1. Strong Autonomy Message: MPC Declines Finance Ministry's Request to Meet
Asserting its autonomy, the 6-member monetary policy committee had unanimously declined a meeting with finance ministry officials ahead of the policy review, RBI Governor Urjit Patel said on Wednesday.
The meeting did not take place. All the MPC members declined the request of the Finance Ministry for that meeting.Urjit Patel, RBI Governor
Ahead of the second bi-monthly policy review of 2017-18, unveiled on Wednesday, the finance ministry had scheduled a meeting with the interest rate setting panel. Relations between the Mint Road and North Block have often been frosty, with the former's calls for lowering rates being the biggest point of difference.
Source: BloombergQuint
2. RBI Keeps Key Interest Rates Unchanged, Lowers Inflation Forecast
The Reserve Bank of India’s (RBI) monetary policy committee (MPC) on Wednesday kept key interest rates unchanged, but softened its hawkish policy stance after retail inflation and economic growth slowed sharply. While the repo rate – at which the central bank infuses liquidity in the banking system – has been kept unchanged at 6.25 percent, RBI lowered its inflation forecast for the current fiscal.
The MPC has projected headline inflation at 2-3 percent in the first half of the year and 3.5-4.5 percent in the second half. Economists see this as an indication that the central bank may be accommodative on the future course of rates in a bid to revive economic growth.
Source: Livemint
3. Govt Abandons Goal of Training 500 Million People in New Skills by 2022
The government has abandoned its goal of training 500 million people in new skills by 2022, in a clear shift in strategy. Skill development ministry officials, at a press conference in New Delhi on Tuesday, also refused to spell out a new number that the Union government and its 22 departments and ministries will chase.
We don’t want to chase any number. Whether it is 150 million by the National Skill Development Corporation (NSDC) and 350 million by ministries – we are delinking it, not attaching any number.Rajesh Aggarwal, Director-General, Training; Joint Secretary, Skills Ministry.
Skill Development Minister Rajiv Pratap Rudy agreed. “It will be demand driven than supply driven,” he said.
Source: Livemint
4. Home Loans Set to Get Cheaper as RBI Eases Norms for Banks
The Reserve Bank of India (RBI) on Wednesday made it possible for banks to lend more to home buyers, and at lower interest rates, in a move that should benefit customers as well as real estate developers. The central bank did this by reducing the amount of money banks have to set aside (as security) on home loans. Previously, they had to set aside 0.4 percent or Rs 400 per lakh. This has now been reduced to 0.2 percent, or Rs 250 per lakh.
Combined with the cut in the statutory liquidity ratio (the portion of deposits which banks have to invest in government securities) by 50 basis points, or 0.5 percentage point, this means banks now have that much more capital to lend. The reduction in the amount banks have to set aside (also called a provision) also mean lower home loan rates.
Source: Livemint
5. India Signs OECD Pact to Check Tax Evasion by MNCs
India on Wednesday signed the OECD Multilateral Convention that aims to check cross-border tax evasion by multinational companies. Union Finance Minister Arun Jaitley signed the Convention in Paris to implement tax treaty- related measures to prevent base erosion and profit shifting.
More than 65 countries, including India, signed the Convention. More countries are expected to sign it in coming days, a finance ministry statement said. The Finance Ministry said in a statement:
The Convention will modify India’s treaties in order to curb revenue loss through treaty abuse and base erosion and profit shifting strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out and where value is created.
Source: BloombergQuint
6. Value of Digital Transactions Rose Marginally in May, RBI Data Shows
Digital transactions in May increased slightly from the previous month in terms of value, provisional data released on Tuesday by the Reserve Bank of India (RBI) showed. The month saw total digital transactions worth Rs 111.09 trillion, up 1.4 percent from Rs 109.60 trillion in April, according to the data. The value is still the second highest after the peak recorded in March.
However, the number of digital transactions declined marginally to 851.1 million in May from 853.1 million in April. The highest volume was recorded in December at 957.5 million.
Digital transactions include those conducted via credit and debit cards, unified payments interface (UPI), unstructured supplementary service data (USSD), prepaid payment instruments (PPIs), Internet banking and mobile banking.
Source: Livemint
7. India Among Top FDI Destinations, but Tax Concerns Remain
India continues to be a favourite FDI destination though tax-related concerns remain a deterrent for some foreign investors, an UNCTAD report said today. It also said that foreign direct investment (FDI) inflows to developing Asia shrank by 15 percent to USD 443 billion in 2016, the first decline since 2012.
This affected three sub-regions, with only South Asia spared. However, UNCTAD’s World Investment Report 2017 said an improved economic outlook in major economies, such as ASEAN, China and India, will likely to boost investors’ confidence, propping up the region’s FDI prospects for 2017.
Source: The Financial Express
8. Reliance Nippon Life Asset Management Plans IPO in 2017-18, to Sell 10% Stake
Reliance Nippon Life Asset Management Ltd, India’s third largest mutual fund manager, plans to sell shares amounting to a 10 percent stake in an initial public offering (IPO) as it seeks to tap an equity boom that has propelled stock prices to record highs.
The share sale will happen in 2017-18 and the company would sell more shares over the next four years, adding up to a 25 percent stake by 2021, chief executive Sundeep Sikka said at a press conference on Wednesday. Sikka said, offering a rationale for the fund raising.
The idea is to be in a state of readiness for both growth opportunities that lies ahead and even more (for) the consolidation that will happen.
Source: Livemint
9. Infosys Drops $20 Billion Revenue Target, Forms Advisory Panel for CEO Vishal Sikka
Infosys Ltd has dumped its ambitious long-term revenue target, had search firm Egon Zehnder evaluate each of the 10 members of the company’s board, and set up a three-member panel to “support and advise” chief executive officer Vishal Sikka in executing strategy. The panel comprises non-executive chairman R Seshasayee, co-chairman Ravi Venkatesan and director DN Prahlad.
All three developments are part of steps taken by the board to address criticism from several quarters, especially co-founder NR Narayana Murthy.
Source: Livemint
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