Sat, 27th May 2017

Anirudh Sethi Report


Archives of “supreme court” Tag

Emerging Markets :An Update

  • China’s government approved the creation of a bond link between Hong Kong and the mainland.
  • S&P upgraded Indonesia one notch to investment grade BBB- with stable.
  • Fitch revised the outlook on Vietnam’s BB- rating from stable to positive.
  • Egypt will announce a package of social spending soon.
  • Moody’s changed the outlook on Poland’s A2 rating from negative to stable.
  • Brazil press reported that meat-packing company JBS has submitted compromising tape recordings to the Supreme Court.
  • Chile central bank surprised markets with a 25 bp cut but signaled a move to a neutral bias.

In the EM equity space as measured by MSCI, Hungary (+2.6%), Indonesia (+2.0%), and Peru (+1.4%) have outperformed this week, while Brazil (-11.1%), Poland (-1.8%), and Egypt (-1.7%) have underperformed.  To put this in better context, MSCI EM fell -0.3% this week while MSCI DM was flat.

In the EM local currency bond space, India (10-year yield -11 bp), Korea (-7 bp), and Peru (-4 bp) have outperformed this week, while Brazil (10-year yield +155 bp), Argentina (+28 bp), and Turkey (+22 bp) have underperformed.  To put this in better context, the 10-year UST yield fell 8 bp to 2.25%.

In the EM FX space, SGD (+1.3% vs. USD), ZAR (+1.0% vs. USD), and THB (+0.9% vs. USD) have outperformed this week, while BRL (-4.6% vs. USD), ARS (-3.1% vs. USD), and INR (-0.5% vs. USD) have underperformed.

Audit cop lens on note ban

The Comptroller and Auditor General of India (CAG) plans to audit the impact of note ban and the effect it has had on the government’s tax revenues, CAG Shashi Kant Sharma said.

Sharma said the auditor was gearing up to audit tax revenues under the new goods and services tax (GST) regime and has started capacity building and reorienting its audit methods and procedures.

The government had withdrawn old Rs 500 and Rs 1,000 rupee notes from circulation on November 8 last year, and announced a new tax amnesty scheme for those holding unaccounted junked currency.

“We plan to audit certain issues related to the fiscal impact of demonetisation, largely its impact on tax revenues,” Sharma said.

The CAG audit may look into the expenditure on printing of notes, RBI dividend payout and banking transaction data.

The auditor has also conveyed to the government its stand on the recent move of the GST council to delete section 65 of the preliminary draft that authorised CAG to audit GST. “Our mandate covers GST just like the earlier taxation regimes were covered. We have already started work on restructuring our revenue audit arrangements to meet this likely challenge when GST is introduced,” Sharma said.

Federal Judge Grants Partial Block Of Trump Immigration Order

Symbolic war broke out between the Judicial and Executive branches shortly before 9pm on Saturday evening, when federal judge Ann Donnelly in the Eastern District of New York in Brooklyn issued an emergency stay halting Trump’s executive order banning immigrants from seven mostly Muslim nations entering the US, and temporarily letting people who landed in U.S. with valid visa to remain on US territory, saying removing the refugees could cause “irreparable harm”.

The court’s ruling was in response to a petition filed on Saturday morning by the ACLU on behalf of the two Iraqi men who were initially detained at JFK International Airport on Friday night after Trump’s ban, and were subsequently granted entry into the US.

The ACLU issued the following statement following the court ruling:

 A federal judge tonight granted the American Civil Liberties Union’s request for a nationwide temporary injunction that will block the deportation of all people stranded in U.S. airports under President Trump’s new Muslim ban. The ACLU and other legal organizations filed a lawsuit on behalf of individuals subject to President Trump’s Muslim ban. The lead plaintiffs have been detained by the U.S. government and threatened with deportation even though they have valid visas to enter the United States.

Lee Gelernt, deputy director of the ACLU’s Immigrants’ Rights Project who argued the case, said:

“This ruling preserves the status quo and ensures that people who have been granted permission to be in this country are not illegally removed off U.S. soil.”

ACLU Executive Director Anthony D. Romero, had this reaction to the ruling:

“Clearly the judge understood the possibility for irreparable harm to hundreds of immigrants and lawful visitors to this country. Our courts today worked as they should as bulwarks against government abuse or unconstitutional policies and orders. On week one, Donald Trump suffered his first loss in court.

However, while some media reports present the court ruling as a wholesale victory over Trump’s order, the stay only covers the airport detainees and those currently in transit, and it does not change the ban going forward.

Judge Donnelly has ordered the federal government to provide a list of all people currently held in detention. Where the stay falls short is that according to the ACLU’s lawyer, there still can be no new arrivals from countries under the ban, but the ACLU and other organizations are working to file additional suits to roll back other portions of the order.

* * *

A detailed read of Judge Donnelly’s ruling, per Josh Blackman, reveals that the order states that petitioners have shown a “strong likelihood of success” and that their removal would violate the Due Process and Equal Protection clause, and cause irreparable injury. (Note, this order only applies to those already in the country, and thus protected by the Constitution; the same analysis does not apply to those outside the United States).

As a result, the court issues what is effectively a nationwide stay, enjoining all of the named respondents, including President Trump, Secretary Kelly, and the acting director of the CBP, from the “commission of further acts and misconduct  in violation of the Constitution as described in the Emergency Motion for Stay of Removal.

The key part is what they are enjoined from doing:

Emerging Markets -An Update

Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term.
Korea’s parliament voted 234-56 to impeach President Park.
Czech National Bank raised the possibility of negative rates to help manage the currency.
A Brazilian Supreme Court justice removed Senate chief Renan Calheiros from his post, but was later overturned by the full court.
Brazil central bank signaled a possibly quicker easing cycle.

In the EM equity space as measured by MSCI, UAE (+6.2%), Poland (+6.0%), and Mexico (+5.9%) have outperformed this week, while Czech Republic (-0.6%), Hong Kong (-0.2%), and China (+0.6%) have underperformed.  To put this in better context, MSCI EM rose 2.8% this week while MSCI DM rose 2.8%.
In the EM local currency bond space, Brazil (10-year yield -60 bp), the Philippines (-59 bp), and Indonesia (-40 bp) have outperformed this week, while India (10-year yield +20 bp), China (+5 bp), and Czech Republic (-1 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 3 bp this week to 2.41%. 
In the EM FX space, BRL (+3.1% vs. USD), COP (+2.9% vs. USD), and CLP (+2.8% vs. USD) have outperformed this week, while EGP (-2.3% vs. USD), CNH (-0.8% vs. USD), and SGD (-0.7% vs. USD) have underperformed.
Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term.  He cited family reasons.  The next chief executive will be selected in March by a committee of 1,200.  China has veto power over the final selection, and so it’s clear that another establishment leader will be chosen. 

Court tells govt: Spell out figure – Lens on withdrawal sum; govt bares retention plan

The Supreme Court today directed the government to spell out by December 14 a minimum weekly withdrawal limit that banks cannot deny to customers, after the Centre said the previously announced Rs 24,000-a-week limit was a “ceiling, not a minimum”.

Many banks have been refusing this amount citing a cash crunch and forcing customers to settle for sums ranging anywhere between Rs 3,000 and Rs 10,000, senior counsel and Congress politicians Kapil Sibal and P. Chidambaram had earlier told the court.

While clarifying on the matter, attorney-general Mukul Rohatgi said the government had no intention of replacing the entire volume of the old notes in new currency: it would leave a gap of Rs 1.5 lakh crore to promote cashless transactions.

 The bench of Chief Justice T.S. Thakur and Justices A.M. Khanwilkar and D.Y. Chandrachud was hearing a batch of 32 petitions and applications from individuals, groups and political parties complaining about the hardship caused by demonetisation.

At the next hearing on December 14, the court will sift through them and frame the questions it needs to answer, including one on the constitutional validity of the demonetisation and the curbs on cash withdrawals.

Justice Thakur indicated that if necessary, the court might refer the matter to a five-judge Constitution Bench.

“We assume you (the government) are capable (of replacing the withdrawn currency). Your estimate shows you are in a position (to do so) but what has happened?” Justice Thakur asked.

Rohatgi said the government needed time till December 31.

“Are you agreeable that if there is a (lower) limit imposed by us, then no bank will deny withdrawal of the money? We will make sure that Rs 24,000 is withdrawn by each person?” the Chief Justice said.

Rohatgi clarified: “The Rs 24,000 limit is a ceiling, not a minimum limit.”

The bench then said: “If he (customer) has a legitimate right, then let there be a limit below which banks cannot deny.”

Rohatgi said the government would then have to rework the limit. “If not Rs 24,000, let it be Rs 10,000, but it must be given,” the Chief Justice said.

The court quizzed the government on the speed of currency replenishment. “How much money is being printed? How much is being infused?” it asked.

Rohatgi said the government had so far collected between Rs 11.5 lakh crore and Rs 12 lakh crore in old currency, having initially expected about Rs 10-11 lakh crore. “It (the government) may get another Rs 1 lakh crore.”

Justice Thakur said the court was conscious of the “larger objective” of the demonetisation but asked whether the government had “properly applied (its) mind” while undertaking the drive.

“Was there any material before you that were apprised? How much money will be lost? How we will meet the situation? Was there a plan (about what the) banks should have to take care of when a situation like this arises?” he asked.

“It is one thing to completely stop (the use of old notes) and another thing to intelligently regulate.”

Rohatgi acknowledged “some amount of inconvenience” to the people but cited the incentives for digital transactions that the government had announced yesterday by offering concessions at petrol stations and in insurance payments, among other things.

Supreme Court directs central government committe to file report on NPAs in various banks

Following accusations from oppositons, claiming that the main objective behind the implementation of the demonetisation policy by the Narendra Modigovernment is to bail out the non performing assets (NPA) of banks, the Supreme Court had today asked the central government committee to file a comprehensive report regarding NPAs in various banks. With the next hearing for the issue is set to be on December 3, the apex court had directed the committee to submit recovery process with in three weeks. however, the SC didn’t stress on disclosing any names but ordered for a probe to figure out the root cause of bad loans.

Earlier, representing the Conngress Party, senior leader Kapil Sibal, had alleged the center for making attempts to bail out NPAs of banks, owed by many industrialists. The senior Congress leader said, “Out of the roughly 16,000 crore rupees in the market, the government hopes to see 10,000 crores placed in the banks. The balance 6,000 would be generated by the RBI and placed at the disposal of the government and the real objective of that fund was to pay off the non performing assets of banks.”

While Sibal claimed that, through the demonetisation policy, the money of the common people of the country will be used by the government, in the interest of rich industrialists, Union Minister and senior BJP leader N Venkaiah Naidu criticized the opposition for attempts to politicise the anti-graft policy.

Supreme Court refuses to stay demonetisation move: 5 key takeaways

The Supreme Court on Tuesday declined to stay the demonetisation of Rs 500 and Rs 1,000 currency notes announced by Prime Minister Narendra Modi on November 8 but wanted the government to justify the drastic step through an affidavit. The court will examine its legality with reference to the provisions of the Reserve Bank Act.
Here are the latest developments on this issue:

1. The bench presided over by Chief Justice T S Thakur clarified that it did not intend to interfere in the economic policy of the government, but asked the Attorney General to file an affidavit explaining what steps the government had taken to ensure liquidity.

2. It asked the Centre to explain the steps it has taken or will take to deal with the chaos outside banks and ATMs following the demonetisation move and observed that people should not suffer.

Senior counsel Kapil Sibal said, “We are with the government incurbing the black money, but the inconvenience it is causing to the public is jeopardising their life.”

3. Everyone carrying Rs 500 or Rs 1,000 cannot be painted as a black money hoarder and will take up the case again on November 25 after government’s reply.

Supreme Court asks RBI: 87 owe Rs 85000 crore, why not make their names public

Image result for supreme court indiaUnderlining that 87 persons owe more than Rs 85,000 crore to public sector banks (PSBs), the Supreme Court said on Monday that the Reserve Bank of India (RBI) should not work in the interest of the banks but in the interest of the country which calls for disclosing the names of the biggest defaulters.

After going through a list of defaulters submitted in a sealed cover envelope by the RBI, a bench led by Chief Justice of India T S Thakur disclosed that there are 87 individuals who owe Rs 500 crore or more to the banks and bad loans on account of their default to repay totalled Rs 85,000 crore.

“See this amount…if we had asked for details of those who owe Rs 100 crore, this could be another Rs 1 lakh crore…why should we not put the names of these defaulters in public domain? The RBI publishes a list of wilful defaulters every year. It does not matter whether they are wilful defaulters or not but they certainly owe Rs 500 crore and more to the banks… people may have a right to know,” said the bench, also comprising Justices D Y Chandrachud and L N Rao.

RBI was asked to explain the huge amount of loans written off by PSBs in the last five years after the top court took suo motu cognizance of The Indian Express report dated February 8, 2016, that Rs 1.14 lakh crore had been written off as Non-Performing Assets (NPAs) by 29 state-owned banks in the last three years.

Builders have developed attitude of not fulfilling promises: Supreme Court

Real-estate firms on October 18 got a rap on their knuckles from the Supreme Court for making tall claims to purchasers which remained unfulfilled due to inordinate delay in completing the housing projects.

“In this country, builders have developed an attitude to make committments to the purchasers and not fulfill them by delaying the projects,” a bench headed by Justice Dipak Misra said.

The apex court’s observation came after real estate firm Parsvnath Buildwell Pvt Ltd said it will give flats to 70 home buyers, who are before the court, by December 17.

“They (home buyers) do not have patience and trust in you and need refund. Money should go back to them and they should not suffer,” the bench also comprising Justices Amitava Roy and A M Khanwilkar said.

The bench, also pulled up the realty firm for seeking time to deposit additional Rs 10 crore, asking “why do you get into all this business when you can’t pay back the money You have to give back the money to home buyers.”

Senior advocate Subramanian Prasad, appearing for the firm, said that as directed by the court, the company has deposited Rs 12 crore with the Supreme Court registry. The bench asked Supreme Court registry to disburse Rs 12 crore to the 70 home buyers on pro-rata basis after proper identification.

I-T Department considering banning cash deals over Rs 3 lakh

The government is examining a recommendation by the special investigation team to ban cash transactions of over Rs 3 lakh in a bid to clamp down on black money in the economy, a top tax official said on Tuesday.
“These recommendations have come. It (banning cash transactions over Rs 3 lakh) is under examination. SIT recommendations are under consideration,” Central Board of Direct Taxes (CBDT) chairperson Rani Singh Nair told reporters on the sidelines of an Assocham event in New Delhi.

The Income Tax Department, she said, has already put a 1% tax collected at source (TCS) on cash transactions of over Rs 2 lakh and made quoting of Permanent Account Number (PAN) mandatory for transactions above Rs 2 lakh through any paymemt mode.
“All these aspects are part of SIT recommendations to stop use of cash in the economy. Suggestion on Rs 3 lakh and above is under consideration,” she said.
CBDT had earlier clarified that no tax will be collected at source when cash component of the payment for goods and services is less than Rs 2 lakh even if the total consideration is more than this amount.