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Global economic landscape shifting in the second half of 2016
Jan 17,2017

An accumulation of recent data suggests that the global economic landscape started to shift in the second half of 2016, says IMF in its latest update to the World Economic Outlook. Developments since last summer indicate somewhat greater growth momentum coming into the new year in a number of important economies. International Monetary Fund (IMF) earlier projection, that world growth will pick up from last years lackluster pace in 2017 and 2018, therefore looks increasingly likely to be realized. At the same time, we see a wider dispersion of risks to this short-term forecast, with those risks still tilted to the downside. Uncertainty has risen, says the report.

Our central projection is that global growth will rise to a rate of 3.4 percent in 2017 and 3.6 percent in 2018, from a 2016 rate of 3.1 percent. Much of the better growth performance we expect this year and next stems from improvements in some large emerging market and low income economies that in 2016 were exceptionally stressed. That being said, compared to our view in October, we now think that more of the lift will come from better prospects in the United States, China, Europe, and Japan.

A faster pace of expansion would be especially welcome this year: global growth in 2016 was the weakest since 2008-09, owing to a challenging first half marked initially by turmoil in world financial markets. General improvement got under way around mid-year. For example, broad indicators of manufacturing activity in emerging and advanced economies have been in expansionary territory and rising since early summer. In many countries, previous downward pressures on headline inflation weakened, in part owing to firming commodity prices.

A significant repricing of assets followed the U.S. presidential election. Its most notable elements were a sharp increase in U.S. longer-term interest rates, equity market appreciation and higher long-term inflation expectations in advanced economies, and sharp movements in opposite directions of the dollarn++upn++and the yenn++down. At the same time, emerging market equity markets broadly retreated as currencies weakened.

Of course, asset markets adjust not just to unexpected current events, but to shifting expectations of future events. Most commentators have interpreted the post-election moves as predicting that U.S. fiscal policy will turn more expansionary and require a swifter pace of interest rate increases by the Federal Reserve. Markets have noted that the White House and Congress are in the hands of the same party for the first time in six years, and that change points to lower tax rates and possibly higher infrastructure and defense spending.

In light of the U.S. economys momentum coming into 2017, and the likely shift in policy mix, we have moderately raised our two-year projections for U.S. growth. At this early stage, however, the specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the Federal deficit, and the dollar.

There is thus a wider than usual range of upside and downside risks to this forecast. A sustained non-inflationary growth increase, marked by higher labor force participation and significant expansion of the U.S. capital stock and infrastructure, would allow a more moderate pace of interest rate increases in line with the Federal Reserves price stability mandate.

On the downside, if a fiscally-driven demand increase collides with more rigid capacity constraints, a steeper path for interest rates will be necessary to contain inflation, the dollar will appreciate sharply, real growth will be lower, budget pressure will increase, and the U.S. current account deficit will widen.

This last scenario, one with a widening of global imbalances, intensifies the risk of protectionist measures and retaliatory responses. It would also imply a faster than expected tightening of global financial conditions, with resulting possible stress on many emerging market and some low-income economies. Some emerging and especially low-income commodity exporters could benefit from higher export prices, but importers would then lose. The details of the U.S. policy mix matter; and as these become clearer, we will adjust our forecast and spillover assessment.

Among emerging economies, China remains a major driver of world economic developments. Our China growth upgrade for 2017 is a key factor underpinning the coming years expected faster global recovery. This change reflects an expectation of continuing policy support; but a sharp or disruptive slowdown in the future remains a risk given continuing rapid credit expansion, impaired corporate debts, and persistent government support for inefficient state-owned firms.

At the global level, other vulnerabilities include higher popular antipathy toward trade, immigration, and multilateral engagement in the United States and Europe; widespread high levels of public and private debt; ongoing climate changen++which especially affects low-income countries; and, in a number of advanced countries, continuing slow growth and deflationary pressures. In Europe, Britains terms of exit from the European Union remain unsettled and the upcoming national electoral calendar is crowded, with possibilities of adverse economic repercussions, in the short and longer terms.

We continue to recommend a three-pronged policy approach relying on fiscal and structural policies alongside monetary policy, but one that is tailored to country circumstances.

Some advanced economies are now operating at close to full capacity, for example, Germany and the United States. In these, fiscal policy should focus, not on short-term demand support, but on increasing potential output through investments in needed infrastructure and skills, as well as supply-friendly, equitable tax reform. Policymakers in these economies should also turn their attention to longer-term fiscal sustainability, while monetary policy can follow a data-dependent normalizing path.

Structural reform remains a priority everywhere in view of continuing tepid productivity growth, although in many cases appropriate fiscal support can raise the effectiveness of reforms without worsening governments fiscal positions.

Financial resilience is another universal priority and requires stronger financial regulatory frameworks, better focused on key problem areas. Countries can do much on their own to improve financial oversight and institutions, but not everything, and continuing multilateral financial regulatory cooperation is vital.

Social dislocation due to globalization and, even more, to technology change is a major challenge that will only intensify in the future. One result has been wider inequality and wage stagnation in many countries. Rolling back economic integration, however, would impose aggregate economic costs without reducing the need for government investment in well-trained, nimble workforces, along with policies to promote better matching of available jobs to skills.

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Fitch Rates State Bank of Indias Proposed Senior Debt BBB-(EXP)
Jan 17,2017

Fitch Ratings has assigned State Bank of Indias (SBI, BBB-/Stable) proposed senior unsecured debt an expected rating of BBB-(EXP).

The notes will constitute direct, unconditional, unsubordinated and unsecured obligations of the issuer. They will at all times rank pari passu among themselves and with all other unsubordinated and unsecured obligations of SBI.

The tenor of the issue is expected to be around five years and the notes are to be issued by SBIs London branch.

The final rating is subject to the receipt of final documentation conforming to information already received.

KEY RATING DRIVERS - SENIOR DEBT

The senior unsecured instruments are rated at the same level as the banks Issuer Default Rating (IDR), in accordance with Fitchs criteria.

SBIs IDR is driven by its Support Rating Floor (SRF) of BBB-, which is at the same level as its Viability Rating (VR) of bbb-, implying that the banks standalone credit strength also underpins the IDR. The SRF reflects Fitchs expectation of a high probability of extraordinary support from the government of India, if necessary, given the banks very high systemic importance and quasi-sovereign status.

SBIs core capitalisation is set to improve in the financial year ending 31 March 2017 (FY17) from a core equity Tier 1 ratio of 10.3% at end-September 2016. The bank is likely to receive around USD835 million in new capital from the government shortly (of the total USD1.1 billion earmarked for FY17; around 5% of FY16 equity) and has plans to raise an additional USD2.2 billion directly from the market, for which it has received shareholder approvals. The banks NPL ratio (7.1% at end-1HFY17) and stressed asset ratio (9.6%) have moderately picked up in 1HFY17, but they remain considerably lower than those of other large government banks.

RATING SENSITIVITIES - SENIOR DEBT

SBIs VR and SRF are at the same level as the IDR, which would only be downgraded if both the SRF and the VR were to be downgraded. A downgrade of Indias sovereign rating will also trigger a downgrade of the banks IDR as it is at the same level as the sovereign. Any change in the IDR will have a similar change on the proposed notes rating.

SBIs other ratings are unchanged and are as follows:

- Long-Term IDR at BBB-; Outlook Stable

- Short-Term IDR at F3

- Viability Rating at bbb-

- Support Rating at 2

- Support Rating Floor at BBB-

- USD10bn medium-term note programme at BBB-

- USD3.5bn senior unsecured notes at BBB-

- USD400m perpetual Tier 1 bonds at B

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Moodys: Global airline industry outlook remains stable; fuel costs and capacity to be key to upcoming earnings trend
Jan 17,2017

Moodys Investors Service is maintaining its stable outlook on the global airline industry, reflecting the rating agencys expectations of declining but still-strong operating margins relative to the sectors historical levels.

Moodys projects the aggregate operating margin of rated airlines to approach 9% in 2017 and about 8% in 2018, from a projected 10.8% in 2016. This trend reflects declines in operating profit of the rated airlines of about 11% in 2017 and about 12% in 2018, widening from a projected 1.2% contraction in 2016. These rates of change fall within Moodys -20% to 20% range for a stable outlook.

US carriers will still have the industrys highest operating margins, despite being on track to drop by about 20% over the next 12 to 18 months due to modestly higher fuel and increases in labor costs under new union contracts agreed to in 2016 at major airlines, says Moodys Vice President -- Senior Credit Officer Jonathan Root. A mature domestic market, a more rational industry structure and modest exposure to weaker foreign currencies will help US carriers maintain that position.

Legacy carriers in Europe and in increasingly competitive developing markets, on the other hand, face greater challenges to grow their operating margins.

Low-cost, low-fare carriers will advance their expansion across Europe and in long-haul, sustaining pressure on legacy operators, explains Root. It will be much the same across Asia as well.

Passenger demand will continue to trend upwards, albeit slowly, supported by modest but steady global economic growth and increasing air travel in the developing world. Aggregate capacity growth, however, will outstrip growth in aggregate demand by about half a percentage point due to the still relatively low cost of fuel, availability of older aircraft coming off leases and growth of low-cost carriers.

Capacity growth across geographic regions will vary, with the US growing in the low single digits, Europe in the mid-single digits, and, according to IATA, developing markets like Asia and the Middle East growing about 7.5% and 10.0%, respectively. Unrated airlines will lead capacity growth in Latin America in 2017, while rated carriers, LATAM Airlines Group S.A. (B1 stable) and Gol Linhas Aereas Inteligentes S.A. (Caa3 negative), will slow capacity growth in 2017 as they continue to restructure operationally.

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New approach needed to tackle rising drug prices-OECD
Jan 17,2017

The proliferation of high-cost medicines and rising drug prices are increasing pressures on public health spending and calling into question the pharmaceutical industrys pricing strategies. Governments need to work with the industry and regulators to define a new approach to the development and use of new health technologies that encourages innovation while also delivering more affordable and value for money treatments, according to a new OECD report.

New Health Technologies: Managing Access, Value and Sustainability says that pharmaceutical spending is increasingly skewed towards high-cost products. The launch prices of drugs for cancer and rare diseases are rising, sometimes without a commensurate increase in health benefits for patients. For instance in the United States, the launch price of oncology drugs per life-year gained has been multiplied by four in less than 20 years - in constant terms - and now exceeds USD 200 000.

Payers, such as insurers or public health providers, are also increasingly struggling to pay for high-cost medicines targeting very small populations, which are expected to proliferate with the development of precision medicine. On the other side of spectrum, new treatments for hepatitis which are very effective and cost-effective in the long-term but target a wide population, are unaffordable to many who would benefit in almost all OECD countries because of their high budget impact.

The prices paid for technologies must reflect their real-world health benefits compared to alternatives, and be adjusted based on evidence about their actual impact. Payers must be equipped with the necessary powers to adjust prices and withdraw payment for ineffective technologies.

A rebalancing of the negotiating powers of payers and manufacturers is needed, says the report. This could be through increased transparency and co-operation between payers and international joint procurement initiatives, as tested in Europe and Latin America. Pricing agreements, which link the final price paid to the actual performance of the drug, as used in Italy and England, may also be effective if management and administration costs are controlled and the clinical data and evidence collected made widely available to the scientific community.

The report highlights other challenges facing the adoption of new technologies. Investment in R&D to treat neglected diseases, such as HIV/AIDS or tuberculosis, fight antimicrobial resistance and address dementia has also become less attractive as their profitability is lower. The incentives for private investment in these areas should be strengthened.

Many biomedical technologies are today approved and adopted based on limited evidence of their safety and effectiveness. Assessment of their performance in real world conditions is rare. This compromises safety, is wasteful and no longer sustainable.

More efforts are also needed to harness the potential of health data more effectively. Use of personal health data creates major opportunities for health system improvement, research and disease surveillance, but requires the right governance frameworks to realise these benefits while managing the privacy risks.

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OECD unemployment rate stable at 6.2% in November 2016
Jan 17,2017

The OECD unemployment rate was stable at 6.2% in November 2016. Across the OECD area, 38.5 million people were unemployed, 5.9 million more than in April 2008, before the crisis. Youth (people aged 15 to 24) unemployment remained high, especially in Southern Europe. A total of 9.3 million young people were counted as unemployed in OECD countries.

The November 2016 unemployment rate in the euro area was also stable at 9.8%. The largest falls in unemployment were recorded in France (down 0.2 percentage point, to 9.5%), Ireland (down 0.2 percentage point, to 7.3%) and the Slovak Republic (down 0.2 percentage point, to 9.0%). The unemployment rate increased by 0.1 percentage point in Finland (to 8.8%) and Italy (to 11.9%).

Unemployment declined by 0.2 percentage point in Canada (to 6.8%) and the United States (to 4.6%) in November but more recent data show that it subsequently increased by 0.1 percentage point in both countries in December (to 4.7% in the United States and to 6.9% in Canada). The November unemployment rate increased by 0.1 percentage point in Japan (to 3.1%) and Mexico (to 3.7%).

The OECD unemployment rate for youth declined by 0.1 percentage point to 12.8% in November. However, it increased further in the euro area (by 0.3 percentage point, to 21.2%), with rises in Italy (by 1.8 percentage point, to 39.4%) and in Portugal and Spain (by 0.6 percentage point, to 28.4% and 44.4%, respectively). The OECD unemployment rate for women (unchanged at 6.3%) remained slightly above that for men (which fell by 0.1 percentage point, to 6.1%).

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India & Mauritius Sign MoU for Cooperation in the field of Cooperatives
Jan 17,2017

The Union Minister of Agriculture and Farmers Welfare, Shri Radha Mohan Singh and Minister of Business, Enterprise and Cooperatives, Govt. of Mauritius, Shri Soomilduth Bholah signed on MoU for Cooperation in the field of Cooperatives & related areas here today. The MoU will enable the two countries to collaborate in this vital sector and can significantly benefit thousands of Mauritians. India offered to exchange its expertise and technology with Mauritius in agro industry, fisheries and dairy sector.

The two ministers expressed satisfaction at the historic, time-tested relationship between India and Mauritius which is anchored in linkages of culture and ancestry has grown from strength to strength over the years, adding that frequent high level visits have added significant momentum to the bilateral relationship between the two countries.

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Ministry of Earth Sciences Commissions Higher Resolution Weather Prediction Model
Jan 16,2017

The Ministry of Earth Sciences (MoES) has commissioned a very high resolution (12 km) global deterministic weather prediction model for generating operational weather forecasts. The model has been on trial since September 2016. It has shown significant improvements in skill of daily weather forecasts. This model has been made operational from January 16, 2017.

The present model replaces the earlier version which had a horizontal resolution of 25 km. It was very helpful, especially in predicting the track and the intensity of the recent Very Severe Cyclonic Storm Vardah and the cold wave over the northern parts of India.

MoESs operational Ensemble Prediction System (EPS) will also be upgraded to 12 km. For this the High Performance Computing (HPC) system resources available with MoES is to be augmented to 10 Peta Flops from the current 1.2 Peta Flops. The operational EPS currently has a horizontal resolution of about 25 km.

The EPS is adopted to overcome the problem of uncertainties in the forecasts. It involves the generation of multiple forecasts using slightly varying initial conditions. The EPS also help generate probabilistic forecasts and quantify the uncertainties.

The Ministry of Earth Sciences (MoES) provides Weather, Climate and Hydrological Services to various users round the year and 24/7. Both operational and research aspects for these services are implemented through its constituent units India Meteorological Department (IMD), National Centre for Medium Range Weather Forecasting (NCMRWF), Indian Institute of Tropical Meteorology (IITM) and Indian National Centre for Ocean Information System (INCOIS).

In general, during the last five years, the skill of weather and climate forecasts in India has improved. The improvement is noted especially in general public weather forecasts, monsoon forecasts, heavy rainfall warnings and tropical cyclone warnings and alerts. The successes in predicting the Tropical Cyclones Phailin/Hudhud, heavy rainfall event in Chennai during December 2015, deficient rainfall during monsoon season of 2015 are the best examples for the improvement in prediction capability during the recent years.

Focused research and development activities have been carried out at IITM, NCMRWF and IMD on weather prediction model development and data assimilation methods. Data from the International and Indian satellites are being assimilated in the weather prediction models.

The communication of forecasts to the stake holders on time and in proper language is very important in the effective use of weather and climate forecasts and minimizing the loss and damages due to severe weather. IMD has established an effective mechanism for dissemination of weather and climate forecasts to different stake holders using different communication channels.

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India Signs Financing Agreement with World Bank for US$ 48 Million for n++Nagaland Health Projectn++
Jan 16,2017

A financing agreement for IDA credit of US$ 48 million (equivalent) for the Nagaland Health Project was signed with the World Bank here today. The Financing Agreement was signed by Mr. Raj Kumar, Joint Secretary, Department of Economic Affairs on behalf of Government of India and Mrs. Genevieve Connors, Acting Country Director, World Bank (India) on behalf of the World Bank. A Project Agreement was also signed by Dr. L. Watikala, Principal Director, Directorate of Health & Family Welfare, Government of Nagaland and Ms. Genevieve Connors, Acting Country Director, World Bank.

The Objectives of the project are to improve health services and increase their utilization by communities in targeted locations in Nagaland. Communities in targeted locations will benefit from project activities at the community and health facility levels while the population of the state as a whole will benefit from improvements in higher-level facilities as well as system-wide investments. The project will directly benefit about 600,000 people. It will support and complement existing systems and mechanisms involving communities under the National Health Mission.

The closing date of Nagaland health Project is 31st March, 2023.

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Gartner Says More Than 40 Percent of Data Science Tasks Will Be Automated by 2020
Jan 16,2017

More than 40 percent of data science tasks will be automated by 2020, resulting in increased productivity and broader usage of data and analytics by citizen data scientists, according to Gartner, Inc.

Gartner defines a citizen data scientist as a person who creates or generates models that use advanced diagnostic analytics or predictive and prescriptive capabilities, but whose primary job function is outside the field of statistics and analytics.

According to Gartner, citizen data scientists can bridge the gap between mainstream self-service analytics by business users and the advanced analytics techniques of data scientists. They are now able to perform sophisticated analysis that would previously have required more expertise, enabling them to deliver advanced analytics without having the skills that characterize data scientists.

With data science continuing to emerge as a powerful differentiator across industries, almost every data and analytics software platform vendor is now focused on making simplification a top goal through the automation of various tasks, such as data integration and model building.

Making data science products easier for citizen data scientists to use will increase vendors reach across the enterprise as well as help overcome the skills gap, said Alexander Linden, research vice president at Gartner. The key to simplicity is the automation of tasks that are repetitive, manual intensive and dont require deep data science expertise.

Mr. Linden said the increase in automation will also lead to significant productivity improvements for data scientists. Fewer data scientists will be needed to do the same amount of work, but every advanced data science project will still require at least one or two data scientists.

Gartner also predicts that citizen data scientists will surpass data scientists in the amount of advanced analysis produced by 2019. A vast amount of analysis produced by citizen data scientists will feed and impact the business, creating a more pervasive analytics-driven environment, while at the same time supporting the data scientists who can shift their focus onto more complex analysis.

Most organizations dont have enough data scientists consistently available throughout the business, but they do have plenty of skilled information analysts that could become citizen data scientists, said Joao Tapadinhas, research director at Gartner. Equipped with the proper tools, they can perform intricate diagnostic analysis and create models that leverage predictive or prescriptive analytics. This enables them to go beyond the analytics reach of regular business users into analytics processes with greater depth and breadth.

According to Gartner, the result will be access to more data sources, including more complex data types; a broader and more sophisticated range of analytics capabilities; and the empowering of a large audience of analysts throughout the organization, with a simplified form of data science.

Access to data science is currently uneven, due to lack of resources and complexity not all organizations will be able leverage it, said Mr. Tapadinhas. For some organizations, citizen data science will therefore be a simpler and quicker solution their best path to advanced analytics.

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WPI inflation rises to 3.4% in December 2016
Jan 16,2017

The Wholesale Price Index (WPI)-based inflation rose to 3.4% in December 2016 from 3.2% in November 2016, while snapping decline for last three straight months. An increase in WPI inflation was mainly driven by higher inflation for fuel and basic metals items, while inflation for food items declined sharply in December 2016.

Inflation of primary articles dipped to 0.3% in December 2016 from 1.3% in November 2016. However, the inflation for manufactured products rose to 3.7% in December 2016. Further, the inflation for fuel items accelerated further to 8.7% in December 2016 from 7.1% in November 2016.

As per major commodity group-wise, inflation eased for food grains, fruits, vegetables, fish marine, poultry chicken, spices, fibres, flowers, sugar, tea & coffee products, textiles, wood products and leather products in December 2016. On the other hand, inflation of oilseeds, raw rubber, metallic minerals, crude petroleum, mineral oils, grain mill products, edible oils, beverages and tobacco products, rubber products, chemical products, basic metals, machinery and tools, and transport equipment rose in December 2016.

Inflation of food items (food articles and food products) eased to 2.8% in December 2016 from 4.4% in November 2016. Meanwhile, inflation of non-food items (all commodities excluding food items) moved up to 3.7% in December 2016 from 2.6% in November 2016.

Core inflation (manufactured products excluding foods products) accelerated to 2.1% in December 2016 from 1.5% in November 2016.

The contribution of primary articles to the overall inflation, at 3.15%, was 08 basis points (bps) in December 2016 compared with 36 bps in November 2016. The contribution of manufactured products was 206 bps compared with 179 bps, while that of fuel product group was 129 bps against 106 bps in November 2016.

The contribution of food items (food articles and food products) to inflation fell to 91 bps in 3.39% in December 2016 compared with 140 bps to 3.15% in November 2016. Meanwhile, the contribution of non-food items (all commodities excluding food items) was 250 bps in December 2016 compared with 179 bps in November 2016.

As per the revised data, the inflation figure for October 2016 was revised up to 3.8% compared with 3.4% reported provisionally.

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Demonetisation Triggers Shift from Unorganised to Organised Retail, Card Transactions rise upto 90% of Total Sales in Q3FY17
Jan 16,2017

Demonetisation has catapulted the shift from unorganised to organised retail sector in the light of the cash crunch, says India Ratings and Research (Ind-Ra). While the market expected the sector to witness contraction in Q3FY17 post demonetisation, Ind-Ra expects most companies in the organised retail sector to post low single digit growth with varying impact across different sub-sectors. Ind-Ra expects organised retailers in the food, grocery and fashion retail segments to be unaffected, high value items namely jewellery, luxury items (watches), consumer durables to show contraction in topline in 3QFY17.

Ind-Ra has been assessing the situation post 8 November 2016 and based on our interaction with the management of companies in the retail segment, Ind-Ra believes the impact of demonetisation across retail segments will vary, depending on the nature of consumption (discretionary/non-discretionary), ticket size and ease of adoption of alternate modes of payment.

Organised Retailers Insulated, High Value Items Feel Pain: Organised retailers in the food, grocery and value to premium fashion retail segments have been insulated from the influence of demonetisation in 3QFY17, given the relatively low average ticket size of transactions (around INR2,000) and the willingness of consumers to switch to cashless transactions. However for segments of high value, namely jewellery, luxury items (watches), consumer durables where the transaction value is high and the purchases are more discretionary in nature and presumably the use of unaccounted for money is higher, even organised retail is likely to report de-growth in 3QFY17.

Organised Food and Grocery Retailers Win: Organised food and grocery retailers are the biggest beneficiaries of demonetisation and are expected to post a healthy double digit growth and even like to like sales growth in 3QFY17. The cash crunch impaired the traditional wholesale and retail channels and led to a shift in consumers from local grocery stores/neighborhood stores to supermarkets/hypermarkets. Additionally, footfalls were also driven by the availability of cash withdrawal facility from the POS machines installed at some of these stores supported by the discount and promotional offers. The consumers were quick in adopting the digital mode of payment and the share of cash transactions declined to about 20% from about 50%-60% earlier. Companies in the segment will however face the challenge of building customer stickiness and retaining the growth momentum witnessed in the last two months as the traditional channel emerges from the disruption in Q4.

Organized Fashion Retailers Recover from Knee Jerk Reaction: Contrary to the popular belief, organised fashion retailers (departmental stores) have bucked the impact of demonetisation. After the sharp decline in footfalls as well as volumes in the first week post demonetisation, revenue growth recovered and is likely to be in high single digit to double digits in 3QFY17 on the back of festive season and early commencement of end of season sale in December 2016. Most of these departmental stores are located in Metros and Tier I and II cities where consumers were readily shifting to card payments; resulting in the share of cards as a percentage of revenue increasing to 80%-90% in the last quarter (averages around 40%-50%). Additionally, the impact on margins due to the end of season sale was largely counterbalanced by the waiver of fee on POS transactions through debit cards which were earlier in the range of 0.75%-1%. Further, companies in this segment continue to be on track with their store opening plans for 2HFY17.

Share of digital wallets is still below 5-10% in the both these segments and the industry is gearing towards increasing the share of digital wallets and launching their own wallets as well.

Organized Retail Jewelers to De-grow: Organised retail jewelers is likely to report minimal growth to de-growth year on year in Q3 revenues as consumer demand remained muted in the aftermath of demonetisation. Margins are also likely to be impacted given the high operational leverage in the segment; albeit supported by higher gold prices for most part of the demonetisation period. Companies are cautious on restocking to reduce any liquidity pressure which may arise due to reduced offtake.

It remains to be seen whether organised retail will continue to gain market share at the cost of unorganised retail post re-monetisation or the customers will go back to their preferred mode of transaction once the currency notes are replaced completely.

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Let Budget be presented on 01 February 2017- ASSOCHAM
Jan 16,2017

Making a strong appeal to different political parties to let the Union Budget for 2017-18 be presented to Parliament on February 1, the apex industry chamber ASSOCHAM said the advancement to this effect would help the government to begin its capital and other expenditure right from April and revive the much needed economic growth.

n++The decision of the Central Government for advancing the date of the Budget is well thought out from the point of view of revival of the economic sentiment. As is evident, the consumer demands as also corporate investment have rather been subdued owing to a host of factors. Under these circumstances, the only option in the immediate future is the government expenditure gathering pace and creating a positive cycle of economic revival, ASSOCHAM Secretary General Mr D S Rawat said.

He said in the earlier arrangement when the Budget was presented on the last working day of February, its full and final passage could take place in the middle of May with the result that by the time the money is available with the individual ministries and departments, half the financial year is completed.

n++This typically leads to back- loading, rather than front-loading of the government expenditure of the order of Rs 20 lakh crore, which itself is a strong trigger for boosting the economic activity. The bundling of expenditure in the last few months also affects the quality of government spending as the pressure to exhaust the allocated outlays in the set period leads to rush jobs, the chamber said.

It said with early beginning of the budget allocations, the quality of spending would certainly improve even as it leaves a positive multiplier effect on rest of the economy. This is particularly true in sectors like roads, highways, ports, irrigation projects and above all the railways.

The Indian Railway is implementing a big capex plan that can generate a significant multiplier impact on several sectors like steel, cement, manufacturing, wagon building etc. All efforts must be made to ensure that all the Parliamentary approvals are given to the Rail budget, which would now be part of the main Budget, well in time.

Same holds good for other vital infrastructure ministries like shipping, power, coal, road transport, petroleum etc.

The chamber said the Budget should be seen well beyond the partisan politics for the common national good.

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Refining margins in Asia expected to stay at $5.0-$5.5 per barrel through 2017
Jan 16,2017

Refining margins in Asia, is expected to stay at $5.0-$5.5 per barrel through 2017, says Moodys in its latest edition of Asia Oil and Gas Quarterly.

Moodys Investors Service has released its latest edition of Asia Oil and Gas Quarterly, a quarterly publication that examines the major credit trends in the oil and gas industry across Asia, through recently published Moodys reports.

We expect that refining margins will show volatility in 2017, driven by bloated supply and the lagged effect of crude-price fluctuations on petroleum-product prices, says Rachel Chua, a Moodys Analyst.

Moodys believes that low profitability levels will force small-scale, low-complexity refiners with higher costs of production to reduce output.

Moodys newsletter also says that firmer oil prices in 2017 and continued cost reductions will support the earnings of Asian integrated and upstream players. At the same time, capital spending levels should rise, and upstream acquisitions in 2017 should increase, based on the growth ambitions of Asian players.

Moodys says that given the prolonged oversupply of oil globally, compounded by very high inventory levels, a rebalancing of the oil markets will likely occur in late 2017 at the earliest.

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Set-up quotas for women to enhance their decision making role: Anupriya Patel, MoS, Ministry of Health and Family
Jan 16,2017

Establish quotas to increase womens willingness to compete in competitive mixed-gender environments result in more qualified candidates for competitive positions, said Ms. Anupriya Patel, Minister of State, Ministry of Health and Family Welfare at an ASSOCHAM event.

n++Empowering women to participate fully in economic life across all sectors is essential to build stronger economies, achieve internationally agreed goals for development and sustainability. It will not only improve the quality of life of women, but for men, families, and communities as well. Empowerment of women has proven time and again across the world, to be the most efficient catalyst for rapid socio economic growth,n++ said Ms Patel.

Ms Patel further said, n++Modelling female leadership can go a long wayn++. The important factor is financial inclusion of women which can create gender equality by empowering them and giving them gender control over their financial lives. She said, 42% of women worldwide- approximately 1.1 billion- remain outside the formal financial system, according to the Global Findex database. Despite recent progress in financial inclusion rates in general, the gender gap has not narrowed.

While women represents a larger share of the self employed in developing countries and thus are less likely to secure bank credit according to the research by the World Bank.

n++When it comes to female labour force participation the situation is not very encouraging either. The South Asian Region has some of the lowest female labour force participation rates in the world,n++ added Ms Patel. It is therefore the need of the hour that we strive collectively for participation of women of south Asia region in all spheres of political, economic, social and cultural life as equal partners, added Ms. Patel.

She also said there is need for n++increasing funding and sustained advocacy for quality literacy programmes that empower women as literate women have a positive ripple effect on all development indicators.n++

Ms. Mridula Sinha Governor of Goa said the planned agenda of this forum is very critical as there is indeed an urgent need to locate strategies and develop systems that support womens entrepreneurship, education, empowerment, their financial inclusion, IT literacy and enhance their role in decision making. But we also should not ignore social empowerment of women as well because economic empowerment has to go hand with social change to make the vision of this forum a reality.

Ms. Preeti Saran, Secretary (East), Ministry of External Affairs said for South Asia, we have also established a Gender policy advocacy group (GPAG), that works along with UN-ESCAP and UN women, for economic empowerment of small scale women entrepreneurs. Work is also underway to reach goals of gender equality as per the Beijing Platform for Action. A SAARC Gender information base (SGIB), a comprehensive pool of data/ information on gender issues in different formats, including multimedia for quick access, has also been initiated.

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Moodys and ICRA: Indian economy to remain strong in 2017, despite short-term impact of demonetization
Jan 16,2017

Moodys Investors Service and its Indian affiliate, ICRA Limited, say that India (rated Baa3 positive by Moodys) will remain one of the fastest growing major economies globally in 2017, although GDP growth will moderate in the first half of the year, as the economy adjusts after demonetization. Moodys also believes that the government will likely achieve its fiscal deficit target of 3.5% of GDP for the current fiscal year ending 31 March 2017.

ICRA expects the countrys growth of gross value added at basic prices to remain healthy in 2017, although such growth will ease somewhat to about 6.6% from around 7.0% in 2016, with a likely pick-up in H2 2017.

Even after the currency in circulation is replenished, we expect that Indias economic growth will stabilize with a lag, while remaining strong, says Aditi Nayar, an ICRA Principal Economist. The adjustment and recovery period could stretch to as much as 2-3 quarters for certain sectors.

ICRA says that the focus on digital transactions and the introduction of a goods and services tax (GST) will likely reduce the competitiveness of the unorganised sector. ICRA therefore anticipates a relatively healthier expansion of the organised sectors in 2017, at the cost of the unorganised sectors.

ICRA further points out that the low agricultural growth in H1 2016, as well as healthy reservoir levels on a seasonally adjusted basis, will support the pace of expansion of agricultural output in the first half of 2017. But agricultural growth in subsequent quarters will be influenced by various factors, the most important being the magnitude and dispersion of monsoon rainfall.

ICRA also says that the loss of incomes in some sectors and deferral of consumption are likely to weigh on capacity utilization, delaying the capacity expansion plans of the private sector. And, the extent of capital spending budgeted by the central and state governments for the fiscal year ending 31 March 2018 will affect the extent to which infrastructure spending can stimulate growth in a non-inflationary manner.

Nevertheless, economic and institutional reforms already introduced and potentially forthcoming, continue to offer a reasonable expectation that Indias growth will outperform that of its similarly rated peers over the medium term, and that the country will achieve further improvements in its macroeconomic and institutional profile, says William Foster, a Moodys Vice President and Senior Credit Officer.

Moodys and ICRA point out that after a temporary dampening effect on consumption and investment in the medium term, demonetization will likely strengthen Indias institutional framework n++ by reducing tax avoidance and corruption n++ and should support efficiency gains through a greater formalization of economic and financial activity.

Moodys also points out that in an environment of lackluster global trade, and with economies globally facing the increasing risk of protectionism, Indias very large domestic markets provide a relative competitive advantage when compared to smaller and more trade-reliant economies.

On the fiscal front, Moodys says that the government will likely remain committed to achieving its fiscal deficit target of 3.5% of GDP for the fiscal year ending 31 March 2017. However, room to reduce the deficit further to the target of 3.0% of GDP in the following year will be limited, due to the need for increased infrastructure spending and higher government salaries.

The government announced its intention to increase public capital expenditure in the last budget to help reduce supply-side bottlenecks and stimulate growth. Meanwhile, wages and salaries account for about 50% of total fiscal expenditure, with a large, one in 10-year increase in central government compensation just implemented. Moodys expects that the government will renew its commitment to increase capital spending and address the short-term disruptive impact of demonetization, during its budget speech on 1 February 2017.

Moodys explains that the implementation of the pending GST and other measures aimed at enhancing income declarations and tax collection will help widen Indias tax base and boost revenues. However, such a boost will only materialize over time, with the magnitude uncertain at this point.

As a result, the general government deficit will remain sizeable, and any reduction in Indias government debt burden will largely rely on robust nominal GDP growth. Moodys expects that Indias debt-to-GDP will hover around the current levels (at 68.6% in 2015) before falling gradually, as nominal GDP growth is sustained and revenue-broadening and expenditure efficiency-enhancing measures take effect.

On the issue of average CPI inflation, ICRA says that the rate will soften to 4.5% in 2017 from 4.9% in 2016, although the readings will continue to register month-to-month volatility. Key factors that will dominate CPI inflation in 2017 include monsoon dynamics, the impact of the GST on prices of various goods and services, commodity price movements, and the INR-USD exchange rate.

ICRA says that based on the minutes of the Monetary Policy Committees December 2016 meeting n++ which revealed a renewed emphasis of some members on achieving the mid-point of the inflation target range of 4% n++ the room for incremental repo rate cuts will prove limited, at 25 basis points over the next six months.

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