ECONOMY AFFAIRS OCTOBER 2014

ECONOMY AFFAIRS OCTOBER 2014

• CSR mandates changed
  Corporate contributions towards two key initiatives of Swachh Bharat and Clean Ganga will now be counted as CSR spend. The Corporate Affairs Ministry has amended Schedule VII of Companies Act to specify that contributions to ‘Swachh Bharat Kosh’ and ‘Clean Ganga Fund’ would be eligible CSR spend.
  
  Under the CSR framework, certain companies have to fork out 2 per cent of their three-year average annual net profit towards CSR activities.
  
  The mandatory CSR norm applies to companies having at least Rs 5 crore net profit, Rs 1,000-crore turnover or Rs 500 crore net worth. The CSR framework came into effect from April 1 this year after the enactment of a new company law in 2013.
  
  What is CSR?
  Corporate social responsibility is a form of corporate self-regulation integrated into a business model. CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms.
  
  About Swachh Bharat Abhiyan
  Swachh Bharat Abhiyan is a campaign to clean India, it is a national level campaign by the Government of India covering 4041 statutory towns to clean the streets, roads and infrastructure of the country. This campaign was officially launched on 2 October 2014 at Rajghat, New Delhi, by Prime Minister Narendra Modi
  
  This campaign aims to accomplish the vision of 'Clean India' by 2 October 2019, 150th birthday of Mahatma Gandhi and is expected to cost over 62000 crore (US$10 billion). The campaign was described as "beyond politics" and "inspired by patriotism
  
• Projections of Indian Economy
  World Bank: According to World Bank India’s gross domestic product (GDP) is likely to expand by 5.6 per cent this financial year as reforms gain momentum. The growth is expected to accelerate as proposed measures such as the goods and services tax (GST) will give a boost to manufacturing, a World Bank report said on 27th October. In the following years, GDP growth is likely to rise further to 6.4 per cent and 7 per cent in FY16 and FY17 respectively, it said.
  
  Growth has rebounded significantly due to a strong industrial recovery. Capital flows are back, signalling growing investor confidence as inflation has moderated from double digits, exchange rate has stabilised and financial sector stress has plateaued, said the update.
  
  NCAER: The mid-year review of the economy by the National Council of Applied Economic Research (NCAER), released on 1st November, paints a sobering picture, with the outlook for 2014-15 worsening from the beginning of the financial year.
  
  After growing at 5.7 per cent in the first quarter, the NCAER estimates the gross domestic product will grow at 5 per cent in 2014-15, down from the 5.7 per cent forecast in July, implying a significant deceleration in the coming quarters.
  
  But with the quarterly model forecasting growth of 6.1 per cent for the current fiscal year), it also underlines uncertainty in the economy.
  
  The Baseline and Professional Forecasters' Median Projections of the Reserve Bank of India estimates GDP growth for 2014-15 will be 5.5 per cent, while the World Bank and the IMF are predicting 5.6 per cent.
  
  Expectations of a slowdown are largely on account of agriculture and industry. Rainfall this year has not only been deficient at 17.1 per cent on a year-on-year basis, but has also been unevenly distributed. According to the ministry of agriculture's estimates, the output of kharif grain in 2014-15 is likely to be 120 million tonnes, 7 per cent lower than the previous year's 129 million tonnes. The NCAER expects agricultural growth to slow down to 2 per cent for the entire year from 4 per cent in 2013-14.
  
  For the current fiscal year, the NCAER's forecasts for current account deficit, fiscal deficit and inflation (Wholesale Price Index) are 2.6 per cent, 4.3 per cent and 4.5 per cent, respectively.
  
• Centre cancels selection of 6 government bank chiefs by UPA
  The National Democratic Alliance (NDA) government on 27th October scrapped the selection of six chiefs of public sector banks, recommended under the United Progressive Alliance (UPA) regime, following a high-level panel finding irregularities in the process followed.
  
  The probe into selections for banks such as Bank of Baroda and Canara Bank followed the arrest of tainted Syndicate Bank Chairman and Managing Director (CMD) S K Jain for alleged graft. Earlier, the government had constituted a committee comprising Raghuram Rajan, governor of the Reserve Bank of India (RBI); expenditure secretary Ratan Watal; and the secretary for school education and literacy in this regard. “After the receipt of the report of the committee, the government decided to cancel the current selection process of CMDs and EDs (executive directors) of public sector banks. As a result, eight CMD posts and 14 posts of EDs will have to be filled up de novo,” said a statement by the finance ministry.
  
• Centre given list of black money account holders to SC
  The names of Pradip Burman of Dabur, Rajkot-based bullion trader Pankaj Chimanlal Lodhiya and Goa-based mining baron Radha Timblo were disclosed by the Centre on 27th October in an affidavit submitted before the Supreme Court on Indians holding illegal bank accounts abroad.
  
  According to reports , other Indians being investigated for allegedly stashing black money in foreign banks include four from the Congress. Among them is a former minister in Manmohan Singh's government who lost the Lok Sabha election in May.
  
  However the Supreme Court on 28th October ordered the government to disclose all their names in a sealed cover by 28th October. A three-judge Bench of Chief Justice H.L. Dattu and Justices Ranjana Desai and Madan B. Lokur rejected the argument of Attorney-General Mukul Rohatgi for a modification of the order directing disclosure of all the names.
  
• India slips further in gender gap index
  According to World Economic Development India stood at 114th rank in the Gender Gap Index-2014. In total 142 countries ranks were released. According to WEF, the poor rank of India is mainly down to deterioration in economic participation and opportunity, as well as educational attainment
  
  In economic terms, India ranks 134th overall, with low scores in terms of labour force participation, wage equality and estimated earned income. Equality in terms of health and survival, too, remains a problem, where it ranks 141 out of 142 only behind Armenia. As regards, the sex ratio, India is at a poor 134th
  
  The only silver lining is the country remains a role model in terms of political empowerment, in which it ranks 15th. India has 111 women in Parliament, with 107 women in Ministerial positions. This is the ninth year of the index, introduced by WEF in 2006. WEF said that in nine years, the world has seen only a small improvement in equality for women in the workplace, with the gender gap for economic participation and opportunity at 60 per cent worldwide having closed by only 4 per cent from 56 per cent in 2006. According to report it will take 81 years for the world to close this gap completely
  • India also tops the list of countries on the years with woman head of state (over the past 50 years). While it fell 13 places to 114th slot, politically it is ranked higher than the United States and the United Kingdom.
  • It ranks 111 on the list of countries which have women in Parliament and 107 on the list of countries with women ministers.
  • On economic participation and opportunity, India ranks 134, while on educational attainment it ranks 126. But on the health and survival parameter India’s rank is among the lowest at 142.
  • Owing to its low sex ratio at birth India slumps to 114th position overall, which makes it the lowest-ranked BRICS nation and one of the few countries where female labour force participation is shrinking, the report states.
  • Pointing out that it will take 81 years for gender parity at the workplace, the report shows Nordic nations dominate the Global Gender Gap Index in 2014; Nicaragua, Rwanda and the Philippines all make the top 10.
  • The report says on average, in 2014, over 96 per cent of the gap in health outcomes, 94 per cent of the gap in educational attainment, 60 per cent of the gap in economic participation and 21 per cent of the gap in political empowerment has been closed. No country in the world has achieved gender equality.
  
  
• India @ 142 in ease of doing business
  India has slipped two places in the Doing Business index. According to a report by the World Bank Group and released on 28th October in Washington, India ranks 142, while Singapore remains the best place to do business. India was originally 134 in the group of 189 countries, but in 2014 fell to the 140th place in the revised ranking.
  
  But in terms of protecting minority shareholders, India is in the top 50 nations in two categories: protecting minority shareholders and credit availability. It moved up to the seventh rank from 21 in terms of protecting minority shareholders, ahead of countries such as the US, Japan, France and Germany in a list topped by New Zealand. However, India has dropped to the 36th place in the ranking from 30th in credit availability.
  
• Panel to assess value of already running coal mines
  The Coal Ministry has set up a committee headed by former Chief Vigilance Commissioner Pratiyush Sinha to assess the compensation to be paid by winning bidders of already running mines. The committee will include officials from the Ministries of Coal, Power, Finance and Law and will submit its recommendations by November 10. The move is part of the e-auction process of coal blocks which was started after the Government promulgated an Ordinance to allow the same.The committee formed will value the assets of each of these 42 blocks. The committee will also assess the liabilities associated with the operation of the mine.
  
• Cabinet relaxes norms for FDI in construction
  The Cabinet has relaxed norms for foreign direct investment (FDI) in construction development to make the sector more attractive for overseas investors. The minimum built-up area requirement for FDI in construction projects has been reduced from 50,000 sq metres to 20,000 sq meters. The Government has also halved the minimum capital requirement for such projects from $10 million to $5 million.
  
  Projects that commit at least 30 per cent of the total project cost toward low-cost affordable housing will be exempted from the minimum built-up area and capitalisation requirements.
  
  However, there has been no relaxation in land-use norms. The easier rules will help speed up completion of projects, which are being delayed by a squeeze on funds due to elevated debt levels, he added. In the case of development of serviced plots, there is no condition of minimum land area.
  
  The existing FDI policy allows 100 per cent foreign direct investment in the construction sector subject to minimum built-up area and minimum capitalisation requirements.
  
  According to the new rules, an investor will be permitted to exit on completion of the project or three years after the date of final investment, subject to development of trunk infrastructure. The Government may permit repatriation of foreign investment or transfer of stake by one non-resident investor to another non-resident investor before the completion of the project. These proposals will be considered by the Foreign Investment Promotion Board on a case by case basis.
  
• RBI hikes gold loan limit for UCBs
  The Reserve Bank has raised the limit for urban co-operative banks (UCBs) to sanction loan against gold collateral to Rs 2 lakh from Rs 1 lakh at present. "...it has been decided to increase the quantum of loan that could be granted under the scheme, from Rs 1 lakh to Rs 2 lakh," RBI said in a notification.
  
  The urban co-operative banks are allowed to give gold loan under the bullet repayment scheme. The bullet repayment scheme allows the UCBs to sanction loan only on conditions that the period of loan shall not exceed 1 year from the date of sanction and interest will be charged at monthly rests but will become due for payment along with principal only at the end of 12 months from the date of sanction.
  
  Among others, banks should maintain a Loan to Value (LTV) ratio of 75 per cent on the outstanding amount, including the on an ongoing basis, failing which the loan will be treated as a Non Performing Asset, RBI said. UCBs are expected to take necessary and usual safeguards and also have a suitable policy for lending against gold jewellery with the approval of their boards of directors, RBI said.
  
• Fiscal deficit touches 83% of full-year target
  The fiscal deficit touched nearly 83% of the full-year target at the end of the first half of the current financial year, raising some worries, but the government is confident of keeping it within the target of 4.1% of GDP. Government data released on 31st October showed the deficit at the end of September at Rs 4.39 lakh crore, which is 82.6% of the full-year target. The deficit was at 76% of GDP during the corresponding period last year.
  
  Sluggish tax revenues and higher tax refunds contributed significantly to the April-September deficit number. Net tax receipts were at Rs 3.23 lakh crore at the end of September or 33.1% of the full year-target compared to 35% in April-September 2013.
  
• Oxfam report on billionaires
  A tax of just 1.5 per cent on the rising number of billionaires since the 2008 financial crisis could have saved the lives of 23 million poor people, says a new report on growing inequalities in the world. Since the 2008 financial crisis, the number of billionaires has more than doubled, swelling to 1,645 people, said the report, ‘Even it Up: Time to End Extreme Inequality’, released by non-profit Oxfam here on 31st October.
  
  It said extreme wealth was not restricted to rich countries. The world’s richest man is telecom tycoon Carlos Slim of Mexico. “Today there are 16 billionaires in Sub-Saharan Africa, alongside 358 million people living in extreme poverty,” it added.
  
  In India, the number of billionaires rose from two in the 1990s to 65 in 2014, and the net worth of these super rich people is enough to eliminate absolute poverty in the country, twice over, said Nisha Agrawal, CEO, Oxfam India
  
• Import tariff reduced
  The government on 1st November slashed import tariff value on gold to $391 per 10 grams and silver to $551 per kg following weak global price trends. During the last fortnight, the tariff value on imported gold was fixed at $401 per 10g and on silver at $575 per kg.
  
  The import tariff value is the base price at which Customs duty is determined to prevent under-invoicing. It is revised on a fortnightly basis taking into account global prices. The decrease in tariff value on imported gold has been notified by the Central Board of Excise and Customs (CBEC)
  
  Gold in New York, which normally sets price trend on the domestic front, fell 2.3 per cent to $1171.60 per ounce and silver by 1.73 per cent to $16.18 per ounce in Friday’s trade. In the national capital, gold prices on Saturday are ruling at Rs 26,550 per 10g, while silver at Rs 36,250 per kg.
  
  Gold is the second largest import item for India after petroleum. Gold import increased for a consecutive month to 95 tonnes in September ahead of festival season.
  
  The government has imposed several restriction to curb imports to contain current account deficit (CAD). Import duty on gold was increased thrice to a record 10 per cent last year and made it mandatory to export 20 per cent of the imported gold.
  
• Finance Commission term extended
  Government has extended the term of the 14th Finance Commission by two months to December 31. The Commission had sought two months' extension for the submission of its report by up to December 31, 2014 to examine financial projections, carry out consultations with the government of Andhra Pradesh and Telangana in view of additional term of reference made to it. It is to make recommendations for the successor states on reorganization of the Andhra Pradesh in accordance with Andhra Pradesh Reorganization Act, 2014.
  
  The 14th Finance Commission was constituted in January 2013 to recommend, among other things, distribution of taxes between the Centre and states as well to suggest measures for maintaining a stable and sustainable fiscal environment. The Commission was to submit its report on the basis of its terms of reference by October 31, 2014 covering a period of five years from April 1, 2015 to March 31, 2020.
  
• Centre gives nod to defence projects worth Rs. 80,000 cr
  Defence projects worth a whopping Rs. 80,000 crore were on 25th October cleared by the government which decided that six submarines will be made indigenously and over 8,000 Israeli anti-tank guided missiles and 12 upgraded Dornier surveillance aircraft will be purchased.
  
  The decisions were taken following a meeting of the Defence Acquisition Council, chaired by Defence Minister Arun Jaitley the bulk of the decisions went in favour of the Navy that was in dire need of up gradation and capability enhancement. The big ticket step was the decision to build six submarines in India at a cost of about Rs. 50,000 crore rather than source it from outside.
  
  The other major decision was to purchase 8,356 Anti Tank Guided Missile of Israel worth Rs. 3,200 crore rather than the US’ Javelin missile for the Indian Army. The Army will also purchase 321 launchers for the missile. Another 12 Dornier surveillance aircraft with enhanced sensors will also be bought from the Hindustan Aeronautics Ltd at a cost of Rs. 1,850 crore.
  
  The DAC also decided to buy 362 infantry fighting vehicle from the Ordinance Factory Board, Medak in West Bengal for Rs. 662 crore. The submarines will be Air Independent Propulsion (AIP) capable that will enable them to stay underwater for longer than a conventional submarine besides having enhanced stealth features. The Navy currently has 13 operational submarines and the target set in 1999 was to have 24 by 2030.The previous UPA government had gone in for six Scorpene submarines and the first is likely to be delivered only in 2016.
  
  Six submarines to be ‘made in India’:
  All six submarines will be built in a single Indian shipyard within the country under the “Make in India” category with foreign collaboration. The council has decided to set up a committee to decide on the shipyards to be issued the Request for Proposal (RFP). The shipyards compliant will be identified within two months.
  
  These submarines will have air-independent propulsion for extended submergence, land attack missile capability and stealth features. The Navy is currently making do with 14 submarines.
  
  The deal includes 8,000-plus missiles, 300-plus launchers and requisite technology transfer to Bharat Dynamics Ltd. (BDL) to build them indigenously. Spike is a third-generation, fire-and-forget, man-portable anti-tank missile. It is intended to equip the 382 Infantry battalions and subsequently the mechanised forces.
  
  The major deals include 363 new BMP-2/2k infantry vehicles to be built by the Ordnance Factory in Medak, Telangana, at a cost of Rs. 1,800 crore and a repeat order of 12 Dorniers, with enhanced sensors, for the Navy to be built by Hindustan Aeronautics Ltd. (HAL) at a cost of Rs. 1,850 crore. The Navy currently operates over 40 of them.
  
  An amount of Rs. 740 crore was allotted for 1,768 critical rolling stock wagons used to transport equipment by the Army to replace the existing ones which are more than 30 years old. Five and 7.5 tonne radio relay containers, which are mounted on vehicles with communication equipment, worth Rs. 662 crore were cleared for which Acceptance of Necessity (AON) will be issued soon to domestic manufacturers.
  
• Four clusters created
  Reserve Bank of India governor Raghuram Rajan has finalized organizational restructuring of the central bank by reassigning responsibilities of deputy governors under four new clusters.
  
  A key element of RBI's restructuring has been the separation of supervision and regulatory functions. It also involves the merging of some departments but the central bank has made it clear that there will not be any redundancies.
  
  The RBI is also expected to induct some lateral talent as part of its skill-building attempt. 
  • Deputy governor H R Khan will be responsible for the organizational cluster that has been defined as financial markets and infrastructure. These include departments like external investment, government accounts, payments and settlements, foreign exchange and internal debt management.
  • Deputy governor Urjit R Patel continues to hold charge of monetary policy and research, which will include departments of communication, economic and policy research, financial market operations, and monetary policy department.
  • The newly christened department of banking regulation, which comes under the 'regulation and risk management' cluster, is part of deputy governor R Gandhi's portfolio. Gandhi is also responsible for regulation of finance companies, deposit insurance, financial stability unit, currency management and risk monitoring.
  • Deputy Governor S S Mundra will oversee department of banking supervision, consumer education and protection, financial inclusion, human resource and development and cooperative bank supervision.
  
  
• India set to become $2tn economy this year
  India is poised to become a USD two trillion economy this year, while its GDP size would cross another milestone of USD three trillion after five years in 2019, according to IMF's latest world economic outlook. India's ranking would also improve to seventh largest economy in the world, while measured on "current prices" basis in US dollar, in 2019 from its tenth position currently.
  
  Latest data from the International Monetary Fund (IMF) show that Indian economy is set to be worth USD 2.05 trillion this year, increasing its size from USD 1.88 trillion in 2013.
  
  Last year too, India was among the ten largest economies in the world. Going by the IMF, United States would remain the world's largest economy with a size of USD 17.42 trillion, followed by China at USD 10.35 trillion.
  
  Meanwhile, India is all set to cross the USD 3 trillion milestone in 2019 with a size of USD 3.18 trillion, surpassing Russia, Brazil and Italy. This would also make India the world's seventh largest economy. At that time, Brazilian economy is estimated to be worth USD 2.89 trillion while Russian and Italian economies would have a size of USD 2.59 trillion and USD 2.45 trillion, respectively.
  
  The United States would remain the world's largest economy in 2019 with a size of USD 22.15 trillion, followed by China (USD 15.52 trillion) and Japan (USD 5.43 trillion). In 2019, other economies in the top ten segments would be Germany (USD 4.55 trillion), the United Kingdom (USD 3.7 trillion) and France (USD 3.39 trillion). India's economic growth was below 5 per cent in the past two financial years.
  
• Cabinet clears ordinance to re-auction coal blocks
  Putting to end the uncertainty on coal mining in the country, the Centre on 20th October decided to promulgate an Ordinance to allow e-auction of blocks to the end users. The end users in round one of the auctions will be power, steel and cement. But the Government has also left an enabling provision in the Ordinance by which it can decide on additional commercial use at a later date.
  
  The Supreme Court judgment of September 24, cancelling all coal block allocations between 1993 and 2010, which will lead to complete de-allocation of 204 blocks by March 31, 2015, had left the Government with little time to put in place a foolproof system.
  
  To begin the process of auctions, end-users in the power, cement and steel sectors will have to put in their requirements and a sufficient number of mines will be put for auction, in a pool.
  
  In the case of 37 mines which are producing, five that are about to start operations and 32 where significant development work has happened, the winning bidders will need to pay a compensation amount to the existing allocatee.
  
  While the private sector will bid for the blocks, NTPC and State Electricity Boards will be allocated blocks as per their requirement.
  
  Currently, nearly $20 billion tonnes of coal are imported and this can come down if the mines start production after the e-auctions, said Jaitley.
  
  Synopsis of Whole Issue
  • Jun ’93: Coal Mines (Nationalisation) Amendment Act to allow captive coal mining passed
  • 1993 to 2009: Govt allocates 201 blocks to private, public sector firms for captive use
  • Aug 17, ’12: CAG says govt extended undue gains to firms by not auctioning 57 blocks allocated between 2006 and 2011
  • Aug 27, ’12: PM tells Parliament CAG’s assessment of Rs 1.86-lakh-crore loss to exchequer due to allocation not justified
  • Sep ’12: CBI begins questioning in the alleged coal scam after CVC forwards complaints; raids are conducted, FIRs filed
  • Jun ’13: FIR filed against JSPL Chairman Naveen Jindal; former minister Dasari Narayan Rao also named an accused
  • Oct ’13: FIR filed against industrialist Kumar Mangalam Birla and ex-coal secretary P C Parakh for alleged criminal conspiracy and abuse of official position
  • Aug ’14: SC terms allocations made between 1993 and 2010 illegal
  • Sep ’14: SC cancels 214 block allocations, directs CIL to take over these mines
  • Oct ’14: Govt says it will promulgate ordinance to resolve issues related to Supreme Court’s order de-allocating coal blocks 
• Validity of industrial licenses increased to seven years
  The Government has increased the validity of industrial licenses to seven years from the existing validity period of three years. The Department of Industrial Policy & Promotion (DIPP) said that it has been decided to give two extensions of two years each in the initial validity of three years of the industrial license. It has also been decided to deregulate the annual capacity for defense items for industrial license. However, the licensee shall submit half yearly production return to DIPP and Department of Defense Production (DoDP), Ministry of Defense in the prescribed format, which will be notified separately.
  
• Centre orders merger of scam-hit NSEL with FTIL
  The Centre on 21st October announced that the crisis-ridden National Spot Exchange Ltd (NSEL) would have to merge with its holding company, Financial Technologies (India) Ltd (FTIL).
  
  The Ministry of Corporate Affairs issued a draft order invoking Section 396 of the Companies Act for the merger. This is the first time that a listed entity in the private sector is involved in a Section 396 order of the Central Government. NSEL was embroiled in a Rs 5,600-crore payment crisis.
  
• Govt. eases norms for private defense firms
  In a move expected to rake in investments into the defense sector, the government on 20th October allowed private defense manufacturing firms to sell equipment to state-run entities without prior approval. However, permission would be required to sell to non-government entities, the Ministry of Commerce and Industry said.
  
  The Ministry also removed the cap on the annual production capacity for defense-related equipment. However, licensed firms would be required to submit their production returns to the government every six months.
  
• Think tank to draft national IPR policy
  At a time when India’s intellectual property rights (IPR) regime is facing flak, particularly from the US, the Department of Industrial Policy & Promotion (DIPP) under the commerce ministry has set up a six-member think tank to draft a National Intellectual Property Rights Policy.
  
  The entity, to be chaired by Prabha Sridevan, would identify the areas in IPR that needed further study and furnish its views in this regard to the ministry
  
  The think tank will provide views on the possible implications of the demands of negotiating partners in this regard and prepare periodic reports on best practices in other countries, according to the terms of reference.
  
• 20 FDI proposals worth Rs 988 crore cleared
  The finance ministry has cleared 20 FDI proposals including 6 in the pharma sector envisaging a total inflow of Rs 988.3 crore. At the same time, 8 proposals including four from the pharma sector was rejected.
  
• ASSOCHAM for allowing FDI in E-Commerce retailing
  India's FDI policy restricts e-commerce companies from offering services directly to retail consumers. At present, 100 per cent FDI is allowed in business -to-business e-commerce but not in retail trading. Pitching for foreign direct investment (FDI) in e-commerce retailing, industry body Assocham on 12th September said the Flipkart fiasco should not be used as an excuse by the government to over-regulate the e-commerce business which is in its infancy.
  
  While the unorganised retail has been estimated at about $550-600 billion, the organised retailers have been able to corner a market of about $25-30 billion and e-commerce is just about $3-4 billion, it said.
  
  The FDI in e-commerce can be allowed as the neighbourhood kirana stores are not really going to be affected by the kind of technology-driven delivery platforms and the supply chain linked to e-tailing, the statement said. India's FDI policy restricts e-commerce companies from offering services directly to retail consumers. At present, 100 per cent FDI is allowed in business -to-business e-commerce but not in retail trading.
  
  What is E-commerce?
  E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the Internet
  
  E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the Internet. These business transactions occur business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business. The terms e-commerce and e-business are often used interchangeably. The term e-tail is also sometimes used in reference to transactional processes around online retail.
  
• Fine on novartis
  The National Pharmaceutical Pricing Authority (NPPA) has imposed a fine of around Rs 300 crore on Swiss multinational drug company Novartis for overcharging consumers on sale of Voveran, its best-selling painkiller medicine. The drug pricing regulator also served a showcause notice on the company, asking to explain within two weeks why action should not be taken against it for overcharging
  
  Novartis' analgesic brand, Voveran, is based on diclofenac, a component that is under the government's direct price control. According to IMS Health annual data, Voveran, with annual sales of about Rs 225 crore, was among the top 10 brands in the domestic drug retail market as of April this year.
  
  The new drug price control order, implemented in May last year, brought 348 medicines under price control. The prices of these were capped at an average of the prices of all drugs with more than one per cent market share in their respective segments.
  
  However, Novartis, Cipla and GlaxoSmithKline had approached the court in July last year to protest against provisions of the new order, which required them to replace within 45 days their stocks in the market with new ones mentioning revised prices.
  
  According to a trade source, a strip of 15 Voveran SR 100 mg tablets currently costs Rs 102, while one of 50 mg comes for Rs 74.
  
  Voveran's market share is believed to have dipped since the new pricing regime came into force. The IMS data show the value growth of the drug has fallen 14.5 per cent from last year.
  
• SEBI bars DLF, 6 directors from market for three years
  The Securities and Exchange Board of India (SEBI) has banned DLF and six of its directors — KP Singh (Chairman), Rajiv Singh, TC Goyal, Pia Singh, Kameshwar Swarup and Ramesh Sanka — from trading in the securities market for three years.
  
  The market regulator found them indulging in fraudulent and unfair trade practices and also held them guilty of suppressing important information, particularly on legal cases, in the red herring prospectus for DLF’s initial public offering (IPO). The company went on to raise $2.3 billion, in what was then a record-breaking sum.
  
  In addition, SEBI, in its show-cause notice, has alleged that “the process of share transfer of three subsidiaries of DLF in Sudipti, Shalika and Felicite was through sham transactions”. It said the company and its directors employed a plan to camouflage the association of DLF with the three subsidiaries.
  
  DLF founder KP Singh is the 21st richest Indian with a net worth of $3.3 billion, according to Forbes data.
  
• Co-op Banks implementing core banking will be classified as financially sound: RBI
  The Reserve Bank of India on 13th October said full implementation of core banking solution will be included as an additional criterion for classifying an urban co-operative bank (UCB) as financially sound and well managed (FSWM).
  
  Hitherto, UCBs fulfilling criteria, among others, such as capital to risk weighted assets ratio of not less than 10 per cent; gross non-performing assets (NPAs) of less than 7 per cent and net NPAs of not more than 3 per cent; were classified as FSWM banks.
  
  The other criteria prescribed by the RBI for classifying a UCB as financially sound and well managed are: net profit for at least three out of the preceding four years, subject to it not having incurred a net loss in the immediate preceding year; no default in the maintenance of cash reserve ratio / Statutory Liquidity Ratio during the preceding financial year; sound internal control system with at least two professional directors on the Board; and regulatory comfort.
  
  When it comes to regulatory comfort, the RBI said UCBs should have an impeccable record of regulatory compliance and no warning letter / cautionary advice should have been issued to or monetary penalty imposed on the bank on account of violation of RBI directives / guidelines during the preceding three financial years.
  
  The RBI said the new criteria would henceforth be considered for processing applications received from UCBs for opening of on-site/off-site / mobile ATMs, applications under Annual Business Plans, extension of area of operation, shifting of premises and all other permissions from RBI.
  
  UCBs offering Internet banking (view only) facility to their customers should ensure that online facility offered is strictly non-fund based service such as balance enquiry, balance viewing, account statement download, request for supply of cheque-books etc. and no online fund-based transactions are allowed
  
• Asia Index launches 2 new BSE indices
  Asia Index Pvt. Ltd (AIPL), a joint venture between S&P Dow Jones Indices Llc and BSE Ltd, said on 13th October it has launched two more indices—the S&P BSE Sensex Futures index and S&P BSE CPSE (central public sector enterprises) index. The S&P BSE Sensex Futures index will help investors track the returns generated from investments in the near-month futures contract on S&P BSE Sensex traded on BSE.
  
  Govt clears 25 FDI proposals worth Rs 1, 546.12 crore
  The government on 14th October has cleared 25 foreign direct investment (FDI) proposals, including that of AIF III of Mauritius and Mumbai based Microqual Techno, worth Rs 2,973.40 crore. The applications were cleared after recommendations of the Foreign Investment Promotion Board (FIPB) headed by Economic Affairs Secretary R Gopalan
  
• 2G auction: TRAI for 10% hike in 1800 MHz base price
  Telecom regulator TRAI on 15th October recommended a hike of around 10 per cent in the price of 2G spectrum in the 1800 MHz band, in 20 circles, at Rs. 2,138 crore per MHz, during the next round of auctions. The regulator said that due to the paucity of airwaves in Maharashtra and West Bengal in the 1800 MHz band, auctions should not be held in these states.
  
  The hike had been recommended due to the increase in data usage by consumers, it said. However, the suggested price per MHz is lower than in the February auction when the Government had received bids valued at Rs. 2,270.4 crore per MHz in the 1800 Mhz band.
  
  The regulator has also recommended that the DoT take a fresh look at the proposed implementation of the extended GSM (E-GSM)s band. Some industry members and analysts said the base price hike will help broaden connectivity. TRAI has also suggested a price of Rs. 3,004 crore per MHz for the 900 MHz band, in which the mobile signal covered is about twice that of the 1800 MHz band.
  
  The said amount per band will be applicable only in 18 of 22 circles as spectrum in this band is not available in J&K, Delhi, Mumbai and Kolkata.
  
  The telecom regulator has said that a dialogue needs to be held at the level of the Finance Communications, IT and Defence ministries to ensure additional spectrum for commercial use.
  
  Other proposals
  • 1.2 MHz spectrum in 900 MHz band should be taken back from BSNL when licences expire in 2015-16
  • DoT should take a fresh look at the implementation of E-GSM band
  • Unused spectrum in the Defence band should not be kept idle
  • Government should also announce the roadmap for the auction of spectrum in 700 MHz band
  • All efforts should be made to make spectrum available in contiguous form
  • Spectrum should be put to auction in a block size of 2x200 KHz in both the 900 and 1800 MHz bands
• Norms for 3,000 MW solar projects released
  In a revamped National Solar Mission (NSM) programme, the Union Ministry of New and Renewable Energy (MNRE) has now come out with draft guidelines for setting up 3,000 MW of solar PV projects under Tranche-I. Earlier planned allocation of 1,500 MW under batch II of phase II is reported to have been cancelled.
  
  The proposed 3,000 MW Solar PV projects will be implemented by NVVN (NTPC Vidyut Vyapar Nigam) on Solar Parks to be developed through association of Central and State agencies.
  
  Under Part-I of Tranche-1 scheme, which seeks suggestions and comments from all stakeholders by October 30, a capacity of 1,000 MW of the grid-connected solar projects to be developed at a solar park in Andhra Pradesh (AP), said the document.
  
  Of the 1,000 MW, a capacity 250 MW is reserved for bidding with domestic content requirement. The individual project size has been decided at 50 MW and a single group (including its subsidiaries and associates) can apply for a maximum of five projects. The power produced by these projects will be bundled with coal power and sold to utilities by NVVN. The tariff will be determined through a reverse bidding process. The allocation process is expected to commence in December.
  
  Meanwhile, the MNRE has now proposed to add a more ambitious solar PV capacity of 15,000 MW in three tranches under Batch II of phase II of NSM. Under Tranche-I, it has planned to add 3,000 MW (2014-15 to 2016-17), while Tranche-II envisages addition of 5,000 MW (2015-16 to 2017-18). Tranche-III will see the programme targeting 7,000 MW (2016-17 to 2018-19).
  
• Uncertain global outlook might impact India
  Six years after the financial crisis of 2008, global economic growth continues to be anaemic. In its latest World Economic Outlook, the International Monetary Fund (IMF) has scaled down its estimate of growth in global gross domestic product this year from 3.4 per cent to 3.3 per cent.
  
  The report, however, painted a few bright spots — among developed countries, the US was showing signs of strength, while among emerging economies, India appeared on the upswing, the IMF said.
  
  Though the IMF has raised its growth estimate for India this year from 5.4 per cent to 5.6 per cent, there are several caveats. An immediate risk is the possibility of higher interest rates in the US, owing to strong growth and a fall in unemployment numbers in that country. While stronger growth in the US is good for the global economy, higher yields may lead to capital outflows from emerging economies such as India.
  
  The last time the US Federal Reserve hinted at raising rates, the rupee plunged. In the past, countries that were impacted the most had high current account and fiscal deficits, as well as high inflation. While India has made considerable progress on these fronts since then, ambiguity remains on whether the claw back of liquidity by the US Fed will be balanced out by liquidity injections by the European Central Bank (ECB) and the Bank of Japan, which are embarking on various versions of quantitative easing programmes to stimulate their depressed economies.
  
  While the fact that the IMF raised its estimate of growth in India is based on the assumption of stronger exports and investments, its estimate of global trade growth was slashed from 4.9 per cent in October 2013 to 3.8 per cent, indicating sluggish demand.
  
• India to overtake UK in aviation: IATA
  India, which is now the ninth largest aviation market in the world, will overtake the UK to take the third position in over 15 years, after China and the United States, global airlines' body IATA said on 16th October. India would be among the top five fastest growing markets in terms of adding more passengers every year, the first IATA projection for the next two decades showed.
  
  By 2034, "the five fastest-increasing markets in terms of additional passengers per year will be China (856 million new passengers per year), the US (559 million), India (266 million), Indonesia (183 million) and Brazil (170 million)."
  
  The Indian and Brazilian domestic markets would grow at 6.9 and 5.4 per cent respectively, with the former adding 159 million extra passengers and the latter 147 million. Their total domestic air markets will be 215 million and 226 million respectively, the IATA projections showed.
  
  Eight of the ten fastest-growing markets in percentage terms over the next two decades would be in Africa, with Central African Republic, Madagascar, Tanzania, Burundi and Kuwait making up the five fastest-growing markets.
  
• Cannot reveal details of black money stashed abroad: Govt
  The Government on 17th October informed the Supreme Court that under Double Taxation Avoidance Agreements, confidentiality had to be maintained and names of persons revealed to India by the German authorities could not be made public and should be used only for tax purposes.
  
  Attorney-General Mukul Rohatgi, making this application, informed a three-judge Bench of Chief Justice HL Dattu and Justices Madan B Lokur and AK Sikri that the Government wanted modification of the orders passed in May 2014. Those orders directed the Centre to disclose to the petitioner, senior advocate Ram Jethmalani, and the names of persons who had stashed money in German banks, as revealed by the German authorities.
  
  In its May 1 order, the apex court said: “Since the investigation is completed in the cases filed against those who had stashed money abroad, we direct the Union of India to furnish the documents and information … to Jethmalani. The information pertained not only to the 18 individuals against whom prosecution was launched but also … eight individuals against whom no tax evasion was found.”
  
  Seeking modification of this order, the AG said that under DTAA conventions and Tax Information Agreements, confidentiality should be maintained in line with internationally accepted principles of exchange of information.
  
  The court must now consider whether international standards had been violated in directing the disclosure of names, otherwise India’s rating would be lowered, he said.
  
  The Centre, in its application, also pointed out that as per the DTAA, information received should be kept confidential and generally not used for non-tax purposes even after the consent of the state sharing the information. The German authorities had stated in their letter dated March 18, 2009 that the information provided was subject to the provisions of the DTAA.
  
  It said that if the names were disclosed, the Government of India would not be able to sign a proposed Inter Governmental Agreement (IGA) with the US for exchange of information.
  
  Under the proposed IGA information provided by financial institutions in India will be transmitted to the US on an automatic basis and the US will also provide information about Indian taxpayers available with it. It would not be possible to modify the proposed IGA since the US had similar agreements with over 100 countries, the Centre said.
  
  It noted that 47 countries had already agreed on early adoption of G20 standards on disclosure of information. Further for signing this multilateral competent authority agreement, the Government of India had to give a commitment internationally that the information received would be used as per international standards.
  
  Finance Minister Arun Jaitley said Switzerland had agreed to share information on Indians stashing illicit money there in certain cases but blamed a 1995 agreement as the constraining factor in disclosing their names.
  
• EPFO panel on construction workers
  The Employees Provident Fund Organisation (EPFO) has constituted a five-member sub-committee on construction workers under the tripartite Central Board of Trustees to suggest a mechanism for increasing social security coverage for workers in the sector. The sub-committee will be chaired by the Central Provident Commissioner, and will include one Government representative to be nominated by the Labour Secretary and an additional Central PF commissioner. The employers will be represented by SS Patil and Ravi Wig, while the employees will be represented by Ramen Pandey of Congress-led INTUC and MJ Rao of the BJP-led Bhartiya Mazdoor Sangh. The tenure of the sub-committee shall be “at the pleasure of the Chairman,” according to the circular.
  
• RBI inks MoU with Kenya’s central bank
  The Reserve Bank has signed a pact with Central Bank of Kenya for exchange of information and supervisory cooperation. With this, RBI has signed 22 such MoUs and one Letter for Supervisory Co-operation. The MoU was signed by RBI Governor Raghuram Rajan and Central Bank of Kenya Governor Njuguna Ndung'u. The RBI has been signing the MoUs and Letter for Supervisory Co-operation with supervisors of other countries to promote greater co-operation and share supervisory information among the authorities.
  
• Diesel deregulated, Gas price hiked
  The government on 18th October took a step forward on fuel pricing by approving a 33 per cent jump in natural gas prices to $5.61 per mBtu and by decontrolling the price of diesel.
  
  This is the first reduction in diesel rates in about five years. Diesel rates were last cut on January 29, 2009, by Rs 2 a litre to Rs 30.86. Diesel prices were last raised by 50 paise on September 1.
  
  The gas price hike will impact power and fertilizer prices, apart from piped gas consumers. The switchover from government-dictated diesel rates to market pricing immediately reduces diesel prices by Rs 3.37 a litre in Delhi. Diesel prices will henceforth be exposed to the volatility in global crude oil prices.
  
  Every dollar increase in the price of gas pushes up urea production costs by Rs 1,370 a tonne, power tariffs by 45 paise a unit, compressed natural gas (CNG) prices by Rs 2.81 a kg and piped natural gas (PNG) prices by Rs 1.89 a standard cubic metre (scm). After this decision, CNG prices will increase by Rs 4.25 a kg and PNG prices will rise by Rs 2.60 per scm, according to Indraprastha Gas Ltd (IGL).
  
  While the earlier gas pricing guidelines were based on the recommendations of the Rangarajan committee that favored doubling of rates to $8.4 per mBtu, the new price has been derived from a modified Rangarajan formula. The new formula eliminates both the Japanese and Indian LNG import components and adds new indices - Alberta Gas Reference price in place of Henry Hub and Russian actual price in place of National Balancing Point for Russian consumption.
  
  Other decisions of cabinet
  • The Cabinet Committee on Economic Affairs (CCEA) approved a proposal on policy framework for early monetization of hydrocarbon discoveries.
  • The cabinet decided that no government bungalow in Delhi will henceforth be converted into any memorial
  • The cabinet approved Rs 10,773 crore for the phase-1 of Ahmedabad metro 1 covering 35.96 km.
  • The CCEA approved a DoT proposal to provide a one-time financial support to state-run telecom company MTNL for meeting liabilities arising from levy of minimum alternate tax.
  • The cabinet gave its ex-post facto approval for payment of Productivity Linked Bonus (PLB) equivalent to 78 days' wages for 2013-14 to all eligible non-gazetted railway employees.
  • The railways has given a bonus to its 12.6 lakh employees without obtaining the mandatory sanction as Railway Minister Sadananda Gowda could not obtain the cabinet clearance earlier.
  • The CCEA approved the fertiliser ministry's proposal to provide Rs 14,500 crore as subsidy to the cash-starved fertiliser industry through a special banking arrangement route.
  • The CCEA approved widening of 133-km national highway in Odisha at an estimated cost of Rs 1,476.56 crore.
  
  
• Private sector insurers will need Rs 36,000 cr capital over 5 years
  The private insurance industry needs about Rs 36,000 crore capital over the next five years, according to a study commissioned by the ASSOCHAM. Of this, about Rs 25,000 crore could come in the form of FDI (foreign direct investment), the report states, and emphasizes on the need to increase the existing FDI limit substantially.
  
  The FDI might lead to more participation of foreign insurers in development of new-age channels of distribution and eventually lead to listing of some of the entities providing better valuation. On the emerging technological advances in insurance, the study said the use of telematics, Web and social media, and risk management through analytics would have a positive impact on the industry. The demand for insurance products would go up as the working population (25-60 years) is expected to increase from 507 million in 2011 to 631 million by 2021, it added.
  
• No decision on making CAG multi-member body: finance ministry
  No decision has been taken on the suggestion of the United Progressive Alliance government-appointed Shunglu committee to make Comptroller and Auditor General (CAG) a multi-member body, the finance ministry has said.
  
  The high-level committee, headed by former CAG V K Shunglu, had in March 2011 written to former Prime Minister Manmohan Singh, suggesting changes in the country’s top auditing body. Replying to a query under the Right to information (RTI) law, the finance ministry said it was suggested a three-member body would have greater transparency in its operation.
  
  The Shunglu panel, which probed alleged irregularities in the 2010 Commonwealth Games-related projects executed by various government departments and private firms, had also suggested changes in Controller General of Accounts , Controller of Accounts under the Delhi government, Central Vigilance Commission (CVC) and Delhi Development Authority.
  
  In his six-page letter, Shunglu had said the autonomy of the Chief Technical Examination wing under the CVC needed to be increased and recommended outsourcing of professional hands to assist in its probe.
  
  CAG:
  The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India under Chapter V, who audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. The CAG is also the external auditor of Government-owned corporations and conducts supplementary audit of government companies, i.e., any non-banking/ non-insurance company in which the state and Union governments have an equity share of at least 51 per cent or subsidiary companies of existing government companies. The reports of the CAG are taken into consideration by the Public Accounts Committees, which are special committees in the Parliament of India and the state legislatures. The CAG is also the head of the Indian Audit and Accounts Department, the affairs of which are managed by officers of Indian Audit and Accounts Service
  
  The CAG is mentioned in the Constitution of India under Article 148 – 151.The CAG is ranked 9th and enjoys the same status as a judge of Supreme Court of India in Indian order of precedence. The current CAG of India is Shashi Kant Sharma, who was appointed on 23 May 2013. He is the 12th CAG of India
  
• Finance Ministry asks banks to tighten norms for high value FDs
  The finance ministry has asked public sector banks (PSBs) to tighten norms, including know your customer (KYC) monitoring for high-value fixed deposits (FDs), to check the kind of frauds suspected to have been committed at Dena Bank and Oriental Bank of Commerce (OBC).
  
  The ministry would like banks to make a foolproof arrangement for high-value fixed deposits, including due diligence of KYC details Banks have been advised to categorize FDs, which may fall under the high-value criteria. At the moment, different banks have varied definitions of high-value FDs.
  
  By the preliminary forensic audit report, a fraud to the tune of Rs 436 crore in two PSBs, Dena Bank and OBC, were committed through multi-layer system. It is suspected there was money laundering. The lenders are also alleged to have siphoned off the money (Rs 180 crore by OBC and Rs 256 crore by Dena Bank) received as FDs.
  
  Besides, the ministry has asked the Reserve Bank to tighten lending norms to prevent borrowers from opening multiple current accounts outside their consortium banks’ in the light of Kingfisher Airlines case.
  
  There are a few instances where defaulting borrowers diverted of funds by opening multiple current accounts outside the members of the consortium, sources said.Therefore, sources said, the finance ministry has urged RBI to tighten the norms and monitoring system so that such activities could be prevented.
  
• Audit finds under-utilization, misuse of Universal Services Obligation funds
  An audit conducted by the Comptroller & Auditor General on the implementation of schemes under the Universal Services Obligation fund has concluded that funds are under utilised and misused in a number of cases.
  
  For example, random tele-calling of village public telephones across seven circles by auditors revealed that only half of the phones supported by the USO fund were working. In another instance, it was found that the number of rural fixed line telephones for which subsidy was sought by telecom operators far exceeded the actual number of households in the villages.
  
  The audit has also reiterated that the fund is not being fully utilised. Compared to a total collection of Rs 58,579 crore, only Rs 17,947 crore has been disbursed.
  
• Two electronic manufacturing clusters coming up in Madhya Pradesh
  Union Minister for Communications and Information Technology Ravi Shankar Prasad on 6th October laid the foundation stone of two Greenfield Electronic Manufacturing Clusters (EMC) at Purva, Jabalpur and Badwai,Bhopal. The two clusters in Madhya Pradesh are the first greenfield EMCs in the country to get final approval and sanction of grants from the Government.
  
  They will be operational in two years. It is expected that EMC at Jabalpur will generate around 3,000 direct employment opportunities and around 9,000 indirect employment opportunities
  
  The EMC at Purva is spread over 40 acres and is being set up at an estimated cost of Rs 38 crore, out of which Government is providing a grant of Rs 17.75 crore. It will generate around 1,400 direct employment opportunities and around 4,000 indirect employment opportunities
  
  The Greenfield EMC at Badwai is spread over an area of 50 acres and is being set up at an estimated cost of Rs 47 crore out of which Government is providing a grant of Rs 21 crore.
  
  The EMC in Bhopal will mainly focus on telecom and IT hardware product manufacturing including major manufacturing units like Bharat Business Channel (Videocon Group), for manufacturing of set top boxes
  
  Other units such as EVDAT Software Technologies Pvt Ltd, and Heaven Techno System Pvt Ltd have already shown interest and given commitments of setting up of manufacturing facilities in this EMC, it added.
  
• World Bank presses for reforms
  The World Bank on 6th October marginally scaled up its estimate of India’s economic growth to 5.6 per cent for 2014-15 from its earlier one of 5.5 per cent, made in June.
  
  However, the multilateral institution advised the government to go for structural reforms, including implementation of a national goods and services tax (GST) and prudent macroeconomic management, to reach its potential growth. Even reducing time to carry goods from one place to another would boost competitiveness in India, it said.
  
  The report said economic growth was expected to accelerate from 4.7 per cent in 2013-14 to 5.6 per cent in the current financial year and then to 6.4 per cent the next year. The year 2013-14 was the second in a row to witness below-five per cent growth. India's economy rose to a two-year high of 5.7 per cent in the first quarter of 2014-15.
  
  In June, the Bank had pegged India's gross domestic product growth at 5.5 per cent for 2014-15 and 6.3 per cent for 2015-16.
  
  The report said continued dynamism in the US should support India's merchandise and service exports, remittance inflows are expected to continuously strengthen domestic demand and declining oil prices should boost private sector competitiveness in the short run.
  
  The Bank laid special focus on implementation of GST, which it said could transform India into a common market and dramatically boost competitiveness. The Centre is expected to soon come out with a cabinet note on a Constitution amendment Bill to roll out GST, after evolving a consensus with states. GST has missed a number of deadlines and is not expected to come up before April 2016, even if the Bill is tabled in this winter session of Parliament.
  
  The Bank said supply chain delays and uncertainty were a major, yet under-appreciated constraint to manufacturing growth and competitiveness in India. Regulatory impediments to the movement of goods across state borders raise truck transit times by as much as a quarter, and put Indian manufacturing firms at a significant disadvantage with international competitors.
  
• IMF paper suggests RBI should raise rates to contain inflation
  The Reserve Bank of India (RBI) should consider raising interest rates to bring down the persistently high inflation on a durable basis, an IMF working paper has suggested.
  
  Food and fuel inflation in India has remained high for several years, the paper said, adding to durably reduce the current high inflation, the monetary policy stance needs to remain tight for a considerable length of time. It suggested that the government pursue structural reforms to push growth to potential levels instead of relying fully on monetary policy to promote growth.
  
  RBI Governor Raghuram Rajan has been pursuing hawkish monetary policy stance to keep inflation under check. It has not reduced rates in four consecutive policies despite pressure from industry and the finance ministry to cut rates to boost growth. The government is in touch with RBI to set up a new structure to deal with monetary policy issues, including targeting of inflation, in line with the recommendations of the Urjit Patel committee.
  
• April-Sept gross direct tax mop-up rises 15%
  Net direct tax collections in April-September increased just 7.09 per cent against a Budget target of 15.31 per cent for 2014-15, as income tax refunds shot up 54.51 per cent during the period.
  
  Tax collections, net of refunds, stood at Rs 2,68,836 crore in the first six months of the current financial year (FY15), compared to Rs 2,51,028 crore during the same period in 2013-14, the Central Board of Direct Taxes (CBDT) said in a press statement issued on 7th October.
  
  Refunds during the six-month period this year rose to Rs 77,308 crore from Rs 50,035 crore in the year-ago period. Higher refunds in the first half of the year are not unusual as tax officers, under pressure to meet target, persuade taxpayers to pay more in the last quarter.
  
  Direct tax collections, inclusive of refunds, in April-September 2014 were up 15 per cent and stood at Rs 3,46,144 crore, against Rs 3,01,063 crore collected during the same period last year.
  
  The government has projected its net direct tax collections for 2014-15 at Rs 7,36,221 crore - an increase of 15.31 per cent over last year’s collections of Rs 6,38,495 crore. Despite a slower growth in the first six months, the target looks achievable considering a growth of 14.29 per cent was posted last year as well. It should be higher this year as the economy is projected to grow 5.9 per cent.
  
• IMF revised growth rate
  The International Monetary Fund (IMF) has revised India’s 2014 GDP growth projection marginally upwards to 5.6% from its July forecast of 5.4%. It said the post-election recovery of confidence in India provides the country an opportunity to embark on “much-needed structural reforms”.
  
  The IMF’s flagship World Economic Outlook (WEO) Report, however, has left its projection for India’s 2015 GDP growth unchanged at 6.4%. The report said growth in India is likely to increase in the remaining period of 2014 as well as in the entire 2015 because exports and investment will continue to pick up and more than offset the effect of an unfavorable monsoon on agricultural growth earlier in the year.
  
  However, the Washington DC-based global body said India should ensure an improvement in investment conditions, remove infrastructure bottlenecks in the power sector. The IMF warned that infrastructure bottlenecks in India are not just a medium-term worry but remain a constraint even on near-term growth. In order to raise competitiveness and productivity, India must implement reforms to education, labour, and product markets, it added.
  
  The IMF, for the third time in 2014, slashed its projections for global economic growth. The IMF WEO report projected world output to grow at 3.3% this year (0.1% down from its July WEO update). It has forecast the world output growth in 2015 at 3.8% (a 0.2% cut from its July forecast).
  
  Among major emerging markets, it said though growth will pick up in India, there will be a modest slowdown in China. Growth in Brazil and Russia will stay subdued, it said, adding that the growth in core euro zone nations will be weaker. Blanchard said the legacies of the financial crisis continue to impact the eurozone. It said the US and Britain, however, are seeing stronger growth.
  
  The IMF said India, during the past year, successfully lowered its vulnerabilities to adverse shocks by adopting tighter macroeconomic policies to reduce inflation and narrow external current account deficits. The IMF said growth in India increased in the second quarter this year thanks to rising business confidence and stronger manufacturing activity since the election.
  
  The IMF projected that by 2019, India’s GDP growth is likely to be 6.7%, returning to what it was in 2011 (6.6%) but way lower than 10.3% growth it achieved in 2011 or the over 9% growth rates in 2006 and 2007.
  
  The IMF said for India, data and forecasts are presented on a fiscal year basis and output growth is based on GDP at market prices. Corresponding growth rates for GDP at factor cost are 4.5%, 4.7%, 5.6%, and 6.4% for 2012/13, 2013/14, 2014/15 and 2015/16, respectively.
  
• Indian economy to see better growth momentum: OECD
  The Indian economy is projected to see a pickup in growth momentum while most of the other major economies are anticipated to see stable prospects, Paris-based think tank OECD said on 8th October. Only India is anticipated to witness better growth momentum among the BRIC bloc whereas other member countries are expected to see "stable growth momentum".
  
  The Organisation for Economic Cooperation and Development (OECD) said that its indicators point towards a mixed outlook across major economies. The readings are based on Composite Leading Indicators (CLIs), that are designed to anticipate turning points in economic activity relative to trend, for the month of August. 
  • The country's CLI stood at 99 in August, higher than 98.8 recorded in July.
  • Since April, when it stood at 98.5, India's CLI has been on the rise.
  • Last month, the Reserve Bank of India (RBI) pegged Indian economy to grow 5.5 per cent in the current fiscal (2014-15) and accelerate to 6.3 per cent in 2015-16.
  • India's growth was below 5 per cent in the last two financial year.
  
  
• PSUs need to comply with 25% minimum public shareholding by August 2017
  Listed public sector companies will have to comply with the norm of 25 per cent minimum public shareholding by August 21, 2017. This will help the Government’s disinvestment programme as well as ensure more PSU shares for retail investors.
  
  At present, public sector companies are required to maintain 10 per cent minimum public shareholding, while listed private sector entities are required to have 25 per cent public shareholding.
  
  However, On June 19, the SEBI board decided that there should be a uniform norm for all companies listed on stock exchanges.
  
  According to website, there are 25 Central Public Sector Enterprises (CPSEs), nine public sector banks (PSBs) and one State-level public enterprise (SLPE) which are listed and have less than 25 per cent minimum public shareholding.
  
  The Finance Ministry has notified an amendment to the Securities Contracts (Regulation) Rules, 1957, according to which “every listed public sector company which has public shareholding below 25 per cent, on the date of commencement of the Securities Contracts (Regulation) (Second Amendment), Rules, 2014, shall increase its public shareholding to at least 25 per cent, within a period of three years, in the manner, as may be specified, by the Securities and Exchange Board of India.” The date of effect is August 22, 2014.
  
  SEBI’s norms mandated minimum public shareholding norms of 25 per cent for listed private sector companies by June 3, 2013.
  
  Accordingly, on June 4, the SEBI passed an order against 105 private companies for not fulfilling these norms. It first issued a show-cause notice to these companies and, based on their replies, initiated action, including freezing voting rights, dividend, imposing penalty among other things.
  
• Emerging economies more vulnerable to shocks: IMF
  The Global Financial Stability Report released by the International Monetary Fund (IMF) on 8th Octob er warns that the risk of shocks emerging from advanced economies hitting emerging economies, including India, has doubled since the collapse of Lehman Brothers in 2008, triggering a global financial crisis.
  
  The report finds that the share of portfolio investments from advanced economies in the total debt and equity investments in emerging markets has doubled in the past decade to 12 per cent. The heightened risk is on account of these rapidly rising financial market linkages through which shocks can get transferred swiftly.
  
  The finding has implications for Indian policy-makers as foreign portfolio investments in the debt and equity markets have been on the rise.
  
  The phenomenon is also flagged as a threat that could compromise global financial stability in a chain reaction, in the event of geopolitical flare-ups or a less-than-orderly unwinding of the U.S. easy-liquidity monetary policy.
  
• Flipkart’s Diwali sale backfire govt sets up
  The blockbuster Big Billion Day sale on Flipkart that gave it $100 million in revenue in only 10 hours has clearly backfired on the poster boy of Indian e-commerce. Flipkart is now facing government scrutiny, following complaints from traders over undercutting prices and adversely affecting competition. A probe by the Competition Commission of India (CCI) is not ruled out.
  
  Indeed, an e-commerce policy has been in the making for long, even as the sector, pegged at around Rs 18,000 crore, has been growing at a rapid pace and is expected to touch Rs 50,000 crore by 2016.
  
  Even as there are suggestions that CCI should take up the matter as it deals with undercutting and predatory pricing, there is no decision yet on that. CCI Chairman Ashok Chawla said the commission would take up the matter if and when there was a complaint linked to predatory pricing.
  
  Initiations
  • Flipkart faces Enforcement Directorate probe over alleged violation of the Foreign Exchange Management Act
  • Karnataka govt wants value-added tax on third-party goods that are stored in e-commerce companies' warehouses
  • Allegations by traders of price undercutting in mega sale on October 6
  
  
• Nokia to close Chennai plant
  Telecom gear maker Nokia said that it will shut down its Chennai plant from November 1 as Microsoft has terminated mobile purchase agreement from the the factory and it is left with no business. In September 2013, Nokia announced it would sell its devices and services (D&S) business, including assets in India, to Microsoft for $7.2 billion by March 2014.
  
  The deal was completed on April 25 but Chennai facility could not be transferred to Microsoft because of legal issues related to tax demand by Indian government. Nokia started manufacturing in Chennai in January 2006 and exported to markets including in the Middle East and Africa,
  
  Important Points:
  Prime Minister Narendra Modi's "Make in India" seems to have received a body blow with the news on that Nokia's mobile-phone manufacturing facility in Chennai will close down. The closure of this factory, which at its height employed 8,000 workers and was the cellphone giant's largest in the world, has naturally questioned the government's claims of reviving the domestic manufacturing sector. 
  • The Nokia plant in Chennai has a history of problems. To start off with, the company was hit with an enormous tax bill - some of it for transfer pricing, and some for service tax.
  • The combined bill was about five times the profit the company made in the quarter it was presented. Both bills were controversial. For example, the service-tax demand was because Nokia had claimed a service-tax exemption for software exports. But, the authorities said, this claim was illegal - as Nokia exported software developed in India to Finland, and some of it was used in the overall software packages that were later sent to India to be put on phones sold to Indians.
  • The company had challenged the position the government had adopted. But it wasn't even the tax claims themselves, which could be decided either way, that worried Nokia and its fellow multinationals. The tax authorities conducted a prolonged raid on the Chennai factory, along with sustained interrogation of Nokia workers and executives, which the company said were "excessive and unacceptable". Disagreements piled up - the company complained that the Tamil Nadu government withheld credits for setting it up in the Sriperumbudur special economic zone, for example.
  • So wide-ranging and deep were the disputes with the Indian state that the Chennai factory had to be left out of the giant, complex purchase of Nokia's cellphone division by Microsoft earlier this year.
  • Nokia has pointed out in a letter that it is shutting down the factory, not selling it. It cannot sell it because of the "continuing asset freeze imposed by the tax department", it says.
  
  
• GVK’s Alpha coal project in Australia gets green nod
  GVK Power & Infrastructure Ltd has secured an environmental approval for the $6-billion Alpha coal project, located in the Galilee basin in Queensland, Australia. The Environmental Authority (Clearance) has been granted after over six years of rigorous assessment of the Alpha mine, which included around 300 collaborative scientific studies, involving over 500 specialist consultants.
  
  GVK acquired the coal mines in Queensland with 8 billion tonnes reserves for $1.26 billion in 2011 and envisages an investment of $10 billion for developing Alpha mines, a 500-km rail project and a 60-million-tonne a year port.
  
  The Alpha coal project would allow for large scale mining techniques, which would ensure that the proposed mine remains cost competitive even in current tough market conditions, GVK Hancock, the group’s Australian coal unit, said in a statement.
  
  The company will execute coal off-take agreements after finalising a joint venture with coal rail operator Aurizon Holdings and overcoming the legal challenges to the project. The Alpha mine will be a full open cut mine producing around 32 million tonnes a year for 30 years.
  
• CBDT revises hiring norms for IT firms units in SEZs
  The Central Board of Direct Taxes (CBDT) has revised upward the percentage of existing employees that can be transferred by companies in the IT & ITeS sector to a new SEZ unit, without losing the tax holiday benefits. IT-ITeS companies that have set up a new unit in a special economic zone (SEZ) will be able to transfer existing technical employees, provided they account for not more than 50% of the total manpower engaged in software development in the new SEZ unit.
  
  The circular clarifies that the computation of the manpower ratio for the new SEZ unit in its first year of operation will be considered as 'at the end' of the financial year. "Thus, it could be possible for a company to start business operations from its SEZ unit, by transferring a handful of existing employees and later hire new employees and meet the ratio," explains a CFO of an IT company.
  
  An alternative option has also been provided to companies. If the company is able to show that the net addition of new technical manpower in all units of the company is at least equal to the number that represents 50% of the total technical manpower of the new SEZ, the tax holiday benefit will not be denied.
  
  SEZ units are granted a graded 15-year tax holiday. As part of eligibility conditions, under section 10AA of the Income-Tax Act, the new SEZ unit should not have been formed by splitting up or reconstruction of a business already in existence; and it should not have been formed by the transfer, to a new business, of machinery or plant previously used for any purpose in excess of 20% in value.
  
  The ministry of commerce in November 2010 had stated that there is no bar on transfer of manpower to SEZ units and the cap on transfer of assets applied only to old plant and machinery.
  
  The CBDT has also clarified that its revised circular will not apply to assessments that have already been completed.
  
  About SEZ in India
  Special Economic Zone (SEZ) is a specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs. In order words, SEZ is a geographical region that has economic laws different from a country's typical economic laws. Usually the goal is to increase foreign investments. SEZs have been established in several countries, including China, India, Jordan, Poland, Kazakhstan, Philippines and Russia. North Korea has also attempted this to a degree
  
  The Special Economic Zone (SEZ) policy in India first came into inception on April 1, 2000. The prime objective was to enhance foreign investment and provide an internationally competitive and hassle free environment for exports. The idea was to promote exports from the country and realising the need that level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally.
  
  Legislation has been passed permitting SEZs to offer tax breaks to foreign investors. Over half a decade has passed since its inception, but the SEZ Bill has certain drawbacks due to the omission of key provisions that would have relaxed rigid labour rules. This has lessened India's chance of emulating the success of the Chinese SEZ model, through foreign direct investment (FDI) in export-oriented manufacturing.
  
  The policy relating to SEZs, so far contained in the foreign trade policy, was originally implemented through piecemeal and ad hoc amendments to different laws, besides executive orders. In order to avoid these pitfalls and to give a long-term and stable policy framework with minimum regulation, the SEZ Act, '05, was enacted. The Act provides the umbrella legal framework, covering all important legal and regulatory aspects of SEZ development as well as for units operating in SEZs
  
  SEZs play a key role in rapid economic development of a country. In the early 1990s, it helped China and there were hopes (perhaps never very high ones, admittedly) that the establishment in India of similar export-processing zones could offer similar benefits -- provided, however, that the zones offered attractive enough concessions.
  
• Panel backs using cash-rich PSUs to revive sick units
  A committee headed by NTPC Chairman Arup Roy Choudhury has endorsed the Government’s view on revival of sick public sector undertakings with the help of cash-rich PSUs.
  
  The committee has submitted its report to the Ministry of Heavy industries and Public Enterprises. It had been asked to examine the feasibility of cash-rich Maharatnas, Navratnas and other Central public sector enterprises (CPSEs) seeding a a joint venture (JV) company that would revive sick PSUs.
  
  Heavy Industries Minister Anant Geete recently said there are 70 sick PSUs, of which 43 can be revived. However, according to an answer given by the Ministry in Parliament, there were 61 sick CPSEs as on March 31, 2013, with over 1.53 lakh employees.
  
  Currently, sick PSUs are referred to the Board for Reconstruction of Public Sector Enterprises for revival, restructuring, sale or closure. According to a Government resolution, a company will be considered sick if it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during the four preceding years.
  
  Recently, the Ministry announced a plan to close six PSUs: HMT Watches, HMT Bearings, HMT Chinar Watch, Hindustan Photo Films, Hindustan Cables and Tungabhadra Steel.
  
• Tax benefits in SEZ: manpower transfer limit raised for IT firms
  The Central Board of Direct Taxes (CBDT) has raised the limit for transferring technical manpower from existing units to a new unit in a Special Economic Zone (SEZ), a move that will benefit the software industry.
  
  Further, if the company is able to prove that that the net addition of the new technical manpower in all units of the said firm is at least equal to the number that represents 50 per cent of the total technical manpower of the new SEZ unit during such previous year, deduction would not be denied, said the circular.
  
  The board revised the limit after receiving representations from the industry, which said that the 20 per cent limit was inadequate and restrictive since it impacts the competitiveness of Indian software industry in global market in terms of quality of product and delivery timelines. “Global competitiveness can be ensured only when highly skilled and experienced manpower is deployed for software development,” it said. The industry requested to enhance the limit in line with the recommendations of the Rangachary Committee, which was set up to review the taxation of the IT sector and Development Centres.
  
• Factory output growth slows to five-month low of 0.4%
  Factory output growth slowed to five-month low of 0.4 per cent in August mainly due to contraction in manufacturing and capital goods. The Index of Industrial Production (IIP) for August was at 0.4 per cent, the same as in August 2013.
  
  Meanwhile, the IIP for July 2014 has now been revised downward to 0.4 per cent from 0.5 per cent estimated earlier, official data released by the Central Statistics Office on 10th October showed. For the April-August period, factory output saw 2.8 per cent growth as against flat production (nil growth) in the same period last fiscal.
  
  According to the latest data, manufacturing — which accounts for 75 per cent of the index — contracted 1.4 per cent, compared to 0.2 per cent decline a year ago.
  
  While capital goods contracted 11.3 percent (-2.0 per cent), consumer durables contracted 15 per cent (-8.3 per cent). On an overall basis, consumer goods output contracted 6.9 per cent in August (0.9 per cent decline. The Confederation of Indian Industry Director-General Chandrajit Banerjee said industrial production continues to be slow and a visible turnaround is not happening. There is a need to provide a competitive market for coal and mining sectors, he said.
  
• Change in mind-set vital for giving 24-hour biz clearances
  According to Amitabh Kant, the secretary of Department of Industrial Policy and Promotion all business clearances can be given within 24 hours if States work towards increasing the ease of doing business through reforms and all departments that give approvals work efficiently with a new mind-set. He has spoken in a seminar of ‘Digitization of process for setting up of business’ organized by FICCI.
  
  Kant said several States including Gujarat, Maharashtra and Tamil Nadu are following best practices to improve ease of doing business which other States should adopt and implement.
  
  The Secretary added that if 26 departments of the Government (which investors in a city like Mumbai have to approach to get clearances for their projects) work with a new mindset and there is enough administrative will in States, businesses should be able to get a clearance within 24 hours.
  
  It takes approximately 186 days to get clearances in India while in many other countries it takes from 1 day to 10 days. India has slipped three positions to 134th spot in the latest ‘ease of doing business’ list brought out by the World Bank, which is topped by Singapore. State Governments should devise effective mechanism so that an entrepreneur gets faster approvals and clearances for manufacturing units and projects, Kant said.
  
• Vodafone wins Rs. 3, 200-crore tax dispute in Bombay HC
  In a ruling, the high court of Bombay on 10th October ruled in favour of British telecom major Vodafone Group, saying it didn’t have to pay additional tax of Rs 3,200 crore, as demanded by income tax authorities.
  
  The income tax department had said Vodafone India under-priced shares in a rights issue to its parent. The tax demand was for the two financial years ended March 2011. The amount included tax and interest for the tax demand for assessment year 2009-10.
  
  Vodafone background:
  Vodafone was embroiled in a $2.5 billion tax dispute with the Indian Income Tax Department over its purchase of Hutchison Essar Telecom services in April 2007. It was being alleged by the Indian Tax authorities that the transaction involved purchase of assets of an Indian Company, and therefore the transaction, or part thereof was liable to be taxed in India.
  
  Vodafone Group Plc. entered India in 2007 through a subsidiary based in the Netherlands, which acquired Hutchison Telecommunications International Ltd’s (HTIL) stake in Hutchison Essar Ltd (HEL)—the joint venture that held and operated telecom licences in India. This Cayman Islands transaction, along with several related agreements, gave Vodafone control over 67% of HEL and extinguished Hong Kong-based Hutchison’s rights of control in India, a deal that cost the world’s largest telco $11.2 billion at the time.
  
  The crux of the dispute had been whether or not the Indian Income Tax Department has jurisdiction over the transaction. Vodafone had maintained from the outset that it is not liable to pay tax in India; and even if tax were somehow payable, then it should be Hutchison to bear the tax liability.
  
  In January 2012, the Indian Supreme Court passed the judgement in favour of Vodafone, saying that the Indian Income tax department had "no jurisdiction" to levy tax on overseas transaction between companies incorporated outside India. However, Indian government thinks otherwise. It believes that if an Indian company, Hutchison India Ltd., conducts a financial transaction, government should get its tax out of it. Therefore, in 2012, India changed its Income Tax Act retrospectively and made sure that any company, in similar circumstances, is not able to avoid tax by operating out of tax-havens like Cayman Islands or Lichtenstein. In May 2012, Indian authorities confirmed that they were going to charge Vodafone about INR20000 crore (US $3.3 billion) in tax and fines. The second phase of the dispute is about to start.[24] The Bombay high court on Thursday directed the Income-Tax Appellate Tribunal (ITAT) to hear a Rs.8,500 crore transfer-pricing tax dispute relating to the Indian arm of Vodafone Group Plc from 21 February on a daily basis till a final order is passed
  
  Other transfer pricing disputes
  Shell, IBM and Nokia are also fighting transfer pricing cases in India.
  
  Shell India: Income tax department argued Shell under-priced its shares, which led to a loss of Rs 15,000 crore to its Indian subsidiary. A demand order pegging Shell’s tax liability at Rs 5,000 crore was sent. An order by HC is awaited
  
  Leighton India Contractors:Leighton India was slapped a notice by tax authorities for subscribing to the shares of its Indian arm. The transfer-pricing dispute was over an amount of Rs 900 crore
  
  IBM: The US technology major was asked to pay Rs 5,753 crore as income tax for under-reporting revenue for 2008-09
  
  Nokia: Nokia got a Rs 13,000-crore tax demand for transfer-pricing violations. Since then, the company has moved courts and shut its Chennai unit
  
  Cairn India: Cairn Energy transferred shares of Jersey-based Cairn India Holding to Cairn India in 2006. The total share transfer in India was valued at about Rs 26,000 crore. Authorities claimed this led to capital gains for Cairn UK Holdings taxable in India
  
• Environmental rules eased
  The Union environment ministry has barred its Expert Appraisal Committee (EAC) commissioning any additional impact assessment studies. According to the revised norms, the EAC, which recommends projects for environment clearance, cannot ask a developer for additional environmental studies while appraising a proposal. Environmental studies are needed for every project. These are supposed to take into account all concerns, the basis for granting a green nod.
  
  According to EIA Notification 2006, a project has to go through several stages before environment clearance is granted. The first stage involves screening, which determines if a project requires further environmental studies for preparation of an EIA, after the developer sends the relevant information for setting up a factory or whatever. Then, the EAC recommends TOR for preparation of EIA (termed 'scoping').
  
  Once this is done, public consultation with locally affected persons takes place and then the project is appraised by the committee. During the appraisal, the final EIA report and outcome of public consultation becomes the basis for a recommendation on the project.
  
  There have been several instances where the EAC has received apprehensions related to the natural resources surrounding the project and during appraisal, has sent back the proposal, seeking more details on how the project proponent plans to deal with it.
  
  The ministry has now ordered the EAC to look into all these concerns at the time of the initial stages only (while granting TOR) and “ensure that no fresh issues are raised (during appraisal) unless it turns out that the information provided by the project proponent at the time of scoping was wrong and misleading”.
  
  And, the government has in a move allowed project proponents to give proof of initiation of land acquisition instead of going for full acquisition. At present, an industrialist has to give documents reflecting full land acquisition before the project is considered for environment clearance (EC). Industries will now have to only file documents showing initiation of the acquisition.
  
  According to the order, a developer needs to file a copy of the preliminary notification on land acquisition issued by the state government concerned if the land parcel is taken through government intervention. If parcel is obtained through a private entity, a “document showing the intent of the land owners to sell the land” would be the only requirement.
  
  The New Rules: 
  • No additional green studies
  • Union environment ministry orders its expert appraisal committee (EAC) to not ask for additional reports while clearing projects
  • Developers give environment impact assessment (EIA) report for green clearance
  • While appraising the project, EAC often asks developers to give additional studies
  • Land rules have been eased
  • Industries allowed to give initial evidence of land acquisition during the environment clearance process
  • Industries need to give documents showing initial land acquisition
  • At present, industrialists have to fully acquire land for clearance consideration
  
  
• Government cancels 9 SEZ projects
  The government has cancelled approvals of nine special economic zones, including that of Hindalco Industries, Essar and Adani as no “satisfactory” progress was made to execute the projects. The decision was taken in the meeting of the Board of Approval (BoA) headed by Commerce Secretary Rajeev Kher on September 18. It said the developers have to refund the duty benefits availed by them.
  
  Hindalco Industries had proposed to set up an aluminium product SEZ in Orissa. The formal approval to the developer was granted in July 2007. The developer was granted extension from time to time and the last extension granted expired on December 31, 2013.
  
  Essar Jamnagar SEZ Ltd, which had proposed to set up a multi-product zone in Gujarat, got formal approval in August 2006. It was expired in August 2009. The developer did not make any request for further extension of approval.
  
  Similarly, Adani Townships & Real Estate Company Ltd had proposed an IT/ITeS zone in Gujarat. The BoA granted formal approval in June 2007, which expired in June 2010.
  
  The developer had reported that they could not proceed with the SEZ project due to adverse demand scenario from IT sector and accordingly they are not interested in perusing the project.
  
  What is SEZ?
  The term special economic zone (SEZ) is commonly used as a generic term to refer to any modern economic zone. In these zones business and trades laws that differ from the rest of the country. Broadly, SEZs are located within a country's national borders. The aims of the zones include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone liberal policies are introduced. There policies typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays.
  
  India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.
  
• Singareni to open country’s biggest underground coal mine
  India's second-largest coal producer Singareni Collieries will open the country's biggest underground mine next month with a capacity of 2.8 million tonnes per year, which should help the firm edge past its output target for this fiscal year.
  
  Singareni's output is just about 10 percent of what Coal India, the world's largest miner, digs out. But its small size and focus on one state, Telangana, has helped it beat its production targets for years, unlike Coal India that has its mines across the country.
  
  The company expects to produce a total of 55 million tonnes in the current fiscal year ending March 31, 2015, and 56 million the year after that. Its target for the current fiscal year was 54.5 million.
  
  Coal India fell short of its production target of 183.9 million tonnes for April-August by 8 million tonnes. The company fears it may not be able to meet its commitment of supplying 408 million tonnes to power firms this fiscal year. The inability of Coal India - accounting for 80 percent of the country's coal output - to raise production fast enough has made India the world's third-largest coal importer despite sitting on the fifth-largest reserves.
  
• RBI maintained status quo
  Continuing the effort to fight “persisting inflation” and inflationary pressures, the Reserve Bank of India (RBI) Governor Raghuram Rajan, on 30th September, maintained the policy rates at the current levels.
  
  The central bank kept the short-term policy indicative rate (Repo rate) unchanged at 8 per cent while keeping the Cash Reserve Ratio (CRR) at 4 per cent. The repo rate is the rate at which the central bank lends money to banks. The CRR is the portion of total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.
  
  Turning to the medium-term objective — inflation target of 6 per cent by January 2016 — Dr. Rajan said the balance of risks was still to the upside, though somewhat lower than in the last policy statement. This continued to warrant policy preparedness to contain pressures if the risks materialised.
  
  Dr. Rajan said that in pursuance of the Urjit R. Patel Committee’s recommendation to move away from sector-specific refinance, the access to the Export Credit Refinance (ECR) was is being brought down to 15 per cent from 32 per cent of the eligible export credit, thus continuing to give banks room for manoeuvre. This will be in effect from October 10.
  
  He also said that with liquidity conditions easing, the recourse to ECR had fallen off substantially to about 10 per cent of the outstanding export credit eligible for refinance.
  
  About Monetary policy:
  Monetary policy is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.
  
  In India, monetary policy of the Reserve Bank of India is aimed at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth.
  
  The RBI implements the monetary policy through open market operations, bank rate policy, reserve system, credit control policy, moral persuasion and through many other instruments. Using any of these instruments will lead to changes in the interest rate, or the money supply in the economy. Monetary policy can be expansionary and contractionary in nature. Increasing money supply and reducing interest rates indicate an expansionary policy. The reverse of this is a contractionary monetary policy.
  
  For instance, liquidity is important for an economy to spur growth. To maintain liquidity, the RBI is dependent on the monetary policy. By purchasing bonds through open market operations, the RBI introduces money in the system and reduces the interest rate.
  
• KYC norms for bank account opening further simplified
  Guidelines on ‘know your customer’ (KYC) have been further simplified with immediate effect with a view to easing difficulties faced by common persons while opening bank accounts and during periodic updating, according to the Reserve Bank of India.
  
  As per the simplified KYC guidelines, banks will not insist on physical presence of the customer at the time of periodic updating and they will not seek fresh proof of identity and address at the time of periodic updating in case of no change in status for 'low risk' customers.
  
  Banks will allow self-certification and accept a certified copy of the document by mail/post, etc. Further, they will not seek fresh documents if an existing KYC compliant customer of a bank desires to open another account in the bank.
  
  The RBI, in its fourth bi-monthly monetary policy statement, said there is a need for banks to complete KYC for all customers including long standing ‘low risk’ customers.
  
  Banks should complete documentation, while minimising the effort on the part of the customer to what is strictly needed.
  
  In the event that customers are unable to comply within a reasonable time period, ‘partial freezing’ may be introduced in respect of KYC non-compliant customers, that is, credits would be allowed in such accounts while debits would not be allowed, with an option to the account holder to close the account and take back the money in the account.
  
• Fiscal deficit for five months at 75% of Budget estimate
  The fiscal deficit for the first five months of 2014-15 is 75 per cent of the Government’s Budget estimate. This trend is similar to what was seen in the corresponding period of last fiscal. According to the latest data of the Controller General of Accounts, fiscal deficit during the April-August period reached Rs 3.97 lakh crore, nearly 75 per cent of the budget estimate of Rs 5.31 lakh crore.
  
  Fiscal deficit is the difference between the Government’s earnings and expenditure.
  
  The Government has set a target to mobilise over Rs 63,000 crore through disinvestment for Central PSUs and its residual stake sale in private companies. But experts point out that the Government has not moved forward and the first nine months of the fiscal has ended.
  
• Govt sets up task force on public debt management
  The government on 30th September set up four different task forces to lay a road map for up gradation of existing agencies in the financial sector and establishment of new ones, including the Public Debt Management Agency (PDMA). The action is based on recommendations of the Financial Sector Legislative Reforms Commission.
  
  The task forces are on Financial Sector Appellate Tribunal, Resolution Corporation, PDMA, and Financial Data Management Centre. These will be headed by N K Sodhi, former chief justice of Karnataka and Kerala high courts; M Damodaran, former chairman of the Securities and Exchange Board of India;
  
  D Swarup, former chairman of Pension Fund Regulation Development Authority; and Subir Gokarn, former deputy governor of Reserve Bank of India.
  
  FSLRC, set up in March 2011 for rewriting financial-sector laws to bring them in harmony with the current requirements, had submitted its report to the government on March 22, 2013.
  
  It had recommended a non-sectoral, principle-based, legislative architecture for the financial sector by restructuring or upgrading existing regulatory agencies and creating new ones wherever needed for better governance and accountability.
  
  It suggested creation of PDMA to perform the function of debt management for the government. It would help the government raise debt and support its cash management function. The nine-member task force will review international best practices in public debt management and develop an administrative plan that includes a design of the required physical infrastructure, among other things.
  
  The task force on FSAT will review global best practices of procedural rules and internal processes of courts and tribunals. It will review the present rules of procedure for the Securities Appellate Tribunal.
  
  FDMC task force will review the present practices of management of regulatory data in the country. The one on RC would develop an organisation design for the corporation that would implement the Indian Financial Code. All the four task forces have been given one year to submit their report.
  
• 5.5% Growth rate in FY: UN study
  United Nations Economic and Social Commission for the Asia and the Pacific (UN ESCAP) expects a stronger growth momentum of 5.5 per cent for India in 2014-15 on account of economic expansion, likely uptick in exports and a stable government at the Centre.
  
  The Indian economy had registered a growth of 4.9 per cent in fiscal year ending 2014, up from 4.5 per cent in the previous fiscal, but far below the 9.5 per cent pace three years before the global financial crisis of 2008.
  
  The economy is expected to enjoy stronger growth momentum of 5.5 per cent in the fiscal year 2014, underpinned by solid expansion in the industrial and services sectors. Higher growth in the developed countries and the weaker local currency would support exports," said the UN ESCAP report on Economic and Social Survey of Asia and the Pacific-2014 released.
  
  On Asia Pacific, the report said developing countries in the region are forecast to grow at an average of 5.8 per cent in 2014, up from 5.6 per cent last year.
  
  About UN ESCAP:
  The Economic and Social Commission for Asia and the Pacific (UNESCAP or ESCAP), located in Bangkok, Thailand, is one of the five regional commissions of the United Nations Economic and Social Council. It was established in 1947 (then as the UN Economic Commission for Asia and the Far East - ECAFE) to encourage economic cooperation among its member states. The name was changed to the current in 1974. It is one of five regional commissions under the administrative direction of United Nations headquarters. ESCAP has 53 member States and nine Associate members, and reports to the UN Economic and Social Council (ECOSOC). As well as countries in Asia and the Pacific, it includes France, the Netherlands, the United Kingdom and the United States.
  
• RBI eases norms for short sale in g-secs
  The Reserve Bank of India (RBI) on 30th September said it will gradually lower the ceiling on bonds that can be held-to-maturity (HTM) starting in January, while further easing currency hedging rules for importers in moves to boost trading in markets.
  
  In order to enhance liquidity and develop the government securities (G-sec) market, the RBI brought down the ceiling on statutory liquidity ratio (SLR) securities under the HTM (held-to-maturity) category from 24 per cent of NDTL to 22 per cent in a phased manner. It asked banks to bring the SLR down to 23.5 per cent with effect from the fortnight beginning January 10, 2015, 23.0 per cent with effect from the fortnight beginning April 4, 2015, 22.5 per cent with effect from the fortnight beginning July 11, 2015 and 22.0 per cent with effect from the fortnight beginning September 19, 2015.
  
  In addition, RBI liberalised guidelines on short sale in G-Secs by increasing the limit on short sale for liquid securities to 0.75 per cent (from 0.50 per cent) of outstanding stock or Rs. 600 crore, whichever is lower. RBI also permitted banks and primary dealers (PDs) to take short positions in G-Secs in the over-the-counter (OTC) market (within the total short sale limit), subject to appropriate audit/ internal controls.
  
  The RBI also announced it would extend the period that foreign investors can settle their over-the-counter government bonds to two days of their trade from one, a measure that traders speculated could be aimed to facilitate the settlement of debt in the Euroclear platform. India is considering joining Euro clear, the world's largest securities settlement system.
  
  What are G-secs?
  The Government securities comprise dated securities issued by the Government of India and state governments as also, treasury bills issued by the Government of India.Reserve Bank of India manages and services these securities through its public debt offices located in various places as an agent of the Government.
  
  Why G-secs:
  Provident funds, by their very nature, need to invest in risk free securities that also provide them a reasonable return. Government securities, also called the gilt edged securities or G-secs, are not only free from default risk but also provide reasonable returns and, therefore, offer the most suitable investment opportunity to provident funds.
  
• India to grow 5.6% this fiscal: Fitch
  India’s growth is expected to accelerate to 5.6 per cent in the current financial year and further to 6.5 per cent in 2015-16, buoyed by strong investments and political certainty, rating agency Fitch said on 1st October. Fitch expects gross domestic product (GDP) growth to pick up to 5.6 per cent in FY15 (ending in March) and 6.5 per cent in both FY16 and FY17, the agency said, in its global economic outlook report.
  
  The Reserve Bank of India has projected a 5.5 per cent GDP growth for the current financial year and 6.3 per cent for 2015-16. Fitch further said the expected pick-up is supported by the 5.7 per cent GDP growth in April-June quarter of FY15.
  
  India had clocked a sub-five per cent growth in the previous two financial years. It grew 4.5 per cent in in 2012-13 and 4.7 per cent in 2013-14. Fitch said lifting GDP growth to substantially higher levels would require large productivity gains through implementation of reforms related to governance, product and labour markets, as well as reduction of infrastructure bottlenecks.
  
• Jan Dhan: banks asked to set up Rs. 75-cr corpus for media campaign
  Public sector banks have been asked to pick up the tab on media campaign expenses incurred for the Pradhan Mantri Jan Dhan Yojana
  
  The Department of Financial Services (DFS) in the Finance Ministry has advised the Indian Banks’ Association (IBA) to create a corpus of Rs. 75 crore to meet all the media campaign expenses for the scheme, sources in the banking industry said. IBA has, in turn, approached its member banks seeking an initial aggregate contribution of Rs. 30 crore for the expenses already incurred and also expected to be spent shortly.
  
  While public sector banks would have little option but to cough up money towards this corpus, indications are that private and foreign banks are keen to escape
  
  The DFS has also urged NABARD, Life Insurance Corporation, General Insurance Corporation and pension regulator PFRDA to contribute ( Rs. 15 crore) towards the corpus.
  
  The PMJDY — which was launched on August 28 by Prime Minister Narendra Modi — targets to bring financial inclusion to atleast 7.5 crore unbanked families by January 26 next year.
  
  The effort will be to ensure that atleast one person from every household in the country has a bank account in his/her name by January 26. Meanwhile, IBA’s managing committee has now decided to focus the media campaign on ground level activities.
  
  To ensure success of the campaign and to create a pull effect, the DFS had planned a nationwide campaign during the PMJDY programme period. After calling for presentation from agencies empanelled with different banks, DFS had selected RK Swamy BBDO for carrying out the campaign in the initial stages for a period of one month covering pre-launch, launch and post-launch period.
  
  The cost of this campaign carried out worked out to Rs. 20 crore, details available with DFS showed. The DFS now wants the media campaign to be carried out during the rest of the programme also.
  
• Panel formed on pension system
  The Pension Fund Regulatory and Development Authority (PFRDA) has set up an 18-member advisory committee to help frame regulations for developing pensions system in the country. The move comes eight months after the PFRDA law got notified on February 1 this year, giving the regulator the much-needed statutory backing.
  
  As many as 12-13 draft regulations are currently under the process of receiving public feedback and these are then expected to go through the newly set up PAC before being taken up by the PFRDA Board for final approval
  
  The draft regulations that had been already exposed to the public include pension funds management, points-of-presence regulations, aggregator regulations, customer grievance regulations and exit regulations.
  
  Besides the 18 members, the PAC will have the PFRDA Chairman and PFRDA members as ex-officio chairperson and ex-officio members respectively. The banking sector is fully on board with representatives from the Reserve Bank of India (at the level of chief general manager) besides the Chief Executive of Indian Banks’ Association.
  
  The panel also has representatives from the Clearing Corporation of India, National Stock Exchange, Labour Ministry, SBI Pension Funds, ICICI Prudential Pension Funds and NSDL e-governance Infrastructure.