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Fitch: Economic Nationalism and Fiscal Reflation Dominate 2017 Global Economic Outlook
Nov 29,2016

The surge in populism and anti-establishment sentiment witnessed in the Brexit vote and Donald Trumps victory in the US presidential election seem likely to push structural policies in the direction of economic nationalism, entailing a reduction in trade openness and international labour migration, says Fitch Ratings in its latest global economic outlook (GEO). At the same time, electoral expressions of discontent are pushing leaders in the advanced economies to embrace easier fiscal policies.

In the long term, there is little doubt that increased trade protectionism and weaker migration flows would dampen growth in the advanced economies. However, in the short run, it is likely that the shift towards fiscal reflation will be the dominant factor, said Brian Coulton, Chief Economist at Fitch.

We have revised our global growth forecasts for 2017 upwards as the US is now expected to see a significant fiscal boost, albeit far smaller than that set out in President-elect Trumps campaign proposals. Fitchs US growth forecasts have been revised upwards modestly, by 0.2pp in 2017 and 0.1pp in 2018, to 2.2% and 2.3%, respectively.

An important implication of the shift towards fiscal easing is that central banks are no longer alone in providing macro policy stimulus. While we have not changed our central view that the Fed will hike rates in December and follow up with two further hikes in 2017, this increases confidence that the normalisation of US monetary policy will progress at a faster pace than over the last year, added Coulton.

Global bond yields have increased sharply since the US election. With headline inflation rates set to rise across the board in early 2017 and the potential for a reversal of globalisation to push up prices in the advanced countries over the medium term, there has been a renewed focus on inflation risks. However, changes to the macro policy outlook are most pronounced in the US and with the ECB likely to announce an extension of asset purchases for six to nine months beyond March 2017, this has partly been reflected in renewed dollar strengthening.

In emerging markets, the macro picture has brightened during 2016 as recessions in Russia and Brazil have started to bottom out and commodity prices have recovered. Furthermore, Chinas efforts to stabilise the economy following the slowdown last year have been more successful than anticipated. We have revised our China forecast for 2016 to 6.7% from 6.5% in Septembers GEO and 2017 up to 6.4% from 6.3%. Policy is now turning less accommodative in China, with a number of measures designed to cool the housing market, but the impact on GDP growth through 2017 is likely to be gradual.

Overall, against a backdrop of generally better-than-expected GDP growth outturns in 3Q16, our global growth forecasts have been revised up by 0.1pp in both 2016 and 2017. Global growth is expected to pick up to 2.9% in 2017 from 2.5% this year as US investment recovers, fiscal policy is eased and recessions come to an end in Brazil and Russia. The revision to global growth in 2017 is entirely explained by a 0.2pp upward revision in growth in the advanced economies. For emerging markets, the increase for China is more than offset by a weaker outlook for Mexico and India. Emerging market growth in 2017 has been revised down by 0.1pp to 4.8%.

This central scenario is accompanied by sizeable and increasing downside risks. First, the populist surge could exacerbate fragmentary tensions within the eurozone, with non-mainstream anti-EU parties gaining in popularity ahead of a series of key elections. Second, in the event of the US imposing punitive trade restrictions on China, retaliatory actions could see a trade or currency war develop. This would be highly damaging for global market sentiment and would reduce world growth.

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Cash Flow Recovery Concern for Corporates with Relatively Weak Asset Quality
Nov 29,2016

India Ratings and Research (Ind-Ra) says that 111 of the top 500 corporate borrowers, which held INR7.4trn of the overall debt of INR30.2trn at FYE16, are unlikely to generate higher return on capital employed (ROCE) than weighted average cost of capital (WACC), even in a high economic growth scenario. The agency attributed this to an incremental build-up of relatively high non-productive assets during FY11-FY16. Such corporates witnessed a decline in the proportion of their fixed assets to total assets to 52% in FY16 from 71% in FY11. As a result, the credit metrics of these corporates are likely to marginally improve in the near term.

85 Corporates with Relatively Weak Asset Quality Unlikely to ReviveInd-Ra analysed the balance sheets of borrowers for the period FY11-FY16. The agency observed that INR4trn of the INR12.4trn debt as at FYE16 of the 240 Vulnerable corporates was held by entities with a relatively high proportion of non-productive assets and weak cash flows. Debt servicing could remain a challenge for such corporates. Hence, these entities must engage in deep debt restructurings and reduce their debt significantly for long-term sustainability. Banks exposed to such entities may find it difficult to fit these corporates into the Scheme for Sustainable Structuring of Stressed Assets (S4A). Largely, corporates from infrastructure and construction, sugar, consumer durables, engineering and equipment, airlines and trading have a relatively high proportion of non-productive assets and a structural mismatch in cash flows.

155 Corporates with Relatively Better Asset Quality to Gain from Economic Recovery

Ind-Ra believes that corporates with a relatively high proportion of productive assets but with cash flow mismatches have a better chance of servicing their debts. Such corporates accounted for INR8.4trn debt of the overall Vulnerable debt. Ind-Ra believes such corporates could fall under the ambit of S4A scheme. Although haircuts may still be inevitable in many of them, quantum could be significantly lower. Such entities are likely to generate higher ROCE than WACC as the economy recovers. With an economic recovery, sectors such as oil and gas, metals and mining, power and textile are likely to rebound.

26 Corporates with Relatively Weak Asset Quality to Continue to Receive Lender Support

Ind-Ra expects lower shareholder returns to be generated by 26 Non-Vulnerable corporates with low volatility in cash flows but a relatively high proportion of non-productive assets. These entities accounted for INR3.4trn of the INR17.8trn debt held by Non-Vulnerable corporates. The debt servicing ability of these corporates would remain intact, as many of them benefit from strong parentage. Ind-Ra believes equity investment would be the most desirable option for these entities to deleverage and improve their capital structure. Sectors such as real estate and telecom have corporates with a relatively high proportion of non-productive assets and low, but, positive cash flow growth.

234 Corporates with Relatively Better Asset Quality to Drive Private Sector Capex

Corporates with strong profitability levels, healthy capital structures and a relatively higher productive asset base hold INR14.3trn debt of the overall Non-Vulnerable debt. These entities are likely to significantly benefit from an economic recovery. Ind-Ra believes these corporates would be the key driver of a revival in private sector investment. Corporates from sectors such as auto and automotive supplier, cement, chemical and pharmaceutical have low cash flow volatility and a high proportion of productive assets.

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Point of Sale (POS) Devices and Goods required for their manufacture exempted from Central Excise Duty till 31 March 2017
Nov 29,2016

The Government has demonetised the currency notes of Rs 500 and Rs 1,000 with effect from mid-night of 8th-9th November, 2016. Along with this, the Government has also laid increased emphasis on promoting digital payments.

Point of Sale (POS) devices are used for cashless transactions, both for making payments or disbursing cash. POS do not attract any basic customs duty. To further reduce the cost of such devices and thereby encourage digital payments, the Government has exempted such devices from Central Excise Duty. Consequently, these devices will also be exempt from Additional Duty of Customs [commonly known as CVD] and additional duty of customs [commonly known as SAD]. Simultaneously, to encourage domestic manufacturers of such devices, all goods required for the manufacture of POS devices have also been exempted from excise duty, and consequently from CVD and SAD. These exemptions will be valid till 31st March 2017.

Notification No.35/2016-Central Excise, dated 28th November, 2016 has also been issued in this regard.

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RBIs Liquidity Measures to Put Markets on the Backfoot
Nov 29,2016

The surge in inter-bank liquidity compelled the Reserve Bank of India (RBI) to announce surprise measures with a retrospective approach. The increase in the cash reserve ratio (CRR) maintained by banks for the past period will halt the softening of yields temporarily, says India Ratings and Research (Ind-Ra). The 10-year G-sec yield could trade at 6.25%-6.35% (6.23% at close on 25 November 2016) through the week, with a possibility of a near-term cap at 6.4%. The rupee is likely to trade at 67.95/USD-68.85/USD (68.47 /USD at close on 25 November 2016).

CRR Hike to Suck out INR3.5trn: Ind-Ra believes that the measures are taken with an aim to blot out the excessive liquidity in the system triggered by denotification of currency notes; however it will deprive banks of the discretionary allocation of the deposits, constraining their ability to utilise these deposits and increasing the carrying cost. The move will mop up a substantial amount of liquidity (current liquidity surplus at around INR5.3trn) without the need of collateral or a higher cost from RBI.

Bond Yields to Spike: Ind-Ra believes the latest measures will act as a significant sentiment dampener, and also change the demand-supply balance in the system. The impact will be more visible at the shorter end of the curve. After the current measures, the markets expectation of a rate cut in the upcoming monetary policy review could also face a downward revision, further weighing down on the bond market. This could lead to the widening of spreads between G-sec and corporate bonds, as near term investor appetite will remain weak.

Rupee Weakness to Stay: Ind-Ra believes, in the event of hardening US treasury yields and buoyant financial sentiment in US, emerging market currencies are in period of correction, and the rupee will not be an exception. Foreign investors have been pulling out money from both debt and equity segments - with total net outflows clocking USD4.4bn in November 2016. Globally, the next non-farm payroll data will be critical prior to the Feds policy review in December. With near consensus among market participants about the Fed rate hike in the upcoming December policy, rupee weakness will continue in the near term. However, if volatility surges, potential intervention by RBI will rein in the rupee weakness.

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2.5 Crore Free Electricity Connections Provided to BPL Households
Nov 29,2016

Under DeenDayalUpadhyaya Gram Jyoti Yojana (DDUGJY), Government of India is providing free electricity connections to BPL households. Out of total 4.27 crore connections sanctioned, free electricity connections to 2.5 crore BPL households have been provided as on 31.10.2016 under the scheme.

State-wise Coverage and Achievement of BPL Households under DDUGJY (including RE component)

Sl. No.Name of the StateCoverageAchievement                                     
(As on 31.10.2016)
1Andhra Pradesh245728724145552Arunachal Pradesh74679516213Assam179460412102244Bihar1066085237670195Chhattisgarh144899711433436Gujarat8480058429457Haryana2579021985808Himachal Pradesh19578162909Jammu & Kashmir1428856914810Jharkhand2367897127517011Karnataka103696695009812Kerala19291915030513Madhya Pradesh3209701166840714Maharashtra1621836122135015Manipur1375257030716Meghalaya12175810438317Mizoram306432971018Nagaland986165455919Odisha4499998277672320Punjab929889298821Rajasthan1791657116642622Sikkim136011360123Tamil Nadu52646850209424Telangana112530670886525Tripura20873213796226Uttar Pradesh5212392191094827Uttarakhand23840423792128West Bengal24800342204398Grand Total4271244624989940

In order to provide access to electricity to all rural households and also ensure quality and reliability of power supply in rural areas, Government of India has launched DeenDayalUpadhyaya Gram Jyoti Yojana (DDUGJY) with an outlay of Rs.43033 crore and Budgetary support of Rs.33453 crore consisting of separation of agriculture and non-agriculture feeders, strengthening and augmentation of sub-transmission and distribution network, metering at all level and rural electrification.  In addition to this, rural electrification component projects with total outlay of Rs.32860 crore including budgetary support from Government of India of Rs.29574 crore have been subsumed in DDUGJY.  Under the scheme, adequate infrastructure would be created in all the villages to provide access to electricity to all households.  Release of service connections to households is the responsibility of concerned State DISCOM / Power Department. Projects under the scheme are to be completed in 24 months from the date of award.

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LPG coverage to increase by 75% by 2019
Nov 29,2016

The Government with a view to increase LPG coverage to 75% by 2019 and to provide LPG connections to poor household, has launched Pradhan Mantri Ujjwala Yojana (PMUY). Under PMUY, 5 crore new LPG connections over a period of three years starting from 2016-17 to BPL households identified through SECC data, are to be released. In order to ensure availability and accessibility of LPG, Public Sector Oil Marketing Companies (OMCs) appoint new LPG distributors based on market feasibility. Currently selection and commissioning of new distributors is underway in more than 2300 locations. Further advertisement for 400 locations each in the States of UP and Odisha has been released by OMCs.

Release of LPG connections is a continuous process. LPG distributors are under instruction to release new connections on demand and, if any waiting list arises, liquidate the same within seven days.

Assessment of requirement of LPG (domestic/commercial) in the country including state of Madhya Pradesh is made by Public Sector Oil Marketing Companies (OMCs) on annual basis for planning the imports as indigenous production of LPG is less than the demand. The projected demand is monitored on a regular basis and necessary changes in the projections are made based on the prevailing sales trend, change in policies or any other factor which may influence the demand. Action is taken accordingly to meet any fluctuation in demand of LPG due to such factors.

OMCs carry out regular surprise inspections at distributors premises, conduct refill audits, surprise checks at customers premises, en-route checking of delivery vehicles etc., to check black-marketing and pilferage of cylinders.

During 2015-16, the established cases of malpractice/irregularities including overcharging, underweight/pilferage of LPG cylinders were 2633.

Public Sector Oil Marketing Companies (OMCs) take punitive action under the prevailing Marketing Discipline Guidelines (MDG) and the Distributorship Agreement against LPG distributors in all established cases of irregularities.

SMSs are sent to the LPG consumers at the time of booking, cash memo generation and delivery of cylinders.

Further, HPCL had launched Smart Refill Delivery Management on Pilot basis through Mobile application n++zy Gas. The advantages/features of the application are:

1. Delivery of Refill Cylinder to right consumer

2. Delivery of Refill Cylinder at right place at right time.

3. Options to the consumers to pay for the refill using cash or credit Card/Debit Card at the time of delivery at their door step. (E-Wallets to be integrated)

4. On the spot Delivery confirmation in the central system of HPCL as delivery happens

5. Near real time display of all delivery related information at the distributorship through a dashboard, providing much needed control of distributors on delivery process.

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Coal Stock with Thermal Power Plant Increased to 38.9 MT
Nov 29,2016

The coal stock with Thermal Power Plants (TPPs) has increased to 38.9 MT (equivalent to 27 days requirement) as on 31.03.2016 from 26.1 MT (equivalent to 18 days requirement as on 31 March 2015).

The subsidiary-wise production of coal and offtake by CIL for the last three years and current year are:

( in MT )

(APR-OCT) Prov.)
2015-162014-152013-14Prod.OfftakeProd.OfftakeProd.OfftakeProd.OfftakeECL19.58623.31640.20938.60740.00838.47036.05436.255BCCL19.49419.12635.86136.14134.51433.67232.61434.200CCL28.11930.36461.32459.58255.65255.33850.02252.122NCL42.97144.68580.22478.53272.48473.69368.63972.111WCL17.47819.44844.81542.31041.14741.24639.72939.945SECL71.11373.801137.934138.748128.275123.223124.261122.027 MCL74.68081.011137.901140.234121.379123.003110.439114.344NEC0.1270.4050.4860.3420.7790.7320.6640.577CIL273.568292.156538.754534.496494.238489.377462.422471.581

 State- wise coal production of CIL for the last three years and the current year is as below:

( in MT )

2015-162014-152013-14West Bengal11.69123.71821.65220.430Jharkhand55.508113.675108.52198.260Chhattisgarh65.334124.206115.192110.143Orissa74.680137.901121.379110.439Madhya Pradesh43.41287.89276.40373.590Maharashtra14.94038.18735.35434.175Uttar Pradesh7.87612.68914.95714.721Assam0.1270.4860.7790.664CIL273.568538.754494.238462.422

As regards import by CIL, under the provisions of new Fuel Supply Agreements in accordance to the Presidential Directives issued to CIL, option is given to Power Utility sector consumers to opt for supply of a part of the Annual Contracted Quantity (ACQ) from imported coal through CIL (viz. 15% of ACQ up to 2014-15, 13% of ACQ in 2015-16 and 5% of ACQ from 2016-17 onwards).

The scheme of supply of imported coal arranged by CIL to willing Thermal Power Plants (TPP) on cost plus basis was started only in 2014-15.  3 TPPs in 2014-15 and 3 TPPs in   2015-16 had opted for supply of imported coal arranged by CIL on cost plus basis.  Accordingly, CIL had imported 4.83 lakh tonnes of coal with sales value of Rs.333.31 Crores in 2014-15 and 3.57 lakh tonnes with sales value of Rs. 163.81 Crores in 2015-16.  For 2016-17, none of the TPPs have opted for supply of imported coal through CIL.

Till now, 83 coal mines have been allocated to private and public sector under the provisions of the Coal Mines (Special Provisions) Act 2015.  So far, a revenue of Rs. 2779.36 crores (approx.) has already been generated from these allocated

ASSOCHAM collaborates with Tally Solutions to simplify GST for the Retail Community
Nov 29,2016

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Tally Solutions, the premier Indian software product company, today, signed a Memorandum of Understanding (MoU) to demystify, educate and train the retail community for the roll out of the Goods and Services Tax (GST) law in India.

ASSOCHAM & Tally Solutions plan to conduct a series of conferences for the retail community across the nation, over the next few months. Tax experts from government bodies will be participating in these conferences to help clear the air about GST, by discussing the law and its implementation in these events. The conferences are designed to help the businesses shift from the existing taxation method and adapt to the new technology led law with ease.

Speaking on this occasion, Mr. Sathya Pramod, Chief Financial Officer of Tally Solutions Private Limited, said, n++Since the inception of GST discussion, Tally has been making constant efforts to demystify the new taxation policies for businesses and help with its smooth transition. This association with ASSOCHAM gives us a wider platform to reach out to the retail community and acquaint them with the technological changes that they need to adopt in the next few months. A thorough understanding of GST will allow these businesses to continue their functions comfortably post the roll out as well.n++

Mr. D.S Rawat, Secretary General, ASSOCHAM, said, n++GST has created a lot of clamour in the business community given the technological changes required to comply with the law. The lack of clear knowledge at the grassroots level about the draft Bill is another reason for resistance by the smaller businesses in the Nation. We are happy to partner with Tally on this, as this provides our members a platform to understand the significance of this new taxation policy and make an easy transition towards itn++

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MoPNG & MSDE sign MoU to boost to skill initiatives in the Hydrocarbon sector
Nov 29,2016

The Ministry of Petroleum & Natural Gas (MoPNG) and Ministry of Skill Development & Entrepreneurship (MSDE) signed a Memorandum of Understanding (MoU) to scale up skill development initiatives in the Hydrocarbon and allied sectors among other areas of cooperation.

Speaking on the occasion, Shri Pradhan said as his ministry is gearing up for new avenues that Petroleum and Natural Gas sector will open up for the country, there is tremendous focus on sourcing skilled workforce to make all plans successful. The partnership with MSDE through this MoU signing will help MoPNG to develop the ready workforce for Exploration and Production, Pipeline & Transportation, Refinery & Marketing and Service providers going forward. He said, in this way, we are investing back into our sectors and the countrys brighter future.

Welcoming contribution from the hydrocarbon sector, Shri Rajiv Pratap Rudy said, the hydrocarbon sector has tremendous potential for employment generation, and hence it is vital to develop a skilled workforce to meet both current and future needs. The setting up of the Hydrocarbons SSC is the first step in that direction. He said, with todays partnership, both Ministries commit to develop globally benchmarked workforce for the sector so that lakhs of youth can aspire for better economic opportunities through skill development programs.

MoPNG has now formally joined hands with MSDE to:

n++ Develop comprehensive skill development plans for existing and potential workforce in alignment with National Skills Qualification Framework (NSQF)

n++ Certify existing workforce in the hydrocarbon sector for Recognition of Prior Learning under Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

n++ Promote and scale-up apprenticeship training under National Apprenticeship Promotion Scheme

n++ Facilitate the setting-up of Skill Development Institutes/Centres of Excellence for vocational training to meet sectoral needs

MoPNG has setup the Hydrocarbons Sector Skill Council (HSSC) with representatives from the Government, PSUs and private sector to address the skill development needs across the value chain of the sector.

Under the MoU, MoPNG will continue to support the growth of the Hydrocarbon Sector Skill Council and align with the NSQF for skill development programs. Additionally, MoPNG will encourage Oil & Gas Companies and related contractors to hire skilled personnel, incentivize skill training & certification, promote apprenticeship programs, undertake Recognition of Prior Learning (RPL) programs in the sector and setup institutes focused on various sub-sectors and allied trades. MoPNG will catalyse these initiatives in the Hydrocarbon sector, through its various agencies and PSUs, and develop a plan in close alignment with the Skill India mission.

MSDE would primarily discharge its responsibilities through Directorate General of Training (DGT) and National Skill Development Corporation (NSDC).

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The global economy has the prospect of modestly higher growth
Nov 28,2016

n++The global economy has the prospect of modestly higher growth, after five years of disappointingly weak outcomes,n++ OECD Secretary-General Angel Gurrn++a said while launching the Global Economic Outlook. n++In light of the current context of low interest rates, policymakers have a unique window of opportunity to make more active use of fiscal levers to boost growth and reduce inequality without compromising debt levels. We urge them to do so,n++ Mr Gurrn++a said.

The Outlook projects that well targeted public spending initiatives could catalyse private economic activity and help to get the global economy out of the low-growth trap. The ongoing or projected shift in the fiscal stance in a number of major economies accounts for much of the modest increase in global growth to 3.3% in 2017 and 3.6% in 2018.

Among the major advanced economies, activity is expected to accelerate in the United States, due to an assumed easing of fiscal policy, with the economy projected to grow by 2.3% in 2017 and 3% in 2018. The euro area will grow at a 1.6% rate in 2017 and by 1.7% in 2018. In Japan, growth is projected at 1% in 2017 and 0.8% in 2018. The 35-country OECD area is projected to grow by 2% in 2017 and 2.3% in 2018, according to the Outlook.

With rebalancing continuing in China, growth is expected to continue drifting lower, to 6.4% in 2017 and 6.1% in 2018. Indias growth rates are expected to hover above 7.5% over the 2017-18 period, but many emerging market economies will continue to grow at a more sluggish pace. The deep recession in Brazil is expected to end in 2017, after which the economy will grow at a 1.2% rate in 2018.

The Outlook draws attention to conditions that create a n++window of opportunityn++ for new fiscal initiatives, as extraordinarily accommodative monetary policy has led to very low interest rates and created fiscal space. A targeted annual increase in public spending of n++ percent of GDP could be financed for several years in most countries without increasing the debt-to-GDP ratio in the medium term. Combining this initiative with structural reforms, and acting collectively across countries, would boost the impact, according to the Outlook.

n++This is not a blank cheque for governments,n++ Mr Gurrn++a said. n++The OECD is calling for fiscal policy to be used more wisely, with spending targeted at areas that boost growth, like high-quality infrastructure investment, innovation, education and skills, which also make growth more inclusive.n++

The Outlook identifies a number of financial risks where exchange rate and capital flow volatility coupled with pricing distortions are exposing the vulnerability of corporate balance sheets, particularly in emerging markets, and challenging bank profitability and the long-term stability of pension schemes in advanced economies.

An increase in protectionism could risk impairing already weak growth in global trade.

n++Protectionism and the inevitable trade retaliation would offset much of the positive effects of proposed fiscal initiatives on domestic and global growth,n++ said OECD Chief Economist Catherine L. Mann. n++It would also likely raise prices, harm living standards and leave countries in a worsened fiscal position. Trade protectionism may shelter some jobs, but it will worsen prospects and lower well-being for many others.n++

The Outlook calls on governments to avoid protectionist policies and encourages them instead to implement structural policy packages that create more job opportunities, increase business dynamism and promote successful reallocation, ensuring that the gains from trade are better shared by all.

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Taxation Laws (Second Amendment) Bill, 2016 introduced in Lok Sabha
Nov 28,2016

Evasion of taxes deprives the nation of critical resources which could enable the Government to undertake anti-poverty and development programmes. It also puts a disproportionate burden on the honest taxpayers who have to bear the brunt of higher taxes to make up for the revenue leakage. As a step forward to curb black money, bank notes of existing series of denomination of the value of Rs.500 and Rs.1000 [Specified Bank Notes(SBN)] have been recently withdrawn the Reserve Bank of India.

Concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 (the Act) can possibly be used for concealing black money. The Taxation Laws (Second Amendment) Bill, 2016 (the Bill) has been introduced in the Parliament to amend the provisions of the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision.

Further, in the wake of declaring specified bank notes as not legal tender, there have been suggestions from experts that instead of allowing people to find illegal ways of converting their black money into black again, the Government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean so that not only the Government gets additional revenue for undertaking activities for the welfare of the poor but also the remaining part of the declared income legitimately comes into the formal economy.

In this backdrop, an alternative Scheme namely, Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) has been proposed in the Bill. The declarant under this regime shall be required to pay tax @ 30% of the undisclosed income, and penalty @10% of the undisclosed income. Further, a surcharge to be called Pradhan Mantri Garib Kalyan Cess @33% of tax is also proposed to be levied. In addition to tax, surcharge and penalty (totaling to approximately 50%), the declarant shall have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI under the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. This amount is proposed to be utilised for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc., so that there is justice and equality.

An overview of the amendments proposed in the Bill are placed below:

Overview of Amendments Proposed                                                        







General provision for penalty

PENALTY (Section 270A)
Under-reporting - @50% of tax
Misreporting - @200% of tax

(Under-reporting/ Misreporting income is normally difference between returned income and assessed income)

No changes proposed

Provisions for taxation & penalty of unexplained credit, investment, cash and other assets

TAX  (Section 115BBE)

Flat rate of tax @30% + surcharge + cess
(No expense, deductions, set-off is allowed)


TAX  (Section 115BBE)

Flat rate of tax @60% + surcharge @25% of tax (i.e. 15% of such income). So total incidence of tax is 75% approx.
 (No expense, deductions, set-off is allowed)

PENALTY (Section 271AAC)

If Assessing Officer determines income referred to in section 115BBE, penalty @10% of tax payable in addition to tax (including surcharge) of 75%.

Penalty for search  seizure cases

Penalty (271AAB)

(i) 10% of income, if admitted, returned and taxes are paid

(ii) 20% of income, if not admitted but returned and taxes are paid

(iii) 60% of income in any other case

Penalty (271AAB)

(i) 30% of income, if admitted, returned and taxes are paid

(ii) 60% of income in any other case

Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY)

New Taxation and Investment Regime

Undisclosed income in the form of cash & bank deposit can be declared:

(A) Tax, Surcharge, Penalty payable

       Tax                   @30% of income declared

       Surcharge          @33% of tax

       Penalty              @10% of income declared

       Total                  @50% of income (approx.)

(B)  Deposit

     25% of declared income to be deposited in interest    

     free Deposit Scheme for four years. 

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Six Rivers of Goa to be developed as National Waterways
Nov 28,2016

Total 106 new waterways have been declared as National Waterways (NWs) under the National Waterways Act, 2016, in addition to the five existing NWs notified earlier. Specific stretches of six rivers of Goa viz. Chapora (NW-25), Cumberjua Canal (NW-27), Mandovi (NW-68), Mapusa (NW-71), Sal (NW-88) and Zuari (NW-111) have been included in the declared NWs.

Detailed Project Reports have been prepared for the rivers Mandovi, Zuari and Cumberjua. For the remaining three NWs, two-stage DPR studies (Stage-I - Feasibility study) and (Stage-II-DPR) have been awarded. The requirement of land and civil structural interventions and the requirement of funds for the development of the six NWs in Goa would be known after the finalization of the DPRs.

For development of NWs in Goa, a Memorandum of Understanding (MoU) has been signed by Inland Waterways Authority of India (IWAI) with Mormugao Port Trust (MPT). Expenditure to develop these waterways will be met from Government Budgetary Support (GBS), extra budgetary resources such as bonds, MPT and Government of Goa.

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During Q2 of FY17, the Government issued dated securities worth Rs. 176,000 crore taking the gross borrowings during H1 FY17 to Rs. 341,000 crore
Nov 28,2016

During Q2 of FY17, the Government issued dated securities worth Rs. 176,000 crore taking the gross borrowings during H1 FY17 to Rs. 341,000 crore or 56.8 per cent of BE, vis-a-vis 58.5 per cent of BE in H1 FY 16. Net market borrowings during H1 FY 17 was at Rs.124,777crore, 55.1 per cent of BE. Auctions, both Government dated Securities and Treasury Bills, during Q2 of FY17 were held in accordance with the pre-announced issuance calendar.

Since April-June (Q1) 2010-11, Public Debt Management Office (PDMC) (earlier Middle Office), Budget Division, Department of Economic Affairs, Ministry of Finance, is bringing-out a Quarterly Report on Debt Management on regular basis. The Current Report pertains to the Quarter July-Sept. 2016 (Q2 FY 17).

In the 12 tranches of G-securities auction, two new securities, namely 6.97% GS 2026 and 6.84% GS 2022 were issued during the quarter on Sep 6 and Sep 12, 2016, respectively. The weighted average maturity (WAM) and weighted average yield (WAY) issued during Q2 FY17 was 14.26 years and 7.24 per cent. Liquidity conditions in the economy remained comfortable and in surplus mode during the quarter. It continued to improve in Q2 with RBI front-loading the liquidity required to manage FCNR (B) redemptions. The cash position of the Government during Q2 of FY17 was comfortable and remained mostly in surplus mode.

The Public Debt (excluding liabilities under the Public Account) of the Central Government provisionally increased by 3.0 per cent in Q2 of FY 17 on Q-o-Q basis. Internal debt constituted 92.3 per cent of Public Debt as at end-September 2016, while marketable securities accounted for 83.4 per cent of Public Debt. About 26.2 per cent of outstanding stock has a residual maturity of up to 5 years at end - September 2016, which implies that over the next five years, on an average, around 5.6 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches in coming period is expected to reduce roll over risk further.

G-sec yields declined sharply across the curve during the quarter, with 10 yr segment gaining the most, on the back of softening of crude prices, increase in risk appetite globally after sharp correction post Brexit, passage of GST Bill by Upper House of Parliament, liquidity easing measures of RBI, expectation of rate cut from RBI, etc.The trading volume of Government securities on an outright basis during Q2 FY 17 increase by 78.45 per cent over the previous quarter.

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Modern RFID Access Control System Introduced at Paradip Port
Nov 28,2016

Paradip Port has taken a step forward with introduction of the modern RFID Access Control System (RFID) for controlling and tracking the entry and exit of vehicular as well as human traffic into and out of its prohibited area. The implementation of the system was done as per the directives of the Ministry of Shipping. With introduction of the RFID System w.e.f. 26th September, 2016, the earlier. Paper Pass system for vehicles and the port users has been scrapped.

The implementation of the RFID system has contributed to improvement in productivity of Paradip Port due to smooth movement of traffic across the gates. Paradip Port is the first among all Major Ports to have successfully implemented the RFID Access Control System adding yet another distinction to its string of achievements.

The new RFID system is inherently accompanied with enhanced Maritime Security features. Faster and efficient movement of traffic across the gates leading to reduction in congestion, simplified online payment procedure, availability of real-time information on number of different types of vehicles, equipment, port user personnel inside the prohibited area, availability of entry and exit details of a particular person, vehicle inclusive of the gate no. instantly through which the traffic moved, are some of the added advantages of the new system. Retrieval of data pertaining to the entire period of time is also another advantage of the system.

The new RFID system is beneficial to the port users in that they can avail data related to their cargo inflow and outflow over any desired period of time. Besides, the system also keeps a record of the details of the vehicles along with the credentials of drivers & helpers which can be retrieved from the system at a later date for verification, reconciliation or investigation if required. Port users are facilitated with additional convenience of one more HEP (Harbour Entry Permit) Issue Section and more counters compared to the earlier system of two HEP Issue Sections.

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Moodys: Indian, Korean and Singapore securitization markets will remain stable in 2017
Nov 28,2016

Moodys Investors Service says that the performance of the securitization markets of India (Baa3 positive), Korea (Aa2 stable) and Singapore (Aaa stable) will be stable in 2017, with good credit quality across most asset classes.

In India, robust growth and low oil prices will underpin stable auto ABS performance, despite the economic disruption from the countrys demonetization, says Yian Ning Loh, a Moodys Senior Vice President.

In Korea, low unemployment and interest rates will keep credit card ABS delinquencies low, while covered bond credit quality will also remain strong in both Korea and Singapore, adds Loh.

Moodys expects the performance of Indian commercial vehicle (CV) loans backing auto asset-backed securities (ABS) transactions to remain stable. Delinquency rates will increase somewhat in the very short term owing to the Indian governments decision to withdraw INR500 and 1,000 notes. However, delinquencies should return to their current levels over the course of 2017, owing to robust economic growth and low oil prices.

Moodys also expects new Indian auto ABS issued in 2017 will have good credit characteristics.

Residential mortgage performance should also remain strong in 2017, with low delinquencies reflecting low interest rates, steady house prices and stable prepayment rates.

In Korea, delinquency rates for credit card receivables were low in 2016, and should remain low in 2017. The credit quality of new credit card ABS deals issued in 2017 will also be good, says Moodys.

The credit quality of new and outstanding Korean covered bonds will also be strong and stable in 2017, supported by the high credit quality of the issuers and the countrys sovereign strength. The credit quality of the collateral will also be good.

Finally, the credit quality of new and outstanding Singaporean covered bonds will be strong and stable in 2017, supported by the credit quality of the bank issues, which remains high despite our negative outlooks on the major Singaporean banks, and the countrys sovereign strength. The credit quality of the collateral will also be good.

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