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India to hold top spot for economic growth but oil poses risk

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Bengaluru: India will remain the fastest-growing major economy this year supported by increased government spending ahead of next year’s general election, but rising oil prices pose the biggest downside risk, a Reuters poll of economists showed.
The over $2 trillion economy, which surpassed France recently to become the world’s sixth-largest economy, is expected to grow 7.4 per cent in the fiscal year ending in March 2019 and 7.6 per cent next, according to average forecasts in the latest poll of nearly 70 economists, taken July 19-24.
In contrast, analysts in the most recent Reuters poll expect China’s economy, the world’s second largest, to grow 6.6 per cent this year.
But record high costs of diesel and petrol – which are the biggest items on India’s import bill – at a time when the rupee is weakening and close to a record low has become a major burden, posing a risk to those forecasts.
Over 60 per cent of 41 economists who answered an additional question on risks to the outlook said the recent rise in oil prices was the biggest threat, as that would increase the prospect for more interest rate hikes by the Reserve Bank of India.
“We think that for every 10 dollar rise in oil prices, India growth declines by 30-40 basis points. This impacts growth by lowering consumption and raising input costs,” said Shashank Mendiratta, economist at ANZ.
India’s economy has started to recover after a slowdown caused by a ban on high-value currency notes in November 2016, followed by the hasty implementation of a goods and services tax (GST) in July last year.
Indeed, growth has been accelerating over the past year from a low of 5.6 per cent to above 7 per cent in recent quarters.
But, while the quarterly growth outlook for India is relatively steady through to the end of next year, it is not expected to match or surpass the 7.7 per cent rate reported for the latest quarter.
“Relatively higher interest rates, high oil prices, uncertainties on the exchange rate, gradually building up political risks from the 2019 elections – are all headwinds that can slow down the growth momentum,” noted Samiran Chakraborty, senior economist at Citi.
“Much will depend on the extent of (government) spending in fiscal year 2019 and its multiplier effect on the rural economy.”
The consensus for growth has remained largely unchanged for almost a year in Reuters polls, despite worries about escalating trade disputes, which has dented confidence among economists surveyed on most other major economies.
Indeed, the Reuters poll growth forecast for India this fiscal year is now a touch higher than the International Monetary Fund’s projection, at 7.3 per cent.
Some respondents also said the trade dispute between the United States and its trading partners will have only a minimal impact on the Indian economy, compared to others in the region.
“The big concern for many economies in Asia at the moment is the growing protectionist threat from the US It is difficult to know how events will unfold, but the key point for India is that it doesn’t look particularly exposed to a more protectionist US,” noted Shilan Shah, senior India economist at Capital Economics.


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Income Tax return processing time to reduce from 63 days to just 1 day

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Mumbai:The Union Cabinet approved an integrated income-tax e-filing and centralised processing centre (CPC) portal, which will reduce the return processing time from 63 days to just one day. The new portal is also expected to process the refunds within one day of filing of tax returns, in huge relief for taxpayers. However, one will have to wait for 18 months to see its launch.

“Earlier, taxpayers would face troubles because of delay in refund processing and the CBDT used to spend a lot of money every year as interest on pending refunds, which will be history now,” Union minister Piyush Goyal told reporters after the Cabinet meeting here.

Last month, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra had said a simplified return form and process would be put in place soon in which the department would process the self-declaration made by the taxpayer. The new Rs 4,241-crore project will incorporate these changes.

 

“This is a laudable initiative and will go a long way to ease tax compliance, and enhanced experience for taxpayers. However, the real success of this will be measured when it brings ease to a common man and is accompanied by changes in the culture of the tax authorities at the operational level,” said Neeru Ahuja, partner, Deloitte India.

Currently, the e-filing portal and the CPC work separately. While e-filing is being managed by Tata Consultancy Services (TCS), the CPC is run by Infosys.

In the bids invited by the government, Infosys emerged as the lowest bidder and it would develop the ITR-CPC 2.0 project in 18 months from now, Goyal said.

Under the new system, Infosys will handle end-to-end solution — from e-filing to return assessment to refund processing. The CBDT and Infosys would work in a revenue-sharing model, sources in the know said.

Goyal said ramping up scrutiny was not the mandate of the new portal. Currently, about 0.3 per cent of the I-T returns are scrutinised, he said. The system intends to resolve taxpayer grievances as well as tax demands from the CBDT faster and equitably, he said.

“The decision will ensure horizontal equity by processing returns filed by all categories of taxpayers across the country in a consistent, uniform, rule driven, identity blind manner. This will assure fairness in tax treatment to every taxpayer irrespective of their status,” a government release said.

But even under the new ecosystem, only those applications which are clean would have the chance of getting processed in a day, sources said.

About 23 crore I-T returns have been processed, along with Rs 2.62 trillion worth of refunds, till September 2018 cumulatively. Of this, refunds worth Rs 1.83 trillion have been processed in 2018-19, said Goyal.

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Lenders considering resolution plan for Jet Airways: SBI

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Mumbai: State Bank of India (SBI) on Thursday said lenders are considering a resolution plan for Jet Airways to ensure long-term viability of the debt-laden company.

The SBI statement comes a day after the crisis-hit airline said discussions were “progressing well” with stakeholders on a comprehensive resolution plan that also contemplates equity infusion and consequent changes in its board of directors.

There are rising concerns over financial health of Jet Airways, whose shares have also taken a beating at stock exchanges.

 

“We would like to state that lenders are considering a restructuring plan under the RBI framework for resolution of stressed assets that would ensure a long-term viability of the company,” SBI said in a statement.

It said the restructuring plan for the cash-strapped airline would need approval from boards of lenders.

“Any such plan would be subject to approval of boards of the lenders and subject to adherence and clearance, if required, from the RBI and/or Sebi (takeover code, ICDR regulations.) and Ministry of Civil Aviation and in compliance with all regulatory prescriptions,” the statement said.

Shares of the airline are trading 4.24 per cent lower at Rs 259.50 apiece on BSE.

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NGT slams Volkswagen for not depositing Rs 100 crore as per its 2018 order

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New Delhi: The National Green Tribunal (NGT) slammed German auto major Volkswagen for not depositing Rs 100 crore in accordance with its November 16, 2018 order and directed it to submit the amount within 24 hours.

A bench headed by NGT chairperson Adarsh Kumar Goel took strong exception to the non-compliance of its order by the automobile giant and asked it to give an undertaking that it will submit the amount by 5 PM Friday.

“Why have you not complied with our order when there is no stay. We will not give you any further time,” the bench, also comprising Justice S P Wangdi, said while asking Volkswagen to submit an affidavit of compliance after deposit.

 

The tribunal deferred the matter for hearing after it was informed that the Supreme Court is also seized of the issue.

On November 16 last year, the tribunal had said that the use of ”cheat device” by Volkswagen in diesel cars in India leads to inference of environmental damage and had asked the German auto major to deposit an interim amount of Rs 100 crore with the Central Pollution Control Board (CPCB).

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