All’s Well Between Rajan-FM, GST May Miss 2016 Deadline and Other India News

RBI governor Raghuram Rajan may have announced his monetary policy yesterday but media attention was squarely on the much-touted battle of wills between the central bank and the finance ministry. Turns out, there’s none. A draft financial code recently suggested that the finance ministry will have a bigger say in the panel that decides interest rates and the governor’s veto powers will be revoked. According to Rajan that’s a good thing, as committees are less likely than individuals to make mistakes and spreading the power will ensure continuity. All good points, so it appears that the so-called battle was partly because of nervousness at any change in the decision making process and of course, media hype.

In his policy review, Rajan left rates unchanged but pulled up banks for not passing on previous rate cut benefits to their customers, but banks are in no mood to listen.

Foxconn is stepping up its investment in India. Chairman Terry Gou has pledged $2 billion over the next five years to make mobile devices, TVs and electronic components. The company hopes to make India its export base for its Middle East and Africa markets. Foxconn recently restarted its manufacturing in India, setting up a plant to make Xiaomi phones in India, after shutting down its Nokia factory earlier this year. Also on the cards is a tie-up with Adani Enterprises to make iPhones in India.

Having reached a consensus of sorts for the land bill, the government is trying to push it through the Lok Sabha, racing against the deadline of Aug 13 when the monsoon session of Parliament ends. The critical GST bill however remains in limbo as the opposition Congress is determined to stall its progress, protesting against the suspension of 25 of its members for five days for unruly behavior in Parliament. It's almost certain that the government will miss its April 2016 deadline to roll out the new GST, if the bill gets pushed to the winter session.

“As a loose analogy, think of this as the difference between a democracy and a dictatorship.” Governor Raghuram Rajan.

 General Motors got a rap on its knuckles from the industry policy for announcing the closure of its Gujarat plant without getting necessary clearances from the government. GM had previously approached the BIFR, an Indian version of Chapter 11 (but not as effective), saying it’s Indian unit is sick and needs rehabilitation.

 Amazon’s new partner Vakrangee will be helping the e-commerce company make inroads into the rural market and plans to use the Jan Dhan programme of the government (which aims to make banking services available for the poorest of poor) for online payments.

Image Credit: Congress Vice President Rahul Gandhi (R) and President Sonia Gandhi (C) shout slogans during a protest by Congress Party Members of Parliament at the Mahatma Gandhi statue at Parliament house in New Delhi on August 4, 2015. Congress MPs protested outside Parliament, raised slogans against the NDA government following the suspension of 25 of their MPs, and demanded the resignation of Foreign Minister Sushma Swaraj. AFP PHOTO/ PRAKASH SINGH.

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