ECONOMY AFFAIRS MAY 2015
- Expert committee on Health Insurance suggest changes in disclaimer wordings
An expert committee on Health Insurance has suggested changing the wordings of disclaimer in advertisements of insurance companies. The Insurance Regulatory and Development Authority of India, IRDAI mandates that all insurance companies issue a disclaimer, "Insurance is a subject matter of solicitation", in all their advertisements.
The report of the Expert Committee said the disclaimer needs to be reworded as -- "before buying, know the conditions and exclusions, to make a well-informed decision." The report has also recommended that there should be greater transparency and clarity to enable policy holders to understand the boundaries of coverage in their policies. - MUDRA Bank partners with states, regional level co-coordinators
Making the survival of small businesses in the country further trouble-free, Central government’s ambitious project Micro Units Development Refinance Agency (MUDRA) Bank has now partnered with 19 state and regional level co-coordinators. Since small entrepreneurs are often cut off from the banking system because of limited branch presence, this venture by MUDRA will help finance ‘Last Mile Financiers’ of small/micro businesses. The Government feels these funded businesses would further provide almost 10 times jobs to what was being generated by the big companies currently.
Looking at the hopelful scenario MUDRA Bank has created in just one month of the launch, it might soon help transform small enterprises into a Rs 11 lakh crore industry, giving a significant push to country’s economy.
In its effort to boost the growth of small scale businesses, the Central government has set up the Micro Units Development Refinance Agency (MUDRA) Bank. Merely one month into the setting up of this ambitious project, the Bank has partnered with 19 state and regional level co-coordinators. Since small entrepreneurs face difficulty in access to the banking system for various reasons, this venture by MUDRA will help finance small/micro businesses at the grassroots level. These funded businesses are expected to create large scale employment compared to big companies. - Government approves 21 proposals of FDI
Government has approved twenty one proposals of Foreign Direct Investment, FDI. These amount to 280.70 crore rupees approximately. The FDI proposals were approved based on recommendations of the Foreign Investment Promotion Board
The proposal of pharma firm La Renon Healthcare to invest 100 crore rupees in a brownfield project has been cleared. The inter-governmental panel also cleared Blue Dart Express's proposal to acquire shares in Blue Dart Aviation Ltd and hike shareholding to 74 per cent from 49 per cent. The FIPB has, however, deferred 12 proposals including that of Kotak Bank for increasing the aggregate foreign investment limit in the bank to 55 per cent. - ICICI Bank launches voice recognition service
ICICI Bank, India’s largest private sector bank, launched a voice recognition service which authenticates customers based on their speech patterns and allows them to execute banking transactions through the bank’s call centre.
The-first-of-its kind service will be available to over 33 million customers…With the voice recognition technology in place, customers are no longer required to enter their card numbers, PIN and answer security questions to authenticate themselves. Their voice will now act as the password for banking transactions. This will be available to all savings bank and credit card customers.
The voice recognition technology is secure as it works on voice prints, which are unique to an individual. It comprises more than 100 characteristics, including voice modulation, speed, accent and pronunciation which are impossible to imitate, thereby enhancing security. The bank stores the customer’s unique voice print against his account and matches it whenever he calls from his registered mobile number. - Telangana's new industrial policy to be effective from June 7
Telangana’s new industrial policy will be effective from June 7 and permissions will be granted for construction of new industries within 15 days.
This decision was taken on 25th May- According to policy Government’s responsibility is to provide land, power and water to the industries. And also the government will see to it that the industries do not face any water scarcity.
- Through Telangana State Industrial Infrastructure Corporation (TSIIC), the land will be distributed to the industries and till now 1.6 lakh acres of land have been given for industrials construction.
- RBI to soon set up Central Fraud Registry
The Reserve Bank of India will soon set up a Central Fraud Registry as part of an early warning system. The idea is to set up a structure for quick sharing of information about unscrupulous borrowers and help banks fight bad loans. Currently, there is no single database that lenders can access for all relevant details of previously reported frauds.
The structure will make available more information to banks at the time of starting a banking relationship, extension of credit facilities or at any time during operation of an account. - Switzerland govt reveal 3 more names holding Swiss bank accounts
Switzerland authorities have revealed three more names holding Swiss bank accounts. The names of Industrialist Yash Birla and two Mumbai-based individuals, Gurjit Singh Kochar, son-in-law of late realty baron Ponty Chadha, and a Delhi-based businesswoman Ritika Sharma have been made public in Switzerland's official gazette with regard to ongoing tax probes against them in India. These are in addition to the two other Indians -- SnehLata Sawhney and Sangita Sawhney -- whose names have also been made public in similar manner for being probed by the Indian tax authorities. Making public these names, the Swiss Federal Tax Administration has asked them to file an appeal within 30 days before the Federal Administrative Court. - FIIs, FPIs can invest up to 49% in Gammon Infra Projects: RBI
The Reserve Bank said that Foreign Institutional Investors (FIIS) and Foreign Portfolio Investors (FPIs) can now invest up to 49 per cent in Gammon Infrastructure Projects Ltd. The RBI said in a statement issued on 27th May that the purchases could be made through primary market and stock exchanges. The board of Gammon has passed resolutions and the shareholders have passed a special resolution, agreeing for enhancing the limit for the purchase of its equity shares and convertible debentures by Foreign Institutional Investors (FIIs)/RFPIs. - 4,410 KM Highways were completed in country in last fiscal: Minister
According to Union Minister of State for Road Transport, Highways and Shipping P Radhakrishnan in the last fiscal 4,410 KM Highways were completed in the country.
At present road works are being done at the rate of 12 KM per day and this will be roads to 30 KM per day soon. - RBI issues draft norms on stable funding
The Reserve Bank of India on 28th May issued draft guidelines on net stable funding ratio (NSFR) under the Basel III framework on liquidity standards for banks. The RBI has committed to the scheduled implementation of NSFR from January 1, 2018, for banks in India.
The ratio seeks to ensure that banks maintain a stable source of funding with respect to the profile of their assets (loans and investments) and off-balance sheet activities (for instance, offering asset management/brokerage services to clients). Defined as the amount of available stable funding relative to the amount of required stable funding, the net stable funding ratio for a bank should be 100 per cent on an ongoing basis. NSFR limits over-reliance on short-term wholesale funding, encourages better assessment of funding risk across all on- and off-balance sheet items, and promotes funding stability.
However, the NSFR would be supplemented by supervisory assessment of the stable funding and liquidity risk profile of a bank. Based on this, the RBI might require banks to adopt more stringent standards to reflect their funding risk profile and their compliance with the sound principles outlined.
Available stable funding (ASF) is that portion of capital that is expected to be reliable over a one-year horizon, that is, readily available over a one-year horizon. Required stable funding (RSF) is a function of the liquidity characteristics (based on the ease of conversion of the asset into cash) and residual maturities (time left for the asset to mature) held by a bank.
RBI intends banks to have a sustainable funding structure. This would reduce the possibility of banks’ liquidity position eroding due to disruptions in their regular sources of funding thus increasing the risk of failure leading to broader systemic stress.
The Basel Committee on banking supervision framed two ratios, that is, liquidity coverage ratio (LCR) and the NSFR after the global credit crisis. They are considered global regulatory standards on liquidity.
LCR aims at promoting short-term resilience of banks to potential liquidity disruptions by ensuring that they have sufficient high-quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days. NSFR promotes resilience over a longer-term horizon by requiring banks to fund their activities with more stable sources of funding on an ongoing basis. The objective of NSFR is to ensure that banks maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. - Kerala achieves 100% financial inclusion under PMJDY
Kerala is one of the states in the country where the Prime Minister's Jan Dhan Yojana has been successfully implemented-- that is, one bank account in every household. High literacy, human development index and deeper penetration of banking systems have helped the state to achieve 100 per cent financial inclusion.
The state was declared 100 per cent saturated in terms of coverage of all households with at least a bank account in November last year. The target was achieved in less than three months of the launch of the programme. By the end of last fiscal, over 18 lakh new accounts were opened in the state, which include more than 10 lakh in rural areas and over eight lakh accounts in urban areas. Ernakulam and Wayanad topped the districts where maximum accounts were opened.
A major factor that helped Kerala to achieve the target was the financial literacy camps organised by the banks. Rupay cards have been issued to the beneficiaries, who will get personal accident insurance of one lakh rupees under the scheme. In addition, there is a life insurance cover of 30,000 rupees for eligible beneficiaries. - RBI asks banks to advise argi-borrowers to hedge risks
The Reserve Bank on 28th Mayh asked the banks to advise their large agri-borrowers to hedge their commodity price risks through derivative products available on the exchanges.
The RBI said, banks may encourage large agricultural borrowers such as agricultural commodity processors, traders, millers, and aggregators, to hedge their commodity price risks.
RBI further said that volatility in agricultural commodity prices is a prominent risk which needs to be addressed. The advice comes amidst rising threats of an El Nino incident impacting the monsoon for the second successive year this year.
The Met department has already predicted below par monsoon with a long-term average of rain falling short to 92 per cent. RBI said there is a lack of awareness among the borrowers due to which the available hedging tools are not used by them. Emphasizing the need of fostering a risk management culture, the central bank said hedging of the agri-commodity price risks will be beneficial to both the borrowers as well as banks. - Indian economy grows at 7.3% during last financial year
March quarter gross domestic product or GDP data shows that India is the fastest-growing major economy in the world. Manufacturing sector output, a big focus area jumped sharply in the March quarter.
The Indian economy grew at 7.3 per cent in 2014-15 due to improvement in the performance of both services as well as manufacturing sectors. According to the data released by Central Statistics Office (CSO) on 29th May, the economic growth was 6.9 per cent in 2013-14 as per the new series of national accounts with base year of 2011-12.
However, the growth in 2014-15 was lower than the advance estimates of 7.4 per cent released in February. The CSO said, the fourth quarter of last fiscal saw the economy grow at 7.5 per cent, better than 6.6 per cent recorded in the previous quarter. The output of electricity, gas, water supply and other utility services rose by 7.9 per cent as against 4.8 per cent a year ago.
The construction activity too registered an increase of 4.8 per cent, up from 2.5 per cent a year ago. The farm and allied sectors grew by a meagre 0.2 per cent compared to 3.7 per cent a year ago. However, the output of mining and quarrying sector slipped to 2.4 per cent from 5.4 per cent a year ago. - Indian economy poised to grow at 9-10% in medium-term: CII
Confederation of Indian Industry (CII) has said that India's economy can grow at 9 to 10 per cent in the medium-term with a multi-pronged economic strategy. The industry body has outlined ten areas requiring policy attention that can bring huge economic benefits for growth, investment and employment creation. The areas highlighted by CII for more attention include macro-economy, mining, manufacturing, land acquisition, energy, labour reforms, skill development, taxation, financial sector and Companies Act.
On the Land Acquisition Bill, CII suggested that compensation package should be reviewed to reduce rehabilitation and resettlement costs as sellers receive multiples of market value on acquisition. - Framework notified for MSMEs rehabilitation
The Center on 29th May notified a framework for revival and rehabilitation of Micro, Small and Medium Enterprises (MSMEs), which mandates banks to form a panel to chalk out a corrective action plan to be adopted for units having stressed accounts. It is expected that above Framework help the lenders and debtors in revival and rehabilitation of enterprises and shall unlock the potential of MSMEs
The salient features of the framework are identification of incipient stress; formation of committees for distressed MSMEs; and a Corrective Action Plan by the Committee. Pending a detailed revision of the legal framework for resolving insolvency/bankruptcy, there is a felt need for special dispensation for revival and exit of MSMEs.
The MSMEs facing insolvency/bankruptcy need to be provided legal opportunities to revive their units. This could be through a scheme for re-organization and rehabilitation, which balances the interests of the creditors and debtors
Under the framework, before a loan account of an MSME turns into a non-performing asset (NPA), banks/creditors are required to identify incipient stress in the account. Any MSME may also voluntarily initiate proceedings if enterprise reasonably apprehends failure of its business or its inability or likely inability to pay debts and before the accumulated losses of the enterprise equals to half or more of its entire net worth. Under the Corrective Action Plan, the Committee may explore various options to resolve the stress in the account. - Cabinet clears land ordinance again
Union Government on 30th May decided to re-promulgate the Land Ordinance, saying it is necessary for maintaining continuity and providing a framework to compensate people whose land is acquire
With the controversial legislation on land acquisition running into a logjam, the Union Cabinet recommended re-promulgation of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2015. The ordinance, first re-promulgated in March this year, is set to lapse on June 4, much before the monsoon session of Parliament begins.
The Bill to replace the ordinance, with amendments, was passed by the Lok Sabha on March 10, but met with stiff opposition in the Rajya Sabha where the BJP-led alliance does not have majority. Following an impasse, the Rajya Sabha was prorogued March-end to facilitate re-promulgation of the ordinance since it would have otherwise lapsed on April 5. Following the Cabinet’s approval, the recommendation to repromulgate the ordinance again will now be sent to President Pranab Mukherjee, who is expected to re-issue it in time before June 4 . - Indigenous New Bank Note printing lines at Security Paper Mill
As part of Make in India, Finance Minister Arun Jaitely inaugurated Indigenous New Bank Note printing lines at Security Paper Mill in Hoshangabad.
The New Bank Note Paper Line of 6,000 metric tonnes capacity at Security Paper Mill, Hoshangabad in Madhya Pradesh. The Bank Note Paper Line in Mysore with 12,000 Metric Tonnes capacity is expected to be commissioned by the year end.
The government is expected to save foreign exchange worth 1,500 crore rupees by commissioning two new bank paper lines in Hoshangabad and Mysore for indigenously printing Indian currency. The production of the Bank Note paper from these two units will reduce the import considerably. This will also reduce possibility of diversion of the paper supplied by the foreign suppliers to the other destinations for the purpose of generating the fake currency. - More sectors brought under ‘Swiss challenge’ purview
The Andhra Pradesh State government issued a GO on 28th May, bringing new sectors for development of infrastructure projects in public private partnership (PPP) mode under the schedule-III of the AP Infrastructure Development Enabling Act, 2001.
The new sectors brought under the above Act in addition to 16 sectors already included are Telecommunications and broadband internet services, power generation, transmission and distribution including renewable energy projects, highway projects including housing or other activities being an integral part of high way project, transport terminus and depots.
Other sectors brought under the Act include railway systems, urban transit projects, ports and inland ports, airports, urban development projects including smart city and educational institutions.
The order issued by the Infrastructure and Investment Department will facilitate the government to extend ‘Swiss Challenge’ method in awarding infrastructure projects under the above sectors too. But sources caution that that it could result in discretion in awarding the projects and give scope for omissions and commissions.
The State already indicated that it will select the master developer for construction of capital under the Swiss Challenge method. But the decision already raised eye brows as swiss challenge is not considered the ideal method and the Central Vigilance Commission was on record about its reservations about the Swiss Challenge and it said it should be an exception rather than a norm. But the above GO would enable the government to bring more projects under the Swiss Challenge method. - Kakinada SEZ to turn Chinese manufacturing hub
China’s Guizhou International Investment Corporation will invest $500 million to develop an industrial park at the Kakinada SEZ, a subsidiary of GMR Infrastructure Ltd.
Kakinada SEZ President Challa Prasanna and senior officials of GIIC signed an MoU in the presence of the Prime Minister during Narendra Modi’s China tour.
A consortium of leading Chinese manufacturing companies, GIIC plans to bring to the 2,000-acre industrial park a number of Chinese manufacturers of power equipment, electronics items, wind and and solar energy gear. These Chinese companies are expected to invest $2-3 billion over the next five years.
This industrial park is expected to ensure development around Kakinada and generate more than 5,000 jobs for both skilled and unskilled workers. Apart from infrastructure, the Chinese companies will also be able to benefit from the Prime Minister’s ‘Make in India’ campaign and the Andhra Pradesh Government’s investment incentives in the ‘Sun-rise State’. The multi-product Kakinada SEZ is spread over 10,500 acres, and is located in an area rich in oil and natural gas deposits. - Centre moves to unlock the gold hoard
The Centre unveiled a scheme on 19th May to get people to deposit their idle gold holdings with banks and earn interest. The stock of gold that is neither traded nor monetised — that is, lying in lockers — is estimated to be over 20,000 tonnes. Indians are also one of the largest consumers of gold in the world and the country imports up to 1,000 tonnes a year.
As per the draft of the scheme put out by the Finance Ministry, an individual can deposit as little as 30 gm of gold and earn interest and also get tax benefits. The ministry has invited public comments on the scheme.
The scheme, a Budget announcement, aims to replace both the Gold Deposit and Gold Metal Loan Schemes. The Gold Deposit scheme was introduced in 1999 to mobilise gold idling in lockers and put it to productive use. But the scheme did not meet with much success, with less than 10 tonnes collected. The key reasons for this disappointing performance were the low interest rate and the long process for issuance of a certificate.
The government has tried to make the new scheme more appealing. Besides the low minimum deposit quantity of 30 gm aimed at attracting even small depositors, the draft says that “the gold can be in any form — bullion or jewellery.”
Depositors will have the option of taking cash or gold at the time of maturity. The minimum tenure of the account will be one year with an option of rolling over in multiples of one year. According to the draft scheme, exemptions from Capital Gains Tax, Wealth Tax, and Income Tax are likely to be made available after “due examination”.
The scheme will also allow jewelers to obtain loans in their metal account. It has been proposed to allow banks to lend the gold they collect under this scheme to jewellers. This will help meet some of the demand of the jewelry industry. This will also help reduce the reliance of jewellers on imports. But analysts say banks need to make this loan more attractive than the schemes now available to make it appealing to jewelers. - India, China account for 54% of total gold demand during Q1
India and China accounted for 54 percent of the total global gold consumer demand in the first quarter of this year. According to a the Gold Demands Trends report prepared by the World Gold Council, demand for jewellery, still the most significant component of overall demand, totalled over 600 tonnes in the first quarter of 2015, three per cent lower than the last year. The report said, conditions differed from market to market, but at an aggregate level these differences broadly balanced each other out. - PAC recommends probe in bidding process of Ultra Mega Power Projects
The Public Accounts Committee (PAC) of Parliament has recommended a through investigation by an appropriate agency to unearth manipulations in the entire bidding process of Ultra Mega Power Projects. According to PAC Chairman Prof. K. V. Thomas, investigation has also been recommended in connection with the operation and sustenance of such power projects by private developers. The PAC in its report tabled in Parliament has also asked the Ministries of Coal and Power to work in unison and put in place a reliable mechanism to ensure correct estimation and allocation of coal blocks.
The PAC in its report on Jawaharlal Nehru National Urban Renewal Mission, has recommended proper utilization of sanctioned funds and timely release of installments.
The PAC was constituted in August last year has submitted 20 reports to Parliament on various departments during its 8 month tenure. The committee's tenure came to an end on 30th of last month. - At 14%, services will be pricier from June 1
The Finance Ministry has notified the date for the higher rate, which was announced in the Budget. The new rate will be implemented from June 1st on wards of this year.
The 14 per cent rate will be inclusive of an education cess. At present, the basic rate is 12 per cent and education cess is levied at the rate of 3 per cent of the basis tax, which takes the total rate to 12.36 per cent. Service tax is levied on all services except those in the negative list. Over half the services that attract service tax also have abatement, which means that the tax will be levied only on a portion of the total value. There is no change in the abatement rules. - IDBI Bank to launch e-huts for services in rural areas
IDBI Bank is set to expand its branch network to 2,000 by the end of the current year from 1,740 now, besides rolling out e-huts to provide services to people in rural areas.
According to Deputy Managing Director of IDBI Bank Melwyn Rego, the bank has introduced e-lobbies, which are next to branches, across the country. E-hut is a western concept and is set up at relatively populated areas, such as malls. - MUDRA Bank: 12 crore people from unorganized sector to be benefited
The Pradhan Mantri MUDRA Yojana (PMMY), launched by the Prime Minister Narendra Modi last month will be responsible for business developing and refinancing. The MUDRA bank will cater to 5.77 crore small business units that are spread all over India which currently find it difficult to access credit from the regular banking system.
MUDRA bank has been in existent for the last one month, it has already enlisted around 90 partner institutions, who would be a partnering with MUDRA for extending the financial credits. This initiative will add more employment and prosperity to the country. - India to deepen cooperation on Black money
Indian tax authorities and investigators probing black money cases have decided to hold one-to-one meetings with their overseas counterparts based in tax haven nations and other countries to deepen cooperation in the fight against illicit funds stashed abroad.
As part of the measures to combat the menace, investigators have also received a new dossier on tax-related business information on about a dozen entities.
The Union Finance Ministry, after due consultations with the Special Investigation Team on black money and various financial probe agencies, has decided that a team of senior officials will be tasked to hold bilateral meetings with foreign jurisdictions either in India or at the location of the respective counterparts, to thrash out issues quickly.
The step is aimed to cut down on the time taken in paper-based documentation and communication in cases of illegal funds stashed abroad. The face-to-face engagements are aimed at understanding the problems faced by authorities abroad in parting with information related to black money and solve those at the earliest. - Govt contains fiscal deficit at 4%; beats its own target
The government has contained the fiscal deficit at 4 percent of GDP against its own target of 4.1 percent for the financial year 2014-15, while it was 4.4 percent during 2013-14. The revenue deficit has also been confined to 2.8 percent, beating the budget target of 2.9 per cent for the last fiscal.
An official statement said as a result of prudent policies and commitment to fiscal consolidation, the fiscal deficit at the end of 2014-15 stands over Rs. 5 lakh crore.
The lower fiscal deficit reduces the government's expenditure on interest payment and unlocks funds for investments in social welfare programmes as well as infrastructure development.
On the other hand, the gross tax collection has also registered a growth of 9 percent in 2014-15 as compared to the last fiscal. The tax collection stands at over 12 lakh 45 thousand crore rupees in 2014-15. The statement also said that devolution of tax collections to states at the end of 2014-15 was around Rs. 3.37 lakh crore, which is higher by Rs. 19,578 crore over the previous financial year.
Besides, Plan Expenditure at the end of 2014-15 stood at around Rs. 4.35 lakh crore while Non-Plan Expenditure during the same year has been Rs. 11,91,140 crore. - India economic growth to surpass China's in 2015-16: UN report
India's economic growth is projected to surpass that of China's, with the GDP expected to zoom by 7.7 per cent in 2016, according to a UN report which said India will help accelerate economic growth in South Asia. The mid-year update of the UN World Economic Situation and Prospects (WESP), released on 19th May, said India's economy is projected to grow by 7.6 per cent this year and 7.7 per cent in 2016, overtaking China. China is projected to grow by 7per cent in 2015 and 6.8 per cent next year. - Amendments in FDI policy on investments by NRI's PIOs and OCIs
In a bid to increase capital inflows in the country, government has decided to liberalise foreign direct investment norms for NRIs and overseas citizens of India. Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi approved amendments to FDI policy.
This will give PIOs & OCIs parity with NRIs in economy and education. According to a proposal any investment made by NRIs, OCIs and PIOs from their rupee account in India, will not be treated as foreign investment. The cabinet has also approved revival of FCI's closed urea plant at Sindri in Jharkhand. - China-led AIIB in which India is founding member finalizes AoA
The China-led Asian Infrastructure Investment Bank (AIIB) on 22nd May finalized Articles of Agreement (AoA). The Bank in which India is a founding member, said that AoA would be ready for signing by the end of June.
The 57-member bank also said it would be operational by the end of this year. The announcement came after the conclusion of'5th Chief Negotiators' Meeting on Establishing the AIIB', in Singapore.
China, with a share of 100 billion dollar is likely take a 25-30 percent stake in the AIIB while India, with a likely share between 10 to 15 percent could be the second-largest shareholder. In all, Asian countries will own between 72-75 percent of the assets of the bank, while European and other nations will own the rest. - Delhi, 3 other states decide to work on uniform tax rates
Delhi and its neighbouring states Punjab, Haryana and Himachal Pradesh have agreed to move towards uniformity in tax rates and develop a common market to boost trade. The decision to this effect was taken at a meeting held at the Delhi Secretariat in which Finance Ministers of all four states were present.
It was decided to establish a Zonal Economic Intelligence Unit to avoid cross border smuggling of goods. A committee comprising secretaries and commissioners of the Finance and Taxation departments of the northern states will be formed soon to decide about the moralities to achieve uniformity in tax rates and others. - Mineral Rules: govt comes out with two types of licences
There will be two types of licence/lease – Mining Lease and a Composite License – that will be electronically auctioned under the Mines and Minerals (Development and Regulation) Amendment, Act 2015. This is as per the Mineral (Auction) Rules, 2015 notified by the Centre.
While the mining lease will be for areas with proven reserve of minerals, the composite licence (prospective-cum-mining) will be for areas where preliminary exploration has been done by the government but further exploration is required by mining companies.
Also, for auctioning mining leases, State governments will be required to specify the reserve price, which will be the mineral despatched in a month multiplied by its sale price, as published in the Indian Bureau of Mines for the month of despatch.
The rules make it clear that auctioning will be done on a forward auction basis where the highest bid above the reserve price wins.
Similar to the e-auction of coal blocks, there will be a two-stage bidding process, where bidders will have to give an initial price offer at the technical stage. The initial price offer will have to be higher than the reserve price.
The highest such initial price offer will be the floor price (starting price) for the e-auction in the financial bid stage.
According to the rules, auctioning for composite licence will follow a similar pattern, but with additional requirements. Here, State governments will be required to share the findings of the preliminary exploration of an area, the details of the land, including that under forest, and not owned by the State government.
The winner will have to undertake exploration in the area. If the winner fails to find mineral content, the licence will lapse and the mining lease shall be cancelled.
To be eligible for participation in the auction of either of the licence/lease, the mineral reserve should not exceed more than 1.25 times the requirement of the bidder for its specified end-use over 50 years. Also, bidders will need to furnish performance bank guarantees, which will be linked to the milestones in the mining plan. - Sebi notifies norms for MFs managing offshore money
Simplifying norms for domestic funds to manage offshore pooled assets, Sebi has dropped '20-25 rule', which required a minimum of 20 investors and a cap of 25 per cent on investment by an individual, for funds from low-risk foreign investors.
As per the existing norms, a fund manager who is managing a domestic scheme is allowed to manage an offshore fund, subject to three specific conditions.- The first requires the investment objective and asset allocation of the domestic scheme and of the offshore fund to be the same.
- The second condition requires at least 70 per cent of the portfolio to be replicated across both the domestic scheme and the offshore fund.
- The third condition, which was being considered as the most stringent by the industry, requires that the offshore fund should be broad-based with at least 20 investors with no single investor holding more than 25 per cent of the fund corpus. Otherwise, a separate fund manager is required to be appointed for managing an offshore fund.
The regulator said these restrictions would not apply "if the funds managed are of Category I foreign portfolio investors (FPIs) and/or Category II foreign portfolio investors which are appropriately regulated broad based funds.
These regulations would be called the Securities and Exchange Board of India (Mutual Funds) Regulations, 2015. Sebi has classified FPIs into three categories, with the first two broadly being low-risk foreign institutions that include sovereign wealth funds, pension funds, banks, mutual funds, insurers, multi-lateral institutions and well-regulated foreign entities, including portfolio managers. - SAIL and ArcelorMittal signed MoU
Steel Authority of India Limited (SAIL) and ArcelorMittal on 22 May 2015 signed a Memorandum of Understanding (MoU) to set up an automotive steel manufacturing facility under a Joint Venture (JV) arrangement in India. The MoU was signed in London by CS Verma, Chairman of SAIL and Lakshmi Mittal, Chairman and CEO of ArcelorMittal in the presence of Rakesh Singh, Secretary to the Government of India, Ministry of Steel. - Centre to print 15 crore Rs. 1 notes every year: Sinha
After a gap of 20 years, the Rs. 1 note is set to make a comeback. The Center has decided to print 15 crore Rs. 1 notes every year, Parliament was informed on 9th May. There is, however, no proposal to introduce a Rs. 15 note, Minister of State for Finance Jayant Sinha said
It is only Rs. 1 notes that are issued by the government of India, all other currency denominations are issued by the RBI.
The Center had in mid-December decided to print Rs. 1 currency notes with effect from January 1 this year under the provision of coinage law. While the Union Government has decided to print Rs. 1 notes, indications are that the cost of printing may exceed the value of such notes.
There is also no proposal before the government to replace small currency notes with coins, Sinha added. - RBI report on state finances
The Reserve Bank of India (RBI) 12 May 2015 released the report titled State FINANCES: A Study of Budgets of 2014-15. The theme of this year’s report is Fiscal Consolidation: Assessment and Medium Term Prospects. The report is an annual publication that provides data, analysis and an assessment of the Finances of state governments. It provides the snapshot of the changing dynamics of fiscal federalism over the years.- It calls for renewed and sustained efforts by states towards fiscal consolidation in the years following the global FINANCIAL crisis so as to increase states’ own revenues.
- It calls for freeing up resources for higher capital outlays, improving the quality of fiscal consolidation and setting the consolidated debt-GDP ratio of the states, including off budget liabilities on a declining trajectory.
- The rapidly growing e-commerce could contribute to states’ own revenue efforts, provided there is greater clarity in rules and procedures to enable better compliance.
- Windfall gains accruing over time from auctioning of natural resources need to be channelized effectively for meeting developmental needs of the mineral rich states.
- Transition from the present origin-based indirect tax regime to a destination-based tax regime under the Goods and Services Tax from 1 April 2016 is expected to create a buoyant source of revenue for the centre and states in the medium term.
- Improvement in fiscal marksmanship is important for delivering on fiscal consolidation intentions, particularly by minimizing the systematic bias towards over-estimation of expenditure relative to receipts.
- The report has been prepared in the Fiscal Analysis Division (FAD) of the Department of Economic and Policy Research.
- Lok Sabha passes Foreign Black money Bill
The Lok Sabha has passed the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill 2015 which makes money laundering outside India a chargeable offence. Government also said that it has amended money laundering act which will make unlawful assets outside a crime.
As per the Bill, introduced in the Lok Sabha in March, the provisions would come into effect from April 1, 2016. The Government constituted an SIT to deal with menace of black money in the first cabinet meeting, Prime Minister Narendra Modi undertook. Now an important bill has been passed by the Lok Sabha raising hopes of decisive battle against the menace.
On the provisions in the black money bill, the finance minister Arun Jaitley said, there will be a window to help persons having such funds abroad to come clean by paying tax and penalty...after which, there is a provision for stiff punishment. - Center puts MAT notices on hold
In yet another relief for the Foreign Institutional Investors (FIIs), the tax authorities have put on hold issuance of new notices as well as action on already issued notices.
A directive issued to Principal Chief Commissioners and Chief Commissioners (International Taxation) in Delhi, Mumbai, and Bengaluru was sent on 11th May. This was in response to the Finance Minister’s announcement about constituting a Committee headed by Justice AP Shah to look into the issue of MAT on FIIs. The Committee is expected to give its report on this issue expeditiously.
The Finance Bill had proposed exempting MAT on FII or FPI (Foreign Portfolio Investors) from April 1, 2015. However, the controversy began when tax authorities issued Rs. 602.83 crore demand notices in 68 cases of overseas funds to pay MAT for ‘untaxed gains’ made by them in the Indian markets over the past years. This shocked the market which witnessed sharp withdrawal of funds by FIIs.
The Income-Tax Department has imposed 20 per cent MAT on capital gains made by FPIs. All these along with weak global signals shook the market and it is estimated that overseas investors pulled out nearly Rs. 10,000 crore from the Indian capital markets. - RBI tells banks to appoint internal ombudsman
To ensure undivided attention in resolving customer complaints and to further boost the quality of customer service, the Reserve Bank of India has advised all public sector banks and some private sector and foreign banks to appoint an internal ombudsman.
The internal ombudsman will be a forum for bank customers to resolve customer complaints before approaching the Banking Ombudsman.
The internal ombudsman shall be designated as Chief Customer Service Officer (CCSO) and detailed operational guidelines will be issued shortly, RBI said.
Among private and foreign banks, RBI said it had chosen ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Standard Chartered Bank, Citi Bank NA and HSBC, based on parameters such as asset size and business mix, among others.
The regulator introduced the Banking Ombudsman Scheme in 1995 to redress grievances related to deficiency in services provided by banks. It is based on 27 parameters and is available to all, free of cost. - Rs. 3,061 cr. Investment in Andhra Pradesh
Andhra Pradesh has attracted as many as 37 IT companies, mostly in the services sector, with an investment of Rs. 3,061 crore and a job potential of 32,305. The 37 companies had been given permission over the past several months.
Proposals had been sent to the Centre for setting up IT Investment Regions at Kakinada and TirupatiThe incubators, each with 15,000 sq.ft, would be set up at Kakinada and Tirupati, while another one would come up on JNTU campus, Anantapur.50,000 sq.ft had been provided for incubation centres and start-ups in Visakhapatnam where an Animation Academy and a Signature Tower with 10 lakh sq. ft space would also be coming up.
Plans are afoot for setting up Electronic Manufacturing Clusters at Gurrampalem village (98 acres) in Visakhapatnam district, Anantapuram (Kappalabanda-200 acres). - GST bill sent to select committee of Rajya Sabha
The government on 12th May referred the Goods and Service Tax related Constitution Amendment Bill to the Select committee of the Rajya Sabha. The 21-member Committee of the House will examine various aspects of the Bill, which has already been cleared by the Lok Sabha. The motion to refer to the Select Committee was moved by Finance Minister Arun Jaitley when the House reassembled after lunch break. The motion was approved by the House by voice vote. The Committee has been asked to submit its report by the last day of the first week of the monsoon session. - Land bill refereed to joint committee of Parliament
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Second Bill-2015 has been referred to the Joint Committee of Parliament for wider consultations. A resolution to this effect was unanimously adopted by the Lok Sabha after a four hour discussion this evening. The Committee will have 20-members from the Lok Sabha and 10 from the Rajya Sabha. It has been mandated to submit its report by 1st day of the first week of the Monsoon Session.
The Land Acquisition Bill in its present form was not only opposed by the entire opposition but some NDA allies including Shiv Sena and Shiromani Akali Dal also expressed their reservations on the provisions of the bill. - India to grow 7.5% in FY16, highest in G20: Moody's
India growth story received an impetus on 12th May when rating agency Moody's said it will grow at a strong pace of 7.5 per cent in 2015-16, the highest among G20 economies, helped by the reforms drive and lower oil prices. Moody's Investors Service in a report said, at a time of shifting global investment flows, India benefits from reduced external imbalances. G20 is a group of 20 developing and industrialized economies, which accounts for 85 per cent of the world's economic output. - Food grain output likely to fall by 5.25% in 2014-15 crop year
India's food grain production is estimated to have declined by 5.25 per cent to 251.12 million tonnes in 2014-15 crop year. The country had registered a record food grain production of 265.04 million tonnes in 2013-14 crop year.
Releasing the third advance estimates for 2014-15, the Agriculture Ministry said that the production of most of the Kharif crops fell because of the poor monsoon last year and Rabi crops due to the recent unseasonal rain and hailstorms.
As per the estimates, rice production is estimated to have fallen to 102.54 million tonnes in 2014-15 against the record output of 106.65 million tonnes in the previous year.
Wheat output is estimated to have declined to 90.78 million tonnes in 2014-15 as against a record production 95.85 million tonnes achieved in the previous year.
The Ministry said, total production of Coarse Cereals is estimated at 40.42 million tonnes which is lower by 2.87 million tonnes.
Production of pulses is estimated at 17.38 million tonnes which is lower by 1.87 million tonnes than last year. With a decrease of 5.37 million tonnes over the last year, total production of oil seeds in the country is estimated at 27.38 million tonnes.
Production of sugarcane is estimated at 356.56 million tonnes which is higher by 4.42 million tonnes as compared to last year.
As per the second Advance Estimates, the government had estimated 257.07 million tonnes food grains production in 2014-15 crop year. - Govt .nod to Rs 11,930 cr Airbus-TATA consortium bid to replace Avro fleet
Government has cleared the lone bid of Airbus-TATA consortium for replacing Indian Air Force's ageing fleet of Avro transport aircraft for Rs 11,930 crore. Defense Acquisition Council (DAC) also approved Russia's offer to build Kamov Ka-226T helicopters under the 'Make in India' initiative. The DAC also cleared the proposal to convert two Boeing 777-300 ER for VVIP travel.
Other major proposals cleared by the DAC, chaired by Defense Minister Manohar Parrikar, include six new Brahmos supersonic cruise missile systems for the Navy worth 2,700 crore rupees and acquisition of 145 M-777 Ultra-Light Howitzers from the US under a government-to-government deal. - Cabinet clears 5% disinvestment in NTPC & 10% in Indian Oil
The Union Cabinet cleared five per cent disinvestment in National Thermal Power Corporation Limited and ten per cent in Indian Oil. It may fetch the government over 13,000 crore rupees at current market price. The proposed share sale of 5 per cent in NTPC will fetch the government 5,565 crore rupees while that of 10 per cent in IOC will bring in 7,932 crore rupees. Thus, the stake sale in both companies will help the government mop up over Rs 13,000 crore.
According to the BSE data, the government holds 74.96 per cent in NTPC and 68.57 per cent in IOC. The government has budgeted to raise 41,000 crore rupees through PSU stake sale in the current fiscal and another 28,500 crore rupees through strategic stake sales. - Govt. allocates Rs 113.58 crore for Green India Mission
The Union Government has allocated 113 crore 58 lakh rupees on 14th May for Green India Mission of the state of Punjab. A decision to this effect was taken by National Executive Council of National Mission held at New Delhi for preservation of ecology of the state.
This approval has been accorded in a meeting held under the chairmanship of Secretary, Environment Forests & Climate Change. Punjab Government had submitted a prospective plan to preserve ecology in view of climate change was accepted by the committee. - RBI relaxes norms for IDF-NBFCs
In a bid to ensure flow of funds to infrastructure projects, the Reserve Bank of India (RBI), on 14th May, allowed Infrastructure Debt Fund-Non-Banking Financial Companies to invest in public-private partnerships (PPPs) and infrastructure projects which have completed at least one year of satisfactory commercial operation. The maximum exposure that an IDF-NBFC can take on individual projects will be at 50 per cent of its total capital funds.
An additional exposure up to 10 per cent could be taken at the discretion of the board of the IDF-NBFC. The RBI, however, said that it could permit additional exposure up to 15 per cent (over 60 per cent) “subject to such conditions as it may deem fit to impose regarding additional prudential safeguards.”
The Reserve Bank of India also said that all assets covering PPP and post-commercial operations date (COD) infrastructure projects in existence over a year of commercial operation would be assigned a risk weight of 50 per cent. - SBI launches contact less debit and credit cards
State Bank of India on 14th May joined its private sector rivals to launch contact less credit and debit cards using latest near field technology (NFC). Called the SBIinTouch cards, these contact less debit and credit cards are more secure and hassle-free to use at merchant outlets or ATMs and use the NFC technology which enables users to make payments by waving or tapping the card near the contact less reader instead of swiping or dipping it.
Private lenders ICICI Bank and HDFC Bank have already launched such NFC cards. Launching the cards, SBI chairperson Arundhati Bhattachrya said the bank has already issued 1.08 lakh new cards to its customers in the eight largest metros and the remaining customers will get the cards in the following months. - UNESCAP Survey on Inclusive for Sustainable Development
United Nation Economic and Social Commission for Asia and the Pacific (UNESCAP) 2015 survey titled Making Growth More Inclusive for Sustainable Development was released on 14 May 2015
The survey analyzes the economic growth performance of the region, along with its outlook and challenges countries face in sharing the benefits of growth with all people.
Survey on India’s perspective
The survey has predicted Indian Economy growth at 8.1 per cent in the current financial year 2015 and 8.2 per cent in 2016, spurred by strong consumer spending amid low inflation, infrastructure projects and government's reform measures.- Investment is also expected to rebound, although unevenly, given the still low capacity-utilisation rate at about 70 per cent.
- Volatile capital flows that may follow monetary policy normalisation in the US remain the downside risk.
- SBI launched RuPay Platinum Debit Card
State Bank of India on 7 May 2015 launched State Bank RuPay Platinum debit card in association with National Payment Corporation of India (NPCI). Initially, the card will be issued free to customers maintaining a quarterly balance of Rs. 50000. The RuPay card is accepted at all payment channels like ATMs, PoS and eCommerce portals.
The card offers various benefits like 5 per cent cash back on utility bills, complimentary airport lounge access, personal accident death and permanent total disability insurance cover of Rs 2 lakh, among others. Currently, SBI has 19.7 crore debit cards in circulation and of which 4.5 crore are RuPay cards. In the year ended March 2015, the bank saw a 37 per cent rise in its debit card transaction at Rs 30,785 crore from Rs 22,407 crore last year. - Govt to invest Rs. 20,000 crore for roads projects in NE states
Centre will invest twenty thousand crore rupees for roads projects in North Eastern states this year while set a target of constructing 30 kilometers of road everyday across the nation to improve connectivity
According to Union Minister Nitin Gadkari the union surface road ministry has set a target of constructing 30 kilometer roads every day across the country within 2 years from 12 kilometers at present. Road and Transport Minister Nitin Gadkari laid the foundation stone of the office building of National Highway Infrastructure Development Corporation Limited in Guwahati. - Procurements worth Rs 1,10,000 crore cleared
The Defense Ministry has cleared procurements worth Rs 1,10,000 crore, of which 90 per cent is under 'Make in India' campaign. Ahead of French Defense Minister Jean-Yves Le Drian's visit, India said that negotiations for procurement of Rafale fighter jets for IAF will begin this month and the multi-billion dollar deal will be finalized "as early as possible". - India seeks deeper engagement of ADB for smart cities, railways
India has sought deeper engagement of the Asian Development Bank, ADB for development of smart cities, industrial corridors and railways as part of its flagship initiatives like Make In India and Skill India. 48th Annual meeting of the ADB at Baku in Azerbaijan happened on 4th May. Finance Minister Arun Jaitley said that India is now ADB’s largest client and both share a productive and beneficial relationship. - Lok Sabha nod for GST Bill
The Lok Sabha has passed the Goods and Services Tax Bill. 352 members voted in favor and 37 against the bill. The main opposition Congress staged a walkout during Finance Minister’s reply to the debate on the Constitution Amendment Bill.
According to Finance Minister Arun Jaitley, the proposal to reform the indirect taxes has been pending for the last 12 years
As per the provisions, the Constitution Amendment Bill is required to be passed by not less than two thirds of the members present and voting. The bill seeks to carry out new indirect tax regime, that will subsume various central and state levies like sales tax, excise and service tax except taxes on the supply of alcoholic liquor for human consumption and petroleum products.
Finance Minister Arun Jaitley assured the states that Center will compensate the revenue losses suffered by them for the period of five years following implementation of the Goods and Services Tax, GST. He asserted that States will be benefited through the new tax regime and GST will bring uniform tax structure facilitating smooth flow of goods and services across the country. - Banking system’s bad loans on the rise: RBI report
Bad loans of the banking system have risen alarmingly in fiscal year 2015 due to continued economic slowdown, according to the Reserve Bank of India. The stressed assets ratio (gross non-performing assets plus restructured standard advances to gross advances) for the system as a whole rose to 10.9 per cent at the end of March 2015 compared with 10 per cent in March last year.This means that nearly Rs. 7.05-lakh crore worth of bank loans now fall in the stressed category compared with Rs. 5.91-lakh crore last year.
According to the central bank’s Financial Stability Report, five sub-sectors — infrastructure, iron and steel, textiles, mining (including coal), and aviation — had significantly higher levels of stressed assets.When a loan account ceases to generate income for a bank, it is termed a non-performing asset (NPA). NPAs and restructured assets eat into the profitability of banks as they have to set aside money to cover defaults in loan repayments.
As per preliminary data received by the RBI, the gross NPAs have increased to 4.45 per cent of gross advances for the banking system from 4.10 per cent in March-end 2014. The net NPAs (after making provisions) have also climbed to 2.36 per cent of net advances from 2.20 per cent.The gross NPAs for PSBs as on March 2015 stood at 5.17 per cent while the stressed assets ratio stood at 13.2 per cent, nearly 230 basis points more than that for the banking system. - Central excise arrears rise to Rs 59,309 cr in FY'14: CAG
Comptroller and Auditor General, CAG in its audit report has said that tax arrears towards central excise rose to Rs 59,309 crore in 2013-14, from Rs 45,463 crore a year ago. In its report on Indirect Taxes tabled in Parliament yesterday, CAG showed that arrears have been rising since 2011-12.
At the end of 2011-12, the arrears were Rs 35,964 crore. CAG said, the collection during 2013-14 has fallen drastically to 2.59 per cent compared to 4.34 per cent in 2012-13 fiscal and there is a need to strengthen the recovery mechanism of the department. It further said the revenue foregone on account of central excise exemptions has declined marginally to Rs 1.95 lakh crore during 2013-14 fiscal, from Rs 2.09 lakh crore a year ago.
It said, the Rs 1.95 lakh crore was 115 per cent of the total revenue collected from central excise during the said fiscal. The CAG report showed that revenue foregone as a percentage of central excise receipts has been coming down from 2009-10 fiscal to 2013-14 fiscal. - Cabinet gives green signal for insurance, pension schemes
The Union Cabinet on 6th May approved operationalisation of three Centre-sponsored insurance and pension schemes — Atal Pension Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana — in all States and Union Territories.
The Pradhan Mantri Suraksha Bima Yojana provides insurance against accidental death and disability at a premium of Rs. 12 per annum. The risk coverage for accidental death and full disability is Rs. 2 lakh while for partial disability the amount is Rs. 1 lakh.
The Pradhan Mantri Jeevan Jyoti Bima Yojana provides life insurance cover of Rs. 2 lakh for death at an annual premium of Rs. 330 while Atal Pension Yojana is a pension scheme for old-age income security. In another decision, the Cabinet agreed to revise the double taxation avoidance agreement between India and South Korea. The revisions will provide tax stability as well as higher economic cooperation and boost investment flow.
Amongst other decisions, the Cabinet also approved an MoU for co-operation in renewable energy between India and Seychelles. Approval was also given for the launch of the GSAT 18 communications satellite and services to augment existing telecom, television and VSAT services. It also approved amendment of the Whistleblowers Protection Act 2011 to safeguard against disclosure affecting sovereignty and integrity. - Rs. 2,800 crore unspent under Rashtriya Krishi Vikas Yojana: CAG
The report by the Comptroller and Auditor General of India (CAG) on the performance of the Rashtriya Krishi Vikas Yojana (RKVY) since its launch in 2007 to 2013, which was tabled in Parliament on 5th May, has detected shortfalls in achieving targeted outputs in 62 projects costing Rs. 1,405 crore in 19 States.
Against the backdrop of faltering growth in the agriculture sector, the scheme was launched in the XI Five Year Plan giving complete flexibility to the States to launch projects with an aim to generate growth in agriculture and allied sectors. As part of the plan, Rs. 30,873 crore was released to 28 States and seven Union Territories during the period under review. However, Rs. 2,800 crore remained unspent. The CAG report highlights numerous instances of the expected benefits of the RKVY not reaching the farmers.
According to the report, of the 4,061 projects sanctioned in 19 selected sectors during 2007-08 to 2012-13, 2,506 were completed. While 1,279 projects were under progress, 85 had not been implemented, 100 abandoned and 90 dropped. The CAG report revealed that RKVY funds to the tune of Rs. 91.24 crore were diverted for other purposes in nine projects. - Nod for 19 foreign investment proposals worth Rs. 2,165 crore
The Centre has given its nod for 19 foreign direct investment (FDI) proposals worth Rs. 2,165.04 crore. The pitches approved include those of Bharti Axa Life Insurance Company Ltd and Bharti Axa General Insurance Company Ltd involving foreign investments of Rs. 858.60 crore and Rs. 431.40 crore, respectively. All 19 approvals were based on recommendations of the foreign investment promotion board (FIPB) at its meeting on April 9. - Jaitley announces setting up of high level committee on issue of MAT on FIIs
Finance Minister Arun Jaitley has announced that a high-level committee, headed by Justice A P Shah, will look into the controversial issue of payment of Minimum Alternate Tax (MAT) by Foreign institutional investors.
The minister said that the committee will also look into few other tax issues, which are essentially legacy issues. According to Finance Minister, the government will consider the recommendation of the committee and take an appropriate decision as early as possible. Later Parliament gave its nod to the Appropriation Bill, 2015-16 and the Finance Bill, 2015-16 with the Rajya Sabha approving them and returning to the Lok Sabha. The Appropriation Bill seeks to authorise payment and appropriation of certain sums from and out of the consolidated fund of India for the services of financial year 2015-16. On the other hand, the Finance Bill seeks to give effect to the financial proposals of the Central government for the financial year 2015-16. The Lok Sabha has already passed both the bills. - India is a bright spot in Asia: IMF
International Monetayr Fund said India is a bright spot in Asia and as it pegged India be one of the fasted growing emerging economies earlier
With higher political certainty improved business confidence, reduced external vulnerabilities and lower commodity prices, real GDP is forecast to rise to 7.2 per cent in FY 2014/15, accelerating to 7.5 per cent in 2015/16.
International monetary fund said that Reforms to streamline and expedite land and environmental clearances, increase labor market flexibility, and simplify business procedures should continue to improve India's business climate which is crucial for sustaining faster and more inclusive growth.
On the other side, The International Monetary Fund will soon send a team to India to get a grasp of the implementation of the government's new GDP methodology, which has been questioned in certain quarters, including RBI. - 56 Indian firms figure in Forbes list of world's 2000 powerful companies
Reliance Industries lead the pack of 56 Indian companies which figured in the world's 2000 largest and most powerful public companies. According to the Forbes's annual list issued in New York, US and China dominate the current global business landscape with top 10 spots for a second year in a row.
US is on top with its share of 579 companies. Japan slid to the third spot. Reliance Industries, the topmost India company is ranked 142 on the list, down from last year's 135th spot. Reliance is followed by State Bank of India. Major banks ICICI Bank, Axis Bank and HDFC Bank, PSUs like Oil and Natural Gas Corporation, Indian Oil, Bharat Petroleum, NTPC and others like Tata Motors, Tata Consultancy Services ,Bharti Airtel ,Infosys, Wipro ,Tata Steel and Adani Enterprises make it to the 'Global 2000' list. - CAG found irregularities in Railways, telecom…
Comptroller and Auditor General, CAG has said that Railways has suffered a huge loss of over Rs 29,000 crore in freight earning due to the non-compliance of rules in iron ore booking during May 2008 and September 2013. In its latest report tabled in Parliament on 8th May, the CAG found that iron ore carried at domestic rate but not consumed for domestic purposes and diverted for third party trading or export resulted in loss to the exchequer.
It said, Railways failed to do the needful and allowed the manufacturers to transport iron ore at concessional rates. The national auditor reviewed the records connected with 83 major loading points over seven zonal railways and 180 major unloading points over 15 zonal railways during the period. It said, Railways had introduced the dual freight policy, DFP from May 22, 2008 as per which transportation of iron ore was categorized in two parts - domestic consumption and other than domestic consumption and there were inherited deficiencies in the framework of the DFP for iron ore.
The DFP in effect led to freight difference between the domestic and export category, which was on an average more than three times. Audit also observed that Railways did not lay down adequate internal controls check and balances for effective implementation of DFP.
Undue gain to RJio, Airtel: The Comptroller and Auditor General criticized the Telecom Ministry for giving Mukesh Ambani-led Reliance Jio Infocomm undue benefit of over Rs 3,367 crore by allowing it to provide voice calling on broadband spectrum. In its report tabled in Parliament, CAG said Reliance Jio was the first firm to seek a universal license for voice services after the government permitted Internet service provider license to migrate to universal license.
Reliance Jio Infocomm paid universal license entry fee of Rs 15 crore and additional migration fee of Rs 1,658 crore in August 2013. CAG said, the entry fee of Rs 1,658 crore was discovered in 2011 through the bidding for the 4th Cellular Licenses and this price did not reflect the present value as on August 2013. Taking into account the cost inflation in the economy for the period from 2011 to 2013 the value of license would have been at least Rs 5,025 crore. It said, the migration resulted in undue advantage.
The CAG report also said Bharti Airtel made an undue gain of Rs 499 crore because of Department of Telecom's decision to merge Chennai telecom circle with Tamil Nadu in a hasty manner in 2005.
Fertilizer Dept: CAG flayed Department of Fertilizer for delaying contract finalisation saying this has resulted in an unavoidable subsidy burden of Rs 5,555 crore. In its recent report tabled in Parliament, CAG said, fixation of benchmark at a lower level in comparison to the then prevailing prices for determining Nutrient Based Subsidy, NBS rates for Di-Ammonium Phosphate, DAP resulted in delay in finalization of contracts for import of DAP for 2011-12, which led to the unavoidable subsidy burden.
The auditor also pointed that Department of Fertilizers imported additional quantity of fertilizers which was not required, resulting in undue subsidy payment of Rs 653 crore. It also said that there was no monitoring mechanism in Department of Fertilizer to ensure that the prices fixed by fertilizer companies were based on their cost of production and were reasonable.
The report also raised concerns that Department of Fertilizer did not finalist guidelines for recovery from fertilizer companies using cheap domestic administered price mechanism gas for production even after the delay of more than two years after direction of EGoM in February 2012 in this regard.
Meanwhile, CAG has recommended that Department of Fertilizer may factor in the impact in movement of international prices while fixing the benchmark price before start of financial year. It also suggested that as NBS policy gives freedom to companies to fix MRP, Department of Fertilizer may critically review that prices are actually fixed by companies at the reasonable level. - Social security Schemes launched
Prime Minister Narendra Modi on 9th May unveiled three social security schemes under Jansuraksha programme, two on insurance and one on pension.
Two of the schemes launched – Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana – are insurance schemes, while the third one Atal Bima Yojana would address old age income security needs.
The Suraksha Yojana, under which the schemes were launched countrywide, is expected to reduce the number of zero balance bank accounts created under the Jan Dhan Yojana. The schemes target the poor and unorganized sector who are neither covered by any form of insurance nor get pension.
Under the accident insurance scheme, a person will be provided cover of Rs.200,000 for an annual premium of Rs.12. The cover is for accidental death or permanent total disability.
The scheme will be available to people in the age group of 18 to 70 years with a savings bank account, who give their consent to join and enable auto-debit on or before May 31 for the coverage period - June 1 to May 31 - on an annual renewal basis.
The life insurance scheme will offer a renewable one year life cover of Rs.200,000 to all savings bank account holders in the age group of 18 to 50 years, covering death due to any reason, for a premium of Rs.330 per annum per subscriber.
On the other hand, the pension scheme focuses on the unorganized sector and provides subscribers a fixed minimum pension of Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000 or Rs.5,000 per month starting at the age of 60 years, depending on the contribution option exercised on entering at an age between 18 and 40 years. Thus, the period of contribution by any subscriber under APY would be 20 years or more. The benefit of fixed minimum pension enjoys sovereign guarantee.
While the scheme is open to bank account holders in the prescribed age group, the central government would also co-contribute 50 percent of the total contribution or Rs. 1,000 per annum, whichever is lower, for five years.
The government contribution will be for those joining the scheme before Dec 31, 2015, are not members of any statutory social security scheme and are not income tax payers.
It is estimated that the unorganized sector workers, which constitute 88 percent of the total labour force of 47.29 crore, as per the 66th Round of NSSO Survey of 2011-12, do not have any formal pension provision.
The schemes were launched simultaneously at 115 places in the country with Central and State Chief Ministers and senior ministers attending the functions.
Finance Minister Arun Jaitley launched the schemes from the country's financial capital Mumbai.Home Minister Rajnath Singh launched the schemes from Lucknow. External Affairs Minister Sushma Swaraj launched the schemes from Bhopal.
Minister of State for Information and Broadcasting Rajyavardhan Rathore launched these schemes from Guwahati. Environment Minister Prakash Javadekar launched these schemes from Kochhi, Kerala.
Chemicals and Fertilisers Minister Ananth Kumar launched these schemes from Bengaluru With the start of Pradhan Mantri Bima Suraksha Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojana, the dream of wiping out tears has been fulfilled and this is a step in the right direction.
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