RBI Policy: Why MPC changed monetary policy stance to neutral

 "The Committee remains committed to bringing headline inflation closer to 4.0 percent on a durable basis and in a calibrated manner. This requires further significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky," the central bank said in a statement. In the sixth bi-monthly monetary policy committee (MPC) meeting for FY17, the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.25 percent and changed its outlook from accommodative to a neutral. "The Committee remains committed to bringing headline inflation closer to 4.0 percent on a durable basis and in a calibrated manner. This requires further significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky," the central bank said in a statement.

 "The committee decided to change the stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetisation on inflation and the output gap play out," it added. RBI said that inflation is edging up on the back of rising energy prices and a mild firming up of demand. "Global trade remains subdued due to an increasing tendency towards protectionist policies and heightened political tensions. Furthermore, financial conditions are likely to tighten as central banks in advanced economies (AEs) normalise exceptional accommodation in monetary policy," the release said. Listing the intent behind the outlook shift from accommodative to neutral, RBI governor Urijit Patel said that the main reason for this shift is because the committee wanted to emphasise that in a calibrated manner and on a more durable basis move closer to the 4 percent inflation mark. Secondly, the non-food, non-fuel part of the CPI index has been stubborn at 4.8-4.9 percent since September, 2016 and therefore due to such kinds of risks and various other uncertainties the committee felt it need all the flexibility that it could muster, he added.

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Budget 2017 to bring positive structure to economy

Anil Sardana Anil Sardana, MD & CEO, Tata Power is of the view that the efforts that the government has undertaken to bring a positive structure into the economy by moving towards a policy based administration with an increased focus on digitisation. Anil Sardana (more) MD, Tata Power | Anil Sardana, MD & CEO, Tata Power "We commend the efforts that the government has undertaken to bring a positive structure into the economy by moving towards a policy based administration with an increased focus on digitisation. The government’s commitment to rural electrification and the announcement of an additional 20,000 MW of solar target is a welcome step that gives a much needed boost to the renewable sector. However, we believe that for renewable sector to achieve its potential strengthening the Renewable Purchase Obligations (RPO) mechanism is essential and should be part of government’s larger vision for renewable energy

"The move towards improving electricity access to rural India will be instrumental in contributing to the social and economic development of the country. Tata Power will also continue to amplify government’s initiatives for rural development, as we partner with surrounding communities. The increased budget for the Deen Dayal Gram Jyoti Yojana will strengthen and uphold the ongoing work of feeder separation and sub-transmission & distribution infrastructure. This is a positive step towards augmenting the reliability and quality of supply distribution network which is affected due to poor financial health of discoms." "We are hopeful that our long pending demand that the electricity sector will be included in the GST regime will soon set into a roll-out stage." "Further, the reduction of individual taxation rates and provision to increase taxation net alongside clarity in taxation processes are also positive moves and we applaud the government’s efforts in initiating these reforms. We are also in support of this government’s reforms directed towards curbing corruption and bringing about a transparent system.

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Only 54% of land title documents digitised so far in Maharashtra 

Only 54% of the total 2.5 crore 7/12 receipts (a land title document) in Maharashtra have been digitised so far, a state government said. Maharashtra’s revenue minister Chandrakant Patil, in December 2016, had announced R Only 54% of the total 2.5 crore 7/12 receipts (a land title document) in Maharashtra have been digitised so far, a state government said. Maharashtra’s revenue minister Chandrakant Patil, in December 2016, had announced that digitisation of all 7/12 receipts will be completed by March 31, 2017. However, going by the current pace, it is highly unlikely that the state will be able to do so. See also: Maharashtra to have digitally signed 7/12 receipts from March 2017 “There have been a number of challenges, including poor internet connectivity, lack of skilled manpower and non-availability of infrastructure, to carry out the drive.

 There have been efforts to push the digitisation but other factors are affecting the progress of the project,” said an official, on the condition of anonymity. The 7/12 receipt is a crucial piece of document for the establishment of ownership of a land. The receipt is extensively used by farmers, for loan agreements, crop survey and availing government facilities. Till some years ago, hand-written 7/12 receipts were prepared by the village-level revenue officers (Talathi). Only Talathis are entrusted with the powers to make changes in these receipts and this resulted in several instances, wherein officers misused their authority. To avoid this, the state government had come up with an idea of digitisation of entire revenue documents. The aim is also to boost transparency and avoid any tampering with documents. The state government has made several provisions, including setting up optical fibre networks, providing high-speed internet connection and asking Talathis to use laptops instead of pen and paper, for issuing 7/12 receipts to needy people. We may miss the deadline but we will achieve it for sure, the official assured

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Budget 2017: Government has done a bare minimum for the IT sector 

The intention of the government seems clear to slowly and steadily develop an entire back end eco system in India for manufacture of mobile phones. Mahesh Jaising (more) Partner, BMR & Associates LLP | Mahesh Jaising Expectations are always on a high during Budgets with every person expecting a small piece of the incentives proposed by the Finance Minister. The run-up to Budget 2017 in terms of expectation for the IT sector was no less. While the IT industry did not expect big bang changes on the indirect tax front account of the imminent migration to GST, the IT sector was definitely expecting a few proposals especially on the customs front and extension of the Governments ‘Make in India’ initiative. The government has been very committed towards this initiative and has been rigorously pursuing this initiative.

 The recent initiative of differential duty benefit has given a facelift to the manufacturing sector in India, especially for domestic manufacture of mobile phones, tablet and CPE equipment and attracted world class established manufacturers globally to set up manufacturing facilities throughout the country. In addition to providing a facelift to the manufacturing sector, the initiative has resulted in generating employment, manufacturing ecosystem, capex expenditure and improving India’s forex reserves. As a next step to increase the level of value addition undertaken in India, the government has introduced special additional duty (SAD) at the rate of 2 percent on populated printed circuit boards used for manufacture of mobile phones. The intention of the government seems clear to slowly and steadily develop an entire back end eco system in India for manufacture of mobile phones. Given the success enjoyed for manufacture of mobile phones and in the backdrop of the government’s Digital India program, it was the ask of the IT industry that the success should not be limited and should be extended at least to IT products such as laptops, notebooks and desktops. These products have become necessities for day to day functioning of life in the present digital era. With the importance of these products showing an increasing trend, most of India’s demand is catered by importing these goods

However, despite advocacy efforts made by the industry, the said ask did not come through. Nonetheless, the government provided nil customs duty incentive to goods such as Micro ATMs as per standards version 1.5.1, Fingerprint reader / scanner, Iris scanner and Miniaturised POS card reader for mPOS (other than Mobile phone or Tablet Computer). Further, parts of the said goods can be imported without customs duty for manufacture in India. While the initiative is welcome, these exemption may not per se aid in boosting the domestic manufacturing industry as the import of finished goods is exempt from customs duty as well. Another relief for the industry would be repealing the Research and Development Cess Act, 1986 (32 of 1986) (‘R&D cess’) is proposed to be repealed. Levy of R&D cess, levied at 5% on payments for import of technology, was not available as credit and hence was a cost. This amendment should aid the domestic manufacturers. The government in the budget has done a bare minimum for the IT sector. With imminent implementation of Goods and Services Act in due course of time in India, the manner in which ‘Make in India’ scheme and other incentives would be grandfathered by the government should be interesting space to watch out for

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Union Budget 2017-18: Big infrastructure push a major takeaway, says 

Arun Lakhani A big infrastructure push along with a substantial hike in provisions for the National Highways in the Union Budget for 2017-18 is a major takeaway and I congratulate the Finance Minister for the growth oriented approach. Arun Lakhani (more) Chairman and Managing Director, Vishvaraj Infrastructure Ltd | Arun Lakhani, Chairman and Managing Director, Vishvaraj Infrastructure Ltd "A big infrastructure push along with a substantial hike in provisions for the National Highways in the Union Budget for 2017-18 is a major takeaway and I congratulate the Finance Minister for the growth oriented approach. A 25 percent higher capital expenditure is sure to give the economy a big growth momentum. 

Priority to doubling of farm income and rural development makes it a balanced and inclusive Budget. The focus on rural sector, large allocation of Rs 3.96 lakh crore for infrastructure development and social spending are welcome moves. New dispute resolution mechanism for quick dispute settlements and abolishing FIPB will improve the ease of investing in India along with the push on digital that will bring in efficiency and eradicate corruption. Addressing arsenic and fluoride menace in 28,000 villages gives the Budget a human touch while reducing corporate tax rate by 25 percent for MSME and the move to curb cash donations for political funding are very good move

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