1. Retail inflation inches up in June even as industrial growth slows down in May 2019
The rate of retail inflation based on the Consumer Price Index (CPI) stood at 3.18 per cent in June, against 3.05 per cent in May. Urban areas faced higher inflation with the CPI rate at 4.33 per cent. Food inflation too hardened in urban areas, at 5.5 per cent.
The CPI inflation remained largely benign, in line with expectation, recording only a modest uptick despite the delay in the monsoon and kharif sowing.
While food inflation hardened to 2.4 per cent, its impact was partly offset by a mild dip in core inflation to 4.2 per cent.
While vegetable prices are likely to firm up due to seasonal factors as well as higher transport costs, the pick-up in the monsoon rainfall is likely to boost sowing in the near term, which will help to keep food inflation in check.
Industrial production slowed down a bit in May to 3.1 per cent, against 4.32 per cent in April and 3.8 per cent in May 2018.
2. SEC convicts Indian-origin fund CEO
An Indian-origin founder of a Manhattan-based hedge fund firm and a former trader of the enterprise have been found guilty of securities fraud for their participation in a scheme to inflate the net asset value for hedge funds managed by the company by over $100 million. Anilesh Ahuja, also known as Neil, was the founder and CEO of Premium Point Investments LP (PPI). The 51-year-old resident of New York’s New Rochelle area and 44-year-old former PPI trader Jeremy Shor, also from New York, were found guilty on four counts of conspiracy to commit securities fraud and wire fraud. The two carry a minimum of 25 years in prison.
3. Now, Trump warns Facebook against digital currency plan
July 12 US President Donald Trump on Thursday warned Facebook Inc over its plan to create a digital currency, the Libra, a move that poses a new obstacle to the company’s cryptocurrency ambitions.
“Facebook’s Libra virtual currency will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks,” Trump said in a series of posts on Twitter. In the tweets, the President also expressed scepticism over digital currencies. Trump tweeted, “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.”
“Unregulated Crypto Assets can facilitate unlawful behaviour, including drug trade and other illegal activity,” he added.
Trump’s entrance into the debate over Bitcoin and Libra could mark a significant development for crypto enthusiasts. The White House has largely remained silent on the subject even as federal regulators like the Securities Exchange Commission, the Commodity Futures Trading Commission and units of the Treasury Department have grappled with how to regulate virtual coins.
After tumbling last year, Bitcoin, the world’s most-traded cryptocurrency, has surged over 200 per cent in 2019.
4. Consumer Protection Bill gets more teeth
The Consumer Protection Bill, 2019 placed in the Lok Sabha by Minister of Food and Consumer Affairs Minister Ram Vilas Paswan seeks to give manufacturers and service providers who make false or misleading advertisements repeatedly a jail term of up to five years and a fine of up to ₹50 lakh.
The Bill was quite similar to the one passed by the previous Lok Sabha in December 2018, but failed to become law as the Rajya Sabha failed to clear it on time. An additional features of the new Bill, however, is the quantum of punishment that it proposes to hand out to celebrities who endorse products or feature in ads with misleading claims.
What is Proposed?
As per the proposed Bill, an endorser may have to pay a penalty off up to ₹10 lakh and may even be barred from endorsing any product for a year. Every subsequent contravention the bar may go up to three years, it said.
The proposed Bill seeks to establish a Central Consumer Protection Authority (CCPA) which would have adequate powers to investigate violations of consumer rights, recall unsafe goods and order pulling out of misleading advertisements. Conceived on the lines of the US Federal Trade Commission, the CCPA would have powers to take swift action at all stages of consumers’ engagement with market — before, during and after.
False and misleading ads at first instance would attract a two-year jail term and a fine up to ₹10 lakh, which would go up to five years and ₹50 lakh for every subsequent offence. Similarly, failure to comply with the orders of the authority can lead to imprisonment of six months or a fine of ₹20 lakh or both.
The end of Consumer Protection Act, 1986
Once passed by Parliament, the Bill would repeal the Consumer Protection Act, 1986, which is said to have several shortcomings, the main one being slow disposal of consumer disputes.
Consumer markets have undergone drastic transformations since the enactment of the 1986 Act. The emergence of global supply chains, rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services.
The CCPA would be empowered to make interventions to “prevent consumer detriment” arising from unfair trade practices and to initiate class action including enforcing recall, refund and return of products.
5. SBI to abolish IMPS charges from August 1
State Bank of India has decided to do away with charges on IMPS (Immediate Payment Service) transactions on internet banking (INB)/ mobile banking service (MBS) with effect from August 1.
IMPS provides a robust and real-time fund transfer facility, offering an instant, 24X7, interbank electronic fund transfer service that could be accessed on multiple channels such as mobile, internet, ATM, SMS, branch and USSD(*99#). IMPS is an emphatic service which allows transfer of funds instantly within banks across India. The IMPS facility is provided by the National Payments Corporation of India through its existing National Financial System switch.
While SBI will offer IMPS free of charge on INB/MBS, the bank has revised the charges on IMPS transactions at branches. The charges on the first two IMPS slabs at branches remain unchanged — nil for up to the ₹1,000 slab and ₹2 plus GST (Goods and Services Tax) for the ₹1,001 up to ₹10,000 slab.
The charges on the remaining three slabs have been revised — to ₹4 plus GST (₹2 plus GST now) on the ₹10,001 up to ₹25,000 slab; to ₹4 plus GST (₹5 plus GST) on the ₹25,001 up to ₹1 lakh slab; and to ₹12 plus GST (₹10 plus GST) on the ₹1,00,001 up to ₹2 lakh slab.
6. Gujarat leads in Centre’s urban housing programme
Gujarat, Prime Minister Narendra Modi’s home State, is the only one among the bigger States to have completed construction of over 50 per cent of the houses sanctioned under the Pradhan Mantri Awas Yojana-Urban (PMAY-U). Haryana is the worst performer with just 6 per cent of sanctioned houses constructed.
PMAY (U) is a Mission to provide housing for all by 2022 and is being implemented from June, 2015. It provides central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for in-situ Rehabilitation of existing slum dwellers using land as a resource with private participation; Credit Linked Subsidy; Affordable Housing in Partnership and Subsidy for beneficiary-led individual house construction/enhancement.
Out of total 83,62,975 houses sanctioned across the States, construction of 31 per cent (26,07,913) houses has been completed while 57 per cent (47,57,987) are ‘grounded’ for construction — at various stages of construction, according to the Ministry of Housing and Urban Affairs data presented to the Rajya Sabha this month.
The States have undertaken demand survey for assessing actual demand of housing under the PMAY(U) and the demand validated is around 100 lakhs. Kerala, Madhya Pradesh, West Bengal, Jharkhand and Orissa are among those that have achieved 40-43 per cent of target.
Gujarat also leads the chart of States with the highest number of houses under construction. Of total 5,24,827 houses sanctioned for Gujarat 4,28,083 (82 per cent) are at grounded or construction stage. and in Telangana and Tamil Nadu about 80 per cent are grounded for construction.
Highest number of houses (12,95,679) have been sanctioned for Uttar Pradesh followed by Andhra Pradesh (12,47,929) and Maharashtra (9,85,591). However, these States lag in execution. Andhra Pradesh has completed 25 per cent houses followed by Uttar Pradesh 24 per cent and Maharashtra 22 per cent.
In pursuance of the Government’s vision of ‘Housing for All’ by 2022, the Ministry is implementing PMAY(U) since June 2015 for providing assistance to States to address housing requirements of people belonging to the Economically Weaker Sections, Lower Income Group and Middle Income Group categories in urban areas. Based on the project proposals received from the States, Central Assistance of ₹1,30,161 crore have been sanctioned for approved houses.
7. India’s tariffs ‘no longer acceptable’, tweets Trump
US President Donald Trump on Tuesday targeted India’s tariff regime once again, tweeting that it is no longer acceptable. “India has long had a field day putting tariffs on American products. No longer acceptable!” he posted from his Twitter handle.
The tweet came less than two weeks after Trump’s ‘patch-up’ meeting with Prime Minister Narendra Modi in Osaka, where the two decided to ask their respective trade teams to meet and iron out all the contentious issues.
The US Trade Representative’s office is scheduled to visit New Delhi later this week to hold talks with their Indian counterparts. The two teams are expected to negotiate a limited trade agreement. The deal had been suspended when the US decided early last month to withdraw a scheme offering duty-free entry to over 3,000 products from India. India then imposed retaliatory tariffs on 28 US products with effect from June 16, 2019, after delaying them for a year. Those were in retaliation to the US not acceding to India’s request for the withdrawal of penal duties on its steel and aluminium.
At the moment, the US wants India to remove price restrictions on medical equipment and labelling restrictions on dairy products and also lower duties on smartphones and other IT and telecom products.
8. Not so “Saubagyashali”
The Centre’s ambitious household electrification scheme Pradhan Mantri Sahaj Bijli Har Ghar Yojana (PM Saubhagya) has lapsed, but its target of 100 per cent electrification nationwide is yet to be achieved. Going by Power Ministry estimates, over 1.5 lakh homes across the the country are yet to be given electricity connection. This despite the Centre shifting the goalposts. The scheme was launched in September 2017 with a target to electrify all households by December 2018. This target was moved forward to March 31, 2019, and eventually the Centre declared that all ‘willing’ homes have been provided with electricity connections.
9. Niti Aayog to fund out under utilised government assets
The Central government has begun a survey of government-owned properties to determine land availability, rationalise their use and find ways to monetise them. The survey will also include determination of assets like stadiums and golf courses among other things.
According to Rajiv Kumar, Vice-Chairman, NITI Aayog, monetisation could happen by way of long-term lease to private developers, unlocking land for building the affordable houses or even sale of unutilised land.
Giving an example, Kumar maintained that some Central public sector enterprises own golf courses or a stadium which are used exclusively for them. But, there could be an additional revenue generation opportunity with these assets being jointly maintained with private players. In certain cases, public sector undertakings may have closed factories or units in cities which have outlived their purposes. For instance, a factory that was once set up on the outskirts of a city; but with the city expanding, it may not be possible to run the factory there anymore. Such a land can be identified and monetised too.
“A survey of government-owned properties for monetisation purpose is on. There are many under-utilised assets that can be looked into,” Kumar told reporters on the sidelines of the 91st annual general meeting of the Indian Chamber of Commerce (ICC) here on Tuesday.
Kumar said a list of 50 PSUs has been suggested for disinvestment. At present, a list of 24 has been shortlisted by the Centre.
10. ‘To be sustainable, Libra must come under the oversight of monetary regulators’
Facebook’s push to create its own cryptocurrency, called Libra, must be put under the oversight of monetary authorities, according to a senior official from China’s central bank.
As a convertible crypto asset or a type of stablecoin, Libra can flow freely across borders, and it “won’t be sustainable without the support and supervision of central banks,” Mu Changchun, deputy director of the People’s Bank of China’s payments department. Mu said digital currencies can be used for lending, could disrupt monetary policy and induce foreign exchange risks in economies with a volatile local currency. In addition, Facebook hasn’t made clear its commitment to anti-money laundering and anti-terrorist financing responsibilities, as well as how it will protect the privacy of its users, Mu wrote.
In the longer term, the yuan will be damaged by Libra if it’s not convertible
Contentions against Libra by Central Banks and Governments
When Libra is used in developing economies where the local currency is volatile, the public will have an incentive to exchange large amounts of local currency into Libra, sparking depreciation in domestic currencies and worsening the financial situation of the poor. The International Monetary Fund or other international organisations will have to monitor the issuance of Libra and oversee the exchange rate mechanism among the various currencies in Libra’s basket. Otherwise, countries will engage in competitive easing in order to exchange more Libra.
When Libra is widely used in payments, transactions will be priced in Libra, and financial products such as credit sales and consumer loans, could be granted in Libra, too. Libra, therefore, enters the credit market, creates derivative deposits denominated in Libra and generates a money multiplier. In that case, the reserves that back up Libra’s original equivalent purchase of fiat currencies, won’t be enough to secure the value of all the Libra created, and it won’t be enough to keep the Libra stable. Central banks should be involved in the process to carefully evaluate and control the money multiplier and decide how much reserves are needed.
Know Your Customer
Libra expects its users and participating institutions to observe existing know your customer (KYC) rules and anti-money laundering or anti-terrorist financing regulations, but it had offered little information on its own responsibilities on these issues. Libra’s users overlap with those of Facebook or WhatsApp, and Facebook’s new subsidiary Calibra would possibly know the real identity of these users.
Blockchain, or not
Whether Libra will use authentic blockchain technology is questioned by many. Its announced goal of supporting 1,000 transactions per second can’t meet the high concurrent requirements in the retail payments market. The transaction peak of China’s NetsUnion Clearing Corp is 92,771 transactions per second. Libra will highly likely adopt a mixed technical path by combining centralised distributed architecture and blockchain technology.