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More than Rs. 820 crore expected to be realised through Fifth Tranche of Sovereign Gold Bond (SGB) Scheme from 1st to 9th September 2016
Sep 22,2016

The amount realised through the 5th Tranche of Sovereign Gold Bond (SGB) Scheme, is expected to cross Rs. 820 crore. This was mobilised through over 2.00 lakh applications representing around 2.37 tonnes of gold. These numbers are likely to go-up further as the receiving offices are still in the process of uploading information of huge rush of applications received on the last day. The aggressive marketing of the product by Govt of India, including through its receiving offices, namely Banks, Post Offices, NSE and BSE helped in mobilizing such encouraging response. SBI at Rs. 245 Crore subscription and Bank of India at Rs. 56 Crore subscription were the top performers. The Post Offices did their bit by attracting maximum number, around 22,000, applicants. The total mobilisation by Post Offices is expected at around Rs. 15-20 crore. The 5th Tranche of Sovereign Gold Bond (SGB) Scheme was open from 1st to 9th September, 2016.

The issue price of the Sovereign Gold Bond in 5th tranche worked-out to a still higher level Rs. 3,150 per gram of gold based on the average of closing price of gold of 999 purity for the week August 22 to 26, 2016, as published by the India Bullion and Jewellers Association (IBJA).

The Government will come-up with more tranches in 2016-17. The next tranche of SGB is expected around the third week of October, prior to Diwali. The next tranche is expected to come up with additional features to attract consumers even more.

In pursuance of the announcement in the Union Budget 2015-16, the Sovereign Gold Bond (SGB) scheme was launched as an alternative mode of investment to physical gold in November 2015. The aim of SGB is to reduce demand, including through imports, for physical gold, and in process reduce Indias Current Account Deficit.

Three tranches of SGB scheme were floated in 2015-16. In the current financial year two tranches have been launched (4th tranche from July 18-22, 2016 and 5th tranche from September 01-09, 2016). The total subscription in first 4 tranches was Rs. 2239 Crore corresponding to 7.85 tonnes of gold. The highest mobilisation was Rs. 921 Crore in the 4th tranche when the issue price was Rs. 3119 per gram of gold.

The sustained and encouraging response of the investors to the SGB Scheme (Series-I and series-II) of 2016-17, indicates that the product has come of age, and is increasingly becoming popular amongst the general public due to advantages it offers over physical gold, namely use as collateral for loans, Capital Gain Tax exemption on redemption, Zero risk of theft/ impurities associated with handling of physical gold; tradability through Stock Exchanges and also availability in DEMAT and paper form. The product, in addition, earns an interest rate of 2.75% per annum, semi-annually payable on initial investment.

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Mergers no quick fix for public sector banks; they need autonomy: ASSOCHAM Paper
Sep 22,2016

Asserting there are no quick fixes for grave problems facing the public sector banks, mainly centered around close to Rs 5 lakh crore non-performing assets, ASSOCHAM President Mr Sunil Kanoria today said a paper brought out by the chamber clearly suggests mergers or consolidation of the PSBs is certainly no answer to the present crisis, which can only be resolved by professionalizing these banks with the government keeping an arms length.

Addressing the media, Mr Kanoria said, n++Our paper has also noted that as things stand today, the boards of the PSBs are not empowered enough to choose a glide path for their banks. Instead, they need to refer to the Finance Ministry circulars even for mundane things.n++

Releasing a study titled Convergence, Not Consolidation Answer for Public Sector Banks, along with chambers Secretary General, Mr D S Rawat at a press conference held in New Delhi said, n++If size of the banks had a relationship with the health of the financial sector, the Chinese banks would have been the healthiest lot. But, the biggest concern before the global financial community today is the health of the Chinese banksn++.

Of the top ten global banks on the S & P Global Market Ranking, the first four are from China with Industrial and Commercial Bank of China right at the top. Only two American banks - JP Morgan and Bank of America, figure on the table of top ten and the Wall Street has no liking either for the size and seems quite disillusioned with the so-called Too Big to Fail concept whereupon it is on the sovereigns to save their banks even if they go reckless in their business.

n++But then, somehow, here in India we have got this penchant for large size to be achieved by merging different entitiesn++, said Mr Kanoria. If at all, there is a case for a merger, it is weak bank merging into strong one; but here we have a situation where there are hardly strong banks in terms of crucial parameters, large book size notwithstanding.

With some high profile borrowers getting into litigation and facing criminal probes, the public discourse puts additional pressure on the government, to find some quick fixes for NPA-ridden banks, which find themselves terribly constrained to improve lending with the credit growth well below 10 per cent.

More than the size of the bank, what matters is the composition and the empowerment of the bank boards which need to include professionals without operational interference from the government, said ASSOCHAM President.

Unlike the present situation where the Financial Services Division in the Finance Ministry is virtually the master of the PSBs, the level of the government interface with the banks should be well-defined and be done only through the Banks Board Bureau ( BBB) , comprising people of eminence, integrity and domain expertise

There is a case, certainly for synchronization of the businesses among the PSBs. The paper said there could be a few PSBs which are strong in say, automobile portfolio in a particular region, say south India. On the other hand, there may be banks which are strong in agro financing in the same area but are not doing well in automobile finance. The entire portfolio of auto finance can be swapped. Conversely, same thing can be achieved for the agro financing portfolio, of course over and above the mandatory priority sector lending.

Sensing an inflexion point, the paper said the technology driven banking is here, right away and it is only going to increase. In about a year, 17 new banks will begin business. These are not driven by sheer size; but would leverage technology to reach the un-reached; create new banking customers, take away existing customers from those complacent about their business and would redefine the way people at large do their financial transactions.

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Mineral Production during July 2016 was 0.8% higher as compared to July 2015
Sep 22,2016

The index of mineral production of mining and quarrying sector for the month of July (new Series 2004-05=100) 2016 at 118.7, was 0.8% higher as compared to July 2015. The cumulative growth for the period April- July 2016-17 over the corresponding period of previous year stands at (+) 2.0%.

The total value of mineral production (excluding atomic & minor minerals) in the country during July 2016 was Rs. 17339 crore. The contribution of Coal was the highest at Rs. 6238 crore (36%). Next in the order of importance were: Petroleum (crude) Rs. 5593 crore, Natural gas (utilized) Rs. 2165 crore, Iron ore Rs. 1347 crore, Limestone Rs. 554 crore and Lignite Rs.535 crore. These six minerals together contributed about 95% of the total value of mineral production in July 2016.

Production level of important minerals in July 2016 were: Coal 442 lakh tonnes, Lignite 30 lakh tonnes, Natural gas (utilized) 2618 million cu. m., Petroleum (crude) 31 lakh tonnes, Bauxite 1972 thousand tonnes, Chromite 177 thousand tonnes, Copper conc. 11 thousand tonnes, Gold 172 kg., Iron ore 115 lakh tonnes, Lead conc. 22 thousand tonnes, Manganese ore 150 thousand tonnes, Zinc conc. 89 thousand tonnes, Apatite & Phosphorite 54 thousand tonnes, Limestone 253 lakh tonnes, Magnesite 17 thousand tonnes and Diamond 3100 carat.

The production of important minerals showing positive growth during July 2016 over July 2015 include Gold (19.4%), Coal (4.7%), Natural gas (utilized) (4.4%), Lead conc. (3.0%), Chromite (2.1%), Manganese ore (1.2%), Iron ore (0.7%) and Limestone (0.3%) . The production of other important minerals showing negative growth are: Apatite & Phosphorite [(-) 72.6%], Zinc conc. [(-) 31.4%], Magnesite [(-) 31.3%], Bauxite [(-) 31.0%], Copper conc. [(-) 16.5%], Diamond [(-) 15.3%], Petroleum (crude) [(-) 1.8%] and Lignite [(-) 1.6%].

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OECD warns weak trade and financial distortions damage global growth prospects
Sep 22,2016

The global economy is projected to grow at a slower pace this year than in 2015, with only a modest uptick expected in 2017. The Outlook warns that a low-growth trap has taken root, as poor growth expectations further depress trade, investment, productivity and wages.

Over the past few years, the rate of global trade growth has halved relative to the pre-crisis period, and it declined further in recent quarters, with the weakness concentrated in Asia. While low investment has played a role, rebalancing in China and a reversal in the development of global value chains could signal permanently lower trade growth, leading to weaker productivity growth. Lack of progress - together with some backtracking - on the opening of global markets to trade has added to the slowdown.

Exceptionally low - and in some cases negative - interest rates are distorting financial markets and raising risks across the financial system. A disconnect between rising bond and equity prices and falling profit and growth expectations, combined with over-heating real estate markets in many countries, increases the vulnerability of investors to a sharp correction in asset prices.

n++The marked slowdown in world trade underlines concerns about the robustness of the economy and the difficulties in exiting the low-growth trap,n++ said OECD Chief Economist Catherine L. Mann. n++While weak demand is surely playing a role in the trade slowdown, a lack of political support for trade policies whose benefits could be widely shared is of deep concern.

n++Monetary policy is becoming over-burdened. Countries must implement fiscal and structural policy actions to reduce the over-reliance on central banks and ensure opportunity and prosperity for future generations.n++

The OECD projects that the global economy will grow by 2.9 percent this year and 3.2 percent in 2017, which is well below long-run averages of around 3n++ percent.

The small downgrade in the global outlook since the previous Economic Outlook in June 2016 reflects downgrades in major advanced economies, notably the United Kingdom for 2017, offset by a gradual improvement in major emerging-market commodity producers.

Growth among the major advanced economies will be subdued. In the United States, where solid consumption and job growth is countered by weak investment, growth is estimated at 1.4 percent this year and 2.1 percent in 2017. The euro area is projected to grow at a 1.5 percent rate in 2016 and a 1.4 percent pace in 2017. Germany is forecast to grow by 1.8 percent in 2016 and 1.5 percent in 2017, France by 1.3 percent in both 2016 and 2017, while Italy will see a 0.8 percent growth rate this year and next.

In the United Kingdom, growth is slowing following the 23 June referendum to leave the European Union. While a strong response from the Bank of England has helped stabilise markets, uncertainty remains extremely high and risks are clearly on the downside. In this environment, the UK is projected to grow by 1.8 percent in 2016 and 1 percent in 2017, well below the pace in recent years.

Growth in Japan will remain weak and uneven, at 0.6 percent in 2016 and 0.7 percent in 2017, with the appreciation of the yen and weak Asian trade weighing on exports. Canadian growth is projected at 1.2 percent this year and 2.3 percent in 2017.

China is expected to continue facing challenges as it rebalances its economy from manufacturing-led demand toward consumption and services. Chinese growth is forecast at 6.5 percent in 2016 and 6.2 percent in 2017. India will continue to grow robustly, by 7.4 percent in 2016 and 7.5 percent in 2017. Despite some improvements, Brazils economy continues experiencing a deep recession, and is expected to shrink by 3.3 percent this year and a further 0.3 percent in 2017.

The Interim Economic Outlook renews calls for a stronger collective response using fiscal, structural and trade policies to boost growth. On the fiscal front, low interest rates offer governments additional fiscal space for investing in human capital and physical infrastructure to promote short-term demand, long-term output and inclusiveness.

On the structural side, more ambitious policies are needed, particularly those that boost trade, including commitments to stand still on new protectionist measures, roll back existing ones and urgently tackle other obstacles to trade and investment.

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Apex Council Meeting Decides to Set up Telemetry System and Joint Teams for River Basin Study
Sep 22,2016

The Apex council meeting on Krishna river held in New Delhi today decided for setting up telemetry systems for water gauging on river Krishna to provide upto date data on flow of water in the river. The council under the Chairpersonship of Union Water Resources, River Development and Ganga Rejuvenation Sushri Uma Bharti also decided to constitute joint teams for river basin study of both the states. The joint teams will have experts from both the States and Centre. The teams will give their report about water sharing which will be forwarded to Krishna tribunal for speedy decision. Briefing media after the meeting Sushri Bharti said the meeting was held in a very cordial atmosphere. She said both the states will continue consultation on official levels on other related issues. The meeting was attended by Chief Minister of Andhra Pradesh Shri N Chandrababu Naidu and Chief Minister of Telangana Shri K Chandrashekar Rao.

Referring to todays cabinet approval for setting up of National Council for River Ganga, the Minister called it a turning point in Ganga Rejuvenation programme of the government. Sushri Bharti said this decision will give more teeth to the NMCG for environmental protection of river Ganga. The Minister said in order to ensure transparency and cost effectiveness, a provision for concurrent audit and safety audit has been made. She said this move will ensure effective abatement of pollution in Ganga and will help in maintaining ecological flow of the river. The Minister informed that by next week tenders will be issued for taping 22 major drains of 11 towns which account for 90 per cent of sewer flow into Ganga on hybrid annuity mode.

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IWAI Signs Contract with DST, Germany for Designing Special Vessels for NW-1
Sep 22,2016

With its objective of providing safe, environment friendly and economical mode of transportation through National Waterway-1 (NW-1), The Inland Waterways Authority of India (IWAI), Ministry of Shipping signed a contract with M/s DST, Germany to design vessels, especially suited to navigate the 1620 km stretch of NW-1.

Speaking on the occasion a senior IWAI official said it is a revolutionary step and a milestone in the journey of NW-1. n++The objective of IWAI is to go along with nature and disturb the river minimally. The specially designed vessels will navigate on low drafts and will be of high carrying capacity, and most importantly, will be environment friendly,n++ he said.

Considering the expected growth of the Inland Waterways sector in India, DST, Germany is expected to develop a combination of standardised vessels to meet the requirement of various types of cargo. One of the most important navigational challenges for NW-1 is the kind of vessels that will play on the Ganga-Bhagirathi-Hooghly stretch. Keeping in view the difficult hydro-morphological characteristics of the river in the upper reaches between Patna and Varanasi, it is important to have vessels which can ply on low draft, with high carrying capacity, and are economically viable and environment friendly.

Earlier in August 2016, the Honble Minister for Road Transport, Highways and Shipping Sh. Nitin Gadkari flagged off the trial run of two cargo vessels from Varanasi on NW-1(River Ganga). Keeping in view the demand for transportation of cars through NW-1, M/s DST,Germany has been initially tasked to develop low draft vessels that can carry up to 150-200 vehicles.

Government is developing NW-1 under the Jal Marg Vikas Project, with assistance from the World Bank at an estimated cost of Rs. 4,200 crore. The project would enable commercial navigation of vessels with capacity of 1500-2,000 tons.Phase-I of the project covers the Haldia-Varanasi stretch. The project includes development of fairway, Multi-Modal Terminals at Varanasi, Haldia, and Sahibganj, strengthening of river navigation system, conservancy works, modern River Information System (RIS), Digital Global Positioning System (DGPS), night navigation facilities, modern methods of channel marking, construction of a new state of the art navigational lock at Farakka etc.

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Indian Oil and GAIL sign MoU for taking equity stake in upcoming Dhamra LNG terminal
Sep 22,2016

Indian Oil Corporation and GAIL (India) signed an MoU with Dhamra LNG Terminal (DLTPL) for taking equity in the 5 MMTPA capacity LNG Receiving, Storage and Regasification Terminal, being put up at Dhamra Port, Odisha. The agreement was signed in New Delhi in the presence of Minister of State (I/C) for Petroleum and Natural Gas Sh Dharmendra Pradhan.

As per the MoU, DLTPL shall be an equal Joint Venture of IndianOil and GAIL on one hand and Adani Group on the other. IndianOil and GAIL would acquire 39% and 11% equity respectively in DLTPL, with the balance 50% being held by Adani group. Going forward, IndianOil and Adani group will each divest 1% of their respective stake to a credible financial institution which will then have 2% stake in the terminal. Apart from equity, IndianOil and GAIL intend to book regasification capacity of 3.0 and 1.5 MMTPA respectively in the terminal.

The development comes in the backdrop of Governments consistent focus on undertaking welfare and growth measures in eastern India so as to bring this hitherto underdeveloped region into the economic mainstream of the country. Prime Minister Shri Narendra Modi has maintained that India cannot develop till the eastern part of India progresses.

Presently, the states in eastern India viz. Odisha, Bihar, Jharkhand and West Bengal are not able to get the benefits of natural gas in sectors like Domestic, Transport, Industries etc., as the region does not have gas infrastructure by way of LNG Terminals and cross-country gas pipeline grid. The LNG Terminal at Dhamra would provide the potential customers in these states a clean and economically viable alternative which will also help in reducing the carbon footprint. This will also provide momentum to the economic growth of this region by attracting new industrial projects.

The LNG Terminal would also meet the gas requirements of three oil refineries of IndianOil situated in Barauni, Haldia and Paradip. The three fertilizers plants at Barauni, Sindri and Gorakhpur which are being revived by Govt. of India will also benefit from this terminal. The natural gas from the terminal would also be supplied to various City Gas Distribution networks coming up in eastern India, which in turn would cater to the requirements of piped gas for households, CNG for automobiles and clean fuel requirements of commercial establishments and industries. It is, therefore, expected that once operational, Dhamra LNG terminal will emerge as a bridge to prosperity for the entire eastern India.

Cabinet Committee on Economic Affairs approved Capital Grant of 40%, amounting to Rs. 5,176 Crores over 5 years, for Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) project, which is being implemented by GAIL (India) at a total capital outlay of Rs. 12,940 Crores. This is the first time ever that Govt of India has extended Capital Grant to a Natural Gas pipeline project.

The 2,539 km long JHBDPL is expected to be completed by December 2020 and will connect UP, Bihar, Jharkhand, West Bengal and Odisha. The project will also see City Gas Distribution (CGD) networks being set up by GAIL in 7 important towns in eastern India, namely, Varanasi, Patna, Ranchi, Jamshedpur, Kolkata, Bhubaneshwar and Cuttack. The JHBDPL gas pipeline will be used for gas supply to 3 fertilizer plants in eastern India, namely Barauni, Sindri and Gorakhpur.

The Dhamra LNG Terminal project and JHBDPL project, cumulatively, are expected to bring investments to the tune of Rs 51,000 Crores into the economy of eastern India. Of this, about Rs. 13,000 Crores will be spent on JHBDPL pipeline infrastructure; Rs. 6,000 Crores on CGD projects in 7 cities; Rs. 6,000 Crores on Dhamra LNG Terminal and Rs. 26,000 Crores on revival of Gorakhpur, Barauni, Sindri & Talcher fertilizer units.

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MHA sanctions additional 10,000 SPOs for J&K
Sep 22,2016

Union Ministry of Home Affairs (MHA) has sanctioned the engagement of additional 10,000 Special Police Officers (SPOs) in the Police Department of Jammu and Kashmir.

The orders have been implemented with immediate effect and the additional numbers is over and above the existing strength of the SPOs. The additional SPOs will be utilized especially for the security related requirements. The reimbursement of expenditure to the State Government by the Centre in respect of 10,000 SPOs will be as per existing approved Security Related Expenditure (SRE) Guidelines.

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Indias current account deficit narrows to US$ 0.3 billion in Q1FY2017
Sep 21,2016

Indias current account deficit (CAD) narrowed to US$ 0.3 billion (0.1% of GDP) in Q1 of 2016-17, significantly lower than US$ 6.1 billion (1.2% of GDP) in Q1 of 2015-16. The contraction in the CAD was primarily on account of a lower trade deficit (US$ 23.8 billion) than in Q1 of last year (US$ 34.2 billion) and in the preceding quarter (US$ 24.8 billion). On a BoP basis, merchandise imports declined sharply (by 11.5%) against merchandise exports (which declined by 2.1%), leading to a lower trade deficit in Q1 of 2016-17.

Net services receipts declined on a y-o-y basis, largely due to a fall in net earnings on account of travel, financial services and other business services.

Net payment on account of primary income (dividend, interest and profit) increased marginally in Q1 of 2016-17 from its level a year ago.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 15.2 billion, declining from their level in the preceding quarter as well as from a year ago.

Net foreign direct investment moderated to US$ 4.1 billion in Q1 of 2016-17 from US$ 10.0 billion in Q1 of 2015-16 and US$ 8.8 billion in the preceding quarter i.e. Q4 of 2015-16.

On the other hand, portfolio investment, recorded a net inflow of US$ 2.1 billion in Q1 of 2016-17 as against a marginal outflow in the corresponding period of last year and an outflow of US$ 1.5 billion in the preceding quarter, primarily reflecting net inflow in the equity component.

Accretion to non-resident Indian (NRI) deposits at US$ 1.4 billion moderated in Q1 of 2016-17 from their level in Q1 last year as well as in the preceding quarter.

Higher repayments under external commercial borrowings led to a net outflow under loans to India in Q1 of 2016-17 as against net borrowings in the same period last year.

Foreign exchange reserves (on a BoP basis) increased by US$ 7.0 billion in Q1 of 2016-17 as compared with an accretion of US$ 11.4 billion in Q1 of 2015-16 and US$ 3.3 billion in the preceding quarter.

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Push for Aquaculture as India targets marine products exports worth $5.6 bn in 2016-17
Sep 21,2016

Marine product exports from India are projected to increase nearly 20% to USD 5.6 billion in 2016-17, particularly with strides in aquaculture diversification, quality control, value addition and improved production infrastructuren++ all of which will be demonstrated at the upcoming biennial India International Seafood Show (IISS) in Vishakhapatnam.

The Marine Products Export Development Authority (MPEDA), the broad fisheries sector coordinating agency under the Ministry of Commerce, expects the industry will reverse the decline from last fiscal when total seafood exports stood at 945,892 MT worth US$ 4.7 billion.

IISS 2016, the 20th edition of one of the oldest and largest seafood events in Asia which will be on from September 23-25, is focusing on Safe and Sustainable Indian Aquaculture to highlight the technological advances and sustainable practices followed in capture & culture fisheries in India, to ensure quality of seafood produced for both domestic and export market.

The USA and South East Asia are the major importers of Indian seafood and frozen shrimp continued to be the major export item last year, followed by frozen fish.

Small and marginal farmers in India, who contribute to the bulk of coastal aquaculture are organising to stave off competition from countries such as Thailand and Vietnam by boosting production and adopting global standard marketing strategies such as certification, traceability and eco-labelling.

n++Aquaculture is a very significant area for marine exports as far as India is concerned and our efforts are geared towards greater technology inputs and product diversification in this area,n++ said Dr A Jayathilak, MPEDA Chairman, n++Our higher target for exports this year is in part due to increased production of globally in-demand seafood produce such as Whiteleg Shrimp and Black Tiger Shrimp, and diversification of aquaculture species particularly of Mangrove Crab and Tilapia.n++

The MPEDA is actively supporting shrimp culture through cluster farming approach. More than 10,000 farmers have been organized into aquasocieties that implements Better Management Practices. The aquasocieties also help the farmers access credit, quality seeds, feeds and other inputs, reducing the burden of diseases and improving product quality.

While Aquaculture will be in the spotlight at the IISS 2016, the show will also focus on new technologies, production infrastructure and value-added products. The MPEDA says increasing export of value added exports to about half of the total quantity is a key component of the marine products export plan of India.

IISS 2016, organised by the MPEDA in partnership with the Seafood Exporters Association of India (SEAI) at the Port Trust Diamond Jubilee stadium in Vishakhapatnam, will also be a major platform for business interactions. It is expected to pave the way for foreign direct investment in India and contribute significantly to the Make in India programme.

The event will see participation from countries including USA, United Kingdom, Spain, Belgium, Finland, Sweden, Japan, Vietnam, The Netherlands, Thailand, Vietnam, Taiwan, Germany and China.

International and domestic exhibitors will showcase their products and services to a potential global market and explore leads and partnerships. Of the 290 stalls booked at the exhibition, more than 70 are from foreign companies.

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Major Boost for Coastal Transportation of Vehicles Through Ro-Ro Vessels
Sep 21,2016

Promotion of costal shipping is one of the major thrusts of the Ministry of Shipping. In order to promote transportation of automobiles through coastal shipping, Ministry of Shipping has decided that all Major Ports will provide discount of 80 per cent for two years on Vessel Related Charges (VRC) & Coastal Related Charges (CRC) for coastal transportation of vehicles through Ro-Ro Ships. This discount is also extended to other similar ships such as Ro-Pax, PCC, PCTC, PTC etc. An order in this regard has been issued on 20th September, 2016. In order to make this discount sustainable for the Shipping Service Providers, the Major Ports will also carry out intensive marketing for demand generation.

As per the earlier scheme, coastal vessels including Ro-Ro vessels used to get a discount of 40 per cent over that of the foreign going vessels. With increase in discount to 80 per cent, it is expected that the Shipping Service Providers will be able to attract more auto-mobile cargo through the coastal route and decongest the already congested roads and railways and also make the Ro-Ro ship service operations more sustainable.

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Cabinet approves merger of rail budget with general budget
Sep 21,2016

The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to (i) the merger of Railway budget with the General budget, (ii) the advancement of the date of Budget presentation from the last day of February to the 1st of February and (iii) the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.

Merger of Railway Budget with the General Budget:

The arrangements for merger of Railway budget with the General budget have been approved by the Cabinet with the following administrative and financial arrangements-

(i) The Railways will continue to maintain its distinct entity -as a departmentally run commercial undertaking as at present;

(ii) Railways will retain their functional autonomy and delegation of financial powers etc. as per the existing guidelines;

(iii)The existing financial arrangements will continue wherein Railways will meet all their revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from their revenue receipts;

(iv)The Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India;

The presentation of separate Railway budget started in the year 1924, and has continued after independence as a convention rather than under Constitutional provisions.

The merger would help in the following ways:

n++ The presentation of a unified budget will bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government.

n++ The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance.

n++ Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.

Advancement of the Budget presentation:

The Cabinet has also approved, in principle, another reform relating to budgetary process, for advancement of the date of Budget presentation from the last day of February to a suitable date. The exact date of presentation of Budget for 2017-18 would be decided keeping in view the date of assembly elections to be held in States.

This would help in following ways:

n++ The advancement of budget presentation by a month and completion of Budget related legislative business before 31st March would pave the way for early completion of Budget cycle and enable Ministries and Departments to ensure better planning and execution of schemes from the beginning of the financial year and utilization of the full working seasons including the first quarter.

n++ This will also preclude the need for seeking appropriation through Vote on Account and enable implementation of the legislative changes in tax; laws for new taxation measures from the beginning of the financial year.

Merger of Plan and Non Plan classification in Budget and Accounts:

The third proposal approved by the Cabinet relates to the merger of Plan and Non Plan classification in Budget and Accounts from 2017-18, with continuance of earmarking of funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan. Similarly, the allocations for North Eastern States will also continue.

This would help in resolving the following issues:

n++ The Plan/Non-Plan bifurcation of expenditure has led to a fragmented view of resource allocation to various schemes, making it difficult not only to ascertain cost of delivering a service but also to link outlays to outcomes.

n++ The bias in favour of Plan expenditure by Centre as well as the State Governments has led to a neglect of essential expenditures on maintenance of assets and other establishment related expenditures for providing essential social services.

n++ The merger of plan and non-plan in the budget is expected to provide appropriate budgetary framework having focus on the revenue, and capital expenditure.

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Cabinet approves the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016
Sep 21,2016

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has approval the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016. The Order lays down a new institutional structure for policy and implementation in fast track manner and empowers National Mission for Clean Ganga to discharge its functions in an independent and accountable manner. It has been decided to grant a Mission status to the Authority with corresponding powers under Environment (Protection) Act, 1986 to take cognizance of the provision of the said Act and follow up thereon. Similarly, there is adequate delegation of financial and administrative powers which will distinctly establish NMCG as both responsibility and accountability centre and effectively accelerate the process of project implementation for Ganga Rejuvenation.

Salient Features:

Briefly, the Order envisages:

1. Creation of the National Council for River Ganga (Rejuvenation, Protection and Management), as an Authority under the Chairperson of Honble Prime Minister, in place of the existing NGRBA for overall responsibility for superintendence of pollution prevention and rejuvenation of river Ganga Basin.

2. Setting up of an Empowered Task Force chaired by Honble Minister of Water Resources, River Development and Ganga Rejuvenation to ensure that the Ministries, Departments and State Governments concerned have:

An action plan with specific activities, milestones, and timeliness for achievement of the objective of rejuvenation and protection of River Ganga.

A mechanism for monitoring implementation of its action plans.

It will also ensure co-ordination amongst the Ministries and Departments and State Governments concerned for implementation of its action plans in a time bound manner.

3. Declaration of National Mission for Clean Ganga (NMCG) as an Authority with powers to issue directions and also to exercise the powers under the Environment (Protection) Act, 1986 to enable it to carry out efficiently its mandate. The NMCG will have a two-tier management structure with a Governing Council (GC), to be chaired by DG, NMCG. Below the GC, there will be an Executive Committee (EC) constituted out of the GC, to be chaired by the DG, NMCG.

NMCG will comply with the decisions and directions of the National Ganga Council and implement the Ganga Basin Management Plan approved by it; co-ordinate and carry out all activities necessary for rejuvenation and protection of River Ganga and its tributaries.

4. At the State level, it is proposed to create the State Ganga Committees in each of the defined States as Authority, to function as Authorities in respect of each State and perform the superintendence, direction and control over the District Ganga Protection Committees under their jurisdiction.

5. Similarly, the District Ganga Committees in each of the Ganga Bank Districts will carry out the assigned tasks as an Authority at the district level, to take cognizance of local threats and needs of river Ganga and conceptualise such measures as necessary to ensure overall quality of water in river Ganga and monitor various projects being implemented.

The proposed structure is to be implemented through the subordinate legislation route by issue of an Order invoking the provisions under Section 3 of Environment (Protection) Act, 1986 (29 of 1986) relating to creation of authorities to achieve its objectives.

The other main features of the proposal are as follows:

This will give more teeth to the NMCG for Clean Ganga for the environmental protection/rejuvenation of River Ganga. It will also ensure proper co-ordination with the local bodies and compliance with the directions of NMCG for pollution abatement of the river Ganga.

NMCG will, however, take action only in the event when required action is not taken by CPCB. CPCB shall also take action jointly with NMCG under the provisions of said Act.

A special focus of the revamped structure would be to maintain required ecological flows in the river Ganga with the aim of ensuring water quality and environmentally sustainable development.

For taking up fast track creation of sewerage treatment infrastructure in Ganga basin, an innovative model based on Hybrid Annuity has also been approved. This will ensure that the infrastructure created under the project is operational on a sustainable basis.

In order to ensure transparency and cost effectiveness, a provision for concurrent audit, safety audits, research institutions and financial framework has been made.

Background:

The Ganga Action Plan (GAP) Phase-I was launched in 1985 and later GAP Phase-II was initiated in 1993 with the objective of improving the water quality of river Ganga and was later expanded to include some of its tributaries also. In May, 2015, the Government approved the Namami Gange programme as a comprehensive mechanism to take up initiatives for rejuvenation of river Ganga and its tributaries as a Central Sector Scheme with hundred per cent funding by the Union Government. The programme, despite making moderate gains in arresting the declines in water quality, had certain limitations in implementation.

Although, the NMCG has been functional as a registered Society since 2012 its role has been largely limited to fund the projects to implementing organisations. It neither had the mandate to take cognizance of various threats to river Ganga nor the powers to issue directions to the concerned authorities/polluters. While the organisation has been made responsible as custodian of river Ganga in both public eye as well as various courts, the mission is grossly ill-equipped to handle such expectations.

It is expected that the move will ensure effective abatement of pollution and rejuvenation of the River Ganga; maintain ecological flows in the River; impose restrictions on polluting industries; and carry out inspections to ensure compliance. In addition, it is proposed to maintain and disseminate data and carry out research on the condition of the river.

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Cabinet approves USOF support to BSNL for Rural Wire-line connections installed prior to 1.4.2002
Sep 21,2016

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal to extend subsidy support of Rs. 1,250 crore to Bharat Sanchar Nigam Limited (BSNL) from Universal Service Obligation Fund (USOF), as compensation for deficit incurred by BSNL in operating the Rural Wire-line connections installed prior to 1st April, 2002. The eligible rural wire-line connections installed prior to 1.4.2002 is 32.32 lakh, across India as on 31.3.2014.

The Cabinet also approved that the above subsidy support would be the last and final payment and no further request from BSNL for financial/subsidy support from USOF on this count shall be considered.

In order to make Bharat Sanchar Nigam Limited (BSNL) eligible for subsidy funding on nomination basis from USOF, amendment will be required in Rule 526 of the Indian Telegraph Rules (ITRs), 1951. It stipulates that the criteria for selection of Universal Service Providers shall be made by bidding process from amongst eligible entities for implementation of USOF schemes. Corresponding Amendment in Rule 525 will also be required.

Full/lump-sum amount of Rs. 1,250 Crore shall be disbursed, consequent to necessary amendment of the ITRs and signing of USOF agreement with BSNL. Utilization certificate of the USOF subsidy disbursed towards operation and maintenance of the rural wire-line connections would be submitted by BSNL.

Background:

USOF since its inception in 2002 has been providing subsidy for BSNL for the rural wire line connections installed prior to 1.4.2002. A total of Rs. 8,692 crore has been extended as USOF subsidy support till date, for the rural wire-line connections, installed by BSNL prior to 1.4.2002. The details are as follows:

USOF Scheme

 

Basis

 

Amount (Rs. crore)

 

Period of support

 

RDEL-D

 

Difference between regulated rental and actual rental

 

1192

 

1st April 2002 to

31st January 2004

 

RDEL-P

 

TRAI recommendations dated 27.03.2008

 

6000

 

18th July 2008 to 17th July 2011

 

RDEL-P

 

TRAI recommendations dated 14.05.2012

 

1500

 

18th July 2011 to 17th July 2012

The TRAI in its report dated 14.05.2012 had recommended amount of subsidy support-of Rs. 1,500 crore for the period 18th July 2011 to 17th July 2012 and Rs. 1,250 crore for the 18th July 2012 to 17th July 2013.

Telecom Commission, in its meeting dated 11.12.2012, considered the views of the TRAI and USOF and directed that an assessment be carried out of the current status of the infrastructure.

Telecom Commission/EFC in its meeting dated 14th July 2015 considered the findings of the evaluation/assessment study conducted by National Institute of Communication Finance and recommended the subsidy support of Rs. 1250 crore to BSNL from USOF, as compensation for deficit incurred by BSNL in operating the Rural Wire-line connections installed prior to 1st April 2002 Telecom Commission also recommended that the subsidy support of Rs. 1250 crore would be the last and final payment and no further request from BSNL for financial/subsidy support from USOF on this count shall be considered.

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Cabinet approves Agreement between India and Samoa for exchange of information with respect to Taxes
Sep 21,2016

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has given its approval for signing and ratification of Agreement between India and Samoa for the exchange of information with respect to Taxes.

The Agreement will stimulate the flow of exchange of information between India and Samoa for tax purposes which will help curb tax evasion and tax avoidance.

There is no financial implications at present. Only in the event of extraordinary costs exceeding USD 500, the same will be borne by India. India has similar provisions in other such tax information exchange agreement.

Salient features of the Agreement:

1. The Agreement enables the competent authorities of India and Samoa to provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the two countries concerning taxes covered by this Agreement.

2. The information received under the Agreement shall be treated as confidential and may be disclosed only to persons or authorities (including courts or administrative bodies) concerned with assessment, collection, enforcement, prosecution or determination of appeals in relation to taxes covered under the Agreement. Information may be disclosed to any other person or entity or authority or jurisdiction with the prior written consent of the information sending country.

3. The Agreement also provides for Mutual Agreement Procedure for resolving any difference or for agreeing on procedures under the Agreement.

4. The Agreement shall enter into force on the date of notification of completion of the procedures required by the respective laws of the two countries for entry into force of the Agreement.

Background:

The Central Government is authorized under section 90 of the Income Tax Act, 1961 to enter into an Agreement with a foreign country or specified territory for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under the Income-tax Act, 1961. Negotiations for entering into an Agreement for the exchange of information with respect to Taxes were finalized between India and Samoa in June, 2016 and both countries have agreed on the text of the Agreement.

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