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Fitch Affirms Bharat Petroleum at BBB-; Outlook Stable
Aug 24,2016

Fitch Ratings has affirmed India-based Bharat Petroleum Corporations (BPCL) Long-Term Foreign-Currency Issuer Default Rating (IDR), its senior unsecured rating, and ratings on its outstanding senior unsecured debt at BBB-. The Outlook is Stable.


Strong Linkages with State: Fitch equalises BPCLs rating with that of its largest shareholder, the state of India (BBB-/Stable) (54.9% shareholding), due to their strong operational and strategic linkages. Fitch believes the linkages remain strong despite the deregulation of diesel prices in 2014 and introduction of the direct benefit transfer scheme - which transfers subsidies directly to the consumers - for household liquefied petroleum gas (LPG). BPCL continues to retail kerosene at government-prescribed prices that are lower than market prices. Government covers the under-recoveries (the difference between market prices and state-controlled selling prices) from the sale of kerosene through subsidies and discounts from upstream companies, whereas downstream companies had borne part of the under-recoveries in the past.

Fitch may reassess BPCLs linkages with the state if the state-owned oil marketing companies policy role weakens due to further deregulation of prices for petroleum products. Fitch will also take into consideration governments commitment to maintaining market-based prices for already-deregulated products when oil prices rise. The lower oil prices and deregulation of diesel have improved BPCLs finances significantly. Fitch assesses the standalone credit profile at BB+.

Falling Subsidies: The oil sector reforms by way of deregulation of diesel prices in 2014, along with low crude oil prices, has resulted in a zero subsidy for BPCL during the financial year ending 31 March 2016 (FY16) (FY15: INR4.9bn). We expect no subsidy burden for BPCL over the next two years, given Fitchs assumptions of oil prices at USD42 per barrel (bbl) in 2016 and USD45 per bbl in 2017. Furthermore, government hiked the subsidised LPG prices by INR1.98 in July 2016 and by INR1.93 in August 2016. Similarly, government increased kerosene prices by INR0.25 per litre in July 2016.

Fitch believes that under-recoveries could be reduced significantly if the price hikes continue on a regular basis. Nevertheless, it remains uncertain as to how government will approach subsidies at higher crude prices, especially prices above USD60 per bbl.

Significant Operator: BPCL is the third-largest refiner in the country, with a capacity of 30.5 million tonnes per annum (mtpa) - representing 13% share of Indias refining capacity - and the second-largest marketer of petroleum products, with around a one-quarter market share. BPCL marketed 36.8 mtpa of petroleum products in FY16 (FY15: 35 mtpa) and refined 29.8 mtpa (FY15: 29.3mtpa). We expect BPCL to maintain its leading position over the medium to long term, given its capex plans for enhancing capacity.

Comfortable Financial Profile: We expect BPCLs net leverage (net adjusted debt/operating EBITDAR) to remain below 3x and EBITDA interest cover above 4.5x over the next three years. This is despite the large capex and investment. Credit metrics improved during FY16, with net leverage of 1.3x (FY15: 1.7x) supported by strong gross refining margins (GRM) of USD6.59 per barrel (bbl) (FY15:USD3.62 per bbl).

We expect the GRMs to moderate over the next two years in line with the industry. This, together with the large investment plans, is likely to result in a marginal weakening of credit metrics during FY17 and FY18. However, we expect the benefits from the expanded Kochi refinery and continuing strong performance of the Bina refinery (GRM FY16 USD11.7/ bbl; FY15 USD6.1/bbl) to support improvement in operational cash flows from FY18.

Large Capex: We expect BPCLs capex to remain high at over INR600bn over the next five years (FY16: INR113.6bn). In addition, the company (through its subsidiary) is acquiring a stake in Rosnefts Taas-Yuriah and Vankor fields in Russia for a consideration of around USD1.1bn (around INR75bn). The large investments are likely to result in BPCLs FCF remaining negative over the medium term. The largest portion of the capex is for the expansion of the Kochi refinery to 15.5mtpa from the current 9.5mtpa, at a cost of around INR165bn. The company expects to complete expansion of the Kochi refinery by end-2016, and to start operations in early 2017.

Upstream Discoveries: BPCL has 17 upstream blocks (seven in India and 10 abroad), from which some successful discoveries have been made, and is in the process of acquiring a stake in two blocks owned by Rosneft. Other than the current acquisitions which are producing fields, the most notable is BPCLs 10% participating interest in the Rovuma Basin in Mozambique (discovery of 75 trillion cubic feet of natural gas resources). The other noteworthy discoveries are in its Brazilian assets (20% participating interest), and West Australian onshore assets in Perth (27.8% stake). We expect BPCL to start benefiting from its upstream investments in the medium to long term.


Fitchs key assumptions within the rating case for BPCL include:

- Industry refining margins to moderate during FY17 and FY18

- No net under-recoveries for FY17 and FY18

- Oil prices of USD42 per bbl for FY17, USD45 for FY18 and USD55 for FY19 in line with Fitchs base-case price deck, as outlined in Corporate Oil Price Assumption Raised for 2016; Slow Recovery From Here, dated 27 July 2016

- Total consolidated capex of around INR600bn over the next five years


Positive: Developments that may, individually or collectively, lead to positive rating action include:

-An upgrade of the sovereign rating, provided the rating linkages with the state remain intact.

Negative: Developments that may, individually or collectively, lead to negative rating action include:

- A downgrade of the sovereign rating

- Weakening of linkages between BPCL and the state.

For Indias sovereign rating, the following sensitivities were outlined by Fitch in its Rating Action Commentary of 18 July 2016.

The main factors that, individually or collectively, could lead to positive rating action are:

- Fiscal initiatives that would cause the general government debt burden to fall more rapidly than expected in the medium term

- An improved business environment resulting from implemented reforms and persistently contained inflation, which would support higher private investment and real GDP growth.

The main factors that, individually or collectively, could lead to negative rating action are:

- Further deviation of the already-high public-debt burden from the peer median, which may be caused by stalling fiscal consolidation or greater-than-expected deterioration in the banking sectors asset quality that would prompt large-scale sovereign financial support

- Loose macroeconomic policy settings that cause a return of persistently high inflation levels and a widening current-account deficit, which would increase the risk of external funding stress.

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Crude oil production during July 2016 was 1.81% lower than in July 2015
Aug 24,2016

Crude oil production during July 2016 was 3077.40 TMT which is 0.39% and 1.81% lower than target and production achieved in July 2015 respectively. Cumulative crude oil production during April-July, 2016 was 12078.34 TMT which is 0.69% and 2.95% lower than target and production during corresponding period of last year respectively.

Unit-wise production details with reasons for shortfall are given below:

1.1 Crude oil production by ONGC during July, 2016 was 1867.77 TMT which is 1.66% lower than the monthly target and 0.70% less when compared with July, 2015. Cumulative crude oil production during April-July, 2016 was 7359.84 TMT which is 1.12% lower than target for the period and 1.28% lower than the production during corresponding period of last year. Reasons for shortfall in production in some fields are as under:

n++ Natural decline from matured and marginal cluster fields

n++ Maintenance of Mumbai-Uran Trunkline due to safety reasons

n++ Assam: Less than envisaged production from new wells, producing wells becoming sick, power shutdown & less gas injection pressure.

n++ Rajahmundry: Closure of 24 wells due to repair / replacement of Kadali-Tatipaka & Endamuru-Oduru GAIL pipelines. Decline in flowing pressure of self-flowing wells in Malleshwaram field. Increase in water cut in Gopavaram field.

n++ Cauvery: Less than envisaged production from Kamlapuram.

1.2 Crude oil production by OIL during July, 2016 was 272.69 TMT which is 0.71% higher than monthly target and 0.89% less than production in July 2015. Cumulative crude oil production during April-July, 2016 was 1070.87 TMT which is 0.18% higher than target for the period but 3.71% lower than the production during corresponding period of last year. Reasons for shortfall in production are as under:

n++ Less than planned contribution from old well

n++ Rise in water cut in wells of Greater Hapjan, Bhogpara & Greater Chandmari fields

n++ Loss in production due to bandhs and blockades by various Organisations

1.3 Crude oil production by Pvt. /JVs during July 2016 was 936.94 TMT which is 1.90% higher than the monthly target but 4.21% less when compared with July, 2015. Cumulative crude oil production during April-July, 2016 was 3647.63 TMT which is 0.06% lower than target for the period and 5.93% lower than the production during corresponding period of last year. Reasons for shortfall in production are as under:

n++ Natural Decline in Ravva, CB-OS/2 and Panna-Mukta

n++ Closure of one well in MA and one well in D1D3 field

Natural Gas

2. Natural gas production during July 2016 was 2704.65 MMSCM which is 2.76% lower than the target for the month but 3.27% higher than the production in July 2015. Cumulative natural gas production during April-July, 2016 was 10449.30 MMSCM which is 2.85% lower than target for the period and 3.80% lower than the production during corresponding period of last year.

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Moodys: North American and EMEA refining and marketing sector outlook to negative on high fuel inventories, weakening margins
Aug 24,2016

Moodys Investors Service says the outlook for the North American and EMEA refining and marketing sector is shifting to negative from stable. This change in outlook reflects Moodys expectations for the fundamental business conditions in the sector over the next 12 to 18 months.

Moodys expects EBITDA for the North American and EMEA independent R&M sector EBITDA to decline by more than 15% through late 2017/early 2018, owing to continued anemic crack spreads. Even summer gasoline demand has not provided a much-needed lift to refining margins, as demand has proven lower than downstream operators had expected, pushing inventories higher.

Adding to the challenge of weak refining margins, we are seeing global and regional product inventories increase, worsening the glut of fuel products in North America and Europe, noted Arvinder Saluja, a Moodys Vice President -- Senior Analyst. Slow demand in Europe and rising Chinese stockpiles, along with the onset of the shoulder season for North American gasoline demand, prevent a drawdown of inventories in the near term, keeping a lid on refining margins globally.

And despite tight refinery margins and high fuel inventories, most refiners have reduced utilization only marginally in 2016. Refiners closer to crude production or to export facilities, with access to cheaper imported oil, or with tighter product supply/demand balances in their regions, will enjoy better crack spreads. As a result, most refineries along the Gulf and West Coasts are likely to maintain high utilization, along with some Midwest and Rockies refineries. East Coast refineries will have to cut production amid historically high inventories, few opportunities to export, and continuous imports from Europe.

The negative outlook could be revised to stable if global inventories -- especially for US gasoline -- decrease significantly, bringing fuel stockpiles back to historical average levels, and with better capacity rationalization for weaker and higher-cost refiners in Europe. A positive outlook could be considered if the US and Asian diesel and distillates markets surged along with gasoline demand, leading to much stronger crack spreads.

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World crude steel production rises 1.4% in July 2016
Aug 24,2016

World crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was 133.7 million tonnes (mt) in July 2016, 1.4% up on July 2015.

Chinas crude steel production for July 2016 was 66.8 mt, an increase of 2.6% compared to July 2015. Elsewhere in Asia, Japan produced 8.9 mt of crude steel in July 2016, an increase of 0.5% compared to July 2015. India produced 8.1 mt of crude steel in July 2016, up 8.1% compared to the same month last year. South Koreas crude steel production was 6.0 mt in July 2016, up by 1.5% on July 2015.

In the EU, Germany produced 3.4 mt of crude steel in July 2016, a decrease of -6.1% compared to July 2015. The United Kingdom produced 0.7 mt of crude steel, down by -27.3% on July 2015.

Turkeys crude steel production for July 2016 was 2.7 mt, up by 6.5% on July 2015.

In July 2016, Russia produced 6.1 mt of crude steel, up by 0.9% over July 2015. Ukraine produced 2.1 mt of crude steel, up by 10.5% compared to the same month in 2015.

The United States produced 6.9 mt of crude steel in July 2016, a decrease of -2.2% compared to July 2015.

Brazils crude steel production for July 2016 was 2.7 mt, down by -6.0% on July 2015.

The crude steel capacity utilisation ratio of the 66 countries in July 2016 was 68.3%. This is the same figure as in July 2015. Compared to June 2016, it is 3.7 percentage points lower.

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Emerging market outlook stabilizes, while political risks take center stage
Aug 24,2016

Over the last year, many of the risks to global growth that we had identified in our previous outlooks have materialized, with Brexit being the latest, said Moods in Global Macro Outlook 2016-17. The global economy experienced steep reductions in commodity prices associated with a slowdown in Chinas economy and severe terms of trade shocks to commodity-exporting countries. Global financial market volatility intensified in late 2015 and early this year on concerns regarding Chinas growth trajectory, as well as the pace of US monetary policy normalization. Going forward, these challenges remain and financial markets volatility can easily re-emerge.

Looking ahead, growth in emerging market economies will stabilize, although there is substantial differentiation between countries

We have revised our growth forecast for G20 emerging markets up by 0.2 percentage points, to 4.4% for 2016 and 5.0% for 2017. The revisions are mainly driven by faster easing of the contractions in Russia and Brazil, against lower growth in Turkey and South Africa and somewhat higher growth in China. We now expect Chinas economy to grow at the rate of 6.6% and 6.3% in 2016 and 2017 respectively, compared to 6.3% and 6.1% previously, driven by significant fiscal and monetary policy support. Medium-term downside risks to Chinas growth outlook persist, especially if the reduced efficacy of policy support over time becomes apparent. We dont expect material implications for other countries, as Chinas imports continue to fall. Headwinds to emerging markets have moderated, driven by the economic stabilization in China, the modest recovery in commodity prices, and the return of capital flows; however, we expect the US Federal Reserve to resume its interest rate tightening cycle at the end of this year.

Growth in advanced economies will remain stable at low levels

We expect G20 advanced economies to grow at 1.6% for 2016 and 1.9% for 2017, compared to 1.9% in 2015. We have revised up Japans growth forecast to 0.7% and 0.9% in 2016 and 2017, from 0.4% previously for both years, to incorporate the impact of the recent fiscal stimulus and expectations of further monetary policy easing. We have revised our GDP growth estimate for the US down to 1.7%, from 2.0%, for 2016 to reflect the lower advanced estimates of second quarter growth. Our 2017 US growth forecast remains unchanged at 2.3%. In our July post-Brexit update, we already revised our forecasts for the UK, the euro area, Germany, France and Italy.1 Our baseline real GDP growth expectation for the UK is 1.5% in 2016 and 1.2% in 2017. We expect limited Brexit-related spillovers to the euro area but some deterioration due to country-specific developments and maintain our euro area forecast at 1.5% and 1.3% for 2016 and 2017.

There are a number of downside risks to the global economic outlook, the most immediate being associated with the US presidential election in November. A change in US policy stance that contributes to a weakening of the current global trade and security architecture could have a detrimental impact on global confidence and growth, and would prompt us to revise our forecasts. EU political contagion represents the greatest risk to otherwise muted global impact from Brexit. Uncertainty surrounding Chinas growth path, the future path of US interest rates, the sustainability of the recent inflows of capital to emerging markets, the rise in emerging market corporate sector leverage, and other political risks remains. Constrained monetary and fiscal policy space limit the ability of policymakers to provide support if downside risks were to materialize.

Global Synthesis

There are six main themes that inform our outlook for the remainder of 2016 and 2017.

1. Advanced economies are growing close to historically low potential growth rates due to a mix of demand and supply factors, including public and private deleveraging, deficient demand, slow productivity gains and aging populations. Persistently low inflation rates and inflation expectations continue to defy central bank objectives. Limited effective policy space constrains policymakers from stimulating nominal demand.

2. Economic growth in the euro area as a whole remains stable, although structural factors deter improvements in some of the countries, especially France and Italy. While monetary policy is expected to remain supportive, its effectiveness is limited due to the structural constraints.

3. Given the stability and strength of the US economy, the normalization of monetary policy is expected to resume at the end of this year. However, we expect the tightening cycle to be gradual in keeping with the cautious approach demonstrated by the members of the FOMC so far.

4. With Chinas economy significantly supported by fiscal and monetary policy, slowdown and rebalancing is likely to be gradual. Thus we do not expect China to exert a significant drag on global growth prospects over the rest of 2016 and 2017.

5. Stabilization of commodity prices, especially non-oil commodities, from the lows reached in January has provided relief to commodity-exporting economies. However, we expect limited upside to commodity prices from here.

6. External conditions have become more favorable for emerging market countries since March given the expectation of stable growth in China, more stable commodity prices and the delay in the normalization of US interest rates. But there is substantial differentiation in the fundamentals of individual emerging market economies. Their ability to weather external headwinds during the early phase of the Federal Reserves interest rate tightening cycle in 2017 is material to the assessment of their economic outlooks. Our growth expectations for India, Indonesia, Korea and Saudi Arabia are unchanged from our previous outlook publication in May.

There are a number of downside risks to the baseline outlook. These include:

The risk to the global financial sector from heightened volatility and possibly synchronous re-pricing of assets including equities, bonds and currencies when US interest rate normalization process resumes.

Downside risks to growth from strong reversals of capital flows in emerging market countries that have external imbalances and open capital markets. This could be triggered for instance when US interest rates begin to rise. Countries carrying foreign currency denominated debt on public or private sector balance sheets are especially vulnerable in case of a sharp currency depreciation.

Medium-term risk of a marked deterioration related to the Chinese economy and its financial sector, given the evidence that the most recent rounds of policy stimulus have become less effective.

The political and geopolitical risks of a rise in nationalist and protectionist pressures. The most immediate risk in this context is an outcome in the upcoming US presidential elections that ushers in an administration that would renegotiate global trade pacts and security alliances. We believe that such a development would harm confidence and global growth. In Europe, with a busy election calendar over the coming two years, we see a potential risk that the European Union fragments further, with global consequences. Geopolitical risks, especially from a potential diplomatic or military flare-up over the sovereignty over the South China sea, or renewed tensions in the Korean peninsula could have a regional impact in Asia, as well as globally.

Our Global Macro Outlook underpins our universe of ratings, providing a consistent benchmark for analysts and investors. This report is an update to our May 2016 Global Macro Outlook. It reviews recent key developments, provides an update on our central forecasts for 2016-17, and discusses the main risks around our forecasts. We present our central scenario in Exhibit 1 and highlight the following factors:

We express our forecasts for annual GDP growth and unemployment as a

SIT recommendation to ban cash transactions above Rs 3 lakh under consideration: CBDT chief
Aug 24,2016

The government is considering the recommendation of Special Investigation Team (SIT) on black money to ban cash transactions above Rs three lakh, a top Finance Ministry official said at an ASSOCHAM.

n++The SIT recommendations are under consideration. As far as the Income Tax Department is concerned, we have put a one per cent TCS (Tax Collected at Source) on cash transactions, we have made PAN quoting mandatory, all these aspects are also part of the SIT recommendation to stop the use of cash in the economy, Rs three lakh and above is under consideration,n++ said Ms Rani Singh Nair, chairperson, Central Board of Direct Taxes (CBDT) while inaugurating an ASSOCHAM International Tax Conference.

She also informed that the government is holding discussions for the renegotiated India-Singapore tax treaty.

n++So now that we have renegotiated Mauritius, Singapore is under discussion. We are discussing it, we hope we will soon have a discussion with them as this is a bilateral treaty, so we have to take the concerns of both the countries and then we will sign,n++ said Ms Nair.

She said that during the course of past two years, endeavour of the government and the CBDT has been to facilitate investments into India to ensure that the taxpayer pays his taxes with the ease of doing business because ultimately the tax coffers will never be full if there is no business in India.

n++For the last two years we have believed that participating in rule-making, law-making will help in making more robust tax laws and with this idea we have every time put all our major initiatives in the public domain and after seeing what people have said, we have even proposed amendments to facilitate the business. This change of thinking, this proactive approach has gone down very well both internally in the country and I can say that this is the way to move forward,n++ said Ms Nair.

She also said that role of the tax administration is not only limited to tax and it is also to listen and to guide the taxpayer and see that the advice given is correct.

n++I have also felt that for international business, for foreigners who are coming to invest in India, we should have a kind of a guide available on the internet, in the market which tells step-by-step what are the tax laws, tax procedures and the way to go forward in doing business in India,n++ said the CBDT chairperson.

n++I have had a lot of interactions with foreign business, with associations who have come to meet me in my stint in the CBDT and they all feel that they are adrift in India because there is not one place that they can go to and get advice and then they can digest that advice and take their own decisions,n++ she said.

n++If we have to make India a place to do business, we have to have this kind of facility not only in the government but in the private space also, where any business which is coming to India comes with a lot of confidence, that the advise they get is complete and comprehensive. I think when we talk of international taxation, this is the one aspect that we need to focus on and we need to see that India becomes a favoured place of doing business,n++ further said Ms Nair.

On the issue of advancing the date of general budget presentation to January, she said that it will bring in more efficiency in the budget making as two-three months of the financial year will not be lost in the budget process.

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BRICS Disaster Risk Reduction meet adopts Udaipur Declaration
Aug 24,2016

A two-day meeting of BRICS Ministers on Disaster Management ended in Udaipur, Rajasthan today with the adoption of the Udaipur Declaration. The meeting laid bare the common thread of challenges on disaster issues faced by all the BRICS nations.

The Minister of State for Home Affairs, Shri Kiren Rijiju termed the meeting as a new milestone in collaboration and cooperation among BRICS countries in the field of disaster management. He said that the Udaipur meeting has successfully adopted the Udaipur Declaration whereby we have resolved to set up a dedicated Joint Task Force for Disaster Risk Management for regular dialogue, exchange, mutual support and collaboration among BRICS Countries.

The roadmap for implementation of the three-year Joint Action Plan (JAP) for BRICS emergency services (2016-18) was also finalised. The JAP was agreed upon at the first meeting of BRICS Ministers for Disaster Management at St. Petersburg in Russia earlier this year. Shri Rijiju said that this meeting has agreed on a road map for implementation of the Joint Action Plan where all of us have resolved to work together on exchange of Information/ experiences on disaster management, research & technology exchange on forecasting and early warning for floods and extreme weather events and capacity building of stakeholders for disaster management.

A technical session on Disaster risk in a changing climate was held today. The session focused on emerging disaster risks as a result of climate change and evolving practices in the area of Disaster Risk Management. It began with a presentation followed by discussions on the implications of changing climate on disaster risk.

BRICS nations have made a clear move from relief-centric to a holistic approach to disasters with a greater emphasis on prevention, mitigation and preparedness. This highlights the importance of forecasting and early warning systems to help authorities in alerting the communities as well as responding swiftly to a situation. The meeting discussed the advances in technology and knowledge sharing amongst member countries to enable them leverage it to reduce disaster risk.

Summing up the takeaways from the meeting, Shri R.K. Jain, Member, National Disaster Management Authority, said that it came out clearly during the meeting that all member countries face similar challenges. Mainstreaming of disaster risk reduction, use of advanced technology in providing early warning, need for adequate funding to deal with rehabilitation and reconstruction after a disaster and the impact of climate change on disasters are common challenges faced by all of us. The deliberations have been very useful and we got an opportunity to learn about the disaster management structure, system and processes followed in other BRICS countries.

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DBTL (PAHAL) Mechanism made it possible to block 3.34 crore duplicate / fake / inactive domestic LPG connections. Estimated savings due to blocking of
Aug 23,2016

Ministry of Petroleum & Natural Gas has come across several news items appearing in various newspapers about the CAG report stating that direct LPG subsidy savings was less than the Governments claim.

In this regard, it is clarified that an intensive exercise was carried out for identifying duplicate/fake/ghost/inactive domestic LPG connections and, as of 01.04.2015, 3.34 Crore such connections were identified by the Oil Marketing Companies (OMCs). As a result of implementation of DBTL (PAHAL) mechanism, it became possible to block these 3.34 Crore LPG connections as the subsidy was transferred in the accounts of only those consumers who had registered under PAHAL and who have been cleared after de-duplication exercise. Before DBTL, all or many of these 3.34 crore consumers would have continued to purchase subsidized cylinders from the distributors. But for the blocking of these accounts, the subsidy bill would have been much higher despite fall in crude oil prices.

Estimated Savings from the above efforts are calculated as follows:

For the financial year (FY) 2014-15, for 3.34 crore consumers outside the PAHAL net, the Estimated savings would be 3.34 crore x 12 cylinders x Rs.369.72 (average Subsidy/cylinder for FY 2014-15) equal to Rs.14,818.4 crore. Following a similar principle, the Savings estimated for FY 2015-16 is Rs.6,443 crore and the total for both the years works out to Rs. 21,261 crores.

FINANCIAL YEARAverage Subsidy per Cylinder (for that year)CALCULATIONSEstimated Savings (in crores of rupees)2014-15Rs. 369.723.34 * 369.72 * 1214,818.42015-16Rs. 150.823.56 * 150.82 * 126,443TOTAL21,261.4

The total consumption of cooking gas in any given year is a combination of the number of connections at the beginning of the year, bogus connections eliminated during the year through the process of DBT under PAHAL, new connections issued to genuine consumers during the year and normal fluctuations in individual consumption. Hence, the saving from implementation of DBT cannot be correctly computed merely by reference to the total consumption in a year or the total expenditure on subsidy. If the DBT had not been implemented, the outgo on the subsidy would have been higher by Rs. 14,818 crore in 2014-15 and Rs. 6,443 crore in 2015-16. Hence the total savings from the elimination of fake/duplicate/ghost connection as a result of implementation of DBT for the two years together, as calculated above, is estimated at more than Rs. 21,000 crore. Since fake/duplicate/ghost connections are mostly used for diversion, hence it is assumed that the full entitlement would have been utilised. This figure is not comparable with the actual expenditure on subsidy which includes the subsidy on new genuine connections given during these two years. Without implementation of PAHAL, subsidy burden would have been higher than the actual expenditure recorded during these years, even with lower petroleum prices.

Furthermore, it should be noted that concrete evidence of successful elimination of bogus connections is seen in the phenomenal growth of non-subsidized commercial LPG sales which have registered an increase of 39.3% in the period April 2015 to March 2016. This is in contrast to the pre-PAHAL experience when commercial sales growth was negligible or declining.

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Jawaharlal Nehru Port Trust Signs Agreement for ECB worth $400 Million with State Bank of India and Development Bank of Singapore
Aug 23,2016

Indias premier container port, Jawaharlal Nehru Port Trust in Navi Mumbai, has signed an agreement with State Bank of India and Development Bank of Singapore for External Commercial Borrowing (ECB) to the tune of USD 400 Million at a n++very competitiven++ interest rate to improve the infrastructure required for n++doublingn++ its existing capacity to 9.85 Million TEUs annually. JNPT has US Dollar denominated foreign currency earnings which can be leveraged for a low cost foreign currency borrowing. The ECB of USD 400 Million (USD300 Million from the SBI & USD100 Million from DBS) will be primarily utilised by JNPT for expanding the network of roads that connect to its port projects. The existing road network for evacuation of traffic is currently operated at a capacity utilisation of 100%, and the expansion is needed for quicker and more efficient evacuation of traffic.

The agreement with the SBI and Development Bank of Singapore was signed by the JNPT Chairman Anil Diggikar in the presence of Minister for Shipping, Road Transport & Highways Shri. Nitin Gadkari after the Reserve Bank of India granted approval to JNPT for raising USD 400 Million with an end use of on-lending to Mumbai JNPT Port Road Company (MJPRCL) for implementation of road project. The Ministry of Shipping has already granted its approval as required under the Major Port Trusts Act,1963.

Speaking on the occasion, Shri Gadkari said that JNPT is the first major port in the country to have taken loans in dollars. This was possible because ports have a natural hedge in foreign currency earnings. He also said that the rate of the ECB loan of 2.025% plus Libor USD 6M (approx 3.15%) is cheaper than Indian currency loan. He said the funding by JNPT is the first of its kind for major port and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their requirements.

Borrowing by JNPT is for Door-to- Door tenor of 7.5 years. However, lending by JNPT to MJPRCL is for 16 years (two years construction and 14 years repayment). The funding process involved assessment and structuring of cash-flows (both at JNPT level and MJPRCL level), bid process management, engagement of domestic and foreign lenders. The project will be developed by Mumbai JNPT Port Road Company (MJPRCL), a joint venture company of NHAI, JNPT and CIDCO at a total estimated cost of Rs. 2895 crore. Considering the importance and urgency of implementation of the project, it will be taken up by MJPRCL on EPC mode and funding for the project would be carried out by JNPT.

The project will primarily benefit and cater to the needs of JNPT. JNPT is going to double its capacity in the next seven years. This project will cater to the additional cargo which will be handled at the 4th Container Terminal. An improved connectivity is essential for traffic evacuation from JNPT. This evacuation corridor would help in supporting the EXIM trade besides providing economic opportunity to the local people and people from the region. The project is of great significance to JNPT and will give a boost to the countrys economy.

Port projects, including connectivity projects, are critical to developing cargo handling capacity. With the thrust on port led development under the Sagarmala programme, improving viability of projects is critical. One of the primary factors that impacts viability is the interest rate on borrowings to fund projects. While Ports have surplus funds, they also need to borrow to achieve a quantum jump in the investment. Minister of Shipping and Road Transport & Highways Shri Nitin Gadkari had suggested an innovative means of raising low-cost external commercial borrowings, particularly when the port had revenues in foreign exchange, which provided a natural hedge to the ports. This would substantially eliminate the requirement of hedging the forex risk and would reduce the cost of borrowing. This suggestion was followed up by Ports and JNPT became the first Major Port to finalise the terms of external commercial borrowing. With this beginning, other Major ports would also adopt similar means to improve their capability to invest. The step is another milestone in infusing dynamism into the functioning of the ports, both in their operations and financing.

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Government planning to set up Indian Council for Fertilizers Research
Aug 23,2016

The Union Minister of Chemicals & Fertilizers and Parliamentary Affairs Shri Ananth Kumar has advocated a n++3 An++ approach towards fertilizers in the country, these being authenticity (Quality), availability and affordability. Inaugurating a Conference of Officers of State Agriculture Departments handling fertilizers in New Delhi today, Sh. Ananth Kumar said that the ultimate aim of the Government should be to provide last mile timely availability of quality fertilizers at affordable rates to the farmers. This, he said, would ensure the fertilizers security of the country which is essential for the food security.

Sh. Ananth Kumar said that till two years back, there used to be shortage of urea, leading to its hoarding, black-marketing and smuggling. He congratulated the Indian Fertilizer manufacturers for running the plants at over 100 per cent capacity and achieving an all time record of 245 lakh MT urea production last year. The Minister said that the timely imports, pre-positioning of the fertilizers, contribution of the States in timely distribution, and cooperation of the Railways through Good Rake Movement also helped in making the fertilizer position comfortable in the country.

Sh. Ananth Kumar asked the State Government officials to enforce quality checks on the fertilizers, undertake district level planning for supply of fertilizers, ensure early turnaround of rakes, provide adequate storage facilities, and take benefit of pre-positioning. He called upon the States to initiate a drive against those who indulge in hoarding, black-marketing, diversion and smuggling of fertilizers. He also said that the unethical practices of the retailers/companies to tag certain items for selling to farmers along with the required fertilizers, should be discouraged. The Minister also emphasized on the issue of soil security and ways to compost initiative. He said the Government is reviving the sick fertilizer PSU and the basic principle of producing where it is being consumed.

Sh. Ananth Kumar said that the Government is soon planning to set up Indian Council for Fertilizers Research, on the lines of ICMR and ICAR. He said research is very much required to discover and develop various means and ways of producing quality fertilizers, fortified fertilizers, hybrid fertilizers, nutrients and various combinations which are good for the soil. He said research has a role to play in the all aspects of the fertilizer chain which includes production, transportation, storage, availability, application, etc.

The Minister of State for Chemicals and Fertilizers, and Road Transport, Highways and Shipping Sh. Mansukh L Mandaviya said that Prime Minister has given a call to double the income of farmers and the Department is working on this direction by reducing their input costs. He said that poor farmers are often misguided by certain vested interest and it is essential to launch a campaign to inform them about the best practices, balanced and optimum use of fertilizers. He said that recently the Government announced reduction in non-urea fertilizers and the farmers should be made aware about this. He called upon the States to work in tandem with the Central Government for the welfare of the farmers.

The Conference of Principal Secretaries/Secretaries/Directors dealing with the Agriculture Departments in the State/UTs is the first such initiative of the Department of Fertilizers. The Central and the State Government officials dealing with the various aspects of fertilizers discussed various issues concerning the sector including availability and supply of fertilizers, implementation of Direct Benefit Transfer Scheme, fertilization and neem-coating of urea, quality control of fertilizers, issues in Fertilizer Monitoring System and promotion of city compost.

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India and Germany join hands on skill agenda Germany Contributes Rs 22.6 crore for Skill Development in India
Aug 23,2016

India and Germany are deepening their collaboration in the area of skill development. An implementation agreement was signed between the Ministry of Skill Development and Entrepreneurship (MSDE) and (German International Cooperation (GIZ), to initiate a new project focused on adapting elements of the German dual system in select industrial clusters in India.

This new project will run for three years starting August 2016 with a budget of EUR 3,000,000 (22.6 Crores INR) - made available by the German Government and aims to foster conditions which will help create and improve cooperative workplace-based vocational training in Indias industrial clusters. The project will be implemented in three selected clusters, which include the Automobile cluster in Maharashtra and Electronics cluster in Bangalore.

German technical assistance will be used to enhance industry institute partnerships between Indian and German organizations, build capacity of local training institutions and foster industry linkages which will help adapt elements of the German dual system, into the Indian context. This new project will also play an important role in supporting MSDEs existing programmes to scale up apprenticeship training.

The project will be implemented under the umbrella of the Joint Memorandum of Understanding (MoU) in the field of Skill Development and Vocational Education and Training (VET), signed during the Indo- German intergovernmental consultations on 5th October 2015 in New Delhi.

The Joint Working Group, under the MoU held its first meeting on 26 July 2016, in New Delhi. At the meeting, the two countries agreed to deepen their collaboration in a number of specific areas including: curriculum development, research and sharing of best practices, training of trainers, and establishing cooperative workplace based skill training programmes in three industrial clusters.

Commenting on the Indo-German partnership in the area of skill development, Shri Rajiv Pratap Rudy, Union Minister of State (I/C) for Skill Development and Entrepreneurship said, n++We in India recognize the fact that Germanys dual system is widely acclaimed as one of the best in the world, noted for its close linkages between industry and training institutions. This provides a competitive edge to German industry and businesses. We need to adapt elements of the German VET system to the Indian context to ensure that skill training in India is closely aligned with the requirements of industry.n++

n++Germany has been one of countries which is on top of the manufacturing and innovation pyramid and continues to develop most high end products. It has some of the best working models in sustainable workforce development which is the reason for the countrys economic progress. This partnership with Germany will help strengthen our skill development initiatives. The recent budget allocations that have been made for promoting apprenticeship programs in the country will help our plans see daylightn++ said Shri Rohit Nandan, Secretary, Ministry of Skill Development and Entrepreneurship.

n++Germany is known for its excellent vocational education system that relies on the strong participation and engagement of the private sector. Having a very long standing partnership with India, Germany is pleased to support the n++Skill Indian++ and n++Make in Indian++ initiatives with a new bilateral programme on vocational education and training. Herein, the engagement of private enterprises, including German firms, as carriers for skill development will be crucial for the successn++, said German Ambassador to India, Dr Martin Ney, during an official signing ceremony for the launch of a new bilateral partner programme at the Ministry of Skill Development and Entrepreneurship (MSDE).

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Union Home Minister Shri Rajnath Singh assures NSG of upgrading their infrastructure and training needs
Aug 23,2016

Union Home Minister Shri Rajnath Singh has assured the National Security Guard (NSG) of upgrading their infrastructure and training needs. Shri Rajnath Singh also stressed upon the NSG to conduct regular exercises with counterpart forces from friendly countries. Pointing out that such exercises will help the NSG soldiers hone their skills, the Home Minister said that today no developed country can claim immunity from terrorist strikes. All progressive societies have to stand up against terrorism, he added.

Underlining that the people of India have reposed faith in the NSG as the elite anti-terrorist force, Shri Rajnath Singh said that even during the attack on the Pathankot airbase in January, 2016, the security forces prevented any damage to vital strategic assets and installations.

Noting that 19 NSG personnel have laid down their lives in the service of the nation since the force was set up in 1984, the Union Home Minister called upon the NSG to bring out illustrated booklets containing biographies of the NSG martyrs as an inspiration for the youth. The NSG must commemorate the martyrdom day of the forces martyrs with at least one NSG Officer visiting their families and organising programmes at their homes by involving the community. Shri Rajnath Singh also assured that to consider instituting more medals for the NSG personnel.

Earlier, Director General, NSG Shri RC Tayal said that all State Police Forces have now set up their specialized Counter-Terrorism Units. The NSG conducts regular exercises with them, he added.

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The main cause of water scarcity in country is consecutive failure of monsoon, resulting low storages in dams
Aug 23,2016

The report of on the Spot Study of Water Situation in Drought Affected Areas of the country (2015-16) has recommended construction of water harvesting structures, mass awareness among citizen for water conservation, construction of new water storage structures, interlinking of rivers, renovation and repair of existing water bodies as some of the important measures to meet the challenges of overall water scarcity scenario in the country. The study was carried out by Central Water Commission under the Ministry of Water Resources, River Development and Ganga Rejuvenation. Various long/short term measures (being taken up and to be taken up) to mitigate water scarcity situation have also been recommended which are region/area/state specific.

In some areas like Marathwada of Maharashtra, Bundelkhand of UP and MP interlinking projects have been recommended. Water budgeting and planning the cropping patterns for the oncoming agricultural season(s), the strategy for avoiding water intensive crops to the extent in consultation with the relevant expert departments are also crucial for checking such situation. Micro irrigation (sprinkler and drip) should be adopted to achieve more crops per drop.

The study says that at almost all places minimum domestic water requirements are being met through importing water from other regions, if required; by digging local deep bore wells and also by tankers. Ground water levels have been reported as falling in almost all regions of the country due to over exploitations and inadequate recharging mechanism for ground water. However, no specific observation on water quality has been reported at most of the areas except in Gujarat, where problem of salinity in coastal areas has been reported.

According to the report, the water scarcity situation is prevailing in the country, but some pockets like Marathwada in Maharashtra, Bundelkhand in U.P. and MP, Telangana and Andhra Pradesh are more affected by water scarcity situation. The main cause of water scarcity in country is consecutive failure of monsoon, resulting low storages in dams, during last two years. Rainfall deficit in country as a whole during 2015 was 14% and in 2014 it was 12%. Earlier, year 2012 was also a rainfall deficit year with 11% deficit. Consecutive less rainfall also resulted less carryover storage in reservoirs.

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Mineral Production during June 2016 was 4.7% higher as compared to June 2015
Aug 23,2016

The index of mineral production of mining and quarrying sector for the month of June (new Series 2004-05=100) 2016 at 127.3, was 4.7% higher as compared to June 2015. The cumulative growth for the period April- June 2016-17 over the corresponding period of previous year stands at (+) 2.3%.

The total value of mineral production (excluding atomic & minor minerals) in the country during June 2016 was Rs. 18344 crore. The contribution of Coal was the highest at Rs. 7171 crore (39%). Next in the order of importance were: Petroleum (crude) Rs. 5393 crore, Natural gas (utilized) Rs. 2077 crore, Iron ore Rs. 1802 crore, Limestone Rs. 584 crore and Lignite Rs.517 crore. These six minerals together contributed about 96% of the total value of mineral production in June 2016.

Production level of important minerals in June 2016 were: Coal 517 lakh tonnes, Lignite 37 lakh tonnes, Natural gas (utilized) 2511 million cu. m., Petroleum (crude) 30 lakh tonnes, Bauxite 2177 thousand tonnes, Chromite 297 thousand tonnes, Copper conc. 10 thousand tonnes, Gold 114 kg., Iron ore 150 lakh tonnes, Lead conc. 17 thousand tonnes, Manganese ore 179 thousand tonnes, Zinc conc. 73 thousand tonnes, Apatite & Phosphorite 54 thousand tonnes, Limestone 274 lakh tonnes, Magnesite 23 thousand tonnes and Diamond 2932 carat.

The production of important minerals showing positive growth during June 2016 over June 2015 include Iron ore (42.6%), Bauxite (35.5%), Chromite (34.9%), Gold (14.0%), Coal (11.4%), Diamond (9.5%), Limestone (7.6%) and Magnesite (0.7%). The production of other important minerals showing negative growth are: Apatite & Phosphorite [(-) 80.7%], Zinc conc. [(-) 44.2%], Lead conc. [(-) 17.8%], Petroleum (crude) [(-) 4.3%], Natural gas (utilized) [(-) 3.9%], Lignite [(-) 3.6%], Manganese ore [(-) 3.0%] and Copper conc. [(-) 2.7%].

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Gartner Says Five of Top 10 Worldwide Mobile Phone Vendors Increased Sales in Second Quarter of 2016
Aug 23,2016

Global Sales of Smartphones Grew 4.3 Percent Year on Year

Global sales of smartphones to end users totaled 344 million units in the second quarter of 2016, a 4.3 percent increase over the same period in 2015, according to Gartner, Inc. Overall sales of mobile phones contracted by 0.5 percent with only five vendors from the top 10 showing growth. Among them were four Chinese manufacturers (Huawei, Oppo, Xiaomi and BBK Communication Equipment) and South Koreas Samsung.

Demand for premium smartphones slowed in the second quarter of 2016 as consumers wait for new hardware launches in the second half of the year, said Anshul Gupta, research director at Gartner. In addition, the decline in sales of feature phones (down 14 per cent) bolstered the decline in overall sales of mobile phones in the second quarter of 2016 (see Table 1).

All mature markets except Japan saw slowing demand for smartphones leading to a decline in sales of 4.9 percent. In contrast, all emerging regions except Latin America saw growth, which led to smartphone sales growing by 9.9 percent.

Table 1

Worldwide Smartphone Sales to End Users by Vendor in 2Q16 (Thousands of Units)

2Q16 Market Share (%)2Q15
2Q15 Market Share (%)Samsung76,743.522.372,072.521.8Apple44,395.012.948,085.514.6Huawei30,670.78.926,454.48.0Oppo18,489.65.48,073.82.4Xiaomi15,530.74.515,464.54.7Others158,530.346.0160,162.148.5Total344,359.7100.0330,312.9100.0

Source: Gartner (August 2016)

In the second quarter of 2016, Samsung had nearly 10 percent more market share than Apple. Samsung saw sales of its Galaxy A and Galaxy J series smartphones compete strongly with Chinese manufacturers. Its new smartphone portfolio also helped Samsung win back share it recently lost in emerging markets.

Apple continued its downward trend with a decline of 7.7 percent in the second quarter of 2016. Apple sales declined in North America (its biggest market) as well as in Western Europe. However, it witnessed its worst sales decline in Greater China and mature Asia/Pacific regions, where sales declined 26 percent. Apple had its best performance in Eurasia, Sub-Saharan Africa and Eastern Europe regions in the second quarter of 2016, where iPhone sales grew more than 95 percent year on year.

Among the top five smartphone vendors, Oppo exhibited the highest growth in the second quarter of 2016 at 129 percent. This is due to strong sales of its R9 handset in China and overseas.

Features such as an anti-shake camera optimized for selfies, and rapid charge technology, helped Oppo carve a niche market for itself and boost sales in a highly competitive and commoditized smartphone market, said Mr. Gupta.

In terms of the smartphone operating system (OS) market, Android regained share over iOSto achieve an 86 percent share (see Table 2) in the second quarter of 2016. Androids performance continued to come from demand for mid- to lower-end smartphones from emerging markets, but also from premium smartphones, which recorded a 6.5 percent increase in the second quarter of 2016.

A number of key Android players, such as Samsung with the Galaxy S7, introduced their new high-end devices, but Chinese brands like Huawei and Oppo are also pushing their premium smartphone ranges with more affordable devices.

Google is evolving the Android platform fast, which allows Android players to remain at the cutting edge of smartphone technology, said Roberta Cozza, research director at Gartner. Facing a highly commoditized smartphone market, Googles focus is to further expand and diversify the Android platform with additional functionalities, like virtual reality, enabling more-intelligent experiences and reach into wearables, connected home devices, in-car entertainment and TV.

Table 2

Worldwide Smartphone Sales to End Users by Operating System in 2Q16 (Thousands of Units) 

Operating System2Q16
2Q16 Market Share (%)2Q15
2Q15 Market Share (%)Android296,912.886.2271,647.082.2iOS44,395.012.948,085.514.6Windows1,971.00.68,198.22.5Blackberry400.40.11,153.20.3Others680.60.21,229.00.4Total344,359.7100.0330,312.9100.0

Source: Gartner (August 2016)

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