Bharat Kapadia joins BrandAd Emedias Dollartune Board
MMNN:21 July 2017
a seasoned media professional, joins the board of BrandAd Emedia Solutions Pvt Ltd, promoters of Dollartune. Dollartune is an optin Android based application offering brand communication delivery on pay per delivery model. The application was launched in November 2016, and crossed 125,000 downloads mark, and counting, well ahead of anticipated milestone of the first year of operation. Dollartune has now targeted to grow to 200,000 downloads by Diwali.
brings in his rich experience of holding senior level positions with various media houses like Lokmat, Jagran 18, Divya Bhaskar group, and Chitralekha. He is also the founder of firstname.lastname@example.org. He has also been Chairman of Advertising Standards Council (ASCI), Chairman of Media Research Users Council (MRUC), and Chairman, Mumbai Regional Committee of Indian Newspaper Society (INS), an Industry body of the Publishers.
Promoter and Director Dollartune says that it was a seminar delivered by Bharatbhai on innovations some time back that seeded the thought of Dollartune. Having worked on the concept and perfecting it meant that advertisers have a medium where they can optimaly utilise their advertising budget. Bharatbhai joining the board is the most natural process and we are delighted to have him on the board.
Raja Gupta CEO, BrandAd Emedia Solutions said,
Having emerged as an innovative platform for advertisers to engage with customers, our objective facilitates the targeting of a more precise audience based on accurate demographics. We are indeed fortunate and would seek the expertise of Bharat Kapadia in propelling our growth.
With smartphones increasingly dominating the market, the app combines the best of ATL marketing activities, revolutionizing communication with users. With brands facing the challenge of ad-avoidance, this is an innovative and effective marketing platform for advertisers through a mobile application that is non intrusive in nature and offers abundant time to its users to engage with brands innovatively.
The Tagline Faayde ki Ghanti is to provide the user a reward value every time the phone rings. The user allows their phones to be used as a broadcast medium for the reward the brand communication takes place every time the phone rings. With a partnership with Indias largest e-wallet service, PayTM, Dollartune makes gratification for the users extremely convenient.
For Advertisers, this is an innovative platform as the Cost Per Engagement module which makes Dollartune a cost effective medium to engage with customers and target a more precise audience based on accurate Demographics. The total daily ad deliveries are in excess of 350,000 per day on the ad-wall of Dollartune, along with more than 250,000 ringtones delivered.
Dollartune is a venture by BrandAd Emedia Solutions Private Limited, promoted by Rohit Kanabar, Bharat Kapadia and Raja Gupta, experienced media professionals.
Reliance Jio to raise Rs 20,000 crore via rights issue to meet funding needs
MMNN:21 July 2017
Reliance Jio, the latest entrant in the telecom sector, will raise Rs 20,000 crore through a rights issue to meet funding requirements.
The Board of Directors at its meeting held on July 20, 2017 has decided to make a rights issue of four billion - nine per cent non-cumulative optionally convertible preference shares (OCPS) of Rs 10 each for cash, at a premium of Rs 40 per OCPS, aggregating Rs 20,000 crore, Reliance Jio Infocomm said in a regulatory filing.
An aggressive newcomer, the Mukesh Ambani-led firm launched 4G services commercially on September 5, 2016 with free data and voice offerings, and signed up the first 50 million subscribers in just 83 days.
The company started charging for mobile services from April 1, but continues to offer disruptive data rates and free voice calls.
Earlier this month, Jio rolled out new plans after its Dhan Dhana Dhan offer launched on April 11 reached the maximum allowed 90-day period.
It has lowered validity and data on a revamped Rs 309 plan, but is dishing out a bumper 84GB for Rs 399. Jio had over 112 million users at the end of April 2017.
RIL plans to sell 200 million 4G feature phones in 2 years
MMNN:20 July 2017
The company is planning to launch it in the second half of August. However, it could not be ascertained if the handsets will be sold by Reliance Retail or Jio.
With an eye on 2G mobile users, Reliance Industries is working on a strategy to sell 200 million 4G feature phones -- likely to be priced Rs 1,000- 1,500 -- in two years, industry sources told PTI.
The company is planning to launch it in the second half of August. However, it could not be ascertained if the handsets will be sold by Reliance Retail or Jio.
“Reliance has not yet finalised actual unit price of the feature phones, but it is likely to be in the range of Rs 1,000-1,500 a unit. It will be smart feature phone with pre- loaded apps of Reliance Jio like Jio TV Jio Money etc, one of the sources who did not wish to be named said.
He said the phone will not have touchscreen facility like smartphones, but will have rest of facilities like wi-fi connectivity and browsing and come with a cable that can connect the handset with television sets to watch Jio TV content.
“The company is eyeing 2G users who cannot afford expensive smartphones and are paying high call rates. Jios voice calls will be free which will encourage them to buy these handsets the source said.
Reliance Jio has started the process of importing handsets and is in discussion with Foxconn and Intex to make them in India.
“Around 10 million units are being planned for initial sales and the company has plans to increase inventory to 100 million in the first year and another 100 million next year. Discussions have started with Foxconn and Intex to make these phones in India, the source said.
Mobile industry body Indian Cellular Association in a submission to the government has said the total size of Indian mobile phone market was estimated to be around 280 million units in 2016 and is expected to grow to 320 million by 2018.
A source privy to discussions said Intex had approached RIL for bundling Jio service for a state government tender.
Intex will bid for a state government tender which has huge requirement of low-cost mobile phone, but it wants bidder to come with a service provider. The economy of scale is enough to bring down the cost of phone. The discussion with RIL started for this tender and is now moving in direction for low-cost 4G feature phones, the source said.
He said Jio will use Qualcomm chipsets in 4G feature phones.
When contacted, Reliance Jio declined to comment. Intex said: ...we are exploring various business opportunities, including those with Reliance Jio, and would keep you updated about the details as they materialise. We also keep participating in various state governments tenders and are always keen to work with them.
Infosys results look good only when compared to TCS
MMNN:17 July 2017
Infosys’s Q1 results are better than TCS’s, and to that extent come as a relief, but a 2.7% revenue growth is hardly a sign of recovery or return to double-digit growth
After Tata Consultancy Services Ltd’s (TCS) weak performance in the June quarter, Infosys Ltd’s results came as a relief for investors. Its revenues grew 2.7% in constant currency terms, in line with analysts’ estimates, while profit margins were far ahead of the Street’s expectations. TCS disappointed on both revenues and margins.
Infosys shares rose 3% in early trading, even while TCS fell by nearly as much. While the latter’s shares, understandably, continue to be under pressure, Infosys’s shares have given up most of their gains. After all, while the company’s reported profit may be more than what analysts had estimated, nothing material has changed on the ground.
At the end of the day, growth in the core business remains sluggish. As the chart alongside shows, year-on-year volume growth has fallen below the levels it stood at when Vishal Sikka had taken over as chief executive officer. According to an analyst at a multinational brokerage, it’s likely the half decent June quarter numbers were boosted by the GST (goods and services tax) project being handled by the company. Growth in core markets, he says, was far more subdued. For instance, growth in North America stood at just 1.3% sequentially, far lower than the company average.
Volvo V90 Cross Country: Should you consider it over other luxury sedans or SUVs
MMNN:15 July 2017
Volvo has found considerable success with its Cross Country models in India. First, there was the V40 Cross Country that continues to move decent numbers. Then, the company brought in the rugged S60 Cross Country sedan, which, it turns out, massively outsells its traditional sibling. The next luxury crossover from the Swedish carmaker will come in the form of the V90 Cross Country. Its a strongman-suit clad version of the V90, the estate sibling to the impressive S90 sedan. But should you consider it over typical luxury sedans or SUVs?
Youll find that the face, and much of the body up to the rear doors, is near-identical to the S90. From thereon, however, the V90s rear culminates in a sleek rear section, much unlike estates. Volvos signature tail-lamp cluster adds to the Cross Countrys handsome looks. For the luxury crossover, Volvo has toughened the design with some mild bumper cladding while standard 20-inch wheels fill out the large wheel arches nicely. Volvo has even raised the car by 60mm, giving it an SUV-rivalling 210mm of ground clearance. All-wheel drive is standard and, like the S90, there’s adaptive air suspension at the rear. The estate shape has not done well in India so far, but the V90 Cross Country presents one of the prettiest ones to have hit our roads.
The cabin, based on the S90 sedan, features the same minimalist dashboard with a large 9.0inch touchscreen that controls most of the air con and infotainment settings. The V90 Cross Country, however, trades the veneer inserts on the dash and doors of the S90 for lovely aluminium panels.
The front seats are similar to the S90s heated and superbly supportive, and with electric adjust for the bolsters, lumbar support and extendable squabs. But the V90 takes it a step further with a cooling function and an enjoyable massage feature. Theres also a heated steering wheel. The rear seats in comparison are comfortable but on the firm side and come with none of the adjustability of the front. But, the new roofline means better headroom behind than the S90. Thigh support, however, is low and extendable squabs would have helped. Space at the back is good for two, but the large transmission tunnel eats into the middle passengers legroom.
What you will never complain about is storage space the wagon has an impressive 560 litres of wide and flat boot space. Should the need arise, the rear seats can be dropped to increase that number to 1,526 litres, enough for all your kitchen sinks. Recessed under the boot is a space saver spare tyre.
Theres just one fully loaded variant which comes with all the bells and every last whistle. The equipment list includes a panoramic sunroof, a sensational 19 speakers, 1,400W Bowers and Wilkins sound system, an electric tailgate, a heads-up display, four-zone climate control, full-LED headlights and paddle shifters for the automatic gearbox
Power comes from a 235hp, 2.0-litre turbo-diesel engine that is a significantly stronger unit than the 190hp motor found in the S90 sedan. It is smooth, refined, and dishes out power in a linear fashion. Power builds till just over 4,000rpm, after which the engine starts to get quite noisy.
This motor benefits from Volvos PowerPulse technology that helps keep the engine responsive even at low revs. The system works quite well, but put your foot down at low revs, especially on inclines, and you still feel the pause before the engine starts to pull convincingly.
The eight-speed gearbox offers smooth and near-seamless shifts in normal driving conditions, but is a bit slow to downshift when driven aggressively. There is no Sport mode either, so the best solution for spirited driving is to use manual mode through the paddle shifters. There are four driving modes – Eco, Comfort, Off-road and Dynamic. Eco dulls engine response a bit and slightly softens the steering. Comfort finds a middle ground while Dynamic offers heavier steering and sharper engine response. Dynamic also firms up the suspension a bit, but the overall differences between the modes are subtle.
The V90 Cross Country can even do a fair bit of off roading. Driving it up some broken muddy tracks through a coffee estate, the car impressed. Engaging Off-road mode sends more power to the rear wheels, and effects a small rise in ground clearance and engages hill-descent control.
Ground clearance is sufficient to deal with fairly deeply rutted tracks, and the all-wheel drive works quite nicely at pulling the car up steep tracks. In fact, the overall off-road ability is comparable with something like an Audi Q5.
The handling mannerism meets Volvos new relaxed confidence approach well. While rivals focus on a sportier experience, Volvo aims more at comfort, confidence and capability. Even in Dynamic mode, the V90 Cross Country wallows and sways a bit. However, the grip levels are quite impressive, thanks to the sticky Pirelli P Zero tyres that the car comes with. But given the large wheel and rather low profile, durability of the tyres on poor roads might be an issue.
In all, the car offers brisk and capable performance, but its not particularly sporty or engaging. However, ride quality is excellent and its only the deeper potholes that cause a thud if met with speed.
The V90 Cross Country will go on sale shortly and is expected to cost Rs 60-65 lakh (ex-showroom). What it has over the S90 sedan is a more powerful engine, additional equipment, and the ability to handle the worst that our roads can offer. Safety is given full priority, of course, with a raft of features which includes radar-assisted systems like Pilot Assist, Lane Keeping Aid (only works on clearly marked roads) and Front Collision Mitigation Support. Theres also a parking assist, adaptive cruise control, hillstart assist and hill-descent control.
The V90 Cross Country opens a new niche in the market and Volvo isnt sure if it will attract more sedan buyers or SUV buyers. It will more likely be the former as the V90 Cross Country doesn’t offer the commanding presence that SUV buyers love. Either way, if you’re considering a car or an SUV at this price point, this Volvo deserves your consideration.
Sensex breaches 32k-mark, Nifty at a fresh high too
MMNN:13 Jul 2017
Breaking boundaries, the benchmark Sensex breached the 32,000 mark for the first time and the NSE Nifty hit a new peak of 9,879 today on strong buzz that a policy rate cut may be on the anvil after inflation touched a record low.
A positive lead from Asia after US Federal Reserve chief indicated a gradual approach to raising US interest rates made investors here go in for fresh bets.
The 30-share index zoomed 215.60 points, or 0.67 %, to hit a new peak of 32,020.42, surpassing previous intra-day record of 31,885.11 reached on July 11.
The gauge had rallied 444.18 points in the previous three sessions.
The stock of the largest IT exporter TCS was trading 0.65 % higher ahead of its earnings today.
All the sectoral indices, led by FMCG, capital goods, power, metal, banking and auto, were trading in the positive zone, with gains of up to 1.06 %.
Shattering records, the 50-share NSE Nifty too rose 62.40 points, or 0.63 %, to hit a new life high of 9,878.50. It had touched an intra-day record high of 9,830.05 on July 11.
There are renewed hopes of a rate cut by the Reserve Bank at its policy meet next month after retail inflation hit a historically low level of 1.54 % in June and industrial output growth slumped to 1.7 % in May.
Prominent gainers in the Sensex kitty were ICICI Bank, ITC Ltd, L&T and Sun Pharma, gaining by up to 1.69 %.
Hong Kongs Hang Seng rose 1.15 % while Japans Nikkei was up 0.15 % in early session. Shanghai Composite was up 0.33 %.
The US Dow Jones Industrial Average rallied 0.57 % to close at a record yesterday.
Amazon wins India’s approval to invest in selling food and groceries
MMNN:11 Jul 2017
Amazon confirmed winning Indian government approval for its plan to sell food products, but it declined to provide further details
Online retail giant Amazon.com Inc has secured approval to stock and sell food and groceries in India, potentially expanding its business in the fast-growing economy where it is in a pitched battle with home-grown rival Flipkart.
Amazon confirmed winning government approval for its plan to sell food products, but it declined to provide further details.
Separately, a source familiar with the matter said Amazon planned to invest $500 million in the food segment, over and above the $5 billion it had already committed to investing in India.
Cheaper smartphones, increasing internet penetration and steep discounts have led to a surge in domestic online shopping for everything from gadgets to clothes and food items in India.
Still, mom-and-pop stores account for the biggest share of grocery sales, offering organised players huge growth potential.
Currently Amazon offers food products in India via Amazon Pantry, where retailers including joint venture Cloudtail sell various products. It also offers same-day grocery delivery on its Amazon Now app through a tie-up with Indian retailers Big Bazaar, Star Bazaar and Hypercity.
Amazon did not comment on whether its new investments would affect any of its existing tie-ups, or its Cloudtail joint venture.
Venture-funded Flipkart, whose backers include Tiger Global, Tencent Holdings and Microsoft, also plans to move into the groceries space, company executives have said.
Amazon last month announced plans to buy upscale U.S. grocer Whole Foods Market Inc for $13.7 billion.
Google search sammelan held
MMNN:10 July 2017
Google search sammelen for the online publishers was held at Hotel Noorus Sabha.Google team members enlightened the delegates about the Google search engine working and discussed Various useful points for the publishers Ms. Snigdha Bhardwaj welcomed the delegates and said that the number of internet users in india would rise to 65 crore by 2021.The number of indian language users have already overtaken the English users, she said.
Mr.Syed Malik and Abhash Tripathi explained to the delegates how to keep the web safe.They said we provide tools to help webmasters make the webpages mobile friendly.
Google provide many tools for the web masters.They also advised webmasters to access g.co/Search console that would provide all vital information about the website.
While exclusively talking to Metromirror.com Mr.Abhash Tripathi told "demand for the local language content is growing and online News is the top search category"
Ms.Sinha said by the year 2020 Adspend on the local language Ads would cross 9700 crore.
She also elaborated about the Google's Adsense program and how publishers are generating significant revenue allover the world.
Technical glitch hits NSE, F&O trading stopped
MMNN:10 Jul 2017
Trading was disrupted at the National Stock Exchange on Monday morning, after price quotations for individual stocks and indexes failed to update, but the exchanges interim chief executive said it was working to resolve the technical glitch. After resuming at 11:15am, trading was suspended again.
The technical problem on individual stocks affected traders from the start of Mondays session, preventing them from placing trades, multiple dealers said.
The exchanges stock indexes updated when trading opened but also stopped soon after. Futures and options began trading normally initially, but the NSE has stopped providing quotes, the dealers said.
The NSEs interim CEO J Ravichandran to CNBC-TV 18 was working to resolve the issue.
At this point our focus is to re-start the market and then we will have to analyse the cause.
NSEs rival, BSE Ltd, said its exchange was operating normally. The benchmark BSE index rose as much as 0.77 percent to a record high, surpassing its previous milestone hit on June 22.
It may be due to some technical glitch, said a dealer at a domestic brokerage.
Indian exchanges have previously suffered from occasional trading disruptions though they have tended to be quickly resolved.
The NSE is pursuing a listing that bankers say could raise up to $1 billion though it has yet to win approval from market regulator Securities and Exchange Board of India, which is looking into a disclosure from the exchange that some brokers may have been provided unfair access to its servers.
Tax on Rosogolla, mishti doi: GST injects bitterness into popular Bengali sweets
MMNN:6 Jul 2017
Rosogolla and sandesh, misti doi and pantua - sweets that represent the soul of Bengal - have turned a tad bitter since July 1 with makers busy negotiating the maze of GST rates on the sweets, so far left out of the tax ambit.
Walk into any sweet shop in Kolkata and the dominant discussion between customers and cashier are the GST rates that have been levied on all the dozens of items that are on display.
Currently we are calculating 5% GST on all sorts of sweets, except the chocolate-flavoured ones, where the rate is fixed at 28%. We will continue to do so unless there is further notification from the government differentiating between ordinary sweets, packaged suits and dry fruit- flavoured sweets. But the apprehension of harassment possibilities are always there, said Sudip Mullick, the proprietor of the 132-year old Balaram Mullick & Radharaman Mullick. One of the most prominent chains, it has a total of six outlets throughout Kolkata.
Sweet shops across Kolkata have turned into centres of chaos: Customers are unable to decide which sweets to buy given that the before and after tax prices vary and then they get into a long discussion with the cashier to figure the exact GST on their buy.
For example, if you buy a few pieces of rosogollas, they will attract 5% tax. But if you are taking a can for your friend who lives in another city, you will be taxed at 18%. If the sweetmaker adds pista, or kesar, the rosogolla will again be eligible for 18%. The logic: the GST rate fixed for food items made out of dry fruit is 18%.
The government has clarified that the GST rate on the main product, and not on the ingredients, will prevail. But shop owners complain of confusion.
We have about 200 products. There is one basic item with additives and condiments making a few value-added varieties out of the basic variant. So you can understand the complexity it can lead to, especially with the queue of customers in our stores where each customer has to wait for an average of 10 minutes to pay, said Dipak Kumar Mukherjee, executive director, operations of K C Das Private Limited. K C Das, which is famous all over the country for its sponge rosogolla, started its first outlet in 1930.
There are around one lakh sweet shops in Bengal. An overwhelming number of them work from hole-in-the-wall existence and cant think of buying computers and software to calculate and print bills.
These sweet traders of the state say that so far no official communication has reached them, or their association, and they are constantly in fear of inspectors turning up at their door.
But its not just the sweets but also the snacks accompanying them that have felt the GST pinch.
Popular snacks such as singara (a variant of samosa) and kachuri are confusing the maker and the consumers. The GST rate fixed for these two items is 12%, but the moment one adds dry fruits or nuts for taste, they are eligible for 18%. Again, if these items (plan, without additives such as nuts) are packed, they will be taxed at 18%.
Jiten Saha, the manager of Sri Gopal Sweets in Bondel Road pointed out problems in everyday life with retail customers. Suppose if a customer comes and buys eight pieces of singara, two cups of mishti doi, four rosogollas and two chocolate sweetmeats. There are different slabs for each. Imagine the herculean task of calculating, Saha said.
Alokesh Dholey, proprietor of Jagaddhatri Mishtanna Bhandar, said that this variety of GST slabs can create problems for both the sweetmeat retailers as for the government.
Business with annual turnover of Rs 20 lakhs are totally exempted from GST, while for those having the figure between Rs 20 lakh and Rs 75 lakh, the rate is flat at 1%. This will, on the one hand, discourage sweet retailers to expand their business. On the other, there will be tendency of under-reporting turnover. Those with Rs 25 lakh turnover will try to show it within Rs 20 lakhs, while those at Rs 80-90 lakhs will try to show it within Rs 75 lakh, he said.
Mullick also sniffs regional bias in fixing GST rates.
Lassi, a staple food among north Indians, has been totally exempted from GST. But, 18% tax has been imposed on mishti doi (sweet curd), a favourite in Bengal that carries the same ingredients as lassi, he told HT.
But whatever the confusion, one thing is for sure, GST will not be able dent the Bengali appetite for sweets.
Reliance Jio may launch 4G VoLTE feature phone worth Rs 500 soon: Report
MMNN:5 Jul 2017
Reliance Jio is likely to launch its much awaited 4G feature phone priced as low as Rs 500, a media report said, which would further stiffen competition in the telecom sector which Mukesh Ambanis venture has already disrupted.
The launch could be during RILs annual general meeting on July 21, The Economic Times reported on Wednesday.
Rumour are also rife that Reliance Jio may soon launch a new 4G-capable laptop with dedicated 4G SIM slot, besides more offers and deeper discounts.
As its Dhan Dhana Dhan offer comes to a close, telecom sector observers say that Jio will continue on its customer acquisition spree with aggressive tariffs plans. Jio already has 112.55 million subscribers as of April 2017.
Currently, Jio offers smartphones under its Lyf brand, starting as low as Rs 3,000, in the economy 4G phones segment of the likes of Micromax and Intex. But a 4G phone worth Rs 500 would disrupt the Indian telecom sector that has been seen huge competition since the launch of Jio in 2016.
Mukesh Ambani has been capitalising on Indias growing internet users with big investment plans into his venture Jio. According to a recent Internet Trends 2017 report by Mary Meeker, Indias access to internet has growing exponentially from mobile phones, with 355 million users on phones in June 2016 and 277 million broadband users, as of March 2017. Only China has larger internet-using population of around 700 million.
Interestingly, 72% of Internet users in India are less than 35 years of age.
Reliance derives the bulk of its revenue from its core refining and petrochemicals operations, but the group has bet big on Reliance Jio Infocomm. When launched in September 2016, Jio offered a flurry of cheap phones, free voice and data plans, forcing some rivals to crumble and others to unite.
Mukesh Ambanis younger brother Anil Ambanis Reliance Communications merged with its smaller rival Aircel. In February, Indias biggest telco Bharti Airtel bought out the Indian operations of Norways Telenor. This was followed by Britains Vodafone announcing a merger with Aditya Birla Groups Idea Cellular, to together become the biggest telecom company in India.
Reliance Jio, however, controls the highest chunk of 4G airwaves across India.
Samsung to invest $19 billion in chip, display plants in South Korea
MMNN:4 Jul 2017
Global tech companies have been increasing servers and data centers to handle more data from mobile devices and auto vehicles and also on expectations that adoption of artificial intelligence would create even more demand for handling data.
Samsung Electronics said Tuesday it will invest 21.4 trillion won ($19 billion) in the next four years in its memory chip and display plants in South Korea.
The South Korean company’s announcement comes as the global memory chip industry enjoys a massive boom thanks to a surge in demand for microchips. Global tech companies have been increasing servers and data centers to handle more data from mobile devices and auto vehicles and also on expectations that adoption of artificial intelligence would create even more demand for handling data.
Samsung said by 2021, it will spend an additional 14.4 trillion won ($12.5 billion) to increase the capacity in its memory chip factory in Pyeongtaek, south of Seoul, which began operating in the day. Samsung said the 15.6 trillion won ($13.6 billion) chip plant, which broke ground two years ago, is one of the largest semiconductor production lines in the world.
Samsung will spend 6 trillion won ($5.2 billion) in its memory chip cluster in Hwaseong as well.
Another 1 trillion won ($871 million) will be spent on its display factory in Asan, which produces OLED screens for mobile phones. Samsung uses OLED screens for its high-end Galaxy smartphones. The advanced displays have allowed Samsung to distinguish its Galaxy phones from rivals with curved forms. Samsung is the dominant supplier and OLED screens for mobile devices are a lucrative business for the company, along with memory chips.
Samsung added that it is considering adding more semiconductor production lines in its factory in Xi’an, China.
GST rollout to be very smooth, assures FM
MMNN:1 Jul 2017
We will be very liberal in the first two months. For two months we have given a lot of laxity since we are getting into a new order,Arun Jaitley/ Finance Minister.
New Delhi : Finance Minister Arun Jaitley on Friday held out the assurance of a very smooth transition into the Goods and Services Tax (GST) regime, promising that the administration will be very liberal and not implement it very strictly in the first two months.
Acknowledging that there will be some minor problems when a massive change takes place, he said that things will smoothen out in the times to come
I think the roll-out will be very smooth, as smooth as possible. All systems are in place. When massive change takes place there is an element of uncertainty of the unknown and when there is unknown there is fear. The whole process will change. There will be some minor problems.I think that will be a matter of days, he said.
He was replying to a question at the Aaj Tak GST Conclave on how smooth he expected the transition into the new indirect tax regime. Asked if he would give a time-frame by when things will smoothen out, he said the process of registration is on. People will get attuned to the system, reports IANS.
We will be very liberal in the first two months. For two months we have given a lot of laxity since we are getting into a new order, he said.There may be glitches because of lack of awareness. In any technology, glitches are possible. But glitches are rectifiable almost immediately, Jaitley said. This is a formal launch, because the switch over will be from 12 midnight. Its an idea of the government, he said when asked why the midnight hour was chosen for the launch. Jaitley said that the July 1 roll-out date was not his decision. It was the GST Councils decision.
Last years constitutional amendment was valid till September 15. After September 15, we would have been a tax-less society. The Constitution does not allow this. There would be anarchy if we postponed it by six months, he said.
On the whole, he said, the new law will bring in the principle of equivalence and equity in the indirect tax regime.
Indirect tax is regressive. For a product, rich or poor has to pay same tax. To bring equity in indirect tax, the product being used by common man is being taxed at lesser rate. Single slab tax not possible in India. It may be possible in a developed country, he said.
There is a need to bring equity in indirect taxation, otherwise rich and poor will be paying the same tax. The Finance Minister said that the multiple tax slabs were chosen to keep a tab on inflation.
Multiple tax rates necessary to check inflation. To prevent inflationary impact, 12, 18 per cent tax rate was necessary. At some later stage, they may be converged into 15 per cent.
If you see the overall tax rate and the goods basket, the revenue will go up but the burden will come down, he said.
GST Launch 2017 Live: A milestone in cooperative federalism, says PM Modi in Parliament
MMNN:1 Jul 2017
New Delhi: The much-awaited Goods and Services Tax (GST) was rolled out from midnight tonight from the historic Central Hall of Parliament in the presence of President Pranab Mukherjee, Prime Minister Narendra Modi, finance minister Arun Jaitley and other Cabinet ministers, many chief ministers and senior government officials. The Congress and the Left parties have decided to skipped the launch though some opposition parties attended the event.
The GST has replaced more than a dozen central and state taxes or Value Added Tax (VAT) with an aim to create a seamless unified market for the $2 trillion Indian economy.
Here are the live updates to the GST launch:
President Pranab Mukherjee, Prime Minister Narendra Modi press button to officially launch GST. (PTI)
President Pranab Mukherjee said the ambitious central tax is a tribute to the maturity and wisdom of Indias democracy.
The new era in taxation, which we are about to initiate in a few minutes, is the result of a broad consensus arrived at between the Centre and states, Mukherjee said minutes before the GST roll-out in his speech at a special function in the central hall of Parliament.
This consensus took not only time but also effort to build. The effort came from persons across the political spectrum who set aside narrow partisan considerations and put the nations interests first. It is a tribute to the maturity and wisdom of Indias democracy, he said.
The President termed the GST a disruptive change.
It is also a moment of some satisfaction for me because, as the Finance Minister, I had introduced the Constitution Amendment Bill on 22 March 2011 he said.
It is similar to the introduction of VAT when there was initial resistance. When a change of this magnitude is undertaken, however positive it may be, there are bound to be some teething troubles and difficulties in the initial stages, he said.
Mukherjee said these issues have to be solved with understanding and speed to ensure that they do not impact the growth momentum of the economy.
Success of such major changes always depends on their effective implementation. In the months to come, based on the experience of actual implementation, the GST Council and the Central and state governments should continuously review the design and make improvements, in the same constructive spirit as has been displayed till now, he said. (PTI)
Prime Minister Narendra Modi today termed the GST as a good and simple tax which will end harassment of traders and small businesses while integrating India into one market with one tax rate.
In the historic Central Hall of Parliament, Modi said the indirect tax reform is a result of combined efforts of various political parties at different points of time.
GST, he said, is an example of cooperative federalism as the centre and states together thrashed out the new law with consensus.
Besides being a transparent and fair system that will end generation of black money and corruption, GST will promote new governance culture that will end harassment at the hand of tax officials.
Touching upon initial teething troubles that may be witnessed because of unification of more than a dozen central and state levies into one and switching over to a new online return filing system, Prime Minister said even eyes have to adjust for a couple of days when a sight corrective spectacles are worn.
Modi said GST will eliminate the compounding effects of multi-layered tax system. (PTI)
Finance minister Arun Jaitley today said rollout of the GST will ease inflation, make tax avoidance difficult and boost GDP growth.
Addressing the midnight launch event of the GST in the Central Hall of Parliament, Jaitley said the implementation of the landmark unified tax should be seen as the beginning of a new journey that will expand the countrys economic horizon.
He further said that 17 transaction taxes in states and centre and 23 cesses would be subsumed in GST. An assessee will have to file only one return.
Inflation will come down, tax avoidance will be difficult, Indias GDP will be benefited and extra resources will be used for welfare of poor and weaker section, Jaitley said.
India is making history with the launch of GST, which is the biggest and most ambitious tax and economic reform in its history, the finance minister said.
The old India was economically fragmented. New India will create one tax, one market, one nation. It will be in India where Centre and states work together towards the common goal of shared prosperity, Jaitley said.
Terming GST as an important achievement for the country, he said not only will India write a new destiny, the new tax regime would also strengthen federalism.
The Constitution says India is a union of states. The union is strong if both Centre and states are strong. That is the real meaning of cooperative federalism.While enacting the GST, neither the states nor Centre gave up their sovereignty. They have pooled their sovereignty to make joint decisions in indirect taxation, the finance minister said.
In a large and complex federal system of multi-party democracy with Centre and 29 states and 2 UTs, Jaitley said India has implemented a constitutional amendment and brought in a large tax reform.
We have done this at a time when world is facing a slow growth, isolationism and lack of structural reforms. With the GST, India has showed that these forces can be overcome through display of inclusion, openness and boldness, he said.
He appreciated the efforts of all members of parliament, state finance ministers and officials in making GST a reality when many had expressed doubts whether it could be implemented from 1 July.
Jaitley also recalled the initiatives taken by his predecessors, including the then finance minister Pranab Mukherjee. He recalled the contribution of former finance Yashwant Sinha and former economic affairs secretary Vijay Kelkar.
All decisions of GST Council were taken uninamously.We did not want to burden common man and weaker section, Jaitley said.
President Pranab Mukherjee, PM Narendra Modi, VP Hamid President Pranab Mukherjee, PM Narendra Modi, VP Hamid Ansari arrive in Central Hall of Parliament for launch of GST. (PTI)
Rollout of the Goods and Services Tax is historical as it will bring about a revolutionary change in the country, Maharashtra Chief Minister Devendra Fadnavis said today, hours ahead of the high-profile event in Delhi to mark the transition to the new tax reform.
One nation, one tax, one market will come into effect with the rollout of GST. The taxation system will make trading easier. While Maharashtra will benefit from GST, other states too will benefit a lot and our economy will get a boost, Fadnavis said in a statement issued. (PTI)
With the Goods and Services Tax (GST) coming into effect from tomorrow, rail passengers will have to pay a little more to travel AC and first class. Service tax on AC ticket charges will be hiked from 4.5% to 5%, an increase of 0.5%, after the GST implementation. Similarly, GST on transport of goods by rail will be 5% in place of service tax of 4.5% levied earlier with exemption for essential goods like milk and agriculture produce. Service tax is levied only on AC and first class fares in the Railways. (PTI)
Retailers offered steep discounts before shutting shop for software updates before GST launch at midnight on Friday. Read more
Union minister M Venkaiah Naidu today said there would be some initial hiccups in rolling out the Goods and Services Tax (GST), but those can be addressed. (PTI)
Consumers will have to shell out more for banking services, insurance premium payments and credit card bills with GST rollout from Saturday. ATM withdrawals, debit card transactions, fund transfers too will cost more. read more
Restaurants will present diners with two bills in some places on Friday one before midnight, and one after that to reflect the tax change after GST launch. read more
Retailers on an overdrive to clear stocks before the GST launch at midnight kicked in, as they wanted to minimise their pre-tax regime inventory. Prices of branded garments would go up from Saturday in line with the 12% GST rate on garments priced above Rs1,000. Those that cost less than Rs1,000 will be taxed at 5% and could be priced lower.
What was driving the discounts was the fact that traders will get only 60% credit for taxes paid by them while sourcing their stocks for meeting the GST liability on the sales they make, if invoices for taxes paid previously are not available. If documents proving taxes paid previously are available, full tax credit will be granted under the GST regime.
Power Minister Piyush Goyal today said that GST rollout is a transformational move aimed at increasing revenues that will bring down the taxes in future. (PTI)
The Delhi BJP today said it will organise camps to help trader organisations and the common people on problems and misconceptions related to the Goods and Services Tax (GST). Delhi BJP president Manoj Tiwari said finance minister Arun Jaitley will address a GST-related meeting at the Talkatora Stadium on 6 July.
Nokia appoints Samsung executive as head of technologies
MMNN:30 Jun 2017
The badge Nokia is eyeing a comeback in the smartphone industry led by Apple iPhone and an array of Chinese players.
Senior Samsung executive Gregory Lee has been appointed as the head of Nokias technologies unit and member of the group leadership team, the telecoms network equipment maker said on Friday.
Gregorys passion for innovation and operational excellence, along with his proven ability to build and lead global consumer technology businesses, make him well suited to advance Nokias efforts in virtual reality, digital health and beyond, the Finnish company added.
The badge Nokia is eyeing a comeback in the smartphone industry led by Apple iPhone and an array of Chinese players. Recently, the company, promoted by a group of former Nokia employees called HMD Global, launched three new Android-based smartphone range -- Nokia 6, Nokia 5 and Nokia 3.
Like several others, Samsung rose as a smartphone maker on Googles open-source Android operating system, which Nokia refused to adopt, eventually led to its downfall and bankruptcy.
IndiGo airlines expresses interest in buying stake in Air India: Report
MMNN:29 Jun 2017
IndiGo airlines, owned by InterGlobe Aviation, has expressed an unsolicited interest in buying a stake in state-owned carrier Air India, television channel CNBC-TV18 reported on Thursday quoting the aviation ministry.
Cabinet on Wednesday gave approval to privatise debt-laden Air India, the first step of a process that could see the government offload an airline struggling to turn a profit in the face of growing competition from low-cost rivals.
Shares in InterGlobe Aviation were trading lower by 3.3 percent at 0841 GMT in a strong Mumbai market.
SpiceJet chief the man of the moment at Modi-Trump meet
MMNN:28 Jun 2017
Starting a week before Trump’s inauguration in January, SpiceJet has placed orders for 225 planes with Boeing, which is worth more than $22 billion
He is the man you didn’t see at the Rose Garden presser by Prime Minister Narendra Modi and President Donald Trump, but heard about there. And his company’s big deal with an American company has the whole town from the White House to US congress talking.
He is the man Vice-President Mike Pence sought out on Tuesday from a hall full of top business executives from India and the US at the annual summit of US India Business Council and met him backstage before taking the podium.
“He greeted me by my name and said, ‘Look. I know about the company and I know about the order that’s been placed by your company,” Ajay Singh, the soft-spoken chairman and managing director of SpiceJet, who got a shout-out from Trump at the Rose Garden presser, said in an interview to Hindustan Times.
“I was pleased to learn about an Indian airline’s recent order of 100 new American planes, one of the largest orders of its kind, which will support thousands and thousands of American jobs, the president had said, with the prime minister by his side, without naming either Singh or SpiceJet.
Starting a week before Trump’s inauguration in January, SpiceJet has placed orders for 225 planes with Boeing, which is worth more than $22 billion and which will, according to a US government certification, create 132,000 jobs. The first planes will start arriving in 2018, with the last in 2024.
Ads by ZINC
In Singh’s telling, it was Boeing’s idea to let the US government know of the deal once work go under way on Modi’s visit. It seemed like a good idea, and as it wound around the corridors of power in New Delhi and DC, it got even better, picked up backers and, finally, the PM’s office asked for a note.
Singh says he never expected this kind of attention when he placed those orders turning around a company he had built and left and came back to rebuild, from near bankruptcy — “when I took over the company (in 2015) its stocks were at Rs 12 each, and they are now at Rs 125; (we have) done well”.
Sure, well enough to be cited as an example of opportunities for American companies in the Indian growth story and find mention in the Fact Sheet issued by the White House after the meeting of the two leaders listing the highlights of the cooperation between the two countries.
In their short meeting backstage at the USIBC event, Singh said Pence expressed the desire to visit SpiceJet offices when he travels to India — on Prime Minister Modi’s invitation, which he said he has accepted — at a date to be determined.
Later on Tuesday, Singh was on Capitol Hill to meet lawmakers.
So how does it feel? “It’s great, fantastic,” Singh said, leaning forward in his seat in the coffee shop of a hotel in downtown DC, “It’s a great testament to what SpiceJet has achieved…and we are glad were a part of his whole .. important meeting.”
Robots are coming: What jobs will still be around in 20 years?
MMNN:27 Jun 2017
A study by Oxford University examined 702 common occupations and found that some jobs – telemarketers, tax preparers and sports referees – are at more risk than others including recreational psychologists, dentists and physicians.
The robots are coming, the robots are coming!
Regular reports warn us that an automation apocalypse is nigh. In January, a McKinsey & Company study found that about 30% of tasks in 60% of occupations could be computerised and last year, the Bank of England’s chief economist said that 80m US and 15m UK jobs might be taken over by robots .
Of course, not all jobs are created equally. In 2013, a highly cited study by Oxford University academics called The Future of Employment examined 702 common occupations and found that some jobs – telemarketers, tax preparers and sports referees – are at more risk than others including recreational psychologists, dentists and physicians.
In the past, reports of the death of human jobs have often been greatly exaggerated, and technology has created a lot more jobs than it has wiped out. It’s called the “Luddite Fallacy”, in reference to the 19th century group of textile workers who smashed the new weaving machinery that made their skills redundant. Further, in the last 60 years automation has only eliminated one occupation: elevator operators .
While there have been optimistic predictions that new technology would increase prosperity and lower drudgery, very few of us are working the 15-hour work week that, in 1930, the economist John Maynard Keynes predicted would be the norm for his grandkids. If anything, we’re working 15-hour days.
Today’s technological revolution is an entirely different beast from the industrial revolution. The pace of change is exponentially faster and far wider in scope. As Stanford University academic Jerry Kaplan writes in Humans Need Not Apply : today, automation is “blind to the colour of your collar”. It doesn’t matter whether you’re a factory worker, a financial advisor or a professional flute-player: automation is coming for you.
Before we get too deep into deep into doom and gloom, it’s worth stressing that automation isn’t synonymous with job losses. Speaking to me over the phone, Frey was quick to point out that his work doesn’t make any explicit predictions such as “47% of US jobs will disappear”. It simply says that these jobs are exposed to automation.
In other words, the jobs themselves won’t entirely vanish; rather, they will be redefined. Of course, as Frey concedes, “from the perspective of the worker there is not much of a difference” between work disappearing and being radically redefined. It’s likely they’ll lack the new skill sets required for the role and be out of a job anyway.
Professor Richard Susskind, author of The Future of the Professions and Tomorrow’s Lawyers , echoes this distinction. “What you’re going to see for a lot of jobs is a churn of different tasks,” he explains. “So a lawyer today doesn’t develop systems that offer advice, but the lawyer of 2025 will. They’ll still be called lawyers but they’ll be doing different things.”
So which professions are at greatest risk?
Martin Ford, futurist and author of Rise of the Robots: Technology and the Threat of a Jobless Future , explains the jobs that are most at risk are those which “are on some level routine, repetitive and predictable”.
Telemarketing, for example, which is highly routine, has a 99% probability of automation. according to The Future of Employment report; you may have already noticed an increase in irritating robocalls. Tax preparation, which involves systematically processing large amounts of predictable data, also faces a 99% chance of being automated. Indeed, technology has already started doing our taxes: H&R Block, one of America’s largest tax preparation providers, is now using Watson , IBM’s artificial intelligence platform.
Robots will also take over the more repetitive tasks in professions such as law, with paralegals and legal assistants facing a 94% probability of having their jobs computerized. According to a recent report by Deloitte, more than 100,000 jobs in the legal sector have a high chance of being automated in the next 20 years.
Fast food cooks also face an 81% probability of having their jobs replaced by robots like Flippy, an AI-powered kitchen assistant which is already flipping burgers in a number of CaliBurger restaurants.
Ford, the futurist, classifies resilient jobs in three areas.
The first is jobs that involve “genuine creativity, such as being an artist, being a scientist, developing a new business strategy”. Ford notes: “For now, humans are still best at creativity but there’s a caveat there. I can’t guarantee you that in 20 years a computer won’t be the most creative entity on the planet. There are already computers that can paint original works of art. So, in 20 years who knows how far it’s going to go?”
The second area is occupations that involve building complex relationships with people: nurses, for example, or a business role that requires you to build close relationships with clients.
The third area is jobs that are highly unpredictable – for example, if you’re a plumber who is called out to emergencies in different locations.
You can see these parameters at play in the jobs The Future of Employment identifies as least at risk of automation, which include recreational therapists, first-line supervisors of mechanics, installers, repairers, occupational therapists and healthcare social workers.
While being in a creative or people-focused industry may keep your job safe for the next 10 years or so, it’s very hard to predict what will happen 20 years into the future. Indeed, Susskind stresses that we should be wary of downplaying just how much computers might change the working world.
She says she believes that the 2020s are going to be a decade not of unemployment, but of redeployment. Beyond that, however, the picture is far less clear: “I don’t think anyone can do long-term career planning with any confidence.” As Susskind notes, “we make assumptions about the indispensability of human beings”, but machines are already doing things we thought only humans might be able to. They’re composing original music , for example, and beating professional players at complex board games with creative moves.
They’re even helping us with our relationships with God. While the clergy only has a 0.81% probability of automation, according to data from The Future of Jobs, Susskind believes even algorithms might one day replace the ordained. As he notes, there are already apps like Confession which offer “drop-down menus for tracking sin”.
While we’ve been doing a lot of robot-bashing, it should be noted that automation isn’t the only phenomenon having an impact on the job market. Saadia Zahidi , head of the education, gender and work system initiative at the World Economic Forum (WEF), says that we “shouldn’t forget that there are other drivers of change”.
A 2016 WEF report identified such drivers as climate change, the rise of the middle class in many emerging markets, aging populations in certain parts of Europe and East Asia, and the changing aspirations of women as factors that will have significant impacts on jobs. “It’s really the coming together of these various drivers of change that then leads to disruptions in the labor market,” Zahidi notes.
The report warns that we’re going to see significant ramifications from automation very soon. Zahidi explains: “The next three years will be a period of flux and a period of relatively higher losses than gains. This is not meant to be alarmist in the sense that there will be heavy job losses. But if we do nothing then this will be where we end up.”
Automation may also exacerbate gender inequality, Zahidi says. Women don’t make up a large proportion of people who are going into science, technology, engineering and math (Stem) and IT fields, which are likely to be the areas in which jobs will grow. On the other hand, Zahidi notes, there do tend to be more women in care-related professions, such as healthcare and education, which are at a lower risk of automation.
In the long run, women may actually end up faring better from technological change. A recent PricewaterhouseCoopers report found that a higher proportion of male than female jobs are at risk of automation, especially those of men with lower levels of education.
Related: Why robots should be taxed if they take people’s jobs | Robert Shiller
Justin Tobin, founder of the innovation consultancy DDG, says he believes: “More and more independent thinkers are realizing that when being an employee is the equivalent to putting all your money into one stock – a better strategy is to diversify your portfolio. So you’re seeing a lot more people looking to diversify their career.”
Faith Popcorn, a futurist, echoes the idea that we will all have to become as agile as possible and “have many forms of talent and work that you can provide the economy”.
In the future, she says, we’ll all have seven or eight jobs, with the average adult working for a number of companies simultaneously rather than working for one big corporation.
“We’re in the midst of this huge sweeping change that is going to impact all levels of society,” Popcorn warns.
Predicting the future is Popcorn’s livelihood, and she’s made herself a bit of a legend over the years doing so, but even she seems a little unsettled by the pace of change today. As she tells me with a world-weary sigh, it “just makes you want to have some more tequila”.
RBI reconstituted Overseeing Committee
MMNN:23 Jun 2017
The Reserve Bank of India(RBI) has reconstituted the Overseeing Committee (OC) to include five members from two earlier to expedite resolution of stressed assets in the banking system.
The three new members of the OC are: MBN Rao , YM Deosthalee and S Raman. Mr Raman will join the OC on September 7.
So far, the committee had only two members ”Pradeep Kumar and Janki Ballabh. Kumar is the Chairman of the OC.
Are half-baked anti-profiteering rules a nightmare in the making?
MMNN:21 Jun 2017
Businesses are worried whether anti-profiteering rules under GST would lead to witch-hunting by taxmen
In the current format, the government’s anti-profiteering rules on the goods and services tax (GST) raise more questions than answers. While the intent is to curtail inflation post-GST implementation, the notification suffers from a lamentable lack of clarity on many aspects, increasing uncertainty for businesses.
To begin with, the law would be applicable to all businesses irrespective of their nature or revenue. Since businesses are already struggling to brace for the 1 July deadline, tax experts say it would have been better if these provisions were restricted to those having oligopolistic markets or ones where a significant inflationary spiral is expected due to GST.
“The concern at this point in time is whether the sweeping provisions provided in the law can be effectively enforced without affecting business confidence. Also, every reduction in tax rates or increase in input tax credit may not lead to a corresponding reduction in prices as there could be simultaneous upward movement of costs of raw material or forex swings,” said MS Mani, senior director (indirect tax) at advisory firm Deloitte India.
Retro tax on Cairn: I-T dept orders recovery of Rs 10K cr, to seize shares in Indian firm
MMNN:19 Jun 2017
The Income Tax Department has ordered coercive action against Cairn Energy Plc to recover Rs 10,247 crore of retrospective tax after the British oil firm lost a challenge to the move before an international arbitration panel.
The department ordered taking away $104 million dividend due to it from its remaining stake in the erstwhile subsidiary Cairn India (now called Vedanta Ltd) and another Rs 1,500 crore of tax refund due to it, a top source said.
This follows an international arbitration panel last week deciding not to entertain a plea by Cairn Energy seeking injunction against the coercive action to recover the tax.
The source said the tax department will now move to take over the 9.8% shareholding Cairn Energy had in Cairn India.
In an emailed statement, Cairn Energy confirmed the tax department’s move.
“On June 16, 2017 the Indian Income Tax Department (IITD) issued an order to Vedanta India Ltd (VIL) directing it to pay over any sums due to Cairn. Sums due to Cairn from VIL now total USD 104 million, including historical dividends of $ 53 million and a further dividend of $ 51 million after the merger of CIL and VIL,” it said.
The company said however that it will continue with the international arbitration proceedings against the retrospective tax demand.
“Cairn is seeking full restitution for (UK-India Bilateral Investment Treaty) Treaty breaches resulting from the expropriation of its investments in India in 2014, the attempts to enforce retrospective tax measures and the failure to treat the Company and its investments fairly and equitably,” it said.
The company said it has a high level of confidence in its case under the Treaty and, in addition to resolution of the retrospective tax dispute, its claim seeks damages equal to the value of the Group’s residual shareholding in Cairn India at the time it was attached (approximately $1 billion).
US Fed raises key interest rate to 1.0-1.25%, unveils cuts to bond holdings
MMNN:15 Jun 2017
The decision lifted the Federal Reserve’s benchmark lending rate by a quarter percentage point to a target range of 1.00% to 1.25%
The Federal Reserve raised interest rates on Wednesday for the second time in three months, citing continued US economic growth and job market strength, and announced it would begin cutting its holdings of bonds and other securities this year.
The decision lifted the US central bank’s benchmark lending rate by a quarter percentage point to a target range of 1.00% to 1.25% as it proceeds with its first tightening cycle in more than a decade.
In its statement following a two-day meeting, the Fed’s policy-setting committee indicated the economy had been expanding moderately, the labour market continued to strengthen and a recent softening in inflation was seen as transitory.
The Fed also gave a first clear outline on its plan to reduce its $4.2 trillion (3.28 trillion pounds) portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession.
“The committee currently expects to begin implementing a balance sheet normalisation programme this year, provided that the economy evolves broadly as anticipated,” the Fed said in its statement.
The central bank said it would gradually ramp up the pace of its balance sheet reduction and anticipates the plan would feature halting reinvestments of ever-larger amounts of maturing securities.
The Fed said the initial cap for Treasuries would be set at $6 billion per month initially and increase by $6 billion increments every three months over a 12-month period until it reached $30 billion per month in reductions to its holdings.
For agency debt and mortgage-backed securities, the cap will be $4 billion per month initially, increasing by $4 billion at quarterly intervals over a year until it reached $20 billion per month.
US stocks rose after the Fed announcement, while the dollar reversed some of its earlier losses.
“The Fed announcing an update to their reinvestment principles leaves September open. The start of balance sheet runoff and the fact that they haven’t slowed their projected path of rate hikes suggest they can do both balance sheet and rate hikes at the same time,” said Gennady Goldberg, interest rate strategist at TD Securities.
Fed Chair Janet Yellen was holding a press conference at 2:30pm EDT (1830 GMT).
Eyes on inflation
The Fed has now raised rates four times as part of a normalization of monetary policy that began in December 2015. The central bank had pushed rates to near zero in response to the financial crisis.
Policymakers also released their latest set of quarterly economic forecasts which showed temporary concern about inflation and continued confidence about economic growth in the coming years.
They forecast US economic growth of 2.2% in 2017, an increase from the previous projection in March. Inflation was expected to be at 1.7% by the end of this year, down from the 1.9% previously forecast.
A retreat in inflation over the past two months has caused jitters among some Fed officials who fear that the shortfall, if sustained, could alter the pace of future rate hikes. Earlier on Wednesday, the Labor Department reported consumer prices unexpectedly fell in May, the second drop in three months.
The Fed’s preferred measure of underlying inflation has retreated to 1.5%, from 1.8% earlier this year, and has run below the central bank’s 2% target for more than five years.
Expectations of any fiscal stimulus in the near term from the Trump administration have also waned with campaign promises on tax cuts, regulation rollbacks and infrastructure spending either still on the drawing board or facing hurdles in Congress.
Interest rates are seen rising one more time by the end of this year, according to the median projection of the forecasts released with the Fed’s policy statement, in keeping with the previous forecast.
Estimates for the unemployment rate by the end of this year moved down to 4.3%, the current level, and to 4.2% in 2018, indicating the Fed believes the labour market will continue to tighten.
The median estimate of the long-run neutral rate, which is seen as the level of monetary policy that neither boosts nor slows the economy, was unchanged at 3.0%.
Minneapolis Fed president Neel Kashkari dissented in Wednesday’s decision.
WPI inflation in May cools to 5-month low of 2.17%
MMNN:14 Jun 2017
Inflation based on the wholesale price index fell to a five-month low of 2.17% in May, mainly because of a sharp drop in prices of vegetables.
In December, the reading was 2.10%.
WPI inflation was 3.85% in April and (-)0.9% in May 2016.
Pulses and cereals saw a slower growth in prices.
The wholesale price index (WPI) for the month is based on the new base year 2011-12, which was revised last month from 2004-05, with an aim to reflect the macroeconomic picture more accurately.
The slowdown in wholesale inflation comes against the backdrop of retail inflation easing to a multi-year low of 2.18% in May.
Government data showed that prices of food articles shrank by 2.27% in May on an yearly basis.
The inflation print for vegetables read (-)18.51 %. While potato saw a deflation of 44.36 %, for onion, it came in at 12.86 %.
The rate of price increase was 4.15 % in cereals, down from 6.67 % in May last year. Protein-rich pulses turned cheaper in May as prices fell by 19.73 %.
Eggs, meat and fish saw a price decline of 1.02 % annually.
The index basket of the new series has a total of 697 items, including 117 for primary articles, 16 for fuel and power and 564 for manufactured products.
There was acceleration in prices of fuel and power (11.69 %) and manufactured products (2.55 %).
However, the price rise in sugar, which falls under the category of manufactured items, slowed to 12.83 % in May, from 23.12 % a year earlier.
Google’s Gboard to now recognise hand-drawn emojis, suggest phrases as you type
MMNN:13 Jun 2017
Google rolled out the Gboard for more than 200 languages, besides expanding support for languages like Hawaiian, Maori and Belgian French.
Thanks to the latest update of Google’s Android keyboard, you will now be able to draw the emoji you wish to send across. The update makes the Google keyboard, called Gboard, more user-oriented on Android devices.
To start with, you can draw emojis which you are struggling to find on the emoji keyboard.
“In the emoji search box, you can now tap the emoji handwriting icon to draw emoji directly onto the screen. Your drawing will automatically be recognised and show results for your favourite emoji,” Google said in a blogpost on Tuesday.
In the latest update, Gboard has taken predictive typing to next level. It now suggests phrases that could follow, instead of words, as you type.
Google gave an example: Try typing “looking forward” and Gboard suggests “to seeing” or “to it” as you type. This is supported in English today and will be rolling out to more languages soon.
The Google Search on Android phones will now show multiple, more interactive result cards.
Google rolled out the Gboard for more than 200 languages, besides expanding support for languages like Hawaiian, Maori and Belgian French
India's plan to develop Iran's Chabahar port yet to see light as US weighs sanction
MMNN:10 Jun 2017
Western manufacturers are shying away from supplying equipment for an Iranian port that India is developing for fear the United States may reimpose sanctions on Tehran, Indian officials say, dealing a blow to New Delhi's strategic ambitions in the region.
Lying on the Gulf of Oman along the approaches to the Straits of Hormuz, the port of Chabahar is central to India's hopes to crack open a transport corridor to Central Asia and Afghanistan that bypasses arch-rival Pakistan.
India committed $500 million to speed development of the port after sanctions on Iran were lifted following a deal struck between major powers and Tehran to curb its nuclear program in 2015.
But the state-owned Indian firm that is developing Chabahar is yet to award a single tender for supplying equipment such as cranes and forklifts, according to two government sources tracking India's biggest overseas infrastructure push.
US President Donald Trump denounced the nuclear agreement on the campaign trail, and since taking office in January has accused Iran of being a threat to countries across the Middle East.
Swiss engineering group Liebherr and Finland's Konecranes and Cargotec have told India Ports Global Pvt Ltd, which is developing the deep water port, they were unable to take part in the bids as their banks were not ready to facilitate transactions involving Iran due to the uncertainty over US policy, the two officials said in separate conversations with Reuters.
These firms dominate the market for customised equipment to develop jetties and container terminals. One official said the first tender was floated in September, but attracted few bidders because of the fear of renewed sanctions. That fear has intensified since January.
"Now the situation is that we are running after suppliers," one official said, speaking on condition of anonymity because of the sensitivity of matter.
A Konecranes spokeswoman declined to comment beyond confirming the company was not involved in the project.
Cargotec and Liebherr did not respond to requests for comment.
Some tenders have been floated three times since September because they failed to attract bidders. A Chinese firm, ZPMC, has since come forward to supply some equipment, the same Indian official said.
Banks can now lend more, cheaper home loans likely
MMNN:8 Jun 2017
The reduction in the amount banks have to set aside (also called a provision) also mean lower home loan rates.
The Reserve Bank of India (RBI) on Wednesday made it possible for banks to lend more to home-buyers, and at lower rates, in a move that should benefit customers as well as real estate developers.
The central bank did this by reducing the amount of money banks have to set aside (as security) on home loans. Previously, they had to set aside 0.4% or Rs 400 per lakh. This has now been reduced to 0.25%, or Rs 250 per lakh.
Combined with the cut in the statutory liquidity ratio (the portion of deposits which banks have to invest in government securities) by 50 basis points, or 0.5 percentage point, this means banks now have that much more capital to lend.
The reduction in the amount banks have to set aside (also called a provision) also mean lower home loan rates.
The central bank also reduced the so-called risk weightage on home loans of between Rs 30 lakh and Rs 75 lakh to 35% from 50%, and over Rs 75 lakh to 50% from 75%.
Risk weights are used to calculate the minimum amount of capital that must be held by banks to reduce the risk of insolvency.
This could make bigger home loans less expensive (typically loans above Rs 75 lakh were up to 0.5 percentage points more expensive, in terms of interest than other loans).
“When risk weightage drops it means the banks have that much more money to lend. If it has dropped by one third it means the cost of doing business comes down which makes it possible for banks to then cut interest rate and pass it on to the borrowers,” said Rajeev Ahuja, chief operating officer, RBL Bank Ltd.
The reduction in rates will be higher for bigger ticket size loans which are already more expensive when compared to loans of lower value.
Currently, the interest rate on home loans above Rs 75 lakh is higher. For instance, SBI offer an interest rate of 8.35% for loan amount below Rs 30 lakh while for loan above Rs 75 lakh the interest rate is at 8.65%.
RBI’s decision was prompted by an understanding of the multiplier effect of home loans, according to N.S. Vishwanathan, deputy governor of RBI. His reference is to the fact that an increase in home loans means more home sales, which will benefit real estate developers, and companies in the construction, cement and steel businesses at one end, and companies in the furniture and appliance businesses at another.
“Delinquencies (are) generally among the lowest in home loan segment....It has been decided to reduce risk weight on certain categories on home loans and also the standard asset provisioning,” Vishwanathan added.
According to Vishwanathan, reduction of statutory liquidity ratio (SLR) by 50 basis points will help banks in achieving 100% liquidity coverage ratio by January 2019. These two factors together will bring buoyancy to the home loan segment.
Credit to the housing segment has increased by 13.4% year-on-year at the end of April.
Banks are focusing on affordable housing as demand from other sectors of the economy has dried up and to take advantage of incentives offered by the government to home buyers. Many banks have reduced their home loan rates. The government on 31 December announced the Credit Linked Subsidy Scheme for Middle Income Groups, where interest subsidy of 4% was granted on housing loans of up to Rs 9 lakh and 3% on housing loans of up to Rs 12 lakh.
According to a report by CLSA India Pvt., housing sales could rise from Rs7 trillion in financial year 2017 to Rs17 trillion by fiscal 2024 on the back of market growth and impetus to affordable housing.
“The decision to reduce the risk weights for home loans over Rs. 30 lakh category will release capital for the banking industry and is a positive move,” said Arundhati Bhattacharya, chairman of State bank of India (SBI).
Banks have already been aggressively cutting rates in the home loan segment. SBI, the country’s largest lender, for instance, has already cut its one-year marginal cost of funds based lending rate (MCLR)--the rate linked to its home loans--to 8% currently from 9.20% in April 2016, when MCLR first came into effect.
15th meeting of GST Council in Delhi tomorrow
MMNN:2 Jun 2017
Union Minister for Finance, Defence and Corporate Affairs, Arun Jaitley, will chair the 15th meeting of the GST Council here tomorrow.
The meeting, to be held at Vigyan Bhavan, is important because it is likely to finalise the rates of tax and cess to be levied on the commodities remaining after the fitment exercise in the 14th GST Council Meeting, Ministry of Finance said in a statement today.
Besides, approval of amendments to the draft GST Rules and related Forms are also on the agenda of the one- day meeting. The meeting is likely to be attended by the Finance Ministers of different states/UTs besides senior officers.
Cabinet may decide on FIPB abolition today
MMNN:24 May 2017
The Union cabinet is expected to clear a proposal on Wednesday to allow direct approval to foreign investment proposals by ministries as part of the government’s efforts to expand the ease of doing business.
In the latest push for ease of doing business, the Union cabinet is expected to allow direct approval to foreign investment proposals by ministries.
The likely clearance of the proposal on Wednesday can also speed up the much-needed investment process amid the Narendra Modi government’s desperate push for job generation.
During this year’s Union budget presentation, finance minister Arun Jaitley had announced that the decades-old Foreign Investment Promotion Board (FIPB), which clears proposals up to Rs 5000 crore, would be scrapped.
India has opened up most of the sectors to enable foreign companies to set up shop in the country. This in turn has reduced the utility of the FIPB.
“The Cabinet is likely to take up the proposal of abolishing FIPB at its meeting on Wednesday,” official sources said.
The Department of Industrial Policy and Promotion, DIPP, will act as the nodal body for all foreign investment proposals, a source added.
The FIPB was initially constituted under the Prime Minister’s Office in the wake of economic liberalisation in the early 1990s. It vets sectors such as defence and retail trading.
After the abolition of the FIPB, sources said, ministries concerned will clear FDI proposals.FDI inflows touched a record $60.1 billion in 2016-17, as the Narendra Modi government eased rules to lure global conglomerates to enter India.
In the last three years, the government has eased 87 FDI rules across 21 sectors to accelerate economic growth and boost jobs.
Tata Motors cuts up to 1,500 managerial jobs
MMNN:24 May 2017
Tata Motors says blue collar or worker jobs have not been impacted as part of the exercise.
Tata Motors said on Tuesday it has reduced its managerial workforce by up to 1,500 people domestically as part of an organisational restructuring exercise.
“The reference (total managers) on which we started (the exercise) was in the vicinity of 13,000...we do see as far as the white collar population is concerned, an overall reduction in the vicinity of 10-12% (up to 1,500),” managing director and chief executive Guenter Butschek told reporters here.
He was speaking after announcing the company’s earnings for the fiscal 2016-17.
The company joins a growing number of organisations adopting such strategies for a variety of reasons, ranging from cutting the flab to automation. These job cuts, which have led to concerns on ‘jobless economic growth’ in various quarters, have been across multiple sectors, including capital goods, banking & finance, and information technology.
Engineering, procurement and construction major Larsen and Toubro had announced shedding of 14,000 jobs in the first half of FY17, HDFC Bank has also reduced its workforce by over 10,000 in the second half of FY17 alone.
In the IT segment, the country’s largest private sector employer, some estimates have pegged the job losses at over 50,000.
The Tata Motors management, however, said blue collar or worker jobs have not been impacted as part of the exercise.
With the aim to reduce the number of managerial levels to 5 from the earlier 14, the top automaker undertook a review during the last financial year and identified the possibilities for restructuring.
“We underwent a very detailed exercise in terms of the roles, the requirements and the fitment of the roles etc. It was a very comprehensive exercise which we rolled out over a 6-9 month period which also factored in performance and leadership qualities,” the company’s group chief financial officer, C Ramakrishnan, told PTI.
Terming it as a “holistic fundamental review”, he said the programme has been completed now and the company will be coming out with a new structure soon.
Officials said the exercise was carried out with a view to get ownership and accountability within the organisation and not to cut costs.
While some of the affected employees were given voluntary retirement option, some were transfered to a services arm -- Global Delivery Centre, the officials said.
However, they did not quantify the number of people moved to the services arm which is based out of Pune.
Vijay Mallya arrested in London, released on bail within hours
MMNN:18 April 2017
Businessman Vijay Mallya was arrested by the Scotland Yard in London on Monday on India's request for his extradition on fraud charges. He was released on bail a few hours later after he appeared at a central London police station.
"Officers from the Metropolitan Police's Extradition Unit this morning arrested a man on an extradition warrant. Vijay Mallya was arrested on behalf of the Indian authorities in relation to accusations of fraud," said the Scotland Yard.
The London Metropolitan Police said Mallya was arrested after appearing at a central London police station. He appeared at Westminster magistrates' court in London and was seen walking out with his legal team a few hours later after being granted bail.
An unfazed Mallya later tweeted on Tuesday, "Usual Indian media hype. Extradition hearing in Court started today as expected."
The Central Bureau of Investigation (CBI) and the Indian High Commission in London will now present India's case in the UK court for Vijay Mallya's extradition as the country "wants to the myth that by crossing boundaries you are out of bounds", said a person aware of the developments. India is seeking extradition of Mallya for defaulting on Kingfisher Airlines loans due to IDBI Bank.
CBI has been investigating a case against Mallya and the companies he controlled over allegations of money laundering since early last year and had secured a non-bailable warrant against the absconding businessman in a case related to money laundering and wilful default of loans, Mint reported on 22 November. CBI clarified that the arrest was in connection with his extradition.
"Vijay Mallya has been arrested in connection with the IDBI bank case. We cannot comment further on the matter till it is heard at the London Court," a senior CBI official told Mint, on condition of anonymity.
A senior government official on condition of anonymity stated that, "protocol would now require Mallya's case to be heard in London. The extradition case will be heard and evidence related to the same will be produced on the basis of which the London courts will take an informed decision. It is too soon to comment on when he will be extradited to India."
On 23 January, CBI's central and Bengaluru division raided the premises of the Vijay Mallya-run UB Group in Bengaluru in connection with a Rs900-crore loan default and money laundering case. On the same day, CBI arrested nine officials of Kingfisher Airlines and IDBI Bank Ltd, including the bank's former chief.
In September 2016, the Enforcement Directorate (ED) had issued the order, under the Prevention of Money Laundering Act (PMLA), to attach the various properties including flats, a farmhouse, shares and fixed deposits in Mallya's name and his associate firms. The agency had earlier said that the market value of these assets was Rs6,630 crore.
The Ministry of External Affairs (MEA) had stated that India's request for Mallya's extradition had recently been certified by the UK, after the UK's home department on 21 February conveyed India's request for Mallya's extradition to the Westminster magistrate's court, after being certified by the UK secretary of state. However, with Mallya's extradition proceedings just beginning in the UK, India may well have to wait till he is handed over by the British authorities.
In New Delhi, MoS (finance) Santosh Kumar Gangwar said, "We are now assessing the facts how we can bring him back into the country and start judicial proceedings against him." The government, he said, will leave no stone unturned to bring to justice anyone indulging in financial irregularities.
On 23 March, MoS (external affairs) V.K. Singh informed the Rajya Sabha that while India and the UK had an Extradition Treaty which has been in force since 1993, "In the last five years, only one fugitive criminal namely Samirbhai Vinubhai Patel has been extradited from the UK. As per Article 2 of the India-UK Extradition Treaty, an extradition offence for the purposes of this Treaty is constituted by conduct which under the laws of each Contracting State is punishable by a term of imprisonment for a period of at least one year. An offence may be an extradition offence notwithstanding that it relates to taxation or revenue or is one of a purely fiscal character."
Singh also added that the extradition requests in respect of criminal fugitives namely Raymond Varley, Ravi Shankaran, Velu Boopalan, Ajay Prasad Khaitan, Virendra Kumar Rastogi and Anand Kumar Jain had been rejected by the UK government.
Meanwhile, S.S.Naganad, who is the senior counsel appearing for the consortium of banks led by State Bank of India stated that, "There was more than one issue against him (Mallya). There was money laundering case, Karnataka high court has issued an arrest warrant, a magistrate court has also issued an arrest warrant. All this put together is what the Indian government had sought an extradition for."
Fuel pumps in eight states to be shut on Sundays from May 14
MMNN:18 April 2017
Beginning May 14, fuel outlets in eight states will be shut every Sunday following Prime Minister Narendra Modi's call to conserve oil, a fuel pump owners' body said here today.
"We had planned to shut our outlets on Sundays a few years back. But oil marketing companies had then requested us to reconsider our decision. Now we have decided to shut the outlets on Sundays," said Suresh Kumar, an executive committee member of the consortium of Indian petroleum dealers.
He said the association's decision was made in view of the Prime Minister's call during his recent 'Mann ki baat' programme to conserve oil to save the environment.
Kumar, also the vice-president of Tamil Nadu Petroleum Dealers Association, said nearly 20,000 outlets in Tamil Nadu, Kerala, Karnataka, Puducherry, Andhra Pradesh, Telangana, Maharashtra and Haryana would be shut for 24 hours on Sundays, starting May 14.
"In Tamil Nadu, we expect a business loss of Rs 150 crore if we do not operate on a Sunday. But we have been seeing a decline in sales on Sundays by upto 40%," he said.
Asked if the association's decision was supported by the OMCs, he said, "We will communicate our decision to them shortly."
Kumar said the fuel outlets which normally have about 15 staff each would have one staff member on the holidays to provide fuel if there was an emergency situation.
On the issue of OMCs hiking the margins to petroleum outlets, he said the association was discussing it and would soon make an announcement in this regard.
"That struggle is going on. We are meeting our association members shortly. We will announce our decision soon," he said.
Enough is enough: SC orders sale of Sahara's Rs 34,000 crore Aamby Valley
MMNN:17 April 2017
The Supreme Court today asked Bombay High Court's official liquidator to sell the Rs 34,000 crore worth of properties of the Aamby Valley owned by the Sahara Group and directed its chief Subrata Roy to personally appear before it on April 28.
"Enough is enough. You cannot say something today and resile tomorrow," a bench, comprising Justices Dipak Misra, Ranjan Gogoi and A K Sikri, said, taking strong note of non- submission of over Rs 5,000 crore by the Sahara group.
The bench also cautioned Roy from playing with the court's order and said non-compliance of its order would invite the wrath of the law and ultimately he will be at his own peril.
The bench asked the official liquidator, attached with the Bombay High Court, to auction the Aamby Valley properties, estimated to be worth Rs 34,000 crore, and directly report to it.
The bench also directed Roy and his group as well as SEBI to provide all necessary details relating to the properties to the official liquidator within 48 hours.
Meanwhile, the top court restrained one Prakash Swamy, who has filed an affidavit with regard to the sale of Sahara hotels in the USA, from leaving India and asked him to deposit Rs 10 crore as fine with the market regulator SEBI.
Swamy will also have to appear in person in the apex court on April 28.
The Supreme Court had on April 6 warned the Sahara Group that if it failed to deposit Rs 5092.6 crore in SEBI-Sahara refund account by April 17 in pursuance of its order, it will be "compelled" to auction its property at the Aamby Valley in Pune.
The top court had told the group that no extension of time would be granted for depositing the amount.
The observation had come when the lawyer mentioned an interim plea seeking extension of time for depositing the money in the SEBI-Sahara refund account.
The court had also observed that it had clearly told the group that a "substantial amount" must come in the refund account.
"Whatever you do, we had told you that a substantial amount must come. Otherwise we will be compelled to put up Aamby Valley for auction," the bench had said, noting "What matters is the money coming in the kitty." The apex court had on February 28 said "in case, the substantial amount is deposited, this court may think of extending the time, otherwise appropriate direction shall be issued".
The court had last month ordered an international real estate firm, which had shown willingness to buy Sahara's stake in New York-based Plaza Hotel for USD 550 million, to deposit Rs 750 crore in the SEBI-Sahara refund account, instead of the apex court registry to show its bonafide.
The top court had earlier directed attachment of Sahara Group's prime property for realisation of money to be paid to its investors.
It had also asked the group to provide it within two weeks the list of "unencumbered properties" which can be put up for public auction to realise the remaining over Rs 14,000 crore of the principal amount of around Rs 24,000 crore that has to be deposited in the SEBI-Sahara account for refunding the investors.
The court had on November 28 last year asked Subrata Roy to deposit Rs 600 crore more by February 6 in the refund account to remain out of jail and warned that failure to do so would result in his return to prison.
It had on May 6, 2016 granted a four-week parole to Roy to attend the funeral of his mother. His parole has been extended by the court ever since. Roy was sent to Tihar jail on March 4, 2014.
Besides Roy, two other directors -- Ravi Shankar Dubey and Ashok Roy Choudhary -- were arrested for failure of the group's two companies -- Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL) -- to comply with the court's August 31, 2012 order to return Rs 24,000 crore to their investors.
However, director Vandana Bhargava was not taken into custody.
WPI inflation falls to 5.7% in March due to easing fuel prices
MMNN:17 April 2017
Inflation based on the wholesale price index slipped to 5.70 per cent in March due to easing fuel prices and cost decline of manufactured goods even as food prices hardened.
The WPI inflation, reflecting the annual rate of price rise, in February was 6.55 per cent. In March 2016, the print came in at (-)0.45 per cent.
According to official data released on Monday, food prices saw a sharp rise of 3.12 per cent in March compared to 2.69 per cent in the previous month.
This is primarily because of a steep price jump in vegetables where inflation stood at 5.70 per cent. As for fruits, the figure was also high at 7.62 per cent, while for egg, meat and fish, it was 3.12 per cent.
Fuel inflation declined to 18.16 per cent, from 21.02 per cent in February.
The manufactured items witnessed some softening in price rise, with inflation at 2.99 per cent in March, as against 3.66 per cent in the previous month.
The government also revised upwards January inflation to 5.53 per cent from the provisional estimate of 5.25 per cent.
Earlier this month, the Reserve Bank had left key policy rate unchanged at 6.25 per cent for the third review in a row citing upside risks to inflation. It had, however, increased the reverse repo rate -- which it pays to banks for parking funds with it -- by 0.25 per cent to 6 per cent, narrowing the policy rate corridor.
For 2017-18, it projected retail inflation to average 4.5 per cent in the first half and 5 per cent in the second half.
Data released last week showed that retail inflation touched a five-month high of 3.81 per cent in March on costlier food items and non-food products like fuel and light. RBI frames its monetary policy stance on the basis of retail inflation.
Petrol, diesel prices to change daily from 1 May
MMNN:12 April 2017
Petrol and diesel prices in some cities will now see daily change in sync with international rates, according to two officials from oil marketing companies.
This will be effective 1 May in five cities including Puducherry and Visakhapatnam, Udaipur, Jamshedpur and Chandigarh as part of a pilot project. This will be extended to other parts of the country after an assessment of consumer response.
Diesel and petrol prices move in tandem with the price of crude oil in most countries. In January, Mint reported that the fuel retailers plan to introduce dynamic pricing in India this year.
"We have been piloting dynamic pricing at a few of our retail outlets for some months now, and the response has been encouraging. This has allowed us to go ahead and introduce it formally," an executive director from an oil marketing company said on condition of anonymity as he is not allowed to talk to reporters.
Currently, state-run fuel retailers-Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)-revise petrol and diesel prices on the 1st and 15th of every month based on average international price of the fuel in the preceding fortnight and the currency exchange rate.
"Due to the fortnightly revision of fuel prices, petroleum dealers were applying breaks (not lifting fuel daily) on uplifting of fuel. If the prices go up on the 1st or 15th of every month, there would be a rush to uplift products, else, the upliftment would be impacted. This would result in losses for OMCs and we wanted that this price predictability should go away. So dynamic pricing will be a good bet," said a senior official from an oil marketing company on the condition of anonymity.
Shares of Indian Oil fell 0.07% to Rs408.90 on BSE, Bharat Petroleum rose 1% to Rs717.60, Hindustan Petroleum rose 1% to Rs542.45 while India's benchmark Sensex fell 0.49% to 29,643.48 points.
Although state-run fuel retailers have the capability to revise petrol and diesel prices on a daily basis, what needs to be monitored is how consumers react to price volatility, industry experts say.
"If there is heightened volatility in global markets due to geopolitical developments, it could get reflected in domestic retail prices too. Therefore, companies are doing the right thing in testing the model in pilot projects to see how its impact and consumer response. In the medium- to long-term, daily price revision may be a good idea as is practised elsewhere," said R.S. Butola, a former chairman of Indian Oil.
Indian Oil chairman B. Ashok and Hindustan Petroleum chairman and managing director M.K Surana didn't immediately respond to phone calls seeking comment.
Besides, global fuel prices and currency exchange rate, central and state taxes account for a major part of the fuel prices. It accounts for half of retail petrol price and 46% of retail diesel price. The central government collected Rs64,509 crore from petrol as excise duty in 2016-17 up to end-February, 20% more than what was collected in the whole of FY16. Excise receipts from diesel jumped 36% in the same period to Rs1.37 trillion.
No self-certification? Accounts used for overseas transactions to be blocked
MMNN:12 April 2017
Bank accounts used for cross-border transactions, including remittances and deposits from abroad, will be "blocked" after April 30, if the holder does not provide a self-certification of their identity and residential address.
The account holder will have to provide all details of transactions that were undertaken outside India besides updating the know-your-customer (KYC) data, income tax department officials said.
The department said in a circular that financial institutions must make all efforts to obtain the self-certification. This is applicable for all individual and entity accounts opened between July 2014 and August 2015.
"The account holders may be informed that, in case self-certifications are not provided till 30 April 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts," it said.
"The transactions by the account holder in such blocked accounts may, thereafter, be permitted once the self-certification is obtained and due diligence completed," it added.
According to the Reserve Bank of India norms, submission of permanent account number (PAN), Aadhaar card, driver's license, voter's identity card or passport will serve as proof of identity and address. However, quoting of Aadhaar for a self-certification is not mandatory, a senior I-T department official told Hindustan Times.
The new rule comes in the wake of an Inter-Governmental Agreement (IGA) with the United States for implementation of Foreign Account Tax Compliance Act (FATCA) implemented by India from August 31, 2015.
Under the alternative procedure provided in Rule 114H(8) of the Income-tax Rules, 1962, financial institutions need to obtain self-certification and carry out due diligence in respect of all individual and entity accounts opened between July 2014 and August 2015.
Such self-certification and documentation were required to be obtained by the financial institutions by August 31, 2016, otherwise, they were required to close the accounts and report the same if found to be a "reportable account" as per the prescribed due diligence procedure for a preexisting account.
"The banks were supposed to have done this exercise by August but now it needs to be completed by April 30 ... For this particular rule, there is no need to mandatory link this with Aadhaar number," Central Board of Direct Taxes chairperson Sushil Chandra told Hindustan Times.
However, in view of the difficulties highlighted by stakeholders in following the provision for "closure" of financial accounts, it was informed that the financial institutions may not close the accounts by August 31, 2016, in respect of which self-certifications have not been obtained under the alternative procedure and a revised timeline shall be notified in due course.
The financial institutions were also advised to continue to work on completing the required due diligence, including obtaining self-certifications.
What next for Adani Power, Tata Power after Supreme Court order on tariffs?
MMNN:11 April 2017
The streak of negative news does not seem to end for Tata Power Co. Ltd and Adani Power Ltd. Even as the investors were coming to terms with the Central Electricity Regulatory Commission's (CERC's) stringent compensation proposal for their troubled power plants at Mundra, Gujarat, the Supreme Court squashed hopes of any such relief.
The full tariff order is not available at the time of writing this story and it is not yet clear if the apex court has allowed any remediation mechanism. But investors are worried. Shares of both the companies dropped 2-16% on Tuesday.
The ramifications can be severe for Adani Power. Assuming a favourable verdict, the company has been booking compensation in its quarterly revenues. Post the latest verdict, the company may have to write-off those revenues, retrospectively (pertaining to changes in Indonesia law), which can adversely hit the company earnings.
That can raise questions about Adani Power's financial health. As of December, the company has an estimated debt (long term plus working capital loan) of Rs 48,000 crore. Its debt-to-equity ratio based on 2016-17 estimates stood at 6.8 times and interest coverage ratio stood at 0.8 time, indicating earnings-interest expense mismatch.
Tata Power's Mundra ultra mega power project has seen cost under-recovery of 70 paise per unit in the December quarter. But unlike Adani Power, Tata Power is not booking compensation in its revenues. And thanks to other assets which are doing well, the company's interest coverage ratio is at 1.3 times (2016-17 estimate). Further, most analysts were not assuming tariff order relief in their earnings estimates. So the latest verdict may not alter the company's earnings estimates much.
That does not mean the companies can leave the situation unaddressed. As Deepak Agrawala, senior vice president (utilities, renewables and industrials research), Elara Securities (India) Pvt Ltd says, no one can run the business at a loss.
According to analysts, the power plants in question will not be able to break even at profit before tax level or make any money at current coal prices. The plants are built on Indonesian coal. A change in law in Indonesia pushed up the coal costs. Companies petitioned for cost recovery which the Supreme Court disallowed.
One option is the exit of unviable power purchase agreements (PPAs). This may not be possible given the weak demand environment. According to analysts, companies can face power distribution companies' ire and reputational risks.
A second option could be the sale of the said power plants after inflicting valuation cuts on promoters and lenders. According to Bhargav Buddhadev, an analyst at Ambit Capital Pvt. Ltd, Tata Power's Mundra asset is a low-cost plant, though there is a question mark on the profitability. But then as one analyst with a domestic broking firm point out, it can be tough for the lenders to take valuation cuts. Further, selling a PPA tied power plant can be a long drawn process.
A third option is to work around the current circumstances. According to Buddhadev, Tata Power can ramp up its power plant beyond the 75% utilisation level, recover fixed costs and curtail financial losses. With coal prices unlikely to enter a structural uptrend in the near future, the damage to Tata Power can be limited, Buddhadev adds.
The third option looks plausible if the companies contain the financial losses at these plants. But can that be achieved? And if the plants break even, are investors prepared to live with zero returns from one of the large investments these companies made? In the midst of so much uncertainty, no wonder investors made a beeline for the exits.
How To Maintain Your House Rent Allowance (HRA) Exemption
MMNN:11 April 2017
Now salaried class taxpayers cannot claim house rent allowance or HRA exemption on the basis of fake rent receipts in name of their mother, father, wife or any other close relative. The Income Tax Department may disallow fake HRA exemptions on basis of guidelines recently issued by the Mumbai ITAT (Income Tax Appellate Tribunal). Now onwards, such taxpayers may have to keep other documents to substantiate payment of rent to claim HRA exemption.
Many salaried class taxpayers claim exemption of house rent allowance (HRA) by furnishing fake rent receipts - in the name of their mother, father, wife or any other close relative - to their employer. Till now, there was no guidance available with the Income Tax Department to deal with such cases and taxpayers firmly believed that only rent receipt was sufficient proof to show genuineness of rental payments. Taxpayers make such sham transactions with the sole intention of claiming HRA exemption in order to reduce tax liability.
Problems taxpayers can face
Now, salaried class taxpayers which were claiming HRA exemption on the basis of fake rent receipts may find it difficult to claim the exemption. Recently, the Mumbai ITAT issued guidelines for income tax officials to deal with such cases.
In a case, a woman working as senior finance and accounts executive had claimed an HRA exemption of Rs. 7,31,640 for Assessment Years 2009-10 to 2011-12. She also owned a 2 BHK house, jointly owned by her with her husband.
She was showing payment of rent to her mother for residential purposes. She did not produce any evidence except rent receipts to substantiate that there was actual hiring of premises. Her claim was disallowed by the Assessing Officer and the CIT(A).
On further appeal, the Mumbai tribunal disallowed her claim of HRA exemption on the ground that there were no evidences available to substantiate hiring of premises except the rent receipt. The taxpayer could not produce any evidence to substantiate rental payments such as leave and license agreement, letter to society intimating about tenancy, payment through bank, electricity bill and water bill payments etc. It also said "the taxpayer was staying in her own flat with her husband which is emanating from ration card, bank statement and return of income. The mother of assessee also did not file any income-tax return since last six assessment years and said rental income was not brought to tax in the hands of mother of assesse."
Procedure to follow
You should have evidence of your actual stay at residential house of your mother, father, wife etc. (viz. close relative). You can enter into a rent agreement for this purpose. You may also keep a copy of any other correspondence through email wherein there is consent of your relative to let out the house in your favour.
It is difficult to substantiate rental payments made in cash. So, it's better to pay house rent to your close relative through transfer of money in his or her bank account.
If you are making rental payments which will be taxable in the hands of your close relative, make sure that he or she files income tax return (ITR) and shows such rental receipts in that return of income.
Married women cannot claim HRA exemption by showing rental payments to their mother when actually living with husband and daughter in another house.
It may happen that the addresses mentioned in your ration card, bank statement and return of income do not match with the recorded address of your rented premises. In that case, you will be in trouble as now the Income Tax Department may scrutinize such cases. Such a probe may indicate that you are living in another house in the same city as you rented premises.
You cannot claim HRA exemption if you have own house in the same city wherein your rented house is situated. It is difficult to prove the necessity of new rental house when you already have one house at your disposal.
You can claim HRA exemption if your rented house is situated in the same city where you work but your own house is outside that city. For example, suppose Mr A is working in Delhi and claiming HRA exemption for rented premises the tax officer cannot disallow such claim if his own house in situated outside Delhi.
You will have to ensure that your rental payments do not exceed the market value of similar property in your vicinity. Suppose you are paying a rent of around Rs. 40,000 for a 1 BHK house in Delhi, it clearly shows that it is a sham transaction. The income tax officer may disallow HRA exemption in such a case.
If you are staying in any flat of society of your relative, make sure to intimate the secretary of society about your tenancy.
If you are claiming tax deduction for EMI of home loan in your income tax return, do not claim exemption of HRA. However, you can claim both the deductions simultaneously if your own house is not in the same city in which you are working and you have taken rented accommodation in the same city where you are working.
Flipkart raising $1.4 bn from Microsoft, Tencent, eBay shows Indian e-commerce is going strong
MMNN:10 April 2017
India's first and largest home-grown e-commerce player has moved to the centrestage with a funding of $1.4 billion from Tencent, eBay and Microsoft.
The transaction values Flipkart at $11.6 billion. This comes at a time when investors, concerned over the profitability and rising competition, are marking down the company's valuation. In February, Morgan Stanley mutual fund had marked down the valuation of the company for the fifth time to around $5.37 billion. Compare this with the $15 billion value the company commanded in 2015.
The latest round of funding has been viewed with much positivity by the trade primarily because many expect this to help the company get wings to soar and take on deep-pocketed Amazon.
The funding only shows that the ecommerce story in India is going strong and that there is market growth in the sector, said Paula Mariwala, partner, Seedfund and co-founder, Stanford Angels. "What did not work was the economics of acquiring customers and customer services. This development shows that the fundamentals of the growth story is intact and ecommerce continues to be a solution for products, consumers and marketers who want to reach out to consumers," said Mariwala. The funding only goes on to prove that the promise held out by the sector still holds true, she added.
The sector is ripe for correction and funding of this kind will buoy the sagging sector which is seeing many players bleeding on account of intense competition and the discounts game to attract customers. "The sector is right for course correction be it in furniture, food delivery or digital wallets. There are too many players across segments in the e-commerce space and it is time for the stronger players to consolidate their position with mergers and then becoming a stronger contender," says Arvind Singhal, chairman and managing director of Technopak Advisors, a retail industry consulting firm.
When one player dominates the market and the others are struggling to survive, it does not bode well for the industry per se and also the consumers, says an analyst.
The government has given a fillip to digital payments post-demonetisation which has further helped the ecommerce sector. People are adopting the digital medium faster than ever. The India story has got stronger with a large number of people using the Unified Payments Interface (UPI) platform developed by the National Payments Corporation of India. All this will only help ecommerce players to penetrate deeper into the market.
Under these circumstances, when a home-grown player like Flipkart gets a helping hand, it is a win-win situation for the company and its investors. "I don't think Flipkart qualifies to be called a home-grown player any more," said an analyst, pointing out to the fact that not just Flipkart but most ecommerce players are no longer run by the promoters but the investors who are keen on growth and not in a hurry to exit the market.
By the end of this year, more consolidations in the e-commerce sector is expected. "Consolidation is one solution to growth. It is happening all across the country," said Anil Talreja ,Partner, Deloitte Haskins & Sells. He said, in the ecommerce sector, there is always an issue with regard to startups and sustainability. If you are not in a position to sustain yourself and get a helping hand and subsume into that, it is a way to growth, he said.
According to another analyst, the biggest asset in the space is connect with customers. In this case, Flipkart is a company with this asset already. "The funders are willing to pump in money so as to enlarge the customer base and get loyal ones on board," the analyst said.
However, Singhal points out the development proves the sector has enough space for more than large players. "People have been speculating on the demise of Flipkart or its merger with partners not of its liking. This funding only goes to show that there is space for more players in the market," said Singhal.
What is curious about the Flipkart deal is its buying out eBay's India operation while the latter makes an investment in Flipkart. eBay, a first mover in the category, had lost much of its sheen and was not in the race at all for some years now. "It has had a face-saver with its buy-out by Flipkart and also by making an investment in Flipkart," said Mariwala.
With demands not yet met, petrol pumps threatens to take off every Sunday
MMNN:10 April 2017
With the government yet to decide on their demand for higher commission, the petrol pump owners have threatened to take off every Sunday. As per the report 'The Times of India' the petrol pump owners have also threatened to observe May 10 as 'No Purchase Day'.
In January, amid tussle between banks and petrol pumps, the central government had declared that the pump dealers and customers would not have to pay transaction cost after owners of petrol pump owners threatened to stop taking cards. A day before, the associations had threatened of not accepting debit or credit cards, even though there was no such notifications from the Reserve Bank of India on the matter.
Speaking to reporters, one of the petrol pump owners had said that for each payment on credit cards, the banks charged 1 percent. Speaking to reporters, Delhi Petrol Dealers Association president Anurag Narain had said that banks had levied a fee of 1 percent, due to which petrol pumps have an option but to stop EDC machines from operating.
The pump owners, who were not willing to pay such a huge amount, had voiced their concern in public and had promised to retaliate in kind against these banks. Some banks like ICICI Bank had however late on Sunday announced they had not issued any such orders and were not imposing any such charge.
Coming in their support, the Tamil Nadu Petroleum Dealers Association had also said it received a notice from banks saying that a Merchant Discount Rate of one percent will be taxed on all transactions done at the retail fuel outlets.
In a response to this, the associations had announced to stop digital payment for fuel on the day. Later in the night, the announcement was taken back, following intervention by authorities.
25% of Indian youth willing to deal in cash to help businesses survive
MMNN:6 April 2017
Demonetisation, which aimed at hitting out at the cash element in the economy to curb corruption and black money, has had a mixed impact, according to the EY Fraud Survey 2017.
While a majority of the respondents in EY's Europe, Middle East, India and Africa (EMEIA) Fraud Survey support the stance taken by the regulators and the government to curb corruption and bribery, the youth is still willing to make payments in cash to help their businesses survive.
"One of out of every four of generation Y (25-34 years old) could justify offering cash payments to win or retain business," said the EY survey.
The survey was conducted between November 2016 and January 2017, the period when India was going through the demonetisation exercise to reduce the cash element in the economy.
A huge 73% of youth feels that unethical action can be justified to help a business survive, adds the EY survey.
Unethical behaviour at the workplace has become a serious concern for corporate India as employees refuse to report fraud, bribery and corruption to enhance career prospects, the report suggests.
"There is also a general sense in youth that their colleagues are willing to act unethically to better their careers," said Arpinder Singh, partner and national leader, Fraud Investigation & Dispute Services, Ernst & Young LLP.
"To my mind this kind of tendency stems from the deep rooted belief that corruption is part of the society. But, this needs to stop, as they are our future leaders. If companies do not take action now to combat unethical conduct at all levels of their organizations, such behaviours may increase in the future," he adds.
The Ey survey identified three reasons to justify unethical behaviour-uncertainties in the business environment, augmenting pressure to meet financial targets and aspirations to achieve unprecedented career growth.
As many as 41% of employees in India are ready to act unethically to enhance their own career, while 13% are prepared to provide false information to improve their career or pay, according to the India findings of the survey.
30% of Indian employees are ready to book revenues earlier than they should in order to meet financial targets, while 16% would deliberately mis-state their company's financial performance to meet financial targets.
Singh said these tendencies can be tackled by mentoring, coaching and monitoring.
"Monitoring also throws up another debate that is on 'privacy'," says Singh.
Companies generally take to checking emails, call records, tracking social media profile as monitoring tools. 89% of people surveyed by EY consider this as a breach of privacy.
"There needs to be a clear policy, to what extent a company can monitor," Singh said.
While Indians still consider corruption as normal and India is ranked at number 79 in global corruption perceptions index, Indians have taken regulatory scrutiny in their stride.
"Overall 28% of our respondents believe that regulation has had a positive impact on ethical standards in their company, increasing from 24% in 2015," said the EY audit.
77% of respondents also feel that prosecuting individuals will improve ethical behaviour.
52% said that regulatory activity has had a positive impact within the company and industry.
A huge 79% of participants in India said that prosecuting individuals would help deter fraud, bribery and corruption, while 78% said that bribery and corruption is widespread, compared to 51% globally. Strikingly 68% of the youth or millennials also believe the company management would engage in unethical behaviour to help a business survive.
Initials, punctuations on PAN card make linking with Aadhaar a pain
MMNN:6 April 2017
K Venkatesh never thought the initial in his name would put him in a spot over filing his tax returns. When his PAN card could not be linked to his Aadhaar card, the Chennai-based banker consulted his accountant who discovered the problem: Venkatesh's initial 'K' was expanded as Krishnaswamy, his father's name, in the Aadhaar database. The system wouldn't accept the 'mismatch', leaving Venkatesh at his wits' end.
Millions of people across the country could be facing the problem as the government insists on linking the two accounts by July 31, a prerequisite to filing tax returns. And with manual intervention not possible to rectify even minor differences, chartered accountants are flooded with SOS messages.
For college lecturer Eugiene D'Silva, the chartered accountant was of no help. This is because the Aadhaar database does not recognise special characters such as an apostrophe while the PAN card does. In the same boat is K S Srinivas, whose PAN card details have full stops between his initials while the Aadhaar card doesn't. "It would be impossible for us to change our names on the PAN card as it would mean having to change several other documents, will have to inform my banks, submit fresh KYC documents for three bank accounts, one demat account, and inform the insurance companies. It's a nightmare," says Srinivas.
Chartered accountants and lawyers feel that the government should enable manual intervention for linkage, particularly in the case of such minor discrepancies. "The government should form a special cell," says Pankaj Dharamshi, a CA in Bengaluru. "Many of my clients have been having PAN cards for 15-25 years. Now getting a new PAN card and updating all other docu ments would be impossible.It's better to correct the details in the Aadhaar database."
People can look up their name in the PAN database by doing a mock self-tax assessment or with their registered user ID or through their linked bank account.Once they get the name as entered in the records, they can ensure that the Aadhar data matches.
Activists are angry."This is threatening to turn taxpayers into defaulters," says Gopal Krishna of Citizens Forum for Civic Liberties, New Delhi. For those still struggling to figure out how to file tax returns, a former chief justice of the Madras high court has this piece of advice: "File the returns by speed post and attach a copy of the recent Supreme Court order. There is no way they can refuse your IT returns. In fact, the Income Tax Act has provisions that allow you to file income tax even without a PAN card."
Fake rent receipt won't help you lower tax burden anymore
MMNN:5 April 2017
For as long as anyone can remember, producing fake property rent receipt, often from parents and relatives, has been an easy way to lower tax burden.
Such cavalier disregard for tax rule was overlooked by most employers as well as taxman, who possibly felt it was a minor transgression. Perhaps, not anymore.
The income tax department now has good reason to insist on proof from the tax payer showing that he is indeed a genuine tenant, staying in the property in question.
A salaried employee receiving 'house rent allowance' from the employer could escape paying tax on at least 60% of this amount by generating sham rent receipt.
However, according to a recent tribunal ruling, the assessing officer can now demand proof - such as leave and licence agreement, letter to the housing co-operative society informing about the tenancy, electricity bill, water bill etc. - in allowing a lower taxable income as computed by a salaried employee.
"The ITAT (Income Tax Appellate Tribunal) ruling has now laid down the criteria for the assessing officer to consider the claim of a salaried employee and if necessary question its justification. This will put the onus on the salaried class to follow the rules in availing the tax rebate," said Dilip Lakhani, senior tax advisor, Deloitte Haskins & Sells LLP.
Understandably, none of the required documents are available with salaried employees submitting fake rent receipts. There may not be any actual rent outflow from the person as he may be staying in his family home and collecting a receipt signed by his father. Even if a person is a genuine tenant, the amount mentioned in the receipt may be more than what's paid. This will not pose a problem if the person receiving the rent is outside the tax net. There are several instances where a person may be staying separately but claiming to pay rent to a relative owning another property in the same city; or, one of member of the family claiming a loan repayment deduction while another submitting a false rent receipt to evade tax.
Given the widespread practice of paying tax on only a small slice of HRA, it's unclear how far tax officials would go in questioning such claims and pinning down salaried employees.
However, ITAT Mumbai's decision to strike down the HRA exemption claim of a salaried individual for rent paid to her mother could set a precedent.
"Technology and stricter reporting system may make it easier for the (income tax) department. For instance, there was a time when many never bothered to pay tax on interest earned from bank fixed deposits. Today, it's almost impossible. In case of HRA exemption, the assessing officer may crosscheck whether the address mentioned in the ITR form is the same as the property on which rent is paid," said a tax officer.
The Tribunal ruling comes a few months after the government's decision to cap the loss on property bought with borrowed money. Till now, a person paying an interest of, say, Rs 3 lakh on a loan (he took to buy the property) and earning Rs 1.2 lakh as rent could show the difference of Rs 1.8 lakh as 'loss' and set it off against salary income to pay lower tax.
In the last Union budget it was laid down that such losses for an individual tax payer cannot exceed Rs 2 lakh.
SBI hikes transaction charges; customers decide to boycott bank on April 6
MMNN:5 April 2017
After five years, the country's largest lender State Bank of India has decided to raise charges on various transactions through ATMs.
Some SBI customers have taken to social media to protest the hikes and called for a "no transaction day" on April 6.
They are also sharing the a text message calling for the boycott on April 6 and subsequent protests on April 24- April 26, if the bank does not remove the charges.
SBI has implemented a new list of rules for millions of its customers across India. Right from the introduction of an increased minimum balance to various new transaction charges. The new changes have been implemented from April 1.
Even customers of the six new banks that merged with SBI will have to follow this new list of rules. With the central bank introducing these new charges, there is a high probablity that other private sector banks will follow the suit and increase their banking charges.
The move came after private banks like ICICI, HDFC and Axis bank announced similar changes.
Banks including HDFC Bank, ICICI Bank and Axis Bank began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.
The charges would apply to savings as well as salary accounts effective from last month.
WhatsApp Considers Foray Into Digital Payments With India Launch
MMNN:4 April 2017
Instant messaging app WhatsApp, owned by Facebook Inc, is mulling a foray into digital payment services in India, its first such offering globally, and has advertised to hire a digital transactions lead in the country. A WhatsApp move into digital payments in India, its biggest market that is home to 200 million of its billion plus global users, would replicate similar moves by messaging apps like Tencent Holdings Ltd's WeChat in China. WhatsApp is working to launch person-to-person payments in India in the next six months, news website The Ken reported earlier on Tuesday, citing unnamed sources.
A job advertisement on WhatsApp's website said it was looking for a candidate with a technical and financial background - who understands the Unified Payments Interface (UPI) and the BHIM payments app that enable money transfers and merchant payments using mobile numbers - to be its digital transactions lead for the country.
"India is an important country for WhatsApp, and we're understanding how we can contribute more to the vision of Digital India," a WhatsApp spokesman said, referring to a flagship government programme that aims to boost the use of Internet-based services in the country.
"We're exploring how we might work with companies that share this vision and continuing to listen closely to feedback from our users," the spokesman said, declining to elaborate further.
Digital transactions in India have surged after Prime Minister Narendra Modi's shock ban of Rs. 500 and Rs. 1,000 bank notes in November last year that accounted for more than 80 per cent of the country's currency in circulation at the time.
In February, WhatsApp co-founder Brian Acton had told local media that the app was in early stages of investigating digital payments in the country and that he had talked to the Indian government about the matter.
Just last week, Swedish communications app Truecaller, which has a large user base in India, started a mobile payment service in the country based on the UPI platform.
Another new note, this time for Rs 200, from RBI on its way?
MMNN:4 April 2017
Are you tired of receiving higher denominations of Rs 2,000 and Rs 500 notes? Or are you still grappling under the effects of demonetisation where Rs 100 notes are a rare sight at Automated teller machines (ATMs)? Worry no more -The Reserve Bank of India (RBI) has cleared a proposal to inject Rs 200 notes around June, 2017.
The development comes after anonymous sources revealed that the decision was taken at the RBI board meeting in March, Live Mint reported.
The move comes against the backdrop of government's aim to rework the Indian monetary system. An RBI spokesperson declined to comment.
Even though the RBI lifted all cash withdrawal caps from ATM and banks on March 13, 2017, operators say there is a dearth of lower denomination banknotes.
The RBI board has 14 members, including Urjit Patel, four deputy governors, Economic Affairs Secretary Shaktikanta Das.
Narendra Modi government's surprise move on November 8 to scrap Rs 500 and Rs 1,000 notes has posed some temporary trouble for consumers in a cash-dominant economy like India, putting 86 per cent of the currency out of circulation.
RBI Governor Urjit Patel later announced that Rs 4 lakh crore (19.1 billion notes) had been injected into the system. As on 24 March, currency in circulation was Rs 13.12 trillion, the reported added.
Even by a conservative estimate, there was a minimum of Rs 2.5 lakh crore excess cash before November 8, 2016 in financial transactions, it said.
The process of demonetisation has opened up huge potential for digital channels. PoS machines, m-wallets and mobile banking are the major available channels for digital transactions.
There has been an increase of 584 per cent in digital transactions done through the Unified Payments Interface (UPI) since demonetisation in November last year.
The government is also keen to increase transactions through digital payment methods to 25 billion this year to reduce black money and fight shadow economy.
Infosys Defends Raise For COO That Narayana Murthy Objects To
MMNN:3 April 2017
The dispute between founders and board of India's second largest software services company Infosys Ltd over governance issues spilled into the public again as founder Narayana Murthy criticized a salary hike given to Chief Operating Officer Pravin Rao. Infosys responded by stating that Mr Rao's "compensation revision reflects the philosophy of aligning the interests of our leadership team to long term shareholder interests."
Here are the 10 latest developments in this story
In a letter, Mr Murthy described the raise for the COO, sanctioned in February this year, as "grossly unfair to the majority of the Infosys employees."
"The impact of such a decision will likely erode the trust and faith of the employees in the management and the board," said Mr Murthy in a letter that has been published in full.
The company's founders, who still own 12.75 percent of the group, had earlier questioned the pay rise granted to chief executive Vishal Sikka and also the size of severance payouts given to others, including former finance head Rajiv Bansal.
According to a stock exchange filing by the company, only 24 percent of promoter votes cast voted in favour of a resolution seeking a 35 percent rise in the COO's compensation, while the rest of the voters abstained.
The new conflict comes after the company in February reassured investors and analysts it was not being distracted by a dispute with its founders over how the company was being managed.
"Giving nearly 60 percent to 70 percent increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6 percent to 8 percent is, in my opinion, not proper. This is grossly unfair to the majority of the Infosys employees..." wrote Mr Murthy.
Mr Murthy referred in detail to "compassionate capitalism", stating that without it, "this country cannot create jobs and solve the problem of poverty. Experts tell me that capitalism may come to an end in the not-so-distant future if the current corporate leaders do not heed this advice in India. "
Referring to the decision on Mr Rao's raise, he said that "No previous resolution in the history of the company has received such a low approval."
In February, Infosys Board Chairman R Seshasayee defended the pay rise for CEO Vishal Sikka, and said that he enjoys the board's complete confidence.
Today, Dr Sikka said that the COO's revised compensation "as with several of our senior leadership team, is focused on making Infosys more competitive, is benchmarked against peers, is critical for us to retain key talent and aligns the long term interests of our leadership team with that of our shareholders."
Infosys will announce its March quarter earnings on April 13. Analysts will be looking forward to comment from the company's management on the fresh issues raised by Mr Murthy. Infosys shares fell today by 1.3 percent. Shares of IT companies have underperformed in the March quarter in part because of concerns over changed US rules for H-1B visas. The US accounts for 60 per cent of Indian IT's exports. So a rise of the Indian currency against the dollar hurts the earnings of large Indian IT firms.
SBI reduces its base rate by 15 bps
MMNN:3 April 2017
The State Bank of India reduced its base rate by 15 basis points to 9.10 per cent with effect from April 1, 2017. This move of India's largest lender brought joy to customers who had raised loans before April 1, 2016. Earlier, the base rate was 9.25 percent.
However, the marginal cost-based lending rate (MCLR) of the bank remained unchanged. Whereas the six-month MCLR rate stood at 7.95 percent, and the three-year rate stood at 8.15 percent.
Meanwhile, India's largest lender also created the largest database with 500 million users and 740 million accounts post its merger with five associate banks and Bharatiya Mahila Bank on April 3, 2017.
State Bank of India ended at Rs 293.15, up by Rs 0.55 or 0.19% from its previous closing of Rs 292.6 on the BSE.
The scrip opened at Rs 294.3 and touched a high and low of Rs 295.5 and Rs 291.5 respectively. A total of 11587493(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs 233304.74 crore.
The BSE group 'A' stock of face value Rs 1 touched a 52 week high of Rs 294.25 on 31-Mar-2017 and a 52 week low of Rs 166.6 on 24-May-2016. Last one week high and low of the scrip stood at Rs 294.25 and Rs 275.3 respectively.
The promoters holding in the company stood at 61.23 % while Institutions and Non-Institutions held 27.78 % and 9.4 % respectively.
The stock traded above its 50 DMA.
PPF, Kisan Vikas Patra interest rates to fall from 1 April, it's time to consider bolder investment options
MMNN:31 March 2017
The government today cut interest rate on small savings schemes such as PPF (public provident fund), Kisan Vikas Patra and Sukanya Samridhhi Savings Scheme by 10 bps or 0.1 percent. The new rates are applicable for April-June quarter. This will have a marginal impact on investors who depend on interests income from small saving schemes. For instance, if you had invested Rs 1 lakh, you would have earlier got an interest of Rs 8,000 per annum when the rate was at 8 percent. In the reduced interest rate scenario, you now stand to get Rs 7,900 per annum at 7.9 percent. The move is in keeping with the government's decision to reduce small savings rates to align with the rates in the economy. Currently, one-year bank fixed deposits rates are hovering in the range of 6.50-7.00 percent.
In general, interest rates are on a downward curve, with bank deposit rates too falling in last few months owing to liquidity gush post the demonetisation move.
The question is how should savers adjust in a falling interest rate scenario.
Here is what financial planners have to advise in a falling interest rate regime:
Invest in debt mutual fund:
According to Suresh Sadagopan, founder of Ladder7 Financial Advisories - a specialist financial planning firm, the latest cut in small savings rate is a very minute adjustment. But the options for savers in such a scenario are limited. "We will have to learn to live in this scenario," he says.
His advise is to consider investing in debt mutual funds. "FDs and other small saving schemes are treated as income from taxation point of view and savers will have to pay complete tax on it. In debt mutual fund schemes, investing in it for three years or more is considered as long-term capital gains. Effective tax incidents will be three to four percent then." The debt funds become attractive from a taxation point of view.
Look for equities and real estate:
Bhargavi Sridharan, founder, Finmintra (www.finmintra.com), an online investment services firm, feels that rates will fall further as the government wants to boost investments. Many infra projects are in limbo and 80 percent of them are dependent on debt. A small reduction in rates changes the economics, said Sridharan. She thinks that with the government being pro business, pro economy and pro growth, it is bound to encourage this climate by cutting interests.
Sridharan suggests that with equity markets on a strong footing over the past four to six months, investment in equity market-related instruments could be a better option in a falling interest rate scenario.
"Equities are always a better option when interest rates are falling. However, i feel interest rates will go down further and it is better to lock one's money in fixed deposits for a year to a year and a half period. I would consider that a better option even now," she says.
Another choice is to invest in housing. Prices are stable now and that would be a good option, Sridharan says. Due to demonetisation exercise, interest rates are falling, and with the government pushing for for clean investment, investing in real estate is a good option, reiterates Sridharan.
Consider investing in bonds, debentures:
The common refrain from small savers is that they do not understand financial instruments beyond fixed deposits, life insurance policies and post office savings. That is something that has to be remedied soon, says Pankaj Mathpal, Managing Director, Optima Money Managers Pvt Ltd. Financial literacy is a must in the times we are living in and in the future, said Mathpal.
He advises that an option for small savers should now be to consider investing in bonds and debentures. "Another option is mutual funds. Though bonds and debt are better instruments and can't be compared with equity schemes, small savers should now step forward and invest in it and also look at G-Sec funds and debt-oriented mutual funds."
Centre notifies simplified one-page ITR form; e-filing to start
MMNN:31 March 2017
The government on Friday notified a simpler, one-page form for filing income tax returns while making it mandatory to quote Aadhaar number and disclose bank deposits of more than Rs 2 lakh post-demonetisation.
The Income Tax Return Form-1 (Sahaj) will replace the 7-page form, removing a plethora of columns on deductions from income claimed.
Sahaj can be filed by an individual having income of up to Rs 50 lakh from salary, house property and interest.
Currently, SAHAJ (ITR 1) is filed by salaried employees and ITR 2 by individuals and HUFs whose income does not include income from business.
The government has done away with form ITR 2A (used by individuals & HUFs not having income from business or profession and capital gains and by those who do not hold foreign assets).
Sahaj makes quoting of 12-digit biometric identifier Aadhaar number mandatory along with Permanent Account Number (PAN) and also seeks details of cash in excess of Rs 2 lakh that was deposited in bank accounts in the 50-day post-demonetisation window.
ITR 2 and ITR 3 have a Schedule AL requiring assessees to declare their assets and liabilities at the end of the fiscal.
Only six crore out of 29 crore persons having PAN file income tax returns at present.
The e-filing facility for ITR-1 is enabled from April 1 and ITRs can be filed till the stipulated deadline of July 31.
While the old ITR form too had column to quote Aadhaar, the government has through an amendment to the Income Tax Act this week made quoting it mandatory.
"The Central Board of Direct Taxes has notified Income- tax Return Forms (ITR Forms) for the Assessment Year 2017-18. One of the major reforms made in the notified ITR Forms is the designing of a one page simplified ITR Form-1 (Sahaj)," CBDT said in a statement.
In the new form, parts relating to tax computation and deductions have been rationalised and simplified for easy compliance.
Besides personal details, an income tax filer needs to disclose only his income from salary or pension, one house property and other sources like interest. Thereafter, deduction claims are to be stated, followed by computation of taxable income.
Bank details are to be filled in the column following that. Details of advance tax, self-assessment tax payments and tax deducted at source come next.
In the column for providing bank details, cash deposited in excess of Rs 2 lakh during November 9 to December 30, 2016 has to be mentioned.
The rationalised ITR will "reduce the compliance burden to a significant extent on the individual tax payer," the CBDT said, adding that the move would benefit more than two crore tax-payers who will be eligible to file their return of income in this simplified Form.
Instead of 20 columns of deductions in the old form, only four deductions claims in respect of Section 80C, 80D, 80G and 80TTA need to be filled.
"Simultaneously, the number of ITR Forms have been reduced from the existing nine to seven forms. The existing ITR Forms ITR-2, ITR-2A and ITR-3 have been rationalised and a single ITR-2 has been notified in place of these three forms," it said.
Consequently, ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and ITR-4 (Sugam) respectively.
There will be no change in the manner of filing of ITR Forms and all the returns are to be filed electronically.
However, where return is furnished in ITR-1 (Sahaj) or ITR-4 (Sugam), an individual of the age of 80 years or more, an individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund in the return of income, have an option to file return in paper form.
At the time of filing the form, the taxpayer has to fill in PAN, Aadhaar number, personal information and information on taxes paid. TDS will be auto-filled in the form.
Post-July 1, as per amendments to the Finance Bill 2017 as passed by the Lok Sabha, it would become mandatory for an assessee to provide the Aadhaar number or the number showing that he has applied for Aadhaar in the ITR.
Also ITR 4 (filed by Individuals & HUFs having income from a proprietary business or profession) will now be known as 'Sugam' and ITR-4S will be substituted.
"Going forward for AY 2017-18, the benefit of using the simplest ITR form i.e. ITR-Sahaj shall not be available to the following category of taxpayers: those earning total income of more than Rs 50 Lakh, those earning dividend income of more than Rs 10 lakh and those whose total income includes cash credits, unexplained investments, unexplained money etc," said Nangia & Co Partner Suraj Nangia.
Similarly, ITR 4 (Sugam) cannot be used by the following category of taxpayers -- those earning dividend income of more than Rs 10 lakh, those whose total income includes cash credits, unexplained investments, unexplained money etc.
"Owing to the aforesaid changes, taxpayers earning income for these sources will have to file a more detailed form containing disclosure in respect of their assets and liabilities, bank accounts etc," Nangia said.
Telecom Ministry Rules Out Special Treatment for Vodafone-Idea Post-Merger
MMNN:30 March 2017
Vodafone and Idea Cellular will not get any special treatment post-merger and the combined entity will have to comply with existing rules on revenue, subscriber and spectrum caps, government said on Thursday.
Telecom Minister Manoj Sinha asserted that the ministry will work with sectoral regulator TRAI to ensure policies are in place that balance consumer interest with the financial health of the sector.
On Vodafone and Idea Cellular merger - which is set to create India's largest telecom operator displacing Bharti Airtel from its current pole position - the Minister said if the merging entities do not adhere to the rules, they would not be allowed to proceed.
"They have to comply," he told reporters on the sidelines of an event to release commemorative postage stamp on Cub Scouts.
Asked if there would be any special consideration for the mega merger, the Minister said, "No, nothing".
Telecom analysts have been flagging certain hurdles in the deal, including breach of revenue market share, subscriber and spectrum caps in five markets.
"There are already parameters in place...that in the next one year, if your revenue or subscriber numbers are more (than the permitted ceiling) they will have to reduce...they will have to comply," Sinha said.
He said there is no danger of cartelisation in the sector despite the ongoing consolidation, given that each service area will still have 5-6 players post the M&A phase. Also, guidelines are in place to ensure that a single operator does not have a dominant position.
Prime Minister Narendra Modi's dream project Udan rolled out
MMNN:30 March 2017
13 airports in tier 2 cities that had to wait for days to see a flight touchdown or take off will witness regular air traffic, all thanks to Udan.
Aviation Secretary RN Choubey who has been spearheading this project said, "Air India has got 15 routes, Spice Jet has got 11, Turbo 18, Air Deccan 34 and Air Odisha has got 50 routes". Apart from the 13 lesser known airports, 43 airports too will be part of this project.
Aviation Minister Gajapathi Raju said, "Within 4-6 months, all these new regional flights will become operational. UDAN will have a positive effect on the economy, in terms of employment and investment," he added.
Rajus' deputy Jayant Sinha said, "205 crore will be needed for subsidy to implement this".
Interestingly, nearly 50% of the seats on Udan flights will cost Rs 2500 and the subsidy will be borne by passengers from whom a nominal amount will be charged every time they fly.
Some of the routes under Udan flights will cover are Bhatinda- Delhi, Gwalior-Indore, Gwalior-Lucknow, Pathankot-Delhi, Agra-Jaipur, Diu-Surat, Jamnagar-Ahmedabad, Kanpur-Varanasi, Pondicherry- Chennai and Bilaspur-Raipur.
India launched the Regional Connectivity Scheme to get more people flying in what is already the world's fastest growing aviation market.
Under Udan that has been touted as Prime Minister Modi's pet project, the government has capped fares and is offering incentives to attract airlines to fly on offbeat routes.
BS-III exit: Rajiv Bajaj cheers SC verdict, says 'A just cause never fails'
MMNN:29 March 2017
The Supreme Court of India has given a clear message that public health is important, said environmentalist Sunita Narian commenting on the apex court's order banning sale and registration of BS-III vehicles.
However, there is leeway for those who have bought vehicles before March 31 and can register the vehicles by providing the proof of sale.
Speaking to CNBC-TV18, Narian pointed out that companies instead of making BS-IV compliant vehicles continued with BS-III, which causes 80 percent more pollution than BS-IV vehicles.
Standing away from the crowd, Rajiv Bajaj of Bajaj Auto, who was batting for the ban of BS-III vehicles, said that it is the right thing for our children.
Bajaj had earlier talked about the issue of data integrity and that few companies were misleading the SC with a lesser number of inventory. He said that the damage to some of the auto companies could be more than it was anticipated.
Also, companies like Tata Motors and Mahindra that do not have an overseas market for their vehicles will face a difficult time as selling abroad was the only option for the unsold inventory.
"This is a signal that things are changing," said Bajaj and Narian concurs with him and added that public health is paramount.
Lashing out at auto companies, Narian said that progressive companies need to break rank and think of the greater good.
"Maruti has no BS-III vehicles but it did not stand differently" and say, "If we can do it so can you."
India becomes net exporter of electricity for the first time
MMNN:29 March 2017
India has become a net exporter of electricity during the April-February period this fiscal for the first time, Power Ministry on Wednesday said.
"As per Central Electricity Authority (CEA), the designated authority of Government of India for Cross Border Trade of Electricity, first time India has turned around from a net importer of electricity to Net Exporter of electricity," Power Ministry said in a statement.
According to the statement, during the current year 2016-17 (April-February), India has exported around 5,798 Million Units to Nepal, Bangladesh and Myanmar which is 213 Million units more than the import of around 5,585 Million units from Bhutan. Export to Nepal and Bangladesh increased 2.5 and 2.8 times respectively in the last three years.
Ever since the cross border trade of electricity started in mid-80s, India has been importing power from Bhutan and marginally exporting to Nepal in radial mode at 33 kV and 132 kV from Bihar and Uttar Pradesh. On an average, Bhutan has been supplying around 5,000-5,500 Million units to India, it said.
India had also been exporting around 190 MW power to Nepal over 12 cross border interconnections at 11kV, 33kV and 132 kV level.
The export of power to Nepal further increased by around 145 MW with commissioning of Muzaffarpur (India)- Dhalkhebar (Nepal) 400kV line (being operated at 132 kV) in 2016, it added.
The export of power to Bangladesh from India got further boost with commissioning of the first cross border Interconnection between Baharampur in India and Bheramara in Bangladesh at 400kV in September 2013.
It was further augmented by commissioning of second cross border Interconnection between Surjyamaninagar (Tripura) in India and South Comilla in Bangladesh. At present, around 600 MW power is being exported to Bangladesh.
The export of power to Nepal is expected to increase by around 145 MW shortly over 132 kV Katiya (Bihar)- Kusaha (Nepal) and 132 kV Raxaul (Bihar)- Parwanipur (Nepal).
A few more cross border links with neighbouring countries are in the pipeline which would further increase export of power.
Reliance Industries shares slump 3% as Sebi curbs futures trading
Mumbai:MMNN:27 March 2017
Investors of Reliance Industries Ltd (RIL) on Monday have lost over Rs12,500 crore market value after market regulator penalized the company for unlawful transactions and imposed a one year ban on it and 12 other entities from trading in equity derivatives.
During the day, the Reliance Industries shares touched a low of Rs1,247.10 and fell as much as 3.04%. The scrip closed at Rs1,247.55 on BSE, down 3%, its steepest fall since 17 January, from its Friday's close while India's benchmark Sensex Index fell 0.64% to closed at 29,233.44 points.
"Any adverse order by regulator impacts the reputation of the company," said J.N. Gupta, co-founder of Stakeholders Empowerment Services. "We do not see any financial impact due to penalty amount however we expect long legal battle ahead," he added.
SEBI directed Reliance Industries to pay Rs447.27 crore along with an annual interest of 12% dating back to 29 November 2007, which translates into a penalty of around Rs1,300 crore.
Sebi arrived at the unlawful gain of Rs513 crore by considering the net short position that RIL and 12 other entities maintained while trading in the Reliance Petroleum Ltd (RPL) stock in November 2007, ahead of a planned amalgamation of the firm with RIL.
In 2007, RIL sold a 4.1% stake in RPL, but to prevent a slump in the RPL stock, the shares were sold first in the futures market and later in the spot market, covering the share sales in the futures market.
RIL has already said that it will appeal against the Sebi order in Securities Appellant Tribunal.
Shares of the RIL have gained nearly 19% in last five weeks after analysts started upgrading the stock on triggers that the revenue generation for its telecom venture Jio starting from 1 April following the announcement that it will end free service and start charging its customers.
Analysts also expected that its cash flow may go up significantly as its core projects get commissioned by next year. The core projects include its refinery off-gas cracker (ROGC) and petcoke gasifier.
In letter to PM Narendra Modi, orphans plead for help after finding Rs 96,500 in old notes at mother's locked house
Mumbai:MMNN:27 March 2017
In a letter to Prime Minister Narendra Modi, orphans aged 17 and 12 years plead for help after discovering Rs 96,500 in old notes at their mother's house that was locked for the last three years. The money was found by the orphans, a boy and a girl visited their mother's house that was locked ever since her death in 2013. Their father, who was a truck driver had left them in 2007 while their mother was run over to death by a man who they called their "uncle." For the last three years, they have been living in a Kota child care home, according to an Indian Express report.
The letter to PM Modi, written by the kids in Hindi says-
"Please listen to our Mann ki Baat, Modiji. Humare aage peeche koi nahin (We don't have any relatives)... our father left us when we were young and our mother was murdered. We want to deposit the money back with the government. please help us at the earliest."
Hardcopy of the letter will be mailed to the Prime Minister on Monday.
On March 7, the boy who was accompanied by policemen visited their mother's house in Sarawada village. The outsides of the house covered with mud, once inside the house a number of things came out. Things like an iron box, a cooler, one cot, two speakers, 2 DVDs, a sewing machine, a plastic drum, a clothes iron and a small trunk; several utensils like 25 steel glasses, 19 steel plates and 20 steel bowls; some gold and silver jewellery; an ATM card; and other small things. The most shocking discovery by the boy was finding Rs 96, 500, stuffed inside a pillow that was found in the trunk. But his happiness soon tuned down when he realised that the money was in the form of old notes, 22 notes of Rs 1,000 and 149 notes of Rs 500.
Harish Gurubaxani who took charge as the chairman of the Kota Child Welfare Committee on January 13 said, "...but for these siblings, the social investigation, which should have been mandatorily completed within the first four months, was never undertaken." He further added, "Police could not reach their father when their mother was murdered. A woman claiming to be their grandmother has turned up at the orphanage, saying that her son, their father, has passed away. We are verifying her claims. We spoke to Minister of State for Finance Arjun Ram Meghwal, the MP from Bikaner, and he has assured that he would see to it that our concerns are addressed."
India for fast tracking of talks on pact in services at WTO
Mumbai:MMNN:23 March 2017
India on Thursday called for fast tracking of the negotiation process for a trade facilitation pact in services at the WTO, saying multilateral bodies cannot afford delivering slowly in the present political reality of the globe.
Commerce and Industry Minister Nirmala Sitharaman said member countries of the World Trade Organisation (WTO) can learn lessons from the negotiations on the trade facilitation agreement in goods, which took long time for conclusion.
On the lines of the trade facilitation pact in goods, India has submitted a detailed proposal to the WTO to negotiate a trade facilitation agreement in services (TFS).
"I hope it will not take too long because the disillusion that multilateral institutions are delivering slowly cannot be afforded any longer in the political reality of the globe today," she said .
She was speaking at a workshop on TFS, organised by the commerce ministry and the World Bank.
The TFS proposal aims at liberalising rules for movement of professionals and other steps to reduce transaction costs to boost growth of the services sector.
TFS will focus on issues like liberalised visa regime, long-term visas for business community and freer movement of professionals for the greater benefit of both India and the world, among others.
India is pitching for this pact as the sector contributes over 60 per cent to the GDP and 28 per cent to total employment.
The minister said the lessons learnt in the time absorbed in the process of getting TFA in goods are very critical.
She also urged the World Bank to engage with the WTO on TFS as it would help in generating traction for the pact.
On allegation that India is in list of countries that put high level of restrictions on services trade, she stated that this is not right and the reality is different.
On apprehensions being raised by certain members that TFS means more market access and not facilitation, she clarified that there is a binary between these two and they are completely different issues.
"Facilitation is going to bring in transparency and also great deal of reduction of regulatory (burdens)," she added.
Citing India's experience, the minister raised concerns over demand for review of certain provisions in a bilateral agreement already agreed upon.
Ms. Sitharaman further said despite services being an important component of the global trade, "we are still not talking about facilitating services exports".
Speaking at the event, Commerce Secretary Rita Teaotia said TFS, if implemented, would benefit enormously to all economies and "therefore there is no better time to start talking about TFS".
High transaction cost is impacting services trade, she said. "We need to debate extensively on the barriers discussion on services in WTO was timid," she added.
Sensex snaps 3-day losing streak, ends 164 pts higher; broader market up 1%
Mumbai:MMNN:23 March 2017
The benchmark indices snapped three sessions long losing streak to end higher with energy shares leading the gains while financial and auto shares bounced back.
Positive trade in Asian markets just before a vote in the US Congress on US President Donald Trump's GOP healthcare bill also contributed to the gains.
The S&P BSE Sensex ended at 29,332, up 164 points, while the broader Nifty50 settled at 9,086, up 56 points.
The broader market outperformed with S&P BSE Midcap index and S&P BSE Smallcap index gaining nearly 1% each.
The market breadth, indicating the overall health of the market was strong. On BSE, 1,685 shares rose and 1,088 shares fell. A total of 205 shares were unchanged.
Sectors and stocks
Energy shares gained with the S&P BSE Oil & Gas index gaining 1.2%. Major oil marketing companies, including Bharat Petroleum Corp, Hindustan Petroleum Corp and Indian Oil Corp added up to 2% ahead of their board meetings today to consider the interim dividend.
The finance and the auto sector recovered from the previous day's fall with Nifty Auto and Nifty Bank index gaining 1% and 0.5%, respectively.
Tata Motors (up 3%), GAIL (up 2%), NTPC (up 2%) and Hero MotoCorp (up 1.8%) were the top Sensex movers, while ITC, TCS and Hindustan Unilever shed up to nearly 1%.
Among other stocks, Cairn India and Vedanta rallied up to 5% after the company announced that National Company Law Tribunal has approved their merger.
Hindustan Zinc gained nearly 3% to Rs 320 after the company announced a special interim dividend of Rs 13,985 crore.
Som Distilleries & Breweries soared 20% to Rs 145 after the company announced that it has started the supply of Black Fort Beer to Karnataka.
European shares fell in early trade as investors assessed the risks to Trump's stimulus plans. Britain's FTSE 100 shed 0.2%, while France's CAC 40 and the pan-European STOXX 600 were trading flat with negative bias.
Asian markets edged higher. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.2%.
Japan's Nikkei closed 0.2% higher. China's CSI 300 had made early gains on hopes that index compiler MSCI may include A-shares in its indices, but those gains were lost as money began flowing out of the mainland market through link to the Hong Kong exchange.
The Shanghai Composite dropped 0.3% while the H-share index added 0.2%. Hong Kong's Hang Seng retreated 0.1%.
Not in talks with Paytm, Flipkart for sale: Snapdeal
Mumbai:MMNN:22 March 2017
E-commerce marketplace Snapdeal on Wednesday firmly denied that it was in talks to sell the firm, after Mint newspaper reported the company was in talks with domestic rivals for a potential sale.
Mint had reported Snapdeal was in talks with Paytm and Flipkart for a potential sale, quoting sources.
"Snapdeal categorically denies having had any such discussion. The information is incorrect and without basis. We are making decisive progress in our journey towards profitability and all our efforts are aligned in this direction," a spokeswoman said in a written statement.
China, India led slowdown in coal power development, says report
Mumbai:MMNN:22 March 2017
China's clampdown on new coal projects and a reluctance by backers to provide further funds in India are mainly responsible for last year's drop in the amount of coal-powered generation capacity under development, environmental groups said in a report.
Greenpeace, the Sierra Club, and CoalSwarm found global pre-construction planning fell 48% and new construction starts dropped 62% last year compared with 2015, according to the report, titled "Boom and Bust 2017: Tracking The Global Coal Plant Pipeline."
China last year imposed restrictions on further expansion of coal-power capacity amid increasingly low utilization rates at existing plants, according to the report. In India, the ministry of power said in June that the country had enough coal-fired plants to meet demand through 2019, while a draft National Energy Plan, released in December, said no further coal power capacity beyond that currently under construction will be needed until at least 2027.
In China and India, 68 gigawatts of construction is frozen at more than 100 project sites, according to the report. The research also found that coal plant retirements are taking place at an unprecedented pace, with 64 gigawatts of retirements in the past two years, mainly in the European Union and the US.
Meanwhile, the report identified 10 "hot spot" countries including Turkey, Indonesia, Vietnam and Japan, that have failed to develop their renewable-energy sectors in step with their peers while continuing to build and plan new coal plants.
Cabinet Clears GST Supplementary Legislations
Mumbai:MMNN:20 March 2017
The Union Cabinet on Monday approved four legislations to implement the Goods and Services Tax (GST), ahead of their introduction in Parliament this week to enable roll out of the tax reform from July 1.
Approval of the bills by Parliament and a separate one by all state assemblies will complete the legislative process for roll out of one-nation-one-tax regime by merging central taxes like excise duty and service tax and state levies like VAT.
The GST Council has already approved four-tier tax slabs of 5, 12, 18 and 28 per cent plus an additional cess on demerit goods like luxury cars, aerated drinks and tobacco products. The work on for putting various goods and services in different slabs is slated to begin next month.
"The Union Cabinet chaired by Prime Minister Narendra Modi has approved the four GST related bills -- The Central Goods and Services Tax Bill 2017 (The CGST Bill), The Integrated Goods and Services Tax Bill 2017 (The IGST Bill), The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill) and The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill)," an official statement said.
"These bills would be introduced as Money Bills in Parliament this week, could be even today," a source said, adding that discussion on the four legislations could happen together.
The GST legislations were the only agenda in today's meeting of the Union Cabinet.
"The Government is committed to introduction of GST, one of the biggest reforms, in the country as early as possible. GST Council has decided July 1 as the date of commencement of GST," the statement said.
These four legislations had been cleared by the Council in its last two meetings this month.
"The CGST Bill makes provisions for levy and collection of tax on intra-state supply of goods or services or both by the central government. On the other hand, IGST Bill makes provisions for levy and collection of tax on inter-state supply of goods or services or both by the central government," the statement said.
The UTGST Bill makes provisions for levy on collection of tax on intra-UT supply of goods and services in the Union Territories without legislature.
Union Territory GST is akin to States Goods and Services Tax (SGST) which shall be levied and collected by the States/Union Territories on intra-state supply of goods or services or both.
The Compensation Bill provides for compensation to the states for loss of revenue arising on account of implementation of the GST for a period of five years.
While the four bills approved by the Cabinet today have to be passed by Parliament, the SGST law has to be approved by each of the state assemblies.
Finance Minister Arun Jaitley in his Budget for 2017-18 mentioned that country-wide outreach efforts will be made to explain the provisions of GST to trade and industry.
The biggest tax reform since independence is expected to boost the rate of economic growth by at least 0.5 percentage points, broaden the revenue base and cut compliance cost for firms.
Commenting on the development, Abhishek Rastogi, Partner, Khaitan & Co, said: "The GST plan is well on time and July 1 looks realistic!"
"The timely approval of the Bills by the Cabinet ensures that the industry would have reasonable time to peruse the details of the law impacting them. As a corollary, the assesses will be better prepared for implementation. It is hoped that all the State Assemblies clear SGST on time as well," he added.
IT Major Cognizant Likely To Lay Off 6,000 Employees
Mumbai:MMNN:20 March 2017
IT major Cognizant, which has significant operations in India, is likely to cut at least 6,000 jobs, according to people familiar with the matter. This represents over 2 per cent per cent of its total workforce. Nasdaq-listed Cognizant approximately had 2.6 lakh employees as of December 31, 2016. The layoffs are part of the routine annual reviews to weed out non-performers, a company spokesperson told NDTV. Cognizant has also cut variable pay for employees. "As part of our workforce management strategy, we conduct regular performance reviews to ensure we have the right employee skill sets necessary to meet client needs and achieve our business goals. This process results in changes, including some employees transitioning out of the company. Any actions as the result of this process are performance-based and generally consistent with those we've made in previous years," the spokesperson told NDTV.
The spokesperson also clarified that "the numbers may bounce a percentage here or there, but this is part of our standard practice. At the same time, we continue to enhance our capabilities and hire for roles across all our practice areas in the company".
Commenting on the variable pay, the spokesperson said, "Cognizant has a performance-based culture and our variable payout is a function of company and individual performance. In previous years where we outperformed our goals, we paid significantly above the target payout. In 2016, we missed our original goals and our variable payout is reflective of that."
Analysts say that many IT roles will soon become redundant due to the impact of automation on lower-end jobs. Many Indian IT companies are struggling with lower growth amid big changes in the technology landscape that is fast shifting towards new digital services.
Cognizant had earlier announced a plan to return $3.4 billion to shareholders over the next two years through share buybacks and dividend.
Music Broadcast makes stock market debut at 26% premium
Mumbai:MMNN:17 March 2017
Shares of Radio City FM's operator Music Broadcast Ltd on Friday debuted at a 26% premium on listing after its issue subscribed 39.3 times for its Rs400 crore initial public offer (IPO) last week.
The stock opened at Rs420 a share and touched a high and a low of Rs420 and Rs370.15, respectively. At 10.43am, the scrip was trading at Rs381.85 on the BSE, up 14.67% from its issue price of Rs333. India's benchmark Sensex index rose 0.41% to 29,710.06 points.
Analysts at Prabhudas Lilladher said the company has a 12-13% market share and is expected to report revenues of Rs267 crore for financial year 2017, a compounded annual growth rate (CAGR) of 17% for the past five years.
"We feel the pricing is reasonable considering strong parentage, professional management, debt-free Balance Sheet post IPO, good growth opportunity & limited Equity offering," the Prabhudas Lilladher report added.
For the six months ended 30 September 2016, the company generated a total revenue of Rs138.21 crore, and recorded an Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs45.51 crore and net profit of Rs29.76 crore. For the fiscal year ended 31 March 2016, it generated a total revenue of Rs245.51 crore, Ebitda of Rs78.59 crore and net profit of Rs42.51 crore.
The issue was open during 6-8 March and the portion reserved for high net-worth individuals was subscribed 109 times, while the institutional investors and retail investors categories were subscribed 39.7 times and 9.1 times, respectively.
On 3 March, the company raised Rs146.5 crore by allotting shares to anchor investors as part of the so-called anchor book allocation. Shares were allotted to anchor investors at Rs333 each, the upper end of the IPO price band of Rs324-333 per share.
Investors who participated in the anchor book allocation include funds from financial institutions HSBC, Nomura, Franklin Templeton, DSP BlackRock, Reliance Capital, ICICI Prudential, HDFC Standard Life Insurance and Birla Sun Life Insurance, among others.
Music Broadcast plans to use the proceeds of the share sale to pare debt and for general corporate purposes.
Music Broadcast is promoted by Jagran Prakashan Ltd, a media group with interests in print, radio, digital, out-of-home and brand activations. Jagran publishes 10 print titles in five different languages across 13 states in India and has over 400 editions and sub-editions. These include Dainik Jagran and Inquilab.
Radio City, which started operations in four cities in 2001, is present in 37 cities, including Bengaluru, Mumbai, Chennai, Pune, New Delhi and Hyderabad. As on 31 March 2016, it reached more than 49.6 million listeners in 23 cities, as per market research and consulting firm AZ Research, the firm said in its draft IPO prospectus.
H1-B visa applications to be accepted from April 3
Mumbai:MMNN:17 March 2017
The US will start accepting applications for H-1B work visas for the fiscal 2018 from April 3 amid the uncertainties surrounding the visa programme, the most sought after by Indian IT firms and professionals.
Unlike previous years, the official announcement by US Citizenship and Immigration Services (USCIS) did not say till when it would continue accepting the H-1B petitions.
The department normally has been accepting the application for the first five business days.
In the last few years, the department has received enough petitions to fill in the Congressional mandated 85,000 H-1B visas.
The Congressional mandated limit on H-1B visas include 65,000 in the general category and another 20,000 for those foreign students who have masters or higher degree from a US academic institution.
Those coming to the US on H-1B visas in certain categories for research and scientific institutions are exempted from this limit, but their visa processing is handicapped this year as the premium processing has been suspended by USCIS for six months.
USCIS's announcement also reflects that there is no changes in H-1B visas this year as was being anticipated in view of some media leaks of a proposed executive order on this work visa.
White House says it is working on a comprehensive immigration reform.
In its statement, USCIS said it begin accepting H-1B petitions subject to the fiscal year 2018 cap on April 3.
"All cap-subject H-1B petitions filed before April 3, for the FY 2018 cap will be rejected," it said.
Fiscal year 2018 begins on October 1, 2017.
USCIS said H-1B programme allows companies in the US to temporarily employ foreign workers in occupations that require the application of a body of highly specialised knowledge and a bachelor's degree or higher in the specific speciality, or its equivalent.
H-1B speciality occupations may include fields such as science, engineering and information technology.
Closing Bell: Sensex ends 187 points higher, Nifty closes above 9100 for first time ever
MMNN:16 March 2017
The market ended the day on a strong note as they closed at almost record high level on both the indices. The Nifty closed above 9100-mark for the first time ever, signaling the bullish trend on the Street.
The 30-share Sensex was up 183 points at 29581.55, while the Nifty was up 71.50 points at 9156.30. The market breadth was on the positive side, with 1,784 shares having advanced, 1,043 shares having declined, while 185 shares remained unchanged.
Adani Ports and Tata Steel were the top gainers on both the indices, while Hero MotoCorp and Bharti Airtel were the top losers.
Market is trading at a record high. Nifty is up 70 points at 9155.3, while the Sensex is currently 190 points higher at 29587.70.
Shares of Pennar Engineered Building Systems rose nearly 12 percent intraday Thursday on order wins worth Rs 152 crore.
Pennar Engineered Building Systems, a subsidiary of Pennar Industries, has announced receipt of orders from Hetero Drugs, Amplus Energy Solution, MELPL, S G Pharma, Shahi Exports and others of totalling Rs 152 crore.
The orders includes, order from Hetero Drugs for its Laboratory Building at Medak, Telangana and order from Solar Developer for its solar MMS project at Banda, UP.
ABG Shipyard shares were locked at 5 percent upper circuit at Rs 21.35 after Anil Dhirubhai Ambani Group company showed interest in buying company's assets.
Sources told CNBC-TV18 that Reliance Defence has expressed its interest in buying 'agreed assets' of ABG Shipyard. It is not interested in buying equity stake in ABG.
Liberty House has also expressed conditional interest in the Ahmedabad-based shipbuilding company.
The ICICI Bank-led consortium of lenders initiated the process to find a buyer for the debt-ridden defence firm ABG Shipyard to change its management.
Sources told CNBC-TV18 that Tata Steel will finalise decision on UK business merger by May that will include company's largest plant Port Talbot.
Tata Steel's closure of pension scheme is crucial in merger deal going through.
Tata Steel-Thyssenkrupp talks are in final stages of price negotiation. Both completed operational due diligence.
The company is in talks with 2 other players for UK business merger.
Rupee closes up 0.43% against dollar
Mumbai:MMNN:16 March 2017
The rupee on Thursday pared some gains but still closed near a 17-month high against the US dollar as the Reserve Bank of India's (RBI's) intervention via state-run banks capped the steep rise, dealers said.
The rupee closed at 65.41, a level last seen on 30 October 2015, up 0.43% from its previous close of 65.82. So far this year, the rupee has become the third-best performing currency in Asia after the South Korean won and Taiwanese dollar. It gained nearly 3.85% in this period.
Earlier in the day, the rupee touched a high of 65.23 a dollar, a level last seen on 30 October 2015, and gained as much as 0.7%, tracking its Asian peers after the US Federal Reserve raised interest rates without accelerating its timeline for future tightening. Gains in rupee were also due to narrowed trade deficit data for February.
The Fed raised interest rates by 25 basis points and continued to project two more increases this year, signalling more vigilance as inflation approaches its target. One basis point is one-hundredth of a percentage point.
"The recent US rate hikes could mark the beginning of a significant shift in the global interest rate environment, with benchmark US policy rates settling higher over the long term than current market expectations," according to Fitch Ratings.
Among Asian currencies, South Korean won was up 1.02%, Taiwan dollar 0.46%, Philippines peso 0.26%, Chinese renminbi 0.26%, Malaysian ringgit 0.23%, Indonesian rupiah 0.19%, Thai baht 0.07% and Japanese yen 0.05%. However, the China offshore was down 0.38% and Singapore dollar 0.27%.
Data released by the commerce ministry showed exports grew 17.48% to $24.5 billion in February, while imports rose 21.76% to $33.4 billion in the same month, leading to a trade deficit of $8.9 billion, the lowest in five months.
"The trade data suggest that exports have finally started to recover, but much of the recovery in imports has been largely driven by higher prices and not as much by volumes. In particular, low core import volumes are a clear sign of still-subdued domestic demand," said Nomura Research in a note to investors.
"In our view, the spike in gold imports in February is likely a one-off and not the start of a trend. We expect the current account deficit to narrow to 2% of GDP (gross domestic product) in Q1 2017 from ~2.5% in Q4 2016. In 2017, we expect India's current account deficit to widen marginally to a still-sustainable 1.3% of GDP in 2017 from 0.8% in 2016, owing to higher commodity prices and our expectation of a domestic demand recovery in H2 2017," the Nomura report added.
The benchmark Sensex rose 187.74 points, or 0.64%, to close at 29,585.85. So far this year, it has risen 11.1%.
The 10-year bond yield closed at 6.841% compared to Wednesday's close of 6.829%. Bond yields and prices move in opposite directions.
So far this year, foreign institutional investors have bought $2.90 billion and $627.30 million from local equity and debt markets, respectively.
The dollar index, which measures the US currency's strength against major currencies, was trading at 100.63, down 0.11% from its Monday's close of 100.74.
Core problem of NPAs is large corporates in steel, power, infrastructure, textile sectors: Arun Jaitley
MMNN:15 March 2017
The rate of rise in bank's non-performing assets has slowed down in the March quarter and the steel sector has started showing signs of improvement, Finance Minister Arun Jaitley said Wednesday. The core problem of NPAs is with very large corporates, though few in numbers, which are predominantly in the steel, power, infrastructure and textile sectors, Jaitley said at the Parliamentary Consultative Committee meeting.
"To deal with the NPAs of the banks is a challenging task even though the NPAs have shown a declining trend in the last quarter of the current financial year," Jaitley said.
He said some corporates have expanded their capacity during the boom period from 2003-2008, but could not face the onslaught of global financial crisis and consequent slow down thereafter.
"The government is taking sectoral specific measures to deal with the problem of NPAs specifically in the resolution of large debts... Steel Sector is on its path of recovery while many decisions have been taken in the infrastructure, power and textile Sectors to resolve their problems," Jaitley said.
The gross NPAs of public sector banks have risen from Rs 5.02 lakh crore at the end of March 2016 to Rs 6.06 lakh crore in December 2016.
The members of Consultative Committee too gave various suggestions in order to deal with the NPAs of PSBs.
Some Parliamentarians suggested that apart from recovery proceedings, criminal action must be taken against the big wilful defaulters and their photographs may also be published, a finance ministry statement said.
"A member also suggested that under the SARFAESI Act, the focus should be on catching big wilful defaulters," the statement added.
Jaitley said the RBI has set up an Oversight Committee to look into process of the cases referred to it by the different banks. "Seeing the response and its performance, the Government is considering multiplication of such committees".
On the issue of setting-up a 'bad bank', Jaitley said that several possible alternatives exist and the issue is being debated on public platforms.
The Finance Minister further said the Insolvency and Bankruptcy Board of India (IBBI) has already been set up under the Insolvency and Bankruptcy Code, 2016.
During the meeting, members of Parliament was apprised of the various measures undertaken by the government and Reserve Bank to deal with the problem of NPAs.
During the meeting, one member suggested that state governments may be allowed to take part in the auction of stressed assets.
Some members also said that since Asset Reconstruction Companies (ARCs) are in private sector and their performance is not up to the mark in many cases, therefore, close monitoring of their operations be done through stringent regulations especially in the wake of decision to allow 100 per cent FDI in the ARCs through automatic route.
Another member suggested that to improve the confidence of bank officials, the Gross NPA norm may be fixed in the range of 9-10 per cent as well as not counting the asset as NPA if it has been restructured.
Some members suggested that the government must go ahead to establish Public Sector Asset Rehabilitation Agency (PARA) and it should only consider those NPAs where sector specific reforms do not work.
Other suggestions given by the members included that a Special Bank may be created where NPAs of all the Public Sector Banks be transferred.
Young entrepreneurs who have taken soft loans from the banks but suffered due to slow down may be supported by the banks in order to revive their businesses.
It was also suggested by some members that there is a need to restore the confidence of the officers of the banks which have been off later adversely affected due to increasing NPAs.
The MPs recommended measures be taken to comfort these officials and to enable them to take commercially viable and rational decisions.
They suggested creating a Special Performance Vehicle (SPV) Committee outside the banking system to guide commercial decisions.
The Members of the Consultative Committee who participated in the today's meeting include Baijayanta Panda, Kailkesh Narayan Singh Deo, Udit Raj, Anil Desai, N Gokularishnan, Rajeev Chandrasekhar, Rajkumar Doot and Shri Sukendu Sekhar Roy.
Finace Secretary Ashok Lavasa, Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia, Financial Services Secretary Anjuly Chib Duggal, DIPAM Secretary Neeraj Gupta and Chief Economic Advisor Arvind Subramanian also attended the meeting.
Rupee Hits 16-Month High, Bonds Rally Most In Two Weeks
Mumbai:MMNN:15 March 2017
The rupee hit a 16-month peak against the dollar and bonds rallied the most in two weeks on Wednesday on hopes of a less hawkish tone on interest rates by the Federal Reserve at the end of its two-day policy meeting later in the day.
The stock market however ended nearly unchanged a day after the broader NSE index hit a record high and the benchmark BSE index hit two-year highs.
The benchmark 10-year bond yield fell as much as 9 basis points before ending the day at 6.83 per cent, its lowest since March 3, bolstered by a strong currency ahead of the US central bank meeting and on short covering, traders said.
The February consumer inflation that came largely in line with expectations after market hours on Tuesday added to the positive sentiment.
The positive momentum came after results over the weekend showed that the ruling Bharatiya Janata Party (BJP) scored an overwhelming win in the key state of Uttar Pradesh. The victory was widely seen as a strong endorsement of Prime Minister Narendra Modi's agenda.
Foreign investors net bought Rs. 4,100 crore ($625.76 million) worth of shares on Tuesday, according to BSE data. That marked the biggest single-day net purchase since February 17, according to Thomson Reuters estimates.
This helped the rupee climb as far as 65.41 per dollar on Wednesday, its strongest since November 2015, ending the day at 65.71 compared with its previous close of 65.80.
The Reserve Bank of India stepped in for a second straight day to cap gains, two traders said.
Stock markets were largely flat, with the Nifty ending down 0.02 per cent and the Sensex 0.15 per cent lower.
The Fed is widely expected to raise its benchmark interest rates, but investors are keen on reading the tone of the statement to gauge how much more tightening will happen this year.
Worries about the US central bank and concerns about domestic share valuations could cap further gains in equities, analysts said, even as broader sentiment remains positive.
"The market is definitely in a bullish phase but it is difficult to say how long the positive effect of BJP's win will last," said Mugilan K, deputy manager of research at Cholamandalam Securities.
IT stocks fell on worries about the stronger rupee. Tata Consultancy Services Ltd dropped 2.5 per cent, while Infosys Ltd fell 2.4 per cent.
Direct tax receipts climb 10.7%
MMNN:11 March 2017
Net direct tax collections up to February grew 10.7% as compared with the same period of the previous financial year, while net indirect tax collections increased 22.2% during the same period.
"The direct tax collections up to February 2017 continue to show a steady growth trend," according to a government statement. "The collection net of refunds stands at Rs. 6.17 lakh crore, which is 10.7 % more than the net collections for the corresponding period last year. This collection is 72.9 % of the total Budget Estimates for direct taxes for financial year 2016-17."
During February 2017, net indirect tax collections grew 8.4%, with customs, central excise and service tax collections growing 10.9%, 7.4% and 7.6%, respectively. This was slower than the 16.9% growth in net indirect collections in January 2017, when customs, central excise and service tax collections grew was 10.1%, 26.3% and 9.4%, respectively.
"In the earlier part of the year, it was customs collections that grew at a slower rate," D.K. Srivastava, Chief Policy Advisor at EY India said.
"Now, domestic indirect taxes (excise duty and service tax) are also reflecting the slowdown in the economy. This implies a poor performance in Q4 brought on largely by demonetisation, since January and February are already captured in the data."
Within direct tax, corporate tax collections grew 11.9% while personal income tax collections grew 20.8%. However, after accounting for refunds, these growth rates stand at 2.6% and 19.5%.
The tax department issued refunds worth Rs. 1.48 lakh crore over the April 2016 to February 2017 period, which is 40.2% higher than the refunds issued during the corresponding period last year.
"For direct taxes, this is slightly lower than what they had estimated and it is more because of the underperformance of the corporate income tax," Mr. Srivastava said. "And this is because of the slowdown of the economy. On the slowdown, it started even before demonetisation. There was an investment contraction in Q1 and Q2 and after demonetisation, it was consumption contraction."
"The figures for indirect tax collections (central excise, service tax and customs) up to February 2017 show that net revenue collections are at Rs. 7.72 lakh crore, which is 22.2% more than the net collections for the corresponding period last year," the official statement said. "Till February 2017, about 90.9% of the Revised Estimates (RE) of indirect taxes for financial year 2016-17 has been achieved."
Within indirect taxes, net central excise collections stood at Rs. 3.45 lakh crore during the April 2016-February 2017 period compared with the Rs. 2.53 lakh crore collected during the corresponding period of the previous financial year, which amounts to a growth of 36.2%.
Decoding Air India mess: Understating losses, bleeding international ops, crew mismanagement
New Delhi:MMNN:11 March 2017
New Delhi: Air India has been under reporting losses for at least four years, says the country's top auditor. This under-reporting is not any insignificant amount but a sum of over Rs 6,800 crore between 2012-13 and 2015-16. The airline has, as expected, said it did not do any under provisioning while asserting that its Rs 105 crore operating profit in FY16 was indeed a profit, never mind the observations of the Comptroller & Auditor General (C&AG) that the airline actually posted an operating loss of Rs 321 crore last fiscal.
Since the two erstwhile airlines (Air India and Indian Airlines) merged to form the present entity, the measly Rs 105 crore operating profit was the first time in a decade that the word 'profit' was used for Air India in any form. Now even this figure has been called into question, raising doubts about the accounting standards followed by the state-owned carrier. As the airline and the C&AG continue to differ over what 'provisioning' actually means in standard accounting practice, it is interesting to examine the detailed explanations and instances C&AG has given in its report, of Air India's operational blunders during the four years under review.
Remember, the airline was in deep financial trouble when the UPA government, in its infinite wisdom, decided to offer it equity support of a whopping Rs 42,182 crore for a 20-year period till 2031-32. Since the government is this ailing airline's sole owner and taxpayers' money is being spent in such a large amount to keep this white elephant afloat, the C&AG audited the airline's workings for the four years under review. What the auditor found is startling, to say the least. It has now recommended that the equity support to the airline should be reduced - something the government seems to have agreed to - but there is no clarity on the quantum by which the promised funds' infusion will be lessened.
Bleeding international ops: India might take pride in saying that Air India is its international airline of repute, but financially the airline's international operations have bled it dry. As per C&AG, the deficit in recovery of total costs on international operations was Rs 3,755 crore in 2015-16 versus a much lesser Rs 1,759 crore in domestic operations. The airline operated 68 international service, 154 domestic services. Contribution of services to the USA was the highest in international segment; they also brought in a fair share of the losses.
Highest loss was by the Ahmedabad-Mumbai-Newark flight at Rs 2,411.46 crore - this is the deficit the flight incurred in not meeting its total costs. Three other services also brought in losses but it is interesting to see that the San Francisco service, launched with much fanfare in December 2015, was also bringing in a deficit of Rs 43.74 crore vis-à-vis total cost within just three months of operations. USA operations alone brought in cumulative loss of Rs 6,685 crore in FY16.
On-time flights: Between January 2012 and March 2016, 9,808 Air India flights were delayed; 10,037 flights were re-scheduled and 554 cancelled due to non-availability of pilots and cabin crew. This, when the personnel department of the airline noted there were excess pilots besides excess personnel in the in-flight services and operations department. This was contradicted by the H R Department. Anyway, Air India went in a hiring spree for pilots, cabin crew etc. all of last year so it is clear that deployment of manpower is a huge issue for this airline, which has the staff but is unable to utilise it properly.
C&AG found that up to 78 percent of A320 pilots flew less than 72 hours a month; remaining pilots flew more than 72 hours during the same period. So some were being made to fly much more than others - this of course points to mismanagement of the pilot strength available with the airline, leading to huge delays and re-scheduling of flights.
31 convicted, 117 acquitted in Maruti's 2012 violence case
MMNN:10 March 2017
A court here today convicted 31 employees of Maruti Suzuki India Ltd (MSIL), including 13 on charges of murder, for the violence at the company's Maneser plant in August 2012.
Additional District and Sessions Judge R K Goyal also acquitted 117 MSIL employees. A total of 148 workers were arrested and charged with the murder of senior HR officer Awanish Kumar Dev.
The court sentenced 13 employees, holding top posts in MSIL workers' union, on charges of murder and attempt to murder besides rioting and other related offences.
The other 18 were convicted on charges of rioting, trespassing, causing hurt and other related offences under Indian Penal Code sections.
The quantum of punishment will be decided on March 18 during the next hearing, defence counsel Rajendra Pathak told.
The violence on August 18, 2012 broke out over wage issues when a group of employees allegedly torched a section of MSIL facility which claimed the life of Dev, a resident of South Delhi's Malviya Nagar.
A total of 148 workers were arrested and charged with the murder of Dev, a resident of South Delhi's Malviya Nagar.
More than 100 other employees, including some foreign nationals, suffered injuries.
The district administration imposed CrPC section 144 near the civil court and Industrial Model Township (IMT) Manesar, prohibiting gathering of more than five people.
Assembly of more than five people has also been prohibited in the 500 metres radius of MSIL plant and Gurgaon court.
Air India Plane Goes Off Radar Over Hungary, Escorted By Fighter Jet
New Delhi:MMNN:10 March 2017
An Air India passenger aircraft flying to London went off the radar for a few frightening moments while flying over Hungary, the airline said on Friday.
The aircraft, which flew from Mumbai in the morning with 231 passengers and 18 crew members, had to be escorted by fighter jets after it lost contact with the Air Traffic Control while flying over Hungary.
The Air India flight AI 171 lost contact with the Air Traffic Control due to "frequency fluctuation", an Air India spokesperson said. A Hungarian fighter jet then escorted it.
The flight which took off from the Chhatrapati Shivaji International Airport in Mumbai at 0700 hours, landed safely at London's Heathrow Airport at 11.05 hours, the spokesperson said.
This comes less than a month after a Jet Airways aircraft with more than 300 people on board was escorted by German Air Force planes after it lost contact with Air Traffic Control during a flight from Mumbai to London.
The incident took place on February 16 in German air space. Fighter jets escorted the Boeing 777 aircraft. Communication was restored eventually and the flight landed at London's Heathrow airport without incident.
Dramatic footage of the incident, posted by website Aviation Herald, showed the Jet Airways flight being escorted by two fighter jets - vapour trails billowing in their wake.
According to Aviation Herald, the communication blackout happened when the air traffic control in Slovakia was handing over charge to the ATC in Prague. The website claims the blackout happened as the Jet Airways pilot chose a wrong frequency to communicate.
RBI opposes $1.17 billion Tata-DoCoMo settlement
MMNN:9 March 2017
The Reserve Bank of India on Wednesday opposed the $1.17 billion deal between Tata Sons Ltd and Japan's NTT DoCoMo, reported Economic Times.
Tata Sons and DoCoMo had made a joint application in the Delhi High Court to resolve the matter, had the hearing on Wednesday.
RBI argued that the settlement would lead to transferring of shares which would be illegal.
Considering that both the companies had agreed to settle the dispute through the payment, Justice S Murlidhar questioned if the RBI could oppose the award's enforment.
The Delhi High Court asked the RBI whether its permission was required if there is no other objection to the enforcement of the $1.17 billion arbitral award in favour of Japanese telecom major NTT Docomo in its case with Tata Sons.
"Is RBI's special permission required for paying damages for failing to fulfill contractual obligations? Say yes or no. If yes, then quote the circular, regulation or rule under which permission is required. If not, then say no," Justice S Muralidhar said and added, "make your stand clear".
The query from the court came as the RBI opposed the consent terms arrived at between Tata Sons and Docomo with regard to the enforceability of the award granted in favour of the Japanese telecom major by the London Court of International Arbitration (LCIA) in June 2016.
The RBI said it will submit its stand before the court on the next date of hearing on March 14.
Tata has already deposited the amount of $1.17 billion with the Delhi High Court.
Tata and Docomo have decided to settle their two-year old dispute regarding their telecom joint venture, Tata Teleservices Ltd (TTSL), with the Indian company withdrawing its objections to the enforcement of the award.
The Japanese company in turn has said it will "suspend its related enforcement proceedings in the United Kingdom and the United States" for a period of six months.
The Reserve Bank of India (RBI) has objected to the consent terms saying if Docomo fails to succeed in enforcement of its award in India, it cannot say it will try and enforce it in some other jurisdiction after six months.
The court, however, disagreed with the contention and termed it "absurd". It said that if Docomo does not succeed here, it can take the award for enforcement of the award to the US or the UK and "RBI has no jurisdiction outside India".
"How can you object to enforceability anywhere else in the world? If they (Tata) have assets anywhere else, they (Docomo) can move a court there for the enforcement of the award. There is no law prohibiting it," the judge said.
The judge said "all I will say is that objections to enforceability of the award stand withdrawn. ... So it won't be a precedent as I have not adjudicated on the correctness of the tribunal's ruling."
The court asked RBI whether it will still say that special permission was required for remission of the award amount if the central bank fails to succeed in its intervention application filed in the matter. RBI has sought to intervene in the matter contending that that the shareholding agreement between the two companies permitting transfer of funds abroad was illegal as it violated Foreign Exchange Management Act (FEMA) Regulations.
Tata, in the past, has been consistently maintaining that while it has every intention to pay the arbitral award to Docomo, it has been unable to do so due to lack of permission from RBI. The issue pertains to Docomo's exit from the joint venture, TTSL, for alleged breach of agreement by the Tatas and the subsequent enforcement of the damages awarded by LCIA in favour of the Japanese company for it.
Indian banks at risk of skipping coupon payments on bonds, says Fitch
New Delhi:MMNN:9 March 2017
Indian banks are still at risk of defaulting on their interest payments on certain capital instruments in the next couple of years, as a large number of them are under-capitalised, global rating agency Fitch Ratings said in a note on Thursday.
Distributable reserves at small- to mid-sized state banks were down by one-third in the first nine months of financial year 2016-17, compared with financial year 2014-15, reflecting persistent losses and weak internal capital generation, Fitch said.
Previously, in August 2016, old generation private sector lender Dhanlaxmi Bank had skipped interest payments on its Upper Tier-2 bonds as the bank had not met its minimum capital requirement in the March quarter of 2015-16. Under the present norms, if a bank does not meet its minimum capital norms, it has to reach out to Reserve Bank of India (RBI) and seek permission before it pays off bondholders.
Five state-owned banks suffered losses that were equivalent to more than 30% of distributable reserves in April-December in the current financial year alone.
"The RBI's recent decision to allow banks to make additional Tier 1 (AT1) coupon payments from statutory reserves may have helped mitigate short-term coupon-deferral risks, but state banks' reserves are likely to continue falling," Fitch said.
Some banks are also at risk of missing coupon payments on capital instruments as a result of breaching minimum capital requirements, the rating agency said.
"Fitch's analysis indicates that the total capital adequacy ratio (CAR) of 12 banks was at or below the 11.5% minimum that will be a prerequisite for payment of coupons on both legacy and Basel III AT1 capital instruments by FYE19," it noted.
There were 11 banks with common equity tier-1 ratios at or below the 8% minimum that will be required to make coupon payments on AT1 instruments by March 2019.
"We estimate that banks require around $90 billion in new capital by FYE19 to meet Basel III standards - state banks account for around 80% of that," Fitch analysts said in the note.
According to analysts Saswata Guha, Jobin Jacob and Dan Martin, state-owned lenders are constrained in the way they can raise capital, owing to low valuations. Some large lenders are also shying away from international fundraising activities, owing to increased cost in this process.
Most public sector banks are thus dependent on the government for their needs, whereas Rs10.4 billion earmarked by the government would be inadequate to sustain balance sheet growth.
SBI Justifies Penalty For Not Keeping Minimum Balance
MMNN:8 March 2017
Facing a backlash for levying penalty on non-maintenance of minimum balance in accounts, State Bank of India, the country's largest lender, on Wednesday justified its move saying the bank needs to impose some charges to balance the "burden" of managing a large number of no-frills Jan Dhan accounts.
The bank also said it has not received any "formal communication" from the government for re-considering the penalty and it will take a call "if something comes". It also clarified the penalty would not apply to Jan Dhan accounts.
Last week, the country's largest bank decided to reintroduce penalty on non-maintenance of minimum balance in accounts and also revised charges on other banking services.
The new charges would be applicable from April 1. The move by the state-run banking major has faced a lot of criticism, including from the opposition parties.
"Today, we have lot of burden such as we have 11 crore financial inclusion or Jan Dhan accounts. To manage such a large number of Jan Dhan accounts, we need some charges. We have considered many factors and after analysing carefully, we have taken this step," State Bank of India chairperson Arundhati Bhattacharya told reporters here on the sidelines of a national convention of women entrepreneurs.
As per the list of revised charges of SBI, failure to maintain monthly average balance (MAB) in accounts will attract a penalty of up to Rs. 100 plus service tax.
In metropolitan areas, there will be a charge of Rs. 100 plus service tax, if the balance falls below 75 per cent of the monthly average balance of Rs. 5,000. If the shortfall is 50 per cent or less of the MAB, then the bank will charge Rs. 50 plus service tax.
The charges and monthly average balance varies according to the location of bank. It is minimum in case of rural branches.
Ms Bhattacharya said that all the banks have minimum balance requirement for account holders and SBI as such has the lowest minimum balance requirement.
She said the penalty was there earlier also and State Bank of India was the only bank to withdraw it in 2012.
"Our analysis have shown that most of the account holders maintain more than Rs. 5,000 on a monthly basis and so they do not have to worry about any penalty," Ms Bhattacharya said.
She clarified that the penalty on non-maintenance of minimum balance will not be applicable on Jan Dhan accounts.
Asked about the government's direction to the bank to reconsider the decision, SBI managing director (national banking) Rajnish Kumar said the bank has not received any communication on this issue.
"There is no formal communication. We will see if something comes," Mr Kumar said.
Under the revised charges, withdrawal of cash from ATMs will attract a charge of up to Rs. 20 if the number of transactions exceeds three from other bank's ATMs in a month and Rs. 10 for more than five withdrawals from State Bank of India ATMs.
However, SBI will not levy any charge on withdrawals from its own ATMs if the balance exceeds Rs. 25,000. In case of withdrawal by its customers from ATMs of other banks, there will be no charge if the balance exceeds Rs. 1 lakh.
"We are charging as people go to ATMs, withdraw cash and give it to somebody who in turns deposit it into the bank. This type of transaction involves a cost which is not known to public as bankers do not levy any charge on the customers."
"There is some cost involved in printing cash, in transportation, counting and providing security to cash. The cost is borne by the tax payers. There is a cost in installing an ATM and so we feel the charges are very reasonable," Ms Bhattacharya said.
She said the customers must use alternate channels like mobile, internet to do their transactions.
"We do not see there is a requirement for an household person to withdraw cash through ATMs for more than four times. Daily cash requirement is more for people doing businesses and we want them to use mobile and internet banking to do transactions," she said.
While addressing the convention, Ms Bhattacharya said the bank so far has given loan worth to Rs. 1,60,000 crore to the MSME sector.
"This year alone we have done more than Rs. 10,000 crore. We wish to do around Rs. 16,000 crore of Mudra loans by the end of this financial year," she said.
At present, nearly 55 per cent of the bank's balance sheet comprises retail segment and balance is to large segment.
"I have no problem at all if I am able to tilt that more in favour of retail. I would love to do that. Of course large segment needs support because of that you would have the airports ... the roads you have today, for defence you are going to set up an SME and for that you need steel, cement.
"So, the large sector also needs support from the bank. But that does not mean that we (banks) are not there for you (retail segment)," she said.
Flipkart Now Said to Be Looking to Raise Up to $1 Billion
New Delhi:MMNN:8 March 2017
India's top e-commerce company Flipkart is holding talks with investors to raise up to $1 billion (roughly Rs. 6,671 crores) in one of its biggest funding rounds so far, a source familiar with developments said on Wednesday.
The source declined to name the potential investors and the exact valuation Flipkart was looking for, but said it hoped the valuation would be in the "double digits", referring to a valuation of $10 billion or more.
Earlier on Wednesday, Financial Express newspaper, citing unidentified sources, said the expected fundraising could value Flipkart at up to $8 billion, far lower than the roughly $15 billion in its last funding round.
A Flipkart spokesman said the company would not comment on market speculation.
Flipkart's latest fundraising comes amid intensifying competition in the e-commerce space from the likes of US Internet giant Amazon.com Inc and domestic rival Snapdeal, which is backed by Japan's Softbank Group.
The ensuing heavy losses have hit valuations among India's e-commerce players. Some funds that have invested in Flipkart have recently slashed the value of their holdings, media reports have said, citing securities filings.
Launched by two former Amazon employees in 2007, Flipkart's biggest investor is US hedge fund Tiger Global. Others include Accel Partners, DST Global and Baillie Gifford.
The company has so far raised more than $3 billion in funding, mostly from international investors.
SBI's decision to charge on monthly minimum balance may lead to consolidation of family accounts
MMNN:7 March 2017
The state owned State Bank of India (SBI) rubs shoulders with its private sector peers like ICICI Bank and Axis Bank in the rather cramped BSE 30 or Sensex basket. But it doesn't mean it should ape them on banking practices impinging on customers. Last week, the private sector banking triumvirate HDFC, ICICI and Axis set the cat among pigeons by slapping an Rs 150 cash transaction charge on cash withdrawals or deposits in branches in excess of four a month.
Taking a cue and in a me-too spirit, the SBI too has announced its decision to hike steeply the average minimum monthly balance requirement from the hitherto Rs 500 to Rs 5,000 in respect of its customers in six metropolitan cities at the pain of penalty ranging from Rs 20 to Rs 100 with effect from 1 April 2017. What is more, the average minimum balance norm would also apply to current accounts with vengeance---Rs 500 for non-compliance is the penalty when current account unlike savings account does not earn interest for its depositors.
It has gone a step ahead of the private sector banks in so far as cash transaction charges are concerned by also targeting ATM withdrawals. It is good that the government has intervened to request SBI as well as private sector banks to withdraw these anti-customer moves. If they remain adamant, it may perhaps use its clout on the banking regulator RBI to ask it to issue a fiat to rein in the rampaging banks.
Private sector banks especially the elitist among them might have justification for mandating a minimum default balance of Rs 10,000 in savings accounts at the pain of penalty which they actually levy hungrily. But SBI is the bellwether common man's bank. It has been perceived as one from times immemorial. It has by far the largest number of branches spread across the nooks and corners of the country with a sizeable rural presence too. It has a staggering 310 million savings bank accounts many of which were enlisted in the recent Jan Dhan drive the Prime Minister initiated in 2014 to make bank accounts a necessity.
For such a people-oriented bank to prescribe a steeply heightened minimum balance of Rs 5,000 albeit in select urban pockets is retrograde and could even be counterproductive. If the cash transactions charges of private sector banks could lead to the elitist customers splitting their money among three or four banks so as to break free of the free cash transactions limit of four a month per bank in what could be termed as a banker's nightmarish vision of voting with feet, SBI might experience consolidation of family accounts. To wit, if three members of the family maintain accounts with a SBI branch, two of them might close their accounts and transfer their balances to the family patriarch or matriarch's account so that s/he might ensure the minimum balance of Rs 5,000 which might be difficult for all the three of them to maintain separately.
At a time when the accent is on digitisation of payments that is impossible without banking support, the regressive moves of these banking biggies would have the effect of repelling people from the banking habit and retreat to the old habit of piling up cash and paying in cash. It is amazing that the SBI has prescribed a one-size-fits-all minimum balance requirement for those living in the six metropolitan cities because while a wealthy customer can easily keep say a minimum balance of Rs 1 lakh, for a worker living in a shanty Rs 5,000 might be a tall order. This despite Jan Dhan account holders having been spared from the Rs 5,000 minimum balance requirement because in Delhi for example in rehabilitation colonies there are a lot of poor people who opened bank accounts even before the Jan Dhan initiative. It is cruel to expect them to maintain a minimum Rs 5,000 balance.
I-T department lens on petrol pumps complicit in converting black money post demonetisation
New Delhi:MMNN:7 March 2017
Petrol pumps, which were allowed to accept old currency notes in payments towards refueling of vehicles after demonetisation, are under the scanner of the income tax department for suspected conversion of unaccounted cash, BTVi reported citing unidentified sources.
The income tax department is reportedly investigating whether some deposits camouflaged as payments from bogus debtors, allowing tax evaders to convert their undeclared cash money at the petrol pumps.
Prime Minister Narendra Modi, in a surprise move on November 8, demonetised high-value currency notes in order to curb the menace of black money, sucking out 86% of cash currency in circulation in the country. The total value of the demonetised Rs-1000 and Rs-500 notes was at Rs 14.6 lakh crore.
Huge cash deposits in banks followed, as people queued up to trade in their old worthless notes with the new ones being issued by the government, leaving a trail in many cases for tax authorities to investigate suspicious inflows.
The government had allowed several points of sale to accept old currency notes in payments for purchases, in a bid to ease the pain of the people trying to meet their daily needs amid a severe cash crunch. Among those points were Mother Dairy and Safal outlets, petrol pumps, government payments, railway tickets, air travel tickets and utility bills.
However, now a survey by the income-tax department has revealed widespread involvement of petrol pumps in conversion of unaccounted cash, BTVi news report said, adding that the department has found that cash deposits in demonetised currency by certain petrol pumps exceeded their sales by as much as 20%.
The income-tax department's findings pertain to deposits made between November 9 and December 30 last year, the report said.
Further, the income-tax department is planning similar action against LPG distributors and CNG pumps in coming days, as they too, were accepting old currency notes.
It must be noted that the Reserve Bank of India has scrapped limits on cash withdrawal from savings accounts, which will come into full effect from March 13, as the cash situation in the country returns to normalcy with progressing remonetisation. In the first stage, the RBI hiked the cash withdrawal limit from savings accounts to Rs 50,000 per week by February 28.
The RBI had imposed strict withdrawal limits after demonetisation to ensure maximum distribution of the new currency notes in view of the constraints on printing and supplying of the currency.
Sensex closes up 216 points, Nifty 0.74% higher on hopes of BJP's win in UP polls
MMNN:6 March 2017
The markets made a powerful comeback on Monday as the Sensex rallied almost 216 points and reclaimed the 29,000-mark on hopes the ruling Bharatiya Janata Party (BJP) would win the ongoing elections in Uttar Pradesh.
The elections are the world's largest this year and will have a key influence on Prime Minister Narendra Modi's chances of clinching a second term in 2019. Election results are due out on Saturday.
Sentiment was also boosted as the country moved a step closer towards launching a long-awaited Goods and Services Tax (GST) from July after a panel of central and state finance officials finalised two key bills to be put before parliament.
The all-powerful GST Council approved the final draft of central GST (C-GST) and integrated GST (I-GST) and will take up for approval the state-GST and Union Territory-GST (UT-GST) laws at its next meeting due 16 March, which instilled a sense of confidence in investors.
"The expectation is that the BJP government will come into power in UP, and that is possibly driving the market a little more confident than before," said Deven Choksey, managing director at KR Choksey Shares and Securities.
The 30-share barometer remained up throughout and hit a high of 29,070.20, powered by a rally in RIL and other blue-chips. The index ended 215.74 points up, or 0.75%, at 29,048.19-its highest closing since 5 March 2015, when it had closed at 29,448.95.
The index has lost 152.04 points over the past two days. The optimism led to the NSE Nifty gaining 65.90 points, or 0.74%, to end at 8,963.45, a level last seen on 3 March 2015, too when it settled at 8,996.25. The rupee notched up gains against the dollar, which added to the sunny side.
Reliance Industries came out top on the heap, surging 3.69% and settling at a fresh 9-year high of Rs 1,304.90, after the company announced that the promoters will be reshuffling their shareholding.
RIL has gone up by over 21% after its telecom venture Jio said last month that it will begin charging for data services from April. Dredging Corporation rallied 12.68% to close at Rs 502, largely on reports of possible stake sale. Capital inflows continued, which ensured both the Sensex and the Nifty were back at their crucial levels.
Foreign portfolio investors (FPIs) net bought shares worth Rs1,528.48 crore on last Friday, according to provisional data. Globally, major Asian indices closed mixed. China's Shanghai Composite and Hong Kong's Hang Seng rose.
Japan's Nikkei, however, fell as the yen jumped after North Korea fired four ballistic missiles, three of which landed in Japanese waters.
European shares sank at the start of trade after Germany's troubled Deutsche Bank unveiled plans over the weekend to raise 8 billion euros ($8.5 billion) in fresh capital. Other major gainers that fed the rally were Adani Ports (2.48%), Tata Motors (2.30%), Bharti Airtel (1.81%) and SBI (1.79%).
As many as 23 stocks finished higher while seven, including TCS, Hindustan Unilever and Dr Reddy's, ended lower. On the sectoral front, oil & gas zoomed 1.32%, followed by infrastructure, auto and power. Broader markets such as the BSE mid-cap and small-cap went up.
Gold steadies, remains pressured by U.S. rate prospects
New Delhi:MMNN:6 March 2017
Gold steadied on Monday after falling to two-week lows in the previous session on comments from Federal Reserve Chair Janet Yellen that reinforced expectations of an increase to U.S. interest rates this month.
Spot gold was down 0.2 percent at $1,231.7 an ounce by 1243 GMT, after Friday's slide to $1,222.51, the lowest since Feb. 15. U.S. gold futures were up 0.5 percent at $1,232.50.
Yellen said last week that the Fed was poised to lift benchmark U.S. interest rates provided that jobs and inflation data held up -- comments seen as cementing plans for an increase at the March 14-15 meeting.
Higher U.S. rates would boost the U.S. currency and make dollar-priced commodities more expensive for holders of other currencies.
"Fed comments have become increasingly hawkish," Societe Generale analyst Robin Bhar said, adding that the next set of U.S. data to watch would be non-farm payrolls this week.
The U.S. monthly jobs report on Friday includes the non-farm payrolls, seen rising by 190,000 in a Reuters poll.
"The U.S. labour market is tight, inflation is picking up ... investment is revving up, consumer confidence readings are increasing and both housing and equity valuations are moving higher," INTL FCStone analyst Edward Meir said in the note.
"All this should be enough to persuade the Fed to make a move should it want to get at least one of its three advertised rate hikes out of the way for this year."
However, traders say that geopolitical tensions created by North Korea firing four ballistic missiles into the sea off Japan's northwest coast were helping gold.
"European elections are also a source of uncertainty; gold will get support from that," one trader said, adding that there was strong support for gold around $1,210, the 100-day moving average.
Physical gold holdings in exchange-traded funds have fallen since last week, partly because of the stronger dollar, but at 54.855 million ounces they are still more than 3 percent higher than at the start of February.
Elsewhere, spot silver fell 0.7 percent to $17.83 an ounce, platinum slipped by 0.9 percent to $985.1 and palladium ceded 0.3 percent to $768.65.
Geet & Devashish Bag First Prize For CII Young Indians Dream Start Up Challenge Competition
MMNN:27 Feb. 2017
Geet Soni and Devashish Saxena bagged the first prize worth Rs.2 lakh in the prestigious Dream Start Up Challenge 2017 competition for their healthcare start up Medicloud365. The second prize of Rs.1 lakh was given away to Rahul Dixit of Pooja Path Solutions- a start up providing religious services for all the occasions whereas Pramod Maithali won consolation prize for his primary school learning kit Tinkering Lab.
This national level competition that received 213 entries from across India, was organised by CII Young Indians in association with AISECT University and Netlink Limited. The finale of the competition held here on Saturday in which 8 finalists presented their business ideas before the jury. These shortlisted finalists were mentored for last six months by CII Young Indians Enterpreneurship & Innovation vertical head Siddharth Chaturvedi and co chair Nikhil Kaushik.
The jury included Dr Sandeep Kadwe, Managing Director & CEO, Madhya Pradesh Venture Finance Limited; Mr Anurag Shrivastava, Chairman, Netlink Private Limited, Mr Abhishek Sanghvi, Co-Founder, Swan Angel Network; and Mr. Sandro Stephen, Head Of Operations, North & South India, Indian Angel Network.
Jury member Anurag Shrivastava in his address gave useful tips on how to take their businesses forward.
In his welcome address CII Young Indians, Bhopal chairman Mr. Rakesh Sukhramani said the objective of the competition was to bring together young entrepreneurs, angel investors, mentors and government and private bodies working in the field of start ups.
Dr. Sandeep Kadve, managing director, Madhya Pradesh Venture Finance Limited said the State government has allocate aed Rs.100 crore worth fund for upcoming entrepreneurs. He said start ups seeking investment may approach him for the necessary support.
Paytm E-Commerce Launches Online Marketplace App - Paytm Mall
New Delhi:MMNN:27 Feb. 2017
Paytm E-commerce today announced the launch of its new Paytm Mall application on Android.
Paytm Mall aims to offer a combination of the Mall and Bazaar concepts to Indian consumers.
"Only trusted sellers passing strict quality guidelines and qualification criteria will be allowed on the 'Mall'," Paytm said in a statement here.
All products listed on the mall will also go through Paytm certified warehouse and shipping channels ensuring guaranteed consumer trust, it said.
"We have defined quality criteria for sellers and are building strict controls over warehousing and shipping for products sold on Paytm Mall. Consumers would continue to get the largest assortment of domestic and international products through Paytm Bazaar, which will also be featured on the new app," said Saurabh Vashishtha, Vice President - Paytm.
The Bazaar is an unstructured shopping channel on Paytm that will also be featured on a new application, it added.
Paytm Mall has over 17 fulfilment centres across the country to offer consumers an efficient online shopping experience.
The platform would also offer sellers the widest reach through its vast network of over 40 courier partners, it said.
The Paytm Mall would also launch an ungraded version of the Paytm Seller app, available in 7 regional languages allowing anyone with a smartphone to set up an online shop on Paytm Mall.
Paytm Mall is available on Android, and lists over 68 million products sold by 1.4 lakh sellers spread over 1000 cities and towns across the country. The iOS app is expected soon.
Focus Now Needed On Stopping Blackmoney Flow: Arvind Subramanian
Ahmedabad:MMNN:25 Feb. 2017
India's Chief Economic Advisor Arvind Subramanian on Friday said that after the attack on black money through demonetisation, the country should now focus squeezing its flow.
Delivered a talk on "The Surprise that is the Indian Economy" at the Indian Institute of Management, Ahmedabad, he said the need was to adopt a carrot and stick approach to prevent the flow and generation of black money.
"Black money has two dimensions. One is generating money via prohibited illegal activities and another one involves not disclosing it to tax authorities," he said, adding that there is a need to find out what exactly is in the system, high taxes or regulations, that is prompting some to conceal their income.
Subramanian again advocated implementation of Universal Basic Income (UBI) scheme in India.
"There is no scientific evidence to suggest that if you give money directly to poor, they would squander it. This is more of an elitist thought process," he said. "The big advantage is that you have no leakage in this scheme."
Subramanian, however, pointed out that for UBI to be implemented, other welfare schemes of the government would have to be withdrawn. "The UBI could cost anywhere around 5 per cent of the GDP and if we have to afford it, other schemes would have to go. That is the big challenge."
He asserted that despite opening of a large number of Jan Dhan accounts during the last two to three years, India was still far behind "perfect financial inclusion".
"Now you have UBI where the mobile (phone) can become the real effective means of financial inclusion but the shocking statistics is that 350-400 million people in India neither have smartphones nor any phone," he said.
About the benefits of demographic dividend to India, he said the country could soon see this tapering off from 2020. "The window is closing fast and we need more migration within India as some states are ageing more than the others."
Subramanian told reporters later that the government was looking at initiating strong action on banks' bad debts.
"There has been a recognition that one of the major challenges of the macro-economy is the twin balance sheet problem. Many firms have unsustainable debt and that in turn affects the banks and hence both the balance sheets have debts. It is having an effect on the economy in terms of reducing private investment and growth. I think in the months to come, the government will take some good, strong action against this problem," he added.
Wind power tariff at record low of Rs 3.46; green future awaits India, says minister
New Delhi:MMNN:25 Feb. 2017
Wind power tariff dropped to a record low of Rs 3.46 per unit on Friday in an auction of 1,000 MW capacity conducted by Solar Energy Corporation of India (SECI).
This is another major development for clean energy after solar power touched all-time low of Rs 2.97 per unit earlier this month for Reva solar Park.
The source added that the aggressive bidding, which started on Thursday, went on till around 0200 hrs on Friday despite an advisory issued by the industry body to avoid bold bids.
The Indian Wind Turbine Manufacturers Association had reportedly issued an advisory to some players before the auction started in view of uncertainties due to GST implementation.
"After solar cost reduction below Rs 3/unit, wind power cost down to Rs 3.46/ unit through transparent auction. A green future awaits India," Power, Coal, New and Renewable Energy Minister Piyush Goyal said in a tweet.
The power from these 1,000 MW capacity will be supplied to states which do not have adequate wind resources.
The auction assumes significance because India has set an ambitious target of having 60,000 MW of wind power capacity by 2022.
SECI is the nodal agency for implementation of this scheme and is working on the e-bidding process followed by e-reverse auction for eligible bidders.
Although SECI did not provide any benchmark tariff, the average figure for wind power is around Rs 5.
Globally, India is at the fourth position after China, the US and Germany, in terms of wind capacity installation. The Centre has set an ambitious target of 175 gw power from renewable energy resources by 2022 and out of this, 60 gw has to come from wind power.
Bharti Airtel-Telenor deal: M&As will cut costs in sector but fierce fight will continue
New Delhi:MMNN:24 Feb. 2017
The ongoing consolidation in the Indian telecom sector will likely create four large operators versus almost double this number earlier and this is good news for the country's fragmented telecom market.
But make no mistake, the new powerful telcos will continue to fight fiercely for each consumer via low tarffis to take on Reliance Jio Infocomm. Besides, the recent flurry of M&A (mergers & acquisitions) activity in the world's second largest telecom market will reduce costs but the current M&A rules on spectrum ownership and subscribers may discourage further consolidation. In this scenario, pricing power will continue to elude telcos even after the market has finished this round of consolidation, as cheaper data and free voice by RJio has set the benchmark for further cuts.
Sandip Agarwal and Pranav Kshatriya of brokerage Edelweiss said in a note to clients on Thursday, after market leader Bharti Airtel announced the acquisition of Norwegian telco Telenor's Indian operations, that "We expect competitive intensity to remain high, despite reduction in number of players as new operators continue to aspire for higher market share and would be looking to cut prices, forcing others to follow suit."
Bharti is acquiring Telenor for a song, in a no-cash deal, getting additional spectrum in at least four of India's populous telecom circles and around 44 million of Telenor's subscribers as part of this acquisition. Analysts are divided over what the cost of this acquisition will eventually be for Bharti, since it will have to pay future spectrum liabilities of Telenor and deal with excess manpower, but the bottomline is that this transaction will reduce competitive intensity in the market and provide Bharti added muscle. Remember, the number two and three telcos by subscribers, Vodafone India and Idea Cellular, are also already in merger talks. And the entity so created would dwarf Bharti in market share.
Meanwhile, RJio's massive investment of$20-25 billion and unprecedented offering of free voice and data for six months to new subscribers has accelerated industry consolidation, noted analysts from Fitch Ratings. RJio entered the market last September with freebies including free voice, which forced incumbents to also cut rates and bleed in the process. Both listed telcos, Bharti and Idea, reported a significant dent in their numbers for the December quarter.
The Fitch analysts went on to say that the on-going consolidation is likely to leave four larger operators - Bharti, Jio, the combination of Vodafone India and Idea Cellular, and the combined Reliance Communications Limited and Aircel Limited. Vodafone India and Idea Cellular are planning to merge their operations to combine spectrum assets, strengthen balance sheets and reduce cost and capex to compete effectively. Reliance Communications is also in the process of merging its wireless operations with Aircel. "We continue to believe that competition will continue to remain high, and the consolidation is not likely to return any pricing power to the operators in the near term."
Earlier this week, RJio announced its plans to charge nominally for services from next fiscal while also saying it had acquired 100 million customers in the last 170 days. Analysts at brokerage Jefferies noted that a key strategy of RJio would be to increase the retention rate of its 100 million customers once it starts charging. "Given the Rs 303/month plan for unlimited usage ..... clearly the focus is on high ARPU (average revenue per user) customers of the incumbents. Typically such unlimited (high usage) plans are >Rs 2000/month across the incumbents. A part of the effect of this ARPU compression is already reflected in the December quarter results (8-10 percent sequential blended ARPU compression across the Top-3 incumbents) but could continue into future quarters as well".
As we have said earlier, the rule of thumb in the telecom market is this: The top 20 percent customers generate 80 percent of the industry's revenues. These "high-value" customers are obviously a pampered lot and their loyalty is keenly fought for. Now, more than ever, RJio will want to retain these customers and so will the incumbent telcos. Jefferies' analysts said that the top 3 percent of subscribers deliver > Rs 1000 ARPU per month; another 3 percent deliver Rs 500-1000 (using FY16 data). "The top 15 percent of customers account for >40 percent of industry revenues per our classification, with cross checks being industry revenue numbers broadly matching the TRAI reported numbers for FY16. This top 15 percent is the segment of the market that could see the maximum ARPU compression (already reflected partially in Dec-16 quarter) and hence put pressure on near-term industry revenue growth".
Analysts at brokerage Motilal Oswal said that RJio's arrival and increasing competitive intensity in the market will continue to put pressure on the earnings of incumbent telcos (their remarks on Bharti were made before it announced the Telenor deal). "For FY17 and FY18, we expect Bharti India's wireless revenue to remain flat, while Idea's revenue could decline marginally by 1 percent. This factors in 10-11 percent HoH revenue decline in H2FY17. We build in a recovery in H1FY18 on the basis of 30-40 percent churn out of RJio subscribers. However, we believe EBITDA recovery could be subdued. Subsequently, we factor in EBITDA decline of 5-8 percent for Bharti India wireless and Idea in FY18," they said.
The bottomline is that consolidation is the way forward but the battle for subscribers and hence revenues has only just begun.
Freedom 251 Maker Ringing Bells' MD Mohit Goel Detained for Fraud
New Delhi:MMNN:24 Feb. 2017
Mohit Goel, the Director of Noida-based company Ringing Bells which had announced Freedom 251 smartphones at an astonishingly low price of Rs. 251 apiece, was detained on Thursday in Ghaziabad on allegations of fraud, police said.
Goel has been detained after owner of Ghaziabad-based Ayam Enterprises filed an FIR yesterday alleging that Ringing Bells "defrauded" it of Rs. 16 lakh.
Ghaziabad Deputy SP Manish Mishra said Goel has been detained for interrogation in the matter.
In the FIR, Ayam Enterprises has claimed it was persuaded by Goel and others from Ringing Bells to take up the distributorship of the Freedom 251 phones in November 2015.
"We paid Rs. 30 lakh to Ringing Bells through RTGS on different occasions. But it delivered us product worth Rs. 13 lakh only. Upon follow-up, we could get products plus money totaling Rs. 14 lakh," it claimed in the FIR.
The owners of Ayam Enterprises claim that they were threatened with life if they asked for the rest Rs. 16 lakh "again and again".
Ringing Bells had begun the sale of Freedom 251 handsets, touted as the world's cheapest, via its website in February last year.
It landed in a controversy, however, with some alleging it was like ponzi scheme. The firm had claimed that around 30,000 customers had booked the phone despite some glitch and seven crore people registered for it.
Banking on Aadhaar without bank accounts via IndiaPost payments bank can be a real game-changer
Mumbai:MMNN:23 Feb. 2017
Aadhaar-based transactions by people even without a bank account through the IndiaPost payments bank's Aadhaar-pay model could be the real game-changer.
It appears extremely attractive in the context of the government's drive to promote digital transactions in a big way that Aadhaar numbers of the people-the total number has touched 112 crore already-will be good enough to pay or receive money, even without a bank account.
This is what IndiaPost payments bank is striving to establish as its basic model once it starts operations in the next few months. According to its CEO A P Singh this can change the face of financial transaction in the country, especially in the rural areas where post offices can play a big role in promoting financial inclusion and handling direct benefit transfers (DBT), which is still around Rs 50,000 crore in a year.
The way it will work is, take for example MGNREGA payment to a worker is sent to the nearest post office mentioning his/her Aadhaar number. The worker will go to the post office, complete the Aadhaar authentication process, and just take out that money.
There will be various options with him apart from just taking cash-he/she can open an account with the IndiaPost payments bank immediately as the e-KYC process is complete with Aadhaar authentication, or just take a pre-paid card which can be used in any ATM to withdraw cash or make payments anywhere just as a debit card does.
Switch to normal transaction between two persons, and the same thing can be replicated through mobile wallets without bringing in any bank account. Going ahead, India Post is planning to equip the postman with biometric authentication and payment machines to remove the hassle of even going to the post offices.
Thanks to the extensive reach of India Post throughout the country, something that has been a major bottleneck for the banks in handling transactions in rural areas and also DBT, Aadhaar-post combine can prove to be a big driver here.
That India Post is targeting about 650 districts in the country in the initial stages itself with the help of those having feature phones and even those who have not, through its network, indicates that the door-to-door banking model may soon become a reality.
But, for this model to succeed, the mobile and broadband connectivity in the rural areas will also have to improve besides Aadhaar seeding, which to a certain extent is happening at a better pace now than what it was in the UPA years, even after the launch of DBT on January 1, 2013.
Only about 35% people in India are having internet facility, and out of the 65,475 gram panchayats with access to the optic fibre laid under the BharatNet project, according to a report in The Indian express, less than 25% have active internet. So, even though the government, as announced in the Budget, achieves the target of taking broadband connectivity to 1.5 lakh panchayats by the end of 2017-18-it will be of help if there is a working internet available in these panchayats.
Airtel buys Telenor: Norwegian co's foray was jinxed from get-go
New Delhi:MMNN:23 Feb. 2017
About six months ago, Reliance Industries-promoted Jio changed the rules of the game in India's crowded but stable telecom space, by offering free services. For Telenor India however, the struggle for survival begun much earlier. A late entrant into India's crowded telcom sector, Telenor (formerly Uninor) never really found its footing in an industry with a long running price war.
So, it is not surprising that Telenor is selling its India operations to Bharti Airtel. Entering India in the aftermath of the 2007-2008's economic meltdown, the company - which was a joint venture between Unitech Wireless of India and Telenor - decided to penetrate the Indian market with the cheapest voice calls, promoting them with the tagline: Sabse Sasta Tariffs. It also offered India's first dynamic pricing, which gave some cash back to the users based on the traffic on the network when they made calls. In little more than two years time, in 2012, the company crossed 40 million users on its network.
However, this was the peak for the company. In February 2012, the Supreme Court cancelled all of Uninor's licenses following the 2008 2G allocation spectrum scandal. Uninor was forced to bid for new spectrum to continue seamless operations and services in its existing circles. But till it could win fresh spectrum, it had to be discontinued. The telco was also forced to shut its services in various circles including metrocities like Kolkata and Mumbai. Uninor was able to give prior notice to users in Kolkata.
But due to no prior warning on the Mumbai's shut down, more than 1.8 million subscribers (and Uninor's Mumbai employees), were left in the lurch. Meanwhile, following investigations into the 2G case, Unitech and Telenor began having differences of opinions.
When they finally decided to part ways, Telenor decided to buy out the assets of Uninor. It tied up with Lakshdeep Investments and Finance, creating a new entity named Telewings Communications. Telewings soon secured fresh spectrum and helped grow its customer base in the best performing regions likes Uttar Pradesh, Maharashtra and Bihar.
Unfortunately, the company was never able to build on that. After it was officially rebranded to Telenor in September 2015, the company continued to perform poorly in India, with profits only heading towards gravity. In the year 2016, the company's losses widened to a bruising Rs 5,856 crore from Rs 871.2 crore the year before. The Norwegian telco's CEO, Sigve Brekke, during a recent investor meet, had talked about the group's unwillingness to continue its India business due to mounting losses.
"In India business is not sustainable. We are looking for an alternative which we are yet to find," he had told investors. Bharti Airtel acquiring Telenor further intensifies the consolidation in the telecom sector, following the Idea Cellular -Vodafone India merger talks and an Aircel-MTS- Rel Comm (with Tata Teleservices still in talks to be a part of it) merger. Airtel will benefit greatly from this deal, adding 52.5 million users from Telenor to its existing 269.4 subscribers.
EPFO Introduces Easier Norms For Provident Fund Advance, Withdrawal: 10 Facts
Mumbai:MMNN:22 Feb. 2017
The Employees' Provident Fund Organisation or EPFO has simplified the norms for provident fund-related claims - from provident/pension fund withdrawal to the advance facility. The Employees' Provident Fund Organisation has come out with a single-page form for all these claims, doing away with the need for filling up multiple forms. In addition, an Employees' Provident Fund Organisation or EPFO subscriber can submit the new one-page form directly to the retirement fund body without the employer's attestation if their accounts are seeded with Aadhaar and bank account details. Also, no other document would be required to be submitted by the subscriber for taking advances from the PF corpus.
Here are 10 things to know:
1) For now, subscribers who have seeded Aadhaar and bank account details to their UAN (Universal Account Number) have the facility to submit claim form directly to EPFO without the attestation of employers. EPFO had in 2014 launched a Universal Account Number or UAN-based portal to provide a number of facilities to its members through a single window.
2) However, for subscribers who are yet to seed Aadhaar and bank details, a new composite claim form has been introduced which has to be submitted with attestation of employers for any claims.
3) EPFO has made it mandatory for all subscribers as well as pensioners to submit their Aadhaar numbers. The PF body has recently extended the deadline for submitting Aadhaar for its subscribers and pensioners till March 31, 2017.
4) Provident fund (PF) is meant for saving towards post-retirement years. Financial planners don't advise withdrawal from the corpus before retirement. According to provident fund norms, 12 per cent of an employee's salary goes into the fund along with a matching contribution from the employer. But 8.33 per cent of that goes into Employees' Pension Scheme. The Employees' Provident Fund Organisation or EPFO or every year announces interest rate to be paid on the accumulated provident fund corpus.
5) A provident fund subscriber can go for partial withdrawal/advance from his or her corpus for specific purposes like purchase of flat, construction, marriage/education of children etc.
6) However, to be eligible for these partial withdrawal/loan benefits, a person has to be a subscriber for a minimum number of years. And the advance amount depends on the specific situation.
7) For example, to buy a house, the subscriber has to be a member of at least five years.
8) To further simplify the provident fund claims, the Employees' Provident Fund Organisation or EPFO plans to launch an online facility by May this year, EPFO Central Provident Fund Commissioner VP Joy told news agency Press Trust of India recently.
9) EPFO has an ambitious plan to settle the claims within a few hours after filing of application. Currently, the PF body settles most of the withdrawal-related claims within the stipulated 20 days.
10) PF money can be withdrawn after two months from the cessation of employment. To encourage long-term savings, the government has formulated tax laws accordingly. If the withdrawal from a recognised PF happens after five years of continuous employment, it attracts no tax liability.
1,000 Rupee Note Not Coming, Down Overdraw From ATMs, Urges Shaktikanta Das
New Delhi:MMNN:22 Feb. 2017
The government has no plans to re-introduce 1,000 rupee notes and is focusing to increase production of lower denomination currencies to address cash shortage, Economic Affairs Secretary Shaktikanta Das said today. "No plans to introduce Rs. 1000 notes. Focus is on production and supply of Rs. 500 and lower denomination notes," he tweeted. In another tweet, he said: "Complaints of cash out in ATMs being addressed. Request everyone to draw the cash they actually require. Overdrawal by some deprives others."
Last week, Finance Minister Arun Jaitley had said the remonetisation situation with regard to replenishing the scrapped currency is "almost normal" now and the Reserve Bank is monitoring the supply on a daily basis.
The government had announced withdrawal of old 500 and 1,000 rupee currency notes on November 8, 2016, with an aim to check black money, counterfeit notes and terror financing.
This took away 86 per cent or Rs. 15.44 lakh crore out of circulation. The Reserve Bank of India has been gradually relaxing withdrawal restrictions imposed after the notes ban.
From February 20, the limits from cash withdrawal from savings bank accounts were increased to Rs. 50,000 per week. And effective March 13, 2017, there will be no limits on cash withdrawal from savings bank accounts.
Asked about the amount of scrapped currency received by banks post demonetisation, the finance minister said RBI Governor Urjit Patel had recently informed that the central bank would disclose the figure only after the process of currency verification is complete.
"Whatever time is required, RBI will take that much time. I would not like to say anything thing beyond that," he added.
N. Chandrasekaran taking Tata helm as challenges loom from steel to hotels
Mumbai:MMNN:21 Feb. 2017
Natarajan Chandrasekaran is to become chairman of Tata Sons Ltd, the holding company of Tata Group, on Tuesday. The 30-year company veteran known for creating Asia's largest software maker will preside over a $100 billion Indian conglomerate with subsidiaries spanning coffee and cars to hotels, salt and chemicals.
The challenge for Chandrasekaran, or Chandra as he's known, will be to rekindle growth and revive Tata's weaker units after almost four months of boardroom turmoil since the ouster of predecessor Cyrus Mistry.
Tata, founded in 1868, named Chandra to take the helm after a feud between scion Ratan Tata and Mistry over the latter's strategy of paring back the empire Ratan Tata had built through more than a decade of acquisitions before handing the reins to Mistry. While Mistry looked for ways to pare the conglomerate's debt-laden sprawl, Chandra helped turn software maker Tata Consultancy Services Ltd into a growth machine, boosting market value by more than 10 times since 2009.
"Going by Chandra's track record at TCS, I think his biggest focus will be to grow the group," said Juergen Maier, a Vienna-based fund manager at Raiffeisen Capital Management, who oversees about $1 billion in assets including Tata Motors and Tata Consultancy shares. "For companies like Indian Hotels and Tata Steel, Tata will have to rework their strategy as their overseas acquisitions were the problem areas, while the local businesses did well. Tata still has huge opportunities to grow in the coming years."
Chandra didn't immediately respond to an email seeking comment. A spokesman for Tata Sons declined to comment.
Tata Sons announced last month the appointment of Chandra, 53, who joined the Tata group in 1987 after obtaining a masters degree in computer applications from the Regional Engineering College in his home state of Tamil Nadu.
As Chandra starts his day in Bombay House, Tata Group's head office-where stray dogs lounge in the lobby of the restored heritage building in Mumbai's original business district-investors will be looking to the man who made Tata Consultancy Services the group's biggest subsidiary by market value.
That performance may be critical for Tata.
Amid a boardroom battle that spilled into public over the past four months, Mistry said the group faces about 1.18 trillion rupees ($17 billion) in writedowns in coming years from five unprofitable units.
In an email to directors of the company days after his ouster, the chairman cited Indian Hotels Co., Tata Motors Ltd's passenger-vehicle operations including Jaguar Land Rover, Tata Steel Ltd's European business, and the group's power and telecommunications units as "legacy hotspots."
"Nobody will deny that there were some problem companies," Tata Sons said in a statement on 10 November, responding to Mistry. TCS and Jaguar Land Rover "probably account for around 50 percent of the total turnover and probably over 90 percent of the total profits of the whole group and have been performing successfully continuously over the past many years."
Here's a look at some of the key challenges facing Tata Group units:
Indian Hotels, operator of the Pierre hotel in New York, has been paring debt by selling assets including a property in Boston and its stake of almost 6% in Belmond Ltd, owner of the 21 Club restaurant in New York and Hotel Cipriani in Venice. Under Ratan Tata, it had tried to buy control of the company, formerly called Orient-Express Hotels Ltd, in 2012. It gave up the chase in 2013 under Mistry.
This year, Indian Hotels is expected to report an annual profit after losing money in the previous four financial years. The sale of the Boston property led to a one-time loss of Rs103 crore, the company said in a filing on 3 February.
In 2008, Tata Motors Ltd bought the Jaguar and Land Rover luxury brands from Ford Motor Co. for $2.4 billion. Tata turned around the brands, helping boost revenue more than seven-fold between 2008 and 2015.
In the quarter ended 31 December, Tata Motors's profit plunged 97% after margins at its luxury Jaguar Land Rover unit narrowed and costs surged. Tata Motors is also contending with potential fallout from a proposed US border tax on imported cars and Britain's withdrawal from the European Union.
The Jaguar Land Rover unit is vulnerable because it doesn't have factories in the US and sells much of its UK output abroad. The domestic business in India continues to struggle amid competition from Maruti Suzuki India Ltd and Hyundai Motor Co.
Japan's NTT Docomo Inc. has sought compensation for its stake in Tata Teleservices Ltd as it tries to exit one of its worst overseas investments. In June, the London Court of International Arbitration ordered Tata Sons to pay $1.17 billion to NTT Docomo for breaching an agreement over the wireless venture.
The mobile phone business has been losing customers amid a price war that's prompting India's 11 carriers struggle to consolidate. Reliance Jio Infocomm Ltd, controlled by India's richest man, turned up the heat in September by introducing free calling and data services. Tata Teleservices has about Rs30,000 crore of debt, according to a company filing.
In 2007, Tata Steel made one of India's most expensive overseas acquisitions, buying Corus Group Plc. for $12 billion. Its fortunes soon went south, as Europe fell into a demand slump after the 2008 economic crisis and was hurt by a flood of cheaper Chinese imports.
This month, Tata Steel announced that it had agreed to sell its UK specialty steels business to Liberty House Group for £100 million ($124 million), as part of Tata Steel's efforts to pare its debt. The company has been seeking to sell or turn around its UK operations after years of losses, and is in talks with Thyssenkrupp AG and other companies for a joint venture of its European operations.
The group's previous strategy of consolidation meant it missed some opportunities to expand, said Ajay Srivastava, New Delhi-based managing director at Dimensions Consulting."They've missed out on the three big areas -- financial services, telecom and defense -- that have been growing in India."
Tata is left with the challenge of finding ways to grow at the same time as finding ways out of underperforming businesses, said Srivastava. "Chandra will have to deal with the 'ailing children' -- Tata Steel Europe, Tata Motors and Indian Hotels -- even as he identifies new growth projects and finds the resources to grow them."
Niti Aayog rewards: 120 people get Rs 1 lakh each for embracing digital payment
New Delhi:MMNN:21 Feb. 2017
Nearly 10 lakh consumers and merchants have been rewarded over Rs 153.5 crore under Niti Ayog's scheme to incentivise digital payments. "Among 9.8 lakh winners, more than 9.2 lakh consumers and 56,000 merchants, 120 consumers have so far won prize money worth Rs 1 lakh each, " Niti Aayog CEO Amitabh Kant announced on Tuesday.
Asserting that Niti Aayog will continue to encourage digital payments, Kant said they will soon come up with a cashback scheme as well.
Since December 25, the government has given away daily, weekly and mega cash rewards totalling Rs 340 crore to consumers as well as merchants in its bid to promote digital payments. Announcing the 'Lucky Grahak Yojana' and 'Digi Dhan Vyapar Yojana', Kant had said both the schemes will cover small transactions between Rs 50 and Rs 3,000 to encourage every section of the society to move to digital payments.
Kant termed it a Christmas gift to the country and said the first draw will happen on December 25 and the mega draw on April 14 - the birth anniversary of B R Ambedkar.
RBI increases weekly cash withdrawal limit to Rs 50,000
New Delhi: MMNN:20 Feb. 2017
The Reserve Bank of India on Monday increased the weekly limit on withdrawal of cash from savings bank accounts to Rs 50,000.
The limit will be removed from March 13. Earlier, the RBI had decided to remove the limits on cash withdrawals in two phases, keeping with the pace of remonetisation.
Cash withdrawal limits have been in place since November 8, 2016 following the Narendra Modi-led central government decision to demonetise Rs 500 and 1000 notes.
Government and RBI had imposed limits on withdrawal of money from ATMs and bank branches in view of the currency shortage following demonetisation.
These limits, however, are being gradually eased, with RBI pumping in new notes of Rs 500 and Rs 2,000. The decision to increase the withdrawal limit was taken after the RBI announced its sixth bi-monthly monetary policy review.
On the basis of remonetisation, RBI had earlier eased restrictions on cash withdrawal from current accounts, cash credit accounts and withdrawal through ATMs on February 1.
Litigation, sagging financials to hit Tata Tele, R-Com merger talks
MMNN:20 Feb. 2017
Any proposed merger between Tata Teleservices and the group of companies lead by Reliance Communications is likely to be difficult.
According to reports, the Tata company has been approached to join the proposed combination comprising Reliance Communications, Aircel and MTS. However, the Supreme Court is hearing a petition against Aircel in the 2G case, and till the apex court does not dispose of the case, the fate of the proposed combination, even without Tata Teleservices in the mix, is uncertain.
Reports of the proposed merger emerged after Tata Teleservices' talks with Vodafone to merge their operations failed.
On February 3, the Supreme Court had said that Aircel's assets would be seized if Malaysia-based Maxis and its owner did not appear before 2G trial court in four weeks. Further, the court said that all earnings of Aircel would be restrained and that the prohibition would become enforceable if Maxis, its promoter Ananda Krishnan and one of its directors, Augustus Ralph Marshall, failed to accept court summons and show up. The bench also stayed selling and trading in the 2G spectrum under consideration with Reliance Communications.
Apart from the ongoing litigation, the financials of Tata Teleservices itself are in a mess. The company needs fresh capital worth Rs 10,000 crore in the next financial year to keep its operations going. Besides, Tata Sons will have to pay another $1.2 billion to NTT Docomo to buy back its 26.5 per cent shares in the company. The matter is currently under litigation. Till both these financial issues are cleared, no other company would be interested in merging their operations, analysts have said.
According to media reports, Reliance Group Chairman Anil Ambani has approached N Chandrasekaran, who takes over as Tata Sons' chairman on Tuesday, to discuss the merger. The combination would create the country's third-largest wireless carrier, assuming Vodafone and Idea merge, the report said.
However, the report added that no deal has been finalised and obstacles include Tata Teleservices' huge debt, which is around Rs 30,000 crore. The industry is going through a churn with Telenor also initiating talks to either join Reliance Communications-Aircel or be acquired by Bharti Airtel Ltd.
Analysts have said that Tata Sons might not be interested in investing more money into the company as it has already invested close to Rs 4,500 crore in the last few years to keep the company afloat and to bid for spectrum.
With a new leadership in place at Tata Sons, fund infusion in Tata Teleservices would be critical for the company to fight cut throat competition from Reliance Jio and from the other three large players - Bharti Airtel, Vodafone and Idea Cellular. Earlier, Tata Teleservices had initiated talks with Vodafone for a possible merger, but the talks could not make headway as the British telecom giant wanted to focus on its possible initial public offer.
Tata Teleservices is already facing multiple issues, including ongoing litigation regarding 2G dual technology, delisting of Tata Tele Maharashtra Ltd, contingent liability of several thousand crore with respect to the contracts entered with Viom, and outstanding litigation with Docomo. This would come in the way of closing any deal with a rival for a merger. In fact, the non-disclosure of the put option in the Docomo transaction to the Foreign Investment Promotion Board has been interpreted as a default by Tata Sons and Docomo, according to a petition filed by Mistry with the National Company Law Tribunal. One of the options on table was to file for bankruptcy by the company but this option was ruled out by the Tata group due to reputational damage to the Tata group as well as negative reaction from the banks, according to Mistry's petition. Mistry has warned that the Tata group faces a potential write-down of $5 billion if the company shuts its operations or merges its operations.
Aditya Puri of HDFC Bank says wallet players have no future
New Delhi: MMNN:18 Feb. 2017
In one of the sharpest comments against prepaid wallets like Paytm, HDFC Bank chief Aditya Puri today said such companies which hold on to customers through cash-backs are loss-making and have "no future".
"I think wallets have no future. There is not enough margin in the payment business for the wallets to have a future," Puri, the managing director and chief executive of the second largest private sector lender, said at the annual Nasscom summit here. "Wallets as a valid economic proposition is doubtful. There is no money in the payments business. The current loss reported by market leader Paytm is Rs 1,651 crore.
You cannot have a business that says pay a Rs 500 bill and take Rs 250 cash-back," Puri said. Wallet companies cannot "copy" the "Alibaba model" as well, as the domestic regulators are "better", he said. The comments are interesting as HDFC Bank also has a wallet service called Chillr. Drawing on his trip to the Silicon Valley to look at evolving scenarios in financial services world, Puri said ApplePay is also "another version of the wallet" and there is no "reimagining" of the bank happening there.
It can be noted that there is a high degree of friction between the entrenched lenders and the standalone wallet players and there have been multiple episodes last month like blocking of money transfer by ICICI Bank into Flipkart's PhonePe or SBI refusing to let its customers transact on Paytm.
Stating that banks also have wallets for e-commerce transactions, Puri said the standalone wallet players depend on banks as an intermediary to get funds. Additionally, the launch of the Unified Payments Interface (UPI) makes it possible for banks to carry out payments transactions faster. "Is this wallet any better than mine, other than a cash- back? I don't have a Rs 1,651 crore loss. You eliminate the loss, then we will talk," he said.
GST Council likely to finalise draft model GST law today
MMNN:18 Feb. 2017
The GST Council, which is meeting on Saturday, is likely to finalise the draft model GST law including final drafting of the anti-profiteering clause to ensure benefit of lower taxes gets shared with consumers. The Council, headed by Finance Minister Arun Jaitley and comprising representatives of all states, is also likely to finalise the definition of 'agriculture' and 'agriculturist' as well as constitution of a 'National Goods and Services Tax Appellate Tribunal' to adjudicate disputes.
The Law Ministry has sent the approved language and draft of the model GST Law, which outlines how the new national sales tax will be levied on goods and services. The law ministry-approved draft and the language have been discussed today by the Council's sub-committee comprising central and state officials. The vetted draft will then be put up before the Council at its 10th meeting scheduled to be held in Udaipur tomorrow.
The government intends to introduce the model GST law in Parliament in the second half of the current Budget Session beginning next month, officials said. The government is keen to roll out the new regime from July 1 but for that, it will have to get two laws - the Central GST (CGST) Act and Integrated GST (IGST) Act -- approved by Parliament and each of the state legislatives have to pass the State GST (SGST) Act.
The model GST law provides a common draft of CGST Act, SGST Act. Besides, there is an IGST law and Compensation law. Officials said that the government is keen to pass benefit of lower taxes to consumers and so an anti-profiteering measure has been incorporated in the draft law. It provides for constituting an authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.
For example, a good or service is to be levied with a GST of 5 percent. But in course of supply, a 20 percent tax is paid, whose input credit is taken. So, the final consumer will be levied only 5 percent tax and not 25 percent, as the input credit of 20 percent is already taken, an official explained. "This has to be declared at the time of filing returns by the taxpayer," the official said. The taxable event under GST is supply of goods and services. The place of supply of goods is the place where the goods are delivered, except in few cases.
Tax Department To Issue 'Non-Statutory' Letters In Case Of No Reply
New Delhi: MMNN:17 Feb. 2017
Over Rs. 4.5 lakh crore worth of suspicious deposits by 18 lakh people are under "verification" by the I-T department, which will send "non-statutory" letters to those who have not responded to SMS and e-mail queries.
So far, it has received replies from over 7 lakh people who have accepted making such deposits and the department will issue letters to the remaining nudging them to explain the source of deposits on the e-filing portal under Operation Clean Money.
"More than 99 per cent of the 7 lakh respondents have accepted that the data are correct," the official said.
As many as 5 lakh people out of these 18 lakh people who have been sent SMS and e-mail are not registered in the e-filing portal, the official said.
As many as Rs. 4.5 lakh crore worth of deposits have been made by these 18 lakh people during the 50-day demonetisation period, a senior official told.
The department has alerted the field offices about the data of people who have not responded as well as over 5 lakh people who are not registered with the e-filing portal and they have been asked to send letters.
Under Operation Clean Money, the tax department had issued SMS and e-mails to 18 lakh people who have made suspicious deposits of over Rs. 5 lakh asking them to explain the source of funds by February 15 on the e-filing portal.
"So far, over 7 lakh responses had come. The window is still open and people can file replies. Those who have not replied will now be getting letters from the tax department," the official said.
As per the data with the I-T department, deposits of over Rs. 2 lakh totalling Rs. 10 lakh crore have been made in 1 crore bank accounts. Of this, Rs. 4.5 lakh crore have come under verification of the tax department.
The official further said the tax department wants to avoid harassment to taxpayers and hence, has asked the field offices to send "non-statutory" letters to the people who have not filed reply.
"Only in certain cases where we have full evidence of an assessee trying to evade the tax net, there we will visit physically and conduct surveys," the official said.
RBI governor Patel says looking beyond muted headline inflation
Mumbai:MMNN:17 Feb. 2017
The RBI governor said it needs to look beyond recent muted headline inflation figures and focus on trends in core inflation, which excludes more volatile food and fuel prices.
Recent declines in vegetable prices could be short-lived, Urjit Patel said in an interview with CNBC TV18.
Falling food prices helped cool India's consumer inflation rate to 3.17%in January year-on-year, the mildest reading in at least five years and well below the Reserve Bank of India's medium-term target of 4%.
But core inflation accelerated to around 5.1% pointing to building price pressures in the broader economy.
India's wholesale prices rose at the fastest pace in two-and-a-half years in January as fuel prices climbed, reinforcing the Reserve Bank of India's surprise decision last week to move to a neutral policy stance as inflation risks grow.
"We also find commodity prices have firmed up globally," Patel said, in an initial snippet of the interview that aired early on Friday.
Global crude oil prices are up more than 23% since mid-November.
The RBI is expected to keep interest rates on hold until at least the second half of next year, according to a Reuters snap poll taken after earlier this month after the central bank's change in policy stance.
Patel has faced some criticism from bankers for not adequately guiding the markets on the central bank's thinking, especially after it abruptly shifted its stance from "accommodative" last week.
"The committee felt that inflation excluding food and fuel is something that has been stubborn since September-October and has shown little sign of coming decisively below 5 and that was the main reason why we had to look through headline inflation," Patel said.
Asia's third-largest economy is still limping back to health after Prime Minister Narendra Modi's November 8 decision to outlaw old 500- and 1,000- rupee banknotes wiped out 86% of the currency in circulation overnight.
The move dampened consumer and corporate demand, sending prices lower, though activity is slowly returning to normal.
Patel said the RBI's monetary policy committee will continue to monitor how long the disinflationary pulse from the cash crackdown will last.
"It's most likely going to be short-lived," he told CNBC.
"That was the reason that MPC thought that we needed to have flexibility going forward, therefore the shift of stance form accommodative to neutral".
PHD Chamber To Organise One Day Conference On Food Processing On 17th Feb
New Delhi: MMNN:16 Feb. 2017
PHD Chamber Of Commerce & Industries will organise a one day conference on food processing industry on 17thFebruary at hotel Palash Residency.
The objective of the conference is to highlight the agri and food processing potential in Madhya Pradesh and the strategy to leverage on these opportunities by encouraging investment in the food processing sector.
In a press release issued here on Tuesday PHD Chamber Of Commerce, Madhya Pradesh, Regional Director R.G. Dwivedi said the conference will witness participation of representatives of some of food processing industry giants like ITC, Adani, Reliance Retainl, Bansal Foods, Nirmani besides a number of Central and State government agencies and agri and horticulture universities.
Allied and supporting agencies viz. machineries and equipments sector, financing bodies, skill development agencies, laboratories, state approval bodies, etc. have also been invited to participate.
In A First, IT Industry Body Nasscom Defers Growth Forecast
New Delhi: MMNN:16 Feb. 2017
Nasscom or National Association of Software and Services Companies, the domestic IT services and BPO industry body, has for the first time in its 25-year history deferred issuing growth projection for the next fiscal year (2017-18). Nasscom President R Chandrashekhar said the association will come out with its guidance in the next quarter, most probably in May, once it is done with "deeper interactions" with customers and other stakeholders. The deferment of growth guidance comes at a time when the Indian IT industry is facing multiple headwinds - changing technology landscape, global events like Brexit and concerns over tightening of H-1B visa regime by the Trump administration.
The IT industry body had in November cut its growth estimate for the sector to 8 to 10 per cent in constant currency terms for the fiscal year ending March 2017, lower than an earlier forecast of 10 to 12 per cent. Now, it estimates the growth to be at 8.6 per cent, which would take the Indian IT industry's revenues to over $155 billion.
Some industry observers expressed surprise over the Nasscom's decision to defer its FY2018 outlook. "We are surprised that growth projection has not been given for FY18 as we believe the uncertainties indicated are unlikely to be as severe as the ones witnessed in February 2009 post the global financial crisis - despite which it gave a two- year growth forecast of 15 per cent CAGR (compound annual growth rate) over FY09-FY11," domestic brokerage Nirmal Bang said in a report.
So what has led to the deferment of growth outlook? Nirmal Bang said probably the big players are "uncertain in their outlook on growth".
"One thing that has to be understood is that Nasscom's growth projection is based on a bottom-up aggregation of revenue growth projections of its individual members with Tier-1 India-based players likely having a significant sway. Probably, they are uncertain in their outlook on growth," the brokerage said.
The brokerage does not expect Nasscom's growth projection to be higher than the 6-8 per cent range. "This growth includes expansion not only of India-origin IT services and BPO players, but also of global in-house captives (GICs) of some large customers. We expect Tier-1 players in our coverage universe to increase their revenues organically by 3%-6% in US dollar terms in FY18," Nirmal Bang said.
Nasscom's Mr Chandrashekhar conceded there are headwinds on factors like change in policies in the largest market of US under a protectionist Donald Trump regime. He, however, was quick to add that there are positives as well like analyst estimate of a near doubling of global IT spends to 5 per cent from 2.6 this fiscal year.
Nasscom chairman CP Gurnani asserted the sector is still a "growth industry" and has a "good future". He dismissed notions of a jump in uncertainties but said "the rate of change is unprecedented" which is causing the deferment of the outlook for next fiscal year.
Mr Gurnani, who heads the fifth largest firm Tech Mahindra, said the industry body could have given a wider target between 6 and 10 per cent but has chosen to arrive at a better picture. He said the target will be given by May and added that areas like BPM (business process management), product companies, platforms and digital are still growing. He said the revenue stream which may reduce is traditional outsourcing.
Mr Gurnani said the number of direct employees has grown 5 per cent to 3.8 million this fiscal year as against a 8.6 per cent revenue growth. Due to the digital disruption taking place in the technology sector, a massive re-skilling exercise will have to be undertaken and up to 1.5 million employees will have to be re-skilled over the next two-three years, the industry body said.
Mr Gurnani maintained that for the industry, digital revenue is growing at 1.5 times faster and now constitutes 14 per cent of the total revenue stream.
TCS Board To Consider Share Buyback On February 20
MMNN:16 Feb. 2017
Tata Consultancy Services or TCS, India's biggest outsourcer, today announced that its board will meet on February 20 to discuss a share buyback. Big Indian IT companies have huge cash piles on their balance sheets. TCS, for example, has over Rs. 43,000 crore on its books. "The Board of Directors will consider a proposal for buyback of equity shares of the company at its meeting to be held on February 20, 2017," TCS said in a statement to the Bombay Stock Exchange (BSE) today. As growth rates come down and share prices suffer, many analysts have said that IT companies should use the cash pile to buy back shares, which will help prop up their share prices.
A share buyback program is a way to return money to shareholders. The company buys back its own shares from the market, usually because the management thinks the shares are undervalued.
"Nearly all IT companies are sitting on excess capital that is diluting return ratios and has corresponding impact on valuations. A sizable cash balance and an operating engine churning consistent and strong free cash present a strong case for Tier-1 ITs to pursue a consistent share buyback program," Kotak Institutional Equities said in a recent note.
The announcement from TCS comes in the wake of rival Cognizant's board earlier this month approving a plan to return $3.4 billion to shareholders over the next two years through a combination of share repurchases and dividends.
Infosys, which also has over Rs. 35,000 crore on its books, has also faced pressure for share buybacks. Former top executives of Infosys V Balakrishnan and TV Mohandas Pai have urged the Bengaluru-based IT major to go for a share buyback. "All over the world, for listed companies when growth slows down and there is too much cash, shareholders will ask what are they doing with the cash...about capital allocations. Most Boards around the world will respond with a buyback to show confidence in the company and stabilise the stock price," Mr Pai said.
Mr Pai, along with former colleague Mr Balakrishnan, had sought a $1.8-billion share buyback in 2014 just as CEO Vishal Sikka was taking over.
Shares of many Indian IT companies are struggling amid slower growth and concerns over tightening of H-1B visa regime by the new Trump administration. Analysts have welcomed Tata Consultancy Services' move to discuss share buyback and say that if the company's board approves a big buyback, it will increase pressure on other top IT firms to announce similar moves. Sarabjit Kour Nangra of Angel Broking told NDTV Profit that even in these tough times, top Indian IT companies are generating good amounts of profit and buybacks will be a "comforting factor" for investors. (Also read: Indian IT firms should stop using H-1B: Narayana Murthy)
TCS shares rose over 1 per cent to Rs. 2,443 while Infosys rose 1.6 per cent to Rs. 998. Manav Chopra, head technical analyst at Monarch Networth Capital, said TCS shares look good from a short-term perspective and the stock could head to Rs. 2,550 levels.
Independent market analyst Lancelot D'Cunha, who has a positive stance on IT stocks, said that most of the negatives are priced in and investors could accumulate them, including TCS and Infosys, at lower levels.
When Jhunjhunwala grilled Tata Motors on its hedging policy
New Delhi: MMNN:15 Feb. 2017
Tata Motors' declared a dismal set of quarterly numbers yesterday, with consolidated profit falling 96 percent year-on-year to Rs 112 crore. While performance dipped because of operational weakness in both the domestic and the key JLR business, one key aspect that caught analysts' eyes was the Rs 369 crore forex loss arising out of JLR.
Further, in a conference call last evening, the management said hedging losses may continue for two to four quarters. This was despite the fact the pound has depreciated in recent times, something that should be favourable for a company that has operations in the UK. The losses arose because the company hedged a lot of its US dollar receivables' positions before the British pound tanked in June last year after the Brexit vote.
In a dramatic move, the sterling fell from 1.5 to the pound to about 1.2 levels. On the conference call, Tata Motors told ace investor Rakesh Jhunjhunwala that it hedges 80 percent of one-year out payments, 60 percent to two years out, 45 percent to three years out and 25 percent to four years out. Jhunjhunwala has invested heavily in Tata Motors, confirming to a publication last year it was his largest portfolio pick.
As per accounting rules, the impact of unrealized hedging profits or losses have to reflect on the income statement on a mark-to-market basis. In other words, because Tata Motors has an aggressive hedging policy, the costs arising out of derivative positions that expire worthless (assuming the pound does not go back above the hedge level) will reflect as a loss on the income statement.
"One thing is very clear, because you have hedged beyond 1.25 (GBP-USD) you will always have a hedging loss [for the next few quarters]," Jhunjhunwala asked JLR CFO Ken Gregor, who replied in the affirmative. Gregor also said on the conference call that very few positions are hedged since June 2016 as of now, but defended the company's hedging policy saying such costs were mandatory to "protect" the business. "It is the nature of hedging".
Tata Motors' problems go beyond hedging. An unfavourable product-mix for JLR (people are starting to opt for cheaper Jaguars) and continuing losses in the India business mean some analysts are worried for the medium term prospects for the Tata Motors' stock (CLSA downgraded the stock from a buy to a sell this morning). "Hedging is not the main issue for the company," Hitesh Goel of Kotak Securities told CNBC-TV18, pointing to the fact that it also means that it took in higher US dollar denominated revenues.
"So in the next quarter, if the pound continues to stay at around 1.2 levels, you will see higher absolute hedge loss. But you will also see higher net realisations," he said. Goel also said the company took a hit on margins in order to push JLR sales in the US. He added that as the net hedging rate rolls over and the effect goes out over the course of next two years, and as new launches replace old models that are being phased out, both volume growth and margins should get better going forward. Goel said that investors should use volatility in the stock to buy into it. "We have a 12-month price target of Rs 550."
Sensex falls over 210 points, Nifty down 0.86% on sustained sell-offs
MMNN:15 Feb. 2017
The market benchmark BSE Sensex extended its losses for the second straight day, falling over 69 points in early trade on Wednesday on sustained selling by investors amid disappointing corporate earnings. The 30-share Sensex fell further with auto, realty, healthcare and consumer durables stocks leading the fall. The gauge had lost 12.31 points in the previous session.
Brokers said that apart from profit-booking in recent gainers by investors, disappointing earnings by some bluechips companies such as Tata Motors and Sun Pharma dampened sentiment. Shares of Tata Motors continued to remain under pressure and tanked 7.81% to Rs 448.80 after the company on Wednesday reported a steep 96.22% decline in consolidated net profit for the December quarter. Stocks of Sun Pharma too plunged by 3.28% to Rs 628.80 on sustained selling by participants after the company reported 4.72% decline in consolidated net profit for the third quarter quarter of 2016-17. On the other hand, trends at other Asian markets was better in their early session with the Hong Kong's Hang Seng index rising 1.09%, while Japan's Nikkei gained 1.22%.
"We will see a drop-curtain on earnings; not been negative but in line, in some cases better ... We are in a consolidation market for the next week and a half," said Gaurang Shah, Vice President, Geojit Financial Services.
2.00pm:BSE Sensex trades lower by 212 points, or 0.75%, to 28,127, while the Nifty 50 falls 76 point, or 0.86%, to 8,716. BSE realty index falls 3.31% while the BSE auto index declines 2.89%.
12.42pm: BSE Sensex trades lower by 213 points, or 0.75%, to 28,126, while the Nifty 50 falls 69 point, or 0.78%, to 8,723.
12.01pm: BSE Sensex trades lower by 156 points, or 0.55%, to 28,183, while the Nifty 50 falls 54 point, or 0.61%, to 8,738.
11.40am: SpiceJet Ltd shares fall 5.8% to Rs60.65 after the company reported 24% decline in its net profit to Rs 181.10 crore in December quarter from Rs239.90 crore a year ago. Revenue rose 12.5% to Rs1,642.4 crore from Rs1,459.95 crore the year before.
11.35am: Housing Development & Infrastructure Ltd shares fall 5% to Rs65.05 after the company reported 84% decline in its net profit in December quarter to Rs16.22 crore against Rs100.32 crore a year ago.
11.30am: BSE Sensex trades lower by 124 points, or 0.44%, to 28,215, while the Nifty 50 falls 38 point, or 0.43%, to 8,755.
11.20am: Intellect Design Arena Ltd shares fall 9% to Rs 112.80 after ace investor Rakesh Radheyshyam Jhunjhunwala and his wife Rekha Rakesh Jhunjhunwala sold 10 lakh and 32.30 lakh shares, respectively, in Intellect Design Arena through bulk deals on Tuesday.
11.00am: Banking stocks fell after Bloomberg reported that the government is likely to cut the amount of capital it plans to inject into state-controlled lenders this fiscal year by as much as Rs7,800 crore because of slow loan growth. Federal Bank falls 3.7%, Bank Of India falls 3.7%, IDBI Bank 3.6%, Allahabad Bank 3.4%, Punjab National Bank 2.5%, Union Bank of India 2.1%, Syndicate Bank 2.1%, Canara Bank 2%, Andhra Bank 2%, Oriental Bank of Commerce 2%, Bank of Baroda 1.7%, ICICI Bank 1.8%.
10.40am: BSE Sensex trades lower by 55 points, or 0.20%, to 28,284, while the Nifty 50 falls 14 point, or 0.16%, to 8,778.
10.35am: Adani Enterprises Ltd shares rise 4.4% after the company said its net profit rose 61.7% to Rs339.96 crore in December quarter against Rs210.22 crore a year ago,
10.30am: Jindal Steel & Power Ltd rose 4.2% to Rs91.70 after the company said its net loss for the December quarter narrowed to Rs 407.40 crore against Rs 869.73 crore a year ago.
10.00am: IDBI Bank shares fall 2.9% to Rs81.65. IDBI Bank has joined Indian Overseas Bank to become the only two banks to be classified as "very weak" after a ratings downgrade by Standard & Poor's (S&P) Global Ratings on Tuesday.
9.30am: BSE Sensex trades lower by 15 points, or 0.05%, to 26,325, while the Nifty 50 falls 1 point, or 0.01%, to 8,791.
9.28am: DLF Ltd shares fall 3.1% to Rs142.95 after the company said its profit fell 46% to Rs98.14 crore from the year-ago period. Revenue also fell 30% to Rs2,057.92 crore during the three months ended 31 December.
9.25am: PC Jeweller Ltd shares fall 5% to Rs368.80 after the company reported 27.4% decline in its net profit to Rs 106.97 crore in December quarter against Rs147.34 crore a year ago. Gitanjali Gems Ltd shares fall 5% to Rs68.75 after the company said its net profit fell 73% in December quarter to Rs50.04 crore from a year ago.
9.20am: Vivimed Labs Ltd shares rise 7.2% to Rs104 after the company said its net profit surged 125% from a year ago in December quarter to Rs51.71 crore.
9.17am: Tata Motors Ltd shares fall 7.5% to Rs449 after the company said its third-quarter profit plummeted 96% as lower sales at its British luxury car unit Jaguar Land Rover Automotive Plc. (JLR) and a wider loss in its domestic business took its toll on India's largest automaker by revenue.
9.15am: The local currency opened at 66.93 a dollar. At 9.15am, the home currency was trading at 66.93, down 0.01% from its previous close of 66.92.
9.10am: India's 10-year bond yield was at 6.873%, from its Tuesday's close of 6.875%. Bond yields and prices move in opposite directions.
9.00am: Asian currencies were trading higher. Taiwan dollar was up 0.15%, China Offshore spot 0.11%, Singapore dollar 0.06%, China renminbi 0.05%. However, South Korean won was down 0.28%, Philippines peso 0.14%, Japanese yen 0.07%.
Consumer Inflation Eases To Lowest Level In At Least Five Years
New Delhi: MMNN:14 Feb. 2017
Inflation in the country cooled to its lowest in at least five years in January as food prices fell following the government's cash clampdown, but emerging price pressures mean the Reserve Bank of India (RBI) will probably keep interest rates on hold.
Consumer prices rose by an annual 3.17 per cent last month - their slowest pace since January 2012, when the government launched the current index series.
Economists surveyed by Reuters had expected prices to rise by 3.22 per cent from a year earlier, compared with December's 3.41 per cent increase.
Annual retail food inflation eased to 0.53 per cent last month from 1.37 per cent in December, helped by lower prices for vegetables and pulses, government data showed on Monday.
In a worry for the central bank, another inflation gauge that excludes volatile food and fuel prices accelerated to around 5.1 per cent in January, after hovering around 4.9 per cent since September.
The RBI's monetary policy committee reckons sticky core inflation could trigger wide side-effects.
"The RBI is seeing upside risks to inflation and one data point is not going to change their view dramatically," said Varun Khandelwal, managing director at Bullero Capital.
"Interest rates will remain on hold in the near term."
Headline inflation has been under 4 per cent since November, well below the RBI's 5 per cent target for March and medium-term target of 4 per cent.
End of loosening cycle
Still, the RBI last week shocked investors by holding the repo rate at 6.25 per cent and shifting its monetary policy stance to "neutral" from "accommodative".
The shift comes as Asia's third-largest economy is still limping back to health after Prime Minister Narendra Modi's November 8 decision to outlaw old Rs. 500 and Rs. 1,000 banknotes wiped out 86 per cent of the currency in circulation overnight.
Industrial production fell 0.4 per cent, year on year, in December, government data showed last week.
Even as the economic fallout of demonetisation remains unclear, the RBI is worried about a pickup in global crude prices along with exchange rate volatility, which it says could push headline inflation above its medium-term target.
Global crude oil prices are up nearly 14 per cent since end-November. The rupee is expected to weaken by nearly 4 per cent from its current levels to 69.50 a dollar in 12 months.
Most economists now expect the RBI to hold rates until at least the second half of next year.
"We continue to believe that the RBI will have to tighten policy sooner than most are anticipating," Capital Economics said in a flash note.
Toshiba Chairman Quits After Company Takes $6 Billion Nuclear Hit
Tokyo:MMNN:14 Feb. 2017
After a day of delays and confusion, Japan's Toshiba Corp said on Tuesday it expected to book a $6.3 billion hit to its US nuclear unit, a writedown that wipes out its shareholder equity and will drag the group to a full-year loss.
Hours earlier on Tuesday, the battered conglomerate rattled investors by failing to release its earnings on schedule, saying initially it was 'not ready' and then announcing later it needed more time to probe its Westinghouse nuclear business after internal reports uncovered potential problems.
The figures eventually released were numbers that have yet to be approved by its auditor and Toshiba cautioned investors that a major revision was possible. Fully audited numbers are now not due till March 14 after the firm was granted a reprieve for its formal filing by Japanese regulators.
Toshiba also said in a statement it could push harder to raise capital, including selling a majority stake in its memory chip arm. Previously, it had sought to sell just under 20 per cent of its prize business.
"Finally now people are starting to recognize that internal control problems, the accounting issues and governance issues are very real and no longer abstract," said Zuhair Khan, an analyst at Jefferies in Tokyo.
"They impact the viability of the company."
Shares in the group slid 8 per cent, putting the company's market value at 973 billion yen ($8.6 billion), less than half its value in mid-December. Just under a decade ago, the firm was worth almost 5 trillion yen.
It also announced the first top-level departure since the nuclear problems were uncovered in December: chairman Shigenori Shiga, a former Westinghouse boss brought in to the top role last year after a $1.3 billion accounting scandal in 2015 shook up Toshiba's upper ranks.
Toshiba said it expected to book a 499.9 billion yen ($4.4 billion) net loss for the nine months to December, and a 390 billion yen net loss for the full year.
It also ended 2016 with negative shareholder equity due to the 712.5 billion yen nuclear writedown - a charge that was first flagged in December last year.
Toshiba said it would withdraw from nuclear plant construction overseas. Reuters reported this month that Toshiba was seeking at least a partial exit from ventures in Britain and India, a blow to both countries' nuclear plans.
In an earlier, separate statement, Toshiba outlined concerns at its Westinghouse business, the US nuclear unit bought from the UK government a decade ago.
Internal reports, Toshiba said, suggested controls at Westinghouse had been "insufficient" and it needed to look into whether senior managers at Westinghouse exerted "inappropriate pressure" during discussions over a US deal to buy the company at the heart of its cost overruns, it said.
"We judged that it would take about a month for external lawyers... to conduct these further probes and for the independent auditors to review the results," Toshiba said.
A source briefed on the matter said Toshiba had not been able to immediately secure the approval of its auditor, PricewaterhouseCoopers Aarata. The source asked not to be identified because he is not allowed to talk the media.
PricewaterhouseCoopers Aarata declined to comment, citing client confidentiality. Toshiba declined to comment on the audit process
($1 = 113.4200 yen)
Govt mulls 5-10% divestment in Coal India, could earn Rs 20k cr
NEW DELHI:MMNN:13 Feb. 2017
The government is likely to divest between 5 and 10 percent in Coal India by August, reports the Economic Times today. The move could bring down the government's stake in the company to roughly 69 percent from 79.78 percent and add Rs 20,000 crore to its divestment earnings.
If 10 percent is divested, Coal India will also benefit in terms of conforming to holding norms in which a public listed company needs to have at least 25 percent shares listed on stock exchanges The government's holding had increased marginally to 79.78 percent from 79.68 after the company bought back 1.7 per cent (10.89 crore shares) of its fully paid-up shares for Rs 3,650 crore last year.
Poor demand has led to a fall in production as well as sales for the company with growth at sub-2 percent this year so far from 10 percent in 2015-16. In the third quarter, it posted a loss of Rs 39 crore on a standalone basis as compared to a profit of Rs 672.6 crore in the year-ago period.
Total income declined to Rs 257.1 crore in the quarter from Rs 880 crore. On a consolidated basis, Q3 net profit dipped 22 percent to Rs 2,884.4 crore. The company had recently announced plan to explore coking coal assets overseas as the country is faced with constraints of techno-commercially viable domestic metallurgical coal reserves.
"The recent spurt in global coal prices, particularly for coking coal, is expected to create an encouraging scenario for such acquisition process," Coal and Power Minister Piyush Goyal said in a written reply to Rajya Sabha.
Ghost town Hind Motor sees no hope of Ambassador revival
MUMBAI:MMNN:13 Feb. 2017
A decrepit factory in various stages of rust, crumbling staff quarters, hospital in coma, deserted streets that was the sight that haunted visitors to Sahaganj after the Dunlop factory closed down.
Driving into Hind Motor a decade and a half later, one is gripped with a sense of deja vu. The scenes are all too familiar; only the setting is different. In three short years since work was suspended at the plant near Uttarpara, decay has taken roots and turned this bustling township-factory into a ghost town.
As the day dawns, ghosts emerge from decrepit buildings, amble over to the crumbling platforms at the base of sprawling banyan and peepal trees and slouch on them to while away time. The blank eyes betray neither life, nor hope.
There is no anger or resentment over their fates being sealed by the sale of brand Ambassador (the one product that had sustained the plant for half a century) to French auto major Peugeot. Neither is there curiosity over a vague assurance on the plant's revival.
The only Ambassador visible at Hind Motor is the one used by security guards to patrol the factory and township.
"The revival story is a joke that doesn't evoke laughter. It's been told too often. When 314 acre was carved out of the plant and sold for Rs 285 crore to ostensibly revive the factory, nothing happened. There is no illusion that Rs 80 crore earned from sale of Ambassador brand will turn this junk-yard around. Minus Ambassador, there's nothing in Hindustan Motors," stated Raj Kumar Jha who joined Hindustan Motors in 1986 and worked 20 years at the press shop and the rest in the foundry.
In fact, they believe the sale has nothing to do with Ambassador's revival or a comeback in a new avatar. It is, they believe, a means to facilitate transfer assets like the company's sales channel to Peugeot without legal hassle.
Chandrabhushan Singh, who worked in the car AC control before production was unceremoniously suspended on May 24, 2014, says everyone played a part in Ambassador's, and hence Hindustan Motors', demise: the owner did not reinvest in the plant; the management didn't upgrade the technology; and the unions did not care.
"When Ambassador sales began to slide after Maruti's arrival, we realized the grand old warhorse needed to transform. But those at the helm refused to see the inevitable. Since 1983, Ambassador was forever playing a catching up game, only the gap with modern cars were widening further," he said.
The news of Peugeot purchasing the Ambassador brand and the possible infusion of funds to revive Hind Motor does not seem to enthuse the workers.
Some had a foreboding in the mid-1990s when sales plunged, losses mounted and salaries were delayed. The company floated a series of VRS that pruned the workforce from 22,000 to 2,300 at the time of work suspension. Another VRS that offered Rs 1 lakh ex-gratia has seen the staff count dwindle to around 500. However, only two dozen guards on the payroll actually draw a monthly salary. They patrol the factory and township in a white Amby that is now a rare sight at Hind Motor that in the 1980s churned out up to 125 Ambassadors a day. By 2014, daily production had trickled down to five. Now, two press shop dies of the Ambassador's roof and rear windshield lies like a relic in Uttarpara PS, recovered from 1 km off the plant site while being siphoned off at night.
Ramkrishna Saha, who ran a cycle store at a market adjoining the township when Hind Motor flourished and Ambassadors ruled the road, rues the change in fortune that has impacted not just individuals but dented the region's pride.
"I have heard from my grandfather that this was the first automobile factory in the country and only the second in Asia after a Toyota plant in Japan. In 1948, Uttarpara had made Bengal the auto hub of India, decades before Gurgaon, Chennai, Bengaluru, Pune and Ahmedabad became such centres. It is sad to see history going to the seed," he said.
The near-irretrievable situation at Hind Motor is a far cry from Cowley in England where the Morris Oxford plant from where it derived the Ambassador, is located. Set up in 1912, it had its ups and downs but battled resolutely on till BMW purchased it in 2000, revamped the plant and machinery and relaunched the Mini in its new avatar. There has been no looking back since.
As dusk draws over Hind Motor, the workers without work melt into the darkness and their ghostly existence.
Idea Cellular slips into red with Q3 net loss of Rs 384 cr
NEW DELHI:MMNN:11 Feb. 2017
Telecom operator Idea Cellular today logged a consolidated net loss of Rs 383.87 crore for the December 2016 quarter compared to a net profit of Rs 659.35 crore in the year-ago period, hurt by newcomer Reliance Jio's free voice and data promotions.
Total income also has decreased to Rs 8,706.36 crore for the quarter, from Rs 9,032.43 crore in the same period in the previous year, as per a BSE filing.
"The Indian mobile industry witnessed an unprecedented disruption in the quarter of October to December 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector," Idea Cellular said in a statement.
Consequently, revenue KPIs (key performance indicators) and financial parameters for all mobile operators have sharply declined, and for the first time in its history, the flourishing Indian wireless sector is trending towards an annual revenue decline of 3-5 per cent in 2016-17 (vs 2015-16), it added.
"The sector can expect to recover revenues only once the new operator starts charging for its pan-India mobile services. As a result of this current industry upheaval, the standalone Idea revenue dropped to an unforeseen level at Rs 8,662.7 crore, a decline of 6.9 per cent on sequential quarterly basis," it said.
Idea, which is in talks with rival Vodafone for a merger, said it was "forced to reduce" its voice rates on sequential quarterly basis by 10.6 per cent to 29.6 paise per minute (versus 33.1 paise in the second quarter of 2016-17) and drop in mobile data rates by 15.2 per cent q-o-q to 15.9 paise per megabyte (vs 18.7 paise).
"Despite an unprecedented outgoing voice rate fall, the lure of free offerings resulted in lower than normal volume elasticity with the quarterly sequential voice minutes growing only by 7.3 per cent to 210 billion minutes (vs 195.5 billion minutes in second quarter of 2016-17), that too led by double digit growth in incoming call volume," Idea said.
Also, the higher blended voice realisation rate fall was also an outcome of the "tsunami of minutes" terminating on Idea's network from the new operator, resulting in overall higher ratio of subsidised incoming minutes recovered at below cost IUC settlement rates.
Idea, for the first time, witnessed a decline of 5.5 million mobile data customers on sequential quarter basis with overall mobile data subscriber (2G+3G+4G) base receding to 48.6 million (vs 54.1 million in second quarter of 2016-17).
Its net debt stood at Rs 49,140 crore at the end of December 2016, including a larger proportion of this debt from DoT under 'Deferred payment obligation' for spectrum acquired in last four spectrum auctions.
Idea's capex spend was Rs 2,000 crore (excluding forex and interest capitalisation) in the reported quarter, partially funded by cash profit of Rs 1,230 crore.
Dubai welcomed 1.8 million overnight visitors from India in 2016
MUMBAI:MMNN:11 Feb. 2017
Dubai attracted 1.8 million overnight visitors from India in 2016, recording a 12 per cent growth over the previous year to become the number one source market in South Asia.
The country hosted 1.6 million Indian travellers in 2015, according to data from Dubai Tourism.
Data also revealed that overall worldwide, Dubai attracted 14.9 million overnight visitors in 2016, recording 5 per cent increase over 2015. Overall Dubai attracted more than 14.2 million overnight visitors in 2015.
"Expectations on tourism growth from India remain high for 2017 with even stronger bilateral ties being forged between the UAE and India," a release issued here said.
The strong performance of the Emirate's tourism industry amid turbulent year across the world indicates that progress towards the annual target of 20 million visitors by 2020, is on track, it added.
With our international overnight traffic reaching 14.9 million, Dubai has cemented its ranking as the fourth most visited city in the world, critically delivering the highest value to the domestic economy with the country getting number one ranking in terms of spend per tourist compared to any other competitor destination, Dubai Tourism Director General Helal Saeed Almarri said.
"The effectiveness of our three-pronged approach is evidenced by the encouraging 13 per cent growth in volumes from South Asia led by India, despite the demonetisation and cash pressures facing the market. Similarly, Kingdom of Saudi Arabia (KSA) remained the dominant market within the Gulf Cooperation Council (GCC), bringing first time and significant repeat travellers to Dubai," he added.
Highlights of 2016, also include the massive 20 per cent boost in Chinese visitors, crossing the half million mark for the first time with 5,40,000 tourists arriving in Dubai and the definitive resurgence of Russian inbound tourism recording a 14 per cent growth in overnight traffic, he said.
"Our traditional core markets spanning the GCC, India, UK and Germany, continue to deliver over 40 per cent of our tourism traffic and we remain committed to investing further in driving greater penetration and frequency from these bases where we have built a credible recognition of the Dubai destination offering," he said.
Almarri said infrastructure, accommodation, air connectivity, access and policy enablers continue to be the facilitating levers that ensure Dubai remains price competitive and hugely attractive for a broad range of global travellers.
Full text: RBI keep repo rate unchanged at 6.25%
NEW DELHI:MMNN:8 Feb. 2017
Sixth Bi-monthly Monetary Policy Statement, 2016-17 Resolution of the Monetary Policy Committee (MPC), Reserve Bank of India
On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to:
1) keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 per cent.
Consequently, the reverse repo rate under the LAF remains unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth. The main considerations underlying the decision are set out in the statement below.
2. Global growth is projected to pick up modestly in 2017, after slowing down in the year gone by. Advanced economies (AEs) are expected to build upon the slow gathering of momentum that started in the second half of 2016, led by the US and Japan. However, uncertainty surrounds the direction of US macroeconomic policies with potential global spillovers. Growth prospects for emerging market economies (EMEs) are also expected to improve moderately, with recessionary conditions ebbing in Russia and Brazil, and China stabilising on policy stimulus. Inflation is edging up on the back of rising energy prices and a mild firming up of demand. However, global trade remains subdued due to an increasing tendency towards protectionist policies and heightened political tensions. Furthermore, financial conditions are likely to tighten as central banks in AEs normalise exceptional accommodation in monetary policy.
3. International financial markets turned volatile from mid-January on concerns regarding the 'Brexit' roadmap and materialisation of expectations about economic policies of the new US administration. Within the rising profile of international commodity prices, crude oil prices firmed up with the OPEC's agreement to curtail production. Prices of base metals have also increased on expectations of fiscal stimulus in the US, strong infrastructure spending in China, and supply reductions. Geopolitical concerns have also hardened commodity prices. More recently, the appetite for risk has returned in AEs, buoying equity markets and hardening bond yields as a response to the growing likelihood of further increases in the Federal Funds rate during the year. Coupled with expectations of fiscal expansion in the US, this has propelled the US dollar to a multi-year high.
4. The Central Statistics Office (CSO) released its advance estimates for 2016-17 on January 6, placing India's real GVA growth at 7.0 per cent for the year, down from 7.8 per cent (first revised estimates released on January 31) a year ago. Agriculture and allied activities posted a strong pick-up, benefiting from the normal south-west monsoon, robust expansion in rabi acreage (higher by 5.7 per cent over the preceding year) and favourable base effects as well as the continuing resilience of allied activities. In contrast, the industrial sector experienced a sharp deceleration, mainly due to a slowdown in manufacturing and in mining and quarrying. Service sector activity also lost pace, concentrated in trade, hotels, transport and communication services, and construction, cushioned to some extent by public administration and defence.
5. Industrial output measured by the index of industrial production (IIP) finally shrugged off the debilitating drag from insulated rubber cables from November and was also pushed up by a favourable base effect. In December, the output of core industries accelerated on a year-on-year as well as on a sequentially seasonally adjusted basis. The drivers of the upturn were steel production and petroleum refinery throughput, the former, inter alia, supported by import tariff safeguards and the latter buoyed by external demand. The acceleration in coal production and thermal electricity generation since November after three consecutive months of contraction augur well for the outlook for power. Reflecting these developments, the manufacturing purchasing managers' index (PMI) returned to expansion mode in January on the back of growth of new orders and output, and the future output index has risen strongly. On the other hand, the 76th round of the Reserve Bank's industrial outlook survey suggests that financing conditions facing the manufacturing sector have worsened in Q3 of 2016-17 and are expected to remain tight in Q4. This is corroborated by the sharp slowdown in bank credit to industry and continuing sluggishness in the investment climate in some sectors.
6. High frequency indicators point to subdued activity in the services sector, particularly automobile sales across all segments, domestic air cargo, railway freight traffic, and cement production. Nevertheless, some areas stand out as bright spots, having weathered the transient effects of demonetisation - steel consumption; port traffic; international air freight; foreign tourist arrivals; tractor sales; and, cellular telephone subscribers. The services PMI for January 2017 remained in retrenchment, but the fall in output was the least in the current phase of three consecutive months of contraction.
7. Marking the fifth consecutive month of softening, retail inflation measured by the headline consumer price index (CPI) turned down sharper than expected in December and reached its lowest reading since November 2014. This outcome was driven by deflation in the prices of vegetables and pulses. Some moderation in the rate of increase in prices of protein-rich items - eggs, meat and fish - also aided the downturn in food inflation.
8. Excluding food and fuel, inflation has been unyielding at 4.9 per cent since September. While some part of this inertial behaviour is attributable to the turnaround in international crude prices since October - which fed into prices of petrol and diesel embedded in transport and communication - a broad-based stickiness is discernible in inflation, particularly in housing, health, education, personal care and effects (excluding gold and silver) as well as miscellaneous goods and services consumed by households.
9. The large overhang of liquidity consequent upon demonetisation weighed on money markets in December, but from mid-January rebalancing has been underway with expansion of currency in circulation and new bank notes being injected into the system at an accelerated pace. Throughout this period, the Reserve Bank's market operations have been in liquidity absorption mode. With the abolition of the incremental cash reserve ratio from December 10, liquidity management operations have consisted of variable rate reverse repos under the LAF of tenors ranging from overnight to 91 days and auctions of cash management bills under the market stabilisation scheme (MSS) of tenors ranging from 14 to 63 days. The average daily net absorption under the LAF was ' 1.6 trillion in December, ' 2.0 trillion in January and ' 3.7 trillion in February (up to February 7) while under the MSS, it was ' 3.8 trillion, ' 5.0 trillion and ' 2.9 trillion, respectively. Money market rates remained aligned with the policy repo rate albeit with a soft bias, with the weighted average call money rate (WACR) averaging 18 basis points below the policy rate during December and January.
10. Turning to the external sector, export growth remained in the positive zone for the fourth month in succession in December. Imports other than petroleum oil and lubricants (POL) came out of the spike in November and moderated in December. In contrast, there was an increase of over 10 per cent in POL imports, in part reflecting the rise in international crude oil prices. Overall, the trade deficit shrank both sequentially and on a year-on-year basis, being lower for the period April-December by US$ 23.5 billion than its level a year ago. On the whole, the current account deficit is likely to remain muted and below 1 per cent of GDP in 2016-17. While the buoyancy in net foreign direct investment was sustained, there have been portfolio outflows beginning October on uncertainty relating to the direction of US macroeconomic policies and expectations of faster normalisation of US monetary policy in the year ahead. Foreign exchange reserves were at US$ 363.1 billion on February 3, 2017.
11. In the fifth bi-monthly statement of December, headline inflation was projected at 5 per cent in Q4 of 2016-17 with risks lower than before but still tilted to the upside. The decline in headline CPI inflation in November and December has been larger than expected, but almost exclusively on the back of deflation in vegetables and pulses. While the seasonal ebb in the prices of vegetables that usually occurs with the onset of winter as well as some demand compression may have contributed to this outcome, anecdotal evidence points to some distress sales of perishables having accentuated the decline in vegetable prices, with spillovers into January as well. Looking beyond, prices of pulses are likely to remain soft with comfortable supply conditions, while vegetable prices may potentially rebound as the effects of demonetisation wear off.
12. The Committee is of the view that the persistence of inflation excluding food and fuel could set a floor on further downward movements in headline inflation and trigger second-order effects. Nevertheless, headline CPI inflation in Q4 of 2016-17 is likely to be below 5 per cent. Favourable base effects and lagged effects of demand compression may mute headline inflation in Q1 of 2017-18. Thereafter, it is expected to pick up momentum, especially as growth picks up and the output gap narrows. Moreover, base effects will reverse and turn adverse during Q3 and Q4 of 2017-18. Accordingly, inflation is projected in the range of 4.0 to 4.5 per cent in the first half of the financial year and in the range of 4.5 to 5.0 per cent in the second half with risks evenly balanced around this projected path (Chart 1). In this context, it is important to note three significant upside risks that impart some uncertainty to the baseline inflation path - the hardening profile of international crude prices; volatility in the exchange rate on account of global financial market developments, which could impart upside pressures to domestic inflation; and the fuller effects of the house rent allowances under the 7th Central Pay Commission (CPC) award which have not been factored in the baseline inflation path. The focus of the Union budget on growth revival without compromising on fiscal prudence should bode well for limiting upside risks to inflation.
13. GVA growth for 2016-17 is projected at 6.9 per cent with risks evenly balanced around it. Growth is expected to recover sharply in 2017-18 on account of several factors. First, discretionary consumer demand held back by demonetisation is expected to bounce back beginning in the closing months of 2016-17. Second, economic activity in cash-intensive sectors such as retail trade, hotels and restaurants, and transportation, as well as in the unorganised sector, is expected to be rapidly restored. Third, demonetisation-induced ease in bank funding conditions has led to a sharp improvement in transmission of past policy rate reductions into marginal cost-based lending rates (MCLRs), and in turn, to lending rates for healthy borrowers, which should spur a pick-up in both consumption and investment demand. Fourth, the emphasis in the Union Budget for 2017-18 on stepping up capital expenditure, and boosting the rural economy and affordable housing should contribute to growth. Accordingly, GVA growth for 2017-18 is projected at 7.4 per cent, with risks evenly balanced.
14. The Committee remains committed to bringing headline inflation closer to 4.0 per cent on a durable basis and in a calibrated manner. This requires further significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky. The committee decided to change the stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetisation on inflation and the output gap play out.
15. The Reserve Bank has conducted market liquidity operations consistent with the liquidity management framework put in place in April 2016, progressively moving the system level ex ante liquidity conditions to close to neutrality. This stance will continue. Surplus liquidity should decline with progressive remonetisation. Nonetheless, the currently abundant liquidity with banks is likely to persist into the early months of 2017-18. The Reserve Bank is committed to ensuring efficient and appropriate liquidity management with all the instruments at its command to ensure close alignment of the WACR with the policy rate, improved transmission of policy impulses to lending rates, and adequate flow of credit to productive sectors of the economy.
16. The Committee believes that the environment for timely transmission of policy rates to banks lending rates will be considerably improved if (i) the banking sector's non-performing assets (NPAs) are resolved more quickly and efficiently; (ii) recapitalisation of the banking sector is hastened; and, (iii) the formula for adjustments in the interest rates on small savings schemes to changes in yields on government securities of corresponding maturity is fully implemented1 .
1 Since the introduction of the formula in April 2016, interest rates on small savings are about 65-100 basis points higher, depending on tenor, compared to what they should be if the formula is followed. If the spread between small savings rates and bond yields remains wide, the diversion of deposits to small savings would impede a full transmission to bank lending rates.
17. Six members voted in favour of the monetary policy decision. The minutes of the MPC's meeting will be published by February 22, 2017.
18. The next meeting of the MPC is scheduled on April 5 and 6, 2017.
No cash withdrawal limits on savings bank accounts from March 13: RBI
Mumbai:MMNN:8 Feb. 2017
The Reserve Bank of India in its post-monetary policy media interaction said that the central bank would remove all the cash withdrawal limits currently in place on savings bank accounts from March 13.
The RBI said that the limits on cash withdrawals from savings bank accounts will be removed in two phases.
In the first phase, weekly cash withdrawal limits on savings banks would be hiked to Rs 50,000 from the current Rs 24,000 from February 20. Recently, while the daily withdrawal limit of cash from the ATMs was hiked to Rs 10,000 from Rs 4,000 earlier, the weekly limit had been kept in place.
In the second phase, there would be no limits on cash withdrawals from savings bank accounts from the RBI from March 13, the central bank said.
The central bank in cognizance with the government had imposed cash withdrawal limits from ATMs and banks, to ensure, they said, equal distribution of cash amongst the public at a time when there was a severe cash crunch going on in the aftermath of demonetization. On November 8, the government moved to delegalise the use of Rs 500 and Rs 1,000 notes.
On Wednesday, the RBI left key repo rates unchanged at 6.25%, maintaining status quo for a second straight policy outing. This was against the consensus view of experts, the markets and bankers, that the central bank would cut rates by 25bps. After the policy announcement, the BSE Sensex fell 120 points and NSE Nifty fell over 30 points.
Vijay Mallya saga: How things went awry for UBHL
NEW DELHI:MMNN:7 Feb. 2017
Liquor baron Vijay Mallya suffered a major blow when the Karnataka High Court yesterday ordered winding up of the United Breweries Holdings Limited (UBHL). The winding-up was ordered to facilitate recovery of debt owed by defunct Kingfisher Airlines to a consortium of bank led by State Bank of India . UBHL is the holding company of the UB Group.
Kingfisher was promoted by UB and the court ordered that the parent company, being a guarantor to Kingfisher's loans, had to be held responsible for recovery of debt. Currently, Vijay Mallya's stake in UBHL stands at 52.34 percent.
Below is the chronology of events that led to the winding up of UBHL.
May 2005: Vijay Mallya sets up Kingfisher Airlines to cater to the premium segment.
June 2007: Kingfisher Airlines decides to purchase debt-ridden Air Deccan.
2008: UBHL paid Rs 550 crore for a 26 percent stake in Air Deccan.
March 2008: Kingfisher Airlines debt touches Rs 934 crore due to spike in oil prices.
2009: Airline debt reaches Rs 7,000 crore.
2011: Airline accumulated losses reach more than 50 percent of its net worth.
2011: 11 bank accounts were suspended by service tax department for non-payment of Rs 70 crore.
2012: Mallya gives guarantees of Rs 5,904 crore for carrier's loan.
February 2013: UBHL seeks shareholders' approval for Rs 450 crore for Kingfisher Airlines.
March 2013: Kingfisher Airlines net worth falls to negative of Rs 13,000 crore.
December 2014: United India Bank recognises UBHL, guarantor of Kingfisher Airlines as wilful defaulter.
February 2015: SBI led bank consortium takes possession of Kingfisher House in Vile Parle.
April 2015: United Spirits Limited (USL) asked Vijay Mallya to step down as chairman and director of fund on alleged fund diversion.
October 2015: CBI conducts raids on Vijay Mallya's offices in connection with Rs 950 crore loan provided by IDBI Bank .
December 2015: CBI questions Vijay Mallya in Rs 900 crore IDBI Bank's loan.
February 2016: SBI led consortium moved debt recovery tribunal (DRT) to attach Vijay Mallya's passport.
March 2016: Vijay Mallya in discussion with banks to settle debt.
March 2016: On March 9, Mallya leaves India.
March 2016: Mallya offers to pay Rs 4,000 crore by September to banks.
April 2016: Banks rejected Mallya's offers for payment of dues worth Rs 9,000 crore.
April 2016: Hyderabad court convicts Vijay Mallya in case filed by GMR Hyderabad International Airport for bounced cheque.
April 2016: Ministry of External Affairs revokes Vijay Mallya's passport.
April 2016: Enforcement Directorate approach special court to issue non-bailable arrest warrant against Mallya.
Airtel To Simplify Shareholding Structure In Foreign Arms
NEW DELHI:MMNN:7 Feb. 2017
Telecom major Bharti Airtel on Wednesday said it is restructuring shareholding pattern of foreign subsidiaries to simplify structure and bring in synergies between the companies.
"The Board of Directors...approved the company's investments in its wholly-owned subsidiaries Bharti Airtel International (Mauritius) Ltd (BAIM), Bharti Airtel International (Netherlands) B.V. (BAIN), Netherlands and Bharti International (Singapore) Pte Ltd (BISPL), Singapore will be held entirely by Network i2i Ltd (Ni2i), Mauritius, another wholly-owned subsidiary of the company," Bharti Airtel said in a regulatory filing.
It further said: "BAIN will continue to hold the shareholding in African operating companies and the company's investments in its wholly-owned subsidiaries Bharti Airtel (USA) Ltd, Bharti Airtel (Hong Kong) Ltd and Bharti Airtel (UK) Ltd will be help entirely by BISPL, another wholly-owned subsidiary of the company".
Elaborating on restructuring, it said: "The resultant 'vertical step by step shareholding structure' envisaged by the above restructuring aims to offer number of benefits including delayering and simplification of structure and synergies without any change in ultimate ownership over the said subsidiaries".
Sensex ends 199 points higher, Nifty retains 8,800 ahead of RBI policy
NEW DELHI:MMNN:6 Feb. 2017
Benchmark indices settled the day at 4-month high as investors bet RBI will cut interest rates in their policy review meet later this week.
Most of the 17 economists polled by Business Standard were hesitant to give a clear call on the possible policy outcome. While six economists expected RBI to pause on Wednesday, 11 said the chances of RBI cutting rates by 25 basis points (bps) were a bit on the higher side.
Nifty50 ended above it's crucial 8,800 level for the first time since September 19, 2016 led by gain in realty, pharma, FMCG, and banking stocks.
The S&P BSE Sensex settled the day at 28,439, up 199 points, while the broader Nifty50 ended at 8,801, up 60 points.
The positive sentiment lifted Nifty Midcap and Smallcap indices higher by 1.1%and 0.9% respectively, to their record highs.
Sectors and Stocks
Sun Pharma, ICICI Bank, Adani Ports and HUL were the top movers on Sensex today while Dr Reddy's, Cipla and ONGC were the biggest laggards.
BSE Realty index (up 1.9%) was the top sectoral gainer, extending gains for the fourth consecutive sessions after finance minister Arun Jaitley accorded infrastructure status to affordable housing in Budget 2017 to encourage investment in the segment and offered tax sops for developers sitting on completed unsold inventories.
Banking stocks also rose over 1% with ICICI Bank and Axis Bank rising as much as 3.14% and 1.65%, respectively on rate cut hopes.
Lupin gained over 4% during the day after it received final approval from USFDA for its generic drug Triamcinolone Acetonide Cream which provides relief to the inflammatory and pruritic manifestations of corticosteroid responsive dermatoses. The stock ended 0.5% higher.
Among the losers, Dr. Reddy's Laboratories Ltd fell as much as 3.14% during intra-day to end 1.4% lower after the company reported a 16% drop in its consolidated net profit for the December quarter.
European Markets started the week lower as investors carefully weighed President Donald Trump's policies and focused on corporate earnings. The pan-European Stoxx 600 was 0.32% lower with most sectors trading negative.
Asian shares were mostly higher on Monday as Wall Street gathered momentum into a busy week of earnings with more than 100 major companies due to report, while the dollar was again hobbled by a lack of progress on US fiscal stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.4%, with Taiwan leading the pack by adding 0.9%.
Japan's Nikkei rose 0.2% in the wake of a firmer finish on Wall Street. Japanese Prime Minister Shinzo Abe meets US President Donald Trump on February 10 and 11, with trade and currencies likely to be on the agenda.
Trouble in IT: TechM halts appraisal for senior level employees
NEW DELHI:MMNN:6 Feb. 2017
Tech Mahindra has halted its appraisal for employees with over six years of experience as the industry grapples with both global and domestic challenges. The suspension decision is pending a management review, according to a report on The Economic Times . The senior level employees will have to wait for another two quarters or so before any final decision on wage hike comes through. Other employees will get their appraisal letters in March, but the hike will be applicable from July.
The media report says that the company informed its decision to the employees via a webinar chaired by L Ravichandran, chief operating officer of the company. Confirming the news to ET, Tech Mahindra's management said that wage hikes have not been postponed indefinitely and a management review is awaited before any decision on the subject is made. Mahindra's management also said that the decision to suspend hikes has nothing to do with its third quarter numbers. In Q3, the company reported 4 percent sequential rise in revenue to USD 1.12 billion while the profit rose 30.8 percent to USD 126.3 million.
In the same sector, Infosys is looking to end the practice of giving revenue forecast on back of issues while estimating spend of its US clients, says a report in today's Livemint . The company has already stopped giving quarterly guidance in 2012 and is now contemplating halting its year guidance as well. Another IT major, TCS does not give guidance while Wipro only gives quarterly guidance. Changing technology, uncertain political conditions as well as shift from time and labour to market innovation are the current bumps for these companies.
Economy to grow more than 7% in FY18, says Shaktikanta Das
NEW DELHI:MMNN:4 Feb. 2017
Stepping up the growth pitch, Economic Affairs Secretary Shaktikanta Das on Saturday expressed confidence that the economy will grow upwards of 7 per cent next financial year.
"For this year's GDP growth, we have to wait till March-end. But next year, it will be upwards of 7 per cent," he said.
Drawing on Finance Minister Arun Jaitley's statements, the secretary said there will be transient impact of demonetisation on the economy, but it will not spill over to the next financial year.
A large part of economy is moving towards digital transactions, he noted.
Despite the global headwinds, Das said India's growth remains much stronger.
"It has stayed afloat. Not only stayed afloat, but also doing well. Our commitment is to push growth momentum," he explained.
Listing various reforms measures as announced in the Budget, Das spoke of gains for farmers from integration of spot and derivative market in commodity.
He also dubbed announcement on contract farming and UGC as very big reforms.
Speaking at the seminar, Finance Secretary Ashok Lavasa said the government has already implemented 54 per cent of the recommendations of the Expenditure Management Commission.
"There are many more which are in the process of being addressed," he said. "We are in the process of revising our General Financial Rules (GFR). These are the rules by which all government expenditure is controlled and regulated." GFR is a compendium of general provisions to be followed by all offices of the central government while dealing with matters of financial nature.
These were first issued in 1947 and last amended in 2010.
However, it is felt that many of the rules have become redundant in view of rapid growth of alternative service delivery systems, developments in information technology, outsourcing of services and liberalisation of the system of procurement.
He said it was sometimes felt by the private sector that these rules have been constraining the freedom of decision making.
"So, we are in the process of amending the GFR and before March 31. It is our endeavour to produce a revamped document which recognises the modern ways of management," he said.
Lavasa also said there will be efforts to increase the number of goods and services which can be procured through e-marketplace.
On centrally sponsored schemes (CSS), he said the CSS were reviewed and their number has been brought down to 28.
"Similarly, central sector schemes have been rationalised and the exercise is not completed. We will continue to rationalise these schemes. The objective being that the government should focus on doing a few critical things and utilise resources to derive benefit of people," he added.
Paytm, Reliance Jio served govt notice for using PM Modi's image in ads
NEW DELHI:MMNN:4 Feb. 2017
Paytm and Reliance Jio Infocomm were served with notices by the government for using Prime Minister Narendra Modi's photograph in their advertisements, reported Economic Times on Saturday. The Ministry of Consumer Affairs, Food and Public distribution has asked the companies whether they had taken prior permission before using the photograph. According to the report, three unnamed officials from the department confirmed the move.
Apart from this, the consumer affairs department has also reportedly advised the ministry of information and broadcasting to sensitise the media on the need to obtain "prior permission" before commercial usage of specific emblems and names prohibited by the The Emblems and Names (Prevention of Improper Use) Act, 1950. While Paytm had earlier applauded PM Modi's demonetisation decision urging people to switch to digital transactions, Reliance Jio had claimed it was furthering the government's 'Digital India' move.
The two companies came under severe criticism as many lashed out at the move. Last year, Congress vice-president Rahul Gandhi referred to PayTM - the payment gateway has seen a huge growth in numbers since the November 8 announcement - as "Pay to Modi". "That is the idea behind a cashless economy. That a few people should get maximum benefit from every transaction. That is what is going on," Rahul said. Hitting out at Modi over demonetisation, West Bengal CM Mamata Banerjee had said, "India's prime minister has become a salesman for a company(Paytm), 40% shares of which are owned by a blacklisted Chinese company."
Demonetisation lowers India's gold demand to 7-year low in 2016
NEW DELHI:MMNN:3 Feb. 2017
In a major respite for policy makers, the country's gold demand fell to a seven-year low in calendar 2016, due to a sharp decline in smuggling following the demonetisation of high-value currency notes in November.
Data compiled by the World Gold Council (WGC) showed India's gold demand at 675.5 tonnes in calendar year 2016 compared to 857.2 tonnes in the previous year, down 21.2 per cent. In dollar terms, India's gold demand fell 15 per cent to $27.2 billion in calendar 2016 from $32 billion the previous year.
The decline in India's gold demand assumes significance, as the government took several initiatives to discourage consumers from purchasing precious ornaments. To eradicate cash transactions above the threshold, the government last year strengthened the KYC (know-your-customer) norms by imposing a limit on cash dealings of Rs 200,000 without KYC while no restriction was imposed on cash purchase of jewellery with KYC. In Union Budget 2017-18, Finance Minister Arun Jaitley, however, capped cash transactions at Rs 300,000 without changing the rule for KYC requirement. Apart from that, the government had also levied excise duty of one per cent in the Union Budget 2016-17.
"Gold demand was affected as the industry faced a number of challenges in transitioning to the emerging, structurally transparent system - be it the PAN (permanent account number) card requirement, the excise duty on jewellery, demonetisation or the publicity around income disclosure schemes. This was not unique to gold, but trade practices and embedded buying behaviour created short-term headwinds," said Somasundaram, PR, Managing Director (India), World Gold Council.
Of the two main categories of gold, jewellery demand was hit harder than investment. While the jewellery demand slumped by a massive 22.4 per cent to 514 tonnes in calendar 2016 from 662.3 tonnes in 2015, investment demand was down 17 per cent to 161.5 tonnes in calendar 2016 from 194.9 tonnes in calendar 2015.
"Looking ahead, these policies aim to deliver a stronger economy and a more transparent gold industry, both of which should deliver significant benefits to gold buyers and also accelerate the industry's transformaton to becoming more organised. Gold remains a legitimate saving option for millions and in order for it to play a dynamic role in the economy, it has to enter the mainstream via organised channels. However, we anticipate that calendar 2017 will see a demand range of 650-750 tonnes, due to the introduction of Goods and Services Tax (GST), coupled with the gradual adaptation to the previous years' policy changes," said Somasundaram.
In the overall demand for gold, however, the share of smuggling has declined to 17 per cent (upper limit of 100-120 tonnes) in calendar 2016 compared to around 20 per cent (upper limit of 140-160 tonnes) in 2015 due to a demonetisation-driven liquidity crisis.
"The year 2017 is likely to be more a year of transition for gold demand in India, with a greater shift towards the organised sector. A conservative estimate puts gold demand at 650-750 tonnes in 2017. But, long-term prospects look bullish in India, with an average 850-950 tonnes. For gold to remain in the financial system, the government needs to keep the GST rate (along with import duty) substantially lower than the current prevailing duty of around 13 per cent. It must also incentivise honest taxpayers in gold trade, such as investors in exchange traded funds (ETFs) not seeking delivery of the bullion," said Somasundaram.
Meanwhile, India's gold import declined by a staggering 39 per cent to 648.3 tonnes in calendar 2016 from 1,065 tonnes in the previous year, WGC data showed. Of this, unrefined (dore) import contributed to 141.9 tonnes in calendar 2016 from 229 tonnes in 2015, indicating a decline of 38 per cent. Total gold recovery from scrap, however, jumped by 12 per cent to 89.6 tonnes in calendar 2016 from 80.2 tonnes in the previous year.
On considering 25,000 tonnes of gold holding in Indian households, the average per capita deposits work out to 18 grams.
'Like' scam: Noida man dupes 6 lakh people of Rs 3,700 crore
NOIDA:MMNN:3 Feb. 2017
26-year-old BTech graduate tricked more than 6 lakh people into giving him their money through a Ponzi scheme that promised big returns for hitting 'likes' online. In a little over a year, Anubhav Mittal's Social Trade perpetrated a fraud of Rs 3,700 crore.
The scheme operated through a maze of dubious URLs (online links) sent to phones of subscribers that they were asked to click. Cheekily, these would sometimes be links to Facebook or Twitter profiles of other subscribers. A fake server was set up where these links would terminate.
The scam surfaced with the arrest of Mittal and his two aides - 40-year-old Shridhar Prasad, an MBA, and 25-year-old Mahesh Dayal, who served as tech support - from an office in Noida's Sector 63 on Thursday.
They had floated a fake company called Ablaze Info Solutions Private Limited that operated from there.
The STF team that raided the office found 250 passports, purportedly of some high performers and employees of the fraudsters, who were to be rewarded with a trip to Australia.
The investigation also led police to Rs 520 crore deposited in 12 accounts of the company registered in Canara Bank, Kotak Mahindra Bank, Yes Bank and Axis Bank. The officials are investigating the company's balance sheet, investors' information, and bank accounts to which money was transferred.
Noida has seen a series of call centre fraud busted over the past couple of years but this is the first racket to come to light that used 'like-trading' for a Ponzi scheme and perpetrated a fraud of this scale. Buying likes is common practice among companies that want to look better on social media.
That is what Mittal's Social Trade used to spin its yarn - investors were told the company got business from a third party to increase the latter's online hits on digital platforms. The investors were given 25, 50, 75 and 125 URLs on their phones every day, based on the 'subscription plan'.
Amit Pathak, senior superintendent of police, STF, said the trio had launched Social Trade as a pyramid scheme in 2015, telling people they could earn sitting from home. "They enrolled people with subscription money ranging from Rs 5,750, Rs 11,500, Rs 28,750 and Rs 57,500. The investors were given a user ID and password and told they would get random URLs on their phone and would be paid Rs 5 per like," Pathak said.
For this purpose, they used Ablaze, which rented a four-storey building in Sector 63 for its office. Investors were told that they would receive monthly payments in their registered bank accounts. They were also told if they brought in more subscribers within 21 days, their income would increase. This process was called a 'booster' and, like any other Ponzi scheme, helped build a pyramid of investors. Till Thursday, the number of subscriptions had reached around 6.5 lakh.
As the numbers soared, so did the risks. Most people did not receive the payments they were promised and began complaining. Some went to the police. An FIR was registered at Surajpur police station on January 31 and another FIR on February 1 at Phase III police station. The case was handed over to the STF. It emerged during the probe that around 1 lakh people had filed complaints on emails and text messages to Ablaze for non-payment of dues.
"We found there was no business from any third party for getting online hits. The probe shows the accused had set up a fake server in Ghaziabad and the URL links terminated on the same server," Pathak said.
The trio also shifted the domain name of their website frequently to hoodwink police. The Social Trade website - socialtrade.biz - was transferred to freehub.com in December 2016.
Ten days later, it was shifted to intmart.com. On January 27, the business was shifted to frenzzup.com. Last week the accused had also changed the company's name and put up a board of W-3 Company.
Ablaze paid monthly rent of Rs 7 lakh for the office. Mitta took home a 'salary' of Rs 5 lakh a month while Shridhar received Rs 1 lakh. Police said subscription money was their only revenue and the scheme was doomed to fail.
What is a Ponzi scheme?
A Ponzi scheme is a fraudulent investment operation where the operator promises and pays initial investors short-term returns that are far higher or unusually consistent compared to other investment options available in the market - not from profit earned from legitimate business, but from new capital collected from newer investors, enticed by the promise of high returns.
It's named after Charles Ponzi, who became notorious for using the technique in the US in 1920, borrowing from an idea present in novels such as Charles Dickens' Martin Chuzzlewit and Little Dorrit.
Hundreds of investors gathered outside the office of Ablaze Info Solutions Private Limited in Sector 63 on Thursday when they came to know that the money they had invested in the company disappeared. However, it was a bizarre situation with a group of investors protesting in support of accused Anubhav Mittal and his company while another group protested against the company.
The investors started reaching the office since morning and enquired about the issue from the guards and other staff. A group of investors claimed they were getting the returns as promised by the company officials and the crackdown was not justifiable. The investors started a protest and also raised slogans in support of Mittal. "I invested Rs 57,500 in the company and also got the return as promised. The police action is not good," said Sanjeev Kumar, an investor.
However, a few people also protested against the company and its officials.
5 key things missed in this Budget, which could make life much better
NEW DELHI:MMNN:2 Feb. 2017
Investors on Dalal Street gave a thumbs-up to the Union Budget on Wednesday, only to find the equity benchmark turning choppy on Thursday.
Finance Minister Arun Jaitley's Budget proved a sentiment booster for rural and lower-middle income households and allayed fears of higher taxes on equity investments, and analysts in an ETMarkets poll gave four out of five to it.
But it missed four key areas that needed urgent attention.
No big jump in capital expenditure
While the government was expected to focus more on capital expenditure in FY18, the target set at Rs 3.09 lakh crore crore was roughly 10.7 per cent higher than the FY17 target.
The targeted growth in capital expenditure for FY17 was at 10.6 per cent.
Foreign brokerage BofA-ML said the growth in budgeted public capital expenditure for key infrastructure sectors was 'muted' in comparison with what analysts had anticipated. That has made the broking firm prefer consumption over the investment theme.
The delta in capital expenditure as a percentage of GDP in FY18 at 0.2 per cent, too, was similar to the level estimated for FY17.
Capital infusion in PSU banks isn't enough
The Rs 10,000 crore capital infusion in PSU banks budgeted for FY18 fell far short of the Rs 25,000 crore budgeted in the previous year. That disappointed Dalal Street investors.
Abheek Barua, Chief Economist at HDFC BankBSE -0.53 %, believes while the enhancement in tax exemption limit for NPAs from 7.5 per cent to 8.5 per cent was a welcome step, the additional capital infusion seemed "far too insufficient" given the stress levels.
Brokerage EdelweissBSE 0.51 % Securities was expecting the government to step up the quantum of bank recapitalisation, considering the asset quality and the consequent profitability pressures on PSU banks.The much-anticipated bad bank or public sector asset rehabilitation Agency was also missing.
It could have helped speed up solutions for the rising challenges of NPA for banks and loss -making PSUs, analysts said.
Ambit Capital said even if the government's hands were tied with respect to funding recapitalisation of PSU banks, the announcement of banking sector reforms could have helped resolve the situation at hand.
"The introduction of a 'thin capitalisation' rule in India, the Budget will worsen the problem of highly-indebted companies, which have low Ebitda. This rule says if a company's interest cost is in excess of 30 per cent of its Ebitda, then the excess over 30 per cent of Ebitda will not be tax deductible. As a result, several high debt companies will now end up paying tax, which will reduce their ability to service debt," the brokerage said.
No clarity on GST roadmap
There was no mention of a firm date for GST rollout, but the Finance Minister maintaining excise and other taxes largely unchanged hinted that he was expecting the rollout soon.
"Even as the FM highlighted the fact that he intends to implement GST by July 1, we did not see the government tweak its indirect tax structure to prepare for GST implementation," Ambit Capital said in a report.
"A mention of the date that the Central Government is working towards would have helped create credibility around the government's resolve to implement GST," the report said.
Capital expenditure in FY18 is budgeted to grow 11 per cent YoY from the revised estimates of FY17, which is the same growth rate as last year.
Budgeted public capital expenditure for key infrastructure sectors will likely increase by a muted 10 per cent, as expected by infrastructure sector analysts. On balance, this supports the call for playing consumption over investments, Ambit said.
The Indian banking system, which is the backbone of the economy, has been reeling under asset quality stress. Banks are already struggling with a corporate asset quality cycle that is yet to bottom out. Furthermore, higher NPAs in the SME/retail segments would worsen the situation. Loss of income due to demonetisation, pressure on cash flows owing to higher tax compliance and a decline in the value of real-estate-based collateral will raise asset quality risks.
"Though PSU banks have much lower exposure to retail/real-estate-linked lending than private sector banks, we suspect their quality of lending. These segments have grown at a much faster pace for PSU banks in recent years and high reliance on the segment implies a greater in-built risk in the PSU banks' retail/real-estate-linked lending," the report said.
Disinvestment target looks irrational
The government expects to raise Rs 45,500 crore from disinvestment proceedings this financial year, compared with a Budget estimate of Rs 56,500 crore. Data suggest the FY17 divestment target of Rs 56,500 crore was 2.2 times of what the government actually managed to garner, on an average, in the past six years. Analysts were expecting some rationalisation.
"Miscellaneous capital receipts, an amalgam of conventional disinvestment, strategic divestment and listing of insurance companies are projected to yield Rs 72,500 crore in FY18 is a tall order indeed, given the myriad uncertainties on the global front, specifically the problems of emerging markets that Jaitley alluded to at the beginning of his speech," HDFC Bank's Baruah said.
No universal basic income scheme
Jaitley avoided any mention of the proposed universal basic income (UBI) scheme. Analysts noted that the Economic Survey provided some compelling evidence in its favour as a substitute for the extant plethora of welfare schemes and subsidies.
"The FM could have done more structural stuff such as direct benefits transfers, bring in UBI and cancel all subsidies. He could have done more transformational stuff," Akash Prakash, CEO & Director, Amansa Capital, told.
Oil shares spike as Budget positive on energy, but not due to mega PSU plan
New Delhi:MMNN:2 Feb. 2017
Energy shares gained with oil exploration companies and marketing companies rising, and gas explorers and distributors falling a day after the Union Budget 2017-18 provided for adequate subsidy support, avoided import duty on crude oil, and showed the government's positive intent by announcing creation of a mega integrated oil PSU of international standards.
S&P BSE Oil & Gas index was up 0.73% at 13,124 points amid firm broader markets. BSE Sensex was up 0.36% at 28,243.21 points, while NSE Nifty held above the 8,700-mark at 8,739.3 points, up 0.26%.
Earlier Wednesday, Finance Minister Arun Jaitley proposed setting up an integrated oil PSU (public sector undertaking) by merging companies with synergy. Though it has been proposed earlier as well, the fresh announcement signals the government's intent to support the energy sector in achieving a global scale to compete with the biggest of oil companies.
Oil marketing companies
Jaitley also reduced the subsidy support target for the next financial year by about 9% to Rs 25,000 crore, which is being considered enough despite a recent rise in crude oil prices.
Indian Oil Corp, India's largest refining and fuel marketing company, was trading up 2.41% at Rs 384.45 on BSE; Hindustan Petroleum Corp was up 2.2% at Rs 549.35; Bharat Petroleum Corp was trading up 1.54% at Rs 704.4.
HDFC Securities said in a research note that it does not see any financial burden on oil marketing companies till the time the global crude oil prices remain below $60 per barrel.
Global crude oil prices have risen since November when OPEC, a group of 13 oil producing nations, decided on November 30 to cut global crude oil output by 1.2 million barrels per day. Price of Indian basket of crude oil has risen to $54.24/bbl for the fortnight of January 16, from $53.05/bbl for the preceding fortnight. Further, a slightly weakened Indian rupee against the US dollar extends the pressure upon Indian crude oil buyers.
The Union Budget has also skipped levying import duty on crude oil, which was being feared as part of the government's efforts to boost its revenue in order to help bridge fiscal deficit. The impact is positive on the OMCs, HDFC Securities said.
Oil exploration companies
Explorers also gained. Oil and Natural Gas Corp, the largest, was up 0.85% at 201.9, after rising to the day's high of 204.5. Oil India Ltd, the smaller explorer, was trading up 3.16% at Rs 341.6, near its day's high of Rs 342.8.
ONGC has said that the proposed integration of oil PSUs will be a big positive for the sector as an integrated company is well positioned to handle volatility in crude oil prices, ET Now reported citing ONGC without identifying the spokesperson. Negotiation power of a large oil company is better with its business partners, ET Now report added citing ONGC.
HDFC Securities said the upstream and downstream companies can merge to reduce the impact of crude volatility. The newly formed oil major with strong balance sheet can also plan for big ticket global acquisition of oil fields to reduce import dependency, it added. However, the brokerage sees limited impact on stocks from this aspect while the details are awaited.
Both, Gail India - the gas exploration firm, and Indraprastha Gas - the distributor, fell despite the budget recommendations being positive for their costs and volumes. Gail India was trading down 1.38% at Rs 478.2, while IGL was down 0.55% at Rs 955.7.
Jaitley has proposed reduction in basic custom duty on LNG (liquified natural gas) to 2% from 5%, which would result in lower raw material cost for petrochemical companies. The relative attractiveness of LNG will improve against liquid fuels, HDFC Securities said.
It added that Gail will doubly benefit as feed cost for petchem will reduce and lower LNG price will spur higher gas transmission volumes. All other gas players are also expected to benefit from increased volumes.
The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley presented the General Budget 2017-18 in Parliament today
NEW DELHI:MMNN:1 Feb. 2017
Total expenditure in Budget for 2017-18 has been placed at`21.47 lakh crores and this is expected to have multiplier effects and lead to higher growth.
The total resources being transferred to the States and the Union Territories with Legislatures is Rs. 4.11 lakh crores in 2017-18, as against Rs.3.60 lakh crores in BE 2016-17.
Defence expenditure excluding pensions stands at Rs. 2,74,114 crore
For the first time, a consolidated Outcome Budget, covering all Ministries and Departments, is being laid along with the General Budget
FM: Revenue Deficit for next year is pegged at 1.9% as against 2% mandated by the FRBM Act.
FM: India seen as an engine of global growth and is expected to be one of the fastest growing major economies in 2017.
Terming demonization a right cause, Finance Minister recalled Mahatma's quote that "A right cause never fails".
FM: Agenda is (TEC)- to transform the quality of governance, energise various sections of society and to clean the country from evils of corruption, black money and non-transparent political funding.
FM:Approach is to spend more in rural areas, on infrastructure and poverty alleviation while maintaining fiscal prudence.
The Government will undertake a Mission Antyodaya to bring one crore households out of poverty and to make 50,000 gram panchayats poverty free by 2019, the year marking the 150th birth anniversary of Gandhiji.
Mahila Shakti Kendras to be set up at village level
Budget for the welfare of Women and Children stepped up from Rs. 1,56,528 crores
to Rs 1,84,632 crores in 2017-18.
Allocation for infrastructure development in 2017-18 is Rs.3,96,135 crores.
Railways expenditure will be Rs. 1,31,000 crores, Rs.55,000 crores to be provided by the Government .
Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18.
Further liberalisation of FDI policy is under consideration.
Government decided to abolish the Foreign Investment Promotion Board
FIPB in 2017-18.
An integrated Public Sector 'Oil Major',
to match the performance of huge international and domestic private sector oil
and gas companies, is proposed.
The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed
in stock exchanges.
The Finance Minister announced that a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18.
Rs. 10,000 crores is provided for recapitalization of Banks in 2017-18. The Finance Minister says that an additional allocation will be provided, as may be required.
For the The Pradhan Mantri Mudra Yojana the lending target has been set at Rs. 2.44 lakh crores in 2017-18, doubling it from the ones in 2015-16 with priority to be given to Dalits, Tribals, Backward Classes, Minorities and Women.
The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley presented the General Budget 2017-18 in Parliament here today. This is the first of its kind which included the Railway Budget. This year's Union Budget also does not have Plan and Non-plan classifications and has been advanced by a month to the beginning of February. The Finance Minister Shri Jaitley in his Budget speech said that the agenda is "Transform, Energise and Clean India" (TEC)- to transform the quality of governance for better quality of life.
The aim is to energise various sections of society, especially the youth and the vulnerable and to clean the country from the evils of corruption, black money and non-transparent political funding. He says, the approach is to spend more in rural areas, on infrastructure and poverty alleviation while maintaining fiscal prudence. Economic reforms will be continued promote higher investments and accelerate growth for the benefit of the poor and the underprivileged.
Total expenditure in Budget for 2017-18 has been placed at Rs.21.47 lakh crores. Shri Arun Jaitley said that this is expected to have multiplier effects and lead to higher growth.
The total resources being transferred to the States and the Union Territories with Legislatures is Rs. 4.11 lakh crores, against Rs.3.60 lakh crores in BE 2016-17.
Defence expenditure excluding pensions, is to be Rs. 2,74,114 crores.
The Finance Minister said that he has taken into consideration the need for higher public expenditure in the context of sluggish private sector investment and slow global growth.
He however said that he had kept in mind the recommendation of the FRBM Committee that a sustainable debt should be the underlying basis of prudent fiscal management. He said that considering aspects in the committee report, the fiscal deficit for 2017-18 has been pegged at 3.2% of GDP. The Minister said that he remains committed to achieve 3% in the following year. Shri Jaitley also asserted that the Revenue Deficit for next year is pegged at 1.9% , against 2% mandated by the FRBM Act.
For the first time, a consolidated Outcome Budget, covering all Ministries and Departments, is being laid along with the Union Budget
Shri Arun Jaitley announced that the target for agricultural credit in 2017-18 has been fixed at a record level of Rs. 10 lakh crores. A dedicated Micro Irrigation Fund with an initial corpus of Rs.5,000 crores with an objective to achieve the goal, 'per drop more crop' besides the Long Term Irrigation Fund with total corpus of this Fund to Rs. 40,000 crores will be set he added.
The Finance Minister said that a model law on contract farming would be prepared and circulated among the States for adoption. He also said that Dairy Processing and Infrastructure Development Fund with a corpus of Rs. 8,000 crores over 3 years would be set up in NABARD. Initially, the Fund is to start with a corpus of Rs.2,000 crores.
Shri Arun Jaitley announced that the Government will now undertake a Mission Antyodaya to bring one crore households out of poverty and to make 50,000 gram panchayats poverty free by 2019, the year marking the 150th birth anniversary of Gandhiji. He says the strategy is to utilise the existing resources more effectively along with annual increases and a focused micro plan for sustainable livelihood for every deprived household.
Under the reoriented MGNREGA to support our resolve to double farmers' income, about 10 lakh farm ponds are expected to be completed by March 2017 against the targeted 5 lakh farm ponds. This will contribute greatly to drought proofing of gram panchayats. The budgetary provision of Rs.38,500 crores under MGNREGA in 2016-17 has been increasedto Rs. 48,000 crores in 2017-18, the highest ever allocation for MGNREGA, the Finance Minster added..
The pace of construction of The Pradhan Mantri Gram Sadak Yojana (PMGSY) has accelerated to reach 133 km roads per day in 2016-17, as against an average of 73 km during the period 2011-2014, Shri Arun Jaitley said that the government is committed to complete the current target under PMGSY by 2019. A sum of Rs. 19,000 crores in 2017-18 for this scheme and together with the contribution of States, an amount of Rs. 27,000 crores is to be spent on PMGSY in 2017-18.
An allocation of Rs. 23,000 crores for Pradhan Mantri Awaas Yojana - Gramin from crores is made in 2017-18 against Rs.15,000 in BE 2016-17. Finance Minister said the government proposes to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses. He said the allocation for Prime Minister's Employment Generation Programme (PMEGP) and credit support schemes has been increased more than 3 times.
Shri Arun Jaitley asserted that the total allocation for the rural, agriculture and allied sectors in 2017-18 is Rs.1,87,223 crores, which is 24% higher than the previous year.
In the Sector of education and skill development to benefit you several new measures have been announced in this year's budget . The Pradhan Mantri Kaushal Kendras (PMKK) have presently promoted in more than 60 districts are proposed to be extended to more than 600 districts across the country.
A programme called SANKALP - Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme to provide market relevant training to 3.5 crore youth with a budget of Rs. 4,000 crores has been announced . The next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) is also be launched in 2017-18 at a cost of Rs.2,200 crores to focus on improving the quality and market relevance of vocational training provided in ITIs and strengthen the apprenticeship programmes through industry cluster approach.
A National Testing Agency is proposed to be established as an autonomous and self-sustained premier testing organisation to conduct all entrance examinations for higher education institutions in the country.
Leveraging Information Technology, a platform called SWAYAM is proposed to be launched to teach at least 350 courses by the best faculty online. This will enable students to virtually, attend the courses taught, access high quality reading resources; participate in discussion forums; take tests and earn academic grades.
For higher education reforms in UGC and for secondary education an Innovation Fund to encourage local innovation for ensuring universal access, gender parity and quality improvement with initial focus on 3479 educationally backward blocks are proposed.
For schools flexibility in curriculum to promote creativity through local innovative content with emphasis on science education and introduction of a system for measuring annual learning outcomes is proposed.
Shri Arun Jaitley announced that Mahila Shakti Kendras will be set-up at village level with an allocation of Rs. 500 crores in 14 lakh ICDS Anganwadi Centres. He said these Kendras are for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition.
Recalling announcements made by the Prime Minister, the Finance Minister made on 31st December, 2016 as a part of the nationwide scheme Rs. 6,000 each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and to vaccinate their children.
Budget for the welfare of Women and Children stepped up from Rs. 1,56,528 crores in BE 2016-17 to Rs 1,84,632 crores in 2017-18.
As a part of strengthening overall health infrastructure in the country the Finance Minister announced setting up of two new All India Institutes of Medical Sciences in the States of Jharkhand and Gujarat. He said the Government is committed to take necessary steps for structural transformation of the Regulatory framework of MedicalEducation and Practice in India which includes several steps for increasing post graduate medical seats.
The allocation for the welfare of Scheduled Castes has been stepped up from Rs.38,833 crores in BE 2016-17 to Rs.52,393 crores in 2017-18, representing an increase of about 35%. The allocation for Scheduled Tribes has been increased to Rs.31,920 crores and for Minority Affairs to Rs.4,195 crores. The Government will introduce outcome based monitoring of expenditure in these sectors by the NITI Aayog ,Shri Arun Jaitley.
The Finance Minister asserted that investments in infrastructure sector are in line with the agenda set for this year budget that is to transform the quality of governance for better quality of life to people, to energise various sections of society to enable them to unleash their true potential; and to clean the country from the evils of corruption, black money and non-transparent political funding.
The Finance Minister said that accordingly a total allocation of Rs.3,96,135 crores is made for infrastructure development in 2017-18, out of which Rs. 2,41,387 crores is for rail, roads, shipping.
The total capital and development expenditure on Railways for 2017-18 is to be Rs. 1,31,000 crores. Out of this Rs.55,000 crores provided by the Government . Railway lines of 3,500 kms will be commissioned in 2017-18, as against 2,800 kms in 2016-17. A Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs. 1 lakh crores over a period of 5 years, for passenger safety. Government will lay down clear cut guidelines and timeline for implementing various safety works to be funded from this Kosh.
The Finance Minister said that a new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software. He also said that a new Metro Rail Act will be enacted by rationalising the existing laws to facilitate greater private participation and investment in construction and operation.
For the road sector, a Budgetery allocation of Rs. 64,900 crores is made for 2017-18 for highways against Rs. 57,976 crores in BE 2016-17. He said 2,000 kms of coastal connectivity roads have been identified for construction and development to facilitate better connectivity with ports and remote villages.
Shri Arun Jaitley said that the Airport Authority of India Act will be amended to enable effective monetisation of land assets. The resources, so raised, will be utilised for airport upgradation. The Minister said that select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode.
The Finance Minister said by the end of 2017-18, high speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats, with wifi hot spots and access to digital services at low tariffs. He said accordingly the budget for Bharat Net Project has been stepped up to Rs.10,000 crores in 2017-18. He pointed out that under the BharatNet Project, OFC has already been laid in 1,55,000 kms. The Minister said that a 'DigiGaon' initiative will be launched to provide tele-medicine, education and skills through digital technology.
The Minister also talked of strengthening our Energy sector. He said the Government has now decided to take up the second phase of Solar Park development for additional 20,000 MW capacities. Similarly in the second phase the government has decided to set up two more Strategic Crude Oil Reserves one Chandikhole in Odisha and other in Bikaner in Rajasthan besides the three set up earlier.
Shri Arun Jaitley announced that a new and restructured Central scheme, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18.
The Finance Minister has announced that the government has decided to abolish the Foreign Investment Promotion Board (FIPB) in 2017-18. He said that a roadmap for the same will be announced in the next few months. The minister said that this became possible as The Foreign Investment Promotion Board (FIPB) has successfully implemented e-filing and online processing of FDI applications and more than 90% of the total FDI inflows are now through the automatic route. In the meantime, further liberalisation of FDI policy is under consideration and necessary announcements will be made in due course, the minister added.
Shri Arun Jaitley asserted that a bill will be introduced in the Parliament to curtail the menace of illicit deposit schemes, after the draft bill, placed in the public domain, has been finalized. He said this is part of this budget's and the Government's 'Clean India' agenda. The Minister said that an amendment Bill to change the Arbitration and Conciliation Act 1996 will be introduced to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts.
The Minister asserted that the disinvestment policy announced in the last budget will continue and the Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges.
Shri Arun Jaitley announced that a Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established and it will work in close coordination with all financial sector regulators and other stakeholders.
Other proposals announced by the Minister are:
1. The commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks.
2. The process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc. will be made fully online by SEBI to improve ease of doing business.
3. A common application form for registration, opening of bank and demat accounts, and issue of PAN will be introduced for Foreign Portfolio Investors (FPIs). SEBI, RBI and CBDT will jointly put in place the necessary systems and procedures. This will greatly enhance operational flexibility and ease of access to Indian capital markets.
4. Steps will be taken for linking of individual demat accounts with Aadhar.
5. Presently institutions such as banks and insurance companies are categorised as Qualified Institutional Buyers (QIBs) by SEBI. They are eligible for participation in IPOs with specifically earmarked allocations. It is now proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as QIBs. This will strengthen the IPO market and channelize more investments.
6. Listing and trading of Security Receipts issued by a securitisation company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows in to the securitisation industry and will particularly be helpful to deal with bank NPAs.
The Finance Minister announced that the Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges.
He announced that the shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock exchanges.
Shri Arun Jaitley said that government also proposes to create an integrated public sector 'oil major' which will be able to match the performance of international and domestic private sector oiland gas companies. He said the Government sees possibilities of strengthening our CPSEs throughconsolidation, mergers and acquisitions.
Rs. 10,000 crores for recapitalization of Banks in 2017-18 has been allocated. Additional allocation will be provided, as may be required. The Minister said that Listing and trading of Security Receipts issued by a securitization company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows into the securitization industry and will particularly be helpful to deal with bank NPAs.
For the The Pradhan Mantri Mudra Yojana the lending target has been set at Rs. 2.44 lakh crores in 2017-18, doubling it from the ones in 2015-16 with priority to be given to Dalits, Tribals, Backward Classes, Minorities and Women.
The Finance Minister announced that a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18.
Shri Arun Jaitley said that India is now on the cusp of a massive digital revolution. He said that earlier initiative of our Government to promote financial inclusion and the JAM trinity were important precursors to our current push for digital transactions. He hoped the BHIM app has launched would unleash the power of mobile phones. The Minister said that Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly to specifically benefit those who do not have debit cards, mobile wallets and mobile phones for digital payments and financial inclusion. The minister said that a Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 throughUPI, USSD, Aadhar Pay, IMPS and debit cards. He said there is a proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration. The minister also pointed out that Necessary amendments are proposed in the Finance Bill 2017 to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems. Government is also considering the option of amending the Negotiable Instruments Act suitably to ensure that the payees of dishonoured cheques to be
able to realise the payments.
Saying that the Government is committed to improve the standards of public service and transparent governance, the Finance minister announced that the fallowing measures will be take:
Government now proposes to utilise the Head Post Offices as front offices for rendering passport services to people in far flung areas.
A comprehensive web based interactive Pension Disbursement System for Defence Pensioners will be established to receive pension proposals and make payments centrally.
A Centralised Defence Travel System has now been developed through which travel tickets can be booked online by oursoldiers and officers.
Government is considering introduction of legislative changes, or even a new law, to confiscate the assets within our country of such economic offenders who flee the country,, till they submit to the jurisdiction of the appropriate legal forum.
The government proposes to rationalise the number of tribunals and merge tribunals wherever appropriate.
Recalling that Service to the people was the life-long commitment of the Father of the Nation, Mahatma Gandhi, the Minister said that a High Level Committee under the Chairmanship of the Prime Minister is proposed to be set up to take steps to celebrate the 150th Birth Anniversary of the Mahatma,
The total expenditure in Budget for 2017-18 has been placed at`21.47 lakh crores.
Sensex rallies 500 points, Nifty reclaims 8,700 as investors cheer Budget
New Delhi:MMNN:1 Feb. 2017
The benchmark indices recovered the lost ground as finance minister Arun Jaitley made no reference to long-term capital gains tax on equities, and also set a comfortable fiscal deficit target of 3.2% for the fiscal year 2017-18.
After the Budget speech, the S&P BSE Sensex gained over 400 points to reclaim 28,000 level, while Nifty50 surged above its crucial 8,650 mark.
At 3.05 pm BSE Sensex was up 481 points at 28,138 while the broader Nifty 50 index was quoting at 8,716, up 155 points.
In the broader market, the BSE Midcap and BSE Smallcap indices mirrored the gains in frontline indices to trade over 1% higher.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,479 shares rose and 1,042 shares fell. A total of 109 shares were unchanged.
BSE Oil and Gas index rose 0.74% after Jaitley announced to create an integrated public sector oil major.
Upstream oil major ONGC was trading 0.47% up at Rs 203, while Oil India dipped 0.47%.
Stocks of oil marketing companies, IOC, BPCL and HPCL were trading higher by 1.67%, 0.53% and 2%, respectively.
Shares of irrigation and fertiliser companies rose between 3% to 7% after Jaitley, in his Budget presentation said the agriculture sector is expected to grow at 4.1% in 2016-17 thanks to better monsoon.
Deepak Fertilisers and Petrochemicals climbed as much as 7.3%, Coromandel International rose as much as 5.2%, while Madras Fertilizers and Jain Irrigation Systems gained 5% and 3%, respectively.
Shares of real estate companies moved higher by up to 7% on a slew of budgetary stimulus to real estate sector.
Godrej Properties, Unitech, Oberoi Realty, DLF, Housing Development and Infrastructure Ltd (HDIL), Prestige Estates Projects from the realty index were up between 2% and 7% on the NSE.