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Economy

October - 2014

Healthy inflation declines are not enough: RBI Governor

• As the Reserve Bank of India (RBI) gets ready to announce its fourth quarter bi-monthly monetary policy review on September 30, the usual expectations from the market for an interest rate cut are surprisingly muted.

•  The surprise element lies in the fact that whatever data that are available in the public domain would seem to suggest a softer interest rate regime. According to this view, the RBI has, after a very long time, a favourable environment to lower the benchmark repo rate, which has remained at 8 per cent for the greater part of the year.

•  The broad macro-economic indicators have generally been positive even though one ‘lead’ indicator — the index of industrial production (IIP) — continues to remain erratic.

•  Most significantly, inflation data for August — both retail and wholesale — have delivered big, pleasant surprises. Retail inflation based on the consumer price index (CPI) has declined by almost a full percentage point from July from close to 8 per cent to just above 7 per cent.

RBI’s monetary policy statement

•  The key take-away from the Reserve Bank of India’s fourth bi-monthly monetary policy statement, released on 30 September is the central bank’s projections on the economy’s revival, a key element on the agenda of the Modi government. The RBI did not raise its growth projection for 2014-15, retaining it at the pre-elections level of 5.5 per cent, thereby, refusing to buy into the sharp surge in business sentiment and consumer confidence that its own surveys are capturing.

•  Quelling all hopes of a quick turnaround of the economy, it said, the momentum of activity across the economy is yet to stabilise and that the monsoon deficiency will dampen agricultural growth, which, in turn, will spill over to the rest of the economy as lower demand for the farm sector’s produce.

•  Business expectations of corporates for the third quarter, surveyed by the RBI, are at a eleven-quarter high, it said in its monetary policy report, ascribing the upbeat sentiment to the formation of a stable government at the Centre and the greater certainty about the policy environment, improvement in twin deficits, buoyant foreign capital inflows, a stable exchange rate and improved financial market conditions.
   

Microsoft announced its 'Windows 10' Operating System

•  Microsoft Corp. announced its 'Windows 10' Operating System to replace the largely unpopular Windows 8, skipping a number to mark a leap toward unifying the way people work on tablets, phones and traditional computers.

•  Microsoft is restoring some of the more traditional ways of doing things and promises that Windows 10 will be familiar for users regardless of which version of Windows they are now using. For instance, the start menu in Windows 10 will appear similar to what’s found in Windows 7.

Govt. refuses to bow to U.S. pressure on IP regime

•  The Modi Government denied that the reference to Intellectual Property Rights (IPR) in the joint statement from U.S. President Barack Obama and Prime Minister NarendraModi, was an outcome of the U.S. “arm-twisting”. The U.S. consent to discussion of IPR issues through the bilateral mechanism is a re-affirmation of India’s stand that issues need bilateral discussion and not unilateral action, a Department of Industrial Policy and Promotion (DIPP) clarification said.

•  The clarification further said the bilateral mechanism agreed to for discussing IPR disputes — Trade Policy Forum (TPF) — was put in place by the UPA Government in March 2010 through a US-India statement, was signed by the then Commerce Minister and his U.S. counterpart. “We have not submitted to the U.S. or yielded ground…. We have reiterated that the U.S. should not act unilaterally,” Industry Minister NirmalaSitharaman.

•  The joint statement, the DIPP clarified, in fact “merely reiterates” the position India has held since 2010 — this consistent position being that the IPR legal regime in India is fully TRIPS compliant and that issues to be discussed have to be taken up in bilateral forums like TPF. India has consistently refused to be subjected to unilateral action, the clarification added.
  Retail sector to benefit from REITs

•  The entry of real estate investment trusts (REITs) in the Indian market is expected to infuse a large dose of liquidity into the cash-strapped commercial real estate sector and could be a game changer.

•  In India, of the estimated 350 million square feet of ‘Grade A’ office space — valued at around $65-70 billion — concentrated in the major urban centres, about 80-100 million sq. ft is estimated to be eligible for REITs in the next 2-3 years, valued at about $15-20 billion, according to KPMG in India.

•  Apart from these, there are a host of other commercial properties such as shopping centres, retail malls, among others, which are eligible for REITs.

•  Retail malls in particular had seen developers rush in and churn out malls all over the country, but the rising vacancy rates following the economic slowdown saw a slowdown on the supply of mall space. An improvement in consumer sentiment now is good news for organised retail.

RBI Going beyond interest rate changes

•  Entirely in line with expectations, the Reserve Bank of India in its fourth bi-monthly monetary policy review did not change the policy repo rate, which remains at 8 per cent.

•  The main determinant of monetary policy has been to get a handle on inflation. This has been very well articulated by the RBI Governor both through the policy statements and outside. In fact, this time the Governor had amply made it clear that a rate cut was out of the question given the inflation scenario. The RBI has not only explained why a rate cut was not possible this time but has also more than hinted as to why there might not be any change for quite sometime.

•  The ‘pause’ may well extend to the greater part of 2015. The reason, of course, is inflation. While the RBI is fairly confident of reaching its target of 8 per cent retail inflation by January, 2015, it is far less certain about its medium-term target of 6 per cent by January, 2016. The central bank’s views on the glide-path for inflation are the same. However, the risks to attaining the 6-per cent target by January, 2016, remain even though they have lessened compared to August. As to why achieving a 6 per cent inflation target by January, 2016, may be so difficult, the RBI Governor explained that lots of things can happen in the world.

• The present softening of commodities prices, especially of oil — now trading below $100 a barrel — might not last indefinitely. Food prices may spike. The impact of the recent monsoons has not been assessed fully.

Oil PSUs set for a big change

•  Under-recoveries (losses incurred on selling regulated fuels like diesel, LPG and kerosene below their cost prices) on petroleum products are expected to decline by over 50 per cent over the next 2 years from 2013-14 levels due to decline in crude oil prices as well as ongoing efforts to move towards market-linked diesel prices. This will have a significant positive impact on the profitability of oil PSUs and the exchequer as well.

•  CRISIL Research believes that international crude oil prices and thereby petroleum product prices will slip by 8-10 per cent over the next two years to about $100 per barrel in 2015 from an average of $109 per barrel in 2013, barring any major geo-political events, fuelled by supply glut, waning demand growth and increased use of cleaner fuels.

•  While crude oil output from Iraq, Iran and North America will increase, global demand is expected to be impacted by weak consumption. The tepid consumption growth will be on account of better efficiencies and a shift towards natural gas in developed regions like North America and Europe, as well as relatively slower increase in demand from developing countries such as China and Indonesia because of reduction in subsidies and slower economic growth.

Railways decided to allow PPP in sale of tickets

•  With a view to expand the facilities for purchase of tickets, the Indian Railways have decided to allow public-private partnership in the establishment and operation of computerised Passenger Reservation System-cum-Unreserved Ticketing System terminals.

•  At present, only authorised travel agents are allowed to sell e-tickets while all the PRS counters across the country are operated by the Commercial Department of the Ministry. These new reservation centres, as per the proposal cleared by the Railway Board, would be called Yatri Ticket SuvidhaKendras.

•  Sources said Director (Finance), Railway Board, has issued a circular to all zonal general managers to work out the modalities for implementing the scheme. A circular has also been issued to the Centre for Railway Information Systems to make necessary modification in the software.

•  However, only authorised agents providing railway ticketing services of the Indian Railways for at least five years would be able to become a part of the scheme.

Clarification on tax treatment under Basel-III sought

•  Bankers have sought clarity from the Finance Ministry regarding taxation of additional tier-I bonds through which they are expected to raise capital to meet Basel-III norms.

•  Clarity on taxation would help investors in putting money into such instrument without hesitation.

•  Banks have requested the Ministry to clarify tax treatment issues with regard to additional tier-I bonds in a meeting held recently.

•  bankers in the meeting said that investors want to know whether these instruments would be treated as bonds or equity for taxation purposes.

•  Under the Basel-III norms, additional tier-I bonds come with loss absorbency features meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the RBI.

•  This would help banks to conserve capital at the time of stress or loss.

•  Additional Tier-I bonds, which qualify as core capital or equity capital, is one of the means of raising capital by the public sector banks which would require Rs.2.40 lakh crore by March 2019.

IMF lowered its outlook for global economic growth

•  The International Monetary Fund (IMF) slightly lowered its outlook for global economic growth this year and next, mostly because of weaker expansions in Japan, Latin America and Europe.

•  The global economy will grow 3.3 per cent this year, one-tenth of a point below what it forecast in July. World growth should then pick up to 3.8 per cent in 2015, two-tenths of a point lower than its previous estimate, the IMF says in the latest installment of its World Economic Outlook.

•  The global lending organization has a more optimistic view of the U.S. economy, which it expects will grow 2.2 per cent this year, up from an earlier forecast of 1.7 per cent. Its forecast for 3.1 per cent growth in the U.S. next year was unchanged.

•  Still, the global lending organization warned that the U.S., Europe and Japan could face years of sluggish growth unless governments take steps to accelerate activity. It acknowledged that it has frequently cut its forecasts in the past several years, and said that was partly because of slower long-run growth in advanced economies.

•  “World growth is mediocre and a bit worse than forecast in July,” the report said.

•  The IMF forecasts that growth in the 18 countries that use the euro will be just 0.8 per cent this year, down from 1.1 per cent in its July forecast. It lowered its 2015 projection to 1.3 per cent from 1.5 per cent.

Govt. clears 19 defence sector projects

•  The government, said it had cleared 19 long-pending defence sector projects, including that of Reliance Aerospace Technologies, Bharat Forge, Mahindra Telephonic Integrated Systems, Tata Advanced Materials and Punj Lloyd.

•  “Giving a big boost to ‘Make In India’, the Licensing Committee chaired by Secretary, Department of Industrial Policy & Promotion (DIPP), last week cleared 19 proposals for grant of industrial licence,” the Commerce and Industry Ministry said in a statement.

•  “It is expected that clearance of these 33 applications and the deregulation of the defence product list excluding a large number of components from the purview of industrial licensing will provide a major impetus to advanced manufacturing in defence sector,” the statement said.

•  Many of the 19 proposals have been pending with the government for the last several years. As per the liberalised policy, the FDI cap in defence has raised from 26 per cent to 49 per cent.

•  It also permitted portfolio investments of up to 24 per cent of the total equity of the investee/joint venture company under automatic route and doing away with requirement of 51 per cent equity ownership by a single Indian investor/company.

RBI considering G-secs settlement

•  The Reserve Bank of India is working towards allowing settlement of government bonds in the international systems like the Euroclear, Deputy Governor H. R. Khan said.

•  “We have the proposal of Euroclear and Clearsteam settlement. There is a budget announcement also on international settlement. So, we are working on it to see how we can balance between the loss of liquidity in the local market as well as providing ease of trading for overseas investors,” he told reporters on the sidelines of an event.

•  However, he did not offer a timeline for this. He said to start with only settlement of government bonds would be allowed on the international system.

•  When asked about whether the RBI is looking for further liberalising the external commercial borrowing (ECB) window, Mr. Khan said the bank had been cautious and it could not fully liberalise the route.

•  “We cannot open (the ECB window) fully given the current situation. The Sahoo committee has made certain recommendations and we are looking at that. It is not that we will open in a big bang way,” he said.

Emerging economies more vulnerable to shocks: IMF

•  The Global Financial Stability Report released by the International Monetary Fund (IMF) warns that the risk of shocks emerging from advanced economies hitting emerging economies, including India, has doubled since the collapse of Lehman Brothers in 2008, triggering a global financial crisis.

•  Reserve Bank Governor and former IMF Chief Economist RaghuramRajan has also warned of the vulnerability of the global economy and emerging market economies such as India to the U.S. Fed’s imminent reversal of its “Quantitative Easing” (QE) policy by which it kept interest rates at near-zero levels to spur domestic demand and kick-start the U.S. economy. This resulted in a flow of dollar investments into emerging markets such as India.

•  Mirroring Dr. Rajan’s views, the IMF report warns that how the U.S. Fed will conduct this reversal, the timing of the unwinding and the manner in which it will communicate the normalisation process, besides chances of escalation of geopolitical developments going forward, will determine global financial stability.

•  Market sentiment has been resilient, but the Fed will have to conduct the normalisation process in a manner that is in line with their economy’s levels of jobs.

•  At the same time, it must also be mindful of the repercussions of the QE unwinding on the rest of the world, Financial Counsellor and Director of IMF’s Monetary and Capital Markets Division said at a press conference at the release of the report.

IMF stresses labour reforms for India

•  The global economy needs a new momentum and a bold policies agenda to avoid a “new mediocre” period of low and uneven growth as it continues to struggle with a disappointing recovery six years after the Lehman Brothers’ collapse triggered a financial crisis, International Monetary Fund (IMF) Managing Director Christine Lagarde said.

•  Ms. Lagarde said the IMF was recommending country-specific infrastructure investments and structural reforms, including those for labour markets in emerging market economies such as India, as the imperatives for raising growth.

•  It was a question of getting on with the job and doing it and not just talking about building infrastructure to push growth, Ms. Lagarde said at a press conference at the onset of the IMF’s annual meeting of members. Finance Secretary ArvindMayaram is leading the Indian delegation to the meeting as Union Finance Minister ArunJaitley is recovering from a surgery. On India, Ms. Lagarde said India’s growth was better than expected.

•  Earlier this month, Ms. Lagarde had in a speech at Georgetown University here said: “The global economy is at an inflection point: it can muddle along with sub-par growth — a ‘new mediocre’ — or it can aim for a better path where bold policies would accelerate growth, increase employment, and achieve a ‘new momentum.’”

GIF launched, to help India tackle infrastructure deficit

•  World Bank President Jim Yong Kim, while launching the Global Infrastructure Facility (GIF), said the potential economic impact of the Ebola epidemic could be as high as $32.6 billion, if not quickly contained.

•  The GIF is aimed at mobilising the private sector to help tackle the massive infrastructure deficit now facing developing countries and emerging markets such as India. The World Bank estimates that these countries need $1 trillion a year in extra investments through 2020 and with public purses stretched, it is significant that the heads of some of the world’s leading institutional investors such as insurance and pension funds will be signing up as partners in the GIF.

•  Deep-pocketed institutional investors have $80 trillion in assets but less than a percentage of pension funds are allocated directly to infrastructure projects and the bulk of that is in advanced countries, Dr. Jim said.

•  He said the GIF would address the challenge of finding “bankable projects” as investible resources were available with the private sector. This was in line with Prime Minister NarendraModi seeking the World Bank’s technical support for the country’s infrastructure augmentation plans that he had raised in his meeting with Dr. Jim recently, the President said.

Financial reform is not difficult: RaghuramRajan

•  Underscoring the need for financial sector reforms, Reserve Bank of India Governor RaghuramRajan has stressed that the ‘time to deliver begins now’ and there is political will to undertake reforms and improve India’s economic growth.

•  “Financial reform is not difficult - we have the political will to improve,” the Indian Consulate here tweeted the RBI Governor as saying during an event. “Time to deliver begins now. We need to focus on deliverables,” another tweet quoting Dr. Rajan said.

•  The head of India’s central bank addressed a select gathering of prominent and influential Indian-American businessmen from the finance and investment banking sector at an event organised by the Consulate General in collaboration with the India-America Chamber of Commerce.

•  Outlining the major areas that require change and immediate implementation, Dr. Rajan said it was a good time to invest in the Indian economy now.

•  Developing infrastructure, improving quality of human capital, optimum regulation for good business and extensive financial sector reform should be the next steps for improvement and development of the Indian economy, according a press statement issued by the Consulate.

•  Dr. Rajan encouraged the Indian-American business community to get involved in the “nitty-gritty of the implementation process,” saying such involvement was not difficult especially since the Indian government had the political will to reform.

Economic recovery is likely only beyond December: RBI Governor

•  On a day when official data showed further weakening of the industrial sector, Reserve Bank Governor RaghuramRajan said that the Indian economy was expected to weaken further and a recovery was likely only beyond December.

•  He cautioned that despite the sharp surge in sentiment in the economy, captured by consumer and investor confidence surveys, including by the Reserve Bank, a pick-up in investments would take time.

•  “We have to accept that recoveries are not straight-line recoveries … there is volatility around the general trend … investment is yet to pick up on a strong basis, [though] we are seeing signs of the coming together of conditions for it [including a stable government that has signalled pro-investments initiatives] … there will be slight weakening compared with the first quarter in the second and third quarters, but beyond that we will hopefully see some strengthening of the economy,” he told.

•  Dr. Rajan is here to attend the International Monetary Fund (IMF) and World Bank Group annual meetings. Official data released in New Delhi showed factory output growth slowed further to 0.4 per cent in August, marginally lower than the 0.5 per cent in July.

Trade Unions in protest against ‘anti-worker’ policies

•  Trade unions such as the CITU, AITUC, IFTU, and TNTUC jointly organiseddharna at the Vizianagaram Collector’s office, in protest against the State government’s ‘anti-worker policies.’.

• The protesters said that after Chief Minister N. Chandrababu Naidu came to power, the government had retrenched around 9,000 field assistants and 3,000 work inspectors and others in the Housing Corporation and alleged that TDP cadres were now trying hard to appoint their men by replacing Anganwadi and Aashaworkers . “We will continue to protest until Mr. Naidu does not change his attitude,” they said.

IIP will not impact GDP growth: Nirmala Sitharaman

•  Union Minister of State for Commerce and Industry Nirmala Sitharaman, dismissed fears about the latest data on index of industrial production (IIP), saying they were overly worrisome and would not impact the country’s GDP growth.

•  The Minister, along with Minister of State for Textile Santosh Gangwar, was here to meet the stakeholders in the jute industry.

•  Responding to reporters’ queries, Ms. Sitharaman said over the last few months, the government had improved the ease of doing business. There were signs of revival, or else agencies such as Standard and Poor’s would not have assigned a stable outlook to India.

•  To a question on FTAs (free trade agreements), she said a review of SEZs (special economic zones) and FTAs was now in the final stages. The new Foreign Trade Policy, due to be announced soon, would give domestic manufacturers and exporters the benefit of the revisions.

•  She said her Ministry wanted better utilisation of the FTAs for boosting exports, adding that India was keen on FTAs with ASEAN countries.

• On WTO negotiations, Ms. Sitharaman said India believed in multi-lateral agreements, but not at the cost of the country’s sovereignty.

Overseas investors pull out Rs. 800 crore from stock market

•  Overseas investors have pulled out nearly Rs. 800 crore from the Indian stock market since the beginning of this month, mainly on account of profit booking. In comparison, the debt market saw huge inflow of over Rs. 6,300 crore during the period.

•  Foreign investors were gross buyers of equities worth Rs. 20,252 crore till October 10 and sellers to the tune of Rs. 21,038 crore — a net outflow of Rs. 786 crore (USD 128 million), according to the latest data.

•  The outflow comes after overseas investments in the stock market hit seven months low in September. Market experts attributed the outflow to profit booking and consolidation in the equity market.

•  “We have witnessed an outflow in this month mainly due to profit booking and the market is also in a consolidation mode,” CNI Research Head Kishor Ostwal said. He further said that the long-term prospects of staying invested in India are still positive.

Tata Value Homes plans to launch three new projects

•  Tata Value Homes (TVH), a fully-owned subsidiary of Tata Housing Development Company, plans to launch three new ‘Value Home’ projects in the Mumbai metropolitan area, the Delhi NCR region and Kolkata. These projects, to be launched this financial year, will develop 12,000 flats, and these will be ready in phases over a 7-8 year horizon.

•  Tata Housing Development Company Managing Director and CEO Brotin Banerjee said two of these projects were under the joint venture model, while the other one would be in a development management model.

•  Speaking on the sidelines of the launch of its e-commerce platform for home buying, www.tatavaluehomes.com, he said the plan was to also add some international projects on the portal in this fiscal. TVH was working on projects in Sri Lanka and the Maldives under the public-private-partnership model, and was also considering projects in Africa, he added.

•  TVH sold more than 750 flats online in a year, valued at over Rs.300 crore, and has now launched the e-commerce portal, Mr. Banerjee said, adding that the new user-friendly platform would allow buyers from anywhere in the world to book their flats in three easy steps, including selection of location, reviewing the details and booking online.

•  The booking entails a non-refundable payment of Rs.30,000, and the inaugural offer is ‘one price one nation’, starting from October 15. Accordingly, buyers can buy units at a uniform price across projects in Ahmedabad, Bengaluru, Mumbai, Pune and Chennai.

SEBI ban puts DLF in a spot

•  The Securities and Exchange Board of India’s ban on the country’s largest property developer, DLF, means the company could now struggle to pay down its debt using equity or debt instruments regulated by the market regulator. Its debt, which swelled as the firm ramped up land acquisitions before the financial crisis, stood at Rs.19,100 crore ($3.13 billion) at the end of June.

•  The ban, a blow to the heavily indebted real estate firm, follows what the regulator said was DLF’s failure to provide key information on subsidiaries and pending legal cases at the time of its record-breaking 2007 initial public offering.

•  A DLF spokesman said the company was reviewing the order, but declined to comment further.

•  “As far as non-disclosure cases are concerned, this is the biggest case in SEBI’s history, and this is by far the biggest punishment they have imposed,’’ said J. N. Gupta, a former Executive Director at the regulator, who now runs a shareholder advisory firm.

•  DLF raised $2.3 billion in 2007 at the height of the pre-financial crises euphoria, in what was then the country’s biggest market debut. New Delhi-based DLF builds homes, offices and shopping centres, and is now developing a 1.9-million square-foot retail mall close to the capital, which is expected to be the biggest in the country when it is completed next year.
  Retail inflation slips 7.73 % to 6.46

•  Providing respite to common man ahead of Diwali, falling food prices pulled down September retail inflation to 6.46 per cent, the lowest since the new series of Consumer Price Index was released in January, 2012, although experts do not see a rate cut by the Reserve Bank any time soon.

•  Although retail inflation, which has been on decline since July, is below the RBI target of 8 per cent by January, 2015, experts said the central bank is expected to reduce interest in the next fiscal (2015-16) only.

•  The overall food inflation as measured by CPI fell to 7.67 per cent from 9.35 per cent in the previous month and 11.75 per cent in September, 2013.

•  Retail inflation was at 7.73 per cent in August, revised downward from the earlier estimate of 7.8 per cent.

•  As per the government data released, CPI inflation in the vegetable basket in September fell to 8.59 per cent from 15.15 per cent in the previous month.

•  Inflation in fruits slowed to 22.4 per cent from 24.27 per cent in August. The price rise in protein rich items like eggs, fish and meat was slower in September against August.

•  “...while the RBI has become more proactive in providing liquidity to the banking system, it seems that lowering the policy interest rate will likely take place only in 2015,” said Barclays Research.ICRA Senior Economist Aditi Nayar said CPI at a series-low 6.5 per cent in September provides some optimism in light of the near-stagnation in industrial output in July-August, 2014.

•  In its last monetary policy, RBI had maintained status quo on interest rate citing worries on the inflation front despite industry demanding reduction.

6% rise in indirect tax collections

•  Indirect tax collections inched up by 5.8 per cent in the April-September period of this fiscal.

•  Indirect tax collections, comprising excise, customs and service tax, stood at Rs.2.42 lakh crore in the first six months of 2014-15 as against Rs.2.29 lakh crore in the corresponding period a year ago, the Finance Ministry said in a statement.

•  The growth at 5.8 per cent is far less than 25 per cent annual increase envisaged in the budget for 2014-15. Excise collections contracted marginally by 0.6 per cent during six-month period to over Rs.75,021 crore.

•  Customs mop up rose by 5.5 per cent to over Rs.89,324 crore during period under reference against Rs.84,643 crore in the same period a year ago.

•  Service tax collections, which have become a new focus area for revenue officials, grew by 13.1 per cent to Rs.77,466 crore, the statement said.

•  With an aim to widen the service tax net, the government had introduced the concept of negative list of taxation. As per it, all services except those in the negative list are taxable.

•  The indirect tax collections target for 2014-15 stands at Rs.6.24 lakh crore. Indirect tax collections in September grew by 12.3 per cent to Rs.48,012 crore. Excise duty mop up in September contracted by 0.4 per cent to Rs.14,288 crore.

Wholesale Price Inflation drops to 5-year low of 2.38% in September

•  Wholesale Price Inflation dropped to a near five year low in September to 2.38 per cent, helped by moderation in food and fuel prices. The favourable base effect of last year has also benefited the WPI.

•  The WPI based inflation was at 3.74 per cent in August 2014 and 7.05 per cent in September 2013.

•  As per data released by the government, food inflation fell to a nearly 33-month low of 3.52 per cent. The sharp drop in WPI inflation, which fell for the fourth month in a row, comes close on the heels of retail inflation declining to a record low of 6.46 per cent in September.

•  Wholesale inflation in onion contracted to 58.12 per cent in September as compared to a contraction of 44.7 per cent in the previous month. While inflation in vegetable basket as a whole shrunk to 14.98 per cent in September, rate of price rise in potato was at 90.23 per cent from 61.61 per cent in the previous month.

•  The WPI inflation in the fuel and power segment, which includes LPG, petrol and diesel, declined to 1.33 per cent as compared to price rise of 4.54 per cent in August.

•  Commenting on the data, industry body CII Director General Chandrajit Banerjee said, “Going forward, the downslide in global commodity prices led by fuel together with improved monsoon conditions and favourable policy interventions should help contain inflation and prevent prices from resuming its inflationary tendency anytime soon.”

Discriminatory regulation of tobacco cultivation will cause revenue loss: study

•  The discriminatory regulation of tobacco cultivation will cause a revenue loss of about Rs.21,000 crore annually to India Inc, besides forcing about 3.80 crore people out of livelihood, a study report, jointly conducted by the Associated Chambers of Commerce and Industry of India (Assocham) and the Thought Arbitrage Research Institute (TARI), said.

•  Releasing the report on ‘Tobacco economics in India: the voice of the farmer and other stakeholders’ here on Thursday, Assocham national Secretary-General D. S. Rawat and TARI founder Kaushik Dutta said non-ratification of the Framework Convention on Tobacco Control (FCTC) would have an adverse impact on the lives of a sizable section of people in the country.

•  The study suggested that a multi-pronged strategy of agricultural diversification in a phased manner and shifting to other economic activities was the need of the hour to provide sustainable livelihood solutions to the people associated with tobacco. “Tobacco cultivation is a lifeline for a sizable population, including rural women, tribal communities and other weaker sections,” Mr. Dutta said.

•  The alternative livelihood should be based on the capabilities of those involved in tobacco cultivation, and should match their present socio-economic position. “Or else, it will lead to economic imbalance and social conflicts,” Mr. Dutta said.

•  Further, non-ratification of the treaty for limiting tobacco production would lead to trade disputes and illegal smuggling, thereby threatening millions of jobs and lower realisation of taxes, duties and foreign exchange.

•  Terming the proposal of the Union Health Ministry to limit only Flue Cured Virginia (FCV) tobacco, an export-oriented variety, tobacco farmers said they had no qualms if the government banned all varieties of tobacco, including the ones used in other forms of products.

Exim Bank aims to boost project exports

•  The Exim Bank of India aims to boost project exports to over $50 billion from the current levels of $27 billion in the next five years through its innovative initiatives and by leveraging the increasing opportunities in Asia and Africa, Chairman and Managing Director Yaduvendra Mathur said.

•  Addressing a seminar, Mr. Mathur said project exports would be linked to job creation to get preferential treatment from the government. Henceforth, he said, whatever the projects had been exported emphasis needed to be given to generate employment opportunities in India and also work on establishing brand India, echoing the Prime Minister’s vision.

•  When industry asked for concessions from the government, it also needed to look into job creation opportunity, he added. The bank has been promoting project exports, covering overseas industrial turnkey projects, civil construction contracts, supplies as well as technical and consultancy service contracts out of India.

•  Exim Bank, in collaboration with the African Development Bank, is also setting up a Project Development Company (PDC) in Africa to identify and develop infrastructure projects with the objective of providing the Indian private sector an opportunity to invest in and implement such projects in Africa.

Guidelines for 3,000 MW solar projects released

•  In a revamped National Solar Mission (NSM) programme, the Union Ministry of New and Renewable Energy (MNRE) has now come out with draft guidelines for setting up 3,000 MW of solar PV projects under Tranche-I. Earlier planned allocation of 1,500 MW under batch II of phase II is reported to have been cancelled.

•  The proposed 3,000 MW Solar PV projects will be implemented by NVVN (NTPC Vidyut Vyapar Nigam) on Solar Parks to be developed through association of Central and State agencies.

• Under Part-I of Tranche-1 scheme, which seeks suggestions and comments from all stakeholders by October 30, a capacity of 1,000 MW of the grid-connected solar projects to be developed at a solar park in Andhra Pradesh (AP), said the document.

•  Of the 1,000 MW, a capacity 250 MW is reserved for bidding with domestic content requirement. The individual project size has been decided at 50 MW and a single group (including its subsidiaries and associates) can apply for a maximum of five projects. The power produced by these projects will be bundled with coal power and sold to utilities by NVVN. The tariff will be determined through a reverse bidding process. The allocation process is expected to commence in December.

• Meanwhile, the MNRE has now proposed to add a more ambitious solar PV capacity of 15,000 MW in three tranches under Batch II of phase II of NSM. Under Tranche-I, it has planned to add 3,000 MW (2014-15 to 2016-17), while Tranche-II envisages addition of 5,000 MW (2015-16 to 2017-18). Tranche-III will see the programme targeting 7,000 MW (2016-17 to 2018-19).

Rajasthan will streamline procedures for clearance encourage investment

•  Rajasthan will streamline the procedures for clearance of projects to encourage investment in the State. This follows reforms in the labour laws and announcement of the New Industrial Promotion and Solar Energy policies announced just last month.

•  “We want to ensure that investment is just a click away,” Rajasthan Chief Minister VasundharaRaje said at the unveiling of Hero Motocorp’s manufacturing facility and Global Parts Centre. The manufacturing unit, Hero Motocorp’s fourth in the country, named, ‘Garden Factory’ is built on ‘green concept’ to promote sustainable growth and ‘happiness’ among the workers.

•  The company has invested Rs.1,050crore in the world-class production unit and Global Parts Centre. Ms. Raje said the government was aware that the procedures and rules needed to be eased and old regulations re-visited. “We are doing that.

•  We have already made changes in three major labour laws and announced the New Investment Promotion Policy and Solar Energy Policy,” she said. The Chief Minister said the government alone could not be the source of livelihood.

•  Well thought-out partnership with the private sector can make a difference, Ms. Raje said while calling upon the private sector to invest in skill development to enhance the employability of youth. Referring to her recent visit to Singapore, where she saw the skill development platforms, Ms. Raje said Rajasthan was hopeful of collaborating with it for skill development.

AIBEA flays delay in filling top positions in ten PSU banks

•  At least ten public sector banks have been functioning without full-time chairmen and managing directors and executive directors for the last three months.

•  While the interviews were conducted recently to fill these posts, orders have not been issued. This has caused anxiety in the banking circle, said All India Bank Employees’ Association, General Secretary C.H. Venkatachalam.

•  If the Prime Minister and Finance Minister were serious about achieving the target of reaching every section of the people through their recently-launched initiative such as Jan DhanYojana, then these posts had to be filled up immediately, he said in a letter to the Prime Minister NarendraModi.

•  According to him, at least six public sector banks do not have chairmen and managing directors. These include United Bank of India, Canara Bank, Syndicate Bank, Bank of Baroda, Indian Overseas Bank and Oriental Bank of Commerce.

•  The post of second executive director has to be filled up in Allahabad Bank, Andhra Bank, UCO Bank and Union Bank of India (third position).

•  “Almost all these positions have remained vacant for three to five months, except Syndicate Bank chairman and managing director, S.K. Jain, who was suspended on August 2. What is the problem in filing these posts? A few more top posts are set to fall vacant by end-December and this will aggravate the situation,” Mr. Venkatachalam said

Partially freeze and subsequently close KYC non-compliant accounts: RBI

•  Customers, who have not complied with KYC requirements despite repeated reminders, may face trouble with RBI asking banks to partially freeze and subsequently close such accounts.

•  “As regards non-compliance of KYC (Know Your Customer) requirements by the customers despite repeated reminders by banks, it has been decided that banks should impose ‘partial freezing’ on such KYC non-compliant in a phased manner,” the Reserve Bank said in a notification.

•  While imposing ‘partial freezing’, RBI said banks are advised to ensure that the option is exercised after giving due notice of three months initially to the customers and followed by a reminder for further period of three months.

•  “Thereafter, banks may impose ‘partial freezing’ by allowing all credits and disallowing all debits with the freedom to close the accounts.

•  “If the accounts are still KYC non-compliant after six months of imposing initial ‘partial freezing’ banks may disallow all debits and credits from/to the accounts, rendering them inoperative,” it said.

Revised GST Bill in Winter Session: ArunJaitley

•  Finance Minister ArunJaitley said the revised Constitution Amendment Bill to roll out GST would be introduced in the forthcoming Winter Session of Parliament.

•  He also said the first “tranche” of compensation to states for their revenue loss arising due to phasing out of Central Sales Tax (CST) may also be taken up in the Winter Session.

•  “Confident of introducing revised GST Constitution Amendment Bill in the Winter Session. Targeting Winter Session for transfer of first tranche of CST compensation (to states),” Mr. Jaitley told reporters.

•  The government proposes to implement the Goods and Services Tax (GST) from April 1, 2016, and the new Finance Commission may be set up ahead of its schedule to look into the issues related with the new indirect tax regime.

•  The UPA government in 2011 introduced a Constitution Amendment Bill in the LokSabha to pave the way for the introduction of GST.

•  The states have sought a 5-year compensation mechanism from the Centre and demanded that it be included in the Bill.

•  Lack of consensus on compensation to states on revenue loss has delayed implementation of GST. The GST aims at subsuming most of the indirect taxes at the central as well as state level.

•  As part of the roll out of GST, the CST is being phased out and has been reduced to two per cent from four per cent.

•  The Centre collects CST and distributes it among states.

•  Kashmir Finance Minister and Chairman of the Empowered Group of State Finance Ministers Abdul Rahim Rather had said Rs 13,000 crore has been pending as CST compensation with Centre as on March 2010.

•  The government had earlier said the Finance Commission can be involved in the exercise of compensating states for revenue losses following implementation of the GST.

DLF seeks interim relief from SAT

•  Barred by the Securities and Exchange Board of India from accessing capital markets, realty giant DLF has sought interim relief from the Securities Appellate Tribunal (SAT) to allow it to redeem funds locked in mutual funds and other instruments.

•  After hearing the petition filed by the realty developer against the ban, SAT Presiding Officer J. P. Devadhar adjourned the matter to October 30, and sought response from the capital markets regulator on DLF’s plea for an interim relief.

•  Pleading for relief, the Delhi-based realtor said it needed to redeem funds, including around Rs.2,000 crore locked in mutual funds as also through redemption of some bonds worth thousands of crores, but SEBI had restrained it and six others, including top executives, from tapping capital markets for three years.

Government clears 20 FDI proposals worth Rs 988.3 crore

•  The Finance Ministry has cleared 20 FDI proposals including 6 in the pharma sector envisaging a total inflow of Rs 988.3 crore.

•  The proposals of Fresenius Kabi Oncology for Rs 119 crore and Amneal Pharmaceuticals Company’s for up to Rs 205 crore have been approved by the Foreign Investment Promotion Board (FIPB), a multi-department panel headed by Finance Secretary.

•  Indusind Bank’s proposal seeking increase in foreign investment in the bank to 74 per cent has also been cleared. The amount of fund flow would depend on when the actual transaction takes place in case of the bank.

•  The bank, according to a release today, sought “a specific request to grant post-facto approval for increase in foreign holding from 68.51 per cent to 72.07 per cent on June 30, 2014”.
  These proposals were approved at the FIPB meeting held on September 16, it said. Tamil Nadu-based Equitas Holdings Pvt Ltd, with the largest proposed investment in the lot, would bring foreign capital of Rs 325 crore.
   

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