Daily Financial News Analysis – 17th Sep’19 | PDF Download

Fuel Prices

• Crude oil jumped 10%
• Raising prospects of higher domestic fuel prices
• Government expressed confidence that supplies to Indian refineries would not be disrupted.
•  The 5.7-million-barrels-perday of lost production in Saudi Arabia is the single biggest disruption on record and has wiped out 5% of global supplies.

India-Iran

• The possibility of foreign minister S Jaishankar visiting Tehran soon.
• The decision was taken during foreign secretary Vijay Gokhale’s two-day visit to Tehran which ended on Monday.
• Gokhale had met foreign minister Javad Zarif.
• The two sides reviewed the entire gamut of bilateral cooperation.
•  Exit of John Bolton as US National Security Advisor has raised hopes of a dialogue between the Trump administration and Tehran.
• After French president Emmanuel Macron invited Zarif to Biarritz, where US president Donald Trump was attending the G7 summit, there were hopes of US-Iran talks. Macron had urged Trump to lift the embargo on Iranian oil sales to India. India-USA
• Piyush Goyal on Monday said that India is looking at an early resolution of its issues with the US and the two sides are in continuous dialogue.
• He also hinted that the two sides may announce some deal when Prime Minister Narendra Modi meets US President Donald Trump.

Handset Making: New Policy

• An interministerial panel set up by the Prime Minister’s Office (PMO) to develop India as a hub for electronics exports will release its policy, focused on how to further boost handset manufacturing, within one month, top government officials said.
• A larger policy for the entire electronics manufacturing ecosystem will also be put in place in the next two to three months, which will include fresh incentives and sops to promote India as a global manufacturing hub.
• Industry officials raised concerns about the end of incentives, lack of focus on components, skilling and infrastructure issues.
• According to the National Electronics Policy 2019, the government is aiming at a turnover of $400 billion in domestic electronics manufacturing by 2025, of which $190 billion is expected to be contributed by exports.

 WPI Inflation

• India’s wholesale inflation remained at 1.08% in August.
• The same level as that in the previous month when it had hit a 25-month low as per the Wholesale Price Index (WPI).
•  In August last year, it was 4.62%. Inflation in fuel and power declined 4%, after a 3.64% fall in July, and that in manufactured products was flat after a 0.34% growth in the trailing month.

PM Kisan Instalments

•  The finance ministry has asked the agriculture ministry to ensure immediate release of the first two instalments under the PM Kisan Yojana.
• To boost consumption demand in rural India.
• Farmers receive ₹6,000 annually in three equal instalments. 14.5 crore beneficiaries
• Premium-driving behaviour regime
• A dipstick measure of how seriously the government is taking the issue of road accidents and poor driving behaviour.
• Apart from the heavy fines under the amended Motor Vehicles Act.
• Linking premiums for vehicular insurance to the individual’s history of traffic violations.
• Indeed, the compounded penalty could induce motorists to exhibit safer driving behaviour.
•  On September 6 , IRDAI notified the constitution of a working group to recommend the implementation framework and methodology for a potential premiumdriving behaviour regime.
• The national capital territory (NCT) might see a pilot launch of the new insurance policy as early as November.
• At present, premiums for automobile insurance in India are dependent on the make and model, as opposed to the global practice of basing them on the driving practices of the insurance beneficiary.
• However, the new system is expected to follow the globally-accepted pointsbased model, wherein the severity of traffic violations affects the premium.
• The data for customising insurance premiums is expected to be sourced from Automated Traffic Enforcement systems and e-challans.
• This model would, equally, give discounts on premiums to motorists with exemplary records of driving behaviour.
• For better collation of data, perhaps the use telematics devices, or black boxes, within vehicles could be considered.

Pay bills Government

•  A notice issued last week by a Supreme Court bench headed by Justice Rohinton Nariman to various arms of the Union government that owe large amounts of money to a construction company deserves wider attention.
• The company has bank loans under ₹4,000 crore and around ₹1,800 crore worth of dues to operational creditors, some of whom have moved the National Company Law Tribunal against the company under the Insolvency and Bankruptcy Code.
• The company is owed large amounts of money by various arms of the public sector, including arbitration awards in excess of ₹6,000 crore.
•  Instead of paying up, the public sector agencies have challenged the arbitration awards in court.
• Such conduct on the part of the government and its companies is a major contributor to the country’s economic woes.
• The government’s promise of increasing and front-loading infrastructure spending by the public sector sounds hollow, if the government refuses to pay its bills in time.
• At the heart of the problem is the conflict between the private interests of the civil servants.
• They have to sign off on payments and run the risk.
• Comptroller and Auditor General (CAG) report of notional loss to the exchequer worth ₹1,76,000 crore in the allocation of 2G spectrum.
• It is the job of the political executive to release the economy’s fate from the thrall of civil servants’ perception that doing their work is a threat to their future liberty.
•  That must be accepted as an urgent priority.

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