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Exporters exempted from registration for cotton waste.
- The Central Government has issued a notification exempting exporters from registration of contracts for cotton waste, including yarn
- Earlier, exporters had to register their contracts with the Directorate General of Foreign Trade (DGFT) and execute the shipment within 30 days of registration. “Export of cotton waste, including yarn and garneted stock, will continue to be free.
India, ADB to commemorate 25 years of partnership
- India and the multilateral lending agency Asian Development Bank (ADB) will join hands to commemorate 25 years of partnership
- the highlight of the India-ADB commemorative celebration will be the addresses by Finance Minister Pranab Mukherjee and ADB President Haruhiko Kuroda. Finance Ministers of the Philippines and Malaysia will also participate in a panel discussion on the theme ‘Realising the Asian Century'.
Revised tax treaty with Switzerland will help seek specific information on illegal funds
- Even as black money remains an issue of intense political debate in the country, the amended double taxation agreement with Switzerland came into effect on Monday to open up a new window that will allow the government to seek specific information on illegal funds and tax evasion cases dating back to January this year.
- As per the latest data from the Swiss National Bank, the total deposits of Indian individuals and companies in Swiss banks at the end of 2010 is pegged at about $ 2.5 billion.
- treaty will contribute to further the positive development of bilateral economic relations.”
- The CBDT said India could obtain data for cases dating from April 1, 2011.
- As per Swiss rules, bilateral tax treaties are subject to public scrutiny for a period of 100 days, which ended on October 6.
Sharma takes stock of trade scenario
- Anand Sharma, on Tuesday stressed on the need to meaningfully engage China, which has emerged as India's largest trading partner, to convert concerns into opportunities.
- The BoT noted that there was a dramatic increase in trade, touching $60 billion last year. However, it also noted with concern the huge trade deficit of $20 billion
- India's exports to China are largely commodity based and iron ore exports dominate the export basket.
- In 2008-09, India adopted a multi-pronged strategy by providing a stable policy regime and adopting a conscious market diversification plan and providing additional support to sectors hit badly by the global recession.
- We added 41 new markets for incentives in Africa, Latin America, Oceania and Central Asia. Labour-intensive industry received our special attention as we recognised the need of protecting the interests of millions of people engaged in textiles, leather and gems and jewellery with fluctuating global demand
- He said last year the government had set a merchandise exports target of $200 billion. It was the collective effort of the entire exporting community that exports crossed the $254-billion mark, exceeding the target by over 25 per cent.
Centre for raising FDI limit in single-brand retail
- Union Commerce and Industry Minister Anand Sharma on Tuesday hinted that the Government was considering raising the 51 per cent foreign direct investment (FDI) limit in single-brand retail business to a much higher level.
- At present, the government allows 51 per cent FDI in single-brand retail businesses run by global chains such as Adidas, Nike, Louis Vuitton, Hermes and Gucci.
- India is in talks with the EU, its biggest trading partner, since June 2007 for liberalising trade in goods, services and investment through a Broad-based Trade and Investment Agreement (BTIA).
Interest subsidy scheme for exporters extended
- The Reserve Bank of India on Tuesday announced 2 per cent interest subsidy on rupee export credit to the labour-oriented and small scale sectors to cushion them from slowdown in major markets like the U.S. and Europe
- Exporters of handicrafts, handlooms and carpets will be eligible for the interest subvention to be available up to March 31, 2012
- Exporters in the small and medium enterprises across all sectors would also be entitled for cheaper bank credit, subject to a minimum interest rate of 7 per cent.
- The decision to help exporters was announced on a day when the high-level Board of Trade reviewed the situation arising out of renewed worries about the U.S. economy and the debt crisis in Europe.
New norms curtail ‘options' for FDI investors
- the Department of Industrial Policy and Promotion (DIPP) altered the way foreign direct investments (FDI) into India are to be structured.
- The new policy is nebulous in that it is bereft of all explanations and clarifications, while blandly stating that the only eligible equity and debt instruments through which FDI may come into India are those that are fully mandatorily and compulsorily convertible into equity.
- Thus, equity instruments having “in-built” options or supported by options sold by third parties would lose their equity character, which means that such instruments would qualify as debt and would have to comply with the extant External Commercial Borrowing (ECB) guidelines.
- The term “options in securities” finds its origin in the Securities Contract Regulation Act (SCRA) that explains it as a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future, and includes a put, a call or a put and call in securities and goes on to state that all options in securities entered into after the commencement of this Act (of 1956) shall be illegal.
- Although in 2000, the notification was struck off, SEBI swiftly replaced the contents of the notification with its own in the same year.
- The only investment transaction that the new law seems to bless is the vanilla investment transaction with no options to safeguard the exit of the foreign investor.
Gurus of macroeconomics
- Macroeconomics, it is said, is an art, not a science. That means most of it is guesswork, and whatever governments do is based as much on hope and a prayer as hard analysis of data. Which prevails, of course, is what everyone wants to know. And this is what makes this year's Nobel for economics important.
- As so many treasuries, finance ministries and central banks may have realised, the problem is not of finding out how to steer the car; it is of knowing what to do when you hit a huge bump: do you brake, accelerate, swing hard to the right or to the left, or simply do nothing?
- Sargent tells us where to go and Sims tells us how to get there.
- for example, if the government announces a policy that involves increasing money supply, revisions would only be made not on the announcement but only after the increase in money supply has occurred, and even then agents would react only gradually.
- However, agents were not observed to make such systematic errors in their expectations. This was made even starker by the failure of policy based on adaptive expectations in the 1970s to deal with the high inflation — the high unemployment trap.
- In response to this, economists developed the notion of rational expectations (RE), where agents respond not only to the past but also to their beliefs about how events will unfold in the future. Agents are, in other words, rational.
Safety cover for deposits
- Bank failures have been rare in India. This is unlike, say, in the US, which saw some 4,000 banks go belly-up in 1933 during the Great Depression and as many as 398 since the Great Recession of 2008.
- But that still should not obscure the fact that nearly two-thirds of deposits with Indian banks — well over Rs 32 lakh crore — have no insurance cover
- Deposit insurance is a safety net to ensure that bank depositors are protected in the event of any adversity.
- Of course, it could be argued that a significant part of banks' deposits — 30 per cent — are to be compulsorily invested in government securities or held as liquid cash and that, in itself, constitutes some kind of insurance.
- it ignores the possibility of retail depositors' money in any bank also being at risk from large corporate borrowers — an overextended airline or even a cash-strapped state-owned oil company.
- The least that the Government and the Reserve Bank of India could do is revise upwards the current Rs 1 lakh insurance limit on retail deposits, which was fixed in 1993. The Damodaran Committee on Customer Service in Banks had recommended that this be raised to Rs 5 lakh.
- Yet, despite the higher costs and moral hazard issues, it makes sense to guarantee adequate protection
Centre to seek Parliament nod for Rs.12,000 cr more funds for PSBs
The Finance Ministry is likely to seek Parliament's nod for an additional Rs.10,000-12,000 crore to recapitalise about half a dozen public sector banks this fiscal, over and above Rs.6,000 crore earmarked in the budget, PTI reports, quoting Financial Services Secretary D. K. Mittal.
