Economy
India's 2016-17 budget credit positive: Moody's and Fitch Ratings

According to Moody's while the budget is moderately positive for most sectors, it is negative for public sector banks

 

Global credit rating agencies -- Moody's Investors Service (Moody's) and Fitch Ratings -- termed India's fiscal budget for 2016-17 as credit positive for sovereign rating, but pointed out certain uncertainties.
 
"The budget is modestly credit positive for the sovereign, since it indicates a continued commitment to gradual fiscal consolidation by bringing down fiscal deficits to 3 percent over the next two years," said Atsi Sheth, a Moody's associate managing director for the Sovereign Risk Group, in a statement.
 
"However, the proposals did not contain significant measures to address structural fiscal challenges, such as the government's low tax revenue base and the vulnerability of government finances to economic shocks," added Sheth.
 
"This situation suggests that any deficit reduction will come from either cyclical upswings or tactical fiscal management, rather than a broad-based fiscal consolidation strategy," Sheth said.
 
According to Moody's while the budget is moderately positive for most sectors, it is negative for public sector banks.
 
The credit rating agency said the budget is credit negative for public sector banks due to its insufficient allocation of capital for the sector, as the government has stuck to the capital infusion road map announced last year, budgeting Rs.25,000 crore in capital injections.
 
However, increased recognition and provisioning for non-performing loads (NPL) will require a corresponding front-ending of capital requirements, which suggests that capital constraints will remain a key credit weakness for public sector banks, Moody's said.
 
The budget's changes on tax and duties are credit positive for energy and commodity producers, but negative for auto-makers.
 
Finally, the budget is positive overall for India's securitisation markets as changes in the distribution tax norms for securitisation trusts will improve investors' post-tax returns and make investments in securitisation products more appealing, which could attract a new class of investors to the asset class.
 
According to Fitch Ratings, the budget contains a number of elements that could be positive from a sovereign rating perspective over the medium term, but uncertainties regarding implementation of the reform agenda and meeting targeted revenue growth remain.
 
Fitch Ratings said the Indian government retains its vision on how to structurally improve the economy and create sustainable growth and cited reforms relating to financial sector, agriculture and liberalisation of the foreign direct investment regime announcements.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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Apple can't be forced by FBI to unlock iPhone

It's a win for Apple, which is being pressured by federal law enforcement agents to help it break into iPhones in at least 13 instances across the country

 

A federal magistrate-judge in New York city has ruled that the government can't force Apple to hack an iPhone to investigate a drug dealer.
 
It's a win for Apple, which is being pressured by federal law enforcement agents to help it break into iPhones in at least 13 instances across the country.
 
Apple says doing the federal government's bidding would undermine the security features in hundreds of millions of iPhones around the world, CNN reported.
 
So far, the justice department was relying on the All Writs Act, 1789, which gives judges broad discretion in carrying out the law.
 
On Monday, Judge James Orenstein said federal investigators cannot use that law to pull this off.
 
The US government's argument does not justify "imposing on Apple the obligation to assist the government's investigation against its will", the judge said.
 
The judge said law enforcement was inappropriately trying to use powers that it had not been given by the US Congress.
 
"The question is not whether the government should be able to force Apple to help it unlock a specific device," Orenstein said.
 
"It is instead whether the All Writs Act resolves that issue and many others like it yet to come... I conclude it does not," the judge ruled.
 
The case involves a methamphetamine dealer, Jun Feng, who was arrested in 2014 and cut a plea deal with prosecutors.
 
The Drug Enforcement Agency in 2015 got a search warrant to look through Feng's iPhone 5C to track down his fellow drug dealers and customers, but the device was running the iOS 7, and agents could not crack the passcode to see the data inside.
 
The agency sought Apple's help. Apple initially said it would help. The US Department of Justice claims Apple was being inconsistent.
 
"Apple... only changed course when the government's application for assistance was made public by the court," the department said on Monday.
 
An Apple senior executive said on Monday that the company did offer to help -- but only if the US government makes a lawful request.
 
"We will produce information when there is a lawful order to do so," the executive said. "But Judge Orenstein, on his own behalf, said he would not issue this order."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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Only 60% of interest accrued after April 1 taxable

The salaried class had been shocked by Monday's budget proposal presented by Finance Minister Arun Jaitley that seemed to suggest that 60% of withdrawal from EPF would be taxable

 

The central government on Tuesday clarified that only some portion of the interest accrued on Employees Provident Fund (EPF) contributions made after April 1 this year will the taxed while the principal will continue to remain tax exempt.
 
Clarifying the position, Revenue Secretary Hasmukh Adhia said 40% of the interest accrued on contributions made after that date would be tax exempt. He said the corpus won't be taxed on withdrawal.
 
The salaried class had been shocked by Monday's budget proposal presented by Finance Minister Arun Jaitley that seemed to suggest that 60% of withdrawal from EPF would be taxable.
 
There would be no change in the tax treatment of contributions to the Public Provident Fund (PPF), Adhia said.
 
Presenting the budget for 2016-17, Jaitley said 40% of the National Pension Scheme (NPS) corpus would be tax exempt at the time of withdrawal to make it attractive for savers.
 
Jaitley said the annuity fund which goes to legal heir won't be taxable.
 
In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from April 1.
 
He said the government was proposing the monetary limit for contribution of employer in recognised Provident and Superannuation Fund of Rs.150,000 per annum for taking tax benefit.
 
The service tax on single premium annuity policies had been reduced to 1.4% from 3.5%  of the premium paid in certain cases.
 
Similarly, Jaitley also announced exemption of service tax for annuity services provided by NPS and services provided by Employees Provident Fund Organisation (EPFO).
 
The clarification from Adhia seems to have come due to the uproar against the government's proposal.
 
"The Finance Bill does not reflect Adhia's clarification. Perhaps the government may change the relevant provisions," Neha Malhotra, executive director, Nangia & Co, an international tax advisory and accounting firm, told IANS.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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