From a sagar mala or a chain on the sea, connecting India ports and then the hinterland, to an enabling groundwork for cheaper air travel to small cities, President Pranab Mukherjee on June 9, 2014 outlined a slew of projects to show the thrust the Narendra Modi government wishes to give to infrastructure development. Lack of robust infrastructure is one of India’s major impediments, the president said during the course of his 55-minute address to the joint session of the two Houses of Parliament in the Central Hall.
The government will chalk out an ambitious infrastructure development programme to be implemented in the next 10 years. A fast-track, investment friendly and predictable public-private-partnership mechanism will be put in place, he assured. Among the projects and policies he listed were:
· A Diamond Quadrilateral Project of high-speed trains.
· Freight corridors with specialised agri-rail networks for perishable farm products.
· Higher investment in railways with innovative financing.
· Expansion of railways in hilly states and northeast region.
· Modernization of rail safety systems with prime focus.
· Sagar Mala Project to connect sea ports with hinterland through road and rail.
· Inland and coastal waterways for use as major transport routes.
· New National Energy Policy with focus on development.
· Expand the National Solar Mission.
· Connect households and industries with gas-grids.
· Reform coal sector with urgency to attract investment.
· Operationalise international civil nuclear pacts.
· Build 100 new cities with world class amenities.
· Integrated infrastructure with focus on cleanliness and sanitation.
· All-weather houses for every family in 10 years with all basic amenities.
· Time-bound programme for national highways network.
· Low-cost airports to promote air connectivity to smaller towns.
· Develop coastlines as gateway for India’s prosperity.
· Modernalisation of existing ports and development new world class ones.
With Modi at helm, FIIs pump in $1.2 bn
The markets on June 6 continued to scale new highs, as foreign investors pumped in dollars amid the improved sentiment surrounding the new government. Since the Narendra Modi-led National Democratic Alliance government took charge at the Centre on May 26, the markets have gained about three per cent, while foreign investors have pumped in about Rs 6,600 crore ($1.2 billion) into Indian stocks. The positive momentum in the secondary market and the availability of foreign capital has helped India Inc tap the market to raise capital. On June 6, the Sensex gained about 377 points, or 1.5 per cent, to close at a new all-time high of 25,396.46, while the broader Nifty gained 109.3 points, or 1.46 per cent, to record a new high of 7,583.4. During intra-day trade, the Sensex and the Nifty recorded new intra-day highs of 25,419.14 and 7,592.7, respectively. The latest boost to markets was from oil and gas stocks such as index heavyweights Reliance Industries Ltd (RIL) and Oil & Natural Gas Corporation (ONGC), which surged on hopes the prime minister would raise natural gas prices. While ONGC gained 11 per cent, RIL rose three per cent and GAIL about eight per cent. The three stocks were among the top gainers in the Sensex, contributing to the bulk of the gains.After correcting about two per cent last week, the benchmark indices have added about five per cent this week. The year-to-date inflow of foreign institutional investment stands at about $8.5 billion. \"Investors had wanted a clear mandate at the Centre. Markets have been running up on the back of a stable government at the Centre, as well as improving global factors,\" said Nirmal Jain, chairman, IIFL. \"This is just the beginning of the bull phase. There will be some correction on the way but overall, the markets will do well,\" said Deven Choksey, managing director, KR Choksey Securities. Investors are hoping the new government will take steps to turn around the economy and revive investment. \"The government just needs to de-bottleneck and create a favourable environment. If the economy is able to grow 6.5 per cent, it will have tremendous multiplier effect,\" Choksey said. In the past two weeks, the Street has seen some big-ticket capital-raising. Telecom company Idea successfully completed its Rs 3,000-crore equity placement; YES Bank, too, raised a similar amount. Promoters of Kotak Mahindra Bank pared their holdings worth Rs 2,200 crore to a Canadian pension fund. \"The momentum has just started. We will see more and more companies raise capital,\" said Choksey. Among the other major gainers on June 6 were banking and financial services stocks. Housing Development Finance Corporation rose 2.9 per cent, State Bank of India gained 1.6 per and Kotak Mahindra Bank recorded 3.9 per cent gains. Experts said these stocks would continue to do well due to the easing global liquidity. On June 5, the European Central Bank took interest rates to negative territory to help spur economic growth. \"This kind of optimism is positive for the market. The rally is justified and could continue, as valuations are still not expensive,\" said Gautam Chhaochharia, head of research (India), UBS.
RBI allows FPIs, NRIs to invest up to 26% in insurance sector
The Reserve Bank of India (RBI) on June 5 said overseas investors, including foreign portfolio investors (FPIs) and Non Resident Indians (NRIs), can invest up to 26% in insurance and allied activities through the automatic route. “Effective from February 4, 2014, foreign investment by way of FDI, investment by FIIs/FPIs and NRIs up to 26% under automatic route shall be permitted in insurance sector,” RBI said in a circular. Earlier in February, the government had allowed 26% foreign investment in activities related to insurance like broking, third party administrators and surveyors and allowed FIIs and NRIs to invest in insurers within the stipulated cap. In case of insurance companies, the 26% cap will include foreign direct investment (FDI) and investments from foreign institutional investors (FIIs) and Non-Resident Indians (NRIs), said a press note issued by Department Of Industrial Policy and Promotion (DIPP). Earlier, only FDI under the automatic route was allowed in insurance companies. FPIs encompass all FIIs, their sub-accounts and qualified foreign investors (QFI) under a new regime that came into force on 1 June. Under the new norms, 26% foreign investment including FDI, FII and NRI will be allowed under the automatic route in insurance companies, insurance brokers, third party administrators (TPAs), surveyors and loss assesses. Companies bringing in foreign investment will, however, have to obtain necessary licence from the Insurance Regulatory and Development Authority (IRDA) for undertaking prescribed activities. Insurance brokers are entities which for remuneration arrange insurance contracts with insurers or re-insurers on behalf of their clients. The TPAs help in facilitating health insurance on behalf of insurers. Surveyors and loss assessors provide technical services to the insurance companies. All these entities are required to obtain a licence from the IRDA for undertaking specific activities
India is new world No. 2 in textile exports
India has overtaken Germany and Italy to emerge as the world\'s second largest textile exporter. But it lags China, whose exports are nearly seven times higher.
Data released by the Apparel Export Promotion Council, the industry body for garment exporters, showed that India\'s textiles exports were estimated at $40 billion in 2013, compared with China\'s $274 billion. Textiles includes everything from fibre and yarn to fabric, made-ups and readymade garments made of cotton, silk, wool and synthetic yarn. Over 55 per cent of the global trade relates to readymade garments, where India ranked sixth in 2013 with exports of $16 billion, which is around 40 per cent of the country\'s textiles exports. India beat Turkey to move up a notch. For China the share of garments is estimated at close to 60 per cent, indicating that the government needs to provide a bigger fillip to the readymade industry. India has overtaken Germany and Italy to emerge as the world\'s second largest textile exporter. But it lags China, whose exports are nearly seven times higher. Apart from China, Italy and Germany, smaller countries such as Bangladesh and Vietnam have overtaken India in recent years as major suppliers to retail chains in Europe and the US on the back of cheap labour and lower-duty access. The industry had expected part of the business from Bangladesh to shift to India after accidents in factories raised safety concerns. But it managed to log 18 per cent growth in the garments segment in 2013, compared to global growth of 6per cent. Over the past few months the Indian garment industry has staged a recovery of sorts which can be seen in the 23per cent rise in exports of shirts, trousers, skirts and other readymades during 2013. Exporters said a change in focus to markets beyond the US and the EU has helped. \"Despite having slow recovery in the US and EU, our biggest traditional markets as well as prevailing global slowdown coupled with sustained cost of inflationary inputs, we made the best possible efforts to reach here. In recent years, UAE, Oman, Brazil, Malaysia, Poland and the Russian Federation have seen a spurt in growth.
Indian airports now amongst world’s best service providers
New Delhi\'s Indira Gandhi International Airport (IGIA) and Mumbai\'s Chatrapati Shivaji International Airport (CSIA) have found place in the top five of the best service quality providers in the world. IGIA has been adjudged as the second best in the 25-40 million passengers per annum (MPPA) category in the world, in the Airports Council International\'s (ACI) airport service quality (ASQ). CSIA is the fifth best in the list. Even Hyderabad\'s Rajiv Gandhi International Airport (RGIA) has won the second best service quality award in the 5-15 MPPA category. This is the third time in a row that IGIA has won the coveted award for airport service quality (ASQ) from ACI. \"In an airport setup, it serves as the cornerstone for not just delivering a world class passenger experience consistently but also achieving a healthy financial performance,\" said I. Prabhakara Rao, chief executive, DIAL. \"We strongly believe that if we ensure sustainability in all our services, retail offerings, operational efficiency, and environment friendliness then we can attain perpetual success.\" IGIA has made rapid progress in enhancing the service quality over the last seven years since its privatisation. The airport scored 4.84 points on the ASQ scale out of 5 points and has been recognised as the sixth best airport in the world amongst 235 participating airports. IGIA\'s ASQ score of 2007 stood at 3.02 points and a ranking 101 out of the 125 participating airports. IGIA has an annual capacity of over 60 million passengers. Around 36.88 million passengers passed through it in 2013. It also handled nearly 600,000 tons of cargo and over 300,000 air traffic movements (ATM) during the same period.
India, Bhutan to boost hydropower cooperation
India and Bhutan reiterated their commitment to achieving the 10,000 MW target in hydropower cooperation and not to allow their territories to be used for interests “inimical” to each other. In a joint statement at the end of Prime Minister Narendra Modi’s two-day visit to the Himalayan kingdom, the two countries also decided to strengthen cooperation in a host of fields including information technology and education. They also decided to cooperate on multilateral and regional forums as well as promote trade and investment between them. Prime Minister Narendra Modi, who chose Bhutan as his first port of call after assuming office, met Bhutan King Jigme Khesar Namgyel Wangchuck and addressed a joint session of the Bhutan parliament on Monday.
The joint statement said that the countries expressed satisfaction with the cooperation between them related to mutual security. “They agreed to continue with their close coordination and cooperation with eac h other on issues relating to their national interests, and not allow each other’s territory to be used for interests inimical to the other,” it said. Bhutan in 2003 had been the first neighbouring country to quietly help India by tackling militants working from its territory. Bhutan had conducted ‘Operation All Clear’ against India specific insurgents, something that no neighbour had ever done for India. The statement said: “The two sides exchanged views and held discussions on bilateral relations and economic cooperation as well as cooperation in regional and multilateral forums”. Modi assured Bhutan Prime Minister Tshering Tobgay of India’s continued commitment to capacity building especially in the education and information technology sectors in Bhutan. India also conveyed its decision to exempt Bhutan from any ban or quantitative restrictions on export of items like milk powder, wheat, edible oil, pulses and non-basmati rice. The two sides also agreed to further promote trade and investments between the two countries. They acknowledged the importance of cooperation and mutual benefit arising from the hydro-power sector between the two countries and expressed satisfaction on the progress being made and reiterated their commitment to achieving the 10,000 MW target, it said. India is involved in a big way in hydropower projects in Bhutan, which it has described as a “win-win” situation for both. It has three projects, of 1,416 MW, already in operation in Bhutan. It has three more under construction - which would be commissioned in 2017-18. Earlier this year, both countries inked an agreement for four more joint venture model hydroelectric projects totalling 2,120 MW. The 600 MW Kholongchu hydropower project, of which Modi laid the foundation here Monday, is part of this. It is joint venture model between Satluj Jal Vidyut Nigam and Druk Green Power Corporation. According to the statement, both leaders recalled the strong historical ties of friendship and understanding that exist between the governments and peoples of the two countries. Tobgay conveyed his appreciation to the government and people of India for the generous development assistance given to Bhutan since 1961.
India set to grow at 5.5 percent: World Bank
The World Bank projected India’s growth at 5.5 percent in fiscal 2014-15, accelerating to 6.3 percent in 2015-16 and 6.6 percent in 2016-17 as it urged developing countries to double down on domestic reforms. The growth in South Asia was 2.6 percentage points below average growth in 2003-12, the World Bank noted in its twice yearly Global Economic Prospects report that also lowered projections for global economic outlook. Firming global growth and a modest pickup in industrial activity should help lift South Asia’s growth to 5.3 percent in 2014, rising to 5.9 percent in 2015 and 6.3 percent in 2016, it said Most of the acceleration is localised in India, supported by a gradual pickup of domestic investment and rising global demand. The World Bank, however, cautioned that forecasts assume that reforms are undertaken to ease supply-side constraints (particularly in energy and infrastructure) and to improve labour productivity, fiscal consolidation continues, and a credible monetary policy stance is maintained. “The financial health of economies has improved. With the exception of China and Russia, stock markets have done well in emerging economies, notably, India and Indonesia,” said Kaushik Basu, Senior Vice President and Chief Economist at the World Bank. Developing countries are headed for a year of disappointing growth, as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, the Bank said. The Bank has lowered its forecasts for developing countries to 4.8 percent this year, down from its January estimate of 5.3 percent. Signs point to strengthening in 2015 and 2016 to 5.4 and 5.5 percent, respectively. China is expected to grow by 7.6 percent this year, but this will depend on the success of rebalancing efforts, the GEP said. Bad weather in the US, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of sub 5 percent growth for the developing countries as a whole, it said. Fiscal policy needs to tighten in countries where deficits remain large, including Ghana, India, Kenya, Malaysia, and South Africa, the Bank said. In addition, the structural reform agenda in many developing countries, which has stalled in recent years, needs to be reinvigorated in order to sustain rapid income growth.
The global economy is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 percent in 2015 and 2016, respectively. High-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40 percent in 2013, providing an important impetus for developing countries, the Bank said.
FIIs pump Rs 26k cr into mkts in June, 2014
Foreign investors pumped more than Rs 26,000 crore into the Indian market this month so far, primarily on account of positive bias after polls and reform-oriented decisions taken by the new government. According to the data compiled by securities depositories, net investment by foreign investors into equity markets stood at Rs 10,359 crore, while in debt market it was Rs 15,806 crore -a total of Rs 26,165 crore ($4.4 billion) -this month so far. Foreign investors, the main drivers of the equity market, have helped in pushing up the benchmark Sensex by over 4% so far this month.
India’s exports jump by 12.4 percent in May
India’s exports jumped by 12.4 percent to $27.99 billion in May, the sharpest rise in six months helped by a weaker rupee, government data showed on June 11. Exports had increased by 5.26 percent to $25.63 billion in April year-on-year. A weaker rupee had its impact on imports also which fell by 11.41 percent to $39.23 billion in May, according to data released by the ministry of commerce and industry here. However, trade deficit widened to $11.23 billion in
May from $10.08 billion recorded in the previous month. Cumulative value of exports for first two months of the current financial year stood at $53.63 billion, which was 8.87 percent higher than $49.26 billion recorded in the corresponding period last year. The value of imports slumped by 13.16 percent to $74.95 billion in April-May period of 2014-15 from $86.31 billion recorded in the same period in the previous year. The trade deficit for the April-May 2014-15 period stood at $21.32 billion, which was sharply lower from $37.04 billion during the corresponding months of last fiscal. Oil imports rose by 2.5 percent to $14.46 billion in May from $14.11 billion during the like period of last fiscal, while non-oil imports slumped by 17.9 percent to $24.76 billion from $30.16 billion shipped-in during May 2013.
