Archives for December 2018

 The RBI is expected to keep its key interest rate unchanged at its
penultimate monetary policy review of the fiscal on Wednesday at a time when inflation – the
central bank’s key concern – has softened, as has GDP growth, according to the figures
for the second quarter ending in September.

At its previous bi-monthly review in October, the Reserve Bank of India’s (RBI) Monetary
Policy Committee (MPC) held its repo, or short term lending rate, unchanged at 6.5 per cent
in a context of rising crude oil prices posing an inflationary risk as well as a weakening
rupee.

Official data earlier showed that the consumer price index (CPI), or retail inflation in
October, fell to its lowest in a year at 3.31 per cent owing to lower food inflation, from 3.7 per cent in the previous month.

Besides, from the depths it had plunged, the rupee has since appreciated to a level of just over 70 to the US dollar.

Moreover, global crude oil prices have softened sharply from $86 per barrel in October to
currrent levels of around $60 amidst reports that Saudi Arabia and Russia have reached a deal to cut output so as to shore up falling prices.

Meanwhile, official data on November 30 showed the pace of India’s GDP growth slowed
during the July-September quarter to 7.1 per cent, from 8.2 per cent in the previous one,
mainly on the back of a drop in manufacturing, agriculture and mining.

“RBI may get the much needed elbow room to keep the policy rate unchanged in the
forthcoming bi monthly policy review on December, 5,” said US rating agency Fitch Group subsidiary India Ratings and Research Chief Economist Devendra Kumar Pant.

“Based on the September quarter GDP growth and likelihood of lower growth in the second
half of the year, chances of fiscal slippage are very high. The central bank is expected to
stay on hold,” he added.

Belying market expectations of a rate hike in October, the RBI held its repo rate unchanged
in the context of an uncertain global economic scenario but turned hawkish in its stance,
moving to one of calibrated tightening from the ‘neutral’ it has maintained over its six
previous policy reviews.

Elaborating on the change of stance to “calibrated tightening”, RBI Governor Urjit Patel said that it implied that “in this cycle, a rate cut is out of the table and we are
not bound to increase rates every time we meet.

“With this stance we have two options, we can either increase rates or hold them,” he said.
A “neutral” stance allows the RBI to move either way on rates.

On the decision to hold the repo rate, Patel said that “actual inflation outcomes, especially
in August, were below projections as the expected seasonal increase in food prices did not
materialise and inflation excluding food and fuel moderated”.

The RBI has lowered its inflation projection for the July-September quarter to 4.0 per cent,
and between 3.9-4.5 per cent for the second half of the fiscal “with risks somewhat to the
upside”.

India’s budgetary fiscal deficit for the April-October period at Rs 6.49 lakh crore has exceeded the target for the full fiscal, accounting for 103.9 per cent of the budgeted target of Rs 6.24 lakh crore, mainly owing to slow revenue growth.

The RBI’s policy review is coming at a time of slowdown in growth and private investment, and soon after the ongoing liquidity crunch has provoked a tiff between the government and the central bank.

The government’s differences with the RBI centres on four issues – the former wants liquidity support to head off any credit freeze risk, a relaxation in capital requirements for lenders, relaxing the prompt corrective action (PCA) rules for banks struggling with accumulated non-performing assets (NPAs), or bad loans, and support for micro, small and medium enterprises.

The current liquidity crunch, particularly among non-banking finance companies, follows a series of defaults last month by the privately-run Infrastructure Leasing and Financial Services and banks hesitating to lend after a series of scams, most notably the Rs 14,000 crore fraud on state-run Punjab National Bank reported in February.

IANS

 Union Finance Minister Arun Jaitley on Monday said trading across borders has become an “economic imperative of our times” and it is in every nation’s interest to bring down the trade barriers for the global economy.

“No nation can produce all products. It cannot specialise in all forms of services and therefore trading across barriers of nations is an economic imperative of our times and this is going to increase with times to come,” Jaitley said at an event here.

Addressing the 80th Session of the Policy Commission of the World Customs Organisation (WCO) through video conference, he said nations have realised that increase in trade gives impetus to the global economy as he advocated free trade.

“It is in the larger interest of every country to make sure that trade barriers are brought down to the extent possible,” he said at a time when protectionism is on the rise fuelled by the trade war initiated by the US against China and with the latter’s retaliation.

Jaitley said trade barriers have a significant impact on transactional costs for all transactions and any delay either due to lack of infrastructure or on account of terms and procedures adds to the cost thereby taking away the competitiveness of that trade.

“Domestic economy itself starts suffering and therefore it is in the larger interest of each economy globally to make sure that trading across customs, trade barriers of nations is facilitated to the largest extent possible,” he said.

He said countries have invested a lot in improving upon infrastructure including ports, airports and roads, and that India has been in the forefront of increasing its own capacities.

“This is reflected from the fact that in the last four years our ranking in World Bank’s Ease of Doing Business has moved from 142 to 77, a record movement of 65 position. On facilitating global trade, India’s rank has improved from 140 to 80 among 190 countries.

“India remains committed as far as improvements in trade facilitations and facilitating trading across barriers is concerned,” he said.

He expressed hope that the three-day 80th Session of the Policy Commission will be of great utility for facilitating global trade.

Hosted by the Central Board of Indirect Taxes and Customs, the session on various topics including trade facilitation is being attended by delegates from 33 countries.

IANS

 The government on Monday said nearly 94 per cent of the total GST refund claims of Rs 97,202 crore has been settled by the Central Board of Indirect Taxes and Customs (CBIC) and the state authorities.

“Total GST refunds to the tune of Rs 91,149 crore have been disposed by CBIC and state authorities out of the total refund claims of Rs 97,202 crore received so far. Thus, the disposal rate of 93.77 per cent has been achieved,” the Finance Ministry said in a statement.

It said the pending Goods and Services Tax (GST) refund claims of Rs 6,053 crore are being expeditiously processed so as to provide relief to eligible claimants. Refund claims without any deficiency are being cleared expeditiously, it said.

In case of integrated GST (IGST) refunds, about 95 per cent or Rs 48,455 crore of the total IGST refund claims of Rs 50,928 crore transmitted to Customs from GSTN as on November 28 have been disposed of.

“The remaining claims amounting to Rs. 2,473 crore are held up on account of various deficiencies which have been communicated to exporters for remedial action,” it said.

Further, in case of Input Tax Credit (ITC) and other refund claims, of the total refund claims of Rs 46,274 crore received in the jurisdictional tax offices, the pendency as on December 3 is Rs 902 crore with the Centre and Rs 2,678 crore with states.

Provisional or final order has been issued in case of refunds amounting to Rs 37,406 crore. In claims amounting to Rs 5,288 crore, deficiency memos have been issued by respective GST authorities, it said.

The Ministry added efforts are being made continuously to clear all the pending refund claims, where ever requisite information is provided and found eligible.

It sought cooperation of the exporter community to ensure that they respond to the deficiency memos and errors communicated by Centre and state GST as well as customs authorities and also exercise due diligence while filing returns and shipping bills.

IANS

 The Pentagon will begin sending a backlog of thousands of green-card holders to recruit training, suspending a policy adopted by President Donald Trump’s administration that required more-stringent background checks for some immigrants wanting to serve.

The policy called for green-card holders to submit to and complete a full background check and respond to any concerns before they could go to boot camp which was in addition to standard requirements for green-card applicants, such as biometrics screening, reports The Washington Post.

The change put thousands of people in limbo, as their screening languished and specific jobs within the military promised to them slipped away.

The new directive issued on Monday says that each armed service must comply immediately with a preliminary injunction issued last month in the District Court for the Northern District of California.

Air Force Lt. Col. Carla Gleason, a Pentagon spokeswoman, said the services will begin sending the recruits to training this week and will be placed in available slots.

About 18,000 US troops were green-card holders at the beginning of the Trump administration, and about 5,000 joined the military each year before the stricter policy, Pentagon officials have said.

The Marine Corps sent 1,044 green-card holders to recruit training in 2016 and 1,169 in 2017, but the number dropped to 808 in the most recent fiscal year ending in September, according to Pentagon data.

The Air Force sent 567 green-card holders to recruit training in 2016 and 590 in 2017. But that number dropped to 44 in the fiscal year ending in September. About 470 green-card holders are under contract and waiting to attend training.

The Army sent 4,600 green-card holders to recruit training in 2016, and 3,600 in 2017, according to data provided by the Pentagon. That number plummeted to 513 in 2018.

IANS