Daily Financial News Analysis – 28th Oct’20 – Free PDF Download

FinMin on Indian Economy

  • Finance Minister Nirmala Sitharaman – Indian economy may contract or stagnate this fiscal but it will bounce back to be among the fastest growing in the world next year.
  • Demand revival and the government’s focus on infrastructure, agriculture and related sectors, along with support to sovereign funds and pension funds will drive economic growth.
  • The highest level seen in manufacturing PMI since 2012 signalled revival.
  • Indicators show that the primary sector, related sectors or agriculture and rural India are all doing very well.
  • Sitharaman said demand for durable goods, agricultural equipment, tractors, vehicles are all going up in India.
  • Infrastructure spending is the government’s top priority, she said. The sector is attracting domestic and foreign funds, she added.
  • The government is also focusing on creating infrastructure to support export of surplus grain and vegetables, she said.
  • Sitharaman said India’s foreign direct investment between April and August had risen 13% compared to the previous year, despite the disruption caused by the pandemic.
  • She said investors were attracted by various factors including low tax rates and automatic approvals for 95% of the economy.
  • Any of the sovereign funds which would want to come in for investments, are being given several taxation-related concessions.
  • The finance minister said investment in efficient and clean energy was another focus area of the government.
  • These included the country’s ambitious plan to expand clean energy generation, incentives to produce ethanol from stored grains and incentives to use biomass to produce energy.
  • Opening up of the nuclear energy sector to private participation was another major step the government had taken, she said.

FinMin on Indian Economy

  • The finance ministry will seek the views of other ministries, including external affairs, on the law ministry’s opinion regarding whether India should appeal against the arbitration award in the Vodafone tax case.
  • These will be placed before the attorney general for his take on the matter.
  • However, the call on whether to appeal or not will be taken at the highest political level.
  • India has the option of filing an appeal against the decision of the Hague-based Permanent Court of Arbitration (PCA) at the Singapore-based appellate tribunal.
  • Solicitor general Tushar Mehta has reportedly favoured appealing against the award.
  • Tax experts and industry are of the view that the government should accept the award as the move will reassure foreign investors.
  • India maintains that taxation is a sovereign right that cannot be challenged under bilateral investment treaty (BIT).
  • Another government official said the award pertained to the bilateral investment treaty (BIT) between India and the Netherlands and the question was whether it covered issues related to tax policy.
  • The arbitration court had ruled that the tax department was in breach of “guarantee of fair and equitable treatment” under the BIT and that the company was entitled to protection under the accord.

Core Sectors Bounced Back

  • Piyush Goyal: India’s construction, automobiles and energy sectors have bounced back and the government will soon address the downturn in the commercial vehicles sector.
  • He added that the hospitality, aviation and tourism sectors are back to 50%- 60% of pre-Covid levels, and will take another six to eight months to be normal, but compared with Western economies, these sectors have a relatively small share in the GDP.
  • Energy, petroleum, gas, all of these are back to normalcy.
  • Steel is back to normal, cement is near normal, which leads us to believe that the construction and infra projects are almost back to normal.
  • Goyal also said India wants to open its doors and integrate further with the global economy.
  • #Atmanirbhar bharat

SCO Ministers of Foreign Economy & Foreign Trade

  • India today hosted the 19th Meeting of the Shanghai Cooperation Organisation (SCO) Ministers of Foreign Economy and Foreign Trade.
  • The virtual meeting was attended by the Secretary General of SCO and Ministers from,  Kyrgyz Republic, Kazakhstan,  Pakistan, Russia, Tajikistan and Uzbekistan.
  • Minister of Commerce and Industry Piyush Goyal said  the current crisis due to Covid-19 is a clarion call to the SCO countries to leverage the economic strength and explore partnerships that enhance trade and investment in the region.
  • He said cooperation should be continued to enhance intra-SCO trade and investment which would be critical in ensuring the speedy recovery from the aftermath of the pandemic.
  • In the meeting four documents were adopted.
  • They include statement on the response to Covid-19 which reinforces the need for greater cooperation for access to medicines and facilitation of trade and statement on the Multilateral Trading System of Ministers of SCO Countries who are WTO Members.
  • This statement highlights the importance of the rule-based multilateral negotiations.
  • Besides, statement on SCO Cooperation on Intellectual Property Rights (IPR) was also adopted which relates to cooperation of intellectual property and include sharing information and experience on legislation and enforcement, cooperation in international organisations and other areas.
  • Minister of State for Commerce and Industry  Hardeep Singh Puri also spoke on the occasion.




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