Arun Jaitley inaugurates exhibition on history of coin, currency 

The exhibition, at the North Block which houses finance and home ministries, depicts how money has changed in appearance and substance and has evolved from barter to coins to the present day bank notes and e-money. Finance Minister Arun Jaitley inaugurated an exhibition on 'coin and currency of India' which displays the history of evolution of coinage in the country. The exhibition, at the North Block which houses finance and home ministries, depicts how money has changed in appearance and substance and has evolved from barter to coins to the present day bank notes and e-money. "The exhibition depicts the many names of money, some of which have gone into oblivion and some are in use even today. The exhibition presents a brief history of the Great Hall (where the exhibition is being organised) as well," a Finance Ministry statement said. 

It is for the first time that such an exhibition has been organised in the historic hall which is otherwise used as a common passage to cross from one side of North Block to other, it added. Speaking on the occasion, Jaitley said this exhibition would help in knowing the history of evolution of currency in the country. He hoped this Great Hall will also be used for multiple purpose in future as well which in turn would help in restoring its old grandeur. Finance Secretary Ratan Watal said that this initiative is part of the Prime Minister Narendra Modi's call for a Swachh Bharat, as this initiative would also help in keeping our office environment clean. He said that one of our targets for cleanliness has been this Great Hall of North Block whose top stone was laid on 30th September, 1927. "This area (the hall) had become no man's land between the Ministry of Home Affairs and the Ministry of Finance... We have taken it upon as a mission to not only keep this place clean but also restore the memories of its legacy," Watal said. He said Indian coinage has played a crucial role in documenting political and economic changes over time. Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia, Disinvestment Secretary Neeraj Kumar Gupta, Chief Economic Advisor Arvind Subramanian, and other senior officers of the Ministry of Finance were also present on the occasion

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Currency demonetisation decision lies with govt:

 RBI Amidst demand by Yoga guru Ramdev of banning currency notes of Rs 500 and Rs 1,000, the Reserve Bank today said the decision to demonetise a currency is taken by the government not the regulator. Amidst demand by Yoga guru Ramdev of banning currency notes of Rs 500 and Rs 1,000, the Reserve Bank today said the decision to demonetise a currency is taken by the government not the regulator.

 "These decisions (of banning Rs 500 and Rs 1,000 notes) are taken by the government and not the RBI. The central bank only prints currency notes, denominations are decided by the government," Reserve Bank Deputy Governor K C Chakrabarty said here, to a query over Baba Ramdev''s demand on discontinuation of high value currency notes. He was talking to reporters on the sidelines of a programme organised by International Management Institute. Ramdev, who is on an indefinite fast against corruption and blackmoney, is demanding that the government should ban currency notes of Rs 500 and Rs 1,000 denominations to check corruption. However, experts believe that it would not be an easy task for the government to take out Rs 500 and Rs 1,000 notes from circulation.

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Modi takes dig at Centre for decommissioning 25-paisa coin

 Gujarat Chief Minister Narendra Modi today took a potshot at the central government on twitter for demonetising the 25-paisa coin. Gujarat Chief Minister Narendra Modi today took a potshot at the central government on twitter for demonetising the 25-paisa coin. "Nation is furious over black money, Ramdevji asks for banning Rs 1,000 notes. 

GoI removes 25ps coins..DoTheOpposite (sic) Understand the intentions," Modi''s tweet says. The coin, along with those with lower denominations, will be cease to be legal tender from tomorrow

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India Economic Survey 2017:

As people return to cash, no major effect on digital payments The initiative invoked mixed reactions from different sectors. While companies in the fin-tech segment posted record transactions, segments such as e-commerce witnessed major blip in transactions volumes. Digital transactions among new users increased sharply even as the transactions made by existing users grew in line with historical trend, post the government announced the demonetisation drive, said the Economic Survey 2016-17 tabled in the Parliament on Tuesday. It highlighted that once the cash was back in supply, some people returned to using cash as their primary mode of transaction. 

However, it stressed that the same did not have a major effect on the digital drive, which is expected to continue. Prime Minister Narendra Modi on November 8 announced the demonisation of Rs 500 and Rs 1,000 currency notes in a drive to fight corruption, black money and make India a cashless economy. The initiative invoked mixed reactions from different sectors. While companies in the fin-tech segment posted record transactions, segments such as e-commerce witnessed major blip in transactions volumes. "Demonetisation has short term cost, long term benefits. However poor don't have much digital access. Thus faster remonetisation of the economy is needed," admitted India's CEA Arvind Subramanian in his speech on Tuesday.

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Japan Dec core consumer prices fall at slowest pace in a year 

The data, released on Friday, will be among factors the Bank of Japan will scrutinise at a policy meeting early next week, where it is widely expected to keep monetary policy steady and maintain its upbeat inflation projections. Japan's core consumer prices fell at the slowest annual pace in nearly a year in December, a sign that inflation should pick up in coming months on a rebound in oil costs and rising import costs from a weak yen. The data, released on Friday, will be among factors the Bank of Japan will scrutinise at a policy meeting early next week, where it is widely expected to keep monetary policy steady and maintain its upbeat inflation projections. While prospects of accelerating inflation offer some relief for the BOJ, many central bankers remain wary on whether price rises driven by external factors could help speed up inflation to their ambitious 2 percent target.

 "Consumer prices will start rising ahead. But for inflation to approach 2 percent, companies must more actively distribute profits" to households through wage hikes, said Takeshi Minami, chief economist at Norinchukin Research Institute. Core consumer prices, which include oil products but excludes volatile fresh food prices, slipped 0.2 percent in December from a year earlier, government data showed, roughly in line with a median market forecast for a 0.3 percent fall. It was the 10th straight month of declines but the smallest fall since February, when there was a flat reading, as gasoline and fuel costs rebounded from last year's lows. Core consumer prices in Tokyo, considered a leading indicator of nationwide trends, also fell less sharply. In January, they declined 0.3 percent from a year earlier, compared with 0.6 percent in December, the biggest annual drop in nearly four years. GROWTH PICK-UP AHEAD? Japan posted a third straight quarter of annual expansion in July-September and analysts expect growth to pick up in coming quarters, thanks to a recent rise in exports and factory output driven by improvements in emerging economies.

 Policymakers hope that prospects of a sustained recovery will prompt companies to boost wages and household spending, seen as a soft spot in the world's third-largest economy. Many analysts expect core consumer prices to turn positive in coming months and head toward 1 percent later this year. But some warn that global uncertainties, such as U.S. President Donald Trump's protectionist streak, may make big manufacturers cautious of raising wages for fear of declining profits. Overall consumer prices rose 0.3 percent in December from a year earlier, as downward pressure from energy costs dissipated. But prices of durable goods, such as television sets and personal computers, continued to fall, a sign consumption remains too weak for retailers to hike prices. The BOJ had blamed slumping oil prices as among factors that hampered achievement of its 2 percent target and argued a steady rise in household income will gradually push up inflation. In an attempt to better gauge Japan's broad price trend, the government said it will begin releasing a new index on consumer prices that excludes the effect of volatile fresh food and energy costs

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Oil prices stable as US output gains offset OPEC-led cuts SINGAPORE (Reuters) - 

Oil prices were stable  with rising crude output from the United States offsetting efforts by OPEC and other producers to prop up the market by cutting supplies. Oil prices were stable on Friday, with rising crude output from the United States offsetting efforts by OPEC and other producers to prop up the market by cutting supplies. Brent crude futures, the international benchmark for oil prices, were trading at USD 56.21 per barrel at 0231 GMT, virtually unchanged from their last close. US West Texas Intermediate (WTI) crude futures were at USD 53.84 a barrel, up 6 cents. Traders said growth in US output was counteracting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia to reduce a global fuel overhang, resulting in range-bound prices. "US producer hedging via futures and increasing shale production offset the progress OPEC has made with its production cut implementation," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore. 

"Market participants are hyper-focused on two issues: shale's response to higher prices and OPEC compliance," Barclays bank said. "Producers and OPEC countries are all talking their books, yet the jury is still out," it added, referring to widespread scepticism over compliance with announced cuts. The British bank said it expected Brent and WTI prices to average USD 55 and USD 53 per barrel respectively for the first quarter. OPEC and other producers have agreed to cut production by almost 1.8 million barrels per day (bpd) for the first half of 2017 to fight a supply overhang that has seen between 1 million and 2 million bpd of crude being produced in excess of consumption over the past two years. US oil production, however, has risen by around half a million barrels per day since mid-2016 to 8.96 million bpd

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Budget 2017: See only populist measures this year, not significant reforms

 Every year, bond market participants want the government to cut the fiscal deficit, which will lead to lower borrowing and hence lower interest rates. This year, too, the bond market wants the government to cut the fiscal deficit to 3.0 percent of GDP from the current year’s 3.5 percent of GDP. India’s annual Union Budget has seemingly lost its significance and impact on the market, but every year there is considerable build-up, especially, in the media towards expectations from the government. Major announcements used to be made on Budget Day, but in today’s times the government does not wait for the Budget to announce reforms. Hence, the Budget has become a rather tepid affair

Equity markets react for a few hours on Budget announcements and then get back to worrying about other general events impacting the market.The bond market though has a slightly deeper link to the Budget. In layman’s terms a Budget is a statement of accounts with a forecast on what you are likely to earn and what you are likely to spend in the coming financial year.On the Budget Day then, the government states its projection of revenues (taxes, dividends, divestments) that it is likely to earn and the expenditure (salaries, subsidies, interest payments, infrastructure spending) it is likely to incur in the new fiscal year.Prudence requires that the expenditure be equal to the revenues

But in a country like India, where close to one fourth of the population lives below the poverty line and is deprived of physical and social infrastructure, being prudent is not an option.The Indian government, thus every year, spends more than it earns. This difference (of expenditure over revenue) is popularly known as the fiscal deficit. You should rightfully ask, 'How is this possible. How can one spend what you don’t have?’ The answer, of course, is by borrowing. The Indian government borrows money from the market by issuing government bonds/government securities/ G-Secs. Banks, insurance companies, mutual funds, foreign investors buy these bonds and trade these bonds in the bond market.Bond market players, hence, watch the Budget with expectant anticipation. Every year, bond market participants want the government to cut the fiscal deficit, which will lead to lower borrowing and hence lower interest rates. This year, too, the bond market wants the government to cut the fiscal deficit to 3.0 percent of GDP from the current year’s 3.5 percent of GDP.

 If so, the government bond yields will fall further on lower borrowing and RBI rate cuts, from 6.5 percent currently to below 6.0 percent.But the government, we believe, is unlikely to oblige. The Modi government is clearly under pressure to deliver on its promises – of 9 percent growth, doubling farmers income, building better infrastructure, creating jobs etc. In the back drop of the economic impact of demonitisation and with key elections looming – we expect the government to increase spending over revenue to try and live up to peoples’ expectations. We believe that the government will try and retain the fiscal deficit at 3.5 percent/ GDP and not cut it as expected. The monetary policy committee (MPC) of the RBI may then decide against cutting the Repo rate on fiscal worries

.We believe that Indian bond yields will then likely increase from 6.5 percent to 7.0 percent in this year. Indian bond market has been on a bull run in the last 3 years with fiscal deficit being cut from 5.0 percent of GDP in 2013 to 3.5 percent in 2015, inflation has been falling from 9 percent to 5 percent and thus the the repo rate has been cut from 8 percent to 6.25 percent; while the government bond yields have fallen from 9.0 percent to 6.5 percent. Bond mutual funds, especially gilt and dynamic bond funds, have posted remarkable returns in the last 3 years as bond prices rose with falling interest rates 

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Gold rises to 2 mth high on Trump policy uncertainty,dollar drop 

 Spot gold rose 0.7 percent, to USD 1,217.81 per ounce by 0303 GMT. It earlier touched a high of USD 1,219.43, the most since November 22. Gold prices rose on Monday to the highest in two months as investors sought safer assets amid uncertainty around the economic policies of new US President Donald Trump and as the dollar declined against other major currencies. Spot rose 0.7 percent, to USD 1,217.81 per ounce by 0303 GMT. It earlier touched a high of USD 1,219.43, the most since November 22. US gold futures were up 1.1 percent, to USD 1,218.20 at 0303 GMT. The dollar index, which measures the greenback against a basket of currencies, fell for a second day by 0.4 percent to 100.310.

 Donald Trump, who took power as the 45th president of the United States on Friday, pledged to end the "American carnage" of social and economic woes in an inaugural address that was a populist and nationalist rallying cry, prompting investor concern about protectionist trade policies. With the lack of a clear policy direction from Trump, the market movement is a sign that risk aversion is back on the table, OCBC analyst Barnabas Gan said. Data from US Commodity Futures Trading Commission (CFTC) on Friday underscored investor's bullish gold views. 

The CFTC reported that speculators raised their net long positions during the week to Jan. 17 in COMEX gold contracts for the second straight week. Bank of America Merrill Lynch said last week that precious metal funds had their biggest inflow in five months, according to data through to last Wednesday. Bond funds also notched a fourth consecutive gain over the last week, as investors continued to hedge against the so-called "Trump trades" put on late last year that bet on stronger growth and rising inflation. 

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Trump may weigh on stocks but earnings may surprise:

Sanger However, there are two reasons why Indian markets could do well: the economy could bounce back from demonetisation-induced slowdown and the Budget and GST rollout may be positive triggers, says Arvind Sanger, Managing Partner, Geosphere Capital Management. Like this story, share it with millions of investors on M3 Trump may weigh on stocks but earnings may surprise: Sanger However, there are two reasons why Indian markets could do well: the economy could bounce back from demonetisation-induced slowdown and the Budget and GST rollout may be positive triggers, says Arvind Sanger, Managing Partner, Geosphere Capital Management. Post Your Comments Share Cancel | Arvind Sanger (more) Founder & Managing Partner, Geosphere Capital Management | Capital Expertise: Equity - Fundamental   New US President Donald Trump's inaugural speech was no different from candidate

 Trump's rhetoric, centering around the promise of making every decision on trade, taxes, immigration and foreign trade with "America first" being the priority. Trump's statements could mean emerging markets could stay rangebound till the President articulates his policies more clearly, says Arvind Sanger, Managing Partner, Geosphere Capital Management however, said that should Trump indulge in protectionism and impose trade barriers, the move should be "disruptive". "Emerging economies that are trade dependent could see some slowdown and India IT firms. 

They are already facing technological challenges and could see more headwinds," says Sanger. Lewis Alexander of Nomura says that Trump's perceived hard line on immigration may not be such a "straight line" after all, but did not rule out the possibility of a trade war among countries on his watch.  "[However] there is currently too much optimism about the US economy, so one will have wait for a month to see how things pan out," he said. Talking about earnings in India, Sanger says numbers have not been as disappointing as expected but have been mixed with a positive bias. "Q3 earnings haven't seen the full impact of demonetisation." However, there are two reasons why Indian markets could do well: the economy could bounce back from demonetisation-induced slowdown and the Budget and GST rollout may be positive triggers, Sanger added.

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Will economic compulsions allow for a realty-friendly budget? 

The state of the Indian economy, suggests that the government will have to walk a tight rope with the Union Budget 2017-18, amidst forecasts of a slowing economy. Although banks are now flush with R The state of the Indian economy, suggests that the government will have to walk a tight rope with the Union Budget 2017-18, amidst forecasts of a slowing economy. Although banks are now flush with funds, due to the government’s demonetisation drive and limit on the extent of cash withdrawal, the overall effect of the measure has not gone down well, with the health of the economy. The Indian Central Statistics Office, has estimated that economic growth will slow to 7.1% in the current fiscal year ending March 31, 2017. This is slower than the government’s prior estimates and the 7.6% growth, last year. The estimates have been reduced in all the sectors, except agriculture, which has improved due to the positive monsoon season. Analysts, however, warn that these forecasts are toned down, since the real impact will be seen in the upcoming fiscal year. 

Moreover, the impact on agriculture will also be visible, as the demonetisation immediately prior to the crop season will take its toll. Similarities with global markets, brings hope to Indian realty The real estate fraternity, nevertheless, remains upbeat and believes that the state of the economy, definitely allows the government to provide relief to the real estate sector and home buyers. They cite the Morgan Stanley report dated December 6, 2016, which suggests that annual Indian property sales is expected to grow, from USD 105 billion in 2015 to USD 462 billion in 2025. Research estimates a 14% compound annual growth rate (CAGR) for property sector demand during 2015-20 (8% volume, 6% pricing) and an 18% CAGR in the five years after that, versus the 12% CAGR (5% volume, 7% price) over the past six years. India in 2015, is also similar to China in 2000-03 on key macro parameters. In the past 15 years, China’s economy and per capita income have quadrupled, urbanisation has doubled and the property segment has grown 10x, to USD 1.3 trillion in annual sales. See also: Budget 2017: 3 key hopes of the realty market Why real estate cannot be generalised with other sectors “While the slow job market is a challenge, on a macro level, a one-size-fits-all statement cannot be made about the economic situation,” maintains Nikhil Hawelia, managing director of the Hawelia Group. 

“This is because, while the cash-driven markets like Dehi-NCR are witnessing a slowdown, the service-driven markets are not that much affected,” he explains. Parth Mehta, managing director of Paradigm Realty, believes that the demonetisation drive has resulted in increasing the expectations of the common man, vis-à-vis the upcoming budget. The realty sector will be benefited indirectly by exemption in tax rates, as it will increase buyers’ purchasing power. The budget should provide a holistic model, where developers are incentivised for budget housing. “The budget should cover the entire value chain for the delivery of the affordable housing – from procurement of materials, government premiums and quicker approvals to developers, to stamp duty payments and lower home loans rates,” says Mehta. Impact of previous policy changes Vivek Mohanani, joint managing director, Ekta World, points out that the government offered various incentives to businesses, in the previous two budget sessions. 2016 witnessed a strong foundation being laid for the real estate sector, with policies like Smart Cities, Housing for All by 2022, the Goods and Services Tax (GST), implementation of the Real Estate Act, demonetisation and Benami Transaction Act, he feels. “Consequently, the upcoming budget will be a step further in the right direction,” says Mohanani.

While the sum of the recent policy changes is expected to improve the sector’s practices, the state of the economy may leave little room for the finance minister to provide major sops and ensure that Indian real estate remains an end-user-driven market. Challenges for the finance minister, vis-à-vis real estate and the budget The emerging economic and political compulsions, suggest that the finance minister may unveil a budget that is friendly to middle-class home buyers. Rate cuts ahead of the budget, may indicate more sops. However, the state of economy leaves little room for any budget bonanza. Growth in real estate can help GDP growth but excess liquidity could also derail the economy with artificial growth

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Demonetisation: RBI seeks details of fake currency from banks

 Banks are required to send details of fake currencies in three different dates, the first of which is December 16. To ascertain the amount of counterfeit currency, the Reserve Bank has asked all banks to send details of all fake notes detected during exchange and deposits of defunct old high-value notes post demonetisation. Banks are required to send details of fake currencies in three different dates, the first of which is December 16. The RBI in an advisory issued to banks earlier had said that banks needed to daily report the counterfeit notes detected from specified bank notes (i.e. scrapped old Rs 500 and Rs 1,000 notes) received by them till December 30, 2016. "In continuation by the same, the banks are advised to send branch-wise report on detection of counterfeit notes," the RBI said in a notification. For counterfeit notes detected between November 10 to December 9, banks need to furnish the report in a specified sheet prescribed by the RBI on December 16. For reporting period December 10-16, the details are to be sent on December 23; while for December 17-30 period,

 RBI has asked them to send report on January 6, 2017. The RBI has also asked banks to keep details on specified bank notes (SBNs) separately for analysis later on. "Further, counterfeit notes detected in the SBNs received in exchange and deposits should be kept branch-wise, in a secured and segregated manner, so that further analysis, as necessary, can be conducted at a later stage," read the RBI notification. Though the RBI is publishing data on SBNs regarding the amount exchanged/deposited at banks and RBI counters on a regular basis, there is no data as to what percentage of it contains the counterfeit notes in SBNs. Giving the rationale behind scrapping SBNs last month, Prime Minister Narendra Modi in an address to the nation on November 8 said it is aimed at eliminating fake notes and unaccounted money from the system apart from checking terrorism financing.

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Budget 2017: Jaitley may cut MAT along with lower corporate income tax

 The extent of the cut in MAT’s rate will depend on the reduction in headline corporate income tax rate that the finance minister is expected to announce in the budget Gaurav Choudhury Finance Minister Arun Jaitley may lower the Minimum Alternate Tax (MAT) from the existing 18.5 percent in Budget 2017 as part of the government’s broad strategy to overhaul India’s corporate income tax structure that is beset with layers of exemptions and incentives. The extent of the cut in MAT’s rate will depend on the reduction in headline corporate income tax rate that Jaitley is expected to announce in the Budget. Corporate income tax rate is expected to be cut by 1.25-1.5 percentage points to 28.75-28.5 percent in the Budget 2017, but will likely remove a plethora of exemptions that allow companies to cut down on their effective tax payouts.

 MAT is currently applied at a rate of 18.5 percent and goes up to 21.34 percent including cesses and surcharges. MAT was introduced in fiscal year 1998 to address inequity in taxation of Indian corporations. Many companies, despite making book profits as per their profit and loss account, were hardly paying any tax because income computed as per provisions of the Income-tax Act, was either nil, or insignificant. The Indian Income Tax Act contains a large number of exemptions from total income. Besides exemptions, there are several deductions permitted from gross total income. The result of such exemptions, deductions, and other incentives under the Income Tax Act in the form of liberal rates of depreciation is the emergence of “Zero tax companies,” which inspite of having high book profit, are able to reduce their taxable income to nil. 

The system of MAT was accordingly introduced under which a company is required to pay a minimum tax of 18.5 percent of the book profit in case the tax on the total income computed under the normal provisions of law works out to less than this amount. In November 2015 the government had laid down a comprehensive roadmap for phasing out corporate tax exemptions by 2018 as it looks to reduce the tax rate, simplify the administration and improve India’s competitive edge globally. Tax deductions and exceptions have been prone to misuse and consequential litigation. Currently, there are 32 incentives applicable on corporate profits before calculating



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Budget 2017: Is it time to mediate with the revenue?

 Considering the lengthy and time consuming litigation route and pendency rate in Indian courts, and to encourage a healthy business environment, it is time to create another viable option for the taxpayers. Paras S. Savla and Keerthiga R. Sharma The Indian Income-tax Act has evolved; from the 1922 legislation to the frequently amended 1961 statute. For resolving disputes with the taxpayer, apart from the time-tested and time consuming appeal procedure, there are few alternate dispute resolution mechanisms. We have progressed from standard appeal procedure [beginning with the Commissioner of Income-tax (Appeals), followed by the Income-tax Appellate Tribunal, High Court and ending with the Supreme Court] to alternatives like Advance Pricing Agreements, Mutual Agreement Procedure, etc. However, these alternate dispute resolution mechanisms are more focused on foreign taxpayers or transactions with non-residents.

 The time-bound Dispute Resolution Panel is available only for foreign companies or in cases where there has been a Transfer Pricing adjustment. Advance Pricing Agreements can be entered by taxpayers desirous of “mutually deciding” the arm’s length price of international transactions, and thereby avoid Transfer Pricing adjustments. Mutual Agreement Procedures are available through the Double Taxation Avoidance Agreements entered into by India with various countries. Even before actually making payment to a non-resident, an Indian payee can apply to the Income-tax Department to determine the rate at which tax ought to be deducted. Further, Advance Rulings are also available to non-residents to determine the taxability even before actually entering into a transaction in India

However, Indian residents have limited options available to them when it comes to income-tax disputes. If one desires to avoid the arduous litigation process, then one is left with very limited options. The option of Advance Rulings is available to public companies and to those whose question arises out of transactions exceeding Rs. 100 crore. The Settlement Commission was introduced as a forum to mediate with the Income-tax Department, but even this option is subject to a minimum disclosure of additional income of Rs. 10 lakh. Further, rather than a mutual settle. 

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Budget to make sweeping recast of direct taxes: SBI Research

 According to SBI's research report Ecowrap, the upcoming Budget is likely to see an increase in personal income tax exemption limit, increase in section 80C exemption limit, interest exemption on housing loan and and at least reducing (if not abolishing) the lock in period for bank fixed deposits. |  Budget to make sweeping recast of direct taxes: SBI Research The Government is likely to make sweeping recast of direct taxes in the ensuing Budget to give a boost to the economy following demonetisation, says a report.

 According to SBI's research report Eco wrap, the upcoming Budget is likely to see an increase in personal income tax exemption limit, increase in section 80C exemption limit, interest exemption on housing loan and and at least reducing (if not abolishing) the lock in period for bank fixed deposits. "We expect an increase in personal income tax exemption limit from Rs 2.5 lakh to Rs 3.0 lakh, increase in section 80C exemption limit from current Rs 1.5 lakh to Rs 2 lakh, interest exemption on housing loan from Rs 2 lakh to Rs 3 lakh and at least reducing (if not abolishing) the lock in period for bank fixed deposits from 5 years to 3 years for availing tax exemption," SBI Research said in its Eco wrap report. The report, authored by Soumya Kanti Ghosh, Chief Economic Adviser & GM,

 Economic Research Department, SBI noted that "such giveaways will cost Rs 35,300 crore but we expect this to be more than balanced by IDS2 revenue and cancelled note liabilities of RBI". SBI Research expects tax collection under IDS to be around Rs 50,000 crore and cancelled liabilities from RBI to be around Rs 75,000 crore. Following the demonetisation move, the recast in direct tax moves is expected to give a boost the economy. "The demonetisation has changed the entire gamut of the economy. The GDP growth is expected to be grow by 7.1 percent in 2016-17 compared to 7.6 percent growth in 2015-16," it said. The report further noted that the challenges for the budget this year are more formidable than they were in the previous year. "There is no substitute to investment led growth as opposed to consumption led. A more prudent approach will be to select two-three high potential sectors for fiscal stimulus, agriculture being the most promising followed by SME," it said. 

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Will stall RS proceedings if no discussion on GSPC:

  Congress Seeking to put the government in a tight spot, the Opposition Congress demanded a thorough discussion on the alleged GSPC scam, when Narendra Modi was the Chief Minister of Gujarat. Will stall RS proceedings if no discussion on GSPC: Congress With the Agusta Westland issue set to be debated in Rajya Sabha today, Congress threatened to stall the proceedings if the Centre opposed a discussion on the alleged Rs 20,000 crore Gujarat State Petroleum Corporation (GSPC) scam. Seeking to put the government in a tight spot, the Opposition Congress demanded a thorough discussion on the alleged GSPC scam, when Narendra Modi was the Chief Minister of Gujarat. 

"If that is the case, we will not allow the House to function," party spokesman Jairam Ramesh, a member of the Upper House, told reporters. His remarks came after Parliamentary Affairs Minister Venkaiah Naidu's reported opposition to taking up the GSPC issue in spite of the matter being pending with the Chairman of the Rajya Sabha. "If the CAG report was to be 'Brahmastra' for 2-G, and if CAG Report was the 'Brahmastra' for the coal allotment, how can't it not be 'Brahmastra' for KG Basin (the GSPC issue). Why are these double standards," Ramesh asked. Targeting Modi, he said, "The 'Sutradhar' of the GSPC is now the Prime Minister of India. That is the only reason the man who masterminded the GSPC, who ran the GSPC, after all he is hands-on PM, he is hands-on CM and one of the characteristics of the hands-on CM is that he had his hands on everything and he certainly had his hands on GSPC." On being asked about the Agusta Westland issue, he said, "Congress is not running away from debate and is wanting it and we will participate" 

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China, Japan growth to slow sharply in 2016, warns

 IMF Government stimulus measures, lower commodity prices and low unemployment will help drive regional expansion, the International Monetary Fund said, and called on leaders to push on with reforms. China, Japan growth to slow sharply in 2016, warns IMF China and Japan's economies are expected to slow sharply over the next two years but Asian growth will remain strong as domestic demand takes up the slack from weak global trade, the IMF said today. Government stimulus measures, lower commodity prices and low unemployment will help drive regional expansion, the International Monetary Fund said, and called on leaders to push on with reforms. However, in its Regional Economic Outlook for Asia and the Pacific, the Fund also warned of several external challenges, from weakness in advanced economies, weak global trade and increasingly volatile global financial markets.

 Since its previous outlook on the region in October, global markets have seen wild volatility, with worries over China's economy and plunging oil prices hammering shares in January and February, wiping trillions off valuations. While there has been a slight recovery since March, investors remain on edge. "Asia remains the most dynamic part of the global economy but is facing severe headwinds from a still weak global recovery, slowing global trade, and the short-term impact of China's growth transition," the Fund said. "To strengthen its resilience to global risks and remain a source of dynamism, policymakers in the region should push ahead with structural reforms to raise productivity and create fiscal space while supporting demand as needed." The Fund predicted growth in Asia to come in at 5.3 percent this year and next, down from its previous forecast of 5.4 percent.China's economy, the world's second biggest and a crucial driver of global growth, is tipped to expand 6.5 percent this year - the lower end of Beijing's target - and 6.2 percent in 2017. 

The figures are well down from the 6.9 percent seen in 2015, which was the slowest rate in a quarter of a century, but slightly better than the IMF's October outlook. "While Asia remains the global growth engine, the external environment is becoming much more difficult," said Rhee Chang- Yong, director of IMF's Asia and Pacific Department, speaking to reporters today. The Fund noted China's leadership is trying to transform the country's growth driver away from a reliance on government investment and exports to one dominated by domestic consumption. It also warned of the spillover effects of China's slowing growth on other economies that rely on the country to drive their own expansion, including weaker trade and commodity prices 

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SEBI keen on P-notes; will tighten norms further if

SIT so wants Sebi is keen on continuing with participatory notes and it has also told SIT that P-note rules could be tightened further if the agency was not convinced that the present safeguards were adequate.  The Securities and Exchange Board of India is keen on continuing with participatory notes, a senior official of the regulator told a group of reporters on the sidelines of a public event. Participatory notes are derivative instruments with equities/debt as the underlying. They are favoured by overseas investors who want to have an exposure to Indian securities—mostly shares—without registering with SEBI for reasons genuine or dubious. However, P-notes, as they are called in market parlance, have attracted a lot of scrutiny by agencies over the years. That is because they have been widely used for money laundering, and in many cases the identity of the beneficial owners is screened by a layer of intermediaries. The white paper on black money released during UPA-II’s regime also mentioned P-notes as one of the conduiys for money laundering. In May last year, SEBI had tightened disclosure norms for P-notes to be able to know the beneficial owners of these instruments at any point of time. 

As of November 2016, the value of P-notes with equity as the underlying was around Rs 1.14 trillion and account for 7.5 percent of all assets (equity + debt) owned by foreign institutional investors. At one point in 2007, the proportion was as high as 50 percent. Foreign institutional investor (FII) investments through P-notes have been steadily declining over the years as regulations got stricter. In October last year, the Special Investigating Team (SIT) appointed by the Supreme Court (SC) asked SEBI to furnish the details of all those investing through P-Notes, including the list of beneficial owners and transfers among P-note clients. The SEBI official said it has told SIT that P-note rules could be tightened further if the agency was not convinced that the present safeguards were adequate. Sources say the SIT is of the view that there are loopholes that can still be exploited. In an interview to last week, Former RBI Governor YV Reddy said that the fight against black money was incomplete till there was a total ban on P-notes. “It is very important because of two things, first the black money fight inside is one thing, black money which goes outside and comes back is another type of black money-round tripping and it is not cash, it is going through the financial system,” Reddy had said. “You don't take millions of dollar cash in suitcase and put it in bank in Switzerland, it has to be through financial system,” he said


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Industry to continue growing in mid-teens: 

Max Life Listing is a time-consuming process and not for all companies, only for those that have reached certain maturity and scale, says Rajesh Sud, Executive VC & MD, Max Life Insurance. MD & CEO, Max Life Insurance | Capital Expertise: Insurance Error loading player: No playable sources found Rajesh Sud, Executive VC & MD, Max Life Insurance is confident of the private insurance sector clocking a growth in mid-teens. For the last few years industry has been posting a flat growth with exception of Max Life, but now growth has returned, says Sud. He expects this growth trend to continue going forward. For the past 9 months the private insurers has seen a growth of around 23 percent, says Sud. The insurance industry, in fact, benefited from demonetisation because of increased cash flow into the formalised sector.

 The Cabinet on Wednesday approved plans to divest a 25 percent stake in each of the five fully-owned public sector general insurance companies by listing these on stock exchanges. Sud says listing will bring a lot more attention, capital and transparency to the sector. However, listing is a time-consuming process and not for all companies, says Sud adding, it is meant for companies that have reached certain maturity and scale

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Budget 2017: Govt may announce measures for under-banked sections 

 One can foresee that the short-term impact on GDP, triggered by demonetization, and the impending elections in four states of the country, will majorly impact the policies of this year’s budgetDasvir Ankhi Tata Capital India is looking forward to the Union Budget 2017-18 announcement on February 1, 2017. It is the first time that the Railway Budget will be combined in the Union Budget and be presented much earlier as compared to previous years. One can foresee that the short-term impact on GDP, triggered by demonetisation, and the impending elections in four states of the country, will majorly impact the policies of this year’s Budget. The government may look at devising additional measures that will benefit the under-banked sections of the society to curb the problem of untaxed funds.

 To accelerate India’s economic growth, the Budget could look at increasing capital expenditure by the government, revive private capex by providing necessary support to various industries and take a calibrated move towards the GST regime. Giving a major push to its flagship policies such as Start-up India, Make in India and Skill India will help the government tackle the challenge of unemployment in the country. To improve the conditions of the economically weaker sections of the society, the Budget could have welfare provisions that improve education, health, and housing. Housing and agriculture continue to affect millions of lives in India. From a micro economic perspective, the Budget could look at introducing some vital policies for individuals. 


There is a special focus on affordable housing and the government can look at introducing measures for low-cost housing and offer cheaper home loans to push towards achieving the vision of ’Housing For All by 2022'. In terms of surging agricultural activity in the country, farmers must be provided adequate irrigation infrastructure and access to quality fertilizers and seeds. Also, since the honest tax payer has suffered many difficulties owing to the sudden demonetization drive in the country, the government could consider rewarding them by increasing the basic tax exemption limit and the 80C limits. Given their increased expectation of financial social security, it could also look at National Pension Scheme (NPS) being converted from an EET to EEE based scheme. In an otherwise ‘dormant’ economic environment wherein private capex is yet to pick up, the government may look at increasing capital spending to transform transport systems in the country. Railways modernization project calls for special attention as well.

 Most corporates are awaiting a revised roadmap for the already delayed GST Bill and reduction in corporate tax rates. Though Prime Minister Narendra Modi has called for an increased contribution from market participants for economic development, we expect that this Budget could addresses the fears of interference with capital markets tax rates. Further, raising of STT or short term capital gains tax cannot be ignored. The recent outflow of Foreign investments might also compel the government to promote foreign investments as well as improve India’s ranking on the ‘Ease of Doing Business’ scale. 

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Railway Ministry plans Rs 1.3 lakh crore capex for FY18

 In its highest- evercapital expense, the Railway Ministry is planning a capital expenditure of about Rs 1.3 lakh crore and is expecting a gross budgetary support of Rs 55,000 crore (GBS) for the fiscal year 2017-18. In its highest-ever capital expenditure, the Railway Ministry is planning a capital outlay of about Rs 1.3 lakh crore and expecting a gross budgetary support of Rs 55,000 crore (GBS) for the fiscal year 2017-18.

 During the current fiscal the Indian Railways spent only about 54 percent of its planned capital expenditure. The budgetary support this year was at Rs 45,000 crore. Despite this, it is seeking a higher support this year. The ministry is hopeful of the budgetary support on the back of a unified Union and Railway Budget. Recently, Railway minister  unveiled plans to undertake measures to trim costs significantly and reduce dependence on imported fuel. The plan, named Mission 41k, aims to electrify 24,000 kilometre of railway tracks over a five-year period . The higher outlay together with initiatives to cut costs will open up opportunities for engineering, procurement, and construction (EPC) industry. Other infrastructure-related industries will also benefit through a jump in volumes. 

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India's cash crunch seen biting into economic growth:

 Poll Having posted growth of above 7 percent for six consecutive quarters, India's gross domestic product is expected to have expanded just 6.5 percent in the October-December quarter - the weakest in nearly three years. Indias cash crunch seen biting into economic growth: Poll India's economy lost momentum in the final three months of 2016 after Prime Minister Narendra Modi's ban on high-value notes hurt consumption and businesses but it is set to pick up this quarter, a Reuters poll found.

 Having posted growth of above 7 percent for six consecutive quarters, India's gross domestic product is expected to have expanded just 6.5 percent in the October-December quarter - the weakest in nearly three years. The poll also suggested growth would remain below 7 percent in the first quarter of 2017, at 6.9 percent. India's GDP for the fiscal year to March 2017 is expected to grow 6.9 percent, according to the poll of over 20 economists. 

That is higher than the International Monetary Fund's estimate of 6.6 percent. "If the demonetization exercise has led to some permanent supply-side disruptions, growth could be weaker for longer," wrote Pranjul Bhandari, chief economist for India at HSBC, in a note. The Nov. 8 announcement of the ban on high-value notes, which coincided with Donald Trump's U.S. Presidential election victory, has caused major disruptions in the cash-reliant economy.Industrial and services output have been hobbled, with a survey earlier this month showing private sector activity contracted in December.


 "Lower growth for at least two quarters means that the output gap will take longer to close, suggesting that the revival of the investment cycle, which is already very weak, could be pushed out even further," added Bhandari. Still, a majority of economists answering a separate question said they were confident or somewhat confident the government's demonetization drive would boost consumption and investment in the longer-term. 

China, Japan growth to slow sharply in 2016, warns

 IMF Government stimulus measures, lower commodity prices and low unemployment will help drive regional expansion, the International Monetary Fund said, and called on leaders to push on with reforms. China, Japan growth to slow sharply in 2016, warns IMF China and Japan's economies are expected to slow sharply over the next two years but Asian growth will remain strong as domestic demand takes up the slack from weak global trade, the IMF said today. Government stimulus measures, lower commodity prices and low unemployment will help drive regional expansion, the International Monetary Fund said, and called on leaders to push on with reforms. However, in its Regional Economic Outlook for Asia and the Pacific, the Fund also warned of several external challenges, from weakness in advanced economies, weak global trade and increasingly volatile global financial markets

Since its previous outlook on the region in October, global markets have seen wild volatility, with worries over China's economy and plunging oil prices hammering shares in January and February, wiping trillions off valuations. While there has been a slight recovery since March, investors remain on edge. "Asia remains the most dynamic part of the global economy but is facing severe headwinds from a still weak global recovery, slowing global trade, and the short-term impact of China's growth transition," the Fund said. "To strengthen its resilience to global risks and remain a source of dynamism, policymakers in the region should push ahead with structural reforms to raise productivity and create fiscal space while supporting demand as needed." The Fund predicted growth in Asia to come in at 5.3 percent this year and next, down from its previous forecast of 5.4 percent. China's economy, the world's second biggest and a crucial driver of global growth, is tipped to expand 6.5 percent this year - the lower end of Beijing's target - and 6.2 percent in 2017. 

 The figures are well down from the 6.9 percent seen in 2015, which was the slowest rate in a quarter of a century, but slightly better than the IMF's October outlook. "While Asia remains the global growth engine, the external environment is becoming much more difficult," said Rhee Chang- Yong, director of IMF's Asia and Pacific Department, speaking to reporters today. The Fund noted China's leadership is trying to transform the country's growth driver away from a reliance on government investment and exports to one dominated by domestic consumption. It also warned of the spillover effects of China's slowing growth on other economies that rely on the country to drive their own expansion, including weaker trade and commodity prices

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Sensex & Midcap extend gains, Nifty above 8450;

 BHEL surges 3% Benchmark indices as well as broader markets extended gains in morning with the Nifty reclaiming 8450 level, supported by banking & financials, FMCG, auto, oil and infra stocks. The market digested speech by the UK Prime Minister Theresa May on Brexit plans.  Earnings estimates: Pune-based IT firm KPIT Technologies is likely to report moderate growth in bottomline on account of strong operational performance but topline growth may be muted. Profit is seen rising 2.3 percent sequentially to Rs 57.5 crore in the quarter ended December 2016, according to average of estimates of analysts polled . Revenue in rupee terms is likely to increase 0.5 percent quarter-on-quarter to Rs 835 crore and dollar revenue may rose toillio USD 123.5 mn from USD 123.43 million. EBITDA (operating profit) may jump 9.4 percent to Rs 100 crore and margin may expand 100 basis points to 12 percent compared with previous quarter. Overall third quarter is expected to be soft mainly due to seasonal lower billing days and furloughs but Q4 is expected to be better than


Strong domestic flows are helping to hold up the market but Budget could be the next big trigger, says Vikas Khemani, President and CEO at Edelweiss Securities. Foreign outflows, though a cause for concern, are more technical than fundamental, Khemani says. Since India was on top of most emerging market portfolios so far, it was natural to take the first hit in case of any global uncertainties, he noted, adding, a favourable Budget can reverse the trend. Khemani does not see any major disappointment from corporate earnings yet. The market is keenly watching changes in corporate and long term capital gains taxation in the Budget and will certainly cheer if these are constructive,  

Buy, sell, hold: 2 midcaps, 1 largecap to watch out today, Benchmark indices as well as broader markets extended gains in morning with the Nifty reclaiming 8450 level, supported by banking & financials, FMCG, auto, oil and infra stocks. The market digested speech by the UK Prime Minister Theresa May on Brexit plans. The 30-share BSE Sensex was up 165.80 points at 27401.46 and the 50-share NSE Nifty gained 56.20 points at 8454.20. The BSE Midcap and Smallcap indices, too, rose 0.6 percent each on strong breadth. About 1374 shares advanced against 523 declining shares on the BSE. BHEL, HUL and Tata Steel were biggest gainers among Sensex stocks, up 2-3 percent followed by HDFC Bank, HDFC, L&T, SBI and ONGC with around a percent upside. Bharti Airtel and Dr Reddy's Labs fell 0.6 percent each. Globally investors awaited Federal Reserve Chair Janet Yellen's speech later today, to the Commonwealth Club in San Francisco, which could offer clues about the direction of monetary policy



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Nifty ends below 8400, Sensex in red; Reliance drags 3%

 HUL up NTPC, Asain, Axis Bank, Hero MotoCorp and HUL were top gainers while Reliance, Coal India, Adani Ports, ONGC and HDFC were losers in the Sensex. The market has ended in red. The Sensex was down 52.51 points or 0.2 percent at 27235.66 and the Nifty slipped 14.80 points or 0.2 percent at 8398. About 1342 shares have advanced, 1377 shares declined, and 320 shares are unchanged. NTPC, Asain, Axis Bank, Hero MotoCorp and HUL were top gainers while Reliance, Coal India, Adani Ports, ONGC and HDFC were losers in the Sensex. 2:59 pm Market Update: Benchmark indices were lower in afternoon, weighed by oil, metals and select banking & financials stocks.

 The Sensex was down 63.76 points at 27224.41 and the Nifty fell 18.25 points to 8394.55. 2:45 pm Earnings: Electrical equipment manufacturer Havells India said profit increased 27.5 percent year-on-year to Rs 153 crore in the quarter ended December 2016. It was driven by other income and one-time gain. Revenue during the quarter grew by 13.3 percent to Rs 1,622 crore compared with Rs 1,431.6 crore in year-ago period, aided by cable and electrical consumer durables businesses. Operating profit increased 4.2 percent year-on-year to Rs 193 crore but margin contracted by 100 basis points to 11.9 percent in the quarter gone by. Earnings except margin beat analysts' estimates. Profit was expected at Rs 123 crore on revenue of Rs 1,368 crore and operating profit was estimated at Rs 177 crore with margin of 12.9 percent for the quarter, according to average of estimates of analysts polled 

 Nomura on GST: The goods and services tax (GST) is expected to be fiscally neutral and the resulting inflation impact is likely to be minimal at less than 20 bps, says a Nomura report. According to the Japanese financial services major, while the resulting inflation impact will be minimal, the impact on growth would be marginally negative in the run up to its implementation. Nomura's observations of the Indian economy comes ar a time when the International Monetary Fund has revised India's GDP growth forecast on note ban woes by one percentage point to 6.6 percent for the current fiscal. Meanwhile, the Centre has agreed to allow states control over most of small taxpayers, but the GST rollout date was pushed back by three months to July 1. 2:15 pm FDI for single brand retail: The government is considering allowing 100 percent FDI through automatic route in single brand retail to attract a larger number of global players in the sector. 

 According to sources, there is a proposal to allow 100 percent Foreign Direct Investment in single brand retail sector "through automatic route" with certain conditions. Currently, FDI up to 49 percent is permitted under the automatic route but beyond that limit, government's nod is required. Foreign investment is allowed subject to certain conditions, which require products to be of a 'single brand' only and to be sold under the same brand globally. Furthermore, in respect of proposals involving FDI beyond 51 percent, it is mandatory to source 30 percent of the value of goods purchased from India, preferably MSMEs. ITC may rejig top deck; Sanjiv Puri front runner for CEO: Srcs Benchmark indices as well as broader markets continued to consolidate in afternoon as investors awaited British Prime Minister Theresa May's speech on Brexit plans due later today.

 The 30-share BSE Sensex was down 66.72 points at 27221.45 and the 50-share NSE Nifty declined 18.50 points to 8394.30. Motherson Sumi, Force Motors, RBL Bank, Reliance Industries, Shriram City, Axis Bank, LIC Housing Finance and UPL were most active shares on exchanges. Reliance Industries, Coal India, ONGC, HDFC and Adani Ports were top losers, down 1-3 percent whereas HUL, Asian Paints, Axis Bank, Sun Pharma, NTPC and UltraTech Cement gained around a percent. Markets in Europe were lower as investors waited to hear from the UK Prime Minister Theresa May on her Brexit plans. France's CAC, Germany's DAX and Britain's FTSE were down 0.4-0.6 percent. 

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