Category: Economy

India opens some doors for onion exports after nearly five months of ban

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

After nearly five months of export ban, the government on April 26, has allowed export of 99,150 million tonne of onions, mainly sourced from Maharashtra, to six neighbouring countries.

In an official statement, the Ministry of Consumer Affairs, Food & Public Distribution said the government has “allowed export of 99,150 tonne of onion to six neighbouring countries of Bangladesh, UAE, Bhutan, Bahrain, Mauritius and Sri Lanka”.

On December 8, 2023, the government banned export of onions to ensure adequate domestic availability against the backdrop of estimated lower Kharif and Rabi crops in 2023-24 as compared to previous year and increase demand in international market.

The National Cooperative Exports Limited (NCEL), the agency for the export of onion to these countries, sourced the domestic onions to be exported through e-platform at L1 prices, the statement said. NCEL has supplied to the agency or agencies nominated by the government of the destination country at the negotiated rate on a 100% advance payment basis.

The offer rate of NCEL to the buyers takes into account the prevailing prices in the destination market and also international and domestic markets. The quota allocated for export to the six countries are being supplied as per requisition made by the destination country.

As the largest producer of onion in the country, Maharashtra is the major supplier of onions sourced by NCEL for export, the statement said.

The procurement target for onion buffer out of Rabi crop 2024 under the Price Stabilisation Fund (PSF) of the Department of Consumer Affairs has been fixed at 5 lakh tonne this year.

The Central agencies, like NCCF and NAFED are tying up local agencies like FPOs/FPCs/PACs to support the procurement, storage and farmers registration to begin the procurement of any store-worthy onion.

A high-level team of the Department of Consumer Affairs, NCCF and NAFED visited Nashik and Ahmednagar districts of Maharashtra from April 11-13, 2024, to create awareness among the farmers, FPOs/FPCs and PACs about the procurement of 5 lakh tonne of onion for buffer stock.

To reduce the storage loss of onions, the department has decided to enhance the quantum of stocks to be irradiated and cold stored from 1,200 tonne last year to over 5,000 tonne this year, with technical support from BARC, Mumbai.

The pilot of onion irradiation and cold storage taken up last year has been found to have resulted in the reduction of storage loss to less than 10%, the statement said.

The Centre on Thursday April 25 also allowed exports of 2,000 million tonne of white onion cultivated from Mundra Port, Pipavav Port and Nhava Sheva/JNPT Port. Traders from any state can export their onions via these three Gujarat Ports.

However, CNBC-TV18’s Santia Gora reports that Maharashtra traders believe the decision is partial and is taken to favour Gujarat traders.

According to Maharashtra traders, exporters will need an NOC from Gujarat’s Horticulture Commissioner and even if Maharashtra traders would try and export, Gujarat exporters will reach the ports first, and the 2000 million tonne limit will get over.

Exporting onions via Gujarat Ports will also be logistically and monetarily unviable for traders from Maharashtra and other states.

Traders believe that taking a container from states like Maharashtra and others to Gujarat will increase overall cost by multiple folds. It will also increase the time required to complete the export procedure by at least two days.

Amid rising resentment among traders, the Mahayuti government in Maharashtra has been batting for revoking the ban.

Reacting to exports of white onions via the three ports, Aaditya Thackeray in a post on social media platform X, questioned why is the Centre anti-Maharashtra.

“Once again, Maharashtra faces injustice from the BJP, only to benefit Gujarat. Why can’t both states be given equal treatment?” he said.

Once again, Maharashtra faces injustice from the bjp, only to benefit Gujarat.

Why can’t both states be given equal treatment?

Why is bjp so anti Maharashtra? https://t.co/uPI02mh9Kd

— Aaditya Thackeray (@AUThackeray) April 27, 2024

In March, the Union Agriculture Ministry released the data for onion production. As per the data, onion production in 2023-24 (First Advance Estimates) is expected to be around 254.73 lakh tonnes compared to around 302.08 lakh tonnes last year.

This is due to a decrease of 34.31 lakh tonne output in Maharashtra, 9.95 lakh tonne in Karnataka, 3.54 lakh tonne in Andhra Pradesh and 3.12 lakh tonne in Rajasthan, the data showed.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India must prepare for a US stagflation, says Sanjeev Sanyal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister (EAC-PM), on Saturday, April 27, said stagflation in the US is a not a certainty, but a possibility that India needs to consider.

“The reason for it is simple – the fiscal is too loose and, in compensation, monetary is too tight. Until the former corrects, the latter cannot,” Sanyal said in a post on social media platform X, formerly known as Twitter.

Stagflation is an economic condition which combines slow economic growth, high inflation and high rate of unemployment.

US inflation witnessed its biggest increase in a year as it accelerated to 3.4% in the January to March period, up from 1.8% in the previous quarter.

The US eocnomy in the last quarter slowed sharpy to a 1.6% annual pace, in the face of high interest rates. However, consumers kept spending at a solid pace. The recent data from the US commerce department stated that the country’s GDP decelerated in the January to March quarter from its 3.4% growth rate in the final three months of 2023.

Consumer spending too increased 2.5%, maintaining a solid pace, even though it was down from the 3% in the previous two quarters. Americans spending on services — everything from movie tickets and restaurant meals to airline fares and doctors’ visits — rose 4%, the fastest such pace since mid-2021.

These are likely determining factors for traders to expect the first rate cut by the US Federal Reserve to be pushed to December, a Bloomberg report earlier this week stated.  Before the recent US data was released, the Street was estimating the American Central Bank to begin cutting interest rates in September.

Sanyal, in his post on X on Saturday, shared a Bloomberg article titled ‘The US economy may be barrelling towards stagflation, an outcome worse than recession’. The report summarised that the slower than expected growth, higher than expected inflation, and hotter-than-expected increase in consumer prices, put serious limits on the US Fed’s ability to take action. The central bank has made it clear that inflation needs to slow down for any rate cuts to occur.

The Bloomberg report stated that sputtering growth and higher prices are also key ingredients for stagflation, which can be harder to fight than a recession as the US Fed’s hands are tied due to the above mentioned factors.

“A stagflation situation in US in 2025 would have global consequences that will complicate macro-management for the rest of us,” Sanyal’s post on X stated.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

PM Modi dials Georgia Meloni to fortify India-Italy strategic partnership, extends greetings for 79th Liberation Day

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

In a significant diplomatic exchange, Prime Minister Narendra Modi engaged in a telephone conversation with Prime Minister Georgia Meloni of Italy. The discussion, which took place on Thursday, April 25, highlighted the deepening ties between the two nations and set the stage for collaborative efforts on the global stage.

Prime Minister Modi commenced the conversation by extending his warm greetings to Prime Minister Meloni and the people of Italy on the auspicious occasion of the 79th anniversary of Liberation Day.

During the dialogue, Prime Minister Modi expressed gratitude for the invitation extended by Prime Minister Meloni to the G7 Summit Outreach Sessions scheduled to be held in June 2024 in Puglia, Italy.

A key focus of the conversation was the commitment to build upon the significant outcomes achieved during India’s G20 Presidency, particularly in supporting the Global South.

Both leaders emphasised the importance of leveraging the upcoming G7 Summit, under Italy’s Presidency, to further advance these shared objectives.

Furthermore, Prime Minister Modi and Prime Minister Meloni reaffirmed their dedication to strengthening the bilateral strategic partnership between India and Italy.

In addition to discussing bilateral matters, the two leaders exchanged views on regional and global developments of mutual interest.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

World IP Day | Why a robust IP ecosystem vital for progress of a nation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Intellectual property rights (IPR) is an important driver for innovation and growth. From global health to addressing the issues of climate change, intellectual property is an important element in policy making. Therefore, maintaining a robust intellectual property ecosystem that fuses innovation and creativity is imperative for a better and sustainable world. However, it is always a challenge for countries, especially the countries with poor resources and a low income population.    

World Intellectual Property Day, observed on April 26 every year as a reminder of the effects that intellectual property has on the social and economic progress,  has this time chosen the theme — IP and the SDGs: Building our common future with innovation and creativity. 

The United Nation’s Sustainable Development Goals (SDGs) still have a lot to attain and are lagging behind in targets. The countries must collaborate to make the goals attainable and for this there is a need to harness the innovation and creative potential while making intellectual property an important area of all developments.

IP creation will naturally foster innovation, develop new technologies and build better concepts. These will collectively help in addressing global challenges like climate change and tackling health issues.  Innovators across the world are using IPR to translate their innovations into assets that can have a positive social and  economic benefit for the people.

Intellectual property refers to any kind of creation and creativity like an invention, artistic and literary work, names, images and designs. And, the intellectual property rights are being protected in the form of patents, trademarks, copy rights and geographical indications.    

IP and SDG

According to a recent report of the World Intellectual Property Organisation (WIPO), the intersection of IP and the SDGs offers a unique lens and help track innovation aligned with the SDGs across diverse technology landscapes. It provides a quantifiable measure of the intellectual capital being invested in each goal, offering a tangible representation of the commitment to sustainable development within the global innovation landscape.

The report tracks how patents contribute to progressing towards and achieving the SDGs revealing the latest patent trends. It shows the pivotal role of IP in steering development towards sustainability and can be used to empower the decision makers, policy makers and innovators to foster collaborations. WIPO’s Global Challenges program seeks to raise awareness and understanding of the complex linkages between global health and access to medical technologies, innovation, technology transfer and trade. The goal is to leverage intellectual property (IP) as a tool that contributes to meeting the world’s most pressing health needs.

Patent data offers a powerful lens into the state of technological development because groundbreaking innovations are typically disclosed through the patenting process.  Sagacious IP, an organisation that helps to provide IP solutions to global companies and expand their IP portfolios, has highlighted the need to analyse patent portfolios for identifying how they can serve as a leading indicator of a company’s commitment to sustainable practices. 

In 2020, Sagacious IP embarked on an extensive green patent landscape study to identify the leading innovators driving the transition to a greener future through their patenting activities. The resulting GREEN100® report, first published in 2021 and updated in 2023, spotlights companies generating high-quality “green” patents focused on mitigating climate change. An analysis of the green patent portfolios reveal that organisations from five key industries are having an outsized impact —transportation, motor vehicles & parts, energy and power, information and communication technology, industrial machinery and renewables.

India needs a better IP ecosystem 

Intellectual property (IP) filings in India have surged significantly in recent years. In a statistics released by WIPO in 2022, India ranked fifth in terms of the number of trademark applications filed annually and sixth in the world for patent filings.

According to the 12th edition of the International IP Index released by the US Chamber of Commerce in February,  2024,  India ranked at 42 out of the 55 countries in the index with an overall score of 38.64%. The United States emerged at the top of the list followed by the United Kingdom and France respectively.

The report highlighted concerns over India’s IP regime, pointing out the dissolution of the Intellectual Property Appellate Board in 2021, and a judiciary that lacks adequate resources. While acknowledging certain IP strengths such as the Cinematograph (Amendment) Bill 2023, the report urged leading economies like the USA and EU to reaffirm their IP policy leadership.

The report also affirmed that multilateral organisations can reaffirm global IP commitment instead of tolerating counterproductive measures like IP waivers.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

As India develops, problem of high food inflation will get less severe: RBI MPC member Ashima Goyal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The problem of high food inflation will be “less severe” in India going ahead, as modern supply chains with diversified sources can help quickly address sudden spikes in prices of specific food items, RBI Monetary Policy Committee (MPC) member Ashima Goyal said on Thursday. Stressing that the share of food in the household budget is high in India, Goyal said policy needs to focus on increasing agricultural productivity, since stable agricultural prices are important for non-inflationary growth.

“As India develops, this problem (high food inflation) will get less severe, for a number of reasons. Modern supply chains with diversified sources respond quickly to large spikes in specific items,” she told PTI. Goyal further pointed out that one does not hear of tomato or onion prices spiking in advanced economies.

“We naturally have diverse geographic regions, better integrated markets sourcing from different regions can help mitigate climate change induced food price spikes,” she said. Moreover, as the weight of food in consumption falls and food consumption itself becomes more diversified, the impact and size of future food price shocks falls, she noted.

Goyal stressed that under flexible inflation targeting, expectations get better anchored. She cited the example of East Asia, where food prices were allowed to rise and agriculture was subsidized only after food budget shares fell.

“India unfortunately opted for a distorting system of subsidies to farmers as well as to consumers,” she said, adding that given India’s huge population this was very expensive and reduced the space for government investment in agriculture. Besides, Goyal said it also kept inflation high as procurement prices rose each year.

She said agricultural productivity is finally rising supported by a policy reset, along with the availability of new technologies even though further policy adjustment is required, she stressed. According to official figures, retail inflation declined to a five-month low of 4.85% in March, mainly due to cooling down of food prices. The inflation in the food basket was at 8.52% in March, down from 8.66% in February.

Also Read: Pradhan Mantri Awas Yojana may allow bigger home loans to many more people

RBI Governor Shaktikanta Das has recently said that the baseline projections show inflation moderating to 4.5% in 2024-25, from 5.4% in 2023-24, and 6.7% in 2022-23. Replying to a question on India’s current macroeconomic situation, Goyal said conditions have been created for sustainable and inclusive growth.

“We are seeing results since 2021 with continued robust growth, reduction in multi-dimensional poverty, more assets and infrastructure sustainably helping the lower income groups, more opportunities for youth,” she said. Goyal said inequality has risen but the famous ‘Kuznets inverted U-curve’ tells us that this is normal in a period of high growth and should come down over time.

But for the economy to continue on such a path, the eminent economist said policy continuity is very important. “Policy lessons on what worked must be internalized, domestic policy shocks avoided and external shocks smoothed, even as supply-side enabling reforms continue,” Goyal suggested.

She emphasised on the need of enhancing the economy’s resilience and diversity saying, “we live in troubled times of geopolitical, geoeconomic and climate fragilities.” During 2023-24, the economy is likely to record a growth rate of near 8% on account of good performance of manufacturing and infrastructure sectors. Recently, the International Monetary Fund (IMF) raised India’s growth projection to 6.8% for 2024, from its January forecast of 6.5%, citing bullish domestic demand conditions and a rising working-age population.

The Asian Development Bank (ADB) also raised India’s GDP growth forecast for the current fiscal to 7%, from 6.7% earlier, saying the robust growth will be driven by public and private sector investment demand and gradual improvement in consumer demand.

Also Read: View | A small inheritance tax is not a bad idea

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Supreme Court issues notices on constitutional validity of anti-profiteering norms under GST

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

In yet another move by industry challenging the anti-profiteering norms under the ambit of Goods and Services Tax, the Supreme Court issued notices to the Union Finance Ministry, the Central Board of Indirect Taxes and Customs (CBIC), the Goods and Services (GST) Council and the National Anti-Profiteering Authority (Now subsumed under the Competition Commission of India) to reply on the claims of the constitutional validity of the anti-profiteering norms.

The apex court issued notices taking cognizance of petitions filed by real estate firms namely Swati Realty and Manas Developers, which have moved the top court challenging a Delhi High Court verdict, upholding the constitutional validity of anti-profiteering provisions.

According to a Special Leave Petition (SLP) by Swati Realty and Manas Developers, the High Court failed to appreciate the impugned provisions under the GST system, which the firm claims are unconstitutional.

Delhi High Court had earlier decided on the constitutional validity of the anti-profiteering provisions and had held such provisions to be constitutionally valid. The moot point before the Delhi High Court was with respect to the absence of any methodology and in such a situation, it was difficult for the businesses to determine the quantum of profiteering as the National Anti-Profiteering Authority had used different methods and mechanisms to compute Profiteering for different sectors.

Interestingly, while the Delhi High Court in January had upheld the constitutional validity of the anti-profiteering provisions, the order of the Delhi High Court was in favour of the real estate sector as the order very categorically mentioned that the methodology used by the National Anti-Profiteering Authority with respect to the input tax credit ratios for the erstwhile period and the GST period, appears to be not appropriate, keeping in mind the business of the real estate sector.

Also Read: A small traders union sues Indian govt for loss of business due to payment deadlines

However, as far as the validity of the anti-profiteering provisions was concerned, the Delhi High Court held that in favour of the revenue. The question thereafter arises whether the quantum of profiteering would be now addressed by the Delhi High Court or by the lower authorities. In this regard, the option was given to the companies to either opt to be heard before the High Court or get the quantum decided by the lower authorities.

The matter is listed tomorrow for direction before the Delhi High Court in this regard.

In the meanwhile, FMCG and real estate players have knocked on the doors of the Supreme Court so that they are heard on the constitutional validity of the provisions. Supreme Court has issued notices to the central government and related parties such as CBIC, GST Council, and NAA (now under CCI) for several FMCG and real estate companies on the determination of the constitutional validity of these anti-profiteering provisions.

“We have been arguing before Delhi High Court and Supreme Court that the anti-profiteering provisions will have to test the constitutional validity in the absence of a specific methodology to determine the quantum of commensurate reduction in prices. Accordingly, it is imperative that the constitutional validity aspect is decided by the Supreme Court, especially for real estate players, where the findings of the Delhi High Court are tilted favourably towards the sector. This is predominantly on the methodology applied by the authorities to determine the quantum of Profiteering for the sector,” said Abhishek A Rastogi, founder of Rastogi Chambers, arguing for the petitioners in real estate and FMCG sectors.

Earlier in February, the apex court had issued a notice to the union government over the same matter in a separate petition. National Anti-Profiteering Authority has been facing several such litigations at various levels of the judiciary. The National Anti-Profiteering Authority was set up in November 2017 to ensure that companies pass on the benefits of Input Tax Credit (ITC) and GST reduction to consumers by way of reduction in prices.

Later on, NAA was subsumed under the Competition Commission of India, which has been looking into complaints of profiteering against companies since December 2022. In January, more than 100 companies, including Hindustan Unilever, Patanjali, Jubilant Foodworks, and Phillips, had filed petitions against the anti-profiteering provisions in the High Court.

Also Read: Supreme Court frowns on growing disputes between Centre and states

The High Court had held that the provisions pertaining to a commensurate reduction in prices when GST rates are reduced or due to ITC. Hence, these provisions are in the public interest. They are in line with legislative powers given under the Constitution, it had ruled.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

View | A small inheritance tax is not a bad idea

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Escalating an ongoing war of words between the Congress and Bharatiya Janata Party in India over the Congress election manifesto that talks about redistribution of wealth, Sam Pitroda, head of the Overseas Congress Party, on Wednesday said that the inheritance tax that exists in the US is fair.    

Explaining the inheritance tax in the US, Pitroda said in an interview; “If one has $100 million worth of wealth and when he dies, he can only transfer probably 45% to his children, 55% is grabbed by the government, that’s an interesting law.” 

“…it says you, in your generation made wealth, and you are leaving now, you must leave your wealth for public, not all of it, half of it, which to me sounds fair.” Pitroda said in the interview. 

However,  the above statement of Pitroda has stirred the hornet’s nest, and given additional ammunition to the BJP to go to town with the charge of Congress if voted to power would confiscate properties considered to be excessive in the hands of individuals and distribute them among the minorities.  

But let us leave the polemics aside and examine the case for inheritance tax or its variant estate duty dispassionately. It is not as if the concept is alien or unknown to India. It was in vogue till 1985 when it was put in a suspended animation by the then Rajiv Gandhi government. 

Today, in the arsenal of direct taxes, the Indian government has only one weapon — income tax. Gift tax was tried as both donor and donee based only to be set aside completely. Wealth tax was abolished in 2015 by Arun Jaitley, the then Finance Minister on the facile ground that the revenue therefrom of the order of around ₹2800 crore or so was more than eaten away by the administrative and recovery expenses. He forgot that while revenue considerations are important, direct taxes seek to correct horizontal inequity in income and wealth distribution.  

Tax rates should not be confiscatory. At the height of Indira Gandhi’s socialistic zeal, the maximum marginal rate of income tax was 98%. People said they would rather not earn given the grim prospect of losing 98% of it to the exchequer.  Not for them was the wooly notion that such heavy-handed taxation was meant to bankroll welfare schemes. At the same time, a bouquet of direct taxes is required to target the rich and help the poor.  So much so, even an avowedly capitalistic country like the USA has at least six states imposing heavy inheritance tax which is a perfect fit with the American belief system that one should earn his keep and not be an inheritor. Be that as it may.

The Netherlands, another avowedly capitalistic country, imposes a fairly heavy estate duty. We need a slew of direct taxes whereas we have only income tax to show. A reasonable estate duty on estates worth more than say ₹20 crore would not hurt and the annual wealth tax of say 2% on net wealth in excess of say ₹ 5 crore would not hurt either. Ditto for gift tax on donors. As it is, the optics are not good.  Income tax evasion is quite widespread. GST on the other hand is begetting much greater compliance thanks to its indirect tax status which hurts the poor more being a regressive tax. Coupled with it, fuel taxation (50% of the petrol bunk price) sends out the wrong message that the government is turning Robinhood taxation — tax the rich to serve the poor—on its head.  

Wealth tax under the 1992 law was crafted on the lines suggested by the Raja Chelliah Committee which targeted just six assets whereas it ought to target all assets secularly.  It left out bank balances and shares while targeting even a small car. Small wonder, the collection was abysmally low.  Tilt towards direct taxes is a marker of development. 

Sam Pitroda might have spoken at the wrong time but in a country characterised by Pareto’s law — 80% of the population gets to own only 20% of the national wealth and vice versa — with a greater skew, there is a case for the exchequer using all the four types of direct taxes to garner more revenue for the government while at the same time correcting the skew in income and wealth distribution. One of the canons of taxation is tax according to ability to pay. This touchstone too has been turned on its head with poor willy-nilly bearing the brunt with a backbreaking GST and fuel tax.

The BJP itself wasn’t averse to the idea of inheritance tax staging a comeback with its Minister of State for Finance, Jayant Sinha waxing eloquent about its potential.  Inheritance tax or estate duty is not the same as confiscation or denuding one of his property rights.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Pradhan Mantri Awas Yojana may allow bigger home loans to many more people

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

At the peak of the election season in India, government sources tell CNBC-TV18 that the scope and size of the subsidised home loans under the Pradhan Mantri Awas Yojana (PMAY), an affordable housing programme for poor people living in cities, may be widened.

Under the PM Awas Yojana, home buyers could save a maximum of ₹2.67 lakh in interest cost over a period of 20 years (the maximum tenure for home loan allowed under the scheme).

The maximum size of these affordable homes are 200 square metres.

There are at least four changes to the PMAY benefits under government consideration, according to sources:

1. Proposal: Sources told CNBC-TV18 that the PMAY programme would soon be taken beyond blue-collar workers and people with low salaries to include self-employed people, shopkeepers, traders, and professionals, among others.Impact: More people will be eligible to apply for home loans under PMAY.
2. Currently, loans under PMAY depend on the borrowers’ income.
   
   Proposal: One proposal under consideration is to change the benchmark to the cost of the house instead of the individual’s income.Impact: Linking the loan to the cost of the house may enable eligible borrowers to get bigger home loans.
3. Proposal: Home buyers may get subsidies on home loans upto ₹30 lakh for houses that cost upto ₹35 lakh in both metro and non-metro cities.Under the existing provisions, people could get a maximum of ₹12 lakh as home loan as long as their annual income didn’t exceed ₹18 lakh. Impact: Borrowers can cover a bigger chunk of the cost with subsidised loans.
   The government estimates the average ticket size of a subsidised home loan at ₹25 lakhs under the new scheme.

    

4. Interest subsidy on these home loans is likely to be pegged around 4%. Stamp duties on registration may also be tweaked.
   
   Currently, the interest subsidy on home loans under PMAY is anywhere between 3% and 6.5%. 

These changes are in line with some of the promises made by Prime Minister Narendra Modi in his Independence Day Speech last year. “We are coming up with a new scheme in the coming years that will benefit those families that live in cities but are living in rented houses, slums, chawls, and unauthorised colonies. If they want to build their own houses, we will assist them with relief in interest rates and loans from banks that will help them save lakhs of rupees,” he had said

Fresh sanctions under the credit-linked subsidy scheme were closed in March 2021. In the five years before that, lenders had financed 2.5 million low and middle-income homes, which cost the government ₹59,000 crore in subsidy.

The Modi administration plans to subsidise the purchase or construction of 10 million homes under the changed PMAY scheme.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Unemployment is India’s biggest worry, shows Reuters poll

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The biggest economic challenge for the government after the ongoing election is unemployment, according to economists polled by Reuters who expected the world’s most populous country to grow a healthy 6.5% this fiscal year.

Despite growing at the fastest pace among major peers, the economy has failed to generate enough jobs for its large and expanding young population, a key issue among citizens in the midst of electing the next government.

A majority of economists, 15 of 26, in the April 16-23 Reuters poll who answered an additional question said the biggest challenge for the government after the national election would be unemployment.

Eight said rural consumption, two picked inflation and one said poverty.

“Following a decade of near jobless growth, the rising number of discouraged workers had pushed India’s LFPR (labour force participation rate) down well below levels exhibited by the four Asian tigers at comparable stages in their demography,” said Kunal Kundu, India economist at Societe Generale.

“Bharatiya Janata Party’s focus on existing employment drivers (infrastructure, manufacturing, and government jobs) that have not moved the needle much to date is all the more worrying. Without a more concrete plan, India runs the risk of missing out on potential demographic dividends.”

Also Read: ILO shares six ways that might help India bridge labour market inequalities

Prime Minister Narendra Modi’s BJP, widely expected to return to power for a third straight term, had promised to create more jobs when elected in 2014.

Despite that promise, the unemployment rate over recent years indicates not enough jobs have been added to make a significant difference. Periodic Labour Force Survey data showed the unemployment rate which stood at 3.4% in 2013-14 was only marginally lower at 3.2% in 2022-23.

According to the Centre for Monitoring Indian Economy, an economic think tank, the unemployment rate was 7.6% in March.

Although job creation has stayed lacklustre, the government ramping up of capital expenditure helped the economy grow a faster-than-expected 8.4% in the October-December quarter.

The economy likely grew 6.5% last quarter and 7.6% in the previous fiscal year that ended on March 31, the survey showed.

It was forecast to expand 6.5% and 6.7% this fiscal year and next, broadly unchanged from last month.

Also Read: Global unemployment seen inching up to 5.2% in 2024, says UN labour body ILO

“Repeating the exceptional strength of 2023 shouldn’t be taken for granted. Last year’s growth was strongly supported by the government’s capex push, but the need for fiscal prudence will limit the boost this year and over the coming years,” said Alexandra Hermann at Oxford Economics.

“We currently see risks to the upside with increasing signs the economy’s resilience of last year was maintained into the beginning of 2024.”

With various institutes like the International Monetary Fund upgrading India’s growth forecast the risk to the outlook was to the upside.

A strong majority of economists, 20 of 28, who answered an additional question said economic growth this fiscal year was more likely to be higher than they expected rather than lower.

Consumer price inflation, at 4.85% in March, was forecast to average 4.5% this fiscal year and next. However, a majority of economists, 19 of 28 said it was more likely inflation would be higher than they currently predict.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan ‘very close’ to currency intervention, former forex chief says

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Japan is on the brink of currency intervention if the yen weakens any further, according to one of the country’s former top currency officials.

“Amid no change in US and Japan interest rates, the yen has depreciated against the dollar quite rapidly,” said Mitsuhiro Furusawa, former vice minister of finance for international affairs, in an interview with Bloomberg on Tuesday.

“Should this trend continue, intervention will come,” Furusawa said, adding that “we are very close.” He cited market reaction to US data as a factor that may nudge Japanese authorities to act and pointed to last week’s joint statement between Japan, the US and South Korea as an indication that Tokyo’s allies won’t stop it entering the market.

The comments from the former finance ministry official come with Japan’s currency close to Tuesday’s fresh 34-year low of 154.88 against the dollar. Finance Minister Shunichi Suzuki reiterated Tuesday that authorities are prepared for action to address the situation.

The yen continues to look vulnerable with a Bank of Japan meeting this week and the Federal Reserve’s preferred gauge of inflation due out later on Friday.

Furusawa sees the possibility of the BOJ raising interest rates again as early as July, but, like almost all economists surveyed by Bloomberg, he expects no rate change on Friday.

Market participants and policymakers are wary that the widely expected stand-pat decision on Friday after last month’s historic rate hike may trigger another slide in the currency.

Allowing market players to push the exchange rate can’t be tolerated, Furusawa said. “No one thinks it’s a good idea to leave speculators unchecked,” he said.

Furusawa expects Japan’s authorities to step into the market before the currency reaches 160 yen to the dollar. Some market participants, such as Bank of America Corp., foresee the yen sliding further to 160.

Japan spent around $60 billion intervening in currency markets in September and October of 2022 when the yen approached the 146 and 152 levels.

Last week, Suzuki issued a rare joint statement with US Treasury Secretary Janet Yellen and South Korean Finance Minister Choi Sang-mok in Washington, stating that they would continue to consult closely on foreign exchange developments. The three nations also acknowledged the serious concerns felt by Japan and Korea over the recent sharp depreciation of their currencies.

“With the statement, it’s hard to imagine the US will stop Japan if it actually takes action,”said Furusawa, while noting that the statement does not give Japan a complete go-ahead to intervene.

The main factor behind the recent weak yen is the rate differential between Japan and US, according to Furusawa, who now heads the Institute for Global Financial Affairs at Sumitomo Mitsui Banking Corp. Furusawa previously served as the finance ministry’s top currency official from 2013 to 2014 before joining the International Monetary Fund as deputy managing director.

The difference in policy rates between the two countries looks set to remain unchanged until the summer at least, with surveyed economists flagging October as the most likely month for the BOJ to move again.

Governor Kazuo Ueda reiterated in parliament on Tuesday that it’s appropriate to maintain an accommodative environment for a spell, while in the US, Fed Chair Jerome Powell and other officials have signaled that it’ll take longer to cut rates.

“A July hike is a possibility if the bank is convinced it can raise rates after the effects of the income tax rebate and wage hikes are seen,” said Furusawa, referring to a one-off tax break for households dealing with elevated levels of inflation. Unions have secured their biggest annual pay raises in decades this year starting from April.

At its upcoming meeting, the BOJ is expected to project 2% price growth in the fiscal year beginning in April 2026, partly reflecting the optimism surrounding wages and prices. If the bank does so, that may support the case for a July move, Furusawa said. The BOJ could then hike again later in the year, he added.

Weakness in the yen could also be a motive for the bank to move if that starts to affect inflation, but changing monetary to correct currency trends would be difficult, he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow