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Fitch: India Demonetisation Fallout Offset by Uncertain Benefits
Nov 23,2016

The demonetisation of large-denomination bank notes has caused short-term disruption in Indias economy. The move has the potential to raise government revenue and encourage bank lending, but Fitch Ratings believes the positive effects are unlikely to be strong and sufficiently enduring to support credit profiles.

The withdrawal of bank notes - that account for 86% of the value of currency in circulation - has created a cash crunch, and seems to be holding back economic activity. Consumers have not had the cash needed to complete purchases, and there have been reports of supply chains being disrupted and farmers unable to buy seeds and fertiliser for the sowing season. Time spent queueing in banks is also likely to have affected general productivity. The impact on GDP growth will increase the longer the disruption continues, but we will already need to revise down our forecasts to reflect what will almost certainly be a weak 4Q16.

The ultimate aim of the note withdrawal was to curb the use of black money, which is in line with the governments broader reform agenda. The informal sector is very large in India, accounting for over 20% of GDP and 80% of employment.

The move could boost government revenue to the extent that demonetisation helps to move economic activity from the informal to the formal sector, as more earnings would be declared. It is possible that this positive effect would soon outweigh the drag on revenue collection from lower short-term GDP growth. Government finances may also benefit from a proportion of high-denomination notes not being traded. This potentially significant amount would be subtracted from the Reserve Bank of Indias (RBI) liabilities, and the authorities would have the option to transfer this windfall to the government.

Indias sovereign credit profile would benefit from an improvement in government finances, which currently stand out as a major weakness. However, there are considerable uncertainties over the potential positive effects. Most importantly, demonetisation is a one-off event. People that operate in the informal sector will still be able to use the new high-denomination bills and other options (like gold) to store their wealth. There are no new incentives for people to avoid cash transactions. The informal sector could soon go back to business as usual.

There are similar uncertainties over the impact on the banking sector. Some banks have already reported large increases in deposits since demonetisation began. A surge in low-cost funding may remove a constraint on banks that prevented lending rates from keeping pace with the RBIs policy rate cuts in recent years. Reduced lending rates could encourage stronger credit growth, supporting the economy. Lower debt-servicing costs might also speed the resolution of banks asset-quality problems.

However, demonetisation could also affect the ability of borrowers in sectors that rely on cash transactions to service their loans, with negative effects on bank asset quality, which is why the RBI has temporarily allowed banks to give small borrowers more time to repay loans before classifying them as non-performing. Furthermore, the positive impact on funding conditions will depend on deposits remaining in banks beyond the next few months. There is nothing to prevent them being withdrawn again. Finally, there are other factors holding back lending, most notably the under-capitalisation of state-owned banks and weak investment demand. Fitch today reaffirmed our negative outlook on Indias banking sector - notwithstanding the effects of demonetisation - which reflects the fragile standalone position of state banks and the risks to their viability ratings in the absence of larger capital injections.

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Insolvency and Bankruptcy Board (IBBI) of India notifies two Regulations
Nov 23,2016

The Insolvency and Bankruptcy Board of India (IBBI), in exercise of its powers conferred under section 240 of the Insolvency and Bankruptcy Code, 2016, has notified the following two regulations yesterday:

n++ The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, and

n++ The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016.

These two regulations inter alia provide for the eligibility norms to be a Professional Member of an Insolvency Professional Agency and also for eligibility norms to be registered with the IBBI as an Insolvency Professional Agency.

A company registered under Section 8 of the Companies Act, 2013 with a minimum net worth of Rs. 10 crore shall be eligible to be an Insolvency Professional Agency. More than half of the Directors of its Board shall be independent directors and not more than one fourth of the Directors shall be insolvency professionals. It shall have Membership Committee(s), Monitoring Committee, Grievance Redressal Committee(s), and Disciplinary Committee(s) for regulation and oversight of professional members.

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534 Pradhan Mantri Jan Aushadhi Kendras functioning in 26 States/UTs
Nov 23,2016

With a view to achieving the objective of making available quality medicines at affordable prices, the Government has been taking several regulatory and fiscal measures from time to time. In order to provide further relief to the common man in the area of healthcare, a countrywide campaign for ensuring availability of quality generic medicines at affordable prices to all, in the name of n++Pradhan Mantri Jan Aushadhi Yojanan++ (PMJAY) has been started. As on date, there are 534 Pradhan Mantri Jan Aushadhi Kendras (PMJAK) functioning over 26 States/UTs. The PMJAY is being implemented by the Bureau of Pharma PSUs of India (BPPI).

The Medical Council of India has amended the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 on 08 October 2016 to provide a new para 1.5 regarding use of generic names of drugs which provides as under:

n++Every physician should prescribe drugs with generic names legibly and preferably in capital letters and he/she shall ensure that there is a rational prescription and use of drugs.n++

As on date, 226 Pradhan Mantri Jan Aushadhi Kendras (PMJAK) have been opened in State run hospitals, Medical Colleges and other Government hospitals.

Indian Medical Association and Indian Medical Council are supporting PMJAY to promote the use of generic medicines. Medical Council of India has amended the code to promote the use of generic medicines.

Generic version of each medicine is available in the market except patented medicines. The Government companies which are manufacturing generic medicines are : Indian Drugs & Pharmaceuticals Limited (IDPL), Rajasthan Drugs & Pharmaceuticals Limited (RDPL), Hindustan Antibitoics Limited (HAL), Karnataka Antibiotics & Pharmaceuticals Limited (KAPL) and Bengal Chemicals & Pharmaceuticals Limited (BCPL).

BPPI is buying generic medicines from private companies also through open tendering process for Pradhan Mantri Jan Aushadhi Yojana. Presently, more than 100 private manufacturers are providing generic medicines to Pradhan Mantri Jan Aushadhi Yojana (PMJAY).

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M-wallet/digital payment cos. must win customers trust for widespread adoption, says study
Nov 22,2016

With a view to win customers trust, companies operating in the mobile-wallet sector should take measures like providing effective, completely secure, private and reliable services, 3-D or OTP (one time password) security options, data back-up system and others to spread awareness among people, suggested an ASSOCHAM-RNCOS joint study.

n++Crystal clear policies and a common regulatory body for all m-wallets (closed, semi-closed and others) are required to bring clarity in procedures and policies between m-wallet companies and the Reserve Bank of India (RBI),n++ suggested the study titled Indian m-wallet market: Forecast 2022, conducted by ASSOCHAM jointly with research firm RNCOS.

n++A strong authentication mechanism must be put in place to bind the identity of the user to the authorization of the transaction thereby being extremely mindful of authentication and risk assessment,n++ said Mr D.S. Rawat, secretary general, ASSOCHAM while releasing the findings of the study.

n++As the mobile payment space evolves, the stakeholders must create secure transactions that foster consumer trust, besides, m-wallet companies must provide a much more secure payment authentication process out to the masses,n++ said Mr Rawat.

The Indian m-wallet market in FY 2016 was around INR 1.54 billion or Rs 154 crore, and it is expected to grow at a compounded annual growth rate (CAGR) of 141 per cent during the period between 2015-16 to 2021-22 and reach till INR 300 billion or Rs 30,000 crore by the end of FY 2022 driven by growing usage of smartphones, robust mobile internet penetration, growth of e-commerce sector together with increasing disposable incomes, the study noted.

It is also anticipated that the market value of m-wallet transactions in India will grow at a CAGR of 154 per cent during the period FY 2016 to FY 2022, and reach INR 55 trillion or Rs 55 lakh crore from INR 206 billion or Rs 20,600 crore, more so as m-wallet transaction is among the fastest growing paperless modes of payment or banking, and it is expected that the majority of transactions will go paperless in the next 10 years.

Besides, in FY 2016, the total m-wallet transaction was 0.6 billion; and it is expected to reach 120 billion by FY 2022, growing at a CAGR of 142 per cent.

M-wallet market can be segmented into three broad services - money transfers from wallet to wallet, bank to wallet and vice versa which accounts for 38 per cent share followed by recharge and bill payments for mobile, DTH, landline, electricity and other such services (31 per cent share) and the remaining share of 31 per cent is captured by online shopping, hotel/travel/movie ticket reservations, online food order, payment of insurance premium, recharging metro rail card and others.

While mobile wallet service contributed 21 per cent share in mobile payment volume transactions in FY16, its share in total mobile payment volume transactions is expected to increase to 79 per cent by FY22.

However, it said that the Reserve Bank of India (RBI) licensing regime is discouraging mobile wallet growth in the country. n++The present system allows only e-transfer of money and approves semi-closed prepaid instrument issuance while it does not allow cash out from the semi-closed wallet.n++

Besides, for all the entities (including banks, non-banking finance companies (NBFCs), telecos and others) to operate any kind of m-wallet, there are copious of strict RBI policies which encumbrance the growth of m-wallet sector in India.

n++The RBI should relax its current policies and allow cash withdrawals from the semi-closed wallets,n++ suggested the study.

The consumers mindset is the biggest factor that hinders the growth of Indian m-wallet market, as they are more sceptical about the safety and security issues as in the case of internet banking as users worry that their devices could be hacked or attacked by some kind of viruses, noted the ASSOCHAM-RNCOS study.

Also, often people complain that their money has been debited but the transaction got declined while transacting via mobile, and to avoid such problems users keep away from using mobile wallet related services, it added.

Privacy is another issue related to the growth of m-wallet industry as for all kinds of monetary transactions and other such services one needs to disclose his/her identity, which might create a huge problem for the customers if the hackers hack the security or wireless transmission and obtain all the information related to the social or financial matters, highlighted the study.

n++There is an urgent need for m-wallet based companies to spread awareness about their services across the country regarding the major issue of lack of awareness about their usage and benefits,n++ it said.

The ASSOCHAM-RNCOS study has suggested that m-wallet companies should expand their reach by offering services through agents and distributors in order to capture large consumer base.

n++They should establish more and more distributors or agents outlets/office in the areas where there is poor or no internet connectivity,n++ it said.

It is also recommended that companies in this domain should increase both - the limit of number of transaction and transaction amount even in case of basic account.

Introducing lucrative schemes and offers can also go a long way in strengthening the customer base for m-wallet companies like a small amount of interest on the amount kept in the wallet for a month/quarter/year would attract customers to load money in their wallet to get interest rate benefits.

Besides, there is a need for technological advancement by the m-wallet companies so that their m-wallets are compatible with all operating systems and they do not have pay extra money every time to launch their application on a new platform.

n++The m-wallet companies must develop a common platform for their application to save money and time as this would ultimately result in reduction in cost and expansion in user base and hence revenue,n++ further noted the ASSOCHAM-RNCOS study.

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Forthcoming Budget will have stipulations for simplified direct and indirect taxation: MOS Finance
Nov 22,2016

Minister of State for Finance, Mr. Arjun Ram Meghwal promised that the forthcoming budget would have stipulation and provisions that would lead to further simplification of tax administration and tax dispensation of both direct and indirect taxes to enable business community to render their transaction smoothly and effectively.

In his Valedictory address at International Tax Conference : Global Tax Issues & Recent Developments under aegis of PHD PHD Chamber of Commerce and Industry, Mr. Meghwal described the demonetization move of the NDA government as a step that would severely attack the menace of cross border terrorism and its funding besides substantially reducing the threat of rising black money.

n++Tax administration and tax policies need to be further simplified to promote ease of doing business as well as its facilitation. The forthcoming budget would reflect and adequately cater to this effectn++, said Mr. Meghawal adding that the government of the day is committed to eliminate corruption and red tape.

n++The decision to demonetize the Rs.500 and Rs.1,000 notes is one such step in this direction and many more such moves would follow as Prime Minister Mr. Modi is determined to purge the system from all its ailmentsn++, said the Minister.

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Regional Connectivity Fund created for Udan Scheme
Nov 22,2016

The Ministry of Civil Aviation launched Regional Connectivity Scheme (RCS)-UDAN (Ude Desh ka Aam Nagrik) scheme on 21st October, 2016 for providing connectivity to un-served and under-served airports of the country. The primary objective of RCS is to facilitate and stimulate regional air connectivity by making it affordable. Promoting affordability of Regional air connectivity is envisioned under RCS by supporting airline operators through (i) concessions by Central Government, State Governments and airport operators to reduce the cost of airline operations on regional routes and (ii) financial support (viability gap funding or VGF) to meet the gap, if any, between the cost of airline operations and expected revenues on such routes. RCS-UDAN is a demand-driven scheme, where airline operators undertake assessment of demand on particular routes.

A Regional Connectivity Fund (RCF) has been created under powers conferred under Rule 88-B of the Aircraft Rules, 1937 to provide the VGF requirements under the scheme. The Central Government has decided to impose a levy on the scheduled flights being operated within India to fund the Regional Connectivity Fund. However, following flights has been exempted from the above mentioned levy:

i) Flights operated on CAT II/ CAT IIA routes as specified in Route Dispersal Guidelines issued under Rule 134 (1A).

ii) Flights operated on RCS routes.

iii) Flights operated with aircraft having maximum certified take off mass not exceeding 40,000 kg.

The payment of VGF will be made to selected airline operators from the RCF. Selection of airlines will be done through transparent bidding process and the RCS flight is expected to start from January, 2017 onwards

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GST, Bankruptcy Laws Will Emerge Facilitator For Inbound & Outbound M&A: PHD Chamber
Nov 22,2016

Global Investment and Acquisitions Forum 2016 held under joint aegis of PHD Chamber of Commerce and Industry, Corporate Catalyst India and M&A Worldwide, has forecast that with GST and Bankruptcy Laws in place, prospects for mergers and acquisitions both inbound and outbound would grow proportionately in India.

The Forum also felt that India is no longer experimental zone for multi nationals for their operations as it has evolved so much in the last couple of years that global giants have strategies for setting up of their operations in India because of its emerging potentials which promise higher returns on investments.

The unanimous view of the forum was that multi nationals and global giants that would earlier set up representative offices and liaison channels in India as part of their strategy to open up offices in India have moved on to a next phase as per which their strategies are to launch their corporations and begin business with their counterparts in joint venture sector.

This change has come after the new government has come to power with Prime Minister Narendra Modi at the helm of affairs.

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Demonetization to help inflation remain under control, interest rates to fall: PHD Chamber
Nov 22,2016

While appreciating the Government efforts to control inflation in the economy vis-a-vis reforms in supply chain, Dr. Mahesh Gupta, President, PHD Chamber of Commerce and Industry said that demonetisation of rupees 500 and 1000 notes would also help prices to remain under control in the coming months.

Good monsoon behaviour and abundant supply of kharif crops coming in the market in the recent months has checked the rise in prices of many commodities, said Dr. Gupta.

The average WPI inflation so far in this financial year stands at around 3% during Apr-Oct 2016 and we are hopeful that inflation will fall below 3 percent in the coming months, he said.

The recent developments has created a good scope for further reduction in repo rate in the forthcoming monetary policy statement scheduled on December 7, 2016.

Repo rate at this juncture should not be more than 6% to give a big push to the economy with the new currency in circulation, said Dr. Gupta.

Reduced rate of interest with benign inflationary expectations would be a major breakthrough for the economy to enter the higher growth path, going forward, said Dr. Gupta.

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Airport Expansion, Enhanced Regional Air Connectivity & Expansion in Air Traffic is top Priority of Govt.: Ashok Gajapathi Raju
Nov 22,2016

Minister of Civil Aviation, Ashok Gajapathi Raju Pusapati, remarked that with new civil aviation policy in place and other associated reforms accompanying it, the civil aviation sector would emerge to serve the un-served at affordable pace.

Minister of Civil Aviation, Ashok Gajapathi Raju Pusapati reassured the Indian civil aviation industry, emphasizing that the government of the day is exploring all possibilities for capacity expansion of leading airports in the country as well doing its best to make sure that the regional air connectivity is accomplished as per its UDAAN initiative.

The Minister also stressed that though the domestic civil aviation industry has been growing at a rate of more than 20% in the last few years, admitting that higher passenger growth in civil aviation sector is still a challenge for the government which could be won with addition of capacities in Indias leading airports.

Ashok Gajapathi Raju Pusapati also emphasized that the cargo sector of Indian civil aviation though has developed but needed further expansion and development since the industry as such has been growing over 20% per annum and hoped that this growth rate would even exceed in times to come in view of Indias economic potential with its high appetite for higher growth.

Minister of State, Ministry of Civil Aviation, Mr. Jayant Sinha asked civil aviation industry to grow in such a manner so that its passenger traffic, currently estimated at about 150 million for domestic and overseas sector multiplies manifold and catches on pace with the air traffic of China which presently is calculated at 500 million per annum.

In order to achieve this objective, the ministry has been adopting three pronged strategy under its UDAAN commitment which includes expansion of airports capacities, ensure regional connectivity and equip the air passenger with better level of satisfaction and experience under its Air Sewa initiative, emphasized the minister adding that the government would do all possible to transform the civil aviation sector.

Secretary, Civil Aviation, Rajiv Nayan Choubey, reiterated the government commitment for higher growth of civil aviation sector with all possible governments initiatives in partnership spirit, adding that by December 2016 dozen of schedule commercial operations could begin to connect small towns in the country under its regional connectivity drive.

Minister, Government of Ireland, Pat Breen emphasized that India and Ireland should have stronger partnership to expand Indias civil aviation sector as his country is one of the global leaders in this sector, particularly on leasing out operations in which Ireland has already established its hegemony.

Chairman Civil Aviation Committee, PHD Chamber, K Narayana Rao proposed to the government to bring in civil aviation sector under priority lending scheme of the government, especially for acquiring smaller air crafts for enhanced regional air connectivity.

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FICCI launches Self-regulation Code of Conduct for the e-pharmacy sector
Nov 22,2016

The Federation of Indian Chambers of Commerce and Industry (FICCI) announced the launch of Self-regulation Code of Conduct for the E pharmacy sector in the presence of key stakeholders here. Accessibility, affordability and lack of awareness are the major challenges for last mile access to medicines. These barriers could be effectively overcome by adopting technology, specifically the Internet, into the healthcare system. Over the last one year, E-pharmacy has come up as a significant channel to provide last mile access to medicines. This will most importantly benefit patients of chronic diseases, elderly patients and sick patients who are not in a condition to go out to find a pharmacy. The E-Pharmacy model provides tracking and traceability of medicines, addressing the problem of counterfeit medicines, consumption of drugs without prescription, tax loss and provides value added services for consumer empowerment in healthcare, which are well aligned with Digital India initiative of our Honourable Prime Minister with a vision to transform the country into a digitally empowered society. The conference started with the release of the Selfregulation Code of Conduct -an attempt by the Industry to adhere to the highest professional standards and to have proper safeguards so as to ensure that consumers health and safety is not compromised.

1. Processing medicines against Prescription Scheduled medicines must be processed only against a valid copy of prescription (physical or scanned copy) of a registered medical practitioner

2. Restriction of Sensitive habit forming medicines E pharmacy must ensure that no schedule X and other sensitive habit forming medicines are processed through their platform. Ensure there are adequate checks and balances in place to prevent sale of any such drugs.

3. Dispensation only from duly licensed pharmacy domiciled in India E Pharmacy must ensure that the medicines are dispensed through licensed pharmacies only. The E pharmacy must make reasonable effort to ensure that all the pharmacy partners (before facilitating the sale of any medicines through such pharmacy partners) are duly registered under the Drugs & Cosmetics Act/ Rules.

4. Convenient access of medicines E-pharmacy player must make suitable arrangements to ensure that the medicines are packed, transported and delivered in such a way that their integrity, quality, and effectiveness are preserved.

5. Public health Initiatives of Government of India E pharmacy players must partner with Government for any recall of medicines and collect adverse events of medicines (consumer reports) and comply to submit them to National Centre for Pharmacovigilance.

6. Customer grievances E pharmacy must ensure that there is a proper mechanism in place to address any queries or grievances that the end-customer may have. E pharmacy players must appoint an ombudsman commission comprising of reputed members of civil society to address any public grievance. The Ombudsman commission shall be appointed for six months by members of the governing council in consultation with other stakeholders.

Didar Singh, Secretary General, FICCI voiced the support of consumer friendly models and mentioned that India needs to move with the times and embrace new age models to stay ahead. Also FICCI has been at the forefront helping many sectors operate with a process of developing self-governance models, and this initiative is a step in the right direction to help enable this sector of the economy

Arvind Gupta, Head of Digital India Foundation said n++we need to embrace technology - in both offline and online models. There is a great opportunity to take this ecosystem ahead by leveraging the India stack using the existing infrastructure of Aadhar and Digi-locker to maintain the repository of prescription, health records and monitor the dispensing of sensitive medicines. All pharmacies, online or offline, should check prescriptions on this lockern++

Noted consumer activist, Bejon Mishra, welcomed the initiative and re-iterated that there is no difference between e-Pharmacy and offline pharmacy, and both should operate with compliance and maintain proper records and dispense with prescription. He also congratulated the effort of the association to come up with progressive self-regulation framework and suggested that there be mechanisms put in place to make sure this is adhered to.

Prashant Tandon, CEO and Founder of 1mg mentioned that this group of progressive epharmacies have come up with code of conduct in the interest of consumers and as a group they look forward to productive engagement with the regulator to help make the Indian pharmacy sector a model sector.n++

Pawan Kaul, Co-Chair of FICCI e-commerce committee added that n++by recognising and registering the legitimate e pharmacies, Government can easily address the challenges by maintaining sanctity of both IT act and Drug and Cosmetic Act. This will bring effectiveness and efficiency in the entire ecosystem.n++

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Gartner Says Indias Digital Commerce Players Needs to Find a Sustainable Growth Model
Nov 22,2016

Digital commerce sales in India have remained flat, so digital commerce companies need to identify a sustainable growth model that can be achieved in a defined timeframe, according to Gartner, Inc. One of the challenges was that leading marketplaces cut back on promotions and discounts after the regulation banning price competition came out in March 2016.

Digital commerce is at an early stage in India, and consumers are value-conscious, so they are enticed when there are big promotions and steep discounts. said Gene Alvarez, managing vice president at Gartner. However, sales stalled once incentives were not present, challenging the performance of digital commerce players. This is partially a result of the continuous discounts at online marketplaces that are competing fiercely to gain market share, and which sets them to an incentive-driven growth model.

None of the digital commerce companies in India are profitable. They typically earn between 5-15 percent commissions of product sales, but the massive discounts on top of the investment needed to expand to more geographies saw those companies losing money. This can be a serious problem when the capital market tightens up.

The problem is being neglected when there is plenty of funding, and companies can live off sufficient capital. Once the market tightens, it is a survival game that only those that watch the bottom line and cash flows will win in the end, said Mr. Alvarez, There is a need to go back to the basics, that is, to operate on a sustainable growth model. Of which, customer experience and data-driven incentives are two fundamental factors.

Customer Experience: This is the most important differentiator of a digital commerce service as price becomes transparent across sites. Discounts will only retain customers as long as the promotion lasts, while good customer experience will make people come back and purchase more even when there is no promotion. Good customer experience will also entice new customers as word-of-mouth spreads, and visitors experience the service themselves. Customer experience goes beyond a frictionless shopping experience on the website or in the mobile app, and includes delivery, custom service, returns, retail discovery, customer ratings and reviews.

Data-driven incentives: Promotions and discounts are still important techniques to drive sales. However, they need to have positive return on investments (ROIs). Businesses can not only recover the cost of incentives but also make a profit. This requires businesses to personalize incentives based on shoppers profiles and purchasing propensity, and only give out the amount that is enough to trigger a purchase but not too much to lose money. This capability takes time to build as it requires data analytics and personalization technologies, built on the data collected about the shoppers.

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Gartner Says Public Cloud Services in India Forecast to Reach $1.3 Billion in 2016
Nov 22,2016

The public cloud services market in India is on pace to grow 35.9 percent in 2016 to total $1.3 billion, according to Gartner, Inc. The highest growth will come from cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow 45.5 percent in 2016, followed by platform as a service (PaaS) projected to grow 33.5 percent (see Table 1).

The overall global public cloud market will mature, and its growth rate will slightly slow down from 17.2 percent in 2016 to a 15.2 percent increase in 2020, said Sid Nag, research director at Gartner. While Brexit and other growth challenges exist, some segments such as financial SaaS applications and the PaaS user markets will still see strong growth through 2020.

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

201520162017201820192020Cloud Business Process Services (BPaaS)7187112144186239Cloud Application Services (SaaS)2973955246718191,000Cloud Application Infrastructure Services (PaaS)80107140181229286Cloud System Infrastructure Services (IaaS)3334857211,0451,4642,016Cloud Management and Security Services80104134168206249Cloud Advertising96123158189223266Total9571,3011,7902,3983,1264,055

Source: Gartner (November 2016) 

As buyers intensify and increase IaaS activity, they will be getting more for their investment: ongoing enhancement of performance, more memory, more storage for the same money (which will drive increases in consumptions) and increased automation in traditional IT outsourcing (ITO) delivery, said Mr. Nag.

As PaaS offerings mature and the competitive landscapes consolidates, we predict that more organizations will consider expanding their PaaS adoption as an important component to their cloud strategy, and specifically to their SaaS deployments, added Mr. Nag.

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OECD GDP growth accelerates to 0.6% in third quarter of 2016
Nov 22,2016

Real growth of gross domestic product (GDP) in the OECD area picked up markedly to 0.6% in the third quarter of 2016, compared with 0.3% in the previous quarter, according to provisional estimates.

Growth accelerated in most Major Seven economies in the third quarter of 2016, with the exception of the United Kingdom and Germany, where growth slowed to 0.5% and 0.2%, respectively, compared with 0.7% and 0.4% in the previous quarter.

In the United States, growth accelerated to 0.7% in the third quarter of 2016, following a rate of 0.4% in the previous quarter. Growth also picked up in Japan, to 0.5%, compared with 0.2% in the previous quarter, and in Italy and France (to 0.3% and 0.2%, respectively, compared with 0.0% and minus 0.1% in the previous quarter).

In the European Union and in the euro area, growth was stable at 0.4% and 0.3%, respectively.

Year-on-year GDP growth for the OECD area was 1.7% in the third quarter of 2016, marginally up from 1.6% in the previous quarter. Among Major Seven economies, the United Kingdom (2.3%) and Germany (1.7%) recorded the highest annual growth rates, while Japan registered the lowest (0.8%).

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Global Gyrations and Domestic Liquidity Glut to Keep Markets Volatile
Nov 22,2016

The improvement in domestic conditions owing to the de-notification of the currency and worsening of the global rate market conditions will keep the domestic markets on tenterhooks, says India Ratings and Research (Ind-Ra). The 10-year G-sec yield can trade between 6.28%-6.4% (6.43% at close on 18 November 2016). The rupee is likely to trade in the range of 67.85/USD-68.50/USD (68.14/USD at close on 18 November 2016).

Debt Markets at the Cusp of a New Horizon: The bond market is wedged between the improvement in domestic fundamentals and deterioration in the global environment. Ind-Ra believes that low inflation, marked improvement in the demand supply equation, expectations of further monetary easing will all keep the domestic bond market conditions constructive. Global developments, however, are likely to pose headwinds - resulting in an increase in the spread between the long end and the short end of the G-sec curve.

Liquidity Glut in the Market: The gush of bank deposits and restriction on withdrawal has led to a glut in the interbank liquidity market conditions. The situation is likely to continue for a while as the government endeavours to normalise conditions. Ind-Ra believes, volatility in the money market will continue in the near term, until normalcy is restore to banking operations. Ind-Ra also expects RBI to continue to sterilise the excessive liquidity through various modes, and explore other avenues apart from the reverse repos, if the easy liquidity conditions persist.

Headwinds to Rupee Continue: The increase in the probability of the Fed rate hike in the December 2016 policy - pushed up the dollar index to 101.2 from 97.5 through November 2016 and low of 92.6 in May 2016. The sharp strengthening of the dollar has been keeping emerging currencies under pressure. Ind-Ra believes this will keep the rupee trading with a weakening bias in the near term. Moreover, portfolio investment outflows from domestic bond markets and the weak equity market will deepen the pressure on the rupee.

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Drop in CV Loan Delinquencies, On-going Stress in Construction Equipment and Tractor Loans
Nov 22,2016

India Ratings and Researchs (Ind-Ras) analysis of structured finance pool data as of August 2016 shows that commercial vehicle (CV) delinquencies continued to fall while the stress in the construction equipment industry and tractor loans remained elevated. A continuous performance improvement was seen across all vintages of Ind-Ras rated commercial vehicle (CV) ABS portfolio. This is evident from the drop in the weighted average (WA) 90+ days past due (dpd) delinquency of 2014 and 2015 vintages. Also, Ind-Ras CV loans early delinquency index (tracks 30+dpd delinquencies) remained in the range of 5.2%-5.7% since the last report was published in June 2016, indicating an arrest of short-term delinquencies.

Stress in the construction equipment industry persists, with the six monthly average year-on-year changes in the mining index declining to 0.56% in August 2016 from 1.36% in August 2015. Also, WA 90+dpd delinquency for the 2014 vintage remained flat at 4% over the last six months, making it difficult to recover from deeper buckets. Also, the improvement observed in the core infrastructure index has not been consistent enough to support the recovery.

Tractor loans of 2014 and 2015 vintages are experiencing high delinquency levels. As of August 2016, WA 90+dpd delinquency stood at 6.45% for 2015 vintage loans, which is comparable to the loans of 2014 vintage at a similar level of seasoning. This however will have a limited impact on the transactions, because of high credit enhancement coverage on account of the significant amortisation of pass through certificates.

Ind-Ra observes a continual rise in portfolio at risk (PAR) for loans from microfinance institutions (MFI) since 1QFY17 for its rated MFI securitisations. The credit enhancement built up for Ind-Ras rated MFI securitisations has been strong, due to faster amortisation of around 50% within the first six months after issuance.

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