mentorstudypoint.inmentorstudypoint.in/notice/economy current affairs.doc · Web viewHighlights: Budget 2015-16. Here are the highlights of Jaitley's budget for the fiscal year

MENTOR

Highlights: Budget 2015-16

Here are the highlights of Jaitley's budget for the fiscal year that begins on April 1.

Three Key achievements:

* Financial Inclusion - 12.5 crores families financially mainstreamed in 100 days.

* Transparent Coal Block auctions to augment resources of the States.

* Swachh Bharat is not only a programme to improve hygiene and cleanliness but has become a movement to regenerate India.

* Game changing reforms on the anvil: . Goods and Service Tax (GST) . Jan Dhan, Aadhar and Mobile (JAM) - for direct benefit transfer.

STATE OF ECONOMY

Inflation

* Inflation declined - a structural shift * CPI inflation projected at 5% by the end of the year, consequently, easing of monetary policy. * Monetary Policy Framework Agreement with RBI, to keep inflation below 6%. * GDP growth in 2015-16, projected to be between 8 to 8.5%.

Amrut Mahotsav - The year 2022, 75th year of Independence

Vision for "Team India" led by PM

* Housing for all - 2 crore houses in Urban areas and 4 crore houses in Rural areas.

* Basic facility of 24x7 power, clean drinking water, a toilet and road connectivity.

* At least one member has access to means for livelihood.

* Substantial reduction in poverty.

* Electrification of the remaining 20,000 villages including off-grid Solar Power- by 2020.

* Connecting each of the 1,78,000 un-connected habitation.

* Providing medical services in each village and city.

* Ensure a Senior Secondary School within 5 km reach of every child, while improving quality of education and learning outcomes.

* To strengthen rural economy - increase irrigated area, improve the efficiency of existing irrigation systems, and ensure value addition and reasonable price for farm produce.

* Ensure communication connectivity to all villages.

To make India, the manufacturing hub of the World through Skill India and the Make in India Programmes.

* Encourage and grow the spirit of entrepreneurship - to turn youth into job creators.

MENTOR. SCO 40-41, FIRST FLOOR, LEELA BHAWAN, PATIALA. 9780505391.

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* Development of Eastern and North Eastern regions on par with the rest of the country.

Major Challenges Ahead

* Five major challenges: Agricultural income under stress, increasing investment in infrastructure, decline in manufacturing, resource crunch in view of higher devolution in taxes to states, maintaining fiscal discipline.

* To meet these challenges public sector needs to step in to catalyse investment, make in india programme to create jobs in manufacturing, continue support to programmes with important national priorities such as agriculture, education, health, MGNREGA, rural infrastructure including roads.

* Challenge of maintaining fiscal deficit of 4.1% of GDP met in 2014-15, despite lower nominal GDP growth due to lower inflation and consequent sub-dued tax buoyancy.

Fiscal Roadmap

* Government firm on journey to achieve fiscal target of 3% of GDP.

* Realistic figures shown in fiscal account without showing exaggerated revenue projections.

With improved economy, pressure to accelerate fiscal consolidation too has decreased.

* Accordingly, journey for fiscal deficit target of 3% will be achieved in 3 years rather than 2 years. The fiscal deficit targets are 3.9%, 3.5% and 3.0% in FY 2015-16, 2016-17 & 2017-18 respectively.

* Additional fiscal space will go to funding infrastructure investment.

* Need to view public finances from a National perspective and not just the perspective of the Central Government. Aggregate public expenditure of the Governments, as a whole can be expected to rise substantially.

* Disinvestment to include both disinvestment in loss making units, and some strategic disinvestment.

Good governance

* Need to cut subsidy leakages, not subsidies themselves. To achieve this, Government committed to the process of rationalizing subsidies.

* Direct Transfer of Benefits to be extended further with a view to increase the number of beneficiaries from 1 crore to 10.3 crore.

Agriculture

* Major steps take to address the two major factors critical to agricultural production, that of soil and water.

* 'Paramparagat Krishi Vikas Yojana' to be fully supported.

* 'Pradhanmantri Gram Sinchai Yojana' to provide 'Per Drop More Crop'.


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* Rs 5,300 crore to support micro-irrigation, watershed development and the 'Pradhan Mantri Krishi Sinchai Yojana'. States urged to chip in.

* Rs 25,000 crore in 2015-16 to the corpus of Rural Infrastructure Development Fund (RIDF) set up in NABARD; Rs 15,000 crore for Long Term Rural Credit Fund; Rs 45,000 crore for Short Term Co-operative Rural Credit Refinance Fund; and Rs 15,000 crore for Short Term RRB Refinance Fund.

* Target of Rs 8.5 lakh crore of agricultural credit during the year 2015-16.

* Focus on improving the quality and effectiveness of activities under MGNREGA.

* Need to create a National Agriculture Market for the benefit farmers, which will also have the incidental benefit of moderating price rises. Government to work with the States, in NITI, for the creation of a Unified National Agriculture Market.

Funding the Unfunded

* Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs 20,000 crores, and credit guarantee corpus of Rs 3,000 crores to be created.

* In lending, priority will be given to SC/ST enterprises.

MUDRA Bank will be responsible for refinancing all Micro-finance Institutions which are in the business of lending to such small entities of business through a Pradhan Mantri Mudra Yojana.

* A Trade Receivables discounting System (TReDS) which will be an electronic platform for facilitating financing of trade receivables of MSMEs to be established.

* Comprehensive Bankruptcy Code of global standards to be brought in fiscal 2015-16 towards ease of doing business.

* Postal network with 1,54,000 points of presence spread across villages to be used for increasing access of the people to the formal financial system.

* NBFCs registered with RBI and having asset size of Rs 500 crore and above may be considered for notifications as 'Financial Institution' in terms of the SARFAESI Act, 2002.

From Jan Dhan to Jan Suraksha

* Government to work towards creating a functional social security system for all Indians, specially the poor and the under-privileged.

* Pradhan Mantri Suraksha Bima Yojna to cover accidental death risk of Rs 2 Lakh for a premium of just Rs 12 per year.

* Atal Pension Yojana to provide a defined pension, depending on the contribution and the period of contribution. Government to contribute 50% of the beneficiaries' premium limited to Rs 1,000 each year, for five years, in the new accounts opened before 31st December 2015.

* Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk of Rs 2 lakh at premium of Rs 330 per year for the age group of 18-50.


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* A new scheme for providing Physical Aids and Assisted Living Devices for senior citizens, living below the poeverty line.

* Unclaimed deposits of about Rs 3,000 crores in the PPF, and approximately Rs 6,000 crores in the EPF corpus. The amounts to be appropriated to a corpus, which will be used to subsidize the premiums on these social security schemes through creation of a Senior Citizen Welfare Fund in the Finance Bill.

* Government committed to the on-going schemes for welfare of SCs, STs and Women.

Infrastructure

* Sharp increase in outlays of roads and railways. Capital expenditure of public sector units to also go up.

* National Investment and Infrastructure Fund (NIIF), to be established with an annual flow of Rs 20,000 crores to it.

* Tax free infrastructure bonds for the projects in the rail, road and irrigation sectors.

* PPP mode of infrastructure development to be revisited and revitalised.

* Atal Innovation Mission (AIM) to be established in NITI to provide Innovation Promotion Platform involving academicians, and drawing upon national and international experiences to foster a culture of innovation, research and development. A sum of Rs 150 crore will be earmarked.

* Concerns of IT industries for a more liberal system of raising global capital, incubation facilities in our Centres of Excellence, funding for seed capital and growth, and ease of Doing Business etc. would be addressed for creating hundreds of billion dollars in value.

* (SETU) Self-Employment and Talent Utilization) to be established as Techno-financial, incubation and facilitation programme to support all aspects of start-up business. Rs 1000 crore to be set aside as initial amount in NITI.

* Ports in public sector will be encouraged, to corporatize, and become companies under the Companies Act to attract investment and leverage the huge land resources.

* An expert committee to examine the possibility and prepare a draft legislation where the need for multiple prior permission can be replaced by a pre-existing regulatory mechanism. This will facilitate India becoming an investment destination.

* 5 new Ultra Mega Power Projects, each of 4000 MW, in the Plug-and-Play mode.

Financial Market

* Public Debt Management Agency (PDMA) bringing both external and domestic borrowings under one roof to be set up this year.

* Enabling legislation, amending the Government Securities Act and the RBI Act included in the Finance Bill, 2015.

* Forward Markets commission to be merged with SEBI.


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* Section-6 of FEMA to be amended through Finance Bill to provide control on capital flows as equity will be exercised by Government in consultation with RBI.

* Proposal to create a Task Force to establish sector-neutral financial redressal agency that will address grievance against all financial service providers.

* India Financial Code to be introduced soon in Parliament for consideration.

* Vision of putting in place a direct tax regime, which is internationally competitive on rates, without exemptions.

* Government to bring enabling legislation to allow employee to opt for EPF or New Pension Scheme. For employee's below a certain threshold of monthly income, contribution to EPF to be option, without affecting employees' contribution.

Monetising Gold

* Gold monetisation scheme to allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account to be introduced.

* Sovereign Gold Bond, as an alternative to purchasing metal gold scheme to be developed.

* Commence work on developing an Indian gold coin, which will carry the Ashok Chakra on its face.

Investment

* Foreign investments in Alternate Investment Funds to be allowed.

* Distinction between different types of foreign investments, especially between foreign portfolio investments and foreign direct investments to be done away with. Replacement with composite caps.

* A project development company to facilitate setting up manufacturing hubs in CMLV countries, namely, Cambodia, Myanmar, Laos and Vietnam.

Safe India

* Rs 1000 crores to the Nirbhaya Fund

Tourism

* Resources to be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently abled , visitors' amenities, including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites.

* Visas on arrival to be increased to 150 countries in stages.

Green India


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* Target of renewable energy capacity revised to 175000 MW till 2022, comprising 100000 MW Solar, 60000 MW Wind, 10000 MW Biomass and 5000 MW Small Hydro.

* A need for procurement law to contain malfeasance in public procurement.

* Proposal to introduce a public Contracts (resolution of disputes) Bill to streamline the institutional arrangements for resolution of such disputes.

* Proposal to introduce a regulatory reform Bill that will bring about a cogency of approach across various sectors of infrastructure.

Skill India

* Less than 5% of our potential work force gets formal skill training to be employable. A national skill mission to consolidate skill initiatives spread accross several ministries to be launched.

* Deen Dayal Upadhyay Gramin Kaushal Yojana to enhance the employability of rural youth.

* A Committee for 100th birth celebration of Shri Deen Dayalji Upadhyay to be announced soon.

* A student Financial Aid Authority to administer and monitor the front-end all scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya Lakshmi Karyakram.

* An IIT to be set up in Karnataka and Indian School of Mines, Dhanbad to be upgraded in to a full-fledged IIT.

* New All India Institute of Medical Science (AIIMS) to be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam. Another AIIMS like institutions to be set up in Bihar.

* A post graduate institute of Horticulture Research & Education is to be set up in Amritsar.

* 3 new National Institute of Pharmaceuticals Education and Research in Maharashtra, Rajasthan & Chattisgarh and one institute of Science and Education Research is to be set up in Nagaland & Orissa each.

* An autonomous Bank Board Bureau to be set up to improve the governance of public sector bank.

* The National Optical Fibre Network Programme (NOFNP) to be further speeded up by allowing willing states to execute on reimbursement of cost basis.

* Special assistance to Bihar & West Bengal to be provided as in the case of Andhra Pradesh.

* Government is committed to comply with all the legal commitments made to AP & Telengana at the time of their re-organisation.

* Inspite of large increase in devolution to state sufficient fund allocated to education, health, rural development, housing, urban development, women and child development, water resources & cleaning of Ganga.

* Part of Delhi-Mumbai Industrial Corridor (DMIC); Ahmedabad-Dhaulera Investment region and Shendra-Bidkin Industrial Park are now in a position to start work on basic infrastructure.


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* Made in India and the Buy and the make in India policy are being carefully pursued to achieve greater self-sufficiency in the area of defence equipment including air-craft.

* The first phase of GIFT to become a reality very soon. Appropriate regulations to be issued in March.

BUDGET ESTIMATES

* Non-Plan expenditure estimates for the Financial Year are estimated at Rs 13,12,200 crore.

* Plan expenditure is estimated to be Rs 4,65,277 crore, which is very near to the R.E. of 2014-15.

* Total Expenditure has accordingly been estimated at Rs 17,77,477 crore.

* The requirements for expenditure on Defence, Internal Security and other necessary expenditures are adequately provided.

* Gross Tax receipts are estimated to be Rs 14,49,490 crore.

* Devolution to the States is estimated to be Rs 5,23,958.

* Share of Central Government will be Rs 9,19,842.

* Non Tax Revenues for the next fiscal are estimated to be Rs 2,21,733 crore.

* Fiscal deficit will be 3.9 per cent of GDP and Revenue Deficit will be 2.8 per cent of GDP.

TAX PROPOSAL

* Objective of stable taxation policy and a non-adversarial tax administration.

* Fight against the scourge of black money to be taken forward.

* Efforts on various fronts to implement GST from next year.

* No change in rate of personal income tax.

* Proposal to reduce corporate tax from 30% to 25% over the next four years, starting from next financial year.

* Rationalisation and removal of various tax exemptions and incentives to reduce tax disputes and improve administration.

* Exemption to individual tax payers to continue to facilitate savings.

Broad themes:

. Measures to curb black money; . Job creation through revival of growth and investment and promotion of domestic manufacturing, Make in India; . Improve ease of doing business - Minimum Government and maximum governance; . Improve quality of life and public health, Swachh Bharat; . Benefit to middle class tax-payers; and . Stand alone proposals to maximise benefit to the economy.


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Black Money

* Generation of black money and its concealment to be dealt with effectively and forcefully.

* Investigation into cases of undisclosed foreign assets has been given highest priority in the last nine months.

* Major breakthrough with Swiss authorities, who have agreed to:

. Provide information in respect of cases independently investigated by IT department; . Confirm genuineness of bank accounts and provide non-banking information; . Provide such information in time-bound manner; and . Commence talks for automatic exchange of information.

* New structure of electronic filing of statements by reporting entities to ensure seamless integration of data for more effective enforcement. * Bill for a comprehensive new law to deal with black money parked abroad to be introduced in the current session.

Key features of new law on black money:

. Evasion of tax in relation to foreign assets to have a punishment of rigorous imprisonment upto 10 years, be non-compoundable, have a penalty rate of 300% and the offender will not be permitted to approach the Settlement Commission.

. Non-filing of return/filing of return with inadequate disclosures to have a punishment of rigorous imprisonment upto 7 years.

. Undisclosed income from any foreign assets to be taxable at the maximum marginal rate.

. Mandatory filing of return in respect of foreign asset.

. Entities, banks, financial institutions including individuals all liable for prosecution and penalty.

. Concealment of income/evasion of income in relation to a foreign asset to be made a predicate offence under PML Act, 2002.

. PML Act, 2002 and FEMA to be amended to enable administration of new Act on black money.

* Benami Transactions (Prohibition) Bill to curb domestic black money to be introduced in the current session of Parliament.

* Acceptance or re-payment of an advance of Rs 20,000 or more in cash for purchase of immovable property to be prohibited.

* PAN being made mandatory for any purchase or sale exceeding Rupees 1 lakh.

* Third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions.

* Provision to tackle splitting of reportable transactions.

* Leverage of technology by CBDT and CBEC to access information from either's data bases.


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Make in India

* Revival of growth and investment and promotion of domestic manufacturing for job creation.

* Tax "pass through" to be allowed to both category I and category II alternative investment funds.

* Rationalisation of capital gains regime for the sponsors exiting at the time of listing of the units of REITs and InvITs.

* Rental income of REITs from their own assets to have pass through facility.

* Permanent Establishment (PE) norm to be modified to encourage fund managers to relocate to India.

* General Anti Avoidance Rule (GAAR) to be deferred by two years.

* GAAR to apply to investments made on or after 01.04.2017, when implemented.

* Additional investment allowance (@ 15%) and additional depreciation (@35%) to new manufacturing units set up during the period 01-04-2015 to 31-03-2020 in notified backward areas of Andhra Pradesh and Telangana.

* Rate of Income-tax on royalty and fees for technical services reduced from 25% to 10% to facilitate technology inflow.

* Benefit of deduction for employment of new regular workmen to all business entities and eligibility threshold reduced.

* Basic Custom duty on certain inputs, raw materials, inter mediates and components in 22 items, reduced to minimise the impact of duty inversion.

* All goods, except populated printed circuit boards for use in manufacture of ITA bound items, exempted from SAD.

* SAD reduced on import of certain inputs and raw materials.

* Excise duty on chassis for ambulance reduced from 24% to 12.5%.

*Balance of 50% of additional depreciation @ 20% for new plant and machinery installed and used for less than six months by a manufacturing unit or a unit engaged in generation and distribution of power is to be allowed immediately in the next year.

* Ease of doing business - Minimum Government Maximum Governance

* Simplification of tax procedures.

* Monetary limit for a case to be heard by a single member bench of ITAT increase from Rs 5 lakh to Rs 15 lakh.

* Penalty provision in indirect taxes are being rationalised to encourage compliance and early dispute resolution.

* Central excise/Service tax assesses to be allowed to use digitally signed invoices and maintain record electronically


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* Wealth-tax replaced with additional surcharge of 2 per cent on super rich with a taxable income of over Rs 1 crore annually.

* Provision of indirect transfers in the Income-tax Act suitably cleaned up.

* Applicability of indirect transfer provisions to dividends paid by foreign companies to their shareholders to be addressed through a clarificatory circular. * Domestic transfer pricing threshold limit increased from Rs 5 crore to Rs 20 crore.

* MAT rationalised for FIIs and members of an AOP.

* Tax Administration Reform Commission (TARC) recommendations to be appropriately implemented during the course of the year.

* Education cess and the Secondary and Higher education cess to be subsumed in Central Excise Duty.

* Specific rates of central excise duty in case of certain other commodities revised.

* Excise levy on cigarettes and the compounded levy scheme applicable to pan masala, gutkha and other tobacco products also changed.

Excise duty on footwear with leather uppers and having retail price of more than Rs 1000 per pair reduced to 6%.

* Online central excise and service tax registration to be done in two working days.

* Time limit for taking CENVAT credit on inputs and input services increased from 6 months to 1 year.

* Service-tax plus education cesses increased from 12.36% to 14% to facilitate transition to GST.

* Donation made to National Fund for Control of Drug Abuse (NFCDA) to be eligible for 100% deduction u/s 80G of Income-tax Act.

* Seized cash can be adjusted towards assessees tax liability.

Swachh Bharat

* 100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund.

* Clean energy cess increased from Rs 100 to Rs 200 per metric tonne of coal, etc. to finance clean environment initiatives.

* Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12% to 15%.

* Enabling provision to levy Swachh Bharat cess at a rate of 2% or less on all or certain services, if need arises.

* Services by common affluent treatment plant exempt from Service-tax.

* Concessions on custom and excise duty available to electrically operated vehicles and hybrid vehicles extended upto 31.03.2016.


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Benefits to middle class tax-payers

* Limit of deduction of health insurance premium increased from Rs 15000 to Rs 25000, for senior citizens limit increased from Rs 20000 to Rs 30000.

* Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of Rs 30000 towards medical expenditures.

* Deduction limit of Rs 60000 with respect to specified decease of serious nature enhanced to Rs 80000 in case of senior citizen.

* Additional deduction of Rs 25000 allowed for differently abled persons.

* Limit on deduction on account of contribution to a pension fund and the new pension scheme increased from Rs 1 lakh to Rs 1.5 lakh.

* Additional deduction of Rs 50000 for contribution to the new pension scheme u/s 80CCD.

* Payments to the beneficiaries including interest payment on deposit in Sukanya Samriddhi scheme to be fully exempt.

* Service-tax exemption on Varishtha Bima Yojana.

* Concession to individual tax-payers despite inadequate fiscal space.

* Lot to look forward to as fiscal capacity improves.

* Conversion of existing excise duty on petrol and diesel to the extent of Rs 4 per litre into Road Cess to fund investment.

* Service Tax exemption extended to certain pre cold storage services in relation to fruits and vegetables so as to incentivise value addition in crucial sector.

* Negative List under service-tax is being slightly pruned to widen the tax base.

* Yoga to be included within the ambit of charitable purpose under Section 2(15) of the Income-tax Act.

* To mitigate the problem being faced by many genuine charitable institutions, it is proposed to modify the ceiling on receipts from activities in the nature of trade, commerce or business to 20% of the total receipts from the existing ceiling of Rs 25 lakh.

* Most provisions of Direct Taxes Code have already been included in the Income-tax Act, therefore, no great merit in going ahead with the Direct Taxes Code as it exists today.

* Direct tax proposals to result in revenue loss of Rs 8315 crore, whereas the proposals in indirect taxes are expected to yield Rs 23383 crore. Thus, the net impact of all tax proposals would be revenue gain of Rs 15068 crore.

Others

* Increase in basic custom duty:


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. Metallergical coke from 2.5 % to 5%. . Tariff rate on iron and steel and articles of iron and steel increased from 10% to 15%. . Tariff rate on commercial vehicle increased from 10 % to 40%.

* Basic custom duty on digital still image video camera with certain specification reduced to nil.

* Excise duty on rails for manufacture of railway or tram way track construction material exempted retrospectively from 17-03-2012 to 02-02-2014, if not CENVAT credit of duty paid on such rails is availed.

* Service-tax to be levied on service provided by way of access to amusement facility, entertainment events or concerts, pageants, non recoganised sporting events etc.

Service-tax exemption:

. Services of pre-conditioning, pre-cooling, ripening etc. of fruits and vegetables. . Life insurance service provided by way of Varishtha Pension Bima Yojana. . All ambulance services provided to patients. . Admission to museum, zoo, national park, wile life sanctuary and tiger reserve. . Transport of goods for export by road from factory to land customs station.

* Enabling provision made to exclude all services provided by the Government or local authority to a business entity from the negative list. * Service-tax exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port withdrawn.

* Transportation of agricultural produce to remain exempt from Service-tax.

* Artificial heart exempt from basic custom duty of 5% and CVD.

* Excise duty exemption for captively consumed intermediate compound coming into existance during the manufacture of agarbathi.

RBI issued Draft Framework on Issuance of Rupee linked Bonds Overseas

The Reserve Bank of India (RBI) on 9 June 2015 issued Draft Framework on Issuance of Rupee linked

Bonds Overseas. It is intended to permit Indian corporate and International Financial Institutions (IFIs) to

issue rupee-linked bonds overseas.

Key Features

• Indian corporates eligible to raise external commercial borrowings (ECBs) are permitted to issue Rupee

linked bonds overseas.

• The corporates which, at present, are permitted to access ECB under the approval route will require prior

permission of the RBI to issue such bonds and those coming under the automatic route can do so without

prior permission.

• The bonds may be floated in any jurisdiction that is Financial Action Task Force (FATF) compliant.• The subscription, coupon payments and redemption may be settled in foreign currency. The proceeds of

the bonds can be parked as per the extant provisions on parking of ECB proceeds.

• Banks incorporated in India will not have access to these bonds in any manner whatsoever.


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• International Financial Institutions, of which India is a shareholding member intending to deploy the

entire proceeds of the issuance in India, would not be requiring any prior permission for the issuance of

rupee bonds overseas irrespective of amount of issuance.

• In other cases, where an International Financial Institution (of which India is a member) wishes to retain

the freedom to deploy the issue proceeds in any member country would require prior permission from the

Reserve Bank / Union Government.

• For dollar-Indian rupee conversion, the Reserve Bank's reference rate on date of issue would be

applicable.

RBI announced Strategic Debt Restructuring Scheme

The Reserve Bank of India (RBI) on 8 June 2015 announced Strategic Debt Restructuring (SDR) Scheme which allows banks and non-banking lending institutions to convert their loans into equity stake.

The scheme will benefit all Scheduled Commercial Banks, excluding Regional Rural Banks (RRBs), all-India term-lending and Refinancing Institutions including Export-Import (EXIM) Bank and National Housing Bank (NHB) and National Bank for Agriculture and Rural Development (NABARD).

Key Features of Strategic Debt Restructuring (SDR) Scheme

• Lenders will have the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package.

• Lenders must stipulate in the debt restructuring deal itself that if the borrower fails to meet certain milestones in terms of performance, they would have the option to convert part or whole of the debt into equity.

• A decision on invoking the SDR should be taken within 30 days after a review of the account of borrowers. It should be approved by 75 percent of the creditors by value and 60 percent of creditors by number.

• The lenders must approve the SDR conversion package within 90 days after taking such a decision.

• Post conversion, all lenders should together own 51 percent or more of the company's equity.

• A joint lenders forum (JLF) should closely monitor a company's performance and appoint a suitable professional management.

• Lenders should divest equity holdings of the company to new promoters as soon as possible.

• New promoter should not be a person/entity/subsidiary/associate, etc (domestic as well as overseas), from the existing promoter/promoter group.

• The new promoter has to acquire the entire 51 percent. However, if foreign investment is limited to less than 51 percent, the new promoter should own at least 26 percent of the paid-up equity capital or up to the applicable foreign investment limit.

• On divestment of banks' holding in favour of a new promoter, the asset classification of the account may be upgraded to standard.


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• The formula for conversion of debt into equity will be different from existing norms laid down by the Securities & Exchange Board of India (SEBI) for banks.

• The price of debt to equity conversion will be capped either at the market value of the borrowing company (if it is listed) or the book value as per the latest balance sheet (for unlisted firms). Share conversion cannot happen at below par that is less than the face value of 10 rupees.

• Conversion of debt into equity will also be exempted from regulatory ceilings on capital market exposures, investment in para-banking activities and intra-group exposure.

Comment

RBI announced the scheme against the backdrop of huge surge in bad loans or Non Performing Assets (NPAs) in the banking system. As per an estimate, the Gross NPAs may rise to 5.9 percent of total advances during 2015-16 against 4.4 percent during 2014-15.

NPAs are those assets, where Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan.

IREDA awarded Miniratna (Category-1) status by Department of Public Enterprises

Indian Renewable Energy Development Agency Limited (IREDA) was on 2 June 2015 awarded the Miniratna (Cateogry -1) status by the Department of Public Enterprises under the Union Ministry of Heavy Industry and Public Enterprises.

The proposal for conferring Miniratna status for IREDA was recommended by the Union Ministry of New and Renewable Energy (MNRE).

Grant of status allows IREDA to make capital expenditure on new projects, modernization, purchase of equipment, etc. without Government approval up to 500 crores rupees, or equal to their net worth, whichever is lower.

For IREDA, now the ceiling on equity investment to establish joint ventures and subsidiaries in India will be 15% of its net worth in one project limited to 500 crore rupees. The overall ceiling on such investment in all projects put together shall be 30% of the net worth IREDA.

The Scheme of Maharatna/Navratna/Miniratna

The scheme of awarding Navratna, Miniratna (Category-1 and 2) status to public sector undertakings (PSUs) was started by the Union Government vide a notification dated 22 July 1997 so as to grant greater autonomy to PSUs to become global giants.

Later on 4 February 2010, the scheme of Maharatna for PSUs was started.

At present, there are 55 Public Limited Companies in Mini Ratna (Cateogry -1) and 17 are in Mini Ratna (Cateogry-2). Besides, there are 7 Maharatna Companies and 17 Navratnas companies.

Eligibility for Miniratna Category-I PSEs

They should have made profit in the last three years continuously, the pre-tax profit should have been 30 crores rupees or more in at least one of the three years and should have a positive net worth.


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About IREDA

IREDA was established as Public Limited Government Company in 1987 to promote, develop and extend financial assistance for renewable energy and energy efficiency /conservation projects with the Motto Energy for Ever.

It was created as Non-Banking Financial Institution (NBFI) in Schedule C of the Reserve Bank of India (RBI) and was upgraded as Schedule B in 2010.

The Chairman and Managing Director (CMD) of IREDA is KS Popli.

RBI permitted cross holding in infrastructure bonds

The Reserve Bank of India (RBI) on 1 June 2015 allowed cross holding in long-term infrastructure bonds. With this, now banks would be able to cross hold these bonds among themselves for financing infrastructure and affordable housing loans, which earlier was not permitted.

The move was taken amidst the concerns that such prohibition on cross-holding was inhibiting the liquidity and tradability of these bonds, as banks are the major participants in the debt market.

However, to preserve the primary objective of allowing regulatory exemptions on CRR and SLR requirements as well as priority sector lending and to prevent double counting of regulatory exemptions allowed, such investments will be subject to following conditions:

• Banks’ investment in such bonds will not be treated as assets with the banking system in India for the purpose of calculation of Net Demand and Time Liability (NDTL).

• Such investments will not be held under Held to Maturity (HTM) category.

• An investing bank’s investment in a specific issue of such bonds will be capped at 2 percent of the investing bank’s Tier 1 Capital or at 5 percent of the issue size, whichever is lower.

• An investing bank’s aggregate holding in such bonds will be capped at 10 percent of its total Non-SLR investments.

• Not more than 20 percent of the primary issue size of such bond issuance can be allotted to banks.

• Banks cannot hold their own bonds.

• RBI’s relevant extant prudential norms will be applicable on such issuances and investments.

All other terms and conditions as mentioned in circulars dated 15 July 2014 and 27 November 2014 will remain unchanged.

Background

RBI in its circular dated 15 July 2014 allowed banks to issue long term bonds for their financing of infrastructure and affordable housing loans. However, banks were not permitted to cross-hold such bonds among themselves.


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Moreover, in order to provide liquidity to retail investors in such bonds, RBI in its circular dated 27 November 2014 also allowed banks to extend loans to individuals against such long-term bonds issued by them.

Finance Minister inaugurated new Bank Note Paper Line unit in Hoshangabad, MP

Union Finance Minister Arun Jaitley on 30 May 2015 inaugurated the new Bank Note Paper Line unit of 6000 metric tonne capacity at Security Paper Mill in Hoshangabad, Madhya Pradesh.

With opening of this, India will become self-reliant in producing Bank Note Paper for big denominations. Earlier, India was considerably dependent on import of bank note paper for currency of big denominations.

He also flagged off the first consignment of one thousand rupees bank note paper made indigenously to Currency Note Press Nashik.

It is part of the indigenisation of the Bank Note paper under taken by Security Printing and Minting Corporation of India Limited. The project has been completed at a cost of 495 crore rupees within the time schedule.

The plant is capable of incorporating the advanced security features into the Bank Note paper. It is also capable of manufacturing all denominations of Bank Note paper including 1000 rupees.

It is expected that the plant will help in generating both direct and indirect employment and overall will boost the economy of the state.

Another such unit will be soon operationalised in Mysore.

RBI released Draft Guidelines on Net Stable Funding Ratio for Banks

The Reserve Bank of India on 28 May 2015 released the Draft Guidelines on Net Stable Funding Ratio (NSFR) under Basel III Framework on Liquidity Standards for banks.

The Reserve Bank proposed to make NSFR applicable to all banks in India from 1 January 2018. The objective of NSFR is to ensure that banks maintain a stable funding profile in relation to their assets and off-balance sheet activities.

A sustainable funding structure can reduce the probability of erosion of a bank’s liquidity position due to disruptions in its regular sources of funding that would increase the risk of its failure and potentially lead to broader systemic stress.

The NSFR limits overreliance on short-term wholesale funding, encourages better assessment of funding risk across all on-off balance sheet items and promotes funding stability.

What is NSFR?

Net Stable Funding Ratio (NSFR) is defined as the amount of available stable funding relative to the amount of required stable funding.


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It measures the amount of longer-term, stable sources of funding employed by an institution relative to the liquidity profiles of the assets funded and the potential for contingent calls on funding liquidity arising from off-balance sheet commitments and obligations.

In particular, the NSFR standard is structured to ensure that investment banking inventories, off-balance sheet exposures, securitisation pipelines.

Background

In the backdrop of the global financial crisis that started in 2007, the Basel Committee on Banking Supervision (BCBS) proposed certain reforms to strengthen global capital and liquidity regulations with the objective of promoting a more resilient banking sector.

In this regard, the Basel III: International framework for liquidity risk measurement, standards and monitoring was issued in December 2010 which presented the details of global regulatory standards on liquidity. The Basel Committee on Banking Supervision issued the final rules on the Net Stable Funding Ratio (NSFR) in October 2014.

Two minimum standards- Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for funding liquidity were prescribed by the Basel Committee for achieving two separate but complementary objectives.

The RBI has already started phasing in implementation of the Liquidity Coverage Ratio (LCR) from January 2015.

RBI proposed to introduce PPI for Mass Transit Systems

The Reserve Bank of India on 28 May 2015 proposed to introduce Prepaid Payment Instruments (PPI) for Mass Transit System (PPI-MTS).

These PPI-MTS will be semi-closed instruments that will be used facilitate the migration to electronic payments in line with the country’s vision of moving to a less-cash society.

Further, it can also be used within the mass transit systems and will have a minimum validity of six months from date of issue. Such PPIs will be reloadable instruments subjected to an outstanding limit of 2000 rupees at any point of time.

Main features of Prepaid Payment Instruments (PPIs)

• The semi-closed PPIs will be issued by the mass transit system operator (PPI- MTS) who will be authorised under the Payment and Settlement Systems Act, 2007.

• The PPI- MTS will necessarily contain the Automated Fare Collection application related to the transit service.

• Such PPI-MTS can be used by other merchants whose activities are allied to or are carried on within the premises of the transit system only.

• The PPI- MTS issuer will ensure on-boarding of merchants following due procedure applicable to any other PPI issuer.

• The PPI-MTS will have minimum validity of six months from the date of issue.


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• The issuer may decide upon the desired level of Know Your Customer (KYC), if any, for such PPIs.

• No cash-out or refund will be permitted from these PPIs.

• Funds transfer under Domestic Money Transfer (DMT) will also not be applicable to these PPIs.

The RBI proposed to introduce PPIs after it received requests from various segments, including providers of mass transit services and road transport services, indicating the need for PPIs catering to the requirements of this segment to enhance commuter convenience.

NCDEX launched Gold Now platform for forward contracts in gold

The National Commodity & Derivatives Exchange Limited (NCDEX) on 27 May 2015 launched Gold Now platform to undertake forward trading in gold.

Features of Gold Now

• It is an India-centric gold forward contracts platform and involves selling and buying of locally-refined gold.

• The maximum duration of the contract is for 60 calendar days and delivery is compulsory.

• Delivery unit of the contract is 100 grams and 1 kilogram.

• The contract will have six delivery centres viz., Delhi, Mumbai, Ahmedabad, Hyderabad, Cochin and Chennai.

• The NCDEX have tied up with four gold refiners’ viz., MMTC-PAMP, Kundan Group, Shirpur Gold Refinery and Edelweiss for the delivery of the contracts.

• The NCDEX is also planning to set up purity verification centres in partnership with the NCDEX approved refineries.

Importance of Gold Now

Approximately 20000 metric tonnes of gold is estimated to be lying with Indian households, temples and trusts. If mobilized effectively, this could create a domestic supply of gold, while reducing dependence on imports.

The Gold Now platform is intended to complement the Gold Monetization Scheme (GMS) as proposed by the Union Finance Ministry in the draft outline released on 19 May 2015.

Under the scheme banks were allowed to mobilize unutilized gold from customers and buy and sell them on domestic exchanges.

What is a forward contract?

A forward contract is a contract between two parties to buy or sell an asset or commodity at a specified future time at a price agreed upon on the day of the contract. This is in contrast to a spot contract wherein, buying or selling takes place on the spot date, which is normally two business days after the day of the contract.


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Union Cabinet approved revised FDI norms for NRIs, PIOs and OCIs

The Union Cabinet on 21 May 2015 gave its nod for changes in the Foreign Direct Investment (FDI) policy on

investments by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India

(OCIs).

The amendments to the FDI policy are

• The definition of Non-Resident Indian (NRI) was expanded by including OCI cardholders as well as PIO

cardholders. The decision is meant to align the FDI policy with the stated policy of the Government to provide

PIOs and OCIs parity with Non Resident Indians (NRIs) in respect of economic, financial and educational fields.

• Investment made by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident

outside India) Regulations, 2000 will be deemed to be domestic investment at par with the investment made by

residents. The decision is meant to provide clarity in the FDI policy as such investment is not included in the

category of foreign investment.

The above decisions of the cabinet coupled with its earlier decisions allowing FDI up to 100 percent in the

Railway infrastructure sector and up to 49 per cent in the insurance and defence sectors are expected to result

in increased investments and remittances leading to economic growth of the country.

Union Ministry of Finance released draft outline of Gold Monetization Scheme (GMS)

The Union Ministry of Finance on 19 May 2015 released the draft outline of Gold Monetization Scheme

(GMS).

The Ministry prepared the draft after due deliberations and consultations with various stakeholders which

includes banks, refineries, hallmarking centres, jewellers’ associations, Reserve Bank of India (RBI) and

various government departments.

The Ministry has sought comments from stakeholders by 2 June 2015.

Features of Gold Monetization Scheme (GMS)

Objectives

• To mobilize the gold held by households and institutions in the country.

• To provide a fillip to the gems and jewellery sector in the country by making gold available as raw material

on loan from banks.

• To reduce reliance on import of gold to meet the domestic demand.


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Scope

Since the implementation of the scheme requires a vast set-up of infrastructure for facilitating easy and secure

handling of gold, it will be initially launched only in selected cities and over time, as the infrastructure for

assaying and refining of gold develops, will be extended to other cities.

Process of Gold Monetization by customers/Gold Mobilisation by Banks

Stage1: Customer willing to monetize gold, which is in the form of bullion or jewellary, will approach Purity

Testing Centre (PTC). In a PTC, a preliminary XRF machine-test (Preliminary Test) will be conducted to

assess the approximate amount of pure gold.

The minimum quantity of gold that a customer can bring is proposed to be set at 30 grams and around 350

Hallmarking Centres that are certified by the Bureau of Indian Standards (BIS) will act as PTCs to test the

gold.

Stage2: After the preliminary assessment, if the customer gives his consent for melting the gold, a further test

of purity (Fire Assay Test) will be conducted at the same PTC. The test will melt the gold and net weight of

gold will be estimated.

Stage3: After the result of the Fire Assay Test, if the customer willing to deposit the gold he will be given

a certificate by the collection centrecertifying the amount and purity of the deposited gold; Otherwise he can

take back the melted gold in the form of gold bars after paying a nominal fee.

Stage4: The depositor produces the certificate at the bank and the bank in turn will open a Gold Savings

Account for the depositor and credit the quantity of gold into the depositor’s account. Simultaneously, the

PTC will also inform the bank about the deposit made.

Stage5: The bank will pay interest to the depositor after 30/60 days of opening of the account. The amount of

interest rate to be given is proposed to be left to the banks to decide.

Both principal and interest to be paid to the depositors will be valued in gold. For example if a customer

deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.

The tenure of deposit will be a minimum period of 1 year and with a roll out in multiples of one year. The

depositor will have the option of redemption either in cash or in gold, which will have to be exercised at the

time of deposit.

Similar to the Gold Deposit Scheme (1999), in which the customers received Capital Gains Tax, Wealth tax

and Income Tax exemptions, the depositors of GMS also will receive similar benefits after due examination.


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Utilisation of Mobilised Gold by Banks

PTC will send the gold to the refiners. The refiners will keep the gold in their ware-houses, unless the banks

prefer to hold it themselves. The refiners will be paid a fee by the banks, as decided by them, mutually.

The banks will also be permitted to exercise following options regarding utilization of gold it collected from

the depositors.

a) Deposit the mobilized gold as part of their Cash Reserve Ratio (CRR)/ Statutory Liquidity Ratio (SLR)

requirements with RBI.

b) Sell the gold to generate foreign currency which can then be used for onward lending to exporters or

importers.

c) Convert mobilized gold into coins for onward sale to their customers.

d) Can buy and sell on domestic commodity exchanges, where mobilized gold can be delivered.

e) Can lend to jewellers upon opening of Gold Loan Account for this purpose with the banks.

For implementation of the scheme, the banks will enter into a tripartite Memorandum of Understanding

(MoU) with refiners and PTCs that are selected by them to be their partners in the scheme.

Union Government sanctioned 30 new cold storage projects

Union Ministry of Food Processing Industries on 18 May 2015 sanctioned proposals for setting up 30 new cold

storage chains in the country. The total expected grant-in-aid to be released by the Ministry is 274.9 crore

rupees which would attract an investment of 470 crore rupees.

These 30 new cold storage chains were sanctioned under the Integrated Cold Chain project. So far, 138 cold

storage chains under the project have been sanctioned out of which 108 are under implementation. Out of these

52 cold storages have been completed and are operational.

Importance of the decision

• These 30 projects will help in creating a capacity of 1.12 lakh Million Tonnes (MT) of cold storage, 11.10

lakh litres per day of milk processing, 1434 MT per day of ripening chamber and 209 Reefer Vehicles.

• This decision will also help bridge the shortfall in handling capacity for at least 29-30 million tonnes (mt) of

milk and dairy products, fruits and vegetables, fish and marine produce and cereals.

• It will also help in creating a Cold Chain Infrastructure to link the farmer with the consumer seamlessly and

creating a Cold Chain Grid in the country.

• This decision along with earlier decision of setting up 17 Mega Food Parks will help attract a total investment

of about 3077 crore rupees in the creation of infrastructure in food processing industry in the country.

India is the third largest food producer in the world yet barely 2.2% of fruits and vegetables in India are

processed.


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Also, Government estimates the food processing sector to be growing at 8.4% and comprised 13% of factory

employment in 2012-13.

RBI allowed Tap And Pay without PIN for transactions up to 2000 rupees

Reserve Bank of India (RBI) on 14 May 2015 allowed Tap And Pay without PIN for transactions up to 2000

rupees. For amounts higher than that, the customer must be given the option of contact payment and would

require pin authentication.

RBI decided to relax current guidelines on the needs for additional factor authentication (AFA) for small value

card present transactions only using contact-less cards.

The move is expected to hasten acceptance of tap and pay electronic payments at retail outlets, in transport

services and for toll payments.

Tap and pay refers to the use of near field communication technology in payment cards where instead of the

traditional swiping of the card and punching in payment details, all the customer needs to do is wave a card in

front of an acceptance device for the bill to be settled.

One of the preconditions set out by RBI is that the contactless card should also incorporate the latest EMV

Chip technology for enabling payment beyond 2000 rupees.

Also, Banks must give customers the option to choose to pay using the regular swipe method without using

NFC irrespective of the amount involved.

In most countries where payment technology has advanced NFC cards are used for payment of metro or bus

fares or in electronic toll collection.

CCEA gave its approval for 5% disinvestment in NTPC and 10% in Indian Oil Corporation

The Cabinet Committee on Economic Affairs (CCEA) on 13 May 2015 gave its approval for 5 percent

disinvestment in National Thermal Power Corporation Limited (NTPC) and 10 percent disinvestment in Indian

Oil Corporation (IOC).

Disinvestment in these two Maharatna companies will fetch government over 13000 crore rupees at current

market price. The proposed share sale of 5 percent in NTPC will fetch Union government 5600 crore rupees

while that of 10 percent in IOC will bring in 8100 crore rupees.


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Currently, Union Government holds 74.96 percent stake in NTPC and 68.57 percent stake in IOC. After the

sale, the Government will be left with a 58.57 percent stake in Indian Oil and 69.96 percent in NTPC.

Disinvestment in both these companies will be executed through the Offer for Sale (OFS) route, through stock

exchanges. Retail investors (those bidding for up to 2 lakh) will be required to deposit the full amount at the

time of the bid, while high net-worth and institutional investors need not do so.

These approvals are part of Union Government’s budgeted target to raise 41000 crore rupees through

disinvestment in CPSUs for the current financial year 2015-16.

Rajya Sabha passed The Companies (Amendment) Bill, 2014

Rajya Sabha on 13 May 2015 passed the Companies (Amendment) Bill, 2014 by voice vote. With this, the bill

stands passed by the two houses of Parliament as Lok Sabha passed the bill earlier on 17 December 2014.

The bill seeks to amend the Companies Act, 2013 that came into effect on 1 April 2015. Some sixteen

amendments pertaining to winding up of companies, board resolutions, bail provisions and utilisation of

unclaimed dividends have been incorporated into the Companies Act and are designed to address some issues

raised by stakeholders.

Further, the amendments are also aimed at simplifying bail provisions. For instance, except in various issues of

serious frauds, normal Criminal Procedure Code (CrPC) provisions would apply.

To maintain the confidentiality of the board resolutions, the relevant amendment now prohibits public

inspection of board resolutions filed in the registry.

The paid-up capital criteria have been scrapped while threshold limits for various transactions for getting

shareholders’ nod has now been stipulated.

Moreover, one of the amendments approves prescribing specific punishment for deposits accepted, a condition

that was left out in the Companies Act inadvertently.

Another amendment exempts corporates from the need to get shareholders’ nod in the case of related party

transactions valued lower than 100 crore rupees or 10 percent of net worth. Earlier corporate were required to

get shareholders’ permission for party transactions valued more than 10 crore rupees.

Also, amendments to Companies Act exempts related party transactions between holding companies and

wholly owned subsidiaries from the requirement of approval of non-related shareholders.

Lok Sabha approved Negotiable Instruments (Amendment) Bill, 2015

The Lok Sabha on 13 May 2015 passed the Negotiable Instruments (Amendment) Bill, 2015 with a voice vote.

The bill intends to amend the Negotiable Instruments Act, 1881.


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Key Features of Negotiable Instruments (Amendment) Bill, 2015

• Cases of bouncing of cheques can be filed only in a court in whose jurisdiction the bank branch of the payee

(person who receives the cheque) lies.

• If a complaint against a person issuing a cheque has been filed in the court with the appropriate jurisdiction,

then all subsequent complaints against that person will be filed in the same court, irrespective of the relevant

jurisdiction area.

• If more than one case is filed against the same person before different courts, the cases will be transferred to

the court with the appropriate jurisdiction.

• It seeks to amend the definition of cheque in the electronic form. While the parent act defines it as a cheque

containing the exact mirror image of a paper cheque and generated in a secure system using a digital signature,

the amendment bill re-defines it as a cheque drawn in electronic medium using any computer resource and

which is signed in a secure system with a digital signature, or electronic system.

Necessity for Negotiable Instruments (Amendment) Bill, 2015

The Negotiable Instruments Act, 1881 defines promissory notes, bills of exchange, cheques and creates

penalties for issues such as bouncing of cheques. Though, the act specifies circumstances under which

complaints for cheque bouncing can be filed (Section 138) but does not specify the territorial jurisdiction of the

courts where such a complaint is to be filed.

In a bid to overcome the legal lacunae, the Supreme Court of India (SC) in August 2014 issued an

order stating that cases against those having defaulted on their cheque payments could only be filed in courts

under which jurisdiction of the bank account of the accused fell. However, since this order is not Payee-

friendly (who happens to be the victim) the government has brought the present amendment bill to by-pass the

court’s order.

The new law is also intended to help consolidate the cases and aid the judicial system, which is currently

dealing with 21 lakh cheque-bounce cases with 259 courts hearing them exclusively.

PM Narendra Modi launched Atal Pension Yojana (APY) for unorganised sector workers

Prime Minister Narendra Modi on 9 May 2015 launched Atal Pension Yojana (APY) in Kolkata, West Bengal.

The scheme is intended to enhance old age income security of the working poor and is focused on encouraging

and enabling them to join the National Pension System (NPS). It will be operational from 1 June 2015.

Key Features of Atal Pension Yojana (APY)

Operational Framework: It is a Government of India Scheme and is administered by the Pension Fund

Regulatory and Development Authority (PFRDA). The institutional architecture of NPS would be utilised to

enroll subscribers under scheme.


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Eligibility: All citizens in the unorganised sector, who join the NPS administered by the PFRDA and who are

not members of any statutory social security scheme are eligible to benefit under the scheme.

The minimum age of joining is 18 years and maximum age is 40 years. All the existing subscribers of

Swavalamban Scheme would be automatically migrated to APY, unless they opt out.

It is expected that around two crore subscribers would be enrolled during the financial year 2015-16 under the

scheme.

Benefits: The subscribers would receive the fixed pension, as guaranteed by the Union Government, of 1000

rupees per month, 2000 rupees per month, 3000 rupees per month, 4000 rupees per month, 5000 rupees per

month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining

the scheme.

The pension would also be available to the spouse on the death of the subscriber and thereafter, the pension

corpus would be returned to the nominee.

Funding: The Government would co-contribute 50 percent of the subscriber contribution or 1000 rupees per

annum, whichever is lower, for a period of 5 years starting from 2015-16, who join the NPS before 31

December 2015 and who are not Income Tax payers. The government would also reimburse the promotional

and development activities including incentive to the contribution collection agencies to encourage people to

join the scheme.

The Government expenditure is expected to range between 2520 crore and 10000 crore rupees on account of

co-contribution to subscribers of the APY over a period of five years. Further, an expenditure of 2000 crore

rupees for promotional and developmental activities for enrolment and contribution collection is allocated for

period of five years.

Enrolment agencies: All Points of Presence (Service Providers) and Aggregators under Swavalamban

Scheme would enroll subscribers through architecture of NPS.

Comment

In India, workers in the unorganized sector constitute 88 percent of the total labour force of 47.29 crore, as per

the 66th Round of National Sample Survey Organisation (NSSO) Survey of 2011-12, but do not have any

formal pension provision. Hence, in order to address the longevity risks and encourage them to voluntarily

save for their retirement the Union Government had launched the Swavalamban Scheme in 2010-11.

However, enrollment under the scheme is not encouraging due to lack of clarity of pension benefits at the age

after 60 years. So, in order to address the lacunae in the Swavalamban Scheme the APY was launched.

PM Narendra Modi launched Pradhan Mantri Suraksha Bima Yojana (PMSBY) for accidental Insurance Cover


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PM Narendra Modi on 9 May 2015 launched Pradhan Mantri Suraksha Bima Yojana (PMSBY) in Kolkata,

West Bengal. It is an Accident Insurance Scheme (AIS) offering death and disability cover on account of an

accident.

Key Features of Pradhan Mantri Suraksha Bima Yojana (PMSBY)

• It provides for the risk coverage of 2 lakh rupees for accidental death and full disability and 1 lakh rupees for

partial disability due to an accident.

• It is available to people in the age group of 18 to 70 years having a savings bank account.

• The coverage period is of one year duration starting from 1 June to 31 March of the succeeding year.

• A premium of 12 rupees per annum is paid by the subscriber which will be deducted from the account

holder’s savings bank account through auto debit facility in one installment on or before 1 June of each annual

coverage period.

• The product will be offered by Public Sector General Insurance Companies (PSGICs) and other General

Insurance companies willing to offer the product on similar terms with necessary approvals and tie up with

banks for this purpose.

PM launched Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) in Kolkata

PM Narendra Modi on 9 May 2015 launched Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) in Kolkata,

West Bengal. The scheme is intended to provide for life insurance cover to the eligible subscribers.

Key Features of PMJJBY

• It provides for an annual life insurance of 2 lakh rupees and covers death due to any reason.

• A premium of 330 rupees per annum is paid by the subscribers to enroll in the scheme.

• People in the age group of 18 to 50 years having a bank account are eligible to join the scheme.

• It will be administered through Life Insurance Corporation (LIC) and other Life Insurance companies willing

to offer the product on similar terms with necessary approvals and tie ups with banks for this purpose.

• The coverage period is of one year duration starting from 1 June to 31 March of the succeding year.

• The Union Government will spend 50 crore rupees per annum between 2015 and 2020 for creating awareness

about the PMJJBY and thePradhan Mantri Suraksha Bima Yojana (PMSBY) launched on the same day to

provide insurance cover for disabilities due to accidents.

PM inaugurated upgraded IISCO Steel Plant in Burnpur housing largest blast furnace plant of India

Prime Minister Narendra Modi on 10 May 2015 inaugurated the upgraded IISCO Steel Plant (ISP) in Burnpur,

West Bengal. The ISP houses the largest blast furnace of India.


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The ISP was modernised by the Union Government at a cost of 16000 crore rupees. After modernisation, the

plant's production capacity has increased from 0.85 million tonnes per annum (mtpa) to 2.9 mtpa.

The revamped plant in Burnpur is spread across 953 acres. It is the fifth integrated steel plant of SAIL. Also,

the new plant is equipped with the latest green technologies with zero emission.

The revamped plant has already achieved some major milestones, both in production and quality, since 2014. It

has started operating the continuous casting plant, and the first batch of 8-mm thermo-mechanical treatment

(TMT) bars was produced in January 2015. The company's reserves of iron ore are the largest in Asia.

The modernization will held India in attaining the target of producing 300 million tonnes of steel by 2025 to

meet industry demand. Also, it will help SAIL in achieving the target of enhancing production capacity to 50

million tonnes by 2025.

Indian Iron and Steel Company (IISCO) was taken over by the Union Government in 1972 as part of a

nationalisation drive and made a fully-owned subsidiary of SAIL in 1978. It was thereafter renamed ISP.

Union Government, ADB signed loan agreement worth 31 Million US dollars

The Union Government and Asian Development Bank (ADB) on 7 May 2015 signed a 31 million US dollars

loan agreement to boost water availability in selected river basins in Karnataka and ensure improved water

efficiency in irrigation.

The agreement was signed by Raj Kumar, Joint Secretary (Multilateral Institutions), Department of Economic

Affairs on behalf of the Union Government and M Teresa Kho, Country Director of ADB in India.

ADB’s loan of 31 million US dollars will cover about 65 percent of the total project cost of 48 million US

dollars with the state government of Karnataka providing the balance of 17 million US dollars.

The loan is the first tranche of the Karnataka Integrated and Sustainable Water Resources Management

Investment Program of 150 million US dollars, approved by ADB in 2014. The program will improve

irrigation efficiency in three river basins in the state saving 1700 million cubic meters of water.

This saved water could be used on an additional 160000 hectares of farmland which will further lead to

increase in farm incomes by about 50 percent and benefit about 1.5 million people.

Besides, the loan will help train and certify over 200 Water Resources Department (WRD) staff in integrated

water resources management and build capacities of water users cooperative societies.

Through this project, Advanced Centre for IWRM (AC-IWRM) will be developed into a sub-regional

accredited institute to provide certification in the field of IWRM.


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Union Cabinet gave nod for revised Double Taxation Avoidance Agreement (DTAA) with South Korea

The Union Cabinet on 6 May 2015 gave its approval for the revised Double Taxation Avoidance Agreement

(DTAA) with South Korea.

The bilateral DTAA was signed in 1985 for the avoidance of double taxation and for the prevention of fiscal

evasion with respect to taxes on income for the citizens of both the countries.

Features of revised Double Taxation Avoidance Agreement (DTAA)

• Its primary purpose is to provide for tax stability to the residents of India and South Korea and facilitate

mutual economic cooperation as well as stimulate the flow of investment, technology and services between the

two countries.

• It provides for source based taxation of capital gains, making adjustments to profits of associated enterprises

on the basis of arm's length principle and residence based taxation of shipping income.

• It rationalizes tax rates in the Articles on Dividends, Interest and Royalties and Fees for Technical Services.

• It enables effective exchange of information and assistance in collection of taxes between tax authorities

• It incorporates limitation of benefits provisions under the agreement to ensure that the benefits are availed of

only by genuine residents of both countries.

The revision in the agreement has become necessary in the backdrop of growing investment flows and

increased movement of working professionals between the two countries in recent years.

Union Cabinet approved foreign investments into Real Estate Investment Trusts (REITs)

The Union Cabinet on 6 May 2015 gave its nod for allowing foreign investments into Real Estate Investment

Trusts (REITs) by recognizing it as an eligible financial instrument or structure under the Foreign Exchange

Management Act (FEMA) 1999.

The decision allows entities registered and regulated under the SEBI (REITs) Regulations 2014 to access

foreign investment inflows into the completed rent yielding real estate projects, which is, as of now, prohibited

under the FEMA Regulations.

About Real Estate Investment Trusts (REITs)

• It was proposed by the then Union Finance Minister Arun Jaitley during his budget speech of 2014-15.

• They are intended to attract long term finance from foreign and domestic sources including Non Resident

Indians (NRIs).

• They are listed entities that primarily invest in leased office and retail assets, allowing developers to raise

funds by selling completed buildings to investors and list them as a trust.

• To operationalise the instrument, the capital market regulator The Securities and Exchange Board of India


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(SEBI) issued the SEBI (REITs) Regulations 2014 in September 2014.

• However, due to the limitation of its access only to domestic investments, it has not attracted desired

investments from the market, which is remedied by the recent decision of the Cabinet.

CCEA approved hike in investment limit for cases requiring prior approval of FIPB

The Union Cabinet Committee on Economic Affairs (CCEA) on 6 May 2015 gave its nod for increase in the

investment limit for cases requiring prior approval of Foreign Investment Promotion Board (FIPB) to 3000

crore rupees from the present 2000 crore rupees.

The decision is aimed at expediting foreign investment clearance process there by increased investment flows

into the economy.

The FIPB is an inter-ministerial body under the Union Ministry of Finance which is responsible for processing

Foreign Direct Investment (FDI) proposals and making necessary recommendations to the Finance Ministry,

which gives the final approval.

Under the present practice, FDI is allowed into the country under two routes: Automatic and Approval Route.

Under the Automatic Route, the investors need not take any approvals from the government but only

required to give prior intimation to the Reserve Bank of India (RBI). Majority of the sectors of the economy

come under the Automatic Route.

Under the Approval Route, if the investment is up to 3000 crore rupees it is vetted by the FIPB and will be

forwarded to the Finance Ministry for final approval. If the investment is above 3000 crore rupees the

investment proposal must be cleared by the CCEA which functions under the chairmanship of the Prime

Minister. At present, strategic sectors like telecommunication services, defense, civil aviation are kept under

this route.

CCEA Permitted Central Government agencies to invest beyond 26 percent in Mega Food Parks

The Union Cabinet Committee on Economic Affairs (CCEA) on 6 May 2015 relaxed the provision related to

investment limit by the Central Government agencies in Mega Food Parks by allowing them to invest up to

100 percent on their equity holding in the Special Purpose Vehicle (SPV) from the present 26 percent.

The new regulation is expected to trigger further investment in the food processing sector and ensure smooth

implementation of the Mega Food Parks Scheme (MFPS) particularly projects at initial phases of the

implementation.

Apart from the above decision, the Cabinet also decided to give weightage to those proposals for new MFPs

which are focused on the processing and preservation of perishable food products.


MENTOR

About Mega Food Parks Scheme (MFPS)

• The Scheme was launched in 2008 by UPA Government. Its focus is to overcome the bottlenecks in the food

supply chain due to which around 33 percent food is wasted in India making it the largest food waster in the

world.

• For execution of a MFP a Special Purpose Vehicle (SPV) will be set up with or without the involvement of

government agencies.

• A MFP entails an area of a minimum of 50 acres and works in a cluster based approach based on a hub and

spokes model. Union government provides a financial assistance of up to 50 crore rupees to set up a MFP.

Lok Sabha passed the Goods and Services Tax Bill, 2014

Lok Sabha on 6 May 2015 passed the Goods and Services Tax (GST) Bill, 2014. The bill also called

Constitution (122nd Amendment) Bill seeks to introduce GST regime in India.

The bill will transform India into a common market, harmonising myriads of state and central levies into a

national goods and services tax which is expected to boost manufacturing and reduce corruption.

Main Highlights of the Bill

• It provides for constitution of a Goods and Services Tax (GST) Council by inserting Article 279A in the

Constitution. The Council will recommend to the Union and States on the inclusion and exclusion of goods

and services.

• It proposes an additional tax on supply of goods, not exceeding one percent, in the course of inter-State trade

will be levied and collected by the Union for a period of two years and apportioned to the States.

• The net proceeds of additional tax on supply of goods, except the proceeds from Union Territories, will not

form the part of Consolidated Fund of India.

• It provides for the compensation to the States for loss of revenue arising on account of implementation of

GST for a period of five years.

• It subsumes all the Central indirect taxes, levies and Central Sales Tax and State Value Added Tax and Sales

Tax.

• It covers all goods and services except alcoholic liquor for human consumption for the levy of GST.

Now, the bill needs to be passed in Rajya Sabha after which more than a half of India's 29 states must approve

it before the central and state governments would get equal powers to tax goods and services.

With the passage of GST bill at every stage, the whole country, which is one-sixth of world's population,

would become a single market and would give a necessary fillip as far as the trade is concerned.

Union Government made PAN mandatory for Central Excise Registration


MENTOR

Union Finance Ministry on 4 May 2015 made Permanent Account Number (PAN) mandatory for private firms

seeking Central Excise Registration.

In this regard, the Ministry issued an order mentioning that applicants seeking registration will mandatorily

have to quote PAN of the proprietor or the legal entity being registered in the application form.

The new laws say that the PAN registration will be given within two days of filing online applications to

improve the ease in doing business in manufacturing. While, the government departments has been exempted

from the requirement of quoting PAN in their online application.

Apart from this, the order also mentions that the applicant will have to quote his e-mail address and mobile

number in the application form for communication with the department.

Union finance Ministry exempted MAT for foreign investors

During the Finance Bill debate in Parliament, Union Finance Minister Arun Jaitley said that MAT would not

be applicable on foreign companies’ earning from capital gains on securities, royalty, fee on technical services

and interest.

However, MAT would not be applicable on sale of units of real estate investment trusts (REITs). Further, the

exemption would apply only in those cases where the normal tax rate is below 18.5 percent. The issue between

foreign investors and the government cropped up in 2014-15 when the tax department started sending notices

to FIIs to cough up MAT.

Total 68 notices were sent to FIIs for their past capital gains up to 31 March 2015 creating a huge uproar.

The government has been trying to soothe the foreign institutional investors, who turned net sellers for the first

time since April 2014.

Minimum Alternate Tax

MAT is a way of making companies pay minimum amount of tax. It is applicable to all companies except

those engaged in infrastructure and power sectors. Income arising from free trade zones, charitable activities,

investments by venture capital companies are also excluded from the purview of MAT.

Union Government approved continuation of 1000 rupees Monthly Pension Scheme under EPS

Union Government on 29 April 2015 approved continuation of 1000 rupees Monthly Pension Scheme under

Employees' Pension Scheme, 1995 (EPS) beyond 2014-15 on perpetual basis.


MENTOR

The move would benefit over 20 lakh pensioners under social security scheme run by Employees Provident

Fund Organisation (EPFO). It will cost additionally 850 crore rupees to the exchequer of the government.

The scheme was launched with effect from 1 September 2014. It hiked the pension amount to a flat 1000

rupees per month for those who were getting lower amount earlier and it was initially effective till 31 March

2015.

As a result, the EPFO had to suspend the scheme from 1 April 2015 in the absence of any direction from the

government to continue with this benefit beyond 31 March 2015.

Union Government allowed EPFO to invest 5 percent of its corpus in stock market

Union Government on 24 April 2015 allowed Employees’ Provident Fund Organisation (EPFO) to invest five

percent of its corpus in Exchange Traded Funds (ETFs). The decision will result into an inflow of around five

thousand crore rupees into the stock markets during fiscal 2015-16.

Union Labour Ministry has notified the new investment pattern for the EPFO, which allows the body to invest

5 per cent of its funds into ETFs.

The investment will begin by one percent and go up to five percent by the end of the financial year. As per

estimates, the EPFO's incremental deposits for 2014-15 would be around 80 thousand crore rupees.

Background

Union Finance Minister Arun Jaitley in the Union Budget 2015-16 presented on 28 February 2015 proposed a

new investment pattern under which the EPFO would invest a minimum of 5 percent of its investable funds

into equity and equity related schemes.

Railways launched mobile app utsonmobile for paperless unreserved tickets

The Railway Ministry on 22 April 2015 launched a mobile application named utsonmobile, for paperless

unreserved tickets. This mobile application aims to eliminate the need for printing of unreserved tickets.

The application was launched as a pilot project in New Delhi by Railway Minister Suresh Prabhu and will

cover 15 stations between Egmore and Tambram suburban sections in Chennai of the Southern Railway. Later,

the service will be extended to in suburban section in all metros of the country in phases.

Feature of the application

• The application is developed by Centre for Railway Information Systems (CRIS) and aims to eliminate the

need for printing of unreserved ticket

• It allows the passenger to buy a ticket on the move


MENTOR

• It allows him to board the train with the ticket secured on his mobile phone, without any need for printing the

ticket

• The application provides necessary on-screen alerts to guide the passenger during the booking process

• Payment for the ticket is done through the Railway Wallet feature in the App

• The passenger will have to use the ticket within an hour of booking of the ticket

• Every day, the ticket will have distinct colour scheme and it cannot be forwarded to another mobile

Background

The application was launched in accordance to the budget proposal made by Suresh Prabhu in his Railway

Budget 2015-16 presented on 26 February 2015. In the budget, he proposed to provide paperless tickets in

unreserved segment.

WEF released a report titled Urban Development Recommendations for India under FUDS initiative

World Economic Forum (WEF) on 13 April 2015 released a report titledUrban Development

Recommendations for India under the Future of Urban Development and Services (FUDS) Initiative. The

report has been written in collaboration with Accenture.

The report highlights the importance of wider private-sector participation to bridge the urban infrastructure and

services funding gap of 110 billion US dollars, which is widening due to India’s rapid urban population

growth.

The WEF in its report has made three recommendations on urban development which the Government of India

can take so as to foster inclusive growth in urban India. These recommendations are:

Integrate spatial planning at all governmental levels: The primary goal of spatial planning is to integrate

housing, strategic infrastructure and urban infrastructure, and improve national and local governance in the

context of urban development.

Create a stable policy framework for private investment in urban infrastructure: This emphasizes on

creating right conditions for the investors and foster public-private partnerships to enable investments in

strategic infrastructure and urban development.

Create institutions to stimulate capacity building and attract talent to grow businesses: Private sector

participation requires creation of institutions that will help the private sector in increasing the quality of white

collar service jobs and attracting investment in manufacturing capacity. It also emphasizes on need for

interdisciplinary collaboration in the area of urban development.

Status of urban development in India


MENTOR

India with an urban population of 410 million is the world’s second largest urban population and its urban

population is forecasted to almost double to 814 million between 2014 and 2050.

However, the urbanization rate of India is relatively low at 32 percent. As a result, India is witnessing

accelerated migration from rural areas to cities. This in turn is leading to inadequate access to basic urban

infrastructure and services facilities to urban population.

Towards this, Government of India under Prime Minister Narendra Modi is making some efforts. These

include among others introduction of 100 Smart Cities initiative, launch of Heritage City Development and

Augmentation Yojana (HRIDAY) and Swachh Bharat Abhiyan (Clean India Mission).

For all this, India needs an investment of more than 640 billion US dollars between 2012 and 2031 to deliver

basic urban infrastructure to this growing urban population.

About FUDS Initiative

The WEF Future of Urban Development and Services (FUDS) Initiative serves as a partner in transformation

to cities around the world as they seek to address major urban challenges and transition towards smarter, more

sustainable cities in this rapidly urbanizing world. The FUDS Initiative works collaboration with local

partners.

The report on India is the third in the FUDS Initiative. The first two presented the results of the initiative’s

engagement with three Chinese cities: Tianjin, Dalian and Zhangjiakou.

World Bank released South Asia Economic Focus report

World Bank on 13 April 2015 released South Asia Economic Focus report. The report has projected the

economic growth of South Asia for the year 2016 and 2017.

As per the report, economic growth of the region will increase from 7 percent in 2015 to 7.6 percent by 2017.

This increase in the forecast of growth rate has been possible primarily due to decline in oil prices and it could

be achieved by maintaining strong consumption and increasing investment.

The region is among the greatest global beneficiaries from cheap oil, as all countries in it are net oil importers.

In the Quarter 4 (Q4) of 2014 South Asia was already the fastest-growing region in the world.

Projection for India

The report projected a GDP growth rate of 8 per cent for India by 2017. In India, GDP growth is expected to

accelerate to 7.5 per cent in fiscal year 2015-16. It could reach 8 per cent in FY 2017-18, on the back of

significant acceleration of investment growth to 12 per cent during FY 2016 to FY 2018.


MENTOR

The report highlighted that India has already taken encouraging steps to decouple international oil prices from

fiscal deficits and to introduce carbon taxation to address the negative externalities from the use of fossil fuels.

The challenge will be to stay the course in the event of oil price hikes – something that may well happen in the

medium term.

SEBI raised the limit for currency derivatives trades to 15 million US dollar

Securities and Exchange Board of India (SEBI) on 8 April 2015 raised the transaction limit in exchange traded

currency derivatives to 15 million US dollars for both foreign and domestic investors without having any

underlying exposure. Earlier, the limit was 10 million dollars.

SEBI issued the circular after Reserve Bank of India (RBI) on 1 April 2015 notified the revision.

The capital market regulator, SEBI in a circular said that the Foreign Portfolio Investors (FPIs) and domestic

clients can take position (long and short) in foreign currency up to 15 million US Dollars or equivalent per

exchange.

The notification said that the Foreign portfolio investors (FPIs) or domestic investors should ensure that their

short positions at the stock exchange across all contracts in USD-INR pair do not exceed the limit and do not

exceed five million dollar per exchange in EUR-INR, GBP-INR and JPY-INR pairs, all put together.

RBI notified hike in Foreign Direct Investment (FDI) cap in Insurance Sector to 49 percent

The RBI (Reserve Bank of India) on 8 March 2015 notified hike in FDI (Foreign Direct Investment) limit in

Insurance Sector to 49 percent from the present 26 percent.

As per the notification, FDI up to 26 percent will be under automatic route and beyond 26 percent and up

to 49 percent will be allowed with the approval of Foreign Investment Promotion Board (FIPB).

The RBI notification is in tune with March 2015 decision of Department of Industrial Policy and Promotion

(DIPP) regarding operationalisation of increased FDI limit in the insurance sector.

Prime Minister launched MUDRA Bank under PM Jan Dhan Yojana to fund small entrepreneurs

Prime Minister Narendra Modi on 8 April 2015 launched the Micro Units Development and Refinance

Agency Ltd. (MUDRA) Bank to fund the small entrepreneurs.


MENTOR

The Bank was launched under the ambitious Pradhan Mantri Jan Dhan Yojana (PMJDY). The bank will

provide credit of up to 10 lakh rupees to small entrepreneurs and act as a regulator for Micro-Finance

Institutions (MFIs).

It was set up through a statutory enactment. It would be responsible for developing and refinancing all Micro-

finance Institutions (MFIs) which are in the business of lending to micro / small business entities engaged in

manufacturing, trading and service activities.

The concept of MUDRA Bank goes beyond credit only approach and offers a credit plus solution for these

enterprises spread across the country.

The role of MUDRA Bank

Lay down policy guidelines for micro enterprise financing business

Registration of MFI entities

Accreditation/rating of MFI entities

Lay down responsible financing practices to ward off over indebtedness and ensure proper client

protection principles and methods of recovery

Development of standardised set of covenants governing last mile lending to micro enterprises

Promoting right technology solutions for the last mile

Formulating and running a Credit Guarantee Scheme for providing guarantees to the loans/portfolios

which are being extended to micro enterprises

Support development & promotional activities in the sector

Creating a good architecture of Last Mile Credit Delivery to micro businesses under the scheme

It would partner with State/Regional level coordinators to provide finance to Last Mile Financiers of

small/micro business enterprises.

Products offered by MUDRA Bank

The bank will initially offer products like Shishu, Kishor and Tarun to differentiate the stage of growth and

funding needs of the beneficiary entrepreneur.

Shishu will cover loans up to 50000 rupees

Kishor will cover loans above 50000 rupees and up to 5 lakh rupees

Tarun will cover loans above 5 lakh rupees and up to 10 lakh rupees

Background


MENTOR

Union Finance Minister Arun Jaitley had proposed the creation of a Micro Units Development Refinance

Agency (MUDRA) Bank, with a corpus of 20000 crore rupees and credit guarantee corpus of 3000 crore

rupees during the presentation of Union Budget 2015-16 on 28 February 2015.

Union Government launched FAME-India scheme to boost electric, hybrid vehicle sales

Union Government on 1 April 2015 launched Faster Adoption and Manufacturing of Hybrid and Electric

vehicles (FAME) – India Scheme.

The scheme was launched with an aim to boost sales of eco-friendly vehicles in the country. It is a part of the

National Mission for Electric Mobility.

The scheme envisages providing 795 crore rupees support till 2020 for the manufacturing and sale of electric

and hybrid vehicles.

Characteristic Features of FAME – India Scheme

It envisages providing demand incentives to electric and hybrid vehicles from two wheelers to buses

in range of 1800 rupees to 66 lakh rupees

Focus areas of the scheme will be technology development; demand creation; pilot projects; and

charging infrastructure

Depending on technology, battery operated scooters and motorcycles will be eligible demand

incentives ranging between 1800 rupees to 29000 rupees

In three-wheeler the incentives will range from 3300 rupees and 61000 rupees

In four-wheeler segment incentive ranges from 13000 rupees and 1.38 lakh rupees

In case of Light Commercial Vehicles (LCV) incentive ranges from 17000 rupees to 1.87 lakh rupees

In case of buses the incentive ranges from 34 lakh rupees to 66 lakh rupees

The Department of Heavy Industries will be nodal department for the scheme.

Implementation of the Scheme

The scheme will be implemented in phases with fund allocations of 260 crore rupees and 535 crore rupees for

the first two years respectively. The funds will be spent on technology platform (including testing

infrastructure) demand incentives, charging infrastructure, pilot projects and operations.

In the first phase, the scheme will be implemented over a two year period between 2015-16 and 2016-17. The

government will review the implementation of the scheme in first phase after 31 March 2017.


MENTOR

The future allocation will depend on the outcome and experience gained during the period.

National Electric Mobility Mission Plan

Union Government launched the National Electric Mobility Mission Plan (NEMMP) 2020 in 2013. NEMMP

aims to achieve national fuel security by promoting hybrid and electric vehicles in the country. There is an

ambitious target to achieve 6-7 million sales of hybrid and electric vehicles year on year from 2020 onwards.

Government aims to provide fiscal and monetary incentives to kick start this nascent technology. With the

support from the Government, the cumulative sale is expected to reach 15-16 Million by 2020.

Cabinet Committee on Economic Affairs approved uniform gas price for urea plants

The Cabinet Committee on Economic Affairs (CCEA) on 31 March 2015 approved to supply gas at uniform

delivered price to all fertilizer plants on the gas grid for production of urea through a pooling mechanism.

As per the estimation of the Department of Fertilizer (DOF), the decision will lead to additional production of

around 37.13 lakh million tones (MT) of urea in existing fertilizers units over the next four years, that is, from

2015-16 to 2018-19.

Further, the decision will reduce import dependence and will result in saving of 1550 crore rupees of subsidy.

It is expected that the cost of production of urea at pooled price would be less than the price of imported urea,

which will encourage the existing urea units to produce beyond their reassessed capacity.

This reform measure is also expected to augment indigenous manufacturing capacities. It is expected to help in

reviving the Gorakhpur, Barauni and Sindri urea plants. These three urea plants will serve as the anchor load

customers for Jagdishpur Haldia pipeline. As a result, work on this pipeline which was approved in 2007 is

expected to start in this financial year.

At present, there are 30 urea producing units in the country, out of which 27 units are gas based and three

units, viz., Mangalore Chemicals and Fertilizers Limited (MCFL), Madras Fertilizers Limited (MFL) and

Southern Petrochemicals Industries Limited (SPIC) are Naphtha based.

Out of the total consumption of about 30 Million Metric Tonne Per Annum (MMTPA) of urea, about 23

MMTPA of Urea is currently produced in the country. In addition to domestic production of Urea, around 2

MMTPA is imported from Oman under the Urea Off-Take Agreement (UOTA) which will continue till 2020.

The shortfall of about 5 MMTPA Urea is being met through imports. Urea demand during 2017-18 is projected

to be about 34 MMTPA and by 2024-25, it is expected to be 38 MMTPA. Hence, in absence of new capacity

addition in the country, urea imports would have increased.


MENTOR

RBI signed Currency Swap Agreement with Central Bank of Sri Lanka

The Reserve Bank of India (RBI) on 25 March 2015 signed a 400 million US dollar currency swap agreement

with the Central Bank of Sri Lanka. The agreement is valid for a period of three years from the date of signing.

According to the agreement, the Central Bank of Sri Lanka can make withdrawals of US dollar or Euro in

multiple tranches up to a maximum of 400 million US dollar or its equivalent.

This agreement will further economic co-operation between the two countries and also bring in more financial

stability in the region.

The Currency Swap Agreement with Sri Lanka was inked in backdrop of the announcement of May 2012 by

the RBI Governor during the SAARCFINANCE Governor’s meeting, held in Nepal. At the meeting, RBI had

offered swap facilities aggregating 2 billion US dollar, both in foreign currency and Indian Rupee to

neighbouring countries of the SAARC region.

This facility will be available to all South Asian Association for Regional Cooperation (SAARC) member

countries, that is, Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

The swap arrangement is intended to provide a backstop line of funding for the SAARC member countries to

meet any balance of payments and liquidity crises till longer term arrangements are made or if there is need for

short-term liquidity due to market turbulence.

Indian Railways launched RuPay pre-paid debit cards

Indian Railways on 24 March 2015 launched its own RuPay pre-paid card. The card will enable passengers to

book their Rail tickets and do shopping using RuPay pre-paid debit cards. Card can be availed from either the

Union Bank or the IRCTC.

The RuPay pre-paid card was launched by Indian Railway Catering and Tourism Corporation (IRCTC), the

Railways' tourism and catering arm, in collaboration with the Union Bank of India.

RuPay is India's own card payment gateway network and provides an alternative system for banks to provide

debit card service.

The transaction charge will be 10 rupees per ticket for booking a ticket through the card on the IRCTC portal.

As an opening offer, the transaction charge will not be levied for six months for purchasing tickets on the

IRCTC's website. The initial value of the card is 10000 rupees, which can be recharged.

SEBI Board approved SEBI (International Financial Services Centres) Guidelines, 2015


MENTOR

The capital market regulator, Security and Exchange Board of India (SEBI) Board on 22 March 2015 approved

SEBI (International Financial Services Centres) Guidelines, 2015.

The guidelines for IFSCs aim to provide an enabling environment for setting up of capital market

infrastructure like stock exchanges, clearing houses, depository services, etc., in such centres.

Guidelines for International Financial Services Centres (IFSC)

• Any Indian stock exchange by the SEBI or a foreign stock exchange recognized by the originating country’s

market regulator can set up subsidiaries in IFSC.

• A stock exchange can be set up with 25 crore rupees capital, against the normal requirement of 100 crore

rupees. However, this will have to be raised to 100 crore rupees within three years. Such exchanges will also

be given three years to complete de-mutualisation.

• A Clearing Corporation can be set up, with 50 crore rupees capital, against the norm of 300 crore rupees,

which will have to be achieved within three years of establishment.

• Issue of depository receipts and other securities by foreign issuers under the Foreign Currency Depository

Receipts Scheme, 2014, will also be allowed.

• IFSC will be set up under the Special Economic Zone (SEZ) Act of 2005.

• Non-resident Indians, foreign investors, institutional investors, and resident Indians eligible under the Foreign

Exchange Management Act (FEMA) are allowed to participate in IFSC.

The guidelines were proposed in pursuant to the announcement made by Union Finance Minister Arun Jaitley

during his budget speech of 2015-16. In that he had announced to establish the first IFSC, Gujarat International

Finance Tec-city (GIFT), in Ahmadabad.

SEBI Board approved SEBI (Issue and Listing of Debt Securities by Municipality) Regulations, 2015

Security and Exchange Board of India (SEBI) Board on 22 March 2015 approved the SEBI (Issue and Listing

of Debt Securities by Municipality) Regulations, 2015. The regulations will enable the resources starved

municipalities across the country to mobilise financial resources from capital market.

The regulations provide for public issuance and listing of privately placed municipal bonds and also provides

for disclosure requirements to be made by the prospective issuers.

Till now, municipalities were denied permission to list themselves in stock exchanges and conduct trade in

bonds issued by them.

New norms for listing and trading of municipal bonds

• An issuer making a public issue shall only issue revenue bonds. In case of private placements, an issuer may

issue general obligation bonds or revenue bonds

• Issuer’s contribution for each project shall not be less than 20 percent of the project costs, which shall be

contributed from their internal resources or grants


MENTOR

• Mandatory credit rating, which has to be investment grade rating in case of public issuances

• The tenure of these bonds will be of 3 years

• Municipality should not have defaulted in repayment of debt securities or loans obtained from

Banks/Financial Institutions, during the previous 365 days

• Municipality should not have had negative net worth in any of the last three preceding financial years

• Banks or Financial Institutions will be appointed as monetary agencies who inter-alia will prepare periodic

reports

History of Municipal Bonds in India

Municipal Bonds have been issued by various municipal authorities in the country, the total funds raised

through them stand at only about 1353 crore rupees because of their non-tradability.

The Bangalore Municipal Corporation was the first municipal corporation in the country to issue a municipal

bond of 125 crore rupees with a state guarantee in 1997.

The Ahmadabad Municipal Corporation (AMC) issued the first municipal bonds in the country without state

government guarantee in January 1998 for financing infrastructure projects in the city. AMC raised 100 crore

rupees through its public issue.

Till now, only Hyderabad, Visakhapatnam, Chennai, Nashik and Nagpur municipal authorities have issued

such bonds.

CCEA gave nod to extend PDS Kerosene, Domestic LPG Subsidy Scheme

The Cabinet Committee on Economic Affairs (CCEA) on 4 March 2015 gave its nod to extend the PDS

Kerosene and Domestic LPG Subsidy Scheme 2002 for a period of one year that is up to 31 March 2015.

It also approved extension of the Freight Subsidy Scheme 2002 for far-flung areas till 31 March 2015. The

Freight Subsidy Scheme 2002 provides for freight subsidy to PDS Kerosene and Domestic LPG consumers in

far-flung areas.

These approvals will help in reducing the under-recovery of the Oil Marketing Companies (OMCs). Till date

government was providing a subsidy of 22 rupees 58 paise per 14.2 kg on LPG cylinder and 82 paise per litre

on PDS Kerosene and Domestic LPG Subsidy Scheme.

Union Government and RBI signed an agreement on Monetary Policy Framework

Union Government and Reserve Bank of India (RBI) signed an agreement on Monetary Policy Framework.

The agreement was signed on 20 February 2015 but was made public on 2 March 2015.


MENTOR

The agreement empowers the RBI to go for inflation targeting that is common in developed countries and it

also empowers RBI to monitor its monetary policy framework.

As per the agreement, RBI will aim to bring down the inflation below six percent by January 2016 and

inflation target for 2016-2017 and subsequent years will be 4 percent +/-2 percentage points.

Features of the agreement that empowers RBI to monitor its framework

• India’s monetary policy framework will be operated by the RBI.

• India’s monetary policy framework will aim to “maintain price stability while keeping in mind the objective

of growth.

• If the RBI fails to meet the target, then it will have to report to the Union Government the reasons for the

failure to achieve the target.

• It will also provide the remedial action to take and estimate of the time period within which the target would

be achieved.

• It will put in place a framework of a modern monetary policy to meet the challenges of an increasingly

complex economy.

• The RBI’s Governor will determine the country’s key interest rates or any measures needed to achieve that

inflation target.

• It binds the Union Government to take proactive measures for price control.

The agreement will provide a predictable policy stance on inflation, helping investors, especially in the debt

market.

The agreement was signed in line with the recommendations of the RBI’s Urjit Patel committee. The

committee’s recommendation will smoothen the monetary policy scene in the country.

At present, the Union Government and the RBI provides inflation estimates but don’t set any targets for it.

Union Budget 2015-16: Vision 2022

Union Finance Minister, Arun Jaitley on 28 February 2015 presented first full year Union Budget 2015-16 of

NDA government in the Lok Sabha. Jaitely presenting his second budget announced the Vision of Budget

aimed at achieving certain things by 2022, the 75th Year of India’s independence, which will be observed as

Amrut Mahotsav.

The vision of Team India, as called by Prime Minister Narendra Modi, will be led by State and guided by the

Central Government. The vision will include following things:

• A roof for each family in India under the vision Housing for All by 2022 requiring construction of 2 crore

houses in Urban areas and 4 crore houses in rural areas


MENTOR

• Each house of the country will be provided the basic facilities like 24-hour power supply, clean drinking

water, toilet and connection to a road

• To provide access to means for livelihood and employment or economic opportunity to at least one member

of each family, to improve his or her lot

• Substantial reduction of poverty visions to eliminate absolute poverty and thus seeks that all schemes will

focus and center on the poor

• To electrify remaining 20000 villages in the country by 2020, this will be met by different process including

by off-grid solar power generation

• 178000 unconnected habitations will be connected by all weather roads. This process will require completion

of 1 lakh kilometer of roads, which are under construction right now and an additional 1 lakh kilometer road

will be sanctioned for construction

• Medical services will be provided in each village and city as it is absolutely essential. This thing will help in

providing good health to people, which is necessary for the quality of life as well as person’s productivity and

ability to serve his or her family.

• To enable every youth to get employment, they will be educated and skill will be provided to them. For this

purpose, a senior secondary school is required within 5 kilometer reach of each child, thus 80000 secondary

schools will be upgraded and or 75000 junior or middle schools will be upgraded to the senior secondary

level. Apart from this, it will be ensured that education is improved in terms of quality and learning outcomes

• For welfare of rural areas there is a need to boost agricultural productivity and ensure reasonable prices for

agricultural production. For this purpose, irrigated area will be increased and efficiency of existing irrigation

system will be improved. Apart from this, agro-based industry will be promoted for value addition and farm

incomes will be increased, and reasonable prices for farm produce will be given

• In terms of communication, the rural and urban divide will be ended and it will be ensured that connectivity

to all villages is provided

• Two-thirds of India’s current population is below 35 and, thus to ensure that the young get proper jobs, it has

been planned to make India a manufacturing hub of the world. This purpose will be addressed through the Skill

India and the Make in India programmes

• Plan to turn India into job-creator from job-seekers and for this purpose spirit of entrepreneurship in India

will be encouraged and new start-ups will be supported

• It will be ensured that the Eastern and North Eastern of the country regions are on par with rest of India as

currently are lagging behind in development in many fronts

Government wants to achieve all the thirteen major points described above by the time of 75th year of Indian

Independence, Amrut Mahotsav is reached. These points will help India to become a prosperous country and

responsible global power, which will be a true and meaningful tribute to the freedom fighters of the nation.


MENTOR

Economic Survey of India 2014-15: Highlights

Union Finance Minister Arun Jaitely on 27 February 2015 presented Economic Survey of India 2014-15 in the

Parliament.

The Economic Survey reviews the developments in the Indian economy over the previous 12 months,

summarises the performance on major development programmes and highlights the policy initiatives of the

government and the prospects of the economy in the short to medium term.

Three pronged strategy suggested in Economic Survey 2014-15

To improve the investment climate and reduce the backlog of stalled projects, Economic Survey 2014-

15 suggested a three-pronged strategy, namely

Revival of public investment in short term, to act as an engine of growth in infrastructure sector. It

argues that public investment cannot be a substitute for private investment; but is required as a complement

and to crowd it in.

Need of creative solutions to strengthen institutions relating to bankruptcy. This will ensure that exit

options are available. This will also ameliorate over-indebtedness that lowers the capacity to generate new

investments. Towards this end, it contemplates setting up of a high-powered Independent Renegotiation

Committee.

Economic Survey highlights the need for reorientation and restructuring of the PPP model. This is

expected to make them more viable in future.

Main Highlights of the Economic Survey 2014-15

General Highlights

Using the new estimate for 2014-15 as the base, GDP growth at constant market prices is expected to

accelerate to between 8.1 and 8.5 percent in 2015-16.

Inflation declined by over 6 percentage points since late 2013 which is likely to remain in the 5-5.5

percent range in 2015-16, creating space for easing of monetary conditions.

The current account deficit declined from a peak of 6.7 percent of GDP in Quarter 3 of 2012-13 to an

estimated 1.0 percent in the fiscal year 2015-16.

After a nearly 12-quarter phase of deceleration, real GDP has been growing at 7.2 percent on average

since 2013-14, based on the new growth estimates of the Central Statistics Office.

Foodgrains production for 2014-15 is estimated at 257.07 million tonnes, which will exceed average

food grain production of last five years by 8.5 million tones


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Foreign portfolio flows have stabilized the rupee, exerting downward pressure on long-term interest

rates which is reflected in yields on 10-year government securities and surge in equity prices.

From a cross-country perspective, a Rational Investor Ratings Index (RIRI) which combines

indicators of macro-stability with growth illustrates that India ranks amongst the most attractive investment

destinations.

It ranks well above the mean for its investment grade category (BBB), and also above the mean for the

investment category above it (on the basis of the new growth estimates).

In the short run, growth will receive a boost from the cumulative impact of reforms, lower oil prices,

likely monetary policy easing facilitated by lower inflation and improved inflationary expectations, and

forecasts of a normal monsoon in 2015-16.

Growth in medium-term prospects will be conditioned the “balance sheet syndrome with Indian

characteristics” that has the potential to hold back rapid increases in private sector investment.

In the long-run, private investments will be the engine of growth. However, there is a case for reviving

targeted public investment as an engine of growth in the short run to complement and crowd-in private

investment.

Expenditure control and expenditure switching from consumption to investment will be the key to

growth in the short-run

It calls for complementing Make in India initiative with Skill India initiative to enable a larger section

of the population to benefit from the structural transformation that such sectors will facilitate.

The Survey emphasizes on creation of a National Market for Agricultural Commodities in place of

thousands of agricultural markets

The Model APMC Act, 2003 should be amended along the lines of the Karnataka Model that has

successfully introduced an integrated single licensing system.

Fiscal Framework

The Survey calls for adhering to the medium-term fiscal deficit target of 3 percent of GDP. This will

provide the fiscal space to insure against future shocks and also to move closer to the fiscal performance of

its emerging market peers.

It also calls for moving toward the golden rule of eliminating revenue deficits and ensuring that, over

the cycle, borrowing is only for capital formation.

Expenditure control combined with recovering growth and the introduction of the GST will ensure

that medium term targets are comfortably met.


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In the short run, the need for accelerated fiscal consolidation will be conditioned by the

recommendations of the Fourteenth Finance Commission (FFC).

The quality of expenditure needs to be shifted from consumption, by reducing subsidies, towards

investment.

Subsidies and the JAM Number Trinity Solution

Food Subsidy Bill stands at 107823.75 crore rupees during 2014-15 (up to January 2015) which

means an increase of 20 percent over previous year

The direct fiscal cost of select subsidies is roughly 378,000 crore rupees or 4.2 percent of GDP in

2011-12.

41 percent of subsidy given for the PDS kerosene is lost as leakage and only 46 percent of the

remaining 59 percent is consumed by households that are poor.

The JAM Number Trinity – Jan Dhan Yojana, Aadhaar, Mobile – can enable the State to transfer

financial resources to the poor in a progressive manner without leakages and with minimal distorting effects.

Indian Railways and Public Investment

The Indian Railways over the years has been plagued by host of issues. Some of them include

underinvestment resulting in lack of capacity addition and network congestion; neglect of commercial

objectives; poor service provision; and consequent financial weakness. These have cumulated to below-

potential contribution to economic growth.

As a result, the competitiveness of Indian industry has been undermined. Calculations reveal that

China carries thrice as much coal freight per hour compared to India. Coal is transported in India at more

than twice the cost vis-à-vis China, and it takes 1.3 times longer to do so.

The railways public investment multiplier (the effect of a 1 rupee increase in public investment in the

railways on overall output) is around 5.

In the long run, the railways must be commercially viable and public support must be linked to

railway reforms. These include adoption of commercial practices, tariff rationalization, and technology

overhaul.

Railway Budget 2015-16: Statistical Highlights

Railway Minister Suresh Prabhu on 26 February 2015 presented his maiden Rail Budget 2015-16 in the Lok

Sabha. This was also the second rail budget of the Narendra Modi-led NDA government.

The major statistical highlights of the Budget encompassing Financial Performance 2014-15, Budget Estimates

2015-16 and Plan outlay 2015-16 are given below:


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Financial Performance in 2014-15

• In 2014-15, there was a net reduction in Gross Traffic Receipts by 917 crore rupees compared to the

Budgeted Estimate (BE) of 160165 crore rupees

• Growth in Ordinary Working Expenses (OWE) scaled down to 11.7 percent. The budgeted OWE of 112649

crore rupees decreased in the Revised Estimate (RE) of 2014-15 to 108970 crore

• Appropriation to the Pension Fund increased to 29540 crore rupees in the RE 2014-15

• Internal resource generation also improved and accordingly the appropriation to Depreciation Reserve Fund

(DRF) was scaled up to 7975 crore rupees in RE from the BE 2014-15 provision of 7050 crore rupees

• Excess of receipts over expenditure stood at 7278 crore rupees in RE 2014-15 reflecting better financial

management

• Plan size for 2014-15 increased from 65445 crore rupees in the Budgeted Estimates to 65798 crore rupees in

the Revised Estimates

Budget Estimates for 2015-16

• Passenger earnings growth pegged at 16.7 percent and target budgeted at 50175 crore rupees

• Freight traffic is pegged at an all time high incremental traffic of 85 million tonnes, anticipating a healthier

growth in the core sector of economy

• Goods earnings proposed at 121423 crore rupees which includes rationalisation of rates, commodity

classification and distance slabs

• Other coaching and sundries are projected at 4612 crore rupees and 7318 crore rupees respectively

• Gross Traffic Receipts estimated at 183578 crore rupees, a growth of 15.3 percent

• Ordinary Working Expenses proposed to grow at 9.6 percent over RE 2014-15. Traction fuel bill is

anticipated to shrink further

• Lease charges, interest component of the current and previous market borrowings are pegged at a growth of

21 percent

• Appropriation to Pension Fund is proposed at 35260 crore rupees and appropriation to DRF at 8100 crore

rupees

• Appropriation of 7616 crore rupees is proposed to be made to Capital Fund for payment of principal

component of lease charges to IRFC

Plan Outlay 2015-16

• Gross Budgetary Support of 40000 crore rupees for the Railway’s annual Plan

• Total Plan Outlay is 100011 crore rupees, an increase of 52 percent over RE 2014-15

• 1645.60 crore rupees has also been provided as Railway’s share of diesel cess from the Central Road Fund

• Market borrowing under Extra Budgetary Resources (EBR) projected at 17655 crore rupees, an increase of

about 46.5 percent

• Balance Plan outlay includes 17793 crore rupees from Internal Resources and 5781 crore rupees from PPP


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• A new financing approach to expand EBR has been projected. This EBR, presently named EBR (Institutional

Finance) is projected at 17136 crore rupees and is aimed at accelerating completion of capacity augmentation

projects.

Railway Budget 2015-16: Quality of Life in Journeys

Railway Minister Suresh Prabhu on 26 February 2015 presented his maiden Rail Budget 2015-16 in the Lok

Sabha. This was also the second rail budget of the Narendra Modi-led NDA government.

In the budget, Prabhu gave 11 thrust areas to improve quality of life in train journeys which also includes

Swachh Rail - Swachh Bharat drive. The 11 thrust areas include

Cleanliness

•Swachh Rail - Swachh Bharat campaign

•New department for cleanliness

•Integrated cleaning by engaging professional agencies and training our staff

•Waste to energy conversion plants

•New toilets covering 650 additional stations compared to 120 stations in 2014

•Bio-toilets to be fitted in the coaches

Bed linen

•National Institute of Fashion Technology (NIFT), Delhi to design bed linen

•The facility of online booking of disposable bedrolls at select stations will be extended to all passengers

through the IRCTC portal on payment basis

Help-line

•Start a 24X7 helpline number 138 and a toll-free number 182 for security related complaints

Ticketing

•Operation Five Minutes to ensure Speedy Purchase of Tickets for Unreserved Class Passengers.

•Provision of modified hot-buttons, coin vending machines and single destination teller windows will be

launched to reduce the transaction time.

•For the differently-abled travellers, a special initiative will be launched whereby they can purchase

concessional e-tickets after one-time registration.

•Proposal to work towards developing a multi-lingual e-ticketing portal

•Some other facilities include introduction of integrated ticketing system on the lines of rail-cum-road tickets

on Jammu – Srinagar route will be expanded.


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Catering

•Integrate Best Food Chains for E-Catering

•Railway passengers to order their food through IRCTC website at the time of booking tickets

Leveraging technology

•Introduce hand-held terminals to Travelling Ticket Examiners (TTEs) for verification of passengers and

downloading charts.

•Extending facility of SMS on mobiles as a valid proof of travel for PRS tickets

•SMS Alert service to inform passengers in advance of the updated arrival/departure time of trains at starting

or destination stations

Surveillance

•Surveillance cameras will be provided on a pilot basis in selected mainline coaches and ladies’ compartments

of suburban coaches without intruding into privacy

Entertainment

•Project for introducing on-board entertainment on select Shatabdi trains on license fee basis

•Mobile phone charging facilities will be provided in general class coaches & its numbers will be increased in

sleeper class coaches

Station facilities

•200 more stations to come under Adarsh Station scheme

•Wi-Fi will be provided at B category station

•Facility of self-operated lockers to be made available at stations

•Provision of concierge services will be introduced through IRCTC at major stations

•Online booking of wheel chair on payment basis for senior citizens, patients and the differently-abled

passengers will be available through IRCTC on select stations

Train capacity

•Capacity in identified trains will be augmented to run with 26 coaches

•More General class coaches will be added in identified trains

Comfortable travel

•NID to design user friendly ladders for climbing to the upper berths

•Quota of lower berths for senior citizens will be increased

•Middle bay of coaches will be reserved for women and senior citizens

•NID will develop ergonomically designed seats

•Provision of 120 crore rupees for Lifts and escalator has been made

•The newly manufactured coaches will be Braille enabled


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•Entrances will be widened to ease of differently-abled passengers

•Corporate houses & MPs requested to invest in improving passenger amenities at Railway stations through

CSR & MPLAD funds

Railway Budget 2015-16: Major Initiatives

Railway Minister Suresh Prabhu on 26 February 2015 presented the Railway Budget 2015-16 in the Lok

Sabha. The Budget plans to invest around 8 lakh crore rupees over the next 5 year to rejuvenate the Indian

Railways.

In this regard, Railway Budget 2015 – 16 unveiled certain initiatives ranging from cleanliness drive to

development of infrastructure to improving the overall quality of life in train journeys.

The major initiatives undertaken in the Railway Budget 2015-16

Station Redevelopment

Zonal and Divisional offices to be empowered for quicker decision making

Development of 10 Satellite Railway terminals in major cities with twin purpose of decongesting the

city and providing service to suburban passengers

Network expansion

Fast-track sanctioned works on 7000 kms of double/third/fourth lines

Commission of 1200 km of network in 2015-16 at an investment of 8686 crore rupees

Expansion of freight handling capacity

Transport Logistics Corporation of India (TRANSLOC), to be set up for developing common user

facilities to provide end-to-end logistics solution at select Railway terminals through Public Private

Partnerships.

Policy for Private Freight Terminals (PFT) to be revised.

Automatic Freight Rebate Scheme for traffic to be expanded

Long haul freight operations to be used extensively and construction of long loop lines to be

expedited.

Improving train speed

Speed of 9 railway corridors to be increased from existing 110 and 130 kmph to 160 and 200 kmph

respectively.


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Average speed of freight trains in empty and loaded conditions will be enhanced to 100 kmph for

empty freight trains and 75 kmph for loaded trains.

Bullet train

Feasibility study for High Speed Rail between Mumbai-Ahmadabad is in advanced stage.

Upgrading manufacturing capability

Creation of job opportunities by upgrading the manufacturing capability and review of functioning of

Indian Railways Production Units.

Workshops for technological upgradation and enhancing productivity be undertaken to make them

self-sustaining.

Safety

RDSO to develop a suitable device with reliable power supply system based on theft-proof

panels/batteries in consultation with Indian Space Research Organization using geo-spatial technology.

Train Protection Warning System and Train Collision Avoidance System to be installed on selected

routes at the earliest.

Better welding techniques being promoted and digital type machines to replace analogue type

machines.

Technology upgradation

Constitution of an innovation council called Kayakalp for business re-engineering.

Technology portal being constituted to invite innovative technological solutions.

Research Centers to be set up in selected universities for fundamental research.

Partnerships for development

PPP cell to be revamped to make it result oriented. Foreign Rail Technology Cooperation scheme to

be launched.

Joint ventures to be set up with States for focused project development, resource mobilization, land

acquisition and monitoring of critical rail projects.

Improvements to Management Processes and Systems

Systems audit to be conducted for review of all processes and procedures.

Constitution of a working group to modify present system of accounting, to ensure tracking of•

expenditure to desired outcomes and Train operations to be audited.


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Paperless working in material management system to be expanded and Vendors to be integrated

through Vendor Interface Management System.

Resource Mobilisation

Support from the Central Government for 41.6 percent of the Plan and Internal generation of 17.8

percent for setting up of a Financing Cell in the Railway Board.

Setting up an infrastructure fund, a holding company and a Joint Venture with an existing NBFC of a

PSU with IRFC for raising long term debt from domestic as well as overseas sources.

Digitized mapping of land records and responsibility fixing for encroachments.

New strategy to tap latent advertising potential including offering stations and trains for corporate

branding.

Railways in partnership with ports will deliver rail connectivity to Nargol, Chharra, Dighi, Rewas and

Tuna. Scrap disposal policy to be reviewed for speedier scrap disposal.

Human Resources

Human Resource Audit to be undertaken; Separate accounting head for HRD; ERP based Human

Resource Management System.

Setting up a full-fledged University during 2015-16 and Improved delivery of health services to

employees

Energy and sustainability

Environment Directorate to be constituted in Railway Board to give increased focus on environment

management.

Initiative likely to save at least 3000 crore rupees in next few years will be taken up. 1000 MW solar

plants will be set up by the developers on Railway/private land.

Water conservation mission will include water audit and expansion of water harvesting systems. 100

DEMUs to be enabled for dual fuel- CNG and diesel.

Noise levels of locos to be at par with international norms and concerns related to wildlife will be

addressed.

Transparency and Governance initiatives

System of on-line applications introduced for two categories of recruitment as a pilot project.

All possible solutions be explored to address menace of corruption. E-procurement value chain to be

expanded.


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Social initiatives

Infrastructure like stations and training centers to be made available for skill development.

Promotion of products made by Self Help Groups, consisting mainly of women and youth on the

model of Konkan Railway.

Tourism

Incredible Rail for Incredible India to be launched and Promotion of training of auto-rickshaw and

taxi-operators as tourist-guides on the model of Konkan Railway.

Coaches in selected trains connecting major tourist destinations to travel agencies may be offered on a

revenue sharing model.

IRCTC to work on promoting the Gandhi circuit to attract tourists to mark the occasion of 100 years

of the return of Mahatma Gandhi to India from South Africa.

IRCTC will work on Kisan Yatra, a special travel scheme for farmers for farming & marketing

technique centres.

Union Cabinet approved the implementation of 15000 MW Grid-connected SPV Projects under NSM

The Union Cabinet on 25 February 2015 approved the implementation of the scheme for setting up of 15000

Mega Watt (MW) Grid-connected Solar Photo Voltaic (SPV) Power projects under the National Solar Mission

(NSM).

The scheme will be implemented through National Thermal Power Corporation (NTPC) and NTPC Vidyut

Vyapar Nigam Limited (VVNL) in three tranches. The three tranches are:

• Tranche 1: 3000 MW of SPV plants will be completed under mechanism of Bundling of solar power (3000

MW) with Unallocated Coal based Thermal Power (1500 MW) in the ration of 2:1.

• Tranche 2: 5000 MW will be completed with some support from Government to be decided after getting

some experience while implementing Tranche-l.

• Tranche 3: remaining 7000 MW will be completed without any financial support from the Government.

Other Highlights of the Scheme

• The bundled power will be allotted to various States that come forward to

(i) Provide land for setting up the solar power projects and

(ii) Purchase a major portion of the bundled solar power for consumption within the State

(iii) Ensure connectivity to the solar power project.

• The capacity allotted to each such State will be set up through developers, to be selected through


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international competitive bidding by NTPC /NVVN. Both private and government companies would be free to

bid for projects.

• 1000 MW capacity out of the 3000 MW under the bundling scheme will be set up on land already identified

in Andhra Pradesh. The balance 2000 MW capacity under the Bundling Scheme will be allotted in other

interested States that come forward.

• A Payment Security Mechanism / Working Capital Fund with an estimated corpus of 2300 crore rupees to

cover 3 months payment for bundled capacity of 3000 MW of Solar Capacity with 1500 MW NTPC Coal

Power, will be set up to ensure bankability of PPAs and timely payment to developers.

• Some capacity of the total procurement under the scheme will be fixed for domestically manufactured solar

cells as well as modules. The quantity to be fixed with Domestic Content Requirement (DCR) in each tender

will be prescribed by Ministry of New and Renewable Energy (MNRE) based on the prevailing market

conditions from time to time.

Completion of the projects under the Mission would accelerate the process of achieving grid tariff parity for

solar power and will also help in reducing consumption of kerosene and diesel.

Other decisions of Union Cabinet

• The Cabinet also approved establishment of the New Development Bank for funding infrastructure and

development projects in the BRICS countries.

• It also cleared the BRICS Contingent Reserve Arrangement (CRA) which is meant to provide short-term

liquidity support to the members in case of a Balance of Payments Crisis.

CCEA approved continuation of incentive scheme for marketing of raw sugar production

The Cabinet Committee on Economic Affairs (CCEA) on 19 February 2015 approved the continuation of the

incentive scheme for marketing and promotion services of raw sugar production during the current sugar

season (October-September) of 2014- 15.

The approval was granted for raw production of 14 lakh metric tonne of sugar.

The CCEA also fixed uniform rate of export subsidy at 4000 rupees per metric tonne for 2014-15 sugar season

which is much higher than 3371 rupees per tonne fixed in 2014 for August-September period.

Further, in case of mills having alcohol production capacities, the incentive will be available to them if they

offer to supply ethanol to oil marketing companies (OMCs) under the Ethanol Blending Programme (EBP) up

to 25 percent of their annual production level of alcohol.

The decision will help sugar mills to clear the cane price dues of the farmers.

Earlier in 2013, the UPA Government had announced a subsidy for exports of raw sugar up to 4 million tonne


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in order to help the cash-starved industry clear sugarcane arrears to farmers. However, subsidy scheme ended

in September 2014 as the NDA government did not extend the scheme for the current marketing year.

Union Government launched single window eBiz portal to foster business environment

The Union Minister of Finance Arun Jaitley launched a single window eBiz portal for 11 central government

services in New Delhi on 19 February 2105. eBiz is a Government-to-Business (G2B) portal and was launched

with an aim to bring transparency and ease of doing business in the country.

The 11 Central Government services that will be catered by the portal include four services of Ministry of

Corporate Affairs (MCA), two services of Central Board of Direct Taxes (CBDT), two services of Reserve

Bank of India (RBI), one service each from Directorate General of Foreign Trade (DGFT), Employees

Provident Fund Organization (EPFO) and Petroleum and Explosives Safety Organization (PESO).

A business user can avail the service any time from the day of launch either from the portal of

respectiveMinistry/Department or by physical submission of forms.

The list of 11 services

Sl.

No.

Ministry or Department Name Service Name

1 Ministry of Corporate Affairs Name Availability

2 Ministry of Corporate Affairs Director Identification Number

3 Ministry of Corporate Affairs Certificate of Incorporation

4 Ministry of Corporate Affairs Commencement of Business

5 Central Board of Direct Taxes Issue of Permanent Account

Number (PAN)

6 Central Board of Direct Taxes Issue of Tax Deduction Account

Number (TAN)

7 Reserve Bank of India Advanced Foreign Remittance

(AFR)


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8 Reserve Bank of India Foreign Collaboration-General

Permission Route (FC-GPR)

9 Employees’ Provident Fund

Organization

Employer Registration

10 Petroleum and Explosives Safety

Organization

Issue of Explosive License

11 Directorate General of Foreign

Trade

Importer Exporter Code License

About eBiz

The eBiz portal was conceptualised with support from National Institute of Smart Government (NISG) as the

consulting partner and was developed by Infosys Limited, Bangalore. It was developed in a Public Private

Partnership (PPP) Model for a period of 10 years.

In the first three years, eBiz portal will be implemented on pilot basis during which 50 services (26 central +

24 state) across 10 states will be covered. These 10 states are Andhra Pradesh, Delhi, Haryana, Maharashtra,

Tamil Nadu, Odisha, Punjab, Rajasthan, Uttar Pradesh and West Bengal.

One of the salient features of eBiz is its payment gateway solution. It has been set up in collaboration with all

the Public Sector Banks (PSBs) to transfer government fees on T+1 basis.

For eBiz transactions, an electronic PAO system (ePAO) has been set up in Department of Industrial Policy

and Promotion (DIPP) to make booking and reconciliation of all Central Government fees received through

eBiz portal.

The eBiz portal has been approved by the Comptroller and Auditor General (CAG) of India and it is for the

first time in the country that collection of fees through credit and debit cards for different services have been

permitted making it very convenient for business to deposit fees.

RBI issued Guidelines on Import of Gold by Nominated Banks and Agencies

Reserve Bank of India (RBI) on 18 February 2015 issued operational aspects of the guidelines on import of

gold under 20: 80 Scheme by nominated banks and agencies.

The RBI issued the guidelines in consultation with the Union Government. It issued the guidelines after it

received the requests for clarification on some of the operational aspects of the guidelines on import of gold

consequent upon the withdrawal of 20:80 scheme on 28 November 2014.


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RBI issued the guidelines under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act

(FEMA), 1999 (42 of 1999).

The guidelines include:

• The obligation to export under the 20:80 scheme will continue to apply in respect of unutilised gold imported

before 28 November 2014 when the scheme was withdrawn.

• The nominated banks are now permitted to import gold on consignment basis, whereas, all sale of gold

domestically will be against upfront payments.

• Banks can grant gold metal loans.

• Star and Premier Trading Houses (STH/PTH) can import gold on DP basis as per entitlement without any end

use restrictions.

• The import on the gold coins and medallions will no longer be prohibited but the restrictions on banks in

selling gold coins and medallions were not lifted up.

About 20:80 scheme

It was introduced by RBI in 2013, to bring down inbound shipments, to stop the sliding rupee and to combat a

huge current account deficit (CAD).

Under the scheme, 20 percent of the imported gold had to be mandatorily exported as finished products like

jewellery.

Union Ministry of Finance imposed Anti-dumping duty on imports of graphite electrodes

Union Ministry of Finance on 16 February 2015 imposed the anti-dumping duty on imports of graphite

electrodes for five years. The imposed duty ranges between 278.19 US dollars and 922.03 US dollars per

tonne. With this move, government aims to protect the domestic industry from below-cost shipments of

graphite electrodes. The graphite electrodes are used in melting of steel. The decision was taken following the

recommendations of the Directorate General of Anti-Dumping Duty (DGAD). Earlier, DGAD had conducted

investigation into dumping following the petition filed by domestic manufacturers like HEG Limited and

Graphite India Limited. It said that the production, sales and capacity utilisation of the domestic industry

declined in January 2012-December 2012 after a healthy growth during the previous years. While the imports

increased substantially over the period from April 2009 to December 2012.

About Anti-Dumping Duty

Anti-Dumping Duty is the duty imposed by government on imported products which have prices less than their

normal values or domestic price. It is imposed under the World Trade Organisation (WTO) regime and varies

from product to product and from country to country.


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Union Government divested 10 percent stake in Coal India Limited

Union Government on 30 January 2015 divested 10 percent of its stake in Maharatna Coal India Limited

(CIL). With this, government’s share in CIL came down to 79.65 percent. Government divested 63.16 crores

shares (10 percent) of CIL through offer for sale (OFS) at a floor price of 358 rupees per share and realized an

amount of 22557.63 crore rupees through the disinvestment process. The offer of CIL was oversubscribed by a

magnitude of 5 percent of the total shares offered for sale. That is, CIL received a total bid for 67.5 crore

shares as against the 63.16 crore shares offered for sale. This was the largest ever disinvestment among Central

Public Sector Enterprises (CPSEs) and the stake sale exceeds the previous record of over 15000 crore rupees

realized in 2010 through the initial public offering (IPO) of CIL.

CCEA approved mandatory packaging of food-grains, sugar in Jute material for the Jute Year 2014-15

The Cabinet Committee on Economic Affairs (CCEA) on 28 January 2015 approved mandatory packaging of

food-grains and sugar in Jute material for the Jute Year 2014-15 with certain exemptions. This decision will

preserve and promote the jute sector. The minimum percentage of food-grains and sugar reserved for

packaging in Jute for the Jute Year 2014-15:

• Food-grains: 90 percent of the production

• Sugar: 20 percent of the production

In case of food-grains, the indents for the whole requirement will be placed for the jute bags. However, if jute

mills will not be able to provide the jute bags as per the demand, then a dilution of 10 percent will be permitted

by the Department of Food in consultation with the Union Ministry of Textiles.

Following exemptions will be allowed under Jute Packaging Materials Act, 1987:

• Sugar that is packed for export but could not be exported may be exempted from the operation of the Order

on the basis of an assessment by the Department of Food and Public Distribution.

• Following will be out of the purview of the reservation including sugar fortified with Vitamins, packaging for

export of the commodities, small consumer packs of below 10 kg for food-grains and below 25 kg for sugar

and bulk packaging of more than 100 kg.

• In case of any shortage or disruption in supply of jute packaging material, the Ministry of Textiles may relax

these provisions up to a maximum of 30 percent of the production of food-grains.

RBI simplified procedure for External Commercial Borrowings Policy

The Reserve Bank of India (RBI) on 23 January 2015 simplified procedure for External Commercial

Borrowings (ECB) Policy.


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The directions have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act,

1999. Changes are effected during the tenure of the ECB.

The directions are as follows

• Under the simplified procedure, the RBI has delegated powers to the banks to make changes/modifications in

the draw-down and repayment schedules of the ECB raised both under the automatic and approval routes.

FCCBs will, however, not be covered within these provisions.

• It has simplified the existing procedure for rescheduling/restructuring of external commercial borrowings

(ECBs). It also delegated more powers to banks to deal with cases related to change in draw-down and

repayment schedules.

• The above mentioned changes/modifications could either be associated with change/no change in the average

maturity period and/or with changes (increase/decrease) in the all-in-cost.

• Banks can allow reduction in the amount of ECB (irrespective of the number of occasions) along with any

changes in draw-down and repayment schedules, average maturity period and all-in-cost. They can also permit

increase in all-in-cost of ECB, irrespective of the number of occasions.

• Banks can permit changes/ modifications in the draw-down and repayment schedules of the ECB provided

the revised average maturity period and/or all-in-cost is/are in conformity with the applicable

ceilings/guidelines.

• Banks may also allow the cases requiring transfer of the ECB from one company to another on account of re-

organisation at the borrower’s level in the form of merger/demerger/amalgamation/acquisition after satisfying

themselves that the company acquiring the ECB is an eligible borrower and ECB continues to be in

compliance with applicable guidelines.

Shanta Kumar Committee on FCI restructuring submitted its report to the Prime Minister

Shanta Kumar Committee on 21 January 2015 submitted its report on restructuring of Food Corporation of

India (FCI) to the Prime Minister Narendra Modi.

The Prime Minister asked the Department of Food and Public Distribution to give its comments on the report

so that the recommendations can be implemented in a time-bound manner.

Recommendations of the Shanta Kumar Committee

• FCI procurement should focus on eastern belt, where farmers do not get minimum support price.

• FCI should hand over procurement of wheat and rice to six States which include Punjab, Haryana, Andhra

Pradesh, Chhattisgarh and Odisha.


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• Grain storage needs to be outsourced to private and government agencies like state-owned Central

Warehousing Corporation (CWC), State Warehousing Corporations (SWCs) and private organisations.

• Proposed uniform tax of minimum 3 percent and maximum 4 percent on wheat and rice and the same to be

included in the minimum support price (MSP). In Punjab, this tax rate on wheat and rice as of now is 14.5

percent.

• To strengthen distribution of foodgrains, there needs to be end-to-end computerisation and a vigilance

committee needs to be set up. At present, the leakage in Public Distribution System is estimated at 13.7

percent.

• Recommended cash transfer in 52 cities having 1 million or more population in two years and also asked the

government to give deficit states the option of either supplying grain or cash transfer.

• Called for encouraging private investment in logistics in next two-three years and suggested bulk handling of

foodgrains through grain trains.

Background

The eight-member High Level Committee on FCI restructuring chaired by Shanta Kumar was set up in August

2014. The members of the committee are FCI Chairman-cum-Managing Director C Viswanath, Electronic and

IT Secretary Ram Sewak Sharma, Former Chairman of Commission for Agricultural Costs and Prices (CACP)

Ashok Gulati, Chief Secretaries of Punjab and Chhattisgarh; and Academicians G Raghuram and Gunmadi

Nancharaiah of IIM-Ahmedabad and Hyderabad University respectively.

The Terms of Reference of the Committee were:

• To examine the present day administrative, functional and financial structure of FCI

• To examine the modus operandi of its various operations

• To suggest a model for restructuring FCI to improve its operational efficiency and financial management

• To suggest measures for overall improvement in management of foodgrains by FCI.

World Economic Situation and Prospects 2015 report released by UNESCAP

United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) on 19 January 2015

released World Economic Situation and Prospects (WESP) 2015 report. The report projects that the regional

growth will pick up in 2015-16, as average GDP growth will accelerate from 5.0 percent in 2014 to 5.3 percent

in 2015 and 5.7 percent in 2016.

The report has highlighted that the South Asia’s economic growth is set to reach a four-year high in 2015. The

average gross domestic product (GDP) growth of South Asia accelerated from 3.7 percent in 2013 to 4.9

percent in 2014, and is projected to strengthen further to 5.4 percent in 2015 and 5.7 per cent in 2016.


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It expects that the recovery will be led by a pick-up in growth in India, which accounts for about 70 percent of

regional output.

The report in context of other Asian countries like Bangladesh and the Islamic Republic of Iran said that they

will also see growth in the forecast period.

It says that growth supported by the robust external demand is expected to be underpinned by a moderate

strengthening of domestic consumption and investment.

Report in context of India

WESP 2015 report said that India will see gradual growth acceleration in its GDP which is expected to reach

5.9 percent in 2015 and 6.3 percent in 2016. It says that it is expected that the recovery will be led by India.

India’s economy expanded in 2014 estimated by 5.4 percent, which improved from growth of 5.0 percent

recorded in 2013.

The report said that the recovery is partly the result of improved market sentiment and plans to reform the

bureaucracy, labour laws and public subsidies after the new administration took office in the second quarter of

2014.

About United Nations World Economic Situation and Prospects (WESP) report

WESP report is published annually at the beginning of the year by the UN Department of Economic and Social

Affairs (UN/DESA), the UN Conference on Trade and Development (UNCTAD), the five UN regional

commissions and the World Tourism Organization (UNWTO).

CCEA approved revised buffer norms of foodgrains for better management of food stocks

Cabinet Committee on Economic Affairs (CCEA) on 16 January 2015 approved revision in buffer norms of

foodgrains in the Central Pool. The revision was approved to ensure better management of food stocks in the

country.

Revised buffer norms of food grains

Now the Food Corporation of India will have to maintain higher buffer stock in different quarters as compared

to the existing norms of 2005,they are as follows

As on Existing since April

2005

Revised

1April 21.2 million tonnes 21.04 million tonnes

1 July 31.9 million tonnes 41.12 million tonnes


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1 Oct 21.2 million tonnes 30.77 million tonnes

1 Jan 25.0 million tonnes 21.41 million tonnes

Apart from this, the CCEA also approved that the Department of Food and Public Distribution can offload

excess stock in the domestic market through open sale or through exports, in case the stock of food grains in

the Central Pool is more than the revised buffer norms.

An Inter-Ministerial Group (IMG) has also been constituted to implement the decision. It will comprise of

Secretary, Department of Food & Public Distribution, Secretary, Expenditure and Secretary, Consumer Affairs

and will be responsible for managing the food stock.

Why the need to revise buffer norms?

The buffer norms were increased in light of significant increase in the off take of foodgrains under Targetted

Public Distribution System (TPDS) and also in light of the increased foodgrains requirement necessitated by

the implementation of National Food Security Act, 2013 from 5 July 2013.

The Food Security Act, 2013 promises 5 kg of grains per person every month at 3 rupees and 2 rupees per kg

for rice and wheat respectively. The scheme will cover two-third of the population.

However, the revised buffer norms are lower than what was suggested by the then UPA government. UPA

government led by Manmohan Singh had proposed to increase the buffer norms by 60 percent.

Narendra Modi-led government increased the buffer norms only by 50 percent. This suggests that government

is keen to better target the subsidies and maintain the fiscal deficit within the limits provided by Union Budget

2014-15.

This is because in order to meet the increased requirements of foodgrains necessitated by Food Security Act,

the FCI will have to incur expenditure of 25-32 crore rupees as carrying cost to hold 1 lakh tonnes of wheat

and rice annually.

RBI relaxed Forex Hedging Norms for Exporters and Importers

The Reserve Bank of India (RBI) on 14 January 2015 relaxed the Forex Hedging Norms for exporters and

importers.

The norms were relaxed under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.

Relaxed Forex Hedging Norms

• Now, the exporters and importers can book forward foreign exchange contracts in excess of 50 percent of the

eligible limit. This will give them greater operational flexibility.

• However, approval of these contracts is subjected to some conditions including the submission of a


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declaration that all guidelines have been adhered to while utilising the facility.

• The declaration has to be signed by the Chief Financial Officer (CFO) and the Company Secretary (CS).

• In the absence of a company secretary (CS), the Chief Executive Officer or the Chief Operating Officer shall

co-sign the undertaking of the customer along with the Chief Financial Officer.

• Moreover, a certificate of import or export turnover of the customer during the past three years has to be

attached.

• All other operational guidelines, terms and conditions shall remain unchanged.


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