Viral Acharya on Urjit Patel
- Urjit Patel quit prematurely as Reserve Bank of India governor because of attempts to undermine the institution’s autonomy.
- The government wanted the central bank to transfer excess capital as dividend to the treasury, dilute Prompt Corrective Action (PCA) norms, go slow on defaulters and sought an easy policy that would have helped it borrow more, Acharya alludes.
- It invoked the never-used Section 7 of the RBI Act to direct the regulator on policy matters.
- Like Patel, former RBI deputy governor Acharya also quit before his term was over in 2019.
- Acharya’s book is a compendium of his speeches, research and comments as member of the Monetary Policy Committee — mostly concerned with central banking.
Chinese Apps ban
- 275 Chinese apps user GoI’s radar.
- GoI will examine for any violation of national security and user privacy, signalling heightened scrutiny and the possibility of more Chinese internet companies being banned in the country.
- The list, includes gaming app PubG backed by China’s most valuable internet major Tencent, Zili by phonemaker Xiaomi, AliExpress by ecommerce giant Alibaba as well as apps like Resso and ULike from TikTok-owner ByteDance.
- Reviews aimed at identifying more Chinese apps and their funding is underway.
- Chinese Internet companies have about 300 million unique users in India, indicating that nearly two-thirds of smartphone users in the country have downloaded a Chinese app, according to industry estimates.
- The government is looking to formalise a process for constant scrutiny of the apps operating in India.
- Asia’s fifth-largest economy is now the battleground for Chinese and American internet majors that are vying to dominate one of the world’s largest and most open internet markets, with an estimated base of 450 million smartphone users.
- India is eyeing a major reset of its free trade agreements.
- India would like to exit those FTAs that have brought few tangible benefits to the country and have instead hurt domestic industry.
- There is a view that if any trade agreement has not worked out as expected, we should also look at exiting such a deal.
- Most trading arrangements have a clause for a review or exit.
- There is renewed focus on trade deals with the US, the European Union and the UK, which are key markets for Indian exporters and are keen to diversify their sourcing.
- India could seek a review of some trading agreements including renegotiating tariffs on some items and a tightening of provisions governing country-of-origin certification.
- The government has set up four working groups to assess the trade agreements holistically and frame a fresh strategy for them.
- These inter-ministerial groups that include the finance, commerce & industry and external affairs ministries will chalk out a comprehensive plan.
- There has been a growing view among policymakers that FTAs signed by India have not brought the expected tangible benefits and on the contrary, have hurt the country’s manufacturing sector due to liberal rules of origin.
India-US ‘limited’ deal
- India and the US have inched closer towards hammering out a “limited” deal that could cover annual trade of over $13 billion, or roughly 15% of bilateral shipment.
- It also includes a complete restoration of duty benefits for New Delhi under the so-called Generalised System of Preferences (GSP).
- If an agreement is reached quickly on widening the coverage, the initial deal could take the shape of a preferential trade agreement, amounting to a much higher value of annual trade.
- India may consider opening up its dairy and poultry sectors partially if it gets a good deal from the US in textiles and garment and pharmaceuticals.
- In garments, for instance, the US import duties (for India) currently range between 16.5% and 32%.
- As part of the limited deal, India will likely reduce tariffs on high-end bikes like Harley Davidson, pledge greater market access in farm products, including cherry, and sweeten its initial offer on easing price caps in medical equipment.
- If the US agrees to roll back its extra tariff of 25% on Indian steel and 10% on aluminium, New Delhi will lift retaliatory steps and scrap punitive duties on 29 American goods, including farm items like almond, apple and walnut.
Revamp India Post
- Loss-making India Post, having a size and workforce hugely disproportionate to its shrinking role, may reinvent itself by becoming a full-fledged bank.
- The 14,000 strong branch network of 45 regional rural banks (RRBs) will be brought under the fold of India Post, which itself runs 1.56 lakh post offices in the country.
- The Centre will wield control over the proposed bank via a holding company, of which the RRBs, where the Centre already holds 50%, will become subsidiaries.
- The existing India Post Payments Bank (IPPB) will also be made a subsidiary of the holding company.
- The other shareholders in the RRBs, namely public sector banks (35%) and the state governments (15%), will have the option to retain the stakes or monetise the same by selling these to the Centre.
- Currently, IPPB, as a payments bank, can’t accept deposits above Rs 1 lakh per customer; also, it can’t lend.
- The proposal to make India Post a bank goes with the government’s plan to consolidate PSBs and bring down their number eventually to four or even less.
- At one point, it may so occur that only the State Bank of India and the proposed India Post Bank will remain in the public sector as two large banks and also be vehicles for assorted government transfers to people.