The 2017 Vibrant Gujarat Global Summit’s inaugural ceremony on Tuesday looked like a shadow of its own past glory as the trademark big-ticket investment promises were missing.
Several chief executive officers attending the summit praised Prime Minister Narendra Modi’s “dynamic and visionary leadership” over the past two and a half years.
The PM’s speech, which was at least a quarter of an hour shorter than last year’s, showcased India’s growth story. “Despite the global slowdown, we have registered excellent growth. India is a bright spot in the global economy.” The World Bank, the International Monetary Fund and other institutions have projected even better growth in the coming days, he added.
Listing out India’s global rankings on various indicators, Modi said, “Creating an enabling environment for business, and attracting investments, is my top priority.”
Modi was called a transformational leader by many, including Executive Chairman of Cisco John Chambers and Chief Executive Officer of Fairfax Canada Prem Watsa. Calling Modi the Lee Kuan Yew of India, Watsa said the Prime Minister can transform the country. The late Singaporean leader was the city-state’s first Prime Minister and is credited with transforming Singapore into a developed nation in a span of 25 years.
Investment promises came only from a couple of people. Gautam Adani, chairman of the Adani Group, committed fresh investments worth Rs 49,000 crore over five years and Lulu Group promised Rs 12,000-crore investment.
Former Reserve Bank governor D Subbarao on Thursday termed demonetisation as “creative destruction and the most disruptive policy innovation since 1991 reforms” that has helped destroy black money.
“On November 8, the Prime Minister (Narendra Modi) and the Reserve Bank have demonetised 86 per cent of currency in circulation overnight, which is what is arguably the most disruptive policy innovation in India since the 1991 reforms,” he said.
“Demonetisation, in that sense, is creative destruction. But it is a very special type of creative destruction. Because what it has destroyed is a destructive creation — black money. So, you can understand that demonetisation is creative destruction of a destructive creation,” Subbarao said.
He was addressing an international conference organised by the Institute for Development and Research in Banking Technologies (IDRBT) in Hyderabad. He further said demonetisation is “arguably” leading to a flurry of innovations in Indian financial sector by way of digitisation of payments.
In a decision that will bring big cheer to the common man, the RBI (Reserve Bank Of India) has hiked the daily ATM withdrawal limit to Rs 4,500 per card. This would come as a huge relief to people who stand in queues for a long time and still manage to get only Rs 2,500.
In its latest notification, the RBI said, “The daily limit of withdrawal from ATMs has been increased (within the overall weekly limits specified) with effect from January 01, 2017, from the existing Rs 2500/- to Rs 4500/- per day per card. There is no change in weekly withdrawal limits.Such disbursals should predominantly be in the denomination of Rs 500.”
The current withdrawal limit per bank account per week has not been revised, a fact that is likely to disappoint people.
The Narendra Modi government’s move to demonetise old Rs 500 and Rs 1000 notes has largely been supported by the common man, though most agree that the implementation could have been better planned and executed. Long queues at banks and ATMs were a common sight in the first few days since the historic decision was announced by PM Modi on November 8. The situation has admittedly improved since then, but with increase in the daily limits, the government and banking system must work to ensure that ATMs have enough cash. But even as the central bank has eased the ATM withdrawal limit, the government is leaving no stone unturned to promote cashless transactions.
Prime Minister Narendra Modi is likely to address the nation on December 31 evening, a day after his 50-day deadline for the completion of the demonetisation process draws to a close. “Prime Minister Narendra Modi is likely to address the nation before dawn of the New Year,” news agency PTI reported.
However, it was not clear as to whether he would address the nation on Friday or Saturday. In his address, the Prime Minister may speak about the roadmap post the demonetisation period especially on the steps likely to be taken to ease cash flow that has been a major problem ever since demonetisation took place.
He may also speak on the steps to deal with the problems the economy faces after the demonetisation was announced on November 8. The Prime Minister in his public meetings in the last few weeks has been urging the people to bear with the pain following the government’s decision and that it would start easing gradually once the 50-day period is over. On Tuesday, Modi met economists and experts at a meeting in Niti Aayog to discuss the current economic situation
Trying to calm the jangled nerves, Finance Minister Arun Jaitley on Sunday went to great lengths clarifying that the government had no intention of imposing tax on long-term capital gains from share transactions.
Referring to a speech made by Prime Minister Narendra Modi in Mumbai a day before, Jaitley said the interpretation of the speech was not correct. “The speech has been misinterpreted in some sections of the media which have started speculating that this is an indirect reference to the fact that there could be long-term capital gains (tax) on securities transactions,” he clarified.
“Now, this interpretation is absolutely erroneous, the Prime Minister has made no such statement directly or indirectly… And, therefore, I wish to absolutely clarify that there is no occasion or opportunity for anybody to reach such a conclusion because this is not what the prime minister said, nor is this the intention of the government, as has been reported,” Jaitley said.
The current limits on cash withdrawal will be reviewed after 30 December, the last day to deposit old Rs500 and Rs1,000 currency notes, says finance secretary Ashok Lavasa.
“The cap on cash withdrawal to be reviewed after 30 December, which is the last day to deposit old Rs 500/1,000 notes,” PTI quoted Lavasa as saying.
The use of the old Rs500 currency note as legal tender stopped from Thursday midnight. The Narendra Modi government had let people use them for paying utility bills or buying medicines till 15 December, but decided to not extend the deadline any further.
Now the old Rs 500 note can only be deposited in bank accounts or exchanged at the Reserve Bank of India (RBI). The government had earlier scrapped the use of old Rs1,000 note for utility bill payments and petrol pumps.
The government is considering easing rules on cash withdrawals, starting with cooperative banks, once 80% of the new currency is introduced into the system, a top official said on Thursday.
Former finance minister P Chidambram on Tuesday demanded the Reserve Bank of India should make public minutes of its November 8 meeting whose outcome empowered government to scrap specified notes of Rs 500 and Rs 1,000 denominations.
On November 8, the Narendra Modi government in a televised address announced it was abolishing the legal tender status of Rs 1,000 and Rs 5,00 currency notes.
These high value notes comprised a huge 86 per cent of total currency in circulation and the decision has led to severe cash crunch in country causing inconvenience to the citizens.
“RBI should publish the minutes of meeting on Nov 8, let country know who were the directors who attended the meeting,” Chidambaram demands.
The government had banned these specified notes through an executive order instead of passing a legislation in parliament as part of its drive to curb black money and prevent recurrence of fake currency incidents.
According to the RBI Act, 1934, the Central Board of the apex bank takes a call on legal tender, its validity or invaldity, in circulation in country and proposes government accordingly.
Web-based digital currency bitcoin hit its highest levels in almost three years on Friday, extending gains since India sparked a cash shortage by removing high-denomination bank notes from circulation a month ago.
Bitcoin was trading as high as $774 on the New York-based itBit exchange, up almost 1 percent on the day and the highest since February 2014, having climbed almost 9 percent in the past month.
Bitcoin is a cash alternative that can be used for moving money across the globe quickly and anonymously with no need for a central authority to process transactions. It has climbed around 80 percent so far this year, far exceeding its 35 percent rise in 2015.
Indian prime minister Narendra Modi announced a shock move on Nov. 8 to ditch 500 and 1,000 rupee notes – worth a combined $256 billion – that he said were fuelling corruption, being forged and even paying for attacks by militants who target India.
The cryptocurrency’s value has been highly volatile – after rocketing above $1,100 in 2013, it had fallen to around $150 by early 2015. But it has since stabilized, staying above $500 for the past six months.
Officials from the Income Tax Department’s Karnataka and Goa region operations seized Rs 6 crore, including Rs 4.7 crore in new Rs 2000 denomination, along with huge bullion and jewellery from four persons – two government engineers and two contractors – following searches conducted on Wednesday and Thursday. In the search operations, apart from the cash in excess of Rs 6 crore, gold bullion weighing 7 kg approximately and jewellery in excess of 7 kg were also found, the I-T department said. Out of the total cash of Rs 6 crore found as much as Rs 4.7 crore is surprisingly in new currency of Rs 2000 notes. The I-T department has also seized several property documents and high-end luxury cars including a Lamborghini.
“Huge stacks of Rs 2000 notes have been recovered. The cash is amounts to over Rs 4 crore. The counting of the seized currency is still on. This is one the highest seizures of the new currency. Some entry operators and bankers are under the scanner,” a senior I-T department official told news agency PTI.
Identity cards belonging to several individuals were also found during the searches. I-T department suggested that these cards might have been used to exchange old currency notes at banks.
If West Bengal chief minister Mamata Banerjee’s support was instrumental in passing the Goods and Services Tax (GST) constitutional amendment Bill in the monsoon session of Parliament even in the absence of an NDA majority in the Rajya Sabha, her opposition to the integrated indirect tax structure appears all set to derail its implementation now, thanks to the demonetisation of Rs 500-1000 notes.
Prime minister Narendra Modi and finance minister Arun Jaitley must have gathered by now that implementing GST from April 1 next year has slipped out of their hand from the West Bengal finance minister Amit Mitra’s statement that the demonetisation and the resulting turmoil has made the target unlikely. Incidentally, it was Mitra who played a big role as the chief of the empowered committee of state finance ministers on GST in cobbling a consensus of the states to support GST earlier.
Even though the opinion amongst the experts and politicians would be divided on what will be the impact of demonetisation on the GDP, depending on which side they are, considering Mitra’s credentials as an economist and also an industry spokesman in his previous avatar as the secretary general of Ficci, his argument that the likely 2% hit makes GST untenable at this juncture, stands on a sticky wicket.
But, that is not the point, Mitra’s proposed analysis of the impact in different states of the demonetisation itself may prove him wrong – the bigger concern for PM Modi is that the opposition unity in Parliament over demonetisation impact on public life, in all probability, will get extended to opposing the passage of GST laws that are necessary for its implementation.