INDIAN ECONOMY: OVERVIEW, GROWTH & DEVELOPMENT
Govt withdraws surcharge on long, short term capital gains
Union Finance Minister Nirmala Sitharaman is addressing a press conference amid concerns over the on-going economic slowdown in the country. This development came after Moody’s Investors Service on Friday cut India’s GDP growth forecast for 2019 calendar year to 6.2 percent from the previous estimation of 6.8 percent. For 2020 calendar year, it reduced the estimate by a similar measure to 6.7 percent.
There are concerns around the declining GDP growth too, which is a sign of worry for the government. The GDP growth has gone down from a peak of 8.2 percent in 2016-17 to 5.8 percent in the fourth quarter of 2018-19. The first quarter of 2019-20 is expected to dip further to 5.6 percent.
Though Nirmala Sitharaman had earlier declined to comment on the speculations of a stimulus package, she has been meeting industry representatives from auto, telecom, banking and financial, SMEs (Small and Medium Enterprises), among others, for the past several days to understand their concerns. Major demands of the slowdown-hit industries, especially automobile, FMCG (Fast-Moving Consumer Goods), include a reduction in the GST (Goods and Services Tax) and the rollback of the super-rich tax for FPIs (Foreign Portfolio Investors). FM Sitharaman announced one-time loan settlement through a check box approach to help MSMEs and retail borrowers. This will help with NPAs in the names of MSMEs which are pending because no one wants to take a call.
ED raids Naresh Goyal’s premises, jet airways offices over alleged fdi violations
The Enforcement Directorate on Thursday conducted search operations at the residence of Jet Airways founder Naresh Goyal in connection with alleged violations of Foreign Direct Investment (FDI) norms. The probe agency also searched a dozen more locations in Mumbai and Delhi.
Searches by the agency were conducted under the provisions of the Foreign Exchange Management Act (FEMA) and were aimed at gathering additional evidence in Etihad Airways’ investment in Jet Privilege Private Limited (JPPL). The ED believes the company might have violated FDI norms when the UAE-based airline took a stake in JPPL in 2014.
Commenting on the development, an Etihad spokesperson had earlier said: “Etihad is co-operating fully with relevant authorities and we abide by the laws of various countries we operate in.”
A full-service carrier, Jet Airways shuttered operations on April 17 after running out of funds. Thousands of employees lost their jobs and the airline’s slots and aircraft were leased out to competitors on a temporary basis. The airline is presently facing insolvency proceedings under the Insolvency and Bankruptcy Code and at least three entities have put in initial bids for the debt-laden airline.
Currently, Jet Airways has liabilities exceeding Rs 26,000 crore. These include more than Rs 10,000 crore in vendor dues, Rs 8,500 crore along with interest owed to the lenders, over Rs 3,000 crore in salary dues, and over Rs 13,500 crore in accumulated losses over the past three years.
Maruti recalls over 40,000 units of Wagon R for faulty fuel hose fouling
India’s largest carmaker Maruti Suzuki India Limited on Friday announced it would recall 40,618 units of its hatchback Wagon R powered by its 1 litre K series petrol engine to inspect for a possible issue of fuel hose fouling with metal clamp.
The cars under inspection were manufactured between November 15, 2018 and August 12, 2019.
“Starting Saturday owners of the suspected vehicles will be contacted by Maruti Suzuki dealers for inspection and replacement of the faulty parts, free of cost,” the company said in a statement. “Alternatively, customers of suspected WagonR (1 litre) vehicles can visit the Company website and fill in the chassis number (MA3 followed by 14 digit alpha-numeric number) on the computer screen to check if their vehicle needs any attention. The chassis number is embossed on the vehicle ID plate and is also in the vehicle invoice / registration documents.”
This is one of the largest recall exercises carried out by Maruti in India so far. In April 2013 it had recalled more than 100,000 units of its premium hatchback Swift, the compact sedan based on that Dzire and MPV Ertiga to fix a fault in the fuel neck filter. In September 2014 it had recalled another 69,555 units of the Swift, Ritz and Dzire to fix the wiring harness in the cars. Another 33,098 units of its bestselling small car Alto were recalled in March 2015 to fix defective door latches.
PM inaugurates memorial in honour of victims of 2 Air India crashes in France
Prime Minister Narendra Modi on Friday inaugurated a memorial in the honour of the victims of two Air India crashes at the foothills of the Mont Blanc mountain in France in which several Indians, including Homi J Bhabha, regarded as the father of India’s nuclear programme, were killed.
The memorial at Nid d’Aigle, at the foot of Mount Blanc, was dedicated to Bhabha and several other Indians who were among the passengers and crew of the two Air India planes that crashed in 1950 and 1966.
“In times of sorrow also India and France stand with each other. In the two air crashes we lost many Indian passengers including Homi Bhabha. Those who lost their lives, I pay tribute to them. This is an example of empathy the people of the two countries have for each other,” Modi said addressing the Indian community at the UNESCO headquarters after inaugurating the memorial through video-conferencing.
The death of Bhabha in the crash on Mount Blanc in the French Alps in January 1966 was considered a massive blow to India’s scientific advancement. A total of 106 passengers and 11 crew died in the crash of Air India flight 101, which was named Kanchenjunga, on January 24, 1966.
The Kanchenjunga crashed in almost the same spot on Mount Blanc as an Air India flight 16 years before. On November 3, 1950, Air India flight 245 crashed on Mount Blanc, killing 48 passengers and crew.
The mortal remains of the crew and passengers the two Air India aircraft could never be recovered from the snow-covered mountain heights.
Johnson & Johnson pays Rs 25 lakh each to 3 victims
Pharma major Johnson & Johnson has paid Rs 25 lakh each to three victims of its faulty acetabular surface replacement (ASR) hip implants in Uttar Pradesh, officials said.
According to Uttar Pradesh Drug Licensing and Control officer A K Jain, the company has given compensation to three patients who had undergone revision surgeries for the faulty implants made by the company.
The Delhi High Court had in May directed Johnson & Johnson to make an interim payment of Rs 25 lakh each to the 67 patients who have undergone revision surgeries.
Jain said the Uttar Pradesh Drug Licensing and Control Authority was promptly following such complaints.
SBI cuts fixed deposit rates for second time in a month, maintains status quo on savings rates
India’s largest lender and public sector bank State Bank of India (SBI) announced on Friday that interest rate on fixed deposits will see a revision once again across all tenors, making it the second rate cut on FD rates in less than a month’s period. The revised rates will come into effect from 26 August.
SBI has cut FD rates by 10-50 bps across tenures for retail customers and by 30 bps-70 bps across tenures for bulk depositors. SBI had earlier revised FD rates from 1 August. “In view of the falling interest rate scenario and surplus liquidity, SBI realigns its interest rate on Term Deposits w.e.f. 26th August 2019,” SBI press release stated.
The revised rates of interest shall be made applicable to fresh deposits and renewals of maturing deposits. Premature penalty for Bulk Term Deposits for all tenors will be 1percent. The interest rate payable to SBI Staff and SBI pensioners will be 1.00percent above the applicable rate.
As per the recent notification by SBI in its corporate website, the rate applicable to all Senior Citizens and SBI Pensioners of age 60 years and above will be 0.50percent above the rate payable for all tenors to resident Indian senior citizens i.e. SBI resident Indian Senior Citizen Pensioners will get both the benefits of Staff (1percent) and resident Indian Senior Citizens (0.50percent).
SBI mentioned that it will not reduce the interest rate charged on its savings accounts and hold the same at the existing level as earlier.
Moody’s cuts India GDP growth forecast to 6.2pc for 2019
Moody’s Investors Service on Friday cut India’s GDP growth forecast for 2019 calendar year to 6.2percent from the previous estimation of 6.8percent, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions.
For 2020 calendar year, it reduced the estimate by a similar by a similar 0.6 percentage points to 6.7percent.
Announcing revision in its growth forecast for 16 Asian economies, it said weaker trade and investment weigh on GDP growth, despite stable private and public consumption in the region.
“While not heavily exposed to external pressures, India’s economy remains sluggish on account of a combination of factors, including weak hiring, financial distress among rural households, and tighter financing conditions due to stress among non-bank financial institutions,” it said.
Stating that domestic factors have had a greater influence on growth in India, Moody’s said the moderation in business sentiment and slow flow of credit to corporates have contributed to weaker investment in the country.
“Cooler business sentiment and slow flow of credit to corporates contribute to weaker investment in India,” it said.
Indian economy had expanded by 6.9 percent in 2017 and 7.4 percent in 2018, according to Moody’s.
GDP growth rate had hit a five-year low of 5.8 percent in the January-March quarter and the government is slated to announce the first quarter (April-June) growth number on August 30.
The Reserve Bank of India (RBI) too had earlier this month lowered GDP growth estimate for the current fiscal that began on April 1 to 6.9 percent from previous estimate of 7 percent citing demand and investment slowdown.
Moody’s said inflation was expected to rise to 3.7 percent this year and 4.5 percent in the next from 2.9 percent in 2018.
“Reserve Bank of India has been most active in cutting rates in support of growth, but lingering financial sector issues may blunt the effectiveness of the monetary stimulus,” it added.
Moody’s said of the 16 Asian economies, Hong Kong and Singapore have shown particularly weak expansions this year, with very large deteriorations in real GDP growth when compared to the first half of 2018.
It explained that externally-oriented economies saw a sharper slowing during the first six months of 2019, while domestic factors have had a greater influence on growth in Japan, India and the Philippines.