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Moody’s revises India’s FY21 GDP contraction to (-)10.6%

Under the scheme, manufacturers in key sectors will receive incentives in the form of direct payments over five years.

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New Delhi: Moody’s Investor Service on Thursday revised the contraction rate of India’s FY21 GDP to (-) 10.6 per cent from an earlier estimate of (-) 11.5 per cent.

The revision comes days after the Centre announced new stimulus measures.

Besides, Moody’s revised the forecast for the next financial year ending March 2022.

It now estimates a growth of 10.8 per cent from a rise of 10.6 per cent, which was predicted earlier.

“The latest measures (stimulus) aim to increase the competitiveness of India’s manufacturing sector and create jobs, while supporting infrastructure investment, credit availability and stressed sectors,” Moody’s said.

“As such, they present potential upside to our current growth forecasts, a credit positive.”

According to the ratings agency, consumer confidence in India remains relatively low amid a continued elevated number of daily new coronavirus cases, “although this has come down from a peak in September”.

“Stronger nominal GDP growth over the medium term would make it easier for India’s government to address its weak fiscal position, which the coronavirus has exacerbated; we forecast government debt to increase to 89.3 per cent of GDP in fiscal 2020 and decline to 87.5 per cent in fiscal 2021, from an already elevated 72.2 per cent in fiscal 2019,” Moody’s said.

“By contrast, we forecast the median for Baa-rated peers to rise to 60.8 per cent in 2020. The country’s mixed track record on revenue-raising measures lowers prospects for fiscal policy-driven budget consolidation. A sustained increase in GDP growth would therefore likely be a major driver of any durable future fiscal consolidation.”

Accordingly, the global ratings agency expects the general government fiscal deficit to remain wide, reaching around 12 per cent of GDP, with some upside risk, in fiscal 2020 and narrowing to about 7 per cent of GDP over the medium term, still above the deficit of 6.5 per cent of GDP in 2019.

Furthermore, the agency cited that new measures target manufacturing competitiveness.

The latest package follows the Rs 467 billion (0.2 per cent of GDP) of stimulus announced in October and close to Rs 2 trillion (1 per cent of GDP) of direct spending allocated in the government’s first stimulus package in May.

The government expects that no new borrowing will be required to fund the additional spending.

Among the new measures, the government has allocated Rs 1.5 trillion to extend the Production Linked Incentive (PLI) scheme across a further 10 sectors, including automotive and advance cell chemistry manufacturers.

Under the scheme, manufacturers in key sectors will receive incentives in the form of direct payments over five years.

The scheme aims to increase the competitiveness of India’s manufacturing sector, potentially reviving private investment, where year-on-year growth has been trending downward since the second quarter of 2018.

Business

November GST collection at nearly Rs 1.05 lakh Cr

The government has settled Rs 22,293 crore to CGST and Rs 16,286 crore to SGST from IGST as regular settlement. The total revenue earned by Central government and the State governments after regular settlement in the month of November 2020 is Rs 41,482 crore for CGST and Rs 41,826 crore for the SGST.

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Rupee

New Delhi, Dec 1 : Gross GST revenue collection in November stood at nearly Rs 1.05 lakh crore, an official statement said on Tuesday.

The revenues for the month of November 2020 were 1.4 per cent higher than the GST revenues in the same month last year.

During the month, revenues from import of goods was 4.9 per cent higher and the revenues from domestic transaction, including import of services, are 0.5 per cent higher that the revenues from these sources during the same month last year.

The total goods and services tax collected includes Central GST (CGST) of Rs 19,189 crore, State GST (SGST) of Rs 25,540 crore and Integrated GST (IGST) of Rs 51,992 crore.

“The gross GST revenue collected in the month of November, 2020 is Rs 1,04,963 crore of which CGST is Rs 19,189 crore, SGST is Rs 25,540 crore, IGST is Rs 51,992 crore (including Rs 22,078 crore collected on import of goods) and Cess is Rs 8,242crore (including Rs 809 crore collected on import of goods),” said the Finance Ministry statement.

The total number of GSTR-3B returns filed for the month of November 30 2020 was 82 lakhs.

The government has settled Rs 22,293 crore to CGST and Rs 16,286 crore to SGST from IGST as regular settlement. The total revenue earned by Central government and the State governments after regular settlement in the month of November 2020 is Rs 41,482 crore for CGST and Rs 41,826 crore for the SGST.

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Amalgamation of LVB with DBS Bank completed, Rs 2,500 cr fund injection soon

DBS Bank India Limited is first among the large foreign banks in India to start operating as a wholly owned, locally incorporated subsidiary of a leading global bank.

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Lakshmi Vilas Bank

New Delhi, Nov 30 : Lakshmi Vilas Bank (LVB) is now amalgamated with DBS Bank India Limited (DBIL), the wholly owned subsidiary of Singapore-based DBS Group Holdings Ltd.

In a statement on Monday, DBS Bank said that the scheme of amalgamation is under the special powers of the Government of India and Reserve Bank of India under Section 45 of the Banking Regulation Act, 1949, India, and has come into effect on November 27, 2020.

It added that the amalgamation provides stability and better prospects to LVB’s depositors, customers and employees following a period of uncertainty. The moratorium imposed on LVB was lifted from November 27, 2020 and banking services were restored immediately with all branches, digital channels and ATMs functioning as usual.

LVB customers can continue to access all banking services. The interest rates on savings bank accounts and fixed deposits are governed by the rates offered by the erstwhile LVB till further notice. All LVB employees will continue in service and are now employees of DBIL on the same terms and conditions of service as under LVB.

The DBS team is working closely with LVB colleagues to integrate LVB’s systems and network into DBS over the coming months, the statement said.

Once the integration is complete, customers will be able to access a wider range of products and services, including access to the full suite of DBS digital banking services which have won multiple global accolades, it added.

Moreover, the bank asserted that it is well-capitalised and its capital adequacy ratios (CAR) will remain above regulatory requirements even after the amalgamation.

Additionally, the DBS Group will inject Rs 2,500 crore into DBIL to support the amalgamation and for future growth. This will be fully funded from DBS Group’s existing resources.

DBS has been in India since 1994 and converted its India operations to a wholly owned subsidiary (DBIL) in March 2019.

Surojit Shome, CEO of DBS Bank India Limited, said, “The amalgamation of LVB has enabled us to provide stability to LVB’s depositors and employees. It also gives us access to a larger set of customers and cities where we do not currently have a presence. We look forward to working with our new colleagues towards being a strong banking partner to LVB’s clients.”

On November 27, the 94-year-old Karur-headquartered LVB cease to exist officially as it was amalgamated with DBS Bank India.

As part of the moratorium announced by RBI on November 17, withdrawal of deposits from LVB were capped at Rs 25,000 and this will be taken off from November 27 onwards.

On its part, the Central government notified in the official gazette that the Lakshmi Vilas Bank Limited (Amalgamation with DBS Bank India Limited) Scheme, 2020 will come into force on November 27.

As announced earlier by Reserve Bank of India (RBI) in its draft scheme of amalgamation, the Central government had notified: “On and from the appointed date, the entire amount of the paid-up share capital and reserves and surplus, including the balances in the shares or securities premium account of the transferor bank, shall stand written off.”

DBS Bank India Limited is first among the large foreign banks in India to start operating as a wholly owned, locally incorporated subsidiary of a leading global bank.

In 2016, DBS launched India’s first, mobile-only bank-digibank, which now has over 2.6 million customers.

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UK bans installation of Huawei 5G telecom gear from Sep 2021

The US Federal Communications Commission (FCC) designated Chinese telecom companies, Huawei and ZTE, as national security risks to America’s communications networks.

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Huawei Technologies

London: The UK government announced on Monday that the Chinese telecom giant Huawei will not be able to install its 5G equipments in the country from September 2021.

The Department for Digital, Culture, Media and Sport said that as per its earlier decision, the UK carriers will no longer be able to install Huawei equipment beginning September 2021.

The UK government has laid out a roadmap for removing all telecoms equipment made by “high risk vendors,” including Huawei, from the country’s 5G network by 2027, reports CNET.

In July this year, the UK government had announced a ban on the purchase of new Huawei kits for 5G from next year and said that the Chinese telecom giant’s equipment will be completely removed from 5G networks by the end of 2027.

The telecoms operators have seven years to remove its existing technology from their 5G infrastructure at an expected cost of 2 billion pounds.

The decision came following new advice produced by the National Cyber Security Centre (NCSC) on the impact of US sanctions against the telecommunications vendor.

The US Federal Communications Commission (FCC) designated Chinese telecom companies, Huawei and ZTE, as national security risks to America’s communications networks.

In a U-turn, the UK government that earlier allowed Huawei to sell its 5G technology in the country, signalled a tougher stand against the Chinese telecom giant.

Huawei called the decision “bad news for anyone in the UK with a mobile phone”.

Struggling to keep its consumer business afloat in the wake of the US sanctions, Huawei this month announced to sell off its Honor smartphone business assets to China-based Shenzhen Zhixin New Information Technology Co Ltd.

The company said that the sale — which could be around $15 billion according to multiple reports — will help Honor’s channel sellers and suppliers make it through this difficult time.

Honor smartphones have been hit by US sanctions that prevent Huawei from doing business with the US companies.

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