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A quick look at Seventh Pay Commission’s recommendations

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Picture Courtesy:- www.financialexpress.com

New Delhi:  The Seventh Pay Commission headed by Justice AK Mathur submitted its report to Indian Finance Minister Arun Jaitley on Thursday. It recommended a 16-percent salary hike for government servants with an estimated 47 lakh serving central government employees and 52 lakh pensioners expected to benefit from the recommendations.

Following are some of the highlights:.

  • A 16-percent salary hike recommended.
  • A 24-percent hike in pension, besides a minimum pay of Rs.18,000 per month for all entry-level employees.
  • Rs.2.5 lakh for the senior-most serving officer, the cabinet secretary.
  • Increase in pay will be 16 percent, increase in allowances will be 63 percent.
  • Annual increment of 3 percent recommended.
  • An estimated 47 lakh serving central government employees and 52 lakh pensioners will be impacted.
  • Proposals will entail an outflow of Rs.102,100 crore from the exchequer during the next fiscal.
  • One rank One pension(OROP) proposal recommended for all employees, including the defence personnel, retiring before January 1 next year.
  • Rate of house rent allowance be revised to 27 percent, 18 percent and 9 percent when dearness allowance crosses 50 percent, and to 30 percent, 20 percent and 10 percent when it crosses 100 percent.
  • House building advance ceiling proposed at Rs.25 lakh against Rs.7.5 lakh.
  • Health insurance scheme for central government employees and pensioners.
  • The ceiling of gratuity recommended at a higher rate of Rs.20 lakh, against Rs.10 lakh.
  • For defence personnel, against the existing pay of Rs.6,000 per month for service officers, the proposal is for Rs.15,500.
  • Performance-related pay for all categories of central government employees.

(Inputs from IANS)

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Economic Survey 2016-17 : Arun Jaitley Says Significant Decline in India’s Reliance on Cash

Economic Survey is a snapshot of the state the country is in

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Economic survey presents a state of the country
The Economic Survey 2016-17 was charted by Finance Minister Jaitley on August 11 (representational image) Wikimedia
  • Finance Minister Jaitley tabled the second volume of Economic Survey 2016-17 in both Houses of Parliament
  • Second volume to be presented by Chief Economic Adviser Arvind Subramanian and his team

New Delhi, August 12, 2017: The last day of the Monsoon session of the Parliament saw the Indian Finance Minister Arun Jaitley table the second part of Economic Survey 2016-2017.

The survey revealed that a sharp, however balanced decline has been observed in the use of cash after Prime Minister Narendra Modi heralded the demonetization move in November last year. This trend has been observed both, in levels, and as a share of GDP and money.

Before assessing whether the move was a success or a failure, we must first identify what were the objectives behind stalling Rs. 500 and Rs. 1,000 notes,

  • Immediate objective – flush out large amounts of black money that were hoarded in cash at the moment
  • Long term objective – transform the cash-based Indian economy into a digital economy

It was assumed that these objectives would make India an efficient economy with higher tax revenues.

Before the introduction of demonetization, India heavily relied on cash, which in turn led to an unhealthy cash-to-GDP ratio (12 percent) – a trend that was only worsening with time.

The finance minister presented the second volume of Economic Survey 2016-17 in both the houses of the Parliament with demonetization being discussed for a significant part. The following has been revealed in an attempt to gauge the outcome of the move,

  • At present, total cash in holding is Rs. 3.5 lakh crore. This figure is 20 percent less than what it would have been had the economy not been demonetized.
  • Cash as a share of GDP has also witnessed a decline by 1.6 percentage points. Previously it was 11.3 percent of GDP and now stands at 9.7 GDP.
  • Cash as a share of M1 which economically represents liquid portions of money supply, has also declined by five percentage points.

To ease understanding of everybody from a non-economic background, these trends indicate a significant reduction in Indian economy’s reliance on cash since November 2016.

Another bonus point is the huge amount of cash that was previously lying dormant with people and has now entered the banking system.

ALSO READ: Indian Government’s Demonetisation measures did not impede Future Black Money Flows: UN report

When talking about the long term objective of the move- digitalization, a significant movement can be observed across all sectors :

  • The affluent segment of the society has increasingly shifted to mobile banking, online transactions, and app-based banking solutions
  • The middle segment are using their debit and credit cards
  • People from the less affluent segment are slowly joining the digital economy with their Jan Dhan accounts and RuPay cards
  • Pensioners who were previously only undertaking transactions in cash are now being encouraged to use card-based techniques.
  • Farmers, who comprise a significant part of the Indian economy, are also being encouraged to issue and use Kisan credit cards.

The Indian banking sector is not only promoting the issuance of debit and credit cards but also their use.

The question that comes to mind here is, was demonetization successful? 

It would be wrong to say that the economy has completely transformed into a digital economy as many people have shifted back to cash. However, digital transactions are higher than pre-demonetization levels, and the overall movement is in the positive direction.

The Indian economy can thus, be rightly considered on the path to a holistic digital economy as the Economic Survey 2016-2017 notes “surge has moderated but the level and pace of digitalization are still substantially greater than before demonetization.”

However, while there is proof that the reliance on cash has declined sharply, it has also been pointed out in the survey that a “definitive judgments can only be passed if current levels of cash relative to GDP persist over time but so far”.


 
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India-UK free trade agreement to be signed once it exits the European Union in 2 years Time

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European Union. Pixabay

New Delhi, March 28, 2017: With Britain set to launch the formal process of its exit from the EU on Wednesday, a prominent British entrepreneur has said that a joint working group of officials from both countries is working on an India-UK free trade agreement to be signed once it exits the EU in two years time.

“One of the very important steps forward of Theresa May’s (India) visit last November was that we now have a government-to-government working group with the Commerce Secretary and the International Trade Secretary in charge that is looking at the totality of the relationship,” Patricia Hewitt, Chair UK-India Business Council, told BTVi in an interview.

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“What I found since the referendum is the great enthusiasm on the part of India’s political and business leaders as well as Britain’s political and business leaders, for…it may be a free trade agreement…perhaps more accurately a comprehensive economic partnership. This was discussed further during Finance Minister Arun Jaitley’s very successful visit to London recently,” she said.

“And the aim there is not only to identify things that both governments could act on immediately even before Brexit actually happens, but also to lay the groundwork for a more formal agreement..a bilateral agreement that could happen once the UK actually leaves the European Union,” she added.

British Prime Minister Theresa May plans to trigger Article 50 – the step that starts the process of negotiations for Britain’s formal exit from the EU – on Wednesday.

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There is consequent uncertainty over what will happen once Britain leaves the EU because it needs to make new trade agreements with the rest of the world.

Indian Commerce Minister Nirmala Sitharaman had announced this joint working group last year following talks here with UK’s then Secretary of State for International Trade Liam Fox after Britain voted in a referendum to exit the EU.

Sitharaman said formal talks on a bilateral free trade agreement could only begin once the UK formally exited the EU.

Bilateral trade between the two countries stood at $14 billion in 2015-16, as compared to $14.33 billion in 2014-15. (IANS)

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Are Multiple Deposits allowed till Dec 30? U-turn by Reserve Bank of India (RBI) leads to more Confusion

Finance Minister Arun Jaitley said that the one-time deposit till December 30 would not invite scrutiny by bank officials

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Reserve Bank of India. VOA

New Delhi, December 21, 2016: The U-turn by the Reserve Bank of India (RBI) on Wednesday withdrawing its circular of Monday may lead to further confusion.

The question that still remains: Are multiple deposits till December 30 allowed?

In its circular of December 19, the RBI had said that deposit of old Rs 1,000 and Rs 500 notes would be allowed only once till December 30.

That same evening, Finance Minister Arun Jaitley said that the one-time deposit till December 30 would not invite scrutiny by bank officials.

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On Tuesday, Jaitley emphasised that only one-time deposit would be allowed.

On Wednesday, the RBI notified that it was withdrawing the first two paras of its Monday notification for KYC-compliant accounts.

That would mean that the clause on one-time deposit — which was in part one — too goes out.

By doing this, the RBI has now contradicted what the Finance Minister said on Monday and reiterated on Tuesday — that deposits can be made only once.

The confusion would only get removed by another notification, and clear explanation, by the RBI.

On Tuesday, banks were wary about taking in deposits above Rs 5,000 because the Monday notification had also said that credit to a person’s account should only be done after questioning by two bank officials and on “receiving a satisfactory explanation” as to why the amount could not be deposited earlier.

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This subjective satisfaction of bankers had resulted in indecision in banks with most managers saying that it was not their job to assess whether an explanation by depositors was “satisfactory”.

The circular had also come in for criticism from the people and political parties who pointed out that both the Prime Minister and the Finance Minister had repeatedly assured that old notes, without any condition, would be accepted till December 30.

The government had demonetised Rs 1,000 and Rs 500 notes on November 8.

The Monday circular had stated:

(i) Tenders of SBNs (Specified Bank Notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation.

The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in the CBS (Core Banking Solution) to that effect so that no more tenders are allowed.

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(ii) Tenders of SBNs up to Rs 5,000 in value received across the counter will be allowed to be credited to bank accounts in the normal course until December 30, 2016. Even when tenders smaller than Rs 5,000 are made in an account and such tenders taken together on cumulative basis exceed Rs 5,000 they may be subject to the procedure to be followed in case of tenders above Rs 5,000, with no more tenders being allowed thereafter until December 30, 2016.

Wednesday’s circular said: On review of the above, we advise that the provisions of the above cicular at sub para (i) and (ii) will not apply to KYC compliant accounts.

Non-KYC accounts have Rs 50,000 limit on deposits and will be subject to norms (i) and (ii) of Monday’s circular. (IANS)