ECONOMY AFFAIRS JULY 2016

ECONOMY AFFAIRS JULY 2016

•  Startup India States’ Conference held
  To improve ease of doing business, Commerce and Industry Minister Nirmala Sitharaman on 24th July said a start-up would now need only a certificate of recognition from the government to avail IPR-related benefits. Earlier, a budding entrepreneur had to go through an elaborate process of approaching an inter-ministerial board to procure the Intellectual Property Rights (IPR) benefits.
  
  A start-up would now require only a certificate of recognition from the Department of Industrial Policy and Promotion (DIPP) and would not be required to be examined by the inter-ministerial board, as was being done earlier. This is one rapid change that we have brought in.
  Under the 'Start-up India' action plan, the government has announced three-year tax holiday and other benefits to these entrepreneurs.
  
  The Minister also said that seven proposals for research parks, 16 for TBIs (Technology Business Incubators) and 13 proposals for Start-up Centres have been recommended by the National Expert Advisory Committee formed by the Human Resource Development Ministry.
  To obtain tax and IPR related benefits, a start-up shall be required to be certified as an eligible business from the inter-ministerial board of certification. The board consists of DIPP Joint Secretary, representative of Department of Science and Technology; and Department of Bio-technology.
  
• Telecom panel moots 3% minimum SUC
  In a bid to find a compromise between warring telecom operators, the Telecom Commission on Monday proposed to collect a minimum 3 per cent of operators’ annual revenues as spectrum usage charge (SUC). The earlier formula proposed by the Commission was based on weighted average of the spectrum holding by individual operators.
  
  This gave an advantage to some of the newer players as their levy worked out to be about 2.5 per cent while incumbent operators had to pay 3-4 per cent of revenues. While the Telecom Commission has proposed to continue with the weighted average formula, the 3 per cent floor would mean that the gap between incumbent operators like Airtel and newer player such as Reliance Jio would be smaller.
  
  The DoT is expected to send the recommendations at the earliest to the Cabinet so that the auctions, to be held in September, get underway.
  
  The Cabinet had earlier decided to send back the issue to TRAI because of a difference in opinion between the DoT and the regulator. While the TRAI suggested a flat fee, it also proposed to include revenue earned from the spectrum band to be factored in while calculating the levy.
  
• SBI, IOC link up to empower farmers
  State Bank Of India (SBI) and Indian Oil Corporation (IOC) have tied up to implement the bank's financial inclusion programme for farmers through the oil company's Kisan Seva Kendras.
  
  Under the agreement, SBI will provide access to banking services for the farmers utilising the IOC's kiosks and also supplement their incomes by earning revenue on banking transactions.
  
• Digital payments to be $500-bn industry by 2020, says report
  India will have the most advanced digital payment ecosystem over the next five years, backed by Unified Payments Interface (UPI) and Aadhaar as well as growing internet user base, rising smartphone penetration and positive regulatory changes, according to Rajan Anandan, vice-president (southeast Asia and India) at Google.
  
• Key findings of survey

• Digital payments industry will reach $500 billion by 2020
• Over 60% of digital payments value will come from offline point of sale like unorganised retail, eateries and transport
• Non-cash contribution for overall payment transactions to increase from 22% at present to 40% by 2020
• Digital payments — electronic and mobile based payments — are expected to contribute 26% of the overall consumer payments
• Merchant acceptance network for cards to grow by 10 folds by 2020
  
• States say no to GST rate cap
  The empowered committee of state finance ministers on the Goods & Services Tax (GST) rejected by consensus two of the three demands raised by the Congress party for supporting the Constitution (122nd Amendment) Bill. The bill is meant to introduce the new tax.
  
  The states agreed, in line with the Congress demand, to recommend that the proposal for 1 per cent additional tax -- introduced to compensate manufacturing states for potential losses from the shift to the new tax to be levied on consumption rather than production -- be dropped.
  The opposition party’s other demands — a Constitutional provision for capping at 18 per cent the GST rate and an independent dispute resolution mechanism headed by a retired high court judge — did not find favour with the empowered committee.
  
  The wording of the Bill it finalised effectively rejects these demands, even as the finance ministers from the Congress-ruled states failed to speak up. The Bill, which was passed in the Lok Sabha, is pending in the Rajya Sabha where the BJP-led ruling coalition does not have a majority.
  The GST rate will not be specified in the Constitution, the empowered committee’s Chairman and West Bengal Finance Minister Amit Mitra said.
  
  Explaining the decisions, Kerala Finance Minister Thomas Isaac said that while a call on the revenue neutral rate will be taken later, states agreed that this rate will have to be much lower than the current effective incidence of taxation on the common man.
  
  At the last meeting in Kolkata, states had flagged the issue of the wide variation in the two sets of proposals on these rates — one by a committee headed by Chief Economic Advisor (CEA) Arvind Subramanian and the other from the National Institute of Public Finance and Policy (NIPFP).
  
  While the CEA’s panel had recommended a revenue-neutral rate of 15-15.5 per cent, the NIPFP had proposed a rate of 27 per cent, leading the Congress to demand the rate be capped at 18 per cent.
  
• India discovers producible natural gas hydrates: US agency
  India has discovered a large, highly enriched accumulations of natural gas hydrates in the Bay of Bengal that has the potential to be tapped
  
  USGS said this discovery was the result of the most comprehensive gas hydrate field venture in the world to date, made up of scientists from India, Japan and the US.
  
  The scientists conducted ocean drilling, conventional sediment coring, pressure coring, downhole logging and analytical activities to assess the geologic occurrence, regional context and characteristics of gas hydrate deposits in the offshore of India
  
  This research expedition was called the Indian National Gas Hydrate Program Expedition 02. It is second joint exploration for gas hydrate potential in the Indian Ocean.
  
  The first expedition, also a partnership between scientists from India and the US, discovered gas hydrate accumulations, but in formations that are currently unlikely to be producible
  Natural gas hydrates are a naturally occurring, ice-like combination of natural gas and water found in the world''s oceans and polar regions. Although it is possible to produce natural gas from gas hydrates, there are significant technical challenges, depending on the location and type of formation.
  
  USGS said the second expedition focused the exploration and discovery of highly concentrated gas hydrate occurrences in sand reservoirs.
  
• Union Cabinet clears amendments in GST Bill
  Union Cabinet on 27th July approved amendment in Goods and Services Tax Bill and dropped one percent additional tax on inter-state sales as proposed in the current bill. The Cabinet also agreed to include the mechanism of compensating states for all loss of revenue for five years in the bill after the roll out of the new indirect tax regime.
  
  The Bill in its present form provides 100 per cent compensation to states by the Centre for first three years, 75 per cent for fourth year and 50 per cent for the fifth year.
  
• Government forms 'Disha' for effective implementation of schemes
  The Union government formed a District Development Coordination and Monitoring Committee (DDCMC) in place of the District Vigilance and Monitoring Committee (DVMC) for effective implementation of Central government schemes.
  
  Union Rural Development Minister Narendra Singh Tomar made the announcement in the Lok Sabha, saying the new committee has been named "Disha" in short.
  
  Disha has been constituted for effective development, coordination and almost all the programmes of Central government will be covered under this
  He said the change was necessitated because the earlier DVMC's jurisdiction was only in the rural development sector and there were regular complaints regarding the effectiveness of this committee. He also assured the house that efforts will be made to ensure the participation of people's representatives at all levels.
  
  The Minister also announced that the "Disha" Committee will ensure that programmes are implemented as per guidelines and it will review the flow of funds and their timely utilization.
  
• Individual FDI cap in bourses raised to 15%
  Individual foreign investors can now hold up to 15 per cent stake in Indian stock exchanges, up from the earlier 5 per cent. A decision to this effect was taken by the Union Cabinet on 27th July. Currently, foreign investors, in aggregate, can hold up to 49 per cent stake in any stock or commodity exchange.
  
  The Union Cabinet also approved a proposal to allow foreign portfolio investors (FPIs) to acquire shares through initial allotment in stock exchanges.
  
• Modi asks NITI Aayog to drive transformation
  Prime Minister Narendra Modi asked to create a new architecture of policy making that anticipates problems and suggests remedies. This was his second visit to the policy-making think tank he established in January 2015, after scrapping Planning Commission.
  
  On 28th July, officials said Modi, who is also the chairman, gave last-minute directions to NITI Aayog Vice-Chairman Arvind Panagariya to change his presentation from a 15-year vision document to flaws in the earlier Plan process. Then, he told the Aayog to work towards transformational and not only incremental change.
  
  He said the vision document should not only lay the road map of the next 15 years but also form the foundation of the country’s development in the next century.
  
  He directed the Aayog to make use of the best talent available both in the country and outside to prepare the vision document for transformation. Modi talked about a few problems….
  
  For instance, on agriculture, Modi told the NITI Aayog, to think of the demand for food in the next 15 years, possible sources from where it would come (both domestic and international) and also prepare a clear road map through which these requirements could be met.
  
  Giving the example of pulses, Modi wondered why everyone talked about it when prices shot up. In its reply, the Aayog is believed to have assured the PM that it will soon constitute a working group of experts to anticipate the requirement for food in the country in the next 15 years and also all available sources.
  
  Modi also spoke of entering into long-term agro-procurement agreements with countries in lieu of technology transfer. Except for these imports, he directed the Aayog to plan towards a zero-import policy for agriculture.
  
• SBI partners Oracle to support Digital India
  State Bank of India and tech giant Oracle have come together for corporate India's largest volunteering programme to bring 'digital fluency' among underprivileged school students. Under the programme - D-Change - both the organisations will deploy resources, including staff and equipment, to train students in the basics of using information, communication and technology (ICT) tools.
  
• FDI inflows up 53% in past 2 years: Jaitley
  Foreign direct investment (FDI) in the country rose 53 per cent in the past two years, Finance Minister Arun Jaitley informed the Lok Sabha on 29th July. He said this was because the country’s investment climate had improved due to the Centre’s steps to foster growth, price stability and fiscal prudence.
  
  The Finance Minister said improving “ease of doing business” was “work in progress“, adding that investments are not made for “charity”. The Minister said when private sector is stressed, the two engines of investments are the government and foreign sources.
  
• Apr-Jun fiscal deficit at 61% of FY17 target
  The Centre’s fiscal deficit for the April-June quarter (Q1, first three months of this financial year) was Rs 3.26 lakh crore, about 61.1 per cent of the full financial year’s target of Rs 5.34 lakh crore.
  
  For the corresponding period last year, the deficit was 51.6 per cent of the full year’s target. This indicates a greater front-loading of expenditure this time, plus below-par non-tax revenue receipts. However, that increase in spending seems to have come from revenue expenditure, not capital spending, which was lower as a percentage of the full-year budgeted estimate as compared to last year.
  
  For these first three months, total expenditure was Rs 5.12 lakh crore or 25.9 per cent of the full-year target of Rs 19.78 lakh crore, compared with 24.2 per cent for the corresponding period last year. Non-Plan spending was Rs 3.64 lakh crore, about 25.5 per cent of the full-year Budget Estimate, compared with 24 per cent for the corresponding period last year. Plan expenditure was 1.47 lakh crore or 27 per cent of the full-year estimate, from 24.7 per cent for the comparable period.
  
  Non-Plan capital spending was 22.6 per cent of the full-year target for April-June, compared with 26 per cent for April-June 2015, while Plan capital spending was 18 per cent of the full-year estimate, compared with 23 per cent last year.
  
• Ease of doing biz' shown to World Bank
  The central government on 18th July showcased its various initiatives towards achieving greater ‘ease of doing business’ in the country to a visiting World Bank delegation.
  
  The World Bank team is in India as part of the multilateral development bank’s annual assessment of the levels of ‘ease of doing business’ in different countries. The team was briefed by officials from the department of industrial policy and promotion (DIPP), Central Board of Direct Taxes, department of financial services, and the law ministry. The team will spend the next two weeks talking to various stakeholders in Delhi and Mumbai.
  
  Officials from DIPP said they were confident of securing a higher ranking for India in the World Bank’s annual Doing Business Report, the 2016 edition of which placed India 130th among 189 countries.
  
  The global ranking of countries is based on certain indicators such as how easy it is to start a business, register a property, get credit, pay taxes, and resolve insolvency. India had performed the best in ‘protecting minority shareholders’ category (eight rank) and the worst in ‘dealing with construction permits’ (183rd rank).
  
  After the last report in October 2015, the government had streamlined existing norms to improve its score on these indicators, especially on building permits, enforcing contracts, and resolving insolvency. He was confident the two areas where the country had made significant strides according to the last report - starting a business and providing electricity - would help the government secure a higher ranking since bureaucratic and legal hurdles have been eased further in these areas.
  
  The government has integrated about 20 services provided by various central government ministries on its online e-biz platform. These include those for securing employer registration, industrial licence, getting permanent account number (PAN), transferring shares in foreign currency, and getting custom duty concessions on project imports, etc.
  
  The ministries of finance and corporate affairs have also pushed for paperless application for PAN and tax deduction and collection account numbers (TAN) as well as seamless exchange of data to provide newly incorporated companies with the same within a day.
  
  Furthermore, 30 different services by Andhra Pradesh, Odisha and Delhi were integrated as on June 7. The government is also keen to showcase the ground level implementation of reforms by various states, the official mentioned above said.
  
  States had been given a set of 340 issues to work on, whose implementation details were to be submitted by July 7. As on that day, Uttarakhand and Telangana led the pack of states in implementing reforms on the issues. However, the window for the re-submission of clarifications by states would be open until July 31, according to the DIPP.
  
• NHAI in pact with banks for funds to revive projects
  The National Highways Authority of India (NHAI) has struck a deal with State Bank of India (SBI) for fresh fund infusion into three projects that cross Bihar, Maharashtra, Goa and West Bengal.
  
  Under the arrangement, the government would put in about Rs 1,100 crore while the banks would put in upwards of Rs 200 crore. Promoters of the three projects would give around Rs 100 crore.
  
  SBI has to give up its first claim on the projects and its revenue stream; NHAI will be allowed to first recover money. The banks already have exposure of about Rs 2,000 crore in the three projects. In two cases, the disbursed sum is more than the originally estimated cost. Now, the banks will specify a standard operating procedure for each.
  
  NHAI would recover the funds it would put in these projects within the lifecycle of these projects. It will charge the developers an interest rate of 2 per cent above the bank rate.
  
  Biggest among the three is the Panvel to Indapur project in Maharashtra. It will now get Rs 540 crore from NHAI and Rs 76 crore from banks and promoters. The project was being implemented by a joint venture between Supreme Infrastructure India, Mahavir Road and Infrastructure and China State Construction Engineering Hong Kong. The 84-km build, operator and transfer (BOT) toll project was started in December 2011 and was scheduled to get completed this December.
  
• Government detects undisclosed income of 44 thousand crore rupees
  Government has detected undisclosed income of nearly Rs 44 thousand crore from domestic and foreign sources in the last two financial years. Minister of State for Finance Santosh Gangwar informed this in a written reply in Rajya Sabha.
  
  Mr Gangwar said the Black Money Act enacted last year provided a one-time compliance window for declaration of undisclosed foreign assets. The window was open from July to September last year. The Minister said an amount of 2,476 crore rupees was received as tax and penalty from 648 declarants under the window.
  
• Centre pumps Rs. 22,915 cr into public sector banks
  The Centre on 19th July allocated Rs. 22,915 crore as capital infusion (in 2016-17) in 13 public sector banks that are burdened with non-performing loans, to help improve their liquidity and support lending operations.
  
  Of the allocated amount for each bank, 75 per cent has been released for now to provide liquidity support for lending operations and enable them to raise funds from the market. The balance amount is linked to performance and would be released later.
  
  As part of its Indradhanush plan to revitalise state-owned lenders, the Finance Ministry plans to infuse Rs.70,000 crore in the four-year period between 2015-16 and 2018-19.
  
  The gross bad loans of PSBs increased to 9.6 per cent as of March 2016, from about 6 per cent a year earlier, according to the Reserve Bank of India. The Union Budget 2016-17 had allocated Rs. 25,000 crore for bank re-capitalisation.
  
  The country’s largest public sector bank State Bank of India has received the highest amount ( Rs. 7,575 crore), followed by Indian Overseas Bank ( Rs. 3,101 crore) and Punjab National Bank ( Rs. 2,816 crore).
  
  Bank of India received Rs. 1,784 crore and Central Bank of India Rs. 1,729 crore, while Allahabad Bank received the least amount ( Rs. 44 crore).
  
  Meanwhile, Finance Minister Arun Jaitley also informed Parliament that there are 8,167 wilful defaulters, who owe banks a cumulative amount of Rs. 76,685 crore. He further said that many defaults on banks have been from sectors such as steel, infrastructure and power, and the government has worked to address the problems of these sectors in the past year and a half.
  
• IMF cuts India's growth projections slightly
  The International Monetary Fund (IMF) has marginally scaled down India's economic growth projections by 0.1 percentage point to 7.4 per cent each for the current financial year and 2017-18, due to a slower investment revival than expected earlier.
  
  According to IMF, in India, economic activity remains buoyant, but the growth forecast for 2016-17 was trimmed slightly, reflecting a more sluggish investment recovery, IMF released its World Economic Outlook on 19th July
  
  The economic growth of 7.4 per cent and also its earlier projection of 7.5 per cent for the two financial years would be lower than 7.6 per cent registered for 2015-16.
  
  The government expected economic growth in the range of 7-7.75 per cent for the current financial year. On 18th July, Asian Development Bank had retained its projections for India at 7.4 per cent for 2016-17.
  
  However, it had pegged the economic growth much higher at 7.8 per cent for 2017-18 than what has IMF projected in its latest report. On the other hand, Morgan Stanley had revised its growth estimate from 7.5 per cent to 7.7 per cent for 2016
  
  It also scaled up growth rate to 7.8 per cent, from earlier 7.7 per cent for 2017. The sluggish pace of investments in the country could be gauged from the fact that capital goods declined for the seventh consecutive month in May and that, too, by 12.4 per cent.
  
  The gross fixed capital formation (GFCF), a proxy for investment, contracted 1.9 per cent in the fourth quarter of 2015-16. It had risen as high as 7.1 per cent and 9.7 per cent in the first and second quarters, respectively.
  
  However, third quarter also saw a small increase of 1.2 per cent. While revising its growth projections for India, Morgan Stanley also said the growth recovery is becoming more broad-based, driven by public capex, foreign direct investment (FDI) and consumption. This indicated that private investments are yet to pick up.
  
  On the other hand, IMF slightly revised China's growth by 0.1 percentage points for 2016 and retained it for 2017.
  
  Even then, latest projections for China at 6.6 per cent for 2016 would be quite lower than India's. Also, China's growth rate will come down to 6.1 per cent for 2017, while India's will remain intact at 7.4 per cent for 2017-18, according to IMF.
  
  The IMF report said indicators of real activity were somewhat stronger than expected in China, reflecting policy stimulus. Benchmark lending rates were cut five times in 2015, fiscal policy turned expansionary in the second half of the year, infrastructure spending picked up, and credit growth accelerated in China, IMF said.
  
  IMF latest update is titled, Uncertainty in the Aftermath of the UK Referendum. It said the vote in the United Kingdom in favour of leaving the European Union (EU) added significant uncertainty to an already fragile global recovery.
  
  IMF admitted that the impact and persistence of the uncertainty are hard to quantify at this stage. The financial market reaction so far has been generally orderly and contained. However, global confidence effects and tighter financial conditions-amid the prolonged negotiations that are likely to precede a new relationship between the UK and EU-could affect global growth negatively beyond what is envisaged in the baseline scenario
  
  IMF cut global economic growth by 0.1 percentage points each for 2016 and 2017 to 3.1 per cent and 3.4 per cent, respectively.
  
• Start Up India: 16 entities incorporated,tax sops rejected for 2
  Only 16 applicants have been incorporated under the Start Up India programme after April 1 this year making them eligible for tax sops out of which two have already been disallowed, Parliament was informed on 20th July.
  
  A total of 728 applications have been received till July 18, 2016 for Start Up recognition, Commerce and Industry Minister Nirmala Sitharaman said in a written reply in the Rajya Sabha.
  
  Out of them, 180 applications are complete and have been recognised as startups by the Department of Industrial Policy and Promotion (DIPP).
  
  The applications for tax benefits are examined by the inter-ministerial board. Out of the 16, three applications were considered in the second meeting of the inter-ministerial board during which one has been recommended for tax benefits and other two have been disallowed.
  
  Incentives under the Start Up India programme include income tax exemption for three years in a block of five years if they are incorporated between April 1, 2016 and March 31, 2019.
  
  However, to avail of these benefits an applicant must get a certificate of eligibility from the Inter-ministerial board.
  
  Sitharaman said in order to increase the coverage of startups in the country several steps have been taken up by her ministry, including setting up of Startup India Hub to resolve queries and provide handling support to startups.
  
• Govt says DBT scheme saves Rs 21K cr in LPG subsidy in 2 yrs
  The government on 20th July clarified that savings resulting from Direct Benefit Transfer of LPG scheme PAHAL is estimated to be Rs 21,261 crore since the launch of the scheme in 2014-15.
  
  The clarification came in the backdrop of a report which had said that government's actual savings were to the tune of only 2000 crore rupees and the remaining was softening of crude oil prices.
  
  According to the the Petroleum Ministry said 3.34 crore fake connections were blocked under the scheme which resulted in the savings. The statement claimed if these connections were not blocked the subsidy bill would have been much higher despite fall in crude oil prices.
  
• Parliament panel proposes revamp of Debt Recovery Bill, RBI audit of ARCs
  To ensure speedy redress of the 70,000 debt recovery cases pending across the country, a Joint Committee of Parliament has suggested major changes to the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, which was introduced in May.
  
  The Committee report, which is expected to be tabled in the Lok Sabha on 22nd July, proposes amendments ranging from definitions to several terms such as ‘company’, ‘financial lease’, and ‘secured creditor’ besides deletion of a “redundant” clause on penalties on Asset Reconstruction Companies (ARCs) if they fail to comply with the RBI’s directions. According to those in the know of the development, it is virtually a new Bill now.
  
  The Bill seeks to amend a set of laws, including the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.
  
  The Committee has changed the definition of an ARC to a “company incorporated under the Companies Act, 2013 and registered with RBI” for the purpose of asset reconstruction and securitisation. This was done after the RBI complained that the current definition is ambiguous.
  
• 7 Indian companies on Fortune's list
  Seven Indian companies have made it to the latest Fortune 500 list of the world’s biggest corporations in terms of revenue, with the retail giant Walmart topping the global rankings.
  
  Indian Oil Corporation (IOC) is ranked highest at 161st among Indian firms, while another state-run firm Oil and Natural Gas Corporation (ONGC) has moved out of the rankings for 2016. Private gems and jewellery major Rajesh Exports has made its debut at 423rd position.
  
  Among the seven Indian companies, four are from the public sector while Reliance Industries (RIL) is the top-ranked among private sector firms, followed by Tata Motors and Rajesh Exports.
  
  Among state-run majors, IOC is followed by banking behemoth State Bank of India, Bharat Petroleum and Hindustan Petroleum. IOC is ranked 161st with revenue of $54.7 billion (down from 119th last year), while RIL is now at 215th (down from 158th). Bharat Petroleum slipped from 280th to 358th this year and Hindustan Petroleum is at 367th, down from 327th.
  
  However, Tata Motors and SBI have improved their position. While Tata Motors has taken the 226th position, up from 254th last year, SBI is ranked 232nd, up from 260th last year.
  
  The overall list was topped by Walmart with revenue of $482,130 million, followed by State Grid (revenue of $329,601 million) and China National Petroleum ($299,271 million) at the second and third place respectively.
  
• CCEA approves construction of new dry dock within Cochin Shipyard Limited
  The Cabinet Committee on Economic Affairs, CCEA has approved construction of a new dry dock within Cochin Shipyard Limited at a cost of 1 thousand 7 hundred 99 crore rupees. The objective is to augment the shipbuilding and repair capacity of the country.
  
  The CCEA also approved installation of Ghatampur Thermal Power Project of 1980 Mega Watt capacity in Uttar Pradesh. The project will be implemented at an estimated cost of over 17 thousand crore rupees.
  
• India receives $5.34 billion FDI in April-May
  India received $5.34 billion foreign direct investment in the first two months of the current financial year, Parliament was informed on 22nd July. During April-May the country attracted $4.76 billion FDI under automatic route, while $582 million came through the approval route, Minister of State for Finance Arjun Meghwal said in a written reply to the Lok Sabha.
  
  The government has relaxed FDI Policy in sectors like defence, pharmaceuticals, aviation, food retailing and broadcast. During the two months, defence received no FDI, while pharmaceuticals attracted $452.86 million foreign inflows.
  
  The other sectors include air transport ($5.65 million), information and broadcasting ($39.2 million) and retail trading ($7.94 million). In the first quarter, April-June, of 2016-17 Foreign Portfolio Investors pumped in Rs 10,4561 crore.
  
• IMF urges key G20 countries to spend more for growth
  The International Monetary Fund (IMF) has warned risks to the global economy are growing, as it called on some G20 nations to boost government spending.
  
  Central bank chiefs and finance ministers from the world's top 20 economies gathered in the southwestern Chinese city of Chengdu on Saturday to tackle a slowing global economy facing new uncertainties with Britain voting to leave the European Union (EU).
  
  In an update to its April forecast, the IMF lowered its forecasts for global growth this year and next by 0.1 percent, to 3.1 percent and 3.4 percent respectively.
  
  Britain's new finance minister Philip Hammond is among those attending to deliver a message that his country is still "open for business", according to a statement from the British treasury.
  
  The IMF wants advanced economies like Germany and the United States to channel more public spending into infrastructure investment to help boost global growth, an issue that has sparked divisions among G20 members. But other challenges loom besides Brexit, including what one official attending referred to as the "Three Ts" -- terrorism, Turkey and Trump.
  
  The recent attack in the French city of Nice which killed 84 people, the third major incident in the European country over the past 18 months, has rattled financial markets, and a gunman in the German city of Munich killed nine people on 22nd July.
  
• India's first smart grid to come up in Gurgaon
  The Union government has set in motion the process of rewarding performing states under Uday, the flagship programme in power sector. It would extend support to the country’s first smart grid project to be set up at Gurgaon in Haryana, which has been a performing state under the debt restructuring programme for state-owned power distribution companies.
  
  Besides, the NDA government also expects interest rates to come down in near future which will help the states in further saving loan costs, According to the Union power minister Piyush Goyal
  
  Goyal also said the Maharashtra government would modify its earlier Cabinet decision of joining Uday for only performance parameters.
  
  For the first phase of smart grid project, the Union government would extend a grant of Rs 273 crore to the state. The assistance to Haryana would be given from the Power System Development Fund (PSDF) for Rs 7,000-crore project, the first phase of which would cost Rs 1,382 crore.
  
  The project would be spearheaded by Power Grid Corporation along with the state government, industry and real estate developers. Haryana chief minister Manohar Lal had a meeting with Goyal earlier in the day for a review of power sector in the state.
  
  The smart grid project would ensure 24X7 quality power supply to the city which depends on diesel gensets due to irregular power cuts. While the state government would match the Centre’s grant for the project, 60% cost would be met through loans.
  
  Goyal said Haryana was among the better performing states under UDAY and they would be provided special incentives as central funding for various projects.
  
  UDAY or Ujwal Discoms Assurance Yojana is the revival plan for state owned power distribution companies. The state owned discoms cumulatively own a debt of Rs 4 lakh crore. Till yet, 19 states have given their consent to join the scheme, out of which 10 States, viz. Rajasthan, Uttar Pradesh, Chattisgarh, Jharkhand, Punjab, Bihar, Haryana, Gujarat, Uttarakhand and Jammu & Kashmir have already signed MOUs with the Central Government.
  
  One of the first steps enlisted in the MoU for Uday is the takeover of 75% of discom’s cumulative debt of 50% in the first year and balance the next year. States would issue non-SLR SDLs (State development loans) against it at prevailing market rates. The balance 25% would be issued as sovereign backed bonds by discoms.
  
  In the year 2015-16, bonds worth Rs 99,541 crore were floated by the participating states to clear half of the outstanding debt of states and outstanding CPSU dues in Jharkhand and Jammu & Kashmir. The Union Cabinet recently approved the extension of the deadline for applying for the UDAY scheme which works on a reward system attached to certain parameters.
  
  Goyal is also banking on lowering of interest rate for the renewable energy sector.
  
  A smart grid is an electrical grid, which includes a variety of operational and energy measures, including smart meters, smart appliances, renewable energy resources and energy-efficiency resources.
  
• Government sets up panel to consider MSP hike
  To address the issue of escalating prices of pulses, the Union government has set up a high-level committee headed by Chief Economic Adviser Arvind Subramanian to consider a reasonable increase in minimum support price for pulses and bonus for farmers.
  
  A ministerial committee headed by Finance Minister also decided to increase the buffer stocks to 20 lakh tonnes from the existing 8 lakh tones.
  
• Cabinet allocates Rs 12,000 crore to impart skill training to one crore people over next 4 years
  Union Cabinet has approved the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to impart skill training to one crore people over the next four years.
  
  Twelve thousand crore rupees has been allocated for it. According to the Law Minister Ravi Shankar Prasad, the scheme will impart fresh training to 60 lakh youths and certify skills of 40 lakh persons acquired non-formally.
  
  In addition to catering to domestic skill needs, the scheme will also focus on skill training aligned to international standards for overseas employment in Gulf countries, Europe and other overseas destinations. There will be scholarship for student undergoing training in high end job roles. Skill training would be done based on industry led standards aligned to the National Skill Qualification Framework.
  
  In another decision, the government has approved the revival of defunct Fertilizer Units in Gorakhpur, Sindri and Barauni. These include two closed urea units of Fertilizer Corporation India Limited at Sindri and Gorakhpur and Barauni unit of Hindustan Fertilizers Corporation Limited.
  
  The government has also approved some facilities to persons from Minority communities of Afghanistan, Bangladesh and Pakistan, namely Hindus, Sikhs, Buddhists, Jains, Parsis and Christians staying on Long Term Visa in India.
  
  The facilities include opening of bank account, permission for purchase of property for self occupation and suitable accommodation and and issuing of driving licence, PAN card and Aadhar number.The move is aimed at easing out the difficulties being faced by them.
  
  The Cabinet also approved revised cost estimates of over 7 thousand 290 crore rupees for ongoing 1020 Mega Watt for Punatsangchhu-II Hydroelectric project in Bhutan.
  
  The Project will provide surplus power to India and thus augment power availability in the country. The bilateral agreement to execute the project was signed between the two country in April, 2010 at the approved cost of around 3778 crore rupees.
  
  The Cabinet gave its ex-post facto approval for the Official amendment to the Rajendra Central Agricultural University Bill, 2015 for change of name from Rajendra Central Agricultural University to Dr. Rajendra Prasad Central Agricultural University.
  
  The Cabinet Committee on Economic Affairs approved disinvestment of 15 per cent paid-up equity in National Building Construction Corporation Limited through the Offer for Sale route.
  
  The Cabinet Committee on Economic Affairs today approved disinvestment of 15 per cent paid-up equity in National Building Construction Corporation Limited through the Offer for Sale route.
  
  Besides, it has also approved transfer of shares by ITI Limited to Special National Investment Fund to meet requirement of Securities and Exchange Board of India's minimum public shareholding.
  
• HCC first to get debt relief under new RBI scheme
  Hindustan Construction Company (HCC) has become the first firm to get relief under the Reserve Bank of India’s Scheme for Sustainable Structuring of Stressed Assets (S4A) for its Rs 4,900-crore debt.
  
  According to the scheme, banks can convert half the company’s loans into equity/redeemable optionally convertible preference shares or optionally convertible debentures in the next 90 days. The rest will be serviced according to present terms and conditions.
  
  The RBI’s Scheme for Sustainable Structuring of Stressed Assets (S4A) allows banks to separate the total debt of a stressed company into two. While the company will service the sustainable part of debt, the rest is converted into equity.
  
  HCC said in a statement that the joint lenders’ forum has agreed to consider its debt, under the recent RBI S4A guidelines, with July 12 as the reference date.
  
  The lenders’ decision comes at an opportune time as HCC is on the recovery path with an order book growth of 35 per cent in the past 15 months in the backdrop of the government’s focus on infrastructure, it said. In the past couple of years, HCC took up the recovery of Rs. 11,000 crore dues from government agencies through arbitration proceedings and has received arbitration awards of Rs. 3,041 crore in its favour.
  
  However, payment of these awards remain a challenge and only Rs. 373 crore could be collected as the clients kept appealing to the Supreme Court without paying the dues, said HCC.
  
• Income Declaration Scheme extended to Sept 2017
  According to the Finance Minister Arun Jaitley the Income Declaration Scheme is a part of government's strategy through which people can clean up their books. This comes on a day when the Government Revised Time Schedule for Making Payments under the Scheme.
  
  The government has extended the deadline for payment of tax and penalty under the black money disclosure scheme and allowed declarants to pay the amount in three installments by September 30 next year. The first installment of 25 per cent under the Income Declaration Scheme 2016 will have to be paid by November 2016 to be followed by another installment of 25 per cent by March 31, 2017.
  
  The remaining amount will have to be paid to the exchequer by September 30, 2017. Finance Minister Arun Jaitley also said that the government will provide globally competitive tax rates and maintain stability in tax policy.
  
  The developments come on a day when Income Tax Department came out with a fourth set of clarifications on the Income Declaration Scheme (IDS) on queries seeking to know if payment under the Scheme can be made out.
  
  The government clarified that blackmoney declarants using the one-time compliance window cannot pay tax and penalty from undisclosed income to bring down their liability and such acts will not get any immunity.
  
  A four-month window starting from June 1 has been provided to persons holding undeclared income and assets to come clean by paying a tax of 30 per cent and interest and penalty of another 7.5 per cent each, totaling 45 per cent. The window ends on September 30.
  
  Meanwhile the Special Investigation Team (SIT) on black money has recommended ban on cash transactions of above Rs 3 lakh and restricting cash holding with individuals to not more than Rs 15 lakh to curb illegal wealth in the economy.
  
  The SIT headed by Justice M B Shah (retd), submitted its fifth report to the Supreme Court on methods to curb black money in the economy.
  
• RBI sets up group to review financial tech
  The Reserve Bank of India (RBI) on 14th July set up an inter-regulatory working group to study regulatory issues relating to financial technology and digital banking in India, as suggested by the sub-committee of the Financial Stability and Development Council (FSDC) in April.
  
  The working group was required in view of the growing significance of technology in financial companies. The group will "review and appropriately reorient the regulatory framework and respond to the dynamics of the rapidly evolving Fin Tech scenario
  
  The group will be headed by RBI's newly appointed Executive Director Sudarshan Sen. The group will submit its report within six months from the date of its first meeting.
  
• 74 schemes of 17 Ministries & Departments brought under DBT
  As many as 74 schemes of 17 Ministries and Departments have been brought under Direct Benefit Transfer, DBT. According to the Finance Minister Arun Jaitley the DBT is a very important scheme as it transfers the benefit to the targeted beneficiaries.
  
  He said the scheme ensures that benefits reach the targeted population and helps reducing leakages. Some members of the Committee suggested that Banking Correspondents scheme should be further strengthened to ensure that there is last mile coverage of beneficiaries.
  
• RBI allows foreign players to hike stake in Axis, IDFC Bank
  Reserve Bank has allowed foreign investors to up their stakes in Axis Bank and IDFC Bank to up to 74 per cent and 46 per cent, respectively.
  
  Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest from existing 62 per cent up to 74 per cent of the paid-up capital of Axis Bank under the Portfolio Investment Scheme (PIS). FIIs/RFPIs can now invest from the existing 24 per cent up to 46 per cent of the paid-up capital of IDFC Bank Limited under PIS.
  
  The hike in foreign investment limit in Axis Bank follows permission granted by the government to raise foreign shareholding ceiling to 74 per cent. The hike in foreign shareholding in the private lender is expected to fetch around Rs 13,000 crore.
  
• PM pushes for Aadhaar-linked DBT at Inter-state Council meet
  Indian Prime Minister Narendra Modi on 16th July utilised the forum of the Inter-state Council for a big push to Aadhaar and Direct Benefit Transfer (DBT).
  
  At the Council, set up in 1990 to discuss Centre-state and inter-state relations, Modi asked the states to use Aadhaar extensively in the implementation of welfare schemes.
  
  He said over 102 crore Aadhaar cards have been distributed and have become a symbol of empowerment and Aadhaar’s use has saved thousands of crore of rupees now being used for development.
  
  The PM said the states should use Aadhaar to reduce kerosene consumption and lauded efforts by Karnataka.
  
  The Bihar CM Nitish Kumar demanded that the post of governor be abolished, or at least provisions relating to the appointment of governors must be clearly defined and made transparent.
  
  West Bengal CM Mamata Banerjee sought formation of a committee headed by the Union Finance Minister to look into the issue of waiver and restructuring of the outstanding loans of the states.
  
  The Council had last met in 2006. The agenda for meeting was to discuss retired Chief Justice of India MM Punchhi Commission report on Centre-state relations, Aadhaar and Direct Benefit Transfer, education, and internal security. Government sources pointed that this meeting of the Council covered a wide range of topics, while previous meetings would focus on one or two sectors.
  
  Presentations were made by the Secretary of Inter-State Council Secretariat and the Secretaries of the Departments of Electronics and IT, School Education and Literacy and the Ministry of Home Affairs.
  
  The meeting was told the recommendations of the Punchhi Commission, which was set up in 2007, will be first referred to the Standing Committee and with their recommendations be placed before the Council.
  
• FPI invests over Rs 3,700 cr into Indian equities in June
  Foreign investors brought in over 3,700 crore rupees into Indian equities in June, mainly on hopes of a good monsoon. According to data available with depositories, Foreign portfolio investors have invested a net of 3,713 crore in the stock market last month.
  
  However, they pulled out 6,220 crore rupees from the debt market during the period under review. So far this year, FPIs have invested 20,648 crore rupees in equities while withdrawing 12,105 crore rupees in the debt market, resulting in a net inflow of 8,543 crore rupees.
  
• Non-urea fertiliser prices slashed by up to Rs 5,000/tone
  The retail prices of non-urea fertilisers including DAP have been slashed by up to Rs 5,000 per tonne following drop in global prices of raw materials.
  
  According to the Fertiliser Minister Ananth Kumar:
  • The state-run fertiliser firms Rashtriya Chemicals and Fertilizers and National Fertilizers Ltd as well as private firm Indian Potash Ltd have agreed to reduce the price of non-urea fertilizers.
  • The retail price of DAP has been cut by Rs 2,500 to Rs 22,000 per tonne, Muriate of Potash (MoP) by five thousand rupees to 11 thousand per tonne.
  • The complex fertilisers rates have been brought down by one thousand rupees per tonne.
  • For a 50 kg bag , the effective rate for DAP will come down by 150 rupees, MoP by 250 rupees and other NPK fertilizers by Rs 100.
  • The rate cut would come into force with immediately effect and entail a benefit of Rs 4,500 crore to farmers.
    
• NSE launches trade repository for corporate debt
  The National Stock Exchange of India (NSE) has launched the NSE Trade Repository for Indian corporate debt. The trade repository provides consolidated information on over-the-counter (OTC) deals in corporate bonds across exchanges.
  
  Currently, market participants report their OTC deals in corporate bonds on the reporting platform of any one of the exchanges. With the implementation of the Indian Trade Repository all deals will be visible. Meanwhile, stock exchanges have also launched e-bidding platforms for corporate debt. LIC Housing Finance raised Rs 435 crore from the NSE’s platform.
  
  The stock exchanges, BSE and National Stock Exchange of India, launched their e-platforms for issuance of debt securities worth around Rs 500 crore on private placement basis.
  
  The platforms, BSE-Bond and NSE-EBP (electronic debt bidding platform), will facilitate online bidding for private placement of debt securities.
  
• Reshuffling portfolios in RBI
  The Reserve Bank of India (RBI) has reshuffled the portfolios of its deputy governors with R. Gandhi tasked with overseeing the foreign exchange department and financial market regulation, in place of H.R. Khan who retired on 3rd July.
  
  Khan’s replacement N.S. Vishwanathan will be responsible for banking and non-banking regulation, responsibilities that were earlier held by Mr. Gandhi. Mr. Gandhi will however continue to handle currency management and the legal department. Vishwanathan also gets Secretary’s department which was with Mr. Khan. Vishwanathan, was elevated from an Executive Director’s post, has been given a three-year term. As ED he was in charge of the banking and non-banking regulation departments.
  
  The central bank has also appointed Sudarshan Sen as the new Executive Director who will look after banking and non-banking regulation. While EDs are appointed by the RBI, Deputy Governors and the Governor of the central bank are appointed by the Centre. The RBI has 11 Executive Directors and four Deputy Governors.
  
• Cabinet nod to Rs 10,000-cr apprenticeship promotion scheme
  The Union Cabinet has approved a National Apprenticeship Promotion Scheme to train 50 lakh apprentices by 2019-20. The Scheme involving a cost of Rs 10,000 crore will catalyze the entire apprenticeship ecosystem in the country.
  
  It will offer a win-win situation for all stakeholders and is expected to become one of the most powerful skill-delivery vehicle in the country.
  
  It provides for incentivizing employers to engage apprentices and 25 per cent of the total stipend payable to an apprentice would be shared with employers directly by the Government.
  
  It is for the first time a scheme has been designed to offer financial incentives to employers to engage apprentices. Besides, 50 per cent of the total expenditure incurred on providing basic training will be supported by the government.
  
• Cabinet approves interest subsidy of 5% for farmers in 2016-17
  The Union Cabinet has approved the interest subsidy of five per cent for farmers for the year 2016-17. It will help farmers to get short term crop loan upto 3 lakh rupees payable at 4 per cent of interest rate within one year. In case farmers do not repay the short term crop loan on time they would be eligible for interest subvention of 2 per cent as against 5 per cent.
  
  The government has earmarked a 18 thousand 276 crore rupees for the Interest Subvention Scheme. An interest subsidy of 2 per cent has also been cleared for loans upto six months for small and marginal farmers who would have to borrow at 9 per cent for the post harvest storage of their produce.
  
  For farmers affected by Natural Calamities, the interest subvention of 2 per cent will be provided to Banks for the first year on the restructured amount.
  
• CCEA okays Axis Bank plan to hike foreign holding to 74%
  The Cabinet Committee on Economic Affairs (CCEA) on 5th July approved increase in foreign shareholding in Axis Bank Ltd to 74 per cent from the existing 62 per cent. With this approval, foreign investment of Rs. 12,973.14 crore is expected to flow into the country
  
  It would also lead to creation of 6,000 to 7,000 jobs over the next three years. Foreign investment will be by way of Foreign Institutional Investors (FIIs)/Foreign Portfolio Investors (FPIs)/Non-Resident Indians (NRIs), Foreign Director Investment covering ADRs/GDRs and Indirect Foreign Investment. Currently, foreign investments in private sector banks are capped at 74 per cent, with the FII limit at 49 per cent. The CCEA had to consider the Axis Bank proposal as the investment envisaged exceeded Rs. 5,000 crore.
  
• Govt forms panel to examine desirability and feasibility of new financial year
  The government has set up a committee to examine the desirability and feasibility of having a new financial year. According to the Finance Ministry, the four member committee will be headed by former Chief Economic Advisor Shankar Acharya. As per terms of reference, the committee will examine the merits and demerits of various dates for commencement of financial year including the existing dates.
  
  The panel will take into account the genesis of current financial year, suitability of financial year from point of view of correct estimation of receipts and expenditure of Central and State governments.
  
  It will also consider the effect of the different agriculture crop periods, impact on business, taxation systems and procedures, statistics and data collection and convenience of legislatures for transacting budget work.
  
  The committee has been asked to submit its reports by 31st of December this year. In case the committee decides to recommend a change in the Financial Year, it will also work out the modalities for effecting the change. Presently the Financial Year starts from 1st of April.
  
• Rajasthan becomes first state to introduce minimum wages for part time workers
  Rajasthan has become the first state in the country to introduce minimum wages for part time workers. Labour Department has issued a notification in this regard.
  
  According to notification, it is now mandatory to pay 50 per cent of the prescribed a day minimum wage to a person who works for less than four hours in a day. With this notification, part time workers now come under the Minimum Wages Act 1948.
  
  In another decision government has increased minimum wages in all categories of scheduled employments by Rs 104 per month.
  
• Panel formed to iron out differences over GST
  The Central Board of Excise and Customs has formed a committee to identify various important concerns and sort them out through dialogue, in smooth passage of Goods and Services tax. The issues include administrative threshold as well as revisionary powers.
  
  The empowered committee of state finance ministers in a meeting in Kolkata last month discussed the model GST draft law, which was also made public for comments. The committee is headed by GST member Ram Tirath.
  
  The states have strongly pressed for all administrative powers, including assessment, scrutiny and passing of orders, for entities with annual turnover up to Rs 1.5 crore.
  
  This will essentially mean that almost all service tax cases, barring those of big entities, will remain with the states. This has not gone down well will many central agencies. Moreover, for entities with annual turnover of more than Rs 1.5 crore, both states and Centre are likely to have assessment powers.
  
  States, including Gujarat, Maharashtra, West Bengal, Tamil Nadu and Karnataka, are pressing for authority over tax assessment and dispute resolution for entities with annual turnover up to Rs 1.5 crore. According to states, this will ensure that small businesses are not harassed because of dual control.
  
  Central official pointed out that the draft model GST law was not final and further changes could be made considering feedback from all stakeholders, including the public. The Centre also ceded to the states’ demand of revisionary powers for three years, compared with three months in the current central law.
  
  According to the central indirect tax laws, senior officials can revoke the order passed by the junior authority within three months, as against three to five years in case of some states. This move could lead to an increase in uncertainty for the tax assesses, resulting in harassment in some cases.
  
• Anti-dumping duty imposed on PTA imports from 5 countries
  Domestic producers of purified terephthalic acid (PTA), a key raw material for manufacture of polyester chips, came under anti-dumping duty on its imports from China, Iran, Taiwan, Indonesia and Malaysia.
  
  This Revenue Department move – which came less than a month after the recommendation of the designated authority in the Commerce Ministry
  
  PTA – a white, free flowing crystalline powder – is the primary raw material for the manufacture of polyester chips which in turn is used in a number of applications in textiles, packaging, furnishings, consumer goods, resins and coatings.
  
  MCC PTA India Corp Pvt Ltd and Reliance Industries Ltd had filed the petition seeking levy of anti-dumping duty on PTA imports from these countries. Indian Oil Corporation had supported the petition.
  
  Based on the recommendations of the designated authority in its final findings, the Revenue Department has imposed anti-dumping duty that ranged from $83.08 per tonne to $168.76 per tonne depending on the producer and country of export.
  
  The duty has been levied for five years effective from December 10, 2015, the date on which the provisional duty was imposed.
  
• Work on Bharatmala project to begin in March 2017
  The government’s ambitious Bharatmala project connecting eastern and western India through 7,000 km of national highways is expected to commence by March 2017. Detailed project reports are being readied and work will begin as soon as land acquisition is complete.
  
  Preparation of project reports for 2,800 km of highways started in January and reports for the rest would be completed by next March
  
  The highway ministry and the National Highways Authority of India (NHAI) will be able to commence project auctions only after states make land available. Once the land was available, projects could be awarded in no time
  
  Bharatmala was announced last year and involves a highway network from Gujarat to Mizoram covering 10 other states and entailing an investment of Rs 90,000 crore. The average cost of constructing 1 km of road is Rs 13 crore. The government will seek assistance of the Border Roads Organisation in tough terrain.
  
  The project on the lines of Sagarmala in which a string of ports will be built in the Indian Ocean to protect maritime interests. The government plans to improve road connectivity not just to coastal and border areas but also backward areas. Under the larger scheme, improving connectivity for the Char Dham circuit in Uttarakhand will also be undertaken. An investment of Rs 11,700 crore will be made on all-weather roads connecting Kedarnath, Badrinath, Gangotri and Yamunotri.