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Fuel excise cuts to create downside risks to fiscal deficit target: Moody’s

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Mumbai, Oct 10 (IANS) Global credit ratings, research and risk analysis firm Moody’s Investors Service on Tuesday said the recent reduction in excise cuts on petrol and diesel will “create material downside risks” to the central government’s fiscal deficit target.

According to a Moody’s note, the excise cuts will reduce government revenue by Rs 105 billion (about $1.4 billion) or 0.05 per cent of the GDP for the remainder of fiscal 2018, which ends in March 2019.

“These measures create material downside risks to the central government’s fiscal deficit target of 3.3 per cent of GDP for fiscal 2018. Because the government had already met 94.7 per cent of the budgeted annual deficit by August 2018, to achieve its deficit target it will likely need to compress capital expenditure,” the note said.

“Consequently, we expect the central government deficit target to slip modestly to 3.4 per cent of GDP, while the combined general government deficit (central and state) should remain at about 6.3 per cent of GDP.”

On October 5, the central government had effected a reduction in the excise duty on petrol and diesel of Rs 1.5 per litre and asked public sector oil-marketing companies to absorb an additional Re 1 per litre reduction in petrol and diesel prices.

Business

Don’t want RBI money, but can’t let economy starve: Jaitley

“The main issue was not the economic capital framework. It’s an issue for a medium term. But the immediate issue is we can’t allow our economy to starve (on liquidity),” Jaitley said at a summit hosted by television channel Republic TV here.

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Arun Jaitley

Mumbai, Dec 18 : Admitting using Section 7 of the RBI Act to force a discussion with the central bank on liquidity and credit issues, Finance Minister Arun Jaitley on Tuesday said he could not have let the economy starve for liquidity.

As for the Reserve Bank of India (RBI)’s economic capital, he said it was never the main issue between the government and the RBI and that the government does not want any money from the bank’s reserves to fix its fiscal deficit.

“The main issue was not the economic capital framework. It’s an issue for a medium term. But the immediate issue is we can’t allow our economy to starve (on liquidity),” Jaitley said at a summit hosted by television channel Republic TV here.

Stating that his government had the best fiscal deficit track record, he declared that even in the current year, he will meet the announced fiscal deficit target within the available resources.

“I don’t want any money from the Reserve Bank’s reserves at the moment. The only question which was raised were really two…there were several questions around two important facts — first relating to liquidity in certain sectors of the economy and availability of credit,” he said.

In his tiff with the RBI, which ended with Governor Urjit Patel resigning last week, Jaitley said he always respects the bank’s autonomy, but as a sovereign and accountable government, he had to flag the liquidity issue for which he used all tools available.

“We used every instrument available to our advantage to force a discussion and whatever steps we took — informal plus formal and statutory — were really to flag the issue of liquidity and credit,” he said hinting at the Section 7 of the RBI Act, which was never used earlier.

The section empowers the government to give directions to the central bank on matters of public interest even if the RBI or its Governor holds a different view.

Stating that there was never a breakdown in his relationship with the central banker, Jaitley said he wanted the autonomous and independent RBI to hold stakeholder consultations and resolve the problem, which was related to monetary policy.

“I say I have read some books, some data, some research papers, some statistics and I am forming an opinion. The empirical evidence in the market would be entirely different… All these institutions must be autonomous but must never be isolationist. If they are isolationists, there is a fair chance they will go wrong,” he added.

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Indian small businesses thrive on Amazon special sales day

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Amazon

Bengaluru, Dec 18 : Indian small businesses and enterprises (SBEs) witnessed a 1.4x spike in the sale of their products on Amazon during its ‘Small Business Day’ sales event, said the world’s leading e-tailer on Tuesday.

“The online sales event held on December 16 had orders coming from 20,400 pin codes across the country, where buyers could find products offered by small and medium businesses,” said the Indian arm of Amazon in a statement here.

Handmade products by weavers and artisans were popular during the sale, and witnessed a sales spike of over 60 per cent compared to average business days, the company said.

Nearly 2,000 sellers witnessed a sales spike more than four times compared to an average business day, and 4,100 sellers saw a two times spike, it added.

Organic skin products, handmade and handloom products were among the top-selling categories during the Small Business Day.

“Few of the small businesses had quit their day jobs to sell on our platform, hired more employees and grew their sales as customers from across the country responded equally well,” said Amazon India Director (Seller Services) Gopal Pillai in the statement.

Tribes India, a handmade products brand under the Tribal Cooperative Marketing Development Federation of India (TRIFED), saw a spike of 4x over average business day during the one-day event, the statement noted.

The online sales event was aimed at promoting small businesses and micro entrepreneurs and encouraging shoppers to discover and buy products directly offered by them.

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Lower oil prices, strong rupee buoy equity indices

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SENSEX NIFTY MARKET

Mumbai, Dec 18: Lower crude prices and a strong rupee aided key the equity indices to trim their early losses to end Tuesday’s trade session in the green.

Initially, the S&P BSE Sensex and NSE Nifty50 had a gap-down opening and traded in the red as investors choose to book profits.

However, lower crude prices and a resurgent rupee triggered buying which pared losses and buoyed the market.

The Brent crude traded at $57.80 a barrel around the time when markets closed.

In terms of currency, the Indian rupee traded at 70.76 (at 3.30 p.m) per US dollar from its previous close of 71.55, gaining close to 80 paise.

Sector-wise, financial stocks rose, whereas export-oriented IT and Tech shares ended over 1 per cent lower.

Index-wise, the Sensex settled 77.01 points or 0.21 per cent higher at 36,347.08 points and the Nifty50 gained 20.35 points or 0.19 per cent to close at 10,908.70 points.

“Crude oil prices fell over 2 per cent providing support to the rupee. In addition, investment has improved in India after weakness in the major global economies,” Anuj Gupta, Deputy Vice President – Research, Commodities and Forex, Angel Broking, told IANS.

In addition to profit booking, global markets were subdued as investors traded with caution ahead of the US Federal Open Market Committee’s (FOMC) two-day meet starting on Tuesday.

The committee is expected to raise interest rates which has kept the sentiments tepid, analysts said.

IANS

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