ECONOMY

Monthly Archives: JANUARY 2017


Supreme Court dismisses petition to postpone Union budget due to state elections
23.01.17 - TEAM PT
Supreme Court dismisses petition to postpone Union budget due to state elections



The Supreme Court on Monday rejected a petition to delay the annual Union Budget, which Finance Minister Arun Jaitley is scheduled to deliver on February 1, dismissing concerns about potential giveaways ahead of critical state polls.

A bench headed by Chief Justice J S Khehar refused to admit the plea saying "there was not even a single concrete example that the presentation of Union budget would influence the minds of electorate in state elections”.

The bench, also comprising Justices N V Ramana and D Y Chandrachud, did not grant opportunity to lawyer M L Sharma, who had filed the PIL in personal capacity, to come back to it if the Centre violated the model code of conduct in its budget, to be presented on February one.

The PIL, filed by advocate M L Sharma, stated that the Centre be directed to present the Union Budget in the financial year 2017-18 which would commence from April 1, instead of the proposed date of February 1.

It also demanded the central government to be restrained from declaring "any relief, programme, financial budget until the states' elections are over", as they would violate the Model Code of Conduct.

Referring to constitutional provisions, the court said there are clear divisions of subjects, Union, State and concurrent, in the Constitution and the presentation of Union budget cannot be dependent on state polls "which keep happening.”

It was not impressed with the arguments that the Centre may announce sops for the voters of the states going for polls in the budget, saying "Your argument is absurd. This way you will say the party in power at Centre should not contest state polls”.

The bench did not agree with the submission that in the past, Centre had postponed presentation of budget due to assembly polls.

Instead of the usual February 28, the 2017-18 Budget is scheduled to be presented by Finance Minister Arun Jaitley on February 1, only a few days before Assembly elections kick off in Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur from February 4 and go on till March 8.




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RBI's image dented beyond repair post demonetisation, bank staff write to Chief Urjit Patel
14.01.17 - TEAM PT
RBI's image dented beyond repair post demonetisation, bank staff write to Chief Urjit Patel



Employees of the Reserve Bank have taken strong exception to the recent measures involving the demonetisation of Rs 500 and Rs 1,000 notes, stating that the government "is impinging on the RBI’s autonomy and its statutory as well as operational jurisdiction”.
 
The employee unions of the Reserve Bank of India (RBI) on Friday expressed their deep concern over alleged interference by the central government in the affairs of the apex bank.

The employees gave vent to their resentment over the alleged interference through a letter addressed to RBI Governor Urjit Patel.
 
In a letter, they said autonomy and image of RBI has been "dented beyond repair" due to mismanagement and termed appointment of a senior Finance Ministry official as a "blatant encroachment" of its exclusive turf of currency management.

"An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained," the letter said.
 
"We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated,” the letter added.

Various employee unions of the central bank have objected to the government "impinging on RBI autonomy” and have written to Patel to take action against the "unwarranted interference”.
 
The Forum’s letter follows reports that the finance ministry had sent a joint secretary to co-ordinate RBI’s cash operations. "If true this is most unfortunate and we take strong exception to this measure,” the Forum said. The Forum represents three RBI unions coordinating the officers and other employees.

"It’s painful to note that the RBI is being criticised by many quarters, for its "operational mismanagement” by the press and many important personalities. Its autonomy and image have been dented beyond repair. Such critics include even former RBI Governors,” the Forum said in the letter.
 
"Having put the RBI in a quandary, the finance ministry has now placed their officials, as reported, on the RBI set-up to "co-ordinate” allegedly,” it said. "Apart from showing the RBI operations and its gigantic performance in poor light, the government now blatantly encroaches on its jurisdiction, which, we state strongly, we cannot accept.”

The letter says: "We want to state very categorically that the RBI is fully capable to co-ordinate the central bank’s currency chest operations which the RBI has been performing over decades, and we do not need "any assistance” from anywhere.” "We may assume that the RBI did not ask for deployment of a joint secretary of the finance ministry in its functions, rather it’s the finance ministry which has imposed itself on the RBI, which is absolutely unacceptable and deplorable,” it said.
 
The RBI has been discharging the role of currency management for over eight decades since 1935, it said, adding the central bank does not need "any assistance" and the interference from FinMin is "absolutely unacceptable and deplorable".

The letter comes days after concerns about RBI's functioning being raised by at least three former Governors -- Manmohan Singh (former PM), Y V Reddy and Bimal Jalan. Former Deputy Governors, including Usha Thorat and K C Chakrabarty, have also voiced their concerns.

The letter said the RBI staff has carried out its job excellently following the move to ban 87 per cent of the outstanding currency by the Government.




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GDP Growth To Fall To 3-Year Low Of 7.1%, says govt; demonetisation impact yet to be factored in
06.01.17 - TEAM PT
GDP Growth To Fall To 3-Year Low Of 7.1%, says govt; demonetisation impact yet to be factored in



Country’s GDP growth is estimated to slow down to 7.1 per cent in current fiscal, from 7.6 per cent in 2015-16, mainly due to slump in manufacturing, mining and construction sectors, the government data showed today without factoring in ‘volatile’ post-demonetisation figures.
 
The Central Statistics Office (CSO) estimate is based on data available till October, Chief Statistician TCA Anant said. This means the impact of demonetisation announced in November is yet to be factored in.

"It was felt in view of the policy of denotification of the currency notes, there is a high degree of volatility in theses figures and conscious decision was taken not make projection using the November figure," Anant said.
 
If the economy grows at 7.1 per cent as predicted, it will be the slowest pace of expansion in three years. In 2015-16, the economy had expanded at 7.6 per cent and at 7.2 per cent in 2014-15.
 
The advance estimates of GDP growth are typically released by the Statistics Office in February. But this year, they have been released earlier as the government plans to bring forward the presentation of the Union Budget to February 1. 

So far this year, the Indian economy expanded by 7.1 per cent and 7.3 per cent in the first and second quarters of 2016-17. But analysts say that the GDP growth numbers in the next two quarters are likely to be hit due the cash crunch following the notes ban.
 
The impact of demonetisation is still playing out and at this juncture it is difficult to estimate the extent to which notes ban will hurt economic growth this year, analysts say. Some analysts even see the impact stretching to the next financial year, starting April 1.
 
Analysts say that after the GDP growth rate could drop sharply if demonetisation is taken into account. "Take demonetisation into account, the rate will substantially drop," said Aneesh Srivastava, chief investment officer of IDBI Federal Life Insurance.




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