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RBI doubles cap on PPIs to Rs. 20,000

The Reserve bank of India (RBI) has increased the per month limit of Prepaid Payment Instruments (PPIs) to Rs. 20,000 from Rs. 10,000 and to Rs. 50,000 for merchant bank.

This decision was taken due to sudden increase in demand for digital wallets (especially mobile wallets) after Government announced demonetisation of Rs. 500 and Rs. 1000 notes.

Key Facts

  • The prepaid PPIs could be also issued to merchants if they provided a self-declaration in respect of their status and bank account and also to be kept on record by the issuer.
  • Funds transfer from such PPIs will be permitted only to the merchant’s own linked bank account and upto an amount of Rs. 50,000 per month, without any limit per transaction.
  • Thus, this decision will boost mobile wallet transactions following the withdrawal of high-value notes. The measures will be applicable till December 30, 2016.

What are Prepaid Payment Instruments (PPIs)?

  • PPIs are methods that facilitate purchase of goods and services against the value stored on such instruments.
  • The value stored on such instruments represents the value paid for by the holder, by debit, by cash to a bank account or by credit card.
  • These prepaid instruments can be issued as online wallets, mobile accounts, mobile wallets, smart cards, magnetic stripe cards, internet accounts, paper vouchers and any such instruments used to access the prepaid amount.

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China agrees to import rice from 17 mills in India

China has agreed to import rice, non-basmati and basmati varieties from 17 registered mills in India. These mills are in Punjab, Haryana, Uttar Pradesh and Madhya Pradesh.

It is considered as a major breakthrough in India’s efforts to ensure market access for Indian products (especially rice) in China as it is the world’s largest rice importer.

What is the issue?

  • India had repeatedly sought market access for Indian products citing the country’s widening goods trade deficit with China.
  • The products included non-basmati rice, pharmaceuticals and many fruits and vegetables among others.
  • However, China had not granted market access to India’s non-basmati rice claiming that it failed to meet Chinese norms on quality, safety and health standards.
  • China’s apprehensions included the possibility of the cabinet beetle (or Khapra beetle) pest getting transported along with Indian non-basmati rice consignments to China.
  • In India, China’s objection to Indian non-basmati export was seen more political in nature than anything else as it imports non-basmati rice from its all weather friend Pakistan.

Note: India’s goods trade deficit with China has ballooned to $52.7 billion in 2015-16 from $1.1 billion in 2003-04.

Background

  • After numerous requests from Indian side, Chinese officials had visited India in September to inspect 19 rice mills registered with National Plant Protection Organization (NPPO).
  • NPPO had assisted its Chinese counterpart AQSIQ during inspection for plant quarantine purposes and pest-risk analysis to ensure that non-basmati consignments from India will be pest-free, of good quality and safe.
  • The Agricultural and Processed Food Products Export Development Authority (APEDA) under the Indian Commerce Ministry was also involved in the process.
  • Besides, India also had earlier sent the information sought by AQSIQ regarding the quality protocol and standard operating procedures.

NPPO is the nodal government agency for inspecting mills and granting certificates on plant health for export purposes. It is mandatory for Indian rice exporters to get registered with NPPO.

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India’s wealth rises and also disparity: Credit Suisse Report

As per a report on global wealth published by Credit Suisse, the total quantum of wealth in India is rising but disparity between rich and poor is also rising.

The report says that the uneven growth has left 96% of the adult population in India at the base of the wealth pyramid with wealth below $10,000. However, a small fraction of the adult population (0.3%) has net worth of more than $100,000.

Key Highlights from report

  • Indian Scenario: The wealth in India is mostly dominated by property and other real estate. It makes up 86% of its estimated household assets.
  • The wealth in India in local currency terms increased 5.1% in 2016 but due to adverse currency exchange movements.
  • India’s household wealth fell by 0.8% to $3 trillion in dollar terms. The annual growth of wealth per adult in rupees has averaged 6% between 2000 and 2016.
  • The number of millionaires remained flat at 1.78 lakh with $973 billion in wealth. Among these, ultra high-networth individuals increased by 5.2% to 2,260, including 1,040 with more than $100 million.
  • The number of millionaires in India is projected to increase by 9.5% in the next five years to 2.8 lakh in 2021.
  • Meanwhile, the personal debts are estimated to be 9% of gross assets in India which is much lower than in most developed countries.
  • Global Scenario: Overall growth in wealth remained limited in 2016. It is continuing the trend that had emerged in 2013 and is contrasting sharply with the double-digit growth rates witnessed before the global financial crisis of 2008.
  • The total global wealth in 2016 edged up by 1.4% or $3.5 trillion to a total of $256 trillion, a rise in line with the increase in the world’s adult population.

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