Daily Financial News Analysis – 3rd Dec’19

Table of Contents

Taxation Laws (Amendment) Bill, 2019

Passed in Lok Sabha
Replacement of an ordinance promulgated
Domestic companies: 22% tax (if they dont claim certain deductions)
Requirement of this law: US-China trade war

Bullet Train Project

New risk factor for India’s bid to upgrade its infrastructure.
1. Contract cancellation
2. Asking for reviews of big projects
Maharashtra regime change
Significant risk for investors
Preconstruction cost turns into loss

Bullet Train: many pros and cons were weighed before giving green signal.
Japanese International Cooperation Agency: long-term funds for 80% of the project cost of Rs 1.08 lakh crore.
Land acquisition has already been completed.
Tenders are ready.
Every new development project has positives and negatives.

e-NAM

E-NAM will enable farmers to reach buyers across the country.
1. The turnover of trade on e-NAM increased 24% on year to Rs 14,000 crore during April-October this fiscal.
2. The volume went up 19% to 44 lakh tonne during the period.
3. The government aims to integrate 200 mandis this year and 215 mandis in 2020-21 with the e-NAM platform.
4. A total of 585 mandis have connected to the platform in less than 2 years of its launch in April 2016.
Problem: middlemen are controlling organised mandis.
Centre will soon launch a facility for transporters to place competitive bids for jobs of moving agriculture goods.
State governments will be empowered to issue licences to winning bidders, whether or not they are registered with the agricultural produce marketing committees.
Trade should be allowed outside the physical mandi platforms.
The registration will be open for all including youth who want to enter this business.

November Factory Activity Improves

Business conditions in the India’s manufacturing sector improved in November.
As per a private survey: but firms shed jobs for the first time in 20 months.
IHS Markit India Manufacturing PMI
1. November: 51.2
2. October: 50.6 (2 year low)
3. It remained above the 50-mark threshold that separates contraction from expansion.
Subdued sales prevented hiring in November.
Workloads had been managed by existing staff.
Some companies cited the non-replacement of retirees and non-renewal of temporary contracts.
Firms are bracing themselves for challenging times ahead.

RBI Policy Review

Loan growth has been slowing sharply
Between March end and November 8, loans to companies and individuals have increased by just 0.43% to Rs 97.67 lakh crore.
Despite the fact that liquidity is ample and the surplus has averaged Rs 2 lakh crore over the past many months.
1. Bloomberg Liquidity Index: As on November 29, the banking liquidity surplus stood at Rs 2.5 lakh crore.
RBI will meet on December 5 to review monetary policy measures.
RBI may cut the repo rate by about 25 basis points to 4.9%.
Transmission has been slow
But it is the slow credit that is stalling the economy.
Loan growth measured year-on-year, is at a two-year low.

NCLT bench in Chennai

The Centre has decided to set up a Bench of the National Company Law Appellate Tribunal (NCLAT) in Chennai for clearing pending litigations.
5 new Benches of the NCLT were set up during 2018-2019 in Jaipur, Cuttack, Kochi, Indore and Amaravati.
The government has recently appointed another 28 members in the NCLT and 4 more members in the NCLAT.
The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that adjudicates issues relating to Indian companies.
Decisions of the NCLT may be appealed at the National Company Law Appellate Tribunal (NCLAT).
The NCLAT decisions can be challenged at the Supreme Court on a point of law.
The National Company Law Tribunal is the Adjudicating Authority for Insolvency resolution process of Companies and Limited Liability Partnerships under the Insolvency and Bankruptcy Code, 2016.
Anurag Singh Thakur, Union minister for state for finance & corporate affairs: Benches of the NCLT are set up in states depending on the case load and other relevant factors.
Thakur also said the government is taking steps to strengthen the NCLT and NCLAT in terms of number of Benches, number of courts and number of members to reduce pendency.

India to post customs intelligence officers

India is looking for suitable officers for posting as customs sleuths in London, Hong Kong, Dubai and Brussels in an effort to check trade-based money laundering among others.
Directorate of Revenue Intelligence has started the process of selecting customs overseas intelligence network (COIN) officers for these places.
The officers will be posted as Consul at the Consulate General of India at Dubai and Hong Kong and as First Secretary at the country’s High Commission at London and in Brussels
Earlier this year, the government created two posts of COIN at the Indian Embassy in Beijing and in the Consulate General of India at Guangzhou.
COIN officers play an important role in checking trade-based money laundering and other financial frauds originating from abroad.
The selection process will involve concurrence by the Ministry of External Affairs and final approval by the Prime Minister Narendra Modi-headed Appointments Committee of the Cabinet.
Officers with ‘outstanding‘ annual performance appraisal report will have weightage over other candidates.
Experience: DRI, Enforcement Directorate (ED), Narcotics Control Bureau (NCB) and customs (preventive) charge, involving intelligence gathering and investigation, will be considered for the posting.
Evaluation committee comprising directors general of DRI, Directorate General of Goods and Services Tax Intelligence, National Academy of Customs, Excise and Narcotics and the Directorate General of Human Resource Development will evaluate the service records of officers concerned for posting.
A high-level committee comprising the chairperson, two members of the Central Board of Indirect Taxes and Customs and the Director General of DRI will interview the officers, they said.
Based on the marks given in the interview and by the evaluation committee, a panel of three officers for each post will be recommended for approval of Finance Minister Nirmala Sitharaman.

Telecom Tariff Hike

Telecom operators announced tariff hikes for pre-paid plans by up to 50%.
VIL and Bharti Airtel have raised tariffs of their popular bundled prepaid plans by 25-41% as well as the low-end plans by around 40%.
RJio has indicated hikes of a similar magnitude but its details are yet to be known.

Q1 Under PM Fasal Bima Yojana, a farmer has to pay ________ % permium of sum insured for cash crops?