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Like tax for like products-Federation of Biscuit Manufacturers of India (FBMI)
Apr 04,2017

Federation of Biscuit Manufacturers of India (FBMI), representing Rs.27,000 crores, organized biscuit Industry, is proud to be a part of the ONE NATION, ONE MARKET initiative, to be achieved through GST. FBMI, affiliated to PHD Chamber of Commerce and Industry has been supporting various initiatives of the government for more than 60 years. It has contributed to the nations goals of achieving food safety, food fortification and wastage reduction.

FBMI is fully supportive of the mammoth efforts of the Government in transforming the current indirect tax regime through GST, through participative and consensus-building process.

With 93% of the food basket comprising basic food, which is proposed to be exempt or taxed at lower GST rate, taxing the remaining 7% that comprises processed food items at higher GST rate will not be in the interest of fairness and simplicity, the basic goals of GST.

Biscuits are an affordable and nutritious food item for all ages and socio-economic segments, consumed by 85% of all households and across all income segments in India. Commensurate with the growth in the aspiring middle class, there has been an increase in the consumption of all types of biscuits. More varieties are now available and being bought across all income segments. Given this, the tax system should not distort or interfere with the different products being introduced in the market, nor with the choices among them.

Differentiating between different varieties will create complexity and classification disputes

FBMI does not endorse differentiation in GST rates within biscuits, as all varities of biscuits, such as cookies, creams, crackers and glucose, are available at the same price points.

Any distortion in the rates within competing products in this sector will create artificial layers. It will encourage spurious products to the detriment of the consumers. Moreover, it will make GST complex to administer and difficult to comply with by the traders, kirana stores etc. involved in the sale of these products. There is a predominance of the SMEs at the retail level and they will are ill-equipped to handle multiple rates within a sector or industry. GST provides the right opportunity to correct these anomalies, by providing a simple uniform lower GST rate on all biscuits, instead of price based taxation.

Further, discrimination of food products, on the basis of their being branded or un-branded, premium or non-premium, will not only be against the principles of efficiency and equity, but will also lead to classification disputes and complex record-keeping and compliance system.

Hence, FBMI, in a representation to the Government, has requested for a fair, simple, equitable and neutral GST regime. This will be in line with the other good policy initiatives being taken by the government, such as ease of doing business and a liberal FDI policy, to attract new investors in the food processing sector in India and encourage existing businesses to expand.

FBMI is of the view that GST regime can reach its optimum efficiency in tax collection, by expansion of tax base within biscuit industry at lower merit rate and not by taxing a section of the consumers at higher rates at the cost of others.

A higher GST rate, even for a segment of biscuits, would impact demand in the entire value chain. It would result in cutting down on procurement of raw materials by biscuit manufacturers, that would adversely impact farmers across India. Lower demand will also negatively impact investments, exports and employment in the food industry.

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Release of a record 3.25 Cr LPG connections in FY 2016-17
Apr 04,2017

Oil Marketing Companies (OMCs) have released 3.25 crore new LPG connections during FY 2016-17. This is the highest ever number of LPG connections released in a financial year so far in the LPG history of the country. The connections released includes 2 crore connections released under Pradhan Mantri Ujjwala Yojana (PMUY), which was launched on 1st May 2016 by Honble Prime Minister and 1.25 crore connections to new consumers other than PMUY beneficiaries. Under PMUY, women of BPL families especially residing in rural areas have been given LPG connections.

This increase in connections has resulted in a jump in the LPG coverage and as on 01.04.2017, the national LPG coverage is estimated to be 72.8% with 19.88 crore active consumers.

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A record 47,350 kms of PMGSY road constructed in 2016-17
Apr 03,2017

A record 47,350 kms. of PMGSY road was constructed during 2016-17. This is the highest construction of PMGSY roads in a single year, in the last 7 years. While, 25,316 kms. of PMGSY roads were constructed in 2013-14, road construction in 2014-15 was 36,337 kms and in 2015-16, it was 36,449 kms.

A release issued by the Ministry of Rural Development states that during the period 2011-14, the average rate of construction of PMGSY roads was 73 kms. per day, which increased to 100 km per day during 2014-15 and 2015-16. For the year 2016-17, a record of 130 kms. per day has been achieved, which is the highest average annual construction rate, in the last 7 years.

The release further added that 11,614 habitations were provided connectivity by construction of 47,350 kms. of PMGSY roads during 2016-17 (an average of 32 habitations being provided connectivity every day). In terms of number of habitations connected with PMGSY roads, 11,606 is highest ever in the last 7 years.

With a view to reduce the n++carbon footprintn++ of rural roads, reduce environmental pollution, increase the working season and bring cost effectiveness, PMGSY is aggressively encouraging use of n++Green Technologiesn++ and non-conventional materials like waste plastic, cold mix, geo-textiles, fly-ash, iron and copper slag etc. in rural roads. 4,113.13 kms. of PMGSY roads were constructed using n++Greenn++ technologies, in 2016-17. This is substantially higher than 2,634.02 kms. achieved during 2014-2016 and 806.93 kms. achieved during 2000-2014.

To ensure quality assurance, the field inspections of PMGSY works by National Quality Monitors (NQMs) were increased. 2016-17, witnessed a record no. of 7,597 NQM inspections compared to 6,516 inspections in 2015-16, 5,226 inspections in 2014-15 and 2,977 inspections in 2013-14. Out of 7,597 works inspected only 8.21% works were found to be of n++Unsatisfactoryn++ quality in 2015-16.

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Moodys assigns definitive Baa3(sf) to notes issued by India Standard Loan Trust - XLIV, Au Financiers-sponsored auto and micro SME loan ABS in India
Apr 03,2017

Moodys Investors Service has assigned a definitive Baa3(sf) rating to India Standard Loan Trust - XLIV, an ABS transaction backed by a static pool of commercial vehicle loans and secured micro, small and medium enterprise (MSME) loans originated by Au Financiers (India) Limited (Au Financiers, unrated) in India.

The complete rating action is as follows:

Issuer: India Standard Loan Trust - XLIV

.... INR 297,503,981.66 Series A1 Pass Through Certificates, Baa3(sf) Assigned

.... INR 725,238,447.13 Series A2 Pass Through Certificates, Baa3(sf) Assigned

The rating addresses the expected loss posed to investors by the legal final maturity. The structure allows for timely payment of interest and repayment of principal of the rated notes by the legal maturity date.

Moodys ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant impact on yield to investors.


This transaction is a securitization of a static pool of commercial vehicle (CV) loans and Micro SME loans (MSME loans; typically secured business loans with a value below INR2.5 million extended to MSME, guaranteed by business owners and secured by mortgages over immovable properties) originated by Au Financiers in India.

The CV loans and secured MSME loans contribute 78.52% and 21.48% of the initial pool principal, respectively. At closing, Au Financiers assigned a pool of these asset-backed loans, together with its security interest over the underlying vehicles and properties, to the issuer. All the MSME loans in the underlying pool are secured by mortgages over residential or commercial properties.

Au Financiers started disbursing MSME loans in April 2010. However, a large proportion of the MSME loans were originated 2013 onwards, reflected by the fact that the MSME loan portfolio grew to INR 23.16 billion as of June-2016 from about INR 5.98 billion as of June-2013. The resultant limited historical performance information may not be sufficient to fully reflect the future performance of the portfolio.

In addition, there is limited performance data available for this asset class at an industry level, and the typical tenure of such loans of 4-7 years means that the performance data does not reflect a full cycle. Whereas, for the early vintages, like 2010, for which the loans have seen full cycle, the disbursements were insignificant and cant be relied up on fully to reflect the performance of recent vintage loans.

As a result, Moodys has used a mean loss rate assumption of 6.50% for the MSME loans, compared to a mean loss rate assumption of 4.50% for the CV loans, although the performance of the MSME loans has thus far shown significantly lower losses than CV loans. Moodys recovery assumption is 0% for both loan types.

All the underlying loans carry a fixed interest rate, with fixed installments and servicing on both the principal and interest on a monthly basis. The weighted average seasoning of the CV loans and the MSME loans is 7.0 months and 10.7 months, respectively.

The rating on the notes will exhibit some linkage to the credit quality of Au Financiers. This is because the issuer, India Standard Loan Trust - XLIV, relies heavily on Au Financiers to continue servicing the securitized pool to meet its timely interest payments and scheduled principal amortization payments to noteholders.

Au Financiers servicing involves the collection in person of loan payments from the borrowers who are located across India -- where Au Financiers operates. For CV loans, repayment is predominantly in cash, while the proportion of cash collection for MSME loans is significantly lower.

Accordingly, any disruption to Au Financiers operations would significantly disrupt the collection of loan payments and, in turn, would negatively impact the trusts own payments to noteholders.

Even though the issuer may appoint a successor servicer -- following certain servicer replacement events or default events -- this process of replacement is expected to prove lengthy and costly, with potential disputes with borrowers over loan payments.

When assigning the rating, Moodys analysis focused, among other factors, on the:

(1) Characteristics of the securitized pool;

(2) Historical performance of similar types of loans originated by the originator;

(3) Credit quality of the originator;

(4) Probability of operational disruption upon originator default;

(5) Size of credit enhancement to support timely payments on the notes against the risks of defaults and arrears in the securitized pool and/or the originator;

(6) Readiness of the trustee to carry out remedial actions to minimize commingling risk and potential set-off risk following a servicer replacement or default event;

(7) Macroeconomic environment; and

(8) Legal and structural integrity of the transaction.

Moodys considered, among other things, the following key strengths of the transaction:

(1) The experience of the originator in underwriting and servicing the underlying loans in India;

(2) The granularity of the pool with about 2,304 loans, although we note that the top 20 loans represent 8.9% of the original balance;

(3) The favorable terms of the loans: equal monthly instalments with a 75.9% weighted average overall loan-to-value (LTV) ratio at loan origination, split between weighted average LTV ratios of 85.3% and 41.5% for the vehicle loans and secured MSME loans respectively;

(4) The transaction has a static pool of loans. As a result, it is only exposed to the default risk of the loans in the cut-off pool (which have a weighted average remaining tenor of about 39.8 months and a weighted average life of 22.1 months) and to the operational risk of the servicer during the life of the portfolio. The weighted average life for the MSME loans (29.2 months) is higher than that for the CV loans (20.20 months);

(5) The transaction benefits from two main sources of credit enhancement: (a) credit facilities equivalent to 9.35% of the original pool balance, composed of the 3.50% first-loss credit facility and the 5.85% second-loss credit facility at closing; and (b) excess interest collections from the pool -- after payment of the interest on the notes in each period -- can be used to top up previously drawn credit facilities to their original target amount;

(6) The originator has a strong alignment of interest with noteholders. According to minimum retention requirements from the Reserve Bank of India (RBI), the originator has to retain 10% exposure in the deal.

Moodys has also considered the following key weaknesses of the transaction:

(1) A back-up servicing arrangement was not set up at closing. Servicing of the transaction may be subject to disruption if the originator/servicer fails to perform when needed. A servicing disruption would negatively impact collections because the transaction has about 2,304 loan contracts from various parts of India, and there are a limited number of viable replacement servicers in the country capable of covering such a geographic spread and conducting the collection of loan payments from borrowers in person and predominantly in cash, should the originator default.

(2) Limited liquidity buffer: The trust can draw money from two credit facilities up to a total of 9.35% of the initial portfolio amount - when there is a shortage of funds to pay interest payments and scheduled principal amortization payments to noteholders. In a scenario where the servicer is not performing, and the trust is not able to receive any loan payments from the borrowers or the servicer for a prolonged period, this amount of initial liquidity coverage appears weak, as the full amount of the credit facilities may be used up rapidly to cover both interest and principal payments.

(3) Commingling risk with servicers fund: The servicer will designate staff for the colle

Union Textiles Minister launches PowerTex India
Apr 03,2017

The Government has launched PowerTex India, a comprehensive scheme for powerloom sector development, simultaneously at over 45 locations in the country. Launching the scheme in Bhiwandi, Thane district, Maharashtra, the Union Textiles Minister, Smt. Smriti Zubin Irani said that Bhiwandi will be known for resurgence in Powerloom sector. Recalling that the powerloom sector alone employs over 44 lakh people, the Minister said that the scheme will especially benefit small powerloom weavers.

The comprehensive scheme has the following components:

n++In-situ Upgradation of Plain Powerlooms

n++Group Workshed Scheme (GWS)

n++Yarn Bank Scheme

n++Common Facility Centre (CFC)

n++Pradhan Mantri Credit Scheme for Powerloom Weavers

n++Solar Energy Scheme for Powerlooms

n++Facilitation, IT, Awareness, Market Development and Publicity for Powerloom Schemes

n++Tex Venture Capital Fund

n++Grant-in-Aid and Modernisation & Upgradation of Powerloom Service Centres (PSCs)

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Nikkei India Manufacturing PMI rises to 5-month high in March 2017
Apr 03,2017

The health of Indias manufacturing sector improved for the third straight month in March, and to the greatest extent since October 2016. Incoming new orders expanded at a stronger pace, thereby leading to quicker increases in production and input purchasing. Moreover, firms hired additional employees to cope with greater workloads. Although both input costs and output charges rose further, inflation rates softened from those seen in February.

Rising to a five-month high of 52.5 in March, from 50.7 in February, the seasonally adjusted Nikkei India Manufacturing Purchasing Managers IndexTM (PMITM) - a composite indicator designed to provide a single-figure snapshot of the performance of the manufacturing economy - indicated that operating conditions in the sector improved to a greater extent. As for the January-to-March quarter, the PMI average (51.2) was the lowest seen since Q1 FY 2016/17 (51.0).

Amid evidence of strengthening demand conditions, the level of new orders received by manufacturers rose solidly in March and at the quickest pace in five months. Likewise, production expanded at the strongest rate since last October as firms sought to fulfil new and existing projects. The increase in total new work was supported by higher new export orders, which grew at a solid and accelerated pace. New work and output increased across the three monitored sub-sectors, with the upturn led by intermediate goods producers in both cases.

Indian manufacturers purchased greater quantities of inputs for use in the production process during March, with the latest upturn in buying levels the strongest in the current three-month sequence of expansion.

This resulted in an overall increase in stocks of purchases. Having fallen in each of the previous three months, pre-production inventories rose modestly in March. Conversely, holdings of finished items dipped sharply due to production volumes failing to match requirements for existing projects.

Business confidence among manufacturers improved in March, with almost one-fifth of panellists expecting output levels at their units to be higher in 12 months time. Forecasts of a pick-up in demand and the launch of new product lines were the main factors underpinning optimism.

Reversing the decline noted in February, manufacturing jobs rose in March as some firms took on extra staff in line with efforts to expand capacity. Despite accelerating to the fastest in almost four years, the rate of job creation was only slight. Concurrently, outstanding business increased to the weakest extent in 2017 so far.

Largely reflecting higher commodity prices, average input costs increased again. That said, the rate of inflation slowed to the weakest in four months and was below the long-run survey average. Similarly, the rate of charge inflation moderated during March as 96% of manufacturers reportedly kept selling prices unchanged in tandem with attempts to stimulate demand.

Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at IHS Markit and author of the report, said PMI data for March reveal positive developments in the Indian manufacturing sector. Rates of expansion in factory orders and production accelerated again, encouraging some companies to scale up their input buying and take on additional workers. The favourable demand environment was supported by relatively muted inflationary pressures. Given that input costs rose at a softer pace, a whopping 96% of goods producers kept their selling prices unchanged over the month. Looking ahead, production volumes are likely to rise further as businesses will seek to replenish their stocks. Indeed, we saw a marked drop in inventories of finished items, alongside a stronger degree of confidence towards the year-ahead outlook for output. Out of the three broad areas of manufacturing, intermediate goods was Marchs shining star, as growth of new work, production and input buying in this category surpassed those seen at consumer and capital goods firms.

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Release of the Central Governments assistance of Rs.1,712.10 crore from National Disaster Response Fund (NDRF) to Tamil Nadu and Karnataka
Apr 03,2017

The Central Government is concerned at prevailing drought situation in the States of Tamil Nadu and Karnataka. After the receipt of detailed memoranda from these States, Inter-Ministerial Central Teams (IMCT) were deputed to visit the drought affected areas for the spot assessment of the calamity. The High Level Committee (HLC) had recommended the quantum of assistance to the States based on the extant norms of assistance and the report of the IMCT.Based on the approval of the High Level Committee (HLC), the Central Government has sanctioned Rs.1793.63 crore to State of Tamil Nadu and Rs.1,782.44 crore to State of Karnataka for drought relief from NDRF. Based on the above sanctions, a sum of Rs.1447.99 crore has been released to the State of Tamil Nadu by the Central Government from NDRF after adjusting Rs.345.64 crore available with the State as balance in the State Disaster Response Fund (SDRF).For State of Karnataka, after adjusting Rs.96.92 crore available with the State as balance in the SDRF and earlier release of Rs.450 crore by the Central Government, sum of Rs.1,235.52 crore has been released from NDRF.The HLC has also advised the State Governments to take utmost care and ensure that all the individual beneficiary-oriented assistance are mandatorily disbursed through the bank account of the beneficiaries. Further, the Central Government has released Rs.264.11 crore from NDRF for providing the Central assistance to the State of Tamil Nadu for the cyclonic storm Vardha during December, 2016. This amount has been approved by the HLC on the basis of the report of the Inter-Ministerial Central Team sent by the Central Government to assess the damage.These releases are over and above the releases made to States as devolution of 42% of Central Taxes as per the recommendation of the 14th Finance Commission. For the year 2016-17, a sum of Rs.6.08 lakh crore has been released to all States as devolution of Central Taxes. Tamil Nadu has received Rs.24,538 crore and Karnataka has received Rs.28,750 crore under devolution formula during 2016-17.During 2016-17, the Central Government has also provided Rs.48,869 crore to all the States as grant for Rural and Urban Local Bodies to primarily meet the requirement of basic necessities for people living in these areas.For the benefit of farmers, Rs.13,240 crore has been provided under Pradhan Mantri Fasal Beema Yojana (PMFBY) in 2016-17.Also, Rs.2,45,435 crore has been provided under the Centrally Sponsored Schemes (CSS) for transfer to the States from the Central Government during 2016-17. This includes Rs.47,499 crore for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) which is used for employment generation and water conservation works.

In view of onset of the summer season, the Prime Minister Shri Narendra Modi has instructed that in the next three months, all the States should focus on water conservation related works by utilizing the funds available under various Schemes such as Pradhan Mantri Krishi Sinchai Yojana (PMKSY) and MGNREGS etc.

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Mizoram becomes 27th State to join UDAY
Apr 03,2017

The Government of India and the State of Mizoram signed a Memorandum of Understanding (MOU) under the scheme Ujwal DISCOM Assurance Yojana (UDAY) for operational improvement of the States Power Distribution Department. With the signing of MoU by Mizoram, the total States/ Union territories covered under UDAY will be 27. Mizoram would derive an overall net benefit of approximately Rs.198 crores by opting to participate in UDAY, by way of cheaper funds, reduction in AT&C and transmission losses, interventions in energy efficiency, etc. during the period of turnaround.

The MoU paves way for improving operational efficiency of the Power Distribution department of the State. Through compulsory Distribution Transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, feeder audit etc. AT&C losses and transmission losses would be brought down, besides eliminating the gap between cost of supply of power and realisation. The reduction in AT&C losses and transmission losses to 15% and 2.50% respectively is likely to bring additional revenue of around Rs.166 crores during the period of turnaround.

Demand Side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & air-conditioners and efficient industrial equipment through PAT (Perform, Achieve, Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in the State of Mizoram. The gain is expected to be around Rs.30 crores.

While efforts will be made by the Power Distribution Department of the State to improve their operational efficiency, and thereby reduce the cost of supply of power, the Central government would also provide incentives to the State Government for improving Power infrastructure in the State and for further lowering the cost of power. The Central schemes such as DDUGJY, IPDS, Power Sector Development Fund or such other schemes of MOP and MNRE are already providing funds for improving Power Infrastructure in the State and additional/priority funding would be considered under these schemes, if the State/DISCOMs meet the operational milestones outlined in the scheme. Further, with improved efficiency, the State Power department would be in a better position to borrow funds at cheaper rates for Power infrastructure development/improvement in the State.

The ultimate benefit of signing the MOU would go to the people of Mizoram. Reduced levels of transmission and AT&C losses would mean lesser cost per unit of electricity to consumers. Further, financially and operationally healthy State Power Distribution department would be in a position to supply more power. Higher demand for power would mean higher PLF of Generating units and therefore, lesser cost per unit of electricity which would again mean lesser cost per unit of electricity to the consumers. The scheme would also allow speedy availability of cheaper power to 22,007 households in the State that are still without electricity. Availability of 24*7 power to hitherto unconnected villages/households etc. would boost the economy, provide more employment opportunities for the people of the State and thereby, improve the standard of living of the people of the State.

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Record Capacity Addition of Wind Power of 5400MW in Last Fiscal
Apr 03,2017

Ministry of New and Renewable Energy (MNRE) has set another record in the wind power capacity addition by adding over 5400 MW in 2016-17 against the target of 4000 MW. This years achievement surpassed the previous higher capacity addition of 3.423 MW achieved in the previous year.

The leading States in the wind power capacity addition during 2016-17 are Andhra Pradesh 2190 MW, followed by Gujarat 1275 MW and Karnataka 882 MW. In addition Madhya Pradesh, Rajasthan, Tamil Nadu, Maharashtra ,Telangana and Kerala have reported 357 MW, 288 MW, 262 MW, 118 MW , 23 MW and 8 MW wind power capacity addition respectively during 2016-17. These figures are tentative.

During 2016-17 MNRE has taken various policy initiatives in the wind energy sector that includes Introduction of Bidding in Wind Energy Sector, Re -powering Policy, Draft Wind-Solar Hybrid Policy, New Guidelines for Development of Wind Power Projects, etc.

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SASEC program of Asian Development Bank (ADB) expanding towards the East with Myanmar becoming its newest member in 2017
Apr 01,2017

South Asia Subregional Economic Cooperation (SASEC) program of Asian Development Bank (ADB) is expanding towards the East with Myanmar formally becoming the 7th member of SASEC in 2017.

Shri Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance of India noted that Myanmar is key to realizing greater connectivity and stronger trade and economic relations between the SASEC sub-region and the countries of East and Southeast Asia and that Myanmars membership in SASEC can offer a host of opportunities for realizing synergies from economic cooperation in the sub-region.

SASEC member countries recognize that most of SASECs multimodal connectivity initiatives include Myanmar. Road corridors in Myanmar provide the key links between South Asia and Southeast Asia. Ports in Myanmar will provide additional gateways to the landlocked North Eastern region of India. Development of multi-modal connectivity between North Eastern region of India, Bangladesh and Myanmar has the potential of unleashing tremendous economic energy in the sub-region.

SASECs energy connectivity and energy trade prospects will be enhanced with the inclusion of Myanmar, involving its substantial resources of hydropower and natural gas. Moreover, developmental impacts of economic corridor in the SASEC sub-region will be maximized by exploring potential synergies with corridors in Myanmar that are linked to those in other Southeast Asian countries.

Myanmar was accorded an observer status of SASEC in 2013 when ADBs annual meeting was held in Noida, India. Myanmar has been participating in annual SASEC Nodal Officials meetings as an observer since 2014. It was invited by the participating countries of SASEC countries to become a full member in 2015.

The SASEC program was formed in 2001 in response to the request of the four countries of South Asia - Bangladesh, Bhutan, India and Nepal - from ADB to assist in facilitating economic cooperation among them. These four countries comprise the South Asia Growth Quadrangle (SAGQ), formed in 1996, as a vehicle for accelerating sustainable economic development through regional cooperation. As a project-based partnership, the SASEC program has been helping realize regional prosperity by enhancing cross-border connectivity, facilitating faster and more efficient trade and promoting cross-border power trade. Maldives and Sri Lanka joined SASEC in 2014, further expanding opportunities for enhancing economic linkages in the sub-region.

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Cabinet Approves changes to Motor Vehicle (Amendment) Bill 2016
Apr 01,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the changes to the Motor Vehicles (Amendment) Bill, 2016. The Bill will be introduced in the Parliament.

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Indias external debt declines to US$ 456.1 billion at end December 2016
Apr 01,2017

Indias external debt stock fell by US$ 29.0 billion (6.0%) to US$ 456.1 billion, at end-December 2016 over the level at end-March 2016. The decline in external debt during the period was due to the fall in long-term external debt, particularly the fall in NRI deposits reflecting the redemption of FCNR (B) deposits and decline in commercial borrowings with fall in both commercial bank loans and securitized borrowings. On a sequential basis, total external debt at end-December 2016 declined by US$ 28.1 billion (5.8%) from the end-September 2016 level.

The maturity pattern of Indias external debt indicates dominance of long-term borrowings. At end-December 2016, long-term external debt accounted for 81.6% of Indias total external debt, while the remaining 18.4% was short-term debt.

While long-term debt at US$ 372.2 billion, declined by US$ 29.4 billion (7.3%) at end-December 2016 over the level at end-March 2016, short-term debt increased marginallyby 0.5% to US$ 83.8 billion.

The valuation gain (appreciation of the US dollar against the Indian rupee and most other major currencies) was US$ 7.3 billion. This implies that excluding the valuation effect, the decrease in external debt would have been lower at US$ 21.7 billion at end-December over end-March 2016.

The shares of Government (Sovereign) and non-Government debt in the total external debt were 19.6% and 80.4% respectively, at end-December 2016.

The share of US dollar denominated debt was 54.7% of the total external debt at end-December 2016, followed by the Indian rupee (31.1%), SDR (5.9%), Japanese yen (4.4%), Euro (2.7%), Pound Sterling (0.7%) and Others (0.5%).

Many key external debt indicators of India show improvement at end-December 2016 over end-March 2016. Besides, total external debt falling by 6.0% during this period, the foreign exchange cover for external debt increased to 78.7% from 74.3% and the ratio of concessional debt to total external debt increased to 9.2% from 9.0%. Though, the share of short-term debt (original maturity) in total debt increased to 18.4% from 17.2% during this period due to rise in trade related credits, the share of short term debt (residual maturity) in total external debt fell to 41.4% from 42.6%. While the share of short-term debt (original maturity) to foreign exchange reserves increased marginally to 23.4% from 23.1% during this period, the share of short-term debt (residual maturity) to foreign exchange reserves fell to 52.6% from 57.4%.

Cross country comparison of external debt indicates that India continues to be among the less vulnerable countries. Indias key debt indicators compare well with other indebted developing countries. Among the top twenty developing debtor countries, Indias external debt stock to gross national income (GNI) at 23.4% was the fifth lowest and in terms of the foreign exchange cover for external debt, Indias position was the sixth highest at 69.7% in 2015. Contrary to Chinas high share of short-term debt to total external debt which has been increasing in each quarter of 2016, Indias share is low and has been decreasing. In 2016 Q3 (end-September), the shares were 16.8% for India and 55.4% for China.

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Cabinet approves the fixation of P&K fertilizers Nutrient-Based Subsidy (NBS) rates for 2017-18
Apr 01,2017

The Cabinet Committee on Economic Affairs (CCEA) Union Cabinet chaired by Prime Minister Narendra Modi has approved the Fixation of Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilizers for the year 2017-18.

Government has been implementing Nutrient Based Subsidy (NBS) Policy for decontrolled P&K fertilizers. Under this policy, the subsidy on Phosphatic and Potassic (P&K) fertilizers is announced by the Government on annual basis for each nutrient i.e., Nitrogen (N), Phosphorous (P), Potash (K) and Sulphur (S) on per kg basis which is converted into subsidy per tonne depending upon the nutrient content in each grade of the fertilizers. These rates are determined taking into account the international and domestic prices of P&K fertilizers, exchange rate, inventory level in the country etc.

The CCEA in its meeting held on 31 March 2017 decided to fix the NBS rates for 2017-18. As compared to 2016-17, the subsidy for the period 2017-18 has decreased from Rs 13.241/kg to 11.997/kg (decrease of Rs 1.244/kg) for P, from Rs 15.470/kg to 12.395/kg (decrease of Rs 3,075/kg) for K whereas the subsidy of N has increased from Rs 15.854/kg to 18.989/kg (an increase of Rs 3.135/kg) and of S from Rs 2.044/kg to 2.240/kg (an increase of Rs 0.196/kg).

During 2016-17, the estimated consumption of P&K fertilizers is 279.8 LMT. Based on the assumption that the consumption of P&K fertilizers during 2017-18 would remain the same, the estimated subsidy requirement at proposed rates would be Rs 19,848.99 crore which is lower than 2016-17 (Rs. 20,688.43 crore) by Rs. 839.44 crore.

This is in continuation with the reforms being undertaken in the fertilizers sector over the past two and a half years including DBT for subsidy payment, neem coating of Urea, reduction in MRP of P&K fertilizers to promote balanced use of nutrients, removal of minimum production criteria for manufacturers of Single Super Phosphate (SSP).

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Cabinet approves the revised Air Services Agreement with Malaysia
Apr 01,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the revised Air Services Agreement (ASA) with Malaysia.

The revised text of ASA was initialed in 2011. However, due to some diversion on Article 13 i.e. related to remittance of earning, the Agreement could not be signed. During the meeting held in ICAN 2016, Malaysian side agreed to revise the text of said article as suggested by M/o Finance, Govt. of India

Features of the Air Services Agreement

n++ Existing ASA was signed in 1974, hence there is a need to revise, update and modernize the exiting ASA

n++ Text of existing ASA has been replaced with the new text as per latest ICAO template.

n++ Cooperative Marketing Arrangement for 3rd country airlines has been added

n++ Clause on domestic codeshare has been added

n++ The articles on safety and security have been added in the revised ASA

n++ The article related to intermodal services have been added in the revised ASA that will permit air passengers and cargo to move through any intermodal transport from any point in the territory of other party.

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Cabinet approves moving of official amendments to The Companies (Amendment) Bill, 2016
Apr 01,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the proposal to move official amendments to the Companies (Amendment) Bill, 2016. The Bill will be introduced in the Parliament.

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