Current Events Chronology Economy · 21/03/2014 Central Statistical Organization's (CSO) data show that the growth rate in the states have been faster than the national growth rate

Visit Aspirantforum.wordpress.com for more...

Current Events ChronologyEconomy

January to mid-July 2014

Vijay Kelkar Committee09/01/14 Kelkar Committee ha s f avou red r e t a in ing the P roduc t ion S ha r ing

Con t r ac t (P S C) s ys t e m fo r t he Oi l an d Gas exp lora t ion s ec tor,b ecaus e gua ran t ee s fo r t h e r ecove r y o f a l l i npu t cos t s a r eimpor t an t t o a t t r a c t ma j o r i nves to r s . Unde r t he p r e s en t s ys t e m,o i l co mpan ie s can r ecove r a l l co s t s f rom s a l e s o f o i l and gasbe fo re sha r ing p ro f i t w i th t he gove rnmen t . H ow eve r, t he CAG hasc r i t i c i s ed the P S C a s i t encou rag es t he p r iv a t e pa r tne r s t oinc r ea s e cap i t a l expend i tu r e and de l a y the gove rnmen t ' s sha r e .K e lka r P ane l f avou r s PS C fo r s ha l low and on - l and b locks on l y,no t deep - s ea exp lo ra t i on . I t a l s o f avou r s an open ac r eage r eg imewhere co mpan ie s can p i ck exp lo ra t i on a r ea s t h rough the ye a r,i n s t ead o f pe r iod i c auc t ions . Th e P ane l ha s p ropos ed to cons t i t u t ea N a t iona l D a ta Repos i to r y (N D R) .

FDI Policy10/01/14 RBI r e l axed FD I no r ms , g iv ing fo r e ign inves to r s an op t ion to ex i t

t he i r i nves t men t s b y s e l l i ng t he i r ho ld ings o f equ i t y o r deb t . Th i s

i s expec t ed to b r ing g r ea t e r FD I f l ow. F D I con t r ac t s c an now have

op t ion a l i ty c lau s es , a l l ow ing the i nves to r t o ex i t , sub j ec t t o

cond i t i ons o f m in im um lo ck - in p er iod and w ith ou t an y as s u red

re tu rn s .

30/01/2014 Mauritius does not allow Round Tripping- Mauritius is the single biggest source ofFDI in India. Mauritius has asserted that it does not encourage round tripping. TheMauritius Minister of Commerce and Consumer Protection said that 'we are open toany investigation or probe that the Indian authorities would like to initiate about theflow of the funds.

30/01/2014 Foreign Portfolio Investment- the government has decided that the Foreign Portfolio


Investment (FPI) will attract uniform tax rate across categories. FPI include the

category of- Foreign Institutional Investment (FII), their sub-accounts and Qualified

Foreign Investors (QFI).

The new system would be beneficial for QFIs, who were subjected to higher tax rates

earlier. The Central Board of Direct Taxes (CBDT) notified that the FPIs would be

treated as FIIs under the Income Tax Act, 1961.

SEBI has classified the FPIs into 3 classes, based on their risk profile and KYC

requirements- 1. Category I FPIs are classified as low risk entities, and include

foreign governments and government related foreign investments; 2. Category II FPIs

cover the regulated broad based funds, regulated entities, university funds and pension

funds; and 3. Category III FPIs include those not included in the first two categories.

04/02/14 FDI in Agriculture- government has been trying to push the FDI in agricultural land

for real estate purposes. But, the Foreign Exchange Management Act (FEMA)

prohibits the use of FDI to buy farmlands. Ministry of Urban Development want to

ease these restrictions.

100% FDI is already permitted for developing townships, housing and other

infrastructure projects. The supporters of the FDI in agricultural land have been

arguing that it is inevitable to buy agricultural lands near the cities.

However, the threat of allowing FDI in agricultural land is that it might lead to

unrestricted land transfer of agricultural lands. In 2013, the Ministry of Rural

Development published a draft National Land Utilization Policy, which argued that

the shrinkage of per capita ownership of agricultural land and rising demand of food,

necessitates the protection of agricultural land.

Similarly, the National Policy for farmers, 2007 insisted that the government conserve

the productive land and allow any change in use only under exceptional

circumstances.

07/06/14 Singapore became the top source of FDI into India, replacing Mauritius. The total

FDI flow from Singapore accounted for about 25% of FDI inflows in 2013-14. One of

the reasons for the increase in FDI from Singapore is the signing of the Double

Taxation Avoidance Act (DTAA), with Limit-of-Benefit (LoB) clause.


Pharmaceutical Sector09/01/14 FD I in Ph arm aceu t i ca l S ec tor - The gove rnmen t ha s dec ided to

con t inue w i th 100% FDI i n pha rmaceu t i c a l s ec to r. H ow eve r, t o

avo id t he ca s e s o f acqu i s i t i ons t ha t a r e no t i n t he i n t e r e s t o f t he

econo mic ava i l ab i l i t y o f e s s en t i a l d rugs , t he Fore ign In ves tm en t

Prom ot ion Board (FI PB ) w ou ld dec ide t he n on -com p ete c lau s e i n

s pec i a l c a s e s . The dec i s ion w as t ak en a f t e r c a s e s o f acqu i s i t i ons o f

Ind i an pha rmac eu t i ca l f i rms b y fo r e ign compan i e s .

27/04/2014 Pharmaceutical traders have demanded the restoration of the margins to pre-July 2013

levels. The Drug Price Control Order (DPCO) had reduced the prices of several drugs,

by setting the ceiling prices for them, under the National List of Essential Medicines

(NLEM).

26/06/2014 Pharmaceutical industry is disturbed by the government's proposal to increase the

number of medicines under price control.

The Drug Price Control Order (DPCO) 2013 controls the prices of about 348 medicines

deemed essential under the National List of Essential Medicines (NLEM). Drugs under

NLEM constitute about 20% of the total market share of medicine.

Cabinet Committee on Economic Affairs (CCEA)12/01/14 CCEA app roved s e t t i ng up o f a un i f i ed s ys t e m a t t he na t iona l

l eve l - N a t iona l Veh ic l e S ecu r i t y and Track ing S ys t e m- and s t a t el eve l - C i t y Command and Con t ro l Cen t r e - f o r GP S t r ack ing o f t heloca t ion o f t he e me rgenc y bu t tons i n and v id eo r eco rd ing o finc iden t s i n pub l i c t r ans po r t veh i c l e s . I t a l s o app rovedamend me n t s i n t he M ega P ow er P o l i c y 2009 fo r p rov i s iona l M egaP ow er p ro j ec t s .

05/02/14 CCEA changed its decision regarding the mining lease of coal blocks, after theSupreme Court refused to classify the blocks according to the status of investigationby CBI. Thus, the states would have to wait for till the decision by the courts.

14/05/2014 CCEA approved a USD 400 million FDI investment by KKR in Hyderabad-basedGland Pharma.It also decided to ratify the sale of a 4.66% government stake in Bharat Heavy


Electricals Ltd through a block deal route.

14/05/2014 CCEA approved the Ordinance to extend the lease of the Mumbai land on which thePodar Mill of the National Textile Corporation is located. The lease ends on June 30,2014, by which the Mill would have to vacate the land.

GDP Growth rate13/01/2014 2011-12 - I nd i a ha s r ev i s ed the 2011 -12 G DP g row th r a t e f ro m 6 .2

to 7%. Ind i a ha s been ove r s t a t i ng the s low dow n , and thus

unde re s t i ma t ing the i ndus t r i a l ou tpu t .

27/01/2014 World Bank Report- World Bank's global economic forecast gave a positive pictureof Indian economy projecting it at 3.2% for 2014, and would remain at that level fortwo years. World Bank's positive feedback is shared by other institutions like the IMF.The report also suggested an improvement in the advanced economies.However, it pointed that in the post-recession period, India and China are no longerthe leaders of global growth. Rather, the leadership role has been taken over by theUS and other advanced countries. World Bank expects the US to grow at a rate of2.8% in 2014. This shows a declining significance of the BRICS grouping in theglobal economy.Similarly, Japan has been able to overcome the economic slowdown, thanks to theaggressive monetary and fiscal policy of Shinzo Abe.By 2016, the Indian economy is expected to grow at a rate of 7.1%. Also the gapbetween the growth rate of India and China is expected to narrow down.

01/02/14 The government updated the growth rate for 2012-13 at 4.5%, compared to the earlierestimates of 5%, on account of subdued performance by Agriculture, mining andmanufacturing. Growth in year 2012-13 is the lowest in the decade. The primarysector grew only by 1%, as against the earlier data of 1.6%. The Secondary sectorgrew by 1.2%, as against earlier data of 2.3%. Thus, the main factor of growth hasbeen the tertiary and service sector.However, GDP growth rate for 2011-12 has been revised up to 6.7% from 6.2%.

08/02/14 The Central Statistical Organization (CSO) released the estimates for 2013-14 GDPgrowth at 4.9%. The figures for 2012-13 stand at 4.5%, which is the lowest for thedecade. The recovery in the growth rate has come mainly because of the agriculture,forestry and fishery sector.

19/02/2014 Global rating agency Moody's has asserted that India’s fiscal position remains weak,based on the interim budget.The issues of caution involve the macro-economic risks posed by the government'shigh deficit and debt ratios as well as its efforts to control the fiscal deficit through ad


hoc measures.Global rating agencies, like- Moody's, Fitch and S&P have been threatening to lowerIndia's credit rating.

21/03/2014 Central Statistical Organization's (CSO) data show that the growth rate in the stateshave been faster than the national growth rate. 16 of the 17 non-special categorystates grew faster than the nation as a whole in 2012-13. The weighted growth rate forGross State Domestic Product (GSDP) of states was 6.84% for 2012-13. Whereas, theNational GDP growth rate is 4.47%.

01/04/14 Core sector growth rate short up to 4.5% (from 1.6% in January 2014) due to therecovery in the output of Electricity, Coal and Crude Oil.Electricity generation grew at a rate of 10.4%; Steel production at 4.8%; and Refineryproducts generation at 3.2%. But Cement Production slowed to 2.3% and Natural gasslowed at 4.4%.The 8 core sector industries are-1. Fertilisers, 2. Cement, 3. Steel, 4. Electricity, 5. Crude Oil, 6. Coal, 7. Petroleumrefinery products and Natural Gas.The core sector products have a weightage of about 38% in the Index of IndustrialProduction.

15/04/2014 WTO informed that the global growth is expected to grow at 4.7% as the richeconomies are expected to mitigate risks in the developing economies. This was anupward revision in the growth estimates, which were previously marked as 4.5%.Further, Asia will continue to be the driving factor of the growth rates. However, itwas also highlighted that the leading economies remain fragile.WTO has also put the expected growth rate for 2015 at 5.3%.For the last two years, global growth rate averaged around 2.2% only.Risks in Europe has receded, due to the end of the Eurozone crisis, and reforms in theUS.But, major concerns in developing economies are- large current account deficits,currency crisis, over-investment in productive capacity, and re-balancing economiesto rely more on domestic consumption and less on exports. WTO also showedconcerns over geopolitical situations like- Middle-East situation, and Ukraine crisis,which could lead to a higher oil prices.

01/05/14 A Word Banks's report placed India as the third largest economy of the world,replacing Japan. The US remained the largest economy of the world, followed byChina, India and Japan, according to PPP terms.

01/05/14 Russian Growth Rate- IMF informed that Russia was in recession and slashed itsgrowth forecast for 2014, due to the effects of the Ukraine crisis, to 0.2%.S&P has also downgraded the Russians to BBB-, while retaining the negativeoutlook.

31/05/2014 An attractive farm growth helped Indian economy grow at 4.7% in 2013-14,according to the provisional estimates. This was a better performance in comparisonto the previous year GDP growth rate figure of 4.5%.However, there was a shrinkage in manufacturing and mining sector. Investment andcapital formation fell due to low movement in infrastructure and high interest rates.


Foreign Exchange16/01/2014 RBI con tro l over U n h ed ged Fore x E xp osu re - RBI has t i gh t ened

the no rms fo r cap i t a l and p rov i s ion ing r equ i r e men t s o f banks ,

wh i ch have expos u re t o co rpo ra t e s w i th unhedged fo r e ign

cu r r enc y expos u re s . Expos u re t o unhedged fo r e ign cu r r enc y can

inc rea s e t he p robab i l i t y o f de f au l t i n t imes o f h igh cu r r enc y

vo la t i l i t y.

01/02/14 RBI cut Swap Rate on Forex Deposits- RBI extended the deregulated interest ratescheme for FCNR, NRE deposits for one month abd cut 1% point interest rate on 3-5% FCNR deposits. The new rates will be LIBOR Swap + 300 basis points. The rateswere increased to attract more inflow from abroad.

22/05/2014 RBI allowed banks to offer long-term advances to exporters to enable them enter intolong-term supply contacts with importers. Banks have been permitted to allowexporters to receive advance payment for exports of goods which would take morethan one year to manufacture and ship and where the export agreement provides forthe same. However, the firms, to be eligible to avail this benefit, should haveirrevocable supply orders in place. The contract with the overseas party/buyer shouldbe formal and clearly specify the nature, amount and delivery time-lines of productsover the years and penalty in case of non-performance or contract cancellation.Further the product pricing should be in line with international prices.

06/06/14 Indian Rupee appreciated against the US dollar and became the best performingcurrency in Asia-Pacific region against US dollar in 2014. The main reason for theappreciation of value of Rupee is estimated to be the increase of Capital inflows andformation of new government which raises the hopes of big bang reforms to revivethe economy.

Nachiket Mor Committee20/01/2014 C omm it t ee on Com p reh en s ive F in an c ia l S erv i ce s f or Sm al l

Bu s in ess an d Low In com e Hou s eh o ld s - Commi t t ee on

Co mpreh ens ive F inanc i a l S e rv i ce s , w i th i t s cha i r man- N ach ik e t

M or, ha s made r eco mme nda t ions t ha t f u r the r t hos e o f t he

co mmi t t ee on f i nanc i a l i n c lu s ion . The commi t t e e ' s t e rms o f


r e f e r ence a r e - t o f r ame a c l e a r and de t a i l ed v i s ion fo r f i nanc i a l

i nc lu s ion and f i n anc i a l deepen ing ; t o l a y dow n a s e t o f de s ign

p r inc ip l e s t ha t w i l l gu ide t he deve lop me n t o f na t iona l f r a mew ork

and r egu la t i on fo r ach i ev ing f i n anc i a l i nc lu s ion and

deve lopmen t ; t o r ev i ew ex i s t i ng s t r a t eg i e s and deve lop new ones

tha t add re s s s pec i f i c ba r r i e r s t o p rog re s s and tha t wh ich

encou r age pa r t i c ip an t s t o w ork s w i f t l y fo r i nc lu s ion and f i nanc i a l

deep en ing cons i s t en t w i th de s ign p r inc ip l e s ; and to deve lop a

co mpr ehens ive ne tw ork fo r mo n i to r ing f i nan c i a l i nc lu s ion and

deep en ing e f fo r t s on a na t ionw ide bas i s .

The Co mmi t t ee ha s s ugges t ed - p rov id ing a un ive r s a l bank

ac coun t t o a l l I nd i ans above the age o f 18 ye a r s , t o be ach i eved

b y J anua r y 1 , 2016 ; t o ach i eve t h i s i t r e co mmend ed a ve r t i c a l l y

d i f f e r en t i a t ed bank ing s ys t e m w i th pa yme n t bank fo r depos i t s

and pa ymen t and w ho le s a l e banks fo r c r ed i t ou t r e ach ; t he A adha r

w i l l be t he p r i me d r ive r t ow ards r ap id expans ion in t he nu mber

o f bank accoun t s ; i t a l s o r ecommend ed an ad j u s t ed 50% p r io r i t y

s ec to r l end ing t a rge t w i th ad j us t s f o r d i f f e r en t r eg ions and

s ec to r ; i t f u r the r advoc a t e s f ew er NBF Cs and s ubs t an t i a l

r egu l a to r y conve rg ence ; a s t a t e - l eve l r egu la to r y co mmis s ion w i l l

cons o l id a t e supe rv i s ion o f a l l NG O s and mo ne y s e rv i c e

bus ines s e s .

24/01/2014 This report is also called the Report on Inclusive Growth. It takes a holistic view andseeks a dramatic change in the architecture for delivery of financial services to thebottom of the pyramid section. One of the important it is examining is whether thereis a need for an alternative banking framework for financial inclusion.


Urjit Patel Panel22 /01 /2014 I t i s an expe r t co mmi t t ee t o exa mi ne the cu r r en t mone ta r y po l i c y

f r amew ork o f t he RBI . I t ha s s ugges t ed t ha t t he apex cou r t bank

shou ld adop t t he new CP I a s t he meas u re o f nomina l ancho r fo r

po l i c y commun i ca t ion . The pane l s ugges t ed t ha t t h e no mina l

ancho r s hou ld be cons i s t en t w i th a s us t a inab l e g row th t r a j ec to r y

and f inanc i a l s t ab i l i t y. The nomina l ancho r shou ld be bas ed

de f ined in t e r ms o f head l ine CP I i n f l a t i on , wh i ch c lo s e l y r e f l ec t s

the cos t o f l i v ing and in f luen ces i n f l a t i on expec t a t i ons r e l a t i ve t o

o the r ava i l ab l e me t r i c s .

The t a rg e t s hou ld be s e t i n t he f r ame o f a tw o-ye a r ho r i zon tha t

i s cons i s t en t w i th t he need to ba l ance t he ou tpu t cos t o f

d i s in f l a t i on aga in s t t he speed o f en t r en chmen t o f c r ed ib i l i t y i n

po l i c y commi t men t .

The co mmi t t ee a s ked the gove rnmen t t o ens u re t ha t t he f i s ca l

de f i c i t a s a r a t i o t o G DP i s b rough t dow n to 3% b y 2016 -17 . i t

r e cogn iz ed the admin i s t e r ed p r i ce s , w ages and in t e r e s t r a t e s a r e

s ign i f i can t i mp ed i me n t s t o mon e ta r y po l i c y t r ans mis s ion and

p r i ce s t ab i l i t y.

The pane l a l s o r eco mmend ed tha t mone t a r y po l i c y dec i s ions

shou ld be ves t ed w i th a M one ta r y Po l i c y Co mmi t t ee (M P C) , w i th

the G ove rno r o f RBI a s i t s Cha i rman . I t a l s o r eco mmended tha t

the D epu t y Gove rno r shou ld be i t s Vice -Cha i r man . M P C cou ld

have tw o ex t e rna l me mber s . Dec i s ions o f MP C w ou ld be t ak en b y

ma j o r i t y.

23/01/2014 The RBI co mmi t t ee , head ed b y U r j i t S ingh , D epu t y Gove rno r,

w as s e t up t o r ev i s e and s t r eng then the mone ta r y po l i c y

f r amew ork . The commi t t e e s ugges t ed t ha t i n f l a t i on shou ld be t he

nomina l ancho r o f t he mone ta r y po l i c y f r a mew ork . The pane l

r eco mme nds u s ing CP I i n f l a t i on a s t he new no min a l ancho r, a s i t

i s t he c lo s e s t r e f l ec t i on o f cos t o f l i v ing and in f l a t i on


expec t a t i ons . The pane l a l s o s ugges t ed adop t ing a l onge r- t e r m

ta rge t o f 4% fo r CP I i n f l a t i on w i th a band o f + / - 2%. A na l ys t s

be l i ev e t ha t t h i s s t ep wou ld b r ing the RBI po l i c y c lo s e t o t he

in t e rna t iona l pa t t e rn . Thes e sugges t ions a r e a l s o c ruc i a l f r om the

po in t o f v i ew o f t he F i s ca l Res pons ib i l i t y and Budge t

M anage men t (F RBM ) t a rge t s . C r i s i l ha s a l s o co mme n ted tha t t he

in t e r e s t r a t e s w ou ld r e ma in f i rm i f RBI fo l l ow s the pane l ' s

r eco mme nda t ion o f i n f l a t i on t a rge t ing . C r i s i l a l s o men t ioned tha t

the r e i s l i t t l e scope fo r mo ne ta r y po l i c y t o boos t g row th in 2014 -

15 , and an y r ecov e r y i n t he i nves t me n t s w i l l be l a rge l y d r iven b y

c l ea r ance o f s t a l l ed p ro j ec t s .

22/03/2014 RBI Gove rno r Raghura m Raj an s a id t ha t RBI has no t mo ved to

in f l a t i on t a rg e t ing a s o f now. The U r j i t P a t e l P ane l had

reco mme nded in f avo r o f i n f l a t i on t a rge t ing . The RBI i s

cons ide r ing the s ugges t ions o f t he P ane l r epo r t .

02/04/14 RBI Gove rno r Raghura m Raj an s a id t ha t t he RBI had adop t ed the

new CP I (Co mb ined ) a s t he ke y meas u re o f i n f l a t i on . I t w as

r eco mme nded b y th e U r j i t P a t e l P ane l r epo r t .

Ea l i e r, RBI gave mo re we igh tage t o WP I than CP I , a s t he ke y

me as u re o f i n f l a t i on fo r a l l po l i c y pu rpos es .

The r e fo r m a l s o i nc ludes exp l i c i t r e cogn i t i on o f t he g l i de pa th

fo r d i s in f l a t i on , t r ans i t i on t o a b i -mon th l y mon e ta r y po l i c y c yc l e ,

p rog re ss ive r educ t ion in acces s t o ove rn igh t l i qu id i t y a t t he f i xed

repo r a t e , and a co r r e s pond ing inc r ea s e i n acc es s t o l i qu id i t y

th rough t e r m r epos , and in t rodu c t ion o f l onge r- t e r m t e r m r epos a s

w e l l a s go ing fo rw ard t e rm r eve r s e r epos .


Black Money23 /01 /2014 To cu rb t h e mena ce o f b l a ck mone y, RBI has dec ided to w i thd raw

f ro m c i r cu l a t i on a l l cu r r enc y no te s i s s ued p r io r t o 2005 . b y do ing

th i s , t he cu r r enc y hoa rde r w ou ld have to l i qu ida t e t he i r

unac coun ted ho ld ings . The move i s a i me d a t c ap tu r ing the mon e y

f low in to t he s ys t e m, and he lp coun te r f i e t t he f ake no t e s .

25 /01 /2014 RBI exp la in ed tha t i t o rde red r ep l ace me n t o f t he cu r r enc y no te s

tha t a r e p r io r t o 2005 bec aus e t he y have f ew er s ecu r t i y f ea tu r e s

co mp ared to bankno te s p r in t ed a f t e r 2005 .

a l s o , i t i s t he s t anda rd i n t e rna t iona l p rocedu re t o r ep l ac e t he o ld

s e r i e s no t e s . RBI has a l r ead y been w i thd raw ing s uch no te s f ro m

the Banks .

23 /04 /2014 The S up reme Cour t pu l l ed up the Cen t e r f o r no t f o l l ow ing i t s

i n s t ruc t ions , i s s ued in J u l y 2011 , t o d i s c lo s e i n fo r ma t ion r ec e ived

f ro m G er man y abou t I nd i an c i t i z ens w ho had s t a s hed aw a y th e i r

mone y in L i ech t ens t e in Bank . The cou r t he ld t ha t s uch neg l igen ce

fo r m a con te mp t o f t he Cour t ' s d i r ec t i ons .

23 /04 /2014 S h ah Com m iss ion i n fo rmed tha t t he S w i t ze r l and gove rn me n t ' s

move to s ha re w i th Ind i a a l i s t o f I nd i an c i t i z ens w ho a r e

s us pec t ed to have s t a s hed aw a y un tax ed w ea l th i n Sw is s Banks

w i l l co me a s a ma j o r b r eak th rough in t he i nves t i ga t ion p roces s .

02 /05 /14 The S up re me Cour t d i r e c t ed t he cen t e r t o d i s c lo s e a l l t he

in fo r ma t ion i t r e ce ived f ro m G er man y on 26 ind iv idua l s w ho had

s t a s hed aw a y the i r b l ack mone y in LG T Bank .

The S o l i c i t e r - Gene ra l had ea r l i e r d i s c lo s ed th e names o f t he 18

pe r s ons , bu t w i thou t t he de t a i l s o f t he a moun t s t a s hed ab road .

28 /05 /2014 U nion gove rn me n t announc ed the fo rma t ion o f a h igh - l eve l

S p ec ia l I n ves t iga t ion Team (S I T) t o he lp unea r th t he b l ack

mone y s t a s hed aw a y ab road . The SIT w ou ld be head ed b y fo r mer

S upre me Cour t j udge M . B . S hah . A no the r Sup re me Cour t j udge

J us t i ce A r i j i t P a s a ya t wou ld ac t as t h e v i ce - cha i r man .


The S IT wou ld have h igh p ro f i l e gove rnmen t o f f i c i a l s l i ke -

Revenu e S ec re t a r y, D epu t y G ove rno r o f RBI , D i r ec to r o f

In t e l l i g ence Bureau ( IB) , D i r ec to r o f En fo r ce men t D i r ec to r a t e

(ED ) , D i r ec to r o f CBI , RAW Ch ie f , D i r ec to r -G ene ra l o f Revenue

In t e l l i g ence , Cha i r man o f t he Cen t r a l Boa rd o f D i r ec t Taxes

(CBD T) and D i r ec to r o f F inanc i a l I n t e l l i genc e .

The S up re me Cour t had o rde red the fo r ma t ion o f t he S IT, a f t e r a

w r i t pe t i t i on f i l ed b y Ra m J e thma l an i i n Ju l y 2011 .

30 /05 /2014 S IT p robe w i l l be ancho r ed b y the Cen t r a l Boa rd o f D i r ec t Taxes

(CBD T) , a s t he ma t t e r l a rge l y i nvo lv es i nco me - t ax ju r i s d i c t i on .

S IT w i l l t ake ove r i nves t i g a t ions aga in s t i nd iv idua l s hav ing

ac coun t s i n L iech t ens t e in banks , whos e na mes w ere d i s c lo s ed b y

G er man y. I t w ou ld a l s o r ev i ew the conc luded ma t t e r s and p r epa re

a co mpreh ens ive ac t i on p l an t o unea r th b l ack mone y f ro m o the r

fo r e ign banks .

03 /06 /14 S IT on B la ck Mone y me t unde r t he cha i rmans h ip o f M. B . S hah ,

and dec id ed the roadmap and de t a i l ed moda l i t i e s o f p roceed ing

fu r the r i n acco rd ance w i th t he Sup re me Cour t ' s ma nda t e .

23 /06 /2014 S w i t ze r l and has p r epa r ed a l i s t o f I nd i an su s pec t ed to have

s t a s hed un - t axed w ea l th i n S w is s banks and the de t a i l s w i l l be

s ha red w i th t he Ind i an gove rn men t . The Sw is s au tho r i t i e s a l s o

exp re s s ed the i r w i l l i ngnes s t o w ork w i th t he Ind i an gove rn me n t i n

p rov id ing a l l neces s a r y s uppo r t t o t he new l y s e t up S IT on B lack

M one y. H ow eve r, i t d en i ed the a rgumen t s t ha t t he mon e y s t a s hed

in Sw is s banks cou ld be t r i l l i ons o f do l l a r s .

24 /06 /2014 RBI gave in s t ruc t ions t o t he banks t o p rov ide nec es s a r y

in fo r ma t ion o r documen t s t o t he S IT on B lack M one y.

25 /06 /2014 J us t i ce M B S hah a rgued tha t t he S w iss au tho r i t i e s have r e fu s ed

to s ha re t he i n fo r ma t ion on Ind i ans hav ing unac coun ted mone y in

S w iss banks . H e r e f e r r ed t o t h i s deve lop me n t a s a se tb ack fo r t he

inves t i ga t ion p roces s .


H ow eve r, Sw is s au tho r i t i e s den i ed the c l a i m o f an y s uch r e fu s a l

on the i r pa r t , and exp re s s ed the w i l l i ngnes s t o work toge the r.

Inflation24 /01 /2014 RBI Gove rno r R . Ra j an gave 5 p i l l a r s o f t h e RBI ' s deve lopmen ta l

meas u r e s ove r t he nex t f ew qua r t e r s . Thes e a r e -

1 . S t r eng then ing the mon e ta r y po l i c y f r amew ork ;

2 . S t r eng then ing the Bank ing s t ruc tu r e t h rough new en t r y ;

3 . Broaden ing f i nanc i a l mark e t s t o i nc r ea s e t he i r l i qu id i t y and

re s i l i ence ;

4 . Expand ing acces s t o f i nan ce fo r s ma l l and me d iu m

en t e rp r i s e s and uno rgan iz ed s ec to r ; and ,

5 . Improv ing the s ys t e m' s ab i l i t y t o dea l w i th co rpo ra t e

d i s t r e s s b y s t r eng th en ing r ea l and f i n anc i a l r e s t ruc tu r ing a s w e l l

a s deb t r ecove r y.

22 /03 /2014 RBI Gove rno r Raghura m Raj an has f avo red the Cons u mer P r i ce

Index (CP I ) i n s t e ad o f t he Who le s a l e P r i ce Index (WP I ) a s an

ind i ca to r o f i n f l a t i on . Co mmo n man i s mor e a f f ec t ed and

conc e rned abou t t he CP I . H e a l s o men t ioned tha t t he r e i s a need

to b r ing dow n the CP I

05 /04 /14 RBI s a id t ha t i t w ou ld co mpu te and r e l ea s e t he Rea l E ff ec t ive

Exch ange Ra te (REER) on l y on the ba s i s o f t he CP I , a s t h e p r i ce

index fo r I nd i a , f r o m th i s f i nanc i a l ye a r.

REER ind ex bas ed on CP I w ou ld ens u re a h ighe r deg ree o f

co mp arab i l i t y o f f o rmer Ind i a ' s i n t e rna t ion a l compe t i t i ven es s

aga in s t i t s t r ad ing pa r tn e r s .

R EER i nd i ca t e s t he move men t s i n exchange r a t e o f ho me

cu r r en c y aga in s t a ba s ke t o f cu r r enc i e s o f t r ade pa r tne r s . I t i s


cons ide r ed to be an i nd i c a to r o f i n t e rna t iona l co mp e t i t i venes s .

Ti l l now, RBI w as p rov id ing th e REER bas ed on WP I fo r I nd i a

and CP I fo r pa r tn e r coun t r i e s .

27 /06 /2014 RBI G ove rno r Raghura m Ra j an a rgued tha t adve r s e g row th -

in f l a t i on s e t t i ng has been an obs t ruc t ion to t he p roces s o f

econo mic r ecove r y. H e a l s o a rgued tha t t he fo rma t ion o f a s t ab l e

gove rn me n t a t t he cen t e r ha s improved the p ros pec t s o f

be t t e r me n t . RBI mad e the s e obs e rva t ions i n i t s F inanc i a l S t ab i l i t y

Repor t o f J une 2014 .

H ow eve r, I nd i a ' s f i nanc i a l s ys t e m r e ma ins s t ab l e , de s p i t e t he f ac t

t ha t bank ing s ys t e m i s f ac ing s o me cha l l enges . The re i s a need to

r ed re s s t he h igh N PA s o f P ub l i c s ec to r banks .

Repo Rate29 /01 /2014 RBI Inc rea s ed the Repo r a t e b y 25 bas i s po in t s t o 8%, i n o rde r t o

cu rb i n f l a t i on . Repo i s t he r a t e a t w h ich banks bo r row s ho r t - t e r m

funds f rom the RBI .

RBI s a id t ha t t he s low dow n in t he econo m y i s ge t t i ng w or s e , bu t

the ma in conce rn r ega rd ing the va lue o f r upee co mes f rom the

CP I In f l a t i on , w h ich has r e ma ined in t he doub le -d ig i t s . H igh

in f l a t i on w eakens t he rupee , and r e s t r i c t i nv es tmen t s .

02 /04 /14 RBI kep t t he r epo r a t e unchanged a t 8%, w h i l e t ak ing meas u r e s t o

p rov ide l onge r t e rm l i qu id i t y i n t he s ys t e m. RBI s t a t ed i t s

i n t en t ion a s - t o keep the econo m y on a d i s in f l a t i on a r y pa th .

RBI has a l s o dec id ed to fu r the r r educ e the acces s t o ove rn igh t

r epos , w h i l e compens a t ing i t w i th a co mmens u ra t e expans ion o f

the ma rke t ' s a c ces s t o t e r m r epos f rom the RBI .

04 /06 /14 RBI r educ ed the S LR b y 50 po in t ba s i s t o 22 .5%. Th i s i s l i ke l y t o


i n fu s e an amoun t o f Rs . 40000 c ro re s i n to t he bank ing s ys t e m.

H ow eve r, t he RBI kep t t h e Repo r a t e and CRR unchang ed a t 8%

and 4%, due to t he s ens i t i ve ma c roecono mic s i t ua t i on .

Reduc t ion in t he S LR i s expec t ed to g ive t he banks more f r eedo m

to expand c r ed i t t o t he non -gove rn me n t s ec to r.

RBI a l s o sa id t ha t t he econo mic i nd i ca to r s po in t s t ow ards a

s lugg i s hnes s i n t he econo m y. The con t r ac t i on in t he p roduc t ion o f

cons u mer du rab l e s and cap i t a l goods , and mode r a t ion in co rpo ra t e

s a l e s and non -o i l non -go ld impor t s , a r e i nd i c a t ive o f con t inu ing

w eaknes s i n bo th cons ump t ion and inves t me n t de ma nd .

WTO Talks29 /01 /2014 Ba l i Sum m it - WTO D i r ec to r Gene ra l Robe r to A zevedo exp re s s ed

tha t - a l t hough the Ba l i ag r ee men t ha s r e s to r ed the w or ld ' s

con f id ence i n t he mu l t i l a t e r a l t r ad ing s ys t e m, t he cha l l enge s t i l l

ex i s t . H e me n t ioned tha t Ba l i ag r ee men t ha s t he po t en t i a l t o

inc r ea s e t he vo lu me o f g loba l t r ade b y $1 t r i l l i on , and a l s o

add re s s t he g loba l i nequa l i t i e s . G loba l i nequa l i t i e s pos e a t h r ea t

to t he s u s t a inab i l i t y o f t he wor ld t r ad ing s ys t e m.

H e s a id t h a t WTO me mb er s need to adop t a ho l i s t i c app roach to

the WTO nego t i a t i ons on ag r i cu l tu r e , ma rke t a cc es s t o non -

ag r i cu l tu r a l goods , and s e rv i c e s .

Ind i a ' s Un ion M in i s t e r f o r Commerc e and Indus t r y A nand Sha r ma

men t ioned tha t Ba l i M in i s t e r i a l p ro t ec t ed t he r i gh t o f deve lop ing


coun t r i e s t o s tockp i l e f ood to s e rve t he na t iona l i n t e r e s t o f

p rov id ing food s ecu r i t y t o c i t i z ens .

19 /06 /2014 Crisis at the WTO talks at Geneva deepened as US demanded that India and China be

categorised as emerging rather than developing economies. India resisted the move

strongly, because if accepted, India will loose half of its subsidies caps on Indian food

subsidy. It would also require India to allow market access to US.

US has been insisting that India meets its food security law obligations. India

defended her stand by arguing that still now, about 600 million people live at less than

USD 2 a day in India, though India is the largest economy among the Least

Developed Countries. US, on the other hand, argued that food subsidies in India and

China exceed those in the US and Europe.

US has, in this way, successfully wasted India’s effort in securing a permanent

protection for its food subsidy regime.

04 /07 /14 India protested against the imbalance in favor of developed countries at the WTO

negotiations at Geneva, and broke away from the consensus on the Trade Facilitation

(TF) Protocol. TF Protocol was prepared as a follow up to the Bali Minsiterial

decisions. However, India's reservations has caused a stalement.

India informed that India would only support the TF agreement if there is progress in

Geneva on mechanisms for ensuring permanent protection of the government's

Minimum Support Price (MSP) against the WTO subsidy caps.

Misc.10/01/14 RBI a l low s N RI s re la t iv e a s jo in t h o ld er - banks mi gh t now

inc lude a c lo s e N RI r e l a t i v e a s a j o in t ho lde r i n an i nd iv idu a l

r e s iden t ' s ex i s t i ng o r new bank ac coun t on an ' e i t h e r o r s u rv ivo r

bas i s ' . S uch ac coun t s wou ld be cons ide red a s r e s iden t a ccoun t f o r


a l l pu rpos es . Bu t , cheques , i n s t ru men t s , r e mi t t an ces , c a s h , c a rd

o r an y o the r p roceed ings o f t he N RI r e l a t i ve w i l l no t be e l i g ib l e

fo r c r ed i t t o t h i s a ccoun t .

12/01/14 GAA R - D r. Par th as ar th i S h om e C omm it t ee on G AA R' s

r eco mme nda t ions have been gene ra l l y ag reed upon , bu t

cons ide ra t i ons on r e t ro s pec t ive t axa t ions a r e unde r deba t e , a s i t

cou ld s end nega t ive s igna l s i n t he ma rke t . D r. S home s a id t ha t

GA A R (G ene ra l A n t i -Avo idanc e Ru le s ) w ou ld no t be u s ed a s a

t ax gene ra t i on too l , bu t t o p r even t e ro s ion o f t he t ax bas e b y

avo idanc e .

08 /02 /14 White Label ATM- RBI permitted 4 non-bank entities to set up white label ATMs in

India. The four companies are- Tata Communications Payment Solutions Ltd.; Prizm

Payment Services Pvt. Ltd.; Muthoot finance Ltd.; and Vakrangee Ltd.

The first three companies have already launched their services. The main objective of

establishing the white label ATMs is to enhance the spread of ATMs in semi-urban

and rural areas. Under the new guidelines, certain minimum number of white label

ATMs needs to be installed in such areas within a year.

23 /04 /2014 RBI on Online Transactions- with increasing number of online banking frauds, the

RBI has suggested that banks introduce two-stage authentication to ensure security of

transactions. It also said that banks should inform customers about risks associated

with different types of online banking transactions.

There are various Public Key Infrastructure (PKI) based electronic payments systems

introduced by the RBI like- NEFT, RTGS, CBLO, Forex Clearing, Government

Securities Clearing and Cheque Truncation System (CTS).

RBI informed that the objective of the an effective payment system is to ensure a

safe, secure, efficient robust and sound payment system in the country.

Banks have further been directed to issue EMV (Card with chip and pin) to certain

category of customers and for other customers, banks have been given option to either

issue EMV cards or adopt Aadhaar biometric authentication as additional factor of

authentication.

23 /04 /2014 Indo-US Agreement under FATCA- India and US has agreed to combat possible tax


evasion by Americans through Indian financial entities. The 'In Substance' Agreement

was concluded on April 11, under the Foreign Account Tax Compliance Act

(FATCA). India had consented to Model I- Intergovernmental Agreement (IGA)

under FATCA.

SEBI plans to issue guidelines for market intermediaries in this regard.

As per Model-I (IGA), financial entities will be required to report information on US

account holders to the US IRS (Internal Revenue Service) through CBDT (Central

Board of Direct Taxes).

FATCA requires US to sign IGAs with various countries where American individuals

and companies may hold accounts and other assets.

07 /05 /14 Forward Market Commission (FMC)- FMC tightened the commodity exchange

investment norms by ruling that no individual could hold more than 5% stake in

them. It also informed that at least 51% of the shares of any commodity exchange will

have to be held by the public, in order to ensure broader participation in commodity

bourses.

Only a commodity exchange, stock exchange, depository, bank, insurance company

or public finance institution can hold up to 15% in such an exchange.

Similarly, foreign investors will not be allowed to hold more than a 5% stake. No

foreign institutional investor can have any representation on the governing board of a

commodity exchange.

20 /05 /2014 Ease of Doing Business- India continue to be ranked one of the lowest in the World

Bank's ranking on the Ease of Doing Business' for 2014. India is now ranked at 134,

against 131 in 2013. It is placed lower than Brazil, South Africa, Russia and China.

The survey ranked the countries on the parameters of- starting a business, land

acquisition, taxation and contract enforcement.

However, India has improved its position in- dealing with construction permits and

paying taxes. But it slipped on the parameters like- starting a business, getting

electricity, registering a property, getting credit, protecting investors, trading across

borders and resolving insolvency.

28 /06 /2014 Technology Upgradation Fund Scheme (TUFS)- TUFS for the Textile industry will

require additional funds for the XII Plan. Presently, Rs. 11900 crores are allocated for


the scheme. Of this amount, Rs. 9500 crores are for committed liabilities. Units in the

textile industry has been facing problems in getting the subsidy since last few years.

03 /07 /14 Industrial License Policy- Modi Government took steps to work on the ease of

doing business in India by increasing period of validity of industrial licenses from

two years to three years and relaxing the requirements for companies to have to go

back to the Licensing Committee for the extensions. The extension will now be done

by the Joint Secretary concerned of the administrative ministry.

However, the applications involving transfers, suspensions or cancellations of

licenses will not be considered for extensions. Also, a license will be treated as having

automatically lapsed if even 5 years after it is issued commercial production does not

start.

Banking Sector08 /02 /14 A RBI w ork ing P ape r- ' Re -e merg ing s t r e s s i n t he as s e t qua l i t y o f

Ind i an Banks : M ac ro - f inan c i a l l i nkages ' ha s po in t ed tha t i f t he

p re s en t adve r s e mac ro -econo mi c s i t ua t i ons con t inue , t he s ys t em

lev e l g ro ss Non-P e r fo r mi ng A ss e t s (N PA ) r a t i o cou ld r i s e . I t a l s o

men t ioned tha t t he P ub l i c s ec to r bank cou ld con t inue to r eg i s t e r

the h ighes t N PA ra t i o .

Rec en t l y, t he RBI has dow ngraded i t s GD P p ro j ec t ion fo r 2013 -

14 . RBI s t r e s s ed the need o f s ome cap i t a l adequa c y o f banks , i n

o rde r t o s t ab i l i z e t he s i t ua t i on . H ow eve r, t h e bank ing s t ab i l i t y

has r e ma ined f i rm .

The inc r ea s e i n t he NPA has been ma in l y due to t he - i nadequ a te

app ra i s a l and mon i to r ing o f c r ed i t p ropos a l s , agg re s s ive l end ing

e t c .

08 /03 /14 A h igh - pow ered commi t t ee unde r t he F inanc i a l S t ab i l i t y and


D eve lop men t Counc i l (F S D C) has been s e t up t o f i nd w a ys fo r t he

bank ing s ec to r t o compl y w i th Bas e l - I I I c ap i t a l no r ms .

The dec i s ion w as t ak en b y the RBI Gove rno r Raghuram Ra j an .

F inanc e M in i s t e r P. Ch ida mbar am had s a id t ha t I nd i an banks

s a t i s f i ed t he g loba l c ap i t a l adequ ac y no rms (Bas e l - I I I ) and the

gove rn me n t w ou ld keep on p rov id ing add i t i on a l c ap i t a l t o banks .

02 /04 /14 F o l low ing the r eco mmenda t ions o f t he h igh - l ev e l adv i s o r y

co mmi t t ee cha i r ed b y Bim al Ja lan , and a f t e r cons u l t i ng w i th t he

E l ec t ion Commis s ion , t he RBI w i l l announce the i n -p r inc ip l e

app rova l f o r new bank l i c ens es .

04 /04 /14 G ran t o f new bank ing l i c ens es t o ID FC an d Ban d h an F in an c ia l

S erv i ce s Pr iva te L im i ted cou ld l e ad to w iden ing o f t he s cope o f

f inan c i a l i nc lu s ion . RBI i s a l s o i n t e r e s t ed i n g iv ing a l i c ens e t o

the D epa r t men t o f P os t s , a f t e r cons u l t a t i ons w i th gove rn men t .

The cu r r en t gu ide l in e s r equ i r e t he new banks t o s e t up 25%

branch es i n un -banked ru r a l l oca t ions w i th popu la t i on up to 9999 .

Bandhan i s w e l l - e s t ab l i s hed in t he Eas t e rn Ind i a . I t e s s en t i a l l y

ca t e r s t o t he en t r ep r eneu r i a l / bank ab le mas s e s b y ex t end ing the m

cred i t v i a J o in t L i ab i l i t y Group ( J LG ) mo de l .

05 /04 /14 RBI Gove rno r Raghura m Raj an ju s t i f i ed t he g r an t o f l i c ens e t o

on l y tw o new banks app l i ca t i ons , b y a rgu ing tha t o the r app l i c an t s

migh t be mor e s u i t ab l e fo r d i f f e r en t i a t ed l i c ens es .

14 /05 /2014 Whi le , c r i t i c i s ing the w a y the l end e r s a r e gove rned , a RBI P ane l

r epo r t - headed b y ex -cha i r man o f Ax i s Bank P. J . N a ya r-

r eco mmended tha t gove rnmen t s hou ld cu t i t s ho ld ing in t he pub l i c

s ec to r banks t o unde r 50%. The r epo r t s a id t ha t pub l i c s ec to r

banks a r e su f f e r ing bec aus e o f ce r t a in ex t e rna l i t i e s impos ed b y

cons t r a in t s l i k e - dua l r egu la t i on b y RBI and F inanc e M in i s t r y and

ex t e rna l v ig i l an ce b y agen c i e s l i ke CV C and CA G .

Reduc ing the gove rnmen t s t akes cou ld r e s o lve t he s e p rob le ms . I t

a l s o sa id t ha t gove rnmen t s hou ld r epea l t he Bank N a t iona l i za t i on


A c t o f 1970 and 1980 , a long w i th t he S BI (S ubs id i a r y Banks )

A c t s .

I t r e co mmended tha t a l l banks shou ld be i nco rpo ra t ed unde r t h e

Co mpan ie s Ac t and a Bank Inves t men t Compan y s hou ld be

cons t i t u t ed whe re t he gove rnmen t ho ld ings i n a l l t he banks shou ld

be t r ans f e r r ed .

15 /05 /2014 RBI a l l ow ed the mino r age o f above 10 ye a r s t o open s av ing bank

ac coun t s , a long w i th t he f ac i l i t y t o ope ra t e t he ac coun t and us e

o the r f ac i l i t i e s l i ke ATM and cheque books .

Ti l l now, banks a l l ow ed mino r s t o open bank accoun t on l y a long

w i th a pa r en t o r gua rd i an .

RBI has b rough t t he new ru l e t o b r ing f i nan c i a l i nc lu s ion .

21 /06 /2014 RBI a l l ow ed the fo r e ign inves to r s t o acces s t he cu r r enc y fu tu r e s

mark e t f o r hedg ing the i r cu r r enc y r i s ks w h i l e a l s o pa r t i a l l y

r eve r s ing the r e s t r i c t i ons i t had pu t l a s t ye a r on banks p rop r i e t a r y

t r ad ing in t he exchange t r aded cu r r en c y fu tu r e s . H ow eve r, i t s e t a

l i mi t o f US D 10 mi l l i on .

24 /06 /2014 RBI f ixed t i me l in e fo r va r ious r egu la to r y app rova l s , i n c lud ing

g ran t o f bank l i c ens es , and a l s o r e l ea s ed a c i t i z ens ' cha r t e r f o r

va r ious se rv i ce s .

The r e l ea s e o f t he t ime l ine s chedu le and c i t i z ens ' cha r t e r i s a pa r t

o f t he non - l eg i s l a t i ve r eco mmend a t ions o f t h e F inanc i a l S ec to r

Leg i s l a t i ve Re fo r ms Commis s ion (F S LRC) .

24 /08 /2014 RBI mad e i t compu l s o r y fo r t he Banks t o mak e tw o- s t ep

au th en t i ca t i on o r va l id a i ton p roces s fo r a l l t r an s ac t ions i nvo lv ing

cred i t card s . Th i s i s a i me d to s e t r i gh t t he p rob l em o f ca rd c r ed i t

mi s us e and f r auds , t ha t happen due to cus tomer- f r i end l y pa ymen t

mode l s . Th i s he lp s i n t he mo ne y l aunde r ing and fo r e ign exch ange

ou t f low s .

RBI has mad e c l e a r t ha t merch an t t r ans ac t ions o f sa l e o f goods


and s e rv i ce s mus t be se t t l ed i n Ind i a on l y. U sua l l y, t he pa ymen t

i s f i r s t r e ce ived b y the pa yme n t ga t ew a y (w h ich a r e gene ra l l y t he

in t e rna t iona l compan i e s ) , and then b y the mer chan t . Th e ove r s ea s

banks gene ra l l y t ake s ome f ee fo r t he i r s e rv i ce s . RBI he ld t ha t

th i s p r ac t i ce i s i n v io l a t i on o f t he F o re ign Exchang e M anage me n t

A c t (F EM A ) 1999 .

SEBI11 /02 /14 P ar l i a men t i s un l ik e l y t o pa ss t he S EBI A mend me n t B i l l

The p ropos ed B i l l e mpow er s t he S EBI to i n i t i a t e r ecove r y

p roce ed ings aga in s t uns c rupu lous p ro mot e r s . S EBI w as g iven the

au tho r i t y t o t a ck l e un reg i s t e r ed co l l ec t i ve i nves t men t s che mes ,

th rough an O rd inance .

The p ropos ed enac t men t b r ings an y inves t me n t sche me ove r Rs .

100 c ro r e , o the r t han thos e exe mpt ed unde r S ec t ion 11A A o f S EBI

A c t , unde r t he pu rv i ew o f S EBIU and s uch sche mes w ou ld have to

ge t r eg i s t e r ed w i th S EBI .

The r e a r e va r ious i nves t men t s che mes r egu l a t ed b y d i f f e r en t

r egu l a to r s . NBF Cs a r e unde r t he pu rv i ew o f RBI ; Co mpan y f ixed

depos i t s co me unde r M in i s t r y o f Corpo ra t e A ff a i r s ; I ns u ranc e

unde r IRD A ; and co l l ec t i ve i nves t men t s che mes unde r t he S EBI .

In ca s e o f P onz i s che mes , i t i s d i f f i cu l t t o de t e r min e unde r w h ich

regu l a to r y au tho r i t y t he y f a l l , a s compan i e s t r y t o exp lo i t t he

loopho l e s i n t he l aw.

30 /03 /2014 P res iden t P r anab M ukhe r j ee r e -p ro mulg a t ed the S EBI O rd inanc e

tha t l ap s ed on J anua r y 15 , 2014 , a s t he P a r l i a men t cou ld no t pa ss

the S ecu r i t i e s Law (A mend me n t ) B i l l , 2013 .


The O rd inanc e empow er s t he S EBI Cha i r ma n to o rde r s ea r ches

and se i zu re s and c r ack dow n on Ponz i s chemes .

The S ecu r i t i e s Law s (A mend men t ) B i l l , 2013 e mpow er s S EBI to

r egu l a t e a l l mon e y poo l ing s chemes w or th Rs . 100 c ro r e s and

above , and a l s o a t t a ch a s s e t s i n ca s e s o f non -co mpl i ance . I t a l s o

e mpow er s S EBI to de ma nd in fo rma t ion fo r a id ing i t s s ecu r i t i e s

t r ans a c t ions i nves t i ga t ions .

Th i s i s t he t h i rd t i me tha t t he S EBI Ord inan ce has been

rep ro mu lga t ed .

06 /05 /14 S EBI p ropos ed a new s e t o f r u l e s , w h ich r equ i r e g r ea t e r

d i s c lo s u re s b y co mpan ie s and g ive mo re pow er t o s tock exchanges

to check an y non -co mp l i anc e . Th e p ropos ed no rms have been pu t

unde r t he S EBI (L i s t i ng O b l iga t ions and D i s c lo s u re

Requ i r emen t s ) Regu la t i ons , 2014 .

Thes e ru l e s w i l l have to be fo l l ow ed b y a l l l i s t ed co mp an ie s .

H ow eve r, t he f i na l d r a f t o f no rms w i l l be pub l i s hed a f t e r t ak ing

the pub l i c commen t s .

The new no rms p rov ide t he bou r s e s t he pow er t o i mpos e pena l t i e s

on en t i t i e s f o r v io l a t i ons o f t he no rms .

The new no rms w ou ld a l s o i nc lude p rov i s ions r e l a t i ng to r ev i s ed

co rpo ra t e gove rnan ce f r a mew ork , s uch a s r equ i r e me n t o f

co mp an ie s t o ge t sha r eho lde r s ' app rova l f o r r e l a t ed pa r t y

t r ans a c t ions , s e t t i ng up a wh i s t l e b low er mec han i s m, e l abo ra t e

d i s c lo s u re s on pa y packages and r equ i r e me n t o f a t l e a s t one

w omen d i r ec to r on compan y boa rd .

18 /06 /2014 S EBI p ropos ed new no r ms fo r c row dfund ing o r co l l ec t i on o f

funds t h rough w eb-bas ed p l a t fo r ms and s oc i a l ne tw ork ing s i t e s . I t

w ou ld he lp t he s t a r tup co mpan ie s t o r a i s e cap i t a l , and a l s o

r egu l a t e t he mi s us e o f such me ans .

The no r ms p ropos ed p rov ide t ha t t he avenues o f c row dfund ing

can on l y be p rov ided b y S EBI - r eg i s t e r ed en t i t i e s , and en t i t i e s


w ou ld on l y be ab l e t o r a i s e up to Rs . 10 c ro r e i n a ye a r t h rough

th i s op t ion .

D ue to t he r i s k s a s s oc i a t ed w i th s uch means , S EBI has p ropos ed

to a l l ow on l y acc r ed i t ed i nv es to r s t o pa r t i c ipa t e i n such

ac t iv i t i e s . S uch inves to r s i nc lude - i n s t i t u t i ona l i nves to r s , H igh

N e t Wor th Ind iv idua l s (H N I ) and f i nanc i a l l y s ecu re r e t r a i l

i nves to r s .

O n l y t hos e en t i t i e s wou ld be a l l ow ed to r a i s e funds t h rough

c row dfund ing wh ich a r e no t a s s oc i a t ed w i th a bus ines s g roup

hav ing tu rnove r o f mor e t han Rs . 25 c ro r e . En t i t i e s w i th an

es t ab l i s hed bus iness , a l r e ad y l i s t ed on an exchang e o r be ing in

ex i s t ence fo r f ou r ye a r s o r mo re ; and thos e engaged in r ea l e s t a t e

and f i nanc i a l s ec to r bus in ess e s w ou ld be ba r r ed f ro m th i s me ans .

20 /06 /2014 S EBI in t roduced ce r t a in r e fo r ms and a s ked a l l t he P SU s to ens u re

a t l ea s t 25% pub l i c s ha reho ld ing w i th in t h r ee ye a r s . I t a l s o

in t rodu ced r e fo r m fo re r e s ea r ch ana l ys t s , e mp lo ye e s tock op t ion

s che mes and r e fo r ms to boos t t he p r i ma r y marke t s .

I t a l s o dec ided to s ha re t he K YC in fo r ma t ion o f en t i t i e s , w i th

o the r f i nanc i a l r egu la to r s , t o f ac i l i t a t e co mmon no r ms ac ros s t he

f inan c i a l marke t .

S a l e o f s ha r e s o f t he P SU s i s expec t ed to f e t ch t he gove rn me n t

abou t Rs . 60000 c ro re s . Up t i l now, P SU s w ere r equ i r ed t o have a

min i mu m pub l i c s ha reho ld ing o f 10%, and fo r a non -P SU f i r m a

min i mu m l eve l o f 25%.

In o rde r t o boos t t he p r i mar y mark e t , S EBI ea s ed the no rms

re l a t ed t he s i ze o f an In i t i a l Pub l i c Off e r ( IPO ) and p r i c ing o f

p re f e r en t i a l sha r e s w h i l e a l l ow ing ancho r i nves to r s t o have a

g rea t e r expos u re t o t he o f f e r ing . A l l compan i e s w i th a pos t - i s s ue

cap i t a l o f above Rs . 4000 c ro re s a r e co mpu l s o r i l y r equ i r ed t o

o ff e r a t l e a s t 10% s t ake i n t he IP O , i n o the r compan ie s , t he

min i mu m d i lu t i on to pub l i c w i l l be 25% o r Rs . 400 c ro r e s , w i l l


eve r i s l ow er.

To s a f egua rd i nves to r s f ro m man ipu la t i ve r epo r t s and us he r i n

more t r ans pa r enc y, S EBI app roved de t a i l ed no rms fo r r e s ea r ch

ana l ys t s , t ha t i nc lude s t r i ngen t d i s c lo s u re r equ i r emen t s .

27 /06 /2014 S EBI Cha i r ma n U K S inha s a id t h a t t he r e i s a need fo r t he mu tua l

fund indus t r y t o i mprove the b r and ing o f mu tua l f unds a s an a s s e t

c l a s s . The re ha s neve r been an y s o r t o f b r and ing p r ac t i c ed in

mu tu a l f unds .

H e a l s o i n fo r med tha t t ha t t he mu tua l f und s che mes w ere

v io l a t i ng the 20 :25 ru l e w h ich manda te s t ha t t he r e s hou ld be a t

l e a s t 20 i nves to r s w i th no inves to r hav ing mo re t h an 25%.

H e a l s o s a id t ha t mu tua l f unds ma rke t ha s no t mak ing fu l l us e o f

the l a t e s t t e chno log y. I n t e rn e t - bas ed t r ad ing i s on l y 5% in ca s e o f

M utua l f unds .

M r. S inha fu r the r a s ked th e gove rn men t fo r c l a r i t y on t ax bene f i t s

fo r p roduc t s l i ke Rea l Es t a t e I nves t men t Trus t s (REITs ) and

In f r a s t ruc tu r e Inves t me n t Trus t s .

Gold19 /02 /2014 A ccord ing to t he Wor ld Go ld Counc i l (WG C) , Ch ina s u rpass ed

Ind ia a s t he l a rges t bu ye r o f G o ld i n 2013 . t he r e w as a dec l ine i n

the pu rchas e o f Go ld b y Ind i ans becaus e o f t he gove rn me n t

i mpos ed cu rbs on impor t s o f go ld .

I t i s specu la t ed t h a t Ch ina i s keen to p l a y an i mpor t an t r o l e i n t he

In t e rn a t ion a l G o ld mark e t . Thus , i t i s mak ing go ld pu rchas es a s a

s t r a t eg y.

22 /05 /2014 RBI a l l ow ed the S t a r Trad ing H ous es (S TH ) and P remie r Trad ing


H ous es (P TH ) to impor t go ld unde r t he 20 :80 s che me .

The 20 :80 s che me w as i n t roduced to co mba t a huge Cur r en t

A ccoun t D e f i c i t (CAD ) . Unde r t h i s s che me , i mpor t e r s can bu y

go ld p rov ided 20% o f t he impor t ed go ld i s expo r t ed a s f i n i s hed

p roduc t , l i ke j ew e l l e r y.

RBI a l s o a l l ow ed banks t o p rov ide go ld me t a l l oans (G M L) to

do mes t i c j ew e l l e r y ma nufac tu r e r s ou t o f t he e l i g ib l e domes t i c

i mpor t quo ta .

Fical Deficit01 /03 /14 The f i s ca l de f i c i t f o r 2013 -14 has ove r s ho t t he r ev i s ed e s t ima t e s ,

b y 101 .6% o f t he r ev i s ed e s t i ma t e s . The gove rn me n t had , i n

budge t 2013 -14 , p ropos ed to b r ing dow n the f i s ca l de f i c i t t o 4 .8%

of G DP. Th i s goa l w as aga in r ev i s ed to 4 .6%.

27 /05 /2014 Ind i a ' s Cu r r en t A ccoun t D e f i c i t (CA D ) , f o r t he J anua r y- M arch

pe r iod na r row ed s ha rp l y t o 0 .2% o f GD P, due to a dec l ine i n t he

t r ad e de f i c i t a s dec l ine i n impor t s w as s ha rpe r t han tha t i n

expo r t s .

CA D fo r J anua r y- M arch 2013 w as 3 .6%, wh i l e t ha t du r ing

O c tobe r-D ece mber 2013 w as 0 .9%.

The dec l ine i n i mpor t s i s ma in l y becaus e o f t he r e s t r i c t i ons on

go ld impor t s .


Foreign Trade27 /03 /201

4

EU Ban In d ian Man goes - EU me mber s dec ided to ban the i mpor t

o f f i ve t yp es o f f ru i t s and vege t ab l e s f rom Ind ia , a f t e r s eve ra l

ba t ches w e re found to be con ta mi na t ed b y pes t s , l i ke - f ru i t f l i e s .

The p roh ib i t ed i t ems inc lud e - M angoes , A ube rg ines , Ta ro p l an t , and

tw o t ypes o f gou rd .

The ban w as pu t a s t he ex i s t ence o f pe s t s i n i mpor t i t ems cou ld

pos e a t h r ea t t o Eu ropean ag r i cu l tu r e and p roduc t ion . EU a l s o

ob j ec t ed t o t he sho r t co mings i n t he ce r t i f i c a t i on s ys t e m o f Ind i a .

27 /03 /201

4

Some WTO-members has asked India to remove the export subsidy on raw sugar, as it

distorts the global trade. The demand was raised at the meeting of the Agricultural

Committee of the WTO.

The central government of India has notified export subsidy of Rs. 3300 a tonne on raw

sugar shipments. Indian government replied that the subsidy was introduced to

encourage diversification away from white sugar to raw sugar.

India is a third largest exporter of sugar in the world.

30 /04 /201

4

UK Department of Environment announced that the decision to ban Indian mangoes and

some varieties of vegetables was only temporary.

The Indian government plans to take up the issue with the EU Trade Commissioner.

03 /05 /14 India threatened to drag EU to WTO, if it did not lift the ban on the import of Indian

mangoes and vegetables.

06 /06 /14 Eurozone Economy- European Central Bank (ECB) launched an array of measures to

fight low inflation and boost the eurozone economy, cutting rates, imposing negative

interest rates on its overnight depositors and offering banks new long-term funds. ECB

cut its rates to a record low, to fight off the risk of Japan-like deflation and bring down

Euro's exchange rate. It decided to charge a fee of 0.10% on banks for parking overnight

funds with the ECB.

Other steps include: extension of the unlimited cheap liquidity for eurozone banks,

injection of about 170 billion euros by regulating government tenders.


Telecom Sector30 /04 /2014 The Te le co m D is pu te s S e t t l e men t and A ppe l l a t e Tr ibuna l (TDS AT)

a l low ed the t h r ee t op mo b i l e ope ra to r s - A i r t e l , Voda fone and IdeaCe l lu l a r - t o con t inue the i r 3G in t r a - c i r c l e r oaming pac t and p rov ideroa mi ng s e rv i ce s t o t h e i r cu s tomer s . I t a l s o quas hed the pena l t yi mpos ed b y the D epa r t me n t o f Te l e co mmun ica t ion fo r v io l a t i ngl i cens e ag re emen t .The th r e e ope ra to r s had mov ed to TD SAT in D ece mber 2011 ,cha l l eng ing the pena l t y impos ed .

GST (Goods and Services Tax)11 /06 /14 The w ork on the deve lop men t o f GS T go t s t a l l ed a s t he E mpow ered

Co mmi t t ee o f F inan ce M in i s t e r s dec ided to s t a r t t he w ork on l y a f t e rP a r l i a men t pa s s e s a Cons t i t u t i ona l A mend me n t fo r i n t roduc ing thenew t ax r eg i me and the s t a t e s r a t i f y t he s ame .The commi t t ee i s o f t he v i ew tha t a l coho l and pe t ro l eu m, w h ich a r ethe ma j o r sou rce o f r evenue fo r t he s t a t e s , shou ld be exc lud ed f romthe G S T. The s t a t e have been a rgu ing fo r a mech an i s m toco mp ens a t e t he m fo r r evenue lo s s e s due to t h e G S T, t o be ma de apa r t o f t he p ropos ed Cons t i t u t i ona l A mend men t B i l l .

04 /07 /14 F inanc e M in i s t e r A run J a i t l e y s a id t ha t t he Cen te r wou ld so r t ou tthe co mp ens a t ion i s s ue w i th s t a t e s t o ens u re ea r l y ro l l - ou t o f G S T.H e a l s o i n fo r med tha t a new ind i r ec t t ax r eg ime wou ld subs u me theva r ious l ev i e s .

Mayaram Panel21/06/2014 A Government Panel on Rationalising Definitions of FDI suggested that foreign

investment above 10% in a listed company should be treated as FDI, and the one from

an NRI on a non-repatriable basis be deemed as domestic investment. It aims at

removing ambiguities over clear demarcation between FDI and Foreign Institutional

Investment (FII).


22/06/2014 Government accepted the recommendations of the Committee on Rationalising

definitions of FDI, chaired by Finance Secretary Arvind Mayaram. Now, foreign

investment of 10% or more in a listed company will be treated as FDI.

If the investment is not raised to 10% or above, then the investment can be treated as

Portfolio Investment. FDI is subject to sectoral caps.

It also recommended that Foreign Investment in an unlisted company, irrespective of

the threshold limit, may be treated as FDI.

FDI indicates a lasting interest and long-term relationship, while under Portfolio

Investment the relationship between the investor and company remains largely

anonymous.

It also recommended that any investment by way of equity shares, compulsorily

convertible preference shares/debentures less than 10% should be treated as Foreign

Portfolio Investment (FPI). FPI includes Foreign Institutional Investors (FIIs) and

Qualified Foreign Investors (QFI).

Rail Budget 2014-1509 /07 /14 The new Ra i l budge t , p r e s en t ed b y Ra i lw a y M in i s t e r D . V.

S adanand a G ow da , ma de a number o f r e fo r ms to t he r a i lw a ys ,w i thou t i n c r ea s ing the r a i lw a y f a r e s ubs t an t i a l l y. Th e ma j o rp ropos a l s i nc lude the Bu l l e t t r a in s and s emi - h igh s peed t r a in s , anex t ens ive ma keove r o f s t a t i ons and FD I to f i nance t he Rs . 9 l akhc ro re p l ans .The budege t ou t l i ned the p l ans fo r i nc r e me n ta l i mprov emen t o fpas s enge r a me n i t i e s and be t t e r f unc t ion ing o f r a i lw a ys , b y s t epp ingup co mpu te r i s a t i on o f i t s ma j o r f unc t ions on a l a rge s ca l e .The Ra i lw a y mi n i s t e r a l s o dec l a r ed an i nc r ea s e o f 54% in t hea l loca t ion to t he Nor th - ea s t r eg ion , and p rov ide r a i l connec t iv i t y t oA runacha l and M egha l a ya .H e a l s o announc ed 864 new t r a in s i n M umba i .M od i ' s mes s age fo r r a i l budge t w as t o bu i l t a ' f u tu r i s t i c and g row th -o r i en t ed ' r a i lw a ys . The ana l ys t s a rgue tha t t he r a i l budge t w asd i f f e r en t f r o m the ones l a id ea r l i e r, a s i t pu t commerc i a l v i ab i l i t ybe fo re soc i a l ob l iga t ions .


O the r p ropos a l s : Rai lw a y Res e rva t ion S ys t e m to be r evamped in to N ex t

G ene ra t ion e - Ticke t ing s ys t em M obi l e ba s ed w akeup ca l l s ys t e m fo r pa ss enge r s i n t e rna t iona l s a f e t y s t anda rds t o be adop ted 4000 w omen RP F cons t ab l e s t o ens u re t he s a f e t y o f w o men

pas s enge r s Rs . 9 l akh c ro r e t o co mp le t e t he Go lden Q uad r i l a t e r a l P ro j ec t Rs . 60000 c ro re s fo r bu l l e t t r a in p ro j ec t 40% h ike i n c l ean l in e s s a l l ow ance fo r r a i lw a ys

Anti-Dumping Duty24 /01 /2014 Ind i a i s l i ke l y t o i mpos e an t i - dumping du t y on ce r t a in t ype o f

a lu min iu m a l lo y au to whee l s i mpor t ed f ro m Ch in a , Tha i l and and

K orea , t o p ro t ec t do mes t i c p l a ye r s . The D i r ec to r a t e G ene ra l o f

A n t i - Du mping and A l l i ed Du t i e s (D G AD ) has r eco mmend ed

i mpos i t i on o f du t y.

24 /05 /2014 Commerce Ministry recommended levying anti-dumping duty on solar cells imported

from the US, Malaysia, China and Chinese Taipei, to help the struggling domestic

manufacturers. The move came after it was probed that cheap solar cells are being

dumped into India.

The Directorate General of Anti-Dumping and Allied Duties (DGAD) recommended

duty on imports of solar cells from these countries.

More coming soon...

Team Aspirant Forum© Aspirantforum

Documents

Current Events Chronology Economy · 21/03/2014 Central Statistical Organization's (CSO) data show that the growth rate in the states have been faster than the national growth rate