Economy This Week (15th to 21st Oct 2022)

Economy is an important part of the UPSC prelims and mains exams; this series titled ‘Economy This Week’ has been initiated to address the need to read and analyse economic articles in various business-related newspapers. The round-up of the Economy/Business section news for 15th to 21st Oct 2022 2022 is given below. Business news is essential for IAS exam preparation.

TABLE OF CONTENTS

1. PM launches 75 digital banking units (BL 15/10/22)
2. Delay in GST council meeting may hit reforms (BL 19/10/22)
3. One time offer to settle minor GST offences (ET 19/10/22)
4. CCI slaps penalties total lying ₹ 392 Cr on MakeMyTrip, Oyo (ET 20/10/22)
5. Railways inducts first indigenous aluminium freight train rake (IE 17/10/22)
6. RBI steps up oversight on Dhanlaxmi Bank (BL 17/10/22)
7. Govt forms exclusive benches at three DRTs to resolve the cases above ₹ 100 Cr (ET 18/10/22)
8. India has the potential to attract $475 bn in FDI in 5 years (TH 17/10/22)
9. Truss announces exit (TH 21/10/22)

1. PM launches 75 digital banking units (BL 15/10/22)

• PM has launched 75 digital banking units (DBUs), the announcement was earlier done by the finance minister in the budget. 
• The goal is to launch these in 75 districts covering every state and UT. 
• PM has urged the bank branches to bring at least 100 businessmen in the region under 100% digital banking. 
• The DBUs will equip people without mobile phones, laptops, etc to get access to banking services. 
• These will be operational 24*7 and they will be helpful in promoting financial literacy and inclusion.

2. Delay in GST council meeting may hit reforms (BL 19/10/22)

• It’s almost four months since the last GST council meeting (June 28th and 29th) took place and there’s still no indication of when the next meeting will be held.
  • The meeting should be held once every three months – as per rule 6 of the Procedure and Conduct of the GST – the council should meet at least once every quarter. 
  • Earlier as well, this had not been followed – there was a gap of around 6 months between the 42nd and the 43rd meeting (5th October 2020 and 23rd May 2021).
• The reasons for the delay are that the reports of GoM will be forming the agenda for the next meeting.   
  • Delay in the reworking of the report of the Group of Ministers (GoM) on online gaming, casinos and horse racing. 
  • Another GoM on setting up of Appellate tribunal.   
• The problem with these delays and uncertainty are: 
  • Because of confusion, the tax authorities are sending tax notices to various gaming/gambling service providers. 
  • The lack of a GST appellate tribunal is increasing the number of cases in the courts. 

3. One time offer to settle minor GST offences (ET 19/10/22)

• The government is considering a GST dispute settlement scheme, which has to be approved by the GST council. This scheme will offer an opportunity for businesses to settle tax cases and avoid litigation. 
  • This will be a time-bound scheme. 
  • Will cover past disputes in excise duty, service tax, and customs duty. 
  • Will be covering minor offences (will not be available for wilful tax evasion cases, repeat offenders and offenders against whom the enforcement agencies have initiated action). 
• The Centre, earlier in 2019, had launched the Sabka Vishwas scheme to resolve the disputes involving service tax and central excise.  
• This will help in reducing the number of cases which has been rising because of differences in interpretations. The govt is also considering setting up appellate tribunals which would be taking some time. 
• This will also address the issues where the authority has spent more money in pursuing the litigation than the tax claim itself. 
• The industry earlier approached the govt seeking such schemes. 

4. CCI slaps penalties total lying ₹ 392 Cr on MakeMyTrip, Oyo (ET 20/10/22)

• The Competition Commission of India (CCI) has imposed penalties worth ₹ 392 Cr on MakeMyTrip (MMT) and Oravel Stays (Oyo). 
• This has been on account of both of them being found to be abusing their market dominance. 
• CCI has also directed Oyo to review their existing agreements so that there is fair access to hotels listed on the platform. 
• Complaints against this were done by Treebo, FabHotels and also by the Federation of Hotel and Restaurant Association of India (FHRAI). 
  • The complaint revolved around the exclusive agreements that the hoteliers were forced to sign by MMT and Oyo.
  • Under such agreements, the hotels are not allowed to sell their rooms on any other platforms or their own online platform at a price below the price at which they are being offered on the MMT platform.
  • The online travel agency was accused of charging a hefty commission in the range of 22 to 40% from hotels.

5. Railways inducts first indigenous aluminium freight train rake (IE 17/10/22)

• The Indian Railways inducted the first indigenously manufactured aluminium goods train rake. 
• It was flagged off from Bhubaneswar, Odisha. 
• It has been manufactured in collaboration with Besco Limited Wagon Division and Hindalco. 
• It is much lighter and has a lower carbon footprint. 
  • The lifetime carbon saving is 8 to 10 tonnes and it means for a single rake it will be saving more than 14500 tonnes. 
  • The rake is 180 tonnes lighter than existing steel rakes. This will help in increasing speed and reducing power consumption. 
  • These are 100% recyclable. 

6. RBI steps up oversight on Dhanlaxmi Bank (BL 17/10/22)

• Under the Basel III guidelines, banks are supposed to have a Capital to Risk-Weighted Assets Ratio (CRAR) of 9%. 
• Dhanalaxmi Bank has been experiencing delays in raising capital which has brought it under the central bank’s tight monitoring. 
• The bank is said to have arrived at a rights issue price of ₹ 10.5 per share, there is a lack of quorum and legal problems which may remain challenging for the bank. 
• Hence it is stated that the central banker is keeping a close watch on the finances of the company and many non-banks have already shown interest in taking over the bank.

7. Govt forms exclusive benches at three DRTs to resolve the cases above ₹ 100 Cr (ET 18/10/22)

• Govt has created exclusive benches of Debts Recovery Tribunals (DRTs) – Delhi, Mumbai, Chennai – to deal with the cases involving ₹ 100 Cr. 
• Govt has also called for applications to fill the present and future vacancies in DRTs. 
• A lot of privately held companies are registered as partnerships or family concerns and hence cannot be tried under the NCLT. 
• The DRTs had ₹ 2.25 lakh Cr of debt pending as of March 2021 against ₹ 1.35 lakh Cr in NCLTs.

8. India has the potential to attract $475 bn in FDI in 5 years (TH 17/10/22)

• As per the report published by CII and EY – Vision – Developed India: Opportunities and Expectations – India has the potential to attract $475 bn in the next 5 years.
• The FDI in the last decade has been consistently rising and in FY22 India received $84.8 bn despite the impact of covid and geopolitical developments. 
• Reasons: 
  • India is seen as an emerging consumer market, an emerging manufacturing hub and a hub for digital transformations.  
  • India has a large and stable democracy and is consistent with reforms amidst a rapidly changing geopolitical environment.  
  • 71% of MNCs in India consider the country an important destination for their global expansion. 
  • The majority of the MNCs feel that the Indian economy will perform significantly better in 3 to 5 years backed by 96% of respondents being positive about the overall potential of India.
    • This is on account of strong consumption demand trends, digitisation and a growing services sector. 

9. Truss announces exit (TH 21/10/22)

• British PM Liz Truss has announced that she will be quitting the post. 
• The mini-budget announced by Liz Truss had rattled the markets and created instability. 
  • The budget announced a freeze on energy bills and a cut in taxes to promote demand and recovery. 
• The current government has seen several high-profile exits in recent days.

Economy This Week (15th to 21st Oct 2022):- Download PPT Here

ETW (15th to 21st Oct 2022):- Download PDF Here