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FM releases the Revised General Financial Rules (GFR) 2017
Mar 08,2017

The Union Finance Minister Shri Arun Jaitley said since this time, the Finance Bill would be passed by the Parliament before the 31st March, 2017, therefore, the different Ministries should be in a stage of readiness as the funds for various schemes would be available with effect from 1st April, 2017. The Finance Minister Shri Jaitley was addressing all the Financial Advisors in the different Central Ministries/Departments after releasing the Revised General Financial Rules (GFRs) - 2017 at the Conference of the Financial Advisors (FAs). The Conference of FAs was organised by the Department of Expenditure, Ministry of Finance, Government of India. The Finance Minister appreciated the role of Financial Advisors in the smooth implementation of Budgeting and Accounting reforms. Shri Jaitley stressed on the challenges lying ahead for the Government as a whole to ensure that expenditure on schemes and projects should start from the beginning of the financial year to leverage the early passing of the Budget. The Finance Minister also applauded the efforts that went into bringing- out the Revised GFRs within a very short span of time to meet the need of the changing environment.

Earlier speaking on the occasion, Shri Ashok Lavasa, Finance Secretary stated that the Revised GFR -2017 aims to provide a framework within which an organization manages its business in a financially prudent manner without compromising its flexibility to deal with varied situations and that the new GFRs 2017 will enable an improved, efficient and effective framework of fiscal management while providing the necessary flexibility to facilitate timely delivery of services.

The Conference also deliberated upon the various challenges and opportunities before the Financial Advisors and their key role in the implementation of the Schemes of the Government and providing innovative solutions in the changed environment in public financial management. Conference of Financial Advisors is a forum through which the Finance Secretary & Secretary (Expenditure), Ministry of Finance holds detailed deliberations with all the Financial Advisors posted in various Ministries/Departments.

The GFRs are rules and orders dealing with matters involving public finances. General Financial Rules were issued for the first time in 1947 bringing together in one place all existing orders and instructions pertaining to financial matters. These have subsequently been modified and issued as GFRs 1963 and GFRs 2005.

In the last few years, the Government has made many innovative changes in the way it conducts its business. Reforms in the Government Budgeting like removal of distinction in non-plan and plan expenditure, merger of Railway Budget with General Budget, focusing on outcomes through an improved Outcome Budget document, all needed to be reflected in the GFRs. Increased focus on Public Finance Management System (PFMS), reliance on the Direct Benefit Transfer (DBT) Scheme to ensure efficient delivery of entitlements, introduction of new e-sites like Central Public Procurement Portal, Government e-Marketing (GeM) Portal, Non-Tax Revenue Portal have also necessitated revision of the existing GFRs to keep them in tune with the changing business environment. The objective was to make the GFRs facilitate efficiency while following principles of accountability and procedures of financial discipline and administrative due diligence. New rules on non-tax revenues, user charges, e-receipts portal have been added in addition to the manner in which Autonomous Bodies are run.

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Clarification by PFRDA on transfer of amount from Recognized Provident Fund & Superannuation Fund to National Pension Scheme (NPS)
Mar 07,2017

In the budget of 2016-17, the Government had announced that the subscribers from recognised Provident Funds and Superannuation Funds would be able to transfer their corpus from these funds to National Pension System (NPS) without any tax implication.

With the NPS gaining momentum vis-n++-vis other retirement products and a number of queries being raised on the transfer of amounts from recognised Provident/Superannuation Funds to NPS, Pension Fund Regulatory and Development Authority (PFRDA) has clarified the process through a circular dated 06.03.2017.

Accordingly, in case the subscriber is interested to get his/her recognised Provident Fund/Superannuation Fund transferred to NPS, he/she needs to follow the below mentioned process:

1. The subscriber should have an active NPS Tier I account which can be opened either through the employer (where NPS is implemented) or through the Points-of-Presence (POPs) or online through eNPS on the NPS Trust website www.npstrust.org.in

2. The subscriber presently under Government/Private Sector employment should approach the recognised Provident Fund/Superannuation Fund Trust through the current employer by giving request for transfer to his/her NPS account.

3. The Recognised Provident Fund/Superannuation Fund Trust may initiate transfer of the Fund as per the provisions of the Trust Deed read with the provisions of the Income Tax Act, 1961.

4. The Recognised Provident fund/Superannuation Fund may issue the cheque/draft in the name of:

a) In case of Government employee: Nodal Office Name (PAO or CDDO Name) Employee Name PRAN (12 Digit No.)

b) In case of subscriber presently under Private Sector including All Citizen Model: POP (Name of the POP) Collection Account-NPS TrustSubscriber NamePRAN (12 Digit No.)

5. In case of Government or Private Sector employee, the employee should request the recognised Provident Fund/Superannuation Fund to issue a letter to his present employer mentioning that the amount is being transferred from the recognised Provident Fund/Superannuation Fund to be credited in the NPS Tier I account of the employee which would be recorded by the present employer or POP as the case may be, while uploading the amount.

It may be noted here that as per the provisions of the Income Tax Act, 1961 the amount so transferred from recognised Provident Fund/Superannuation Fund to NPS is not treated as income of the current year and hence not taxable. Further, the transferred recognised Provident Fund/Superannuation Fund will not be treated as contribution of the current year by employee/employer and accordingly the subscriber would not make Income Tax claim of contribution for this transferred amount.

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No one to be deprived of benefits for lack of Aadhaar
Mar 07,2017

Government has said that no one will be deprived of the benefits for lack of Aadhaar. In a statement issued today, the Government has reiterated that till Aadhaar number is assigned to any individual, the benefit will continue to be given based on alternate means of identification. It also directed the departments to provide Aadhaar enrolment facilities to their beneficiaries under Regulation 12 of Aadhaar (Enrolment and Update) Regulations 2016.

Considering the usefulness of Aadhaar in curbing leakages and bringing transparency in delivery system, the Government has recently issued orders to use Aadhaar in several other welfare schemes funded from the Consolidated Fund of India. While these orders require beneficiaries of these programs to give their Aadhaar number, it has also been ensured that no one is deprived of the benefits for want of Aadhaar.

In case of Mid Day Meal scheme and under the Integrated Child Development Scheme, the schools and Anganwadis have been asked to collect the Aadhaar number of the children beneficiaries and in case a child does not have Aadhaar, the school or ICDS functionary will be required to provide enrolment facilities to a child and till Aadhaar number is assigned, the benefits will be continue.

Aadhaar has been given to more than 112 Crore people. With such wide and extensive coverage, Aadhaar has become an important tool of transformation, good governance and empowerment of people. It ensures that the benefits reach only the deserving and entitled individuals and are not cornered away by fake persons and middlemen. Various studies and survey had earlier pointed out massive leakages in welfare schemes. During the last two and half years, Aadhaar has helped in direct delivery of benefits to crores of people through the Direct Benefit Transfer (DBT) in schemes such as LPG subsidy under Pahal, Scholarships, MNREGA, and Pensions. In the Public Distribution System, Aadhaar is also ensuring that the food grains are received only by the genuine beneficiaries and not diverted by any middle man or unscrupulous elements. It has, thus, saved huge sums of public money which otherwise was being siphoned away by middlemen. The total savings because of plugging of leakages due to Aadhaar during the last two and half years in just a few schemes where Aadhaar has been implemented amount to more than Rs 49,000 Crore.

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33% Sub Quota for Women in Allotment of each Category of minor Catering Units at All Category of stations
Mar 07,2017

Minister of Railways Shri Suresh Prabhakar Prabhu has recently launched New Catering Policy 2017, while there are many new features in the new Catering policy, special provisions for women have also been made in it.

Under this policy, a Sub Quota of 33% for women in allotment of each of the reserved catering units is being introduced on Indian Railways in order to extend economic empowerment for women. It is also in compliance with the announcement made in Railway Budget 2016-17.

Current Status of Reservation at Minor Catering Units (Stalls / Trolleys / Khomchas):

a) A1, A, B, and C Category stations - 25% of the Units are reserved for various categories like SC (6%), ST (4%), BPL (3%), OBC (3%), Minorities (3%), Freedom Fighters (4%) and Physically Challenged persons (2%).

b) D, E and F Category stations - 49.5% of the Units are reserved for various categories like SC (12%), ST (8%), OBC (20%) and Minorities (9.5%).

n++ 33% sub quota for women in allotment of each category of minor catering units at all category of stations has been provided. 33% sub quota reservation for women in each category shall ensure allotment of minimum 8% stalls to women at A1, A, B & C category station and minimum 17% at D, E and F category station.

n++ There are approximately 8000 Minor Catering Units over Indian Railways.

n++ Under this provision, Railways shall ensure that women participation does not fall below a specific level.

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Fitch: Global Growth Shows Resilience to Political Uncertainty
Mar 07,2017

The near-term outlook for growth in the advanced countries has improved despite persistent political uncertainties says Fitch Ratings in its latest Global Economic Outlook (GEO).

Robust labour markets and consumer spending, more supportive fiscal policies and the stabilisation in emerging markets helped advanced country growth recover in the second half of 2016, said Brian Coulton, Chief Economist, Fitch. Furthermore, a synchronised improvement in manufacturing business surveys across the advanced countries suggests growth momentum has continued into early 2017.

Advanced country growth is expected to pick up to 1.9% in 2017 and 2% in 2018 from 1.6% in 2016. The acceleration is led by the US, with growth in the eurozone and Japan expected to remain broadly stable. Fitchs latest forecast changes include upward revisions to 2017 growth of 0.3pp for the eurozone and the UK, 0.2pp for Japan and an upward revision of 0.3pp for 2018 for the US.

While there is genuine upside to the near-term outlook - stemming primarily from a faster-than-expected easing of US fiscal policy and the possibility of animal spirits sparking a more rapid US private investment recovery - downside risks also loom large, added Mr. Coulton.

An aggressive pursuit of protectionist trade polices by the new US administration could spark retaliation and global currency volatility, undermining business confidence. Longer term, if the US were to shift to a more producer-focussed or mercantilist model, with the aim of permanently shrinking trade deficit, it is hard to see who else would step in to fill the gap in global demand. Ultimately, the US has been the worlds consumer of last resort for decades with many countries economies geared to supplying US demand.

In the eurozone, the re-emergence of concerns about fragmentation of the currency-bloc could result in tighter credit conditions and significantly reduced growth. In a more severe scenario, where an overtly anti-EU leader were to cement a strong majority in a major eurozone country the macro disruption could be highly damaging.

The linkages from political uncertainty to economic growth are never straightforward, but for now we are looking at a synchronised improvement in the macro outlook across the advanced countries, Mr. Coulton continued.

Improving growth prospects and increased fiscal policy support are moving the world economy further away from the scenario of never-ending quantitative easing by the major central banks. Fitch now expects the US Fed to raise rates three times this year (up from two hikes in Fitchs November forecast) and by a total of seven times over 2017 and 2018. This is in stark contrast to just two hikes over the previous eight years.

The European Central Bank (ECB) remains resolute in providing additional monetary stimulus at this juncture but they are facing increased communication challenges as headline inflation rates rise. There are also some signs that previous monetary stimulus may be gaining a little more traction on the real economy, with a further pick-up in private credit growth in core eurozone countries and a buoyant real estate market in Germany. ECB asset purchases are likely to be continued in line with the forward guidance provided by the ECB at last Decembers meeting but we expect them to be phased out through the first half of 2018.

The Bank of Japan (BOJ) has held short-term interest rates steady at -0.1% and we no longer expect further cuts into more negative territory. The yen has weakened significantly since our November GEO and the BOJ has become somewhat more optimistic on the growth outlook.

Emerging market growth is expected to rise to 4.7% this year, up from just over 4% in 2015 and 2016. This reflects the return to modest positive growth rates in Russia and Brazil. However, EM growth prospects are slightly weaker than previously forecast, with downward revisions to Mexico, Turkey and Brazil. There are also signs of a shift in the policy stance in China. Following the success of the stimulus measures rolled out from late 2015 in supporting growth, the Chinese authorities have recently shifted focus towards trying to start to address the problem of rapidly rising leverage. The cuts in official interest rates that we previously expected in 2017 no longer seem likely. This change of emphasis has come a little earlier than expected and is likely to result in some sequential slowing of growth later this year. Our 2017 growth forecast for China has been edged down slightly to 6.3%.

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Fitch: Shale Recovery to Keep Oil Prices Under Pressure in 2017
Mar 07,2017

The recovery in US drilling activity will drive up shale oil production in the second half of 2017, offsetting a portion of recent oil price gains, Fitch Ratings says. We therefore expect average oil prices for the year to be below those in January and February.

OPECs November announcement that its members would cut production by about 1.2 million barrels per day (mmbbl/d) and the commitment of non-members to curtail production by roughly 600,000bbl/d have helped support oil prices in a USD50-55 range. OPEC compliance has reportedly been strong, but it remains to be seen whether it will be enough to meaningfully reduce abnormally high inventories. The exclusion of Libya and Nigeria and a poor record of adherence by some members makes us sceptical that the arrangement will be sustainable in the longer term..

At the same time, US rig counts have nearly doubled from their lows in May 2016, which has contributed to a rebound in US crude production to over 9mmbbl/d. We expect this upswing in production to continue throughout 2017 due to the rise in rig activity, increased capex budgets, and the roughly two- to four-month lag between spudding shale wells and production.

We have updated our base-case assumptions to reflect our view of supply fundamentals and the impact of OPECs production cuts. We have also re-established a Brent-WTI spread in our base case to reflect the anticipated resurgence of US shale production, logistics costs, inventory trends, and refinery incentives.

Our 2017 base case Brent price assumption has been raised to USD52.50/bbl from USD45/bbl and we continue to assume prices of USD55/bbl in 2018, USD60/bbl in 2019 and USD65/bbl in the long term. Our 2017 WTI price assumption was raised to USD50/bbl from USD45/bbl and our assumed 2018, 2019, and long-term prices were all adjusted lower by USD2.50/bbl to reflect the re-established Brent-WTI spread. The base case does not factor in the effects of a potential US border adjustment tax.

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Water Level of 91 major Reservoirs of the Country goes down by three per cent
Mar 07,2017

The water storage available in 91 major reservoirs of the country for the week ending on March 02, 2017 was 64.55 BCM, which is 41% of total storage capacity of these reservoirs. This percentage was at 44 for the week ending February 23, 2017. The level of March 02, 2017 was 132% of the storage of corresponding period of last year and 102% of storage of average of last ten years.

The total storage capacity of these 91 reservoirs is 157.799 BCM which is about 62% of the total storage capacity of 253.388 BCM which is estimated to have been created in the country. 37 Reservoirs out of these 91 have hydropower benefit with installed capacity of more than 60 MW.

REGION WISE STORAGE STATUS:-

NORTHERN REGION

The northern region includes States of Himachal Pradesh, Punjab and Rajasthan. There are 6 reservoirs under CWC monitoring having total live storage capacity of 18.01 BCM. The total live storage available in these reservoirs is 5.18 BCM which is 29% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 31% and average storage of last ten years during corresponding period was 36% of live storage capacity of these reservoirs. Thus, storage during current year is less than the corresponding period of last year and is also less than the average storage of last ten years during the corresponding period.

EASTERN REGION

The Eastern region includes States of Jharkhand, Odisha, West Bengal and Tripura. There are 15 reservoirs under CWC monitoring having total live storage capacity of 18.83 BCM. The total live storage available in these reservoirs is 11.93 BCM which is 63% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 46% and average storage of last ten years during corresponding period was 48% of live storage capacity of these reservoirs. Thus, storage during current year is better than the corresponding period of last year and is also better than the average storage of last ten years during the corresponding period.

WESTERN REGION

The Western region includes States of Gujarat and Maharashtra. There are 27 reservoirs under CWC monitoring having total live storage capacity of 27.07 BCM. The total live storage available in these reservoirs is 14.64 BCM which is 54% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 28% and average storage of last ten years during corresponding period was 50% of live storage capacity of these reservoirs. Thus, storage during current year is better than the storage of last year and is also better than the average storage of last ten years during the corresponding period.

CENTRAL REGION

The Central region includes States of Uttar Pradesh, Uttarakhand, Madhya Pradesh and Chhattisgarh. There are 12 reservoirs under CWC monitoring having total live storage capacity of 42.30 BCM. The total live storage available in these reservoirs is 22.64 BCM which is 54% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 38% and average storage of last ten years during corresponding period was 37% of live storage capacity of these reservoirs. Thus, storage during current year is better than the storage of last year and is also better than the average storage of last ten years during the corresponding period.

SOUTHERN REGION

The Southern region includes States of Andhra Pradesh, Telangana, AP&TG (Two combined projects in both states) Karnataka, Kerala and Tamil Nadu. There are 31 reservoirs under CWC monitoring having total live storage capacity of 51.59 BCM. The total live storage available in these reservoirs is 10.16 BCM which is 20% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 22% and average storage of last ten years during corresponding period was 36% of live storage capacity of these reservoirs. Thus, storage during current year is less than the corresponding period of last year and is also less than the average storage of last ten years during the corresponding period.

States having better storage than last year for corresponding period are Punjab, Rajasthan, Jharkhand, Odisha, West Bengal, Gujarat, Maharashtra, Uttar Pradesh, Uttarakhand, Madhya Pradesh, Chhattisgarh, AP&TG (Two combined projects in both states) and Telangana. States having lesser storage than last year for corresponding period are Himachal Pradesh, Tripura, Andhra Pradesh, Karnataka, Kerala, and Tamil Nadu.

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Export of Oilmeals Up by 18% in April 2016-February 2017
Mar 07,2017

The Solvent Extractors Association of India has compiled the export data for export of oilmeals for the month of February 2017. The export of oilmeals during February 2017 has more than doubled and reported at 263,509 tons compared to 122,527 tons in February 2016 i.e. up by 115%. The overall export of oilmeals during April 2016 to February 2017 is reported at 1,673,036 tons compared to 1,422,993 tons during the same period of last year i.e. up by 18%.

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Large imports of items like electronics run counter to Make in India
Mar 07,2017

For success of its flagship programme to boost manufacturing within the country, the governments Make in India should first target high import intensive items like electronic goods, machinery, steel and transport equipment which together add close to USD nine billion or over 27 per cent of the countrys monthly import bill, according to an ASSOCHAM analysis.

n++There are other major import items like crude oil, gold and precious stones which cannot be produced indigenously or are used for re-exports. But a growing economy like India which is witnessing a huge expansion in usage of telecom and other items using electronics , should go about in a focused manner to drastically cut imports of the items which can be substituted by domestic production and add to the countrys manufacturing strength. This is eminently doable, provided the policy initiatives are put in place and implemented with great clarity and speed both by the Centre and the states,n++ the chamber said.

The latest figures show import of close to USD four billion for electronics, .USD 2.36 billion for electrical and non-electrical machinery, USD 1.47 billion for transport equipment and about USD one billion for iron and steel.

Thanks to expanding demand for user industries particularly telecom, automobile, smart consumer devices, the annualized imports of electronics goods grew at a whopping 24.56 per cent in January, 2017.

n++The Make in India should focus on these select items and ensure that their manufacture in India either by the domestic investor or even foreign investor should be quite rewarding. Besides, the tax structure should be such that it should make the domestic manufacture far more competitive than importsn++, said ASSOCHAM Secretary General Mr D S Rawat.

He said too large an import of products which can be manufactured within the country runs contrary to the basic grain of the Make In India initiative.

n++Besides, it is only through manufacturing that large scale employment can be generated. In an environment where fresh investment is hard to come in several key sectors of the economy, electronics is one area where the country does not have adequate capacity and highly import dependent. Thus, investment in the sector from both domestic and global firms should be welcomed and promoted. States like Karnataka have taken some initiative, but much more needs to be done in the sector which is generally pollution free and is required greatly,n++.

Similarly, investment can be made in transport equipment while some leeway should be provided to the steel manufacturers.

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Cabinet approves development of 50 un-served and under-served air strips
Mar 07,2017

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has approved the proposal for revival of 50 un-served/under-served airports/airstrips of the State Governments, Airports Authority of India (AAI) and Civil enclaves in three financial years starting from 2017-18.

The total cost of the project is estimated to be Rs. 4500 crore. 15 airports/airstrips each would be revived during 2017-18 and 2018-19 each while 20 airports/airstrips would be revived during 2019-20.

As an outcome of the approval, small cities/towns shall be connected on commencement of operation of flights to under-served/un-served airports. It will further boost the economic development in these areas as well as surrounding areas in terms of job creation and related infrastructure development.

The Revival of airstrips/airports will be demand driven, depending upon firm commitment from airline operators as well as from the State Governments for providing various concessions as Airports will be developed without insisting on financial viability.

The announcement for making adequate provisions for revival of unserved and underserved airports was made by the Finance Minister in Union Budget 2016-17.

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Cabinet approves MoU between India and Portugal on cooperation in the field of IT&E
Mar 07,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval for the Memorandum of Understanding (MoU) between India and Portugal on cooperation in the field of IT&E. The MoU was signed on 06 January 2017.

The MoU will help in developing a long term and sustainable cooperation on the basis of equality and mutual interest in the areas of IT&E in line with each countrys laws and regulations.

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Cabinet approves Revised Cost Estimate-I of Koteshwar Hydro Electric Project in Uttarakhand
Mar 07,2017

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has approved the Revised Cost Estimate-I of 400 MW Koteshwar Hydro Electric Project (HEP) in Uttarakhand at an estimated completion cost of Rs.2,717.35 crore.

The project is being implemented by Tehri Hydro Development Corporation (THDC) India Limited.

In addition to additional generating capacity of 400 MW of peaking power it will regulate releases from Tehri Reservoir for irrigation and drinking water supply. The reservoir of Koteshwar HEP will also act as lower reservoir for under construction Tehri PSP (1000 MW).

Background:

The Project has already been commissioned fully in March, 2012. Only balance works are to be done which are not linked with operation of the Plant but essential for safety and completion of the project.

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Cabinet approves Indias accession to the Customs Convention on International Transport of Goods under cover of TIR Carnets (TIR Convention)
Mar 07,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for Indias accession to the Customs Convention on International Transport of Goods under cover of TIR Carnets (TIR Convention) and for completion of necessary procedures for ratification, for its entry into force.

The Convention will help Indian traders to have access to fast, easy, reliable and hassle free international system for movement of goods by road or multi- modal means across the territories of other contracting parties.

By joining the convention, the need for inspection of goods at intermediate borders as well as physical escorts en route shall be obviated due to reciprocal recognition of Customs controls. Customs clearance can take place at internal Customs locations thereby avoiding clearances at Border Crossing Points and ports that may often be congested. Movement under the TIR can be allowed by checking only the seals and the external conditions of the load compartment or the container thereby reducing border delays, transport and transaction costs thereby leading to increased competitiveness and growth for the trade and transport sectors.

Compliance with the Convention shall ensure enhanced security in the supply chain as only approved transporters and vehicles are allowed to operate in terms of the Convention. As the TIR Carnet represents a guarantee for Customs duties and taxes and traffic in transit, there is no need for payment of such taxes and duties en route. The TIR carnet also serves as a Customs declaration, and hence it precludes the need to file multiple declarations satisfying national laws of the different transiting countries. The TIR Convention can be an instrument for movement of goods along the International North-South Transport (INSTC) Corridor and would be helpful in boosting trade with the Central Asian Republics and other Commonwealth of Independent States (CIS), particularly using ports in Iran like the Chabahar port.

The proposal does not result in any direct financial implication for the Government of India as it pertains to Indias accession to an international convention.

Background:

The Customs Convention on International Transport of Goods under cover of TIR Carnets, 1975 (TIR Convention), is an international transit system under the auspices of the United Nations Economic Commission for Europe (UNECE) to facilitate the seamless movement of goods within and amongst the Parties to the Convention. At present there are 70 parties to the Convention, including the European Union.

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Cabinet approves Memorandum of Understanding (MoU) on Renewable Energy between India and Portugal
Mar 07,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval for signing of a Memorandum of Understanding (MoU) on Renewable Energy between India and Portugal. The MoU was signed on 6th January, 2017 in New Delhi.

The MoU will help in strengthening bilateral cooperation between the two countries.

Both sides aim to establish the basis for a cooperative institutional relationship to encourage and promote technical bilateral cooperation on new and renewable issues on the basis of mutual benefit equality and reciprocity. The MoU envisages constitution of a Joint Working Group which can co-opt other members from Scientific Institutions, Research Centers, Universities, or any other entity, as and when considered essential.

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Cabinet approves Food Cash Credit to Punjab for food procurement operations - Resolution for settlement of Legacy Accounts (upto crop season 2014-15)
Mar 07,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval for settlement of Legacy Food Cash Credit Accounts (upto crop season 2014-15) of Punjab Government for food procurement operations. This proposal of Department of Expenditure was approved by Prime Minister under Rule 12 of (Transaction of Business) Rules, 1961 on 02.01.2017.

Early settlement of legacy issues will help the banks in disbursement of food credit in the larger interest of numerous farmers of the State and uninterrupted continuity in food procurement operations to ensure food security for the nation. Settlement of outstanding Cash Credit Limits (CCL) account by availing term loan by the Punjab Government would entail savings in terms of interest payment. This will create additional resource enabling Punjab Government to undertake capital expenditure.

The Legacy Cash Credit Accounts (upto crop season 2014-15) for food procurement operations by the Punjab Government shall be settled as under:

a) The outstanding amount in Cash Credit Accounts of Government of Punjab pertaining to season upto Kharif Marketing Season 2014-15 amounting to approx. Rs. 31,000 crore shall be converted into a term loan. It will be repayable in half yearly instalments over a period of 20 years with the option for pre-payment. The terms and conditions of the loan shall be as prescribed by the RBI and the lending banks.

b) The exact amount of the loan shall be the outstanding amount as on 31.03.2015, which is not secured by stocks of food grains. The consortium of banks led by SBI has to finalise the amount in consultation with all stakeholders including Department of Food & Public Distributions, Punjab Government and RBI.

c) The 14th Finance Commission has prescribed the Fiscal Roadmap for each State for its award period 2015-20 and anchored Fiscal Deficit of all States to an annual limit of 3% of States Gross State Domestic Product (GSDP). The above term loan proposed to be extended to Punjab Government in current financial year 2016-17 will not be counted in the fiscal deficit limit of Punjab Government in 2016-17.

d) After the conversion of legacy accounts in long term loan, the State Govt. of Punjab may issue bonds for the purpose of paying back the long term loan only. This will be subject to the approval of consortium of Banks and RBI. The Gol consent will be issued for swapping of loan in the same year of issue of bonds.

e) Punjab Government shall enter into a tripartite agreement with Gol and RBI irrevocably authorizing the Gol to deduct, in case Punjab Government fails to make any payment towards principal or interest of the Term Loan on due dates, such defaulted amount from the States share in central taxes and pay the same to SBI consortium.

f) This will be one-time measure to settle the outstanding amount in legacy accounts upto 2014-15. Punjab Government shall provide adequate annual budget provision to close CCL gaps on a regular basis to avoid future accumulation of CCL gaps over the years. It will also make efforts to reduce its subsidy bill to service the repayment of term loan from its own resources.

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