Prime Minister Narendra Modi leaves on July 6 on an eight-day tour that will take him to the five Central Asian countries of Uzbekistan, Kazakhstan, Turkmenistan, Kyrgyzstan and Tajikistan, and to Ufa in Russia where he will attend the BRICS and SCO back-to-back summits. Modi will be the first Indian prime minister in recent times to visit all five Central Asian countries at one go. Trade with the resource-rich region, in which China has made major inroads, stands at a paltry $1.6 billion. Connectivity, especially through the proposed North South Transport Corridor, will be on top of the talks agenda between Modi and the Central Asian leaders. India will seek to boost energy cooperation and trade with the five nations, which were part of the erstwhile Soviet Union. In Ufa, the summit of the five BRICS countries — Brazil, Russia, India, China and South Africa — comes as the board of governors of the BRICS bank, called the New Development Bank, holds its first meet in on July 7. The bank’s president is India’s M.V. Kamath. Writing about the visit on his Facebook page, Modi said his first stop will be Uzbekistan, where he will hold talks with President Islam Karimov and both sides would ink key agreements to strengthen cooperation. Modi said he would be interacting with Indologists, students learning Hindi and members of the Indian community. “It was in Tashkent that we lost one of our most popular and respected leaders, Shri Lal Bahadur Shastri ji, who ignited our nation with the clarion call of ‘Jai Jawan, Jai Kisan’. I will be paying my tributes to this proud son of India during the visit,” Modi said. In Kazakhstan, his next stop which he will visit on July 7-8, Modi said he will hold talks with President Nursultan Nazarbayev, and Prime Minister Karim Massimov. “There will be delegation level talks with President Nazarbayev followed by the signing of documents and a joint press statement,” he said. Modi said he looks forward to interacting with the youth of Kazakhstan at the Nazarbayev University. He will also inaugurate the India-Kazakhstan Centre for Excellence in Information and Communication Technology at the L.N. Gumilev Eurasian National University and also join a wreath-laying ceremony and planting of sapling at the Monument of Defenders of Motherland. Modi will then visit Ufa for the 7th BRICS Summit and SCO Summit. He expressed hope that the BRICS summit would build on the ground covered during the last summit in Fortaleza, Brazil. “I expect positive outcomes in economic cooperation and cultural ties among the BRICS nations.” Modi said he will be meeting the leaders - Brazil’s President Dilma Rousseff, China’s Xi Jinping, Russia’s Vladimir Putin and South Africa’s Jacob Zuma - individually too at the Ufa and also meet business leaders. At the Shanghai Cooperation Organisation (SCO) summit, India is an observer but is hoping to be included as a permanent member. He flies to Turkmenistan on July 11 — in the first visit by an Indian prime minister after P.V. Narasimha Rao in 1995. Modi said he will hold talks with President Gurbanguly Berdimuhamedov, which would be followed by signing of agreements and a meeting with the press. Areas for boosting ties include tourism, fertilizers, space, science and technology and defence. “Our bilateral trade is way below its potential and I am confident we can improve it,” Modi said. He will also inaugurate a statue of Mahatma Gandhi and a Traditional Medicine and Yoga Centre and also lay wreath at the mausoleum of the first president. His next visit on July 12 would be to Kyrgyzstan, in the first prime ministerial visit in the last 20 years. Modi would hold talks with President Almazbek Atambaye and also meet Prime Minister Semir Tariyev and Speaker of the Parliament Asylbek Jeenbekov. India is gifting medical equipment to Kyrgyz Field Hospital. Modi will inaugurate tele-medicine links, which shall promote medical tourism from Kyrgyzstan to India. A statue of Mahatma Gandhi will also be unveiled. “I will have the opportunity to visit the Kyrgyz-India Mountain Biomedical Research Centre and join the Wreath Laying Ceremony at the Victory Monument in Bishkek,” he said. On Tajikistan, his last stop, Modi said the last prime ministerial visit from India was by former prime minister Atal Bihari Vajpayee in November 2003. He said India and Tajikistan have a strategic partnership and very strong defence cooperation, but economic cooperation has been limited and the scope of growth was immense. Bilateral trade has huge potential. “My visit will build on the existing strong diplomatic and defence ties and script a fresh chapter in our economic ties. I look forward to meeting President Emomali Rahmon. Key agreements will also be signed after our meeting. I will gifting medicines for the India-Tajikistan Friendship Hospital,” he said. A statue of Rabindranath Tagore will also be unveiled in Dushanbe.
India Inc. commits Rs.450,000 crore for Modi’s ‘Digital India’
As Prime Minister Narendra Modi launched the “Digital India Week” here on July 1, India Inc. committed an investment of Rs.450,000 crore (some $75 billion) for the initiative that seeks to empower citizens by deploying IT and associated tools. Choosing no less than a sports stadium to launch the initiative where who’s who of India Inc. packed the rows, Prime Minister Modi said industry captains have committed investments of Rs.450,000 crore toward “Digital India” and create 1.8 million new jobs. The prime minister also unveiled a logo for Digital India -- an umbrella programme that seeks to transform India into a digitally- empowered, knowledge economy with a host of initiatives for a synchronized and coordinated
engagement of the government and its agencies. The prime minister said it was not enough for
India to say that it is an ancient civilization, and a country of 1.25 billion with favourable demography. “Modern technology needs to be blended with these strengths,” he said. He laid emphasis on useful technologies and said at one point India was criticised for launching satellites but today these were helping the common people. Farmers, for instance, are able to access weather forecasts. “Similarly, the Digital India initiative is aimed at improving the lives of the common people,” Modi said, adding while India may have missed the industrial revolution, it will not miss the IT revolution that is transforming peoples’ lives. The Prime Minister assured full support to young entrepreneurs who wished to launch start-ups. He called upon the youth to innovate and said “Design in India” is as important as “Make in India”. The event also saw a host of industrialists announce millions of dollars of investments in their own “digital” programmes. They included Reliance Group’s Anil Ambani, Reliance Industries’ Mukesh Ambani, Bharti Group’s Sunil Mittal and Aditya Vikram Birla Group’s Kumaramangalam Birla. Others at the event included Delta group’s Ping Cheng, Vedanta’s Anil Agarwal, Wipro chairman Azim Premji, Lava’s Hari Om Rai, Airbus’ Peter Gutsmeidl, Hero Group’s Pawan Munjal, and Nidec Corp’s Mikio Katayama. For the “Digital India” scheme, Modi has already been named the chair of a high-powered panel to monitor and all existing and ongoing e-governance initiatives. These will be revamped and aligned with the larger principles of “Digital India”, according to an official statement. The larger goal of Digital India includes broadband connectivity in all panchayats, Wi-Fi in all the schools and universities and public Wi-Fi hotspots in all important cities by 2019. It will be deployed in delivering services in areas like health, education, agriculture and banking. The vision is centred on three key areas: - Digital infrastructure as a utility to every citizen - Governance and service on demand - Digital empowerment of citizens. Communications and IT Minister Ravi Shankar Prasad said, Wednesday marked the launch of a host of pro-people products designed to make life easier and give access in domains like e-education, e-health, e-agriculture, e-commerce and even e-entertainment. “The essence of India’s Digital story is not to be told in the numbers of phones, laptops or the internet use. India’s vision of information technology is not simply IT enabled-services, but IT-enabled society,” he said. Finance Minister Arun Jaitley said the “Digital India Week” was part of a series of programmes intended to give a new direction to the country in terms of the IT revolution. He also announced that a “Skill India” educational initiative will be unveiled next week. The other initiatives launched under the “Digital India” programme on Wednesday included:
- Digital locker system to minimize usage of physical documents and enable their e-sharing via registered repositories.
- MyGov.in as an an online platform to engage citizens in governance through a “Discuss, Do and Disseminate” approach.
- Swachh Bharat Mission Mobile app to achieve the goals set by this mission.
- e-Sign framework to allow citizens to digitally sign documents online using Aadhaar.
- e-Hospital system for important healthcare services such as online registration, fee payment, fixing doctors’ appointments,
online diagnostics and checking blood availability online.
- National Scholarship Portal for beneficiaries from submission of application to verification, sanction and disbursal.
- Digitize India Platform for large-scale digitization of records in the country to facilitate efficient delivery of services to the citizens.
Bharat Net programme as a high-speed digital highway to connect all 250,000 gram panchayat of country -- the world’s largest rural broadband project using optical fibre.
Sony may `Make in India’ via Foxconn
Japanese electronics giant Sony is all set to make in India, though the products will be contract-manufactured at Taiwanese maker Foxconn’s upcoming facilities in the country. Sony looks at local sourcing for the second time after it stopped the practice in 2004 when it opted to only import. Top industry sources said Sony has decided in favour o local manufacturing as the government has offered sever al incentives. “However, Sony is not looking at manufacturing on its own at this moment,” a source said. Sony India MD Kenichiro Hibi said a final decision is ye to be taken. “There are many possibilities that we are look ng at (for making in India).Contract manufacturing is one of them. However, we are yet to decide,” Hibi told TOI. Sources said a decision has been made to tap into Foxconn’s acilities. This route will not en ail heavy investments and will eave the company with an op ion to set up an independent manufacturing location in the future, when required. Foxconn is planning to start many factories in India where it will manufacture products for a host of companies such as Xiaomi and Apple.In Andhra Pradesh, the company is understood to have zeroed in on Sri City for its operations and Sony’s products will also be made there. Sony sells mobile phones, televisions and cameras in India and imports them from plants in Thailand, Malaysia, China and Japan. The benefits given for local manufacturing has put pressure on the company as bigger rivals such as Samsung, LG and a host of other mobile phone companies are already assembling in India. Finance minister Arun Jaitley had made provisions in the Union Budget this year to incentivize local manufacturing in line with the government’s `Make in India’ initiative. In case of mobile phones, for example, local manufacturing will be cheaper by around 11%. Sony stopped local manufacturing in 2004 as a relatively smaller business size in India at that time did not justify a production facility and the company found it more efficient to source from its factories overseas, especially in view of India’s free-trade agreements with some of the countries. India is turning out to be a key market for Sony globally at a time when operations in many other countries are struggling. It is also one of the few markets where operations of mobile phones and TVs are growing for the company. The share of mobile phones to Sony’s India revenues is 35% and a similar contribution comes from the TV division. The company clocked revenues of over Rs 10,000 crore in India last year.
Trade with Central Asia can boost with proper connectivity: CII
On the eve of Prime Minister Narendra Modi’s five-nation Central Asian tour, the Confederation of Indian Industry has said trade with the region could jump manifold provided the right connectivity was put in place. “There is need to rapidly move forward on the International North-South Transport Corridor that would connect India to Central Asia and Russia via Iran,” Confederation of Indian Industry (CII) director general Chandrajit Banerjee said in a statement on July 5. “The INSTC (International North-South Transport Corridor) would greatly reduce freight transport time and open up connectivity between these regions,” he added. “There is need to develop more transport corridors that can connect India to the Central Asia region and provide commercial and shipping access to India’s warm water ports for these land-locked nations,” Banerjee said. “CII estimates that trade with the five Central Asian countries of Kazakhstan, Turkmenistan, Tajikistan, Uzbekistan and Kyrgyzstan can multiply manifold from the small base of $1.4 billion currently,” he added. Pointing to India’s ancient links with Central Asia, the industry body said: “Priority must be given to a pipeline connecting India to Central Asia as in the TAPI (Turkmenistan-Afghanistan-Iran-Pakistan) pipeline project.” The INSTC agreement was signed more than a decade ago with Russia and Iran for better connectivity to the Eurasian region through Iran. The INSTC members met last month and reviewed the status of report on the dry run between India, Iran and Russia via the Caspian Sea, while a follow-up meeting has been slated for this month. The transport corridor across Nhava Sheva (Mumbai) through Bandar Abbas port (Iran) to Astrakhan (Russia) and Baku (Azerbaijan) is expected to substantially cut cargo transportation time between India, the Central Asian region and Russia. The CII also suggested that India and the three-member Eurasian Economic Union of Russia, Kazakhstan and Belarus engage in free trade agreement negotiations on the fast-track. Modi is also slated to visit Ufa City in Russia for the Shanghai Cooperation Organisation (SCO) and BRICS summits, where he will also have an extended meeting with Russian President Vladimir Putin on plans to further the strategic partnership between Russia and India. While Kazakhstan is a major oil producer and Turkmenistan and Uzbekistan have some of the biggest natural gas reserves, Tajikistan and Kyrgyzstan are estimated to have considerable untapped reserves. Modi’s visit will be the first by an Indian prime minister after Jawaharlal Nehru to a region linked by history with India. The ties run deep, considering the journey of the Turkicised Mongols from the region to India to found the Mughal empire. Meanwhile, India and the Eurasian Economic Union have set up a joint study group to explore the feasibility of a free-trade agreement for promoting bilateral trade and investments, India’s commerce ministry said in a statement here last week. The study group will submit its report within a year.
Railways to see $120 b investments: Suresh Prabhu
As much as $120 billion will be invested in Indian Railways in the next five years for expansion and upgradation, said Railway Minister Suresh Prabhu on June 30. Indian Railway did not see any investments in the past 25 years, so there will be an investment of $120 billion to catch up with the backlog, said Prabhu, in an address to students and alumni of premier institutions like the IITs, National Law University and the London School of Economics. As the need of financial infusion in the railways is immense, the government has already decided to welcome FDI in the different departments of railways like station development, coach manufacturing, high speed network and suburban rail, he said. Highlighting the ills ailing the railways, he said the bad condition of toilets and ticketless travel are the two main issues plaguing the railways and sought innovative ideas and solutions from the audience to solve the problems. Asking if odourless toilets can be created without using water and if a fool-proof mechanism can be put in place to abolish ticketless travel, the railway minister promised to reward the best ideas and solutions while announcing that a new website to promote technology in rail services will be opened shortly.
India’s $100 bn push into solar energy to be driven by MNCs
India’s $100 billion push into solar energy over the next decade will be driven by foreign players as uncompetitive local manufacturers fall by the wayside, no longer protected by government restrictions on the sector. The money pouring into India’s solar industry is likely to be soaked up by foreign-organised projects such as one run by China’s Trina Solar – not the country’s own solar panel manufacturers. Last week, Softbank became the latest foreign player to enter India’s solar market, leading an investment of up to $20 billion. The Japanese firm said it would consider making solar panels locally, but with Taiwan’s Foxconn rather than a local manufacturer. Many Indian solar panel producers have benefited over the past six months from a surge in demand for panels not yet fulfilled by foreign companies. But their small scale and outdated technology will quickly make itself felt when the global players arrive. “The smaller manufacturers of India, especially the cell manufacturers, will be adversely hit because they are unable to compete both on technology and even on price structures,” said Jasmeet Khurana at solar consultancy Bridge To India. India’s solar panel makers can no longer turn to the Indian government for help. The government is more concerned about creating jobs quickly and ensuring plentiful power supply in a country known for its many blackouts. India, in contrast to Chinese and German efforts to protect local producers, has scrapped most restrictions on where equipment that turns sunshine into energy is bought. Last year, it dropped an anti-dumping duty on panel import. Foreign players making panels in India are expected to compete with local manufacturers to fulfil so-called domestic content requirements for government projects. Trina has unveiled plans for a $500 million plant and US.-based SunEdison is investing up to $4 billion in a manufacturing facility. Both are tying up with Indian power firms to build the plants. India has said it expects peak power demand to double over the next five years from around 140,000 megawatts today.
To help meet that demand, 100,000 MW of new capacity is to come from solar panels, and of that it wants at least 8,000 MW to come from locally-made cells. Foreign players manufacturing in India will probably win the bulk of those orders. Indian rivals like Indosolar and Moser Baer produce panels, but they cost 8 to 10 percent more than foreign producers, Khurana said. It is not yet clear which foreign firms will emerge as the winners, with most of the facilities years away from being built and the big tenders for huge solar parks touted by the government still to be awarded. But those who can quickly build scale will be the most able to compete on cost. “The lowest cost in manufacturing will only come from scale and integrated facilities,” said Sujoy Ghosh, India Country Head at U.S.-based First Solar. First Solar is to build 5,000 MW of solar power before 2020, but will rely on imported panels for now because it is cheaper to buy component parts internationally where they are more readily available. As for some of India’s small panel makers, they are looking to complement the efforts of foreign players instead of trying to derail them. Maharishi Solar, a small manufacturer based in Delhi, is looking to tie up with a foreign company, the company’s head Ajay Prakash Shrivastava told Reuters. It stopped producing solar panels a few years back as it could not compete with foreign manufacturers, primarily Chinese. Shrivastava said import panels are as much as 45 percent cheaper thanks to subsidies in their home countries and lower borrowing costs. “The Indian manufacturers do have a disadvantage,” he said. “We are trying to find a partner who can bring in the latest technology.”
Shopping through mobile phones may cross $638 bn by 2018
Global e-commerce sales made through mobile devices are expected to cross $638 billion by 2018, says a joint study by ASSOCHAM and Deloitte. At present, the availability of e-commerce applications on various mobility devices is helping to drive sales and revenue. E-tailers like Flipkart, Amazon and Jabong now get 50 percent of their revenues from consumers shopping on their mobile phones, D.S. Rawat, secretary general ASSOCHAM said. However, while shoppers want real-time, relevant, and personalised information and offers, retailers will need to surround this service with very strong privacy and security. Trust, transparency, and protecting customer information will be critical in retaining loyalty as mobile retailing becomes the norm, the study said. “Online commerce companies should enable all features from search-to-purchase on mobile apps, such as facilitating product research, price comparison, view ratings and reviews, and payment.” The launch of wearables, such as Google Glass and Apple Watch, has opened new opportunities for reaching out to customers, the study said, adding that e-tailers would keep an eye on developments in this arena. The e-marketplaces are growing significantly with the increase in the internet penetration and smartphone usage. Internet enabled mobiles are making shopping a unique experience for buyers. According to the joint study “Global Powers of Retailing 2015”, online marketplaces rather than pure inventory-led companies tend to serve as the primary e-commerce model in Asia.“The high costs of holding inventory, poor logistics and supply chain challenges in India are shifting the inventory-led companies and new entrants to adopt marketplace model,” the study said.It also said cash-on-delivery is the most preferred mode of payment in India with 45 percent of the shoppers using it, while 21 percent shoppers opt for debit cards and another 16 percent go for credit cards.
‘India to become world’s second largest smartphone market’
Buoyed by growing sales, India will overtake the US to become world’s second largest smartphone market by 2017, says a report. According to international research firm Strategy Analytics, global smartphone sales are forecast to grow from 1.5 billion units in 2015 to a record 1.7 billion by 2017. China, India and the US are the three big countries driving smartphone growth worldwide. “India will soon overtake the US to become the world’s second largest smartphone market by 2017 behind China, selling an impressive 174 million units,” the report said. “We forecast global smartphone sales will grow from 1.5 billion units in 2015 to a record 1.7 billion in 2017,” said Neil Mawston, executive director at Strategy Analytics in a statement.India is fast becoming the next major growth wave. “India’s growth is being driven by low smartphone penetration, expanding retail availability of devices, wealthier middle-class consumers, and aggressive promotions from local smartphone brands like Micromax,” added Linda Sui, director at Strategy Analytics. According to the report, 118 million smartphones will be sold in India this year. Nearly 458 million smartphones will be sold in China in 2015, rising steadily to 505 million in 2017.About 164 million smartphones will be sold in the US in 2015, climbing marginally to 169 million in 2017. “No serious global hardware or software player can afford to ignore the huge Indian smartphone market today,” the report concluded.
Core sector growth rises to 4.4% in May
Growth in production in the eight key infrastructure sectors hit a six-month high of 4.4 per cent in May, after two consecutive months of decline, indicating a recovery in industrial activity. The index of these eight core sectors grew 3.8 per cent in the corresponding month last year. In February this year, the eight sectors had recorded growth of 1.4 per cent. Cumulatively, growth in the eight core sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — in the first two months of this financial year fell to 2.1 per cent from 4.7 per cent in April-May 2014-15. This was largely because in April, output declined 0.4 per cent, according to data released by the Ministry of Commerce and Industry on Tuesday. In May, production of refinery products jumped 7.9 per cent, against contraction of one per cent, 1.3 per cent and 2.9 per cent in February, March and April, respectively. Overall, output of refinery products in April-May rose 2.6 per cent, against contraction of 1.9 per cent in the corresponding period last year. Coal production increased 7.8 per cent year-on-year in May. In May 2014, it increased 7.9 per cent. Production of steel and cement rose 2.6 per cent each in May, against growth of 0.6 per cent and contraction of 2.4 per cent, respectively, in April. However, these fell from 3.3 per cent and 8.4 per cent growth, respectively, in May last year. Economists said though the positive run might not continue, considering steel and cement production might fall from June, in line with the trend, the Index of Industrial Production (IIP) might show healthy growth, as the core sector has 38 per cent weight in industrial output. Even when core sector production contracted in April, IIP rose 4.1 per cent, primarily due to a surge in the volatile in capital goods segment. Madan Sabnavis, chief economist, CARE Ratings, said: “With such an improvement in the core numbers, I expect the May IIP to be between three and four per cent. However, there might not be correlation between IIP and core all the time. Last year, we had seen how despite good core, IIP had contracted. More, we need to see what happens from June. It will be too early to call this as a recovery.” In May, electricity generation grew 5.5 per cent, against a decline of 1.1 per cent in the previous month. In May 2014, electricity generation rose 6.7 per cent. For April-May this year, electricity generation rose 2.2 per cent, against 9.2 per cent in the year-ago period. “In May, the core sector recorded its highest level of growth in the past six months,” said Rishi Shah, economist, Deloitte. “However, growth has been weak in the core infrastructure industries and, as such, data in the coming months would be crucial in determining if we are indeed witnessing a sustained turnaround.” He said coal production continued to grow at a healthy 7.8 per cent, while electricity growth rebounded to 5.5 per cent after contracting in April. “The growth in steel production was encouraging. But given the condition of the domestic steel sector and the global demand outlook, these numbers need to be looked at carefully,” Shah said. “Growth in cement production, after a gap of two months, is also a positive, though we would watch it for another few months to see if it sustains. Overall, the number bodes well for IIP growth in May.” Fertiliser production grew 1.3 per cent in May, against growth of 17.6 per cent in the corresponding month last year. Natural gas was the only segment that witnessed contraction, of 3.1 per cent, in May. This segment hasn’t recorded growth in 12 months. Five more segments - crude oil, refinery products, steel, cement and fertilisers --- recorded a fall in production in April.
Direct Benefit Transfer a game changer: Arvind Subramanian
Chief Economic Advisor Arvind Subramanian on July 2 described the government’s direct benefit transfer (DBT) as a “game changer” for India. He highlighted the fiscal impact of the government’s DBT scheme of cash transfers which yielded savings of over Rs.12,000 crore on domestic LPG in 2014-15. “DBT is important not only for fiscal savings ... if the government can deliver these services it would legitimise the state, it would arrest the ongoing trend of de-legitimisation of the state the world over,” Subramanian said at a roundtable here on “Direct Benefit and Basic Income Transfers” organised by the International Centre for Human Development. “By moving from a regime of subsidies to transfers, you liberate the market system to work more efficiently. That is why this would count among the first generation of reforms,” Subramanian said in his illustrated talk titled “Realising the JAM vision”. JAM, which was first coined by the chief economic advisor last February in the Economic Survey, represents - Jan Dhan, Aadhar and Mobile - that will allow the transfer of benefits in a leakage-proof, targeted and cashless mode. “The DBT scheme is above all a way of improving the life of the vulnerable and the poor,” he added. Subramanian went on to illustrate how pilot projects and studies show subsidy leakages to have gone down from between 12 to 25 percent.
Growth is picking up, says Raghuram Rajan
Reserve Bank of India (RBI) Governor Raghuram Rajan has said growth is recovering and investment picking up. He, however, stayed guarded on inflation expectations. “We talked about the state of the economy, which I would characterise as recovering, that we see some signs of capital investment picking up, and there is a continuing need that the government is trying to address, of putting some of the stalled projects back on track. We also see some signs of capital investment, which is good,” Rajan said on Thursday, after the central bank’s board meeting here. In January, RBI had reduced its prime lending rate by 75 basis points to boost growth. Rajan declined to share his thoughts on inflation, saying RBI’s stance would be data-dependent. “The monsoon thus far, as the number suggests, has been significantly above normal and there are varied predictions about how it looks, going forward,” he said. He also noted divergent views by different agencies regarding the prospects. “Exports are an area of relative weakness but they have been weak across various Asian economies, with the exception perhaps of China, and clearly the weak state of economy globally is a big factor there,” the governor said. He also allayed worry on contagion of the Greek debt crisis. “India’s direct exposure to Greece is very limited; the exposure is only via exchange rates. Greece is an evolving situation. Untoward developments (there) could lead to risk-off trade,” he said. “There is the indirect exposure in the sense of what Greece will do to the exchange rates or whether the euro will react to any Greece issue or how any untoward developments in Greece could lead to the risk of sentiment among global investors.” He said India had adequate foreign exchange reserves to buffer volatility in capital flows. After taking charge of the central bank amid a currency crisis in September 2013, Rajan has taken several steps to attract foreign inflows. Forex reserves are at an all-time high, swelling by $75 billion in 19 months. Rajan said the issue of banks’ asset quality and bad loans was an ongoing one. RBI was working with banks to ensure they recognised problems related to non-performing assets early. He also cautioned banks against misuse the ‘5/25’ rule by resorting to evergreening of loans. The 5/25 principle allows banks to refinance a loan every five years for 25 years. The move is aimed at spreading risks for long-gestation projects and addressing asset-liability mismatches. The Reserve Bank of India (RBI) has decided to push the idea of a new kind of non-banking financial company (NBFC), which would allow account aggregation and be regulated as an account-aggregator NBFC. “This will allow the common man to basically see all his accounts across various insurance companies, pension funds, as well as banks, in a common format and plans are underway for that,” RBI Governor Raghuram Rajan said in Chennai. Earlier, the government had proposed to set up a facility through which every individual could see all his accounts across insurance companies, pension funds and others, he said. The central bank on Thursday said it was committed to increasing the foreign investment ceiling in government bonds, though it would be mindful of not over-relying on such investments. “We are committed to a steady expansion in the absolute value of FII (foreign institutional investor) participation, while ensuring we don’t go overboard and become overly reliant on FIIs for financing in government bond markets or corporate bond markets,” Reserve Bank of India Governor Raghuram Rajan said at a news briefing after a board meeting of the central bank.
DISCLAIMER
This newsletter is compilation of news articles from various business-e-newspapers and in no way is an endorsement or reflection of Embassy of India, Berne views.
