The Connectere brings forward the mind’s eye and panoramic view of the young writing enthusiasts on various topics

Month: February 2021 Page 1 of 5

weekly analysis

The Weekly Analysis – Edition 47

There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Forty Seventh Edition we are covering the following news:

  1. Govt inviting suggestions on the Blue Economy Policy
  2. CBDT to keep double tax avoidance, international practices in view on NRI tax residency
  3. SEBI eases norms for IPO of large entities
  4. India begins probe to continue anti-dumping duty on some steel imports from China

Govt inviting suggestions on the Blue Economy Policy


The ‘Blue Economy’ is an emerging concept that encourages better stewardship of our ocean or ‘blue’ resources. The Ministry of Earth Sciences (MoES) has rolled out the draft blue economy policy in the public domain, inviting suggestions and inputs from various stakeholders, including industry, NGOs, academia and citizens. It is in line with the Government of India’s Vision of New India by 2030. The draft, prepared by the economic advisory council to the Prime Minister outlines the vision and strategy that can be adopted by the government to utilise the plethora of oceanic resources available in the country. It aims to enhance the contribution of the blue economy to India’s GDP by around 4%, improve the lives of coastal communities, preserve marine biodiversity, and maintain the national security of marine areas and resources. Let’s see the essence of this policy.
The blue economy occupies a vital potential position in India’s economic growth.
It could well be the next multiplier of GDP and well-being, provided sustainability and socio-economic welfare are kept centre-stage. It emphasizes policies across several key sectors to achieve holistic growth of India’s economy. It aids the production of goods and services that have clear linkages with economic growth, environmental sustainability, and national security. It is understood as a subset of the national economy comprising an entire ocean resources system and human-made economic infrastructure in marine, maritime, and onshore coastal zones within the country’s legal jurisdiction.
Therefore, India’s draft blue economy policy is envisaged as a crucial framework towards unlocking the country’s potential for economic growth and welfare. Most importantly, it is the 17 sustainable development goal (SDG), also known as the Global Goal adopted by the United Nations member states including India. SDG 14 seeks to conserve and sustainably use the oceans, seas and marine resources for sustainable development. Several countries have undertaken initiatives to harness their blue economy. For instance, Australia, Brazil, the United Kingdom, United States, Russia, and Norway have developed dedicated national ocean policies with measurable outcomes and budgetary provisions. Canada and Australia have enacted legislation and established hierarchical institutions at federal and state levels to ensure progress and monitoring of their blue economy targets. With a draft blue economy policy framework of its own, India is now all set to harness the vast potential of its ocean resources.

 

CBDT to keep double tax avoidance, international practices in view on NRI tax residency


The Central Board of Direct Taxes (CBDT) is evaluating a number of facets together with double taxation avoidance, greatest practices by different nations, and tax treaties, earlier than arriving at a view on figuring out tax residency for non-resident Indians or NRIs having overstayed in India in FY 21. They want to make sure that it should not be the case that NRIs income becomes tax-free in India as well as their home country being a loss for both at the same time.
Measures or instructions taken by nations such because the US, UK, and others would even have to be thought-about such that the view India takes is in line with international friends. Several nations in Europe and the UK have initiated second or third waves of lockdowns due to resurgence in Covid 19 circumstances at the same time as vaccination drives have begun. CBDT also has to look at tax treaties before formalizing a view. However, the most important problem the Board is going through is an assortment of knowledge of the variety of folks having bought impacted by overstay and lack of readability of guidelines. The officials added that whereas international journey for many a part of FY 21 was barred and opened up later on in a restricted method, the precise quantity of people that could have stayed greater than 182 days could be robust to confirm. Data could be important for figuring out the size of reduction that the Board wants to present, and therefore formulate its response to the Supreme Court. The SC has given CBDT three weeks to determine on reduction to be granted to NRIs on the fee of revenue tax for the continued monetary year. It is listening to a petition filed by an NRI who had stayed more than 182 days in India due to the lockdown and subsequently could have to pay tax in India on his world revenue. The Board had issued a clarification in May final year for FY20, on the facet of residency beneath Section 6 of the I-T Act whereby numerous relaxations have been offered to NRIs who couldn’t journey again to their nation of labor or residence due to the lockdown.  CBDT has not issued any round for fee of revenue tax by NRIs staying past 182 days in India due to the pandemic in FY 21.
A thorough study should ensure that these people don’t escape a tax liability from both nations thus adding some part to both countries depending on various facts of residence and the various treaties but even if a small proportion added, the government revenue will increase and at the same time justice served.



SEBI eases norms for IPO of large entities

The most unexpected announcement at Budget was the proposed disinvestment of Life Insurance Corporation of India (LIC) as the government proposed to sell a part of its holding in LIC by way of an IPO. They are hoping that the listing would bring discipline while allowing retail investors to participate in wealth creation. But the plan to sell the stake has been marked by complications given the sheer size of the state-run company.
To put things in perspective, just a 10 per cent share sale to the public is pegged to be at least Rs 1 lakh crore, which will be tough for the market to absorb. India’s largest financial institution with assets of over Rs 32 lakh crore facing hurdles before the IPO. To deal with it, market regulator SEBI has relaxed the norms to make the listing process easier and smooth for large entities like LIC, making it easier for the government to sell a part of its stake through IPO.

As per the new norms now, for any company with a post-issue market capital of above Rs 1 lakh crore, the IPO size will have to be Rs 10,000 crore plus 5 percent of the incremental market capitalisation amount. It means large companies can now divest a minimum of 5 per cent in the IPO, instead of 10 per cent. Further, they will get five years, instead of three, to raise the public float to 25 per cent. The Central government will hold at least 75% in LIC for the first five years post the IPO, and subsequently, hold at least 51% in the insurer at all times after five years of the proposed IPO. This move eases the minimum offer and public holding norms will allow the government more time to abide by rules and pave the way for the much-awaited mega float of Life Insurance Corporation (LIC). This would also encourage large firms to opt for listing.

The government is betting on diluting its stake in state-run LIC via an IPO in the coming fiscal in an attempt to garner enough non-tax revenues to narrow the country’s fiscal deficit. LIC, which is preparing for its IPO and is currently undergoing an evaluation process by actuarial firms, will be the biggest beneficiary of this relaxation by Sebi.

Galwan Valley

India begins probe to continue anti-dumping duty on some steel imports from China


India has begun an investigation on the need to continue an anti-dumping duty on the imports of certain seamless tubes, pipes, hollow profiles of iron and steel from China based on complaints filed by ISMT Limited and Jindal Saw Limited. The applicants have alleged that dumping of these products from China has continued even after the imposition of anti-dumping duty, and there has been a significant increase in the volume of imports. The duty on the product was first imposed in February 2017 and is set to expire on May 16 this year. As per the notification issued by the Directorate General of Trade Remedies (DGTR), there is a likelihood that such activities would continue if such duties were to expire or removed thus bringing us back to square one in our problem. The period of investigation is April 1, 2019, to September 30, 2020.
Based on the duly substantiated application of the applicants and having satisfied itself, on the basis of the prima facie evidence submitted by the domestic industry, substantiating the likelihood of continuation or recurrence of dumping and injury, DGTR had declared that it initiates a sunset review investigation.
The DGTR, the quasi-judicial investigation arm of the commerce and industry ministry, has also begun a separate sunset review anti-dumping investigation in imports of Viscose Staple Fibre from China and Indonesia based on a complaint filed by the Association of Man-Made Fibre Industry of India on behalf of Grasim Industries Limited. The duty was first imposed on July 26, 2010, and then extended. The existing duties will expire on August 7, 2021. The period of investigation for the present investigation is September 1, 2019, to October 31, 2020.
While the other country might not be very happy from such duties being charged but there seems to be no option left for us as we could either keep an outside nation happy or let our markets prosper or rather survive. As unethical as it could ever get in dumping, it is only fair for India to continue with such duties to protect its own interests first. It is hoped that the new investigation shall ensure that the duties continue if not to be increased.

podcasts

The Connectere Podcast #99: The Australian Ball Tampering Scandal

The Connectere Podcast is an initiative to bring forth innovative ideas and opinions of the youth forward via the digital medium. Tune in to this episode of the podcast where Sahib talks about the iconic ball tampering scandal of Australia from 2018.

Here is the Spotify link for the podcast – https://open.spotify.com/show/4lBNc63mANGyz0iJ80WsOt

The First Forum

The First Forum – Edition 83

The First Forum is an initiative that focuses on covering the latest happenings in a brief format. This is in lieu of the importance of knowledge about current happenings in this fast-changing world.
In the Eighty Third- Edition of The First Forum we would be covering the following topics:
1. Politics
2. Science and Technology
3. Business
4. Economics
5. Finance

(By Ashika Deb, Shitij Goyal and Gunika Vij)

Reliance Industries LTD: Company with exceptional performance in 2020

Though the year 2020 has been a forgettable one for many, it was surely an unforgettable one for Mukesh Ambani. The energy-to-telecom-to-digital conglomerate Reliance Industries Ltd (RIL) became India’s first and the only company to cross a market capitalisation of Rs 15 lakh crore as investors rejoiced at fundraising that eventually helped the company in becoming totally debt-free. RIL is also marked for Asia’s 10th largest firm by market capital.

podcasts

The Connectere Podcast #98: The Economy of Nazi Germany!

The Connectere Podcast is an initiative to bring forth innovative ideas and opinions of the youth forward via the digital medium. Tune in to this episode of the podcast where Manav talks about the economy of Nazi Germany.

Here is the Spotify link for the podcast – https://open.spotify.com/show/4lBNc63mANGyz0iJ80WsOt

APPLE INC: Company with exceptional performance in 2020

INTRODUCTION

The present-day generation is the age of technology, mechanization, mobile phones (particularly android & iPhones) and scientific know-how. The degree of achievement and advancement in just the two decades of this century has been rapid to such an extent that imagining the world 50 years down the line seems impossible. A reasonable share of this growth can be attributed to tech giants of the world. Technology has been embedded in ordinary lives leading to enormous revolution over the decade. Even when humanity is battling a pandemic, experiencing an economic downturn and handling protests, tech firms have nothing but grown in the past year. Today, 4 out of the 5 most valued companies in the world by market capitalization are tech firms. In this article, we will follow the growth of Apple Inc. 

FINTECH DISRUPTION IN FINANCIAL INSTITUTIONS

In his 1997 book, The Innovator’s Dilemma, Harvard professor Clayton M. Christensen coined the term ‘disruptive technology’ to signify new ground-breaking technologies and related concepts that refer to the use of these technologies. As the World stands on the brink of a technological revolution that is fundamentally altering the way everyone lives and works, it’s obvious to observe a complete disruption of various industries and their business models. Financial institutions are no exception. Fintech- an amalgamation of two worlds- finance and technology- involves an evolution of the use of technology in financial services. It locks financial services and technology in a firm embrace. And with this fusion comes both disruption and synergies. 

weekly analysis

The Weekly Analysis – Edition 46

There are two aspects to the news- knowing the headline and understanding the intricacies of it. We at The Connectere focus on both. While The First Forum edition gives a brief about the headlines, The Weekly Analysis Edition is meant to educate the reader on what do various news mean and what are their intricacies. This initiative is meant to educate the reader on how to understand the important news. In the Forty Sixth Edition we are covering the following news:

  1. Decoding the Puducherry political puzzle
  2. Indian alternative to Twitter-Koo
  3. Govt shortlists four mid-sized state-run banks for privatization
  4. China overtakes the US, becomes European Union’s biggest trading partner
  5. Rising brent crude oil prices and its impact on India

Decoding the Puducherry political puzzle

Chief Minister V Narayanasamy’s government plunged into a crisis with resignation of two more MLAs from the party and have pushed the Congress-DMK government below the majority mark in the Union Territory. At present, the Congress government has the support of 14 MLAs, while the opposition also has 14 MLAs including the three nominated MLAs of the BJP in the house which has 28 MLAs at present. The peculiar nature of Puducherry politics and the size of each assembly seat explains what makes it easier for legislators to shift their loyalties in this territory.
The latest developments are similar to the strategies that BJP had been applying in other states like Kerala and Tamil Nadu, ahead of the upcoming polls. BJP has been the beneficiary in the latest Puducherry crisis too like the earlier ones. Two MLAs that resigned have already joined BJP and one more is soon going to join. However, Narayansamy claimed that his government continues to enjoy the majority. The opposition in Puducherry said they would be meeting the governor soon seeking action if the Congress government refused to step down.
The entry of Kiran Bedi’s as Lt. Governor has been a factor to shake the status quo in Puducherry. Narayanasamy’s running feud with Kiran Bedi all through his stint as chief minister. He accused the L-G of overstepping her jurisdiction on several occasions. The fact that Bedi would summon ministers and officials during her surprise visits and issue directions did not go down well with the CM. The turf war deteriorated to such an extent that the CM even went to the extent of sitting on a dharna outside Raj Niwas.
Hours after the MLAs resigned, Bedi was replaced as the Lieutenant Governor of Puducherry, with the Telangana governor being given the additional charge of the UT. The reason is linked to the assembly polls due by May. Sources in the BJP say with this move just before the Puducherry election, the Congress has been robbed of its single biggest election issue. The Congress accuses Kiran Bedi of blocking every move of its government and putting up hurdles in its way. But now with her out of the way, the BJP can give a fight to Congress and win. But V Narayanasamy  said that it is a victory in their fight for secularism. It is a victory for the people of Puducherry who are celebrating the removal of Kiran Bedi.
As for the only Congress government in South India right now, the future remains uncertain, multiple sources have said either they will manage the majority using the same resources used by BJP to weaken them or they will continue to rule the state until the government is dissolved by Delhi.

Indian alternative to Twitter-Koo


The government had asked Twitter to remove some accounts and controversial hashtag that spoke of an impending ‘genocide’ of farmers for allegedly promoting misinformation about the protests, adversely affecting public order. But the micro-blogging site reinstated the accounts and tweets on its own and later refused to go back on the decision, contending that it found no violation of its policy and it would violate the free speech of the people. Responding to the ongoing free speech debate between Twitter and the Indian government, it said that India has a robust mechanism for protection of freedom of speech and expression as this fundamental right is not absolute and it is subject to reasonable restrictions as mentioned in Article 19 (2) of the Constitution of India. It further said that non-compliance with government policies would invite penal action against Twitter. The stakes of Twitter are high in a country of 1.3 billion where it has millions of users and is ardently used by the Prime Minister, his cabinet ministers and other leaders to communicate with the public across the globe.
But when the largest microblogging site in the world has not responded favourably to the Government’s terms, the Indian Government then pushed an alternative in the market against Twitter. Koo app, an Indian alternative to Twitter, is creating a lot of buzzes lately. Recording more than 3 million downloads in just 24 hours, it has suddenly become the talk of the town with many big-ticket politicians and celebrities joining the platform in the wake of the government’s ongoing stand-off with Twitter. Most importantly, Koo has been recognised in a prestigious competition held by the Indian government itself under the Made-In-India initiative in August 2020 and won the Atma Nirbhar Bharat App Innovate Challenge which brought it under the limelight.
This move was taken to curb the way the platform Twitter allowed fake, unverified, anonymous content that raised doubts about its commitment to transparency and healthy conversation on that platform. Hence, Indian politicians are excited about the newly introduced Indian version of a microblogging site and are inviting everybody else to join the platform. But the only concern is using the Indian version of the microblogging site is being cut off from the rest of the world because the domestic audience would shift to this alternative app and the Indian audience may not be able to connect with the global audience in case they do not use other bigger microblogging sites.

Govt shortlists four mid-sized state-run banks for privatization

India’s government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues. Privatization of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk. The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank, and the Central Bank of India. Two of those banks will be selected for sale in the 2021-2022 financial year. The government is considering mid-sized to small banks for its first round of privatization to test the waters. In the coming years, it could also look at some of the country’s bigger banks. The government, however, will continue to hold a majority stake in India’s largest lender State Bank of India, which is seen as a ‘strategic bank’ for implementing initiatives such as expanding rural credit.
India’s deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms. New Delhi also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorize loans that soured during the pandemic as bad. Bank of India has a workforce of about 50,000 and Central Bank of India has 33,000 staff, while Indian Overseas Bank employs 26,000 and Bank of Maharashtra has about 13,000 employees, according to estimates from bank unions.
The government hopes that the Reserve Bank of India, the country’s banking regulator, will soon ease lending restrictions on Indian Overseas Bank after an improvement in the lender’s finances that could help its sale. Some economists said there could be a few takers for weak and small banks – saddled with bad assets – but that Modi should consider the sale of bigger banks like Punjab National Bank or Bank of Baroda. While past has proven that many times privatization helps improve the efficiency of the enterprises so it is expected that the customers can expect better service and better returns for investors both short term and long term.

China overtakes the US, becomes European Union’s biggest trading partner

China last year overtook the United States as the EU’s biggest trading partner, the EU statistics agency Eurostat said. According to news agency AFP, Britain which is no longer part of the European Union, was the third-largest trading partner for the bloc, behind China and the United States. The supremacy of China came after it suffered from the coronavirus pandemic during the first quarter but recovered vigorously with consumption even exceeding its level of a year ago at the end of 2020, AFP said. This helped drive sales of European products, particularly in the automobile and luxury goods sectors, while China’s exports to Europe benefited from strong demand for medical equipment and electronics.
The dethroning of the US comes as the EU and China are seeking to ratify a long-negotiated investment deal that would give European companies better access to the Chinese market. Eurostat said the trade volume with China reached 586 billion euros ($711 billion) in 2020, compared to 555 billion euros ($673 billion) for the US. The EU exports rose by 2.2 percent to 202.5 billion euros while at the same time, imports from the People’s Republic of China increased by 5.6 percent to 383.5 billion euros. EU exports to the United States fell by 13.2 percent in the same period and imports by 8.2 percent. In addition to the Covid-19 crisis, transatlantic trade has been impaired by a series of tit-for-tat feuds that have resulted in tariffs being on steel and products such as French champagne or Harley-Davidson motorcycles. Eurostat said trade with the UK plummeted in 2020, the year Britain officially left the bloc, though it was in a transition period to blunt the effects of Brexit until December 31. EU exports to the UK fell by 13.2 percent, while imports from across the channel dropped by 13.9 percent. While the Covid-19 can be given a reason to have had a rigged response on the entire global economy, but with the improving global condition different regions have different recovery rates so we can expect improving results everywhere apart from the export affected by Brexit in the European Union.

oil during coronavirus

Rising brent crude oil prices and its impact on India

The price of Brent crude crossed the $60 per barrel mark after over a year. The price of Brent Crude has risen by over 50 per cent since the end of October after prices had remained around $40 per barrel for five months. The rise in prices is because major oil-producing countries had cut oil production last year amid a sharp fall in demand due to the Covid-19 pandemic. However oil-producing countries have continued to limit production despite an increase in prices with Saud Arabia cutting its oil production by 1 million barrels per day to strengthen crude oil prices. Expectations of strong improvements in demand with the global rollout of the Covid-19 vaccine have also put upward pressure on crude oil prices. Let’s see how this will impact India?
Rising crude prices may have a cascading impact on petrol and diesel prices in India, which have now hit a new record high which will further increase the fuel bill of the consumers. The increase in oil prices will increase the country’s import bill, and further, disturb its current account deficit (excess of imports of goods and services over exports). India imports 80 per cent of its crude oil requirements and the average price of Indian basket of crude oil has already risen to $54.8 barrel for January. This could also increase inflationary pressures that have been building up over the past few months and will decrease the space for the monetary policy committee to ease policy rates further. The government had hiked central taxes on petrol and diesel in 2020 to boost revenues amid lower economic activity. The increase in taxes had prevented consumers from getting the benefit of low fuel prices as international prices crashed during the first quarter of this fiscal and are now contributing to record high prices as international prices have recovered. Petrol and diesel prices in India are pegged to the international prices of the two products. If oil prices continue to increase like this, the government shall be forced to cut taxes on petroleum and diesel which may cause loss of revenue and deteriorate its fiscal balance.  However, there could be a positive side to the oil price hike as the value of Indian oil and gas companies could be positively impacted. The government could get greater value from disinvestment in Bharat Petroleum Corporation Limited and remittances from the Persian Gulf could increase.

 

 

 

Page 1 of 5

Powered by WordPress & Theme by Anders Norén

Get all updates from The Connectere. Sign up below

The Connectere publishes new content daily. It ranges from articles to podcasts and news analysis. To not miss out on these updates, sign up for our email newsletter. We promise we don't ever spam. (Once you put in your email, you will need to go and confirm the subscription from your inbox once)

Subscribe!