Banks need to give top priority to supporting growth: Jaitley

Sep 1, 2016 0

Mumbai– Nudging the banks to show more progress in the coming year, Finance Minister Arun Jaitley here on Thursday said they need to make supporting the growth possibilities of the country their top priority.

“Banks in India need to give top priority to support the growth possibilities in the country. The sector has, no doubt, performed very well in the context of a non supportive global economic environment, but it needs to show more progress in the coming year,” Jaitley said.

Indian Finance Minister Arun Jaitley

Indian Finance Minister Arun Jaitley

He was speaking at the 69th Annual General meeting (AGM) of Indian Bank Association (IBA).

The banking sector should take it as an opportunity for not only its own growth but also make deeper impact on India’s growth story, he said.

The Finance Minister said the government was making all possible efforts to boost economic growth along with social security in an unprecedented manner through the enactments of various enabling legislations and institutional cum administrative reforms.

“The decision making process is being made more efficient and responsive. The world now looks at India a country with a hugely positive outlook,” he added.

Jaitley said that Jan Dhan Yojana, a tool of financial inclusion, is being hailed as a path breaking banking effort, not only in India but also by most credible experts at global forums.

“The launch of GST (Goods and Services Tax) has demonstrated to the world, the will of the Indian government to continue with high impact economic reforms in the country. The deeper participation of banks is necessary to ensure that process of socio-economic growth gets a bigger push in both public and private sector,” he said.

Financial Services Secretary Anjuli Chib Duggal, who was also present at the IBA event, said the launch of Indian Postal Bank would give a massive fillip to the banking sector.

“Launch of Indian Postal Bank is going to be a game changer for banking sector and the operationalisation of its 1.5 lakh branches would give a massive fillip to the banking and financial system in the country,” Duggal said.

Banks need to take advantage of such rapidly changing positive growth opportunities in the country and contribute further to development of nation, she said.

She exhorted the banks to streamline the system of the recruitment of ‘Bank Mitras’ and consider giving more functional autonomy to the bank branches.

Bank Mitras are representatives of the banks in areas where bank branches are not available and assist people in opening accounts under the Jan Dhan Yojana.

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Piramal Fund invests Rs 2,320 crore in Lodha Group projects

Sep 1, 2016 0

PFM's Managing Director Khushru Jijina

PFM’s Managing Director Khushru Jijina

Mumbai– In the largest debt transaction within the real estate funding space, Piramal Fund Management (PFM) has invested Rs 2,320 crore across several projects of Lodha Group in the city to replace existing debts.

“The use of proceeds will ensure completion of what we believe to be marquee projects in Central and South Mumbai,” said PFM’s Managing Director Khushru Jijina.

The deal has been structured as a fixed return debt investment with periodic coupon payments and has an appropriate security mechanism in place, including hard asset cover as well as an escrow of receivables, a statement said.

“We are seeing momentum building up in our business with sales, deliveries and collections all moving up. This transaction will further strengthen our balance sheet and give us room to further improve our growth,” said Group’s Managing Director Abhishek Lodha.

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In a first, India launches National Apprenticeship Promotion Scheme with Rs. 10,000 crore

Sep 1, 2016 0

New Delhi– In a first, Government on Thursday notified National Apprenticeship Promotion Scheme to offer financial incentives to employers.

“The Scheme has an outlay of Rs. 10,000 crore with a target of 50 Lakh apprentices to be trained by 2019-20.

Union Ministry of Skill Development and Entrepreneurship in a statement here said that apprenticeship training is considered to be one of the most efficient ways to develop skilled manpower for the country.

“It provides for an industry led, practice oriented, effective and efficient mode of formal training. The National Policy of Skill Development and Entrepreneurship, 2015 launched by Prime Minister Narendra Modi focuses on apprenticeship as one of the key components for creating skilled manpower in India,” government said.

The policy proposes to work pro-actively with the industry including MSME to facilitate tenfold increase opportunities in the country by 2020.

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Uniper of Germany India Power joint venture to service power plants

Sep 1, 2016 0

New Delhi– India Power Corporation Limited (IPCL) and Germany-based Uniper on Thursday have entered into an agreement to set up a 50:50 joint venture company to service, operate and maintain power plants.

Hemant Kanoria, Chairman of IPCL, said: “Uniper’s experience of owning and managing a portfolio of about 40 gigawatt (capacity) in various countries will allow the joint venture to adopt best practices and make thermal power plants more competitive.”

The company will offer a broad range of services including plant operations and maintenance, asset monitoring software and analytical tools, flexibilisation of units, life cycle extension, supply and integration of pollution-control equipment and systems, etc.

Klaus Schafer, CEO of Uniper, said: “Europe has faced many of the challenges that India can expect to see in the years to come. Renewables-build out will impact the operating regime of conventional power plants with a need for an increased plant flexibility.”

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Opinion: Raghuram Rajan, Urjit Patel and climate change-financial world links

Sep 1, 2016 0

By Rajendra Shende

Historically, central bank chiefs have overlooked the risks due to climate change and focused on tinkering with the repo rate. They act as monetary technicians to reduce the risks for the savers and investors. Inflation, interest rates and currency are the drivers of their anxieties rather than the economic impact of Green House Gas (GHG) emissions and global warming.

Astonishingly, the governments for whom the central bank governors work proclaim almost without exception that climate change is the darkest impending risk, comparable to that of terrorism. Such dichotomy in addressing climate change is even more alarming in India’s case.

Raghuram Ranjan

Raghuram Ranjan

Thirty-two years ago, when the 23rd Reserve Bank of India (RBI) Governor, Raghuram Rajan, was a graduate student of electrical engineering at the Indian Institute of technology, New Delhi (IIT-D), he studied “electricity generation”. He understood well that power plants that generate electricity are significant contributors to global warming — an environmental challenge of planetary proportions. Electricity generation (along with heat generation) is indeed one of the significant sectors that contribute to more than 50 per cent of total global GHG emissions.

After winning a gold medal at IIT-D, he excelled in management and economics at the Indian Institute of Management-Ahmedabad (IIM-A), whose professors are the authors of reports of the Intergovernmental Panel on Climate Change (IPCC). In its latest assessment, the IPCC said that unless fossil fuels like coal, oil and gas, used inter alia in power plants, are totally wiped out by 2100, the world will be hanging on the cliff of economic disaster.

Urjit Patel

Urjit Patel

Rajan later did his doctorate at MIT-Sloan School in the US, a most prestigious institution by any standard. Sloan School is known for its research on economics and policy on climate change. It even implemented climate-friendly policies and projects on its campus, led by students and faculty that included Rajan.

Booth School of Business at the University of Chicago, where Rajan spent more than a decade as professor, is known to have engaged in the research on how much we should pay to avoid earth becoming uninhabitable by 2100. In fact, Booth School’s research used the classical and innovative discounted rates to arrive at the cost of trillions of dollars and insurance costs of billions of dollars.

The three years that Rajan spent at the IMF as Chief Economist had been a period of intense debate on the economics of climate change. IMF Chief Christine Lagarde recently stated that the 2015 Paris climate deal would go a long way in protecting the interests of the poorest members of society who are the first victims of climate change.

Rajan explained convincingly the link of continued low prices of the dosa to the stagnancy of its technology of manufacture. He talked very effectively about the need to first Make in India for Indians. He also opined publicly on the subject most detached from RBI’s mandate — tolerance in Indian society. But long-term economic and fiscal policies needed to mitigate climate change remained hidden in his discourse — like the fault lines he described in his famous book “Fault Lines: How Hidden Fractures Still Threaten the World Economy”.

After Rajan leaves for the academic world this month to placate his passion for new ideas, innovation and academic research for economics, many will wait for his incisive analysis on the risk, this time, on the climate-led economic crisis.

The arrival of Rajan’s successor, Urjit Patel — with past experience in the energy sector and research papers in economics of energy and climate change — may herald the much-needed connection of the missing links between climate change and the financial world, mentored by RBI.

(Rajendra Shende, an IIT-alumnus, is Chairman of the TERRE Policy Centre and a former Director of UNEP. The views expressed are personal.)

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India August manufacturing index hits 13-month high

Sep 1, 2016 0

Mumbai–Manufacturing saw an uptrend in August, registering a 13-month high on the back of better demand in domestic and external markets, key macro-economic data showed on Thursday.

The Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) — a composite indicator of manufacturing performance — rose to 52.6 in August from 51.8 in July.

An index reading of above 50 indicates an overall increase in economic activity, and below 50 an overall decrease.

“With demand from the domestic and external markets picking up, companies raised output accordingly. Firms recorded an easing in cost inflation during the month, which in turn resulted in a softer overall increase in factory gate charges,” financial services firm IHS Markit, which compiles the monthly report, said in a statement here.

“Climbing from 51.8 in July to a 13-month high of 52.6 in August, the headline index showed a solid improvement in the health of the sector,” it said.

“Manufacturing PMI data show that the positive momentum seen at the beginning of the second semester has been carried over into August, with expansion rates for new work, buying levels and production accelerating further,” said Pollyanna De Lima, economist at Markit and author of the report.

Moreover the sector’s growth dynamics for the near-term are encouraging as companies will likely continue their efforts to replenish stocks, De Lima said.

“In fact, IHS Markit forecast a robust 7.5 per cent increase in real GDP during the fiscal year 2016-17,” she added.

The Indian economy grew at 7.9 per cent in the fourth quarter of 2015-16, taking the overall growth in gross domestic product (GDP) to 7.6 per cent for the entire fiscal.

De Lima said, on the price front, survey data highlighted softer increases in input costs and output charges and, in both cases, inflation rates were below their respective trends.

“In light of these numbers, the RBI (Reserve Bank of India) has scope to loosen monetary policy in the upcoming meeting to further support economic growth in India,” she said. (IANS)

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16 states ratify GST, Bill ready for presidential nod

Sep 1, 2016 0

New Delhi– With Odisha on Thursday becoming the 16th state to ratify the Goods and Services Tax (GST) Bill, the constitution amendment is now ready to be sent for the President’s assent before being notified as law.

Thus, the pan-India overhaul of India’s indirect tax regime has got the mandatory support of more than half the states much earlier than the Centre’s targeted deadline of rolling out the GST by the start of the next fiscal on April 1, 2017.

After Goa became the 15th state to ratify the GST bill on Wednesday, decks would have already been cleared for presidential assent had the West Bengal government moved for its ratification earlier this week.

It did not do so at a one-day special session on Monday, citing “time constraints”.

Meanwhile, at a meeting here with the Empowered Committee of State Finance Ministers on GST on Monday, India Inc. pitched for an 18 per cent standard rate.

They said this rate would generate adequate tax buoyancy without fuelling inflation.

The opposition Congress party had earlier demanded an 18 per cent cap on the GST rate.

Industry chambers also told state finance ministers that the new tax be implemented after a minimum of six months from the date of adoption of the GST law by the GST Council.

The Federation of Indian Chambers of Commerce and Industry (FICCI) suggested that to check inflation and the tendency to evade taxes “the merit rate should be lower and the standard rate should be reasonable”.

“As per current indications and reports, goods will be categorised as being subject to merit rates (12 per cent), standard rates (18 per cent) and de-merit rates (40 per cent),” FICCI said in a release following a meeting here with the Empowered Committee.

“Certain goods will be exempted from GST while bullion and jewellery would be charged to one-two per cent,” it said regarding classification of goods for applying GST rates.

On implementing GST, FICCI said that in order to provide adequate time to trade and industry to prepare “for a hassle-free roll out of the GST regime”, a minimum of six months’ time should be permitted from the date of the adoption of the GST Law by the GST Council.

“Additional time would be required in case the GST Law, as passed by parliament or state legislatures, is significantly different from the one adopted by the GST Council,” the statement added.

In a meeting here with Revenue Secretary Hasmukh Adhia last month, industry chambers had raised concern on the draft GST law, flagging issues like dual administrative control and wide discretionary powers for tax authorities.

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Core Indian industries output index up 3.2 percent in July

Aug 31, 2016 0

New Delhi–The Index of Industrial Production (IIP) of eight core industries at 173.7 in July was 3.2 per cent higher than a year ago, said the Union Commerce & Industry Ministry on Wednesday.

“The cumulative growth of the IIP was 4.9 per cent during April-July of this fiscal (2016-17),” the ministry said in a statement here.

The eight core industries are coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel (alloy and non-alloy), cement and electricity.

The core industries carry 38 per cent of the weight of items in the IIP.

“According to the provisional data, coal production increased 5.1 year-on-year (YoY) and 5.3 per cent in the first quarter under reference (Q1) compared to same quarter year ago,” the statement noted.

Crude oil production, however, decreased 1.8 per cent YoY and 2.9 per cent in the first quarter from like period year ago.

Natural gas production increased 3.3 per cent YoY but declined 3.8 per cent in Q1 over same period year ago.

Petroleum refinery production increased 13.7 per cent YoY and 8.7 per cent in Q1 over corresponding period year ago.

Likewise, fertiliser production increased 2.5 per cent YoY and 8.6 per cent in Q1 over like period year ago.

Steel production marginally decreased 0.5 per cent YoY but increased 2.8 per cent in Q1 over same period year ago.

“Cement production increased 1.4 per cent YoY and 4.6 per cent quarterly, while electricity output went up 1.6 per cent YoY and 7.1 per cent quarterly,” the statement added.

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Q1 GDP at 7.1 percent in India

Aug 31, 2016 0

New Delhi–India’s first quarter gross domestic product (GDP) growth at 7.1 per cent is mainly the result of more than 50 per cent increase in subsidy releases from the union budget, the government said on Wednesday.

“Q1 GDP at 7.1% mainly due to 53% increase in subsidy expr/front loading of subsidy releases from Budget,” Economic Affairs Secretary Shaktikanta Das said in a tweet.

India’s Q1 GDP slowed to 7.1 per cent for the first quarter of this fiscal, from 7.5 per cent in the like period of 2015-16, due mainly to lower activity in farm, mining and construction sectors, official data showed on Wednesday, even as industry said the numbers reflected a moderation of growth impulses.

“Three positives in Q1 GDP data: higher exports; higher manufacturing growth; higher growth in services,” Das said in another tweet.

The government has targeted the GDP growth to top 8 per cent this fiscal, mainly on the back of a normal monsoon season. The growth rate of the entire previous fiscal was at 7.6 per cent.

Worryingly, the gross fixed capital formation — a monetary measure of activities like building of roads, schools and hospitals, investments in plant and machinery, and construction of ports, and railways assets — fell to 29.6 per cent of GDP from 32.7 per cent in the previous year.

“Lower industrial growth & negative growth in gross fixed capital formation being analysed. Proactive policy responses of Govt will continue,” Das said in another tweet.

“Q1 export growth 3.2% against (-) 5.7% in Q1 last year.Manufacturing 9.1 % (7.3% last yr). Growth in services 9.6% (8.8%),” he said in a separate tweet

According to the Economic Affairs Secretary, going forward a good monsoon will help improve agricultural growth and rural purchasing power.

“Good monsoon, 7th pay commission payouts and impact of structural reforms are expected to boost growth in coming quarters of FY 17,” he said.

“FY 17 growth expected to be better than last year. Close to 8%. Policy initiatives of Government will continue,” he added.

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Malls, buildings on Bengaluru drains to be demolished

Aug 31, 2016 0

Bengaluru– Malls and high-rise buildings, including apartments, built illegally on storm water drains of the city would be demolished to prevent flooding after heavy rains, Karnataka Law Minister T.B. Jayachandra said on Wednesday.

“We are determined to demolish all buildings constructed illegally on encroached storm water drains and lake beds across the city and blocking rain water flow to prevent flooding,” Jayachandra told reporters after the state cabinet at a meeting here unanimously took the decision.

Though the minister did not specify how many buildings, including malls and apartments, would be razed, he mentioned that a high-rise apartment building of leading realtor Prestige Group at Bellandur was identified for demolition as it was illegally built on a storm water drain.

The Bruhat Bengaluru Mahanagara Palike (BBMP) a month ago launched a massive demolition drive after heavy rains in July flooded low-laying areas and arterial roads, as water flow in the storm water drains was blocked and two-three lakes breached due to encroachments around them.

“We have taken up the demolition drive in compliance with the 2011 Karnataka High Court’s order, which directed the civic corporation to clear buildings which encroached storm water drains to stop flooding,” reiterated Jayachandra.

The cabinet decision comes in the light of public criticism of the state government and the BBMP as buildings and houses of middle class and poor built on the drains were being demolished while those of the rich and real estate firms were spared.

“We will demolish all buildings illegally built on such drains, be they a massive apartment block, a mall or even an ordinary house,” asserted Jayachandra.

Claiming that the Prestige apartment building had come up on a main storm water drain at Bellandur, the minister said as a result, the 150-foot wide drain was reduced to just 10 feet, with a part of the structure encroaching 140 feet of the drain.

“The builderwants us to divert the drain so that his building could be saved. But we are not going to heed to such requests. We will demolish it,” Jayachandra said.

Asked about Orion Mall, which the BBMP had identified as being on a storm water drain in the south-west suburb, the minister said the corporation would inspect the structure and demolish it if it is found to be illegal.

“We will not differentiate between the rich and poor in the demolition drive, as clearing the storm water drains of encroachments was imperative to avoid a repeat of heavy flooding in Chennai last year after a deluge,” noted Jayachandra.

Of 1,300 small and big buildings the BBMP had identified as those encroaching drains, about 100-150 have been demolished till date, mostly on the city’s outskirts.

“As the rich and big realtors know the law, they exploit loopholes or lacuna in it and secure a court order staying demolition. We are aware of that. None will be spared, as the city cannot be choked by illegal structures on storm water drains,” added the minister.

In its reaction, Prestige said it was not aware of which of its buildings was being referred to by the minister.

“We are unaware of which building is being referred to. We are open to scrutiny and audit at any time. We move forward with the assurance that our stand will be vindicated and we will come out clean,” said Prestige Chairman and Managing Director Irfan Razack in a statement here hours after Jayachandra’s briefing.

Asserting that the group respected rule of law, Razack said works it had undertaken till date were completed with requisite permissions and sanctions.

“We respect the environment and have always focused on developing eco-friendly properties. The spaces we create enhance the value of our property as well as of the area in which the development is located,” he added.

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