Nation
Urjit Patel calls for unified financial regulator for Gujarat's GIFT City
Reserve Bank of India (RBI) Governor Urjit patel called for a unified regulator for the successful execution at India's first International Financial Services Centre (IFSC) coming up at Gujarat International Finance Tec-City (GIFT).
 
"A unified financial regulatory framework providing for a single regulator for GIFT City could contribute to better regulation and supervision of the financial entities," Patel said here at the ongoing Vibrant Gujarat Global Summit 2017.
 
"While individual regulators can supervise the entities initially when the size of the business is small, a unified regulator would be necessary to pay undivided attention to the IFSC. Work on the design of such a framework should begin soon so as to be able to implement this in time," he added.
 
He also said that the existing laws governing financial contracts in India should be reviewed and gaps addressed.
 
"Based on the review, a world class legal framework for financial contracts in GIFT could be enabled, either by appropriately amending the existing laws governing financial contracts or enacting a fresh law," Patel said.
 
"Either way, this should be expedited, may be by constituting a high level working group to address this gap in mission mode," he added.
 
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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Fitch downgrades India's growth on 'uncertain' note ban benefits
Fitch Ratings has downgraded India's growth to 6.9 per cent for 2016-17 from the earlier 7.4 per cent due to "uncertainty" over the benefits of demonetisation.
 
"The demonetisation of large denomination bank notes has caused short-term disruption in India's economy and led us to downgrade our growth forecasts for 2017," Fitch Ratings said in its latest bi-monthly newsletter released on Tuesday. 
 
"The move has some potential benefits, but the positive effects are unlikely to be strong or last long enough to make a significant difference to government finances or medium-term growth prospects.
 
"The impact on the economy will increase the longer the disruption continues, but Fitch has already revised down its GDP growth forecast for the financial year ending March 31 to 6.9 per cent from 7.4 per cent," it said.
 
The move has the potential to raise government revenue and encourage bank lending, but Fitch Ratings believes the positive effects were unlikely to be strong and sufficiently enduring to support credit profiles, it said.
 
"The withdrawal of bank notes has left consumers without the cash needed to complete purchases and farmers without the funds to buy seeds and fertilizer for the sowing season. Supply chains have been disrupted and time spent queueing in banks has meant lost hours of productive work," the newsletter said.
 
Though the intentions behind demonetisation were positive and in keeping with broader reform efforts, the short-term pain may outweigh the uncertain long-term gains, Fitch said.
 
Government finances may also benefit from a proportion of high-denomination notes not being traded. This potentially significant amount would be subtracted from the Reserve Bank of India's (RBI) liabilities and the authorities would have the option to transfer this windfall to the government.
 
Fitch, however, said there were considerable uncertainties over the potential positive effects.
 
"Most importantly, demonetisation is a one-off event. People that operate in the informal sector will still be able to use the new high denomination bills and other options (like gold) to store their wealth. There are no new incentives for people to avoid cash transactions," it said.
 
"The informal sector could soon go back to business as usual," it added.
 
There are similar uncertainties over the impact on the banking sector. While some banks have already reported large increases in deposits since demonetisation began, a surge in low-cost funding might encourage credit growth and support the economy.
 
"The positive impact on funding conditions will depend on deposits remaining in banks beyond the next few months. There is nothing to prevent them being withdrawn again," the newsletter said.
 
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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Retreating monsoon worst in 140 years; TN declares drought as 144 farmers die
The Tamil Nadu government declared a drought on January 10, after 144 farmers ended their lives between October and December. As many as 106 farmers were reported to have committed suicide in one month, according to a notice issued by the National Human Rights Commission to the state government on January 5.
 
The retreating northeast monsoon -- usually unnoticed in India owing to the singular importance of the larger southwest monsoon -- in 2016 was the worst-ever over the last 140 years, according to Indian Meteorological Department (IMD) records, since 1876.
 
"It is an unprecedented situation," S. Panneerselvam, Professor and Head, Agro Climate Research Centre, Tamil Nadu Agriculture University, Coimbatore, said. "It has severely affected 21 of 32 districts of Tamil Nadu." 
 
"Tamil Nadu celebrates Pongal on January the 16th," said Panneerselvam. "It is when the harvest begins, but the yield this time is going to be the worst the state will see."
 
On January 5, reservoirs in Tamil Nadu were at less than 20 per cent of their capacity, cited as the worst-ever for the state.
 
Record-keeping began in 1871, but a worse northeast monsoon, which sweeps across Tamil Nadu, coastal Andhra Pradesh, south interior Karnataka and Kerala, between October and December, was recorded in 1876, making 2016 the year of the second-worst monsoon in 145 years.
 
Overall, the northeast monsoon was 45 per cent short of the average for this period, the state worst hit being Tamil Nadu, where rainfall for the season was 62 per cent short of normal. Although the southwest monsoon -- which waters the subcontinent between June and September -- was classified as normal across India (three per cent below average), it was 19 per cent deficient in Tamil Nadu.
 
Hit by shortages from both monsoons, Tamil Nadu, where the winter crop depends more on the northeast monsoon than in any other Indian state, reported a 33 per cent drop in the winter sowing of rice, according to latest crop sowing situation report, updated weekly by the Ministry of Agriculture.
 
The northeast monsoon becomes active after the southwest monsoon retreats from the subcontinent. While there is no specific date for the retreat of southwest and the onset of northeast monsoon, October is regarded as the starting period of the lesser monsoon.
 
Apart from the two monsoons, Tamil Nadu also receives pre-monsoon rains, all important for agriculture.
 
Nagapattinam, Thiruvarur and Thanjavur were the worst hit districts in Tamil Nadu.
 
"There are 135,000 paddy farmers among the 175,000 lakh farmers in our district, Nagapattinam, which falls in the Cauvery delta. Half the farmers have sown the paddy crop, but less than 20 per cent of the crop has crossed the flowering stage," said J. Sekar, Joint Director of the Agriculture Department in the eastern coastal district of Nagapattinam. "Even this mature crop will yield nothing."
 
"Under the Pradhan Mantri Fasal Bima Yojana (prime minister's crop insurance scheme), about 130,000 (95 per cent) paddy farmers in the district are insured," said Sekhar. His claim could not be independently verified. "A premium of about Rs 11 crore has been collected. This will provide a safety net to our farmers."
 
The failure of the northeast monsoon was evident across the South except Telangana, where farming is mostly rain-fed and dependent on the southwest monsoon.
 
With the northeast monsoon failing and the southwest sketchy, reservoirs in the southern states are in crisis -- or nearing one.
 
Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and Kerala now report the highest deficits nationwide. Tamil Nadu reservoirs are 82 per cent short of normal levels -- the highest deficit in India currently -- while those in Andhra Pradesh are 53 per cent short, Karnataka 39 per cent and Kerala 37 per cent.
 
Karnataka declared a drought in 22 districts and some additional talukas in October 2016; the state has received Rs 1,782 crore from the central government. All of Kerala has been declared drought-hit.
 
As 2016 ended, South India's combined reservoir levels were 34 per cent of capacity, which is 22 percentage points less than 56 per cent, the average water availability over the last 10 years.
 
Tamil Nadu had targeted 14.5 lakh hectares under rice in 2016-17, according to the weekly sowing situation report dated January 6, of the Agriculture Ministry, more than any other state. But no more than 7.18 lakh hectares had been sown until January 5, which is 3.5 lakh hectares -- or 33 per cent -- less than the five-year sowing average of 10.68 lakh hectares.
 
Compared to the first-week-of-January average of 17.28 lakh hectares of sowing, rice has been planted on 12.74 lakh hectares across India, leaving a deficit of 4.54 lakh hectares, or 26 per cent.
 
"Less area coverage has been reported from the states of Tamil Nadu (3.50 lakh hectare), Andhra Pradesh (0.31 lakh hectare), Karnataka (0.15 lakh hectare), Telangana (0.13 lakh hectare), Assam (0.12 lakh hectare), Odisha (0.09 lakh hectare) and Kerala (0.09 lakh hectare)," said the government's sowing report.
 
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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