The Reserve Bank of India’s monetary policy committee (MPC) slashed its GDP growth estimate but disappointed markets and borrowers by keeping its key policy rate unchanged after reducing it five consecutive times in 2019. It was widely expected that the central bank would reduce its repo rate - at which it lends to banks - by 25 basis points to a 10-year low of 4.9%. RBI retained the repo rate at 5.15% even as it cut its GDP growth estimate for 2019-20 by 110 basis points to 5% from 6.1% forecast just two months earlier. Despite the lower growth momentum, RBI said inflation would be higher than expected, in the range of 4.7% to 5.1%. Explaining the reasons for the pause, RBI governor Shaktikanta Das said previous rate cuts resulting in a cumulative reduction of 135 basis points are yet to be passed on to borrowers. “The MPC recognises that there is monetary policy space for future action," the panel said in a statement. "However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture.”
Nirav fugitive economic offender: Court
Absconding businessman Nirav Modi was declared a fugitive economic offender by the special Prevention of Money Laundering Act (PMLA) court, becoming only the second businessman after Vijay Mallya to be labelled thus under a new law. The 49-year-old Modi and several others are accused in the £1.3 billion Punjab National Bank fraud case. The Fugitive Economic Offenders Act was applied in the case as Modi had left the country on January 1 last year and not showed any inclination to return. Modi was arrested this March in London and is currently in judicial custody there. Legal proceedings on his extradition are currently underway. “At this stage, as per record put forth by the Enforcement Directorate, there is material to show that the respondent (Modi) stayed abroad and refused to come to India to face criminal prosecution when he had ample time to return back ... ,” special judge V C Barde said.
Court refuses to cancel warrant against Choksi
A court in Mumbai refused to cancel a non-bailable warrant issued by the Enforcement Directorate against fugitive diamond merchant Mehul Choksi, a key accused in the alleged Punjab National Bank (PNB) scam. Special judge for Prevention of Money Laundering Act cases V C Barde refused to give relief to Choksi. Choksi had moved the court last year seeking cancellation of the warrant issued by the ED. He could not travel to India because of his ill-health and also because there was a threat to his life, he had pleaded. He did not intend to cheat and flee, but left the country for treatment of his medical condition, he had claimed. The court will now hear the ED's petition seeking to declare him a Fugitive Economic Offender (FEO) under the newly enacted Fugitive Economic Offenders Act. The declaration will pave the way for confiscation of his properties.
Forex kitty nears record $452 billion
Foreign exchange reserves continue the upward journey surging to a new high of $451.7 billion as of December 3, RBI governor Shaktikanta Das said. Since the beginning of the current fiscal, the forex kitty has gained by $38.8 billion as of December 3, the largest in recent years, the governor added. The total reserves had risen by $347 million to $448.6 billion in the week to November 22, the last reported number by the RBI. The reserves have been surging to new highs every week for the last few months and this is the first time that they have crossed the $450 billion mark. In the last 12 months several of the emerging market currencies had weakened against the dollar. Among the currencies that weakened the rupee has been among the better-performing currencies depreciating only 1.21% since December 2018.
92,000 in BSNL, MTNL opt for VRS
The government’s generous £3 billion VRS package for ailing telecom PSUs - BSNL and MTNL - closed last week, with over 92,000 employees opting to move out early and resulting in savings of a little over £870 million for them. CMD of the two companies said that the reduction in manpower will help them move towards profitability over the next three years as they save the much-required cash, while launching services such as 4G to lure new high-paying subscribers. “The VRS scheme has met our expectations and for BSNL, the annual savings post the reduction in employees will be £700 million,” CMD Pravin Kumar Purwar said. BSNL is estimated to have losses of around Rs £1.4 billion in 2018-19. It had nearly 150,000 employees before VRS offer. Purwar hopes that a leaner company will be more productive, while sufficient cash at the hands of the management can be put to work out a revival.
