Daily Financial News Analysis – 29th Jan’20 – Free PDF Download

Massive tax shortfall

• Massive gross tax receipts (GTR) shortfall of around Rs 3.5 lakh crore or nearly 15% of the Budget estimate (BE) in 2019-20
• Big decline in nominal GDP growth
• Unrealistic budget assumptions of revenue buoyancy
• Deep corporate tax cuts
• Series of GST rate reductions
• Unchecked GST evasion
• Centre’s net tax receipts shortfall would be around Rs 2.45 lakh crore.
• Centre has consciously built up a buffer for itself through the mechanism of cesses and surcharges over the last few years.
• Also, though states are guaranteed a 14% increase in their GST revenue (S-GST), there is uncertainty over whether they will actually have this luxury, given the inadequate inflows into the compensation kitty.
• The states’ share of taxes in the GTR has been on the decline since the FY16.
• While revenue from cesses and surcharges, which the Centre can lay hands on, has surged to significantly increase its share in GTR.

India-US

• U.S. Trade Representative Robert Lighthizer will be in India in the second week of February.
• To finalize a trade deal ahead of President Donald Trump’s expected visit.
• New Delhi and Washington are still working out the contours of a possible deal.
• India expects to sign deals to raise its defense and energy purchases from the U.S.
• Indian side has indicated its willingness to ease pricing caps on medical equipment.
• The U.S. in turn may consider at least partially restoring an exception that had allowed India duty-free exports of about 2,000 products until last year.
• Following a “phase one” trade pact with China, a partial trade treaty with India could help Trump register another policy victory in an election year.
• An agreement would also help Modi who is struggling to shore up an economy that’s set to expand at 5% in the year ending March 2020 — the weakest pace in more than a decade.
• A likely trade pact will come after India surprised its Asian trade partners in November when it abandoned RCEP.

Agriculture issues

• Global Potato Conclave 2020
• PM Modi: India has emerged as one of the top three nations in production of certain food grains and food products
• A new record was also created in the beginning of 2020 by transferring Rs 12,000 crore to the accounts of six lakh farmers across the country.
• The government is giving encouragement to food processing industry.
• Pradhan Mantri Kisan Sampada Yojana: 100% FDI is allowed

• Modi and also emphasis on using latest technology like Artificial Intelligence, Blockchain, Drone, among others, to address various problems related to agriculture and related activities.
• Due to increasing awareness among farmers to grow processed varieties of potatoes, India is gradually emerging as a leading exporter of frozen potato food items in Asia.
• The exports would further increase due to lower transit time within Asia, lower capital employment by customer, global quality standards and consistency in price.

Russia – Africa

• Nearly 200 Russian mercenaries have deployed in recent months to Mozambique to combat a growing Islamic State offshoot.

• Russia is steadily expanding its military influence across Africa by increasing arms sales, security agreements and training programs for unstable countries or autocratic leaders.
• Other recent actions by Moscow include quietly deploying mercenaries and political advisers to several countries, including the Central African Republic.
• Hundreds of Russian fighters have arrived in Libya in recent months as part of a broad campaign by the Kremlin to intervene on behalf of the militia leader Khalifa Hifter to shape the outcome of Libya’s civil war.

• China has vastly increased its commercial investments in Africa in recent years, building factories and railroads, and it operates a major port in Djibouti.
• The Chinese military is also eyeing the construction of a new port in Senegal under the guise of assisting the Senegalese Navy.
• Russian officials are eyeing the port of Berbera as a location for their base on the coast of Somaliland, a self-declared state within Somalia on the Gulf of Aden.
• Russia has also expressed interest in building a naval logistics center in Eritrea.
• Russian military transport planes landed last summer in Cabo Delgado Province in northern Mozambique.
• The Mozambique government hired the Russian mercenaries to help beleaguered local security forces combat an insurgency that claimed to be affiliated with the Islamic State.
• In the past three years, Moscow has rekindled relations with Soviet-era clients like Mozambique and Angola and forged new ties with other countries.

Download Free PDF

Sharing is caring!