Prime Minister Narendra Modi Moves to Form BJP Rule in Delhi

New Delhi: BJP top brass including Prime Minister Narendra Modi are in favour of seeking fresh mandate in Delhi, but not in immediate future.

With Aam Aadmi Party demanding that Lieutenant Governor Najeeb Jung dissolve the Assembly, a section within BJP’s Delhi unit wants to go for fresh polls soon, but Mr Modi and some senior leaders including Union ministers Arun Jaitley and Sushma Swaraj, it was learnt, are not in favour of going for fresh elections in the next couple of months.

The issue was apparently discussed by the party top brass including Mr Modi.

The PM, sources said, however, has indicated that he was against seeking support of any other party and suggested that the party should not be seen indulging in horse-trading to form government in Delhi.

Sources disclosed that a section of central leadership is of the view that the party should wait till conditions are “more favourable”.

Source: DeccanChronicle.com

PM Narendra Modi's Flight was on Shot Down MH17's Route

New Delhi: Even as the world struggles to come to terms with the shooting down of a Malaysia Airlines plane over Ukraine, it has come to light that Indian Prime Minister Narendra Modi was on the same flight path as the MH17 Boeing 777.

A report in a leading Indian English daily claimed that Prime Minister Modi’s flight back to India was rerouted after the incident, in which 298 people died.

The flight had taken off from Frankfurt, Germany, about two hours before the Malaysian airliner was hit was a surface-to-air missile.

According to the report, while the Indian PM faced no danger his plane would have flown over the same area had the crash not taken place.

The Malaysian airliner crashed at Torez, near Shakhtersk, some 40 kilometres from the Russian border in Ukraine after being hit by a missile, as concluded by the US. The incident happened at 13:20 hrs GMT.

The Air India plane carrying PM Modi would have flown over the same area about an hour later had it continued on the same flight path, as the flight had taken off from Frankfurt at 11:22 GMT.

It takes about three hours to fly from Frankfurt to Donetsk.

Ukraine has, meanwhile, declared the skies over eastern part of the country as a no-fly zone. The area has been a battleground for state forces and pro-Russia rebels for the past few months.

Source: ZeeNews.India.com

Just a Month of Narendra Modi Government Growth Accelerates, Inflation Lowers

NEW DELHI: The first full month under the Narendra Modi government's watch turned out to be a good one for the economy with macro indicators looking up and inflation lower despite lingering monsoon doubts, suggesting that growth could have finally bottomed out.

Exports rose 10.2% in June from a year ago, the government said on Wednesday, marking yet another positive development following a series of good numbers in recent days that suggest the economy is picking up from decade-low growth rates in the past two years.

Industrial production rose to a 19-month high of 4.7% in May while car sales rose at their fastest pace in 10 months in June, clearly indicating that the consumer was more confident of the new government shaping recovery.

Services activity rose to a 17-month high in June on the strength of robust order flow, according to the HSBC Purchasing Managers' Index, indicating rising optimism in the sector that has a share of more than 60% in the economy.

Imports rose for the first time in a year, at around 8.3%, confirming some sort of recovery in the domestic economy even after discounting for higher gold imports, which rose nearly 65% in June after the Reserve Bank of India eased rules by allowing more entities to import gold.

India's other big concern, retail inflation, dropped to 7.31% in June, the lowest since the government started reporting consumer price index inflation in January 2012, although the monsoon fears loom large.

And to top it all, the trade deficit was $11.78 billion in June, the highest in a year, but only marginally more than $11.28 billion in May, according to data released on Wednesday by the commerce department.

Markets cheered the development, with the Sensex rising 1.27% to 25,549.72 points. "The export data is very encouraging, especially the fact that it is led by robust performance of engineering goods, indicating a productivity revival. Given that non-oil, non-gold imports have shown an uptick, industrial production for June will also be quite strong," said Soumya Kanti Ghosh, chief economic advisor, State Bank of India.

"One can say looking at car sales, manufacturing and exports data that the economy may well have finally bottomed out." That will bode well for the Modi government, which has pledged to turn the economy around while bringing prices under control. The economy could begin the first quarter of the current year at near-5% growth, up from 4.6% in the January-March quarter.

The decline in global commodity prices will also act as a booster although Iraq and Ukraine are geopolitical sore spots with the potential to reverse the trend. Meanwhile, the June-September monsoon has been patchy although rains have picked up in the past two days.

A poor monsoon could wreak havoc on prices, something that will force the Reserve Bank of India to keep up the pressure on interest rates at its August 5 policy announcement, although both wholesale and retail inflation slowed sharply in June.

Higher exports will provide further support to industrial production that was up 4.7% in May, a 19-month high, which will be welcomed by the government for its positive effect on jobs.

Engineering exports grew 21.5% to $54 billion while those of readymade garments expanded 14.3% and leather 38.37%. "We are getting higher orders from the US — so much so that our domestic manufacturing infrastructure is not able to support the same," said Engineering Export Promotion Council Chairman Anupam Shah.

This suggests growth may remain strong in the coming months, but some analysts struck a cautious note. "Export growth is expected to be moderate in the coming months, reflecting external demand conditions, a waning of the favourable base effect and relative stability in the nominal exchange rate," said Aditi Nayar, senior economist, ICRA.

"The unfavourable monsoon conditions suggest agricultural exports would be muted in 2014-15." Services showed a trade surplus of $5.8 billion in May.

Rohini Malkani, economist at Citigroup, said her view on the current account deficit was unchanged. "With the 1QFY15 trade deficit at $33.2 billion vs $28.2 billion last quarter, we maintain our view of FY15 CAD remaining at sub-2% of GDP, leading to a BoP (balance of payments) surplus of $33 billion and consequently INR in a 59-62 range," against the dollar, she said in an emailed release.

Source: EconomicTimes

Whistleblower Ashok Khemka Headed for PMO Job

Haryana cadre IAS officer Ashok Khemka, who had alleged that Congress president Sonia Gandhi's son-in-law Robert Vadra was involved in shady land deals, has been given a central government posting. Sources even said that Khemka may join the Prime Minister's Office (PMO), although no official confirmation was forthcoming.

Sources in the department of personnel and training (DoPT) said 20 posts of joint secretaries, including three vacancies in the PMO (department of atomic energy, personnel and training and in general branch), are currently vacant. Further, a post of joint secretary also lies vacant in the NATGRID, under ministry of home affairs.

Khemka has been transferred over 40 times in his 22-year-old career as a bureaucrat, mostly for taking on his political bosses.

Speculation over his return to the PMO follows the Cabinet Secretary's decision to clear the 49-year-old of allegations of misuse of official powers. His argument that a Haryana government charge-sheet against him was "political" has been accepted by the new government under Prime Minister Narendra Modi.

Earlier this year, Khemka had earlier a letter seeking central deputation in April. The DoPT rejected his request, informing him that he could not be empaneled because of the Haryana government's charge-sheet against him.

The charge-sheet by the Congress-led Haryana government in December accused him of "causing damage to Robert Vadra's reputation" by cancelling his land deal in 2012. Khemka had alleged that the Rs 57-crore deal between Vadra and real estate giant DLF in 2012 violated rules to facilitate windfall gains for the businessman.

The Haryana government had also alleged that Khemka's decision to cancel the deal was an administratively improper step since he stood transferred as Managing Director of Haryana Seed Development Corporation (HSDC) on October 11, 2012 from his earlier post of Director General Consolidation of Land Holdings and Land Records-cum-Inspector General of Registration. Just a few months before the general elections, the Haryana government had even recommended a CBI probe into a contract awarded by Khemka to a Gujarat firm in 2009. Khemka was subsequently made the Director General, Archive.

A Congress spokesman said Khemka's possible appointment was the administration's prerogative, and wished the government and the officer well.

Source: DNAIndia.com

Negotiations to Launch New BRICS Bank Hit Snag

(Reuters) - On the eve of the signing of a deal to launch a joint development bank, the BRICS nations have still not agreed on where the lender will be headquartered, a senior official involved in the talks told Reuters late on Monday.

The leaders of the five emerging market economies are expected to sign a deal on Tuesday that creates the $100 billion bank and a reserves fund of the same size to challenge Western dominance over global finance.

The five nations are Brazil, China, India, Russia and South Africa.

Negotiations have stalled for now on a dispute between China, India and South Africa over who will host the bank. The disagreement has also delayed a decision on which of the countries will hold the first 5-year presidency of the bank.

"This should be easy to resolve but we have this dispute. If it doesn't move forward, we may have to leave the decision for another meeting," said the official, who declined to be named.

Another negotiator confirmed that no decision has been reached.

A delay could be an embarrassment for the BRICS, which see the creation of the bank as a major step to gain more influence in the shaping of the world's financial architecture.

The official said that if no deal was reached on Tuesday, the leaders could still sign off on creation of the bank and decide on the headquarters and its president at a later date.

Negotiations to create the bank dragged on for more than two years as Brazil and India fought China's attempts to get a bigger share in the lender than the others.

The stark economic and political differences between the BRICS countries has made it difficult for the group to turn rhetoric to concrete action in coordinating policies.

Russian and Indian officials have signaled that China's business hub, Shanghai, was the front-runner in the race to land the headquarters.

Source: In.reuters.com

PM Modi Leaves for Brazil, Hopes to Seal BRICS Bank Deal

Prime Minister Narendra Modi left for Brazil Sunday to attend the sixth Brics summit that starts on July 15. This will be his first multi-lateral engagement with world leaders.

Before his departure, Modi said he was looking forward to holding discussions to deepen intra-Brics economic cooperation and advance global economic stability and prosperity — with greater Indian engagement.

The summit is widely expected to announce the creation of a new development bank and a reserve fund to fend off currency crisis.

“I look forward to the successful conclusion of major Brics initiatives like the new development bank and the contingent reserve fund, which have seen significant progress since their launch in New Delhi in 2012,” the PM said.

The two initiatives are seen as a counterweight to Western-dominated financial organisations such as the World Bank. The group — Brazil, Russia, India, China and South America -- makes up nearly one-fifth of global GDP and 40% of the world’s population but feels marginalised by the global banks.

On the sidelines of the summit, Modi will also hold one-on-one meetings with the leaders of the emerging nations. With Chinese President Xi Jinping, Modi is expected to discuss border issues and increased access to Indian products to bridge the trade deficit that has already touched US $13 billion this year.

“I look forward to meaningful meetings with them to intensify bilateral relations and exchange views on global and regional developments,” Modi said.

At the summit, the PM will also meet leaders of South American countries invited by host president Dilma Rousseff.

En route to Brazil, Modi landed in Berlin where he will stay the night. A meeting between him and Chancellor Angela Merkel was scrapped after Germany made it to the World Cup finals. On arrival he tweeted: “Best wishes to Argentina & Germany for the FIFA World Cup Final. It is amazing how the tournament brought fans across the world together”.

Source: HindustanTimes

First Budget Test of PM Modi's Reform Mettle

New Delhi: Prime Minister Narendra Modi faces the first major test of his reform credentials on Thursday, when his fresh-faced government presents its maiden budget amid early doubts about his willingness to make unpopular decisions.

Prime Minister Modi, 63, won a landslide general election victory in May with a pledge to boost growth and create jobs for the 1 million people who enter India's workforce every month.

He has since warned of the "bitter medicine" needed to nurse the economy back to health from high inflation and the worst slowdown since free-market reforms in the early 1990s unleashed an era of rapid growth.

Finance Minister Arun Jaitley's promises of bold budget decisions and broadsides against the "mindless populism" of his left-of-centre predecessors have proved a hit with investors, helping the benchmark BSE stock index to a record high last week.

Mr Jaitley is due to address parliament at 11 a.m. (0530 GMT).

But, with an eye on state elections later this year, PM Modi has faltered in administering the medicine he has spoken of, delaying a decision to raise the price of natural gas and partially reversing a train fare hike after protests in Mumbai.

The government has tried to keep rural voters sweet by extending a temporary subsidy for sugar mills, benefiting farmers in Maharashtra, where Mr Modi's BJP hopes to consolidate its strength in elections later this year.

"The budget is a key test of their credibility, and this evidence that they are moving back and dithering on their decisions, and in a sense playing politics, is a sign of more to come," said Nida Ali, India economist at Oxford Economics.

To be sure, the government has started a shake-up of politically sensitive labour laws, and is expected to roll out plans for a new services tax that would unify the states into a common market for the first time.

Even the partial train fare hike was bolder than any measures by the last government to fix the tattered finances of the world's fourth largest rail network.

But some investors were disappointed by a railway budget delivered on Tuesday that was long on promises of opportunities for private investors but short on details of how to make the sector attractive for such capital.

The mood was reflected in losses on the stock market after the railway minister's speech to parliament.

Managing Expectations

Foreign banks watching India have played up expectations of strong action on tax reform, privatisation and subsidy cuts after the young government's drum beats in recent weeks.

"We want Mr. Modi and his team to make a structural change by presenting a budget crowned with quality actions," Spain's BBVA Research said in a research note.

Tushar Poddar, chief India economist at Goldman Sachs, wrote this week that he expected a roadmap for a Goods and Services Tax, greater access for foreign investors to the insurance and defence industries and incentives for manufacturing.

A finance ministry report on Wednesday laid out the government's vision for a sustainable reduction in the fiscal deficit through a lower food and fertilizer subsidies and broadening India's tiny tax base.

The report's tone increased speculation that Mr Jaitley will give a higher, more realistic fiscal deficit target for this fiscal year than the 4.1 per cent of gross domestic product set by the previous government.

But political realities such as the looming elections could make the government reluctant to act too quickly despite commanding the first outright parliamentary majority for any Indian political party in 30 years.

"It is but natural for the new government to move ahead gradually so as to avoid policy-induced distortions," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.

Many of India's economic ills are structural and will take time to fix regardless of the government's appetite or strength. Food inflation, energy shortages and weak institutions will slow the pace of reform.

"At the end of the day they are not a silver bullet, they are not going to turn the economy around in a month's time," Oxford Economics' Ali said.

Source: NDTV.com

Importance of Goods and Services Tax: All You Need to Know about the Tax Reform

Union Budget 2014 Tax Reform: Goods and Services Tax (GST)

In the run up to Budget 2014, there is hardly a write up or conversation that does not make a reference to the GST introduction. GST or Goods and Services Tax, in its purest form, is a harmonized tax on both goods and services, which permits set off of tax paid on purchase of inputs and input services seamlessly. Most countries have some form of GST or VAT, with USA being the notable exception.

In the Indian context, the clamour for GST stems from the inability of all constituents of the supply chain to set off input taxes paid on purchase of goods and services, thereby resulting in cascading of taxes. Since manufacturers pay both Central and State level taxes (excise duty and VAT/CST), their ability to utilize input taxes is the highest.

However, in the case of traders and services, who have only State and Central level taxes respectively, their ability to claim set off of input taxes is limited, since there is no inter-sectoral set off of these taxes.

Ideally, indirect taxes ought to be a pass-through cost for any participant in the supply chain. Since the current system does not permit seamless set off of input taxes, these costs are finding their way to the consumers' pocket as part of 'price' and not as 'tax'. This is the reform that industry seeks, which will bring with it simplicity in compliance, against the present system, which is mired in complexity.

Given the federal polity, the most palatable form of GST is the concurrent dual GST for both goods and services, one levied by the Central government (called Central GST/CGST) and the other by the State Governments (called the State GST/SGST). CGST will replace excise duty and service tax whereas SGST will replace VAT/CST, entry tax, luxury tax and entertainment tax.

All products with the exception of a few (alcohol, petroleum) will be covered under the GST. Input CGST and SGST will be permitted for set off against respective output taxes. The manner of taxing inter-state sales is yet to be finalized, but perhaps it is easiest to tax B2B transactions at destination and B2C transactions at origin, provided there is a strong IT infrastructure to track movement of goods across States.

The GST is a destination-based regime, against the current regime which is origin-based and therefore, the concern of the producing states is that they will lose revenue; more so when they will have limited ability to unilaterally increase tax rates for meeting their revenue needs.

Unkept promises of the Central Government on payment of compensation for reducing CST rates have hindered progress in GST talks with states. While the Union Government cannot on its own make any announcement on the GST introduction, it can set the tone to overcome the trust deficit of the states, by addressing the CST compensation issue and setting aside adequate funds for the same, in the Budget.

It is estimated that the GST would add about 1.5 percent to the GDP, and cumulatively, we have already lost one whole years' growth, if we count the delay from 2010 alone. A much smaller economy like Malaysia is jumping onto the GST bandwagon in 2015. Even if we are able to achieve Phase I of GST in the next couple of years, it will mean a lot to the industry.

GST introduction will support the Government's effort to make India a business-friendly destination, since it affords simplicity, ease of transaction and transparency.

Source: FirstPost