Daily Financial News Analysis – 29th June’20

Table of Contents

Scrutiny of imports

India to increase scrutiny of imports from China or Chinese companies located in ASEAN.
China is setting up shell entities to in ASEAN nations.
India has FTA with ASEAN.
India’s imports from Asean rose 26% in FY19 against a 10% overall increase.
GoI has alerted industries and importers.
Stringent checks of country of origin certificates.
Two-pronged strategy: fewer imports and greater domestic capability.

Consumption growth in rural India is rising.
1. 85% of pre-Covid average
Reasons: underpinned by higher farm income, minimal retail disruption during the lockdown and migrant workers returning home.
Urban market sales: at 70%
More than half a dozen consumer goods companies are expecting rural demand to drive the bulk of their growth during the fiscal year.
Rural hinterland, home to more than 800 million people.

Aadhaar-based database for farmers.
Centre’s plan: digitise all its farm-oriented schemes and ensure farmers are paid procurement prices directly.
1st phase: 50 million farmers across 9 states.
30 June deadline.
Satellite imagining of individiual farm land.
Database may be shared with farm technology companies for developing innovative solutions to increase productivity.

UCBs played pivotal role in spreading reach of formal finance to the unbanked.
State Govts. were not ready to give up their control over UCBs.
UCBs were considered too small to create any systemic hard.
But due to poor corporate governance and inability to detect frauds, many depositors were at risk.
Ordinance to empower RBI to supervise urban cooperative banks.
Market Share of UCBs
1. FY02: 6.4%
2. FY17: 3.3%
Joint regulation with State Govt made job for RBI harder.
Now RBI will oversee UCBs.
RBI should deploy smart technology to keep an eye on UCBs.
AI will allow the supervisor to see patterns in interconnected transactions among multiple banks and shadow banks that today escape scrutiny.
Malegam Committee + R Gandhi panel recommendations: a board of management in cooperative banks must be delegated powers similar to what commercial banks have given to their boards of directors.

Department of Agriculture is hunting for
1. Drones that can fly at night
2. Stay airborne for an extended duration
This is to fight off locust swarms that have invaded western and central India.
Civil aviation regulator granted the agriculture ministry conditional exemption to use drones in anti-locust operation.
Rajasthan: desert locusts will migrate to over the next few weeks to breed and lay their eggs.