ECONOMY AFFAIRS FEBRUARY 2015
- Budget with an out lay of Rs17, 77, 477 Crore
Finance Minister unveiled his much-anticipated first full-year budget on 28th February, promising to boost growth with a major increase in public spending on infrastructure and to lower the corporate tax rate. Finance Minister balanced new welfare programs for the poor, like the creation of a social security plan to provide subsidized insurance and pensions, and relaxed targets for reducing the fiscal deficit.
The government now predicts a growth rate of 7.4 percent in the current fiscal year. Meanwhile, lower oil and other commodity prices have helped curb India's chronic budget deficits
The budget saw the increasing annual spending on roads, ports and railways by the equivalent of about $11.36 billion. It also scaled back goals for spending cuts, increasing the fiscal deficit target to 3.9 percent of the gross domestic product from a target of 3.6 percent, and slowing the timeline for a reduction to 3 percent by a year.
Important points are….
The total expenditure of the budget is Total expenditure: Rs 17,77,477 crore, the plan expenditure is Rs 4,65,277 crore, while non-plan expenditure is Rs 13,12,200 crore. To meet the stiffer fiscal deficit target of 3.9 per cent of gross domestic product in 2015-16, Finance Minister Arun Jaitley has lowered Plan expenditure for the year by Rs 2,657 crore from the revised estimate (RE) of Rs 4,67,934 crore for the current financial year.
What is Plan expenditure and Non plan expenditure?
Plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.
Non-plan capital expenditure mainly includes defence, loans to public enterprises, loans to States, Union Territories and foreign governments.
Allocations for Defense:- Allocation of Rs. 2,46,726 crore for defence
- Focus on Make in India for quick manufacturing of Defence equipment.
However, it is far below what China spends on its defence. China’s defence spending was USD 132 billion in 2014-15, a figure that many believe is under reported.
Finance Minister has earmarked Rs 94,588 crore for military modernisation, which works out to 38 per cent of the total defence outlay. Incidentally, Rs 12,622 crore meant for modernisation last year remained unspent. Of this, Rs 5,992 crore was diverted towards revenue spending. India is seeking to fast-track its military modernisation and has a number of pending deals ahead like the multi-billion contract for 126 multi-role combat aircraft contract.
The other major acquisitions expected to be finalised include the deals for 22 Apache combat choppers, 15 Chinook heavy-lift helicopters and besides new submarines and vessels for the Indian Navy. In 2010, India overtook China as the world’s biggest importer of defence equipment, according to the Stockholm International Peace Research Institute. Indian Air Force, Army and Navy have placed orders worth Rs 83,858 crore from 2011 to the last fiscal.
Infrastructure- Rs. 70,000 crores to Infrastructure sector.
- Tax-free bonds for projects in rail road and irrigation
- PPP model for infrastructure development to be revitalised and govt. to bear majority of the risk.
- Atal Innovation Mission to be established to draw on expertise of entrepreneurs, and researchers to foster scientific innovations; allocation of Rs. 150 crore.
- Govt. proposes to set up 5 ultra mega power projects, each of 4000MW.
Welfare Schemes- GST and JAM trinity (Jan Dhan Yojana, Aadhaar and Mobile) to improve quality of life and to pass benefits to common man.
- Six crore toilets across the country under the Swachh Bharat Abhiyan.
- MUDRA bank will refinance micro finance orgs. to encourage first generation SC/ST entrepreneurs.
- Housing for all by 2020.
- Upgradation 80,000 secondary schools.
- DBT will be further be expanded from 1 crore to 10.3 crore.
- For the Atal Pension Yojana, govt. will contribute 50% of the premium limited to Rs. 1,000 a year.
- New scheme for physical aids and assisted living devices for people aged over 80 .
- Govt. to use Rs. 9,000 crore unclaimed funds in PPF/EPF for Senior Citizens Fund.
- Rs. 5,000 crore additional allocation for MGNREGA.
- Govt. to create universal social security system for all Indians.
The third insurance scheme announced was the Pradhan Mantri Jeevan Jyoti Bima Yojana. This would cover both natural and accidental death risk of Rs 2 lakh at a premium of Rs 330 per year. But like the Jan Dhan scheme-linked insurance, only the details will explain the fiscal implications, as well as the width of the social security net.
The Mid-day Meal Scheme, considered one of the more efficient food and nutrition projects, saw a cut from Rs 11,770 crore to Rs 9,236 crore.
The Mahatma Gandhi National Rural Employment Gaurantee Scheme continued to languish. It got an additional allocation of only Rs 1,694 crore over the previous year's revised estimate of Rs 32,992 crore. The minister promised to provide an additional Rs 5,000 crore, if possible, although under the law, the scheme is demand-driven. Last year, the labour budget had been drawn at around Rs 60,000 crore, but the demand was artificially curtailed to remain within limits.
The government announced the winding up of 12 schemes from central funds, leaving it to the states to use their additional resources. This included the Backward Region Grant Fund with a revised estimate of Rs 2,837 crore last year, the tourist infrastructure development scheme of Rs 495 crore and development of 6,000 model schools at the block level, pegged at Rs 1,020 crore last year under the revised estimates.
The housing-for-all scheme got an additional Rs 1,607 crore over the previous year's revised estimate of Rs 12,393 crore-not reflective of the ambitious scale of work the government requires to do to achieve its housing-for-all promise by 2022.
The urban development ministry saw a repackaging of the erstwhile JnNURM scheme that was wound down last year. Its budgeted estimate had been Rs 6,2167 crore, but was revised down to Rs 240 crore. The 100 smart cities project of the government got Rs 2,000 crore and the urban rejuvenation of 500 habitations got Rs 3,898 crore. The overall support for the urban development ministry was raised to Rs 16,832 crore from the previous year's revised estimate of Rs 11,013 crore. But it stayed below the previous year's original budgeted amount of Rs 17,628 crore.
'Nayi Manzil' scheme announced for the minorities youth to facilitate jobs without a school leaving certificate and a new scheme for physical aids and assisted living devices for people aged over 80.
Additional outlays of Rs. 1000 crore to the Nirbhaya Fund was given. All this notwithstanding, yoga has been included in the ambit of charitable purposes under the Income Tax Act.
Agriculture- Rs. 25,000 crore for Rural Infrastructure Development Bank.
- Rs. 5,300 crore to support Micro Irrigation Programme.
- Farmers credit - target of 8.5 lakh crore.
The budget increased the target for rural credit substantially but lowered the centre’s share under irrigation and other centrally sponsored schemes such as the Rashtriya Krishi Vikas Yojana (RKVY) and the National Food Security Mission (NFSM) by nearly Rs.5,500 crore, hoping that the states will chip in with increased tax devolutions.
On stressed agricultural finances, the budget hoped a national agricultural market will increase the incomes of farmers.
According to Finance Minister increase in agricultural productivity and the realization of reasonable prices for agricultural production is essential for the welfare of rural areas, and added that the government’s goals for 2022, the 75th year of India’s independence, will include, increasing the irrigated area, improving the efficiency of existing irrigation systems, promoting agro-based industry for value addition and increasing farm incomes and reasonable prices for farm produce.
The government has taken major steps to address factors critical to agricultural production—soil and water—the finance minister said.
The soil health scheme, which aims to check the imbalanced use of fertilizers and improve productivity, was allocated to Rs.200 crore. The ambitious programme aims to provide all 145 million farm holders with a soil health card in three years. With an aim to irrigate the field of every farmer and improving water-use efficiency, the budget allocated Rs.5,300 crore to support micro-irrigation, watershed development and the Pradhan Mantri Krishi Sinchai Yojana (PMKSY).
Education- AIIMS in Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, Bihar and Assam.
- IIT in Karnataka; Indian School of Mines in Dhanbad to be upgraded to IIT.
- PG institute of Horticulture in Amritsar.
- Kerala to have University of Disability Studies
- Centre of film production, animation and gaming to come up in Arunachal Pradesh.
- IIM for Jammu and Kashmir and Andhra Pradesh.
Also, apart from a University for Disability studies in Kerala, AIIMS in Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, Bihar and Assam has been announced. But what really takes the cake - in order to enable all poor and middle class students to pursue higher education of their choice without any constraints of funds, a fully IT based Student Financial Aid Authority is proposed to be set up during the year 2015-16.
Tourism- Develpoment schemes for churches and convents in old Goa; Hampi, Elephanta caves, Forests of Rajasthan, Leh palace, Varanasi , Jallianwala Bagh, Qutb Shahi tombs at Hyderabad to be under the new toursim scheme.
- Visa on Arrival for 150 countries.
Gold- Sovereign Gold Bond, as an alternative to purchasing metal gold.
- New scheme for depositors of gold to earn interest and jewellers to obtain loans on their metal accounts.
- To develop an Indian gold voin, which will carry the Ashok Chakra on its face, to reduce the demand for foreign coins and recycle the gold available in the country.
Financial Sector- Forward Markets Commission to be merged with the Securities and Exchange Board of India
- NBFCs registered with the RBI and having asset size of Rs 500 crore and above to be considered as ‘financial institution’ under Sarfaesi Act, 2002, enabling them to fund SME and mid-corporate businesses
- Permanent Establishment norms to be modified to that mere presence of offshore fund managers in the country does not lead to “adverse tax consequences.”
The Finance Bill also proposed the required amendments to the Securities Contracts (Regulation) Act, with commodity derivatives being redefined as securities and forward trading to come under Sebi.
Taxation- Abolition of Wealth Tax.
- Additional 2% surcharge for the super rich with income of over Rs. 1 crore.
- Rate of corporate tax to be reduced to 25% over next four years.
- No change in tax slabs.
- Total exemption of up to Rs. 4,44,200 can be achieved.
- 100% exemption for contribution to Swachch Bharat, apart from CSR.
- Service tax increased to14 per cent.
- GAAR deferred for two years
The highlight in this area has been an increase in transportation allowance for the salaried from Rs. 800 to Rs. 1600 per month. And health insurance premium reduction has been increased from Rs. 15,000 to Rs. 25,000. So essentially from individuals income, the given amounts can be deducted = less amount to tax = less tax to pay.
Various higher exemptions have also been granted to senior citizens and the disabled. Under the latest budget, an individual can achieve a total exemption of up to Rs. 4,44,200.
Skill development programme
With Make in India being the focus of all employment schemes, various customs and excise cuts have been announced. Also, skill development is going to be the focus of the government with National Skills Mission being announced for youth below 25 years of age and skill development to become an important part of various ministries.
Renewable Energy- Rs. 75 crore for electric cars production.
- Renewable energy target for 2022: 100K MW in solar; 60K MW in wind; 10K MW in biomass and 5K MW in small hydro
Finance Minister emphasised on achieving the 1,75,000-megawatt target set for clean energy installations by 2022. This would comprise 1,00,000 MW of solar power, 60,000 MW of wind power, 10,000 MW of energy from biomass and 5,000 MW from small hydroelectric projects. Currently, India's clean energy capacity is 33,000 MW
Jaitley envisioned providing electricity by 2020 to the remaining 20,000 villages that still don't have access to electricity, including through off--grid solar power.
The Budget proposed creation of a national investment and infrastructure fund and finding monies to ensure an annual flow of Rs 20,000 crore into it. The money thus raised can be invested in infrastructure finance companies. The Economic Survey 2014-15, released on 27th February, said India's clean energy sector was likely to generate business opportunities of $160 billion in the next five years.
For complete details on Budget 2015-16 - Click Here - Jail for black money players
The government is working on a plan to provide a one-time opportunity to those who have black money abroad to pay taxes and repatriate their stash even as finance minister Arun Jaitley unveiled a raft of stringent measures in the Budget to crack down on offenders. He is likely to announce this facility when he introduces a comprehensive legislation to curb black money in this session of Parliament. The severity of punishments proposed may prompt those with unaccounted money to come clean. Inadequate disclosure or evasion related to foreign assets will be punishable by jail terms up to 10 years.
Violation of the Foreign Exchange Management Act may result in imprisonment up to five years. In addition to jail time, penalty will be levied at 300% of the tax due for concealing income and assets. Black money in foreign accounts will be non-compoundable and offenders will not be permitted to approach the Settlement Commission. - Panel submits final report on tax reforms
The Parthasarathi Shome-led Tax Administration Reforms Commission has submitted its fourth and final report to Finance Minister Arun Jaitley. This report suggests many departures from existing methodologies including those on revenue forecasting. One of the areas highlighted by the commission is the importance of research inputs in tax governance. - In Joint session President favored Land Act
Addressing a joint session of Parliament, President Pranab Mukherjee justified the changes made in the Land Act and said that the Central government attaches paramount importance to safeguarding the interests of farmers and families affected by any land acquisition. The Land Ordinance is facing stiff resistance from the Opposition
These projects could be for infrastructure or for the creation of basic amenities such as rural housing, schools and hospitals, particularly in remote areas, said Mukherjee.
The Modi Government made changes in the Land Act enacted by the erstwhile United Progressive Alliance Government through an ordinance promulgated on December 29, 2014.
These changes include bringing acts applicable for national highways, metro rail, atomic energy and electricity-related projects, among others, under the new law for compensation and rehabilitation & resettlement. Similarly, acquisition of land for defence and defence production, infrastructure, affordable housing and industrial corridors was fast tracked. The Bill to replace the Ordinance is scheduled for introduction in the Lok Sabha on 24th February.
Noting that this is the first occasion for his Government to present a full-term budget, Modi said the session is beginning with a commitment that there will be dialogue and thorough discussion on every issue. - IRDAI clears Rs 1500 cr nuclear liability pool
IRDAI (Insurance Regulatory and Development Authority of India) has given in-principle approval for setting up of nuclear liability pool for providing risk cover to nuclear reactors. At present, no details have been provided on how the money would be raised for the project. - States to get Rs. 1.78 lakh cr more from Centre
States will get more money from the next fiscal year, as the Center has decided to give them 10 per cent more funding from its divisible resources. This decision is based on the recommendations of the 14th Finance Commission, which had suggested passing on 42 per cent of net tax receipts to the States.
Prime Minister Narendra Modi informed States about the decision, terming it a fulfillment of co-operative federalism. The Commission, headed by former RBI Governor YV Reddy, submitted its report on December 15. The report’s recommendations will guide allocation of resources as well as fiscal policies for five years, from April 1, 2015 to March 31, 2020.
The Government tabled an Action Taken Report on the Commission’s recommendations in Parliament. As against a total devolution of Rs. 3.48 lakh crore approximately in 2014-15, the total devolution to the States in 2015-16 will be Rs. 5.26 lakh crore approximately, year-on-year increase of about Rs. 1.78 lakh crore
The Center has accepted ‘in-principle’ the Commission’s suggestion on revenue deficit grants. The Commission assessed the revenue and expenditure of the States for the 2015-20 period and has projected the deficit for each State after taking into account its share in Central taxes. It has recommended a grant of over Rs. 1.94 lakh crore to meet the deficit of 11 States.
The Commission has identified 30 centrally sponsored schemes for transfer to the States, but Jaitley said that only eight schemes would be delinked from the Centre’s support.
Other suggestion: All electricity and water consumers should be metered in a time-bound manner FC suggested.
It recommend that 100 per cent metering be achieved in a time-bound manner for all electricity consumers as already prescribed statutorily
It also said that the Electricity Act, 2003 needs to be amended to levy penalties for delays in payment of subsidies by State governments.
The Commission, appointed by the President, gave its report on December 15. This is the first time the Commission was asked to consider statutory provisions relating to the pricing of public utilities.
The Commission recommended that States (and urban and rural bodies) should progressively move towards 100 per cent metering of individual drinking water connections to households, commercial establishments as well as institutions. All existing individual connections in urban and rural areas should be metered by March 2017 and the cost of this should be borne by the consumers
It also said that all new connections should be given only when functioning meters are installed. While providing protected water supply through community taps is unavoidable for poorer sections of population, metering of water consumed in such cases also would ensure efficient supply.
Quoting a Road Ministry report, the Commission noted that out of 38 State Road Transport Undertakings (SRTUs), only two reported net profits in 2012-13 The aggregate losses amounted to Rs.7,269 crore, 56 per cent of which was accounted for by just three.
Current arrangements, both at the Union and State level, give rise to a potential conflict, as the rule-making body is also the implementing body. Consequently, there is no independent assessment of the performance of the SRTUs across various parameters.
The Commission highlighted the fact that the tariff structure in the Railways is characterised by very low passenger fares and high freight charges. Indian passenger tariffs are one-fourth of those China, one-ninth of those in Russia, and nearly one-twelfth of tariffs in Japan.
To remedy this, a regulatory framework for tariff setting is urgently required. This will enable costing of services and timely rate revisions along commercial principles for both passenger and freight traffic. Keeping this in mind, the Commission endorsed the initiative to set up a RTA and urge expeditious replacement of the advisory body with a statutory body, through necessary amendments to the Railways Act, 1989.
The report of the 14th Finance Commission in all, asked the government to transfer 42 per cent of tax collections to states. While this is a rather large increase over the 32 per cent proposed by the previous commission, two factors need to be emphasised. The first is that the actual total transfers proposed five years ago were around 39 per cent, when unconditional and conditional transfers were combined. Under the latter category, funds were given to states for specific purposes, which meant that they had little flexibility in their use. Second, and very importantly, the 14th commission has recommended that the government largely do away with this distinction between unconditional and conditional. This represents a fundamental shift in the federal paradigm. It gives states a high degree of autonomy and flexibility in their use of transfers. This reinforces the ongoing movement towards greater de-centralisation, reflected in, for example, the re-structuring of centrally sponsored schemes and the termination of the role played by the erstwhile Planning Commission in state expenditures. To this extent, it is an entirely welcome step, which places a much greater responsibility on states to design and implement schemes. The central government will have to ensure that states create the institutional capacities to strategise, monitor and control programmes. With more power comes more responsibility.
In deciding on the shares of individual states, the 14th commission has done away with a component that some previous commissions used, namely, fiscal discipline. It has introduced two new considerations in addition to the traditional population, per capita income and area considerations. These are the change in population between 1971 and 2011, and giving credit to success in retaining forest cover. Under this formula, Uttar Pradesh predictably gets the highest share of transfers, over 17 per cent. The 14th commission has also made some specific recommendations for transfer of resources to local governments - municipalities and panchayats - including, importantly, an incentive for better fiscal performance.
Apart from the issue of transfers, the 14th commission has made recommendations on the implementation of the goods and services tax (GST) and also laid out a fiscal reform road map. On the GST, it proposes a somewhat more generous compensation formula for states than is currently being debated. And it would like to see this being delivered through a guaranteed pool of funds. This could induce states to accept a more comprehensive and unified system than has been agreed to now. On the long-term fiscal reform agenda, it is strongly in favour of a rule-based approach, both at the Centre and the states. However, it suggests going beyond mere legislative commitments by way of setting up institutions that will monitor the fiscal condition of states and the Centre, and hold governments to account. Of course, these recommendations, unlike the ones on transfers, are "under consideration", as the Action Taken Report placed by the government before Parliament put it. Nonetheless, the overall approach provides a strong boost to meaningful devolution.
In addition, the FFC has significantly changed the sharing of resources between the states — what is called horizontal devolution. The FFC has proposed a new formula for the distribution of the divisible tax pool among the states. There are changes both in the variables included/excluded as well as the weights assigned to them. Relative to the Thirteenth Finance Commission, the FFC has incorporated two new variables: 2011 population and forest cover; and excluded the fiscal discipline variable.
Several other types of transfers have been proposed, including grants to rural and urban local bodies, a performance grant, and grants for disaster relief and reducing the revenue deficit of eleven states. These transfers total approximately 5.3 lakh crore for the period 2015-20. - Increase in progressivity of overall transfers
The FFC transfers have a more favourable impact on the states that are relatively less developed, which is an indication that they are progressive, that is, states with lower per capita net state domestic product (NSDP) are likely to receive on average much larger transfers per capita . The correlation between per capita NSDP and FFC transfers per capita is -0.72 based on some broad assumptions about FFC transfers. This indicates that the FFC recommendations do go in the direction of equalising the income and fiscal disparities between the major states.
In contrast, CAS transfers are only mildly progressive: the correlation coefficient with state per capita GDP (over the last three years) is -0.29. This is a consequence of plan transfers moving away from being formula-based (Gadgil-Mukherjee formula) to being more discretionary in the last few years. Greater central discretion evidently reduced progressivity.
A corollary is that implementing the FFC recommendations would help address inter-state resource inequality: progressive tax transfers would increase, while discretionary and less progressive plan transfers would decline. - Keep power utilities away from politics: World Bank report
Distribution to the end consumer continues to be the weakest link in the power sector value chain, according to a World Bank report.
The report, prepared on the request of the Central Government, recommends freeing state utilities and regulators from political interference, increasing accountability and enhancing competition in the sector.
The study called for a transition from administratively run to commercial run utilities. Maharashtra’s experience with private participation highlights the potential for improving distribution by enhancing accountability — as seen in companies investing in system strengthening, tightening their commercial practices, increasing efficiency and improving the quality of service
On loans to the sector, Pargal said the overall lending to the sector stood at Rs. 4,88,300 crore, which is higher than any other bank credit to other infrastructure sectors. Lenders chose to lend even in the case of continued inefficiencies.
The report said the financial health of the sector was fragile and the total accumulated loss was at Rs. 2.88 lakh crore or three per cent of GDP in 2013.
Over the last two decades, the sector required periodic rescues from the Central Government. A bailout ofRs. 35,000 crore in 2001 was followed by a restructuring package of Rs. 1.9 lakh crore in 2012.
Among key recommendations, the report said banks/ lenders should hold utilities accountable for efficient operation and apply collective pressure to not lend to those not credit worthy The central government should pledge no further bailouts, give regulators autonomy and adequate resources and hold them accountable for performance.
State Governments should pay subsidy transparently, fully and on time. They should insist on evidence that the subsidies are going to intended recipients. - India’s smart phone market shrinks for the first time
In a first for the segment, the Indian smartphone market shrank in the fourth quarter of calendar year 2014. According to numbers released by the International Data Corporation (IDC), the smartphone market declined by 4 per cent compared with the previous quarter sequentially.
The overall mobile phone market stood at 64.3 million units in the fourth quarter of 2014, reflecting a sequential drop of 11 per cent over the third quarter and an annual drop of 5 per cent. The decline is largely owing to high inventories in distribution channels. The fall was also reflected in the feature phone market, which plummeted 14 per cent. - Cabinet nod to BRICS bank
Union Cabinet on 25th February cleared the creation of the proposed 5-nation BRICS bank that will mobilise resources for infrastructure projects and provide short-term liquidity to emerging economies in case of payment crisis. The proposal was approved at the Cabinet meeting, chaired by Prime Minister Narendra Modi.
The setting up of the New Development Bank (NDB) and BRICS Contingent Reserve Arrangement (CRA) is for mobilising resources for infrastructure projects and providing short-term liquidity support to emerging economies in case of Balance of Payment crisis.
India will hold the Presidency of the USD 100-billion NDB for the first six years. The Bank will be based in Shanghai, China’s financial hub.
The BRICS CRA will help India and other signatory nations to forestall short-term liquidity pressures, provide mutual support and further strengthen financial stability.
The governance structure and decision making in the Bank will be equitable unlike the existing multilateral development banks, it added. The NDB would reflect the close relations among BRICS countries - Brazil, Russia, India, China and South Africa, while providing a powerful instrument for increasing their economic cooperation. The Bank will begin operations only after all the member countries deposit their instruments of ratification with Brazil.
BRICS CRA, the statement said, will ensure a backup safety net which will allow India to go ahead with its necessary and bold policy decisions without being concerned about the international economic development.
The NDB to be established by BRICS countries will make available additional resources thereby recycling the savings accumulated in emerging countries which are presently being locked up in Treasury bonds having much lower returns, it added.
The BRICS CRA is expected to serve the needs of India's emerging economy in boosting access to additional foreign exchange reserves, should such situation arise, the statement said. So far, IMF support is the primary safety net that is available to India in case any BOP crisis situation arises.
Heads of the 5-nation BRICS group decided last year to create a development bank as well as a reserve fund to finance infrastructure projects and to head off future economic crises. Infrastructure financing in India has been done from two public sources: government and multilateral development banks.
These have been supplemented by private sector contributions through Public-Private Partnership projects. However, in the context of fiscal consolidation, declining resources of existing MDBs and risk-averse private sector, the NDB to be established by BRICS countries will make available additional resources. - Cabinet approves 15,000 MW solar power projects
The union cabinet on 25th February approved state-run power producer NTPC Ltd's plans to set up 15,000 megawatt of grid-connected solar projects, which would be completed in three tranches. The rapidly falling cost of solar power has ignited interest in its potential in Asia's third-largest economy, which relies on coal for three-fifths of its energy needs while solar supplies less than 1 percent. Prime Minister Narendra Modi aims to make India one of the world's largest renewable energy markets, targeting 100,000 MW of output by 2022 from just 3,000 MW currently. - Train fares untouched: Suresh Prabhu’s maiden budget
Railway Minister Suresh Prabhu’s maiden Budget may not have introduced new trains but it has laid down the track to turn the monolith into a financially self-sustainable organisation.
The centrepiece of the Budget, presented on 26th February, was a five-year action plan that aims to transform the Railways into a commercially viable and customer-centric organisation. To achieve this, Prabhu set four goals, five drivers and 11 thrust areas.
The Railway Minister refrained from hiking passenger fares. But he “rationalised” — increased — freight rates for certain commodities, which could fetch additional revenue of Rs 4,000 crore in the next fiscal year.
High lights- No hike in passenger fares
- No new trains announced
- Freight rate for cement, coal, others hiked by up to 10%
- Investment of Rs. 8.50 lakh cr envisaged in five years
- Buttons, coin vending machines for railway tickets
- e-catering to select meals from an array of choices
- 24X7 helpline for passenger security problems
- Surveillance cameras in suburban coaches for woman safety
- More General class coaches to be added
- SMS alert service for passengers to be expanded
- On-board entertainment on select Shatabdi trains
- Hike daily passenger carrying capacity from 21mn to 30mn
- 200 more stations to come under Adarsh Station scheme
- Wi—Fi connectivity at B category stations
- A new department to keep stations, trains clean
- Operating ratio to improve to 88.5% in 2015—16
- Speed in 9 railway corridors to be increased from 110 kmph and 130 kmph to 160 and 200 kmph
- Collision Avoidance System to be installed on select routes
- Proposed 77 new projects covering 9,400 km of doubling works.
Railway Ministry has proposed that a freight revenue growth of 13.55 per cent and fare growth of 16.7 per cent in his projections for 2015-16. Freight traffic, pegged at an all-time high of an incremental 85 million tonnes, is based on the expectation of healthier growth in the core sector.
Highlighting that the Railways would need investments of Rs 8.5 lakh crore over the next five years, Prabhu has come up with some ‘out-of-the-box’ ideas to mobilise resources from the market and from multilateral bodies.
The first step towards this is a new financing approach of “institutional investments” — projected at Rs 17,136 crore — to accelerate completion of capacity-augmentation projects across the rail network.
This is in addition to the Rs 17,655 crore to be raised by Indian Railway Finance Corporation (Budget Estimate for 2015-16 for IRFC: Rs 17,276 crore) and Rail Vikas Nigam through market borrowings. The gross budgetary support for the Railways’ annual plan has been pegged at Rs 40,000 crore.
Recognising that the Centre’s resources are stretched, Prabhu is looking at other avenues such as setting up an infrastructure fund and allowing IRFC to set up a joint venture with a non-banking finance company promoted by a public sector enterprise.
The Budget also provides for long-term debt to flow into the Railways from pension funds. Prabhu also tabled a white paper on the Railways in the Lok Sabha.
States will also be roped in as partners through joint ventures for focused project development. Prabhu hopes all this will make the Railways efficient and has set an ambitious target to improve the operating ratio to 88.5 in 2015-16. Meaning, out of every Rs 100 it earns, the Railways wants to cap spends on salaries, fuel, maintenance etc to Rs 88.5. In 2014-15, the operating ratio was 91.5 per cent, a tad better than the 93.5 for 2013-14.
The market borrowing as per the revised estimate by these two companies during the current fiscal was pegged at Rs. 12,045 crore from markets, according to the Railway Budget for 2015-16. Besides, the other financial firm under Indian Railway Rail Vikas Nigam Ltd (RVNL) plans to raise Rs. 379 crore through market borrowing.
During 2014-15, IRFC raised Rs. 11,772.60 crore while RVNL mopped up Rs. 273 crore from the market as per the revised estimate.
Railways will create new vehicles to crowd in investment from long-term institutional investors and other partners, he said.
4 year investment plan: The Union Railway Minister, Suresh Prabhakar Prabhu, has outlined a four-year investment plan worth over Rs. 8.56 lakh crore for Indian Railways from 2015-2019.
The investment plan would set aside over Rs. 1.99 lakh crore for network decongestion (dedicated freight corridor, doubling of tracks, electrification and traffic facilities) and Rs. 1.93 lakh crore for network expansion, including electrification.
Investment on safety (track renewal, bridge works, ROB, RUB and Signalling & Telecom) would be to the tune of Rs. 1.27 lakh crore, while production and maintenance of locomotives, coaches and wagons have been earmarked Rs. 1.02 lakh crore over the four-year period.
Station redevelopment and logistics parks would receive an investment of Rs. one lakh crore, while high speed rail and elevated corridor would see investments worth Rs. 65,000 crore.
An amount of Rs. 39,000 crore has been set aside for national projects providing connectivity to the Kashmir valley and the North-Eastern states, Rs. 12,500 crore for passenger amenities, Rs. 5,000 crore for IT and research and other issues a sum of Rs. 13,200 crore.
Ties with software vendors:Suresh Prabhu’s expansive outlay on technology modernisation may compel the Indian Railways to open up and deepen its engagement with Indian software vendors. This may be a big revenue spinner for the likes of Tata Consultancy Services, Infosys, Wipro and Zensar as they have the experience of providing services to transportation networks abroad.
The Railway Minister, has announced an investment plan of Rs 5,000 crore in IT and research for 2015-19. According to the budget document, hand-held terminals will be provided to travelling ticket examiners (TTEs) for verification of passengers and downloading charts.
Also on the cards are introduction of a centrally managed Railway Display Network in over 2,000 stations, “SMS alert” service to update passengers of delays, surveillance cameras in trains, on board-entertainment in select Shatabdi trains, RFID-based tracking of freight wagons and geo-spatial technology for audio-visual warnings at unmanned level crossings.
Currently, it is the Centre for Railway Information Systems (CRIS) that designs, develops and implements important application systems for the Railways.
Private players for Swachh rail:Proposing a new department for keeping stations and trains clean, Prabhu said integrated cleaning will be taken up as a specialised activity and the government will engage professional agencies, besides training the staff. While the Minister refrained from announcing ambitious new projects, he expects higher financial outgo for maintenance, safety and cleanliness activities during the next five years.
Better toilet facilities, both on trains and in stations, ‘integrated cleaning’, bio-toilets and redevelopment of stations are some of the measures proposed by the Minister. While these are not new—bio-toilets were introduced in 2012 by the UPA government—Prabhu promised accelerated development of these.
Upgrading stations: Besides focussing on cleanliness and sanitation, the government has proposed to increase by 200 the number of stations identified for upgrade of passenger amenities under the Adarsh Station scheme. So far, 1,052 stations have been identified. Upgrade of passenger amenities are expected to cost the government Rs 12,500 crore over five years. Private players will also be roped in for development of stations, through the process of open bidding.
GAGAN services for railway crossings: The Indian Railways is in talks with the Indian space agency on the possibility of using GPS-aided geo-augmented navigation (GAGAN) for safety at unmanned railway crossings. The GAGAN system is a regional satellite based augmentation system developed mainly to assist landing of aircrafts accurately.
Online order for food: In a bid to offer more freedom of choice, the Railways will now give the option of online ordering, as e-catering has been introduced across 108 select trains on an experimental basis.
SCR to get Rs 2768 crore: The South Central Railway has been allocated Rs. 2768 crore for infrastructure development during 2015-2016, up 24 per cent over the current fiscal’s allocation of Rs.2240 crore.
The Union Railway Budget has allocated funds for several projects which include Peddapalli-Karimnagar-Nizamabad (Rs 141 crore), Nandayal—Yerraguntla (Rs 130 crore), Nadikudi—Srikalakastri (Rs 110 crore), Vijayawada-Bhimavaram-Nidavolu line doubling and electrification (Rs 150 crore) and new work of Secunderabad–Mahbubnagar doubling project of Rs. 1200 crore has been sanction.
Innovation council planned:Railway Minister Suresh Prabhu’s maiden budget offers a lot of hope to the IT and telecom sectors as the Ministry taps technology to enhance the efficiency of the rail sector.
Some of the measures he announced are 24X7 helpline number 138 and toll-free number 182 for security-related complaints. Another major technological advancement is the introduction of hand-held terminals to traveling ticket examiners (TTEs) for verification of passengers and downloading charts. The Railways are planning to work with IIT-Kanpur to design a project based on radio signal for warnings at unmanned level crossings. - S & P revises GDP forecast to 7.9%: Global rating agency Standard & Poor's Ratings Services revised India’s GDP forecast upwards at 7.9 per cent for the fiscal year ending March 2016 driven by rising investment and low oil prices. However, the forecast of real GDP growth in the Asia Pacific region has been lowered.
S&P has lowered its GDP growth forecasts for China, Japan, and the Asian Tiger economies, as per its report titled ‘Stronger US economy and lower oil prices aren't boosting Asia-Pacific growth’.
The twin factors of strengthening US economy and lower oil prices have yet to lift economic data in much of Asia-Pacific. Central banks have shifted their stance in recent months, with a critical group of monetary policymakers cutting rates or easing financial conditions and the remainder moving to a more neutral stance. This is contrary to what we observed until the latter part of 2014. Weaker growth in China and Japan may be weighing on overall sentiment, although India's star is rising.
S&P trimmed GDP growth forecasts for China to 6.9 per cent this year and 6.6 per cent in 2016, from 7.1 per cent and 6.7 per cent, respectively. It believes the official growth target will be about 7 per cent. For Japan, the agency has lowered our growth forecast to 0.7% this year (from 1.3%) and 1.3% in 2016 (2.1% previously). - NSE to set up international exchange in Gujarat
The National Stock Exchange (NSE), on 26th February, signed a memorandum of understanding with the Gujarat International Finance Tec-City to establish an international exchange at the city-based financial hub. The GIFT Special Economic Zone, spread over 886 acres, is being developed as India’s first International Financial Services Centre (IFSC).
The expected investment in this 'multi-service' SEZ is to the tune of Rs.78,000 crore, and an estimated five lakh persons are claimed to get direct employment in this mega commercial centre. NSE Managing Director and CEO Chitra Ramkrishna said the national entity wished to have its footprint in the international arena and be part of the government to develop IFSC in India. - The Economic Survey stressed on improving business
The Economic Survey, introduced by Finance Minister Arun Jaitley on 7th February pitched for the acceleration of reforms. It sought to improve business environment by making regulation and taxes less onerous to help push growth to 8.1-8.5 per cent next fiscal, and to double digits in the coming years.
Highlights of survey- The survey has said that India has reached good position, which is very rare for any nation, and this help itself to re-launch on a double digit medium-term growth trajectory which would allow the country to attain the fundamental objectives of "wiping every tear from every eye". The macro-economy has been rendered more stable, reforms have been launched, deceleration in growth has ended and the economy appears to be recovering.
- In the coming year, the real GDP growth at market prices is estimated to be about 0.6-1.1 percentage points higher vis-a -vis 2014-15. Using the new estimate for 2014-15 as the base, growth at market prices is expected at 8.1-8.5 percent in 2015-16.
- The budget should continue the process of fiscal consolidation. Overall revenue-to-GDP ratio for 2014 as estimated at 19.5 percent by the IMF, needs to move toward levels in comparator countries - estimated at 25 percent for emerging Asian economies and 29 percent for the emerging market countries in the G-20. To provide legal certainty and confidence to investors, the ordinances on coal, insurance, and land need to be translated into legislation.
- Reforms of labor and land laws and reducing the costs of doing business will need to be a joint endeavor of the states and center.
- The economy is likely to over-perform on the RBI's inflation target by about 0.5-1.0 percentage point, opening up the space for further monetary policy easing.
- The outlook is favorable for the current account and its financing. However, risks from a shift in US monetary policy and turmoil in the Eurozone need to be watched.
- Implementation of 14th Finance Commission recommendations improves cooperative federalism
- The time is ripe for a more broad-based response to the challenges in agriculture and to ensure that agriculture grows at about 4 percent on a sustained basis.
- To ensure fiscal credibility, and consistency with the medium-term goals, the upcoming budget should initiate the process of expenditure control to reduce both the fiscal and revenue deficits.
- Banking is hobbled by policy, which creates double financial repression and impedes competition.
- The solution lies in a four-fold policy response captured in 4 Ds: deregulate, differentiate, diversify, and disinter.
- An intervention that can be immediately implemented is to eliminate the current negative protection facing Indian manufacturing. The trading environment is becoming more challenging as the buoyancy of Indian exports has declined.
- India has taken a number of green actions. It can make a positive contribution to the forthcoming Paris negotiations on climate change.
- Improving the status and treatment of women is a major development challenge.
- India must meet its medium-term fiscal deficit target of 3 percent of GDP. This will provide the fiscal space to insure against future shocks.
- India must also reverse the trajectory of recent years and move towards the golden rule of eliminating the revenue deficit and ensuring that, over the cycle, borrowing is only for capital formation.
- The way to achieve this objective should be based on firm control over expenditures, most notably by eliminating leakages in subsidies and social expenditures.
- Price subsidies are often regressive, a rich household benefits more than a poor household.
- Leakages in subsidies are large and can be reduced without compromising household welfare. Cash transfers can augment the effectiveness of existing anti-poverty programs.
- Jan Dhan Yojana, Aadhaar and Mobile numbers - allows the state to offer this support to poor households in a targeted and less distortive way.
- Two alternative financial delivery mechanisms are suggested - Mobile Money - with over 900 million cell phone users, it offers tremendous opportunities to direct Aadhaar based transfers, Post Offices - the large Postal Network in India can seamlessly fit into the Aadhaar linked benefits-transfer architecture.
- The stalling rate of projects has been increasing at an alarmingly high rate in the last five years, and rate is much higher in the private sector.
- Expectation that the private sector will drive investment needs to be moderated. In this light, public investment may need to step in to recreate an environment to crowd-in private sector investment in the short term.
- Efforts must be made to revitalize the public-private partnership model of investment, albeit in a different manner.
- The Indian banking system is affected by what might be called "double financial repression." Financial repression on the asset side of the balance sheet is created by the statutory liquidity ratio (SLR) requirement that forces banks to hold government securities, and priority sector lending (PSL).
- Financial repression on the liability side has arisen from high inflation since 2007, leading to negative real interest rates, and a sharp reduction in households' financial savings.
- The decline in public as well as private corporate investment has been associated with the growth decline in recent years. The two biggest challenges facing increased public investment in India are financial resources and implementation capacity.
- The present government can now do for the neglected railways sector what the previous NDA government did for rural roads.
- This impetus has the potential to crowd in greater private investment and do so without jeopardizing India's public debt dynamics.
- The provisions of the Model APMC Act do not go far enough to create a national - or even state-level common market for agricultural commodities.
- The 2014 budget recognizes the need for setting up a national market and stated that the central government will work closely with the state governments to reorient their respective APMC Acts to provide for the establishment of private market yards/private markets.
- More steps may have to be taken and incremental moves may need to be considered to get the states on board. For example, first it may be possible to get all the states to drop fruits and vegetables from the APMC schedule of regulated commodities, followed by cereals, pulse and oil seeds, and then all remaining commodities.
- India has cut subsidies and increased taxes on fossil fuels turning a carbon subsidy regime into one of carbon taxation.
- The move to substantial carbon taxation combined with India's ambitious solar power program suggests that India can make substantial contributions to the forthcoming Paris negotiations on climate change.
- Commodities transaction tax expanded to cover 38 more items
The Finance Ministry has expanded the list of agricultural commodities on which the commodities transaction tax (CTT) is currently levied. As many as 38 items have been added to the existing list of 23 commodities.
For this purpose, the Central Board of Direct Taxes has amended the CTT Rules notified in July 2013. The new items that have been added include rice, bajra, ginger, sesamum, small millets, tur, tur dal, urad, urad dal, onion, groundnut, moong dal, methi, ragi , betelnuts, cinnamon, nutmeg, jowar, linseed, gram daland sunflower seed.
Currently, some of the new items added to the list are not traded on commodity bourses. This CBDT move is significant as it comes a fortnight before the Budget for 2015-16 is to be presented. The Forwards Market Commission – the regulator for commodity futures market in India – had recently suggested to the Finance Ministry that the CTT should be either done away with in the upcoming Budget or the quantum of the levy should be reduced.
The Center had imposed a 0.01 per cent CTT on primarily non-agricultural commodities from July 2013, resulting in the volume of trade on the commodity exchanges dropping. - Food prices remain in inflationary zone
Declining fuel rates dragged down Wholesale Price Index (WPI)-based inflation to -0.39 per cent in January, the second month to witness a fall in prices this financial year, though food items remained expensive. In December, inflation stood at 0.11 per cent. Meanwhile, wholesale inflation for November was re-estimated to -0.17 per cent
The fall in wholesale prices in January was the steepest in five and a half years (in June 2009, WPI inflation stood at -0.39 per cent). In January 2014, it was 5.11 per cent.
Data released last week showed Consumer Price Index (CPI)-based inflation rose to 5.11 per cent in January from 4.28 per cent in December. The base year for the CPI was revised from 2011 to 2012. Also, the weights of various items in the index were changed on the basis of the 2011-12 consumption expenditure survey, against 2004-05 earlier. The government is also in the process of changing the WPI base year from 2004-05.
IMP POINTS- CPI-based inflation stands at 5.11 per cent in Jan 2015 against 4.28 per cent in Dec 2014
- CPI revised with the new base year of 2012 instead of 2010. Similarly, weights in CPI also revised on the basis of consumption expenditure survey of 2011-12 against 2004-05
- WPI is also in the process of revision, but currently the base year remains 2004-05
- Though it is deflation at the level of headline WPI number, food inflation rose in January. Vegetable inflation is above 19 per cent.
- Direct Benefit Transfer will be a game-changer: Crisil
Direct benefit transfer (DBT) could help the government save as much as 20 per cent (or Rs. 25,000 crore) in food subsidy expenditure in 2015-16, by eliminating costs associated with procuring, distributing and storing food grains, according to Crisil Research.
These incidentals are so high that they raise the economic cost under the public distribution system (PDS) above the market price of similar quality food grains.
According to Crisil estimates at fiscal 2016 prices, the cash transfers under the DBT will amount to almost Rs. 5,800 per year for a family of five, which will implicitly raise their disposable income.
At first glance, Rs. 5,800 may seem small, but it is higher than the reported total annual expenditure (food + non-food) of the poorest 5 per cent of the rural households and more than half the annual expenditure of the poorest 10 per cent of urban households
According to Crisil, given the high marginal propensity to consume at lower income levels, such a significant unconditional cash transfer will undoubtedly raise discretionary spending of the recipient households, providing a consumption boost to the economy.
Moreover, households have the choice on how to use the cash – whether to buy food grains or something else and thus maximize their utility.
The note said DBT also fits snugly into the concept of Pareto improvement, a development that hurts none and helps at least one person in the economy. The actual success of the scheme and its consumption impact on the economy, however, depends on the progress in identifying those eligible, and the speed of its implementation. - Prime minister urges defense firms to lead 'Make in India' charge
Indian Prime Minister Narendra Modi inaugurated Aero India 2015, India's premier aerospace exhibition in Bangalore. In a major policy speech he said that Make in India should be implemented in Defense Projects
Repeating the familiar lament that 60 per cent of India's defense requirements were still imported, Modi said, that there were studies that show that even a 20 to 25 per cent reduction in imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India.
While claiming credit for raising the permitted level of foreign direct investment (FDI) in defense from 26 to 49 per cent (with up to 100 per cent permissible in cases where a vendor is bringing in state-of-the-art technology), permitting investments up to 24 per cent by foreign institutional investors (FIIs), and drastically pruning the list of products for which defense licences are required, Modi declared that much more needed to be done.
The measures the PM listed have been repeatedly projected by industry bodies to the defense ministry. Now, there was visible satisfaction and delight amongst private industry chief executives on hearing their recommendations being played back to them by the PM. - RBI allows banks to give gold on loan to jewelers
The Reserve Bank of India on 18th December allowed nominated banks to provide gold on loan to jewelers. RBI has clarified that the status of gold import after removal of the 80:20 scheme in end-November, the central bank also said there would be no restriction on import of gold coins, although commercial banks will still not be allowed to sell these in the home market.
Nominated banks for gold import would now be able to import the yellow metal on consignment bases. Meaning, they can import and pay once they actually sell the gold and realist the payment. Banks can also provide gold on loan to jewelers.
This opens the gold import route further and addresses the liquidity crunch of jewelers, who were made to pay the full amount for buying gold since mid-2013.
RBI has said sale of gold to jewelers will have to be against full payment only. Jewelers will, however, prefer to take it on loan rather than purchasing outright. Banks were importing much less gold since removal of the 80:20 scheme in end-November.
In another important clarification, RBI has allowed star and premium trading houses or status holder export houses to import gold without end-use restrictions. This means, said an analyst, that they will be able to import by making full payment and can hold or even use that for trading. - Single window e-biz portal launched
The government on 19th February has launched a single window e-Biz portal for 11 Central government services to bring transparency and ease of doing business in the country. The project will help in fostering the business environment in the country in a holistic manner.
The portal will provide four services from Ministry of Corporate Affairs, two services of Central Board of Direct Taxes, two services of Reserve Bank of India and one service each from Directorate General of Foreign Trade, Employees Provident Fund Organization and Petroleum and explosives Safety Organization. A business user can avail the service any time.
The Center has also identified 10 pilot states for the implementation of these single-window services to expand this project across the country. The government is also planning to roll-out more than 200 services related to investors and businesses in next few years. - Govt. to remove minimum export price on potato
The Government has decided to remove the minimum export price of 450 dollars per tonne on the export of potato in view of the prevailing lower prices and higher domestic availability of potato. The removal of existing MEP on potato will help farmers in realizing better and remunerative prices. It will also help the exporters in earning valuable foreign exchange for the country through exports. - Cabinet approves Rs. 4,000/t subsidy for sugar export
The Centre has cleared a subsidy of Rs. 4,000 a tonne to sugar mills for exports of up to 1.4 million tonnes of raw sugar for the current season to September.
The Cabinet Committee on Economic Affairs, which approved the concession, decided that other conditions will remain the same as last year except in the case of mills that have alcohol production capacities. These mills will be given incentives for supplying ethanol to oil marketing companies under the ethanol blended programme. They will be eligible for incentives for up to 25 per cent of their annual alcohol production level
The move will help mills clear sugarcane arrears, estimated at Rs. 12,300 crore up to February 15. The decision will help corporates such as Bajaj Hindustan, Triveni Engineering, Dhampur Sugar, Bannari Amman and Sakthi Sugars. - Center notifies rules for FDI in insurance
The Center has notified rules for higher foreign direct investment (FDI) in the insurance sector, which will help foreign companies raise or make fresh investments in Indian companies. The new rules have come almost two months after an ordinance was promulgated.
Technically speaking, even if the ordinance lapses now, the rules will continue to be in place and accordingly all actions will have legal validity. The ordinance was issued as the Insurance Laws (Amendment) Bill has been pending in Rajah Sabha since 2008. Now, it is mandatory for the Government to get the Bill passed, otherwise the ordinance will lapse.
According to these rules, foreign equity investment cap of 49 per cent is applicable to all Indian insurance companies. This will comprise both FDI and foreign portfolio investment (FPI). FDI means buying equity directly from the company and proceeds going to the company, while FPI refers to buying equity from the stock market, but money not going to the company. Instead, the shareholder, in its personal capacity, gets the money.
The 49 per cent limit is the composite cap, which means FDI or FPI alone can have 49 per cent. However, SEBI norms prescribe that FPI investment cannot be more than 24 per cent in a company. Only if shareholders approve, FPI investment can go up to 49 per cent.
The rules also say that Indian insurance companies should ensure that ownership and control remains in the hands of resident Indian entities. FDI proposals up to 26 per cent of the total paid-up equity of an Indian insurance company will be allowed on the automatic route, and FDI proposals which take total foreign investment above 26 per cent and up to the cap of 49 per cent, will require Foreign Investment Promotion Board approval. - Cabinet approves over Rs 8600 cr worth of highway projects
Government has given its approval for over 8 thousand 6 hundred crore rupees of Highway projects in Uttar Pradesh, Odisha and Chhattisgarh The Cabinet Committee on Economic Affairs approved the six laning of Chakeri-Allahabad section of NH-2 in Uttar Pradesh. It has also approved six-laning of Handia-Varanasi section of NH-2 in Uttar Pradesh.
Approval was also given for six-laning of Baleshwar-Chandikhole section of NH-5 in Odisha and the development of four to six laning of the Raipur-Bilaspur section of NH-30/NH-130 in Chhattisgarh.
The work for these approved road projects will be under National Highways Development Project Phase Five. In another decision Government also okayed a subsidy on export of up to 1.4 million tons of raw sugar in the ongoing 2014-15 marketing year. - 12th Plan to continue for now: FM
The government has replaced the 60-year-old Planning Commission with the NITI Aayog but it will continue with the 12th Five-Year Plan, formulated by the previous United Progressive Alliance government, at least for the "time being".
The Plan, formulated by the Manmohan Singh government, had targeted eight per cent annual average growth during the five years. With the change in definition of the gross domestic product, new estimates will have to be made. The mid-term appraisal is due in 2015-16.. - India a nearly '100 percent banked country', UN Commission
India is a nearly 100 percent banked country that offers its citizens universal access to financial services aimed at spurring development, according to a UN commission
In the five months since the universal banking access programme, Pradhan Mantri Jan Dhan Yojana, was launched, 100 million people have opened bank accounts, Mayank Joshi, a first secretary in India's UN Mission told the Commission for Social Development. India has undertaken several other programmes in the areas of housing and shelter, health insurance, employment generation, and family planning. - India a $2.1 trillion economy under new GDP measure
The growth of the Indian economy is projected to accelerate to 7.4% in the current fiscal compared with 6.9% last year based on a new way of calculating gross domestic product (GDP). At this level it is estimated to be on par with China, currently the fastest growing economy in the world.
It is also the first time that the economy is projected to be bigger than $2 trillion. India’s GDP is estimated to be $2.1 trillion in 2014-15. The data released on 9th February
With the first three quarters’ economic growth numbers at 6.5%, 8.2% and 7.5% respectively, the data assumes that in the fourth quarter (January-March), GDP will grow at 7.5%. The new growth numbers have been arrived at after a revision of the way GDP is calculated in India.
The Central Statistics Office has revised the base year on which comparisons are made to 2011-12 from 2004-05. It has also expanded its coverage of manufacturing and included under-represented sectors and data from the corporate database of the government in arriving at the growth figure.
The data, however, maintains that gross fixed capital formation, indicative of investment demand in the economy, is set to shrink to 28.6% of GDP from 29.7% of GDP a year ago at current prices. At the same time, private consumption will improve marginally to 60.4% of GDP in 2014-15 from 59.7% of GDP a year ago.The new data series launched on 31 January for 2012-13 and 2013-14 GDP numbers
The statistics department changed the way it calculates the headline GDP growth number to GDP at market prices from GDP at factor cost to make India’s growth rates comparable internationally.
As a result, GDP growth for 2012-13 was revised from 4.7% under the old series to 5.1% in the new series, while the same data for 2013-14 was raised from 5% to 6.9% based on market prices. GDP at market price adds taxes to and deducts subsidies on products and services from GDP at factor cost.
The latest data shows that while agriculture, mining and trade, hotels and public spending slowed in 2014-15 compared with the previous year, key sectors such as manufacturing, construction and financial sectors grew at a faster pace than a year ago. - India’s monthly per capita income rises by 10 per cent
India’s monthly per capita income, the measure of standard of living, is likely to be at Rs 7,378.17 ($118.68) this financial year, up over 10 per cent from last year, after a revision in the method of calculations. In the previous fiscal, the per capita income estimated to have grown by 12 per cent to `6,699 ($107.75) per month, government data showed.
The revised method of calculation takes into account gross value added in goods and services as well as indirect taxes. Also, the base year has been changed from 2004-05 to 2011-12. - Cabinet nod for more capital for minority financial institution
The Union Cabineton 10th February approved a proposal to enhance the authorised capital of the National Minorities Development and Finance Corporation that works for welfare of minorities.
The authorised share capital of the National Minorities Development and Finance Corporation will be increased from Rs.1,500 crore to Rs.3,000 crore. The Cabinet also gave approval to revise the shareholding pattern from 65:26:9 to 73:26:1 among the Centre, States/Union Territories and individuals/institutions, respectively. - ICICI Bank launches digital service ‘Pockets’
ICICI Bank, on 10th February, launched the first digital bank in the country, ‘Pockets’, on a mobile phone.Anyone, including those who are not ICICI Bank customers, can easily download the e-wallet from Google Playstore, fund it from any bank account, and start transacting immediately.
This wallet uses a virtual Visa card, which enables the users to transact on any website or mobile application in India. Customers can also request for a physical card to use it at any retail outlet
The wallet allows users to instantly send money to any e-mail id, mobile number, friends on Facebook and bank account. The users can pay bills, recharge mobiles, book movie tickets, order food, send physical and e-gifts, split and share expenses with friends by using this e-wallet.
The limit for transaction is of worth Rs.10,000, if it is not linked to a savings account of ICICI Bank. Users can choose to add a zero-balance savings account to the wallet, which will allow them to earn interest on their idle money. - Reliance Power to set up 6,000 MW solar park in Rajasthan
Reliance Power inked a pact with Rajasthan government to develop a 6,000 MW solar park in the state over the next 10 years. A MoU in this regard was signed by state Chief Minister Vasundhara Raje and Chairman of Reliance Power Anil Ambani
Raje also dedicated Reliance Power's 100 MW Concentrated Solar Project (CSP) located at Pokhran in Jaisalmer district to the nation. Rajasthan Sun Technique Energy, a wholly-owned subsidiary of Reliance Power, was awarded the CSP project in 2010 based on international competitive bidding.
Reliance Power claims to have the largest portfolio of power projects in the private sector based on coal, gas, hydro and renewable energy with an operating portfolio of nearly 6,000 MW. A few days ago Gautam Adani-led Adani Enterprises also signed a pact with the Rajasthan government to develop the country's largest solar park in the state with 10,000 MW capacity over the next 10 years at an estimated investment of about Rs 40,000 crore. - Star India acquires Maa Television
Star India, an arm of the $85-billion 21Century Fox, will acquire the broadcast business of Maa Television Network for an undisclosed sum. This was announced by Maa Television Chairman and serial investor Nimmagadda Prasad on 11th February. The company is promoted by Prasad, actor-turned politician Chiranjeevi and actor Nagarjuna. - India one of top 3 markets for equities in 2015: CFA survey
India is one of the top three markets worldwide for equity investment opportunities in 2015, according to the CFA Institute’s latest annual Global Market Sentiment Survey (GMSS) for 2015.
The survey of 5,259 CFA charter-holders and members globally — including portfolio managers, research analysts, consultants and C-suite executives — identified the US as the market with the most potential in the ongoing calendar year; every third respondent selected it as their top pick for equity market performance.
China was another favourite, attracting 9.3 per cent of survey respondents’ votes. India rounded up the top 3 with 8.9 per cent of survey respondents betting on the market to outperform this year.
On an average, the CFA Institute members expect the global economy to grow by 2 per cent in 2015, below the World Bank’s most recent forecast of 3.4 per cent. Members in France and Germany were the most optimistic, expecting GDP growth of 2.6 per cent, while survey respondents in Australia and Hong Kong were the most pessimistic with a 1.6 per cent projection.
In the previous year’s survey, 78 per cent of the Indian members had indicated that political stability was their biggest concern, but this year, that proportion fell to just 2 per cent. Not just that, 87 per cent respondents were confident that political stability at home would have a positive impact on growth. And 28 per cent of the respondents also indicated that an increased focus on job creation and consumer consumption would be a big factor in the performance of the economy.
On the employment front, members in India and China were considerably more bullish than those of other countries. Around 77 per cent of domestic respondents believe that opportunities will increase this year, compared with 60 per cent of the Chinese survey participants. In contrast, 88 per cent of members in Germany and 86 per cent in Brazil and Switzerland expect employment opportunities in their markets to contract or remain stagnant.
Although the world economy is expected to grow, the optimism was tempered by concerns about continued weakness in developed economies. This was cited as the biggest risk to global markets by the majority of respondents from various countries. Indian CFA Institute members in particular were apprehensive about a continued slowdown, with 44 per cent of them citing it as the biggest risk, compared with 3 per cent from the UK. As far as the local market, 33 per cent of survey respondents said that inflationary surprises posed the greatest risk. - Industrial production growth slows to 1.7% in December
Industrial production growth rate slowed to 1.7 per cent in December last year on sequential basis mainly due to a contraction in the mining and quarrying sector. The growth in factory output, as measured by the Index of Industrial Production (IIP), in the month under review was, however, higher as compared to December, 2013 when it expanded by 0.1 per cent.
The November IIP has been revised upwards to 3.9 per cent from 3.8 per cent. For the April-December period of 2014-15, IIP is 2.1 per cent as against 0.1 per cent in same period of the last fiscal.
As per government data released on 12th February, manufacturing output, which constitutes over 75 per cent to the index, grew by 2.1 per cent in December compared to a dip of 1.1 per cent in the same month a year ago.
For April-December period, the sector saw an output growth of 1.2 per cent, compared to a contraction 0.4 per cent in the year-ago period.Output in the mining sector contracted by 3.2 per cent in December, compared to a growth of 2.6 per cent in the same month last year.
During the April-December period, the output has grown by 1.7 per cent compared to a contraction of 1.5 per cent year-on-year. The production of capital goods, a barometer of demand, grew by 4.1 per cent in December as against a contraction of 2.5 per cent in same month of last year. During the April-December period, capital goods output grew by 4.8 per cent as against a dip of 0.4 per cent. Thirteen out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of December 2014 year-on-year. - Tata Steel to acquire three service centres of SSAB in Nordic region
Tata Steel Europe on 12th February announced the acquisition of three service centres from SSAB, a Swedish steel manufacturer of strip, plate and tubular products, to strengthen its offering to manufacturers in the region. Tata Steel has acquired the company’s facilities in Sweden, Finland and Norway for an undisclosed amount. - Exports fall 11.9% in January
India’s goods exports declined for the second consecutive month in January, falling 11.19 per cent to $23.88 billion compared with the same month last year as outbound shipments of petroleum products, oilmeal, electronic goods and iron ore continued to dip.
Imports, too, dropped 11.39 per cent to $32.20 billion during the month as oil imports fell, narrowing the country’s trade deficit to $8.32 billion.
Gold imports rose 8.13 per cent to $1.55 billion from the same month last year as the Government eased import restrictions.
While petroleum products posted the steepest export decline of 48.69 per cent (to $2.38 billion), exports of a large number of other items such as plastic and linoleum, handicrafts, jute products, cotton yarn, electronic goods, oil meal, iron ore, chemicals and gems and jewellery also suffered a decline.
FIEO has urged the Centre to restore the 3 per cent interest subvention scheme for exporters. It was discontinued at the beginning of this financial year.
Oil imports fell 37.46 per cent to $8.24 billion in January as global prices crashed.Although non-oil imports rose 3.45 per cent during the month to $23.95 billion, a sharp fall in the import of project goods, machinery and some raw materials indicate a slowdown in manufacturing.
Exports for the April-January period rose 2.44 per cent to $265.03 billion from the same period last year. Imports during the April-January period rose 2.17 per cent over the year-ago period to $383.41 billion. The trade deficit for the April-January period was $118.37 billion, higher than the deficit of $116.53 billion in the comparable period last year. - India to be power surplus in 2019: Goyal
According to Union power minister Goyal, the country would be power surplus in 2019, and several measures were underway to achieve the goal. Current generation is one trillion
The target would be achieved by a combination of measures such as putting up additional power generation capacity and adoption of stringent energy conservation procedures
The government was undertaking route cause analysis for problems bogging sectors and coming out with policies for faster remedial action and implementationSince 32,000 MW of thermal capacity was now 25 years old, the government was encouraging for the phasing out of these plants and capacity expansion at the same location with supercritical power units
Over 70,000 MW worth of power plants, which were deeply underutilised or shut down, were being looked at to achieve optimum generation. Over 14,000 MW of gas based plants that had closed down due to unavailability of gas were likely to be revived.
Another 30,000 to 40,000 MW of capacity that were getting ready or were struck at various stages of implementation were also being given a policy push. Three large hydro projects, namely, Subansiri in Arunachal Pradesh, Teesta in Sikkim and Maheshwar in Madhya Pradesh, stalled for many years, were being given priority for revival
To address the problem faced by a large number of incomplete mini-hydro projects, the government was coming out with a hydro policy that would help in their revival.
The renewable energy sector was being given a boost, and the government had initiated several steps to reduce transmission and distribution losses, increase plant load factor and reduce energy consumption by encouraging use of cost effective LED lights across the country. To provide cheaper fuel to thermal power plants, domestic coal is being augmented through a transparent allotment process. Towards achieving the objectives, Government is looking at $250-billion investment in coal, power and renewable energy sectors in the coming years. - One rupee notes to be bought
The Reserve Bank of India on 13 February 2015 announced that soon the currency notes of one rupees denomination will be in circulation. The notes will be printed by the Government of India.The colour of one Rupee Currency Note will be predominantly pink green on obverse and reverse in combination with others. - Revised guide lines for PMGSY
Union Government on 12th February 2015 approved revised guidelines for Pradhan Mantri Gram Sadak Yojana (PMGSY). The guidelines were revised to accord priority in the selection of roads for new connectivity as well as up gradation, leading to the eligible habitations in the Gram Panchayats identified by the Members of Parliament (MP) under Saansad Adarsh Gram Yojana (SAGY).- The model villages adopted by the MP under the SAGY will currently get rural roads under PMGSY on priority basis. Similarly, in these model villages, rural roads constructed or upgraded under PMGSY would have to be maintained by the State Governments up to prescribed standards and even beyond the built in period of 1st 5 years.
- As per the amended guidelines, the State Governments shall give priority to all roads leading to the Gram Panchayats identified under SAGY irrespective of Comprehensive New connectivity Priority List (CNCPL) to include all eligible unconnected habitations in the selected Gram Panchayats.
- In case of up gradation of roads, priority shall be given to the roads which have Pavement Condition Index (PCI) Value-I & II in the Gram Panchayats identified under SAGY.
- However, the length required for up gradation of these roads should be within the overall target allocated to various States under PMGSY-I and PMGSY-II.
- Moreover, in case of roads already built under PMGSY, in the Gram Panchayats identified under SAGY, State ought to carry out maintenance as per the activities suggested in the Operations Manuals and Rural Roads Manual, even if the maintenance period of five years is over.
- The State Governments must guarantee PCI of not less than four for all such roads at all times. Adequate funds for this purpose will be provided by State Governments.
About PMGSY Scheme:
The Pradhan Mantri Gram Sadak Yojana or PMGSY is a nationwide plan in India to provide good all-weather road connectivity to unconnected villages. This Centrally Sponsored Scheme was introduced in 2000 by the then Prime Minister Of India Shri Atal Bihari Vajpayee. It is under the authority of the Ministry of Rural Development and was begun on 25 December 2000. It is fully funded by the central government. - Panel to asses CSR activities
The Union Government on 3 February 2015 constituted a High Level Panel to suggest a framework to assess Corporate Social Responsibility (CSR) activities undertaken by companies under the Companies Act, 2013.
The panel will be headed by former Union Home Secretary Anil Baijal. The members will be Deepak Nayyar, Professor at Jawaharlal Nehru University, Onkar S Kanwar, Apollo Tyres Chairman and Managing Director, Kiran Karnik, Former Nasscom President
The Union Ministry of Corporate Affairs and the Indian Institute of Corporate Affairs (IICA) will jointly provide the secretarial and technical support to the panel.
The panel is………..- To evaluate money spent on CSR activities by the companies.
- To recommend suitable methodologies for monitoring compliance of the CSR provisions.
- To suggest measures to be adopted by the companies for systematic monitoring and evaluation of their own CSR initiatives.
- To identify strategies for monitoring and evaluation of CSR initiatives through expert agencies and institutions to facilitate adequate feed back to the government with regard to the efficacy of CSR expenditure.
- To look at whether a different monitoring mechanism is required for government companies undertaking CSR works. If it is found necessary, then necessary suggestions will be made.
- Core sector growth drops to 3-month low in December
Annual growth in production of the eight key infrastructure industries declined to a three-month low of 2.4 per cent in December, compared with 6.7 per cent the previous month and four per cent in December 2013. This is likely to have a negative impact on the industrial growth numbers for the month, as these industries have a weight of 38 per cent on the Index of Industrial Production (IIP).
In the first nine months of 2014-15, the eight core sector industries grew 4.4 per cent, against 4.1 per cent in the corresponding period the previous year, official data showed on 2nd February.
The December numbers came as a dampener, especially as there had been some signs of a turnaround in India’s industrial growth the previous month. Industrial output had in November grown 3.8 per cent on a year-on-year basis, after contracting 4.2 per cent in October. Now, if industry does not perform well in December, any theory of a reversal of slowdown might have to be revisited.
This could also affect the rate of economic growth for 2014-15 — India’s gross domestic product (GDP) had expanded 6.9 per cent in 2013-14 — since the current financial year’s numbers will be based on IIP in so far as industry is concerned. Though the annual survey of industries for 2013-14 has not yet been released, the figures for the previous year will have a bearing on GDP numbers for 2013-14.
Core sectors: coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity - Big companies in competition to set up small banks
The Reserve Bank of India has received applications from big companies such as Reliance Industries Ltd, Aditya Birla Nuvo Ltd, Bharti Airtel and Vodafone for setting small payment banks.
The deadline for submission of applications for niche banks – payments banks and small finance banks ended on 2nd February after being extended by the RBI from January 16 to February 2.
All about Payments Bank
It is aimed at enabling payments and remittances to migrant labour workforce, low income households and small businesses that do not have access to regular banking branches. The maximum deposit that a payment bank can accept from an individual customer is Rs.1 lakh. A payments bank can issue you a debit and ATM cards for easy transactions. However, it cannot undertake any lending activity.
Small bank can do everything that a large bank can do but at least 50 per cent of its loan portfolio should constitute loans and advances of less than Rs. 25 lakh. - SLR cut 50 basis points
In its latest monetary policy announced the Reserve Bank of India Governor Raghuram Rajan on 3rd February, the repo rate (the rate at which the RBI lends short-term to banks) was left unchanged at 7.75 per cent in the sixth bi-monthly monetary policy. However, to encourage banks to lend more, the central bank announced a 50-basis points cut in the statutory liquidity ratio — the investment they necessarily have to make in government securities — to 21.5 per cent from 22 per cent.
The cut in the SLR is expected to make banks liquid to the tune of about Rs. 45,000 crore.
The central bank also announced a slew of other measures…….- A proposal for providing greater flexibility in the pricing of instruments to meet the emerging needs of foreign direct investment.
- The RBI rejected banks’ plea to extend the deadline (of April 1, 2015) for withdrawing the special asset classification benefit for all restructured loan accounts by a year. This could lead to lowering of the asset classification of these accounts, requiring banks to make provisioning.
What is Statutory Liquidity Ratio?
SLR is the amount of liquid assets, such as cash, precious metals or other short-term securities, that a financial institution must maintain in its reserves. - Non-callable deposits with higher returns
The Reserve Bank of India proposes to allow banks to take “non-callable deposits” which will not allow the customer to withdraw the money till the end of the tenure. Banks may pay higher interest rates on non-callable deposits to compensate the depositor for sacrificing the discretion to withdraw money
Individuals and companies with surplus liquidity, which may not be required for a certain period of time, can lock into such deposits. The move is aimed at overcoming the asset-liability mismatches for banks. - Forex limit rose
The Reserve Bank of India on 3rd February increased the amount Indians can invest or spend abroad in foreign exchange without seeking its permission. Individuals can now buy property abroad, hold shares or debt instruments, or any other assets or purchase gifts up to limit of $250,000 (Rs 1.5 crore) per person per year.
The earlier limit under the liberalized remittance scheme (LRS) was $125,000 (Rs 75 lakh). Under this scheme, individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions, without permission from the RBI.
The RBI had reduced the limit for foreign exchange remittances under this scheme to $75,000 (Rs 45 lakh) in 2013 as the rupee came under strong pressure. Later, in June 2014, the central bank raised the limit to $125,000 (Rs 75 lakh). - Reinvestment of coupons in G-Secs
To incentivize long-term investors in government securities, the RBI has allowed reinvestment of coupons in G-Secs even when exiting limits are fully utilized. As on date, the limit on investment in G-Secs is fully utilized, the RBI said. The investment limit in G-Secs for foreign portfolio investors (FPIs) is $30 billion of which $5 billion is reserved for long-term investors.
RBI has also decided to harmonize the minimum residual maturity requirement for future FPI investment in G-Secs and corporates at three years. Earlier, the three-year condition was applicable only to FPI investment in G-Secs. However, FPI investment in corporate bonds did not have any ceiling with regard to tenor. - UN Report on Indian poverty
About 30 crore people still live in extreme poverty in India even as the Millennium Development Goal (MGD) programme will expire in December, a United Nations report has said.
India, which has a population of over 125 crore, adopted the United Nation's MGD in 2000 with an aim to free millions from extreme poverty and hunger, illiteracy, poor health.
The eight-point MGD among others targets promotion of gender equality and women empowerment, reducing child mortality, improve maternal health, combating HIV/AIDS and environmental sustainability.
India has an opportunity to become a leader in sustainable development. It has achieved the poverty reduction target, but the progress is uneven, said the report.
After MGD expiry, the UN will begin its SDG programme. India has halved incidence of poverty from 1990s. Still over 27 crore people in 2012 remained in extreme poverty, making the post-2015 goal of eliminating extreme poverty by 2030 challenging, but feasible. - 8% GDP growth helped reduce poverty: UN report
United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has said the 8 per cent GDP growth in India from 2004 to 2011 led to a sharp decline in poverty from 41.6 per cent to 32.7 per cent and achieved the first Millennium Development Goals (MDGs) set for 2015 of reducing poverty by half.
In a report — India and the MDGs — UN ESCAP said …….- Other MDGs achieved include gender parity in primary school enrolment, maternal mortality reduction by three-fourths and control of spread of HIV/AIDS, malaria and tuberculosis.
- India also achieved MDGs related to increased forest cover, halved the proportion of population without access to drinking water.
The MDGs that India has missed are…………- Universal primary school enrolment and completion and
- Universal youth literacy by 2015, empowering women through wage employment and political participation,
- Reducing child and infant mortality and improving access to adequate sanitation to open defecation.
- RBI issues final guidelines on capital buffer for banks
The RBI on 5th February released the final guidelines for enabling banks to have unhindered credit flow to sectors such as infrastructure, power and ports during difficult times. Technically called Countercyclical Capital Conservation Buffer (CCCB), it is a system where banks save up on good days for tough times.
It also aims to reduce the overexposure of the banking system during good times, as banks have been found to lend excessively and often carelessly when the going is good.
The central bank said that it will, for most parts, announce the percentage of money that banks need to set aside as CCCB at least four quarters in advance. This will be mainly based on the credit-GDP ratio in the economy at various points in time.
The central bank clarified that banks will have to start setting aside money as soon as the credit-GDP ratio falls to 3 per cent. This will increase progressively till the credit-GDP ratio reaches 15 per cent. At this level, banks will have to set aside a full 2.5 per cent of the total risk weighted assets towards CCCB. - Alibaba arm buys 25% in Paytm parent
Alibaba has taken a 25 per cent stake in Paytm, a mobile commerce company. Ant Financial Services, part of Jack Ma’s Alibaba Group, has bought the stake in One97 Communications, which owns Paytm.
Alibaba is investing around $700 million. This is Ant Financials first investment in an Indian company. The deal values One97 at more than $2 billion, taking it to the big league in the Indian start-up universe. Paytm will use the funds to grow its mobile payment ecosystem and boost its commerce user-base, the companies said in a joint statement.
According to IDC, with 72.5 million units, India was the fastest growing smartphone market in Asia-Pacific in the third quarter 2014; the market had grown 15 per cent quarter-on-quarter and 9 per cent year-on-year. - NITI Aayog meet
Indian Prime Minister Narendra Modi on February 2ndsought ideas from economists to attract investments, create jobs and finance infrastructure to put the country back on a high growth path.
Modi brainstormed suggestions with leading economists at the maiden meeting of the “think tank” NITI Aayog and will follow it up with another meeting with Chief Ministers on 8th February
The meeting also discussed suggestions with regard to effective implementation of several flagship schemes of the government and how poverty levels can be brought down.
The NITI Aayog came into existence on January 1 after the government scrapped the Planning Commission. - Healthy competition favoured:The Prime Minister noted that one of the objectives of NITI Aayog was to establish a dynamic institutional mechanism where eminent individuals outside the Government system could contribute to policy making.
Setting the tone for the interaction, the Prime Minister emphasized on the need for cooperative federalism, and added that he favoured healthy competition for development among states.
The economists emphasized on the need for the Government to work towards high growth, predictable tax regime, fiscal prudence and rapid infrastructure development. A large number of other suggestions were also made on various sectors of the economy. - Govt. to infuse Rs. 6,990 crore in 9 public sector banks
Government will soon infuse Rs 6,990 crore in nine public sector banks including SBI, Bank of Baroda (BoB), Punjab National Bank (PNB) for enhancing their capital and meeting global risk norms.
This is the first tranche of capital infusion for which the government had allocated Rs 11,200 crore in the Budget for 2014-15. The capital infusion has been decided based on the performance of the bank. Better the performance higher will be the infusion. The government has infused Rs. 58,600 crore between 2011 to 2014 in the state-owned banks.
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