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Cabinet approves Pan-India implementation of Maternity Benefit Program
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given ex-post facto approval to Pan-India implementation of Maternity Benefit Program which now has been extended to all districts of the country w.e.f. 01.01.2017. The Prime Minister in his address to the nation on 31.12.2016 had announced Pan-India implementation of Maternity Benefit Program.

The Maternity Benefit Program will provide compensation for the wage loss in terms of cash incentives so that the women can take adequate rest before and after delivery and not be deprived of proper nutrition.

The total cost of the proposal for the period from 01.01.2017 to 31.03.2020 including Central and State Government share isRs.12,661crore. Government of Indias share during the period 01.01.2017 to 31.03.2020 comes to around Rs. 7932 crore.

Objective of the Scheme

i)        To provide partial compensation for the wage loss in terms of cash incentives so that the woman can take adequate rest before and after delivery of the first living child.

ii)      The cash incentives provided would lead to improved health seeking behaviour amongst the Pregnant Women and Lactating Mother (PW&LM) to reduce the effects of            under-nutrition namely stunting, wasting and other related problems.

Target Group

All eligible Pregnant Women and Lactating Mothers (PW&LM), excluding the Pregnant Women and Lactating Mothers who are in regular employment with the Central Government or State Government or Public Sector Undertakings or those who are in receipt of similar benefits under any law for the time being. It has been decided to give the benefit of Rs.5000/- to PW&LM in three installment for the birth of the first live child by MWCD and the remaining cash incentive as per approved norms towards Maternity Benefit under existing programmes after institutional delivery so that on an average, a woman will get ? 6000/-.

Conditions and installments

Pregnant Women and Lactating Mothers who are eligible will receive a cash benefit of Rs.5,000/- in three installment at the following stages as specified in the table given below:

Cash TransferConditionsAmount (in Rs)

First installment

n++   Early Registration of Pregnancy.

1,000/-

Second installment

n++   Received at least one antenatal Check-up (after 6 months of pregnancy)

2,000/-

Third installment

n++   Child birth is registered.
n++   Child has received first cycle of BCG, OPV, DPT and Hepatitis-B or its equivalent/substitute.

2,000/-

The eligible beneficiaries would continue to receive the remaining cash incentive as per approved norms towards Maternity Benefit under existing programmes after institutional delivery so that on an average, a woman will get Rs 6000/-.

Mode of cash transfer to the Beneficiaries

The conditional cash transfer scheme would be in DBT mode.

Background:

The Government of India is committed to ensure that every woman gets adequate support and health care during pregnancy and at the time of delivery and every newborn is immunized on time which is the foundation for better health of the mother and the newborn. Normally, the first pregnancy of a woman exposes her to new kinds of challenges and stress factors. Hence, the scheme intends to provide support to the mother for safe delivery and immunization of her first living child. The improved health care seeking behaviour of the PW&LM would lead to better health status for the mother and the child.

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Cabinet approves Industry-Academia Collaborative Mission for accelerating discovery research to early development for biopharmaceuticals
May 17,2017

The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi has given its approval for Industry-Academia Collaborative Mission for accelerating discovery research to early development for biopharmaceuticals - Innovate in India (13) empowering biotech entrepreneurs & accelerating inclusive innovation to be funded by the Government of India. The Mission will be implemented by Biotechnology Industry Research Assistance Council (BIRAC) - a Public Sector Undertaking of Department of Biotechnology (DBT).

The Mission Program would be a Pan-India program. The key focus areas of the program would aid in preparing Indias technological and product development capabilities in the biopharmaceutical sector to a level that it is globally competitive over the next 10-15 years and will transform the health standards of Indias population through affordable product development.

Total project cost to be funded by Government of India is Rs. 1500 crore for five years. 50% cost for the Mission Programme will be arranged through the World Bank loan.

For the implementation, a Programme Management Unit will be set up at BIRAC which will work as an operational and functional arm that oversees and monitors program implementation and progress.

The Mission will focus on Development of specific products - vaccines, biotherapeutics, medical devices and diagnostics; establishment of shared infrastructure and facilities; building and strengthening domain specific knowledge and management skills; creating and enhancing technology transfer capabilities in public and private sector.

The Mission will provide a holistic and integrated approach to strengthen and support the entire product development value chain for accelerating the research leads to product development. This will help not only in immediate product development addressing public health needs, but will also help to create an ecosystem which will facilitate development of a continuous pipeline of products.

Background:

The National Biotechnology Development Strategy 2015-2020 announced by the DBT lays emphasis on making India ready to meet the challenge of achieving US $100 billion biotech industry by 2025. The focus is on generation of biotech products, processes and technologies for affordable and accessible health care, promoting innovation R&D, establishing India as world class biomanufacturing hub, and building the required skilled workforce. To achieve this, it is important to promote industry -academia interface and enable the start-ups and small and medium enterprises to build translational innovation research capacities for affordable healthcare product development.

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Cabinet approves Restructuring plan for Hindustan Organic Chemicals
May 17,2017

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved a restructuring plan for Hindustan Organic Chemicals (HOCL), a loss making and sick Central Public Sector Enterprise (CPSE) under the Department of Chemicals & Petrochemicals. The company, having units at Rasayani (Maharashtra) and Kochi (Kerala), has been making continuous cash losses since 2011-12 resulting in acute shortage of working capital. Most of its plants have remained shut down during the last few years. It could not pay regular salary and statutory dues to the employees since February, 2015.

Restructuring:

The restructuring plan involves closing down the operations of all the non-viable plants at Rasayani unit of HOCL except Di-Nitrogen Tetroxide (N2O4) plant which is to be transferred to ISRO on as is where is basis, with about 20 acres of land and employees associated with the plant. The N2O4 plant is of strategic importance as it is the only indigenous source of N2O4 which is used as liquid rocket propellant by ISRO in the space launch vehicles.

Financial implications:

Financial implications of the plan is Rs. 1008.67 crore (cash) which is to be met partly from sale of 442 acres HOCL land at Rasayani to Bharat Petroleum Corporation Ltd. (Rs.618.80 crore) and the balance (Rs.365.26 crore) through bridge loan from the Govt. The funds will be used to liquidate the various liabilities of the company, including payment of outstanding salary and statutory dues of employees and repayment of Govt. guaranteed bonds of Rs.250 crore due for redemption in Aug.-Sept. 2017. The bridge loan amount, along with other Govt. liabilities of the company, is proposed to be repaid to the Govt. from the disposal of remaining unencumbered land and other assets of Rasayani unit.

Impact:

Implementation of the restructuring plan will enable HOCL to close down the operations of non - viable plants at Rasayani unit while transferring the strategically important N2O4 plant to ISRO to ensure continuity of manufacture and supply of N2O4 for ISROs space programme. Interest and welfare of employees will be addressed by payment of all their outstanding salary dues. Disposal of land assets, initially through sale of 442 acres to BPCL and subsequently of the remaining unencumbered land, will unlock the land assets for being redeployed for economically productive investments and thereby creating new employment generation opportunities.

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Cabinet approves construction of 10 units of Indias indigenous Pressurized Heavy Water Reactors (PHWR)
May 17,2017

In a significant decision to fast-track Indias domestic nuclear power programme, and give a push to countrys nuclear industry, the Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for construction of 10 units of Indias indigenous Pressurized Heavy Water Reactors (PHWR). The total installed capacity of the Plants will be 7000 MW. The 10 PHWR project will result in a significant augmentation of nuclear power generation capacity.

India has current installed nuclear power capacity of 6780 MW from 22 operational plants. Another 6700 MWs of nuclear power is expected to come onstream by 2021-22 through projects presently under construction. As the government marks three years of its nation and people centric governnace, in a first of its kind project for Indias nuclear power sector, the ten new units will come up in fleet mode as a fully homegrown initiative. It would be one of the flagship n++Make in Indian++ projects in this sector.

With likely manufacturing orders of close to 70,000 crores to the domestic industry, the project will help transform Indian nuclear industry by linking our goal of a strong nuclear power sector with our indigenous industrial capacities in high-end technologies.

This Project will bring about substantial economies of scale and maximise cost and time efficiencies by adopting fleet mode for execution. It is expected to generate more than 33,400 jobs in direct and indirect employment. With manufacturing orders to domestic industry, it will be a major step towards strengthening Indias credentials as a major nuclear manufacturing powerhouse.

The ten reactors will be part of Indias latest design of 700 MW PHWR fleet with state-of-art technology meeting the highest standards of safety.

The approval also marks a statement of strong belief in the capability of Indias scientific community to build our technological capacities. The design and development of this project is a testament to the rapid advances achieved by Indias nuclear scientific community and industry. It underscores the mastery our nuclear scientists have attained over all aspects of indigenous PHWR technology. Indias record of building and operating PHWR reactors over the last nearly forty years is globally acclaimed.

The Cabinets decision reflects the Governments commitment to prioritise the use of clean power in Indias energy mix, as part of low-carbon growth strategy and to ensure long-term base load requirement for the nations industrialization.

It also supports Indias commitment to sustainable development, energy self-sufficiency and bolsters global efforts to combat climate change.

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Cabinet approves MoU between India and Australia on Cooperation in Combating International Terrorism and Transnational Organized Crime
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given ex-post facto approval to the Memorandum of Understanding (MoU) between India and Australia on Cooperation in Combating International Terrorism and Transnational Organized Crime.

The proposed MoU would strengthen the relationship between India and Australia for building peace and stability in the region through exchange of information, expertise, experience and capacity building.

The MoU is an effective framework to deal with all issues requiring interaction and cooperation in the areas identified.

The mutual cooperation would facilitate the institutional interactions between the two countries. The MoU, once in force, would help in curbing combating International Terrorism and Transnational Organized Crime.

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Cabinet approves Faculty Exchange Agreement between National Defence College, New Delhi and National Defence College, Dhaka, Bangladesh
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval to the Faculty Exchange Agreement signed between the National Defence College, New Delhi and National Defence College, Dhaka, Bangladesh.

The objective of the Agreement is to institutionalize regular exchange programs and establish sustainable mechanisms between the two National Defence Colleges with an aim to enhancing mutual cooperation in the field of national security, development and strategic studies.

Given the geographical and cultural closeness between the two countries, there are many common challenges like countering terrorism that needs joint action. Hence, there is a need for better coordination and cooperation among the armed forces. The exchange of faculty members of the premier institutes will help to bring symmetry in the capacities of the armed forces and contribute to countering and managing common threats and challenges much better.

The Agreement establishes the framework for enhanced cooperation in the field of military education concerning strategic and operational studies.

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Cabinet approves Amendment of the Ancient Monuments and Archaeological Sites and Remains Act, 1958
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the introduction of the Ancient Monuments and Archaeological Sites Remains (Amendment) Bill, 2017 in the Parliament.

To make way for certain constructions limited strictly to public works and projects essential to public within the prohibited area, the following amendments have been approved:

i) Insertion of a new definition of n++public worksn++ in section 2 of the Act.

ii) Amendment to section 20A of the Act so as to allow any Department or Office of the Central Government to carry out public works in the prohibited area after obtaining permission from the Central Government.

iii) Insertion of a new clause (ea) to section 20-I of the principal Act

Background:

The Ancient Monuments and Archaeological Sites Remains Act, 1958 (as amended in the year 2010) prohibits grant of any permission for new construction within the prohibited area of a centrally protected monument/ site.

Prohibition of new construction within prohibited area is adversely impacting various public works and developmental projects of the Central Government.

The amendment will pave way for certain constructions limited strictly to public works and projects essential to public within the prohibited area and benefit the public at large.

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Cabinet approves amendment of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for amendment in Section 2 and Section 3 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (PPE Act, 1971), by inserting definition of residential accommodation occupation in a new clause in section 2 of the Act and inserting provisions relating to eviction from residential accommodation occupation in a new sub-section 3B below sub-section 3A of Section 3 of the Act.

The Amendment will enable the Estate officer to apply summary proceedings for evicting unauthorised occupants from residential accommodations allotted for a fixed tenure or for a period he/she holds office on the basis of an order of allotment on licence basis, as non-vacation of such residences leads to unavailability of houses to new incumbents.

Thus, now, the Estate Officer can make such inquiry as he deems expedient in the circumstances of the case and thus do not have to follow the elaborate procedures prescribed as per sections 4, 5 and 7 of the Act. Estate Officers can even make an order for the eviction of such persons forthwith following the procedure proposed in the new section. If such persons refuse or fail to comply with the said order of eviction, Estate Officer may evict them from premises and take possession thereof and may, for that purpose, use such force as may be necessary.

The amendment will thus facilitate smooth and speedy eviction of unauthorised occupants from government residences.

As a consequence to these amendments, Government of India can now ensure that the unauthorised occupants are evicted from government residence in a speedy and smooth manner and the vacated accommodations are made available to eligible Govt. employees thus reducing the waiting period.

The amendments will facilitate smooth and speedy eviction of unauthorised occupants from government residence, as non-vacation in time leads to unavailability of houses to new incumbents and will increase the availability of the residential accommodation benefitting the waitlisted persons.

The beneficiaries include the employees of the Central Government offices who are eligible for General Pool Residential Accommodation (GPRA) and waiting for the maturity of their turn.

Background:

The Government of India has to evict unauthorized occupants from Government accommodations under the provisions of PPE Act, 1971. However, the eviction proceedings take unusually long time, thereby reducing the availability of govt. accommodations to new incumbents.

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Cabinet approves Agreement between India and Tajikistan on Cooperation and Mutual Assistance in Customs Matters
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for signing and ratifying, an Agreement between India and Tajikistan on Cooperation and Mutual Assistance in Customs Matters.

The Agreement will help in the availability of relevant information for the prevention and investigation of Customs offences. The Agreement is also expected to facilitate trade and ensure efficient clearance of goods traded between the countries.

Background:

The Agreement would provide a legal framework for sharing of information and intelligence between the Customs authorities of the two countries and help in the proper application of Customs laws, prevention and investigation of Customs offences and the facilitation of legitimate trade. The Agreement takes care of Indian Customs concerns and requirements, particularly in the area of exchange of information on the correctness of the Customs value declared, origin of goods and the tariff classification of the goods traded between the two countries.

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Cabinet approves signing of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting by India
May 17,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. The Convention is an outcome of the OECD / G20 BEPS Project to tackle base erosion and profit shifting through tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.

The Final BEPS Project identified 15 actions to address BEPS in a comprehensive manner. Implementation of the Final BEPS Package requires changes to more than 3000 bilateral tax treaties which will be burdensome and time consuming. In view of the same, the Convention was conceived as a Multilateral instrument which would swiftly modify all covered bilateral tax treaties (Covered Tax Agreements / CTA) to implement BEPS measures. For this purpose, formation of an Ad-hoc Group for the development of such multilateral instrument was endorsed by the G20 Finance Ministers and Central Bank Governors in February 2015.

Background:

India was part of the Ad Hoc Group of more than 100 countries and jurisdictions from G20, OECD, BEPS associates and other interested countries, which worked on an equal footing on the finalization of the text of the Multilateral Convention, starting May 2015. The text of the Convention and the accompanying Explanatory Statement was adopted by the Ad hoc Group on 24 November 2016.

The Convention implements two minimum standards relating to prevention of treaty abuse and dispute resolution through Mutual Agreement Procedure. The Convention will not function in the same way as an Amending Protocol to a single existing treaty, which would directly amend the text of the Covered Tax Agreements. Instead, it will be applied alongside existing tax treaties, modifying their application in order to implement the BEPS measures. The Convention ensures consistency and certainty in the implementation of the BEPS Project in a multilateral context. The Convention also provides flexibility to exclude a specific tax treaty and to opt out of provisions or parts of provisions through making of reservations.

The Convention has been opened for signature as on 31st December 2016 and a first joint signing ceremony is scheduled to be held in Paris on 7th June, 2017. Signature is the first step in the process of expressing consent to be bound by the Convention, which will become binding only upon ratification. A list of Covered Tax Agreements as well as a list of reservations and options chosen by a country are required to be made at the time of signature or when depositing the instrument of ratification.

Cabinet approval has been sought for the signing of the Convention by India. It is also proposed to make a provisional list of Covered Tax Agreements and a provisional list of reservations at the time of signature in June, 2017. Final lists for both will be submitted by India at the time of submission of instrument of ratification.

Signing of the Multilateral Convention will enable the application of BEPS outcomes through modification of existing tax treaties of India in a swift manner. It is also in Indias interest to ensure that all its treaty partners adopt the BEPS anti-abuse outcomes. Signing of the Convention will enable curbing of revenue loss through treaty abuse and base erosion and profit shifting strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out and where value is created.

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Cabinet approves proposal to establish Indian Agricultural Institute (IARI) in Assam
May 17,2017

The Cabinet Committee approved the proposal of DARE/ICAR scheme of the establishment of the Indian Agricultural Institute (IARI)- Assam with hundred percent outlay of central government on 587 acres of land provided by the government of Assam. Also, the proposal for 98 positions has been approved.

Agriculture and Farmers Welfare Minister, Shri Radha Mohan Singh said that IARI-Assam would be a Post-Graduate Institute of higher learning in Agricultural Education and it will have all the hallmark identities of IARI in New Delhi including all sectors of agriculture like field crops, horticulture crops, agroforestry, animal husbandry, fisheries, poultry, piggery, silk rearing, honey production, etc.

Shri Singh informed that IARI-Assam would work on the agrarian challenges and complexities of North Eastern India in coordination with all existing central and state government R&D Institutions and private sector enterprises for undertaking research, education, extension programs in its mission towards developing quality human resource, generation of farmer-friendly technologies to enhance productivity, quality, profitability, promote agro-based industries and generate employment opportunities for holistic and sustainable development of the agriculture sector in the North Eastern region. It will be an off campus of IARI, New Delhi and integrated multi-disciplinary research would be undertaken in school mode i.e. Schools of Crop Sciences, Natural Resource Management, and Animal Sciences & Fisheries.

Union Agriculture Minister said that after coming to the power, our Prime Minister Narendra Modiji had announced that for the growth of agriculture sector in the northeastern region, an IARI will be established in Assam. Six months ago, the State Government provided land for the project. Now, with the cabinets approval, the route is clear for this project.

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89% MGNREGA wages paid within 15 days
May 17,2017

Ministry of Rural Development in partnership with the State Governments has been trying to ensure timely payment of wages to MGNREGA workers. Timely payment of wages has been a major concern. In the current financial year, 20.88 crore person days of work has been generated so far. 89.08% of wage payments have been made within 15 days of work done. Twenty two States including Puducherry received wage payment directly through National Electronic Fund Management System. The remaining States access Electronic Fund Management System in nearly all cases. The Ministry is continuously striving in partnership with States to ensure timely payment of wages to MGNREGA workers directly into their Aadhar linked Bank accounts.

Over 85% of active MGNREGA workers have their Aadhar details seeded in NREGASOFT MIS (with their consent) and 4.85 crores workers are already on the Aadhar payment bridge linked Bank accounts.

The thrust of the Ministry is on water conservation and States have adopted Mission Water Conservation Guidelines to focus on 2264 water stressed and irrigation deficient Blocks of the country. The evaluation of over 80 lakh hectare of water conservation work done under MGNREGA in 2015-17 has also been taken up through Institute of Economic Growth and the final report would be available by 30th September, 2017. The Ministry of Rural Development is making all efforts to create durable assets and provide employment on demand through a thrust on Mission Water Conservation.

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Disappointing April MHCV Sales Reflective of Possible MHCV Industry Downturn
May 17,2017

The Medium and Heavy Commercial Vehicle (MHCV) segment posted a 55% yoy and 73% mom decline in domestic sales volumes in April 2017, which is disconcerting and reflective of the possible MHCV industry downturn, says India Ratings and Research (Ind-Ra). MHCV sales volumes traditionally have displayed a sharp month on month decline in the month of April, due to highest annual sales usually registered in the month of March. The year on year percent volume change however for April has not displayed such high volatility. In fact the last two years witnessed high year on year volume growth in April, following the decline for the previous three years. Ind-Ra believes that the sharp decline in April 2017 volumes is therefore the first signs of a possible downturn for the MHCV industry.

BS3 Fire Sale Supported March Volumes: The month on month volume decline in April 2017 was expected due to incremental sales volumes in the previous month, fuelled by the fire sale resorted to by original equipment manufacturers (OEM) to offload their unsold inventory of Bharat Stage 3 emission norms (BS3) heavy vehicles. With the Supreme Court notification towards the end-March 2017 banning the sale of BS3 automobiles effective from the following month, the OEMs offered large discounts to cut down inventory of BS3 MHCVs.

Wait and Watch Approach by Potential Buyers: Considering that there is no restriction on the use of BS3 trucks and buses in the country, Ind-Ra believes that buyers could delay their purchases of new BS4 compliant vehicles, especially due to the significantly higher costs associated with the latter. The average increase in MHCV vehicle cost will be in the range of 10%-15% according to the agency. In addition, the operating costs are also higher due to the use of diesel exhaust fluid to control emissions. The key demand driver for MHCV sales - indicated by the level of industrial activity - remains weak and thus Ind-Ra estimates sales volumes to decline in FY18 despite favourable interest rates. Buyers seem to be adopting a wait and watch approach for two reasons - to gauge the performance of the new BS4 vehicles and assess whether any improvement can be expected on the industrial performance front.

Decline Averted in FY17: Ind-Ra had highlighted in the report India Ratings Maintains Stable Outlook for Auto for FY18 that weak demand from the industry segment together with impact of demonetisation could have translated into MHCV volume decline in FY17, however sales volumes were propped up by pre-emptive buying of BS3 vehicles in the last quarter and last minute buying at the year end to avail of discounts during the BS3 fire sale. In addition, the agency believes that the 31 December 2015 notification from the National Highways Authority of India (IND AAA/Stable) to toll plazas to levy a toll of 10x on the usual toll on overloaded trucks has also supported MHCV volumes in FY17 to some extent. Domestic MHCV volumes in FY17 were flat at 302,529 compared with 302,397 in the previous year.

Passenger Carrier Segment Decline Not a Concern: April 2017 bus sales volumes also declined sharply year on year, however this was on a much smaller base compared with goods carriers. Ind-Ra believes that the sale of buses during FY18 will bounce back given that the key growth drivers continue to be favourable. The governments focus on improving urban as well as long-distance/interstate mass transportation systems in the country through the public private partnership model is expected to be one of the drivers in FY18. Over the mid to long term, rapid urbanisation along with augmentation of the road network in the country is expected to lead to a steady demand for buses. The limitation of Indian Railways to cater to a large increase in passenger traffic is an important growth driver. The low penetration of buses in India (approximately 1.5 per 1000 population, compared with approximately 7 for China, 9 for Russia and close to 20 for South Korea) also points towards a steady growth potential for the segment.

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INR2.6 Trillion of Bank Credit Could Potentially Slip in the Next 12-18 Months
May 17,2017

India Ratings and Research (Ind-Ra) estimates that potentially INR2.6 trillion of corporate and SME loans (3.2% of total bank credit) will be recognised as stressed loans by FY19. As per Ind-Ra analysis Indian banks are sitting on unrecognised stressed loans worth of INR7.7 billion. India Ratings study pegs stressed corporate and SME debt at 22% of total bank credit. While a sizeable proportion of the unrecognised stressed exposure has strong group linkage or some form of parental support, potentially half of it could further slip in the next 12-18 months. The recognised stressed corporate and SME loans in the system stands at around 12% of total bank credit.

India Ratings highlighted that impaired assets will peak at 12.5%-13% by FY18/FY19. Credit costs however will show an extended recovery period (FY18F:185bp; FY16:230bp), as a large proportion of recently acquired higher-bucket non-performing loans keep aging. This will keep the return on assets (RoAs) for public sector banks and private sector banks at around 20bp below their respective long-term medians.

India Ratings estimates that out of the total unrecognised stressed book that banks are sitting on, around 1.8% is to stressed public sector units, around 2% of it either enjoys some group support and could flow to joint lender forum or would be subject to asset sale, around 2.9% could be the addition to the restructured book from infrastructure projects and 3.2% is the potential slippage in next 12-18 months.

The sector wise break up of stress shows some interesting findings; the sectors which have the highest unrecognised stressed exposure include infrastructure, power, telecom and real estate among a few other sectors. While the iron and steel sector has seen lot of stress recognition in the Asset Quality Review exercise conducted by the Reserve Bank of India in the last fiscal, provisioning continues to remain inadequate considering higher loss given default estimates. Some sectors including infrastructure, real estate among others have lower amount of stress recognised as in many cases they enjoy group support.

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FICCI urges the Govt. to curb the menace of smuggled and counterfeit goods in the country
May 17,2017

According to FICCI smuggling and counterfeiting severely harms the economy of a country in multidimensional ways. It undermines the local industry, suppresses innovation and investment, discourages legal imports, reduces the volume of revenues collected from duties and levies by the government, fuels transnational crimes and hampers the health of citizens. The ill effects are felt widely across industries.

Alarmed by the pace at which such goods are growing and in order to bring adequate attention to the magnitude of the problem, FICCI has undertaken in depth research on the magnitude of the problem and shared the findings with policy makers from Ministry of Finance, Cabinet Secretariat and Prime Ministers office, urging them to take swift action to clamp down the rising illicit trade in smuggled and counterfeit goods in India.

India is one of the growth engines of the global economy and as the Indian economy grows it is faced with the challenges posed by the growth of smuggled and counterfeit goods. To deal with a problem of this extent, it is vital to highlight the enormity of the problem and take firm steps to eradicate the nation-wide menace.

FICCI has a dedicated body Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE) - a unique forum addressing the problem of growing illicit trade in counterfeits, pass offs and smuggled goods in India. As per FICCI CASCADE reports, the estimated loss to the industry in just 7 industry sectors is Rs 1,05,381 crores, an increase of 44.4% between 2011-12 to 2013-14.

The market for contraband and smuggled goods is thriving in India and is today one of the biggest challenges faced by Indian industry. As per FICCI CASCADE report, the total loss to the government on account of illicit markets in just seven manufacturing sectors is Rs 39,239 crores in 2014. Amongst the various sectors, the maximum revenue loss to the exchequer on account of counterfeiting and illicit trade is attributed to tobacco products, estimating a revenue loss of Rs. 9139 crores followed by mobile phones at Rs 6705 crore and alcoholic beverages at Rs 6309 crore.

According to FICCIs recent report - Invisible Enemy - A Threat to Our National Interests - focusing on the negative impact of smuggled goods on the Indian economy and businesses, the smugglers are now switching over to cigarettes and fabric/silk yarn as they are low-risk, highreward goods. As per the report, in the last one year, the DRI seizures of smuggled cigarettes has increased by 78% (from Rs. 90.75 crores in 2014-15 to Rs. 162 crore in 2015-16) followed by fabric/silk yarn, where the increase is by 73% (from Rs. 24.03 crores in 2014-15 to Rs. 41.78 crore in 2015-16). The seizures of gold have witnessed an increase of 61% (from Rs. 692.35 crore in 2014-15 to Rs. 1119.11 crore in 2015-16). While the DRI seizures of machinery parts and electronic items has seen a decline.

The report establishes a relationship between high taxes and availability of illicit products. High tax rates tend to exacerbate illicit markets by creating greater demand for cheap and counterfeit substitutes. A significant reason being that high tariffs and taxes create opportunities for those involved in illicit markets to step in and supply reduced versions of the original product at lower prices. Considerable differences in tax rates between states open up opportunities for illegal cross-border trade. A perspective of having the right balance between tax revenue targets and consumer interests is therefore imperative. The Goods and Service Tax (GST), will have to take due care to rectify this anomaly in taxation policy and set this imbalance right.

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