March

The Cabinet Committee on Investment (CCI) on 21 March 2013 cleared Reliance Industries' (RIL) KG-D6 and NEC-25 blocks for oil and gas exploration along with three other areas. The work on these blocks, which has an investment close to 10.7 billion has dollars, was having difficulties because of inter-ministerial differences, particularly relating to Defence issues. Eight blocks, including RIL's Krishna Godavari basin KG-D6 block and gas discovery area of NEC-25 in the North East Coast (NEC) region, were declared No-Go zones for reasons relating to defence issues raised by the Indian Navy, and the Indian Air Force. An approval for eight blocks, was Sought by the Petroleum and Natural Gas Ministry of which one was already renounced by the contractor, Reliance Industries Ltd. Out of the remaining seven, conditional clearance for four blocks – two of Reliance Industries, one each of ONGC consortium and Cairn India – were sought. The Ministry had also sought CCI approval to declare three blocks as ‘no go’ areas. Two blocks belonged to the ONGC-led consortium and one to the Oil India Ltd-led consortium.
The CCI, headed by Prime Minister Manmohan Singh, was set up to fast-track clearances to infrastructure projects involving investments of over 1000 crore rupees.

The Reserve Bank of India (RBI) on 19 March 2013 cut the repo rate by 25 basis points to 7.5 per cent from 7.75 percent in its mid-quarter review of the monetary policy. The change of the Repo rate is aimed to prompt growth and revive investment. Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent from the earlier 6.75 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 8.5 per cent with immediate effect. The Cash Reserve Ratio (CRR) has been retained at 4 per cent. It is for the second time since the start of the year RBI has cut down the repo rate in a bid to help revive flagging growth in Asia's third-largest economy. RBI has also warned that its scope for further policy easing is limited. The RBI will continue to actively manage liquidity through various instruments, including open market operations, to ensure adequate flow of credit to productive sectors of the economy. With the change in Repo rate, the Reserve Bank of India also announced infusion of 10000 crore rupees into the financial system by purchasing government securities as part of its liquidity injection measure. The Indian economy expanded at a 25-quarter low of 4.5% in October-December 2012 quarter, and the 2.4% rise in industrial production in January 2013 after two months of contraction suggests the recovery is still weak. The current account deficit hit a record-high 5.4 per cent in the September quarter and is expected to end the 2012/13 fiscal year at its highest level ever.

Commercial production of Aishwarya Oil Field at Barmer in Rajasthan has started on 23 March 2013. The commercial production of natural gas will take place from the Rageshwari Well of Barmer region. It is expected that every day production of the oil field shall be 25000 barrels of Crude Oil and 50000 lakh cubic feet of natural gas. The gas field was dedicated to the nation by Petroleum Minister Veerappa Moily and Chief Minister of Rajasthan Ashok Gehlot. After the operations of the Barmer Oil field will reduce the import bills of the country for petroleum that is about 6.5 lakh crore rupees at present. Creation of a national gas grid is in plans of the government for better distribution of natural gas.

Financial Sector Legislative Reforms Commission (FSLRC) headed by Justice BN Srikrishna in its final report submitted to the Union Government of India on 22 March 2013 recommended constitution of unified financial sector regulator by deriving powers from Indian Financial Code including Commodity Derivatives Market. The 200 page long report in its key recommendations have directed the Government of India for unification of the Securities and Exchange Board of India (Sebi), Pension Fund Regulatory and Development Authority (PFRDA), Insurance Regulatory and Development Authority (IRDA) and Forward Markets Commission (FMC) under a single regulator. It also recommended that the Reserve Bank of India should stay as the monetary Authority Regulating Bank. As per the report of the commission, the regulatory structure shall be governed by the Financial Regulatory Architecture Act that to create a uniform legal process for the financial regulators. Before changing the legislative structure the Ministry of Finance shall unify the regulatory structure.
The proposed regulatory structure will be governed by the Financial Regulatory Architecture Act that will ensure a uniform legal process for the financial regulators. The Resolution notifying the FSLRC was issued by the Government on 24 March 2011. The FSLRC is required to submit its findings within a period of 24 months. FSLRC was set up two years ago for reviewing and harmonizing the financial sector legislations, rules and regulations that have gone obsolete or outdated in about a century’s time since when it was written.

Andhra Pradesh on 18 March presented a tax-free, revenue-surplus budget for 2013-14 with an overall expenditure of over Rs 1.61 lakh crore (nearly USD 30 billion). Finance Minister Anam Ramanarayana Reddy told the assembly during his budget speech that the overall expenditure during 2013-14 would be Rs 1,61,348 crore, comprising Rs 1,01,926 crore under non-plan and Rs 59,422 crore under plan heads.

Presenting his third budget, Ramanarayana Reddy said he estimated the revenue surplus would be Rs 10,023 crore and fiscal deficit Rs 24,487 crore, at 2.85 percent of Gross State Domestic Product (GSDP). "I am confident that the budget 2013-14 will infuse new energy to the strategy of inclusive growth of the state," he said. He described the budget as momentous, as allocations enshrine the priority agenda of inclusiveness. It is the first budget after the state enacted a historic legislation in December last year to give statutory status to the scheduled castes and scheduled tribe sub-plan. Under this legislation, the first in the country, funds have been allocated separately to SC sub-plan and ST sub-plan in proportion to the population of these sections. The total allocation for SC sub-plan in 2013-14 budget is Rs 8,585 crore and for the tribal sub-plan Rs 3,666 crore, which is 16.21 and 6.92 percent of the annual plan size respectively. The finance minister said another path-breaking feature of this year's budget is the presentation of the first-ever exclusive agriculture action plan, which is expected to help in comprehensive development of the agriculture sector. Another change brought in the budget presentation this year is the constitution of departmentally related standing committees of the state legislature for considering the demands for grants.

Farm sector in AP gets whopping Rs 25,000 crore: New Agricultural Action Plan
n a first for the Congress Government in Andhra Pradesh, the Agriculture Minister Kanna Lakshminarayana on 18 March presented immediately after the regular budget for 2013-14 a new agricultural action plan for the farm sector which proposes to allocate a sum of Rs. 25,962.02 crore for the year 2013-14.

The Minister said this agriculture budget will show a way in ushering in a new era for the farmers and suggest solutions for the problems engulfing the sector. The budget includes plan component of Rs. 17,694.61 crore and non-plan component of Rs. 8,267.41 crores.

Supplementary to these proposed budgetary allocations, an amount of Rs. 72,450 crore is planned under agricultural credit plan. This makes the total investment for the farm sector as Rs. 98,940.54 crores as against Rs. 79,924.78 crores, an increase of about 24 per cent over last year.

In tune with the basic theme of 12th Five Year Plan, “faster, more inclusive and sustainable growth” and in order to achieve the growth target of 6 per cent under the farm sector, the State has set an ambitious target of increasing food grain production to 300 lakh tonnes by 2016-17.

The Minister said key strategies identified for the farm sector to grow rapidly are: establishment of agriculture technology mission for convergence among concerned departments, strategies to optimise and harness potential of horticulture, animal husbandry and fishery as farm sector growth engines.

Highlighting the farm sector initiatives, the Minister said for the year 2013-14, the Government proposes to continue implementation of supply of quality seeds, Polam Badi (Farmers Field School), extension services, RKVY, National Agricultural Insurance Scheme, National Food Security Mission, Pavala Vaddi and interest free crop loans to farmers, farm mechanisation and input subsidies.

Japanese automotive major Isuzu Motors on 15 March, announced setting up a manufacturing plant in India to make Light Commercial Vehicles (LCVs) and Sports Utility Vehicles (SUVs). The plant, coming up in Nellore district of Andhra Pradesh with an investment of Rs.1,500 crore, will manufacture one lakh units a year. Isuzu Motors India signed a Memorandum of Understanding (MoU) with the Andhra Pradesh government to set up the plant at Sri City in Nellore district. Officials of Isuzu and the state government signed the MoU in Hyderabad, in the presence of Chief Minister Kiran Kumar Reddy, Japan's Ambassador to India Takesai Yagi and Isuzu Motors Limited's executive vice president and general manager, sales, Ryozo Tsukioka. An agreement was also signed between Isuzu Motor India and Sri City, a special economic zone. Shigeru Wakabayashi, deputy managing director, Isuzu Motors India, later told reporters that the plant would manufacture pick-up truck (D-MAX) and SUV (MU-7) from late 2015 or early 2016.The company unveiled on the occasion both D-MAX and MU-7, which it started selling this month by importing built up vehicles. It is currently selling it only in Andhra Pradesh and Tamil Nadu. The plant in Andhra will also act as support foothold for Isuzu's main LCV operation in Thailand. The company manufactures three lakh LCVs and SUVs in Thailand every year. The oldest Japanese automobile firm is scouting for a local partner to assemble its vehicles in India till its plant commences production. It is keen to start the assembly of its products as soon as possible to avoid rising import duties. The Japanese envoy said India account for seven percent of the global production of Japanese automotive companies. He hoped that India would overtake Thailand and China, which account for nine and 10 percent of their production respectively.

Hindustan Petroleum Corporation Limited (HPCL) and the Government of Rajasthan on 14 March 2013 signed a Memorandum of Understanding (MOU) at Jaipur for setting up a refinery-cum-petrochemical complex in Barmer, Rajasthan. The project will be a joint venture between HPCL and Rajasthan State Refinery Limited, apart from other equity partners. The MoU was signed by Subhash Pant, Secretary Mines and Petroleum, Government of Rajasthan and K.Murli, Director (Refineries) of HPCL. The refinery-cum-petrochemical complex in Barmer will be set up at an estimated capital investment of 37230 crore Rupees. The project will be completed in 4 years time duration. The purpose of the refinery will be to process the locally available crude apart from other crudes. The proposed complex will be the first of its kind to be specifically designed to produce petrochemicals from the indigenous crude oil.

Infosys on 15 March has collaborated India Post for developing a service delivery platform that will allow more than 1.30 lakh rural post offices to offer online services. The platform will also connect and manage more than 1.30 lakh handheld devices used by rural postal workers for distribution of social benefits under the National Rural Employment Guarantee Act and process Electronic Money Orders, Infosys said in a statement. With this agreement, Infosys will facilitate India Post’s Rural Systems Integration programme, which will increase adoption of the department’s services and enhance the reach of postal services to the country’s rural population.

The Central Government on 15 March, raked in over Rs.620 crore through sale of its 6 per cent stake in an aluminium producer Nalco, taking it closer to its disinvestment target for the fiscal. Nalco share sale, whose size was pruned to 12.88 crore shares or 5 per cent plus an option to retain an equal number in case of over-subscription, managed to get bids for 15.69 crore or 6 per cent of government shareholding. The government, which priced the issue at a discount of Rs.40 a share, decided to retain all of additional bids for over 2.81 crore shares that came in. The auction had received bids for over 15.69 crore shares, against an offer of over 12.88 crore shares, according to stock exchanges’ data. The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram, on 13 March, cleared stake sale of 25.77 crore shares, or up to 10 per cent, in Nalco through the offer for sale (OFS) route.

The World Bank on 11 March 2013 forecasted that the Indian economy is estimated to grow over 6 per cent during 2013-14. World Bank Chief Jim Young Kim, who is on a three-day visit to India asserted that India is estimated to have grown 5 percent in the current fiscal and the growth rate is likely to improve to 6.1-6.7 percent in 2013-14. The Indian economy, like any other economy, is subject to global slowdown. It has effect here and at the same time, the export market has started doing better. On the positive node, it also had be seen that share of India in global economy almost doubled in five years between 2005 and 2010. Kim is on his first visit to India after taking over as President of World Bank Group in July 2012.

India’s Current Account Deficit (CAD) as a percentage of gross domestic product (GDP) rose to an all-time high of 5.4 per cent in the second quarter of 2012-13 on account of widening of trade deficit and slower growth in invisibles, the Reserve Bank of India (RBI) said in its monthly bulletin for March released on 11 March. The rise in CAD to GDP ratio was partly due to slower growth in GDP and rupee depreciation, the RBI report said adding that a steeper decline in exports growth (12.2 per cent year-on-year) compared with imports growth (4.8 per cent year-on-year) led to widening of trade deficit. The trade deficit widened to $48.3 billion during the quarter under review from $44.5 billion during the corresponding quarter of the previous year. While the net services receipts registered reasonable increase, net invisibles earnings could finance only a lower proportion of trade deficit as net ‘primary and secondary’ income flows were relatively smaller. As per this report, during the first-half of 2012-13, India’s Balance of Payments deteriorated as trade deficit widened and invisibles remained sluggish. On the other hand, capital flows remained lower than that in the preceding year and were just sufficient to meet the gap of current account leading to small accretion to foreign exchange reserves, it said.
Financial sector regulators of India, on 8 March, signed an agreement to monitor conglomerates - large banks and other key players - in view of their rising importance to the real economy, apart from approving a national strategy for financial education. The Reserve Bank said in a statement that the decisions were taken at a sub-committee meeting of the Financial Stability and Development Council (FSDC) held in New Delhi. The four financial sector regulators are the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority. The MoU is aimed at better cooperation in the field of joint supervision and monitoring of the large groups identified as financial conglomerates. The FSDC meeting, chaired by RBI Governor D Subbarao, also approved formulating a national strategy for financial education by incorporating the feedback received from public consultations and from a global peer review. All the four RBI Deputy Governors - K C Chakrabarty, Anand Sinha, H R Khan and Urjit Patel - and RBI Executive Director G Gopalakrishna was also present.

A Group of Ministers (GoM) headed by Agriculture Minister Sharad Pawar cleared export of 5 million tone wheat from government warehouses through private traders on 7 March. The proposal is targeted to clear the huge wheat stock in the country ahead of the new harvest season. Earlier, the government had allowed export of 4.5 million tone through public-sector trading agencies out of which about 2 million tone has already been shipped in a price range of $295-$330 per tone.

The National Association of Software and Services Companies (Nasscom), the apex body of the Indian business process outsourcing and software services industry, announced on 4March, that it is targeting revenues of $300 billion by 2020, 177 per cent more than that earned in 2012.N. R. Narayana Murthy, Infosys Chairman Emeritus, who headed an expert committee that deliberated on the ways and means of achieving the target, said revenues had traditionally come from four “focus areas” — IT services, Indian operatives of MNCs, Business Process Management (BPM) and Engineering and R&D services. However, the industry needed to focus on areas such as mobile and Internet and the domestic market if it was to grow at a compounded annual growth rate of 15 per cent, which is the asking rate if the industry plans to reach its target by 2020.Revenues from the domestic market, a new focus area, are projected to increase from $23 billion to $75 billion. The biggest chunk of revenues is projected to come from the Internet and mobile space, one of the seven “focus verticals” identified by the committee. This segment is likely to account for one-third of all revenues earned by 2020.The Chairman of Nasscom, N. Chandrasekaran, said the focus on the domestic market reflected its large and growing size as well as the talent that was available to tap the potential.

The Defence Ministry, in response to a direction by the Cabinet Committee on Investment (CCI), has given a partial consent to two oil and gas blocks in areas near defence installations even while five others continued to remain in the ‘no-go’ service zone. While five blocks, bagged by Oil and Natural gas Corporation (ONGC), BG Group of the U.K. and Cairn India, will continue to be in the ‘no-go’ areas, Reliance Industries Limited (RIL) received relief for its KG D6 gas block and discovery block of NEC-25 in the Bay of Bengal. Nearly 30 per cent of the KG-D6 block overlapped with one of the Navy's firing and exercise areas. The Ministry was of the view that any exploration and production activities near its naval base would hamper surveillance and detection operations. Following this, RIL agreed to relinquish 495 sq. km of area, qualifying it for receiving a formal nod from defence authorities.ONGC's two KG basin blocks, KG-OSN-2005/1 and KG-OSN-2005/2, have not been cleared as they fall directly within the boundary of a proposed naval base. Also, the firm's KG-OSN-2009/4 block fell within the range of the DRDO's Machhlipatnam launch site. BG’s block KG-DWN-2009/1 fell right at the entry of the proposed naval base, while Cairn's KG-OSN-2009/3 block was in the proximity of the Suryalanka GWFR. The Ministry has also imposed stringent conditions for the exploration of the other 32 blocks.

Considering the serious nature of the observations made by the Comptroller and Auditor General (CAG) on the gross misuse of the agricultural debt waiver and debt relief schemes, the Reserve Bank of India on 6 March, has asked all scheduled commercial banks and local area banks to undertake a complete verification of the list of beneficiaries with priority being given to areas where indebtedness was high. The RBI has told them to fix the accountability on those officials involved in the administrative/accounting lapses. Banks have been asked not to spare the internal auditors and statutory auditors who were responsible for verification, certification, or for passing the claims. They must be identified, and full responsibility fixed at the earliest with no exceptions, the bank said. The apex bank said debt waiver/debt relief certificates must be issued in all eligible cases immediately, and full records of such issuance must be kept ready for inspection. For effective monitoring of the action being taken, the RBI has asked banks to report it on a monthly basis, latest 7th of every month so that the government would be informed accordingly. The CAG in a report has pointed out that several ineligible farmers had availed themselves of the benefits under the government’s much- published Rs.52, 000 crore farm loan waver scheme.

Mukesh Ambani retained his title as the richest person of India for the sixth consecutive year with the net worth of 21.5 billion US Dollars, according to the annual rankings published by Forbes on 4 March 2013. The richest man in the world for fourth time in a row was Mexican business tycoon Carlos Slim with the net worth of 73 billion US Dollars. In the overall list of the billionaires of the world, Mukesh Ambani was ranked at number 22. Lakshmi Mittal, on the other hand was ranked at 41st position with the net worth of 16.5 billion US Dollars. The first in the list was Carlos Slim, followed by Bill Gates with the net worth of 67 billion US Dollars, Spain's Amancio Ortega with net worth of 57 billion US Dollars, Warren Buffett with the net worth of 53.5 billion US Dollars and Larry Ellison with the net worth of 43 billion US Dollars. A total of 55 billionaires from India appeared on the list of 1426 people from the world who have a minimum net worth of 1 billion US Dollars. Among Indians, Mukesh Ambani as well as Lakshmi Mittal was followed by Azim Premji, Dilip Shanghvi, Shashi & Ravi Ruia, Kumar Mangalam Birla, Savitri Jindal, Sunil Mittal, Shiv Nadar, K P Singh and Anil Ambani.

Failure to pay excise duty and service tax could lead to arrest of defaulters, as per the provisions proposed in the Finance Bill 2013 introduced by finance minister P Chidambaram in the Lok Sabha on 4 March. As per the provisions, offences relating to excise and customs duty evasion of over Rs 50 lakh would be made cognizable and non-bailable. Similarly in case of service tax, the failure to deposit the tax amount exceeding Rs 50 lakh with the government would result in imprisonment up to seven years.

More than Rs 31,900 crore was received by over 68,000 NGOs operating in different parts of the country during 2008-11, Rajya Sabha was informed on 6 March. Minister of State for Home Mullappally Ramachandra also said that registration of 4,138 NGOs was cancelled under Foreign Contribution (Regulation) Act, 2010 for violating existing guidelines, while 24 cases were referred to CBI for investigation.
A Chennai Bengaluru Industrial Corridor Being Planned The Finance Minister, P Chidambaram in his Budget speech in Lok Sabha on 28 February, said that the Delhi Mumbai Industrial Corridor (DMIC) project has made rapid progress. Plans for seven new cities have been finalized and work on two new smart industrial cities at Dholera, Gujarat and Shendra Bidkin, Maharashtra will start during 2013-14. We acknowledge the support of the Government of Japan. In order to dispel any doubt about funding, The Government will provide, if required, additional funds during 2013-14 within the share of the Government of India in the overall outlay for the project. The Department of Industrial Policy and Promotion (DIPP) and the Japan International Cooperation Agency (JICA) are currently preparing a comprehensive plan for the Chennai Bengaluru Industrial Corridor. The corridor will be developed in collaboration with the Governments of Tamil Nadu, Andhra Pradesh and Karnataka. The next corridor will be the Bengaluru Mumbai Industrial Corridor on which preparatory work has stared.

The Securities and Exchange Board of India (SEBI) on 1 March issued detailed guidelines allowing shareholders to convert their depository receipts into equity shares of the Issuer Company and vice-versa. IDRs are generally instruments denominated in rupees and allow overseas companies to raise funds from the Indian market. It stipulated that IDRs would be redeemable into underlying equity shares after completion of one year period from the date of listing them and the issuer will provide two-way fungibility of IDRs. This move is expected to attract more foreign companies to be listed on Indian bourses. So far only the UK-based banking major Standard Chartered PLC was listed as an IDR.