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Mechanisation perks up non-major ports
With increased focus on mechanisation and efficiency, private-owned non-major ports in the country are eating into the market share of government-owned major ports. In the last three years, the share of major ports in total cargo has declined continuously, while that of non-major ports has been increasing. As a result, capacity utilisation of non-major ports was better than their counterparts. Experts said frustrated with growing delays at some of the major ports, shippers and ocean carriers were looking for alternative port options. Data show non-major ports increased their share in country’s total seaborne trade to 44.75 per cent in 2014-15, from 42.90 per cent in the previous year. Also, cargo volumes reached 470.87 million tonne (mt), up from 417.22 mt in 2013-14. That translates into a 12.85 per cent growth in 2014-15 over the previous financial year. On the other hand, the overall market share of major public ports declined from 57.10 per cent in 2013-14 to 55.25 per cent in 2014-15. Cargo volumes stood at 581.34 mt in 2014-15 compared with 555.49 mt in the previous year, a growth of 4.7 per cent. India has 12 publicly-owned major ports.
Govt approves Rs 34,000-cr road projects in Feb; Rs 6k-cr today
Government today approved eight highway projects worth Rs 6,000 crore for six states – Punjab, Jharkhand, Madhya Pradesh, Rajasthan, Himachal Pradesh and Odisha. With today’s approval, the number of projects cleared by Road Transport and Highways Ministry this month so far has swelled to 37, entailing a total investment of about Rs 34,000 crore. “The Ministry has approved eight projects with a total length of about 350 kms and aggregate total project cost of Rs 6,000 crore,” Road Transport and Highways Secretary Sanjay Mitra said. Of these, six will be implemented in EPC (engineering, procurement and construction) mode and two in hybrid annuity mode, he said. The projects approved today include construction of partially access controlled four-lane elevated highway between Samrala Chowk to Ludhiana Municipal limit on NH 95 in Punjab on hybrid annuity mode to be executed at a cost of Rs 910 crore. Another project for Punjab pertains to four-lane Laddowal Bypass (linking NH 95 WITH NH 1 via Laddowal seed farm at Ludhiana) under NHDP on hybrid annuity mode at a cost of Rs 444 crore.
Centre finalising gold policy reforms, Budget rollout likely
forums.bharat-rakshak.com/viewtopic.php?f=2&t=7090&start=1280The Centre has called a meeting on Monday to finalise a proposal to set up a National Bullion Board, an umbrella body to implement gold policies and reforms, as well as a gold spot exchange. Industry stakeholders, representatives from the Indian Institute of Management Ahmedabad (IIM-A)'s India Gold Policy Centre and officials from the commerce and finance ministry will attend the meeting, which comes a week ahead of the Union Budget for 2016-17. According to sources, finance minister Arun Jaitley will announce several measures in the meeting, intended to reform the gold trade. Apart from these two major issues, the finance ministry will also consider duty on dore (unrefined gold) imports, in view of some cases of misuse of concessions in import duty by some refineries in excise-free zones. The move is aimed at ending a one per cent arbitrage by way of lower duty to refineries in excise-free zones. According to sources, the ministry is also considering a proposal to relax the Gold Monetisation Scheme (GMS) to ensure a better response. The Central Board of Direct Taxes had clarified that during raids by the income tax department, gold up to 500g cannot be seized. The finance ministry might allow such gold to be monetised under GMS without producing evidence of purchase.
GoI brings power to 5537 villages so far this fiscal year
The government said Monday 5,537 villages have been electrified in the current fiscal till date under the Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY). "258 villages have been electrified across the country during previous week (February 15-21, 2016) under the Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY)," the Ministry of Power said in a statement. Out of these electrified villages, 120 belong to Odisha, 64 Jharkhand, 41 Assam, 19 Madhya Pradesh, 8 Rajasthan, and 6 Chhattisgarh, it said. "In 2015-16, 5,537 villages have been electrified till date. Out of the remaining 12,915 villages, 9,026 are to be electrified through grid and 3,381 through off-grid where grid solutions are out of reach due to geographical barriers, (among others)," it said. In view of Prime Minister Narendra Modi's address to the nation on Independence Day last year, the government had decided to electrify 18,452 villages within 1,000 days i.E. By May 1, 2018.
Land acquisition pace up after enhanced compensation: Nitin Gadkari
"People are queuing up to offer their land for highway projects after enhanced compensation. In fact enhanced compensation in the RFCTLARR Act has proved a boon in disguise," Road Transport, Highways and Shipping Minister Gadkari said at a TV programme here. Gadkari said in rural areas the farmers were getting four times of the earlier compensation while in urban areas it was twice of the previous fixed compensation. The move will lead to rolling out projects worth crore of rupees embroiled in about 2,000 cases. The minister said of the 9.8 lakh crore of NPAs of the banks, 3.8 lakh crore belonged to the road sector but a series of meetings led to rolling out of these stuck projects. He said the government could slightly miss the target of building 30 km of road a day this fiscal but was trying hard to achieve it. The present road building pace is 18 km a day. He said the target to award projects for 10,000 km will be achieved.
Govt working on creation of financing agency for higher education
The HRD ministry is actively working on the contours of a Higher Education Financing Agency (HEFA), which has been proposed with the aim of funding infrastructure creation at top educational institutions like the IITs and IIMs. Senior officials said deliberations are on and HEFA is likely to be formed as a company under Section 8 of the Companies Act. It will be chaired by the higher education secretary. Since it is going to be a non-banking financial company, the HEFA CEO would have to be a professional, most likely from the banking sector, while the Board would be a mix of donors and institutions chosen on a rotation basis, said an official. In his budget speech last month, Finance Minister Arun Jaitley had said the government would set up HEFA with an initial base of Rs 1,000 crore and the organisation will leverage funds from the market and supplement that with donations from corporate social responsibility (CSR) funds to meet infrastructure requirements of the country's top educational institutions. Sources said it is aimed that from an initial corpus of Rs 1,000 crore, the fund, over the next five years, would grow to over Rs 20,000 crore through leveraging of the markets and CSR contributions. It will provide interest-free loans to higher educational institutions for constructing new campuses, expanding or renovating existing infrastructure and creating state-of-the-art laboratories. It is proposed that all central and state higher educational institutions be made eligible for joining as members of HEFA, subject to certain conditions, an official said.
No Proof Required: The best government for fiscal discipline
Budget 2016-17 has met with near universal approval for its commitment to the path of fiscal consolidation (and focus on agriculture). On deeper investigation, the path of fiscal consolidation for the current fiscal year is even more impressive than credited by experts. As is well known, the accounts for any fiscal year run from April to March. Throughout this article, a fiscal year will be represented by the first year — that is, April 2015 to March 2016 is year 2015. The world, including India, has been going through a long period of declining inflation — the world since the crisis year of 2008, and India since the exit of the UPA-led government in May 2014. If this decline is broadly structural then it is likely that the government will consistently miss the targeted nominal GDP growth. This has been happening consistently in India since 2011. Inflation (based on consumer price index) in India reached a peak of 13.2 per cent in 2009. Since 1974, retail inflation has been higher just once — in 1991, when CPI inflation hit 16.6 per cent. Now no one, not even the most apologist admirer of the UPA’s dole-onomics, has even dared to suggest that 2009 was a reform year. The financial crisis, which started in May 2008, brought down inflation rates around the world. On the other hand, in India, CPI inflation accelerated by 3.5 percentage points to 13.2 per cent. This was a policy choice made by the UPA government: Increasing doles to win over hearts and minds and votes — the economy and fiscal discipline be damned. In February 2015, the BJP government committed itself to a 3.9 per cent fiscal deficit. This goal involved two separate targets — a target for the nominal revenue and expenditure stream of the government, and a target for nominal level of the GDP. But the denominator (actual GDP) is affected by several factors both domestic (such as weather) and international (such as global growth and oil prices). Essentially, these factors are nearly exogenous to any government. But the numerator (revenue and expenditure) is within the control of the government. The analysis of fiscal discipline should be limited to factors that the government can influence. Our method for estimating real fiscal discipline (RFD) is straightforward. If the nominal GDP level is above the targeted mark for the year, then the fiscal deficit (as a percentage of the GDP) should come out below target; if nominal GDP level is below the targeted mark, then it should come out above the target. The RFD is, therefore, defined as the difference between the actual fiscal deficit and the budgeted fiscal deficit, after adjusting for actual GDP levels. For example, in 2011, actual nominal GDP was 2.7 per cent below target and the fiscal deficit target was 4.6 per cent of the GDP. Since the fiscal deficit target was 4.6 per cent of the GDP, a shortfall of 2.7 per cent in the GDP meant that the adjusted fiscal deficit should be (4.6x(1 + 0.027)) or 4.73 per cent. Note that the plus sign changes to a minus sign if the actual GDP level is above the budgeted level.
New Oil Exploration Policy Is True Market-Based Reform; Dharmendra Pradhan Has Earned His Reform Stripes
This is reform. Real reform. The NDA government’s announcement of a new Hydrocarbon Exploration and Licensing Police (HELP), which replaces the controversy-ridden NELP, is likely to go down as one of its biggest market-oriented reforms to date, possibly as big as the New Telecom Policy of NDA-1, which launched the telecom revolution. The stage has been set to increase oil, gas and coal-bed methane products in the coming years dramatically. The key features of HELP, drafted under the stewardship of Petroleum Minister Dharmendra Pradhan, are that there will be one single licensing policy for all kinds of hydrocarbon (oil, gas, coal-bed methane, shale), market-based pricing for hydrocarbon produced in deep water, ultra deep water, and high pressure temperature areas (that is, places where exploration and production are difficult), and, most importantly, offer licensees bidding based on revenue-sharing instead of profit sharing. With this policy, Pradhan has emerged as one of the unexpected reform icons in the Modi government, after stewarding diesel price decontrol and shifting LPG subsidies to direct benefit transfers. Next on his list could be kerosene, for which pilot projects are underway. Pradhan’s hydrocarbon licensing policy is a big shift from the profit share-based bidding process under the previous New Exploration and Licensing Policy (NELP) that resulted in endless wrangles, heartburn and arbitration involving Reliance Industries’ gasfields in the Krishna-Godavari (KG) offshore areas, among other things. Revenue-sharing is intrinsically easier to define and capture for both parties than profit share, since profit share needs you to calculate both variable and investment costs, often leading to gold-plating of projects by contractors since this enables them to postpone sharing of profits with government. If costs are inflated, the profit share date get pushed back for the government as profits can be made only after full investment and variable costs are recovered. But before Arvind Kejriwal rushes in to say that this was intended to benefit Reliance Industries, the policy explicitly states that HELP will apply only to new offshore oilfield projects that are yet to start commercial production as on 1 January 2016. Reliance can benefit only from bidding in new fields, and it has to win those bids in the first place. The new, liberalised marketing and pricing freedom policy will not apply to contractors who have “pending arbitration or litigation…directly pertaining to gas pricing covering such fields”. Thus Reliance, which has arbitration and litigation going on in respect to its Krishna-Godavari fields, will not benefit from this till it settles with the government. The government’s policy also makes it clear that “all the fields currently under production will continue to be governed by the pricing regime which is currently applicable to them.” In short, it is about future projects, and not current ones. However, the marketing and pricing freedom indicated by the new policy is not total, and the government has put in a ceiling based on the landed cost of imported fuels. The ceiling price to be announced by the government will be the lowest among three prices – the landed price of fuel oil, the weighted average landed price of substitute fuels such as fuel oil, coal and naphtha, and the landed price of imported liquefied natural gas (LNG).
February retail inflation at four-month low of 5.18%
Consumer Price Index (CPI)-based inflation for February contracted to the lowest in four months at 5.18 per cent, compared with 5.59 per cent in January and 5.37 per cent in February last year, on the back of a sharp decline in food prices, data released by the Central Statistics Office showed on Monday. Consumer food price inflation rose 5.3 per cent for February, compared with a 6.85 per cent rise in January and 5.37 per cent in February last year, according to the data. In fact, the CPI inflation for January was the highest in 17 months, raising the prospect of a delay in any further interest rate cut by Reserve Bank of India Governor Raghuram Rajan.
Real estate regulator to be a reality soon, Parliament passes the Bill
There’s good news for home buyers. Real estate regulator will be a reality soon as the Parliament gave its nod to the Bill today. The Real Estate (Regulation and Development) Bill, 2013, was approved by Lok Sabha today, five days after it was passed in Rajya Sabha. The bill seeks to create a set of rights and obligations for both the consumers and developers, according to an official statement. It will make mandatory for developers to set aside 70 per cent of sales proceeds from a project in an escrow account and compulsory approvals prior to project launches. Developers and buyers will be paying same interest rate on defaults. Minister of Housing and Urban Poverty Alleviation Venkaiah Naidu said after passage of this Bill, existing/ongoing projects would not come to a standstill. It does not provide that the existing projects should stop all operations until complied with the provisions of the Bill.
Total PE investments in 2015 at $19.5 billion, best ever for India
Private equity (PE) investments during the October-December period totalled $3.9 billion, taking the deal value for the year 2015 to $19.5 billion — the "best ever" for India, says a report. According to the PwC MoneyTree India report, a quarterly study of PE investment activity based on data provided by Venture Intelligence, the fourth quarter of 2015 saw investments worth $3.9 billion, a 12% drop as compared to the same period of 2014. However, despite the drop, the stellar performance throughout the year helped 2015 become the best year ever, with a total of $19.5 billion worth of PE inflows across 159 deals. "India's macros are looking good, with the current account and fiscal deficit at acceptable levels, a relatively stable rupee, inflation at below 5% and, most importantly, a declining interest rate regime. This should encourage private investment as demand picks up," PwC India leader — Private Equity, Sanjeev Krishan said. Sectorwise, the information technology (IT) and IT-enabled services (IT & ITeS) continued to be the biggest sector, as this space attracted $1.3 billion in 93 deals, followed by the banking, financial services and insurance sector that attracted $910 million in 10 deals. "In 2015, sectors such as banking, insurance and telecom saw the stabilisation of their business and opened up their technology spend over the year, thereby driving the growth of the Indian IT & ITeS industry," PwC India leader — Technology, Sandeep Ladda said. "Media & entertainment sector was a surprise, attracting investments worth $414 million," the report said. Regionally, Mumbai attracted $1.9 billion, while Bengaluru was a distant second with investments worth $733 million.
Govt opens up coal sector beyond Coal India monopoly
Bringing cheer to fuel starved small industries, the Ministry of Coal earmarked 16 coal mines to be allocated to states for sale to MSMEs. This is also the first step towards government’s effort to open up the coal sector beyond monopoly of state owned Coal India Limited. The government released a list of 16 mines which will be allocated to states through transparent auction process. The list is divided into 2 parts -- host state and non-host states. The states will then mine and sell coal to their own Industries - mostly MSME’s. The effort is also to curb black marketing of coal which small industries succumb to as there is supply shortfall from Coal India.
ANIL AGARWAL'S $10-BILLION LCD PLANT TO START PRODUCTION IN 2018
Vedanta group chairman Anil Agarwal's $10-billion LCD screen plant, which is billed as the country's first, will start production in 2018."Panel FAB is expected to begin by 2018 with full production over the next 10 years subject to external environment," Mr Agarwal told PTI in an interview.This will be the largest investment made in setting up of an electronics plant in India.It will be operated by Twinstar Display Technologies and will not fall under any of the Vedanta group companies' current business ambit."The proposed LCD manufacturing unit, the first of its kind in India, will be operated by Twinstar Display Technologies. It is promoted by Volcan Investments Ltd, whose other investments include Vedanta Resources and Sterlite Technologies," he said.Mr Agarwal along with his family holds a majority stake in Volcan Investments. The company clarified that the LCD plant is Mr Agarwal's personal investment and not part of his Vedanta group."We endeavour to make India a significant export hub of display units with the setting up of Panel FAB," he said.At present, all LCD displays used in mobile phones, TV screens and computers are imported. "India is one of the fastest growing markets for LCD panel based products such as TV, smartphones, tablets, desktops and laptops.""By 2020, India's LCD panel import bill is expected to touch $10 billion (about Rs 68,000). Panel FAB will not only significantly reduce this but also earn foreign exchange through exports," Mr Agarwal said.
India's balance of payments swing to modest surplus
India's balance of payments swung to a surplus in October-December, marking a modest upturn in its financial position that analysts believe may prove resistant to global economic fragility. Monday's central bank data also showed a narrowing of the current account deficit and higher foreign investments. Volatile oil prices and worries about China's economy have hit foreign appetite for Indian assets and, while the European Central Bank and the Bank of Japan are providing plenty of monetary stimulus, the US Federal Reserve is expected to continue raising interest rates, although only slowly. The risks to capital flows could be sharper outflows in foreign direct investments and we could also see some slowing of remittances on account of depressed oil prices for a prolonged period," said Shubhada Rao, chief economist at Yes Bank. The fourth quarter balance of payments surplus was $4.1 billion, reversing a deficit of $856 million in July-September. The current account deficit narrowed to $7.1 billion, or 1.3 percent of gross domestic product, from $8.7 bill ..Analysts expect a balance of payments surplus of nearly $15 billion for the full fiscal year ending in March, and a similar surplus in the coming fiscal year. Those are much healthier levels than in 2013, when anticipation of a reining-in of the Fed's then stimulus programme led to big outflows that ballooned the balance of payments deficit and sent the current account gap to a record high of 4.8 percent of GDP. Since then India's economy has picked up and inflation eased, and the central bank is widely expected to cut interest rates by at least 25 basis points at its policy review on April 5. But India's external financial position seems unlikely to improve much from current levels. Foreign investors have dipped in and out of Indian shares and bonds in the past two quarters, and a weakening global economy is raising concerns about exports and remittances. The trade balance stayed in deficit in the December quarter, narrowing to $34.0 billion from $37.4 billion in the previous three months. The capital account, which includes foreign direct investments and portfolio flows, registered a $10.54 billion surplus in October-December, up from $8.58 billion in the previous quarter.
India attracts over Rs 1.28 lakh cr ($22 billion) in electronic manufacturing: Prasad
Total investments in electronics manufacturing sector in India, one of the world's largest consumer electronics market, has crossed Rs 1.28 lakh crore, Communications and IT Minister Ravi Shankar Prasad said today. "When our government came (in 2014), the total investment in electronics manufacturing was around Rs 11,700 crore and as of two days ago it is Rs 1,28,000 crore plus," Prasad said. Government was working towards making India a hub for electronics manufacturing, in which the Centre and states have to play a crucial part, he added. Prasad said India is fast adopting technology and the country is likely to have half a billion Internet users by the end of this year. "It took 2.5-3 years for Internet users to go from 200 to 300 million. It has taken a year to reach 400 million and when Internet service providers said we have reached 400 million, I was really surprised. I think the target of 500 million by 2017... Maybe this will come by this year-end," he said.
India overtakes China in US FDI
Though India's overexposure within the emerging market basket has gradually declined, India has overtaken China in terms of direct equity allocation by US investors. The data released by US Treasury shows India makes up 1.8% of US foreign equity holdings as on December 2015 as against 1.6% of China. US investors direct investment in Indian equities has risen from $7 billion in September 2013 to $12 billion in December 2015.
India Speeds Corporate Registration To One Day Via Centralisation
This is good news for the future vibrancy of the Indian economy. The government has decided that the system of corporate registration is simply too complex and time consuming and has decided to centralise the process. This is expected to bring the time elapsed down to only one day. The economic point here being that of course the number of people setting up new businesses (and perhaps more importantly, setting them up legally) is obviously going to be influenced by the cost in both time and money of setting up a new business legally. Given that we like people setting up such new businesses, that being where the vibrancy and growth of the economy comes from, making this easier is obviously a good idea: In a significant step towards improving the ease of doing business, the Corporate Affairs Ministry will soon centralise the whole process related to registering a new company and strive to complete the processing within a day. The Central Registration Centre (CRC) to speed up services for incorporation of companies, set up by the Corporate Affairs Ministry, is already functional.
India Wants To Make Everything You Buy
India received $222 billion in investment pledges at the “Make in India Week” in Mumbai last month. Prime Minister Narendra Modi’s signature initiative, to transform his country into a “global manufacturing hub,” is catching fire. Modi announced his “Make in India” plan in September 2014, shortly after coming to power in a landmark election, and selling the initiative around the world has been the easy part for the reform-minded, charismatic leader. Foreign direct investment into his country is on the verge of overtaking that of both the United States and China. That’s not too surprising because Modi’s got a great story to tell. India, after all, is by far the most promising of the BRICS. The countries represented by the first two letters, Brazil and Russia, have contracting economies and face intractable problems across-the board. The “C,” China, is heading into a debt crisis as growth stalls and money flees. South Africa, the “S,” is limping. The “I,” however, is roaring ahead. India has the highest growth rate of all the BRICS—the IMF predicts 7.3% GDP growth this fiscal year and 7.5% next year—a relatively stable and open political system, and a near-perfect demographic profile. It is not as if Modi’s plan is novel. In East Asia, it has been tried, with great success, in Japan, South Korea, Taiwan, Singapore and China. Malaysia prospered with its factories, and Vietnam and Bangladesh are now taking that route. The question the Indian prime minister faces, therefore, is whether he is too late to the manufacturing game. Next door to his country is the nation often described as “the world’s factory,” and some say no other will ever replace it. Today, however, its manufacturing sector is ailing. Beijing’s National Bureau of Statistics reports that industrial output increases month after month, but other official figures point to a contraction at least a year old. So do purchasing managers’ indexes.
EPFO to invest more in govt bonds, FinMin hikes limit to 65%
Retirement fund body EPFO can now invest up to 65% of its investible deposits in government bonds, up from 50% currently, a senior official said Tuesday. A proposal by the Labour Ministry in this regard has been approved by the Finance Ministry, which will pave the way for additional Rs 11,000 crore investment by EPFO in government bonds every year. "There was a limit of 50% for investments in government securities. We exhausted that limit. Now, we are getting a lot of instruments (bonds), which were getting us very good returns. With this kind of bar, we were unable to invest (more) in G-Secs," Labour Secretary Shankar Aggarwal said after EPFO's trustees met in New Delhi Tuesday. EPFO has been allowed to invest 5% in equity. Now out of remaining 95%, it can invest up to 65% in government securities, he said. The retirement fund body is expected to receive about Rs 1.12 lakh crore in incremental deposits during this fiscal ending March 2016. The body manages a corpus of over Rs 8.5 lakh crore and has a subscriber base of more than 5 crore.
Highest ever urea output of 24.5 mt in FY16
India had its highest-ever urea production of 24.5 million tonnes in 2015-16. This could lead to reduction of import by two mt, the government said on Thursday. Production was 22.5 mt in 2014-15. Ananth Kumar, the minister, said the next target should be produce 31 mt annually in the next two-three years, negating the need for any import. "In the past year, a silent urea revolution has taken place in the country...a remarkable achievement," he said. Urea's now-compulsory neem coating was also acting as an insecticide and benefiting soil health, he said. Annual domestic demand is estimated at 30 mt. Production had been stagnant in recent years at around 22 mt a year. The rest is met through import. The government is reviving units closed earlier to boost domestic production. Urea is a controlled fertiliser and is sold at a fixed Rs 5,360 a tonne. The difference with cost of production is paid as a subsidy to manufacturers.
Major relaxation in GMS as govt allows long term deposits to be redeemed in gold at maturity
In a major relaxation in gold deposit scheme, the Reserve Bank of India today allowed banks to redeem gold deposited under the scheme in form of gold when deposit is for medium or long term. This was a major demand from temple boards. So far the provision of redeeming gold deposits under the scheme in form of gold or returning gold on maturity was allowed only for short term deposits of short term of 1-3 years. Temples were demanding option to ask for gold on maturity in medium and long term deposits also as returns there were 2.25 to 2.5 per cent compared to much lower returns in short term. So far medium and long term deposits have to be redeemed only in cash equivalent to price of gold at the time of maturity. Today RBI amended gold monetisation scheme giving option of getting gold or cash at maturity. However when a depositor asks for gold at maturity in gold, "an administrative charge at a rate of 0.2% of the notional redemption amount in terms of INR shall be collected from the depositor. However, the interest accrued on MLTGD shall be calculated with reference to the value of gold in terms of Indian Rupees at the time of deposit and will be paid only in cash," said RBI.
Approved solar parks up at 33 in 21 states; solar power capacity crosses 5,000 MW: Piyush Goyal
The total number of approved solar parks has risen to 33 in 21 states with an aggregate capacity of 19,900 MW, an official statement said on Saturday. "As against 25 solar parks planned, the ministry (of new and renewable energy) has approved 33 solar parks in 21 states with aggregate capacity of 19,900 MW," said Solar Energy Corporation of India (SECI) managing director Ashvini Kumar in a statement. The SECI is the implementing agency and has already released Rs.54.93 crore to respective states from the sanctioned Rs.374 crore. Power and New and Renewable Energy Minister Piyush Goyal told a parliamentary consultative committee of his ministry that installed solar power capacity in India has crossed 5,000 MW in January and would achieve the target of 18,000 MW by the end of 2017 At the meeting held in Tirupati, he said India initiated the world's largest renewable energy programme by increasing the existing 3,500 MW by five-fold to 175 GW to be achieved by 2022. The meeting also attended by MPs Bharat Singh, Om Prakash Yadav, Sushil Kishore Singh and Jayadev Galla reviewed the progress made by Solar Park Scheme and National Thermal Power Corporation (NTPC) measures aimed at reducing emissions. MNRE Secretary Upendra Tripathy said the ministry has launched several projects like Scheme for Development of Solar Parks to achieve 20 GW through ultra mega solar parks. Top executive from MNRE, NTPC and National Hydroelectric Power Corporation (NHPC) gave presentations gave presentations on their initiatives.
India jumps to sixth place in top-10 manufacturers list.
With its ranking going up by three places, India has now been ranked sixth among the world's 10 largest manufacturing countries, a UNIDO report has said. The country previously held the 9th rank. The Yearbook, published by the United Nations Industrial Development Organization (UNIDO), finds that in India, the Manufacturing Value Added (MVA) grew by 7.6 per cent in 2015 compared to the previous year. It also said that the quarterly index of industrial production ( IIP) shows 1 per cent growth of manufacturing output in the fourth quarter of 2015 compared to the same period of previous year. "India is now the sixth largest manufacturer in the world," the report said. The report also said that the global growth rate of manufacturing production has slowed to 2.8 per cent in 2015. "This slowdown could be due to reduced manufacturing growth rates recorded by major developing and emerging economies," it added. China tops the list of 10-top industrial producers followed by the US, Japan, Germany and Korea. Indonesia was at the bottom of the list.
NITI Aayog moots tax breaks for electronics manufacturing, plans to dent China's clout
Seeking to capture world electronics markets with China vacating some space in the sector, the government's key body on policy formulation has suggested a series of reforms to kick-start electronics manufacturing under the Make In India initiative, including tax breaks for big investors and a special coastal zone for production. In a new policy paper on electronics manufacturing, NITI Aayog has suggested that with a policy shift, India is poised to make a dent in the global market w .. Read more at: http://economictimes.indiatimes.com/articleshow/51721572.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Services PMI rises to 21-month high
Growth in India’s services firms rebounded in March, rising to 54.3 after a sudden contraction of 51.4 in February, as new business increased markedly, a business survey showed on Wednesday. The seasonally adjusted Nikkei/Markit Services Purchasing Managers’ Index (PMI) has experienced a straight ninth month above the 50 level that separates growth from contraction. In March, incoming new work in the Indian private-sector economy rose at the fastest pace in three years. This reflected on sub-sector growth as Markit reported that five of the six major sectors witnessed growth, apart from transport & storage, which continued to lag. The survey showed March was not different for job creation compared to previous months. The employment sub-index has more or less remained at the 50-mark throughout 2015-16. However, higher workloads encouraged service providers to hire additional staff for the third successive month. Job creation across the private sector as a whole was seen for the sixth straight month, but the rate of growth remained fractional overall.
Tax collection estimate for FY16 crossed
The government says it surpassed the revised (higher) tax collection target for 2015-16 by Rs 5,000 crore, at Rs 14.6 lakh crore. The revised estimate (RE) was Rs 14.55 lakh crore, higher than the original budget estimate (BE) of Rs 14.45 lakh crore. Indirect tax collections have exceeded the RE by Rs 9,885 crore and direct tax realisations were short by Rs 4,000 crore over the revised estimate, said the finance ministry on Wednesday. The total collection, it said, was 17.6 per cent more than in FY15. Indirect tax revenues are Rs 7.11 lakh crore and direct tax collection Rs 7.48 lakh crore. The former exceeded the (original) BE for 2015-16 by Rs 65,618 crore and the RE by Rs 9,885 crore. This was primarily due to the additional duties on petrol and diesel, and the increase in service tax rates. The collection represents a growth of 31.1 per cent over 2014-15. Direct tax collection was 7.6 per cent higher than the 2014-15 receipts.
Only one third of infra projects delayed, cost overruns in 18% of projects
Prime Minister Narendra Modi is starting to see some success in getting infrastructure projects moving again. About a third of more than 1,000 projects valued at 14 trillion rupees ($210 billion) are delayed as of January, down from 42 percent a year earlier, according to government data released on Thursday. Cost overruns have come down from 19.8 percent to 18.4 percent in that time, it showed. Modi has made reviving investment a priority since he took office, taking steps to ease bottlenecks and entice foreign companies to set up factories. Yet bad debt, weak global demand and difficulties in pushing through key reforms threaten to hobble the world’s fastest-growing major economy. “Many of the projects today are stuck because of stressed assets," said Hemant Kanoria, chairman of SREI Infrastructure Finance Ltd. “If someone has gone to the hospital, is taken to the ICU and a quick treatment is not given, the person will die. It’s similar with infrastructure projects." The number of stalled projects fell in the past six months due to faster government clearances in the power and chemical industries, according to a report released by the central bank this week. Proposals to set up new factories remained subdued due to demand uncertainty and muted business confidence, it said. Markets should scale back expectations of a strong cyclical recovery, Deutsche Bank said in a report on April 5, citing data from Centre for Monitoring Indian Economy Pvt., a local research company. It showed that projects are delayed primarily because investors are wary of deploying capital. "While earlier investors complained about problems with land acquisition, availability of raw materials, and delays with regulatory clearances, those factors do not rank high any longer," it said. "The drag now principally comes from a lack of conviction about demand, locally or externally." About 38 percent of the delayed projects are in roads and highways, followed by power and coal, according to the statistics ministry. India’s northeast states marred by insurgency have seen cost escalations as high as 800 percent. Mizoram, a small state in India bordering Myanmar, has waited 18 years for a dam that will generate 60 megawatts of electricity and end its power woes. Construction is finally expected to be finished by October after issues over land compensation delayed the project and escalated its cost by almost four times.
India’s audacious plan to bring digital banking to 1.2 billion people
India is trying to yank its cash-based economy into the 21st century. But how do you get 1.2 billion people, many of whom have never seen a bank or opened an account, to send digital payments to each other? The government’s answer is an effort it has named the Unified Payment Interface. Debuting Monday, it’s a system designed to make transferring and receiving money as easy as exchanging e-mail or text messages. The goal is to bring banking and financial services to hundreds of millions of citizens, many of them poor and disadvantaged, in one fell swoop. The network was created by India’s retail banks and backed by India’s central bank—and they’re confident it will work because it’s built on top of an even more audacious project: India’s biometrics-enabled national ID system, called Aadhaar.
India's forex reserves rise to $359.75 billion: RBI
India gets $ 42 bn FDI during April-February: RBI
Foreign direct investment in the country increased to $ 42 billion during April-February in 2015-16, up by 27.45 per cent from the inflows in the corresponding period of the previous fiscal, RBI said today. The inflows were $ 32.96 billion during April-February 2014-15. The data further revealed that FDI in February was $ 3.2 billion, down from $ 5.14 billion in January. The foreign direct inflows were $ 3.48 billion in February 2015. The net FDI (minus FDI outflow) was $ 34.04 billion during April-February as against $ 29.66 billion in the corresponding period of the last fiscal. As per the Finance Ministry, 98 per cent of foreign direct investment is coming into India through the automatic route and as a “positive sign” the number of applications being routed via the FIPB approval route has started declining.
Industrial output up 2% in February
Industrial output in the country rose two per cent in February after falling continuously for three months, government data showed on Tuesday. The Index of Industrial Production (IIP), down 0.5 per cent in January, was boosted mainly by a 9.6 per cent rise in electricity generation and a five per cent rise in mining output. Cumulative industrial growth for April-February, first 10 months of financial year 2015-16, over the same period of the previous year stands at 2.6 per cent, slightly less than the 2.8 per cent rise for the period a year before that.
Lower food price inflation pulls CPI to 6 month low
Retail inflation, measured by the Consumer Price Index (CPI), eased to a six-month low of 4.83 per cent in March from 5.26 per cent in February, according to data released by the Central Statistics Office (CSO) on Tuesday. Retail inflation was at 5.25 per cent in March 2015. It is trending below the RBI (Reserve Bank of India)'s target of 5 per cent by the end of the current financial year.
India world’s largest remittance recipient in 2015: World Bank
India was the world's largest remittance recipient in 2015 despite experiencing a $1 billion drop from the previous year, the first decline in its remittances since 2009, the World Bank said on Wednesday.India retained its top spot in 2015, attracting about $69 billion in remittances, down from $70 billion in 2014, the World Bank said in its annual report "Migration and Development Brief"."Remittances are an important and fairly stable source of income for millions of families and of foreign exchange to many developing countries," said Augusto Lopez-Claros, Director of the World Bank's Global Indicators Group.."However, if remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges including nutrition, access to health care and education," Lopez-Claros said.
Deals worth over Rs 82,000 cr signed for 141 projects
A total of 141 agreements worth Rs 82,905.75 crore were signed during the two day Maritime India summit which concluded today. This apart, the union ministry of shipping and ports has identified another 240 projects worth Rs 4.50 lakh crore ($66 billion). The ministry has set up investment facilitation centre at the Indian Ports Association for the speedy implementation. The investment deals were for the setting up of liquid cargo handling jetty, development of free trade warehousing zone, development of captive jetty, setting up of container terminal and multipurpose terminal, redevelopment of berths, construction of shallow draft vessels for inland waterways. Some of these deals include JNPT and various private sector entities for projects well over Rs 15,500 crore, Kolkata Port Trust and domestic and foreign agencies for projects close to Rs 6,500 crore, Mumbai Port Trust & different entities for project of Rs 1,800 crore. The Sterlite Ports will redevelop berths at the Mormugao port which envisages investment of Rs 1,420 crore. The state run Shipping Corporation of India signed agreements worth Rs 2,165 crore for long term crude oil transportation, carriage of crude from West Africa to India and acquisition of vessels. The Petronet LNG has signed agreement worth Rs 1,500 crore for setting up LNG terminal and power plant in Andaman and Nicobar islands and development of LNG bunkering facilities at Mumbai, Kandla, Cochin, Chennai, Vizag and Paradip Ports.
India to stop thermal coal imports; save Rs 40,000 crore. Only coking coal to be imported: Piyush Goyal
In view of rising production of the dry fuel, India plans to completely stop thermal coal imports in 2-3 years that would result in annual savings of Rs 40,000 crore, Minister of State for Power, Coal, New and Renewable Energy Piyush Goyal said on Friday. Coking coal, however, would need to be imported, the coal and power minister said at the maiden Maritime India Summit here, adding that his Ministry was ready to tie up with Indian shipping companies for this purpose. Record coal production by the world's largest coal miner Coal India Limited (CIL) helped India reduce its import bill of the dry fuel by more than Rs 28,000 crore in the last fiscal. "I have no hesitation in saying that Indian companies used to import a lot of thermal coal. We want to completely stop the import of thermal coal in the next two to three years. We have already reduced imports by Rs 28,000 crore. We will save Rs 40,000 crore," Goyal said. He said his ministry was ready to enter into pacts with Indian shipping companies for import and transportation of coal. "This is the time for Indians to buy ships, to invest in infrastructure. This is the time for Indian shipping companies to own ships. I am happy to do long-term contracts with Indian shipping companies to transport our coal. Why don't we have a long-term contract," he said.
India's Services Sector grew 10% a year in 2015-16: CII Report
India's services sector contributed about 61 per cent to India's Gross Domestic Product, growing strongly at approximately 10 per cent per annum in 2015-16, a report launched on Wednesday at the second Global Exhibition on Services. The report, published by industry body Confederation of Indian Industry (CII) and KPMG says India is currently the second fastest growing services economy in the world. With the 2015-16 financial year witnessing dismal merchandise trade, the government is betting big on services trade. Incidentally, India's share in global services exports was 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent. The government has called for a renewed focus on the services sector which contributes 53 per cent of the country's Gross Domestic Product, 51 per cent of foreign direct investment and 28 per cent of employment. The government had earlier stated that almost 50 per cent of its current account deficit was met from exports in services. The report states that India's share in global services exports was 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent, placing India in the eighth place currently amongst the top ten exporters of services in the world.
State-run firms likely to launch $1-bn masala bonds in UK
As India gears up to raise funds to meet renewable energy target, state-run companies like NTPC, Power Finance Corp and REC are likely to launch masala bonds worth $1 billion in the UK in the next four months. The bonds, which will be of $150-250 million, are likely to be limited to a band of five to seven years. "Companies, including NTPC, Neyveli Lignite Corporation, Power Finance Corporation, Power Trading Corporation and Rural Electrification Corporation are likely to launch these bonds in the next three or four months in UK to gauge investor appetite," Power Minister, Piyush Goyal said today. These will be subjected to decisions made by the boards of the PSU energy companies, the minister said at a round table -- Financing Renewables and Energy Efficiency, organised by the city of London here.
India’s crude oil import bill halves to $64 bn in 2015-16
India’s crude oil import bill nearly halved to USD 64 billion in 2015-16 fiscal as global oil prices slumped to multi-year lows. India imported 202.1 million tonnes of crude oil in the fiscal year that ended March 31, for USD 64.4 billion, according to latest data available from Petroleum Ministry. This compared to import of 189.4 million tonnes of crude oil for USD 112.7 billion in the previous 2014-15 fiscal. In rupee term, import of crude oil, which on processing converts into fuel like petrol and diesel, was Rs 4,18,931 crore in 2015-16, down from Rs 6,87,416 crore a year ago. While the basket of crude oil India imports averaged USD 84.16 per barrel in 2014-15, it cost only USD 46.17 a barrel in FY16. Indian basket averaged USD 105.52 per barrel in 2013-14.
India overtakes China as top FDI destination in 2015: Financial Times
India has replaced China as top destination for foreign direct investment by attracting USD 63 billion worth FDI projects in 2015, says a report. “India was the highest ranked country by capital investment in 2015, with USD 63 billion-worth of FDI projects announced,” according to fDi Intelligence, a division of The Financial Times Ltd. Also there was an 8 per cent increase in project numbers to 697. Major companies such as Foxconn and SunEdison have agreed to invest in projects valued at USD 5 billion and USD 4 billion, respectively, in India in 2015, it said. “India replaced China as the top destination for FDI by capital investment following a year of high-value project announcements specifically across the coal, oil and natural gas and renewable energy sectors,” the report said. It said the biggest change in greenfield FDI in 2015 was the near tripling of greenfield FDI into India, with an estimated USD 63 billion. “In 2015, India was for the first time the leading country in the world for FDI, overtaking the US (which had USD 59.6 billion of greenfield FDI) and China (USD 56.6 billion),” the report noted.
GoI announces Transforming India economic plan
Transforming India, an ambitious action plan finalised after two months of brainstorming shepherded by Prime Minister Narendra Modi, has recommended a slew of reforms to be implemented by ministries and departments if India has to grow by 10 per cent per annum until 2032. This, according to the action plan, will totally eradicate poverty from India in the next 16 years and also create 175 million new jobs. "Growing at 10 per cent will transform India - India will be a $10 trillion economy with no poverty in 2032," the plan states. In 2015-16, the size of the Indian economy was a little over $2 trillion and the gross domestic product growth was around 7.6 per cent. As part of first steps in this grand plan, the government has set out to implement WTO-compatible procurement norms by 2017-18, achieve 100 per cent rural electrification by May 2018, increase rural teledensity to 100 per by 2020, reach broadband connectivity through optical fibre to all gram panchayats by December 2018 and have 175 million broadband connections by 2017. The 23-page action plan also envisages reforms in the agriculture and allied sectors, including deregulation of genetically engineered (Bt) insect-resistant pulses by 2017-18, creation of buffer stock for pulses by 2017-18 and target 15 million metric tonnes of fish production by 2020. It also plans to implement seeding of Aadhaar number in 90 per cent of ration cards by the end of FY17. PAN (Permanent Account Number) is to be made mandatory for all businesses and entities and serve as unique business identifier also by the end of FY17.
New projects by India Inc touch a new peak
New projects completed by Indian companies have reached Rs 4,58,000 crore in 2015-16, their highest ever. According to the Centre for Monitoring Indian Economy (CMIE), the turnaround follows two consecutive years of declines in project completion. The CMIE expects completed projects will rise in the coming quarters as companies mobilise resources and the government issues orders for new highways and railway projects. CEOs said steps taken by the Modi government to revive investment climate has helped. "After the Supreme Court cancelled coal mines, we acquired a mine in Jharkhand. At the same time, Coal India started marketing its coal aggressively. This helped us restart our power project in Mahan," said Sushil Maroo, executive vice-chairman, Essar Power.
Government takes several measures to curb pulses prices
As price of pulses has started climbing again after last October’s steep rise, the government has taken several counter-measures. These include releasing stocks from the buffer, empowering states to impose stock limits, conducting tax raids on traders in Maharashtra, and sharply increasing the margin on chickpeas futures.The Centre on Friday decided to release 10,000 tonnes of pulses, mainly tur and urad, from buffer stocks. States have been asked to release stocks available with them and they can approach the Centre for more. The Security and Exchange Board of India has told the National Commodity and Derivatives Exchange to levy a special margin of 25 per cent (in cash) on the long side and 5 per cent (in cash) on the short side on all running and yet to be launched chana contracts from Friday. This is second action by Sebi on chana. The regulator on April 13 had imposed five per cent special and five per cent additional margin. The total margin on chana comes to 50 per cent. In October last year, Sebi had imposed virtually 100 per cent margin on chana futures. Sebi has taken this action to control the speculative interest in chana contract, so that the price discovery does not get distorted. Our surveillance system is closely monitoring the contract to ensure market integrity, said Rajeev Agarwal, whole time member, Sebi.
Eight states issued Rs 98,960 cr of bonds under UDAY
The Reserve Bank of India (RBI) on Friday said eights states issued Rs 98,960 crore worth of bonds under the UDAY (Ujwal DISCOM Assurance Yojana) scheme. The bonds, though eligible for market repo, were privately placed so that the bond market doesn't get disrupted. Market repo indicates bonds that can be used as an eligible security to borrow from the RBI. With a coupon that was higher by as much as 75 basis points above equivalent maturity 10-year bonds, and the ability to use them for repo made the bonds attractive buy. Under the scheme, Rajasthan issued Rs 37,349 crore, Uttar Pradesh Rs 24,332 crore, Chhattisgarh Rs 870 crore, Punjab Rs 9,860 crore, Jammu & Kashmir Rs 2,140 crore, Bihar Rs 1,551 crore, Jharkhand Rs 5,553 crore and Haryana Rs 17,300 crore of bonds, RBI's said in a statement on its website.
Temples have given 1,512 kg under gold scheme: Sinha
Banks have collected 1,512 kg of gold from temples trusts across the country under the Gold Monetisation Scheme (GMS) since its launch last November, Minister of State for Finance Jayant Sinha said in a written reply to the Lok Sabha on Friday. “GMS was launched on November 5 and it is too early to make an assessment of the impact of the scheme on the imports of gold," Sinha said. He added that there was considerable reduction in the quantum of gold imports during the past six months compared to the previous year.
Govt to invest Rs 25 lakh cr ($385 billion) in infra, says Gadkari
The government expects investments worth Rs 25 lakh crore in roads, railway and shipping infrastructure over three years, including setting up of 27 industrial clusters at ports at around Rs 8 lakh crore, Road Transport and Highways Minister Nitin Gadkari said on Friday. Speaking at the same event, National Highways Authority of India (NHAI) Chairman Raghav Chandra said it was planning to award projects worth Rs 11,000 crore over the next few years to enhance safety on national highways in a bid to curtail road accidents. According to Gadkari, the government plans to spend an additional Rs 5 lakh crore on road, railway and ports connectivity projects, apart from the expenditure of Rs 8 lakh crore on 27 industrial clusters and building smart cities at ports. The minister also announced the total award of highways projects will rise to Rs 2 lakh crore by May as compared to Rs 1.6 lakh crore at present. He added the figure would rise to Rs 5 lakh crore by May 2017. Gadkari said the pace of road construction had risen from two km (kilometre) per day in May 2014 to 20 km per day now and his ministry had ensured execution of 403 projects worth Rs 3.35 lakh crore, barring 33 projects, where work was stuck.
Core sector grows 6.4% in March
Growth in the eight core sectors jumped to a 16 month high of 6.4% in March due to sharp pick-up in fertiliser and cement production and a commensurate rise in electricity generation. According to the data released by the Ministry of Commerce and Industry on Monday, the eight core industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - comprising nearly 38% of India's total industrial production had a cumulative growth of 2.7% in the financial year 2015-16 ending March. This was lower than 4.5% for the previous financial year. In March this year, fertilizer production jumped by 22.9% followed by cement at 11.9%. Electricity generation also saw a rise of 11.3%. However natural gas continued to fall by the highest margin at 10.5% followed by crude oil at 5.1%. The same sectors had also dipped last month. Steel generation however recovered, growing by 3.4%.
Auto sales in top gear
Sales of passenger vehicles — cars, vans and utility vehicles — surged over 12 per cent in April, thanks to the popularity of newly-launched models and a low base effect. The industry is estimated to have sold 237,149 units in April this year (based on data available for the top 10 players). Maruti Suzuki, Hyundai Motor and M&M reported double-digit growth in domestic sales to dealers. Tata Motors reported a growth of eight per cent after months of decline, thanks to the newly-launched Tiago. On the other hand, Honda and Toyota continue to see double-digit decline in sales.
MMDR amendment to give $6-bn M&A boost
With the Rajya Sabha passing the amendment to The Mines and Minerals (Development and Regulation) Act, about a dozen mergers and acquisitions (M&As) worth $5-6 billion are expected to fructify. The 2015 amendment to the Act, which introduced the auction of mines, had barred the transfer of mining leases in case of asset sales if they had not been allotted through an auction. However, there was no restriction on transfer of mines in case a company was sold through the share sale route. This put several deals in a spot, and some of the deals were called off. Jaiprakash Associates' plan to sell its 5.2 million tonnes per annum (mtpa) cement capacity in Madhya Pradesh to UltraTech Cement for Rs 5,400 crore and Lafarge India's plan to sell 5.15 mtpa cement capacity to Birla Corp for Rs 5,000 crore fell through.
Center sets up dedicated funding agency for roads, ports
The government is setting up a dedicated funding agency in the state sector for highways and ports. The move, road transport and highways minister Nitin Gadkari told FE, is in view of the Rs 25-lakh-crore investments envisaged in these two infrastructure sectors in the medium term. The new institution, on the lines of Power Finance Corporation, which is committed to electricity generation and transmission projects, would be set up with an initial equity capital of R500 crore, the minister said. The new institution, he said, would ensure that road and port projects don’t get crowded out by companies from other sectors While the initial capital base of Rs 500 crore would largely be contributed by the National Highways Authority of India, all 12 major state-owned ports and Shipping Corporation of India (SCI) will also contribute, Gadkari said, adding that efforts would also be made to bring in foreign funds at cheaper rates. “The funding agency would be just like PFC, which finances the power sector. Today’s scenario warrants a financial institution for our sectors as we are doing many projects. Sometimes contractors also need finance. The entity will also help sectoral players get funds at 2-2.5% cheaper than the bank rates,” Gadkari said. Set up in 1986 as a financial institution dedicated to power sector financing, PFC became the largest NBFC operating in the country as of March 2015. As per a government survey, it was the sixth largest profit-making PSU among 290 state-owned firms in 2015
Spending on infrastructure rose sharply in 2015-16
Spends by the government and public sector companies on infrastructure projects rose sharply in 2015-2016. While the value of tenders floated rose 58% to Rs 6.24 lakh crore, contracts worth Rs 3.4 lakh crore were awarded, an increase of 33%, Emkay Research estimates. However, the increases came off a low base in 2014-15 when there was a fall in the value of contracts given out partly because the government was struggling to rein in the fiscal deficit and consequently curbed expenditure. The renewed focus on infrastructure last fiscal saw the government upping spends. The investments are critical as most private sector firms remain over-leveraged and are are not in a position to add fresh capacity. Data released by CMIE showed stalled projects between January and March rose for the third straight quarter. The increase in infra spends will boost the order books of capital goods manufacturers. Engineering heavyweights such as Larsen & Toubro and BHEL have been struggling to win orders as have smaller companies such as ABB and Thermax. However, the government has outlined big plans for the construction of roads and also intends to invest heavily in railways. Indian Railways achieved a capital expenditure of Rs 94,000 crore in FY16, up 44% year-on-year, with IR cutting the timeline for approving projects to six months from 24 months earlier. The government hopes to award 10,000 km of roads in FY17 and has increased the allocation by 25% over that in FY16.The rate of execution per day has picked up for the sector to 15 km per day in the nine months to December, 2015, from 11-12 km per day in FY15.
Odisha iron ore output hits 80MT, highest in 10 years
Iron ore production in Odisha touched an all-time high of 80.86 million tonne (mt) in 2015-16, the highest in last 10 years, recovering from a lowly 47 mt in FY15. Production witnessed a spurt of nearly 50 per cent as the state government passed swift orders for reopening of many iron ore mines that were under shutdown because of the Supreme Court order. The state orders for extending validity of leases were prompted by the amended Mines and Minerals-Development & Regulation (MMDR) Act. According to a report released by Religare on the status of mining in Odisha, the state's iron ore production has returned to the level of FY14 when production was 78 mt. Iron ore output in this financial year is expected to look up as the Supreme Court has asked the Odisha government to consider resumption of the balance 102 mining leases. Moreover, the Odisha High Court, in a recent order, allowed Jindal Steel & Power Ltd (JSPL) to lift inventory (10 mt) from the Sarda Mines.
Cabinet approves flexible coal use policy, to save Rs.25,000cr, cut generation cost by 50p/unit
The Union Cabinet today approved a proposal to relax norms for utilisation of domestic coal aimed at bringing down cost of power generation. The move, Goyal said, will help reduce cost of power generation by 40-50 paise per unit. He expects that this will lead to savings of Rs 25,000 crore per annum in 4-5 years. Earlier, the government has allowed swapping of coal mines by users so that transportation cost can be reduced for generation of power. The government has allowed coal swapping in 19 blocks which brought down the cost of power generation as users were able to source the dry fuel from mines located nearer to them.
Rs 3,000 crore per annum plan to boost nuclear power sector
To increase investment in nuclear power generation, the government is preparing a comprehensive plan spanning over the next 15-20 years with a proposed budgetary allocation of Rs 3,000 crore per annum, Lok Sabha was informed on Wednesday. A recent amendment to the Atomic Energy Act 1962 has created a provision enabling Nuclear Power Corporation of India to seek equity participation from other central PSUs for atomic power projects and this will help in infusing additional capital, Minister of State for the Department of Atomic Energy, Jitendra Singh, said in a written reply in Lok Sabha.
Govt saves Rs 21,000 crore in LPG subsidy
The government could save Rs 21,672 crore of liquefied petroleum gas (LPG) subsidy outgo in the past two financial years (2014-15 and 2015-16), thanks to the implementation of the Direct Benefit Transfer in LPG (DBTL) scheme that eliminated ghost or duplicate connections. Oil ministry’s joint secretary Ashutosh Jindal, who was also present on the occasion, said the savings, thanks to DBTL, stood at Rs 7,000 crore in FY16, compared with Rs 14,672 crore in the previous financial year, due to a slump in crude oil prices.
Services PMI falls to 4-month low in April
Services PMI fell to 53.7 points in April from 54.3 in March as new business grew slower than previous months. A reading above 50 is expansion and the one below is contraction. PMI for services was at a 19-month high at 54.3 in January, which was maintained in March.
Lok Sabha clears bankruptcy code
Amid a surge in bad loans, the Lok Sabha on Thursday approved a Bill to overhaul century-old laws that regulate insolvency. The proposed Insolvency and Bankruptcy Code aims to slash the time it takes to wind up a company or recover dues from a defaulter. The Bill will become a law once the Rajya Sabha clears it. The proposed uniform law will streamline the existing insolvency process which depends on 11 separate laws. Minister of State for Finance Jayant Sinha, while answering queries from fellow lawmakers, described the Code as "transformational" and said it would help India improve its ranking in the World Bank survey on 'ease of doing business'.
RBI proposes relaxation of bank licence requirements
The Reserve Bank of India (RBI) has issued proposals for the relaxation of requirements for banking licences in the latest effort to boost a sector struggling with $100 billion of stressed debt that is choking the financial system and hitting economic growth. With only about half of India's population having access to financial services, particularly in rural areas, the RBI is keen to extend the sector's reach and the new proposals aim to encourage investment in new lenders. The draft guidelines announced on Thursday include a move to allow large industrial companies to buy up to 10% stakes in new lenders. The central bank also proposed a lowering of the minimum ownership level for companies or people setting up lenders under a financial holding structure to 51% from 100%. The RBI emphasised, however, that it would remain cautious when granting licences.
Govt to build 1,000 km of expressways for Rs 16,680 crore
To ensure quicker connectivity, the government plans to build 1,000 km of expressways at an investment of Rs 16,680 crore under its NHDP programme, which include the Vadodara-Mumbai project. "The central government has approved a plan for constructing 1,000 km of expressways under the National Highways Development Project (NHDP) phase-VI at a cost of Rs 16,680 crore on design, build, finance, operate and transfer (DBFOT) basis," Minister of State for Road Transport and Highways Pon Radhakrishnan told the Lok Sabha in a written reply. The main criterion for the selection of expressway corridors is traffic volume, with the government approving the high-density corridor ie Vadodara-Mumbai (400 km) for feasibility study, he said.
India received $40.82 billion FDI till December in FY16: Government
Foreign Direct Investment (FDI) inflows stood at $40.82 billion till December in the fiscal 2015-16, Parliament was informed today. For 2014-15, FDI inflows were $44.29 billion, up 23 per cent as compared to the previous fiscal. Giving details in Parliament about FDI investment in the last six years, Minister of State for Finance Jayant Sinha said foreign investment in most of the sectors is already under automatic route. In 2013-14, FDI inflows were up 5 per cent at $36.05 billion. However, inflows dropped by 26 per cent in 2012-13 to $34.30 billion, after having grown by 34 per cent in 2011-12 to $46.56 billion. But in 2010-11, the FDI inflows were down 8 per cent to $34.85 billion. “Government approval is required for only few sectors which are listed in the consolidated FDI policy,” Sinha said in a written reply to Lok Sabha.
Government looking to create a fund for steel firms under NIIF
Government is looking at creating a fund under India’s first sovereign wealth fund, NIIF, which will address capital requirements of domestic steel companies. The government in December created the Rs 40,000-crore National Investment and Infrastructure Fund (NIIF) as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects. “Government is also working on operationalising National Infrastructure Fund, the sovereign fund, and that is envisaged as a mother fund and within that there will be specific sectoral funds.
Direct benefit transfer to be used for fertiliser subsidy: Government
Government today said it plans to extend the direct benefit transfer (DBT) scheme for health insurance, even as trials are on to use the programme for fertiliser subsidy to check leakage of funds. Responding to queries in Lok Sabha during Question Hour, Minister of State for Finance Jayant Sinha said government intends to use the DBT scheme for health insurance and pensions in the coming days in collaboration with states. For fertiliser subsidy, trials are on in some places to transfer funds through DBT to check leakages by bringing in restrictions, he said.
Modi govt to push big labour reforms, including hire & fire norms
The government is firm on achieving all it can on labour reforms despite political hurdles. In spite of protests from unions, it is unlikely to relent on the proposal to allow units employing up to 300 to lay off workers sans government approval. It is also in no mood to withdraw proposals to make it tougher to form trade unions and bar outsiders as union leaders. Labour minister Bandaru Dattatreya told FE that two labour-related codes — one on wages and another on industrial relations — would be introduced for “discussion and passage” in the monsoon session of Parliament. When asked about the aforementioned contentious proposals, he said: “By and large the provisions will remain the same” as in earlier drafts, hinting that moves to give more labour flexibility to the industry are afoot. While firms employing more than 100 people now require government’s prior approval for labour retrenchment, the minimum employee strength to set up a trade union is 10. The draft code on industrial relations proposes to bar outsiders from being leaders of trade unions in organised-sector units, in what could end the practice of professional trade union leaders, seen by many as detrimental to the interests of both industry and workers.
India knocks China from top of FDI league table
Crony capitalists' wealth in India shrinks, says The Economist
With the government taking several measures to clean up the system, the wealth of “crony capitalists” in the country has dipped, according to a study by The Economist. The study claims that from its peak of 18 per cent of gross domestic product (GDP) in 2008, the crony capitalists’ wealth is now down to three per cent. Its index on crony capitalism across the world is based on work by Ruchir Sharma, the head of the emerging markets teams at Morgan Stanley Investment Management, and Aditi Gandhi and Michael Walton of Delhi’s Centre for Policy Research, among others. The Economist said the crony index is the idea that some industries are prone to “rent seeking” — when the owners of an input of production, land, labour, machines, or capital, extract more profit than they would get in a competitive market. Cartels, monopolies and lobbying are common ways to extract rents. Industries that are vulnerable often involve a lot of interaction with the state, or are licensed by it: for example, telecoms, natural resources, real estate, and defence. India Inc has successfully managed to stop foreign direct investment in several sectors, including insurance and defence, and later made huge capital gains by selling their stake to foreign companies once the sector was opened up.
Q4 corporate results show signs of recovery, fastest growth in 6 quarters
After a poor report card during the first nine months of financial year 2015-16, corporate results for the fourth quarter offer hope of a recovery. The combined net sales of 350 companies, which have declared results so far, were up 5.6 per cent year-on-year (y-o-y) for the quarter ended March 31, 2016. This marked the fastest growth in the past six quarters. Before this, these companies had reported a decline in revenue for four consecutive quarters. The combined net profit (adjusted for exceptional gains and losses) was up 16.9 per cent y-o-y, growing at the fastest pace in the past six quarters. The reported net profit was, however, down 8.8 per cent y-o-y, resulting in a decline in companies' underlying earnings per share. This was largely because of Cairn India, which took an impairment charge of Rs 11,674 crore on account of lower crude oil prices and adverse long-term impact of revised cess on its Rajasthan assets.
States sell Rs 100,000 cr of electricity bonds in first 3 weeks: Goyal
Union Power Minister Piyush Goyal today said within a short span of three weeks the states could sell bonds worth Rs one lakh crore. As per the schedule we will have another round of sale of state government bonds and discom bonds backed by state government guarantees this fiscal. We have already sold Rs one lakh crore worth of such bonds. The plan is all made out and from time to time these will be approved by the Reserve Bank as per a set procedure, Goyal said one the sidelines of the convocation of the Tata Institute of Social Sciences here. On coal availability, he said there was sufficient quantity of stock to the extent that in the past four months the government had to regulate production. He further said to ensure energy security, the government will cut down coal imports further this year and hope to save about Rs 40,000 crore from this. So far, 10 states, including those with heavily indebted discoms like Uttar Pradesh, Haryana and Rajasthan, have signed up for the Uday scheme, launched last year to bail out the broke state electricity boards (SEBs). But highly broke SEBs like that of Tamil Nadu which has huge debt of Rs 80,000 crore, has refrained from embracing the scheme.
The biggest ever fire sale of Indian corporate assets has begun, to tide over bad loans crisis
‘For sale’ tags on airports, roads, ports, steel plants, cement units, refineries, corporate park, among others, are visible. We are seeing what is effectively India Inc.’s biggest ever fire sale. It’s even bigger than the government’s planned divestment target. The Reserve Bank of India’s (RBI) has decided to clean up the balance sheets of Indian banks, which are collectively saddled with Rs five lakh crore of bad loans, by the end of this fiscal. So, the banks have started cracking the whip on Indian companies for repayment of loans. For most affected firms and groups, this will mean they will be forced to sell prized assets to repay their ballooning debts. We are seeing ‘for sale’ tags on airports, roads, ports, steel plants, cement units, refineries, malls, corporate parks, land banks, coal mines, oil blocks, express highways, airwaves, Formula One teams, hotels, private jets, and even status symbol corporate HQs. Substantial stakes in firms, and in some cases entire companies, are on the block. The Hindu reviewed leading corporate houses with billion-dollar loans riding on them, and the results are startling. The top 10 business house debtors alone owe Rs 5,00,000 crore to the banks. They will be forced to sell assets worth over Rs 2,00,000 crore.
Passenger car sales inch up 2% in April, total car+UV sales up 11%: SIAM
Domestic passenger car sales inched up by 1.87 per cent last month, industry data showed on Monday. According to the data furnished by the Society of Indian Automobile Manufacturers (SIAM), passenger car sales during April stood at 162,566 units against 159,588 units in the corresponding period of last year. However, sales of total passenger vehicle, which include cars, utility vehicles and vans surged by 11.04 per cent to 242,060 units from 217,989 units sold in April, 2015. The total passenger car sales rose on the back of healthy demand for utility vehicles (UVs) and vans. The utility vehicles sales rose by 42.83 per cent to 62,170 units, whereas the off-take of vans increased by 16.46 per cent to 17,324 units.
Rs 43,000 crore lies in inoperative EPF accounts: Govt
About Rs 43,000 crore is lying in inoperative Employees' Provident Fund accounts and interest would be credited to such accounts, government said on Monday. Minister of State for Labour and Employment, Bandaru Dattatreya told Lok Sabha that 118.66 lakh claims were settled by the Employees' Provident Fund Organisation (EPFO) in 2015-16, adding that 98 per cent of them were settled within 20 days. "There is around Rs 43,000 crore in inoperative (EPF) accounts," Dattatreya said during Question Hour. Listing the steps taken, the Minister said it has been recently decided to credit interest to the inoperative accounts.
DBT reduces zero balance PMJDY accounts
With all government welfare schemes switching to the direct benefit transfer (DBT) regime soon, the Centre is hopeful that the high incidence of zero-balance accounts in the Pradhan Mantri Jan Dhan Yojana will come down substantially. “With more people becoming beneficiaries under the DBT and receiving cash transfers, there should be a significant reduction in zero balance or no-activity accounts under the PMJDY,” said a senior government official. Insurance cover under the Pradhan Mantri Jan Suraksha Yojana is also linked to these accounts and will improve the transaction status, the official added. The issue of zero balance accounts has dogged the government’s ambitious financial inclusion scheme that was launched in August 2014, with critics pointing out that bank accounts are not sufficient if there is no activity associated with them. Of the 21.68 crore bank accounts opened under the PMJDY scheme, a quarter or 26.39 per cent have zero balance. In the past one year, zero-balance accounts have substantially reduced from a level of 45 per cent in September 2015 with schemes such as DBT PAHAL or cash transfer for cooking gas kicking off.
Indirect tax collections grow 41% in April
Indirect tax collections witnessed an increase of 41 per cent to Rs. 64,394 crore mainly on the account of spurt in central excise realisation. Revenue Secretary Hasmukh Adhia said excise duty mop up in April spurt by 70 per cent to Rs. 28,252 crore as against Rs. 16,546 crore in the year-ago month. “Provisional revenue figures for indirect tax for April 2016 are Rs. 64,394 crore, a 41 per cent growth over April 2015 of Rs. 45,417 crore,” Adhia tweeted. He further said that after discounting for the additional resource mobilisation measures taken in the Budget, the growth in indirect tax collection was 17 per cent in April. As regards collection of customs duty, Adhia said there was 25 per cent increase to Rs. 17,945 crore in April, as against Rs. 14,286 crore in the same month a year ago. Besides, service tax collections grew by 27 per cent to Rs. 18,647 crore in April 2016, as against Rs. 14,585 crore in the same month last fiscal.
FDI tide turns in India’s favour
Foreign direct investment (FDI) inflows into India are on the rise. According to the IMF, FDI refers to “an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor.” FDI is considered one of the most stable forms of non-debt creating capital inflows, with significant positive effects on the economy. In the case of India, FDI inflows have risen rapidly, from $24 billion in 2012 to $44.2 billion in 2015 — a seven-year high. This increase is also fairly broad-based. It is not just the e-commerce (trading) sector that has received more inflows; other sectors such as computer software and hardware, construction, services, autos and the telecom sectors also account for a large share of the increase. Interestingly, even though China continues to attract larger FDI inflows than India in absolute terms, India has started to close the gap, when FDI is measured as a share of GDP. FDI inflows into China have moderated to 2.3 per cent of GDP in 2015, from 2.6 per cent in 2014. During the same period, FDI inflows into India rose to 2.1 per cent from 1.7 per cent. Additionally, one could also argue that the quality of FDI inflow into India is much better. Over the last decade or more, China has accumulated a large stock of FDI. As a result, almost half of the FDI inflow into China includes retained earnings. In contrast, almost three-quarters of FDI inflows into India are fresh equity infusions. The resurgence of FDI inflows into India can be traced to both domestic pull factors as well as global push factors. On the domestic front, India has emerged as one of the fastest-growing Asian economies, while China’s growth has stumbled due to large overcapacity and high leverage. More importantly, ongoing economic reforms in India are likely attracting FDI flows. FDI limits have been increased in various sectors such as defence, railway infrastructure, insurance and construction (to name a few). Incremental reforms aimed at improving the ease of doing business and to improve public infrastructure have perhaps also encouraged long-term investors. What may also have helped are pull factors such as rising labour costs in China. Rising costs in China have partly pushed multinational corporations (MNCs) into shifting production base to South-East Asia, such as Vietnam. India, belatedly, is possibly benefiting from production facilities moving out of China. India has not been a part of the Asian supply chain in the past. Because of their widespread operations, MNCs have tended to segregate their production process into various stages, with different countries specialising in different stages based on their relative comparative advantage (vertical FDI). This led to a rapid rise in trade of components and parts across the supply chains located in various Asian countries. India could become a part of this supply chain in years ahead.
Banks to infuse more funds into stalled road projects
The highways ministry has reached an understanding with banks on infusing funds equivalent to government equity infusion in select stalled projects. State Bank of India (SBI) and YES Bank are among a host of banks that have agreed in principle to handhold some of the troubled projects. THE NDA STRATEGY Around 83 highway projects have been identified as stranded. Barring 15-16 projects, issues concerning the others have been resolved. Following are the key features of the process: Termination of contracts because of underperformance Rescheduling contract deadlines One-time funding by the govt Infusion of matching bank equity Harmonious substitution of operators Union Transport Minister Nitin Gadkari has said all stranded highway projects will get off the ground by May 26. Over a dozen chronic projects were still stalled, a government official pointed out.
India's unthreatening Mauritius tax deal
India had managed to rejig a three-decade-old tax agreement with Mauritius, which foreign investors used to escape the short-term capital-gains tax of 15 percent that locals pay.NEW RATE FOR SHORT-TERM GAINS7.5%The changes mean that profits on shares bought after March 31 next year will be taxed for 24 months at half the domestic rate. From 2019, the advantage of investing via Mauritius will completely disappear. (The capital-gains tax is only on Indian shares or mutual funds held for less than a year.) Foreign investors have about $283 billion in Indian equities, of which $57 billion is from Mauritius. Only the U.S. portion, at $97 billion, is bigger. Upsetting the cozy relationship might sound like a bad idea, but it really isn't. For one thing, the new measures are far from draconian. Gains already accumulated won't be taxed, and a 7.5 percent levy for two years afterward will hardly be a showstopper. At worst, some venture-capital funds will have to tweak the way they control their stakes in Indian startups. Ditto for managers of existing structures that have been legitimately created to garner the tax benefit, such as JPMorgan's Copthall Mauritius Investment, which according to data compiled by Bloomberg owns $1.7 billion of Indian equities. Most such vehicles, however, are small. Deutsche Securities Mauritius, for example, has less than $62 million in Indian shares. Besides, the logic of the tax increase is hard to fault. As long as it remains cheaper to invest in the Indian market from overseas, locals will have an incentive to move wealth out of the country illegally. Apart from abetting corruption, this round-tripping of capital adds to exchange-rate volatility. Closing the loophole is therefore a good start. Restricting the discounted 7.5 percent rate to companies that spend at least $40,000 a year in Mauritius will curb sham operators, if not completely eliminate them. Investing in India via Singapore requires companies to spend $146,000 in 24 months for them to avoid the short-term capital-gains tax.What's more notable is that the Indian government managed to communicate its intention without causing a stock-market rout. That means one of two things: Either the plan really is an honest effort to flush dodgy money out of the stock market; or the devil is in the fine print, and nobody has quite grasped it yet. We'd all better hope it's the former.
New home launches up 27% in January-March qtr at 31,200 units
Launches of new homes increased by 27 per cent to 31,200 units in eight major cities with developers betting on the affordable segment to boost their sluggish sales, property consultant Cushman & Wakefield said. “The residential market, which saw a slump in launches in 2015, saw a remarkable comeback in the first quarter, backed by a six-fold rise in launches in the affordable housing segment…,” C&W said in a statement. As many as 10,952 units were launched during Q1 2016 in the affordable segment in the top eight cities of the country as developers foresee greater demand in this highly price- sensitive segment, it added. Mumbai witnessed the maximum drop in launch price of about 35 per cent during January-March quarter compared with the year-ago period. The other cities include Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad and Pune. The affordable housing segment accounted for about 35 per cent of total launches during Q1 2016. The segment contributed 22 per cent of total unit launches seen in 2015, up from its share of 17 per cent in 2014.
Five Year Plans cancelled, Fifteen Year Vision Documents planned
The National Democratic Alliance government at the Centre, led by Prime Minister Narendra Modi, has decided to get rid of the Nehruvian five-year plans, and replace them with 15-year vision documents. These will be framed keeping in mind the country's social goals and the sustainable development agenda. According to a senior official, the issue was discussed at length and a decision was taken at the highest level. The NITI Aayog has been directed to prepare a vision document at the earliest. The current 12th Five-Year Plan will be terminated in the current financial year, 2016-17.Of-teKuYE52B2YXw/edit#gid=0
Services of entities getting money via Mauritius to be taxed
The recently signed India-Mauritius tax treaty has expanded the definition of permanent establishment (PE) to bring various services offered by entities getting investments through the island country in the tax net. With the introduction of the Service Permanent Establishment clause in the treaty, a foreign company in India will be taxable if its employees spent 90 days in India in the past 12 months, according to the text of the Protocol of the India-Mauritius Double Taxation Avoidance Convention (DTAC) signed on Tuesday. After the amendment, such companies' business income in India will be taxable at 40 per cent, which is the corporate tax for foreign entities.
Steel min seeks similar freight for iron ore, coal
The steel ministry has asked the railway ministry to charge similar haulage rates for iron ore and coal. The steel ministry said the iron ore rate was almost 14 per cent more than that for coal. According to the railways' website, a company needs to pay Rs 213 to transport a tonne of coal 125 km (kilometre) and Rs 241 for a tonne of iron ore. "The steel ministry has been taking this matter up at the Railway Board level since August. However, it has not received a response yet," said a senior government official. "Iron ore is classified under freight class 165. We want it under freight class 145, the same as coal," said a steel ministry official. The railway ministry earlier this week abolished a policy where the haulage rate for iron ore meant for export was higher than the one meant for local use. With the steel industry going through a severe downturn, Union junior steel minister Vishnu Deo Sai said a demand for a comprehensive package had been referred to the department of financial services.
Trade deficit narrows for fourth straight month in April
A plunge in oil and gold imports has trimmed India's trade deficit to its lowest level in more than five years, bolstering the outlook for its balance of payments. The trade shortfall narrowed for the fourth straight month in April to $4.84 billion, its lowest level since March 2011, from $5.07 billion in the previous month, government data showed on Friday. Tumbling global crude prices drove down the oil import bill by 24% from a year earlier to $5.66 billion last month. Overall, India's imports shrank by an annual 23.10% to $25.41 billion. India's balance of payments swung to a surplus in the October-December quarter. Exports, meanwhile, posted their 17th straight fall, contracting by an annual 6.74% to $20.57 billion.
Coal imports decline by 15% to 15.9 MT in April
Country's coal imports fell by 15% to 15.9 million tonnes (MT) in April this year. The imports stood at 18.7 MT in the same month last year. "Provisional coal import figures: Reduction from 18.7 MT in April 2015 to 15.9 MT in April 2016. In value terms, from Rs 8,942 crore to Rs 6,023 crore (32%)," Coal Secretary Anil Swarup said in a tweet. He further said reduction in imports during last fiscal led to a saving of an estimated Rs 24,000 crore in foreign exchange. The government had earlier said in view of the rising production of the dry fuel, India plans to completely stop thermal coal imports in 2-3 years that would result in an annual saving of Rs 40,000 crore. However, Coal and Power Minister Piyush Goyal is of the view that coking coal needs to be imported and his Ministry was ready to tie up with shipping companies for this purpose. Coal India Ltd (CIL) produced 37.5 MT of the dry fuel in April as against the target of 37.6 MT.
The Mauritius Loophole: The Story Of Its Origin And How India Finally Managed To Shut It
Between 2001 and 2011 nearly 40% of all FDI that came to India came from Mauritius - thanks to a loophole that exempted such investments from capital gains tax. India and Mauritius have recently agreed to amend a 1982 treaty between the two countries that would effectively seal this loophole. Here is the story of how (and why) the loophole came into existence. On a hot April afternoon the finance minister got up to reply to an equally hot Lok Sabha. In Bombay (not yet Mumbai) an income tax commissioner had sent out a letter in March to some foreign institutional investors telling them to provide proof that they were genuine Mauritius residents. As soon as the news hit the stock market (4 April) trading in the stock market had collapsed. The foreign investors had begun to do what would be a pattern for the better part of the next decade. They sold securities furiously. The finance minister Yashwant Sinha got up to inform the house, the letter was to be withdrawn immediately. In addition, he promised investors that the government was not planning to do any investigation of the proof of address they had furnished to the Indian stock exchanges. Any proof of address given out by the Mauritius government would be considered as adequate by the Indian tax authorities. Members of the Lok Sabha thumped their desk in appreciation as Sinha made the statement. The markets pulled back. Fifteen years later, his son Jayant Sinha as minister of state for finance in the government has been part of the team that erased this provision from the Indian tax laws. Between April 2000 and December 2015 of the total foreign portfolio investment (investment through stock markets, Sebi data) of $179.32 billion as equity that has flown into India, nearly 35 per cent has come from Mauritius. Any income generated by a person or a company in a country is to be taxed. For residents of a country, this poses no problem. But when the same resident earns money in another country, he is liable to be taxed in that country and back home. To ensure he is not taxed twice, countries sign a double taxation avoidance agreement with each other.
Banks pick up 75% of UDAY bonds
Of the Rs 1.11 lakh crore of bonds issued by the states and their power distribution utilities as part of debt restructuring, close to 75 per cent has been picked by banks, followed by the Life Insurance Corporation of India (LIC) and the Employees Provident Fund Organisation (EPFO). Private sector entities like mutual funds and banks have picked up eight per cent of the bonds amounting to Rs 9,030 crore. The Union government expects a large chunk, amounting to around Rs 3 lakh crore liability accumulated by state power distribution utilities, to be issued as bonds during the current financial year. The bonds were picked up at interest rates ranging 8.58-8.21 per cent, varying according to states, till March 31, 2016. “Interest rates have started to come down in line with the G-Sec rate. They will further come down,” said a power ministry official who did not want to be named.
Following Mauritius, Singapore DTAA pact to be amended
India will amend the Avoidance of Double Tax agreement with Singapore soon. The negotiation process is unlikely to be a long drawn one, since it requires a simple modification, according to officials in the income tax (I-T) department. Indian officials are in the process of reaching out to the Singaporean authorities for the amendment. Singapore will likely get the same two-year transition benefit of 50 per cent capital gains tax like in the case of Mauritius. Limitation of Benefit is much higher in the case of Singapore, a threshold of Rs 50 lakh against Rs 27 lakh for Mauritius. The southeast Asian nation has emerged as the largest contributor of foreign direct investment (FDI) in the last financial year. For the nine-month period between April and December 2015, Singapore accounted for Rs 71,195 crore in FDI against Rs 39,506 crore through Mauritius. The changes to India-Mauritius Double Taxation Avoidance Convention last week has put the focus on a similar treaty inked between India and Singapore in 2005.
India’s receipts from invisible services down 4% in December quarter
India’s receipts from invisible services declined 4 per cent to USD 57.61 billion in the October-December quarter of 2015-16, while payments towards such activities rose by 5.8 per cent to USD 30.67 billion, the RBI said today. Invisibles refer to payments and receipts resulting from international trade in ‘invisible’ services rather than ‘visible’ goods. It comprises services, primary income and secondary income. The RBI released the data on India’s invisibles in accordance with IMF’s Balance of Payments and International Investment Position Manual for October-December of 2015-16. As per the RBI data, the invisibles receipts from services in the third quarter ending December stood at USD 37.89 billion, down 4.4 per cent from a year ago. The receipts from primary income, however, increased by 29.4 per cent to USD 3.79 billion. The secondary income receipts were down by 8.8 per cent at USD 15.93 billion. In the invisibles payments category, services payments from India increased by 2.3 per cent to USD 19.8 billion for the quarter ended December of 2015-16. Invisibles payments from primary income sources also grew by 16.5 per cent at USD 10.21 billion. While that from secondary income, the invisibles payments fell by 25.5 per cent to USD 665 million.
Framework for abolition of Plan, non-Plan classification soon
The government is likely to bring out a framework to remove the existing Plan and non-Plan expenditure classifications from future Budgets, switching to a more globally relevant system of classifying spending as revenue expenditure and capital expenditure. The move will link government spending to its eventual outcome more effectively. The framework is expected to be put in the public domain by July for comments and feedback before the changes are incorporated as part of the upcoming Budget, Business Standard has learnt. The framework on how to switch from Plan/non-Plan budgeting to revenue/capital spending might also provide guidelines for states to switch over as well in a time-bound manner.
Govt reviews interest rates on sovereign gold bonds
The central government, in consultations with banks and the Reserve Bank of India, is finalising a fourth tranche of sovereign gold bonds (SGB). This one is expected to be more investor-friendly and options under consideration include selling bonds also through a stock exchange, via an offer for sale (OFS), where member-brokers can put orders on behalf of investors. There is also some procedural simplification under consideration, say sources. In the earlier tranche, RBI was not able to complete issue of bond certificates; these are being issued now. RBI is sending these wherever possible through e-mails; a demat process is also said to be on. The government is also considering if the interest rate paid, now 2.75% per annum, needs to be aligned with the overall rate structure. Recently, the government cut interest rates on all saving instruments, including postal savings, in line with an overall falling rate structure. At a fixed 2.75%, the government knows the outgo during the tenure.
Made-in-India Campaign Fuels Expanded Bet on Money-Losing Steel
India is doubling down on its money-losing steel industry. Despite a global surplus and a record $47 billion of debt, companies including Tata Steel Ltd. and Jindal Steel & Power Ltd. plan to boost India’s capacity by 34 percent, with a third of the work set for completion by year-end, Bloomberg Intelligence estimates. The expansion may cost $33 billion at a time when many producers are hemorrhaging cash, according to India Ratings & Research. Prime Minister Narendra Modi wants to almost triple the size of the domestic industry over the next decade. He is seeking to reduce the country’s reliance on imports, part of a “Made in India” campaign that predates the global slump. The Steel Ministry estimates capacity will rise to 300 million metric tons by 2025 from 110 million now. So far, 37 million tons is under construction or planned, with 14.5 million set to be online by the end of 2016, said Yi Zhu, a Bloomberg Intelligence senior industry analyst. Steel Authority of India Ltd., the country’s biggest producer, plans to increase capacity to 21.4 million tons from 13.9 million tons, while JSW Steel Ltd. said it will more than double to 40 million tons by 2025 from 18 million now. Tata Steel expects to begin producing this year from its Kalinganagar plant, with a capacity of 3 million tons. But the new wave of expansions comes after years of investment in capacity increases that fueled a global surplus. Domestic iron and steel producers owe banks a record 3.1 trillion rupees ($47 billion), the Reserve Bank of India estimates. To reach Modi’s capacity goal, those companies would have to invest another 12 trillion rupees, based on an estimated 60 billion rupees for every 1 million-ton increase in capacity, according to India Ratings & Research. Demand for domestic supplies has slowed as purchases of cheaper supplies from China, the world’s top producer, surged 20 percent to a record of 11.2 million tons in the year through March, government data show.
Govt to kick off minority stake sale in six PSUs
The department of investment and public asset management is gearing up for minority stake sale in state-owned companies to garner around Rs 6,400 crore in the first half of 2016-17. Over the past week, the department has issued requests for proposals for merchant bankers to assist in stake sales in State Trading Corp, MMTC, NMDC, Oil India, National Fertilizers and Rashtriya Chemicals and Fertilizers (RCF). The Centre plans to sell 15 per cent stake each in STC, MMTC and National Fertilizers, 10 per cent each in NMDC and Oil India, and 5 per cent in RCF. According to the share price of these scrips on Friday, the government could earn about Rs 6,400 crore from these divestments. The sales are expected to be through the offer-for-sale route.
Govt caps royalities to GM seed providers
In a blow to seed technology providers such as Monsanto, the government has capped the trait value (similar to royalty fee) for all new genetically modified (GM) seed technologies at 10 per cent of the maximum sale price. The fee will be capped for the first five years, from the time when the technology is commercialised in India, after which it will be lowered by 10 per cent every year. The government already regulates the retail sale price of BT cotton seeds. Cotton is the only crop in which GM technology is allowed for commercial use in India. Monsanto's Indian subsidiary, Mahyco Monsanto Biotech Ltd (MMBL), has sub-licenced GM cotton seed technology since 2002 to 50-odd domestic seed companies. First it sub-licenced BG 1 technology, which went off-patent in 2006, thereafter, has been sub-licensing BG 2 technology. The GM seeds produced through this technology occupy over 95 per cent of the Indian cotton market. New technology, BG-3, is in the pipeline but its commercial use has not been approved in India so far. Seed companies allege that MMBL collected around Rs 530 crore annually as trait value from Indian seed companies for its technologies. According to estimates, since 2002, MMBL has collected over Rs 7,000 crore as trait value from seed companies alone. The annual Indian GM seed market is worth Rs 3,500 crore. The maximum selling price of BG-2 technology seeds is already being regulated by the government through the Cotton Seeds Price Control Order, 2015.
Gadkari plans financing arm for road, shipping sectors
Union minister for roads, transport and shipping Nitin Gadkari says he wants to set up a financing corporation for the two sectors. And, push the bureaucracy to take quick decisions to make banks plough more money into projects. A proposal for setting up the corporation will be placed before the Cabinet for approval. “It will give a sense of security to banks to deal with projects from these sectors,” he said in an interview with Business Standard this week. According to him, these will be the fulcrum of his plans to revive investments in the infrastructure sector, which had slipped badly in the past few years. According to Gadkari, the proposed corporation will be in addition to the role of the National Highways Authority of India, which, too, raises finances for the road sector.
Public Debt Falls To Rs.55.73 Lakh Crore At Fiscal-End
India's public debt declined marginally to Rs.55.73 lakh crore at the end of the last fiscal in March, registering a fall over the previous quarter of 0.04 per cent, an official statement said on Monday. Government debt (excluding liabilities under the Public Account) was at Rs 55.75 lakh crore at the end of December 2015, said the quarterly report on debt management released by the finance ministry. Government's domestic borrowing for 2015-16 have been revised downwards, it said. Government issued dated securities worth Rs.84,000 crore to complete its gross borrowings of Rs.5,85,000 crore for FY 16. "Gross and net market borrowing requirements of the government for FY16 were revised lower to Rs.5,85,000 crore and Rs.4,40,608 crore, which were lower by 1.18 percent and 2.75 percent, respectively, than Rs.5,92,000 crore and Rs.4,53,205 crore in FY15," it said. "The cash position of the government during Q4 of FY16 was comfortable and remained in surplus mode during the quarter. The issuance amount under Treasury bills was also broadly as per calendar," it added. The outstanding internal debt of the government at Rs.5,130,179 crore constituted 37.8 percent of GDP at end-March 2016, as compared to 38.7 per cent of GDP at end-December 2015. Central government dated securities continued to account for a dominant portion of total trading volumes in the fourth quarter of 2015-16, it said. Net inflows in the form of foreign direct investment during the quarter in question were robust and more than sufficient to fund the external financing requirements, the report added. During 2015-16, there has been an accretion of $18.54 billion to the foreign exchange reserves which touched $360.1762 billion at end-March 2016.
Govt eyes Rs.25 lakh crore ($385 billion) infrastructure investments to create 40 million jobs by 2019
Government expects investments worth Rs 25 lakh crore in the infrastructure sector by 2019 which will help generate 4 crore jobs, Union Minister Nitin Gadkari has said. “First two years were spent in correcting the legacy we had inherited of stalled projects. We could manage to award projects worth Rs 2.5 lakh crore only as most of our efforts were directed towards addressing roadblocks. The infrastructure space was one of the worst victims and things were at standstill. Yet, with our grit we bulldozed majority of the problems impeding growth. “We expect investments worth Rs 25 lakh crore in the sector in the next three years. We rolled out the majority of the 403 stuck projects worth Rs 3.85 lakh crore. The developers who were shying away were brought back again and now the stage is set for an unprecedented work,” Road Transport and Highways Minister Gadkari told PTI in an interview.
Govt seeks bids for first oil/gas field auction since 2010
Government is putting up for auction nearly four dozen small oil and gas fields in the first such sale in six years, the country’s oil ministry said in a newspaper advertisement on Tuesday. A successful auction of the small oil and gas fields is seen as crucial to a recently announced hydrocarbon policy, which India hopes will unlock energy resources worth $40 billion by simplifying rules and offering pricing incentives. The world’s fourth-biggest oil and gas consumer imports nearly three-quarters of its energy requirements, but Prime Minister Narendra Modi has set a target of cutting its fuel import dependency to two-thirds by 2022 and to half by 2030. India is auctioning a total of 46 oil and gas fields, the oil ministry said, with 26 on land, 18 offshore in shallow water and two in deep water. The deadline for submitting the bids is on Oct. 31, with companies free to try for more than one exploration block.
Amid big red flags, small green shoots point to uptick in economic growth
The most significant pointer to an uptick is a rebound in sales of light commercial vehicles such as pick-up and mini trucks used for last-mile connectivity, indicating improving economic activity. More than this, it is the motorcycles story — which represents more rural than urban demand — that is getting India Inc excited. “Rural India is more a motorcycle market given the difficult roads. Here sales are lighting up,” says Sunil Munjal, Joint Managing Director, Hero Motors, the largest two-wheeler manufacturer in India. Total motorcycle sales increased 16.24% in April and sales of scooters, more an urban choice, jumped 35.86% in April. “The larger picture is quite clear now, you can see growth across some geographies and some industry sectors,” adds Munjal, who is also a past-president of the Confederation of Indian Industry. Motorcycles sales have been growing in two digits since January this year, after a marginal 0.44% increase in December 2015. But more credible signals are those emanating from the commercial vehicles (CVs) segment, which has a strong correlation with economic activity. And within CVs, it is growth in light commercial vehicles (LCVs) that has raised hopes now. “It (LCV sales) has picked up in the last three months. This is a huge positive,” says RT Wasan, Vice President, Sales and Marketing, Tata Motors, the largest player in the commercial vehicles market. Higher infrastructure spend (roads and rail) and higher expenditure by many states resulted in higher demand for cement, fertilisers, steel and metals, which, in turn, spurred commercial vehicle sales in 2015-16. Sale of heavy and medium commercial vehicles jumped 30% last year. But LCVs had remained flat. Over the last four months, LCVs shifted gears. For Tata Motors, LCV sales continued to decline till November 2015. It turned the corner in December and continue to grow during January-March. Oil volumes have also been rising for a while now. In fact, India saw the largest volume growth globally according to the International Energy Agency, which in its latest monthly oil report released on May 12 said that with demand at 4.4 million barrels a day in the first quarter, India is the world’s fourth biggest oil consumer behind US, China and Japan. Over the last couple of months, cement sales perked up, too, backed by higher off take in certain states such as Andhra and Telangana, road freight rates have firmed up, and even power demand growth has remained steady.
More PF money in equity
The Employees' Provident Fund Organisation (EPFO) will increase its investment in the equity market beyond the present 5 per cent despite a dismal 2 per cent return in the first year, the government today said. Labour minister Bandaru Dattatreya told reporters that the EPFO had invested Rs 6,700 crore, 5 per cent of its investible funds, in equities since last July. The return till date was a gain of 1.68 per cent. "Equity is a long-term investment. World over the trend shows that the profit is high. We have held some discussions. We will again discuss with the Central Board of Trustees (CBT). It will be an increasing trend," Dattatreya said. Labour secretary Shankar Aggarwal said investible funds available with EPFO every year are around Rs 1.2 lakh crore. The CBT, a statutory body representing the government, workers and industry, may meet soon to decide on the PF interest rate, he said. Nearly 40 million workers and employees contribute to the EPF. The EPFO corpus of Rs 7.5 lakh crore is largely invested in debt, while 5 per cent is invested in equity. Trade unions have opposed the move to increase the investment in equities. AITUC general secretary Gurudas Dasgupta has said it was a dangerous move.
Govt plans GST roll-out from April 2017
The Union government is confident it would be able to garner an adequate number of votes in the Rajya Sabha to ensure the passage of the Constitution amendment Bill on goods and services tax (GST) during the forthcoming monsoon session of Parliament. Based on this, it has already begun working on a timeline that envisages roll-out of the GST regime from April 2017. Top government sources told Business Standard that all political parties other than the Congress and the All India Anna Dravida Munnetra Kazhagam (AIADMK) have supported the GST Bill. AIADMK leaders are understood to have indicated that their members in the Rajya Sabha would not come in the way of the passage of the Constitution amendment Bill on GST. The understanding is that AIADMK members in the Upper House would abstain at the time of voting. This is expected to help the government as the Congress, whose strength is already reduced, would be further isolated, paving the way for the passage of the Bill. According to the current government thinking, the Constitution amendment Bill is likely to be taken up for discussion and voting in the Rajya Sabha during the very first week of the monsoon session. This will give adequate time for the Bill to be sent to states, so that at least half of them could approve it. Once that is obtained, the government plans to introduce two GST Bills, whose passage should not be a problem as these would be money Bills, for which the Rajya Sabha's approval is not mandatory. These Bills could be approved by Parliament either in the winter session or in the first half of the Budget session next year. The government's confidence on rolling out GST from April also stems from its internal assessment that most chief ministers are in favour of the new tax regime that would introduce uniform rates and improve the ease of doing business.
Capital goods policy gets nod, aims to triple output
The Cabinet on Wednesday approved a policy for the capital goods sector, aimed at increasing production to Rs 7.5 lakh crore by 2025. Apart from tripling the sector's production from Rs 2.3 lakh crore now, the policy aims to increase direct and indirect employment from 8.4 million to at least 30 million by 2025.
Govt mulls 10-year tax holiday for low-value electronics manufacturing
In a major shift in strategy, the BJP-led NDA government could soon incentivize low value added electronics manufacturing in India as against high-value added products encouraged by its predecessor besides granting a 10-year tax holiday to manufacturers setting up base in India. "A ten-year tax holiday for a firm that invests $ 1 billion and provides employment to 20,000 people may be considered," the draft policy has recommended. Citing the example of manufacturing of i-phones in China, NITI Aayog has recommended not to shun low value addition per unit. "If produced on a large scale, low value addition per unit still translates in a large total value addition and large number of jobs," it said.
Why Jan-Dhan Yojana is gaining currency in Uttar Pradesh & West Bengal
As the Modi government enters its third year, one of its flagship scheme — Jan-Dhan Yojana — seems to have more takers in Uttar Pradesh and West Bengal than any other state. Data show that the two states account for more than one-fourth of deposits accrued so far. As of May 18, Jan-Dhan Yojana had garnered deposits of around Rs 37,775 crore. Of this, the share of Uttar Pradesh was Rs 5,916 crore, while West Bengal’s was Rs 4,932 crore. Thus, the two states accounted for nearly 29 per cent of deposits amassed so far. Also, Uttar Pradesh and West Bengal account for 24 per cent of total accounts opened under the scheme. So far, about 219 million accounts have been opened under Jan-Dhan Yojana, of which around 57 million are zero-balance accounts.
Centre lowers foodgrain price for welfare plans
The food ministry has lowered the prices at which it sells wheat and rice for the mid-day meal programme and the Integrated Child Development Scheme On two years of the Narendra Modi government, the food ministry has lowered the prices at which it allocates wheat and rice for the mid-day meal programme and the Integrated Child Development Scheme (ICDS). Both mid-day meal and ICDS are government welfare programmes. Presently, wheat for these programmes is allocated at Rs 4.15 per kg (kilogram), while rice is given at Rs 5.65 per kg. Wheat will be now be sold to the schemes at Rs 2 per kg, while rice would be given at Rs 3 per kg, the same rate at which it is sold to BPL (below poverty line) families under the National Food Security Act. In 2015-16, the Centre provided three million tonnes (mt) of wheat and rice to both these schemes, with the larger chunk - 2.37 mt - being lifted by the mid-day meal scheme. This incurs an annual subsidy of Rs 2,800 crore for these programmes, which is a part of annual food subsidy.