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Moody's Expects Improvement in Tata Steel's Results in FY16

Moody's Investors Service said that the huge loss Tata Steel incurred in the 2014-15 fiscal was mainly due to iron ore supply disruption in India. Kaustubh Chaubal, Vice President and senior analyst of Moody’s, said that the ratings of the company will remain same in spite of the “below expectation” performance. The rating agency feels that in the 2015-16 fiscal, the losses will "fade away". Available data shows that in comparison to net profit of Rs. 3,594.89 crore during 2013-14, consolidated net loss during 2014-15 was reported to be Rs 3,925.52 crore.  Moody’s expects the incurred loss of Tata Steel in the last fiscal to be ironed out in the ongoing fiscal as the company starts mining its own iron ore, uses imported iron ore stock, and starts getting new shipments from its plant in Kalinganagar.

India Ratings and Research projects Slightly Lower GDP Growth Estimate in FY15 than CSO's Projection

Report published by India Ratings and Research (IRR) says that its GDP growth forecast for FY15 (at FY12 prices) is slightly lower than that of the advance estimates of Central Statistics Office (CSO). While CSO’s GDP growth estimate was 7.4 per cent for financial year 2015, the same forecast by India Ratings and Research is 7.3 per cent. The report says that net export for last quarter of FY15 may be positive, though the overall net exports for FY15 will be negative. While CSO’s advanced GDP growth estimate of net exports sees a decline of 19.5 per cent on a year-on-year basis that of IRR report is 22.5 per cent decline. The concerned report also observed that industrial gross value-added (GVA) growth for FY15 will miss CSO’s 5.9 per cent estimate as it will be 5.4 per cent.  

Competition Commission of India approves AXA's request of Raising its Stake in its Two Indian Insurance Ventures

Competition Commission of India (CCI) approved proposal of European financial services behemoth AXA to raise its stake in its two insurance ventures in India - Bharti AXA General Insurance and Bharti AXA Life Insurance – from current 26 per cent to 49 per cent. These two deals worth Rs 1,290 crore were earlier approved by FIPB or Foreign Investment Promotion Board. Reports say that this is the first foreign company that raised its stake in its Indian subsidiaries after Government of India approved increase of FDI in the insurance sector from 26 per cent to 49 per cent. Insurance sector expects that this move will be followed by similar actions by other foreign investors in the coming time. Fair trade watchdog CCI said that they have also approved acquisition of renewable power, thermal power, and grid businesses of Alstom by GE.  

Justice A P Shah Committee on MAT seeks Stakeholders' Suggestions by 22 June

Justice A P Shah committee has asked for representations as well as suggestions from all the stakeholders including industry bodies by 22 June. This high-level committee was formed for resolving the retrospective Minimum Alternate Tax disputed with the Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs).  Resistance from 68 foreign investors started when tax department sent 18.5 per cent MAT demand (totaling Rs. 602.83 crore) on their trading income. A finance ministry statement said that the first meeting of the Shah committee took place on 25 May 2015 and decided to seek suggestions from stakeholders as a prerequisite for resolving the MAT issues of foreign investors prior to 1 April 2015. Other important members of the concerned committee include chartered accountant Girish Ahuja and ex chief economic advisor Ashok Lahiri.

Union Finance Minister vouches for Implementing GST from 1 January 2016

Arun Jaitley, Finance Minister of India, said while addressing an audience at Ahmedabad’s Tagore Hall on the occasion of Modi government’s first anniversary, that his government is undertaking all possible steps for implementing Goods and Service Tax (GST) from 1 January 2016. While stressing on the importance of GST, Jaitley said that it is a uniform tax system and its implementation will help in easy transfer of goods and services. He also said that in 2015-16, his government is expecting the income tax collection to increase by 14-15 per cent. As Jaitley is vouching for additional one per cent tax in GST for two years after implementation (expected to help manufacturing states), Chief Economic Advisor of Modi government, Arvind Subramanian, reportedly said that the additional tax is not in tandem with principles of GST and will ultimately undermine PM Narendra Modi’s ambitious “Make in India” campaign.  

Modi Government gets Pat on the Back from FICCI

Jyotsna Suri, President of industry body FICCI, said in a press conference that the Narendra Modi government in the last one year has been successful in establishing India as a brand, restored confidence of the investors, and most importantly infused a positive sentiment in the economy. While appreciating improvement of macro economic indicators in the last one year in comparison to earlier government, Jyotsna Suri went on to appreciate extensive international tour of the PM in bringing positive global focus on India. She also observed that in the last one year, there has been an influx of foreign investment in India, current account and fiscal deficits are in control, inflation is low, and there has been an improvement in GDP growth too. R V Kanoria (former President of FICCI) said that it will take another 18-24 months time for the actions taken to be visible on ground.

RBI Governor Raghuram Rajan vouches for Increasing States' Participation to Improve Government Finances

While inaugurating a conference of Chief Secretaries, Finance Secretaries and states’ cooperative secretaries, RBI Governor Raghuram Rajan stressed on more proactive participation of state governments for improving fiscal performance of the government. He also said that despite the improved macro economic parameters, the growth rate is picking up slowly. Rajan emphasised on quantitative as well as qualitative fiscal consolidation along with the need of more effective and active roles of the State Level Coordination Committees (SLCCs). RBI Governor said that government sector’s consolidated fiscal performance can be improved only when state governments play an important role in improving the same. This conference was attended by important dignitaries such as UK Sinha (SEBI Chairman), Harsh Kumar Bhanwala (NABARD Chairman), HR Khan, Urjit Patel and SS Mundra (Deputy Governors of RBI), and other senior government officials.

Indian Banks Association signs Wage Agreement; Will Hike Bank Employees' Salaries by 15 Per Cent

Indian Banks Association has signed a wage agreement with bank employees’ unions and officers’ associations, representing about 10 lakh employees across 43 banks, which increases salaries of bank employees by 15 per cent. It will be retrospectively effective from November 1, 2012. T M Bhasin, Chairman of IBA, said that this hike will swell the banks’ exchequer by Rs. 4,725 crore in a year and if superannuation cost is included it will swell to a whooping Rs. 8,370 crore. For bank officers, salaries have been revised from Rs 14,500-Rs 52,000 to Rs 23,700-Rs 85,000 along with special allowance on basic pay in the 7.75 to 11 per cent range (and applicable DA). While salaries of workmen and non-subordinate staffs have been increased from Rs 7,200-Rs 19,300 to Rs 11,765-Rs 31,540, while that of subordinate staffs have been hiked from Rs. 5,850-Rs 11,350 to Rs. 9,560-Rs 18,545.

CII President says No Big Bang Investment in One Year of Modi Government

Sumit Mazumder, President of Confederation of Indian Industry (CII), said on the eve of Narendra Modi government’s completion of one year in office, that there has been no “big-bang investment” in the last one year “on ground”. He also stressed on the fact that the government is yet to address the ease-of-doing business issue. Though Mazumder believes investments will take place in India in a gradual manner, he termed Union government’s claim of reaching 50th rank in the ease-of-doing business index of World Bank as “ambitious”. CII President expected the results to start showing from this year’s 3rd or 4th quarter. He made it clear that India Inc. now wants to see results on ground, especially regarding doing away with red tapism. Sumit Mazumder added that he wants to see digitization of forms and ease of approval process involved in setting up an industry.

Sensex and Nifty falls by Over 1 Per Cent on Monday

Both the Indian bourses today fell by over 1 per cent on weak global cues, lower-than-expected Q4 earnings reported by some companies, and profit booking. While BSE Sensex fell by 1.2 per cent or 313.62 points than previous close (to close at 27,643.88), NSE Nifty fell by 1.05 per cent or 88.7 points (to close at 8,370.25). All the sectors other than oil & gas and infrastructure, ended in deep red. Some of the stocks that bled heavily include VEDL (fell 3.59 per cent), ITC (which fell by 3.84 percent), Canara Bank (fell by 5.10 per cent), HDFC (fell by 2.57 per cent), and others. Analysts believe that the major reason of this significant fall in the indices is the indication of US Federal Reserve Chair Janet Yellen that they are going to increase the interest rate in 2015.

UBI Loses Hope of Recovering Rs. 400 crore Consortium Loan from Kingfisher Airlines

United Bank of India has said that it has lost all hopes of recovering its dues from the now defunct Kingfisher Airlines. UBI is the first among the 17 lenders who admitted in public that the bank is not expecting recovery of its Rs. 400 crore consortium loan given to the beleaguered airlines. It was UBI that first tagged Vijay Mallya led Kingfisher Airlines as willful defaulter. Reports say that till now the seventeen lenders have been able to recover just Rs. 1,000 crore out of the total money given as loan to Kingfisher Airlines (excluding penal interest) – Rs. 7,500 crore. MD and CEO of UBI, P Srinivas, said that his bank is not getting any amount from the Kingfisher account. However, he also added that they will get another few crores by selling off the Kingfisher House and other collaterals.  

Finance Minister Claims Success in Containing Inflation in Last 1 Year; Kapil Sibal Negates Him as Vegetable Prices Soar

Finance Minister Arun Jaitley, during second press conference highlighting success of Narendra Modi government’s one year in office, said that they are successful in bringing inflation within control “to a great extent” in last one year. In comparison to last one decade, overall inflation is at a better situation now, he added. Jaitley emphasized that the factors that led to bringing down WPI and CPI from their peak of 11 per cent include fall in international crude oil and commodity prices, coupled with adequate government measures in the last 1 year to control food inflation. Congress’s Kapil Sibal hit back at Arun Jaitley by claiming that he is naïve of the ground realities on food inflation and questioned whether he has at all visited the market. Sibal claimed that expense of necessary food items including pulses, vegetables, and fruits have soared.

Coal and Power Minister woos Investors at U.S. India Business Council Investment Round-Table

Union Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy, Piyush Goyal, chaired USIBC (US India Business Council) investment round-table conference in Washington DC. While addressing the business persons and dignitaries, Goyal said that Narendra Modi led government is not only striving to keep the country corruption free but also creating foundation for ease of doing business. While stressing on the importance given by his government on energy sector and the self imposed target of increasing renewable energy production by five times to 175 GW in coming seven years, he invited businesspersons to participate in the $250 billion power sector opportunity in India. In the conference, he had a telephonic conversation with Ambassador Michael Froman (US Trade Representative) and also met Penny Pritzker (US Commerce Secretary) and Dr Ernest Moniz (US Energy Secretary).

PM headed Cabinet Committee Liberalise FDI Norms for NRIs, OCIs, and PIOs

A Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given nod to liberalization of FDI norms for Overseas Citizens of India (OCIs), NRIs, and PIOs. Reports say that this decision has been taken in order to increase flow of capital in India. As per statement of an official spokesperson, approved amendments to FDI policy will bring OCIs and PIOs at same level as NRIs when it comes to education and economy. The spokesperson also said that these amendments are made with the expectation that they will create inflow of greater extent of remittances and investment (construction development, railways, defence, insurance, and medical devices) from OCIs, NRIs, and PIOs.

RBI Relaxes Rules to Help Indian Companies working Offshore to Raise Funds in Rupees

The Reserve Bank of India has made it easier for Indian companies, with overseas operations, to raise funds from abroad in rupees denomination and not in any other currency by relaxing the related rules. Indian corporate entities having offshore operations had to earlier take loans in US Dollar denomination and then convert them to Indian currencies. However, this arrangement included exposure to foreign currency risks. Now, lender abroad will swap currency with banks abroad, which will provide fund in rupees through tapping of a bank present in India and extend money in Indian currency to the borrowing company. A senior foreign banker said that the foreign exchange risk involved in the earlier system will now to borne by the offshore lender.  

SEBI Sets up N R Narayana Murthy-led Panel to recommend on Further Development of Start-ups

Securities and Exchange Board of India has set up an 18-member panel called Alternative Investment Policy Advisory Committee (AIPAC) that will recommend the securities watchdog on formulating a new regulatory framework for start-ups and alternative investments. To head the panel SEBI has roped in Infosys founder and reputed industrialist N R Narayana Murthy. Reports say that AIPAC will recommend SEBI on any hurdle that may stall alternative investment industry development. SEBI will be advised on the coordination needed on issues for developing the start-up and alternative investment industry ecosystem. The panel consists of members from RBI, SEBI, Finance Ministry, start-up organisations, private equity firms, and industry. Some of the renowned names in the panel are Sanjay Nayar, Saurabh Srivastava, Ajay Piramal, Devinjit Singh, and others.

Finance Ministry Announces Committee for Reviewing MAT Imposition to Resolve Dispute with Foreign Investors

The Finance Ministry has announced the formation of a committee, headed by ex-chief justice of High Court A P Shah. The committee will mainly look into the grievances of the foreign investors regarding minimum tax on transactions that were done before 1 April 2015. Foreign investors started protesting when Tax Department asked the foreign companies to pay up retrospective MAT tax to the tune of Rs 602 crore. Though Union Government tried to address the issue by saying that MAT will be levied on foreign investors’ income prior to 1 April 2015, foreign investors challenge this aspect too. The finance ministry statement said that the concerned committee will examine judicial/quasi judicial, legal provisions, and other related aspects and suggest on resolving the issue. The committee will also have Ashok Lahiri, ex-chief economic adviser to federal government, and Girish Ahuja, a chartered accountant.

India Inc wants Modi to invest Rs.1 trillion in Infrastructure to Boost Economic Growth

As Narendra Modi government is about to complete one year in office, business leaders of India want the Prime Minister to invest heavily in infrastructure sector in the coming few months so that the multiplier effect sets in and makes the $1.9 trillion Indian economy to increase at a faster pace. Mahindra and Mahindra Ltd’s group Chief Financial Officer V.S. Parthasarathy has suggested the Modi government to invest Rs. one trillion on infrastructure in the coming six months time to increase growth rate of the economy. While hoping for a “boom loop”, Parthasarathy went on to say that the economy currently needs to pass two major bills including land acquisition and GST. He also stressed upon the point that the stalled projects must kick start again, where the investment can be channelised either by the government alone or through public-private partnership.       

Infosys founder NR Narayana Murthy Urges People to Support PM Modi's Endeavours

Narendra Modi government received a pat on the back from Infosys founder NR Narayana Murthy, as it is on the threshold of completing one-year in office on 26 May. While delivering CCI lecture, Murthy urged Indians to support the endeavours of the Prime Minister. He reminded everyone in the audience that it is too early to make statements on the achievements of the current government; however he mentioned that a lot of good things are happening. Putting his weight behind the foreign investors, Narayana Murthy vouched for transparency in tax policy and went on to add that it should not be levied in an arbitrary and retrospective manner. While he opined that efficient land allocation will lead to societal benefit, he preferred the running of airports and ports by private players.

Crisil says Expectations from Narendra Modi Government Taper Off

Rating agency Crisil in its report “Modified Expectations”, evaluating Modi government’s performance on economic front in the last one year, said that expectation from the Narendra Modi government has tapered down from extremely high-level to moderate one. Dharmakirti Joshi, Chief Economist of Crisil, has said that disappointment is there in the economy on two counts. While the first disappointment is regarding the expectation of quick turn-around of the economy and the second is regarding slower pace of reform than expected. Joshi went on to add that Modi government was unable to adequately use both monetary and fiscal instruments largely due to the legacy issues it inherited.