G20 HOST INDIA TO PROPOSE CHINA, OTHER CREDITORS TAKE HAIRCUTS ON LOANS

PROFIT REUTERS

INDIA is drafting a proposal for G20 countries to help debtor nations badly hit by the economic fallout from the pandemic and Ukraine war, by asking lenders including China, the world’s largest sovereign creditor, to take a large haircut on loans.

Two Indian government sources told Reuters of the proposal as finance ministers and central bank chiefs from the Group of 20 prepared to meet in Bengaluru next week. The gathering will be the first major event of India’s one-year presidency of the G20, a bloc composed of the world’s biggest economies.

The International Monetary Fund (IMF) said on Tuesday it would hold a virtual meeting with the World Bank, India, China, Saudi Arabia, the United States and other wealthy Group of Seven (G7) democracies on Friday to try to reach understandings on common standards, principles and definitions for how to restructure distressed country debts.

“India is designing a proposal” to try to persuade countries like China to take a big haircut in lending to nations in difficulty, said one of the Indian officials, both of whom declined to be named as they were not authorized to talk to the media.

China and other G20 countries were aware that India was working on a proposal, the officials said. China’s Ministry of Foreign Affairs told Reuters on Wednesday it had nothing to share beyond spokesperson Wang Wenbin’s comment at a news conference on Tuesday.

“China takes the debt issue of developing countries seriously and supports relevant financial institutions to put forward solutions,” he said.

“It is our consistent stance that multilateral financial institutions and commercial creditors, which hold the bulk of the debt of developing countries, should participate in the debt relief efforts.” The People’s Bank of China and the Finance Ministry did not immediately respond to requests for comment.

India’s finance and foreign ministries did not immediately respond to emails and messages seeking comment either.

New Delhi expects the United States to be one of the main backers of its proposal, said one of the sources. A spokesperson for the U.S. Treasury declined to comment.

U.S. Treasury officials have previously said that they are opposed to China’s demand that multilateral development banks also take haircuts on debt principal in any restructurings. It was unclear whether the Indian proposal would advocate multilateral lenders taking haircuts.

Two of India’s neighbours, Pakistan and Sri Lanka, are in economic crisis, and urgently seeking international help before they run out of foreign currency to pay for vital imports.

India and the Paris Club of creditors recently told the IMF they supported Sri Lanka’s debt restructuring plan as the bankrupt nation sought a $2.9 billion loan. The United States said earlier this month it was willing to do its part too but that “we need to see credible and specific assurances that (China) will meet the IMF standard of

Cigarette prices to go up by over 250pc

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The industry sources believe the recent excise increases are detrimental to the legitimate companies’ survival as their sales decline; they are forced to shut down their manufacturing units and in some instances shut down their businesses from the country as well.

The government’s stance on the matter, however, has been consistent across political leaderships. Starting from 2018, “sin tax” was initially imposed on the consumption of cigarettes. The same stance has later been picked up in the times of a financial crunch.

As a product, the consumption of cigarettes results in huge sums of fiscal budget being allocated towards health, however, as producers, cigarette manufacturers have been some of the biggest benefactors of the national exchequer. Being an addictive substance, the somewhat inelastic demand of cigarettes, allows the government to make these changes. But like most issues, the case of cigarettes is trickier than a sweeping aim of public well-being.

“In Pakistan’s case, with the recent excise increase, if legitimate companies are forced to close, the government will lose more than Rs. 150 billion per year of revenue, more than 75,000 jobs will be lost directly and indirectly and last but not the least the loss from evasion by the illicit sector will increase to hundreds of billions of rupees,” said an office bearer of a cigarette

Unleashing ‘mini-budget’, govt drops petrol, gas bombs on inflation-hit masses

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Gas price for commercial gas consumers has been jacked up by 28.6pc as their gas price has been increased from Rs 1283 to Rs 1650/MMBTU. For the power sector, the gas price has been increased by 22.8pc and the new price for the power sector has been fixed at Rs 1050/MMBTU while previously this sector was paying Rs 857/MMBTU. For the export sector, gas price has been increased by 34pc as the gas price for this sector has been increased from Rs 819/MMBTU to Rs 1100/MMBTU. The gas price for the Compressed Natural Gas (CNG) sector has been increased by 31pc as the gas price for the CNG sector has been increased from 1370/MMBTU to Rs 1800/MMBTU. For the fertilizer sector, the gas price has been increased by 46pc as the new gas price has been fixed at Rs 1500/MMBTU while previously this sector was paying Rs 1023/MMBTU. Gas price for the cement sector has been increased by 17.46pc as the new gas price for this sector has been increased from Rs 1277 to Rs 1500/MMBTU. It is pertinent to mention that this new massive gas price hike will be applicable from 1st January to 30th June 2023 while collection of Rs 50 per month from the protected category of domestic gas consumers while Rs 500/month from the non-protected domestic gas consumers has been notified by the OGRA.

According to him, the government should first ensure that the measures being taken to counter illicit sector brands are firmly in place and are providing the right output e.g. track and trace has been implemented to counter illicit however, only 3 companies have implemented it, while 7 companies have gone to the court against it and the remaining have not implemented it on one pretext or the other.

Currently the legitimate sector holds 60 to 65% of the cigarette market share and pays more than 150 billion in taxes every year, while the illicit sector which holds 35 to 40% of the market share pays only Rs. 2 billion in taxes every year.