Raghuram Rajan's first monetary policy today: Can he please all?

New Delhi, Mar 15: The new rules for debit and credit cards to increase security and reduce frauds kick in from Monday. In January, the Reserve Bank of India (RBI) had issued new rules to improve user convenience and increase the security of card transactions. These rules will help in curbing the misuse of debit and credit cards.

RBI has directed banks to allow only domestic card transactions at ATMs and PoS terminals in India at the time of issuance/reissuance of card. For international transactions, online transactions, card-not-present transactions and contactless transactions, customers will have to separately set up services on their card.

These rules will be applicable for new cards from March 16. Those with old cards can decide whether to disable any of these features.

As per the existing rules, these services used to come automatically with the card, but now it will start at the request of the customer.

Debit or credit card customers who have not yet done any online transaction, contactless transaction or international transaction with the card, then these services on the card will automatically stop from March 16.

The Reserve Bank has asked all banks to provide mobile banking, net banking option to enable limit and enable and disable service 24 hours a day, seven days a week.

If the customer makes any change in the status of the card, the bank will alert the customer through SMS/email and send the information.

Issuers shall provide to all cardholders facility to switch on/off and set/modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions -- domestic and international, at PoS/ATMs/online transactions/contactless transactions, etc.,

The provisions, however, are not mandatory for prepaid gift cards and those used at mass transit systems.

The latest instructions come in the wake of rising instances of cyber frauds and the huge increase in the use of cards.

New Delhi, Jan 24: Although India's Ujjwala programme encouraged adoption of liquefied petroleum gas (LPG) for cooking among the poor, households availing the scheme have not shifted away from using highly polluting fuels like firewood, a study reveals.

The researchers, including those from the University of British Columbia (UBC) in Canada, found that additional incentives to encourage regular use of cooking gas are necessary for a complete transition to clean cooking fuel among poor rural households.

They noted that about 2.9 billion people across Asia, Africa, and Latin America burn solid fuels like firewood to meet their cooking energy needs.

This has significant negative implications for public health, the environment, and societal development, according to the researchers.

Through the Pradhan Mantri Ujjwala Yojana (PMUY), India has provided capital cost subsidies to poor women to adopt a clean-burning cooking fuel or LPG.

The researchers explained that within the first 40 months of the scheme, more than 80 million households obtained LPG stoves.

However, the full benefits of LPG adoption depend on near complete replacement of polluting fuels with LPG, according to a research-based policy brief published in the journal Nature Energy.

The scientists said this cannot be assumed solely on the basis of LPG presence in the household.

"Our research shows that Ujjwala was able to attract new consumers rapidly, but those consumers did not start using LPG on a regular basis," Abhishek Kar, a postdoc at Columbia University in the US, told PTI.

The study analysed LPG sales data for over 25,000 consumers, including PMUY beneficiaries, as well as general rural LPG consumers in Koppal district of Karnataka.

The scientists employed data covering all LPG purchases of PMUY beneficiaries through their first year in the programme.

They also assessed the general rural population's purchases during their first five years as consumers to assess the effect of experience on use.

The findings estimate that an average rural family needs to purchase five 14.2 kilogramme-cylinders annually to meet half of their cooking needs.

However, the study said just seven per cent of PMUY beneficiaries in Koppal purchased five or more cylinders annually, suggesting that the beneficiaries seldom use LPG.

The general (nonPMUY) consumers in this region use on average two times more LPG cylinders than PMUY beneficiaries, the researchers noted.

Yet, only 45 per cent of nonPMUY consumers use five or more cylinders per year -- even after several years of experience with LPG, they said.

The team assessed price and seasonal factors affecting LPG use among the general population over a three-year period.

It found that LPG consumers are sensitive to price and seasonality -- LPG cylinder refill rates are lower in the summer when agricultural activity is limited, and cash is scarce.

"There was no scheme incentives to promote use, except general LPG subsidies which is available to all, including the urban middle class," said Kar, who was a Ph.D. scholar at UBC when the research was published.

"If there is no additional income, what cost would a poor family on an already tight budget cut to pay for an extra expense on a regular basis.

"Ujjwala has started the scheme of 5 kg-cylinder in response, but the impact of that on LPG sales is still publicly unknown," he said.

These findings, the researchers noted, suggest the need for additional measures to promote regular LPG use for all rural populations.

Although the finding come from a single district in Southern India, it may also apply to other areas with similar socio-economic conditions, they said.

A more expansive evaluation of PMUY would help design targeted incentives to transform infrequent users to regular users, according to the researchers.

Jan 24: India’s economy appears to be shaking off a slump, as activity in the services and manufacturing sectors expanded for a second straight month in December.

The needle on a gauge measuring so-called animal spirits signaled the economy may be taking a turn for the better, as five of the eight high-frequency indicators tracked by Bloomberg News came in stronger last month. The dial was last at the current position in August.

“Animal spirits” is a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action, and the gauge uses the three-month weighted average to smooth out volatility in the single-month numbers.

The nascent recovery would need a helping hand, with expectations building that Finance Minister Nirmala Sitharaman will provide some stimulus when she presents the budget Feb. 1. Official forecasts show the economy is set to expand at 5% in the year ending March 2020 -- the weakest pace in more than a decade.

Here are the details of the dashboard:

Business Activity

The dominant services index rose to the highest level in five months in December as improving new work orders helped boost activity. The seasonally adjusted Markit India Services PMI index climbed to 53.3 from 52.7 in November, helping post a strong end to the calendar year.

India’s manufacturing PMI also rose -- to 52.7 from 51.2 a month ago -- boosted by the fastest increase in new orders since July. A reading above 50 means expansion while anything below that signals contraction.

The uptick in business confidence was accompanied by a rise in inflationary pressures, the survey showed. That trend may keep monetary policy makers from resuming interest-rate cuts anytime soon, leaving most of the heavy-lifting to boost growth with the government.

“The relative stability in macro indicators over the past two months suggests that the worst is behind, but the recovery is likely to be prolonged,” said Teresa John, an economist at Nirmal Bang Equities Pvt. in Mumbai. “Still, sluggish growth and rising inflation indicate that India may well remain in stagflation for most of 2020.”

Exports

Exports remained a laggard, falling 1.8% in December from a year ago. The drag was mainly because of a fall in export of engineering goods, which constitute a third of India’s non-oil exports.

Capital goods imports continued to contract and was lower by 16.5% year-on-year in December after a 22% drop in November. This was the seventh consecutive month of continuous decline, underscoring the weakness in the capex cycle, according to IDFC First Bank.

Consumer Activity

Weakness in demand for passenger vehicles persisted, with local sales falling 1.2% in December from a year ago, according to the Society of Indian Automobile Manufacturers. That capped the worst yearly passenger vehicle sales on record. A Nielsen study on demand for fast-moving consumer goods showed volume growth dropped to 3.5% in the last quarter of 2019 from 3.9% in the same period of 2018.

Funding conditions held out hope, showing considerable improvement in December, according to the Citi India Financial Conditions Index. Credit growth remained tardy though, with demand for loans rising at a slower 7.1% pace from a year ago compared with a nearly 8% growth in November.

Industrial Activity

Industrial output rose for the first time in four months in November. The pick up was broad-based, led by mining, manufacturing and electricity. Mining and manufacturing, in particular, posted a second month of sequential growth. Production of consumer goods also rose after a few months of contraction.

The index of eight core infrastructure industries, which feeds into the index of industrial production, however, declined 1.5% in November from a year ago -- the fourth straight month of contraction. That was on account of shrinking production of electricity, steel, coal, natural gas and crude oil. Both the core sector and industrial output numbers are reported with a one-month lag.