Daily Financial News Analysis – 5th Sep’19 | PDF Download

GST Math

• September 20 Goods and Services Tax(GST) Council meeting
• Rate reductions aimed at boostingdemand during the festive season.
• Finance Mnistry: wants to estimate therevenue it would lose
• Fitment panel: comprises central andstate officials
• Fitment panel that examines ratechanges is expected to meet shortly

• Among big-ticket consumer items,automobiles, tyres, cement, air conditioners and large LCD televisions are currently in the 28% bracket.
• RBI rate cut: 35 Bps
• Some say now Govt should take a call

 Link Loans to Benchmarks

• Reserve Bank of India (RBI) has made itmandatory for banks to link loans to external interest rate benchmarks.
•  Aim: to make transmission of monetarypolicy more effective.
• The RBI also suggested a series of ratesthat lenders can choose from as the peg.
• The RBI has already cut the policy rateby 110 basis points this year

• Banking conference last month, Dassaid: the transmission of policy rates at just 29 basis points (bps) this year, compared with a combined repo rate cut of 75 bps (excluding the 35bps cut in August), did not meet RBI’s expectations.

India-US Deal

• 10 Boeing P8I maritime patrolaircraft
• $3.1-billion deal to acquire maritimeaircraft for the Navy.
• Surveillance capabilities in the IndianOcean Region.
• Mandatory clause for at least 30%offsets to domestic companies.

FDI Inflows

• Foreign direct investment (FDI) equity inflows rose 28%in the first quarter of 2019-20.
• $16.3 billion from $12.7 billion in the year-ago period
• Financial
• Banking
• Insurance
• Non-financial/business
• Outsourcing
• Research and development
• Courier
• Technology testing & analysis

• India-bound FDI had dipped 1% to$44.4 billion in 2018-19 from $44.8 billion in the previous fiscal.
• This was the first decline in six years.
•  While Mauritius does not provide anytax incentives anymore, a lot of investors use Singapore as their regional headquarters

Services PMI Dips

• The IHS Markit India ServicesPurchasing Managers’ Index (PMI)
•  India’s services sector activitysoftened in August as job creation and output expansion moderated.
• Services PMI: declined to 52.4 inAugust, in July it was 53.8.
• Manufacturing PMI: slipping to a 15-month low in August.
• The IHS Markit India Composite PMIOutput Index that maps both the manufacturing and services industries fell to 52.6 in August from 53.9 in July.
• Govt measures: opening up foreigndirect investment in contract manufacturing, easing norms for overseas investors in single brand retail and coal mining, rolling back enhanced surcharge on foreign portfolio investors.

Infra Players

• Finance minister Nirmala Sitharaman metrepresentatives from the infrastructure industry.
• Aim: to understand issues faced by them
• Concerns: pace of execution of projects,lack of investor frinedliness, financing and land issues
• This was part of series of sectoralmeetings being held by Sitharaman

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