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Stronger collaboration between Asia Pacific countries key to empowerment and digital transformation
Feb 17,2017

n++Networks are the key to transforming India into a knowledge based society and a digital economyn++, pointed out Mr P P Chaudhary, Union Minister of State for Law and Justice and Electronics and Information Technology.

The Minister emphasized upon Indias strong position at the digital frontier, riding on the back of the National Digital India Mission, the Jan Dhan-Aadhar-Mobile (JAM) trinity, the role of Direct Benefits Transfer in reaching welfare schemes to the poor and a robust e-Governance infrastructure enabling delivery of citizen centric services to the last mile. He also pointed out the dynamic role played by the Village Level Entrepreneurs in empowering the villages of India and fostering social inclusion.

Inviting international collaboration on high quality research on digital technology, Dr Ajay Kumar, Additional Secretary, Ministry of Electronics & Information Technology, Government of India said that the Asia Pacific region comprises the vortex of internet activities and it is essential to create strong linkages through a number of collaborative efforts like the Visvesvaraya PhD Scheme and Global Innovation and Technology Alliance (GITA), that are supported by the Government of India. He called upon the Asian Pacific countries to play a greater role in global internet governance policy making through greater collaboration and participation.

Dr Neena Pahuja, Director General, ERNET highlighted that technology has helped in creating transparency & disruptive changes. With the base of high speed advanced networks, we are now on the verge of witnessing another wave of disruptive change both in industry and also in day-to-day lifes. In Industry, the connected environment is helping in better productivity and applications such as preventive healthcare, disaster mitigation, remote soil health check-ups are now becoming reality.

She added that India has very big plans to empower every citizen with access to digital services, knowledge and information, and is investing in large scale connected environment. The ambitious project of creating 100 Smart Cities in India will also ride on strongly connected cities.

Mr Bhaskar Pramanik, Chairman, CII National Committee on IT & ITeS and Chairman, Microsoft Corporation said that the digital revolution was reminiscent of the Industrial revolution and would have major impact on the social fabric, healthcare, education system and a plethora of sectors including agriculture, defense, MSME, skills, among others. n++Technology should flow from the technocrats to the people who turn the wheels of the economyn++, he said. He also laid emphasis upon industry - academia collaboration that will take the digital revolution, a step further.

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Retail inflation in Delhi, J&K more than double national average, demonetization possible reason: ASSOCHAM
Feb 17,2017

The retail inflation may have been hovering at quite a reasonable level of 3.17 per cent for January, 2017 on an all-India basis, but there is no respite for people right in Delhi along with a couple of other states, suffering the price rise at double the national average, with demonetization leaving its possible impact, an ASSOCHAM analysis has noted.

n++Against the national average of 3.17 per cent, Delhi had to bear the inflation rate, measured by the Consumer Price Index (CPI) at 6.32 per cent, while it was 7.01 per cent for Jammu and Kashmir (J&K) and 5.92 per cent for Himachal Pradesh,n++ said the ASSOCHAM analysis of the inflation data.

It also noted that in the rural belt of the national capital, the CPI inflation was close to seven per cent at 6.85 per cent. Similarly the rural areas of Jammu and Kashmir and HP which were quite high on the retail inflation chart, witnessed quite a high rate of price rise in January, 2017 year on year.

In J& K rural and far flung, the CPI inflation was 9.08 per cent and for the similar areas of HP it was 6.17 per cent, adds the ASSOCHAM.

n++The CPI inflation for January, 2017 on an all India level is much lower at 3.17 per cent than the one measured on the Wholesale Price Index, at 5.25 per cent. One of the plausible reasons could be the impact of demonetization on the supply chain, n++said ASSOCHAM President Mr Sandeep Jajodia.

But, what is more surprising is the huge gap between retail inflation in Delhi and the national average. n++ This was not expected at least in Delhi, especially when the phenomenon was not seen even in the neighbouring states of Haryana, UP and Punjab, thought it was slightly over four per cent in these statesn++, the chamber said, adding the demonetization would have led to supply chain disruption more in the national capital than other states.

In any case, there are several supply chain issues which can be fixed only by an efficient transport that is a function of a huge investment needed in building quality roads, rail network, air cargo and a well integrated and modern cargo movement trade, said Mr. Jajodia.

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There has been a growth of 72% in the tourists arrived on e-Visa during January 2017 over January 2016
Feb 17,2017

Foreign Tourist arrivals to India and Foreign Tourist availing E-Visa facility during January 2017 Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) & FTAs on e-Visa on the basis of Nationality-wise, Port-wise data received from Bureau of Immigration (BOI). Accordingly, for the month of January 2017, a growth of 16.5% is observed as compared to January 2016, surpassing the previous years corresponding growth of 6.8% observed in January 2016 over January 2015. Correspondingly, there has been observed a growth of 72% in the tourists arrived on e-Visa during January 2017 over January 2016 by registering a figure of 1.52 Lakhs as compared to 0.88 Lakhs in the month of January 2016. Clearly, the share of tourists availing e-Visa facility in January 2017 has reached a level of 15.5% as against 10.4% in the month of January 2016. This clearly outlines the steady success of e-Visa facility in quantifiable terms.

Following a modified approach, Ministry of Tourism from the month of January 2017, shall be presenting monthly Foreign Tourist Inflows to India as well as the Foreign Tourists who availed e-Visa facility, simultaneously.

The following are the important highlights regarding FTAs & FTAs on e-Visa from tourism during the month of January, 2017.

Foreign Tourist Arrivals (FTAs):

n++ The number of FTAs in January, 2017 were 9.83 lakh as compared to FTAs of 8.44 lakh in January, 2016 and 7.91 lakh in January, 2015.

n++ The growth rate in FTAs in January, 2017 over January, 2016 is 16.5% compared to 6.8% in January, 2016 over January, 2015.

n++ The percentage share of Foreign Tourist Arrivals (FTAs) in India during January 2017 among the top 15 source countries was the highest from USA (15.01%) followed by Bangladesh (14.91%), UK (11.11%), Canada (4.63%), Russian Fed. (4.46%), Australia (3.65%), Malaysia (3.15%), Germany (2.92%), France (2.89%) and China (2.54%), Sri Lanka (2.45%), Japan(2.15%),Afghanistan (1.84%), Rep. of Korea (1.61%) and Nepal (1.60%).

n++ The percentage share of Foreign Tourist Arrivals (FTAs) in India during January 2017 among the top 15 ports was the highest at Delhi Airport (28.30%) followed by Mumbai Airport (18.23%), Haridaspur Land checkpost (8.17%), Chennai Airport (7.32%), Goa Airport (6.51%), Bengaluru Airport (5.32%), Kolkata Airport (4.32%), Cochin Airport (3.73%), Ahmedabad Airport (3.37%) and Hyderabad Airport (2.74%), Gede Rail Land checkpost (1.77%), Trivandrum (1.62%), Trichy Airport (1.38%), Ghojadanga land checkpost (1.08%) and Amritsar Airport (1.02%).

Foreign Tourist Arrivals (FTAs) on e-Visa

n++ During the month of January, 2017 total of 1.52 lakh tourist arrived on e-Visa as compared to 0.88 lakh during the month of January 2016 registering a growth of 72.0%

n++ The percentage shares of top 15 source countries availing e-Visa facilities during January, 2017 were as follows:

UK (22.9%), USA (13.6%), Russian Fed (8.3%), China (6.3%), France (5.6%), Australia (4.4%), Germany (4.1%), Canada (3.6%), Korea (Rep.of) (3.2%) and Ukraine (2.2%), Netherlands (1.6%), South Africa (1.4%), Singapore (1.3%), Malaysia (1.3%) and Sweden (1.1%).

The percentage shares of top 15 ports in tourist arrivals on e-Visa during January, 2017 were as follows:

New Delhi Airport (36.5%), Mumbai Airport (20.5%), Dabolim (Goa) Airport (16.2%), Chennai Airport (7.0%), Bengaluru Airport (5.1%), Kochi Airport (4.2%), Kolkata Airport (2.7%), Trivandrum Airport (2.0%), Hyderabad Airport (2.0%) and Ahmadabad Airport (1.7%), Amritsar Airport (0.8%), Jaipur Airport (0.5%), Tirchy Airport (0.4%), Gaya Airport (0.2%)and Lucknow Airport(0.1%).

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Insurance penetration in India likely to cross 4 pc this year: ASSOCHAM
Feb 17,2017

Governments policy of insuring the uninsured has gradually pushed insurance penetration in the country and proliferation of insurance schemes are expected to catapult this key ratio beyond 4 per cent mark by the end of this year, reveals the ASSOCHAM latest paper.

Despite the gentle rise in insurance penetration which is percentage of insurance premium with reference to the Gross Domestic Product (GDP), it is still far below the global average, according to paper titled Insurance penetration in India, by the Associated Chamber of Commerce and Industry of India (ASSOCHAM).

The insurance penetration has started its northward journey is evident from the fact that it has increased from 3.3 per cent in 2014 to 3.44 per cent in 2015 on the back of various insurance schemes launched by the government, adds the paper.

As part of social security initiative, the government has launched low premium insurance schemes both life and non-life in 2015. Last year, it introduced crop insurance.

With objective to provide insurance cover to all, the Government launched Pradhan Mantri Suraksha Bima Yojna (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJBY) in 2015, noted the study.

PMSBY offers a renewable one-year accidental death-cum- disability cover of Rs 2 lakh for partial/permanent disability to all savings bank account holders in the age group of 18-70 years for a premium of Rs 12 per annum per subscriber. The scheme is managed by general insurance firms, adds the chamber.

PMJJBY, on the other hand, offers a renewable one year life cover of Rs 2 lakh to all savings bank account holders in the age group of 18-50 years, covering death due to any reason, for a premium of Rs 330 per annum per subscriber.

Besides, Pradhan Mantri Fasal Bima Yojana (PMFBY) launched last year to provide financial support to farmers suffering crop loss or damage arising out of unforeseen events will also add to insurance penetration.

PMFBY has been approved for implementation in all States and Union Territories from Kharif 2016 season in place of National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).

PMFBY is a significant improvement over the earlier schemes on several counts and comprehensive risk coverage from pre-sowing to post-harvest losses are some of the salient points. A budget provision of Rs 5501.15 crore has been made for the scheme for the current crop season, ASSOCHAM President Mr. Sandeep Jajodia said.

Rashtriya Swasthya Bima Yojana (RSBY) is a government-run health insurance scheme that provides for cashless insurance for hospitalisation in public as well as private hospitals. The scheme is force since April 1, 2008 and has been implemented in 25 states.

The number of lives covered under Health Insurance policies during 2015-16 was 36 crore which is approximately 30 per cent of Indias total population. The number has seen an increase every subsequent year as 28.80 crore people had the policy in the previous fiscal.

The measure of insurance penetration and insurance density calculated as the ratio of premium to population or per capita premium reflects the level of development of insurance sector in a country, said ASSOCHAM President.

During the first decade of insurance sector liberalization, the sector has reported consistent increase in insurance penetration from 2.71 per cent in 2001 to 5.20 per cent in 2009.

However, since then, the level of penetration has been volatile and remained below the peak. It declined from 3.9 to 3.3 per cent in 2014 due to certain regulatory changes and unfavourable market conditions.

This trend was observed in the level of insurance density which reached the maximum of USD 64.4 in the year 2010 from the level of USD 11.5 in 2001. During 2015, the insurance density moderated to USD 54.7. The insurance density of life insurance business had gone up from USD 9.1 in 2001 to reach the peak at USD 55.7 in 2010 and declined to USD 43.2 in 2015.

The life insurance penetration surged from 2.15 per cent in 2001 to 4.60 per cent in 2009. Since then, it has exhibited a declining trend reaching 2.6 per cent in 2014.

However, there was a slight increase 2015 reaching 2.72 per cent in 2015 when compared to 2.6 per cent in 2014. The Insurance Penetration for the insurance sector as a whole in 2015 was 3.4 per cent in India, as against world average of 6.2 per cent.

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India Ratings Maintains Stable Outlook for Auto for FY18
Feb 17,2017

India Ratings & Research (Ind-Ra) has maintained a stable outlook on the auto sector for FY18. This is based on the expectation of a moderate yoy volume growth of 6%-9% for the passenger vehicle (PV) segment, and despite an expected negative 2% to 2% slowdown in the commercial vehicle (CV) segment. The agency believes that growth in the PV segment would be driven by 15%-20% yoy volume increase in utility vehicles (UV), with cars likely to register a lower growth of 3%-5% yoy. The slowdown in the CV segment is expected to be on account of a 9%-12% decline in medium and heavy commercial vehicles (MHCVs), partially offset by a 6%-9% growth in light commercial vehicles (LCVs).

Another factor supporting the agencys stable sector outlook is the continued strong financial profile of the 10 listed companies in its sample set. The mean FY16 EBITDA margin for the agencys sample set was 12.4% (9MFY16: 12%), with EBITDA gross interest cover maintained at above 100x. In Ind-Ras assessment, mean leverage (net debt/EBITDA) would continue to be maintained below 1x in FY17 and FY18. The credit profile of the companies outside the sample set (comprising mostly subsidiaries of overseas auto companies) would benefit from the support potentially available from strong parent companies.

Ind-Ra believes that the governments demonetisation drive had a limited impact on the auto sector as most of the auto original equipment manufacturers have countered build-up of channel inventory through higher discounts without altering their production schedules with vendors. Moreover, the impact of demonetisation was restricted largely to the two-wheeler segment, given the relatively higher proportion of cash transactions considering the low ticket size of purchases versus PVs and CVs.

In the agencys assessment, MHCV volumes would decline in FY18 due to depletion of replacement demand, inconsistent Index of Industrial Production, and sales volumes artificially propped up in FY17 due to pre-emptive purchases to avoid paying higher prices from April 2017, when vehicles need to be BSIV compliant. Contrarily, LCV volumes would continue to be supported by demand for last mile transportation, arising from a substantial increase in the online retail sales.

Ind-Ra estimates domestic scooter volumes would grow by 15%-18% in FY18 (close to the estimated FY17 growth rate), but lower than the previous years due to the base effect. The agency expects motorcycle volumes to recover slightly over April-December 2016 yoy growth level of 6.3%, with increased currency in circulation, leading to a demand revival in 4QFY17 and FY18.

Furthermore, the agency believes that the Goods and Service Tax (GST) will be largely neutral for the industry, as reduction in logistics and supply chain costs would be partly offset by an increase in the effective tax rate.

Outlook Sensitivities

Positive Outlook Unlikely: Given the structural issues of overcapacity and intensifying competition, Ind-Ra does not envisage a positive outlook revision in the event of a revival in sales. However, curtailment or postponement of planned capacity additions, coupled with sales volumes higher than the agencys expectations, could have a positive impact on the credit profile of the sector.

Weak Demand, External Shock: A sustained reduction in CV volumes due to slowdown in industrial production, together with moderation in PV volumes due to rising fuel prices and weak consumer sentiments among others, could have a negative impact on the sector outlook.

Additionally, any external shock pressuring the rupee and a subsequent spurt in the interest rate may have a moderate impact on the sector, thus impacting the volumes, as well as the credit profile of auto companies.

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Ind-Ra: Telecom Industry to Consolidate amidst Hypercompetition in FY18
Feb 17,2017

India Ratings and Research (Ind-Ra) has revised its outlook on the telecommunications services sector for FY18 to negative from stable-to-negative. The negative outlook reflects Ind-Ras expectation of longer and deeper than expected deterioration in the credit profile of telcos following the extended free services by Reliance Jio Infocomm (RJio - IND AAA/Stable).

A redistribution of market share among the existing telcos is underway as RJio gained a quick subscriber base of 72 million by January 2017 which could cross 100 million by March 2017. Rjios ability to retain market share would be driven by both pricing as well as user experience given the choice of complete reliance on voice over LTE (VoLTE) technology. The industry could witness the increase in the dual-sim phenomena in the interim. Thus the data and voice usage pattern for each telco could remain inconsistent and unpredictable. Retaining customer base will necessitate the telcos to continue to augment their capacity and coverage for superior speed and virtual network platforms.

Per capita data usage is likely to increase by about 35%-40% in FY18 to 1,250MB (FY16: 600MB; FY17-Projected: 900MB. A decline in data tariffs by 20%-30% will pull down average revenue per user despite higher volumes coming from rise in data usage. Ind-Ra expects voice revenue to moderate in FY18 on stagnant minutes of usage (MoU) and on further moderation in voice realisations which are expected to drop to 25 paisa - 28 paisa per minute from 30 paisa - 35 paisa currently. The incumbent telcos are moving towards more bundling of voice and data plans in line with RJios voice calling bundled-free with data. Blended average revenue per user (ARPUs) are slated to decline by 10% in FY18, according to Ind-Ra.

Credit profile is likely to weaken in FY18 with a fall in profits and a rise in debt, due to spectrum and network-related capex. Free cash flows will be negative due to the double whammy of weaker earnings and capex. Telcos will balance debt levels through monetising non-core assets in order to mitigate the pressure on credit profiles.

The industry has lost approximately 20% revenues due to free services by RJio. Consolidation in the industry will help a quicker return of pricing power.. The proposed merger of Vodafone Mobile Services Limited (Vodafone - INDAAA/RWE) and Idea Cellular Ltd (Idea) will be positive for the telecom industry by eliminating duplication of spectrum and infrastructure capex. Smaller telcos may not be able to sustain cash burn by operating independently and are looking for exit options. The Rating Outlook for FY18 for the rated entities is Stable to Negative despite industry outlook being negative.

OUTLOOK SENSITIVITIES

Stabilisation of the pricing would be key driver to revise the sector outlook back to stable. Return of pricing power and/or substantially higher data volumes are critical to generate the desired return on large investments made into the sector. Clarity on the market share will also be a driver to reassess business profile of telcos.

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Ind-Ra: Capacity Sufficient, Demand Deficient
Feb 17,2017

India Ratings and Research (Ind-Ra) has maintained a stable to negative outlook on the power sector for FY18, despite an improvement in coal availability, the restructuring of discom debt and the operationalisation of stuck projects. This is owing to large underutilised capacities, muted demand, bunched capacity addition, soft merchant power prices, continued investments in renewable capacities, lack of power purchase agreements (PPAs) and weak discoms.

Moreover, Ind-Ra has maintained a Stable Outlook on most of its rated power sector entities for FY18, as the agency expects its rated entities will continue to manage fuel and state power utility risks due to a favourable tariff mechanism, a comfortable liquidity position and support from central and state governments.

Credit profiles of large-sized power companies appear to have stabilised, though the sectors return on capital employed remains unattractive. However, small private companies are the worst hit. With a sub-50% plant load factor (PLF), they have a high probability of debt default. Under the current scenario, the survival of such players is not possible. There is a possibility of sector consolidation, which could be triggered by the new bankruptcy code.

Ind-Ra expects the PLFs of coal-based power plants to decline further in FY18 and rise thereafter, though they would continue to remain sub-65% until FY22. India added nearly 115GW of coal-based capacity over FY11-9MFY17. However, demand growth did not keep pace with such capacity addition. This has put pressure on the PLFs of coal-based thermal power plants. In the past, coal and discom financial health were the two key constraints to the overall PLF. However, demand, solar capacity addition and discom financial health will be the major factors putting pressure on PLF in future.

Ind-Ra believes nearly 45GW of private sector coal-based capacity running at sub-50% PLF is currently stressed, with a debt of nearly INR1.9 trillion. The private sector has been hit harder due to lack of PPAs for the entire capacity. Earlier, the private sector kept a part of the capacity untied due to high short-term prices. The PLF of the private sectors coal-based power plants fell to 56.3% in 9MFY17 from 83.9% in FY10. Given short-term power prices are likely to remain benign and discoms unwillingness to sign PPAs, these capacities are unlikely to see an increase in PLF. According to Central Electricity Authority estimates, 50GW of capacity has a high probability of getting commissioned over FY18-FY22. Central and state power utilities account for 60% of the 50GW capacity, followed by the private sector (40%). PPAs have been signed for the capacity belonging to central and state power utilities. This will put further pressure on the coal-based capacity of private power generators.

Solar power tariffs across the world declined to USD24MWh compared the lowest solar power tariff of USD48MWh in India. Given the wide difference, Ind-Ra believes there is ample room for domestic solar power tariffs to fall. This belief is more likely as solar panel prices fell 15% in 2HFY16. Solar power tariffs globally are a function of strong counterparty, higher PLF, single axis tilt use and lower borrowing cost. Moreover, battery storage advancements worldwide could alter solar power economics and make solar a more price and consumer-friendly energy source.

OUTLOOK SENSITIVITIES

Sovereign Linkages, High Capex and Low Prices: Weakening of linkages of public sector enterprises with the government of India, debt-funded capex with low incremental profitability due to lower PLF and average realisations could have a negative impact on ratings.

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Indias services export declines 1.7% in December 2016
Feb 16,2017

As per the data released by the Reserve Bank of India, Indias services exports declined 1.7% to US$ 13.80 billion in December 2016 over December 2015. Meanwhile, Indias services imports moved up 15.4% to US$ 8.29 billion in December 2016. Indias services trade surplus narrowed 19.6% to US$ 5.51 billion in December 2016 from US$ 6.85 billion in December 2015.

Indias services trade surplus fell 9.8% to US$ 48.32 billion in April-December 2016 over a year ago, with 12.2% rise in services imports to US$ 71.56 billion. Indias services exports rose mere 2.2% to US$ 119.87 billion in April-December 2016.

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Indias merchandise export improves 4.3% in January 2017
Feb 16,2017

Indias merchandise exports increased 4.3% to US$ 22.12 billion in January 2017 over a year ago. Meanwhile, merchandise imports moved up 10.7% to US$ 31.96 billion. The trade deficit increased 28.3% to US$ 9.84 billion in January 2017 from US$ 7.67 billion in January 2016.

Oil imports zoomed 61.1% to US$ 8.14 billion, while the non-oil imports was flat at US$ 23.82 billion in January 2017 over January 2016. The share of oil imports in total imports was higher at 25.5% in January 2017, compared with 17.5% in January 2016. Indias basket of crude oil surged 92.6% to US$ 54.08 per barrel in January 2017 over January 2016.

Among the non-oil imports, the major contributors to the overall rise in imports were petroleum, crude & products imports rising 61.1% to US$ 8.14 billion, electronic goods 24.6% to US$ 3.93 billion, coal 47.3% to US$ 1.64 billion, non-ferrous metals 10.3% to US$ 0.80 billion, transport equipment 4.6% to US$ 1.47 billion, vegetable oil 6.1% to US$ 0.82 billion, electrical & non-electrical machinery 1.6% to US$ 2.36 billion and dyeing/tanning/colouring materials 17.5% to US$ 0.18 billion.

The imports also improved for fruits & vegetables by 13.8% to US$ 0.16 billion, cotton raw & waste 130.9% to US$ 0.03 billion, pearls, precious & semi-precious stones 1.1% to US$ 1.55 billion, professional instrument, optical goods 3.4% to US$ 0.30 billion and metaliferrous ores & other minerals 1.7% to US$ 0.59 billion.

On the other hand, the imports have declined for gold by 29.9% to US$ 2.04 billion, fertilisers, crude & manufactured 57.3% to US$ 0.24 billion, iron & steel 18.1% to US$ 1.00 billion, silver 33.1% to US$ 0.20 billion, organic & inorganic chemicals 5.4% to US$ 1.19 billion, wood & wood products 13.7% to US$ 0.36 billion, chemical material & products 10.4% to US$ 0.45 billion and project goods 11.6% to US$ 0.18 billion in January 2017.

On exports front, the petroleum products recorded an increase in exports by 29.0% to US$ 2.69 billion, followed by engineering goods 11.9% to US$ 5.45 billion, iron ore 974.1% to US$ 0.18 billion, marine products 29.3% to US$ 0.40 billion, cotton yarn/fabrics/made-ups, handloom products 9.8% to US$ 0.93 billion, oil meals 180.4% to US$ 0.09 billion, organic & inorganic chemicals 4.8% to US$ 1.21 billion, and rice 10.2% to US$ 0.51 billion.

However, the exports declined for, drugs & pharmaceuticals by 11.6% to US$ 1.27 billion, gems & jewellery 4.5% to US$ 3.00 billion, electronic goods 11.4% to US$ 0.46 billion, meat, dairy & poultry products 15.4% to US$ 0.27 billion, leather & leather products 10.3% to US$ 0.42 billion, plastic & linoleum 7.7% to US$ 0.47 billion, tobacco 39.2% to US$ 0.06 billion, in January 2017.

Merchandise exports in rupees increased 5.6% to Rs 150560 crore, while imports moved up 12.1% to Rs 217557 crore in January 2017 over January 2016. The trade deficit widened to Rs 66997 crore in January 2017 compared with Rs 51566 crore in January 2016.

Indias merchandise exports rose 1.2% to US$ 220.92 billion, while merchandise imports fell 5.5% to US$ 307.31 billion in April-January 2017. The decline in imports was driven by a 5.7% plunge in oil imports to US$ 69.06 billion. Indias merchandise trade deficit declined to US$ 86.39 billion in April-January 2017 from US$ 107.08 billion in April-January 2016.

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Estimated growth rate of Agriculture Sector is 4.1% in the next financial year
Feb 16,2017

The Union Minister of Agriculture and Farmers Welfare, Shri Radha Mohan Singh said that despite difficult challenges being faced by ICAR in its working period of 87 years, it has attained many achievements and these achievements are the milestones of progress of agriculture. Increase in production and income, development of institutes, human resources, development of new techniques, agriculture diversification are the areas in which ICAR has established new standards of success.

On this occasion, Secretary, the Department of Agricultural Research and Education & DG, ICAR, Dr. Trilochan Mohapatra and distinguished members of Society and senior officers of ICAR were also present.

Shri Singh said that Government is committed to double the income of farmers in five years. In this budget, holistic development of agriculture is the main focus in which to provide credit to farmers on affordable rates, assured supply of seeds and fertilisers, increase in irrigation facilities, increase in productivity through soil health cards, through E-nam assured market and providing profitable price has been emphasised.

Agriculture Minister said that for the progress of agriculture and prosperity of farmers, Government has made many initiatives in the budget, In comparison to the budget last year, in the budget of year 2017-18, the fund for rural, agriculture and allied sectors has been increased by 24%, it is now Rs. 1,87,223 crore. In the next financial year, it is estimated that the progress rate of agriculture sector will be 4.1%.

Shri Singh said that because of a good monsoon and policy initiatives by the government, there is a record production of food grains this year. As per the second advance estimate for the year 2016-17, there would be a total of 271.98 million tonnes production of food grains which is 6.94 million tonnes compared to last records (265.04 MT is 2013-14) 20.41 million tonnes higher than last year production.

Shri Singh said that during this Rabi in comparison to last year 2015-16, we got more sowing has been done viz. 7.7% in wheat, 12.96% in pulses and 12.69% in oilseeds which is in total 6.86% more in comparison to last year. Agriculture Minister said that Indian agriculture scientists have played a major role developing research and technology and bringing green revolution, and thereby in the development of agriculture. Since 1951, production of food grains has increased five times, horticulture production by 9.5 times, Fisheries production by 12.5 times, milk production by 7.8 times and egg production by 3.9 times. This has made a considerable impact on national food nutritional security. Our scientists have major role in increasing the excellence of higher agriculture education.

Shri Singh said that in the International Pulse Year 2016, 150 seed herbs of pulses have been established. Early maturing variety of moong IPM 205-7(VIRAT) has been released. The efforts for promoting research in agriculture sector have been remarkable in the last two and a half years. From the year 2012 to May, 2014, 261 new varieties of different crops have been released and from of June, 2014 to December, 2016, 437 new varieties have been released.

To increase International co-operation in the field of agriculture during October, 2016, in New Delhi with the help of coordination unit, one MoU has been signed for establishment of BRICS research platform in agriculture. This unit will be managed by DARE, GoI. Besides this in the year 2016, 17 international collaborative projects have also been approved.

Shri Singh said that since agriculture is state subject, so State Agriculture Ministers have an important role in its progress. On this occasion Agriculture Minister appealed to all the representatives to develop scientists-state-farmer linkage and to work unitedly in coordination with centre for the prosperity of farmers and progress of agriculture.

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The total milk production has increased from 52.21 Million Tonnes during 2015-16 (Rainy) to 54.50 Million Tonnes during 2016-17 (Rainy)
Feb 16,2017

The Integrated Sample Survey is a regular sample survey under taken on a general principle of 15% sample basis across the country. The sample Villages/Urban wards are selected from the entire rural and urban areas of States/UTs and the survey is conduct by the States/UTs in three seasons. The list of latest Livestock Census villages constitutes the sampling frame. As per general principle, for the estimation of livestock numbers, 15% (5% for each season) of the villages/urban wards will be selected in the form of two independent sub-samples in a State for complete enumeration of livestock and poultry population by using Simple Random Sampling Without Replacement (SRSWOR). Subsequently, 5 samples will be selected from each of the sub-sample to carry out detailed survey for the estimation of yield rates. The number of sample will increase or decrease according to the number of villages in each district.

Period of Survey: The Survey period for rainy season was 1st July, 2016 to 31st October, 2016.

Key Findings: The key finding of the survey is summarised as under:

Milk Production: The total milk production has increased from 52.21 Million Tonnes during 2015-16 (Rainy) to 54.50 Million Tonnes during 2016-17 (Rainy) registering a growth 4.38%. As against the targeted production of 163.74 Million Tonnes during 2016-17, the total estimated production in two seasons, summer and rainy, is 105.42 Million Tonnes showing an achievement of 64.38%. Further, as compared to previous years (2015-16) rainy estimates, the average milk yield per day has marginally improved for indigenous category of cows and buffaloes. The average yield rates of exotic and crossbred cows are estimated to be as 10.85Kgs and 7.40Kgs per animal per day respectively and the average yield rates of indigenous and non-descript cows are estimated to be as 3.56 Kgs and 2.29 Kgs per animals per day. The average yield rates of indigenous and non-descript buffaloes are estimated to be as 5.86Kgs and 4.04Kgs per animals per day respectively.

The first five highest milk producing States are Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat and Andhra Pradesh during the Rainy Season.

3.2 Egg Production: The total egg production has increased from 27.33 Billion during 2015-16 (Rainy) to 29.09 Billion during 2016-17 (Rainy) registering a growth 6.42%. As against the targeted production of 87.05 Billions of eggs during 2016-17, the total estimated production in two seasons, summer and rainy, is 55.11 Billion showing an achievement of 63.31%. The production of egg is largely contributed by commercial poultry farms with nearly 75.75% and remaining production is from household/backyard poultry. The first five highest eggs producing States are Tamil Nadu, Andhra Pradesh, Telangana , West Bengal & Haryana during the Rainy Season.

3.3 Meat Production: The total meat production has increased from 2.24 Million Tonnes during 2015-16 (Rainy) to 2.43 Million Tonnes during 2016-17 (Rainy) registering a growth 8.74%. As against the targeted production of 7.37 Million Tonnes during 2016-17, the total estimated production in two seasons, summer and rainy, is 4.67 Million Tonnes showing an achievement of 63.28%. Nearly, 47.86% of the meat production is contributed by poultry and 20.11% is from buffaloes. The first five highest Meat producing States are Uttar Pradesh, Maharashtra, West Bengal, Andhra Pradesh, & Telangana during the Rainy Season.

3.4 Wool Production: The total wool production has decreased from 5.91 Million Kgs during 2015-16 (Rainy) to 5.78 Million Kgs during 2016-17 (Rainy), a decline of 2.16%. As against the targeted production of 44.07 Million Kgs during 2016-17, the total estimated production in two seasons, summer and rainy, is 20.66 Million Kgs showing an achievement of 46.89%. The first five highest Wool producing States are Karnataka, Gujarat, Maharashtra, Himachal Pradesh, & Jammu & Kashmir during the Rainy Season.

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Now It is Easier to File Petition for Poor
Feb 16,2017

Now, it is easier for the middle and relatively lower income group to avail and enjoy the legal services of the country. The Honble Supreme Court of India has introduced the Middle Income Group Scheme. It is a self supporting scheme which provides legal services to the middle income group citizens i.e. citizens whose gross income is not exceeding Rs.60, 000 per month or Rs. 7,50,000 per annum.

The members of the governing body to whom the management of the Society is entrusted as required under Section 2 of the Societies Registration Act, 1860, as applicable to the National Capital Territory of Delhi includes Honble Chief Justice of India as Patron-in-Chief, Attorney General for India as Ex-officio Vice-President, Solicitor General of India as Honorary Secretary and other senior advocates of the Apex Court as its members.

As per the Supreme Court rules it is only through advocates on record cases can be filed before it.

A sum of Rs.500/- shall be payable to the Supreme Court Middle Income Group Legal Aid Society (SCMIGLAS) as service charges. The applicant shall have to deposit the fee indicated by the Secretary, which will be in accordance with the schedule attached to the Scheme. It is the Secretary, who will register the case under the MIG Legal Aid Scheme and proceed to forward the papers to the Advocate-on-Record/Arguing Counsel/Senior Counsel on the panel for opinion.

If Advocate-on-Record is satisfied that it is a fit case to be proceeded with, then the Society will consider that the applicant is entitled to legal aid. The view expressed by the Learned Advocate-onRecord will be final insofar as the eligibility of the applicant for obtaining the benefit of the Scheme is concerned.

Under the scheme, middle class people who can`t afford the expensive litigation in the Supreme Court can avail the services of the society for a nominal amount. The person desirous of availing the benefit of the Scheme shall have to fill up the form prescribed and accept all the terms and conditions contained therein.

As per the scheme, contingent fund will be created to meet the miscellaneous expenditure in connection with the case under the Scheme by requiring the applicant to deposit upto the stage of admission, a sum of Rs.750/- in addition to the charges required to be deposited with the Society, out of this contingent fund.

In the event of the learned Advocate taking the view that the case is not fit one for an appeal to the Supreme Court, then the entire amount after deduction Rs.750/- towards minimum service charges of the Committee shall be refunded to the applicant by way of cheque.

As the next step, further, if the Advocate who is appointed under the Scheme is found negligent in the conduct of the case entrusted to him, then he will be required to return the brief together with the fee which he may have received from the applicant under the scheme. Further, the Society will not be responsible for the negligent conduct of the case but the entire responsibility will be that of the Advocate vis-a-vis the client. The name of the Advocate will, however, be struck off from the panel prepared under the Scheme.

A large number of poor people would approach the Honble Supreme Court for aid to sort out their cases, file cases on their behalf and get justice, but could not afford the expenses. To make filing petitions easy for the underprivileged strata of the society, the Honble Supreme Court decided to introduce this scheme.

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FY18 Steel Outlook: Increased Government Spending will be the Key
Feb 16,2017

India Ratings and Research (Ind-Ra) maintains a negative outlook on the steel sector for FY18 as the agency believes that the sector will continue to face operational and financial challenges during the year. Profitability and cash flow are unlikely to improve significantly in FY18 due to continued muted demand, limited pricing power due to global overcapacity, and significant increase in cost of inputs. The agency has also maintained a Negative Outlook on its rated steel entities for FY18 in view of their high indebtedness. Some of the rated steel producers require significant deleveraging and cash flow generation to maintain their ratings.

Ind-Ra believes demand growth will remain muted at 4%-5% during FY18, and is likely to be driven by demand growth from key end-user industries such as constructions, capital goods and consumer durables. Increased government spending due to budget push on infrastructure and housing would support demand from the construction sector. Increase in demand for consumer durables is likely to be supported by the expected growth in consumption following better monsoon, increase in salaries under 7th pay commission and lower interest rate. However, the recent planned demonetisation measures to curb black money are likely to limit the growth in the real estate sector consequently impacting the demand for steel in real estate in FY18; the agency notes that the steel demand growth for FY17 is likely to be 3%-3.5% and in line with the 3.3% yoy during April-December 2016.

Ind-Ra expects that the capacity utilisation for FY18 will remain low at around 75%. Capacity of around 6.0MT- 6.5MT is likely to be added in FY18 following the expected addition of around 9MT - 10MT during FY17. However, production is expected to grow only by 8MT - 10MT per year in FY17 and FY18. Low capacity utilisation is likely to limit the ability of steel producers to pass on the input cost increases, and also the improvement in profit margin during FY18.

Ind-Ra expects the government of India (GoI) to extend anti-dumping duty (ADD) on steel products beyond February 2017. Profitability of domestic steel industry got a respite during FY17 after the imposition of Minimum Import Price (MIP) by GoI in February 2016. However, the significant increase in inputs costs since then has again increased international as well as domestic prices very close to the levels envisaged under ADD, and any further increase is likely to make the protection infructuous. But with likely correction in steel price in 4QFY17 and early FY18 due to softening of input prices regulatory support becomes crucial for the domestic industry.

The profitability of domestic steel producer is likely to improve from the FY16 levels, but not high enough to significantly improve the liquidity. Cost cutting, significant improvement in efficiencies and improvement in the capacity utilisation are likely strategies to improve interest servicing. Many steel players may need to refinance debt to avoid default.

OUTLOOK SENSITIVITIES

A stable sector outlook could result from a significant recovery in the steel demand on the back of increased infrastructure spending by GoI. Improvement in domestic steel prices and/or stabilisation or decline in the input prices could improve profitability and cash flows leading to better debt service coverage that could change the outlook to stable. A better sector outlook resulting in a significant improvement in profitability and credit profile would result in a Stable Rating Outlook.

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Ind-Ra: Auto Ancillaries to See Healthy Domestic Demand, Lower Exports Growth in FY18
Feb 16,2017

India Ratings and Research (Ind-Ra) has maintained a stable outlook on the auto ancillaries sector for FY18. This is based on the expectations of a healthy demand from original equipment manufacturers (OEMs) for two-wheeler and passenger vehicle (PV) components along with a marginal improvement in profitability and a stable credit profile. Ind-Ra expects the sector companies to see volume growth of 6%-9% yoy in FY18 and 7%-9% in FY17. Ind-Ra expects the impact of demonetisation to wane by 1QFY18.

Ind-Ra expects volumes in the domestic two-wheeler vehicle segment and PV segment to grow 9%-12% and 6%-9% yoy, respectively, in FY18 (FY17 Ind-Ras estimate: 10.5%, 7%). However, Ind-Ra expects lower volume growth of negative 2% to 2% for the commercial vehicle (CV) segment, and hence ancillaries with higher exposure to the CV segment could see lower growth in FY18.

Ind-Ra expects exports from the sector to grow at a slower pace in FY18 year-on-year, due to a decline in new vehicle sales in the key market of the US and lower growth in European markets. The impact of Brexit will also remain an overhang on the sales in Europe and particularly in the UK.

The two-wheeler segment has been impacted the most by demonetisation, with two-wheeler OEMs December production declining by 15%-35%yoy. However, channel checks indicate that advance production schedules for March have reached pre-demonetisation levels. Thus, the likely impact of demonetisation on related ancillaries should remain limited to 1QFY18. The medium & heavy commercial vehicle segment also saw a decline in production in December 2016. However, the situation normalised in January 2017 and is likely to remain strong in February-March 2016 due to pre-buying on account of BS-IV emission norms.

Ind-Ra expects the operating margins of sector companies to improve in FY18, driven by operating efficiencies due to volume growth. Pricing pressures by specific OEMs are likely to keep a check on the profitability of sector companies with higher customer concentration. Demonetisation is likely to have a negative impact on the profitability of few of the auto ancillaries in 2HFY17, due to negative operating leverage.

The credit metrics of sector companies are likely to remain stable in FY18, due to limited capex as well as comfortable cash flows. The implementation of goods and services tax is likely to ensure higher utilisation of the existing capacities, while ancillaries catering to the replacement segment will benefit from improved competitiveness compared to the unorganised segment.

The agency has also maintained a Stable rating Outlook on sector companies for FY18. Ind-Ras analysis indicates that within its rating universe, around 96% companies were either affirmed or upgraded during 2016 (2015: 88%; 2014: 70%), reflecting the credit strength of these companies.

Outlook Sensitivities

Aggressive Expansion Plans: A significant uptick in capex announcements in FY18 on the back of favourable policy decisions as well as higher demand expectations could strain the cash flow and stretch the credit profile of sector companies resulting in a negative sector and rating outlook.

Auto Demand: Weaker-than-expected growth in domestic auto sales could negatively impact the financial profile of sector companies and could lead to the sector outlook being revised to negative.

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India Ratings Maintains Stable Outlook on Oil and Gas Sector for FY18
Feb 16,2017

India Ratings and Research (Ind-Ra) has maintained a stable outlook on both public and private oil and gas sectors for FY18. Ind-Ra expects public sector companies to sustain their strong linkages with the government of India, or maintain business stability in cases where ratings are based on standalone financial profiles.

Upstream companies will benefit from the likely increase in domestic gas prices, higher crude prices and almost nil subsidy burden during FY18. Downstream companies would see a moderation in gross refining margins during FY18, due to a decline in crack spreads and lack of inventory gains. Also, their continued capex is likely to result in leverage inching up moderately; however, their credit profiles would still remain comfortable.

Crude oil prices are likely to increase only moderately higher from the December levels of USD50/bbl-55/bbl and remain in the range of USD55/bbl-USD60/bbl in FY18. This is despite Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members reducing their output by 1.2mbpd and 0.6mbpd, respectively, since early January 2017. However, the prices would remain under check, as higher prices could lead to increased production by US drillers.

Ind-Ra expects the domestic natural gas prices to rise to USD2.7/mmbtu in 1HFY18 and USD3.1/mmbtu in 2HFY18, driven by an increase in the price of the reference price index constituents particularly henry hub. Moreover, city gas players would continue to exhibit strong pricing power and are likely to protect their gross margins even in a rising gas price scenario. Players with a higher share of CNG and domestic PNG consumers are better placed than the players with a higher tilt towards industrial/commercial volumes. The prices during FY17 fell in line with Ind-Ras expectation to USD2.85/mmbtu.

Ind-Ra additionally, expects the spot liquefied natural gas (LNG) prices to remain benign during FY18, driven by i) significant supply-side capacity additions ii) peaking of demand from major LNG importers (Korea, Japan and China) and iii) competition from alternate fuels such as fuel oil and coal iv) increasing share of non-long-term LNG v) expiration of global long-term LNG contracts and vi) increased competition in Indian LNG market. Given the benign spot LNG prices, Ind-Ra expects a significant increase in LNG volume to 79mmsmd in FY18 from 58mmscmd in FY16 (9MFY17: 68mmscmd).

Ind-Ra notes long-term LNG offtake could again pose a problem if the spot LNG prices were to fall below the level of long-term LNG. This is because Ind-Ra expects term LNG prices to inch higher at USD7.5/mmbtu-USD8//mmbtu in FY18 on freight on board basis (FY17: USD6.6/mmbtu-USD7/mmbtu) with the rise in crude price to USD55/bbl-USD60/bbl (FY17: USD48/bbl).

Ind-Ra expects the diesel consumption growth to be slower than petrol growth even in FY18, on account of the break in the dieselisation trend due to the narrowing of price differential between petrol and diesel. Additionally, some of the large consumers are looking at switching away from diesel to either renewable energy or LNG. This could result in refinery configuration changes which would imply additional capex for refineries. Ind-Ra had estimated petrol and diesel consumption to grow by 10% in FY17 and 5%, respectively. While the petrol consumption grew 11% and diesel grew 4% during 9MFY17.

OUTLOOK SENSITIVITIES

A weakening of the linkages between public sector enterprises and the government of India, debt-funded capex with low incremental profitability and continued lower crude/gas prices could impact the ratings negatively.

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