Bharat Rakshak

We have to look at the tender. Maybe it will be a JV with an Indian partner.

IMF sends out warning on slowing growth. Lots of good data points on the slowdown.

https://economictimes.indiatimes.com/ne ... arebuttons

It is strange that govt has still not been able to figure out the GST regime judging from complaints on this forum.

The NBFC crisis is far from over. It seems govt has not been on the ball on the economy one year prior to elections. Otherwise early measures could have been taken.

https://economictimes.indiatimes.com/ma ... s?from=mdr

Biggest pain in taxes stuck in GST, because the next (before or after) in supply chain has not filed for GST soon enough. One option could be that government can stand up a bank only for this purpose that will extend the liquidity (as debt, with 0% or very less interest rate say for 90 days...the money that is paid by these companies as taxes (less their own value addition tax) have to be returned to them) to these companies, and as the payments from next in supply chain come in, the owed part goes down. Of course other details need to be worked out. It does increase the M supply, but in very controlled env, should not effect inflation a lot.

Key economic indicators still in red.

https://www.livemint.com/news/india/ind ... 54649.html

isubodh wrote:

nandakumar wrote: ... The working capital requirements have gone up by Rs roughly Rs 35 lakhs assuming a 90 day credit availed by customers on the incremental annual turnover of Rs 1.3 crore which were earlier exempt from excise duty levy. ...

Is there no factoring facility available ? for a cost of 2-3% Invoices should be discounted by some bank/NBFC.

Factoring service is not extensively used in India. Banks themselves offer a bill discounting facility which mimics a factoring service. Also it is a facility with recourse to the borrower if the customer doesn't pay on due date.

Banks’ NPAs decline for first time in seven years

Read more at:
https://timesofindia.indiatimes.com/bus ... 961638.cms

no thanks to RRR, who played the role of nero as this was piling up.

VKumar wrote:Nowadays customers not paying GST amount till they see the invoice on their computer.

Meaning Client will only pay GST to vendor (not the prinicipal amount which may be further delayed) after vendor has paid GST of their Tax Invoice to the Govt so that Client can take vendor financed GST input credit?

^^

Glad to see that the NPAs are getting lower. The credit bubble/large scale looting that started at 2002-2004 period is finally beginning to get smaller

For folks who have been wanting quantitative easing, fiscal loosening etc. : 50% recovery of 11.8 trillion rupees/150 billion $ back to the public sector banks will be a tremendous boost to the public sector banks and the economy

https://www.thehindubusinessline.com/op ... 331406.ece

We got into NPA crisis because of indiscriminate lending. Just as we are coming out of it, what is the point in creating another crisis? Looks like there are green shoots of recovery. So any fiscal loosening should be done accordingly. Slow and steady wins the race.

tandav wrote:

VKumar wrote:Nowadays customers not paying GST amount till they see the invoice on their computer.

Meaning Client will only pay GST to vendor (not the prinicipal amount which may be further delayed) after vendor has paid GST of their Tax Invoice to the Govt so that Client can take vendor financed GST input credit?

Yes, that is what I too heard. But the problem is a bit more nuanced than that. For some services, you have to depend on a local manpower contractor. Now he is also likely to be socially and politically connected. He also has a dismissive attitude towards paying taxes of any kind. He thinks regular bribing of party people, contributing to political activities in the neighbourhood is equivalent to paying taxes. As a SSI vendor doing contract manufacturing for bigger companies, he has to pay GST. It is not always possible to enforce similar treatment to his own suppliers.

nandakumar wrote:

tandav wrote: Meaning Client will only pay GST to vendor (not the prinicipal amount which may be further delayed) after vendor has paid GST of their Tax Invoice to the Govt so that Client can take vendor financed GST input credit?

Yes, that is what I too heard. But the problem is a bit more nuanced than that. For some services, you have to depend on a local manpower contractor. Now he is also likely to be socially and politically connected. He also has a dismissive attitude towards paying taxes of any kind. He thinks regular bribing of party people, contributing to political activities in the neighbourhood is equivalent to paying taxes. As a SSI vendor doing contract manufacturing for bigger companies, he has to pay GST. It is not always possible to enforce similar treatment to his own suppliers.

Exactly right... it is the in between player of the ecosystem: typically a well educated, technically competent vendor/ first time entrepreneur who get the shaft : They have to pay GST before getting paid by the larger client, they can't GST credit from their vendors since the vendors are too small and default on tax paying anyway.

Tandav
You would be happy to note that TN which is in the forefront of pioneering SSI ecosystem for decades, has officially represented to the GST Council (the apex decision making body of FMs) that all traders should get 90 day credit for their GST dues on payment of interest at 9% per annum and only delays beyond 90 days should attract the punitive rate 18%. This is part of the GST Council meeting records. What happens is that the official position of every State on all matters relating to GST is captured in the Finance Minister 's speech at the meeting. Since the Council consists of 22 State FMs, the speeches are not read out in full and a full fledged discussion taking place on each of these. The meeting would go on for days. It is expected that the secretariat of the GST Council at New Delhi would study these presentations and put it up to the GST Council for its final decision. The Secretariat consists of only excise department officials who are not very sensitive to concerns of SSI units. The CII and Assocham etc are not concerned. That is the tragedy.

Aadhaar enrollment touches the 125 crore mark.

Enrollment in the Aadhaar project has crossed the 125 crore mark, close to ten years after its launch. The unique identification authority of India (UIDAI) which administers the Aadhaar project has said in a statement "The achievement comes along with the rapidly increasing use of Aadhaar as the primary identity document by the Aadhaar holders."

Aadhaar-based authentication services have been used close to 37,000 crore times since inception and present UIDAI receives about 3 crore authentication requests every day, the statement added.

The 12 digit identity number which was launched from Tembhli, Nandurbar in Maharashtra in September 2009 has been linked with government welfare payments along with income tax returns and Permanent Account Number. It has also been reallowed to be used by banks and telecom companies as a means for customer identification through electronic means.

The statement added that residents are more inclined on keeping their details in Aadhaar updated. "UIDAI recorded close to 331 crore successful Aadhaar updates (biometric and demographic) till date. At present, UIDAI receives about 3-4 lakh Aadhaar updates request per day.

R Jaggi on land and labor reforms. Strongly disagree on both counts. Here is why.

Labor
1) India still has a window of 20 years where wage arbitrage can be used to carry out low to medium end manufacturing.
2) Why have a caste system in labor?
3) Why not have an uniform system that gives all labor rights, incentives based on performance instead of entitlements?

Land
Right now except in some urban pockets land prices are still low in India. Unless he wants to build in remote areas where no one is going to use either infra or industry imagine when India becomes more and more richer. Distortion in land rates is going to hit India hard if this distortion gains permanency.

https://swarajyamag.com/economy/land-an ... -in-growth

https://pib.gov.in/PressReleaseIframePa ... ID=1597870

Finance Minister launches eBक्रय for online auction of assets attached by banks

Steps announced for boosting digital transactions

Bankers assured of protection for prudent commercial decisions taken

Bank outreach to MSMEs and transmission of rate cuts continues
Posted On: 28 DEC 2019 2:34PM by PIB Delhi

Union Finance Minister Smt. Nirmala Sitharaman here today discussed banking issues with chiefs of Public Sector Banks (PSBs), chief executive of Indian Banks’ Association and representatives of leading private sector banks. Finance Secretary, Revenue Secretary, Economic Affairs Secretary, Electronics and Information Technology Secretary, CBI Director, RBI representative and the chief executive officer of NPCI were also present.

1. Steps for enhancing digital transactions

In order to strengthen the digital payment eco-system and move towards less-cash economy, Hon’ble FM in her budget speech of 2019-20 had, inter alia, announced that business establishments with annual turnover of more than Rs. 50 crore shall offer low cost digital modes of payment ( such as BHIM UPI, UPI QR Code, Aadhaar Pay, Debit Cards, NEFT, RTGS etc.) to their customers, and no charge or Merchant discount rates (MDR) shall be imposed on customers as well as merchants. To facilitate implementation of this announcement, it was decided as under:

· Department of Revenue (DoR) will notify RuPay and UPI as the prescribed mode of payment for undertaking digital transactions without any MDR.
· Accordingly, all companies with a turnover of Rs. 50 crore or more shall be mandated by DoR to provide the facility of payment through RuPay Debit card and UPI QR code to their customers.

· All banks will also start a campaign to popularise RuPay Debit card and UPI.

2. Banks restored to health for lending


Extensive reforms carried out by the Government have restored banks to health, with the gross NPAs of PSBs declining from Rs. 8.96 lakh crore in March 2018 to Rs. 7.27 lakh crore in September 2019, their provision coverage ratio rising to their highest level in seven years, and banks returning to profitability, with as many as 13 banks reporting profits in H1FY20.

With the Essar resolution decision, banks have recovered Rs. 38,896 crore, in addition to Rs. 4.53 lakh crore recovered in the last 4½ years.



PSBs have attached assets worth over Rs. 2.3 lakh crore over the last three financial years and to enable online auction by banks of attached assets transparently and cleanly for improved realisation of value, eBक्रय, a common e-auction platform was launched today by the Finance Minister. The platform is equipped with property search features and navigational links to all PSB e-auction sites, provides single-window access to information on properties up for e-auction as well as facility for comparison of similar properties, and also contains photographs and videos of uploaded properties. As on 27.12.2019, a total of 35,000 properties had been uploaded on the platform by PSBs.

To strengthen banks, in addition to the recent infusion of Rs. 60,314 crore, additional infusion of Rs. 8,855 crore (Rs 4360 crore to Indian Overseas Bank, Rs 2153 crore to Allahabad Bank, Rs 2142 crore to UCO Bank and Rs 200 crore to Andhra Bank) has been approved and would be released shortly.

Having improved asset quality and internal resource generation, PSBs are now fully poised to support prudential credit growth towards a $ 5 trillion economy by 2025.

3. Robust banks to lend without undue apprehensions

· Bankers were assured that prudent commercial decision-making would be protected.

· To allay any apprehensions in this regard and to take feedback, Director, CBI also attended the meeting. It was decided that—

(a) CBI would develop a mechanism as recently introduced for income tax notices, so that CBI notices carry a registration number to avoid any scope for unauthorised communication and consequent harassment.

(b) While pursuing criminal action against those responsible, the agency shall be sensitive to the distinction between genuine commercial failures and culpability. It was also noted that there is need for preserving the value of the business enterprise by treating it on a separate footing from culpability of individuals, if any.

(c) PSBs may report instances of fraud through e-filing of FIRs on a designated email address of CBI so as to avoid scope of any arbitrage due to information asymmetry.

(d) CBI would create a dedicated phone number on which any person could give information regarding any undue harassment by the investigative machinery.

· Banks were also advised to ensure rigor and adherence to objective standards in selection of forensic auditors and devising objective SOPs for carrying out of forensic audit. To this end, the Indian Banks’ Association was requested to—

(a) strengthen the forensic auditor empanelment process;

(b) put in place robust arrangements for assessing adherence to standards by forensic auditors; and

(c) tie up with CBI for training forensic auditors.

4. Credit outreach by banks
· PSBs have sanctioned over 11.68 lakh Repo-linked loans to retail borrowers for home/vehicle/education/personal loans and to micro and small enterprises, amounting to Rs. 1.32 lakh crore post Finance Minister’s announcements on 23.8.2019 on measures to boost the economy.

· All PSBs have introduced checkbox-based OTS and have sanctioned settlements under OTS in over 5.26 lakh accounts amounting to Rs. 16,716 crore, post Finance Minister’s announcements on 23.8.2019.

· In order to address the working capital needs of MSMEs on account of stress arising from delayed payments, PSBs are offering up to 25% enhancement in working capital limits for standard MSME accounts as a Standby Line of Credit and have launched a MSME Outreach Initiative for restructuring of stressed standard assets as needed on priority and in a timely manner, besides providing new term loans, payment solutions for delayed receivables, bill discounting and trade finance. A total of 5,38,440 MSME loan accounts have been restructured in terms of RBI’s circular dated 1.1.2019, out of which 1,65,104 accounts have been restructured since October, 2019.

5. Support to NBFCs and HFCs by PSBs

· On 11.12.2019, the Cabinet has approved the recently launched Partial Credit Guarantee Scheme (PCGS) that would now cover NBFCs/HFCs which may have slipped into SMA-0 (up to 30 days overdue) category during the one-year period prior to 1.8.2018, and asset pools rated BBB+ or higher. Under PCGS, Government has already approved issuance of guarantee for buy-outs of NBFC asset pools worth Rs. 4,294 crore from 10 NBFCs/HFCs covering a wide spectrum of entities.

· Post IL&FS default, aided significantly by Government support, assets of NBFCs have grown by 12.83% from Rs 28.31 lakh crore to Rs 31.94 lakh crore, and assets of the 211 larger NBFCs with 81% of market share have grown at an even higher rate of 19.69%. Bank exposure to NBFCs has grown at a much higher rate of 17.46% as compared to market financing.

· Similarly, 76 out of 101 HFCs with 82% of market share have shown a positive asset growth of 18% post IL&FS default from Rs 8.45 lakh crore to Rs 10 lakh crore. Exposure of banks and NHB to the 76 performing HFCs has grown by 38% post IL&FS default, as compared to 14% growth in market financing to these HFCs..

· Thus, the NBFC/HFC sector post IL&FS default, is now stabilizing and good NBFCs/HFCs are able to raise funds from market even at times at rates less than the pre-IL&FS rates. The market is, however, distinguishing between good and not-so-good entities which is reflected in the better entities being able to obtain higher financing from both banks and the market.

https://timesofindia.indiatimes.com/bus ... 040898.cms
This was not the making of NDA or Modi 1/2 is it.
If you look at the industrial 'Mahachors':
Anil A close to SJP/Mulayam/Singh
Naresh G close to NCP/Patel
RIP Coffee King SIL of SMK/Congress
Subhash Chandra DNA/Dainik Bhaskar probably Congi given Rajya sabha MP from Haryana
I mean the list is endless and all grew during UPA 1/2 and all had complete political backing
Should BJP media wing highlight this!!!

^^
And I forgot to add Undi TV head honcho to that illustrious list

Data point from FM's Presser:

Total Government (State + Center) Spending on Infra in last 5ys = 51L Cr ~ 715B
Total Planned Infra spending in next 5yrs on Infra = 105L Cr ~ 1.47T

Some more interesting data from the conference. Some articles should come out soon.

There was also reports today of Govt reducing the expenditure for the last quarter on revenue shortfall. I am wondering how the mega spending push is going to be funded.

GOI seems to have increase PPP content in the infra programs. I didn't catch exact details but substantial increase. There were couple of questions on this specific point. One of the Secy outlined various measures GOI took to ensure encouragement to PPP projects.

Given the NPA reduction and substantial capital flowing back to the banks, if economy recovers in next couple of quarters, we could easily see increasing lending to the infra projects under PPP model. That could cover to some extent, the reduction in GOI spending. Also, given the initial signals from the Fastag collection, its likely we will see substantial value increase in the toll collection. The demonetisation of toll collection might also increase, giving broader base for fund raising.

Now, its important to bring the sentiments and the GDP growth rate back to the level they were in last FY.

https://timesofindia.indiatimes.com/bus ... 045493.cms

NEW DELHI: Finance minister Nirmala Sitharaman on Tuesday unveiled Rs 102 lakh crore of infrastructure projects that will be implemented in the next five years as part of the government's spending push in the infrastructure sector.

There are far too many stakeholders in public projects especially in the infrastructure sector. Besides the Central Government , the private promoter and the executor contractor there is the State Government, environmental authority, land owners whose lands might be taken over, NGOs, judiciary and lethargic administrative machinery you have a heady mix that is guaranteed to not complete the project in time. I am not too sanguine about these promises of massive investments announced by the Minister.

http://164.100.117.97/WriteReadData/use ... ol%201.pdf

This is detail report of Task force.

twitter

What to say in an interview or panel discussion on macroeconomic policy to address India's slowdown.

India needs very serious reforms: IMF's Gita Gopinath | Deccan Herald https://www.deccanherald.com/business/i ... 89662.html …






C,I,X on the left hand side before slowdown.

Credit, investment, x is exports

Something positive: https://www.livemint.com/news/india/gst ... 68759.html

India needs very serious reforms: IMF's Gita Gopinath

This is typical theory economist who haven't sold one tomato in their life talk.

A closed and centrally managed economy like China is 15 trillion is growing at 6%... They don't even have google, nor they plan reforms of any kind.

Reality is we don't produce things (service or goods) what the world wants to buy. Period. We are not even trying.

Post Nirmala Sitharaman’s decision of no MDR on RuPay & UPI, Payments Council warns it will kill industry

No MDR charges on transactions through RuPay cards and UPI payments will kill the digital payments industry, the Payments Council of India stated on Monday while criticising the government’s move. After a meeting with bankers last Saturday, Finance Minister Nirmala Sitharaman had asked them not to charge MDR on payments via RuPay, UPI from January 1 with a view to driving digital payments. The move will apply to all companies with a turnover of Rs 50 crore or more. Merchant Discount Rate is the fee paid by a merchant to a bank for accepting digital payments. The move is part of the budget announcement in July.

Describing the decision as surprising and will stop investment and innovation, Vishwas Patel, the Payments Council of India Chairman, said, “the zero MDR on RuPay and UPI will kill the industry and make the business model unviable. It’s like nationalisation of the payments industry. If the government wants to drive digitization, then it should bear the cost.” Stating that there will be significant negative impact on the payment ecosystem — innovation, job losses and a slowdown in the expansion of the digital payments, he said the move will lead to end of customer incentive spends by participants.

The PCI, the representative body of merchant acquirers and aggregators, also warned that elimination of MDR will dry out revenue, creating a catastrophic situation for the industry. Additionally, if there is zero revenue to be made from the over 500 million plus active RuPay debit cards, service providers will start withdrawing PoS terminals to cut their losses. “If government wants to push digital payments, then making MDR zero is not the solution, but a lower, controlled MDR along with added tax benefits to merchants will go a long way,” Patel suggested.

Terming the decision with the right intention but a wrong policy, he said the decision is going to impact the whole digital payment industry as well as investments. He also recalled expert panel recommendations by the RBI-appointed Nandan Nilekani panel and the Watal committee of Niti Ayog calling for market-driven pricing.

Digital payments had reached 13 per cent during the demonetisation months but has since declined to around 11 per cent now, indicating rising cash in circulation, he said. “It is also irrational to pass on the benefits to large retail merchants for transactions above Rs 2,000,” he said, adding the move will deflate the hard work done by the acquiring industry and that if MDR is not to be charged to merchants, it should be borne by the government.

Didn't the govt bear the cost of zero MDR for debit card usage sometime back?

In my opinion NS is not thinking through on these issues. NEFT and MDR charges should not have been withdrawn. These are sources of legitimate income for financial institutions. One can bring it down to a minimum if govt thinks it is too high but eliminating it does not make sense to me. The cost of extremely low mobile phone tariffs is visible to everyone with the companies nearly tanking. Financial transactions are a fundamental function of these companies for which there should be a charge.

Supratik wrote:In my opinion NS is not thinking through on these issues. NEFT and MDR charges should not have been withdrawn. These are sources of legitimate income for financial institutions. One can bring it down to a minimum if govt thinks it is too high but eliminating it does not make sense to me. The cost of extremely low mobile phone tariffs is visible to everyone with the companies nearly tanking. Financial transactions are a fundamental function of these companies for which there should be a charge.

NEFT charges are like charging for taking the money out of bank to put in another bank. This cannot be justified. The cheques used to be free transfer, replacing it with a electronic/digital channel which is highly automated, where is the saving for the customer ?
MDR in case of Debit cards is similar case. For credit cards there is already a cost of credit so why charge anything else ?

Financial institutions are hiding the actual cost of business under small charges for the customer like transfer, sms. There is already a QAB/MAB in practice and then they can always change the interest offered on accounts. It not a simple for customer to understand all this and need simplification.

In my opinion every service has a cost and must have a charge even it is a very tiny amount including cheque books.

And once a service stops generating revenue it weakens the justification for maintaining quality and more importantly, security.

NEFT charges are like charging for taking the money out of bank to put in another bank. This cannot be justified. The cheques used to be free transfer, replacing it with a electronic/digital channel which is highly automated, where is the saving for the customer ?

A chequebook, which has limited availability, is not too convenient for e-payment which requires infra of its own. One can say chequebook is also automated once all personnel and infrastructure is accounted for.

GST Collections

A question for members who know about finance and banking.

When a large or in fact any business approaches a bank for finance/loans, what checks are carried out?
Is it a matter of the business owner using his contacts, social, family, community, business or political?

I worked for a bank in the city of London, not in finance but in IT, I got speaking to one of their Corporate Finance people and what he said to me was that if the bank was approached for corporate finance, then they would basically investigate the business and all aspects of it.
Accountants would pore over the accounts/books.
Lawyers would go through legal back ground checks.
The owners/senior management would be investigated, including their personal details, work histories, CV's, finance.
Private investigators would also be used sometimes.
Business histories, past and current decisions would be probed.
Business plans investigated.
All of the above would be investigated forensically.

How is it possible for some businesses/companies to borrow huge sums of money in India and then just siphon off the money and not pay it back?
Does this happen just to State banks or private as well?

If it happens just in state banks, surely it would be better to leave it to private players who would have the financial incentive to be more prudent?

Is lending a political decision?

Haresh wrote:A question for members who know about finance and banking.

Is lending a political decision?

Each bank differ in assessing the risk with some being aggressive and some conservative. Assessment has a significant degree of subjectivity that can be used for approvals. At the extreme ends documents can be falsified as well (false invoices, fake contracts etc.).

for most part the banks have been duped by existing customers who have good credit standing for many years and have paid back their previous loans or installments on time. Higher credit was obtained using existing relationships.

vijayk wrote:

GST Collections

Maharashtra is really the Big Daddy. The difference between it and the other states is huge. Even on a big base, GST collections growth rate is impressive.
For the kind of contribution Tamil Nadu makes, it made lot of unnecessary noise against implementation of GST claiming it will be a loser under the GST regime.

December manufacturing PMI at 52.7.