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Indirect Tax Collections During the month of April 2016 is Rs. 64,394 crore which is an increase of 41.8%
May 11,2016

Indirect Tax collections for the month of April 2016 was Rs 64,394 crore registering a growth of 41.8% as compared to Rs. 45,417 crore collected during the same period previous year i.e. month of April 2015. Overall growth in revenue collections on account of Indirect taxes excluding Additional Revenue Measures is 17%. The overall collections of Indirect Taxes during the month of April, 2016 amounts to achievement of 8.3% of BE target for Indirect Taxes for 2016-17.

The Revenue collections target for indirect taxes as per the Budget Estimates 2016-17 is Rs. 7,78,000 crore while the actual collections on account of indirect taxes during 2015-16 was Rs. 7,09,022 crore. Thus, there is an increase of 9.7% in BE target for 2016-17 over the last year actual collections.

As far as Central Excise collections in the month of April 2016 are concerned, Rs. 28,252 crore were collected during the month as compared to Rs. 16,546 crore in the corresponding period in the previous year and thus registering a overall growth of 70.7%.

As far as Service Tax collections in April 2016 are concerned, the total collections during the month of April, 2016 amounts to Rs. 18,647 crore as compared to Rs. 14,585 crore during the corresponding period (April 2015) last year and thereby registering a growth of 27.9% in the service tax collections.

As far as Revenue collections on account of Customs is concerned, Rs. 17,495 crore were collected during the month of April 2016 as compared to Rs. 14,286 crore during the corresponding period in the previous year i.e., April, 2015 and thus registering a growth of 22.5.% on account of customs collections.

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Gartner Says Public Cloud Services in India Forecast to Reach $1.26 Billion in 2016
May 11,2016

The public cloud services market in India is projected to grow 30.4 percent in 2016 to total $1.26 billion, according to Gartner, Inc. The highest growth will come from cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow 32.5 percent in 2016, with platform as a service (PaaS) projected to grow 31.7 percent.

We are witnessing a shift from legacy IT services to cloud-based services. Cloud services are growing due to organizations pursuing a digital business strategy, said Sid Nag, research director at Gartner.

Table 1. India Public Cloud Services Forecast (Millions of U.S. Dollars)

201520162017201820192020Cloud Business Process Services (BPaaS)92.5114.3146.9188.8242.4311.5Cloud Application Services (SaaS)299.3389.8514.4654.2792.4959.6Cloud Application Infrastructure Services (PaaS)62.482.1106.9135.0160.4184.7Cloud System Infrastructure Services (IaaS)338.9448.9615.4839.71140.61558.0Cloud Management and Security Services79.4104.2134.5167.7206.2247.8Cloud Advertising95.6123.2158.0189.0222.8266.0Total968.11262.61676.22174.32764.73527.6

Source: Gartner (March 2016)

The IaaS segment will remain the fastest-growing segment in 2016, forecast to reach $448.9 million.

IaaS continues to be the strongest-growing segment as enterprises move away from data center build-outs and move their infrastructure needs to the public cloud, said Mr. Nag. Certain market leaders have built a significant lead in this segment, so providers should focus on creating differentiation for success.

Cloud application Infrastructure services (PaaS) is forecast to grow 31.7 percent in 2016, to $82.1 million. This is an artifact of enterprises looking to develop and build applications in the public cloud that are cloud native, as well as non-cloud native applications that are refactored taking advantage of PaaS.

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TOP Scheme and Out of Pocket Allowance
May 11,2016

Sports Authority of India has utilized a sum of Rs 4,39,90,842 out of the block grant sanctioned/releases from National Sports Development Fund (NSDF) for operation of the Target Olympic Podium (TOP) Scheme.

Ministry of Youth Affairs and Sports has released fresh grant of block grant of Rs. 5 crore from NSDF under TOP Scheme to SAI.

Since Rio Olympics are very near and athletes are in urgent need for funds it has also been decided by the Ministry of Youth Affairs and Sports that n++Out of Pocket Allowancen++ may be released to the athletes without insisting on prior submission of certificate. The athletes may be allowed to submit a self certificate about their eligibility for getting the allowance in due course. In case an athlete fails to submit such a certificate or is found otherwise receiving dual allowance, the amount disbursed may be adjusted at the time of final settlement of accounts.

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TN tops with 32% decadal growth in investments attracted by irrigation sector across India: Study
May 11,2016

Tamil Nadu has ranked on top in terms of growth in live investments attracted by the irrigation sector thereby clocking a compounded annual growth rate (CAGR) of over 32 per cent during the decadal period 2004-05 and 2014-15, apex industry body ASSOCHAM said today.

n++Investments in irrigation sector attracted by Tamil Nadu from both private and public sources have increased from a meagre Rs 151 crore in 2004-05 to over Rs 2,400 crore, besides the states share in this regard has also increased from 0.1 per cent to 0.4 per cent respectively,n++ highlighted the ASSOCHAM study titled Irrigation investment in India: Analysis of state-level experiences.

About 57.5 per cent investments attracted by Tamil Nadu in irrigation sector are under implementation thereby facing a delay of about 39 months and their costs have increased by about 24 per cent of their actual cost.

Jammu and Kashmir (25.5 per cent), Chhattisgarh (23 per cent), Jharkhand (20 per cent) and Telangana (19 per cent) are amid top five states in this regard, while Gujarat and Uttarakhand have recorded sharp negative growth of about five per cent and 10 per cent in terms of investments attracted by irrigation sector during the said period.

n++Investment in irrigation sector in India have increased at a CAGR of about 11 per cent between 2004-05 and 2014-15 and have more than doubled i.e. from just over Rs two lakh crore to over Rs 5.5 lakh crore,n++ highlighted the study prepared by ASSOCHAM Economic Research Bureau (AERB).

About 47 per cent of live investments attracted by irrigation sector are concentrated in Telangana, Andhra Pradesh, Maharashtra, Karnataka and Madhya Pradesh.

As of 2014-15, over 84 per cent of investment projects in irrigation sector are under different stages of implementation i.e. 248 projects with investments worth over Rs 4.7 lakh crore are in different stages of implementation.

Of these about 189 projects have reported either time or cost overruns ranging between 1-288 months, while costs have increased by over 61 per cent i.e. by over Rs 2.5 lakh crore of their actual costs of Rs 4.1 lakh crore.

Interestingly, about 98 per cent of investments attracted by irrigation sector in India come from public sector as private players have shown poor interest in developing the irrigation sector.

n++Almost half of the total live investments worth over Rs 5.5 lakh crore attracted by irrigation sector across India as of financial year 2014-15 are concentrated in Telangana (11 per cent share), Andhra Pradesh (10 per cent), Maharashtra & Karnataka (nine per cent) and Madhya Pradesh (six per cent).

There is an urgent need to reform the current irrigation policy and strategy to further its contribution to agriculture, employment, income and economic growth to perk up the irrigation sector and lead to production optimisation.

Investment projects in irrigation sector have recorded maximum delay of 229 months in Jammu and Kashmir followed by Jharkhand (216 months), Bihar (197 months), Uttar Pradesh (195 months) and Kerala (185 months).

Irrigation projects in Maharashtra have recorded maximum share of about 21 per cent in terms of cost escalation followed by Karnataka (18 per cent), Andhra Pradesh (14 per cent), Gujarat (12 per cent) and Telangana (nine per cent).

Within states, Assam has recorded maximum cost escalation rate of about 97 per cent, Jammu & Kashmir and Kerala (95 per cent), Maharashtra (92 per cent) and Uttar Pradesh (87 per cent).

In its study, ASSOCHAM has suggested that all state governments should set up irrigation development authority to look after all projects and ensure their timely completion.

Besides, the government should bring in policy changes to improve efficiencies, encourage accountability, transparency and willingness to promote irrigation development.

n++The objective should be to ensure irrigation services are more resource-efficient, responsive to farmer needs and equitable,n++ suggested the ASSOCHAM study.

It has further recommended for moving away from government controlled institutions to commercially oriented, effective and efficient autonomous service institutions. n++The need is to encourage participatory management in irrigation sector, shift from current emphasis on physical expansion to performance improvement, and encourage wider adoption of irrigation equipment by providing incentives.n++

Increasing farmer participation for development of irrigation projects by making land acquisition easier is another significant suggestion, highlighted the ASSOCHAM study.

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Future of Electricity in India Rest on the Pillars of Affordability, Sustainability & Energy Security- Shri Piyush Goyal
May 11,2016

Shri Piyush Goyal, Minister of State (IC) for Power, Coal and New & Renewable Energy said that future of electricity in India rest on the pillars of affordability, sustainability and countrys energy security. While delivering Keynote address at a conference on n++The Future of Electricity here on Tuesday, Shri Goyal said, n++Future of electricity, as I see, in India, rest on the pillars of affordability, sustainability and countrys energy security.n++

Shri Piyush Goyal said that in recent years the economic growth has become stagnant in many parts of developed world. With more and more energy efficiency coming to the fore, the demand curve of electricity in most of the developed world is either flat or showing a downward trajectory. Whereas, Indias electricity consumption is going to quadruple from about 1.1 trillion units to about 4 trillion units by 2030. The Minister further said that despite the massive roll out of energy efficient schemes, we still see a possible 10% jump in the electricity growth annually for the next 15 or 16 years. Indian Electricity sector, to my mind, is possibly the biggest business opportunity the world has to offer today. n++So India is a bright spot offering a huge trajectory of growth in the electricity consumption going forwardn++, he added.

While talking about the fresh demand for power in India, Shri Goyal said. n++The fresh demand for power will come from the 230 million people who will get electricity for the first time, the elimination of diesel generation sets because of access to power and from increased economic activity coming from the Make in India campaign,n++ . The Minister said that power consumption is expected to grow at 10% annually over the next 10-15 years and added that higher personal incomes and the emphasis given to domestic manufacturing activities will significantly increase power consumption despite the improvements in energy efficiency.

India has set a target of setting up 175 gigawatt (GW) of renewable energy generation capacity by 2022, out of which 100 GW is to come from solar. Shri Goyal said that solar power capacity, presently at 6.7 GW, will touch 20 GW by next year. Since the solar power sector is on track, the government will now focus on encouraging new hydropower and wind power capacity, the Minister added.

The Minister said that the government launched Ujwal Discom Assurance Yojana, n++UDAY which is expected to improve health of state-run power utilities , enable them to buy more power from producers and invest more in efficiency improvement.

Shri Goyal said that the government is also ready to contract at least 70 to 80 million metric standard cubic metres (mmscmd) of natural gas from global suppliers if they are ready to supply long-term at affordable rates, which will enable India to operate its idle gas-based power capacity. The Government will adopt new technologies to make coal-based power generation cleaner and also set up a pool of capital to fund research on green energy technologies with contribution from public sector companies, in which private enterprises could also take part, he said.

Speaking about the environmental concerns, Shri Goyal said that the challenge before the nation is to balance development imperative with sustainability and concerns towards environment. The Minister told, n++India will couple maximum amount of Renewable Energy that we can feed into our grid with growing generation of coal based power, maintain that delicate balance to ensure the affordability of power and sustainability of generating and mixing this power and lastly also protect the energy security of the country.n++ Shri Goyal took the opportunity to invite foreign investors and said n++I invite companies from around the world to come and participate in this great growth story that India has to offer.n++

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Moodys: Global spec-grade default rate up again on continued stress in commodities sector
May 11,2016

Moodys Investors Service forecasts that the global speculative-grade default rate will continue to rise this year, to reach 5.0% in November. Thereafter, it will stabilize in the range of 4.5%-5.0% through April 2017.

We expect the oil price slump to continue to place upward pressure on corporate defaults, said Sharon Ou, a Moodys Vice President and Senior Credit Officer. Nonetheless, high-yield spreads have tightened noticeably in the past two months, signaling that the default rate could taper off next year.

In the US, the default rate is expected to climb to 6.2% by the end of 2016, but a continued slow pace of defaults in Europe will keep the European speculative-grade default rate below 3.0% over the next 12 months, acting as a damper on the overall, global rate.

Continued stress from low oil and gas prices will see high default rates in the commodities sectors in the coming year, however. In the US, the default rate for Moodys-rated metals & mining companies is forecast to climb to 11.5%, and for oil & gas companies to increase to 10.3%. In Europe, defaults are expected to be highest in the metals & mining sector, followed by forest products & paper.

Forty-six defaults were recorded in the first four months of 2016, with 18 of these in the oil & gas sector and nine in metals & mining. In contrast, there were 29 defaults from January through April last year. Among the 10 Moodys-rated issuers that defaulted last month were Peabody Energy Corporation and Energy XXI Gulf Coast Inc., both of which filed for bankruptcy.

If defaults continue at the current pace for the remainder of the year, the default count for 2016 will come in at 138, which would match our February prediction, Ou added.

The rise in defaults has also led to an increase in the trailing 12-month global speculative-grade default rate, which edged up 4.0% in April from 3.9% the prior month. In the US, the comparable rate rose to 4.4% from 4.3%, and in Europe it retreated to 2.5% from 2.7%. At this time last year, the US rate stood at 1.7% and the European rate was 2.3%.

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Recommendations of Tax Administration Reform Commission (TARC) in all the four Reports submitted to Government
May 11,2016

The Tax Administration Reforms Commission (TARC) headed by Dr. Parthasarathi Shome submitted its report in four volumes containing a total of 385 recommendations that pertain to Central Board of Direct Taxes (CBDT) and 201 recommendations that pertain to Central Board of Excise and Customs (CBEC). The broad recommendations inter-alia include changes in structure, improvement in taxpayers service, enhanced use of information and Communication Technology, exchange of information with other agencies, strengthening of human resource management, Key Internal Processes, Customs Capacity Building, Impact assessment, Expansion of Base, Compliance Management, Revenue Forecasting, Predictive Analysis and Research for tax Governance etc.

Two new bodies namely Tax Policy Council (TPC) and Tax Policy Research Unit (TPRU) have been set up for making recommendations on tax policies and other policy matters. Vide the Department of Revenues Office Order dated 02 February 2016, the Government has set up a ten Member Tax Policy Council (TPC) under the Chairmanship of Honble Finance Minister with an aim to have a consistent and coherent approach to the issue of tax policy and having regard for need to have an inter-disciplinary approach. The Council will look into all research finding of the Tax Policy Research Unit (TPRU) and suggest broad policy measures for taxation. The Council will be advisory in nature and will help the Government in identifying key policy decisions for taxation.

Vide the Department of Revenues Office Order dated 02 February 2016, the Government has also created the Tax Policy Research Unit (TPRU) under the direct supervision of Revenue Secretary to carry out the research on the basis of empirical data. The TPRU will carry out studies on various topics of fiscal and tax policies referred to it by CBDT and CBEC and will provide independent analysis on such topics, prepare and disseminate policy papers and background papers on various tax policy issues, assist TPC in taking appropriate tax policy decisions and liaise with State Commercial Tax Departments.

As per the terms of reference, these bodies are permanent bodies and no periodic reports are expected.

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Declaration of Assets & Liabilities in the new ITR forms
May 11,2016

Central Board of Direct Taxes (CBDT) have released new income-tax return forms with mandatory provisions of declaring Assets & Liabilities (A&L) such as cars, jewellery yacht, aircrafts, shares, properties, etc. Prior to Assessment Year (A.Y.) 2015-16, the Asset -Liability Schedule (AL schedule) was applicable to filers of ITR 3 and 4, whose total income for the previous year exceeded Rs.25 lakh. The Wealth-tax Act primarily captured the information regarding assets of specified taxpayers. With a view to reduce compliance burden, the Wealth-tax Act was made inapplicable from A.Y.2016-17 with the stipulation that the information regarding assets forming part of the wealth-tax return will be captured in the Income-tax returns. Accordingly, the ITR forms for A.Y. 2016-17 have been rationalised by making the Schedule AL applicable to individuals and Hindu undivided family (HUFs) whose total income for the previous year 2015-16 exceeds Rs.50 lakh. The objective of AL schedule is to capture details of assets and liabilities and not the net worth.

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Plans of Government to render black money and fake notes circulating in the market ineffective
May 11,2016

The Government has not issued any guidelines regarding minimising daily financial transactions in cash to curb money laundering, black money and so on. However, the plans of Government to render black money and fake notes circulating in the market ineffective are as under: -

n++ Appropriate action against evasion of taxes, including black money circulating in the market, is an on-going process. Such action under the laws includes searches, surveys, enquiries, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable. Such taxes, penalties, etc. form part of the total tax liability of each assessee and is enforced accordingly. The Government has taken several measures to effectively deal with the issue of black money. Such measures include policy-level initiatives, more effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Recent major initiatives of the Government in this regard include - (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Honble Supreme Court, (ii) Enactment of a comprehensive new law - The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 which has come into force w.e.f. 01.07.2015 to specifically and more effectively deal with the issue of black money stashed away abroad, (iii) Introduction of the Benami Transactions (Prohibition) Amendment Bill, 2015 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution, (iv) While focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest for credible deterrence against tax evasion/black money, (v) Proactively furthering global efforts to combat tax evasion/black money, inter-alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA).

n++ Looking at the multi-dimensional aspects of the Fake Indian Currency Notes (FICNs) menace, several stakeholders like the Ministry of Finance, Ministry of Home Affairs, Reserve Bank of India, Security and Intelligence Agencies at the Centre and States are making efforts to curb the illegal activities related to FICNs.

n++ A special FICN Co-ordination (FCORD) Group has been formed in the Ministry of home Affairs (MHA) to share intelligence/information amongst the different Security Agencies of States/Centre to counter the menace of circulation of Fake Currency Notes in the country.

n++ The Government has also constituted a Terror Funding & Fake Currency Cell (TFFC) in National Investigation Agency (NIA) to investigate Terror Funding and Fake Currency cases.

n++ The legal regime has been strengthened by amendments in the section 15 of the Unlawful Activities (Prevention) Act, 1967 (UAPA) (effective from 01 February 2013), wherein the damage to the monetary stability of India by way of production or smuggling or circulation of High Quality Fake Indian Paper currency, coin or any other material has been declared as a terrorist act.

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India Mauritius sign Protocol for amendment of Convention for Avoidance of Double Taxation & Prevention of Fiscal Evasion
May 11,2016

The Protocol for amendment of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains between India and Mauritius was signed by both countries today at Port Louis, Mauritius. The key features of the Protocol are as under:

i. Source-based taxation of capital gains on shares: With this Protocol, India gets taxation rights on capital gains arising from alienation of shares acquired on or after 1st April, 2017 in a company resident in India with effect from financial year 2017-18, while simultaneously protection to investments in shares acquired before 1st April, 2017 has also been provided. Further, in respect of such capital gains arising during the transition period from 1st April, 2017 to 31st March, 2019, the tax rate will be limited to 50% of the domestic tax rate of India, subject to the fulfillment of the conditions in the Limitation of Benefits Article. Taxation in India at full domestic tax rate will take place from financial year 2019-20 onwards.

ii. Limitation of Benefits (LOB): The benefit of 50% reduction in tax rate during the transition period from 1st April, 2017 to 31st March, 2019 shall be subject to LOB Article, whereby a resident of Mauritius (including a shell / conduit company) will not be entitled to benefits of 50% reduction in tax rate, if it fails the main purpose test and bonafide business test. A resident is deemed to be a shell/ conduit company, if its total expenditure on operations in Mauritius is less than Rs. 2,700,000 (Mauritian Rupees 1,500,000) in the immediately preceding 12 months.

iii Source-based taxation of interest income of banks: Interest arising in India to Mauritian resident banks will be subject to withholding tax in India at the rate of 7.5% in respect of debt claims or loans made after 31st March, 2017. However, interest income of Mauritian resident banks in respect of debt-claims existing on or before 31st March, 2017 shall be exempt from tax in India.

iv The Protocol also provides for updation of Exchange of Information Article as per international standard, provision for assistance in collection of taxes, source-based taxation of other income, amongst other changes.

Major impact: The Protocol will tackle the long pending issues of treaty abuse and round tripping of funds attributed to the India-Mauritius treaty, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius. It will improve transparency in tax matters and will help curb tax evasion and tax avoidance. At the same time, existing investments, i.e. investments made before 1 April 2017 have been grand-fathered and will not be subject to capital gains taxation in India.

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Government has Identified Three Areas for use of Information Technology (IT) in Fisheries
May 11,2016

The Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture and Farmers Welfare has identified three areas for use of Information Technology (IT) in fisheries namely (i) dissemination of information to marine fishers on Potential Fishing Zone (PFZ), (ii) weather assessment, forecasting & forewarning and (iii) real time monitoring and tracking of fishing vessels. Indian National Centre for Ocean Information Services (INCOIS), Ministry of Earth Sciences (MoES) presently provides the Potential Fishing Zone (PFZ) Advisories using satellite data and Geographic Information System (GIS). The INCOIS has reported that currently about 2,50,000 fishermen in the country are using this information. Presently, the Potential Fishing Zone (PFZ) advisories are disseminated through Electronic Display Boards installed at fishing harbours/fish landing centers/ fishing hamlets/fishermen cooperative societies, local cable TV networks, radio, INCOIS web site, email, Interactive Voice Response System (IVRS), mobile applications viz. Fisher Friend Mobile Application (FFMA) etc. Besides, the dissemination of fishery related information is also being done through web based media networks like mKRISHI, NeGPA and other web portals including social media.

The Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture and Farmers Welfare under the Centrally Sponsored Scheme on Development of Marine Fisheries, Infrastructure and Post Harvest Operations provides financial assistance for supply of safety kit consisting of GPS, Communication equipment, echo-sounder and search and rescue beacon to fishermen.

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Marine Fish Production in the Country Stand at 35.83 lakh Tonnes (Provisional) in 2015-16
May 11,2016

The marine fish production in the country during the last four years has been reported as 33.20 lakh tonnes in 2012-13; 34.39 lakh tonnes in 2013-14; 36.55 lakh tonnes (Provisional) in 2014-15 and 35.83 lakh tonnes (Provisional) in 2015-16 respectively, against the potential yield of 44.12 lakh tonnes estimated for the Indian Exclusive Economic Zone (EEZ). The variations in fish production may be attributed to several reasons such as high fishing pressure, changes in fishing gear dimensions, over capacity, pollution, environmental factors, climate change etc. Deep-sea fishing vessels (DSFVs) in the Exclusive Economic Zone are only allowed to carry out resource-specific fishing beyond 12 nautical miles from the territorial limits. Apprehensions of local fishing community, if any, regarding poor fish yield in territorial waters due to operation of these DSFVs are largely unsubstantiated, as the areas of operation as well as targeted resources are different in case of DSFVs and the local traditional fishing communities.

A committee has been constituted on 28th July, 2015 under the chairmanship of Dr. S. Ayyappan, former Director General, Indian Council of Agricultural Research (ICAR) with terms of reference to inter alia ascertain the present status of exploitation of marine fishery resources by various sectors, namely, traditional sector, mechanized boats sector and deep-sea fishing vessels; and to consult all stakeholders for preparing a draft National Policy on Marine Fisheries for over-all development of marine fisheries in India.

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DebtFX: Macro Data and RBI in Focus
May 10,2016

The macroeconomic data releases and the Reserve Bank of Indias (RBI) intervention in the domestic liquidity market will drive debt and currency markets this week, says India Ratings and Research (Ind-Ra). The benchmark 10-year G-sec yield is expected to stay in the range of 7.40%-7.50% (7.44% at previous weeks close) while rupee could remain in the 66.10-66.90/USD (66.56/USD at previous weeks close).

Bond Market Sentiment to Stay Supported: RBIs announcement of another round of open market purchase operation (OMO) for INR100bn may have a salutary impact on government bond yields - with benchmark 10-year yield testing the 7.42% mark. Caution ahead of retail inflation data (to be released on Thursday) will keep the bond investors watchful and limit further softening of yields.

RBI Intervenes to Ease Liquidity Constraints: Ind-Ra believes the announcement of INR100bn OMO is a pre-emptive measure by RBI to stave off liquidity crunch that may arise in the course of the week. With the frictional mismatch persisting, the systemic dependence on RBI may stay between 0.25%-0.75% of net demand and time liabilities.

Rupee to Stay Range-bound: Mixed signals from major global economies and swings in crude oil prices are likely to keep the rupee in a range. The medium-term outlook of rupee will hinge on global developments while earnings and flows position is likely to dictate the near-term range. A protracted recovery in corporate earnings is likely to keep flows to Indian markets subdued.

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Ind-Ra: Policy Support, Private Sector Interest to Increase Reach & Quality of Education
May 10,2016

India Ratings and Research (Ind-Ra) believes the education sector has tremendous potential to grow due to the huge demand-supply gap. Presently, there is an additional requirement of 200,000 schools, 35,000 colleges, 700 universities, and 40 million seats in vocational training centres in India.

Ind-Ra estimates the market size of the education sector to reach around INR7,800bn in FY17 from INR6,423bn in FY16. Besides the expansion in the conventional public and private sector education systems in the form of schools and higher education institutes, the sector shall grow reasonably backed by the non-formal private education sector in the form of pre-schools, coaching institutes, vocational training centres etc. More international collaborations with education institutions along with joint ventures and merger and acquisitions with both foreign and domestic corporate players would further help the sector to grow.

The share of state private universities out of the total universities in India spiked to 29% in FY15 from around 3% in FY09 (Source: Ministry of Human Resource Development). Some private universities have even created a niche for themselves within a span of four to five years or even less on the back of efficient faculty, tie-ups with reputed international universities, less administrative intervention from the government, updated syllabi of courses, and state-of-the-art infrastructure. The agency believes that there is a significant incentive for opening up state private universities in the absence of any regulatory cap on the approved intake for students, which has a positive bearing on the functioning of such universities.

The rapid expansion of education sector in India, however, is accompanied by a high student-teacher ratio in both the school and higher education segments. This indicates that the supply of teachers is not keeping pace with the rise in student strength. Besides the quantity, there is a problem of qualified and skilled faculty. Thus, the quality of learning and academic standards have become an issue as reflected by the international rankings of Indian educational institutions. However, rising the government policy support in the form of a rise in budgetary allocations, setting up of boards to evaluate the standards of schools and colleges, teacher training initiatives among other things is a positive step towards augmenting the quality of education in both school and higher education.

Ind-Ra rated educational institutes include schools, higher educational institutes and coaching institutes. In FY16, Ind-Ra upgraded and affirmed the credit ratings of 25% and 64% educational institutes, respectively. It also downgraded the ratings of 11% of institutes due to liquidity issues and stressed operating performance.

Among Ind-Ra rated portfolio, a few non-investment grade educational institutions are facing stressed operating margins due to the regulated nature of tuition fee. However, Ind-Ra rated investment grade institutions are able to post reasonable year-on-year growth on the back of the introduction of new courses, a strong market position and increasing enrolment. Regulation on limiting the increase in tuition fee attempts to increase the access of education to the aspirants. However, many trusts/societies are facing challenges in the form of a depleting bottom line due to a high operating and maintenance cost.

Ind-Ra believes the implementation of Seventh Pay Commission would exert additional cost pressure on private institutions (including those in Ind-Ras portfolio) but it shall kick in with a lag. The liquidity condition will continue to be affected by the delays in fee reimbursement by the government on account of the several government-run welfare schemes in selected regions. Ind-Ra, therefore, expects the working capital utilisation of educational institutions to remain high in FY17.

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Over 62,000 MT pulses procured by government agencies
May 10,2016

The government agencies have procured over 62,000 MT of pulses till now which include 50,424.07 MT of Tur and Urad from Kharif Marketing Season (KMS) 2015-16, and 11,754.06 MT of Chana and Masur from Rabi Marketing Season (RMS) 2016-17.

In addition, imports have been contracted for about 13,500 MT of Tur and 12,500 MT of Urad respectively.

There has been a strict vigilance by the Government to prevent importers from mis-using the facilities of Customs Bonded Warehouse facility. Domestic searches and surveys have also been conducted on a number of importers, traders and financiers engaged in pulses trade.

Till now, request for allocation of pulses from buffer stock has been received from Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, and Rajasthan.

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