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Cabinet approves Bilateral Investment Treaty between India and Cambodia to boost investment
Jul 28,2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved Bilateral Investment Treaty (BIT) between India and Cambodia.

The Treaty seeks to promote and protect investments from either country in the territory of the other country with the objective of increasing bilateral investment flows. The Treaty encourages each country to create favourable conditions for investors of the other country to make investments in its territory and to admit investments in accordance with its laws.

The Treaty is the first Bilateral Investment Treaty in accordance with the text of the Indian Model BIT, approved by the Cabinet in December, 2015.

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Cabinet approves Policy for award of Waterfront and associated land to port dependent industries in major ports
Jul 28,2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the Policy for award of waterfront and associated land to port dependent industries in major ports and its operationalization.

The Policy will result in uniformity and transparency in the procedure for awarding captive facilities. It will enable optimal utilization of capacities in major ports and increase revenue to the Major Port Authority. The ambit of the Policy includes creation of new assets as well as utilization of currently unutilised existing assets such as vacant berths. The Policy will be applicable to all the Major Ports.

Under the Policy, concession will be granted to Port Dependent Industries (PDI) for setting up dedicated facilities in Major Ports for import and/or export of cargo and their storage before transportation to their destination, for a period not exceeding 30 years. Extension of concession period on conditions including under utilization of asset as per the Concession Agreement may be allowed.

After a maximum of 30 years of operation, the waterfront and associated land in a Major Port will be allotted for construction of berths, offshore anchorages, transhipment jetties, single point moorings etc. It will be as per the terms and conditions of the Concession Agreement (CA) to be entered into between the Port Authority and the PDI concerned.

Under the existing guidelines for private sector participation in Major Ports issued by the Ministry of Shipping (MoS) in 1996 and 1998, provisions have been made for allotment of waterfront and land on a captive basis to Port Based Industries including Central/State Public Sector Undertakings (PSUs) which fulfil the prescribed eligibility criteria. Though, some berths and facilities have been set up in some Major Ports following these Guidelines, the potential for development of such facilities is not yet fully realized.

Government of India has focused on Port led development through the Sagarmala program as a key enabler for economic growth. Optimal utilization of land and waterfront at the disposal of the Major Ports is of critical importance in this context. The objective of this Policy is to ensure uniformity and transparency in the procedure for awarding captive facilities. The policy will help generate committed business for the Major Ports on a long term basis by facilitating the development and operation of dedicated port facilities by industries which are substantially dependent on a particular Major Port for import and/or export of their cargo and thus play a catalytic role in the eventual realization of the objectives of Port led development.

Background:

The Government of India is committed to improving the level and quality of physical and social infrastructure in the country of its goal of achieving national economic prosperity. In pursuance of this goal, the Government has envisaged a substantial role for Public Private Partnerships (PPPs) as a means for harnessing private sector investment and operational efficiencies in the provision of public utilities and services. Allocation of waterfront and associated land to Port based Industries on PPP/captive basis is one of the areas which have been identified for participation/investment by the private sector in Major Ports.

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Cabinet approves abolition of Separate Guidelines for establishing Joint Venture Companies by Defence PSUs
Jul 28,2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved abolition of existing Guidelines for establishing Joint Venture Companies by Defence Public Sector Undertakings (DPSUs). These guidelines which were notified in February, 2012 will not be required for separate JV by the DPSUs. The Guidelines issued by the Department of Public Enterprises (DPE) and Ministry of Finance (MoF) from time to time, which are uniformly applicable to all Central Public Sector Enterprises (CPSEs) will be applicable for the DPSUs to set up JV companies now. This will meet the goal of indigenization / self-reliance in this sector.

The abolition of the existing JV Guidelines will provide a level playing field between DPSUs and the private sector. It will allow DPSUs to forge partnerships in an innovative manner enhancing self-reliance in defence and provide for enhanced accountability / autonomy of DPSUs in ensuring that the process of JV formation is effectively managed by them, so as to secure best outcomes in the interest of national security.

All nine DPSUs i.e. Mazagon Dock Limited, Goa Shipyard Limited, Garden Reach Shipbuilders & Engineers Limited, Hindustan Shipyard Limited, Bharat Electronics Limited, Hindustan Aeronautics Limited, Bharat Earth Movers Limited, Bharat Dynamics Limited and Mishra Dhatu Nigam Limited will be benefited through this decision.

The decision comes in the backdrop of the issues which emerged in the operationalisation of JV guidelines of DPSUs. The Department of Defence Production came to the conclusion that with the increasing participation of the private industry in defence sector and the transformation taking place in the defence acquisition eco system thereon, the requirement of having separate JV guidelines for DPSUs is no longer considered necessary. In the emerging scenario with primacy being accorded to indigenous manufacturing / Make in India, it is felt that having multiple set of guidelines may lead to ambiguity and incongruity in the environment.

Background:

Defence Production Policy promulgated in January 2011 with the objective of achieving substantive self-reliance in defence production including design and development capability had recommended that all viable approaches including JVs to be undertaken to achieve the desired self-reliance in defence production. Consequent to this, a need was felt to supplement the DPE guidelines with formulation of JV protocols / guidelines tailored for DPSUs which would address the specific requirements of the defence sector and also ensure that the interests of DPSUs were safeguarded. Accordingly the existing Guidelines for establishing Joint Venture Companies by DPSUs was approved by the Cabinet during the meeting held on 9th February, 2012 and the same was notified on 17th February, 2012. Now, the requirement for having separate JV Guidelines for DPSUs has been reviewed in the context of the increasing participation of the private industry in defence sector and the transformation taking place in the defence acquisition eco system.

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Cabinet increases the limit for foreign investment in Stock Exchanges from 5% to 15%
Jul 28,2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for raising foreign shareholding limit from 5% to 15% in Indian Stock Exchanges for a stock exchange, a depository, a banking company, an insurance company, a commodity derivative exchange. The Cabinet has also approved the proposal to allow foreign portfolio investors to acquire shares through initial allotment, besides secondary market, in the stock exchanges.

The move will help in enhancing global competitiveness of Indian stock exchanges by accelerating/facilitating the adoption of latest technology and global best practices which will lead to overall growth and development of the Indian Capital Market.

The approval is in pursuance of implementation of the Budget Announcement made by the Finance Minister Shri Arun Jaitley while presenting the Union Budget 2016-17 regarding reforms in FDI Policy with respect to enhancement of investment limit for foreign entities in Indian stock exchanges from 5% to 15% on par with domestic institutions.

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Cabinet approves rescinding the decision of the Government to set up the Concurrent Evaluation Office in Ministry of Rural Development
Jul 28,2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has decided to rescind the earlier decision of the Government to set up the Concurrent Evaluation Office (CEO) for managing Concurrent Evaluation Network (CENET) in Ministry of Rural Development. The CEO was envisaged to undertake concurrent evaluation of Rural Development programmes in conjunction with Independent Evaluation Office (IEO) of the erstwhile Planning Commission.

The decision will pave the way for a need based strengthening of the Economic and Monitoring Wing of the Ministry of Rural Development for managing and carrying out evaluation studies of Rural Development programmes.

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Rs. 2333 Crore sanctioned for projects under Swadesh Darshan and PRASAD in last 18 months
Jul 27,2016

The Ministry of Tourism, in last 18 months, has sanctioned projects worth Rs. 2333 Crore under Swadesh Darshan and PRASAD, the flagship schemes of the Ministry of Tourism. These projects envisage world class infrastructural development of the sites with special emphasis on Tourist Facilities including Tourist Facilitation Centres, way-side amenities Parking, Public convenience, Illumination, Sound and Light Shows and Theme Parks.

In the meeting of the National Steering Committee (NSC, the apex committee for steering these schemes) held yesterday under the Chairmanship of Dr. Mahesh Sharma, Minister of State (I/C) for Tourism and Culture, the status was reported by the Mission Directors of Swadesh Darshan and PRASAD Schemes. In his inaugural address Dr. Sharma stressed on the need of proper coordination / convergence of schemes with Central Ministries for proper development of Infrastructure in the country.

Speaking on occasion Union Tourism Secretary Shri Vinod Zutshi emphasized upon the need for proper Rail, Road & Air connectivity with places identified under various Circuits.

11 projects in Amravati, Kamakhya Temple, Patna Sahib, Patna,Vishnupad Gaya, Shri Jaggannath Puri, Amritsar,Ajmer-Pushkar,,Varanasi,Mathura-Vrindavan, Kedarnath Dham Uttarakhand for Rs.284.53 have been sanctioned so far under the PRASAD scheme. They include 2 Projects worth Rs.36.96 Crore approved for Varanasi River Cruise and Dwarka and 3 Projects viz Laser show on Ghats of Varanasi and projects of Kanchipuram, and Vellankanni .are under active consideration of the Ministry..

Thirteen themes tourist circuits of Buddhist Circuit, Ecotourism Circuit, Wild life, Himalayan, Spiritual, North East India, Tribal, Krishna, Rural, Coastal, Heritage , Desert, Ramayana have been identified to attract both domestic and international tourists having special interest of visiting such places. Swadesh Darshan is a Mission Mode project of Ministry of Tourism, Government of India.From January 2015 till date 25 projects for Rs. 2048 Cr. have been sanctioned. They include EcoTourism Circuit in states of Uttarkhand,Telangana,Kerala, Tribal Circuit in Nagaland, Chattisgarh, Telangana, Coastal Circuit in Andhra Pradesh, Odisha, Pudicherry,West Bengal, Maharashtra, Goa, Buddhist Circuit in Bihar and Madhya Pradesh, Himalayan Circuit in Jammu and Kashmir, Desert Circuit in Rajasthan, Wild Life Circuit in Madhya Pradesh & Assam and North East India Circuit in Arunachal, Sikkim, Manipur, Mizoram, Meghalaya, Tripura under Swadesh Darshan.

Five Pan India Mega Circuits have been also identified namely, Ramayana-Krishna- Buddhist Mega Circuit, Himalayan & Adventure, World Heritage, Coastal and Wild Life Circuit identified for development under Swadesh Darshan to showcase India as a Land of Buddha and destination for Spiritual and Religious Tourism.

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Leverage to Drive Two-Track Recovery in Corporates; Restrict Overall EBITDA Growth to Single Digits in FY17
Jul 27,2016

Leveraged borrowers are likely to report a higher degree of deterioration in financial performance than non-leveraged borrowers in the next 18 months, restricting the overall improvement in profitability to single digits in FY17 (FY16: 2% yoy, FY15: 8.6% yoy), says India Ratings and Research (Ind-Ra). This would be significantly below the 25% growth seen during FY11 when the last wave of investments was initiated.

Companies having strong cash flow generation ability and low debt levels are likely to benefit from a gradual revival in the economy as nominal gross domestic product (GDP) growth picks up during the course of FY17 (FY16 provisional: 8.7%). The agency believes FY17 growth would be supported largely by consumption demand especially urban consumption with improvement in rural consumption likely during 4Q assuming normal monsoons. Other pillars of growth such as private investment, exports and government expenditure are likely to remain marginal contributors in FY17 as highlighted in Ind-Ras Corporate Risk Radar Report.

On the other hand, corporates having weak credit profiles, significant leverage and low pricing power are likely to lose market share and show further deterioration or limited improvements in cash flow generation. As demand picks up, borrowing conditions would continue to be difficult for these corporates due to their stretched balance sheets especially given their sole reliance on Indian banks.

Ind-Ra analysed 366 of the 500 listed corporate borrowers (excluding banks and financial services, public sector units) in its reportRefinancing Risk: Top 500 Corporate Borrowers, dated 21 June 2016. 60% of the companies analysed showed a 20% yoy improvement in cumulative operating profitability in FY16 (median growth: 22.1%), while 40% posted a 25% yoy decline (median decline: 25%) with overall cumulative growth of 2% yoy. EBITDA margin remained stable at 14.6% in FY16 compared with 14.3% in FY15 on the back of flat top line growth (0.2% yoy) and lower input prices. As highlighted in the refinancing report, EBITDA of the entities in the high ease of refinancing and medium ease of refinancing categories grew at an average 13.3% and 10.5%, respectively, in FY16, while EBITDA of the entities in the elevated risk of refinancing category declined 5.1% yoy. Stressed corporates witnessed a decline of 8.1% yoy in EBITDA in FY16.

For FY17, Ind-Ra expects consumption-linked sectors to fare better than the investment-linked sectors as the latter would be affected by the issues of high leverage and continued low capacity utilisation amid improving-but-tepid demand conditions. Also, revenue in some of the investment-linked sectors could pick up in FY17 on the back of an improvement in demand and continuous spending by the government such as those in roads and railways through the engineering, procurement, and construction route. However, benefits of input cost would fade away keeping a check on profitability.

Eight sectors account for 75% of the total debt of 500 corporate borrowers. Of these, positive EBITDA growth for FY16 was reported in auto & automotive supplier (11%yoy), cement (9%), real estate (4%), telecom (7.5%), infrastructure and construction (20%) and power (23%). High growth in infrastructure in FY16 was driven by lower input prices. Power sector companies benefitted from an improved plant load factor on the back of an increase in coal supply by Coal India Limited. However, significant pressure on merchant prices and limited interest from the state electricity boards to sign new power purchase agreements could limit further improvements during FY17.

Sectors such as metal & mining and oil & gas reported an EBITDA decline of 21% and 13%, respectively, in FY16 due to a fall in crude and metal prices amid a slowing demand. Within these two sectors, the number of corporates which reported deterioration in the EBITDA levels was more than the number of corporates showing an improvement. Ind-Ra believes a combination of an improvement in commodity prices and operating leverage could provide some fillip to margins especially in sectors with high fixed costs. However, import threats would keep a lid on a significant improvement in capacity utilisations in FY17, impacting overall profitability growth for corporates.

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Negative Yields Globally Provide a Window of Opportunity for Blue chip Masala Bonds
Jul 27,2016

The uncertainty in global markets and the resultant flight to safety has resulted in USD11.7trn worth of negative yielding sovereign debt, leading to highly rated entities in India capitalising on this opportunity by tapping the masala bond market, says India Ratings & Research. Ind-Ra believes the cost (including withholding tax) economics for most entities lower down the credit curve and credit risk aversion in an uncertain time may keep overall issuer interest muted. The issuances at the higher end, will allow issuers to diversify their investor base and also provide investors a reasonable yield with the expectation of a relatively stable currency.

The global economy has been going through a rough patch since the 2008 global financial crisis. The incipient recovery however is now turning fragile due to Brexit - a geopolitical conundrum. This has however opened up opportunities for the global fixed income investors; the secular rally has now increasingly entering into an unchartered negative yield territory. Fitch estimates that the total sovereign debt trading at a negative yield stood at USD11.7trn as of 27 June 2016, up by USD1.3trn from the end of May. Fitch has highlighted the widespread adoption of unconventional monetary policies, including large-scale bond-buying programs and negative deposit rates, to have driven the large increases in negative-yielding debt seen this year. However, an increasing amount of long-term negative-yielding debt underscores the challenges faced by large bond investors, namely insurance companies that need to match their long-term liabilities with similar maturity assets.

This opens up opportunities for Indian corporates to tap a new spectrum of investors residing abroad. The Reserve Bank of India (RBI) introduced masala bonds in 2015. Ind-Ra highlighted in its report Ind-Ra: Indian Masala Bond Market May Take Time to Kickoff in October 2015, that RBIs efforts to operationalise the issuance of Indian rupee denominated off-shore bonds by Indian corporates will help to broaden the investor base without dollarisation of the corporates balance sheets, but may take time for lower rated corporates to reap the benefits.

The RBI in April 2016, enabled issuers to issue short term bonds by reducing the minimum tenure to three years compared to the initially allowed five years. This enables issuers to issue short term bonds to develop investor confidence, which may push up appetite for higher tenure issuances in the future, as investors are cautious about credit quality, coupled with higher duration. The RBI also fixed the ceiling for the borrowing limits by an entity in a financial year under the automatic route to INR50bn, with a provision of prior approval for higher issuances. Moreover the relatively stable Indian currency, on the back of the stable macroeconomic conditions has also led to higher investor appetite.

Indias largest housing finance company Housing Development Finance Corporation Limited (HDFC) is the first Indian entity to issue masala bonds and the issue received an encouraging response from investors. HDFC issued its 37 month maturity masala bonds, at a fixed semi-annual coupon of 7.87%, and the bond has been issued at a price of 99.24% of the par value and will be redeemed at par, this translates into 8.33% annualised return for the investor. The bond will be listed in the London Stock Exchange. Cost economics at present show that it is almost similar to domestic borrowing rates, since HDFC issued a three year domestic bond at a coupon of 8.38% subsequently.

The masala bond gained considerable interest in the primary markets, notwithstanding weak appetite for domestic corporate bonds by Foreign Portfolio Investors (FPI). The utilisation limit of FPI in corporate bonds has been hovering at around 66% (of the limit INR2.44trn), which has come down from 76% in October 2015. Masala Bond will also be an easier mode of investments by foreign investors not registered as FPIs in India. However for FPIs registered in India, the yield differential is unattractive for investments in the issuers domestic bond or masala bond. In view of Indias sovereign rating, Ind-Ra continues to expect the market for masala bonds to take some more time to develop. In this round of masala bond issuances we may see PSUs and quasi-sovereigns coming into the market to diversify. The feeble recovery in the global economy is likely to keep investor appetite muted for issuers with relatively lesser credence.

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The Automotive Mission Plan [AMP 2026] envisages creation of 65 million jobs
Jul 27,2016

The Automotive Mission Plan [AMP 2026] envisages creation of 65 million jobs.

The salient features of the Automotive Mission Plan 2016-26 [AMP 2026] are:-

i) The Indian Automotive industry to be a top job creator - 65 million additional jobs.

ii) The Indian Automotive industry to be the prime mover of Manufacturing sector and n++Make in Indian++ Programme.

iii) The Indian Automotive industry to aim at increasing exports of vehicles by 5 times and components by 7.5 times.

iv) For success of AMP 2026, there is a need of coordinated and stable policy regime for the automotive sector.

v) Specific interventions are envisaged to sustain and improve manufacturing competitiveness and to address challenges of environment and safety.

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Cochin Shipyard Signs MoU with Government of India
Jul 27,2016

Cochin Shipyard has signed a Memorandum of Understanding with the Government of India for the financial year 2016-17. The Memorandum of Understanding was signed by Shri Rajive Kumar, Secretary Shipping and Shri Madhu S Nair, Chairman & Managing Director, Cochin Shipyard.

The MoU broadly consists of the performance evaluation parameters and targets for Cochin Shipyard for the ensuing year. The MoU will be reviewed by the Ministry on a regular basis and the performance of PSU would be evaluated and ratings awarded at the end of the financial year. The targets agreed in the MoU are in line with the aggressive growth plans of CSL in line with the Ministry of Shippings ambitious plans and the Government of Indias Make in India policies.

CSL has posted an excellent performance during the last financial year, despite very difficult market conditions. In the year ended 31st March 2016, CSL has posted a record turnover of Rs.1995 crores (provisional) surpassing the MoU target for the year. This is an increase of 7.3% over the previous year. The provisional PBT and PAT figures are Rs. 424 crores and Rs. 275 crores respectively representing an increase of 15.4% and 17 % respectively over the previous year.

In 2015-16, CSL has won new building contracts for building 5 vessels. The contracts for two 1200 pax cum 1000 T Cargo Vessels and two 500 pax cum 150 T Cargo Vessels for the A&N Administration and one Technology Demonstration Vessel for Defence Research & Development Organisation are worth about 1675 Crores.

CSL is proceeding with two major expansion projects at a total cost of Rs.2800 Crores. An International Ship Repair Facility based on a 6000T shiplift and allied transfer facilities in approx 42 acres of land leased from Cochin Port Trust in Kochi is being setup. When commissioned, this facility will help the yard substantially increase its ship repair capacities and position Kochi as a major ship repair hub. A new Large Dry Dock of 310x 75/60 m size will be constructed within CSLs premises in Kochi, which will provide the yard the capability to build large modern vessels like LNG vessels, large aircraft carriers etc in addition to undertaking repairs/ construction of jack up rigs, semi submersibles etc. Government approval has been accorded for both the projects.

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Allowing 74 Per Cent FDI in Pharma Sector under automatic route
Jul 27,2016

FDI in Brownfield pharma sector has been permitted upto 74% under automatic route; and FDI beyond 74% and upto 100% is allowed under Government approval route. The move to permit 74% FDI under automatic route in Brownfield pharmaceutical sector is aimed at attracting required capital, international best practices and latest technologies in the sector. Further, 100% FDI under automatic route is permitted for Greenfield pharma sector.

The Government while reviewing FDI policy on pharma sector has put in place necessary safeguards by providing that non-compete clause would not be permitted. This will enable Indian promoters to operate in the same line of business in new ventures. Further, to ensure domestic availability of essential medicines and drugs; and to maintain deployment of adequate capital in R&D, extant FDI policy on the sector mandates specified level of production of National List of Essential Medicine drugs and extent of R&D expenditure to be maintained by the investee company.

Both Greenfield and Brownfield investments are in line with the initiative of Make in India and thus there is no proposal under consideration of Government to restrict such investments only to Greenfield project.

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Gartner Says Worldwide Security Software Market Grew 3.7 Percent in 2015
Jul 27,2016

Analysts to Focus on Top Security Trends at Gartner Security & Risk Management Summits 2016 in Sao Paulo, Sydney, Mumbai and London

Worldwide security software revenue totaled $22.1 billion in 2015, a 3.7 percent increase in from 2014, according to Gartner, Inc. (see Table 1). Security information and event management (SIEM) remained the fastest-growing segment in 2015, with 15.8 percent growth, while consumer security software showed the sharpest decline at 5.9 percent year on year.

In 2015, the top five vendors together accounted for 37.6 percent of the security software revenue market share, down 3.1 percentage points from 2014. These vendors also displayed a collective decline of 4.2 percent in 2015, while the rest of the market (Others) grew strongly at 9.2 percent year on year.

The below-market growth seen by these large vendors with complex product portfolios is in contrast to the market growth and disruption being introduced by smaller, more specialized security software vendors, said Sid Deshpande, principal research analyst at Gartner.

Table 1. Security Software Vendor Revenue, Worldwide 2014-2015 (Millions of Dollars)


Company2015 Revenue2015 Market Share (%)2014 Revenue2014-2015 Revenue Growth (%)Symantec3,35215.23,574-6.2Intel1,7517.91,825-4.1IBM1,4506.61,4152.5Trend Micro9904.51,052-5.9EMC7563.4798-5.3Others13,77362.412,6119.2Total22,071100.021,2763.7

Source: Gartner (July 2016)

Symantec maintained the No. 1 position despite the company suffering its third consecutive year of revenue decline and its highest decline in revenue over a three-year period. Its security software revenue declined 6.2 percent to $3.4 billion. In 2015, 74 percent of Symantecs revenue came from the consumer and endpoint protection platform (EPP) categories, which collectively declined 7 percent year on year and were a major contributor to Symantecs revenue decline.

Intels security software revenue also declined in 2015, with revenue falling 4.1 percent to $1.75 billion. Once again, the decline in the consumer and EPP markets, which accounted for 75 percent of Intels revenue in 2015, contributed in large part to Intels revenue decline. IBM was the only one of the top five vendors to show growth. IBMs security software revenue grew 2.5 percent to total $1.45 billion in 2015. IBMs growth was driven by its positive performance in the SIEM segment and its significant services business, which generates revenue for its product business.

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World Bank Raises 2016 Oil Price Forecast
Jul 27,2016

The World Bank is raising its 2016 forecast for crude oil prices to $43 per barrel from $41 per barrel due to supply outages and robust demand in the second quarter.

Oil prices jumped 37 percent in the second quarter of 2016 due to disruptions to supply, particularly wildfires in Canada and sabotage of oil infrastructure in Nigeria. The revised forecast appears in the World Banks latest Commodities Markets Outlook and takes into account a recent softening of demand and the recovery of some disrupted supply.

n++We expect slightly higher oil prices for the second half of 2016 as oil market oversupply diminishes,n++ said John Baffes, Senior Economist and lead author of the Commodities Markets Outlook. n++However, inventories remain very large and will take some time to be drawn down.n++

Despite the recovery of oil and many other commodity prices in the second quarter of 2016, most commodity indexes tracked by the World Bank are expected to decline this year. This trend is due to persistently elevated supplies, and in the case of industrial commodities - which include energy, metals, and agricultural raw materials -- weak growth prospects in emerging market and developing economies. However, most of the declines are projected to be smaller than expected in the April outlook.

Energy prices, which include oil, natural gas and coal, are due to fall 16.4 percent in 2016, a more gradual decline than the 19.3 percent drop anticipated in April. Non-energy commodities, such as metals and minerals, agriculture, and fertilizers, are expected to ease 3.7 percent this year, a more moderate contraction than the 5.1 percent retrenchment forecast in the previous outlook.

Metals prices are projected to fall 11 percent in the coming year, a sharper decline than the 8.2 percent drop forecast in April, reflecting weak demand prospects and new capacity coming on line. Agriculture prices are forecast to fall less than projected in April as a result of reduced harvests in South America and plateauing demand for biofuels.

Because energy constitutes more than 10 percent of the cost of agricultural production, movements in energy prices have been a major factor in the path of food prices, a special feature of the Commodity Markets Outlook says. Energy prices fell 45 percent in 2015 and are projected to drop again this year. About one-third of the likely 32 percent drop in prices of grain commodities and soybeans from 2011 through 2016 is due to energy price declines.

Lower energy prices have also eased pressures to produce biofuels as an alternative energy source. Biofuels production has been an important driver of demand growth for food commodities in the past decade.

n++Energy exporting emerging and developing economies have struggled to adjust to persistently low prices,n++ said Ayhan Kose, Director of the World Banks Development Prospects Group. n++Partly because of the strong linkages between energy prices and agricultural commodities prices, agricultural producers can expect lower prices in an era of depressed energy prices. Both energy and agricultural commodity exporting countries need to step up economic diversification efforts to bolster resilience to commodity price fluctuations.n++

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Treat HFCs at par with private banks & PFIs: ASSOCHAM plea to SEBI
Jul 27,2016

Apex industry body ASSOCHAM has sought respite for housing finance companies (HFCs) from markets regulator SEBI with a request to treat HFCs at par with private banks and public financial institutions (PFIs).

n++Debt investments in HFCs should be exempted from sectoral limits and securities issued under AAA rating for long-term instruments and A1+ for short-term instruments by HFCs should be treated on par with AAA rated securities and certificate of deposits issued by private banks,n++ urged ASSOCHAM in a communication addressed to the Securities Exchange Board of India (SEBI) chairman, Mr U.K. Sinha.

The ASSOCHAM has further suggested the capital markets regulator that mutual fund investments in AAA rated pass through certificates (PTCs) backed by mortgages should not be considered as exposure to the HFCs as these are serviced and secured by underlying pools of granular secured housing loans.

n++As specialist housing loan and mortgage financiers, HFCs are an important source of efficient finance for the housing sector with almost 40 per cent share in housing loan market share,n++ said Mr Sunil Kanoria, president, ASSOCHAM.

n++Besides, HFC loan books consist of granular housing loans to individuals backed by houses financed and thus represent one of the safest types of loans, evidently as the non-performing asset (NPA) levels of HFCs are far lower than public and private banks,n++ said Mr Kanoria.

Considering the governments thrust on finance sector together with crucial role of HFCs, it is surprising to note the SEBIs recent guidelines vis-n++-vis reducing the additional exposure limit provided to HFCs.

As such ASSOCHAM has urged the SEBI to consider the socio-economic importance of the housing sector and its role in furthering the union governments mission of Housing for All by 2022.

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Uma Bharti underlines the need for deciding the definition of surplus water of rivers
Jul 27,2016

Union Minister for Water Resources, River Development and Ganga Rejuvenation Sushri Uma Bharti has underlined the need for deciding the definition of n++Surplus watern++ of rivers once for all. Chairing the tenth meeting of the Special Committee for Inter-Linking of Rivers the Minister said that this issue has to be sorted out in consultations with the states. She said n++till this issue is decided the dispute about surplus water will continue to crop up time and againn++. The Minister said, for this we will require a detailed study of countrys agricultural land including irrigated land, non irrigated land, agricultural produce and their market. The Union Minister said her Ministry will take a final decision on this issue after detailed deliberation with the states. Sushri Bharti that a Jal Manthan (Seminar on water related issues) will also be held to deliberate on this issue. Stressing the need for speedy implementation of inter linking of river projects, the Water Resources Minister said n++I hope that National Water Devlopment Agency will work with more vigour and will complete the delayed inter linking projects in a time bound manner.n++

Addressing the meeting, the Water Resources Minister of Bihar Shri Rajiv Ranjan Singh raised the issue of flood in the rivers flowing into Bihar form Nepal. He said keeping this in view the issue of inter linking of rivers in the state should be taken up on priority. He also suggested that the projects with the potential to irrigate more than two lak hect. of land should be declared as National Project. The Water Resources Minister of Uttar Pradesh Shri Surendra Singh Patel argued for starting the work on Ken-Betwa link at the earliest. He wanted to know the total cost of the project and his states in share in the same.

Union Cabinet in its meeting held on July 24, 2014 approved the constitution of the Special Committee on ILR. Accordingly, Special Committee on ILR was constituted vide order dated September 23, 2014. The first meeting of the committee was held on October 17, 2014 and its last meeting was held on April 29, 2016. The committee, after considering the views of all the stakeholders, is proceeding ahead to expedite the objectives of the interlinking of rivers as per terms of reference. Vigorous efforts have been made for generating consensus with development of alternative plans and also setting out road maps for implementation of projects.

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