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In a relief to businesses, the Supreme Court on Friday said taxpayers who had missed out on transitional tax benefits when India switched to the Goods and Services Tax (GST) regime, will be able to claim such benefits in September and October this year.

The apex court bench of Justice Abdul Nazeer and JK Maheshwari directed the revenue authorities to facilitate taxpayers who were not able to claim benefits when the country transitioned from an indirect tax system to GST in 2017.

The top court asked the government to facilitate the filing of Tran 1 and Tran 2 forms. The forms were introduced when GST was rolled out so that taxpayers could carry forward the pre-GST-credit into the GST system.

The court said the GST Network portal must be open for the taxpayers from September 1 to October 31st to claim the transitional credit. Tax officials have been given 90 days to verify the veracity of the claims as well as hear the taxpayers.

Plea challenging GST on disability equipment

A plea was filed in the apex court on Friday challenging the GST on disability equipment. The writ petition called ‘Nipun Malhotra versus Union of India’ was filed in 2017.

The counsel of the petitioner said according to an earlier order by the apex court the petitioner had challenged the tax before the GST council but it was not abolished.

The matter will be heard in September.

SC to hear plea regarding ITAT appointments

The Supreme Court will hear a plea concerning the non-appointment of some names cleared by Search-Cum-Selection-Committee(SCSC) to the Income Tax AppellateTribunal(ITAT).

The contempt petition hearing on Friday claimed the Centre had disobeyed the apex court's order for non-consideration of 19 names out of the 41 names recommended by the SCSC in 2019 for the ITAT.

The SCSC led by Justice AM Khanwilkar had proposed 28 candidates on the main list and 13 on the waitlist out of which 16 were selected from the main list and 6 from the waitlist.

The Attorney General said on Friday that some people were not appointed because new materials had surfaced that raised questions about the integrity of the persons that were left out.

The court asked the Centre to submit these new materials before it and posted the matter for July 26.

Since the Covid-19 outbreak in the Arab Gulf countries in March 2020, many in Kerala had anticipated that the state would lose its pole position in remittances. Last week, the Reserve Bank of India's (RBI)'s Fifth Round of Survey on Remittances for 2020-21 put it down in black and white.

Yes, Kerala has been pushed down to the second position in the volume of inward remittances. Of the total, Maharashtra has secured the top position with a share of 35.2 percent. Meanwhile, Kerala could garner only 10.2 percent of the total inward remittances. Additionally, the United States (US) grew as the largest remitter to India with a share of 23.4 percent. The United Arab Emirates (UAE) followed with 18 percent and the United Kingdom with 6.8 percent.

In the previous survey which analysed the inward remittances for 2016-17, Kerala was in first position with a 19 percent share followed by Maharashtra with 16.7 percent. The UAE was the largest remitter with a 26.9 percent share then, followed by the US (22.9 percent) and Saudi Arabia (11.6 percent).

The fresh survey also reveals that the share of remittances from West Asia to India has declined from more than 50 percent in 2016-17 to about 30 percent in 2020-21.

These changes weren’t unexpected. "The West Asian economies were badly hit during the Covid-19 outbreak because they mainly depend on construction, tourism, hospitality, and aviation sectors. All these sectors were locked down, and thousands of low-paid workers were terminated from their jobs," said Rafeek Ravuther, a migrant rights activist.

"More than 1.7 million Keralites had returned to  the state, mainly from West Asia, due to job loss between 2020 and 21. With this situation, how can the remittances grow?," he asked.

A World Bank outlook released in April 2021 said that "heavy GDP losses were observed in all MENA (Middle East and North African) country groups, which includes West Asia."

And while talking about how and why Maharashtra has toppled Kerala from the pole position in inward remittances, and the US has become the largest remitting country, Mini Mohan, a migrant rights expert, said “dynamic changes" are happening in migration.

"While Keralites still prefer West Asia, skilled migrants from other parts of the country, like Maharashtra and Delhi, are migrating to the US and Europe, which brings in more money to the remittance kitty," Mohan said.

A history of remittances 

Since the 1960s, Keralites have been migrating to different parts of the world, especially to West Asia.

The 2018 Kerala Migration Survey by S. Irudaya Rajan and KC Zachariah reveals that one in every fifth household in Kerala has a migrant citizen.

And a study by KP Kannan, a leading economist in Kerala, also reveals that remittances received annually in Kerala are some 13.33 percent of the Net State Domestic Product (NSDP).

However, following the Covid-19 outbreak, remittances to the state, especially from West Asia have been hit badly. A World Bank study on Covid-19 and migrants from Kerala in 2021 had revealed that "around 49 percent of households stated that the amount received had declined after January 2020. On average, overseas remittances fell by $267 monthly among households that reported receiving remittances."

What the dip means?

M Suresh Babu, an IIT-Chennai professor and a development economist, said, "Kerala relies heavily on remittance and any dip in that will affect the state economy because it is already under financial stress."

"There are two types of multipliers in any economy. One is the investment multiplier, and the other one is the consumption multiplier. The remittances go to the consumption multiplier. Or in other words, inward remittances to Kerala are used to purchase things, to pay school or medical bills, repay loans  etc," Suresh Babu said.

"So, when remittances are low, less money is circulated in the market. Less money in the market means the government tax collection share also goes down," he said. Babu added that the state economy is unofficially called LLR (Liquor, Lottery and Remittance) economy and if there is imbalance in any one of them, then it’s going to be a serious issue.

Kerala's public debt is around 2.8 lakh crore and is among the top 10 states with the highest debt burden. A RBI note called Kerala “highly stressed.”

Kerala's committed expenditure rises every year limiting the state’s flexibility to decide on other spending priorities such as developmental schemes and capital outlay.

Committed expenditure of a state typically includes expenditure on the payment of salaries, pensions, and interest. In 2022-23, Kerala has budgeted to spend Rs 94,781 crore on committed expenditure items, which is 71 percent of expected revenue receipts. This comprises spending on salaries (31.3 percent of revenue receipts), pension (20 percent), and interest payments (19.4 percent).

Further, Babu said, “Kerala has reached the third phase of migration where skilled migrants are required. Unfortunately, the current Kerala higher education sector is not capable of delivering job-market oriented talented migrants.

“Eventually, Keralites will be rejected, and skilled workers from states like Maharashtra and others will benefit and they will remit more to their states,”  he concluded.

The Indian economy is "relatively better placed amid grim global scenario," RBI Governor Shaktikanta Das on Friday said, adding that the "Indian rupee is holding up well relative to advanced and emerging market peers.."

"We have zero tolerance for volatile and bumpy movement of rupee," Das said, adding, "RBI actions have helped in smooth movement of rupee."

The rupee fell seven paise to 79.92 against the US dollar in opening trade on Friday.

"RBI has been supplying US dollars to the market to ensure adequate supply of liquidity," the governor said.

Speaking at the inauguration of the Bank of Baroda Annual Banking Conclave 2022, "The future of banking would witness a major shift in customer's choices and preferences with enhanced expectations from the banking industry."

Das said, "The banking sector is going through a churning, the future of banking would witness a major shift in customer's choices and preferences with enhanced expectations from the banking industry."

"Each of the developments would present unique oppurtunities, and challenges to the existing and newer players."

The RBI Governor added, "It has to be borne in mind that sometimes that the disruptions can be sudden that it is impossible to anticipate them."

Talking about the future of the banking industry, Das said, "Banking beyond tomorrow would revolve around, a) the adoption of emerging technologies, customisation of products and services, enhanced business and process automation, b) development of suitable business models with strong governance frameworks, better information management, changes in the mode of working, building of enhanced resilience capabilities and more responsible societal, enivornmental role for the banks."

The RBI Governer said, "The current inflation targeting framework has worked very well since its adoption in 2016."

RBI's decision on the rate hike, and liquidity always takes into consideration the growth objective, Das said.

New airline Akasa Air on Friday said it will launch commercial flight operations on August 7 by operating its first service on Mumbai-Ahmedabad route using Boeing 737 Max aircraft.

In a statement, the carrier said it has opened ticket sales on 28 weekly flights it will be operating on Mumbai-Ahmedabad route from August 7, as well as on 28 weekly flights it will operating on Bengaluru-Kochi route from August 13.

The carrier will launch commercial operations with two 737 Max aircraft. Boeing has delivered one Max plane and the second one's delivery is scheduled to take place later this month.

Praveen Iyer, Co-founder and Chief Commercial Officer, Akasa Air, said, We kick-start operations with flights between Mumbai and Ahmedabad, with the brand-new Boeing 737 Max aircraft."

"We will adopt a phased approach to support our network expansion plans, progressively connecting more cities, as we add two aircraft to our fleet each month, in our first year," he added.

Jharkhand Chief Minister Hemant Soren has expressed concern over the continuing dry spell in the state, which is "taking a toll" on its farming practices.

There is a 51-per cent rainfall deficit this monsoon so far, and the state is heading towards an early season drought, experts and government officials said.

The state, which is still reeling under the impact of the COVID-19 pandemic, is now staring at a drought-like situation. Farmers are not able plant seeds due to scanty rainfall. I am worried.

The prediction of meteorological department is also not encouraging, Soren said. The CM was in Dumka on Thursday to inaugurate and lay foundation of 112 projects worth Rs 401 crore.

Jharkhand has received 199.3 mm rainfall between June 1 and July 21 against the usual 403.4 mm during the period. The state has achieved a mere 11.76 per cent of the paddy sowing target thus far, according to the data provided by the state agriculture department.

Jharkhand Agriculture Minister Badal Patralekh has held a virtual meeting of deputy commissioners to review the paddy-sowing situation in the state.

India’s economic activity showed early signs of cooling off in June as acute price pressures, rising interest rates, and a falling rupee dampened sentiment after a strong showing the previous month.

Softer increases in factory orders dragged the manufacturing sector, pushing the needle on a dial measuring so-called ‘Animal Spirits’ back to 5, from 6 earlier. The gauge, based on eight high-frequency indicators compiled by Bloomberg News, uses a three-month weighted average to smooth out volatility. A move to left signifies a loss of momentum.

Pent-up consumption had powered revival in Asia’s third-largest economy, but rising prices, due in part to the war in Ukraine and supply disruptions, thwarted the nascent recovery. The Reserve Bank of India raised rates by 90 basis points in two moves to temper price gains and is scheduled to hold its next review from August 2-4.

India’s rupee fell past 80 to a dollar as foreign investors pulled out money amid monetary policy tightening by the Federal Reserve. A declining currency may also prevent a faster pass-through of commodity slump, thereby delaying revival.

Business Activity

Purchasing managers’ surveys showed India’s services activity rising to the highest level in more than a decade. At the same time, expansion in manufacturing slowed, pulling down the S&P Global India Composite PMI Index a tad in June.

India’s economic activity showed early signs of cooling off in June as acute price pressures, rising interest rates, and a falling rupee dampened sentiment after a strong showing the previous month.

Softer increases in factory orders dragged the manufacturing sector, pushing the needle on a dial measuring so-called ‘Animal Spirits’ back to 5, from 6 earlier. The gauge, based on eight high-frequency indicators compiled by Bloomberg News, uses a three-month weighted average to smooth out volatility. A move to left signifies a loss of momentum.

Pent-up consumption had powered revival in Asia’s third-largest economy, but rising prices, due in part to the war in Ukraine and supply disruptions, thwarted the nascent recovery. The Reserve Bank of India raised rates by 90 basis points in two moves to temper price gains and is scheduled to hold its next review from August 2-4.

India’s rupee fell past 80 to a dollar as foreign investors pulled out money amid monetary policy tightening by the Federal Reserve. A declining currency may also prevent a faster pass-through of commodity slump, thereby delaying revival.

Business Activity

Purchasing managers’ surveys showed India’s services activity rising to the highest level in more than a decade. At the same time, expansion in manufacturing slowed, pulling down the S&P Global India Composite PMI Index a tad in June.

By Rae Wee

SINGAPORE (Reuters) - Having bucked a global dash to tighten monetary policy for a year, Asian central banks find themselves scrambling to catch up in order to tackle rising inflation and defend weakening currencies.

Market analysts suspect Indonesia, the last remaining dove in emerging Asia, may be the next to move by pushing interest rates higher on Thursday, as policymakers rush to convince investors they are tackling rising prices.

Singapore and the Philippines surprised markets with unscheduled tightening announcements last week, underlining the growing urgency among policymakers to act.

Asia has lagged as the rest of the world, including emerging markets, began lifting rates as early as last June, after the U.S. Federal Reserve kicked off an accelerated timeline for its policy tightening.

While relatively subdued inflation allowed central banks in Asia to remain dovish in a bid to support the post-pandemic economic recovery, that led to weakening currencies and capital outflows, even as the war in Ukraine exacerbated price pressures globally.

"Have central banks been too slow to act? Yes, I know, it's a common question," Ravi Menon, managing director of the Monetary Authority of Singapore, said at a conference on Tuesday.

"And I don't want to sound defensive on behalf of my colleagues elsewhere but very few people saw this coming. The markets didn't see it.

"The climb in inflation has been quite rapid. It was unusually fast ... And many thought the bigger risks were on the downside on growth and so did not see this coming."

Currencies and bonds have borne the brunt. Among the worst hit, the Philippine peso is down more than 10% year-to-date, and just off a nearly 17-year low of 56.53 per dollar. Yields on the country's government bonds have spiked about 200 basis points (bps) since the start of the year.

The Thai baht has fallen more than 10% this year, and Thailand snapped a five-month streak of foreign investment into equities to lose $816 million in June.

A large part of the selling has been a response to rising Treasury yields and the U.S. dollar - factors beyond domestic policymakers' control, giving Asia an excuse to hold off on rate hikes.

But central banks are suddenly finding they can no longer ignore rising food and oil prices. Thailand and Indonesia saw inflation hit multi-year highs this month.

Even South Korea, which began raising rates as early as August 2021, saw prices hit a 24-year high in June, triggering a record half-point rate hike last week.

"What I suspect they're doing at this stage is really (to) still focus on fighting inflation for the next few months, because that's where the concern is," said Euben Paracuelles, chief ASEAN economist at Nomura.

He added that rising global headwinds and the risk of recession in major economies complicated the policy challenge at a time when inflation was at the start of a sharp pickup in Southeast Asia.

PEER PRESSURE

India, which first saw its central bank raising rates by 40 bps in an off-cycle move in May, has logged six straight months of foreign investor equity outflows, contributing to a record drop in the rupee.

The historically volatile Indonesian rupiah is actually only down around 5% versus the dollar for the year, although it saw its largest monthly fall of 2.2% in June.

It has to some extent been helped by resource-rich Indonesia's improved trade position and the fact foreigners now hold less than a fifth of its high-yielding bonds.

Others, such as the Philippines and Thailand, are far more vulnerable owing to their current account deficits and, in the latter's case, reliance on a tourism sector still struggling following the COVID pandemic.

"Indonesia has been, for the most part, able to hold off on rate hikes. But I actually think they'll hike ... just because everybody has tightened already," said Nicholas Mapa, senior economist at ING.

Yet, only 11 out of 29 economists polled by Reuters expect Bank Indonesia to raise rates on Thursday.

"The room to keep growth-supportive monetary policy is definitely coming to a close very imminently," said UOB economist Enrico Tanuwidjaja, referring to central banks that have yet to raise rates.

A senior director at the Bank of Thailand said last week that the central bank is highly likely to raise its key policy rate in August, adding that the bank is ready to intervene if the baht weakens too much.

"At the end of the day, we are dealing with a much tighter global monetary policy landscape, so there's definitely compulsion for central banks in general to raise rates," said OCBC economist Wellian Wiranto.