Eye on fiscal deficit, govt may carry over subsidy bills

Source: LiveMint.com, Dec 17, 2018

New Delhi: The government is likely to account for a significant portion of its subsidy burden for the current fiscal, including ₹20,000 crore on subsidizing fuel, in 2019-20 to meet the fiscal deficit target for the year to 31 March. “We have to shift part of the overall subsidy bill to the next financial year. The petroleum subsidy bill is expected to exceed the budgeted target by ₹20,000 crore due to high crude oil prices and rupee depreciation, which cannot be footed this fiscal year,” a government official said on condition of anonymity.

The Modi government has allocated ₹2.9 trillion for various subsidies in the 2018-19 budget, including ₹24,933 crore for petroleum subsidy, which analysts say is an underestimation considering that fuel subsidies stood at ₹24,460 crore in 2017-18, when average crude oil prices were much lower. Read the rest of this entry »

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Current account deficit widens to 2.9% of GDP in Q2

Source: The Economic Times, Dec 07, 2018

India’s current account deficit (CAD) widened to 2.9 per cent of the GDP in the second quarter of the fiscal compared to 1.1 per cent in the year-ago period, mainly due to a large trade deficit, the RBI said Friday.

The CAD, or the difference between outflow and inflow of foreign exchange in the country’s current account, was USD 19.1 billion during the quarter ended September 30, 2018.

It increased from USD 6.9 billion or 1.1 per cent of GDP in the second quarter of 2017-18. The CAD stood at USD 15.9 billion (2.4 per cent of GDP) in the April-June quarter.

“India’s current account deficit (CAD) at US$ 19.1 billion (2.9 per cent of GDP) in Q2 of 2018-19 increased from US$ 6.9 billion (1.1 per cent of GDP) in Q2 of 2017-18 and US$ 15.9 billion (2.4 per cent of GDP) in the preceding quarter,” the RBI said.  Read the rest of this entry »

Microfinance industry may come up with Rs 8-bn pool of saleable securities

Source: Business Standard, Nov 30, 2018

Kolkata: To tide over liquidity squeeze, the microfinance industry is expected to come up with a Rs 8-billion pool of saleable securities by the first week of December. This is for the first time that the microfinance industry is coming up with a common pool.

According to a senior official in the MicroFinance Institutions Network (MFIN), the representative body of microfinance institutions, the initial size of the pool was estimated at around Rs 5 billion. However, given good participation from small and large MFIs, the size of the pool is expected to be around Rs 8 billion.

The pool will be bundled with a mix of small and big MFI portfolios across geographies, will be credit rated and sold to banks.

MFIs, especially small and medium-sized ones, have been facing acute liquidity crunch ever since the IL&FS crisis broke out. Read the rest of this entry »

India Inc foreign borrowings down 66% to $1.41 billion in October

Source: The Economic Times, Nov 28, 2018

MUMBAI: India Inc’s foreign borrowings dipped nearly 66 per cent to USD 1.41 billion in October this year, Reserve Bank data showed Wednesday.

The domestic firms had borrowed USD 4.09 billion from overseas markets through external commercial borrowings (ECBs) as well as Foreign Currency Convertible Bonds (FCCBs) in October 2017.

Besides, there was additional borrowings of USD 314.99 million through rupee denominated bonds (RDBs) in the year-ago month.

However, the borrowings through RDBs remained unchanged in October this year. Read the rest of this entry »

RBI eases liquidity squeeze for NBFCs, small businesses; relaxes ECB hedging guidelines

Source: Financial Express, Nov 27, 2018

Amid persisting concerns in the government over a liquidity squeeze in the non-bank lenders (NBFC) segment and its adverse effect on the financing of small businesses, the Reserve Bank of India on Monday announced further easing of the hedging norms for external commercial borrowings (ECBs).

According to a circular issued by the central bank, for ECBs of maturity period between three-five years, the mandatory hedging requirement will now be 70%, instead of 100%. Also, for such ECBs already raised, the existing hedges would be required to be rolled over only to the extent of 70% of the outstanding amount. Read the rest of this entry »

Finance minister Arun Jaitley to present interim budget in February

Source: The Economic Times, Nov 23, 2018

NEW DELHI: Finance minister Arun Jaitley will follow established convention and present an interim budget for FY20 in February 2019 that’s expected to highlight the government’s achievements and lay out its vision for the next five years, a senior official said. He rejected speculation about a full budget being introduced months before a general election.

However, the government is not ruling out a few tax measures in the budget, citing precedents when transition budgets have included such measures. Read the rest of this entry »

NBFC Mudra loans grew faster than banks in FY18

Source: LiveMint.com, Nov 22, 2018

Mumbai: Non-banking financial companies (NBFCs) still have a long way to go to achieve the scale of commercial banks in Mudra loans, but they’re growing swiftly in sanctioning these small loans for businesses, official data showed.

According to the 2017-18 annual report of Pradhan Mantri Mudra Yojana (PMMY), though NBFCs sanctioned only over ₹27,000 crore of Mudra loans in FY18 against ₹92,492.68 crore by public sector banks, their year-on-year growth was faster. While NBFC Mudra loan sanctions increased ₹21,562.63 crore from a year ago, state-run banks could raise their Mudra loans by only ₹20,539.01 crore in the same period.

Impressively, NBFCs not only met their Mudra target of ₹9,050 crore for FY18, but their sanctions for the year were a five-fold jump from the previous year. Read the rest of this entry »