The Burning Topics

In a path breaking reform, both houses of parliament have passed the International Financial Services Centres Authority Bill, 2019. The Bill provides to set up world class unified regulator for international financial services combining powers and functions of RBI, SEBI, IRDAI and PFRDA.  Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators such as RBI, SEBI and IRDAI. The dynamic nature of business in the IFSCs necessitates a high degree of inter-regulatory coordination. It also requires regular clarifications and frequent amendments in the existing regulations governing financial activities in IFSCs. The development of financial services and products in IFSCs would require focused and dedicated regulatory interventions. Hence, a need was felt for having a unified financial regulator for IFSCs in India to provide world class regulatory environment to financial market participants. The establishment of a unified financ...

The Government of India is exploring to switch over to a new and progressive methodology to calculate Gross Domestic Product (GDP). The new methodology may be chain base system in place of existing fixed base system. THE FIX BASE SYSTEM This method is in vogue in India. In this method weight assignment to various economic activities and goods remain fix for specific period which can range from 5 to 10 years or a period as decided by the government. This helps comparing the trend of growth over 5 -10 years on the same parameters with the same weight assigned. THE CHAIN BASE SYSTEM In this system the weight assigned index keeps on changing and changes are incorporated annually. Thus the structural changes of the economy are adjusted quickly. Also the activities are updated and captured annually. This method appears more correct as the economic activities are updated and captured every year based on the current prices. In many foreign countries chain base system is being u...

The government recently announced tax rate cut for corporates across the board.   This has been done in the backdrop of slowdown in the economy to support the corporates and to attract new investments which are moving towards other emerging economy like Vietnam. This cut is historical in last 28 years. The measure is in line with the recommendations of the much-awaited Direct Tax Code (DTC) report that was submitted to the Finance Ministry in August 2019. The report has not been made public yet. (The Direct Tax Code aims to consolidate and amend the law relating to all direct taxes, namely, income-tax, dividend distribution tax, fringe benefit tax and wealth-tax to establish an economically efficient, effective and equitable direct tax system which will facilitate voluntary compliance and help increase the tax-GDP ratio. Another objective is to reduce the scope for disputes and minimize litigation. All the direct taxes have been brought under a single Code and compliance proced...

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to keep the interest rate unchanged at 5.15% in the fifth bimonthly policy review, citing inflation concerns despite economic growth continuing to slow down. RBI however reduced GDP estimate to 5%. All the six members of the MPC voted in favour of keeping the interest rate unchanged. Cash-starved realtors expressed disappointment over the RBI's decision on Thursday to keep the benchmark lending rate unchanged and said the apex bank should have cut repo rate by 1 percentage point to boost housing sales and economic growth. The RBI Governor told to media that rate cut is not a mechanical exercise and he will first see the outcome of earlier cuts and other measures and then again MPC will think over it. India Inc. was expecting a rate cut of 100 basis points which would have provided a boost to the government's recent initiatives to kick-start GDP growth. The decision to wait and watch the outpl...

A common discussion now days in all the forums, be it social gathering, political or TV debate, is the slowdown of the Indian Economy. Although all such discussions have their own opinions but the projection being done is appears very high. No doubt, Indian economy is passing through a difficult stage which needs very careful assessment and quick remedial measures by the Government. The seriousness of the matter can be understood from the fact that in Q 2 this year (TY) GDP grew by 4.5% which is the slowest during the last 6 years. In Q1 the growth was 5% which too was a warning signal. The growth last year (LY) was 5% and 7% in Q1 and Q2 respectively.    During first half of the current fiscal the growth is 4.8% as compared to 7.5% last year. There is decline in growth of 6 out of 8 core sectors which is a major area of concern. The other data released by NSO also support the gradual slowness of the economy. ·         The gross value ad...