Finance News: latest Financial News, Finance News today in India – The Economic Times
Finance Minister Nirmala Sitharaman stated that the government and the Reserve Bank are actively involved in enhancing the central bank digital currency (CBDC) for cross-border payments. The RBI initiated a pilot project for wholesale CBDC with nine banks, and a retail version of CBDC or e-rupee was launched on December 1, 2022.
Despite being an election year where Prime Minister Narendra Modi is bidding for a rare third straight term in power, the government is likely to rein in its fiscal deficit by at least 50 basis points by capping its spending on welfare schemes and subsidies.
The ratio of cost overrun in central government infrastructure projects rose to a three-month high of 18.65% in December. The anticipated completion cost at Rs 30.7 lakh crore was higher than the original cost of Rs 25.9 lakh crore for 1,820 projects. The ratio of delayed projects rose to 46.6% in December.
The total loan guarantees extended by the 17 major states to their entities have more than tripled to Rs 9.4 lakh crore as of FY23 from Rs 3 lakh crore in FY17. This is equivalent to the entire increase in such guarantees of these states during FY2017-22, Icra Ratings chief economist Aditi Nayar said in the report.
The Rs 2,000 bank notes were introduced in November 2016, following the demonetisation of the then-prevailing Rs 1,000 and Rs 500 bank notes. The Rs 2,000 bank notes continue to be legal tender.
The Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty announced that the total corpus under the National Pension System and Atal Pension Yojana has surpassed Rs 11 lakh crore. This milestone was achieved on January 10, 2024. The AUM has risen from Rs 10 lakh crore to Rs 11 lakh crore in just 4 months and 18 days. Additionally, the private sector AUM has exceeded Rs 2 lakh crore. The PFRDA is working on a minimum assured pension plan, which could become a reality in the next fiscal year.
The net revenue target for the next financial year will be modest, likely to be between 9-11%. One of the reasons for this modest target is the already high base, ET was informed by a senior government official. It may be noted here that in the past two years, tax collections have been more than the revised target.
Border tensions, the biggest irritant to relations between the nuclear-armed Asian giants, have eased, which could lead to improved investment ties, top industrial policy bureaucrat Rajesh Kumar Singh told Reuters on Wednesday at the annual World Economic Forum meeting in Davos, Switzerland.
Highlighting the focus on tangible implementation, Eknath Shinde emphasised the acceleration of growth compared to last year. He said the state’s image has been spotlighted as people-oriented with a strong emphasis on industrialisation, skilled manpower, and quick decision-making, the statement said.
India’s net government borrowing in the next fiscal is likely to remain largely unchanged. The central government is expected to target a narrower fiscal deficit of 5.3%-5.6% of GDP in FY25, leading to a net borrowing of 11.80 trillion to 12.20 trillion rupees. Foreign investors are expected to invest $25 billion-$30 billion in government debt, with a significant portion being absorbed by foreign portfolio investment. This increase in foreign portfolio investment is driven by the inclusion of government bonds in the JPMorgan emerging market debt index starting June 2024.
Interim Budget: India plans to allocate about 4 trillion rupees ($48 billion) for food and fertiliser subsidies in the next fiscal year. The Ministry of Consumer Affairs, Food and Public Distribution estimates the food subsidy bill to be 2.2 trillion rupees, a 10% increase from the current fiscal year. Additionally, the fertiliser subsidy for the next fiscal year is expected to be 1.75 trillion rupees. Prime Minister Narendra Modi is expected to win a third term in the upcoming elections. Maintaining the subsidies is crucial for managing India’s fiscal deficit.
Lower supplies for the second consecutive week finally led to the coupons on state debt to fall from the two-year high at the latest auction held on Tuesday, and the weighted average cut-off eased by 7 bps to 7.65 per cent. For the past two weeks, despite poor supplies states were forced to offer very high returns, which had touched 7.72 per cent last week, the highest in the past two years.
The upcoming Union Budget for FY2025, a vote-on-account, is expected to provide cues on fiscal consolidation and capex number. The fiscal deficit target for FY2025 is projected to be 5.3% of GDP, leading to a decline in market borrowings. The inclusion of India’s G-secs in the GBI-EM Global Index could result in FPI inflows of $18-22 billion. The net and gross market borrowings of the General Government are expected to be marginally higher in FY2025. The softening of Government bond yields could lead to a downward shift in the yield curve, benefiting corporate borrowers and private capex.
Budget 2024: The government aims to limit the increase in overall spending to around 10% in the interim budget for FY25, balancing the need for sustained growth with fiscal consolidation imperatives. It plans to achieve this by raising capital expenditure at a slower pace, while moderately increasing revenue spending. The government has set a fiscal deficit target of 4.5% of GDP by FY26 and expects to meet the target this year.
India’s potential for attracting foreign direct investment (FDI) could significantly increase with another five years of a majority government, according to Sanjiv Bajaj, the Chair and Managing Director of Bajaj Finserv. Speaking at the World Economic Forum annual meeting on Monday, Bajaj expressed optimism about the future of FDI in India.
The Ministry of Finance has announced a significant change in personal income tax benefits, implementing an amendment to Section 87A of the Income-tax Act, 1961. This amendment allows a rebate to be taxed, ensuring no tax liability for individuals with income up to Rs. 7 lakh. This move aligns with the government’s commitment to easing the tax burden on the middle-income segment.
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