General Affairs
Sushma Swaraj Arrives In Pakistan, To Hold Talks With Sartaj Aziz
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NEW DELHI: External Affairs Minister Sushma Swaraj today arrived in Islamabad on a two-day visit during which she will hold talks with her Pakistani counterpart Sartaj Aziz and call on Prime Minister Nawaz Sharif.
Immediately after arriving herein Islamabad, she said relationship between the two countries should be better and that she will hold talks with Pakistani leaders to find ways to improve bilateral ties.
"I have come with the message that ties between the two countries should be good and move forward," said Ms Swaraj, who is in Islamabad to lead the Indian delegation at the 'Heart of Asia' 5th Ministerial Meeting on Afghanistan tomorrow.
She refused to share what she would be discussing with Pakistani leaders, but said, "What will happen during the talks will be known after meeting."
Invited by Pakistan to attend the multilateral meet on Afghanistan, Ms Swaraj will attend the conference tomorrow before holding talks with Mr Aziz who said the focus would be on the resumption of composite dialogue process.
"Heart of Asia conference is very important for India because it is associated with Afghanistan. That is why I have come here to participate. Since it is happening in Pakistan it is necessary and appropriate for me to meet Prime Minister Nawaz Sharif and hold talks with my counterpart Sartaz Aziz to talk about improving the bilateral ties and take them forward," Ms Swaraj said.
Adopting a cautious approach over the agenda of talks between Ms Swaraj and Mr Aziz, Indian officials said they will see how the meeting goes and if there will be any point of convergence.
Ms Swaraj's visit comes after talks between the National Security Advisors of India and Pakistan in Bangkok on Sunday, where they discussed terrorism, Jammu and Kashmir and a range of key bilateral issues apart from agreeing to carry forward the "constructive" engagement.
Mr Aziz had said yesterday that the deadlock in Indo-Pak ties had eased to some extent.
During his talks with Ms Swaraj, Mr Aziz said he would discuss various matters with focus on resumption of composite dialogue process between the two countries.
Ms Swaraj's trip came three years after former external affairs minister SM Krishna's visit here in 2012 when the two sides inked a visa liberalisation pact.
NEW DELHI: External Affairs Minister Sushma Swaraj today arrived in Islamabad on a two-day visit during which she will hold talks with her Pakistani counterpart Sartaj Aziz and call on Prime Minister Nawaz Sharif.Immediately after arriving herein Islamabad, she said relationship between the two countries should be better and that she will hold talks with Pakistani leaders to find ways to improve bilateral ties.
"I have come with the message that ties between the two countries should be good and move forward," said Ms Swaraj, who is in Islamabad to lead the Indian delegation at the 'Heart of Asia' 5th Ministerial Meeting on Afghanistan tomorrow.
Invited by Pakistan to attend the multilateral meet on Afghanistan, Ms Swaraj will attend the conference tomorrow before holding talks with Mr Aziz who said the focus would be on the resumption of composite dialogue process.
"Heart of Asia conference is very important for India because it is associated with Afghanistan. That is why I have come here to participate. Since it is happening in Pakistan it is necessary and appropriate for me to meet Prime Minister Nawaz Sharif and hold talks with my counterpart Sartaz Aziz to talk about improving the bilateral ties and take them forward," Ms Swaraj said.
Adopting a cautious approach over the agenda of talks between Ms Swaraj and Mr Aziz, Indian officials said they will see how the meeting goes and if there will be any point of convergence.
Ms Swaraj's visit comes after talks between the National Security Advisors of India and Pakistan in Bangkok on Sunday, where they discussed terrorism, Jammu and Kashmir and a range of key bilateral issues apart from agreeing to carry forward the "constructive" engagement.
Mr Aziz had said yesterday that the deadlock in Indo-Pak ties had eased to some extent.
During his talks with Ms Swaraj, Mr Aziz said he would discuss various matters with focus on resumption of composite dialogue process between the two countries.
Ms Swaraj's trip came three years after former external affairs minister SM Krishna's visit here in 2012 when the two sides inked a visa liberalisation pact.
Why Not Shut Down Badarpur Power Plant, Asks Pollution Watchdog
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NEW DELHI: Amid the controversy over Delhi government's plan to contain vehicular pollution, the Pollution Control Committee has asked why the power plant at Delhi's Badarpur -- considered one of the key sources pollution -- should not be shut down.
The plant is one of the big emitters of carbon dioxide and also fly ash, which contributes massively to the harmful particulate matter in Delhi's air.
The Pollution Control Committee also gave National Thermal Power Corporation - which runs the plant -- till December 15 to explain the emissions.
Delhi stands to lose a whopping 400 MW power if the Badarpur plant is shut down. The National Thermal Power Corporation had isolated Badarpur plant from grid collapses to ensure uninterrupted power supply to Delhi.
In case of a shut down, the Delhi government will also have to pay considerable damages to the NTPC.
But in February, a study by the Centre for Science and Environment said the coal-based power plants in India were among the most inefficient in the world and the carbon dioxide emissions were 14 per cent higher than similar plants in China.
It also ranked the 40-year-old Badarpur power plant as one of India's most polluting power units.
In the wake of Delhi's being declared the world' most polluted city, the Arvind Kejriwal government has planned to control vehicular pollution through the even-odd car number system.
The proposal, which envisages cutting down the number of public vehicles to half on Delhi roads, has already been challenged in court. The petitioners have pointed out that trucks and construction sites were the other big sources of pollution.
NEW DELHI: Amid the controversy over Delhi government's plan to contain vehicular pollution, the Pollution Control Committee has asked why the power plant at Delhi's Badarpur -- considered one of the key sources pollution -- should not be shut down.The plant is one of the big emitters of carbon dioxide and also fly ash, which contributes massively to the harmful particulate matter in Delhi's air.
The Pollution Control Committee also gave National Thermal Power Corporation - which runs the plant -- till December 15 to explain the emissions.
In case of a shut down, the Delhi government will also have to pay considerable damages to the NTPC.
But in February, a study by the Centre for Science and Environment said the coal-based power plants in India were among the most inefficient in the world and the carbon dioxide emissions were 14 per cent higher than similar plants in China.
It also ranked the 40-year-old Badarpur power plant as one of India's most polluting power units.
In the wake of Delhi's being declared the world' most polluted city, the Arvind Kejriwal government has planned to control vehicular pollution through the even-odd car number system.
The proposal, which envisages cutting down the number of public vehicles to half on Delhi roads, has already been challenged in court. The petitioners have pointed out that trucks and construction sites were the other big sources of pollution.
Government To Bring Amendments To Arbitration Bill In Lok Sabha
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NEW DELHI: Government is set to bring official amendments to the Arbitration Act (Amendment) Bill in the Lok Sabha to remove ambiguity on whether it will apply to ongoing arbitration cases.
Though no formal decision has been taken on as to whether the law will apply on ongoing arbitration cases, highly-placed sources in the ministry said it is unlikely to effect ongoing cases and will only apply only on new cases.
The amendment assumes significance as experts in the field and stakeholders had sought clarification in this regard as an ordinance to amend the Arbitration and Conciliation Act, 1996 is already in force since October 23.
The Law Ministry is likely to send the file to the Prime Minister for his approval shortly and ex post facto approval of the Union Cabinet will be sought later, the sources said.
The bill, pending in the Lok Sabha, seeks to replace the ordinance.
Moved by Law Minister DV Sadananda Gowda in the lower house on December 3, the bill is aimed at amending a law on arbitration for speedy settlement of high value business disputes.
For speedy settlement of commercial disputes, the Cabinet had in August cleared the bill to amend the Arbitration Act to fix a timeline for arbitrators to resolve cases. The bill was not introduced in Parliament.
Under the proposed amendments to the Arbitration and Conciliation Act, 1996, an arbitrator will have to settle a case within 18 months.
However, after the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger on.
The Cabinet had in December last year given a nod to an ordinance to amend the Arbitration Act but it was never sent to the President for approval.
The amendments to the law come amid keenness of the government to attract the greater foreign investment. Certain foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.
The Prime Minister has been stressing on steps to promote ease of doing business in India.
NEW DELHI: Government is set to bring official amendments to the Arbitration Act (Amendment) Bill in the Lok Sabha to remove ambiguity on whether it will apply to ongoing arbitration cases.Though no formal decision has been taken on as to whether the law will apply on ongoing arbitration cases, highly-placed sources in the ministry said it is unlikely to effect ongoing cases and will only apply only on new cases.
The amendment assumes significance as experts in the field and stakeholders had sought clarification in this regard as an ordinance to amend the Arbitration and Conciliation Act, 1996 is already in force since October 23.
The bill, pending in the Lok Sabha, seeks to replace the ordinance.
Moved by Law Minister DV Sadananda Gowda in the lower house on December 3, the bill is aimed at amending a law on arbitration for speedy settlement of high value business disputes.
For speedy settlement of commercial disputes, the Cabinet had in August cleared the bill to amend the Arbitration Act to fix a timeline for arbitrators to resolve cases. The bill was not introduced in Parliament.
Under the proposed amendments to the Arbitration and Conciliation Act, 1996, an arbitrator will have to settle a case within 18 months.
However, after the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger on.
The Cabinet had in December last year given a nod to an ordinance to amend the Arbitration Act but it was never sent to the President for approval.
The amendments to the law come amid keenness of the government to attract the greater foreign investment. Certain foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.
The Prime Minister has been stressing on steps to promote ease of doing business in India.
IITs, IIMs in Bad Position: Murli Manohar Joshi
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NEW DELHI: Premier institutes IITs and IIMs are in "bad position" as they only contribute to transfer of capital to developed nations, senior Bharatiya Janata Party (BJP) leader Murli Manohar Joshi today said, claiming that the country's youth is being reduced to "tailors" rather than "textile makers".
The former Human Resource Development Minister also suggested that the government should assess the country's technological power before introducing development schemes.
"The IITs and IIMs are in a bad position... they are only contributing to transfer of capital to developed countries. We are not creating opportunities here and the students who pass out from these institutes are only contributing to management of multinational companies of other countries," he said.
Mr Joshi was addressing the 5th National Summit on Instituionalising Academia-Industry interface organised by PHD chamber.
Mr Joshi, Member of Parliament from Kanpur, said that the country is focusing more on borrowing technology rather than creating technology which is reducing educated youth into "tailors" rather than "textile makers".
"Vajpayeeji had mooted a wonderful idea of quadrangle roads. But even before the concept plan for how the roads will be constructed was worked out, Volvo came up with buses that can be run on those roads. It is good to borrow technology but ultimately our projects don't generate employment and revenue for our youth but become a profit making ground for others.
"Governments need to realise that they need to assess technological power of the country before progressing on such schemes so they do not cause long term loss to the country," he said.
NEW DELHI: Premier institutes IITs and IIMs are in "bad position" as they only contribute to transfer of capital to developed nations, senior Bharatiya Janata Party (BJP) leader Murli Manohar Joshi today said, claiming that the country's youth is being reduced to "tailors" rather than "textile makers".The former Human Resource Development Minister also suggested that the government should assess the country's technological power before introducing development schemes.
"The IITs and IIMs are in a bad position... they are only contributing to transfer of capital to developed countries. We are not creating opportunities here and the students who pass out from these institutes are only contributing to management of multinational companies of other countries," he said.
Mr Joshi, Member of Parliament from Kanpur, said that the country is focusing more on borrowing technology rather than creating technology which is reducing educated youth into "tailors" rather than "textile makers".
"Vajpayeeji had mooted a wonderful idea of quadrangle roads. But even before the concept plan for how the roads will be constructed was worked out, Volvo came up with buses that can be run on those roads. It is good to borrow technology but ultimately our projects don't generate employment and revenue for our youth but become a profit making ground for others.
"Governments need to realise that they need to assess technological power of the country before progressing on such schemes so they do not cause long term loss to the country," he said.
Nuclear Expansion On Agenda Of PM Modi's Visit To Russia
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NEW DELHI: The upcoming visit of Prime Minister Narendra Modi to Russia is expected to see the two countries deciding on expansion of nuclear programme, government told the Lok Sabha today.
Minister of State for PMO Jitendra Singh said the earlier visits of the Prime Minister to various countries were also marked by signing of agreements to procure uranium and give boost the nuclear programme.
"I would like to point out that one of the major achievements of the Prime Minister's foreign trips in the last few months is the reinforcement of our uranium and our nuclear programme," he said.
Mr Singh said the pacts signed during PM Modi's foreign visits included an agreement with Canada in April for procuring 5,000 metric tonne (MT) of uranium.
"During his (PM) visit to Kazakhstan, we could finalise a deal for 7,000 MT uranium. During his visit to Australia, a Nuclear Cooperation Agreement, which had waited for several years, was finalised," the minister said while replying to questions.
He said during PM Modi's visit the US, a deal was finalized for the construction of nuclear reactors in Gujarat and during the visit to France, a deal was finalised with AREVA, world's leading nuclear power company.
"For the visit of the Prime Minister to Russia, a programme has been finalised for expansion of nuclear programme," he said about the trip expected later this month.
Mr Singh said India currently has a storage of 2,25,000 tonnes of uranium and is the richest source of thorium.
NEW DELHI: The upcoming visit of Prime Minister Narendra Modi to Russia is expected to see the two countries deciding on expansion of nuclear programme, government told the Lok Sabha today.Minister of State for PMO Jitendra Singh said the earlier visits of the Prime Minister to various countries were also marked by signing of agreements to procure uranium and give boost the nuclear programme.
"I would like to point out that one of the major achievements of the Prime Minister's foreign trips in the last few months is the reinforcement of our uranium and our nuclear programme," he said.
"During his (PM) visit to Kazakhstan, we could finalise a deal for 7,000 MT uranium. During his visit to Australia, a Nuclear Cooperation Agreement, which had waited for several years, was finalised," the minister said while replying to questions.
He said during PM Modi's visit the US, a deal was finalized for the construction of nuclear reactors in Gujarat and during the visit to France, a deal was finalised with AREVA, world's leading nuclear power company.
"For the visit of the Prime Minister to Russia, a programme has been finalised for expansion of nuclear programme," he said about the trip expected later this month.
Mr Singh said India currently has a storage of 2,25,000 tonnes of uranium and is the richest source of thorium.
Business Affairs
Sensex ends 274 points down, Nifty at 7,612 as GST hopes dim and oil prices fall
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Extending losses for the sixth straight session, the S&P BSE Sensex ended the day 274 points down in Wednesday's trade, while broader CNX Nifty closed a tad above its key support level of 7,600.
Markets fell as harsh exchanges between ruling party and opposition suggested Goods and Services Tax (GST) Bill may not see the light of the day in the Winter Session of Parliament.
The 30-share index settled at 25,036.05, down 274.28 points, while broad-based 50-share index closed at 7,612.50, down 89.20 points.
Market breadth remained fairly negative with 24 of the 30 Sensex components ending the day in red.
Main opposition Congress disrupted proceedings and accused the government of pursuing a "vendetta" against the Gandhi family on Tuesday, in a blow to hopes of passing the proposed GST Bill.
Prime Minister Narendra Modi's government plans to implement the nationwide tax that will replace a long list of state levies from April 2016.
Shares in logistics firm Gati, which stand to gain most from a speedy rollout of the tax, fell 7.95 per cent.
"Initially, people didn't even expect GST to go through, the expectation was one of some sort of consensus arriving," told Arun Gopalan, vice president of research at brokerage firm Systematix Shares and Stocks to Reuters.
"But now with a lot of other unrelated negatives coming into the political scenario, even that sort of a consensus the market would find difficult to envisage," expert added.
Markets also took cues from Asian markets, which slipped to two-month lows after Brent and US crude's West Texas Intermediate (WTI) sunk beneath $40 a barrel on Tuesday, hitting February 2009 levels.
Though, oil prices pared losses towards the close, and were trading 1 per cent lower on Wednesday's trade.
All sectors were down, barring select consumer and IT stocks that gained on short-covering.
Shares of Bharat Heavy Electricals (BHEL) rose 2.64 per cent after a minister said the government had no plans to divest some of its shareholding in the company.
Stock markets are expected to see capital outflows accelerate ahead of the US Federal Reserve's December 15-16 meeting, when it is widely expected to lift rates.
Meanwhile, diagnostic chain Dr Lal PathLabs' initial public offer was oversubscribed 1.08 times till afternoon on the second day of the issue today.
Among Asian markets, China's Shanghai Composite ended with a downtick of 0.12 per cent, while Hong Kong's Hang Seng lost 0.41 per cent. Japan's Nikkei lost 0.98 per cent to end at a three-week low.
Overnight, US stocks ended in the negative zone citing weak global commodity prices and poor exports data from China.
A lowdown on markets today
03:20 pm
Sensex at 25,039.53, down 270.80 points
Nifty at 7,615.50, down 86.20 points
2:00 pm
Sensex at 25130.24, down 180 points
Nifty at 7641.90, down 60 points
1:00 pm
Sensex at 25201.60, down 108 points
Nifty at 7664.60, down 38 points
9:24 am
Sensex at 25,264.72, down 45.61 points
Nifty at 7,687.50, down 14.20 points
Extending losses for the sixth straight session, the S&P BSE Sensex ended the day 274 points down in Wednesday's trade, while broader CNX Nifty closed a tad above its key support level of 7,600.
Markets fell as harsh exchanges between ruling party and opposition suggested Goods and Services Tax (GST) Bill may not see the light of the day in the Winter Session of Parliament.
The 30-share index settled at 25,036.05, down 274.28 points, while broad-based 50-share index closed at 7,612.50, down 89.20 points.
Market breadth remained fairly negative with 24 of the 30 Sensex components ending the day in red.
Main opposition Congress disrupted proceedings and accused the government of pursuing a "vendetta" against the Gandhi family on Tuesday, in a blow to hopes of passing the proposed GST Bill.
Prime Minister Narendra Modi's government plans to implement the nationwide tax that will replace a long list of state levies from April 2016.
Shares in logistics firm Gati, which stand to gain most from a speedy rollout of the tax, fell 7.95 per cent.
"Initially, people didn't even expect GST to go through, the expectation was one of some sort of consensus arriving," told Arun Gopalan, vice president of research at brokerage firm Systematix Shares and Stocks to Reuters.
"But now with a lot of other unrelated negatives coming into the political scenario, even that sort of a consensus the market would find difficult to envisage," expert added.
Markets also took cues from Asian markets, which slipped to two-month lows after Brent and US crude's West Texas Intermediate (WTI) sunk beneath $40 a barrel on Tuesday, hitting February 2009 levels.
Though, oil prices pared losses towards the close, and were trading 1 per cent lower on Wednesday's trade.
All sectors were down, barring select consumer and IT stocks that gained on short-covering.
Shares of Bharat Heavy Electricals (BHEL) rose 2.64 per cent after a minister said the government had no plans to divest some of its shareholding in the company.
Stock markets are expected to see capital outflows accelerate ahead of the US Federal Reserve's December 15-16 meeting, when it is widely expected to lift rates.
Meanwhile, diagnostic chain Dr Lal PathLabs' initial public offer was oversubscribed 1.08 times till afternoon on the second day of the issue today.
Among Asian markets, China's Shanghai Composite ended with a downtick of 0.12 per cent, while Hong Kong's Hang Seng lost 0.41 per cent. Japan's Nikkei lost 0.98 per cent to end at a three-week low.
Overnight, US stocks ended in the negative zone citing weak global commodity prices and poor exports data from China.
A lowdown on markets today
03:20 pm
Sensex at 25,039.53, down 270.80 points
Nifty at 7,615.50, down 86.20 points
2:00 pm
Sensex at 25130.24, down 180 points
Nifty at 7641.90, down 60 points
1:00 pm
Sensex at 25201.60, down 108 points
Nifty at 7664.60, down 38 points
9:24 am
Sensex at 25,264.72, down 45.61 points
Nifty at 7,687.50, down 14.20 points
Goldman Sachs pegs India's GDP growth at 7.9 per cent in FY17
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Country's GDP is expected to grow by 7.9 per cent next fiscal driven by rising domestic demand and higher capital spending by the government, even though global economy will remain anaemic, Goldman Sachs said on Wednesday.
"India is already the fastest growing large economy and will remain so in FY 2016-17. We have positive views on the economy. The cyclical upturn will continue to be driven by the domestic demand," Goldman Sachs India chief economist Tushar Poddar told reporters in Mumbai.
He said the investment demand will improve gradually, driven by greater government spending on infrastructure - particularly railways and highways, lower interest rates, rising FDI inflows and ongoing improvements in ease of doing business, including some improvement in stalled projects.
"Moreover, the economic activity can be boosted by both monetary and fiscal policy being looser next year," he said.
The Wall Street major further said the economy should also reap the benefits of the 125 basis points reduction in interest rates by the Reserve Bank and the continued weakness in commodity prices.
"Higher productivity growth from improvements in technology, education and the ease of doing business (TEEs) can boost potential growth to 8 per cent from FY 2016-17 through FY 2019-20," Poddar said.
However, on the inflation side, he was not so sanguine, saying headline inflation will inch up to 5.3 per cent in FY 2016-17 as against the projected 4.9 per cent in FY 2015-16, driven by an uptick in both core and food inflation.
"We see upside risks to inflation. There is still a structural supply-demand imbalance in the food economy.
Consumption growth rates remain much higher than production growth rates," Poddar added.
The inflation trajectory would be influenced by the effects of El Nino, which could add about 35 basis points to headline inflation and by a narrowing of the output gap.
"We see risks to our inflation forecasts skewed to the upside, both from higher food inflation, as well as the inflationary effects of the central government employees' wage hike and if GST were to be implemented in FY 2016-17," he added.
Poddar further said while the RBI has retained the option of cutting rates again, the bar for another rate cut is not very high and expects the RBI to remain on hold through 2016.
Country's GDP is expected to grow by 7.9 per cent next fiscal driven by rising domestic demand and higher capital spending by the government, even though global economy will remain anaemic, Goldman Sachs said on Wednesday.
"India is already the fastest growing large economy and will remain so in FY 2016-17. We have positive views on the economy. The cyclical upturn will continue to be driven by the domestic demand," Goldman Sachs India chief economist Tushar Poddar told reporters in Mumbai.
He said the investment demand will improve gradually, driven by greater government spending on infrastructure - particularly railways and highways, lower interest rates, rising FDI inflows and ongoing improvements in ease of doing business, including some improvement in stalled projects.
"Moreover, the economic activity can be boosted by both monetary and fiscal policy being looser next year," he said.
The Wall Street major further said the economy should also reap the benefits of the 125 basis points reduction in interest rates by the Reserve Bank and the continued weakness in commodity prices.
"Higher productivity growth from improvements in technology, education and the ease of doing business (TEEs) can boost potential growth to 8 per cent from FY 2016-17 through FY 2019-20," Poddar said.
However, on the inflation side, he was not so sanguine, saying headline inflation will inch up to 5.3 per cent in FY 2016-17 as against the projected 4.9 per cent in FY 2015-16, driven by an uptick in both core and food inflation.
"We see upside risks to inflation. There is still a structural supply-demand imbalance in the food economy.
Consumption growth rates remain much higher than production growth rates," Poddar added.
The inflation trajectory would be influenced by the effects of El Nino, which could add about 35 basis points to headline inflation and by a narrowing of the output gap.
"We see risks to our inflation forecasts skewed to the upside, both from higher food inflation, as well as the inflationary effects of the central government employees' wage hike and if GST were to be implemented in FY 2016-17," he added.
Poddar further said while the RBI has retained the option of cutting rates again, the bar for another rate cut is not very high and expects the RBI to remain on hold through 2016.
No govt guarantee for EPFO investments in stocks
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Retirement fund body EPFO 's investments in stock markets are not backed by any guarantee by the government as these are subject to market movements, Parliament was informed on Wednesday.
"The government has not provided any guarantee for such investments in the stock market as investment in such instruments are subject to market movements," Labour Minister Bandaru Dattatreya said in a written reply to Rajya Sabha.
"Some of the trade unions have expressed reservations over the decision to invest in equity as they are concerned about the risk associated with the investments in stock market," the minister informed the House.
The Employees' Provident Fund Organisation (EPFO) started investing in Exchange Traded Funds (ETFs) from August 6 and it has plan to invest 5 per cent of its incremental deposits into ETFs during the current fiscal.
Dattatreya explained that EPFO's apex decision making body the Central Board of Trustees (CBT) has approved the proposal of investing in ETFs after considering the possible risk associated with the investments.
Minister of State for Finance Jayant Sinha in a reply on Tuesday had said: "Investments in ETF started in August and a total of Rs 3,174 crore has been invested till November 30."
EPFO expects to receive Rs 1.2 lakh crore as incremental deposits during the current fiscal. Thus, it is likely to invest around Rs 6,000 crore in ETFs during 2015-16.
Retirement fund body EPFO 's investments in stock markets are not backed by any guarantee by the government as these are subject to market movements, Parliament was informed on Wednesday.
"The government has not provided any guarantee for such investments in the stock market as investment in such instruments are subject to market movements," Labour Minister Bandaru Dattatreya said in a written reply to Rajya Sabha.
"Some of the trade unions have expressed reservations over the decision to invest in equity as they are concerned about the risk associated with the investments in stock market," the minister informed the House.
The Employees' Provident Fund Organisation (EPFO) started investing in Exchange Traded Funds (ETFs) from August 6 and it has plan to invest 5 per cent of its incremental deposits into ETFs during the current fiscal.
Dattatreya explained that EPFO's apex decision making body the Central Board of Trustees (CBT) has approved the proposal of investing in ETFs after considering the possible risk associated with the investments.
Minister of State for Finance Jayant Sinha in a reply on Tuesday had said: "Investments in ETF started in August and a total of Rs 3,174 crore has been invested till November 30."
EPFO expects to receive Rs 1.2 lakh crore as incremental deposits during the current fiscal. Thus, it is likely to invest around Rs 6,000 crore in ETFs during 2015-16.
Manufacturing companies likely to gain most from GST
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The proposed Goods and Services Tax (GST ) rate of 17-18 per cent as suggested by a panel headed by Chief Economic Adviser Arvind Subramanian would benefit most companies engaged in manufacturing of goods, according to tax experts, economists and brokerage houses.
"Most goods manufactured in the country have an average 27-30 per cent indirect taxes component. If the proposed standard rate of 17-18 per cent is implemented, the final prices of these goods can come down by 10-12 per cent," says Sachin Menon, partner and head, indirect tax and COO, tax and regulatory services, KPMG in India.
At present, manufactured goods attract 12 per cent excise duty, 5-15 per cent value-added tax (VAT) and in case of inter-state sales, a central sales tax of 2-15 per cent. Besides, some states also impose entry tax and Octroi of up to 15 per cent. With GST, all these taxes would be subsumed and a standard rate would be applicable across the country.
Though initially the government was planning a single uniform rate across the country, due to protests from states, which fear losing out on tax revenue, the government has proposed a three-tiered tax structure to begin with - a low rate of 12 per cent for essential items, a high rate of 40 per cent for luxury cars, tobacco products and aerated beverages, and a standard rate of 17-18 per cent for most goods and all services.
According to a report released by Nomura, the announcement is positive for most FMCG companies. "Currently, most consumer companies in India incur tax rates of around 22-25 per cent, due to which a standard rate of 17-18 per cent should benefit them. We see companies such as Hindustan Unilever, Colgate-Palmolive and Asian Paints benefiting from this recommendation the most, especially as their exemptions have recently expired. One should see a positive effect either in their volumes or through margin expansion," says the report.
However, companies which are into food processing business - edible oils, biscuits, chocolate, cocoa and baked items - may get negatively impacted as they would reap the benefits exemptions extended to processed food items.
"If you look at companies like Marico, their current tax incidence is much lower at 11-12 per cent and therefore, they would get impacted by an 18 per cent standard GST rate," says Jay Shankar, Chief India Economist & Director, Religare Capital Markets Limited.
There are other sectors such as pharma and locally manufactured mobile handsets that enjoy lower incidence of indirect taxes.
According to a Religare report on the impact of GST, sectors such as automobile, capital goods, cement and building materials would gain due to lower incidence of tax post-GST implementation. The report points out that these sectors pay around 24-40 per cent indirect taxes.
The GST is also likely to widen the tax net as Sachin Menon of KPMG says it is very difficult in the GST regime to escape paying taxes. This would benefit the companies that operate in sectors with large number of unorganised players.
"The price competitiveness of the unorganised entities is likely to deteriorate, resulting in narrowing of the price differentials. This is likely to lead to accelerated topline growth and also increase in market share of the organised players," says the report from Religare.
According to Religare, companies like BATA India (Footwear), Kajaria Ceramics, Somany Ceramics (Tiles), Mayur Uniquoters (Artificial leather), Finolex Industries (Pipes), Pidilite (adhesive), etc may benefit from unorganised players losing the price differential benefits post GST.
However, Nomura believes that this can impact Titan, a jewellery manufacturer, in the long run.
According to Nomura, Titan will have to suffer if this recommendation is implemented as competitiveness with the unorganised sector will decrease as they increase prices further, and attractiveness of jewellery as an investment will reduce further.
The government's decision to levy sin/demerit rates at 40 per cent 'on goods and services that create negative externalities for the economy' may be negative for sectors such as tobacco, aerated drinks, luxury cars and pan masala.
The obvious loser in this category is ITC, the largest manufacturer of cigarettes in the country.
The proposed Goods and Services Tax (GST ) rate of 17-18 per cent as suggested by a panel headed by Chief Economic Adviser Arvind Subramanian would benefit most companies engaged in manufacturing of goods, according to tax experts, economists and brokerage houses.
"Most goods manufactured in the country have an average 27-30 per cent indirect taxes component. If the proposed standard rate of 17-18 per cent is implemented, the final prices of these goods can come down by 10-12 per cent," says Sachin Menon, partner and head, indirect tax and COO, tax and regulatory services, KPMG in India.
At present, manufactured goods attract 12 per cent excise duty, 5-15 per cent value-added tax (VAT) and in case of inter-state sales, a central sales tax of 2-15 per cent. Besides, some states also impose entry tax and Octroi of up to 15 per cent. With GST, all these taxes would be subsumed and a standard rate would be applicable across the country.
Though initially the government was planning a single uniform rate across the country, due to protests from states, which fear losing out on tax revenue, the government has proposed a three-tiered tax structure to begin with - a low rate of 12 per cent for essential items, a high rate of 40 per cent for luxury cars, tobacco products and aerated beverages, and a standard rate of 17-18 per cent for most goods and all services.
According to a report released by Nomura, the announcement is positive for most FMCG companies. "Currently, most consumer companies in India incur tax rates of around 22-25 per cent, due to which a standard rate of 17-18 per cent should benefit them. We see companies such as Hindustan Unilever, Colgate-Palmolive and Asian Paints benefiting from this recommendation the most, especially as their exemptions have recently expired. One should see a positive effect either in their volumes or through margin expansion," says the report.
However, companies which are into food processing business - edible oils, biscuits, chocolate, cocoa and baked items - may get negatively impacted as they would reap the benefits exemptions extended to processed food items.
"If you look at companies like Marico, their current tax incidence is much lower at 11-12 per cent and therefore, they would get impacted by an 18 per cent standard GST rate," says Jay Shankar, Chief India Economist & Director, Religare Capital Markets Limited.
There are other sectors such as pharma and locally manufactured mobile handsets that enjoy lower incidence of indirect taxes.
According to a Religare report on the impact of GST, sectors such as automobile, capital goods, cement and building materials would gain due to lower incidence of tax post-GST implementation. The report points out that these sectors pay around 24-40 per cent indirect taxes.
The GST is also likely to widen the tax net as Sachin Menon of KPMG says it is very difficult in the GST regime to escape paying taxes. This would benefit the companies that operate in sectors with large number of unorganised players.
"The price competitiveness of the unorganised entities is likely to deteriorate, resulting in narrowing of the price differentials. This is likely to lead to accelerated topline growth and also increase in market share of the organised players," says the report from Religare.
According to Religare, companies like BATA India (Footwear), Kajaria Ceramics, Somany Ceramics (Tiles), Mayur Uniquoters (Artificial leather), Finolex Industries (Pipes), Pidilite (adhesive), etc may benefit from unorganised players losing the price differential benefits post GST.
However, Nomura believes that this can impact Titan, a jewellery manufacturer, in the long run.
According to Nomura, Titan will have to suffer if this recommendation is implemented as competitiveness with the unorganised sector will decrease as they increase prices further, and attractiveness of jewellery as an investment will reduce further.
The government's decision to levy sin/demerit rates at 40 per cent 'on goods and services that create negative externalities for the economy' may be negative for sectors such as tobacco, aerated drinks, luxury cars and pan masala.
The obvious loser in this category is ITC, the largest manufacturer of cigarettes in the country.
RBI to intervene in exchange-traded currency market, if required
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The Reserve Bank of India said it would intervene in the exchange-traded currency derivatives (ETCD) market, if required, and the related data will be published in monthly bulletins.
RBI intervenes in the forex market as and when required in order to manage excessive volatility and maintain orderly conditions in the market.
"As a further measure, it has been decided to intervene in the ETCD segment, if required," RBI said in a statement.
The data for ETCD intervention will be published in the RBI monthly bulletin as in the case of over-the-counter (OTC) management, it added further.
Earlier in March this year, RBI had relaxed norms in this segment by raising the limit for domestic entities and foreign portfolio investors (FPIs).
It had also allowed an aggregate limit of $5 million equivalent per exchange.
The rules were relaxed in the ETCD market so as to bring it on par with OTC markets and also provide greater flexibility to both FPIs and domestic participants.
The Reserve Bank of India said it would intervene in the exchange-traded currency derivatives (ETCD) market, if required, and the related data will be published in monthly bulletins.
RBI intervenes in the forex market as and when required in order to manage excessive volatility and maintain orderly conditions in the market.
"As a further measure, it has been decided to intervene in the ETCD segment, if required," RBI said in a statement.
The data for ETCD intervention will be published in the RBI monthly bulletin as in the case of over-the-counter (OTC) management, it added further.
Earlier in March this year, RBI had relaxed norms in this segment by raising the limit for domestic entities and foreign portfolio investors (FPIs).
It had also allowed an aggregate limit of $5 million equivalent per exchange.
The rules were relaxed in the ETCD market so as to bring it on par with OTC markets and also provide greater flexibility to both FPIs and domestic participants.
General Awareness
GFI ranked India 4th in black money outflows p/a
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A Washington-based research and advisory organisationGlobal Financial Integrity (GFI) released its report titled“Illicit Financial Flows from Developing Countries: 2004-2013” showing a dramatic increase of illicit financial flows from 2004 when it was USD 465.3 billion to USD 1.1 trillion in 2013.
(Illegal financial outflows includes tax evasion, crime, corruption and other illicit activity)
- Report ranked India at 4th place in black money outflows with USD 51 billiondrawn out of the country per annum between the years 2004-2013.
- China tops the list with USD 139 billion average outflow of illicit finances per annum, followed by Russia (USD 104 billion per annum) and Mexico (USD 52.8 billion per annum).
This study demonstrates that illicit financial flows are the most damaging economic problem faced by the world’s developing and emerging economies.
GFI recommendations to curb Illicit Financial Flows
GFI recommends that world leaders should focus on curbing opacity in the global financial system, which facilitates these outflows.
- Governments should establish public registries of verified beneficial ownership information on all legal entities and all banks should know the true beneficial owner(s) of any account opened in their financial institution.
- Policymakers should require multinational companies to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries and staff levels on a country-by- country basis
- Countries should actively participate in the worldwide movement towards theautomatic exchange of tax information as endorsed by the OECD and the G20.
- Customs agencies should treat trade transactions involving a tax haven with thehighest level of scrutiny.
- Governments should significantly boost their customs enforcement by equipping and training officers to better detect intentional mis-invoicing of trade transactions.
GFI recommended that governments should sign on to the Addis Tax Initiative to further support efforts to curb IFFs as a key component of the development agenda.
- A Washington-based research and advisory organisationGlobal Financial Integrity (GFI) released its report titled“Illicit Financial Flows from Developing Countries: 2004-2013” showing a dramatic increase of illicit financial flows from 2004 when it was USD 465.3 billion to USD 1.1 trillion in 2013.
(Illegal financial outflows includes tax evasion, crime, corruption and other illicit activity)- Report ranked India at 4th place in black money outflows with USD 51 billiondrawn out of the country per annum between the years 2004-2013.
- China tops the list with USD 139 billion average outflow of illicit finances per annum, followed by Russia (USD 104 billion per annum) and Mexico (USD 52.8 billion per annum).
This study demonstrates that illicit financial flows are the most damaging economic problem faced by the world’s developing and emerging economies.GFI recommendations to curb Illicit Financial Flows
GFI recommends that world leaders should focus on curbing opacity in the global financial system, which facilitates these outflows.- Governments should establish public registries of verified beneficial ownership information on all legal entities and all banks should know the true beneficial owner(s) of any account opened in their financial institution.
- Policymakers should require multinational companies to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries and staff levels on a country-by- country basis
- Countries should actively participate in the worldwide movement towards theautomatic exchange of tax information as endorsed by the OECD and the G20.
- Customs agencies should treat trade transactions involving a tax haven with thehighest level of scrutiny.
- Governments should significantly boost their customs enforcement by equipping and training officers to better detect intentional mis-invoicing of trade transactions.
GFI recommended that governments should sign on to the Addis Tax Initiative to further support efforts to curb IFFs as a key component of the development agenda.
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