RBI has approved a record transfer of Rs 2.11 lakh crores as surplus to the government for the financial year 2023-24. This significant surplus, largely driven by higher income from forex holdings, is based on the Economic Capital Framework (ECF) recommended by the Bimal Jalan committee.
The transfer, which is the highest ever, will support the government’s liquidity and expenditure for fiscal year 2025.
Additionally, the RBI has increased the Contingent Risk Buffer (CRB) to 6.50 percent for FY 2023-24, reflecting confidence in the economy’s resilience.
GIFT City, India’s only International Financial Services Centre (IFSC), is becoming a preferred destination for foreign portfolio investors (FPIs) over traditional investment routes like Mauritius and Singapore.
This shift is driven by the Indian government’s incentives, including guaranteed tax benefits and enhanced ease of doing business in GIFT City, which are backed by a stable legal and regulatory framework.
The ten-year exemption on business income in GIFT City is seen as secure, unlike the renegotiable DTAs with countries like Singapore.
The introduction of the Principal Purpose Test (PPT) to prevent treaty abuse has further complicated investments via Mauritius, increasing the compliance burden and making GIFT City more appealing.
SEBI has also facilitated this trend by allowing FPIs in GIFT City to accept higher investments from Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs), up to 100%.
SEBI committee has proposed changes to the Business Responsibility and Sustainability Reporting (BRSR) framework.
Starting from FY25, the top 250 listed entities must disclose ESG information for their value chain on a comply-or-explain basis. The definition of ‘value chain’ is refined to include partners that make up 2% or more of the entity’s purchases or sales. Reporting prior year ESG data for FY25 will be voluntary.
Green Credits will be added as a leadership indicator. The term “assurance” in BRSR will be replaced with “assessment or assurance” to offer flexibility. SEBI has mandated BRSR reporting for the top 1,000 companies since FY22-23 and introduced the BRSR Core framework for more detailed ESG disclosures.
RBI added 24 tonnes of gold to its reserves from January to April 2024, significantly more than the 16 tonnes added throughout 2023. As of April 26, 2024, the RBI’s gold holdings increased to 827.69 tonnes from 803.6 tonnes in December 2023.
This raised gold’s share in India’s total foreign exchange reserves from 7.75% to 8.7%. The RBI, like other emerging market central banks, is diversifying reserves to hedge against currency volatility amid geopolitical tensions and global economic uncertainties.
The first quarter of 2024 saw central banks worldwide buying 290 tonnes of gold, highlighting gold’s importance as a store of value and crisis response asset.
