ECONOMY AFFAIRS DECEMBER 2015
- Assocham lowers fiscal's export outlook again - to $255-260 bn
Associated Chambers of Commerce and Industry (Assocham) on 27th December further lowered its outlook for India's exports in the current fiscal to $255-260 billion, countering the government's claim that there is no crisis in the sector.
The development came on a day when industry chamber FICCI said the country's third quarter manufacturing is also set to decline due to sluggish exports. While India's exports stood at $310 billion in the previous fiscal, Assocham in September had forecast the fiscal's exports to be around $265-268 billion. The decline in exports continued for the 12th month in a row in November as these fell nearly 25 percent to $20.01 billion amidst a slowdown in global demand.
A commerce ministry statement earlier this month had however held that there "is no crisis in India on the export front and while there is a need for caution, there is no need for alarm". The cumulative value of exports during the April-November period was down over 18 percent at $174.30 billion, as against $213.77 billion in the same period last year.
Assocham said the export crisis goes well beyond petroleum products, gems and jewellery to highly job-oriented leather and leather products and has engulfed the entire agriculture exports sector.
The Federation of Indian Chambers of Commerce and Industry said, citing its survey, that the outlook for India's manufacturing sector for the third quarter ending December appear to be weakening mainly on account of sustained sluggish exports. - India may be the third largest economy after 2030: Study
India could become the world's third largest economy after 2030 and its ascension could see France and Italy kicked out of the exclusive G8 group or its membership increased to 10 to accommodate India and Brazil, according to a new study.
According to a report by the UK think tank Centre for Economics Business and Research (CEBR), China will overtake the US as the largest economy in the world in 2029 with the US slipping to second place and India close behind at third.
India's projected GDP in 2030 was USD 10,133 billion, behind America's USD 32,996 billion and China at the top with a projected GDP of USD 34,338 billion. However, India will become the largest economy in the Commonwealth in 2019 when its economy overtakes the British economy.
The study also says that India is finally starting to catch up with China and will eventually overtake the Communist-giant in the second half of the century. Britain will move up to take fourth spot and Brazil will complete the top five.
Europe's third and fourth largest economies will be replaced by India and Brazil in the G8 over the next 15 years, the report says. As Brazil and India meet the political criteria for membership of the exclusive G8 club of developed democracies, their ascension could see France and Italy kicked out of the group, or the club expanded to a G10 as more economies join, the report says.
The UK meanwhile is set to become the best performing economy in the western world over the next 15 years, boosted by its leading position in global software and IT sectors.
The CEBR said France's "dire" economic prospects will see it fall from the world's 5th to 9th largest economy by 2030. Italy - currently 8th in the global league table - is also going through tough times.
Since joining the euro in 2000, GDP growth has remained flat, making it the slowest growing economy of any major developed nation. Europe's largest economy, Germany, will maintain its position in the world's leading economies as its declining population receives a welcome boost of a 1.5 million refugees and migrants, according to the analysis. - RBI takes woman, girl-child route to financial inclusion
In a bid to push financial inclusion, an RBI panel has recommended a slew of measures, including a special deposit scheme for the girl child, government-to-person social cash transfer, and opening interest-free windows (Islamic banking) by banks.
To address the problem of a large number of women being left out of the financial system, the committee on medium-term path on financial inclusion chaired by RBI Executive Director Deepak Mohanty said banks have to step up account opening for women.
The committee suggested that the government consider a welfare scheme — Sukanya Shiksha — that can be jointly funded by the Central and State governments.
The scheme will link education with banking habits by crediting a nominal amount in the name of each girl child belonging to the lower income group who enrols in middle school.
This would make it incumbent on the school and the lead bank and its designated branch to open an account for social cash transfer. This scheme will also have the benefit of lowering school dropout rates and empowering the girl child.
Given the low level of personal disposable income, particularly for the bottom quartile of the population, the RBI committee is of the view that meaningful financial inclusion will not happen without Government-to-Person (G2P) social cash transfers.
The committee said there is a need for better use of the mobile banking facility for G2P payments, and this would push government in its financial inclusion drive. The committee also recommended that a unique biometric identifier such as Aadhaar be linked to each individual credit account and the information shared with credit information companies. This will not only help in identifying multiple accounts, but will also help mitigate the overall indebtedness of individuals who are often lured into multiple borrowings without being aware of the consequences.
The committee recommended that commercial banks in India be enabled to open specialised interest-free windows with simple products. In an interest-free banking structure, the bank accepting deposits will not engage in lending as a purely financial activity but undertakes operations on the basis of profit and loss sharing by engaging in equity and/or trade financing.
Other recommendations- To increase formal credit to all agrarian segments, the committee said digitisation of land records is the way forward.
- This should be backed by an Aadhaar-linked mechanism for credit eligibility certificates to facilitate credit flow to actual cultivators. The panel suggested phasing out the agricultural interest subvention scheme and ploughing the subsidy amount into an affordable technology-aided universal crop insurance scheme with a monetary ceiling of Rs. 2 lakh to end agrarian distress.
- To encourage discipline in loan repayments, the panel recommended a scheme of ‘Gold KCC’ (Kisan Credit Card) with higher flexibility for borrowers with prompt repayment records.
- This move could be dovetailed with a government-sponsored personal insurance, and digitisation of the KCC to track expenditure pattern.
- Kelkar panel suggests easier funding for PPP projects in infrastructure sector
A committee on reviving Public Private Partnership, PPP model has suggested the government to encourage development of infrastructure sectors by ensuring easier funding. The host of recommendations suggested by the Vijay Kelkar Committee, include review of the model concession agreements, raising of funds through zero coupon bonds and setting up of independent sectoral regulators.
The report uploaded on Finance Ministry's website on 28th December has called for better identification and allocations of risks between the stakeholders and the contracts for the PPP projects.
It said, there should be more focus on service delivery than fiscal benefits. The committee has recommended amendment to Prevention of Corruption Act to distinguish between genuine errors in decision making and corrupt practices.
PPPs are an important policy instrument that will enable India to compress time in this journey towards economic growth and development. The report was submitted by Kelkar to Finance Minister Arun Jaitley in November 2015. - Selection panel for Sebi chief reset; PMO nominee included
As the search continues for next chief of the markets regulator Sebi, the government has reconstituted the search-cum-selection panel which would now include a representative from the Prime Minister's Office. An official order said that members of the revamped panel will accordingly include Additional Principal Secretary to the Prime Minister, Economic Affairs Secretary and three experts of repute (who are to be nominated by the central government from a panel of experts in the area of finance, economics, law, public administration, financial markets and other related subjects maintained by it). - LPG subsidy to be withdrawn from consumers having taxable income of more than Rs 10 lakh
LPG subsidy will not be available to consumers who had taxable income of more than ten lakh rupees in previous financial year. In a release Petroleum and Natural Gas Ministry said, this will be given effect to initially on self-declaration basis while booking cylinders from next month. At present, there are about 16.5 crore LPG consumers in the country.
While many of them have given up subsidy voluntarily, it is felt that consumers in the higher income bracket should get LPG cylinders at the market price. So far, 57.50 lakh LPG consumers have opted out of LPG subsidy voluntarily heeding to the Prime Minister's call to give up the subsidy. The subsidy saved from the ‘Give it Up’ campaign is being utilized for providing new connections to the BPL families under the ‘Give back’ campaign.
The objective of the scheme is to ensure that the subsidy benefits go to the targeted group. This enables provision of LPG, a clean fuel, to poor households by replacing the conventional fuels such as kerosene, coal, fuel wood and cow dung. The Ministry said, the subsidy is being transferred directly to the Bank Account of 14.78 crore LPG Consumers under the implementation of the PAHAL Scheme, DBTL. - Microsoft in pact with AP for cloud solutions
Microsoft will help Andhra Pradesh in using cloud solutions to help deliver digital services better. The State government has signed an agreement with the Redmond (US)-based company here to improve access, deployment and use of information technology and communication (ICT) to offer better citizen services and drive digital inclusion.
The MoU was signed during the meeting of Microsoft Chief Executive Officer Satya Nadella’s with Andhra Pradesh Chief Minister N Chandrababu Naidu. Microsoft India will support building of up to three proof-of-concept (POC) solutions to apply Microsoft Azure Machine Learning and Advanced Visualisation in the fields of education, agriculture and eCitizen services.
These POC solutions will be built and deployed to address specific problems within each of the fields to achieve better outcomes for the State. The company would conduct a workshop where it would expose top officials to productivity technologies developed by it. - Govt. further relaxes rules for selling natural gas
The government has further relaxed rules for selling natural gas produced from small and isolated fields by waiving-off time stipulation for fields located in the North East India.
The Oil Ministry had in July 2013 allowed pricing freedom for gas produced from small, isolated fields and given marketing freedom by imposing no obligation of seeking customers only from the fertilizer and power sectors. The policy however stipulated that only those customers who can take supply within 90-days be sold the gas. In view of the difficulties faced by customers of North East Region, this timeline has now been extended to one year in Oil Ministry's new order.
Current gas price as per the formula approved by the BJP-led government in October last year, is 4.24 dollar per million British thermal unit. - Green signal to Dholera Airport in Gujarat
Civil Aviation Ministry has given clearance for four greenfield airports including the Rs 1,378 crore international airport at Dholera in Gujarat, which is expected to reduce air traffic load at the existing Ahmedabad airport. The three other greenfield airports are proposed to be set up in Andhra Pradesh, with two of them likely to be no-frills ones.
The Environment Ministry has already given environmental clearance to Rs 1,378 crore airport project at Dholera in Ahmedabad last year. The Ministry has also given its go ahead for development of a greenfield airport in Nellore and Kurnool districts of Andhra Pradesh under a public-private partnership. - CARE Ratings signs MoU with Japan Credit Agency
Credit Analysis and Research (CARE Ratings) on 29th December informed the exchanges that it had signed a memorandum of understanding (MoU) with Japan Credit Rating Agency Ltd. (JCR). This MoU is to collaborate with each other as strategic business partners. CARE ratings said that they had agreed to cooperate with each other to maximise their support for the Indian and Japanese companies’ funding and other business activities. - Govt hikes outlay of roof top small solar power plants to Rs 5,000 crore
The Cabinet Committee on Economic Affairs (CCEA) has approved upscaling of Grid connected rooftop and small solar power plants programme to Rs 5000 crore . The Ministry of New and Renewable Energy's financial outlay for 12th plan was Rs 600 crore for grid interactive rooftop and small solar system.
The government is providing financial assistance of 15 per cent of the benchmark cost for installation of grid connected rooftop solar system/project on four categories of building - residential, institutional, government and social sector. Under residential class, all types of residential buildings are covered.
The institutional category covers schools, health institutions including medical colleges and hospitals, educational institution (public and private) and R&D institutes. All Panchayati Raj buildings are also covered under this category.
In the social sector category, all community centres, welfare homes, old age homes, orphanages, common service centres, common workshop for artisans or craftsman, facilities for usage of communities and any other establishment for common use are eligible for financial assistance for installing grid connected rooftop solar system. - Use Rs. 2,000-cr financial inclusion fund to set up more ATMs, says RBI panel
In view of the low penetration of ATMs in rural and semi-urban centres, a Reserve Bank of India panel has recommended that the Rs. 2,000 crore Financial Inclusion Fund should be utilised to encourage installation of ATMs in these centres.
The RBI’s committee on medium-term path on financial inclusion observed that as of 2014 there were only 18 ATMs per one lakh adult population in India against over 65 in South Africa and over 180 in Russia. The objective of FIF, which is managed by the National Bank for Agriculture and Rural Development, is to support “developmental and promotional activities” including creating financial inclusion (FI) infrastructure across the country, capacity building of stakeholders, creating awareness to address demand-side issues.
The Committee, headed by Deepak Mohanty, Executive Director, RBI, is of the view that installing more ATMs in rural and semi-urban centres will create more touch points for customers. As at October-end 2015, there were 1,90,827 ATMs in the country.
The Committee recommended that interoperability of micro ATMs should be allowed to facilitate the usage of cards by customers in semi-urban and rural areas across any bank micro ATM and Business Correspondent (BC). For this, connectivity of micro ATMs to the National Financial Switch should be enabled. Adequate checks and balances should be put in place to ensure customer protection and system safeguards.
Micro ATMs are handheld devices (usually operated by BCs) that allow customers to perform basic financial transactions using only their Aadhaar number and their biometric/OTP as identity proof (along with a Bank Identification Number for inter-bank transactions).
Unlike an ATM, the cash-in/cash-out functions of the micro ATM are performed by an operator. These devices support transactions such as deposit, cash withdrawal, funds transfer and balance enquiry. A BC is appointed by a bank and provides access to basic banking services using the micro ATM.
The panel felt that although a quantum jump in banking access has taken place, a significant element of regional exclusion persists for various reasons that need to be addressed by stepping up the inclusion drive in the north-eastern, eastern and central States to achieve near-universal access.
This may entail a change in banks’ traditional business model through greater reliance on mobile technology for ‘last mile’ service delivery. - Govt makes PAN mandatory for transactions of over Rs 2 lakhs
The government has made it mandatory to quote Permanent Account Number, PAN for all transactions in excess of Rs 2 lakh regardless of the mode of payment through cash, cheques or debit or credit cards to curb black money. The new rule which will come into effect from tomorrow will cover purchases of all goods and services.
To bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, the Government has enhanced the monetary limits of certain transactions which require quoting of PAN. For sale or purchase of immovable property, the monetary limit will now be Rs 10 lakh as against Rs 5 lakh.
The monetary limit has been raised from 25 thousand to 50 thousand in case of hotel or restaurant bills paid at any one time and for bills on account of overseas travel.
In case of purchase or sale of shares of an unlisted company, the limit has also been raised to Rs 1 lakh from 50 thousand.The amendment rules which were notified yesterday are aimed at widening the tax net by non-intrusive methods. The new rules also expected to help in curbing black money and move towards a cashless economy. - Now file cheque bounce cases locally
People can now file cheque bounce cases at the place where the cheque is presented for clearance and not at the place of issue, as per the new law which got the President assent recently. According to Official, the Negotiable Instruments (Amendment) Act, 2015 received President Pranab Mukherjee's nod. There are an estimated 18 lakh cheque bounce cases across the country, of which about 38 thousand are pending in High Courts. Some litigants have to travel to different places from where the cheques were issued and not honoured. The Negotiable Instruments (Amendment) Bill, 2015 was passed by Parliament in the recently concluded Winter Session. - World Bank offers $50 million loan for minority education
The World Bank signed a credit agreement of $50 million with the government on 31st December for education and skill training for minorities. The Education and Skills Training for Minorities Project, to help young people from minority communities complete education and gain from market-driven training programmes with the aim of improving their employment outcome,” World Bank said in a statement.
The project will support the government’s national Nai Manzil (New Horizon) scheme, which was launched in August. The project will reach out to disadvantaged youth from minority communities and support their enrolment in open schooling as well as provide hands-on vocational training.
It will also provide post-placement support in finding sustainable employment, the statement said. “Interventions under this project will support the Nai Manzil Scheme in improving employability and performance of minority youth in the labour market,” said Raj Kumar, joint secretary of economic affairs in the finance ministry.
The loan agreement was signed by Kumar and World Bank’s Michael Haney, the operations advisor in India. Credit will be facilitated by the World Bank’s concessionary lending arm, International Development Association. The loan carries a maturity of 25 years, including a five-year grace period. - Assocham pegs growth at 8.1-8.2% for FY16
The finance ministry's mid-year analysis slashed economic growth projections from 8.1-8.5 per cent to 7-7.5 per cent for 2015-16. Asia's third-largest economy is now expected to grow 7-7.5 per cent in the year ending in March 2016," the finance ministry said in its mid-year economic review.
In the first half of 2015-16, the country's economy expanded only 7. 2 per cent. Assocham made quite an optimistic forecast of nine per cent and above growth in 2016-17, if the government and the Congress come together and clear the goods and services tax Constitutional amendment Bill in Parliament and it is rolled out from April 2016.
For the current financial year, Assocham said the latest revival in manufacturing which helped overall index of industrial production reach 9.8 per cent in October, along with a robust pick-up in electricity and capital goods would trigger the growth trajectory. In the process, a lot more activities in the services would get a boost.
The number of passengers handled by the civil aviation sector in the second quarter of the current financial year went up by 17 per cent. So was the case with commercial vehicles, which registered a growth of 10.7 per cent, another indicator of a pick-up in economic activity, it said.
There was a catch-up seen by 3.5 per cent in the case of civil aviation cargo and 3.9 per cent by major ports during the second quarter of 2015-16. - Centre sanctions over Rs 2000 crore to states affected by drought, landslides and flood
The Centre on 21st December sanctioned an assistance of Rs 2443 crore from the National Disaster Relief Fund to four States affected by drought, landslides and flood. An assistance of 925 crore rupees was approved for Chhattisgarh, 1104 Crore for West Bengal, Rs 34 crore for Manipur and Rs 380 crore for Odisha during the meeting of the High Level Committee chaired by Home Minister Rajnath Singh in New Delhi on 21st December.
The Committee examined the proposals based on the report of the Central team which visited the states affected by severe Natural Disasters. - CAG flays under-utilisation of 4 Central hydro power units
The Comptroller and Auditor General of India (CAG) has found that at least four hydro power stations of Central public sector units were operating below capacity during 2009 and 2014.
The findings were part of the CAG’s audit report on NHPC Lt, SJVN Ltd, THDC India Ltd and NHDC Ltd which was laid in Parliament on 21st December. The performance audit covers activities from generation of electricity to collection of revenue between April 2009 and March 2014 by power stations of the four hydro power Central Public Sector units.
One of the main objectives of hydro CPSEs (Central Public Sector Enterprises) was to operate and maintain power station with maximum efficiency. However, the average capacity utilisation factor of four power stations of NHPC were below their respective design capacity utilisation factor and THDC has not so far been permitted to fill the reservoir up to Full Reservoir Level,” the findings of the CAG report said.
The CAG found that despite rehabilitation of families done by the Uttarakhand government at a cost of Rs.972.97 crore, the Tehri Hydro Power Station has not been permitted to fill the reservoir resulting in under utilisation of the plant.
While criticising the under utilisation of the hydro power plants, the CAG also found that distribution utilities of Delhi, Uttar Pradesh, Jammu & Kashmir and Bihar owed hydro power CPSEs failed to clear dues of Rs. 4,112.49 crore at the end of 2014-15 as against Rs. 397.95 crore at the end of 2009-10.
The report also found that the hydro power stations suffered forced outages during the monsoon season of 2009 to 2014.
This resulted in the power stations not meeting the operational norms of Central Electricity Regulatory Commission that machines of hydro power plants should be available for 24 hours during monsoons. “The machines of CPSEs suffered forced outages aggregating 9871 hours during monsoon periods of 2009-14,” the report added.
The CAG also pointed to improper flushing operations reducing the reservoir capacity due to silt deposit at the bottom of the reservoirs. - AP Assembly passes Bill to regulate money lending
Cracking the whip on private moneylenders, the Andhra Pradesh State government has decided to forthwith make it mandatory for them to obtain licence for carrying out the business.
The interested parties should also pay security deposit ranging from Rs. 5,000 to Rs. 2.5 lakh depending on the size of the lending in addition to arranging for display boards at their respective businesses comprising their names as also the quantum of interest they would charge.
The Assembly on 21st December passed the Andhra Pradesh Money Lenders Bill, 2015 incorporating various penal provisions, including a jail term of up to three years and fine of Rs. 1 lakh to check the exorbitant interests charged from the gullible people.
Piloting the Bill, Deputy Chief Minister and Home Minister N. Chinarajappa said offences under the new Act would be made cognisable and a designated special court would be constituted to try cases relating to sexual exploitation of women.
Moneylenders should forthwith keep the book of accounts and it should be open for inspection by the licensing authorities like a revenue officer of the rank of Tahsildar.
The accounts of the moneylenders should be audited at least once a year by a chartered accountant and the documents should also be electronically posted.
The officials concerned were vested with powers to summon witnesses. Licence for moneylenders would be refused if the applicant was found guilty of fraud and when a moneylender refuses to accept the whole or any portion of the money due, the debtor could deposit the said amount in the court having jurisdiction to entertain a suit for recovery.
The enactment of the legislation, Mr. China Rajappa said, was necessitated as there was no consolidated law governing moneylenders in the State. Though there was the Andhra Pradesh (Telangana area) Money Lenders Act, it was applicable only for the State of Telangana. Though the then government had introduced a Money Lenders Bill in 2000 based on the suggestions made by the select committee, the same could not become an Act and the Bill was returned to the State post bifurcation.
The Minister said moneylenders would be given licence within 30 days of application and the licence would be deemed to have been issued if the officials concerned failed to sanction the same within the period. Responding to the members’ suggestion on the high interest rates charged, he said the government would soon communicate the maximum rate of interest that could be charged from the debtors and separate guidelines would soon follow in this regard. - Private Universities Bill passed:The Andhra Pradesh State government has decided to permit private companies to set up universities as part of efforts to create world-class centres for higher learning. The Legislative Assembly passed a legislation Andhra Pradesh Private Universities (Establishment and Regulation) Bill, 2015.
Introducing the Bill, HRD Minister Ganta Srinivasa Rao said the objective of the legislation was to create and disseminate knowledge across a broad range of disciplines. It envisaged engaging students in the process of discovery of critical thinking and inculcating in them the habit of learning besides focussing on research, innovation and entrepreneurship.
The Bill would enable a seamless ecosystem of best in class education which was sustainable and futuristic. It was introduced in the light of private universities that had been established in various States by private bodies without financial assistance from the Government.
The Government had conducted a detailed exercise before introducing the Bill by constituting an expert panel to finalise the modalities and incorporating the views of all stakeholders including the former vice-chancellors.
Responding to doubts that the economically weaker sections could not afford the fee charged by these private entities, he said the Government would extend assistance to such students whoever was willing to take these courses. - Cabinet approves Rs 3,000-cr scheme for fisheries sector
Cabinet Committee on Economic Affairs (CCEA) has given its approval for implementation of an umbrella scheme for integrated development and management of fisheries. The scheme will be implemented at an outlay of 3,000 crore rupees, for a period of five years.
It will cover development and management of inland fisheries, aquaculture, marine fisheries and all activities undertaken by the National Fisheries Development Board (NFDB) towards realizing Blue Revolution. The scheme aims development and management of fisheries and aquaculture sector to ensure a sustained annual growth rate of 6 to 8 percent. It will be implemented in all the States including North East States and Union Territories.
The CCEA also approved investment of 5 thousand crore rupees by Oil and Natural Gas Company Limited (ONGC) into the equity share capital of ONGC Videsh. The approved investment will strengthen the capital base of ONGC Videsh. It will enhance the ability of ONGC to undertake overseas Exploration and Production business, thereby improving the energy security of the country. - 10% increase in rural spending: Official data
According to the Official data, nearly 10 per cent increase happened in real expenditure on agriculture and rural development in the first six months of this year over the corresponding period last year. No belt-tightening is visible in the health sector with expenditure rising. The increases are substantial both in absolute terms as well as a percentage of GDP.
Actual plan spending by the Rural Development Ministry touched Rs 48,204 crore in April–September 2015, up from Rs 45,050 crore in the corresponding period last year.
Spending by the Ministry of Urban Development has surged to Rs 7,031 crore from Rs 5,532 crore. The Health Ministry’s planned spending is up to Rs 15,020 crore from Rs 14,250 crore. Spending on education too is up by Rs 6,700 crore though its share in the overall GDP declined marginally.
The quality of spending has improved too with the shift in expenditure away from current to capital investments. Data for both Centre and States shows aggregate capital expenditure is up by 0.5 percentage point of GDP.
In real terms, this translates in to a 25 per cent jump. Of this, the Centre contributed 60 per cent and the rest came from the States. There is a corresponding reduction of 0.3 percentage points in revenue expenditures as a percent of GDP. - RBI extends deadline to exchange pre-2005 notes to June 30
Reserve Bank on 23rd December extended the deadline for exchanging pre-2005 currency notes of various denominations by another six months to June 30, 2016. The decision to extend the deadline was notified by the apex bank. The Reserve Bank had, in June 2015, set the last date for public to exchange pre-2005 banknotes notes as December 31, 2015. - Govt scraps minimum export price on onions to boost export
The government on 24th December scraped the minimum export price (MEP) on onions. The decision is expected to encourage out-bound shipments of onion. In a notification, Directorate General of Foreign Trade said that now all varieties of onions can be exported without any MEP. The MEP is the rate below which no trader is allowed to export. The rise in MEP restricts exports and improves domestic supply.
In August, the government had hiked MEP of onion to 700 dollar per tonne as prices at both wholesale and retail levels skyrocketed on lower output due to unseasonal rains. The Maharashtra government had recently asked the Centre to scrap the minimum export price for onions to help boost overseas shipments after its wholesale price went down to 10 rupees per kilogram. - Indian Oil, Oil India sign MoU with Rosneft
Indian Oil Corporation and Oil India Ltd have signed a memorandum of understanding with Russian national oil company Rosneft for co-operation in geologic survey, exploration and production of hydrocarbons in select onshore areas in Russia.
The MoU was signed during the visit of Prime Minister Narendra Modi to Russia. In all, 16 agreements were signed between Indian and Russian firms in the field of nuclear energy, hydrocarbon, defence and other sectors.
The MoU document lays the foundation for a long-term partnership between Indian Oil, OIL and Rosneft. - 41 more housing finance firms allowed to use SARFAESI law
The Finance Ministry has allowed 41 more housing finance companies (HFCs) to use the SARFAESI law, bolstering their efforts in recovery of dues and thereby reducing their non-performing assets.
This move of the Department of Financial Services (DFS) is also expected to build confidence among the HFCs to lend more to the vulnerable section of society, thereby aiding financial inclusion.
Taken together with the 19 HFCs notified earlier for using SARFAESI law, almost the entire housing finance industry regulated by the National Housing Bank can now use this law for recovery of their dues.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, empowers banks and financial institutions to attach pledged assets of the borrower in the event of the non-repayment of dues by the borrower.
NPA situation
Housing finance (residential mortgage) has been growing at a scorching pace (about 20 per cent in the case of HFCs) with total outstanding home loan portfolio estimated at about Rs. 10 lakh crore as of December 31, 2014. Currently, the non-performing assets level for HFCs is miniscule. Their gross NPAs as on December 31, 2014 stood at 0.74 per cent. Despite the stress in their operating environment, many HFCs have been able to maintain their asset quality.
Of the housing loan book of Rs. 10 lakh crore, banks accounted for as much as Rs. 6.3 lakh crore while the remaining Rs. 3.7 lakh crore came from the HFCs.
The housing finance market is dominated by five major groups — State Bank of India, LIC Housing Finance, HDFC, ICICI Bank and Axis Bank. The five entities account for over 60 per cent of housing credit in the country. - Around 21 Companies raise Rs 13,600 crore in IPO market; highest in 5 years
Around 21 companies have entered the Initial Public Offering (IPO) market on Dalal Street in 2015 with initial public offers to garner Rs 13,600 crore - the highest in five years - and an impressive pipeline is already in place for the New Year.
While IPOs worth Rs 14,000 crore are already in the final stages of hitting the market, experts say the overall pipeline currently stands at well in excess of Rs 50,000 crore.
Adding to the depth of the IPO market, companies from diverse sectors like renewable energy, quick service restaurants, logistics, pharmaceutical, electronics and airlines have made their way into the IPO space this year. The total funds collected by the 21 IPOs in 2015 is the highest since Rs 37,534.65 crore garnered in 2010.
As an icing on the cake, the year has seen as many as 60% of the newly-listed stocks trading at a high premium over their issue prices, as against most of the stocks trending below issue price in previous years.
The star performers this year include InterGlobe Aviation which runs the country's largest airline IndiGo (Rs 3,017 crore), Coffee Day Enterprises that owns the largest coffee chain Cafe Coffee Day (Rs 1,150 crore), Alkem Laboratories (Rs 1,350 crore) and Inox Wind (Rs 1,020 crore).
The sectors represented on the IPO market also included engineering (Power Mech Projects), beverages (Manpasand Beverages), milk and dairy products (Prabhat Dairy). - FDI in Services Up 20% in Fiscal First Half
With the government taking steps to improve ease of doing business and attract investments, FDI (foreign direct investment) inflows into the services sector grew by about 20 per cent to $1.46 billion (Rs 9,404 crore) in the first six months of the current fiscal year.
The services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, had received FDI worth $1.22 billion (Rs 7,366 crore) in the same period last fiscal year, data from the Department of Industrial Policy and Promotion (DIPP) showed.
Earlier this year, the government hiked the FDI cap in insurance sector to 49 per cent. In banking sector also, the government has eased the norms and permitted portfolio investors to buy up to 74 per cent stake in local private banks with full fungibility.
Other sectors which have attracted healthy foreign inflows during the first half of this fiscal include computer software and hardware ($3.05 billion), trading ($2.3 billion) and automobile ($1.46 billion). Strong inflows in these sectors propelled the overall FDI into the country by 13 per cent to $16.63 billion during April-September 2015.
The government has announced a series of steps like fixing timeliness for approvals to improve the ease of doing business in the country. The services sector contributes about 60 per cent to India's GDP and receives high foreign inflows.
Foreign investments are considered crucial for India, which needs around $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 strengthens the rupee. - NPCIL can now form joint ventures with PSUs
The Lok Sabha passed the Atomic Energy (Amendment) Bill, 2015 on 14th December which will allow Nuclear Power Corporation of India Ltd (NPCIL) to form joint ventures with other public sector units for setting up civil nuclear power plants in the country.
The Bill would now need the approval from the Rajya Sabha.
Till now, the Atomic Energy Act only allowed NPCIL and Bhartiya Nabhikiya Vidyut Nigam Ltd to build and operate nuclear power plants. Several central government public sector units, including the likes of hydrocarbon exploration & production company ONGC, steelmaker Steel Authority of India Ltd and others, have in the past expressed interest to invest in the sector.
Jitendra Singh, Minister of State for the Department of Atomic Energy, said in the Lok Sabha that the changes will now allow State governments to be part of the nuclear energy programme by investing through state owned corporations.
The existing Atomic Energy Act defined ‘Government Company’ as a company where not less than 51 per cent stake is held by the Central government. This prevented NPCIL from entering into joint-venture with any other public sector units.
The amendments now allow NPCIL to form joint ventures with both central and state public sector units. The amendments would also allow the government to issue licences to such joint venture to set up nuclear power plants, take measures for safe operation and ensure safe disposal of nuclear material. - Japan hands out deal for Mumbai-Ahmedabad bullet train
The longest loan tenor, longest moratorium on repayment, and lowest interest rate — three terms define the finance extended by Japan to India for the Mumbai-Ahmedabad high speed train project, in context of Japan’s earlier loans in the rail-based sector.
The Japanese loan component of $12 billion has been worked out on one of the most attractive repayment terms at 0.1 per cent, after strong negotiations for financing, with a 15-year moratorium on a 50-year repayment period. Funds for freight corridor have been extended with 0.2 per cent interest rate and 40 years, with a 1-year moratorium.
The deal requires supply of eight-ten Japanese technology items such as rolling stock (train set), signalling and telecommunication systems. But this works out to be about 20-22 per cent, much lower than the extent of tied-component of 30 per cent in case of dedicated freight corridor
According to an official statement, Japan has offered an assistance of over Rs. 79,000 crore. The loan is for a period of 50 years with 15 years moratorium, carrying an interest rate of 0.1 per cent. The project is a 508-km line, costing a total of Rs. 97,636 crore.
The project will be implemented over a period of seven years. It has been agreed that for the Mumbai–Ahmedabad HSR Project, Shinkansen Technology (Japanese high speed technology) will be adopted. The cooperation of Japan will be fixed on transfer of technology and ‘Make in India’. The project structuring and administrative details will have to be worked out. - Rules regarding quoting of PAN for specified transactions amended
The Government has enhanced the monetary limits of certain transactions which require quoting of PAN. The monetary limits have now been raised to Rs. 10 lakh from Rs. 5 lakh for sale or purchase of immovable property, to Rs.50,000 from Rs. 25,000 in the case of hotel or restaurant bills paid at any one time, and to Rs. 1 lakh from Rs. 50,000 for purchase or sale of shares of an unlisted company.
In keeping with the Government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan Account will not require PAN. Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks. The changes to the Rules will take effect from 1st January, 2016. - FDI in services rises 20% to $1.46 bn in first half of FY16
The Foreign Direct Investment, FDI inflows into the services sector grew by about 20 per cent to 1.46 billion dollars in the first six months of the current fiscal. According to the data of Department of Industrial Policy and Promotion, the services sector, which includes banking, insurance, outsourcing, Research and Development, courier and technology testing, had received FDI worth 1.22 billion dollars in the same period last fiscal.
According to experts, measures announced by the government are helping these sectors attract more investments. Earlier this year, the government hiked the FDI cap in insurance sector to 49 per cent. In banking sector also, the government has eased the norms and permitted portfolio investors to buy up to 74 per cent stake in local private banks.
Other sectors which have attracted healthy foreign inflows during the first half of this fiscal include computer software and hardware which amounts to 3.05 billion dollars, trading 2.3 billion and automobile 1.46 billion. Strong inflows in these sectors propelled the overall FDI into the country by 13 per cent to 16.63 billion dollars during April-September 2015.
The government has announced a series of steps like fixing timeliness for approvals to improve the ease of doing business in the country. The services sector contributes about 60 per cent to India’s GDP and receives high foreign inflows. - World Bank approves $1.5bn to support clean India campaign
The World Bank has approved a 1.5 billion dollar loan to India for its ambitious 'Clean India' campaign to support the government's efforts to improved rural sanitation and end the practice of open defecation by 2019. The loan, to be disbursed over a five-year period, will be used for the Swachh Bharat Mission (SBM) Support Operation Project.
As per World Bank statistics, of the 2.4 billion people who lack access to improved sanitation globally, more than 750 million live in India, with 80 per cent living in rural areas. Another 25 million dollars will be provided by the World Bank as technical assistance to build the capacity of select State governments in implementing community-led behavioural change programmes targeting social norms to help ensure widespread use of toilets by rural households. - 80% of social sector spending comes from States’ budgets: YV Reddy
About 80 per cent of social sector spending has come from the States’ budgets in the last 25 years, according to 14th Finance Commission Chairman and former RBI Governor YV Reddy. In his speech at 14th Finance Commission and its implications he said that the Commission did not provide any sector-specific grants to States which was a departure from the past. While examining the various routes for social sector spending, through earmarked cesses and centrally-sponsored schemes, he said in the Indian federal system States are the primary drivers of social sector spending, be it on health or education. Financing social sector through big ticket Central schemes is a phenomenon of the last one-and-a-half decades.
States’ share in the combined social sector expenditure, both Plan and non-Plan, was 90.32 per cent in the 2014-15 Budget while the net of Central transfers in combined social sector expenditure comes to 70.78 per cent. Thus, over 20 per cent of the social sector expenditure by States is funded by Central transfers. - India opposes rich nations’ bid to cherry pick farm issues
India, at the ongoing WTO’s Nairobi meet, called for a balanced outcome in negotiations on agriculture including an agreement on Special Safeguard Mechanism (SSM).
SSM is a trade remedy that will allow developing countries to temporarily increase duties to address import surges and price dips due to heavily subsidised imports of agricultural products from developed countries. SSM is meant to protect the interests of resource-poor and subsistence farmers in the developing nations.
India opposed efforts by the developed world to cherry pick issues from within the ‘Export Competition’ pillar that concerns farm export subsidies reforms, which is either reduction or elimination of such subsidies. India had earlier called for a drastic reduction of farm subsidies in the rich countries,
India has also opposed efforts by the rich countries to link a deal on SSM to that on ‘export competition, as it is sticking to its position that SSM is not up for bargain during the negotiations.
An instrument similar to SSM was already available to a select few countries (especially the developed countries) for over two decades. Therefore, the demand for SSM was reasonable and pragmatic, Commerce Minister, Nirmala Sitharaman
India has already rejected claims by rich countries that there is a broad consensus for a deal during the WTO’ss Nairobi meet on getting rid of farm export subsidies. Brazil and European Union were among those WTO members who have pitched for a deal on ‘Export Competition’ at the ongoing Nairobi Ministerial Conference. A deal, only in ‘Export Competition’ and not on SSM, at the Nairobi meet will disturb the balance in WTO’s agricultural negotiations
Developing and poor countries want rich countries to drastically reduce their trade distorting farm subsidies, while simultaneously seeking adequate flexibility in reducing their own farm export subsidies. Rich countries, on the other hand, have sought greater commitments from emerging markets such as India on undertaking greater commitments on farm export subsidies. India had sought additional flexibility for developing countries so that they can provide such more subsidies on some products, while reducing subsidies on other products. - Interest rate to be based on marginal cost of funds from April 1: RBI
The RBI on 17th December said all banks will have to follow a new and uniform methodology from April next year to calculate base rate as per the marginal cost of funds. The Reserve Bank said that apart from helping borrowers reap the benefit of lower rates, the step will also improve transparency in the methodology followed by banks for determining interest rates on advances.
It added the guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
As per the final guidelines by the Central bank all rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 will be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark for such purposes.
RBI said the MCLR will be a tenor linked internal benchmark and actual lending rates will be determined by adding the components of spread to the MCLR. It also said banks will review and publish their MCLR of different maturities every month on a pre-announced date. It said banks may specify interest reset dates on their floating rate loans. - India ranks 97th on Forbes' best countries for business list
India has been ranked a low 97th out of 144 nations, behind Kazakhstan and Ghana, on Forbes' annual list of the best countries for doing business in 2015, scoring poorly on metrics like trade and monetary freedom and tackling challenges like corruption and violence. The ranking is, however, one step up from last year's 98th rank.
Denmark topped the list of the 144 nations on the Best Countries of Business in 2015 list by Forbes. The US has dropped four spots to number 22, continuing a six-year descent since 2009 when it had ranked second overall.
The US is the financial capital of the world and its largest economy at $17.4 trillion (China is second at $10.4 trillion), but it scores poorly on monetary freedom and bureaucracy or red tape, Forbes said.
India is ranked 97th on the list, with Forbes saying that while the country is developing into an open-market economy, traces of its "past autarkic policies" remain.
The publication added that India faces other challenges like high spending and poorly-targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration. Forbes further said that growth in India last year fell to a decade low, as its economic leaders struggled to improve the country's wide fiscal and current account deficits.
The country performed moderately well on certain factors, ranking eighth on investor protection, 41st on innovation, 57th on personal freedom and 61st on property rights. It scored low on trade freedom, ranking 125th and on monetary freedom it ranked 139th. On technology it ranked 120th, 77th on corruption and 123rd on red tape.
The United Kingdom and Japan both moved up three spots to No 10 and No 23 respectively. Germany improved two places to No 18 and China rose from No 97 to No 94.
South Africa is ranked 47th on the list followed by Mexico (53), Kazakhstan (57), Zambia (73), Ghana (79), Russia (81), Sri Lanka (91), Pakistan (103) and Bangladesh (121).
The very bottom of the list features a number of emerging markets restrained by high levels of corruption and little freedom. - FDI up about 35% in last 17 months on Make in India push: DIPP secy
Claiming that the Make in India initiative has made a “tremendous impact” on investment climate in the country, the department of industrial policy and promotion (DIPP) on 17th December said that following the initiative, foreign direct investment has surged by about 35 per cent in the last 17 months compared to the same period a year ago.
The department is all set to launch a Make in India week in Mumbai next year where over 1,000 companies and delegates are expected to participate from over 60 countries. Prime Minister Narendra Modi will kick off the week-long event on February 13, on the theme of innovation, design and sustainability, the secretary said.
Emphasising that the aim is to attract more FDI into the country, Kant said that the government has been successful in getting substantial investments in areas including electronics, automotive, food processing, textiles and garments, renewable energy and construction.
The department is also taking measures to hold road shows for pushing domestic companies to manufacture in the country. However, the key challenge is to make India the easiest and simplest place to do business, a goal which the government is determined to achieve.
Detailing the progress made in the Smart City initiative, he said that engineering, procurement and construction contracts worth Rs 3,000 crore have been awarded for the upcoming cities of Dholera in Gujarat, Shendra in Maharashtra and Vikram Udyogpuri in Maghya Pradesh, where work has started. Further, the master planning of the Chennai-Bengaluru Industrial Corridor has also been initiated. - Govt revises growth forecast to 7.5% from 8.5 estimated earlier
Chief Economic Adviser Arvind Subramanian on 18th December said inflation has moderated considerably, rupee has been stable and rural wages and Minimum Support Prices are seeing moderation. According to Mr Subramanian, GDP growth would be between 7 and 7.5 percent. Expressing confidence that India will be able to meet fiscal deficit target of 3.9 per cent, he said emphasis is to meet fiscal deficit aim without spending cut.
Mr Subramanian also said fiscal outlook will be a little bit challenging next year. The CEA said economy is recovering, but it is hard to be definitive about length and breadth of recovery. He said indirect tax collections have been very buoyant.
He said, economy is powered by private investment and public consumption at the moment. He also said economy is well-cushioned to absorb any volatility that might come about because of recent US federal reserve actions. - India to contribute 5 Lakh USD to UN annual ERF
India will contribute 5 Lakh US dollars to the United Nations annual Emergency Response Fund, ERF, to support global humanitarian relief operations. India had contributed equal amount in 2014 as well. First Secretary in the Indian Mission to the UN, Abhishek Singh said in New York 17th December, India has been in the forefront of humanitarian action and the country has been responding to several global humanitarian relief operations in keeping with its resources and capabilities.
Noting that the Emergency Response Fund provides funding to world's most neglected and underfunded crises, Singh said the fund extended support in humanitarian emergencies in around 50 countries in 2014. India earlier contributed 10 Million dollars to the Ebola Trust Fund. It also helped in evacuating many foreign nationals from war-torn Yemen this year. - Project completion delays have cost Railways Rs. 1.07 lakh cr: CAG
The Indian Railways needs to revisit all projects that are over 15 years old and that do not fulfil the prescribed rate of return to assess their viability, the Comptroller and Auditor General of India (CAG) has recommended.
Cost overrun: In a report tabled in Parliament on 18th December, the CAG said the delay in completion of projects had resulted in a cost overrun of Rs. 1.07 lakh crore and a throw-forward of Rs. 1.86 lakh crore in respect of 442 ongoing projects.
The Railways needs to prioritise projects on a short-term basis and ensure adequate funding so that ongoing projects are completed in a time-bound manner. The report observed that 75 projects have been ongoing for over 15 years and of these, three were 30 years old.
Also, monitoring the execution of projects at both the Railway Board and zonal levels needs to be strengthened to avoid wasteful expenditure and blocking of funds, said the report. It added that timely completion of strategically important “national projects” needs to be ensured in a coordinated manner.
While the Railway Ministry has put in place processes to speed up the award of contracts, only for 35 per cent of the 442 ongoing projects it had set completion targets, the CAG said. - UP 8th state to join Centre's discom revival scheme
In a major boost for UDAY, the Centre’s reform scheme for ailing power distribution companies, Uttar Pradesh, has joined the scheme. UP is the eighth state to join UDAY after Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand and Rajasthan.
India’s most populous state is powered by near-bankrupt discoms. Top four debt-ridden discoms in the country are Rajasthan, Rs 85,000 crore arrears, Tamil Nadu, Rs 70,000 crore arrears, UP, Rs 32,000 crore arrears, and Haryana, Rs 10,000 crore arrears.
With UP on board, around 40 per cent of debt on India’s power discoms is set to undergo major restructuring. Among the worst performing states, only Tamil Nadu is yet to join the scheme.
The first step of UDAY is taking over discoms’ debt by the respective state government. The discoms collectively owe Rs 4.3 lakh crore to financial institutions. The plan, designed by the Centre and open to all states, would be implemented through a memorandum of agreement with the state governments and the respective discoms. - Govt to set up public debt office via executive order
The government said on 18th December the proposed Public Debt Management Agency (PDMA), an independent office to manage the Centre’s debt, would be set up through an executive order. In its mid-year economic analysis presented in Parliament, the finance ministry said it was in “consultations with the Reserve Bank of India” on setting up the PDMA.
Modelled on independent public debt offices in the US and the UK, India's debt management office will be charged with selling debt on behalf of the government after taking away such powers from RBI.
The ministry has proposed to make PDMA an autonomous agency that will act as an investment banker to the government and will raise capital through bonds for the government. It will be tasked with setting the borrowing calendar as well as deciding on maturities of securities to be issued on behalf of the government. The ministry said the draft Cabinet note for inter-ministerial consultation has been circulated. - India lost Rs 26,200-cr hydrocarbons in past decade: CAG
The Comptroller and Auditor General of India (CAG) has said India lost oil and gas production worth more than Rs 26,200 crore over the past decade due to delays in awarding of the Ratna and R-Series hydrocarbon blocks, located 130 kilometre off the Mumbai coast.
Domestic production of 56 million barrels of crude oil (valuing Rs 25,650 crore) and 920 million standard cubic metre of natural gas (valuing Rs 550 crore) had been deferred during October 2005 to March 2015, the CAG has said in its report tabled in Parliament on 18th December.
Further, government’s take to the tune of Rs 1,050 crore on account of royalty and cess on crude oil and Rs 55 crore towards royalty on natural gas for the period also remained deferred and unrealised, it added. The medium-sized hydrocarbon fields were discovered by state-owned Oil and Natural Gas Corporation (ONGC) and partially developed in 1979. The firm started commercial production from one of the fields in 1983 but stopped operations after the centre put up the fields for competitive bidding for exploitation by private parties.
The fields were awarded in 1996 to a consortium led by Essar Oil and the Union cabinet approved finalising the production sharing contract (PSC) in 1999. However, the issue remained unsettled even after 23 years of the policy decision, 19 years of award and 16 years of approval of Cabinet Committee on Economic Affairs.
Delays in taking final decision on various matters and raising of already settled issues led to repeated assessments of the financial capability of the successful bidders which contributed to further delays. It has also said the redevelopment of the once-producing field, now closed, would cost more than Rs 1,086 crore. The auditor pulled up the government for the delay in decision making – primarily owing to the issue of rate of levy of royalty and cess – even as India imports more than 80 per cent of its crude requirement through costly imports. - Singapore replaces Mauritius as top source of FDI into India
Singapore has replaced Mauritius as the top source of foreign direct investment into India during the first half of the current fiscal. During April to September period, India has attracted 6.69 billion dollars FDI from Singapore while from Mauritius; it received 3.66 billion dollars, according to data from the Department of Industrial Policy and Promotion. Foreign investment from Singapore has more than doubled from 2.41 billion dollars in the year-ago period. - Govt introduces 4 key Bills in Lok Sabha
Four key economic Bills were introduced in the Lok Sabha on 7th December. These Bills sought to bring in legislative changes in atomic energy, potable alcohol, commercial disputes and bonus payments.
Bonus enhancement: Labour Minister Bandaru Dattatreya introduced a Bill to enhance the eligibility limit for bonus payment from Rs. 10,000 per month to Rs. 21,000. Also, the Payment of Bonus (Amendment) Bill 2015 seeks to raise the calculation ceiling from Rs.3,500/month to Rs. 7,000/month or the minimum wage for the scheduled employment, whichever is higher.
If this enhanced ceiling is adopted, then it may lead to additional ad hoc bonus payout of Rs.3,128 crore to employees of the central government, the Railways and the postal department (productivity-linked bonus).
Atomic energy: The Atomic Energy (Amendment) Bill 2015 seeks to widen the scope of a ‘government company’ so as to enable the formation of joint venture companies between Nuclear Power Corporation of India and other PSUs for civil nuclear power projects in the country. The Bill also seeks to enable the Centre to issue licences to such joint venture companies to set up nuclear power plants, take measures for their safe operation and ensure disposal of nuclear material. It also provides for cancellation of licence in case the licensee ceases to be a government company.
Potable alcohol: A Bill to bring industries engaged in the manufacture of ‘potable alcohol’ under the total and exclusive control of States in all respects was also introduced in the Lok Sabha. However, the Centre would continue to be responsible for formulating policy and regulating foreign collaboration (foreign direct investment and foreign technology collaboration agreements) for all products of fermentation industries, including industrial and potable alcohol.
This Industries (Development and Regulation) Amendment Bill 2015 was introduced by Commerce and Industries Minister Nirmala Sitharaman.
The Centre is conforming to the Supreme Court diktat in the Bihar Distillery versus Union of India case, wherein it held that where the removal or clearance is for industrial purposes (other than manufacture of potable alcohol), the levy of excise duty and all other control should be with the Union Government.
Commercial disputes: Union Law Minister Sadananda Gowda introduced a Bill that would pave the way for constitution of commercial courts at the district level.
This Bill — which seeks to replace an existing ordinance promulgated in October this year — would lead to the setting up of a commercial appellate division in all High Courts to hear the appeals against the orders of the commercial courts and the orders of the commercial division of the High Court. - Telangana seeks Rs 2,514 crore central aid for drought relief
Telangana state has sought Rs 2,514 crore central assistance to take up relief activities in the drought affected areas. Briefing the state inter-ministerial team that took up field visit to assess the extent of damage occurred in various drought-affected districts State Chief Secretary Rajiv Sharma asked the team to provide assistance to a maximum extent.
The team headed by Joint Secretary in Agriculture Department Utpal Kumar Singh has assured all possible assistance for the drought affected areas on the occasion.
The central team in three groups is touring in districts. The state Government had declared 231 Mandals, more than two thirds of the total Mandals in the state, as drought affected due to inadequate rainfall and depleting water tables. The team will continue its assessment in the affected areas. - BioAsia 2016 in Hyderabad from Feb 8
The 13th edition of BioAsia annual international convention will be held in Hyderabad during February 8-10, 2016. The three day event is organised by Industries & Commerce Department, Government of Telangana, Federation of Asian Biotech Associations and Pharmaceutical Export Promotion Council.
- Rs 40,000 cr irregularities in govt paddy procurement and milling: CAG
CAG has pointed out alleged irregularities to the tune of Rs 40,564 crore in procurement and milling of paddy meant for subsidised public distribution system (PDS). It also pointed out payment of nearly Rs 18,000 crore as support price to paddy farmers without authentication and undue benefits to the rice millers.
The report of the CAG on Procurement and Milling of Paddy for the Central Pool was tabled in Parliament on 8th December. The Central Auditor has sought revisiting the existing procurement and milling plans and suggested to the government to transfer minimum support price to farmers' accounts directly. CAG has also noticed instances of large scale non-delivery of rice by millers to Food Corporation of India or State Government Agencies in Bihar, Haryana, Odisha, Punjab, Uttar Pradesh and Telangana. - No proper financial management in Tribal Sub-Plan: CAG
Comptroller and Auditor General of India, CAG has detected many instances of underutilisation and diversion of funds under Tribal Sub-Plan. It said, financial management under the Plan is not proper. This was observed during the performance audit report of Tribal Sub-Plan done by CAG from 2011-12 to 2013-14. The CAG's report was tabled in Parliament on 8th December.
The audit noted that up to 2010, there was no linkage between earmarking of funds under TSP and benefits flowing to the tribal people.
Subsequently, efforts were made by Planning Commission to earmark part of funds for TSP in all sectors and schemes. However, the audit found that mechanism in place to ensure proper utilisation of allocated funds is still inadequate. The concept of TSP was started by the government in the Fifth Five Year Plan to ensure that the share of resources is spent for benefit of Scheduled Tribes. - MoU signed on training for workforce in manufacturing sector
Ministry of Skill Development and Entrepreneurship and Department of Heavy Industry on 8th December signed a Memorandum of Understanding for skill development in the manufacturing sector with focus on capital goods and automotive sector.
According to the Union Heavy Industries Minister Anant Geete, the top priority of the government is to create jobs for the 65 per cent population which is young. Partnership with Ministry of Skill Development is important to make people job-ready for the capital goods sector.
The purpose of the MoU is to create centres of excellence for different manufacturing skills and a multi-location national institute of manufacturing technologies for training education and research.
The existing training facilities of Central PSUs such as HMT, BHEL and Instrumentation Ltd will also be upgraded. It will ensure that a robust national ecosystem for development of skills in the manufacturing sector is created in the country and internationally known best practices in this field are brought in with active participation of countries like Germany. It will make India’s manufacturing globally competitive. - Subramanian panel for higher threshold for GST
The government panel to recommend rates for the proposed national goods and services tax (GST) has called for higher threshold. And, said the government could look at relaxing its fiscal deficit target if the rates in question seem likely to mean a revenue shortfall.
The committee, chaired by Chief Economic Advisor Arvind Subramanian, had given its recommendations to the finance minister last week. The contents were disclosed on 9th December.
In the event of a revenue shortfall, the Centre and the States can both raise non-GST taxes (petroleum, tobacco and tobacco products, and alcohol); they can together raise GST rates; and, as a last resort, the Centre could even afford to relax its deficit target, the report said.
That would, it says, be "actually an investment for implementing an unprecedentedly ambitious tax reform with enormous long-run gains; moreover, a moderately higher deficit due to a low GST will benefit consumers, especially poorer ones”.
Minimizing the burden on small taxpayers would call for higher thresholds. This would also achieve a social objective, as poorer households are more likely to buy from smaller outlets.
Last week, Subramanian had said the panel feels the one per extra cent levy proposed on GST for inter-state trade, to help manufacturing states, should be dropped.
It has suggested the main or standard GST rate be 16.9-18.9 per cent, with the preferred rate between 16.9 per cent and 17.7 per cent. The standard rate will apply to most goods and services in the new indirect tax regime. These rates were calculated by excluding real estate, electricity, alcohol and petroleum products.
The panel also recommended other rates, with the lower one for goods at 12 per cent and the highest at 40 per cent. The highest rate is for 'demerit goods' such as alcohol, luxury cars and tobacco. On precious metals, two to six per cent. As this rate increases, the main GST rate should come down.
The report said in the case of a dual rate GST, an 18 per cent standard rate would impact retail inflation by -0.1 per cent if all producers reacted to headline tax changes and 0 per cent if they did so after adjusting for input tax credits as well. Under a dual rate structure, food and beverages would see almost no price increase and neither would fuel and lighting, important for protecting poorer consumers. - Cabinet approves measures to increase production of pulses
The Cabinet Committee on Economic Affairs (CCEA) has approved creation of buffer stock of pulses to deal with wide fluctuation in prices of pulses and check food inflation. The buffer stock will be in place this fiscal itself. As per decision, about 50 thousand tonnes of pulses will be procured from the kharif crop and one lakh tonne from the arrivals of current rabi crop.
Procurement will be done at market prices through Food Corporation of India, NAFED and Small Farmers’ Agribusiness Consortium. The procurement will be done at market price above Minimum Support Price (MSP) out of the Price Stabilisation Fund.
The CCEA also decided to import pulses depending on the requirement through Ministry of Commerce. If the prices fall below MSP, procurement will be made at MSP under Price Support Scheme of Department of Agriculture.
The Ministry of Agriculture has identified lack of availability of new varieties of seeds as an important hindrance in increasing productivity of pulses.
Steps will also be taken to expand the scope of National Food Security Mission from 2016-17 so that additional interventions for increasing production of pulses may be initiated. - CAG pulls up ONGC for poor rig management practices
The Comptroller and Auditor General of India (CAG) has pulled up state-owned Oil and Natural Gas Corporation (ONGC) for poor planning in hiring and use of drilling rigs, which resulted in a loss of Rs 7,995 crore.
The CAG said the firm lacked uniformity in preparation of annual rig requirement plan (RRP), delayed rig acquisitions and hiring, was inconsistent in deployment and had an inefficient repair and refurbishment policy.
ONGC's non-productive time or idling time of rigs ranged between 19 and 23 per cent over 2010-14. The bulk of idling time costing Rs 6,418 crore was due to factors which could have been controlled by the company, CAG said in a report tabled in Parliament on 9th December.
The auditor also raised doubts over the company’s safety procedures for rigs and said it had to spend Rs 1,577.27 crore after a rig snapped from its original location.
ONGC also did not adhere to the repair schedule for dry dock management and major lay-up repairs of jack-up rigs. Failure on the part of the company led to a situation wherein rigs were being operated with outdated and obsolete equipment, CAG said.
The company also failed to decide a policy on acquisition of new offshore rigs for over a decade — from 2002 to 2015. During this time, four out of six offshore rigs outlived their economic usable life of thirty years.
CAG asked ONGC to ensure that the plans are complete and consistent with each other and are complied with. The auditor said drilling activities are key to hydrocarbon production and reserve accretion and constitute the single most significant operation of ONGC, both financially and operationally. - RBI specifies SLR reduction pathway
Reserve Bank of India (RBI) has outlined the path for Statutory Liquidity Ratio (SLR) of scheduled commercial banks, local area banks, primary (Urban) co-operative banks (UCBs), state co-operative banks and central co-operative banks.
This was announced in the fourth bi-monthly monetary policy statement 2015-16 in September 2015. The banking regulator said that it has been decided to reduce it from 21.5% of their Net Demand and Time Liabilities (NDTL) to 21.25% from April 2, 2016, 21% from July 9, 2016, 20.75% from October 1, 2016, and 20.5% from January 7, 2017. - Asia’s oldest chamber BCC&I opens office in Siliguri
The Bengal Chamber of Commerce and Industry (BCC&I), Asia’s oldest industry body, has opened a new office at Siliguri in northern part of West Bengal. The main objective of the Siliguri office will be facilitating the issue of “origin of certificates” facilitating export of goods
Considered to be the gateway of north Bengal and the North Eastern states as well as neighbouring countries like Nepal and Bangladesh, Siliguri is now an economic centre in itself with timber, tea, transport and tourism accounting as the main businesses. The road network through Siliguri is also used for transporting rice and other commodities.
The Siliguri office is expected to help the Chamber work more closely with the many industrial/trade associations in the region, paving the way for more dynamic growth of trade and commerce there. - Credit guarantee scheme for MSMEs in Telangana soon
Telangana will be rolling out a credit guarantee scheme for the micro, small and medium enterprises (MSME) sector with the collaboration of Small Industries Development Bank of India (SIDBI).
This was announced by Arvind Kumar, Secretary, Industries & Commerce, at an insurance awareness consultation campaign organised by Export Credit Guarantee Corporation (ECGC).
With the new scheme, the bankers will be encouraged to extend the sector-specific interventions aimed at encouraging investment, employment creation and overall income generation in the newly created Telangana state.
The new industrial policy of the state had attracted many industrialists in view of its transparency and online processes, he claimed. A new export promotion policy will also be unveiled soon. - ADB grants $1-bn loan for PowerGrid
The Asian Development Bank (ADB) will provide a $500-million government-backed loan and a further $500 million in non-sovereign lending to Power Grid Corporation of India Ltd
The funds will be used to build and upgrade high voltage transmission lines and substations in Rajasthan and Punjab as part of the Government’s Green Energy Corridor initiative
The project will also include new high-voltage direct current terminals in Chhattisgarh, Tamil Nadu and Kerala, boosting interconnectivity between the regions from about 10 gigawatt (GW) to 16 GW. - RBI forms panel to check menace of Chit-fund & various financial irregularities
The Reserve Bank of India has set-up a committee to check the menace of Chit-fund and various financial irregularities in the country. This Committee will work in coordination with the State governments regularly. This was stated by the RBI Governor Mr. Raghuram Rajan, in a press conference in Kolkata on 11th December. Mr. Rajan said that a sub-committee has also been formed to take necessary action against the Chit-funds including Sardah Reality Estate.
With a view to control the money scams, the newly formed Committee has been asked to organize meetings regularly and the banks have been alerted about any financial irregularities or lapses. The financial status of West Bengal has marginally improved said Mr. Rajan. - Unlisted Firms Had Larger Share of FDI Equity in 2014-15: RBI
The Reserve Bank of India on 11th December said unlisted companies had a larger share of foreign direct investment (FDI) equity capital at Rs 3,46,090 crore at face value as compared to listed companies at Rs 11,700 crore in 2014-15.
The share of non-financial companies in total foreign equity participation was much larger at Rs 3,02,950 crore at face value as compared with financial companies at Rs 54,840 crore, according to data released by the RBI on 11th December.
The RBI released data related to the Census on Foreign Liabilities and Assets of Indian Direct Investment Companies for 2014-15. The annual census on foreign liabilities and assets (FLA) covers the Indian companies which submit information on their overseas liabilities and assets arising on account of foreign direct investment (FDI) in the country, their overseas direct investment (ODI) and other investments.
In the 2014-15 round of FLA census, 17,642 companies reported, of which 16,242 companies had FDI/ODI in their balance sheet in March 2015.
Equity participation had a much larger share at 94.1 per cent than debt in total inward FDI, which stood at Rs 19,62,970 crore at market value in March 2015 at Rs 15,06,260 crore a year ago. Total ODI was placed at Rs 5,32,010 crore at market value Rs 5,58,080 crore a year ago. Under ODI too, equity participation had a large share at 79.2 per cent, the data showed.
The ratio of outward to inward direct investment, at market value, declined from 37.1 per cent to 27.1 per cent over this period. Among the source countries for FDI, Mauritius had the largest share at 21.9 per cent followed by the US at 16.9 per cent, the UK at 15.3 per cent, Singapore at 9.5 per cent and Germany at 8 per cent.
The destination for ODI of Indian companies was largely shared by Singapore at 24.7 per cent, Mauritius 15 per cent, the Netherlands at 13 per cent and the USA at 11.8 per cent. - RBI constitutes a committee to check menace of Chit-fund and various financial irregularities
The Reserve Bank of India, RBI, has set-up a committee to check the menace of Chit-fund and various financial irregularities in the country. This Committee will work in coordination with the State governments regularly. According to RBI Governor Raghuram Rajan a sub-committee has also been formed to take necessary action against the Chit-funds including Sardah Reality Estate. With a view to control the money scams, the newly formed Committee has been asked to organize meetings regularly and the banks have been alerted about any financial irregularities or lapses. - GDP growth seen at 7.3-7.6% in July-September
After the seven per cent growth in the first quarter of the current financial year (FY16), most economists estimate gross domestic product (GDP) growth in the second quarter at 7.3-7.6 per cent.
The projected growth would be way below the 8.4 per cent witnessed in the second quarter of FY15. In fact, high GDP growth a year ago would also make economic expansion in the second quarter of this financial year look smaller, due to what is called 'base effect' in technical jargon. The GDP data for the second quarter will be out on Monday. The first quarter number might also see a revision.
While most economists forecast the growth to be 7.3 per cent, Care Ratings Barclays and India Ratings put it bit higher. While Care Ratings expected the growth to be 7.4 per cent, Barclays projected it to be 7.5 per cent and India Ratings forecast it at 7.6 per cent. India Ratings (Ind-Ra) pegged the growth higher than other economists, as it believes the economy expanded that much in volume terms (GDP growth is taken without inflation). - AP sets target of 10K MW by 2020
The Andhra Pradesh State government is taking steps to tap renewable sources of energy. In line with the Central government’s plan to develop solar power capacity of one lakh MW by 2020, the State government finalised an action plan to develop solar power plants with an installed capacity of 10,000 MW by 2020.
According to Energy secretary Ajay Jain as part of the solar mission, the biggest solar park in Asia, with a capacity of 3,500 MW (N P Kunta1,000 MW, Orvakallu 1,000 MW, Talaricheruvu 500 MW and Galiveedu 1,000 MW) is being developed in Anantapur district in association with NTPC and AP Solar Power Corporation. The government also decided to introduce latest technologies and best practices adopted in the West to harness adequate power from energy sources at an affordable price to the domestic consumers. - RBI eases norms for accessing foreign loans
Indian companies will now be able to raise money from foreign regulated financial entities, including pension funds, insurance funds and sovereign wealth funds, with the Reserve Bank of India relaxing rules for offshore borrowings.
The RBI on 30th November unveiled a revised external commercial borrowing (ECB) policy, entailing, among other things, a more liberal approach towards long-term foreign currency borrowings and rupee-denominated ECBs, and expansion of the list of overseas lenders. For example, it has raised the limit for small value ECBs with a three-year maturity to $50 million from the existing $20 million.
There will only be a small negative list that will not be allowed to raise funds via ECBs or rupee-denominated borrowing. This could include stock market operations, real estate activity and purchase of land. ECBs refer to commercial loans in the form of bank loans, securitised instruments buyers’ credit, and suppliers’ credit from non-resident lenders with a minimum average maturity of three years.
According to the RBI, ECBs as a means to attract funds from abroad will continue to be a major tool to calibrate its policy towards capital account management. These guidelines will be reviewed after a year, based on the experience and evolving macroeconomic situation.
To promote long-term foreign currency borrowings, the RBI said such borrowings would come with fewer restrictions on end-use. The extended term will make repayments more sustainable and also minimise roll-over risks for the borrower. Further, resident entities will enjoy a more liberal regime for rupee-denominated ECBs, where the currency risk is borne by the lender. The list of infrastructure entities eligible for ECB has been harmonised with the list of the government. - States get more time to spend funds on micro irrigation
The Agriculture Ministry has extended by a month the deadline for States to utilise funds under the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) for implementation of micro irrigation projects.
Earlier, Agriculture Minister Radha Mohan Singh had said that unutilised funds should be diverted to States that showed better utilisation. About Rs. 1,000 crore had been allocated to States for micro irrigation schemes to be implemented by November but several States were found lagging, at a review meeting held recently. Under the scheme, States were supposed to restore water bodies and converge micro irrigation projects.
The schemes had to be implemented by States but if they failed to do so, then they would stand to lose the funds. So far, of the Rs.1,000 cr. released, only 50 per cent had been utilised. Against a target of 5 lakh hectares, only 1.32 lakh hectares had been brought under micro irrigation.
The programme envisages drought proofing, drip and sprinkler irrigation and tying up with MGNREGS schemes, all of which are within the purview of State governments.
The Minister said some of the States that had suffered crop damage due to drought and deficit southwest monsoon had not even submitted memorandum for drought relief funds.
The Pradhan Mantri Krishi Sinchai Yojana, with an outlay of Rs. 50,000 crore for a period of 5 years (2015-16 to 2019-20), aims to achieve convergence of investments in irrigation at the field level.
It focuses on convergence of ongoing schemes including the Accelerated Irrigation Benefit Programme (AIBP) of the Ministry of Water Resources, River Development & Ganga Rejuvenation; the Integrated Watershed Management Programme (IWMP) of the Department of Land Resources; and On Farm Water Management (OFWM) component of National Mission on Sustainable Agricure (NMSA) of the Department of Agriculture and Cooperation.
The PMKSY has to be implemented in an area development approach, adopting decentralised State-level planning, allowing the States to draw their irrigation development plans based on district/block plans. - RBI keeps repo rate unchanged at 6.75%, CRR at 4%
Reserve Bank of India governor, Raghuram Rajan on December 1st left the key policy interest rate, or repo rate unchanged, at 6.75 percent. In its bi-monthly monetary policy review, the RBI also kept the Cash Reserve Ratio unchanged, at 4 percent. The RBI governor said that uptick in retail inflation, excluding food and fuel, for two months in succession warrants vigilance. Rajan said, the Reserve Bank will use the space for further accommodation, when available, while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017.
On growth, the RBI governor said robust second quarter GDP numbers suggest that the economy is in early stages of recovery. But he retained the RBI's earlier projection of 7.4 per cent growth for the current fiscal. - Govt to launch Rs 10,000-cr fund for domestic electronic firms
The government plans to launch an electronics development fund soon, with a corpus of Rs 10,000 crore to provide financial assistance to firms for electronics manufacturing. The fund, housed with Canbank Venture Capital Fund, will start this month with an initial corpus of Rs 2,500 crore and the rest will be raised from various sources.
US-based chip maker Qualcomm announced $400,000 fund for development of electronic products by Indian entrepreneurs under its ‘Design in India’ programme in association with IT (information technology) industry body National Association of Software and Services Companies (Nasscom).
The programme, started from 1st December, will run till February 29 next year. Qualcomm will shortlist 10 entities which will be eligible for funding of $10,000 each to start prototyping their product idea at Qualcomm’s lab in Bengaluru. Subsequently, it will select three best products and give them funding of $100,000 each.
Engineering export from India was around $18.1 billion in 2014-15. This is the fastest growing segment within the information technology industry and expected to reach $40 billion by 2020. Nasscom President R Chandrashekhar said DeitY has also selected Nasscom to set up an incubation centre for developing an Internet of Things (IOT) ecosystem. - Telangana set to lose Rs1,500 cr Central funds
Telangana State would be losing a whopping Rs 1,500 crore which it was entitled for the implementation of Centrally Sponsored Schemes (CSS) in the current financial year , the changes effected by the Union government in the cost sharing pattern. Besides foregoing its share of funds from the Centre, it would have to bear an additional financial burden of another Rs 1,500 crore on the implementation of these schemes- which in turn would mean an additional burden of Rs 3,000 crore on the State exchequer.
It may be noted that the Union Government has decided to de-link eight Centrally Sponsored Schemes (CSS), including National e-Governance Plan, Backward Regions Grant Funds, Modernisation of Police Forces and Rajiv Gandhi Panchayat Sashaktikaran Abhiyaan (RGPSA), from its support.
As many as 24 CSS will have to be run as per the changed sharing pattern. The State government has already taken up the issue with the NITI Aayog in a meeting held in Delhi.
Finance Department Special Chief Secretary Pradeep Chandra and Planning Department Principal Secretary B P Acharya told NITI Aayog members that cut in the Central funding would prove to be a burdensome for the State. They felt the need for continued funding by the Centre for the ongoing programmes in current financial year as per the original funding pattern. The changes could be effected from the next financial year.
According to the officials, the Centre has cut its share in some CSS. The funding pattern of ICDS has been changed from 75:25 to 65:35 between Centre and State. State government has to bear the cut made by the Centre for 10 percentage points in the case of ICDS. Same is the case with five more schemes. Union government has changed the funding pattern of CSS, in this financial year, as it raised the funds to the states through share in the direct transfer system.
The share of the States has been raised to 42 per cent. NITI Ayog has reviewed the funding pattern to the Centrally Sponsored Schemes and recommended revised funding pattern. Several schemes have been transferred to the states also. State was allocated Rs 17,000 crores in the Union Government budget for the present financial year. With the cut in the CSS grants, this would go down to Rs 15,500 crores in the next financial year.
The State Finance and Planning officials urged the Centre to postpone revised funding pattern and to release grants in the old manner to complete the ongoing programmes under CSS. Apart from this, they have also sought details of transfer of funds to the State, from the Centre and wanted the Centre to give the outlines of the funds that would be granted to the State in the next Union budget.
As the State government wants to present its budget in January next year, notwithstanding the presentation of Union Budget in February, next year, it wants to know in advance about the funds to come from the Centre to prepare its revenue estimations. NITI Ayog conducted the meeting with the heads of Planning and Finance departments of the states, to elicit their opinions on the role of the NITI Ayog in the economic and development related issues of the country. - Celkon launches first 'Made in TS' tablet
Celkon Mobiles is planning to invest Rs 250 crore on setting up new manufacturing units in Hyderabad and Tirupati to produce mobile phones and tablets by mid 2016. The company will raise funds internally to fund the expansion. Telangana IT minister K T Rama Rao formally launched first ‘Made in Telangana’ tablet of Celkon on 1st December in Hyderabad. Priced at Rs 4,999, the tablet comes with a 3G SIM slot which works on Android Lollipop. The 1.2 GHz quadcore, 1GB RAM tablet has 2,800 mAh battery with an expandable memory of 32 GB.
The company which is making 3 lakh devices a moth now is targeting to manufacture 10 lakh phones a month after having the new units in place. It is also going to enter a collaboration with a Chinese company firm shortly to foray into manufacturing of television sets. - Cabinet gives ex-post-facto nod to FDI reforms in 15 sectors
Cabinet on 2nd December gave ex-post-facto nod to recently announced FDI policy reforms in 15 sectors. Last month the government had opened these sectors in a bid to push up reforms. The sectors include real estate, defence, civil aviation and news broadcasting.
The Cabinet also approved setting up of six new Indian Institutes of Technology (IITs) in Andhra Pradesh, Chhatisgarh, Goa, Jammu, Kerala and Karnataka. The Cabinet also gave its approval for their operationalization initially under the Societies Registration Act to give a legal status to them till IIT Act is amended.
Each IIT will have an initial intake of 180 students in its first year which would increase to 450 in the second year and to 928 in the third year. About 1,412 crore rupees is estimated to be incurred between 2015 and 2019 for running these IITs.
The Cabinet also approved the revised cost estimates to the tune of 4,799 crore rupees as against the originally approved cost of 2,500 crore rupees, for setting up of five Indian Institutes of Science Education and Research, IISERs at Kolkata, Pune, Mohali, Bhopal and Thiruvananthapuram.
Approved for rehabilitation package and upgradation of infrastructure of the Bangladeshi enclaves and Cooch Behar district after transfer of enclaves between India and Bangladesh has also been given by the Cabinet. The total financial implication for implementation of various components is around 1006 crores. This includes 898 crores as the fixed cost of strengthening and creation of infrastructure in Cooch Behar district and Bangladesh enclaves in India.
Besides, a variable cost of 107 crore rupees is likely to be incurred for the rehabilitation. The actual variable cost would depend upon the actual number of families returning to India. All the works will be implemented by the State Government or its agencies in a time-frame of 3 to 5 years, and funds will be released by the Ministry of Home Affairs to the State Government as grant-in-aid.
Approval was also given for MoU between Indian and Germany, to expand bilateral development cooperation in the field of Solar Energy and for implementation of Make in India campaign for Capital Goods Sector. In an another decision, Cabinet gave its nod for signing of the agreement between India and Iran on visa facilitation for Diplomatic, Official, Service and Ordinary passport holders.
The Cabinet also gave its nod for a Memorandum of Understanding, MoU between India and Maldives in the field of sports and youth affairs. It also approved signing of a MoU between India and Israel in the field of water resources management and development cooperation. - NRLM interest subvention to 100 more districts
The Cabinet on 2nd December approved some critical changes in key rural development programmes, which would enable targeted intervention for faster poverty reduction.
Interest subvention under the National Rural Livelihood Mission (NRLM) has been extended to 100 more districts, along with the allocation of funds under the Himayat programme. Besides, Deen Dayal Upadhyaya Grameen kaushalya Yojana has been made flexible to enable swift disbursal.
On NRLM, the Cabinet approved the extensive use of the database generated by the newly released socio economic caste census (SECC) for rural areas for targeted reduction of poverty and convergence with other schemes.
Under the interest subvention scheme, women SHGs availing loans up to Rs 300,000 from banks are charged seven per cent interest per annum; they also get additional interest subvention of three per cent for timely repayment, bringing down their effective rate of interest to four per cent per annum.
On the Himayat programme, the Cabinet has approved the existing cap of Rs 235.30 crore on the total outlay to be replaced with a demand-based allocation and target within the overall Budget provision of NRLM. The scheme will be funded entirely by the Central government. - Aerospace sector in Telangana
Telangana IT Minister K.T. Rama Rao, top executives of Boeing India and Tata Advanced Systems Limited (TASL) have announced setting up of a facility on the outskirts of the city to make the fuselage for Apache helicopters.
The announcement came from Boeing India president Pratyush Kumar and managing director of TASL, Sukaran Singh in the presence of Mr. Rama Rao and Secretaries Arvind Kumar (Industries) and Jayesh Ranjan (IT). The finer details of the extent of land to be made available, the exact location and the timelines are yet to be firmed up.
This will also have an effect on the 1,000-odd small and medium enterprises already working in the sector, for whom this will be an ideal opportunity to scale up their number and progress from being Tier III, to Tier II and eventually Tier I positions. - Govt to start electronic transfer of MGNREGA wages from 2016
To prevent leakages in the MGNREGA programme, the govt will introduce the system for electronic transfer of wages to the beneficiaries from 1st January next year in Kerala, Lok Sabha was informed. An additional Rs 2,000 crore would be sought from the Finance Ministry towards ensuring that MNREGA wages are at par with the agriculture wages fixed by some states, Rural Development Minister Birender Singh said on 3rd December.
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides 100 days of employment to registered workers on their demand. For smooth fund flow, the electronic Fund Management System (e-FMS) has been made mandatory from 1st April this year, the Minister said.
Centre releases half of the funds to States under PMGSY in current fiscal
The Centre has released half of the funds to the States allocated under Pradhan Mantri Gram Sadak Yojana, PMGSY in the current fiscal. The total budgetary allocation of 15,291 crore rupees about 7,850 crore rupees have already been released.
Tthe projects for providing road connectivity to nearly 1.45 lakh unconnected habitations have been cleared. As per States report, around 1.12 lakh habitations have been provided connectivity till October this year. The PMGSY had been launched in the year 2000 as hundred per cent Centrally Sponsored Scheme. - Dena Bank Gets Board Approval to Dilute Government Stake
Public sector lender Dena Bank has got board approval for dilution of government holding to up to 52 per cent and raise capital up to Rs 2,500 crore from various bonds. Government shareholding in the bank was 65 per cent at the end of September 30. Last year, the government allowed public sector banks to to bring down its stake to 52 per cent so as to meet capital requirement.
As per law, government holding at any moment must not come below 51 per cent to maintain the public sector character of the state-owned banks. The bank said it has got board approval to raise Additional Tier-1 (AT1) capital up to an amount of Rs 1,500 crore in one or more tranche, in one or more instruments. It further added that the bank has got board approval to raise Tier 2 capital up to an amount of Rs 1,000 crore in one or more tranche, in one or more instruments. - ADB, S&P scale down growth projections for economy
Three days after the government had reduced its growth projections for the current fiscal year, two international agencies — ADB and S&P — have also scaled down their expectations on India’s economic performance.
The Asian Development Bank has revised its forecast downwards and projected India’s growth at 7.4 per cent in 2015, while S&P has maintained it at 7.4 per cent for the current fiscal year on concerns over the global slowdown, a weak monsoon, and stalled structural reforms.
The forecasts are largely in line with government data released last week as well as the projection made by the Reserve Bank of India. According to the Central Statistics Office, the economy grew at 7.2 per cent in the first half.
The Finance Ministry expects GDP growth at about 7.5 per cent this year, against the Budget target of 8 to 8.5 per cent. These projections, however, do not restrain Finance Minister Arun Jaitley from presenting a growth oriented Budget for 2016-17.
For 2016, the ADB has estimated growth of 7.8 per cent. It had earlier estimated economic growth at 7.8 per cent this year and 8.2 per cent next year.
Global ratings agency Standard & Poor’s, while giving its growth projections, has said that the government’s lack of a majority in the upper house of Parliament has impeded its ability to implement key reforms such as the goods and services tax. It, however, has said that economy will pick up to 8 per cent in 2016-17. - Telangana Government to waive Rs423-cr power, water bill arrears in city
A big monetary relief is in the offing for the denizens in the limits of the Greater Hyderabad Municipal Corporation. The Government has, in principle, agreed to extend a relief of Rs 423 crore by waiving off water and electricity charge arrears. An order to this effect would be issued after the code of conduct in place for the MLC elections is lifted. - GST logjam: Panel for 17%-18% standard rate
The panel led by Chief Economic Advisor Arvind Subramanian has recommended a range of 15 to 15.5 per cent as the revenue neutral rate of the Goods and Services Tax, setting the stage for consensus building for this important reform to get through Parliament in the winter session.
In line with the Centre’s conciliatory stance, the report also suggested eliminating taxes on inter-State trade, including the proposed 1 per cent additional tax under GST to help promote “Make in India by making India one”.
But the Centre may be taking an unpopular decision if accepts the panel’s recommendation of the standard rate in the 16.9-17.9 per cent range that will make services costlier. Eating out, and telecom and banking services will become expensive. At present, these services are taxed at 14.5 per cent while the central excise duty is levied at 12 per cent.
The range for standard rates is in line with the Congress’ demand that the GST rate should be capped at 18 per cent.
The panel also recommended other rates, with the lowest rate for goods at 12 per cent and the highest rate at 40 per cent. The highest rate is for demerit goods such as alcohol.
The CEA was categorical that tax rates should not be “constitutionalised” or included in the Constitution Amendment Bill, and this is what the report also proposes.
Subramanian said that the committee was “conservative” in its calculations and did not factor in any improvement to the GDP rate.
DefinitionsStandard Rate: This is the rate at which most goods and services will taxed under the new indirect tax regime.
Revenue Neutral Rate: It is the rate at which the tax revenue remains same despite allowing input tax credit and other factors. - Parliamentary panel on PSUs presses for more clarity on CSR
The Committee on Public Undertakings (CoPU) headed by former Himachal Pradesh Chief Minister and veteran BJP MP Shanta Kumar has urged the government to amend the Companies Act to define corporate social responsibility (CSR).
According to Kumar, the Corporate Affairs Ministry should draft the guiding principles for CSR funding to include poorer sections of the society in the growth process. The spirit of CSR should be in line with the Antyodaya philosophy.
After examining the pattern of expenditure, Kumar said the panel found that it had not always targeted the poorest of the poor, or the most backward of the country’s areas. The committee, therefore, recommended that CSR should be clearly defined in the Act itself. The definition should cover the broader principles of CSR spending so as to ensure that allocations are spent for the specified activities targeting poor and backward areas
The report said the panel was concerned to note that the Corporate Affairs Ministry and the Department of Public Enterprises had not bothered to maintain data on the amount spent on CSR so far by Central Public Sector Undertakings as well as private companies.
The report said that although the word ‘shall’ has been used in Sub-section 5 of Section 135 for making CSR expenditure mandatory, the second proviso to this sub-section dilutes this position. “Committee strongly feels that the whole purpose of making the CSR spending mandatory is defeated by the second proviso as a company can get away easily by simply stating the reasons for not spending prescribed CSR allocations,” the report said. - Nitin Gadkari lays foundation stone for 3 projects in capital region AP
Union Minister for Road Transport and Highways, Nitin Gadkari on 5th December laid the foundation stone for three projects worth almost 2,500 crore rupees in the capital region of Andhra Pradesh. Later he announced 50,000 crores rupees new road projects for Andhra Pradesh.
The four-lanning road project between Vijayawada-Machilipatnam also includes Benz Circle flyover being taken up by the National Highways Authority of India at a total capital cost of Rs. 1462.32 crores under National Highways Development Programme. Among the new projects for which he laid foundation stone also include Vijayawada-Bhaadrachalam-Jagadalpur national highway.
Once the project is materialised a four-lane connectivity between Vijayawada-Machilipatnam would be established paving the way for development of industrial growth around Machilipatnam saving time and fuel besides ensuring safety and comfort for the commuters. The four-lane highway will pass through 36 villages in 8 mandals in Krishna district. - Telangana to develop 500-acre Chinese Industrial Park
Telangana government will allocate 500 acres of land to develop separate Chinese industrial park with all facilities. The Chinese delegation comprised of 25 members, both from government and industry from the Hunan Province, China. The objective of the meeting was to explore various business opportunities between the Hunan Province, China and the State of Telangana.
One of the interesting dynamics of the bilateral relationship in recent years is the increasing emphasis in both India and China on expanding interactions between Indian States and Chinese provinces, cities and local governments.
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