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INDIAN ECONOMY: OVERVIEW, GROWTH & DEVELOPMENT
Jet Airways shares fall 10 percent

Shares of Jet Airways plunged 10 percent in opening trade Thursday, a day after the ailing airline shuttered its operations temporarily.

On the BSE, the scrip hit the lower circuit of Rs 217.70, a fall of 10 percent compared to the previous closing level.

Similar trend was witnessed on the NSE too, where the share crashed to hit the lower price band of Rs 216.45.

With lenders deciding not to extend any emergency funds, Jet Airways on Wednesday announced temporary suspension of operations.

Meanwhile, in a statement early Thursday, Jet Airways’ lenders said they were reasonably hopeful of a successful bidding process for stake sale.

The announcement came early morning ahead of market opening.

DGCA officers want their own service for job growth, perks

Officers at India’s civil aviation regulator want a service of their own, the Indian Civil Aviation Service, because they claim this will ensure their salaries and career progression are on par with officers of organised Group A services of other ministries. About 150 of the 400 staff working with the Directorate General of Civil Aviation (DGCA) have submitted a representation to the ministry demanding what is called a Group A central service.

The officers have written about the boom in aviation, but also stagnant career prospects, leading to demotivation.

“The career growth of DGCA officers in various directorates is stagnating for many years at different levels inevitably resulting in demotivation and discrimination. In spite of putting in more effort in the ever expanding field of aviation, there is wide disparity in pay progression and promotions between officers of DGCA and officers of Organised Group A services of other ministries,” read the representation submitted to the ministry.

According to The International Air Transport Association (IATA), India’s domestic market posted the fastest full-year domestic growth rate (across markets) for the fourth consecutive year, with an 18.6% annual demand increase.

A DGCA officer said on condition of anonymity that in other ministries, even if promotions are not forthcoming, officers get the salary of the next grade after completing the requisite years in service. In DGCA they get neither, this person added.

“The workload has increased drastically but because of the lack of an organised service, the Indian Administrative Service gets the top positing and DGCA staff hardly gets promotion. A committee headed by MK Kaw, former secretary, civil aviation, that was set up in 2005 for reviewing and restructuring DGCA, recommended the creation of Indian Civil Aviation Service to man the various positions in DGCA but even after completion of more than 12 years, no affirmative action has been taken,” said a second DGCA official who too asked not to be named.

The number of aircraft with scheduled airlines in India was 620 as on July 31, 2018, up from 448 in March 2016. India’s 17 scheduled airlines operated 9.22 lakh flights in 2017-18, up from 8.1 lakh from previous year. International aircraft movement was 3.79 lakh in 2017-18 against 3.45 lakh in 2016-17. DGCA staff not only issue licences to pilots, airports and aircraft, but also investigates accidents and have to ensure air safety by conducting regular inspection.

We want balanced trade with India: Chinese envoy

Consul general of China in Kolkata, Zha Liyou said on Tuesday that his country is keen on balanced trade with India as it is always beneficial and inclusive.

There is greater need for boosting trade and investment between the two countries, he said on economic ties between the two countries.

“We do not want to have trade deficit with India. We want a bilateral balanced trade as it is always mutually inclusive”, he told the Bharat Chamber of Commerce Liyou said that Yunan Provincial Investment Infrastructure would come to West Bengal after the Lok Sabha election to discuss possible investment avenues between Kunming and Kolkata, the sister cities.

Besides, there is great need for creating a good environment through more people to people contact.

Talking about the Belt and Road Initiative (BRI) proposed by China, Liyou said it is directed by a mutually constructed and shared vision and China is a great supporter for multilateralism.

“Our country is open today. In a few days time, China is going to hold the BRI convention where delegates from 40 countries and various business leaders would be present”, he said.

The Chinese envoy invited India to participate in the Import-Export event in China during the later part of the year.

WPI inflation spikes to 3.18% in March on costlier food, fuel

Wholesale price inflation rose to a 3-month high of 3.18 percent in March on costlier food and fuel, government data released Monday showed.

The Wholesale Price Index (WPI)-based inflation was at 2.93 percent and 2.76 percent in February and January this year, respectively, and 3.46 percent in December 2018. It was 2.74 percent in March last year.

Inflation in the‘food articles’ basket hardened to 5.68 percent during March 2019 as against 4.28 percent in February, as prices of vegetables skyrocketed.

Vegetable inflation was at 28.13 percent in March, up from 6.82 percent in the previous month. However, inflation in potato cooled substantially to 1.30 percent, from 23.40 percent in February.

Pulses and wheat witnessed some cooling in inflation at 10.63 percent and 10.13 percent, respectively. Also protein rich items such as ‘egg, meat and fish’ saw inflation fall to 5.86 percent during March.

Deflation in onion was 31.34 percent, while the same in fruits was 7.62 percent during the month.

Wholesale inflation in the‘fuel and power’ category, however, spiked to 5.41 percent, from 2.23 percent in February.

Inflation is diesel shot up to 7.33 percent during the month from 3.72 percent in February. In petrol, inflation was 1.78 percent in March, as against a deflation of 2.93 percent in the previous month.

The Reserve Bank of India, which mainly factors in retail inflation for monetary policy decision, had earlier this month cut interest rates by 0.25 percent to 6 percent, while projecting retail inflation to be at 2.9-3 percent, mainly due to lower food and fuel prices as well as normal monsoon.

 

India seizures of cash, booze and gold surge

India’s enforcement agencies have so far seized cash, liquor, drugs, gold and other contraband worth 25 billion rupees ($361 million) as the country’s polling gets underway, already double the value of goods seized in the entire 2014 elections .

They’re confiscating as much as one billion rupees in cash and goods each day, as offenders use ambulances and other vehicles fitted with flashing lights to carry cash and give handouts in lunch boxes to lure voters.

The Election Commission’s observers, surveillance teams and enforcement agencies are raiding airports, highways, railway stations, hotels and farm houses if there’s a suspicion of illegal money. They keep watch on financial brokers, cash couriers and pawn brokers engaged in the movement of cash, check vehicles crossing state borders and open bags on buses to search for bribes in order to ensure a fair vote.

The cat-and-mouse game between election commission officials and offenders happens because small handouts mean a lot to people in a country where a quarter of the population still live on less than $2 per day.

Politicians also give handouts such as petrol, free meals, umbrellas and torches to stay below the permitted spending limit by a candidate — a maximum seven million rupees, or the price of Jaguar’s top luxury car model. These are on top of the publicly-declared freebies — from smartphones to wifi, bicycles to pressure cookers — provided by the political parties as part of their campaign promises.

Acceptance of money to vote or not to vote for a candidate is punishable with prison terms, fines or both. In 2014 the Election Commission seized 12 billion rupees worth of cash and contraband.

Sector funds are not always a safe bet

While looking at mutual fund investment options, you might think that it is an easier bet to just pick a well-performing sector that has delivered double-digit returns. According to data by Value Research, the technology sector delivered an average returns of 19.55% in the last year. However, one year returns may not be enough to place your bets in funds which take a highly concentrated approach towards their portfolio. Are sector funds a one-size fits all category? And how different are they from thematic funds? Let HTMoney decode it for you.

A sector fund is a mutual fund scheme that invests most of its corpus in equities of one particular sector.

“Sector funds invest in securities of specific sectors such as information technology, banking and pharma sector as specified in the investment objective of the fund,” said Gautam Kalia, head–investment solutions, Sharekhan, an online broking platform.

All sector funds are, therefore, equity oriented.

“A sector fund invests at least 80% into equity and equity-related instruments of a particular sector,” said Joseph Thomas, head research, Emkay Wealth Management. There are a total of 54 sector funds in the market among which five were launched last year, according to Value Research. Out of the 40 asset management companies (AMCS) in the industry, 25 offer such funds.

“They are different from general mutual fund schemes that have their portfolio diversified across different sectors of the economy,” said Aashish Somaiyaa, CEO, Motilal Oswal AMC. For example, ICICI Prudential Technology Fund invests only in shares of technology-oriented companies such as Infosys Ltd, Tech Mahindra Ltd and Oracle Financial Services Software Ltd.

New ITR form wants more information

With the new financial year comes a new income tax return (ITR) form . The income tax (I-T) department has said that the new ITR-1 and ITR-4 form for assessment year 2019-20 is available for e-filing on the website. Every year, the tax department makes changes in the ITR form. This year is no different. This time the number of details on your income and investment asked by the tax authorities has increased considerably. Let’s take a look at what has changed for salaried individuals.

If you are a salaried individual, you will have to provide more details in the ITR form for the assessment year 2019-20.

“ITR forms are changed for every financial year. The changes are in line with the Finance Act. This year, a lot of disclosures have been incorporated for individual tax payers,” said Anupam Jain, partner-taxation, Nangia Advisors(Andersen Global). It is not just the salary break up but couple of other changes that may require a lot of collation of data.

ITR-1 or Sahaj is usually the easiest to fill with the least number of details. From now, a non-resident Indian (NRI) and resident but not ordinary resident (RNOR) can’t fill the ITR-1 anymore.

Directors of unlisted shares or investors in unlisted equity will also no longer be able to file their returns.

“An individual who is a director in an unlisted company, who would have earlier been able to fill the form, is out of the purview of this form. If you hold any unlisted shares in a domestic company, then you are not eligible to fill this form,” she added.

RBI says India’s economy needs to grow even faster

India’s central bank chief said the expansion of the world’s fastest-growing major economy needs to pick up to around 8 percent to deal with poverty and other challenges.

While the past few years’ average growth of around 7.5 percent was impressive, “the expectation is India can be better,’ Reserve Bank of India Governor Shaktikanta Das said at an International Monetary Fund event in Washington on Friday. He also said more structural reforms were needed in areas such as land and labor.

India is expected to post real economic growth of 7.2 percent in the 2019-2020 fiscal year, and is seeing below-target inflation even as rising oil prices add an upside risk, the governor said. Still, he added that the inflationary impact from spikes in crude — India’s biggest import — can be exaggerated.

“If there is a temporary spike of oil prices and again it comes down, then obviously the impact gets moderated,’ Das said. Any “sustained increase in crude prices will definitely have an impact on inflation, but we have to see how sustained it is.”

Higher oil prices over the longer term may hurt India’s growth as well as its current account deficit, factors which would drag the rupee down. The recent oil spike is occurring against a backdrop of consumption suffering from a crisis in the shadow banking sector and exports stagnating amid a global slowdown — all of which has seen India’s growth prospects dim.

The RBI reduced interest rates by a quarter-percentage point last week, the second cut in as many meetings chaired by Das who took charge in December after Urjit Patel’s sudden resignation. Despite the easing, the central bank still retained its neutral policy stance.

‘Our priority is to remain watchful and take coordinated action to revive growth, and maintain macroeconomic, financial and price stability,’ he said in Washington.

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