Civil Service Bytes

India and US trade concerns and ties Open up services sector, Kant tells US The U.S. must open up its market for services to Indian firms, just as India has liberalised foreign direct investment in many sectors such as railways and defence for the benefit of American firms, Niti Aayog CEO Amitabh Kant said. “India has opened up every sector of the economy in the last two years. While India is becoming more and more open, America must also open its services sector for Indians to go and work there. It can’t be a halfway house,” Mr Kant said,. The Indo-US relationship will only flourish further when there’s reciprocity in market access, Mr Kant said. “India has allowed American companies to come in and flourish otherwise GE would have never got the biggest contract to build locomotives for the Railways. Similarly, America must welcome Indian services and software companies to work there.”

Eight states have issued bonds worth over Rs.98,959.96 crore under UDAY Bonds scheme  in 2015-16, which is  aimed at improving operational and financial efficiency of state power distribution companies . As part of the scheme,  Reserve Bank had issued the special bonds (non-SLR special securities)  on behalf of eight state governments in the last fiscal, according to a Reserve Bank of India statement. The Power Ministry had unveiled UDAY (Ujwal DISCOM Assurance Yojana) on November 20, 2015. The  scheme is expected to help discoms save about Rs. 1.8 lakh crore in the next three years . The cumulative debt of discoms is Rs 4.37 lakh crore. These securities have been issued by the state governments under the Government Securities Act, 2006 and are eligible for market repo , RBI added. UDAY (Ujwal DISCOM Assurance Yojana) for financial turnaround of Power Distribution Companies  Ujwal DISCOM Assurance Yojna or UDAY – new scheme moved b...

7- Seven Mission Mode Activities 1.      Mission 25 Tonne – It aims to increase revenue by augmenting carrying capacity. 2.      Mission Zero Accident: It comprises of two sub missions a.       Elimination of unmanned level crossings: The goal is eliminate all unmanned level crossings on Broad Gauge in the next 3-4 years through innovative financing mechanisms. It will reduce deaths due to accidents and improve throughput of the network b.      TCAS (Train Collision Avoidance System): An indigenous technology has been developed to equip 100% of the High Density Network with TCAS in the next 3 years. This will prevent head on collisions and improve throughput by increasing average sectional speeds. 3.      Mission PACE (Procurement and Consumption Efficiency): This mission aims to improve our procurement and consumption practices to improve the quality of goods and services. It will introduce a culture of optim...

Affirming that the economy is right on track, Finance Minister Arun Jaitley presented the Union Budget for 2016-17. Citing that the CPI inflation has come down to 5.4% from 9 plus, he said it is huge relief for the public. Tax Infrastructure and agriculture cess to be levied. Excise duty raised from 10 to 15 per cent on tobacco products other than beedis 1 per cent service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh. SUVs, Luxury cars to be more expensive. 4% high capacity tax for SUVs. Companies with revenue less than Rs 5 crore to be taxed at 29% plus surcharge Limited tax compliance window from Jun 1 - Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties Excise 1 per cent imposed on articles of jewellery, excluding silver. 0.5 per cent Krishi Kalyan Cess to be levied on all services. Pollution cess of 1 per cent on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars of cer...

It is now clear that the markets were right. They never believed the PSB numbers and thus refused to recapitalise them. Ultimately, the RBI had to force the banks to come clean. Having been lied to for years, it is but natural that investors don’t believe the government’s contention that after fully recognising all asset impairments no significant bank will breach its minimum core capital requirement. Nobody believes that the capital the government has already committed to the PSBs will be enough to get them through the Basel changes, recognise their asset impairments and fulfill their growth needs. If the authorities are so confident of their numbers they should disclose their assumptions. What is the true extent of asset impairment, and based on what stress assumptions? How much is this hidden capital, property etc that the banks have? What are they assuming for loss given default? How much of the restructured and SDR book are they assuming goes bad? What are the commodity price ...

The recent turmoil in the financial markets has not dampened Chinese government’s enthusiasm for building infrastructure projects across Asia. For instance, after international sanctions were removed recently, Chinese President Xi Jinping was the first head of the state to visit Iran, where he promised to build a high-speed train network and termed Iran as a ‘natural partner’ in implementing the One Belt, One Road (OBOR) initiative. The OBOR is an ambitious connectivity project, which seeks to leverage Chinese core-competency in infrastructure-building and also address the problem of domestic industrial overcapacity in sectors such as steel and cement. The OBOR has both continental and maritime components. The maritime route will connect important ports in China, the South China Sea, and the Indian Ocean, with the European ports in the Mediterranean Sea. The continental route will link-up western China with Central Asia and Europe. An arm of the continental route, the China-Pakista...

The reasons for the banking mess are well known. What India is now battling is the inevitable result of a credit binge sponsored by the previous government. Bankers too misread the growth trajectory of the Indian economy after the quick recovery from the effects of the North Atlantic financial crisis. Individual projects got stuck in the regulatory morass during the last years of the second Manmohan Singh government. It is now time to move beyond the game of pinning blame. There is a more immediate concern: what should be done? The first task should be to throw more light on the extent of the problem. Reserve Bank of India (RBI) governor Raghuram Rajan deserves credit for pushing banks to reveal the true state of their loan books. These asset quality reviews come just a few months after regulatory changes that push the promoters of defaulting companies to either bring in fresh equity or lose control of their enterprises. Recent bad loan disclosures by banks have lent credence to t...

India has emerged as one of the five most promising markets for businesses globally, says  the annual global CEO survey of consultancy giant PricewaterhouseCoopers (PwC)  released at the WEF Annual Meeting. The survey pointed out: India offers one of the best opportunities for both domestic as well as global companies. The confidence level among Indian CEOs remains higher than the global average although they have also become less confident since last year about the growth prospects of their own companies. CEOs in India (64 per cent), Spain (54 per cent) and Romania (50 per cent) stand out as more optimistic. CEOs are less optimistic about prospects this year and those who think global growth would improve over the next 12 months have declined to 27 per cent from 37 per cent seen in 2015. 90 per cent of the Indian CEOs cited inadequate basic infrastructure as a major threat and 80 per cent mentioned exchange rate volatility and 77 per cent cited over-regulat...

Recommendations of Deepak Mohanty Committee on Medium-term Path on Financial Inclusion The Reserve Bank of India (RBI) has released the Report on Medium-term Path on Financial Inclusion submitted by 14-member committee headed by RBI Executive Director Deepak Mohanty. RBI had constituted the committee in July 2015 to examine the existing policy regarding financial inclusion and the for m a five-year (medium term) action plan. It was tasked to suggest plan on several components with regard to payments, deposits, credit, social security transfers, pension and insurance. Key recommendations : Cash transfer:  Augment the government social cash transfer in order to increase the personal disposable income of the poor. It would put the economy on a medium-term sustainable inclusion path. Sukanya Shiksha Scheme: Banks should make special efforts to step up account opening for females belonging to lower income group under this scheme for social cash transfer as a welfare me...

The government has decided to scrap a tax on seed funding provided to start-ups by  Indian angel investors   in the upcoming Union Budget, to help domestic financiers bankroll new entrepreneurial ventures under its Start Up India campaign. Finance act 2013 introduced a tax on seed capital provided to startups by domestic angel investors ,thus domestic angel investors are subjected to double taxation. The tax provision in question treats infusion of funds by domestic angel investors as income in the hands of the start-up, making India the only country in the world to penalise local angel investors in such a manner. Tax is one of the key reasons that 90 per cent of Indian start-ups are financed by foreign venture capital and angel funds. This tax applies only to domestic investors. The problem is that tax is levied at the time of investments not at the time of booking profits, so it discourages domestic angel investors who are keen to bet on start-ups as the stoc...

The CBDT   has announced that Rule 114B of Income Tax, relating to quoting of PAN for specified transactions, has been amended effective from 1st Jan., 2016. Why such amendment? To bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value. To enhance limits of specified transactions for mandatory quoting of Permanent Account Number (PAN).  Expected to be useful in widening the tax net by non-intrusive methods.  Expected to help in curbing black money and move towards a cashless economy. The Income Tax Deptt and Govt. collects information of certain types of transactions from third parties in a non-intrusive manner, to curb the circulation of black money and widening of tax base, and hence there is a requirement of quoting of PAN in certain specified transactions of the amount beyond certain limits. What if you don’t have PAN?  Persons who do not h...

Here are 15 thrusts of 2015 that have the potential to significantly impact and influence activities and investments in the infra sector in 2016. *  National Investment and Infrastructure Fund:  The NIIF, proposed in Budget 2015, demonstrates the NDA’s objective of creatively using off-budget resource raising measures. The NIIF is also a relevant vehicle to monetise the goodwill emanating from PM  Narendra Modi ’s successful diplomatic outreach efforts. The Cabinet has cleared an initial equity corpus of R20,000 crore which can be leveraged extensively. It is likely to be set up as a ‘fund of funds’ with three buckets—stressed projects, renewables and general investments—with the government holding a 49% stake in its management company. *  Roads uptick:  The ministry of road transport and highways has instituted a bouquet of practical and remedial measures in 2015 to get the beleaguered roads sector to emerge again as a star in the infrastructure portfolio...