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Software is eating trade, digital platforms replacing agreements

India has been trying to bring E-commerce under the WTO rules. It also needs to clearly establish guidelines for its usage under the FTAs with ASEAN or any other country.

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Economy

Since India rejected RCEP (Regional Comprehensive Economic Partnership) with ASEAN and six other countries, most commentators have focused on reasons for exit. The government has reiterated that it was a decision in the interest of the country. Impact on farmers due to agri-imports impact is one of the dominant reason. There are more powerful forces at play shaping the structure of global trade that India needs to account for in any trade negotiation going forward.

Digitization of global trade converts physical goods into bytes it allows delivery and creation of services. It also creates a set of digital goods which are globally transferable through platforms.
Platte fourme of trade

The term “platform” comes from French plateform or platte fourme, which means “flat form.” The word refers to a specific physical artifact: a raised level surface. Global trade in services has been flat much before a NYT columnist popularized the term. Now, in this flat world digital platform are seizing control of global trade. These platform with their global supply chains have become omnipotent and omniscient.

Amazon, JingDing, Alibaba, Rakuten, B2W Copahina Digital are some of the largest E-commerce platform controlling flow of global goods. These powerful brands are known as consumer brands and their impact is seen only on the retail sector. The sectoral myopia obfuscates their impact on global trade. In a way now software is eating trade agreements countries need to wake up to this realization.

Global e-commerce sales grew 13 per cent in 2017, touching $29 trillion, according to data released by United Nations Conference on Trade and Development (UNCTAD) in March 2019. The number of online shoppers, jumped by 12 per cent and stood at 1.3 billion people, or one quarter of the world’s population. Though most internet buyers purchased goods and services from domestic vendors, the share of those buying from abroad rose from 15 per cent in 2015 to 21 per cent in 2017. As a result, cross-border business-to-consumer (B2C) sales reached an estimated $412 billion, accounting for almost 11 per cent of total B2C e-commerce, as per UCTAD. These are estimates based on statistics collected by countries and are indicative of the shift of trade through global digital platform. Experts believe that their impact is much larger and growing much faster than the numbers shown by UNCTAD.

Governments cannot fully capture the data of global trade taking place through E-commerce platforms as their systems are not designed to track single package shipments. The American Association of exporters and importers made up of shipping companies estimates that global cross border B2C E-commerce sales will hit $1 trillion by 2020. Most of this growth will come in Asia-Pacific and India is the largest consumer market.

Since the recession of 2008, global trade has remained flat while e-commerce has increased 20% per year. Government everywhere including India is clueless about the impact of these digital platforms. Government’s control system for trade like custom duties are focused on large shipments and cannot track or levy duties on single shipments. This is also referred as ‘de minimis provisions’ basically the threshold below which no customs duties are collected.

Earlier this year in March 2019, Organization for Economic Co-operation and Development (OECD) set up a working group to measure the impact of digital global trade. Besides, physical goods it includes services and digital goods which are being transferred through these platforms. Digital trade is defined as product that digital ordered and digital delivered.

Movies used to be consumed locally in a cinema and tracked and taxed through ticket sales. Now it is digital ordered and delivered on Netflix. This creates a new category of digital trade is not tracked or monitored by government as a trade item. Airbnb selling hotel services is not captured under global trade, Uber selling taxi services locally but booking revenues globally does not get recognized as an import of service by national statistician tracking trade.

Another complication of digital trade through platform is when the buyer pays it in crypto-currency or from an international bank account or global wallet. Such transaction may not be completed in the country where the consumer or consumption happens.

Similarly, services being rendered by individuals on a global platform are very difficult to track. Their impact on trade is not measured and not taken into account for the purpose of negotiation in FTAs.

As global trade moves to bytes using digital infrastructure like cloud services and E-commerce platforms. The physical intermediaries between buyer and producer vanish as a result identification of taxation and duties become difficult. It also means that digital information of goods can jump several borders before the physical good finally lands in the buyer hands. This creates issues around the origin of the product, sale, profit and resulting transfer pricing norms. The digital data trail of the transaction is crucial in establishing the origin, consumption and taxation. This is not envisaged as part of trade agreements.

Hence, the flow of data on such transactions has to be established. Even to prevent dumping from China through global platforms it is data that will determine the origin of products. Allowing discovery of such data is important for the future of trade.

India has been trying to bring E-commerce under the WTO rules. It also needs to clearly establish guidelines for its usage under the FTAs with ASEAN or any other country.

It is important that data flows be free within countries and conflict resolution on transaction be defined under sovereign laws. A free market defining transaction data in the digital world is the most important consideration in every FTA going forward. Digital transaction has to be linked product origin rules to ensure that there is no dumping happening using electronic platforms. Currently, Chinese companies are dumping in India using FTA, DTAA and E-commerce platforms. This causes enormous harm to India’s labor intensive industry.

A crucial inclusion in every FTAs has to be recognition of sovereignty of transaction data. Transactions are rapidly moving from the real world to the digital world. As digital transaction become the norm, taxation and economic growth will be determined by data. It is important that future FTAs acknowledge the source and origin of transactions and India demand sovereign rights over such data. This will prevent conflict around taxation and duties and create a much more conducive environment around trade.

(K. Yatish Rajawat is a senior journalist and policy analyst he tweets @yatshrajawat. The opinion expressed is personal.)

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FM Sitharaman may push for Rs 30K cr interim dividend from RBI to meet low revenue generation, slowdown

The government is fighting a six year low growth, subdued demand and consumption leading to projections of 5 per cent growth in current fiscal which is an 11 year drop.

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Nirmala Sitharaman
RBI governor Shaktikanta Das and FM Nirmala Sitharaman RBI governor Shaktikanta Das and FM Nirmala Sitharaman and at the post-Budget meeting (Picture Credit DNA)

The Finance Ministry is likely to push for Rs 25,000-30,000 crore interim dividend from RBI, for the third time in a row, to check slippages in the fiscal deficit of 3.3 per cent in 2019-20.

The central bank and government may touch upon the issue when Finance Minister Nirmala Sitharaman will meet RBI Governor Shaktikanta Das at post Budget Vision customary meeting.

Government has a Budget estimate of Rs 90,000 crore dividend from RBI in FY20. RBI follows a fiscal of July-June. The interim dividend of the RBI’s total dividend for 2019-20 (July-June) can help the government check 3.3 per cent fiscal deficit target slippage.

In the past RBI has paid a total Rs 38,000 crore as interim dividend (Rs 28,000 crore in FY19 and Rs 10,000 crore in FY18).

“If the RBI board recommends, then it will be the third time when interim payout will be given to the government,” said sources.

The central bank had paid Rs 28,000 crore as interim dividend from its 2018-19 fiscal accounts (July-June) in February, which helped the government contain deficit at 3.4 per cent in the last fiscal.

The Reserve Bank follows July-June financial year and usually distributes the dividend in August after annual accounts are finalised and interim dividends if any, they are given around February to the government.

Seeking interim dividends are not common. The Bimal Jalan-led committee on the RBI’s economic capital framework recommended in August that an interim dividend should be paid to the government only in “exceptional circumstances”.

The Finance Ministry’s contention is that this year has “exceptional circumstances” because of the slowdown, low revenue generation and outgo of Rs 1.45 lakh crore due to corporate tax cuts.

For 2018-19 (July-June), the RBI transferred a total of Rs 1.76 trillion to the central government, including a one-time transfer of Rs 52,637 crore which was deemed as excess reserves and comprising Rs 1,23,414 crore of surplus for the year 2018-19.

The government is fighting a six year low growth, subdued demand and consumption leading to projections of 5 per cent growth in current fiscal which is an 11 year drop.

On Monday, the International Monetary Fund (IMF) slashed India’s FY20 growth forecast to 4.8 per cent, besides trimming global outlook and said India’s slow growth is dragging down the world economy.

The Finance Ministry might seek the interim dividend from the RBI to meet some of the financial pressure due to the low revenue generation from taxes and disinvestment and slowdown, said the sources.

The RBI largely earns profits on its trading of currencies and government bonds. Part of these earnings are set aside by the RBI for its operational and contingency needs while the rest is transferred to the government in the form of dividends.

The Union Budget 2019-20 had pegged dividend or surplus of the RBI, nationalised banks and financial institutions at Rs 1.06 lakh crore up from Rs 74,140.37 crore realised in the previous fiscal.

(Anjana Das can be contacted at [email protected])

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31% Goa IT workers battle hypertension, 40% overweight: Study

“Thirty seven (31.4 per cent) had hypertension, 50 (42.4 per cent) suffered from pre-hypertension… 13 (11.2 per cent) had diabetes mellitus and three (2.5 per cent) blood sugar in pre-diabetic range,” the study noted.

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working pressure hypertension

Panaji, Jan 20 : Nearly 31 per cent of the IT sector workforce in Goa suffers from hypertension whereas more than 40 per cent are either overweight or obese, a cross-sectional study of IT professionals working in the coastal state has revealed.

“A majority of the 118 surveyed employees — 63 (53.4 per cent) — had normal range body mass index, seven (5.9 per cent ) were underweight, 40 (33.9 per cent) overweight, six (5.1 per cent) class I obesity and two (1.7 per cent ) class II obesity,” the study by Preksha P Vernekar, Kalyani and Jagadish A Cacodcar said.

“Thirty seven (31.4 per cent) had hypertension, 50 (42.4 per cent) suffered from pre-hypertension… 13 (11.2 per cent) had diabetes mellitus and three (2.5 per cent) blood sugar in pre-diabetic range,” the study noted.

“A significant prevalence of lifestyle diseases is noticed among the participants in the study. Lifestyle diseases like hypertension, diabetes, dyslipidaemia and overweight/obesity are major risk factors for the development of cardiovascular disease,” as per the study published in the Epidemiology International journal.

Considerable pre-hypertension cases raised concern over possible cardiovascular morbidities along with complications in due course of time, the research paper’s authors pointed out.

The study data was collected from health records of 118 IT professionals working in four top Information Technology firms in Goa, whose government is pitching the coastal state as a destination for IT start-ups.

The study authors, all medical professionals working at the state’s top government-run medical facility, also underlined the need for periodic health checkups to ensure timely detection and early management of health problems.

“The companies should have mandatory periodic health check-ups of their employees, preferably at their health centres, to gain better insight into their general health status.

“Pre-placement examination of employees is must to know their working capacity so as to ensure ergonomics as well as to procure first-hand knowledge on health problems workers may be suffering from before employment,” the study recommended.

The study suggested the introduction of stress-busting modules in the IT work space to ensure better physical and mental health of staff, which ensured better performance by the workforce.

“Health education on diet, physical activity and relaxation techniques such as yoga and meditation can be imparted to employees. These steps will finally improve their performance and in turn lead to decreased incidence of morbidities, absenteeism due to sickness and job stress, thereby leading to optimum work output,” the study said.

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BJP denies tickets to 3-time MLA Kulwant Rana, 25 others

Rana became the youngest candidate to win the elections in 2003, while he retained his seat from Rithala constituency in 2008 and 2013 too.

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BJP

New Delhi, Jan 17 : The Bharatiya Janata Party (BJP) on Friday announced the first list of candidates for the Delhi Assembly elections to be held on February 8.

In its first list, the party announced 57 candidates while it denied tickets to 26 leaders, including former state vice president and three time MLA Kulwant Rana.

Rana became the youngest candidate to win the elections in 2003, while he retained his seat from Rithala constituency in 2008 and 2013 too.

The BJP has still not announced its candidates for 13 seats, including New Delhi, Mehrauli and Sangam Vihar.

The party has fielded Manish Chaudhary in place of Rana from Rithala. Sources said the party denied a ticket to Rana as he was involved in some controversies.

Similarly, Rajni Abbi has been replaced by Surendra Singh Bittu in Timarpur, while Rajesh Yadav from Badli, Gugan Singh Ranga from Bawana, Prabhu Dayal from Sultanpur Majra, Surjeet from Mangolpuri and Nandkishor from Trinagar have not been given tickets for the upcoming Assembly polls.

The party has also denied the ticket to Vivek Garg, who lost the elections in 2015 from the Model Town seat, and fielded former AAP Minister Kapil Mishra, who joined the BJP after quitting AAP.

The party has also denied tickets to Praveen Jain from Sadar Bazar, Shyam Lal from Ballimaran, B.B. Tyagi from Laxmi Nagar, Jitendra Chaudhary from Gandhi Nagar, Sanjay Jain from Seelampur, Ajay Mahawat from Ghonda and Krishna Teerath from Patel Nagar.

The party has also changed the candidates in Janakpuri, Uttam Nagar, Palam, Jangpura, Malviya Nagar, Ambedkar Nagar, Greater Kailash, Kondli and Patparganj.

(Navneet Mishra can be reached at [email protected])

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