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Ministry of Power issued more than 38 lakhs Energy Savings Certificates to Industries
Mar 22,2017

Ministry of Power has issued/entitled to purchase Energy Savings Certificates (ESCerts) to Designated Consumers (DCs) of Perform, Achieve and Trade (PAT) Cycle I on 16th February 2017 on verification of their performance with regard to energy savings, based on the recommendations of Bureau of Energy Efficiency (BEE). The first cycle of PAT has been completed in March 2015.

The DCs have contributed to the success of PAT cycle I and this cycle has witnessed an energy saving of 8.67 million tonne of oil equivalent (Mtoe) against the targeted energy saving of 6.886 Mtoe which is about 30% more than the target.This cycle also contributed in emission reduction of 31 million tonnes of CO2 and avoided generation of about 5,635 MW resulting in monetary savings of Rs. 37,685 crore. It has also contributed in investment of Rs. 24,517 crore for energy efficient technologies by DCs under PAT. PAT is a multi-cycle scheme aimed to cover most of the energy intensive sectors of the economy. In this regard currently in the PAT cycle II, 621 DCs from 11 sectors have been included in the scheme.

Bureau of Energy Efficiency (BEE) under Ministry of Power is implementing Perform, Achieve and Trade (PAT) scheme, a component under National Mission for Enhanced Energy Efficiency (NMEEE) in India. PAT is a market based mechanism to enhance cost effectiveness through certification of excess energy savings in energy intensive industries that can be traded. PAT scheme was launched in 2012 with first PAT cycle (2012-15) covering 478 Designated Consumers (DCs) from 8 energy-intensive sectors, namely Aluminium, Cement, Chlor-alkali, Fertilizer, Iron and Steel, Pulp and Paper, Textiles and Thermal power plant which roughly covered 33% of Indias total energy consumption.

Central Electricity Regulatory Commission (CERC) is the Market Regulator and Bureau of Energy Efficiency is Administrator for the trading of ESCerts. POSOCO (Power System Operation Corporation limited) has been appointed as Registry for making DCs as eligible entities for trading of ESCerts and book-keeping of ESCerts. There are two power exchanges i.e. IEX and PXIL where trading of ESCerts shall take place.

CERC has already approved the Procedure for Transaction of Energy Savings Certificates (ESCerts) on 14th Feb 2017. BEE shall soon inform the date of opening of Registration to all DCs along with the fee details, after the same is approved by CERC. Trading/transaction of ESCerts shall be done on continuous basis i.e. every Tuesday on weekly basis. Trading of ESCerts at power exchanges is expected to start from April 2017.

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Private organisations & corporates should develop fund to support persons with disabilities: Ramdas Athawale
Mar 22,2017

While the government is doing its bit to empower the persons with disabilities under the Accessible India Campaign, the private sector should also develop a fund to help such people gain sustainable employment or become entrepreneurs, Union Minister of State for Social Justice and Empowerment, Mr Ramdas Athawale said at an ASSOCHAM event.

n++Though private enterprises and the industry undertake different initiatives as part of corporate social responsibility, they should also work towards helping persons with disabilities and develop a special fund for their skill development,n++ said Mr Athawale.

He also said that it is the responsibility of both the government and the corporate sector to work in tandem to help and support people with disabilities by providing them vocational training to become self sufficient as they too are a part of the society.

He also said that reservation in vacancies in government jobs which had been enhanced from three per cent to four per cent in The Rights of Persons with Disabilities Bill - 2016, should be implemented in every sector.

n++My Ministry is trying to ensure that all departments have four per cent disabled workers and they should also be imparted skill training to help them start their own business,n++ said Mr Athawale.

The study stressed upon the need for development of affordable, effective and readily available information, communication technologies (ICTs) and assistive technologies in order to further empower the specially-abled people for creating an inclusive and power society.

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IWAIs New Ro-Ro Terminal at Assam to Boost Cargo and Passenger Transport in North East
Mar 22,2017

The Inland Waterways Authority of India (IWAI) carried out successful berthing operation of a vessel at its newly constructed permanent state-of-the-art Roll-on Roll-off (Ro-Ro) terminal built at a cost of Rs.46 crore on Brahmaputra river (National Waterway-2) in Assams Dhubri district on March 4, 2017.

IWAIs initiative opens a new gate of opportunities in the region by paving the way for drastically bridging the distance and cost for cargo and passenger movement between Dhubri and Hatsingimari which shares its border with Meghalaya.

The Ro-Ro vessel, MV Gopinath Bordoloi which was flagged off from Haldia port (West Bengal) via the India-Bangladesh Protocol Route, successfully carried its first load from Dhubri terminal. Built at a cost of approximately Rs.10 crore, MV Gopinath Bordoloi is 46.50 metre long and 13.30 metre wide with a draft of 1.50 metre. It has a capacity to transport eight trucks and 200 passengers at a time.

The IWAI vessel will be deployed for Ro-Ro service between Dhubri and Hatsingimari having a total waterway length of 29 KM. This new service will avoid the circuitous route of 220 KM to reach Meghalaya on the opposite side. Dhubri is one of the business hubs of Assam which is connected to Meghalaya presently through a road bridge over river Brahmaputra at Jogighopa. IWAI is also exploring other sites in North East to facilitate quick movement of goods and passengers across the rivers, effectively acting as floating bridges.

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Foreign Exchange Earnings through Tourism in India was 12% higher in February 2017 compared with February 2016
Mar 22,2017

The highlights of the estimates of Foreign Exchange Earnings (FEEs) from tourism in India for February 2017 are as below:

Foreign Exchange Earnings (FEEs) through tourism (in Rs. terms)

n++ FEEs during the month of February 2017 were Rs. 15,260 crore as compared to Rs.13,627 crore in February 2016 and Rs.11,642 crore in February 2015.

n++ The growth rate in FEEs in rupee terms in February 2017 over February 2016 was 12.0% compared to positive growth of 17.1% in February 2016 over February 2015.

n++ FEEs during the period January- February 2017 were Rs.31,357 crore with a growth of 14.9%, as compared to the FEE of Rs. 27,296 crore with a growth of 15.0% in January- February 2016 over January- February 2015.

Foreign Exchange Earnings (FEEs) through tourism (in US $ terms)

n++ FEEs in US$ terms during the month of February 2017 were US$2.275 billion as compared to FEEs of US$ 1.996 billion during the month of February 2016 and US$ 1.877 billion in February 2015.

n++ The growth rate in FEEs in US$ terms in February 2017 over February 2016 was 14.0% compared to a positive growth of 6.3% in February 2016 over February 2015.

n++ FEEs during the period January-February 2017 were US$4.639billion with a growth of 15.2% as compared to the FEE of US$ 4.028 billion with a growth of 5.4% in January- February 2016 over January- February 2015.

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48,998 Complaints register against e-commerce companies during April 2016-February 2017
Mar 21,2017

The number of complaints against e-commerce companies, as registered in the National Consumer Helpline, over the last three years are as under:Call received at National Consumer Helpline in e-commerce SectorYearCallsMay 2014 - March 201516919April 2015 - March 201628331April 2016- February 201748998

The redressal of the complaints are registered by a complainant with the three tier system of quasi-judicial bodies namely the District Consumer Disputes Redressal Forum, State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission established under the provisions of the Consumer Protection Act, 1986. Besides, Consumer Grievances addressed to the National Consumer Helpline (NCH) are redressed by forwarding the complaints to concerned departments and the companies and constant monitoring the progress in their redressal. The NCH has established partnership with 225 companies under a convergence programme for speedy redressal.

The Government is aware about the functioning of e-commerce companies. The rights of the consumers involved in e-commerce are equally protected as per the provisions of the Consumer Protection Act, 1986, in a manner similar to transactions involving goods and services.

The draft amendment to the Packaged Commodities Rules, 2011 made under the provisions of Legal Metrology Act, 2009 proposes that the mandatory labeling declarations as per the rules shall be displayed on the online trading platforms.

A consumer dealing in e-commerce can file complaints in consumer courts for deficiency in service and defective products, under the provisions of the Consumer Protection Act, 1986 which has provisions regarding jurisdictional issues. The Consumer Protection Bill, 2015, introduced in August, 2015, seeks to strengthen the provisions regarding jurisdictional and also has provisions regarding Alternate Disputes Resolution.

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MoU signed with ASCI by M/o AYUSH to monitor misleading AYUSH related advertisements: Shri Shripad Naik
Mar 21,2017

Ministry of AYUSH received 79 complaints in the year 2014 about advertisements and misleading claims allegedly of herbal and AYUSH products. Department of Consumer Affairs has informed that Advertising Standards Council of India (ASCI) referred 263 complaints of allegedly AYUSH products related advertisements since January, 2015 including seven advertisements of herbal medicines in 2016. Such complaints of 381 advertisements are also registered online till 16th March, 2017 in the Grievances against Misleading Advertisements (GAMA) portal maintained by the Ministry of Consumer Affairs, Food & Public Distribution.

In this regard, it is pertinent to state that the proof of safety and effectiveness as required for issuing license to manufacture Ayurvedic, Siddha or Unani medicine is prescribed in the guidelines under Rule 158-B of the Drugs & Cosmetics Rules, 1945, which can either be based on textual rationale from the authoritative books listed in the First Schedule to the Drugs & Cosmetics Act or published literature; and if no such evidence of effectiveness of the drug is available, it needs to be generated by conducting the pilot study. In order to check the veracity of misleading advertisements of AYUSH products, the Central Government has issued directives to the State Governments for appointing Gazetted Officers for monitoring of advertisements of such drugs. Complaints of misleading advertisements of medicines are forwarded to the concerned State Licensing Authorities for action in accordance with the provisions of Drugs & Cosmetics Act, 1940 and Rules thereunder and Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954 and Rules thereunder. States have reported action taken against the defaulters. Ministry of AYUSH has also signed MoU with Advertising Standards Council of India (ASCI) on 20th January, 2017 to undertake monitoring of the misleading AYUSH -related advertisements appearing in print and TV media and bring the instances of improper advertisements to the notice of the State Regulatory Authorities for taking necessary action.

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IWAI raises Rs 340 Crore through Infrastructure Bonds
Mar 21,2017

In a landmark development for expansion of inland waterways in the country, the Inland Waterways Authority of India (IWAI) has raised Rs 340 crore through its maiden bond issue from the market. The fully serviced Government of India Bonds were privately placed with banks and financial institutions on March 1, 2017.

The Finance Minister in his Budget Speech 2016-17 had announced mobilization of extra budgetary resources through issuance of Bonds to support infrastructure projects. To augment infrastructure spending further, Government will permit mobilization of additional finances to the extent of Rs 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Waterways Authority through raising of Bonds during 2016-17, he had said.

Accordingly, IWAI launched its maiden venture of mobilizing Government of India fully serviced Bonds by private placement mode on the electronic bidding platform of Bombay Stock Exchange on March 1, 2017. The Issue was oversubscribed with a total mobilization of Rs 340 crore against the announced size of Rs.200 crore.

The inflow of these funds provides a major fillip to IWAIs ambitious plan to develop National Waterways in India. These river highways are economical and environment friendly and are expected to contribute in correcting the existing transport modal mix that imposes available logistics cost on the Indian economy.

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The Union Government has decided to make timely payment of accumulations under the Savings Fund of CGEGIS
Mar 21,2017

The Union Government has decided that in all cases where the service of the retiring Central Government employees has been verified, payment of the accumulation under Savings Fund of Central Government Employee Group Insurance Scheme (CGEGIS) will be made without awaiting confirmation of deduction of each monthly subscription of CGEGIS. This would help in timely payment of accumulations under the Savings Fund of the CGEGIS. The necessary Orders in this regard have been issued by Department of Expenditure, Ministry of Finance on 17.03.2017.

Often delay occurs in payment of dues to the retiring Central Government employees as the existing procedure requires confirmation of deduction of each monthly subscription to the scheme. The present decision of the Union Government is a step towards simplification of procedure as well as to ensure timely payment of savings along with interest under CGEGIS, to the Central Government employees at the time of retirement.

Under the Central Government Employees Group Insurance Scheme, 1980, the accumulations under the component of Savings Fund together with interest thereon are payable to the employees on retirement or on cessation of employment with the Central Government or to their family on death while in service.

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Gartner Says by 2020, At Least 30 Percent of Industrie 4.0 Projects Will Source Their Algorithms From Leading Algorithm Marketplaces
Mar 21,2017

Industrie 4.0* has been underway for more than five years, and while many businesses have begun some promising Industrie 4.0 projects, key challenges remain that are making algorithms the heartbeat of these projects, according to Gartner, Inc. By 2020, Gartner predicts that at least 30 percent of Industrie 4.0 projects will source their algorithms from leading algorithm marketplaces n++ a significant rise from less than 5 percent in 2016.

Industrie 4.0 projects are facing two significant challenges, said Thomas Oestreich, managing vice president at Gartner. First n++ in the connected world of cyber-physical systems n++ they need to deal with the sheer volume, real-time velocity and diversity of data. Second, in order to drive new value and differentiating innovations, new algorithms need to be developed. This is making algorithms the pulse of Industrie 4.0 initiatives.

Mr. Oestreich added that developing new algorithms requires skills and competencies that most companies do not have yet. To increase time to market and speed up the development process, some organizations employ service providers and combine this with using algorithm marketplaces.

Reusable Algorithms Can Reduce Development Time

Analytics vendors have started creating marketplaces for software components, such as analytical algorithms, to bring greater flexibility and choice to end users. These marketplaces will bring the benefits of the app economy to software development. They will radically lower software distribution costs and improve access to thousands n++ if not millions n++ of available algorithms.

Algorithm marketplaces offer reusable algorithms, which help organizations speed up their development processes and cope with the transformational changes introduced with digital business. Reusing prebuilt algorithms and applying them to a specific use case can significantly reduce development time and will offer an important library, expanding the possibilities for in-house development teams, said Mr. Oestreich.

We encourage CIOs to build a task force with data and analytics leaders to evaluate algorithm marketplaces, and then create their own library of available and potentially useful algorithms, said Mr. Oestreich.

Modernize and Transform ERP Solutions Into a Solid Foundation for Industrie 4.0

Early adopters of Industrie 4.0 are also renovating their enterprise resource planning (ERP) solutions. ERP systems are connected to Internet of Things (IoT) infrastructure that consists of sensors and actuators, middleware to collect and store data, and applications and analytics to make decisions and trigger actions.

Many ERP solutions are old, and they cannot cope with the amount of data and transactions to be processed, and the level of granularity in business transactions, said Christian Hestermann, research director at Gartner.

The music industry is a good example of how an industry has gone through transformation. Customers went from buying complete albums in a record store to streaming one individual song, which triggers an immediate invoice about the microamounts due. ERP could fast become the bottleneck of digital business, not allowing a business to act quickly enough to grasp digital business opportunities in a fast-changing business world, Mr. Hestermann added.

CIOs need to develop digital business moments to grow their business. Signals coming from sensors inside products or from external sources could be used to offer additional services to customers. This will likely require the modernization of the ERP solutions involved, as older ones will not support the level of granularity and the volumes of microtransactions required, said Mr. Hestermann.

Gartner said that, by 2020, 50 percent of the companies that have renovated their ERP core and migrated their IoT infrastructure to a standardized platform will increase customer interactions by over 20 percent.

CIOs should determine where IoT and digital business play a role in their business scenarios, and develop Industrie 4.0 value chains by modeling the business capabilities that their organizations need, concluded Mr. Hestermann. They also need to assess their current state and their needs for renovation on all layers of the IoT architecture and take the necessary measures to improve.

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Fitch: Strategic Business and Market Value in Vodafone India Idea Merger
Mar 21,2017

Fitch Ratings says the announced merger between Vodafone India and Idea Cellular has strong business logic and strategic sense - both in terms of the scale of the enlarged group as well as how it may affect the overall market structure. On a reported basis the transaction will have a positive effect on net debt/EBITDA leverage once India is deconsolidated at the group level. However, Fitch estimates a mildly negative effect on funds from operations (FFO) lease adjusted net leverage given that Fitch does not currently include the Indian spectrum in its leverage calculation. Roughly 80% of the combined entitys pro-forma debt represents spectrum commitments. The effect is estimated at around 0.2x negative turns of leverage and is not considered material in the context of Vodafones BBB+/Stable rating and the wider positive implications of the deal.

With FFO net leverage of 3.3x as at September 2016, the group has limited headroom versus a rating sensitivity of 3.5x. An ownership equalisation put option granted to Vodafone by joint venture partner, Aditya Birla Group, following a three-year lock-up period, would realise cash proceeds at the Vodafone Group level of USD1.3bn. This could provide leverage relief if at the time it was needed. The transaction is expected to immediately be accretive to Vodafones cash flow. The limited impact on leverage and timing of the transaction, which is not expected to close until sometime in 2018, reduce any potential leverage risks.

Fitch considers the strategic rationale for the merger is strong. It brings together Indias number two market player (Vodafone India) with the market number three (Idea). Importantly the enlarged group will have the market number one or two position, in 21 of the 22 circles (regions) in which they operate, with Vodafone strong in markets where Idea is weaker and vice versa, making a strong complimentary fit.

The combined business is targeting run-rate annual synergies of USD2.1bn to be achieved over the four years from closing. Of these, opex savings are expected in the region of 60% and the business estimated to deliver an EBITDA margin of around 40% subject to the market becoming more rationale once new entrant, Reliance Jio, starts to charge its subscribers (expected from April 2017). The latter entered the market a little over a year ago and has quickly built a customer base of 72 million and 6% share of the market on the back of free trial subscriptions. Given the costs of developing a greenfield-mobile business, a free subscription model is not sustainable indefinitely.

Elsewhere in the market, Telenor is selling its Indian operations to current market leader, Airtel. Fitch regards both transactions as positive signs of the consolidation the market has been waiting for.

Fitch does not believe the Indian transaction reveals a new economic model at the Vodafone group level, given that it represents a second transaction where it has been prepared to address a structural market weakness through a joint venture; the other recent example being the VodafoneZiggo JV with Liberty Global in the Netherlands. Moreover, Fitch sees both transactions as pragmatic and strategic approaches to markets where a partnership makes a strong economic proposition. In both examples the combinations will provide what Fitch regards as structural solutions to markets where competition has proven intense.

In the Netherlands the combination was about securing a strong convergent position relative to a strengthened incumbent. In the latest transaction Vodafone is seeking a solution to a market which has long needed consolidation and where competition has been intensified by the entrance of an aggressive new entrant. Fitch regards both as providing sound strategic logic, ultimately seeking ways of de-risking the overall group perimeter.

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High expectations riding on new UP Government: ASSOCHAM
Mar 21,2017

Faced with high expectations created by a massive mandate given to the BJP, the incoming Chief Minister of Uttar Pradesh has to meet immediate challenges of ensuring much better electricity supply in the coming summer, give urgent relief to Bundelkhand and find a lasting solutions for arrears of sugarcane farmers, the ASSOCHAM said today.

The Uttar Pradesh has a sizeable annual budget of about Rs 3.5 lakh crore with a deficit of about Rs 50,000 crore. Though there is a scope for bettering the state balance sheet, its fiscal situation is not as bad as some states, the chamber said.

The top priority of the new government should be to drastically improve the quality and quantity of power supply in the ensuing summer. Like several parts of the country, the challenge is not as much generation and availability of power but the financial health of the power utilities, mostly in the state ownership.

The new government should immediately take recourse to the UDAY scheme of the Centre and bring the state utility to robust health so that the users in both rural and urban areas are given better power supply. As is provided in the new scheme of things, fresh investment should be made in separate supply channels to the farmers who, for welfare reasons, have to be given the electricity supply at the concessional rates and the financial load can be taken by the state government, rather than the individual power utility.

n++Being an agricultural state, Uttar Pradesh has a huge potential in diverse agro activities like live stock, milk production and processing, food processing . For instance, abundant supply of potatoes in districts like Kannauj and mango in areas like Maliabad, need a modern processing facilities which should be encouraged in the private sector by way of fiscal and other support. Likewise, lot more agro hubs and mandis should be built in the state,n++ ASSOCHAM Secretary General Mr D S Rawat said.

As of now, the state produces about 360-400 lakh tonnes per annum and is the number one producer of milk in the country.

The state has several large sized cities like Lucknow, Kanpur, Varanasi, Allahabad, Noida, Agra, Meerut, Moradabad, Meerut , which need to be modernized and upgraded in terms of infrastructure. While initiatives like metro rail have been taken, they must be enlarged and lot more investment be made in city infrastructure including sanitation, drinking water, urban waste management.

n++A drive down the state presents a bad picture of heaps of plastics not only in cities but also in villages, creating an environment hazards, including the ground water,n++ the chamber said.

Since the same BJP is now in power in Madhya Pradesh and Uttar Pradesh, a better coordination should be achieved between the two states to give a better deal to the Bundelkhand areas which have suffered for long due to water scarcity and general backwardness.

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Moodys: Liquidity-Stress Index down again in March, extending overall declining trend
Mar 21,2017

Moodys Liquidity-Stress Index (LSI) edged lower again in March, extending its overall improving trend, the rating agency says in its most recent edition of SGL Monitor. The index declined to 5.6% in mid-March from 5.7 in February. The decreasing LSI bodes well for a lower US speculative-grade default rate, which Moodys forecasts will fall to 3.1% by next February, from around 5.4% today.

Moodys Liquidity-Stress Index falls when corporate liquidity appears to improve and rises when it appears to weaken.

The LSI has been steadily improving for a year now, except for a short-lived uptick in January, said Senior Vice President, John Puchalla. Speculative-grade companies continue to benefit from generally solid fundamentals, including modest US economic growth and robust credit markets fueled by investor appetite for higher yields.

New high-yield bond and loan issuance in the year to date is at least twice as high as it was this time last year, Puchalla says in LSI Stable Amid Robust Issuance. Bond issuance so far totals about $70 billion and loan issuance around $190 billion, according to Dealogic. February was a particularly busy month, with the momentum carrying into March. While M&A activity has been modest, refinancing activity is heavy as issuers continue to capitalize on good market conditions to push out maturities at favorable pricing.

So far in March, there have been three upgrades and three downgrades of Moodys speculative-grade liquidity (SGL) ratings. Operating weakness contributed to the downgrades, but appear to reflect company-specific issues rather than any more broad-based industry shifts. The number of SGL rating downgrades remains far below the level of early 2016, when Moodys undertook a major ratings review of the energy sector.

Meanwhile, Moodys Covenant-Stress Index slipped to 3.6% in February from 3.9% the prior month, also resuming a steady decline after a brief uptick in January. The index measures the extent to which US speculative-grade companies are at risk of violating debt covenants, and continues to indicate that the risk of their doing so is very small.

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ASSOCHAM-Crisil study suggests three pronged strategy to deepen bond market in India
Mar 21,2017

A three pronged approach based on - facilitating larger institutional investment in corporate bonds together with weaning companies away from bank loans and ensuring facilitative policies and infrastructure from perspective of both issuers and investors is imperative for comprehensive development of debt market in India, suggested a recent ASSOCHAM-Crisil joint study.

n++Setting up of a dedicated team of experts or department within the Ministry of Finance to facilitate development of the corporate bond market and following up on relevant implementation initiatives will help,n++ suggested the study titled, Giving debt its due, jointly conducted by ASSOCHAM and Crisil thereby highlighting the need to put in facilitative policies and requisite infrastructure.

As part of facilitating larger institutional investment in corporate bonds - mutual funds, insurance companies and pension funds have best chance of channelling financial savings. While bank financing is by far the most preferred mode of funding, as such more companies should come out with bonds.

n++The Indian bond market has not grown the way it should have due to structural constraints - dominance of banks in lending, risk appetite of investors limited to higher ratings, regulatory arbitrage between loans and bonds and prescriptive regulatory limits on investments,n++ noted the study.

Factors such as dominance of banks in lending, risk appetite of investors limited to higher ratings, regulatory arbitrage between loans and bonds, and prescriptive regulatory limits on investments are hindering the growth of corporate bond market in India.

n++Also, retail (individuals) participation in debt markets is almost non-existent, even though the Indian investor psyche is skewed towards fixed income instruments - with as much as 47 per cent of the annual household financial savings flowing into bank fixed deposits,n++ said the report.

Highlighting the importance of a thriving corporate bond market, it said, n++It would be a win-win for both industry participants and investors - issuers will benefit from being able to generate stable funding at low costs, while investors can get secure and predictable cash flows with higher returns compared with plain-vanilla bank fixed deposits.n++

The report further stated that in the long run, this also offers economic benefits to the country as a whole, and is growth-conducive as it becomes especially important for funding the governments ambitious infrastructure agenda, which will require an estimated Rs 43 trillion in the five fiscals to 2020.

Considering the major role of individual investors, the study highlighted the urgent need to promote vigorous investor education and awareness initiatives as part of encouraging measures undertaken by regulators.

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Moodys: Demonetization adds to short-term adjustment pressure on Indias non-bank finance companies, but will not derail their growing franchise
Mar 21,2017

Moodys Investors Service says that non-bank financial companies (NBFCs) in India (Baa3 positive) will demonstrate broadly stable asset quality, but delinquencies will likely rise over the next 1-2 quarters, as demonetization adversely affects collections across asset classes.

While the 90+days delinquency rate in the commercial vehicle (CV) loan segment largely stabilized in the first half of the fiscal year ending 31 March 2017, such delinquencies should build up in the near term due to the adverse impact of demonetization and tighter recognition norms for non-performing assets (NPAs), says Alka Anbarasu, a Moodys Vice President and Senior Analyst.

Moodys also notes that the growth in loans against property (LAP) has outpaced overall retail credit growth in recent years, but relatively loose underwriting practices -- combined with intensifying competition -- will translate into higher asset quality risk for this segment.

Furthermore, over the past 3 years, NBFCs have gained some market share in the origination of retail lending, on the back of the faster growth exhibited by such entities when compared to the banks.

This is particularly the case when compared to public sector banks, which face significant challenges on their asset quality and overall solvency profiles.

Nevertheless, we expect that competitive pressures from the banking sector will remain intense as banks are increasing targeting of the retail segment to offset weakness in their corporate lending. In addition, retail lending, particularly housing loans, is more capital efficient for the banks, adds Anbarasu.

And, while the NBFCs capitalization levels are adequate, with average Tier 1 ratios in excess of 14%, capital generation will lag credit growth. Access to external capital will therefore be key in sustaining the NBFCs growth momentum.

On funding, Moodys expects that the NBFCs funding profiles will broadly remain stable, and funding costs should moderate gradually, given the reduction in systemic rates.

In addition, the NBFCs profitability and capital, as well as funding and liquidity levels, will stay broadly stable. Moodys conclusion is despite the fact that n++ in line with the global trend n++ the funding and liquidity profiles of Indian NBFCs present key downside risks, particularly because of their dependence on confidence-sensitive market funding.

Moodys also says that the NBFCs will maintain well-matched asset-liability profiles n++ despite their weak funding profiles n++ a situation which will protect them against downside risks. However, adverse market events have exposed them to volatility in refinancing and remain a key credit challenge.

The NBFCs are growing at a fast pace, and have gained market share in the origination of retail credit. And, their share of LAP pose a potential source of risk, with such loans growing at a rapid compound annual growth rate of about 25% over the last four years compared to 17% for overall retail credit. Moodys says that the NBFCs exposure to potential risks from LAP is broadly offset by their share of stable mortgage loans, because favorable demographics and economics, tax incentives for home loans and an increasingly affordable housing segment support asset quality. Moodys expects that the loss given default for both home loans and LAP will be limited, in light of the underlying collateral.

The performance of individual NBFCs varies widely, even as the sector as a whole shows better performance when compared to the banks. In addition, within segments n++ such as for housing finance companies n++ variation is also widespread, reflecting the nature of portfolios, as well as the ability to manage costs.

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Inland Water Transport to Reduce Overall Logistics Cost
Mar 21,2017

Inland Water Transport (IWT) mode is widely recognized as an environment friendly and cost effective mode of transport.  As per RITES Report of 2014 on Integrated National Waterways Transportation Grid (INWTG), one litre of fuel moves 24 tonne - km on road, 95 tonne-km on rail and 215 tonne-km on IWT.  The comparative inter modal costs are given below:-

Mode

Pre tax freight

(Rs. per tonne Km)

Post Service tax freight

(Rs. per tonne km)

Railways

1.361.41

Highways

2.502.58

IWT

1.061.06

The significant cost saving shows that the promotion of Inland Water Transport (IWT) is expected to have a positive impact on reduction in overall logistics cost.  However, as compared to roads and railways, development of transportation on national waterways is still in infancy stage. 

The Three National Waterways (NWs) viz. Ganga-BhagirathiGôHooghly river system (NW-1), River Brahmaputra (NW-2) and West Coast Canal (NW-3) have been developed with targeted depth, fixed and floating terminals with mechanized facilities for cargo loading, unloading and Navigational Aids.  Vessels are plying on these waterways.

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