Ahead of the Union Budget 2020, RBI Governor calls for structural reforms. India stares at first fall in direct tax collections in two decades. India may raise import duties on $56bn worth of goods from China, elsewhere. US wants India to buy $5-6bn worth of American goods to seal trade pact. Hinduja Group and Interups join race to acquire Air India. US Pentagon blocks attempts to impose restrictions on Huawei.
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Reform and Revamp: Ahead of the Union Budget and as the country struggles through dire economic straits, the RBI Governor has called for structural reforms and more fiscal measures to revive growth and consumption.
Monetary policy, Shaktikanta Das said in a speech at St Stephen’s College, has its own limits.
Das also listed out some of the priority areas where structural reforms are necessary – food processing industries, tourism, e-commerce and startups need to be prioritised, he argued.
He also urged states to play an important role by enhancing capex, which could boost the Centre’s focus on infrastructure spending. India Today
This Too Shall Pass: IMF chief Kristalina Georgieva has said that the economic slowdown in India appears to be temporary and she expects the momentum to improve going ahead.
While global growth appears to be at a brighter spot than last year, she said growth is still sluggish. “We want fiscal policies to be more aggressive and we want structural reforms and more dynamism...We had a downgrade in one large market, India, but we believe that's temporary. We expect momentum to improve further going ahead." ET
With China...: India is reportedly planning to increase import duties on $56bn worth of imports from China and elsewhere. More than 50 items will be affected, including electronics, electrical goods, chemicals and handicrafts. The increase in tariffs is likely to be about 5%-10% and the move is apparently aimed at curbing “imports of non-essential items”, according to government officials. Details could be disclosed by the Finance Minister when she unveils the Union Budget on February 1st. BS
...And With the US: As per a Reuters report, the United States wants India to buy at least $5-6bn worth of American farm goods if a trade pact between the two countries is to be signed.
Last year, after Washington removed India from its Generalised System of Preferences (GSP) programme that allowed zero tariffs, New Delhi retaliated by slapping higher tariffs on more than two dozen US products. Now, after hectic negotiations, a wide trade deal appears to be on the table, although an agreement remains elusive.
Taxing Times: Amidst a sharp fall in economic growth and cut in corporate tax rates, India’s corporate and income tax collection is likely to fall for the first time in about two decades.
The Government was targeting direct tax collection of ?13.5trn ($189.36bn) for the year ending March 31st – a 17% increase over the prior fiscal year. But as of January 23rd, the Tax Department has managed to collect only ?7.3trn ($102.39bn). This is more than 5.5% below the amount collected by the same point last year, and tax officials expect tax collections to fall below the ?11.5trn ($161.3bn) collected in 2018-19. Financial Express
Courtly Interjection: In a relief to businesses living under the threat of bank accounts being attached during a pending Goods and Services Tax (GST) inquiry, the Bombay High Court recently ordered that GST officials must not exercise the power of attaching a taxpayer’s bank account on a routine basis. The court said an attachment order cannot be passed merely on the basis of a summons in the absence of actual or pending proceedings. BBG Quint
FYI: Two new companies have joined the race to acquire Air India – the Hinduja Group and US-based fund Interups.
The spike in interest follows the Government’s transfer of ?29,500cr ($4.13bn) of Air India’s debt to a special purpose vehicle (SPV) named Air India Assets Holding, which has reduced the financial cost of the airline considerably. Deccan Herald
Let Them Be: Market regulator SEBI has urged the Supreme Court to allow Malaysian healthcare provider IHH Healthcare to proceed with an open offer for Fortis Healthcare. “The open offer ought to be proceeded with, in the interests of the shareholders of Fortis Healthcare Ltd, who are entitled to, if they so desire, exit the company by accepting the offer,” SEBI said. More details here.
Fight Another Day: Chinese telecom giant Huawei has been fighting Western governments’ criticisms of its ties to the Communist Party and allegations of spying and anti-competitive practices. And now, it may have found itself the unlikeliest of allies – the US Defence Department and Treasury Department.
Commerce officials, who were pitching for tough regulations to make it difficult for US companies to sell equipment to Huawei, have withdrawn their proposals after the Pentagon interjected. The Pentagon is apparently concerned that if US firms don’t continue to ship to Huawei, they will lose a key source of revenue, which could deprive them of capital needed to boost research and maintain a technological edge. TechCrunch
The Future of Work: The 5G revolution is around the corner, and it might have the potential to change the very nature of work. 5G connections could increase current speeds by nearly 200 times, and this could increase the efficiency and allure of work-from-home roles. The network’s low latency improves video conferencing quality and improved connectivity makes it easier for colleagues to share on-screen documents and presentations. But is this a solid promise or just a dream sold by telecom evangelists? Read this article for a deep-dive into the matter.
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