4 FEBRUARY 2015: RBI liberalise foreign remittance & SLR

Ø  The central bank doubled the amount of foreign exchange that an individual can remit in a year under a scheme that allows asset purchase outside India. An individual can now remit up to $250,000 a year under the Liberalised Remittance Scheme, which was started in 2004 with a view to simplify foreign exchange avenues available to Indians. This is the second time the limit has been raised since a drastic 62.5 per cent cut in the limit to $75,000 in August 2013, when the RBI was fighting hard to stem the free fall in rupee against the dollar. The conditions are far different this time. The rupee has strengthened against the dollar in 2015. RBI Governor Raghuram Rajan on Tuesday noted other positives, including on managing inflation, the growth pick-up as well as a low current account deficit.

Ø  Journalist-writer Hindol Sengupta’s book on entrepreneurial ventures in India has been shortlisted for the U.S.’ prestigious Hayek Prize this year. Recasting India: How Entrepreneurship is Revolutionizing the World’s Largest Democracy is among the six books in race for the $50,000 prize awarded by the Manhattan Institute each year to writers whose work best celebrates the principles of Austro-Hungarian Nobel laureate in economics, Friedrich von Hayek.

Ø  Indian officials have clarified that Section 46 of the Liability Act, that relates to tort or civil suits, will not be applicable to American suppliers. U.S. officials were given a presentation that included “a mixture of case law, official assurances and reading of the regulations,” that eventually convinced them. For the first time, India also agreed to “offer data and annual consultations” on nuclear material, that could raise questions for the NDA government. However, the administrative arrangements are yet to be signed, and will await a “memorandum” assuring India’s stand on the liability law (Civil Nuclear Liability Damages Act, 2010), which still needs to be cleared by the U.S. On the defence front, sources said the 10-year defence strategic partnership framework has yet to be signed, but that the “language has been frozen” for this. There is no confirmation when the agreement will be inked, but sources say it could wait for the confirmation of the new Defence Secretary Ash Carter, who has been a prime mover on Indo-U.S. defence relations. Another sticking point between officials came over the selection of co-development, co-production projects to be announced under the DTTI (Defence and Technological Trade Initiative). While the U.S. presented 17 proposals, Indian officials felt they didn’t represent “high-end” technology transfers, and came up with their own list of six proposals. However, the final four agreed to, under DTTU including one for “Raven” drones, didn’t belong to the group requested by India. “We need to walk before we can run,” said sources, pointing out that India is yet to sign three key foundational agreements. “So we chose the agreements that could be easily done, given U.S. requirements on end-use monitoring, etc.”

Ø  Britain became the first country in the world to allow the creation of babies with DNA from three people after MPs voted for the controversial procedure. Lawmakers at the House of Commons voted by 382 to 128 in favour of allowing the creation of in-vitro fertilisation (IVF) babies with DNA from three people, a move aimed at preventing serious inherited diseases being passed on from mother to child. Under the change to the laws on IVF, as well as receiving the usual “nuclear” DNA from its mother and father, the embryo would also include a small amount of healthy so-called mDNA from a woman donor. Families who know what it is like to care for a child with a devastating disease are best placed to decide whether mitochondrial donation is the right option for them. The change could apply to up to 2,500 women of reproductive age in Britain with hereditary mitochondrial diseases but opponents say it opens the way to the possibility of “designer babies” in future.

Ø  In an attempt to provide more liquidity to the banking system, the Reserve Bank of India (RBI), reduced the Statutory Liquidity Ratio (SLR) by 50 basis points to 21.50 per cent from 22 per cent. This is likely to pump in around Rs.45,000 crore to the system, which is likely to prod banks to cut their lending rates.