Interim Budget 2019: Highlights
The highlights of the Interim Budget 2019 presented by the Finance Minister are listed below:
6,000 rupees yearly direct support to farmers through PM-KISAN Programme.
Pension of 3,000 rupees for unorganised sector workers earning up to 15,000 rupees through a mega Pension Scheme – Pradhan Mantri Shram- Yogi Maandhan.
Present Income Tax rates to continue and full tax rebate up to an income of 5 lakh rupees for individual taxpayers. Standard deduction raised to 50,000, a hike of 10,000 for salaried class.
Simplification of Direct tax system and returns to be processed in 24 hours with immediate refunds.
90 per cent GST payers can file quarterly returns.
Two per cent interest rebate for Small and Medium Enterprises to get an incremental loan of one crore rupees.
Constituting group of Ministers to examine GST burden on home buyers.
Digitalization of Customs for export and import transactions.
Allocations towards Health care, MGNREGA, SC/ST welfare programmes, Pradhan Mantri Gram Sadak Yojana, Development of infrastructure in North-East has been increased substantially.
Rashtriya Kamdhenu Aayog for genetic upgradation of the cow.
Separate Department of Fisheries.
Electricity connection to all willing families by next month.
Allocations to Defence budget crosses three lakh crore rupees for the first time.
More than three lakh 38 thousand shell companies deregistered after demonetization.
10 point vision for 2030 to realize India’s social economic potential.
India to be a 10 trillion dollars economy in 13 years.
Government e-Marketplace – GeM to be extended to all Central Public Sector Enterprises.
Container cargo movement to the North-East through Brahmaputra river.
Allocation for infrastructure development in the North East increased by 21 per cent.
AIIMS to be established in Haryana.
Digital connectivity for more than one lakh more villages.
National Centre on Artificial Intelligence Centre to be established.
Tightening of Cinematograph Act to check piracy.
Single window clearance for shooting films for Indian filmmakers.
Indigenous development of semi-high speed Vande Bharat Express train
The fiscal deficit pegged at 3.4 per cent of GDP.
The Budget was keenly watched as the country is heading for a general election in 2019.
Interim Budget 2019: What’s there for Agriculture
The Union Minister of Finance Piyush Goyal presented the interim budget. The various provisions in the budget related to the Agricultural sector are listed below:
The budget announced a farm support scheme for farmers owning up to 2 hectares of lands.
These farmers will get Rs 6,000 per year in three equal instalments effective from December 1, 2018.
The Finance Minister has set aside Rs 75,000 crore for the scheme.
The farm support scheme is expected to benefit 12 crore small and marginal farmers.
The allocation for the Rashtriya Gokul Mission has been increased to Rs 750 crore for increasing the production and productivity of cows.
2% interest subvention for farmers pursuing animal husbandry and fisheries through Kisaan credit cards.
A separate Department for fisheries would be created.
Farmers adversely affected by natural calamities would get 2% interest subvention and additional 3% interest subvention upon timely repayment.
Budget announced setting up of Rashtriya Kamdhenu Aayog to upscale sustainable genetic upgradation of cow resources and to enhance production and productivity of cows.
The Rashtriya Kamdhenu Aayog would also be responsible for effective implementation of laws and welfare schemes for cows.
The budget has made some big announcements but the critics argue that the long-term plans are mere slogans with no clear road map.
Foreign Exchange Reserves
The RBI data shows that Indian Foreign Exchange Reserves have been increased by USD 1.497 billion to reach USD 398.178 billion for the week to January 25. This increase has been attributed to a jump in core currency assets.
Why the Foreign Exchange Reserves frequently fluctuate?
The Foreign Exchange Reserves are expressed in terms of the US dollars are subject to variations due to the appreciation/depreciation of non-US currencies such as the euro, pound and yen held in the reserves.
Trends in Indian Foreign Exchange Reserves
India’s Foreign Exchange Reserves fluctuations are listed below:
In the week previous to January 25, the foreign exchange reserves had dropped by USD 671 million to USD 396.68 billion.
The foreign exchange reserves of India had touched a record high of USD 426.028 billion in the week to April 13, 2018. Since then it is mostly declining. The decline is largely attributed to the selling of the dollar by the RBI to contain rupee volatility. The central bank now holds 566.23 tonnes of the gold and purchase of 8.46 metric tonnes of gold was made in the fiscal year ending June 2018.
In its annual Report, RBI had stated that the purchase of gold was made to diversify the foreign currency assets.
Foreign Exchange Reserves
Foreign Exchange Reserves are the reserve assets held by a central bank in foreign currencies. They are used to back liabilities on their own issued currency as well as to influence monetary policy. These reserves act as a buffer during the challenging times to the economy. The components of India’s FOREX Reserves which is expressed in terms of US dollars include foreign currency assets (FCAs), Gold Reserves, Special Drawing Rights (SDRs) and RBI’s Reserve position with International Monetary Fund (IMF). FCAs constitute the largest component of Indian Forex
The government has decided to set up a five-member working committee to look into the angel tax issue and come up with guidelines in one week. It also agreed to implement some key changes requested by start-ups regarding the issue.
What is Angel Tax?
Angel Tax is a 30% tax that is levied on the funding received by startups from an external investor. However, this 30% tax is levied when startups receive angel funding at a valuation higher than its ‘fair market value’. It is counted as income to the company and is taxed. The tax, under section 56(2)(viib), was introduced by in 2012 to fight money laundering. The stated rationale was that bribes and commissions could be disguised as angel investments to escape taxes. But given the possibility of this section being used to harass genuine startups, it was rarely invoked.
Why is Angel tax problematic?
There is no definitive or objective way to measure the ‘fair market value’ of a startup. Investors pay a premium for the idea and the business potential at the angel funding stage. However, tax officials seem to be assessing the value of the startups based on their net asset value at one point. Several startups say that they find it difficult to justify the higher valuation to tax officials.
In a notification dated May 24, 2018, the Central Board of Direct Taxes (CBDT) had exempted angel investors from the Angel Tax clause subject to fulfilment of certain terms and conditions, as specified by the Department of Industrial Policy and Promotion (DIPP) now renamed as the Department for Promotion of Industry and Internal Trade. However, despite the exemption notification, there are a host of challenges that startups are still faced with, in order to get this exemption.
Earlier, start-ups whose aggregate amount of paid-up share capital and share premium after the proposed issue of share does not exceed ₹10 crore are eligible for exemption from the tax. The government is planning to raise this limit to ₹25 crore. It is also planning to amend the definition of a start-up to include companies that have been in operation for up to 10 years rather than the previous limit of seven years.
Is Scrapping Angel Tax possible?
The angel tax could not be scrapped as money laundering is a major problem. There is a network of 200 shell companies and they have been under control since 2012, so it cannot be scrapped.
However, concessions are under consideration with the size of the start-up, the duration of its operation, and the income of the angel investor.
National Testing Agency Launched Mobile App
National Testing Agency (NTA) has launched a ‘mobile app’ through which students can practice or take mock tests on their own computers or smart phones.
Benefits: In order to ensure that no student is disadvantaged due to lack of resources, NTA has established a network of more than 4000 Test Practice Centres (TPCs) to acquaint the aspirants, especially those from rural areas with Computer Based Tests (CBTs). Students across the country can register themselves online at NTA Website or ‘NTA Students App’ for visiting the TPCs. All these services are provided to the students free of cost. So far, more than one lakh students have registered at these TPCs and more than one crore students have benefited from these ‘App & Web’ services.
NTA: In pursuance of the Budget Announcement 2017-18, the Union Cabinet, in November 2017, approved creation of the National Testing Agency (NTA) as an autonomous and self-sustained premier testing organization to conduct entrance examinations for Higher Education Institutions (HEIs) in the country.
Composition: It will be chaired by an educationist who will be appointed by the MHRD. The agency will have a board of governors who will represent the member institutions.
NGOs and regulation of their foreign funding
Greenpeace has been forced to close two of its regional offices and “considerably” reduce its staff in India because of a government crackdown on allegedly unlawful foreign funding of NGOs. Greenpeace India had its foreign funding blocked in 2015 as part of a nationwide crackdown on charities.
Significance of NGOs:
NGOs play an important role in the upliftment of the weaker sections of the society and their overall development. This is especially true in the case of India, where a vast majority of its population continues to remain under the poverty line and have little or no access to even basic facilities provided by the government.
Regulation of Foreign Funding:
The Foreign Contribution (Regulation) Act, 2010 and rules framed under it (the “FCRA” or “Act”) regulate the receipt and usage of foreign contribution by non-governmental organisations (“NGOs”) in India.
Scope and objective of FCRA:
The intent of the Act is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest. It has a very wide scope and is applicable to a natural person, body corporate, all other types of Indian entities (whether incorporated or not) as well as NRIs and overseas branches/subsidiaries of Indian companies and other entities formed or registered in India. It is implemented by the Ministry of Home Affairs, Government of India.
In order to achieve the above objective, the Act:
Prohibits acceptance and use of foreign contribution or foreign hospitality by a certain specified category of persons such as a candidate for election, judge, journalist, columnist, newspaper publication, cartoonist and others. Regulates the inflow to and usage of foreign contribution by NGOs by prescribing a mechanism to accept, use and report usage of the same.
Definition: It defines the term ‘foreign contribution’ to include currency, article other than gift for personal use and securities received from foreign source. While foreign hospitality refers to any offer from a foreign source to provide foreign travel, boarding, lodging, transportation or medical treatment cost.
Acceptance of foreign funds:
The Act permits only NGOs having a definite cultural, economic, educational, religious or social programme to accept foreign contribution, that too after such NGOs either obtain a certificate of registration or prior permission under the Act.
Registration and prior approval under FCRA:
In order to be registered under the FCRA, an NGO must be in existence for at least three years and must have undertaken reasonable activity in its field for which the foreign contribution is proposed to be utilised. Further, it must have spent at least INR 1,000,000 over three years preceding the date of its application on its activities. The registration certificate is valid for a period of five years and must be thereafter renewed in the prescribed manner. NGOs not eligible for registration can seek prior approval from FCRA for receiving foreign funding. This permission is granted only for a specific amount of foreign funding from a specified foreign source for a specific purpose. It remains valid till receipt and full utilisation of such amount.
The Act imposes various conditions on the use of foreign funds and some of them are as follows:
All funds received by a NGO must be used only for the purpose for which they were received. Such funds must not be used in speculative activities identified under the Act. Except with the prior approval of the Authority, such funds must not be given or transferred to any entity not registered under the Act or having prior approval under the Act. Every asset purchased with such fund must be in the name of the NGO and not its office bearers or members.
Every NGO registered or having prior approval under the Act must file an annual report with the Authority in the prescribed form. This report must be accompanied by an income and expenditure statement, receipt and payment account, and balance sheet for the relevant financial year. For financial years where no foreign contribution is received, a ‘NIL’ report must be furnished with the Authority.
RBI to introduce Ombudsman Scheme for Digital Transactions
Reserve Bank of India (RBI) has announced to introduce ‘Ombudsman Scheme for Digital Transactions’ to provide cost-free mechanism to redress grievances of customers related to digital transactions. The scheme will be notified by end of January 2019. It will cover services provided by entities falling under RBI’s regulatory jurisdiction. The scheme is being implemented taking into consideration rise in digital mode for financial transactions which is gaining traction in the country. There is emerging need for dedicated, cost-free and expeditious grievance redressal mechanism for strengthening consumer confidence in this channel.
Framework for limiting customer liability: RBI has also decided to come out with framework for limiting customer liability in respect of unauthorised electronic payment transactions involving prepaid payment instruments (PPI). It already has issued instructions on limiting customer liability in respect of unauthorised electronic transactions involving banks and credit card issuing non-banking financial companies (NBFCs). This framework will bring all customers up to same level with regard to electronic transactions made by them and extend benefit of limiting customer liability for unauthorised electronic transactions involving PPIs issued by other entities not covered by extant guidelines. The guidelines will be issued by end of December 2018.
Distribution of Soil Health Cards (SHC) for optimal utilization of fertilizers
Soil Health Card Scheme has been taken up for the first time in a comprehensive manner across the country. It is provided to all farmers.
Objective: It is to enable the farmers to apply appropriate recommended dosages of nutrients for crop production and improving soil health and its fertility.
Unique Features: Collecting soil samples at a grid of 2.5 ha in irrigated area and 10 ha in un-irrigated areas. Uniform approach in soil testing adopted for 12 parameters primary nutrients (NPK), secondary nutrient (S); micronutrients (B, Zn, Mn. Fe & Cu); and other (pH, EC & OC) for comprehensiveness. GPS enabled soil sampling to create a systematic database and allow monitoring of changes in the soil health over the years.
National Mission for Sustainable Agriculture (NMSA) will be implemented during 12th Plan to make agriculture more productive, sustainable and climate resilient; to conserve natural resources; to adopt comprehensive soil health management practices; to optimize utilization of water resources; etc. Soil Health Management (SHM) is one of the most significant interventions under NMSA.
Aims of SHM: To promote Integrated Nutrient Management (INM) through judicious use of chemical fertilizers including secondary and micro nutrients in conjunction with organic manures and bio-fertilisers for improving soil health and its productivity; To strengthen soil and fertilizer testing facilities to give soil test based recommendations to farmers for improving soil fertility; To ensure quality control requirements of fertilizers, bio-fertilizers under Fertiliser Control Order, 1985; To upgrade skill and knowledge of soil testing laboratory staff, extension staff and farmers through training and demonstrations; To promote organic farming practices, etc.
Citizens to get an option to opt out of Aadhaar
Government is finalising a proposal to amend the Aadhaar Act to give all citizens an option to withdraw their Aadhaar number, including biometrics and the data. This follows the Supreme Court judgment in September that upheld the validity of Aadhaar. In line with the court order, the proposal also seeks to appoint an adjudicating officer to decide whether a person’s Aadhaar-related data need to be disclosed in the interest of national security. A Constitution Bench of the Supreme Court had struck down Section 57 of the Aadhaar Act that allows private entities to use the unique number for verification. The Bench also declared that seeking to link it with bank accounts and SIM cards was unconstitutional. The court had also struck down Section 33(2), which allowed disclosure of Aadhaar information for national security reasons on the orders of an officer not below Joint Secretary. It had said an officer above Joint Secretary should consult a judicial officer and together take a call.
World Bank assisted project SMART launched in Maharashtra
Maharashtra Government has launched World Bank assisted State of Maharashtra’s Agribusiness and Rural Transformation (SMART) Project to transform rural Maharashtra. This project aims to revamp agricultural value chains, with special focus on marginal farmers across 1,000 villages. This initiative is in line with Union Government’s step towards doubling farmers’ income by 2022. The launch of project which was followed by signing of 50 memorandum of understandings (MoUs) between big corporates and farmers producer groups.
State of Maharashtra’s Agribusiness and Rural Transformation (SMART) Project
The objective of project is to create and support value chains in post-harvest segments of agriculture, facilitate agribusiness investment, stimulate SMEs within the value chain. It will also support resilient agriculture production systems, expand access to new and organised markets for producers and enhance private sector participation in the agribusiness. The project will be implemented in 10,000 villages of total 40,913 villages in states with objective to achieve sustainable farming within the next three years. It will cover almost one-fourth of Maharashtra. Its focus is on villages which are reeling under worst agriculture crisis compounded by lack of infrastructure and assured value chains to channelise farm produce. The project will be implemented in 10,000 villages comprising 10,000 gram panchayats which were shortlisted by state government based on multiple parameters of socio-economic backwardness in terms of development and growth. The project is giant step towards transformation of rural economy and empowerment of farmers and also sustainable agriculture through public-private partnership (PPP) model. It seeks to sure higher production of crops and create robust market mechanism to enable farmers to reap higher remunerations for the yield. It unites agriculture-oriented corporates and farmers by providing them common platform.
CCEA approves strategic sale of Rural Electrification Corporation
Cabinet Committee on Economic Affairs (CCEA) has given its in principle approval for strategic sale of Central Government’s existing 52.63% of total paid up equity shareholding in Rural Electrification Corporation (REC) to Power Finance Corporation (PFC) along with transfer of management control. Both REC and PFC are Central Public Sector Enterprises under the Ministry of Power.
The acquisition intends to achieve integration across Power Chain, create economies of scale, obtain better synergies and have enhanced capability to support energy access and energy efficiency by improved capability to finance power sector. It may also allow for cheaper fund raising with increase in bargaining power for combined entity.
Rural Electrification Corporation (REC): It is public Infrastructure finance company in India’s power sector. It finances and promotes rural electrification projects across India. It provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers. It was founded in July 1969 and is headquartered in New Delhi.
Union Cabinet approves Agriculture Export Policy, 2018
Union Cabinet chaired by Prime Minister Narendra Modi has approved Agriculture Export Policy, 2018 with aim to double farmer’s income by 2022. Cabinet has also approved proposal for establishment of Monitoring Framework at Centre with Ministry of Commerce as nodal Department to oversee implementation of Agriculture Export Policy. It will also have representation from various ministries and departments and agencies and representatives of concerned State Governments
Agriculture Export Policy: It is aimed at doubling agricultural exports and integrating Indian farmers and agricultural products with the global value chains. Its vision is to harness export potential of Indian agriculture, through suitable policy instruments and to make India global power in agriculture and raise farmers’ income.
Objectives: Double agricultural exports from present US$ 30+ Billion to US$ 60+ Billion by 2022 and reach US$ 100 Billion in next few years thereafter with stable trade policy regime. Diversify India’s export basket, destinations and also boost high value and value added agricultural exports including perishables. Provide institutional mechanism for pursuing market access, tackling barriers and deal with sanitary and phyto-sanitary issues. Strive to double India’s share in world agri-exports by integrating with global value chain at earliest. Promote indigenous, organic, ethnic, traditional and non-traditional agri products exports. Enable farmers to benefit from export opportunities in overseas market.
Startups to be listed for angel tax exemption
The Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) soon will come up with a list of startups eligible for angel tax exemption, based on their audited financial statements and income tax returns of the previous year. Angel tax is imposed on the excess share capital raised by an unlisted firm, over and above the fair market value of its shares. Angel tax impact investment and startup industries whether they are genuine or not.
Recently the government has also decided to raise the limit for tax exemption for startups from 7 years to 10 years and paid-up share capital threshold for tax exemption has been raised from 10 crores to 25 crores.
Startups would have to furnish three types of documents in order to be registered with the government: (i) audited financials for the previous year, (ii) IT returns for the previous year, and (iii) a self-certified declaration.
Firm has to certify it does not intend to deploy the angel investment in real estate holdings, including premium cars of value above ₹10 lakh, precious jewelry, listed or unlisted securities directly or indirectly via equity mutual funds etc.
GeM and CCI Sign MoU
Government e Marketplace (GeM) and Competition Commission of India (CCI) entered into a Memorandum of Understanding to enable a fair and competitive environment in the e-Marketplace.
GeM: What is it? GeM is a state-of-the-art national public procurement platform of Ministry of Commerce and Industries, that has used technology to remove entry barriers for bonafide sellers and has created a vibrant e-marketplace with a wide range of goods and services. GeM aims to enhance transparency, efficiency and speed in public procurement.
Features: It facilitates online procurement of common use Goods & Services required by various Government Departments / Organisations / PSUs. It provides the tools of e-bidding, reverse e-auction and demand aggregation to facilitate the government users, achieve the best value for their money.
Competition Commission of India: It is a statutory body of the Government of India, responsible for enforcing the Competition Act, 2002 throughout India and to prevent activities that have an adverse effect on competition.
New Policy for Overseas Borrowings
The Reserve Bank has come out with a new policy for overseas borrowings. The RBI has rationalized the earlier policy in consultation with the Government of India.
Features of the New Overseas Borrowing Policy
The new policy allows all eligible borrowers to raise External Commercial Borrowings (ECB) up to $750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits. To liberalise the framework ECB and rupee-denominated bonds Tracks I and II under the existing framework are merged as ‘Foreign Currency denominated ECB’ and Track III and Rupee Denominated Bonds framework are combined as ‘Rupee Denominated ECB’ to replace the current four-tiered structure (Track I, II and III denotes amount and maturity of funds raised). All-in cost ceiling per annum has been pegged at the benchmark rate plus 450 bps spread.
The minimum average maturity period (MAMP) has been kept at three years for all ECBs, irrespective of the amount of borrowing except the borrowers specifically permitted in the circular to borrow for a shorter period.
The list of eligible borrowers has been expanded to include all entities eligible to receive foreign direct investment (FDI).
The new policy allows port trusts, units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, registered societies/trusts/ cooperatives and non-government organisations to borrow.
Negative list for which the ECB proceeds cannot be utilised includes real estate activities, investment in the capital market, equity investment, working capital purposes except foreign equity holder, repayment of Rupee loans for except foreign equity holder.
The recent changes that have been brought out in the ECB policy are likely to help wider set of eligible borrowers i.e. corporates and other entities to avail ECBs to meet their capital needs with the Uniform Minimum Average Maturity Period requirements, uniform all-in-cost ceilings and small negative end-user list.
What is External Commercial Borrowings or ECBs: ECB is the financial instrument used to borrow money from the foreign sources of financing to invest in the commercial activities of the domestic country. Simply, borrowing money from the non-resident lenders and investing it in the commercial activities of India is called as external commercial borrowings.
ECBs are managed by: Finance Ministry of GoI
What includes ECBs: External Commercial Borrowings (ECBs) includes commercial bank loans, buyers’ credit, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc., credit from official export credit agencies and commercial borrowings from Multilateral Financial Institutions. ECBs are being permitted by the Government as a source of finance for Indian Corporate for expansion of existing capacity as well as for fresh investment. Following are the advantages of ECBs.
The government of India seeks investment in the infrastructure and core sectors such as power, coal, railways, roads, telecom, etc. which are directly related to economic development of the country.
Significance of ECBs: The ECBs have emerged as a major form of foreign capital called as FDI. The contribution of ECBs is 20 to 35 per cent in our total capital inflows. PSUs and corporates they use this ECB as a major platform for the source of investment. In our country large amount of ECBs are obtained by private sector corporates.
Advantages of ECBs
ECBs provide opportunity to borrow large volume of funds
The funds are available for relatively long term
Interest rate are also lower compared to domestic funds
ECBs are in the form of foreign currencies. Hence, they enable the corporate to have foreign currency to meet the import of machineries etc.
Corporate can raise ECBs from internationally recognised sources such as banks, export credit agencies, international capital markets etc.
How ECB is different from FDI?
In case of Foreign Direct Investment, the foreign money is used to finance the Equity Capital. But in case ECBs, foreign money is used to finance any kind of funding other than Equity.
Open Acreage Licensing Policy
The ministry of petroleum and natural gas has launched the third bidding round under the Open Acreage Licensing Policy (OALP), offering 23 hydrocarbon blocks covering over 31,000 sq km for exploration. With the launch of the third bidding round, more than 1,20,000 sq km has now been made available for exploration in last one year under the OALP. The 23 blocks offered now are spread across states of Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh, Odisha, Assam, West Bengal, Nagaland, Tripura, Maharashtra, Jharkhand and Madhya Pradesh. Some blocks are also in eastern and western offshore.
What is Open Acreage Licensing Policy (OALP)?
The OALP, a critical part of the Hydrocarbon Exploration and Licensing Policy, provides uniform licences for exploration and production of all forms of hydrocarbons, enabling contractors to explore conventional as well as unconventional oil and gas resources. Fields are offered under a revenue-sharing model and throw up marketing and pricing freedom for crude oil and natural gas produced. Under the OALP, once an explorer selects areas after evaluating the National Data Repository (NDR) and submits the EoI, it is to be put up for competitive bidding and the entity offering the maximum share of oil and gas to the government is awarded the block. NDR has been created to provide explorers’ data on the country’s repositories, allowing them to choose fields according to their capabilities. Data received through the National Seismic Programme, an in-depth study of 26 sedimentary basins, are continuously being added to the NDR.
The Hydrocarbon Exploration and Licensing Policy (HELP) replacing the erstwhile New Exploration Licensing Policy (NELP) was approved in March 2016 and the Open Acreage Licensing Programme (OALP) along with the National Data Repository (NDR) were launched in June 2017 as the key drivers to accelerate the Exploration and Production (E&P) activities in India.
The main features of HELP are Revenue Sharing Contract, single Licence for exploration and production of conventional as well as unconventional Hydrocarbon resources, marketing & pricing freedom, etc.
What was the need for the new Hydrocarbon Exploration and Licensing Policy (HELP)?
India is the 3rd largest consumer of crude oil and petroleum products with oil and gas contributing 34.4% to primary energy consumption. In 2015-2016, India’s crude oil import dependence rose to 81% from 78.5%. In last five years, India has seen overall decline in exploration and production of conventional resources.
New Exploration Licensing Policy (NELP) created in 1997 ended the state dominance and created a competitive environment leading to liberalization of oil and gas exploration and production industry. However, it failed to keep the momentum of production growth and attracting the foreign investment.
Bureaucratic hurdles like multiple approvals and sanctions, cost overruns, and disputes led to some oil majors leaving their awarded blocks and exit from the space.
RBI restructuring package for small businesses
The Reserve Bank of India’s (RBI’s) restructuring package for small businesses announced last month will help recast Rs 1 lakh crore of loans for 7 lakh eligible micro, small and medium enterprises (MSMEs).
The scheme: The scheme announced by RBI is a one-time scheme wherein a loan tenor and interest rate can be revised without classifying the asset as a NPA. The facility is available for standard advances of up to Rs 25 crore only. The scheme will help free up additional resources which will fuel demand and create further opportunities in the industry. The restructuring must be implemented by March 31, 2020. Banks will need to make a provision of 5% towards these restructured loans. Each bank/NBFC should formulate a policy for this scheme with board approval. Those MSMEs that are not exempt from GST will need to be registered on the GSTN on the date on restructuring.
MSMEs form an important component of the Indian economy and contribute significantly to the country’s gross domestic product, exports, industrial output and employment generation. Considering the importance of MSMEs in the Indian economy, it is considered necessary at this juncture to take certain measures for creating an enabling environment for the sector.
It is a mobile application launched by the Ministry of Textiles for quality certification in silkworm seed sector. E app will help quality certification in silk worm sector. It will be used by the Seed Analysts and Seed Officers nominated under Central Seed Act for system and product certification through real time reporting. India is the second largest producer of silk after China and the largest consumer of silk. India’s silk production capacity is expected to reach about 38,500 tonnes by 2020 from the current level of 32,000 tonnes.
e-Kuber is the Core Banking Solution of Reserve Bank of India. E-Kuber provides the provision of a single current account for each bank across the country, with decentralised access to this account from anywhere-anytime using portal based services in a safe manner.
Core Banking Solutions (CBS) can be defined as a solution that enables banks to offer a multitude of customer-centric services on a 24×7 basis from a single location, supporting retail as well as corporate banking activities, as well as all possible delivery channels existing and proposed. The centralisation thus makes a “one-stop” shop for financial services a reality. Using CBS, customers can access their accounts from any branch, anywhere, irrespective of where they have physically opened their accounts. Almost all branches of commercial banks, including the Regional Rural Banks (RRBs), are brought into the core-banking fold.
Core Banking Solutions (CBS) marked a paradigm shift as it made a bank’s particular branch customers, now bank customers as they can access their accounts from any branch for defined purposes. CBS links all branches of a bank and offers opportunities for information management, better customer service and improved risk management.
e-Kuber enables ease of operations. The system also benefits state /central Governments as users. Some of the facilities offered include the provision of portal based access which allows Government departments to access on anywhere-anytime basis and view their balances – of all types including the Ways and Means Advances, drawings, funds positions and the like – all in a consolidated manner so as to help them in better funds management. The capability of consolidating revenue collections by banks through the e-Kuber offers the potential for better flexibility for the Government in managing its finances apart from moving over towards higher levels of electronic banking.
The e-kuber system can be accessed either through INFINET or Internet. The INFINET is a Closed User Group Network for the exclusive use of member banks and financial institutions and is the communication backbone for the National Payments System, which caters mainly to inter-bank applications like Real Time Gross Settlement (RTGS), Delivery Vs Payment, Government Transactions, Automatic Clearing House, etc.
The e-kuber system, implemented in 2012, is reported to be one of the foremost central bank oriented Core Banking Systems in the world.
Auction of Government securities is done through e-kuber system. Sovereign Gold Bonds are available for subscription at the branches of scheduled commercial banks and designated post offices through RBI’s e-kuber system. Goods and Service Tax (GST) settlements are also proposed to be done through e-kuber. On 7 April 2016, RBI launched a platform to enable trading in the priority sector lending certificates (PSLC) through its Core Banking Solution (CBS) portal (e-Kuber).
Kuber refers to Lord Kubera – the lord of wealth in Hindu Mythology. Technology partner for RBI for launching e-kuber is Polaris Ltd
Minimum support for minor forest produce
The Centre will frame new guidelines and extend the coverage of Minimum Support Price (MSP) for minor forest produce (MFP) scheme, which is aimed at benefiting a majority of 10 crore tribals. The government is also considering increasing the MSP for various MFPs by around 40%. The MSP for MFP scheme was started by the United Progressive Alliance (UPA) government in 2013 to ensure fair and remunerative prices to MFP gatherers.
Significance of MFP:
Minor Forest Produce (MFP) is a major source of livelihood for tribals living in forest areas. The importance of MFPs for this section of the society can be gauged from the fact that around 100 million forest dwellers depend on MFPs for food, shelter, medicines and cash income.
It provides them critical subsistence during the lean seasons, particularly for primitive tribal groups such as hunter gatherers, and the landless. Tribals derive 20-40% of their annual income from MFP on which they spend major portion of their time.
This activity has strong linkage to women’s financial empowerment as most of the MFPs are collected and used/sold by women. MFP sector has the potential to create about 10 million workdays annually in the country.
Van Dhan Vikas Kendras initiative:
The initiative aims to promote MFPs-centric livelihood development of tribal gatherers and artisans. It mainstreams the tribal community by promoting primary level value addition to MFP at grassroots level. Through this initiative, the share of tribals in the value chain of Non-Timber Forest Produce is expected to rise from the present 20% to around 60%.
Credit linked capital subsidy scheme
The Central government will continue the “Credit Linked Capital Subsidy and Technology Upgradation Scheme” for micro, small, and medium enterprises (MSEs) beyond the 12th Plan period for three years from 2017-18 to 2019-20.
The Cabinet Committee on Economic Affairs has approved the continuation of the scheme with a total outlay of Rs 2,900 crore.
Credit Linked Capital Subsidy Scheme: The objective of the Scheme is to facilitate technology up-gradation in MSEs by providing an upfront capital subsidy of 15 per cent (on institutional finance of up to Rs 1 crore availed by them) for induction of well-established and improved technology in the specified 51 sub-sectors/products approved. The major objective is to upgrade their plant & machinery with state-of-the-art technology, with or without expansion and also for new MSEs which have set up their facilities with appropriate eligible and proven technology duly approved under scheme guidelines. The Scheme is a demand driven one without any upper limit on overall annual spending on the subsidy disbursal.
Nature of assistance:
The revised scheme aims at facilitating technology up-gradation by providing 15% up front capital subsidy to MSEs, including tiny, khadi, village and coir industrial units, on institutional finance availed by them for induction of well-established and improved technologies in specified sub-sectors/products approved under the scheme.
WPI Inflation Hits 10-Month Low
The Union Ministry of Commerce and Industries has released the data on WPI Inflation. The data makes the following observations:
The WPI Inflation fell to a 10-month low of 2.76 per cent in January owing to softening prices of fuel and some food items.
The WPI inflation has stood at 3.8 per cent in December 2018, and 3.02 per cent in January 2018.
Manufactured products inflation which has a weightage of 64.23 per cent in WPI declined to 2.61 per cent in January, from a level of 2.96 per cent in January 2018.
The wholesale based price inflation for ‘fuel and power’ segment fell sharply to 1.85 per cent as against 8.38 per cent in December 2018, due to easing in prices of motor fuel and LPG.
The government also revised the November WPI downwards to 4.47% from 4.64% earlier.
The primary articles inflation with the weightage of 22.62 per cent increased to 3.54 per cent in January from 2.53 per cent in same month last year.
In its last monetary policy review, RBI had decreased the lending rate by 0.25 per cent. It is expected that the decrease in inflation may provide further head-room to the RBI to cut interest rate (repo) in the coming months.
What Is Wholesale Price Index (WPI)?
Wholesale Price Index (WPI) is an indicator of price changes in the wholesale market. WPI calculates the price paid by the manufacturers and wholesalers in the market. WPI measure the changes in commodity price at selected stages before goods reach to the retail level.
Difference between WPI and CPI is as follows;
Basis For Comparison Wholesale Price Index (WPI) Consumer Price Index (CPI)
Meaning WPI, amounts to the average change in prices of commodities at wholesale level CPI, indicates the average change in the prices of commodities, at the retail level.
Published by Office of Economic Advisor (Ministry of Commerce & Industry) Central Statistics Office (Ministry of Statistics and Programme Implementation)
Measures prices of Goods only Goods and Services both
Measurement of Inflation First stage of transaction Final stage of transaction
Prices paid by Manufacturers and wholesalers Consumers
How many items covered 697 (Primary, fuel & power and manufactured products) 448(Rural Basket)
460 (Urban Basket)
What type of items covered Manufacturing inputs and intermediate goods like minerals, machinery basic metals etc. Education, communication, transportation, recreation, apparel, foods and beverages, housing and medical care
Base year 2011-12 2012
Used by Only a few countries including India 157 countries
Data released on Primary articles, fuel and power (Weekly basis) &
overall (monthly basis since 2012) Monthly basis
India Withdraws MFN Status of Pakistan
One day after the Pulwama terror attack on 14th February, 2019, India has taken a stern step of withdrawing the Most Favoured Nation or MFN Status of Pakistan. This move would enable India to increase customs duty on goods coming from Pakistan. The decision was taken in the meeting of the Cabinet Committee on Security (CCS) that took place on 15th February 2019.
What is the MFN Status?
The MFN status is given under WTO’s General Agreement on Tariffs and Trade (GATT). It is given to an international trade partner to ensure non-discriminatory trade amongst all the members of WTO.
As per the first clause in the General Agreement on Tariffs and Trade (GATT), a country providing MFN status to another country has to provide concessions, privileges, and immunity in trade agreements.
WTO states that if a special status is granted to one trade partner, the country is required to extend it to all members of the WTO without discrimination or any special treatment.
An MFN status helps reduce trade barriers and results in a reduction in tariffs especially in customs duty. This in turn strengthens trade-ties between the two countries.
As India and Pakistan both are members of the WTO, both are required to grant MFN status to each other and other partner countries.
What is the State of MFN Status Between India and Pakistan?
India had granted MFN status to Pakistan in 1996, a year after the formation of WTO. But Pakistan hasn’t accorded MFN status to India till now. The reason for this is decades of conflict, mistrust and war. Now the total India-Pakistan trade has increased marginally to $2.41 billion in 2017-18 as compared to $ 2.27 billion in 2016-17. India had imported goods worth $488.5 million in 2017-18 and exported goods worth $ 1.92 billion in that fiscal. India’s exports mostly include cotton, dyes, chemicals, vegetables and iron and steel; while its imports include fruits, cement, leather, chemicals and spices. Given that Indo-Pakistan trade-ties is not very strong, this step of revoking the MFN status is only symbolic.
What is the Cabinet Committee on Security?
There are 6 Cabinet Committees in India i.e. Appointments Committee of the Cabinet, Cabinet Committee on Accommodation, Cabinet Committee on Economic Affairs, Cabinet Committee on Parliamentary Affairs, Cabinet Committee on Political Affairs and Cabinet Committee on Security. The Cabinet Committee on Security (CCS) of the Central Government of India looks into the matters of defence expenditures and National Security. It consists of the Prime Minister, Minister of Home Affairs, Minister of External Affairs and, Minister of Finance and Minister of Defence. It is chaired by the Prime Minister.
Know Your Budget series
What is it? It is a fortnight series started by the union Finance Ministry on Twitter which explains the importance of Union Budget and its making. It aims to educate the general public about the budgetary process. The government on February 1 would unveil the interim Budget for 2019-20 as the general elections are due in the next couple of months. The final Budget for the next fiscal would be presented by the new government. The first series of tweets explained what is Union Budget and Vote on Account.
What is Budget? Budget is the most comprehensive report of the government’s finances in which revenues from all sources and outlays for all activities are consolidated. The Budget also contains estimates of the government’s accounts for the next fiscal year called Budget estimates.
The government has notified changes to Section 56 of the Income Tax Act, in a move that brings relief to start-up founders and investors dealing with the issue of “Angel Tax”.
Major Changes introduced: As per the changes, all DIPP-recognised start-ups can apply to the department for approvals requesting exemption from Angel Tax, or Section 56 2 (viib) of the Income Tax Act, which will then be sent to the Central Board of Direct Taxes (CBDT) for approval. The changes are applicable to start-ups, recognised by DIPP, where the amount of paid-up share capital, and share premium of the capital after the proposed issue of share does not exceed Rs. 10 crore. The notification specifies a list of documents that start-ups will have to submit to the DIPP while seeking approval. The CBDT is mandated to either approve or reject the applications within 45 days.
WHAT IS THE LATEST ISSUE?
At least 80 startups have received notices to pay angel tax since last year. Many founders have said they have been asked to pay up as much as 30% of their funding as tax. Angels have also received multiple notices asking them to furnish details on their source of income, their bank account statements and other financial data.
Agri-Vision 2019, a two-day conference on ‘Envisioning Agro Solutions for Smart and Sustainable Agriculture’ was held at Hyderabad. Agriculture sector accounts for 18 per cent of India’s GDP and provides employment to 50 per cent of the workforce of the country. The Gross Value Added by agriculture, forestry and fishing is estimated at Rs 17.67 trillion (US$ 274.23 billion) in FY18. During 2017-18 crop year, food grain production is estimated at record 284.83 million tonnes. The introduction of high yielding varieties, irrigation facilities, increased input flow through fertilizers and pesticides, farm mechanization, credit facilities, price support, and other rural infrastructure facilities ushered the green revolution over the past few decades. Growth of Agricultural sector is important for inclusive growth and poverty alleviation. Need for concerted efforts from all stake holders to find long term solution to various challenges faced by Agricultural sector, Loan waiver is only a temporary relief but proves futile in long run in addressing Farmers concerns. India today is not only self-sufficient in respect of demand for food, but is also a net exporter of agri-products occupying seventh position globally. It is one of the top producers of cereals (wheat & rice), pulses, fruits, vegetables, milk, meat and marine fish. However, we are still facing deficit of pulses and oilseeds. Although, the availability of fruits, vegetables, milk, meat and fish has increased, the most important aspect is to ensure access and affordability to a vast majority of Indians, including farmers.
Food processing industry: Plays a critical role in improving agrarian economy, raising farm incomes, reducing wastages, ensuring value addition, promoting crop diversification and generating employment opportunities as well as export earnings. Vital link between agriculture and industry. The Indian food and grocery market is the world’s sixth largest. The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India.
Organic Farming: India holds a unique position among 172 countries practicing organic agriculture. India is home to 30 per cent of the total organic producers in the world, but accounts for just 2.59 per cent (1.5 million hectares) of the total organic cultivation area of 57.8 million hectares.
Horticulture: leading horticultural country of the world with a total annual fruits and vegetable production of 306.82 million tonnes during 2017-18. India is the second largest fruit producer in the world.
Livestock: Has been growing faster than crop sector. The contribution of livestock output to the total output of the agriculture sector has significantly increased from 15 per cent in 1981-82 to 29 per cent in 2015-16. acts as cushion and engine for agricultural growth.
Dairy industry: India is also the world’s second largest milk producer and is emerging as a major exporter now. It is contributing around 26 per cent to total agriculture GDP.
Government initiatives: Improve soil fertility on a sustainable basis through the soil health card scheme. Provide improved access to irrigation and enhanced water efficiency through Pradhan Mantri Krishi Sinchai Yojana (PMKSY). Support organic farming through Paramparagat KrishiVikasYojana (PKVY). Creation of a unified national agriculture market to boost the income of farmers. To mitigate risk in agriculture sector, “Pradhan Mantri Fasal BimaYojana (PMFBY) has been launched for implementation from Kharif 2016. Focusing on irrigation with schemes like “Per Drop More Crop”, provision of quality seeds and nutrients based on soil health, setting up warehouses and cold chains to prevent post-harvest crop losses, promoting value addition through food processing, creating a National Farm Market, removing distortions and e-platform across 585 Stations. To achieve the target of doubling farmer income by 2022 increasing investments in agricultural R&D and rolling out efficient institutional reforms are vital to tackle the emerging challenges in agriculture, including food and nutrition security both at national and regional levels.
Small Farmers’ Agri-Business Consortium (SFAC):
Silver Jubilee Celebrations of the Small Farmers’ Agri-Business Consortium (SFAC).
SFAC: The Government established Small Farmers’ Agri-Business Consortium (SFAC) as a Society in January 1994 to facilitate agri-business ventures by catalysing private investment through Venture Capital Assistance (VCA) Scheme in close association with financial institutions. The role of State SFACs is to aggressively promote agribusiness project development in their respective States.
Management: The Society is governed by Board of Management which is chaired, ex-officio, by Hon’ble Union Minister for Agriculture and Farmers Welfare as the President and the Secretary, Department of Agriculture, Cooperation and Farmers Welfare, Government of India, is the ex-officio Vice-President.
The main functions of SFAC are: Promotion of development of small agribusiness through VCA scheme. Helping formation and growth of Farmer Producer Organizations (FPOs) / Farmer Producer Companies (FPCs). Improving availability of working capital and development of business activities of FPOs/FPCs through Equity Grant and Credit Guarantee Fund Scheme. Implementation of National Agriculture Market (e-NAM) Electronic Trading platform.
TRAI new regulatory framework would make TV choices – ” à la carte “
“à la carte” means: If you eat à la carte, you choose each dish from a separate list instead of eating a fixed combination of dishes at a fixed price
Reasons for new TRAI regulatory guidelines: To address the issue of transparency in cable service and to provide real choice to consumer unrealized since Digitization of cable TV network in March, 2017
Salient Features of TRAI regulatory guidelines:
New guidelines will come into effect from February 1, 2019. Applicable to all Direct to Home (DTH) and Local cable operators. Customers could choose set of channels they want to view rather than pre decided packs provided earlier by service providers. Customer needs to pay only for channels chosen. MRP of channels should be display on TV screen through Electronic Program Guide. Additionally, Distributors and Broadcasters can provide bouquets of channels but with price transparency. Network Capacity Fees with upper ceiling of Rs 130/ 100 channels. High definition channel will be counted as two Standard definition channel for determining network capacity fees. Subscribers with advanced payment could not be charged higher and would be adjusted if they want to switch to new package wrt February 1, 2019
Benefits of TRAI regulatory guidelines:
Provide real choice to consumers by allowing them to choose channels set they want to view. Transparency in cable price through on screen display would reduce monthly cable/DTH bill. Covers all cable operators providing uniform regulatory standard. Some educational channels like Swayam Prabha 32 DTH channels would be get wide viewer base. Provides equal opportunities for all channel for consumer choices
RBI eases norms for external commercial borrowing
Reserve Bank of India has decided to liberalise external commercial borrowing (ECB) norms.
Removed the sector-wise limits: RBI has allowed all eligible borrowers to raise up to $750 million per financial year ECBs under the automatic route, replacing the existing sector-wise limits.
List of borrowers expanded: The list of borrowers has been expanded to include all entities eligible to receive FDI.
List of lenders expanded: Any entity who is a resident of a country which is financial action task force compliant, will be treated as a recognised lender.
Maturity of borrowings: RBI has revised minimum average maturity period at 3 years for all ECBs, irrespective of the amount of borrowing, except for borrowers specifically permitted to borrow for a shorter period. Earlier, the minimum average maturity period was five years.
ECBs: An external commercial borrowing(ECB) is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (public sector undertakings). ECBs include commercial banks loans, buyers’ credit, suppliers’ credit, securitised instruments such as floating rate notes and fixed rate bonds etc., credit from official export credit agencies and commercial borrowings from the private sector window of multilateral financial institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc. ECBs cannot be used for investment in Stock Market or speculation in real estate.
The DEA (Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve Bank of India, monitors and regulates ECB guidelines and policies. For infrastructure and greenfield projects, funding up to 50% (through ECB) is allowed. In telecom sector too, up to 50% funding through ECBs is allowed. Recently Government of India allowed borrowings in Chinese currency yuan. Corporate sectors can mobilize USD 750 million via automatic route, whereas service sectors and NGO’s for microfinance can mobilize USD 200 million and 10 million respectively. Borrowers can use 25 per cent of the ECB to repay rupee debt and the remaining 75 per cent should be used for new projects. A borrower can not refinance its entire existing rupee loan through ECB. The money raised through ECB is cheaper given near-zero interest rates in the US and Europe, Indian companies can repay part of their existing expensive loans from that.
Impact of the decision:
Higher funds availability: The step would increase the funds availability in India as until now RBI had capped funds raised via ECBs at 6.5% of GDP.
Ease of doing business: The move will lead to increase in EoDB in India.
Ease to cash-strapped companies: The move will bring more liquidity to cash strapped sectors and Indian airlines sector like currently struggling Jet Airways.
Skill development and National Skills Qualification Framework (NSQF)
NSQF is an important component of Skill India Programme and improvements in NSQF can realize the aims of Skill India.
NSQF: This organises all qualifications/courses according to a series of levels of knowledge, skills and aptitude, in 10 levels. It is similar to classes in schools, for instance, level 1 corresponds to Class 9 (because vocational education begins in secondary school). Levels 2, 3 and 4 correspond to Classes 10, 11 and 12, respectively. Levels 5-7 correspond to undergraduate education, and so on. The Ministry of Skill Development has mandated all training/educational programmes/courses be NSQF-compliant. It has mandated that all training and educational institutions must define eligibility criteria for admission to various courses in terms of NSQF levels.
India Skills 2018:
It is a national skill competition organized by Ministry of Skill Development and Entrepreneurship (MSDE). Twenty-seven States participated in India Skills 2018, held in Delhi. Maharashtra secured maximum medals, followed by Odisha and Delhi. India Skills was open to government industrial training institutes, engineering colleges, Skill India schemes, corporates, government colleges, and school dropouts.
Five pillars/sources of skill training in India:
The secondary schools/polytechnics.
Industrial training institutes.
NSDC funded private training providers offering short-term training.
16 Ministries providing mostly short-term training.
Employers offering enterprise-based training.
A majority of the participants in India Skills, 2018 were from corporates (offering enterprise-based training) and industrial training institutes. Neither industrial training institutes nor corporates’ courses are aligned with the NSQF. Less than 20% participants were from the short-term courses of the NSDC which are NSQF compliant. If India Skills 2018 was only open for the NSQF-aligned institutions, it would have been a big failure.
Problems facing NSQF:
Unlike general academic education, where certain level of certification is required before further progression is permitted, there is no clear definition of the course curriculum within the NSQF that enables upward mobility. There is no connection of the tertiary level vocational courses to prior real knowledge of theory or practical experience in a vocational field. Efforts to introduce new Bachelor of Vocation and Bachelor of Skills courses were made, but the alignment of these courses was not completed. Lack of alignment between the HRD Ministry (responsible for the school level and Bachelor of Vocation courses) and the Ministry of Skill Development (responsible for non-school/non-university-related vocational courses). There are too many Sector Skill Councils in India and each is not comprehensive, like we have four SSCs for manufacturing but they are treated as one in World Skills courses.
SEBI Regulations and their attempt to limit Insider Trading
SEBI lays down mechanism to prevent insider trading on the recommendations of the TK Viswanathan committee
What is Insider Trading: Insider trading is the buying or selling of a security by someone who has access to nonpublic information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still nonpublic. The term ‘insider’ has been defined under Regulation 2(e) of SEBI (Prohibition of Insider Trading) Regulations, 1992. Basically, the term ‘insider’ can be classified into three broad categories, which are:
Persons who are connected to the company, Persons who were connected with the company, Persons who are deemed to be connected to the company.
In order to become an insider a person has to fulfil three elements:
The person should be a natural person or legal entity; The person should be connected person or deemed to be connected; Acquisition of the unpublished price sensitive information by virtue of such connection.
Mechanism to prevent insider trading
According to SEBI Promoters will be held responsible for violation of insider trading norms, if they possess unpublished price-sensitive information (UPSI) regarding the company without any “legitimate purpose“.
Legitimate purpose – Sharing of the UPSI by an insider with partners, collaborators, lenders, customers, suppliers, merchant bankers, legal advisors, auditors, insolvency professionals or other advisors or consultants, provided that such sharing has not been carried out to evade or circumvent the prohibitions of these regulations. The board of directors to maintain digital database containing the names of such persons or entities with whom the information is shared. A promoter who does not hold any position on the board will not be considered a person having “Legitimate Purpose” to hold UPSI. Advisors who need access to UPSI, needs to be informed that the information shared with them is insider information and they should apply it only for the purpose meant. Identification data of recipients must be maintained.
Cases under spotlight
Cyrus Mistry, the former Chairman of Tata Sons, had alleged that information related to Tata group companies was being shared with Ratan Tata.
Recommendation of Kotak committee
Committee has recommended flow of unpublished price sensitive information (UPSI) shall be considered for ‘legitimate purpose’, and not an offence under the SEBI (Insider Trading) for those who:
Is part of the promoter group. Has a nominee director on the board. The information should be pursuant to a formal agreement in accordance with the regulations. Communication of information must comply with the Insider Trading Regulations.
Government approves Capital Infusion to the Exim Bank
The Union Cabinet headed by Prime Minister Narendra Modi has approved a capital infusion of Rs 6,000 crore in state-owned Export-Import Bank of India (Exim) to expand its business.
How the capital infusion would be made?
Key facts about the capital infusion proposal are:
The government would issue recapitalisation bonds to the tune of Rs 6,000 crore for capital infusion of Exim Bank.
The capital infusion would take place in two tranches of Rs 4,500 crore in 2018-19 and Rs 1,500 crore in 2019-20 respectively.
The government has also approved an increase in the bank’s authorised capital from Rs 10,000 crore to Rs 20,000 crore.
Authorised capital refers to the maximum amount of capital for which shares can be issued by a company. The Authorised capital would be mentioned in the Memorandum of Association of the Company and can be increased at any time in future. The capital infusion and increase in authorised capital give an impetus to new initiatives such as supporting Indian textile industries, likely changes in the Concessional Finance Scheme, likelihood of new letters of credit in future in view of the country’s active foreign policy and strategic intent. This will have a positive impact on increasing the exports of India.
Export-Import Bank of India (Exim Bank)
Exim Bank is a premier export finance institution of India. It was established in 1982 under the Export-Import Bank of India Act to promote the Indian exports. Exim Bank assists the Industries across wide avenues like import of technology, export product development, export production, export marketing, pre-shipment and post-shipment and overseas investment.
RBI to transfer Rs 28,000 crore interim surplus to government
Reserve Bank will transfer an interim dividend of Rs 28,000 crore to the government, a move that will help the Centre keep fiscal deficit in check.RBI has already transferred Rs 40,000 crore in current year (2018-19). Interim dividend is a payment made during the course of a financial year.RBI is a “full service” central bank —While carrying out it’s functions or operations, it makes profits which it transfers to government according to the economic capital framework. Economic capital framework refers to the risk capital required by the central bank while taking into account different risks.It reflects the capital that an institution requires or needs to hold as a counter against unforeseen risks or events or losses in the future. The central bank transfers its surplus to the government in accordance with Section 47 (Allocation of Surplus Profits) of the RBI Act. The act says that the amount will be arrived at after making provision for (a) bad and doubtful debts (b) depreciation in assets, (c) contributions to staff and (d) superannuation fund. RBI have constituted a committee headed by former RBI Governor Bimal Jalan to review the economic capital framework.The panel was formed after differences between the government and the central bank over RBI’s reserves.
States’ ranking on Startup initiatives
Department for Promotion of Industry and Internal Trade (DPIIT) has released second edition of Startup Ranking for 2019.
Startup Ranking framework: The Startup Ranking framework aims to rank the States/UTs for establishing a robust ecosystem for supporting Startups. The framework also encourages States and UTs to identify, learn and replicate good practices from each other.
The 2019 edition: The Ranking Framework 2019 comprises of 7 pillars and 30 action points. The pillars will assess States’/UTs efforts across institutional support, simplifying regulations, easing public procurement, incubation support, seed funding support, venture funding support and awareness and outreach related activities. The ranking exercise aims to evaluate measures taken by States/UTs during the assessment period from May 1, 2018 to June 30, 2019.
Significance of Startups: India is home to about 20,000 startups, with about 1,400 beginning operations every year. They are not only driving economic growth but also leading to technological innovations and employment generation in every state. Entrepreneurs are introducing new solutions everyday and also improving existing processes. To encourage and help statrups the Govt of India has taken the lead in creating policies and a framework. Many States and UTs have a startup focussed environment with ease of doing business for startups.
Norms relaxed for Start- ups
The government has relaxed the norms under the definition of Start-Ups. The relaxations are in line with the government’s vision to promote the culture of entrepreneurship and ease of doing business in India.
The new norms aim to catalyse entrepreneurship by enabling angel investments by innovators across all sections of society and all sectors of economy.
The changes brought in are: The investment limit of angel investors to seek exemption under the Income Tax Act, 1961 has been increased to Rs 25 crore from 10 Crore. An entity shall be considered a start-up up to 10 years from its date of incorporation/registration instead of the previous period of 7 years. An entity would be considered as a startup up to a turnover of Rs 100 crore as against the earlier limit of Rs 25 crore.
Exemptions Proposed: A start-up cannot invest in a building or land unless it is for its business or used by it for purposes of renting or held by it as stock-in-trade. A start-up cannot offer loans or advances, other than those where lending money is part of its business. A start-up cannot make any capital contribution to any other entity or invest in shares, car, any vehicle or mode of transport that costs more than Rs 10 lakh.
VIVID-Vision Insight and Voices as India goes Digital”- the District Informatics Officer (DIO) meet, is being organised by National Informatics Centre (NIC).
What is it? The meet is held as an initiative to interact with the DIO’s and to share their experiences as well as contribution, as digital change-makers at the grass-root level in the States. VIVID started in 2017, as an annual event, with the objective to empower NIC officials in the field of technology. The National meet will cover a wide range of relevant topics in various technical sessions including Emerging Technologies (Artificial Intelligence, Machine Learning & Big Data Analytics), Cyber Threats & Counter Measures (Changing Digitisation Paradigm & its impact on Security), Enterprise Level Applications, and many other relevant topics.
Financial Action Task Force (FATF)
The Financial Action Task Force (FATF) has decided to keep Pakistan on its grey list at the end of its week-long plenary meeting in Paris. India had lobbied hard to get the global financial body to blacklist Pakistan for non-compliance in curbing terror financing. India wanted Pakistan to be put under “closer scrutiny immediately” and has demanded that “stronger implementation” be sought from Islamabad in curbing terror financing. India had even prepared a dossier for the watchdog nailing the culpability of Pakistan in the Pulwama terror strike, the worst such attack in J&K in decades.
Background: Pakistan was placed on the grey list by the FATF in June for failing to curb anti-terror financing. It has been scrambling in recent months to avoid being added to a list of countries deemed non-compliant with anti-money laundering and terrorist financing regulations by the Paris-based FATF, a measure that officials here fear could further hurt its economy.
Implications of this move: Pakistani analysts say being put on the FATF watchlist could deal a blow to Pakistan’s economy, making it harder for foreign investors and companies to do business in the country. It would be counterproductive to put Pakistan on the watch list as it would hurt its capability to fight terrorism. Also, being put back on the grey list would heighten Pakistan’s risk profile and some financial institutions would be wary of transacting with Pakistani banks and counterparties. Being placed on the FATF watchlist carries no direct legal implications but brings extra scrutiny from regulators and financial institutions that can chill trade and investment and increase transaction costs.
What is it? The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 on the initiative of the G7. It is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas. The FATF Secretariat is housed at the OECD headquarters in Paris.
Objectives: The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
Functions: The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures and promotes the adoption and implementation of appropriate measures globally. In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
What is blacklist and grey list?
FATF maintains two different lists of countries: those that have deficiencies in their AML/CTF regimes, but they commit to an action plan to address these loopholes, and those that do not end up doing enough. The former is commonly known as grey list and latter as blacklist.
Once a country is blacklisted, FATF calls on other countries to apply enhanced due diligence and counter measures, increasing the cost of doing business with the country and in some cases severing it altogether. As of now there are only two countries in the blacklist — Iran and North Korea — and seven on the grey list, including Pakistan, Sri Lanka, Syria and Yemen.
NITI Aayog hosts Conference on Future of Indian Banking and role of technology Tomorrow
The think tank Niti Ayog had hosted the conference on Future of Indian Banking and role of technology Tomorrow in association with the Foundation for Economic Growth and Welfare (EGROW Foundation). The conference was inaugurated by Dr Rajiv Kumar, Vice Chairman, NITI Aayog. The speakers in the event included Rajiv Kumar, Secretary, Department of Financial Services, Dr K.V. Subramanian, Chief Economic Advisor, Dr Andreas Bauer, Senior Resident Representative, IMF, Dr Marius Vismantas, Lead Financial Sector Specialist, World Bank, Shri Sunil Mehta, Managing Director, Punjab National Bank.
About the Conference
The conference was aimed at increasing and elevating the discourse on the banking sector in India and help in developing insights to inform the continued evolution of the Indian banking sector for optimally supporting the growing credit needs of the Indian economy.
Research papers were presented on the following themes:
Evaluating critical banking situation in the country, considering domestic and international developments.
Recapitalization of Public Sector Banks, Insolvency and Bankruptcy Code.
The future course of Prompt Corrective Action and recovery.
Alternatives to Basel Norms, if any.
Privatization, Mergers and Acquisitions, etc.
The event witnessed the participation of more than 200 domestic and international participants, including policy makers, academicians, researchers, professionals, and students from various banks, universities and institutes.
The Foundation for Economic growth and Welfare (EGROW Foundation) is a non-profit, multi-disciplinary public policy organisation engaged in independent, high-quality research in the areas of macroeconomic policy, public welfare, national security and diplomacy.
CBIC sets up Working Groups to Facilitate Exports, Curb Tax Evasion
The Central Board of Indirect Taxes and Customs (CBIC) has constituted three working groups to suggest ways to facilitate exports, especially through e-commerce, and improve compliance by way of curbing tax evasion. The Working Groups would study and recommend measures to facilitate trade, promote exports and improve compliance.
Mandate of Working Groups
Export promotion and facilitation with emphasis on boosting exports through e-commerce by addressing the trade facilitation barriers faced in India’s export market.
Recommend the ways for improving the quality of logistics services for exporters.
Enhancing compliance, plugging loopholes to improve customs revenue collections and curb Integrated GST (IGST) refund frauds.
Improving the legislative structure of customs tariff and update it to suit the emerging and future needs of the economy and industry.
Creation of a comprehensive export tariff structure to enhance India’s export competitiveness.
The working groups will consult stakeholders, including export promotion councils, and submit the report within two months.
Central Board of Indirect taxes
Central Board of Indirect Taxes and Customs (erstwhile Central Board of Excise & Customs) works under the Department of Revenue under the Ministry of Finance, Government of India. The board is vested with the responsibility of formulation of policy concerning levy and collection of Customs, Central Excise duties, Central Goods & Services Tax and IGST, prevention of smuggling and administration of matters relating to Customs, Central Excise, Central Goods & Services Tax, IGST and Narcotics to the extent under CBIC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Central GST Commissionerates and the Central Revenues Control Laboratory.
Prepaid payment instruments
In a much needed respite to e-wallet companies, the Reserve Bank of India has extended deadline for completion of Know Your Customer (KYC) norms for prepaid payment instrument (PPI) issuers by six months. As per RBI directions, PPI issuers were required to complete the KYC process by February 28, 2019. PPIs or mobile wallets were mandated by the banking regulator in October 2017 to capture all information required under the know-your-customer (KYC) guidelines by end February.
What are PPIs?
Prepaid payment instruments are those which facilitate purchase of goods and services against the value stored on such instruments. Value stored on them is paid by the holder using a medium (cash, debit card, credit card etc). These are generally issued in the form of smart cards, mobile wallets, paper vouchers, internet accounts/wallets. Prepaid payment instruments (PPIs) come with a pre-loaded value and in some cases a pre-defined purpose of payment. They facilitate the purchase of goods and services as well as inter-personal remittance transactions such as sending money to a friend or a family member. These payment instruments are licensed and regulated by the Reserve Bank of India. There are three types of PPIs—closed system PPIs, semi-closed system PPIs and open system PPIs. The most common example of a closed system PPI is a brand-specific gift card. Such cards, physical or otherwise, can be used only at specific locations, and cannot be used to transfer funds from one account to another.
Nine new items added to MSP for minor forest produce scheme
The Ministry of Tribal Affairs (MoTA) has added nine minor forest produce (MFP) items to its minimum support price (MSP) for MFP scheme. The total number of MFPs covered under the list is 49. The nine new items are: Bakul (dried bark), Kutaj (dried bark), Noni/Aal (dried fiuits), Sonapatha/Syonak pods, Chanothi seeds, Kalihari (dried tubers), Makoi (dried fiuits), Apang plant and Sugandhrnantri roots/tubers.
MSP for MFP scheme:
The MSP for MFP scheme was started by the Centre in 2013 to ensure fair and remunerative prices to MFP gatherers. The total outlay for the scheme is Rs 967 crore as Centre’s share for the planned period (2013-14 to 2016-17). The scheme is designed as a social safety net for improvement of livelihood of MFP gatherers by providing them fair price for the MFPs they collect. The scheme has been started with the objective of providing fair price to MFP gatherers, enhance their income level and ensure sustainable harvesting of MFPs. The MSP scheme seeks assurance of buying at a particular price, primary processing, storage, transportation etc while ensuring sustainability of the resource base.
Implementation of the scheme:
Ministry of Tribal Affairs, Government of India is the Nodal Ministry for implementation of the scheme which will announce Minimum Support Price (MSP) for the selected MFPs with the technical support from TRIFED. TRIFED will act as the Central Nodal Agency for implementation and monitoring of the scheme through State level implementing agencies. State designated agencies will undertake procurement of notified MFPs directly from MFP gatherers (individual or collectives) at haats notified procurement centers at grass root level at prefixed Minimum Support Price and ensure full & timely on the spot payment to MFP gatherers.
Significance of MFP:
Minor Forest Produce (MFP) is a major source of livelihood for tribals who belong to the poorest of the poor section of society. The importance of MFPs for this section of the society can be gauged from the fact that majority of 100 million tribals depend on MFPs for food, fodder, shelter, medicines and cash income. It provides them critical subsistence during the lean seasons, particularly for primitive tribal groups such as hunter gatherers, and the landless. Tribals derive 20-40% of their annual income from MFP on which they spend major portion of their time. This activity has strong linkage to women’s financial empowerment as most of the MFPs are collected and used / sold by women. MFP sector has the potential to create about 10 million workdays jobs annually in the country.
Tribal Cooperative Marketing Development Federation of India Limited (TRIFED)
TRIFED is a national-level apex organization functioning under administrative control of Ministry of Tribal Affairs. It was established in August 1987 by then Ministry of Welfare under Multi State Cooperative Societies Act 1984 (which has now been replaced by Multi-State Cooperative Societies Act, 2002). It is headquartered in New Delhi. Its core objective is to institutionalize trade of Minor Forest Produce (MFP) and Surplus Agriculture Produce (SAP) collected or cultivated by tribals as they are heavily dependent on these natural products for their livelihood. TRIFED also works as an agency to the FCI for procurement of Wheat and Rice. It also organizes exhibitions like National Tribal Craft Expo called “Aadi Mahotsav” etc. to promote and market tribal products. It also facilitates participation of tribal artisans to enable them to interact directly with art lovers to assess market needs.
SWAYATT and GeM Start-up Runway
Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu, launched SWAYATT and also dedicated GeM Start-up Runway-an initiative of Government e Marketplace (GeM).
It is an initiative to promote Start-ups, Women and Youth Advantage Through e-Transactions on Government e Marketplace (GeM).
It will bring together the key stakeholders within the Indian entrepreneurial ecosystem to Government e-Marketplace the national procurement portal.
GeM Start-up Runway
It is an initiative of GeM in association with Start -up India is to facilitate Start-ups registered under it to access the public procurement market and sell innovative products and services to government buyers.
GeM, an online market place for procurement of common use goods and services by government ministries, departments and CPSEs was setup in 2016.
GeM Start-up Runway seeks:
To align certified Start-ups with Government procurement orders and contracts, to enable Start-ups in scaling operations from ideation to growth stage in minimal time, and spur hyper-local job-creation and wealth-generation and for achieving socially-inclusive economic growth.
Enable Start-ups to conduct market trials with government buyers, seek time-bound feedback and gain realistic product, price comparison and market valuation from potential buyers and investors.
To support technology development, spur research and innovation by ensuring a conducive policy environment for industrial diversification and value addition to commodities, and aligns with Government’s philosophy to turn Job-seekers into job-creators.
Address goals and objectives under United Nations Sustainable Development Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.
“South Coast Railway (SCoR)”- a new Zone of Indian Railways:
Creation of a new zone with headquarter at Visakhapatnam. The new zone named “South Coast Railway (SCoR)”, will comprise of existing Guntakal, Guntur and Vijayawada divisions. South Central Railway will comprise of Hyderabad, Secunderabad and Nanded divisions.
Technology Support and Outreach (TECH-SOP):
TECH – SOP is an initiative of the MSME Ministry to bridge the gap between research and development institutions and MSMEs so that they can use latest technologies and become a part of global value chain.