ECONOMY AFFAIRS OCTOBER 2015

ECONOMY AFFAIRS OCTOBER 2015

• Department of Heavy Industries comes out with draft national policy on capital goods
  The Department of Heavy Industries has come out with draft national policy on capital goods. This is the first time that such a policy is being framed after active consultation with industry associations.
  
  According to the Ministry of Heavy Industries and Public Enterprises the policy is focused on the most critical sector for achieving the vision of Make in India.
  
  This Policy on Capital Goods is envisaged to unlock the potential for this promising sector and establish India as a global manufacturing hub.
  
• NITI Aayog panel raps business environment
  A panel of experts asked by the NITI Aayog to examine the current initiatives on innovation and entrepreneurship in India has found the country's business environment unfriendly and not conducive for corporate investment.
  
  Complicated tax regime, difficulty in shutting down failing businesses, weak intellectual property regime, unfavourable regulatory frame-work, complex and cumbersome labour laws and infrastructure defict all create barriers to entrepreneurship, the report said.
  
  To change this, the panel wants the government to have a thorough look at the Companies Act, review Section 56 of the Income Tax Act in terms of investment by angel investors in start-ups, frame a bankruptcy law to tackle the bad debts of banks and undertake reforms in the labour sector.
  
  Headed by academician Tarun Khanna and comprising representatives from corporate India, including Swati Piramal of Piramal Enterprises, the panel was entrusted with the task of framing a detailed contours for the Atal Innovation Mission (AIM) and Self Employment and Talent Utilisation, both announced by Finance Minister Arun Jaitley in the 2014-15 Union Budget, with an initial outlay of Rs 150 crore and Rs 1,000 crore, respectively.
  
  Section 56 of the I-T Act, it has said, greatly impacts the fair market valuation norms on angel investments. Under the current rule, introduced in the Finance Act of 2012, capital raised by an unlisted company from any individual against an issue of shares in excess of fair market value would be taxable as "income from other sources". Start-ups are liable to pay 33 per cent tax on any investment they receive.
  
  As for the Companies Act, it is actually only around three years old, having replaced the earlier legislation of 1956, with several amendments. The Niti Aayog panel wants it to be further changed, to distinguish between closely held private companies, public companies, and publicly listed companies.
  
  It also wanted changes in the Act to lift a ban on employee stock options to independent directors of unlisted companies. "Such rules deter talented and experienced individuals from taking up these positions," the report said.
  
  As for the proposed bankruptcy law, it said this would be a key for improving access to capital. The aim is to allow faster closure of troubled businesses and give creditors easier and faster exit options. Therefore, it should expedite the cleansing of bank balance sheets, and allow fresh lending.
  
  The report said AIM should be headed by the vice-chairman of NITI Aayog and secretaries from seven major ministries should form its board of directors. Of these, four should have voting rights.
  
  To improve access to capital, the committee favoured granting of more bank licences, deepening the corporate bond market, giving a level playing field for offshore and onshore private equity and venture capital, and a stable and transparent regulatory and taxation regime.
  
  For the corporate sector, the report also recommended a "central identification number", where all other corporate identities such as tax-payer identification number for commercial taxes and service tax number would converge.
  
  It said as part of labour law reforms, employers should be given a choice of compliance under the Factories Act or the Shops and Establishments Act in all non-hazardous industries, and all the 44 central labour laws should be consolidated into four labour codes.
  
  It wanted the Trade Unions Act to be amended to reduce, if not remove, the role of outsiders in TUs because the politicisation of trade unions is toxic for the Make in India campaign, it felt. States should be encouraged to use Article 254 (2) of the Constitution (whereby they may, with central assent, legislate matter where there is already Union legislation) to amend labour laws.
  
  To prevent the growth of unaccounted money, the committee recommended, creation of an online nationwide portal for the registration of all land purchase, sale deals by all entities and their beneficiaries, within 48 hours of a transaction, with strict penal provisions.
  
  India's intellectual property regime (IPR) is weak, and a deterrent to innovation. It ranks at the bottom of the US Chamber of Commerce's Global Intellectual Property Center's ranking of 25 countries, in terms of its intellectual property environment. To change this, the committee said enforcement of IPR laws should be made more prompt.
  
  It said that apart from issues related to infrastructure and capital, business leaders often complain of a slow and inefficient bureaucracy, which leads to delay in decisions and in implementation. To overcome these, the panel in the short term has favoured incentivising those innovations which provide low-cost solutions to India's most intractable problems.
  
  On education and skilling, the committee said the private sector can be tapped to fund research and development at universities and one per cent of corporate profit could be directed towards research labs for this. To improve the standard of education, it favoured a system of annual assessment of schools and faculty on basic science, maths and literacy, on the lines of the one being done in Pratham's Annual Status of Education Report.
  
  On skilling, the report said the number of apprentices needs to be increased to 10 million a year from the current 400,000. And, employment exchanges need to be converted to career centres (last year, the 1,200 exchanges led to only 300,000 jobs for the 40 mn registered).
  
• Trade facilitation pact can boost global exports by $1 tn: WTO
  Full implementation of the trade facilitation agreement (TFA) reached in December 2013 could increase global merchandise exports by up to $1 trillion annually, the World Trade Organization (WTO) said in a report on 26th October.
  
  The overall boost to world export growth per annum has been estimated at up to 2.7 percent due to the TFA deal on standardising global customs procedures, which was the first multilateral agreement concluded by the WTO, it said. The TFA approved by 160 WTO members in Geneva in November aims to streamline and harmonise customs procedures to bring an estimated saving of over $1 trillion annually.
  
  The agreement will come into force when two-thirds of the 161 WTO members have ratified it. Fifty have done it so far. An agreement between India and the US last year opened the way for a consensus on the TFA which eluded the WTO members.
  
  India has asked for a permanent solution to the issue of public stockholding for food security purposes and not restricted for a period of four years as decided earlier during the WTO ministerial meeting in Bali, Indonesia, in 2013.
  
• Central schemes: NITI Aayog panel for more funding flexibility for States
  A NITI Aayog sub-group has suggested increasing the flexi-fund component of centrally-sponsored schemes (CSS) to 25 per cent from the current 10.
  
  This would give more flexibility to States to spend on development and social welfare schemes, said Shivraj Singh Chouhan, Madhya Pradesh Chief Minister and Convenor of the NITI Aayog’s sub-group of Chief Ministers on ‘Rationalisation of Centrally-sponsored Schemes’, after submitting the report to Prime Minister Narendra Modi on 27th October.
  
  ‘Flexi-fund’ was introduced in January 2014 to give States more leeway to meet local needs and requirements within the overall objective of each programme. The fund is also for piloting innovations, improving efficiencies, and mitigation/restoration activities in case of natural calamities.
  
  On the funding pattern, Chouhan said that it should remain the same for core schemes, at 90:10 (wherein 90 per cent comes from the Centre and 10 per cent from States), for 11 special category States, and 60:40 for other States. For optional schemes, it suggested a funding pattern of 80:20 for special category States and 50:50 for others.
  
  The report also elaborates on how the funding will continue for projects where work has been partially completed. The sub-group has suggested splitting CSS into three categories for deciding the funding pattern. However, for schemes such as the Mahatma Gandhi Rural Employment Guarantee Act, it has suggested maintaining the same funding pattern.
  
  The sub-group was constituted on March 9, after the first meeting of the governing council of the NITI Aayog, headed by the Prime Minister, took a decision on February 8.
  
  The sub-group was tasked with examining the existing CSS and recommending measures for ensuring their proper implementation. The sub-group was also asked to recommend measures for coordination between the Centre and the States in the backdrop of the Finance Commission’s suggestion to increase devolution of taxes to the states and higher revenue deficit grants.
  
• India jumps 12 spots on World Bank's ease of doing business list
  India has jumped 12 spots in the World Bank's rankings in terms of ease of doing business. For 2016, India has been ranked 130th on a list of 189 countries, compared with a ranking of 142nd this year, the steepest rise seen by the country in recent years.
  
  The rise was primarily on account of improvement in two areas - ease of starting a business and securing an electricity connection.
  
  In 2014, the government of India launched an ambitious programme of regulatory reform, aimed at making it easier to do business. Spanning a range of areas measured by 'Doing Business', the programme represents a great deal of effort to create a more business-friendly environment, particularly in Delhi and Mumbai," said the report, titled Doing Business 2016, Measuring Regulatory Quality and Efficiency.
  
  Singapore retained the top spot in the rankings, followed by New Zealand, Denmark and South Korea. While China's ranking improved from 90th to 84th, Pakistan fell 10 positions to 138th from 128th last year.
  
  The World Bank ranks countries on 10 parameters - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority shareholders, paying taxes, enforcing contracts, trading across borders and resolving insolvency.
  
  For India, the ranking covers data from Delhi and Mumbai, with weights of 53 per cent and 47 per cent, respectively. In terms of starting a business, India's ranking improved to 155th from 158th last year, essentially on account of elimination of minimum capital requirement, which was 111.2 per cent of income per capita till last year.
  
• India ranked 8th in protecting minority investor interests; betters US, Japan
  India is the eighth best country in the world when it comes to protecting the interests of minority investors, says a World Bank report titled Doing Business 2016.
  
  It measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gains as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse.
  
  The most recent round of data collection for the project was completed in June 2015. India is ahead of many developed and major developing nations, including the US (35th rank), Japan (36), Germany (49) and Australia (66).
  
  The World Bank gave India a score of 6.7 out of 10 with regard to extent of conflict of interest regulations index, 8 on 10 for extent of shareholder governance index and 7.3 on 10 for strength of minority investor protection index.
  
  While Singapore topped the rank in protecting minority investors, New Zealand and Hong Kong jointly hold the first position; Malaysia and the UK share the fourth position, followed by Canada and Slovenia. India along with Albania, Ireland, Israel, Mongolia and Korea share the eighth position.
  
  India’s position in the Ease of Doing Business index also improved to 130 among 189 countries and the number of days to start a business has come down dramatically to 29 in 2015 from 127 in 2004.
  
• IMF, World Bank must reflect rise of developing economies: India
  United Nations India has called for reforming the World Bank and the International Monetary Fund (IMF) to reflect the rise of the developing and transitional economies and give them more say in governance.
  
  The share of the developing and economies in transition in the world gross domestic product has increased from 39 percent in 2008-2010 to 49 percent in 2012-14, but the shareholding patterns at the financial institutions have not kept pace with the change, Amit Narang, a counsellor at the Indian Mission told a session of the General Assembly committee that deals with economic and financial matters on 27th October.
  
  As for the IMF, he said it was facing an "unprecedented situation" having failed to implement the quota of shares set during the last review in 2010 even as the time has come for the next review.
  
  The Republican-controlled US Congress has blocked the implementation of the new quota structure, which would increase the shares of India, Brazil, Russia and China-the BRIC countries-putting them among the 10 largest shareholders of the IMF. The share quotas determine the voting power and access to funding.
  
  He also criticised the Financing for Development Conference for "formalising the status quo which effectively keeps out the voices of a large number of countries" in the Committee of Experts on Sustainable Development.
  
• Govt to launch 100 highway projects through PPP
  Government will launch 100 highway projects through Public-private partnership next year. According to Union Minister Nitin Gadkari the government will float tenders for about 18 projects by December. The minister added Forty per cent cost will be borne by the government while 60 per cent will be funded by the private investor in PPP mode. Of the 60 per cent, banks will provide 30 per cent of the requirement.
  
• World Bank maintains 7.5% GDP growth forecast for India in FY16
  The World Bank has maintained its growth forecast for India at 7.5 per cent for 2015-16, but marginally lowered the projections for 2016-17 and 2017-18 to 7.8 per cent and 7.9 per cent, respectively. The projection is, however, more optimistic than by other agencies such as the International Monetary Fund, which has pegged India’s GDP (gross domestic product) growth at 7.3 per cent this fiscal. The earlier Update, released in April, had pegged GDP growth at 7.9 per cent next fiscal and at 8 per cent in 2017-18. Though India is well positioned to weather the global volatility in the short term, the country will not remain immune to a slowdown in global demand and heightened volatility in the medium term, it noted. The World Bank also called for three crucial reforms in the economy to boost growth — improving the asset quality of banks; rolling out the goods and services tax (GST); and improving service delivery by States and local bodies.
  
  Underlining challenges before the economy, the report said the government’s efforts to lower the fiscal deficit next year onwards beyond the targeted 3.9 per cent of GDP this fiscal may have limited impact.
  
  Global crude oil prices are unlikely to fall further, mounting payments from contingent liabilities from the infrastructure sector, and implementations of the Seventh Pay Commission report would take a toll on the finances.
  
  Terming the additional levies of excise duty on petrol and diesel this year as “implicit carbon tax”, the World Bank said that pricing reforms have led to a reduction in emissions. The petroleum subsidy burden came down from 1.4 per cent of GDP in 2012-13 to 0.2 per cent in 2015-16, while excise duties for petrol and diesel increased by an average of 130 per cent in the fourth quarter of 2014-15 (year-on-year).
  
• RBI allows NRIs to subscribe to National Pension System
  To enable Indians living abroad to access old age income security, the Reserve Bank of India has allowed non-resident Indians (NRIs) to subscribe to the National Pension System (NPS). NRIs may subscribe to the NPS governed and administered by the Pension Fund Regulatory and Development Authority (PFRDA), provided such subscriptions are made through normal banking channels.
  
  The subscription amounts shall be paid by the NRIs either by inward remittance through normal banking channels or out of funds held in their NRE/FCNR/NRO account.
  
• RBI grants permission to Indian corporate to issue rupee denominated bonds outside India
  The RBI has granted permission to the Indian corporate to issue rupee denominated bonds outside India. According to the Finance Ministry, the matter of taxation of income from such bonds under Income-tax Act has been considered by the Government.
  
  The government also clarified that the taxation of interest income from these INR off-shore bonds in the case of non-resident investors is 5 percent, which is in the nature of final tax and it would be applicable in the same way as it is applicable for off-shore dollar denominated bond.
  
  The government also decided the Capital gains, arising in case of appreciation of rupee between the date of Issue and the date of redemption against the foreign currency in which the investment is made, would be exempted from capital gains tax.
  
• Centre announces draft aviation policy
  The centre on 30th October announced draft aviation policy aimed at popularizing air travel among the people. The draft proposes to improve air connectivity among the smaller cities.
  
  Airlines will not be allowed to charge more than 2500 rupees for one hour flight between two small cities. As per the new draft, about 300 airports and air strips in smaller cities could be operationalized.
  
  The draft says the government will provide money for it by setting up a special fund. To boost the aviation sector, the draft proposes tax incentives to airlines by giving them custom exception on aviation fuel. The policy aims to bring India to third position from the current 10th position in the global aviation sector.
  
  Government has proposed a slew of tax incentives for airlines and maintenance works in the draft civil aviation policy unveiled on 30th October. It has proposed hiking FDI in domestic airlines to over 50 per cent in open skies policy, which is 49 per cent at present. Under open skies policy, overseas airlines can operate unlimited number of flights into and out of India.
  
  The policy proposes to put service tax at zero to promote Maintenance, Repair and Overhaul, MRO facility in order to develop India as an MRO hub in Asia.
  
  It also seeks to revive under-served airstrips and build no-frills airports at a cost of 50 crore rupees under Regional Connectivity Scheme. The Draft Policy proposes two per cent levy on all domestic and overseas tickets for funding the Scheme. Another proposal is to cap fare at 2,500 rupees for one-hour flight under regional connectivity scheme.
  
  The policy proposes separate regulations for helicopters from the first of April, 2016. Centre will support growth of helicopters for remote area connectivity, intra-city movement, tourism, law enforcement, disaster relief and medical evacuation.
  
  However, the government has decided to seek more comments from stakeholders before taking a final call on 5/20 norms - whereby local airlines can fly overseas only when they have five years operational experience and at least a fleet of 20 aircraft.
  
  Other policy reforms which have been envisaged are greater de regulation, transparency and e governance, aviation education and skill building, and promotion of sustainable aviation practices. The policy is open to comments from the industry and various stakeholders before being finalised.
  
• India's fiscal deficit reaches 68 pct of 2015/16 target
  India's fiscal deficit reached 3.79 trillion rupees ($58.1 billion) during April-September or 68.1 percent of the full-year target, government data showed on 30th October. The deficit amounted to 82.6 percent of the annual target in the same period a year ago. Net tax receipts stood at 3.7 trillion rupees in the first half of the fiscal year that ends in March 2016, while total spending touched 9.1 trillion rupees.
  
• India needs more action to support fiscal stability: IMF
  India needs to take further policy action to support external and fiscal stability in the future, and should focus on revenue-side measures and adopt additional structural reforms to sustain strong growth, the International Monetary Fund (IMF) said on 30th October.
  
  The IMF said, that since 2013, reductions in spending have fostered some improvement in fiscal deficit, and current account deficit has narrowed more than expected. More recently, economic activity has been strengthening, as business and consumer confidence have rallied in response to favourable policies and increased political certainty following the 2014 election, it said.
  
  Going forward, strong growth is expected to continue as a result of lower oil prices and favourable policy measures, though inflation expectations remain elevated despite relatively tight monetary policy and lower global commodity prices, IMF said.
  
  The main risks stem from a surge in global financial market volatility, slower-than-expected progress in addressing domestic supply-side bottlenecks, and a supply-induced spike in inflation, the IMF said.
  
  According to the report, in coming years the current account deficit is expected to remain stable as downward pressure on imports associated with lower oil prices should be largely offset by stronger domestic demand and stronger external demand should buoy exports.
  
  Still, recent increase in private investment could imply larger future external deficits, particularly if national saving does not increase, it noted. The IMF said there are several risks to economic stability, from both domestic and external factors.
  
• India among most corrupt in World Bank survey
  In a survey, conducted by World Bank, it found that, corruption prevailing in India at an alarm level. The survey noted that some lower income states have much higher incidence of corruption.
  • In a representative sample of 9,281 business establishments in the private sector in India that the World Bank interviewed between June 2013 and December 2014, 23 per cent of firms, across India, reported at least one bribe request across six regulatory and utility transactions i.e., bribery incidence.
  • The World Banks Enterprise Survey complements the ease of doing business (DB) report by capturing a broad range of business environment topics, some similar to the DB report such as access to finance and electricity and some not included in the DB report, though very critical to a business environment, such as corruption and crime.
  • Interestingly, Jharkhand and Rajasthan scored high in the sub-national ranking of states in ease of doing business, in a September World Bank report for all Indian states commissioned by the Modi government.
  • The World Bank data from 136 economies on the number of newly registered firms per year over the period 2004-2014 captured by the DB 2016 ranking shows Indias new business density at 0.12 for the year 2014, lower than Nepals 0.69 and Afghanistans 0.15.
  
  
• Filpkart opens warehouse in Telangana
  Leading ecommerce company Flipkart , which opened its largest 'Automated fulfillment centre at Gundlapochampally in Medchal mandal, outskirts of Hyderabad in Telangana state, on 30th October, will go to public possibly in next 5 years. The 17th warehouse spread across 2.
  
• P&G to set up planning center in Hyderabad
  The American consumer goods behemoth Proctor & Gamble has proposed to establish a planning center with a100 highly skilled people in Telangana that would cater to the entire South Asia operations. P&G India managing director Rajwani met with Telangana chief minister K Chandrasekhar Rao and sought the government's cooperation to their local plans. The company already has a fabric and home care, beauty care, oral care and feminine care product manufacturing unit in 171-acre area on the city outskirts.
  
  The company would like to set up its planning center by recruiting 50 skilled professionals in the beginning and it would double its strength later, according to the chief minister's office. It was also planning to increase the number of employees at its manufacturing unit to 1,200 from the present 786 people.
  
• Centre imposes stock limits on holding of pulses
  Government has imposed stock limits on pulses held by importers, exporters, licensed food processors and large departmental retailers to prevent its hoarding. According to food and consumer Affairs Ministry, the Central Order under Essential Commodities Act, 1955 has been amended with immediate effect to increase the availability of pulses.
  
  The government has taken several measures for increasing the availability of pulses by banning export of pulses, extension of zero import duty on pulses and also import of 5000 tonnes of pulses from Price Stabilization Fund.
  
  To increase production of pulses, the minimum support price for Urad and Arhar dal have been increased to 4625 rupees per quintal each and for Moong dal to 4850 rupees per quintal. The Ministry has directed all the departments to keep a close watch on prices of essential commodities, especially pulses and work in close coordination with all States to control price rise.
  
  Food Ministry has said, 500 tonnes of Tur dal have been allotted to Kendriya Bhandar and 200 tonnes to Safal for distribution through over 400 outlets. To meet the shortage of pulses in future, Government has decided to create a buffer stock of 40 thousand tonnes of pulses and 200 crore rupees have been earmarked for the Buffer stock.
  
• PM launches IDFC Bank in MP
  Indian Prime Minister Narendra Modi on 19th October inaugurated the IDFC Bank in Madhya Pradesh through remote control at a function organised at his Official Residence in Delhi. According to PM, the main aim of the bank is to venture out to the villages to provide banking facilities to the people.
  
  He said, rural economy is contributing to the overall growth of the country. He said, banking system is witnessing changes and in the coming days, premises-less and paper-less banking system will become the identity of banks.
  
• Centre clears extension of Wipro’s SEZ in Kolkata
  In a decision that will allow IT-major Wipro Technologies to expand its IT/ITES Special Economic Zone at Salt Lake, Kolkata, the government has agreed to waive the contiguity or continuity norm permitting the company to include another patch of land that is not attached to the existing zone.
  
  The Board of Approval for SEZs, which met earlier this month, however, placed the condition that the developer has to put in place fool-proof security systems at the entry and exit points to preclude foul-play.
  
  Wipro had requested the BoA to allow it to develop 2.5 acres of land with the existing structure of 11 floors as an extension of its Salt Lake SEZ, despite the two pieces of land being non-contiguous. It had suggested that it would build in a fool-proof surveillance system to ensure that items were not brought in or taken out of the SEZ illicitly.
  
  Although the BoA is very particular about ensuring that contiguity is maintained by building the required infrastructure, in the case of Wipro it decided to relax the rules because of the peculiarity of the case, the official said.
  
  Contiguity norm is an important part of the SEZ policy to ensure that an SEZ is not set up on multiple patches of land with public roads and other infrastructure running through it. This is important as SEZ developers and units are given several tax concessions to produce within the zone and their interface with the area outside the zones is subjected to various rules and regulations.
  
  In case two pieces of land are non-contiguous, approval for the project is usually given when developers agree to construct over-bridges, under-passes or sky-walks to establish contiguity.
  
  Although the BoA is very particular about ensuring that contiguity is maintained by building the required infrastructure, in the case of Wipro it has decided to relax the rules because of the peculiarity of the case.
  
• Guidelines in FDI for insurance firms issued
  The Insurance Regulatory and Development Authority of India (Irdai) on Monday said the total foreign investment in Indian insurance companies had been capped at 49 per cent. The regulator gave three months to insurers to comply with these norms from the date of issue of the guidelines.
  
  The existing shareholders agreements will have to be reworked to comply with the norms. Some insurance companies have already begun work on this.
  
  Irdai said the regulator might grant another three months to existing insurers to comply for valid reasons. This extra time would be given provided that the total time taken to comply with “Indian owned and controlled” stipulations does not extend beyond six months.
  
  New insurance companies will have to comply with the norms before registration.
  
  The law will be applicable in case the companies propose to hike their foreign investment from the existing level; or even when they do not intend to increase their current foreign stake from the existing level, Irdai clarified.
  
  Irdai said domestic firms should ensure that a majority of directors, excluding independent ones, are nominated by Indian promoters /investors.
  
  The appointment of key management person, including chief executive officer or managing director or principal officer, should be through the board of directors or by the Indian promoter.
  
  However, key management person, excluding CEO, might be nominated by the foreign investor provided company board approves it.
  
• Employment increases by 5.21 lakh in FY'15; 64K in Jan-Mar
  Employment in 8 sectors including IT/BPO, automobiles, gems & jewellery and textile rose by 5.21 lakh last fiscal, said a government report. However, job creation in these 8 sectors which also include handloom/powerloom, leather, transport and metal remained little stressed in the January-March quarter at 64,000 over the previous quarter, as per Labour Bureau's '25th Quarterly Report on Changes in Employment'.
  
  During the first three quarters of 2014-15, these sectors witnessed an overall increase in employment by 1.82 lakh, 1.58 lakh and 1.17 lakh over the previous quarters. As per the 24th report, the overall employment had reduced by 36,000 in the January-March quarter in 2013-14.
  
  The report also stated that the overall employment increased by 2.76 lakh during 2013-14, lower than 5.21 lakh in the previous fiscal. At industry level, the highest increase in employment is observed in IT/BPOs sector where jobs increased by 37,000 during January-March, over November-December, 2014, followed by textiles including apparel sector (24,000), automobiles sector (20,000) and metals sector (1,000).
  
  The largest decrease in employment was recorded in leather sector (8,000) followed by gem & jewellery (6,000), transport (2,000) and handloom/powerloom (2,000).
  
  In the direct category of workers, employment has increased by 15,000 whereas for contract category of workers, it has increased by 49,000 during the quarter ended March, 2015 over December, 2014.
  
  Employment in the exporting units has increased by 73,000 at overall level, whereas in the non-exporting units, it has decreased by 9,000 during January-March, 2015 over the previous quarter November-December, 2014.
  
  Labour Bureau has been conducting a series of quarterly quick employment surveys since January, 2009 to study the impact of global economic slowdown on employment in Indian economy. The first one was conducted to study the impact of economic slowdown on employment during the October-December quarter of 2008.
  
• APSEZ inks MoU with IPGA to handle pulses across its ports in country
  Gujarat-based Adani Ports and Special Economic Zone -APSEZ- India’s largest port developer company has signed a Memorandum of Understanding -MoU- with the India Pulses and Grains Association -IPGA- to handle pulses across its ports in the country.
  
  The MoU is intended to develop a dedicated and efficient supply chain for pulses, using strategically located Adani Ports’ facilities to all key consumption centers in the country to ensure the smooth and cost efficient availability of this key protein source. Adani has developed the world class facilities for an agricultural market place at its all ports. It has largest dedicated covered warehouse space inside ports for Agri goods.
  
• Cabinet decisions: Ease of doing business gets a push; government clears two ordinances
  The Cabinet cleared two ordinances for expeditious settlement of commercial disputes that would improve ease of doing business in the country. It gave its nod to ordinances to amend the Arbitration and Conciliation Act and bring into force the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 pending before a Parliamentary standing committee
  
  The latter would enable setting up of commercial benches in high courts for expeditious resolution of disputes. The Department Related Standing Committee on Law and Personnel was to table its report on the Bill in Parliament by end-July. However, it was granted a month's extension till August 30. The panel has now sought a fresh extension till November 30.
  
  After being referred to a Rajya Sabha Select Committee during the United Progressive Alliance's tenure, the Bill was sent to the Law Commission. Based on the law panel's recommendations, the National Democratic Alliance government re-drafted the Bill as part of its ease of doing business initiative.
  
  The ordinance to amend the Arbitration and Conciliation Act is aimed at making India a favourable place to settle disputes through arbitration. The Cabinet move came amid companies such as Vodafone choosing overseas courts for this purpose.
  
• RBI unveils gold monetisation scheme norms
  To cut down on the import bill, the Reserve Bank of India (RBI) on 22nd October announced a gold monetisation scheme (GMS) that allows individuals, trusts and mutual funds to deposit gold with banks and earn an interest on it. Prime minister Narendra Modi will launch the scheme on November 5.
  
  The RBI said the minimum deposit under the scheme should be raw gold equivalent to 30 grammes of 995 fineness. The central bank has not fixed a maximum limit for deposit.
  
  The designated banks will accept gold deposits under the short-term (one to three years) bank deposit as well as medium-term (five to seven years) and long-term government deposit schemes (12 to 15 years). There will be a provision for pre-mature withdrawal, subject to a minimum lock-in period and penalty to be determined by individual banks.
  
  The GMS will replace the existing gold deposit scheme, started in 1999. However, the deposits outstanding under the old scheme will be allowed to run till maturity unless the depositors prematurely withdraw them. The deposit certificates will be issued by banks in equivalence of 995 fineness of gold. The principal and interest of the deposit under the scheme will be denominated in gold.
  
  The short-term bank deposits will attract applicable cash reserve ratio and statutory liquidity ratio (SLR). However, the stock of gold held by the banks will count towards the general SLR requirement.
  
• Water and sewerage plans worth Rs 2,786 cr in 89 AMRUT cities
  Aiming at ensuring water supply and sewerage facilities in urban households, Urban Development Ministry has cleared plans worth over Rs 2,700 cr in 89 cities under Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
  
  The Ministry has approved state-level action plans under AMRUT for providing water supply and sewerage connections for 89 cities in the states of Andhra Pradesh,Gujarat and Rajasthan
  
  An inter-ministerial Apex Committee of AMRUT chaired by Urban Development Secretary Madhusudhan Prasad has cleared the plans worth Rs 2,786.28 cr involving 143 projects in 89 AMRUT cities in the three states.
  
  These include 47 schemes relating to ensuring water supply connections and augmenting water supply and 31 projects for expanding sewerage network services in identified cities and towns. The rest pertain to storm water drains, urban transport and green spaces and parks.
  
  Sewerage projects got a lion share of Rs 1,471.07 cr followed by Rs 1,225 cr for water supply related schemes.
  
  The Apex Committee of AMRUT approved State Annual Action Plans (SAAP) for the three states for 2015-16. Gujarat proposed SAAP entailing an investment of Rs 1,204.42 cr followed byRajasthan - Rs 919 cr and Andhra Pradesh proposing an investment of Rs 662.86 cr.
  
  Under the SAAP approved, Gujarat will take up sewerage projects in 25 AMRUT cities at a cost of Rs 916 cr and water supply schemes in 11 cities with an investment of Rs 233.65 cr.
  
  Rajasthan will take up sewerage schemes in 6 cities at a cost of Rs 555 cr and water supply projects in 10 cities at a cost of Rs 344 cr. Andhra Pradesh will focus on water supply in 26 AMRUT cities at a cost of Rs 646.29 cr and provision of green spaces and parks in 30 cities at a cost of Rs 16.57 cr.
  
  Under AMRUT, Central Government will provide an assistance of 50 per cent of project cost for cities with a population of up to 10 lakhs each and one third of project cost for cities with a population of above 10 lakhs each. Rest of the project cost has to be borne by the states and urban local bodies. As per these norms, central assistance for the approved projects in three states comes to Rs 1,356.23 cr.
  
• Government exempts banking correspondents under PMJDY from service tax
  The Government has exempted services provided by a business facilitator or a business correspondent to a banking company with respect to basic savings bank deposit accounts covered by Pradhan Mantri Jan Dhan Yojana (PMJDY) from payment of service tax.
  
  Further, services provided by any person as an intermediary to a business facilitator or a business correspondent for these services have also been exempted from service tax.
  
  PMJDY, a national mission on financial inclusion, was announced by Prime Minister Narendra Modi in his Independence Day 2014 speech and was formally launched by him on August 28 the same year with the main objective of covering all households with at least one bank account per household across the country.
  
  So far, over 18.7 crore accounts have been opened under the scheme. As per RBI guidelines, the accounts that can be opened under PMJDY are basic savings bank deposit accounts (BSBDA) which can be of zero balance.
  
  Deposit in accounts opened under the government’s flagship financial inclusion programme has exceeded Rs 25,000 crore.
  
• Government in overdrive to rein in prices of pulses
  Even as retail prices of pulses continued to exceed Rs 200 a kg in some cities, the Centre stepped up its countrywide crackdown on hoarders and black marketers. The central government claims to have seized around 50,000 tonnes of pulses so far from 10 states, about 15,000 tonnes in the last few days alone.
  
  The government is planning to create a buffer stock of about 500,000 tonnes, purchasing it directly from growers. From November, it is expected to start purchasing 40,000 tonnes of pulses through the National Agricultural Cooperative Marketing Federation of India and scale this up gradually. Some officials say a Cabinet note on this is being considered.
  
  Earlier this month, minister of state for agriculture Sanjeev Balyan had announced a plan to purchase about 40,000 tonnes of pulses directly from farmers, for sale at a later date.
  
  Meanwhile, preliminary rabi sowing data showed the area under pulses doubled to 0.98 million hectares as of Friday from 0.47 million hectares during the corresponding period last year, as farmers seem to have reacted to the price signals. Rabi sowing starts in October, while harvesting begins in March.
  
  Recently, the Centre had extended the stockholding limit on pulses to include importers, exporters, departmental stores and licensed food processors.
  
  India imports three-five million tonnes (mt) of pulses annually. In the 2014-15 crop year (July-June), consumption of pulses in the country was estimated at 23 mt, against an estimated production of 17 mt.
  
  With an estimated 1.82 mt drop in pulses production in 2014-15, owing to drought in the primary growing regions of Maharashtra and Karnataka, the prices of pulses, led by tur, jumped sharply. In the past three months, tur prices have doubled to Rs 180-220 a kg across the country.
  
  Since October 18, a day the Centre announced stock limits, the prices of pulses have moderated 10-15 per cent in both the spot and futures markets. Chana prices for delivery in November, for instance, fell 8.5 per cent to Rs 4,874 a quintal as of Friday, compared to its recent peak of Rs 5,329 a quintal. In wholesale markets in the national capital, urad prices fell about Rs 200 a quintal.
  
• Exports sector providing good employment
  According to Labour Bureau report, for the quarter ended March 2015, with exports contracting consistently, sectors such as leather, automobiles and gems and jewellery have begun to shift their hiring away from export-oriented units and boost employment in other areas. The textiles and metals sectors, however, are still increasing employment in their exporting units, though export growth has been rapidly decelerating.
  
  The textiles sector, including apparels, added 1.6 lakh employees to its exporting units in the quarter. To put it in perspective, textile exports grew by 17 per cent in the March quarter of 2014 and the sector added 1.9 lakh employees to its exporting units during those three months. In the quarter ended March 2015, the sector added 1.6 lakh export-oriented employees, though export growth slumped to just 0.2 per cent.
  
  The metals sector is following a similar trend. It actually reduced its export-oriented employment in the quarter ended June 2014 by 11,000 employees, though exports grew 22 per cent.
  
  The metals sector is following a similar trend. It actually reduced its export-oriented employment in the quarter ended June 2014 by 11,000 employees, though exports grew 22 per cent. In the quarter ended March 2015, exports grew at a much slower 15 per cent; yet it added 39,000 employees to its workforce in exporting units. This trend of slowing export growth but increasing export-oriented employment is apparent in the previous two quarters too.
  
  Other industries are following a more predictable path. The leather, automobiles and gems and jewellery sectors have either reduced the additions to the export-oriented workforce or downsized it. Instead, most of these sectors are favouring their non-exporting units.
  
  The leather sector, for example, laid off 14,000 export-oriented employees in the quarter ended March 2015. This follows the retrenchment of 7,000 employees in the previous quarter. In comparison, the sector reduced just 4,000 people from its non-exporting units in the quarters ended December and March combined.
  
  The automobiles sector added just 7,000 employees to its exporting units in the six months ending March 2015. It added 44,000 employees to its non-exporting units in the same period.
  
  The gems and jewellery sector had added an average of 12,000 export-oriented employees every quarter until December 2014. But it added just 1,000 workers between then and March 2015.
  
  Overall, the sectors selected by the Labour Bureau added a total of 2.6 lakh employees to their non-export units and 2.7 lakh employees to their exporting units.
  
• PM Narendra Modi lays foundation stone of JNPT’s Rs 7,900 cr 4th terminal in Mumbai
  Indian Prime Minister Narendra Modi on 11th October laid the foundation stone of an ambitious project which will more than double the capacity of the country’s largest container port JNPT in next two years.
  
  Modi laid the foundation stone at Jawaharlal Nehru Port Trust (JNPT), situated off the financial capital’s eastern seafront, for the Rs 7,900 crore fourth terminal projects to be carried out in two phases.
  
  The port aspires to be among the top 15 of the world with the implementation of several infrastructure projects, including the fourth terminal. At present it is ranked 31st.
  
  The terminal will help the exim trade, and comes at a time when the country is aspiring to be a manufacturing powerhouse which is clear through the government’s flagship ‘Make in India initiative.
  
  The fourth terminal project is being executed by Bharat Mumbai Container Terminal, a subsidiary of Port of Singapore, on a design, built, fund, operate and transfer basis under which JNPT will get a 35.9 per cent share in revenues. Work on the project has been divided into two phases, entailing an investment of Rs 4,719 crore and Rs 3,196 crore, respectively, and work is expected to be complete by the end of 2017. The project involves construction of two berths of one km in each of the two phases and land acquisition is also minimal as 70 hectares of land will be reclaimed from the sea for each of the berths.
  
  At present, JNPT operates one of the three terminals at the port while the other two are done by D P World and APM Terminals, Kumar had said, adding that addition of the fourth terminal will mean three of the biggest port operators being present at the port.
  
  A corporate film tracing growth of JNPT into the 31st biggest container port globally and projects being undertaken to increase capacity, including a standalone berth and a Special Economic Zone, was shown at the ceremony.
  
• Environment cess on commercial vehicles entering Delhi
  The Supreme Court on 12th October imposed an 'Environment Compensation Charge' (ECC) on commercial vehicles entering Delhi, in addition to the toll tax, from November 1 for four months on a trial basis, in a bid to check high pollution levels in the city.
  
  The charges would be payable at the rates of Rs 700 for light duty vehicles and two-axle vehicles and Rs 1,300 for three-axle and above.
  
  The apex court directed the Delhi Government to issue appropriate notification in this regard as it made clear that these charges would be operative for four months from November 1 till February 29, 2016 on an "experimental basis".
  
• Centre, states complete drafting of model GST law, IGST
  The Centre and states have completed the drafting of model Goods and Services Tax law as well as an integrated-GST (IGST), which will be put up in public domain by early November. The Empowered Committee of state finance ministers is likely to meet this month to discuss the legislations Central GST (CGST), and iGST.
  
  The CGST will be framed based on the model GST law. Also the states will draft their own State GST (SGST) based on the draft model law with minor variation incorporating state based exemption. The drafts of the proposed legislations are based on three principles definitional clarity, certainty in assessment and promoting ease of doing business.
  
  The model GST law and iGST law have been drafted by the officials of both Centre and states. The government has planned to roll out the GST, which is touted as the most comprehensive indirect tax reform since Independence, from April 1, 2016.
  
  The government has already put up three reports of empowered committee on GST on refunds, payment process and registration for public comments by October 31st.
  
• Shipping Ministry to develop 78 lighthouses as tourism centers
  The shipping ministry along with the Directorate General of Lighthouses and Lightships (DGLL) has drawn up an ambitious programme to develop 78 lighthouses in the country as centres of tourism in the first phase under Public Private Partnership (PPP). The identified lighthouses are in Gujarat, Maharashtra, Goa, Karnataka, Kerala, Lakshadweep, Tamil Nadu, Puducherry, Andhra Pradesh, Odisha, West Bengal and Andaman and Nicobar Islands.
  
  The land adjacent to these lighthouses may have hotels, resorts, viewing galleries, maritime museums and heritage museums, adventure sports facilities, thematic restaurants, souvenir shops, LASER shows, spa and rejuvenation centers, to attract the tourists.
  
• India ranked 3rd in global startup space: Nasscom
  After the success in the IT services industries, India has now emerged as the youngest startup nation in the world with over 72 per cent of founders are less than 35 years old. With the presence of more than 4,200 startups, the country has also become the third largest startup base worldwide. By registering a growth of 40 per cent over the last year, India has overtaken Israel to become the third largest startup base after the U.S. and the U.K.
  
  According to a report published by Nasscom in association with research firm Zinnov, around 1,200 tech startups were born in the year 2015, out of which more than 50 per cent focus on e-commerce, consumer services and aggregators business.
  
  Bengaluru remains the hot destination for entrepreneurs to launch their business and was ranked 15 globally. More than 65 per cent of the startups are located in Bengaluru, Mumbai and NCR. Around 26 per cent of India’s start-ups are located in Bengaluru; and NCR and Mumbai had 23 and 17 per cent respectively.
  
  Another reason cited for the growth of the entrepreneur ecosystem is the investment of business tycoons like Ratan Tata and Azim Premji in startups. So far, Mr. Tata has made around 10 investments in startups.
  
  Large Indian enterprises have also formed dedicated corpus to invest in startups. Wipro has set up $100 million VC fund to invest in startups while Infosys has formed a $500 million innovation fund, of which $250 million is dedicated for India.
  
  The report published by Nasscom also reveals many interesting numbers in terms of the activities happening in the Indian startup environment. As per the report, one of the major reasons for India’s growth in the new age business is the rapid increase in the availability of risk capital.
  
  In 2015, Indian startup founders have managed to raise capital to the tune of around $4.9 billion, an increase of over 125 per cent against last year. This is also much higher compared to cumulative funding of approximately $3.2 billion over 2010-14 period.
  
  While the overall VC/PE funding has grown by 2.2 times the seed stage funding has grown by 6.5 times. More than 390 startups have received funding compared to 175 startups in 2014, stated the report ‘StartUp India Momentous rise of the Indian Start-up Ecosystem’.
  
• Cabinet okays one-time funding for highway projects left in lurch
  Languishing highway projects — where promoters have run out of funds and banks are unwilling to lend — will now get a one-time fund infusion from the government to complete the project. However, the promoter will have to return the funds from the toll revenue to the National Highways Authority of India (NHAI) at bank rate plus two per cent. Such funds, which are already applicable in projects implemented on build-operate-transfer (BOT-toll) basis, will now be implemented in projects on BOT (annuity) basis.
  
  The decision was approved by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on 14th October and is seen as a move to revive and physically complete languishing national highway projects.
  
  The decision will allow the provisions of the Policy Circular of NHAI issued in June on one-time fund infusion for BOT (toll) projects to be extended and made applicable in case of languishing projects on BOT (annuity) mode, subject to the condition that after completion of construction of such projects, loans are to be recovered along with interest by NHAI from the annuities payable, bi-annually, through execution of a tripartite agreement among the senior lender, concessionaire and the authority.
  
  The infusion of fund would be a one-time dispensation for all such projects that have been languishing as on November 1, 2014, the statement said, adding that all such cases and the amount of bridge fund required in each shall be approved by the NHAI, on a case-by-case basis.
  
• Central victim compensation fund set up with Rs 200 crore
  The government has introduced the Central Victim Compensation Fund to support and supplement the existing victim compensation schemes notified by States and Union Territories. The fund with an initial corpus of 200 crore rupees will help provide assistance to victims of various crimes especially sexual offences including rape, acid attacks, crime against children and human trafficking.
  
  Women victims of cross-border suffering permanent or partial disability or death will also be compensated under the Central Victim Compensation Fund Scheme.
  
  States have been requested to suitably modify the State Victim Compensation Schemes to reduce disparity in quantum of compensation notified by them and claim financial support from the Central Victim Compensation Fund Scheme.
  
• Cabinet okays RCE of Rs 2904 cr for Kaladan Multi Modal Project in Myanmar
  The cabinet gave its approval for the Revised Cost Estimate (RCE) of 2904 crore rupees for the Kaladan Multi Modal Transit Transport Project in Myanmar. The project will provide an alternate access route to the North-Eastern region of India and contribute towards the region's economic development.
  
  According to Communications and IT minister Ravi Shankar Prasad, being a key connectivity project, it will promote economic, commercial and strategic links between India and Myanmar.
  
  This project was jointly identified by the India and Myanmar to create a multi-modal mode of transport for shipment of cargo from the eastern ports of India to Myanmar as well as to the North-Eastern part of India through Myanmar.
  
  The cabinet also approved upgradation of existing National Institute of Fashion Technology (NIFT) campuses for implementation of reservation for OBC students.
  
  The Cabinet Committee on Economic Affairs (CCEA) gave its nod its ex-post facto approval for a Special Banking Arrangement (SBA) for a loan of 7000 crore rupees with the consortium of Public Sector Banks led by State Bank of India (SBI) and Punjab National Bank (PNB) for settlement of outstanding indigenous urea subsidy bills of fertilizer companies in 2014-15.
  
  CCEA cleared construction of Houses and barracks at various establishments of CISF, CRPF and ITBP at a cost of 3090 crore rupees.
  
  The construction will be done at 68 locations across the country. The cabinet also approved the recommendations of the Committee of secretaries to regularize the 2007 Pay Revision implemented by Coal India Limited (CIL) with effect from 1st January 2007 in the loss making subsidiaries.
  
  The cabinet also approved the payment of Performance Related Pay (PRP) to executives and non-unionised supervisors of CIL and its subsidiaries.
  
• India most attractive investment destination globally for next 3 yrs: EY
  India has been ranked as the most attractive investment destination in the world for the next three years. This was revealed in a survey by Global consultancy firm Ernst and Young. 32 per cent of the business leaders from global corporations polled for the survey said India is the most attractive investment destination in the world, followed by China, Southeast Asia and Brazil. Department of Industrial Policy and Promotion Secretary Amitabh Kant said the finding reconfirms and reaffirms many other recent findings in this regard.
  
  He said the study clearly brings out that there is an increased focus and emphasis on manufacturing and India's growth in terms of FDI will be driven by manufacturing. The survey includes views of over 500 decision-makers from multinational organisations across sectors like industrial, automotive, consumer products, life sciences, infrastructure and technology, among others.
  
• FIPB to fast-track FDI proposals
  Keen to improve India’s attractiveness as an investment destination, the government has now decided to speed up clearances for foreign direct investment proposals and is also in the process of simplifying rules governing such proposals.
  
  The Foreign Investment Promotion Board will now meet twice a month and try to take up all the FDI proposals submitted up to a month before. The government’s decision to hasten and simplify FDI clearances comes at a time when India has been ranked as the top destination for foreign capital.
  
  The objective is to ensure that all FDI proposals submitted to the FIPB up to four weeks before the meeting will be taken up in the first meeting of the month. In the second meeting, all deferred or pending proposals will be taken u
  
  This system of a meeting every fortnight would continue to ensure that there is no backlog of proposal. Simultaneously, the Department of Industrial Policy and Promotion (DIPP) is also working to simplify the consolidated FDI circular to make it easier for investors to comply with.
  
  As part of the exercise, the DIPP is examining how guidelines can be streamlined and sector specific conditions removed. Instead, the investor would be expected to follow norms laid down by the sectoral regulator. Further, the sectoral regulator would also be responsible for monitoring and ensuring compliance by the investor.
  
• Nominal property tax in Hyderabad
  The Telangana government has decided to collect Rs 101 nominal property tax from owners who have been paying Rs 1,200 as annual property tax. About five lakh house owners are likely to benefit from the government decision.
  
  The state government initially mulled completely waiving property tax for those paying Rs 1,000 per year. As per section 202 A(1) of GHMC Act, the state government may exempt any residential building occupied by the owner from property tax where the annual rental value is Rs 600. As per this provision, properties attracting a tax of Rs 156 can be given complete exemption. Similarly, the property tax is very nominal, Rs 4 per year, for houses constructed for the urban poor.
  
• Rs 2,000-cr fund to push financial inclusion: RBI
  The RBI has announced the merger of two different funds to create a new Financial Inclusion Fund- FIF with a corpus of 2,000 crore rupees. In a notification issued in Mumbai, the apex bank said it has decided to merge Financial Inclusion Fund and Financial Inclusion Technology Fund into a single Fund to support 'developmental and promotional activities' of banking services. The new Fund will be maintained by the National Bank for Agriculture and Rural Development - NABARD.
  
  RBI said that the objectives of the FIF shall be to support 'developmental and promotional activities' including creating of financial inclusion infrastructure across the country, capacity building of stakeholders and creation of awareness to address demand side issues. Another of its major objective would be enhanced investment in Green Information and Communication Technology solution. FIF will also provide support for funding the setting up and operational cost for running Financial Inclusion and Literacy Centres.
  
• NITI Aayog suggests various measures to deal with volatility of prices
  NITI Aayog has suggested various measures including enhancing of storage infrastructure and stocking of Onion by Central and State agencies to deal with the volatility of prices of kitchen staple. According to Prof. Ramesh Chand, the member of the Aayog, to reduce effect of weather shock, Onion cultivation in States like Uttar Pradesh should be promoted and its production in kharif season be popularized.
  
  He also advised the Directorate of Economics and Statistics in the Agriculture Ministry to develop reliable price forecast model for Onion and come out with early warning system for it. He said such system would enable the government to take appropriate measures in advance like procurement, regulating export, arranging imports and putting check on hoardings of onion.
  
• TRAI asks telcos to compensate consumers by Rs 1 for call drop
  Telecom Regulatory Authority of Indian, TRAI, has made it mandatory for telecom operators to compensate consumers by one rupee for call drops with effect from first January 2016. The compensation will, however, be limited to three dropped calls in a day.
  
  According to the Telecom Authority the telecom operators should send a message to the calling customer within four hours of the occurrence of call drop and the details of amount credited in his account.
  
  It also said for post-paid customers, the details of the credit should be provided in the next bill. The regulator said it will keep a close watch on the implementation of the mandate as well as the measures being initiated by service providers to minimise the problem of dropped calls and may undertake a review after six months.
  
• No relaxation in CRR, SLR norms, RBI tells small finance banks
  The Reserve Bank of India (RBI) has turned down the plea of entities that have secured licences to set up small finance banks that they be given some leeway in cash reserve ratio (CRR) and statutory liquidity ratio (SLR) norms.
  
  Ahead of foraying into formal banking, these entities have expressed concern over some regulatory provisions. On 17th October, the 10 licence holders met RBI officials to discuss issues such as priority sector lending norms, SLR and CRR requirements, liability management, the nature of bank branches and the capital structure of new banks.
  
  The liability structure of banks was discussed at length in meeting. Currently, about 70 per cent of the borrowings of microfinance institutions (MFIs) are in the form of bank loans. As a non-banking financial company (NBFC)-MFI, an entity doesn't have to keep aside part of the borrowings as SLR and CRR. However, once it converts into a bank, it has to deploy a substantial part of its liabilities as SLR and CRR. This will not only raise the cost of funds, but also limit lending capacity.
  
  As small finance banks with no deposit base, micro-financiers had sought special dispensation so that initially, they didn't have to maintain the same SLR and CRR levels as banks. Besides, banks had limits on inter-bank lending, which would make funding difficult for new banks
  
  Also, most lenders offer loans to MFIs as part of priority sector lending, a win-win-situation for both parties. While lenders are able to meet their priority sector lending targets (40 per cent of the loan book), the borrower has to pay slightly lower rates of interest. Once an MFI is converted into a bank, its existing loans won't be technically treated as part of priority sector lending, both in the books of the lender and the borrower. As such, the lender might fail to meet its targets.
  
  Non-priority sector loans would entail higher interest rates. Currently, banks lend to MFIs at 12.5-14.5 per cent. However, non-priority sector lending would mean higher cost of funds (14.5 per cent).
  
• Sagarmala for promotion of port related developments
  Union Minister Nitin Gadkari chairs first meeting of the National Sagarmala Apex Committee in New Delhi. Sagarmala project is to promote port-led direct and indirect development and to provide infrastructure to transport goods.
  
  The agenda of meeting includes discussions on the concept of Sagarmala, action taken on setting up of Sagarmala Institutional Mechanism and the role of the Centre as well as states in project identification and implementation.
  
  Sagarmala is an initiative that aims at promoting "port-led development" along India's 7,500-km long coastline, with the Shipping Ministry as the nodal ministry.
  
  The prime objective of the Sagarmala project is to promote port-led direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively.
  
• ICRA gives ‘A’ category status to Telangana
  Living up to its image as a rich state, Telangana has gained 'A' category status in the rating of India Credit Rating Agency (ICRA). ICRA had earlier given A-minus to the united Andhra Pradesh, which vindicates the advantage of the bifurcation for the Telangana region.
  
  A communique issued by the Chief Minister's Office (CMO) said the ICRA has given Telangana 'A' category status in recognition of revenue in terms of tax collection. Attracting investment thanks to its industry policy TS-iPASS, Telangana has emerged as economically advanced state, the communique added.
  
  Surveying the states on the basis of their debt repayment capacity, ICRA has given the ratings in which Telangana's growing economic strength has found a special mention.
  
  As against Rs 74.38 national average of per-capita income, Telangana's per-capita income stood at Rs 95.361. with this 'A' category status, Telangana gets priority in terms of availing loan from the national and international agencies, with lower interest rates as compared to the rates imposed on the states with lower rankings.
  
• WB cuts growth forecast for Asia Pacific region for 2015, 2016
  The World Bank has cut its growth forecast for the Asia Pacific region for 2015 and 2016, because of the risks posed from a sharp slowdown in China and raising US interest rates. The bank now expects growth in developing East Asia and the Pacific to be 6.5 percent this year and 6.4 percent in 2016, down from an earlier forecast of 6.7 percent. In September 2015 the Asian Development Bank said slowing growth in China would drag down the developing region's growth to 5.8 percent this year.
  
• Fall in India’s poverty rate: The World Bank has revised the global poverty line, previously pegged at $1.25 a day to $1.90 a day (approximately Rs. 130). This has been arrived at based on an average of the national poverty lines of 15 poorest economies of the world.
  
  The poverty lines were converted from local currency into U.S. dollars using the new 2011 Purchasing Power Parity (PPP) data.
  
  In its latest report ‘Ending Extreme Poverty, Sharing Prosperity: Progress and Policies’, authors Marcio Cruz, James Foster, Bryce Quillin, and Phillip Schellekkens, note that world-wide poverty has shown a decline under these new estimates.
  
  The latest headline estimate for 2012 based on the new data suggests that close to 900 million people (12.8 per cent of the global population) lived in extreme poverty.
  
  Compared with 2011, this number represents continued poverty reduction, as the headcount estimate then, using 2011 PPP data, was 987 million people (14.2 percent of global population). Further, tentative projections for global poverty in 2015 suggest that the global headcount may have reached 700 million, leading to a poverty rate of 9.6 per cent.
  
  With the Sustainable Development Goals adopted in September, seeking to end all forms of poverty world over, the World Bank Group has set itself the target of bringing down the number of people living in extreme poverty to less than 3 per cent of the world population by 2030.
  
  The 2015 Multidimensional Poverty Index (MPI) counts 1.6 billion people as multi-dimensionally poor, with the largest global share in South Asia and the highest intensity in Sub-Saharan Africa.
  
  Though home to the largest number of poor in 2012, India’s poverty rate is one of the lowest among those countries with the largest number of poor, a latest World Bank report notes.
  
  Also in the case of India, with large numbers of people clustered close to the poverty line, poverty estimates are significantly different, depending on the recall period in the survey, the authors note.
  
  Since 2015 is the target year for the Millennium Development Goals, the assessment of changes in poverty over time is best based on the Uniform Reference Period consumption method, which uses a 30-day recall period for calculating consumption expenditures, as per the report. This method, used to set the baseline poverty rates for India in 1990, shows India’s poverty rate for 2011/12 to be 21.2 per cent.
  
  By comparison, the Modified Mixed Reference Period (MMRP), which contains a shorter, 7-day recall period for some food items, leads to higher estimates of consumption and, therefore, lower poverty estimates. More country-specific details will be available once the Global Monitoring Report, using the new estimates, is launched in Washington DC on October 7.
  
  Important points
  • Only 12.4 per cent of India's population lived below the poverty line in 2011-12, it arrived at the figure using its new expenditure cut-off of $1.9 a person a day and the National Sample Survey Office (NSSO)'s new methodology of poverty estimation.
  • If the NSSO's previous methodology is used, the figure stands at 21.2 per cent.
  • The World Bank, which scaled up its expenditure cut-off from $1.25 a day, said India's poverty rate was one of the lowest among developing countries, even if one used the previous NSSO methodology.
  • The new cut-off is based on purchasing power parity (PPP) during 2011; the previous one was based on PPP for 2005.
  • On a list of 10 countries, India's poverty rate of 21.2 per cent was higher than only China's and Indonesia's. However, in terms of the absolute number of poor people, India topped the list for 2011-12.
  • The new methodology is based on a modified mixed reference period, or the measure of MPCE when household consumer expenditure on most food items is recorded for a reference period of the past seven days.
  • For household consumer expenditure on items of clothing and bedding, footwear, education, institutional medical care, and durable goods, a reference period of the past 365 days is used, while expenditure on all other items is recorded for a reference period of the past 30 days.
  • In the previous methodology, based on a uniform reference period, the MPCE was based on household consumer expenditure on each item for a reference period of the past 30 days.
  • The new method is considered accurate, as it converts the 30-day recall to a seven-day recall for food items and to one-year recall for low-frequency non-food consumption items. The World Bank said as a result, expenditure in both rural and urban areas was 10-12 per cent higher than previous estimates.
  • It added from now, revised estimates of consumption expenditure would be used to gauge poverty in India.
  • In 2011-12, the United Progressive Alliance was in power at the Centre. At that time, the estimation of poverty had stirred a huge controversy. The poverty rate of 21.9 per cent for 2011-12, using the Suresh Tendulkar methodology, and 29.5 per cent based on the C Rangarajan model were higher than the World Bank's current estimate.
  • In India, reduction in income-based poverty rates was greater in states with higher initial poverty values, the report said. However, in terms of multi-dimensional poverty, the trend appears to be divergent, with states with less poverty showing greater progress, the World Bank said.
  • Infrastructure has played a crucial role in boosting the earnings of the poor in India. Rural electrification has increased labour supply and promoted girl schooling by redistributing their time to tasks that encourage attendance, according to the report. Investment in rail transportation has helped reduce the impact of adverse weather on agricultural prices and, consequently, real income.
  • The report said at the global level, the number of people living in extreme poverty had likely fallen to 9.6 per cent of the entire population this year from 12.8 per cent in 2012, based on an income cut-off of $1.9 a day.
  • In absolute terms, the number of poor across the world fell from 902 million people in 2012 to 702 million, according to the report.
  • The global poverty target of three per cent by 2030 seems optimistic, as the swift growth through the past decade is unlikely to be repeated across countries. Further, poverty is likely to remain at 20.1 per cent in Sub-Saharan Africa, which accounts for half the global poor.
  • Even if incomes were to rise at the average growth through 1994-2013, global poverty would stand at 5.7 per cent in 2030, with poverty in Sub-Saharan Africa at 26.9 per cent.
  • Poor structural characteristics of impoverished nations, the need to incorporate natural resources in economic decision-making, and adverse climate change were significant challenges to eradicating poverty, the World Bank report said. It added poverty also extended to aspects such as lack of access to basic infrastructure, health, education and employment. Even if income-based poverty was eradicated, it was likely that multi-dimensional poverty would persist in the short run, it said.
  
  
• Subsidies slide to 1.6 per cent of GDP
  According to the Union Government, the Finance Ministry has achieved, over the past one year, restructuring of the expenditure side of the budget: Outgo towards major subsidies is down to 1.6 per cent of GDP in 2015-16 from 2.5 per cent of GDP in 2012-13.
  
  Tax collections, however, could see a minor shortfall of 5 per cent within the targeted Rs.14.5 lakh crore, said Revenue Secretary Hasmukh Adhia. Tax collection will fall short by Rs.50,000 crore, he said, but expressed confidence that economic growth will exceed 7.5 per cent, with the fiscal deficit remaining within the budgeted target.
  
• Technology & services market to touch $350 billion by 2025
  The Indian technology and services market is on track to reach its goal of $250 billion by 2020 and is likely to grow further to $350 billion by 2025, according to a report by Nasscom and McKinsey. The industry’s size is currently pegged at $132 billion.
  
  Spurred by the government’s Digital India initiative, the domestic technology market is also expected to grow rapidly to over $70 billion in 2025 from $34 billion in 2014-15.
  
  Digital India initiatives will catalyse growth of the domestic market…Government departments have committed more than $16 billion to the program — for example, special initiatives to drive smart cities, defence, National Optical Fibre Network
  
  The report ‘Perspective 2025: Shaping the Digital Revolution’ added that the industry created over 5.5 million direct and indirect jobs in the last decade and the next $100 billion of revenues will likely add 1.2-2 million more people to the industry.
  
• Telangana govt announces 50% subsidy on seeds for farmers
  The Telangana Government has announced 50 per cent subsidy on purchase of seeds to reduce input costs for farmers in the Rabi season in view of the Kharif failure. Agriculture Minister Pocharam Srinivas Reddy informed this after a high level review meeting in Hyderabad. He said groundnut and Bengal gram seeds will be supplied to farmers at 50 per cent subsidy.
  
  Accordingly, a 30 kilogram bag of groundnut seeds will be sold at 1400 rupees and 25 kilogram bag of Bengal Gram seeds for 800 rupees. The decision gained significance as the number of farmers committed suicide is on rise due to crop failure in Kharif season. The Government has asked officials to monitor supply of seeds, fertilisers and power on a day-to-day basis and Bankers to issue fresh loans for Rabi season.
  
• 1 lakh crore plan to bolster power sector
  Aiming to meet the power demand in domestic and agriculture sectors and also for the water grid and new lift irrigation projects, the Telangana State government has prepared plans to strengthen the energy sector with an investment of Rs 1.05 lakh crore in the next four years.
  
  According to State Energy minister G Jagadish Reddy, to cater to additional requirement of power for the proposed lift irrigation projects,
  
  The total investment in power sector had been increased to Rs 1.05 lakh crore from Rs 91,500 crore meant for power generation and transmission projects.
  
  The government targeted to increase the power generation capacity to 24,272 MW by 2018-19 from the present 4,365 MW and attain “surplus power”’ status in three years
  
  Under the action plan, the Minister said the thermal projects with 5,880 MW installed capacity were already launched. The Manuguru project with 1,080 MW would be commissioned by December 2016 and Kothagudem (800 MW) and Dameracharla (4000 MW) would start operations in December 2017 and 2018 respectively.
  
  Environmental clearances for all the projects were already obtained. The NTPC also started work on setting up thermal plant with 4,000 MW capacity at Ramagundam as mandated by the Reorganisation Act 2014.
  
  Explaining all measures taken by the government to tide over energy crisis in the State that was left as power-deficit State after the bifurcation, the Minister said the Centre also sanctioned Rs 1,116 crore (out of which Rs 837 crore as grant) under Power For All (PFA) scheme from 2018-19.
  
• New pharma city to come up in Hyderabad
  The new pharma city coming up here will have a separate drug control unit for speedy clearance of regulatory requirements. The Drug Control Department (DCA) is also going the US FDA way by promoting specialisation of inspectors in all verticals of manufacturing for better efficiency.
  
  The Telangana Government had recently announced plan to develop an exclusive pharma zone on about 11,000 acres near Mucherla in the neighbouring Rangareddy district with an in-house pharmaceutical university and research facility. The land acquisition modalities for the project are being examined by the Government.
  
• UNCTAD calls for radical reforms in International monetary to meet SDGs demands
  United Nations Conference on Trade and Development, UNCTAD has called for radical reforms in the International monetary and financial system to meet the demands of the new sustainable development goal, SDGs by 2030. This was revealed in the Trade and Development report 2015 of the United Nation's trade body, which was released in New Delhi on 6th October. The report emphasized: 
  • For long-term investment there is need for right kind of financing vehicles and the government should take dedicated action to correct this shortfall to achieve the development goals.
  • The development banks designed specifically to compensate for the short-fall of private capital flows and market should be strengthened. These banks have accumulated extensive skill and knowledge over the years but their reach is hampered by the limited lending capacity.
  • The rich countries should increase public expenditure; raise wages and boost demand to revive their economies to avoid the global slowdown.
  
  
• Indian economy to grow at 7.5% in 2015: UNCTAD
  India’s gross domestic product (GDP) is expected to grow at 7.5 per cent in 2015, a report released by the United Nations Conference on Trade and Development (UNCTAD) has said.
  
  In the ‘Trade and Development Report 2015’ released on 6th October, UNCTAD pointed out that lower oil prices have eased current account deficits in countries, such as Pakistan and India.
  
  The UN body’s growth estimates are in line with the projections made by the World Bank, and ratings agency Fitch. The RBI, too, revised downwards its projections for GDP growth to 7.4 per cent from 7.6 per cent earlier. India’s growth projection, however, is higher than that of most economies in the world.
  
  China’s growth is likely to slow down to 6.9 per cent in 2015 (from 7.4 per cent in the previous year), as it rebalances the structure of its demand by concentrating more on exports, the report said.
  
  While growth in the global economy for 2015 is expected to remain unchanged from last year at 2.5 per cent, the report warned that rich countries needed to boost demand by increasing public expenditure if a global slowdown is to be avoided.
  
  Increase in public expenditure, such as on infrastructure, has shown very substantial positive multiplier effects in stagnating economies; so public investment should be a key instrument for addressing the so-called secular stagnation now being seen in developed countries, the report added.
  
• IMF cuts India's growth forecast for FY16 to 7.3%
  The International Monetary fund (IMF) has lowered India’s growth forecast for FY16 to 7.3 per cent from its July forecast of 7.5 per cent. Growth is expected to bounce back to 7.5 per cent in 2016-17 on the back of reforms, a pick-up in investment and lower commodity prices, it said in its latest World Economic Outlook (WEO).
  
  Policymakers in India are not confident of the country’s economic expansion at 8.1-8.5 per cent for the current financial year projected by the Economic Survey. Unlike IMF, they are, though, sure that GDP would grow over 7.5 per cent. The United Nations Conference on Trade and Development also projected the economy to expand 7.5 per cent for 2015-16.
  
  If economic growth indeed stands at 7.3 per cent as projected by IMF for the current financial year, the expansion would be same as in 2014-15. Even then, the economy would be the fastest growing large economy, as China’s economic expansion is projected to come down to 6.8 per cent in 2015 from 7.3 per cent in the previous year.
  
  The economy grew seven per cent in the first quarter of the current financial year, against 7.3 per cent in the previous quarter.
  
• RBI relaxes norms for FPI investment in government debt
  Easing norms for foreign ownership of government debt, the Reserve Bank of India (RBI) on 6th October announced higher investment limits in rupee terms in government securities by FPIs (foreign portfolio investors) with a view to bringing in an additional Rs.1.2 lakh crore by March 2018.
  
  The announcement follows a decision by RBI to fix FPI investment limits in rupee terms and raise it in phases to reach 5 per cent of the outstanding stock by March 2018
  
  For the current fiscal, RBI said it had been decided to enhance the limit for investment by FPIs in G-secs in two tranches from October 12, 2015, and January 1, 2016.
  
  The limit will be increased from Rs.1.53 lakh crore to Rs.1.7 lakh crore from October 12 and Rs.1.86 lakh crore from January 1. Additionally, RBI said there would be a separate limit for investment by all FPIs in the state development loans (SDLs), to be raised in phases to reach 2 per cent of the outstanding stock by March 2018.
  
• RBI to be payment aggregator for GST
  The finance ministry on 7th October released three reports on the processes for the new indirect tax regime. These suggested that the Reserve Bank of India (RBI) can act as the aggregator of payments, and businesses will have to mandatorily register with the goods and services tax network (GSTN) portal to avail of benefits of the new tax system.
  
  The reports, prepared by joint sub-committees of the Union finance ministry and the empowered committee of state finance ministers, relate to registration, refunds and processes.
  
  The GSTN portal - IT backbone for the new indirect tax system - will be designed by IT major Infosys by March 31, 2015. The company will also maintain it for the next five years. It won the ~1,380-crore contract from GSTN in September. The portal will have back-end integration with the respective IT systems of the Centre and states.
  
• NMDC to set up steel plant in Jharkhand
  NMDC, the state-owned iron ore miner, said it has incorporated Jharkhand Kolhan Steel, a wholly owned subsidiary company on 29 September for development of steel plant in the state. In an exchange filing, the company said it will be building the steel facility through the special-purpose-vehicle (SPV) route.
  
• RBI liberalises norms for booking of forward contracts
  As mentioned in the fourth bi-monthly monetary policy review, the Reserve Bank of India (RBI) has allowed all resident individuals, firms and companies who have actual or anticipated foreign exchange exposures to book foreign exchange forward and foreign currency and rupee options contracts up to $1 million without any requirement of documentation on the basis of simple declaration.
  
  RBI also said that based on the track record of the entity, the concerned bank may however call for underlying documents, if considered necessary at the time of rebooking of cancelled contracts.
  
• Govt unveils Kisan project; hailstorm app to assess crop damage
  To fasten payment of crop insurance claims to farmers, the Centre launched a pilot programme Kisan, which will use satellite and drone-based imaging and other geospatial technology to get timely and accurate data on crop yields.
  
  Payment of crop insurance claims is done on the basis of crop cutting experiments and the government was concerned over the delays in settlements. Also to access large-scale damage to standing crops, it launched an Android-based app for collection of data of hailstorm.
  
  The app will be used by state agriculture officials and the data will help the Union Agriculture Ministry in having very fast assessment of damage to crops because of hailstorm.
  
  Initially, the pilot study will be carried out in rice and cotton fields in four districts during the ongoing Kharif season in Karnataka (Shimoga district), Maharastra (Yavatmal), Haryana (Kurkshetra) and Madhya Pradesh (Seoni)
  
  It will also be carried out during the 2015-16 rabi season in eight districts in same states to assess the crop yields of rice, wheat and shorghum, the minister said adding that the the programme will be scaled up across the country after assessing the results.
  
  The programme envisages use of high resolution remote sensing data both from satellite and drone-based imaging, sophisticated modelling activity and other geospatial technology for improving the accuracy of crop yield estimation through more efficient crop cutting experiments.
  
  Block level yield estimation and development of a new index based insurance approach, using remote sensing data are also envisaged under the project.
  
  The programme will be jointly conducted by Mahalanobis National Crop Forecast Centre, Indian Space Research Organisation, India Meteorological Department, State Agriculture Departments and Remote Sensing Centres, Climate Change, Agriculture and Food Security (CCAFS).
  
  The app can be used through smartphones for collection of hailstorm data along with photographs and locations and can be uploaded on real-time to ISRO's Bhuvan server. The app will be used by state agriculture department officials for data collection. Even farmers can download the app and send pictures of hailstorm.
  
• G-20 FMs approve global tax reforms' standards
  Finance ministers from India and other G-20 countries have endorsed the final detailed plan for putting in place a coherent and transparent global tax regime to curb artificial profit-shifting ways. Once implemented, the steps would bolster India’s efforts to prevent tax avoidance and illegal fund.
  
  At the G-20 finance ministers meeting, also being attended by Finance Minister Arun Jaitley, the final package of measures for a comprehensive, coherent and co-ordinated reform of the international tax rules was approved.
  
  In a statement on 9th October, the Paris-based think-tank Organisation for Economic Cooperation and Development (OECD) said at the meeting, chaired by Turkish Deputy Prime Minister Cevdet Yilmaz, the G-20 finance ministers expressed strong support for the Base Erosion and Profit Shifting Project.
  
  Earlier on 1st week of October, 2015, the OECD came out with the final detailed action plan for coherent and transparent international taxation norms for multinationals. Artificial profit shifting activities are estimated to be causing up to $240 billion loss annually.
  
  The OECD/G-20 project provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to be artificially shifted to low or no tax environments where little or no economic activity takes place.
  
  The ministers also “renewed a commitment for rapid, widespread and consistent implementation of the BEPS measures and reiterated the need for the OECD to prepare an inclusive monitoring framework by early-2016 in which all countries will participate on an equal footing,” the statement noted.
  
  Measures under the BEPS project will be discussed at the G20 heads' meeting to be held in November in Turkey. Undertaken at the request of the G20 leaders, the work to address BEPS is based on the 2013 G20/OECD BEPS Action Plan, which identified 15 steps to put an end to international tax avoidance.
  
  The final package measures include new minimum standards on country-by-country reporting, treaty shopping and curbing harmful tax practices. The standards on treaty shopping are aimed to end the use of conduit companies to channelise investments.
  
• World Bank pledge 15 billion dollars a year by 2020 to fight climate change
  Ahead of UN climate talks in Paris in November this year, world leaders scramble to reach the 100 billion dollars funding to combat global warming
  
  Just two months before key United Nations (UN) climate talks in Paris, world leaders are scrambling to reach the magic number of US$100 billion in funding to combat global warming and help vulnerable nations cope with the impact of climate change.
  
  Development banks including the World Bank have pledged an additional 15 billion US Dollars a year by 2020 to fight climate change. The officials have said that it would take the world closer to the target of 100 billion US dollars. Just two months before key UN climate talks in Paris, world leaders are scrambling to reach the 100 billion US Dollars in funding to combat global warming and help vulnerable nations cope with the impact of climate change.
  
  The figure, agreed in previous rounds of talks is seen as a make-or-break issue in the years-long negotiations to reach a comprehensive carbon-cutting pact to save the planet from the potentially catastrophic impacts of global warming.
  
• IMF recommends India to launch next phase of economic reforms
  With India's growth rate projected to drop slightly from 7.5 per cent to 7.3 per cent in 2015, the International Monetary Fund, IMF, has recommended the country to launch next phase of economic reforms and improve its business climate for achieving faster and more inclusive growth. The IMF said, in India, while several policy actions have been taken recently, further steps in relaxing longstanding supply bottlenecks, especially in the energy, as well as labour reforms are crucial to achieving faster and more inclusive growth.
  
  It added that lower global oil prices have also boosted economic activity in India and underpinned a further improvement in the current account and fiscal position and a sharp decline in inflation.
  
• Raising wages can boost growth in India, says ILO
  The latest International Monetary Fund report has warned of a global slowdown of economic growth to 3.1 per cent, even though countries such as India and China have been projected as doing relatively better when compared to other advanced economies.
  
  Given this global context, International Labour Organisation’s Deputy Director-General (Policy) Sandra Polaski told that increasing wages through state intervention will be the way forward for India to protect its workers and also shield its economy from the ripple effects of slow growth globally.
  
  Referring to the labour reform policies of the Narendra Modi government, where measures are being taken to make it easy to hire and fire workers, with an eye on foreign investors likely to invest in the country under the ‘Make in India’ programme, Ms. Polaski said that such measures alone cannot guarantee better Foreign Direct Investment (FDI).
  
  More and more investors from the West were finding that ‘portfolio investment’, where bonds and stocks are purchased in the short-term and them sold for a profit, especially with government bonds, provided a higher rate of return, and were opting for it, she said.
  
  Therefore, a balance of domestic demand and increase in export demands was the way forward for countries like India to improve growth.
  
  According to a recent report by the McKinsey Global Institute, India could add 60 per cent to its 2025 GDP by bridging gender gap at work.
  
  At present India seriously lags behind in female labour force participation, having missed its Millennium Development Goal target in this area. To this, Ms, Polaski said relatively strong growth and implementation of MGNREGS has perhaps pushed female labour participation down from 34 % earlier to 28 %.
  
  With the garment export industry suffering due to reduced demand globally, and India’s inability to compete with cheaper labour provided by countries like Bangladesh, she said that tapping into the domestic market was a better way to sustain these industries and also ensure that women, who dominate such industries, get to keep their jobs.
  
• India’s growth faces more domestic than global obstacles: Crisil
  Domestic factors are a bigger constraint for India's shift to a faster growth trajectory than the global factors, according to Crisil, a rating agency. Crisil is a subsidiary of Standard & Poor's.
  
  According to Crisil: 
  • Weak demand, low capacity utilization and high leverage are impediments to reviving the private corporate investment cycle
  • While lower crude oil and commodity prices have helped to rein in fiscal and current account deficits and inflation, slack global growth has hurt India's exports.
  • Reforms aimed at enhancing financial sector access to the unserved and under-served, improving transparency in government decision-making and making it easier to do business will play an important role in pushing growth up over the next two to three years, according to the report.
  • The transition to a sustainable high growth path over the next decade will also require additional reforms such as goods and services tax, along with land and labour reforms.
  
  
• Venture capital funds can now invest 25% in India-linked firms
  To boost entrepreneurship and prevent Indian firms shifting their businesses to foreign countries, Securities and Exchange Board of India (Sebi) on 1st October allowed alternative investment funds (AIFs) and venture capital funds (VCFs) to invest 25 per cent of their funds into foreign companies having an Indian connection.
  
  Until now, India-based VCFs were restricted to invest only 10 per cent of their funds in Offshore Venture Capital Undertakings, while AIFs had no specific guidelines in place with regard to the quantum of such investments.
  
  Such entities include companies having a front office overseas, but back office operations in India.
  
  According to Sebi that AIFs can invest in equity and equity-linked instruments of offshore venture capital undertakings with Indian connection, subject to an overall limit of $500 million (combined limit for AIFs and VC Funds registered with Sebi).
  
  The regulator has put necessary safeguards for the investors by requiring greater disclosures about the associates and managers of the AIF.
  
  Sebi had proposed to raise the limits in April-end after it received representations from the industry, indicating a major shift of Indian entrepreneurs outside India. Many Indian entrepreneurs were setting-up their headquarters outside India with back end operations and/ or research and developments being undertaken in India.