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Organised Jewellery Retailers to Benefit from Regulatory Changes; Exporters Continue to Face Headwinds
Mar 06,2017

India Ratings and Research (Ind-Ra) has maintained a stable outlook on organised jewellery retailers and a negative outlook on cut and polished diamond (CPD) exporters for FY18.

As per World Gold Council, Indias gold jewellery demand fell sharply 22% yoy to reach a seven-year low in 2016 (522MT). The demand was impacted severely on account of various one-off events such as nationwide jewellers strikes in 1Q16 and severe liquidity crunch on account of the Government of Indias (GoI) demonetisation drive in 4Q16. Given the backdrop of four months of complete disruption on either the supply or demand side, Ind-Ra believes the fall in consumer demand was caused by idiosyncratic factors. However, the underlying jewellery demand still remains robust, given Indias strong macro-demographics and the consumers affinity towards gold. Hence, demand is likely to bounce back to above a five-year average of 600MT in 2017.

The GOI has been introducing regulatory changes over the last two years to control illicit trade practices prevalent in the jewellery industry, which is likely to benefit organised jewellers at the cost of unorganised retailers. Retailers face an overhang of the impending Goods and Services Tax Bill and a higher slab rate may turn out to be demand dampener particularly for the non-wedding segment.

Conversely, CPD exports increased 13% yoy to USD16.8 billion during 9MFY17, after declining for two consecutive years as per the Gems and Jewellery Export Promotion Council. This was because players across the value chain restocked following stock unloading and cautious inventory management in 2015 in response to a slowdown in the consumer demand for diamond jewellery in China and Hong Kong beginning 2H14. Although CPD exports have rebounded, the agency believes that midstream players continue to face headwinds for diamond jewellery demand owing to political and economic environment in key export markets. Additionally, the players continue to operate on thin margins and carry the inventory/price risk.

As expected by Ind-Ra, rough producers continued to lower rough prices by around 5% in 2016, while maintaining production close to 2015 levels (128 million carats) and extending additional flexible purchasing terms to CPD players. Ind-Ra expects rough prices to remain stable in 2017, unless CPD prices decline sharply due to muted demand and rough producers are forced to lower rough prices again.

Organised retailers are likely to have a limited impact of demonetisation in FY17 as reflected in revenue growth of around 8% yoy and improved EBITDA margins of 50bp to 10.2% in 9MFY17 based on Ind-Ras sample set. Favourable market dynamics and government regulations are likely to improve organised retailers revenue growth to double digits in FY18. EBITDA margins will improve with increasing share of diamond/studded jewellery in the sales mix On the other hand, Ind-Ra believes credit metrics for CPD exporters are likely to remain stretched in FY18 with EBITDA/interest coverage of 2.9x (FY17 Projected: 2.75x-3.0x), given muted revenue growth, low profitability margins, long working capital cycles and a high dependence on bank lines for inventory funding.

Outlook Sensitivities

Regulatory Actions by Government: Reintroduction of any measures to curb gold imports or reduce its physical consumption or higher-than-anticipated Goods and Services Tax rates is likely to have a negative impact on the organised retailers.

Recovery in Demand and Reduction in Divergence of Prices: Recovery in Chinese demand and buoyant US demand for diamond jewellery, and the relative improvement in CPD prices than rough prices are likely to positively impact the exporters.

Supply Shocks in the Short-term: Any severe fall in supply of mined gold globally can lead to higher gold prices and may dampen the gold consumption, leading Ind-Ra to change its outlook to negative for the organised retailers.

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Work on Shahpur Kandi Dam to Resume Soon Punjab and J&K sign agreement to this effect
Mar 06,2017

In a major step towards utilization of Indias rights on Eastern rivers of Indus basin, the mediation efforts of Ministry of Water Resources , RD&GR persuaded the States of J&K and Punjab to reach an agreement to resume works on Shahpur Kandi Dam project in Pujab/ J&K. The agreement to this effect was signed by Shri KS Pannu,Secretary (Irrigation),Punjab and Shri Saurabh Bhagat, Secretary ( Irrigation),J&K in the presence of Union Water Resources Secretary Dr.Amarjit singh in New Delhi last evening.

The project was being built with an estimated cost of Rs. 2285.81 crore (April, 2008 price level) and is included in the Scheme of National Projects by Government of India. Under the scheme, MoWR, RD&GR provides central assistance @ 90% of the balance cost of works component of irrigation and water supply.

The construction of Shahpur Kandi project was taken up in May 1999 but later halted in 2014 due to dispute between Punjab and J&K. The Ministry of WR,RD&GR had been making all out efforts to resolve the issues and resume construction which resulted in yesterdays agreement.

The design of the project shall be as already agreed by both the states while concurrently model studies will be done to ensure that the mandated share of 1150 cusecs of water is available to the State of J&K, which will be binding on both the States.

The project will continue to be implemented by the Government of Punjab. However, there will be a tripartite team headed by Member, CWC and consisting of Chief Engineers of two States to monitor the project as and when required but atleast once in three months to ensure that the construction is as per the agreement.

The balance costs on account of compensation for land acquisition in respect of Thein Dam, as per the agreement would be paid for by the Government of Punjab promptly. In addition, jobs to the oustees would be given by the State Government of Punjab as per the agreed R&R policy of both the State Governments.

The Government of Punjab would be making available to the Govt. of J&K 20% share in the total power generated at the Thein Dam at the mutually agreed rate of Rs. 3.50 per unit immediately, subject to the confirmation of the rates by the Central Electricity Regulatory Commission.

Both the States agreed that other issues will be referred to Arbitration mechanism provided in the agreement signed between two states of 1979 without affecting the progress of work. It was unanimously agreed that the work on the Shahpur Kandi Dam Project would resume as soon both the State Governments formally approve the agreed decisions.

The 55.5 high Shahpur Kandi dam, located in Gurdaspur district of Punjab, will help in providing irrigation facility to 5000 hectares of land in Punjab and 32173 hectares in J&K besides generation of 206 MW power.

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Goods and Services Tax Council approves the Central Goods and Services Tax (CGST) Bill and the Integrated Goods and Services Tax (IGST) Bill
Mar 06,2017

The Goods and Services Tax GST) Council, in its meeting held today in Vigyan Bhawan in New Delhi under the Chairmanship of the Union Minister for Finance & Corporate Affairs, Shri Arun Jaitley has approved the draft CGST Bill and the draft IGST Bill as vetted by the Union Law Ministry. This clears the deck for the Central Government to take these two Bills to the Parliament for their passage in the ongoing Budget Session.

Some of the main features of the two Bills, as finalized by the GST Council, are as follows:

i. A State-wise single registration for a taxpayer for filing returns, paying taxes, and to fulfil other compliance requirements. Most of the compliance requirements would be fulfilled online, thus leaving very little room for physical interface between the taxpayer and the tax official.

ii. A taxpayer has to file one single return state-wise to report all his supplies, whether made within or outside the State or exported out of the country and pay the applicable taxes on them. Such taxes can be Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Union Territory Goods and Services Tax (UTGST) and Integrated Goods and Services Tax (IGST).

iii. A business entity with an annual turnover of upto Rs. 20 lakhs would not be required to take registration in the GST regime, unless he voluntarily chooses to do so to be a part of the input tax credit (ITC) chain. The annual turnover threshold in the Special Category States (as enumerated in Article 279A of the Constitution such as Arunachal Pradesh, Sikkim, Uttarakhand, Himachal Pradesh, Assam and the other States of the North-East) for not taking registration is Rs. 10 lakhs.

iv. A business entity with turnover upto Rs. 50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.

v. In order to prevent cascading of taxes, ITC would be admissible on all goods and services used in the course or furtherance of business, except on a few items listed in the Law.

vi. In order to ensure that ITC can be used seamlessly for payment of taxes under the Central and the State Law, it has been provided that the ITC entitlement arising out of taxes paid under the Central Law can be cross-utilised for payment of taxes under the laws of the States or Union Territories. For example, a taxpayer can use the ITC accruing to him due to payment of IGST to discharge his tax liability of CGST / SGST / UTGST. Conversely, a taxpayer can use the ITC accruing to him on account of payment of CGST / SGST / UTGST, for payment of IGST. Such payments are to be made in a pre-defined order.

vii. In the Services sector, the existing mechanism of Input Service Distributor (ISD) under the Service Tax law has been retained to allow the flow of ITC in respect of input services within a legal entity.

viii. To prevent lock-in of capital of exporters, a provision has been made to refund, within seven days of filing the application for refund by an exporter, ninety percent of the claimed amount on a provisional basis.

ix. In order to ensure a single administrative interface for taxpayers, a provision has been made to authorise officers of the tax administrations of the Centre and the States to exercise the powers conferred under all Acts.

x. An agriculturist, to the extent of supply of produce out of cultivation of land, would not be liable to take registration in the GST regime.

xi. To provide certainty in tax matters, a provision has been made for an Advance Ruling Authority.

xii. Exhaustive provisions for Appellate mechansim have been made.

xiii. Detailed transitional provisions have been provided to ensure migration of existing taxpayers and seamless transfer of unutilised ITC in the GST regime.

xiv. An anti-profiteering provision has been incorporated to ensure that the reduction of tax incidence is passed on to the consumers.

xv. In order to mitigate any financial hardship being suffered by a taxpayer, Commissioner has been empowered to allow payment of taxes in instalments.

The remaining two Bills namely, State Goods and Services Tax (SGST) Bill and the Union territory Goods and Services Tax (UTGST) Bill, which would be almost a replica of the CGST Act, would be taken-up for approval after their legal vetting in the next meeting of GST Council scheduled on 16 March 2017.

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Owning a House Becomes Easier for Army Personnel
Mar 03,2017

Army personnel by virtue of deployment in remote areas find it extremely difficult to invest time in buying a good house, therefore, to fulfill this essential need and meet the aspirations, AWHO has come up with a pragmatic business model called the Private Industry Collaborative Business Model which will facilitate acquiring houses from reputed private builders at discounted prices for Army personnel & Veer Naris. A Pilot Project is being undertaken in Delhi/ NCR and based on its success, similar ventures will be executed in other locations.

Major advantages of this concept are detailed market research to identify the most suitable builder/ project, negotiations for price reduction, due diligence and buyer friendly terms & conditions. Prop Equity, a leading Real Estate Data & Analytics Consultant firm has been selected after a prolonged process to undertake the facilitation process forward.

This historical MoU was signed by Lt Gen Rakesh Sharma, UYSM, AVSM, VSM, Chairman (Ex-Officio) AWHO and Mr Samir Jasuja, MD, Prop Equity Analytics on 3 March 2017.

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MSTC supports the Promotion of Agri-Forest Produce of the North Eastern Region
Mar 03,2017

The Minister of State (Steel) Shri Vishnu Deo Sai said that the North-East Region is endowed with a climate for rich agri and forest produce but the growers do not have any market access for their produce and are compelled to be exploited by middle men leading to a very pitiable situation for them. The situation is also aggravated due to the lack of proper logistic supports in the region.

The Minister appreciated MSTCs vision towards developing an eco system bringing all the enabling partners such as North-Eastern Regional Agriculture and Marketing Corporation (NERAMAC), Central Railside Warehousing Corporation (CRWC), Packaging Company and Inland Waterways Authority (IWA).

The above ecosystem will not only improve the financial status of the growers but also prevent the crops from colossal wastage and make niche products available to the rest of the country. This collaborative effort may play an important role as envisaged in the Government Policy for the development of the north-east region.

In order to provide direct market access to the growers of the North-East region and also effective co-ordination and required services amongst the above agencies, MSTC has recently opened an office at Guwahati, which will be a nodal point to cater to the needs of all the sister states of the North-East.

MSTC, a PSU under Ministry of Steel has also been rendering services to the oil marketing companies and paramilitary forces including defence in this region since long. In addition, MSTC is eying on all the State Government Departments of North-East states to provide e-Commerce services.

To increase its presence and services in the North East Region, the Minister of State for Steel has advised MSTC to waive off the registration fees charged to the new buyers in the North East Region to increase its buyer base and help the region in reaping the benefits of the e-commerce services.

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Structural Changes Required to Reboot Real Estate Sector in FY18
Mar 03,2017

India Ratings and Research (Ind-Ra) has maintained a negative outlook on the real estate sector for FY18, based on the expectation of a continued slump in the sale of residential units. This will result in continued negative cash flows and a further increase in already-high debt levels, resulting in weakening of the sectors credit profile.

The sale of residential units has been falling since FY14 due to the continued high prices of residential units making them unaffordable to end-users and the significant delays in the completion of under construction projects (sometimes by even more than three years), thus impacting consumer confidence in the sector. The sale of units to individuals who purchase residential units for investment purposes is also likely to be severely curtailed by the demonetisation exercise, the implementation of the Prohibition of Benami Transactions Act and the proposal to restrict set-off of loss on rented properties against other income heads introduced in the union budget 2017-2018.

The continued fall in sales is likely to curtail liquidity, which will be further impacted by the likely implementation of the Real Estate (Regulation and Development) Act, 2016 during 1HFY18. While the sector has largely relied on refinancing to meet its debt servicing obligations, Ind-Ra believes refinancing will increasingly become difficult with revival in sales unlikely.

Ind-Ra believes that the sector needs to undergo a structural change in the way it does business to revive itself and move towards a model of unit sales post completion of projects. Such a structure would favour large organised real estate companies having better access to institutional funding and lead to consolidation in the sector. However, a single window system for time-bound approvals is imperative for the success of any such structural changes in the system and for the sectors long-term survival and growth.


Improvement in Demand: A price correction and the consequent revival in consumer demand, resulting in a positive free cash flow and a reduction in debt levels could result in a stable outlook for the sector.

Asset Monetisation: Sale of land and commercial property assets, leading to a substantial reduction in debt levels could be a positive driver for issuer ratings.

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Increasing Insurance Coverage to Drive Growth of Corporate Healthcare Sector
Mar 03,2017

India Ratings and Research (Ind-Ra) has maintained a stable outlook for the corporate healthcare sector for FY18, based on expectations of continued stable revenue growth. Profit margins will continue to be impacted by expansion plans across the sector owing to long breakeven periods for new facilities.

Ind-Ra expects the sector to register stable revenue growth of about 15% for FY18, driven by the completion of new facilities and aided by strong growth in health insurance coverage. The growth in health insurance coverage (28.9% CAGR over FY14-FY16) is positive for the sector, as it increases the addressable market size. However, the majority of this growth was from government schemes; this is a concern due to lower profitability on procedures covered by such schemes and longer collection periods involved.

EBITDA margins and cash flow margins of companies operating in the sector will remain under pressure due to initial losses or lower profitability during the ramp-up phase of new facilities. Free cash flow (FCF) will continue to be negative due to expansion plans across the sector over the next three years.

Ind-Ra believes that large corporate hospital chains would attract patients to their facilities (old and new) on account of their established brands and ability to attract reputed doctors. Hence, the sector will continue to witness significant interest from private equity and strategic foreign investors, looking at leveraging the established brands of regional or sub-regional players to create strong national or regional chains. Ind-Ra believes that companies would increasingly rely on acquisitions to enter new cities, given the availability of capital.


Positive FCF: Significant improvement in revenue and profits due to the successful ramp-up of new facilities, leading to positive FCF could result in a positive sector outlook.

Delay in Ramp-up: Ambitious debt-funded capex and stressed profitability due to low occupancy or cost and time overruns in ongoing capex could result in a negative outlook.

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Industry upbeat to expand business with Indian Ocean Rim Region (IORA) : FICCI Industry Perception Survey
Mar 03,2017

The Indian Ocean has been a fulcrum of Indian diplomacy. According to the Government of India, maritime trade accounts for about 75 per cent value and more than 90 per cent of volume of Indian trade. Possessing a population of 2 billion people with 9% of world GDP, 12% of global exports and 18% of global investment flows, the IOR region has enormous economic potential to expand and grow.

India enjoys a strategic location within the Indian Ocean region. Prime Minister Narendra Modi has endorsed the imperative to form a close connect with nations in the Indian Ocean Region during his visit to Seychelles, Mauritius and Sri Lanka in 2015 and his maiden trip to the East African countries of Kenya, Tanzania, Mozambique, and South Africa in 2016.

Countries of the Indian Ocean Rim Region are brought together under the umbrella of the Indian Ocean Rim Association (IORA).

As a run up to the Summit, FICCI, in its capacity as the Business Secretariat of IORA in India, conducted a perception survey to understand the current sentiment within the Indian industry on the economic potential of Indias engagement with the Indian Ocean region. The companies surveyed share deep trade and investment linkages with the IOR region. Responses were received from respondents across India and from participants of regional stakeholder consultations organised by FICCI in 3 metropolitan coastal cities- Kolkata, Mumbai and Chennai.

The companies represent wide span of sectors including fisheries and aquaculture, renewable ocean energy, seaports and shipping, offshore hydrocarbons and seabed minerals, manufacturing, construction, electricity, gas and water supply, business services, trading and renting, banking and financial services, health and education and information and communication technology, to promote the Blue Economy as a driver for sustainable development; research and development; investment, technology transfer and capacity building.

An overwhelming majority of respondents were upbeat about opportunities for trade and investment expansion within IORA and complementarities that India can tap with IORA. Manufacturing - both for IORA nations and for collaborative projects was rated quite high by the respondents reinforcing Government of Indias Make in India initiative. Moreover, better trade facilitation, appropriate dissemination channels, access to financial resources for smooth functioning of SMEs and innovative business models to encourage women entrepreneurship are some of the suggestive measures by the respondents to turn the region pro-business and investor friendly.

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OECD Signs MoU with CII for Greater Collaborative Work
Mar 03,2017

n++India with 7% growth rate is flowing against the tide despite the difficult economic environment prevailing across the world,n++ said Mr. Angel Gurria, Secretary-General of Organisation for Economic Cooperation and Development (OECD).

The MoU reinforces their common commitment to promote best practices and collaboration to create a robust competitive environment for global trade, the Secretary - General observed.

The OECD, in its economic survey for India, hailed India as a top reformer, specifically noting the significance of demonetization and the imminent roll-out of the GST act. Mr. Gurria commended India on maintaining high economic growth rates despite the global economic environment not being suitable to this. n++India has maintained a 7% growth rate, which is four times the average for any OECD country and twice the world average,n++ he noted.

The major challenge now is to ensure inclusive growth. He particularly stressed this as the biggest failure of globalization and the need to address this to turn back the new protectionist tide we see in the world. He identified some key areas of India-OECD collaboration, including Energy, water conservation, electrification, pollution, urban-rural inequality, and especially gender inclusion. He noted how female participation in the labour market had fallen by 10 percentage points and stated that this was a luxury India could not afford. n++Dealing with only productivity and growth creates disaffectionn++ there is a need for a nexus with inclusive growth,n++ he added.

CII is an active member of the Business and Industry Advisory Council (BIAC) of the OECD and the B20. He hailed this as representing the centrality of industry members to more innovation and inclusivity creating a great equalizer. It would be indispensable in addressing the backlash against the pitfalls of globalization. Quoting Prime Minister Modi, he said, n++We must walk together, work together, and progress together.n++ This was not only to develop but also to deliver better policies for better lives which is the OECD motto.

Mr Suresh Prabhu, Minister for Railways, Government of India, noted the possibilities for exchange of best practices in various fields.

Mr. Rakesh Bharti Mittal, Vice President of CII, hailed the new possibilities that the MoU created for increasing Indias competitive efficiency. He added that India and OECD could collaborate for greater digital literacy. We could also adopt the OECDs gender recommendations for education and employment. Indian industry, he said, must remain resilient in the face of any crisis. He emphasized the importance of Corporate Social Responsibility in achieving the same.

Mr. Chandrajit Banerjee, Director-General CII, also noted that the MoU offers an opportunity for greater cooperation for the adoption of best practices and for joint study and research. OECD expertise could play a role in each of the 9 Centers of Excellence of the CII. He laid special emphasis on the possibilities of cooperation on Sustainable Development, Corporate Governance, and Green Businesses besides technological innovation. The aim was to go beyond the one size fits all position to create better policies.

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Nikkei India Services PMI rises above 50 mark
Mar 03,2017

The Nikkei India Services Business Activity Index signalled growth in February as businesses recovered from the demonetisation-related disruptions seen in each of the previous three months. After slumping to a near three-year low last November, signalling the first monthly drop in output since June 2015, the headline index edged above the 50.0 no-change mark posting 50.3 (January: 48.7).

Having contracted for three months in a row, incoming new business also picked up in February. However, as was the case for output, the pace of growth in new work was marginal overall. Anecdotal evidence from survey participants suggested that, after being hampered by shortages of cash in the economy, demand for services in India improved.

The turnaround in business activity and inflows of new work came from the Financial Intermediation and Other Services categories, with further declines seen elsewhere. Nonetheless, rates of contraction softened in all cases.

With manufacturing production rising again in February, the seasonally adjusted Nikkei India Composite PMI Output Index rose from 49.4 in January to 50.7, pointing to the first increase in private sector activity across India since last October.

Other survey indicators painted a mixed picture of the service sectors health. Respondents became less optimistic about the 12-month outlook for activity, with sentiment falling since January as firms were concerned about market competition. Concurrently, services companies continued to reduce payroll numbers.

Employment has shown only one noteworthy monthly increase in the past one-and-a-half years (November 2015), though the rate of job losses in February was only fractional. By comparison, manufacturing staffing levels decreased over the month.

Backlogs of work at Indian services firms rose for the ninth successive month in February. The rate of accumulation was solid and the fastest since October 2016. In some cases, the increase in outstanding business was associated with difficulties in obtaining payments from clients. Goods producers also registered a sharper rise in work-in-hand.

Input prices facing services companies in India rose at the second-fastest pace in the current six-month sequence of inflation during February. According to survey participants, freight and raw material costs increased over the month. Higher cost burdens were also recorded in the manufacturing industry, where the rate of inflation climbed to a two-and-a-half year peak.

Services firms sought to pass rising costs on to customers by way of raising their own selling prices. The increase in output charges was the first in five months and the most pronounced since mid-2016. Meanwhile, factory gate prices rose at the sharpest rate in almost three-and-a-half years.

Commenting on the Indian Services PMI survey data, Pollyanna De Lima, economist at IHS Markit, and author of the report, said: n++The upturn in services activity follows news from the sister PMI survey showing factory production growing for the second straight month in February. With demand conditions strengthening in India, new business inflows rose in both sectors, leading to the first increases in private sector new work and output since October 2016. Nevertheless, growth rates were mild at best and far from their historical averages.

It is still too early to state that expansion rates will climb to their trend levels in the near term. Companies remain reluctant to take on additional staff and confidence towards the 12-month outlook for output dipped to its second-lowest mark in over one year. These factors indicate that, so far, firms are doubtful about the sustainability of the economic recovery.

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Government has added over 4000 medical PG seats for 2017-18: J P Nadda Government has added over 4000 medical PG seats for 2017-18: J P Nadda
Mar 03,2017

Shri J P Nadda, Union Minister of Health and Family Welfare today stated that n++an all-time record number of over 4,000 PG medical seats have been approved by Government of India in various medical colleges and hospitals for the academic session 2017-18 this year, taking the total number of PG seats available to 35,117.n++

Thanking Prime Minister Shri Narendra Modi for his visionary leadership and constant guidance, Shri Nadda said that this will further boost our resolve to strengthen tertiary care and improve the medical education in the country. The Health Minister added that of the total increase, 2,046 seats are in medical colleges. Looking at the need to increase PG seats in clinical subjects, the Government had decided to amend the teacher student ratio in clinical subjects in government medical colleges. This change alone has resulted in the creation of 1,137 extra seats in 71 colleges. Many others out of the total of 212 government colleges are sending their proposals and it is expected that at least 1000 more seats can be added during the month of March 2017, Shri Nadda stated.

This includes DNB seats, which are equivalent to MD/MS, have increased by 2,147 in the last one year. Shri Nadda said that there has been a total addition of 4,193 PG seats in the country so far, and a further addition of more than 1000 seats is likely during March 2017. The budget announcement of adding 5,000 PG medical seats in the country is thus likely to be achieved soon, the Union Health Minister said.

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Government has added over 4000 medical PG seats for 2017-18: J P Nadda
Mar 03,2017

Shri J P Nadda, Union Minister of Health and Family Welfare today stated that n++an all-time record number of over 4,000 PG medical seats have been approved by Government of India in various medical colleges and hospitals for the academic session 2017-18 this year, taking the total number of PG seats available to 35,117.n++

Thanking Prime Minister Shri Narendra Modi for his visionary leadership and constant guidance, Shri Nadda said that this will further boost our resolve to strengthen tertiary care and improve the medical education in the country. The Health Minister added that of the total increase, 2,046 seats are in medical colleges. Looking at the need to increase PG seats in clinical subjects, the Government had decided to amend the teacher student ratio in clinical subjects in government medical colleges. This change alone has resulted in the creation of 1,137 extra seats in 71 colleges. Many others out of the total of 212 government colleges are sending their proposals and it is expected that at least 1000 more seats can be added during the month of March 2017, Shri Nadda stated.

This includes DNB seats, which are equivalent to MD/MS, have increased by 2,147 in the last one year. Shri Nadda said that there has been a total addition of 4,193 PG seats in the country so far, and a further addition of more than 1000 seats is likely during March 2017. The budget announcement of adding 5,000 PG medical seats in the country is thus likely to be achieved soon, the Union Health Minister said.

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NMCG Signs MoU with Rotary India for the Success of Namami Gange
Mar 02,2017

In its effort to make Namami Gange programme a mass movement with the involvement of more and more voluntary organisations, National Mission for Clean Ganga under Ministry of Water Resources, River Development and Ganga Rejuvenation signed an MoU with Rotary India.

Rotary India will support clean Ganga mission through their WASH in Schools program in various schools. The program includes the implementation of Water, Sanitation and Hygiene services in the targeted government schools and sensitizing all the stakeholders including school children, teachers, school management communities and communities etc. on practicing positive health behaviors for improving awareness on sanitation. This will be achieved through an integrated learning environment and enabling children to serve as agents of change for their siblings and communities at large. Rotary India has planned to undertake WASH in Schools programme in 20,000 Government Schools.

It may be recalled that Union Minister for Water Resources, River Development and Ganga Rejuvenation Sushri Uma Bharti has been advocating the involvement of voluntary organization and NGOs into the Namami Gange programme to make it a mass movement.

The MoU will pave the way for integrating the theme of Ganga Rejuvenation with Rotarys program of WASH which is to be undertaken in government schools and communities located along the river Ganga in the states of Bihar, Jharkhand and Nadia District of West Bengal and other states where Rotary has a strong presence. It will undertake activities and campaigns to create awareness in schools and communities about Ganga rejuvenation and thereby reducing the pollution flowing into the river. The emphasis will be on public outreach and community participation. The MoU shall remain in force for two years. The collaboration between NMCG and Rotary is a significant step in involving various stake holders and communities in Ganga Rejuvenation. The collaboration would initially focus on synergizing the strength of Rotary International for Ganga Rejuvenation without any additional financial commitment from NMCG.

The MoU was signed by Director General, National Mission for Clean Ganga Shri UP Singh and Vice Chairman of Rotary India Shri PT Prabhakar.

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Moodys: Performance of Indian auto ABS stabilizes in January following deterioration immediately post demonetization
Mar 02,2017

Moodys Investors Service says the performance of rated Indian auto asset backed securities (ABS) leveled off in January 2017 after worsening immediately after demonetization, and expects auto ABS performance to not deteriorate beyond March 2017, as the economy recovers, and oil prices remain range-bound and budget policy initiatives provide support.

Signs of stabilization appeared in January 2017, with collection efficiency rising half a percentage point to 93.0% from December 2016, but was still 1.9 percentage points lower than the average in the three months to October 2016.

The rate of increase in 30+ days delinquencies has recently stabilized, rising only to 11.1% in January 2017 from 10.9% in December 2016, compared to a 1.9 percentage point increase over November and December 2016.

For the 15 Indian auto ABS transactions that Moodys rates, collection efficiency -- the ratio of total collections to billings, excluding prepaid amounts -- between November 2016 and January 2017 declined to 93.4% from an average collection efficiency of 94.9% in the three months to October 2016, immediately before demonetization.

The 30+ days delinquency rate also increased to 11.1% in January 2017 from 9.0% in October 2016, marking a disruption in the recovery witnessed for the commercial vehicle segment over the pasts two years.

Over the same period, the rises in the 60+ days, 90+ days and 180+ days delinquency rates were more subdued at 0.6, 0.6 and 0.8 percentage point respectively.

The nine transactions that utilized their credit facilities in December 2016 have all started to replenish them in January 2017. As a result, the average outstanding credit facilities drawdowns declined to 0.4% at the end of January 2017 from 0.9% at the end of December 2016.

In January 2017, all transactions collected more funds than the amount they needed to pay interest and principal to investors. The transaction trustees used the excess to partially or fully replenish outstanding credit facilities. For transactions with no credit facility drawdowns in December 2016, the trustees passed the excess on to the originators.

The stabilization we have observed in January 2017 further supports Moodys view that deterioration in the performance of the 15 Indian auto ABS transactions that we rate will not extend beyond March 2017.

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Sustained Student Enrolments and Private Sector Participation to Support Education Sector Growth in FY18
Mar 02,2017

India Ratings and Research (Ind-Ra) has maintained a stable outlook on the education sector for FY18. Although enrolments increased marginally in the school segment (FY15: 0.43% yoy) and moderately in higher education (FY15: 5.88% yoy), Ind-Ra believes the sector has the potential to grow due to a huge demand-supply gap. Besides new educational institutions, the existing institutions are continuously churning themselves both in terms of physical infrastructure and course content/curricula to keep abreast with the needs of the economy.

In India, funding remains a key challenge for an education venture. Although 100% foreign direct investment in education is allowed, running an educational venture with the profit motive is still difficult. This is so because education in general is considered a public good and education up to the elementary level is considered a merit good. As a result, the predominant organisational structure of private educational institutions in India is not for profit and they are mostly managed by trusts and societies. The presence of multiple regulators in conjunction with the requirement of numerous approvals and regulatory compliances has further complicated the investment process in the Indian education sector.

Ind-Ra has maintained a Positive Outlook on its rated portfolio of educational entities for FY18 due to their robust credit profiles. Ind-Ra expects their profiles to remain healthy during the year, on account of growing enrolments and improving profit margins. This is attributed to the regionally sound market position of the rated entities, their quality infrastructure and high academic standards.

Ind-Ra has observed a continuous rise in enrolments across all segments of education such as schools, higher education, distance learning and vocational courses. Despite tuition fee being regulated, educational institutions across the board are able to generate reasonably healthy operating margins. Generally, technical and professional courses/programmes are in demand and their pricing is high. However, several educational institutions offering these courses are finding it difficult to absorb the additional cost pressure and are facing liquidity pressures. Also, the cyclical nature of business leads to liquidity mismatches because tuition fees (main source of revenue) are collected at designated intervals, but expenditure takes place on a regular basis.

The impact of demonetisation on the education sector has been mixed. Institutions where donation and capitation fees are collected in cash and have been a significant component of revenue such as in engineering, medical, nursery colleges have been negatively impacted due to demonetisation. However, the increasing number of cashless transactions has the potential to bring in more transparency in the education sector, leading to increased interest of private sector, especially private equity/venture capital players in the sector.


Government policy support towards augmenting the quality of education across all the sub-groups along with creating an environment conducive to foreign and domestic investments, which would reduce the infrastructure deficit in the education sector, would be a positive.

Disproportionate debt-led capital expenditure plans along with increases in debtors, aggravating the liquidity profile, would be a negative for the sector.

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