Indian Economy News & Discussion - Nov 27 2017

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Deans
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Deans » 02 Jun 2018 10:11

jaysimha wrote:Ministry of Finance
New Benami Transactions Informants Reward Scheme, 2018 launched by the Income Tax Department
To get people’s participation in the Income Tax Department’s efforts to unearth black money and to reduce tax evasion
http://pib.nic.in/PressReleaseIframePag ... ID=1534071

---------------

http://pib.nic.in/PressReleaseIframePag ... ID=1534070

Ministry of Finance
Income Tax Department issues Revised Income Tax Informants Reward Scheme, 2018
Posted On: 01 JUN 2018 1:09PM by PIB Delhi
With the objective of obtaining people’s participation in the Income Tax Department’s efforts to unearth black money and reduce tax evasion, a new reward scheme titled “Income Tax Informants Reward Scheme, 2018” has been issued by the Income Tax Department, superseding the earlier reward scheme issued in 2007.

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The Benami act could have brought about a transformative change in the battle against corruption (even more than DeMo). However, seizures have been significant. In this context, I wonder why it has taken over 1.5 years to notify this reward scheme. Even now, there is no format or means to give tip offs on benami assets. (I've tried).

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby jaysimha » 02 Jun 2018 11:02

Deans wrote:The Benami act could have brought about a transformative change in the battle against corruption (even more than DeMo). However, seizures have been significant. In this context, I wonder why it has taken over 1.5 years to notify this reward scheme. Even now, there is no format or means to give tip offs on benami assets. (I've tried).


Look at the form,,,,who will write the full details to report

https://www.incometaxindia.gov.in/news/letter-it-informants-rewards-scheme-1-5-18.pdf
https://www.incometaxindia.gov.in/news/letter-benami-informants-rewards-scheme-1-5-18.pdf

typical babudom......

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 02 Jun 2018 12:14

^^The discussion on Benami act should go into DeMo thread or its own thread.


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 02 Jun 2018 18:58

On the GVA deflator quest: Learned the concept of "chained dollar" versus "constant dollar".
In the constant dollar, a fixed basket of goods is priced each year to figure out how this year's dollar compares with the base year.

The problem is that what is actually bought and sold in the economy is not proportional to that fixed basket; the economy changes. So the idea of the "chained dollar" is that the year 2 basket based on year 2's economic activities, is then priced with year 1 prices to see what the change in value of the dollar is over the one year. Similarly year 3's basket is priced with year 2 prices, and so on. Hence the term "chained".

IMO, if the basket is properly constructed, in a rapidly changing economy like India's, where the composition of what is bought and sold is shifting, the "chained rupee" would make more sense than the "constant rupee".

I think the "chained rupee" would give a better indication of the current state of health of the economy. The "constant rupee" leads to illusions of its own - consider the difference in what is traded between 1947 and now, some product categories have vanished, so many new products and services are there now; what does a "constant rupee" needed to compare over this era even mean? Or even the weight given to a particular commodity, when it might have been 20% of all trade in 1947, and 2% of all trade now. Is the economy better off relative to last year is a much more answerable question than is it better off compared to 10 years ago, let alone 70 years ago.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 02 Jun 2018 21:33

Updating the base year is also part of the process of ensuring the changing composition of the economy is taken into account.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 03 Jun 2018 09:21

https://economictimes.indiatimes.com/news/economy/finance/gst-monthly-collection-at-rs-94016-crore-in-may/articleshow/64411937.cms

GST collections at 94000 cr in May.
From this fiscal, the govt has shifted to reporting GST collections in that particular month and not for the month of sales.
Having said that, I wonder if the numbers are still inflated due to last years year end filings still going on.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 03 Jun 2018 09:38

I think it is not a good idea to use the term ‘inflated’, since it sounds pejorative. Plenty of economic behavior is seasonal . Q3 and Q4 account for the largest part of annual GDP because of holiday season in Oct-Dec and then attempt to close out deals by fiscal end in March . Similarly from a tax perspective there’s a rush of filings at year end . However general business activity records should be stable, as GoI continues to streamline the GST reporting processes .

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 03 Jun 2018 20:50

Rural India is helping to revive the country's economy
https://www.thenational.ae/business/eco ... y-1.736265
“A normal monsoon in 2018 and benign interest rates would support growth, together with the government’s thrust on rural and infrastructure sectors,” according to analysts at Crisil, an Indian ratings and research firm which is part of Standard & Poor's.

In particular, Crisil highlights that it is the rural population that is expected to drive an 11 to 12 per cent increase in revenues for companies in India's fast moving consumer goods sector in the current financial year, amid rising disposable incomes.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Sachin » 04 Jun 2018 16:42


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 04 Jun 2018 22:00

I don't think there's ever been a time when the CSO's numbers haven't been critiqued by someone or the other (including us here). For quite a long time, they were so far behind (the base year was 1993-94 until the mid 2000s) it wasn't funny. While it would be interesting to have the chief statistician explain the deflators, in my opinion there's an element of noise in the discussion because it's not critical, and GDP data in general gets revised several times.

I think there are far more important and urgent datapoints for the economy. For example, monthly overall and non-farm employment, and employment migration. A more detailed and immediate tracking of inflation data.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Austin » 04 Jun 2018 22:39

https://www.ndtv.com/india-news/indian- ... am-1861858

Government expenditure is on only in healthcare and in some other amenities, he said.

"To keep this expenditure going on, the government has continued taxing petrol, diesel and even LPG. It is squeezing money from people in such taxes and spending some from it on public amenities," Mr Chidambaram said.


Did you see any investment in the power sector recently, he questioned.

"For example, out of the 10 major companies that went into insolvency, five were steel companies. How can you expect any investment in such sectors," he wondered.

Mr Chidambaram also criticised the government for introducing a "five-slab" Goods and Services Tax (GST) regime.

"Post-demonstration this government has introduced GST with five tax slabs with a cess over it. In other countries, GST is just one tax system but we can have two types of taxation in India. Still, having five slabs is not what we had imagined about GST," he said.

He said that the government is incompetent in addressing the economic issues, which has "worsened" under the current dispensation.

"Industrial utilisation is mere 60 per cent in the country. The export of merchandise, during the UPA was USD 315 billion, which was USD 303 billion last year. Before that, it was not even USD 300 billion. This shows we are not earning from exports too," the former finance minister said.

He mocked the Pradhan Mantri Mudra Yojana under which loans of up to Rs. 10 lakh are provided to non-corporate, non-farm small/micro enterprises.

"The average amount of disbursed Mudra loan is Rs. 43,000 per person. No major investment can be done with such low amount

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 04 Jun 2018 22:46

$210 Billion of Indian Bad Debt Lures Funds Seeking Returns
India’s two-year-old bankruptcy law, which gives creditors more power to restructure troubled companies, is luring more and more offshore investors from as far as Canada to buy the nation’s bad debt.

Caisse de dépôt et placement du Québec, a Canadian pension fund manager, has made $600 million available to Edelweiss Group for investment in local distressed assets, according to R.K. Bansal, an adviser for Edelweiss Asset Reconstruction Co. Hong Kong-based SSG Capital Management Ltd. sees more opportunities in such assets, and foreign funds including Oaktree Capital Group LLC and Varde Partners are also keen to participate in the fledgling market.

India’s banking sector is coping with about $210 billion of soured or problem loans, a legacy of a borrowing spree following the global financial crisis and an economic slowdown after that. The Insolvency and Bankruptcy Code introduced in 2016 has given rise to opportunities for funds to acquire borrowers’ distressed assets. High potential profits on those deals attract funds: SC Lowy Financial HK Ltd. expects annualized returns of about 15 percent, according to Chief Investment Officer Soo Cheon Lee.

“The change now is that there is more bad debt available to buy as many more names are in restructuring,” said Pallavi Gopinath Aney, a principal in the finance and projects team at Baker McKenzie Wong & Leow in Singapore. Foreign funds see significant value in problem assets and “are willing to bring in management and expertise to run the distressed companies,” she said.

SSG Capital Management, which oversees more than $4 billion, has deployed a “significant amount of capital” in India, said the fund’s Chief Investment Officer Edwin Wong without elaborating. Its outlook on the nation remains positive, he said.

HSBC directly contradicts Chidambaram: growth is being driven by public spending in infrastructure, and core sector/IIP data disproves his claim about steel output.
‘Hand of government’ lifts March-quarter GDP growth to 7.7 per cent, says HSBC report
The “hand of government” was the main driver behind the rise in January-March GDP growth to 7.7 per cent — the fastest pace in seven quarters — as exports and private consumption disappointed, says an HSBC report. India retained the tag of the fastest growing major economy in the March quarter on robust performance by manufacturing and service sectors as well as good farm output. According to the global financial services major, “the hand of government” lifted GDP growth. The report cited four key drivers for the rise in growth print — core GVA (Gross Value Added), the public spending component of GVA, construction, and rise in central and state government fiscal deficits.

As per the report, core GVA (GVA excluding public services and agriculture), which is a rough proxy for private sector growth, moderated slightly in the March quarter to 7.2 per cent versus 7.4 per cent last quarter and 4.1 per cent in the same quarter last year. “The GDP print reinforces our view that much of the current uptick in growth is led by the government’s push to construction and consumption,” the HSBC report said.

Moreover, construction and capital formation grew at double digits and public roads contracts awarded quadrupled in the March quarter. Besides, central government fiscal deficit for FY18 rose to 3.5 per cent, versus a budget estimate of 3.3 per cent and this has growth dividends., the report noted.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 04 Jun 2018 22:52

Indian lenders are raising interest rates even before any central bank action as the strongest loan demand in four years amid weak deposit growth pressures funding costs.

State Bank of India, ICICI Bank Ltd. and Punjab National Bank are among the nation’s biggest banks that increased their benchmark lending rates last week. The Reserve Bank of India, on the other hand, is expected to keep its key rate unchanged for a fifth straight meeting when it decides on policy Wednesday.


https://www.bloomberg.com/news/articles ... wing-costs

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 05 Jun 2018 02:51

SEBI moves to ease corporate insolvency resolution process
Corporate insolvency resolution process (CIRP) in India will get a boost with SEBI now amending its ‘Takeover Code’ to remove capital infusion hurdles in companies with approved resolution plans under the Insolvency and Bankruptcy Code (IBC)

The latest change will enable acquirers of shares under approved resolution plan to go beyond the maximum permissible non-public shareholding, that is, 75 per cent.

The SEBI move is expected to smoothen the implementation of successful resolution plans, say corporate observers.

Hitherto, the ‘Takeover Code’ barred acquirers of shares in a company from entering into any transaction that would take their aggregate shareholding above the maximum permissible non-public shareholding limit.

This will be a huge positive in terms of better price discovery in the case of the listed entities undergoing the CIRP as it will generate a lot of interest among the applicants who were seeking maximum control to maximise their returns against the huge risk being assumed by them while bidding for the target companies whose future remains uncertain in spite of all the due diligence being carried out, Mahajan said.

Govt weighs merger of Bank of Baroda, IDBI, Oriental Bank, Central Bank
The government is considering merging at least four state-run banks, including Bank of Baroda, IDBI Bank Ltd, Oriental Bank of Commerce and Central Bank of India, two people aware of the matter said. If the plan goes through, the merged entity will become the second-largest bank in the country after State Bank of India, with combined assets of ₹16.58 trillion.

With the merger, the government hopes to help stem the rise in bad loans in their books at a time when poor asset quality has crippled the lending ability of some of them. The merger will also allow the weak banks to sell assets, reduce overheads and shut money-losing branches.

The four banks that are being proposed to be merged are under pressure with combined losses of ₹21,646.38 crore in the year ended 31 March.

The department of financial services, under the finance ministry, is also simultaneously considering a 51% stake sale in IDBI Bank to a strategic partner, for ₹9,000-10,000 crore, the people said on condition of anonymity.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 05 Jun 2018 16:21

The Nikkei Services PMI in India dropped to 49.6 in May of 2018 from 51.4 in the previous month and marking the first month of contraction in the sector since February. New order broadly stagnated while jobs growth slowed to the weakest since last December. On the price front, input cost inflation picked up from April’s recent low. That said, service providers were restricted in their ability to fully pass on higher cost burdens to clients. Meanwhile, confidence hit its strongest since January 2015.
From: https://tradingeconomics.com/india/services-pmi

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karthik S » 05 Jun 2018 22:02

Second successful NPA resolution: Vedanta has finally forayed into the steel industry by offering a cheque of Rs 5,300 crore to buy out bankrupt Electrosteel Steels under the newly-adopted Insolvency and Bankruptcy Code. this is the second successful resolution under the IBC law from the very first list of big defaulters known as the Reserve Bank of India’s ‘Dirty Dozen’. The deal is subject to final approval from National Company Law Appellate Tribunal (NCLAT).


https://www.financialexpress.com/indust ... l/1193155/

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 05 Jun 2018 22:22


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 05 Jun 2018 22:37

DBT saves more than 32000 crores.

https://www.financialexpress.com/econom ... 8/1193744/

Banks to sell part of bad loans portfolio.

https://economictimes.indiatimes.com/in ... 443840.cms

Ports profit rises under Sagarmala project.

https://swarajyamag.com/infrastructure/ ... evelopment

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 05 Jun 2018 23:07

Coastal movement policy of agri, farm products relaxed.

https://economictimes.indiatimes.com/ne ... n&from=mdr

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 05 Jun 2018 23:32

It's great to see both takeovers and liquidations working smoothly under the IBC 2016 now. A lot of attention goes towards DeMo and GST, but this law will soon become prominent as another great reform during this administration.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Hari Seldon » 06 Jun 2018 10:06

Excerpt from ZH of what Urijit Patel wrote y'day in an FT op-ed

In an op-ed published overnight in the FT, a central banker writes that when it comes to the turmoil gripping the world’s Emerging Markets, whether it is the acute, idiosyncratic version observed in Argentina and Turkey, which according to JPM may be doomed, or the more gradual selloffs observed in places like Indonesia, Malaysia, Brazil, Mexico and India, don’t blame the Fed’s rate hike cycle. Instead blame the “double whammy” of the Fed’s shrinking balance sheet coupled with the dollar draining surge in debt issuance by the US Treasury.

That’s the message from the current Reserve Bank of India, Urjit Patel, who writes that “unlike previous turbulence, this episode cannot be attributed to the US Federal Reserve’s moves on interest rates, which have been rising steadily since December 2016 in a calibrated manner.” But does that mean that the Fed is not to blame for what increasingly looks like another budding EM crisis? Not at all: according to Patel, the dollar funding shortage “upheaval” stems from what he sees as the confluence of two significant events of which the Fed’s balance sheet reduction is one, while the second is the dramatic increase in US Treasury issuance to pay for Trump’s tax cuts; what is notable is that both events are drastically soaking up dollar liquidity.

As a result, Patel blames a lack a coordination between the Fed and Treasury on the adverse flow through across global funding markets as a result of this decline in dollar liquidity, and writes that “given the rapid rise in the size of the US deficit, the Fed must respond by slowing plans to shrink its balance sheet. If it does not, Treasuries will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.” Putting these two parallel processes – which threaten to materially impair dollar funding markets – in context, on one hand there is QT, or the gradual decline in the Fed’s balance sheet which is set to peak at a rate of $50BN/month by October, while at the same time US net Treasury issuance is set to jump to $1.2 trillion in 2018 and 2019 to cover the forecasted budget deficit of $804BN and $981BN in 2018 and 2019, respectively.

And in a curious coincidence, the withdrawal of dollar funding by the Fed in monthly terms, as it reduces its reinvestment of income received, is proceeding at roughly the same pace as that of net issuance of debt by the US government. Furthermore, both processes are open ended which means that over the next few years, the government’s net issuance will stabilize, albeit at a high level, whereas the Fed’s balance-sheet reduction will keep rising. Both are terrible news for Emerging Markets, which are in desperate need of reversing the ongoing dollar outflows; however as long as Trump continues to make America great, and funds said stimulus with excess debt issuance, emerging market turmoil is virtually guaranteed.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 06 Jun 2018 16:56

The Reserve Bank of India raised its benchmark policy repo rate by 25bps to 6.25 percent on June 6th 2018 while markets expected no changes. It is the first hike in borrowing costs since January of 2014, mentioning upside risks to inflation that include higher oil prices and uncertainty in global financial markets. Policymakers said the decision is consistent with a neutral monetary policy stance and is in line with achieving the inflation target of 4 percent +/- 2 percent while supporting growth.

-from trading economics.com

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JTull » 06 Jun 2018 17:31

Few big players dominating digital payments is a risk, warns RBI

The Reserve Bank of India (RBI) has a message for Paytm, PhonePe, Amazon Pay, Google Tez and now Facebook. It does not want just a few big companies to dominate India's digital payments sector. In its 'Statement on Developmental and Regulatory Policies' released today, the RBI has warned of a concentration risk in the retail payments sector.

"With the maturing of the retail payments market, it is important that the concentration risk in retail payment systems is minimized from a financial stability perspective. The Reserve Bank plans to encourage more players to participate in and promote pan-India payment platforms so as to give a fillip to innovation and competition in the sector," it said. The RBI will put out a policy paper in this regard for public consultation by September 30, 2018.

After demonetisation, there has been spurt in digital payments in India which has attracted a number of big players. Early mover Paytm was the biggest beneficiary of demonetisation which made a large number of people take to digital payments. Facebook, the latest entrant to the sector, is set to launch its WhatsApp payment services in the whole of India soon. Google, Amazon and Paytm Mobikwik and PhonePe are the major digital payments companies operating in India.

Paytm emerged as the country’s most preferred digital payments platform in April, accounting for a third of the 190 million unified payments interface (UPI)-based transactions recorded in the month, according to an ET report citing sources in the banking industry. The ecommerce and digital payments company registered 62.9 million transactions and was followed by Yes Bank with 22% share at 42.4 million payment. Yes Bank’s transactions are mainly generated through Flipkart-owned payment application PhonePe.

The RBI is keeping a sharp eye on digital payments industry. In April, the central bank asked the global behemoths to host India-relevant data within the country and bringing oversight rules on a par with what is prevalent in Asia’s richer neighbourhoods. The RBI directive to store all user data on servers within India by October sharply divided the industry. While local companies such as Paytm and Flipkart-owned PhonePe have welcomed the move, global technology firms have voiced strong concerns over it

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 06 Jun 2018 20:17

Suraj wrote:It's great to see both takeovers and liquidations working smoothly under the IBC 2016 now. A lot of attention goes towards DeMo and GST, but this law will soon become prominent as another great reform during this administration.


We need to hold our breath and wait to see if judiciary derails the whole process or not

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 06 Jun 2018 20:27

vijayk wrote:
Suraj wrote:It's great to see both takeovers and liquidations working smoothly under the IBC 2016 now. A lot of attention goes towards DeMo and GST, but this law will soon become prominent as another great reform during this administration.

We need to hold our breath and wait to see if judiciary derails the whole process or not

No "we" don't. You can hold yours in if you want :)

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Gus » 06 Jun 2018 22:33

why is the repo rate going up, causing interest rate hikes?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 06 Jun 2018 22:51

Read that new IBC code considers home buyers as Creditors. Buyers can even invoke IBC against builders to enforce bankrupcy proceedings. This is an excellent step IMO.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 06 Jun 2018 22:53

Gus wrote:why is the repo rate going up, causing interest rate hikes?


Becuase inflation in on rise and GDP is also on upswing.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 06 Jun 2018 23:21

Further, credit growth has risen much more than deposit growth, which means demand for capital driven by investments exceeds the rate at which bank deposits are growing. As a result there's a natural impetus for the cost of capital to go up. This can be gauged from the fact that banks were raising rates even before RBI's much expected rate hike. The system is working as intended - credit growth in excess of deposit growth ought to push up rates, which in turn make deposits more attractive and brings about a new equilibrium.

A continued smooth process of the IBC through NCLT and NCLAT for other big insolvency cases will help rapidly recapitalize the banks' bad loan books, enabling them to more easily lend out previously 'dead' assets on their books. Yes the update to IBC for homeowners was promulgated a few weeks ago. It's an excellent step for homeowners who can now challenge the builders trying to extend and pretend after taking money in.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 06 Jun 2018 23:37

Also rising oil prices may give an uptick to inflation.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 07 Jun 2018 02:07

The same day that President Kovind signed the new update to the IBC enabling homeowners as creditors under the law, RBI increases the limits for priority home loans for both urban and rural areas:
RBI announces hike in limits for cheaper loan for affordable housing
In a statement, Reserve Bank of India said that it has been decided to revise the housing loan limits for PSL eligibility from Rs 2.8 million to Rs 3.5 million in metropolitan centres and from Rs 2 million to Rs 2.5 million in other centres.

The overall cost of the dwelling unit in the metropolitan centre (with population of ten lakh and above) and at other centres does not exceed Rs 4.5 million and Rs 3 million, respectively.

"Big boost to Housing for all. Increase in home loan limits under Priority sector lending to Rs 3.5 million in cities & Rs 2.5 million elsewhere to make such bank loans cheaper," Financial Services Secretary Rajiv Kumar said in a tweet after the statement of the RBI.

Loans given under PSL are less expansive than those provide by the banks in their ordinary course.

RBI further said a circular in this regard will be issued by the month end.

President Ram Nath Kovind has given his assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, according to an official release.

"The ordinance provides significant relief to home buyers by recognising their status as financial creditors. This would give them due representation in the Committee of Creditors (CoC) and make them an integral part of the decision-making process," the release said.

Further, home buyers would be able to invoke Section 7 of the IBC against errant developers. Section 7 allows financial creditors to file application seeking insolvency resolution process.

The move also comes at a time when many home buyers are facing hardships on account of delayed and incomplete real estate projects.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chetak » 07 Jun 2018 21:13

vijayk wrote:
Suraj wrote:It's great to see both takeovers and liquidations working smoothly under the IBC 2016 now. A lot of attention goes towards DeMo and GST, but this law will soon become prominent as another great reform during this administration.


We need to hold our breath and wait to see if judiciary derails the whole process or not


aaaaaaaaaaaaaand they are off.

twitter

A court judgement has effectively de-fanged the new Indian bankruptcy code. Power producers - among the most distressed - are now basically exempt, thanks to heavy lobbying. Unless government challenges this, it will nullify one of its most important reforms.

Image

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 07 Jun 2018 21:38

I don’t think there is anything wrong with the HC judgment . Power cos have to deal with not being paid for their output , due to theft or indebtedness of the state level entities who purchase the power . It’s pointless to force them into bankruptcy process , which is intended to clear the problem, not simply find another buyer who has to put up with the same sh1t until HE goes bankrupt too .

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 07 Jun 2018 22:13

Date of Decision - 31/5/2018
Court Number - Chief Justice's Court
Judgment Type - Interlocutory Non AFR
Coram - Hon'ble Dilip B. Bhosale,Chief Justice and Hon'ble Suneet Kumar,J.
Petitioner's Counsels - Ashish Mishra
Respondent's Counsel - A.S.G.I. and Sanjay Kumar Om
WRIT - C No. - 18170 of 2018 at Allahabad : Independent Power Producers Association Of India Vs. Union Of India And 5 Others

?Chief Justice's Court
Case :- WRIT - C No. - 18170 of 2018
Petitioner :- Independent Power Producers Association Of India
Respondent :- Union Of India And 5 Others
Counsel for Petitioner :- Ashish Mishra
Counsel for Respondent :- A.S.G.I.,Sanjay Kumar Om

Hon'ble Dilip B. Bhosale,Chief Justice
Hon'ble Suneet Kumar,J.

Heard Mr. Sajan Poovayya, Senior Advocate with Mr. Ashish Mishra, learned counsel for the petitioners and Mr. Sanjay Kumar Om, learned counsel for respondents 1 and 3 to 6.

Issue notice to respondent no.2, returnable on 10.7.2018. In addition to Court notice, the petitioners to serve notice to respondent no.2 by registered post with AD/Speed Post/Courier and to file proof of service.

As requested by counsel for the respondent nos. 1 and 3 to 7, the question of maintainability of the writ petition, is kept open to be argued on the next date. It is open to the respondents to file short reply - affidavit at this stage, if they so desire and are advised.

After hearing both the sides, counsel for the parties have agreed for the order that we propose to pass today. Hence the following order:

We request the Secretary, Ministry of Finance, Union of India, to hold a meeting in the month of June, 2018 of respondents 2 to 5 through their Secretaries and a representative of the petitioners' association to consider their grievance and see whether any solution to the problem is possible, in the light of observations made by the Thirty-Seventh Report of Standing Committee on Energy presented to Lok Sabha on 7.3.2018 with regard to stressed/non-performing assets in electricity sector. Though, we could not go through the report, our attention was specifically drawn to some observations in Part-II of the report, which reads thus:

"The Committee are of the considered view that providing finances, though vital, to the project is only one of the several factors essential for the commissioning of the project. As of now, commissioned plants worth of thousands of Mws are under severe financial stress and are currently under SMA-1/2 stage or on the brink of becoming NPA. This is due to fuel shortage, sub-optimal loading, untied capacities, absence of FSA and lack of PPA, etc. These projects were commissioned on the basis of national need/ demand of electricity, availability of all other essentials required in this regard. However, due to unforeseen circumstances, these plants are suffering from cash flows, credit rating, interest servicing etc. Hence, simply applying the RBI guidelines mechanically by the banks, financial institutions, joint lender forums will push these plants further into trouble without any hope of recovery."


It is needless to mention that the petitioners representatives shall supply a copy of this order and of the writ petition with annexures to all the respondents within one week from today. We only observe that action may be avoided on the basis of the impugned circular dated 12.2.2018 issued by respondent no.2-Reserve Bank of India addressed to all Scheduled Commercial Banks and All-India Financial Institutions, against members of the petitioners association, subject to condition that the member(s) is/are not willfull defaulter(s) till the meeting is conducted by the Secretary, Ministry of Finance, Union of India. We also observe that the Secretary, Ministry of Finance shall communicate the date and time of the meeting to all concerned, including the President of the petitioners' association, well in advance.
S.O. to 10.7.2018.
Order Date :- 31.5.2018
RK
(Suneet Kumar, J) � � � (Dilip B Bhosale, CJ)

Supratik
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 07 Jun 2018 22:19

Correct decision.

chetak
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chetak » 07 Jun 2018 22:34

Suraj wrote:I don’t think there is anything wrong with the HC judgment . Power cos have to deal with not being paid for their output , due to theft or indebtedness of the state level entities who purchase the power . It’s pointless to force them into bankruptcy process , which is intended to clear the problem, not simply find another buyer who has to put up with the same sh1t until HE goes bankrupt too .


I hope that I am wrong but I think that this may just be the thin edge of the wedge. Crony capitalism is a way of life for a great many people in this country and not just the big industrial families.

They will find innovative ways to overcome this adversity too.

Power producers are private entities mostly and especially in a state like KAR, they thrive on patronage. No one talks about the failure of govt entities which are maliciously run into the ground by "chairmen" carefully selected to bleed these companies.

Newer entrants "invest" in power plants, always with some unofficial understanding that there will be "easy" funding, slick write-offs or eternal roll overs of the funds and sure offtake of the power produced.

And a paid rudali press to mourn publicly when called upon to do so.

So mundane considerations like risk factors, fuel price hedging etc don't weigh too heavily on them. Their mai baap is always there to take care of all such minor issues.

But when the mai baaps themselves are severely hamstrung and the banks start to foreclose per the new laws, their goose is well and truly cooked.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 07 Jun 2018 23:19

In this case you are wrong. The power sector in India is still dysfunctional for various reasons we already know of and those reasons are not entirely in owners hands. Just changing ownership under NCLT is not going to change anything. Besides it is a strategic sector so cannot be liquidated unless you want India to plunge into darkness. Until the bottlenecks are not ironed out they should be out of purview of NCLT.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 07 Jun 2018 23:26

We only observe that action may be avoided on the basis of the impugned circular dated 12.2.2018 issued by respondent no.2-Reserve Bank of India addressed to all Scheduled Commercial Banks and All-India Financial Institutions, against members of the petitioners association, subject to condition that the member(s) is/are not willfull defaulter(s) till the meeting is conducted by the Secretary, Ministry of Finance, Union of India


The way I read the above is that the power companies cannot be declared to be willful defaulters at least until the court-mandated meeting is held with the Secretary, Ministry of Finance, and perhaps also till a further court hearing ("...writ petition, is kept open to be argued on the next date...").

I am not at all sure that what the media report, i.e., the pasted newspaper page above, is anywhere close to accurate.

It took me 15 minutes to find the actual Allahabad High Court writ, and so in general I recommend -- if the subject matters to you enough for "rhona-dhona", then go as close to the primary sources as you can. If the subject is kind of just general knowledge, then it is OK to stay with the media reports, but recognize that the media reports can be wrong. It is OK to have no opinion at all or "floating opinion based on media reports". But if it matters to you to have a firm opinion, try to get to the primary sources.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chetak » 08 Jun 2018 00:06

Supratik wrote:In this case you are wrong. The power sector in India is still dysfunctional for various reasons we already know of and those reasons are not entirely in owners hands. Just changing ownership under NCLT is not going to change anything. Besides it is a strategic sector so cannot be liquidated unless you want India to plunge into darkness. Until the bottlenecks are not ironed out they should be out of purview of NCLT.


The point I was trying to make was, once shown the way, other, more "innovative" judgements may come about which may well wind up undercutting the fundamental premise in the very passing of the reforms in bankruptcy laws.

Regarding NCLT and power producers with NPA problems, I agree with you that there are issues and their genuine problems should be carefully considered.

Where huge loans have been taken without sufficient collateral, good sense should prevail over all other considerations, and only after reasonable corrective measures have been exhausted.


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