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Large number of non-performing assets (NPA) in the farm sector a worry, says Rajnish Kumar.
The government is speaking to banks as it considers a stimulus package to revive India's economy that has hurt credit demand in its slump, said Rajnish Kumar, chairman of State Bank of India (SBI), in Kolkata on Sunday.
"Hopefully, with increased government spending, monsoons and festive season we will see credit demand. Last year we saw nearly 14 per cent credit growth at SBI, and this year we expect at least 12-14 per cent credit growth,‖ he said.
India‘s economy grew at its slowest pace in more than four years in the January-March period, falling behind China‘s pace for the first time in nearly two years and raising the prospect of fiscal stimulus. ―About the size of the stimulus, consultations are going on and government is speaking all including banks, said Kumar.
Banks had a large number of non-performing assets (NPA) in the farm sector lending because of fragmented land holdings and lack of modernisation in the sector, he said.
The Pradhan Mantri Mudra Yojana (PMMY), the government's flagship credit scheme for micro and small enterprises, too had become a source of NPAs for banks and is being revamped, he said.
SBI registered slippages amounting Rs 16,000 crore in the April-June 2019 quarter. In the retail sector, agricultural advances accounted for nearly 69 per cent of the total slippages.
The total value of NPAs held by public sector banks under PMMY was close Rs 7,277.31 crore as of March 31, 2018, according to a recent written reply the government gave in the Rajya Sabha. "These issues are being discussed with an open mind. Once these consultations are over we should be able to come up with a blueprint," he said.
On being asked about transmission of rate cut in terms of further MCLR reduction, Kumar said, ―as a bank we need to strike a balance between lending rate and interest of the depositors.‖
Also, the bank was examining the possibility of giving the opportunity to migrate from MCLR to repo rate linked rate for home loan buyers. SBI was the first to launch a repo-rate linked home loan scheme, effective July 2019.
Source: Business Standard
CAIT has "given the call to boycott Chinese products to make China understand the repercussions of supporting Pakistan".
CAIT has urged the government to levy customs duty from 300 to 500 per cent on imports of Chinese goods.
Traders body CAIT on Sunday gave a call for the boycott of Chinese products and sought high customs duties of up to 500 per cent on these goods as China supported Pakistan's case on abrogation of Article 370 in Jammu and Kashmir at the UNSC. It said that while presenting and supporting Pakistan's case on abrogation of Article 370 in United Nation Security Council, China has placed itself on the list of probable enemies for the national security of the country which has made citizens and trading community in particular grossly anguished.
The Confederation of All India Traders (CAIT) has "given the call to boycott Chinese products to make China understand the repercussions of supporting Pakistan".
It added that the issue will be discussed in a national conference of traders from all states convened by CAIT on August 29 here.
"China has become habitual in supporting Pakistan on every matter which is against India and therefore now the time has come when we should reduce our dependence on Chinese goods," it said.
Besides, CAIT has urged the government to levy customs duty from 300 to 500 per cent on imports of Chinese goods.
Source: The Economic Times
These are some of the factors that Citi evaluated in its study.
Mumbai: Foreign investors have preferred India over South Korea among emerging markets since 2006 on better corporate profitability and better returns.
Now, there is a possibility that India could lose that competitive edge. According to Citi’s strategist Markus Rosgen, the gap in various parameters that led to investors preferring India over Korea is shrinking.
“Since 2006, investors have been overweight India and underweight Korea — India’s equity market has historically been viewed as more exciting than Korea’s, delivering better overall performance, both as a market and a corporate sector,” he said.
Now, Rosgen said Korea is catching up as India’s premium share valuations could lead to higher downsides.
These are some of the factors that Citi evaluated in its study:
CORPORATE HEALTH
Rosgen said financial ratios like return on equity (ROE), return on assets ( ROA) and return on invested capital (ROIC), which reveal how well companies are utilising capital to grow, are higher in India than in Korea but the gap has been closing. In real terms, Korea trumps India, when it comes to free cash flows, he said.
ALL PRICED IN
In terms of total returns, India has performed better than Korea with Mumbai returning 4.5 per cent every year versus 3.7 per cent by Seoul. “For that additional 0.8 per cent p.a. investors have been willing to pay a 150 per cent valuation premium, a premium that has widened as fundamentals have converged,” said Rosgen.
UPSIDE POTENTIAL
Citi said Korea has upside potential based on valuations even compared to the previous recession lows. India has more downside possibilities, which is a major investor underweight. “India is among the most favoured. Valuations tell us a lot is priced in for India and little for Korea,” said Rosgen.
Source: The Economic Times
The Prime Minister’s Office and the Finance Minister have been meeting various stakeholders over the last week to discuss the slowdown which is adversely impacting various sectors now.
With the economy on a continuous slide, the Prime Minister‘s Economic Advisory Council Chairman Bibek Debroy said it is high time the government focused on expenditure and recommended a GST Council-like mechanism for the Centre and states to strategise on public expenditure for maximum impact.
―The key question today is whether we are on a 7% GDP growth rate trend, or a 6% trend,‖ Debroy told The Indian Express in an interview last week. The Prime Minister‘s Office and the Finance Minister have been meeting various stakeholders over the last week to discuss the slowdown which is adversely impacting various sectors now.
Pointing to the phenomenal success of the GST Council as a decision-making body, he said, ―This (GST Council) was about indirect taxes. Time has now come for a similar body on public expenditure to do exactly what the GST Council did for taxes. This body should decide on what should be public expenditure.‖
―There are questions within the PM EAC on whether the slowdown is ‗cyclical‘ or ‗structural‘ in nature,‖ Debroy said, but advised against widening the fiscal deficit. ―If I just look at it from an academic point of view, I‘d probably say, yes, to expanding the fisc. But looking at the past, the moment you open the tap, there is no controlling it.‖
Elaborating on government expenditure, Debroy said there are limits to public expenditure because there are fiscal consolidation issues. But focused and strategic expenditure by the Centre and states together could yield efficiency gains, he said.
Some aspects the government can address on the tax side include streamlining and harmonisation of GST rates, and reduction in direct tax rates, the PM EAC Chairman said. ―A lot can be done on GST. As an economist, I would argue, there should be a single GST rate. In practice, it is impossible. No country in the world has a single GST rate. From a pragmatic point of view, we must have three GST rates. For illustrative purposes, say 6%, 12% and 18%. Everyone wants the 24% to come down to 18%, but no one wants the items under 0% to come under 6%,‖ Debroy said.
On the direct tax side, he said the rates can be reduced significantly. ―But this can be done only when both corporate and income tax exemptions are removed,‖ Debroy said. He also advised against sectoral tax sops. ―We should not have any sector-specific interventions. These will create distortions. Fiscal concessions to specific sectors will complicate the tax story even further,‖ he said.
Source: Indian Express
On the NSE, the dollar-rupee futures were trading at 71.20 for August delivery and at 70.50 for September on Friday
Importers of cooking oil, pulses and other commodities are increasingly hedging their rupee exposure as the local currency has weakened over the past week, increasing their cost. With the market being volatile and the rupee fluctuating on an average 40-50 paise
a day to the dollar NSE 1.60 % , it is the right time to hedge currency exposure, said Anuj Gupta, the deputy VP of commodity & currency research at Angel Broking. ―Companies use forward contract derivatives to hedge currency exchange risk, to mitigate losses incurred due to currency price fluctuations,‖ said Gupta. On the NSE, the dollar-rupee futures were trading at 71.20 for August delivery and at 70.50 for September on Friday.
Gupta said that on the exchange, around 25 lakh contacts were being traded daily with open interest (OI) at around 35 lakh contracts. The OI measures the total level of activity in the futures market. In the near term, the rupee might trade in a range of 70.00-72.80, he said.
Rushabh Maru, a research analyst for currency and commodity at Anand Rathi Shares & Stock Brokers, said given the state of the global and domestic economy, the rupee might gradually move towards 73 to the dollar. ―There is a huge sell-off in domestic equities amid FIIs outflows. The RBI has been cutting interest rates. But it may not suffice to tackle the present slowdown in the domestic economy. Because of all these factors, importers will hedge their currency risk,‖ he said, adding: ―On the other hand, exporters will not hedge their exposure at current levels and will wait for 72.50-73 levels.‖ India spends more than Rs 70,000 crore a year to import 15 million tonnes (MT) of its annual requirement of 25 MT of edible oil. Maru said edible oil importers would continue with their purchases to meet demand ahead of the festive season, irrespective of the rupee movement.
Latest stocks data from solvent extractors reveal that around 19.95 lakh tonnes of imported edible stock is being held at ports and in the pipeline, which is equal to about 32 days‘ requirement, he said. For pulses, overseas purchases may turn even more costly, further slowing down imports, said Maru.
Atul Ganatra, the president of the Cotton Association of India, said with the rupee depreciating 3.5% in the past 15 days, import of cotton has become costlier by Rs 1,500 per candy of 356 kg each. ―This will slow down import of cotton to India, but in the coming season (October-September), it will help exporters. We expect the rupee to touch 72.50
Source: Economic Times
We are making every effort to completely exempt handlooms from the purview of GST: Manian.
Tamil Nadu is making efforts to convince the Central government to fully exempt handloom textiles from the purview of GST, just as the Khadi sector has been exempted in the weavers‘ interests, the State minister for Handlooms and Textiles, Mr. O.S. Manian said on Sunday.
Speaking to reporters after participating in a private function here, he said though the GST rate for handloom sector has been reduced from 12 per cent to five per cent in a bid to make handloom weaving sustainable for the vast majority of poor weavers under the cooperative sector, ―we are making every effort to completely exempt handlooms from the purview of GST.‖ Mr. Manian said it was lower GST rate which was helping the garment and hosiery sector in Tirupur to achieve an annual sales turnover of Rs 40,000 crore. Tamil Nadu has 1,081 weavers‘ cooperative societies in all, the minister said, adding, with a view to encourage the handloom sector several concessions were like interest subsidy continued to be extended.
Source: Deccan Chronicle
A Chinese firm engaged in the manufacture of yarns and fabric is looking to set up shop in the Philippines, the Department of Trade and Industry (DTI) said.
Trade Secretary Ramon Lopez met with representatives from Texhong Textile Group Ltd. in China last week and the company discussed its interest to invest in the Philippines.
Lopez said the company is currently in the study phase and has yet to finalize details including the amount of investment to be made.
―Nothing final yet as to timing. But they‘re serious,‖ he said.
Texhong Textile is among the biggest suppliers of cotton textile in the world.
It is engaged mainly in the production and distribution of quality yarn, grey fabrics and garments fabrics of high-value added core-spun yarn and fashion cotton textile.
At present, it serves over 3,000 customers in China and overseas.
The firm has operations in China and Vietnam, and also has a sales network across China, South Korea, Hong Kong and Bangladesh.
The Philippines expects to benefit from the investment, when it pushes through, as the country wants to revive the garments and textile industry.
Considered as among the top performing sectors in the 1990s, the Philippines‘ garments and textile sector has been challenged, leading to closure of some factories and reduction of jobs, after the World Trade Organization put an end to the quota system which allowed the country to export garments and textiles at preferential tariffs in 2005.
The Prime Minister‘s recent announcement of a $20 million fund to grow Australia‘s recycling industry and ban the export of plastic, paper, glass and tyres has generally been seen as a positive initiative to combat our poor track record in recycling.
What struck me as missing from the discussion was any mention of textile waste. Neither the exporting of textile waste nor textile recycling in Australia was included in any of the fanfare.
Despite the growing concern in this space, unlike glass and plastic, we do not measure these figures accurately across the country.
For me, this explains why the government does not talk about it; the old management rule of ‗what gets measured, gets managed‘ clearly applies to textile waste. If it‘s not measured, it can‘t be managed.
I believe this is driven by the personal relationship we have with our clothes. Would you take your ‗beautiful‘ drink bottle collection, which contains memories of friends and great times, and leave them with a charity store to sell, so someone else can appreciate them?
No, of course not. They would be disposed of properly in a yellow top bin because they are plastic, and plastic is bad, and plastic hurts the planet
Yet, more than 65 per cent of the world‘s clothing is made out of PET, or polyester, which is exactly the same material as a drink bottle. And when our clothes go into the bin, or landfill, they have exactly the same environmental impact as burying a drink bottle.
Last year, the retail sector produced 50 million tonnes of polyester for garments. That‘s 50 million tonnes of the same material that is used for drink bottles, and only 13 per cent of that was recycled, and only 1 per cent of that was chemically recycled back into reusable polyester. The rest was burnt or buried.
This is a clear sign that we still, even in 2019, have little knowledge of what goes into our garments, and our belief that they do less damage than plastic bottles is misguided.
But if we did know this, would we allow our textiles to end up on landfill or would we take different decisions about recycling our textiles? Would we take a stronger view of not allowing textile exports for somebody else‘s landfill? I think we probably would.
But let‘s return to the Prime Minister‘s announcement. The government can no longer be a quiet observer regarding the issue of textile waste, as it is growing relentlessly and causing massive harm to the land, air and ocean.
France recently passed laws banning supermarkets from disposing of unsold food, and it is reviewing extending this to excess clothing and electronics.
While this action may feel ‗heavy handed‘, there is increasing frustration at the lack of product stewardship in relationship to textile waste. No one appears to own the problem; we just pass it from retailer to consumer to charity to exporter to landfill. Who pays for this? Who takes accountability for the problem?
I would encourage the Australian government to continue to drive the right behaviour in the whole recycling space, but with particular reference to textiles. To do this, they need to:
Measure: Treat textile waste with the same seriousness as plastic, as it is the same thing, and start to gather accurate data on what is disposed of, where to and from whom?
Legislate: Extend and enforce mandatory government procurement of recycled polyester. The government need to lead by example by insisting that its own departments procure locally produced recycled polyester from domestic textile waste. Introduce textile kerbside collection so textiles can be sorted and reprocessed before they enter landfill.
Innovate: Extend and simplify R&D legislation and innovation grants that allow Australian retailers and startups in the textile recycling sector to develop innovative and
environmentally sustainable solutions to scale and quickly. The government needs to become more entrepreneur-friendly and innovation-focussed and needs to encourage the retail sector to take some more risks and be more aware of its long-term footprint. One idea is to use the landfill levy to directly support waste reduction grants. The days of not recognising textile waste and not treating it as seriously as plastic, paper, glass and tyre waste are long past us.
It‘s time to ban textile waste exports and build a more vibrant textile recycling industry in Australia – and this needs to be led by the retail sector.
Source: Inside Retail Australia
World financial markets have been on edge amid a series of signs pointing to a slowing of the global economy and have been reacting to even the
WASHINGTON: Washington and Beijing are working actively to revive negotiations aimed at ending the trade war that has rattled world markets, Donald Trump's chief economic advisor said Sunday. If teleconferences between both sides' deputies pan out in the next 10 days "and we can have a substantive renewal of negotiations," Larry Kudlow said on "Fox News Sunday," "then we are planning to have China come to the USA and meet with our principals to continue the negotiations."
That left it uncertain, however, whether a Chinese delegation would be coming to Washington next month, as a White House spokesperson predicted after US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin left a round of trade talks in Shanghai in July.
But Kudlow emphasized that phone conversations held last week to follow up on the Shanghai talks -- involving Lighthizer, Mnuchin and two senior Chinese negotiators, Vice Premier Liu He and Commerce Secretary Zhong Shan -- were "a lot more positive than has been reported in the media."
World financial markets have been on edge amid a series of signs pointing to a slowing of the global economy -- notably because of the trade war between the world's two largest economies -- and have been reacting to even the slightest new indicator.
But Kudlow insisted that the outlook was far from gloomy. "Let's not be afraid of optimism," he said, adding that "I sure don't see a recession."
The US-China negotiations began in earnest in January and seemed at first to make substantial progress, raising hopes that a trade deal could be rapidly reached.
But during the spring, the US president abruptly called off the talks, saying the Chinese had reneged on earlier commitments.
The discussions resumed again in June at the highest levels in the margins of the G-20 summit meeting in Osaka, Japan between Trump and his Chinese counterpart Xi Jinping.
But markets were hit with a fresh surprise when Trump suddenly announced that as of September 1 he was imposing punitive 10-percent tariffs on USD 300 billion in Chinese goods that had so far been spared.
And then came the announcement Tuesday that Trump -- already campaigning for re-election in 2020 -- had decided to delay imposing the tariffs until December 15 so as not to cast a shadow on the Christmas shopping plans of Americans.
The delay was seen as a concession to China and a backhanded admission that the tariffs -- despite Trump's repeated insistence to the contrary -- could in fact have an impact on US consumers.
Nonetheless, the president's chief trade advisor, Peter Navarro, firmly rejected that notion in several television appearances on Sunday.
He said Trump had decided on the postponement only after several company heads told him their contracts with Chinese suppliers were denominated in dollars, meaning they got no benefit from the weakening of the Chinese yuan and their orders ahead of the year-end holidays would be hard-hit.
Navarro said the executives also insisted they were increasingly looking to suppliers outside of China.
He vigorously rejected the notion that the tariff war is hurting American consumers, saying no data supported that view -- despite studies to the contrary by the International Monetary Fund, Harvard University and the Federal Reserve Bank of Boston.
"We're seeing production investment and supply-chain sourcing move -- hemorrhaging from China," Navarro said, with Southeast Asia and the US benefiting.
Source: The Economic Times
NABE conducted its policy poll as President Donald Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31.
NABE conducted its policy poll as President Donald Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31. However, the Fed was already sending strong signals that it intended to pull back on the rate increases made in 2018 due to concerns starting to dog the economic outlook, including the trade war with China.
Source: Financial Express
The powerloom industry is an important part of textile industry in Multan, but entire sector is facing crisis due to continuous inflation, increased rates of energy and gas and rupee depreciation, which has left the powerloom workers jobless, The News has learnt.
Sixty per cent powerlooms have been closed in Multan. The export of loom products has been reduced to 50pc depriving the country from heavy foreign exchange after failing to meet the cost of production, powerloom workers said. The local powerloom industry entertains export orders from United States, Germany, Middle East and Russian States.
The hot shawls, kitchen clothe items, Lungi and Romal are the products, which are popular in US, Germany and Middle East, but almost export has been suspended due to heavy taxes.
The increased taxes on import of yarn, regulatory duty and customs duty running as high as 17pc in February last are one of the reasons behind crises. The government imposed an overwhelming 36pc duty on polyester imports some months ago, making matters worse for the industrial sector.
At least 100,000 powerlooms are functioning in 40 localities in Multan while 500,000 workers are associated with the industry. The workers deliver work in three shifts in 24 hours a few months back, Now one shift has been closed due to increased power and gas tariffs, rendering the workers jobless.
Talking to The News, All Pakistan Powerloom Association president Khaliq Qandil Ansari said that heavy taxes and depreciation of rupee had reduced export.
The country had been involved in powerloom products‘ exports worth $36 billion, he told.
The export had reduced to $22 billion in the PML-N rule, he added. It further went down to $15 billion in this regime, he lamented. Currently, the country was exporting loom products only worth $15 billion, he maintained.
He said that under the weight of such heavy taxes, it had become difficult to continue the powerloom operations. He said that ex-PM Nawaz Sharif had allocated 3.40pc funds for the relief of the industry, but the present government had abolished it, overburdening the entire sector, he infomed.
The government had increased power tariff from Rs 10 per electricity unit to Rs 24.5 per unit, which was beyond the cost of production and matchless to expenditures, he continued. The powerloom industry depends upon dying process for refining piece of cloth and the dying process was run on gas but the government had increased gas tariff to 186pc, he maintained.
He said that production cost, wages and rising taxes caught factory owners off guard as they now had to pay motor tax, professional tax, property tax, civil defense and social security fees, which heavily cut into profitability. By November 2018, factories began shutting down, a trend that was still ongoing, he told.
The powerloom workers complained on complex tax system, which had spread confusion among the illiterate workers, he added. The powerloom owners were ready to pay taxes but complex process was a key hurdle, he added.
Akram Ansari, who works in a powerloom unit at Sharifpura, said that the workers associated with the powerloom sector had started losing their jobs. A majority of powerloom workers did not know any other craft, he lamented. They have little knowledge where to go next, he added.
He said that even the workers who still had jobs were finding it impossible to make ends meet. They were penniless, deprived from bread and butter, and unable to get groceries on credit, he continued.
They pay shopkeepers when they get money and many have had to sell their belongings to stay afloat, he maintained. Khaliq Qandil Ansari appealed to the government to announce a relief package for the dying powerloom industry.
Source:The News
