How a country gets a currency manipulator tag

Treasury secretary Steven Mnuchin has said that the US is open to changing how it determines which nations are gaming their currencies. Mint gives the lowdown on the currency manipulation list prepared by the US and where India stands with respect to it.

The US Department of the Treasury publishes a semi-annual report in which the developments in global economic and exchange rate policies are reviewed. If a US trade partner meets three assessment criteria, the US labels it a currency manipulator. The US then tries to solve it via bilateral talks.

The October report of the Treasury says that it continues to press major trading partners that have maintained large, persistent external surpluses to support stronger and more balanced global growth by facilitating domestic demand growth as the primary engine for economic expansion.

How are countries identified for the currency manipulation list?

The US Treasury has established thresholds for the three criteria. First, a significant bilateral trade surplus with the US is one that is at least $20 billion; second, a material current account surplus is one that is at least 3% of GDP; and third, persistent, one-sided intervention reflected in repeated net purchases of foreign currency and total at least 2% of an economy’s GDP over a year. The Treasury’s goal is to focus attention on those nations whose bilateral trade is most significant to the US economy and whose policies are the most material for the global economy.

Such currencies have been falling against the dollar. Japan’s yen fell 0.13%, South Korea’s won slipped 5.13%, Switzerland’s Swiss Franc fell 2.3% and China’s yuan dropped 6.3%.

Does India feature on the currency manipulation list?

The US Treasury, in its report, said no major trading partner met the criteria to be designated as manipulating its currency. It has kept India, China, Japan, South Korea, Germany and Switzerland on the monitoring list. It said that India’s circumstances have shifted markedly, as the central bank’s net sales of forex over the first six months of 2018 led net purchases over the four quarters through June 2018 to fall to $4 billion, or 0.2% of GDP. The rupee has depreciated by 13.05% this fiscal.

Do policymakers in India need to worry?

Economists say India doesn’t need to worry as it only meets one of the three criteria. If this remains the case at the time of its next report, Treasury would remove India from the Monitoring List. India being on the watch list was not important. If we were to be labelled as manipulators, there would have been pressure on India to reduce tariffs.

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US named the world’s most competitive economy

The United States was named the world’s most competitive economy by the World Economic Forum (WEF) on Wednesday.

In its Global Competitiveness Index, WEF — known for its annual economic forum in Davos, Switzerland — ranked the U.S. as the most competitive of 140 economies, the first time the nation has reached the top spot in a decade.

Performance of India:

India was ranked as the 58th most competitive economy with a score of 62.0 on the Global Competitiveness Index 2018.

India jumped five spots from 2017, the largest gain among G20 economies.

India ranked highest among South Asian countries. Sri Lanka was ranked 86th, Bangladesh 103rd, Pakistan 107th, and Nepal 109th.

As per the report, India leads the region in all other areas of competitiveness except for health, education, and skills.

As per the report, India’s greatest competitive advantages include its market size and innovation.

Global performance:

On the list of 140 economies, the United States topped the list with a score of 85.6, followed by Singapore and Germany at the second and the third positions respectively.

Other countries in the top 10 include Switzerland (4th), Japan (5th), Netherlands (6th), Hong Kong (7th), United Kingdom (8th), Sweden (9th) and Denmark (10th).

In Europe, Sweden is ranked the highest among the Nordic economies at 9th position, while France (17th) is among the top 20. Countries such as Germany and Switzerland set global standards for innovation.

Competitiveness performance in the Middle East and North Africa remains diverse, with Israel (20th) and the United Arab Emirates (27th), leading the way in their respective regions.

17of the 34 sub-Saharan African economies are among the bottom 20. Mauritius (49th) leads the region, ahead of South Africa and nearly 91 places ahead of Chad (140th).

Among the BRICS economies, China topped the list at 28th place with a score of 72.6, followed by Russia, India, South Africa, and Brazil respectively.

The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation are the 12 pillars.

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SIDBI launches a National Level Entrepreneurship Awareness Campaign, Udyam Abhilasha

On the occasion of Birth Anniversary of Mahatma Gandhi yesterday i.e. October 02, 2018, Small Industries Development Bank of India (SIDBI), had launched a National Level Entrepreneurship Awareness Campaign, Udyam Abhilasha in 115 Aspirational Districts identified by NITI Aayog in 28 States and reaching to around 15,000 youth.

SIDBI has partnered with CSC e-Governance Services India Limited, a Special Purpose Vehicle, (CSC SPV) set up by the Ministry of Electronics & IT, Govt. of India for implementing the campaign through their CSCs.

About the Campaign:

  • The campaign would create and strengthen cadre of more than 800 trainers to provide entrepreneurship training to the aspiring youths across these districts thus encouraging them to enter the admired segment of entrepreneurs.
  • SIDBI has partnered with CSC e-Governance Services India Limited, a Special Purpose Vehicle, (CSC SPV) set up by the Ministry of Electronics & IT, Govt. of India for implementing the campaign through their CSCs.

The objectives of the missionary campaign include:

  • To inspire rural youth in aspirational districts to be entrepreneurs by assisting them to set up their own enterprise.
  • To impart trainings through digital medium across the country.
  • To create business opportunities for CSC VLEs.
  • To focus on women aspirants in these aspirational districts to encourage women entrepreneurship.
  • To assist participants to become bankable and avail credit facility from banks to set up their own enterprise.

About SIDBI:

Small Industries Development Bank of India (SIDBI) was set up on 2nd April 1990 under an Act of Parliament.

It acts as the Principal Financial Institution for Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector as well as for co-ordination of functions of institutions engaged in similar activities.


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LSE inks pact with NSE India to create dual listing route for Masala bonds

The London Stock Exchange Group announced a new memorandum of understanding with the National Stock Exchange of India to cooperate on dual listings and the launch of the group’s offerings in India.

London Stock Exchange (LSE) said the MoU is aimed at working together with the National Stock Exchange (NSE) on creating a dual listing route for Masala bonds and explore the launch of ELITE, LSE group’s business support and capital raising programme for private high-growth companies, in India next year.

The MoU was signed in London by Vikram Limaye, MD & CEO of the NSE, and Nikhil Rathi, CEO, London Stock Exchange Plc, and witnessed by MK Das, Principal Secretary to the Chief Minister of Gujarat Vijay Rupani.

Dual listing of Masala bonds would enhance visibility, increase liquidity in secondary markets and enhance the efficiency of price discovery for Masala bond issuers. This would also reduce the cost of raising capital for all issuers and encourage the participation of a wider variety of issuers in the Masala bond market.

London Stock Exchange claims to be the leading international listing venue for Masala bonds, having listed 46 Masala bonds, which have raised over $5 billion equivalent. Masala bonds are typically bonds issued outside India to raise capital for the country but denominated in Indian Rupees, rather than the local currency.

Masala bonds are rupee-denominated bonds issued by Indian institutions abroad to help fund infrastructure and other projects back home and are a route for promoting foreign exchange inflow.

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Temasek becomes seventh investor in NIIF Master Fund, parks Rs 27.5 bn

Temasek Holdings, the Singapore based global investment firm, has agreed to invest up to $400 million or Rs 27.5 billion in the National Investment and Infrastructure Fund’s (NIIF) Master Fund, said NIIFs CEO and Managing Director Sujoy Bose at a media roundtable.

Temasek is now the seventh investor in the NIIFs Master Fund, after the Government of India, Abu Dhabi Investment Authority (ADIA), HDFC Group, Kotak Mahindra Life Insurance, Axis Bank and ICICI Bank.

The NIIF is essentially a fund manager that is registered with the Securities and Exchange Board of India (Sebi) as an Alternative Investment Fund (AIF). And unlike banks and other financial institutions that provide loans for infrastructure projects, the NIIF is a pure equity investor in companies and projects.

The Government-backed investment company hopes to raise Rs 400 billion across its three funds in the near term namely, the Master Fund, Fund of Funds and Strategic Investment Fund.

The Government’s shareholding in the Master Fund stands at 49 percent, while the other investors hold 51 percent. In 2015, the Government allocated Rs 200 billion towards the NIIF in its budget announcement and NIIF raised a matching sum from domestic and international investors.

ADIA’s investment in the Master Fund stands at Rs 68 billion, followed by Temasek with Rs 27.5 billion and domestic financial institutions who have contributed a total of Rs 5 billion in total, Bose said.

The NIIF Master fund will mainly look at investing in operational assets in the core infrastructure areas like roads, ports, airports and energy projects. Essentially the fund will be used to provide a boost for brown-field projects by matching domestic capital requirements with international investors.

So far the Master Fund of NIIF has invested in a large-scale platform for ports, transportation, and logistics business with DP World, and has acquired a 90 percent stake in the Continental Warehousing Corporation. Bose told members of the press that, “The aim is to raise a total of $2.1 billion and more for the Master Fund.”

Apart from the Master Fund, which was set up in July 2017, the NIIF in February of this year launched its ‘Fund of Funds’ to primarily invest in infrastructure projects, affordable housing opportunities as well as renewable energy and other green businesses.

The Fund of Funds is structured so as to pull money from domestic and international investors and channel the investments into sector-specific funds that are managed by NIIF. The aim is to raise a total of Rs 70 billion in the Fund of Funds, said Bose.

Under the Fund of Funds, in April NIIF set up its Green Growth Equity Fund (GGEF) with a target to raise GBP 500 million. The GGEF is anchored by NIIF and the United Kingdom Government’s Department for International Development (DFID), both of whom have contributed GBP 120 million, each.

The NIIF will also be launching a ‘Strategic Investment Fund’ aimed at financing development stage infrastructure projects and companies. These projects will require financing from the ground-up, therefore, involving large capital outlays and medium-to-long-term investment horizons.

Bose said that the NIIF board will require a couple of months to finalize the structure of the third investment vehicle and thereafter they will rope in the right investors, interested in long-term infrastructure projects.

When asked if the NIIF will contribute capital towards the National Asset Management Company, under Project Sashakt, and if there is any interest in stressed infrastructure and energy (power producers) companies, Bose said, “Right now on the table we are not looking at any distressed funds, but under the Fund of Funds as the fund manager there is nothing stopping us from investing.”

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The World Bank Just Issued a Bond That Relies On Blockchain Technology From Start to Finish

The World Bank has launched a blockchain-only bond. The so-called bond-i—for “blockchain operated new debt instrument” and perhaps also for Sydney’s famous Bondi Beach—is a two-year bond that was arranged by Commonwealth Bank of Australia and raised 110 million Australian dollars ($80 million.)

Investors included several Australian banks and state treasuries. Arunma Oteh, the World Bank treasurer, mentioned in a statement the additional help of King & Wood Mallesons, Mark-it, Microsoft and Toronto Dominion Securities.

The World Bank, whose bonds carry an AAA rating, regularly uses its borrowing power to help develop new bond markets as well as pioneering new means for selling and trading the securities. It issues between $50 billion and $60 billion a year of bonds to back economic progress in developing countries.

Australia is a popular test site for market developments because of its well-established financial infrastructure and the familiarity of international investors with the Australian dollar, which is one of the most-traded currencies in the world.

Blockchains are a new data structure that is secure, cryptography-based, and distributed across a network. The technology supports cryptocurrencies such as Bitcoin and the transfer of any data or digital asset. Spearheaded by Bitcoin, blockchains achieve consensus among distributed nodes, allowing the transfer of digital goods without the need for centralized authorization of transactions. The present blockchain ecosystem is like the early Internet, a permissionless innovation environment in which email, the World Wide Web, Napster, Skype, and Uber were built.

The technology allows transactions to be simultaneously anonymous and secure, peer-to-peer, instant and frictionless. It does this by distributing trust from powerful intermediaries to a large global network, which through mass collaboration, clever code, and cryptography, enables a tamper-proof public ledger of every transaction that’s ever happened on the network.

A block is the “current” part of a blockchain which records some or all of the recent transactions, and once completed, goes into the blockchain as a permanent database. Each time a block gets completed, a new block is generated. Blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block.

As a public ledger system, blockchain records and validate each and every transaction made, which makes it secure and reliable.

All the transactions made are authorized by miners, which makes the transactions immutable and prevent it from the threat of hacking.

Blockchain technology discards the need for any third-party or central authority for peer-to-peer transactions.

It allows decentralization of the technology.

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Cosmos Bank fraud due to malware in system: NPCI

The National Payments Corporation of India (NPCI) has said the recent incident of a cyber attack in Pune-based Cosmos Cooperative Bank, that has caused an over ₹90-crore loss, is due to a malware attack on the bank’s system.

Hackers transferred over ₹90 crore out on August 11 and 13 through the malware attack on the bank’s server by cloning debit cards of the bank’s customers. The transactions were carried through automated teller machines (ATMs) in 28 countries, including Canada, Hong Kong, and India. Visa and Rupay debit cards were cloned.

Malware is defined as a software designed to perform an unwanted illegal act via the computer network. It could be also defined as software with malicious intent. Malware can be classified based on how they get executed, how they spread, and/or what they do. Some of them are discussed below:

a) Virus: A virus is a program that can infect other programs by modifying them to include a possibly evolved copy of itself. A virus can spread throughout a computer or network using the authorization of every user using it to infect their program. Every program so infected may also act as a virus and thus the infection grows. Viruses normally affect program files, but in some cases, they also affect data files disrupting the use of data and destroying them completely.

b) Worms: Worms are also disseminated through computer networks, unlike viruses, computer worms are malicious programs that copy themselves from system to system, rather than infiltrating legitimate files. For example, a mass mailing e-mail worm is a worm that sends copies of itself via e-mail. A network worm, on the other hand, makes copies of itself throughout a network, thus disrupting an entire network.

c) Trojans: Trojan is another form of Malware, trojans do things other than what is expected by the user. Trojan or trojan horse is a program that generally impairs the security of a system. Trojans are used to create back-doors (a program that allows outside access into a secure network) on computers belonging to a secure network so that a hacker can have access to the secure network.

Unlike viruses, Trojan horses do not replicate themselves but they can be just as destructive. One of the most insidious types of Trojan horse is a program that claims to rid your computer of viruses but instead introduces viruses onto your computer.

d) Hoax: Hoax is an e-mail that warns the user of a certain system that is harming the computer. The message thereafter instructs the user to run a procedure (most often in the form of a download) to correct the harming system. When this program is run, it invades the system and deletes an important file.

e) Spyware: Spyware invades a computer and, as its name implies, monitors a user’s activities without consent. Spywares are usually forwarded through unsuspecting e-mails with bonafide e-mail i.ds. Spyware continues to infect millions of computers globally.

National Payments Corporation of India (NPCI) is an umbrella organization for all retail payments system in India. It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA). NPCI has ten promoter banks.

Its recent work of developing Unified Payments Interface aims to move India to a cashless society with only digital transactions.

It has successfully completed the development of a domestic card payment network called RuPay, reducing the dependency on international card schemes.

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Union Cabinet approves extension of CFS for infrastructure projects abroad

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the first extension of Concessional Financing Scheme (CFS) to support Indian Entities bidding for strategically important infrastructure projects abroad for five years till 2023.

Under the Scheme, MEA selects the specific projects keeping in view the strategic interest of India and sends the same to the Department of Economic Affairs (DEA).

The strategic importance of a project to deserve financing under this Scheme is decided, on a case to case basis, by a Committee chaired by Secretary, DEA.

Once approved by the Committee, DEA issues a formal letter to EXIM Bank conveying approval for financing of the project under CFS.

The Scheme is presently being operated through the Export-Import Bank of India, which raises resources from the market to provide concessional finance.

The government of India (GoI) provides a counter guarantee and interest equalization support of 2% to the EXIM Bank.

Under the Scheme, EXIM Bank extends credit at a rate not exceeding LIBOR (avg. of six months) + 100 bps. The repayment of the loan is guaranteed by the foreign govt.

Prior to the introduction of CFS, Indian entities were not able to bid for large projects abroad since the cost of financing was very high for them and bidders from other countries such as China, Japan, Europe, and the US were able to provide credit at superior terms, i.e., lower interest rate and longer tenures which works to the advantage of bidders from those countries.

Also, by having projects of strategic interest to India executed by Indian entities, the CFS enables India to generate substantial backward linkage induced jobs, demand for material and machinery in India and also a lot of goodwill for India.

The strategic importance of a project to deserve financing under this scheme, is decided, on a case to case basis, by a Committee chaired by Secretary, DEA and with members from Department of Expenditure, Ministry of External Affairs, Department of Industrial Promotion and Policy (DIPP), Department of Commerce, Department of Financial Services and Ministry of Home Affairs. The Deputy National Security Adviser is also a member of this Committee. Once approved by the Committee, DEA issues a formal letter to EXIM Bank conveying approval for financing of the project under CFS.

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Seva Bhoj Yojana

The Ministry of Culture, Government of India has launched the new scheme namely ‘Seva Bhoj Yojna’ starting today, 01.08.2018, with a total outlay of Rs. 325.00 Crores for Financial Years 2018-19 and 2019-20.

The scheme envisages to reimburse the Central Government share of Central Goods and Services Tax (CGST) and Integrated Goods and Service Tax (IGST) so as to lessen the financial burden of such as Religious / Charitable  Institutions who provide Food/Prasad/Langar (Community Kitchen)/Bhandara free of cost without any discrimination to Public/Devotees.

About Seva Bhoj Yojana:

The scheme seeks to reimburse the central government’s share of Central Goods and Services Tax (CGST) and Integrated Goods and Service Tax (IGST) on purchase of raw items such as ghee, edible oil, atta, maida, rava, flour, rice pulses, sugar, and jaggery, which go into preparation of food/Prasad/langar/Bhandara offered free of cost by religious institutions.

The main objective of the scheme is to lessen the financial burden of such charitable religious institutions, which provide free of cost without any discrimination to the general public and devotees.

The charitable religious institutions including temples, gurudwara, mosque, church, dharmik ashram, dargah, monasteries, which fulfill the following criteria are eligible for the grant:

  1. The institutions that have been in existence for at least five years before applying for financial assistance/grant.
  2. The institutions that serve free food to at least 5000 people in a month.
  3. The institutions covered under Section 10( 23BBA) of the Income Tax Act or those registered as Society under Societies Registration Act ( XXI of 1860) or as a Public Trust under any law for the time being in force of statuary religious bodies constituted under any Act  or institutions registered under Section 12AA of Income Tax Act.

Ministry of Culture will register the eligible charitable religious institutions for a time period ending with finance commission period and subsequently the registration may be renewed by the Ministry, subject to the performance evaluation of the institutions. The details of registered institutions will be available on an online portal for the viewership of public, GST authorities and entity/institution itself. The entity/institution will be permitted to submit the reimbursement claim of the GST and Central Government share of IGST to the designated authority of GST Department at State level in the prescribed format during the validity of registration. It would be the responsibility of the institutions/entity to intimate the Ministry about any changes being made in Memorandum of Association, Office bearers or addition/deletion of the location of the free food services.

All the eligible institutions should be registered with Darpan portal. All applications along with supporting documents received from the institutions in the Ministry shall be examined by the committee constituted for the purpose within 4 weeks and on the basis of the recommendation of the committee, competent authority in the Ministry shall register charitable religious institutions for reimbursing claim of CGST and Central Government share of IGST paid on above mentioned specific items.

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Core industries growth quickens to 6.7% in June

Core industrial growth accelerated in June to 6.7% on the back of a surge in the petroleum products and steel sectors, according to official data released

Petroleum products saw 12.06% growth in June 2018, up from 4.94% in May. The sector saw 6.6% growth in the April-June quarter. The steel sector also witnessed significant acceleration in growth to 4.42% from 0.7% in May. The sector saw a 2.9% year-on-year growth in the quarter. Growth in the coal sector slowed to 11.5% in June from 12.16% in May, while the crude oil and natural gas sectors both contracted, by 3.4% and 2.74%, respectively, in June.

Fertilisers saw growth slowing sharply in June to 0.93% from 8.44% in May. Growth in the cement sector touched 13.18% in June, up from 12.99% in May.

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