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Emerging market outlook stabilizes, while political risks take center stage
Aug 24,2016

Over the last year, many of the risks to global growth that we had identified in our previous outlooks have materialized, with Brexit being the latest, said Moods in Global Macro Outlook 2016-17. The global economy experienced steep reductions in commodity prices associated with a slowdown in Chinas economy and severe terms of trade shocks to commodity-exporting countries. Global financial market volatility intensified in late 2015 and early this year on concerns regarding Chinas growth trajectory, as well as the pace of US monetary policy normalization. Going forward, these challenges remain and financial markets volatility can easily re-emerge.

Looking ahead, growth in emerging market economies will stabilize, although there is substantial differentiation between countries

We have revised our growth forecast for G20 emerging markets up by 0.2 percentage points, to 4.4% for 2016 and 5.0% for 2017. The revisions are mainly driven by faster easing of the contractions in Russia and Brazil, against lower growth in Turkey and South Africa and somewhat higher growth in China. We now expect Chinas economy to grow at the rate of 6.6% and 6.3% in 2016 and 2017 respectively, compared to 6.3% and 6.1% previously, driven by significant fiscal and monetary policy support. Medium-term downside risks to Chinas growth outlook persist, especially if the reduced efficacy of policy support over time becomes apparent. We dont expect material implications for other countries, as Chinas imports continue to fall. Headwinds to emerging markets have moderated, driven by the economic stabilization in China, the modest recovery in commodity prices, and the return of capital flows; however, we expect the US Federal Reserve to resume its interest rate tightening cycle at the end of this year.

Growth in advanced economies will remain stable at low levels

We expect G20 advanced economies to grow at 1.6% for 2016 and 1.9% for 2017, compared to 1.9% in 2015. We have revised up Japans growth forecast to 0.7% and 0.9% in 2016 and 2017, from 0.4% previously for both years, to incorporate the impact of the recent fiscal stimulus and expectations of further monetary policy easing. We have revised our GDP growth estimate for the US down to 1.7%, from 2.0%, for 2016 to reflect the lower advanced estimates of second quarter growth. Our 2017 US growth forecast remains unchanged at 2.3%. In our July post-Brexit update, we already revised our forecasts for the UK, the euro area, Germany, France and Italy.1 Our baseline real GDP growth expectation for the UK is 1.5% in 2016 and 1.2% in 2017. We expect limited Brexit-related spillovers to the euro area but some deterioration due to country-specific developments and maintain our euro area forecast at 1.5% and 1.3% for 2016 and 2017.

There are a number of downside risks to the global economic outlook, the most immediate being associated with the US presidential election in November. A change in US policy stance that contributes to a weakening of the current global trade and security architecture could have a detrimental impact on global confidence and growth, and would prompt us to revise our forecasts. EU political contagion represents the greatest risk to otherwise muted global impact from Brexit. Uncertainty surrounding Chinas growth path, the future path of US interest rates, the sustainability of the recent inflows of capital to emerging markets, the rise in emerging market corporate sector leverage, and other political risks remains. Constrained monetary and fiscal policy space limit the ability of policymakers to provide support if downside risks were to materialize.

Global Synthesis

There are six main themes that inform our outlook for the remainder of 2016 and 2017.

1. Advanced economies are growing close to historically low potential growth rates due to a mix of demand and supply factors, including public and private deleveraging, deficient demand, slow productivity gains and aging populations. Persistently low inflation rates and inflation expectations continue to defy central bank objectives. Limited effective policy space constrains policymakers from stimulating nominal demand.

2. Economic growth in the euro area as a whole remains stable, although structural factors deter improvements in some of the countries, especially France and Italy. While monetary policy is expected to remain supportive, its effectiveness is limited due to the structural constraints.

3. Given the stability and strength of the US economy, the normalization of monetary policy is expected to resume at the end of this year. However, we expect the tightening cycle to be gradual in keeping with the cautious approach demonstrated by the members of the FOMC so far.

4. With Chinas economy significantly supported by fiscal and monetary policy, slowdown and rebalancing is likely to be gradual. Thus we do not expect China to exert a significant drag on global growth prospects over the rest of 2016 and 2017.

5. Stabilization of commodity prices, especially non-oil commodities, from the lows reached in January has provided relief to commodity-exporting economies. However, we expect limited upside to commodity prices from here.

6. External conditions have become more favorable for emerging market countries since March given the expectation of stable growth in China, more stable commodity prices and the delay in the normalization of US interest rates. But there is substantial differentiation in the fundamentals of individual emerging market economies. Their ability to weather external headwinds during the early phase of the Federal Reserves interest rate tightening cycle in 2017 is material to the assessment of their economic outlooks. Our growth expectations for India, Indonesia, Korea and Saudi Arabia are unchanged from our previous outlook publication in May.

There are a number of downside risks to the baseline outlook. These include:

The risk to the global financial sector from heightened volatility and possibly synchronous re-pricing of assets including equities, bonds and currencies when US interest rate normalization process resumes.

Downside risks to growth from strong reversals of capital flows in emerging market countries that have external imbalances and open capital markets. This could be triggered for instance when US interest rates begin to rise. Countries carrying foreign currency denominated debt on public or private sector balance sheets are especially vulnerable in case of a sharp currency depreciation.

Medium-term risk of a marked deterioration related to the Chinese economy and its financial sector, given the evidence that the most recent rounds of policy stimulus have become less effective.

The political and geopolitical risks of a rise in nationalist and protectionist pressures. The most immediate risk in this context is an outcome in the upcoming US presidential elections that ushers in an administration that would renegotiate global trade pacts and security alliances. We believe that such a development would harm confidence and global growth. In Europe, with a busy election calendar over the coming two years, we see a potential risk that the European Union fragments further, with global consequences. Geopolitical risks, especially from a potential diplomatic or military flare-up over the sovereignty over the South China sea, or renewed tensions in the Korean peninsula could have a regional impact in Asia, as well as globally.

Our Global Macro Outlook underpins our universe of ratings, providing a consistent benchmark for analysts and investors. This report is an update to our May 2016 Global Macro Outlook. It reviews recent key developments, provides an update on our central forecasts for 2016-17, and discusses the main risks around our forecasts. We present our central scenario in Exhibit 1 and highlight the following factors:

We express our forecasts for annual GDP growth and unemployment as a

SIT recommendation to ban cash transactions above Rs 3 lakh under consideration: CBDT chief
Aug 24,2016

The government is considering the recommendation of Special Investigation Team (SIT) on black money to ban cash transactions above Rs three lakh, a top Finance Ministry official said at an ASSOCHAM.

n++The SIT recommendations are under consideration. As far as the Income Tax Department is concerned, we have put a one per cent TCS (Tax Collected at Source) on cash transactions, we have made PAN quoting mandatory, all these aspects are also part of the SIT recommendation to stop the use of cash in the economy, Rs three lakh and above is under consideration,n++ said Ms Rani Singh Nair, chairperson, Central Board of Direct Taxes (CBDT) while inaugurating an ASSOCHAM International Tax Conference.

She also informed that the government is holding discussions for the renegotiated India-Singapore tax treaty.

n++So now that we have renegotiated Mauritius, Singapore is under discussion. We are discussing it, we hope we will soon have a discussion with them as this is a bilateral treaty, so we have to take the concerns of both the countries and then we will sign,n++ said Ms Nair.

She said that during the course of past two years, endeavour of the government and the CBDT has been to facilitate investments into India to ensure that the taxpayer pays his taxes with the ease of doing business because ultimately the tax coffers will never be full if there is no business in India.

n++For the last two years we have believed that participating in rule-making, law-making will help in making more robust tax laws and with this idea we have every time put all our major initiatives in the public domain and after seeing what people have said, we have even proposed amendments to facilitate the business. This change of thinking, this proactive approach has gone down very well both internally in the country and I can say that this is the way to move forward,n++ said Ms Nair.

She also said that role of the tax administration is not only limited to tax and it is also to listen and to guide the taxpayer and see that the advice given is correct.

n++I have also felt that for international business, for foreigners who are coming to invest in India, we should have a kind of a guide available on the internet, in the market which tells step-by-step what are the tax laws, tax procedures and the way to go forward in doing business in India,n++ said the CBDT chairperson.

n++I have had a lot of interactions with foreign business, with associations who have come to meet me in my stint in the CBDT and they all feel that they are adrift in India because there is not one place that they can go to and get advice and then they can digest that advice and take their own decisions,n++ she said.

n++If we have to make India a place to do business, we have to have this kind of facility not only in the government but in the private space also, where any business which is coming to India comes with a lot of confidence, that the advise they get is complete and comprehensive. I think when we talk of international taxation, this is the one aspect that we need to focus on and we need to see that India becomes a favoured place of doing business,n++ further said Ms Nair.

On the issue of advancing the date of general budget presentation to January, she said that it will bring in more efficiency in the budget making as two-three months of the financial year will not be lost in the budget process.

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BRICS Disaster Risk Reduction meet adopts Udaipur Declaration
Aug 24,2016

A two-day meeting of BRICS Ministers on Disaster Management ended in Udaipur, Rajasthan today with the adoption of the Udaipur Declaration. The meeting laid bare the common thread of challenges on disaster issues faced by all the BRICS nations.

The Minister of State for Home Affairs, Shri Kiren Rijiju termed the meeting as a new milestone in collaboration and cooperation among BRICS countries in the field of disaster management. He said that the Udaipur meeting has successfully adopted the Udaipur Declaration whereby we have resolved to set up a dedicated Joint Task Force for Disaster Risk Management for regular dialogue, exchange, mutual support and collaboration among BRICS Countries.

The roadmap for implementation of the three-year Joint Action Plan (JAP) for BRICS emergency services (2016-18) was also finalised. The JAP was agreed upon at the first meeting of BRICS Ministers for Disaster Management at St. Petersburg in Russia earlier this year. Shri Rijiju said that this meeting has agreed on a road map for implementation of the Joint Action Plan where all of us have resolved to work together on exchange of Information/ experiences on disaster management, research & technology exchange on forecasting and early warning for floods and extreme weather events and capacity building of stakeholders for disaster management.

A technical session on Disaster risk in a changing climate was held today. The session focused on emerging disaster risks as a result of climate change and evolving practices in the area of Disaster Risk Management. It began with a presentation followed by discussions on the implications of changing climate on disaster risk.

BRICS nations have made a clear move from relief-centric to a holistic approach to disasters with a greater emphasis on prevention, mitigation and preparedness. This highlights the importance of forecasting and early warning systems to help authorities in alerting the communities as well as responding swiftly to a situation. The meeting discussed the advances in technology and knowledge sharing amongst member countries to enable them leverage it to reduce disaster risk.

Summing up the takeaways from the meeting, Shri R.K. Jain, Member, National Disaster Management Authority, said that it came out clearly during the meeting that all member countries face similar challenges. Mainstreaming of disaster risk reduction, use of advanced technology in providing early warning, need for adequate funding to deal with rehabilitation and reconstruction after a disaster and the impact of climate change on disasters are common challenges faced by all of us. The deliberations have been very useful and we got an opportunity to learn about the disaster management structure, system and processes followed in other BRICS countries.

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DBTL (PAHAL) Mechanism made it possible to block 3.34 crore duplicate / fake / inactive domestic LPG connections. Estimated savings due to blocking of
Aug 23,2016

Ministry of Petroleum & Natural Gas has come across several news items appearing in various newspapers about the CAG report stating that direct LPG subsidy savings was less than the Governments claim.

In this regard, it is clarified that an intensive exercise was carried out for identifying duplicate/fake/ghost/inactive domestic LPG connections and, as of 01.04.2015, 3.34 Crore such connections were identified by the Oil Marketing Companies (OMCs). As a result of implementation of DBTL (PAHAL) mechanism, it became possible to block these 3.34 Crore LPG connections as the subsidy was transferred in the accounts of only those consumers who had registered under PAHAL and who have been cleared after de-duplication exercise. Before DBTL, all or many of these 3.34 crore consumers would have continued to purchase subsidized cylinders from the distributors. But for the blocking of these accounts, the subsidy bill would have been much higher despite fall in crude oil prices.

Estimated Savings from the above efforts are calculated as follows:

For the financial year (FY) 2014-15, for 3.34 crore consumers outside the PAHAL net, the Estimated savings would be 3.34 crore x 12 cylinders x Rs.369.72 (average Subsidy/cylinder for FY 2014-15) equal to Rs.14,818.4 crore. Following a similar principle, the Savings estimated for FY 2015-16 is Rs.6,443 crore and the total for both the years works out to Rs. 21,261 crores.

FINANCIAL YEARAverage Subsidy per Cylinder (for that year)CALCULATIONSEstimated Savings (in crores of rupees)2014-15Rs. 369.723.34 * 369.72 * 1214,818.42015-16Rs. 150.823.56 * 150.82 * 126,443TOTAL21,261.4

The total consumption of cooking gas in any given year is a combination of the number of connections at the beginning of the year, bogus connections eliminated during the year through the process of DBT under PAHAL, new connections issued to genuine consumers during the year and normal fluctuations in individual consumption. Hence, the saving from implementation of DBT cannot be correctly computed merely by reference to the total consumption in a year or the total expenditure on subsidy. If the DBT had not been implemented, the outgo on the subsidy would have been higher by Rs. 14,818 crore in 2014-15 and Rs. 6,443 crore in 2015-16. Hence the total savings from the elimination of fake/duplicate/ghost connection as a result of implementation of DBT for the two years together, as calculated above, is estimated at more than Rs. 21,000 crore. Since fake/duplicate/ghost connections are mostly used for diversion, hence it is assumed that the full entitlement would have been utilised. This figure is not comparable with the actual expenditure on subsidy which includes the subsidy on new genuine connections given during these two years. Without implementation of PAHAL, subsidy burden would have been higher than the actual expenditure recorded during these years, even with lower petroleum prices.

Furthermore, it should be noted that concrete evidence of successful elimination of bogus connections is seen in the phenomenal growth of non-subsidized commercial LPG sales which have registered an increase of 39.3% in the period April 2015 to March 2016. This is in contrast to the pre-PAHAL experience when commercial sales growth was negligible or declining.

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Jawaharlal Nehru Port Trust Signs Agreement for ECB worth $400 Million with State Bank of India and Development Bank of Singapore
Aug 23,2016

Indias premier container port, Jawaharlal Nehru Port Trust in Navi Mumbai, has signed an agreement with State Bank of India and Development Bank of Singapore for External Commercial Borrowing (ECB) to the tune of USD 400 Million at a n++very competitiven++ interest rate to improve the infrastructure required for n++doublingn++ its existing capacity to 9.85 Million TEUs annually. JNPT has US Dollar denominated foreign currency earnings which can be leveraged for a low cost foreign currency borrowing. The ECB of USD 400 Million (USD300 Million from the SBI & USD100 Million from DBS) will be primarily utilised by JNPT for expanding the network of roads that connect to its port projects. The existing road network for evacuation of traffic is currently operated at a capacity utilisation of 100%, and the expansion is needed for quicker and more efficient evacuation of traffic.

The agreement with the SBI and Development Bank of Singapore was signed by the JNPT Chairman Anil Diggikar in the presence of Minister for Shipping, Road Transport & Highways Shri. Nitin Gadkari after the Reserve Bank of India granted approval to JNPT for raising USD 400 Million with an end use of on-lending to Mumbai JNPT Port Road Company (MJPRCL) for implementation of road project. The Ministry of Shipping has already granted its approval as required under the Major Port Trusts Act,1963.

Speaking on the occasion, Shri Gadkari said that JNPT is the first major port in the country to have taken loans in dollars. This was possible because ports have a natural hedge in foreign currency earnings. He also said that the rate of the ECB loan of 2.025% plus Libor USD 6M (approx 3.15%) is cheaper than Indian currency loan. He said the funding by JNPT is the first of its kind for major port and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their requirements.

Borrowing by JNPT is for Door-to- Door tenor of 7.5 years. However, lending by JNPT to MJPRCL is for 16 years (two years construction and 14 years repayment). The funding process involved assessment and structuring of cash-flows (both at JNPT level and MJPRCL level), bid process management, engagement of domestic and foreign lenders. The project will be developed by Mumbai JNPT Port Road Company (MJPRCL), a joint venture company of NHAI, JNPT and CIDCO at a total estimated cost of Rs. 2895 crore. Considering the importance and urgency of implementation of the project, it will be taken up by MJPRCL on EPC mode and funding for the project would be carried out by JNPT.

The project will primarily benefit and cater to the needs of JNPT. JNPT is going to double its capacity in the next seven years. This project will cater to the additional cargo which will be handled at the 4th Container Terminal. An improved connectivity is essential for traffic evacuation from JNPT. This evacuation corridor would help in supporting the EXIM trade besides providing economic opportunity to the local people and people from the region. The project is of great significance to JNPT and will give a boost to the countrys economy.

Port projects, including connectivity projects, are critical to developing cargo handling capacity. With the thrust on port led development under the Sagarmala programme, improving viability of projects is critical. One of the primary factors that impacts viability is the interest rate on borrowings to fund projects. While Ports have surplus funds, they also need to borrow to achieve a quantum jump in the investment. Minister of Shipping and Road Transport & Highways Shri Nitin Gadkari had suggested an innovative means of raising low-cost external commercial borrowings, particularly when the port had revenues in foreign exchange, which provided a natural hedge to the ports. This would substantially eliminate the requirement of hedging the forex risk and would reduce the cost of borrowing. This suggestion was followed up by Ports and JNPT became the first Major Port to finalise the terms of external commercial borrowing. With this beginning, other Major ports would also adopt similar means to improve their capability to invest. The step is another milestone in infusing dynamism into the functioning of the ports, both in their operations and financing.

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Government planning to set up Indian Council for Fertilizers Research
Aug 23,2016

The Union Minister of Chemicals & Fertilizers and Parliamentary Affairs Shri Ananth Kumar has advocated a n++3 An++ approach towards fertilizers in the country, these being authenticity (Quality), availability and affordability. Inaugurating a Conference of Officers of State Agriculture Departments handling fertilizers in New Delhi today, Sh. Ananth Kumar said that the ultimate aim of the Government should be to provide last mile timely availability of quality fertilizers at affordable rates to the farmers. This, he said, would ensure the fertilizers security of the country which is essential for the food security.

Sh. Ananth Kumar said that till two years back, there used to be shortage of urea, leading to its hoarding, black-marketing and smuggling. He congratulated the Indian Fertilizer manufacturers for running the plants at over 100 per cent capacity and achieving an all time record of 245 lakh MT urea production last year. The Minister said that the timely imports, pre-positioning of the fertilizers, contribution of the States in timely distribution, and cooperation of the Railways through Good Rake Movement also helped in making the fertilizer position comfortable in the country.

Sh. Ananth Kumar asked the State Government officials to enforce quality checks on the fertilizers, undertake district level planning for supply of fertilizers, ensure early turnaround of rakes, provide adequate storage facilities, and take benefit of pre-positioning. He called upon the States to initiate a drive against those who indulge in hoarding, black-marketing, diversion and smuggling of fertilizers. He also said that the unethical practices of the retailers/companies to tag certain items for selling to farmers along with the required fertilizers, should be discouraged. The Minister also emphasized on the issue of soil security and ways to compost initiative. He said the Government is reviving the sick fertilizer PSU and the basic principle of producing where it is being consumed.

Sh. Ananth Kumar said that the Government is soon planning to set up Indian Council for Fertilizers Research, on the lines of ICMR and ICAR. He said research is very much required to discover and develop various means and ways of producing quality fertilizers, fortified fertilizers, hybrid fertilizers, nutrients and various combinations which are good for the soil. He said research has a role to play in the all aspects of the fertilizer chain which includes production, transportation, storage, availability, application, etc.

The Minister of State for Chemicals and Fertilizers, and Road Transport, Highways and Shipping Sh. Mansukh L Mandaviya said that Prime Minister has given a call to double the income of farmers and the Department is working on this direction by reducing their input costs. He said that poor farmers are often misguided by certain vested interest and it is essential to launch a campaign to inform them about the best practices, balanced and optimum use of fertilizers. He said that recently the Government announced reduction in non-urea fertilizers and the farmers should be made aware about this. He called upon the States to work in tandem with the Central Government for the welfare of the farmers.

The Conference of Principal Secretaries/Secretaries/Directors dealing with the Agriculture Departments in the State/UTs is the first such initiative of the Department of Fertilizers. The Central and the State Government officials dealing with the various aspects of fertilizers discussed various issues concerning the sector including availability and supply of fertilizers, implementation of Direct Benefit Transfer Scheme, fertilization and neem-coating of urea, quality control of fertilizers, issues in Fertilizer Monitoring System and promotion of city compost.

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India and Germany join hands on skill agenda Germany Contributes Rs 22.6 crore for Skill Development in India
Aug 23,2016

India and Germany are deepening their collaboration in the area of skill development. An implementation agreement was signed between the Ministry of Skill Development and Entrepreneurship (MSDE) and (German International Cooperation (GIZ), to initiate a new project focused on adapting elements of the German dual system in select industrial clusters in India.

This new project will run for three years starting August 2016 with a budget of EUR 3,000,000 (22.6 Crores INR) - made available by the German Government and aims to foster conditions which will help create and improve cooperative workplace-based vocational training in Indias industrial clusters. The project will be implemented in three selected clusters, which include the Automobile cluster in Maharashtra and Electronics cluster in Bangalore.

German technical assistance will be used to enhance industry institute partnerships between Indian and German organizations, build capacity of local training institutions and foster industry linkages which will help adapt elements of the German dual system, into the Indian context. This new project will also play an important role in supporting MSDEs existing programmes to scale up apprenticeship training.

The project will be implemented under the umbrella of the Joint Memorandum of Understanding (MoU) in the field of Skill Development and Vocational Education and Training (VET), signed during the Indo- German intergovernmental consultations on 5th October 2015 in New Delhi.

The Joint Working Group, under the MoU held its first meeting on 26 July 2016, in New Delhi. At the meeting, the two countries agreed to deepen their collaboration in a number of specific areas including: curriculum development, research and sharing of best practices, training of trainers, and establishing cooperative workplace based skill training programmes in three industrial clusters.

Commenting on the Indo-German partnership in the area of skill development, Shri Rajiv Pratap Rudy, Union Minister of State (I/C) for Skill Development and Entrepreneurship said, n++We in India recognize the fact that Germanys dual system is widely acclaimed as one of the best in the world, noted for its close linkages between industry and training institutions. This provides a competitive edge to German industry and businesses. We need to adapt elements of the German VET system to the Indian context to ensure that skill training in India is closely aligned with the requirements of industry.n++

n++Germany has been one of countries which is on top of the manufacturing and innovation pyramid and continues to develop most high end products. It has some of the best working models in sustainable workforce development which is the reason for the countrys economic progress. This partnership with Germany will help strengthen our skill development initiatives. The recent budget allocations that have been made for promoting apprenticeship programs in the country will help our plans see daylightn++ said Shri Rohit Nandan, Secretary, Ministry of Skill Development and Entrepreneurship.

n++Germany is known for its excellent vocational education system that relies on the strong participation and engagement of the private sector. Having a very long standing partnership with India, Germany is pleased to support the n++Skill Indian++ and n++Make in Indian++ initiatives with a new bilateral programme on vocational education and training. Herein, the engagement of private enterprises, including German firms, as carriers for skill development will be crucial for the successn++, said German Ambassador to India, Dr Martin Ney, during an official signing ceremony for the launch of a new bilateral partner programme at the Ministry of Skill Development and Entrepreneurship (MSDE).

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Union Home Minister Shri Rajnath Singh assures NSG of upgrading their infrastructure and training needs
Aug 23,2016

Union Home Minister Shri Rajnath Singh has assured the National Security Guard (NSG) of upgrading their infrastructure and training needs. Shri Rajnath Singh also stressed upon the NSG to conduct regular exercises with counterpart forces from friendly countries. Pointing out that such exercises will help the NSG soldiers hone their skills, the Home Minister said that today no developed country can claim immunity from terrorist strikes. All progressive societies have to stand up against terrorism, he added.

Underlining that the people of India have reposed faith in the NSG as the elite anti-terrorist force, Shri Rajnath Singh said that even during the attack on the Pathankot airbase in January, 2016, the security forces prevented any damage to vital strategic assets and installations.

Noting that 19 NSG personnel have laid down their lives in the service of the nation since the force was set up in 1984, the Union Home Minister called upon the NSG to bring out illustrated booklets containing biographies of the NSG martyrs as an inspiration for the youth. The NSG must commemorate the martyrdom day of the forces martyrs with at least one NSG Officer visiting their families and organising programmes at their homes by involving the community. Shri Rajnath Singh also assured that to consider instituting more medals for the NSG personnel.

Earlier, Director General, NSG Shri RC Tayal said that all State Police Forces have now set up their specialized Counter-Terrorism Units. The NSG conducts regular exercises with them, he added.

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The main cause of water scarcity in country is consecutive failure of monsoon, resulting low storages in dams
Aug 23,2016

The report of on the Spot Study of Water Situation in Drought Affected Areas of the country (2015-16) has recommended construction of water harvesting structures, mass awareness among citizen for water conservation, construction of new water storage structures, interlinking of rivers, renovation and repair of existing water bodies as some of the important measures to meet the challenges of overall water scarcity scenario in the country. The study was carried out by Central Water Commission under the Ministry of Water Resources, River Development and Ganga Rejuvenation. Various long/short term measures (being taken up and to be taken up) to mitigate water scarcity situation have also been recommended which are region/area/state specific.

In some areas like Marathwada of Maharashtra, Bundelkhand of UP and MP interlinking projects have been recommended. Water budgeting and planning the cropping patterns for the oncoming agricultural season(s), the strategy for avoiding water intensive crops to the extent in consultation with the relevant expert departments are also crucial for checking such situation. Micro irrigation (sprinkler and drip) should be adopted to achieve more crops per drop.

The study says that at almost all places minimum domestic water requirements are being met through importing water from other regions, if required; by digging local deep bore wells and also by tankers. Ground water levels have been reported as falling in almost all regions of the country due to over exploitations and inadequate recharging mechanism for ground water. However, no specific observation on water quality has been reported at most of the areas except in Gujarat, where problem of salinity in coastal areas has been reported.

According to the report, the water scarcity situation is prevailing in the country, but some pockets like Marathwada in Maharashtra, Bundelkhand in U.P. and MP, Telangana and Andhra Pradesh are more affected by water scarcity situation. The main cause of water scarcity in country is consecutive failure of monsoon, resulting low storages in dams, during last two years. Rainfall deficit in country as a whole during 2015 was 14% and in 2014 it was 12%. Earlier, year 2012 was also a rainfall deficit year with 11% deficit. Consecutive less rainfall also resulted less carryover storage in reservoirs.

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Mineral Production during June 2016 was 4.7% higher as compared to June 2015
Aug 23,2016

The index of mineral production of mining and quarrying sector for the month of June (new Series 2004-05=100) 2016 at 127.3, was 4.7% higher as compared to June 2015. The cumulative growth for the period April- June 2016-17 over the corresponding period of previous year stands at (+) 2.3%.

The total value of mineral production (excluding atomic & minor minerals) in the country during June 2016 was Rs. 18344 crore. The contribution of Coal was the highest at Rs. 7171 crore (39%). Next in the order of importance were: Petroleum (crude) Rs. 5393 crore, Natural gas (utilized) Rs. 2077 crore, Iron ore Rs. 1802 crore, Limestone Rs. 584 crore and Lignite Rs.517 crore. These six minerals together contributed about 96% of the total value of mineral production in June 2016.

Production level of important minerals in June 2016 were: Coal 517 lakh tonnes, Lignite 37 lakh tonnes, Natural gas (utilized) 2511 million cu. m., Petroleum (crude) 30 lakh tonnes, Bauxite 2177 thousand tonnes, Chromite 297 thousand tonnes, Copper conc. 10 thousand tonnes, Gold 114 kg., Iron ore 150 lakh tonnes, Lead conc. 17 thousand tonnes, Manganese ore 179 thousand tonnes, Zinc conc. 73 thousand tonnes, Apatite & Phosphorite 54 thousand tonnes, Limestone 274 lakh tonnes, Magnesite 23 thousand tonnes and Diamond 2932 carat.

The production of important minerals showing positive growth during June 2016 over June 2015 include Iron ore (42.6%), Bauxite (35.5%), Chromite (34.9%), Gold (14.0%), Coal (11.4%), Diamond (9.5%), Limestone (7.6%) and Magnesite (0.7%). The production of other important minerals showing negative growth are: Apatite & Phosphorite [(-) 80.7%], Zinc conc. [(-) 44.2%], Lead conc. [(-) 17.8%], Petroleum (crude) [(-) 4.3%], Natural gas (utilized) [(-) 3.9%], Lignite [(-) 3.6%], Manganese ore [(-) 3.0%] and Copper conc. [(-) 2.7%].

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Gartner Says Five of Top 10 Worldwide Mobile Phone Vendors Increased Sales in Second Quarter of 2016
Aug 23,2016

Global Sales of Smartphones Grew 4.3 Percent Year on Year

Global sales of smartphones to end users totaled 344 million units in the second quarter of 2016, a 4.3 percent increase over the same period in 2015, according to Gartner, Inc. Overall sales of mobile phones contracted by 0.5 percent with only five vendors from the top 10 showing growth. Among them were four Chinese manufacturers (Huawei, Oppo, Xiaomi and BBK Communication Equipment) and South Koreas Samsung.

Demand for premium smartphones slowed in the second quarter of 2016 as consumers wait for new hardware launches in the second half of the year, said Anshul Gupta, research director at Gartner. In addition, the decline in sales of feature phones (down 14 per cent) bolstered the decline in overall sales of mobile phones in the second quarter of 2016 (see Table 1).

All mature markets except Japan saw slowing demand for smartphones leading to a decline in sales of 4.9 percent. In contrast, all emerging regions except Latin America saw growth, which led to smartphone sales growing by 9.9 percent.

Table 1

Worldwide Smartphone Sales to End Users by Vendor in 2Q16 (Thousands of Units)

Company2Q16
Units
2Q16 Market Share (%)2Q15
Units
2Q15 Market Share (%)Samsung76,743.522.372,072.521.8Apple44,395.012.948,085.514.6Huawei30,670.78.926,454.48.0Oppo18,489.65.48,073.82.4Xiaomi15,530.74.515,464.54.7Others158,530.346.0160,162.148.5Total344,359.7100.0330,312.9100.0

Source: Gartner (August 2016)

In the second quarter of 2016, Samsung had nearly 10 percent more market share than Apple. Samsung saw sales of its Galaxy A and Galaxy J series smartphones compete strongly with Chinese manufacturers. Its new smartphone portfolio also helped Samsung win back share it recently lost in emerging markets.

Apple continued its downward trend with a decline of 7.7 percent in the second quarter of 2016. Apple sales declined in North America (its biggest market) as well as in Western Europe. However, it witnessed its worst sales decline in Greater China and mature Asia/Pacific regions, where sales declined 26 percent. Apple had its best performance in Eurasia, Sub-Saharan Africa and Eastern Europe regions in the second quarter of 2016, where iPhone sales grew more than 95 percent year on year.

Among the top five smartphone vendors, Oppo exhibited the highest growth in the second quarter of 2016 at 129 percent. This is due to strong sales of its R9 handset in China and overseas.

Features such as an anti-shake camera optimized for selfies, and rapid charge technology, helped Oppo carve a niche market for itself and boost sales in a highly competitive and commoditized smartphone market, said Mr. Gupta.

In terms of the smartphone operating system (OS) market, Android regained share over iOSto achieve an 86 percent share (see Table 2) in the second quarter of 2016. Androids performance continued to come from demand for mid- to lower-end smartphones from emerging markets, but also from premium smartphones, which recorded a 6.5 percent increase in the second quarter of 2016.

A number of key Android players, such as Samsung with the Galaxy S7, introduced their new high-end devices, but Chinese brands like Huawei and Oppo are also pushing their premium smartphone ranges with more affordable devices.

Google is evolving the Android platform fast, which allows Android players to remain at the cutting edge of smartphone technology, said Roberta Cozza, research director at Gartner. Facing a highly commoditized smartphone market, Googles focus is to further expand and diversify the Android platform with additional functionalities, like virtual reality, enabling more-intelligent experiences and reach into wearables, connected home devices, in-car entertainment and TV.

Table 2

Worldwide Smartphone Sales to End Users by Operating System in 2Q16 (Thousands of Units) 

Operating System2Q16
Units
2Q16 Market Share (%)2Q15
Units
2Q15 Market Share (%)Android296,912.886.2271,647.082.2iOS44,395.012.948,085.514.6Windows1,971.00.68,198.22.5Blackberry400.40.11,153.20.3Others680.60.21,229.00.4Total344,359.7100.0330,312.9100.0

Source: Gartner (August 2016)

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Economy in Motion, But Slow Investment Recovery is Hindering Growth Acceleration
Aug 23,2016

India Ratings and Research (Ind-Ra) has revised its gross domestic product (GDP) growth forecast for FY17 upwards to 7.8% from its earlier forecast of 7.7% (FY16: 7.6%, FY15: 7.2%). The upward revision has been prompted by the progress of monsoon and the sowing of kharif crops so far. With the exception of East and Northeast, the rainfall in other regions of the country has been more than long period average.

With a favourable monsoon so far, Ind-Ra expects rural demand to recover in FY17. This coupled with urban demand, which will be aided the Seventh Central Pay Commission payout, will give a fillip to the consumption demand in the economy. Ind-Ra expects consumption demand to grow at 8.4% in FY17. However, industrial growth at 7.2% in FY17 will still be lower than the 7.4% witnessed in FY16.

The key factor that is holding the acceleration of industrial growth is investment recovery. The incumbent government has taken several initiatives. For example, to encourage manufacturing activity there has been a concerted focus on improving the ease of doing business through programmes such as Make in India, Start Up India etc. Similarly, to address the power sector woes, it has introduced the Ujwal DISCOM Assurance Yojana (UDAY) scheme and to address the woes of other sectors such as metals, mining, road and oil & gas etc. it has introduced debt restructuring schemes. However, all this has failed to rekindle the animal spirit in the economy so far.

In fact, the debt-fuelled investment boom that began during FY10-FY11 has taken a heavy toll on the financial health of both corporates and banking sector. As a result, both are repairing their balance sheets. Another factor that is holding up investments is low capacity utilisation rates in a number of manufacturing sectors due to both tepid domestic demand and global overcapacity in sectors such as steel, tyre etc.

Ind-Ra expects the Wholesale Price Index and Consumer Price Index based inflation to come in at 3.3% and 5.0%, respectively, in FY17 (FY16: negative 2.5% and 5.0%). With food inflation surprising on the upside and households expecting inflation to rise in the near term, the window for further rate cuts by the Reserve Bank of India (RBI) is shrinking. The real risk-free interest rate which had inched up to 4% in July-August 2015 is now down to 1.7%.

Despite a bit rusty fiscal arithmetic, Ind-Ra expects that the union government will still be able to achieve its fiscal deficit to the GDP target of 3.5% in FY17. Ind-Ra further expects FY17 to be the fourth consecutive year of comfortable current account deficit (CAD) deficit at USD29.0bn (1.3% of GDP). Ind-Ra believes that the export and import trends will not change during the remaining months of this fiscal due to the lack of global demand and soft commodity prices coupled with tepid domestic investment demand. A robust foreign capital inflow is expected to add nearly USD17bn to the forex reserve in FY17. Yet, Ind-Ra expects average INR/USD to be 67.79 in FY17 due to active RBI intervention in the forex market.

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Jawaharlal Nehru Port Trust to sign agreement with bankers for External Commercial Borrowing
Aug 23,2016

Port projects, including connectivity projects, are critical to developing cargo handling capacity at Ports. With the thrust on port led development under the Sagarmala program, improving viability of projects is critical. One of the primary factors that impacts viability is the interest rate on borrowings to fund projects. Ports have surplus funds, but to achieve a quantum jump in the investment, borrowings would also have to be made by ports. Minister of Shipping and Road Transport & Highways Shri Nitin Gadkari, had suggested an innovative means of raising low-cost external commercial borrowings, particularly when the port had revenues in foreign exchange, which provided a natural hedge to the ports. This would substantially eliminate the requirement of hedging the forex risk and would reduce the cost of borrowing. This suggestion was followed up by Ports. JNPT is the first Major Port to finalise the terms of external commercial borrowing.

Considering the need of the JNPT to cater to the increase in traffic, Shri Nitin Gadkari realised the criticality of project implementation especially for NPTs cargo evacuation requirements and in a review meeting in July 2014, it was decided that the project for conversion of the existing road connectivity to 6/8 laning of NH-4B, SH-54 and Amra Marg on the boundaries of proposed Navi Mumbai International Airport in the state of Maharashtra, would be undertaken on EPC basis. Substantial investment would be required for this project, and cheaper funds would add to the viability of the project, reduce costs for end-users, and also ad to the profitability of JNPT.

In line with Prime Minister Narendra Modis port-led development programme, Indias premier container port, Jawaharlal Nehru Port in Navi Mumbai, has signed an agreement with State Bank of India and Development Bank of Singapore for External Commercial Borrowing to the tune of USD 400 Million at a n++very competitiven++ interest rate to improve the infrastructure required for n++doublingn++ its existing capacity to 9.85 Million TEUs annually.

The ECB of USD 400 Million ( USD300 Million from the SBI & USD100 from DBS) will be primarily utilised by the JNPT, which has US Dollar denominated foreign currency earnings which can be leveraged for a low cost foreign currency borrowing, for expansion of its existing roads network connecting to its port project as the existing road network for evacuation of traffic is currently operated at a capacity utilisation of 100%.

The agreement with the SBI & DBS was signed by the JNPT Chairman Anil Diggikar in the presence of the Shipping Secretary Rajive Kumar after the Reserve bank of India granted approval to JNPT for raising USD400 Million with an end use of on-lending to Mumbai JNPT Port Road Company Limited (MJPRCL) for implementation of road project. The ministry of shipping has already granted its approval as required under the Major Port Trusts Act, 1963. The two parties will exchange the documents today.

Borrowing by JNPT is for Door-to-Door tenor of 7.5 years. However, lending by JNPT to MJPRCL is for 16 years (two years construction and 14 years repayment).

The funding process involved assessment and structuring of cash-flows (both at JNPT level and MJPRCL level), bid process management, engagement of domestic and foreign lenders.

Project will be developed by Mumbai JNPT Port Road Company (MJPRCL), a joint venture company of NHAI, JNPT and CIDCO at a total estimated cost of Rs. 2895 crore. Considering the importance and urgency of implementation of the project, it will be taken up by MJPRCL on EPC mode and funding for the project would be carried out by JNPT.

The rate of ECB loan of 2.025% plus Libor USD6M ( approx 3.15%) which is cheaper than any other Indian currency loan.

The funding by JNPT is the first of its kind for major port and it opens up one more avenue for major and government ports to raise funds by accessing international markets for their requirements.

The project will primarily benefit and cater to the needs of JNPT and an improved connectivity is essential for traffic evaluation from JNPT. It is of great significance to JNPT and will give a boost to the countrys economy.

This project will cater to the additional cargo which will be handled at the 4th Container Terminal. JNPT is going to double its capacity in the next seven years. This evacuation corridor would help in supporting the EXIM trade besides providing economic opportunity to the local and region.

With this beginning, other Major ports would also adopt these means and improve their capability to invest. The step is another milestone in infusing dynamism into the functioning of the ports, both in their operations and financing.

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Shipping Ministry seeks 5% of Central Road Fund for development of Waterways
Aug 23,2016

The Shipping Ministry has mooted a proposal to utilize part of the fuel cess collected for building national highways for expansion of National Waterways as well. Speaking at the Infrastructure Session of the Indo-American Chamber of Commerces Annual Convention in Mumbai today, Union Minister for Shipping, Road Transport & Highways, Nitin Gadkari said his Ministry has sent a proposal seeking allocation of 5% of the Central Road Fund for development of Inland Waterways. n++My Ministry has prepared the proposal, but the final decision will be taken by the Ministry of Finance. I am pursuing the mattern++ Mr. Gadkari added.

Central Road Fund is a non-lapsable fund created under the Central Road Fund Act 2000 out of a cess imposed on petrol and high-speed diesel. The funds are meant to be used to develop and maintain national highways, state roads and railway over and under bridges. The move to seek a pie in the CRF follows governments ambitious plan to tap Indias vast network of rivers and canals stretching 14,500 kms for moving goods.

Mr. Gadkari said n++It is far more cheaper to transport goods by water as compared to road or rail. n++Currently cargo movement along the five existing national waterways is paltry 3% of all cargo movement in India. We want to raise the share of waterways in overall cargo movements to 15%n++ he said.

Earlier last week, the Shipping Minister Mr. Nitin Gadkari flagged off a cargo vessel carrying 200 Maruti cars from Varanasi to Kolkata as part of a pilot run. The Government has commissioned the Jal Marg Vikas project with the technical and financial support of the World Bank to augment capacity of River Ganga from Varanasi to Haldia. The Rs 4,200 crore project, when completed in six years, will facilitate movement of up to 2000 tonne vessels.

Under the National Waterways Act 2016, 111 inland waterways have been declared as National Waterways. Out of these, Allahabad-Haldia Ganga Waterway (NW1), Brahmaputra (NW2), West Coast Canal in Kerala (NW3), Mandovi river in Goa (NW 68), Sundarbans Waterway in West Bengal (NW97) and Zurari River (NW 111) are presently operational. Six more waterways are likely to be commissioned during this financial year.

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Delhi Poised to get New Air Force Aerospace Museum
Aug 23,2016

Delhi will soon have a sprawling new Aerospace Museum close to the international airport focused mainly on Nations rich aviation history. New Aerospace Museum is not only meant to preserve the glorious tradition of the IAF but also to create awareness in general public about Indias rich Aerospace heritage.

The IAF believes that the Museum would be a popular tourist attraction and a landmark in Indias capital city. A proposal for new Air Force Aerospace Museum was cleared by Ministry of Defence and final financial sanction on the Detailed Project Report is awaited. After the approval, the new museum would be ready for the tourists within 3-5 years.

Spread over 43 acres, the new Aerospace Museum would have extensive indoor and outdoor displays including huge aircraft parked and hanging in flying attitude with mural depicting the golden era. A dedicated childrens area would be part of the museum where children could enter cockpits of displayed aircraft and get the feel of flying controls. A video arcade would also be created. As per the plan, the internal displays would have a history section in which all IAF Squadrons history would be displayed along with aviation legends, major campaigns and wars fought by the IAF. Along with this history, major Humanitarian Assistance and Disaster Relief operations undertaken by the IAF would also be highlighted.

The IAF presently has a museum near the technical area of Air Force Station Palam, which was established in 1967. The museum has an average footfall of 500 tourists daily and exhibits details about combat operations undertaken by the IAF depicting IAFs rich history since its formation in 1932 to present date, along with the display of various aircraft and equipment on the IAFs inventory, since its inception.

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