*An agreement for credit of US$ 84 million (equivalent) from World Bank for the Bihar Panchayat Strengthening Project was signed on 27 June 2013 at New Delhi. Mr. Nilaya Mitash, Joint Secretary, Department of Economic Affairs, Ministry of Finance signed on behalf of Government of India and Mr. Michael Haney, Operations Advisor, World Bank, India on behalf of the World Bank. On behalf of Government of Bihar, Mr. Amitabh Verma, Principal Secretary, Department of Panchayati Raj signed the documents.
*The Objective of the project is to support the State Government in promoting inclusive, responsive and accountable gram panchayats in six districts, namely Patna, Nalanda, Bhojpur, Saharsa, Supaul and Madhepura. Successful experimentation and learning in these six districts can be scaled up to other districts under other Government programmes.
*The new project has five main components viz (i) Gram Panchayat Sarkar Bhawan (ii) capacity building for gram panchayats (iii) strengthen the State Government capacity to manage a gradual decentralization and empowerment process (iv) panchayat performance grant and (v) project management and coordination. The closing date for the project is December 2017.
*Market regulator Securities and Exchange Board of India (SEBIi) on 25 June 2013, has adopted the K.M. Chandrasekhar Committee report on ways to simplify foreign portfolio investment regime. Finance Minister P. Chidambaram had set the ball rolling in his budget speech, and the mandate of picking out ways to ease the entry routes for various foreign portfolio investors (FPIs) into India was given to a committee headed by former Cabinet Secretary K.M. Chandrasekhar.
*However, the panel's original report, submitted to SEBI on the 12th June 2013, was converted into a draft report and the panel was asked to modify it. This modified report, which the SEBI board adopted at its June 25th meeting, had significant changes.
One, the draft report called for a 34 per cent automatic cap for a new category of investor called FPIs that's an amalgam of the 24 percent automatic cap for FIIs, and the 10 percent cap for qualified foreign investors (QFIs). But the final report sets this FPI cap at just 24 percent or as per the discretion of companies in keeping with the sectoral cap in effect.
*Hence, many think this makes for a narrower investment window. The other big change was that the original report dwelt in detail on the changes required to the IT Act to ensure smooth transition from FII to FPI regime.
*But the final report has none of these recommendations and puts the onus of making any necessary changes to the IT Act on the finance ministry. SEBU and the Finance Ministry have now accepted recommendations to expand the jurisdiction for QFIs from the current 48, to 168 jurisdictions. This means QFIs, especially those coming via Mauritius, will be welcome as long as the investor does not fall under the 'high-risk and non-cooperative jurisdictions' list.
*The Union Cabinet on 28 June 2013, gave its nod to the proposal for setting up of an independent regulatory authority for the coal sector and also approved the introduction of the Coal Regulatory Authority Bill, 2013 in Parliament. The setting up of an independent regulatory body for the coal sector shall help in the regulation and conservation of coal resources and will benefit all stakeholders; that is coal companies, coal consuming industries such as power, steel, cement and coal bearing States and people, directly or indirectly associated with the coal industry.
*The Cabinet also approved that pending enactment of the legislation, the regulator will be set up through an executive order. The Authority shall specify methods of testing for declaration of grades or quality of coal, monitor and enforce closure of mines, specify principles and methodologies for price determination of raw coal and washed coal and any other by-produce generated during the process of coal washing, adjudicate upon disputes between parties and discharge other functions as the Central Government may entrust to it.
*A fund called ‘The Coal Regulatory Authority Fund” would be created and all grants, fee and charges received by the Authority shall be credited to this fund. After passing of the Bill, details would be worked out and submitted to the Government for appropriate financial sanction for the initial start-up funding.
*The Cabinet Committee on Economic Affairs (CCEA) on 28 June 2013, approved the disinvestment of 7.64 per cent paid up equity capital of the National Fertilizers Limited (NFL) that is approximately 3.74 crore shares, each of Face Value of Rs. 10/-. The disinvestment will be out of Government of India‘s (GOI's) shareholding of 97.64 percent, as per the Securities and Exchanges Board of India (SEBI) rules and regulations in order to make the NFL compliant to public share holding requirements under the Securities Contracts (Regulation) Rules (SCRR).
*The paid up equity capital of the company as on 31.03.2012 is Rs. 490.58 crore that is approximately 49.05 crore equity shares, each of Face Value of Rs. 10/-.NFL is a Scheduled 'A' Mini Ratna Central Public Sector Enterprises (CPSE) under the administrative control of the Ministry of Chemicals and Fertilizers, and is engaged in manufacturing and marketing of urea, 16 industrial products and three types of bio-fertilizers from its five operating units. These are one each at Nangal and Bhatinda in Punjab, Panipat in Haryana and two units at Vijaipur in Madhya Pradesh.
*The Cabinet Committee on Economic Affairs (CCEA) on 28 June 2013, gave its approval for fixation of price of domestic natural gas according to the recommendations of the committee constituted under the Chairmanship of Dr. C. Rangarajan on Production Sharing Contract (PSC) mechanism in the petroleum industry. The present gas pricing policy under the New Exploration Licensing Policy (NELP) had been approved by the Government for five years beginning April, 2009. This pricing policy will be due for revision with effect from April, 2014.
*The CCEA has approved the Rangarajan Committee Report recommendations. The approved recommendations known as the Natural Gas Pricing Guidelines, 2013 will remain valid for five years. On the one hand these guidelines will help incentivize investment in the Indian upstream sector, so that production reaches optimum levels and all exploitable reserves are put to production expeditiously.
*At the same time these guidelines will ensure that producers do not cartelize because of the huge unmet demand. This will protect consumer interests. These guidelines will be applicable from April, 2014 to all domestically produced gas. However, the guidelines will not be applicable in respect of gas for which prices have been fixed contractually for a certain period of time, till the end of such period. These guidelines will also not be applicable where the contract provides a specific formula for natural gas price indexation/fixation.
*The Cabinet Committee on Economic Affairs on 21 June approved the disinvestment of 5 percent equity of Neyveli Lignite Corporation (NLC), out of its holding of 93.56 percent through an Offer For Sale (OFS) in the domestic market according to Securities and Exchange Board of India (SEBI) rules and regulations. The authorized capital of NLC is Rs. 2,000 crore of which the issued and subscribed equity capital as on 31st March, 2012 is Rs.1, 677.71 crore comprising 167.771 crore equity shares of face value of Rs.10 each. After this disinvestment, Government of India’s holding in the company would come down to 88.56 percent.NLC is a Central Public Sector Enterprise with Navratna status under the administrative control of the Ministry of Coal. NLC was incorporated in the year 1956 under the Companies Act, 1956 with the objective of meeting the electricity demand of the southern states of India by excavating lignite for generation of power. The Company currently has lignite mines and power stations in Tamil Nadu and Rajasthan.
*India Infrastructure Finance Company Limited (IIFCL) has launched on 18 June 2013, its first infrastructure debt fund (IDF) with targeted initial corpus of $1 billion. The company has launched the debt fund through the mutual fund route. After launching the new scheme, Finance Minister P Chidambaram said the fund would help mobilize long-term financing for infrastructure projects. Chidambaram said introduction of the new scheme by the IIFCL would "pave the way for setting-up of more such infra debt funds."Besides IIFCL, other investors in the debt fund include Canara Bank, Oriental Bank of Commerce, Corporation Bank and HUDCO. The new scheme will mainly undertake investment in debt securities or securitized debt instruments of infrastructure companies, infrastructure capital companies or infrastructure projects, special purpose vehicle (SPV), bank loans etc. with the investment objective of capital appreciation and trade on the stock exchange, according to a statement issued by the finance ministry. IIFCL chairman S.K. Goel said the IDF will complement commercial banks in providing the required long-term funding to infrastructure sector and help in addressing their asset liability mismatch.
*A government panel on 19 June 2013 has recommended a dramatic liberalization of India's foreign direct investment regime, including raising the FDI limit to 74% in multi-brand retail and allowing complete foreign ownership of telecom and aviation companies. "We have given our recommendations to the finance minister. He has forwarded them to the Department of Industrial Policy & Promotion (DIPP)," department of economic affairs Secretary Arvind Mayaram, who headed the panel, told reporters on 19 June. He did not provide details of the report's contents. It has also batted for raising or doing away with FDI caps in a number of sectors, including non-scheduled air transport, ground handling at airports, satellites, private security agencies and Internet Service Providers (ISPs) to attract capital flows that are needed to finance the current account deficit and bolster the rupee. The DIPP, the administrative ministry in charge of FDI policy, will now have to implement the Mayaram Committee report. Key ministers, notably Finance Minister P Chidambaram and Commerce Minister Anand Sharma, are expected to meet in the first week of July to finalise the plan. The panel has suggested allowing foreign supermarkets to buy up to 74% in Indian retailers with prior government approval. The multi-brand retail sector was thrown open to foreign investors in September 2012 but has failed to see any investment so far. The panel has suggested 100% FDI in telecom and non-scheduled air transport and amending rules to allow complete ownership by foreign investors, including airlines, in scheduled carriers. FDI in telecom will need approval of the Foreign Investment Promotion Board (FIPB), a government panel. The committee has also favoured allowing 100% FDI in ISPs, private security agencies, satellite, ground handling operations, cable networks, direct-to-home services, mobile TV and teleports. It has also suggested lifting caps to 49% from 26% in a number of sectors and doing away with mandatory FIPB clearance in these industries. The government is actively discussing raising FDI in defence production to 49% and in telecom to 100%.
*The first Unit of ONGC’s Mega Power project in Tripura was formally dedicated to the Nation by the President of India, Pranab Mukherjee at Palatana on 21 June 2013. This Unit 1 of the gas-based plant will generate 363.3 MW. The Unit II of the 726.6 MW power plant is expected to be commercially operational later this year. ONGC realized the audacious dream of transporting such heavy and over-dimensional equipment through the territories of Bangladesh. The nature has bestowed Tripura with abundant natural gas. This power plant would meet the requirements of power deficient states in the region and open up avenues for industrialization in Tripura. The power project not only constituted the largest investment in the North East but it was also the largest project in the world registered under the Clean Development Mechanism of the UNFCC. It would earn India over a million of carbon credits. OTPC, a joint venture company of ONGC, IL&FS Energy Development Co. Ltd. and Govt. of Tripura, is setting up a 726.6 MW (2x363.3 MW) capacity Combined Cycle Gas Turbine based Mega Power Project in the state of Tripura with the objective of monetization of gas, which had been lying idle for want of adequate market in the region. The project cost is estimated at 3804crore rupees .
Smart phones, emails and SMSes seem to have pushed the humble telegram service to a quiet corner with the BSNL deciding to discontinue the 160-year-old telegraph service from July 15. Once the main source of quick and urgent communication, the service delivered several happy as well as sad news to the people all over the country. But with the advent of technology and newer means of communication, the telegram found itself edged out.
*As per a circular issued by Shameem Akhtar, Sr General Manager (Telegraph Services) Bharat Sanchar Nigam Ltd (BSNL) Corporate office, New Delhi, the telegraph service is to be discontinued with effect from July 15, 2013.
*The circular has also directed the telecom offices to maintain the log books, service messages, delivery slips only for six months from the date of bookings. However, complaints, press reports and other messages from different consumer forum are to be kept for one year. Two months ago, telegram services for overseas communication was withdrawn by BSNL.
*The rupee fell by a whopping 71 paise to hit a new life-time low of 57 rupees 77 paise on 9 June 2013. The fall comes after the persistent dollar demand from importers and banks amid the US currency gaining overseas. The rupee which resumed lower at 57 rupees 18 paise against dollar as against the last weekend's level of 57 rupees 6 paise per dollars, dropped further to an all-time low of 57 rupees 77 paise per dollar. This crosses its life-time closing low level of 57 rupees 32 paise touched in June-end 2012.The weakening of the rupee against the Dollar is persistent with the pattern of currencies of other emerging markets also depreciating the world over.
*Face book on 12 June, opened its first data centre outside the United States, in Luleaa, a coastal Swedish town near the Arctic Circle. In opening the facility in the arctic north, Facebook joins Google and other tech companies attracted by chilly temperatures that rarely exceed levels that require special cooling capabilities which critics say hurt the environment. Luleaa, just south of the Arctic Circle, was also chosen due to its renewable energy resources. Face book said data equipment inside the facility were to be powered by locally generated hydro-electric energy.
*Apollo Tyres, on 12 June, said it would acquire U.S.-based Cooper Tire & Rubber Company in an all-cash transaction valued at approximately Rs. 14,500 crore ($2.5 billion), making the combined entity the seventh largest tyre company in the world.Cooper is the 11th largest tyre maker in the world by revenue. It supplies premium and mid-tier tyres through brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. As part of the deal, Apollo Tyres will take over the operations of the American firm, including eight plants and 14,000 employees spread across different parts of the world.“This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” Apollo Tyres Chairman Onkar S Kanwar said. In terms of tyre production, Apollo's capacities will more than double from 1,500 tonnes per day to 3,500 tonnes per day, according to Apollo Tyres Vice-Chairman and Managing Director Neeraj Kanwar.
*The World Bank slashed its growth forecast for China's economy for 2013 to 7.7 per cent from 8.4 per cent, here on 14th June. In its report, the World Bank stated that the main risk related to China remains is - the possibility of high investment rates proving unsustainable and provoking a disorderly unwinding and sharp economic slowdown. The projection is lower than the 7.8 per cent expansion the country recorded in 2012, which was its weakest in last 13 years.
*The report also stated that the Chinese household debt is around two to three times higher than the level before 1997, when the Asian Financial Crisis hit. It added that, while the headline inflation rate is mild, price pressures remain in certain rapidly growing segments of the economy, including real estate. In April 2013, China announced unexpectedly weak growth of 7.7 per cent for the first quarter, surprising analysts who had expected expansion to accelerate in 2013, after showing strength at the end of 2012.
*Other recent indicators have raised alarm bells, with exports showing almost no growth in May 2013, while industrial output expanded at a slightly slower pace than April 2013 and big ticket investment growth also eased. The World Bank's forecast cuts followed a recent lowering by the International Monetary Fund to 7.75 per cent from the previous 8.0 per cent.
*The Indian telecom sector has registered a phenomenal growth during the past few years and has become second largest telephone network in the world, only after China. A series of reform measures by the Government, the wireless technology and active participation by private sector played an important role in the exponential growth of telecom sector in the country. National Telecom Policy-2012 (NTP-2012) was announced with the primary objective of maximizing public good by making available affordable, reliable and secure telecommunication and broadband services across the entire country.
*With the implementation of NTP 2012, the number of telephonic connections rose exponentially. The number of telephone connection was 893.14 million as on January 2013 with the rural telephone connections having increased by nearly 10 million in the last year. The overall teledensity stood at 73.07 per cent as on January 2013 with the rural teledensity crossing 40 per cent. This is in sharp contrast with the overall teledensity of 7.04 per cent and rural teledensity of merely 1.7 per cent in March 2004.
*As far as mobile penetration is concerned, the preference for use of wireless telephony continues. The share of wireless telephones increased from 96.62% as on March 31, 2012 to 96.74% by the end of June 2012 and thereafter slightly declined to 96.56% by the end of December 2012. On the other hand, the share of landline telephones slightly increased from 3.38% to 3.44% during the period from April to December 2012. The wireless subscriber base increased from 33.6 million in March 2004 to 864.72 million as on December 2012. On the other hand, the average tariff for each outgoing call per minute for GSM services dropped from Rs. 2.89 in March 2004 to 47 paisa in December 2012.
*GAIL India on 6 june, announced that it had signed an MoU with Shipping of Corporation India (SCI) for transporting LNG sourced by GAIL from the U.S. The MoU was signed in the presence of B. C. Tripathi, Chairman and Managing Director, GAIL India, and B. K. Mandal, Chairman and Managing Director, SCI. Under the MoU, both entities would join hands for transportation of 5.8 million tones LNG per annum, which is being sourced by GAIL from Sabine Pass and Cove Point terminals in the U.S.
*The co-operation would include SCI assisting GAIL in the charter hiring of LNG ships and GAIL assigning step-in right to SCI in the ownership of LNG ships. GAIL has signed an LNG sales and purchase agreement with Cheniere Energy Partners, LP (Cheniere) for 20 years. It has also signed a terminal service agreement with Dominion through GAIL Global (U.S.) LNG LLC.
*The Union Minister of Commerce, Industry and Textiles Anand Sharma on 6th June, asserted that fostering of democracy in Myanmar has provided an enabling environment which can inspire the investors’ confidence and India remains committed “to be a steadfast partner of Myanmar as it charters its path to growth and progress.”
*Speaking during a session entitled “The Long-Term View” at the World Economic Forum on East Asia 2013 in Nay Pyi Taw, Myanmar, Sharma highlighted that India’s engagement with Myanmar is premised on a strong development partnership and that India would like to align its cooperation with the economic priorities of Myanmar. With India concluding a Comprehensive Economic Partnership Agreement with ASEAN, Sharma stressed that this over-arching framework will act as a catalyst to boost trade and investment ties with countries of the region including Myanmar.
*Sharma also spoke on the importance of investment in development of human resource, by adding that India has always believed that it will reap dividends in the long run. “We have already established Centre of Excellence in IT sector in Yangon. We are going to establish another university-like Information Technology Institute in Mandalay. In addition to that we have also established an Industrial Training Centre in Pakokku to develop skilled labour for Myanmar industry,” said Sharma. During the visit of Indian Prime Minister Dr. Manmohan Singh in 2012, India announced doubling the number of training slot to Myanmar from 250 to 500.
*Emphasising the fact that sound infrastructure will help in the creation of a robust economic linkage between India, Myanmar and beyond, Sharma said that “India is developing Kaladan Multimodal Transit-Transport Project which will connect Mizoram to Sittwe port in Myanmar.”
*Pursuant to the Union Cabinet approval, the Government has constituted the National Skill Development Agency (NSDA) on 7th June by subsuming the Prime Minister’s National Council on Skill Development (PMNCSD), the National Skill Development Coordination Board (NSDCB) and the Office of the Adviser to the PM on Skill Development.
*The NSDA will coordinate and harmonize the skill development efforts of the Government of India and the private sector to achieve the skilling targets of the 12th Plan and beyond. It will endeavour to bridge the social, regional, gender and economic divide by ensuring that the skilling needs of the disadvantaged and marginalized groups like SCs, STs, OBCs, minorities, women and differently-abled persons are taken care of through the various skill development programmes.
*While the Central Ministries and National Skill Development Corporation (NSDC) will continue to implement schemes in their remit, the NSDA will develop and monitor an overarching framework for skill development, anchor the National Skills Qualifications Framework (NSQF) and facilitate the setting-up of professional certifying bodies in addition to the existing ones. NSDA will be an autonomous body chaired by a person of the rank and status of a Cabinet Minister supported by a Director General and other support staff.
*The Reserve Bank of India (RBI) released certain clarifications on the guidelines issued for licensing of new banks on 3rd June. Based on the feedback received from the interested entities, the RBI increased the validity period of the in-principle approval of setting up of banks from one year to 18 months. RBI stated that intending applicants have brought out several complex issues pertaining to reorganization of the existing corporate structure, restructuring of businesses and meeting the regulatory requirements.
*Once the in-principle approval is given by the RBI for setting up of a bank, the promoter group has to set up a non-operative financial holding company (NOFHC) and the bank within 18 months from the date of in-principle approval. The bank has to start banking business within this period after getting the banking licence.
*The Union Government of India hiked the import duty on gold from 6 per cent to 8 per cent here on 5th June. The hike is aimed at curbing the import of gold, which is largely responsible for the rise in Current Account Deficit (CAD) and impacts the foreign exchange reserves of the country as well as the value of rupee. The import duty on platinum was also increased from 6 per cent to 8 per cent, following the Customs notification. Before the hike in import duty, the RBI took several steps to limit the imports to meet genuine domestic demands for jewellery and export purposes. The excise duty on gold ore was also raised from 5 per cent to 7 per cent through another notification issued by Central Board of Excise and Customs.
This is the second hike on the duty of gold imports in six months and the decision of government came up after witnessing the alarming 162 tones import of gold in May 2013. In April and May 2013, import touched new figures of US $ 15 billion. The CAD touched a historic high of 6.7 per cent of GDP in the quarter ending December 2012. Earlier the import duty on gold was hiked from 4 per cent to 6 per cent in January 2013.Current Account Deficit is a difference between inflow and outflow of foreign currency.
*The Objective of the project is to support the State Government in promoting inclusive, responsive and accountable gram panchayats in six districts, namely Patna, Nalanda, Bhojpur, Saharsa, Supaul and Madhepura. Successful experimentation and learning in these six districts can be scaled up to other districts under other Government programmes.
*The new project has five main components viz (i) Gram Panchayat Sarkar Bhawan (ii) capacity building for gram panchayats (iii) strengthen the State Government capacity to manage a gradual decentralization and empowerment process (iv) panchayat performance grant and (v) project management and coordination. The closing date for the project is December 2017.
*Market regulator Securities and Exchange Board of India (SEBIi) on 25 June 2013, has adopted the K.M. Chandrasekhar Committee report on ways to simplify foreign portfolio investment regime. Finance Minister P. Chidambaram had set the ball rolling in his budget speech, and the mandate of picking out ways to ease the entry routes for various foreign portfolio investors (FPIs) into India was given to a committee headed by former Cabinet Secretary K.M. Chandrasekhar.
*However, the panel's original report, submitted to SEBI on the 12th June 2013, was converted into a draft report and the panel was asked to modify it. This modified report, which the SEBI board adopted at its June 25th meeting, had significant changes.
One, the draft report called for a 34 per cent automatic cap for a new category of investor called FPIs that's an amalgam of the 24 percent automatic cap for FIIs, and the 10 percent cap for qualified foreign investors (QFIs). But the final report sets this FPI cap at just 24 percent or as per the discretion of companies in keeping with the sectoral cap in effect.
*Hence, many think this makes for a narrower investment window. The other big change was that the original report dwelt in detail on the changes required to the IT Act to ensure smooth transition from FII to FPI regime.
*But the final report has none of these recommendations and puts the onus of making any necessary changes to the IT Act on the finance ministry. SEBU and the Finance Ministry have now accepted recommendations to expand the jurisdiction for QFIs from the current 48, to 168 jurisdictions. This means QFIs, especially those coming via Mauritius, will be welcome as long as the investor does not fall under the 'high-risk and non-cooperative jurisdictions' list.
*The Union Cabinet on 28 June 2013, gave its nod to the proposal for setting up of an independent regulatory authority for the coal sector and also approved the introduction of the Coal Regulatory Authority Bill, 2013 in Parliament. The setting up of an independent regulatory body for the coal sector shall help in the regulation and conservation of coal resources and will benefit all stakeholders; that is coal companies, coal consuming industries such as power, steel, cement and coal bearing States and people, directly or indirectly associated with the coal industry.
*The Cabinet also approved that pending enactment of the legislation, the regulator will be set up through an executive order. The Authority shall specify methods of testing for declaration of grades or quality of coal, monitor and enforce closure of mines, specify principles and methodologies for price determination of raw coal and washed coal and any other by-produce generated during the process of coal washing, adjudicate upon disputes between parties and discharge other functions as the Central Government may entrust to it.
*A fund called ‘The Coal Regulatory Authority Fund” would be created and all grants, fee and charges received by the Authority shall be credited to this fund. After passing of the Bill, details would be worked out and submitted to the Government for appropriate financial sanction for the initial start-up funding.
*The Cabinet Committee on Economic Affairs (CCEA) on 28 June 2013, approved the disinvestment of 7.64 per cent paid up equity capital of the National Fertilizers Limited (NFL) that is approximately 3.74 crore shares, each of Face Value of Rs. 10/-. The disinvestment will be out of Government of India‘s (GOI's) shareholding of 97.64 percent, as per the Securities and Exchanges Board of India (SEBI) rules and regulations in order to make the NFL compliant to public share holding requirements under the Securities Contracts (Regulation) Rules (SCRR).
*The paid up equity capital of the company as on 31.03.2012 is Rs. 490.58 crore that is approximately 49.05 crore equity shares, each of Face Value of Rs. 10/-.NFL is a Scheduled 'A' Mini Ratna Central Public Sector Enterprises (CPSE) under the administrative control of the Ministry of Chemicals and Fertilizers, and is engaged in manufacturing and marketing of urea, 16 industrial products and three types of bio-fertilizers from its five operating units. These are one each at Nangal and Bhatinda in Punjab, Panipat in Haryana and two units at Vijaipur in Madhya Pradesh.
*The Cabinet Committee on Economic Affairs (CCEA) on 28 June 2013, gave its approval for fixation of price of domestic natural gas according to the recommendations of the committee constituted under the Chairmanship of Dr. C. Rangarajan on Production Sharing Contract (PSC) mechanism in the petroleum industry. The present gas pricing policy under the New Exploration Licensing Policy (NELP) had been approved by the Government for five years beginning April, 2009. This pricing policy will be due for revision with effect from April, 2014.
*The CCEA has approved the Rangarajan Committee Report recommendations. The approved recommendations known as the Natural Gas Pricing Guidelines, 2013 will remain valid for five years. On the one hand these guidelines will help incentivize investment in the Indian upstream sector, so that production reaches optimum levels and all exploitable reserves are put to production expeditiously.
*At the same time these guidelines will ensure that producers do not cartelize because of the huge unmet demand. This will protect consumer interests. These guidelines will be applicable from April, 2014 to all domestically produced gas. However, the guidelines will not be applicable in respect of gas for which prices have been fixed contractually for a certain period of time, till the end of such period. These guidelines will also not be applicable where the contract provides a specific formula for natural gas price indexation/fixation.
*The Cabinet Committee on Economic Affairs on 21 June approved the disinvestment of 5 percent equity of Neyveli Lignite Corporation (NLC), out of its holding of 93.56 percent through an Offer For Sale (OFS) in the domestic market according to Securities and Exchange Board of India (SEBI) rules and regulations. The authorized capital of NLC is Rs. 2,000 crore of which the issued and subscribed equity capital as on 31st March, 2012 is Rs.1, 677.71 crore comprising 167.771 crore equity shares of face value of Rs.10 each. After this disinvestment, Government of India’s holding in the company would come down to 88.56 percent.NLC is a Central Public Sector Enterprise with Navratna status under the administrative control of the Ministry of Coal. NLC was incorporated in the year 1956 under the Companies Act, 1956 with the objective of meeting the electricity demand of the southern states of India by excavating lignite for generation of power. The Company currently has lignite mines and power stations in Tamil Nadu and Rajasthan.
*India Infrastructure Finance Company Limited (IIFCL) has launched on 18 June 2013, its first infrastructure debt fund (IDF) with targeted initial corpus of $1 billion. The company has launched the debt fund through the mutual fund route. After launching the new scheme, Finance Minister P Chidambaram said the fund would help mobilize long-term financing for infrastructure projects. Chidambaram said introduction of the new scheme by the IIFCL would "pave the way for setting-up of more such infra debt funds."Besides IIFCL, other investors in the debt fund include Canara Bank, Oriental Bank of Commerce, Corporation Bank and HUDCO. The new scheme will mainly undertake investment in debt securities or securitized debt instruments of infrastructure companies, infrastructure capital companies or infrastructure projects, special purpose vehicle (SPV), bank loans etc. with the investment objective of capital appreciation and trade on the stock exchange, according to a statement issued by the finance ministry. IIFCL chairman S.K. Goel said the IDF will complement commercial banks in providing the required long-term funding to infrastructure sector and help in addressing their asset liability mismatch.
*A government panel on 19 June 2013 has recommended a dramatic liberalization of India's foreign direct investment regime, including raising the FDI limit to 74% in multi-brand retail and allowing complete foreign ownership of telecom and aviation companies. "We have given our recommendations to the finance minister. He has forwarded them to the Department of Industrial Policy & Promotion (DIPP)," department of economic affairs Secretary Arvind Mayaram, who headed the panel, told reporters on 19 June. He did not provide details of the report's contents. It has also batted for raising or doing away with FDI caps in a number of sectors, including non-scheduled air transport, ground handling at airports, satellites, private security agencies and Internet Service Providers (ISPs) to attract capital flows that are needed to finance the current account deficit and bolster the rupee. The DIPP, the administrative ministry in charge of FDI policy, will now have to implement the Mayaram Committee report. Key ministers, notably Finance Minister P Chidambaram and Commerce Minister Anand Sharma, are expected to meet in the first week of July to finalise the plan. The panel has suggested allowing foreign supermarkets to buy up to 74% in Indian retailers with prior government approval. The multi-brand retail sector was thrown open to foreign investors in September 2012 but has failed to see any investment so far. The panel has suggested 100% FDI in telecom and non-scheduled air transport and amending rules to allow complete ownership by foreign investors, including airlines, in scheduled carriers. FDI in telecom will need approval of the Foreign Investment Promotion Board (FIPB), a government panel. The committee has also favoured allowing 100% FDI in ISPs, private security agencies, satellite, ground handling operations, cable networks, direct-to-home services, mobile TV and teleports. It has also suggested lifting caps to 49% from 26% in a number of sectors and doing away with mandatory FIPB clearance in these industries. The government is actively discussing raising FDI in defence production to 49% and in telecom to 100%.
*The first Unit of ONGC’s Mega Power project in Tripura was formally dedicated to the Nation by the President of India, Pranab Mukherjee at Palatana on 21 June 2013. This Unit 1 of the gas-based plant will generate 363.3 MW. The Unit II of the 726.6 MW power plant is expected to be commercially operational later this year. ONGC realized the audacious dream of transporting such heavy and over-dimensional equipment through the territories of Bangladesh. The nature has bestowed Tripura with abundant natural gas. This power plant would meet the requirements of power deficient states in the region and open up avenues for industrialization in Tripura. The power project not only constituted the largest investment in the North East but it was also the largest project in the world registered under the Clean Development Mechanism of the UNFCC. It would earn India over a million of carbon credits. OTPC, a joint venture company of ONGC, IL&FS Energy Development Co. Ltd. and Govt. of Tripura, is setting up a 726.6 MW (2x363.3 MW) capacity Combined Cycle Gas Turbine based Mega Power Project in the state of Tripura with the objective of monetization of gas, which had been lying idle for want of adequate market in the region. The project cost is estimated at 3804crore rupees .
Smart phones, emails and SMSes seem to have pushed the humble telegram service to a quiet corner with the BSNL deciding to discontinue the 160-year-old telegraph service from July 15. Once the main source of quick and urgent communication, the service delivered several happy as well as sad news to the people all over the country. But with the advent of technology and newer means of communication, the telegram found itself edged out.
*As per a circular issued by Shameem Akhtar, Sr General Manager (Telegraph Services) Bharat Sanchar Nigam Ltd (BSNL) Corporate office, New Delhi, the telegraph service is to be discontinued with effect from July 15, 2013.
*The circular has also directed the telecom offices to maintain the log books, service messages, delivery slips only for six months from the date of bookings. However, complaints, press reports and other messages from different consumer forum are to be kept for one year. Two months ago, telegram services for overseas communication was withdrawn by BSNL.
*The rupee fell by a whopping 71 paise to hit a new life-time low of 57 rupees 77 paise on 9 June 2013. The fall comes after the persistent dollar demand from importers and banks amid the US currency gaining overseas. The rupee which resumed lower at 57 rupees 18 paise against dollar as against the last weekend's level of 57 rupees 6 paise per dollars, dropped further to an all-time low of 57 rupees 77 paise per dollar. This crosses its life-time closing low level of 57 rupees 32 paise touched in June-end 2012.The weakening of the rupee against the Dollar is persistent with the pattern of currencies of other emerging markets also depreciating the world over.
*Face book on 12 June, opened its first data centre outside the United States, in Luleaa, a coastal Swedish town near the Arctic Circle. In opening the facility in the arctic north, Facebook joins Google and other tech companies attracted by chilly temperatures that rarely exceed levels that require special cooling capabilities which critics say hurt the environment. Luleaa, just south of the Arctic Circle, was also chosen due to its renewable energy resources. Face book said data equipment inside the facility were to be powered by locally generated hydro-electric energy.
*Apollo Tyres, on 12 June, said it would acquire U.S.-based Cooper Tire & Rubber Company in an all-cash transaction valued at approximately Rs. 14,500 crore ($2.5 billion), making the combined entity the seventh largest tyre company in the world.Cooper is the 11th largest tyre maker in the world by revenue. It supplies premium and mid-tier tyres through brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. As part of the deal, Apollo Tyres will take over the operations of the American firm, including eight plants and 14,000 employees spread across different parts of the world.“This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” Apollo Tyres Chairman Onkar S Kanwar said. In terms of tyre production, Apollo's capacities will more than double from 1,500 tonnes per day to 3,500 tonnes per day, according to Apollo Tyres Vice-Chairman and Managing Director Neeraj Kanwar.
*The World Bank slashed its growth forecast for China's economy for 2013 to 7.7 per cent from 8.4 per cent, here on 14th June. In its report, the World Bank stated that the main risk related to China remains is - the possibility of high investment rates proving unsustainable and provoking a disorderly unwinding and sharp economic slowdown. The projection is lower than the 7.8 per cent expansion the country recorded in 2012, which was its weakest in last 13 years.
*The report also stated that the Chinese household debt is around two to three times higher than the level before 1997, when the Asian Financial Crisis hit. It added that, while the headline inflation rate is mild, price pressures remain in certain rapidly growing segments of the economy, including real estate. In April 2013, China announced unexpectedly weak growth of 7.7 per cent for the first quarter, surprising analysts who had expected expansion to accelerate in 2013, after showing strength at the end of 2012.
*Other recent indicators have raised alarm bells, with exports showing almost no growth in May 2013, while industrial output expanded at a slightly slower pace than April 2013 and big ticket investment growth also eased. The World Bank's forecast cuts followed a recent lowering by the International Monetary Fund to 7.75 per cent from the previous 8.0 per cent.
*The Indian telecom sector has registered a phenomenal growth during the past few years and has become second largest telephone network in the world, only after China. A series of reform measures by the Government, the wireless technology and active participation by private sector played an important role in the exponential growth of telecom sector in the country. National Telecom Policy-2012 (NTP-2012) was announced with the primary objective of maximizing public good by making available affordable, reliable and secure telecommunication and broadband services across the entire country.
*With the implementation of NTP 2012, the number of telephonic connections rose exponentially. The number of telephone connection was 893.14 million as on January 2013 with the rural telephone connections having increased by nearly 10 million in the last year. The overall teledensity stood at 73.07 per cent as on January 2013 with the rural teledensity crossing 40 per cent. This is in sharp contrast with the overall teledensity of 7.04 per cent and rural teledensity of merely 1.7 per cent in March 2004.
*As far as mobile penetration is concerned, the preference for use of wireless telephony continues. The share of wireless telephones increased from 96.62% as on March 31, 2012 to 96.74% by the end of June 2012 and thereafter slightly declined to 96.56% by the end of December 2012. On the other hand, the share of landline telephones slightly increased from 3.38% to 3.44% during the period from April to December 2012. The wireless subscriber base increased from 33.6 million in March 2004 to 864.72 million as on December 2012. On the other hand, the average tariff for each outgoing call per minute for GSM services dropped from Rs. 2.89 in March 2004 to 47 paisa in December 2012.
*GAIL India on 6 june, announced that it had signed an MoU with Shipping of Corporation India (SCI) for transporting LNG sourced by GAIL from the U.S. The MoU was signed in the presence of B. C. Tripathi, Chairman and Managing Director, GAIL India, and B. K. Mandal, Chairman and Managing Director, SCI. Under the MoU, both entities would join hands for transportation of 5.8 million tones LNG per annum, which is being sourced by GAIL from Sabine Pass and Cove Point terminals in the U.S.
*The co-operation would include SCI assisting GAIL in the charter hiring of LNG ships and GAIL assigning step-in right to SCI in the ownership of LNG ships. GAIL has signed an LNG sales and purchase agreement with Cheniere Energy Partners, LP (Cheniere) for 20 years. It has also signed a terminal service agreement with Dominion through GAIL Global (U.S.) LNG LLC.
*The Union Minister of Commerce, Industry and Textiles Anand Sharma on 6th June, asserted that fostering of democracy in Myanmar has provided an enabling environment which can inspire the investors’ confidence and India remains committed “to be a steadfast partner of Myanmar as it charters its path to growth and progress.”
*Speaking during a session entitled “The Long-Term View” at the World Economic Forum on East Asia 2013 in Nay Pyi Taw, Myanmar, Sharma highlighted that India’s engagement with Myanmar is premised on a strong development partnership and that India would like to align its cooperation with the economic priorities of Myanmar. With India concluding a Comprehensive Economic Partnership Agreement with ASEAN, Sharma stressed that this over-arching framework will act as a catalyst to boost trade and investment ties with countries of the region including Myanmar.
*Sharma also spoke on the importance of investment in development of human resource, by adding that India has always believed that it will reap dividends in the long run. “We have already established Centre of Excellence in IT sector in Yangon. We are going to establish another university-like Information Technology Institute in Mandalay. In addition to that we have also established an Industrial Training Centre in Pakokku to develop skilled labour for Myanmar industry,” said Sharma. During the visit of Indian Prime Minister Dr. Manmohan Singh in 2012, India announced doubling the number of training slot to Myanmar from 250 to 500.
*Emphasising the fact that sound infrastructure will help in the creation of a robust economic linkage between India, Myanmar and beyond, Sharma said that “India is developing Kaladan Multimodal Transit-Transport Project which will connect Mizoram to Sittwe port in Myanmar.”
*Pursuant to the Union Cabinet approval, the Government has constituted the National Skill Development Agency (NSDA) on 7th June by subsuming the Prime Minister’s National Council on Skill Development (PMNCSD), the National Skill Development Coordination Board (NSDCB) and the Office of the Adviser to the PM on Skill Development.
*The NSDA will coordinate and harmonize the skill development efforts of the Government of India and the private sector to achieve the skilling targets of the 12th Plan and beyond. It will endeavour to bridge the social, regional, gender and economic divide by ensuring that the skilling needs of the disadvantaged and marginalized groups like SCs, STs, OBCs, minorities, women and differently-abled persons are taken care of through the various skill development programmes.
*While the Central Ministries and National Skill Development Corporation (NSDC) will continue to implement schemes in their remit, the NSDA will develop and monitor an overarching framework for skill development, anchor the National Skills Qualifications Framework (NSQF) and facilitate the setting-up of professional certifying bodies in addition to the existing ones. NSDA will be an autonomous body chaired by a person of the rank and status of a Cabinet Minister supported by a Director General and other support staff.
*The Reserve Bank of India (RBI) released certain clarifications on the guidelines issued for licensing of new banks on 3rd June. Based on the feedback received from the interested entities, the RBI increased the validity period of the in-principle approval of setting up of banks from one year to 18 months. RBI stated that intending applicants have brought out several complex issues pertaining to reorganization of the existing corporate structure, restructuring of businesses and meeting the regulatory requirements.
*Once the in-principle approval is given by the RBI for setting up of a bank, the promoter group has to set up a non-operative financial holding company (NOFHC) and the bank within 18 months from the date of in-principle approval. The bank has to start banking business within this period after getting the banking licence.
*The Union Government of India hiked the import duty on gold from 6 per cent to 8 per cent here on 5th June. The hike is aimed at curbing the import of gold, which is largely responsible for the rise in Current Account Deficit (CAD) and impacts the foreign exchange reserves of the country as well as the value of rupee. The import duty on platinum was also increased from 6 per cent to 8 per cent, following the Customs notification. Before the hike in import duty, the RBI took several steps to limit the imports to meet genuine domestic demands for jewellery and export purposes. The excise duty on gold ore was also raised from 5 per cent to 7 per cent through another notification issued by Central Board of Excise and Customs.
This is the second hike on the duty of gold imports in six months and the decision of government came up after witnessing the alarming 162 tones import of gold in May 2013. In April and May 2013, import touched new figures of US $ 15 billion. The CAD touched a historic high of 6.7 per cent of GDP in the quarter ending December 2012. Earlier the import duty on gold was hiked from 4 per cent to 6 per cent in January 2013.Current Account Deficit is a difference between inflow and outflow of foreign currency.
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