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Economy Current Affairs
Economy Current Affairs March 2nd Week 2016
Author : priya
Category : Economy Current Affairs
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Economy Current Affairs March 2nd Week 2016

  1) Indian Railways appointed EY as consultant to discover advertising potential of trains & stations.

 

  • Indian Railways has appointed Ernst & Young (EY) as consultant to identify and leverage on advertising potential of its assets across India.
  • The recent Rail Budget that he plans to leverage on the vast physical infrastructure for advertisement. Special focus will be given to exploit extra potential of stations, trains and land adjacent to tracks.
  • Minister of Railways has always been emphasizing on increasing revenues through non-fare box route especially through advertising. Initial estimates have indicated an advertising potential on Railways in excess of Rs. 5,000 crores over the next few years.
  • EY will identify assets and pricing strategy across 7,000 stations for the purpose of advertising.
  • Railway`s consulting wing, RITES, awarded the mandate to EY after a multi-party bid.
2) Centre To Sign Pacts Worth Over Rs. 72,000 crore At Shipping.
  • The government is expected to sign agreements worth over Rs. 72,000 crore with private players on port-related projects at the Indian Maritime Summit to be held in Mumbai.
  • The Ministry of Shipping has identified 109 projects worth Rs. 72, 864 crore on which agreements will be signed during the event to be held from April 14-16. South Korea will be the partner country for the Summit.
  • The sectors identified for investment include ship-building, ship repair and recycling, port modernization, new port development and multi-model logistic hubs among others.
  • In addition, more than 150 projects will be showcased for investment under the Sagarmala Project for port modernization.
  • Prime Minister Narendra Modi will inaugurate the summit.
  • The government will award tenders for 15 projects worth Rs. 6,700 crore.
3) Government To Divest 5% Stake In Concor.
  • The government will sell 5% stake in Container Corporations of India (Concor) at a minimum price of Rs. 1,195 a piece, to garner Rs. 1,165 crore.
  • However, the disinvestment – including the seventh one of Concor in the current financial year, will fall short of the revised disinvestment target of Rs. 25,000 crore, making it the sixth consecutive year of deficit.
  • The government has already raised over Rs. 18,000 crore through stake sale in six public sector units – Indian Oil (IOC), NTPC, EIL, PFC, REC and Dredging Corporation. In the revised estimates, the government had lowered the disinvestment target for current fiscal to Rs. 25,000 crore from the budgeted Rs. 41,000 crore.
  • The company provides logistics support such as inland container depots, container terminals, transportation by rail and road, warehousing, storage and other value added solutions.
  • The government holds 61.8% stake in the rail container company which is under the administrative control of the Railways ministry.
  • Meanwhile, Indian aluminium company Nalco`s plan to buy back up to Rs. 3,250 crore ($483 million) of government shares will be delayed to the next fiscal year because of procedural delays.
4) Made In India Baleno launched In Japan.
  • Overwhelmed by the response to Maruti Suzuki’s Baleno in the domestic market, Suzuki Motor Corporation (SMC) launched the premium ‘Made in India’ hatchback in Japan.
  • The move came four months after Prime Minister Narendra Modi announced that the country would, for the first time, export cars made domestically by the Maruti Suzuki India Ltd (MSI) to Japan under the ‘Make in India’ initiative.
  • The MSI manufactures Baleno solely at the automaker’s Manesar facility in Haryana. Launched at the Frankfurt Motor Show, Baleno has sold over 38,000 units in India. The company also plans to export the premium hatchback to more than 100 countries.
  • Suzuki’s association with India began in 1969, when the Suzuki Fronte SS caught the attention of Congress leaders Sanjay and Rajiv Gandhi. Their talks with SMC CEO Osamu Suzuki led to the establishment of the Maruti Udyog Limited, which eventually rolled out the first Maruti 800.
  • Maruti Suzuki exports to over 125 countries, including those in Europe, which is proof of the quality of its products. The model being launched the Baleno is a state-of-the-art car developed and manufactured in India through Suzuki’s excellence. It will be exported to 100 global markets, including Japan. I am confident that the Baleno will be a huge success in Japan. I wish the launch complete success.
  • A landmark moment like this bears testimony to the success of the Indian government’s ‘Make in India’ campaign. The launch of the ‘Made in India’ Baleno in Japan is a proud moment for all of us. This reaffirms Maruti Suzuki’s manufacturing potential, and its growing importance in Suzuki Motor Corporation’s global business strategies. I am confident that our Baleno will be well-accepted by Japanese customers as well.
5) CCEA approves Pradhan Mantri Ujjwala Yojana.
  • Cabinet Committee on Economic Affairs, CCEA approved Rs. 8,000 crore scheme to provide cooking gas, LPG connections free of cost to women members of poor households. Cabinet has approved Pradhan Mantri Ujwala Yojana which will be implemented from ensuing financial year, 2016-17.
  • It will provide access to clean cooking and preserve the health of women and families. The decision will fuel Make in India in petroleum sector, and will also create lots of jobs. The scheme is a boost for women’s health as it brings free LPG to poor families that suffered the curse of smoke while cooking.
  • CCEA has also approved policy for grant of extension to Production Sharing Contracts, PSCs for small and medium sized discovered fields. The policy deals with 28 fields and will grant extensions in fair manner and enable companies to take investment decisions on reserves.
  • CCEA also gave its nod to proposal to grant marketing including pricing freedom for gas from High Pressure High Temperature, Deep water and Ultra Deep water areas.
  • The marketing freedom will be capped by a ceiling price arrived at on basis of landed price of alternative fuels. It will help in incentivizing production of natural gas in country and help in enhancing country’s energy security. In a boost to firms like ONGC and Reliance Industries, the Cabinet today approved a new price formula for their undeveloped gas discoveries in difficult areas. This will lead to a near-doubling of rates.
6) PSUs Spent Over Rs. 2400 Crore In CSR In 2014-15.
  • 116 central public sector enterprises have spent an amount of Rs. 2447.59 crore on Corporate Social Responsibility (CSR) activities in 2014-15 and no complaint has been received on misuse of these funds.
  • The members that he understood their concerns and added that he was not ruling out the possibility of misuse. He however added that his ministry had received no "written" complaint regarding which could be acted upon.
  • Speaking about companies in the private sector, the government did not control these companies, but has issued guidelines. "If there is a specific complaint, we can act on it``.
  • As members voiced concern about the spending of funds in the private sector.
7) Capacity utilization criteria for SSP Manufacturing Units scrapped.
  • The Centre has decided to remove the criteria of minimum capacity utilization for Single Super Phosphate (SSP) units that are eligible for subsidy, under the Nutrient Based Subsidy (NBS) Scheme.
  • This will enable small units to avail the subsidy and result in cheaper fertilizers being available to farmers.
  • The decision, which comes into effect immediately, was taken at a meeting of the Union Cabinet.
  • This new policy will put the SSP units on the same footing as other fertilizers, and they will be eligible for subsidy irrespective of quantity of SSP produced and sold for agriculture purposes.
  • Single Super Phosphate is a phosphatic multi-nutrient fertilizer, which contains 16 per cent each of phosphate and calcium, along with 11 per cent sulphur and some other essential micro-nutrients.
  • It is one of the cheapest chemical fertilizers and is suited for crops like oilseeds, pulses, horticulture, vegetables and sugarcane.
  • It was mandatory for SSP units to use at least half of their recognized production capacity or to produce 40,000 MT, whichever was less, per year, to be eligible for subsidy. Though there was some capacity addition in the beginning, the production and consumption of SSP in the country had become stagnant in the last four years.

 

8) Crisil Sees GDP growing at 7.9% in 2016-17.

  • The country`s GDP can grow by 7.9 per cent next fiscal if the monsoon is normal and government implements the reform measures announced so far.
  • The growth forecast, highest by any house and even above the government`s own estimate of 7-7.75 per cent, has been arrived assuming a faster growth in agriculture.
  • The country has faced weather shocks for three consecutive years including two years of deficient rains in 2014 and 2015, and a normal monsoon season this year can lead to a 4 per cent growth in agriculture on lower base effect.
  • Even though he flagged concerns on the banking front, implementation of reforms should help the economy achieve higher growth and termed 2016-17 as the "year of reckoning" which has the potential to illustrate the path which the economy can take.
  • Welcoming the Budget as one with realistic growth and revenue targets, achievement of the divestment target, which the government has trailed in the past, will be keenly watched.
  • Calling the banking sector as the "hardest place", the overall weak assets, including gross NPAs and assets that are likely to slip into NPAs, will rise to 8.9 per cent or Rs 8 trillion, with state-run banks bleeding the most.
9) LIC’s total investments swell to Rs. 19.46 lakh crore.
  • The total investments of Life Insurance Corporation of India (LIC) at the end of FY15 jumped 18 per cent to Rs. 19.46 lakh crore from Rs. 16.48 lakh crore.
  • According to LIC’s annual report for 2014-15, the country’s largest insurer had Rs. 19.43 lakh crore worth of investments in India and Rs. 3,042 crore abroad.
  • The performance of the investments was satisfactory during 2014-15. In respect of non-linked business, the Corporation earned Rs. 1,14,389.72 crore as interest and Rs. 6,314.13 crore as dividend, returning a yield of 8.39 per cent for the year.
  • Another Rs. 18,949.44 crore was realized as net profit from the sale of equities, government securities and other securities (including amortization). In respect of linked business, LIC earned Rs. 4,195.77 crore as interest and Rs. 983 crore as dividend for the year.
  • The overall yield on investments grew 8.22 per cent in FY15 as against 8.08 per cent in FY14.
  • Good gains
  • In the previous year (FY15) when the capital markets rose, the Corporation made good gains by booking profits in its equity transactions.
  • In the current year, when the market has been down, the company has been a net buyer of equities, with investments crossing Rs. 53,000 crore as against Rs. 39,000 crore in the previous fiscal.
  • In the current fiscal, the company also booked income on investments, which stood at about Rs. 10,000 crore. Investments in government securities crossed Rs. 1.5 lakh crore.
10) India to supply 18 Meter Gauge Diesel Electric Locomotives to Myanmar.
  • India will supply 18 Meter Gauge 1350 HP Diesel Electric Locomotives to Myanmar to augment locomotive fleet of Myanmar Railways to meet increasing demand for passenger and freight traffic.
  • A contract to this effect was signed, 2016 at Naypyitaw, Myanmar by Mr. S.B. Malik, Director Technical, RITES Ltd. (a Public Sector Enterprise under Ministry of Railways) and Mr. U. Thurein Win, Managing Director, Myanmar Railways in presence of Mr. U. Nyan Tun Aung, Hon’ble Minister of Rail Transportation, Myanmar and Mr. Gautam Mukhopadhaya, Ambassador of India to Myanmar.
  • The supply contract of locomotives is a vital project being funded under an existing line of credit extended to Myanmar by Government of India. These locomotives will be manufactured by Diesel Locomotive Works, Varanasi with several modern features like microprocessor controls, fuel-efficient engine and ergonomic cab design etc.
  • RITES is making all efforts to augment export of rolling stock manufactured at Railway Production Units. Response from South East Asian markets is very encouraging.
 
11) Moody’s Retains SBI, IDBI Bank Ratings.
  • Moodys Investors Service has affirmed State Bank of Indias (SBI) local and foreign currency deposit ratings at Baa3/P and expects not much deterioration in its asset quality.
  • The agency has also retained IDBI Banks local currency and foreign currency bank deposit ratings at Baa3/P-3 apart from affirming its Baa3 senior unsecured debt and senior unsecured medium-term note programme ratings at (P)Baa3.
  • On retaining SBIs ratings, given the amount of bad loans that SBI has recognized over the years, we believe its asset quality will not come under significant pressure.
  • The affirmation of the ratings also take into account SBIs strong liquidity and funding position. As the largest bank by assets and deposits, SBI accounts for around 16 per cent of system loan and 17 per cent of system deposits.
  • The key remaining asset quality challenges is SBIs exposure to highly leveraged corporates that remain classified as standard assets, despite these groups showing weak debt-to-Ebitda and interest coverage ratios.
  • The agency has also affirmed the senior unsecured debt and senior unsecured medium-term note programme, issued through SBIs London branch at Baa3, apart from retaining SBIs baseline credit assessment at Ba1.
  • Moodys has also retained the ratings on the foreign currency subordinated MTN and foreign currency junior subordinate MTN programme at (P)Ba1 and (P)Ba2, respectively.
  • The agency has a positive outlook on SBIs long-term deposit and senior unsecured debt issued through the London branch.
12) MUDRA refinancing touches Rs. 1,500 crore so far this fiscal.
  • The Micro Units Development and Refinance Agency (MUDRA), set up to provide credit to micro and small units, has so far refinanced Rs. 1,500 crore, mostly to public sector banks and micro-finance institutions (MFIs).
  • Loans were disbursed by banks and MFIs under the Pradhan Mantri MUDRA Yojana (PMMY). Rs. 800 crore has been refinanced to public sector banks.
  • In the first nine months since our inception, refinancing has been done to the tune of Rs. 1,500 crore, mostly to public sector banks and MFIs.
  • Some of the refinanced banks include Bank of Maharashtra, Indian Overseas Bank and State Bank of Travancore.
Disbursements:
  1. Disbursements of Rs. 75,000 crore have been made till last year under the PMMY scheme; the target for this fiscal is Rs. 1.22 lakh crore.
  2. Disbursals have been made to around 1.73 crore beneficiaries, of which 50 per cent are new units and the remaining half existing ones for the purpose of expansion. Loans under the scheme fall under three categories: Shishu loans up to Rs. 50,000; Kishor loans between Rs. 50,001 and Rs. 5 lakh; and Tarun loans, Rs. 5-10 lakh. Shishu loans are for small businesses, while Kishor and Tarun are for larger ones.
  3. To make the MUDRA scheme more attractive, the Centre has cleared the setting up of a Rs. 3,000 crore Credit Guarantee Fund for these loans.
  4. This will provide insurance against default on MUDRA loans to a maximum of 50 per cent.
13) Village Financial Services to get Rs. 10 crore capital from an NBFC.
  • Kolkata-based microfinance institution Village Financial Services (VFS) is expecting a fund infusion of Rs. 10 crore.
  • VFS Pvt Ltd, the Tier-II capital infusion will be done by a non-banking finance company as Tier-II capital.
  • If things go as planned we might witness a fund infusion of Rs. 10 crore from an NBFC.
  • VFS has also obtained approval for another equity infusion of Rs. 3 crore from the Small Industries Development Bank of India (SIDBI); it is currently in the processing stage.
  • The MFI has a net worth of Rs. 32 crore and is mainly promoter-owned.
  • The company is looking to double disbursals this fiscal to around Rs. 400 crore. In the first nine months, its disbursals stood at Rs. 340 crore. Last fiscal (FY15), disbursals stood at Rs. 200 crore.
  • Similarly, the loan outstanding (the loan book after deducting repayments) stood at Rs. 170 crore - a 59 per cent growth over last fiscal’s Rs. 107 crore - for the first nine months of FY16.
  • We expect the loan book to be to the tune of Rs. 200 crore by the end of this fiscal.
  • So far, the MFI has borrowed around Rs. 180 crore, mostly from banks (for this year) at around 15 per cent.
  • The average ticket size of its loans - to women self-help groups - is Rs. 10,000-50,000 and it charges 23 per cent interest. It has a recovery rate of over 99 per cent.
  • VFS is also looking to expand into five more states by the end of this fiscal.
  • While its current operations are in West Bengal, Bihar, Jharkhand and Assam, the MFI is looking to start operations in Tripura this month. Sikkim, Odisha and Uttarakhand are the other states where it is planning to expand operations.

14) Michelin Ties Up With Snapdeal To Sell Tyres Online.

  • French tyre major Michelin tied up with online marketplace Snapdeal to sell its products through the e-commerce platform.
  • Snapdeal with its large subscriber base and pan India reach has been an obvious choice. We believe this new channel will augment our existing distribution and enable our dealers with a parallel sales pipeline.
  • Under the partnership, consumers can place an order online via Snapdeal to purchase Michelin tyres from an authorized dealer and request for fitment at a time and place of their choice.
  • The consumer has the option of same day free fitment, as well as access to exclusive offers on services like alignment and balancing.
  • Recently launched omni channel platform Janus will deliver the convenience of online product discovery and offline installation services at the nearest location.
15) Kotak Mahindra Group ties up with Canada Pension Plan for investment in Indian stressed assets.
  • The Kotak Mahindra Group signed an agreement with Canada Pension Plan Investment Board (CPPIB) for investment in stressed assets in India, a boiling matter that eats into bank profitability.
  • The agreement facilitates a total investment of up to US $525 million in the asset class, with CPPIB having the ability to invest up to US $450 million.
  • The current environment has created a much larger opportunity that requires significant capital commitment CPPIB put patient capital to work, backed by strong and active asset management, to capitalize on the stressed assets market.
  • The Kotak Mahindra Group, and its affiliate Phoenix ARC, has been a player in the distressed and structured credit market for over a decade.
  • This investment is an important step in CPPIB`s strategy to build a diversified credit business and will add to our direct credit investment capabilities in India.
  • Kotak will act as an advisor. Through this agreement, CPPIB will aim to invest in assets that suits their long-term investment mandate.
16) DBS Likely To Acquire Royal Bank Of Scotland`s India Operations.
  • Singapore-based banking and financial services company DBS (Development Bank of Singapore) is likely to buy Royal Bank of Scotland`s Indian onshore operations. The deal potentially valued at Rs. 1,000 crore and is expected to be finalized.
  • The transaction includes three main parts of RBS` India operations - a network of 10 branches, corporate loan platform and debt capital market.
  • RBS had a balance sheet of Rs. 19,000 crore and loan book of Rs. 11,150 crore, according to financial statements posted on its website. "For the entire business, including debt corporate market division, corporate loan portfolio and branch networks, the price is likely to be around Rs. 1,000 crore. That would be much below the expectation and less than the net worth of India operations.
  • The Infrastructure Development Finance Company (IDFC) was also reportedly keen to acquire RBS` Indian assets but later "walked out of the deal" because it felt the asset portfolio would not add any value to its operations.
  • RBS Chief Executive Officer Ross McEwan took over its leadership, after which the bank has exited many countries around the world and has sold its assets as well. However, National Bank of Abu Dhabi (NBAD) bought RBS`s offshore loan book in India for $816.8 million (about Rs. 5,422 crore).
17) Over Rs. 1 lakh crore disbursed under MUDRA Yojana.
  • Loans worth Rs. 1.09 lakh crore have been given to small entrepreneurs under the Pradhan Mantri MUDRA Yojana.
  • Loans worth over Rs. 1.09 lakh crore were given to over 2.96 crore beneficiaries.
  • Under Pradhan Mantri MUDRA Yojana, which was launched in last year, loans between Rs. 50,000 and Rs. 10 lakh are provided to small entrepreneurs.
  • The Micro Units Development and Refinance Agency Ltd (MUDRA) focuses on the 5.75 crore self-employed who deploy funds totaling Rs. 11 lakh crore and provide jobs to 12 crore people.
  • The banking sector has been allocated an overall disbursement target of about Rs. 1.22 lakh crore during 2015-16 for MUDRA loans.
18) Union Government imposed anti-dumping duty on plastic-processing imports.
  • Union Government imposed anti-dumping duty of up to 44.7 per cent on import of plastic-processing machines for five years.
  • It will be implemented on the imports from Chinese Taipei, Malaysia, the Philippines and Vietnam.
  • The duty will be levied on all kinds of plastic-processing or injection-moulding machines, also known as injection presses.
  • The safeguard duty was imposed after it was noticed that these imports from other countries led to deterioration of performance of the domestic industry.
  • Anti-dumping duty of 27.98 per cent has been imposed on plastic-processing machines imported from Chinese Taipei.
  • Safeguard duty of 44.74 per cent and 30.85 per cent has been imposed for the same products imported from Malaysia and the Philippines. Imports from Vietnam will attract a levy of 23.15 per cent.
  • Plastic-processing or injection-moulding machines are used for processing or moulding plastic materials. Anti-dumping measures are taken to ensure fair trade and provide a level-playing field to the domestic industry. They are not a measure to restrict imports or cause an unjustified increase in cost of products.

 

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