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Economy Current Affairs June 5th Week 2017

 1. RBI: Fiscal Deficit of States Soars to Rs 4.93 trillion in FY16.

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According to ‘Handbook of Statistics on States 2016-17‘, the gross fiscal deficits of all the states have soared to Rs 4,93,360 crore in fiscal 2016 from Rs 18,790 crore in FY1991. This is the second edition of RBI’s statistical publication.

Key Points:

‘Handbook of Statistics on States 2016-17 follows a ‘one-indicator-one table’ approach. It covers all sub-national statistics on socio- demographics, state domestic product, agriculture, industry, infrastructure, banking and other fiscal indicators across the states during the period 1950-51 to 2016-17. 

The handbook also provides data on the state-wise availability of power, per capita availability of power, installed capacity of power, and power requirement, the length of national highways, roads and state highways, and railheads. Uttar Pradesh had a fiscal deficit of Rs 3,070 crore in FY91, which has soared to Rs 64,320 crore in FY16. 

It is projected to improve to Rs 49,960 crore in FY17. Rajasthan had a fiscal deficit of Rs 540 crore in FY91, which has soared to Rs 67,350 crore in FY16. However, the gross fiscal deficit is projected to decline to Rs 40,530 crore in FY17. 

Maharashtra has a fiscal deficit of Rs 37,950 crore in FY16 which is projected to soar to Rs 35,030 crore in FY17. Gujarat which has seen rapid industrialisation in the period of data analysis has got its fiscal deficit increased from Rs 1,800 crore in FY91 to Rs 22,170 crore in FY16 and the deficit is projected to further deteriorate in FY17 to Rs 24,610 crore.

 In fact from FY01, Gujarat has not shown improvement in its macro numbers even for a single year. Andhra Pradesh has a deficit of Rs 17,000 crore in FY16 which is set to increase to  Rs 20,500 crore in FY17.

 Tamil Nadu is also projected to have a higher deficit at Rs 40,530 crore in FY17. Karnataka is also estimated to post higher deficit in FY17 at Rs 25,660 crore. Bihar which has a fiscal deficit of Rs 28,510 crore in FY16 is slated to improve its finances with the fiscal deficit of Rs 16,010 crore in FY17. Similarly, West Bengal is also slated to improve its fiscal deficit to Rs 19,360 crore in FY17 .

2. World Bank clears $250-million loan for Skill India Mission.

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The World Bank has cleared a USD 250-million loan to aid the Skill India mission. The loan amount would be used for making Indian youth more employable through reskilling.

The USD 250 million Skill India Mission Operation (SIMO) is set to increase the market relevance of short-term skill development programmes (3-12 months or up to 600 hours) both at the national and state levels. It will help the government of India to better equip the young workforce with employable skills. SIMO will be a six- year programme in support of National Policy for Skill Development and Entrepreneurship (2017-23).

 Under the programme, persons in the age group of 15-59 will acquire skill training irrespective of their employment status. This will benefit 1.2 crore youngsters in the age bracket of 15 and 29 years who are entering the labour market every year. 

The programme is expected to benefit approximately 15,000 trainers and 3,000 assessors. The programme has also a mandate to offer placement and entrepreneurship opportunities to women and increase their exposure to skill training. 

As per the official estimates, India is in need of additional 109 million skilled workers to work in 24 key sectors by 2022. SIMO will support the government’s vision of increasing women’s participation in the labour force and increase greater off-farm employment. Higher skilled labour force will have an improved employment opportunity to raise their earnings. 

3. The World’s Top Airline Stock Is India’s SpiceJet With 124% Gain.

Two and a half years after SpiceJet Ltd. was forced to ground its entire fleet on its inability to pay a mere $2.2 million in fuel bills, the budget airline has become the world’s best-performing airline stock — with $26 billion in plane orders to boot.

The company’s co-founder and Chairman Ajay Singh has played the white knight, injecting capital, cutting loss-making routes and aggressively adding capacity in one of the world’s fastest growing markets. To top it all off, crude prices are staying low.

For investors, that’s been a winning formula: SpiceJet shares are the best performers on a Bloomberg Intelligence index of airline stocks this year. The stock is up 124 percent in 2017 and has gained more than 800 percent since the company’s near-demise in December 2014, giving SpiceJet a market value of $1.2 billion.

The outlook for aviation stocks looks good “as long as oil prices are under control,” said Mahesh Patil, co-chief investment officer of Birla Sun Life Asset Management Co., which has $30 billion in assets. Birla held a stake of about 1.2 percent in SpiceJet as of May 31, according to Bloomberg data.

4. Government issues Notification for roll out of GST.

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The government has notified the roll out of Goods and Services Tax (GST) from July 1st.

To launch GST in the midnight of June 30th, the government has organised a special programme to be held in Central Hall of Parliament. The event will see the participation of President Pranab Mukherjee, Prime Minister Narendra Modi, Finance Minister Arun Jaitley and other Ministers and bureaucrats. 

As per the last year’s Constitutional amendment approved by Parliament, the government has been given time only till 15th of September, 2017. 

Within that time period, the government has to replace the existing indirect tax structure by the GST, failing which may trigger a constitutional crisis as no tax can be levied on goods and services. 

So, the government has ruled out the possibility of deferring the roll out of GST by any further time period. GST which will subsume a host of indirect levies like excise, service tax and VAT will be one of the nation’s biggest economic reform.

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 5. India offers $100,000 to UN Tax Fund.

India has contributed $ 100,000 to the UN Trust Fund for International Cooperation in Tax Matters (the UN Tax Fund). The fund is aimed at helping the developing countries to actively participate in the discussion of tax issues.

This was announced by the UN Department of Economic and Social Affairs Office for Financing, Development Office. India has also earned the distinction of becoming the first country to make a voluntary contribution to the UN tax fund.

The objective of UN Tax Trust Fund is to support the work of the Committee of Experts on International Cooperation in Tax Matters (the UN Tax Committee). The funding will be used for supporting the participation of the developing countries’ in the sub-committee meetings of the UN Tax Committee, which are currently unfunded.

The UN and the Committee of Experts on International Cooperation in Tax Matters have been calling for the voluntary contributions for the tax fund since its establishment in 2006. The call for the contribution to the tax fund was also made at the Addis Ababa Action Agenda, which was adopted at the third International Conference on Financing for Development in 2015.

India has become the first country to respond to this call. India has expressed its hope that other countries will also make similar contributions to the UN fund in near future. The UN expects that the funding will support more developing countries to draw upon the best practice of other bodies, ensuring effective and efficient global tax cooperation norms and rules for all countries and all stakeholders.
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 6. ADB commits USD 10 billion to support development of States in India.

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The Asian Development Bank has committed USD 10 billion to support infrastructure building and to cater to the immediate development needs of less-developed States in India. This has been stated by ADB President Takehiko Nakao during his 3-day visit to India.

The ADB president has said that the bank is ready to meet immediate critical infrastructure needs of less developed states like Uttar Pradesh, Bihar, Jharkhand, Odisha and Chhattisgarh over a period of five years. 

ADB has also assured its support to relatively lesser developed states in the area of power, transport, urban development, and health services. 

ADB’s President has also in-principle accepted India’s suggestion of setting up a regional hub in New Delhi to cater to the needs of the South Asia region. As per the estimates of ADB, India is expected to grow by 7.4% in the current financial year and 7.6% in 2018-19.
 
7. Money Parked by Indians in Swiss banks hit record low.
 
According to the data released by Zurich-based SNB, money parked by Indians in Swiss banks have nearly halved to 676 Swiss francs (about Rs. 4,500 crore) in 2016. The data release comes ahead of a new framework for the automatic exchange of information between Switzerland and India to check the menace of black money.  SNB (Swiss National Bank) is Switzerland’s central banking authority

During 2016, the total money held by Indians fell by 45 % to stand at CHF 675.75 million. This is the biggest ever yearly decline in such funds. Out of the total funds, CHF 377 million was in the form of customer deposits, about CHF 98 million owed to Indians through other banks and CHF 190 million constitutes other ‘liabilities’. 

The funds reported in 2016 is the lowest amount of funds possessed by Indians in the Swiss banks ever since 1987 and marks the third straight year of decline. Apart from this year, since 1987, the earlier lowest ever figure was recorded in 1995 at CHF 723 million. 

On the other hand, the funds held through fiduciaries was nearly $11 million. These funds which used to be in billions till 2007 has been falling since then due to the regulatory crackdown. Similarly, the funds held by Indians with Swiss banks was CHF 6.5 billion (Rs 23,000 crore) at 2006-end. But at present, the funds have come down to nearly one-tenth of that level. Except in 2011 and 2013, the quantum of funds held by Indians has seen a decline. Swiss banks have said that Indians have parked their money in other global financial hubs like Singapore and Hong Kong after a global clampdown was initiated on the mighty banking secrecy practices in Switzerland.

8. Eight core sectors growth slips to 3.6% in May 2017.
 
 
The growth of eight core sectors slowed to 3.6% in May 2017 due to fall in output of coal and fertilisers. It was 5.2% in May 2016. In April 2017, these eight sectors had recorded a growth rate of 2.8%. Core industry can be defined as the main industry. In most countries, there is a particular industry that seems to be the backbone of all other industries and it qualifies to be the core industry. In India, there are eight core sectors comprising of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. The electricity has the maximum weight of 10.32% followed by Steel (6.68%), Petroleum Refinery (5.94%), Crude Oil production (5.22 %), Coal production (4.38 %), Cement (2.41%), Natural Gas production (1.71 %) and Fertilizer production (1.25%). These eight Core Industries comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), which measures factory output.
  • In May 2017, Coal and fertiliser productions recorded negative growth of 3.3% and 6.5%, respectively. Steel sector growth dipped to 3.7% as against 13.4% in May 2016. 

  • Slow growth in these key sectors may also have implications on the Index of Industrial Production (IIP) number as these segments account for about 41% to the total factory output. 

  • However, growth in refinery products and electricity output grew by 5.4% and 6.4% in May 2017 as against 3.3% and 6.2%, respectively in the same period last year. 

  • Natural gas production too grew by 4.5% in May 2017 as against a negative growth rate of 6.5% a year earlier.
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Economy Current Affairs June 4th Week 2017

1.  GST: Anti-profiteering Panel to be set up.

A five-member anti-profiteering authority will be set up to decide on levying a penalty if businesses do not pass on the benefit of price reduction to consumers under the goods and services tax regime. The authority to be headed by a retired secretary-level officer, can take suo motu action, besides acting on complaints of profiteering.

The GST Council, chaired by Union finance minister Arun Jaitley and comprising state finance ministers as members, on Sunday approved the anti-profiteering rules. As per the norms, the authority will have a sunset date of two years and will decide on a penalty to be levied. It would ask the businesses to refund the price reduction on a proportionate basis to consumers.Where the consumer cannot be identified, the amount would be credited to the consumer welfare fund, an official said.

A search-cum-selection committee will be set up for finalising the members of the anti-profiteering authority. Officials said it is likely to take about two months to finalise the members.
 Besides the chairman, the four other members of the authority will be joint secretary-level officers who have been commissioners in central excise and service tax either at the Centre or states.

As per the structure, the complaints of profiteering would first come to the standing committee comprising tax officials from states and the Centre. It would forward the complaint to the Directorate of Safeguards (DGS) for investigation, which is likely to take about two-three months to complete the inquiry.

On completion of the investigation, the report would be submitted to the anti-profiteering authority which would decide on the penalty. The Section 171 of the Central GST Act provides that any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit will be passed on to the recipient by way of commensurate reduction in prices.
2.India’s Largest Municipal Bond Programme Launched.
 
The Pune Municipal Corporation (PMC) became the first municipal corporation in the country to tap money through municipal bonds in 14 years. The AA+ rated PMC’s municipal bonds raised Rs 200 crore at 7.59 per cent rate at the Bombay Stock Exchange (BSE). 

This is the first-ever mobilisation of debt capital by a municipal corporation on the BSE BOND platform. This will also be the first issuance since the publication of ‘Issue and Listing of Debt Securities by Municipalities Regulations, 2015’ by Securities and Exchange Board of India (SEBI). 

The 10-year bonds will be used by the Pune Municipal Corporation (PMC) for a Rs 2,300-crore water project. The scheme is aimed at providing water 24×7 for all residents of Pune.
 
3. CBDT notifies Rule 10CB for secondary adjustments under section 92ce of it act, 1961.
 
 
Rule 10CB for operationalising the provisions of secondary adjustment has been notified by the Central Board of Direct Taxes on 15th June, 2017. 
 
It prescribes the time limit for repatriation of excess money and the rate of interest to be applied for computing the income in case of failure to repatriate the excess money within the prescribed time limit. 
 
Separate rates of interest have been provided for international transactions denominated in Indian currency and in foreign currency. The rates of interest are applicable on an annual basis.
 
The time limit of 90 days for repatriation of excess money shall begin only when the primary adjustments exceeding Rupees One Crore made in respect of Assessment Year 2017-18 or later, attains finality. 
 
Where the transfer pricing order is appealed against by the taxpayer, the time limit for repatriation shall commence only after the appeal is finalised by the appellate authority.
 
4. Government notifies 18 sections and 2 rules under GST Act.
 
The government has notified 18 sections and two rules to be effective from 22 June 2017 under the GST Act.

 The notified sections are related to registration of current central excise, service tax and VAT payers with the GSTN as well as transitional provisions. 

The Central Board of Excise and Customs (CBEC) has notified two rules of registration and composition levy.

 Every business carrying out a taxable supply of goods or services with a turnover exceeding the threshold limit of Rs.2 million will have to register for GST, as per the notified sections.
 
5. RBI releases Handbook of Statistics on Indian States 2016-17.
 
 
The Reserve Bank of India released the second edition of its statistical publication titled “Handbook of Statistics on Indian States 2016-17”. Through this publication, the Reserve Bank has been disseminating wide-ranging data on the regional economy of India.

This publication follows the ‘one indicator-one table’ approach and in 129 tables it covers sub-national statistics on socio-demographics, state domestic product, agriculture, industry, infrastructure, banking and fiscal indicators across Indian States over a time period ranging from 1951 to 2016-17. 

While the Handbook has been updated based on latest available data, its content has been improved by covering additional tables on infrastructure.

Thus, in addition to the existing data series on State-wise availability of power, per capita availability of power, installed capacity of power, and power requirement, this edition has added data on State-wise length of national highways, railway routes, length of roads, and length of state highways, based on information sourced from the respective authorities namely, Ministry of Road Transport and Highways, and Ministry of Railways; Government of India.
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Economy Current Affairs 3rd Week of June 2017

1. RBI Release New Rs. 500 Currency Notes.

Reserve Bank of India announced that it will release new Rs. 500 currency notes. These new currency notes having similar to the recently released Rs. 500 currency notes.

Latest Changes on New Rs. 500 Notes

Some of the minute changes made in the new Rs. 500 currency notes as per the Reserve Bank of India guidelines. Such as,

The new Rs. 500 Currency Banknotes will have inset letter “A” in the both of the number panels.

It will bear the printing year as 2017 on reserve side.

The new currency note will have the signature of RBI Governor Dr. Urjit R.Patel.

The old Rs. 500 Notes released in the wake of demonestisation would continue to remain as legal tender.

 The banknotes also having Swachh Bharat logo printed on the backside of the banknote.

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