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Over 43.3 cr monthly digital transactions in India: FM Sitaraman

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Finance Minister Nirmala Sitharaman lauded the strong digital public infrastructure and access that has been given to all, which has brought India at the forefront of digital transactions. Speaking at the Viksit Bharat 2047 Ambassador Campus Dialogue at Pallavaram, the Finance Minister said that in India, 43.3 million transactions are being done every month through digital payment without any charge. “The country is becoming a hub of digital infrastructure. Digital public infrastructure has been designed in such a manner that it involves the seller, the buyer, and the payment system. 43.3 crore transactions are being conducted digitally per month,” she said.

Speaking at the event, the FM highlighted that today India is producing mobile phones not only for domestic consumption but also for exporting to other countries, and all this happened because of the efforts of the current Indian government. Finance Minister Sitharaman said, “The production-linked incentive (PLI) schemes have incentivized the industries to invest in the thorium, solar energy, and green hydrogen sectors. India has also joined hands with other countries to make progress in the renewable energy sector, and in the coming future, India will become a leader in the renewable energy sector.”

Highlighting the achievements of start-ups in India Sitharaman says that now the start-ups are coming to the space sector, the government has opened the space sector for private investment, and the Indian government is giving opportunities and assistance to the new players. In the interim budget, the government has also allocated 1 lakh crore rupees for science and research, which will give a further boost to the emerging start-ups in India.

Sitharaman highlighted the indicators of the Viksit Bharat. She said that better infrastructure, modern schools, and hospitals are the key indicators of Viksit Bharat. The FM said the focus of the Modi government is to achieve the Viksit Bharat goal through the development of infrastructure.

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Economic

Raghuram Rajan urges India to harness demographic dividends and prioritize job creation

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Former RBI governor Raghuram Rajan has underscored India’s failure to fully leverage its demographic dividends, emphasizing the critical need to enhance human capital and skill sets. Speaking at a conference titled “Charting India’s Path to an Advanced Economy by 2047” held at George Washington University, Rajan highlighted India’s current growth rate of approximately 6 percent, which he deemed insufficient given the country’s demographic advantage.

Despite being in the midst of a demographic dividend, Rajan noted that India’s growth rate falls short of the levels achieved by countries like China and Korea during their respective demographic dividend periods. He cautioned against complacency, suggesting that the 6 percent growth rate, when stripped of GDP number inflation, reveals a less impressive performance.

Rajan stressed the urgent need for job creation and advocated for a focus on enhancing people’s capabilities and transforming available job opportunities. He criticized the allocation of significant funds towards chip manufacturing subsidies while neglecting job-intensive sectors like leather, which has contributed to India’s escalating unemployment crisis.

Highlighting the importance of addressing job creation in sectors such as leather, Rajan urged policymakers to identify and rectify underlying issues rather than solely relying on subsidies. He cautioned against neglecting industries that are more labor-intensive, emphasizing the long-standing nature of India’s job problem.

Moreover, Rajan addressed the trend of Indian innovators establishing businesses abroad due to easier access to global markets. He called for a reflection on the factors driving this phenomenon and stressed the importance of fostering domestic innovation and job growth across various sectors.

Despite acknowledging the entrepreneurial spirit of Indian youth, Rajan emphasized the need for systemic changes to create a conducive environment for innovation and job creation within the country. His remarks underscored the imperative for policymakers to prioritize investments in human capital development and address structural barriers to economic growth.

Raghuram Rajan’s insights underscore a pressing concern facing India’s economic trajectory: the imperative to harness its demographic dividends effectively. With a burgeoning population and a significant proportion of young people entering the workforce, India possesses a demographic advantage that could fuel robust economic growth if leveraged appropriately.

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Economic

China: Consumer prices up 2nd month, factory deflation persists

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China’s consumer prices showed a modest increase in March, but factory deflation persists, indicating a continuation of weak demand.

In March, China experienced a greater-than-expected cooling of consumer inflation, alongside persistent deflation in producer prices. This maintains pressure on policymakers to implement additional stimulus measures, given the ongoing weakness in demand. While deflationary pressures in the world’s second-largest economy seem to be gradually alleviating, concerns persist due to the prolonged property crisis, which continues to undermine both consumer and business confidence.

Consumer prices rose by a muted 0.1 per cent in March from a year earlier, National Bureau of Statistics (NBS) data showed on Thursday, versus a 0.7 per cent rise in February which was the first gain in six months and a 0.4 per cent rise in a Reuters poll. “Seasonal effects definitely played a role – food prices rose sharply during the Chinese New Year in February and subsequently came back down,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “More broadly, the over capacity issue is passing into prices in a way that will thwart the People’s Bank of China’s efforts to reflate the economy,” Xu added.

“Vehicle prices fell an annual 4.6 per cent, which could suggest manufacturers are introducing deeper price cuts in the distribution and sales process.” Factory-gate prices fell 2.8 per cent in March from a year earlier, with the producer price index (PPI) widening a 2.7 per cent slide from the previous month and extending a year-and-a-half long stretch of declines. On a month-on-month basis, the PPI fell 0.1 per cent. “Although consumer prices are no longer falling, rapid investment in manufacturing capacity is still weighing on factory-gate prices,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

In recent months China has rolled out a raft of incentives to spur household spending including easier car loan rules, but consumers remain cautious about big-ticket purchases amid worries about the sputtering economy and the weak job market. Earlier this month, China’s central bank vowed to strengthen efforts to expand domestic demand and boost confidence. Core inflation, excluding volatile food and energy prices, in March was at 0.6 per cent from a year earlier, slower than 1.2 per cent in February.

The CPI fell 1.0 per cent month-on-month, cooling from a 1 per cent gain in February and worse than a 0.5 per cent drop forecast by economists. “Interestingly, CPI inflation surprised on the upside in the U.S. and downside in China,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “This indicates the monetary policy stances in these two countries may continue to diverge as well, hence the gap of interest rates in these two countries will likely persist,” he added.

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Economic

Kalanamak rice exports get boost as Govt waives duty on 1,000 tonnes

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The removal of the hefty 20% duty on overseas exports marks a significant shift in the government’s trade policy regarding Kalanamak rice.

In a significant move aimed at promoting trade of agricultural commodities, the government has lifted the duty on exports of the Kalanamak variety of rice. This exemption applies to shipments of up to 1,000 tonnes and is effective immediately from Wednesday, according to a notification issued by the Finance Ministry.

Previously subject to a hefty 20% duty on overseas exports, the removal of this tariff barrier marks a notable shift in the government’s trade policy concerning Kalanamak rice. The Directorate General of Foreign Trade (DGFT) paved the way for this initiative on Tuesday by authorizing exports of up to 1,000 tonnes of Kalanamak rice through six specified customs stations.

Kalanamak rice, a type of non-basmati rice renowned for its distinct aroma and taste, was previously prohibited for export. However, with this recent decision, it joins the ranks of exportable agricultural commodities, offering new avenues for Indian rice producers to tap into international markets.

Exporters can now utilize six designated customs stations for shipping Kalanamak rice abroad. These include Varanasi Air Cargo, JNCH (Jawaharlal Nehru Customs House) in Maharashtra, CH (Customs House) Kandla in Gujarat, LCS (Land Customs Station) Nepalgunj Road, LCS Sonauli, and LCS Barhni.

The government’s move to facilitate the export of Kalanamak rice underscores its commitment to boosting agricultural exports and diversifying the country’s trade portfolio. This decision is likely to open up new opportunities for farmers and exporters, while also enhancing India’s presence in the global rice market.

This strategic decision by the government comes amidst efforts to bolster India’s agricultural sector and enhance its competitiveness in the global market. Kalanamak rice, with its unique characteristics and cultural significance, holds immense potential for export growth. By lifting the duty on its overseas shipments, the government aims to capitalize on this potential and support the livelihoods of farmers involved in its cultivation.

Furthermore, the exemption of duty on Kalanamak rice exports aligns with the broader agenda of promoting agricultural trade and achieving the goals outlined in various government initiatives such as the Agricultural Export Policy and Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission). Encouraging exports of agricultural products not only contributes to economic growth but also fosters rural development and empowers farmers by providing them access to international markets.

As India strives to become a global powerhouse in agriculture, initiatives like these play a crucial role in strengthening the country’s position as a reliable supplier of high-quality agricultural commodities. Moreover, by tapping into niche markets with unique products like Kalanamak rice, India can carve out a niche for itself and establish a reputation for excellence in agricultural exports.

In conclusion, the removal of duty on Kalanamak rice exports signifies a significant step towards realizing the full export potential of India’s agricultural produce. It reflects the government’s commitment to fostering a conducive environment for agricultural trade and underscores its resolve to empower farmers and bolster rural economies. This move is poised to not only boost India’s export earnings but also enhance its stature as a key player in the global agricultural arena.

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Economic

World Bank projects Indian economy to grow 7.5% in FY24

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The Indian economy is projected to grow at a rate of 7.5 percent in 2024, as stated by the World Bank, marking a revision of its earlier forecasts by 1.2 percent. This growth is expected to be a key driver of South Asia’s overall economic performance, with the region anticipated to achieve a strong growth rate of 6.0 percent in the same year. India, being the largest economy in the region, is expected to play a significant role in driving this growth, with output growth projected to reach 7.5 percent in the fiscal year 2023-24, before moderating to 6.6 percent over the medium term. Despite the positive outlook for the region, the World Bank highlights persistent structural challenges that threaten sustained growth.

Fragile fiscal positions and increasing climate shocks are identified as potential obstacles on the horizon. To bolster growth resilience, the report emphasizes the need for policies aimed at boosting private investment and strengthening employment growth. The report also sheds light on the economic outlook for other countries in the region. Pakistan is expected to see a mild recovery, with growth projected at 2.3 percent in fiscal year 2024-25. Similarly, Sri Lanka is anticipated to experience an increase in output growth to 2.5 percent in 2025, driven by recoveries in reserves, remittances, and tourism. Meanwhile, Bangladesh is projected to witness a rise in output by 5.7 percent in the same period, albeit constrained by high inflation and trade restrictions. In light of these projections, the World Bank recommends a range of policy measures to stimulate firm growth and boost employment, including enhancing trade openness, improving access to finance, and fostering a conducive business climate.

Additionally, the removal of financial sector restrictions, improvements in education, and the elimination of barriers to women’s economic participation are suggested as means to drive growth and productivity while creating space for public investments in climate adaptation. The upbeat economic forecasts come amid a positive sentiment regarding India’s economic trajectory. Morgan Stanley recently revised its GDP growth forecasts upwards for both the ongoing financial year and the following year, citing optimism about India’s strength and stability as key factors driving growth in the current cycle. The World Bank projects India’s economy to grow at 7.5% in 2024, driving South Asia’s overall growth at 6.0%. Despite this optimism, persistent structural challenges loom, threatening sustained growth.

Fragile fiscal positions and increasing climate shocks pose potential obstacles. To bolster resilience, policies promoting private investment and employment growth are crucial. Pakistan expects a mild recovery at 2.3% growth, while Sri Lanka anticipates a rise to 2.5% in 2025. Bangladesh aims for 5.7% growth in FY24/25, hindered by high inflation and trade constraints. The World Bank advocates for policy measures to spur growth and create space for public investments in climate adaptation.

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Economic

Govt’s yearly gross GST revenue hits record Rs 20.14 lakh cr in March ‘24

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The Government’s yearly gross Good and Services Tax (GST) revenue for March 2024 witnessed the second highest collection ever at ₹20.18 lakh crore, with a 11.7 per cent year-on-year growth as strong consistent performance in FY 2023-24 paved the way for the milestone of total gross GST collection exceeding ₹20 lakh crore, the Finance Ministry said on Monday. This surge was driven by a significant rise in GST collection from domestic transactions at 17.6 per cent. The GST revenue net of refunds for March 2024 is ₹1.65 lakh crore which is growth of 18.4 per cent over same period last year.
The average monthly collection for this fiscal year stands at ₹1.68 lakh crore, surpassing the previous year’s average of ₹1.5 lakh crore. With continued double-digit growth, the CGST collections have exceeded the FY2024 revised estimate, albeit — Aditi Nayar, Chief Economist, ICRA – with a modest shortfall in the GST compensation cess inflows, which are now being used to repay the loans undertaken during the covid period. “With the CGST collections surpassing the FY2024 RE, the implicit growth needed to meet the interim budget estimate for FY2025 has come down to single-digits, which appears likely to be exceeded,” says Nayar.
The GST revenue net of refunds as of March 2024 for the current fiscal year is ₹18.01 lakh crore which is a growth of 13.4 per cent over same period last year. Recording positive performance across components, the Central goods and services tax (CGST): stands at ₹34,532 crore and state GST at ₹43,746 crore. The integrated GST (IGST) stands at ₹87,947 crore, including ₹40,322 crore collected on imported goods, cess of ₹12,259 crore (including ₹996 crore collected on imported goods). Similar positive trends are observed in the entire FY 2023-24 collections.
The CGST stands at ₹3,75,710 crore and SGST at ₹4,71,195 crore. The IGST collection is ₹10,26,790 crore, including ₹4,83,086 crore collected on imported goods and cess of ₹1,44,554 crore, including ₹11,915 crore collected on imported goods. Shravan Shetty, Managing Director at Primus Partners finds the growth in line with that estimated in the Budget for the coming year and feels maintaining this growth in the coming months will help the government meet its fiscal target. Such fiscal prudence combined with record reserves, notes Shetty, will “provide stability to the rupee and increase India’s attractiveness as a stable, high-growth economy in a sea of uncertainty seen across both developing and developed countries”.
As for inter-governmental settlement, in the month of March, 2024, the Central Government settled ₹43,264 crore to CGST and ₹37,704 crore to SGST from the IGST collected. This translates to a total revenue of ₹77,796 crore for CGST and ₹81,450 crore for SGST for March, 2024 after regular settlement. For the FY 2023-24, the central government settled ₹4,87,039 crore to CGST and ₹4,12,028 crore to SGST from the IGST collected.

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Policy

RBI to set up DIGITA to check illegal lending apps

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As part of its efforts to curb growing cyber fraud, the Reserve Bank is considering establishing a Digital India Trust Agency (DIGITA) to stop the mushrooming of illegal lending apps. The proposed agency will enable verification of digital lending apps and maintain a public register of verified apps, sources said.

Apps not carrying the ‘verified’ signature of DIGITA should be considered unauthorized for the purpose of law enforcement, sources said, adding that this will serve as a pivotal checkpoint in the fight against financial crimes in the digital realm. DIGITA, once in place, would be entrusted with the responsibility of vetting digital lending apps, they noted.

According to sources, a thorough verification process would help instill greater transparency and accountability within the growing digital lending sector, which has witnessed a surge in fraudulent activities and unscrupulous practices in recent times. Meanwhile, the Reserve Bank of India has shared a list of 442 unique digital lending apps with the IT Ministry to whitelist with Google. Besides, Google has removed over 2,200 digital lending apps (DLAs) from its app store from September 2022 to August 2023.

The search giant has updated its policy regarding the enforcement of loan apps on the PlayStore, and only those apps are allowed which are published by the RBI’s regulated entities (REs) or those working in partnership with REs. This policy change by Google has happened at the request of the Reserve Bank of India (RBI) and the Department of Financial Services (DFS) under the Finance Ministry.

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