Economy This Week (20th Aug to 26th Aug 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 20th Aug to 26th Aug 2022 is given below. Business news is essential for IAS exam preparation.

TABLE OF CONTENTS

1. Adani acquisition of NDTV (BS 24/8/22)
2. FTA provisions to prevail in Rules of Origin Disputes (ET 20/8/22)
3. Centre to assess impact of EUs decision to withdraw GSP benefits for certain exports (BL 22/8/22)
4. Finance Ministry tweaks overseas investment rules (IE 23/8/22)
5. FSIB recommends 14 candidates for appointment as EDs in PSBs (BL 25/8/22)
6. Government implements one nation one fertiliser scheme (BS 25/8/22)
7. Commerce department to overhaul services sector scheme (BS 25/8/22)
8. GoM finalizes contours of GST appellate tribunal (ET 20/8/22)
9. Widen food security act coverage (BS 25/8/22)

1. Adani acquisition of NDTV (BS 24/8/22)

• The media arm of Adani Group has announced that it had exercised the rights to acquire an indirect stake of 29.18% in NDTV through the conversion of loans into equity 
• The move also has triggered an open offer of acquiring 26% stake in NDTV from its shareholders 
  • The open offer has been given at ₹ 294 per share which is at a discount of 19.7% to the closing price of ₹ 366.2 on Tuesday 
• This, NDTV has clarified that has been done without the consent of the NDTV founders and till recently NDTV had informed the stock exchange that there was no change in the shareholding of its founders 
• Vishvapradhan Commercial Private Ltd (VCPL) holds warrants of RRPR Holding and is entitled to convert them to 99.99% stake in the firm. VCPL (owned by AMG Media Networks Limited) has exercised warrants to acquire 99.5% stake in RRPR. this means the VCPL will be acquiring RRPR

2. FTA provisions to prevail in Rules of Origin Disputes (ET 20/8/22)

• India will be following the provisions of free trade agreements (FTAs) over the wider and stringent domestic framework in case of any dispute in case of value addition or rules of origin related to imports under FTAs 
• The domestic rules are framed under Customs (Administration of Rules of Origin under Trade Agreements) Rules 2020 – CAROTAR 
  • Currently under CRAOTAR rules there is requirement of  submission of extensive data and in certain cases, the requirement goes beyond the stipulated conditions under the bilateral/multilateral FTAs 

3. Centre to assess impact of EUs decision to withdraw GSP benefits for certain exports (BL 22/8/22)

• EU (European Union) has decided to withdraw the GSP (Generalized System of Preferences) benefits to some of the exports – electrical machinery, plastics, articles of stones/leather – from India starting 2023 
• Indian government is seeking to engage the industry to assess the impact of such decision     
• Under GSP, EU allows preferential access to some of the products originating from developing countries by reducing the customs duties to zero or keeping it at a lower level. However if a product is deemed to have become sufficiently competitive then such benefit will be withdrawn 
• GSP 
  • Was envisaged by UN 50 years ago to help developing countries 
  • There are more than a dozen countries offering such benefits – USA, Canada, Australia, New Zealand, Norway, UK etc    
• Earlier in 2019, the USA also had withdrawn GSP benefits for various Indian exports. However the exports of such products have not been affected

4. Finance Ministry tweaks overseas investment rules (IE 23/8/22)

• Government has introduced Foreign Exchange Management (Overseas Investment) Rules 2022 and Foreign Exchange Management (Overseas Investment) Regulations 2022 which were notified on Monday 
• As per these 
  • Indian resident classified as wilful defaulter or is under investigation by CBI, ED or SFIO will have to get a no objection certificate (NOC) from their bank in order to invest in foreign market 
  • If the NOC is not provided within 60 days from the date of application then will be presumed that there is no objection for the presumed investment/transaction 
  • Indian resident will not be allowed to invest into foreign entities engaged in real estate activity, gambling in any form, dealing with financial products linked to rupee without specific approval from RBI 
  • Clarity over the overseas direct investment and overseas portfolio investment has been brought in. Various overseas investment transactions which were earlier under the approval route has been made automatic now 
• These rules will make it 
  • Difficult for the wilful defaulters to send the funds outside India 
  • Easier for the domestic companies to invest abroad

5. FSIB recommends 14 candidates for appointment as EDs in PSBs (BL 25/8/22)

• The newly constituted Financial Services Institutions Board (FSIB) has recommended 14 candidates to the panel from which Executive Directors (EDs) would be appointed to various PSBs for 2022-23 
• FSIB is an autonomous professional body which has subsumed the Bank Boards Bureau (BBB) and has wider function compared to the latter 
• FSIB is a 11 member body and will
  • Recommend personnel not just to the banking sector but also for Public Sector Insurers (PSIs), Financial Institutions (FIs)
  • Advise the government on extension of terms and even termination of services for WTD, NEC across public sector entities in financial services 
  • Advise government over the formulation and enforcement of code of conduct and ethics for full time directors and NECs in PSBs, FIs and PSIs 
  • Build data bank on performance of these institutions 
  • Help the PSBs, PSIs and FIs in developing business strategies and capital raising plans 

6. Government implements one nation one fertiliser scheme (BS 25/8/22)

• Government has directed all the fertilizer companies to sell their products under a single brand name ‘Bharat’ 
• This has been done to bring in uniformity in fertilizer brands 
  • Whether it is urea, DAP or MOP etc the bags will have to sport the brand name Bharat Urea, Bharat DAP, Bharat MOP etc irrespective of the company that manufactures it, be it public or private 
• The private sector companies have raised the concern that this would be killing their brand value and market differentiation  
• Apart from the brand name, the company will also have to put the logo of Pradhan Mantri Bhartiya Janurvarak Pariyojana (PMBJP) has to be displayed on the bags (the fertiliser companies receive the subsidy under PMBJP) 
• The company name can be displayed in a small portion of the total packaging
• The new system would be put in place from 2nd October 2022

7. Commerce department to overhaul services sector scheme (BS 25/8/22)

• Department of commerce is working to overhaul the Service Exports from India Scheme (SEIS) with an objective of supporting the pandemic hit sectors – tourism, hospitality, education and health care 
• The Information Technology (IT) sector will continue to remain outside such schemes as it accounts for lion’s share in exports 
• The revamped scheme is expected to be part of the new foreign trade policy which is expected to be announced in next month and is also expected to comply with the WTO norms  
  • For the last two years – FY21 and FY22 – there has been no export incentive scheme for service exports  
  • SEIS was announced as a part of Foreign Trade Policy but wasn’t notified after 2019-20 
  • The govt under this provided incentives in the form of duty credit scrips in the range of 3 to 7% of the net foreign exchange earned, which can be used to pay the customs duty 
• The demand for such a scheme is increasing with rising fears of recession in US and EU, affecting the merchandise exports from India 
• Mode – II of services requires little more support as the international travel has been affected 

8. GoM finalizes contours of GST appellate tribunal (ET 20/8/22)

• A Group of Ministers (GoM) headed by Haryana deputy CM – Dushyant Chautala – has recommended setting up of GST Appellate Tribunal (GSTAT) with its principal bench in New Delhi and similar benches at various other locations 

• • The regional benches will consist of a judicial officer equivalent to high court judge and a senior tax officer from either the centre or state
  • The states are allowed to set up to 5 benches 
  • The appellate body will be headed by the chief justice of a high court 
• The recommendation of the GoM will be placed before the GST council for consideration and the final call on the recommendations will be taken by GST Council 
• The CGST act will be modified to provide for all benches of the same kind as the principal bench in New Delhi and at this bench the tribunal’s president will sit. The president will distribute business cases  

9. Widen food security act coverage (BS 25/8/22)

• The Supreme Court has directed the government to widen the benefits under National Food Security Act (NFSA) as the beneficiaries are covered based on the population of 2011. If widened more people will come under the coverage and get the benefits
  • The population has increased and coverage has not increased, hence over 100 mn people have been left out of the scheme  
• Supreme Court (SC) noting that the right to food is a fundamental right under article 21 of Indian constitution in 2021 has directed the centre to redetermine the coverage under section of the act
  • It has directed the centre to come out with a formula and/or appropriate policy/scheme so that the benefits can be extended based on census 2011   
• Centre has noted that the act requires coverage to be updated in accordance with the census of 2021. However the census has been postponed indefinitely, hence the coverage cannot be re-determined 

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