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In this issue of paradise 3.0 magazine.we the editorial team is proud to publish the articles to build
our next generation in a smarter way and empowering people with the touch of the button with the
power of technology.

BEST WISHES
SYDNEY,Proprietor
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NPA: Chronic Anguish and proposed therapy

Mär.16

Nov.15

Jul.15

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Nov.14

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Nov.13

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Non-performing assets (NPAs)actingas a caterpillar lacerating over Indian Banking
system. These are the particular stage of loans when a financial institution finds the balance
due in scheduled payment of principal and
Gross NPA (in %)
interest. RBI guidelines say that payment has not
been received for 90 days after the expiration of 8
loan repayment period, considered as an NPA. 6
Banks can only record it as an NPA only when 4
there is a threat of loss or recoverability is in
2
doubt. Borrowers are not always responsible for
the act, sometimes unavoidable natural 0
conditions prevail that limits his capacity to
repay. Particularly in case of farming where
unpredictable natural calamities prevents farmer to pay back the loans as per schedule, banks
can restructure his loan for further but in certain conditions when borrower default by his will
or diverts loan to unauthorized purposes and does not deposit payments on time, the loan
become bad for the banks and loss for the country’s economy.

A look at the issue
From the last decade, gross NPA of the business sector is highest at 7.6% and expected
to rise further to 8.5% by March 2017,
Non-performing loans (as % of total gross
according to baseline scenario
loans)
projection by RBI in its financial
stability report. Bloomberg in March
Greece
2016 reported that 10 Indian stateUkraine
Nigeria
owned lenders lost overall $2.3 billion
Pakistan
among them Punjab National bank is
Hungary
the worst victim. Public sector banks
Russia
are at the corner with Rs. 5.8 lakh
India
crores outstanding bad debts. The total
Kenya
recovery of loans in 2015-16 by all the
Spain
PSBs was Rs. 1.6 lakh crores which
0
10
20
30
40
include 46% of the amount being
written off. In just 3 years NPAs have risen from 3.1% at the end of March 2013 to 6% at the
end of last year and still surging. Bank of international settlement (BIS) remarked that Indian
corporate debt-to-GDP ratio stood at 51% of GDP till the end of FY2015-16. It is much lower
than other major economies like US, EU etc.

Interest coverage ratio
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It is the ratio of EBITDA to total interest payable. Albeit India’s overall corporate
debt is relatively low, the ability of Indian companies to meet its interest expenses is
also relatively less. Depressed interest coverage is due to slower revenue growth of
the company and high-interest rate in India, that’s why many companies have
preferred in raising money from abroad (ECBsi) at a relatively lower interest rate. The
poor debt quality and repayment ability of indebted firms continue to be major
shortcomings in Indian economy.
Why bad debts became so prominent?
Several reasons are ratifying the issue like:
 Corporate borrowers blaming the economic slowdown as the primary factor limiting
return generation and ultimately failure of debt payments.
 Periodic independent audits have revealed diversion of funds and willful default
leading to stress.
 Banking institutions leveraging big corporate houses with a sizable amount of credit.
 Natural calamities which are beyond the control of borrowers like in agriculture,
affecting farmer’s output.
 Banks lacking specific skills in determining credit risk before lending like credit
appraisal system.
 Irregularity of banking institutions for timely monitoring business activities of a
borrower to check the doubtfulness in its returns generating capacity.
Moreover, financial institutions are too in-capacious in developing an effective process to
recover their dues, two reasons:
 Banks and financial institutions have attitude and approach towards financing and
recovery from SMEs.
 Lack of knowledge about the banking and violation of RBI directives which are to be
mandatorily followed by these institutions.
Rectification measures
Asset quality Review by RBI
It is conducted with a view to clean up the balance sheet of banks. Every year RBI
inspectors examine bank books as a part of its annual financial inspection process. A small
sample of loan is inspected to check whether asset classification is in the line with loan
repayment and whether the bank has made certain provisions. As per RBI, today rise in NPAs
is mainly because of asset quality review conducted by bank regulator. They found several
restructured advances, which need to classify as non-performing but maintained standard in
bank books. According to Financial Stability Report 2016, asset quality of scheduled urban
cooperative bank (SCUBs) as well as NBFCs improved, they are relatively better performing
than Banks. Five sectors- mining, iron, and steel, textiles, infrastructure and aviation together

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constitute 24.8% of total advances of commercial banks have a share of 51.1% in total
stressed advances.
Government initiative
Enforcement of security interest and recovery of debts law and miscellaneous provision bill,
2016 and Insolvency and Bankruptcy code, 2016 are novice initiate government has taken to
cure this chronic economic problem. The Government also proposed electronic filing of all
the proceedings, the time period for appealing reduces to 30 days from 45 days and before
filing an appeal there is a provision for depositing 50% of the amount payable. Currently,
about 70,000 cases are pending in debt recovery tribunal (DRTs). According to Moody’s,
promotion of asset restructuring companies for banks to get rid of their NPA and prioritizing
secure lending are positive features of Indian banks.
Conclusion
The global economy is passing through a difficult phase and vulnerabilities. Asset quality
holds an important place and in this era of globalization. Declining creditworthiness of major
business players has a direct impact on GDP growth and can lead to economic turmoil.
Therefore proper checkup and preventive measures must be taken by banking institutions
before lending but at the same time responsibility goes to the court of borrower to maintain a
sense of trust and loyalty towards lender because ultimately the issued money is a social
property coming from the pockets of common citizens of this country in the form of taxes.
For unavoidable reasons, the government can support in the form of loan restructuring or
waive off. But deliberate attempts cannot be tolerable at any cost and particularly for willful
defaulters, the government has made several reforms in bankruptcy law to make it too tight
and stringent for the accuser.
References:
https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=5761#L4
http://www.business-standard.com/article/economy-policy/law-for-bad-debts-recovery-goodfor-indian-banks-moody-s-116080800552_1.html
http://www.livemint.com/Companies/0mmTyNS2J3MjRZyy7VNyOK/How-bad-is-Indiascorporate-debt-problem.html
http://indianmoney.com/how/what-is-the-main-cause-for-an-increase-in-non-performingassets-of-banks
Author:
VinodPandey
NIAM, Jaipur
PGDABM 2016-18
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Death of India's farmers or farming in India?
Agriculture is showing stress because of the lack of crucial reform in the sector — in
procurement, marketing, credit, storage and crop insurance — while policy continues to view
agriculture and industry as silos. The two sectors must be seen as part of the same economic
continuum, the dots must be connected, complementarities identified. That would go a long
way in alleviating distress on the farm — the result of overreliance on the monsoon, unstable
prices, fragmentation of land holdings, degradation of farm land — and also help farmers to
explore greater livelihood options outside agriculture and supplement their earnings from
non-farm work. As in Punjab, for instance, where the gains of the green revolution plateaued
long ago, the Indian farmer needs a new wind to move ahead.It was the latest in a wave of
suicides that has left at least 40 farmers dead in recent weeks – and some 300,000 dead since
1995. State officials across north India have promised financial help to farmers who lost their
crops – and who are often indebted to local loan sharks who advanced them money for seeds
and fertilizers – but those payments have been slowed by bureaucracy and corruption. Almost
three quarters of Indians still live in villages, and farm income is crucial to the country’s
economy. Most farmers, though, survive season to season on tiny plots. One poor harvest can
destroy a family financially.Rising prices for seeds and fertilizers, and banking reforms that
ended up forcing farmers to turn to loan sharks, have magnified the trouble. In 2014, of the
5,642 cases across India, 2,568 were reported from the state.Of this, 857 farmers took the
extreme step due to bankruptcy and indebtedness, again the highest in the country. As much
as 80% of India's farmland relies on flooding during monsoon season, so inadequate rainfall
can cause droughts, making crop failure more common.In regions that have experienced
droughts, crop yields have declined, and food for cattle has become scarcer. Agricultural
regions that have been affected by droughts have subsequently seen their suicide rates
increase. he suicide rate among Indian farmers was 47 percent higher than the national
average, according to a 2011 census. Forty-one farmers commit suicide every day, leaving
behind scores of orphans and widows.In a country where agriculture remains the largest
employment sector, it contributed only 13.7 percent to the GDP in 2012-13.Agricultural
investment in India is a big gamble. Farmers usually take out bank loans against land to buy
seeds and fertiliser, pay salaries, and acquire irrigation equipment.Local moneylenders often
take the place of banks and boost interest rates year after year, creating a debt-trap for the
farmers who rely on crop success - and prayers - for loan repayments. Farmers suicide is a
global phenomenon. About every 30 minutes, a farmer in India commits suicide. In the last
decade, more than 250,000 Indian farmers have killed themselves because of Monsanto’s
costly seeds and pesticides. Globalization and monopoly have forced farmers to buy GMO
seeds and since GMO crops have become pest resistant, the farmers have no choice but to
purchase Monsanto’s popular herbecide.In 2008, the Daily Mail called the continuous suicide
of Indian farmers a “genocide” in the human history. What’s really disturbing is that often
time farmers commit suicide by drinking the insecticide shipped to them by Monsanto. The
high cost of GMO seeds, extensive use of herbecides and great reduction in crop value have
often times left farmers bankrupt and as a result many farmers are falling into the endless
cycle of debt,depression, hopelessness and despair and they have no choice but to ends their
lives. The figures provided by NY University School of Law show that just in 2009 alone,
17,638 of farmers committed suicide.Here is the Figures by NY University School of Law.As
a result of Monsanto’s costly GMO seeds, many families of farmers have lost their livelihood
and lands and are left on their own to struggle with starvation and misery. 1.1 billion (which
is 60% of Indian population) are directly or indirectly dependent on the agriculture.Monsanto
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is resposible for dominating the market by forcing farmers to buy their seeds and chemicals.
Seeds that die every year, so farmers are forced to buy new seeds.
Sahaya Justus
Founder of Inspire Educational trust
Member at ASME (American society of mechanical Engineers)

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BREXIT- WHAT IT MEANT FOR INDIA?
As far as I dia is o er ed, if there is a e tr poi t for us to the EU, tha that is the UK
— Narendra Modi, Prime Minister of India [November 2015]
On 23rd June 2016, UK
opted to move out from
the EU and this was
decided
through
a
referendum, and Brexit is
the nomenclature that
was given by Social
Media for this exit. The
exit of Britain from the
European Union was a
surprise and a shock at
the same time. Experts
termed this happening as
o e i a lifeti e e e t
that
willaffect
the
economies of almost all
countries
for
years
ahead. This referendum is expected to affect mainly all UK businesses and all those businesses that
are related to UK.Although UK had put forward its decision to leave the EU, the real process of goodbye by the European Union will be long lasting and hence the actual effect will be seen mainly in the
long run. For India, Britain has always been an entrance to the European Union and the majority of
the Indian companies have their offices in Britain so that they can gain benefits and stay a part of the
EU. But with Brexit, this advantage will no longer exist and companies will have to relocate their
offices to cater to the rest of the European Union.There are few sectors which will take the major hit
due to Brexit like Automobile, IT and Pharma. NASSCOM had predicted that the impact of Brexit will
be dealt by $108 billion Indian IT sector as UK is India's 2nd biggest market for IT sector, around 25%
of market share. IT firms are not commenting on this yet because there is some possibilityof
renegotiations for all the urre t proje ts due to de aluatio i the pou d s alue. For the
Automobile sector, Brexit may lead to a decrease in sales and companies may face a huge dropdown
in revenue.A little effect of Brexit was also seen on the Indian Apparel Industry as Britain accounts
for arou d 37 % of the total I dia s Apparel e port share. The I dia Fi a ial arket also felt the
heat with Sensex dropping by 900 points in the opening session after the referendum and also the
Indian Currency weakened to 68 rupees to the US dollar.Other concern is related to the welfare of
around three – million India-based UK citizens. Also, the interests of a large number of Indians who
visit Britain as tourists, professionals, Business people, spouses, parents and relatives.Though the
Indian equity market faced a big jerk because of this referendum, the local debt market did not
reacted strongly to Brexit. A 10-year G-sec continued to trade around 7.5% after Brexit for a long
period of time.Brexit might also have a positive impact on Indian Economy but that will not show up
immediately and the process will take a long time as the government will have to re-design and
implement their strategies and policies.Initially, UK Universities had to offer scholarships to the
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citizens to the students of EU. Brexit will enable more Indian students to get scholarships and hence
beneficial for the education sector. Also, there will be a reduction in the value of the pound and this
will decrease the travelling cost to the Britain and hence it will make a good travel destination. Brexit
ill stre gthe I dia s ties ith Britai as I dia ei g a de elopi g a d heap la our pro ider
remains an attractive source for outsourcing and investment. The major ones to benefit from this
event will be those who import from the UK as there will be fall in the value of the pound. Also
I dia e port usi esses hi h operatei the UK a also e efit through the Bre it. O erall, I dia s
exports more than what it imports from the UK and the overall impact should turn out to be good
for us.Brexit will have a different impact on different sectors and it is believed that the effect will be
short-lived, and in the long run it will be beneficial to India if we consider the holistic view. FICCI has
commented that there will be an adverse impact on investment and a high uncertainty for Indian
businesses due to Brexit as India is the 3rd largest source of FDI for the UK. Brexit did have a large
impact on the Indian stock market due to volatility in the pound, but it was short lived and India
recovered fast as it had huge forex reserves.The outcome of this referendum will surely affect the
gro i g e o o ies of the orld i ludi g I dia, o e of the Britai s i porta t trade part er. The
net impact of the Brexit is expected to be nominal for the Indian Economy. A strong retrieval in the
local demand negate this impact and support economic growth for the country.

The above image shows that if past is any judge, then event driven corrections in the stock
markets have been decent buying opportunities for the investors.While there may be some
slowdown in the investment activity from the foreign investors but the strong micro-economic
fundamentals of the India would encourage investors to return to India in the long run and hence it
will support economic growth for the country.

REFERENCES
https://www.hdfcbank.com/assets/pdf/privatebanking/Event-Update-Brexit-Impact-on-India28-6-2016.pdf
http://www.dnb.co.in/edm/files/IndiaafterBrexit.pdf
http://www.jaagore.com/articles/current-issues/brexit-and-its-effects-on-the-indian-economy
http://www.ndtv.com/opinion/your-guide-to-brexit-and-5-ways-it-will-impact-india-1421554
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http://ficci.in/SEDocument/20369/BREXIT-July-2016.PDF
http://www.clearias.com/brexit-how-does-it-affect-india-and-the-world/
http://www.business-standard.com/article/international/what-is-brexit-and-how-does-itimpact-india-116062000026_1.html
http://www.orfonline.org/research/brexit-has-positive-implications-for-india-say-experts/
http://www.firstpost.com/india/brexit-impact-decoder-indian-sectors-will-be-impacted-buttheres-no-need-to-be-worried-2855114.html
http://www.livemint.com/Money/iltjhLLPBTuAFyYNt3H83O/Brexits-impact-on-Indiawhen-elephants-fight-the-grass-su.html
Author’s Name – Ronak Mantri
Nirma university

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Future of Payment Banks in India
Governor Raghuram Rajan flapped his wings and set off what could turn out to be a
revolutionary storm in the Indian banking system - a storm bigger than the one created when
private banks were first given licences in the 1990s.Eleven private parties were given licences
to set up "payment banks" - banks which can do everything a regular bank can do - take
deposits, pay bills, issue cheques and drafts, et al. The only thing they can't do is lend to you
and me. Payment banks can only lend to the government and almost anybody with Rs 100
crore in his pocket can, in future, set up a payment bank, assuming they pass the RBI’s “fit
and proper” norm (which basically means if you are not a crook, or someone who has cocked
a snook at the regulator, you can get a licence). This means payment banks will theoretically
be the safest of banks since they have only the government as borrower – and governments
don’t default. In future, payment bank licences may be available on tap, and we could see
even 50-100 such banks being set up. India will be fully banked over the next decade. hat
payment banking is a big deal is evident from who’s got the initial set of licences – the big
boys and billionaires are there. Among them: the Aditya Birla Group, Reliance Industries
(majority owner of Network 18, which publishesFirstpost), the big telcos (Airtel, Vodafone),
the National Securities Depository (which holds almost all of India’s stocks in demat form,
and provides the backbone for a tax information network), PayTM (India’s biggest mobile
wallet company), Tech Mahindra (one of the Top Five IT companies in India), and Sun
Pharma’s Dilip Shanghvi. Billionaires wouldn’t be filling in forms at the RBI’s window if
they didn’t think payment banking was the in thing, though they might prefer to become
regular banks, if that were possible. Since the RBI does not want corporates in banking, they
are going for the next big thing that’s available – payment bank licences. First, and foremost,
payment banks will bridge the last mile (or last 10-20 miles) between bank branches and the
remote customer living in a rural hamlet. Payment banks will essentially rely on technology
to reach payment services to all customers, using mobiles as the vehicle of banking. Mobiles
go even where humans don’t. Physical bank branches (or bankers or ATMs) will still be
needed for some functions - opening an account, depositing cash, etc - but all day-to-day
payments, including peer-to-peer payments) can be done remotely. The mobile phone will
become the virtual ATM and small-payments cheque-book. Second, banking costs will come
down due to intense competition driven by the expected proliferation of payment banks.
Currently, we pay through our noses for banking services, whether it is above-limit ATM
transactions, additional cheque-books, big money transfers, maintenance of minimum
balances, or draft issuance fees. Currently, efficient private banks like HDFC Bank, ICICI
Bank and Axis Bank make huge profits from their low-cost current and savings bank
accounts, but a big chunk of this will move to payment banks, who may offer higher savings
bank rates of 5-7 percent. Third, the public sector banks are sitting ducks for bankruptcy and
taxpayer bailouts if they do not change. Fourth, the arrival of payment banks - including
India Post - will transform social welfare and subsidy schemes. Even if the Modi government
does no other reform but this one, government subsidy payments to the poor - whether for
LPG, kerosene or even food and fertiliser - can now be routed through regular and payment
banks. Fifth, mobile banking will create the conditions for cash-less banking. This means,
over time, the mobile will perform the same role as credit and debit cards, obviating the need
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for too many cash payments. Even ATM expansion can now be slowed down in cities, and
focused on distant villages or towns.Sixth, we now have one additional tool to eliminate black
money in large parts of the financial system. It is achievable in five to 10 years, with some
public and private investment in financial literacy education and empowerment of rural
citizens, especially women.Seventh, the government will be one of the biggest beneficiaries
of payment banking, as payment banks will expand its access to cheap funds. Currently,
banks are the major investors in government bonds. Eighth, bank depositors can expect to
earn higher short-terms deposit rates from payment banks, and the old 4 percent savings bank
norm will probably fade away. Even as technology transforms banking as we know it,
branches will continue to play a crucial role in moulding the industry. As collective brains of
indefatigable computer servers handle daily business, customers will find banking more
efficient and access far easier.
Sydney,proprietor
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Crude oil prices and impact on world economy

Introduction
Crude oil is raw material for oil Refining Industry and the finished product are petroleum,
Gasoline, Diesel, Kerosene, Heating oil and Liquefied Petroleum Gas. The major top Crude
oil producing countries are Saudi Arabia (13%), United States (12%), Russia (13%), China
(5%), Canada (5%), Iran (4%), Iraq (4%), Kuwait (4%), United Arab Emirates (4%) and
Venezuela (4%).70%Worlds oil production is totally dependent on upon these nations. Oil
has become basic need in all aspects like it need for household purpose, industrial purpose,
automobile and also in production of medicine so its Demand and prices can never be fixed.
It will vary with Global Economic changes and this in directly effects the prices of oil in
global market.
Facts and figures for crude oil international market
There has been tremendous change of price of crude oil from 1960 to 2016. It has raised
$1.63 to $ 37.82 per Barrel of oil. Between this sort of time there had been lot fluctuation in
oil prices as The remarkable down fall in crude oil prices, from a crest of $106.82 per barrel
in June 2014 to under $37.82 at the end of June 2016 as shown in Graph, has been one of the
most important global macroeconomic blooming of the past two years. The searing fall of oil
prices are similar to 1985-1986, when OPEC (Organization of petroleum exporting countries)
members drive backward earlier production cuts, and in 2008-2009 at the outset of the global

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financialcrisis.

Crude oil staticits from 1960 to 2016
120
100
80
60
Total
40
20

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

1960

0

This has resulted Slow growth of emerging markets, most importantly in down fall of US
economy has led to this condition.in present due to exit of Britain has also shrink oil
consumption. This steady drop in oil prices has however has been significantly steep than
food and precious metals. The rise in supply has most of all impacted demand of oil in world.
This has effectedatremendous change in global economic condition which has shown a net
positive rise on, order of 0.5% this is satisfied condition but not up to mark which resulted in
past.
Present condition oil market in world:
World oil prices
According to OPEC averaged price of oil per barrel $42.68 in July,2016 shows the first
decline in five months. Due to low demand for oil and high production of refined stock of
products has created this condition of fall in pricesup to the $3.16 drop.
World Economy
The economic growth remains unchanged at 3.0% for 2016 and will be 3.1% for 2017. The
recently announced fiscal stimulus in Japan led to an upward revision in growth to 0.9% for
both 2016 and 2017. The Euro-zone’s forecast remains unchanged at 1.5% and 1.2%.
Forecasts for China and India are also unchanged at 6.5% and 7.5% for 2016 and 6.1% and
7.2% for 2017. Both Brazil and Russia are forecast to rebound from two-year recessions in
2017 with growth of 0.4% and 0.7% respectively, after declines of 3.4% and 0.8% in 2016.
World Oil Demand

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In 2016 is expected to average 1.22 million barrel per day, some 30 trillion barrel per day
higher than last month. For 2017, world oil demand is forecast to grow by 1.15 million barrel
per day.
World Oil Supply
It is expected to contract by 0.79 million barrel per day in 2016, following an upward revision
of 90 trillion barrel per day since the previous report, driven by higher-than-expected output
in 2016 in the US and UK.
Balance of Supply and Demand
In 2016 is estimated at 31.9 million barrel per day, unchanged from last report and 1.9
million barrel per day higher than in the previous year. In 2017, demand for OPEC crude is
forecast at 33.0 million barrel per day, in line with the previous report and 1.2 million barrel
per day higher than in 2016.
Impact on Consumer and exporter:
On consumers:
The fall in prices of crude oil in international market will be beneficial to every consumer as
it will add more cost to standard of living and this will result in lowering inflation rate. Fall in
prices is one reason behind United Kingdom rate of inflation to 0%. This downfall will add
more value to GDP of oil consuming nations.
On exporters:
For exporters fall in prices of crude oil is headache. Many exporters depend upon Tax
revenue from oil producing fund allotted by their governments expenditure on different
sectors of their economy. Russia gains 72% tax revenue form products like oil and gas. Fall
in price will stimulate government to rise tax on crude oil and cut down spending.
Impact of crude oil prices on World’s top economies:
Impact on United States economy:
As it is top of world in all aspects it effects most when prices rapidly fall or raised. US is
largest user as well as producer of crude oil in world. Their demand for is not completely
satisfied on their domestic production which meets 50% of their need remaining 50% is
imported from other oil producing nations. In present the production of oil has rapidly
increased but due to sudden fall in prices of oil has affected on their economy.
Impact Russian economy:
Russia is top exporter of crude oil. Their economy was recovered from crisis during 20092014 when oil prices were towering high. According to Global report on oil and gas
economic contribution of oil and gas is 70% of their total export. every single downfall in
crude oil prices effects $2 billion loss.In present Russia economy is struggling. If the phase in
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drop of prices continues then will show impact on their federal budget as it is depending on
profit of crude oil prices.
Impact on Indian economy:
India imports 80% of crude oil to satisfied its demand. this help to rise in current account
deficit. The fall of oil price strengthen positon of rupee as India is importer of oil so from
international market India gets oil at low price. Due to this the consumers gets benefit of
saving income and earn more profit form invested amount.The fall in prices of crude oil is
beneficial to India but other side it is loss to exporters of crude oil finished products exporters
of petroleum as India stands at 6th position in export of petroleum in world.
Impact on china economy:
China is largest importer of products oil and petroleum in world. China imports 6.7 million
barrel per day, so a downfall in $50 price of crude oil adds $ 300 savings of this nation which
is 1.1% of GDP. Fall in oil prices will be beneficial to every Chinese consumer as it will give
more amount to spend on their other needs and demand.
Conclusion
To conclude a topic which make its place in daily news and creates major fluctuation on
worlds different economies. The fall in price of crude oil will be beneficial to importer
nations but on other side for exporter it will shake their economic condition. This will result
in condition like rescission.

Hemantkumar
C C S NATIONAL INSTITUTE OF AGRICULTURAL MARKETING
JAIPUR

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“Taxation Laws (2nd Amendment) Bill, 2016”
The Lok Sabha on 29 November passed the Taxation Laws (second Amendment) Bill 2016,
which provides another chance for people with unaccounted cash to come clean. The
amended law provides those with unaccounted cash or deposits of demonetised Rs 500 and
Rs 1,000 notes to pay 50% tax and come clean, or else, if caught they'll be slapped with a
penal 85% charge.In this bill, there is provision for who disclose black money will have to
pay 50 per cent tax, it including surcharge and penalty. While they will get back 25 per cent
immediately, the rest 25 per cent will be returned after 4 years without any interest. Who
disclose money by 30 December. Who will not disclose his money such type of person have
provision 60 per cent tax will be levied on such income together with 25 per cent surcharge
of tax (15 per cent of such income). So, total incidence of tax will be 75 per cent with no
expense, deductions or set-off allowed.Income-tax law amendments for enable the window,
which will involve the establishment of the Pradhan Mantri Garib Kalyan Yojana, 2016, and
allowing declarants kept the source of funds deposited in banks from November 10 a secret if
they use the option. The Taxation Laws (Second Amendment) Bill: With effect from April 1,
2016, in case of unexplained cash/assets/investments, etc a 60% tax plus 25% of tax as
surcharge plus 3 per cent of tax as cess will be levied.

The amendment has proposed to hike applicable tax rate on unexplained cash
shown in the Return from the existing 30 per cent to 60 per cent.

Additionally, 10% of this tax would also be leviable as penalty under section
271AAC if undisclosed income is not offered in return by taxpayer.

This is total of 77 per cent of tax, if the assesse shows it in the Return filing or
else tax payable on income will total to 85% (tax + penalty).

Penalty for search and seizure has increased from 10 per cent and 20 per cent
to 30 per cent (even if assesse admits and shows it in the Income Tax Return).
If not shown, 60 per cent of income will be the penalty.

In Pradhan Mantri Garib Kalyan Yojana (PMGKY), apart from 50 per cent of
income being taken as tax, penalty and surcharge, 25% of the disclosed
income will have to be compulsorily placed in interest-free deposit scheme for
four years.

The existing provision of penalty of 200% for misreporting income under
section 270A has not been changed.

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There is no limit on legitimate holding of gold and jewellery, including from
inheritance.

During search operations conducted by I-T Department, there would be no
seizure of gold jewellery and ornaments to the extent of 500 grams per
married women. 250 gm for unmarried lady and 100 gm for male member will
not be seized, even if prima facie, it does not seem to be matching with the
income record of the assessee.

What about Gold in Income Tax Law amendments?

There will be no seizure of gold jewellery and ornaments to the extent of
existing guidelines during search operations, the government has clarified,
allaying fears of possible action against household gold savings following the
proposed amendments to the Income-Tax Act.

There will be no seizure of gold jewellery and ornaments to the extent of 500
grams per married lady, 250 grams per unmarried lady and 100 grams per
male member of a family during search operations, it said, reiterating existing
guidelines.

This had triggered rumours that gold jewellery could be covered under the
amended law. Dispelling such apprehensions, CBDT has clarified that no new
provision had been introduced regarding chargeability of tax on jewellery.

The jewellery/gold purchased out of disclosed income or out of exempted
income like agricultural in-come or out of reasonable household savings or
legally inherited, which has been acquired out of explained sources, is neither
chargeable to tax under the existing provisions nor under the proposed
amended provisions.

In a separate decision, the government has done away with exemptions from
countervailing duty of 12.5 per cent on imports of gold coins.
AMIT KUMAR

NATIONAL INSTITUTE OF AGRICULTURE MARKETING, JAIPUR
BATCH 2016-18

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