Mentor july 2017 national india launches South-Asia satellite

Significance The IIP has been revised after a gap of 13 years and the obsolete items which are no longer in production in the index have been replaced with contemporary products in the new index making it to be more comprehensive in nature. Introduction of the new series would make all the key macroeconomic indicators such as IIP, WPI, CPI and national accounts to have a common base of 2011-12, paving way for easier comparisons among them. The new series indices have painted a healthier picture of the Indian economy in 2016-17 than that of the old series.
Home Ministry asks NGOs to open Bank Accounts in Core Banking format

The Home Ministry has instructed 5,845 NGOs to open their accounts in banks having core banking facilities. The NGOs are also required to furnish the account details for real time access of security agencies in case of any discrepancy. The move is aimed at checking “errant” NGOs especially those organizations receiving foreign funding. The Home Ministry has mandated the NGOs registered under the Foreign Contribution Regulation Act to have their accounts in either nationalised banks or in a few private banks that has core banking facilities. Around 3,768 NGOs have been told that their accounts in banks does not have core banking facilities. Another 2,077 NGOs have been instructed to furnish their bank accounts details as such details are not available with the home ministry. The significance of the move is that the core banking system with all of the branches of the networked banks interconnected would allow the security agencies to access the accounts of the NGOs on real time basis.

The government has taken a slew of measures to regulate the NGOs especially those receiving foreign funding. As a part of the measures, registration of more than 10,000 NGOs were suspended for non filing of annual returns as per the FCRA. And more than 1,300 were denied renewal over the past three years owing to various violations committed by these NGOs. In 2016, government had directed around 11,000 NGOs to file applications for renewal before February 28, 2017. Out of 11,000, only 3,500 NGOs had filed applications for renewal before the expiry date. As a result of all the above measures, there are only 24,000 active NGOs as against 40,000 in 2014-15.
Indian Railways to acquire EoTT Equipments to run Trains without Guards

The Indian Railways has planned to acquire the End of Train Telemetry (EoTT) equipments to run nearly 1,000 trains without guards in the current fiscal. The EoTT system is designed in such a way that it will perform the guard’s job. EoTT system comprises two units, namely, ‘cab display unit’ (CDU) which is fitted on the locomotive and ‘sense and brake unit’ (SBU) which is fitted on the last coach of the train. The units will be fitted with radio transmitter which can communicate with each other. The transmitter will send signals at regular intervals to the last coach to ensure that the train is running intact. The Indian Railways will initially acquire 1,000 EoTT equipments for its container operations and later on more units will be procured to be fitted on all trains. Accordingly, all goods trains on the proposed dedicated freight corridors will run with EoTT system. Each set of EoTT device will cost approximately Rs 10 lakh.

The EoTT system will help in establishing communication between the locomotive driver and the last wagon of the train and ensure that the train is running as a complete unit. In case of parting of coaches from the rear side of the train, it will give indication to the loco driver so that the driver can apply brakes to the rear unit thereby averting collision of the rear portion with the front portion of the train. The transmitter at the last coach is connected to the brakes and the brake gets applied so that the broken away portion of wagons do not collide with the front portion.
RBI tightens Rules for JLFs

The Reserve Bank of India (RBI) has tightened the rules around making the Joint Lenders’ Forum (JLF) more effective, directing banks not to break any rules and to meet all deadlines. The RBI has said that any breach of rules would attract a monetary penalty. JLFs are meetings held to revitalise stressed assets. In JLF banks attempt to red-flag stress early and check them by putting in place a corrective action plan (CAP). JLFs inefficiency basically stems out from the disagreements between lenders.The entire model of JLF is based on the premise that collective action of banks against a borrower for recovery. However, in reality, different lenders have different levels of comfort or discomfort, based on the exposure, collateral, etc. Many lenders have also complained about the lack of transparency in JLF.

Salient Highlights

As per the new norms, RBI has lowered the threshold needed for implementing the corrective action plan (CAP). Now, the decisions agreed to by a minimum of 60% of creditors by value and 50% of creditors would now be valid to implement the CAP. Once a decision is reached by the JLF, it would be binding on all other lenders and they must implement it without any additional conditionalities. However, if a lender wants to exit by exercising the substitution option but failed to exit within the given time, it has to go along with the decision taken. RBI has asked all banks to ensure their representatives on the JLF to be armed with appropriate mandates. It has also asked the executives to take an unambiguous and unconditional stand and vote accordingly. As per the new norms, the executives after taking the decision should be suitably empowered to implement them without necessitating any board approvals. The CAP can include resolution through the flexible structuring of project loans, change in ownership under strategic debt restructuring or scheme of the sustainable structuring of stressed assets.

Forex Reserves Touch Life Time High of $372.73 billion

According to the Reserve Bank of India’s weekly statistical supplement, India’s foreign exchange (Forex) reserves have increased by $1.594 billion to touch a lifetime high of $372.73 billion in the week that ended on April 28. The increase was due to increase in foreign currency assets (FCAs), The reserves had increased by $1.250 billion to $371.14 billion in the previous week.

Components

The components of India’s Foreign Exchange Reserves include: Foreign currency assets (FCAs) Gold Special Drawing Rights (SDRs) RBI’s Reserve position with International Monetary Fund (IMF) FCAs constitute the largest component of the Forex Reserves. FCA surged $1.569 billion to $349.055 billion in the reporting week. FCAs consist of US dollar and other major non-US global currencies. It also comprises of investments in US Treasury bonds, bonds of other selected governments, deposits with foreign central and commercial banks. FCAs include with them the effects of appreciation or depreciation of non-US currencies like the euro, pound, and the yen and is expressed in terms of dollars. The gold reserves stand at $19.869 billion. SDRs’ value has increased $8.5 million to reach $1.460 billion. RBI’s reserve position with the IMF also increased by $15.8 million to reach $2.347 billion.

SAMPADA Scheme

The Cabinet Committee on Economic Affairs has approved re-structuring the schemes of the Ministry of Food Processing Industries (MoFPI) under new Central Sector Scheme called as SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) for the time period 2016-20.

SAMPADA is an umbrella scheme incorporating ongoing schemes of the Ministry of Food Processing Industries (MoFPI) such as Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Food Safety and Quality Assurance Infrastructure, etc. It will also incorporate the new schemes like Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages, as well as Creation / Expansion of Food Processing & Preservation Capacities. SAMPADA with an allocation of Rs. 6,000 crore is expected to benefit 20 lakh farmers and generate 5,30,500 direct and indirect employment opportunities in the country by the year 2019-20. The objective of SAMPADA is to supplement agriculture, modernize processing of agri products and decrease their wastage.

The new umbrella scheme gives renewed thrust to the food processing sector in the country. It aims to develop modern infrastructure to facilitate entrepreneurs to set up food processing units based on cluster approach and provide effective and seamless backward and forward integration for processed food industry. It proposes to achieve this by plugging gaps in supply chain and development of infrastructure facilities for processing and preservation and modernization of existing food processing units. As a result, SAMAPADA will result in the creation of modern infrastructure coupled with efficient supply chain management from farm gate to a retail outlet. It would provide better prices to farmers and would help in doubling their incomes. Implementation of the scheme will result in creating huge employment opportunities, especially in rural areas. From the perspective of the consumer, it would promote the availability of safe and convenient processed foods at an affordable price.

Other initiatives to boost Food Processing industry

The government has allowed 100% FDI in trading including through e-commerce with respect to food products manufactured and produced in India. The Governments has created a Special Fund of Rs. 2000 crore in NABARD to provide credit at the concessional rate of interest to designated food parks and agro-processing units in the designated food parks. Food and agro–based processing units and cold chain infrastructure have been placed under the ambit of Priority Sector Lending (PSL).

Union Cabinet clears Ordinance to tackle Bad Loans

The Union Cabinet has cleared an ordinance that seeks to amend the Banking Regulation Act to give more powers to Reserve Bank of India to deal with non-performing assets (NPAs) in the banking sector. The ordinance has been sent to the President for assent. Amendments will empower RBI to act against loan defaulters and defaulting companies under the bankruptcy code. Amendments will enable RBI to set up multiple oversight committees to deal with NPAs. Amendments will be made to make sure that bankers opting for resolution of bad debts are ring-fenced from any regulatory backlash.

The ordinance would empower RBI to speed up the NPA resolution process. The NPAs would be resolved faster as the bankruptcy code provides for a time-bound winding up of companies and recovery of secured loans. The RBI and the government have already made ready a list of 50 top loan defaulters against whom action can be initiated. Those corporate borrowers who have diverted loans taken for specific purposes are expected to be first brought under the scanner.

The assets of the banks which don’t perform (that is – don’t bring any return) are called Non Performing Assets (NPA) or bad loans. If customers don’t pay either interest or part of principal or both, the loan turns into bad loan. According to RBI, terms loans on which interest or instalment of principal remains overdue for a period of more than 90 days from the end of a particular quarter are termed as a Non-performing Asset. The menace of NPAs has been rising in the banking sector. As per the finance ministry data, the gross NPAs of the Scheduled commercial banks’ is Rs 9.64 lakh crore as on December 31, 2016. The menace of NPAs is more in State-owned banks than in the Private banks. It has been estimated that the state-owned banks had written off Rs 1.14 lakh crore of bad loans between 2013 and 2015. The gross NPAs of the private sector banks have also increased to Rs 70,321 crore by December 31, 2016, from Rs 48,380 crore as on March 31, 2016.

Banganapalle Mango of Andhra Pradesh gets GI Tag

The Registrar of Geographical Indications Registry, Chennai, has accorded GI Tag for the much famed Banganapalle Mango of Andhra Pradesh. Henceforth, Andhra Pradesh government will be the registered proprietor of the GI tag for Banganapalle mangoes. GI Tag A GI tag specifies that the product comes from a specific region. Geographical Indications of Goods are defined as that aspect of industrial property which refers to the geographical indication referring to a country or to a place situated therein as being the country or place of origin of that product. Typically, such a name conveys an assurance of quality and distinctiveness. Under Articles 1 (2) and 10 of the Paris Convention for the Protection of Industrial Property, geographical indications are covered as an element of IPRs. They are also covered under Articles 22 to 24 of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. A Geographical Indications Registry with all India jurisdiction operates in Chennai, as per the Geographical Indication of Goods (Registration and Protection) Act 1999.

Banganapalle Mango Banganapalle mango is known for its sweetness and is known as “the King of fruits.” Banganapalle mangoes can retain their quality under cold storage even up to three months and have been growing in Andhra Pradesh for over 100 years. The primary centre of origin of the fruit is Kurnool district. Rayalaseema and coastal Andhra are the secondary centres of origin. Khammam, Mahabubnagar, Rangareddy, Medak and Adilabad districts in Telangana also form as secondary centres of origin. India exports around 5,500 tonnes of Banganappalle variety of mangoes to countries like the US and UK.
Union Cabinet Clears New National Steel Policy

The Union Cabinet has given its approval for National Steel Policy (NSP) 2017 to give impetus to the steel sector. The policy aims to enhance domestic steel consumption and transform Indian steel industry into a technologically advanced and globally competitive steel industry. The new policy favours the domestic manufacturers.

Policy aims to create self-sufficiency in steel production by providing policy support and guidance to private manufacturers, MSME steel producers, CPSEs Encourages adequate capacity additions and promote the development of globally competitive steel manufacturing capabilities. Facilitates foreign investment and aims to enhance the domestic steel demand. Promote cost-efficient production. Aims to ensure the domestic availability of iron ore, coking coal & natural gas and other raw materials at competitive prices.

Salient Highlights

The policy envisages the achievement of crude steel capacity of 300 million tonnes (MT), production of 255 million tonnes (MT) and a robust finished steel per capita consumption of 158 Kgs by 2030 – 31. At present the current consumption is 61kgs. The policy aims to meet the entire demand of high-grade automotive steel, electrical steel, special steels and alloys for strategic applications through adequate local production. It aims to increase domestic availability of washed coking coal in order to reduce import dependence on coking coal from about 85% to around 65% by 2030-31. All the government tenders would give preference to domestically manufactured iron and steel products. The domestic manufacturers who import raw materials or intermediate products will be able to claim the benefits of the domestic procurement provision if they add a minimum of 15% value to the product. R&D in the steel sector would be carried out through the establishment of Steel Research and Technology Mission of India (SRTMI).

India is the third largest producer of steel globally. The steel sector is contributing to about 2% of the country’s GDP. India had produced 100 Million Tonnes (MT) of steel in 2016-17. Though the National Steel Policy 2005 charted out a roadmap for the sustained and efficient growth of the Indian steel industry, the recent changes in the economic order calls for a new national policy.
Real Estate Act comes into effect

The Real Estate Act which aims to protect the interests of homebuyers by ensuring transparency has come into effect. The Ministry of Housing and Urban Poverty Alleviation (HUPA) has asked all the states and Union Territories to implement the Act with letter and spirit. Since land is a state subject, real estate sector comes within the ambit of the state governments. The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March last year. Partially, the act came into force on 1 May last year with 59 of 92 notified sections of the act coming into force. The remaining provisions have come into the force now. Already the act has been notified by 13 states and Union Territories including Andhra Pradesh, Uttar Pradesh, Bihar, Gujarat, Delhi, Daman and Diu.

Buyers and developers of real estate property can seek relief by approaching Real Estate Regulatory Authorities against violation of the contractual obligations and other provisions of the Act. The act provides for the mandatory registration of projects and real estate agents. The act mandates depositing 70% of the funds collected from buyers in a separate bank account for construction of the project. The funds could be withdrawn only for construction purposes. The act prescribes penalty on developers if the project is delayed. The project developers are required to disclose the project details on the website of the regulator and need to provide quarterly updates on construction progress. Under the act, the Regulatory authorities are required dispose of complaints in 60 days and Appellate Tribunals will be required to adjudicate cases in 60 days.

The act will ensure transparency and accountability in the real estate sector. It will enhance the consumer confidence and will benefit the whole sector. It will help to attract more investments into the real estate sector and may also open gates for FDI. This act will aid in the effective implementation of projects such as Hosing for All by 2020 and Smart City.

RBI asks ARCs to have a minimum net corpus of Rs100 crore by 2019

The Reserve Bank of India (RBI) has asked all the existing asset reconstruction companies (ARCs) to have a minimum net owned fund (NOF) of Rs100 crore by March 2019. This decision has been taken by RBI in accordance with its last bi-monthly monetary policy in which it had proposed to stipulate a minimum NOF of Rs100 crore taking into consideration the enhanced role and greater cash based transactions carried out by ARCs. As per amended SARFAESI Act, 2016, ARCs cannot carry on the business of securitisation or asset reconstruction without having NOF of not less than Rs 2 crore or any other amount stipulated by the RBI. As per the notification of RBI, the existing ARCs not meeting the minimum NOF criteria need to achieve the minimum NOF of Rs100 crore latest by 31 March 2019.

Asset Reconstruction companies (ARCs)

ARC is a company registered under Section 3 of the Securitization and reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. ARCs are regulated by the RBI. They are the specialised agencies with a main role of resolving the stressed assets issue of the Indian banking system. They are involved in buying bad loans from Indian banks to turn them around. ARCs are similar to the asset management companies present in countries like Malaysia, Korea and several other countries. Narsimham Committee – II (1998) proposed setting up of ARCs on the similar lines with that of asset management companies present globally. The main advantage of ARCs is they help the banks to concentrate on normal banking operations rather than dealing with stressed assets

India to give Rs 35 cr to children of freedom fighters in Bangladesh

India will give Rs. 35 crore rupees to children of freedom fighters in Bangladesh under the new ‘Muktijodha scholarship’ scheme in the next five years. Under the scheme, students at higher secondary level will get a one-time grant of Tk 20,000 (Rs 15,370) and students at the undergraduate level will get a grant of Tk 50,000 (Rs 38,430). In addition, all freedom fighters will be eligible for multiple entries on Indian visa for a period of five years. Also, every year 100 of them will be entitled to free medical treatment in Indian hospitals.

Background

Muktijodha Scholarship Scheme was initiated in 2006 to support the descendants of the 1971 Freedom Fighters. So far, more than 10,000 scholarships worth Tk150 million have been granted to the descendants under the scheme. It is India who aided Bangladesh to gain independence from Pakistan in 1971. During Bangladesh Prime Minister Sheikh Hasina’s recent visit to India, Prime Minister Narendra Modi had announced that India will provide scholarships to another 10,000 students under the new ‘Muktijodha scholarship’. During the visit, India and Bangladesh had signed 22 agreements in various fields such as defence, nuclear cooperation, judicial sector, earth sciences, navigation, peaceful uses of outer space, to boost bilateral cooperation. India also announced concessional Line of Credit (LoC) of $4.5 billion to Bangladesh for projects in priority sectors. Moreover, India also gave LoC of $500 million to Bangladesh for defence purchases. Bangladesh gives away ‘Friends of Bangladesh Liberation War Award’ to individuals and organizations who had extended the most crucial support for Bangladesh’s independence struggle. Former Indian Prime Minister Indira Gandhi was the first to be honoured with this award. The other prominent recipients include President Pranab Mukherjee and former Prime Minister Atal Bihari Vajpayee.

India’s Current Sovereign Ratings

Fitch, in its latest rating review, has affirmed India’s sovereign rating at BBB-, which is the lowest investment grade rating. Despite pressure from the government and corporate for an upgrade in the rating, Fitch has kept its sovereign rating on India unchanged. Although Fitch acknowledged India’s strong growth and recent economic reforms, it has a given a BBB- rating owing to the weak state of the government’s finances. According to the rating agency, India’s general government debt burden was 67.9% of GDP whereas the ‘BBB’ median is 40.9%. Also, Fitch has estimated a wide fiscal balance of -6.6% of GDP for FY17. Similarly, India’s long-term foreign and local-currency issuer default ratings were also fixed at ‘BBB-’. Fitch expects a strong medium-term growth outlook as well as favourable external balances with a weak fiscal position and difficult business environment. However, it expects the business environment to gradually improve with the implementation of the government’s structural reform agenda. Fitch has said that economy of the country is less developed on a number of structural metrics. In India, the average per capita GDP remains low at $1,714, whereas the ‘BBB’ range median is $9,701. It has also observed that the governance standards of India also remain weak as evident from the World Bank governance indicator for India at 46th percentile when compared to the ‘BBB’ median of 58th percentile.

An official committee of the government reviewing the Fiscal Responsibility and Budget Management (FRBM) Act has recommended lowering of the government debt to 60% of GDP. The finance minister in his February 2017 budget speech has recognised that India is largely a tax non-complaint society with a low number of taxpayers. The major liabilities for the sovereign emanates largely from public sector banks with the menace of banking sector’s non-performing assets (NPAs) continuing to linger. Fitch expects the NPAs to rise to 9.7% of total loans by the end of FY17.
Madhya Pradesh becomes First State to Shift Financial Year to Jan-Dec Format

Madhya Pradesh has become the first state in the country to shift its financial year from the present April-March cycle to January-December. The state’s budget session for the next financial year would be held in December-January. Hence, the state government plans to finish the current budget proceedings by December this year.

Shifting of the financial year format to January-December would require shifting of the tax assessment year. It also necessitates changes to be made in infrastructure especially at the level of companies.

The decision of the Madhya Pradesh state government comes in the backdrop of Prime Minister Narendra Modi’s suggestion of shifting the fiscal year to January-December period during NITI Aayog governing council meeting on April 23 held at New Delhi. He had reasoned that as agricultural income is exceedingly important, budgets need to be prepared immediately after the receipt of agricultural incomes for the year.