0203

A day after India retained fastest-growing economy tag despite demonetisation shock, country's former Finance Minister P Chidambaram said it is too early to celebrate.
Chidambaram's statement came soon after India's Central Statistics Office on Tuesday pegged 7 per cent GDP growth for the October-December period, and retained the overall growth projection for the FY 2016-17 at 7.1 per cent. The CSO's GDP projection surprised many economists as it was feared that Prime Minister Narendra Modi's black money crackdown will put Indian economy at risk of losing its growth story as India is largely a cash-driven economy and demonetisation had squeezed the cash flow for months.
In an interview to CNBC, P Chidambaram said: "The GDP numbers have come as a bit of a surprise. The 7 per cent projection by India's Central Statistics Office is completely out of line with other projections including estimates made by the IMF, the Reserve Bank of India (RBI) and the Center for Monitoring Indian Economy."
"All these are very credible institutions which have made credible forecast in the past, so I think we'll have to take this number for what it is for the time being and examine it closely," he said.
Chidambaram is not alone in doubting the recent GDP numbers. IDBI Federal Life Insurance Co's CIO Aneesh Srivastava has also raised doubts about the quality of India's official economic data reporting. "Perhaps this data is not capturing the impact of demonetisation," Srivastava said.
"I am totally surprised and stunned to see this number," he further said.
In a report, Reuters said that the latest data has only added to the confusion. For example, it said, the official figures show economic growth was primarily driven by consumer spending, offsetting a fall in government expenditure. However, this is not backed up by the earnings of consumer goods firms in the last quarter.

News source: Business Today

Posted On Thursday, 02 March 2017 06:55

0202

NEW DELHI: Surprised again by India's strong official growth statistics, economists are relying increasingly on high-frequency indicators like bank

Posted On Thursday, 02 March 2017 06:48

0201

A few private sector banks have started levying heavy charges on cash transactions. The move comes four months after Prime Minister Modi's demonestisation drive which has pushed the nation at the cusp of a digital revolution.

These charges can go up to Rs 150 depending on the number of transactions made in a single month. The exorbitant charges on cash transactions will deter people from pursuing cash transactions. So far, PSU banks have not applied such high taxes on cash transactions but the government did put a cap of Rs 3 lakh on transactions done in cash.
Banks including HDFC Bank, ICICI Bank and Axis Bank began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.
The charges would apply to savings as well as salary accounts effective from today, leading private sector player HDFC Bank said in a circular.
The bank would also cap the third party cash transactions at Rs 25,000 per day, while cash handling charges would be withdrawn effective today, the circular added.
The move was seen in some quarters as aimed at discouraging cash transactions and furthering the digital payment drive. For the basic no-frills accounts, maximum four cash withdrawals would continue to remain free and there would be no fees for cash deposits.
In case of ICICI Bank, the charges are same as they were before the demonetisation move announced on November 8, while there is an increase in such fees in case of some others.
According to details on ICICI Bank website, there will be no charge for first four transactions a month in home branch while Rs 5 per thousand rupees would be charged thereafter subject to a minimum of Rs 150 in the same month.
The third party limit would be Rs 50,000 per day.
For non-home branches, ICICI Bank would not charge anything for first cash withdrawal of a calendar month and Rs 5 per thousand rupees thereafter subject to a minimum of Rs 150.
For anywhere cash deposit, ICICI Bank would charge Rs 5 per thousand rupees (subject to a minimum of 150) at branches, while deposit at Cash Acceptance Machine would be free of charge for first cash deposit of a calendar month and Rs 5 per thousand thereafter.
ATM intercharge charges have also been re-introduced.
At Axis Bank, the first five transactions or Rs 10 lakhs of cash deposits or withdrawals would be free and charged at Rs 5 per thousand rupees or Rs 150, whichever is higher.
It could not be ascertained whether the public sector banks have also begun imposing such charges.
When contacted, a senior official said there has been no directive from the government to the banks regarding levy of such charges.

News source: Business Times

Posted On Thursday, 02 March 2017 06:02

0106

Asserting that adequate capital will be made available for state-owned banks, Economic Affairs Secretary Shaktikanta Das today said every amount of tax payers' money given would be linked to their performance.
Acknowledging non-performing assets of banks as one of the challenges for the economy, he said, "the easier solution people have been talking about the problem of balance sheet of the banks, the problem of NPA is to provide more capital, inject more capital into the banks."
As on September 30, 2016 gross NPAs of public sector banks rose to Rs 6,30,323 crore as against Rs 5,50,346 crore by June end.
This represents an increase of Rs 79,977 crore on quarter on quarter basis.
To clean up balance sheet, the government has announced plans to recapitalise the PSU banks.
Das wondered, "Are we going to inject simply more capital and encourage inefficiency or are we going to link up capital infusion with improvement in efficiency, with resolution of stressed asset."
The government has already announced fund infusion of Rs 22,915 crore, out of the Rs 25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75 per cent has already been released to them.
The first tranche was announced in July with the objective of enhancing their lending operations and enabling them to raise more money from the market.
"I think every amount of tax payers' money that goes into the bank will have to be performance linked. That is precisely what the government is doing," he said at the launch of the OECD Economic Survey here.
"While it continues to be on recapitalisation that need to be capitalised, the emphasis is perhaps more on linking it to performances, linking it to outcomes of the efforts taken by the banks," he said.
Under Indradhanush roadmap announced last year, the government will infuse Rs 70,000 crore in state-owned banks over four years, while they will have to raise further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms Basel-III.
In line with the blueprint, Rs 25,000 crore earmarked for the PSBs in each fiscal, 2015-16 and 2016-17. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.
In the Budget 2017-18 speech on February 1, Finance Minister Arun Jaitley announced capital infusion of Rs 10,000 crore for the next fiscal beginning April 1.

News source: Business Today

Posted On Wednesday, 01 March 2017 07:02

0105

India defied expectations on Tuesday to retain the title of the world's fastest growing major economy, despite the pain caused by Prime Minister Narendra Modi's shock crackdown on cash.
Annual gross domestic product (GDP) growth for the October-December period came in at 7.0 percent, a tad slower than 7.4 percent in the previous quarter but much faster than the 6.4 percent expansion forecast by economists in a Reuters poll.
It was also higher than China's 6.8 percent growth for the last three months of 2016.
Modi's decision last November to outlaw old 500 rupee and 1,000 rupee banknotes was widely expected to exact a heavy toll on an economy where most people are paid in cash and buy what they need with cash.
Little surprise, then, that Tuesday's robust GDP figures have left economists dazed, and have also raised fresh doubts about the quality of India's official economic data reporting.
"Perhaps this data is not capturing the impact of demonetisation," said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance Co.
"I am totally surprised and stunned to see this number."
VINDICATION
Modi had received flak for his shock monetary therapy from political opponents as well as prominent economists such as Amartya Sen and Paul Krugman. The move sucked 86 percent of the currency out of circulation virtually overnight and left many companies, farmers and households in misery.
Anecdotal evidence suggested massive job losses following the cash crunch in India's vast informal sector, which not only supports the formal sector but also employs nine out of 10 workers.
The government as well as the Reserve Bank of India (RBI), however, all maintained the pain would be short-lived and predicted a sharp economic rebound.
The latest GDP data vindicated their assessment.
"The numbers completely negate the kind of negative projections and speculations which were made about the impact of demonetisation," Economic Affairs Secretary Shaktikanta Das told reporters after the data release.
The strong performance in the Oct-Dec period allowed the federal statistics office to retain its growth forecast for the fiscal year that ends in March 2017 at 7.1 percent.
Strong growth figures would also dash hopes of further interest rate cuts by the central bank, which has shifted its focus squarely to inflation.
The Reserve Bank of India (RBI) left the policy repo rate on hold at 6.25 percent for a second meeting in a row this month and signalled an end to its longest easing cycle since the global financial crisis, citing growing inflationary risks.
"With inflation pressures also building, we think that the RBI could begin hiking rates over the next 12-18 months," analysts at Capital Economics wrote in a note.

News source: Business Today

Posted On Wednesday, 01 March 2017 07:00
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