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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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Midcap and Small caps to lead upsurge

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Sensex equity Nifty
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Markets began the last week with big gains on Monday and then traded in a narrow range, gaining on four of the five trading sessions.

The BSE SENSEX gained 345.65 points or 0.83 percent to close at 41,945.37 points while NIFTY gained 95.55 points or 0.78 percent to close at 12,352.35 points. The broader market saw BSE100, BSE200, and BSE500 gain 0.98 percent, 1.22 percent and 1.44 percent respectively.

The breadth of the market rose very sharply with BSE MIDCAP gaining 3.63 per cent and BSESMALLCAP gaining 3.97 percent. This kind of gain in Midcap and Smallcap indices has happened after a very long time.

The Indian Rupee was volatile and lost 14 paisa or 0.20 per cent to close at Rs 71.08 to the dollar. Dow Jones hit yet another lifetime high and gained 524.33 points or 1.82 percent to close at 29,348.10 points.

Result season is off to a good start with first Infosys declaring a decent set of numbers and now Reliance Industries and HDFC Bank. While the bank has reported a growth of 12.7 per cent in net interest income, it reported a jump of 15.6 percent in profit before tax and 32.8 per cent in net profit at Rs 7,416 crore. The only point of concern was Gross NPA’s which rose by 4 basis points to 1.42 percent and 23.2 percent to Rs 13,427 crore as an absolute number.

Market is expecting changes in DDT or Dividend Distribution Tax with the same likely to be shifted to the recipient instead of the giver. Further, there are expectations that there would be changes in individual taxes with the rates and slabs changing. Also, some of the deductions available to individuals may be removed or substantially altered.

The gold monetisation scheme has somehow not taken of with the vast majority of individuals worried that their conversion under the scheme would attract the attention of the tax authorities and lead to complications. Considering the high stakes involved where India’s holding of gold is estimated at between 25,000-30,000 tons, the government needs to be innovative and bold in tweaking the scheme. They need to allow a housewife or lady to convert 500 grams of gold without asking for details. This would free up a large amount of gold and ensure that India does not need to import the annual approximately 600 tonnes of gold which is our domestic demand for many years to come. This would be a big relief to our trade deficit and would indirectly help in also strengthening the Indian currency.

The open interest in the market continues to be healthy and even though we have been on a buoyant note, the positions have not risen or changed dramatically. We are in no imminent danger of being either overbought or oversold. This is a very healthy indication that nothing dramatic in the market is to happen in the immediate short term

The week ahead would see the benchmark indices scale new peaks. These however would not be big jumps but of a more measured and laboured move. The action would continue like the previous week in the Midcap and Smallcap space where there would be a larger number of stocks performing. This would keep marketmen and investors happy.

The strategy would be to ride the wave and pick stocks from the Midcap and Smallcap space where all the action is currently focused. While the large cap stocks had seen lot of traction in the BFSI space, this sector took a breather last week and would be ready for another round of up move before the week is over.

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Rahul urges FM Sitharaman over high GST on cochlear implant add-ons

They said cochlear implants attracted 5 per cent GST, while the implant accessories that required periodic replacement were subject to 12-28 per cent GST.

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Rahul Gandhi on Kashmir Situation

New Delhi, Jan 18 : Former Congress chief Rahul Gandhi has written to Finance Minister Nirmala Sitharaman regarding high Goods and Services Tax (GST) on cochlear implant accessories.

In the January 17 letter to Sitharaman, Gandhi said during his last visit to Kerala a delegation from the Cochlear Implantees Association and charitable societies highlighted the high cost of cochlear implants.

They said cochlear implants attracted 5 per cent GST, while the implant accessories that required periodic replacement were subject to 12-28 per cent GST.

The Wayanad MP also pointed out that as per 2011 census there were 1.26 million people with hearing disabilities and large number of them belonged to poor and vulnerable sections.

Cochlear implants, he said were assistive devices for people with hearing impairment and could improve their ability to comprehend speech.

“I request you to look into the matter,” Gandhi urged Sitharaman and also attached a copy of representation from the association.

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California to enhance ties with India for inclusive economic growth

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california governor

New Delhi, Jan 15: Eleni Kounalakis, the lieutenant governor of California is on a visit to India to enhance business relations between California and India for inclusive economic growth .

Kounalakis is leading a high-powered delegation of the Bay Area Business Council comprising of top business people from the aviation, finance and consulting, hospitality, and information technology industries.

The focus of the Lt. Governor’s visit along with the Delegation is to enhance economic relations between California and India,explore potential business and investment opportunities, and deepen cultural and tourism ties.

Kounalakis and the delegation met key government and industry leaders for a foreign direct investment (FDI) from the country, more Indian visitors through tie ups with industries.

Both India and US being the two largest democracies in the world, culture is the key area through which the two countries are engaged and main agenda of Kounalakis’s visit in India is to enhance connectivity coupled with rise in exports of California goods into India and more FDI from India into California.

Among the delegates joining the trip are Gary Meltzer, Managing Partner of PwC, Winsome Bowen of Facebook, Anurag Varma of Infosys, SynBioBeta CEO John Cumbers, Joydeep Ganguly of Gilead Sciences, Bijal Patel of the California Hotel and Lodging Association, Harshul Asnani of Tech Mahindra and Kausik Rajgopal of McKinsey & Co.

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