Indian Economy News & Discussion - Aug 26 2015

[Suraj]

Basic summary of recent reforms. Hard to pull extracts but worth reading:
Modi shows a new energy in reforms
Surge in award of projects puts road construction in top gear

The pace of national highway construction, which has been slow for the last few years, is slowly gathering momentum. The National Highways Authority of India (NHAI) and the ministry of road transport and highways have together got some 2,400 km of highways constructed during April-September this year compared with 1,800 km in the corresponding period last year.

With the recent surge in award of projects — NHAI itself awarded 3,067 km of highway projects in 2014-15 and its target for the current year is 5,000 km — and the considerable additional flexibilities being built into the public-private partnership (PPP) model, the government is confident of meeting the target of expanding the country’s road network by 30 km every day in the next few months, official sources told FE. The rate of road construction is currently some 13 km a day, up from around 2 km a day when the NDA government took over, the sources added.

NHAI, significantly, awarded 870 km of highways in the build, operate, transfer model in the first six months of the current fiscal, a sign of gradual improvement in the PPP segment. “The fact that 870 km roads have already been awarded through the BOT (toll) mode itself signifies that private sector is now coming back to the sector,” Rohit Kumar Singh, joint secretary (highways) in the ministry, told FE.

The government has set a target of 6,300 km for construction and 10,000 km for project awarding for the current fiscal. Against 6,300 km highway construction target for the last fiscal, only about 4,400 km could actually be achieved.

Sources said road project awarding has more than doubled during the April-September period of the current fiscal at 4,500 km compared with 2,200 km during the same period of last fiscal. NHAI is more proactive on this front, awarding about 2,500 km during the period and the ministry, 2,000 km.

Rs.3 lakh crore ($47 billion) mobilized from coal auctions, 8 more mines to be e-auctioned

The government today kick-started the process of online auction for eight blocks in the fourth round for sectors like steel, cement and iron.

The government has already mobilised over Rs 3 lakh crore in the first three rounds of coal auction and allotment.

“It has been decided to auction eight Schedule III coal mines earmarked for non-regulated sectors like, iron and steel, cement and captive power plants in the fourth tranche. The e-auction for these mines will be held from January 18 to January 22, 2016,” Coal Secretary Anil Swarup said addressing the media here.

Directions have been issued to the nominated authority for auctions, Joint Secretary, Coal, Vivek Bhardwaj, to conduct the auction, and the notice inviting tenders will be issued tomorrow, Swarup said.

The Secretary said Coal India is “well on way of achieving 550 million tonne coal production target” for the current fiscal and has crossed the 300-MT output mark this week.

[Lisa]

Apologies if already posted,

LONDON STOCK EXCHANGE GROUP SIGNS MOU WITH INDIA’S YES BANK

http://www.lseg.com/resources/media-cen ... s-yes-bank

LSEG and YES BANK to collaborate on debt and equity issuances

Yes BANK aims to list up to $500m Green Bond on London Stock Exchange in 2016

YES BANK to potentially raise equity capital through global depository receipt listing in London

Confirms London’s position as leading international green finance centre

[Sridhar K]

Cross posting
India Reforms Are Gathering Pace

Nothing new for BR but lists a few significant initiatives that have been kicked off and the author's optimistic view of them going to yield positive results . We may have to wait to see how the actual results pan out are over a period of time against the expected outcome.

A comprehensive note from Jupiter Investment Management's Avinash Vazirani (Manager of the Jupiter India Fund) highlights how Prime Minister Modi's recent high profile visit to the UK shines a light on Anglo/India relations, and the potential for closer ties between the two countries on issues such as climate change and defence. While this is very interesting for politicians and general observers, Modi's comments on the attractiveness of India as an investment destination should be a focal point for investors, he says. As a long term investor in the Indian market, the background changes discussed below, and which are receiving little or no publicity, are setting the scene for a transformation of the Indian economy the likes of which we have not seen in recent history.

Indian stocks have been an isolated area of relative calm amid the storm that has raged across global emerging markets in recent months. Vazirani believes the game-changing reforms that have helped drive growth in India are continuing to gain momentum, and together with strongly positive business conditions, will help power the next leg of Indian economic growth. Meetings with government have also left him confident that the government will do whatever it takes to ensure fiscal and monetary policy are aligned to protect India's low-inflation, rate-cutting cycle.

One of the flagship reforms of the Modi government has been its introduction of a programme of universal social security designed to help lift hundreds of millions out of poverty, for the first time establishing minimum living standards and bringing vast swathes of the population out of the shadow economy and into the formal banking system. A system of biometric identity records, linked to bank accounts and mobile phone accounts will provide basic health and life insurance and social security benefits. This should dramatically reduce the waste and inefficiency of the state's payment of subsidies.

The speed and success of this scheme has been breath-taking. Since its launch in September 2014, 190m bank accounts have been opened and 165 million debit cards issued. Shared ownership of bank accounts means that this figure already covers a large portion of the estimated 600,000 Indians who did not have access to bank accounts before the programme was rolled out. With around 2 million new accounts opening per week, the remaining pool of 200-300 million people without access to a bank account is decreasing fast.

It's easy to overlook the amount of job creation that's happening in India as a result of other government initiatives, he says. The ‘Make in India' scheme aimed at persuading foreign companies to manufacture in India has already seen Taiwanese electronics giant Foxconn sign up to spend US$5 billion building its factories in Maharashtra State, while the ‘Skill India' programme aims to give 4 million Indians the skills that should help fuel India's burgeoning economy. Meanwhile the MUDRA programme of microenterprise funding that seemed to be in its planning stages just months ago has already disbursed $3.5 billion dollars in loans to small businesses. Under the scheme, banks make loans to small businesses, laying off this risk to this to a government agency. According to government sources, at least half a million jobs have been created, while the boost to GDP (gross domestic product) of the extra economic activity from these newly-funded businesses is clear.

The government's focus on agricultural productivity is another area of major change. It's being pursued in a number of ways, he says. The first is a plan to ensure every field is irrigated (hitherto farmers have relied on unpredictable rainfall), funded through the agricultural credit bank (NABARD). Next, crop insurance has been trialled in pilot schemes across India and will be rolled out across the country next year. Under the scheme, farmers can insure crops so that in the event of drought or infestation, they are reimbursed. Then there is the farmers' Soil ID card system, which will help farmers understand which fertiliser to use, and has seen a 60 percent uptake already. All of these initiatives are bringing another (rural) section of the population into the formal banking and social security network and into the formal economy. As well as delivering a boost to the safety of their livelihoods, from an investors' point of view, it constitutes a huge secular increase in business for banks and insurance companies and we continue to watch this space.

After years of stagnation, India's infrastructure build-out got back into gear under Narendra Modi's government. Today in India, new highways are being built at a rate of 18 kilometres per day. A previously-stalled project to redevelop India's ports has re-started, with new contracts being given out to developers. And the largest piece of India's transport infrastructure project is its railways. Here, the government has earmarked a massive 8.5 trillion rupees (around $150 billion) and for the first time that figure constitutes a guaranteed allocation from budget resources – a first in India. Contracts for the build-out have been awarded, and the process of upgrading India's transport system is underway.

On the fiscal side, the new government has vowed to devolve spending budgets to the states that make up the Indian federation. As a result of new laws, some 42 percent of central taxes now go directly to state governments (up from 32 percent). The new Goods and Services Tax (GST) legislation, which promises to harmonize what is currently a patchwork of sales tax regimes across the Indian states, in favour of a single national sales tax, and should produce a major boost to revenues by reducing the cost of business, is currently stalled in parliament amid dogged resistance from parliamentary opposition. Here, again, Vazirani says he gets the sense that this is a reform whose benefits are so clear compelling that both sides of the argument – even those currently delaying its progress through parliament – know it has to happen. While there has been some confusion around the amount that individual states can add to the tax for themselves (in fact they may apply an extra 1 percent for a limited period of two years), there is no question that this is another move that will be hugely beneficial to state finances, which in turn will help reduce inflation.

And while the government has no real scope to affect monetary policy change or set the independent central bank's inflation targets, recent conversations with government have reassured him that the government will do whatever needs to be done to align fiscal with monetary policy and ensure that any threats to India's new low-inflation, rate-cutting environment are dealt with adequately and promptly.

However, one reform the government has been able to implement within the monetary sphere has been a shake-up of India's banking sector. The 21 new licenses issued since the beginning of this initiative – 11 to payment banks and 10 to small finance banks – are part of the transformation of a sector that has been open to accusations of risk-averse lending, inaction on non-performing loans and insufficiently autonomous board and executive appointments. "The new entrants to the banking sector are a good sign, a new bankruptcy code will give its existing members the means to recover bad loans in a way they couldn't previously and there is even talk of a special situations fund which could take on some of these assets," he says.

The final piece, on board appointments, is part of the government's wider plan to beat corruption at board level and improve the corporate governance not just of banks, but of state-owned companies too. Here, the new administration is making huge strides, sending a message to government-controlled companies by refusing to appoint non-executive board members who will not comply with its new corporate governance standards. "These are measures will take some time to show through, but the message is clear: in my view, the outlook for Indian businesses has never been brighter."

[Suraj]

Deep in India's Desert, a Crucible for Modi's Economic Plan

The capital of the northwestern state of Rajasthan saw one of India’s steepest surges in foreign direct investment in the year through March 2015. Chief Minister Vasundhara Raje, taking advantage of her absolute dominance over the state and municipal legislatures, has pushed through reforms Modi has struggled with, relaxing contentious labor rules and making it easier for companies to acquire land.

Fettered by an opposition-controlled upper house of parliament where national bills lie blocked, Modi’s counting on India’s 29 states to individually ease restrictions and compete for investment. Some are heeding his call: a spate of lavish investor summits by state governments has seen FDI into India poised for a record this fiscal year.

"It isn’t incongruent with what Modi had initially launched in terms of decentralization and a smaller government," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. "The more the individual states show they are in favor of such reforms, that kind of momentum will seep through at the national level.”

India’s constitution allows state governments to tinker with certain federal laws to meet local requirements. Raje, 62, a descendant of the former royal family and a member of Modi’s Bharatiya Janata Party, last year made it easier to hire and fire workers. Modi’s attempts to do so have been stymied by national labor unions.

Raje has also relaxed land acquisition rules to set up factories in special economic zones and is now looking to extend the provisions state-wide, after Modi was forced to backtrack from his proposals.

In other areas, she’s a step ahead of Modi: Rajasthan in October unveiled a new start-up policy, vowing to provide funding for new companies, months ahead of Modi’s promised incentives.

Finance Minister Arun Jaitley called on the state to hasten the pace of project implementation, adding that "the aspirational constituency of India has increased," which is demanding faster reforms.

Failing to persist with reforms would leave Rajasthan at the risk of losing out to other BJP-ruled peers such as Madhya Pradesh, India’s fastest-growing state, or Congress-led Karnataka that’s due to hold its own investor summit in February.

There’s also the chance that -- like Gujarat, which championed investment summits while Modi was chief minister -- only a fraction of investment pledges will actually be implemented.

Rajasthan has won 295 pledges worth $65 billion that will generate 250,000 jobs, Raje said in Jaipur on Thursday. Indian billionaires Gautam Adani and Kumar Mangalam Birla committed to invest 100 billion rupees each and Takeshi Yagi, Japan’s ambassador to India, said five Japanese companies will sign pacts with the state government.

The administration is also looking to create a land bank of 10,000 acres and is working with the federal government to help clear debt accumulated at power distribution companies. About 40 percent of India’s ambitious Delhi-Mumbai Freight Corridor will run through Rajasthan, across the sands of the Thar desert and the shrines of Ajmer.

[Viv S]

What gives?

PM Narendra Modi’s gold deposit scheme attracts only 400 grams so far

[Suraj]

Check previous page for the post containing article about issues with the deposit scheme and what GoI's done to address it.

[nachiket]

Not surprising. Forget gold, people in India wouldn't trust the government (any govt.) with their steel utensils. It will take time to change mindsets enough so that they are comfortable with giving them their gold. I'm sure Modi and co. must have anticipated a slow start. Even PMJDY had mostly zero-balance accounts earlier and was derided. It's a much better picture now. For the country's sake, I hope this works and people change their minds.

[Suraj]

Reforms coming in thick and fast. Corporate tax rationalization is next in line - remove tax breaks and cut the nominal rate:
Most corporate tax breaks to be phased out by FY2018

The finance ministry has proposed a road map on making tax rates more competitive and proposed phase-out of most of the exemptions from the 2017-18 financial year. This is in tune with this year’s Budget announcement that the corporate tax rates would be reduced to 25 per cent over the next four years from 30 per cent at present but would be accompanied by a corresponding phase-out of exemptions and deductions.

The draft schedule for phasing out these exemptions was put in the public domain by the Central Board of Direct Taxes on Friday. It has invited comments within the next 15 days.

The road map says profit-linked, investment-linked and area-based deductions would be done away with for corporate and non-corporate tax payers.

Provisions with a sunset date would not be extended or advanced. For incentives with no terminal date, a sunset date of March 31, 2017, would be provided for commencement of the activity or for claim of benefit.

Textile sector gets TUFS again:
TUFS to see re-launch shortly

The government is likely to reintroduce the technology upgradation funds scheme (Tufs) for the textile sector.

"Prime Minister Narendra Modi evinced keen interest and talked about Tufs in the last Cabinet meeting. With his special interest in textiles sector, I can say Tufs will be re-launched very soon, say, in a few months," said Santosh Kumar Gangwar, minister of state for textiles. He was speaking on the sidelines of the Texprocil award function here on Friday.

Tufs was launched in early 1990s to boost investment into the textiles sector. Under the scheme, five per cent of the total investment for technology upgradation is compensated by the government.

The scheme was touted to be a great success, attracting massive investment and helping revive the textiles sector. Tuffs was discontinued two years ago.

The chairman of the pay commission suggests putting an end to them, because they don't keep up annually with cost of living, and instead impose a fiscal shock on the government every few years, that then takes the government 1-2 years to recover from:
End pay commissions, says pay commission chairman

ince pay commission awards come once in 10 years, the two to three years subsequent to each award tend to be fiscally stressful for the government — the latest instances are FY09 and FY10, years when the Centre’s fiscal deficit exceeded 6% and states too suffered major blows to their finances.

According to Mathur, this could be avoided if a system of annual salary hikes — as in the private sector — is implemented for government staff as well. “The government should review the matter (salary of its staff) every year looking into the data available to it and based on the price index,” he told FE in an interview.

The 7thCPC, which submitted its report to the government on Thursday, has proposed an increase of 23.55% in the pay (salary and allowances) of central government employees and similar increase in pensions, which will become effective from January 1, 2016. The additional payout is projected to be Rs 1.02 lakh crore in FY17, or 0.65% of GDP, making it difficult for the government to reduce the fiscal deficit by 0.4% to 3.5% of GDP in the year. India Ratings in a note said the actual impact of the 7th CPC award could be higher at Rs 1.27 lakh crore after taking into account the arrears for three months (January-March) as the implementation will be from April 1, 2016.

[vipins]

Government looks to promote sustainable fishery on Ganges basin

He also emphasised on shifting focus from fishery in coastal states to inland resources in order to increase India's overall fish production from the current level of over 10 million tonnes and export earnings of Rs 33,441 crore.

"India is second after China in fish production in the world. However, there are potential areas where production can be strengthened further.

[Picklu]

^^ Cage fish farming should be encouraged to properly utilize the still water bodies as well as flowing river & canal water volumes that is available in the country to increase fish production efficiency.

Also instead of the current measly 750 meter long 1 MW Canal Solar Power Project noutanki on Narmada (frankly more optics at this point than real usefulness), govt should get serious and implement it across board all over India. Guj itself has 19k+ km of open canal suitable for such with potential for 20+ GW solar power generation. Without any land acquisition cost involved, almost the entire target of 175 GW green energy can be achieved using this one single project.

[RoyG]

What gives?

PM Narendra Modi’s gold deposit scheme attracts only 400 grams so far

Gurumurthy has indicated that the gov has a goal of adding 2000 tons to reserves in the short to medium term. Have a feeling that we'll begin demanding our gold sitting in foreign vaults sometime next year.

[Austin]

RBI chief bats for Yuan as international currency

BEIJING: Reserve Bank of India governor Raghuram Rajan has expressed support for China's efforts to internationalize the Yuan and make it part of the currencies favored by the International Monetary Fund.

"I do not know what the ultimate requirements of the IMF are and how much of these China has met. But the IMF does need to accommodate currencies of large economies with strong positions in global trade and finance, and clearly China has made a lot of progress on both counts", he said in an interview with the Hong Kong-based South China Sea.

China has been seeking the support of major countries in its efforts to internationalize its currency and persuade the IMF to admit the Yuan in its favored basket of currencies for special drawing rights.

The RBI chief's backing is expected to further its cause.

Rajan also defended China against criticism that it had indulged in competitive depreciation of its currency.

"Currencies elsewhere were already depreciating in a large way even before the Chinese move because of the unconventional monetary policies adopted by some countries.

"It is not reasonable to say the Chinese move precipitated the trend. Second, given the small scale of the Chinese devaluation, it cannot be blamed for a currency war," Rajan said.

The RBI chief also said that the present economic slowdown in China is affecting the Indian economy.

"But India being a commodity importer, has been helped a bit by cheaper commodities. So the impact has not been as bad as it could have been. Still, on the whole, we have been adversely affected by the Chinese slowdown because China's slowdown has impacted global growth and India is very well integrated into the global economy," he said.

Speaking at a conference in Hong Kong, the RBI chief expressed concern about the deceleration of private investments in India.

"On the growth front, the central concern is with investments. Private investment has fallen back quite a bit and so has public investment," he said.

He expressed the hope that strong flows of foreign direct investments and some traction in infrastructure financing would help deal with the problem of lowered domestic investments.

This month, India relaxed foreign direct investment norms in 15 major sectors, including mining, defense, civil aviation and broadcasting.

"We are seeing a lot of traction in FDI, in both announcements and actual investments on the ground," Rajan said. "Once we start seeing a little stronger demand, we will start seeing more projects being pulled out of the drawer."

[Suraj]

Q2 (July-Sept) GDP data will be released this week. Estimates:
Barclays: July-Sept GDP to grow 7.5%, 50 bps repo rate cut in H1 2016

India is likely to clock a growth rate of 7.5 per cent for the July-September quarter, while the Reserve Bank is expected to go for 50 basis points cut in interest rate in the first half of next year amid softer inflation, says a Barclays report.

According to the global financial services firm, India's macroeconomic data is largely "favorable" and inflationary pressures are expected to stay lower for a longer time.

According to official figures retail inflation stood at 5per cent in October, while the Wholesale Price Index (WPI) contracted to 3.8per cent during the month.

Factors like effective food price management, idle industrial capacity, softer commodity prices and a largely stable Indian Rupee augur well for inflation remaining "anchored" in 2016, the report said.

"A prolonged period of softer inflation is likely to offer space for more monetary easing - we forecast another 50 basis points of repo rate cuts during the first half of 2016," it said.

Reserve Bank Governor Raghuram Rajan on September 29, effected a more-than-expected interest rate cut of half aper cent to spur the economy.

"India's WPI stayed in negative territory and the trade deficit narrowed. FDI rules were eased. We expect Q3 2015 GDP to grow 7.5per cent and 50 basis points of repo rate cuts in H1 2016," Barclays said.

[Suraj]

MP follows Gujarat and Rajasthan on the labour reforms bandwagon:
President clears Madhya Pradesh labour reforms

The wait of the Shivraj Singh Chouhan-led Madhya Pradesh government to usher in labour reforms in the state is over with President Pranab Mukherjee approving amendments to 15 central labour laws.

Some of the key amendments include easing retrenchment norms, three months’ compensation to retrenched workers, raising overtime hours and night shift for women.

Madhya Pradesh is the second state after Rajasthan to be granted presidential assent to its labour law amendments. Gujarat, which had passed a slew of labour law amendments earlier this year, is awaiting presidential assent.

Govt contemplates tax incentives to boost housing

In order to spur investment in the housing sector, the government is considering to provide tax incentives for certain projects to ensure ‘Housing for All’ by 2022.

The tax incentives, which could be announced in the Union Budget, would aim at promoting investments in rental housing by institutional players.

The draft National Urban Rental Housing Policy have suggested a host of fiscal incentives to encourage rental housing with a view to achieve the goal of housing for all by 2022.

Housing is considered as one of the key sectors to promote growth by increasing demand for steel, cement, besides creating additional jobs.

No policy paralysis: GDP growth to touch 8 per cent this year: Arvind Panagariya

Rejecting criticism that the policy paralysis has returned to haunt the NDA in view of critical legislations getting stuck in Parliament, NITI Aayog Vice Chairman Arvind Panagariya says the economic growth this year may touch eight per cent due to implementation of various critical economic reforms.

He asserts that projects are being cleared and gathering speed and ease of doing business has improved.

“In the last quarter meaning January to March, 2016, I expect that we would touch eight per cent mark, hopefully cross it a bit,” he told PTI here in an interview.

He said the economic growth for the entire year is expected to be at 7.5 per cent to eight per cent.

“We might get full eight per cent because I also expect the first quarter growth rate which has been at seven per cent for 2015-16 will be revised upwards,” he said.

Govt plans to put 98% sectors for FDI under automatic route

India is planning to put around 98% of sectors that are open to foreign investments under the automatic route so that investors are spared of the trouble of approaching either the finance or the commerce ministry for any approval, a senior government official said on Tuesday.

“We are putting maximum sectors (of FDI) through automatic route. Our belief is that nobody should come to the government. So we get 92% of FDI coming through automatic route. We are targeting that almost 97-98% must come through the automatic route, Amitabh Kant, secretary in the department of industrial policy and promotion (DIPP) said here at a function organised by industry chamber Assocham.

“We do not want any businessman to enter Udyog Bhavan (the Commerce and Industry Ministry building), we do not want any businessman to enter the finance ministry,” he added. Currently, foreign investments are allowed either through the automatic route or through the approval of the FIPB.

Manufacturing sector growth improves in Nov: SBI Index

India's manufacturing growth improved on monthly as well as yearly basis, suggesting a continued pick-up in economic momentum going forward, says a report.

The monthly SBI Composite Index, an indicator for manufacturing activity in the country, increased to 51.6 in November from 50.9 in October.

On yearly basis, it reached the 6-month high of 54.5 in November, compared to 53.5.

The Index captures two components of the manufacturing cycle, namely, month-on-month and year-on-year growth on a scale of 0 to 100. Index above 50 implies growth over the previous respective period and less than 50 suggests a contraction over a respective period.

[Suraj]

Oil import bill expected to drop 35% this fiscal year

India's crude oil import bill is likely to dip by 35% to $73 billion this fiscal as global energy prices slumped on weak demand.

India had imported 189.43 million tons of crude oil in 2014-15 for $112744 billion or Rs 6.87 lakh crore. This fiscal the imports are projected at 188.23 million tons, almost the same level as last year.

According to data available from Petroleum Planning & Analysis Cell of the Ministry of Petroleum & Natural Gas, the country imported 114.9 million tons of crude during April- October for $43.6 billion.

Going by the trend, PPAC projected an import of 188.23 million tons for $73.28 billion or Rs 4.73 lakh crore.

Officials said while the April-October 2015 imports are based on actuals and for November 2015 to March 2016, the imports are estimated at $55 per barrel of oil and an exchange rate of Rs 65 to a US dollar.

A $1 per barrel change in crude price impacts the net import bill by Rs 3,513 crore or $0.54 billion. Similarly, Re one variation in exchange rate impacts the import bill by Rs 2,972 crores ($0.46 billion).

The basket of crude oil that India buys averaged $55.79 per barrel during the first half of current fiscal as against $84.16 a barrel average in full 2014-15 fiscal. The Indian basket had averaged $105.52 per barrel in 2013-14.

[Karthik S]

Wouldn't it be a good idea to buy oil now and store them for future when the prices are up? The govt can profit then by "buy low sell high".

[vishvak]

Can't sell high since oil producers will pump more to grab profits. However storing to hedge and SAVE huge monies is not new. I think US, China have huge stores of oil for safeguards against price fluctuations. In fact, USA has built entire fracking industry as if to regulate industry wide prices - that itself saved huge amounts I think.

[Karthik S]

Can't sell high since oil producers will pump more to grab profits. However storing to hedge and SAVE huge monies is not new. I think US, China have huge stores of oil for safeguards against price fluctuations. In fact, USA has built entire fracking industry as if to regulate industry wide prices - that itself saved huge amounts I think.

Fracking is going on fine now in ND area especially, but not not sure how long they can continue with it. In some areas, the process of getting out oil is more expensive than the earnings from it.

[Gus]

India did start strategic reserves and filled it up when oil was cheap. Just another of the 1000 things that modi had to do that should have been done decades back.

[Suraj]

GoI has been using these last several months to augment the strategic petroleum reserve.

[A_Gupta]

Here is Nov 1 news:
http://www.livemint.com/Opinion/t1Y0xmw ... forms.html

India has had plans to build and implement strategic petroleum reserves (SPR) in the rock caverns of Visakhapatnam, Mangaluru and Pudur. While the financing for SPR must come from the budget, the stored oil can be part of “international reserves” on the Reserve Bank of India’s balance sheet. In recent weeks, China has been stockpiling crude at a furious pace and is nearly half way through building 500 million barrels in storage, which is equivalent to 90 days’ oil demand. India’s ambition is to hold nine days of demand (36 million barrels) and the implementation has only just begun with the completion of the Visakhapatnam facility. SPRs are no panacea, but have both a strong strategic and insurance rationale.

[Karthik S]

Would it have been safer to have the SPR in central part of India strategically instead of a coastal location?

[Suraj]

Would you mind looking for details on the topic yourself since it interests you, instead of asking a succession of questions for others to answer you on ?

[Karthik S]

http://www.businessinsider.com/india-is ... ry-2015-11

It is widely known that China’s growth rate has been slowing. But less discussed is how India has taken the title of the world’s fastest growing economy from China and what it means for investors.

[Kakkaji]

Coastal locations were chosen first for SPR because they could be quickly filled up with imported oil just off the ships. After the 3 coastal locations, there are plans to build SPR storages in inland locations including one in Rajasthan.

The concept is sound, the plans are good. The problem, as usual in India, are the delays in execution. The Vishakhapatnam facility got ready earlier this year after a delay of several years from planned completion. Other 2 facilities were supposed to be ready by now, but I have not read anything in the news about their actual completion.

Now is the golden time to build the reserves, but the delays in getting the facilities ready may stretch beyond the time when oil prices move up again. Then it would be a major opportunity lost.

By the way, the SPR is to guard not just against price hikes, but also against supply disruptions due to global events beyond the GOI's control.

[vipins]

30 of 32 parties back gst bil

Naidu claimed that of the total 32 parties represented at the all-party meet, 30 were in favour of the legislation and wanted its early passage.

BSP and NCP have already extended their support to the bill and want it to be passed in the current session.

The April 1 deadline may be missed if Parliament does not pass the Bill in the session from November 26 to December 23.

Once the Bill is passed, more than half of the states have to ratify it before Parliament passes another enabling bill to implement GST.

[vipins]

RBI to make gold monetisation scheme simpler to help it take off

According to the plan that has now been envisaged, banks would be allowed to deposit the tendered metal directly at refineries, instead of involving Collection and Purity Testing Centres (CPCT).

[vipins]

FAME-India scheme to save Rs 60,000 crore on oil import bill: Government

"We will spend about Rs 800 crore in the first two years. Overall, Rs 14,000 crore are needed to make the scheme succeed. However, we will save fuel worth Rs 60,000 crore through this spend," Union Heavy Industries Minister Anant Geete

[vipins]

Government to scrap digital life certificates for pensioners

Barely a year of its launch by Prime Minister Narendra Modi, the Centre may soon scrap its ambitious online system of issuing digital life certificates to pensioners owing to privacy issues.

They are learning and evolving without wasting much time.

[Prem]

Oil import bill expected to drop 35% this fiscal year

India's crude oil import bill is likely to dip by 35% to $73 billion this fiscal as global energy prices slumped on weak demand.Going by the trend, PPAC projected an import of 188.23 million tons for $73.28 billion or Rs 4.73 lakh core.Officials said while the April-October 2015 imports are based on actuals and for November 2015 to March 2016, the imports are estimated at $55 per barrel of oil and an exchange rate of Rs 65 to a US dollar

Oil import is now same as invisible flow. Part of The surplus in service sector export can be added to reserve kitty.

[Suraj]

Pace of rail project awards doubles this year

Railway projects worth Rs 10,594 crore were awarded in the April-October period, first seven months of this financial year, more than double the value of those awarded in the same period last year, at Rs 4,279 crore.

This comes some months after the railway ministry was rapped by the Prime Minister’s Office (PMO) for slow pace of capital spending and progress on key projects. Suresh Prabhu, the minister, has pushed hard to lure investors, to meet the financial year’s targeted spending of Rs 1 lakh crore.

Among the projects awarded last month was a Rs 1,102- crore contract to Alstom Transport India by Lucknow Metro Rail Corporation, for train sets and signaling systems for the new network planned for the city. The contracts for civil works and electrification of the under-construction Rs 82,000 crore Dedicated Freight Corridor project has also pushed up projects award activity.

Most of these projects involve engineering, procurement and construction (EPC) contracts. Relying on EPC in the wake of limited success in PPP (public-private partnerships) is a correct strategy. If the current rate of project award continues in the railways, the government would be able to award around Rs 2 lakh crore of EPC contracts over five years,” said Abhaya Agarwal, partner-infrastructure at research and ratings agency Ernst & Young.

He said a major cause for the improvement in award of rail projects is the ministry’s decentralising of powers to delegate works to the zonal railways, apart from the huge budgetary support. “This is a very encouraging sign and would allow the railways to create more capacities within a short time frame,” he said.

The railways’ plan size is Rs 1 lakh crore for this financial year, a 53 per cent jump over 2014-15’s spending target of Rs 65,000 crore.

The government's Plan B for GST

The Centre is confident of rolling out a combined goods and services tax (GST) at the national level in time to meet the April 2016 deadline, even before states get their legal structures in order.

"Nothing in the law stops the Centre from doing so in this financial year (FY16)," said an officer in the know of the developments. The plan is a fallback option, to be resorted to only if the government is unable to make the first of the three Constitution amendment Bills sail through in the current session of Parliament. One of the options is to raise both excise and service tax rates in FY16, as these are way below any expected GST rates.

Sources say the government is very serious about meeting the April deadline. Doing so will restore confidence among investors, domestic and foreign, about the government's ability to make reforms happen, especially when it involves Parliament. The prime minister has already announced to investors in Singapore that GST will happen by April.

Gold Bond scheme gets Rs 246 cr; excellent response: FinMin

The gold bond scheme has evoked "excellent response" with the government receiving 63,000 applications for purchase of bonds worth Rs 246 crore in the first tranche, a top official has said.

"Gold Bond Scheme: 63,000 applications for 917 kg. Gold amounting to Rs 246 crore in first tranche. Excellent response for an innovative product," Economic Affairs Secretary Shaktikanta Das tweeted.

Aimed at providing an alternative to buying physical gold, the government had sold gold bonds through banks and post offices between November 5-20. The allotment will take place on November 30.

The gold bond scheme will offer investors an interest rate of 2.75% and a choice to buy bonds worth 2 grams of gold, up to a maximum of 500 grams. The issue price of the sovereign gold bond for this tranche was Rs 2,684 per gram.

The tenor of the bond will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates.

[Singha]

Piyush Goyal our power minister has asked people to hold him accountable and unveiled a real time dashboard for people to track progress of electrification across the country

Browser: http://kyrosoft.com/recpms/dashboard
Android: https://t.co/JTeTPxFLGF
Apple: https://t.co/7r5DvbmzQp

[Suraj]

Transporting coal via waterways can save Rs 10,000 crore annually: Gadkari

Inland waterways can not only boost the movement of goods and passengers across the country, but will also help in saving about Rs 10,000 crore annually in transporting coal, Shipping Minister Nitin Gadkari said today.

The minister, who also holds the charge of Road Transport and Highways, added that he is hopeful of Parliament's nod on the bill to convert 111 rivers across India into National Waterways in the current Winter Session.

Shenzhen govt to invest $200 million in ZTESoft's Gujarat smart city project

Shenzhen city, which comes under the Central Government of China, has announced an investment of $200 million in ZTESoft's smart city project for Gujarat.

"We will invest $200 million in ZTESoft which is associated with smart city project in Gujarat," said Tainfu, standing committee member of CCP Shenzhen committee.

Since May 2015 after signing memorandum of understanding with Gujarat during chief minister Anandiben Patel's China visit, ZTESoft has been working with Ahmedabad and Gandhinagar Municipal Corporation for smart city projects.

Plan to raise spend by 285% will transform railways: Morgan Stanley

Railway Minister Suresh Prabhakar Prabhu’s plan to increase spending by the Indian Railways by 285 per cent to $132 billion over the next five years through 2019, as against the capital expenditure of $34 billion in the preceding five years, is a positive step that will transform the Indian Railways, global investment major Morgan Stanley has said in its report.

The primary reason for this optimism, according to the report, is the “reformist credentials” of Prabhu as power minister (1998-2004) and the fact that he was quick to identify the impeding elements, namely overcapacity and speed, and has also devised an innovative approach to ensure funding for projects.

“Rail is a significantly cheaper mode of transport than roads, yet the share of roads in Indian freight movement is more than 1.5 times that of the Railways, owing to the congestion in the rail network and poor policies. The railway minister is in the process of bringing change to a relatively moribund ministry. He has promised to spend $132 billion on the railways in 2015-19, a 285 per cent increase from the $34 billion spent in 2009-14,” said, Ridham Desai, head of India Research at Morgan Stanley.

The investment to be made by the railways over the next five years, along with its multiplier effect on the economy, will result in a 12 per cent increase in the growth of the gross domestic product (GDP) between 2015 and 2019, according to Akshay Soni, the author of the report.

[Virupaksha]

I know that even the world bank is being roped in for making inland ganga water way.

[SaiK]

.. track progress of electrification across the country
Browser: http://kyrosoft.com/recpms/dashboard

I don't see all states. Does that mean they are already completely energized?

[Suraj]

Why don't you ask them that and contribute positively with answers too ? Clearly, Singha didn't create the app.

[Vriksh]

We are working on multiple Govt contracts across multiple states as consultant and our contractors are "claiming" that they are under stress due to non payment of invoices from govt orgs. Anyone else facing similar issues? This has come to a point where So much so that at this point working with Govt will be fatal due to unsustainable negative cash flows.

[Suraj]

2nd quarter (July-Sept) GDP data is due out today. Here's WSJ's estimate:
WSJ: India’s GDP Growth Likely Accelerated To 7.4%

India’s economic expansion may have gained speed last quarter as manufacturing and services output improved even as weak rains hurt agriculture, economists said.

Gross domestic product in the three months ended Sept. 30 rose 7.4% from a year earlier, according to the median estimate in a poll of 14 economists by The Wall Street Journal. That is a step up from the 7.0% expansion in the preceding quarter.

The government is scheduled to issue the data on Monday.

“India’s GDP growth is expected to have improved as industry clocked the highest output gains in over four years, while services remained resilient,” said Sujit Kumar, an economist at Union Bank of India.

Industrial production data that were released earlier show output of manufacturing, mining and utilities firms rose 4.7% from the previous year during the quarter. That is a modest pickup from the 3.2% increase in the previous quarter and the strongest pace of expansion since the three months ended June 2011.

Still, the country received 15% less than the average level of rainfall during the June to September monsoon season—the second successive year of shortfall. That is expected to weigh on farm production.

Along with Q2 data, it's possible Q1 GDP data will be revised upwards from 7%.

Meanwhile, RBI's policy statement is also due today, and they're expected to hold rates steady. Of course Rajan may spring another surprise. Last time he cut rates 50bps.
RBI to hold rates steady - Reuters poll

The Reserve Bank of India (RBI) is expected to hold its policy interest rate at 6.75 percent next week to stifle inflation, while data is seen showing economic growth accelerated to 7.3 percent in the September quarter, a Reuters poll of economists showed.

All 45 economists surveyed expected the RBI to stand pat at its policy review on Tuesday, while the range of forecasts for gross domestic product growth for the latest quarter was between 6.9-7.6 percent, with the median at 7.3 percent. The GDP data is set to be released on Monday.

Having posted 7.0 percent year-on-year growth in gross domestic product during the June quarter, the economy is improving, but the government's target of 8.0 to 8.5 percent for the fiscal year ending March looks a long way off.

[vivek.rao]

http://www.firstpost.com/business/gdp-a ... 27178.html
GDP at 7.4%: Why better-than-expected growth is good news for both Modi and Rajan

The July-September Gross Domestic Product (GDP) numbers released on Monday reaffirms the belief that growth recovery is well underway in the economy. This should offer the much-needed room for the Reserve Bank of India (RBI) governor, Raghuram Rajan, to hold rates for now and watch on the inflation-front.

The RBI is set to announce the fifth bi-monthly monetary policy on Tuesday at 11 am in the backdrop of a worrying pick up in the retail inflation in the recent months, especially in the prices of pulse items. The central bank is widely expected to take a pause tomorrow and watch for more cues.

The GDP, on a gross value added basis, grew at 7.4 percent in the July-September quarter compared with 7 percent in the June-quarter. A Reuters poll by analysts had forecast the GDP at 7.3 percent.

Boost for Modi government
But, the higher-than-expected pick-up in GDP numbers in the July-September quarter is good news for the Modi government, which has been trying hard to bring back growth momentum to the economy by attracting foreign investments and clearing clogged projects in the domestic economy. The government is desperate to show that economy has indeed taken the growth path.

India’s economy has remained at subdued growth rate in recent years, before started showing some pick up in the recent quarters. Even then, the pick up in the GDP numbers is yet to reflect in other key economic indicators such as bank credit growth and corporate earnings. There has been some pick up in manufacturing segment, partly on account of government spending and improvement in ground-level economic activities.

But, it is too early to say the growth-recovery in the economy has taken firm hold.
The stress in the economy persists with significant number of stalled projects and hardly any fresh projects coming up. "The stock of stalled projects climbed in the Sep quarter, while existing capacity is being under-utilized. This has, not surprisingly, lowered interest in green field investments, with industrial credit loan growth stagnating in single digits," said DBS bank in a research report.

[Suraj]

To answer WSJ's question, stellar manufacturing output made up for the drought effect on farm output after all:
July-Sep GDP growth at 7.4%; Manufacturing grows 9.3%, farm output at 2.2%

India’s gross domestic product (GDP) growth for the three-month period ended September 30 stood at 7.4 per cent, compared with seven per cent in the previous quarter and 8.4 per cent in the same quarter last year. The increase in the rate of growth over the June quarter was mainly on account of good numbers for the manufacturing sector.

Earlier, several economists had estimated the rate of economic growth in the July-September quarter to be 7.3-7.6 per cent, and analysts polled by Reuters and Bloomberg had put the figure at 7.3 per cent.

After the September quarter GDP growth numbers, there is likely to be a downward revision in official GDP growth estimates for the full financial year 2015-16 — the 2014-15 economic survey had estimated it to be between 8.1 per cent and 8.5 per cent.

The gross value added (GVA), comprising agriculture, industry and services, increased 7.4 per cent in the September quarter, against 7.1 per cent in the previous three-month period.

Manufacturing growth during the quarter was 9.3 percent, against 7.2 per cent in the previous quarter. The agricultural sector grew 2.2 per cent, against 1.9 per cent.

Construction accounts for the biggest drop:

Code: Select all

---------------------------------------------------------------
ITEM                                Q2FY16     Q1FY16   Q2FY15  
Agriculture, forestry & fishery           2.2     1.9     2.1
Mining & quarrying                        3.2     4.0     1.4
Manufacturing                             9.3     7.2     7.9
Electricity, gas & water supply           6.7     3.2     8.7
Construction                              2.6     6.9     8.7
Trade, hotels, transport  & comm.        10.6    12.8     8.9
Financing, insurance, real estate         9.7     8.9    13.5
Public admin, defence, other services     4.7     2.7     7.1
GVA at basic prices                       7.4     7.1     8.4
GDP at market prices                      7.4     7.0     8.4
*All figures in percentage
---------------------------------------------------------------

The commodity price crash hitting core sector:
Core sector growth rate slows to 3.2% in Oct

The growth rate of eight core sectors industries slowed to 3.2% in October from a year earlier on account of a sharp drop in crude oil and steel production.

The eight core industries -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- with a total weight of nearly 38% in IIP had grown at 9% in the same month last year.

The growth rate in September too was 3.2%.

The cumulative growth rate in April-October of 2015-16 came in at 2.5%, much lower than 5.6% in the first seven months of the last fiscal.

According to data released by the Ministry of Commerce and Industry today, crude oil, natural gas, refinery products and steel recorded negative growth in October.

Crude oil and steel production fell by 2.1% and 1.2%, respectively, from a growth of 1% and 14.2% a year ago.

Similarly, output of natural gas and refinery products declined 1.8% and 4.4%, respectively.

In contrast, coal, fertiliser, cement and electricity notched up a positive growth rate during the month under review.

Coal, fertiliser, cement and electricity generation grew 6.3%, 16.2%, 11.7% and 8.8%, respectively.

Meanwhile thanks to better fiscal management, the fiscal deficit is doing far better this year despite aggressive capex:
Fiscal deficit hits 74% of Budget Estimate in Apr-Oct

Fiscal deficit in the first seven months of the current fiscal reached Rs 4.11 lakh crore, or 74 per cent, of the Budget estimate (BE) for the whole year.

The fiscal situation in April-October showed improvement over the year ago period as the deficit then stood at 89.6 per cent of the Budget estimate of 2014-15.

The fiscal deficit - gap between government's expenditure and revenue - for 2015-16 has been pegged at Rs 5.55 lakh crore.

As per the data released by the Controller General of Accounts, tax revenue came in at Rs 4.28 lakh crore, or 46.6 per cent, of the full year BE of Rs 9,19,842 crore.

Total receipts from revenue and non-debt capital of the government during the first seven months read Rs 6.10 lakh crore. The government estimates Rs 12.21 lakh crore receipts at end-March 2016.