- GST council has sought opinion of government’s top law officer i.e. ATTORNEY GENERAL.
- States’ suggestion to GST Council: if there is shortfall, borrow funds from market.
- Attorney General: GST Council can decide about market borrowing mechanism
- For FY21, Centre has expressed its inability to compensate states.
- Other options are
- increasing GST rates
- bringing more items under the compensation cess
- increasing the cess rate
- States can borrow themselves. Score will be settled from compensation fund in future.
- Lockdown has thrown cashflows of industries out of gear and supply chains are disrupted badly.
- One-time restructuring of loans
- Extending the repayment moratorium
- Financial institutions: 1 & 2 will corrupt payment culture and some are gaming the system.
- But, RBI is looking for a 3rd option
- RBI may ask banks to use existing mechanisms such as the Insolvency and Bankruptcy Code and its June 7, 2019, circular, which details how banks should handle defaults.
- The circular provides for a 30-day review period after a payment is missed and 180 days to come up with a binding resolution plan agreed to by banks with 75% of the outstanding loans and 60% of the lenders by number.
- If a resolution plan is not implemented within 180 days, banks must set aside 20% of the outstanding amount, and after 365 days, the provisioning increases to 35%.
RIL in FMCG business
- Reliance Industries Ltd is set to make a foray into the FMCG sector.
- RIL has picked up a minority stake in Future Consumer Ltd (FCL)
- A minority stake in the consumer goods business will give RIL greater say over pricing and discounting strategies for products sold in its stores as well as online, while for FCL, it will ensure continuity of sales and supplies of its FMCG products to its big retailers in the long term.
- For RIL, it could help in their deep discounting strategy for JioMart, which was launched two months ago that competes with Amazon and Flipkart.
- Experts feel if RIL controls the entire value chain, they can use their bargaining power to beat down prices or introduce their own cut-price versions to earn higher margins.
- Goldman Sachs report: RIL will have 50% market share in egrocery retailing by FY25.
WTO & ICT
- Many countries are not happy with India’s import duties on information and communication technology (ICT) products, including mobile phones.
- There are now three dispute settlement panels on the issue.
- The EU, Japan and Taiwan are also pushing for the establishment of a single panel.
- The panels have been set up to decide on India’s July 2017 move to levy 10% customs duty on mobile phones and some other ICT products, which it increased to 15% the same year.
- The duties were further raised to 20% despite opposition from several WTO members.
- India said the complaints seriously undermine its sovereignty as it goes beyond its commitments under the first ITA agreement (ITA-I).
- Losing the disputes would make China the main beneficiary as no import duty would not only mean revenue loss for India but also lead to flooding of Chinese ICT goods.
- In FY20, India had imported $15.7 billion worth of electronics, telecom gear and computer hardware from China.
- The US, Turkey, the UK, Norway, Singapore, Thailand, Russia, Brazil, Korea, China, Canada and Indonesia are some of the third parties, implying that they are neither the complainants nor respondents, but have a “substantial interest in the matter”.