Current Affair 18th July
Govt to pump Rs 113 bn into 5 PSBs to meet regulatory capital requirements
- The government has decided to infuse Rs 113 billion into five public sector banks, including Punjab National Bank, to help them meet regulatory capital requirements
- The capital infusion will be a part of the Rs 2.11-trillion recapitalisation plan for public sector banks announced by the government last year. It is a result of the banks’ inability to fund the interest payment to bond holders of Additional Tier 1 (AT-1) bonds
- The government had announced a Rs 2.11-trillion capital infusion programme in October last year. According to the plan, public sector banks were to get Rs 1.35 trillion through re-capitalisation bonds, and the balance Rs 580 billion through fund raising from the market.
State Budgets for 2018-19 show a healthy recovery on fiscal deficit front
- The combined size of the Budgets presented by 29 states of India is now at least 37 per cent more than the Union Budget. Compared to the Union Budget size of Rs 24.42 trillion for 2018-19, the states’ budget size for the current year is estimated at about Rs 33.59 trillion.
Just seven years ago, in 2011-12, the Union Budget size was bigger than the state Budgets. But since then, the combined size of the state Budgets has been growing rapidly. Last year it was 36 per cent more than the Union Budget and in 2014-15
GST Council likely to cut rates on handlooms, sanitary napkins on Saturday
- The Goods and Services Tax Council is likely to reduce the rates on a handful of products at its next meeting this Saturday. That on sanitary napkins is likely to be cut from the present 12 per cent to five per cent. Lower rates are also possible on handicrafts, handlooms and e-books, among others.
- “The proposal before the Council will be to reduce the rate to five per cent for sanitary napkins; reducing it to nil will deprive domestic manufacturers from input tax credit. That will put them at a disadvantage as against import,” said a government official. Rate reduction for handlooms was discussed in the past few meetings as well but the Council could not agree on a definition acceptable to all states.
- As for handicrafts, it could be items priced up to a certain limit that might see a rate cut, such as Rs 500 or Rs 1,000. The Council might also take up rate reduction on e-books, taxed at 18 per cent as against a nil rate for normal books.
Japan, European Union sign free trade deal to defy Trump protectionism
- Japan and the European Union signed a wide-ranging free trade deal on Tuesday that both sides hope will act as a counterweight to the protectionist forces unleashed by US President Donald Trump.
- The ambitious trade pact, which creates the world’s largest open economic area, comes amid fears that a trade war between the United States and China will diminish the role of free trade in the global economic order.
- Japan and the EU account for about a third of global GDP and their trade relationship has room to grow, according to EU officials, who expect the deal to boost the EU economy by 0.8 per cent and Japan’s by 0.3 per cent over the long term.
- The United States this month imposed 25 per cent tariffs on $34 billion of Chinese goods to lower the US trade deficit, and China quickly retaliated with an increase in tariffs on US goods.
India’s growth remains quite robust into the future, says IMF official
- India’s growth remains “quite robust” into the future, the IMF has said despite slightly downgrading the country’s growth projection for 2018-19 due to high oil prices and a tight monetary policy regime.
- The International Monetary Fund (IMF) on Monday forecast a growth rate of 7.3 per cent in 2018 and 7.5 per cent in 2019 for India, which was down by 0.1 per cent and 0.3 per cent, respectively, than its April projections.