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Ind-Ra: Consolidation Ahead of Crucial RBI and FED Policies
May 31,2016

India Ratings and Research (Ind-Ra) expects both debt and currency markets to remain cautious ahead of two big events globally. This week, the 10-year benchmark yield is likely to be in the range of 7.44%-7.50% (7.47% at previous weeks close) while the rupee might range between 67.05-67.75/USD (67.03/USD at previous weeks close).

Bond Markets to Remain Cautious: The impact of open market operations (OMOs) has only been a minimal reaction in the bond market other than protecting from an upside movement in yield. Against INR1.35trn of gross G-Sec issuances raised since April 2016 including this weeks auction, INR0.7trn have been OMO purchases and INR0.4trn have been redemptions. Hence, only INR250bn of net supply has come into the system. Ind-Ra expects the market to react on a favorable demand-supply equation once the uncertainties related to FEDs action and concerns over monsoon start disappearing.

Liquidity to Improve in June: The core liquidity deficit is likely to improve in the coming weeks. Ind-Ra expects the net deficit to come down to 0.5% of net demand and time liabilities in June 2016. However, the overall aggregate deficit may remain 1% of net demand and time liabilities due to quarterly advance tax flows to the government. Hence, the scope of an OMO purchase in June will be neutral, and will mostly depend upon forex flows.

Rupee to Stay Range-bound: Ind-Ra expects a FED rate hike in the near term to remain a sensitive event for global rates and currencies, but to not be disruptive for the Indian rate market. The global market will be keenly focused on US nonfarm payrolls and unemployment data for May 2016, crucial data before the next FED meeting on 16 June 2016. Other than these, labor market data and PMI data for the euro will be important.

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1.04 crore people skilled in 2015-16 under Skill India Mission; a quantum leap by 36.8% since last year: Shri Rajiv Pratap Rudy
May 31,2016

On the occasion of completion of two years of inclusive growth and development under the NDA government, Union Minister of State for Skill Development and Entrepreneurship (Independent Charge) and Parliamentary Affairs Shri Rajiv Pratap Rudy here today said that more than 1.04 crore youth have been trained under the Skill India Mission in the year 2015-16 which is 36.8% higher than the previous years recorded data. In the current arrangement, 60 percent of the trainings are directly under Ministry of Skill Development and Entrepreneurship while 40 percent are across other Central Ministries.

The Minister said that Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which was launched on July 15, 2015 by the Prime Minister Shri Narendra Modi, alone has witnessed more than 20 lakh people, of which 40 per cent are women candidates, being trained in their choice of skills.

Shri Rudy further elaborated on the endeavors and achievements made under the Skill India programme saying that in the last two years, the skill training and development ecosystem has seen transformational change through concerted efforts in terms of initiatives such as PMKVY, new ITIs with private/ industry partnership, infusion of new ideas and finance through World Bank assistance, a paradigm shift in entrepreneurship education and development, amendments in Apprenticeship Act for increasing opportunities for the youth etc. He said, together, these have for the first time, brought in a new focus to skill development in the country.

The Minister said, at another level, there has been a consistent effort on coordination and convergence of innumerable schemes run by various Ministries and Departments across sectors and States, so as to bring them in conformity with the national standards, common norms and local requirements. He said, a slew of policy level changes have been introduced with the launch of National Skill Development Policy and Mission as well. Today, Shri Rudy said there are more than 1500 courses that have been aligned to National Skill Qualification Framework (NSQF).

Emphasizing the need to have better connect of skills with employability, Shri Rudy mentioned that provision of a skilled workforce is a pre-requisite for a growing economy and success of various other initiative of the government such as Make in India, Digital India, Smart Cities, rapid highway constructions etc. and his ministry will ensure endeavors in this direction. He said, there have been MoUs with Central Ministries (including Railways, Defence, Health, Telecom, Power, Coal) to leverage existing infrastructure and opportunities for skill development across sectors. He said, 52 Skill Centres in Railway premises have been identified so far, of which 12 are already operational.

The Ministry has also created a new model for skilling of retiring defence personnel to meet the trainers demand in the ecosystem and has successfully completed a pilot with 56 IAF officers and provided them with training and placement letters.

Listing the achievements further made in the last two years, Shri Rudy said, the number of ITIs in the country has increased from 10,750 in May 2014 to over 13,105 in May 2016 and these will be further scale up to 18000 by September this year. More than 1141 new ITIs have been added and 1.73 seats have been increased in the last one year. MSDE has also enabled the opening up of 5 new RVTIs for women in skill development.

The Minister stated that the Ministry of Skill Development and Entrepreneurship is aiming extensive modernization of the existing ITI ecosystem and establishment of new ITIs and Multi Skill Training Institutes (MSTIs), so that more and more people get skills of recognized standards which will help them become more employable for the industries. The MSTIs will be set up in the unserved areas/blocks to improve the outreach of the Skill India initiative.

He also said that his Ministry is working towards the establishment of one Model Skill Center in each district of the country, which would be operational in more than 500 districts by March 2017. These will be high quality centers which will help make skill development aspirational and accessible.

In the private skill ecosystem catalyzed by National Skill Development Corporation (NSDC), 11 new Sector Skill Councils have been added making it to 40 sectors now and an additional 151 training partners have joined the ecosystem making the total to 267 partners.

The formation of the proposed National Skill Certification Board will result into a new era of training, assessment and certification where both government and industry will collectively enable a joint framework for quality skill training and certification.

Shri Rudy also emphasized the need for promoting entrepreneurship in the light of Stand Up India and Start Up India announced by the government. He said his ministry will work to deliver Entrepreneurship, Education and training in 2200 colleges, 300 schools, 500 government ITIs and 50 Vocational Training Centres. Aspiring entrepreneurs will be connected to mentors and credit markets.

Till date 4,82,079 entrepreneur trainings have been done by National Institute for Entrepreneurship and Small Business Development (NIESBUD). 83 percent of these have been trained through digitized entrepreneurship Orientation Programs.

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Government of India and World Bank Sign US$ 100 Million Agreement for Urban Water Supply Modernization in Karnataka
May 31,2016

The Government of India, the Government of Karnataka and the World Bank has signed a US$ 100 million loan agreement for the Karnataka Urban Water Supply Modernization Project (KUWSMP) to support the efforts of Hubballi-Dharwad, the second largest urban center in Karnataka, to become one of the first Indian cities to provide citywide, continuous, piped water supply to its residents.

The project, signed, will help bring clean water to one million citizens of Hubballi-Dharwad, including 160,000 people who live in slums and currently depend upon public standposts or private vendors for water. The project will finance physical investments in the water supply system for the twin cities, and support city authorities in strengthening systems and procedures required to sustainably close the current water service delivery gaps.

n++The Government of India recognizes the importance of 24x7 water supply and has made it a Service Level Benchmark for water providers. This project will support the Government of Karnatakas efforts to provide clean water on a continuous basis and scale up the 24x7 water service to cover all parts of the twin cities of Hubballi-Dharwad,n++ said Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India.

The credit agreement for the project was signed by Raj Kumar, Joint Secretary, Department of Economic Affairs on behalf of the Government of India; V Ponnuraj, Managing Director, Karnataka Urban Infrastructure Development Finance Corporation (KUIDFC), on behalf of the Government of Karnataka; and Michael Haney, Operations Adviser, World Bank India on behalf of the World Bank.

n++No major city in fast-urbanizing India provides its residents with continuous piped water supply, a situation that particularly affects the poor, women and children, who spend time and money to secure water for their basic needs,n++ said Michael Haney, World Banks Operations Adviser in India. n++The Government of Karnataka and the city authorities of Hubballi-Dharwad are trying to change this reality. The World Bank is pleased to support their efforts to ensure that all the citizens of the twin cities, including the poor who usually remain under-served in most urban areas, have access to clean water in their homes.n++

Most Indian towns and cities supply water intermittently. According to the Ministry of Urban Development, only 50 percent of consumers in most cities have household connections to the pipe system, while the poor are typically not connected at all, and have to pay significantly higher prices to purchase water from private vendors. Women and children bear the cost of coping with intermittent supply by spending time collecting water from public standposts or waiting hours for water to become available.

The Government of Karnataka has acknowledged this challenge and has undertaken significant efforts to improve urban water service levels in select cities, most recently through a World Bank-supported pilot project which provided continuous water supply to about 230,000 people in select wards of the cities of Belagavi, Kalaburagi and Hubballi-Dharwad. The government now intends to scale up this level of service delivery to the entire city of Hubballi-Dharwad, the second largest city of Karnataka.

Under the KUWSMP, the Hubballi Dharwad Municipal Corporation has hired a professional water supply operating company to help make the necessary improvements to its water supply system, and to manage the refurbished system through a 12-year contract in accordance with strict performance criteria. The municipality will retain ownership of the water supply assets and control of the service delivery set up. The project will help the Hubballi-Dharwad Municipal Corporation set up a city-level water utility that will take over water supply operations from the professional operating company at the end of its contract period.

The municipality will control tariff-setting in accordance with guidelines laid down by the state Government of Karnataka, which include provisions to ensure that the water tariff for lifeline consumption (up to 18KL per month) is kept at levels that poorer households can afford. The project will also ensure that poorer households are able to avail of the improved services by subsidizing household-level water connections.

n++The Government of Karnataka has laid down strict contractual provisions to hold the operating company accountable for improving levels of service to customers, whilst at the same time providing incentives to ensure that the improvements are achieved and sustained in the most cost-effective manner and do not strain the citys finances,n++ said Bill Kingdom, Lead Water and Sanitation Specialist and the projects Task Team Leader for the World Bank. n++In parallel, the project will help the city of Hubballi-Dharwad establish institutions and financing mechanisms that will support sustainability of water services to the city in the long term.n++

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 24 years.

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The Direct Tax Dispute Resolution Scheme 2016 & Equalisation Levy to come into effect from 1st June 2016
May 31,2016

The Direct Tax Dispute Resolution Scheme, 2016 incorporated as Chapter X of the Finance Act, 2016, shall come into force on the 1st of June, 2016 and Declarations under this Scheme may be made on or before the 31st December, 2016 in respect of tax arrears & specified tax. The relevant rules and forms in this regard have been notified vide notification no. 34 & 35 dated 26th May, 2016.

The provisions relating to imposition and collection of Equalisation Levy incorporated as Chapter VIII of the Finance Act, 2016 comes into force from the 1st of June, 2016The notification also provides for date of effectivity of equalisation levy, the statement of specified services, notice of demand and the relevant forms. The relevant rules and forms in this regard have been notified vide Notification No.37 & 38 dated 27th May, 2016.

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World Bank Approves $135 Million for Horticulture Development in Himachal Pradesh, India
May 31,2016

The World Bank Board has approved a US$ 135 million credit to support the efforts of the Government of Himachal Pradesh in modernizing and expanding the production of high value horticulture commodities.

The Himachal Pradesh Horticulture Development Project will support small farmers and agro entrepreneurs in Himachal Pradesh, to increase the productivity, quality, and their market access to selected high value horticulture commodities. Over 150,000 producers, mainly small and marginal farmers of the state will benefit from the project of which about 33 percent are expected to be women.

Given the agro climatic conditions, ability to produce for off-season markets, and proximity to consumer markets gives Himachal an edge in producing high value horticulture commodities. Today, 44 percent of the cropped area in the state is dominated by high value horticulture commodities.

However, despite the significant potential of horticulture production in Himachal Pradesh, the state faces a number of challenges which includes limited access to appropriate production technology; an entirely rainfall dependent system; high post-harvest losses, exacerbated by weak storage and marketing capabilities; weak institutional capacity for agro processing among small and medium enterprises; and lack of access to medium and long-term financial capital among others.

n++While the efforts of the Government of Himachal Pradesh has helped the state become one of the leading producers of fruits and off-season vegetables in the country, this project will reach out to small and marginal farmers, including women. The project will support them in acquiring the necessary technical knowledge to take full advantage of the opportunities in the horticulture sector,n++ said Onno Ruhl, World Bank Country Director in India.

Recognizing the need for a long-term development of the horticulture sector, the Government of Himachal, through this project, plans to invest in modernizing the horticulture sector with climate resilient technology, strengthen the productive capacities of producers and their organizations, facilitate access to markets and use of financial services - in particular credit and insurance.

n++Addressing the current constraints will require a predictable and supportive policy environment for private sector development, better access to product and input markets, and improved access to extension and financial services for the farmers. We hope this project will help set the stage for the state to tap its full potential in the area of horticulture,n++ said Manivannan Pathy, Senior Agricultural Specialist and World Banks Task Team Leader for the project.

The credit is from the International Development Association (IDA) - the World Banks concessionary lending arm with a maturity of 25 years, including a 5 year grace period.

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World Bank Group Launches Groundbreaking Financing Facility to Protect Poorest Countries against Pandemics
May 31,2016

The World Bank Group today launched the Pandemic Emergency Financing Facility (PEF), an innovative, fast-disbursing global financing mechanism designed to protect the world against deadly pandemics, which will create the first-ever insurance market for pandemic risk. Japan, which holds the G7 Presidency, committed the first $50 million in funding toward the new initiative.

n++Pandemics pose some of the biggest threats in the world to peoples lives and to economies, and for the first time we will have a system that can move funding and teams of experts to the sites of outbreaks before they spin out of control,n++ said Jim Yong Kim, President of the World Bank Group. n++This facility addresses a long, collective failure in dealing with pandemics. The Ebola crisis in Guinea, Liberia and Sierra Leone taught all of us that we must be much more vigilant to outbreaks and respond immediately to save lives and also to protect economic growth.n++

G7 leaders had urged the World Bank Group to develop the initiative during their May 2015 summit in Schloss-Elmau, Germany.

n++Japan is proud to support the Pandemic Emergency Financing Facility, which prevents pandemics from undermining important development achievements,n++ said Deputy Prime Minister and Minister of Finance of Japan Taro Aso. n++Innovative financing for crisis responses by the PEF, together with financing for preparedness and prevention in peacetime including through IDA, are important to mitigate human and social losses and to help quickly recover in the event of a crisis. It is cost-effective and should be emphasized at all stages of economic development.n++

The new facility will accelerate both global and national responses to future outbreaks with pandemic potential. It was built and designed in collaboration with the World Health Organization and the private sector, introducing a new level of rigor into both the financing and the response.

n++Recent years have seen a dramatic resurgence of the threat from emerging and re-emerging infectious diseases,n++ said Margaret Chan, Director-General of the World Health Organization. n++WHO fully supports the Pandemic Emergency Financing Facility as a critical contribution to global health security and a crucial line of defence against high-threat pathogens.n++

The PEF includes an insurance window, which combines funding from the reinsurance markets with the proceeds of World Bank-issued pandemic (catastrophe, or Cat) bonds, as well as a complementary cash window. This will be the first time World Bank Cat Bonds have been used to combat infectious diseases. In the event of an outbreak, the PEF will release funds quickly to countries and qualified international responding agencies.

The insurance window will provide coverage up to $500 million for an initial period of three years for outbreaks of infectious diseases most likely to cause major epidemics, including new Orthomyxoviruses (e.g. new influenza pandemic virus A, B and C), Coronaviridae (e.g. SARS, MERS), Filoviridae (e.g. Ebola, Marburg) and other zoonotic diseases (e.g. Crimean Congo, Rift Valley, Lassa fever). Parametric triggers designed with publicly available data will determine when the money would be released, based on the size, severity and spread of the outbreak.

The complementary cash window will provide more flexible funding to address a larger set of emerging pathogens, which may not yet meet the activation criteria for the insurance window.

All 77 countries eligible for financing from the International Development Association, the World Bank Groups fund for the poorest countries, will be eligible to receive coverage from the PEF. The PEF is expected to be operational later this year.

Recent economic analysis suggests that the annual global cost of moderately severe to severe pandemics is roughly $570 billion, or 0.7 percent of global GDP. A very severe pandemic like the 1918 Spanish flu could cost as much as 5 percent of global GDP, or nearly $4 trillion.

During the past two years alone, pandemic threats have included the devastating Ebola crisis in West African++which crippled the economies of Guinea, Liberia and Sierra Leone, and cost them an estimated $2.8 billion in GDP losses ($600 million in Guinea, $300 million in Liberia and $1.9 billion in Sierra Leone); the MERS outbreak, which took a toll on the South Korean economy; and the Zika virus that is spreading in the Americas and putting thousands of unborn children at risk.

Four global expert panels that were convened over the past year in the wake of the Ebola crisis concluded that the world must urgently step up its capacity for a swift response to outbreaks before they become more deadly and costly pandemics.

The PEF will do a number of important things to prevent another Ebola crisis:

n++It will insure the worlds poorest countries against the threat of a pandemic.

n++In the event of a severe infectious disease outbreak, it will release funds quickly to the countries and/or to international responders, to accelerate the responsen++saving lives and reducing human suffering.

n++By mobilizing an earlier, faster, better planned and coordinated response, it will reduce the costs to countries and their people for response and recovery.

n++It will promote greater global and national investments in preparing for future outbreaks and strengthening national health systems.

n++It will combine public and private resources to advance global health security, and create a new insurance market for managing pandemic risk.

The World Bank Group estimates that if the PEF had existed in mid-2014 as the Ebola outbreak was spreading rapidly in West Africa, it could have mobilized an initial $100 million as early as July to severely limit the spread and severity of the epidemic. Instead, money at that scale did not begin to flow until three months later. During that three month period, the number of Ebola cases increased tenfold. The Ebola epidemic has claimed more than 11,300 lives and cost at least $10 billion to date. International assistance has totaled more than $7 billion for Ebola response and recovery.

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India`s power deficit may reach 5.6% in FY22 with demand set to outpace supply: ASSOCHAM-PwC study
May 31,2016

Indias power deficit may rise from 2.6 per cent of peak demand in FY16 to 5.6 per cent in FY22 as demand starts to overtake supply, noted a recent ASSOCHAM-PwC joint study.

n++Availability of reliable, affordable and sustainable electricity is an essential requirement for propelling the India growth story and all potential sources of energy will need to be tapped to meet the envisaged demand and ensure its energy security,n++ highlighted the study titled Hydropower @Crossroads, jointly conducted by ASSOCHAM and PwC.

Considering an energy elasticity of 0.8, India is estimated to require seven per cent annual growth in electricity supply to sustain annual gross domestic product (GDP) growth of around 8-9 per cent, it said.

In order to achieve the target of 1,800 kilowatt-hour (kWh) per capita consumption and electricity access for 300 million people by 2034, India will require an additional power supply capacity of 450 gigawatt(GW), as such hydropower, with an abundant 148 gigawatt (GW), can substantially contribute towards meeting Indias energy needs.

Considering that coal-based generation accounts for about 70 per cent of total installed capacity and over 80 per cent of total units generated in India, the study cautioned that such higher dependency on thermal generation sources pose a serious threat to energy security in terms of fuel availability, long-run economic viability and environmental sustainability.

n++Hydropower can play a crucial role in Indias sustainable development and energy security given that it meets the criteria of sustainability, availability, reliability and affordability,n++ said the ASSOCHAM-PwC study.

However, share of hydropower in Indias energy mix has decreased almost by 30 per cent in last 40 years owing to various issues like water sharing disputes, environmental concerns, rehabilitation and resettlement (R&R) issues, land acquisition problems, delays in procuring clearance and approvals, inadequate technical and financial capability of developers.

Considering that hydropower projects are capital-intensive and are faced with various risks and uncertainties, optimum risk allocation mechanisms between developers, government and project affected people need to be in place, suggested the study.

Moreover, new financing avenues need to be developed along with sufficient funding support from the government in order to attract investment in the sector.

Highlighting the need to expedite various clearances, such as those for environment, forest and land, the ASSOCHAM-PwC study suggested the government to form a specialised institution for facilitating large infrastructure projects in terms of clearances and approvals, thereby minimising the time taken for these processes.

Adequate fiscal incentives in terms of tax holiday, Value Added Tax (VAT) exemption, and exemption of custom duty should be allowed by the government to help in reducing hydropower project cost and securing a cheaper source of finance, it added.

Viability gap funding (VGF) can also be a viable proposal to make hydropower projects price competitive, further said the study.

n++Government of India may create a special hydropower development fund or can use the clean energy fund to provide loans to hydro projects at a lower rate of interest,n++ recommended the ASSOCHAM-PwC study.

It has also been suggested that the Central Electricity Regulatory Commission (CERC) should facilitate market-based instruments like hydropower purchase obligations (HPOs), which have an underlying principle of mandatory purchase of hydropower by distribution utilities.

n++CERC needs to come up with a differentiated peak and off-peak tariff to incentivise hydropower, given its potential to meet peak demand.n++

Hydropower project developers, as a part of economic and social development of the area, need to be mandated to open technical training centres, clinics and health centres, schools, etc., in the project affected area to gain public acceptance and get skilled labour, while local residents get employment opportunities.

n++A structured mechanism needs to be developed for balancing benefits from hydropower projects and transferring economic rents from projects to the government, which should ultimately be passed on to affected stakeholders,n++ the study said.

Besides, hydropower developers should incorporate modern machinery and techniques to enhance their capability to deal with contingencies.

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signed Ministry of Railways and PEC University of Technology for setting up of Kalpana Chawla Chair on Geospatial Technology for Indian Railways
May 30,2016

Memorandum of Understanding (MoU) signed Ministry of Railways and PEC University of Technology for setting up of Kalpana Chawla Chair on Geospatial Technology for Indian Railways at PEC University of Technology, Chandigarh

In the august presence of Minister of State for Railways Shri Manoj Sinha, a Memorandum of Understanding (MoU) between Ministry of Railways and PEC University of Technology for setting up of Kalpana Chawla Chair on Geospatial Technology for Indian Railways at PEC University of Technology, Chandigarh was signed today i.e. on 30.05.2016. On the event of Signing Ceremony, Chairman Railway Board Shri A. K. Mital, Member Engineering Shri V. K. Gupta, and other Board Members and Senior Officials were present. On behalf of the Railway Ministry Shri V.K. Gupta, Member Engineering signed the MoU whereas on behalf of PEC University of Technology Shri Som Mittal, Chairman, Board of Governance, PEC University of Technology signed the MoU. Prof. Manoj K. Arora, Director, PEC University of Technology was also present among others. The MoU was signed in the backdrop of Railway Ministers Budget announcement.

Speaking on the occasion, Minister of State for Railways Shri Manoj Sinha said that updated technology always promises safe railway operation throughout the country and thus in the recent past years the role of technology has been recognized by the Railways to remove technological and engineering related problems. He said that todays MoU is a unique collaboration between the two organizations which will help in developing applications to remove day to day engineering and technological problems and geospatial solutions to Indian Railways. He stated that this is very historic partnership which will ascertain smooth functioning of the Railways.

Salient Features of the MoU:-

In the august presence of Honble Minister of State for Railways Shri Manoj Sinha a function was organised on 30.05.2016 to mark the signing of a MOU between Shri V.K.Gupta , Member Engineering Railway Board and Shri Som Mittal , Chairman , Board of Governors, PEC University of Technology , Chandigarh to set up n++Kalpana Chawla Chairn++ at PEC University of Technology , Chandigarh . Function was attended by distinguished officials from Railway Board including Chairman Railway Board Shri A.K.Mital, Finance Commissioner Shri Sanjay Mookerjee, Shri Hemant Kumar Member Mechanical .

In order to promote research in Geo-spatial Technology , the Chair was announced in Budget speech of Honble MR for the current financial year .

This academic chair is being instituted in fond memory of Late Kalpana Chawla , an Indo - American Astronaut and Alumnus of PEC during the year 1978-82 .She was incidentally the first woman of Indian origin in space. To honour her contributions in Aerospace Engineering Indian Railways decided to institute the academic chair in the area of Geo-spatial Technology in her alma mater.

Indian Railways would provide a corpus of Rs 10 Crore to PEC University of Technology, Chandigarh towards setting up and to meet the running expenses of this chair. The Chair will be headed by Shri V.K.Gupta , Member Engineering , Railway Board as Chairman and Shri Manoj Arora , Director , PEC University of Technology, Chandigarh as Co - chairman . The Chair will function through a Chair Core Committee (CCC) having members from Railways and PEC.

The objective of this chair is to encourage research activities in Geo-spatial Technology and to strengthen Indian Railways especially Railway projects where use of remote sensing data , global positioning system (GPS) and Geographical information System (GIS) is predominant. This will immensely help Indian Railways to develop in house solutions to the problems which are often outsourced to western countries.

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Ind-Ra: CSO to Miss FY16 GDP Growth Forecast by a Whisker, Gross Value Added Forecast to be Attained
May 30,2016

The FY16 real gross value addition (GVA) will be achieved as per the advance estimate of the central statistical office (CSO); however gross domestic product (GDP) growth may miss the estimate by 10bp, says India Ratings and Research (Ind-Ra). The GVA projected at 7.3% at basic prices for FY16, will be achieved as per the advance estimate. The GVA during 1QFY16, 2QFY16 and 3QFY16 grew by 7.2%, 7.5% and 7.1% respectively. Ind-Ra expects the 4QFY16 GVA to have grown by 7.4%.

At the same time, Ind-Ra expects gross domestic product (GDP) in 4QFY16 to have grown by 7.4%, which translates into the FY16 GDP growth of 7.5%. The GDP during 1QFY16, 2QFY16 and 3QFY16 grew by 7.6%, 7.7% and 7.3% respectively. The FY16 GDP growth is likely to have been marginally lower than the FY16 advance estimate of 7.6%. Ind-Ra notes that any change in the 4QFY15 or the annual FY15 growth by the CSO, will have an impact on the quarterly and annual growth estimates.

Ind-Ra believes that the agricultural GVA growth can surprise positively, despite the second consecutive year of sub-par monsoons, mainly due to the unseasonal rainfall during 4QFY15. The growth in industrial GVA during 4QFY16 is likely to have declined from the 3QFY16 level, however Ind-Ra estimates it to have been better than 4QFY15. The main support to the industrial performance is driven by the strong performance of the electricity sector. The construction sector is likely to have performed better than the 3QFY16 and 4QFY15. The cement production in 4QFY16 grew by 11.4% (3QFY16: 4.3%, 4QFY15: -0.5%). The production of steel was flat in 4QFY16, but its performance improved from the contraction in 3QFY16 (-4.7%) and 4QFY15 (-1.3%).

Leading indicators of the service sector - namely air and port cargo and petroleum consumption points towards a stable GVA growth for the service sector.

On the expenditure side, the private final consumption expenditure (PFCE) is the largest component of the GDP. As per the CSOs advance estimates, it was estimated to have grown by 7.6% in FY16. In 1QFY16, 2QFY16 and 3QFY16 PFCE grew by 6.4%, 5.6% and 6.4% respectively. Ind-Ra expects FY16 PFCE to have grown by 6.3%, lower than the CSO advance estimate of 7.6%. With a large share in the GDP, PFCEs growth trajectory has a significant impact on GDP growth. Ind-Ra expects a minor underachievement in the FY16s gross fixed capital formation (GFCF) growth forecast of 5.3%.

GDP and GVA for the period Q4FY16 and FY16 is scheduled to be released on 31 May 2016.

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Delhi-NCR tops job creation among 8 cities in Q4 of FY 16: ASSOCHAM study
May 30,2016

Delhi-NCR (National Capital Region) has emerged as the leader in creating the maximum number of jobs during the fourth quarter of the last fiscal, generating over 2.6 laks new jobs while a total of 8.5 lakh jobs were created in eight major cities, an ASSOCHAM study has found.

Cornering over one-fourth share of the total number of new jobs generated across India, Delhi-NCR emerged on top with over 2.6 lakh new jobs created during January to March 2016 followed by Bangalore (1.9 lakh), Mumbai (1.5 Lakh), Chennai (82.2 thousand) and Hyderabad ( 60 thousand). About 88.9 percent of job openings have been recorded in these top five cities, ASSOCHAM placement study.

Among top metro cities, Delhi-NCR had maximum share of over 30.1 per cent in job creation while Bangalore witnessed a 23.4 per cent contribution in job creation followed by Mumbai with 18.6 per cent, said Mr. D S Rawat, Secretary General ASSOCHAM while releasing the study.

Other major cities that have recorded significant job openings during January to March 2016 are Pune (49.2 thousand), Kolkata (25.2 thousand) and Ahmedabad (20.5 thousand), highlighted the study.

Information technology (IT), IT-enabled services (ITeS) and IT hardware sector together accounted for a majority share of about 60.6 per cent in the total number of new jobs generated across sectors during January - March 2016, while services has ranked second with 17.6 percent share followed by manufacturing (9.4 percent), banking, financial services & insurance (7.6 percent) and construction & real estate (3.2 percent) in total employment generation in July, says the chamber study.

A total of over 8,50,000 lakhs new jobs were generated across India during the last quarter of 2016, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said in a release.

However, banking, construction, financial services, fast moving consumer goods (FMCG), human resources (HR), manufacturing, advertising, event management, real estate, retail and telecom are the other sectors which created job creation during 2016.

In Delhi-NCR, out of the total job openings about 61.1 percent of job openings are recorded from ITEs followed by services (18.5), manufacturing (8.4 percent), banking financial services & insurance (7.2 percent) and construction & real estate (3.1 percent) of all the new jobs generated.

Sector wise Job Openings

Banking Financial Services and Insurance

Manufacturing

ITEs

Construction and Real Estate

Services

Others

Total

Mumbai1604915380872276228308822788158554Bangalore12668171501259905208352012928199145Delhi & NCR18585215681570728016474324253256926Chennai6067973850619241712150126682257Hyderabad37295849384681489999592560455Kolkata21603106134851310474144925251Ahmadabad1712291111212776355437620541Pune35874547321741956639055349207Total64557802495162472740015034513538852336

City wise share in Job Openings

Banking Financial Services and Insurance

Manufacturing

ITEs

Construction and Real Estate

Services

Others

Total

Mumbai24.919.216.922.720.520.618.6Banglore19.621.424.41923.421.623.4Delhi28.826.930.429.331.531.430.1Chennai9.412.19.88.88.19.49.7Hyderabad5.87.37.5

GDP Growth Estimated at 7.7% for 2016-17 - FICCIs Economic Outlook Survey
May 30,2016

The results of latest round of FICCIs Economic Outlook Survey puts across a median GDP growth forecast of 7.7% for the fiscal year 201617. The growth in 2016-17 is expected to be supported by an improvement in the agricultural and industrial sector performance. Prediction of a good monsoon after two consecutive years of sub-optimal rainfall backs the improved outlook in the current fiscal.

According to the survey results, agriculture sector is expected to record a median growth of 2.8% in 2016-17, with a minimum and maximum range of 1.6% and 3.5% respectively. Industrial growth is anticipated to grow by 7.1% in 2016-17, while services sector growth is estimated at 9.6%.

The survey was conducted during April/May 2016 among economists belonging to the industry, banking and financial services sector. The economists were asked to provide forecast for key macro-economic variables for the year 2016-17 as well as for Q4 (JanuaryMarch) FY16 and Q1 (April-June) FY17.

The median growth forecast for IIP has been put at 3.5% for the year 2016-17, with a minimum and maximum range of 3.0% and 4.5% respectively.

The outlook of the participating economists on inflation remained moderate. The median forecast for Wholesale Price Index based inflation rate for 2016-17 has been put at 2.2%, with a minimum and maximum range of (-)1.3% and 2.9% respectively. The Consumer Price Index has a median forecast of 5.1% for 2016-17, with a minimum and maximum range of 4.5% and 5.5% respectively.

Views of the economists were sought on whether the government will be able to achieve the fiscal deficit target of 3.5% in 2016-17. The government has been serious about treading on the path of fiscal consolidation and maintained its credibility by meeting the targeted fiscal deficit of 3.9% for the financial year 2015-16.

A majority of the participating economists believe that the fiscal deficit target for the year 2016-17 seems achievable. It was pointed out that some of the enabling factors would include expectation of a normal rainfall, improved buoyancy in domestic growth leading to higher revenue collection through direct and indirect tax collections and government continuing with subsidy rationalization. However, it was also pointed out that it would be important to realize the non-tax revenue target for achieving the targeted fiscal deficit to GDP ratio. Realising the targeted receipts from disinvestment and spectrum sales would be a critical factor. Furthermore, it was mentioned that the economy will have to achieve a GDP growth rate between 7% - 7.75% this fiscal year (as also projected in the Economic Survey) to be able to garner the requisite amount of revenue receipts.

It was also felt that going ahead, risk could arise from an increase in global crude oil prices and this could possibly change the projected trajectory of fiscal deficit this year. A few economists also pointed out that continuing productive capital expenditure like infrastructure will be important as that will remain a major driving factor to push the economy forward.

Further, on being asked about expectations for recovery of the banking system, majority of the economists felt that while the government and the RBI are working together to address the issues at hand, recovery will take time. It was unanimously felt that a turnaround in this fiscal year looks unlikely and an improvement in numbers would not come until next financial year. It was also mentioned that the passage of Insolvency and Bankruptcy Code Bill, 2015 is a very positive step to deal with the challenging issue of exiting unviable businesses. Easy exit for a business would help in speedy winding up, productive redeployment of capital and ensure greater availability of credit by freeing up of capital.

In the current round, the participating economists were asked to share their thoughts on bank consolidation. A majority of participating economists said that bank consolidation will be the way forward as it will improve capital efficiency significantly. Further, consolidation would enhance the ability of banks to recover bad loans.

A majority of the economists said that we can move forward on the path of consolidation only when the banks balance sheets are cleaned. It would be imperative to ensure that issues related to asset quality of banks and capital shortfalls are addressed. It is essential to empower banks by allowing them greater operational flexibility. Most of the participating economists felt that overhauling the banking industry through consolidation is one of the most challenging tasks in hands of the Bank Board Bureau.

In addition, economists also shared their prognosis about the expected recovery in the investment cycle. A majority of the economists were of the view that investment cycle will take at least two more quarters to witness a pickup. It was further opined that an uptick is likely post monsoons as good monsoons will give an impetus to rural demand. Also, urban demand is expected to strengthen once the pay and pension hikes are rolled out. An improvement in demand conditions would be a key driving factor for investments to gain strength. Furthermore, much would also be contingent upon greater infrastructure spending by the government. The interest rate scenario was deemed positive by the respondents for a pick-up in credit growth.

In the Union Budget 2016-17, the Honble Finance Minister announced that the government will reorient its interventions in the agriculture sector to double the income of farmers by 2022. This is an ambitious target; nonetheless an important one given that a majority of our population is still dependent on agriculture. In the current survey, the respondents were asked to indicate the way forward to achieve this target.

The participating economists unanimously felt that first and foremost the basics have to be in place. For instance, setting up proper irrigation facilities is definitely a prerequisite. Along with this, encouraging water harvesting, promoting crop insurance schemes with greater vigour and creating a unified agricultural market that would ensure appropriate price for the agricultural produce by eliminating middlemen, will be most critical.

Economists were of the opinion that a structural change in the sector is required to invigorate the sectors growth potential. It was recommended that research and development in agriculture sector should be encouraged along with strengthening of extension services at the ground level to make the farmers aware of the available technology and its usage.

It was also proposed that greater investments are needed towards building necessary rural infrastructure (such as warehouses, roads) and rural supply chain infrastructure. This will not only lead to seamless movement of agricultural commodities across the country but will also be the key to generate greater income for farmers. Besides ensuring higher public spending on rural infrastructure, economists believed that increasing expenditure on NREGA will also help increasing farmer incomes especially during distress in the agriculture sector.

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Moodys: Most Asia Pacific banks have buffers against commodity risks
May 30,2016

Moodys Investors Service says that banks in Asia Pacific (ex-Japan) show moderate loan exposure to borrowers in commodity-related industries, with such loans making up around 7% of gross loans on average at end-2015.

However, the quality of such loans will likely continue to deteriorate, based on Moodys assessment that energy and commodity prices will remain low over a prolonged period.

In Asia Pacific (ex-Japan), the riskiest exposure for banks in terms of energy and other commodity loans originate from metals and mining, as well as from certain parts of the oil and gas sector, including services, offshore marine and shipping and shipbuilders, says Eugene Tarzimanov, a Moodys Vice President and Senior Credit Officer.

In general, we do not expect negative bank rating actions related to commodity exposures, because banks in Asia Pacific have either good financial buffers, moderate commodity exposures, or ratings that already capture asset quality weakness, adds Tarzimanov.

The report says that based on Moodys expectation that commodity prices will stay low for a prolonged period, corporate earnings will be negatively affected; thereby weakening the debt repayment capacity of many commodity firms, and creating pressure on or delaying the recovery of asset quality and profitability for the banks in Asia Pacific.

Moodys notes that the pressure on the quality of commodity-related loans could lead to possible negative bank rating actions in Singapore, Korea and Mongolia over the next 12-18 months, as reflected in Moodys negative outlooks on many banks in these economies.

Moodys report says that for oil & gas and related industries such as shipping and ship and rig building, banks in Singapore and Korea are more exposed when compared with other banks in Asia Pacific. In Singapore and Korea, the exposure is around 5% of gross loans.

As for the metals & mining sector, banks most exposed to these sectors are in Mongolia (10% of gross loans), India (7%, including steel), Indonesia (around 5%) and China (around 4%). The global metals & mining sector has been under stress for many years and some Asia Pacific banks demonstrate large legacy problem loans in this industry.

On the issue of agriculture-related exposures, Moodys does not expect a material weakening in the banks asset quality, because global agriculture prices have shown better performance relative to energy and metals prices. Moodys points out that banks most exposed to agriculture are in New Zealand (14% of gross loans), India (13%), and Thailand (around 6%).

Moodys report says that overall, banks in Asia Pacific demonstrate good buffers against rising credit risks, despite the likely continued pressure on the quality of their commodity portfolios. Such buffers include their generally low problem loan ratios and a problem loan coverage above 80% for more than half of Asia Pacific banking systems. Banks in Asia Pacificn++except for banks in Vietnam and public-sector banks in Indian++also show good capital buffers and profitability, providing a good line of defense against rising problem loans.

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Fare Fixation Committee for Delhi Metro notified ; to submit report in 3 months
May 30,2016

Ministry of Urban Development has notified the Fare Fixation Committee (FFC) for recommending the passenger fares for Delhi Metro network in Delhi and its extension to National Capital Region.

Set up under Sections 33 and 34 of the Metro Railway (Operations and Maintenance) Act, 2002, the Committee has been given three month time from the date of assumption of charge by the Chairperson of the Committee Shri Justice M.L.Mehta, retired Judge of the High Court of Delhi, for submission of its report and recommendations to the Delhi Metro Rail Corporation (DMRC).

The other members of the fourth FFC are Additional Secretary in the Ministry of Urban Development (Shri Durga Shanker Mishra) and Shri K.K.Sharma, Chief Secretary, Government of National Capital Territory of Delhi.

The last Fare Fixation Committee submitted their recommendations on metro fares in 2009.

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117 Villages Electrified last week
May 30,2016

117 villages have been electrified across the country during last week (from 23rd to 29th May 2016) under Deen Dayal Upadhyaya Gram Jyoti Yojna (DDUGJY). Out of these electrified villages, 18 villages belong to Arunachal Pradesh , 26 in Assam, 23 in Jharkhand, 1 in Rajasthan, 6 in Madhya Pradesh , 3 in Uttar Pradesh , 5 in Bihar, 2 in Chhattisgarh, 11 in Odisha and 22 in Meghalaya .

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Centre asks States to prevent diversion of 14th Finance Commission Grants meant for Urban Local Bodies
May 30,2016

Central Government has asked the States to prevent diversion and misuse of 14th Finance Commission (FFC) Grants meant for Urban Local Bodies (ULBs) and ensure their utilization only for improving delivery of basic urban services like sanitation, water supply, solid and liquid waste management, storm water drains, maintenance of community assets, roads and footpaths, street lighting and burial and cremation grounds.

Following a review of utilization of FFC grants by Shri M.Venkaiah Naidu, Minister of Urban Development and Housing & Urban Poverty Alleviation, the Ministry has issued guidelines in the matter for strict compliance by the States.

Shri Rajiv Gauba, Secretary (Urban Development), in his communication to the States/UTs has sought utilization reports in respect of FFC grants for the year 2015-16 by the end of next month. Shri Gauba has also urged the States/UTs to prepare annual plans for city-level utilization of FFC grants linked to improving basic urban infrastructure till 2019-20.

Asking the States/UTs to ensure transfer of FFC grants to the ULBs within 15 days of receipt of the same from the Central Government, Shri Gauba said that Bank rate of interest shall be paid for any delays and the same shall be reflected in the utilization reports to be sent to the Ministry of Urban Development.

In a threefold increase over that of the 13th Finance Commission, the 14th Finance Commission awarded total grants of Rs.87,144 cr to Urban Local Bodies as Basic Grant (80%) and Performance Grant (20%). While Basic Grant is given to all States/UTs, release of Performance Grant is linked to ULBs ensuring audit of accounts for the previous two years, increase in revenues over the previous year and notification of Service Level Improvement Plans in respect of basic services.

States/UTs have been advised to use FFC grants to provide additional assistance to eligible beneficiaries over that of Central and State governments assistance wherever required under Swachh Bharat Mission, towards ULB share for projects for water supply and solid and liquid waste management and for Operation & Maintenance of infrastructure assets in urban areas.

States/UTs have also been asked to ensure effective monitoring of utilization of FFC grants at the level of Chief Secretaries besides concurrent evaluation by third party.

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