Daily Financial News Analysis – 22nd Nov’19

Table of Contents

OECD on Indian Growth

Organisation for Economic Co-operation and Development marginally cut India’s economic growth forecast for 2019 to 8%.
Growth would pick up to 2% in 2020 and further to 6.4% in 2021.
In September, it had forecast India’s growth at 9%.
Projected global economic growth forecast to 9% next year, a decline of 0.1% point from its September forecast.
The Reserve Bank of India has slashed its projection on economic growth for this fiscal year to 1% from 6.8% estimated earlier.
World Bank has last month lowered its forecast to 6% from 7.5%.
Moody’s last week cut its estimate for India’s growth this year to 6% from 5.8%.
Paris-based OECD said private investment would bounce back as capacity utilisation rises and the cost of borrowing for the corporate sector declines.
As a reuslt of the good monsoon rural consumption will pick up.
Full implementation of the new income-support scheme for farmers and measures to reduce liquidity stress in non-banking financial companies will show results.
Ongoing resolution of distressed assets of non-financial corporates under the Insolvency and Bankruptcy Code is expected to unlock resources for new investment.
OECD also expects help from reforms to improve ease of doing business, including measures to liberalise foreign investment, lower corporate income tax rates, and efforts to improve judicial services and contract enforcement.
The organisation emphasised that job creation remained a challenge and efforts to modernise labour regulations should continue.
It expects renewed stress in the banking or non-banking financial sector to create a credit crunch and affect growth, and higher oil prices to put pressure on inflation and reduce households’ purchasing power.
An aggravation of trade tensions would further affect business sentiment and investment, but it could be limited as India has specialised more in services than in merchandise trade, it said.
Overall, India has succeeded in seizing some of the market shares lost by other countries and exports have proved relatively resilient, according to the OECD.

Common fund pool for all skills

Skills development minister Mahendra Nath Pandey..
A high-level panel is contemplating setting up a common fund pool for all skills related schemes.
Recently formed cabinet committee for skill development is discussing
Main target: make youth employable and efficient
The government spends nearly Rs 15,000 crore every year on skilling through different schemes spread across 20 different ministries.
This is topped up with matching contribution from states, taking the total spend to Rs 30,000 crore
Considering the diversity of the country and varied geographies and segments, one scheme cannot justify the local requirement for skilled workforce across all.

PM Modi to CAG

Prime Minister Narendra Modi asked auditor CAG to develop technical tools to check fraud in government departments and play a role in making India a 5 trillion economy.
Auditor can play a role in improving governance and efficiency.
CAG should look for innovative methods to deal with occupational fraud.
Modi said the government wants to move to evidence-backed policy-making by 2022 and the CAG can play a role by becoming a think tank and focusing on big data analysis.
PM stressed that India is gearing to become a 5 trillion economy.

Trade War Threatens Tech Sectors

Tensions are exposing growing rifts between China and Silicon Valley.
Dangers
1. decline in cross-border investment
2. disruption in the supply chain
3. decreased collaboration in fields like artificial intelligence, wireless technology and cancer research.
The fight to rule the technology sector is at the heart of China-U.S. tensions.
American money has flowed into China, lending the capital essential in creating many of the countries’ top technology companies like Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
Chinese and American engineers have traversed both countries, driving innovation at startups and large companies

GST Compensation

West Bengal finance minister Amit Mitra said that it was for the Central government to devise a mechanism for payment of compensation to states under Goods and Services Tax (GST).
If the fund set up for the purpose runs dry, as the relevant law is silent on an alternative mechanism.
“If there is no money in the fund, call a GST Council meeting and tell the states the way forward,” Mitra said.

Double toll from December 1

Union Minister Nitin Gadkari: Twice the toll amount will be charged from December 1 for passing through FASTag lanes without the tags at toll plazas on national highways.
There will be one hybrid lane, where usual toll will be charged from non-FASTag vehicles.
The programme is being implemented pan-India to remove bottlenecks and ensure seamless movement of traffic.
Gadkari said that to promote FASTags, the National Highways Authority of India (NHAI) will distribute it free of cost bearing Rs 150 security charges for buyers till December 1.
However, it is up to the buyer to charge it with desired amount, he said and added that after December 1, the FASTags will become chargeable.