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Ahead of Budget, Modi discusses macro blueprint with experts

NEW DELHI, June 22: Ahead of the Union budget for 2019-20 and amid concern over slowing economic growth, Prime Minister Narendra Modi on Saturday held a meeting with a group of 40 economists and industry experts organised by the government think-tank Niti Aayog.

The meeting, on the theme “Economic Policy – The Road Ahead,” followed the release of data showing that growth in the fourth quarter of the 2018-19 financial year had slowed to 5.8%. According to Central Statistics Office data, growth in the Gross Domestic Product (GDP) for 2018-19 (at 2011-12 prices) was at a five-year low of 6.8%, compared to 7.2% in 2017-18.

“Had a fruitful interaction with economists and other experts on the themes of macro-economy and employment, agriculture and water resources, exports, education, and health. The inputs received were insightful and will benefit our growth trajectory,” Modi wrote in a Twitter post.

Further opening of the banking and insurance sectors to foreign direct investment and speeding up the disinvestment process were among the focus areas of Modi’s interaction with economists and industry experts. During the interactive session, speakers made a case for “single minded pursuit” to achieve growth, the news agency added.

The period from 2019 to 2024 would be more transformative for India than 2014 to 2019, the PM said, according to a person who attended the meeting. People were emotionally connected to 75 years of Independence and Mahatma Gandhi’s 150th anniversary, both of which will be marked in 2022, Modi was quoted as saying.

Reiterating an assertion that “the government has no business to be in business”, Modi said the process of the government’s exit from business would, however, be gradual.

The meeting was also attended by Union ministers Piyush Goyal and Rao Inderjeet Singh. Niti Aayog vice chairman Rajiv Kumar and chief executive officer Amitabh Kant, and senior officers from the Union Government and Niti Aayog were present. Economists including Soumya Kanti Ghosh, Bibek Debroy, Nilesh Shah and Surjit Bhalla, and representatives of HSBC Bank, ICICI Bank and Credit Suisse were also in attendance.

“In the run-up to the Union budget discussions are held with economic experts each year. About 40 economic experts were called to share their views, inputs and expectations from the budget,” a senior Niti Aayog official said on condition of anonymity.

The Union budget is scheduled to be presented by finance minister Nirmala Sitharaman on July 5 in the Lok Sabha. It will be first full budget of the National Democratic Alliance government’s second tenure.

The fifth meeting of Niti Aayog’s governing council chaired by the PM on June 14 had discussed rainwater harvesting, the drought situation and relief measures, and the need for structural reforms in agriculture, and internal security, among other issues.

At the meeting, Modi had said the goal of making India a $5 trillion economy by 2024 is “challenging, but achievable”. He also reiterated the Centre’s commitment to double farmer incomes by 2022.

The government think tank, in the first 100 days after being reconstituted, has been tasked to focus on employment generation, and come up with a blueprint to tackle drought situation, set up health centres and an aspirational districts programme.

Former Defence Research and Development Organisation chief VK Saraswat, a member of NITI Aayog, said the official think tank was also working on a policy paper on the introduction of artificial intelligence in the fields of healthcare, agriculture, education, smart cities and infrastructure and smart mobility and transportation.“ We have drafted a strategy paper and it has gone for inter-ministerial comments, following which we will send it to the Union Cabinet,” he said.

 

India to levy retaliatory tariffs on 29 US products

NEW DELHI, June 14: In what could potentially aggravate trade tensions between India and the US, New Delhi has decided to impose long-pending retaliatory tariffs on 29 US products. Washington had withdrawn duty-free benefits for Indian exports under its Generalized System of Preferences (GSP) effective June 5.

“The duty hikes will come into effect in normal course as the notification to postpone the hikes will expire on Saturday night. We don’t see any reason for escalation as the duty hikes are against the tariff hikes by the US on steel and aluminium products, and not because the US withdrew duty-free benefits to Indian exporters,” said a government official with direct knowledge of the matter, requesting anonymity.

According to the current notification, the retaliatory tariffs will come into effect beginning June 16.

India had repeatedly postponed the imposition of retaliatory tariffs of $235 million on import of US goods worth $1.4 billion since they were first announced on June 20, 2018.

Key items imported by India from the US include almond and fresh apples worth $645 million and $165 million, respectively.

Biswajit Dhar, professor of economics at Jawaharlal Nehru University, said the escalation in trade tensions between the two countries would have happened in any case. “Trump wants market access in India and he will not stop at the withdrawal of GSP benefits. But I am happy that India has responded, since it was giving a wrong signal about India’s decision-making process. Now, both sides can sit down and talk like equal partners,” he added.

India’s move comes ahead of a meeting between US President Donald Trump and Prime Minister Narendra Modi on the sidelines of a G20 summit on June 28-29 in Osaka, Japan. Trump has often termed India a “tariff king” and repeatedly pointed to the 50% duty that India imposes on imports of Harley-Davidson motorcycles.

US secretary of state Mike Pompeo is scheduled to visit New Delhi on June 25-26, on his way to the G20 Summit, to hold bilateral discussions with his Indian counterpart, external affairs minister S Jaishankar.

Speaking at the 44th annual meeting of the US-India Business Council in Washington DC on Wednesday, Pompeo said they may discuss “tough topics”, including the recent GSP programme decision. “We remain open to dialogue, and hope that our friends in India will drop their trade barriers and trust in the competitiveness of their own companies, their own businesses, their own people, and private sector companies,” Pompeo said.

The trade ministry’s move, which was cleared by the external affairs ministry, comes a day after a senior Trump administration official raised “serious concerns” about India’s planned acquisition of Russian S-400 missile defence systems.

Last week, commerce and industry minister Piyush Goyal said India accepts the decision of the US to withdraw GSP benefits to its exporters “gracefully”, and will work towards making the exports competitive.

Briefing reporters after a meeting with exporters and state government representatives, Goyal said the withdrawal of GSP is not a matter of life and death for all exporters. “India is now evolving and moving out of the crutches that we thought we needed to export. India is no more an underdeveloped or least developed country that we will look at that kind of support. We believe we can be export-competitive at our own strength or at the strength of our own comparative advantage.”

In March, the US had announced its decision to withdraw the preferential duty benefits to India after talks between the two sides broke down on “disproportionate” demands by Washington.

However, the US had deferred the withdrawal of the GSP because the Indian general elections were underway. This had raised hopes that the two sides may re-engage to try and resolve their differences after the Modi government took charge. On June 1, though, the US president surprised everybody by issuing the presidential proclamation and withdrawing GSP benefits given to India, effective June 5.

India's auto sales see biggest fall

NEW DELHI, June 14: On Tuesday, the Society of Indian Automobile Manufacturers (SIAM) reported that domestic sales of passenger cars in May 2019 suffered the steepest annual drop in almost two decades. The annual growth in domestic passenger car sales in May 2019 was -26%, the lowest since the -31% figure in September 2001. To be sure, annual growth in passenger car sales has been going down since November 2018.

Even two-wheeler domestic sales have been falling continuously since December 2018. When read with the fact that India’s GDP growth has been going down for four consecutive quarters (beginning June 2018), the car and two-wheeler sale statistics paint a disconcerting picture. Should we brace ourselves for an even bigger fall in GDP growth in the next quarter?

Looking at past statistics might offer some answers. A comparison of domestic sales of two-wheelers and passenger cars with quarterly GDP figures suggests that the recent deceleration in vehicle sales is in keeping with the fall in GDP growth.

However, there have been periods in the past where an increase in GDP growth has been accompanied by fall in car sales growth. There have also been times when growth in car and two-wheeler sales has moved in opposite directions.

Another set of statistics from the Reserve Bank of India’s Consumer Confidence Surveys (CCS) can help us understand this better. CCS gives the current perception of respondents in urban areas on key economic metrics such as general economic situation, income, employment and essential and non-essential spending. A comparison of these values shows that net current perceptions on non-essential spending, which is what car and two-wheeler purchases can be termed as, is often at variance with current perceptions on general economic situation and income.

For example, while net current perception (difference between respondents with positive and negative perceptions) on general economic situation and income was the lowest during the November 2017 CCS round, non-essential spending recorded its highest value. These comparisons include statistics from the September 2015 CCS round onwards , which was the first to record perceptions on non-essential spending.

A comparison of passenger car sales growth and net perception on non-essential spending shows that the two move together more closely and have achieved their maximum and minimum values in almost the same periods. The relationship is not as strong in the case of two-wheeler sales growth. This makes sense, given the fact that CCS tracks only urban economic sentiment, and two-wheelers have a large market in rural India.

These statistics suggest that the current crash in car sales could be rooted in a crisis of consumer confidence in the urban economy, than overall activity levels in the economy. For example, Index of Industrial Production (IIP) grew at 0.1%, 0.4% and 3.4% in the months of February, March and April this year. However, growth in domestic passenger car sales in these months was -4.3%, -6.9% and -20% in these months. This shows that even as activity levels in the urban economy could have gone up, car sales have actually plummeted.

This crisis of confidence is not a benign issue. If urban consumers start cutting back on big-ticket spending in anticipation of bad times ahead, it can actually lead to a deceleration in economic activity via a negative multiplier effect. Herein lies the biggest policy challenge for the government with just weeks before the Union Budget. Any policy which hurts consumer sentiment in pursuit of fiscal or welfare goals could also hurt economic activity.

Online fund transfer through NEFT and RTGS to be free from July 1: RBI

NEW DELHI, June 11: The Reserve Bank of India (RBI) on Tuesday ordered banks to stop charging customers for online fund transfer through the Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) system from July 1.

In a communication to banks, the RBI said the decision had been taken to provide an impetus to digital funds movement.

“It has been decided that with effect from July 1, 2019, processing charges and time varying charges levied on banks by Reserve Bank of India (RBI) for outward transactions undertaken using the RTGS system, as also the processing charges levied by RBI for transactions processed in NEFT system will be waived by the Reserve Bank,” the central bank said.

The RTGS system is primarily meant for high-value transactions. The minimum amount to be remitted through RTGS is ₹2 lakh with no maximum limit. RTGS transactions, in contrast to NEFT transactions, are carried out in real time. Here the beneficiary bank receives the instruction to transfer funds immediately when customers issue the instructions and the transfer is instantaneous.

Nilekani panel suggests 24x7 RTGS, NEFT, elimination of all charges

MUMBAI, June 4: To encourage digital payments, the Nandan Nilekani committee has suggested a host of measures, including elimination of charges, round-the-clock RTGS and NEFT facility, and duty-free import of point-of-sales machines.

The committee, which was appointed by the RBI, had submitted its suggestions on promoting digital payments to Governor Shaktikanta Das last month.

Among other things, the panel has suggested that there should be no convenience fee on payments made to government agencies by customers and recommended that payment systems use machine-driven, online dispute resolution systems to handle complaints.

“The committee recommends that the RBI and the government put in place an appropriate mechanism to monitor the digital payment systems and make aggregated information based on blocks, and PIN code, available to all players on a monthly basis, so that they can make the necessary adjustments,” said the report released by the RBI.

Keeping in mind that digital transactions result in larger balances with the bank, the panel felt customers must be allowed to initiate and accept a reasonable number of digital payment transactions with no charges.

Samsung brings its QLED 8K TVs to India, prices start at Rs 11 lakh

NEW DELHI, June 4: South Korean tech giant Samsung on Tuesday launched its new range of QLED 8K TVs in India starting at Rs 10,99,900.

Samsung said the new TV range will be available in four sizes - 98-inch, 82-inch, 75-inch and 65-inch.

They are priced at Rs 10,99,900 and Rs 16,99,900 for 75-inch and 82-inch variants respectively. The 98-inch variant is priced at Rs 59,99,900.

The price of the 65-inch variant, which will be available in July, will be announced shortly, Samsung said.

The South Korean tech giant said its QLED 8K TVs come with 33 million pixels, four times the resolution of 4K Ultra High Definition (UHD) TVs and 16 times that of a Full HD TV.

They come packed with new Quantum 8K processors which use Artificial Intelligence (AI) technology to enable users to re-create and upgrade the image content to 8K standard.

“In the absence of 8K content, this new QLED TV range will be able to upscale any content, be it SD or 4K, to 8K using the 8K Quantum Processor and its AI upscaling capability,” Raju Pullan, Senior Vice President, Consumer Electronics Online Business, Samsung India, told IANS.

“In the premium TV segment (above 55 inch), Samsung today has a market share of 47 per cent (at the end of March quarter). We are aiming 55 per cent share in this market by this Diwali riding on the new line of 8K QLED and 2019 QLED range that has been launched today,” Pullan added.

“In the 75 inch and above TV segment, Samsung has a market share of 53 per cent. We have set a target of achieving 70 per cent market share in this segment by this Diwali,” he added.

Samsung’s 2019 QLED TV line-up comes packed with the power of Bixby along with other voice assistants like Google Assistant to access content through voice commands.

These TVs are designed to double up as interactive wall feature that blends in with the interiors.

The “Ambient Mode” in the TV enables users to apply an interactive background to the TV frame, blending it into the living room wall, while displaying information such as weather conditions and time when it is not in use.

It can also display artistic content like photos and works of art.

The TVs will be available at all Samsung Smart Plazas, leading consumer electronic stores and across online platforms, including Samsung’s official online store Samsung Shop, Samsung said.

 

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