(General Awareness For Bank's Exams) Economy

December-2014

Mallya resigns from Mangalore Chemicals Board (MCFL)

• In a surprise move the UB Group Chairman Vijay Mallya has resigned from the Board of Directors of Mangalore Chemicals and Fertilizers Ltd (MCFL) with immediate effect.
•  What prompted this move is still not known. The company has intimated this development to the stock exchanges. Soon after the announcement MCFL stock prices rose sharply on the stock markets.
•  The prices moved from Rs. 80 range to around Rs. 92. The volume was as high as nine lakh shares in early morning trade.
•  MCFL is amidst a takeover battle between Deepak Petrochemicals and Fertilizers and Zuari Agro Chemicals and Fertilizers. Mr. Mallya had sided with Zuari to ward off the takeover bid of Deepak Fertilizers.
•  Recently, Deepak's bid to acquire 26 per cent addition stake had failed and Dr Mallya had retained control over the company.
•  Currently Deepak holds 32 per cent stake in the company, Zuari 16 per cent, UB Group 22 per cent and the rest by public shareholders.

Nifty touches record high

•  A benchmark index of Indian equities markets was trading 208.40 points or 0.73 percent up as fast moving consumer goods (FMCG) stocks surged.
•  All the sectors were trading in green and good buying was observed in FMCG, banking and healthcare sectors.
•  The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 28,616.93 points, was trading at 28,651.11 points (at 09.27 a.m.) in the early session, up 208.40 points or 0.73 percent from the previous day’s close at 28,442.71 points.
•  The Sensex has touched a high of 28,808.78 points and a low of 28,587.75 points in the trade so far.
•  The S&P FMCG index gained by 200.87 points, bankex went up by 105.17 points and healthcare index moved up by 67.73 points.

Reliance Industries signs agreement with Mexican company for oil and gas

•  Reliance Industries has signed an agreement with Mexican state-owned company, Petroleos Mexicanos (PEMEX) for cooperation in upstream oil and gas production as well as in refining business.
•  As per the Memorandum of Understanding (MoU) “RIL will cooperate with PEMEX for assessment of potential upstream oil and gas business opportunities in Mexico and jointly evaluate value added opportunities in international markets,” a company statement said.
•  RIL and PEMEX will also share expertise and skills in the relevant areas of oil and gas industry, including for deep—water oil and gas exploration and production.
•  “The MoU envisages sharing of RIL’s pioneering expertise in deep-water development and best practices in East Coast of India and RIL’s experience in shale gas in United States,” it said.
•  RIL will also provide technical support and share experience with PEMEX for refining value maximisation and other technical optimisation strategies.
•  “RIL’s cooperation with PEMEX is in line with its growth strategy to explore opportunities to expand its international asset base in regimes having internationally attractive competitive terms.
•  “The company hopes to leverage its organisational capabilities and expertise to create long-term value for Exploration and Production Business and for RIL on the whole,” it added.

Govt. relaxed FDI policy for investors in construction sector

•  To help attract foreign funds in construction of townships, hospitals and hotels, the government relaxed the FDI policy for this sector by easing exit norms and reducing built-up area and capital needs
• The revised norms relating to construction development sector has been notified by the Department of Industrial Policy and Promotion (DIPP). India allows 100 per cent FDI in the sector through the automatic route.

 The new policy has done away with the three-year lock-in period for repatriation of investment.

•  “The investor will be permitted to exit on completion of the project or after development of trunk infrastructure, that is, roads, water supply, street lighting, drainage and sewerage,” a DIPP circular said.
•  It is to be noted here, the official statement issued after the October 29 Cabinet meeting had mentioned that the investor can exit on completion of the project or “after three years from the date of final investment,” subject to development of trunk infrastructure.
•  Under the new policy, the minimum floor area requirement has been reduced to 20,000 square metres from 50,000 square metres earlier.
• It also brought down the minimum capital requirement to $5 million from $10 million. In case of development of serviced plots, the condition of minimum land of 10 hectares has been completely removed.

RBI comfortable on Current Account Deficit: Khan

•  The Reserve Bank of India (RBI) Deputy Governor H.R. Khan said that the central bank is reasonably comfortable with the present Current Account Deficit (CAD) position of the country.
•  The central bank is “reasonably comfortable from the current account point of view because of prices of oil,” which is hovering at five-year lows, said Mr. Khan while talking to reporters on the sidelines of ‘National Payments Excellence Awards 2014’ function here.
•  The Government recently scrapped the 80:20 rule on gold imports, mandating traders to export 20 per cent of all gold imported into the country. He said that a view has been taken in this regard after considering the CAD position into account.
•  Mr. Khan also said that the RBI is having concerns on e-commerce transactions and would issue guidelines to regulate these transactions.
•  National Payments Corporation of India (NPCI), the umbrella organization for all retail payments system in the country, has institutionalized ‘National Payments Excellence Awards 2014’ to recognize outstanding achievements in operating various payment systems.

RBI keeps policy rates unchanged

•  As is widely expected, the Reserve Bank of India (RBI) has kept the key policy rates unchanged.
•  On the basis of an assessment of the current and evolving macro-economic situation, the RBI has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent.
•  It has also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL). And, it has said that it will continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate, and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions. Also, it has decided to continue with daily one-day term repos and reverse repos to smooth liquidity.
•  As a result of these decisions, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the bank rate at 9.0 per cent
•  “The headline inflation has been receding steadily, and current readings are below the January 2015 target of 8 per cent as well as the January 2016 target of 6 per cent,'' the RBI said. “The inflation reading for November, which will become available by mid-December, is expected to show a further softening.

Shome panel: Tax cash withdrawal beyond limit in a day

•  A high-level official panel proposed levying of banking transaction tax on withdrawal of cash beyond a specified limit in a day to check black money, and was not in favour of the tax amnesty scheme.
•  A report by the Parthasarathi Shome Committee, appointed by the previous UPA government, suggested taxing farmers with large land holdings in addition to a host of measures to widen the net.
•  “Taxpayers keep waiting for amnesty schemes to be announced and take advantage of these schemes to build their capital.
•  “Amnesty schemes also cause inequity among taxpayers, and there is no proof that they improve taxpayer behaviour among evaders.
•  They, therefore, should not be encouraged through amnesties,” said the report of the Tax Administration and Reform Commission (TARC). It was the third report in the series.
•  Highlighting that there is no instrument at present that captures details of cash withdrawals from bank accounts, it said such information would help the Income Tax department widen its information base on the use of black money.
•  Making a case for banking cash transaction tax (BCTT), it said: “...IT Act should be suitably revised to include in its ambit cash withdrawals exceeding specified amounts in a day from bank accounts other than savings accounts.

Lower oil prices will boost global economy: Christine Lagarde

•  The recent decline in oil prices will help boost global economy, IMF chief Christine Lagarde has said, as global oil prices have tumbled to multi-year low.
•  “It is good news for the global economy,” Ms. Lagarde said at The Wall Street Journal CEO Council annual meeting.
•  For the United States, low energy prices would help accelerate the economic growth to a 3.5 per cent next year from the October forecast of 3. 1 per cent, she said, adding that Europe is also expected to benefit from lower oil prices.
•  Ms. Lagarde, however, noted that the Eurozone also faces a risk of the “new mediocre,” and described it as an economy marked by slow growth, low inflation and high unemployment.
•  But at the same time, she asserted that reluctant political leaders need to adopt more job-friendly labour market reforms, aggressive and innovative monetary policy and other structural reforms.
•  “Where they are at the moment they need to use all available tools. They have to get on with it and do it,” Ms. Lagarde said.
•  During the meeting, the International Monetary Fund Managing Director was highly critical of Japan for being slow on implementation of fiscal and labour market reforms.
•  On Russia, Ms. Lagarde said lower prices are adding to their fragility and their vulnerability.

53% of Indians connected to internet every hour, beat global average

• Fifty-three per cent of Indians are connected to the internet every waking hour, which is higher than the global average of 51 per cent, a new international study has found.
•  “The continuous online connectivity is becoming a phenomenon in India with 53 per cent of respondents in the country saying they are connected to the internet every waking hour,” said the study conducted by the London-based AT Kearney Global Research.
•  “That is higher than 51 per cent global average, 36 per cent in China and 39 per cent in Japan,” said the study titled “Connected Consumers Are Not Created Equal: A Global Perspective.”
•  The study covered 10 countries involving 10,000 respondents in July 2014.
•  The results of the study found that continuous connectivity is having a big impact on online retail in the country with social networks becoming a major influencing factor.
•  “97 per cent of the respondents from India said they have a Facebook account with 77 per cent saying they logged in to the social network daily,” said the study.
•  According to the study, there are three key motivations for Indian people to be continuously connected to internet.

OnePlus expects India will be its biggest market in next few months

•  Bullish on the multi-billion dollar opportunity in the Indian smartphone segment, Chinese handset maker OnePlus said it expects India to become its biggest market in the next few months.
•  At present, China is the biggest market for OnePlus, which announced its foray into India with the launch of its ‘One’ smartphone at Rs 21,999.
•  “In the next few months, we expect India to be our biggest market, it will overtake China,” OnePlus India General Manager Vikas Agarwal said.
•  In line with its global practice, users in India will receive India-specific invites through OnePlus and Amazon.in.
•  The two platforms have been integrated so that invites can be used to purchase the device exclusively on eCommerce major, Amazon.in.
•  “We will bring in as many devices as possible in sync with our production capacity. Cumulatively, till mid-October, we have already sold 500,000 devices (globally),” he added.
•  This is the first time that OnePlus has entered a new market with local presence and collaboration with a local partner.
•  It has set up a local team in India, led by Mr. Agarwal, for marketing and sales. The Chinese startup is also putting together an engineering team in Bangalore in the next few months.

More steps to rationalise subsidies: Jaitley

•  Assuring India Inc. of the National Democratic Alliance’s commitment to economic reforms, Union Finance Minister Arun Jaitley said that the government would announce more steps to rationalise subsidies.
•  “I had a series of meetings with the Expenditure Management Commission. In the next few months ... maybe earlier than that, they will come out with some interim recommendations so that we can proceed with rationalisation,” Mr. Jaitley said.
•  Recalling the government’s decision to link the diesel price with the market price, the Minister told the India Economic Conclave, organised by the television channel ET Now, it would help reduce the subsidy burden.
•  The Centre had set up a commission to suggest steps to rationalise subsidies and bring down the fiscal deficit. Mr. Jaitley expressed confidence that the government would be able to push the Insurance and the Goods and Service Tax (GST) Bills in this session of Parliament.
•  Mr. Jaitley ruled out the NDA government “tinkering” with the country’s federal structure to help push economic reforms faster.
•  The democratic process “has its own dynamics” and that should go on, the Minister said when asked why the government could not straightaway convene a joint session of both Houses of Parliament to help pass key laws (in the backdrop of the BJP not having a majority in the Rajya Sabha).
•  Mr. Jaitley said that even in the past, legislation had been passed in the Rajya Sabha on the basis of a consensus among the parties.

India’s manufacturing & services growth outpaced China in November: HSBC survey

•  Manufacturing and services sectors in India expanded at a faster pace than China in November, even as emerging market output slipped for the second consecutive month to a six-month low, a HSBC survey said.
•  The HSBC Emerging Markets Index (EMI), a monthly indicator derived from PMI surveys, slipped for the second month running to 51.2, signalling the weakest rate of expansion since May.
•  The EMI remained well below its long-run trend level of 53.7 as both manufacturers and service providers in emerging markets registered slower and identical rates of output expansion in November, HSBC said.
•  “2014 looks set to record the lowest annual average for the Index since its inception in November 2005,” the HSBC report added.
•  Data for the four largest emerging economies showed contrasting activity trends in November. China registered growth for the seventh month running, while India posted the fastest growth since June.
•  Russia and Brazil, however, registered sharper rates of decline during November.
•  During November, the HSBC composite index for India that maps both manufacturing and services, stood at 53.6, whereas for China it was 51.1, Brazil (48.1) and Russia (47.6).
•  An index measure of above 50 indicates expansion.
•  “Downturns in Russia and Brazil are intensifying to worrying extents, and China’s economic growth rate continues to slow. Only India saw an improvement in November,” Markit Chief Economist Chris Williamson said.

RBI has retained growth estimate at 5.5% for 2014-15

•  The Reserve Bank of India (RBI) has retained its growth estimate for 2014-15 at 5.5 per cent.
•  The reiteration of growth estimate is based on its expectation of a normal monsoon. Also, the apex bank is hopeful that there will not be any adverse supply or financial shocks.
•  While keeping the policy rates unchanged in its fifth bi-monthly policy, the RBI said conditions for a turnaround "are gathering." Nevertheless, it did concede that "activity appears to have lost some momentum in Q2, probably extending into Q3."
•  The RBI pointed to the softening of inflation, easing of commodity prices/ input costs, comfortable liquidity conditions, and rising business confidence as well as purchasing activity.
•  "These conditions could enable a pick-up in Q4 if co-ordinated policy efforts fructify in dispelling the drag on the economy emanating from structural constraints,’’ it said.
•  "A durable revival of investment demand continues to be held back by infrastructural constraints and lack of assured supply of key inputs, in particular coal, power, land and minerals,’’ it said.
•  The success of ongoing government actions in these areas wouldl be key to reviving growth and offsetting downside risks emanating from agriculture – in view of weaker-than-expected Rabi sowing – and exports – given the sluggishness in external demand, it added.
•  The apex bank said some easing of monetary conditions had already taken place. The weighted average call rates as well as long-term yields for government and high-quality corporate issuances had moderated substantially since end-August, it said.

IBM signs multi-billion deal with ABN Amro

•  IBM has signed a ten-year, multi-billion dollar deal to provide computer infrastructure services to Dutch bank ABN Amro running on its cloud systems, the U.S. information technology firm said.
•  The deal comes as IBM is trying to gain momentum in the market for Internet-delivered computing services, known as cloud computing.
•  IBM will provide fully managed services for mainframe computers, servers, storage and end-user computing as well as a help desk and other technical support.

SEBI (research analysts) norms to be effective from Dec. 1

•  The Securities and Exchange Board of India (SEBI) said the SEBI (Research Analysts) Regulations, 2014 (RA Regulations), would come into effect from December 1.
•  This was notified on September 1. “No person shall act as research analyst or research entity or hold itself out as research analyst unless he has obtained a certificate of registration from SEBI under these regulations unless an exemption specifically applies,” SEBI said in a release.

Kisan Vikas Patra, re-launch with very few justifications

•  Despite some criticism and misgivings in certain quarters, the government has decided to re-introduce the Kisan Vikas Patra (KVP), a savings instrument that was discontinued three years ago.
•  Positioned as a savings instrument in line with other continuing ‘small savings schemes’ such as the Public Provident Fund (PPF) and the National Savings Certificates (NSCs), the new KVP, like its predecessor, has certain advantages as well as disadvantages over these. Most ordinary investors will compare the new KVP with bank deposits and other debt instruments.
•  Broad features of the new KVP
  * Interest: 8.7 per cent.
  * Tenure: eight years and four months (100 months).
  * Investment doubles in 100 months.
  * Minimum lock-in period two years and six months.
•  Liquidity
  * Can be encashed in eight equal monthly instalments after the lock-in period
  * Can be transferred to another person by endorsement and delivery
  * Can also be given as collateral for loans by banks
  * Minimum investment Rs.1,000. Thereafter, in denominations of Rs.5,000, Rs.10,000 and Rs.50,000. There is no maximum limit.
  * Taxability: fully taxable
  * Mode of investment: cash or cheque
  * Know your customer (KYC) norms: PAN not required but identity/address proof required
  * Will be sold initially through post offices across the country, but later through some government-owned banks also.
• Taking three other relevant traits — liquidity, convenience and tax advantage — the new KVP is reasonably liquid. Investors can come out after the minimum lock-in period in eight equal instalments. The KVP can also be given as collateral. Unlike PPF and NSCs, the KVP does not have a tax advantage. Interest on it is fully taxable.
•  Bank deposits are superior to KVP in terms of returns — three year fixed deposits offer 9 per cent and some banks even more. The argument that deposit rates are set to fall over the medium-term is no doubt valid, but one expects the banks to safeguard their depositors’ concerns by floating innovative schemes.
•  It is also certain that the corporate bond market will revive and be a conduit for infrastructure finance. This will matter to senior citizens and others who want a fixed, steady return in the form of investment in infrastructure bonds.
•  Bank deposits are liquid, absolutely secure and highly accessible to most middle-class investors. They have a minimum tax advantage — practically restricted to interest on savings accounts.
  Petroleum product prices headed for further correction
•  Petroleum product prices are headed for further correction after the Organiztion of the Petroleum Exporting Countries (OPEC) decided not to resort to output cut to revive falling Brent crude prices.
•  According to experts, petrol and diesel prices may come down by Rs.2 a litre as the Indian basket price is different and is higher than spot prices.
•  A sharp division among the oil cartel members augurs well for emerging countries like India for at least the next 6 months when OPEC would meet again to take a call on restricting production.
•  After the proposal to cut production by 1 million barrels a day was rejected, Brent crude prices plunged to four-year low of around $71 a barrel.
•  The impact could be much more in the coming days and in the December-January period when fund houses would reduce their exposure to underperforming commodity assets and allocate funds to high yielding equities, said analysts.
•  “Most OPEC members decided against production cut to protect their market share. They have deep pockets to afford a price as low as $67 a barrel.
•  Even if the sales realisation comes, down OPEC members like Saudi Arabia, Iraq, Iran and Libya have the longest holding power to continue production.

Dubai will invest $32-billion to build world’s largest airport

•  To further secure its position as the world’s aviation hub, Dubai Airports is building a whopping USD 32—billion greenfield airport at the upcoming Dubai World Central, 30 km off the present international airport which already is the second busiest in the world.
•  The proposed new airport will become the world’s largest aviation facility on completion and will have five runways which all will be simultaneously operational, all A380-compatible with a length of 4.5 km each.
•  “We are planning a USD 32—billion brand new airport at the Dubai World Central at Al Maktoum, 30 km off the present Dubai facility.
•  In the first phase, the new airport will be able to handle 120 million passengers, which will go up to 200 million by 2020, when the project is completed,” Dubai Airports Corporate Communications Head Julius Baumann told PTI.
•  “On completion, the new airport will be the world’s largest airport, with each concourse the size of seven football fields and have five runways which all will be simultaneously operational, all A380-compatible,” Mr. Baumann said.
•  The other features include 200 aircraft stands for wide bodied aircraft, four concourses connected via six airport trains to two terminals, which in turn will be linked to the city’s metro network. When complete, the mega-hub will have total annual capacity exceeding 200 million passengers and 12 million tonne of freight.
•  The existing Al Maktoum International opened its doors to passengers on October 27, 2013 and three airlines are operating from here.

Switzerland rejected plans to hoard gold, limit immigration

•  Voters in Switzerland rejected plans to protect the country’s wealth by investing in gold and drastically limit immigration, according to polling firm gfs.bern.\
•  A proposal to require the Swiss central bank to hold a fifth of its reserves in gold was opposed by 78 per cent of voters and supported by 22 per cent, projections based on tallies provided by selected voting districts indicated.
•  The plan would have forced the Swiss National Bank to buy massive amounts of gold within five years and likely causing the global price for the valuable metal to jump.
•  The proposal to limit immigration to 0.2 per cent of Switzerland’s population about 16,000 immigrants a year for a country of 8 million received the backing of 26 per cent of voters, while 74 per cent opposed it. Currently, immigration is estimated at around 80,000 a year.
•  The “Ecopop” initiative would also have forced Switzerland to devote a large chunk of its foreign aid to programs aimed at reducing population growth in poor countries.
•  Earlier this year, Swiss voters narrowly backed a proposal by the nationalist People’s Party to reintroduce quotas for immigrants.
•  The outcome has proved to be a political headache for the Swiss government as it now needs to renegotiate bilateral treaties with the European Union, of which it isn’t a member.

RIL to transfer textile business to new Joint Venture with Chinese company

•  Reliance Industries Ltd. (RIL), announced that it had entered into a definitive agreement with a wholly-owned subsidiary of China’s Shandong Ruyi Science and Technology Group (Ruyi) to transfer its founding textile business into a newly incorporated joint venture (JV) company.
•  RIL said that it would receive cash consideration from the deal. It will own 51 per cent in the proposed joint venture, while Ruyi will own the balance. The proposed transaction is subject to requisite approvals.
•  In the 1970s, Reliance entered into the textile business in a small way, and since then, it has grown to be a Fortune Global 500 company through backward vertical integration.
•  The textile business of RIL operates under the brand Vimal, which was popularised by the ‘Only Vimal’ campaign. This business has a prominent presence in the domestic worsted and synthetic suiting fabric segments.
•  Ruyi, China’s leading textile company with revenues of $3 billion, has a global presence with a portfolio of world-renowned brands. It operates in India under the Georgia Gullini brand in the worsted suiting segment. This business operation would be realigned with the joint venture.
•  “Our joint venture will help Reliance reposition its textile business on a high growth path. Our partner’s deep commitment and global reach in textile business will enable this joint venture to harness the growth potential of the Indian market and emerge as a global textile player,” said RIL Executive Director Nikhil Meswani.

Essar group set to ink a deal to import crude from Russia

•  The Essar Group will sign a long-term crude oil import deal with Russia's Rosneft during President Vladimir Putin's visit to New Delhi, government and industry.
•  “Essar will sign an MoU (memorandum of understanding) with them (Rosneft),” two Indian government sources said. “The deal will be for ten years,” an industry source familiar with the matter said.
•  The Essar group operates the 405,000 barrels per day (bpd) Vadinar refinery in Gujarat and also the 296,000 bpd Stanlow refinery in northwest England, which is operating at below its capacity.
•  Volumes, pricing and other details of the deal with state-controlled Rosneft, the world’s largest listed oil firm by output, were not immediately known. Essar depends heavily on Iran to feed its Vadinar refinery.
•  In January, sources told Reuters that Russia and Iran were negotiating an oil-for-goods swap deal. Russian Economy Minister Alexei Ulyukayev was quoted on November 30 as saying the deal with Iran might be sealed soon.

India is on growth track: IMF

•  The International Monetary Fund said the focus on governance and financial inclusion measures taken by the government were positive signs that India was back on the growth track.
•  In India, the growth was stalled for sometime, but the measures taken by the new government started showing signals of growth, it said.
•  “We see a positive outlook for India. Last year, the growth rate was 4.7 per cent, and in the current year it would be around 5.6 per cent.
•  With the new government’s initiatives, we believe the growth rate next year would be even more,” said Ratna Sahay, Deputy Director (Strategy, Planning and Coordination), Monetary and Capital Markets Department, IMF.
•  The IMF also said, in India lack of infrastructure was a major hurdle for developmental activities, which the government needed to address for speedy growth.
•  Commenting on the ‘Make in India’ move by the government, Ms. Ratna said, “It will create jobs, and will generate tax revenues. This will help in reducing the fiscal deficit.’’ The IMF also said the growth outlook was good.
•  However, the country needed more reforms to fuel the growth. “Though there are positive signs, there are lot of reforms needed to bring inflation and budget deficit down,” she added.
•  Some of the reforms the government should look at would be to improve tax administration, introduction of GST, to get rid of subsidies on fertilizers as well as food and reduce corruption.

PSBs can issue equity with differential voting rights: Arundhati Bhattacharya

•  With the government indicating that it would not continue to fund public sector banks (PSBs), State Bank of India (SBI) Chairman Arundhati Bhattacharya said they could look at issuing shares with differential voting rights to raise funds to meet the Basel-III capital adequacy norms.
•  “The writing on the wall is very clear...they (PSBs) have to think of differential voting rights. It is time to lay out some kind of roadmap on how much the banks need to do and how much support it would get,” she said while talking to reporters on the sidelines of a conference.
•  The government allowed PSBs to raise up to Rs.1.60 lakh crore from markets by diluting government holding to 52 per cent in phases so as to meet the Basel III norms.
•  Pitching for consolidation in the banking sector, Ms. Bhattacharya said it was important to have 3-4 major banks. According to Ms. Bhattacharya, “it is better to merge good banks with good banks.”
•  “The news that the government has allowed PSBs to bring down the government stake to 52 per cent kicks off the next round of reforms... because for the first time, clear signal has been given (to PSBs) to source capital from the market.
•  “The big daddy back there is not going to be around to give them capital as and when they need. If they need to be competitive and want to grow, then they definitely need to look at other places for more capital,” Ms. Bhattacharya added.

‘Civilised’ tax regime to attract investors: Jaitly

•  India will soon raise the foreign investment cap in the insurance sector and work for making the tax regime “civilised” to attract overseas investments, Finance Minister Arun Jaitley said, while exuding confidence of achieving 6 per cent growth next fiscal.
•  Mr. Jaitley was replying to a debate in the Lok Sabha on Supplementary Demands for Grants for an additional expenditure of over Rs. 12,500 crore. However, the actual cash outgo would be Rs. 500 crore.
  India likely to improve economic growth in 2016: UN
•  India’s economic growth is expected to improve to 6.3 per cent in 2016 with the country leading economic recovery in South Asia, according to a United Nations report.
•  The UN World Economic Situation and Prospects 2015 (WESP) report, launched, also said India is likely to make progress in implementing economic policy reforms and help provide support to business and consumer confidence.
•  It said global economic growth is forecast to continue increasing over the next two years, despite legacies from the financial crisis continuing to weigh on growth, and the emergence of new challenges, including geopolitical conflicts such as in Ukraine, and the Ebola outbreak in West Africa.
•  The global economy is expected to grow 3.1 per cent in 2015 and 3.3 per cent in 2016, compared with an estimated growth of 2.6 per cent for 2014, when the pace of expansion has been moderate and uneven.
•  It said India, which is estimated to record a 5.4 per cent economic growth in 2014, will see GDP growth improving to 5.9 per cent next year and 6.3 per cent in 2016.
•  Economic growth in South Asia is also set to gradually pick up from an estimated 4.9 per cent in 2014 to 5.4 per cent in 2015 and 5.7 per cent in 2016.

Inflation declined to 4.38% in November

•  Declining for the fifth consecutive month, retail inflation dropped to 4.38 per cent in November, the lowest since the new series of data was introduced in January, 2012, on the back of high-base effect of last year and softening of prices of food items.
•  The Consumer Price Index-based inflation or retail inflation stood at 5.52 per cent in October, while it was 11.16 per cent in November, 2013.

Industrial production measured by IIP contracts by 4.2% in October

•  The factory output as measured by the Index of Industrial Production (IIP) contracted by 4.2 per cent in October, on account of de-growth in the manufacturing sector and poor demand for consumer goods.
•  The factory output had declined by 1.2 per cent in the same month last year. For September, it was revised to 2.8 per cent from the provisional estimates of 2.5 per cent released last month.
•  During the April-October period, the IIP rose 1.9 per cent against 0.2 per cent in same period of last fiscal.
•  “The fall in manufacturing growth in October is disturbing, more so because it is broad-based and not limited to a few sectors,” FICCI President Sidharth Birla said.
•  It not only reflected slowdown in investments but also the deep rooted slackness in consumer demand which required bringing down the interest rates urgently, he added.
•  Industry experts expressed concern over the fact that despite being a festive month, growth of consumer goods, especially durables, has been negative in October.
•  “Sixteen of the 22 industries registered negative growth rates. It is disappointing more so because October is one of the peak spending months when rural incomes increase and two festivals should have prompted consumer spending.
•  It does appear more was spent on gold (imports have increased),” CARE Ratings said. Manufacturing output, which constitutes over 75 per cent of the index, contracted by 7.6 per cent in October, compared to a dip of 1.3 per cent in the same month a year ago.

TCS targets to exceed 55,000 hiring this fiscal

•  TCS, said it was undertaking a performance-based workforce restructuring, but it was not a ‘retrenchment’ exercise and the company might exceed its target of hiring 55,000 new professionals this fiscal.
•  Without giving any specific numbers for employees to be affected by this ‘continuous’ restructuring process, the HR head of the company also said that “it is not that everyone being relieved is a bad performer.”
•  “It is not a special process. It is a continuous process,” TCS EVP and Head (Global) HR Ajoyendra Mukherjee told reporters.
•  His comments follow reports about TCS undertaking a significant performance-related restructuring of its workforce, which may also lead to some employees being asked to leave the company.
•  Downplaying it as a ‘regular exercise’, Mr. Mukherjee also said the company was on track to meet its gross hiring target of 55,000 employees in the current fiscal ending March 31, 2015, and may even exceed it.
•  He said that the company has a campus offer target of 35,000 people and it has already made over 31,000 offers and more than 3000 offers would be made during the fiscal. “This (restructuring) is nothing new what we are doing.

Switzerland’s gold exports to India marked near Rs. 1 trillion in 2014

•  Amid concerns of bullion trade being used for routing of black money, Switzerland’s gold exports to India have risen further and fast approaching Rs. 1 trillion mark for the entire 2014.
•  The Swiss gold exports to India stood at over 2.8 billion Swiss francs (over Rs. 18,000 crore) in October, up from about 2.2 billion Swiss francs in the previous month, shows the latest data from the Swiss Customs Administration.
•  This has taken the total Swiss gold exports to India since January this year to 14.2 billion Swiss francs (nearly Rs. 93,000 crore), as per the data compiled by Switzerland’s cross-border trade monitoring agency
•  This surge in gold shipments has made India the largest destination for the yellow metal exports from Switzerland.
•  There are concerns that gold trade could be a possible route for laundering of unaccounted wealth, suspected to be stashed by Indians in Swiss banks, although there has been no official word from either countries so far in this regard.
•  The Supreme Court-constituted SIT, however, said in its latest report on black money that a dedicated institutional mechanism needs to be put in place to examine “mismatch between export/import data with corresponding import/export data of other countries on at least a quarterly, if not a monthly basis.”
•  The SIT said that this suggestion has been made by the Financial Action Task Force (FATF), while citing the Data Analysis and Research for Trade Transparency System adopted by US, to control over/under invoicing to some extent.

Incentivise domestic savings to boost economy: RBI Chief

•  Reserve Bank Governor Raghuram Rajan cautioned the government on Prime Minister Narendra Modi’s ‘Make in India’ mantra, suggesting that India would have to look for regional and domestic demand for growth — to make in India primarily for India.
•  Dr. Rajan said that at this stage, an exports-push strategy for growth would be ineffective; as the industrial world stagnated, many emerging markets were rethinking their export-led growth model, he said.
•  “There is a danger when we discuss ‘Make in India’ of assuming it means a focus on manufacturing, an attempt to follow the export-led growth path that China followed … But the world as a whole is unlikely to be able to accommodate another export-led China,” Dr. Rajan said.
•  Since the global economy was still weak, he argued, it would be much less likely to be able to absorb a substantial additional amount of imports in the foreseeable future.
•  “Export-led growth will not be as easy for India as it was for the Asian economies that took that path before.”
•  He also cautioned the Modi government against picking a particular sector such as manufacturing for encouragement, simply because it had worked well for China.

SpiceJet officials meeting the DGCA

•  SpiceJet has indicated that its promoters are backing the airline that is apparently facing financial problems.
•  The airline’s officials met the Secretary, Civil Aviation, and the Director-General of Civil Aviation to pass this message. This is the second time this week that SpiceJet officials are meeting the DGCA.
•  The low-cost carrier’s chief operating officer, Sanjiv Kapoor, refused to comment on the meeting. On his Twitter page, he posted the message: “@SKapoorSpiceJet: Apologies again to all our customers affected by our temporary ongoing challenges. We will do our best to win back your loyalty and support.”
•  “The falling global crude prices will work to our benefit if we set things right soon,” said a source at SpiceJet, who wished anonymity. “We will come back soon. We will come out with an update in a day or two.”
•  On the other side, the Travel Agents Association of India (TAAI) sent out an e-mail to its members saying its airline council was in touch with the SpiceJet management.
•  “This morning, we had a conference call with Shilpa Bhatia, senior vice-president and head of sales,” TAAI said in an e-mail. “The airline management is meeting DGCA officials this afternoon along with a plan and insight of the airline’s financial status.
•  They have stated that there is a financial crunch, but not something that will shut down the airline.” When TAAI voiced its concerns, SpiceJet assured it that all refunds due to cancellations and waivers would be granted, looking at the situation.

CII demanded clarity and stability in tax policy

•  In pre-budget consultations with Revenue Secretary Shaktikanta Das and other officers of the Finance Ministry, the Confederation of Indian Industry (CII) emphasised the need for the government to implement steps for reviving the economy.
•  It also demanded a bunch of tax concessions. The CII demanded simplicity, clarity and stability in the tax policy regime and technology based e-governance initiatives on procedural simplification at the meeting, according to a press release.
•  To boost the investor sentiment, the CII demanded that the government take the ‘Make in India’ initiative to a new level and galvanise the economy to a higher and inclusive growth path.
•  The CII team was led by past President Arun Bharat Ram. He stated that the CII was deliberating in a constructive manner on the possible solutions for fundamental design issues on Goods and Services Tax (GST) and asked for opportunities for regular interaction with the officials dealing with the reform.
•  The industry chamber recommended that the government remove anomalies in customs duty and halve the Central Sales Tax rate from 2 per cent to 1 per cent to compensate for the delay in the implementation of the GST.
•  It also demanded that the government extend the excise duty concessions on certain goods to March 15, 2015. In the Union budget 2014-15, this reduction in the range of 2 per cent-6 per cent was provided up to December 31, 2014.
•  It also demanded that investment allowance should be extended to the infrastructure sector to further spur investment activity in the economy.

Global demand for OPEC crude in 2015 will be less

•  Global demand for OPEC crude in 2015 will be less than expected and far below its current output, the group said, pointing to a hefty supply surplus without OPEC output cuts or a slowdown in the U.S. shale boom.
•  In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group’s oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation and over one million bpd less than it is now producing.
•  The report follows OPEC’s decision last month not to prop up prices by cutting output. Top exporter Saudi Arabia urged fellow members to combat the growth in U.S. shale, which needs relatively high prices to be economic and has been eroding OPEC’s market share.
•  OPEC’s November 27 decision to retain its output target of 30 million bpd sent prices plunging. Brent crude was trading below $66 a barrel, close to a five-year low and down more than 40 per cent since June.
•  The report cut its forecast for growth in global demand in 2015 due to a weaker outlook for Europe and Asia, and predicted higher supply growth from shale and other non-OPEC sources, although it said this may be slowed if prices stay weak.
•  “Should the current fall in crude prices continue over a longer period, it will impact the non-OPEC supply forecast for 2015, especially anticipated growth in tight crude,” OPEC's report said, using another term for shale oil.
•  For now though, OPEC’s report indicates that, with OPEC pumping 30.05 million bpd in November, according to secondary sources cited by the report, there will be a surplus of 1.13 million bpd in 2015, and 1.83 million bpd in the first half.

WTO rules against the U.S. in steel dispute with India

•  The World Trade Organization (WTO) has ruled against the U.S. imposing high duty on imports of certain Indian steel products, an order hailed by India as a ‘significant victory’ that will help domestic manufacturers and exporters.
•  The Appellate Body of the WTO has ruled that the high duty imposed by the U.S. on the certain Indian steel imports was ‘inconsistent’ with various provisions of the Agreement on Subsidies and Countervailing Measures (ASCM).
•  “India has achieved a significant victory at the WTO, as the Appellate Body held that the Countervailing Duty (CVD) measures imposed by the U.S. against certain hot-rolled carbon steel flat products are inconsistent with various provisions of the ASCM,” an official statement said.
•  The move would definitely help domestic manufacturers, which had been suffering due to inconsistent practices by the U.S. Department of Commerce, it added.
•  The implication of this ruling is that the U.S. has to amend its domestic law to be WTO compliant. “It has significant trade impact for India as out of the current 10 products on which U.S. has imposed CVD, about seven products suffer from the same inconsistency,” it said.

India sees ‘clear pick-up’ in growth momentum says OECD

•  Reflecting improved prospects, India is the only major economy seeing a ‘clear pick up in growth momentum’ while mixed trends are predicted for developed countries, according to Paris-based think tank Organisation for Economic Co-operation and Development (OECD).
•  The OECD said growth would continue to lose momentum in Europe. For other major economies, the outlook is for stable growth momentum.
•  The readings, for the month of October, are based on composite leading indicator (CLI), which is designed to anticipate turning points in economic activity relative to trend.
•  “India is the only major economy where the CLI points to a clear pick-up in growth momentum,” OECD said in a statement.
•  The country’s CLI rose to 99.6 in October from 99.4 in the previous month. Last month, the OECD said the Indian economy was expected to see an average growth of 6.7 per cent over the 2015-19 period, while a further boost would depend on reform plans of the government.
•  In October, the International Monetary Fund and the World Bank projected 5.6 per cent growth rate for India this year, citing renewed confidence in the market due to a series of economic reforms pursued by the new government.

Reliance Group sells multiplex business to Carnival

•  Anil Ambani led Reliance Group has sold its multiplex business to South India based Carnival Group in the largest ever deal in this space.
•  The transaction will reduce Reliance Capital’s overall debt by Rs 700 crore and is part of Reliance Capital’s strategy to exit minority investments.
•  The deal will make Carnival the third largest multiplex operator with nationwide presence and over 300 screens, a statement said. The firms did not disclose the exact value of the deal.
•  The deal struck between Carnival Cinemas and Reliance MediaWorks, will exclude IMAX Wadala (Mumbai) and some other properties worth Rs 200 crore, the statement added.
•  Reliance Capital is the parent firm of Reliance MediaWorks, which operates one of the largest cinema chains, under the brand ‘BIG Cinemas’ with over 250 screens pan-India.
•  Sam Ghosh, CEO, Reliance Capital, said: “We are delighted to begin a long term relationship with the rapidly growing Carnival Group, through the sale of the multiplexes business of Reliance Media Works to them.”
•  Carnival Group is targeting to achieve “1,000 screens by the year 2017”, said its chairman Shrikant Bhasi. The proposed transaction is subject to necessary statutory and other approvals and is expected to be closed within the current financial year.

Mid-Year Economic Review projects 5.5% growth: Jaitley

•  Despite the sprouting of green shoots, a robust recovery is still to fully take hold, says the Mid-Year Economic Analysis for the current year, tabled in Parliament by Union Finance Minister Arun Jaitley.
•  The Review projects 2014-15 growth will be 5.5 per cent. India faces challenges that are mostly domestic, says the Review.
•  India grew at sub-5 per cent for the last two years. Growth bounced to 5.7 per cent in the April-June quarter before slipping again to 5.3 per cent in the July-September quarter.
•  We see some signs of private consumption stirring, Chief Economic Advisor (CEA) Arvind Subramanian told reporters after the Review was tabled.
•  “What we are yet to see decisively is private investment picking up.”
•  The Review says that over-indebtedness in India’s corporate sector is amongst the highest in the world. This, it says, exerts a drag on future investment and spending. The public private partnership model has been less than successful, the Review says.
•  “First, the backlog of stalled projects needs to be cleared more expeditiously…But even if the backlog is cleared, there is going to be a flow challenge: attracting new private investment, especially in infrastructure.”
•  With private sector investments uncertain, Dr. Subramanian said, public investment itself could be an engine of growth over the medium-term but not in the short run as government’s revenues are likely to fall short of the budget’s ‘optimistic’ targets.
•  The Review said too that the Centre faces a ‘major challenge’ in achieving its fiscal deficit target of 4.1 per cent of GDP in the current year. Dr. Subramanian, however, said the government is committed to achieving it and is considering all measures including spending cuts.

GreenDust.com planning to expend global presence

•  Refurbished goods retailer Reverse Logistics Corps, which operates GreenDust.com, is planning to expand its global footprint by entering Africa, South Asia and CIS. It has already started a pilot in Dubai, the U.S., and Hong Kong.
•  “We are planning to expand our presence in the emerging markets. Returns and refurbished market are a $500-billion opportunity worldwide, and we want to be the Alibaba of this space,” said GreenDust founder and CEO Hitendra Chaturvedi.
•  Founded in 2008, GreenDust refurbishes damaged or defective products and sells through its online channel and offline franchisee. The company sells products under three categories such as end of life products, factory seconds and refurbished products at a discounted price.
•  “We started with consumer appliances, mobile phones, laptops and computers. However, looking at the growth of the e-commerce sector, we believe that we can sell anything that is sold through e-commerce,” added Mr. Chaturvedi.
•  The company had recently partnered e-commerce companies such as Flipkart, Snapdeal and Amazon to manage their reverse supply chain. The company, which expects a revenue of over Rs.1,000 crore this year, is planning to expand its reach.
   

Go Air offers discount on fares, lowest at Rs 1,469 for travel next year

•  The Wadia Group-promoted budget carrier GoAir said it has put 1.7 million seats up for sale, offering fares as low as Rs. 1,469 for travel next year with a five-day booking period, to stimulate demand during the lean period.
•  The special offer is available on flights across the GoAir network for a travel period between January 1 and March 31, the airline said. The bookings under the offer can be made between December 21 and December 25, it said.
•  “The January-March quarter is traditionally a lean quarter... The purpose of introducing these fares is to make air travel affordable during the period,” GoAir chief executive Giorgio De Roni told PTI in New Delhi.
•  Stating that lowering of ticket prices was not to trigger a fare war in the domestic skies, Mr. De Roni said, “It is not an offer on lowest price or the cheapest price but to make it affordable and more attractive during the lean period.”
•  GoAir is committed to offer the affordable fares that allows it to deliver a sustainable result, Mr. De Roni said, adding “we can grow only when we are profitable and develop our network and the fleet.”
•  The airline wants to be consistent with its pricing strategy, he said. The Mumbai-based airline operates across 22 destinations in the country with a fleet of 19 Airbus A320s.

SpiceJet is all to change hands

•  Embattled airline company SpiceJet is all set to change hands.
•  With the Marans of Sun Group not keen on investing more, Ajay Singh, one of the original co-promoters of SpiceJet is understood to be doing due diligence of the company with a view to acquire a fresh stake along with a couple of financial investors.
•  An official privy to the development said that the data room had been opened for due diligence.

SEBI barred 260 entities for suspected money laundering

•  In its biggest ever crackdown for suspected tax evasion and laundering of black money through stock trading platforms, the Securities and Exchange Board of India barred 260 entities, including individuals and companies, from the securities markets.
•  While SEBI would further probe these cases, it has also decided to refer the matter to the I-T Department, the Enforcement Directorate, the Financial Intelligence Unit, among other agencies, for necessary actions on their part.
•  Through two separate interim orders, SEBI said that these 260 entities would be restrained from accessing the securities market and from buying, selling or dealing in securities, either directly or indirectly, with immediate effect till further directions.
•  It has also asked stock exchanges and the depositories to ensure that all its directions are strictly enforced. While 152 entities have been barred in one case relating to an entity, named First Financial Services Ltd, another 108 entities have faced the action in a case related to Radford Global Limited.
•  The action comes at a time when the government has sharpened its focus on unearthing black money stashed abroad and within the country, while SEBI also recently tightened its surveillance of shell companies .
•  In the first case, the suspected dealings took place on the stock market for almost two years till March 31, 2014, while the second case relates to a period of little more than a year starting January, 2013.
  Petroleum products brought under GST
•  Apart from subsuming various Central indirect taxes and levies and State taxes, the Constitution (122 Amendment) Bill, introduced in the Lok Sabha, confers simultaneous power to Union and State legislations to legislate on Goods and Service Tax (GST).
•  All goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. Petroleum and petroleum products have also been constitutionally brought under GST.
•  However, it has also been provided that petroleum products shall not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council.
•  The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
•  Responding to the concerns aired by members, Union Finance Minister Arun Jaitley took them down memory lane to 2006 when it was mooted by the UPA in its Budget and also narrated efforts made by the present government to build a consensus on what he has often billed as the “single most important tax reform after 1947.”
•  Stating that GST was “originally conceived by Vajpayeeji”, he pointed out that it was pushed by both the UPA Finance Ministers. “The object behind the GST is to have a seamless transfer of goods and services across the country. Let there be no tax on tax,” Mr Jaitley said.

SEBI makes fresh bid to find ‘Sahara investors’

•  In a fresh effort to locate Sahara investors eligible for refunds, regulator Securities and Exchange Board of India (Sebi) has asked bondholders to submit their claims by January along with necessary proof of their investments.
•  The latest exercise follows a similar attempt made by Sebi in August, wherein the eligible bondholders were asked to submit their refund claims to the regulator by September 30, 2014.
•  Sebi said it received 4,900 refund claims during that exercise from the bondholders of two Sahara companies — Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL), which had raised over Rs 24,000 crore from about three crore investors.
•  “In the interest of those bondholders of Saharas who could not submit their refund claims before the last date, this advertisement is being issued to enable those bondholders to submit their refund claims,” Sebi said.
•  The Supreme Court had asked Sebi to facilitate refund to the bondholders of the two companies in connection with a long-running dispute involving raising of funds to the tune of over Rs 24,000 crore from investors across the country.

Existing account enough to avail ‘Jan Dhan’ benefits: govt.

•  Government said persons already having bank account need not to open a fresh one to avail benefits of the Pradhan Mantri Jan Dhan Yojana (PMJDY).
•  “A person who is already having a bank account with any bank need not have to open a separate account under PMJDY. He/she will just have to get issued a RuPay card in his existing account to get benefit of accidental insurance,” a Finance Ministry statement said.
•  The overdraft facility can be extended in existing account, it said. Accidental insurance of Rs 1 lakh will be available to all RuPay card holders between 18-70 years. They will need to use their RuPay card once in 45 days of receipt of the card to get the benefit.
•  The accidental claim intimation should be given to bank within 30 days from the date of accident, it added. For life insurance coverage, one person per family will get a single cover of Rs 30,000 on one card only despite having multiple accounts/cards.
•  “The claim of Rs 30,000 is payable to the nominee of account holder who need to submit necessary documents to the nodal branch of the concerned bank,” the Ministry said.
   

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