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Finance Minister Nirmala Sitharaman Measures To Boost Export and Housing Sector

With GDP growth sliding to six-year low of 5 per cent, Finance Minister Nirmala Sitharaman on Saturday announced a fresh set of measures to boost exports and the housing sector.

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TV, LED panels, Finance Minister, India, import duty
Finance Ministry has abolished the import duty on open cell LED TV panels from 5 per cent to zero. Wikimedia Commons

With GDP growth sliding to six-year low of 5 per cent in April-June quarter and several sectors facing low demand, Finance Minister Nirmala Sitharaman on Saturday announced a fresh set of measures to boost exports and the housing sector.

The key measures include extending the scheme of Reimbursement of taxes and Duties for export promotion, fully automated electronic refund for Input Tax Credits (ITC) in GST, revised priority sector lending norms for exports and expanding the scope of Export Credit Insurance Scheme (ECIS). An inter-ministerial working group has also been formed to monitor export finance.

Accordingly, the Scheme for Remission of duties or Taxes on Export Product (RoDTEP) was announced which will replace Merchandise Exports from India Scheme (MEIS) for textiles. In effect, RoDTEP will more than adequately incentivise exporters than existing schemes put together.

Revenue foregone on this account is projected at up to Rs 50,000 crore.

Existing dispensation in textiles of MEIS plus old ROSL scheme will continue up to December 12, 2019. Textile and all other sectors which currently enjoy incentives upto 2 per cent over MEIS will transit into RoDTEP from January 1, 2020.

Finance, Minister, Nirmala Sitharaman, GDP, Measures
There is concern about the speed and nature of the government and industry’s response, and will these actions turnaround things immediately, or not. Pixabay

Sitharaman also announced to reduce turnaround time for exports by leveraging technology and benchmarking it to Boston and Shanghai ports.

She said that priority sector lending norms for exports is being examined by the RBI and the guidelines will come out soon. Further, government will provide Rs 1,700 crore for export guarantees and to cut credit cost for the exporters.

The minister came out with several measures to prop up country’s housing sector which is considered one of the main job creators. Now, there would be relaxed ECB norms for housing sector. Further, interest on house building advance would be lowered by linking it with 10-year government securities.

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Sitharaman said that there would be special window for affordable and middle-income housing. Under this, a special window to provide last-mile funding for housing projects which are non-NCLT, non-NPA cases to complete unfinished projects. For this, a fund of Rs 10,000 crore would be contributed by the government and “roughly the same size by outside investors.”

The fresh set of measures to boost the economy has come in the wake of sinking business sentiment across the industry.

With most engines of growth stuttering, the Reserve Bank of India recently lowered its GDP forecast and pegged it at 6.9 per cent in 2019-20. Several rating agencies and research firms expect the growth to be in the range of 6.5-7 per cent.

Besides domestic consumption slowdown, the external factors remain adverse threatening to pull down the economy. A lingering US-China trade war and fears of a global recession could make things worse. (IANS)

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Advance Of Summit, NATO Pacify Trump

NATO also plans to consider a Franco-German proposal

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Flags of NATO member countries
Flags of NATO member countries are seen at the Alliance headquarters in Brussels, Belgium. VOA

As Britain prepares for the NATO leaders’ meeting outside London December 3-4, the alliance said Thursday it had agreed to redistribute costs and cut the U.S. contribution to its central budget.

NATO’s central budget is relatively small at around $2.5 billion a year, mostly covering headquarters operations and staff, and different than its defense budget. U.S. President Donald Trump often complains of inequitable burden-sharing, with only nine of the 29 member countries meeting the 2%  of gross domestic product target for the alliance’s defense spending.

Regarding the central budget, “The U.S. will pay less, Germany will pay more, so now the U.S. and Germany will pay the same,” NATO Secretary-General Jens Stoltenberg said in Paris Thursday.

The United States currently pays about 22% of NATO’s central budget. Beginning 2021, both U.S. and Germany will contribute about 16%.

NATO also plans to consider a Franco-German proposal to create a working group of “respected figures” to discuss reform in the alliance and address concerns about its future.

The announcement to reduce the American contribution is seen as a move to placate Trump, who has considered withdrawing from the alliance but has since taken credit for its promised reforms.

“In 2016, only four allies spent 2%  of GDP on defense,” a senior administration official told reporters Friday, adding that there are now nine countries, including the U.S.,  meeting the 2% target, with 18 expected to do so by 2024.

“This is tremendous progress, and I think it is due to the president’s diplomatic work,” he said.

 U.S. forces from Syria, a move Trump made without consulting NATO
A convoy of U.S. vehicle is seen after withdrawing from northern Syria, on the outskirts of Dohuk, Iraq. VOA

Internal strife

Leaders of the 29 member states will attempt a show of unity during the summit but the alliance is facing questioning about its relevance and unity, particularly after the October withdrawal of U.S. forces from Syria, a move Trump made without consulting NATO.

“It’s exactly in the wake of that decision that you had [French] President [Emmanuel] Macron say what he said about the alliance being ‘brain-dead’ and referencing the lack of American leadership in the sense of leading in a community and not just going out on your own,” said Gary Schmitt, a NATO analyst with the American Enterprise Institute.

U.S. troops’ withdrawal from Syria prompted Turkey to launch an offensive against Kurdish YPG militia in northern Syria. The move spurred Macron to vent his frustration over what French diplomats say is NATO’s lack of coordination at a political level, and triggered fear among allies that the assault will undermine the battle against Islamic State militants.

Meanwhile, a simmering war between Russia and Ukraine has become the backdrop of Trump’s impeachment, with the American president allegedly having withheld hundreds of millions of dollars of military aid to pressure the Ukrainian government to announce an investigation of former Vice President Joe Biden, a Democratic presidential candidate running against Trump. Kyiv needs the aid to counter Moscow’s aggression.

The two conflicts in Europe’s eastern and southern flank further complicate Washington’s already-strained relations with other NATO members. Meanwhile, despite American efforts to reassure European leaders of Washington’s continuing commitment, anxiety about U.S. neglect of NATO under Trump persists, said Hans Kundnani, Senior Research Fellow in the Europe Program at Chatham House.

Ukrainian President Volodymyr Zelenskiy, welcomes NATO Secretary General Jens Stoltenberg
Ukrainian President Volodymyr Zelenskiy, left, welcomes NATO Secretary General Jens Stoltenberg during their meeting in Kyiv, Ukraine. VOA

Kundnani noted a series of American officials who have come to reassure Europeans not to take Trump’s tweets too seriously and focus on what is happening on the ground, particularly the military reinforcement of NATO’s eastern flank. Still, Kundnani said that in the last year Europeans have started to realize it’s “not really good enough” and they’re now facing the “reality of the of the crisis in NATO.”

“Some of them are hoping that Trump will be out of office in in a year’s time but the real fear is that Trump wins a second term,” said Kundnani, adding that some Europeans are hoping that “U.S. gradual withdrawal from Europe” might “snap back to the status quo ante if Trump is not re-elected.”

Diverging European responses

“The upcoming celebration of NATO’s 70th anniversary will be marked by important divisions within the alliance — not just across the Atlantic, but also within Europe,” said Karen Donfried, president of the German Marshall Fund of the United States.

In Paris, the view is “strategic autonomy,” said Donfried, with many in France concluding that Washington’s security guarantee can no longer be relied on. Warsaw is promoting “strategic embrace”  developing close bilateral relationship with Trump to guarantee its own security, while Berlin is advocating “strategic patience.”

Germany in the middle is a little bit divided between the “Atlanticists” and the “post-Atlanticists,”   Kundani said, adding that “Europeans are very much arguing” about these approaches.

Donfried said that against this backdrop, NATO allies are approaching the London summit with a sense of foreboding, knowing that they carry the responsibility to articulate alliance’s common purpose and ongoing relevance.

“If they don’t, [Russian President Vladimir] Putin will be raising a glass in Moscow to the fraught state of the alliance at 70,” she said.

Another summit goal for most European leaders, is to simply avoid a Trump flare-up, like those that have happened in past meetings.

NATO meetings
President Donald Trump meets with British Prime Minister Boris Johnson at the United Nations General Assembly, New York. VOA

Many have discovered this can be achieved through flattery. “They can talk about all the things that they’ve done and very smartly suggest that President Trump has generated the kind of pressure to make those things happen,” Schmitt said.

“They can actually praise President Trump, even though this is very hard for them to do because of the personality clashes.”

Many will be watching Trump’s encounters with Macron, including their bilateral meeting, as well as with British Prime Minister Boris Johnson. Johnson has pleaded for Trump to stay out of the upcoming British election during his London trip.

The senior administration official said that Trump is “aware of this” and “absolutely cognizant of not wading into other countries’ elections.”

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Other potential clashes are simmering too. Turkish President Tayyip Erdogan said Friday that Emmanuel Macron’s NATO “brain-death” warning reflects a “sick and shallow” understanding, telling the French president “you should check whether you are brain dead.”

The French foreign ministry has summoned Turkey’s ambassador to Paris to protest the statement. (VOA)