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Ind-Ra: GST Transition to Disrupt Working Capital Cycle of India Inc; Easy System Liquidity Essential
May 23,2017

The transition to GST will disrupt the working capital cycle of businesses in the initial phase and thus easy liquidity in the system is essential for two to four months, says India Ratings and Research (Ind-Ra). The agency believes that in order to minimise the magnitude of such disruption at the earliest, and to absorb the sudden changes in requirement of short term finance, easy system liquidity is necessary. Ind-Ra studied a sample set of 11,000 corporates and estimates that the input credit lock up for this sample could be around INR 1 trillion of which about INR500 billion could be blocked for about two months which may result in higher short term working capital requirement for businesses in the near term.

Ind-Ras sample set of corporates showed that the task is humongous and can be gauged by the size of closing inventory of around INR11.2 trillion as at FY16, which are at various stages of production process and includes other inventory procured at various dates from different sources including CST, VAT and exempt purchases. The average excise duty of the sample set works out to around 5.5%. Further assuming that 25% of the over-all inventory is procured locally and is subject to an average VAT rate of 14%, the over-all input credit lock up will be around INR1 trillion for this sample and would be higher on an over-all basis. Even if 50% of this is not available for set-off during the transition phase, it would result in blockage of INR500 billion of input credit for about two months (although may not necessarily be used during the first two months). Moreover, service tax rates are likely to increase by a flat 3% to 18% as against 15%. These factors may put stress on the short term working capital requirement for businesses.

Ind-Ra believes that even if businesses are able to achieve this seemingly mammoth task and the amounts are credited to the electronic ledger on a provisional basis, it will be subject to variations in the near term as there could be litigations on eligibility and availability under the existing laws and under the GST regime which may lead to disruption of working capital for businesses. The impact on individual companies could however vary widely and Ind-Ras study suggests that around 85% of the blocked input credit will be with companies with greater than INR5 billion revenues. Ind-Ra believes larger companies whose credit profiles are relatively stronger will tide over the short term working capital disruption relatively easily as compared to the ones which have weaker credit profiles.

Focusing on the liquidity conditions, the system liquidity remained abundant- reflected in the liquidity adjustment facility (LAF) provided by Reserve Bank of India (RBI). On an average in May 2017 banks are parking over INR3 trillion (3% of net demand and time liabilities) under the LAF window, comparted to above INR5 trillion in March 2017. Currently, the high liquidity situation is owing to the lower amount of currency in circulation and a surge in foreign portfolio investments (FPI). The currency in circulation has now restored to INR14.5 trillion, compared to INR18 trillion, prior to November 2016. Additionally, net FPI investment in equity and debt has crossed INR1 trillion since the starting of 2017, an exogenous money creation.

The sloshing system liquidity has become a cause for concern, as it impacts the monetary policy objective and practices. The objective of monetary policy is to keep the overnight rate (O/N) and the shortest end of the yield curve anchored to policy rate (i.e. repo rate). During the months of March -April 2017, O/N rates were substantially lower than the policy rates and similarly short term yields were below the policy rate. To tackle such anomalies the RBI in its April 2017 monetary policy spelt out a detailed course of actions. And in line with the monetary policy communication, RBI has sterilised INR1 trillion of liquidity through Treasury bills (T- Bills) under the market stabilisation scheme. As a result, the O/N rates and short term rates have now realigned to RBIs objective, i.e. anchored to repo rates.

The ongoing dilemma is now, how RBI will tackle this sloshing liquidity surplus, or whether it is even necessary to sterilise such liquidity. Ind-Ra believes that such liquidity surplus need not be sterilised. The RBIs objective is to keep O/N rates close to policy rate, where liquidity is one of the tools. After issuances of T-Bills under the market stabilisation scheme at higher yield, overnight rates have now recalibrated to policy rate. And as more importantly, as per Ind-Ras prognosis the system liquidity should be at ease during the transition phase of GST. Thus in order to minimise the magnitude of such disruption at the earliest and to absorb the sudden changes in requirement of short term finance, easy system liquidity is necessary. However some fine tuning will be needed to maintain O/N rates closer to policy rates.

Thus Ind-Ra believes the changes of both fund flow and cash flow cycle may cause abrupt volatility in the working capital requirements during the initial phase of GST transition. The actual manifestation is expected to be visible in the volatility of system liquidity and short term rates. To tackle such a disruption with ease and so as to ring-fence short term fiancn++ market from a market failure, the easy financing option is critical. Thus an easy system level liquidity is essential to pursue these objectives. Since the overall credit offtakes is low and banking system liquidity is at its high level, banks will also be in a position to tackle any unanticipated volatility in fund requirements.

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Reserve Bank of India Outlines the action plan to implement the Banking Regulation (Amendment) Ordinance, 2017
May 23,2017

The Reserve Bank of India has outlined the steps taken and those on the anvil post the promulgation of the Banking Regulation (Amendment) Ordinance, 2017.

The amendments to the BR Act 1949, introduced through the Ordinance, and the notification issued thereafter by the Central Government empower RBI to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). It also enables the Reserve Bank to issue directions with respect to stressed assets and specify one or more authorities or committees with such members as the Bank may appoint or approve for appointment to advise banking companies on resolution of stressed assets.

Immediately upon the promulgation of the Ordinance, the Reserve Bank issued a directive bringing the following changes to the existing regulations on dealing with stressed assets:

i. It was clarified that a corrective action plan could include flexible restructuring, SDR and S4A.

ii. With a view to facilitating decision making in the JLF, consent required for approval of a proposal was changed to 60 percent by value instead of 75 percent earlier, while keeping that by number at 50 percent.

iii. Banks who were in the minority on the proposal approved by the JLF are required to either exit by complying with the substitution rules within the stipulated time or adhere to the decision of the JLF

iv. Participating banks have been mandated to implement the decision of JLF without any additional conditionality.

v. The Boards of banks were advised to empower their executives to implement JLF decisions without further reference to them.

It was made clear to the banks that non-adherence would invite enforcement actions.

Currently, the Oversight Committee (OC) comprises of two Members. It has been constituted by the IBA in consultation with RBI. It has been decided to reconstitute the OC under the aegis of the Reserve Bank and also enlarge it to include more Members so that the OC can constitute requisite benches to deal with the volume of cases referred to it. While the current Members will continue in the reconstituted OC, names of a few more will be announced soon. The Reserve Bank is planning to expand the scope of cases to be referred to the OC beyond those under S4A as required currently.

The Reserve Bank is working on a framework to facilitate an objective and consistent decision making process with regard to cases that may be determined for reference for resolution under the IBC. Reserve Bank has already sought information on the current status of the large stressed assets from the banks. The RBI would also be constituting a Committee comprised majorly of its independent Board Members to advise it in this matter.

The current guidelines on restructuring are under examination for such modifications as may be necessary to resolve the large stressed assets in the banking system in a value optimising manner. The Reserve Bank envisages an important role for the credit rating agencies in the scheme of things and, with a view to preventing rating-shopping or any conflict of interest, is exploring the feasibility of rating assignments being determined by the Reserve Bank itself and paid for from a fund to be created out of contribution from the banks and the Reserve Bank.

The Reserve Bank notes that the proper exercise of the enhanced empowerment would require coordination with and cooperation from several stakeholders including banks, ARCs, rating agencies, IBBI and PE firms, to which end the Reserve Bank would be holding meetings in the near future with these stakeholders.

The Reserve Bank will issue further updates as may be deemed necessary at an appropriate time.

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GST will lead to lower tax burden in packaged cement, Medicaments, Smart phones, and medical devices, including surgical instruments
May 23,2017

The roll out of Goods and Services (GST) Tax will bring benefits to the consumers due to reduced tax rates on various commodities such as packaged cement, medicaments, smart phones, and medical devices, etc.

Packaged cement attracts central excise duty of 12.5% + Rs.125 PMT and standard VAT rate of 14.5%. At these rates, the present total tax incidence works out to more than 29%. If we include tax incidence on account of CST, octroi, entry tax, etc., the present total tax incidence would work out to more than 31%. As against this, the proposed GST rate for cement is 28%.

There will be lesser tax burden in case of Medicaments, including Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systemsalso. Medicaments, in general, attract 6% central excise duty and 5% VAT. Further, CST, octroi, entry tax, etc. are also applicable in general. At these rates, the present total tax incidence works out to more than 13%. As against this, the proposed GST rate on medicines, including ayurvedic medicines, is 12%.

Smart phone attracts 2% central excise duty [1% excise duty + 1% NCCD]. VAT rates vary from State to State from 5% to 15%. Weighted average VAT rate on smart phones works out to about 12%. Thus, the present total tax incidence on smart phones works out to more than 13.5%. As against this, the proposed GST rate for smart phones is 12%.

Similarly, medical devices, including surgical instruments, in general attract 6% central excise duty and 5% VAT. Along with CST, octroi, entry tax, etc., the present total tax incidence on them works out to more than 13%. As against this, the proposed rate under GST is 12%.

Puja samagri including havan samagri will be under the Nil category. However, exact formulation for the same is yet to be finalized.

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Foreign Exchange Earnings (in Rupee Terms) through Tourism in India in April 2017 rises by 27.8% y-o-y
May 23,2017

Ministry of Tourism estimates monthly Foreign Exchange Earnings (FEEs) through tourism in India, both in rupee and dollar terms. Based on the credit data of Travel Head from Balance of Payments of RBI.

The FEEs of 2016 and Jan-Mar 2017 (both in Rs. terms & $ billion) have undergone a revision due to adoption of final figure of Foreign Tourist Arrivals of 2016.

The highlights of the estimates of FEEs from tourism in India for April 2017 and Jan-Apr 2017 are as below:

Foreign Exchange Earnings (FEEs) through tourism (in Rs. terms)

n++ FEEs during the month of April 2017 were Rs.14,692 crore as compared to Rs. 11,495 crore in April 2016 and Rs. 10,091 crore in April 2015.

n++ The growth rate in FEEs in rupee terms in April 2017 over April 2016 was 27.8% compared to positive growth of 13.9% in April 2016 over April 2015.

n++ FEEs during the period January- April 2017 were Rs. 61,605 crore with a growth of 18.9%, as compared to the FEE of Rs. 51,812 crore with a growth of 15.2% in January- April 2016 over January- April, 2015.

Foreign Exchange Earnings (FEEs) through tourism (in US $ terms)

n++ FEEs in US$ terms during the month of April 2017 were US$ 2.278 billion as compared to FEEs of US$ 1.726 billion during the month of April 2016 and US$ 1.609 billion in April 2015.

n++ The growth rate in FEEs in US$ terms in April 2017 over April 2016 was 32.0% compared to a positive growth of 7.3% in April 2016 over April 2015.

n++ FEEs during the period January-April 2017 were US$ 9.275 billion with a growth of 20.5% as compared to the FEE of US$ 7.697 billion with a growth of 6.7% in January- April 2016 over January- April 2015.

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Lower Tax Incidence on Entertainment Services under Goods and Services (GST) Tax
May 23,2017

Taxes on entertainments and amusements (covered by the erstwhile entry 62 of State List of the Constitution) have been subsumed under Goods and Services Tax (GST) except to the extent of taxes on entertainments and amusements levied by a Panchayat or a Municipality.

The rate of GST approved by GST Council on services by way of admission to entertainment events or cinematography films in cinema theatres is 28%. However, the entertainment tax rates in respect of exhibition of cinematography films in theaters/cinema halls, currently levied by States are as high as 100% in some of the States.

The rate of entertainment tax on cable TV and Direct-To-Home (DTH) levied by States is in the range of 10%-30% in many States. Apart from this, Service tax is also leviable at the rate of 15%. As against this, the rate of GST approved by GST Council on these services is 18%.

The rate of GST approved by GST Council on access to circus, theatre, Indian classical dance including folk dance and drama is 18% ad valorem. Further, the GST Council has approved an exemption upto a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the States.

Thus, entertainment services shall suffer a lower tax incidence under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services. Presently, such service providers are not eligible to avail of input credits in respect of VAT paid on domestically procured capital goods & inputs or of Special Additional Duty (SAD) paid on imported capital goods and inputs. Thus, while GST is a value added tax, entertainment tax, presently levied by the States is like a turnover tax.

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Mineral Production was 9.7% higher for March 2017 compared with March 2016
May 23,2017

The index of mineral production of mining and quarrying sector for the month of March (new Series 2011-12=100) 2017 at 127.2, was 9.7% higher as compared to the level in the month of March 2016. The cumulative growth for the period April- March 2016-17 over the corresponding period of previous year has been (+) 5.3 percent.

The total value of mineral production (excluding atomic & minor minerals) in the country during March 2017 was Rs. 26350 crore. The contribution of Coal was the highest at Rs. 11658 crore (44%). Next in the order of importance were: Petroleum (crude) Rs. 5616 crore, Iron ore Rs. 2960 crore, Natural gas (utilized) Rs. 2214 crore, Lignite Rs. 996 crore and Limestone Rs. 639 crore. These six minerals together contributed about 91% of the total value of mineral production in March 2017.

Production level of important minerals in March 2017 were: Coal 770 lakh tonnes, Lignite 55 lakh tonnes, Natural gas (utilized) 2677 million cu. m., Petroleum (crude) 31 lakh tonnes, Bauxite 1875 thousand tonnes, Chromite 793 thousand tonnes, Copper conc. 13 thousand tonnes, Gold 127 kg., Iron ore 196 lakh tonnes, Lead conc. 31 thousand tonnes, Manganese ore 298 thousand tonnes, Zinc conc. 181 thousand tonnes, Apatite & Phosphorite 108 thousand tonnes, Limestone 304 lakh tonnes, Magnesite 17 thousand tonnes and Diamond 5026 carat.

The production of important minerals showing positive growth during March 2017 over March 2016 include: Chromite (85.4%), Zinc conc. (41.4%), Diamond (25.5%), Apatite & Phosphorite (17.0%), Manganese ore (12.3%), Iron ore (11.7%), Lead conc. (11.5%), Coal (10.9%), Natural gas (utilized) (9.9%), Limestone (4.2%) and Petroleum (crude) (0.9%). The production of other important minerals showing negative growth are: Magnesite [(-) 34.7%], Gold [(-) 13.6%], Copper conc. [(-) 6.5%], Lignite [(-) 4.2%] and Bauxite [(-) 4.0%].

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During Q4 of FY17, the Government issued dated securities worth Rs. 80,000 crore
May 23,2017

During Q4 of FY17, the Government issued dated securities worth Rs. 80,000 crore to complete its borrowings of Rs. 582,000 crore (RE) for FY 17. Gross and net market borrowings requirements of the Government for FY17 were revised lower to Rs 5,82,000 crore and Rs. 4,06,708 crore, which were lower by 0.52 per cent and 8.34, respectively, than Rs. 5,85,000 crore and Rs. 4,40,625 crore in FY16. Auctions of both, Government dated securities and Treasury Bills during Q4 of FY17 were held smoothly.

Since Apr-Jun (Q1) 2010-11, Public Debt Management Office (PDMC) (earlier Middle Office), Budget Division, Department of Economic Affairs, Ministry of Finance, is bringing out a quarterly report on debt management on regular basis. The current report pertains to the quarter Jan-March 2017 (Q4 FY 17).

In view of comfortable cash position of the Government, Rs. 30,982.787 crore was utilised to buy-back the securities from the market and borrowing from the market were also reduced by Rs. 18,000 crore during the quarter. The weighted average maturity (WAM) and weighted average yield (WAY) of the issuance made during Q4 FY17 was 15.01 years and 6.75 per cent respectively. The liquidity in the economy was in surplus, due to demonetization, during the quarter. The cash position of the Government during Q4 of FY17 was comfortable and remained in surplus mode.

The Public Debt (excluding liabilities under the Public Account) of the Central Government provisionally decreased by 1.9 per cent in Q4 of FY 17 on Q-o-Q basis. Internal debt constituted 92.6 per cent of Public Debt as at end-March 2017 while marketable securities accounted for 83.2 per cent of Public Debt. About 25.0 per cent of outstanding stock has a residual maturity of up to 5 years at end - March 2017, which implies that over the next five years, on an average, around 5.0 per cent of outstanding stock needs to be repaid every year. Thus, rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches during the quarter resulted in reduction of roll over risk.

G-sec yields were low across the curve at start of the quarter, post the Governments decision on November 8, 2016 to demonetize high denomination value notes which led to surge in bank deposits and the bullish market sentiment, particularly for short end bonds. The bullish market sentiment and low yield was however restrained as RBI in its bi-monthly policy review during early February changed the monetary policy stance from accommodative to neutral leading to hardening of interest rates in the market. Also on Feb 15, 2017, US Fed indicated that it may hike the rates soon as the economy was growing at a healthy pace which along with the presidential elections in USA also had a negative impact [due to protectionist view of the new Government] leading to hardening of the yields. As such during the quarter, the yields were at elevated levels from Mid-February onwards.

The trading volume of Government securities on an outright basis during Q4 FY 17 decreased by 39.32 per cent over the previous quarter.

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The Union Minister of Finance Shri Arun Jaitley says India-Africa together can shape the future of the world
May 23,2017

The Union Minister of Finance and Corporate Affairs Shri Arun Jailtey said that the African Development Banks (AfDB) Annual Meeting organized in India this year is a new chapter in India - Africa relationship. India-Africa together can shape the future of the world, he added.

Shri Jaitley said n++our commitment is reflected in high level engagement with Africa on a scale never seen before.n++ He further added that India-Africa partnership model is unique; the cornerstone is voluntary partnership without any imposition on partner and the partner is free to decide what is best for them.n++

Talking about the High 5 Agenda of the AfDB, the Finance Minister said that the High 5 Agenda is not different from Indian policy. n++If India is a bright spot, then Africa is not very far awayn++, he added.

Shri Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance called Africa a continent of immense opportunities and said that there are opportunities for India and Africa to revive global growth.

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CBDT signs 2 Unilateral APAs with Indian taxpayers taking the number of APAs signed in the current Financial Year to four
May 23,2017

The Central Board of Direct Taxes (CBDT) has entered into two Unilateral Advance Pricing Agreements (APA) on 04th May, 2017 and 11th May, 2017 respectively, with Indian taxpayers. One of the Agreements also has n++Rollbackn++ provision.

The two APAs signed pertain to chip design/development of embedded software and Information technology (software development) sectors of the economy. The number of APAs signed in the current financial year now is four. The CBDT expects more APAs to be signed in the near future. The progress of the APA Scheme strengthens the Governments commitment to foster a non-adversarial tax regime.

The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arms length price of international transactions in advance for the maximum of five future years. Further, the taxpayer has the option to roll-back the APA for four preceding years, as a result of which, total nine years of tax certainty is provided. Since its inception, the APA scheme has attracted tremendous interest among Multi National Enterprises (MNEs).

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Commissioning a Study on Common Risk Mitigation Mechanism for Solar Power Generation Projects in Solar Resource Rich Countries Under Aegis of ISA
May 20,2017

Argentina, Burkina-Faso, Chad, France, India, Ivory Coast, Mali, Namibia, Niger, Nigeria, Sn++nn++gal, Uganda and Yemen have jointly supported commissioning of a study to define and structure a Common Risk Mitigation Mechanism (CRMM) for solar power generation projects in solar rich countries today . This is a major step in the implementation of the Paris Declaration of the International Solar Alliance (ISA) adopted on 30 November 2015 and of the ISA Programme aimed at mobilising n++Affordable finance at scalen++. This instrument will dramatically lower the cost of finance for renewable energy and the overall price of electricity.

Today, the cost of capital represents a substantial amount of the final costs of renewable energy, in particular solar PV. The Council on Energy, Environment and Water calculates that in India it represents 70% of the total cost of solar power. The proposed CRMM will offer a simple and affordable tool that will create a secure environment for private institutional investment in solar assets. The instrument will help diversify and pool risks on mutualized public resources and unlock significant investments.

The study was entrusted by the Interim Secretariat to a task force chaired by Terrawatt Initiative (TWI), the World Bank Group, the Currency Exchange Fund (TCX), the Council on Energy, Environment and Water (CEEW) and also the Confederation of Indian Industries (CII). Public and private stakeholders and partners will be consulted to contribute to the initiative and to ensure collective buy-in and validation. Participating countries may each appoint a qualified representative who will liaise with the task force and convey information regarding countries specific expectations, experience and needs. They call all other countries lying fully or partially between the Tropics to join them and support this initiative to attract investments into the solar sector.

Background on ISA:

The International Solar Alliance is an initiative jointly launched by the Prime Minister of India and the President of France on 30 November 2015 at Paris, in the presence of the Secretary General of the UN, on the side lines of COP21. Under the ISA, solar rich countries lying fully or partially between the Tropics are invited to share and aggregate data regarding their needs and objectives; emulate successful practices; and set up common mechanisms and instruments, in order to address obstacles to deployment at scale of solar energy.

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5 times more Villages electrified in 2016-17 under DDUGJY as compared to 2013-14; Four-fold jump in Intensive Electrification of Rural Households
May 19,2017

Union Minister of State (IC) for Power, Coal, New and Renewable Energy and Mines, Shri Piyush Goyal addressed the media on DeenDayalUpadhyaya Gram Jyoti Yojana (DDUGJY) here today. The Minister said, Every state in the country has joined Power for All agreement. All the states have pledged to boost holistic development of entire village electrification process to provide 24x7 affordable and quality power to all which is planned under DDUGJY.

The Minister interacted with the regional media representatives from 12 State Capitals through video conferencing and informed them about latest achievements under the DDUGJY scheme in the respective States. Shri Goyal also launched the new dashboard for GARV application and booklet on rural electrification on the occasion.

Talking about the impact of good governance in Rural Electrification, Shri Goyal said, The Government is working on the concept of 4S i.e. Skill, Speed, Scale and now Sewa to improve the lives of the rural populace as the prime priority. The Minister further added, We have changed the rules of this game. Instead of counting 10% households in the village to complete electrification process, now the Government is focusing on providing power connections to each and every household of village, thus providing meaning to the concept of Antyodaya.

Shri Goyal said that, in line with the philosophy of Pandit DeenDayalUpadhyaya of ANTYODAYA (serving the last Man), on 20th November 2014, Government of India had approved DeendayalUpadhyaya Gram Jyoti Yojana (DDUGJY), an integrated scheme covering all aspects of rural power distribution viz., Feeder Segregation, System Strengthening, Metering. Prime Minister of India, Shri Narendra Modi, in his Independence Day address to the nation on 15th August 2015 pledged to electrify all Un-electrified villages within 1000 days. Government of India therefore taken up Village Electrification on Mission mode targeting completion by May 2018.

Shri Goyal further added that, out of the 18,452 un-electrified census villages in the country, 13,469 villages have been electrified up to 15th May, 2017. A comparison of Achievements and the Physical & Financial Progress under rural electrification scheme in 2013-14 & 2016-17 is given as follows:

Parameters2013-142016-172017-18 TargetElectrification of un-electrified villages1,1976,015 (5.02 times)Balance  un-electrified villages to be electrified by May 2018Intensive electrification of villages14,95663,330 (4.2 times)85,000Free Electricity Connections to BPL households*9.6222.42 (2.3 times)40 LakhGovernment of India Grant released to States**Rs. 2938.52 CroresRs. 7965.87 Crores (2.7 times)Rs. 4814 Crores

*Free electricity connections to BPL Households provided to256.81Lakh BPL families up to 30th April 2017
** Release of highest ever grant in any FY of Rs 7965.87 Crores to States

Background Information

The remaining rural electrification works of the erstwhile scheme have been subsumed into DDUGJY. The scheme outlay is Rs 43,033 Crores with Rs 33,453 Crores grant from Government of India. The overall outlay, with the subsumed rural electrification works, is Rs. 75,893 Crores including Grant of Rs. 63,027 Crores from Government of India.

Under new DDUGJY, Government of India provides grant at the rate of 60% of project cost (85% for special category States). Further, additional grant at the rate of 15% grant is provided (5% for Special Category States) on fulfilment of the prescribed milestones. Under this scheme, the new projects with an outlay of Rs. 42,553.17 Crores have been approved for 32 States/UTs including works of Feeder Separation (Rs 15572.99 Crores), System Strengthening & Connecting Rural Households (Rs 19706.59 Crores), Metering (Rs 3874.48 Crores), Village Electrification (Rs 2792.57 Crores) and SansadAdarsh Gram Yojana (Rs 398.54 Crores).

More than 350 Gram Vidyut Abhiyantas (GVA) deployed in the field to monitor the progress of village electrification works. GARV Mobile App (garv.gov.in) was developed for monitoring progress of electrification in 18,452 un-electrified villages, in line with milestones. GVAs update in the GARV App, field photographs, data and other information. On 20th December 2016, updated GARV App had been launched for monitoring Household electrification in all 5.97 Lakh Villages. Updated GARV has the special feature of SAMVAD - engaging the citizens for establishing transparency and accountability.

The scheme is expected to transform lifestyle of villagers and bring in overall socio-economic development in rural areas. Following are the key outcomes of the scheme:

n++ Increased productivity in agriculture

n++ Reducing drudgery for women

n++ Improvement in children education

n++ Connectivity to all villages and households

n++ Viable and reliable electricity services in rural areas

n++ Improvement in delivery of health & education services

n++ Improvement in access to communications (radio, telephone, television, mobile)

n++ Improvement in public safety through lighting

The scheme has complete flexibility for selecting scope of works as per local requirement/priority of States. The population criteria have

Chitale Committee recommends several measures for Desiltation of Ganga
May 19,2017

Chitale committee on Desiltation of Ganga has recommended a slew of measures which include study of reach wise sediment transport processes along with establishing annual sediment budgets to guide de-silting activities, Preparation of annual reports (Sand registry) describing the previous de-silting/ dredging activity and a technical institute may be entrusted to conduct the sediment budget, morphological and flood routing studies that would examine and confirm the necessity of the de-silting of the reach under consideration.

The committee was constituted in July 2016 by the Ministry of Water Resources River Development and Ganga Rejuvenation to prepare guidelines for desiltation of river Ganga from Bhimgauda (Uttarakhand) to Farakka (West Bengal). Shri Madhav Chitale (Expert Member, NGRBA) was appointed as Chairman of the committee. The other members of the committee were: Secretary, Ministry of Water Resources, River Development & Ganga Rejuvenation, Secretary, Ministry of Environment, Forests & Climate Change and Dr. Mukesh Sinha, Director, Central Water and Power Research Station, Pune. The committee was asked to establish difference between desilting and sand mining and also to establish need for desilting for ecology and e-flow of the river Ganga.

The committee in its report says erosion, sediment transport and siltation are very complex phenomena. It is impossible to apply a n++one-size-fits-all‟ approach to sediment management and control, because the issues involved are frequently very regionally-specific. Local factors such as topography, river control structures, soil and water conservation measures, tree cover, and riparian land-use or land disturbance (for example agriculture, mining, etc.) can have a large impact on sediment loads in rivers. River control structures (such as reservoirs), soil conservation measures and sediment control programmes can cause downstream sediment loads to decrease, while factors such as land disturbance (clearing of vegetation, for example) or agricultural practices can cause increased sediment loads. At the same time, indiscriminate de-siltation works may result into more harm to ecology and environment flow. Thus, there is a need to evolve Guidelines, better broad principles, which should be kept in mind while planning and implementing de-silting works.

According to the report erosion, sediment transport and siltation in large rivers like Ganga are very complex phenomena and their estimation has inherent limitations and uncertainties. A reconnaissance of Main River Ganga on Google earth map reveal that different reaches are in a dynamic equilibrium phase. Sedimentation is mainly seen downstream of Bhimgauda barrage and near the confluences of tributary rivers with Ganga. The discharge congestion, large scale sediment deposition and its negative effects are mainly seen downstream of the confluence of Ghagra and beyond. The river flood plain drastically widens beyond the confluence of Ghagra and is estimated to be around 12 to 15 kms.

The committee says though de-siltation works can improve hydraulic performance of the river and this itself can justify undertaking de-siltation, these have no direct role in improving environment flow in the river. On the other hand, indiscriminate de-silting or sand mining would cause adverse impacts on river e-flow. Recognizing the importance of sediment transport in rivers, following basic principles of siltation in rivers should be kept in mind while considering de-siltation works:

n++ Catchment Area Treatment and Watershed Development works, along with good agricultural practices and river bank protection/anti-erosion works, are necessary to reduce silt inflow into the river system and must be undertaken in a comprehensive way.

n++ Erosion, movement and deposition of sediment are natural regulating functions of river and Sediment equilibrium of river should be maintained.

n++ Rivers should be provided with sufficient flood plains (lateral connectivity) without any hindrance to the flow.

n++ Instead of n++keeping the silt awayn++, strategy to n++giving the silt wayn++ should be adopted.

In specific reference to de-siltation works in river Ganga, in addition to MoEF&CC Sand Mining Guidelines, which are statutory in nature, and the GSI Guidelines, the committee has suggested following Guidelines;

1. River Ganga tends to achieve equilibrium on its own given the hydrology, sediment and natural bed and bank disposition. It is necessary to provide the river sufficient areas of flood plain and lakes along the river to moderate the flood level. Any encroachment of flood plain, reclamation of lakes or disconnection of lakes from river should be avoided; rather adjoining lakes/depressions may be de-silted to increase their storage capacities. The de-silting of lakes, etc., should be in such a manner that the sediment continuity is maintained and should not lead to head cut that creates safety issues for the river crossings, water intakes or river training works locally, downstream or upstream.

2. Upstream reaches of natural constriction works, like barrages/bridges, etc., tend to get silted leading to wandering of river. Possibly river training, cut-off developments and provision of extra water way near the constrictions could be tried after proper assessment without impacting the morphology of river elsewhere. The area freed from the development in the form of oxbow lakes should be used for flood moderation rather than reclaiming it for other purposes.

3. In case where constriction is causing large scale siltation, de-siltation along the preselected channel to deepen and attract the flow could be tried to guide the main course of flow. The dredged material may be dumped along the alternate channel which was to be closed to avoid bank erosion. Care shall be taken to develop stable channel which do not affect the flow either on upstream or downstream. Efforts should be made to provide silt continuity along the weirs and barrages.

4. Embankments, spurs and river training measures provided to protect the banks should not encroach upon the flood plains and delink the lakes, flood plains and other riverine environment from the river.

5. The proposed de-silting of any river reach need to be justified bringing out clearly the flooding caused due to siltation along with technical comparisons of the alternative flood mitigation measures with n++do nothingn++ or n++proposed de-silting/ dredgingn++ being other options. It should invariably be associated with sediment flux studies and morphological studies to confirm no significant adverse effect on downstream or upstream reach of the river including the safety and effectiveness of river crossings, water intakes, existing river bank / flood protection measures etc.

6. De-silting of the confluence points, especially with huge silt carrying tributaries, such as Ghagra, Sone, etc., may be necessary to make confluence hydraulically efficient.

7. Reservoirs in main river Ganga and its tributaries, particularly in upper reaches, should be operated in such a manner that first floods, having high silt load, are allowed to pass through without storage and river flows in later phases of the monsoon are only stored for use during non-monsoon season. This would require quantitative long term forecast with decision support system to be established for optimum reservoir operations.

8. Agricultural practices along the river flood plains should be such that it does not disturb the passage of flood by increasing the resistance to flow causing aggradations.

9. River morphological studies should be carried out to initiate in-stream channel improvement works. It shall be ensured that the head cut induced upstream should automatically de-silt the reach. The headcut induced should progress upstream slowly so that the flora a

Rank of India Improves in International Tourist Arrivals
May 19,2017

As per the UNWTO definition, International Tourist Arrivals (ITAs) comprises two components namely Foreign Tourist Arrivals (FTAs) and Arrivals of Non-Resident Nationals. The UNWTO in its barometer ranks countries in terms of their ITAs. So far only the figures of FTAs were compiled in India. However, now India has started compiling the data arrivals of Non-Resident Indians (NRIs), also.

The number of NRI arrivals during 2014 and 2015 were 5.43 million and 5.26 million, respectively. Accordingly, the numbers of ITAs in India during 2014 and 2015 were 13.11 million and 13.28 million, respectively. The data of ITAs, containing both the arrivals of NRIs and FTAs, is now as per International recommendations.

Due to this inclusion, Indias improved rank reflecting the true and comparable scenario has now been acknowledged by the UNWTO. As per the latest UNWTO Barometer for March 2017, Rank of India in International Tourist Arrivals in both 2014 and 2015 is 24 as against the previous rank of 41 and 40 in the year 2014 and 2015, respectively. With this inclusion the share of India in the ITAs has also increased from 0.68% (based on FTAs) to 1.12% in the year 2015.

Earlier Indias rank in the Travel & Tourism Competitiveness Index (TTCI), 2017 had also shown a 12 places jump from 2015. Rank of India in TTCI Report of 2017 was 40th as compared to 52nd in 2015, 65th in 2013 and 68th in 2011.

While UNWTO gives ranking in terms of numbers of ITAs, TTCI is composed of 14 pillars organized into four sub-indices of Enabling Environment, Travel & Trade Policy and Enabling Conditions, Infrastructure and Natural and Cultural Resources.

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Merchandise Exports from India Scheme being re-designed to make exports GSTcompliant
May 19,2017

The Merchandise Exports from India Scheme (MEIS) is being redesigned to make exports from India GST-compliant and the issue of working capital requirements under the new tax regime is being deliberated upon by the government, said Mr. Neeraj Prasad, Additional Commissioner, GST Cell, Central Board of Excise and Customs (CBEC).

He said that the GST regime would help build competitive advantage by leveraging supply chain. While manufacturing and trading activities at present times have a strong taxation orientation and the cost of logistics is high vis-a-vis the mature markets, adoption of GST will reduce the cost of production and distribution. It will also pave the way for the transfer of consignments directly from plant to the wholesaler and retailer, thereby eliminating the inventory cost in many supply chain operations.

Mr. Prasad said that technology in logistics, such as the use of advanced telematics, real-time vehicle tracking and route planning are likely to help manage and execute operations in a efficient and seamless manner and added that implementation of GST will finally set the ball rolling for the emergence of the hub and spoke model in the Indian transportation sector.

He said that job work under GST would encourage lean manufacturing even as the switchover to GST for the largely unorganized logistics sector would be challenging as the interplay of technology will intensify. GST, he said, would lead to re-alignment in the main verticals of supply chain and would bring down the dominating unorganised factor in the logistics business.

As regards the implications for State finances, Mr. Prasad said that the RBI in its latest report on state finances mentions that the introduction of the GST is likely to have an enduring impact on state finances as GST would lead to revenue expansion which would also possibly result in augmenting the shareable pool leading to greater transfer of resources from the Centre to the states. Furthermore, the Federal Reserve of USA, in a recent research paper states that the welfare enhancement through GST has the potential to expand the GDP by 3-4 percentage points.

Mr. Rajeev Agarwal, Senior Vice President (Outreach & Cpacity Building), Goods and Services Tax Network (GSTN), made a presentation on GST IT strategy. The mandate of GSTN, he said was to build the GST IT System to provide shared IT infrastructure and services to Central and State Governments, tax-payers and other stakeholders for implementation of GST; develop Common Registration, Return Filing and e-Payment services running on a Common GST Portal; integrate Common GST Portal with existing tax administration systems of Centre and States and build efficient and convenient interfaces for tax payers.

Sharing the GST Status Update, Mr. Harsh Mariwala, Chairman FICCIs Task Force on GST & Chairman, Marico Ltd, said that FICCI will be conducting three-day workshops on GST compliance for industry. FICCI, he said, would conduct training sessions for trade and industry starting from the first week of June. He added that FICCI has submitted compliances issues for the consideration of the government in some of the key sectors such as banking, financial, insurance, textiles, exports, ITes, transport and logistics.

Mr. Mariwala said that the Finance Minister was treating rates on a mechanical basis, which was a positive sign for industry as it meant current excise and VAT rates were being considered for fixing the tax slabs in GST. The GST Councils meeting, which is scheduled for the next two days, would primarily discuss the tax rates and exemptions under GST. He added that there would be disruptions in the implementation phase of GST and industry should prepare for it.

He said that FICCI was playing the role of a facilitator and disseminating information via various forums such as seminars about GST and helping industry to cope up with compliance issues. He added that the third series of interactive sessions on GST with KPMG was in the offing. Also, FICCI was releasing a monthly report on GST updates, which was being circulated among industry members.

Alluding to the issues, challenges, concerns and opportunities in the new tax regime, Mr. Sachin Menon, Co-Chairman, FICCIs Task Force on GST, said that the pre-requisites for smooth transition to GST were maintenance of level of inventory at each location and whether pricing of transition stock necessitate any change; co-relate closing inventory with excise invoices or other invoices and determine the extent of eligible credit; carry forward of credit allowed of tax reported in last return and ensure all invoices for goods and services received before appointed dates are accounted for in the last return; rejig of business processes - advance receipts, debit/credit notes, raising of PO, customers/vendor communication; devise strategy for pricing and promotional/incentive schemes across value chain (depot, distributor, dealer and retailer); and quick implementation of IT changes and IT to ensure smooth compliance process.

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The 14th Goods and Services Tax (GST) Council meeting approves GST rates for goods and GST Compensation Cess
May 19,2017

The 14th Goods and Services Tax (GST) Council Meeting, chaired by the Union Minister of Finance Shri Arun Jaitley, was held at Srinagar, Jammu and Kashmir yesterday. The fitment of rates of goods were discussed during the Council meeting. The Council has broadly approved the GST rates for goods at nil rate, 5%, 12%, 18% and 28% to be levied on certain goods. The Council has also broadly approved the rates of GST Compensation Cess to be levied on certain goods.

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