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Cabinet approves signing of the Extradition Treaty between India and Afghanistan
Sep 12,2016

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the signing and ratification of the Extradition Treaty between India and Afghanistan.

The treaty would provide a legal framework for seeking extradition of terrorists, economic offenders and other criminals from and to the Afghanistan.

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Indirect Tax Collections upto August, 2016 show an increase of 27.5% over the net collections for the corresponding period last year
Sep 12,2016

The figures for indirect tax collections (Central Excise, Service Tax and Customs) upto August 2016 show that net revenue collections are at Rs 3.36 lakh crore which is 27.5% more than the net collections for the corresponding period last year. Till August 2016, 43.2% of the Budget Estimates of indirect taxes for Financial Year 2016-17 has been achieved.

As regards Central Excise, net tax collections stood at Rs.1.53 lakh crore during April-August, 2016 as compared to Rs.1.03 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 48.8%.

Net Tax collections on account of Service Tax during April-August, 2016 stood at Rs.92,696 crore as compared to Rs. 75,219 crore during the corresponding period in the previous Financial Year, thereby registering a growth of 23.2%.

Net Tax collections on account of Customs during April-August 2016 stood at Rs. 90,448 crore as compared to Rs. 85,557 crore during the same period in the previous Financial Year, thereby registering a growth of 5.7%.

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Fitch: Basel III Add to Indian Banks Capital Trigger Risk
Sep 12,2016

The progressive increase in minimum capital requirements under Basel III is likely to put nearly half of Indian banks in danger of breaching capital triggers, says Fitch Ratings. State banks are the most at risk, given their poor existing capital buffers and weak prospects for raising capital through market channels.

Our analysis of 27 Indian banks with outstanding hybrid capital instruments indicates that at end-June 2016 the total capital adequacy ratio (CAR) for 11 banks was at or lower than the minimum of 11.5% required by end-March 2019 (FYE19). Of these, six did not have enough capital to meet the minimum required by FYE17. The minimum total CAR is a prerequisite for payment of coupons on both legacy and Basel III perpetual debt capital instruments.

For Basel III perpetual instruments, coupon deferral is also linked to banks meeting both minimum regulatory common equity tier 1 (CET1) ratio and Tier 1 ratio. More than half of the banks currently have a CET1 ratio that is below the required 8% minimum that will be applied from FYE19.

Fitch estimates that Indian banks will require around USD90bn in new capital by FYE19 to meet Basel III standards, with the state banks accounting for about 80% of the total. Meeting IFRS 9 accounting requirements could add to the challenges faced by the banks. The government has already earmarked INR700bn (USD10.4bn) for capital injections into state banks through to FYE19 and in July it announced that INR229bn (USD3.4bn) was being frontloaded. Priority is being given to the banks most in need of new capital but the capital injections may not be sufficient to address their ongoing capital needs to meet required provisions and to support balance sheet growth. However, we believe that more capital will be needed from the government to restore market confidence.

As it stands, state banks are heavily reliant on the government for new capital. Sharply deteriorating financial profiles have raised the standalone credit risks of state banks over the last year. Equity valuations have suffered as a result. Most continue to trade at heavy discounts to their book value, which acts as a significant constraint on raising new core equity.

The State Bank of Indias (BBB-/Stable; Indias largest bank) proposed USD1bn issuance of dollar-denominated AT1 instruments will be the first cross-border deal, and Fitch believes the issuance will serve as a pricing benchmark for other banks keen to access the dollar AT1 market. The Reserve Bank of Indias recent proposal to allow banks to issue masala bonds - rupee-denominated bonds issued in offshore capital markets - could also help widen the investor pool and ultimately deepen the market for AT1 bond issuance.

Nevertheless, state banks will continue to face difficulties in raising capital from the market, which will keep their Viability Ratings under pressure and will weigh on the sector outlook.

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CCI has disposed off 80% anti-trust cases handled by it by now: D.K. Sikri
Sep 12,2016

The fair trade regulator, Competition Commission of India (CCI) has disposed off more than 600 of 750 anti-trust cases handled by the Commission by now i.e. about 80 per cent of the total cases, its chairman, Mr D.K. Sikri said at an ASSOCHAM event held in New Delhi today.

n++Of the information filed, now 80 per cent is not subject to any investigation as only 20 per cent cases go through the investigation stage,n++ said Mr Sikri while inaugurating an ASSOCHAM conference on Competition Law: Opportunities & challenges in India.

n++Unlike in the past when we undertook the investigation, in more than 50 per cent of the cases or informations filed with us we are now applying rigours of enquiry very-very strongly,n++ he said.

n++What is more important is that the decisions so far made by the Commission have gone on very well and that is very satisfying for us and that has produced some positive outcome,n++ added Mr Sikri.

He said that the CCI, in about past six months, had organised 40 events for promoting awareness in one way or the other amongst the people about the Competition Law, for all stakeholders and people to understand the scope of the law and the remedies it offers.

The CCI chief also said that the Competition Law is also helpful to the government when it comes to making public procurements especially. n++Cases of collusive bidding as well as cartelisation have come to the Commission from various departments of the government, state governments and public sector enterprises, they have been investigated.n++

He also said that there is greater awareness now about the competitive bidding among the enterprises as well as the government departments.

n++While evaluating the bids they have been closely looking at the fact whether the bidders are independent and they are not under the same management, mind you this was not the case earlier and this was not appreciated in the past,n++ said Mr Sikri.

n++Similarly, they are complaining if the prices quoted by the bidders are identical, this behaviour earlier was given not much consideration because the public enterprises would hold negotiation treating them all as L1 but now the same behaviour is being questioned and the government departments are genuinely looking for an L1 bidder who offers really a truly competitive price,n++ he added.

He said that this change has the potential to bring about considerable savings in the public procurement by the government as it constitutes 30 per cent of Indias GDP (gross domestic product).

n++If the government agencies become alert as they have become now and enforce competition thoroughly in the bidding process, even two per cent savings in the public procurement, including financial procurement can wipe out the entire fiscal deficit of the budget,n++ further said Mr Sikri.

He said that competition compliance must go beyond being made a formality, it should be formalised and imbibed as an article of faith by all the businesses in the country.

n++We have recently embarked upon and are preparing a competition compliance manual which is comparable to international standards and are taking the help of legal fraternity in preparing this,n++ he said.

n++We are hopeful that this will help in better understanding and promoting the culture of compliance in the country amongst businesses,n++ added the CCI chairman.

He also said that the Commission is not in favour of imposing penalties as they have to be rational and proportional. n++We do not favour it and we do not want this to be imposed, we will advocate and favour more and more compliance which is in the best interest of Indian economy.n++

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Cash not much in demand; no more parking space in equities, gold
Sep 12,2016

n++We are in a peculiar situation where the benchmark market indices -NIFTY and Sensex have reached levels, perceived to be high while gold cannot be safe haven option for too long as the yellow metal has seen quite a run in the past eight months. Investment cannot go in the real estate and property markets which are in a state of a mess. So the cash would sit idle in banks, irrespective of higher or lower interest ratesn++, the chamber document noted.

It said there is no investment appetite from the industry which is not even operating at full capacity. Whatever investment is coming in the industry is from the foreign direct investment or for bidding in obligatory natural resources like telecom spectrum.

Explaining the key point as to where too much liquidity is being generated from, in the absence of robust industrial growth or demand, barring a few sectors like automobile, the ASSOCHAM paper said India has been one of the main recipients of large cash being printed by central banks of the developed countries without any takers there, even at the sub-zero interest rates.

n++So, when we look at the elevated levels of valuations in the stock market, we should see with a muted sense of excitement because a large part of it is driven by a global liquidity and absorbing it has its own issues; though in the short term, the trend has helped bring stability in the foreign exchange value of rupee, n++said ASSOCHAM Secretary General Mr D S Rawat.

He said generally when too much money chases too few goods or assets, the prices of latter tend to increase; but not any more.

n++Equities had their run, so is the case with the gold. That leaves real estates. With several top notch builders in a messy situation of not being able to deliver the in-hand projects, there is a tremendous lack of confidence of investors or actual users in the property market. So, that leaves cash idlen++, the paper said.

It said thanks to improved prospects in agriculture following good spell of rains this Monsoon, Indias rural demand coupled with the services sector would keep the rate of economic growth ticking at a decent pace. n++While the increased rural demand would give leg-up to certain industrial segments as well, it would not be to the extent of causing investment in fresh capacityn++.

Besides, the commodity cycle remains muted, though there are some pick up signs, though in a tentative manner. The export demand would too remain mutedn++. n++Thus, the biggest trigger has to be demand for money for fresh investment, which is still far. On the other hand, the asset classes -equities, gold have reached saturation while real estate is in a nursing wardn++.

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The Government assures that all resources are made available to the Port sector to achieve maximum growth of business
Sep 12,2016

Mumbai Port Trust needs to bring about administrative reforms to develop ability to compete with the private ports, said Minister of State for Shipping, Road Transport & Highways, Chemicals & Fertilizers, Shri Mansukh L. Mandaviya on an inspection visit to Mumbai Port Trust today. He further expressed a need for the port to have a clear vision and road map for development for next ten to twenty years and appealed to all the stakeholders to work in this direction.

The Minister held a meeting with the Deputy Chairman and the Heads of Departments and reviewed the functioning of the Mumbai Port in all its scope and ambit. While reviewing the existing and the future projects undertaken by the Port, the Minister assured that Government would ensure that all resources are made available to the sector to ensure maximum growth of business.

The Minister also visited the Cruise Terminal at BPX Mumbai Harbour and inspected the liquid cargo handling facilities at Jawahar Dweep and Pir Pau. He appreciated the facilities created at Second Chemical Berth, which provides handling capacity of 55000 DWT tankers and capacity to handle 2.5 MMTPA cargo. He was informed that the MPT facilities have provided a lot of advantages mainly to the Public Sector Oil Companies and eliminated the waiting time of oil tankers at Mumbai Port as also reduced the ships turn round time.

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Kharif Crop Sowing Crosses 1054 Lakh Hectare Areas
Sep 09,2016

The total sown area as on 09th September, 2016 as per reports received from States, stands at1054.49lakh hectare as compared to 1012.35 lakh hectare at this time last year. 

It is reported that rice has been sown/transplanted in 380.28lakh ha, pulses in 143.95   lakh ha, coarse cereals in187.86 lakh ha, oilseeds in 186.95 lakh ha, sugarcane in 45.77lakh hectare and cotton in 102.13 lakh ha.

The details of the area covered so far and that covered during this time last year are given below:

Lakh hectare

CropArea sown in 2016-17Area sown in 2015-16Rice380.28370.04Pulses143.95111.48Coarse Cereals187.86177.05Oilseeds186.95181.70Sugarcane45.7749.60Jute & Mesta7.567.73Cotton102.13114.75Total1054.491012.35

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RBI requested to issue instructions to banks to allow payment of tax under the Scheme in cash and to allow deposit of cash over the counter
Sep 09,2016

The Income Declaration Scheme, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets. The Scheme has come into effect from 1 June 2016 and is open for declarations upto 30 September 2016.

In respect of the issue of deposit of cash declared under the Scheme, the Central Board of Direct Taxes (CBDT) vide Circular No.29 of 2016 dated 18 August 2016 clarified that Reserve Bank of India (RBI) has been requested to issue instructions to banks to allow payment of tax under the Scheme in cash and to allow deposit of cash over the counter.

The RBI has vide its circular dated 08.09.2016 instructed the banks to invariably accept cash deposits from all the declarants under the Scheme and to accept cash deposits, irrespective of amount, over the counters, for making payment under the Scheme through challan ITNS-286.

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Water Level of 91 major reservoirs of the country goes up by two per cent
Sep 09,2016

The water storage available in 91 major reservoirs of the country for the week ending on September, 08 2016 was 108.104 BCM, which is 69% of total storage capacity of these reservoirs. This was 117% of the storage of corresponding period of last year and 97% of storage of average of last ten years.

The total storage capacity of these 91 reservoirs is 157.799 BCM which is about 62% of the total storage capacity of 253.388 BCM which is estimated to have been created in the country. 37 Reservoirs out of these 91 have hydropower benefit with installed capacity of more than 60 MW.

REGION WISE STORAGE STATUS:-

NORTHERN REGION

The northern region includes States of Himachal Pradesh, Punjab and Rajasthan. There are 6 reservoirs under CWC monitoring having total live storage capacity of 18.01 BCM. The total live storage available in these reservoirs is 14.24 BCM which is 79% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 90% and average storage of last ten years during corresponding period was 81% of live storage capacity of these reservoirs. Thus, storage during current year is less than the corresponding period of last year and is also less than the average storage of last ten years during the corresponding period.

EASTERN REGION

The Eastern region includes States of Jharkhand, Odisha, West Bengal and Tripura. There are 15 reservoirs under CWC monitoring having total live storage capacity of 18.83 BCM. The total live storage available in these reservoirs is 14.27 BCM which is 76% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 58% and average storage of last ten years during corresponding period was 69% of live storage capacity of these reservoirs. Thus, storage during current year is better than the corresponding period of last year and is also better than the average storage of last ten years during the corresponding period.

WESTERN REGION

The Western region includes States of Gujarat and Maharashtra. There are 27 reservoirs under CWC monitoring having total live storage capacity of 27.07 BCM. The total live storage available in these reservoirs is 20.38 BCM which is 75% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 59% and average storage of last ten years during corresponding period was 73% of live storage capacity of these reservoirs. Thus, storage during current year is better than the storage of last year and is also better than the average storage of last ten years during the corresponding period.

CENTRAL REGION

The Central region includes States of Uttar Pradesh, Uttarakhand, Madhya Pradesh and Chhattisgarh. There are 12 reservoirs under CWC monitoring having total live storage capacity of 42.30 BCM. The total live storage available in these reservoirs is 36.70 BCM which is 87% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 77% and average storage of last ten years during corresponding period was 65% of live storage capacity of these reservoirs. Thus, storage during current year is better than the storage of last year and is also better than the average storage of last ten years during the corresponding period.

SOUTHERN REGION

The Southern region includes States of Andhra Pradesh, Telangana, AP&TG(2combined projects in both states) Karnataka, Kerala and Tamil Nadu. There are 31 reservoirs under CWC monitoring having total live storage capacity of 51.59 BCM. The total live storage available in these reservoirs is 22.52 BCM which is 44% of total live storage capacity of these reservoirs. The storage during corresponding period of last year was 32% and average storage of last ten years during corresponding period was 72% of live storage capacity of these reservoirs. Thus, storage during current year is better than the corresponding period of last year but is less than the average storage of last ten years during the corresponding period.

State having equal storage than last year for corresponding period is Gujarat. States having lesser storage than last year for corresponding period are Himachal Pradesh, Tripura, Uttarakhand and Tamil Nadu.

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Ministry of Steel extends date of enforcement of Stainless Steel Products (Quality Control) Order, 2016 by three months
Sep 09,2016

Steel Minister Shri Birender Singh held wide-ranging consultations with various stakeholders before the decision and exhorted the stainless steel industry to be a partner in government drive to encourage use of quality steel.

Ministry of Steel has issued Stainless Steel Products (Quality Control) (Amendment) Order, 2016, dated 08.09.16, for extending the date of enforcement of the Principal Order dated 10thJune, 2016, from three months to 180 days. The Order aims at ensuring use of high quality standards in respect of 3 specified stainless steel product categories.

The Steel Minister Shri Birender Singh had met representatives of various stakeholders, who had differing views on the impact of implementation of Quality Control Order, issued in June 2016. Producers, traders, merchants and users attended this meeting organised in August 2016. In the no-holds-barred deliberations under the Chairmanship of the Minister, each side put forth their issues and concerns in detail. Shri Singh gave a patient hearing and facilitated free exchange of ideas. He advised that all sides must put their minds together and come up with a practical resolution in larger interest, within a given timeframe. He directed that an empowered functionary from each group should sit together with Ministry of Steel officials and resolve the deadlock. The ultimate objective must be to see that there is no compromise on quality of steel, he added. Subsequent rounds of discussions at various levels have resulted in the present amendment order. While complimenting all concerned for reaching a consensus, Shri Singh has urged the users and trader groups to come forward and join the central government in its drive to provide quality steel to Indian consumers. The Minister has exhorted them to apply to BIS for licenses and to also encourage their foreign suppliers to do the same, as quality of steel cannot be compromised.

The 3 stainless steel product categories covered under the Order are IS 5522 (stainless steel sheets and strips of utensils), IS 15997 (low nickel austenitic stainless steel sheet and strip for utensils and kitchen appliances-specification) and IS 6911 (stainless steel plate, sheet and strip-specification). The Order stipulates prohibition regarding manufacture, storage, sale, distribution etc. without Standard Mark of BIS and obligation of certification.

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Gartner Says Organizations Must Update Their Network Access Policy to Address Attack of IoT Devices
Sep 09,2016

By 2020, 21 billion of Internet of Things (IoT) devices will be in use worldwide. Of these, close to 6 percent will be in use for industrial IoT applications. However, IT organizations have issues identifying these devices and characterising them as part of current network access policy, said Gartner, Inc. Infrastructure and operations (I&O) leaders must therefore update their network access policy to seamlessly address the onslaught of IoT devices.

Having embraced a bring-your-own-device strategy, organizations must now get employee devices on the enterprise network and start addressing the 21 billion IoT devices that we project will want access to the enterprise network, said Tim Zimmermann, research vice president at Gartner. Whether a video surveillance camera for a parking lot, a motion detector in a conference room or the HVAC for the entire building, the ability to identify, secure and isolate all IoT devices n++ and in particular headless devices n++ is more difficult to manage and secure.

Many IoT devices will use the established bandwidth of the enterprise network provided by the IT organisation (wireless 1.3 Gbps of 802.11ac Wave 1 or 1.7 Gbps of 802.11ac Wave 2). However, it is important that the IT organisation works directly with facilities management (FM) and business units (BUs) to identify all devices and projects connected to the enterprise infrastructure and attaching to the network.

Once all of the devices attached to the network are identified, the IT organization must create or modify the network access policy as part of an enterprise policy enforcement strategy. This should determine if and how these devices will be connected, as well as what role they will be assigned that will govern their access.

In order to monitor access and priority of IoT devices, I&O leaders need to consider additional enterprise network best practices. These can be defining a connectivity policy, as many IoT devices will be connected via Wi-Fi; performing spectrum planning n++ many IoT devices may be using 2.4GHz, but may not be using 802.11 protocols such as Bluetooth, ZigBee or Z-Wave, which may create interference; or considering packet sniffers to identify devices that may do something undesirable on the network.

While more IoT devices are added to the enterprise network, I&O leaders will need to create virtual segments. These will allow network architects to separate all IoT assets (such as LED lights or a video camera) from other network traffic, supporting each FM application or BU process from other enterprise applications and users.

As the concept of virtual segments continues to mature, the capabilities will allow network architects to prioritize the traffic of differing virtual segments as compared with the rest of the traffic on the network. For example, security video traffic and normal enterprise application traffic may have a higher priority than LED lighting.

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Gartner Says India Security Market is on Pace to Grow 10.6 Percent in 2016
Sep 09,2016

Enterprise security spending (hardware, software and services) in India is on pace to reach $1.12 billion in 2016, up 10.6 percent from $1.01 billion in 2015, according to Gartner, Inc.

Security spending will continue to grow in 2017 when revenue is projected to reach $1.24 billion. Security services (that includes consulting, implementation, support and managed security services) revenue accounted for 61 percent of this total revenue in 2015, and this proportion will increase to 66 percent by 2020.

The strong growth in the security services market will be primarily because customers need external services to transform their security posture in the digital business era. Security services are typically categorized as either implementation, consulting or security outsourcing services, and many providers are beginning to offer all three categories to address customer requirements, Siddharth Deshpande , principal research analyst at Gartner.

In 2016, we are seeing large enterprises increase their security budgets to enhance their security program, and several midmarket and enterprise organizations creating new space for security spending as part of their technology budget, said Mr. Deshpande.

Key security initiatives for a majority of organizations in 2016 include: security operations, incident response network and data center security, identity governance and administration, mobile and cloud security governance, advanced threat defense, application security, security policy and program development and governance, risk and compliance (GRC).

Mature organizations that have begun the journey towards detection and response approaches are now looking to focus on advanced capabilities around security operations and incident response. Several organizations in India are now realizing that a purely technology centric approach to their security strategy will not suffice. As a result many organizations are beginning to pay equal emphasis on the people and process elements. In the context of digital business, the people and process elements of security and risk management are becoming extremely important.

Digital business challenges the basic principles of information risk and security management, said Mr. Deshpande. Digital business moves at a faster pace than traditional business, and traditional security approaches designed for maximum control will no longer work in the new era of digital innovation. Risk and security leaders must understand the risks associated with business unit innovation, and balance the imperative to protect the enterprise with the need to adopt innovative technology approaches.

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Government approves subsidized helicopter services in J&K and Himachal Pradesh
Sep 09,2016

The Government has accorded its approval for operation of helicopter services in the State of Jammu and Kashmir and Himachal Pradesh on a pilot basis in 10 sectors, as per the stipulation that the most inaccessible destination points should be chosen. The scheme can be extended to other/additional sectors at a later date depending upon the assessment of the justifiable needs of the local population.

The State Governments of Jammu and Kashmir and Himachal Pradesh will re-identify/chose and finalize the most critical sectors in their States, with number of flying hours by the State Governments in consultation with the Ministry of Home Affairs based on current justifiable needs. While deciding the sectors for providing the air connectivity, the difference of time between the road travel and air travel may be taken as an important factor.

In case of Jammu and Kashmir, the recommendation of the Joint Working Group for the following five sectors in Srinagar-Drass-Kargil-Zanskar-Leh has been accepted:

n++ Srinagar - Kargil - Srinagar

n++ Srinagar - Drass - Srinagar

n++ Kargil - Padum - Leh - Padum - Kargil

n++ Leh - Lingshed - Leh

n++ Srinagar - Leh - Srinagar

The above 5 sectors may be re-aligned based on the fresh assessment made by Government of J&K in consultation with MHA.

The Government of India will subsidize only the cost towards actual number of entitled passengers utilizing the helicopter services. No subsidy will be provided for the vacant seats.

Emergency services and common passenger services to the local residents of the State will be provided on priority and at subsidized rates. VIPs, Officers of the State Government on tour, Income tax payers or tourists will not be eligible for subsidized fares. Such persons will have to pay full fare subject to availability of seats.

The operator of the services will be selected by open tender process by the State Government. The operation of helicopter services in the State will continue till March, 2017 or expiry of contract, whichever is earlier.

Review and rationalization of annual ceiling of flying hours vis-a-vis actual utilization as well as internal review of the sectors/ scheme will be carried out in consultation with Financial Advisers of Ministry of Home Affairs and Civil Aviation after March, 2017.

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Global Trade Finance Gap Reaches $1.6 Trillion, SMEs Hardest Hit - ADB
Sep 09,2016

The inability of financial institutions to provide $1.6 trillion in support to buyers and sellers of goods across countries resulted in forgone growth and job creation in 2015, according to an Asian Development Bank (ADB) Brief. Developing Asias share of the global trade finance gap was $692 billion, including India and the Peoples Republic of China.n++

In its new study, 2016 Trade Finance Gaps, Growth, and Jobs Survey, ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 337 banks in 114 countries and 791 firms in 96 countries. The annual survey is now in its fourth year.

n++The growth of the trade finance gap in 2015 continues to be a drag on trade, and small- and medium-sized enterprises are the most affected,n++ said Steven Beck, Head of ADBs Trade Finance Program. n++The survey shows that both globally and nationally, regulators and policymakers should increase support for trade finance through smarter banking regulations, more transparent and comprehensive credit ratings systems, and capacity building for local banks. ADBs Trade Finance Program stands ready to assist member countries and our client banks in all of these areas.n++

According to the brief, trade finance gaps persist in part due to the cost and complexity of compliance with banking regulations, with 90% of surveyed banks citing anti-money laundering and know-your-client requirements as impediments to their ability to expand trade finance, especially for small businesses. Basel III banking regulations, which set liquidity requirements for bank finance, are also cited by 77% of respondents as a major barrier to finance new trade.

The report notes small- and medium-sized enterprises (SMEs) face the greatest obstacles in accessing affordable trade financing. Globally, 57% of trade finance requests by SMEs are rejected, against just 10% for multinational companies. High rejection rates lead many firms to turn to inefficient informal financing.

Financial technology, or Fintech, can help bridge the financing gap for businesses left out of trade finance, according to the brief. But awareness of digital finance by small businesses remains low, with 70% of responding companies indicating that they are unfamiliar with these tools. Among firms that were familiar with digital finance, peer-to-peer lending had the strongest uptake rates in developing countries.

Since 2009, ADBs Trade Finance Program has supported more than 8,200 SMEs across the region, with about 11,800 transactions valued at over $23.6 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.

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Central Assistance to Andhra Pradesh
Sep 09,2016

1. The Central Government is committed to help and assist the newly created State of Andhra Pradesh. The commitments of the Centre emanate from four basic documents, namely, the provisions of the Andhra Pradesh Reorganisation Act, 2014, the report of the Fourteenth Finance Commission, the statement of the then Prime Minister before the Parliament on 20.2.2014 and the Report dated 1.12.2015 of Vice Chairman, NITI Aayog on Developmental Support to the Successor State of Andhra Pradesh under the Andhra Pradesh Reorganisation Act 2014.

2. The above mentioned commitments are broadly categorized as under:-

(i) The Andhra Pradesh Reorganisation Act:

(a) Section 46 of the Act provides for a reference to be made to the Fourteenth Finance Commission to take into account the resources available to the Successor States and make separate awards to them. It further provides for a developmental package to be given to the backward areas of the State of Andhra Pradesh. It also provides for adequate incentives in particular for Rayalaseema and north coastal regions of the State.

(b) Section 90 of the Act declares the Polavaram Irrigation Project as a National Project.

(c) Under Section 93 of the Act, the details of institutions and infrastructure to be developed in the State are outlined in the Thirteenth Schedule to the Act.

(d) Section 94 of the Act provides for appropriate fiscal measures, including offer of tax incentives, to be given to the Successor States to promote industrialization and economic growth. It further provides for support to programmes for backward areas including physical and social infrastructure. In addition, it provides for giving special financial support for creation of essential facilities in the new capital of the successor State of Andhra Pradesh, including the Raj Bhawan, High Court, Government Secretariat, Legislative Assembly, Legislative Council and such other essential infrastructure.

(ii) Statement of the then Prime Minister Dr. Manmohan Singh on 20.2.2014:

The then Prime Minister, Dr. Manmohan Singh on 20.2.2014 stated before the Rajya Sabha that Special Category Status would be extended to the State of Andhra Pradesh for a period of five years. This would be done to put the States finances on a firmer footing. He further stated that the resource gap for the year 2014-15 would be compensated by the Central Government.

(iii) Fourteenth Finance Commission:

The Fourteenth Finance Commission defined the financial relationship between Centre and the States for the five year period ending 2019-20. The Commission did not make a distinction between Special and General Category States. Its approach was to fill the resource gap of each State to the extent possible through tax devolution. Accordingly, the Commission recommended an enhanced devolution of 42% of the Central Governments tax revenues to States. If devolution alone could not cover the assessed gap, for certain States, a revenue deficit grant was provided. Andhra Pradesh was one of the States determined to be a revenue deficit State, and the Commission recommended that the Centre would provide revenue deficit grant for the period of the Fourteenth Finance Commission. The amount of deficit for each year was mentioned in the report itself and a total of Rs.22,113 crores is to be paid to Andhra Pradesh as revenue deficit grant for the 5 year period.

(iv) Report on Developmental Support to Andhra Pradesh dated 1.12.2015:

The Vice Chairman, NITI Aayog Dr. Arvind Panagariya studied various aspects of the support to be given to Andhra Pradesh under the Reorganisation Act and made recommendations regarding effective implementation.

The Central Governments commitments to the State of Andhra Pradesh

3. Under the Andhra Pradesh Reorganisation Act, the commitment for the resource gap for the year 2014-15 is being met on the basis of standardized expenditure for that year. The revenue gap has been tentatively quantified subject to further adjustment on account of figures relating to certain pension schemes. A part of the revenue gap compensation amounting to Rs.3,979.5 crore has already been paid and the balance is being paid in annual instalments.

An amount of Rs.2,500 crore has already been paid as support for creation of new capital of State of Andhra Pradesh and a balance of Rs.1,000 crore would be paid in due course.

An amount of Rs.1,050 crore has been disbursed as special package for backward areas and a further amount of Rs.1,050 crore would be paid in the coming years.

4. The Polavaram Project is on the river Godavari near Ramayyapeta village of Polavaram mandal, about 42 km upstream of Sir Arthur Cotton Barrage in the State of Andhra Pradesh. It envisages construction of a dam and canal system to create ultimate irrigation potential of 2,91,000 ha. (7.2 lakh acres), generation of 960 MW of hydro power, drinking water supply to a population of 28.50 lakh in 540 villages and diversion of 80 TMC of water to Krishna river basin.

The project was accorded investment clearance by the Planning Commission for Rs.10,151.04 crore (at 2005-06 price level) in 2009. Further, the Advisory Committee of Ministry of Water Resources approved the cost at 2010-11 price level as Rs.16,010.45 crore during January, 2011 including power and drinking water component of Rs.2868 crore. Prior to the passage of the AP Reorganisation Act, the Polavaram Project was being implemented by the Government of Andhra Pradesh with Central Assistance under the Accelerated Irrigation Benefits Programme (AIBP). An expenditure of Rs.5,135.87 crore had been incurred up to 31.3. 2014 including Central Assistance of Rs.562.469 crore.

The Central Government will fund the Polavaram Irrigation Project in the following manner:

(i) It will provide 100% of the remaining cost of the irrigation component only of the project for the period starting from 1.4.2014, to the extent of the cost of the irrigation component on that date.

(ii) In view of the recommendations of the Vice Chairman NITI Aayog that it will be appropriate for the State of Andhra Pradesh to execute this project (as it is an important project and the State Government is keen to complete it at the earliest), the Government of India has agreed to the States request for the execution of the project by the State Government on behalf of the Government of India.

5. Government of India has already legislated for fiscal incentives of enhanced investment allowance and accelerated depreciation. They will come into effect once notified, after the State of Andhra Pradesh identifies the eligible backward areas.

6. In respect of educational and other institutions:

n++ A Petroleum University has already been established.

n++ The IIT has already been functioning from a transit campus and the main campus is being constructed.

n++ The National Institute of Technology has already been functioning since September 2015 in a temporary campus and its main campus is being constructed.

n++ The Indian Institute of Information Technology, Kurnool has already started functioning from the temporary campus and would start functioning and its main campus is being constructed.

n++ The site for the Central University in Anantapur district has already been selected.

n++ The Indian Institute of Science Education and Research has been established in Tirupati.

n++ The Indian Institute of Management has been established at Visakhapatnam.

n++ An All India Institute of Medical Sciences has been approved at Guntur and the land for the same is being taken over.

n++ A Tribal University is to be established in the State of Andhra Pradesh for which a Site Selection Committ