New Delhi: On a day when the benchmark indices, BSE Sensex and NSE’s Nifty 50, closed over two per cent lower amid a sell-off in global markets, the government hiked import duty on around 15 items up to 20 per cent, effective Friday.
The latest step follows an earlier move to hike customs duty on 19 items, including air-conditioners and refrigerators, from 10 per cent to 20 per cent.
Earlier Thursday, two senior Finance Ministry officials told The Indian Express that more measures to curb imports and a possible issue of bonds to Non-Resident Indians are options that could be considered to contain the rising current account deficit (CAD). In April-June 2018, the CAD widened to $15.8 billion —2.4% of GDP — compared with $15 billion during the same period last year.
The latest hike mainly targeted communication items. Import duty on “populated, loaded or stuffed printed circuit boards” of eight goods, other than mobile phones, has been raised to 10 per cent. Duty has also been raised from 10 per cent to 20 per cent for base stations and for machines for reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus other than modems, voice frequency telegraphy, digital loop carrier systems and multiplexers.
The late evening decision came after a sharp fall in stock, bonds and rupee markets, with traders cautious ahead of retail inflation and Index of Industrial Production data due Friday.
Finance Ministry officials attributed the fall in markets to global factors. “Stock markets have their own way of going up and down. (But) our main worry is current account deficit, balance of payments gap and the rupee. These are the three things which we are watching and we will find ways for them. We have a strategy in place. If the need be, the government can intervene in different ways also to remove the balance of payments gap,” an official said.
For the first time in six quarters, the balance of payments turned negative in the April-June quarter – a deficit of $11.3 billion, compared to a surplus of $11.4 billion last year.
The rupee has lost more than 13 per cent since the beginning of 2018. On Thursday, the rupee hit yet another record low of 74.45 against the US dollar. The BSE Sensex crashed 1,030 points to slip below the key 34,000-mark in the opening trade, tracking a global sell-off as. The Sensex ended 759.74 points, or 2.19 per cent, lower at 34,001.15.
In the global markets, the biggest stock slide since February impacted indices from the US through Europe and Asia on Thursday, triggered, in part, by fresh fears over countries imposing controls on global trade. While China’s Shanghai Composite gauge tumbled more than 5 per cent intra-day, the losses in the European stock markets were far more subdued. Oil prices fell to a two-week low as global stock markets slipped.
”We do have pressure on CAD, we do admit it but the government is not oblivious to it. On CAD and capping our balance of payments, we have got quite good (forex) reserves now compared to 2013, so that way also we don’t need to worry…It is our attempt to take actions in time and we will take more actions if need be. The government is alert about the situation, we are always discussing, we are finding the strategy and we will do what it requires us to do at an appropriate time,” a senior official said.
Asked whether the government will launch NRI bond issue, the official said: “I can’t tell about future. It may happen tomorrow, it may happen after one month, it may not happen. All options are available with us and we will see what time we will get into the market.”
Attributing the fall in markets to global factors, the official said: “What happened in US yesterday had a ripple effect here today. IMF downgraded global growth rate, US growth rate for next year, both these had impact on markets…(But) India’s (growth) is impressive and stable. They have downgraded not only global GDP growth rate but they have also downgraded two specific countries, which will have a competitive effect vis-a-vis India, that is, US and China.”
India’s inflation is “under control” and growth is “picking up”, but rupee is and current account deficit are turning negative mainly due to rising global crude oil prices, the official said. The finance ministry does not expect the crude oil prices to rise above $85 to a barrel in the international markets, and oil marketing companies are unlikely to be asked to share further burden of subsidising prices.
“Oil prices are now coming down, so that is a reason for rupee to appreciate. It’s possible that some people might have taken positions in rupee, with some kind of different outlook, but now I think it is time for them to reconsider also. They may lose money if they…but we believe that rupee should only appreciate from this level. At least, it should start appreciating. That’s our estimate,” the official said.
India one of world’s fastest growing large economies:IMF
Washington: India has been one of the fastest growing large economies in the world, the International Monetary Fund (IMF) has said, asserting that the country has carried out several key reforms in the last five years, but more needs to be done.
Responding to a question on India’s economic development in the last five years at a fortnightly news conference here, IMF communications director Gerry Rice Thursday said, “India has of course been one of the world’s fastest growing large economies of late, with growth averaging about seven per cent over the past five years.”
“Important reforms have been implemented and we feel more reforms are needed to sustain this high growth, including to harness the demographic dividend opportunity, which India has,” he said.
Details about the Indian economy would be revealed in the upcoming World Economic Outlook (WEO) survey report to be released by the IMF ahead of the annual spring meeting with the World Bank next month, he said.
This report would be the first under Indian American economist Gita Gopinath, who is now IMF’s chief economist.
“The WEO will go into more details. But amongst the policy priorities, we would include accelerate the cleanup of banks and corporate balance sheets, continue fiscal consolidation, both at centre and state levels, and broadly maintain the reform momentum in terms of structural reforms in factor markets, labour, land reforms and further enhancing the business climate to achieve faster and more inclusive growth,” Rice said.
Fitch cuts India GDP growth forecast for FY20 to 6.8 pc
New Delhi: Fitch Ratings on Friday cut India’s economic growth forecast for the next financial year starting April 1, to 6.8 per cent from its previous estimate of 7 per cent, on weaker than expected momentum in the economy.
“While we have cut our growth forecasts for the next fiscal year (FY20, ending in March 2020) on weaker-than-expected momentum, we still see Indian GDP growth to hold up reasonably well, at 6.8 per cent, followed by 7.1 per cent in FY21,” Fitch said in its Global Economic Outlook. Fitch Ratings cut India’s FY19 GDP growth forecast to 7.2 per cent from 7.8 per cent on December 6.
The rating agency has also cut growth forecasts for FY20 and FY21 to 7 per cent from 7.3 per cent and 7.1 per cent from 7.3 per cent, respectively. According to Fitch, the RBI has adopted a more dovish monetary policy stance and cut interest rates by 0.25 percentage at its February 2019 meeting, a move supported by steadily decelerating headline inflation.
“We have changed our rate outlook and we now expect another 25 bp cut in 2019, amid protracted below target inflation and easier global monetary conditions than previously envisaged,” it said. “On the fiscal side, the budget for FY20 plans to increase cash transfers for farmers,” it added. Fitch said, it’s benign oil price outlook and expectations of accelerating food prices in the coming months should support rural households’ income and consumption.
India’s total wireless subscribers grew to 1.18 bn in January 2019: TRAI
New Delhi: India’s total wireless subscribers grew by 0.51 percent to 1,181.97 million (1.18 bn) in January 2019, as per a report by telecom regularor TRAI.
Total wireless subscribers (GSM, CDMA & LTE) increased from 1,176.00 million at the end of December 2018 to 1,181.97 million at the end of January 2019, thereby registering a monthly growth rate of 0.51 percent, the TRAI report said.
As on January 31, 2019, the private access service providers held 89.95 percent market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 10.05%, the regulator said in its report.
The Wireless subscription in urban areas increased from 647.52 million at the end of December 2018 to 654.20 million at the end of January 2019, however wireless subscriptions in rural areas declined from 528.48 million to 527.77 million during the month.
The monthly growth rates of urban wireless subscription was1.03 percent and rural wireless subscription was 0.13%, the report said
The Wireless Tele-density in India increased from 89.78 at the end of December 2018 to 90.15 at the end of January 2019.
The Urban Wireless Tele-density increased from 155.48 at the end of December 2018 to 156.85 at the end of January 2019, however Rural Wireless Tele-density declined from 59.15 to 59.04 during the same period.
The share of urban and rural wireless subscribers in total number of wireless subscribers was 55.35 percent and 44.65 percent respectively at the end of January 2019.
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