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I would not have approved of note ban: Bimal Jalan

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New Delhi, Aug 9, 2017: Though demonetisation had some positives, former Reserve Bank of India (RBI) Governor Bimal Jalan says he would not have approved it had he been at the helm of the country’s central bank.

There is need to tackle the problem of black money at the root and see whether taxes are high, he feels.

“On balance, if a rupee has been guaranteed by the Government of India and issued by RBI, I should not demonetise it unless there is a crisis,” Jalan told IANS in an interview ahead of the release of his book ‘India: Priorities for the future’ on Wednesday.

Asked if there was a crisis that necessitated demonetisation, he emphatically said, “No.”

Similar was his reply when asked if he would have approved of demonetisation as RBI Governor.

Jalan, who had been Finance Secretary at the Centre, was the RBI Governor from 1997 to 2004.

“Demonetisation had a negative effect, but it also had a positive impact on savings, deposits, people’s investments, filing of more returns,” he said.

In policy making there are always two sides of the equation. Special deposit schemes were also there so that people can use them if they had black money, Jalan said.

“If the black money is being generated in real estate, we can do something about it. Go to the root of the problem. To my mind, for an ordinary citizen, demonetisation had a negative impact because he didn’t have cash. There are two sides again.

“We can take a balanced view, if we need to tackle black money, then we need to go through the source of black money — is it the high tax rates? If people are not paying authorities?” he said.

However, the disruption of demonetisation, which resulted in GDP falling to 6.1 per cent in the fourth quarter of 2016-17, would not impact the long-term growth of the country, he said.

“The economic growth of the country will pick up from the lows of 6.1. One-time impact of demonetisation will not affect growth. We have comparative advantage. We should be able to grow at a fast rate,” he said.

On criticism about jobless growth, he said it is valid if growth does not translate into more jobs and poverty alleviation.

“Whether it is 6.7 or 7.1, growth is not important. We need to have such a growth rate so that we can do what we need to do and the benefits percolate to the poor and lead to investment, alleviation of poverty, creation of jobs. Eight per cent growth is not worth (it) if the benefits are not percolating. We need to focus on essentials of economy,” he said.

Jalan, who also had a term in the Rajya Sabha as a nominated member, said revenues were increasing. “There is no need to change the income tax and Goods and Services Tax (GST) rates every year. GST is a major move. Despite hiccups, it is worth it. We don’t need to revise GST rates every year. That is the most fundamental part. Let us decide income tax, why can’t we have long-term rates,” he asked.

To a question if he was ok with a number of cesses being added to the income tax, he said, “No.”

On a suggestion in his new book about rationalising subsidies, Jalan appreciated the Direct Benefit Transfer (DBT) of subsidies and said that the subsidies should be consolidated to reduce administrative expenditure on them.

“Instead of having all different subsidies, we should have the ones for people below poverty line. Just give them direct subsidy. The government should have subsidy which is required for benefit of people up to certain limit. Instead of 73-74 subsidies, let’s see how many we can consolidate because that will reduce expenditure. What we need is a more efficient delivery system. DBT is one such step,” he said.

By Meghna Mittal and V.S. Chandrasekar

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Gross NPA may rise to Rs 9.5 lakh crore by March: Study

“Fiscal 2018 marks beginning of third phase of ARCs which promises to change the landscape as new regulations and other changes kick-in.”

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NPA

Gross non-performing assets (NPA) in Indian banks are expected to rise to Rs 9.5 lakh crore by March, from Rs 8 lakh crore in March last year, said a ASSOCHAM-Crisil joint study.

Stressed assets in March 2018 are expected to be at Rs 11.5 lakh crore, the report titled “ARCs headed for a structural shift,” said.

“High level of stressed assets in the banking system provides enormous opportunity size for asset reconstruction companies (ARCs) which are an important stakeholder in the NPA resolution process,” ASSOCHAM said in a statement quoting the study.

It, however, said that owing to capital constraints, growth of ARCs is expected to come down significantly.

“While growth is expected to fall to around 12 per cent until June 2019, however the AUM (assets under management) are expected to reach Rs 1 lakh crore, and that is fairly sizeable.”

The study added that with banks expected to make higher provisioning over and above the provisions made for stressed assets, they may sell the assets at lower discounts, thus increasing the capital requirement.

The study also said that effective implementation of the Insolvency and Bankruptcy Code would be a remedy to the challenge of prolonged litigation and it can help improve the recovery rate of stressed assets’ industry further.

Power, metal and construction sectors contribute the bulk of stressed assets. According to an analysis of 50 stressed assets (forming nearly 40 per cent of stressed assets in the system), sectors like metal, construction and power form nearly 30 per cent, 25 per cent and 15 per cent respectively, while other sectors together form the remaining 30 per cent.

The report stated that 2018 would see a structural shift in the stressed assets’ space as increased stringency in banks’ provisioning norms for investments in security receipts (SRs) is likely to result in more cash purchases.

“Fiscal 2018 marks beginning of third phase of ARCs which promises to change the landscape as new regulations and other changes kick-in.”

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Key Indian equity indices open at fresh highs

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Mumbai, Jan 22: Key Indian equity indices opened at fresh highs during the early morning trade session on Monday, with healthy buying observed in oil and gas, energy and consumer durables stocks.

At 9.20 a.m., the wider Nifty50 of the National Stock Exchange (NSE) traded 8.05 points or 0.07 per cent higher at a new high of 10,902.75 points.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 35,613.97 points, traded at a fresh level of 35,613.73 points — up 102.15 points or 0.29 per cent — from its previous session’s close.

The Sensex has touched a new high of 35,664.01 points during the intra-day trade so far.

The BSE market breadth was bullish as 454 stocks advanced as compared to 238 declines.

On Friday, positive global cues, coupled with upbeat quarterly corporate earnings and healthy buying in banking stocks, propelled the key indices to close at new record highs.

The Nifty50 closed at 10,894.70 points, while the Sensex closed at 35,511.58 points.

IANS

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Amazon opens supermarket with no checkouts

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Amazon Go

Washington, Jan 22: In a move that could revolutionise the way we buy groceries, Amazon opens its first supermarket without checkouts — human or self-service — to shoppers on Monday.

Amazon Go, in Seattle in the US, has been tested by staff for the past year, BBC reported.

It uses an array of ceiling-mounted cameras to identify each customer and track what items they select, eliminating the need for billing.

Purchases are billed to customers’ credit cards when they leave the store.

Before entering, shoppers must scan the Amazon Go smartphone app. Sensors on the shelves add items to the bill as customers pick them up – and deletes any they put back.

The store opened to employees of the online retail giant in December 2016 and had been expected to allow the public in more quickly.

But there were some teething problems with correctly identifying shoppers of similar body types – and children moving items to the wrong places on shelves, according to an Amazon insider.

Gianna Puerini, head of Amazon Go, said the store had operated well during the test phase: “This technology didn’t exist — it was really advancing the state of the art of computer vision and machine learning.”

Amazon has not said if it will be opening more Go stores, which are separate from the Whole Foods chain that it bought last year for $13.7 billion.

As yet the company has no plans to introduce the technology to the hundreds of Whole Foods stores.

However, retailers know that the faster customers can make their purchases, the more likely they are to return.

Making the dreaded supermarket queue a thing of the past will give any retailer a huge advantage over its competitors.

The Seattle store is not Amazon’s first foray into bricks and mortar retailing, however. In 2015 the firm opened its first physical bookshop, also in Seattle where the company is based. There are now about 12 in the US — including one in New York that opened last year — as well as dozens of temporary pop-up outlets.

In its third quarter results in October, Amazon for the first time put a figure on the revenues generated by its physical stores — $1.28 billion. Yet almost all of that was generated by Whole Foods.

While its stores may not yet be moneyspinners, analysts have said Amazon is using them to raise brand awareness and promote its Prime membership scheme. Prime members pay online prices at its bookstores, for example, while non-members are charged the cover price.

Brian Olsavsky, Amazon chief financial officer, recently hinted that rivals should expect more Amazon shops in the months and years ahead.

“You will see more expansion from us – it’s still early, so those plans will develop over time,” he said in October.

IANS

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