November 2013 Economic Affairs | Current Affairs 2013 | Economic Affairs 2013 |

The 9th International Heavy Minerals Conference (HMC 2013) was held in Visakhapatnam, Andhra Pradesh from 27 to 29 November 2013. The biennial International conference is ninth in a series of conferences that focus on the heavy minerals industry. The International conference was held for the first time in India by the Mining Engineers Association of India (MEAI) in collaboration with and support from the Government of India, other professional organizations and industry. The Conference theme is: Overcoming New Challenges. The aim of HMC 2013 was to discuss the technical, managerial, business opportunities and challenges facing the sector worldwide. Delegates attended the conference including from Australia, Canada, Africa, US, China, Vietnam, Sri Lanka and Europe.

Dr. M. Veerappa Moily dedicated the country’s first state-of-the-art Styrene Butadiene Rubber (SBR) Plant to nation at Panipat, Harayana on 29 November. He described this is as a milestone achievement by Indian Oil Corporation, India’s largest company to visualize and implement such a project which will provide us the product E-SBR for which we were looking at other countries. This will result in substantial amount of savings of foreign exchange. SBR is suitable to produce various products like tyres, conveyor belts, hose, shoe soles, industrial goods, etc with superior processing properties like flexing resistance, tear and cracking resistance, improved abrasive resistance, etc. The project is considered as a path breaking venture of national importance as there is no operating capacity in the country and the entire domestic demand is met through imports. Indian Oil Corporation Limited, TSRC Corporation, Taiwan, and Marubeni Corporation, Japan, are Joint Venture Partners in this prestigious project implemented under the banner of Indian Synthetic Rubber Ltd. (ISRL). It is based on Butadiene available from Indian Oil’s Panipat Naphtha Cracker Complex.

Prime Minister Dr. Manmohan Singh and UPA Chairperson, Sonia Gandhi Jointly inaugurated India’s first all-women bank, Bharatiya Mahila Bank in Mumbai on 19 November 2013,marking the birth anniversary of former Prime Minister Indira Gandhi. The main objectives of the bank will be to focus on the banking needs of women and to promote their economic empowerment. The bank will commence operations with an initial capital of one thousand crore rupees. The Union Government on 12 November 2013 appointed Usha Ananthasubramanian as the first chairperson and managing director of public sector Bharatiya Mahila Bank (BMB).The Union government approved 1000 crore Rupees seed capital for the women-focused public sector bank, announced by Union finance minister P. Chidambaram in his 2013-14 budget speech.

The Reserve Bank of India on 18 November opened a 5000 crore rupees refinance window for MSME sector, for a period of one year to ease the liquidity. The view of easing the liquidity stress to the Micro and Small Enterprises sector was taken by the RBI to provide refinance to the small Industrial Development Bank of India. Basically the Micro and Small Enterprises sector is employment intensive and contributes significantly to exports. At present, the slowdown in the economy has resulted in the liquidity tightness in the MSEs in the manufacturing and services sector raising the need of liquidity support. The availability of the refinance facility will be till 13 November 2014.

To boost research and innovation, twelve states and four UTs have been considered eligible to receive Rs. 120 crore each under the Research, Innovation and Quality Improvement Component of RUSA – Rashtriya Uchchatara Shiksha Abhiyan. They are – Andaman & Nicobar, Arunachal Pradesh, Assam, Bihar, Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Himachal Pradesh, Karnataka, Kerala, Maharashtra, Manipur, Nagaland, Odisha, Punjab and Uttar Pradesh. All innovative schemes will be funded as per the decision of the PAB (Project Approval Board). The funds are meant to support different types of research programmes like base research, key technology (R&D), High end (R&D), etc during the current Five Year Plan. Setting up of science parks and cutting edge technology and instrumentation facility will be supported by this fund. The funds will also take care of promoting inter-disciplinary and trans-disciplinary research centres as well as promoting research and entrepreneurial activities. Some other areas to be funded under the Research and Innovation Component are: initiative to attract quality researchers and students; institutions that offer merit-based scholarships, fully funded doctoral fellowships, post-doctoral fellowships; faculty and students exchange programmes with world-class institutions; and initiatives to scale up industry-academia partnership. States may decide about unit of implementation. It can either be the State as a whole or a few select institutions.

The Reserve Bank of India (RBI) on 19 November directed Public Sector Banks (PSBs) to provide loans to women self-help groups (SHGs) at 7 per cent per annum to avail the benefit of interest rate subvention scheme under the Swarnajayanti Gram Swarozgar Yojana-Aajeevika (SGSY) scheme. All women SHGs will be eligible for interest subvention to avail the credit up to 3 lakh Rupees at 7 per cent per annum. Swarnajayanti Gram Swarozgar Yojana-Aajeevika (SGSY) is an initiative by the government to provide sustainable income to poor people living in rural areas of the country.

MTNL (Mahanagar Telephone Nigam Limited) and Los Alamos Technical Associates, Inc. (LATA) of the USA have signed an MOU on 12 November, for launching the state of the art training programs on Cyber Security, Risk And Crisis Management, Public Safety and Disaster Management, Homeland Security/ Critical Infrastructure Protection, Security Operations Management, Industrial Security, Fire & Safety Management etc. This will bring to India the best US practices followed in security, which has been developed over a period of time. India’s security needs are evolving rapidly and this partnership can help develop professional programs in cyber and physical security to meet the country’s growing demands. MTNL is going to start these trainings through its state of the art training centres at New Delhi and Mumbai. A dedicated resource will be allocated for this project and impart training, so that it is more relevant for Indian Conditions. First batch of training is likely to start from March 2014. MTNL will be developing a one or two day series of awareness programs for the top management of companies and the government departments.

The country's largest software services firm Tata Consultancy Services (TCS) inaugurated its 10,000-seat campus at Gandhinagar on 15 November. The software development facility, inaugurated by Gujarat Chief Minister Narendra Modi, has been developed over 25.5 acres, with a built-up area of 1.6 million sq ft, TCS said in a statement."TCS has played a pioneering role to make Gujarat an attractive IT destination for global companies and also helped drive technology-led growth by investing in talented youth of the state and building long-term partnerships with state institutions," TCS CEO and MD N Chandrasekaran said. This centre will help TCS scale up its presence and drive the expansion of the IT industry in Gujarat, he added. The new centre has been developed as a 'green' campus and has applied for a LEED (Leadership in Energy and Environmental Design) Gold rating. Built with locally sourced red stone, the campus will use solar panels, LED lighting, occupancy and light-sensitive sensors to optimise power consumption. The campus, which also features a learning centre and iClass rooms (connected with other TCS learning hubs globally), is located in an approved Special Economic Zone and will serve global customers across industry segments.

With surplus domestic sugar production, the government on 15 November, has relaxed a condition for exports of the sweetener by doubling the limit on overseas shipments that sellers can register. “One of the conditions was the upper limit of 25,000 tonnes per application for registration. This limit is now enhanced to 50,000 tonnes. Accordingly, an exporter can seek registration of up to 50,000 tonnes of sugar,” the Directorate General of Foreign Trade said in a circular. Welcoming the decision, the Indian Sugar Mills Association said this would help in exports of raw sugar, which is generally shipped in bulk.

The Centre has proposed four Ultra Mega Solar Power Projects (UMPPs) with generation capacity ranging between 2,000 MW and 5,000 MW. These projects are planned in Rajasthan (4000 MW), Gujarat (4,000 MW), Kargil (2,000 MW) and Ladakh (5,000 MW). These projects to be developed in phases entail an investment of Rs 90,000 crore. Tarun Kapoor, Joint Secretary, Ministry Of New And Renewable Energy told reporters on 10 November, at the sidelines of Inter Solar conference that the per megawatt capital cost for proposed UMPPs has been estimated at Rs 6 crore against the existing cost of Rs 7-7.5 crore while the per unit tariff at Rs 5.50. ''The UMPP in Rajasthan will be developed on engineering procurement and construction (EPC) basis. Six public undertakings including BHEL (26%), Solar Energy Corporation of India Limited (22%), Power Grid Corporation, Hindustan Salt and Satluj Jal Vidyut Nigam (16% each) and Rajasthan Electronics & Instruments Ltd (3%) will form a joint venture company (JVC) to develop UMPP in Rajathan. As far as Gujarat UMPP is concerned, it will be developed with five to six companies. However, Kapoor said the Centre has yet to finalise details in this regard. Further, a lot of private developers have desired to develop 1,000 MW to 3,000 MW on their own. However, it won't be possible as the project will be tendered, he added. According to Kapoor, transmission is a major issue for the development of Kargil and Ladakh UMPPs.

Giving a big boost to the disinvestment programme to raise Rs.40,000 crore this fiscal, the Cabinet, on 7 November, gave its approval for the follow-on public offer of Power Grid Corporation of India Limited (PGCIL) to raise about Rs.7,500 crore.“The 17 per cent follow-on public offer of PGCIL has been cleared by the Cabinet Committee on Economic Affairs (CCEA). This includes 13 per cent fresh equity and 4 per cent stake sale by the government,’’ Minister of State for Power (Independent charge) Jyotiraditya Scindia said after the meeting. The government will sell 18.51 crore shares in the public sector company. The company will issue fresh 60.18 crore shares through the offer. Out of these fresh shares, about 2.4 per cent would be reserved for employees. At current market valuations, the FPO is likely to fetch close to Rs.7,500 crore. Post-FPO, the government stake in the company will come down to 57.89 per cent from 69.42 per cent. The company may garner close to Rs.5,700 crore while the government will get an estimated Rs.1,700 crore. This would be the second follow-on offering from Power Grid, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs.90 a share.

The Government of India on 4 November 2013 decided to extend the sale of the non-subsidized 5 kg cooking gas (LPG) cylinders at petrol pumps across the country. The proposal to extend the scope of the scheme was approved by M. Veerappa Moily, the Union Minister of Petroleum and Natural Gas. Earlier, the scheme was in operation in Mumbai, Kolkata, Chennai and Bengaluru. The scheme was launched on 5 October 2013 by Moily in Bangalore for sale in selected company owned and company operated petrol pumps in the four cities. The cylinders will be sold at market rates. The scheme has allowed to sale the 5 kg LPG cylinders with just proof of Identity through Petrol Stations to students, IT professional, BPO employees and people with odd duty timings. As per the decision, the sale of the cylinders would be done with or without regulator for the first.

The Reserve Bank of India has signed cooperation agreement with central banks of Australia and New Zealand for exchange of information. The MoUs provide a formal, yet legally non-binding, channel for information exchange between the supervisors, the RBI said in a statement on 7 November. With this, the Reserve Bank has signed such MoUs with 18 supervisors, it said.

The Reserve Bank of India on 6 November 2013 permitted the Wholly Owned -Subsidiaries (WOS) of the foreign banks to acquire the domestic private sector banks. RBI also permitted the banks to set up branches anywhere in the country. As per the permission given by RBI, the foreign banks will have to seek permission of RBI to open branches in certain sensitive locations. The foreign bank subsidiaries have also been allowed to list on the local stock exchanges. Although, they will not be allowed to hold more than 74 percent in the private banks they may acquire. The order of the RBI also stated that the foreign banks that commenced banking business in India before August 2010 will be given an opportunity to convert into a wholly owned subsidiary.

October 2013 Economic Affairs | 2013 Economic Affairs | October Economic Affairs

Mahindra Aerospace, a venture of the Mahindra Group, inaugurated its aero-structures facility at Narsapura, about 50 km from Bangaluru on 21st October. “The facility is aimed at positioning the Indian footprint in the global aero-structures supply chain,” said Anand Mahindra, Chairman, Mahindra Group. Mr. Mahindra also announced that Mahindra Aerospace had entered into a “strategic” technology partnership with the Spanish Tier-I aero-structures supplier, the Aernnova Group. Mr. Mahindra said the company had invested about Rs.150 crore in the facility, which could generate an initial turnover of Rs.200 crore per annum. The facility, spread over 25,000 sq. metres, will employ about 400 personnel. Mr. Mahindra said the Group’s acquisition in 2010 of two Australian companies — Gippsland Aeronautics, a manufacturer of small aircraft, and Aerostaff, an aircraft component manufacturer — had given it a toehold in the global aircraft component supply chain. He said smaller turboprop aircraft had a bright future, especially in connecting smaller towns and inaccessible locations in the country. He said the company had developed capabilities in three segments — aerospace engineering, aero-structural and in the development of utility aircraft.

The Indian Institute of Corporate Affairs (IICA), an autonomous institute functioning under the aegis of the Ministry of Corporate Affairs, on 24th October, signed 5 memoranda of understanding with country’s five leading research, academic and business institutions, namely: Indian School of Business (ISB); Institute of Public Enterprise (IPE); Tata Institute of Social Sciences (TISS); The Energy and Research Institute (TERI) and YES Bank Limited. Sachin Pilot, Minister of Corporate Affairs, was present on the occasion. IICA provides opportunities for research, education, and advocacy and also serves as a knowledge-centre for policy makers, regulators and other stakeholders related to the domain of corporate affairs. The Institute supports the growth of the corporate sector in India through an integrated and multi-disciplinary approach. IICA is also an academy for the Indian Corporate Law Service (ICLS) officers. The Minister had an intense interaction with the probationers of the ICLS, discussing their training needs and how IICA’s course modules could be enhanced to cater to everyday practical requirements. Mr. Pilot emphasized the importance of gauging and assessing the specific needs of industry and business and stressed on the fact that all the courses should add value to the participants’ potential and ability thereby creating a demand in the Corporate Sector for employees to undergo training/development at IICA.

The Central Public Works Department (CPWD) on 24th October, signed a memorandum of understanding to undertake project management consultancy for construction of a permanent campus of IIM Tiruchirappalli. The MoU was signed here in the presence of CPWD DG V K Gupta and IIM Tiruchirappalli Director Dr Prafulla Agnihotri, a statement issued by the Urban Development Ministry said. The campus will come up in 68 hectares of land allotted by the Tamil Nadu government. It will accommodate 1500 students, besides 300 faculty and staff members and comprise of academic facilities, world-class hostels, accommodation for faculty and staff, recreational facilities and a well-equipped management development centre. The master planning and designing of the campus has been entrusted to a firm of leading architects. The construction of the Rs 450 crore-project (aprox.) will begin in March-April next year, and is expected to be completed by March 2016. IIM Tiruchirappalli aims to have a green campus, and will be self-sufficient in terms of its water requirements in five to seven years of its coming up. IIM Tiruchirappalli is country's 11th IIM, where the session began in 2011.

A significant oil discovery has been made in an ultra-deep water block off Brazil where Bharat Petroleum Corp Ltd. (BPCL) and Videocon Industries together hold 40 per cent interest. Brazilian oil giant Petrobras, which is the operator of the block, has confirmed the Farfan-1 oil discovery in the ultra-deep waters of the Segipe-Alagoas basin, off Brazil, Videocon said in a statement on 21st October. The state-owned firm has confirmed excellent productivity of good quality crude following a drilling test. Petr Brasileiro SA (Petrobras) has completed a test in well 3-BRSA-1178D-SES (3-SES-176D), informally known as Farfan 1, to test the production capacity of the accumulation in the BM-SEAL-11 concession area of Block SEAL-M-426.Farfan-1 is located 104 km north of Aracaju, the capital of the northeastern Brazilian state of Sergipe. It lies in a water depth of 2476 metres, about 5 km from the Farfan discovery well. Petrobras is the operator of the block with a 60 per cent interest while IBV Brasil (a 50:50 joint venture of BPCL and Videocon) holds the remaining 40 per cent stake. A 51-metre reservoir was discovered at Farfan-1 well. The discovery has been estimated to hold more than 1 billion barrels of oil.

China’s biggest power companies have, for the first time, agreed to set up a permanent presence in India by opening power equipment service centres to address concerns of their increasingly large customer base, according to an agreement signed by the two governments in Beijing on 23rd October. Under the XI Plan (2007-12), 18 GW of thermal power projects were commissioned, using Chinese-manufactured equipment. Besides, 40 GW of power projects are now being built using equipment from China — more than from any other country. The 23rd October’s pact, which was signed by Wu Xinxiong, Administrator of China’s National Energy Administration, and India’s Ministry of Power, was one of nine agreements signed between both countries, following talks in Beijing , between Prime Minister Manmohan Singh and his counterpart, Chinese Premier Li Keqiang.A move, earlier this year, to impose a 20 per cent import duty on power equipment from China — on account of concerns expressed by the domestic industry — has prompted Chinese companies to revise their plans for the Indian market. The import duty has also concerned Indian industry, particularly as there is a growing shortfall in capacity. Chinese power companies had, so far, limited their business to selling equipment, despite the growing import demand from India and needs for servicing. Other agreements signed on Wednesday included an MoU between the two Ministries of Transport to co-operate in the roads sector, and exchange ideas on transport policy and transport technology, as well as ‘sister cities’ agreements between New Delhi and Beijing, Kunming and Kolkata, and Chengdu and Bengaluru aimed at boosting tourism. The two countries also discussed ways to bridge the increasingly widening trade imbalance, which, this year, is on track to exceed even last year’s record US $28 billion. After nine months of this year, the deficit reached US $24.7 billion, with India’s exports down by 22.5 per cent. Bilateral trade last year reached US $66 billion. Both countries were, however, unable to reach an agreement on industrial parks, officials said, with the Chinese side yet to decide on a location with around five sites under consideration. A joint statement issued after talks said both countries would also explore the feasibility of taking forward a Bangladesh-China-India-Myanmar (BCIM) economic corridor — an initiative that the Chinese side has been pushing since Mr. Li’s May visit to India.

The Tax Administration Reform Commission (TARC), set up by the Finance Ministry to suggest measures to prevent economic offences among other things, is expected to submit its report in six months, TARC Chairman and Advisor to Finance Minister Parthasarathi Shome said in New Delhi on 21st October. The Commission held its first meeting in New Delhi on 21st October. The term of the 7 member TARC is 18 months, and it will work as an advisory body to the Ministry of Finance. The terms of reference of the Commission include a review of the existing mechanism of dispute resolution and methods to widen tax base. The TARC will also recommend measures to strengthen inter-agency information sharing between Central Board of Direct Taxes (CBDT), the Central Board of Excise and Custom (CBEC), the Financial Intelligence Unit (FIU), the Enforcement Directorate, and also with banking as well as financial sectors. It will review the existing mechanism and recommend measures to enhance predictive analysis to detect and prevent tax and economic offences, said an official statement. Besides, it will recommend a system to enforce better tax mechanism — by size, segment and nature of taxes and taxpayers that should cover methods to encourage voluntary tax compliance. The members of the Commission are: Y. G. Parande, Sunita Kaila, M. K. Zutshi, S. S. N. Moorthy, M. R. Diwakar and S. Mahalingam.

The Finance Ministry, on 23rd October, announced that it would infuse Rs.14,000 crore capital in various banks this fiscal, including Rs.2,000 crore in State Bank of India and Rs.1,800 crore each in IDBI Bank and Central Bank of India .Apart from the capital support from the government, public sector banks have the headroom to raise Rs.10,000 crore from the market though rights issue, qualified institutional placement (QIP) or follow-on public offer (FPO) without diluting the existing government stake. Financial Services Secretary Rajiv Takru said the money had been given to enhance equity capital. For the moment, this was good enough to see them through; he added. The capital infusion had been done with the twin objective of adequately meeting the credit requirement of the productive sectors as well as to maintain regulatory capital adequacy ratios in public sector banks (PSBs). The government, as the majority shareholder, was committed to keep all PSBs adequately capitalised, a statement said in New Delhi on 23rd October. Infusion of capital by government in PSBs is in addition to their internally generated capital to enable them maintain a comfortable level of Tier-I capital. Towards this end, the government had been infusing need-based capital in PSBs, the statement said. An amount of Rs.12, 517 crore was infused in 13 PSBs during 2012-13.

Oil and Natural Gas Corporation Videsh Ltd. (OVL), on 14th October, announced that it had bought an additional 12 per cent stake in a Brazilian oilfield for US $ 529 million. OVL, which had a 15 per cent stake in block BC-10 along with Royal Dutch Shell, exercised a pre-emption right to block China’s Sinochem group from buying a 35 per cent interest in the oilfield from Petrobras of Brazil. While the Indian firm will pick up a 12.08 per cent stake, Shell will acquire the remaining 23 per cent. “In August, Petrobras entered into a sales transaction with Sinochem for disposal of their 35 per cent interest in BC-10 for $1.543 billion. This agreement was subject to pre-emption rights of the partners, Shell and OVL,” OVL says in a statement. The acquisition of additional participating interest in the block is subject to approval of the Brazilian anti-trust and regulatory authorities. Shell and OVL served the pre-emption notice to jointly acquire 35 per cent on September 17. On closing, OVL’s stake in the block would increase to 27 per cent, the statement says. Block BC-10, also known as Parque das Conchas, is in the Campos Basin of Brazil, and includes four offshore deep-water fields - Ostra, Abalone, Argonauta and Nautilus, and a few identified exploration prospects. It is located about 120 km from Vitoria town.

After the International Monetary Fund and the Asian Development Bank, the World Bank on 16th October cut India's economic growth forecast for the current financial year to 4.7%, from 6.1% earlier."Although output growth in the first quarter of the current fiscal year fell to 4.4%, growth is expected to rebound strongly in the second half of 2013-14 with core inflation trending down, a bumper crop expected in agriculture (where a 5% increase in area sown is expected to raise agricultural growth to 3.4% from 1.9% a year ago), and exports likely to benefit substantially from the rupee's depreciation," the multilateral agency said in its latest India Development Update.

Last week, IMF lowered the growth outlook to 4.25%, drawing strong protests from the government, which believes that the economy will expand by 5-5.5% this year. Several private economists have also predicted sub-5% growth. In Washington, RBI governor Raghuram Rajan on 16th October said economic activity will gain momentum towards the end of the year. "The effects of that (project) clearance will show up towards the end of the year. So, growth will start picking up because these large projects will start coming back on-stream," he said, adding that the monsoon will help create demand.

The Indian economy grew 5% last year, the slowest pace in a decade as industry put up a poor show and farm sector grew under 2%.The World Bank also warned that India may have to dip into its foreign exchange reserves to finance the current account deficit (CAD) in 2013-14. "International reserves could decline somewhat in 2013-14 but would still amount to a comfortable import cover of approximately five months." India's foreign exchange reserves are sufficient to cover the import bill for around seven months at present and the government is hoping to contain the current account deficit at $70 billion and avoid dipping into reserves.

As per the latest telecom subscription data released by the Telecom Regulatory Authority of India on 31st July 2013, total Broadband subscriber base in India increased from 15.19 million at the end of June 2013 to 15.24 million at the end of July 2013. This is a monthly growth of 0.33 percent. Yearly growth in broadband subscribers is 3.79 percent during the last one year (July 2012 to July 2013). At present, there are 161 Internet Service Providers (ISPs) which are providing broadband services in the country. Out of these, 121 ISPs (having 98.48 percent market share) have provided broadband subscription data for the month of July 2013, for the rest of the ISPs data from previous month has been retained. Top five ISPs in terms of market share (based on subscriber base) are: BSNL (9.97 million), Bharti Airtel (1.43 million), MTNL (1.10 million), Hathway (0.37 million) and You Broadband (0.32 million).

Anand Sharma, Union Minister of Commerce and Industry on 7th October in New Delhi, met the Director General of the World Trade Organization, Mr. Roberto Carvalho de Azevêdo. This was Mr. Azevêdo’s first visit to India after he assumed charge as the sixth Director General of the WTO on 1 September 2013. Sharma commended Mr. Azevêdo on his efforts to inject a new momentum into the discussions which has led to some progress and an intensification of discussions in recent weeks. With less than 10 weeks remaining before the Ninth Ministerial Conference of the WTO in December 2013, Sharma and Mr. Azevêdo had a detailed discussion on the issues being negotiated for an outcome in the Bali Conference. Sharma stressed that the centrality of multilateral processes must be retained. All Members need to work together to strengthen the WTO as an institution. Though Bali is not the end of the road, it is to be seen as a stepping stone to conclusion of the Doha Round. The success of this round is critical for multilateralism. Sharma urged Mr. Azevêdo to persuade all parties to discuss the food security proposal constructively.

He observed that developing countries are finding themselves hamstrung by the existing rules in running their food stockholding and domestic food aid programmes. The developed world too had market price support programmes and was able to move away from market price support - though not fully even now - because of their deep pockets. This is not possible for developing countries. It is important for developing countries to be able to guarantee some minimum returns to their poor farmers so that they are able to produce enough for themselves and for domestic food security. Sharma and Mr. Azevêdo agreed that a lopsided outcome of the Doha Round is not in anyone’s interest. It is up to all of us to participate actively in the negotiations in order to arrive at that balance. Sharma assured the DG of India’s cooperation in striving to achieve a balanced outcome at Bali and an early resolution of remaining issues in the DDA post-Bali.

India Post (Department of Posts) has signed an agreement with Wall Street Exchange, a company of the Emirates Post Group of UAE for launch of an International Electronic Money Transfer service through ‘Instant Cash’ product of the Emirates Post Group. The service was launched in New Delhi on 11th October, by P. Gopinath, Secretary, Department of Posts, by receiving the first payment from United Arab Emirates at a function organized by her Department for signing the tie-up between the Department of Posts and the Emirates Post Group. The service will be rolled out nationally in a phased manner and will be made available at approximately 17,500 post offices across India by next month. The service will be provided through the International Financial System (IFS) of Universal Postal Union. This tie-up offers the Indian diaspora worldwide - especially in the gulf region - a safe, secure and reliable money transfer service for their families back home. This new service has its own significance going by the fact that globally, India is the largest recipient of remittances with over US $ 70 billion annually, half of which come from the Gulf. ‘Instant Cash’ is a wholly owned subsidiary of the Emirates Post Group, and its services are available in 59 countries through more than 60,000 locations. They provide instant money transfer service so that the money is available to the customers within minutes of completing the transaction. India Post is the largest postal network in the world and has completed 158 years of existence.

Telecom Regulatory Authority of India released the latest telecom subscription data on 31 July 2013. As per this data, the total number of subscribers has increased to 904.46 million with a net addition of 1.37 million subscribers during the month – showing a monthly growth of 0.15 percent. Out of the total subscriber base, 548.85 million are from the urban areas and the remaining 355.60 million are the rural subscribers. The total Teledensity at the end of July 2013 was 73.54 out of which the share of urban subscribers was 60.68 percent and that of rural subscribers was 39.32 percent. Mobile Number Portability (MNP) requests increased from 95.59 million subscribers at the end of June 2013 to 97.82 million at the end of July 2013. In the month of July 2013 alone, 2.23 million requests have been made for MNP.

The Cabinet Committee on Economic Affairs on 3rd October has approved the implementation of the National Mission on Oilseeds and Oil Palm (NMOOP) during the 12th Plan Period with financial allocation of Rs. 3507 crore. This would help in enhancing production of oilseeds by 6.58 million tones. This would also bring additional area of 1.25 lakh hectares under Oil Palm cultivation with increase in productivity of fresh fruit bunches from 4927 kg/ha to 15,000 kg/ha and increase in collection of tree borne oilseeds to 14 lakh tone. Implementation of the proposed Mission would enhance production of vegetable oil sources by 2.48 million tones from oilseeds (1.70 million tones), oil palm (0.60 million tones) and tree borne oilseeds (0.18 million tones) by the end of the 12th Plan Period. NMOOP is built upon the achievements of the existing schemes of Integrated Scheme of Oilseeds. Oil Palm and Maize (ISOPOM), Tree Borne Oilseeds Scheme and Oil Palm Area Expansion (OPAE) programme during the 11th Plan period. Implementation of these schemes have shown increase in production and productivity of oilseeds, area expansion with increased production of FFBs under oil palm and augmented availability of quality planting materials, pre-processing technologies and awareness about TBOs.

The Union Culture Minister Chandresh Kumari Katoch on 3rd October, launched a unique project to take India’s Heritage online in New Delhi. Under the project, Archaeological Survey of India (ASI) has agreed with Google to create 360-degree online imagery of 100 of India’s most important heritage sites, including the Taj Mahal, Khajuraho and the Ajanta and Ellora caves. Speaking on the occasion the Minister said these details images will be placed for public viewing over the Internet. The aim of this collaboration is to generate interest and consciousness among the Indian population in general and the youth in particular towards safeguarding the national cultural heritage of India. She said, this information, which will be readily available over the Internet for public viewing, will help in bringing our monuments closer to the public. The Minister expressed the hope that under this project the experience of visiting heritage sites across a vibrant nation would be more accessible and enjoyable and also to bring it to the notice of billions of people connected globally via the Internet. Once published, this new imagery of Indian heritage sites will be available on Google Maps and on the World Wonders site within the Google Cultural Institute so that people across India and around the world can virtually view and explore these areas, and in the process, learn more about thousand years of Indian history.

The Central Government has decided in principle to enhance the amount of capital to be infused into Public Sector Banks (PSBs), on 3rd October. It may be recalled that in the Budget for 2013-14, a sum of Rs. 14,000 crore was provided for capital infusion. This amount will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two wheelers, consumer durables etc, at lower rates n order to stimulate demand. While this will bring relief to the consumers, especially the middle class, it is also expected to give a boost to capacity addition, employment and production. This decision is based on the discussions between Dr. Raghuram Rajan, Governor, Reserve Bank of India (RBI) and the Union Finance Minister, P. Chidambaram when Dr Rajan called on the Finance Minister on 3rd October. The issue of credit growth in different sectors was discussed. At the end of September 2013, growth of Gross Bank Credit stood at about 18 per cent, year-on-year. However, credit growth is sluggish in some sectors leading to the conclusion that demand in these sectors remains subdued. Based on the discussions, the Government has decided in principle to enhance the amount of capital to be infused into Public Sector Banks.

SEBI approved major reforms to attract overseas investors. It has announced new Foreign Portfolio Investor regulations for easier registration process and operating framework for investors from abroad. The new class of investors - FPIs - will encompass all Foreign Institutional Investors, their sub-accounts and Qualified Foreign Investors. They will be divided in three categories as per their risk profile. The Know Your Client - KYC requirements and other registration procedures will be much simpler for FPIs compared to current practices. The SEBI has also decided to grant them a permanent registration. SEBI also approved setting up 'Designated Depository Participants which will register FPIs on behalf of the market regulator subject to compliance with KYC norms.

The Cabinet Committee on Economic Affairs on 3rd October, gave its approval to the proposal of M/s. Etihad Airways PJSC, United Arab Emirates for subscribing 2,72,63,372 equity shares of Rs.10 each of M/s. Jet Airways (India) Limited amounting to 24 percent of the post issue paid up equity share capital for an amount not exceeding Rs.2057.66 crore. The Foreign Investment Promotion Board (FIPB) has recommended the proposal. The approval would result in foreign investment amounting to Rs.2057.66 crore in the country.

The Cabinet Committee on Economic Affairs on 3rd October, has approved the proposal of the Ministry of Petroleum and Natural Gas to authorize ONGC Videsh Limited (OVL) and Oil India Limited (OIL) to acquire 20 percent Participating Interest (PI) in Rovuma Area 1 Offshore Block in Mozambique (Area 1). The transaction comprises acquisition of:- (a) 100 percent of shares in Videocon Mozambique Rovuma 1 Limited, the company holding a 10 percent PI in Area 1, from Videocon Mauritius Energy Limited, a subsidiary of Videocon Industries Limited, jointly by OVL and OIL for US$ 2,475 million. Closing is expected before 31st December 2013; and (b) another 10 percent PI in Area 1 from Anadarko Mozambique Area 1 Limitada, a subsidiary of Anadarko Petroleum Corporation solely by OVL for US$ 2,640 million, with closing in February, 2014.

An agreement to set up the India’s largest Forged Wheel Plant at Lalganj, Raebareli, in Uttar Pradesh was signed in the presence of the Minister of Steel, Beni Prasad Verma and the Rail Minister, Mallikarjun Kharge on 3rd October. The Railway Minister Mallikarjun Kharge said that the forged wheels are essentially required in the rolling stock for running longer trains at higher speed. He said imports substitution, indigenous development and inclusive growth is the driving force for setting up this project through mutual coordination between Ministry of Railways and Ministry of Steel.

September 2013 Economic Affairs | Current Affairs 2013 | Economic Affairs 2013 |

The global financial services major, Barclays on 27th September, has lowered India’s FY14 gross domestic growth (GDP) forecast for the current financial year to 4.7 per cent, saying the growth and fiscal health of the country are likely to remain under pressure, with 2014 election dynamics adding to uncertainties. Earlier, Barclays had projected India’s growth at 5.3 per cent. India’s economic growth had slumped to decade low of five per cent in 2012-13. It had slid to 4.4 per cent during April-June quarter, the lowest in past several years, pulled down by a drop in mining and manufacturing output. According to the global financial services major, the broader trend in manufacturing and mining remains sluggish and the likely elevated-for-longer interest rate trajectory is also emerging as another headwind for industrial growth.Moreover, the country’s fiscal health is once again coming under pressure and the upcoming national elections (around April-May 2014) are another source of potential uncertainty for the economy and is likely to be a headwind against a revival of the investment cycle. It said after the surprise rate rise in the September policy meeting, the Reserve Bank of India is not likely to ease repo rates till the middle of next year. “We now do not expect any easing in the repo rate until mid-2014, as opposed to our earlier expectation of that happening from December 2013,” it said. The central bank has categorically flagged that inflation is higher than its comfort level, the report added.It said the rupee is expected to maintain a stable to positive bias in the near term, reflecting an improving current account, delayed Fed tapering and likely inflows under the FCNR scheme.

The Union government of India on 26 September 2013 notified GAAR (General Anti Avoidance Rules). It seeks to check tax avoidance by investors routing their funds through tax havens. It will come into effect from 1 April 2016. The GAAR will apply to entities availing tax benefit of at least 3 crore rupees. It will apply to foreign institutional investors, FIIs that have claimed benefits under any Double Tax Avoidance Agreement (DTAA).Investments made by a non-resident by way of offshore derivative instruments or P-Notes through FIIs, will not be covered by the GAAR provisions. The notification said, investments made before 30 August 2010, will not be scrutinized under GAAR.

Indian Institution of Corporate Affairs (IICA) and BSE Ltd On 23rd September, signed an MoU in Mumbai to work collaboratively to develop a Corporate Social Responsibility (CSR) index, take up capacity building on CSR, conduct education and awareness programmes, and other activities to facilitate a more effective corporate participation in CSR areas. Indian Institution of Corporate Affairs (IICA) was established by Ministry of Corporate Affairs (MCA), Government of India to act as think-tank and centre of excellence to support the growth of the corporate sector in India through an integrated and multi-disciplinary approach. In the new Companies Act, 2013 it has been mandated for eligible companies to spend 2% of their profits on CSR activities. This initiative of the Ministry of Corporate Affairs which requires companies to look beyond shareholder value and make CSR a core driver of their strategy shall bring competitive advantage to Indian Inc with the global players in the long run and shall attract more investment from investors. The proposed IICA-BSE CSR Index shall assess impact and performance of companies listed at BSE in CSR activities. The Index would also look at the performance of companies in their mandatory CSR spend as per the new Companies Act, 2013 as one of the important and objective criteria. The information provided in the public domain on CSR activities by these listed companies and which is also assured, shall have more preference in the various evaluation parameters of the Index. Performance of the companies in CSR areas would be combined with the market performance of companies for selection of companies. The Index would be sector neutral. Companies eligible to be included in the Index for further evaluation shall ensure basic compliance as per proposed CSR regulations. IICA-BSE proposes to form an Advisory Committee which would guide for CSR index construction and its design. This Advisory Committee would have consultative approach and interact with various stakeholders so that best global practices are aligned to Indian needs as per Section 135, Companies Act 2013, in the index construction and it becomes benchmark index to assess Indian corporate in CSR. IICA-BSE shall also work on capacity building to assist companies for meeting their agenda of CSR and would conduct awareness programme in next 6 months.

Reserve Bank of India on 25 September 2013 banned zero per cent interest rate schemes for purchase of consumer goods. The decision has taken in order to protect consumer interest. In this regard Reserve Bank of India issued a notification to all the Schedule Commercial Banks and local area banks.
The very concept of zero per cent interest is non-existent and such schemes only serve the purpose of alluring and exploiting vulnerable customers. Banks should neither resort to any practice that would distort the interest rate structure of a product nor hide any processing fees. All banks must stop these practices as they violate the very principle of fair and transparent pricing of products which beholds customer rights and protection, especially, in the more vulnerable retail segment. In the zero percent EMI schemes offered on credit card outstandings, the interest element is often camouflaged and passed on to customer in the form of processing fee.

India on 18th September has been recognized as ‘Authorizing Nation’ under the international Common Criteria Recognition Arrangement (CCRA) to test and certify Electronics and IT products with respect to cyber security. Thus, India has become the 17th nation to earn such recognition. This international Arrangement has 26 Member countries. USA, UK, Germany, South Korea, France, Japan, Canada, Australia, Turkey, Malaysia etc. are the other countries who have this recognition. So far India was having the status of ‘Consuming Nation’ with respect to certification of Electronics and IT products. The status of ‘Authorizing Nation’ will enable India to test IT and Electronics products and issue Certificates which will be acceptable internationally. The recognition would also remove the bottleneck which as of now had prevented international companies from submitting their products for testing and certification in India. The recognition would also enable investment in setting up infrastructure and labs in public and private sectors in India for testing Electronics and IT products. Standardisation Testing and Quality Certification (STQC) Directorate of the Department of Electronics and Information Technology (DeitY) has been operating Common Criteria Certification (CC Certification) scheme in India for the last 5-6 years. Under it STQC undertakes certification of Electronics and IT products after evaluation of the products at its lab in Kolkata. The Certificates issued by STQC Directorate shall now be acceptable internationally by all CCRA member countries.

Prime Minister Manmohan Singh on 19th September, commissioned the NTPC’s 2,980 MW Super Thermal Power Station to the nation at a grand function held at Sipat, in Chhattisgarh’s Bilaspur district. He also laid the foundation stone of 1,600 MW stage-I of NTPC’s Lara Super Thermal Power Project. The project to come up at Lara village in the state’s coal-rich Raigarh district will have two 800 MW units in stage I and an ultimate installed capacity of 4,000 MW. “The coal-based Sipat Super Thermal Power Station is capable of generating 2,980 MW of electricity and it will not only cater to the demands of Chhattisgarh but also adjoining states like Madhya Pradesh and as far as Jammu and Kashmir,” the prime minister said in his brief speech, dedicating the project to the nation. He noted that in the 11th Five Year Plan period, India achieved a record power generation capacity of about 55,000 MW which was double the capacity added in the 10th Plan period, and in the 12th Plan a target of adding over 118,000 MW of power generation has been set. Built at an estimated cost of Rs. 13,000 crore, the Sipat plant is the first to have used super critical technology. The prime minister stated that advanced ultra super critical technology is now being developed in the country, and lauded the efforts of NTPC, BHEL and Indira Gandhi Centre for Nuclear Research for working in tandem to develop this technology.

The Cabinet Committee on Economic Affairs on 20th September has approved setting up of Information Technology Investment Region (ITIR) near Hyderabad subject to fulfilling certain conditions. The Ministry of Road Transport & Highways, Ministry of Urban Development and Ministry of Railways will be initiating detailed feasibility study/action. The total investment for the ITIR will be about Rs. 2.19 lakh crore of which the IT/ITES (Information Technology / Information Technology Enabled Services) Sector is to attract investments of Rs. 1.18 lakh crore and the Electronic Hardware Manufacturing (EHM) sector of Rs. 1.01 lakh crore. The major investment will be from Public-Private Partnerships. Government of India has also proposed up gradation of three radial roads and extension of the Metro Rail from Falaknuma to Shamshabad International airport at total cost of Rs 3,275 crore. The ITIR is expected to generate direct employment of 14.8 lakh and indirect employment of 55.9 lakh. The Government of Andhra Pradesh has delineated an area of 202 sq. kms. for the proposed ITIR in three clusters/ agglomerations viz., (i) Cyberabad Development Area and its surroundings (ii) Hyderabad Airport Development area and Maheshwaram in the south of Hyderabad (iii) Uppal and Pocharam areas in eastern Hyderabad. The ITIR will be implemented in two phases. The Phase I will from 2013 to 2018 and Phase II will be from 2018 to 2038. The ITIR is expected to develop into a key industrial region IT, ITES and Electronic Hardware manufacturing sectors. Special consideration will be given to accommodate Small and Medium Enterprises (SMEs) in the proposed ITIR.

The Union Cabinet on 20th September, approved the proposal of Hindustan Petroleum Corporation Limited (HPCL), a Public Sector Undertaking to set up a 9 MMTPA Greenfield Refinery cum Petrochemical Complex in Barmer District in Rajasthan, as a Joint Venture (JV) with Government of Rajasthan under the name HPCL-Rajasthan Refinery Limited (HRRL).The proposed refinery will be a subsidiary of HPCL with its equity of 74% to be held by HPCL and 26% to be held by the Govt. of Rajasthan. The cost of the project is estimated at Rs. 37,230 crore. The project cost is proposed to be sourced with a debt/equity ratio of 1.5:1. Total equity component is Rs.14,892 crore and debt is Rs.22,338 crore. HPCL’s equity contribution is Rs.11,020 crore at 74% equity and Govt. of Rajasthan’s equity contribution is Rs.3,872 crore at 26%.M/s. HPCL has signed a Memorandum of Understanding on 14th May, 2013 with Govt. of Rajasthan in this regard. HPCL has subsequently also signed a JV agreement with Govt. of Rajasthan on 11th July, 2013 on these terms for setting up the refinery as a joint venture. The proposed refinery will process 4.5 MMT of Mangala Crude and 4.5 MMT of Arab/other crude(s).

The Reserve Bank of India (RBI) on 20 September 2013 increased the repo rate or the short term lending rate by 25 basis points to 7.5 per cent from 7.25 per cent with immediate effect. This means that the Repo rate has been increased by 0.25 percent. The Governor of RBI, Raghuram Rajan while reviewing the monetary policy for the first time as a Governor, however, brought down the marginal standing facility (MSF) rate by 0.75 per cent to 9.5 per cent. The MSF rate is the one at which the other banks can borrow from the Central Bank. The cash reserve ratio (CRR) remained unchanged at 4 percent. All these changes were a part of the monetary policy review for September 2013. The next monetary policy review of the Reserve Bank of India (RBI) is scheduled for 29 October 2013.

Indian IT Company Wipro Ltd on 7 September 2013 signed agreement with the US-based Kana Software to provide customer service solutions to its global insurers through a joint development centre. The agreement provides Kana with systems integration scalability, as Wipro has presence across 57 countries worldwide. Ana Software is located at Silicon Valley in California. It provides customer service solutions using cloud computing (on-demand) network to about 900 large enterprises and mid-market organizations, which includes 250 government agencies all over the world. Through its insurance practice division, Wipro works with 35 global insurers which include property and casualty carriers and health insurance providers and life, annuity and pension carriers.

Microsoft Corp. on 3rd September said it will buy Nokia's phone business for $7.2 billion, making its boldest foray yet into mobile devices and bringing well-regarded Nokia CEO Stephen Elop back into the fold. Microsoft will pay $5 billion for the Nokia Corp. unit that makes mobile phones, including its line of Lumia smartphones that run Windows Phone software. It is also paying $2.2 billion for a 10-year license to use Nokia's patents, with the option to extend it indefinitely. Finland’s Nokia, once the undisputed leader in mobile phones, has been struggling to respond to the challenge from Smartphone makers such as Apple and Samsung Electronics. Nokia Chairman Risto Siilasmaa will stay in his current role and assume the duties of interim CEO. When the deal closes in early 2014, about 32,000 Nokia employees will transfer to Microsoft, the companies said.

The Reserve Bank of India on 6 September 2013 allowed the Non-Resident Investors including NRIs to purchase shares of Indian entities Under FDI Scheme. The investment can be made as per the mentioned conditions. RBI has allowed the NRIs to make investment under the FDI scheme only on the listed entities, on recognized stock exchanges. The Reserve Bank of India has decided to include the non-residents, including the NRIs to acquire the shares of domestic companies listed under FDI scheme, on the stock exchanges through a registered broker, if the investor has already acquired and continues to hold control in accordance with SEBI, Substantial Takeover Code. Till now, the FIIs (Foreign Institutional Investor), QFIs (Qualified Foreign Investors) and NRIs were eligible to invest and acquire the shares on the recognized stock exchanges of India in compliance with the FEMA (Foreign Exchange Management Act) regulations. But the NRIs were not allowed to acquire shares on exchange (bourses) under the FDI Scheme.

Danish pharmaceutical major Novo Nordisk, on 2 September, said it would soon launch its insulin injection Tresiba (insulin degludec) in India. Novo Nordisk is the leading manufacturer of insulin in the world, and Tresiba, the new basal insulin, is used for the treatment of Type 1 and Type 2 diabetes. The once-daily use medicine has duration of action beyond 42 hours, and allows flexibility in daily dosing time without reducing efficacy. Novo Nordisk India has 15 per cent share in the diabetes care market with a significant share in insulin. In a bid to provide doctors access to updated and scientific information on insulin therapy, Novo Nordisk has tied up with Indian Academy of Diabetes (IAD) to launch a massive doctor education programme – Master Class in Insulin. India has 65 million diabetes patients and 130 million pre-diabetes patients said Dr. Shashank Joshi, President, IAD. “Yet, only 6 million receive appropriate treatment.

International Paper India on 2 September, inaugurated state-of-the-art machinery at its Rajahmundry-based Andhra Pradesh Paper Mills Limited, which will allow the plant to increase the conversion capacity of branded copier paper. International Paper, a global company in packaging and paper, had acquired a 75 per cent stake in Andhra Pradesh Paper Mills Limited two years ago. With the new machinery, the capacity has been increased from 25,000 MT per year to 90,000 MT.

Banks will no longer be allowed lump-sum disbursal of sanctioned housing loans. The Reserve Bank of India has told the banks that disbursal of sanctioned loan will have to be closely linked to the stages of construction of the housing projects/houses. And, the RBI has also made it clear to them that no upfront disbursal should be made in cases of incomplete/under-construction/green field housing projects. The RBI diktat on 3 September, comes in view of the higher risks associated with such lump-sum disbursal of sanctioned housing loans. Banks have tended to join hands with developers/builders to introduce innovative housing loan schemes such as this one — upfront disbursal of sanctioned loans sans any linkage to stages of construction of a housing project. At times, these are done through tripartite agreements between the bank, the builder and the buyer of the housing unit. “These loan products are popularly known by various names such as 80:20, 75:25 schemes,’’ the RBI said. While directing the banks to link disbursal to stages of project construction, the RBI also told them to take into account the customer suitability and appropriateness issues while introducing any kind of product. Further, it said, banks should ensure that the borrowers/customers were made fully aware of the risks and liabilities under such products.

The Cabinet Committee on Economic Affairs on 3 September, approved the proposal for restructuring of the centrally sponsored Scheme of Swarna Jayanti Shahari Rozgar Yojana (SJSRY) in the 12th Plan and as the National Urban Livelihoods Mission (NULM) with an allocation of approximately Rs. 6,405 crore. The Mission of NULM is to reduce poverty and vulnerability of the urban poor households by enabling them to access gainful self-employment and skilled wage employment opportunities, resulting in an appreciable improvement in their livelihoods on a sustainable basis, through building strong grassroots level institutions of the poor. The mission would also aim at providing shelter equipped with essential services to the urban homeless in a phased manner. In addition, the Mission would also address livelihood concerns of the urban street vendors also by facilitating access to suitable spaces, institutional credit, social security and skills to the urban street vendors for accessing emerging market opportunities. NULM will rest on the foundation of community mobilization and women empowerment. Under the Mission, City Livelihood Centres (CLCs) will be established in Mission cities to provide a platform whereby the urban poor can market their services and access information on self-employment, skill training and other benefits. NULM will target the urban poor who are occupationally vulnerable for Employment through Skills Training & Placement (EST&P). Through the Self-Employment Programme (SEP), NULM will provide financial assistance to individuals and groups of urban poor to set up gainful self-employment / micro-enterprise ventures. A mission mode approach in the form of the National Urban Livelihoods Mission (NULM) is considered necessary to organize urban poor in Self Help Groups, creating opportunities for skill development leading to market-based employment and helping them to set up self-employment ventures by ensuring easy access to credit. This will result in the empowerment and dignity of life of the urban poor. The approval of the National Urban Livelihoods Mission (NULM) represents a strategic shift in the Government’s commitment to urban poverty alleviation. The NULM will be implemented in two phases: Phase I (2013-2017) and Phase II (2017-2022). In Phase I, NULM will target all cities with a population of one lakh or more and district headquarter towns with a population of less than one lakh as per Census of India 2011. However, other towns may be allowed in exceptional cases on the request of the States. Funding will be shared between the Centre and the States in the ratio of 75:25. For North Eastern and Special Category States (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Himachal Pradesh and Uttarakhand), this ratio will be 90:10.

August 2013 Economic Affairs | Current Affairs 2013 | Current Economic Affairs 2013

Oil and Natural Gas Corporation Videsh Ltd. (OVL), on 26 August, announced that it would buy a 10 per cent stake in a giant Mozambique gas field from Anadarko Petroleum Corp of U.S. for US $ 2.64 billion. In a statement issued in New Delhi, OVL said it had signed agreements to buy a 10 per cent stake from Anadarko in Mozambique's offshore Rovuma Area 1, where up to 65 trillion cubic feet of gas reserves are to be converted into LNG for transportation to markets like India. With this, OVL has transacted almost $11 billion in energy deals since last September . The company, along with Oil India Limited (OIL), had, in June, bought a 10 per cent stake in the same block from the Videocon Group for US $ 2.475 billion. The deal has been approved by the Mozambique government but awaits clearance of the Indian government.OVL has also acquired two blocks each in Columbia and Bangladesh, and is mulling exercising its pre-emption rights to block China's Sinochem Group from buying a 35 per cent interest in Brazilian oilfields for US $1.54 billion.

The government has set up a high-level panel under chairmanship of Parthasarathi Shome to review tax laws and suggest ways for a stable and non-adversarial tax administration. The seven-member Tax Administration Reform Commission (TARC) will have 18 months to suggest various measures, including appropriate organizational structure for tax governance, an official statement said. Earlier this month, the Cabinet had approved setting up of TARC. The terms of reference of the commission include a review of the existing mechanism of dispute resolution and methods to widen tax base. Further the TARC would recommend measures to strengthen inter-agency information sharing between the Central Board of Direct Taxes, Central Board of Excise and Customs, Financial Intelligence Unit, Enforcement Directorate and also with the banking and financial sector. It would also look at mechanism for grievance redressal, timely disbursal of tax refunds and duty drawbacks.

The Cabinet Committee on Investment (CCI) on 27 August, has approved 36 projects in the road, railways, power and oil and gas sectors worth Rs.1.83 lakh crore stalled on account of various issues, including regulatory hurdles. Talking to press in New Delhi, Finance Minister P. Chidambaram said 18 major projects in the power sector entailing an investment of Rs.83,773 crore were cleared by the CCI with instructions to the Ministry and the regulatory bodies concerned to put in place all clearances. Similarly, 18 others in sectors such as road, railways, petroleum and gas were also given the green signal. Mr. Chidambaram said apart from power projects, where fuel supply agreements (FSAs) would now be signed by September 6 instead of earlier deadline of August 31, there were nine projects with a total outlay of over Rs.14,084 crore, where banks had disbursed Rs.11,484 crore.

Rattled by the continued decline in value of the rupee, the Commerce and Industry Ministry has constituted a task force comprising representatives from the Ministry, Department of Economic Affairs, Reserve Bank of India (RBI), SBI, industry bodies FICCI, CII and Federation of Indian Export Organizations (FIEO) to work out currency swap arrangements with key trading partners of India. The task force will restrict itself to issues pertaining to the swap of national currency for trade purpose only. “The purpose of the task force is limited to examine swap of national currency for trade which is distinct from currency swap agreements of central banks,’’ according to an official statement. The task force will examine various types of such arrangements and their implication for India’s trade and financial system besides studying the pros and cons of such pacts the country’s commerce. It would also explore the possibility of currency swap agreement between India and identified countries and make recommendations accordingly. The task force may submit its recommendations to the Department of Commerce in four weeks, it said. The issue had come up for discussion during the Board of Trade Meeting chaired by Commerce and Industry Minister Anand Sharma. The inter-departmental group of the Commerce Ministry will also have representation from Export Credit Guarantee Corporation of India. It would explore the possibility of using local currency for trade with major trading partners and advice on pros and cons of the same.

The Cabinet Committee on Economic Affairs on 29 August, gave its approval for continuing the Technology Up gradation Fund Scheme (TUFS) during the 12th Plan period with a major focus on power looms in accordance with the Budget announcement for the financial year 2013-14. The total budget outlay for continuation of the scheme will be about Rs.11, 900 crore, out of which Rs. 2,400 crore have been allocated for the financial year 2013-14. TUFS is one of the flagship schemes of the Ministry of Textiles and has helped the industry to garner investments of Rs. 2.43 thousand crore. The scheme was launched in 1999 and has been instrumental in helping India achieve new heights in the development of the textile sector and particularly in the spinning segment. The Finance Minister in his Budget Speech of February, 2013, had announced continuation of TUFS in the 12th Plan with a major focus on modernization of the power loom sector. Higher subsidies for weaving / power loom sector have accordingly been planned in the continued TUFS.

The Ministry of Civil Aviation will soon float Request For Qualification (RFQ) document for six airports, including the recently refurbished Chennai and Kolkata airports, and is open to offering 100 per cent stake to private players. Highly placed sources in the Aviation Ministry said the RFQ for Kolkata and Chennai airports along with four others, would also be issued in the next few weeks.“These airports would be given on a concessional basis to private parties for a period of 30 years and the Airport Authority of India (AAI) may not have equity participation as we are open to giving 100 per cent stake to private parties,” sources in the Ministry said on 29 August.AAI has a 26 per cent share in the private airports of Delhi and Mumbai and a 13 per cent share in Hyderabad and Bangalore. Once finalised by the government, RFQ would be issued by the Key Infrastructure Development (KID) Cell of AAI. After RFQ, which is a response-seeking process to help identify the participants for the bidding, request for interest (RFI) would be issued. RFQ would include the broad parameters of the privatization process. AAI had modernized the Kolkata and Chennai airports at a cost of Rs. 2,325 crore and Rs.2,015 crore respectively.

In a clear reflection of the ongoing economic downturn, GDP (Gross Domestic Product) growth decelerated further to 4.4 per cent, the slowest pace of expansion since the 2008 meltdown — in the first quarter (April-June) quarter of the current fiscal. The pull-down, as has been the case in recent years, was mainly due to the dismal performance of mining and manufacturing. Such has been the steady slide in economic growth that from a GDP expansion of 5.4 per cent achieved in the first quarter of 2012-13, the performance during the April-June quarter this fiscal marked a further moderation on a sequential basis from 4.8 per cent in the fourth quarter (January-March) last fiscal.

Pointing out that the GDP numbers for the first quarter clearly showed that the economy continued “to be in the throes of a slowdown,” CII Director General Chandrajit Banerjee, in a statement, said on 30 August.Alongside, contraction in the manufacturing sector also yawned further to 1.2 per cent from one per cent in the same quarter a year earlier. These apart, other sectors such as construction, power generation, hotels and transport, also witnessed a significant deceleration in growth. The farm sector also posted a lower growth of 2.7 per cent as compared to a 2.9 per cent expansion in the same period of 2012-13.Among others, the growth rate in the services sector, which includes financing, insurance and real estate, stood pegged at 8.9 per cent against 9.3 per cent in the same quarter of 2012-13. The growth in electricity, gas and water supply was also lower at 3.7 per cent compared to 6.2 per cent a year ago, as was the construction sector which expanded by 2.8 per cent as against seven per cent in the like quarter last fiscal. The only sector that fared better was community, social and personal services sector which posted a higher growth of 9.4 per cent as compared to 8.9 per cent.

A U.S. Federal agency has launched an investigation into Indian trade policies, which allegedly discriminate against American trade and investment. The investigation, “Trade, Investment and Industrial Policies in India: Effects on the U.S. Economy”, was requested jointly by the Senate Committee on Finance and the House Committee on Ways and Means. The United States International Trade Commission (USITC) will report on recent policies and measures in India that affect U.S. exports and investment, and evaluate the effects of such barriers on U.S. firms and the economy, the federal agency has said in a statement on 31 August. In its examination, the USITC will enumerate restrictive trade and investment policies that India maintains or has recently adopted and determine which sectors of the U.S. economy are most affected by these policies. The USITC will provide several case studies of U.S. firms or industries that have been particularly affected by India’s restrictions. As requested, by the Congress, the USITC will also perform a quantitative analysis of the effects of such measures.

India, on 20 August, raised the issue of heavy trade imbalance with China and sought immediate steps to facilitate Indian exports of pharmaceutical and agricultural products, buffalo meat and information technology (IT) services. Raising the issue with Chinese Minister of Commerce, Gao Hucheng, during his meeting in Brunei, Commerce and Industry Minister Anand Sharma drew the attention of the Chinese Minister to India’s pending request for facilitating Indian exports of IT services, buffalo meat, pharma and agricultural products. Mr. Sharma is in Brunei to attend the Regional Comprehensive Economic Partnership Agreement, East Asian Economic Ministers and the ASEAN-India Ministerial meeting.

Both the sides agreed that the working group on trade and economic co-operation should meet in September along with another working group on trade in services and trade statistics with a view to implementing the decision taken by the leadership of the two countries. They also discussed about the possibility for the next meeting of the Joint Economic Group (JEG) likely to be scheduled for late October in Beijing. Gao assured Sharma that China would make every effort to facilitate imports from India for bridging trade imbalance. Sharma also sought Chinese investment in manufacturing in the National Manufacturing Investment Zones. It was decided that they would finalise the details about investments in various sectors during their next meeting in October.

The Reserve Bank of India (RBI) on 20 August 2013 further relaxed the Statutory Liquidity Ratio (SLR) to provide more funds to banks for lending. This was in view of the losses suffered by banks in their investment portfolio. Revising its earlier limit, asking banks to reduce their hold-to-maturity bond holdings gradually to 23 per cent of deposits, RBI has now allowed banks to retain those holdings at 24.5 percent. To further ease rupee volatility, RBI will conduct open market operations of long dated government securities worth Rs. 8000 crore on 23 August 2013. RBI stated that depending on evolving market conditions, it will thereafter decide on the amount and frequency of OMOs (Open Market operations). SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. In other words, it is ratio of cash and some other approved securities to liabilities (deposits). It regulates the credit growth in India.

The Union Cabinet on 13th August, approved the proposal for setting up of the Tax Administration Reform Commission (TARC). The Commission will consist of a Chairman, two full time members and four part-time members, of which at least two part-time members will be from the private sector. The Chairman will be an eminent person having wide experience of tax administration and policy making. Full-time members of the Commission will be one member each with a background in revenue service pertaining to Income Tax and Central Excise and Customs respectively.

The term of the Commission will be 18 months. The Commission will review the application of tax policies and tax laws in India in the context of global best practices and recommend measures to strengthen the capacity of the tax system in India that would reflect best global practices. The Commission will help in removing ambiguity in application of tax policy and tax laws, thereby establishing a stable tax regime and a non-adversarial tax administration. The Commission will facilitate an efficient tax administrative system that would enhance the tax base as well as tax payer base.

The Loan and Project Agreements for World Bank (IDA) assistance of US US $100 million for Low Income Housing Finance Project were signed between Government of India, National Housing Bank (NHB) and the World Bank in New Delhi on 14th August. The Loan Agreement was signed by Nilaya Mitash, Joint Secretary, Department of Economic Affairs, Ministry of Finance on behalf of Government of India and Mr. Michael Haney, Operations Advisor of World Bank (India) on behalf of the World Bank. The Objective of the project is to provide access to sustainable housing finance for low income households, to purchase, build or upgrade their dwellings.

Financing under the project aims to create incentives for lenders to focus on lower income households through a net all-in reduction of the lenders’ cost of funds of approximately 200-300 basis points. The project also aims to deliver on its stated objective of reaching a higher proportion of lower income households while maintaining portfolio quality standards. The project expects to develop prudent lending standards to serve the more vulnerable, lower income households, expand the coverage of credit bureaus to include informal income borrowers, develop consumer information and disclosure norms for the project’s target groups, enhance the appraisal capacity of the lenders, as well as pilot new policies and products to overcome the challenges of dwelling informality. It is a financial intermediary loan for an implementation period of 5 years. NHB is the implementing agency.

The Minister of State in the Ministry of Commerce and Industry Dr. E. M. Sudarsana Natchiappan on 14th August, in a written reply in Rajya Sabha informed that, in-principle approval for National Investment and Manufacturing Zones (NIMZs) in Chittoor, Medak and Prakasam districts has been accorded as requested by the Government of Andhra Pradesh. The state governments have to develop the zones before any private investment can take place in the same.

Weighed down by a weak rupee, the Reserve Bank of India (RBI) on 30th July chose to keep all key interest rates unchanged and asked the government to take urgent steps to reign in the high current account deficit. Lowering the GDP growth projection for the current fiscal to 5.5 % from 5.7 %, the central bank said the external sector is the "biggest threat" to economic stability.

It also said that the recent liquidity tightening measures, taken to support the rupee, will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling it to revert to the policy of supporting growth with continuing vigil on inflation. The RBI will endeavour to keep inflation, which is under threat from a depreciating rupee, at 5 % by March end.

"The policy stance is guided by the need for continuous vigil and preparedness to pro-actively respond to risks to the economy from external developments, especially those stemming from global financial markets," RBI Governor D. Subba Rao said in what would be his last policy announcement unveiled here.

Accordingly, the repo rate or the rate at which RBI lends to the system, has been retained at 7.25 % and the cash reserve ratio, the amount of deposits banks park with RBI, has been kept unchanged at 4 %. Giving the policy guidance, the governor said, "Monetary policy going forward will be shaped by the consideration of supporting growth, anchoring inflation expectations and maintaining external sector stability."

The Cabinet Committee on Economic Affairs (CCEA), in accordance with the Government of India’s disinvestment policy on 2 August, has approved the disinvestment of 10 percent paid-up equity in the Indian Oil Corporation Limited (IOCL), out of its equity capital holding of 78.92 percent. The disinvestment will be through Offer for Sale (OFS) method in the domestic market according to the SEBI rules and regulations. After this disinvestment the Government of India shareholding in the company would come down to 68.92 percent.

The paid up equity capital of the company, as on 31st March, 2013 was Rs. 2,428 crore. The Government of India holds 78.92 per cent of the paid up capital in IOCL. The IOCL is a "Maharatna" Public Sector Undertaking under the administrative control of the Ministry of Petroleum and Natural Gas. It is the highest ranked Indian corporate in the prestigious Fortune `Global 500` listing with a ranking of 83 for the year 2012. IOCL is primarily engaged in refining, transportation and marketing of petroleum products and petrochemicals with an installed refining capacity of 54.2 million metric tonnes.

The Ministry of Steel under Government of India has become the first Central Ministry to be awarded ISO 9001:2008, Quality Management System certification. The certification involves laying down the work processes, manage and control them with the aim of continuous improvement. The Bureau of Indian Standards has conferred the Ministry with the certification for three years; w.e.f. 25.06.2013 to 24.06.2016.Ministry is the first amongst Central Government Ministries to have received the certificate. ISO 9001 is quality management system which codifies quality standards in every area of organization’s functioning. Many Governments around the World have made ISO 9001 a mandatory requirement. ISO certification will result in transparent performance of the Ministry and quick delivery of results to the beneficiaries.

The Cabinet Committee on Economic Affairs (CCEA) on 2 August has approved creation of the Special National Investment Fund for the specific objective of meeting the minimum public shareholding of 10 percent requirement in the following six Central Public Sector Enterprises (CPSEs). (i) Andrew Yule & Company Ltd. (ii) Fertilizers & Chemicals (Travancore) Ltd. (iii) Hindustan Photo Films Manufacturing Co. Ltd.(iv) HMT Ltd. (v) ITI Ltd. (vi) Scooters India Ltd. Since these Companies were not financially sound, it was found difficult to meet the minimum public shareholding by following SEBI approved methods. However, Government was keen to comply with the requirement in all Government Companies. The Department of Disinvestment discussed the matter with SEBI and has proposed to meet the minimum public shareholding in the above six Companies.

The Minister for Micro, Small and Medium Enterprises, K. H. Muniyappa inaugurated the Indian School for Entrepreneurs and Enterprise Development iSEED in New Delhi on 1 August. Speaking at the inauguration the Minister stated that in the present competitive world, Innovation driven Entrepreneurship is critical for the growth of the Indian economy”. Worldwide, the micro small and medium enterprises (MSMEs) primarily driven by first generation entrepreneurs have been accepted as the engine of economic growth and for promoting equitable development. The MSME sector is a nursery of entrepreneurship, often driven by individual creativity and innovation. To enable Indian youth in entrepreneurship and innovation, the Minister emphasized that the MSME ministry is conducting Skill Development Programmes for the entire value chain of manufacturing. 10 Tool Rooms under the Ministry are providing both long and short term training for more than one lakh persons the Minister highlighted.

Tariq Anwar, Minister of State for Agriculture and Food Processing Industries in a written reply to a question in the Lok Sabha on 6 August, stated that, as per the Provisional Estimates released by CSO on 31st May, 2013, Agriculure sector is estimated to grow at 1.9% in 2012-13 at 2004-05 prices and the contribution of agriculture to the GDP is likely to decline to 13.7 % in 2012-13. The decline in growth rate and contribution of agriculture to GDP is on account of structural changes due to a shift from a traditional agrarian economy to a service dominated one. In order to bring reforms in agricultural marketing, the Ministry framed a model APMC Act in 2003 and circulated to States/UTs for adoption. Government has launched several schemes to increase the growth rate of agriculture and boost farm production in terms of its contribution to the GDP such as Rashtriya Krishi Vikas Yojana (RKVY), National Food Security Mission (NFSM), Development and Strengthening of Infrastructure facilities for Production and Distribution of Quality Seed, National Horticulture Mission(NHM), Rainfed Area Development Programme (RADP), Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM), Gramin Bhandaran Yojana etc. In addition, Government has substantially improved the availability of farm credit; implemented a massive programme of debt waiver; introduced better crop insurance schemes; increased Minimum Support Price (MSP), improved marketing infrastructure, etc.

The Cabinet Committee on Economic Affairs (CCEA) on 8 August 2013 approved the export of additional 2 million tonnes wheat from its godowns. The additional wheat would be traded through public sector trading firms. The proposal for additional export of wheat was proposed by the Union Food Ministry. The decision was taken for clearing the surplus stock and to ease the storage crunch. The additional export is allowed as there is a huge stock of 40 million tonnes of wheat.

Microsoft, on 6 August, launched its Office 365 for full-time and part-time university students in India with a subscription offer. The Office 365 University includes the complete set of Office applications and can be installed on two PCs or Macs. Microsoft has priced it at Rs.4,199 for a four-year subscription and is available for students studying in accredited colleges and universities.

The Parliament has passed the historic Companies Bill 2012, moved by Sachin Pilot, Minister of Corporate Affairs. The Bill was passed by the Rajya Sabha on 8 August, which had already been passed by the Lok Sabha many months ago (in December 2012). Pilot has termed it as a historic day for the country as it will usher in a new era in the Corporate Governance. The new Companies Bill, on its enactment, will allow the country to have a modern legislation for growth and regulation of corporate sector in India. The existing statute for regulation of companies in the country, viz. the Companies Act, 1956 had been under consideration for quite long for comprehensive revision in view of the changing economic and commercial environment nationally as well as internationally. The new law will facilitate business-friendly corporate regulation, improve corporate governance norms, enhance accountability on the part of corporates/ auditors, raise levels of transparency and protect interests of investors, particularly small investors. The salient features of the new Companies law are: Business friendly corporate Regulation/ pro-business initiatives; e-Governance Initiatives; Good Corporate Governance and CSR; Enhanced Disclosure norms; Enhanced accountability of Management; Stricter enforcement; Audit accountability; Protection for minority shareholders; Investor protection and activism; Better framework for insolvency regulation; and Institutional structure.

The Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises has prepared the Indian Electrical Equipment Industry Mission Plan 2012-22 with the objective to make the rapid development of the domestic electrical equipment industry possible and to enhance its competitiveness, which was launched on 24.07.2013. Giving this information in written reply to a question in the Lok Sabha on 8 August, Praful Patel, Minister of Heavy Industries and Public Enterprises, said that in this Mission Plan, five areas have been identified for strategic and policy interventions, both by the government and the industry. These are (i). industry competitiveness, (ii). technology upgradation, (iii). skills development, (iv). exports and (v). conversion of latent demand.

July 2013 Economic Affairs | Current Affairs July 2013

*India achieved a record production of 18.45 million tones of pulses in the 2012-13 crop year ended June 2013. This augurs well for the country which is dependent on imports to meet the shortfall of around 3 to 4 million tones. Higher support price prompted farmers to grow pulses. According to the 4th advance estimates released, overall food grain production is projected at 255.36 million tones, which is lower than the record 259.29 million tones achieved in the previous crop year. In food grains category, rice production has been revised upward to 104.4 million tones from 104.22 million tones and coarse cereals to 40.06 million tones from 39.52 million tones in the third estimates. However, wheat output has been revised downward to 92.46 million tones from 93.62 million tones.

*Poverty ratio in the country has declined to 21.9 per cent in 2011-12 from 37.2 per cent in 2004-05 on account of increase in per capita consumption, said the Planning Commission. According to the Commission, in 2011-12 for rural areas, the national poverty line by using the Tendulkar methodology is estimated at Rs. 816 per capita per month in villages and Rs. 1,000 per capita per month in cities. This would mean that the persons whose consumption of goods and services exceed Rs. 33.33 in cities and Rs. 27.20 per capita per day in villages are not poor.

*The Commission said that for a family of five, the all India poverty line in terms of consumption expenditure would amount to Rs. 4,080 per month in rural areas and Rs. 5,000 per month in urban areas. The poverty line however will vary from state to state. The percentage of persons below poverty line in 2011-12 has been estimated at 25.7 per cent in rural areas, 13.7 per cent in urban areas and 21.9 per cent for the country as a whole, a Commission’s press statement said. The percentage of persons below poverty line in 2004-05 was 41.8 per cent in rural areas, 25.7 per cent in cities and 37.2 per cent in the country as a whole.

*In actual terms, there were 26.93 crore people below poverty line in 2011-12 as compared to 40.71 crore in 2004-05.This ratio for 2011-12 is based on the methodology suggested by Suresh Tendulkar Committee which factors in money spent on health and education besides calorie intake to fix a poverty line. The Commission said the decline in poverty is mainly on account of rising real per capita consumption figures which are based on 68th round of National Sample Survey on Household Consumer Expenditure in India in 2011-12. Earlier, a committee was appointed under Prime Minister’s Economic Advisory Council Chairman C Rangarajan to revisit the Tendulkar Committee methodology for tabulating poverty. The Committee is expected to submit its report by mid 2014.

*State-wise, the Commission said the poverty ratio was highest in Chhattisgarh at 39.93 per cent followed by Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar (33.47%). Among the union territories, the Dadra and Nagar Haveli was the highest, with 39.31 per cent people living below poverty line followed by Chandigarh at 21.81 per cent. Goa has the least percentage of people living below poverty line at 5.09 per cent followed by Kerala (7.05%), Himachal Pradesh (8.06%), Sikkim (8.19%), Punjab (8.26%) and Andhra Pradesh (9.20%).

*As part of its CSR initiative, Rural Electrification Corporation (REC), a Central Public Sector Enterprise under the Ministry of Power, has committed financial assistance to provide free one year residential JEE/IIT coaching and mentoring 20 underprivileged meritorious students from Chhattisgarh, Odisha, Bihar, J&K and Delhi under the 'Abhayanand Super 30' initiative. Inaugurating the Delhi chapter of the 'National Super 100' programme on 18 July, Rajeev Sharma, CMD, REC, hoped that the Programme will help the aspiring students to successfully compete and gain admission in prestigious engineering colleges of the country. This initiative, co-founded by Shri Abhayanand, presently Director General of Police, Bihar, for providing free coaching to 30 students of Bihar, has achieved high success rates, and over the years, has expanded to become the 'National Super 100', by providing coaching to 100 students from underprivileged sections of society in seven centres across the country, with the vision of transforming the lives of deserving children with little or no means. The selection of the students is done through transparent procedure.

*Providing a big boost to the power sector, Coal India Limited (CIL) on 26 July, has signed 82 FSAs as on 25 July, 2013, with power stations with a capacity of 34,793 MW. This includes 16 power stations belonging to NTPC and its Joint Venture companies (JVs). 11 more FSAs are ready to be signed shortly with NTPC or its JVs, while another 23 FSAs with State and private sector entities are in the pipeline. These FSAs were part of the 131 FSAs for a capacity of 60,678 MW which CIL was directed to sign in February, 2012. This will substantially increase the power generation during the current and subsequent years. In yet another fillip to the power sector, Ministry of Coal has issued another Presidential Directive to CIL on 17.07.2013 for signing of FSAs for a capacity of 78,000 MW instead of the earlier 60,678 MW. This will not only increase the power generation further but will also fast track several power projects which are under development.

*In a major upgrade of powers given to SEBI, the government has allowed it to pass orders like search and seizure, attachment of properties, arrest and detention of defaulters and pass disgorgement directions to recover the wrongful gains made in contravention of laws. At the same time, the government has also allowed the market regulator to seek information from other regulators within India and abroad with retrospective effect, paving way for collection of details pertaining to cases pending for over 15 years now

*In another retrospective change, which forms part of the Securities Laws Amendment Ordinance promulgated by the President of India last week, the individuals and companies being probed by SEBI can settle their pending investigations. Such settlements can be undertaken in cases that are currently pending for more than six years.

*To tackle the growing menace of ponzi schemes being floated as Collective Investment Schemes (CIS), the rules have also been amended to classify any money collection of Rs. 100 crore or more as CIS operation. SEBI has been given powers to crack down on illegal investment schemes floated by individuals as well, as against companies only as of now. However, all government-notified schemes would be out of the Collective Investment Scheme framework.

*The changes are part of as many as 22 amendments made by the government in three main Acts governing SEBI and its operations -- the Securities and Exchange Board of India (SEBI) Act, the Securities Contracts Regulation Act (SCRA) and the Depositories Act -- through a 16-page Ordinance. Among others, SEBI has also been given powers to pass disgorgement orders for amount equivalent to wrongful gains or to losses averted by contravention of regulations.

*Besides, the regulator can now enter and search buildings, places, vessels, vehicles and aircraft of defaulters. Its officers can also break open the lock of any door, box, locker, safe almirah, etc to get information from suspected entities. At the same time, the defaulters can seek settlement of pending cases with SEBI with retrospective effect from April 20, 2012.

*In yet another step to contain the current account deficit, the Reserve Bank of India imposed restrictions on gold imports by banks and other authorized agencies on 22nd July. As per the new norms, all banks and authorized agencies will have to ensure that at least 20 per cent of the imported gold is made available for exports and a similar amount is retained with the customs. "It shall be incumbent on all nominated banks/nominated agencies to ensure that at least one fifth of every lot of import of gold (in any form/purity including import of gold coins/dore) is exclusively made available for the purpose of export," the RBI said in a notification.

*It further added that such imports should be linked to financing of exporters by the nominated agencies. The banks and other entities will also be required to retain 20 per cent of the imported quantity of the gold in customs bonded warehouses. The restrictions are meant to contain gold imports, which in addition to oil, is putting pressure on the current account deficit that soared to a record high of 4.8 per cent in 2012-13. The RBI and the government had earlier imposed other restrictions on import of gold to check CAD.

*The Cabinet on 17th July approved amendment to the SEBI Act, which is expected to arm the stock market regulator – Securities and Exchanges Board of India (SEBI) to crack down on collective investment schemes such as the Saradha scam in West Bengal.

*The Cabinet had given the nod to the proposal to provide powers to market regulator to help investigate and punish fly-by night operators of p. SEBI will be able to summon any person or entity to assist in an investigation into a chit fund or a para-banking operation. It also provides powers to the stock market regulator to undertake "search and seizure" operations and help them access call records.

*"This will enhance regulation of collective investment schemes," said a senior government official. The changes in the Act are also likely to plug regulatory loopholes and clearly detail the jurisdiction of the stock market regulator on such schemes.

*SEBI will be able to impose "disgorgement orders" on a company that defaults on its commitments or makes illegal gains. The regulator will use its "inherent powers" to recover ill-gotten gains that will then be utilized to promote "investor protection and education".

*The Reserve Bank of India (RBI) opened a special liquidity window for commercial banks to meet the cash requirements of mutual funds (MFs) on 17th July. The special liquidity window was opened taken into concern the Mutual Funds which faced heavy redemption pressure in debt-oriented MF schemes following a series of steps taken by the RBI to shore up the faltering currency.Keeping all this into consideration the RBI opened a special three-day repo window that will allow banks to borrow a total of 25000 crore Rupees at a rate of 10.25%. Banks can borrow this money to lend onwards to MFs. RBI will conduct the first repo auction under the special facility on 19 July 2013.The second auction is scheduled for 23 July 2013 and the subsequent operations at an interval of three days. Individual banks will be allocated funds in proportion to their bids, subject to the overall ceiling of 25000 crore, Rupees. The RBI is also planning to sell bonds worth 12000 crore Rupees in the secondary market on 18 July 2013 for another liquidity draining measure.

*Government of India signed an agreement with Asian Development Bank (ADB) on 19 July, for a $60 million loan for improving urban services and strengthen municipal and project management capacity in several towns in North Karnataka. The agreement is for the 3rd Project under the overall facility of $270 million for the North Karnataka Urban Sector Investment Program (NKUSIP).

*The third tranche loan under the North Karnataka Urban Sector Investment Program will develop sewerage networks in six towns, and help the rehabilitation and expansion of potable water systems in two more towns. More than 100,000 households will benefit from the improvements. Nilaya Mitash, Joint Secretary, Department of Economic Affairs, Ministry of Finance signed the agreement on behalf of Government of India and Mr. Hun Kim, Country Director of ADB’s India Resident Mission, signed the agreement on behalf of ADB. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including co-financing of $8.3 billion.

*The Reserve Bank of India (RBI), on 15 July, penalized 22 banks by imposing fines for violating Know-Your-Customer (KYC) norms and anti-money laundering guidelines. The list includes banks such as SBI, Bank of Baroda and Canara Bank all of whom were fined Rs.3 crore each. The RBI said that it “came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty.” The central bank also issued “cautionary letters” to seven other banks including Citibank, Standard Chartered and Barclays as no violation of serious nature by them was established. The violations by the public sector banks were revealed in a sting operation by online portal, Cobra post, reported in May. Though it imposed penalties, the RBI said that its investigation did not reveal any prima facie evidence of money laundering. Any conclusive inference in this regard can be drawn only by an end to end investigation of the transactions by tax and enforcement agencies, the central bank statement said.

*Slow progress of economic reforms is expected to pull down India's growth to 5.8 per cent in the 2013 calendar year from 6 per cent projected earlier, an Asian Development Bank (ADB) report said on 16th July.

*"In India...slow progress in pushing through the reforms needed to ease business bottlenecks means growth is likely to be 5.8 per cent this year, slower than the previously forecast 6.0 per cent," the report 'Asian Development Outlook Supplement' said.

*Satyam formally merged with Tech Mahindra on 15th July. After debuting on the stock market in 1995, Satyam soon went on to become one of the country's top five IT companies and its share price was trading Rs. 250 level in late 2008. It came to be known by January 2009 that Satyam was home to India's biggest ever corporate scam. Satyam is a Sanskrit word that means truth.

*A quick revival, however, followed with its takeover by Tech Mahindra through a government-monitored auction process and its name was changed to Mahindra Satyam. Tech Mahindra on 12 July 2013 announced the completion of allocation of its shares to the shareholders of Satyam Computer Services, raising the issued capital of the firm from 129 million shares to 232 million.

*Many changes have come through under Mahindra’s and the group finally decided to amalgamate the two IT companies under its fold. Shares of Mahindra Satyam are no longer traded on the bourses. They last traded at a level close to 120 rupees a piece and the value of each erstwhile Satyam share is now equivalent to about 130 rupees a piece, taking into account Tech Mahindra's current share price of 1120 rupees.

*As per the merger ratio, two Tech Mahindra shares have been given for every 17 shares held by Satyam investors. Experts say it made sense for the new owner to drop the Satyam brand name from the business, given its infamous past. Following the integration, Tech Mahindra is now amongst the top-5 IT companies of India with revenues of 2.7 billion US dollars and expects it to rise to 5 billion US dollars by 2015. The integration of two entities makes it a much larger software company and will also aid in cracking and winning larger outsourcing contracts.

*Economic ties between India and Vietnam are on track and may cross $7 billion by 2015, External Affairs Minister Salman Khurshid said on 11 July. Speaking to the media after the 15th meeting of the India-Vietnam Joint Commission, the Minister said investments by Indian companies total about $936 million in 86 projects in sectors such as oil and gas exploration, mineral exploration and processing, sugar manufacturing, agro-chemicals, IT, and agricultural processing.

*Khurshid said Vietnam had recently chosen Tata Power as the developer for a $1.8-billion 2X660 MW Long Phu 2 Thermal Power Project in Soc Trang province in southern Vietnam, despite strong competition from Korean and Russian companies. “It will be the single largest Indian investment in Vietnam when it comes through and will enhance our economic co-operation and strategic partnership. The MoU between the two central banks – Reserve Bank of India and the State Bank of Vietnam – signed in 2012, will enable Bank of India and Indian Overseas Bank to upgrade their representative offices that they opened in Ho Chi Minh City in February 2003 and March 2008, respectively, into full-fledged branches in the near future,” Khurshid said. India has extended 17 letters of credit (LoCs) totaling $164.5 million, including a $19.5-million LoC for setting up Nam Trai-IV hydropower project and Binh Bo Pumping station, which was signed on 11 July. India has also agreed to consider earmarking $100 million under buyer’s credit under the National Export Insurance Account for use by Vietnam.

*The government cleared a proposal to replace Directorate General of Civil Aviation (DGCA) with a new aviation regulator with full operational and financial autonomy on 11th July. The new regulatory body would be called the Civil Aviation Authority (CAA) and it would replace the DGCA. It will administer and regulate civil aviation safety and manage safety oversight over air transport operators, air service navigation operators and operators of other civil aviation facilities. The DGCA had limited delegation of financial powers and hence was “incapable of making adequate structural changes” to meet the demands of a dynamic civil aviation sector. This necessitated its replacement with CAA that would have more administrative and financial powers to deal with the fast-changing aviation scenario.CAA, like DGCA, would also deal with matters relating to financial stress on safety of air operations, as witnessed in connection with the bankrupt Kingfisher Airlines in October last year.CAA is being established to meet the standards set by UN’s International Civil Aviation Organization (ICAO) and in line with aviation regulators in other countries like the Federal Aviation Administration of the US and the UK’s CAA.

*The Cabinet Committee on Economic Affairs (CCEA) on 10 July, approved disinvestment of government stake in State Trading Corporation (STC) and India Tourism Development Corporation (ITDC), which would fetch around Rs 30 crore to the exchequer. The Disinvestment Department had sought Cabinet nod to offload 5 per cent stake in ITDC and 1.02 per cent in STC through the Offer For Sale (OFS) route. The government expects the sale of 5 per cent stake or 42.88 crore shares in ITDC to fetch Rs 23.58 crore. Besides, it aims to garner about Rs. 10 crore through disinvestment of 1.02 per cent, or 6.13 crore shares, in STC. Government currently holds 92.11 per cent stake in ITDC and 91.02 per cent stake in STC. The stake sale would help both the companies meet the minimum 10 per cent public holding norm of market regulator Securities and Exchange Board of India (SEBI). The government is required to bring down its stake in these two companies to 90 per cent by August 8.

*The Cabinet Committee on Economic Affairs (CCEA), on 10th July, has approved the Modified Industrial Infrastructure Upgradation Scheme (MIIUS) with an approved outlay of Rs. 1030 crore for the 12th Five Year Plan period consisting of Rs. 450 crore for committed liability and the remaining Rs. 580 crore for taking up 14 to16 new projects including a minimum 2 projects in the North Eastern Region (NER) for up gradation of infrastructure in existing or Greenfield industrial clusters. The CCEA further approved that at least 10 percent outlay will be set aside for the minimum two projects in the NER. All States are covered under the scheme. However projects are likely to be undertaken in only 14 to 16 States/Districts due to limitation of outlay in the 12th Plan. After notification of the MIIUS, the Project Management Agency (PMA) would be appointed. The IIUS was launched in 2003 as a Central Sector Scheme to enhance competitiveness of industry by providing quality infrastructure through a public private partnership in selected functional clusters with central assistance up to 75 percent of the project cost subject to a ceiling of Rs. 5 crore. The Scheme was recast in February, 2009 based on the recommendation of an independent evaluation.

*Software giant TCS has replaced its group firm Tata Steel as the country's most admired company, as per a Fortune list released on 9th July. TCS is followed by Hindustan Unilever, ITC, Infosys and SBI in the top-five, while last year's top-ranked firm Tata Steel has slipped to seventh position in the list of India's 50 most admired companies. Both ITC and Infosys have shared the third spot. The rankings have taken into account various factors such as corporate governance, innovativeness, corporate social responsibility and leadership. There are a total of four Tata group companies on the list. Besides Tata Consultancy Services (TCS) and Tata Steel, other Tata group firms in the list are Tata Motors at the 12th spot and Tata Power at 50th. As many as ten public sector units (PSUs) have made it to the rankings, global business magazine Fortune's Indian edition said. Among state-run enterprises, SBI and ONGC are in the top ten, ranked at fifth and eighth positions, respectively. L&T (6th rank), Maruti Suzuki (9th) and ICICI Bank (10th) feature in the top ten. State-run oil major Indian Oil Corp was placed at 11th rank, while SAIL (22nd), Bharat Petroleum (25th), NTPC (28th), HPCL (31st), GAIL (34th), ONGC Videsh (47th) and Coal India (48th) also made the cut. Other companies who made it to the list include Microsoft India (15th), Colgate Palmolive (16th), IBM India (17th), Samsung India Electronics (18th), Bharti Airtel (19th), Cadbury (23rd), Dell India (32nd), Siemens (36th), Intel India (38th), Nokia India (42nd) and Sony India (44th).
The Union Government of India on 1 July 2013 launched the National Cyber Security Policy 2013 at New Delhi with an aim to protect information and build capabilities to prevent cyber attacks. The National Cyber Security Policy 2013 to safeguard both physical and business assets of the country. The Policy has outlined the roadmap for creation of a framework for comprehensive, collaborative and collective responsibility to deal with cyber security of the country.

*The policy has ambitious plans for rapid social transformation and inclusive growth and India's prominent role in the IT global market. It will cater to the cyber security requirements of government and non-government entities at the national and international levels. The policy will help in safeguarding the critical infrastructure like Air Defense system, nuclear plants, banking system, power infrastructure, telecommunication system and many more to secure country's economic stability.

*The National Cyber Policy in order to create a secure cyber ecosystem has planned to set-up a National Nodal Agency to coordinate all matters related to cyber security in the country. The nodal agency has clearly defined roles and responsibilities. The policy will also establish a mechanism for sharing information as well as identifying and responding to cyber security incidents and for cooperation in restoration efforts. The National Cyber Security Policy has been prepared in consultation with all relevant stakeholders, user entities and public.

*The Telecom Commission has approved the enhancement of the foreign direct investment (FDI) limit in the telecom sector from 74 per cent to 100 per cent on 2 July. The Telecom Commission’s decision will now be submitted to the Union Cabinet for its approval. The move comes on the eve of Finance Minister P. Chidambaram’s visit to the U.S. on July 11, followed by the Telecom Minister Kapil Sibal’s week-long visit to the U.S. starting July 15.

*The announcement also comes on the heels of new balance of payment challenges; with the rupee at an all-time low of nearlyRs. 60 per one US dollar. The announcement has multiple implications for India. Mr. Sibal said in a statement that, he expected the move to reenergize the telecom industry out of its legacy debt issues by bringing in at least $10-15 billion of FDI. “By improving connectivity through the highest quality of connectivity and competition, it will further empower the aam aadmi of the country in a meaningful manner,” Mr. Sibal said. He further asserted that security concerns surrounding telecom networks would also be addressed with a firm hand.

*It may be unheard of for an energy company, but Oil India Ltd. (OIL) plans to tie-up with the Assam government to start a co-operative dairy business along the lines of Gujarat’s successful ‘Amul’ model. The project named ‘Kamdhenu’ envisages setting up of a milk production facility in Upper Assam to establish the dairy business in 3-5 years, OIL said inj Guwahati on 2 July.“Assam is a milk-deficient state. Availability of good milk is a big issue here. So, as part of our corporate social responsibility, we have decided to join hands with the state government to start a co-operative dairy business here,” OIL Chairman and Managing Director Sunil Kumar Srivastava told reporters.

*The model and OIL’s role are being studied to see how the company can support it. “We are an oil company and milk production is not our business. We will tie-up with the government and see how we can implement this plan,” Mr. Srivastava said. The company was assessing options such as giving cows to farmers in villages, setting up collection centers, and establishing a distribution network, he said. The co-operative might supply milk to the entire North East in future, he said. OIL has started the ground work for the project, and has initiated talks with the Assam government.

*India has ranked 66th in the Global Innovation Index (GII) 2013, an index that is published by Cornell University, INSEAD, World Intellectual Property Organization (WIPO) and the Confederation of Indian Industry (CII) as a knowledge partner. The study ranked 142 economies across the world on their innovation capacity and efficiency. This year’s report casts additional light on the local dynamics of innovation, an area which has remained under-measured globally.

*It shows the emergence of original innovation eco-systems, and signals a needed shift from the usual tendency to try and duplicate previously successful initiatives, CII said in a statement. “The local dynamics of innovation varies across the globe and influences innovation measurement. Learning from the local innovation systems adds newer dimensions to existing measurement approaches.

*The focus of this year’s GII makes it a valuable guide for the policy makers to develop specific strategies relevant to their local innovation eco-system,” said CII Director General Chandrajit Banerjee. India ranked 1st in the Central and South Asia region followed by Kazakhstan and Sri Lanka, and 11th overall in innovation efficiency ratio. (Innovation efficiency reflects the innovation output per unit of innovation input in the economy).India ranked poor in areas such as political stability (rank 123), ease of starting business (rank 128) knowledge absorption (rank 122) among others. As per the report, despite the economic crisis, innovation is alive and well.

*Oil and Natural Gas Corp (ONGC) on 2 July, has lost the giant Kashagan oilfield to the Chinese after Kazakhstan blocked its $5-billion deal to buy U.S. energy major ConocoPhillips’ stake in the Caspian Sea oilfield. ONGC Videsh, the overseas investment arm of ONGC, had, in November last, struck a deal to buy ConocoPhillips’ 8.4 per cent stake in Kazakhstan’s biggest oilfield, Kashagan for $5 billion.