manufacturing units in India,” said Rajesh Ram Mishra, President of India Electronics and Semiconductor Association. “We are pushing for incentives for manufacturing Printed Circuit Boards in India and encourage more design-led manufacturing in the country.”With push for local manufacturing, it also would step up focus on Digital India - adopting technology to improve access to government to citizen services; in education and create skilled workforce that would help Indian IT services firms.
Source: ET