ECONOMY AFFAIRS JANUARY 2016

ECONOMY AFFAIRS JANUARY 2016

• Andhra tops in implementing MGNREGA for 2014-15
  Andhra Pradesh has topped in the country in implementing the Mahatma Gandhi National Rural Employment Guarantee Act for the 2014-2015 in category of transparency and accountability.
  
  Ayyanna Patrudu, Andhra Pradesh Minister for Panchayat Raj and MGNREGA, said that the award will be given in New Delhi on 2nd of February.
  
  According to him the state topped in direct benefit transfer in the country under which the workers have been getting their wages directly to their accounts.
  
  Mr Ayyanna said about 95 per cent of wages are being directly made using electronic fund management and mobile management systems. The Minister also informed that in 2014-2015 fiscal 3100 crore rupees were spent on MNREGA of which 2153 crore rupees was disbursed directly through biometric system.
  
• Sebi sets up panel for commodity market
  The Securities and Exchange Board of India, now also the regulator for commodity derivatives, has set up an advisory committee for the commodity market.
  
  It will be chaired by Ramesh Chand, member, NITI Aayog. On it are Sameer Shah, managing director, National Commodity & Derivatives Exchange and P K Singhal, joint MD at Multi Commodity Exchange of India. Two senior officials of Sebi are on it, as are Vijay Sardana, a commodity expert, Gopal Krishna Nayak from the Indian Institute of Management at Bengaluru, and one G Chandrashekhar
  
  The role of the committee is to discuss issues relating to regulations and development of commodity markets and suggest required measures to the Sebi.
  
  Sebi has such advisory committees for almost all big segments and classes of stakeholders. The existing advisory committees are on te primary and secondary (equity capital) markets, investors protection, technical advisory, mutual funds, consent orders and compounding of offenses, corporate bonds, alternative investments and takeover regulations. Such committees include market and sector experts.
  
  Ramesh Chand, chairman of the committee, has at least 30 years of experience in research and teaching in agricultural economics and policy.
  
  Prior to joining NITI Aayog, he was Director of the National Institute of Agricultural Economics and Policy Research, Delhi.
  
• Indian economy less vulnerable to external shocks: S&P
  Indian economy is less vulnerable to external shocks as it is mainly driven by household consumption and government spending, Standard & Poor’s Rating Services reportedly said. S&P is expecting the current account deficit (CAD), to remain at a modest level of 1.4 per cent at the end of current fiscal and would continue at similar level till 2018.
  
• Centre clears new financing model for highway projects
  The union government on 27th January approved the hybrid annuity model for building national highways, paving the way for construction of 28 projects worth Rs. 36,000 crore this fiscal year.
  
  The move will speed up the construction of roads in the country by renewing interest of private developers in highway projects as the risk will be distributed between the government and the private players. The main object of the approval is to revive highway projects in the country by making one more mode of delivery of highway projects
  
  The government plans to build 28 national highway projects worth Rs.36,000 crore this fiscal year. Under the public-private partnership (PPP) model, the government will invest 40 per cent of the construction cost for building highways and the balance will come from the private developer. The government will invest money in five equal installments based on the targeted completion of the road project.
  
  The private developer will recover his investment from the government by receiving annuity payments over a period of 15 years. Under this model, the highway toll tax will be collected by the government unlike the build, operate and transfer (BOT) toll model where the private sector collects it. “So, there is no revenue or traffic risk on the part of the developer.
  
  A government official said this model will double the speed of highway construction in the country as the government will no longer will be dependent on its limited financial resources and the expertise of private sector will be utilised to operate and maintain the roads.
  
  In the next two fiscal years, the government will build more than 5,000 km of national highways based on the hybrid annuity model. In the present fiscal year, 1,000 km national highway projects were awarded through the BOT model – where a private operator funds the project, operates it for a period and transfers it back to the government – and 3,000 km through the engineering, procurement and construction (EPC) model in which the government pays the contractor a sum to build the project.
  
• India overtakes Thailand as world's largest rice exporter
  India has overtaken Thailand as the world's largest rice exporter in 2015, shipping 10.23 million tonnes. Thai Rice Exporters Association Chairman Charoen Laodhammatas said in Bangkok that Thailand exported 9.8 million tonnes of rice in 2015.
  
  He attributed the downturn to the global economy's contraction, especially among countries with high rice demand, noting that the falling price of oil also impacted the buying power of such countries. Thailand ended 2015 behind India for rice exports. India sold 10.23 million tonnes of rice. Vietnam was third globally while China remained the number one importer of rice.
  
• Govt signs loan deal with ADB for infra in Agartala & Aizwal
  The Government on 28th January signed an 80million US dollar loan agreement with the Asian Development Bank (ADB) to continue improving infrastructure in Agartala and Aizwal. The loan is the third tranche of a 200 million US dollar financing facility under the North Eastern Region Capital cities Development Investment Programme. It will be used for investments in water supply, solid waste management and sanitation in the two North Eastern capital cities.
  
  It will also support urban reforms, benefiting nearly a million people in the two cities. The loan agreement was signed by Mr Raj Kumar, Joint Secretary ministry of Finance and Ms Teresa Kho, Country Director, ADB.
  
• India gets more voting rights as IMF implements quota reforms
  Marking a "historic" change at International Monetary Fund (IMF), India, China and other emerging economies will now have more voting rights at the multilateral funding agency with the implementation of long pending quota reforms.
  
  For the first time, the four emerging economies – India, China, Brazil and Russia -- would be among the 10 largest members of the International Monetary Fund.
  
  Besides, more than 6% of quota shares would shift to dynamic emerging markets and developing countries. It would also mark the shift in shares from over-represented to under-represented IMF members.
  
  The much-awaited quota reforms, pending for many years, were approved by the US Congress in 2015. The 2010 Quota and Governance reforms were approved by the IMF's Board of Governors in December 2010.
  
  In a statement, IMF said the conditions for implementing its 14th General Quota Review, "which delivers historic and far-reaching changes to the governance and permanent capital of the Fund, have now been satisfied."
  
  The reforms also increase the financial strength of the IMF, by doubling its permanent capital resources to SDR 477 billion (about $659 billion). Currently, India has voting rights of 2.34% at the IMF, which has 188 members. In terms of quota, India has a share of 2.44%. Others in the top 10 largest members are the US, Japan, France, Germany, Italy and the UK.
  
  Noting that the reforms would reinforce its credibility, effectiveness and legitimacy, IMF said that for the first time its Board would consist entirely of elected Executive Directors. This would do away with the category of appointed Executive Directors -- currently members with the five largest quotas appoint an Executive Director.
  
  IMF Managing Director Christine Lagarde said these reforms would ensure that the fund is able to better meet and represent the needs of its members in a rapidly changing global environment.
  
  Advanced European countries have committed to reduce their combined Board representation by two chairs. Besides, the quota shares and voting power of the IMF's poorest member countries would be protected, it added.
  
  Other important points
  • The IMF has announced implementation of its long du equota reforms which was approved by the US Congress last year that will give more voting rights to emerging economies
  • The reforms by International Monetary Fund (IMF) represent a major step towards better reflecting in the institution's governance structure, the increasing role of dynamic emerging market and developing countries, IMF said in a statement, adding that this will reinforce its the credibility, effectiveness and legitimacy.
  • As a result of the quota reforms, four emerging market countries (Brazil, China, India, and Russia) will be among the 10 largest members of the IMF. Other top 10 members include the US, Japan, and the four largest European countries (France, Germany, Italy, and the UK).
  • Also for the first time, the IMF's Board will consist entirely of elected Executive Directors, ending the category of appointed Executive Directors.
  • Currently the members with the five largest quotas appoint an Executive Director. The scope for appointing a second Alternate Executive Director in multi-country constituencies with seven or more members has been increased to enhance these constituencies' representation in the Executive Board.
  • As a result, 13 constituencies-including both African constituencies-are currently eligible to appoint an additional Alternate Executive Director, it said.
  • IMF said following the effectiveness of the 14th General Review of Quotas, the focus will now turn to work on the 15th General Review of Quotas and securing the necessary broad consensus, including on a new quota formula.
  • With the entry into force of the Board Reform Amendment and all other general effectiveness conditions met, members can now pay for their quota increases to make them effective. This process is expected to be substantially completed within one month, the IMF said
  
  
• Bank of Japan introduces negative interest rate policy
  Japan's central bank shocked markets on 29th January with plans to effectively charge lenders to park their cash with it, ramping up a long-running battle to kickstart the world's number three economy.
  
  The unprecedented decision to adopt a below-zero interest rate policy is the Bank of Japan's latest weapon as it looks to spur bank lending and drive up inflation. In response, the Nikkei stock index soared almost three percent as the yen plunged.
  
  Under the plan, commercial lenders would now have pay to park cash at the BoJ, giving them an incentive to boost lending, which policymakers hope would stoke economic growth. A similar below-zero policy was adopted by the European Central Bank in 2014, the first time by a major central bank.
  
  All about Negative interest rate:
  With the benchmark rate now at -0.1 per cent, it essentially means that the BoJ will charge commercial banks 0.1 per cent on some of their deposits. According to a report in The Financial Times, negative interest rates will be adopted on the basis of a three-tier system. The current account that each financial institution maintains at the BOJ will be divided into three tiers, on which a positive, zero and negative interest rate will be applied.
  
  In June 2014, the European Central Bank became the first major central bank to adopt negative interest rates. It charged banks 0.3 per cent for holding their cash overnight. Sweden, Denmark and Switzerland also have deposit rates below zero.
  
  BoJ seems to be worried about a slide into deflation territory. Consumer prices have remained stubbornly low, suggesting that demand continues to remain muted with consumers postponing purchases. This could derail the recovery.
  
  According to analysts, collapsing inflation expectations is the key reason for the unexpected move. While the BOJ governor is previously reported to have said that it would hit the two per cent mark by 2016, BoJ now forecasts core inflation to average 0.2 to 1.2 per cent between April 2016 and March 2017.
  
  By charging banks for holding their money, BoJ is hoping that it will spur banks to lend. Theoretically, if bank lending expands, it could boost consumption and investment, and push growth.
  
  Lower rates could also help push down the Yen which could help boost Japanese exports. It might also trigger another round of competitive devaluations as countries try to increase their share in global trade. Many fear that in practice if banks make their customers pay to hold their money, it might lead to a situation where consumers hold on to cash.
  
  It is equally possible that banks may not pass on the charge to their customers. According to economists at the Deutsche Bank, banks in Europe have not passed these costs onto customers and have preferred to lower their profit margin between lending and deposit rates.
  
• GDP growth rate in 2014-15 revised downwards to 7.2%
  In an indication that a full-fledged economic revival may be more challenging than anticipated, the Central Statistics Office on 29th January scaled down the economic growth rate for 2014-15 to 7.2 per cent from its earlier estimate of 7.3 per cent, and that for 2013-14 to 6.6 per cent from the previous 6.9 per cent. The real gross domestic product (GDP) for the years 2014-15 and 2013-14 stands at Rs. 105.52 lakh crore and Rs. 98.39 lakh crore, respectively, showing growth of 7.2 per cent during 2014-15, and 6.6 per cent during 2013-14, according to the First Revised Estimate for National Income for 2014-15.
  
• India 2nd largest fruit producer in world
  The green revolution of the 1960s and 1970s ended chronic food deficits and while cereals still command the attention of policy makers, fruit production has surged impressively, making India the second largest global producer behind China.
  
  Annual growth in horticulture has seen fruit production grow faster than vegetables though the latter constitute the largest segment of this sector of agriculture. The stellar performance of fruits has attracted attention of statisticians with the agriculture ministry's 'horticultural statistics at a glance 2015' noting that India was making its presence felt as the second largest producer of vegetables and fruit.
  
  Grapes occupy the premier position in exports with 107.3 thousand tonnes valued at Rs 1,086 crore in 2014-15. Other fruits which attained significant position in exports are banana and mango
  
  Robust growth of horticulture indicates a growing demand within the country too. There is scope for further growth as while India lies second in the list of major fruit producing countries featuring China, the US, Brazil, Spain, Mexico, Italy, Indonesia, the Philippines and Turkey, its productivity lags most of these countries
  
  India's success in horticulture lies in small towns and districts. In 2012-13, Chittoor and Anantapur in Andhra Pradesh, Baramula in Jammu and Kashmir, Nalgonda in Telangana, Sagar and Shahdol in Madhya Pradesh, Darjeeling in West Bengal and Pune, Aurangabad, Jalgaon and Sangli in Maharashtra shone on India's fruit map
  
  China tops the list of fruit production with 154.364 million tonnes (MT) in 2013 followed by India (82.631 MT), Brazil (37.774 MT), USA (26.986 MT), Spain (17.699 MT), Mexico (17.553 MT), Italy (16.371 MT) and Indonesia (16.003 MT). Surprisingly, though productivity is a weak spot, India does better than China and Spain.
  
  The handbook, published by the Oxford University Press, points out that significant progress has been made in increasing area under horticulture resulting in higher production. State-wise, Maharashtra topped the list followed by Andhra Pradesh, Gujarat, Tamil Nadu, Uttar Pradesh, Karnataka and Madhya Pradesh.
  
• Somnath Temple to invest in Gold Monetisation Scheme
  Somnath Temple Trust is all set to become first temple from Gujarat to deposit its idle gold in the Gold Monetization Scheme. The trustees of Somnath Temple Trust have given their nod to invest the yellow metal reserves in the scheme recently launched by the Government. The trust has around 35 kilo grams of gold and will deposit the gold which is not in day-to-day use of the temple.
  
  The decision was taken during the recent meeting of the trustees at the residence of Prime Minister in New Delhi. Prime Minister Narendra Modi is also a trustee of the Somnath Temple Trust of the historic Somnath Temple.
  
  Former Chief Secretary of Gujarat and trustee of the Somnath Temple Trust Mr. Praveen Lahiri said that all the trustees have agreed to the proposal of depositing the gold in Gold Monetization Scheme, which is not in day-to-day use of the temple. Now, the management will segregate the pure gold from the whole lot to finalize the quantum of gold which can be deposited.
  
• Easwar panel recommends lower capital gains tax
  The RV Easwar Committee on simplification of income tax laws has suggested amendments to allow for lower capital gains tax on annual earning of less than Rs. 5 lakh from share trading rather than treating it as a business income.
  
  Accordingly, it has suggested taxing the gains at 15 per cent and not 30 per cent. But it will be taxed as long-term capital gains if held for more than one year and shown as capital assets.
  
  On the issue of disallowance under Section 14A, it has proposed that the dividends received after levy of dividend distribution as well as income from shares that have already been taxed at the firm’s hands will not be treated as exempt income and no expenditure will be disallowed on them.
  
  It has proposed raising the TDS rate on winnings from lotteries, horse races and crossword puzzles to 30 per cent. However, one of the members of the 10-member committee raised concerns that lower TDS rates may impact revenue collections.
  
  With a one-year time frame, the committee has said issues requiring deeper review will be dealt with in the next batch of recommendations and even the first report is not fully exhaustive in nature. In all, the report includes 27 suggestions for amendments to the Income Tax Act and eight for reform through administrative instructions.
  
  Public comments have been sought till January 23, following which the committee will finalise the first part of the report by January 31.
  
• IMF retains India's economic growth forecast at 7.3% for current fiscal
  The International Monetary Fund (IMF) has said India would continue to grow at a robust pace even as it cut the global growth forecast to 3.4 per cent for 2016. In its update on World Economic Outlook, the IMF on 19th January kept India's growth projection unchanged at 7.3 per cent in the current fiscal and 7.5 per cent in the next. However, the neighbour China's growth would slow to 6.3 per cent in 2016 and further to 6 per cent in 2017, said the global economy's watchdog in its update.
  
  IMF said, the risks to the global outlook remain tilted to the downside. These risks relate to ongoing adjustments in the global economy, that include a generalised slowdown in emerging market economies, China's re-balancing, lower commodity prices, and the gradual exit from extraordinarily accommodating monetary conditions in the United States.
  
• RBI to purchase govt bonds worth Rs 10,000 cr to infuse long-term liquidity in banking system
  The Reserve Bank has said, it will purchase up to 10,000 crore rupees worth of government bonds through an auction to infuse long-term liquidity in the banking system. The auction scheduled for tomorrow is the second such auction in the current financial year.
  
  RBI has offered to buy four government securities for a total value of 10,000 crore rupees saying that the move is based on its assessment of prevailing and evolving liquidity conditions. The move has arrived at a time when liquidity deficit has risen to 1-1.5 trillion rupees and banks are borrowing heavily through term repos and daily repo tenders as well.
  
• Richest 1% own more than the rest: Oxfam
  The richest 1 per cent of the world’s population now own more than the rest of us combined, aid group Oxfam said on 18th January, on the eve of the World Economic Forum (WEF) in Davos. The report, entitled “An Economy for the 1%”, states that women are disproportionately affected by the global inequality. Although world leaders have increasingly talked about the need to tackle inequality “the gap between the richest and the rest has widened dramatically in the past 12 months”, Oxfam said.
  
  Oxfam’s prediction last year that the richest one percent would soon own more than the rest of us, “actually came true in 2015”, it added. As a priority, Oxfam is calling for an end to the era of tax havens which has seen the increasing use of offshore centres to avoid paying taxes.
  
• Govt approves over Rs 5000 cr funding to push solar projects
  The Cabinet committee on economic affairs (CCEA) has approved setting up over 5,000 Mega Watt of Grid-Connected Solar Photo Voltaic Power Projects on build, own and operate basis. According to Minister for Power and Renewable Energy Piyush Goyal it will be implemented by Solar Power Developers with Viability Gap Funding under Jawahar Lal Nehru National Solar Mission.
  
  It will cost five thousand fifty crore rupees over five years and the total investments expected under the scheme is about Rs 30,000 crore. He said, it will give jobs to 30 thousand people, with reduction of more than 8 Million tonne of CO2 emissions into environment every year.
  
  The government has also approved a Rs 4,918-crore highway project for widening of NH 2 stretch in Bihar and Jharkhand to augment the state's infrastructure. The 222 kms long project will improve infrastucture in Bihar and Jharkhand and will reduce time of travel.
  
• World Economic Forum meeting starts in Davos
  Political leaders and business from around the world are starting an annual World Economic Forum meeting on 20th January in the Swiss resort of Davos. The agenda includes the outlook of the global economy and measures to fight terrorism. Leaders from about 40 countries and more than 2,500 business people are attending the meeting.
  
  The 4-day conference will cover the tumbling price of oil and China's uncertain economic prospects. Another topic will be growing terror threats in the wake of the November attacks in Paris. Europe's influx of migrants and refugees will also be on the agenda.
  
  Participants will also review the latest efforts to improve industrial production with robotics, artificial intelligence and information technology. Environmental issues such as greenhouse gas emissions will also be on the agenda.
  
• India among top 5 most promising markets globally
  India has emerged as one of the five most promising markets for businesses globally, says a survey released at the World Economic Forum (WEF) annual meeting at Davos, Switzerland on 20th January. The survey pointed out, India offers one of the best opportunities for both domestic as well as global companies.
  
  USA, China, Germany, the UK and India are the top five markets considered most important for overall growth prospects by the respondents, according to the annual global CEO survey of consultancy giant PricewaterhouseCoopers (PwC) released at the WEF Annual Meeting. The survey covered 1,409 CEOs spread across 83 countries.
  
• Narayana Murthy panel seeks favourable tax regime for VCs, PEs
  Pitching for drastic changes in norms governing venture capital and private equity funds, a Sebi panel has suggested favourable tax regime and measures to attract long-term funds from domestic and overseas investors.
  
  The recommendations of the committee, headed by Infosys founder N R Narayana Murthy, come at a time when the government has unveiled the ambitious 'Start Up India' campaign to boost entrepreneurship and create more jobs.
  
  Apart from calling for favourable taxation framework and ways to unlock domestic capital pools, the panel has also recommended promoting onshore fund management and reforming the current Alternative Investment Fund (AIF) regime.
  
  A significant recommendation is for introduction of Securities Transaction Tax (STT) for private equity and venture capital investments.
  
  Venture capital funds and private equity funds with fund managers domiciled in India, that have been registered with Sebi post 2012, have been classified as AIFs.
  
  According to the committee, an appropriate rate of STT could be introduced "on all distributions of AIFs, investment, short-term gains and other income and eliminate any withholding of tax. After STT, income from AIFs should be tax free to investors".
  
  To ensure that there aren't too much hassles in attracting overseas funds, it has said the government should clarify the rules for investment by non-resident Indians (NRIs) in AIFs on a non-repatriation basis.
  
  Clearing the ambiguity in this regard would help NRIs invest in AIFs using funds in their rupee NRO (Non Resident Ordinary Rupee) accounts, among others.
  
  Sebi had constituted a 21-member standing committee 'Alternative Investment Policy Advisory Committee' in March 2015 with the mandate to prepare a new regulatory framework for start-ups and alternative investments.
  
  Between 2001 and 2015, venture capital and private equity funds worth over $103 billion flowed into Indian companies. The money was put in over 3,100 firms across 12 major sectors. The capital markets regulator has sought comments from the public till February 10 on the report.
  
• World Bank loan to develop Kosi basin
  India and the World Bank on 20th January signed a $250 million financing agreement for Bihar Kosi Basin development project. The loan is for an implementation period of five years. The Bihar government would be the implementing agency. The project would have five components – improving flood risk management; enhancing agricultural productivity and competitiveness; augmenting connectivity; contingent emergency response; and implementation support. The primary beneficiaries will be rural producers and households in the Kosi river basin that is regularly flooded.
  
• Cabinet approves India’s stand on food security at World Trade Organization
  The Cabinet on 20th January cleared ex-post facto the stand taken by India on food security at the last meeting of the World Trade Organisation held in Nairobi. The outcomes of the Conference, referred to ‘Nairobi Package’ include ministerial Decisions on agriculture, cotton. These cover a Special Safeguard Mechanism (SSM) for developing countries & public stock holding for food security
  
  The Tenth WTO Ministerial Conference concluded in Nairobi in December. India wants a permanent solution on the issue of public stock holding for its food security programme. It had proposed either amending the formula to calculate the food subsidy cap of 10 per cent, which is based on the reference price of 1986-88, or allowing such schemes outside the purview of subsidy caps. The food security issue is related to several developing nations which provide subsidised foodgrains to the poor.
  
• FDI flows into India nearly doubled in 2015: UNCTAD
  United Nations' trade agency UNCTAD says, Foreign Direct Investment (FDI) inflows into India nearly doubled to 59 billion dollars in 2015. According to the annual report of the United Nations Conference on Trade and Development released on 20th January, global FDI flows increased significantly by 36 per cent. This comes to an estimated 1.7 trillion dollars, their highest level since the financial crisis of 2008-09.
  
  Developing economies, as a whole, saw their FDI reaching a new high of 741 billion US dollars, which is 5 per cent higher than 2014, the report said. Asia remained the largest FDI recipient region in the world, surpassing half a trillion US dollars and accounting for one-third of the global FDI flows, it said.
  
  The US bounced back as the top host country for FDI in 2015 with FDI worth 384 billion US dollars, the report said. The US is followed by Hong Kong, China, Netherlands, the UK, Singapore and India as the top FDI host economies of the world. FDI flows are expected to decline in 2016, mainly owing to the fragile global economy, the UNCTAD report said.
  
• RBI simplifies gold monetisation scheme
  The Reserve Bank of India has simplified the Gold Monetisation Scheme (GMS) for bulk depositors, aimed to help temple boards to do so. MMTC was hitherto selling such coins, introduced last November, only from its 25 centres in the country.
  
  In a circular issued on 21st January, the central bank said that Banks might accept the deposit of gold at designated branches, especially from larger depositors. This was a major demand of temple trusts, many having tonnes of gold and willing to deposit part of that under the GMS. Now these depositors need not move gold to a collection centre which could be far away from their storage. Banks may open a branch in an area nearby or the refinery can offer this facility directly to the trust.
  
  When government launched GMS, the eye was especially on such trusts, such as the Tirupati Devasthanam or the Siddhi Vinayak one in Mumbaii. In another important clarification which brings GMS in sync with the gold bond scheme, the interest rate for medium and long-term gold deposits will be calculated in rupees and the value will be the prevailing one at the time of making a deposit.
  
  RBI said the principal and interest on a short-term deposit shall be denominated in gold. In the case of medium-term and long-term deposits, the principal will be denominated in gold but the interest calculated in rupees, with reference to the value of gold at the time of the deposit.
  
  RBI has also prescribed a procedure for interest calculation in the case of a premature withdrawal by medium or long-term depositors under GMS, after the minimum lock-in period. Such a withdrawal will attract a penalty, in the form of a lower rate of interest.
  
  The current rate of interest on a medium-term gold deposit is 2.25 per cent annually; for a long-term one, 2.5 per cent. The government, said the circular, might change these if needed at a future date. The principal and interest rate on short-term deposits, essentially bank deposits, will be denominated in gold. Medium and long-term gold deposits will be treated as government borrowing.
  
  For medium-term deposits, withdrawal between three years and five years will attract a penalty of 0.375 per cent in reduced interest rate. For withdrawal between five to seven years, the penalty will be 0.25 per cent in a reduced interest rate.
  
  For long-term deposits, the penalty between five to seven years will be 0.25 per cent; between seven to 12 years, 0.375 per cent; between 12 to 15 years, 0.25 per cent.
  
  For medium and long-term deposits in the first year, the government will pay banks a total commission of 2.5 per cent -- 1.5 per cent as handling charges and one per cent as commission. This was a major clarification, without which banks were reluctant to proceed with accepting of deposits.
  
• India to be fastest growing economy at 7.3% in 2016: UN report
  A United Nations world economy report on 22nd January said India will be the world's fastest growing large economy at 7.3 per cent in 2016 and improving further to 7.5 per cent in the following year. The report said, the macroeconomic environment in India has improved, with the help of sharp decline in the prices of oil, metals and food. The reports also mentioned that consumer and investor confidence has risen even as India's government faces difficulties in implementing its wide-ranging reform agenda.
  
  The report titled World Economic Situation and Prospects 2016 was raised by the United Nations in New Delhi today. It said some economic indicators, such as industrial production, remain volatile. The report further said South Asia is expected to be the world's fastest-growing region in 2016 and 2017.
  
• RBI allows banks to sell India Gold Coins
  Reserve Bank has permitted banks to sell India Gold Coins (IGC) with Ashok Chakra minted by Metals and Minerals Trading Corporation of India (MMTC) through their branches. In a notification issued on 21st January, the RBI said, it has been decided to allow designated banks to sell the IGCs manufactured by MMTC. It said that the terms and conditions shall be as per the contract between the designated bank and MMTC.
  
  MMTC has stated that the gold used for the IGC will be only that mobilised domestically under the existing Gold Deposit Scheme (GDS) and Gold Monetization Scheme (GMS). Coins are available in denominations of 5 and 10 grams while a 20 gram bullion is also being manufactured by MMTC.
  
• Centre tightens green norms for sugar mills
  To minimise water pollution and wastage, the Centre has notified stricter environmental standards for sugar mills. Under the new norms, which come into effect immediately, the permissible specific wastewater discharge has been halved to 200 litres/tonne of cane crushed against 400 litres/tonne earlier. The final treated effluent discharge has been restricted to 100 litres/tonne.
  
  • Under the new standards, notified on January 14, a single outlet from a unit will be allowed in order to encourage operational efficiency and effluent recycling practices.
  • The number of effluent quality parameters to be monitored to ensure compliance has been increased to six from two.
  • The emission limits for particulate matter from stack has been limited to 150 milligram per cubic metre.
  • The new norms also contain a protocol for ‘treated effluent irrigation’ and ‘wastewater conservation and pollution control management’, wherein loading rates have been specified for different soil textures.
  
  
• CBDT signs 7 unilateral APAs
  The Central Board of Direct Taxes (CBDT) on 22nd January signed seven more unilateral Advance Pricing Agreements (APAs) with taxpayers, taking the total number of such pacts to 39. The seven APAs signed pertain to various sectors of the economy like investment advisory services, software development services and IT enabled Services. The agreements signed today also include one of the few agreements to be reached in the manufacturing sector. Tax authorities have signed 30 such agreements this fiscal.
  
  The APA scheme, which was introduced in 2012, tries to provide certainty to taxpayers in transfer pricing by specifying the method of pricing and setting the prices of international transactions in advance. The scheme provides certainty in transfer pricing up to a period of nine years and helps reduce tax disputes.
  
• Plastic units park to come up near Hyderabad
  Plastics as a sector is among 14 thrust areas identified by Telangana Government for industrial development and there are plans to establish a park for the units on 100 acres near Hyderabad.
  
  Stating this at a conference of the Telangana and Andhra Plastics Manufacturers Association (TAAPMA) here on Friday, Industries Minister Jupally Krishna Rao urged entrepreneurs to make most of the industry-friendly policies and stance of the State Government.
  
  Highlighting the industrial policy unveiled by the State and the legislation guaranteeing speedy and deemed clearances, the Minister said favourable weather and skilled manpower are a few other strong points of Hyderabad.
  
  The State Government, he added, is coming up with a plastics park on 100 acres near Mahankali in Maheswaram Mandal, near Hyderabad. The facility will essentially be for reinforced and engineering plastics units.
  
  Hyderabad is already a plastics processing hub across Andhra Pradesh and Telangana, he said, while referring to the various areas, including automobiles and electronics, where the polymer material has become a preferred alternative.
  
  With regard to emerging opportunities in Telangana, Mr. Rao said that the water grid programme, unveiled by Chief Minister K. Chandrasekhar Rao to provide protected water to all the households by 2019, is one such.
  
• Approval given for NIMZ in Telangana
  The government has given in-principal approval to set up a national investment and manufacturing zone (NIMZ) in Telengana. It has the potential to create direct employment for 75,000 people and indirect for 1,50,000 persons
  
  In-principle approval given for NIMZ in Districts: Ranga Reddy and Mahbubnagar, Telangana. Have the potential to create direct employment for 75,000 & indirect for 1,50,000 persons. They shall have a pharmaceutical industry focus
  
  NIMZs are mega industrial zones with world class supporting infrastructure. The National Manufacturing Policy provides for NIMZs -- mega industrial zones with world class infrastructure. The government is offering a host of incentives like exemption from capital gains tax and liberalised norms to promote these zones. The policy aimed at increasing the share of manufacturing sector in the country's economic growth to 25 per cent in a decade from the current 16 per cent and also create 100 million jobs.
  
• WEF to set up its secretariat in AP
  World Economic Forum (WEF) has decided to establish a secretariat in Andhra Pradesh. The State government and WEF have decided to work together towards bringing in best practices from across the world, improve the value chain, increase the incomes of farmers and add value to allied activities through the secretariat.
  
  The WEF has already created sub groups to study and implement best agricultural practices in South America, Africa, Asia and Pacific regions. The studies from these groups will be implemented in Andhra Pradesh to enhance productivity, protection and profitability in agriculture.
  
  The WEF and GoAP partnership would implement an agenda to make agriculture profitable and commercially viable.
  
• Centre clears Mumbai Trans Harbour Link project
  Centre on 23rd January cleared the Mumbai Trans Harbour Link project. The 22-km sea link, will connect the island city at Sewri to Chirle, Nhavasheva, on the mainland in Raigad district. Besides Mumbai Trans Harbour Link project, the Union Environment Ministry also cleared Eco sensitive zone proposals for Karnala Sanctuary and Sanjay Gandhi National Park.
  
• RBI to introduce new banknotes of 500 rupees and 100 rupees denominations
  Continuing its efforts to deter counterfeiting activities, the Reserve Bank of India, RBI, will soon introduce new banknotes of 500 rupees and 100 rupees denominations with enhanced security features. According to RBI the 500 rupees denomination bank notes will be issued in Mahatma Gandhi Series-2005, with inset letter 'E' in both the numbering panels, bearing the signature of its Governor Raghuram Rajan.
  
  These notes will have ascending size of numerals in the number panels, bleed lines and enlarged identification mark.
  
  The notes issued earlier were without bleed lines and enlarged identification mark. Besides, RBI will also issue 100 rupees new bank notes with added features like two sets of bleed lines and an enlarged identification marks for visually impaired persons. RBI has clarified that existing banknotes of both the denominations will continue to be legal tender.
  
• Govt mobilises 900 kg of gold under monetisation scheme
  The government on 23rd January said it netted a hefty 900 kg of idle household and temple gold under the monetisation scheme and is hopeful that the number would rise further in future. The gold monetisation scheme, which did not pick up initially, was fine-tuned to make it more attractive and convenient to encourage entities holding idle gold to participate in the scheme.
  
  Under the monetisation scheme, launched on November 5, banks were authorised to collect gold for up to 15 years to auction it off or lend it to jewellers from time to time. Depositors will earn up to 2.50 per cent interest per annum, a rate lower than savings bank deposits.
  
  Currently, there are 46 assaying and hallmarking centres, which are qualified to act as collection and purity testing centres (CPTC) for handling gold under the gold monetisation scheme.
  
  All gold deposits under the scheme have to be made at CPTC. Banks could also accept deposits of gold at designated branches, especially from larger depositors.
  
  India imports about 1,000 tonnes of gold every year and the precious metal is the second-highest component of the imports bill after crude oil. An estimated 20,000 tonnes of gold is lying with households and temples. In April-December this fiscal, gold imports increased to $26.45 billion.
  
• Andhra investor meet: 32 MoUs worth Rs 1.95 lakh cr on Day One
  The Andhra Pradesh government on 10th January said it has signed 32 MoUs with various companies involving an investment of Rs 1.95 lakh crore on the inaugural day of the three-day long partnership summit.
  
  Andhra Pradesh government has have signed 32 Memorandum of Understanding (MoU) which would attract investments to the tune of Rs 1.95 lakh crore in the state. Out of 32, 22 MoUs are in energy sector. The total investment would create job opportunities for nearly 95,000 people. Participants and delegates from about 45 countries are participating in the summit.
  
• Reliance Defence to set up shipyard in Andhra Pradesh
   Reliance Defence Ltd has signed an accord with a provincial government to set up a naval facility along the country's eastern coast with an initial investment of 50 billion rupees ($748 million), the company said on 10th January.
  
  Reliance Defence, a unit of billionaire Anil Ambani's Reliance Infrastructure Ltd, plans to build submarines and aircraft carriers as well as to provide services including maintenance and refitting of ships at the facility. It will be located 70 km south of Visakhapatnam in Andhra Pradesh.
  
  Reliance Chairman Ambani cited estimates saying the Indian navy could spend nearly 200 billion rupees annually over the next 15 years on acquisitions and fleet modernisation of submarines and aircraft carriers. This would generate a "huge pipeline of opportunity", according to a copy of his speech at an industry event released by the company.
  
  Prime Minister Narendra Modi's government wants a greater role for Indian state and defence firms as the government is forecast to spend $250 billion over the next decade to upgrade its military.
  
  The government has, however, yet to move forward on its plans to build up the submarine fleet, meaning any order for companies including Reliance Defence may be years away.
  
• AP attracts Rs 5,242-cr investment in tourism, hospitality
  Andhra Pradesh government signed 27 MoUs worth of Rs 5,242 crore investments in tourism and hospitality sectors on the closing day of the CII Partnership Summit on 12th January. Of these investment intents, hotel sector alone accounted for MoUs worth of Rs 3,764 crore. Some of the private firms have signed MoUs to establish amusement parks, beach resorts, sea and river cruises and adventure tourism projects among other proposals.
  
  Among these projects, UK-based Ivory Sands has proposed to set up 100 hotels and 15 hospitality training academies at an investment of Rs 2,500 crore in AP.
  
• PwC India sets up centre of excellence for forensics in Hyderabad
  PwC India has set up a centre of excellence (CoE) for forensics in Hyderabad. The CoE, with a trained team of over 100 professionals in India, plans to hire 150 more due diligence and anti-money laundering professionals in the next one year.
  
  This facility will provide clients with solutions related to anti-money laundering compliance, third-party due diligence, e-mail and document review, and investigation support.
  
  Built at an investment of $1.5 million, the facility is well equipped in terms of technology, capability and also has suitable security systems in place to maintain confidentiality of information. The team also has multilingual capabilities -- Mandarin, Bahasa, Cantonese and Spanish, to name a few -- to cater to the demands of resource requirements for PwC network firms.
  
  Apart for the CoE in Hyderabad, the forensics services team at PwC India has two forensics technology labs at Gurgaon and Mumbai with niche capabilities like data analytics, electronic discovery and computer forensics.
  
  This will be first among the Big 4 to have a dedicated centre of excellence with capability to handle expertise in anti-money laundering, KYC, remediation and third-party due diligence. PwC is a network of firms in 157 countries with more than 208,000 people.
  
• Centre announces petrochemical complex for AP
  A petrochemical complex is coming up in Andhra Pradesh and it will be undertaken by HPCL and the GAIL, according to Union Fertiliser, Chemical and Petrochemical Minister Anant Kumar.
  
  The minister said in-principle approval had been given by the Centre. He had discussed the issue with the Union Petroleum Minister, Dharmesh Pradhan, but the details would have to be worked out. He said the HPCL refinery capacity here would be expanded and the scale of investment in the petro-chemical complex could be in the region of Rs. 40,000-50,000 crore. He said he was also following up with the Pharmaceutical Ministry for setting up the National Institute of Pharmaceutical Research (NIPER). The institute would be set up in Visakhapatnam at an investment of Rs. 600 crore and the State Government would have to provide 600 acres. Further, he said, a medical devices park would be set up in the State with an investment potential of Rs. 20,000 crore.
  
  ESSEL and Zee group MoUs: Subhash Chandra, Chairman of Zee group and ESSEL group, said his group had signed two important MoUs with the AP Government on 12th January. He said his group had signed a MoU for manufacturing solar panels from silica at an investment of Rs. 13,000 crore, giving employment to 15,000 persons, and the project would require 2,000 acres.
  
  The second MoU was for setting up a smart industrial township in Andhra Pradesh, on 10,000 acres, housing 200 industries including some of the ESSEL group, and the investment potential would be Rs.73,000 crore.
  
  Chief Minister Chandrababu Naidu announced that 328 MoUs had been signed during the three days by the State Government with an estimated investment potential of Rs. 4,78,000 crore and his Government would make all efforts to get the projects grounded.
  
• ADB to fund $840-m corridor between Vizag, Chennai
  The Asian Development Bank will extend a $625 million loan to the proposed $840 million Visakhapatnam-Chennai Industrial Corridor, according to Teresa Kho, Country Director – India, ADB.
  
  She said the industrial corridor, meant to boost manufacturing activity and help economic growth of the hinterland, will have four nodes: Visakhapatnam, Kakinada, Gannavaram-Kankipadu, and Yerpedu-Srikalahasti. The building blocks of the corridor would be node-centred development and trade and transport.
  
  The VCIC, she said, was anchored on nearly 800 km of National Highway 16, which was highly congested. Arterial roads would have to be developed. The VCIC would be part of the proposed East Coast Economic Corridor, from Kolkata in West Bengal to Tuticorin in Tamil Nadu, Kho said, addressing a plenary session, ‘Sunrise Andhra Pradesh: turning aspirations into reality’, at the CII Partnership Summit now underway.
  
• MoUs for Rs. 1.70 lakh crore investment inked in Andhra Pradesh
  The Partnership Summit organised by CII and Andhra Pradesh saw MoUs entailing investment of Rs. 1.70 lakh crore signed by the end of the second day on 11th January, according to P Prabhakar, the official spokesman. He said Australia’s Queensland Coal Company had evinced interest in setting up a thermal plant in the State with a capacity of more than 5,000 MWs, at an investment of Rs. 30,000 crore or so.
  
  He said by the end of the summit the State Government was expecting to sign MoUs to the extent of Rs. 3.5 lakh crore to Rs. 4 lakh crore.
  
• BHEL commissions 520 MW Hindujas project near Vizag
  Bharat Heavy Electricals Ltd has announced it has commissioned a 520-MW coal-based thermal generating unit of the Hinduja Group near Visakhapatnam in Andhra Pradesh.The unit has been commissioned at the 2x520-MW Vizag Thermal Power Project of Hinduja National Power Company Ltd, Visakhapatnam. BHEL has thus far set up four 500 MW thermal power sets supplied and executed for NTPC Simhadri Thermal Power Station.
  
  The 2x520-MW Vizag thermal power project is being executed by BHEL on engineering, procurement and construction (EPC) basis. This project is located on the coast of Bay of Bengal and uses single flow condenser and seawater as main cooling tower.
  
  The project was affected by the Hudhud cyclone in 2014, while it was under construction. The restoration work was carried out by BHEL and the first unit has been commissioned successfully. The second unit is at advanced stage of completion. BHEL had secured orders for setting up two supercritical thermal power projects of 800 MW capacity each in Andhra Pradesh.
  
  The projects are 1x800 MW Dr Narla Tata Rao Thermal Power Station Stage–V of AP Genco and 1x800 mw Sri Damodaram Sanjeeviah Thermal Power Station State-II (Krishnapatnam supercritical thermal power project) of AP Power Development Company Ltd.
  
  Thus far, BHEL has commissioned 5,010 MW of power plants in the utility sector during the financial year 2015-16.
  
• Andhra Pradesh becomes first state to unveil retail policy
  The Andhra Pradesh government on 11th January announced its retail policy — the first state to do so. It offered greater flexibility in labour laws pertaining to working hours for ease of doing business in the retail sector.
  
  The state has included food and grocery retail enterprises under the Essential Services Maintenance Act (ESMA) to dissuade strikes. It has also declared distribution centres and warehouses of retail enterprises as public utilities under the Industrial Disputes Act, 1947, to prevent flash labour strikes.
  
  The state, which currently accounts for nearly 8 per cent of India's total retail market of 13 million stores, hopes to attract at least Rs 5,000 crore investment by 2020
  
  Retail giants such as Walmart, Future group, Spencer's and Arvind Lifestyle are among those who have agreed to set up large format stores, involving an aggregate investment of at least Rs 1,500 crore. Together, they promised to provide at least 25,000 new jobs
  
• Govt to spend Rs 11,000 cr to reduce road accident
  In a bid to reduce accidents by 50 per cent, the government will spend Rs 11,000 crore in the next five years to fix black spots across the country. It will also set up the Road Safety Authority to reduce the number of accidents on Indian roads.
  
  The government has identified around 726 spots spread across the country, according to Nitin Gadkari, Union minister for road, transport and highways.
  
  India leads the world in road accident deaths, with 138,000 people being killed each year. The country also accounts for 10 per cent of global road accident deaths. According to a road ministry report, the number of accidents in India was 489,400 in 2014.
  
  On an average, 56 road accidents occur and 16 lives are lost every hour in India. Youth in the age group of 15-24 years comprise 33 per cent of the total fatalities.
  
  According to officials, the proposal to set up the Road Safety Authority has gone to the Expenditure Finance Committee; once it gives green signal, the proposal will be placed before the Union Cabinet. After the Cabinet approves, the proposed authority will start functioning. Besides government functionaries, the Authority will include different stakeholders, non-governmental organisations, journalists, among others.
  
• Rae Bareli, Hyderabad and Srinagar out of smart city race
  Rae Bareli, Hyderabad and Srinagar are out of the smart city race. While Telangana chief minister K Chandrasekhar Rao decided against rooting for Hyderabad in the first phase of Prime Minister Narendra Modi's pet project, Gandhi's Rae Bareli got stuck in the Centre-state tussle.
  
  The Smart City Mission envisages developing 100 Indian cities into smart cities over the next five years. The 100 cities chosen have been distributed among the states and union territories on the basis of equitable criteria. The formula gives equal weightage to urban population of the state and the number of statutory towns.
  
  In the first round of competition, 20 out of the 100 cities would be chosen. The remaining would improve on their smart city plans and compete again
  
  Telangana had decided to develop Hyderabad into a smart city. However, in December Rao withdrew the capital city and decided to send an alternate plan in the second round.
  
  Uttar Pradesh has to develop 13 smart cities. While it could choose 12 cities in the intra-state competition, Rae Bareli and Meerut, were tied for the 13th spot
  
  The state lobbed the ball in Centre's court and first asked it to increase the state's tally to 13 and then made the choice in favour of Rae Bareli. However, the urban development ministry has refused to play ball and asked the state to make the choice and explain the reason for choosing one over the other. For the time being the matter seems to be stuck.
  
  Jammu and Kashmir government is facing a similar problem. The state has been allotted a quota of one. The state has refused to make the choice between Jammu and Srinagar and has asked the urban development ministry to increase its share to two. With the ministry not entertaining any increase in quota, the matter is back to the state government. The first round now has 97 instead of 100 smart cities in round 1
  
• Cabinet approves Pradhan Mantri Fasal Beema Yojna
  The Cabinet on 13th January approved Pradhan Mantri Fasal Beema Yojna, a crop insurance scheme aimed to ensure farmers' welfare.
  
  According to Union Home Minister Rajnath Singh, 
  • The scheme will offer more insurance with less premium, and lead to rise of purchasing capacity of farmers.
  • The new scheme replaces the existing National Agricultural Insurance Scheme.
  
  According to the Union Minister Venkaiah Naidu, 
  • Government liability on premium subsidy will be shared by central and state governments on fifty-fifty basis.
  • The budget for Crop Insurance will be substantially increased from 2823 crore rupees in 2015-16 to 7750 crore rupees in 2018-19.
  • Remote Sensing, smart phones and drones will be used for quick estimation of crop losses and early settlement of claims.
  
  According to the Agriculture Minister Radha Mohan Singh, 
  • There will be a uniform premium of two per cent to be paid by farmers for all khairf crops and 1.5 per cent for all Rabi crops.
  • The premium for all horticulture crops will be five per cent.
  
  
  The cabinet has also approved Unified Package Insurance Scheme on pilot basis for 45 districts. It will cover activities like machinery, life, accident, house, and student safety in addition to crop insurance. These schemes will be implemented from Kharif season 2016.
  
  New scheme expands the definition of disaster to include aspects like flooding of crop and damage after harvest. The scheme entails easy usage of technology like mobile phone, quick assessment of damage and disbursement within a timeframe and urged farmers to join it.
  
  Cabinet has also approved setting up of Empowered Committee of Secretaries to process recommendations of 7th Pay Commission in an overall perspective. It has also given its nod to India becoming a member country of the International Energy Agency - Ocean Energy Systems (IEA-OES). India will have access to advanced Research and Development teams and technologies across the world in the field of ocean renewable energies
  
• Aadhaar not mandatory for DBT scheme, clarifies RBI
  The Reserve Bank (RBI) has clarified that use of Aadhaar cards is not mandatory for Direct Benefit Transfer (DBT) Scheme. In a communication to banks, RBI said in view of the Supreme Court's interim orders on 11th August and 15th October last year on usage of Aadhaar, it is clarified that use of Aadhaar card and seeding of bank accounts with Aadhaar numbers is purely voluntary and not mandatory. Under the DBT scheme, the beneficiaries of government schemes get the amount directly in their bank accounts. The benefits include subsidies and scholarships.
  
• Grid-linked solar generation capacity crosses 5,000 MW mark
  India's grid-connected solar power generation capacity has crossed the 5,000 Mega Watt mark. According to a statement by the Ministry of New and Renewable Energy yesterday, Rajasthan has the maximum grid-connected capacity with over 1,200 MW, followed by Gujarat and Madhya Pradesh. The other leading states are Tamil Nadu, Maharashtra, Andhra Pradesh, Telangana, Punjab and Uttar Pradesh. The major States, which are lagging behind are West Bengal, Uttarakhand and Haryana.
  
  Government has an ambitious plan to have 175 Giga Watt of power generation capacity from renewable sources, including 100 GW from solar and 60 GW from wind, by 2022. Under the National Solar Mission, the government increased the solar power generation capacity addition target by five times to 100 GW last year.
  
• Centre to create Rs 10,000 cr corpus fund for innovation driven enterprises: PM
  Prime Minister Narendra Modi on 16th January said the government will create Rs 10,000 crore corpus fund for development and growth of innovation driven enterprises.
  
  Addressing the first conference of start-up entrepreneurs in New Delhi, he said that the Centre has decided to provide tax exemption for income gained by startup during first three years. PM Modi announced a plethora of incentives, from easy registration to easy exit, for startups in the country.
  
  These include a Self certification regime, freedom from Inspector-raj, a number of Tax exemptions, strong IPR regime and legal assistance, easy Exit Policy to safeguard against any fear of failure. Startups will also enjoy a 3-year Income Tax holiday and patent fee fro such ventures will be reduced by 80%. PM Modi also announced a dedicated Rs 10,000-crore Fund funding of start-ups.
  
  Prime Minister launched an action plan of the Startup India scheme in New Delhi. On this occasion, the PM announced several policies with regard to Startups.
  
  AnnouncementsEASE OF DOING BUSINESS
  • Introduction of compliance regime based on self-certification. Start-ups would be allowed to self-certify compliance with labour and environment laws. As far as labour laws are concerned, no inspection would be conducted for a period of three years. In case of environment laws, start-ups under ‘white’ category would be able to self-certify compliance.
  • Fast track mechanisms of start-up patent applications. The government would allow start-ups to realise the value of their intellectual property rights (IPR) at the earliest possible, patent applications of the start-ups will be fast tracked for examination and disposal
  • Faster exits for start-ups: Provisions for fast-tracking closure of businesses have been included in ‘The insolvency and Bankruptcy Bill, 2015’. Start-ups, who have simple debt structures, can be allowed to wind up within a period of 90 days after filing an application
  • Tax exemption to start-ups for 3 years: Start-ups set up after April 1, 2016, shall be exempted from income-tax for a period of three years
  • Tax exemption on investments above fair market value: Exemption would be available to venture capital funds to invest in start-ups above fair market value (FMV). It would also include investments made by incubators above FMV
  • Tax exemption on capital gains: Tax on long-term capital gains in unlisted entities would be cut from present rate up to 20 percent
  • Starting a start-up in a day through mobile app: A mobile app would be made live in April 2016 that would, for budding start-ups, act as a window for information exchange and interacting with government and regulatory bodies. It would help start a new company in a single day as all paperwork would be filed through the mobile app and portal
  • A panel to aid start-ups with legal support and assistance in filing of patent application Government appointed facilitators shall help start-ups in filing and disposal of patent applications The govt would bear the cost of it
  • Norms of public procurement for start-ups to be relaxed. Public sector units would give start-ups preference.
  • 80 percent rebate on filing patent applications by start-ups. Start-ups to be given 80 percent rebate in filing patents to help them lower costs of setting up business
  
  FOR PROMOTING START-UPS
  • Start-up India Hub. An entire start-up ecosystem that would be a set-up and a friend, mentor and guide for start-ups through their entire journey
  • Setting up of 7 new research parks modelled on the research park at IIT-Madras. Seven new research parks with an initial investment of Rs 100 crore each would be set up
  • 35 new incubators in institutions. A maximum of Rs 10 crore financial support to be given by central government to new incubators
  • Launch of Atal Innovation Mission– Entrepreneurship promotion. Sector-specific incubators to be established. 500 tinkering labs with 3D printers in universities. Pre-incubation training to potential entrepreneurs. Strengthening of the existing incubation facilities. Seed funding to high growth start-ups
  • Innovation promotion. Institution of innovation awards: 3 per state/UT and 3 national level. Providing support to State Innovation councils for awareness creation and organising state-level workshops/conferences. Launch of Grand Innovation Challenge Awards for finding low-cost solution to intractable problems
  
  FUNDING HELP FOR START-Ups
  • Credit guarantee fund for start-ups A credit guarantee mechanism through National Credit Guarantee Trust Company and SIDBI to be rolled out with a budgetary corpus of Rs 500 crore per year for the next four years
  • Funding support through fund of funds with a corpus of Rs 10,000 crore The government to set up a fund with an initial corpus of Rs 2500 crore and a total corpus of Rs 10000 crore over a period of four years
  
  
• Sify setting up $20 mn centre in Hyderabad
  Sify Technologies is setting up a global delivery centre at Hyderabad making it the company's largest such centre in India. Sify had recently entered into a global partnership with Fujitsu to collaborate on providing information and communications technology (ICT) solutions. The company will invest $20 million into the facility, which will be operational by 2017, providing employment for 3,000 people.
  
  About 1.5 acre has been acquired for the centre which will be executed in three phases (attracting investment in 50:30:20 ratio in the three phases). The entire project will take four years for completion. The centre will serve BFSI, manufacturing, retail and e-commerce.
  
  The partners are collaborating to strengthen their global approaches to developing new customers and markets and to jointly win multi-regional opportunities, starting with the North America market. The 2,00,000 sq ft delivery centre will focus on supporting the partnership through the development of solutions for the Third Platform (also known as “SMAC” Social, Mobile, Analytics and Cloud Platform). Sify has established six data centres for State governments so far.
  
• Telangana govt to construct multi-level flyovers in Hyderabad
  With an aim to ease traffic snarls in Hyderabad, the Telangana government has taken up an ambitious project of constructing multi-level flyovers at 54 junctions at an estimated cost of Rs 20,000 crore. Foundation stone for the first phase of project as part of the Strategic Road Development Plan (SRDP) was laid at the entrance of the KBR Park in Hyderabad.
  
  According to state Ministers K T Rama Rao the population of the city was already over 1 crore and one need not wonder even if it reaches 10 crore over the next 10 years keeping in mind the rapid strides it has been making in all sectors of development. According to him, 54 junctions including in old city have been identified for construction of multi-level flyovers over the next three years.
  
• Nitin Gadkari announces Rs 16,500 crore highway project for Telangana
  Union Road Transport and Highways Minister Nitin Gadkari today announced a Rs 16,500 crore highway package for Telangana. He announced that 1670 kilo meters of New National Highway projects will be developed in the state.
  
  The Minister announced two Express Highways benefiting Telangana state. Accordingly, 550 KM long Hyderabad-Bengaluru Express Highway will be taken up at a cost of Rs 8400 crore out of which 210 KM will be in Telangana.
  
  Further, 270 KM long Hyderabad-Vijayawada Express Highway will also be built at a cost of Rs 7600 crore. Mr Gadkari also announced that improvement of roads also will be taken up to a stretch of 104 KM in the state at a cost Rs 1000 crore.
  
  The Minister laid foundation stone to four-lining works for national highway for about 100 KMs between Warangal-Yadadri at a cost of Rs 1905 crore. Chief Minister Chandrasekhara Rao was also present for foundation stone laying ceremony for the works.
  
• Telangana simplifies real estate norms
  In an effort to simplify procedures for the real estate sector, the Telangana Government has taken a series of measures, including relaxing certain building norms and facilitating online clearances.
  
  Aimed at facilitating ease of doing business and unlocking the potential in real estate sector in Telangana, the State Cabinet chaired by Chief Minister K Chandrasekhar Rao, sought to remove bottlenecks in the existing building rules while extending some concessions.
  
  A Fast Track On-line Approval System has been put in place in the State to eliminate delays and hassles. Soon it would be implemented.
  
  In the case of layouts with open plots, providing EWS (Economically Weaker Sections) and LIG (Low Income Group) is made optional. The representation of real estate sector agencies to charge shelter fee from the housing projects in lands having an area of more than two hectares/ five acres has been approved.
  
  The city level infrastructure impact fee has been reduced to encourage high-rise buildings and only two slabs have been fixed as against presently existing four slabs. One slab is up to 17 floors and second slab for above 17 floors. Rates range from Rs. 500 per square meter to Rs. 1500 per sq.mt in GHMC (Greater Hyderabad Municipal Corporation Area) area and Rs. 175 per sq.mt to Rs. 500 per sq.mt in Hyderabad Municipal Development Authority (HMDA).
  
  This incentive it is expected to boost revenue of urban local bodies and urban development authorities. The collection of value addition charges of Rs. 100 per square meter in the CDA (Cyberabad Development Area) has been withdrawn to avoid double taxation.
  
  Occupancy Certificate (OC) should be given in 15 days and for every one day of delay a penalty of Rs. 500 shall be levied on the concerned staff for delay.
  
  In gated communities gifting of roads/driveways is dispensed with. Uniform buffer strip of 50 meters along the boundary of Musi River in both GHMC and HMDA areas is mandatory.
  
• Govt to import 5,000 tonnes of tur dal
  The government has invited a tender to import 5,000 tonnes of tur dal to boost domestic supply from next month. State-run MMTC has invited global bids for import of pigeon peas of the latest crop from Myanmar, Malawi, Mozambique or any other origin. The quantity of shipment can be increased depending on the price bids.
  
  Apprehending price of pulses might flare up again due to little improvement in domestic production as compared to last year, the government has directed MMTC to import more pulses to improve domestic availability and check prices.
  
  Pulses production in the country in the current crop year is expected to be much below the earlier estimate of around 18 million tonnes because of poor sowing of rabi crops.
  
• Govt scraps 5% export duty on iron ore pellets
  The government has scrapped a 5% export duty imposed on iron ore pellets, as it meets yet another demand of the domestic steel and mining sector reeling under low demand and weak prices
  
  The announcement of the Central Board for Excise and Customs follows a series of measures — such as a safeguard duty, increase in customs duty and imposition of stringent quality guidelines for imported steel — the government has announced since September 2015 to protect the iron and steel industry from rising imports.
  
  The latest step is expected to benefit pellet makers, which include top miners, as well as leading steel players. The 5% export duty was imposed in 2014. More than half of India's installed pellet making capacity of 90 million tonnes is unutilised due to poor demand. Reeling under low demand and low capacity utilisation, pellet manufacturers, in particular, had been insisting on removal of the export duty and a revision in distance-based charges to help them ship the product overseas.
  
• NSE to launch Private Bank Index
  To reflect the market performance of private sector banks, IISL, which provides indices for the NSE, has launched the Nifty Private Bank Index. It will track the 10 largest private sector banks listed on the NSE.
  
  The index will complement the existing Nifty Bank and Nifty PSU Bank indices and provide the investors with gamut of banking sector indices catering to different investment needs.
  
  The Nifty Private Bank index is calculated using free float market capitalisation method and stock weights are capped at 25 per cent. The base date of this index is April 1, 2005 and the base value is 1000. The index will be maintained by IISL and calculated on an end-of-day basis.
  
  The Nifty Private Bank Index will be available for licensing for the launch of financial products such as exchange traded fund and structured products.
  
• NABARD, NRSC ink pact for monitoring of watershed projects
  Monitoring of watershed projects, especially in remote villages will now be improved with the use of satellite technology and web page.
  
  Facilitating this is an MoU signed between the NABARD and the NRSC, Hyderabad recently. The project will begin with the web-based monitoring of Indo-German Watershed Development (IGWDP) projects in 3 states namely Gujarat, Rajasthan and Telangana.
  
  Also under its ambit are the NABARD assisted watershed projects under Watershed Development Fund (WDF), in Madhya Pradesh. As per the MoU, the National Remote Sensing Centre (NRSC) will create a separate web page for NABARD on its BHUVAN portal, develop customized software tool and mobile application for real time monitoring, online comparison and visualization with respect to activities implemented in the projects.
  
  Going forward, the role of remote sensing, GIS and GPS technologies in monitoring and digitization of agriculture and rural development projects will also be explored further.
  
• Cabinet approves credit guarantee fund for MUDRA loans
  Cabinet on 6th January approved creation of a Credit Guarantee Fund for Micro Units Development Refinance Agency, MUDRA, loans and to convert MUDRA Limited into MUDRA Small Industries Development Bank of India (SIDBI).
  
  The bank will be a wholly owned subsidiary of SIDBI. The Fund is expected to guarantee loans worth more than one lakh crore rupees to Micro and Small units in the first instance. The MUDRA Bank will undertake refinance operations and provide support services with focus on portal management and data analysis apart from any other activity entrusted and advised by Government.
  
  Giving details of the decision, Finance Minister Arun Jaitley said, the total corpus for MUDRA bank will be three thousand crore rupees and around one crore and 73 lakh entrepreneurs will be benefited . Mr Jaitley said, MUDRA will help in increasing the economic activity at the ground level.
  
• Black money: Govt collects Rs 2,428 crore tax from 644 entities
  Government has collected over Rs 2,428 crore in taxes under the one-time black money compliance window till 31st of December 2015 . In a statement, Central Board of Direct Taxes said this amount was received by it by way of tax and penalty.
  
  A total of 644 declarations were made by stash holders under the compliance window which closed on 30th September 2015 provided under the anti-black money Act. The amount involved in these 644 declarations was 4,164 crore rupees.
  
  The new law, called the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act came into force with effect from July last year. The Act provided for a one-time compliance window to declare assets held abroad and pay due taxes and penalty on the value of assets declared.
  
• Govt notifies Negotiable Instruments (Amendment) Bill, 2015
  The Government on 6th January notified the Negotiable Instruments (Amendment) Bill, 2015 providing for filing of cheque bounce cases at the place where it is presented for clear clearance and not the place of issue.
  
  The Negotiable Instruments (Amendment) Act, 2015 received the assent of the President on the December 26, 2015 be deemed to have come into force on the 15th Day of June, 2015, the day on which the Negotiable Instruments (Amendment) Ordinance, 2015 was promulgated to further amend the Negotiable Instruments Act, 1881,'' an official statement said.
  
  The Bill was passed in the recently concluded winter session of Parliament.The act is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 138 of the Negotiable Instruments Act, 1881.
  
  The Negotiable Instruments (Amendment) Act, 2015, facilitates filing of cases only in a court within whose local jurisdiction the bank branch of the payee, where the payee delivers the cheque for payment through his account, is situated, except in case of bearer cheques, which are presented to the branch of the drawee bank and in that case the local court of that branch would get jurisdiction.
  
  Various financial institutions and industry associations had expressed difficulties, arising out of the legal interpretation by the Supreme Court about the jurisdiction of filing cases under section 138 of the Negotiable Instruments Act, 1881. In view of the urgency to create a suitable legal framework for determination of the place of jurisdiction for trying cases of dishonour of cheques under section 138 of the Negotiable Instruments Act, 1881, it was decided by the government to introduce suitable amendments to the Negotiable Instruments Act, 1881.
  
• World Bank: India to stay at top in growth
  The World Bank on 6th January projected that India would remain comfortably the fastest growing large economy in 2016, at a rate more than a percentage point higher than China's.
  
  In its report Global Economic Prospects, the Bank projected the Indian economy to grow at 7.8% in 2016 and China's to grow at a more modest 6.7%. The world economy as a whole would grow at 2.9% it estimated, a modest upturn from the 2.4% growth estimated for 2015.
  
  All of these estimates represent a downward revision from the projections made in June 2015, but the downward revision of 0.1 percentage points in India's case is less than the 0.3 percentage point adjustment in the estimate for China or the reduction of 0.4 percentage points in the reckoning of global growth.
  
  With Bangladesh projected to grow at 6.7% and Pakistan at 5.5%, South Asia will be the world's fastest growing region according to the report. Among the other BRICS economies, Russia's economy is projected to shrink by 0.7% in 2016 and Brazil' by 2.5%, hit by the slump in global commodity prices while South Africa is expected to see its economy grow very slowly at 1.4%.
  
• Cabinet nod for closure of HMT Watches
  The Cabinet Committee on Economic Affairs (CCEA) has approved a voluntary retirement scheme (VRS) at 2007 pay scales for employees of HMT Watches Ltd, HMT Chinar Watches Ltd and HMT Bearings Ltd, thus completing their closure formalities and bringing the curtains down on one of the iconic brands of pre-liberalisation days. HMT Watches Ltd has been incurring losses since 2000 and all its units were closed down in 2014. However, late last year, the Ranibag (Uttarakhand) unit of HMT Watches opened briefly to complete a pending order of 5,500 watches received from its Bengaluru office.
  
  The order is expected to be completed by March 2016. In its heydays, HMT was the premier watch brand in the country. Meanwhile, the Centre has granted an assistance of Rs 427.48 crore for the three loss-making subsidiaries of HMT Ltd.
  
• China tremors rock markets once again
  Another plunge in Chinese stock markets, coupled with weakness in the renminbi, exacerbated the volatile start to 2016, during which $2.5 trillion has been wiped off global equities.
  
  Indian stocks declined two per cent, with benchmark indices briefly slipping below levels last seen in June 2014. The Sensex and Nifty ended at their lowest levels in four months. Other Asian and European markets were rattled more than India and crude oil prices fell to a 12-year low.
  
  The global risk-off trade was caused by a second trading halt on Chinese bourses only three days after indices there tumbled seven per cent, triggering circuit breakers. China's securities regulator suspended a new stock circuit-breaker after the sell-off forced local exchanges to shut, signalling that the country's leadership may reconsider or change the system.
  
  0.5 per cent depreciation in the yuan by the Chinese central bank, the biggest since a surprise devaluation in August 2015, raised fear of a global currency war. The move saw global funds pull out money from riskier assets like emerging markets.
  
  Foreign institutional investors (FIIs) pulled out over Rs 1,000 crore from the domestic market, provisional data showed. Buying by domestic funds remained relatively subdued at Rs 190 crore.
  
• ADB loan, grant disbursals up 21% to $12.34 b in 2015
  The Asian Development Bank’s operations, including approvals for loans and grants, technical assistance, and co-financing, grew over 19 per cent to $27.15 billion in 2015 as against $22.89 billion in 2014. Total disbursements of loans and grants grew 21 per cent to $12.34 billion in 2015, according to provisional data released by ADB on 8th January. Further, approvals of loans and grants (both sovereign and non-sovereign) grew 23 per cent to $16.58 billion in 2015 while, technical assistance was $144 million and co-financing was $10.43 billion in 2015, it said. The Manila-based agency is now also using local currency for lending to the private sector and has increased bond issuances in local currencies to support the lending.
  
  To meet the higher demand for its operations, the ADB Board of Governors had, last year, also approved the merger of ADB’s concessional Asian Development Fund and its market-based ordinary capital resource balance sheet.
  
  This will take its financing capacity (annual approvals of loans and grants) to $20 billion by 2020, it said in a statement.
  
• DBT for kerosene in 26 districts from April 1
   After the success of paying subsidy to LPG users in their bank accounts, the government will from April 1 roll out a similar programme for kerosene, where the users will buy the cooking fuel at the market rate and get the subsidy money directly in their bank accounts.
  
  The cash subsidy will be equivalent to the difference between the current public distribution system (PDS) price of about Rs 12 and the market rate of Rs 43 per litre. The move will help curtail subsidy outgo for kerosene, which in 2014-15 was Rs 24,799 crore.
  
  The scheme will be rolled out in 26 districts across eight states — Chhattisgarh, Haryana, Jharkhand, Maharashtra, Punjab, Himachal Pradesh, Rajasthan and Madhya Pradesh. The Centre has allocated 8.6 million kilolitre of PDS kerosene to states for FY16, though total annual consumption is only 7.13 million kilolitres.
  
  The states will be given 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year.
  
  If some states voluntarily agree to cut kerosene allocation beyond the savings due to DBT, a similar incentive will be given to them. The calculation will be based on net savings in consumption at the state level. Kerosene demand for both lighting and cooking has come down thanks to rural electrification and the rise in LPG connections. Nearly 4.5 million new LPG connections have also been given to the poor.
  
  The government also advised states to take all necessary steps to ensure eligible beneficiaries, particularly in rural areas, are able to access their full entitlement.
  
  To ensure the intended beneficiaries don’t suffer while switching to the new scheme, subsidy will be credited to their bank accounts in advance during the initial purchase
  
  In a nut shell
  • Cash subsidy on kerosene will be equivalent to the difference between current subsidised price of Rs 12 and market rate of Rs 43 per litre
  • Subsidy outgo for kerosene in 2014-15 was Rs 24,799 crore
  • Centre to give states 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year
  • Nearly 4.5 million new LPG connections have been given to the poor to reduce dependence on kerosene
  
  Govt to make LPG available to all in 3 years: Government 1st January declared 2016 as the 'Year of LPG Consumers' while unveiling plans to make the clean cooking fuel available to all households by end of 2018 and rol out online bill payment facility and transparent gas cylinders.
  
  The Union Oil Minister Dharmendra Pradhan launched LPG emergency helpline number 1906 for the cooking gas consumers across the country. The consumers can call on this helpline to seek assistance to deal with gas leakage.
  
  About the availability of LPG in the country, the minister said that there are 27 crore subscribers in the country, of which 16.5 crore are active subscribers and oil marketing companies cover about 60 per cent of the population.
  
• Annual solar power capacity to quadruple
  According to Union Minister of Coal, power and Renewable Energy PIyush goel India might increase its solar energy capacity four-fold during the next fiscal year ending March 2017. At present India’s solar capacity is about 4,500 MW and the capacity addition target for this year is about 2,000 MW. During 2016-17, government is hoping to add 12,000 MW in solar sector alone. Thus, including other renewable sources, there will be a total capacity addition of about 15,000 MW during next fiscal
  
  The government is focusing on speed, skill and scale rather than subsidies to drive reforms and progress in the energy sector. The minister said water heaters that ran on solar energy had subsidy components some years ago.
  
  Minister highlighted the pace with which LED bulbs were distributed in the country as part of government’s energy efficiency drive initiative. Energy Efficiency Services Ltd (EESL), a public sector entity engaged in distribution of LED bulbs, is expected to contribute about seven crore bulbs this year.
  
• E-commerce industry to cross $38 billion this year: Assocham
  India’s e-commerce market is likely to touch $38-billion-mark in 2016, a 67 per cent jump over the $23 billion revenue it clocked last year, according to the Associated Chambers of Commerce and Industry (Assocham).
  The report also said that:
  • Increasing internet and mobile penetration, growing acceptability of online payments and favourable demographics has provided the e-commerce sector in India the unique opportunity to companies connect with their customers
  • Buying trends during 2015 have witnessed a significant upward movement due to aggressive online discounts. India’s e-commerce market was worth about $3.8 billion in 2009, it went up to $17 billion in 2014 and to $23 billion in 2015 and is expected to touch $38-billion mark by 2016
  • Mobile commerce (m-commerce) is growing rapidly as a stable and secure supplement to the e-commerce industry. Shopping online through smart phones is proving to be a game changer and industry leaders believe that m-commerce could contribute up to 70 per cent of their total revenues
  • Mumbaikars had left behind all other cities in India shopping online in 2015. While Delhi residents rank second, Ahemdabad came third, Bangalore fourth and Kolkata fifth in their preference for online shopping in 2015.
  • The customer is connected 24x7 through their smart phones, tablets and other mobile devices which is leading to a gradual evolution of e-commerce into mobile commerce and there is an issue of convenience which also leads to impulsive buying.
  • The browsing trends, which have broadly shifted from the desktop to mobile devices in India, online shopping is also expected to follow suit, as one out of three customers currently makes transactions through mobiles in Tier-1 and Tier-2 cities. In 2015, 78 per cent of shopping queries were made through mobile devices, compared to 46 per cent in 2013
  • The highest growth rate was seen in the apparel segment, almost 69.5 per cent over last year followed by electronic items by 62 per cent, baby care products at 53 per cent, beauty and personal care products at 52 per cent and home furnishings at 49 per cent. The most important contributing factor to the rapid growth of digital commerce in India is the increase in the use of smartphones. Mobiles and mobile accessories have taken up the maximum share of the digital commerce market in India, according to the paper.
  • Almost 45 per cent of online shoppers reportedly preferred cash on delivery mode of payment over credit cards (16 per cent) and debit cards (21 per cent).
  • Only ten per cent opted for internet banking and a scanty seven per cent preferred cash cards, mobile wallets and other such modes of payment.
  • As per the findings, many small companies have also established online stores for group buying, which enable customers to obtain goods at a discount so long as a certain number of people make the purchases.
  • Shopping centres, whole sale markets and supermarkets should create their online stores to reduce costs and develop product-tracking systems
  • Among the age segments, the 18-25 years age group was the fastest growing age segment online with user growth being contributed by both male and female segments, it was said in the paper.
  • The survey highlights that three per cent of regular shoppers are in 18-25 age group, 52 per cent in 26-35, eight per cent in 36-45 and two per cent in the age group of 45-60.
  • Sixty-five per cent of online shoppers are male with females constituting 35 per cent. The products that were sold most in 2015 were mobile phones, iPad and accessories, MP3 players, digital cameras and jewellery, among others.