Current Affairs - 15 January 2016

General Affairs 

Digital India: Techies Bring Free Wi-Fi To Madhya Pradesh Villages

• RAJGARH, MADHYA PRADESH:  In his spare time these days, 28-year-old farmer Ravi Singh Chauhan, a resident of Shivnathpua village in Madhya Pradesh's Rajgarh district, scours the Internet learning new farming techniques or keeping in touch with friends and family on WhatsApp.
  
  Tucked away in one of Madhya Pradesh's most backward districts, a quiet digital revolution is taking place as over 1,200 villagers across two villages, have become netizens with free internet since October.
  
  Ravi Singh says, "Earlier for a mobile recharge we had to go 10 km to Khilchipur. Since the Wi-Fi has been set up, we enjoy free Internet services. Using the service, we learn about farming."
  
  

  The transformation has become a reality because of four local engineers, Tushar, Bhanu, Abhishek and Shakeel, who have set up this Wi-Fi tower for Shivnathpura and Bawdikheda Jageer villages by pooling in Rs. 2.5 lakh without any government funding.
  
  Their aim: to demonstrate that it's possible to digitally connect villages in a cost effective way.
  
  "We also wanted to contribute to the Digital India campaign but we did not stand a chance as there are big players in the race to provide services. So we made this model at a very low cost so the government takes notice and involves us in connecting villages to the Internet."
  
  The impact of Internet can already be seen in the two villages. The villagers have not just taken to social networking and entertainment but have also flocked to e-governance services and schemes like Jan Dhan Yojana.

Bunkers For Locals At International Border In Jammu And Kashmir

• JAMMU:  After some of the worst ceasefire violations over the last two years, the Jammu and Kashmir government is building underground bunkers at the International  Border in Jammu to safeguard the locals.
  
  The bunkers - huge concrete structures built underground -- will have a capacity to accommodate more than 100 people each.
  
  In the first phase four bunkers are being built at sensitive locations of RS Pura district. Ultimately, the state will build 60 such bunkers in the area.
  
  

  "We will construct bunkers in all the border villages, if need be, we will construct two bunkers in each village, so that people can use themselves to escape the shelling," said Shyam Choudhary, the lawmaker from the RS Pura sector, which right at the international border.
  
  In 2014, 19 people died and 150 were injured in more than 550 incidents of ceasefire violations by Pakistan along the International Border and the Line of Control.
  
  In the '90s, hundreds of people migrated from their villages close to the international border when shelling from across the border was a daily routine. After the ceasefire between India and Pakistan in 2003, many returned home.  The ceasefire violations over the last two years have brought the horror back.
  
  Even so, this is the first time the local administration is constructing bunkers for the civilians close to the Zero Line.
  
  "Had this been done some years ago, so many people would not have been killed," said Darshan Lal, a resident of Karotona village, whose brother was killed by a Pakistani shell in 2002.
  
  Of the six sectors at the border, Arnia has suffered the heaviest toll from Pakistani shelling.  Since 2014, five people have died across its four villages.

Why 'Miya-Biwi Raazi' Was Used For India-Pak Talks

• NEW DELHI:  Responding to media questions on the Foreign Secretary talks between India and Pakistan, an official today used a phrase unusual to diplomacy.
  
  "Jab mian biwi raazi to kya karega kazi (if the husband and wife agree, what can the priest say?)," said Vikas Swarup.
  
  The two Foreign Secretaries have spoken and agreed to reschedule talks that had been tentatively set for tomorrow, the government says.
  
  Mr Swarup said Foreign Secretary S Jaishankar had spoken to his Pakistani counterpart on the phone and they have "mutually agreed" on talks "in the very near future".
  
  Asked to spell out a time-frame, the official firmly repeated: "The timeframe is the very near future. The two foreign secretaries have mutually agreed."
  
  The talks are expected to set the ball rolling for the dialogue process between the two countries. The attack on the Pathankot air base earlier this month, which India has blamed on Pakistan-based terror group Jaish-e-Mohammed, has stressed ties days after Prime Minister Narendra Modi made a surprise stop at Lahore to meet Pakistani premier Nawaz Sharif on his birthday.
  
  "We have welcomed the arrest of Jaish-e-Mohammed members as the initial positive step. Pakistan is on the right path," said the foreign ministry spokesperson.
  
  India has also said it supports Pakistan's decision to send investigators to India as part of the probe to collect important evidence about the Pathankot attack in which seven military personnel were martyred and 22 were injured.

Use Facebook, Whatsapp To Alert Officials About Accidents: Nitin Gadkari

• NEW DELHI:  Union Transport Minister Nitin Gadkari today floated an idea that a simple click of the mouse or a snap on Whatsapp about an accident or the site itself can help the government machinery swing into action and thus, save lives.
  
  He exhorted people to leverage the Internet to make India accident-free.
  
  

  "I do not want anyone else to suffer as I did after a road accident. It deeply pains and hurts me to see India top on global list with 5 lakh accidents every year," the Road Transport and Highways Minister said while attending a road safety forum.
  
  "Come join the government in drive to make the nation accident-free like Sweden," he said.
  
  Launching a Facebook page to generate awareness, Mr Gadkari made a strong case for using the Internet technology to alert authorities about accidents, regardless of such mishap spots.
  
  A Road Safety Authority, he said, is also on the anvil and the Prime Minister has given his nod for it.
  
  Mr Gadkari disclosed that the government has already started to address critical issues, be it faulty designing or lack of over- or under-passes on roads, and Rs. 11,000 crore will be spent to fix the same.
  
  "It pains me to see the huge number of accidents as such magnitude of casualties neither happens in a war or extremist killings," the minister pointed out.
  
  He went on to add that not just 30 per cent of driving licences in India are "bogus", but a large number of government drivers suffered from cataract problems. He put the shortage of drivers in India at 22 per cent.
  
  Mr Gadkari was clear that government is committed to addressing all these issues and will set up 3,000 driving, vehicle fitness and pollution certification centres across the country where driving licences will be issued only after computerized tests.
  
  Also, he asked NGOs to impress upon people the need to adhere to traffic norms, safe driving and the like. Those doing exemplary work on road safety issues will be chosen for annual awards, the minister added.
  
  "We have constituted annual awards system for NGOs doing exemplary work in road safety with Rs. 10 lakh for the winner and Rs. five lakh and Rs. three lakh for second and third slots, respectively," Mr Gadkari said.
  
  Also, talks are on with state governments for mandatory lessons to school kids on road safety, besides an all-India exhibition through a train, for which consultations are going on with the Railways Ministry.

Ram Jethmalani Withdrew Offer To Sonia Gandhi After Parliament Disruption

• NEW DELHI:  Senior advocate and Rajya Sabha member Ram Jethmalani had offered to defend Congress president Sonia and Rahul Gandhi in the National Herald case but "revoked" it when she did not act on his "advice" to allow Parliament to function in the normal way.
  
  He had made the offer to Ms Gandhi in a letter on December 10, 2015 telling her that he had "no reason to doubt" her stand that the prosecution instituted against her and Mr Rahul Gandhi by BJP leader Subramanian Swamy is "false and malicious".
  
  "But this is to be established in court and not by tumult and disorder in the Rajya Sabha", he told Ms Gandhi at a time when Congress paralysed Rajya Sabha during the Winter Session.
  
  The former BJP leader told Ms Gandhi that as a senior practising counsel and Parliamentarian he was "not happy" with what has been happening in the Rajya Sabha House "for the last few days".
  
  "The institution of Parliament is suffering total loss of public respect. This does not augur well for Indian democracy," he said in his letter.
  
  Mr Jethmalani today put the letters written by him to Ms Gandhi on his blogspot. He told Ms Gandhi that he neither needed any fees nor any other favour from her. "My services will be service to the nation".
  
  "I hope you will allow the Parliament to function the normal way", he had said concluding the letter in which he had also referred to himself as an "expelled" member of the BJP and "you know my role in recent Bihar elections". Mr Jethmalani had pitched for Nitish Kumar as Chief Minister.

Business Affairs 

UN downgrades India GDP forecast for 2016 to 7.5% from 8.2%

• United Nations has downgraded its GDP growth forecast for India for 2016 to 7.5 per cent from 8.2 per cent estimated earlier, largely due to slow progress in implementing reform policies.

  In 2015, India is expected to see better growth compared to China, but the higher rate is due to a change in the methodology of computing GDP in recent years rather than an increase in the growth rate.

  According to a report by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), the potential for even higher economic growth in some other major economies in the region has been held back due to slow progress in implementing reform policies.

  ESCAP economists believe, China is expected to grow at 6.5 per cent in 2016, lower from 6.8 per cent estimated earlier.

  In case of India, the 2016 GDP is likely to be around 7.5 per cent lower from 8.2 per cent earlier.

  "Instead of any significant acceleration, India is forecast to record growth that is largely unchanged from that recorded in 2014," the year-end update of the flagship report of the United Nations added.

  ESCAP further said the main reason is related to "delays in implementation of reform policies proposed by the new administration".

  "While the government eased restrictions on foreign direct investment and introduced online services to enhance the business environment, there have been delays in instituting some major reforms which had been expected," it said.

  These include reform of land acquisition and labour laws and establishment of a nationwide goods and services tax, measures which were not enacted due to legislative hurdles and opposition from sections of the public.

  "Implementation of such reforms can lead to significant growth acceleration in India," ESCAP said.

  The report noted that despite expectations of expedient implementation by new administrations, India has already undertaken a number of significant economic reforms.

  In India, the government had considerable success in improving financial inclusion, which will help to spur domestic consumption, it said.

  Meanwhile, the government recently lowered its economic growth forecast for 2015-16 to 7-7.5 per cent from 8.1-8.5 per cent.

Raghuram Rajan may cut interest rates once more despite inflation concerns, says Reuters poll

• Having made four reductions in 2015, the Reserve Bank of India (RBI) will likely cut interest rates once more in the coming year, despite expectations that inflation will rise slightly above its medium-term target, a Reuters poll found.

  The survey of 28 economists taken this week showed expectations haven't changed much in the past three months, reflecting how India's steady, if unspectacular, economic performance looks relatively solid compared with peers.

  Economic growth picked up only modestly last year, despite high hopes for a wave of long-awaited economic reforms from Narendra Modi's government. Many analysts now say modest growth is likely to remain for some more time.

  "India continues to experience moderate inflation and only a gradual uptick in economic activity," wrote Siddhartha Sanyal at Barclays, one of the two analysts calling for a more than 25 basis point cut in the RBI's repo rate, currently 6.75 percent.

  Still, this is a better outlook than for some fellow emerging market economies, like China, where growth forecasts have been reduced modestly but financial market turmoil since the start of the year suggests greater problems.

  India is likely to comfortably maintain a faster growth rate than China over the next few years. The most pessimistic forecast for growth next year in India matches the most optimistic figure for China - 7 percent.

  India's economy is expected to expand 7.5 percent in 2015/16 and at a slightly faster 7.8 percent in 2016/17, the same as forecast in a poll three months ago.

  Whereas the headline growth rate appears very respectable, India needs faster to growth to generate jobs for millions of young people joining the workforce each year, and the economy remains hobbled by weak private sector investment.

  Retail inflation has averaged 4.8 percent this fiscal year so far, but the poll predicted it would rise to average 5 percent for 2015/16, and 5.3 percent for 2016/17.

  The RBI's 5 percent target for inflation by March 2017 is at risk with annual price rises of 5.61 percent in December - the fifth straight month inflation has gone up.

  But even with rising inflation threatening to breach that target, 11 of 19 economists polled this week still expect the repo rate to be cut to 6.50 percent by June.

  The RBI cut interest rates four times last year, by a cumulative 125 basis points, surprising the market with a few of its early moves.

  Analysts also expect the government to pick up the slack in terms of providing a fillip to economic growth by passing soon at least one reform through parliament.

  Thirteen of 15 analysts said it was either 'very likely' or 'likely' that the government would pass the land acquisition bill, which would make it easier for businesses to buy land, or a goods and services tax (GST), which would transform the economy into a single market, by the end of this year.

  Weak global demand, along with deflationary pressures abroad, and any reforms announced at the parliament's budget session in February will be key to the economic outlook over the next year, said Rishi Shah, economist at Deloitte.

  In November, a government panel recommended hiking the wages of about 10 million current and former government employees by nearly 25 percent. Pay rises could boost economic growth through higher demand.

  "There will be a pay commission in effect in the next fiscal, so you're going to get demand, at least an urban boost to demand," Shah said.

Macro drivers to dampen BSE 500 earnings: India Ratings

• Credit rating agency India Ratings and Research (In-Ra) expects the EBITDA growth of BSE 500 corporate to range between 12-14 per cent for FY17, under a hypothetical scenario of fiscal loosening, compared to the 5-6 per cent growth expected for FY16.

  Although it is still an improvement over the 3.5 per cent growth witnessed in FY15, it is significantly below the growth numbers of 17 per cent-22 per cent achieved between FY10-FY12 and the median growth of 17.5 per cent over FY01-FY15.

  Given the sluggish growth expectations, an earnings recovery to FY12 growth levels is unlikely till FY18-FY19, the rating agency says in a recently released report.

  

  
  
  
  
  
  
  
  
  
  To achieve an earnings recovery, an improvement in nominal GDP in FY17 would be required.

  However, any growth in earnings is likely to remain lower than the FY12 levels given the decade-low nominal GDP growth of 7.4 per cent recorded in 1HFY16, and the expectation of only a marginal improvement in real GDP as well as of softening in commodity prices over the next 12-18 months, the agency says.

  The report expects the EBITDA growth to be slightly ahead of nominal GDP growth in FY17, but a sustained improvement to post global financial crisis period growth levels is likely to take time.
  
  The growth in profits in FY17 to an extent would be driven by increased government deficit (including state and centre), which would need to grow in double digits from the single digit growth of 2.2 per cent in FY15 and mid-single digit expected in FY16, it says.

  However, Ind-Ra's base case suggests that single-digit growth in deficit could result in earnings growth falling below 10 per cent in FY17.

  Gross fixed capital formation (28.7 per cent of nominal GDP in FY15) growth has been 5 per cent -7.5 per cent over FY13-FY15 after growing in double digits over FY04-FY12.

  The ratings agency expects growth in profits to be supported by higher public spending; however, private investments may remain lackluster until FY18-FY19 given the sizeable unutilised capacity and leveraged balance sheets of corporates in India.

  Also the according to the agency, the weakness in exports due to the fall in global commodity prices and currency depreciation would continue to pressure profits. India's exports fell by 0.4 per cent in FY15 and 13.1 per cent year-on-year over April-November 2015.

  "The merchandise exports to post mid-single-digit negative growth for FY16, but a marginal uptick in FY17 driven by the base effect," says the report.

  The rating agency expects investment and commodity prices linked sectors to post muted EBITDA growth in FY17.
  Growth in sectors such as metals and mining (including volumes) and upstream oil and gas sectors would remain muted despite the base effect.
  However, the downstream oil and gas (refining) sector is likely to exhibit positive growth driven by the higher volume offtake of petroleum products and sustained refining margins.

  According to the report, "The top five sectors including auto and automotive suppliers, power (generation, transmission and distribution) and telecom contribute 55-60 per cent to the overall EBITDA of BSE 500 corporates, and any meaningful recovery in overall corporate profits would have to be driven by these sectors."     

WPI inflation rises to (-) 0.73% in Dec on costlier food items

• Deflationary trend eased in December with WPI inflation moving up to (-)0.73 per cent as food articles, mainly vegetables, turned costlier.

  The Wholesale Price Index-based inflation has been rising for the last four months and was (-)1.99 per cent in November.

  In December 2014, it was (-)0.50 per cent. This is the 14th straight month since November 2014 when the wholesale inflation has remained in the negative zone.

  Food inflation, however, shot up to 8.17 per cent in December as against 5.20 per cent in the previous month. Inflation in pulses and onion stood at 55.64 per cent and 25.98 per cent, respectively.

  The rate of price rise in case of vegetables was 20.56 per cent during December and for fruits it was 0.76 per cent.

  The rate of price rise in potato was (-) 34.99 per cent while in egg, meat and fish it was 5.03 per cent.

  Inflation in fuel and power segment was (-) 9.15 per cent and for manufactured products it was (-) 1.36 per cent in December. Inflation for October has been revised to (-) 3.70 per cent from the provisional estimate of (-) 3.81 per cent.

  The Reserve Bank may face pressure to reduce the key lending rate further as industrial production contracted by 3.2 per cent in November, its sharpest decline in four years.

  Governor Raghuram Rajan had on Wednesday said the bank will carefully look into the latest data on industrial production, and come out with a reasoned response.

  Besides IIP, the central bank also looks into retail inflation data while firming up its monetary policy stance. Retail inflation has been rising for five straight months and stood at 5.61 per cent in December. RBI's next bimonthly policy review will be unveiled on February 2. 

Waiting for the Budget

• On January 6, a group of industry captains, including Ajay Piramal, R. Seshasayee, Harshavardhan Neotia and Sunil Kanoria, met Finance Minister Arun Jaitley at North Block to apprise him of industry expectations from the upcoming Budget. While pre-budget meetings with the FM happen every year, industry leaders were never so anxious to put out a list of things that they wanted to see in Budget 2016.

  The macro, consumer and investment indicators have remained subdued for the longest time and the appetite for fresh investments in the private sector has been down for several quarters. The confidence levels have also been dipping with every quarter. This was reflected in the recent Business Today-C fore Business Confidence Survey. "Sharp degree of volatility in the global markets, recent political outcome in local and Bihar elections, and the government's inability to get big-ticket reforms underway may have led to a dip in confidence levels," says Shubhada Rao, Chief Economist of Yes Bank.

  The confidence levels, on a scale of 100, have dipped for the fourth consecutive quarter to 53.2 between October and December, down from 55.4 in the July-September quarter. The dip in sentiments shows that businesses are losing hope in the revival of the Indian economy. The business confidence index has been moving up and down in the past two years. It began to improve during January-March 2014, just before the general elections, and had reached 62.2 in October-December 2014. The survey was launched in the January-to-March quarter of 2011. Market research agency C fore quizzed 500 CEOs and chief financial officers across 12 cities for the survey.

  

  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Besides the broad index which has declined, there were various other parameters that have registered a downswing, including the overall economic situation, the survey noted. In the previous survey, just 18 per cent of respondents had expected the economic situation to deteriorate compared to 35 per cent saying the economic situation will worsen in the January-March 2016 period, this time.

  Similarly, other parameters, such as the overall business situation, cost of external finance, production level, order book and sales pick-up have also fallen. In the case of cost of external finance, the swing is most remarkable. In the previous survey, 66 per cent respondents had expected that the cost of finance will go down in the October-December 2015 period, whereas in the current survey, just 10 per cent foresee cost of finance to improve between January and March.

  The response on cost of finance is surprising given that interest rates in India have come down considerably over the past one year. Last September, the Reserve Bank of India (RBI) had cut the repo rate by 50 basis points to 6.75 per cent, which was a 4.5-year low.

  

  
  

  Respondents were, however, gung-ho about certain other parameters such as profits pick-up and hiring pick-up. In the previous survey, 46 per cent respondents had said that the hiring situation would get worse in the October-December quarter. In comparison, just 27 per cent say that it will get worse in the January-March quarter.

  More respondents are optimistic about private sector investments. For instance, 34 per cent respondents expect the private investment cycle to improve in the last quarter of 2015/16. In the previous survey, only 19 per cent respondents had expected an uptick in private sector investments and industrial activity in the third quarter of 2015/16.

  Surprisingly, most respondents were not hopeful that low commodity prices and public spending will benefit the Indian economy in 2016. In the second week of 2016, Brent crude, the main international benchmark, fell to its 11-year-low of $34.26 per barrel. Some experts point out that public spending has not happened in the rural sector as much as in the urban areas. Also, road projects have seen some traction whereas other infrastructure projects need push from the government.

  As a supplement to the BCI survey, we have carried out an assessment of other indicators of economic growth, which include macro-economic conditions, and consumer and investment data. In the case of macro-economic conditions, the situation has remained largely same on the exports and consumer price inflation front between April and November 2015. The IIP (Index of Industrial Production), on the other hand, showed improvement during the same period. While consumer inflation has grown marginally from 4.9 per cent to 5.4 per cent between April and November last year, IIP showed remarkable improvement - from 3 per cent to 9.8 per cent - during the same period.

  

  
  

  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  FDI inflows have registered a fall between April and September 2015. In April, for instance, FDI inflows stood at Rs 3,605 crore as compared to Rs 2,897 crore in September. Low rural demand is evident from the consumer goods industry growth numbers. In September last year, industry sales grew at around 3.8 per cent, far lower than the June numbers at 7.7 per cent.

  Weak demand conditions are yet to show some improvement. The forthcoming Budget will hopefully provide some direction on how the government wants to spur demand, deliver on pre-election promises and bring the economy back on track.

General Awareness

E-track management system initiated by Railway Ministry

• • To bring efficiency and effectiveness in management practices, Union Railway Minister Suresh Prabhakar Prabhu inaugurated implementation of E-enabled Track Management System (TMS) and Mobile Application of TMS on Indian Railway at Rail Bhawan, New Delhi.

    • Along with these two initiatives, the minister also inaugurated pilot implementation ofTrack Inventory Management System on Northern Railway to track materials inventory, construction and track machines organization in entire 225 units of Northern Railway.

    Features of E-enablement of Track Management System (TMS)

    • Implemented on all the 68 divisions of Indian Railways.
    • With the implementation of this system, various activities of Track Inspection,Monitoring and Maintenance came on IT platform.
    • The first of its kind Organization Wide Asset Management IT Application.
    • Designed for decentralization of data capturing and speedy information dissemination along with centralized data keeping and analysis.
    • It will eliminate more than 100000 manual record keeping registers and make the area of working almost paperless.
    • Alerts in the form of SMS and E-mails to all concerned officials from Junior Engineer to Railway Board.
    • Database and application servers established in CRIS Data Center at Delhi.

    Features of TMS Mobile Application

    • Developed to use the Track Management System on mobiles and tablets.
    • Useful for senior management and officials on the move.
    • Important information and reports like rail fracture analysis, IMR welds, overdue Ultrasonic testing, track machine working reports & Engineering Control’s morning position are included in this application.