(Current Affairs) Economy & Energy | May: 2017

Economy

Turnaround of rupee is good news for coutry

  • Towards the beginning of this year, no one expected the rupee to break out of the tight range between 66 and 68.85 that had shackled the currency for most part of 2016.
  • But the rupee not only strengthened above the 66 level against the dollar but also went on to mark a 20-month high of 63.93 last week.
  • This sudden spurt of strength follows a stolid show in 2016, when the Indian currency remained unfazed by some of the significant events that spelled a sea change for global markets.
  • The first was the UK’s referendum to decide whether to stay in the European Union or not. While everyone expected the British to vote against the move, results favoured an exit.
  • The British currency took a beating immediately after the referendum. The pound declined 20 per cent against the dollar, from 1.50 in June 2016 to 1.20 in October 2016.
  • Another event that marked a significant shift in the global economic order was the victory of Donald Trump in the US presidential elections. This made the dollar index break the psychological level of 100.
  • The initial trigger that helped the rupee break the 66 level came in the second week of March this year after the BJP’s resounding victory in the State Assembly elections in Uttar Pradesh.
  • This triggered a strong surge in Foreign Portfolio Investors’(FPIs) interest towards the Indian market. FPIs, who had bought just $646 million in Indian debt until then, went on a buying spree after the election results.
  • For the month of March, they bought $3.92 billion in the Indian debt segment. April has also witnessed a strong foreign money inflow of about $3 billion in the debt segment.
  • After selling $6.36 billion in 2016, FPIs have already poured in $7.52 billion in the first four months of this year. This inflow is higher than the $7.4 billion for the entire calendar year 2015.
  • The inflows into the equity segment are also showing signs of a strong pick-up this year. FPIs have pumped $6.38 billion into the Indian equity segment, which is double the $3.19 billion and $3.18 billion flows seen in 2015 and 2016, respectively.
  • With the first rate hike by the Federal Reserve already absorbed by the financial markets, there does not appear to be a great threat to foreign fund flows in the near future.
  • FPI flows into debt will be strong if the rupee continues to strengthen as these are short-term flows that are greatly influenced by currency strength.
  • The second factor that has helped the rupee break the key 66 level is the recent weakness in the dollar.
  • After raising the Fed fund rate by 25 basis points in March, the Fed reiterated that there will be a total of three rate hikes in 2017.
  • So, unless the Fed changes its stance and turns more aggressive over raising the rates, a strong recovery in the dollar is unlikely.
  • Also, the recent developments in Europe had been adding to the pressure on the dollar. The UK heading for early elections in June and the ongoing French elections have triggered a sharp rally in the euro and the pound in the last one month.
  • After falling continuously on a year-on-year basis from December 2014, India’s exports are showing signs of recovery since September last year. Exports have surged 35.85 per cent, from $21.52 billion in August 2016 to $29.23 billion in March 2017.
  • But this has failed to narrow the trade deficit as imports, on the other hand, have also surged at the same rate. India’s imports have risen 39.89 per cent, from $29.19 billion to $39.67 billion.
  • So, if the imports continue to rise at a faster pace than the exports, there is a possibility of the deficit widening further.
  • Two major components that can keep the import bills higher are crude oil and gold. The outlook for both these commodities is bullish.
  • Crude oil prices have been hovering around $50 per barrel over the last few months. The prices have been volatile, between $45 and $55 since December. The bias is bullish within this range.
  • An eventual break above $55 will increase the likelihood of oil prices surging to $60 levels. Gold has been gaining sheen from the geo-political uncertainty between the US and North Korea and from the broader weakness in the US dollar.
  • India’s current account had improved from a deficit of $7.08 billion to $0.3 billion in June 2016. But since then, the Current Account Deficit (CAD) has been widening and is back to $7.92 billion as of December 2016.
  • Given that there is low possibility of the trade deficit to improve in the coming months, there is a danger of the CAD widening further. This is negative for the rupee.
  • The RBI has been building up its forex reserves consistently. The reserves have risen 7 per cent, from around $344 billion in April 2015 to $369 billion now.
  • Also, as uncertainty continues to remain on the back of geo-political tensions between the US and North Korea, these reserves can be used to tackle any unexpected volatility in the market.
  • The rupee appears overvalued when the Real Effective Exchange Rate (REER) is taken into consideration. A currency is considered overvalued if its REER is greater than 100 and it is undervalued if the REER is below 100.
  • REER is a measure of valuing a currency against the currencies of its trade partners, adjusted for inflation.

Investment Trust (Inv-IT) finally arrived

  • The long wait for Investment Trust (Inv-IT) is finally over. IRB Infrastructure Developers (IRB) is the first to raise Rs. 4,650 crore through this route, which will be available for investors with a minimum subscription of Rs. 10 lakh.
  • Put simply, Inv-IT are trusts into which the sponsor, in this case IRB, transfers certain revenue-generating infrastructure assets (at least 80 per cent).
  • Units in these trusts can be purchased by the public and the revenue generated from the assets is distributed to the unit-holder. The trust can also invest in equity or lend to other infrastructure projects.
  • In the upcoming Inv-IT initial public offering, IRB will transfer six of its projects to the trust. The sponsor expects to raise Rs. 4,300 crore through fresh offering and another Rs. 350 crore via offer for sale.
  • According to data provided by IRB, sponsor holding is well above the minimum 15 per cent threshold mandated by the regulator for the initial three years.
  • Investors who don’t subscribe to the primary offer can buy units from the secondary market, where the minimum trading lot is Rs. 5 lakh. The issue will be open from May 3-5 both on the BSE and the NSE.
  • The funds raised through this issue will be used to repay the entire debt of about Rs. 3,300 crore on the books of these six projects. This is expected to improve the cash flows and soundness of the balance sheet, since financial costs will come down in the process.
  • The risks for a project can arise due to delays in construction, revenue collection and other political and project-related issues.
  • In case of road projects, the risks arise during the pre-construction and construction stages.
  • While pre-construction risks pertain to identification of economically-viable projects and related clearances, construction risks relate to design changes and unexpected escalation in raw material prices.
  • Moreover, post-construction, the extent to which the projected toll revenue materialises and how tactfully the initial years of low cash flow and high interest payments are managed, are crucial.
  • Moreover, the open-ended structure of this Inv-IT enables it to capitalise on new projects that suit its mandate.
  • As per SEBI’s norms, Inv-IT should invest at least 80 per cent of the value of the assets in revenue-generating infrastructure assets, while the rest can be invested in under construction projects and securities of infrastructure companies.
  • However, an Inv-IT is not allowed to invest in another Inv-IT. Though currently Inv-IT is not exposed to construction risk, this can definitely change in case a new under-construction project or securities of infrastructure companies are added to the portfolio.

Poor Internet connectivity is turning out to be a challenge for GST rollout

  • Poor Internet connectivity is turning out to be a challenge for the rollout of the Goods and Services Tax (GST), particularly in the North East, as the Centre pushes for the July 1 deadline to implement the new indirect tax regime.
  • The implementation of GST requires high-speed connectivity between the GST server and the State VAT data centre, and also between District VAT office and State VAT office since the processing of returns, among other processes, is done online.
  • Additionally, all dealers have to upload invoice-wise details online.
  • There are multiple projects going on in North East. However, the progress is poor and there is no coordination among all the agencies doing work.
  • In Arunachal Pradesh the optical fibre cable is available only in 7 of the 20 districts. There is a serious shortage of optical fibre cables, leading to delay in completion of work.
  • In addition, the agencies doing work are not following the norms of depth at which the OFC cable should be laid and as a result there are many instances of cutting OFCs in road repair works. This creates problem for connectivity.
  • With little more than two months to go for the proposed GST rollout, the government is yet to finalise the tax rates that will apply for different products but is confident of implementing the new tax regime from July 1.
  • Constitutional amendments to enable the GST regime mean that all existing indirect taxes and levies will lapse from September this year.

SC slams the tendency of country to evade taxes

  • Slamming a tendency in the country to evade taxes, SC referred to the mandatory linking of Aadhaar to PAN and Income Tax returns as an instance of the government’s efforts to bring “new and new laws to stop leakages.”
  • “When tax evasions are there, the government will try to bring new and new laws to stop leakages. We as citizens are like that... we don’t want to pay taxes, shame on us."
  • "This conduct and character is seen for example at the time of matrimonial alliance. Then the groom has the best income. The moment the estranged wife files a maintenance application, the same boy is a pauper,” Justice A.K. Sikri.
  • The provision makes Aadhaar mandatory for getting a PAN. Possession of an Aadhaar card is necessary for the continuing validity of an existing PAN and for filing returns under the income tax law.
  • Attorney-General Mukul Rohatgi said there were “five to 10 lakh fake PAN cards generated every year.” “What are you propagating here in the name of public interest, fake PANs,” he asked the petitioners.
  • To prove that Aadhaar was not foolproof, Mr. Datar responded that 132% of the population of Delhi is shown to have taken Aadhaar cards and 104% all over the country.
  • At least 34,000 agencies which dealt with collecting data for Aadhaar were blacklisted.
  • But the court said these statistics did not necessarily mean that bogus Aadhaars were in circulation. Mr. Rohatgi said the biometric technology used in Aadhaar left no chance for duplication.
  • The Bench responded that Section 139AA was a product of the legislative mandate of Parliament.
  • The Bench observed that Parliament cannot be held accountable for any “solemn undertakings” given by the government to the Supreme Court.

SEBI decided to grant a unified licence to brokers and clearing members

  • Market regulator SEBI decided to grant a unified licence to brokers and clearing members to operate in commodity derivative as well as equity markets.
  • SEBI’s board approved a proposal for integration of stock brokers in equity and commodity derivative space.
  • Following this, a broker or clearing member dealing in the securities markets will be allowed to buy, sell or deal in commodity derivatives without setting up a separate entity and vice-versa.
  • To enable the integration, SEBI will amend norms pertaining to stock broker and securities contract regulations, the regulator said in a statement after the first board meeting under Ajay Tyagi as chairman.
  • Besides, it will increase economic efficiency in terms of meeting operational and compliance obligations at the member level, potentially resulting in ease of doing business.
  • Finance Minister in his budget speech for 2017-18, had announced that the “commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks”.
  • Bolstering steps to curb any flow of illicit funds in markets, SEBI also decided to bar resident as well as non-resident Indians from making investments through participatory notes.
  • The decision is part of efforts to strengthen the regulatory framework for offshore derivative instruments (ODIs), commonly known as P-Notes, which have been long seen as being possibly misused for routing of black money from abroad.
  • The notional value of these instruments has declined over the years from 55.7% of overall FPI investments in June 2007 to just 6.7% in December 2016.
  • There was a surprise uptick in March — presumably due to this being the last month for availing of certain tax benefits.
  • There are also fears that the P-Note investments may start coming from other jurisdictions like the U.S., France and the Netherlands after tightening of rules for inflows from Mauritius, Singapore and Cyprus.

NITI Aayog wants agriculture income to come with in personal income

  • Government think-tank NITI Aayog has suggested that agriculture income be brought under the purview of personal Income Tax in a bid to curb tax evasion.
  • In its three-year action agenda, discussed at the Governing Council meeting, the Aayog reasoned that non-agricultural entities sometimes use the blanket relief to evade taxes.
  • All agricultural income is currently exempted from Income Tax regardless of its size. While the provision is meant to protect farmers, non-agricultural entities sometimes use it to evade taxes by declaring agriculture as the source of their income.
  • A key limitation of personal Income Tax regime is the small tax base. In assessment year 2014-15, only 3.65 crore individuals filed returns. Of this group, only 1.91 crore individuals or around 1.5% of the population paid any Income Tax at all.
  • NITI Aayog Member Bibek Debroy said this would widen the tax base and more funds could be made available for the social sector schemes.

New three plan to be discussed in NITI Aayog meeting

  • Prime Minister Narendra Modi will chair the meeting of the governing council of NITI Aayog, where a new three-year policy action plan to replace the old system of five-year plans will be discussed.
  • Besides the new planning process, the council is likely to take up for discussion issues such as increasing farmer incomes and urban development. Three-year action plan will also include a strategy to spruce up the law and order situation.
  • The practice of five-year plans, being followed for over six decades, ended with the 12th Plan that concluded on March 31 this year.
  • NITI Aayog which was set up in December 2014 after abolishing the Planning Commission, will now come out with a 15-year vision document that is to be supplemented by a seven-year strategy and three-year action plans.
  • The Council, that includes all chief ministers as members, will be presented with “detailed plans on doubling of farmers’ income.”
  • The Prime Minister had in February last year urged all state governments to give priority to boosting the agriculture sector with a target of doubling farmers’ income by 2022.
  • The Aayog is also likely to place before the council a report card on its two years as an institution.

India and Indonesia have agreed to explore cooperation in areas like oil, coal

  • India and Indonesia have agreed to explore cooperation in areas like oil, coal, electricity and energy efficiency, Power Minister Piyush Goyal said.
  • The two sides have agreed to explore cooperation in sharing of experience in use of LEDs and renewable energy in India, sharing the expertise of Indonesia in gasification of fuel oil, exploration of oil, gas and coal fields,” Mr. Goyal said.
  • Mr. Goyal and Indonesian Energy and Mineral Minister Ignasius Jonan met on April 20 during the first ‘India Indonesia Energy Forum’ in Jakarta.
  • According to a statement, Mr. Goyal requested Mr. Jonan to consider joining International Solar Alliance as Indonesia is a solar-rich country.

IT Minister has instructed NPCI to smoothen the refund mechanism for BHIM

  • IT Minister Ravi Shankar Prasad has instructed National Payments Corporation of India (NPCI) to smoothen the refund mechanism for BHIM (Bharat Interface for Money) application.
  • This follows feedback highlighting that the process of getting a refund in BHIM application is more cumbersome compared to other applications.
  • Now 56 crore bank accounts have been linked to Aadhaar, of the total 97 crore back accounts. The lag was due to some issues in states such as Assam and Meghalaya.
  • According to government data, as on December 2017, Assam and Meghalaya have the lowest Aadhaar penetration at 6% and 9%, respectively.
  • This means that about 41% of the bank accounts are still to be linked to Aadhaar.
  • Further, the banks have been instructed to invest in and strengthen their IT infrastructure to deal with the rising number of digital payments and improve transaction success rates.
  • Additionally, every bank has been instructed to have at least 30 Aadhaar biometric machines at every branch, and that 50 lakh such devices be installed in the current year.

Tea export declined in 2017

  • Tea exports have declined in the first eleven months of fiscal 2017 and are likely to close at a lower level after showing a healthy rise by volume and value in 2015-16.
  • A bumper crop in Kenya and lower exports to some of the key markets were the main reasons behind this.
  • As per the latest official statistics, between April and February 2017, exports, at 206.9 million kg were down by 4% over the previous period.
  • India exported 232.9 million kg in 2015-16, breaching the 230-million mark for the first time since 1980-81.
  • A bumper crop in Kenya (a more than 50% rise according to latest statistics) and Bangladesh, which is emerging as tea-growing nation, aggravated the excess supply in the international market.
  • During the period under review, India has increased tea exports to three high-value markets — Iran, Germany and USA.
  • These are now evolving as a stable market for speciality teas. Exports increased to the UAE too. The UAE often serves as a re-export destination.
  • All these markets purchased not only higher volumes of Indian tea between April and February 2016-17 , but also at a higher price than the year’s average of $ 3.04.

RBI come out with a revised prompt corrective action framework for banks

  • RBI has come out with a revised prompt corrective action (PCA) framework for banks, spelling out certain thresholds, the breach of which could invite resolutions such as a merger with another bank or even shutting down of the bank.
  • The revised norms have set out three thresholds. The breach of the third one on capital “would identify a bank as a likely candidate for resolution through tools like amalgamation, reconstruction, winding up etc.,” the RBI said.
  • The provisions of the revised PCA framework will be effective from April 1, 2017 based on the financials of the banks for the year ended March 31, 2017. The framework would be reviewed after three years, the RBI said.
  • The thresholds are based on capital, net non-performing assets, profitability and leverage ratio.The breach of the first threshold will invite restriction on dividend distribution or require parents of foreign banks to bring in more capital.
  • This will get triggered if capital adequacy ratio (including capital conservation buffer) falls below 10.25% or common equity tier-I (CET1) capital ratio falls below 6.75%.
  • Breach of either CAR or CET1 would trigger corrective action, the RBI said. The trigger for net NPA is 6% and 4% for leverage ratio. Two consecutive years of negative return on assets (RoA) will also be classified in threshold one.
  • The breach of the second threshold will occur when the capital adequacy ratio falls below 7.75% or CET1 goes below 5.125%. The net NPA threshold is breach of 12% and leverage ratio below 3.5%.
  • Three consecutive years of negative ROA will also trigger threshold two. Breach of threshold two will result in restrictions on expansion of branches and higher provisions.
  • Corrective action that can be imposed on banks includes special audit, restructuring operations and activation of recovery plan.
  • The RBI has said that promoters of banks can be asked to bring in new management, or even can supersede the bank’s board, as a part of corrective action.

The country’s goods exports rose for the seventh consecutive month

  • The country’s goods exports rose for the seventh consecutive month, recording a 27.6% year-on-year growth in March to $29.2 billion thanks to a low base as well as a robust performance by major sectors including petroleum products.
  • In March, petroleum products grew 69.1% to $3.7 billion, while engineering goods went up by 47% to $7.8 billion and gems & jewellery shipments rose 12.5% to $4.1 billion.
  • Meanwhile, goods imports in March also recorded 45.25% growth to $39.6 billion resulting in trade deficit widening to $10.4 billion — the highest since November 2016 when it was $12.6 billion. Oil imports also rose 101.4% to $9.7 billion in the period.
  • Goods exports during the entire 2016-17 were $274.64 billion — recording a growth of 4.71%, while imports shrank 0.17% to $380.36 billion. This resulted in a trade deficit of $105.7 billion in FY17, wider than $118.7 billion in FY’16.
  • The World Trade Organisation said it was forecasting a 2.4% growth in global trade in 2017. For 2018, the WTO is forecasting global trade growth between 2.1% and 4%.
  • It added, however, that as deep uncertainty about near-term economic and policy developments raise the forecast risk, this figure is placed within a range of 1.8% to 3.6%.

Industrial production shrank to 1.2%

  • Industrial production in February 2017 shrank 1.2% year-on-year, the lowest in four months, mainly due to a decline in manufacturing output and the persistent impact of demonetisation, data released by the Central Statistics Office.
  • The Index of Industrial Production (IIP) had recorded 1.99% growth in February 2016. The previous low was a contraction of 1.87% in October 2016.
  • Manufacturing sector, accounting for more than 75% of the index, shrank 2% in February 2017. The sector had marginal growth of 0.6% in February, 2016.
  • The main factor retarding growth was a fall in consumer goods output — both durable and non-durables being in the negative zone, according to an analysis by CARE Ratings.
  • CARE Ratings said 15 of the 22 industries witnessed negative growth, which was not a good sign, adding that capital goods declined against an increase in January which was expected as such growth rates have been volatile in the past.
  • The Consumer Price Index (CPI) based inflation inched up in March 2017 to 3.81% (provisional) as against 3.65% recorded in February 2017, according to government data. Still, retail inflation was slower than the 4.83% recorded in March 2016.
  • According to CARE Ratings, the acceleration in inflation could be ascribed to higher fuel prices on account of rising global crude oil prices and increases in the costs of food articles like fruits and milk products.
  • Slower gains in the prices of pulses helped cap headline retail inflation.

India’s Internet economy is expected to reach to $250 billion

  • India’s Internet economy is expected to double to $250 billion, according to a report by BCG-TiE.
  • E-commerce and financial services are expected to account for about $40-$50 billion, followed by e-commerce products ($45-$50 billion), private and government infrastructure spending ($50-$60 billion).
  • Connectivity ($45-$55 billion), devices ($30-$40 billion) and digital media and advertising ($5-$8 billion).

New H-1B guidelines could lead to more litigations

  • The U.S. government’s new guidance for issuing H-1B visa, which allows technology firms to hire skilled overseas workers, may lead to increased litigation.
  • USCIS, which oversees immigration into the U.S. and processes the applications, issued guidelines which said computer programmers need to prove that it is a specialised skill to be eligible.
  • In a separate note, the agency said there would be increased scrutiny to detect H-1B visa fraud and abuse. The U.S. Department of Justice also cautioned employers seeking H-1B visas not to discriminate against U.S. workers, warning strict action.
  • Indian IT firms have been one of the biggest users of the H-1B visa programme.

Centre to secure legislative backing for the Rail Development Authority

  • The Centre will likely attempt to secure legislative backing for the Rail Development Authority (RDA) next year to give more teeth to the country’s first rail regulator that will initially be set up through an executive order.
  • The Union Cabinet approved setting up the rail regulator responsible for recommending passenger fares, setting performance standards for rail operations and creating a level playing policy for private sector participation through an executive order.
  • The Ministry has targeted issuing a gazette notification to set up the Rail Development Authority by April 15.
  • After being formed, the Authority will work within the parameters of the Railways Act, 1989, an official statement had said on Wednesday.
  • This means it can only recommend changes to passenger and goods fares to the Railway Ministry which will take a final call on fixing the tariff.
  • However, a Railway Ministry official said the proposal was dropped later as no appropriate mechanism for compensation could be developed.
  • All the six regulators in the country have the sanction of Parliament and have been accorded a statutory status. These include the TRAI, AERAI, IRDA, CERC, TAMP and PFRDA.
  • In fact, the PFRDA became functional in 2003 through an executive order and legislative backing was secured through the PFRDA Act which was passed a decade later in 2013.

Centre survey shows more than 60% faces call drop

  • The Centre said more than 62% of the 2.2 lakh subscribers that it surveyed complained of call drops.
  • The survey was conducted using the Integrated Voice Response System (IVRS) that the Department of Telecommunications (DoT) had rolled out last December in Delhi, Mumbai, U.P., Uttarakhand, Maharashtra and Goa.
  • About 2.21 lakh subscribers participated in the survey, out of which about 1.38 lakh(62.5%) subscribers have reported call drops.
  • As per feedback received, the problem of call drops “is more severe” indoors, according to the statement. The subscribers receive an IVRS call from short code 1955 and are asked a few questions on the call drop problem.
  • They can also send a toll-free SMS to the same short code, containing the name of city/town/village, where they face frequent call drops.
  • The feedback is then shared with the telecom service providers on a weekly basis to take action in a time-bound manner.
  • The operators have installed about 2.13 lakh additional Base Transceiver Stations across the country between June 2016 and February 2017, the DoT added.
  • The telcos submit an action-taken report to the DoT Task Force every fortnight. Additionally, the DoT Task Force meets with the TSPs once a month to discuss the issues that come up via the IVRS.
  • The DoT said for the period February 15-28, 43,403 feedback cases had been taken up for investigation by the operators.
  • Cumulatively, a total of 9,328 cases have been resolved through the initiative. About 5,529 cases which were not associated with call drops but related to data, roaming and billing were also identified by the TSPs.

200 rupee note to come soon

  • The Centre is examining a proposal from the Reserve Bank of India (RBI) to introduce Rs. 200 denomination currency notes to improve the cash situation.
  • According to the sources, a smaller denomination note will improve liquidity. In November last year, the Centre announced the demonetisation of Rs. 1,000 and Rs. 500 notes.
  • While a new Rs. 500 note was introduced with added security features, a new Rs. 1,000 note was not reintroduced. Instead, a new Rs. 2,000 denomination currency note was introduced.
  • There are two bank note printing presses in the country — Bharatiya Reserve Bank Note Mudran Private Limited — a subsidiary of the RBI, and the government-owned Security Printing and Minting Corporation of India Limited.
  • According to RBI, smaller denomination notes constituted only 13.6% of the total currency in circulation, in value terms, as at March 2016.
  • The higher denomination notes — Rs. 500 and Rs. 1,000 — that were demonetised constituted 86.4% of the currency in circulation.
  • At end-March 2016, the value of banknotes in circulation was Rs. 16.415 lakh crore — a rise of 14.9% over the previous year. According to RBI, the volume of banknotes increased by 8% against 8.1% in 2014- 15.

India says it will deepen ties with U.K.

  • Finance Minister Arun Jaitley and U.K. Chancellor discussed the post-Brexit scenario and issued a statement reiterating the two countries’ commitment to strengthen economic cooperation and collaborate on cross-border tax evasion and avoidance.
  • The two Finance Ministers also welcomed the National Highways Authority of India’s proposal to issue a masala bond in London in the next few months.
  • They also welcomed IREDA’s plans to issue a green bond in London and list their masala bonds on the London Stock Exchange within six months.
  • This follows the successful issuances by HDFC (Rs. 3,000 crore or £366 million) and NTPC (Rs. 2,000 crore or £244 million), which were the first ever masala bonds to be issued by Indian entities.
  • The two countries agreed to work together swiftly to encourage sustainable bilateral investment that benefits both countries, including through the Joint Working Group.
  • They also welcomed the recent introduction of a fast-track investment promotion mechanism, which provides a single window for U.K. companies that are looking to either establish or expand their business in India.
  • The two ministers said they encourage the timely implementation of the G20/OECD Base Erosion and Profit Shifting Project outputs and called on other nations to meet their commitments.
  • The exchange of information between the U.K. and India under the Common Reporting Standards on Automatic Exchange of Tax Information will begin this calendar year.

Gross tax collections grew about 18% in 2016-17

  • Gross tax collections grew about 18% in 2016-17 to Rs. 17.1 lakh crore, surpassing the Centre’s revised estimates of Rs. 16.97 lakh crore for the year, as per provisional figures released.
  • Net direct tax collections grew by 14.2% in the year, bringing in Rs. 8.47 lakh crore for the exchequer, while net indirect tax collections grew 22% at Rs. 8.63 lakh crore.
  • While the direct tax kitty was in line with the revised estimates for 2016-17, net indirect tax collections exceeded the revised estimates.
  • Within direct taxes, corporate income tax collections grew 13.1% and personal income tax increased 18.4%. However, after taking into account refunds, the growth rates were 6.7% and 21%, respectively.
  • The provisional figures for direct tax collections up to March 2017 show that net collections are at Rs. 8.47 lakh crore which is 14.2% more than the net collections for the corresponding period last year.
  • which is a major increase compared to the growth rate of the previous financial year.
  • Net direct tax collections stand at Rs. 8.47 lakh crore which shows 100% achievement for financial year 2016-17.
  • Refunds amounting to Rs. 1.62 lakh crore have been issued during April 2016-March 2017, which is 32.6% higher than the refunds issued during FY 2015-16,” the statement added.

Fiscal deficit target exceeded to 113%

  • India’s fiscal deficit at the end of February worked out to Rs. 6.05 lakh crore, 113.4% of the full year target for the 2016—17 fiscal, mainly because of lower realisation on non-tax revenues, according to government data released.
  • The fiscal deficit, reflection of government borrowing to meet revenue—expenditure gap was at 113.4% in the 11-month period as compared to 107.4% in the similar period previous fiscal.
  • Government had budgeted a fiscal deficit of Rs. 5.34 lakh crore for current fiscal ending today (March 31).
  • As per data released by the Controller General of Accounts (CGA), the revenue deficit during April-February at Rs. 4.44 lakh crore works out to be 142.8% of budget estimate.
  • It was 114.4% in the corresponding period last financial year. The total revenue receipt till February was Rs. 10.94 lakh crore or 76.9% of the budget estimate, lower than 78.5% recorded in the year-ago period.
  • The major decline was witnessed in non-tax revenue as government got only 62.4% at Rs. 2.09 lakh crore of the budget estimate.
  • During April-February 2015-16, the non-tax revenue collection stood at 81.7% of that year’s budget estimate.
  • Tax revenue during April-February 2016-17, however, was higher at Rs. 8.85 lakh crore or 81.3% of the budget estimate, up from 77.7% last year.
  • The government data showed Centre’s Plan Expenditure during the period was Rs. 4.81 lakh crore and non-plan expenditure stood at Rs. 12.71 lakh crore.

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