FIPB: A symbolic move

50%

What is it? Percentage of value addition that need to be done in India for goods and services to qualify under the new government procurement policy.

Why is it important? The preferential policy will help domestic manufacturers and service providers as procurement by government, state-run companies and autonomous bodies is estimated at Rs 2 trillion a year. The policy gives preference to local manufacturing, not domestic ownership.

Tell me more: Purchases below Rs 500,000 are exempt from local sourcing norms, and for orders above Rs 50 lakh, local suppliers will be allowed to match the lowest bid if their bid is less than 20% costlier.

 

28 years

What is it? The number of years after which a ratings agency has downgraded China’s credit rating. Moody’s, a ratings agency, downgraded the Asia’s largest economy to A1 (low credit risk) from Aa3 (very low credit risk), citing mounting debt.

Why is it important? The ratings cut could increase the cost of borrowings for the Chinese government. China’s debt stands at 260% to GDP, as compared to 160% in 2008. However, external debt is only 12% of GDP.

Tell me more: Even after the downgrade, China’s credit rating is five notches higher than India’s rating of Baa3 (moderate credit risk).

 

7.7%

What is it? The percentage fall in Reliance Communications’ stock price on Wednesday, following a sell-off in its bonds.

Why is it important? The telecom company is facing investor doubts about being able to repay its loans. Larger competitors are losing money in a fierce competition with a deep-pocketed new entrant (Reliance Industries’ Jio). In the Oct-Dec, 2016 quarter RCom had posted its first consolidated loss leading agencies such as Icra to downgrade its ratings. It has been trying to pare down debt, reportedly at Rs 42,700 crore since last year.

Tell me more: The company came out with a statement saying it had paid half-yearly interest on the 2020 bond and there was no outstanding dues on it.

 

25 years

What is it? The number of years for which Foreign Investment Promotion Board (FIPB) is in existence. Government on Wednesday decided to scrap FIPB to ease flow of foreign investment into India.

Why is it important? A symbolic move to show government’s intent to ease investment flows as 11 sectors that still require prior permission would still need approval from respective ministries. Further, foreign investments more than Rs 3,000 crore would still require approval from the Cabinet Committee on Economic Affairs.

Tell me more: Between 90% and 95% of foreign investment came via automatic route.

 

240

What is it? The number of Benami cases the Income Tax department has attached property for.

Why is it important? The number of cases with provisional attachment of property under the Act, implemented in November, is bound to rise as the IT department has identified 400 Benami transactions till May 23, a jump of 70% since February’s 235 cases. The Benami Act’s section 24 has been invoked to attach properties worth Rs 600 crore for the 240 cases. The Act refers to transactions and property in the name of someone other than the beneficial owner.

Tell me more: Last week, the IT department set up 24 Benami Prohibition Units to tackle the issue.

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