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Economy Current Affairs March 4th Week 2016

1) Nestle India ties up with Paytm to promote KitKat Duo.

  • Nestle India is beefing up its chocolate portfolio with new products.
  • As part of its market strategy to price its ‘premium’ products cheaper, the company introduced a new variant of KitKat, called KitKat Duo.
  • To promote KitKat Duo, it has tied up with Paytm for cash back offer, besides a cross-promotion agreement with the yet to be released Kareena Kapoor and Arjun Kapoor starrer Ki & Ka.
Lower price point:
  • Most players introducing new brands and variants at the Rs. 20-plus range in this category. Pricing at Rs. 10 for KitKat Duo is an attempt to offer innovations at a lower price point.
  • Earlier this year, the company had launched Munch Nuts, which come with peanuts and peanut crème’ as part of its plan to grow the chocolate category.
Target new users:
  1. Talking about the limited period Paytm collaboration, that the brand’s core consumer is in the age group of 17-21 years, the mobile cash-back along with KitKat packs is a strategy to increase brand penetration among new users, while rewarding the existing users.
Dual treat:
  1. With R Balki’s Ki & Ka set for release, Since Ki & Ka celebrates the individuality of two people who come together as a couple, it resonated with the thought of KitKat Duo, which has two flavours - brown and white chocolate - in a single product.
  2. On the growth rate in the chocolate category, it is still at a nascent stage in India in terms of penetration, was witnessing a very healthy growth in the last few years but it saw a bit of a slowdown in 2015 for all the brands.
2) GMR arms divest 51% stake in OSE Hungund highway venture.
  • GMR Highways Ltd and GMR Infrastructure Ltd have signed a share purchase agreement with joint venture partners to divest its 51 per cent stake in GMR OSE Hungund Hospet Highways Pvt Ltd.
  • The deal will help GMR reduce its debt by Rs. 1077.97 crore and create liquidity of Rs. 85 crore.
  • The GOHHHPL special purpose vehicle operates Hungund Hospet section of National Highway No.13, a 99 km project.
  • The project was bagged by the GMR OSE consortium under the design, build, finance, operate and transfer basis. The sale is envisaged in two tranches.
  • Under Tranche I, joint venture partners have bought 14.99 per cent stake of the project from GMR Group.
  • Tranche II will be completed post approvals from NHAI, lenders of GOHHHPL and other closing conditions required for such transactions. While the sale consideration is Rs. 85 crore, it is 1:1 times book value of investment.
  • This transaction signifies about the GMR Group’s commitment and ability to successfully implement its Asset-Light-Asset-Right strategy under challenging market conditions.
3) IL&FS Engineering bags Rs. 154 crore deal.
  • A joint venture of IL&FS Engineering and Construction Company and Unitech Power Transmission Ltd has received a letter of award from Power Grid Corporation of India Ltd worth Rs. 153.99 crore turnkey contract to execute a 765 kV transmission line in Gujarat.
  • In a statement to the BSE, the company has informed that the scope of work includes supply contract for tower package for 765 kV Bhuj-Banaskanta Transmission Line associated with Green Energy Corridor relating to the Inter-State Transmission Scheme.
  • The Rs. 153.99 crore project, funded by The KFW Bank, is to be executed in Gujarat within 24 months from the date of the award. IL&FS Engineering has won the contract under International Competitive Bidding process.
  • The company has executed transmission lines, sub-stations and distribution works in Andhra Pradesh, Telangana, Uttar Pradesh, West Bengal, Haryana and Karnataka.
  • It is currently executing rural electrification works in Uttar Pradesh for Paschim Vidhyut Nigam Ltd worth Rs. 389 crore and for Madhayanchal Vidyut Nigam Ltd worth Rs. 475 crore.
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4) NTT Data to Buy Dell’s IT-Services Arm.

  • Japan`s NTT Data Corp has agreed to buy Dell Inc`s information technology consulting division for over $3 billion to expand in North America and bolster its services business.
  • The move will allow US computer maker Dell to trim some of the $43 billion (Rs. 2.86 lakh crore) in debt it is taking on to fund its pending cash-and-stock acquisition of data storage provider EMC Corp, a deal worth close to $60 billion (Rs. 3.99 lakh crore).
  • The sale will also offer NTT Data, one of the world`s largest technology services companies, a bigger foothold in the US, where it is looking to expand in healthcare IT, insurance and financial services consulting.
  • Dell has also made progress in syndicating $10 billion (Rs. 66,527.5 crore) of its financing package for the EMC acquisition dubbed `term loan A`. This is expected to be increased in size by $500 million (Rs. 3,326.4 crore) to $750 million (Rs. 4,989.6 crore) due to strong demand, with the extra money to be used to downsize some of the more expensive tranches of the remaining $33 billion (Rs. 2.19 lakh crore) in financing.
  • The group of banks participating in the term loan A has been expanded from the original eight underwriters to 25, with more expected to join before the syndication is completed.
  • Dell declined to comment, while NTT Data did not immediately respond to a request for comment. Reuters had reported first that NTT Data was in exclusive talks to buy Dell`s IT services unit.
  • Dell has also been speaking to private equity firms about selling Quest Software, which helps with information technology management, as well as SonicWall, an e-mail encryption and data security provider, Reuters has previously reported. Together, Quest and SonicWall could be worth up to $4 billion (Rs. 26,611 crore).
5) Government to infuse Rs. 5,050 crore in PSU banks soon.
  • The government is likely to infuse additional capital of about Rs. 5,050 crore in some public sector banks this week.
  • Parliament has already approved Rs. 5,050 crore for meeting additional expenditure on recapitalization of public sector banks. The capital infusion by the Finance Ministry in the identified banks would be done soon.
  • Likely contenders for the fresh round of infusion include Central Bank of India, Indian Bank, UCO Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India.
  • It will be part of the Rs. 25,000 crore capital infusion plan earmarked for the current fiscal.
  • In the first tranche, as many as 13 public sectors banks were given fund support of Rs. 19,950 crore. Of this, SBI got the highest amount of Rs. 5,393 crore followed by Bank of India Rs. 2,455 crore.
  • Besides, government infused Rs. 2,229 crore in IDBI Bank, Indian Overseas Bank Rs. 2,009 crore and Punjab National Bank Rs. 1,732 crore.
  • In 2015, the government announced a revamp plan ‘Indradhanush’ to infuse Rs. 70,000 crore in state­owned banks over four years, while they will have to raise a further Rs. 1.1 lakh crore from the markets to meet their capital requirements in line with global risk norms Basel­III.
  • In line with the blueprint, PSU banks will get Rs. 25,000 crore this fiscal and also in the next fiscal. Besides, Rs. 10,000 crore each would be infused in 2017­18 and 2018­19.
6) GVK sells stake in Bangalore International Airport to Fairfax.
  • GVK Power and Infrastructure will sell 33 per cent of total stake in Bangalore International Airport Ltd to Fairfax India for Rs. 2,149 crore, a deal that will trim the group`s debt burden by more than Rs. 2,000 crore.
  • The transaction, expected to be completed by mid-2016, would also help the diversified entity save around Rs. 300 crore annually on interest costs.
  • Bangalore International Airport Ltd (BIAL) owns and operates the Kempegowda International Airport Bengaluru. The airport started operations in 2008.
  • In BIAL, GVK Group holds 43 per cent stake, Siemens Project Ventures GmbH 26 per cent and Flughafen Zurich AG Ltd 5 per cent while state-owned entities Airport Authority of India and Karnataka State Industrial Investment & Development Corporation Limited hold 13 per cent each.
  • GVK Power & Infrastructure would divest 33 per cent stake in BIAL to Fairfax India Holdings Corp through their wholly-owned subsidiaries in Mauritius for an aggregate investment of Rs. 2,149 crore.
  • Grappling with substantial debt burden, GVK Power has been exploring avenues, including possible IPO of its airport business, to raise funds.
  • GVK Airport Developers, a wholly-owned subsidiary of GVK Power, had initiated a financing process last year to reduce its debt obligations. The deal is an important and successful milestone in deleveraging the balance sheet.
  • All proceeds from this stake sale shall be used to bring down our debt obligations to our lenders.
 
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7) 100% FDI allowed in e-commerce marketplace model.

  • Government has given the green light to 100% FDI in the marketplace format of e-commerce retailing with a view to attract more foreign investments.
  • As per the guidelines issued by the Department of Industrial Policy and Promotion (DIPP) on FDI in e-commerce, foreign direct investment (FDI) has not been allowed in inventory-based model of e-commerce.
  • At present, global e-tail giants like Amazon and eBay are operating online marketplaces in India, while homegrown players like Flipkart and Snapdeal have foreign investments even as there were no clear FDI guidelines on various online retail models.
  • To bring clarity, the DIPP has also come out with the definition of `e-commerce`, `inventory-based model` and `marketplace model`.
  • Marketplace model of e-commerce means providing of an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
  • The inventory-based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to consumers directly.
  • A marketplace entity will be permitted to enter into transactions with sellers registered on its platform on business-to-business basis.
  • An e-commerce firm, however, will not be permitted to sell more than 25% of the sales affected through its marketplace from one vendor or their group companies.
  • In order to provide clarity to the extant policy, guidelines for FDI on e-commerce sector have been formulated.
  • The government has already allowed 100% FDI in business-to-business (B2B) e-commerce.
 
8) LIC increases stake in IDBI Bank to 14.37%.
  • State-owned lender IDBI Bank informed stock exchanges that Life Insurance Corp. (LIC) of India now owns 14.37% stake in the bank, after a preferential issue of shares.
  • The life insurance behemoth previously owned 7.21% in the bank, which transferred 7.16% equity stake or 15.87 crore shares to LIC.
  • With this transaction, IDBI Bank is now the second largest bank holding for LIC. The insurance provider owned 21.22% stake in Corporation Bank, the highest equity it holds in any lender.
  • Apart from these two, LIC owns 14.36% stake in UCO Bank and 13.75% stake in Canara Bank, at the end of the third quarter. The government directly owned an 80.16% stake in IDBI Bank.
  • IDBI Bank’s board had approved the bank’s plan for a preferential issue of capital to LIC, aggregating up to Rs. 1,500 crores.
  • Earlier this month, the state-owned lender had stated that it plans to raise Rs. 19,000-20,000 crore worth of equity capital, through all available options such as qualified institutional placements (QIPs) and preferential allotment to large strategic investors.
  • Apart from this, the bank will also try to raise debt capital worth Rs. 4,000 crores by issuing Tier-I bonds and Rs. 8,000-9,000 crore through tier-II bonds during the next three years.
  • Mint had reported that the International Finance Corp. (IFC), US-based private equity firm TPG Capital and UK’s development finance institution CDC Group are all in talks with the government to buy stake in IDBI Bank.
  • Banks have to maintain a minimum CAR of 9.625%, according to the guidelines on the implementation of Basel III norms issued by the Reserve Bank of India (RBI).
  • An asset quality review of RBI had recently asked banks to recognize weaker assets as bad loans and make provision for it. This took a toll on the profitability of public sector banks in the quarter ended.
 
9) CBDT signed 11 unilateral Advance Pricing Agreements.
  • The Tax Department has signed 11 more Advance Pricing Agreements (APAs) with taxpayers covering overseas transactions within group entities so as to reduce litigations.
  • Central Board of Direct Taxes (CBDT) has signed 11 unilateral APAs. With this signing, India has entered into 59 bilateral and/or unilateral APAs. 50 of these agreements have been signed in the current financial year.
  • Unilateral APAs refer to the signing of agreement with the Indian tax authorities and an MNC, while bilateral APAs also involve the government of the country where an overseas company is located.
  • APA, introduced in the Income Tax Act in 2012, provides for pact between taxpayers and the IT department on an appropriate transfer pricing methodology for determining the value of assets and ensuing taxes on intra-group overseas transactions.
  • The agreements cover a range of international transactions including corporate guarantees, royalty, software development services, IT enabled services and trading. The agreements pertain to different industrial sectors like telecom, media, automobiles, IT services, etc.
  • Some of the agreements have rollback provisions and provide certainty to the taxpayers for nine years with regard to the covered international transactions.
  • Rollback provisions in APAs were introduced in 2014 Budget to provide certainty on the pricing of international transactions for four years (rollback years) preceding the first year from which APA becomes applicable.
  • The number of applications is indicative of the wide international and national appreciation of the India`s APA programme`s ability to address complex transfer pricing issues in a fair and transparent manner.
 
10) Jaitley launches `Make in India` conference in Sydney.
Finance Minister Arun Jaitley launched ‘Make in India’ conference in Sydney and asked Australian businesses to be the part of India’s growth story.
India becomes the key focus of the world and ‘Make in India’ is one of the key focuses of the government.
India could manage to become a very low cost service provider but failed to transform into a low cost manufacturing.
The Minister pinpointed that with People in agri sector moving out, there was a need to achieve the target of manufacturing sector to occupy the 25 per cent of India’s GDP. Now is the time when ‘Make in India’ campaign can translate into actual activities.
India has to invest in its infrastructure in a bid to prepare a base for an economy of this huge size. Manufacturing must occupy a space.
The conference was launched in the presence of Australia’s Special Envoy for trade Andrew Robb, Indian High Commissioner Navdeep Suri, CII Director-General Chandrajit Banerjee, CII President Sumit Mazumder and NEW Parliament Secretary for Major Events and Tourism Jonathan O’Dea.
Mr. Jaitley indicated that India has been given a second chance to transform itself into manufacturing hub with ‘Make in India’ campaign launch.
Indian economy was doing well despite global downturns and if the global tailwinds become more supportive, India could perform even better.
Global investors must seriously look at in terms of investing in India.
The constituency that supports economic reforms in India are far more bigger than the one which obstructs it. India becoming an aspirational society has significantly increased.
Mr. Jaitley also cited the size of the market that India offered.
Any market that occupies 1/6 of the global population, 35-40 per cent of them in middle class. Its purchasing power increasing by the day.
The Minister further assured the investors that tax system in India was also being gradually brought to global standards.
 
11) Piramal Enterprises to invest Rs. 900 crore in Essel Green Energy.
  • After real estate, Ajay Piramal has turned his focus on to renewable energy. Piramal Enterprises Ltd (PEL) will, in collaboration with Netherlands-based APG Asset Management, invest Rs. 900 crore ($132 million) in Subhash Chandra’s Essel Green Energy Private Ltd.
  • Essel Green Energy currently owns 160 MW of independent solar power projects in four States, of which 110 MW is operational and 50 MW is currently under execution. The company plans to ramp up its solar power capacity to 1,000 MW in the next 2-3 years.
  • Essel Green had recently installed a 50-MW solar project in Uttar Pradesh. The Centre has set a target of installing 100 gigawatts (GW) of solar power capacity and 60 GW of wind power capacity by 2022.
  • APG represents over 30 per cent of all collective pension schemes in the Netherlands and managed pension assets of more than €400 billion.
  • Over the last one year a number of national and international firms have announced investments in the renewable energy sector, including, SunEdison, SoftBank and Enel.
12) Japan to lend Rs. 14,000 crore for Indian projects.
  • The Government of Japan has committed a loan of JPY 242.2 billion (around Rs. 14, 251 crore) for various projects across India, including Jharkhand, Odisha, Madhya Pradesh and the North East. The Official Development Assistance is to be deployed for a transmission system strengthening project in Madhya Pradesh, an integrated sanitation improvement project in Odisha, a dedicated freight corridor project, a road network connectivity improvement project in the North East, and a micro drip irrigation project in Jharkhand, according to a government release.
  • The Government of Japan has committed a total of JPY 390 billion in the current financial year which is the highest amount committed in a year. India and Japan have had mutually beneficial economic development cooperation since 1958.
  • In the last few years, economic cooperation between India and Japan has strengthened and grown into a strategic partnership.
13) Mallya offers to repay Rs. 4,000 crore to banks.
  • After being pursued for years by a consortium of banks, former liquor baron Vijay Mallya has offered to pay Rs. 4,000 crore of the Rs. 9,091 crore he and his now-defunct Kingfisher Airlines owe the lenders.
  • According to a proposal submitted to the Supreme Court, Mallya has agreed to pay Rs. 2,000 crore up front and an additional Rs. 2,000 crore. The proposal was put forward after Mallya had two rounds of discussions with the lenders through video conferences.
  • The proposal was submitted to the court by Mallya’s counsel CS Vaidyanathan. The Supreme Court asked the consortium of banks to respond to the proposal within a week, and posted the matter for hearing on April 7.
  • Asked by the SBI counsel where Mallya is residing right now, Vaidyanathan said he is still abroad. Mallya has been summoned to appear before the Enforcement Directorate under the provisions of the Prevention of Money Laundering Act, but it is not clear if he will do so now.
  • The lenders are examining the proposal, but disclosed no details. Apart from Rs. 4,000 crore, Mallya has agreed to pay an additional Rs. 2,000 crore if he wins a case against GE Corp.
  • SBI is keen to ensure that the interests of all the banks are sufficiently protected before it takes a decision. If the proposal is accepted, Mallya will be forced to disclose the source of the Rs. 4,000 crore he has agreed to pay. 

 

Economy Current Affairs March 3rd Week 2016

1) Bharti Airtel buys Videocon Telecom for Rs. 4,428 crore.

  • India’s largest telecom operator by subscriber base, Bharti Airtel, it has acquired Videocon Telecom for Rs. 4,428 crore.
  • With this, Bharti Airtel will get the rights to use 2X5 MHz of spectrum in the 1800 band allocated to Videocon by the government. Idea Cellular had terminated its spectrum deal with Videocon under which it was supposed to buy two circles - Gujarat and Uttar Pradesh (West) - for Rs. 3,310 crore.
  • After deal, Bharti’s 4G coverage is likely to go up to 19 circles from the current 15.
  • Bharti Airtel has entered into a definitive agreement with Videocon Telecommunications (VTL) to acquire, at an aggregate consideration of Rs. 4,428 crore, rights to use 2 x 5 MHz spectrum in the 1800 MHz Band allotted to VTL by the government.
  • Bharti will acquire rights to use Videocon`s spectrum in Bihar, Haryana, Madhya Pradesh, UP (East), UP (West) and Gujarat.
  • The closing of the transaction is subject to satisfaction of the standard conditions, including conditions stated in the Spectrum Trading Guidelines.
  • The move comes after Idea CellularBSE, a Bharti Airtel rival, terminated its spectrum trading agreement with Videocon Telecom for the latter`s Gujarat and UP West circles, signed for Rs. 3310 crore.
  • Bharti`s shares rose 2.6% to Rs. 351.55 just after the announcement BSE.
2) Hitachi to setup ATM making firm in India.
  • Hitachi-Omron Terminal Solutions Corp (Hitachi-Omron Terminal Solutions) has established Hitachi Terminal Solutions India Pvt Ltd (Hitachi Terminal Solutions India) to be based in Bengaluru as an ATM manufacturing company.
  • The new company has been set up with a capital of Rs. 100 crore and is set a target to produce 1,500 units of ATMs per month at the end of calendar year 2016. The new entity is expected to commence production.
  • Aimed at strengthening the ATM business in India, Hitachi Terminal Solutions India will allow Hitachi-Omron Terminal Solutions to promptly accommodate the needs of the market, strengthen cost competitiveness, shorten the production lead time from order entry to shipment and expand the business of cash recycling ATMs.
3) 5600 wilful defaulters owe banks Rs. 60,000 crore.
  • More than 5,600 borrowers, who owe banks close to Rs. 60,000 crore, have been declared wilful defaulters by lenders, data from credit information bureau CIBIL shows. These instances of wilful default are those where banks have filed suits.
  • Not surprisingly, the country’s largest lender State Bank of India (SBI) is owed Rs. 12,091 crore, followed by another state-run lender Punjab National Bank (PNB) which has receivables of Rs. 9,445 crore lent to 698 borrowers.
  • If the non-suit filed accounts are also considered, then close to a third of PNB’s gross non-performing assets (NPAs) of Rs. 34,338 crore have resulted from wilful defaults. Of this amount of Rs. 10,869 crore, the top 10 wilful defaulters together owe the New Delhi-headquartered bank Rs. 3,554 crore.
  • Kotak Mahindra Bank has the highest amount of loans stuck with wilful defaulters among private sector banks at Rs. 5,442 crore. Wilful defaults for private sector banks stood at Rs. 10,250 crore and at Rs. 463 crore for foreign banks.
  • According to RBI guidelines, a borrower is termed a wilful defaulter if he has defaulted in meeting the repayment obligations to the lender even when it has the capacity to repay, or has not utilized the money from the lender for the specific purposes for which finance was availed and has diverted the funds for other purposes.
4) Aadhaar enabled e-KYC can save Rs. 10,000 crore over next 5 yrs.
  • Aadhaar enabled e-KYC process could save over Rs. 10,000 crore for banks and telecom operators over the next five years.
  • A development consulting firm, using Aadhaar enabled e-KYC process for customer acquisition, could be highly beneficial for banks and telecom operators in India.
  • If e-KYC is adopted for customer on-boarding by banks (for savings bank account opened through branches and alternate channels) and by MNOs (for pre-paid mobility), an estimated Rs 10,000 crore can be saved over the next five years (by 2021).
  • Apart from substantial cost savings for banks and financial institutions, Aadhaar enabled e-KYC is significantly more efficient compared to current paper-based KYC.
  • Customer enrolment processes followed by banks also takes longer time and it can be two to four weeks before an account is activated. Whereas Aadhaar e-KYC enabled bank accounts can be activated and ready to transact in a few minutes.
  • Given that e-KYC provides near instant verification of customers` identity and their address, substantial cost reduction can be achieved through elimination of paper based verification, movement and storage being replaced by digital processes.
  • Further, automation of the KYC verification process leads to a more efficient process that takes less time, thereby offering faster customer on boarding.
5) India has signed $35 million loan agreement with The World Bank for MP project.
  • India and the World Bank signed a $35 million loan agreement for Madhya Pradesh Citizen Access to Responsive Services Project.
  • The project aims to improve access and quality of public services in the state through implementation of the Public Service Delivery Guarantee Act, 2010.
  • The project size is $50 million, of which $35 million will be financed by the Bank, and the remaining amount will be funded out of State Budget.
 
6) GOI allows 49% automatic route FDI in Insurance.
  • Seeking to attract more foreign investment, the government has relaxed FDI norms for the insurance sector by permitting overseas companies to buy 49 per cent stake in domestic insurers without prior approval.
  • Currently, up to 26 per cent FDI is permitted through the automatic approval route. For FDI up to 49 per cent, the approval of the Foreign Investment Promotion Board is required.
  • The foreign investment proposals up to 49 per cent of the total paid up equity of the Indian insurance company shall be allowed on the automatic route subject to verification by the Insurance Regulatory and Development Authority of India.
  • There are 52 insurance companies operating in India, of which 24 are in the life insurance business and 28 in general insurance.
  • During April-December 2015, FDI into the country grew by 40 per cent to $29.44 billion.
7) Cisco to invest $100 millions in India; to train over 250,000 students.
  • Joining the league of global technology giants who are making a beeline to invest into and nurture the booming India startup ecosystem, US networking major Cisco has committed $100 million over the next 18 to 24 months. The series of investments will include $40 million that will be used to fund early-stage and growth-stage companies in the country, and train around 250,000 students by 2020.
  • The rest of the funds will go towards opening six new innovation labs and three centres of expertise, apart from collaborating with universities and making other investments for skill development, Cisco announced in the presence of its executive chairman John Chambers.
  • Cisco will collaborate closely with state governments on strategic initiatives, "India is well positioned to lead in digitization".
  • India may have been slow to adopt technology but it is leapfrogging now as compared to other Asian countries. "The entire economy is burgeoning because of digital economy".
  • The company has expertise in areas such as security, cloud, and the Internet of Things which it can lend to emerging companies. "There is a lot of scope for development in IP driven technology software companies in India``.
  • The $143 billion firm has over 10,000 people in India. It is also setting up a manufacturing base in Pune to locally make products to "support the Digital India vision" and aims to eventually make it an export hub.
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8) Government cancels recognition of Delhi Stock Exchange.

  • The government has formally withdrawn the recognition of Delhi Stock Exchange, more than a year after capital market regulator Sebi derecognized the bourse citing "serious irregularities" in its functioning.
  • DSE was among the few bourses that were given permanent recognition by the Securities and Exchange Board of India (Sebi), as per information available on the regulator`s website.
  • Under certain provisions of the Securities Contracts (Regulation) Act, 1956, the recognition to a recognized stock exchange can be withdrawn if it "has not been corporatized and demutualised within the specified time".
  • Sebi had notified DSE Ltd (Corporatization and Demutualization) Scheme. The bourse was to be demutualised.
  • Under demutualisation, management and trading at a stock exchange are separated while corporatization refers to running a bourse like a company.
  • After finding "serious irregularities" in its functioning, Sebi had earlier decided to withdraw recognition granted to the exchange.
  • I note that serious irregularities have been found in the functioning of Delhi Stock Exchange at the time when DSE was taking steps for demutualization.
  • It is seen that for completing the demutualization process the erstwhile board of DSE had overlooked the due transfer of shares in demat accounts and receipt of funds by the appointed date.
9) Nasscom warehouse to come up at Sunrise Startup Village.
  • National Association of Software and Service Companies (Nasscom) will be allotted space at Sunrise Startup Village at Rushikonda to set up a startup warehouse as part of an agreement signed with the State government.
  • Nasscom will provide co-working space with comprehensive environment for incubation of startups with regular community events, mentorship, and venture capital funding.
  • As per the arrangement, Nasscom will be provided 8,500 square ft. of area for incubating 50 startups a year (25 every six months).
  • Nasscom has already started warehousing at several metropolis and Tier II cities like Kochi and Pune. It has drawn up an action plan to incubate 10,000 startups by 2023 to create a large pool of skilled talent. It is also known as 10K Project.
  • Visakhapatnam is all set to become a startup hub due to emphasis being laid to encourage innovative ideas among youngsters.
  • An innovation fund with an allocation of Rs. 100 crore was being created as part of IT and Startup Policy to encourage innovation in various fields to create several young entrepreneurs and employment for many.
10) India’s current account deficit narrows to 1.3% of GDP.
  • India`s current account deficit (CAD) narrowed to 1.3% of GDP in third quarter of the fiscal as against 1.5% in the same period last year, mainly on account of lower trade deficit.
  • India`s CAD at $7.1 billion (1.3% of GDP) in Q3 of 2015-16 was lower than $7.7 billion (1.5% of GDP) in Q3 of 2014-15 and $8.7 billion (1.7% of GDP) in the preceding quarter.
  • The contraction in CAD was primarily on account of a lower trade deficit ($34 billion) as against in Q3 of last year ($38.6 billion) and $37.4 billion in the preceding quarter.
  • On a cumulative basis, the CAD narrowed to 1.4% of GDP 1.7% in the corresponding period of 2014-15, on the back of the contraction in the trade deficit.Net services receipts moderated on a year-on-year basis largely due to fall in export receipts in transport and financial services, though there has been a marginal improvement over the preceding quarter.
  • Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $15.8 billion, a decline from their level in the preceding quarter as well as from a year ago.
  • Non-resident Indian deposits moderated significantly in Q3 of 2015-16 over their level in Q3 last year as well as the preceding quarter, Foreign exchange reserves (on a BoP basis) increased by $4.1 billion in third quarter of 2015-16.
  • There was an accretion of $14.6 billion to foreign exchange reserves (on a BoP basis) compared with $31.3 billion in the corresponding period of 2014-15.
11) Paytm ties up with PVR to sell online movie tickets.
  • PVR Ltd, India’s biggest multiplex chain, and mobile payments company Paytm announced a partnership to sell movie tickets on the e-commerce platform.
  • This marks Alibaba-backed Paytm’s foray into the online movie ticketing segment, and the firm will now compete with online tickets booking company Bigtree Entertainment, which operates as Bookmyshow.com.
  • The size of the movie-ticketing market in India is $2 billion, growing at 10 per cent annually. The share of online movie marketing is just 15 per cent, and Paytm is looking to double it in quick time. It has set aggressive targets, with its base of over 125 million registered users and 90 million orders per month.
12) Edelweiss announces buy of JPMAM India.
  • Edelweiss Asset Management (EAML) has announced that it has executed an agreement to acquire the onshore fund schemes managed by JP Morgan Asset Management India (JPMAM), including its India-based onshore mutual fund (MF) business and the international fund of funds for an undisclosed sum.
  • The assets under management (AUM) of JPMAM stands at approximately Rs 7,081 crore, while the combined AUMs of both entities amount to approximately Rs 8,757 crore.
  • Along with the schemes, EAML is committed to absorbing majority of employees of JPMAM ensuring business continuity as well as a platform for enhanced growth across the Edelweiss Group.
  • Given the complementary business advantages and the significant business that JPMAM has built, this acquisition is a natural win for both Edelweiss and JP Morgan.
  • There will be planned investments into the business in terms of products, technology, distribution and a clear strategy to compound growth.
  • The acquisition will further strengthen Edelweiss Group`s Rs. 31,000 crore global asset management businesses, which include the group`s existing MF business, credit alternative funds, offshore funds and equity funds. The global asset management business spans multiple asset classes, client segments and geographies.
  • What makes this transaction attractive is the complementary product suite between the schemes of both the funds thus broadening our entire asset management platform.
  • Edelweiss has worked closely with JP Morgan across businesses and the acquisition is subject to regulatory approvals.
13) Infibeam IPO Subscribed 0.21 times On Day 1.
  • The Rs. 450 crore initial public offering (IPO) of Infibeam Incorporation has received bids for 1.11 crore shares, or 0.89 times.
  • Infibeam, the first online e-commerce company to hit the capital market, has put 1.25 crore shares on the block in a price band of Rs. 360-432 per equity share.
  • Data available on BSE website showed the qualified institutional investor (QIB) quota was subscribed by 0.33 times the quota limit. The quota for non-institutional investors (NIIs) was subscribed by 1.41 times, while retail investors had bid for 0.64 times the quota limit.
  • On NSE, the QIB quota was subscribed by 0.47 times, retail by 0.21 times while NII quota was subscribed by 0.05 times.
  • The e-commerce company has set the limit for retail quota at 10 per cent. QIBs are allowed to bid for up to 75 per cent on the total issue size of 1.25 crore shares. The quota limit for non-institutional investors (other than retail individual investors) has been kept at 10 per cent.
  • Infibeam`s businesses include BuildaBazaar (BaB) e-commerce marketplace (28 per cent revenue) and e-retail website Infibeam.com (72 per cent revenue). While BaB offers cloud-based, modular and customizable digital solutions and other value-added services to enable merchants to set up online storefronts, Infibeam.com is a multi-category e-retailer.
  • The key strengths of the company include its strong merchant base in BuildaBazaar and high growth the company recorded in the e-tail business. BuildaBaz provides digital solutions to 48,724 merchants. It helps merchants to set up online storefronts at an average monthly realization of Rs 1,650 per merchant. Infibeam.com, on the other hand, has 5,000 registered merchants. The company has 12 logistics centres across 11 cities.

 

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14) Government hikes dearness allowance by 6%.

  • The government hiked dearness allowance (DA) by 6 per cent, benefiting over 1 crore central government employees and pensioners.
  • The hike, which will cost the exchequer an additional Rs. 14,724.74 crore annually, will take effect from January 1, 2016.
  • The burden on exchequer would be Rs. 6,795.5 core towards central government employees and Rs. 7,929.24 crore towards pensioners during 2016-17.
  • The DA, which will benefit, 50 lakh central government employees and 58 lakh pensioners, will go up from the existing 119 per cent to 125 per cent.
  • Dearness allowance is paid as a portion of basic pay of employees to neutralize the impact of inflation. Pensioners get dearness relief.
  • The central government revises DA twice in a year on the basis of one year average of retail inflation for industrial workers as per a pre-determined formula.
15) Cabinet approves National Capital Goods Policy.
  • The Union Cabinet has approved the national capital goods policy. The government believes implementation of the capital goods policy is critical and needed to give a boost to the sector and the `Make in India` initiative.
  • The government had unveiled the National Capital Goods Policy. This is the first time such a policy has been framed for the sector.
  • The Cabinet has also green flagged the doubling of two rail lines in Bihar and Jharkhand and approved incentives for rural housing.
  • The capital goods policy would improve trade and exports and also pave the way for advances in technology. In particular, the policy will make sure the country utilizes the capital goods that already exist and cut down on imports. To give a rough idea, the capacity utilization for the industry as a whole, would be between 45 per cent and 70 per cent, adding, Thermax operated at a capacity level of 50 per cent-60 per cent.
  • Unnikrishnan estimates India is importing around USD 35 billion worth of capital goods right now – a figure, which, he is confident, will come down.
  • Indian companies will find themselves exporting capital goods into countries where there is a trade deficit. Long-term loans will be made available to these companies through the likes of EXIM bank.
  • One can see India offering sops to Indian companies wanting to export more in the manner of countries like China and Japan.
16) RBI revises liquidity measuring rules for Basel III.
  • The Reserve Bank has revised certain rules on measuring liquidity for Basel III norms, providing exemption to branches of foreign banks from submitting statement with regard to foreign currency.
  • In view of developments since the issue of circulars regarding Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards, feedback received from the stakeholders and experience gained, it has been decided to amend certain provisions of these guidelines.
  • The revision also includes asking banks to exclude certain loans backed by deposits from liquidity coverage ratio calculations.
  • As branches of foreign banks do not hold any foreign currency, they are exempted from submitting this statement with effect from the date of this circular.
  • All banks in India, including branches of foreign banks are required to report this on a monthly basis, as per the existing norms.
  • The revised guidelines comes into effect from February 1, 2016.
17) Bajaj Finance enters life care financing segment.
  • Bajaj Finance has ventured into lifecare lending, a segment through which it will finance expenses for elective medical procedures such as stem cell storage, eye care, dental treatment, maternity care and cosmetic-based hair and skin treatment.
  • The NBFC plans to launch this product in 40 cities across India, including tier-1 markets like Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad and Pune, and hopes to garner around Rs. 1,000 crore from it over the next five years.
  • The company is the first lender in India to make a foray into the lifecare lending segment. The idea behind the move is to tap into a market which is untouched in India but is a booming business in many western countries. A formal launch in the six top metros is expected.
18) Union Cabinet Has Approved Rs. 9000 crore for Swachh Bharat Mission.
  • The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to the US $1,500 million project of World Bank Support to Swachh Bharat Mission (Gramin) [(SBM (G)].
  • The Project basically provides for incentivizing States on the basis of their performance in the existing SBM-G. Incentivisation of States was approved by the Cabinet while approving the Swachh Bharat Mission (Gramin). The current approval provides for the mechanism of such incentivisation through World Bank credit.
  • Under the approved project, the performance of the States will be gauged through certain performance indicators, called the Disbursement-Linked Indicators (DLIs). Following are three DLIs.
  • Reduction in the prevalence of open defecation: The funds under this result area shall be released to the States on the basis of reduction in prevalence of open defecation amongst rural households in the State, compared to the previous year,
  • Sustaining Open Defecation Free (ODF) status in Villages: The funds under this result area, shall be released on the basis of estimated population residing in ODF villages,
  • Increase in percentage of rural population served by improved Solid and Liquid Waste Management (SLWM): The funds under this DL1 will be based on the population served with acceptable level of SLWM services.
  • The States will pass on a substantial portion (more than 95 per cent) of the Performance Incentive Grant Funds received from the MOWS, to the appropriate implementing levels of districts, Blocks, GPs etc. The end-use of the incentive grants will be limited to activities pertaining to the sanitation sector.
19) ITC acquires Technico Agri Sciences for Rs. 121 crore.
  • FMCG major ITC Ltd had acquired Technico Agri Sciences Ltd India (Technico India), the company announced.
  • The company has acquired the entire equity share capital of Technico Agri Sciences Limited, India, from Technico Pty Limited, Australia.
  • The cost of the acquisition was Rs. 121 crore.
  • The acquisition of Technico India is expected to improve business and operational synergies.
  • Prior to the acquisition, Technico India was a wholly owned subsidiary of Technico Pty Limited, which in turn is a wholly owned subsidiary of ITC Limited.
  • The company acquired by ITC is in the biotechnology business that grows and sells "Technituber" and field generated seed potatoes. ITC added that Technico India has become a direct subsidiary of the company.
20) Hero Cycles Acquires 60% In Sri Lanka`s BSH Ventures.
  • Hero Cycles announced picking up of 60 per cent stake in Sri Lankan bicycle manufacturer BSH Ventures, its third major acquisition within six months, for an undisclosed sum.
  • The acquisition comes in line with the company`s aggressive intent to strengthen its global presence and to spruce up its manufacturing proficiency to feed a rapidly rising global demand.
  • Hero Cycles will further invest into ramping up the plant capacity in Sri Lanka to half a million units per year with clear plans laid out to fuel the domestic as well as ever growing global demand.
  • BSH Ventures is an export-oriented bicycle manufacturing company located in the Biyagama Export Zone in Sri Lanka.
  • Earlier, the company had acquired UK-based Avocet Sports and Firefox Bikes.
  • Avocet Sports was Hero Cycles` first overseas acquisition and marked its entry into mass segment of European bicycle market. On the other hand, the acquisition of Firefox Bikes helped it cement its position in the fast-growing premium bicycling segment in India.
  • The acquisition of BSH Ventures has enabled Hero Cycles to actively build this facility as a key hub for manufacturing its premium bicycles to meet the global demand, and double up exports to Avocet.
  • Simultaneously, it will also feed the ever growing demand for premium bicycles to the South Indian market, given its geographical proximity to Sri Lanka.
  • At pre sent, Hero Cycles has a manufacturing capacity of 7.5 million bicycles per year, with its units in Ludhiana (Punjab), Bihta (Bihar) and Ghaziabad (UP).

 

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.

 

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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.
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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.

Economy Current Affairs March 1st Week 2016

1) Indian Railways launched bar coding system for unreserved tickets.

  • After presenting the railway budget, Suresh Prabhu implemented two crucial promises as he launched bar-coding of unreserved tickets and rail auto hub in Chennai.
  • A railway spokesperson said that it was in keeping with Prabhu`s promise of improving passenger amenities. The inauguration of two services was done through Video-Conferencing from Rail Bhavan in the Capital in presence of minister of state Manoj Sinha and senior railway officials.
  • Bar-coding of unreserved tickets was launched at nominated counters in New Delhi, Delhi and Nizamuddin Railway Stations, Northern Railway and the Rail Auto Hub was inaugurated in Walajabad in Chennai Division of Southern Railway. Prabhu said focus was on improving passenger amenities and increasing freight revenue. For this, railways had adopted multiple strategies including reach to multi commodity cargo.
  • He said that in the direction to generate revenue through cargo, the Rail Auto Hub was the initial step.
  • About Bar Coding of Unreserved Tickets through Thermal Printer, Prabhu said that this would stop possible fraudulent activities which will help railways generate more revenue.
 
2) India Inks $3.1 Billion Deals For Apache And Chinook Helicopters With US.
  • India inked the $3.1 billion contracts for 22 Apache and 15 Chinook helicopters, taking the total worth of defence deals inked with the US well past $13 billion just since 2007.
  • The deliveries of the helicopters will begin in three years, said officials. The contract for the Apache attack helicopters was a "hybrid" case, with the defence ministry inking one part of it with Boeing for the choppers and the other with the US government for its weapons, radars and electronic warfare suites.
  • Ministry had totaling Rs. 22,000 crores, has been placed for the purchase of these choppers, which will strengthen the capabilities of country`s defence forces.
3) IFC launches Uridashi Masala Bonds.
  • International Finance Corporation (IFC) launched its first Uridashi Masala Bonds (Japanese bonds) to mobilize Rs. 30 crore from Japanese retail investors.
  • The proceeds will be used for promoting private sector development in India, IFC said in a statement from Tokyo.
  • The three-year bond builds on IFC`s pioneering Masala Bond programme, which has raised the equivalent of USD 1.7 billion from international investors so far, said the World Bank Group member.
  • The bonds will be settled in yen and each bond is denominated at Rs. 1,00,000, the IFC said, adding that the bonds will be issued and mature with an annual payout of 5.36 per cent.
  • Masala Bonds are rupee-denominated instruments sold only to offshore investors, while Uridashi bonds are sold to Japanese household investors.
  • IFC has played a prominent role in developing capital markets in the country, rolling out a USD 3 billion worth of rupee-denominated Masala Bonds over the past two years.
 
4) Union Budget 2016-17: Social Sector.
  • Finance minister Arun Jaitley’s budget speech focused on the social sector more than before, but it failed to reflect amply in fund allocation to key ministries such as education, health, poverty alleviation and women and child development.
  • The argument put forth was that Rs. 64,144 crore more was allocated to states for 2016-17 as compared to the previous budgetary estimate and the additional money would be spent on the welfare of people.
  • Another reason was that 31 of the 64 Centrally Sponsored Schemes were transferred to the states and, therefore, that money was reflected in the Central plan outlay.
  • The states will have to dole out more to seek Central funds under ‘core schemes’ such as Sarva Shiksha Abhiyan and the Integrated Child Development Scheme - because in October 2015, the Centre reduced its share in these schemes and passed on the burden to the states.
  • The new funding mechanism that came into force last year showed that spending on vital sectors such as education and health had fallen. Only 4% of the funds earmarked for health, according to an analysis by Accountability Initiative. In the case of education, it was 34%.
  • In case of social security for poor senior citizens and widows, Rs. 2,426 crore was allocated, a dip from Rs. 3,385 crore for 2015-16, but the FM presented it as an increase by comparing it with a revised estimate for 2015-16 - which was Rs. 1,558 crore. The most deprived sections of society too got Rs. 1,375 crore less than in last year’s budget.
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5) Reliance Entertainment, Neeraj Pandey join hands to form film production venture.

  • Billionaire Anil Ambani-owned Reliance Entertainment announced a joint venture with film-maker producer duo Neeraj Pandey and Shital Bhatia’s Friday Film works for production of movies.
  • Akshay Kumar starrer ‘Rustom’ will be the first movie under the banner, Plan C Studios. Plan C Studios will be an equal partnership joint venture between the two.
  • Neeraj Pandey won acclaim with his very first film ‘A Wednesday’ in 2008, which went on to win the National Award.
  • Subsequently, he directed ‘Special 26’ in 2013, and ‘Baby’ in 2015.
  • Neeraj is currently on the floors with ‘MS Dhoni -The Untold Story’, one of the most anticipated films of the year.
  • ``The combination will benefit from the creative and production strength of Friday Film works, and leverage the global marketing and distribution capabilities of Reliance Entertainment``.
  • Other projects include Neeraj Pandey’s cinematic version of his novel, Ghalib Danger and films helmed by Shivam Nair, Chandra Prakash Dwivedi, Anurag Singh, Anvita Dutt and Shree Narayan Singh.
 
6) ZTE Soft inks pact with AP.
  • Chinese technology company ZTE has inked a pact with the Andhra Pradesh government to work on smart city projects in the state.
  • As a company associated with a number of smart city projects, the diversified telecom and technology major ZTE plans to engage itself with the state and work on the upcoming smart city projects in Andhra Pradesh.
  • A memorandum of understanding was inked between G.S. Phani Kumar, Special Secretary, Information and Technology, Andhra Pradesh and ZTE Soft MD S.H. Prasoon Sharma in the presence of State IT and Information Minister Palle Ragunath Reddy, here, according to a statement.
  • ZTE Soft has been engaged with more than 140 smart city projects globally and is keen to work on smart city projects in India.
  • With the Narendra Modi government seeking to lay special thrust on development of smart cities, ZTE has already begun to engage itself with smart city initiatives in Gujarat and plans to expand its presence.
  • Under the letter of intent inked by ZTE, it proposes to work with AP on not only smart cities, E-Pragathi project, Incubation Centre, smart technology projects among others which the State has initiated.
  • Two of AP cities –Visakhapatnam and Kakinada – have been chosen to be part of the smart city projects in the first phase announced recently.
 
7) CBI sets up group to deal with financial frauds.
  • The CBI today vowed not to spare scamsters however mighty or rich they may be and announced formation of a working group that will coordinate with various financial institutions to help curb financial frauds.
  • "We will have a working group set up. The group will be meeting regularly and go into various aspects relating to the early detection of these kinds of defaults and frauds.
  • "Our focus is on the recovery of the stolen assets, particularly repartition of the assets which have been stolen and stashed away. Our Endeavour is to bring that money back``.
  • He was speaking after day-long deliberations with bankers, financial institutions and regulators to figure out ways to tackle the rising menace of bank frauds, loan defaults and cyber crime.
  • Mr. Sinha called for free-flow and exchange of information between various institutions so that CBI can actually have a very effective mechanism to proceed against people who are swindling public of their money and also who are causing severe losses to banks.
  • The CBI will now be engaging with financial bodies like banks, insurance firms and regulatory authorities, for capacity building programme.
8) Union Government signed Agreement to provide a loan of 1000 crore rupees to FACT.
  • The government today provided a Rs. 1,000 crore package to the state-run fertilizer firm FACT for its revival and expansion of production capacity to one million tonnes during the next fiscal.
  • The loan assistance of Rs. 1,000 crore to the Kochi-based Fertilizers and Chemicals Travancore Ltd (FACT) would help boost fertilizer supply in Kerala and entire South India.
  • FACT, which is facing liquidity crunch, currently produces about 6 lakh tonnes of NPK fertilizers such as aluminium sulphate with an annual turnover of about Rs. 2,000 crore.
  • An agreement to release Rs. 1,000 crore to the FACT for its revival was signed between the Department of Fertilizer and FACT in the presence of Fertilizer Minister Ananth Kumar.
  • The loan amount along with interest has to be repaid in five years, with a moratorium of one year.
  • ``FACT`s annual production is 6 lakh tonnes. Within one year, because of this loan assistance, the total production will become one million tonnes of fertilizers``, the minister said, adding that the company`s turnover would increase to Rs. 3,000 crore from the current Rs. 2,000 crore.
9) Flipkart launches Commerce Advertising Platform.
  • Leading e-commerce company Flipkart launched its own advertisement platform, Brand Story Ads, with over 50 leading brands on board.
  • Brands including Yes Bank, L`Oreal, Micromax, Intel, Gillette, Datsun and Sony have signed up with Flipkart to launch their ad campaigns on the platform.
  • "With Brand Story Ads, we are offering a platform where the brands can target and engage with largest qualified commerce audience in the country at the right time for the right intent".
  • Flipkart ventured into the online advertising space last year with the introduction of product listing ads to enable sellers on the platform gain more visibility and reach a larger customer base.
  • The new platform, Brand Story Ads, will appear on all properties of Flipkart. The e-commerce firm has access to data of customer’s preference on its platform which it will use brands to reach their target customers.
  • "The magnitude of consumer traffic and intelligent data insights on online shopping behavior gives Flipkart the edge to provide larger reach, impact and measurability``.
  • Along with the brands that retail on Flipkart, this service will also be available to other non-retailing brands in sectors like real estate, FMCG, BFSI, auto, and telecom etc.
10) Vijay Mallya’s exit from United Spirits evokes buy call from analysts.
  • Analysts predict a big jump in the stock price of United Spirits following Vijay Mallya’s exit as chairman and non-executive director in of the company and from the boards of other group companies Royal Challengers Sports and Four Seasons Wines.
Respite from legal tangle:
  1. The average target price of four brokerages, namely, J.P. Morgan, Motilal Oswal, Edelweiss Securities and IIFL works out to Rs. 3,659.
  2. This implies an upside potential of 50 per cent from the current market price of Rs. 2,432.95.
  3. Edelweiss has a sector outperformer rating on USL. ``The deal will provide USL shareholders respite from any legal battle; it will also help the board focus on (its) core business. USL’s prestige and above segment clocked five quarter high volume growth of 15 per cent year-on-year in Q3FY16 reflecting premiumisation focus``.
  4. J.P. Morgan is overweight on USL. “This agreement brings closure to the concerns and uncertainty related to USL’s governance as well as ambiguity related to certain historical transactions.
  5. The relationship with banks will be strengthened as USL gets disassociated with Mallya who has been declared a wilful defaulter by certain banks. Besides, USL is a structural play on the Indian liquor space and has attractive long-term growth prospects led by favourable demographics, low per capita consumption and significant benefits from premiumisation.
  6. The company enjoys a strong portfolio of brands (supported further by Diageo’s brands), and a focused strategy toward profitability by the new management could lead to meaningful gains on the margin front (from current depressed levels), it added.
11) Sinha to discuss future road map with market participants.
  • UK Sinha, who has received a one-year extension as SEBI chief, has called a series of meetings with key capital market participants to discuss regulatory improvements in the coming year.
  • According to sources, equity brokers, commodity brokers, investment bankers, mutual fund houses and foreign institutional investors will meet the regulator individually in the coming weeks.
  • The government extended UK Sinha’s tenure as Chairman of the Securities and Exchange Board of India for a year, after five years at the helm. Based on these meetings, the sources added, SEBI will set the agenda for these markets in the coming year. SEBI’s own board meeting is scheduled in New Delhi.
  • On SEBI’s plate for the coming year is building a regulatory framework for index service providers, such as S&P Dow Jones Index Services and giving greater clarity for mergers and acquisition (M&A) deals. For stock market traders, SEBI is keen on making algo and high-frequency trading rules more transparent and might even possibly relax rules of co-location facilities.
  • Last year, Sinha also spoke about progressively opening the commodity markets to banks and financial institutions, including foreign investors.
 
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12) Samsonite to buy US bag maker Tumi for $1.8 billion.

  • The decision of luggage giant Samsonite International to acquire rival US luxury bag maker Tumi in a deal estimated at $1.8 billion is set to provide a major fillip to its India operations.
  • While the all-cash transaction is expected to give Samsonite access to the premium end of the luggage market, the deal is expected to bring in huge cost savings in terms of logistics, sourcing, sales and marketing.
  • Over 40 per cent of all Samsonite hard luggages are manufactured at its plant in Nashik, Maharashtra.
  • Some of its brands include Samsonite, American Tourister, High Sierra, Hartmann, Lipault and Speck.
  • The deal would incorporate a ``distribution and product development pact" between the two companies, whereby Samsonite could utilize its distribution network to expand Tumi’s global footprint.
  • At present, Samsonite`s products are sold at 46,000 points of sale in wholesale and retail channels, and across 100 countries.
  • The deal provided a huge opportunity for Samsonite to leverage Tumi’s best-in-class products, some of which are already available in India.
  • Some of Tumi’s brands include the Alpha collection, Arrive, Tegra-Lite, Dror, Vapor and Beacon Hill.
  • Tumi opened its third store in India, at New Delhi`s premier luxury mall DLF Emporio.
  • Tumi also has stores at retail outlets like the Palladium in Mumbai, and UB City in Bengaluru.
13) Fitch maintains India’s growth forecast at 7.5%.
  • Global rating agency Fitch has maintained its growth forecast for India at 7.5 per cent this fiscal and sees higher growth over the next two financial years. However, 8 per cent growth will remain elusive in the short term.
  • ``Fitch has maintained its gross domestic product (GDP) growth forecast for India for the fiscal year ending 2016 at 7.5 per cent. Growth is expected to gradually accelerate to 7.7 per cent in 2016-17 and 7.9 per cent in 2017-18``.
FinMin estimates:
  • The forecast is largely in line with the Finance Ministry’s growth estimates.
  • The Economic Survey had also said achieving 8 per cent growth may not be possible in the short run.
  • Higher real disposable income, a normal monsoon and a substantial wage increase for central government employees will support economic recovery in the next two financial years, while underlining the need for structural reforms.
  • ``The gradual implementation of the structural reform agenda is expected to contribute to higher growth, though progress is lacking so far on big-ticket reforms such as the Land Acquisition Amendment Bill and the Goods and Services Tax``.
  • While noting that efforts at legislative reforms may be constrained due to limited support in the Rajya Sabha.
14) 10 bidders eye IFCI’s 26% stake in Stock Holding Corp.
  • As many as 10 bidders have evinced interest in picking up stake in Stock Holding Corporation of India Ltd (SHCIL) following IFCI’s decision to sell up to 26 per cent in India’s largest custodian of securities.
  • IFCI had acquired IDBI Bank’s 18.95 per cent stake in SHCIL at Rs. 851 per share to take the total holding to 52.86 per cent. IFCI could get up to 30-40 per cent premium now.
  • Ernst & Young LLP is the consultant to IFCI for advising and managing the disinvestment process. Bidders were required to have a net worth or assets under management of Rs. 100 crore or more for being shortlisted and considered for the subsequent process for the transaction.
  • The IFCI board had given its go-ahead for the stake sale.
The process:
  1. Shortlisted bidders will be allowed to do a due diligence on SHCIL after signing a confidentiality agreement. After that, a binding bid would be submitted by each bidder through a competitive bidding process and the sale of SHCIL’s shares would be completed thereafter.
  2. The likelihood of SHCIL coming out with its initial public offering in the next 15-18 months is also high, with SBI Caps doing pre-IPO advisory to the custodian.
  3. Merchant bankers for the IPO are yet to be appointed and the manner in which the IPO would be structured is yet to be firmed up.
  4. A debt-free company, SHCIL is also weighing its options of inducting a strategic investor, preferably a multilateral agency, sovereign wealth fund or entities interested in investing a financial market infrastructure company, before finally deciding to launch its IPO.
15) Union Government announced to withdraw tax proposal on Employee Provident Fund.
  • Union Finance Minister Arun Jaitley announced the withdrawal of the budget proposal on taxing Employees Provident Fund, following a backlash in and outside Parliament.
  • The proposal had sought to make up to 60 per cent of savers’ corpus withdrawn from the EPF tax-free if invested in annuity, according to the statement Mr. Jaitley made in the Lok Sabha. The period return on the annuity was to be taxable.
  • The withdrawal decision, however, was taken after MPs pointed out that the tax would ``force people to invest in annuity product even if they are not willing to do so``.
  • The main argument was that the employees should have the choice of where to invest; the objective of encouraging people to join the pension scheme could be achieved through other ways on which the government has received suggestions.
  • ``A number of representations have been received from various sections, including Members of Parliament, suggesting that this change [EPF tax] will force people to invest in annuity even if they are not willing to do so``, ``The government would like to do a comprehensive review... and therefore I withdraw the proposal``.
  • The 40 per cent exemption given to subscribers of the National Pension Scheme (NPS) at the time of withdrawal remains. This would make the NPS, which gives returns of over 11 per cent, more attractive to pension savers than other options.
  • The objective of the reform was ``not to get more revenue but to encourage more private sector employees to go for pension security after retirement instead of withdrawing the entire money from the Provident Fund account``.
  • Towards this objective, it was announced that 40 per cent of the total corpus withdrawn at the time of retirement will be tax-exempt under both provident fund and the NPS.
 
16) Indian Railways Signs Agreement With Bajaj Power.
  • Bajaj Power Generation Company has signed an agreement with the Railways for electrification of the Lalitpur-Udaipura rail section under the public private partnership (PPP).
  • The Railways would complete the electrification work in a year`s time under its customer funding scheme, which would cost nearly Rs. 47 crore.
  • The electrified rail section is expected to facilitate uninterrupted coal supply to its plant and also help running of fast passenger trains in the area.
  • BPGC is setting up a 1,980 megawatt (mw) thermal power plant in Lalitpur district of Uttar Pradesh.
  • While, two units of 660 mw each had already been commissioned in 2015, the third unit of 660 mw is scheduled to start generating later this month. The total investment in the plant is pegged at Rs. 16,000 crore.
  • BPGC President (commercial) Dwarikesh Sharma and North Central Railway (NCR) Additional Divisional Railway Manager (ADRM) Jhansi Vinit Singh signed the agreement on behalf of their respective organizations.
  • BPGC is owned by Kushagra Bajaj-led Bajaj Group, which has business interests in personal care products, real estate, sugar and ethanol.
17) CBDT sets up dedicated structure for monitoring taxpayer services.
  • Grievance redressal is a major aspect of citizen centric governance and is an important feature of the activities of the Income Tax Department. The Income-tax Department is addressing grievances through a multi-layered grievance redressal machinery including Centralized Public Grievance Redress and Monitoring System (CPGRAMS), Aayakar Seva Kendras (ASK), online grievance redressal through Central Processing Centre (CPC) etc.
  • Taking another step in this direction, the Central Board of Direct Taxes (CBDT) has issued an Order setting-up a dedicated structure for delivery and monitoring of tax payer services in the Income Tax Department. Member (Revenue and Tax Payer Services) will oversee the delivery and monitoring of taxpayer services in CBDT.
  • Two separate Directorates, called Directorate of Tax Payer Services-I and Directorate of Tax Payer Services-II have been set up. Together, these Directorates will be responsible for delivery and monitoring of taxpayers services in the field offices and e-services deliverable through various electronic platforms of the Department.
  • They will oversee and co-ordinate all matters relating to grievances of taxpayers and ensure their timely redressal. These Directorates will report to the Member (R and TPS), CBDT through the Principal Director General of Income Tax (Administration).
  • The responsibility for delivery of tax payer services has also been specifically assigned at every level in the field offices. This will ensure accountability of officials in redressing grievances in a time bound manner.
  • The Tax Administration Reforms Commission’s (TARC) Report has also accorded considerable importance to redressal of grievances and a customer focussed approach in the Department through creation of a tax payer services vertical. The creation of this structure will fulfill some of the most significant recommendations of the TARC.
  • With this initiative, the CBDT expects a noteworthy reduction in taxpayer grievances and enhanced taxpayer satisfaction.
18) India’s leading Integrated Travel Thomas Cook Signs Strategic Alliance With Western Union Business Solutions And DCB Bank.
  • Travel solutions provider Thomas Cook India has inked a pact with Western Union Business Solutions and DCB Bank to facilitate international trade payments by small and medium-sized enterprises.
  • This alliance is a pioneering move by Thomas Cook India, to penetrate the high-growth Indian small and medium-sized enterprises (SME) segment for its international trade payment requirements.
  • Western Union Business Solutions is a business segment of the Western Union Company.
  • Thomas Cook India would reach out to its set of SME base and the larger market to essentially refer trade remittance transactions to DCB Bank through the Western Union technology platform.
  • Thomas Cook India aims to assist small and medium-sized enterprises (SMEs) in India with their trade payments across borders.
  • The business alliance with DCB Bank, Thomas Cook (India) and Western Union Business Solutions has the vision to empower micro, small and medium enterprises (MSMEs) and SMEs by providing smooth and convenient trade remittance facility.