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Political stability should awaken the animal spirits of the economy: CEA

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Mumbai: India expects economic growth to rebound this year from a five-year low, as political stability aids a pickup in demand and investments.

Real gross domestic product growth for the fiscal year started April 1 is projected at 7%, the Finance Ministry said in its annual Economic Survey report. The upside and downside risks to growth are evenly balanced, with monsoon rainfall seen tipping the scales, it said.

“The political stability in the country should push the animal spirits of the economy, while the higher capacity utilization and uptick in business expectations should increase investment activity,” said the Survey, authored by Chief Economic Adviser Krishnamurthy Subramanian.

 

The forecast marks an improvement from the 6.8% expansion last year, and is the same as the Reserve Bank of India’s reading, which in June lowered its projection by 20 basis points from 7.2%. A gloomy global outlook spawned by U.S.-China trade tensions also prompted the central bank to cut interest rates three times this year, with the focus now shifting to the government’s budget Friday for measures to support the economy.

The RBI’s easy monetary policy is expected to lower real lending rates, helping boost credit growth and revive investment in the coming months, according to the report on the state of the economy. Further, the narrowing in bad-loans ratio is seen helping boost the capital expenditure cycle.

Oil prices staying well below their 2018 peak is also a positive for consumption, which accounts for about 60% of the gross domestic product, it said.

Still, a rebound in consumption is tied to a recovery in farm sector growth, which in turn depends on rainfall, the survey said. The other downside risks include weaker exports growth and a spillover of the stress in shadow banking sector to this year.

The southwest monsoon, which waters more than half of India’s farmland, has been below average after a delayed started to the season. As much as 69% of the country got deficient rainfall during June 1-July 2 period, according to the weather office.

“Some regions are expected to receive less than normal rains,” the survey said, underlining the risks. “On balance, the prospects of the economy should improve.”


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India’s trade deficit narrows by 7.98% to $15.28 billion in June, exports falls by 9.71%

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New Delhi: India’s trade deficit for June 2019 narrowed by 7.98 percent to USD 15.28 billion as against the deficit of USD 16.60 billion in June 2018, government data showed.

The country’s exports registered a negative growth of 9.71 percent during June 2019 to USD 25.01 billion as compared to USD 27.70 billion in June 2018. Non-POL exports for June 2019 declined by 5.73 percent; non-POL and non-gems and jewelry exports declined by 4.86 percent.

India’s imports in June 2019 too fell 9.06 percent to USD 40.29 billion in June 2019 as compared to USD 44.30 billion in June 2018, data further showed.

 

The major commodities which contributed towards decline exports in June 2019 have been Petroleum products (-32.85 percent), Rice (-28.05 percent), Cotton yarn/Fabrics/made-ups (-19.73 percent), Gems and Jewellery (-10.67 percent), Readymade garments (-9.18 percent), Organic & inorganic chemicals (-8.17 percent), and Engineering goods (-2.65 percent), data showed.

Import of petroleum crude & products in June 2019 (USD 11.03billion) has recorded a negative growth of 13.33 percent as compared to June 2018 (USD 12.73billion). In this connection it is mentioned that the global Brent price ($/bbl) has decreased by 15.81 percent in June 2019 vis-à-vis June 2018 as per data available from World Bank, official data said.

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It will take 2-3 days for scheduling to use Pakistani airspace: AI

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New Delhi: Hours after the Pakistan Civil Aviation Authority ordered its airspace to be opened to all civilian traffic for flights between India and Pakistan, Air India official said that it will take 2 to 3 days for scheduling to use Pakistani airspace.

Indian airlines resumed flight operations over the Pakistan airspace, after the latter removed access restrictions, following Balakot airstrikes by the Indian Air Force in February. Air India was saddled with heavy financial losses following this.

The Ministry of Civil Aviation wrote on Twitter, “After cancellation of NOTAMS by Pakistan and India in the early hours of Tuesday, there are no restrictions on airspaces of both countries, flights have started using the closed air routes, bringing a significant relief for airlines”.

 

In March, Pakistan partially opened its airspace but did not allow Indian flight to fly over its airspace.

Since then, foreign carriers had been using Indian airspace have been forced to take costly detours because they cannot fly over Pakistan. The closure mainly affects flights from Europe to Southeast Asia.

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RBI slaps Rs 7 cr penalty on SBI for violating various norms

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Mumbai: The Reserve Bank of India said it has slapped a penalty of Rs 7 crore on the country’s largest bank SBI for non-compliance with norms related to NPA identification and fraud risk management, among others.

The penalty has been imposed on the bank for non-compliance of income recognition and asset classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and fraud risk management and classification and reporting of frauds.

Giving details of the case, it said the statutory inspection of SBI with reference to its financial position as on March 31, 2017, revealed, non-compliance with IRAC norms, sharing of information about customers with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds.

 

Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by the RBI.

“After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty,” the RBI said.

The penalty, RBI said, is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

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