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GST rate should be below 20 pct – Congress party

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Thu Nov 26, 2015 4:35pm IST


NEW DELHI The proposed goods and services tax (GST) should be set at a rate of less than 20 percent, the opposition Congress party said on Thursday, signalling willingness to compromise as long as the government takes into account its concerns.

The comments by senior Congress leader Anand Sharma came as parliament opened its winter session, with the proposed new sales tax topping the to-do list of Prime Minister Narendra Modi’s nationalist government.

Congress first proposed the tax when it was in government, but political hostilities since Modi’s general election triumph 18 months ago have stalled the measure that seeks to create a single market and boost commerce in India’s $2 trillion economy.

“The government should come up with structured proposals on GST,” Sharma, chief tax negotiator for Congress and its deputy leader in the upper house, told Reuters.

The bill has passed the lower house of parliament, but has been blocked in the upper house where Modi’s coalition lacks a majority.

The government is trying to win over small regional parties to build the two-thirds majority required to pass a key constitutional enabling amendment, but needs to bring round Congress to be sure it can pass.

Congress would like to cap the rate of GST at less than 20 percent, scrap a proposed state levy and create an independent mechanism to resolve disputes on revenue sharing between states, Sharma said.

Finance Minister Arun Jaitley said in a television interview on Wednesday night that these three Congress demands had not been included in its original GST bill.

“GST was not our idea – it was a Congress idea but it’s a good idea,” Jaitley told the NDTV news channel. “I hope the Congress sticks to the good it proposed rather than flaw it.”

(Editing by Douglas Busvine and Jacqueline Wong)

Source: R-Business


Euro on shaky ground as ECB easing talk mounts, European stocks up

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LONDON The euro slipped back towards seven-month lows, bond yields fell and European shares gained on Thursday as talk of aggressive stimulus from the European Central Bank next week grows.

European shares rose 0.25 percent in early trade, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent. Japan’s benchmark stock index also closed 0.5 percent higher.

The euro remained under pressure a day after euro zone central bank officials told Reuters that they are considering options such as staggered charges on banks hoarding cash and buying more debt ahead of next week’s ECB meeting.

That fueled talk that the central bank is getting ready for aggressive measures to lift inflation and economic growth in the 19-member euro zone.

“Ultimately, I think the ECB will be aggressive and that divergence in policy with the United States must imply a weaker euro,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.

“The question now is how far can we go, and as the Fed tightens, euro/dollar parity is looking likely by the second quarter of next year.”

The euro fell about 0.2 percent to $1.0609, having tumbled on Wednesday to $1.0565, its lowest level since mid-April. Against the yen, it was trading 0.2 percent lower at 130 yen, having hit a 7-month low of 129.77 on Wednesday.

Overall market activity was expected to be thin due to the Thanksgiving holiday in the United States.

Speculation about further easing by the ECB comes as upbeat U.S. economic data reinforces a view that the U.S. Federal Reserve will soon lift interest rates for the first time in almost a decade.

Short-term euro zone interest rates fell to record lows on Thursday as markets interpreted an ECB debate about two-tier deposit rates as signaling the intention for an aggressive cut.

ECB easing expectations also pushed German five-year government bond yields to a new record low of -0.196 percent, while two-year yields hovered just above lows of -0.418 percent.

Expectations for a divergence in monetary policy meanwhile has pushed the gap between short-dated bond yields in the U.S. and Germany to their widest since 2006, underpinning the dollar.

The dollar index, which measures the dollar’s value against a basket of six other major currencies, scaled an 8-1/2-month high of 100.170 overnight. It last stood at 99.863.

The firmer dollar and concerns about surplus supply pushed crude oil prices lower.

Brent crude oil futures lost 34 cents, or 0.95 percent, to $45.73 a barrel.

U.S. crude’s West Texas Intermediate (WTI) futures retreated 0.25 percent to $42.94 a barrel after rising to $43.30 during the Asian session.

Spot gold was little changed at $1,071.65 an ounce, hovering close to its lowest in nearly six years on the back of a firmer dollar and expectations for higher U.S. interest rates.

“We are keeping an eye on the dollar as a possible catalyst (for gold),” ScotiaMocatta analysts said in a note.

(Editing by Dominic Evans)

Source: R-Business


Indian gold demand seen falling to 8-year low in festive quarter

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MUMBAI India’s gold buying in the key December quarter is likely to fall to the lowest level in eight years, hurt by poor investment demand and back-to-back droughts that have slashed earnings for the country’s millions of farmers.

The sluggish demand could halve imports by the world’s second-biggest gold consumer in U.S. dollar terms in the final quarter, a retailer and two bank dealers said, putting further pressure on global prices that hit a five-year low earlier this month.

December quarter demand could fall to 150 to 175 tonnes, said Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation, from 201.6 tonnes a year ago and a five-year average for the quarter of 231 tonnes, according to World Gold Council data.

The December quarter usually accounts for about a third of India’s gold sales as it takes in the start of the wedding season as well as festivals like Dhanteras and Diwali, when buying gold is considered auspicious.

Two-thirds of demand comes from rural areas, where jewellery is a traditional store of wealth, but weak monsoon rainfall this year due to an El Nino weather pattern has eroded farmers earnings and their purchasing capacity.

“I incurred huge losses this year as my corn and cotton crops were wilted due to drought,” said Madhukar Patil, a farmer in the western state of Maharashtra, who had been planning to buy gold during Diwali.

A weak rupee has also kept local gold prices relatively strong compared with a slump in U.S. dollar-denominated gold, further denting demand, while investment buying has stalled as investors see little chance of a quick price recovery.

“In the first half of November demand was good due to Diwali, but since then demand has significantly moderated,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesale in the eastern Indian city of Kolkata.

The Indian rupee has fallen over 5 percent this year, restricting the drop in local gold prices to 5.5 percent, compared with a 9.3 percent drop in U.S. dollar denominated gold.

India’s gold imports, which account for nearly all of its demand for the precious metal, could fall to around $5.7 billion in the December quarter, the Federation’s Bamalwa said. Two gold dealers forecast a similar fall.

Sluggish demand has been reflected in physical trading in India as bullion was offered at a discount even during Dhanteras, compared with a premium of $18 an ounce over London prices last year.

“Jewellers from rural areas are making fewer purchases. Their sales have been badly affected due to drought,” said a Mumbai-based bank dealer with a gold importing bank.

($1 = 66.4025 Indian rupees)

(Reporting by Rajendra Jadhav; Editing by Richard Pullin)

Source: R-Business

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