India on fast track of development: PM Modi
Prime Minister Narendra Modi, in a message on the first anniversary of his government on May 26, has expressed his happiness to see India on “the fast path of development”, and added that the country’s environment since the NDA government came to power last May is “suffused with a new enthusiasm”. In a message on the completion of the first year of his government, the Prime Minister said the nation can be proud of the fact that it has an improved image on the international front and is determinedly marching forward to achieve its overall goal of providing welfare to the poor and lifting the marginalized sections of society. Prime Minister Modi’s message described himself as a “Pradhan Sevak”, and adds that he was fulfilling his responsibilities “with that bhakti”. “Antyodaya has been the principle of our political agenda. We have always kept in mind the welfare of the poor, marginalized, labourers and farmers. The Jan Dhan Yojana, opening a bank account for all families, PM Jeevan Jyoti Bima Yojana and the Atal Pension Fund are proof of this goal of Annandaata Sukhi Bhava. That is our supreme goal,” he said. “When our government was formed, the economy was in doldrums and prices were rising. I am happy to say that India is on the fast path to development. The entire environment is suffused with a new enthusiasm. On the international front, India’s image has improved. Foreign investment has increased. Make in India and Skill India programmes are intended to create jobs in youth,” he further stated in his message. “Our goal is to change the way our villages are by working to provide basic facilities. Like, every family should have 24- hour electricity, clean drinking water, toilets, roads and internet connectivity, so that the quality of life improves in villages. We are doing the job of connecting-from the borders of the country to the ports of the country, through roads and railways, and also through Digital India and connectivity,” the Prime Minister’s message stated. “All Chief Ministers are also working with Team India to erase distances in the first year of this development journey. The country has found the faith it had lost in itself. This is just the beginning. The country is set to move forward. Come let us all resolve that our every step will be taken in the service of the nation,” the message adds. On farmers, the Prime Minister’s message says, “Our farmers toil to give us food security. PM Krishi Seenchai Yojana, Soil health, improving power situation for farmers, new urea programme are all aimed towards Krishi Vikas.” The message acknowledges the fact that farmers have faced difficulties due to unseasonal rains and hailstorms, but emphasizes that the government is with them. “We are providing a corruption free, transparent administration where decisions are taken quickly. Earlier, natural resources like coal and spectrum were allocated on whims and fancies to industrialists. But we believe that it is the country’s wealth, and as the government’s mukhiya, I am the trustee. Hence, we decided to allocate these by auction. The country will earn three lakh crore with the coal auction. It will earn one lakh crore with spectrum auction . All this will benefit the economy,” the Prime Minister’s message said. “We have established a Mudra Bank where by even the smallest business owner can get loans from 10,000 rupees to 10 lakhs easily. We promised we would bring back black money, and one of the first things we did when we formed government, was to form an SIT to do that. We also made strong law to book those who have illegally stashed wealth in foreign shores,” the message states further. “Clean India programme’s goal is to ensure that women do not have to defecate in the open. Young girls should not be bereft of education because of lack of toilets. Clean India programme also has the goal that children should not suffer from illnesses due to unhygienic conditions. The falling rate of births of girl children as compared to male children is a cause of concern. Beti Bachao Beti Padhao programme is to tackle this problem,” his message said. The message also states that down the ages, Indians have had faith in Mother Ganga, and to keep the river pure and clean, the government has launched the Namami Gangey programme.
Net FDI inflows touch record high of $34.9 bn in 2014-15
While foreign portfolio investments to India are slowing, net foreign direct investment (FDI) inflows, which are far more stable, have touched a record high of $34.9 billion in 2014-15, as made clear by the chart, compiled by Nomura Global Markets Research. In fact, net FDI inflows touched 1.7% of gross domestic product (GDP) in the just-ended fiscal year, up from 1.1% of GDP the previous year. The reason: more inbound FDI due to growing investor confidence in India and lower outbound FDI as global growth remains anaemic, said Nomura in a note on Tuesday. Foreign investment inflows to India are predominantly to infrastructure, mainly telecom, oil and gas, mining sectors, as well as the services sector. In fact, FDI in manufacturing has remained lacklustre, although there were some inflows into the auto sector. Higher FDI flows are good for India’s current account deficit and also help drive domestic investments. With the government opening up various sectors such as insurance and defence, these stable flows may continue this year as well.
France to cooperate in future Bengaluru, Kochi metro projects
France is looking to collaborate in a major way in India’s sustainable urban development and smart cities projects, and has evinced interest in the phase II Metro projects in Bengaluru and Kochi as well as in the launch of Metro services in Nagpur, officials said here on May 27. French envoy Francois Richier, speaking at an event here, said bilateral cooperation in the field of sustainable development and smart cities was “very important” and France was “committed to working with India” in both the areas. France’s public financial institution Agence francaise de developpement (AFD) is providing the funding for the projects. During Prime Minister Narendra Modi’s visit to France (April 9-13), French President Francois Hollande decided to increase France’s line of credit from euro 1 billion ($1.09 billion) for three years to euro 2 billion ($2.18 billion) to support projects related to sustainable urban development and smart cities in India. As part of its earlier euro 1 billion commitment, AFD has spent half the funding on the Metro projects in Kochi and Bengaluru. S. Selvakumar, joint secretary in the Department of Economic Affairs, said on the sidelines of the event that among the major projects AFD was involved in were the Kochi and Bengaluru Metro projects and a water supply plant in Jodhpur. He said among the future projects that AFD has voiced keenness to participate in were the phase II of the Kochi and Bengaluru Metro and a new Metro project in Nagpur. Richier said France was also collaborating in the field of renewable energy, especially solar energy, in civil nuclear cooperation in the form of the six reactors to come up in Jaitapur in Maharashtra, and also in railways. Pascal Pacaut, director for the Asia department of the AFD, said that after Modi’s visit to France, the credit line has been increased to 2 billion euros.
SAP ties up with IIMA to nurture entrepreneurs
German software maker SAP SE’s Indian arm has joined hands with the Indian Institute of Management Ahmedabad (IIMA) to launch a start-up accelerator programme aimed at mentoring early-stage entrepreneurs from small Indian towns. Through the accelerator programme set up in collaboration with the Centre for Innovation, Incubation & Entrepreneurship (CIIE) at IIMA, SAP is looking to develop a pipeline of start-ups that can be invested in. The initiative will let the entrepreneurs tap angel networks, co-working spaces, fabrication labs, incubators, industry associations, technology and academic institutions. “The programme seeks to help entrepreneurs from tier-II and tier-III towns drive sustainable economic growth and innovation, and make Digital India real,” said Adaire Fox-Martin, president of SAP Asia Pacific Japan. As part of the programme, entrepreneurs will undergo a three-month non-residential boot camp and monthly training workshops and will work closely with domain experts from SAP Labs in Bengaluru. Kunal Upadhyay, CEO of CIIE at IIMA, said it was looking to leverage its past experience and expertise “to fasttrack start-up growth through operational guidance, mentoring and access to capital”. The programme will support entrepreneurs focused on a wide spectrum ranging from social entrepreneurship to the Internet of Things. Apart from IIMs and Indian Institutes of Technology, a clutch of incubators and accelerators such as Microsoft Start-up Accelerator, Morpheus and Kyron have also been nurturing entrepreneurs in India. China’s Alibaba Group recently announced plans to set up a start-up incubator in Bengaluru.
FDI may be allowed in sectors with high employment scope
Hinting at opening up of more sectors to foreign investment, Prime Minister Narendra Modi on May 27 said areas with high employment potential and strong local talent would be the focus to woo foreign investment and expressed confidence that reforms measures like the Goods and Services Tax (GST) and land acquisition Bill will be passed in “a matter of time”. On the land Bill, which the government wants to push early but has now been referred to a parliamentary committee, he said the government would accept any suggestions that benefit “Gaon, Garib, Kisan (village, poor and farmer)”. In a wide-ranging interview to PTI, Modi asserted that measures already taken in past one year had increased the attractiveness of India as an investment destination and investor confidence had improved. He also dismissed suggestions of differences between finance ministry and Reserve Bank saying the central bank has its functional autonomy which the government “will always respect and preserve”. “Wherever there is high employment potential and wherever we have strong local talent, for example, in research and development: those will be the areas of focus for foreign direct investment (FDI). “We have created the National Infrastructure Investment Fund. This is a major step which will increase the flow of foreign investments into all infrastructure sectors, without needing separate sector-by-sector approaches,” he said. Asked whether obstacles to reforms measures like GST Bill and amendment to Land Acquisition Bill was hurting the economy, the Prime Minister said both the GST and the proposed Land Acquisition Bill were beneficial for the country. “The core essence of these Bills should be appreciated by all the parties keeping aside political motives. Long term interest of the nation should be foremost.” “The fact that the States have agreed to the GST design, shows the maturity of our federal system and the GST Bill has already been passed by the Lok Sabha. It is a matter of time before these laws are passed,” he said. To a question what kind of a message would it send to foreign investors if reform measures are not pushed fast, the Prime Minister said, “One of the peculiarities of Delhi is that the term ‘reform’ is associated only with passing of laws in Parliament. “In fact, the most important reforms needed are those without new laws at various levels of Government, in work practices and procedures.” Modi said the government has initiated a number of major reforms which include decontrol of diesel prices, direct transfer of cooking gas subsidy, enhancement of FDI limits, revamping of railways and many others. “The truth is that reform has actually been pushed very fast and in fact as a result FDI has already witnessed an increase of 39 per cent in the period April, 2014 to February, 2015 compared to the previous year,” he said. He also maintained that the success of steps that the government had taken and the positive response of the people to them in the first year “have encouraged us to do even more”. “Our focus will be on P2G2, i.e. Pro-active, Pro-people Good Governance reforms. Another aspect we will emphasize and strengthen is that the State and the Centre are one team which has to work together for reforms to be effective,” he said. Asked about reports of RBI and finance ministry on the same page on issues, Modi said, “I am surprised that an important and credible media agency like PTI is drawing an incorrect inference based on remarks made in different contexts. RBI has its functional autonomy which the Government and the Finance Ministry always respect and preserve”. On the economic growth prospects for the current year, Modi said based on experience of the last year and the enthusiasm of the people give confidence that all economic indicators will exceed the targets. “I do not want to undermine the potential and the efforts by giving any figure which may turn out to be too low,” he said. To a question about Opposition accusation that the government was pro-corporates while some in industry like Deepak Parekh say nothing is happening on ground, he said, “The answer is to be found in your question itself. If opponents are accusing us of being pro-corporate but the Corporates are saying we are not helping them, then I take it that our decisions and initiatives are pro-people and in the long term interests of the nation”. On the issue of making progress on the BJP’s election promise on stringent action against back black money, he said the very first decision of the Government after taking office was to constitute the Special Investigation Team to pursue black money. “This step had been pending for years with no action and we executed it in our very first Cabinet meeting. Subsequently, we have also brought a new Bill which will combat black money held abroad and it prescribes stiff penalties. “Thanks to our efforts, an agreement was reached at the G-20 summit in November 2014 to curb tax evasion and in particular to exchange information between countries. This will help us to trace black money. These are very strong and concrete actions,” he said. To a question on the agrarian crisis in the country, the Prime Minister said suicide by farmers has been a serious concerns for several years. “Political point-scoring through comparing how many suicides occurred under which government will not solve the problem. For a government of any party, and for every one of us, even one suicide is worrisome,” he said.
E NEWS
Global diamond mines allowed to sell in India in special zones
The government has finally allowed international mines to sell rough diamonds in India, which otherwise Indian merchants had to earlier purchase from Antwerp. The Special Notified Zone (SNZ) to allow import and sale of rough diamond directly by global miners like De Beers, Rio Tinto, BHP Billiton and Al Rosa is set to become operational by July 1. While plans to set up the SNZ were announced at the Bharat Diamond Bourse in December 2014, the government had not issued any operational guidelines in consultation with the Central Excise and Customs. Therefore, despite the announcement, global miners were apprehensive over setting up of India offices to bring rough diamond and conduct auctions here. De Beers’ Chief Executive Officer Philippe Mellier on his recent India visit had said his company was ready to set up offices in India, provided conducive trading regulations were put in place. “With operational guidelines in place, global miners will be able to set up offices in India which will reduce travelling time for Indian diamantaires, and also cost of rough diamond procurement,” said Sabyasachi Ray, Executive Director, GJEPC. The decision assumes significance especially for Indian diamantaires who currently travel to major trading centres like Dubai, Johannesburg and Antwerp once for inspection of the lot of rough diamond and again for participating in auctions. India process 11 out of every 13 rough diamond mined globally. “This is first of its kind of revolutionary idea which the government of Israel and others want to replicate. We were pursing with the government for several years for this. The guidelines will transform India into the world class trading center not only for rough diamond but also for other commodities, in case the same is adopted,” said Ray. Meanwhile, the government has set up a special purpose vehicle —India Diamond Trading Centre (IDTC) — to handle import of rough diamond for auctions and sale here. The government proposed BDB to outsource the handling of rough diamond, imported for auctions or sales to ITDC to be constituted jointly by GJEPC and BDB. Also, the government asked BDB to identify and submit floor plan including security related features. “Trading by global miners in India was not allowed in India. Global miners are allowed now to bring even run-of-the-mines goods. For them, we have identified 4000 sq ft with 10-12 rooms which global miners would hire and conduct trading. The unsold quantity may always be taken back,” said Anoop Mehta, President, BDB. The government has identified BDB as a custodian of rough diamond import and export for which the Precious Cargo Customs Clearance Centre at BKC has been notified as a nodal agency. The import of rough diamonds will be permitted through air cargo mode only. No import of hand carriage or express courier service mode will be permitted. Sanjay Kothari, an industry veteran, said, “We are in talks with global diamond miners to bring them for trading of rough diamonds in India. As of now, individual traders, sight holders or processors were importing goods on their personal capacity. With this, however, Indian diamond processors will be at an advantage.”
Reliance leads India Inc. as the highest profit earner
With the results season for 2014-15 drawing to a close, oil refining-to-retail major Reliance Industries has emerged as the top Indian corporate to earn the highest net profit, followed by Tata Consultancy Services (TCS) and the state-owned Oil and Gas Corporation (ONGC). The Mukesh Ambani led-conglomerate reported a consolidated net profit of Rs.23,566 crore for 2014-15. The consolidated net profit for the full financial year was up 4.8 percent from Rs.22,493 crore in 2013-14. Reliance Industries profitability has also sustained its chairman Ambani’s stature as the world’s richest Indian with a net worth of $19.6 billion, according to US business magazine Forbes. The second in line for earning the highest net profits for 2014-15 was the IT major TCS, whose net profit stood at Rs.19,852 crore. The net profit grew by 3.59 percent from Rs.19,163.87 crore. The state-run ONGC came was in the third position by earning a net profit of Rs.18,334 crore. However, the company’s net profit fell by 30.83 percent from Rs.26,506.53 crore during 2013-14. The other major corporate earners include State Bank of India (SBI), whose net profit stood at Rs.16,994 crore, Tata Motors at Rs.13,986 crore, and Coal India at Rs.13,727 crore. Even on the fourth quarter of 2014-15 results basis, the Ambani led-conglomerate topped the list for the highest net profit earners. The net profit for the fourth quarter of 2014-15 stood at Rs.6,381 (over $1 billion), thanks to a jump in refining margins to $10.1 per barrel, this also beat market expectations. The company’s net profit for the corresponding period of 2013-14 stood at Rs.5,631 crore. Reliance was followed by Coal India, whose net profit stood at Rs.4,239 crore, however, this was a decline of 4.4 percent from Rs.4,434.18 crore in the corresponding time frame in 2014. IT major TCS came in at third spot, with net profit stood at Rs.3,713 crore. However, the net profit was down by 30.69 percent at Rs.5,357.61 crore. TCS was followed by Infosys with a net profit of Rs.3,097. It grew by 3.5 percent from Rs.2,883 crore. On stand-alone basis state-run oil refiner and marketer Indian Oil was the highest quarterly net profit earner this season. It stood at Rs.6,285 crore. However, the net profit was down 33 percent from Rs.9,389 crore in the corresponding quarter of the previous fiscal. IOC was followed by ONGC, whose stand-alone net profit stood at Rs.3,935 crore and SBI whose net profit stood at Rs.3,742 crore.
India’s GDP growth tipped to beat China’s for second consecutive quarter
The gross domestic product data on May 28 is expected to show that the Indian economy is growing faster than China for the second consecutive quarter, but sceptics could be forgiven for asking: Why does it feel so slow? Celebrating his first year in office, Prime Minister Narendra Modi has basked in the success of transforming India into the fastest growing major economy. But there are nagging doubts over whether a new way of calculating GDP, introduced by the government earlier this year, has distorted the macroeconomic view. “The economy is not as strong as the GDP numbers might suggest,” said Shilan Shah, India Economist at Capital Economics. “The numbers should not have any bearing on policies and both the central bank as well as the government should look at other activity indicators.” The robust headline growth is hard to square with weak industrial activity, grim corporate earnings and an elusive recovery in bank credit. The median estimate from a Reuters poll of economists put GDP growth at 7.3% in the January-March quarter, slowing from 7.5% in the previous quarter. For the 2014-15 fiscal year ending in March growth is expected at 7.4%, up from 6.9% in 2013/14, using the new series. That is a startling turnaround from the previous data series that showed the economy was still struggling to gather steam after posting two successive years of growth below 5% - the longest spell of such low growth in a quarter century. If India was doing so well there might be far less need for the central bank to lower interest rates for a third time this year, as analysts expect it to do at a policy review on Tuesday. But, the economy is still suffering from slack. Corporate sales and industrial production are down. Merchandise exports have fallen for five months in a row. Output of cement and steel, a proxy for construction, has been extremely weak. Growth in bank credit in the fiscal year ending in March was the slowest in two decades. Arvind Subramanian, the government’s chief economic adviser, this week likened the state of the economy to flying on “one-and-a-half engines”. “Bad stuff has stopped happening, but the good stuff is still waiting to happen,” he said. Whereas India’s statisticians changed their calculation of GDP to come into line with global practices, it has left economists inside and outside government groping for a clear interpretation of the data. The Reserve Bank of India (RBI) has warned the new series is clouding the picture, and reckons growth is still slow in picking up. Still, the economy is in better shape than when Modi took the reins a year ago with the slogan “good days are coming”. He has been helped by a dramatic slide in global crude prices that has cooled inflation and helped narrow the fiscal and current account deficits, giving the RBI leeway to cut interest rates. Modi’s drive to make it easier to do business in India has generated optimism, and has led to a marked increase in foreign direct investment. A massive increase in the government’s planned spending on roads, railways and ports this year is expected to break a persistent investment logjam. Yet, businesses complain that too little has changed and are reluctant to ramp up investment, as their balance sheets are already stretched. Banks, saddled with mounting bad debt, are also cautious lenders. “So far, not enough has been achieved to suggest that India can fulfil its economic potential over the medium term,” said Shah of Capital Economics.
Forbes names SBI chief as 30th most powerful woman in the world
Forbes has named State Bank of India Chairperson Arundhati Bhattacharya in its annual 100 Most Powerful Women list, with a ranking of 30 in the world, a statement said here on May 27. The Kolkata-born Bhattacharya, 59, has moved up six spots (from No.36) in the list from her ranking last year and is the SBI’s first woman chairperson since October 2013. As SBI chairperson, she oversees 220,000 staff in 16,000 branches which service 225 million customers as India’s largest lender with offices in more than 36 countries. Under her stewardship, the SBI with assets worth $400 billion, undertook various initiatives in technology banking such as sbiINTOUCH digital banking outlet, BI Tech Learning Centres for educating customers and SBI e-Pay, a payment aggregator service. Recognising the multiple roles played by women, Bhattacharya has pioneered a two-year sabbatical policy for female employees taking maternity leave to extend care to their families. The Forbes 12th annual list of the 100 most powerful women features extraordinary entrepreneurs, visionary CEOs, politicians, celebrities, activists and philanthropists who are transforming the world and have been ranked according to wealth, media presence and overall impact.
Govt contains fiscal deficit to 3.99% of GDP in FY15
According to national accounts data released by Central Statistics Office (CSO), the Gross Domestic Product at current is estimated at Rs 125.41 lakh crore in the last financial year ended March 31, 2015. Fiscal deficit, gap between government’s expenditure and revenue, at 3.99 per cent of GDP is lower than the downwardly revised estimate of 4.1 per cent provided in the government’s first full Budget announced in February. “As a result of prudent policies and commitment to fiscal consolidation, the fiscal deficit at the end of 2014- 15, stands at Rs 5,01,880 crore which is 98 per cent of the projected figure in Revised Estimate for 2014-15,” the Finance Ministry had said in statement on May 17. The ministry had said that “fiscal deficit as a percentage of GDP is 4 per cent as against revised estimates of 4.1 per cent for 2014-15 , but the GDP data had not been released at that time. The fiscal deficit target was set at 4.1 per cent by the the UPA government, but Finance Minister Arun Jaitley had said he was taking it as a “challenge” to meet this ambitious and “daunting target” set up by his predecessor P Chidambaram. The government has set the fiscal deficit target for the current fiscal at 3.9 per cent of the GDP or Rs 5,55,649 lakh crore with the assumption that the size of the economy at current prices would be Rs 141.08 lakh crore in 2015-16. As per the fiscal consolidation road map outlined in the Budget 2015-16, fiscal deficit is to be brought down to 3.9 per cent of GDP in the current fiscal, then to 3.5 per cent in 2016-17 and further to 3 per cent by 2017-18. The 3 per cent target would now be reached a year later than planned earlier. The lower fiscal deficit reduces the government’s expenditure on interest payment and unlocks funds for investments in social welfare programmes as well as infrastructure development.
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