Indian Economy News & Discussion - Aug 26 2015

Vayutuvan · Post by **Vayutuvan** » 19 Oct 2015 23:54

Suraj: By "fixing infrastructure" do you mean reduction in the level of corruption? Lot of works happen only on paper, especially in R&B and PWD. Quality control oversight has to be tightened which translates to cracking the whip on corrupt inspectors/engineers etc.

Suraj · Post by **Suraj** » 19 Oct 2015 23:57

vayu tuvan wrote:Suraj: By "fixing infrastructure" do you mean reduction in the level of corruption?

No. The topic has been covered in more detail in past pages of this thread.

SaiK · Post by **SaiK** » 20 Oct 2015 02:26

http://www.thehindu.com/news/national/m ... e?w=alauto
Modi says country moving towards paperless banking

Prime Minister Narendra Modi on Monday said the government has initiated a series of banking reforms, including recapitalisation of PSU banks, change in rules for hiring top management and paperless transactions to curb the black money menace.

“The banking sector is seeing changes. Mobile banking is coming up. Banking will be premises-less and paperless,” he said at the launch of IDFC Bank in Delhi.

Mr. Modi further said India is slowly moving towards a situation where the currency printing cost will come down.

“We have to take the country in that direction. As we use technology, we move to paperless banking, currency-less business operations; the possibility of black money will gradually become negligible,” he said.

The Prime Minister also listed out the seven-point agenda to improve operations of the state-owned banks. It includes capitalisation, setting up of Bank Board Bureau and introduction of a framework for accountability.

“We have decided to bring improvements in the appointments at the top levels of the banks. This improves efficiency,” he said.

Talking about NPAs in the banking system, Modi said: “Bad loans in the past few years are a problem but we can’t only cry about it. We are trying to solve this problem.”

Speaking on the occasion, Finance Minister Arun Jaitley said that Rs 35,000 crore has been provided to 61 lakh applicants so far under the MUDRA scheme to help small entrepreneurs.

Suraj · Post by **Suraj** » 20 Oct 2015 03:58

Rather strange utterance from S&P - 'we won't listen to data, only to our own dogma':
S&P rules out rating upgrade for India for two years

Standard & Poor’s (S&P) on Monday retained the lowest investment grade for India, dashing the government’s hope for a rating upgrade for at least for two years — this year and the next. The agency retained India’s rating at ‘BBB-’ with stable outlook and expressed the hope that the country’s economic growth would average at eight per cent during 2015-18.

“We are affirming our ‘BBB-’ long-term and ‘A-3’ short-term sovereign credit ratings on India,” S&P said.

BBB is the lowest investment grade rating and stable outlook reduces risk of possible sovereign rating downgrade.

“The outlook indicates that we do not expect to change our rating on India this year or the next based on our current set of forecasts,” S&P said in a statement.

S&P cautioned the rating might see a downgrade if the proposed monetary policy committee, to be headed by the Reserve Bank of India (RBI) governor, fails to deliver. It added the improvement in policy making has raised the country’s prospect for economic and fiscal performance.

Two other agencies — Moody’s and Fitch — too have the lowest investment grade for India’s economy.

However, they are increasingly disconnected from reality - Indian *rupee denominated* debt continues to be extremely popular with FPIs, and RBI just announced tranche based plans to increase limits on foreign holdings of Indian debt from the previous $30 billion to $40 billion, reflecting persistent demands from foreign investors for greater access to Indian debt, which suggests that BBB- is simply a forced undervaluation used to load up on debt on cheaper terms before a ratings upgrade makes it dearer when the coupon falls:
India's new foreign investor limits to boost inflows (Sept 30 2015)

A new framework to boost government bond limits for foreigners could draw in $24bn of inflows over the next two-and-a-half years, according to ANZ.

The Reserve Bank of India, in consultation with the government, announced a medium-term framework that will increase government bond limits for foreign investors in a gradual manner. Details of the complete framework will be released in coming weeks, but there are already a few key points.

Firstly, the limits for foreign portfolio investment in debt securities will be announced in rupees from now on, rather than US dollars. Second, the limits for foreign investment in central government securities will be raised, in phases, to 5 per cent of the outstanding stock by March 2018, taking the limits to Inr2.74bn ($40bn) from Inr1.54bn now.

There will be a separate limit for investment by foreign portfolios in state development loans, to reach 2 per cent of outstanding stock by March 2018, to Inr17tn from Inr13tn today.

For the remainder of the fiscal year, to March 2016, the foreign portfolio investor limits will be increased in two tranches, with Inr165bn in the first tranche on October 12, and the same amount in the second on January 1. Following that, the increase in the limits for government securities will be announced every half year in March and September, and released every quarter.

An interesting piece of core sector news:
September coal imports slump 27% to 12.6 mn tonne as domestic production grows

India's coal imports fell 27% to 12.6 million tonne in September from a year earlier as local output jumped, Coal Secretary Anil Swarup said on Monday.

"With unprecedented increase in coal production by Coal India Ltd , import of coal comes down for third successive month," Swarup tweeted.

India is opening a mine a month as it races to double coal output by 2020.

Singha · Post by **Singha** » 20 Oct 2015 09:38

i wonder how the ever present bleeding of precious iron ore exported (and importing of finished steel) is doing ?

we really need to get our steel sector in order to totally meet domestic demand in all grades from submarines to ships to aerospace down to scrap steel for spoons and baltis.

Suraj · Post by **Suraj** » 20 Oct 2015 10:26

Steel output continues to grow. This year we will outstrip US in steel output, having outproduced them every month so far. We currently produce ~7.5MT a month. #2 producer Japan produces 8.5-9MT a month. We will overtake them in a 2-3 years probably.

2015 YTD: 61MT (~90MT for full year at current rate)
2014: 83MT
2013: 81MT
2012: 77MT
2011: 72MT
2010: 68MT
2009: 64MT
2008: 58MT
2007: 54MT
2006: 50MT

All data above from World Steel Archive. However, this does not address quality. Specialized steel for automobiles, shipbuilding etc still gets imported, rather than entirely satisfied domestically, though SAIL now produces warship grade steel, that went into INS Vikrant.

India records steel demand growth in difficult external environment

India, according to WSA, is one of the few countries to remain a "resilient" economy in the face of a "global slowdown" because of its commitment to "reforms". Indian steel demand in 2015 is to rise to 81.5 mt from 75.9 mt in 2014. WSA says its use will further improve by 7.6 per cent to 87.6 mt next year. Hopefully, the three-year high of 6.4 per cent rise in industrial growth in August, supported by good showing in manufacturing, mining and electricity, will be sustained to generate good demand for steel in the months ahead.

Singha · Post by **Singha** » 20 Oct 2015 10:29

atleast automobile and railway steel and aluminium must all be produced domestically. its a big sector.

Theo_Fidel · Post by **Theo_Fidel** » 20 Oct 2015 11:43

I'm not sure about others but auto steel we need to use best in the world. Right now it is mostly imported. By the time we figure out a steel alloy production the manufacturers move to a new alloy. Right now west is moving to aluminium alloys and welding and we are no where near geared up for it. Auto sector can't wait for domestic metal companies to catch up...

http://www.livemint.com/Companies/HQLcK ... ports.html

“Japan and South Korea are largely exporters of automotive-grade steel, which is not produced extensively in India, and they have been exporting even earlier. But China exports hot-rolled coils which compete directly with us; this year, they have increased their exports by a huge margin,” said T.V. Narendran, managing director, Tata Steel Ltd, on the sidelines of a press conference on 21 May.

Tata Steel, with a domestic capacity of 10 million tonnes per annum (mtpa), manufactures hot-rolled coils (HRCs) which are largely used for manufacturing automotive panels and white goods such as television sets, refrigerators and washing machines.

According to the joint plant committee (JPC), a statistical body under the ministry of steel, in fiscal 2015, India imported 9.3 million tonnes (mt) of finished steel, 71.1% higher from a year ago, while it exported a mere 5.5 mt.

“A majority of this incremental import was from China. Any further jump in imports from here on is going to be a major concern for steel companies in India,” said A.S. Firoz, chief economist, economic research unit, JPC.

India’s domestic steel production for sale in the same period was 90.5 mt, 3.3% higher than a year ago. The country’s consumption in April-March 2015 was at 76.3 mt, 3.1% higher from a year ago, according to JPC data. This rather large gap is explained by the fact that 1.45 million tonnes is retained as inventory by steel companies. Then, a significant quantity is counted twice—that is, steel bought for value addition such as galvanisation, and then resold in the market as premium steel. This double counting needs to be subtracted, putting steel consumption at 76.3 mt.

Imports from China rose by almost 70% in the last financial year due to two factors—first, Chinese steel prices are much lower than Indian steel prices; and two, if an Indian importer intends to import steel products from China or any other rouble-FTA country with the end-use of eventual exports, they are also exempted from import duty. This makes lower-priced Chinese steel preferable to steel from Japan, South Korea or even domestic steel, Firoz said.

This has put stress on the balance sheets of hundreds of Indian steel companies, dominated by the big three—Steel Authority of India Ltd (SAIL), Tata Steel and JSW Steel.

JSW Steel reported an 87% drop in its consolidated net profit for the March quarter to Rs.62.38 crore from Rs.482.83 crore in the same quarter last year. Tata Steel posted a loss of Rs.5,674.29 crore against a net profit of Rs.1,035.87 crore in the three months ended 31 March 2014. Net sales dropped 21% to Rs.33,336.81 crore in the quarter ended 31 March 2015 from Rs.42,017.63 crore in the year-agoperiod. SAIL Ltd is yet to report its financial results for the March quarter.

According to data from the Corporate Debt Restructuring (CDR) Cell, as on 31 March 2015, of the Rs.2.86 trillion in loans being restructured, 19.7% or Rs.56,443 crore worth of loans came from the iron and steel sector.

Gus · Post by **Gus** » 20 Oct 2015 21:10

http://economictimes.indiatimes.com/new ... 455253.cms

The Prime Minister also listed out the seven-point agenda to improve operations of the state-owned banks. It includes capitalisation, setting up of Bank Board Bureau and introduction of a framework for accountability.

"We have decided to bring improvements in the appointments at the top levels of the banks. This improves efficiency," he said, adding private sector professionals have been hired in PSU banks after nationalisation of banks in 1969.

Modi said the government would be infusing Rs 70,000 crore in the public sector banks in the next few years to help them deal with the distress assets issue.

He also said import duties have been hiked on certain items to help the sectors facing problems and account for distress assets of the banking sector.

Talking about NPAs in the banking system, Modi said: "Bad loans in the past few years are a problem but we can't only cry about it. We are trying to solve this problem."

Suraj · Post by **Suraj** » 23 Oct 2015 00:23

FDI spurt aimed at consumption story: Study

India remains far behind China in terms of ‘gross FDI inflows’ despite a recent spurt and funds largely coming into the consumption space such as e-commerce and not in manufacturing, says a new study.

Stating that the recent surge in foreign direct investment inflows may not give any boost to the government’s ambitious ‘Make in India’ campaign, the latest research report of leading brokerage firm Emkay Global said it is the ‘net FDI’ that has come down in case of China due to higher investments abroad.

"The recent media hype over India surpassing China and US in FDI inflows, is supposedly considered an affirmation of the success of 'Make in India'.

"However, disaggregated data suggests that FDI flows have centred on exploiting domestic consumption, (and) rather than stimulating domestic manufacturing it is likely to have catalysed imports," it said.

The report further said that the gross FDI inflows to China far exceeded India by 3.6 times and China's lower net FDI is due to higher investments abroad.

... a decent fraction of that Chinese 'outward FDI' is just good old capital flight.
GST regime to have 8 forms for filing tax returns

The proposed GST (goods and services tax) regime is likely to provide for monthly filing of returns for business to business dealings through a set of eight forms for different categories of transactions.

The joint committee on Business Process for GST in relation to GST Return has suggested filing of a periodic e-return for Central GST, State GST and Integrated GST.

According to the proposal, the returns can be filed on a specific date of a month, like on 10th of next month for outward supplies, 15th for inward supplies and 20th in case of monthly returns.

The Committee suggested that in the GST regime there should be eight forms for filing of returns by tax payers.

There will also be provision for filing of GST returns by non-resident tax payers in form GSTR-5. Non-resident tax payers could include taxi aggregators like Uber.

Govt eyes public issues, ETFs as choppy markets derail disinvestment plans

Faced with choppy market conditions and a virtual certainty that planned strategic sales of unviable government assets may not happen this year, the finance ministry finds that its job of meeting the ambitious Rs 69,500 crore disinvestment target has become way more difficult.

It is now left grappling with additional revenue-generating options that could include up to three initial public offerings (IPOs) of state-owned companies - Hindustan Aeronautics, RINL and THDC - and raising more money from its central public sector enterprises exchange traded fund (CPSE ETF), Business Standard has learnt.

Of the total 2015-16 budgeted estimate for disinvestment in 2015-16, Rs 41,000 crore was expected to come from minority stake sales in state-owned companies and Rs 28,500 crore from strategic sale of loss-making public sector units (PSUs) and other unviable assets like warehouses, factories, hotels and the like.

While there are positive signs regarding the former, with close to Rs 13,000 crore already garnered from stake sales in Indian Oil, Dredging Corp of India, PFC and REC, senior government sources say that strategic stake sales are off-the-table.

It's a really bad idea to 'wait for better market conditions' because it may just turn into 'a lot worse market conditions'.

Infrastructure:
Road construction picks up 36% this year

The government's ambitious plan to increase the pace of road construction has started showing results. During April-September 2015, the total length of the road constructed in the country under various programmes of the road ministry was 36 per cent higher than the corresponding period the last financial year.

According to the ministry of road, transport and highways data, 2,446 km of roads, including highways, were constructed during April-September 2015 compared to 1,795 km during the corresponding period of the previous financial year. Also, the award of contracts for 4,482 km of roads this year was much higher than the last year's 1,809 km.

Officials added road construction would further gain momentum in the coming months since the pace of construction during the month of July-August is slow because of monsoon. It is likely to touch 10,000 km compared to 6,308 km last year.

Excellent moves from GoI:
Jaitley warns pulses hoarders of penal action

As prices of pulses, particularly tur, continued to remain above Rs 200 a kg in some retail markets, the central government said 41,000 tonnes of pulses have been imported or recovered from hoarders in recent days, leading to an ease in supply.

About 36,000 tonnes have been recovered from hoarders in 3,290 searches by state governments in the past three days (23,340 tonnes from Maharashtra alone) and 5,000 tonnes of imported pulses have arrived, finance minister Arun Jaitley, who heads an inter-ministerial group to monitor the situation, told reporters after its meeting, the second in a week. Another 3,000 tonnes of imported pulses would soon come, he added.

Tamil Nadu has demanded 500 tonnes and Andhra Pradesh 1,500 tonnes, he said.

member_29172 · Post by **member_29172** » 23 Oct 2015 07:58

Four major domestic brands are joining hands to set up units at the country’s first phone manufacturing hub – Sri Venkateshwara Mobile and Electronics Manufacturing Cluster – coming up in Tirupati.

Micromax, Celkon, Karbonn and Lava will invest ₹2,000 crore in phases in the 120-acre hub located near Renigunta airport. Indian companies account for 45 per cent of the 24 crore phones sold in the country.

Prime Minister Narendra Modi will lay the foundation stone for the hub on Thursday. The hub, which is expected to commence production in the next six months, would have an aggregated capacity of 7 crore smart phones a year.

The hub will also house all the players in the ecosystem that includes manufacturers of earphones and adopters.

“The hub would provide 45,000 direct and indirect jobs when fully completed in the next two years. A couple of Chinese firms Vikin Communications and Gaungdong Wivtak Technology too are setting up units to support the mobile manufacturers,” Celkon Mobiles Chairman and Managing Director Y Guru told BusinessLine.

“Mobile phone manufacturing in 2015-16 will grow by more than 110 per cent compared with 2014-15. The Tirupati hub will create more than 10,000 jobs within a year and we expect this hub to contribute at least 5 per cent of our all-India target to create 15 lakh jobs by the year 2019,” said Pankaj Mohindroo, National President of Indian Cellular Association (ICA).

The ICA had been scouting for a location to set up the hub and had been in talks with various State governments.

Mohindroo, who is also the Chairman of Fast Track Task Force (FTTF), set up by the Centre to promote mobile handset manufacturing eco-system in India, said suitable regulatory interventions and proactive support provided by Andhra Pradesh clinched ICA’s decision in favour of Tirupati.

Sudhir Hasija, Chairman of Karbonn Mobiles, has said that the company would invest ₹250 crore to set up 30 lines, each having a capacity to produce 2,500 smart phones in a single shift.

“It is not an assembly facility. We are manufacturing the complete phone. In the first phase, we will build 3 lakh sq ft space,” he said.
Four major domestic brands are joining hands to set up units at the country’s first phone manufacturing hub – Sri Venkateshwara Mobile and Electronics Manufacturing Cluster – coming up in Tirupati.

Micromax, Celkon, Karbonn and Lava will invest ₹2,000 crore in phases in the 120-acre hub located near Renigunta airport. Indian companies account for 45 per cent of the 24 crore phones sold in the country.

Prime Minister Narendra Modi will lay the foundation stone for the hub on Thursday. The hub, which is expected to commence production in the next six months, would have an aggregated capacity of 7 crore smart phones a year.

The hub will also house all the players in the ecosystem that includes manufacturers of earphones and adopters.

“The hub would provide 45,000 direct and indirect jobs when fully completed in the next two years. A couple of Chinese firms Vikin Communications and Gaungdong Wivtak Technology too are setting up units to support the mobile manufacturers,” Celkon Mobiles Chairman and Managing Director Y Guru told BusinessLine.

“Mobile phone manufacturing in 2015-16 will grow by more than 110 per cent compared with 2014-15. The Tirupati hub will create more than 10,000 jobs within a year and we expect this hub to contribute at least 5 per cent of our all-India target to create 15 lakh jobs by the year 2019,” said Pankaj Mohindroo, National President of Indian Cellular Association (ICA).

The ICA had been scouting for a location to set up the hub and had been in talks with various State governments.

Mohindroo, who is also the Chairman of Fast Track Task Force (FTTF), set up by the Centre to promote mobile handset manufacturing eco-system in India, said suitable regulatory interventions and proactive support provided by Andhra Pradesh clinched ICA’s decision in favour of Tirupati.

Sudhir Hasija, Chairman of Karbonn Mobiles, has said that the company would invest ₹250 crore to set up 30 lines, each having a capacity to produce 2,500 smart phones in a single shift.

“It is not an assembly facility. We are manufacturing the complete phone. In the first phase, we will build 3 lakh sq ft space,” he said

http://www.thehindubusinessline.com/eco ... 790319.ece

Supratik · Post by **Supratik** » 23 Oct 2015 19:30

FDI is FDI. This disaggregation business while useful is to make the data look less pretty. It means manufacturing FDI is yet to boom but from other reports there are clear indications it is picking up pace.

member_29172 · Post by **member_29172** » 24 Oct 2015 05:29

There have been many people, here and outside the forum, who've been doubting about the innovation and entrepreneural capabilties of Indian youths, well some news in that direction

India Is The Youngest Startup Nation In The World; Over 80,000 Jobs Created In 2014-15: NASSCOM

The National Association of Software and Services Companies (NASSCOM) has just released a report, according to which, India has been declared as the youngest startup nation in the whole world. The report mentions that an average entrepreneur from India is less than 35 years of age, which is the lowest median age, globally.
The report titled: ‘Startup India – Momentous Rise of the Indian Startup Ecosystem’ has been prepared in association with consultancy firm Zinnov.
On one hand IT industry is struggling to keep pace with the growth rate, and is expected to offer lesser jobs next year, startups are increasing the process of job creation in the country. The report mentions that last year, Indian entrepreneurs created 80,000 jobs, fueled by 100% growth in funding, and 100% growth in PE & VC led funding in the nation.
This once again proves that Indian startup ecosystem has successfully created an environment, which is giving push to innovation, entrepreneurship and overall growth of entrepreneurs.
This report was launched yesterday at Bengaluru by R Chandrashekhar, President, NASSCOM, Ravi Gururaj, Chairman, NASSCOM Product Council and Rajat Tandon, Vice President, NASSCOM 10 K start-up program.
Some other highlights from the report:
72% of all Indian entrepreneurs are less than 35 years of age, hence making us the youngest startup nation, globally
Right now, India is 5th largest startup ecosystem in the whole world, as the total number of startups have growth to 4200, which is an increase of 40% compared to last year
Out of 1200 startups associated with NASSCOM, 50% of them are digitally focused on ecommerce, consumer services and aggregator based model.
Total number of accelerators in the Indian startup scene has increased by 40% in 2015, compared to last year. There are now 114 active accelerators in the nation.
Total funding received by Indian startups has increased by 125% in 2015
By the time 2015 ends, Indian startups would have received $5 billion worth of VC funds, which includes initiatives from State and Central Government
The report also mentions some much needed changes, to improve the overall startup ecosystem in the country. For instance, only 9% of founders and co-founders in the Indian startups are women (which is still 50% more than 2014!)
Some recommendations which were shared in the report:
Simplified rules and procedures for business registration
Ease of FDI rules and investment protocols
Ease of rules pertaining to licenses, permits, approvals for new startups
Simplifying tax structure and tax filing for all startups
Removal of angel investment tax
Easier methods for raising capital for a new business
Removing or reducing credit guarantee for loans required by young startups
National recognition for successful startups, so that more entrepreneurs venture out
Enabling easier exits for entrepreneurs and VCs
The report holds much significance, as India’s largest gathering of product based entrepreneurs: NASSCOM Product Conclave 2015 is being held right now in Bangalore.

http://trak.in/tags/business/2015/10/14 ... d-nasscom/

Suraj · Post by **Suraj** » 24 Oct 2015 23:07

A very interesting piece of news - September diesel consumption is the highest since mid 2011, with higher CV sales driving a significant part of the growth. CV sales are an early bellweather of rising industrial activity.
Sept raises temperature of fuel sector

A rise in the demand for logistics and transportation services pushed the growth of medium and heavy commercial vehicle sales to a record 35 per cent during September. Port traffic and cargo handled at the country’s 12 major ports grew 4.1 per cent in the April-September period driven by 42 per cent growth in finished fertiliser and 18 per cent growth in thermal coal shipments. High diesel usage growth in September was also recorded due to the low base of 0.2 per cent growth in the same month last year.

The consumption of petrol, the other automobile fuel, also set a record by growing at 25 per cent, the highest rate since May 2013 when petrol usage had grown 31 per cent. “The high growth in petrol consumption may be attributed to higher usage of cars and two-wheelers due to eased prices of petrol and consumer preference for petrol-driven vehicles,” said PPAC, adding the onset of festive season, a bad monsoon and the slow progress in rapid transport systems also contributed to high petrol usage.

VinodTK · Post by **VinodTK** » 25 Oct 2015 19:15

India's gold monetisation scheme may be ready in weeks - Modi

NEW DELHI (Reuters) - A programme to attract gold owned by households into a bank deposit scheme to monetise the precious metal could be ready in weeks, Prime Minister Narendra Modi said on Sunday, a step aimed at cutting expensive imports.

The scheme would allow people to put their gold into banks in return for interest payments in an attempt to mobilise thousands of tonnes of the metal sitting idle in Indian households.Indians prize gold as gifts and as a way of storing wealth. The country consumes nearly 1,000 tonnes of gold every year, most of it imported, and gold is the second-biggest expense on the import bill after oil.

In his monthly radio address, Modi said the programme should be ready before Dhanteras next month, a festival when it is considered an auspicious period to buy gold.

"Please, don't let your gold be dead money," Modi said. "Gold is very important for the country. Gold can become an economic strength for us."

Huge gold imports were blamed for pushing the country's current account deficit to a record $190 billion in 2013, prompting the government to hike its duty on imports to 10 percent, an all-time high.

Austin · Post by **Austin** » 25 Oct 2015 23:07

RBI Issues Norms for Gold Monetisation Scheme: 10 Facts

member_29172 · Post by **member_29172** » 26 Oct 2015 00:40

Fascinating stuff:

Status of Village Electrification as on 31.05.2015

This visualization shows the Status of Village Electrification in India as on 31.05.2015. In India majority of villages are electrified now. 96.7 % of villages in India were electrified as on May 2015.
Villages of fifteen States/UTs namely Andhra Pradesh, Goa, Gujarat, Haryana, Kerala, Punjab, Sikkim, Tamil Nadu, Telangana, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi, Lakshadweep and Pondicherry achieved 100% electrification as on May 2015.
Villages of 19 State/UTs were more than 90% electrified. Villages of only 3 states (Arunachal Pradesh, Manipur and Meghalaya) and an union territory (Andaman and Nicobar Island) were less than 90% electrified.
Arunachal Pradesh was the only states in India which lagging behind in the race of electrification, only 70.3% of villages were electrified.

https://data.gov.in/community/status-of ... 1-05-2015/

Please see the link for individual state stats.

panduranghari · Post by **panduranghari** » 26 Oct 2015 14:03

Austin wrote:RBI Issues Norms for Gold Monetisation Scheme: 10 Facts

I am very hopeful and almost certain that this scheme is going to fail. I am pretty much going to ensure my family and friends understand how bad this scheme is.

Whoever is advising the GOI about this has no idea how badly it will boomerang when the SHTF.

prahaar · Post by **prahaar** » 26 Oct 2015 14:34

What are the drawbacks of Gold Deposit Scheme?

nandakumar · Post by **nandakumar** » 26 Oct 2015 15:32

There are no drawbacks as such. The scheme is properly conceived. The problem will be in public acceptance. A lot of gold is acquired as part of wedding gift or other special occasions. So sentiment is vested with the acquisition and it would be difficult to overcome and tender it for melting it into gold bars for deposit purposes. So great chunk of licit gold is thus outside the scope of the scheme. Illicit gold (black money converted into gold or profits from other types of illegal activities) given the KYC norms that banks will employ while transacting in such gold makes it difficult for the owners to offer it as deposit. That leaves only jewelry acquired as part of chit schemes with jewelers as a small savings operation and thus devoid of any special sentiment may be available. Now, how many households would take the trouble to take it to a testing centre and get it assayed and thereafter consent to having it melted not knowing what would be the actual quantity that would be available as liquid gold? Not many, I guess.

Sanjay · Post by **Sanjay** » 26 Oct 2015 15:38

Alka_P wrote:Fascinating stuff:

Status of Village Electrification as on 31.05.2015

This visualization shows the Status of Village Electrification in India as on 31.05.2015. In India majority of villages are electrified now. 96.7 % of villages in India were electrified as on May 2015.
Villages of fifteen States/UTs namely Andhra Pradesh, Goa, Gujarat, Haryana, Kerala, Punjab, Sikkim, Tamil Nadu, Telangana, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi, Lakshadweep and Pondicherry achieved 100% electrification as on May 2015.
Villages of 19 State/UTs were more than 90% electrified. Villages of only 3 states (Arunachal Pradesh, Manipur and Meghalaya) and an union territory (Andaman and Nicobar Island) were less than 90% electrified.
Arunachal Pradesh was the only states in India which lagging behind in the race of electrification, only 70.3% of villages were electrified.
https://data.gov.in/community/status-of ... 1-05-2015/

Please see the link for individual state stats.

The question is what % of homes in each village have electricity. Impressive figures but the devil in in the details (that and a reliable power supply).

Gus · Post by **Gus** » 26 Oct 2015 17:22

nandakumar wrote: So sentiment is vested with the acquisition and it would be difficult to overcome and tender it for melting it into gold bars for deposit purposes.

ok..where does it say your gold will be melted for them take it as deposit?

Now, how many households would take the trouble to take it to a testing centre and get it assayed and thereafter consent to having it melted not knowing what would be the actual quantity that would be available as liquid gold? Not many, I guess.

again, where does it say it will be melted?

you do know that you don't have to melt jewelry to know what it is, right?

Gus · Post by **Gus** » 26 Oct 2015 17:25

i will definitely put our family gold, most of it other than regularly worn stuff. why pay for keeping it in a safe deposit bank box, when i can have it with the same bank while it is earning whatever money it earns. this is a no brainer.

a few early adopters do it and show the money to the rest and rest of the people will do a rush...

nandakumar · Post by **nandakumar** » 26 Oct 2015 19:35

Gus wrote:
nandakumar wrote: So sentiment is vested with the acquisition and it would be difficult to overcome and tender it for melting it into gold bars for deposit purposes.
ok..where does it say your gold will be melted for them take it as deposit?

Now, how many households would take the trouble to take it to a testing centre and get it assayed and thereafter consent to having it melted not knowing what would be the actual quantity that would be available as liquid gold? Not many, I guess.
again, where does it say it will be melted?

you do know that you don't have to melt jewelry to know what it is, right?

Well, the RBI notification does say it will be melted and converted to bars. The scheme does not envisage keeping it in its original form. In fact it would defeat the original purpose of the scheme which is to reduce the appetite for virgin gold from abroad.

Gus · Post by **Gus** » 26 Oct 2015 19:54

ok..I will still do that for old jewelry that is just lying useless

Theo_Fidel · Post by **Theo_Fidel** » 26 Oct 2015 20:21

dlete

ManjaM · Post by **ManjaM** » 26 Oct 2015 20:48

Gus wrote:i will definitely put our family gold, most of it other than regularly worn stuff. why pay for keeping it in a safe deposit bank box, when i can have it with the same bank while it is earning whatever money it earns. this is a no brainer.

a few early adopters do it and show the money to the rest and rest of the people will do a rush...

Gus, the scheme appears to be for 995 purity which is 24 carat. Jewellery is seldom 24 carat. Will that exclude household jewellery or will the bank pay for the jewellery minus the added alloying elements. It will be an added expense if people have to get it melted down to bring the gold up to 995.
As it stands, it appears that the biggest beneficiaries will be the temples sitting on hundreds of kgs of gold in various forms.

EDIT-
Ok it appears from my reading of this line that the price of jewellery minus the alloying elements will be what is the appraised price-

2) The minimum deposit at any one time shall be raw gold (bars, coins, jewellery excluding stones and other metals) equivalent to 30 grams of the precious metal of 995 fineness, the RBI said. There is no maximum limit for deposit under the scheme.

NandaKumar,
From the article linked earlier, there is an option to withdraw in 3 years. If the gold will be melted down, what is it that is going to be withdrawn? Is the the bar/coin equivalent of the deposited jewellery?

7) There will be provision for premature withdrawal subject to a minimum lock-in period and the penalty will be determined by individual banks.

Suraj · Post by **Suraj** » 26 Oct 2015 21:41

The gold deposit scheme hasn't even kicked off and everyone has violent opinions of it either way already. Why not give it a chance to get started ? It's a reasonable request. Most of you have already posted your positions before when the scheme was in the conception stage, so there's no new information here, just repeated vehemence.

Suraj · Post by **Suraj** » 27 Oct 2015 08:22

Captive coal mines production rises 34% to 53 MT in FY15

Coal production from captive mines last fiscal witnessed a significant rise of 33.64 per cent at 52.769 million tonnes (MT) over the previous year.

Coal production in FY 2013-14 stood at 39.484 MT, according to provisional data from the last fiscal, according to provisional coal production data of the last fiscal.

The government is eyeing to achieve 1.5 billion tonnes of coal production by 2020.

"During the year 2014-15, captive coal blocks contributed 52.769 MT of coal to all India coal production of 612.435 MT," it said.

nandakumar · Post by **nandakumar** » 27 Oct 2015 10:11

ManjaM
Under the scheme, investor has the option to take the redemption value in rupees at the market value (prevailing on the redemption date) for the physical quantity of gold that is deposited. Alternatively, in physical gold as coins possibly if the deposited gold is small in volume. Remember the scheme envisages a minimum deposit of 30 gms.

Austin · Post by **Austin** » 27 Oct 2015 15:17

How does the government gain from buying Gold and paying certain interest on it ?

Will GOI sell that gold to IMF etc to buy Forex ? Does having more gold allow GOI to print more Rupee ?

How does it work for the government ?

ashthor · Post by **ashthor** » 27 Oct 2015 16:00

Once the gold scheme start many household will discover that their 24/22/20 carats jewellery were actually 18/16 carats.

kit · Post by **kit** » 27 Oct 2015 17:58

Austin wrote:How does the government gain from buying Gold and paying certain interest on it ?

Will GOI sell that gold to IMF etc to buy Forex ? Does having more gold allow GOI to print more Rupee ?

How does it work for the government ?

right ..same qn here too !

Rahul M · Post by **Rahul M** » 27 Oct 2015 18:02

use it as collateral to raise loans ? (not sure if that works at a national level)
the interest being offered to private users is not that high so it can come from the gains made from the investments that are made from these loans.

rsingh · Post by **rsingh** » 27 Oct 2015 19:09

Austin wrote:How does the government gain from buying Gold and paying certain interest on it ?

Will GOI sell that gold to IMF etc to buy Forex ? Does having more gold allow GOI to print more Rupee ?

How does it work for the government ?

Saving forex by not paying for imports?

Austin · Post by **Austin** » 27 Oct 2015 19:54

rsingh wrote:Saving forex by not paying for imports?

Why would any one save fiat currency and throw away genuine Wealth

panduranghari · Post by **panduranghari** » 27 Oct 2015 19:56

nandakumar wrote:There are no drawbacks as such. The scheme is properly conceived. The problem will be in public acceptance. A lot of gold is acquired as part of wedding gift or other special occasions. So sentiment is vested with the acquisition and it would be difficult to overcome and tender it for melting it into gold bars for deposit purposes. So great chunk of licit gold is thus outside the scope of the scheme. Illicit gold (black money converted into gold or profits from other types of illegal activities) given the KYC norms that banks will employ while transacting in such gold makes it difficult for the owners to offer it as deposit. That leaves only jewelry acquired as part of chit schemes with jewelers as a small savings operation and thus devoid of any special sentiment may be available. Now, how many households would take the trouble to take it to a testing centre and get it assayed and thereafter consent to having it melted not knowing what would be the actual quantity that would be available as liquid gold? Not many, I guess.

I am afraid that is a very naive view.

The problem with the scheme is this- gold in whatever form will be melted and assayed. Depending on the gold quality, the interest will be paid. However, did you know the cost of assaying gold is quite high. If I give a 30 g of gold to assay, it will cost the same as it does to assay 1 kg. The cost for the assay is borne by the owner of the gold. The gov. may choose not to charge the gold holder directly, but the cost has to be recovered so the interest available will be proportionately lower. The cost will have to be paid no matter what. The minimum tie in period + interest rate offered will cover the cost of the assay.

If I want to get the 30 g back, I wont get it back pronto as they will have to get the 30 g from somewhere. The gold which I initially gave (eg. in the form of a gold chain) has already been melted for assaying. If 1 person asks, he or she will get it back say in 2 days. However if 100 people or 10000 people want their gold, then there is a problem.

The local banks as of now, give gold loans. That is perhaps a lot better. Yes interest rates are high, but once loan and the interest is repaid, you WILL get the original gold in whatever form you deposited back.

In the government scheme, that is not the case. Besides why do we buy gold, because we do no trust the currency or banks or the government itself.

Theo_Fidel · Post by **Theo_Fidel** » 27 Oct 2015 20:00

Not sure how it is viewed now but way back gold was considered wasteful consumption type trapped savings by GOI. Essentially wealth that is not being harnessed to productive activity. I don’t think this attitude is based on too much research as such. I for one would be interested in seeing the value to the economy of gold holdings.

nandakumar · Post by **nandakumar** » 27 Oct 2015 20:35

As Suraj pointed out, let us wait till the scheme actually takes off. One issue troubles me though. The bureaucracy in the Finance Ministry and the RBI are engaged in a shadow boxing. Let us start with the sequence of events. The Fin Min issues in September, an official release saying that the Govt has decided to launch a scheme and that the RBI will release the modalities. The RBI lays down the ground rules for banks but leaves the question of who will be officially authorised to do the testing of gold. Without such a basic element the scheme is a non-starter. Now the question is couldnt Fin Min and the RBI not decide by now who are all the authorised agencies? If it was going to be the Fin Min shouldn't it have released by now who the official testing centres are? After all, the RBI notification talks only about what banks can do and can't do.
On a larger plane, this is the kind of challenge that the Modi Govt faces. The bureaucracy can tie the political authority in knots over time that over time a perception gains ground that there is no action on the ground.

geeth · Post by **geeth** » 27 Oct 2015 21:07

quote]There are no drawbacks as such. The scheme is properly conceived. The problem will be in public acceptance/quote]

IMO there are too many issues which will prevent the public from joining this scheme.

1. The perception that buying gold is a dead investment. All the banks/cooperatives/NBFCs and even local pawn brokers extend loan on gold. And they DON'T melt it. The only problem I see with this scheme is that the interest rates are high except for agricultural loans..even here, it is high now.

2. The gold deposit scheme melts the gold. This is a big problem. People often buy jewelry because they like it. Added to that, there is making charges, losses to be added etc, which together would jack up the jewelry price by 25% or more. Once melted, the purity of the gold would invariably be less than 22 carat. Then they would also charge for all these operations.

3.If you get it back after a few years, you will have to spend another 25% of the value on making charges, losses etc ( it is a big racket fattening the jewelry shop owners). Now, who would like to lose 50% or more value of their jewelry in this scheme?

It may be suitable for those holding lumps of gold..but then that may have been bought with black money.