Insurance sector CIOs need to expand their market insight concerning the innovation and disruption potential of insurance technology startups (insurtechs) to complement their digital insurance strategies, according to Gartner, Inc.
According to Gartner research, 64 percent of the worlds 25 largest insurance companies have already invested directly or indirectly via their venture capital arms in insurtech startups.
Gartner predicts that 80 percent of life and property & casualty (P&C) insurers worldwide will partner with or acquire insurtechs to secure their competitive positions by the end of 2018.
Juergen Weiss, managing vice president at Gartner, said insurtechs can stimulate or accelerate innovation among incumbent industry players and complement existing digital insurance strategies.
Gartner has seen growing interest among insurance business and IT leaders in collaborating with insurtechs or making them part of their overall innovation policies, but the research has also found that most insurance CIOs are not familiar with these companies or their value propositions, said Mr. Weiss. We advise CIOs to identify areas where insurtechs could complement their digital insurance strategies, and evaluate potential collaboration or investments.
Gartner defines insurtechs as technology companies (1) that are in their early stages of operation; (2) that drive specific innovation across the insurance value chain by leveraging new technologies, user interfaces, business processes or business models; and (3) that leverage different forms of funding, including, but not limited to, venture capital.
The number of technology startups in the insurance industry has more than doubled globally during the last three years, according to Gartner analysis of the sector conducted in the second quarter of 2016. Digital customer engagement, mobile insurance management and analytics are the most common technology focus areas of insurtechs.
Sixty percent of insurtechs have been founded within the last three years, and two-thirds of them have their headquarters in the U.S. EMEA is the second-most important region for insurtechs, with 27 percent having their headquarters there, mainly in Germany and the U.K. In Asia, countries such as Singapore and China (mainly Hong Kong and Shanghai) have begun to promote the development of a local insurtech ecosystem.
Digitalization is one of the top priorities for insurance CIOs, according to Gartner surveys. However, the vast majority of insurance CIOs are still struggling to progress their digital strategies.
Gartners research indicates that only 12 percent of insurance business and IT leaders consider their organizations to be digitally progressive, while the majority believe that their organizations are digital beginners or intermediate, at best. Reasons for this include a lack of agility caused by legacy IT systems, flat IT budgets and a lack of the right skills or the delivery models to support innovative business models.
Collaborating with insurtechs, or at least evaluating them, could therefore provide a number of potential benefits for insurers, said Mr. Weiss.
According to Gartner, insurers have six main options to capitalize on the opportunities that insurtechs provide:
1.Partner (for example, Axa partnering with BlaBlaCar for carsharing).
2.Acquire, that is, purchase the intellectual assets and hire all resources of an insurtech.
3.Purchase (like one would buy technology from an incumbent vendor such as SAP).
4.Invest (obtain a minority or majority share, either directly or indirectly, via a VC arm, such as Allianzs investment in Simplesurance).
5.Incubate (for example, let insurtechs compete to get into a startup accelerator; mentor them; and give them a space to work and exchange ideas).
6.Insure the operations or assets of insurtechs.
Insurance CIOs who are planning to partner with insurtechs also need to be aware of the risks.
Not all of them will survive, said Mr. Weiss. Insurance CIOs will need to develop a fail-fast approach and an exit plan that secures intellectual property and critical resources.
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In the new digital economy, retailers can best gain competitive advantage through the application of algorithms that reduce costs and grow top-line revenue, according to Gartner, Inc.
Kelsie Marian, principal research analyst at Gartner, said examples of algorithmic retail in action are emerging and yielding results for aggressive retailers.
Retailers are some of the original data hoarders, using years of store-level sales data for demand planning since the mid-1980s, but what we see today is vastly different, said Ms. Marian.
Data is ubiquitous in the new retail environment, and retailers will survive only if quality data is embedded into every decision, minute by minute, across the retail organisation. But retailers cant humanly scale to keep pace with growth of data, so a fundamentally different approach is necessary.
Gartner describes algorithmic retailing as the application of big data through advanced analytics across an increasingly complex and detailed retail structure, to deliver an efficient and flexible, yet unified, customer experience. Algorithms connect big data to results.
Gartner predicts that merchant leaders will be algorithms by 2020, prompting the top 10 retailers to cut up to one-third of headquarters merchandising staff.
According to Gartner, there are four main functions where algorithms can have a big impact in retail.
1) Cost of goods sold
Cost of goods sold is the largest cost of retail operations at 55-60 percent. Since it is driven by the selection, assortment, pricing, promotion and inventory levels of items listed for sale, it has the largest possible benefit from the application of algorithms. Algorithms can both reduce the cost basis and increase top-line revenue.
2) General and administrative
General and administrative is an overhead at 15-18 percent of the cost of retail operations. It typically covers headquarters activities such as finance, legal, HR, advertising and IT, as well as warehousing and distribution. Algorithms used here will significantly improve cost optimization.
Labor represents 13-16 percent of the cost of retail operations, but is rising sharply, and directly impacts the quality of the customers experience. Algorithms can support both cost optimization and customer service.
Stores will remain a major cost of retail operations and an integral part of the retail landscape. They provide a major source of competitive differentiation for multichannel retailers, with store services much of what employees provide to customers. Algorithms can help with pricing, inventory and improving the in-store customer experience.
Retail CIOs and their teams play a pivotal role in helping business leaders understand the benefits and limitations of algorithms, and how algorithms can support their business goals, said Ms. Marian.
Gartner advises retail sector CIOs to:
1) Identify and classify all data sources, and identify data gaps that must be filled.
2) Prepare for an explosion of Internet of Things (IoT) data generated by products, customers and stores.
3) Review examples of how other retailers are successfully using algorithms.
4) Develop a framework for identifying current and future opportunities to improve performance through automation by algorithms.
5) Ensure that smart data discovery technology is bringing big data discovery to the business user at the time of decision. This is a critical step on the path to process automation.
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n++Smart manufacturing practices will increase productivity and the quality of employment opportunitiesn++ said Amitabh Kant, CEO, NITI Aayog. Kant observed that Indian manufacturing sector has to adopt advanced technologies to survive in a highly competitive environment.
Kant highlighted that n++productivity and efficiency are critical for the growth of Indian industry. Industry needs to produce high quality products at a competitive price to withstand the global competition. n++Manufacturing unit shop floors are now as fashionable and automated as any other industry and consumers are now directly influencing the shop floors. Collecting and processing data coupled with cutting edge technologies will enable shopfloors to respond to the rapidly changing consumer demands, according to him.
He informed that amalgamation of 9 systems - robotics, big data, 3D printing, analytics, additive manufacturing, automation, electronic system, design, IOTs will lead to Smart manufacturing 4.0. Globally, countries are looking at manufacturing sector for driving their GDP, Europe will be investing over 40 billion Euros in the next 5 years in manufacturing industry. He urged industry to focus on quality and productivity as essential pre-requisites for increasing exports.
Kant stressed on the need for MSMEs to be interconnected and technically agile to be globally competitive and support the Indian industry. Productivity, cost, employment, after sales services, logistics and others facets of production are now integrated on real time basis with adoption of smart technology.
To shape the transformation, NITI Aayog has also introduced robotic technologies in the incubation centers / labs in 500 schools to promote smart manufacturing.
Anshu Prakash, Additional Secretary, Department of Heavy Industry emphasized that Smart manufacturing is a dynamic process which will happen over a period of time and Government is willing to provide enabling eco-system. Upgradation of skills and news skill sets are critical for manpower to adopt smart manufacturing.Prakash informed about an umbrella Capital Goods Scheme to be announced soon. The new scheme includes technology development fund and is also incentivizing smart manufacturing.
Sumit Sawhney, Country Chief Executive Officer & MD, Renault Operations in India focused on smart thinking and smart mindset for promoting innovation in manufacturing. He illustrated the small car n++KWIDn++ segment has been made lean and smart with smart thinking and processes. He concluded that n++Think Smart - Think Innovativen++ is key to manufacturing and automation will create more jobs in future.
Dilip Sawhney, Summit Chair & MD, Rockwell Automation India mentioned that the Summit is not just a one-off initiative of CII and is aligned with a broader objective of CII Mission Smart Manufacturing programme which aims at promoting smart manufacturing across the Indian manufacturing industry. CII Mission Smart Manufacturing creates a framework at firm level to embrace smart manufacturing technologies. In addition, as per the study conducted by CII to identify Champion Manufacturing industries which have a potential to drive the double digit growth in manufacturing sector, Technology is identified as one of the key drivers.
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India Ratings and Research (Ind-Ra), according to base case scenario, expects another INR550bn of durable liquidity needs to be infused through open market operation (OMO) purchases in 2HFY17, over and above INR1.05trn in 1HFY17. Ind-Ras base case scenario is built on RBIs stated objective of neutral liquidity, which ensures minimal shortages as well as minimal surpluses. Hence, any preference towards considerable excess in liquidity will be adjusted through durable liquidity creation or OMO purchases. Similarly, surge in Fx flows may not necessitate permanent sterilization in the near-term.
BoP, CIC Surprises or Change in Reserve Bank of India (RBI) Strategy could lead to Higher OMOs: Since INR1trillion of OMOs has already been conducted during 1HFY17, necessity of similar amount of OMO in 2HFY17 will only be limited to certain conditions. Higher than expected INR550bn amount of OMO purchase in 2HFY17 would be contingent upon i) subdued net forex flows, or lower than estimated17.4bn BoP surplus ii) sharp rise in currency in circulation (CIC) against tepid growth in nominal variables iii) RBI continuing to maintain high surplus liquidity in the interbank market against the stated strategy for neutral liquidity.
Healthy BoP Surplus will be Major Contributor to Reserve Money Creation: Ind-Ra, after financing of the current account deficit (CAD), expects the capital inflows to add nearly USD17.4bn (INR1.18trn) to the forex reserve in FY17. These accretions take into account the FCNR (B) redemptions. According to the latest BoP data available, USD7bn had been added to the forex reserves till August 2016.
Rise in CIC to Remain Limited: Growth rate in CIC for the current year is likely to be restricted by multiple factors; such as drive against declaration of unaccounted wealth which could bring back large amount of cash into the system. An increase of 13%yoy RM as against similar growth in FY16 (13% yoy as on 18th March 2016) could reduce large (another INR1trn) requirement for OMO.
RBI to Keep Adequate Interbank Liquidity: Ind-Ras prognosis suggests that the urge for maintaining high surplus in the systemic liquidity will reduce after FCNR (B) redemption is over by November. Further, there may be legitimate reasons to retain the appetite for OMO purchase in the next fiscal ahead of limited room for the incremental rating action. This will support policy makers to maintain an accommodative strategy in sync with the RBIs accommodative stance. Otherwise absence of rate action or OMO purchase may exert undue pressure on yields during FY18, limiting the efficacy of RBIs accommodative monetary policy transmission.
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The Basel Committee on Banking Supervisions (BCBS) recent proposals regarding the use of models in calculating risk-weighted capital ratios among medium to large-sized banks would help make minimum capital requirements more consistent across banks, Moodys Investors Service says in a report.
The report Banks -- Global: Basel Proposals Restricting Models Broadly Impact GSIBs Risk-Weighted Assets, focuses on the impact that the reforms would have on so-called global systemically important banks, both in the US and Europe.
The new rules would largely replace internal modeling with a standardized approach to calculating capital. BCBS has proposed removing models completely as a tool for measuring operational risk, significantly restricting internal model use in a large number of credit risk portfolios and using floors in cases where models are still used.
Greater consistency in reported capital ratios is a positive development, says Meredith Roscoe, a Vice President and Senior Research Analyst at Moodys.
The proposed changes are likely to have the greatest impact on risk-weighted asset calculations for the large US banks and banks in Europe, given the current prevalence of modeled approaches across risk areas for these banks.
These banks are most likely to use advanced (model-based) approaches to calculating capital and are the main lenders to low-default large corporate borrowers and financial counterparties, who are the largest consumers of counterparty, market and operational risk.
If the proposals were to be implemented in their current form, capital requirements could increase for many banks. However, as authorities have said the intention of these changes is not to increase capital requirements overall, but rather to reduce variability in risk-weighted assets for similar exposures across banks, the final rules might include offsets or changes from what has been proposed to date.
Recent comments from European Union officials suggest that the proposals will not be adopted by European authorities unless they are modified, while reports suggest that US and Swiss officials are more supportive of the current proposals. Moodys view is that a breakdown of the international agreement on capital rules would be credit negative as it could lead to further fragmentation of capital standards.
Moodys also highlights that the proposed changes to the calculation of risk weights should be viewed in context of Basel IIIs entire capital framework and the importance of additional capital adequacy metrics outside of the risk-weighted capital ratio, which are equally as binding. This includes the unweighted leverage ratio requirement and annual stress testing in the US, UK and Europe for the largest banks.
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The credit/debit/ATM card frauds as detected by some of the largest banks were waiting to happen as India has been on the radar of the global cyber criminals who hack into the computer servers using the malware, putting the entire financial structure into a big risk, an ASSOCHAM-Mahindra SSG joint study had forewarned.
Shocked that we are by such large volume of frauds forcing most of the big banks to recall their swiping cards resulting into not only a huge financial losses but also raising a question mark on our cyber security, the ASSOCHAM has been continuously sensitising the government, RBI and the banks against the unfolding cyber risks, the study said.
He said an ASSOCHAM-Mahindra SSG study published recently pointed out that India has become a favourite hunting ground for global hackers and criminals. In fact, according to this study, India was the third biggest target for these hackers after the US and Japan.
A rapid increase in the use of computers and the emergence of the Internet in particularly in the last few decades has led to the evolution of cyberspace. Cyberspace is borderless and anonymous due to which it becomes difficult to actually trace the origin of any kind of cyber attack. The study had further noted that mobile frauds are an area of concern for companies as 35-40% of financial transactions are done via mobile devices and this menace is expected grow to 60-65% by 2017.
Credit and debit card fraud cases top the chart of cybercrimes. There has been a sixfold increase in such cases over the past three years. According to the data, about 42% complaints of online banking related to/credit/debit card fraud followed by Facebook (31%)-related complaints (morphed pictures/cyber stalking/cyber bullying). Other major cyber complaints were cheating through mobile (12%), hacking of e-mail ID (10%), abusive/offensive/obscene calls and SMS (5%), and others.
These attacks have been observed to be originating from the cyberspace of a number of countries including the US, of Europe, Brazil, Turkey, China, Pakistan, Bangladesh, Algeria and the UAE.
Andhra Pradesh, Karnataka and Maharashtra have occupied the top three positions when it comes to cybercrimes registered under the new IT Act in India.
Phishing attacks of online banking accounts or cloning of ATM/debit cards are common occurrences. The increasing use of mobile/smartphones/tablets for online banking/financial transactions has also increased the vulnerabilities to a great extent. The maximum offenders came from the 18-30 age group, the report added.
Internet frauds alone have cost India a whopping 4 billion $(about Rs 24,630 crore) in 2013 as cyber criminals are using more sophisticated means like ransom ware and spear-phishing, the report said.
During the years 2011, 2012, 2013 and 2014, a total number of 21,699, 27,605, 28,481 and 36,554 Indian websites were hacked by various hacker groups spread across worldwide. In addition, during these years, a total number of 13,301, 22,060, 71,780 and 95,189 security incidents, respectively, showing a sharp increasing trend. The total number of security incidents reported to CERT-In has been on the rise.
There is urgent need for having public-private-partnership (PPP) in cyber security for protecting the critical online data and creating awareness amongst the public. Internet has many stakeholders and the government is involved in terms of making laws and the private sectors are involved in creating technologies like hardware, software and so on and this cant be seen in an isolated manner thats why PPP model is important. The fifth domain warfare is real and expanding at a rate which is more concerning, ISIS use cyber space for expanding its base and support is glaring example of this.
Cyberattacks around the world are occurring at a greater frequency and intensity. Operating securely in the cyber environment is among the most urgent issues facing the government, industry and individuals. It is important to take proactive measures rather than reactive methods as building safe environments will always be the best line of defence against rising cybercrime. Safety first through security by design should be the motto. Security by design ensures reduction in overall cost to the business and increases the efficiency of the system by making it robust and secure.
The government and regulators should develop comprehensive cyber security policies and frameworks from the perspective of incentives, tax breaks and technological development. The policies should be such that they encourage private sector participation in public sector research and promote the commercialisation of research and development and intellectual property.
Effective mechanisms should be established to ensure coordination and cooperation between various countries. India should ensure active collaboration with the other countries and global cyber security agencies through international treaties, bilateral agreements and Memorandum of Understandings in order to understand the latest threats and take proactive security measures.
The government, and specifically the regulators, should look at developing sector-specific policies and frameworks tailored to meet the requirements of the particular sector in order to strengthen cyber security in that domain and ensure compliance with the defined security standards.
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The Indian Patent Office is soon going to put in place a detailed annual plan in consultation with all stakeholders to spread awareness about the new Intellectual Property Rights (IPR) Policy by conducting workshops, seminars in schools, universities and other such institutions, Controller General of Patents, Designs and Trademarks, Mr O.P. Gupta said at an ASSOCHAM event.
n++As part of awareness program, we as Indian Intellectual Property office are interacting with all possible stakeholders and working out a detailed programme so that we may conduct workshops in schools, colleges, universities, seminars together with industry and academia and specific programs for specific industries like SMEs and certain other specialised fields,n++ said Mr Gupta.
n++The idea is to spread awareness, as more and more people become aware, it serves our purpose,n++ he said.
n++We simultaneously try to promote and encourage people to take up programs on their own and involve larger communities whereby we involve agriculturists, farmers and producers on a larger scale,n++ added Mr Gupta.
Talking about the implementation in terms of enforcement aspect of IPR, he said, n++The IPR Policy does talk about that, those steps are being taken, toolkits are being prepared which will circulated to various police stations and other law enforcement agencies.n++
Highlighting that all commercial courts are also now listening to all IPR related matters, he said, n++With law universities and judiciary we are already conducting training programs in different places they are also part of the outreach programs.n++
Mr Gupta said that the basic idea of IPR Policy is to provide an ecosystem which encourages individuals and corporate entities for risk taking for putting in their efforts, money, labour so that they also derive reasonable benefits out of their own efforts. n++But the underlined larger focus still is that all this has to benefit to the society as a whole and India in particular.n++
n++There is a need to foster a kind of an ecosystem and provide an environment to all whereby awareness spreads not only by way of programs which we conduct but people inculcate this as part of their culture,n++ he added.
He also said that creation/innovation and protection are two different aspects of the IP regime. n++When you talk about creation and innovation, it is more about kind of inculcating a culture, providing protection is in terms of seeking balance between both these aspects.n++
Elaborating on this, he said that the main objective of IPR policy is actually to inculcate generative aspect of it and there is certainly not the main thrust on protection.
n++The idea is that whosoever is seeking IP protection in India, should get it in a reasonable period of time without much problems and that kind of facilitation regime in terms of IP administration and management will be and should be provided through this policy,n++ said Mr Gupta.
He added that it is not that number of filings that need to go up necessarily but whosoever seeks protection should get it in specified timeframe with minimum problems/difficulties is the main objective of the IPR Policy.
In his address at the ASSOCHAM conference, Dr H. Purushotham, chairman and managing director (CMD), National Research Development Corporation (NRDC) said that promotion of IPR is imperative to bring equilibrium between knowledge and wealth creation.
n++It is imperative to introduce IPR as a subject in schools and colleges and make it compulsory to promote its awareness,n++ said Mr Purushotham.
He also said that it is also significant to address the issue of poor patent filing in India to position it as a top innovative nation in the world.
He also suggested the Indian Patent Office to strengthen the existing systems and mechanisms vis-n++-vis IPR rather than bring up new ones to avoid duplication of efforts.
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Acting swiftly on the reports of mortality among the birds in National Zoological Park, Delhi NCR and other parts of the country due to H5 Avian Influenza Virus, Minister of Environment, Forest and Climate Change, Shri Anil Madhav Dave, has directed to constitute a monitoring committee for overseeing outbreak of H5 Avian Influenza in the country. The composition of committee is as follows :-
1. Member Secretary Central Zoo Authority Chairman
2. Director National Zoological Park Member Convenor
3. Deputy Inspector General of Forest (WL) Member
The committee will oversee the daily incidences of H5 Avian Influenza in National Zoological Park and other Zoos of the country and submit a daily report to the Environment Minister.
There has been no mortality among the free-ranging birds of the National Zoological Park. However, to control the disease following actions are being taken :-
1. Active surveillance continues in the zoo;
2. Zoo is being screened regularly for any dead bird;
3. Bio-security measures continue;
4. Zoo remains closed for the safety of visitors and to control the disease;
5. A team of doctors from Animal Husbandry Department visited Delhi Zoo for monitoring ;
6. A team of medical doctors visited and examined exposed employees of the zoo and medication was provided.
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As a sequel to the path breaking initiative announced by Hon ble Union Finance Minister Shri. Arun Jaitley in his Budget speech 2016-17 to set up Long Term Irrigation Fund (LTIF) in National Bank for Agriculture and Rural Development (NABARD), NABARD has sanctioned a loan of Rs 19,702 crore to National Water Development Agency (NWDA), the agency of Ministry of Water Resources, RD & GR, towards central government share in 50 identified irrigation projects from 11 states. This would help create additional irrigation potential of 39.14 lakh hectares under these projects in 11 states.
NABARD handed over the sanction letter of loan amounting to Rs 19,702 crore and a cheque for Rs 1,500 crore towards first instalment of loan disbursement to NWDA Top officials of the Government of India and Directors of the Board of NABARD were present on the occasion.
Loan released by NABARD to NWDA would be disbursed to the respective State Governments as central share in the projects sanctioned.
Speaking on the occasion, Shri Arun Jaitley said that this development was a part of the vision of Honble Prime Minister to double farmers income by 2022, for which providing assured irrigation to farmers was one of the important prerequisites. The loan towards the central share of assistance to state governments will ensure front loading of resources so that the identified incomplete irrigation projects under Pradhan Mandtri Krishi Sinchai Yojna [PMKSY] are executed in time. He further stated that this unique initiative would help complete not only the irrigation structures but also the Command Area Development works which are central to ensuring full utilization of irrigation potential created. He highlighted that the initiative would bring additional 76 lakh ha area under irrigation and to a great extent mitigate water scarcity and drought situations in project areas. He appreciated the initiative of the Ministry of Water Resources, River Development & Ganga Rejuvenation and NABARD and indicated that Ministry of Finance is committed to support this endeavor. He advised the agencies to undertake very close monitoring of the progress of work to ensure timely completion of projects.
Sushree Uma Bharati, Hon ble Minister of Water Resources, River Development and Ganaga Rejuvenation said that she was commited to ensure that the project works are completed by the state governments as scheduled and exhorted them to complete the required formalities in time. She shared the vision of Honble Prime Minister to ensure Har Khet ko Paani and n++Per drop more cropn++ which the Ministry is endeavoring to translate into reality. She emphasized that the irrigation potential would be enhanced through participation of farmers. She also highlighted a strong monitoring mechanism put in place to ensure that the money is effectively utilized.
Dr Harsh Kumar Bhanwala, Chairman, NABARD said that besides supporting the central share component, NABARD would also be extending 15 year loan support to the willing state governments at reasonable rate of interest to meet their share in the identified irrigation projects. The total fund requirement is expected to be of the order of Rs 78, 535 crore in the next four years up to 2020, with the shares of the central and state governments at Rs 31,342 crore and Rs 46,253 crore, respectively. He said that through LTIF the irrigation potential in the country was expected to go up by 11.50 % in the next four years.
Shri Shashi Shekhar, Secretary, Ministry of Water Resources, River Development and Ganaga Rejuvenation informed that the programme will be implemented in a Mission mode and the ministry was gearing up for very close monitoring of this massive programme.
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The Ministry of Civil Aviation took a major step towards making flying a reality for the small town common man. The Civil Aviation Minister Shri P Ashok Gajapathi Raju launched the Ministrys much awaited Regional Connectivity Scheme n++ UDANn++ in New Delhi today. UDAN is an innovative scheme to develop the regional aviation market. It is a market-based mechanism in which airlines bid for seat subsidies. This first-of-its-kind scheme globally will create affordable yet economically viable and profitable flights on regional routes so that flying becomes affordable to the common man even in small towns.
Speaking on the occasion Shri Raju expressed hope that the first flight under the scheme would be able to take off by January next year. He said the scheme had been prepared after a lot of stakeholder consultation and called for support from all players to make it a success.
Also speaking on the occasion the Minister of State for Civil Aviation Shri Jayant Sinha said that the objective of the scheme was n++Ude Desh Ka Aam Naagrikn++ He said this scheme ensure affordability, connectivity, growth and development. It would provide a win-win situation for all stakeholders - citizens would get the benefit of affordability, connectivity and more jobs. The Centre would be able to expand the regional air connectivity and market. The state governments would reap the benefit of development of remote areas, enhance trade and commerce and more tourism expansion. For incumbent airlines there was the promise of new routes and more passengers while for and start-up airlines there is the opportunity of new, scalable business. Airport operators will also see their business expanding as would original equipment manufacturers .
The scheme UDAN envisages providing connectivity to un-served and under-served airports of the country through revival of existing air-strips and airports. The scheme would be in operation for a period of 10 years.
UDAN has a unique market-based model to develop regional connectivity. Interested airline and helicopter operators can start operations on hitherto un-connected routes by submitting proposals to the Implementing Agency. The operators could seek a Viability Gap Funding (VGF) apart from getting various concessions. All such route proposals would then be offered for competitive bidding through a reverse bidding mechanism and the route would be awarded to the participant quoting the lowest VGF per Seat. The operator submitting the original proposal would have the Right of First Refusal on matching the lowest bid in case his original bid is within 10% of the lowest bid. The successful bidder would then have exclusive rights to operate the route for a period of three years. Such support would be withdrawn after a three year period, as by that time, the route is expected to become self-sustainable.
The selected airline operator would have to provide a minimum of 9 and a maximum of 40 UDAN Seats ( subsidized rates )on the UDAN Flights for operations through fixed wing aircraft and a minimum of 5 and a maximum of 13 Seats on the Flights for operations through helicopters. On each such route, the minimum frequency would be three and maximum of seven departures per week. Route networks would also be encouraged under the scheme to achieve economies of scale and optimal usage of aircraft.
The fare for a one hour journey of appx. 500 km on a fixed wing aircraft or for a 30 minute journey on a helicopter would now be capped at Rs. 2,500, with proportionate pricing for routes of different stage lengths / flight duration.
This would be achieved through (1) a financial stimulus in the form of concessions from Central and State governments and airport operators and (2) a Viability Gap Funding to the interested airlines to kick-off operations from such airports so that the passenger fares are kept affordable.
n++ Central Government would provide concessions in the form of reduced excise duty, service tax, permission to trade ASKMs for Non-RCS (UDAN) Seats and flexibility of code sharing at the RCS (UDAN) airports.
n++ State governments will have to lower the VAT on ATF to 1% or less, besides providing security and fire services free of cost and electricity, water and other utilities at substantially concessional rates.
n++ Airport operators shall not impose Landing and Parking charge and Terminal Navigation Landing Charges in addition to discounts on Route Navigation Facility Charges.
A Regional Connectivity Fund would be created to meet the viability gap funding requirements under the scheme. The RCF levy per departure will be applied to certain domestic flights.
The partner State Governments (other than North Eastern States and Union Territories where contribution will be 10 %) would contribute a 20% share to this fund. For balanced regional growth, the allocations under the scheme would be equitably spread across the five geographical regions of the country viz. North, West, South, East and North-east.
The States have a key role under the scheme. The selection of airports where UDAN operations would start would be done in consultation with State Government and after confirmation of their concessions. It may be recalled that revival of dysfunctional airports and starting operations on un-served airports has been a long standing demand of most States and this will be addressed through UDAN to a large extent.
The UDAN is likely to a give a major fillip to tourism and employment generation in the hinterland. Through introduction of helicopters and small aircraft, it is also likely to significantly reduce travel timings in remote and hilly regions, as well as islands and other areas of the country.
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Union Minister for Water Resources, River Development and Ganga Rejuvenation Sushri Uma Bharti announced today the release of first installment of Rs. 1500 crore to the states as central assistance for 99 prioritized irrigation projects under Accelerated Irrigation Benefits Program (AIBP). This amount has been released for 50 projects in the states of Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Odisha, Punjab, Rajasthan and Telangana
The Minister said is historic day for AIBP as it will mark a new beginning for these projects. She said total funds required for completion of all the 99 identified projects have been estimated at Rs.77595 crore (Rs.48546 crore for project works and Rs.29049 crore for CAD works) with estimated CA of Rs.31342 crore. Likely potential utilization through these projects is estimated to be 76.03 lakh hectare (Lakh ha). Sushri Bharti said accordingly a proposal was made for providing Central Assistance and State share for above mentioned 99 projects through NABARD. The Minister said these projects will cover all most all drought prone districts of 18 States of country and will also go a long way to contain the incident of suicide by farmers. She expressed the hope that with regular monitoring the speedy implementation, the Government would be able to complete all the 99 projects well ahead of the schedule.
The Finance Minister in his budget speech of 2016 had announced for creation of dedicated Long Term Irrigation Fund (LTIF) in NABARD with an initial corpus of about Rs. 20,000 crore and an amount of Rs.12517 crore was provided as budgetary resources and market borrowings during 2016-17.
The Union Cabinet on July 27, 2016 had approved establishment of the Mission to ensure completion of 99 prioritized projects in phases by December 2019 including Command Area Development and Water Management (CAD&WM). The arrangement of funds for Central share/Assistance (CA) has been made by taking loan from NABARD as per year-wise requirements which could be paid back in 15 years time keeping a grace period of three years. Further, the State Governments, if required, may borrow funds from NABARD for the States Share.
Central Government launched the AIBP in the year 1996-97 to provide Central Assistance to major/medium irrigation projects in the country, with the objective to accelerate implementation of such projects which were beyond resource capability of the States or were in advanced stage of completion. Priority was given to those projects which were started in Pre-Fifth and Fifth Plan period and also to those which were benefiting Tribal and Drought Prone Areas. From the year 1999-2000 onwards, Central Loan Assistance under AIBP was also extended to minor surface irrigation projects (SMI) of special category States (N.E. States & Hilly States of H. P., Sikkim, J&K, Uttaranchal and projects benefiting KBK districts of Orissa). Since its inception, 297 Irrigation / Multi Purpose Projects have been included for funding under AIBP. Out of this 143 projects have been completed and 5 projects were foreclosed. An irrigation potential of 24.39 Lakh ha. has been created through these projects. The cumulative Central Loan Assistance / Grant provided to States under AIBP to all of above project till March 31, 2015 was Rs. 67539.52 crore. Twenty five States got benefited from the programme.
During 2015-16, Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) was launched with an aim to enhance physical access of water on farm and expand cultivable area under assured irrigation, improve on farm water use efficiency, introduce sustainable water conservation practices etc. Major and medium irrigation/multipurpose irrigation projects are being funded under PMKSY-AIBP and Repair, Renovation and Restoration (RRR) of Water Bodies, Surface Minor Irrigation (SMI) projects and CAD&WM projects are being funded under PMKSY-Har Khet Ko Pani (HKKP). During 2015-16, Central Assistance of Rs. 2327.82 crore was released for projects under AIBP and CA of Rs. 1905.81 crore was released for projects under CADWM, SMI and RRR of water bodies together. Total CA of Rs 4233.63 crore was released during 2015-16 for PMKSY (AIBP+HKKP)
The issues related to implementation of projects under PMKSY-HKKP including prioritization of projects were deliberated in the Committee headed by Shri Brijmohan Agrawal, Minister (Water Resources) of Chhattisgarh. As per the information supplied by concerned States to the Committee, 99 projects have been identified for completion upto 2019-20. 23 projects (Priority-I) have been identified to be completed by 2016-17 and another 31 projects (Priority-II) have been identified to be completed by 2017-18. The balance 45 projects (Priority-III) have been identified to be completed by December 2019.
One of the major reasons for the projects to remain incomplete was inadequate provision of funds by the concerned State Governments. As a result, large amount of funds spent on these projects were locked up and the benefits envisaged at the time of formulation of the projects could not be achieved. This was a cause for concern and initiative was required at the national level to remedy the situation.
A Mission has been established vide order dt September 07, 2016 with the Officer on Special Duty in the Ministry of Water Resources, River Development and Ganga Rejuvenation (MoWR, RD & GR) as the Mission Director for completion of the identified 99 projects including development of their command area. Mission would be responsible for overall coordination and outcome focused monitoring of all components of PMKSY for achieving its targets.
A Council headed by CEO, NITI Aayog and having Secretary(WR, RD & GR), Secretary (A&C), Secretary (RD) and Secretary(Finance), Chairman, NABARD as members, has been established vide order dated September 07, 2016 which shall look after the overall implementation of works and policy matters. Chief Secretaries (or their representative) of the States having large number of projects to be completed under this programme i.e. Andhra Pradesh, Maharashtra, Madhya Pradesh, Odisha and Telangana shall also be members. Further, one of Chief Secretaries (or his representative) from rest of the States implementing projects, under this programme, shall also be a member by rotation. The Mission Director would be the Member Secretary of the Council. The Council shall be responsible for overall implementation of project works, coordination and monitoring in a manner so as to complete identified 99 projects as per targets. The Council would be responsible for overall supervision of the Mission to achieve its objectives and shall also undertake monitoring and course correction, where required during implementation.
A High Level Empowered Committee (HLEC) comprising Finance Minister, Minister (WR, RD & GR), Minister of Agriculture, Cooperation and Farmers Welfare, Minister of Rural Development, Vice Chairman, NITI Aayog has also been constituted vide order dt September 07, 2016 which would review the progress of the identified 99 projects and other components under PMKSY and also provide policy guidance for mid-term course correction.
Further, online monitoring as well as physical monitoring at various levels including third party monitoring has been contemplated for ensuring completion of these projects as planned. Expression of Interest (EOI) has already been sought for finalizing the agency in this regard. A MIS system and mobile based application being prepared in this regard in consultation with NITI Aayog is in advance stage of development.
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Organizations that have been able to cause real market disruptions have done so because they have applied digital economics to exploit new value creation opportunities, according to Gartner, Inc.
The deepening and widening of digital business initiatives puts CIOs, chief data officers (CDOs) and digital leaders at the center of creating measurable new business value. These leaders are uniquely positioned to connect digital technology advances with emerging flexible business models to fuel growth, said Chris Howard, vice president and distinguished analyst at Gartner. Digital technologies are expanding the value of traditional products and services by using data, content, algorithms, analytics, and the connections between economic agents in a digital ecosystem. Some organizations, such as GE, Uber, Hitachi and Monsanto, are already beginning to change the basis of competition by exploiting digital value to fuel business growth. They have understood that the framework for exploiting the value of digital business is digital economics.
Gartner defines digital economics as the creation, consumption and control of value associated with digital products, services and assets in organizations. Digital economics creates a framework for organizations to understand and account for how much of an organizations business value can be defined as potential or realized digital value. It guides CIOs and CDOs in creating new value mechanisms and complementing or extending existing ones. By doing so, they are able to monetize the value of digital innovation and link that value with the organizations business objectives.
All too often IT leaders focus value creation more narrowly, with the result that most digital initiatives are aimed at operational improvements, rather than value transformation, said Saul Judah, research director at Gartner. While this tactical approach to digital value can result in very real process and financial improvements, the greatest potential for digital value lies in more strategic initiatives, such as creating new markets, empowering employees, changing the basis of competition and crossing industry boundaries.
To tap into this value, IT leaders should begin by engaging with business leaders to identify the sources of digital value, catalog existing digital assets, products and services, and assess and assign value to them. Digital products, assets and services can be understood, cataloged and valued based on several methods:
Using Infonomics to Exploit Information as an Asset
Information, such as customer data and digital content, is increasingly understood as an asset. These assets have real business value measured, for example, by intrinsic value or market value. Organizations invest in increasing the quality and consistency of their customer contact data so that they can, for example, run marketing campaigns that yield better returns. The theory of infonomics applies information valuation techniques to information assets and can be used by organizations to understand its business value as an asset.
Exploiting the Economics of Connections
Gartner predicts that by 2018, the new economics of connections will drive organizations to increase investments in connected physical assets and systems by 30 percent. Connections between people, businesses and things have business value. That business value exists in the connection itself (for example, charging for usage of an API) as well as the asset being exchanged through the connection. Economic value, therefore, is a function of the number, context and usage of connections in the enterprise.
Exploiting the Power of Algorithms
Algorithms and analytics offer accelerators of value and are themselves of exchangeable and monetizable value. An analytics process may use algorithms in its creation, which could also be monetizable through an algorithmic marketplace, making it available to enterprises of all types and sizes to use.
Without a corresponding economic framework, these elements of digital value remain a loose collection of digital tools and techniques, said Mr. Judah. IT leaders should establish a digital economic framework that connects digital value to a renovated economic architecture. This will help them establish a strategic, commercially sustainable foundation for creating new markets and new revenue sources.
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The meeting of Inter-Ministerial committee on prices held here today under chairmanship of Secretary Department of Consumer Affairs, Shri Hem Pande reviewed prices and availability of pulses. It was decided that besides offering Chana (chickpea) to the State Governments, its significant quantity should be released immediately through NCDEX (National Commodity & Derivatives Exchange Limited) also to cool down prices.
The meeting also suggested exploring possibility to use KVIC outlets for distribution of pulses besides postal network. The committee was informed that Department of Consumer Affairs is working on modalities with Department of Post to start distribution of pulses through its network at the earliest. The subsidized pulses are already being distributed through Kendriya Bhandar, Safal and NCCF in Delhi and NCR Region, NCCF is also selling the pulses in some other metros also.
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Fitch Ratings expects the Indian telcos credit profiles to weaken amid intense competition and high capex requirements in 2017. Pricing power could be eroded as incumbents retaliate against new entrant Reliance Jios (part of Reliance Industries (BBB/Stable)) cheaper data tariffs and free voice and text.
The top-fours - Bharti Airtel Limited (Bharti, BBB-/Stable), Vodafone India, Idea Cellular and Rcom/Aircel - revenue market share will rise to around 84% (2016: 79%) as they gain market share from smaller telcos; we expect Reliance Jio to gain less than a 2% revenue market share in 2017 but to act a major price-disruptor to the sector.
Industry revenue growth could slow to the mid-single-digits (2016: 7%-8%) due to lower data revenue growth, as data tariffs could decline by at least 15%-20%. The EBITDA margin of the top-four telcos could decline by 150bp-200bp (2016 average: 34%) due to lower tariffs and increased marketing spend as data competition rises. Most telcos FCF will be negative, as cash generation is likely to fall short of capex requirements.
Rcoms BB- IDR has low headroom, as its FFO-adjusted net leverage is likely to remain at around 5.5x - higher than the 4.5x threshold above which Fitch may take negative rating action. We believe that Rcoms plan to demerge its wireless business is credit neutral - as the demerger will take away an equal proportion of debt and EBITDA from Rcom. Our Stable Outlook factors in our expectation that Rcom will use the proceeds from the sale of tower assets to improve leverage, commensurate with a BB- rating.
Bhartis BBB- IDR headroom may narrow as FFO-adjusted net leverage could deteriorate to over 2.0x (FY16: 1.8x, excluding USD5bn deferred spectrum costs) due to flat EBITDA as competition intensifies. Its 2017 operating EBITDAR margin could ease to 33%-34% (FY16: 35%) as Jios high-data-allocation plan could hit Bhartis premium customer base, which accounts for the most profitability at its Indian mobile segment.
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Vice Admiral GS Pabby, AVSM, VSM, Controller of Warship Production & Acquisition, Indian Navy, said this is the right time for India to take a major step towards building submarines indigenously by forging a strategic partnership with the Indian industry. He urged the leading industry houses to grab the opportunity to strengthen Indians Navy and added that there is a plethora of design and development opportunities available to the private sector in manufacturing of Navy equipment for the future. He mentioned that the six submarines on offer to the private sector for under P75(I) program was yet another opportunity by MoD to integrate the private sector in strategic defence production.
Vice Adm GS Pabby said that though India entered the sphere of submarines late but it was able to quickly catch up with the complex technology. Today, Indian Navy is designing and developing many of its equipment indigenously. The Navy has also built need-based operational requirements but is now developing its capabilities and is setting up extensive infrastructure to develop submarines in India. He mentioned that the Indian Navy took a visionary step in 1986 to establish in-house submarine design capability and the proposed seminar coincides with the 30th anniversary of the Directorate of Naval Design (Submarine Design Group).
Rear Admiral CS Rao, NM, DGND (SDG), Indian Navy, presented the scope of seminar which aims to deliberate on unique challenges and complexities of submarine design and construction; with the aim to achieve national competence in submarine design and construction through industrial partnership. He mentioned that the seminar will be divided in two technical sessions wherein session 1 will focus on self-reliance in design and construction of submarines while session 2 will deliberate on design challenges in platform integration of emerging submarine technologies. During the seminar, the officers of Indian Navy, will present perspectives on the above topics and deliberate on the future requirements to be met by the industry, academia and research and development agencies.
Dr. A. Didar Singh, Secretary General, FICCI, said that the objective of the international seminar is to emphasize the design capabilities of Indian Navy and other design agencies and to hand hold Indian industry to make the best of the capabilities and how to focus on the future requirements. He said FICCI is continuously focusing on futuristic technologies and added that in order to fulfil the national aspiration of establishment of strong defence industrial base in country, there is a need to do away with licensed production. India needs to encourage innovations in design to enhance its scientific capabilities which can later be transferred to industries for commercialisation of defence technologies.
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