Navigate

  • Current Affairs 28th November 2018

    Updated : 28-Nov-2018

    Current Affairs 28th November 2018 - Important Points

    • India inked protocol of Double Taxation Avoidance Agreement to prevent tax evasion with - China
    • India and ADB sign $200 Million Loan to improve State Highways in - Bihar
    • RBI eases hedging norms for overseas borrowings to 70% from - 100%

    Current Affairs 28th November 2018 - Details

    India inked protocol of Double Taxation Avoidance Agreement to prevent tax evasion with - China

    India and China have inked protocol to modify Double Taxation Avoidance Agreement for avoiding double taxation and for inhibition of fiscal evasion with respect to taxes on income by permitting exchange of information. Under Section 90 of Income-tax Act, 1961, India can arrive into pact with foreign nation/specified territory for the avoiding double taxation of income, for exchange of information for the prevention of evasion.

    Important Points

    The Protocol to modify Double Taxation Avoidance Agreement with China apprises existing provisions for exchange of information to latest international norms. It incorporates variations needed to implement treaty related minimum norms under the Action reports of Base Erosion & Profit Shifting Project. Besides minimum norms, it also brings in variations according to Base Erosion & Profit Shifting Action reports as settled upon by the both sides. It will benefit prevent tax evasion by permitting the exchange of information.

    India and ADB sign $200 Million Loan to improve State Highways in - Bihar

    Union Government has inked $200 million loan pact with Asian Development Bank for Bihar State Highways III Project- BSHP-III. It will invest widening and advancement of around 230 kilometres state highways in Bihar to all-weather norms with road safety features. Since 2008, Asian Development Bank has delivered 4 loans to Bihar amounting value $1.43 billion to upgrade about 1,453 kilometres of State Highways and to build new bridge over Ganga River near Patna.

    Bihar State Highways III Project

    It was sanctioned by Asian Development Bank Board in October 2018. It purposes at upgrading State Highways to standard double lane width with road safety features and paved path for reconstructing, widening and consolidating culverts and bridges. It also pursues to construct institutional capacity of State for road design and maintenance and incorporate suitable new technologies in the State’s road sub-sector. The better-quality roads under the Project will contribute to savings in vehicle operating cost and travel time, diminish vehicle emissions and advance road safety. This loan will accompaniment efforts of Bihar Government to advance all state highways to meet least double lane norms with better surfaces and better-quality road safety leading to enhanced connectivity. It will also create State-level Road Research Institute to advance technical and management capacity of Road Agency Staff.

    RBI eases hedging norms for overseas borrowings to 70% from - 100%

    The RBI on November 26th, 2018 relieved the standards for External Commercial Borrowings by dropping the mandatory hedging provision to 70% from the existing 100%.

    ‘Hedging’ refers to an investment procedure needed to decrease the risk of adverse price/currency movements.

    The Reserve Bank of India also clarified that the External Commercial Borrowings elevated prior to this circular will be needed to mandatorily roll over their current hedge only to the extent of 70% of outstanding External Commercial Borrowing exposure.
    The relaxed standards will be applicable to the External Commercial Borrowings with a maturity period between 3 and 5 years. External Commercial Borrowing is an instrument utilised to ease the access to foreign money by Indian organisations, corporations and Public Sector Undertakings.
    The relaxation in hedging is for Indian organisations raising foreign currency-denominated External Commercial Borrowings under Track I of the External Commercial Borrowing framework. The Track I refer to medium-term foreign currency-denominated External Commercial Borrowing with a minimum average maturity of 3-5 years.

    Significance

    The initiative is likely to enhance the local credit market. It will upsurge the exposure of Indian organisations borrowing abroad to fluctuations in the foreign exchange market. 

    The initiative will also aid in improving dollar inflows into the economy at a time when few foreign currency deposits are likely to mature.