ECONOMY AFFAIRS AUGUST 2015

ECONOMY AFFAIRS AUGUST 2015

• Bandhan becomes the first micro finance company to start operation as a commercial bank
  Finance Minister Arun Jaitley on 23rd August inaugurated Bandhan Bank as a full-fledged scheduled commercial bank in Kolkata, ushering in a new era in country's financial sector, which will now see innovation taking the centrestage to reach out to the unbanked population.
  
  Bandhan is the first micro-finance company to transform into a bank. Reserve Bank of India has turned liberal in doling out banking licenses to entities of different capabilities.
  
  Bandhan Bank will primarily cater to the unorganized sector like daily wage earners and women running small businesses -- the segments that had been its borrowers for a decade. As a bank, it will also offer savings, remittance and insurance services and try to raise its stake in the bottom of the pyramid customers.
  
  Other important points
  • Bandhan Bank started its journey, 14 years after Chandra Shekhar Ghosh started Bandhan micro finance institution (MFI) with three staff members.
  • Bandhan will be the fourth bank to be headquartered in the city and also the first private bank to be based in Kolkata.
  • This is also the first bank to come up here after Independence.
  • The United Commercial Bank Ltd, now UCO Bank, was the last bank to be started here 72 years ago.
  • Bandhan has started with 501 branches in 22 States, 50 ATMs, 1.43 crore accounts and a loan-book of Rs. 10,000 crore brought forward from its MFI days.
  • The depositors include the 75 lakh MFI customer base, almost entirely women.
  • Before the end of this fiscal, the bank will have 632 branches and 250 ATMs across 27 States.
  • Access to cheap deposits, (replacing loans from commercial banks at an average borrowing rate of 12.5 per cent) will bolster its micro-credit activity.
  • Bandhan, currently, records a 99 per cent recovery rate from the segment.
  • With 74 per cent branches in rural areas and 35 per cent in the unbanked areas; micro-credit to women entrepreneurs will be the mainstay of the bank’s activity.
  • As against the national average of 79 per cent; the total credit extended by commercial banks in Bengal is 68 per cent of total deposits raised from the State.
  
  
• Investment in electronic manufacturing surges
  Government has received investment proposals totalling Rs 90,000 crore in the last two months for electronics manufacturing in the country, with significant interest in making mobile phones by local and foreign firms
  
  According to Ajay Kumar, Additional Secretary in Ministry of Communications and IT, India is already the fastest-growing smartphone market and it is now also becoming the fastest growing manufacturing destination of phones in the world. Proposals worth about Rs 1.10 lakh crore have been received in the last 12 months from various companies for electronics manufacturing in the country under the Modified Special Incentive Package Scheme.
  
  According to Cyber Media Research, 24.8 per cent of smartphones shipped in the country during April-June quarter of 2015 were made locally, up from 19.9 per cent in the preceding quarter.
  
• India Inc's business confidence index at six-quarter low: Ficci survey
  India Inc is not as confident about the overall economy and performance of its companies in the second quarter of the current financial year as it was in each of the previous five quarters, showed a survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci).
  
  The Business Confidence Index (BCI), as measured through the responses of 130 companies from a number of sectors, plunged to its lowest level of 66.3 points in six quarters for July-September 2015-16 compared to 73.2 points in the March to June quarter of the financial year.
  
  The surveyed companies from sectors such as steel, food processing, oil and gas, infrastructure, etc, were less optimistic about the current conditions as compared to previous six months as well as expectations in the near term.
  
  While the current condition index was down to 61 points in the second quarter of the current financial year from 65.2 points in the previous quarter, the expectation index dipped to 68.9 points from 77.2.
  
  About 78 per cent of the respondents said they foresee an improved performance at the economy level in the coming six months; the corresponding figure during the previous survey was 94 per cent.
  
  Ficci said this perception of respondents finds ground in the actual economic data as well; a firm rebound in the economy still remains elusive.
  
  At the industry level, 71 per cent of the respondents cited a better performance in the coming six months in the present round, vis-à-vis 87 per cent stating the same last time.
  
  The survey also pointed to the weak corporate performance for the first quarter of FY16. The capacity utilisation rate of companies remained low with about half of all respondents reporting they were operating at below 75 per cent capacity.
  
  In addition, results with regard to operational parameters indicated mixed signs. Compared to the previous round, the proportion of respondents anticipating an increase in investments and employment, however, noted an increase in the survey.
  
  Respondents were gloomy on the matter of profits, with those anticipating a decline spiking to 17 per cent from three per cent, while the proportion of respondents foreseeing higher profits increased cautiously from 32 per cent during the last round to 37 per cent.
  
  As for sales and exports, lower percentage of respondents believed there would be an increase in figures. Weak demand situation has been cited to be a concern by almost 71 per cent of companies, being a persistent concern for almost a year.
  
  Despite the Reserve Bank of India (RBI) undertaking three rounds of cut in the repo rate this calendar year, cost of credit was reported to be a bothering factor by 58 per cent of the respondents. Banks have cut the lending rate by 25-30 basis points (bps) and, hence, a full transmission of the cuts in the repo rate is yet to be seen.
  
  The survey also noted an increasing proportion of respondents citing threat of imports to be a constraint. Those indicating imports to be a concern belonged to sectors like steel, agricultural machinery, food processing, electronics, plastic products and chemicals.
  
• Sensex crashes 1625 points amid global market rout after Chinese stock tumbles 8.5%
  Stock markets around the world went into meltdown mode, on 24th August, as a rout in Chinese stocks triggered a global sell-off.
  
  At the domestic markets, the Sensex at the Bombay Stock Exchange sank a mammoth 1,625 points--its biggest ever single-day fall--to close at 25,742, on intense, across-the-board selling pressure.
  
  The stock market carnage erased nearly 7 lakh crore rupees of investor wealth. The Nifty at the National Stock Exchange crashed 491 points, to 7,809.
  
  The Chinese stock market was battered down a huge 8.5 percent, wiping out all its gains for the year. Other key Asian bourses in Japan, Hong Kong, South Korea and Singapore plunged between 2.5 percent and 5.2 percent. Major European markets in the UK, Germany and France were hammered down between 5.4 percent and 7 percent. Analysts said there was panic in the markets.
  
  Many emerging market currencies also plunged, amid the global turmoil. At home, in the forex market, the rupee weakened as much as 82 paise--its biggest single day fall this year--to a fresh two-year low of 66.65 against the dollar.
  
  Commodities also slumped, with global crude oil prices slipping more than 4 percent, to fresh 6-1/2-year lows. Brent crude oil futures dropped to 43.28 dollars a barrel, while U.S. light crude fell to 38.69 dollars a barrel. But domestic gold prices rose for the 14th straight day, gaining 150 rupees, to a 3-month high of 27,575 rupees per ten grams in Delhi.
  
  According to Finance Minister Arun Jaitley the factors responsible for this are entirely external and not a single domestic factor in India which has contributed to it.
  
• IOC stake sale fully subscribed; govt bags Rs 9,300 crore
  Despite the stock market crash, the government's 10 per cent stake sale in public sector oil refiner and marketer, Indian Oil Corporation was subscribed 1.18 times, on demand from institutional investors. At the floor price of 387 rupees a share, the sale would fetch the exchequer about 9,300 crore rupees. But retail demand for IOC's stake sale remained tepid.
  
• Banks to disburse Rs 1.22 lakh crore loan to small business units
  Banks will disburse about Rs 1.22 lakh crore loan to small business units under Pradhan Mantri MUDRA Yojana (PMMY) during the current fiscal. The banking sector has been allocated an overall disbursement target of Rs 1,22,188 crore during 2015-16 for MUDRA loans and the banks have already disbursed Rs 15,566 crore as on 17th August to more than 20 lakh borrowers under PMMY, while lending, priority will be given to SCs/STs enterprises.
  
  The PMMY provide loans between Rs 50,000-Rs 10 lakh to small entrepreneurs. The Micro Units Development and Refinance Agency Ltd , MUDRA, launched by the Prime Minister Narendra Modi in April this year, focuses on the over 5 crore self-employed who use funds of Rs 11 lakh crore and provide jobs to 12 crore people.
  
• Banking sector witnesses rise in retail NPAs
  The stress in the banking sector is no longer limited to the corporate side with lenders feeling the pinch on the retail business, according to a report by the Boston Consulting Group (BCG) and Ficci. From 2011 onwards, the banking sector witnessed a decline in retail non-performing assets (NPAs). However, the trend reversed last year when NPAs in the retail segment showed an uptick after a decline of three years.
  
  According to the report, the sector saw a 10 basis-point growth in retail loans in 2014-15. With this, the retail gross NPAs inched up to 1.6 per cent by FY15-end compared to 1.5 per cent a year ago.
  
  In 2015, the quantum of gross NPA in the retail assets stood at Rs 11,62,578 crore. Even though it is significantly lower than the 3.2 percentage points in 2011, it is still a cause of concern. It is the old private sector banks that have seen the highest level of stress.
  
  According to the RBI classification, the old private banks include Catholic Syrian Bank, City Union Bank, Dhanlaxmi Bank, Federal Bank, J&K Bank, Karnataka Bank, Karur Vysya Bank, Lakshmi Vilas Bank, RBL Bank, South Indian Bank, and Tamilnad Mercantile Bank. These lenders put together have seen a stress of 30 basis points.
  
  According to RBI's Financial Stability Report published in June, gross NPAs in the system had risen from 3.4 per cent in March 2013 to 4.6 per cent in March 2015. Overall stressed advances were 11.1 per cent of the total this March, from 9.2 per cent in March 2013.
  
  Rajan explained the steps taken by the central bank to ensure early recognition and speedy resolution of NPA. In this regard, RBI has asked banks to set up a Joint Lenders Forum (JLF), which allows banks to come on a common platform to tackle the issue. However, some changes in this regard to improve the functioning of JLF is expected soon, said Rajan.
  
• India ranks 9th in Brookings financial inclusion report card
  India has ranked nine out of 21 countries on its financial and digital inclusion efforts, according to the 2015 Brookings Financial and Digital Inclusion Project (FDIP) report. Kenya has ranked one, followed by South Africa and Brazil. Ethiopia came last on the list.
  
  The 2015 FDIP report evaluates and ranks countries based on four dimensions of financial inclusion - the country's commitment to increasing financial inclusion, its mobile capacity, the regulatory environment, and adoption of traditional and digital financial services.
  
  The 21 countries selected are Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, the Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia. The rationale for selecting these countries was that all of them have made recent commitments to financial inclusion and they reflect political, economic, and geographic diversity.
  
  India's overall score was 72 per cent. It scored 100 per cent on its commitment to financial inclusion. This score is based on its digital financial service commitments, its financial inclusion strategy, quantified targets, a dedicated financial inclusion body and surveys which measure financial inclusion. On mobile capacity, which is based on unique mobile subscribership, 3G mobile network coverage, mobile money deployments, domestic transfers through mobiles, bill payment facilities, it scored 78 per cent.
  
• Centre extends easy exit norms to all BOT highway projects
  The Centre has allowed road developers to completely exit BOT (build-operate-transfer) projects two years after completion and invest the funds in incomplete highway projects, power plants or retire debt. The Cabinet Committee on Economic Affairs (CCEA) on 26th August gave its nod to expand the end-use of the divested equity proceeds of completed road projects.
  
  This move, which comes three months after the Centre eased exit norms for completed projects, is expected to particularly benefit developers who have multiple verticals in the infrastructure sector.
  
  In May, the CCEA had approved a comprehensive exit policy framework that allowed developers to divest 100 per cent equity two years after completion of construction.
  
  While the May decision allowed this facility for pre-2009 projects, the government has now said that the exit facility will be available for all BOT projects, “irrespective of the year of award”.
  
  With the latest decision, highway developers can use the divested equity proceeds in non-NHAI (National Highway Authority of India) projects or in power projects.
  
  Also, the proceeds can be used to reduce their existing corporate debt to financial institutions in any other infrastructure projects. This decision will help unlock equity from completed BOT projects, making it potentially available for investment in all infrastructure projects, and not highway projects alone, said economy watchers. This will result in physical completion of languishing infrastructure projects.
  
  The main objective of the decision is to expedite award and implementation of highway projects by making additional funds available for investment. As of May, 80 pre-2009 BOT projects were completed. The equity locked up in these projects worked out to around Rs. 4,500 crore.
  
  The CCEA decision in May was expected to give a push to mergers and acquisitions in the road sector. Companies such as Ashoka Buildcon, IRB Infrastructure, ITNL, L&T IDPL, GMR, IVRCL and Reliance Infrastructure have projects pre-dating 2009.
  
  The latest decision is expected to pave the way for more domestic and foreign funds to come into the road sector.
  
• Names of 98 cities and towns to be developed as smart cities declared
  The Centre on 27th August declared the names of 98 cities and towns selected for development as smart cities. The aspirants cities were selected by the States and Union Territories on the parametres set by the Centre.
  
  Announcing the list in New Delhi, Union Urban Development Minister, M Venkaiah Naidu said, it include 13 cities from Uttar Pradesh, 12 from Tamil Nadu, 10 from Maharashtra, 7 from Madhya Pradesh, 3 each from Bihar and Andhra Pradesh.
  
  All other states have also got one or two cities for the purpose. Out of these 98 cities, 24 are capital cities, 24 are business and industrial centres, 18 are of cultural and tourism importance, 5 are port cities and three are educational and healthcare hubs.
  
  Two more cities will be announced in due course since the Government of Jammu and Kashmir sought more time to firm up their choice and there was tie between Meerut and Raibarelly in Uttar Pradesh.
  
  Centre will release two crore rupees each for the cities for the preparation of the smart city plan in the next few days. The prime motive of the mission is to enhance urban life. State and union territories and urban local bodies have an important role to play in the implementation of Smart City Mission.
  
  98 cities selected under Smart City Mission have a population of about 13 crore accounting for over 35 per cent of the country’s urban population. Central government will give financial support to the Mission to the extent of 48,000 crores rupees over next five years, of which two hundred crore rupees will be released to every city during the first year.
  • Nine capital cities did not find place includes… Itanagar, Patna, Shimla, Bengaluru, Daman, Thiruvananthapuram, Puducherry, Gangtok, and Kolkata could not be nominated
  • Among the 98 cities, 90 have also already been selected for another flagship scheme — Atal Mission for Rejuvenation and Urban Transformation. v
  • The Centre had in April approved an outlay of Rs. 48,000 crore for the mission.
  
  CORE ELEMENTS OF ‘SMART’
  • Adequate water supply
  • Assured electricity supply
  • Efficient urban mobility and public transport
  • Affordable housing, especially for the poor
  • Robust IT connectivity and digitalization
  • Safety and security of citizens
  
  
• Govt launches e-payment module for deposit of compensatory levies
  Government on 27th August launched an e-payment module to make the payment of compensatory levies receivable in lieu of diversion of forest land quicker and more transparent.
  
  Launching the module in New Delhi, Minister of Environment Prakash Javadekar, said the module will end delays in the deposit of compensatory levies.
  
  The Minister said, technology must be used to the advantage of all and that the Government’s endeavour has been to simplify administrative procedures, without compromising on environmental safeguards. The deposit of compensatory levies through the e-portal will be optional till 31st of this month and from 1st of next month it will be accepted only through the e-module.
  
• SEBI approves commodities mkt norms; to merge FMC from Sept 28
  The market regulator Securities and Exchange Board of India (SEBI) has announced September 28 as the date for merger of Forward Markets Commission (FMC) with itself. In its board meeting held in Mumbai, the SEBI also announced new norms for commodities derivatives market under which exchanges and brokers in this segment will need to comply with rules applicable to their stock market peers.
  
  The market regulator said that these norms will enable functioning of the commodities derivatives market and its brokers under Sebi norms and integration of commodities derivatives and securities trading in an orderly manner. It said the proposed norms also emphasize on strengthening of risk management of the exchanges.
  
  Further, investor protection norms similar to the equity markets would be provided by strengthening the arbitration mechanism and investor grievance redressal mechanism. Sebi said the new regulations provide for compliance of Securities Contracts Regulation (Stock Exchanges and Clearing Corporations) Regulations, 2012, which are currently required to be complied with by stock exchanges.
  
• Airtel acquires Augere to strengthen 4G footprint
  Bharti Airtel on 26th August said it has agreed to acquire Augere Wireless Broadband India (Augere) in a deal that will allow it to take its 4G operations to nine circles. Augere holds 20 MHz of broadband wireless access (BWA) spectrum in the telecom circles of Madhya Pradesh and Chhattisgarh.
  
  The company has launched its 4G services commercially in 296 towns across India early this month, ahead of the impending mega launch by Reliance Jio.
  
  Augere was promoted by a clutch of investors led by Sanjiv Ahuja, the former CEO of France-based Orange Telecom. In 2011, the company signed a deal with Ericsson for supply of network gear. But the company has since decided to exit due to regulatory uncertainties and lack of a strong business plan. Since then it has been looking for a buyer.
  
• Uncertain monsoon still a risk to growth, inflation: RBI
  The Reserve Bank has said uncertainty in the progress and distribution of monsoon, a key factor in performance of the farm sector, continues to be a risk for both growth as well as the inflation outlook While the progress of monsoon has allayed initial fears (of a drought), the uncertainty surrounding its progress and distribution remains a risk to the outlook for both growth and inflation, the apex bank said in its Annual Report for 2014-15.
  
  The report said that there is a need to put in place comprehensive and pre-emptive food management strategies to contain the spillovers of a feeble monsoon.
  
  For the first four months of FY16, indicators of real activity have broadly tracked RBI's baseline projection of output growth at 7.6 percent for the year as a whole, up from 7.2 percent in FY15, it said.
  
  Taking into account the initial conditions, including the prospects for the monsoon and international crude prices, the RBI had in April projected a baseline path for inflation at 6 percent by January next during which time there would a dip due to base effects till August and start rising thereafter to below 6 percent by January 2017.
  
  So far, inflation outcomes have closely tracked these projections. The risks to this trajectory are balanced as the weather-related uncertainties are offset by falling crude prices, the central bank said on 27th August. The RBI report said that for the economy, the outlook for growth is improving gradually.
  
  Business confidence remains robust, and as the initiatives announced in the Budget to boost infra investments get rolled out, they should crowd in private investment and revive consumer sentiment, especially as inflation ebbs.
  
  The RBI said the government's resolve on fiscal consolidation should propel efforts to reach the target for the gross fiscal deficit for 2015-16 at 3.9 percent.
  
• Brookfield Asset Management to buy projects from Gammon India
  A consortium led by Brookfield Asset Management has agreed to buy the Mumbai-Nashik highway and eight other projects from debt-laden Gammon India for about Rs 3,000 crore, in one of the biggest deals involving road projects.
  
  The proposed transaction, comprising debt and equity, is one of the first in the roads sector after the government eased exit rules for developers. This could also be the beginning of numerous deals in infrastructure projects as the Canadian firm's investment shows foreign investors are interested in the sector and that promoters are ready to accept reasonable valuations.
  
  Such deals will also help revive the interest and ability of Indian companies to bid for more infrastructure projects.
  
  Gammon India's infrastructure development arm, Gammon Infrastructure Projects, said it will sell six road projects and three power projects to the consortium in a deal that pegs enterprise value at about Rs 3,000 crore.
  
  Cash flow on account of divestment would be Rs 563 crore, while another Rs 100 crore could flow in if certain undisclosed milestones are reached.
  
• Rs 22,000 crore mobilised under Pradhan Mantri Jan Dhan Yojana: Govt
  Government on 28th August said Rs 22,000 crore have been deposited in over 17.5 crore bank accounts within a year of the launch of the Pradhan Mantri Jan Dhan Yojana, the largest financial inclusion scheme in the world. At present, more than 17.5 crore bank accounts have been opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY). More than Rs 22,000 crore have been deposited by the people in their bank accounts opened under the PMJDY
  
  Indian Prime Minister Narendra Modi had launched this ambitious scheme of financial inclusion on August 28, 2014.
  
• RBI asks financial entities to be ready to comply with FATCA
  RBI has asked all banks and financial institutions to be prepared for the implementation of Foreign Account Tax Compliance Act - FATCA. In a notification on 28th August, RBI said that India has signed an agreement with US for improving international tax compliance apart from a multi-lateral agreement to automatically exchange information based on Convention on Mutual Administrative Assistance in Tax Matters.
  
  RBI has asked all regulated entities to take appropriate action for implementation of due diligence and reporting requirements as laid down in the rules and ensure compliance.
  
  The RBI said all the concerned financial institutions should register on the related e-filing portal of Income Tax Department as Reporting Financial Institution by submitting the requisite details. RBI has said that reporting should be in a manner that lends itself to credible auditability including audit of the IT system which should be suitably upgraded to not only maintain the information required under the rules but also to record and store the due diligence procedures. RBI has said that non-compliance of the rules can lead to huge penalties in addition to loss of reputation.
  
• Made-in-India vehicles for U.N. mission in Mali
  In a sign of increasing Indian defence exports in the global market, Tata Motors has supplied 520 vehicles to the United Nations Multidimensional Integrated Stabilisation Mission in Mali (MINUSMA), including ambulances, jeeps, water and fuel tankers, recovery and refrigeration trucks and buses.
  
  The contract was won in 2014 against stiff international competition and these vehicles have been deployed in mission areas in West Africa.
  
  Recently, Tata Motors won a contract to supply 1,239 units of High-Mobility Vehicles with material handling cranes and 500 units of General Service (GS 800) vehicles to the Myanmar Army in addition to signing a cooperation agreement with Malaysia.
  
  With India embarking on a major defence modernisation drive and the government opening up the sector for private participation with the ambitious ‘Make in India’ initiative of Prime Minister Narendra Modi, private companies are increasingly investing in the lucrative but highly competitive defence sector.
  
  India’s defence exports are paltry compared with the size of its market or imports. Since 2010, India has exported defence items worth over Rs. 2,600 crore, Defence Minister Manohar Parrikar informed Parliament recently. In contrast, China, once a fellow importer, has emerged as the third largest global arms exporter.
  
• Food grain production in country estimated to have declined by 4.66 % in 2014-15
  Country's food grain production is estimated to have declined 4.66 per cent to 252.68 million tonnes (MT) in 2014-15 crop year due to poor monsoon and unseasonal rains in February-March.
  
  The country had registered a record food grain production of 265.04 MT in 2013-14 crop year (July-June). Wheat, rice, coarse cereals and pulses are part of the food grain basket. According to official statements, total foodgrain production in the country is estimated at 252.68 MT, which is lower by 12.36 MT than the last year's record foodgrain production of 265.04 MT.
  
  While releasing the fourth advance estimates for 2014-15, the Agriculture Ministry on 17th August said the production of most of the crops fell because of a bad monsoon in 2014 and unseasonal rains/hailstorms during February-March 2015, which affected kharif (summer-sown) and rabi (winter-sown crops).
  
  Rice production is estimated to have fallen to 104.80 million tonnes (MT) in 2014-15 against the record output of 106.65 MT in the previous year.
  
  Wheat output is estimated to have declined to 88.94 MT in 2014-15 as against a record 95.85 MT achieved in the previous year.
  
  The Ministry has revised downwards the production of wheat, pulses and oilseeds from its earlier estimates released on May 13. Country had received 12 per cent deficient rains from the South-West monsoon in 2014.
  
• Minister of steel and mines inaugurates steel processing unit in Gwalior
  In Madhya Pradesh, Union Steel and Mines Minister Narendra Singh Tomar on 17th August inaugurated a newly built steel processing unit at Biloua in Gwalior district. The unit has been set up by the SAIL in partnership with a private company Prime Gold.
  
  It has the capacity of producing over one lakh metric ton steel. On this occasion Mr. Tomar said that steel sector is providing employment to six lakh people and playing an important role in the development of the country
  
• SBI launches mobile wallet app 'Buddy'
  State Bank of India pm 18th August launched a mobile wallet application, SBI Buddy, in collaboration with Accenture and Mastercard. The service will be available to existing as well as non-SBI customers. According to Union Finance Minister Arun Jaitley, it would fulfill the changing spending style of digital consumers. The initiative would also encourage paperless monetary transactions and thereby represent the future trend of business world.
  
  The application is available in 13 languages with several features like cash transfer, bill payment, all types of ticket bookings payment and booking for movies, hotels as well as for shopping. The app is available to all android mobile phone users, at present, and soon will be launched for other mobile operating software.
  
  The Finance Minister also unveiled the logo and website of SBI Foundation which will be the implementing agency for corporate social responsibility (CSR) activities of the State bank group.
  
• Moody's lowers India growth forecast to 7% on monsoon concerns
  Rating agency Moody's Investors Service decreased India's growth forecast to 7 per cent for 2015, from 7.5 per cent forecasted earlier, citing monsoon concerns. Moody's Investors Service said in its "Global Macro Outlook for 2015-16" that it have revised the GDP growth forecast to about 7 per cent, in view of a drier than average monsoon.
  
  Moody's has retained growth forecast for 2016 at 7.5 per cent. Moody's said economic activity will continue to strengthen as a result of a gradual implementation of reforms that encourage domestic and foreign investment.
  
• Centre drops plan for airport privatisation
  The government has scrapped the privatisation of four major airports - those at Chennai, Kolkata, Jaipur and Ahmedabad. While the airports at Chennai and Kolkata will continue to remain under the complete control of the Airports Authority of India (AAI), fresh bids for the Jaipur and Ahmedabad airports will be invited from private players. These bids, however, would only be for operation and maintenance contracts, said government officials close to the development.
  
  This means only certain activities related to operations of the Jaipur and Ahmedabad airports will be handed to private developers, against an earlier proposal of public-private development of these airports. The public-private partnership (PPP) model had envisaged handing over the operations, management and development of these airports to successful bidders.
  
  The government's plan might come as a setback to the private sector, as companies such as GMR Airports, GVK Group and Adani Ports and Special Economic Zone had expressed interest in running these airports under the PPP model.
  
  The United Progressive Alliance (UPA) government had initiated the PPP process for modernising six airports - those at Kolkata, Chennai, Jaipur, Guwahati, Ahmedabad and Lucknow. However, after coming to power, the National Democratic Alliance government scrapped the process and invited fresh bids for only four of these airports.
  
  Currently, the airports at Delhi and Mumbai are run by private companies. While the Delhi airport is run by GMR Infrastructure Ltd, the one in Mumbai is managed by GVK Infrastructure.
  
  AAI has spent Rs 2,700 crore on upgrading the Kolkata airport and Rs 2,400 crore on modernising the airport in Chennai.
  
• PM announces Rs 1.25 lakh crore special package for Bihar
  Indian Prime Minister Narendra Modi announced a huge financial package to Bihar, i.e. Rs 1.25 lakh crore. Half of the Prime Minister's Bihar Package of Rs 1.25 lakh crore will be spent on construction of highways and bridges. Around 55 thousand crore rupees will be spent on four-laning and widening of highways, construction of bridges across Ganga, Sone and Kosi rivers and 12 Rail overbridges.
  
  Besides, around 14 thousand crore rupees will go towards rural roads. Over Rs 21,000 crore will be allocated for expansion of Barauni Refinery, setting up of new Petrochemical Plant, construction of Gas pipelines and massive expansion in domestic LPG connections. Above Rs 16,000 crore will be earmarked for electrification of villages and towns and over Rs 3000 crore for farmers welfare.
  
  The other investments in the state will be over Rs 40500 crore which include unspent amount of of 2013 Package, ongoing works of National Highways and Ultra Mega Power Project in Banka.
  
  The package of 1.25 lakh crore is over and above the on-going national social sector schemes including Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Atal Pension Yojana, Free LPG connections to BPL and Swachh Vidyalaya Abhiyan.
  
• ICICI Bank launches fully automated digital locker
  ICICI Bank on 18th August launched the first of its kind fully automated digital locker which would be available to customers even on weekends and post banking hours. Named ‘Smart Vault’, the locker is equipped with multi-layer security system, including biometric and PIN authentication and debit cards, among others. Customers can access it without any intervention by the branch staff, ICICI Bank said in a statement. The ‘Smart Vault’ is an example of ‘Make In India’ programme as it has been designed and manufactured by Indian partners, she said. Launched in Delhi, Ms. Kochhar said the bank would replicate this digital locker facility to a much larger scale in the days to come
  
• RBI grants 'in-principle' approval to 11 payment banks applicants
  The Reserve Bank of India (RBI) on 19th August granted in-principle approval to 11 payment banks applicants under the Guidelines for Licensing of Payments Banks.
  
  RBI had received 41 applications for payments banks. The central bank has approved applications of Aditya Birla Nuvo Limited, Airtel M Commerce Services Limited, Cholamandalam Distribution Services Limited, Department of Posts, Fino PayTech Limited, National Securities Depository Limited, Reliance Industries Limited, Tech Mahindra Limited, Vodafone m-pesa Limited among others.
  
  A payments bank differs from conventional banks as it cannot lend to its customers. It is allowed to take deposits, allow remittances and provide simple financial products. The payments bank will need to invest 75 percent of its funds in government securities.
  
  The minimum capital needed to set up a payments bank is set at Rs 100 crore. The bank will be allowed to accept savings deposits of up to Rs 1 lakh from each customer.
  
  RBI's “in-principle” nod will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfill the other conditions as may be stipulated by the central bank.
  
• RBI panel recommends conversion of UCBs into regular banks
  A Reserve Bank of India panel has recommended conversion of Urban Cooperative Banks, UCBs with business size of 20,000 crore rupees or more into regular banks to allow them to grow and proliferate further for financial inclusion.
  
  A report of the High Powered Committee on UCBs headed by RBI Deputy Governor R Gandhi however clarified that the conversion will not be compulsory for large UCBs and they can continue the way they operate currently in terms of balance sheet or asset size. In order to minimise the systemic risk, the committee has recommended that large UCBs convert themselves into commercial banks.
  
  The panel further said smaller UCBs with business size of less than 20,000 crore rupees willing to convert to Small Finance Banks can apply to the Reserve Bank for conversion. It has also suggested that licenses may be issued to financially sound and well-managed cooperative credit societies having a minimum track record of 5-years to operate as UCBs. RBI has invited suggestions and comments from public on this report by 18th of next month.
  
• FDI up 6.5% to USD 2.05 bn in June
  The Foreign Direct Investment (FDI) in the country increased by about 6.5 percent to USD 2.05 billion in June this year, according to official data. In June 2014, the FDI stood at USD 1.92 billion. However, in May this year the country had received USD 3.85 billion in FDI.
  
  During April-June period of this fiscal, FDI in the country grew by 31 percent to USD 9.50 billion as compared to USD 7.23 billion in the same period last year, according to the data of the Department of Industrial Policy and Promotion (DIPP).
  
  Among the top 10 sectors, computer software and hardware received the maximum FDI of USD 2.55 billion during the first quarter of this fiscal, followed by automobile (USD 1.09 billion), trading (USD 897 million), services (USD 636 million) and power (USD 271 million).
  
  During the period, India received the maximum FDI from Singapore (USD 3.67 billion) followed by Mauritius (USD 2.08 billion), the Netherlands (USD 652 million) and the US (USD 627 million). During financial year 2014-15, foreign fund inflows grew at 27 percent to USD 30.93 billion as against USD 24.29 billion in 2013-14.
  
  The government has relaxed FDI norms in various sectors, including insurance, railways and medical devices to boost FDI in the country. Foreign investments are considered crucial for India, which needs around USD 1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
  
  Growth in foreign investments helps improve the country’s balance of payments (BoP) situation and strengthen the rupee.
  
• SEBI proposes relaxed norms for infrastructure investment trusts
  To make it easier to raise funds for infrastructure projects from capital markets, the Securities and Exchange Board of India (SEBI) on 20th August proposed to relax its norms for Infrastructure Investment Trusts (InvITs) by lowering the sponsors’ mandatory holding to 10 per cent and by allowing greater operational flexibilities.
  
  Under the proposed norms for InvITs, a new investment product for arranging long-term financing for infrastructure projects, SEBI has suggested allowing such trusts to invest in two-level SPV (special purpose vehicle) structure.
  
  Currently, InvITs can either hold infrastructure assets either directly or through an SPV, in which such a trust holds control. It has been now proposed to allow InVITs to invest in a holding company which would further invest in other SPVs.
  
• Govt to sell 10 per cent stake in IOC
  The government will sell 10 per cent stake in Indian Oil corporation (IOC). It can fetch about 9,500 crore rupees to the exchequer. Presently, the government holds 68.57 per cent shares in IOC, the biggest oil refining and marketing company in the country.
  
  The stake sale in IOC will be the fourth disinvestment this fiscal. The earlier 3 stake sales had raised over 3,000 crore rupees. The government is targeting to raise 69,500 crore rupees from disinvestment in the current fiscal.
  
• Govt panel sees no case in imposing MAT on FIIs
  In a big relief to Foreign Institutional Investors (FIIs) , a government appointed committee has recommended that there is no case for imposing Minimum Alternate Tax (MAT) on FIIs retrospectively. The government is considering this suggestion of A P Shah Committee favourably.
  
  The Committee was appointed to go into question of levy of MAT on capital gains made by FIIs and had submitted its report to the Finance Minister about a month back.
  
  It saw no legal basis for levy of 20 per cent MAT on past capital gains. In its report, the Shah panel recommended relief for FIIs from paying MAT.
  
  The tax department has sent notices to 68 foreign institutional investors demanding around 603 crore rupees as MAT dues of previous years. This had led to a controversy with FIIs moving the court challenging it.
  
  Finance Minister Arun Jaitley in the Budget for 2015-16 had exempted FIIs from paying MAT with effect from April this year.
  
• Govt issues norms for selection of CEOs of smaller PSBs
  CEOs and MDs of all public sector banks, other than five large ones, will come from within the talent pool of state-owned lenders, according to the new selection guidelines issued by the government.
  
  The selection process will start next month. As per the guidelines, the selection to the top job in the PSBs would be from the existing pool of executive directors or deputy managing directors in state-owned banks with a remaining service period of 2 years.
  
  The guidelines come a week after the government had announced appointment of two private sector bankers to head Bank of Baroda and Canara Bank while also making appointments to three other large state-run banks from the public sector.
  
  The new norms have excluded private sector executives from becoming part of the selection process of top management in the public sector banking space.
  
• Banks can extend loan repayment up to 5 years for crop loss: RBI
  The Reserve Bank on 21st August gave the farming community much to cheer about when it said banks can extend loan repayment period up to 5 years in case 50 per cent crop is damaged due to natural calamities like drought and flood. However, if crop damage is 33 per cent, the loan repayment period can be extended up to 2 years, including one year of moratorium.
  
  Banks may allow a maximum period of repayment of up to 2 years (including the moratorium period of 1 year) if the loss is between 33 per cent and 50 per cent. If the crop loss is 50 per cent or more, the restructured period for repayment may be extended to a maximum of 5 years (including the moratorium period of one year)," it said.
  
  In all cases of restructuring, the central bank said, the moratorium period of at least one year should be considered. Moreover, the banks should not insist on additional collateral security for such restructured loans, it added
  
  The notification follows the government's decision in April to reduce the criteria of crop loss from 50 per cent to 33 per cent for providing input subsidy (compensation) to farmers.
  
• Centre taking a number of steps to contain rising prices of Onions
  After ordering import of 10 thousand tons of onions, now Minimum export price again raised to 700 Dollars per Metric Ton
  
  Government has hiked minimum export price of onion to 700 US dollars per Metric ton from 425 US dollars to check price rise.
  
  Minimum Export Price was last raised from 250 US Dollars per Metric ton to 425 dollars on 26th of June this year. In an official release Food and Consumer Affairs Ministry has said it is keeping a close watch on price rise of onions.
  
  A decision has been taken to import onions and a tender has been floated for 10,000 Metric tons of onions on 27th of August. The Ministry said, onion prices are being reviewed regularly.
  
  Prices of onions have been rising on account of a decline in total production from around 189 lakh tonnes in 2014-15 against 194 lakh tonnes in 2013-14. The shortfall is primarily due to adverse weather conditions including unseasonal rains which impacted both standing and harvested crop at major producing Centres
  
  • Centre hiked minimum export price, MEP, of onion by over 60 percent
  • A decision has also been taken to import onions and a tender has also been floated for 10,000 Metric ton of onions, which will be opened on 27th of this month.
  • The shortfall has primarily been on account of adverse weather conditions including unseasonal rains which has impacted both the standing and harvested crop at the major producing centres.
  
  
• Pahal scheme in Guinness records
  A milestone on 13th August was that the 'Pahal' scheme has been acknowledged by the Guinness Book of World Records for being the largest cash transfer program (households). The government launched the 'Pahal' scheme in 54 districts of the country on November 15, 2014, and in remaining districts of the country on January 1, 2015. As on August 13, 2015, 13.9 crore LPG consumers have joined the Pahal scheme. LPG consumers, who join the Pahal scheme, will get the LPG cylinders at market price and receive LPG subsidy (as per their entitlement) directly into their bank accounts. This scheme has enabled substantive savings in subsidy.
  
  The scheme was formally launched as Direct Benefit Transfer Scheme for LPG subsidy in 2013 in 291 districts under the aegis of Union Ministry of Petroleum and Natural Gas. The scheme was modified and named as Pahal in November 2014 and was then again launched in 54 districts. Later it was extended nationwide on 1 January 2015.
  
• Finance Ministry notifies rules on foreign account tax Act
  The Finance Ministry has come up with rules for information reporting under the Foreign Account Tax Compliance Act (FATCA), spelling out the timelines that the entities have to comply with the new requirements.
  
  The new rules are significant as these also provide reporting timelines for OECD’s Common Reporting Standard (CRS), which India signed on June 3 this year.
  
  CRS sets out a standard basis for automatic tax information exchange between member countries (OECD and G20) through respective bilateral tax treaties.
  
  India is among the few countries that have adopted a common approach for implementation of FATCA and CRS. Most advanced countries have first adopted FATCA and are now adopting CRS.
  
  The Central Board of Direct Taxes (CBDT) move to notify the rules came just a month after India and the US signed an inter-governmental agreement (IGA) to implement FATCA with a view to promoting transparency between the two countries on tax matters.
  
  The IGA was seen as an important step on part of India and the US to tackle offshore tax evasion and avoidance.
  
  As per the IGA, financial institutions in India will be required to report tax-related information relating to US account holders directly to the Indian government, which will, in turn, relay that information to the US. The US will provide similar information relating to Indian account holders in the US, although the exchange of information is not fully reciprocal at present.
  
  The exchange of information on an automatic basis is likely to begin by end of September 2015. The new FATCA rules, which run into 61 pages, prescribe the information to be maintained by the reporting financial institutions in India.
  
• India on top in exporting beef
   India retains its top spot as the world’s largest exporter of beef, according to data released by the U.S. Department of Agriculture, and has extended its lead over the next highest exporter, Brazil. It must be noted, however, that the U.S. government classifies even buffalo meat as beef.
  
  According to the data, India exported 2.4 million tonnes of beef and veal in FY2015, compared to 2 million tonnes by Brazil and 1.5 million by Australia.
  
  These three countries account for 58.7 per cent of all the beef exports in the world. India itself accounts for 23.5 per cent of global beef exports. This is up from a 20.8 per cent share last year.
  
  Data from the Centre for Monitoring Indian Economy (CMIE) shows that most of India’s buffalo meat exports go to Asian countries — Asia receives more than 80 per cent, while Africa takes around 15 per cent. Within Asia, Vietnam is the largest recipient, at 45 per cent.
  
  India’s buffalo meat exports have been growing at an average of nearly 14 per cent each year since 2011, and fetching India as much as $4.8 billion in 2014. Last year, India for the first time earned more from the export of buffalo meat than it did from Basmati rice.
  
  Several databases, including the United Nations Food and Agricultural Outlook, show that meat consumption in India is increasing. However, the data also shows that beef consumption has been falling over the years, down -44.5 per cent in 2014 from the level it was in 2000. This fall in consumption has been taking place regardless of the political party in power. Chicken consumption, however, was up 31 per cent in that period.
  
• India received USD 24 billion in FDI from European Union in last three years
  Despite the Free Trade Agreement talks with the European Union being in limbo, India has received an impressive USD 24 billion in Foreign Direct Investment from the 28-nation bloc over the last three years. As per official figures, India received USD 6.23 billion in FDI equity inflows from EU in 2012-13 which increased to USD 9.06 billion the next year.
  
  The FDI inflow was USD 8.20 billion in 2014-15, which was a decline of USD 862 million compared to the year ago period. In 2015-16, the amount in first two months of current fiscal was USD 1.39 billion.
  
  In total, India received USD 24.91 billion in FDI equity inflows from EU between April 2012 and May 2015. The EU has been India's largest trading partner and the two-way trade is likely to swell significantly if the countries could firm up the long-pending Free Trade Agreement, officially called the Broadbased Investment and Trade Agreement (BTIA).
  
  The two-way commerce between EU and India stood at about USD 99 billion in 2014-15 while it was USD 101.5 billion in 2013-14. The talks on FTA have been caught in a jam on sticky issues relating to intellectual property rights (IPR), data security for IT services and tariff in the automobile sector.
  
  The last round of talks on the FTA were held in May, 2013. The EU has been maintaining that it was ready to show flexibility on all major issues that have stalled the talks as the FTA will be a "win-win deal" for both the sides. The EU was also looking at insurance, banking and retail as major areas for economic engagement with India.
  
• Panel calls for survey on FDI in housing
  The Standing Committee on Urban Development has directed the Ministry of Housing and Urban Poverty Alleviation (HUPA) to undertake a survey to assess the impact of foreign direct investment (FDI) inflows into the housing sector.
  
  Since 96 per cent of the housing shortage in India is in economically weaker section and low income group segment, there is an urgent need to conduct study so that the real impact of FDI can be assessed, the committee said.
  
  FDI is permitted through the automation route in construction and development sector. It covers development of townships, housing, built-up infrastructure and construction-development related projects. The Department of Industrial Policy and Promotion (DIPP), on a regular basis, publishes data on sector-wise FDI inflows in their factsheets.
  
• Favourable doing business in India
  According to the study carried out by Mary Hallward-Driemeier, a World Bank economist, and Lant Pritchett, an economist at Harvard University, compares the data gathered through the Doing Business surveys and the Business Enterprises surveys, both carried out by the World Bank.
  
  The authors examined three indicators - the time spend on obtaining construction permits, starting a business or getting an operating licence and the delay in importing goods - and found that the average time taken for these activities was "much, much less" in the Enterprise Surveys than in the Doing Business Surveys.
  
  The difference is staggering. In the Doing Business report, the median time reported for obtaining construction permits in developing countries is 177 days.
  
  In Enterprise Surveys, it is 30 days. Similarly, time taken to import goods in the Doing Business surveys is estimated at 21 days. In the Enterprise Surveys, it's a mere 6.25 days.
  
  The authors' explanation rests on the chasm between regulations and the capacity of the state to actually be able to implement them. State capacity, especially in developing countries, simply does not exist to be able to enforce regulations effectively. As a result, companies are able to find creative ways to circumvent cumbersome regulations.
  
• Xiaomi unveils first India-made phone 'Redmi 2 Prime'
  China's Xiaomi launched its first India-made phone, the Redmi 2 Prime, and announced a tie-up with Taiwan's Foxconn to make smartphones in the country, giving a huge legup to the government's efforts to boost local manufacturing.
  
  Foxconn is expanding its Sri City plant in Andhra Pradesh - where it assembles completely knocked down Xiaomi phones -- and expects the additional capacity to be ready by December.
  
  India is the second country outside China to get Xiaomi devices locally made after the Beijing-headquartered company got Foxconn to make its phones in Brazil in July.
  
• 3 Raksha Bandhan gifts by govt this year
  The government has come out with an innovative drive to combine its social security schemes with the festival of Raksha Bandhan.
  
  The drive enables brothers to gift the three social security schemes, Pradhanmantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Yojana to sisters on the occasion of the festival of Raksha Bandhan.
  
  Three types of cheques are available under the scheme worth of Rs 201, 351 and 5001
  Rs. 201: This would be used by the beneficiary to reserve Rs.24 for paying two annual payments of Rs.12 each for PMSBY, for an accidental insurance of Rs. 2,00,000, and the remaining Rs.177 would be in a Fixed Deposit (FD) for 5 to 10 years for payment of future premiums of Rs. 12 for the scheme.
  
  Rs 351: It enables to gift one year payment of premium for Pradhan Mantri Suraksha Bima Yojana as well as Pradhan Mantri Jeevan Jyoti Bima Yojana which is a life insurance cover of Rs. 2,00,000.
  
  The recipient of the gift cheque would deposit the instrument in his / her bank account for a realizable value of Rs.342 (Rs.12 + Rs.330) to cover one year subscription to PMJJBY and PMSBY. The balance of Rs.9 from the purchase price of Rs.351 would be retained by the issuing Bank as a service charge.
  
  In the cheque of Rs. 5001, Rs.684 would be set aside for paying two annual payments of Rs.342 each for subscription to PMSBY and PMJJBY, at the appropriate time, and the remaining Rs.4317 would be kept in FD for 5 to 10 years for payment of future PMSBY and PMJJBY subscriptions from the interest accrued every year. With these schemes, the government has come to the aid of women in an innovative way.
  
• Posco to set up 1st steel plant in India in Maharasthra
  The $2-billion Uttam Galva Group has roped in Korean giant Posco to set up an integrated 3 million tonne per annum steel manufacturing facility in Sindhudurg district of Maharashtra at a cost of $3 billion (Rs 19,000 crore).
  
  This will be Posco's first steel plant in the country, with its plan to set up own greenfield unit in Odisha being delayed by almost 10 years due to environmental and land clearances.
  
  It is also the fourth big investment announcement in Maharashtra in a week, and will be the Korean giant's second facility in the state. Earlier this year, the company had inaugurated a state-of-the-art $709-million cold-rolling mill in Mangaon with a capacity of 1.8 mtpa.
  
• SEBI notifies ‘fast-track’ route for share sales
  To boost fund raising from markets, the Securities and Exchange Board of India (SEBI), on 11th August, notified new norms, which will provide all listed companies a ‘fast-track’ route for share sales. As per the new norms, firms in which public shareholders own stocks worth Rs.1,000 crore will now be able to access this route through a follow-on public offer (FPO). Currently, the minimum requirement is Rs.3,000 crore.
  
  The minimum public holding requirement for a rights offer is Rs.250 crore. The listed companies can tap the ‘fast-track’ route even without complying to this minimum average market value limit, provided they meet other conditions.
  
  Under the ‘fast-track’ route, a listed company would not be required to file any draft offer document for its FPO or rights issue and they can proceed with fund-raising programme without necessarily getting ‘observations’ from SEBI.
  
  This new route would also give a boost to the government’s disinvestment drive.
  
  SEBI said that in the case of rights issues, promoters would not renounce their rights, except to the extent of renunciations within the promoter group, or for the purposes of complying with minimum public shareholding norms.
  
  This new mode would be allowed only for those firms in which the promoter group and directors of the issuer have not settled any alleged violation of securities laws through the consent mechanism with SEBI in the past three years.
  
  It also requires that the equity shares of the issuer have not been suspended from trading as a disciplinary measure during last three years.
  
  SEBI said that the issuer company would keep funds in a bank having a credit rating of ‘A’ or above by an international credit rating agency. Earlier in June, SEBI’s board had approved this decision.
  
• Cabinet announces steps to deal with deficit rains
  The Centre decided to launch a series of farmer friendly interventions to deal with the challenges of a deficient monsoon. The Cabinet Committee on Economic Affairs approved the Agriculture Ministry’s plans for immediate remedial measures to be initiated by State governments.
  
  The measures include implementation of diesel subsidy scheme for protective irrigation of crops, enhancement of ceiling on seed subsidy, additional allocation of Rs. 150 crore under Mission for Integrated Development of Horticulture, and implementation of Additional Fodder Development Programme as a sub-scheme of Rashtriya Krishi Vikas Yojana with an allocation of Rs. 50 crore during 2015-16 for ensuring availability of fodder. A total of Rs. 300 crore has been allocated for these schemes.
  
• Loan scheme for sugar mills
  The CCEA has also eased the norms for a soft loan scheme worth Rs. 6000 crore for the sugar mills. The CCEA mandated that banks pass on the financial assistance directly to the cane growers after obtaining the list from the mills.
  
  The government had earlier mandated that soft loans will be provided to only those units which have cleared at least 50 per cent of their outstanding arrears by June 30.
  
• Drug regulatory upgrade
  The Cabinet Committee on Economic Affairs has approved a proposal for strengthening the drug regulatory system both at the Central and the State levels. The Centre will provide Rs. 1,750 crore for a period of three years to upgrade the system. While Rs. 900 crore will be used on central structures and Rs. 850 crore will be made available to the State Governments.
  
  The government said that the process will include arranging additional equipment and manpower in existing drug testing laboratories, setting up of new laboratories for testing drugs, medical devices and cosmetics and making mobile drug testing laboratories available. The upgradation will also introduce information technology-enabled online services.
  
• Rural job scheme empowered women: NCAER
  According to National Council of Applied Economic Research, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) reduced poverty by up to a third and gave a large number of women their first opportunity to earn cash income, a new research has found.
  
  Officials from the Ministry of Rural Development (MoRD) and the National Council of Applied Economic Research (NCAER) released a new report on 12th August which used data from two rounds of the India Human Development Survey (IHDS) – 2004-5 and 2011-12. The survey was conducted by the NCAER and University of Maryland, involving over 26,000 rural households across the country.
  
  Comparisons between the two survey rounds found that the programme reduced poverty overall by up to 32 per cent and prevented 14 million people from falling into poverty.
  
  The numbers show that the MGNREGS is likely to have had a much smaller impact on the rural job market and on rural wages than is commonly believed.
  
  At an all-India level, the average days worked under the MGNREGS is less than four, pointing to the relatively small impact of the scheme to the overall rural job market.
  
  Overall, while the period of 2004-5 to 2011-12 saw a sharp rise in rural wages, MGNREGS plays only a modest role in wage increases, the report notes.
  
  The United Nations Development Programme on 12th August also released a review of recent research studies on the MGNREGS which found similarly, and found that the scheme’s uptake is far greater in the lean season that in the peak agricultural season.
  
• CAG pulls up SAIL for inefficiency in planning, finalisation, execution of projects
  CAG has pulled up Steel Authority of India Ltd, SAIL for inefficiency in project planning, tender finalisation, and project execution. In its report tabled in both Houses of Parliament, the auditor said SAIL failed to implement the Modernisation and Expansion Plan, MEP within the fixed time frame.
  
  It said the integrated commissioning of capacity expansion projects in five integrated steel plants was delayed by over four years which led to failure in taking advantage of growth in steel market.
  
  The CAG has recommended the public sector steel maker to document the lessons from ongoing implementation of MEP as a guide for future capacity expansions. It also suggested the company to revisit the existing policies, procedures, and practices and strengthen them to mitigate the risks of time and cost overrun in future ventures.
  
• Govt clears Rs 300 cr package to save standing kharif crops from weak monsoon
  The Cabinet Committee on Economic Affairs (CCEA) has approved the 300-crore rupee package to save standing kharif agricultural and horticultural crops from weak monsoon. This will help farmers to be better equipped to deal with challenges posed by delayed and aberrant monsoon, as the state governments will be able to initiate immediate remedial measures to save standing agricultural crops and perennial orchards in rainfall deficient districts.
  
  The CCEA gave its nod to a soft loan scheme to the extent of 6,000 crore rupees for the current sugar season. This will ensure that farmers are paid their dues expeditiously. The CCEA has further mandated that banks pass on the financial assistance directly to the cane growers after obtaining the list from the mills.
  
  In order to incentivize mills to clear their dues expeditiously, the government had earlier mandated that soft loans will be provided to only those units which have cleared at least 50 percent of their outstanding arrears by 30th June this year.
  
  The Government has provided one-year moratorium on this loan, and will bear the interest subvention cost to the extent of 600 crore rupees for the period.
  
• RBI to transfer Rs 65,896 cr surplus to govt
  Reserve Bank of India will transfer its surplus profit of 65,896 crore rupees to the Centre. This amount is 25 percent higher than previous year. The Reserve Bank follows the July-June accounting year. Last year, the apex bank had transferred 52,679 crore rupees of its surplus profit to the Government.
  
• Government raises solar power target to 100000 MW
  Government has revised the National Solar Mission target of Grid connected solar power projects from twenty thousand mega watts to one lakh mega watt by 2022.
  
  Power Minister Piyush Goyal informed the Lok Sabha in a written reply on 13th August. He said, the revised National Solar Mission is under implementation. Mr Goyal stated that it is planned to achieve the revised target of one lakh mega watts by setting up distributed Rooftop Solar Projects and Medium and Large Scale Solar Projects.
  
• Govt unleashes big bang reforms for Banking
  The Union Government unleashed second generation banking reforms with a rainbow of measures (Indradhanush), the reform measures including a heavy dose of recapitailsation, setting up of a Bank Board Bureau and streamlining appointment process to spur bank credit and economic growth. These reforms are called big thing in indian banking since nationalization.
  
  Indradhanush- to revamp functioning of public sector banks. The main aim of these reforms is to revitalize capital-starved public sector banks. the government annouced 7-point agenda or pillars which will supoort these reforms.
  
  The seven points are appointments, bank board of bureau, capitalisation, de-stressing, and empowerment, framework of accountability and governance reforms. During the announcement FM said there is no cause for panic or alarm as far as banking sector situation is concerned.
  
  Bank Board Bureau:
  The government will set up Bank Board Bureau. It wil be link between govt n bank and through it performance of state run banks will be monitored .Bank Board Bureau will be operational from April 2016.
  
  Capitalization:
  The government will inject a total of Rs 25,000 crore of capital into debt-laden state banks in this fiscal.Rs 20,000 would be injected in a month. Over the next four years, the government plans to inject Rs 70,000 crore. SBI will get the highest capitalization worth Rs 5,511 cr.
  
  Empowerment:
  More flexibility will be given to state-run banks for hiring manpower. Greater autonomy to PSB and govt is also looking to set up bank holding company.
  
• Govt selects private sector professionals to head BoB, Canara Bank
  The government has appointed P S jayakumar as MD and CEO of Bank of Baroda and Rakesh Sharma as MD and CEO of Canara Bank. This is the first time the government has chosen the two candidates from the private sector to head the Public Sector Banks. The announcements were made along with MD and CEO of Bank of India, IDBI Bank, and Punjab National Bank. The government also announced appointment of Non-executive chairman of 5 banks.
  
• SEBI makes it easier for start-ups to tap market
  The Securities and Exchange Board of India on 14th August notified new listing rules aimed at helping start-ups access the mainstream capital market. The new, ‘institutional trading platform (ITP)’ is for companies that are technology intensive. At least 25 per cent of the pre-issue capital of such companies has to be held by qualified institutional buyers.
  
  Any other entity in which at least 50 per cent of the pre-issue capital is held by qualified institutional buyers as on the date of filing of draft information documents is also eligible.
  
  The biggest gripe for start-ups wishing to list publicly was the strict disclosure norms. The ITP relaxes these requirements. For instance, promoter holdings are locked in for three years while listing on the main platform.
  
  Under the new platform, this is reduced to six months. A company listing on the ITP need not go into details on how it will use the funds raised (the objects clause in the offer document has been liberalized, nor does it have to disclose information on group companies, litigation and creditors unless it believes the information is material.
  
• Exiting the platform
  SEBI has notified that companies can exit the platform if their shareholders have approved the move by passing a special resolution via postal ballot, where 90 per cent of the total votes and the majority of non-promoter votes are in favour of such a move.
  
• DBT scheme for LPG help save Rs 15,000 crore in a year
  The programme to pay cash subsidy to cooking gas consumers directly in their bank accounts has helped save about Rs 15,000 crore by stopping black marketing and diversions, Prime Minister Narendra Modi said on August 15. Modi said about 20 lakh people have voluntarily given up subsidy on LPG, helping widen the reach the scarce fuel.
  
  The Direct Benefit Transfer on LPG, which has been recognised by the Guinness Book of World Records as the largest cash transfer programme in the world, has eliminated "middle-men and black marketers" and ensured the fuel is delivered to right people, he said.
  
  Since the launch of DBTL, now named PAHAL, domestic LPG all over the country is sold at market price. Households get cash subsidy in their bank accounts to make good the difference between old subsidised rate and market price.
  
  The scheme was launched in 54 districts on November 15, 2014, and extended to all over the country from January 1, 2015 with a view to cut diversion and subsidised fuel being consumed by unintended segments like restaurants and other commercial establishments. LPG subsidy payout from Union Budget in 2014-15 was Rs 40,591 crore as against a dole of Rs 52,231 crore in 2013-14, a saving of Rs 11,640 crore. Presently, a household is entitled to receive subsidy to buy up to 12 cylinders of 14.2-kg each every year. Cash advance is transferred into the beneficiary account on first enrollment and another installment is given the moment it is used to buy a LPG refill.
  
• Single window clearance system to resolve all investor grievances
  A Parliamentary panel has suggested single window clearance system to resolve all investor grievances. The panel has suggested bringing the grievance redressal mechanism under the proposed Investor Education and Protection Fund, IEPF Authority.
  
  The suggestion comes against backdrop of rising instances of investors getting duped by fraudulent investment schemes and dubious companies.
  
  The proposed IEPF Authority would be responsible for administration of investor education and protection funds, undertaking investor awareness, refund of unclaimed amounts, and reimbursement of legal expenses under class action suits. The Corporate Affairs Ministry is to set up the IEPF Authority under Companies Act, 2013.
  
• FCI gets Rs.13,000 cr as food subsidy
  To ensure smooth procurement and distribution of grains, the government has released Rs.13,000 crore as food subsidy to state-owned Food Corporation of India (FCI). The corporation is facing a subsidy arrear of above Rs.55,000 crore as of March 31, 2015.
  
  For 2015-16, the government has allocated Rs.97,000 crore as food subsidy to FCI against an estimated bill of Rs.1,18,000 crore.
  
  In 2014-15, the government had allocated Rs.92,000 crore as food subsidy, out of which Rs. 91,995.35 crore was given to FCI. The subsidy incurred in the year was Rs. 1,02,476 crore.
  
  The government has released Rs.13,000 crore as food subsidy to FCI, this is the fourth installment of subsidy released to the corporation. So far, the government has paid Rs 46,250 crore as subsidy to FCI. The bulk of the food subsidy is paid to FCI for running the public distribution system (PDS).
  
• Spices Board launches subsidy scheme to boost production
  The Spices Board has launched a raft of measures to support farmers by offering various subsidies and sensitise them on the need to enhance the quality of spices through post-harvest improvement techniques, as a part of boosting spices production in the country.
  
  The Board has also decided to provide financial assistance to farmers for irrigation, land development, mechanisation, replanting, soil conservation and organic farming of various spices, especially small cardamom. It will also give financial aid to them for purchasing state-of-the-art irrigation and farming equipment and tools.
  
  The initiatives are part of the Board’s 12th Plan to improve export-oriented production of small cardamom and post-harvest improvement of other spices across spice-growing regions in the country.
  
  The eligibility criteria for availing the benefits are based on land held by the grower and is different for each programme.
  
  Under the new schemes, cultivators of small cardamom in Kerala and Tamil Nadu would be provided with a sum of Rs.70,000 a hectare for replanting, while farmers in Karnataka would get up to Rs.50,000 a hectare. The cultivators would also be given aid for planting material production.
  
  To help small scale cardamom farmers in the three southern states in irrigation and land development, the Board will provide financial assistance up to 25 per cent of actual cost for acquiring irrigation pump sets, sprinkler sets, equipment for gravity-fed irrigation system, and up to 50 per cent for water storage structure. The farmers would also get funding up to 25 per cent for soil conservation.
  
  Besides, they would be given a subsidy of Rs.1 lakh for purchasing improved cardamom curing devices and 50 per cent subsidy for GAP (Good Agricultural Practices) kits and bee-keeping boxes.
  
  Under the Board’s farm mechanisation programme, small cardamom growers in these states would be given 50 per cent subsidy for purchasing equipment for plant protection and washing, grading and polishing cardamom.
  
  The Board also provides assistance for post-harvest improvement process of the spices in Gujarat, Rajasthan, Madhya Pradesh, Andhra Pradesh, Telangana, Uttar Pradesh, Bihar, Himachal Pradesh, Maharashtra, Karnataka, Tamil Nadu, Kerala, West Bengal and North-eastern states. The assistance includes funding up to 50 per cent for seed spice thresher, pepper thresher, turmeric boilers and polishers, Integrated Pest Management kits for chilly growers and mint distillation units.
  
  As part of the farm mechanisation programme, spices growers would receive 50 per cent subsidy for purchasing equipment for the post-harvest improvement process, including cleaners, graders, spice slicing machines, de-huller, driers, storage units and extractors/dehydration units.
  
  The Board also provides financial assistance to organic farmers for attaining organic certification, maintenance of internal control system and purchasing organic inputs and bio-agent production units. Apart from this, it would provide a maximum of Rs.5 lakh as subsidy to Spices Producer’s Societies in major spice-growing regions in the country.
  
• Govt to develop 15,000 km highways
  To improve connectivity with far-flung areas including major tourism centres, the government plans to develop 15,000 km of National Highways (NH) at an estimated cost of Rs 1,90,000 crore.
  
  Projecting the country's highways sector as a "unique opportunity" for investments, government has already rolled out projects worth $93 billion, including the $45-billion flagship road building programme NHDP. India has the world's second-largest road network at 4.80 million kms. NHs comprise 2 per cent of total road network carrying 40 per cent of total traffic and 65 per cent of freight and 80 per cent of passenger traffic.
  
• RBI keeps key rates unchanged in monetary policy review
  Reserve Bank of India, RBI, has kept its key policy rates unchanged in its third bi-monthly monetary policy review with Governor Raghuram Rajan saying that the headline inflation is at elevated levels and banks are yet to pass on the full benefits of previous rate cuts.
  
  In Mumbai, RBI announced that repo rate at which the RBI lends to the system, will remain unchanged at 7.25 per cent. The cash reserve ratio (CRR) which is the proportion of deposit banks have to park with the central bank, will remain at 4 per cent, it announced.
  
  Inflation in June rose to an eight-month high of 5.4 percent, while the overall wholesale price index based inflation was at minus 2.4 percent in the same month. RBI in its policy statement trimmed consumer inflation forecast for January-March 2016 by 0.2 percent and said that growth was beginning to look up gradually.
  
  Meanwhile, central bank has retained its growth target at 7.6 per cent for the current fiscal year. It said that hardening of inflation, excluding food and fuel, is most worrisome.
  
  RBI Governor used strong words against banks for holding on to rates, saying banks have only cut 0.30 per cent as against RBI's cut of 0.75 per cent this year. The RBI governor said significant uncertainty on the factors influencing the monetary policy will be resolved in the coming months, including persistence of high inflation and better than expected monsoon.
  
  RBI informed that the fourth bi-monthly monetary policy statement will be announced on September 29, 2015.
  
• Cabinet clears direct release of wages into bank accounts of MNREGA workers
  The Union Cabinet has approved release of wages directly to the accounts of the workers engaged under the Mahatma Gandhi National Rural Employment Guarantee Act, (MGNREGA).
  
  The decision in this regard was taken by the Cabinet, chaired by Prime Minister Narendra Modi, in New Delhi.
  
  As per the scheme, the wage component of MGNREGA will be released following the State Employment Guarantee Fund window directly to the worker's accounts based on a fund transfer order to be generated by states' implementing agencies in accordance with procedures prescribed by Rural Development Ministry.
  
  The decision is aimed at further streamlining the flow of funds and to empower state governments to deliver entitlements as per the objectives of the Act.
  
  The proposed system would benefit all stakeholders and improve overall efficiency of implementation. The scheme will also ensure bring greater transparency in movement of funds and lesser levels of corruption in MNREGA.
  
  The gram panchayats would also be empowered to take up work according to the agreed labour budget, without struggling for release of funds.
  
  After this scheme the state governments would be able to spend more time in planning and improving the process efficiency, without bothering to manage funds for implementation of scheme.
  
  The Cabinet also gave its nod to hiving off BSNL towers into a new company. This will help BSNL to realign its structure in the highly competitive telecom sector. This will also help the public sector company to unlock its tower assets and improve its financial position.
  
  The Telecom Department will constitute an inter-ministerial group for working out capital structure and organizational structure of the new company.
  
  The Cabinet cleared financial assistance of 627 crore rupees to BSNL and MTNL for surrendering 800 MHz telecom spectrum in some circles.
  
  The Cabinet also gave its nod for providing one rank one pension facility for retired High Court judges. It also cleared amendments to arbitration law for faster disposal of commercial disputes.
  
  The Cabinet also approved a proposal to sign an agreement with UNESCO for establishment of a Centre for World Natural Heritage Management and Training for Asia-Pacific region at the Wildlife Institute of India in Dehradun as a category-2 centre of the UN body.
  
• ILO, FICCI sign pact to boost MSME productivity
  The International Labour Organisation and FICCI 5th August took their partnership to the next level by signing an MoU to impart training to MSMEs to make them competitive and boost productivity. This is the second phase of the signing of Sustaining Competitive and Responsible Enterprises (SCORE) Global Programme, wherein national institutes provide training to MSMEs.
  
  In line with the objective of SCORE, ILO is entrusted with building capacity of FICCI in three phases to enable the industry body to effectively coordinate and manage SCORE training services. Each phase will be approximately for a year or more and will be governed by a technical partnership agreement.
  
• RBI allows banks to shift, merge or close branches in urban areas
  Reserve Bank of India has allowed banks to shift, merge or close branches, except in rural areas, at their own discretion. In a notification issued from Mumbai on 5th August, RBI said the move will allow banks greater operational freedom. The central bank said that customers of the branch should be informed well in time before actual shifting, merger or closure of the office.
  
  The banks should ensure that they continue to fulfill the role entrusted to these branches under the government sponsored programmes and Direct Benefit Transfer Schemes. RBI further said that shifting, merger, or closure of any rural branch as well as a sole semi urban branch would require approval of the District Consultative Committee or District Level Review Committee.
  
  However, banking activity, that is deposit or loan business should not be maintained at both places, and the new location for part shifting would have to be within 1 km of the existing location.
  
  RBI has further allowed banks to shift some activities of a branch in any centre due to space or rent constraints without seeking prior approval of RBI.
  
• CBDT inks two more advance pricing pacts
  The Central Board of Direct Taxes (CBDT) said on 6th August that it had entered into two unilateral advance pricing agreements (APAs) on August 3. These two APAs — entered into with two multinational companies — include the first such agreement with a ‘rollback’ provision.
  
  The CBDT has so far entered into 14 such agreements, of which 13 are unilateral APAs and one is a bilateral APA. Unilateral APAs are agreed between Indian taxpayers and the CBDT, without involvement of the tax authorities of the country where the associated enterprise is based. Bilateral APAs include agreements between the tax authorities of the two countries.
  
• LS adopts Negotiable Instruments (Amendment) Bill 2015
  The Lok Sabha on 6th August adopted the Negotiable Instruments (Amendment) Bill 2015. Replying to a brief discussion, Minister of State for Finance Jayant Sinha said the proposed law seeks to amend the Negotiable Instruments Act of 1881 in tune with the modern day requirements for enabling electronic mode of operations.
  
  He said nearly 40 thousand cheque bouncing cases are pending with High Courts and about 19 lakh cases in lower courts across the country. He said the proposed law will enable cheque collections on electronic mode and proposed to change the definition of Cheques.
  
• EPFO announces investment of Rs 5,000 cr in stocks via ETFs
  Marking its maiden entry into stock market, India’s pension fund body on 6th August announced an investment of Rs. 5,000 crore through Exchange Traded Funds - ETFs. This was announced by Union Labour Minister Bandaru Dattatreya in Mumbai.
  
  He said the Employment Provident Fund Organisation - EPFO will invest around Rs 5,000 crore this fiscal through SBI Mutual Fund's two index linked ETFs, one to the BSE's Sensex and the other to NSE's Nifty. The minister said that the return from this investment will be more than the 8.75 percent that EPFO offers to subscribers now.
  
  The decision comes after the labour ministry allowed EPFO to invest 5 to 15 % of its incremental corpus in equities through ETFs.
  
• India gets $19.78 bn FDI from nations visited by PM Modi
  India received 19.78 billion dollars Foreign Direct Investment (FDI) from 12 countries visited by Prime Minister Narendra Modi in financial year 2014-15. During the period, Indian companies invested USD 3.42 billion in these countries which include Bhutan, Brazil, Nepal, Japan, the US, Myanmar, Australia, Fiji, Seychelles, Mauritius, Sri Lanka and Singapore.
  
  The total outflow and inflow of foreign investment in general for 2014-15 fiscal was USD 6.42 billion and USD 75.71 billion, respectively, Commerce and Industry Minister Nirmala Sitharaman said in a written reply to Rajya Sabha. In 2014-15, FDI in India increased by 27 percent to USD 30.93 billion.
  
• Government imposes 10% import duty on wheat
  The government has imposed 10 per cent import duty on wheat. It will remain in force till March next year. Finance Minister Arun Jaitley tabled a notification in the Lok Sabha on 7th August. It will result in the revenue gain of about Rs 90 crore to the exchequer.
  
• Foxconn to set up production unit in Maharashtra for $5 bn
  Foxconn, the world’s largest contract-manufacturing firm for consumer electronics, on 8th August signed a memorandum of understanding (MoU) with the Maharashtra government to invest $5 billion over three years, for setting up a manufacturing unit in the state.
  
  The company said it was yet to identify a site for its proposed production unit.
  
  At present, the company contract-manufactures devices like Apple iPhone, BlackBerry, Kindle e-reader, and Playstation video game consoles. It is not immediately known for which brands Foxconn will manufacture devices at its Maharashtra unit. The state government will provide 1,500 acres of land somewhere between Mumbai and Pune. The location could be Khopoli on Mumbai-Pune road or Talegaon industrial estate, Fadnavis added.
  
  The signing of the MoU took place after nearly two month of parleys and five-six meetings between Terry and Fadnavis.