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The moderation in India's growth coincides with a deceleration in growth of global output and the IMF has projected the country's GDP growth to pick up to 5.8 per cent in 2020, Union Minister Anurag Thakur said in Lok Sabha.

Thakur said India's growth trajectory over the period 2014-15 to 2018-19 is characterised by macroeconomic stability with real GDP growth averaging 7.4 per cent.

"The moderation in India's growth coincides with a deceleration in growth of global output, as estimated by the IMF, in recent years," he said replying a question of Congress MP Abdul Khaleque and TMC's Saugata Roy during Question Hour.

Thakur, union minister of state for finance, said the IMF has projected India's GDP growth to pick up to 5.8 per cent in 2020.

The economic survey 2019-20 has also projected a pick-up in India's growth in the range of 6.0 per cent to 6.5 per cent in 2020-21.

The RBI's sixth bi-monthly monetary policy statement, 2019-20 has also projected GDP growth of 6.0 per cent for 2020-21.

Thakur said as per the National Statistical Office's first advance estimates of national income, 2019-20, India's real GDP is estimated to grow at 5.0 per cent in 2019-20.

He said the World Economic Outlook Update (January 2020) published by the International Monetary Fund (IMF) has revised India's GDP growth rate to 4.8 per cent in 2019.

This revision in growth may not cause any stress in the Non-Banking Financial Companies (NBFCs) sector as NBFCs are well capitalised, he said.

The minister said the government has implemented several major structural reforms in recent years to bolster investment and growth.

These include Insolvency and Bankruptcy Code (IBC) to strengthen the financial system, Goods and Services Tax (GST) to simplify the indirect taxation regime, Make-in-India programme to boost domestic manufacturing capacity, liberalisation of Foreign Direct Investment (FDI) and Jan Dhan-Aadhaar-Mobile (JAM) Trinity towards greater transparency, efficiency and financial inclusion, he said.

Thakur also said recently, the corporate tax rate has been cut to 15 per cent for new domestic manufacturing companies, which is amongst the lowest in the world.

In December 2019, he said, the government has announced the Rs 103 lakh crore National Infrastructure Pipeline which would significantly boost infrastructure and spur growth impulses in the economy.

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Insurance companies largely remained passive investors. But, in a welcome move, the Insurance Regulatory and Development Authority of India (IRDAI) has finally nudged a behavioural change.

The regulator has demanded that insurers keep a close eye on their investee firms and disclose this publicly. After all, it is policyholder’s money that is being invested in these companies.

It said that while insurers can determine their own engagement strategy, the stewardship policy should clearly set out the criteria/circumstances in which they will actively intervene. The regulator also said that the policy should provide for regular assessment of the outcomes of intervention by the insurer.

Stewardship refers to a set of best practices which insurance companies need to follow. IRDAI has now offered a fresh set of these examples to point out what insurers are required to do.

"Intervention should be considered regardless of whether an active or passive investment policy is followed," IRDAI said. This is a crucial development and puts the onus on the insurer to ensure that investee firms’ maintain proper financial health and sound corporate governance.

It has been predominantly noticed that insurers abstain from voting on crucial matters in investee firms. In a few cases, smaller insurers blindly followed the voting decisions of their larger counterparts. Considering that policyholder funds are being used to invest, it is pertinent that independent calls regarding board matters are taken by each insurer.

For voting, IRDAI has made the policy more concrete to ensure that insurers do not sit back and let companies make wrong business decisions.

For insurers with assets up to Rs 2.5 lakh crore, if the insurer’s stake is 3 percent or above in a company they have to compulsorily vote. For those with assets above Rs 2.5 lakh crore, the mandatory voting threshold is 5 percent or above.

When investee companies fail, policyholder funds are impacted. A wrong business decision or a corporate governance lapse in these firms would create a negative impact on the stock price. This, in turn, hurts the investment income of insurers.

Early signals of possible defaults or distress are available to insurers in such investee companies. Thus, rather than waiting for an entity to go to bankrupt, insurers could play an active role in questioning the action of such companies.

IRDAI has made it clear that the policyholder is the ‘ultimate investor’. Hence, all decisions taken in investee firms by insurers will now have to be periodically disclosed publicly. The regulator also said that this should be in a simple format that can be understood by the general public.

There have also been cases where large insurers cross-invest in sister entities. IRDAI has said that potential conflict of interest scenarios also need to be disclosed by insurers. It said that a blanket ban on certain investments could also be considered.

For large corporates with legacy brand-names, it has often been noticed that the insurer sides with the investee firm management on strategic business decisions. This is despite minority shareholders and proxy advisory firms opposing such a move.

In such cases, insurers need to apply rational thought to their voting decision and not blindly support the top leadership.

Insurers have been forced to take these steps in order to bring more transparency in the sector and protect policyholder interests. As a policyholder, individuals also need to seek and verify the investment decisions of their insurance company on a periodic basis.

In fact, policyholders do and should exercise tremendous control over these decisions.

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The insurance regulator is keen that Life Insurance Corporation of India (LIC) pare down its stake in other companies to 15 percent or below. But this reduction has to be gradual, Insurance Regulatory and Development Authority of India (IRDAI) Chairman Subhash Chandra Khuntia said.

"We would like LIC to bring down their stake in firms to below 15 percent. But this cannot happen before the (proposed) IPO. The reduction cannot be instant because it will lead to disruption and prices may get impacted. We will be fixing a timeline," he said on the sidelines of a National Insurance Academy event.

Finance Minister Nirmala Sitharaman announced on February 1 in her Budget 2020 speech that the government will divest its stake in LIC through an IPO. It is likely that LIC will be listed on the stock exchanges in the second half of FY21.

LIC holds more than 15 percent stake in entities like IDBI Bank, ITC and UTI. As per insurance rules, an insurance company cannot hold more than 15 percent stake in any company. However, LIC has been given special exemption for investing in IDBI Bank.

Once the Parliament gives nod for an IPO, the stake sale by the government will be undertaken. It is likely that the government could sell 10 percent stake in LIC, an insurer whose valuation could be as high as Rs 10 lakh crore.

New tax slabs

Khuntia also spoke about the Budget 2020 proposal on the new optional tax slabs that offer lower tax rates but without any tax exemptions or deductions.

"Even if there is a new tax regime I am sure people understand the need for protection. Those who need it will opt for insurance products. But it is a fact that people don't just buy insurance for tax exemption. There is a still an option," added Khuntia.

Capital infusion in PSU insurers

When it comes to the public sector general insurance companies, Budget 2020 has provided for additional capital of Rs 6,950 crore for Oriental Insurance, United India Insurance and National Insurance.

The budget documents showed that the provision was for the higher requirement of maintaining the requisite minimum solvency ratio by each of the three public sector general insurance companies.

"A total of about Rs 9,500 crore has been provided. This year (FY20) there was a provision of Rs 2,500 crore capital. The same for FY21 will be Rs 6,950 crore," Khuntia added.

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The zero customs duty on open-cells for LCD/LED panels used for televisions may get a temporary extension. The government is studying a proposal to extend the nil duty by another six months. Currently, this is valid till September 30.

Imposition of customs duty would lead to an immediate hike in prices of televisions. This is because open cell is what makes the LED/LED screen of a television function effectively. The entire open-cell component is imported from South-East Asian markets.

LED TVs comprise one of the largest segments under the entire domain of Appliance and Consumer Electronics, accounting to a volume of almost 15 million with an estimated sale value of almost Rs. 40,000 crore.

"While the emphasis is on Make in India, the government is cognisant of the fact that key components for products like televisions do not have local manufacturing capacity," said an official.

In September 2019, the Ministry of Finance had said the open-cells for LCD/LED panels will not attract any customs duty. The ministry had said that it will be valid till September 30, 2020 post which local manufacturing of open cell could be incentivised.

In her Budget speech, Finance Minister Nirmala Sitharaman said that it has been observed that imports under Free Trade Agreements

(FTAs) are on the rise.

"Undue claims of FTA benefits have posed threat to domestic industry. Such imports require stringent checks. In this context, suitable provisions are being incorporated in the Customs Act. In the coming months we shall review Rules of Origin requirements, particularly for certain sensitive items, so as ensure that FTAs are aligned to the conscious direction of our policy," she had said.

It is to be noted that televisions are also a category where FTAs are being used in a small way to source products/parts from outside. This will also be under review.

She also said that the custom duty exemptions shall be comprehensively reviewed by September, 2020 for taking a view on their relevance.

Currently, the zero customs duty is applicable for open-cell (15.6 inches and above) used in the manufacture of Liquid Crystal Display (LCD) and Light Emitting Diode (LED) TV panels. Further, components like the chip on film, printed circuit board assembly and cell used in LCD/LED TV panels will also be exempt from customs duty.

Open-cell is a critical component used in manufacturing television sets. At present, there is no local manufacturing of open cell in India so a higher customs duty meant that TV prices stayed high.

The LED TV industry is also one of the biggest employers with estimated employment of 50,000 people directly and many more indirectly through the ancillary units.

The industry has sought a policy to enable phased manufacturing of TVs and end-to-end manufacturing of televisions in the country.

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The proposed levy of 1 per cent TDS on e-commerce transactions announced in the recent Budget may seem like a harmless 'papercut' but could impact working capital of small businesses, Amit Agarwal, country head of Amazon India and Chairman of industry body IAMAI said on Wednesday.

Agarwal said the focus for India should be on "removing friction and bottlenecks" and added that the target of USD 1 trillion digital economy is not far fetched for a country that is seen as a digital powerhouse.

"Just look at the most recent Budget. There is an introduction of tax collection at source. These seem like harmless papercuts but really impact the working capital of small businesses," Agarwal said.

A lot can be achieved by focusing on removing friction, he said expressing hope that there will be more attention in enabling this space for successful entrepreneurs.

Agarwal was speaking at 14th India Digital Summit organised by Internet and Mobile Association of India (IAMAI).

Agarwal further advocated a razor sharp focus on skilling, grassroot entrepreneurship, driving equal opportunity through greater women's participation as well as Artificial Intelligence backed solutions, and said a multi pronged approach can enable India to meet its target of USD 5 trillion economy.

He exuded confidence that bold reforms of last few years and India's rising tech clout globally backed by success of Aadhaar, UPI and other initiatives will help the country scale new highs.

The Union Budget announced on February 1 has proposed a new levy of 1 per cent TDS (tax deducted at source) on e-commerce transactions, a move that could increase burden on sellers on such platforms.

"In order to widen and deepen the tax net by bringing participants of e-commerce (sellers) within tax net, it is proposed to insert a new section 194-O in the Act so as to provide for a new levy of TDS at the rate of one per cent," according to Budget 2020-21 documents.

The amendments will take effect from April 1, 2020. The documents said the e-commerce operator -- an entity owning, operating or managing the digital platform -- will have to deduct 1 per cent TDS on the gross amount of sales or service or both.

This provision will not apply in cases where the seller's gross amount of sales during the previous year through e-commerce operator is less than Rs 5 lakh and the seller has furnished his PAN or Aadhaar number.

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Removal of tax exemptions under Section 80C in the new tax regime could be dampener for life insurance products as well as equity-linked savings schemes (ELSS) of mutual funds.

In her Budget speech on February 1, Finance Minister Nirmala Sitharaman said a salaried professional opting for a lower tax rate under the new regime will not be eligible for deductions, including insurance premium paid and ELSS investments.

“The removal of 80C benefit may pose a risk to new business volumes of life insurance companies,” said Kotak Institutional Equities in a report.

Life insurance

Tax exemptions are an important incentive for purchase of life insurance. To be eligible for exemption under Section 80C, the sum assured has to be 10 times the annual premium. This is part of the Rs 1.5 lakh limit under this section.

But now, those who opt for the new tax regime will not be eligible to claim any deduction under Section 80C.

It is likely that those earning annual income between Rs 5 lakh to 7.5 lakh could switch to the new regime and hence will not have any incentive to buy an insurance product.

Though tax saving is not the only objective to buy life insurance, it is one of the motivators. Life insurers are hopeful that fewer people opt for the new regime.

Kamlesh Rao, CEO Aditya Birla Sun Life Insurance, said the insurance industry will be watchful of the implication of direct tax changes in the new tax regime.

As soon as the new regime was announced on February 1, life insurers' stocks were hit. Currently, HDFC Life Insurance, ICICI Prudential Life Insurance and SBI Life are listed on the stock market.

Shares of Max Financial, which holds Max Life, gained 8.65 percent intraday today (against a 12.8 percent fall on Budget day), ICICI Prudential rose 1.69 percent (against a correction of 10.93 percent), HDFC Life gained 1.80 percent (against a fall of 6 percent) and SBI Life was up 3.12 percent (against a decline of 10 percent).

The high reliance on the fourth quarter for premium collection by life insurers has however come down. Since Q4 is when individuals buy life insurance to claim deductions, a major portion of the new premiums would come in the January to March period.

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The Economic Survey 2020 stated that India had been the dominant economic power for over three-fourths of known economic history. Such economic strength is created "by design" rather than by chance, the report said.

The survey also drew the connection between the invisible hand of the market, the hand of the trust and how it can contribute to India's target of becoming a $5-trillion economy.

"In a market economy too, there is need for state to ensure a moral hand to support the invisible hand," the survey emphasised.

The survey traced the country's history, right from the ancient texts such as Arthashastra and Thirukural to contemporary times and the problem of bad loans.

Pro-business practices can help promote the invisible hand of the market, the report added.

The survey introduced the concept of “trust as a public good that gets enhanced with greater use”.

The Survey suggests that policies must empower transparency and effective enforcement using data and technology to enhance this public good.

The global financial crisis in 2009 and its consequences created a trust deficit in the economy. Economics literature after the financial crisis has emphasised the need to rebuild the trust in the economy.

"Following the Global Financial Crisis, an emerging branch of the economics literature now recognises the need for the hand of trust to complement the invisible hand," the report said.

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Cargo traffic at India's non-major ports jumped 4.8 per cent in April-December period of the current fiscal to 447.21 million tonnes (MT), a Shipping Ministry report has said. These non-major ports had recorded a cargo traffic of 426.53 MT in the April-December period of 2018-19.

During the April-December 2019-20, Directorate of Ports at Odisha recorded highest growth in traffic at 64.2 per cent followed by Ports of Tamil Nadu Maritime Board (34.1 per cent), Directorate of Ports, Puducherry, 27.7 per cent) and Ports Management Board, Andaman & Nicobar Islands (25.4 per cent) against the corresponding period of the previous fiscal, as per the report.

Directorate of Ports, Karnataka, recorded a growth of 25 per cent while Gujarat Maritime Board recorded a growth of 4.1 per cent.

Negative growth was seen at Goa, Kerala Maritime Board, Maharashtra Maritime Board and Directorate of Ports, Andhra Pradesh (2.1 per cent).

Cargo traffic at India's non-major ports jumped 4.8 per cent in April-December period of the current fiscal to 447.21 million tonnes (MT), a Shipping Ministry report has said. These non-major ports had recorded a cargo traffic of 426.53 MT in the April-December period of 2018-19.

During the April-December 2019-20, Directorate of Ports at Odisha recorded highest growth in traffic at 64.2 per cent followed by Ports of Tamil Nadu Maritime Board (34.1 per cent), Directorate of Ports, Puducherry, 27.7 per cent) and Ports Management Board, Andaman & Nicobar Islands (25.4 per cent) against the corresponding period of the previous fiscal, as per the report.

Directorate of Ports, Karnataka, recorded a growth of 25 per cent while Gujarat Maritime Board recorded a growth of 4.1 per cent.

Negative growth was seen at Goa, Kerala Maritime Board, Maharashtra Maritime Board and Directorate of Ports, Andhra Pradesh (2.1 per cent).

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India has initiated a probe into an alleged dumping of a chemical used in dyes and pharma industries from China following a complaint from a domestic player.

Gujarat Narmada Valley Fertilizers and Chemicals Ltd has filed an application before the Directorate General of Trade Remedies (DGTR) for anti-dumping investigation on imports of Aniline originating in or exported from China.

According to a notification of the DGTR, it has found evidence of dumping of the chemical from China.

"The authority, hereby, initiates an investigation to determine the existence, degree and effect of any alleged dumping in respect of the product under consideration," it has said.

If established that dumping has caused material injury to domestic players, the directorate would recommend imposition of anti-dumping duty on imports of the chemical from the neighbouring country.

Aniline is also known as Aniline Oil. It is an essential for vital industries such as drugs, pharmaceuticals, dyes and dye intermediates.

Imposition of anti-dumping duty is permissible under the World Trade Organisation (WTO) regime.

The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a- vis foreign producers and exporters.

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Senior Congress leader Jyotiraditya Scindia termed as "unfortunate" Union minister Piyush Goyal's 'Amazon not doing any favour' remarks, and said such statements would do no good to the country as it desperately needs investments to come out of the "worrisome" economic condition.

He also said that there was a need to attract foreign investment as Indian businessmen's capacity to invest has exhausted.

"An investor as well as the country where the money is invested, both get profited...I think any comment that brings down the investment is not appropriate. It is unfortunate for us," Scindia told reporters here.

"The country desperately needs investment. Countries across the globe give a red carpet reception to investors, but in our country if such a statement is made, then it won't encourage investment," he said in response to a query about Union Commerce Minister Piyush Goyal's statement regarding Amazon's investment into India.

"Indian businessmen's capacity to invest has exhausted. So there is a need to attract investment...Such statements won't do any good to the nation," the Congress general secretary added.

He also called for all-out efforts to accelerate the country's growth rate, to attract investment, to check inflation and to end unemployment.

"The country's condition is worrisome on these four counts right now. It seems this kind of situation did not exist in the last 25-30 years," Scindia, who was Minister of State for Commerce and Industry during the UPA-II, added.

Piyush Goyal had on Thursday said that e-commerce giant Amazon was not doing a favour to the country by investing a billion dollars and also questioned how the online retailing major could incur such "big" losses but for its predatory pricing.

He had also said that e-commerce companies have to follow Indian rules in letter and spirit and not find loopholes to make a back-door entry into multi-brand retail segment.

However, a day later, the minister had said in Ahmedabad that the country welcomes all kinds of investments that follow the "letter and spirit" of the law. He also said that some people had misconstrued his remarks by suggesting that he had said something negative about Amazon.