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Finance Minister Nirmala Sitharaman on September 8 chaired a meeting on illegal lending apps, with a decision being taken that the Reserve Bank of India (RBI) will prepare a 'whitelist' of all such legal applications.

The Ministry of Electronics and Information Technology will then ensure that only these whitelisted digital lending applications are hosted on app stores, the finance ministry said in a statement on September 9.

"The finance minister expressed concern on increasing instances of Illegal Loan Apps offering loans/micro credits, especially to vulnerable and low-income group people at exorbitantly high interest rates and processing/hidden charges, and predatory recovery practices involving blackmailing and criminal intimidation," the finance ministry statement said.

Sitharaman also noted the possibility of money laundering, tax evasions, breach of data, and misuse of unregulated payment aggregators, shell companies, defunct non-bank finance companies for perpetrating such actions.

The meeting, attended by secretaries from the finance, corporate affairs, and information technology ministries along with officials from the RBI, comes in the wake of increasing concerns surrounding illigal mobile-based lending applications.

Late last month, Moneycontrol reported the RBI is working to set up a fraud registry to keep scamsters at bay.

This fraud registry, according to RBI Executive Director Anil Kumar Sharma, will capture information like IP (internet protocol) addresses and phone numbers repeatedly used to commit frauds. Once reported, these numbers and IP addresses will be blacklisted.

Some of the other decisions taken at the meeting on September 8 include:

>> RBI to monitor 'mule/rented' accounts that may be used to launder money

>> Registration of payment aggregators will be completed by the RBI within a certain period of time after which only such payment aggregators will be allowed to function

>> The corporate affairs ministry will identify shell companies and de-register them to prevent their misuse, while the RBI will do the same for dormant non-bank finance companies

The September 8 meeting also comes after the RBI said on August 10 that it had accepted certain recommendations made by its working group on digital lending. However, these would only be applicable on entities under its purview.

Endowed with rich minerals, Chhattisgarh is working out an extensive plan to explore high-value minerals with a focus on lithium.

Recent surveys have indicated lithium deposits in the central and southern regions of Chhattisgarh. According to officials, work is going on in full swing to complete the formalities and extract lithium, given the demand for the mineral. The state is stressing the need to adopt green technology to explore minerals as well.

“The Geological Survey of India (GSI) has identified a Lithium Block in Katghora-Guchapur area of Korba district, and the reconnaissance survey hints at deposits of lithium with high concentration,” said Anurag Diwan, joint director in the Chhattisgarh Directorate of Mines.

Lithium blocks have also been traced in and around Tongpal, Govindpal, Chitalnar and Puspal areas of Sukma district in Bastar, Diwan said. The area can be explored for lithium-bearing pegmatite. Surveyors found lepidolite, a lithium-bearing mineral, Diwan added.

In the Korba belt, analytical results indicate significant mineralisation of rare earth elements (REE) and other rare metals. Similarly, a reconnaissance survey for gold and associated sulphide mineralisation in Barjor area of Jashpur district reveals the anomalous gold value in the bedrock sample.

“Our priority is to assess the availability and quantity of high-value minerals like lithium, tin, gold, copper, nickel and diamond using the latest technology,” Diwan said. Lithium is used in the process of making glasses, ceramics and pharmaceuticals, besides aluminium and magnesium alloys. But the highest potential for growth is in the battery market, where lithium is used as electrode and electrolyte material in lithium disposable batteries and in lithium-ion rechargeable batteries.

The mining department recently organised a conference to design a strategy regarding the auction of mineral blocks and exploration of high-value minerals available in the state. Detailed deliberation was held with the stakeholders, both from the public as well as the private sector, to make Chhattisgarh a hub of high-value minerals in the country.

Till now, more than 100 potential mineral blocks have been identified on the basis of exploration taken up by government agencies in Chhattisgarh. The state government had issued a tender inviting notices for 40 mineral blocks of minerals like gold, iron Ore, limestone and bauxite. As many as 15 blocks have been successfully auctioned.

India's headline retail inflation rate likely rose for the first time in four months to 6.9 percent in August, according to a Moneycontrol poll of 18 economists.

Inflation, as measured by the Consumer Price Index (CPI), eased to a five-month low of 6.71 percent in July. The Ministry of Statistics and Programme Implementation will release retail inflation data for August at 5.30 pm on September 12.

According to economists, inflation likely rose in August as an increase in food prices was partially cancelled out by lower prices of other items in the CPI basket.

"Prices of cereals and pulses are beginning to rise as fears of a smaller sown crop area this year, combined with moderating buffer stocks, are creating expectations of higher prices," said Rahul Bajoria, chief India economist at Barclays. "While a few food export restrictions have been imposed by the government, some passthrough from international prices into domestic prices remains inevitable."

Bajoria expects food and beverage inflation of the CPI to have risen to 7.2 percent in August from 6.7 percent in July.

India has the biggest bond market among emerging economies that’s not covered by global indexes, but bankers say that may change soon, potentially drawing in billions of dollars in inflows. Russia’s recent exclusion is one reason why.

Morgan Stanley expects an announcement that India will be included in JPMorgan & Chase Co.’s emerging markets bond index as early as mid-September with the actual entry in the third quarter next year. Goldman Sachs Group Inc. sees that announcement coming in the fourth quarter this year and inclusion in the second or third quarter in 2023. Both expect India’s weight at 10%, the maximum for a country in the index, and potential inflows of $30 billion from the move.

Getting high-yielding Indian sovereign bonds into global indexes would make it easier for overseas investors to put their money into Asia’s third-biggest economy with its $1 trillion debt market. It would follow many false starts over the years that resulted from wariness about debt inflows and disagreements including one on tax breaks for foreigners. Russia’s exclusion from the JPMorgan gauges after it invaded Ukraine may have added to incentives for the index compilers to fill the hole with Indian debt.

JPMorgan, one of the major index providers, has been collecting feedback from investors over including India in its Government Bond Index - Emerging Markets Global Diversified, or GBI-EM. More than 60% of real money investors are ready or almost ready for India’s inclusion, a Morgan Stanley survey showed. A spokesperson for JPMorgan in India declined to comment.

“India would offer much needed diversification to the GBI-EM index given the different structure of its economy, and so would be a strong addition to the index from a long-term perspective,” said Nivedita Sunil, portfolio manager for Asia and EM debt at Lombard Odier (Singapore) Ltd. “We have held consultations with the index provider and we are broadly supportive of it.”

Bond traders in India have had their hopes dashed in the past on index inclusion. There were widespread expectations in February that the government would announce a tax break for foreign investors in the budget that would facilitate trading of the nation’s debt on platforms such as Euroclear.

Dashed Expectations

Instead, the budget was silent on the issue. Officials have said they decided not to exempt international bond transactions from taxes, and they would like settlement of bonds to be done locally.

“India has its own size and heft to act on its own,” said Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management. “But it is important to make a strategic decision and stick with it, rather than send out conflicting signals.”

Meanwhile, in the GBI-EM index Russia had a weight of about 8% before it was removed, and now there are seven countries with a weight of 10% each and 13 countries sharing the remaining 30%, according to the Morgan Stanley note.

“The exclusion of Russia has made the index more concentrated and unbalanced,” Morgan Stanley strategists Min Dai, Madan Reddy and Gek Teng Khoo wrote in a note early September. “Hence JPMorgan has more incentive to include India even without Euroclear, as long as GBI-EM investors don’t object to that.”

India is currently ‘on track’ to be placed on index watch for inclusion in JPMorgan’s bond index, according to the bank. It’s also on the FTSE Russell watch list to get into its emerging market debt index.

Bloomberg LP is the parent company of Bloomberg Index Services Ltd, which administers indexes that compete from those by other service providers.

Renewed market talk on index inclusion helped revive flows into rupee-denominated bonds last month after six continuous months of outflows. Foreign inflows will be crucial to meet the nation’s ever-growing bond supply as its funding needs expand.

Authorities have taken some steps to ease rules for foreigners. Recent regulations like allowing custodian banks to pre-fund trades on behalf of foreign investors and extended settlement timings are examples, according to Goldman Sachs. Still, key issues remain.

“We think the two biggest operational challenges are account opening time and the burdensome trading requirements,” said Eric Lo, a fixed-income fund manager at Manulife Investment Management. He said it can take up to nine months to open a local India bond trading account, but operational constraints like those aren’t a “show stopper” for the firm to invest in the market.

The Centre is unlikely to extend a scheme for providing free foodgrains to vulnerable sections beyond September, a former agriculture secretary said.

The government in April 2020 unveiled the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY), billed as the largest food security program in the world.

“After September it will not be extended, in my view,” Siraj Hussain, who as agriculture secretary oversaw formulation of several welfare schemes in Prime Minister Narendra Modi’s first term, told Moneycontrol.

“Neither we have the foodgrains nor do we have the money,” Siraj Hussain, who is the promoter of Arcus Policy Research, said. “We don’t have the resources and the economy is recovering so there is no need for extending it.”

Under PM-GKAY, the government has been distributing additional, free-of-cost foodgrains to around 800 million National Food Security Act (NFSA) beneficiaries to mitigate the hardships faced by the poor after the outbreak of COVID.

Five kilograms of foodgrains are provided per person per month to all NFSA beneficiaries, in addition to the normal quota of heavily subsidised foodgrains under the Act.

PM-GKAY was initially operational from April to June 2020, but it has since been extended multiple times. It is currently in force until September-end.

The scheme, fully funded by the Centre, would have entailed a total expenditure of nearly Rs 3.40 lakh crore if it ceases this month.

Expenditure management

The government is on course to maintaining its budget deficit at the targeted 6.4 percent of GDP in this financial year, but is yet to decide on extending the free foodgrains scheme beyond September, Finance Secretary T V Somanathan said last week.

Maintaining the fiscal deficit will require deft expenditure management.

Meanwhile, food prices have been on an upswing globally since Russia’s invasion of Ukraine in February. Changing weather patterns have hurt sowing of summer-sown crops and food stocks have dipped. India has curbed outbound shipments of wheat and wheat flour. It has also prohibited exports of broken rice and imposed a levy on shipments of unmilled and husked brown varieties.

India’s rice stocks in the central pool as of August 1 stood at 279.52 lakh tonnes and those of wheat at 266.45 lakh tonnes, according to the Food Corporation of India (FCI).

According to the buffer norms, FCI should have 102.5 lakh tonnes of rice and 205.2 lakh tonnes of wheat, including 20 lakh tonnes of rice and 30 lakh tonnes of wheat in strategic reserves as on October 1.

The aggregate allocation of free foodgrains under the PM-GKAY will stand at an estimated 1,003 lakh tonnes at the end of September.

Rural vs. urban economy 

To ensure foodgrain stock management, the government substituted a quantity of about 11.06 lakh tonnes of wheat per month under the scheme into rice for five months from May to September.

Meanwhile, the economy has been on an upswing, as indicated by a recent spate of data. Inflation, which is still above the central bank’s medium-term target, has also come off eight-year highs.

To be sure, the decision on extension of the scheme will also depend on the government’s assessment of the rural economy, which is trailing the urban economy.