GST Council to decide on rate cut for automobiles next week, says FM Sitharaman
Amid the worst slowdown in the Indian automobile sector, Finance Minister Nirmala Sitharaman has assured that a decision on GST rate cut for vehicles will be taken soon. Facing its worst decline in sales since 1997-98, the automobile sector has been clamouring for measures to rejuvenate demand.
Sitharaman was addressing the media in Chennai on NDA government completing 100 days of its second term. The Finance Minister also assured that the government is aware of the need to respond to the troubles in the auto sector.
With respect to the auto manufacturers' demand to remove automobiles from the highest bracket under the Goods and Services Tax, FM Sitharaman said that the matter will be taken up by the GST Council in its meeting on September 20.
Sitharaman added that the decline in auto sales is not due to just higher tax rates, but because of change in people's mindset, who prefer cab hailing services like Ola and Uber and public transportation.
The automobile sector saw its worst sales performance in August as it declined 23.5 per cent, the worst in the past two decades. In August 2019, overall sales stood at 18,21,490 units against 23,82,436 units in the same month last year. In absolute volume terms, sales have also fallen on a month-on-month basis since May when 20,86,358 units were sold. Since December 2018, year-on-year monthly decline in sales has been unabated.
For the fiscal so far, passenger vehicle sales has declined by 23.54 percent at 11,09,930 units, commercial vehicles by 19 per cent at 317,061 units and two-wheelers at 15,14,196 units, 14.85 per cent less than last year.
Rupee vs dollar: Rupee logs biggest single-day fall in 2019, loses 97 paise amid weak domestic equities
Rupee logged its biggest fall in 2019 against the US currency on Tuesday amid weak economic data and negative stock market sentiment. The domestic currency opened lower by 55 paise at 71.95 per dollar versus Friday's close of 71.40. The Indian currency extended its fall in afternoon session declining 97 paise to 72.37 per dollar.The currency had hit its all-time low at 74.48 on October 11, 2018. The currency has fallen 3.54% since the beginning of this year.
Forex traders said the US tariffs on imports from China took effect on Sunday and were followed later by Beijing's retaliation. Following this, the domestic currency was under pressure. Weakness in the market led by announcement of mergers of public sector banks and lower than expected economic data also affected sentiment in currency market today.
On Friday, govt data said GDP growth slipped to 6-year low of 5 per cent as compared to 5.8 per cent in the previous quarter, weighed down by slump in manufacturing output, weak consumer demand and deceleration in private investment.
Expansion in manufacturing sector hit its slowest in 15 months in August as demand and output grew at their weakest pace in a year and cost pressures increased, a private sector survey showed on Monday.
The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, declined to 51.4 in August from July's 52.5, its weakest since May 2018. However, it has remained above the 50-mark separating growth from contraction for more than two years.
The rupee had appreciated by 38 paise to close at a two-week high of 71.42 against the US dollar on Friday led by a rally in domestic equities and renewed hopes of the US-China trade talks.
The forex market was closed on Monday on account of Ganesh Chaturthi. Foreign institutional investors (FIIs) remained net buyers in the capital market, putting in Rs 1,162.95 crore on Friday, provisional data with the exchanges showed.
The dollar index, which gauges the greenback's strength against a basket of six currencies, inched up 0.37 per cent to 99.28.
Meanwhile, Sensex and Nifty ended in the red post announcement of mergers for public sector banks by the Modi government and lower than expected economic data. While Sensex closed 769 points or 2.06 per cent lower at 36,562 , Nifty fell 225 points or 2.04 per cent to 10,797.90.
Raghuram Rajan issues warning alert for Modi govt on economy
Former RBI Governor Raghuram Rajan has said the economic slowdown in India is "very worrisome" and has called for a fresh look at the way GDP is being calculated.
"There are a variety of growth projections from the private sector analysts, many of which are perhaps significantly below government projections and I think certainly the slowdown in the economy is something that is very worrisome," Rajan told CNBC TV18. The Monetary Policy Committee recently lowered its growth forecast for FY20 to 6.9 per cent from 7 per cent in the June policy.
Rajan also drew attention to former chief economic advisor Arvind Subramanian's research paper published at Harvard University that claimed that India's GDP growth figure was overstated by about 2.5 percentage points per year in the post-2011 period.
In other words, the actual growth rate is likely to have been a very tepid 3.5-5.5 per cent against a reported average growth of 6.9 per cent between 2011 and 2016. "We need a fresh look from an independent group of experts at the way we compute GDP and make sure that we are not in a sense having GDP numbers that mislead and cause the wrong kinds of policy actions," Rajan said.
This is not the first time Rajan has expressed doubts about India's economic data after the government restructured the GDP methodology. He told India Today TV in March that India's tinkering with lead economic indicators and suppression of discomforting economic data is prompting global economists to plan an independent index for the country. "Some people are developing a Li Kequiang Index for India because they are no longer paying attention to the GDP numbers," he explained.
The Li Keqiang Index was created by The Economist and named after a former head of China's Liaoning province who allegedly said he did not trust government statistics and maintained his own index of broad industrial indicators that couldn't be easily fudged such as electricity consumption and railway volume.
In addition, Rajan believes that "a fresh set of reforms" are now needed to boost the economy and energise the private sector to invest. He added it was imperative to fix immediate problems such as those ailing the power sector and the non-bank financial sector post-haste and "not in the next six months" in order to propel India by the 2-3 per cent faster growth that it needs.
At a recent meeting with Finance Minister Nirmala Sitharaman, India Inc asked the government for a 'quick fix' stimulus package to kick-start the investment cycle. However, Rajan opines that sops and stimulus of any kind "are not going to be that useful in the longer-term, especially given the very tight fiscal situation" and warned that one-off programmes will not amount to a comprehensive reform agenda for the economy. "This is what we need today and I really hope we put our best minds to think about this because absent that my sense is that we are in for not so good times," he added.
Mukesh Ambani's RIL to form task force to invest in J&K, Ladakh after PM Modi's request
Reliance Industries Chairman Mukesh Ambani on Monday promised to invest in Jammu and Kashmir. Mukesh Ambani's Reliance Industries is one of the several businesses, including Amul and Lemon Tree, that have promised to make investments in the state after its bifurcation and revocation of special status by the Centre. Mukesh Ambani's statement comes days after Prime Minister Narendra Modi called on businesses to invest in J&K and Ladakh, especially in key sectors like tourism, agriculture, IT, healthcare among others.
In Reliance Industries' Annual General Meeting on Monday, Mukesh Ambani said RIL stood committed to supporting the people of Jammu & Kashmir and Ladakh in all their developmental needs. "You will see several announcements for the Jammu and Kashmir and Ladakh in the coming days," assured Mukesh Ambani. He added Reliance Industries would create a special task force for developmental activities in J&K and Ladakh.
Mukesh Ambani said RIL had built a unique portfolio of world-class and extremely valuable assets in the world's fastest-growing economy. "It is my passion and conviction that New India will lead and not follow the advanced nations of the world in adopting, even creating disruptive technologies that will decide the winners and losers of the Fourth Industrial Revolution," he added.
With the contentious Article 370 gone, the Centre is encouraging industrialists by openings the economy of J&K, which has huge potential in sectors including hospitality, horticulture and tourism. Recently, dairy major Amul India had expressed interest towards investing in the region. Helmet maker Steelbird also offered to set up a plant in Jammu and Kashmir. Hospitality player Lemon Tree also proposed two new properties with 35-40 beds each in Gulmarg and Sonmarg areas. Lemon Tree already operates three hotels with a capacity of 176 beds in the region. The biggest one with 70 rooms was opened in Katra in 2017. The company started two more hotels in Srinagar and Jammu in 2018. Presently, companies including Lupin, Sun Pharamceuticals, Cadila Pharmaceuticals, Coca Cola, Radisson, Dabur and Berger Paints have investments in Jammu and Kashmir.
SBI home loan interest rates cut by 15 bps across all tenors after RBI policy announcement
State Bank of India (SBI), the country's largest lender, on Wednesday slashed home loan rates after the Reserve Bank of India (RBI) cut its key repo rate for the fourth time this year. Repo rate is the interest rate at which the RBI lends money to banks.
SBI said it has cut its MCLR (marginal cost based lending rates) by 15 basis points (bps) across all tenors with effect from August 10, 2019, a move which is likely to provide some respite to home loan borrower. When the cost of borrowing goes down for banks, they are able to lower their respective MCLR, which directly impacts home loans.
The revised one-year MCLR stands at 8.25% per annum down from 8.40% earlier, SBI said in a statement. The two-years MCLR comes down to 8.35% per annum, from 8.50% annum, while rates for three-years has been cut to 8.45%.
The announcement came within a couple of hours after the RBI slashed key policy rates by 35 basis points to 5.45 per cent from 5.75 per cent on Wednesday with immediate effect. With the fourth cut in a row, the repo rate stands lowest level in the past nine years. After the rate cut, EMIs on home loans and other loans are likely to come down significantly.
Earlier in April, SBI had cut the lending rates by 5 basis points across all tenors after the RBI lowered the repo rate by 25 bps from 6.25 per cent to 6 per cent.
From July 1 this year, state-run lender introduced a repo rate-linked home loan product. This means interest rate on this new home loan product gets revised automatically whenever there is a change in repo rate.
Among others, private sector lender HDFC Bank has reportedly announced a 0.10 per cent cut in lending rates across all tenors, effective Wednesday.