Mumbai: Confederation of Indian Industry president Shobana Kamineni urged the Reserve Bank to reintroduce the letters of understanding (LoUs) as an instrument of trade credit to businesses facing liquidity crunch. During her meeting with RBI Governor Urjit Patel here, she also made a case for maintaining status quo in the key policy rate (repo rate).
Following the scam in PNB, allegedly committed by jewellery designer Nirav Modi and associates through fraudulent LoUs, the RBI had stopped banks from issuing the instrument for trade credit for imports into India.
“The decision of the RBI to ban LoUs is impacting genuine importers by squeezing their liquidity, raising their borrowing cost and in turn putting pressure on the rupee. The traders who have been conducting business through these instruments will now have to necessarily shift their transactions to letters of credit and bank guarantees,” a CII release said quoting her.
She said that due to stopping LoUs, the cost of credit may go up, especially for the small and medium enterprises. The small players, she added, are already under pressure owing to slow GST refund and therefore, stopping of LoUs is like a double whammy.
“The reintroduction of LoUs and Letters of Comfort would help manufacturers in undertaking cost-effective production for both the domestic and export markets,” said the CII head.
Kamineni said the central bank should continue to provide the requisite policy support which would enable industry to raise capital at affordable cost and support the turnaround in the economy.
“There are enough indications that the green shoots of recovery are gathering traction in the economy and a policy action by the RBI which would refurbish business sentiment, support domestic demand and trigger the turn of the investment cycle is very much required,” she said.
The CII chief was of the view that the RBI should continue to maintain a status quo on the policy rate as indicators of inflation have started coming down. She said that with CPI inflation hovering at around 4.5 per cent, there is scope for the cost of credit to moderate.
Under the circumstances, a status quo in rates would address the upside risks to inflation while meeting the collective aspirations of growth.
The six-member Monetary Policy Committee (MPC) headed by Patel would meet on April 4 and 5 here to decide the first bi-monthly monetary policy review.
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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