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31 March 2023: INDIA URGES G20 MEET TO FIND WAYS TO REDUCE WIDENING TRADE FINANCE GAP

  • THE FIRST Trade and Investment Working Group (TIWG) meeting under India’s G20 Presidency started, emphasizing the need for Trade Finance Cooperation among members to help reduce the widening trade finance gap.
  • Panellists discussed the role of Banks, Financial Institutions, Development Finance Institutions and Export Credit Agencies which could play to identify gaps and addressing challenges in trade finance amid the uncertain global trade landscape.
  • The need to accelerate digitalization and the adoption of fintech solutions for improving access to finance was also stressed.

Need of the hour – 

  1. Digitalisation of International Trade is possibly an effective solution towards achieving cost reduction in trade and trade finance.
  2. The challenges to be addressed in digitalising trade were identified as International cooperation in harmonizing definitions, standards and data sharing.
  3. Panellists recommended that all Nations should underwear to adopt enabling legislation in the next few years to achieve paperless international trade.

Disinvestment facing many challenges: GOVERNMENT 

  • Disinvestment receipts so far this fiscal total rupee 35,882 crores versus the revised estimate of rupees 50000 crores.
  • The finance minister concedes in her annual report that the stake seal process has been stalled by global as well as domestic issues.
  • The urine budget has set an FY24 disinvestment target of rupees 51000 crores, a 9-year low.
  • Outlining the key obstacles that is covid-19 pandemic seriously impacted transactions in 2020 and 2021,
  • followed by the Ukraine conflict last year which hurt minorities as well as strategic stake sales as financial capacity and risk-reward options of potential bidders turned worse

Issues in disinvestment and Strategic disinvestment- 

  1. Resolution of land titles
  2. Lease and land use issues with state government authorities
  3. Disposal of non-core assets
  4. Excess manpower and Labour unions
  5. Protection of persistent functionaries
  6. Multiple cases were filed by employee unions and other interest groups against the disinvestment policy as well as specific transactions that were also hindering deals.
  7. Frequent use of ETFs i.e. Exchange Traded Funds e.g. between 2016-17 and 2019-20, the government has raised almost 99000 crores from EPF with underlying shares of CPSEs.

Important note 

The sole strategic sale completed in fi 23 is of Neelachal Ispat Nigam Limited (NINL) to TATA Group firm. NINL was a joint venture between 4 CPSEs and 2 state PSEs of Odisha, with no direct Government of India holding.