- The Reserve Bank of India unexpectedly kept its benchmark interest rate unchanged as headline inflation breached its medium-term target for the first time in more than a year. India will launch its first debt exchange-traded fund comprising debt of state-run companies, aiming to strengthen the country's bond market and boost retail investor participation. Google co-founders Larry Page and Sergey Brin are stepping aside as leaders of the Internet behemoth they founded 21 years ago, handing over the company to Sundar Pichai. Here is more on what made news this week.
- The Reserve Bank of India kept its key lending rate on hold in a shock decision, despite a worrying slowdown in the country that prompted the central bank to sharply reduce its economic growth forecast to 5 per cent for the year through March. The central bank acknowledged that it does have room to cut rates further, but said it was concerned about inflation in the near-term
- India will launch its first debt exchange-traded fund (EFT) comprising debt of state-run companies, said Finance Minister Nirmala Sitharaman, in a bid to allow retail investors to buy government debt. Bharat Bond ETF will have a fixed maturity of three and ten years and will trade on the local stock exchange. It will invest in a portfolio of bonds of state-run companies and other government entities, a government statement said.
- Google founders Larry Page and Sergey Brin are stepping down as leaders of parent company Alphabet Inc., ending day-to-day involvement as regulators intensify scrutiny of an internet industry the two men helped create. Sundar Pichai, the Indian-born CEO of Google, will also run Alphabet. The transition gives Pichai oversight of the conglomerate’s vast array of expensive, futuristic endeavours, such as autonomous cars and new health-care technology.
- The lower minimum alternate tax (MAT) rate announced as part of the corporation tax rate cuts in September will be applicable from the current fiscal year (2019-20 or FY20), the government told Parliament after an error in the Taxation Amendment Bill spooked companies. The Taxation Law Amendment Bill, 2019, introduced and passed in the Lok Sabha this week, had said the lower MAT rate of 15 per cent, down from 18.5 per cent, will be applicable from the next financial year (2020-21 or FY21), while the Ordinance had said the lower rate will be effective from the current financial year.
- Goods and services tax (GST) collection recovered to a seven-month high in November, crossing the Rs 1-trillion mark on account of the festive season demand and anti-evasion measures by the government. Although the collection figures come as a breather for the government, it is lower than the expected collection rate needed to meet the steep target for 2019-20 (FY20).
- Sebi rejected Karvy Stock Broking's plea to use its clients' power of attorney (PoA) to settle trades done, citing the fact that securities worth Rs 2,300 crore of more than 95,000 clients were illegally transferred by the broker. The market regulator alleged Karvy, in one demat account under its name on the BSE, unauthorisedly transferred securities worth Rs 2,300 crore of more than 95,000 clients, into this account, by misusing the PoA given by its clients.
- Former finance minister P Chidambaram was released from prison after the Supreme Court granted him bail in the INX Media case. "The fact is that after 106 days of pre-trial incarceration there is not a single charge framed against me as I speak now," said Chidambaram, a senior Congress leader, after walking out of Tihar Prison in Delhi.
Number Of The Week
41,000: The milestone that the Sensex crossed during intraday trade last week to hit a lifetime high. It also closed above this mark twice this week.
- The northward movement was primarily on account of the robust inflows made by foreign investors, who remained bullish.
- Another reason for the surge was the rally in the global markets due to optimism about a US-China trade deal. This fuelled sentiments among domestic investors. However, Indian institutional investors were selling shares.
- The benchmark indices also gained on hopes that RBI may reduce interest rates and infuse fresh liquidity in the system, largely on concerns of GDP growth slipping below 5 per cent in the second quarter.
- Some experts believe the worst is over for the markets and hope for a better future following a few recent moves by the government, such as the massive cut in corporate tax rates.
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A few links for further reading
Hard path to growth
The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.
Small savings scheme
Investors breathed a sigh of relief when the government announced that interest rates on these instruments would not be revised for the fourth quarter of the calendar year.
Invest and emigrate
The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.