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Early operationalising of BIMSTEC FTA imperative for greater push to trade: ASSOCHAM study
Jul 25,2016

India should work closely with the seven-nation BIMSTEC grouping to conclude trade negotiations and attempt early operationalising of the Bay of Bengal free trade agreement (FTA) to give a big push to trade in the region, an ASSOCHAM study said today.

n++BIMSTEC FTA may help activate production links among member countries and help in rationalising various non-tariff measures (NTMs) which would give big push to regional trade and generate regional value chains,n++ highlighted the ASSOCHAM study titled BIMSTEC Economic Integration: Opportunities and Challenges.

The study was jointly released by Ms Preeti Saran, secretary (East), Union Ministry of External Affairs and Bangladesh state minister for foreign affairs, Mr Shahriar Alam at 7th ASSOCHAM-BIMSTEC Business Forum, along with ASSOCHAM president, Mr Sunil Kanoria; chambers secretary general, Mr D.S. Rawat and Mr Sumith Nakandala, secretary general, BIMSTEC.

n++To achieve trade and connectivity, the FTA, which has been under negotiations since the inception of BIMSTEC needs to be accomplished and all other areas of cooperation will follow once the member countries are connected and trade and commerce flourishes,n++ noted the study.

n++What BIMSTEC needs is firm handholding and visionary leadership that can harness these resources for its own good,n++ it added.

There is also the need to focus on trade facilitation through transport efficiency in maritime and land transport, regulatory environment and service sector infrastructures like electronic documentation, harmonising regulations and others.

The study further said that there is a need to liberalise trade and investment measures in services considering the lack of adequate physical infrastructure in the region, more so as services exports are performing well compared to manufactured exports that are more dependent on infrastructure.

It also suggested that the BIMSTEC countries should work on Single Window facility that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfil all import, export, and transit-related regulatory requirements.

Elimination of non-tariff barrier within a mutually agreed timeframe, reduction in negative list to unlock trade potential, introduction of transit facilities to promote effective intra-BIMSTEC trade, improvement in regional connectivity and introduction of a BIMSTEC visa to facilitate movement of people particularly for investors and businessmen are certain other key recommendations of the ASSOCHAM study.

In her address at the ASSOCHAM summit, Ms Saran said, n++Members of BIMSTEC have been struggling to negotiate a successful free trade agreement which has over the years been overtaken by other instruments which has been somehow disincentive for a greater push on this FTA.n++

n++Even as we strive together to open our borders to free trade in goods. I think the potential for the future lies in investments in the services sector,n++ said Ms Saran.

n++There is a memorandum of understanding (MoU) on establishment of a BIMSTEC technology transfer facility also under negotiation which has the potential to assist small and medium enterprises (SMEs) in sharing their experiences in capacity building, technology evaluation, market assessment and intellectual property management,n++ she said.

Highlighting that the Bay of Bengal is home to over 30 per cent of worlds fishermen, Ms Saran said that sustainable development and modernisation of fishing industry in the region can contribute substantially in improving standards of living of our people.

n++I would urge to look at potential of development of marine resources in agriculture, particularly in the fisheries sector.n++

Talking about role of financial co-operation for boosting intra-regional trade and investment she said, n++Financial co-operation may eventually cover currency swap agreements, pooling of reserves by the Central Banks, exchange rate co-ordination mechanisms, regional supervisory institutions, regional payment agreements and establishment of regional development banks and regional bond markets to boost access to long-term financing.n++

Terming terrorism as a major challenge to regions economic growth and development, Ms Saran said, n++What we together as BIMSTEC need is a concerted action to deal with terrorism including dismantling of structures of terrorism, trainers of terrorism and isolate those who sponsor, finance and train these terrorists.n++

Pushing for early realisation of BIMSTEC FTA to promote trade and investment, Bangladesh state minister, Mr Alam said, n++We would also like to see negotiation on investment in services be fast-tracked to run parallel to the negotiations on trade in goods.n++

He said that in order to sustain the economic growth we need to secure a stable and affordable energy supply through exploration of regional energy resource potential.

n++We expect to sign the MoU on BIMSTEC Energy and Grid Interconnection which will help to foster co-operation in energy sector,n++ said the minister.

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Rise in financial frauds big sour point for foreign investors, says ASSOCHAM-Grant Thornton Paper
Jul 25,2016

A rise in financial frauds over the past few years has emerged as one of the sour points for foreign investors in India and if not checked by a global standard regulatory framework coupled with strong internal corporate prevention mechanism, the menace could take disastrous proportions in corporate India, an ASSOCHAM-Grant Thornton paper has cautioned.

n++With the increased prevalence of fraud and the negative consequences associated with it, there is a strong argument that companies should invest resources and time to tackle it. n++n++cases of financial fraud have risen in India over the last few years and have become one of the main factors deterring foreign companies from investing in India. As the economy is growing, increasing corporate frauds will prove to be disastrous for India,n++ the paper said.

It said while entering India would be a critical component of growth for many international organisations, understanding the risks in India is also critical for the survival of business operations. It is not to suggest as if there are no financial frauds taking place in rest of the world; in fact, the paper has enumerated several big time scandals which had hit the international headlines. These included Lehman Bros which triggered the 2008 global financial crisis and USD 74 billion Enron scam of 2001.

Listing several challenges on the issue, the joint ASSOCHAM-Grant Thornton paper expressed concern over the fact that n++financial managers and accountants at organisations who understand the limitations of an audit and standard auditing procedures are deliberately trying to deceive external auditors and investors by cooking the booksn++.

Noting inability to perform an effective fraud risk assessment, the paper said technology is a double-edged sword. n++As technology is advancing, fraudsters are able to find ways to use it and perpetrate a fraud. Tech-savvy fraudsters are using technology in a variety of ways to commit frauds. Some include creation of false or misleading information accounting records.

n++Putting restrictions on what your employees have access to will limit the potential of misappropriation of assets but if an employee has access to all aspects of an organisation, the potential for fraud is significantly increasedn++.

ASSOCHAM President Mr Sunil Kanoria said n++Devious ingenuity of the human brain is now leveraging technology to indulge in more sophisticated methods of crimes which are very much capable of creating systemic instabilityn++.

Ms Vidya Rajarao, Partner, Grant Thornton India said, the initiative to stop frauds must come from the top. n++The responsibility of preventing, detecting and investigating corporate and financial frauds rests squarely on Board of Directors and this requires board members to adopt preventive steps. Also the BoD and the top management should jointly agree and define their anti-fraud strategy, establish appropriate fraud mitigation steps and train their employees to combat financial and corporate fraudsn++.

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M/o Tourism sanctions 25 projects worth Rs. 2048 Crore to 21 States and UTs sanctioned under Swadesh Darshan scheme
Jul 25,2016

Ministry of Tourism has sanctioned 25 projects under the Swadesh Darshan scheme worth Rs. 2048 Crore so far to 21 States and Union Territories since its launch of in January 2015. These States and UTs include Jammu and Kashmir, Uttarakhand, Rajasthan, Maharashtra, Kerala, Puducherry, Andhra Pradesh, Telangana, Madhya Pradesh, Chattisgarh, Bihar, West Bengal, Sikkim, Assam, Meghalaya, Mizoram, Arunachal Pradesh, Nagaland, Manipur and Tripura.

(a) For North Eastern States, the Ministry has sanctioned 9 projects worth Rs. 821 Crores covering all the 8 states.

(b) For Tribal areas, the Ministry has sanctioned 3 projects for Rs. 282 Crores to the SG of Nagaland, Chhattisgarh and Telangana.

(c) For Buddhist Circuit, the Ministry has sanctioned 2 projects worth Rs. 108.11 Crore to the SG of Bihar and Madhya Pradesh.

The Ministry of Tourism has launched the Swadesh Darshan Scheme in 2014-15 with an objective to develop theme based tourist circuits in the country on the principles of high tourist value, competitiveness and sustainability in an integrated manner by synergizing efforts to focus on needs and concerns of all stakeholders to enrich tourist experience and enhance employment opportunities. Under this scheme, 13 Thematic Circuits have been identified, for development namely: North-East India Circuit, Buddhist Circuit, Himalayan Circuit, Coastal Circuit, Krishna Circuit, Desert Circuit, Tribal Circuit, Eco Circuit, Wildlife Circuit, Rural Circuit, Spiritual Circuit, Ramayana Circuit and Heritage Circuit.

The aim of the scheme are:

n++ To position tourism as a major engine of economic growth and job creation;

n++ To promote India as a global brand and a world class tourist destination;

n++ To develop world class infrastructure in varied thematic circuits and pilgrimage sites;

n++ To showcase full potential of wide range of unique products;

n++ To provide complete tourism experience by enhancing tourist attractions;

n++ Responsible Tourism Initiative- active involvement of local communities , pro-poor approach in a sustainable and inclusive manner.

The work on all sanctioned projects during 2014-15 & 2016-17 has started and Ministry is monitoring the work rigorously. List of Updated Sanctioned projects are as follows :

(Amt. in Rs.crore)

Sr. NoCircuitStateName of ProjectYearSanction Amt.Release Amt.

1.n++n++n++n++n++ n++

CoastalAndhra PradeshDevelopment ofn++ Kakinada-Hope Island- Konaseema as World class Coastal & Eco Tourism Circuit in Andhra Pradesh2014-1569.8313.96

2.n++n++n++n++n++ n++

North East IndiaArunachal PradeshDevelopment of Bhalukpong- Bomdila-Tawang in Arunachal Pradesh2014-1549.7710.00

3.n++n++n++n++n++ n++

Buddhist BiharConstruction of Cultural Centre atn++ Bodhgaya, Bihar2014-1533.176.63

4.n++n++n++n++n++ n++

North EastManipurDevelopment of Tourist Circuit in Manipur: Imphal-Moirang-Khongjom-Moreh2015-1689.6617.93

5.n++n++n++n++n++ n++

North EastSikkimDevelopment of Touristn++ Circuit linking - Rangpon++n++n++n++ (entry) - Rorathang -n++ Aritar -n++ Phadamchen - Nathang - Sherathang - Tsongmo - Gangtok - Phodong - Mangan - Lachungn++ - Yumthang - Lachen - Thangu -n++n++ Gurudongmer - Mangan - Gangtok - Tumin Lingee - Singtam (exit) in Sikkim2015-1698.0519.61

6.n++n++n++n++n++ n++

Eco UttarakhandIntegrated Development of Eco-Tourism, Adventure Sports, Associated Tourism related Infrastructure for Development of Tehri Lake & Surroundings as New Destination-District Tehri, Uttarakhand2015-1680.3716.07

7.n++n++n++n++n++ n++

Coastal Andhra PradeshDevelopment of Coastal Tourism Circuit in Sri Potti Sriramalu Nellore in Andhra Pradesh2015-1660.3812.08

8.n++n++n++n++n++ n++

North East IndiaArunachal PradeshIntegrated Development of Adventure Tourism in Arunachal Pradesh2015-1697.1419.43

9.n++n++n++n++n++ n++

Eco KeralaDevelopment ofn++ Pathanamthitta - Gavi - Vagamon - Thekkadyn++ as Eco Tourism Circuit in Idduki and Pathanamthitta Districts in Kerala2015-1699.2219.8410Desert RajasthanDevelopment of Sambhar Lake Town and Other Destinations under Desert Circuit in Swadesh Darshan Scheme2015-1663.9612.7911Tribal NagalandDevelopment of Tribal Circuit Peren -Kohima-Wokha, Nagaland2015-1697.3619.4712Eco TelanganaIntegrated Development of Eco Tourism Circuit in Mahaboobnagar district, Telangana2015-1691.6218.3213

Sports ministry recommends finance ministry for considering Sports Infrastructure: Secretary, Sports
Jul 25,2016

Sports ministry has proposed the ministry of finance for considering Sports Infrastructure as a concessional finance, said Secretary, Department of Sports, Mr. Rajiv Yadav at an ASSOCHAM event.

n++We have proposed the ministry of Finance for considering sports infrastructure as a concessional finance and I am happy to announce you that finance ministry principals are agreed for this and now putting up the definition in consultation with Reserve Bank of India (RBI) defining as sports infrastructuren++, said Secretary, Department of Sports, Mr. Rajiv Yadav while inaugurating a national summit on Olympics & Role of Corporate India, organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Minister of State for Youth Affairs & Sports, Mr Vijay Goel said at an ASSOCHAM event that we want to create a fever of Olympics in the country and we will be organising a Run for Rio event from India Gate. Thousands of people will join the run to give their support to the Olympic athletes.

n++A big screen will be placed below the flag at the central park along with an exhibition in which there will be posters and cutouts of Olympians like Vijender Singh and othersn++, said Mr. Goel.

The International Hockey federation has changed the specification for hockey just about a year back. This year, we managed to provide and able to trained our athletes on same surface which is to be played in Rio, said Mr. Yadav.

This time we have tried to get very professional mental trainers at the same time, most of the sportsperson are non-urban people keeping that in mind we have allowed their own close family members like father, mother, husband who have been their coach or mental trainer. My classic examples in this Tennis star Sania Mirzas mother, said Mr Yadav.

As far as performance of the team is concerned a lot depends on individual sports person and the slight luck factor also, said Mr Yadav.

This time the sports ministry have allowed the athletes to reach much in advance to acclimatize, to practice there and be ready for the show. The classic case in case of sports which is require lot of concentration like Archery and Shooting . We have allowed our teams to go much in advance. The Archery team is already in Rio and they are already in that environment, added the secretary.

In the department, we have set up a National Sports Development Fund, the unique feature of this fund is whatever contribution you make to it, the equal amount will be contributed by the government of India. So, your contribution become double and you can also specify the field of activities in which you want to invest that money. I request all of you to join hands with us in this effort, whatever you contribute, will also contribute the equal amount, added the sports secretary.

Mr Vijender Singh, Olympian Champion 2016, WBO, Asia Pacific Super Middleweight also stressed for the need for playground for children and emphasised the corporate to take an initiative in this regard.

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Telecom firms seek clarity on GST on value added services: ASSOCHAM
Jul 25,2016

As prospects for passage of the Goods and Services Tax Bill in Parliament improve, the telecom industry has impressed upon the government to come out with a clear cut position with regard to levy of taxes on Value Added Services (VAS) even as the firms across the entire value chain look forward to a smooth transition to much awaited GST, an ASSOCHAM-KPMG Paper has said.

n++Given the broad framework of GST, it is expected that even under the proposed GST regime, the telecom service providers may face significant challenges. For the first time, both the Centre and State governments will have powers to tax services n++The proposed GST law should support the governments overall initiative of ease of doing business and offer a simplified tax regime to telecom service providers,n++ the paper pointed out.

Certain VAS such as ring tones are regarded as entertainment under certain states entertainment tax laws and are therefore subject to taxation. n++Since the service tax is also liable on the revenue generated from rendering such services, there is a dual levy in the form of service tax and entertainment taxn++.

ASSOCHAM Secretary General Mr D S Rawat said the government should clarify the applicable tax on such value added services. This would help move the industry move seamlessly to the GST, adding to the dynamic growth of the sector.

The KPMG, in its note said, the n++growth of the sector is highly dependent on a forward looking policy and regulatory environment that fosters investment, innovation and productivity. However, the industry is grappling with a number of challenges around complexity in policy, regulatory and taxation framework that impacts implantation of well-intentioned ideasn++.

The paper said the GST law should provide clear and comprehensive provisions with respect to coverage of telecom services for providing clarity of levy of taxes on VAS, infrastructure sharing and e-commerce transactions, since these transactions could have different treatment under GST.

Besides, the joint ASSOCHAM-KPMG Paper said, clear and specific place of supply rules should be notified for telecom services, specifically for pre-paid services, B2B transactions, B2C transactions, mobile wallet, VAS etc. n++This will help determine the State in which telecom services would be deemed to have been provided.

Moreover, there should be simplification of overall tax procedures such as a single unified registration for all the states, sharing of tax revenue from telecom service among central and state government without involvement of operators.

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States Asked To Consider Pricing Policy To Cap Prices Of Essential Commodities
Jul 25,2016

In order to ensure adequate availability of pulses, edible oils and other essential food items at reasonable prices, the Center has urged the States to remove all local taxes on essential food items. In a letter written to Chief Secretaries of the States, Shri Hem Pande, Secretary Union Department of Consumer Affairs has asked the states to take up the market intervention on a real time basis and to review APMC Acts on priority to delist pulses and other essential food items so that farmers can sell their produce at any place of their choice, minimizing stages of supply chain from farm gate to ultimate consumers. It will ensure reasonable prices for consumers and also fetch better prices for farmers. The Consumer Affairs Secretary has invited Statess attention towards the action plan adopted for this purpose in the States Food Ministers meeting held in May this year.

States have also been requested to consider a pricing policy for pulses and such other essential food items under Section 3(2) (c) of the EC Act and to make it enforceable for all the stake holders to cap the prices of essential commodities.

The Secretary has also asked the States to implement the Price Stabilization Fund Scheme for market intervention to enhance availability and check prices of essential. For successful functioning of the Scheme, adequate and timely lifting of pulses from buffer stock is a pre-requisite besides strengthening storage facilities for pulses, vegetables edible oils seeds, Onions, he has said

States have also been requested to keep a close watch on hoarding and black marketing of essential commodities in view of coming festival season. Besides regular raids, strict action should be taken against the habitual violators and speculators under the EC Act and PBMMSEC Act which provides for preventive detention up to 6 months. States may also consider creation of a dedicated Force under the EC Act, on the lines of Tamil Nadu Civil Supplies Crime Investigation Department, for effective operations against hoarders, blackmarketeers, profiteers and unscrupulous traders/speculators of essential commodities.

States have been asked to create a robust Information Management System of prices, production, availability, unscrupulous trading, hoarding, black marketing and to strengthen the Price Monitoring Cells to have the ground zero information available on daily basis and sharing it with all the enforcement agencies of Union and state Governments. A monthly report on enforcement actions under the EC Act & Prevention of Black Marketing & Maintenance of Supplies of Essential Commodities Act is mandatory to ensure regular review of the same at highest level and to make public the Action Taken Report of States regularly on the website of Department of Consumer affairs.

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18 Districts of MP to become ODF in FY16-17
Jul 23,2016

The State of Madhya Pradesh today declared that 18 districts of the State, taken up by the Ministry of Drinking Water and Sanitation, will become Open Defecation Free (ODF) by March 2017.

The declaration was made during a State visit by the Secretary, Ministry of Drinking Water and Sanitation, Shri Parameswaran Iyer. During the visit, the Secretary held meetings with the Chief Minister of Madhya Pradesh, Shri Shivraj Singh Chouhan, and the Chief Secretary of Madhya Pradesh. The Swachh Bharat Mission and the National Rural Drinking Water Programme rollout in the State was discussed during the meetings.

The Secretary also made two village field visits and said that the State was doing extremely well on both programmes of the Government of India.

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Land allotment for four industrial cities in DMIC to begin from October: Alkesh Sharma
Jul 23,2016

The Centre will start allocating land in all the four industrial cities being implemented under the Delhi-Mumbai Industrial Corridor (DMIC) project from October this year, a top government official said at an ASSOCHAM event.

n++Land allotment for industries will begin in October this year for anyone who wants to put up an industry, we are looking at anchor investors, we are looking for some big industries to come up but we are open to all industries,n++ said Mr Alkesh Kumar Sharma, chief executive officer (CEO) and managing director (MD), DMIC Corporation Limited said while inaugurating an ASSOCHAM International Summit on DMIC-Hub for investors.

The four industrial cities that are being implemented under DMIC project include - in Dholera Special Investment Region (Gujarat), Shendra Bidkin Industrial Park & Dighi Port Industrial Area (Maharashtra), Integrated Industrial Township (Greater Noida-Uttar Pradesh) and Vikram Udyogpuri (Ujjain-Madhya Pradesh).

n++The land pricing and disposal policies have already been finalised in Gujarat, it will be finalised in a weeks time in Maharashtra and we will also be finalising it in Greater Noida and in Ujjain within this month so that by September-October we can start allotting land,n++ said Mr Sharma.

He informed that DMICDC had already developed a detailed land use plan and that it will soon come up with a mechanism whereby one can apply online and the land shall be allotted.

n++You can identify a plot on the Google maps, fill in and you will see complete details of the plot that this plot is for industrial purpose, the size of the plot is 20 acres and this is the type of industry you can set up,n++ he said.

n++We do not have any issue on land as all the land which we have in these cities are free from litigation,n++ further said Mr Sharma.

He also informed that government was looking at alternate ways of generating energy considering the current power and gas scenario.

The DMICDC CEO said that the type of industries that have been identified for these industrial cities are the ones that are not highly polluting unlike chemical factories and others.

He also said that all environment clearances had been obtained from the union Ministry of Environment and Forests for all the projects. We have taken all the sustainability parameters that are best in the world in terms of both social and economic issues.n++

He said that DMICDC would be following the best global practices be it transportation, power and water supply, water conservation, sewage treatment and others.

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Fitch Affirms India at BBB-; Outlook Stable
Jul 23,2016

Fitch Ratings has affirmed Indias Long-Term Foreign- and Local-Currency Issuer Default Ratings at BBB-. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at BBB- and the Short-Term Foreign-Currency IDR at F3.

KEY RATING DRIVERS

The affirmation of Indias sovereign ratings balances a strong medium-term growth outlook and favourable external balances against a weak fiscal position and still-difficult business environment. However, the latter is likely to gradually improve with implementation and continued broadening of the governments structural reform agenda.

India exhibits one of the highest real GDP growth rates in the sovereigns space. Its five-year average growth is among the 10 highest of all rated sovereigns and the 7.6% real GDP growth in the financial year ended 31 March 2016 (FY16) exceeds the BBB category median of 3.3%. Fitch forecasts real GDP growth to slightly accelerate to 7.7% in FY17 and 7.9% in FY18, resulting from an expected pick-up in consumption in both urban and rural areas after a civil-servant wage hike of 24% and the strong likelihood of stronger rainfall than in the previous two poor monsoon years. Policy rate cuts of 150bp in total since January 2015 may also contribute to growth, even though weak bank balance sheets continue to impair monetary transmission. At the same time, weak private investment indicates that the economy is still not firing on all cylinders.

Fitch also expects the governments continued structural reform push to support GDP growth in the medium term. Passage of the new Bankruptcy Code in both houses of parliament in May 2016 showed that big-ticket reforms are possible in India, even though the governments proposal for a Goods and Services Tax has thus far not passed in the Upper House (Rajya Sabha). Those reforms that only require executive approval continue to be rolled out and some legislative reforms are being pursued at the state level. A resulting improvement in the business environment is also indicated by swelling foreign direct investment inflows, although India still ranks lowest among sovereigns in the BBB category in the World Banks Ease of Doing Business index, and this is not likely to change anytime soon.

Inflation has substantially come down in the past two years, even though it started to pick up again in recent months to 5.8% in June 2016 on the back of food price pressures. Fitch expects inflation to remain below the five-year average of 7.8%, which is high compared with the BBB median of 3.3%, given the change to an inflation targeting framework in February 2015. To what extent the new monetary framework will represent a true regime shift will become clearer in the period ahead, when a new Reserve Bank of India governor will take over from Raghuram Rajan, the Monetary Policy Committee will be established and perhaps more clarity will exist on the life span of the current inflation target (4% +/- 2pp).

Weak fiscal balances, Indias Achilles heel for years, continue to constrain its ratings. The central governments consolidation efforts, illustrated by meeting its deficit target of 3.9% for FY16 and sticking to its 3.5% target for FY17, strengthen its fiscal credibility. The government continues to face a difficult trade-off between its desire to crowd-in private investment by spurring public capex and to further consolidate, especially since a public wage increase of 24% has recently been approved. The review of the Fiscal Responsibility and Budget Management Act leads to short-term uncertainty on the medium-term fiscal framework, but might also provide an opportunity if it brings the fiscal parameters closer in line with Indias peers. This was happening in the years until FY08, just before the Global Financial Crisis. Fitch expects general government debt to reach 69.4% of GDP in FY17 and the general government deficit to slightly fall to 6.8% of GDP, which compares unfavourable with BBB peer medians of 40.6% and 2.6% respectively.

The banking sectors non-performing loans (NPLs) rose to 7.6% of total assets in FY16 from 4.6% in FY15, mainly resulting from stricter implementation of standards. The NPLs are most prevalent in public-sector banks, highlighting significant sovereign contingent liabilities. It is not clear if the governments budgeted IDR700bn capital injection into banks between FY16 and FY19 will be sufficient. Fitch estimates the banking system needs around USD90bn (INR6trn, or 4% of GDP in FY17) of capital, while many public-sector banks are likely to find it difficult to access new capital from non-government sources.

Indias relatively strong external balances make the country less vulnerable to external shocks than many of its peers. The foreign reserves buffer is solid at 8.3 months of current external payments, while gross and net external debt levels also compare well. A narrower current account and a pick-up in FDI caused Indias basic balance to turn positive in FY16. India is not immune to emerging-market turmoil, but should generally be able to weather such jitters relatively well. India is less vulnerable to a severe slowdown scenario in China, as Indias exports to China comprise only 3.5% of total exports and its more domestically based economy is not part of the Asian supply chain. The medium-term Brexit impact on the real economy seems limited given that Indias exports to both the UK and the rest of the EU have fallen to 3.4% and 13.6% respectively of total exports.

The Indian economy is less developed on a number of metrics than many of its peers. Average per capita GDP remains low at USD1,647 compared with the BBB range median of USD9,358, while Indias ranking on the United Nations Human Development Index indicates relatively low basic human development. Governance also continues to be weak, as illustrated by a low score for the World Bank governance indicator (41th percentile versus the BBB median of 57nd percentile) and Transparency Internationals corruption index (76th of 168). Nonetheless, press reports seem to suggest that high-level scams are less prevalent than in the past.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)

Fitchs proprietary SRM assigns India a score equivalent to a rating of BBB- on the Long-Term Foreign-Currency IDR scale. Fitchs sovereign rating committee did not adjust the output from the SRM to arrive at the final Long-Term Foreign-Currency IDR.

Fitchs SRM is the agencys proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign-Currency IDR. Fitchs QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

RATING SENSITIVITIES

The Stable Outlook reflects Fitchs view that upside and downside risks to the ratings are balanced. 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 fundin

Kharif Crop Sowing Crosses 692 Lakh Hectare Area
Jul 23,2016

The total sown area as on 22nd July, 2016 as per reports received from States, stands at 692.98 lakh hectare as compared to 671.01 lakh hectare at this time last year.

It is reported that rice has been sown/transplanted in 183.06 lakh ha, pulses in 90.17 lakh ha, coarse cereals in 130.80 lakh ha, oilseeds in 149.16 lakh ha, sugarcane in 45.41 lakh hectare and cotton in 86.86 lakh ha.

The details of the area covered so far and that covered during this time last year are given below:

Lakh hectare 

CropArea sown in 2016-17Area sown in 2015-16Rice183.06182.38Pulses90.1764.69Coarse Cereals130.80126.27Oilseeds149.16143.03Sugarcane45.4147.40Jute & Mesta7.527.71Cotton86.8699.52Total692.98671.01

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In 2016-17, 423 ICAR-KVKs will demonstrate improved varieties, crop production, protection technologies of oilseeds
Jul 23,2016

During 2015-16, a total of 299 ICAR-KVKs were engaged for cluster demonstration on oilseeds. In 2016-17, 423 ICAR-KVKs will demonstrate improved varieties, crop production, protection technologies of oilseeds.

In order to enhance the production and productivity of pulses and oilseeds, Government of India is implementing schemes like National Food Security Mission-Pulses (NFSM) from 2007-08 and National Mission on Oilseeds and Oil Palm (NMOOP) from 2014-15 in the country.

Under NFSM-Pulses and NMOOP financial assistance are provided to farmers through State Government for various interventions like:

n++ Production and distribution of quality seeds of new varieties

n++ Demonstration of improved technologies

n++ Distribution of bio-pesticides, weedicides, micronutrients, gypsum, lime, bio-fertilizer

n++ Farm machinery & implements

n++ Water carrying pipes, drip, sprinkler

n++ Capacity building of farmers.

Besides, minikits of pulses and oilseeds are distributed to the farmers free of cost mainly to introduce new varieties through State Government and Central seed agencies.

Under NFSM few new initiatives have been taken up for increasing production and productivity of pulses during 2016-17.

n++ 93 Seed Hubs have been created through ICAR, State Agricultural Universities and Krishi Vigyan Kendras for ensuring the availability of new variety seeds.

n++ 15% of the allocation of pulses under NFSM is earmarked for production of quality seeds through State Government.

n++ To increase the availability of breeder seed of pulses, ICAR Institute and State Agricultural universities have been supported.

Apart from NFSM and NMOOP, under Sub-Mission on Seeds and Planting Material (SMSP) of National Mission of Agricultural Extension and Technology (NMAET) a component namely n++Seed Village Programmen++ is in operation to upgrade the quality of farm saved seed. Similarly under the component n++certified seed production of pulses, oilseeds through seed villagen++ financial assistance is available for distribution of foundation/certified seeds of pulses and for production of certified seeds of oilseeds.

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New application process to fast track the allotment of PAN and TAN
Jul 23,2016

For fast tracking the allotment of PAN and TAN to company applicants, Digital Signature Certificate(DSC) based application procedure has been introduced on the portals of PAN service providers M/s NSDL eGov and M/s UTIITSL. Under the new process PAN and TAN will be allotted within one day after completion of valid on-line application.

Similarly, a new Aadhaar e-Signature based application process for Individual PAN applicants has been made available on the portals of PAN service providers M/s NSDL eGov.

Introduction of Aadhaar based e-Signature through M/s NSDL eGov in PAN application not only ensures paperless hassle free PAN application process but also seeding of Aadhaar in PAN which will curb the problem of duplicate PAN to a great extent.

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Fitch: India Bank Capital Injection a Positive, Pressures Remain
Jul 23,2016

Indias decision - announced on 19 July 2016 - to inject INR229bn (USD3.4bn) of capital into 13 public sector banks, including Punjab National Bank, State Bank of India and Bank of India, is supportive of the credit profiles of these lenders, says Fitch Ratings. That said, this step - on its own - is unlikely to address the pressures on the system driven by economic growth in light of the significant asset quality pressures and weak profitability prospects of these banks. Fitch estimates Indian banks will need USD90bn in total additional capital - most of which will be accounted for by the public banks - to meet Basel III requirements by 2019.

The 19 July capital plan frontloads a significant part of the INR250bn (USD3.7bn) in fresh equity capital that had been budgeted by the government for public sector banks this fiscal year (ending 31 March 2017). Banks other than the 13 in the announcement will need to source additional capital.

Fitch believes pressures on public bank credit profiles will remain, and more capital than the INR700bn (USD10.4bn) earmarked through to FYE19 will be needed from the government to restore market confidence and position the sector for long-term growth. Losses at public-sector banks in the second half of the fiscal year ending March 2016 were double the governments capital injection in FY16, and eroded the equivalent of nearly 15% of end-FY15 capital. This caused loan-book contraction at many public banks, which brought sector-wide credit growth to below 10% in FYE16, the lowest increase in a decade.

Earlier this month, Fitch revised the sector outlook for Indian banks to negative from stable in part due to the rapid accumulation of stressed assets that have outpaced capital replenishment. The negative outlook indicates that bank credit profiles will remain under pressure unless addressed through significant capital injections. Fitch maintains that, while NPLs are near a peak, asset quality could deteriorate further through the next 18 months, exacerbated by public sector banks exposure to stressed sectors, the challenging resolution process for stressed assets and delayed recognition of problem loans by banks.

Weak earnings linked to low loan growth and high credit costs will add to these challenges, and continue to make it difficult for public sector banks to access additional capital from sources other than the government. Challenges with market access could add to the risks that the government will need to be the main source of new equity capital to these banks. The market currently values almost all of the listed public banks at well below book value. Without improved market access or further additional capital from the government, pressures on public banks viability ratings will remain, and continue to act as a key driver for Fitchs sector outlook.

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Changes In Tatkal Booking System and Waitlist System in Indian Railways
Jul 23,2016

Following changes have been made in recent past, in Tatkal scheme & waiting list system in general reservation:-

(i) With effect from 15 June 2015, timings of booking of Tatkal accommodation in Air-conditioned and non-Air-conditioned classes were staggered to 1000 hours and 1100 hours respectively on the previous day of journey from train originating station.

(ii) With effect from 25.12.2015, minimum and maximum Tatkal charges were revised.

(iii) Instructions have been issued to Zonal Railways to fix Tatkal quota upto a maximum of 30% of capacity of coach depending on the utilization of this quota during the last six month period. Instructions have also been issued to review this quota preferably twice a year.

(iv) With effect from 07 October 2015, the ratio of updation of Tatkal waiting list against cancellation of confirmed general accommodation, which was earlier 1:1, has been revised to 1 (General) : 2 (Tatkal).

(v) For waiting list limit in general reservation, although no change has been made in current waiting list limit, instructions have been issued to zonal Railways to define adequate waiting list limit so that no inconvenience is caused to the passengers in obtaining waiting list tickets against Pooled quota and remote quota.

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Fitch: India Homebuilders With UK Assets Face Brexit Risks
Jul 23,2016

Indian homebuilders with significant investments in the London property market will face near-term challenges from Britains vote to leave the EU on June 23, says Fitch Ratings. Demand for luxury residential properties and commercial properties - the segments some Indian homebuilders have invested in - may remain weak at least over the coming six to 12 months as buyers postpone purchases and banks trim loans amid increased economic uncertainty.

Asking prices of Londons luxury residential properties have fallen by 5%-20% over the last few weeks by some market estimates. This is in spite of the British pound trading at all-time lows against the US dollar - foreign investors make up a considerable part of the demand for Londons luxury residential properties. However over the longer term, these risks may be moderated by the tight supply of new residential developments, particularly in Central London, owing to challenges in securing regulatory approvals on new projects.

Commercial property demand has also weakened, and in some instances, prompted investors to exit commercial property-focused investment funds. This has led to some funds freezing withdrawals to enable a more orderly closure, while others have offered withdrawals at steep discounts to the net asset value to reflect the potential impact of having to sell assets quickly. Furthermore many foreign and domestic banks have also cut credit exposure to London property investors by reducing loan-to-value ratios or freezing new loans altogether.

The risk to Indian homebuilders will depend on the extent leverage was used to fund their London projects, and whether project construction and marketing sales coincide with the ongoing market volatility. Homebuilders may choose to defer marketing launches until investor sentiment improves, cut prices to spur higher sales, or sell equity stakes in the projects to reduce leverage.

Indiabulls Real Estate Limited (IBREL, B+/Stable) and Lodha Developers (Lodha, B/Negative) have significant exposure to the luxury residential and commercial property segments in London. Both companies made sizeable investments in Londons Mayfair and suburbs in 2013 and 2014. Of the two, IBREL is less exposed to demand volatility in the next six to 12 months because it only expects to start developing its properties in 2017. Lodha could be more exposed to near-term property-market turbulence because it has already launched the smaller of its two investments.

Lodhas rating already factors in the uncertainty around presales in its projects, both at home and overseas, as well as our view that near-term operating cash flows may not be sufficient to reduce its high leverage. IBRELs rating factors in its demonstrated ability to reduce leverage over the last 12 months, as well as the modest improvement in sales momentum in its key domestic property projects.

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