January-2015

Business & Economy

Experts say, Bifurcating top post in PSBs will bring in transparency

•  The government’s decision to bifurcate the top position at public sector banks will bring in transparency and accountability, say experts.

•  On Wednesday, the government initiated management reforms in public sector banks by splitting the post of Chairman and Managing Director in four banks and appointing managing directors (MDs)/chief executive officers (CEOs) in Vijaya Bank, Indian Overseas Bank, United Bank of India and Oriental Bank of Commerce.

•  “It is an extremely healthy move, and will improve governance. In the U.S., more than 50 per cent of enterprises follow this and this practice is followed all over the world,” said Shailesh Haribhakti, Chairman, DH Consultants.

•  “Combining the positions of Chairman and Managing Director with one person is contradictory to the effective functioning of the organisation as the Chairman is the custodian of governance, while the MD/CEO is the custodian of assets and efficiency of running of the organisation.

•  When the same person holds both positions, it leads to confusion and some time even to sacrifices. These are different roles, and so these positions must be occupied by different individuals,” Mr. Haribhakti added.

•  The move to separate the posts would bring in more professionalism in their functioning, said D. S. Rawat, national Secretary-General, Associated Chambers of Commerce and Industry of India.

•  “It looks as though the government wants to bring in outside experts as chairmen in some of the banks, which will be a great value addition to the state-owned banks,” said Mr. Rawat.

•  “However, it is time the remuneration of CEOs in PSU banks is enhanced somewhere near to their peers in the private sector. It cannot be that while we expect the CEO to give performance under challenging circumstances taking into account the social obligations of these banks, but we do not pay them the commensurate salaries,” he added.

Deteriorating asset quality would put pressure on bank finances

•  The banking sector is faced with downgrading of rating as deteriorating asset quality would put further pressure on its finances, make international operations and funding much more difficult during 2015, said the Associated Chambers of Commerce and Industry of India (Asscoham) in a report ‘Non performing assets: current and expected scenario’.

•  Considering this, the report said, the banking sector would attract additional provisioning, which would further put pressure on the profits of banks, which are already under tremendous stress.

•  “This would reduce the effective internal source of increasing capital which is even under a lot of pressure on account of the impending Basel-III guidelines and the capital adequacy ratio is adversely affected,” the report said.

•  As per the report, the gross non-performing assets (NPAs) of banks are expected to be 4.4 to 4.7 per cent for public sector banks by March, 2015, (as against 4.4 per cent as on March, 2014) and 4-4.2 per cent for the whole banking sector (as against 3.9 per cent for March, 2014).

•  The year 2013-14 saw incremental restructuring of Rs.1.20 lakh crore, and Assocham believes that the same figure would be maintained for 2014-15.

•  “Weak asset in the banking sector is likely to be 5.7 per cent by March, 2015, as compared to 5.6 per cent in March, 2014, and 4.3 per cent in March, 2013, bad and restructured loans are expected to touch the 15 per cent mark by the end of 2014-15,” the report said.

•  According to the report, standard assets incremental restructuring would continue in 2014-15 and not much headway is expected in sale of assets to assert reconstruction companies after the guidelines have been changed.

•  For reducing NPAs, Assocham has suggested a four-pronged strategy for early recognition of stress and remedial action thereafter. The measures are categorised under ‘preventive and corrective Management’, it said.

Tata Motors’ sales up 10 percent in Dec. 2014

•  Tata Motors reported 10 per cent increase in total sales at 41,734 units in December, as against 37,836 units in the same month last year.

•  Domestic sales of Tata commercial and passenger vehicles grew by 8 per cent at 37,776 units as compared to 35,010 units in December 2013, Tata Motors said in a statement.

•  Sales of passenger vehicles in the domestic market in December stood at 12,040 units, up 30 per cent from 9,272 units in December 2013.

•  In the commercial vehicles segment, domestic sales remained flat at 25,736 units during the month, the company said. Exports during the month as stood at 3,958 units as against 2,826 units in the year-ago month, up 40 per cent.
  BHEL will use ‘fuel flexible boiler’

•  Bharat Heavy Electricals Ltd (BHEL) will use fuel flexible boiler developed in-house and capable of firing the entire range of coal, from 100 per cent Indian to 100 per cent imported, at projects it will set up in Telangana.

•  The central public sector enterprise, with which the Telangana State Power Generation Corporation Ltd (TSGENCO) has a MoU for thermal plants, has decided on the boiler “to overcome the current uncertainty of coal supply”.

•  The fuel flexible boiler, whose design has been developed by the BHEL, will offer operational flexibility and thereby ensure uninterrupted generation.

•  BHEL said this on Friday giving details of the Rs.3,810 crore order it has received from TSGENCO for 800 MW supercritical thermal power project at Kothagudem, Khammam district, on engineering, procurement and construction (EPC) basis.

•  The project is to be commissioned in 36 months on fast track basis with BHEL and TSGENCO setting up teams to expedite clearances and execution of the project, a release said. The key equipment for the contract will be manufactured at BHEL’s Tiruchi, Hyderabad, Haridwar, Bhopal, Ranipet, Bangalore and Jhansi plants.

•  The company’s Power Sector-Western Region will be responsible for civil works commissioning of the equipment. Chief Minister K.Chandrasekhar Rao recently handed over a cheque for Rs.350 crore to BHEL.

Need to rethink strategy for PSU banks says Hasmukh Adhia

•  There is a need to rethink strategies for public sector banks in the country and the efforts for their consolidation would not be limited to merger and acquisitions, a senior Finance Ministry official said.

•  Financial Services Secretary Hasmukh Adhia also said that it was absolutely essential to implement banking reforms and making the banks stronger was necessary for the economic growth.

•  Speaking to reporters at a pre-event briefing on two-day financial sector retreat ‘Gyan Sangam’, Mr. Adhia also said that asset quality was a problem for many PSU banks, while low credit offtake was also an area of concern.

•  He said there is a need for a rethink on strategies for public sector banks. ‘Gyan Sangm’ was scheduled to start later this afternoon and would be addressed by Prime Minister Narendra Modi.

•  Others expected at the event include Finance Minister Arun Jaitley and RBI Governor Raghuram Rajan, along with a host of PSU bank chiefs and top executives of insurance companies.

•  Among other issues, Prime Minister’s Jan Dhan Yojana would also be discussed at the event and Mr. Adhia said that 10.3 crore accounts have been opened so far under this programme for giving bank accounts to all.

Public sector banks need more autonomy says FM

•  India needs to “conceive” several reforms in the banking sector, Union Finance Minister Arun Jaitley told reporters on the sidelines of a two-day banking retreat.

•  Mr. Jaitley added that there is a need to give greater autonomy to banks and that non-performing loans in some cases was “unacceptable”. “There is a need to get the best talent into the system. There is a need for far greater autonomy being given to them (Public Sector Banks),” Mr. Jaitley told reporters in Pune.

•  PSBs recorded the highest level of stressed loans at 12.9 per cent of their total advances in September 2014, while the same ratio for private sector banks was at 4.4 per cent, according to RBI data.

•  India's top bankers have gathered in Pune to discuss long-pending reforms vital to improving the health of ailing public sector banks in Asia’s third-largest economy.

WB to woo investors at Global Business summit

•  Projecting itself as an ideal investment destination, the Government of West Bengal is organising Bengal Global Business Summit — Bengal Leads 2015 — on January 7 and 8 to attract investment from foreign and domestic companies.

•  Union Finance Minister Arun Jaitley and Union Minister of Road Transport and Highways Nitin Gadkari are expected to attend. Chief Minister Mamta Banerjee will speak on the occasion besides interacting with investors.

•  The State is seeking investment in sectors such as urban infrastructure and housing, IT software and hardware, food processing, horticulture and floriculture, MSME and textiles, health care, education and skills development, manufacturing, energy and infrastructure, hospitality and tourism and business of entertainment and financial services.

•  “This business summit will ride on growth achieved in the past three years. Since formation of our government, radical fiscal reforms have been done and massive capital formation is underway,” said West Bengal Finance and Industry Minister Amit Mitra.
  Transport Ministry to launch e-approval for heavy vehicles

•  In a move heralding digitalization in the heavy transport industry in India, the Surface Transport Ministry is ready with a web portal for online approval of heavy transport vehicles movement.

•  Surface Transport Minister Nitin Gadkari will launch the web portal, allowing e-approval for movement Over Dimensional (OD) and Over Weight Cargo (OWC).

•  The move is in line with Prime Minister Narendra Modi’s key focus areas of “Make in India” and “Digital India.” The launch will be accompanied by a day-long seminar on “Heavy Transport in India: Entering a New Era through Digitalization.”

•  Several industry stakeholders including heavy equipment manufacturers, project owners, Engineering, Procurement and Construction (EPC) companies, along with various research and academic institutions from across the country, will come together and discuss a roadmap for future plans in the transport and road infrastructure development sector, an official release said.

India to see good growth in future: experts

•  India’s growth prospects and the chances that it will pick up pace against China formed a point of discussion at a three-day conference on ‘Management Challenges in Uncertain Environment’ began at the Indian Institute of Management-Kozhikode (IIM-K).

•  The conference is organised jointly by Association of Indian Management Scholars (AIMS) International and the IIMK. Around 150 delegates from India as well as from abroad are participating in the programme.

•  In his inaugural address, C. Balagopal, founder of Terumo Penpol, the largest blood bag manufacturing facility in the world, highlighted that ‘uncertainty’ was the keyword of the moment when industries and businesses across the world were facing challenges in appropriate decision makings.

•  He expressed hope that there would soon be clarity from where the demand for products and services was going to come from. Looking at the Indian conditions, there was already the growth of power generation, highways, ports, and the rest of the infrastructure that were needed to sustain high growth.

•  He stressed that China was the best example of this phenomenon, and India would soon be there too. As China slowed, Indian growth would pick up, and sustain the demand for commodities including steel, building materials, capital equipment, and consumer products.

•  In his keynote address, Prof. Kulbhushan Balooni, Director, IIM-K underlined the dire need of scholarly research in the field of business and management by Indian institutions, and highlighted the research initiatives and programmes that were carried out by the IIM-K.

•  He then shared with the delegates an analysis of ‘Management knowledge development scenario in India’.

•  He underscored the point that, knowledge creation was a point of recognition among the peers, and its benchmarking was done by the number of citations by peers of a research article.

Need to clean up bad debts in banks within a year says RBI Governor

•  Reserve Bank of India Governor Raghuram Rajan, made a strong case for cleaning up bad debts of banks and restructure other possible non-performing assets (NPAs) within a year to put the economy back on track.

•  He also favoured channelising ‘full savings’ of the households into the financial system so that the requisite resources for growth were made available.

•  “In the short-term (up to 12 months), there is need to clean up the NPAs and then restructure other stressed loans so as to put the economy back on the track,” Dr. Rajan said at the two-day Gyan Sangam.

•  Total gross NPAs of public sector banks stood at over Rs.2.43 lakh crore as on September 30, 2014. The top 30 NPAs accounted for Rs.87,368 crore or 35.9 per cent of total gross NPAs of PSBs.

•  Dr. Rajan said the bona fide mistakes made by the bankers while taking commercial decisions should be protected by the government.

•  “If the officers are hauled up for such decisions, this would to lead to delay in good decisions because of avoidance of risk,” he said.

•  The Governor also stated that there was a need for internationalisation of the banking system in the current global environment.

•  “The capital base of the banks may need to be enhanced,” Dr. Rajan said while emphasising on the need for consolidation in ownership, improvement in governance, and enhancement of management capability.

•  With the licensing of the small banks and the payments banks, there would be new players in the industry and competition among the PSBs will also grow to meet these challenges. “Accordingly, PSBs have to develop differentiated products,” Dr. Rajan said.

Xiaomi doubled its revenue to $12 billion in 2014

•  The chairman of Chinese smartphone brand Xiaomi says its sales more than doubled last year to $12.2 billion.

•  In a posting on his company blog, Jun Lei said the 5-year-old company sold 61.1 million handsets, a 227 per cent increase over 2013. Revenue rose 135 per cent to 74.3 billion yuan ($12.2 billion).

•  Xiaomi overtook South Korean tech giant Samsung Electronics Co. in the second quarter of last year to become China’s biggest selling smartphone brand by number of handsets sold.

•  Founder Lei Jun said Xiaomi plans to expand further abroad after selling 1 million handsets last year in India, its biggest foreign market.

•  An Indian court blocked some sales in December after Sweden’s Ericsson complained Xiaomi violated its patents. Mr. Lei called the case a “rite of passage” for a young company.

Unorganized sector workers to get Smart cards soon

•  Every worker in the unorganised sector may soon be issued a smart card with a unique identification number for accessing social schemes and benefits. The portable benefits card will be issued under the Unorganised Workers Social Security Act, 2008.

•  On December 25, the Gujarat Chief Minister launched such a card, “U-WIN,” in the State, and announced that benefits under various social security schemes would be routed to registered workers through this card. The Prime Minister joined the function through videoconferencing from Varanasi.

•  “The Gujarat launch was a pilot for launching the card in all States. It is likely to be launched before the end of the financial year,” said a senior official in the Ministry of Labour and Employment. Officials said workers’ details may be seeded with the card at a later point.

•  “The proposal is all workers must get three things — health insurance, pension and disability assistance. This card will allow workers to self-certify that they are unorganised sector workers, and get these benefits through a portable card,” said another official.

•  By the National Commission for Enterprises in the Unorganised Sector Report, 2005, over 394 million workers, 87 per cent of the country’s working population, are in the unorganised sector.

•  The report said 79 per cent of these workers lived on less than Rs. 20 a dayIn Gujarat, the government announced that benefits under 20 schemes, including education aid, maternity benefits, funeral benefits, accident group insurance scheme and housing, would be routed through the cards.

•  The Unorganised Workers Social Security Act, 2008, passed after the setting up of the NCEUS in 2004 under Arjun Sengupta, provides for constitution of the National Social Security Advisory Board at the Central level, which is to recommend social security schemes, health and maternity benefits and pension schemes for unorganised workers.

•  It said that every adult worker could self-certify that he or she worked in the unorganised sector and shall be issued a smart card and a unique identification number.

Growth in tablet sales will be slow in 2015: Gartner

•  After a troubled year in 2014, the demand for tablets will continue to be slow in 2015, according to research firm Gartner. The global tablet market will not see a return to the levels of growth seen in the last four years, the research company said in a release.

•  According to Gartner estimates, tablet sales across the globe will increase by 8 per cent to 233 million units in 2015. “The steep drop can be explained by several factors.

•  One is that the lifetime of tablets is being extended — they are shared out among family members and software upgrades, especially for iOS devices, keep the tablets current” said Ranjit Atwal, Research Director, Gartner.

•  The worldwide combined shipments of devices, PCs, tablets, ultramobiles and mobile phones are estimated to reach 2.5 billion units in 2015, an increase of 3.9 per cent over 2014, the release added.

•  Further, Gartner said in the operating system (OS) market, Android surpassed one billion shipments of devices in 2014, and will continue to grow at a double-digit pace in 2015, with a 26 per cent increase year-on-year.

•  “From 2015, we expect Windows to grow faster than iOS, as the PC market stabilises and the challenge for the next iPhone to find significant growth becomes greater, narrowing the gap between the two operating systems,” said Mr. Atwal.

Oil prices edge up after 5% plunge

•  Oil edged up, recovering from a five per cent plunge in the previous session that saw prices touch fresh 5-1/2 year lows in an oversupplied market.

•  Growth in oil supplies showed no sign of abating, with output in Russia hitting a record high in 2014 and exports from OPEC's second largest producer Iraq the highest since 1980. Jitters over political uncertainty in Greece drove investors out of risk assets globally to safe haven bonds.

•  "It's building on the recent bearish supply demand output of oil, led originally by the OPEC meeting," said Mark Keenan who heads Asia commodities research at Societe Generale.

•  Brent crude gained 13 cents and was at $53.24 a barrel by 0226 GMT, after dropping to a low of $52.66 on Monday, its lowest since May 2009. U.S. crude was up 7 cents at $50.11 after slipping below $50 for the first time since April 2009.

•  A recent slew of factors combined to push prices lower still, Mr. Keenan said, pointing to concerns about Greece, high output from Russia, Iraq and the United States and a stronger dollar.

•  In December, U.S. oil inventories posted a substantial rise only for the second time in history, he said, confirming a supply glut at the world's largest oil consumer. A rise in the dollar index for the sixth straight month in December has also made dollar-denominated oil more expensive, depressing prices.

•  Some economists expect cheaper oil to boost consumers' purchasing power and buoy the global economy, but the 50 per cent plunge in oil prices since June has also raised deflationary fears.

•  "This is great news for motorists, but it presents a headache for policy makers, with the Fed keen to get their policy settings back to something more normal, and Europe keen to avoid a deflationary spiral," ANZ analysts said in a note.

•  A rebalancing of portfolios at major commodity indices which starts may widen the spread between Brent and West Texas Intermediate, according to Societe Generale.

Pardhan launches subsidised cooking gas scheme

•  Union Petroleum Minister Dharmendra Pradhan launched the sale of subsidised five-kg cooking gas cylinders under Free Trade LPG Scheme, benefiting Below Poverty Line (BPL) families and others.

•  He also launched a new scheme providing concession of Rs.1, 600 to BPL families on new gas connections in the country. The move is aimed to make cooking gas easily available to consumers.

•  “While the subsidised five-kg LPG cylinder will be available only at regular LPG distributor, market-priced cooking gas cylinders can be bought without prior booking and minimal paper work at petrol pumps, gas agencies and some grocery stores,” he said after launching the scheme.

•  The consumers will avail the benefits till the end of March 2015, the minister said. He said the government is also considering providing one-kg, two-kg and three-kg gas cylinders to the poor people. The minister stressed on bringing the gas penetration in Odisha at par with national level.
  Public Sector Banks to accept solar rooftop cost as part of home loan proposals

•  Public sector banks (PSBs) are to accept rooftop solar installation cost as part of home loan or home improvement proposals of individual customers.

•  The Union Finance Ministry is reported to have advised the PSBs to encourage home loan/ home improvement loan seekers to install rooftop solar units and include the cost of such equipment in their loan proposals. The proposals may include non-solar lighting, wiring and other such fittings, among others.

•  Rooftop solar plants, which will produce clean electricity, have become economically viable at about Rs.7 per kWh without any subsidy. The government is providing a subsidy of 15 per cent (revised from 30 per cent earlier) on these plants to the beneficiaries.

•  PSBs have been advised to canvass solar PVs (photovoltaic) to all its existing home loan borrowers by organising programmes in association with dealers and companies, which have been approved by the Ministry of New and Renewable Energy.

•  Eight PSBs — Bank of India, Syndicate Bank, State Bank of India, Dena Bank, Central Bank of India, Punjab National Bank, Allahabad Bank and Indian Overseas Bank — have so far issued necessary instructions to extend loans for rooftop solar schemes.

Stocks crash on meltdown in oil price

•  Stocks tumbled with benchmark indices falling like a pack of cards over worries of a possible exit of Greece from the eurozone and a global recession indicated by the ongoing meltdown in oil prices. .

•  The Sensex (benchmark index of the BSE) dipped by 854.86 points or 3.07 per cent to close at 26987.46. The index was dragged down by oil & gas stocks with a fall of 4.17 per cent, followed by realty 3.66 per cent and metal 3.49 per cent.

•  Markets have fallen for a variety of reasons concerning local and international factors. While falling crude oil prices had a welcome relief for India, it is affecting those countries whose economy is surviving on crude oil.

•  Some of these countries, with large investible surplus, have been traditional investors globally. With crude prices at record low, funds from these countries would not flow to global markets.

•  Global oil prices fell by over 50 per cent since last June to below $50 per barrel on January 5, 2015, a dramatic drop reminiscent of the 1998 fall in oil prices, which led to Russian default, shaking the global financial system.

•  Further, the financial crisis in Europe concerning Greece seems to be escalating leading to global sell off. “The underlying fear is that Euro, as a currency union, may break up,” said Arun Kejriwal, a leading equity analyst.

•  According to him, markets needed a correction and it has happened. “Markets are likely to fall some more but important events like Vibrant Gujarat where the Prime Minister will play host along with the Gujarat Chief Minister for the first time, is less than a week away,” said Mr. Kejriwal, adding, “with global business leaders visiting the event, important announcements are expected,” which are likely to trigger markets.

•  While all sectoral indices fell sharply, broader indices too dipped as BSE 100 recorded a loss of 2.96 per cent and mid-cap and small-cap stocks lost 2.95 per cent each. On the National Stock Exchange (NSE), the 50-share Nifty lost by 251.05 points or three per cent at 8127.35.

Industry leaders demanded to focus on farm sector

•  In pre-Budget consultations with Union Finance Minister Arun Jaitley, industry leaders demanded priority for the farm sector to improve agriculture productivity, raise rural incomes and promote inclusive growth. Industry lobbies demanded that tax officers be appraised on performance parameters rather than the tax revenue raised.

•  “Since a large part of India’s population works in the farm sector, we impressed upon the Finance Minister that rural India needs due focus … and that farm incomes are very important for raising consumption spending in the economy,” Confederation of Indian Industry (CII) President Ajay Shriram told.

•  The Centre’s focus has largely been on the manufacturing sector, improving the ease of doing business and the “Make in India” campaign. Mr. Jaitley said in his opening remarks that ease of doing business was a high priority, an official release said.

•  The Minister said work was being carried out on a task given by the Prime Minister to improve India’s ranking on the ease of doing business index, the release said.

•  “We told the Finance Minister that Gujarat’s experience of bringing over nine lakh hectares of land under drip irrigation has to be taken pan-India, and the Centre should push for augmenting investment in agri-infrastructure and may be even use MGNREGS [Mahatma Gandhi National Rural Employment Guarantee Scheme] funds for it,” Mr. Shriram said.

•  Federation of Indian Chambers of Commerce and Industry President Jyotsna Suri urged Mr. Jaitley to “make earnest efforts to move away from an aggressive revenue approach and provide a genuine non-adversarial and conducive tax environment,” the release said.

•  She demanded that the government set tax revenue targets realistically and exclude tax revenue raised from the performance appraisal parameters of tax officers. The lobbies wanted the Centre to take up expenditure projects, especially in infrastructure for building new capacities in the economy.

Google wants to be a part of ‘Digital India’

•  Vinton Cerf, Chief Internet Evangelist at Google, met Minister for Communications and Information Technology Ravi Shankar Prasad to discuss the role technology giant can play in supporting the government’s vision for a Digital India.

•  Speaking to reporters on the sidelines of an event, Mr. Cerf said, “It is a very early stage of discussion. Google is interested in being helpful (to the Digital India project). We have some ideas. We want to share with them those ideas to find out which of them make sense. Maybe they will have better ideas than us.”

•  “It is clear that the private sector is going to play a major role, but it will not work unless basic infrastructure that the government proposes to bring in is out into place,” he added.

•  The government’s ambitious Digital India project aims to connect all gram panchayats by broadband Internet, promote e-governance and transform India into a connected knowledge economy.

•  Besides, the two discussed growing Internet penetration in the country and ways to bring more women online as well as helping small and medium businesses harness the potential of the online medium.

Recruitments on to cut down delays, Air India said

•  National passenger carrier Air India said it is on a recruitment overdrive to fill on-board manpower vacancies that have affected some of its international flights lately.

•  According to a senior Air India official, the recruitment drive which has been going on for some time is expected to overcome the on-board manpower shortage.

•  Lately, some of the airline’s flights to the US got delayed, leaving many angry passengers. Some passengers of a delayed New Delhi-New York flight even created a ruckus recently at the Indira Gandhi International Airport (IGIA) in Delhi.

•  “We have been carrying out walk-in interviews and recruitment has also been carried out from the industry. These recruitments are being carried out for various cabin crew posts,” the airline official said.

•  “The cabin crew shortage has caused some delays but that is being taken care of by managing existing manpower available with the airline.” The official further said that currently, all international flights are being operated on-time.

•  “Trained cabin crew, who are capable of operating long-haul from the domestic sector, are also being made available to fill up the short-fall,” the official said.

•  The development comes a day after hundreds of New York-bound passengers were stranded at the Indira Gandhi International Airport (IGIA) following delays on the Air India flight which was caused due to cabin crew shortage.

•  Airport sources familiar with the incident said, “Ruckus was created by some of the New York-bound passengers who were stranded. The airline had to finally bring-in cabin crew from its Chicago flight to take care of this operation”

•  “The Chicago flight eventually got cancelled and the passengers of that flight were accommodated on other flights.” Meanwhile, the cabin crew shortage is causing a heavy blow to the airline’s image. Lately, the airline has been trying to refurbish its operations with on-time performance.

No plan to curb gold imports says Rajeev

•  Providing relief to the economy from widening trade deficit on account of gold imports, the inward shipments of the metal slumped to 39 tonnes in December, Commerce Secretary Rajeev Kher said.

•  India imported an astonishing 152 tonnes of gold in November, which had threatened to disrupt the trade balance and impact the current account deficit (CAD). “Gold imports at present on the basis of December and January performance have not been a cause of worry,” Mr. Kher told reporters.

•  In January so far, the imports were aggregated at seven tonnes (about $200 million) only. In September and October, the imports were 95.62 tonnes and 109 tonnes, respectively. Mr. Kher also said that there were no plans to curb gold imports and bring back restrictions like 80:20 scheme.

•  “It is gone, 80:20 scheme. Why should it come back...We are not looking at any new policy (for gold imports),” he said after a meeting on gold imports with representatives of the gems and jewellery sector.

•  Higher gold imports in November have pushed up trade deficit to one-and-a-half year high of $16.86 billion in November as against $9.57 billion in the same month last year. The current account deficit too had widened to $10.1 billion or 2.1 per cent of GDP in the July-September period.

•  Mr. Kher said various issues related to gold as well as gems and jewellery exports were discussed with the industry representatives at the meeting.

•  He said it was the follow-up meeting after the ‘Make in India’ workshop last month. The sector is among the 25 focus areas that have been identified under the ‘Make in India” programme.

•  “We are looking at improving our manufacturing in the gems and jewellery sector and how to improve our exports. We discussed about sourcing of gold, financing of raw material, mining of gold, concept of fashion jewellery.

‘Ford’ will pilot share-car project in Bengaluru

•  Ford will pilot a share-car project in Bengaluru. The project aims to create a model for easy vehicle sharing among small communities such as office workers, apartment dwellers and families to share a vehicle among multiple drivers.

•  “This approach will help consumers who can’t afford a car but want the benefits of owning one. Researchers plan to develop a model for vehicle scheduling and managing ownership,” Ford said in a statement.

•  Ford is working with two-year old start-up Zoomcar on the project. Zoomcar is a self-drive car rental service that allows users to rent cars by the hour, day, week or month. “Basically, we save you the cost and hassle of owning a car while giving you all the good parts: convenience, mobility, and independence,” Zoomcar’s website says.

•  Greg Moran, Co-Founder and CEO of Zoomcar, refused to disclose more on the project, but said the market for car sharing in India was estimated to be $4-5 billion.

•  Ford’s car sharing project in India is among the 25 global mobility experiments the firm unveiled in the consumer electronics show in Las Vegas. “These mobility experiments will test new ideas and address growing or increasing transportation challenges; insights gained will shape Ford’s future investments,” it said.

ING Vysya employee-shareholders oppose merger with Kotak Mahindra Bank

•  Majority of employee-shareholders of ING Vysya opposed the company’s move to merge with Kotak Mahindra Bank. In an extraordinary general meeting (EGM) held at the headquarters of ING Vysya, employee-shareholders said the merger would not help ING Vysya, and it should not happen.

•  In the closed-door EGM, the employees demanded a tripartite agreement as part of the merger. According to sources, around 537 shareholders, including proxy holding around 16.93 crore shares, were present at the meeting.

•  “We participated in the EGM, and we clearly told the board that ING Vysya should be merged with a public sector bank. Due to the merger, the employees’ future may not be safe in the hands of Kotak Mahindra Bank.

•  We are demanding a tripartite agreement with Kotak Mahindra Bank,” said All-India ING Vysya Bank Employees’ Union General Secretary K. J. Ramakrishna Reddy. “If they don’t concede for this, we will go for further struggle and agitation. We will not stop till we achieve it,” he added.

•  Asked about the future if the resolution get approved at the EGM, S. A. Sridhar of ING Vysya Bank Officers’ Association, said: “We have asked for a copy of the MoU, and the management has not provided that.

•  We have all options available and open. If they are not going to take care of the employees, we will go on indefinite strike till we achieve all our demands.”

•  In the second meeting, the Regional Labour Commissioner told the ING Vysya Bank management to involve Kotak Mahindra Bank officials also in the discussion and arrive at an amicable settlement, the union leaders said.

Naphtha-based urea production factories get breather

•  The Ministry of Chemicals and Fertilizers has permitted the three naphtha-fed urea production factories in the South, including Mangaluru-based Mangalore Chemicals and Fertilizers (MCF), to continue production for the next 100 days.

•  However, the subsidy would be paid on ‘spot’ RLNG price and not on naphtha price, the Ministry clarified. The units had to stop production from September 30 following the Central Government’s decision not to continue payment of subsidy for naphtha-fed urea production.

•  Though units had geared up to produce urea from natural gas as directed by the Ministry, government agencies were unable to supply gas, thereby, creating a deadlock.

•  Initially fighting individually, workers of the three units later formed a joint action committee, comprising representatives from MCF, Madras Fertilisers Ltd., (MFL) and Southern Petrochemicals Industries Corporation (SPIC), Tuticorin, and had urged Union Minister for Chemicals and Fertilisers H. N. Ananth Kumar to review the decision since workers as well as farmers were being seriously affected.

•  MCF Mangala Workers’ Union President K. N. Suryanarayana told that the unit received communication from the Centre after the Karnataka Government conveyed its decision to waive VAT.

•  Though the decision to continue the subsidy was taken a fortnight ago by the Cabinet Committee on Economic Affairs, the Karnataka Government’s confirmation was received only, according to Mr. Suryanarayana.

•  Mr. Suryanarayana said the Central Government was likely to come out with a new fertilizer policy within 100 days, thereby, solving the glitch. A senior MCF functionary said he was not aware of the difference between ‘spot’ RLNG and naphtha prices, though RLNG has always been a little cheaper.

TC sends back 3G spectrum proposals to TRAI

•  Inter-ministerial panel Telecom Commission (TC) has decided to send back Telecom Regulatory Authority of India’s (TRAI) recommendations on 3G spectrum pricing for reconsideration.

•  According to sources, TC discussed TRAI’s proposals on 2100 MHz band base price, used for 3G services, in its meeting and decided to send back the recommendations for a review.

•  The TRAI on December 31 had recommended a base price at Rs. 2,720 crore per megahertz. An internal committee of the Department of Telecom (DoT) is believed to have suggested fixing base price of 3G spectrum at Rs. 3,899 crore per megahertz, about 43 per cent higher than the rate recommended by TRAI.

•  As per the practice in place, TRAI sends back its final comments in about 15 days which are again placed before the Telecom Commission for its final call.
  Cotton Corporation of India to start sale of cotton

•  The Cotton Corporation of India (CCI) plans to start selling the cotton, which it purchased at the minimum support price (MSP) from the market, from January 15.

•  CCI director (marketing) M. M. Chockalingam told that the Corporation had so far purchased 40 lakh bales. It planned to sell 10,000 bales every day and measures would be taken to ensure there was no fluctuation in prices.

•  The CCI was now present in 341 centres and purchasing cotton actively in about 150 centres. In the southern States, the CCI purchased 70-80 per cent of arrivals and in Gujarat and Maharashtra, it was about 10-15 per cent of spot arrivals.

•  Traders are active in these two States, and are purchasing cotton at more than the MSP. The total purchases by the Corporation this season (October, 2014, to September, 2015) at MSP is expected to go up to 100 lakh bales.

•  Trade sources here said arrivals had picked up, and over two lakh bales of cotton were coming to the market every day. Though there were no quality issues, export demand was almost nil and domestic mills were buying only limited stocks.

Security & Exchange Board proposes e-IPO norms

•  To boost fund raising from markets, the Securities and Exchange Board of India, proposed e-IPO norms, where investors can bid for shares through Internet and eventually on mobiles, while already listed public sector undertakings (PSUs) will be provided a ‘fast-track’ route for share sales to meet the disinvestment targets.

•  For already listed companies as well, the market regulator has proposed a fast-track route for raising of funds through FPOs (follow-on public offers) or rights offers (where funds can be raised from existing shareholders).

•  Under the new norms, SEBI has proposed to drastically cut the timeline for listing of shares within 2-3 days of the IPO, as against 12 days currently.

•  The fast-track route of raising capital has been proposed for companies having public shareholding market valuation of as low as Rs.250 crore, as against Rs.3,000 crore at present.

•  The public sector entities can tap the ‘fast-track’ route even without complying to this minimum average market value limit, provided they meet other conditions, SEBI said.

•  Under the ‘fast-track’ route, a listed company would not be required to file any draft offer document for its FPO or rights issue and it can proceed with the fund-raising programme without necessarily getting ‘observations’ from SEBI.

•  SEBI has invited public comments till January 30, after which it would put in place final norms for e-IPO as also for fast-track issuances.

•  The proposed moves are part of efforts to simplify the process of IPOs, lowering their costs and helping companies reach more retail investors in small towns. Initially, investors would be able to place bids through Internet and by using broker terminals across the country, as against the current practice of filling long paper forms.

SC allowed Sahara group to raise “junior loan”

•  The Supreme Court allowed the Sahara group to raise a “junior loan” of $650 million from a foreign lender to pay Rs.5,000 crore and bank guarantee of same amount for the release of Subrata Roy and two directors on bail.

•  A three-judge bench led by Justice T.S. Thakur said the amount, raised as loan against its three overseas hotels located in London and New York, would be parked in Aamby Valley (Mauritius) Ltd., a wholly owned subsidiary of Sahara group’s India-based Aamby Valley Limited.

•  However, the court said Sahara Group should also clear up with the Reserve Bank of India if there were any impediments under the Foreign Exchange Management Act in case of transfer of the loan amount from its Mauritius subsidiary.

Renault is set to launch sub-Rs.4 lakh car in 2015

•  Renault is set to launch an all-new hatchback in the sub-Rs.4 lakh segment this year as the French car maker intensifies its efforts to transform into a volume player in the Indian passenger vehicle (PV) market.

•  The proposed small car will compete in the Maruti Alto segment. And, it will be the first product out of Renault-Nissan’s new vehicle platform CMF-A, a global platform meant to design and develop low-budget cars for customers in India and other markets.

•  “It is a very wide platform in terms of diversity, and this will be a global car. It will be sold in other countries also,” Sumit Sawhney, Country CEO and Managing Director, Renault India.

•  He said the company had not finalised the launch dates. But the first new launch of 2015 would be its 7-seater MPV (multi-purpose vehicle) Lodgy, and the new hatch would come after that. Presently, Renault India sells only Pulse in the small car segment.

•  The chairman and CEO of Nissan and Renault combine Carlos Ghosn had said that CMF-A would be India-based platform. It would be designed Indian engineers, he had said, and indicated that the first product out of this platform would hit the market by 2015.

•  But, Mr. Sawhney declined to elaborate on the new hatchback. However, he said the segment accounted for 30-40 per cent of car market and company was keen to have a strong presence.

‘Vibrant Gujarat’ now India’s principle economic summit

•  Finance Minister Arun Jaitley said the Vibrant Gujarat Global Investors Summit has become the country’s “principle economic summit” and welcomed other states organising similar events.

•  “The more the states organise it, the more their idiom and their attitude in support of investment change.... it’s a welcome phenomenon,” he told reporters on the sidelines of the summit in Gandhinagar.

•  The Finance Minister said the recent trend, wherein states like Madhya Pradesh and West Bengal have held such summits while Maharashtra is also mulling one such show, is very heartening and he is glad that such aggressive activities are being undertaken.

•  The Uttar Pradesh government has also adopted an aggressive posture in attracting investors, with a strong media campaign wooing investors. “I think this has become the principle economic summit as far as India is concerned.

•  Now I think this is where economic activity is happening,” Mr. Jaitley said. Earlier in the day, Prime Minister Narendra Modi also lauded the efforts by states and promised all help from the Centre in the efforts.

•  “Today, many other states have adopted this approach. Government of India is committed to supporting any such initiative of any state government,” he said in his speech.

•  Mr. Modi stressed a lot on the growth potential of the country and outlined his approach on the way forward in fastening the economic growth.

•  Speaking at the session on Corporate Social Responsibility (CSR), Mr. Jaitley said there is a huge amount of inequality in the society which is visible in things like lack of access to clean drinking water, absence of toilets etc, even though there is a widespread notion that the country is growing.

WB projects 6.4% economic growth in India this year

•  Indian economy is likely to grow at 6.4 per cent in 2015 and accelerate further in the next year on the back of steps being taken by the Narendra Modi-led NDA government, World Bank President Jim Yong Kim said.

•  Speaking at the Vibrant Gujarat summit, he said the World Bank was committed to catalysing a vibrant India and there is much reason for optimism.

•  “We project that India will be a bright spot in an otherwise medium global economic outlook. (The) economy according to our projections is expected to grow 6.4 per cent this year and even faster in 2016,” he said.

•  After slowing to sub-five per cent growth in the previous two financial years, the economy has started showing signs of pick-up as it expanded by 5.7 per cent and 5.3 per cent in the second and third quarter of 2015.

•  The World Bank President said Mr. Modi and his government have been quickly putting in place the building blocks for even more rapid growth, streamlining national regulatory structure and promoting social inclusion.

•  Mr. Jim said, he was “very encouraged” by the recent proposal of a Constitution amendment bill for Goods and Services Tax. The proposed new indirect tax regime, he said, offers an opportunity to make it substantially easier to do business in India.

•  “GST will create one common market and substantial saving for companies on logistics, especially if the structure of the GST is uniform,” he added. He was also encouraged to see that the Prime Minister has focused on programmes to promote the broad sharing of the benefits of growths.

Aditya Birla Group will invest Rs 20,000 cr in Gujarat

•  Making public his “personal bias” for investing in Gujarat, Kumarmangalam Birla said the diversified Aditya Birla Group will invest Rs. 20,000 crore over a period of time in the state to ramp up capacities across various existing facilities.

•  “We will be continuing to grow our businesses. On the anvil are brownfield expansions at our cement plant in Sevagram, the VSF plants in Vilayat and Bharuch, and along with that, expansion in metal plants (among others)

•  “Our investments will be close to Rs 20,000 crore, as we see it,” he said at the Vibrant Gujarat Summit in Gandhinagar. He further said that for his company, Gujarat is the most preferred investment destination in India.

•  “We’re greatly impressed by proactive approach of government of Gujarat...I have a personal bias for it,” he added. Mr. Birla said it was not tax sops but delivery of high quality infrastructure which has got the group latched on to the state.

•  At present, the Aditya Birla Group’s investments in the state exceed Rs 25,000 crore and it generates revenues in excess of Rs 30,000 crore a year. The company, he said, employs 10,000 employees directly and 20,000 indirectly.

•  Speaking on the occasion, MasterCard President and Global Chief Executive Ajay Banga said investors are hoping for a similar show from Modi (as he had shown as Gujarat Chief Minister) at national level.

•  Mr. Banga, who is also Chairman of USIBC, said the NDA government has “gotten off to a very, very good start” but pointed out some concerns among investors. “They are waiting for clarity, they want transparency in policy decisions, consistency and predictability,” he said.

•  He said progress on key issues like land reforms, labour reforms, property ownership reforms, GST rollout and Government moves on retrospective taxation will be keenly followed now on.

Deal for mega solar project

•  SunEdison Inc, the U.S.-headquartered solar energy services firm, and India’s Adani Group have come together to invest $4 billion or Rs. 25,000 crore in setting up one of the world’s largest solar photovoltaic (PV) manufacturing facility in Gujarat.

•  The project is expected to create not only thousands of jobs, but also provide a much-need impetus to the country’s electrification programmes through solar energy.

•  The proposed solar PV production unit will come up at Mundra in about three years. And, it will vertically integrate all aspects of solar panel production on site, including poly silicon refining, and ingot, cell, and module production.

RBI & ECB sign MoU for cooperation in central banking

•  Reserve Bank and the European Central Bank (ECB) have signed a memorandum of understanding for cooperation in the area of central banking.

•  “Raghuram Rajan, Governor, Reserve Bank of India (RBI) and Mario Draghi, President of the European Central Bank (ECB) signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking,” RBI said in a release.

•  The MoU provides a framework for regular exchange of information, policy dialogue and technical cooperation between the two institutions.

•  Technical cooperation may take the form of joint seminars and workshops in areas of mutual interest in the field of central banking, said the RBI.

SEBI proposes easy norms for domestic MF managers

•  To make it easier for domestic mutual funds to manage offshore pooled assets, Sebi proposed to drop ‘20-25 rule’, which requires a minimum of 20 investors and a cap of 25 per cent investment by an individual investor in a particular scheme, for certain foreign entities.

•  Besides, Sebi has suggested doing away with the rule that requires appointment of separate fund manager for managing an offshore fund.

•  In a discussion paper, Sebi has proposed that the requirements of appointing a separate fund manager, replication of portfolio, criteria of 20 investors with no single investor holding over 25 per cent may not be applicable to funds managed by local fund managers in regard to Category I and Category II FPIs (Foreign Portfolio Investors).

•  Category I FPIs includes government and government related entities and Category II FPIs includes both broad based entities such as mutual funds, investments trusts and persons such as portfolio managers, investment managers, asset management companies, banks among others.

•  Currently, there are 45 mutual fund houses, which together manage Rs 11 lakh crore investor assets. The market regulator has sought comments from public till February 2 on these proposals.

•  These suggestions has been made keeping in view the challenges faced by the local fund managers in managing offshore pooled assets and the introduction of FPI Regulations which has rationalized the investment routes and monitoring of foreign portfolio investments and also streamlined categories of overseas investors.

•  Sebi said that replication of portfolio becomes difficult to achieve as the investment objective, investment strategy and the benchmark for each of the funds, including offshore funds, managed by local fund managers, are different.

•  Majority of offshore funds follow MSCI India Index as their benchmark while none of the local funds follow MSCI India Index. The composition of MSCI India Index is different as compared to local benchmarks such as Nifty, Sensex, CNX 500, BSE 100 or BSE 200.
  ‘Jan Dhan Yojana’ a game changer: RBI

•  The Reserve Bank of India (RBI) Deputy Governor Urjit Patel said that ‘Jan Dhan Yojana’ scheme implemented by public sector banks, whereby 100 million bank accounts have been opened for those who were un-banked, is unequivocally a “game-changer.”

•  “It provides an unprecedented scaffolding and a spring board for meaningful financial inclusion and, concomitantly, substantial financial deepening of our economy,” said Dr. Patel at an award function. The award was presented to Welingkar Institute of Management Development and Research, Mumbai.

•  Citing the discussion at the ‘Gyan Sangam’, gathering of bankers and top-level policy makers in Pune, recently, Dr. Patel said: “We should redefine the metric for effective lending and prioritise loans to enterprises, which will generate more employment.”

•  In other words, he said “bankable labour-intensive enterprises should benefit as we go forward in this direction.”

•  According to him this would benefit, a much larger number of small business loans. He said that the hard earned macroeconomic stability provides an important backdrop for optimal decisions by all stakeholders.

•  “e have to preserve this. The dramatic fall in oil prices is a boon for us. It saves, on an annualised basis, around $50 billion roughly, one-third of our annual gross POL imports of about $160 billion. Of course, there willbe leakages and other set-offs,” he added.

‘Ringo’ app makes international calls cheaper

•  Ringo, an international calling app which provides low cost calling without the use of the Internet, has commenced operations in India offering international calls at 70 per cent cheaper than most mobile telephone service providers and 20 per cent cheaper than calls made on Skype and Viber through the Internet for most destinations.

•  This service is already available in 16 countries including the US, UK, Australia, Hong Kong and Singapore. The company said it would offer high quality international calls at a fraction of existing cost of calls in India to companies conducting global business and families trying to keep in touch with friends and relatives staying abroad.

•  The Internet-free Ringo calls traverse over regular phone networks and it uses a unique call flow to convert international calls into local calls, thus making the call rates very cheap.

•  When a Ringo user from India contacts someone based in one of the 16 countries in which its service is available, Ringo will automatically dial out a local call to the Indian user and another local call to the desired number located in the foreign destination and connect the two over reliable carrier circuits.

•  All this happens instantly and calls using Ringo are identical to making call on one’s carrier, Ringo officials said. “We believe our app will change the way India communicates with the world. In this country, reliable internet connectivity that can support VOIP calling is still far away.

•  Ringo provides the perfect solution for Indians who want to stay in touch with people staying abroad reliably and at a low cost,” said Bhavin Turakhia, Chief Executive Officer, Ringo.

•  “We believe that communication should be easy and inexpensive so that the market would grow phenomenally,” said Mr Turakhia.

Jaitley hailed decision of RBI to cut interest rate

•  Finance Minister Arun Jaitley hailed the decision of RBI to cut the interest rate, saying it is positive for the Indian economy and will certainly help in reviving the investment cycle the government is trying to restore.

•  “The RBI decision to cut the interest rate will lead to more money in the hands of the consumer for greater spending," Mr. Jaitley said.

•  “It is positive for the Indian economy and it will certainly help in reviving the investment cycle the government is trying to restore,” said Mr. Jaitley who has been nudging the central bank to ease the interest rate to lower the cost of capital.

•  Earlier in the day, the RBI cut interest rate by 0.25 per cent to 7.75 per cent.

RBI decided to cut repo rates by 25 basis points

•  Encouraged by softening inflation, the RBI decided to cut the benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth. The decision to reduce repo rate comes a fortnight ahead of the scheduled date of monetary policy announcement on February 3.

•  “It has been decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect,” Reserve Bank said in a statement.

•  The RBI has been keeping the benchmark interest rate at elevated level at 8 per cent since January 2014. The RBI, however, has decided to keep the cash reserve ratio (CRR), the portion of deposits which the banks are required to have in cash with the central bank, unchanged at 4.0 per cent.

•  Following reduction in the repo rate, the reverse repo rate has been adjusted to 6.75 per cent and the marginal standing facility (MSF) rate and Bank Rate to 8.75 per cent.

•  The RBI said that the Consumer Price Index (CPI) has been easing since July 2014 and was below the expected trajectory and the government has reiterated its commitment to adhering to its fiscal deficit target.
  WPI inflation almost flat at 0.11% in Dec.

•  Wholesale inflation inched up to 0.11 per cent in December from 0 per cent in November on the back of a surge in food prices, raising hopes of a rate cut by the Reserve Bank of India in its next Monetary Policy Review, scheduled to be held on February 3.

•  Wholesale inflation in food, according to official data released on Wednesday, shot up to 5.2 per cent, a five-month high. It was 0.63 per cent in November. Inflation in pulses, vegetables and fruits was higher in December over the previous month.

•  The rise in food prices is attributed to the increase in prices in vegetables, fruits, pulses, onion and potatoes. Inflation as measured by the wholesale price index (WPI) has been on the decline since June.

•  The sub-1 per cent WPI inflation figure soon comes after the latest retail inflation data, released, at 5 per cent, too showed a marginal increase, and yet remained below expectations. With global crude now below $50 a barrel, fuel inflation continued to fall.

•  Wholesale inflation for fuel fell to minus 7.82 per cent in December against minus 4.91 per cent in November. Commenting on the WPI inflation, Confederation of Indian Industry Director-General Chandrajit Banerjee said that the December figure was much more favourable than anticipated.

•  The CII hopes that the conducive inflationary situation would spur the RBI to move away from its inflation-centric approach to policy making and focus on rejuvenating growth in the economy and industry, in its forthcoming monetary policy, he said in a statement.

Infosys announces $250 million ‘Innovate in India Fund’

•  In a move to help the Indian start-up ecosystem, India’s second largets IT company Infosys, announced the creation of a $250 million (Rs. 1,550 crore) ‘Innovate in India Fund’ from its recently expanded innovation fund.

•  Earlier, Infosys had said that it will expand its innovation fund to $500 million to accelerate the creation of its worldwide ecosystem of innovation.

• The Innovate in India Fund, announced by Dr. Vishal Sikka, Chief Executive Officer and Managing Director in a meeting with Prime Minister Narendra Modi, will be dedicated for investments in promising new Indian companies that will be inducted into the global ecosystem of strategic partners that Infosys is building.

•  The Fund will be used to invest in young companies innovating in next-generation solutions and technologies such as Artificial Intelligence (AI), automation, pervasive connectedness as well as collaboration and design technologies, the company said in a statement.

•  Speaking on the fund, Dr. Sikka said, “Start-ups represent the vision, the hope and the persevering entrepreneurial spirit taking root in India. With the ‘Innovate in India Fund’, Infosys will invest in great Indian start-ups, help amplify their engineering and operations, as well as help bring their innovations to market at scale.

•  Next-generation solutions built on emerging computing technologies, in innovative new ways, can dramatically reshape and improve the world around us.

•  That’s why, we look forward to working with innovative companies to strengthen our collective potential and also accelerate the success of the Prime Minister’s ‘Digital India’ mission aimed at helping people gain benefits from the latest in information technology.”

Government likely to sell 10% stake in IOC this fiscal

•  The Department of Disinvestment (DoD) has circulated a draft note for the consideration of the Cabinet Committee on Economic Affairs (CCEA) for sale of 10 per cent out of government’s 68.57 per cent stake in Indian Oil Corporation, sources privy to the development said.

•  It sought comments on the proposal from Petroleum Ministry as well as Departments of Expenditure, Public Enterprises and Economic Affairs.

•  Sources said the plan to sell 24.27 crore equity shares in IOC was mooted after big-ticket disinvestment in Oil and Natural Gas Corp (ONGC) got stuck in subsidy woes.

•  Finance Minister Arun Jaitley had discussed possible disinvestment candidates in oil sector, other than ONGC, with Petroleum Minister Dharmendra Pradhan on January 8. Government was to sell 5 per cent of its stake in the country’s biggest oil and gas producer ONGC to raise Rs 17,000-18,000 crore.

•  However, the double impact of tumbling global oil prices and the rising subsidy burden has left the ONGC stock battered. It has slipped from Rs. 472 in June last year to Rs. 343.85 (at close of market). At current price, the government will get no more than Rs. 15,000 crore.

•  In 2014-15, the government has sold 5 per cent stake in steel major SAIL to garner Rs. 1,700 crore. It is racing against time to meet its disinvestment target of Rs. 43,425 crore for this fiscal. Blue-chip companies like ONGC, NHPC and Coal India had been lined up for disinvestment.

SC seeks RIL response to the final CAG report

•  The Supreme Court directed Mukesh Ambani's Reliance Industries Ltd (RIL) to respond to the final CAG report alleging irregularities, including in payments made to the contractors on drilling of D6 wells at the Krishna-Godavari basin.

•  Granting RIL six weeks to respond, a Bench led by Justice T.S. Thakur posted the case for March 20.

•  On that date, the Bench said would examine RIL's reply in connection with the audit body's report that sought disallowance of $357.16 million (about Rs 2,179 crore) expenditure RIL incurred on drilling of wells and payments to contractors in KG-D6.

•  Solicitor-General Ranjit Kumar said the Centre would wait to comment on the CAG findings until the Parliament's Public Account Committee, which is examining it, gives a final word.

•  The order was passed during a brief hearing of petitions filed in 2013 by senior CPI leader Gurudas Dasgupta and NGO Common Cause. The petition challenged the then UPA government decision to double the price of natural gas from $4.2 to $ 8.4 per mmbtu and seeking cancellation of RIL's contract for exploration of oil and gas from the KG basin.

•  The court further permitted Mr. Dasgupta and the other petitioners to file their responses to the NDA government's fresh guidelines which would “supersede” the earlier UPA dispensation's policy on price fixation for natural gas, including that from KG basin.

Obama proposes higher tax on wealthy Americans

•  President Barack Obama’s State of the Union address will propose closing multibillion-dollar tax loopholes used by the wealthiest Americans, imposing a fee on big financial firms and then using the revenue to benefit the middle class, senior administration officials said .

•  Mr. Obama’s annual address to a joint session of Congress will continue his theme of income equality, and the administration is optimistic it will find some bipartisan support in the Republican-dominated House of Representatives and Senate.

•  Mr. Obama’s proposals call for reforming tax rules on trust funds, which the administration called “the single largest capital gains tax loophole” because it allows assets to be passed down untaxed to heirs of the richest Americans.

•  They also would raise the capital gains and dividends rates to 28 per cent, the level during the 1980s Republican presidency of Ronald Reagan.

•  As a way of managing financial risk that could threaten the U.S. economy, Mr. Obama also wants to impose a fee of seven basis points on the liabilities of U.S. financial firms with assets of more than $50 billion, making it more costly for them to borrow heavily.

Saradha scam: accused say bribes paid to SEBI official

•  Some of the accused in the multi-crore Saradha chit fund scam, in their disclosures to the Enforcement Directorate, have levelled bribery allegations against an official of the Securities and Exchange Board of India (SEBI).

•  The ED has been told by the accused that the official, then holding a senior position, was paid bribes regularly to ensure smooth conduct of operations of the Saradha Group companies that were allegedly involved in the scam.

•  Following Supreme Court observations last year, the Central Bureau of Investigation has also initiated investigations into the matter. “Investigation conducted so far puts a question mark on the role of SEBI, Registrar of Companies and officials of the RBI within whose respective jurisdictions and areas of operation the scam not only took birth but flourished unhindered,” said a Supreme Court Bench.

•  The CBI has also questioned several SEBI officials in view of allegations that the regulating body initiated action against Saradha Realty swiftly after receipt of complaints regarding the company’s alleged illegal activities.

•  A few days ago, the agency also sought clarifications from a SEBI member in connection with the probe conducted into the complaints and action taken by the body.

•  The probing agencies have found that the Saradha Group of companies collected funds of Rs.2,459 crore from lakhs of investors spread across 14 States, including West Bengal, Assam and Odisha, between 2008 and 2013.

•  Of the collected funds, Rs.1,983 crore — apart from the interest earned — remained outstanding and has, therefore, been marked as proceeds of crime committed by the accused persons for attachment of their properties under the Prevention of Money Laundering Act. The ED has already attached properties worth about Rs.500 crore.

Kenstar ties up with Amazon

•  Consumer electronics and appliances manufacturer Kenstar has made a foray into the air conditioner segment, and launched its range of split ACs. In a first, Kenstar has tied up with e-commerce player Amazon.in to distribute the ACs exclusively.

•  A statement from the company said it aims to revolutionise the AC segment and plans to capture 5 per cent of the total market share by the close of 2014-15.

Banks free to decide NPA norms, says Supreme Court

•  Dealing a blow to borrowers, especially in the industrial sector, the Supreme Court upheld a 2004 amendment enabling banks to follow different guidelines for declaring bad loans as “non-performing assets.”

•  Noting that quick recovery of bad loans was essential to keep the financial health of the country intact, a Bench of Justices J. Chelameswar and S.A. Bobde upheld an amendment to Section 2, which defines non-performing assets (NPA) under the Securitisation and Re-constitution of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002.

•  The Act allowed a secured creditor bank to determine a bad debt as NPA and proceed to seize and sell the assets to recover the amount due to it as loan.

•  The 2004 amendment classified borrowers into two categories. One, those who got secured loans from institutions which followed RBI guidelines framed on the declaration of NPAs. Two, those who borrowed from institutions governed by guidelines set by their own regulators.

•  The court was deciding a batch of petitions filed by borrowers, contending that the amendment discriminated against between two classes of borrowers. Especially, when RBI guidelines gave only 60 days before a bad debt can be declared an NPA, while individual regulators were allowed up to 180 days to lapse before the secured loan is declared an NPA.

Base year change pushes GDP growth to 6.9% in 2013-14

•  The base year was last revised in January, 2010 The Modi Government, sharply revised India’s 2013-14 GDP growth estimate to 6.9 per cent from 4.7 per cent. The 2012-13 growth estimate was revised to 5.1 per cent from 4.5 per cent.

•  Former Finance Minister and Congress leader P. Chidambaram said that the data released showed that the 10 years of the UPA government recorded the highest decadal growth since Independence.

•  GDP data for a fiscal undergoes three rounds of revisions; the process takes three years. The Central Statistics Office (CSO) releases the second Revised Estimate for a financial year ending in March on the subsequent January 30.

•  The estimates released on Friday also follow a change in the base year for calculating national accounts to 2011-12 from 2004-05 in addition to the routine annual revision — where changes are made only on the basis of updated data becoming available.

•  The base year was last revised in January, 2010.

•  In case of base year revisions, apart from a shift in the reference year for measuring the real growth, conceptual changes, as recommended by the international guidelines, are incorporated, the official release said.

•  The changes have reduced the gap between the way India calculates GDP and the methodology used by the International Monetary Fund.

•  The jobs-creating manufacturing sector’s growth estimate for 2013-14 was revised to 6.2 per cent from minus 0.7 per cent and for 2012-13 was revised to 5.3 per cent from 1.1 per cent.
   

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