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Moodys: Future US climate policy shifts would not stall global emissions reduction efforts
Feb 16,2017

Institutional and private sector forces will continue to drive global efforts to reduce carbon emissions, even if US climate policy is moderated or reversed by the new US administration, Moodys Investors Service said in a report.

Some aspects of climate policy in the US may be altered or dropped under the new administration, said Rahul Ghosh, a Moodys Vice President -- Senior Credit Officer and the reports co-author. Nevertheless, we believe that powerful structural forces at play, including robust institutional and private sector momentum, will continue to drive global sustainable and climate agendas regardless of the direction of US federal climate policy.

Since the US election, the vast majority of countries have reaffirmed their commitment to the Paris Agreement on climate change, reinforcing Moodys view that adoption of carbon regulation globally will accelerate over the coming years.

Policymaking at a state and local government level within countries will also play an increasingly important role in fulfilling national climate commitments, including in the United States.

The ability and willingness of individual US states to enact climate legislation and commit to carbon reduction will vary, as has been the case for some time. More than two dozen states have programmes in place to continue reducing emissions.

Global climate policy is not limited to the Paris Agreement, and institutional efforts such as the G20 study group on green finance and the Financial Stability Board (FSB) taskforce on climate-related financial disclosures suggest that policy momentum on decarbonisation and green finance will be sustained.

Green bond issuance across the globe is another illustration of commitments on the part of the public and private sectors to the Paris Agreement.

Green bond volumes continued to climb in 2016, reaching a new high of $93.4 billion -- an increase of 120% versus $42.4 billion in 2015. Extrapolating this level of year-over-year growth could bring 2017 issuance to $206 billion. Other regulatory initiatives beyond the Paris Agreement will also take effect in the coming years and support the transition to a lower carbon global economy.

Furthermore, corporate leadership and institutional investor focus on carbon emissions reduction and broader sustainability issues is increasing.

Strong institutional investor demand for greater sustainability and transparency, coupled with rising climate awareness and changing consumer preferences and technological change, will encourage more private sector companies to pursue explicit climate change strategies.

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Cabinet approves acquisition of subsidiary banks of State Bank of India
Feb 16,2017

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved the acquisition by the State Bank of India of its subsidiary banks namely State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.

The Cabinet also approved the introduction of a Bill in Parliament to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956.

The merger is likely to result in recurring savings, estimated at more than Rs. 1,000 crore in the first year, through a combination of enhanced operational efficiency and reduced cost of funds. Existing customers of subsidiary banks will benefit from access to SBIs global network. The merger will also lead to better management of high value credit exposures through focused monitoring and control over cash flows instead of separate monitoring by six different banks.

The acquisition under Section 35 of the State Bank of India Act, 1955 will result in the creation of a stronger merged entity. This will minimize vulnerability to any geographic concentration risks faced by subsidiary banks. It will create improved operational efficiency and economies of scale. It will also result in improved risk management and unified treasury operations.

The acquisition of subsidiary banks of State Bank is an important step towards strengthening the banking sector through consolidation of public sector banks. It is in pursuance of the Indradhanush action plan of the Government and it is expected to strengthen the banking sector and improve its efficiency and profitability.

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Cabinet approves award of contracts under Discovered Small Field Policy bid round - 2016
Feb 16,2017

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modihas given its approval to award contract in 31 contract areas (23 on onshore and 8 in offshore) of discovered small fields of Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL).

Award of contract is expected to provide faster development of fields and facilitate production of oil and gas thereby increasing energy security of the country.

These areas were discovered long back but these discoveries could not be monetized due to various reasons such as isolated locations, small size of reserves, high development costs, technological constraints, fiscal regime etc.

It is expected that in-place locked hydrocarbons volume of 40 Million Metric Tonnes (MMT) oil and 22 Billion Cubic Meters (BCM) of gas will be monetised over a period of 15 years. The production from these contract areas will supplement the domestic production.

For early monetization of these fields, in September, 2015, Cabinet approved 69 marginal fields for offer under Discovered Small Fields Policy. Out of these, 67 Discovered Small Fields were clubbed into 46 contract areas and put on offer through online international competitive bidding. A total of 134 e-bids were received for 34 contract areas. A total of 47 companies submitted their bid, out of which 43 are Indian companies and rest four are foreign companies.

These contract areas have been awarded under the new regime of Revenue sharing Model.

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Cabinet approves Amending the Collection of Statistics Act, 2008 (7 of 2009)
Feb 16,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved a proposal to introduce a Bill in Parliament to extend the jurisdiction of the Collection of Statistics Act, 2008 to Jammu & Kashmir on statistics relevant to any matters under any of the entries specified in the List-I (Union List) and the List- III (Concurrent List) in the Seventh Schedule to the Constitution, as applicable to Jammu & Kashmir under the Constitution (Application to Jammu & Kashmir) Order, 1954. The Amendment will strengthen data collection mechanism in the State of Jammu & Kashmir.

The Amendment will:

(a) Provide for extending the jurisdiction of the Act to Jammu & Kashmir State in respect of matters not reserved for the State as per the Constitution (Application to Jammu and Kashmir) Order 1954;

(b) Provide for appointing a nodal officer at the Centre and in each State/Union Territory to effectively coordinate data collection activities and provide consultation to Government Departments for avoiding unnecessary duplication, etc.

Background

The Collection of Statistics Act, 2008 was enacted to facilitate the collection of statistics on economics, demographic, social, scientific and environmental aspects etc. The Act extends to the whole of India, except Jammu & Kashmir. The Jammu & Kashmir State legislature enacted the Jammu & Kashmir Collection of Statistics Act, 2010, which extends to the whole of the State of Jammu & Kashmir and is almost a replica of the central legislation. The Collection of Statistics Act, 2008 and the Jammu & Kashmir Collection of Statistics Act, 2010 are not applicable to statistical subjects falling in the Union List, as applicable to the Jammu & Kashmir under the Constitution (Application to Jammu & Kashmir) Order 1954. This has created a legislative vacuum. Moreover, the concurrent jurisdiction to be exercised by the Centre in Jammu & Kashmir has also not been provided for, in the Collection of Statistics Act, 2008. The amendment is intended to address this vacuum.

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Cabinet approves Establishment of FLRP at Amlaha, Sehore, Madhya Pradesh with Satellite Hubs in West Bengal & Rajasthan by ICARDA
Feb 16,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved:

(i) The Establishment of Food Legumes Research Platform (FLRP) at Amlaha, Sehore, Madhya Pradesh with Satellite Hubs in West Bengal (for pulses) and Rajasthan (for Natural Resource Management) by ICARDA in the second phase; by International Center for Agricultural Research in Dry Areas (ICARDA);

(ii) Signing of lease deed with State Government of Madhya Pradesh for the land provided by them (70.99 hectares, 175.42 acre) at Amlaha Farm, Sehore on land rent of Rs. 1 per acre per year for 30 years on lease and to further lease it to ICARDA to establish the FLRP at Madhya Pradesh;

(iii) In principle approval of the Cabinet for conferring on the Food Legume Research Platform of ICARDA an international status as contemplated in Clause 3 of the United Nations (Privileges and Immunities) Act, 1947.

(iv) Authorizing the Department of Agricultural Research (DARE) on behalf of Government of India in all matters regarding establishment of the Platform.

(v) Authorizing the Ministry of Agriculture to carry out technical modifications in the Supplementary Agreement signed between ICAR and ICARDA relating to establishment of FLRP, if required.

The establishment of FLRP in India will enable India to harness the best of international science in meeting the emerging food security challenges. India would be able to rapidly and effectively absorb the research output achieved in the country by FLRP. A major international R&D institution will make India an even bigger center for agricultural research in the world and this in turn, will attract further research & development investment in the country.

This is a research set up by an international organization. ICARDA has a good track record of innovation, as in climate resilient technologies including suitable food legume varieties for dry-land production systems. ICARDA will carry out research through a multi-disciplinary team of scientists for enhancing productivity of crops range-land and livestock. This platform will contribute significantly towards reducing poverty, improving food security, improving nutrition and health, and sustaining the natural resource base.

The research output would benefit farmers of all regions, whether big, small or marginal; and as technologies developed would be eligible for use by all farmers, the project is equitable and inclusive.

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Cabinet approves signing of Air Services Agreement between India and Rwanda
Feb 16,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the signing of Air Services Agreement between India and Rwanda.

The Agreement has the potential to spur greater trade, investment, tourism and cultural exchange between India and Rwanda, bringing it in tune with developments in the civil aviation sector. It will provide enabling environment for enhanced and seamless connectivity while providing commercial opportunities to the carriers of both the sides ensuring greater safety and security.

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Dr. Mahesh Sharma launches pre-loaded Sim Card for Tourists arriving in India on E-visa
Feb 16,2017

Dr. Mahesh Sharma,Minister of State (Independent Charge) for Tourism and Culture, launched the initiative of the Ministry of Tourism, Government of India for providing pre-loaded Sim Card to foreign tourists arriving in India on e-Visa here today. Addressing on the occasion, he said that this unique initiative will facilitate the foreign tourists in communicating with their acquaintances immediately after their arrival in India. Earlier, the Ministry of Tourism had also launched a 24 x 7 Tourist Helpline 1800111363 in Twelve foreign languages so that the foreign tourists can get the required information in their own language. The Minister presented the First Kit containing Sim to a representative of Travel and Tourism sector.

This initiative has been launched in association with Bharat Sanchar Nigam, (BSNL), wherein BSNL would distribute pre-loaded SIM Cards to foreign tourists arriving in India on e-Visa. This facility will be initially available in the Indira Gandhi International Airport (T3 Terminal), New Delhi and later cover remaining 15 international airports, where e-Visa facility is currently available.

To avail pre-loaded Sim Card, BSNL will collect e-Visa copy and the first page of passport from foreign tourists on arrival at the airport. This facility is only available for tourists arriving in India on e-Visa. Sim cards will be pre-loaded with a value of Rs. 50 talk time and 50 MB data and will be activated on immediate basis so as to enable them use this facility instantly. This initiative is also aimed at providing connectivity to foreign touriststo enable them to stay in touch with their near and dear ones and also help them to contact with the 24x7 Multi lingual toll free helpline of Ministry of Tourism for any assistance and guidance during times of distress / medical emergency, etc.

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330 lakh MT of wheat to be procured during Rabi Marketing Season 2017-18
Feb 15,2017

In consultation with the States, it was decided to procure 330.00 lakh MT of wheat during RMS 2017-18, which is considerably more in comparison with the last season actual procurement of 229.61 lakh MT.

The State-wise break-up of the estimate of wheat procurement during RMS 2017-18 is as follows:n++

Sl. No.StateEstimate for Wheat Procurement (lakh MT)

n++

1.Punjab115.002.Haryana75.003.Madhya Pradesh85.004.Uttar Pradesh30.005.Rajasthan17.506.Bihar5.007.Uttarakhand1.508.Gujarat0.509.Other States0.50n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++ Total330.00

In the Conference, the estimate for procurement of paddy grown in Rabi/ Winter/ Summer crop of Kharif Marketing Season 2016-17 for various States were also done in terms of rice. The estimate is 50 lakh MT with State-wise break-up given below. This estimate is over and above the estimate of 330 lakh MT set for Kharif crop of paddy for KMS 2016-17, for which the procurement operations are going on and the paddy procurement in KMS 2016-17 in terms of rice has already reached to the level of 292.31 lakh MT as reported on 15.02.2017, which is nearly 28 lakh MT higher than the procurement of 264.53lakh MT by the corresponding date in previous year, i.e., KMS 2015-16.n++n++n++n++

n++Estimate for paddy procurement in terms of Rice for winter/ summer Crop in KMS 2016-17:-n++

Sl. No.StateEstimate for Paddy Procurement in terms of Rice (lakh MT)

n++

1.Andhra Pradesh13.002.Telangana15.003.Odisha7.004.Tamil Nadu5.005.Kerala1.006.West Bengal8.007.Assam0.258.Maharashtra0.75n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++n++ Total50.00

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Ministry of Railways to Induct 8 New OHE Inspection and Maintenance Cars
Feb 15,2017

With a view to take inspection of electrical over head equipment to a more modern level for ensuring safe rail operation, Indian Railways has decided to introduce 8 Wheeled Diesel Electric Over Head Equipment (OHE) inspection and maintenance Car on Railway Network. With the introduction of these OHE maintenance and inspection cars, the reliability and safety of OHE equipment on Indian Railway will be increased.

Research Design Standard Organisation (RDSO), the research arm of Ministry of Railways has already finalized the specifications for the prototype of these cars. Under the first phase, Indian Railways will be procuring 45 nos. 8-Wheeler OHE Inspection & Maintenance Cars for operation on Broad Gauge electrified routes on 25kV AC.

The Ministry of Railway has already placed contract with two firms namely M/s Bharat Earth Movers Limited, Bangalore and M/s Phooltas Transrail Limited, Patna for submitting designs.

This inspection car is a self-propelled vehicle and is used not only for periodical inspection, patrolling and maintenance of traction overhead equipment (OHE) but also used for attending to sites of breakdown, restoration and damaged OHE. These are specially used during night for electric current collection tests in order to ascertain the safe contact between pantograph of electric locomotive and contact wire of the OHE. The 8-W Inspection & Maintenance OHE Car uses the power generated by the diesel alternator set provided in the OHE car for propulsion. It has maximum operating speed of 110km/hour.

The Diesel Electric type OHE cars are being procured as per latest specification of Research Design Standard Organisation (RDSO) for which design is to be done by firms, and finally approved by RDSO. The design of these vehicles is likely to be approved by RDSO by March 2017 and prototype shall be approved by November 2017. Thereafter supplies of these OHE cars will start from February 2018 and is likely to be completed by June 2019, In Phase - II another tender for 53 nos. of such vehicles (8-W DETC) is also under finalisation and the contract shall be awarded soon.

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Total foodgrains production in the country is estimated at record 271.98 MT
Feb 15,2017

As per 2nd Advance Estimates, the estimated production of major crops during 2016-17 is as under:

Foodgrains - 271.98 million tonnes (record)

n++ Rice - 108.86 million tonnes (record)

n++ Wheat - 96.64 million tonnes (record)

n++ Coarse Cereals - 44.34 million tonnes (record)

n++ Maize - 26.15 million tonnes (record)

n++ Pulses - 22.14 million tonnes (record)

n++ Gram - 9.12 million tonnes

n++ Tur - 4.23 million tonnes (record)

n++ Urad - 2.89 million tonnes (record)

Oilseeds - 33.60 million tonnes (record)

n++ Soyabean - 14.13 million tonnes

n++ Groundnut - 8.47 million tonnes

n++ Castorseed - 1.74 million tonnes

Cotton - 32.51 million bales (of 170 kg each)

Sugarcane - 309.98 million tonnes

As a result of very good rainfall during monsoon 2016 and various policy initiatives taken by the Government, the country has witnessed record foodgrain production in the current year. As per Second Advance Estimates for 2016-17, total Foodgrain production in the country is estimated at 271.98 million tonnes which is higher by 6.94 million tonnes than the previous record production of Foodgrain of 265.04 million tonnes achieved during 2013-14. The current years production is also higher by 14.97 million tonnes than the previous five years (2011-12 to 2015-16) average production of Foodgrains. The current years production is significantly higher by 20.41 million tonnes than the last years foodgrain production.

Total production of Rice is estimated at record 108.86 million tonnes which is also a new record. This years Rice production is higher by 2.21 million tonnes than previous record production of 106.65 million tonnes achieved during 2013-14. It is also higher by 3.44 million tonnes than the five years average Rice production of 105.42 million tonnes. Production of rice has increased significantly by 4.45 million tonnes than the production of 104.41 million tonnes during 2015-16.

Production of Wheat, estimated at 96.64 million tonnes is also a record. This years wheat production is higher than the previous record production of 95.85 million tonnes achieved during 2013-14. Production of Wheat during 2016-17 is also higher by 4.03 million tonnes than the average wheat production. The current years production is higher by 4.36 million tonnes as compared to Wheat production of 92.29 million tonnes achieved during 2015-16.

Production of Coarse Cereals estimated at a new record level of 44.34 million tonnes is higher than the average production by 3.00 million tonnes. It is higher than the previous record production of 43.40 million tonnes achieved during 2010-11 by 0.94 million tonnes. Current years production it is also higher by 5.82 million tonnes as compared to their production of 38.52 million tonnes achieved during 2015-16.

As a result of significant increase in the area coverage and productivity of all major Pulses, total production of pulses during 2016-17 is estimated at 22.14 million tonnes which is higher by 2.89 million tonnes than the previous record production of 19.25 million tonnes achieved during 2013-14. Production of Pulses during 2016-17 is also higher by 4.50 million tonnes than their Five years average production. Current years production is higher by 5.79 million tonnes than the previous years production of 16.35 million tonnes.

With an increase of 8.35 million tonnes over the previous year, total Oilseeds production in the country is estimated at record level of 33.60 million tonnes. It is higher by 0.85 million tonnes than the previous record production of 32.75 million tonnes achieved during 2013-14. The production of Oilseeds during 2016-17 is also higher by 4.34 million tonnes than the five years average Oilseeds production. The current years production is significantly higher than the production of 25.25 million tonnes during 2015-16.

Production of Sugarcane is estimated at 309.98 million tonnes which is lower by 38.46 million tonnes than the last years production of 348.45 million tonnes.

Despite lower area coverage during 2016-17, higher productivity of Cotton has resulted into higher production of 32.51 million bales (of 170 kg each) as compared to 30.01 million bales during 2015-16.

Production of Jute & Mesta estimated at 10.06 million bales (of 180 kg each) is marginally lower than their production of 10.52 million bales during the last year.

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Ind-Ra: CE Loan Delinquencies to Abate in FY18; Full Recovery for Tractor Loans to Take Longer
Feb 15,2017

India Ratings and Research (Ind-Ra) has taken the following actions on the outlooks for the following underlying asset classes, primarily a part of the ABS and RMBS transactions, in its rated portfolio for FY18: 
 Asset Class OutlookFY17FY18ActionCommercial vehicle loansStableStable to NegativeRevisedLoans against propertyStableStable to NegativeRevisedTractor loansNegativeStable to NegativeRevisedConstruction equipment loans (CE)NegativeStableRevisedMicrofinance loans*-Stable to NegativeAssignedResidential mortgage loansStableStableMaintained

* This sector was not included in the FY17 outlook report.

The agency has revised the outlook on commercial vehicle loans to stable to negative for FY18 from stable for FY17. The agency believes that the combined effect of the marginal 0.4% yoy growth in industrial activity and 8% increase in diesel price without a similar improvement in freight rates over April to November 2016 will stall the asset quality recovery process, which has been made more uncertain because of demonetisation.

The agency has revised the outlook on the loans against property segment to stable to negative for FY18 from stable in FY17. The agency expects that the prevailing slowdown in property prices with high levels of existing inventory and the pressure to move towards a formal business model will continue to weigh on small and medium enterprises, increasing asset quality pressures for them. Also, the larger share of high ticket size collateral (above INR10 million) on the books of non-banking finance companies, which forms a small component of sales in most cities (and hence illiquid collateral), would render achieving recovery difficult, if there is a spike in default rates.

The agency has revised the outlook on tractor loans to stable to negative for FY18 from stable in FY17. The prospect of a strong agricultural production output in 2017 amid a healthy monsoon in 2016 is likely to provide respite to tractor loan borrowers. Also, budgetary support to farm income as announced in the Union Budget 2017-2018 and the average 16% hike in minimum support price for food grains in FY17 YTD (the highest in last five years), blunted to some extent by the hike in diesel prices, would support asset quality improvement. However, high peak defaults reached in the agencys tractor loan portfolio in the last 12 months may not ease swiftly, considering the abrupt cash shortage in the farm sector post demonetisation and with revival expected to be synchronised with future crop cycles.

The agency has revised the outlook on CE loans to stable for FY18 from negative in FY17. Ind-Ra expects the 21% and 24% yoy growth in infrastructure spending in FY16 and FY17, respectively, to mark FY18 as a turnaround year for CE loans. The peak 90+dpd delinquency rate of Ind-Ra rated CE loan portfolio for 2014 vintage was 4% within three years from issuance i.e. a 28% reduction relative to the average peak 90+ dpd delinquency rates of 5.6% for the loans of the 2012 and 2013 vintages.

The agency has assigned a stable to negative outlook on microfinance loans for FY18. Ind-Ra expects that the marginal increase in agri and non-agri based rural wages in FY17 shall provide limited boost to MFI (microfinance institutions) borrowers income, because of growing borrower leverage and hence it is likely to cause asset quality issues. A temporary surge in weighted average delinquencies to 3.45% (0+dpd) in November 2016 for all Ind-Ra rated MFI pools on account of demonetisation would stabilise with improving re-monetisation. However, demonetisation and other local incidents from time-to-time prove that MFI borrowers would continue to be highly subject to idiosyncratic stress.

Ind-Ra rated structured finance transactions including ABS and RMBS, however, are likely to show a stable performance in FY18. Key factors driving the stable outlook include lower actual delinquencies on the underlying asset pool than the agencys initial estimates. Additionally, with higher pool amortisation and original credit enhancement remaining intact, credit enhancement cover shall increase for the outstanding transactions.

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Ind-Ra: Long Tail of Credit Costs to Subdue Profitability Despite Plateauing Stressed Assets
Feb 15,2017

India Ratings and Research (Ind-Ra) has maintained a stable rating and sector outlook on private sector banks and large public sector banks (PSBs) while it has retained the negative sector outlook for small & mid-sized PSBs for FY18. Ind-Ra expects large PSBs with better access to capital and private sector banks with their robust capitalisation to navigate another year of low growth and high credit costs with a stable outlook. The agency retains its negative outlook on mid-sized and smaller PSBs with weak capitalisation and large stock of aging non-performing loans (NPLs). These banks will find it increasingly difficult to grow given increasing capital requirements and large funding gaps impeding their ability to compete on spreads. Ind-Ras Long-Term Issuer Ratings of all PSBs are largely support driven and will mostly remain resilient on the expectations of continued government support.

Ind-Ra expects banks to require INR910 billion in tier-1 capital (including INR500 billion of Additional Tier-1 (AT1) bonds) till March 2019 to grow at a bare minimum pace of 8%-9% CAGR. This includes INR200 billion of residual tranches from the government of Indias Indradhanush programme. Ind-Ra believes there is an increasing divide between the large and smaller PSBs, with the former having some access to growth capital, better market valuation, and also some non-core assets to divest while the latter would only receive bailout capital if required. AT1 bonds have seen some tailwinds in FY17 due to favourable treatment from mutual fund and insurance sector regulators while kick-start of an infant secondary market has started improving the pricing. While the recent Reserve Bank of Indias guideline improves the coupon serviceability of even the weakest PSBs, a broad-based deepening of the market would likely only come from demonstration of PSBs ability to exercise issuer call options in the medium-term.

Ind-Ra expects impaired assets to peak at 12.5%-13% by FY18/FY19 while credit costs will show an extended recovery period (FY18F:185bp; FY16:230bp) as a large proportion of the recently acquired higher-bucket non-performing loans keep aging. This would keep blended return on assets (RoAs) for PSBs and private sector banks 20bp-30bp below their respective long-term medians. Ind-Ras study pegs stressed corporate/SME debt at 22% of bank credit of which 12% has found recognition as impaired so far while about 7% remains as non-PSU debt without any current dispensations such as 5/25 or S4A.

According to Ind-Ras sector-wise stress analysis, sectors such as iron & steel and textiles have seen a fair bit of recognition but provisioning might still not be adequate to protect against eventual loss given defaults (LGDs). On the other hand, significant proportion of unrecognised stress pertains to sectors such as infrastructure, realty and capital goods which potentially have long-term viable assets but would increasingly need cash flow restructuring to avoid slippages.

On the funding side, Ind-Ras analysis reveals that about ten odd mid-sized PSBs were running high asset liability mismatches which could potentially impact their ability to transmit any easing or compete aggressively on marginal cost lending rate. Ind-Ra expects the liability momentum to be another large differentiating factor between large and mid-sized PSBs. Ind-Ra expects sector net interest margins (NIMs) to remain stable at 2.9% for FY18F,15bp-20bp lower than the long-term average.

OUTLOOK SENSITIVITIES

Ind-Ras Long-Term Issuer Rating (which is used to benchmark senior bonds and Basel-III Tier-2 instruments) on PSBs will change only if there is any change in the governments support stance or a relative shift in their systemic importance.

Ratings for private sector banks and ratings on tier-1 bonds (such as AT1) for all banks are linked to the respective banks standalone profile. Positive triggers such as improvements in funding gaps and single-name concentrations together with increased capitalisation levels and lower loan loss provisions may result in a positive outlook for banks whose ratings are driven by performance.

Negative triggers such as pressure on capital ratios due to weak profitability, a spike in credit costs and delays in equity injections may lead to a negative sector outlook.

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Employees Enrolment Campaign 2017 offers opportunity to employers to voluntarily declare details of all employees
Feb 15,2017

EPFO launched Employees Enrolment Campaign 2017 offering opportunity to the employers to voluntarily declare details of all employees hitherto deprived of social security benefits under EPFO. The declaration scheme is operational between January 1st 2017 to March 31st 2017. Under the Scheme: The employees share of contributions if declared by the employer as not deducted shall stand waived. The damages to be paid by the employer in respect of the employer in respect of the employees for whom declaration has been made under this campaign shall be at the rate of Rupee One per annum. No administrative charges shall be collected from the employer in respect of the contribution made under the declaration. A declaration can be made under the Campaign for the period for which no inquiry under Section 7A has been initiated.

EPFO has provided facility for online declaration under the Principal Employer section of EPFO portal which facilities the implementation of the Employees Enrolment Campaign. After declaration, the payments are to be remitted by the employer through month-wise ECRs for the entire past period of enrolments.

To facilitate enhanced services, furnishing of Aadhar has now been made mandatory for members and pensioners of the Employees Pension Scheme. Furnishing of Aadhar seeded bank accounts as well as Aadaar by EPF members would facilitate better identification as well as consolidation of EPF accounts linked with various spells of employment of EPF members. This would allow offering any time anywhere services to EPF members.

ECR 2.0 has been operationlized and the principal employer can view details of contractor establishments compliance status. This will help all employees, particularly contract employees, becoming aware of any non-compliance by their employer/contractor as they shall be immediately receiving SMSs whenever a contribution is credited into their account.

In January 2017, EPFO settled 19,114 grievance leaving 2,556 as pending. Out of the pending grievances, 2,206 were pending for less than seven days.

As a part of next phase of computerization, EPFO is moving towards a centralized receipt and payment, system. EPFO has entered into banking arrangements with multiple banks. Once operationlized, this would also facilitate automation of compilation of financial information as required for compiling the organizational balance sheet and other monitoring reports.

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Import of Vegetable Oils down by 15% in 1st Quarter-November 2016 - January 2017
Feb 15,2017

Import of vegetable oils during January 2017 is reported at 1,024,859 tons compared to 1,258,054 tons in January 2016, consisting of 1,008,085 tons of edible oils and 16,774 tons of non-edible oils i.e. down by 19%, as per the data compiled by The Solvent Extractors Association of India on import data of Vegetable Oils (edible & non-edible) for the month of January 2017. The overall import of vegetable oils during first three months of current oil year 2016-17, November 2016 to January 2017 is reported at 3,410,008 tons compared to 4,016,391 tons i.e. down by 15%.

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FY18 - Another Year In Search of Economic Growth; GDP to Grow 7.4% yoy-Ind-Ra
Feb 15,2017

India Ratings and Research (Ind-Ra) expects the gross domestic product (GDP) to grow 7.4% yoy in FY18. Backed by consumption demand and government spending, the gross value added of the three production sectors namely agriculture, industry and services would grow at 3%, 6.1% and 9.1% yoy, respectively, in FY18. While private final consumption expenditure is expected to grow at 8.9%, the government final consumption expenditure is expected to clock 9% growth in FY18.

Ind-Ra, however, has revised down its GDP growth estimate for FY17 to 6.8% from 7.9%, which is even lower than Central Statistical Organisations advanced estimate of 7.1%.

Although GDP growth after bottoming out in FY13 has recovered, sustaining it in the medium to long term has emerged as a key challenge for the India economy. Two factors that contributed significantly to the GDP growth during the last decade were - (i) total factor productivity (TFP) growth and (ii) investments as measured by gross capital formation (GCF). However, both are languishing presently. In fact, the period of 2005-2010 saw a synchronised movement in investment and TFP growth. Indias TFP, which grew at 3.8% during 2006-2010 dropped to 0.3% during 2011-2014. As a result, the contribution of TFP to Indias GDP growth declined from a staggering 46.2% during 2006-2010 to a meagre 4.6% during 2011-2014.

A suboptimal capacity utilisation in the manufacturing sector and stalled infrastructure projects during 2011-2014 caused inefficient/low intensity utilisation of capital invested pulling down the TFP growth.Similarly, GCF which grew at an average rate of 17.7% during FY06-FY10 dropped to 4.2% during FY12-FY16. As against the popular perception, the main setback to investment growth came from the negative 2.2% growth in the gross fixed capital formation (GFCF) of household sector. During FY12-FY16, 82.6% of the household investment was in dwellings, other buildings & structures. Further, dwelling, other building and structures accounted for about 55.8% of the total investment in the economy. This suggests that a more nuanced approach to policy making is required to revive the investment cycle which is currently focused on government capex. Ind-Ra expects GFCF to grow at 4.9% in FY18.

Although firming up of global commodity prices especially crude will exert some pressure on inflation, Ind-Ra expects Wholesale and Consumer Price Index based inflation to come in at 4.5% and 4.2%, respectively, in FY18. A normal monsoon in 2017 would keep the food inflation soft, yet aberration in the prices of select agricultural commodities due to unforeseen supply shocks cannot be ruled out. Ind-Ra therefore expects one rate cut of 25bp by the Reserve Bank of India in FY18 and 10-year benchmark G-sec yield to trade in the range of 6.4%-6.5% by March 2018.

The agency expects the current account deficit to come in at 1% of the GDP in FY18 as against 0.9% in FY17. This will help the rupee trade at an average 69.18/USD in FY18. While India is likely to face continued headwinds on the exports front due to the play out of Brexit and the anti-globalisation stance of US President Donald Trump, imports are unlikely to pick up so long as the domestic investment cycle does not revive. The Union Government budget FY18 has pegged the fiscal deficit to GDP ratio at 3.2%. Although achieving this target looks plausible, much would depend on the governments disinvestment receipt which has been pegged at INR725 billion for FY18.

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