Current Affairs : Economy
 

  • Seven Indian companies figure in the latest Fortune 500 list, released on Thursday 21 July 2016
  • State-run Indian Oil Corp (IOC) is ranked highest at 161st with revenues of $54.7 billion
  • Public sector firm Oil and Natural Gas Corp has moved out of the rankings for 2016
  • Gems and jewellery firm Rajesh Exports ranked 423rd position
  • IOC is followed by State Bank of India (SBI), Bharat Petroleum and Hindustan Petroleum
  • Mukesh Ambani-led Reliance Industries Ltd (RIL) is the highest ranked, though it has slipped down to 215th position, from 158 last year.
  • Tata Motors follows at number 226, up from 254th last year
  • Bharat Petroleum fell from 280th to 358th this year, while Hindustan Petroleum is at 367th, compared to its 327th place last year.
  • SBI has improved its position to 232, from being at 260 last year.
  • List was topped by retail giant Walmart with revenue of $482,130 million
  • The world's 500 largest companies generated $27.6 trillion in revenues and $1.5 trillion in profits in 2015
  • Global top 10 companies are State Grid (second, $329,601 million), China National Petroleum (third, $299,271 million), Sinopec Group (4th, $294,344 million), Royal Dutch Shell (5th, $272,156 million), Exxon Mobil (6th, $246,204 million), Volkswagen (7th, $236,600 million), Toyota Motor (8th, $236,592 million), Apple (9th, $233,715 million) and BP (10th, $225,982 million).

  • You need the right mentor to become successful in any field. And this 28-year-old young turk found his early in life.
  • Delhi-based JatinKhemani developed a penchant for the stock market by reading some of the illustrious books such as Peter Lynch’s One up on Wall Street , William Thorndike’s The Outsiders, Philip Fisher’s Common Stocks and Uncommon Profits and Saurabh Mukherjea’s The Unusual Billionaires.
  • Jatin claims to have bought his first stocks at the age of 21 in 2010. Some of these eventually proved multibaggers; some generated up to 900 per cent returns in last four years.
  • A commerce graduate from Delhi University with an MBA in finance from Christ University, Bangalore, Jatin says good guidance and the right mindset are what can take you places in a challenging profession like investing.
  • Jatin introduces himself as a value investor and is very bullish on India’s growth outlook. He projects the Sensex to touch the 1,00,000 mark by 2027.
  • All you need to do is make a few right decisions in your lifetime to be a successful investor, says he.
  • Jatin doesn’t believe in sectoral or market-cap biases. Instead, he looks for options in smaller businesses that are easy to understand and mostly operated by owners.
  • “I prefer companies that have a favourable base, are lesser known and have minimum institutional holdings,” he says.

  • Aadhaar may soon become mandatory for buying shares and mutual funds.
  • The government and the Securities and Exchange Board of India (Sebi) are planning to link Aadhaar to financial market transactions to try and curb sharp practices such as conversion of black money into white through the stock market.
  • Two people familiar with the development said the government has realised that the permanent account number (PAN) may not be enough to plug tax leaks.
  • Top Sebi officials have informally sounded out select market intermediaries about the possibility of linking Aadhaar to financial market transactions, a top official with a financial services firm familiar with the development said.
  • "We have been told that making Aadhaar compulsory is in the offing," the official said. The timing of the move is still unclear.
  • It is also not clear whether Aadhaar will replace PAN as the sole identification number for financial market transactions.
  • The government recently mandated that Aadhaar, launched in 2009 by the UPA government, be linked to PAN, bank accounts and mobile phone numbers. The deadline for existing bank account holders to provide their Aadhaar details is December 31.

  • Travelling by train in AC coaches is going to cost more from July even as the railways has sought exemption for several services from GST.
  • In addition, it is seeking to ensure that its system is geared to claim input tax credit for many taxes that it pays across the country - excise, service tax and VAT on various goods and services.
  • Officials said if railways manages to get input tax credit for taxes it has already paid then the burden may be kept under check.
  • Under the proposed GST regime, AC class train travel will attract 5% tax, same as freight levy, compared to 4.5% service tax that is paid currently.
  • An official said those who have booked tickets for AC class in advance but will travel after or on July 1 will have to pay the balance amount calculated on new rate of taxation.
  • However, ticket prices for sleeper class and general class will remain the same.

  • The government plans to wrap up the disinvestment in state-run carrier Air India before end of the year and the preference is veering towards a "domestic buyer" for the debt-laden airline.
  • The Union Cabinet gave an in-principle approval for strategic disinvestment in Air India in June and a panel of ministers headed by finance minister ArunJaitley is now devising the strategy for executing the sale.
  • "We will complete the process before the year-end. There is no choice but to privatise it," a government source told .While no final decision has been taken, the source said the preference so far is for a "domestic buyer." Some foreign companies including airlines have informally expressed interest in buying Air India.
  • Disinvestment of Air India gathered pace after the government's think tank NITI Aayog recommended up to 100% stake sale, along with writing off its debt. Experts say it would be a difficult task to undertake a stake sale in the airline in the run up to 2019 general elections.
  • The source said the panel is discussing several options to deal with the large debt of the airline as no buyer is expected to come forward to take over such a liability. He said options being discussed include a partial write-off of the debt.

  • A Parliamentary panel will hear on August 8 the views of various stakeholders on the disinvestment of national carrier Air India and Pawan Hans Limited.
  • While a group of ministers, headed by Finance Minister ArunJaitley, is looking into various aspects of the proposed disinvestment of Air India, the government has already decided to sell its entire 51 per cent stake in Pawan Hans Ltd (PHL), in which the rest 49 per cent holding is with ONGC.
  • The Parliamentary Standing Committee on Transport, Tourism and Culture will hear the views of the Ministry of Civil Aviation, Department of Investment and Public Asset Management (DIPAM), Air India and Pawan Hans on the disinvestment of Air India and Pawan Hans on Aug 8, as per the panel's schedule.
  • DIPAM comes under the Finance Ministry,The 31-member panel is headed by Trinamool Congress member Mukul Roy and has 21 MPs from the Lok Sabha. The members include those from the Congress, BJP, BJD, SP, CPI(M) and TDP.

  • Amazon India has said it signed a Memorandum of Understanding (MoU) with the Telangana Department of Handloom and Textiles, to educate, train and enable weavers and artisans to directly sell their products to Amazon customers across the country.
  • According to a statement issued by the e-commerce giant last night, with over 17,000 handlooms in the state, this association will further help elevate popular handloom products from clusters such as are Pochampally, Warangal, Gadwal, Narayanpet and Siddipet which have a tremendous potential and demand in urban areas.
  • "Amazon India through this association with the weavers and artisans in Telangana will help them boost their business by training them to list and sell their products online on the marketplace.
  • Additionally, Amazon India and the department will collaborate to conduct various training programs including computer and internet training sessions and registration assistance programs," it said.

  • Indian banks may have to write off 60 per cent of the value of bad loans from their 50 large stressed asset accounts, or a hit of Rs 2.38 lakh crore trillion, ratings agency CRISIL said on 19july.
  • The 50 stressed companies, which account for Rs 4 lakh crore in soured loans, are largely from the metals, construction and power industries and account for nearly half of the total non-performing assets in the banking sector as of the end of March, CRISIL said.
  • The credit agency, part of S&P Global, estimated that banks have provisioned for only around 40 per cent of their exposure to these assets.
  • Banks had total non-performing loans of about Rs 7.29 lakh crore, or 5 per cent of India's gross domestic product, as of end-March.
  • The report comes after rival India Ratings and Research had estimated banks taking 12 of the country's largest defaulters to bankruptcy court would need to make additional provisioning of at least Rs 18,000 crore.

  • Brexit: British + Exit
  • UK joined EU in 1973
  • Withdrawal from EU under article 50 of Treaty of EU
  • Total Votes: 33,578,016, 72% of Registered Voters
  • 51.9 Voted for Leave and 48.1 voted for Remain
  • It will take 2 years to see actual effect
  • Immediate Effect: Global Share markets collapsed, US dollar became stronger
  • Indian IT industry may be affected, Indian IT companies may need to establish separate operations for EU and UK.
  • Gold prise rise

  • The cabinet on Wednesday 29 Jun 2016 cleared a new mineral exploration policy
  • Allow private companies to carry out stand-alone exploration for the first time
  • India is keen to get private firms to start exploring for more minerals like diamonds and gold
  • PM's ambition is to make the country a major mineral producer
  • Current mining is negligible

  • If you thought cash deposits made prior to November 8 last year when the government announced its demonetisation exercise will escape the eagle eye of the tax department, you would be mistaken.
  • Tax authorities have sought explanations related to deposits of cash made in FY11. Not only that, notices have also been sent to homebuyers where the declared value of a purchase has been found much lower than the guidance, or indicative prices based on past transactions in the area.
  • A reassessment can be ordered if the tax authorities don't receive a response or they don't find the reply satisfactory.
  • "Cases on the basis of information available have been classified into two categories high risk and low risk," said a senior income tax official. "High-risk category cases have to be immediately attended to."
  • Cases from FY11 will soon become time-barred owing to the statute of limitations, hence the rush, the official added. These have been classified as high priority and general queries have been issued.
  • The department has asked these individuals and entities to furnish permanent account numbers as well as returns filed for the financial year in question. Tax authorities have the power of assessment or reassessment of any income chargeable to tax under Sections 147 and 148 of the Income Tax Act.
  • Formal notices will be issued if the explanation is found to be unsatisfactory. In the case of property transactions, the authorities have sought to add the difference between guidance value and the declared value to the assessed income. Their argument is that the difference would have been paid but hadn't been declared, putting both seller and buyer under the scanner.
  • The income tax department is getting information from multiple sources including banks and financial institutions as part of its anti-black money drive aimed at nabbing tax evaders.
  • "This is a clear evidence of enhanced data mining capabilities of the tax department," said Amit Maheshwari, partner, Ashok Maheshwary& Associates LLP. "This kind of targeted approach would lead to widening of tax base and increase the tax collections."

  • The Central Board of Direct Taxes (CBDT) has notified revised format for income tax notices to further push its e-proceeding facility and reduce taxpayers' interface with tax officials.
  • In the new format, three types of notices can be issued by the taxman for the scrutiny of returns.
  • The CBDT has directed all its field formations to strictly adhere to the prescribed format and not to issue any other notices.
  • "This has become necessary in view of the board's decision to utilise e-proceeding facility for electronic conduct of assessment proceedings from this financial year," according to a CBDT order issued on 23 june
  • The e-proceeding is aimed to curb complaints of harassment and corruption in tax related issues.

  • Central Board of Direct Taxes (CBDT) signs seven Unilateral Advance Pricing Agreements (APAs)
  • The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014.
  • The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.
  • The APA scheme has attracted tremendous interest and that has resulted in more than 700 applications (both unilateral and bilateral) having been filed in just four years.
  • The 7 APAs signed today pertain to various sectors of the economy like banking, Information Technology and Automotives. The international transactions covered in these agreements include software development Services, IT enabled Services (BPOs), Engineering Design Services and Administrative & Business Support Services.
  • The total number of APAs entered into by the CBDT has reached 77. This includes 3 bilateral APAs and 74 Unilateral APAs. In the current financial year, a total of 13 Unilateral APAs have been entered into so far.
  • The progress of the APA Scheme strengthens the Government’s mission of fostering a non-adversarial tax regime. The CBDT expects more APAs to be concluded and signed in the near future.

  • New dry dock within the existing premises of Cochin Shipyard Limited (CSL) at an estimated cost of Rs.1799 crore to augment the shipbuilding / repair capacity of the country.
  • The objective is to augment the shipbuilding/ ship repair capacity essentially required to tap the market potential of building specialized and technologically advanced large vessels such as Liquefied Natural Gas (LNG) vessels, Indigenous Aircraft Carriers of higher capacity, Jack up Rigs, Drill ships, large Dredgers and repairing of offshore platforms and larger vessels.
  • Apart from direct employment of 300 personnel, about 2000 personnel would be indirectly employed when the project becomes fully operational.
  • The construction of new dry dock as the expenditure of Rs.1799 crore will be funded through Internal and Extra Budgetary resources (IEBR) of CSL and the funding requirements are fully tied up.

  • The Cabinet Committee on Economic Affairs (CCEA) on Wednesday 20 July 2016 granted its approval to set up a 1,980 MW thermal power project at Ghatampur in Uttar Pradesh
  • An estimated cost of Rs 17,237.80 crore
  • Ghatampur Thermal Power Project (GTPS) of 1,980 MW (3 X 660 MW) capacity through a joint venture company named Neyveli Uttar Pradesh Power Ltd formed jointly by Neyveli Lignite Corporation and Uttar Pradesh Rajya Vidyut Utpadan Nigam

  • The government is working on opening 'Jan Aushadhi' (generic medicines) stores at petrol pumps belonging to state-run fuel retailers across the country with a view to make cheap drugs accessible to masses, Union oil minister Dharmendra Pradhan said on16Aug.
  • "Oil marketing companies are bringing an ecosystem of non-fuel retail business at petrol pumps through tieups.
  • The Jan Aushadhi stores under the department of pharmaceuticals in the chemicals & fertilizers ministry will also be opened at the outlets in the future," Pradhan said after the fuel retailers inked MoU with Energy Efficiency Services Ltd for selling energy-efficient appliances and LED bulbs from petrol pumps.
  • But shortage of qualified pharmacists have emerged as a problem. Under law, drug stores need to have qualified pharmacists.
  • While most of the private drug stores list such pharmacists, they are seldom present. "As government entity, we can't do that," a person familiar with inter-government discussions , But the officials were hopeful of finding a way and said it will also open job opportunities.
  • EESL is a company promoted by state-run power utilities. It is spearheading the government's flagship 'Ujala' scheme to replace all incandescent and CFL bulbs in the country with LED lamps by 2019.
  • Pradhan said the IT ministry's 'Common Service Centre' concept is also being explored to offer government services such as issuing PAN and E-Aadhaar cards, utility bill payments, banking solutions and agriservices at the pumps.

  • Checking in more than 15 kg on domestic flights could now blow a big hole in your pocket.
  • The Delhi high court on16 Aug set aside a Directorate General of Civil Aviation (DGCA) order that capped excess baggage charge at Rs 100 per kg for each extra kilo between 15 kg and 20 kg.
  • While airlines were earlier free to charge any amount as excess baggage charge beyond 20 kg, they can now go back to their old fee of up to Rs 350 per kg beyond 15 kg itself. For flyers, it could mean shelling out up to Rs 250 more per kg in the 15-20 kg band.
  • About two years back, all Indian carriers except Air India had reduced free check-in baggage allowance for economy class domestic flyers from 20 kg to 15 kg. They then started charging anywhere uptoRs 350 per kg for each kilo beyond 15 kg.
  • After getting complaints from passengers, the DGCA last summer directed airlines not to charge more than Rs 100 per kg for extra baggage between 15 and 20 kg. Beyond 20 kg, they were free to charge any amount per kg as excess baggage charge.
  • On16 Aug, the Delhi High Court set aside the aviation regulator's order capping excess baggage charge at Rs 100 per kg in the 15-20 kg band. The court said DGCA had no power to fix such tariff for excess checked-in baggage. The Federation of Indian Airlines, which has carriers like IndiGo, Jet, GoAir and SpiceJet as members, challenged this order.

  • Finance Minister Arun Jaitley on Tuesday said GST rollout will not be impacted by any delay in security clearance to GST Network, the IT backbone provider for the new indirect tax system.
  • "It (GSTN) is already functioning," he told reporters here. Security clearance to GSTN is a "procedural matter".
  • "These are all procedural matters, they go on," he said. "That doesn't defer the (GST rollout)."
  • It won't derail "the fate of Constitution amendment", he said.
  • The GST Constitutional (101st Amendment) Act 2016 mandates introduction of a national Goods and Services Tax in India. The Centre and states have agreed to roll out the new indirect tax regime, which will subsume excise, service tax, VAT and other local levies, from July 1.

  • Prime Minister Narendra Modi on 15 Aug hit out at critics of the demonetisation drive and promised to continue the fight against black money while citing independent data to argue that 3 lakh crore of unaccounted wealth had flown into the banking system due to the withdrawal of two high denomination notes.
  • "When demonetisation was announced, the world was surprised. People thought that this was the end of Modi. But the way our 125 crore countrymen showed patience and faith, we were able to take one step after another in our drive against corruption," the PM said in his Independence Day address.
  • Modi said deposits of over 1.75 lakh crore made in banks post demonetisation, and 18 lakh people with income suspected to be beyond their known sources, were under scrutiny. Of the 18 lakh, 4.5 lakh people are now amending their "mistakes", while one lakh "who had neither heard of income tax nor paid income tax have now been forced to do so", the PM said.
  • Modi added that demonetisation forced "black money which was hidden to be brought to mainstream. Our effort was to get money into banks and make it a part of formal economy and we have done it successfully".

  • The recent spate of cuts in savings rates will help Indian banks improve their net interest margins (NIMs) by 15 to 18 basis points(bps), although there is no indication just yet of a corresponding decrease in lending rates.
  • All large banks have taken a cue from the country's biggest lender State Bank of India and reduced their minimum savings bank rate to 3.5 per cent in the last two weeks. The spell of reduction is the first since the rates were deregulated in October 2011. One basis point is 0.01 percentage point.
  • Analysts said the savings bank cuts will also have to be reflected in the bank lending rates under the marginal cost of lending rate (MCLR) calculation, which is closely linked to bank deposits rates.
  • In a report earlier this month, India Ratings & Research Analyst SoumyajitNiyogi said the reductions in savings rates could spur competition among banks, giving public sector lenders an advantage.
  • "PSBs, with a stable, large and granular savings deposit base, will have additional manoeuvrability over private peers to cut MCLR.The maximum cut in MCLR for PSBs can be 35 basis points.
  • For private banks, the threshold is 25 basis points. This could intensify competition among large lenders with strong savings deposit franchise and capitalisation towards gaining credit market share," Niyogi said.

  • Banks will have to develop tracking software which can "fingerprint" parties in a transaction to prevent some customers from trying to game the system.
  • Bankers are worried that customers might cry fraud to avoid making payments.
  • "The onus of proving that the customer was negligent rests with banks," said A P Hota, MD & CEO, National Payments Corporation of India (NPCI), referring to the Reserve Bank of India's latest circular on customer liability in electronic payments.
  • According to the chief of the payments body, the move will help promote electronic payments.

  • Lenders led by SBI are set to initiate action under the Insolvency & Bankruptcy Code (IBC) against Bhushan Steel and Essar Steel, which will join companies such as Electrosteel, Monnet Ispat, Alok Industries and Jyoti Structures.
  • Sources said SBI will take the two companies with combined loans of Rs 85,000 crore to the joint lenders forum and formal action is expected to be initiated next month.
  • In case of the other companies, the country's largest bank plans to approach the National Company Law Tribunal (NCLT) by June 30.
  • Separately, Punjab National Bank is initiating action against Bhushan Power & Steel.
  • The two Bhushan Group companies with combined debt of over Rs 80,000 crore are seen as examples where the lenders were more than liberal in sanctioning loans and are among the most capital-intensive steel plants, at least in India.

  • E-commerce major Flipkart on 1Aug. said it has completed the merger with eBay India's operations.
  • With this, eBay.in will now be a Flipkart Group company.
  • The deal was announced in April when the Flipkart group raised $ 1.4 billion from global technology majors eBay, Tencent and Microsoft.
  • In exchange of an equity stake in Flipkart, eBay had made a cash investment of $ 500 million and sold its eBay.in business to Flipkart.
  • The announcement comes a day after smaller rival Snapdeal said it was terminating all discussions of a potential merger.
  • While Snapdeal did not name Flipkart, it had been widely reported that both were negotiating a merger for the last five months.

  • With the $2.4 billion it just received from Japanese technology and telecom giant SoftBank, Flipkart has become the third most funded private company globally.
  • The homegrown e-commerce company has to date raised almost $7 billion in capital, higher than that raised by global behemoths like online house rental aggregator Airbnb ($3.3 billion) and mobile phone maker Xiaomi ($1.4 billion). The top two are both ride hailing platforms ChinabasedDidiChuxing and USbased Uber.
  • In April, DidiChuxing raised $5 billion and increased its total fund raise to $15 billion, overtaking Uber that has raised $12.9 billion. In the top 10, four are ride-hailing platforms, the other two being Silicon Valley-based Lyft and India's Ola. Flipkart is the only e-commerce company in the top 10.
  • The Flipkart funding reaffirms the faith of global players like SoftBank, Tiger Global, eBay, and Microsoft in Indian companies.
  • "Since Flipkart has been the flag-bearer for the local ecosystem, this reinforces the positive belief around the long-term India opportunity," said Nitin Sharma, principal and founding member at early-stage VC fund Lightbox.
  • The VC ecosystem, he said, eventually needs to show a large-value creation event, and seeing SoftBank, Tencent and others go long should allay some of the concerns that had been dampening the sentiment locally and giving global investors some pause. He said e-commerce in India consumes a lot of capital. "With macro income growth and scale, unit economics will become attractive over five-10 years," he said.

  • Ford Motor Co and Indian automaker Mahindra and Mahindra Ltd announced they are exploring forming a strategic alliance, as traditional automakers increasingly collaborate to meet the threat of competition from technology-focused firms.
  • The companies said in a joint statement on Monday the areas of potential co-operation include connected cars, mobility programs, electric vehicles and sourcing among other areas.
  • "The agreement of intent between the two companies will allow each to leverage their mutual strengths during a period of unprecedented transformation in the global automotive industry," the two companies said.
  • An alliance would also come as foreign car makers such as Volkswagen, General Motors and Fiat Chrysler have struggled in India where nimbler rivals such as Maruti Suzuki and Hyundai Motor have cornered roughly two-thirds of the market.
  • In May, General Motors said it would stop selling cars in India from the end of this year, drawing a line under two decades of battling in one of the world's most competitive markets where small cars make up the bulk of sales.
  • The potential alliance would explore Ford leveraging Mahindra's distribution reach within India and Mahindra looking to benefit from Ford's reach in other emerging markets, the companies said.
  • "Teams from both companies will collaborate and work together for a period of up to three years. Any further strategic cooperation between the two companies will be decided at the end of that period," they said.Mahindra shares closed 0.1 percent higher in a Mumbai market that gained 0.7 percent.
  • Globally, traditional automakers are weighing how best to work on new, disruptive technology, from electric vehicles to autonomous driving, that require hefty investment and have turned firms such as Alphabet Inc's Google and Tesla into rivals. One way is by joining hands.
  • Toyota Motor Corp said last month it planned to take a 5 percent share of smaller Japanese rival Mazda Motor Corp as part of an alliance that will see the two build a $1.6 billion U.S. assembly plant and work together on electric vehicles.
  • Ford is among the top exporters of cars from India and manufactures and exports vehicles and engines from its plants in Chennai, Tamil Nadu and Sanand in Gujarat.