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Government targets doubling food processing levels to 20%
Sep 23,2016

The Government has set a target of doubling food processing levels in the country to 20% by 2019. Union Minister for Food Processing, Ms. Harsimrat Kaur Badal, who was in Mumbai today, to inaugurate the Annapoorna : World of Food 2016 International Expo & Conference, said the n++food processing industry is a sunrise sector ready for exponential growthn++. She said despite all odds, the food processing sector has been able to register a 7.6 per cent growth, much higher than the agricultural and manufacturing sector growth.

The Minister however lamented that despite India being one of the largest food producing countries, the level of processing is a paltry 10%, while it is 70-80% in some of the South East Asian countries like Thailand, Malaysia and Vietnam. n++We have drawn up plans to double the level of processing from 10% to 20% by the time the 5 year term of the government is overn++, she said.

Ms. Badal said her ministry is facilitating ease of doing business and creating investor friendly policies and schemes to give a boost to the sector. She said the governments decision to permit 100 per cent FDI in trading, including through e-commerce, in respect of food products manufactured or produced in India is expected to provide a major impetus to investments, employment and job creation in the food processing sector.

The Minister also informed that a Rs 2,000 crore corpus has been created to disperse cheap credit through NABARD for the food processing sector and several tax and duty concessions are being extended to food processing industries in 42 Mega Food Parks planned across the country.

Ms. Badal said that her recent trip to the UK has been successful and lot of international retail and food processing companies have evinced interest to enter India through joint venture with Indian companies.

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Record Production of Kharif Foodgrains estimated at 135.03 Million Tonnes
Sep 22,2016

Union Agriculture and Farmers Welfare Minister, Shri Radha Mohan Singh today released the 1st Advance Estimates of production of major Kharif crops for 2016-17. On the occasion Shri Singh said that as per 1st Advance Estimates for 2016-17, total production of Kharif Foodgrains is estimated at 135.03 million tonnes which is a new record. This year production is higher by 11.02 million tonnes as compared to last years Kharif foodgrains production of 124.01 million tonnes. Further, Kharif foodgrains production is also higher by 7.65 million tonnes than the last five years (2010-11 to 2014-15) average production of 127.38 million tonnes.

As per 1st Advance Estimates, the estimated production of major crops during Kharif 2016-17 is as under:

n++ Foodgrains - 135.03 million tonnes (record)

n++ Rice - 93.88 million tonnes (record)

n++ Coarse Cereals - 32.45 million tonnes

n++ Maize - 19.30 million tonnes (record)

n++ Pulses - 8.70 million tonnes (record)

n++ Tur - 4.29 million tonnes (record)

n++ Urad - 2.01 million tonnes (record)

n++ Oilseeds - 23.36 million tonnes

n++ Soyabean - 14.22 million tonnes

n++ Groundnut - 6.50 million tonnes

n++ Castorseed - 1.73 million tonnes

n++ Cotton - 32.12 million bales (of 170 kg each)

n++ Sugarcane - 305.25 million tonnes

The cumulative rainfall (1 June to 07 September, 2016) during the current monsoon season has been excess / normal in 29 and deficient in 07 out of 36 meteorological sub-divisions. As a result of favourable monsoon rainfall, area and yield of most of the Kharif crops is expected to be higher. Consequently, estimated production of most of the crops during current Kharif season is estimated to be higher as compared to their production as per 4th Advance Estimates for 2015-16. However, these are preliminary estimates and would undergo revision based on further feedback to be received from the States.

Total production of Kharif rice is estimated at 93.88 million tonnes which is a new record. This year rice production is higher by 1.1 million tonnes than previous record production of 92.78 million tonnes achieved during 2011-12. Production of Kharif rice is also higher by 4.16 million tonnes and 2.57 million tonnes over the average production of the last five years and the last years Kharif rice production respectively.

Total production of coarse cereals in the country is estimated at 32.45 million tonnes as compared to 27.17 million tonnes during 2015-16 (4th Advance Estimates). Production of Maize is estimated at record level of 19.30 million tonnes. This year production of Kharif maize is higher by 4.05 million tonnes than that the last years production.

As a result of significant increase in the area coverage and productivity of tur and urad, total production of Kharif pulses estimated at record level of 8.70 million tonnes which is higher by 3.16 million tonnes than the last years production of 5.54 million tonnes. The production of kharif pulses is also higher by 2.54 million tonnes than their last five years average production.

Total production of kharif oilseeds in the country is estimated at 23.36 million tonnes which is significantly higher than the production of 16.59 million tonnes during 2015-16. This year production of Kharif oilseed is also higher by 2.33 million tonnes than the average production of last five years.

Production of Sugarcane is estimated at 305.25 million tonnes which is lower by 46.92 million tonnes than the last years production of 352.16 million tonnes. Despite lower area coverage, higher productivity of Cotton has resulted in to higher production of 32.12 million bales (of 170 kg each) as compared to 30.15 million bales during 2015-16. Production of Jute & Mesta estimated at 10.41 million bales (of 180 kg each) is marginally lower than their production of 10.47 million bales during the last year.

The assessment of production of different crops is based on the feedback received from States and validated with information available from other sources.

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Ministry of Shipping Proposes New Model Concession Agreement for Port Sector
Sep 22,2016

The Ministry of Shipping has proposed a new Model Concession Agreement (MCA) for the Port Sector. The proposed MCA will replace the existing Model Concession Agreement which came into existence in January, 2008. The proposed MCA has taken into account the suggestions provided in various reports by Member Planning Commission (2010), Indian Ports Association (IPA-2015) and Kelkar Committee Report (2015).

The objectives of the revised Model Concession Agreement are following:

a) More equitable allocation of project risks.

b) Provisions to handle unforeseen circumstances.

c) Removing ambiguity in existing provisions.

d) To attract more private sector investment.

The salient changes proposed in the Revised Model Concession Agreements are:

1. Change in equity holding to provide exit route: The revised MCA has proposed that the Concessionaire shall hold 51 per cent equity until 3 years after Commercial Operation Date (COD) and 26 per cent thereafter for another 3 years. Hence, the private party would be free to exist after 6 years from COD. The Concessionaire may approach the Concessioning Authority to waive the equity holding requirement during the second 3 year term if performance parameters have been achieved during the first three year period.

2. Providing for refinancing provision in MCA: This amendment is aimed at facilitating availability of low cost long term funds to Concessionaire so as to improve the financial viability of the projects and is based on the Model Triartite Agreement approved by Department of Economic Affairs. Under this, the Concessionaire can issue Bonds on completion of one year of operation for refinancing of debt, this will in result in optimization of the finance cost of the projects.

3. Amendment in Definition of n++Change of Lawn++: As per the current MCA, change in law excludes

(i) Imposition of standards and condition arising out of TAMP guidelines, Environmental Law & Labor laws, and

(ii) Increase and imposition of taxes, duties, etc. for compensating the Concessionaire. As these can materially affect the viability of the project the proposed MCA states that the Concessionaire shall be compensated for all changes in law except imposition of n++New Direct Taxn++. This will help the Concessionaire to get compensation for all material changes in law.

4. Provision for mid-term review of concession: It is proposed that concessions may be reviewed by a Review Board (or any such competent authority) under applicable laws at the end of 15 years from COD to arrive at required mitigation measures. The triggers and nature and quantum of mitigation measures will be as per guidelines issued by the Government in this regard.

5. Approval of Discounts on Ceiling Rates for the Purpose of Recovery of Revenue share: Presently, revenue share is payable on Gross Revenue, calculated as per tariff ceilings even if Concessionaire has to allow discount to keep the charges competitive. With a view to have a balanced risk allocation, it is proposed that Concessionaire shall be entitled to approach Port to consider and approve discounts on ceiling traffic and revenue share shall be paid on the approved discounted tariff of the approved revenue share. Cargo storage charges will be excluded while computing Gross Revenue for the purpose of Revenue Sharing.

6. Provision for Commercial Operations before COD: It is proposed to permit operations before COD on project specific terms and conditions about level of operations and payment to the port; this will lead to better utilization of assets provided by the Port in many projects.

7. Improved Utilization of Project Assets and Higher Productivity: Presently, Concessionaire is required to operate the Project as least as per scope of work. In order to avoid any ambiguity, its now been specified that the Concessionaire is free to deploy higher capacity equipment/facilities for higher productivity and improved utilization of Project assets.

8. Grievance Redressal System: The proposed MCA will have a Grievance Redressal System where the Concessionaire shall create a Grievance Redressal Portal in their website with adequate monitoring system and timelines for redressal.

9. Applicable Tariff Guidelines: This provision is to give an option to Concessionaire to adopt changed/revised Tariff guidelines as and when issued by the Government. It is proposed that private party will have option to adopt new or revised guidelines within 90 days of publication in official gazette.

10. Provision for Additional Land, Utilities & Services: Presently the charges payable by the Concessionaire for additional land, utilities and services are equal to 200 per cent of the scale of rates, as per the proposed MCA provisions have been made for providing additional land, utilities and services during operation period and required for Project Operations on payment of 120 percent of the applicable scale of rates.

11. Replacement of n++Actual project Costn++ with n++Approved Project Costn++: Presently, if the Actual Project cost, certified by statutory auditors, is higher than the earlier estimates, Concessioning Authority may increase the project cost. However, the procedure for the same is not prescribed. It is proposed to replace the Actual Project Cost with Approved Project Cost and prescribe procedure for approval. The Concessionaire shall summit statement of actual capital cost incurred on the project as certified by statutory auditors within a period of 90 days of issue of completion certificate. If the cost is more that the Estimated Project Cost or cost incorporated in Financing Plan, it shall be referred to the Independent Engineer for his comments on (i) reasonability of expenditure and (ii) need of expenditure to provide project facilities and services as per Scope of Work. The Concessioning Authority will take a decision on approving the enhanced cost taking into account the Report of the Independent Engineer.

The proposed changes in the Model Concession Agreement have been uploaded on the official website ( of the Ministry of Shipping for seeking comments of the stakeholders.

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Indias fuel product consumption jumps 11.4% in August 2016
Sep 22,2016

Indias fuel product consumption or sales increased 11.4% to 15.80 million tonnes (mt) in August 2016 over a year ago. Diesel sales jumped 13.2% to 6.14 mt, while petrol sales galloped 24.9% to 2.20 mt. Sales of LPG advanced 19.2% to 1.84 mt and petcoke improved 9.5% to 1.68 mt. Consumption of fuel oil gained 14.0% to 0.61 mt, while that of ATF moved up 10.3% to 0.55 mt. The consumption of bitumen also gained 9.8% to 0.26 mt, lubricants 8.7% to 0.27 mt and light diesel oil (LDO) 31.7% to 0.04 mt. However, the consumption of others declined 6.9% to 0.56 mt, naphtha 3.7% to 1.15 mt, and kerosene -13.3% to 0.50 mt in August 2016.

The consumption or sales of fuel product increased 9.3% to 80.37 mt in April-August 2016 over April-August 2015. Sales of petcoke increased 31.0%, diesel 5.7%, petrol 13.9%, and LPG 10.3%. Consumption of fuel oil also moved up 18.3%, bitumen 15.5%, ATF 12.3%, lubricants 9.4% and LDO 16.8%, but declined for others 0.2%, naphtha 0.3% and kerosene 9.9% in April-August 2016.

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Indias natural gas production declines 5.7% in August 2016
Sep 22,2016

Indias natural gas production declined 5.7% to 2.67 billion cubic meters (bcm) in August 2016 over a year ago. Natural gas output of ONGC fell 0.6% to 1.85 bcm, while that of private and JV companies declined 20.8% to 0.58 bcm. Meanwhile, the natural gas production of Oil India rose 0.6% to 0.24 bcm in August 2016.

Natural gas output declined 4.2% to 13.12 bcm in April-August 2016 over April-August 2015.

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Indias crude oil refinery production rises 2.5% in August 2016
Sep 22,2016

Indias crude oil refinery output increased 2.5% to 19.75 mt in August 2016 over August 2015. The output of public sector refineries improved 4.2% to 10.21 mt, while the output of private refineries also rose 0.8% to 8.09 mt. The refinery output of public-private JV refiners moved up 1.0% to 1.45 mt in August 2016.

Among public refineries, the output of Chennai Petroleum Corporation jumped 87.8% to 0.92 mt, while the output of Bharat Petroleum Corporation moved up 6.1% to 2.06 mt, and Indian Oil Corporation 4.7% to 4.63 mt in August 2016 over August 2015. The output of Mangalore Refineries also inched up 2.4% to 1.26 mt, but that of Numaligarh Refineries declined 12.4% to 0.23 mt, and Hindustan Petroleum Corporation 23.7% to 1.12 mt in August 2016.

Among private refiners, the output of Reliance Petroleum increased 0.7% to 6.39 mt, while that of Essar Oil improved 1.5% to 1.70 mt in August 2016 over August 2015. Among JV refineries, the output of Bharat Oman declined 0.6% to 0.57 mt, while the output of HPCL Mittal rose 2.0% to 0.88 mt in August 2015.

The cumulative refinery output increased 7.3% to 99.17 mt in April-August 2016. The output of public refineries increased 10.3% to 52.95 mt, while that of private refineries rose 3.7% to 39.31 mt. The refinery output of JV refineries moved up 6.0% to 6.91 mt in April-August 2016.

Among public refineries, the output of Numaligarh Refineries improved 27.8% , Indian Oil Corporation 14.2% , Hindustan Petroleum Corporation 12.4% , Chennai Petroleum Corporation 12.3% , Bharat Petroleum Corporation 3.6% and Mangalore Refineries 0.5% .

The overall capacity utilization was lower at 103.4% in August 2016 compared with 107.7% in August 2015, while it was higher at 105.5% in April-August 2016 compared with 105.2% in April-August 2015.

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Indias crude oil production declines 3.9% in August 2016
Sep 22,2016

Indias crude oil production declined 3.9% to 3.07 million tonnes (mt) in August 2016 over August 2015. Crude oil output of ONGC fell 3.3% to 1.87 mt, while that of Oil India also declined 1.4% to 0.27 mt. Further, the crude oil production of private and joint venture (JV) companies dipped 5.8% to 0.93 mt. ONGCs offshore output declined 5.3% to 1.36 mt, while onshore production rose at 2.5% to 0.50 mt.

Crude oil output fell 3.1% to 15.15 mt in April-August period of the fiscal year ending August 2017 (April-August 2016), snapping marginal 0.5% rise recorded in the corresponding period of last year. Output of ONGC eased 1.7% to 9.23 mt, while that of Oil India declined 3.3% to 1.34 mt and private companies fell 5.9% to 4.58 mt in April-August 2016 over April-August 2015.

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Government announces enhanced support under Merchandise Exports from India Scheme (MEIS) of the Foreign Trade Policy
Sep 22,2016

In the backdrop of the continued challenging global environment being faced by Indian exporters, Department of Commerce has extended support to certain new products and enhanced the rate of incentives for certain other specified products under the Merchandise Exports from India Scheme (MEIS). This has been implemented through DGFT public Notice No 32 dated 22 September 2016.

The following are the major highlights of the support:-

Addition of new products -

2901 additional products falling under different product categories have been added. These include items in the following areas:

Many items of traditional medicines like Ashwagandha herbs and its extracts, other herbs, extracts of different items.

Certain marine products, sea feed items.

Onion dried, processed cereal products and other value added items of plastics, lather articles, suitcases etc

Industrial products under different categories, including engineering goods, fabrics, garments, chemicals, ceramics, glass products, leather goods, newspapers, periodicals, silk items, made ups, wool products, tubes, pipes etc.

Increase in MEIS rates -

Rates of 575 product items falling under 11 products categories have been increased. These product include products of iron and steel, handicrafts, moulded and extruded goods, rubber, ceramic, glass, auto tyres and tubes, industrial machinery engineering items, IC Engines, machine tools / parts, items of wood, paper, stationary, footwear, auto seats, steel furniture, prefabs, items under the category of butter, ghee and cheese, dried egg albumin and rubber products

With this the total number of items covered under the scheme has been increased from 5012 to 7103. The total support extended by Government of India under the scheme has been enhanced from the present Rs 22,000 crore to Rs 23,500 crore per annum.

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Tyre Sector Volumes to Grow Around 7% in FY17
Sep 22,2016

India Ratings and Research (Ind-Ra) expects the overall tyre volumes (in numbers) to grow around 7% in the FY17 (FY16 Ind-Ra estimates: around 4%) due to a steady demand from original equipment manufacturers (OEMs) and an improvement in replacement demand. However, revenue growth for sector companies might be lower than the overall growth in volume demand due to an increase in imports as well as pricing pressure.

Among the key segments, volumes in the truck & bus segment (T&B) are expected to grow around 4% yoy (FY16: around 1%) in FY17, driven by an improvement in replacement demand and strong growth in the T&B radial segment, while volumes in the passenger car radial segment are expected to grow around 10% yoy (FY16: around 8%) with growth in OEM auto volumes. Two-wheeler volumes are expected to grow around 6% yoy (FY16: around 4%) in FY17, driven by higher volume growth in the scooter segment (around 15%) along with an improvement in volumes in the motorcycle segment (around 3%). Ind-Ra expects volumes in the truck & bus radial segment to grow around 16% higher than the overall T&B segment. The growth in tonnage volume would be lower due to a higher contribution of low tonnage two-wheeler tyres (around 50%) to the overall volumes for the industry.

Rising imports trend could continue increasing the pressure on the volumes of domestic manufacturers in FY17. Import volumes in both passenger car radial and truck & bus radial segments grew 22% and 40% yoy, respectively, in 1QFY17. The T&B segment accounts for around 55% of the industry revenue and a continued increase in imports in this segment could lead to a revenue decline for domestic tyre companies. Domestic T&B production declined 2% yoy in FY16 to 16.8 million tyres, driven primarily by the decline in production in the truck & bus bias (TBB) segment. Ind-n++Ras analysis indicates that 20%n++30% of the revenue of the top players in the industry is contributed by the TBB segment. Increased radialisation due to lown++-cost imports could lead to these companies seeing a rapid volume and revenue decline in this segment. Lower capacity utilisation of the existing domestic TBB capacity could exacerbate the pricing pressures in the segment.

The revenue growth of major tyre manufacturers is likely to be in the range of 3%-6% (FY16: below negative 2.5% to positive 2.5%) in FY17, with higher volume growth negating the year-on-year decline in pricing. Companies could see a moderation in EBITDA margins, due to the recent increase in input costs as well as pricing pressures. EBITDA margins reached historical peak levels in FY16. The recent increase in rubber prices is likely to impact the profitability of tyre companies on a quarterly basis. But, the trend of increase in prices is unlikely to be sustained and prices will stabilise at the current levels due to the prevailing rubber demand-supply dynamics. Crude oil prices have also increased from the low levels seen in February 2016, but are unlikely to increase further. Thus, tyre companies will not face increased input pressure over the next 12 months. Marginal deterioration in the credit profile is likely for some companies undertaking capex.

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SBI index shows decline in growth in September 2016
Sep 22,2016

The yearly SBI Composite Index for September 2016 is indicating a downward momentum and is at 50.2 (Low Growth), compared to last months 52.7 (Moderate Growth), and above the benchmark level of 50. The Monthly Index declined to 50.8 (Low Growth) in September 2016 from 49.9 (Low Decline) in August 2016.

The credit off-take (YoY) is at 9.8% in 02 September 2016, in single digit.

The bad thing is that Debt Weighted Credit Ratio worsens in FY2016 (All Rating Agencies) - the ratio declined below 1 in FY2016 - from 1.24 to 0.79 in FY2016. Hopefully, there should be a medium term course correction.

The SBI Economic Research Department expect that the credit cycle will turn for the better in a gradual manner. The good thing is that a part of the slowdown in corporate credit growth in the current fiscal is because of deleveraging by corporates and subsequent repayments. Retail credit growth continues to be strong. Additionally, about 48% of the credit upgrades in H2FY2016 was due to better order book / healthy demand, improvement in profit margins and efficient management of working capital.

Overall, demand still remain a significant laggard in the system. With the pay commission arrears implemented from August 2016, bank deposits have shown a sizeable growth in September (over 20% of the incremental addition in current fiscal is attributable to such). This will lead to increased consumer demand ahead of festive season. The SBI Economic Research Department is penciling in a 50 bp rate cut by RBI MPC in current fiscal.

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FM: Infrastructure is key to growth of economy
Sep 22,2016

The Union Finance Minister Shri Arun Jaitley said that infrastructure is key to growth of economy. Shri Jaitley said that an institutionalized forum amongst BRICS countries could serve as a regional knowledge hub with exchange of information facilitated through cloud sharing, and other electronic methods. Shri Jaitley said that projects in transportation sector like Highways, Ports and Railways will be area of mega economic activities as far as infrastructure sector in India is concerned. The Finance Ministery Shri Jaitley further said that investment, both from public and private sector, will be required for infrasturucture financing, especially in areas of health, education, sanitation, renewable energy, highways, ports and railways among others. The Finance Minister was delivering the Inaugural Address after inaugurating the BRICS India 2016 seminar on n++BRICS Seminar on Best Practices in Public Private Partnerships (PPPs) and Long-term Infrastructure Financingn++ in the national capital here today.

The Union Finance Minister Shri Arun Jaitley outlined the strategy the Government has adopted to boost the Indian Economy like Make in India, 100 smart cities, and liberalised FDI regime. He said that the Government gives high priority to Infrastructure and have taken a number of policy decisions like NIIF, Innovative new financial instruments such as REITS, INVITS, IDFs. He stressed the need for BRICS member countries to share their experiences in financing and delivery of infra projects so that they can collectively move to higher quality and efficiency in the delivery of public services.

Secretary, Department of Economic Affairs, Shri Shaktikanta Das said that infrastructure financing, especially in clearly demarketed projects is the need of the hour. He said that National Investment and Infrastructure Fund (NIIF) will play a pivotal role especially in infrastructure financing of projects in areas of ports, highways and railways in particular. The Seminar brought together experts from BRICS countries in the field of infrastructure development and financing and PPPs for exchange of best practices, experiences and expertise. The technical sessions covered the areas of Regulatory Issues and Financing of Infrastructure; Innovative Investment Vehicles for Long-Term Infrastructure Investment, PPP Project Delivery and Post award Contract management. Government is also proposing Public Contracts (Resolution of Disputes) Bill, Guidelines for remediating PPP Contracts, New Credit Rating system, Credit Enhancement for Infrastructure projects etc.

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Cauvery Water Management Board ideal for dispute resolution: Central Water Commission
Sep 22,2016

Setting up a Cauvery Water Management Board (CWMB) is the most ideal solution to settle the on-going Cauvery water conflict as per the directions of the Supreme Court, chairman of the Central Water Commission (CWC), Mr G.S. Jha said at an ASSOCHAM event held in New Delhi today.

n++The Cauvery Water Management Board is to be set up within four weeks time with representatives both from Karnataka and Tamil Nadu,n++ said Mr Jha while addressing an ASSOCHAM conference on Governance framework for harmonising water-energy usage.

Highlighting the importance of water storage, he said n++We cannot think of bringing security unless we are able to create storage and then release water as per the requirement.n++

He added that farmers are not getting commensurate benefit on investments made in the water sector. n++Benefits have to be really translated in to the tangible benefits which are to be accrued to the farmers as individual farmers fields are not able to receive water.n++

There is a need to empower, train and tell the farmers that application of more water is not going to yield more production, rather it will make their fields water-logged.

Earlier in his address at the ASSOCHAM event, Mr S.D. Dubey, chairman, Central Electricity Authority (CEA) said that it will be bringing out the National Electricity Plan by the end of this month.

n++We have already submitted it to the Power ministry in September, it is a perspective plan in terms of power transmission, distribution and generation for upcoming period,n++ said Mr Dubey.

n++Once it is approved by the ministry, then we can come out with certain figures pertaining to the same,n++ he added.

n++We would be putting it in the public domain to invite comments from the public,n++ further said the CEA chairman.

While addressing the conference, Mr Sunil Kanoria, president, ASSOCHAM said n++Parallel to power, water should be priced. Reasonable pricing strategy can help curb wastage. Technology intervention is required for optimizing usage of water in thermal power plants, efficient ground water based irrigation, recycling and conservation of water and rainwater harvesting.n++

n++Flood control strategies also need to include the use of smart geo-spatial techniques for flood forecasting and construction and strengthening of embankments at critical locations,n++ said Mr Kanoria.

n++Water is national priority. It would be pertinent to interlink rivers to ensure availability of water in drought prone, rain-fed regions,n++ he added.

n++A beginning can be made at intra-state level e.g. Bihar and Madhya Pradesh or Ganga-Cauvery linking through canals. Loss of water could be checked by deploying solar panels for achieving energy security in parallel to addressing water related issue,n++ further said the ASSOCHAM chief.

He also said that no real estate builder should be given permission unless there is provision for group water storage, rain water harvesting and treatment and recycling of waste water for secondary use. n++Industry licence should also be subject to mandatory provision for treatment and recycling of waste water.n++

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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