The week in charts: Electric vehicle subsidies, oil price dip, GST relief, social security for gig workers

The Cabinet announced a slew of schemes ahead of crucial assembly polls, and the price of Brent crude oil fell below $70 a barrel for the first time since December 2021. Meanwhile, the union government is likely to announce social security benefits for gig workers next week.

Boost for EV industry

The union government on Wednesday announced a ₹10,900-crore electric vehicle subsidy scheme that will provide demand incentives to deploy 14,028 electric buses, and subsidise 2.48 million electric two-wheelers and 316,000 electric three-wheelers. The scheme, which aims to boost electric vehicle adoption, was among several new programmes announced by the Cabinet, including rural roads and hydropower. The Ayushman Bharat health insurance scheme was also extended to senior citizens above 70 years.

Oil drops to 33-month low

Brent crude oil prices fell below $70 a barrel on Tuesday, a 33-month low, after key oil producers slashed their global demand forecast for 2024 and 2025. The Opec+ cartel now expects demand to increase by 2.03 million barrels per day (bpd) in 2024, lower than its earlier forecast of 2.11 million bpd. India's oil demand in 2024 is expected to be 5% higher than in 2023. The price recovered on Wednesday, closing at $70.61.

Shipbuilding fund

₹25,000 crore: That is the size of the Maritime Development Fund that the government may approve later this month to support domestic shipbuilding and blue water infrastructure, Mint reported. The fund will be a corporate entity, with the government holding a minority stake. Funding support could be in the form of debt, equity or viability gap funding. This initiative could boost India's maritime industry and reduce its reliance on foreign shipping.

Protection for gig workers

The government is likely to announce long-overdue social security benefits for gig workers on 17 September, which is Prime Minister Narendra Modi’s 74th birthday and also marks 100 days of his government's third term, Hindustan Times reported. Aggregators could be required to pay up to 2% of their revenue to create a social security fund to provide health insurance and other benefits to workers. India has an estimated 7.7 million gig workers, according to a 2022 report by Niti Aayog.

Also read: On gig workers, Jack Kérouac and Karl Marx

Tax relief for foreign airlines, others

The Goods and Services Tax (GST) Council provided relief to various sectors, including foreign airlines, helicopter services, research institutions and snack food producers in its meeting on Monday. The tax on three key cancer drugs was cut to 5% from 12%, bringing relief to an estimated 1.5 million cancer patients. The council also announced the formation of ministerial panels to address issues such as tax on insurance premiums and the future of the GST compensation cess.

Also read: Reset GST to make it a 'good and simple tax'

Tourism: how much is too much?

11.6 million: That is the number of people who visited Greece in the first half of 2024, up 16% from 2023. While tourism contributes about 20% to the economy, the country is also facing ‘overtourism’, which has led to a housing crisis and strained public infrastructure in popular destinations such as Santorini and Mykonos. Greece became the latest European country to impose restrictions such as a levy on cruise-ship visitors, and a possible increase in a tax on short-term rentals.

India’s wealth fund

The government plans to establish India’s first sovereign wealth fund by pooling its shares in 48 listed public sector units (PSUs), Mint reported. The government will transfer its shares in listed PSUs and Specified Undertaking of the Unit Trust of India (SUUTI) to the fund. The aim is to create a professional sovereign fund similar to Singapore's Temasek and GIC. One of the fund’s aims will be to acquire critical minerals to fund energy production. Around 40 countries currently have their own sovereign wealth funds.

Also read: Why India needs a sovereign wealth fund now

Chart of the week: Gold play

Gold prices have been seen a record-breaking rally recently. An interesting development is that China has become a critical driver of gold demand. Its central bank has been increasing its gold reserves ever since tensions with the US began rising in 2015. By the end of July 2024, China’s central bank held 2,264 tonnes of gold, or 4.9% of its total reserves.

Also read: What the gold rally says about market uncertainty