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Modi govt has thrown the economy to the wolves: Amit Mitra

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Kolkata, Sep 24 : Accusing the NDA government of “throwing the economy to the wolves”, West Bengal Finance Minister Amit Mitra on Monday said “surgical strikes” in the form of demonetisation and rolling out of an ‘unprepared’ GST regime as also liquidity crunch of NBFCs were responsible for the present downturn.

“In November, 2016, there was the first surgical strike on the economy – the demonetisation. Demonetisation was a structural change where both structure and function of the economy had been hit,” said Mitra, addressing the Annual General Meeting of the Bengal Chamber.

On November 8, 2016, following an announcement by prime minister Narendra Modi, the central government demonetised the higher denomination currency notes of Rs 1,000 and Rs 500

“This was perhaps the biggest demonetisation exercise in the world other than in Libya or the USSR. In no democracy have we seen withdrawal of 86 per cent of currency of two denominations. And then the growth rate of 8.15 per cent which we had seen in 2015-16 declined to 7.17 a year later.

“Then on July 1, 2017, came another massive structural change, another surgical strike on the economy, the GST was introduced. But the system was not yet ready. It was an unprepared GST that was rolled out, despite objections from us.

“It was a manmade or person-made singular decision.. You have thrown economy to the wolves,” said Mitra, who earlier headed the Empowered Committee of State Finance Ministers on GST.

He said the crisis in the Rs one lakh core entity infrastructure financing major IL&FS was another major factor. “The NBFCs now face a liquidity crunch”.

Turning to direct taxes, Mitra said in the first six month of 2019-20 fiscal, the corporate tax collection has been only 4.7 percent. The budgetary target for the fiscal is 17.5 per cent. “To make it to the target, you need 27 per cent growth in tax collection at a time when economic growth rate is tanking”.

He alleged that the government-made structural destabilisation Government of the economy has resulted in the present miserable situation, with the country now having the highest unemployment rate in 45 years”.

“What concerns me is that there is not much fiscal headroom,” he said,

Talking about the states’ financial scenario, Mitra said “GST is not hitting its target, while the states’ development expenditure has shot up from 40 per cent to 60 percent, with the centre cutting of its share since the last three years and increasing our share in 18 central projects”.

Disagreeing that companies did not have money to investment, the economist said eight top-50 companies are holding Rs 8 lakh crores in their books. “They are sitting on it because of a demand shortfall.

“Why is the automobile industry passing through difficult times? Because people are not buying cars. So there is a lack of demand. The structural harakiris we have done are trickling down,” Mitra added.

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Policy space exists to address growth concerns: RBI Governor

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Shaktikanta Das

Mumbai, Oct 18 : In what could mean further rate cuts by India’s central bank, RBI Governor Shaktikanta Das has said at the bi-monthly monetary policy committee (MPC) meeting here earlier this month that “there is policy space to address growth concerns”, according to the minutes of the MPC meeting released on Friday.

In 2019, the Reserve Bank of India (RBI) has delivered 135 basis points (bps) of cuts in its key lending rate.

Das, according to the minutes, saw domestic demand moderating significantly.

“As the inflation scenario remains benign with headline inflation projected at below target in the remaining period of 2019-20 and in Q1:2020-21, there is policy space to address growth concerns,” Das said.

“The weakening of private consumption, which, for long, has been the bedrock of aggregate demand, in particular, is a matter of concern,” the Governor added.

Besides, a number of MPC members expressed concerns over the transmission of rates. While Das said that “monetary transmission has remained weak” external member Chetan Ghate said the “monetary transmission has worsened since the last review”.

Das, however, cautioned the government, saying that “there is also a need to be watchful of the fiscal situation; however, the government has indicated that it would maintain the fiscal deficit”.

On the road ahead, MPC member Michael Debabrata Patra stressed that a full throttle effort by all arms of macroeconomic management is the need of the hour.

The RBI on October 5 announced a 25 basis point rate cut in its repo, or short-term lending rate for commercial banks, to 5.15 per cent, from 5.40 per cent, after the rate of gross domestic product (GDP) growth during the first quarter slumped to 5 per cent.

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Banking services may be hit Oct 22 as unions warn of strike

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Bank strike

New Delhi, Oct 18 : Banking services could be affected next week as two bank unions have warned they will go on a 24-hour long strike on October 22 to protest against the recent bank mergers, falling deposit rates and a call for job security.

The two unions – the All India Bank Employees’ Association (AIBEA) and the Bank Employees Federation of India (BEFI) – have informed the Indian Banks’ Association (IBA) through a notice that they will go on strike from 6 a.m. on October 22 to 6 a.m. on October 23.

State Bank of India has already said the impact would be minimum as most of its employees are not members of the participating unions.

“The membership of our bank employees in unions participating in the strike is very few, so the impact of strike on our operation will be minimal,” SBI said in the notice. It further said the loss from the proposed strike cannot be quantified as of now.

Other banks such as Bank of Maharashtra and Syndicate Bank have, however, expressed concern over providing customer services.

“The bank is taking necessary steps tor smooth functioning of branches on the proposed strike day. However in the event the strike materialises, the functioning of the branches/offices may be impacted,” Syndicate Bank said in a notice to stock exchanges.

Bank of Baroda, in a filing with the exchanges, said: “The Bank is taking necessary steps for smooth functioning of bank’s branches on the day of strike, in the event the strike materialises, the functioning of the branches may be affected/paralysed.”

AIBEA and BEFI said they are opposing outsourcing of regular and perennial nature of banking jobs, and privatisation of banking industry while demanding adequate recruitment of clerical and sub-staff and stringent steps for recovery of mounting bad loans.

Last month, the officers’ unions had called a two-day all India bank strike on September 26 and 27 that was later withdrawn on government intervention.

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Jio’s move of passing IUC charges to customers puzzling: Kotak

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mukesh ambani reliance jio

Mumbai, Oct 19 : A recent Kotak report has viewed Jios decision to pass on the IUC (Interconnect Usage Charges) to its customers as “puzzling” on several counts including the timing and the mode of recovery.

The report said that Jio’s decision less than three months before the current date of move to a zero-MTR regime is “baffling” and so is the chosen mode (IUC top-up vouchers).

“Having paid IUC ‘from its own resources while offering free voice to its customers’, per the press release, for nearly three years now, we are not sure why Jio could not have waited another couple of months for the final outcome (a new tariff order reversing the enacted regulation OR no new tariff order) of the ongoing consultation,” it said.

Further on the mode of recovery which is in the form of IUC top-up vouchers ranging from Rs 10 (124 minutes off-out allowance; no validity per the press release) to Rs 100 (1,362 minutes off-out allowance) was difficult to understand, the report said.

“In effect, Jio is making an additional recharge compulsory for off-out calling. This dilutes the �simplicity’ proposition of Jio’s pricing architecture,” Kotak said in the report.

Another puzzling aspect is the fact that Jio has decided to charge 100 per cent of its gross off-out traffic and isn’t just trying to recover the net IUC cost, it added.

Besides the report said, we are not sure why Jio continues to highlight Bharti’s and VIL’s �exorbitant’ voice tariffs for their 2G customers as a problem. Missed call behaviour is real and does result in Jio being a net IUC payer.

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