Economy India English

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regard this new budget, quite Ok,

since there are several facets of

budget, so it is difficult to

address all of them separately, buton the whole, NAMO govt. has

saved its face at least at the

moment through its General budget

. Talking about Railway budget,

while canvassing with the media

persons, I was very amazed to listen

from the present railway minister

Sadanand Gauda that we do not

take suggestion from the Media

people, we take suggestion only

from our officers for doing

anything. This is the reality of our

system. Now I understand why any

democratic government can not take astute decision against the

corruption of bureaucracy, because they are after all the suggestion

maker then why any suggestion maker will go after own self.

The one organization, Indian railway, catering the need of

almost 125 crore citizens of the country, in fact has reached its ceiling

point of its service provider capacity very before. The railways which

has total track length of around 60,000 kilometer has just added

12,000 Kilometer in last 65 years, whereas the numbers of rail

passengers have increased by manifold, by almost 5 times, in the same

manner the tones goods amount, being carried by railways has

increased by more than 10 times. The simple point is, we have not

expanded Railway as per the demand of the country and the reason is,

because it is run and nurtured by one and one government only. If we

would have separate Rail infrastructure development department

under the ministry of railway, things would have been different and

this department might have always worked over raising of funds in

order to expand railway infrastructure, whether collecting money

from the public, from the investors, from the bankers, from the foreign

investors like that. But the railway ministry was left only at the mercy

of its political master.

Anyway the new general budget, presented by Arun Jaitley

provided some relief to almost 3 crore income tax payers of the

country. The exemption limit increased by 50 thousand( from 2 lakh

to 2.5 lakh), the investment exemption limit increased by 50

thousand( from 1 lakh to 1.5 lakh), the home loan tax exemption

increased by 50 Thousand( from 1.5 lakh to 2.0- lakh), the PPF saving

limit by 50 thousand( from 1 lakh to 1.5 lakh), all these have given an

urgent kind of relief to the tax payers, who were waiting these for a

long time under the circumstances, when country was witnessing very

high inflation, salary increase etc.

I think this is very early to judge, in the long run how this govt.

will bring several policies and perspective in order to meet out various

challenges, the administrative management, e-governance, new

personnel policy; on all these fronts, if this government does

something, it will open the new face of government, otherwise in the

existing framework of governance, budget would be also provedsimply a routine exercise.

Empanelled

Indias First Complete

Magazine on Economic Affairs

Editorial

Editor In Chief

MANOHAR MANOJEmail: [email protected]

Editorial AdvisorsDR. MADAN BIHARI PRASAD

RAMESHWAR GUPTA

Bureau ChiefARVIND KUMAR

CirculationMANI KANT

Art Co-OrdinatorAVINASH JHA

Email: [email protected]

Marketing AssistantDeepak Kushwaha

July-August 2014 Volume-8 Number-7

Proprietor, Publisher, Editor,Printer, Manohar Manoj Kumar,

Published at 323 B, J&K Pocket,Dilshad Garden,Delhi-110095, Printed at

Kumar offset printers, 381-P. P. Ganj,

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4/76

CONTENT

June, 2014

60

72

46

Rajartha 06-09

Artha-Desh 10-15

Artha-Pradesh 16-17

Artha-Vishwa 18-19Public Sector 20

Corporate Sector 21-23

Infrastructure 24-25

Banking Sector 26-27

Human Development 28-29

Agriculture 30-31

Budget India 32-57

Financial Market 58-59

Special Story 60-67

Glamour 72

32


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BHARAT PARIVARTAN ABHIYAN

A new wave to change

the system

Presenting a comprehensive,

scientific, pragmatic and Ideal vision

document for bringing all necessary

and required change in the system

A total solution to corruptionan alternative structural

vision to our ethnicity, polity,

society, economy, public

administration and all keyinstitutions of the country,

thus we aim to build India of

the next 100 years

www.bharatparivartanabhiyan.com email:[email protected]

Ph. 011-45052769 Mob: 9811069966


6/76

When NAMO invited several

SAARC countries leaders at

the time of his oath ceremony,

it seemed, this government will

construct a new leak of her actions and

governance, but now it looks very

disappointing to see this new NAMO

government, just following the policy

path of earlier UPA government. The BJP

led new NDA government which

roughly exposed the whole policy

regime of the last UPA govt. during the

election time, is very amazingly still

depending on those very policies;

rather it is continuing the same

governing trend also especially over

price rise, economic management,

subsidy continuation and price hike of

some infrastructure goods & services.

We all were expecting the

NAMO led new government will start

some fundamental and long term

change in the governance mode of the

country, but it seems this government is

even not ready to show some new

symptoms in its style of governance.

Few days ago, Arun Jaitley delivered a

statement that one should be ready to

pay the government for the services

provided to them; principally it was not

a wrong statement. If we do no pay for

consumable goods and services

considering its cost and inflation, we are

playing with the sustainability of a

product or its producer. In this context,

we all know and it is very much true

that there are some government

managed goods and services, which are

not being appropriately charged, but it

is also more than true that there lies ahuge amount of mismanagement,

inappropriate utilization of resources,

existence of rampant corruption,

leakages and lack of productivity in the

several govt. organizations. In order to

this , the new government was very

much expected to start a perspective

kind of reform followed by some

rational price increase, then it would

have called justifiable approach on the

part of new government. But this

government did not show this gesture

and immediately hike the railway fare,

this hike move not only gave wrong

signal to the supporters of this

government, in fact, it was proved to be

neither a reformist approach nor a

politically legitimate approach,

particularly in the context of the

upcoming assembly elections in states

like Hariyana, Maharashtra, Jharkhand

and possibly in Delhi.

The three factors which are

said to be responsible for the defeat of

UPA- 2 govt. the price rise, corruption

and policy paralysis in the governance,

on all these front this government lacks

new vision, so they validated the old

policies, rather they delivered the same

statement in their defense what UPA

people were delivering during their

regime. For the price rise, UPA was also

making hoarders responsible; the

NAMO govt. delivered the same

statement, so the question is if that is

there, why people replaced UPA with

NDA. This NDA government must

understand this fact that if hoarders are

responsible for the price increase, why

don't they do this all the time and

throughout the year, why they do only

off and on. Many times, prices of

essential commodities persist on a

reasonable level, why hoarders do not

do their act on that occasion; after all

we have a defect in our policy, which

ultimately provides opportunity to the

hoarders to hoard and it happens when

there become supply constraints or

inadequate supply of some

commodities in the market seeing their

volume of demand, the problem gets

start.

On the occasion of price

increase, generally it is seen

government eases imports, restricts

export or starts selling items through its

authorized outlets or circulating media

news in regards to start campaign

against hoarders. But the question is,

could these kind of measures bring

permanent control over the price rise.

Obviously reply is in 'no'. So, on behalf

of the new government, it is very much

expected to initiate those kinds of

policies which can stabilize the prices

forever and never ever give opportunity

to the hoarders to hoard. I think it is

possible if govt. does three things, first

and foremost govt. must fix the

minimum remunerative prices to the

producers as well as fix up thereasonable maximum retail prices to all

essential 32 agriculture items. I think in

showing Replica of

the past policies

Manohar Manoj

NAMO Govt.

W

Rajartha

Economy India July-August 20146


7/76

Rajarthahen Arun Jaitley took a

long pause in the

middle of his budget

presentation, it seemed very

awkward to the many, because

it was never seen before, but atthe end of it, it seemed this

backache of finance minister

which compelled FM for taking

pause might have proved

backbone of the governance of

this NAMO government. During

its reign of almost one and half

month, this government , first

time got some round of

applause, otherwise the

growing price rise with addition

of rail fare and diesel-LPG price

hike has attracted many

opposition to this government.

Anyway the new budget provided

some relief to the almost 3 crore

income tax payers of the country. The

exemption limit increased by 50

thousand ( from 2 lakh to 2.5 lakh),

the investment exemption limit

increased by 50 thousand( from 1

lakh to 1.5 lakh), the home loan tax

exemption increased by 50

Thousand( from 1.5 lakh to 2.0- lakh),

the PPF saving limit by 50 thousand(

from 1 lakh to 1.5 lakh), all these have

given an urgent kind of relief to the

tax payers, who were waiting these

for a long time, when country was

witnessing very high inflation, salary

increase etc.

Second this government has given

strong message for keeping the fiscal

deficit under the prescribed target. In

order to this the present fiscal deficit

would be 4.1 percent and for the

upcoming years he has even

indicated the deficit would be cut

down further to 3 percent level, but

the problem is how he would be able

to increase tax revenue, because he

has told this fiscal prudent measure

would be not achieved through

expenditure cut. So he will have to

explore the revenue raising

measures. He talks about clearance of

all tax disputes which involves

around 4 lakh crore and also he has

mentioned all bank NPA whichinvolves around 2 lakh crore, if tax

reform measures are implemented in

strong manner, the volume off

revenue could be increased. We all

know the fiscal deficit is greatly

aggravated by non plan expenditure

like subsidies, defense, pension,

interest payment etc. I think barring

subsidies, nothing can be curtailed

in the existing circumstances , in

the era when petroleum subsidies

are on the lower side, the subsidies

on fertilizers and food are on

alarming side.

Though FM has said that he

would bring a new Urea policy in

time to come, but no one want to

bring down food subsidy. In this

circumstances to check fiscal deficit

under the prescribe limit would be a

herculean task. Many aspirations

were tagged with new government

and Prime Minister Narendra Modi

who had presented many vision

agendas before the nation. FM has

tried his level best to incorporate all

those schemes like AIMS, IIT, IIM,

Metro, smart cities, urban

development, Ganga cleaning and set

up of ghats etc. but very amazingly

he has provided only token amount

of money for these, in reply to this

query Mr. Arun Jaitlye says already 3

months have spend and the full

modalities of the concerned scheme

will come at least within 1.5 to 2

months, then land would be allotted

for this, until then financial yearwould get end so the real budgeting

will be done next year only. Arun

Jaitley, new finance minister has

no doubt given manufacturing

sector, his big focus area, already

economic survey tells about

setting up of 16 national

manufacturing centre in thecountry. In order to this about a

dozen sea port and a dozen

cargo airport, 24X7 electric

supply, speedy land clearance

have been mentioned in the

budget. Bringing manufacturing

sector at the level of 25 percent

of the country's GDP and

enabling 10 crore employment

generation is a mammoth task.

In the budget we saw many

fiscal incentives have bee given

to some industries, the

renewable energy are prime out of

them. The power generating

companies have got long tax holidays

even up till 10 years in the budget.

Most significant point is how this

government will frame a new

guideline over scheme like MNREGA,

Food security,, the schemes which

have aggravated inflation as well as

corruption. These two items take

around 2 lakh crore worth of money

and gives a huge burden over

government kitty. If MNREGA get

converted in some rural

infrastructure development plan

after clubbing it with PMGSY,

AJIVAKA, NREP etc, it will give big

boost to the rural economy of the

country and on the other side if Food

security yojana is replaced by a

better social security schemes, it

would have a more justification.

Provisions for agriculture credit,

infrastructure development have

been mentioned in routine manner. I

think this is very early to judge, in the

long run this govt. will have to

brought many policy and perspective

in order to meet out various

challenges, the administrative

management, e-governance, new

personnel policy on all these fronts, if

this government does something, it

will able open the new face of

government, otherwise in the routine

framework of governance, budgetwould be proved simply a routine

exercise.

New Govt. saved

its face through

the Budget

W



8/76

Rajarthat a r t

developing

railways to

the next level

and utilizing it

as an engine ofinfrastructure

development of

the country was one of the NAMO'

main dream during the election.

So budget was very much

expected on those lines, that is

why in the rail budget, the

government announced the

inception of high speed trains

along with one bullet train

between Ahmadabad to Mumbai.

But on the whole this railway

budget is telling so many things in a very routine

manner, which all railway ministers used to say, like

house keeping, RO drinking water, cleanliness etc,

increasing the booking of e-tickets, but I think the

culture of facilitating railway services in terms of

drinking water, lodging, seating, platform spaces etc. is

rooted so deep in India and so these are on a very high

expectation note from the public side that we forget one

most fundamental thing in the railways, that is availing

reservation ticket on demand on anytime and for any

route, but this is far from the railway's achievability. I

think when we go to the bus stand or airport, we do not

even get seat to sit, we are just being disposed for our

traveling, but from the railway our expectations from the

railway is so high and deep rooted in last 150 years from

colonial period to independence period.

The one organization, Indian railway, catering

the need of almost 125 crore citizens of the country has

reached its ceiling point of providing services very

before. The railway which has total track length of

around 50,000 kilometer has just added 12,000

Kilometer in last 65 years, whereas the Rail passenger

has increased by manifold, by almost 5 times, in the

same manner the tones goods amount, being carried by

railways has increased by more than 10 times. The

simple point is we have not expanded Railway as per the

demand of the country and the reason because; it is run

and nurtured by one and one government only. If we

would have separate Rail infrastructure development

department under the ministry of railway, this

department might have always worked over fund raising

to expand railway infrastructure, whether collecting

money from the public, from the investors, from the

bankers, from the foreign investors like that. But the

railway ministry was left only at the mercy of its political

master. This is the reason when a political master of

railway provides train for any route, people tell him he isfavoring his constituency. Whereas railway is a

commercial enterprise, it must be avail on all those

places , where people are ready to

afford it, pay it, but in regards to

railway our perception is different

as if rail service is freebies for the

public. This is so because there is

scarcity and there is in equilibriumin the demand and supply of

railway service. So the topmost

agenda for railway is to expand it

as per the demand of the public

and for this if railway invites

private players or foreign players,

it should be always allowed. In

the present budget FDI has been

allowed in railway except the

operation side, I think this is very

late but accurate move. But

unless this government bring a

broad policy guidelines for the track expansion of the

country, just announcing public private participation in

pieces meal approach will not help its causes. I think

railway has enough land space to construct one pair

extra track on both side of existing track lying all over the

country. If we do so country will have extra 1 lakh

kilometer extra track which will be sufficient enough to

meet out the present and also future needs of the

country. Government should outline new rail

infrastructure policy like new telecom policy so that

substantial investment can be invited for this. I think

railway thinkers have done sin firstly by not managing

sufficient government funds and secondly by not

inviting investors in it through new policy regime. At

present railway minister talk about private investment

not through a broad policy initiative rat her in pieces

which have been announced in the budget. We know the

expansion of tracks will require a fully modernized

traffic control system, because we already have many

incidents of accidents in railway, but in the western

world the rail traffic control system is fully digitalized,

that can be done in India also.

In this budget, railway minister has started so

many pilot projects, but he could not start a very crucial

project that was to start TT less coaches in Indian railway

through biometric ticketing system. All railway ministers

including new railway minister Sadanand Gowda keep

weeping over fund crunches in the railway organization,

but they never talks about the leakages, under

productivities, lack of booking counters, the influence of

touts and middlemen etc. In this new budget the new

railway minister never mentioned the mismanagement

and corruption in the railway which enables largest

number of complains in the railway and bribery

reporting in organization like CVC. I think railway should

all out for the corporatization of its all 16 zones, it must

be made more revenue consciousness and always availwork for the availing the services as per the demand of

passengers.

Rail Budget

Reformist, but

in routine way


S


9/76

terms of food grains the difference

between minimum and maximum

price must be 25 to 30 percent and in

terms of vegetables and other

perishables the difference between

minimum and maximum prices mustbe 50 to 60 percent, which is right now

50-100 percent in terms of food grains

and 100-200 percent in terms of

vegetables and perishables.

Second this government must

allow its procurement and distribution

agencies like FCI, NAFED and other

marketing cooperative organizations to

intervene in the open market operation.

It means, these agencies would

purchase all agro items in the

harvesting and plucking season from

the producers and farmers and store it

in their warehouses and god owns and

latter on sell them in the off season

period in open market. Third, govt. must

ban the future trading of all agriculture

commodities with immediate effect. If

government starts all these 3 measures,

prices will have a stabilizing trend.

These set of measure would ensure

regular supply chains in the market. If

we do not provide cost plus prices to the

farmers, the supply chain in longer

period will get affected. Food inflation

has a more a supply- demand in

equilibrium dimension, whereas the

problem of general inflation has many

more dimension other than demand

and supply in equilibrium, which needs

to be discussed. General inflation get

affected by monetary environment of

the country, which is controlled by RBI,

it is affected by the fiscal situations of

the country, controlled by ministry of

finance, it is affected by the tariff policy,

controlled by ministry of commerce, it

is affected by the external factor, getadjusted and controlled by all above

mentioned authorities, it is affected by

calamity conditions, controlled through

our disaster management system. In

this context, for any government, task of

controlling inflation is rendered

through bunch of policies, having more

focus on practicing fiscal disciplines inthe governance.

We know, the FRBM act, which

was brought to control the fiscal deficit

within the target limit in the country,

was now followed affectively by the

UPA government. UPA's continuing

dependence over populism to win

elections in fact brought havoc to the

economy. UPA govt. first brought farm

loan waiver schemes in 2008,

implemented sixth pay commission ,

initiated non productive MNREGA

schemes followed by food security act,

these all schemes have had not only

having the inflationary content in their

preamble of the scheme, rather it had

immense potential of corruption. My

latter part of article is going to diagnose

that under this ailing economic

condition, is this government still ready

with policies of UPA Government,

means food security , MNREGA and

measure to control corruption. I don't

think unless the present government

rethinks and takes decision over

petroleum subsidy, continuation of

MNREGA, over pumping food security

and starting a new culture in the

bureaucracy, it would able to start

course correction in dealing with fiscal

deficit, corruption and price rise. I think

UPA took right decision to discard

subsidy over diesel by hiking its rate by

50 paise per liter in every month, now

the under recovery has fallen down to

merely 3 rupee per liter which was once

17 rupee per liter. But on LPG front UPA

took bad and unpopular decision, it

should not have created dual pricing

system, in stead it should have increase

its prices by 200 by limiting maximum

cap 12 which was earlier only 6, raised

to 9 and then to 12.

There must not be difference

of more than 200 rupee between the

prices of subsidized and market price of

LPG cylinder. Govt. initiated the small

size LPG cylinder very late, I think 5 kg

cylinder at the cost of 300 must bemade freely available; it will stop public

anger as well as black marketing of LPG.

On kerosene

front govt. should keep continuing

subsidized coupon system for the rural

areas otherwise it must have diesel

parity price in the urban part of the

country. A uniform type of policies forall 4 petro items gasoline, diesel, LPG,

kerosene must be accompanied with

broad tax reform by bring full white

paper over it. Govt. must minimize as

much as taxes imposed over these.

Providing relief to the consumer

through tax in place of subsidy is the

best policies for any government. It will

stop corruption and mishandling of

public money.

Talking about MNREGA

program, once termed to be a social

inclusive program, in fact proved to be

inflationary as well created lots of scope

for leakages and corruption. If this

money being spent over rural

infrastructure (physical and social)

based on PURA, it would have more

meaningful affect over rural economy. I

think NAMO govt. must amend this

scheme and make it more meaningful .

Coming over food security act which is

consuming more than 1.5 lakh crore

annually, it should be replaced by a

nationwide social security and social

insurance scheme, which can ensure

elderly people having at least pension of

1000 rupee per month. I think present

PDS program should be converted in

mass lungar program with the help of

NGOs and charity organizations. PDS

must be stick with calamity condition

and for the remote and tribal areas,

In regards to tackling

corruption from the public life, this

NAMO govt. must launch a completely

new personnel policy, until unless we

have a new office culture, the designing

and redesigning of cabinet will not help

at all in dealing with public. Unless we

overhaul our bureaucracy, nothing will

happen especially on the front of

corruption. At last this government has

done one thing different to the earlier

government that is stopping of Nehru

and Gandhi nemesis of almost all

program, schemes, institutions etc.,that

has now shifted to people like Shyama

Prasad Mukherji, Deendayal Upadhyay,jayprakash Narayan, Pt. Madan Mohan

Malviya and Sardar Patel.

Rajartha



10/76

Artha-Desh

Take decisions, I'll backyou: Modi

n his first meeting with the secretaries of all the

government departments collectively Prime Minister

Narendra Modi asked them to take decisions without

fear. It was reported that while Modi asked the secretaries

to approach him directly to resolve issues and expedite

decision-making, he also told them to take decisions and

assured his full support. He also "encouraged the officers

to take decisions and assured them that he would stand

by them," an official statement later said. The PM further

asked the bureaucrats to simplify and streamline

administrative rules and procedures in order to make

them people-friendly, while expressing full faith in their

commitment and competence to build a better future for

the country.

He said that "there may be rules and processes

which have become outdated, and instead of serving the

process of governance, they are leading to avoidable

confusion" and stressed upon the need to "identify and do

away with such archaic rules and procedures". During the

marathon two-and-a-half hour meeting, Modi "listened

extensively" to the top bureaucrats and empathized with

their sentiments while noting their anguish in not being

able to realize their true potential because of

"circumstances". The intent behind the meeting was to

give the bureaucracy a greater role in decision-making

with thrust on transparency and speedy and effective

governance. To ensure that implementation of decisionsand programmes are not stuck in 'red-tape', the PM asked

secretaries to call him or email him directly for

suggestions or intervention required in resolving issues or

expediting decisions, sources said.

During the meeting, first by a Prime Minister

directly with all the secretaries without ministers, Modi

made initial remarks and then asked secretaries to raise

issues. About 25 secretaries spoke on the sectoral issues

under their responsibility. "Discussions focussed more on

making governance more effective," a source said. In all,

77 top bureaucrats, including Finance Secretary Arvind

Mayaram, Home Secretary Anil Goswami, Defence

Secretary Radha Krishna Mathur and Foreign Secretary

Sujatha Singh, were called for the meeting.

Sources said 16 groups were formed by clubbing

related ministries. All finance ministry departments were

grouped together, while secretaries of energy-related

departments - power, coal, oil, mines and atomic energy

were put together. Agriculture and related departments

were clubbed under one head, while the infrastructure

group comprised of railways, telecom, roads, civil

aviation, shipping and posts. The sources said the Prime

Minister illustrated what kind of work he expected them

to perform. No presentation was made by the secretaries.

Cabinet Secretary Ajit Seth made the inital remarks. After

that those who spoke included Finance Secretary Arvind

Mayaram, Power Secretary P K Sinha, Heavy Industries

Secretary Sutanu Behuria and DoPT Secretary S K Sarkar,

the sources said.

Previously, the secretaries had been asked to

prepare a 10-minute presentation for the Prime Minister

listing successes and failures of the past regime as well as

points of action for the next five years. That process may

start tomorrow. Notes of Finance Ministry officials for the

meeting included inflation, fiscal consolidation,

controlling the current account deficit, clarity on tax

administration and disinvestment in non-core sectors like

steel and cement. Liberalising the FDI policy in defence, e-

commerce retail, railways and construction development

and hurdles in land acquisition and cumbersome project

clearances topped the agenda of Commerce Secretary

Rajeev Kher.

Updates on the monsoon and a new insurance

scheme to protect farmers from crop failure figured on

Agriculture Secretary Ashish Bahuguna's notes, while the

consumer affairs department was concerned about rising

onion prices. While the Oil Ministry went with a list of

pending decisions, including an increase in natural gas

prices which was due on April 1, the Power Ministry cited

round-the-clock power supply and easing of fuel

shortages as its top focus. Divestment of stake in PSUssuch as SAIL and opening of closed mines were the focus

areas for the steel and mines ministry.

I



11/76

Artha-Desh

India-only funds see biggest

foreign outflows since 2008

ndia-only funds saw a net $786 million in outflows inMay, the highest since the global financial crisis,

reflecting investors' preference for diversified funds

rather than funds dedicated to one country, data from

Thomson Reuters Lipper showed.

Aberdeen Global Indian Equity Fund, the world's

biggest India-only fund run by Aberdeen Asset

Management PLC, accounted for around 40 per cent of

the outflows, or a net $328.8 million, according to the

data this week. The waning interest in these funds come

even as overall foreign interest in India remains high,

especially over the election of Narendra Modi as the

prime minister last month. Data has consistently shown

fund investors prefer diversified emerging market funds

that minimize single-country risk. Foreign investors

invested a net of $8.8 billion in Indian shares so far this

year, adding to their $20.1 billion in purchases last year.

"In the last six months sentiment has turned

positive for India because of the elections and

expectations of a better government," said Niranjan

Risbood, director of Fund Research at Morningstar India

said. "But overall, India has faced a lot of macro problems

and investors are still reluctant to put their money into

India-specific funds, so most of the money coming into

India is through diversified funds." The net outflows in

May compares with $123.51 million withdrawn from

India-only funds in April and is the highest since $814.04

million were redeemed in October 2008. All but one of

the top 10 India funds posted outflows last month.

Combined assets under management of offshore India-

only funds has shrunk from $55 billion in 2009 to $33.9

billion at the end of last year. Aberdeen attributed the

selling to some profit-taking after shares hit record highs

and the end of the elections on May 16.

"We've seen some heavy selling towards the end

of the month purely on valuations as the market hit all-

time highs," James Thom an investment manager in

Aberdeen's Asian equities team said. "Investors are taking

the opportunities to take some profit on the election

event."

Expert panel for re-launch ofdirect benefit transfer scheme

onths after the scheme to pay LPG users cash

subsidy was put on hold, an expert committee

has recommended its reinstatement after

streamlining some processes as it helps prevent

pilferages. The Direct Benefit Transfer for LPG (DBTL)scheme was rolled out in 291 districts from 1 June 2013

in six phases to do away with the practice of selling the

fuel at below cost rates. About Rs5,400 crore was

transferred to more than 2.8 crore LPG consumers across

the country.

However, the scheme, which provided for cash

transfer only to customers having Aadhaar number, was

put on hold on 7 March following complaints that manyconsumers were left out because they either did not have

the unique identification number or a bank account.

"While preliminary results indicated that the scheme met

its primary objective of curbing leakages in the

distribution system, the speed at which it was rolled out

and inclusion of low Aadhaar districts gave rise to

consumer grievances," the panel headed by Prof S.G.

Dhande said in its report. The panel headed by the former

Director of the Indian Institute of Technology, Kanpur was

appointed to review DBTL. "The DBTL scheme was

successful in achieving its objectives, viz. reducing

diversion, eliminating ghost/ duplicate connections, and

improving LPG availability," the report said, adding that

the scheme promotes enhanced financial inclusion. The

Committee "strongly recommends that the DBTL scheme

should be re-instated".

Stating that the scheme design was "very robust

and scalable" which prevents leakages, it suggested some

systemic changes and enhancements to mitigate the

hardships reported by the LPG consumers. It

recommended a centralised grievance redressal

mechanism as consumers, particularly illiterate, face

difficulties in obtaining Aadhaar in some places and in

getting it seeded in bank accounts and LPG database.

Under DBTL, consumers got an advance of Rs435 on

joining the scheme. Consumers used this money to buy a

LPG cylinder at market price of Rs905 per 14.2-kg bottle

in Delhi as against a subsidised rate of Rs411 they were

paying previously. The committee felt that this amount

should be raised as in some months the subsidy or the

difference between the subsidised retail price and the

market price was as high as Rs800. It also recommended

that the launch of DBTL should be preceded by a three

month preparatory period during which there should beextensive communication campaign, enrolment, seeding

of Aadhaar in LPG/bank database.

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India to grow at 5.5%, low

growth for developing

nations: World Bankeveloping countries are headed for a year of

disappointing growth, the World Bank said in its

Global Economic Prospects (GEP) report, which has

lowered its forecasts for developing countries to 4.8

percent growth rate this year from the January estimate of

5.3 percent. The World Bank projected India's growth at

5.5 percent in fiscal 2014-15, accelerating to 6.3 percent in

2015-16 and 6.6 percent in 2016-17 as it urged developing

countries to double down on domestic reforms. Subdued

manufacturing activity and a sharp slowing of investment

growth in India led to GDP growth in South Asia as a

whole slowing to an estimated 4.7 percent in market price

terms in calendar year 2013, the Bank said in a new report

Wednesday. The growth in South Asia was 2.6 percentage

points below average growth in 2003-12, the World Bank

noted in its twice-yearly Global Economic Prospects

report that also lowered projections for global economic

outlook. In its latest report, the Bank has lowered its

forecasts for developing countries, now eying growth at

4.8 percent this year, down from its January estimate of

5.3 percent. Signs point to strengthening in 2015 and 2016

to 5.4 and 5.5 percent, respectively. China is expected to

grow by 7.6 percent this year, but this will depend

on the success of rebalancing efforts. If a hard landing

occurs, the reverberations across Asia would be widely

felt, the Bank said.

"Growth rates in the developing world remain far

too modest to create the kind of jobs we need to improve

the lives of the poorest 40 per cent," said World Bank

Group President Jim Yong Kim. "Clearly, countries need to

move faster and invest more in domestic structuralreforms to get broad-based economic growth to levels

needed to end extreme poverty in our generation," Kim

said. The global economy, it said, is expected to pick up

speed as the year progresses and is projected to expand by

2.8 percent this year, strengthening to 3.4 and 3.5 percent

in 2015 and 2016, respectively. High-income economies

will contribute about half of global growth in 2015 and

2016, compared with less than 40 per cent in 2013, itadded. Kaushik Basu, Senior Vice President and Chief

Economist at the World Bank .

Exports speed up in May,

trade talks planned with U.S.

ndia's exports increased at the fastest pace in six

months in May, in a boost for Prime Minister Narendra

Modi's new government as it signalled a loosening of

gold import rules and a push to improve trade ties with

the United States. Bilateral trade stands at about $100

billion annually but is below potential due to disputes

over protectionism and intellectual property rights that

have worsened in the past two years. Trade secretary

Rajeev Kher said the two countries were planning to start

trade talks in July and could hold a ministerial level

engagement in October - after an expected summit

between Modi and President Barack Obama in

Washington. India's exports have risen in recent months

due to a pick-up in demand from Europe and the United

States and a weaker rupee currency, while strict controls

on gold imports have helped prevent a brewing balance of

payments crisis last year. The trade deficit stood at $11.23

billion in May, up from $10.09 billion in April, data

released by the Ministry of Commerce and Industry

showed. While trade gap grew compared with April, the

year-on-year trend was more encouraging. Exports in May

jumped 12.4 percent from a year earlier to $28 billion,

while imports were down 11.41 percent to $11.23 billion

helped by a 72 percent drop in overseas gold purchases.

India is the world's second-biggest gold buyer

and the government is under pressure from the industry

to loosen restrictions, including a 10 percent import duty

on the metal. Kher said the trade ministry was in favour of

"rationalising" the import duty and that there was a clear

view that "normalcy" needed to be restored to gold

imports. "Export figures have begun to acquire their

normal levels, which is encouraging," he told reporters.

Kher said he also favoured opening up agricultural

exports, where possible, but added the government was

ready to intervene if needed to contain onion and milk

prices, key drivers of India's volatile food

inflation.Although month-on-month increases in the

import bill, particularly for oil, has kept the trade deficit

high for three months in a row, analysts said the trade gap

should be manageable, even with softer restrictions on

gold. "With better economic activity especially in the U.S.

and Europe, Indian exports are likely to stay on areasonably better footing this time," said Anubhuti Sahay,

an economist with Standard Chartered Bank in Mumbai.

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Centre asks states to crack down

on hoarders, to check inflationhe Finance Minister urged that urgent and timely

attention be given to all matters related to price rise,and that the departments concerned should take

necessary steps without any delay. The Finance

Minister also emphasized on the urgency to effectively

check constraints in ensuring smooth flow of essential

commodities availability in the market through

dehoarding, timely inspection, monitoring etc. Finance

Minister Arun Jaitley has asked states to crack down on

hoarders, and introduced several measures to bring

inflation down. Presiding over a high-level meeting that

included ministers and secretaries, Jaitley asked the states

to delist fruits and vegetables from the Agricultural

Produce Market Committee list and allow farmers to sell

their produce directly in the open market. Jaitley told

media last evening that 22 commodities are under active

observation of the government. He also said that the

government has decided to release an additional 50 lakh

tonnes of rice to states for sale in the open market at above

poverty line rate of 8.30 rupees per kilogram and allowed

states to directly import

pulses and edible oils to

meet shortages. The

government has imposed

a minimum export price

(MEP) of 300 dollar per

tonne on onions to curb

overseas sales and check

retail prices. A commerce

ministry notification said

that export of all onion

varieties will be subject to

the MEP of 300 dollar per

tonne.

The MEP, which is the

rate below which no exports are allowed, has been re-

introduced barely

three months after the previous government had

abolished it in March. Onion prices have risen to about 25-

30 rupees per kilogram in the national capital from 15-20

rupees per kilogram a fortnight ago. The auction of onions

at Nashik in Maharashtra will resume today after a gap of

two days after traders called off their strike last evening.

Our Correspondent reports that differences over how

much wages should be paid to porters led onion traders to

go on strike.

Revision of FY15 deficit numbers not

to have major impact, says Moodyating agency Moody's has said that revision of thefiscal deficit numbers for the FY15 will not have any

major impact on India's credit score. However, the

agency is keeping a close watch on sustained steps to

bring down the deficit as it believes that all high growth

forecasts will amount to nothing if these measures are

absent. There has been strong debate on the FY15 deficit

target of 4.1% announced by former finance minister P

Chidambaram under the UPA government. Financeminister Arun Jaitley will announce the new government's

deficit targets in his maiden budget in the first week of

July. Some economists have said that new NDA

government should tolerate a higher deficit and focus on

kick starting growth. According to Moody's; Whether the

new government's FY 2015 deficit estimate is above or

below the previous overnment's estimate of 4.1% of GDP is

not the key determinant of India's credit outlook. The

agency said that more relevant to the sovereign credit

outlook will be whether the budget includes measures

that address the government's low revenue base, high

current expenditures, and exposure to commodity prices.

The agency pointed out that India's budget deficits, are

higher than those in most similarly rated countries and

increase macro-economic imbalances and thus expose the

economy to shocks.

In a report titled, "Frequently Asked Questions on

India's Fiscal Position and the Forthcoming Budget" the

agency outlined the reasons behind India's high fiscal

deficits and compared fiscal developments in India and in

other similarly rated countries to explains how fiscal

policy has affected growth, balance of payments and

exchange rate trends. "India's high budget deficits are

partly due to a large population and low per capita income

levels. Low income levels limit the government's tax

revenue base and at the same time drive socio-political

pressure to increase government spending on subsidies

and economic development. However,

Moody's notes that other countries with low per

capita incomes have avoided deficits as large as India's.

This suggests that fiscal discipline can improve

budget outcomes despite structural challenges," said

Moody's. The report notes that wide budget deficits have

kept India's inflation high and contributed to a widening

current account deficit between 2011 and 2013 which

heightened exchange rate volatility and resulted

in higher domestic interest rates. These trends have

exacerbated the slowdown in GDP growth since

2011. "In Moody's view, absent measures to reduce the

fiscal deficit, the future high growth rates many forecast

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REconomy India July-August 201413


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Artha-Deshfor India may not be realized. The July budget could

indicate whether fiscal constraints on India's sovereign

credit profile will ease over the coming years," said the

report.

email id & mobile updated onthe website of the IT deptt.valid Email ID and Mobile Number has to be

registered/updated on the e-filing website of the

Income Tax Department so that direct

communication with taxpayer can be possible. The

Department will send separate One Time Passwords

(OTP) also referred as PIN on the mobile and email

provided by the taxpayer. The OTPs have to be entered by

the taxpayer after logging into their e-filing account to

authenticate the same. The OTPs will remain valid for 24

hours within which the taxpayer has to complete the

process. For 'Foreign/ NRI' taxpayers, the OTP validation

of the email ID would be sufficient. Validation of email

and mobile numbers has been introduced to facilitate

taxpayers as in many cases incorrect emails and mobile

numbers have been provided and taxpayers did not

receive important communication from the Department.

Further, it has been observed that in many cases

taxpayers are not able to reset their password since the

new temporary password from the Department may be

sent to their registered email which may be different

from the taxpayer's personal email, e.g. email of their

intermediary.

This is a one-time process to validate the mobile

number and email ID. However, whenever the taxpayer

changes the Mobile Number or email ID in their Profile,

the process will be repeated to ensure that the particulars

provided are correct. Further, this validation will ensure

that Department can send an OTP for resetting the

password used for Login in case the taxpayer has

forgotten the password. One mobile number or email ID

can be used for a maximum of 10 user accounts as the

Primary Contact- Mobile Number and Email ID in e-Filing. This is to ensure that family members and related

business concerns (not exceeding 10 separate users) not

having personal email or mobile can be covered under a

common email or mobile, but in general taxpayers should

have their own unique email ID and Mobile registered

with the Department.

The taxpayer can enter any other person's email

or mobile number in addition, as a Secondary Contact(without any restriction on the number of user accounts

linked as a Secondary Contact). Using "Profile Settings

'My Profile" the taxpayer can select to include the

Secondary Contact to also receive emails, alerts etc. It is

advised that the emails and SMS from the Income tax

Department may be included in the 'safe list' or 'white

list' to prevent the communications from the Department

from being blocked or rejected or sent to Spam folder.

Taxpayers are also advised not to share their user-id and

password of their e-filing account with others to prevent

un-authorized access.Taxpayers can reset their password

using the 'Forgot Password?' link while logging in to their

e-filing account and by providing the necessary details.

The Department requests the cooperation of all taxpayers

for completing this validation process at the earliest for a

smooth and convenient return filing process.

CAG to conduct reviews of FRBM

act complianceo give a further boost to knowledge sharing and

capacity building in various aspects of the Fiscal

Responsibility & Budget Management (FRBM) Act,

2003 and Public Debt Management, the Comptroller &

Auditor General of India (CAG) signed a Memorandum of

Understanding (MoU) with the National Institute of

Public Finance & Policy

(NIPFP) here today. The

institution of CAG of India

has been internationally

recognized that it can

play a significant role in

improving public debt

management in terms of

cost efficiency,

sustainability and

exposure to risk. The MoU

was signed by Shri A.W.K.

Langstieh, Director

General of Audit (Central

Expenditure) and Dr.

Rathin Roy, Director, NIPFP in the presence of Shri A.K.

Singh, Deputy Comptroller & Auditor General. In his

opening remarks at the MoU signed ceremony, Sh. A.K.

Singh disclosed that CAG has taken up audit of Public

Debt Management in India this year which is first of its

kind, comprehensive audit effort. Audit will be conducted

in line with international best practices. He said that

amendment to the FRBM Act carried out in 2012 hasentrusted upon the CAG of India a periodic review of the

compliance of the FRBM Act.

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he Government of India had constituted aCommittee for rationalising the definition of FDI and

FII as per the announcement of the then Union

Finance Minister during the Budget Speech 2013-14 (Para

No. 95) which reads as follows:

"In order to remove the ambiguity that prevails

on what is Foreign Direct Investment (FDI) and what is

Foreign Institutional Investment (FII), I propose to follow

the international practice and lay down a broad principle

that, where an investor has a stake of 10 percent or less in

a company, it will be treated as FII and, where an investor

has a stake of more than 10 percent, it will be treated as

FDI. A committee will be constituted to examine the

application of the principle and to work out the details

expeditiously." The Committee has now submitted its

report which has been accepted by the Government

.Report of the Committee is available on the web-site of

Ministry of Finance- www.finmin.nic.in. Major features of

the report are as follows:

The core recommendation of the committee is

that it should be the endeavour to simplify the

classification of foreign investment and enable basically

two classes of foreign investors in the long run viz.

Portfolio Investors and FDI Investors, and at best carve

outs therein for NRIs, in view of their special status. The

committee adopted the conceptual framework that

Foreign Direct investment (FDI) is characterised by a

lasting interest

i.e. existence of

a long term

relationship,

s i g n i f i c a n t

degree of

i n f l u e n c e .

N o r m a l l y ,

ownership of

10 percent or

more of the

o r d i n a r y

shares OR voting power signifies this relationship and it

involves both initial and subsequent transactions. On the

other hand Portfolio Investment is characterised by the

largely anonymous relationship between the issuers and

holders, and the degree of trading liquidity in the

instruments. Further it covers, but is not limited to

securities traded on organized or other financial markets.

The Committee has recommended the merger of the FII

and Qualified Foreign Investors (QFI) regimes under the

new "Foreign Portfolio Investors" (FPI) regime, and this

has been notified by SEBI and RBI in their respectiveregulations. The FPI regime will be subject to the

prevailing SEBI (SAST) Regulations to prevent persons

acting in concert. There is no change proposed in the

monitoring mechanism. However, it has been proposed in

addition, that the onus of adherence to the aggregate FPI

limit will also be cast on the Investee Company, which can

be asked to get the compliance to the foreign investment

limit verified by the Statutory Auditor on a half-yearly

basis.

Foreign investment of 10 percent or more

through eligible instruments made in an Indian listed

company would be treated as FDI. All existing foreign

investments below the threshold limit made under the

FDI Route shall however, continue to be treated as FDI.

Foreign Investment in an unlisted company irrespective of

threshold limit may be treated as FDI. An investor may be

allowed to invest below the 10 percent threshold and this

can be treated as FDI subject to the condition that the FDI

stake is raised to 10 percent or beyond within one year

from the date of the first purchase. The obligation to do so

will fall on the company. If the stake is not raised to 10% or

above, then the investment shall be treated as portfolio

investment. In case an existing FDI falls to a level below 10

percent, it can continue to

be treated as FDI, without

an obligation to restore it to

10% or more. In a particular

company, an investor can

hold the investments either

under the FPI route or

under the FDI route, but not

both. A relook at the

Foreign Venture Capital Investors (FVCI) scheme is called

for since these investors are basically in the nature of FDI.

Regarding NRI investors, they have a special place

in the foreign investment regime since NRI funds flow

even through deposits and remittances. Special privileges

are also available to NRIs in terms of the Overseas

Citizenship Act and the provision to make 'non-

repatriable' investments. This position would remain and

to reinforce the same, it may be further examined if non-

repatriable investment by an NRI can be treated as"domestic" as also an enabling mechanism to enable such

investment to come through via a corporate form.

Govt. accepts the report of the committee for rationalising thedefinition of FDI & FII

The committee adopted the conceptualframework that Foreign Direct investment(FDI) is characterised by a lasting interesti.e. existence of a long term relationship,significant degree of influence. Normally,ownership of 10 percent or more of the

ordinary shares OR voting power signifiesthis relationship and it involves both initial

and subsequent transactions.

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16/76

Delhi to get extra gassupply from NTPC

inally there is some reprieve for Delhi. The Capital,

which a facing a power crisis, will get extra gas

supply from the NTPC so that state government-

owned generators can produce an additional 400

mw of electricity.

The assurance on additional fuel availability to

the Delhi's plants was provided by power minister Piyush

Goyal after he held an emergency meeting with LT

Governor Najeeb Jung

on Tuesday to review

Delhi's power

situation. Delhi's

discoms have tied up

enough power supply

from generating

stations in other states

to meet their peak

e l e c t r i c i t y

requirements but due

to the destruction of some of its sub-transmission

infrastructure in the recent storm, entire power from

outside cannot be moved to Delhi. The current power

shortfall can be mitigated by utilising the idle capacity of

state government's plants.

Out of its quota of 3 million standard cubic meter

( mmscmd) gas lying unused with Gail India, state-owned

NTPC will divert 0.9 mmscmd of gas to Delhi

government's 1,500 mw Bawana power plant, which is

currently producing only 290 mw electricity, much below

its rated capacity. The plant will be able to run at the

higher capacity of 700 mw once it gets additional gas

supply. Delhi's current power demand is estimated at

5,800 mw and against that, availability is pegged at 5,300

mw, leaving a gap of 500 mw. Goyal also promised that

the Bawana-Rohini power transmission line, which was

damaged by the storm in the capital and adjoining states

on May 30, will be restored by Tuesday. "Hopefully, we

will be able to meet the peak demand of today," he added.

All other transmission lines will be repaired in the next

15 days.

Delegation of MPs from biharmeets Power Ministerdelegation of Members of Parliament (MPs) from

Bihar led by Shri Sushil Kumar Modi met ShriPiyush Goyal, Minister of State (Incharge) Power,

Coal and Renewable Energy here today to discuss issues

related to power sector, coal sector, etc with a view toenabling supply of more power to Bihar along with

resolution of issues related to assistance under central

sector schemes. The major pending projects discussed

were, Barh - II, Ultra mega power plant (Banka),

Renovation & Modernisation of State Sector Plant,

Barauni (210 MW) plant. Coal allocation issues relating to

Ultra Mega Power Projects (UMPP) in Bihar (4000 MW)

were also discussed. Ministry of coal has agreed to

allocate a coal block for Bihar UMPP. It was also indicated

that Barh - II Unit 4 (660 MW) of NTPC will be operational

commercially by the end of this month (June 2014).

The issue of setting up of 1320 MW Buxar

Thermal Power Project by SJVNL was also discussed. As

per MoU between SJVNL and Bihar 85% of power from the

project is to be supplied into the Transmission Grid of

Bihar State. Ministry of Coal already allocated Deocha

Pachami Coal Block (2102 MT) located in Barauni District

of West Bengal for this Project with 6 State Power

Utilities. Certificate of possession of private land has been

issued by District Land Acquisition Officer, Buxar for total

land of 1048.72 acres. Cabinet approval for diversion of

total 13.34 acre Government land has also been obtained.

Kerala Travel Mart 2014

coming up in SeptemberTM 2014 will be held from 18th - 20th Sep'14 at

Kochi, Kerala. A new venue has been chosen this

time called "Samudrika Convention Centre" located

at the cruise terminal, Willingdon Island, Cochin and

overlooking the backwaters. This single floor layout,

which in itself will be the major highlight, is fully air

conditioned, with a business centre, food courts, seminar

hall and all the basic amenities. The inaugural function is

scheduled for the

evening on 17th

Sep'14 at Le

Meridien, Cochin.

A Kerala Village

Theme is being

planned for this

edition of KTM

which will give a

glimpse of the

rural life of

Kerala. Adding a

plethora of responsible elements, the village life presents

a wide range of opportunities for the tour operators to

create itineraries based on the Kerala Villages. The Martwill also showcase Kerala, as an ideal spot for Destination

weddings as well as MICE.

Artha-Pradesh

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17/76

Artha-Pradesh

Cairn India Gets Approval

for Raising Oil Output at

Rajasthan Blockairn India Ltd has received approval from a panelset up by the environment ministry to raise oil

output to 300,000 barrels per day from 200,000 at

its block in Rajasthan state, according to a notice on the

ministry website. The panel, however, set some

conditions for the company,

including that Cairn

India will have to

upload the status

of environment

c o m p l i a n c e ,

including results of

monitored data, on its website and update it periodically.

Cairn India has a portfolio of nine blocks, one in Rajasthan

which contains multiple assets, two on the west coast

and four on the east coast of India, and one each in Sri

Lanka and South Africa.

Tamil Nadu, Gujarat favouritesfor starting a business: Survey

amil Nadu and Gujarat have emerged as the most

preferred destinations for those looking to start a

business as these states offer the best incentives

and most conducive investment policies, a survey has

found. The survey is the first-ever nationwide poll of

micro, small and medium industries which was

conducted over a nine month period covering 26 states

and 3,30,000 MSMEs across the country. "In terms of ease

of starting or doing business in a state, Tamil Nadu

topped the survey with 9 per cent respondents extremely

satisfied with policies, infrastructure, benefits and

incentives. Gujarat came in close second with 91.75 per

cent of the respondents from the state highlighting

tremendous growth," the survey said.

Moreover, according to the survey, 58 per cent of

the micro, small and medium enterprises (MSMEs) polled

were doing far better business than last year in terms of

turnover and profitability. Further, 24 per cent of the

MSMEs were doing marginally better than last year while

61 per cent respondents polled had employed new staff

this year. Besides, 19 per cent reported no change in

number of employees from last year while a sizeable 20

per cent actually cut their workforce. The survey was

undertaken to understand the issues faced by MSMEs and

provide them with probable solutions that could help

them to improve their business conditions. It is huge in

terms of sample size and predominantly highlights the

financial ecosystem, national entrepreneurial ecosystem,state entrepreneurial ecosystem, state of MSME business

and other diverse factors concerning MSMEs. The survey

was instituted by the India SME Forum and executed by

SDRC India.

PM flags off train to Vaishno Devi,

names it Shreeshakti Expressrime Minister Narendra Modi on Friday declaredthat the Centre wants to win the hearts of people of

Jammu and Kashmir through development as he

flagged off the train linking Katra--the base camp for

Mata Vaishno Devi shrine in Trikuta hills--with the rest of

the country. Suggesting that the train be named 'Shree

Shakti Express', Modi, who is on his maiden visit to J and

K after assuming power, said the state has gone through

many "problems and difficulties" and the country wants

it to be "prosperous and peaceful". The train connectivity

to Katra is part of the ambitious Kashmir rail link project

that will connect the Valley with the rest of the country.

The last link between Katra and Banihal pass, is expected

to be completed by 2018. The 25-km long Udhampur-

Katra line, commissioned after prolonged delays, has

been built at an estimated cost of Rs.1,132.75 crore. The

train will traverse through seven tunnels and over 30

small and large bridges. There will be a small station -

Chakrakhwal - between Udhampur and Katra. Trains will

be able to reach Katra directly as the 53-km Jammu-

Udhampur rail line is already operational. This would

enable lakhs of pilgrims headed to the revered Vaishno

Devi shrine to travel directly to the base camp at Katra. "I

congratulate the crores of devotees of Mata Vaishno Devi,

who want to come here for pilgrimage from all across the

country," Modi said while dedicating the train to thenation.

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18/76

Artha-Vishwa

Modi to meet Obama in Septemberhe flagging India-US ties are set to mend with Prime

MinisterNarendra Modi to hold a bilateral meeting

with US PresidentBarack Obama in Washington in

September, sources said Thursday.

Prime Minister Modi, who as Gujarat chief

minister was denied a visa

by the US in 2005 over the

Gujarat riots, has said he is

keen to visit Washington,

source said. According to

sources, Obama is keen to

patch up the damage to the

India-US ties as fast as

possible. His meeting with

Modi will be the second in

the span of a year with an

Indian prime minister. He met Manmohan Singh in

September last year during the former prime minister's

visit to Washington en route to the UN General Assembly

summit. Modi said in interviews before becoming prime

minister that individual incidents should not be allowed

to cloud bilateral relations - giving an indication of his

intent to take forward the ties. Obama is keen to discuss

the stalled talks over the civil nuclear liability laws, which

have been a major stumbling block in the execution of the

India-US nuclear deal. The US is also keen to increase its

defence ties with India, a major market.

Hero MotoCorp to enter USmarket next year, Brazil by 2016

ero MotoCorp plans to enter the US market in

2015 with its entry-level bikes and scooters in the

100cc to 125cc range like Splendor and Passion. As

part of its aggressive international plans, the Munjals-

promoted company will also enter another key two-

wheeler market, Brazil, in 2016 while at the same time

starting its first fully-owned overseas manufacturing

plant in Columbia with a $70-

million investment. Pawan

Munjal, Hero MotoCorp's MD

and CEO, told FE on the

sidelines of the Opening

Ceremony of the Fifa World

Cup 2014 that in the US the

company will be distributing

its products through Erik BuellRacing (EBR), its technology

partner, after initially

importing them from India. Hero had purchased a 49.2%

stake in EBR, a niche sports bike maker, in 2013 for $25

million, and is likely to take its holding up further. "Our

products are already going through homologation in the

US, and that takes a long time. There is usually a small

window for launch, so while we have showcased our

products at a motor fair already, we will formally launch

only next year, since we do not want to hit the market in

the winter season," he said. Hero has already started

work on a $70-million plant in Colombia, its first fully-

owned factory overseas that from next year will supply to

most of the region till another factory in Brazil comes up

at a later date. In Brazil, where it will start sales in 2016,

the company is currently talking to potential partners for

distribution support.

"Initially, we will import our products to Brazil

from Columbia. Brazil is different, since it uses ethanol as

a fuel, so we are working on substantial modifications to

our engines with AVL (another technical partner),"

Munjal said. He added: "We aim to launch our products

here in 2016, around the Brazil Olympics and will target

the huge regional market. Its a tough and a very evolved

market with well-established players." Since its split with

Japan's Honda Motor in 2012, Delhi-based Hero has been

focusing aggressively on overseas markets where

operations had been restricted before. In the past year,

the company has started exports to around 18 new

countries like Peru, Ecuador and Guatemala in South and

Central America, besides countries like Kenya and Ivory

Coast in Africa.

Stiff Competition to

Manage Tech Billionshen Microsoft went public in 1986, its chief

executive and largest shareholder, Bill Gates,

wound up with a broker at Goldman Sachs, the

Wall Street firm

that had led the

company's initial

public offering.

The San Francisco

broker, William

Hobi, was so excited to have Gates as a client that he put

a vanity license plate on his Porsche for a few years with

the letters MSFT, the trading symbol for the company's

stock. Times may have changed, but technology

billionaires still set the engines racing among Silicon

Valley brokers. Social media IPOs, including LinkedIn,Facebook and Twitter, and acquisitions like Facebook's

planned $18 billion purchase of WhatsApp have created

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more than a dozen billionaires, by one count of Forbes

magazine data.

Competition to handle their money is intense.

"Every day I get a connection request from a wealth

manager on LinkedIn," said Michael Cagney, the founder

and chief executive of Social Finance, or SoFi, an online

student-loan platform in San Francisco that might go

public in the next year or two. Cagney sold another

financial software company, Finaplex, in 2007 and runs a

hedge fund. The wealth management dollars up for grabs

were detailed last fall at the trial of Mark Cuban, the

Dallas billionaire who was acquitted of civil insider

trading charges. The first defense witness, Charles

McKinney, a former Goldman broker now at Credit Suisse,

testified that Cuban's $695 million account produced

annual fees for his firm of about $2.8 million. Many

wealth advisers charge up to 1 percent for the first $5

million or $10 million, reducing the fee in stages to 0.5

percent or lower, subject to negotiation, for amounts

exceeding $100 million. Clients with simple portfolios of

stocks and bonds may pay less than those in more exotic

assets, such as hedge funds or private equity.

Of course Goldman and its archrival, Morgan

Stanley, the longtime leader of tech IPOs, have the biggest

share of the market partly because their brokers can forge

close ties with technology titans in the IPO process.

Goldman's clients have included Meg Whitman, the chief

executive of Hewlett-Packard who was chief of eBay

when Goldman led its IPO in 1998. Morgan Stanley's

roster has included the venture capital investor Brook

Byers and Raymond J. Lane, the former executive

chairman of HP. But more than two years ago, the

charismatic South Africa-born broker Divesh Makan, who

had worked at Goldman and Morgan Stanley, took a bite

out of their books by starting his own firm, Iconiq Capital,

with a pack of Silicon Valley billionaires led by Mark

Zuckerberg and Sheryl Sandberg of Facebook and ReidHoffman of LinkedIn. Iconiq now manages $7.6 billion, up

more than 50 percent in the last year.

China's 'Apple' Xiaomi to

make India debut sooniaomi, often called the 'Apple'of China, has

launched its official website in India, paving the

way for its entry into the fiercely competitive

Indian smartphone market in the next few weeks.

"Namaste, Mi Fans! We have officially arrived in India.

Join us on this incredible journey at

http://www.mi.com/in," said a tweet on the company's

official Twitter handle.

Founded in 2010 by serial entrepreneur Lei Jun,

the Beijing-headquartered firm has become one of

China's biggest electronics companies that designs,

develops and sells smartphones, mobile apps and other

such consumer items. Other Chinese firms selling its

handsets in India include Huawei, ZTE, Lenovo, Gionee

and Oppo, the latest

entrant. According to the

company's website, it has

already sold over 17

million handsets in China.

Its portfolio includes

devices like Mi 3, Redmi

(Singapore USD 169), Mi

Wi-Fi and Mi Box, among others. It launched its products

in Singapore in February this year. Earlier this month, the

company had also roped in Jabong co-founder Manu

Kumar Jain to head its operations in India. The Indian

smartphone market is witnessing strong competition

between local and international players, all vying to grab

a share of the multi-billion dollar market. According to

research firm IDC, smartphone sales in the country grew

almost three-fold to over 44 million in 2013, buoyed by

affordable devices made by local firms such as Micromax

and Karbonn. In the first quarter of 2014, 17.59 millionsmartphones were shipped into India as compared with

6.14 million in the same period of 2013.

hina's piecemeal approach to loosening monetary

policy this year may be discreet, but the cumulative

effect is proving just as powerful as an outright cut

in bank reserves. Wary of being criticised for not doing

enough to wean the world's second-largest economy off

its reliance on easy credit and heavy investment,authorities have ruled out major stimulus even as

growth slowed to an 18-month low in the first quarter.

Instead, the People's Bank of China (PBOC) has relied on

four low-key adjustments that have added a total of 550

billion yuan ($88 billion) into the banking system, a

calculation based on a Reuters poll and information from

sources shows.

That is equivalent to an economy-wide 50 basis

point cut in the reserve requirement ratio (RRR), the

level of reserves that banks must hold, a splashier move

which would also have released 550 billion yuan in one

stroke. The four moves -- two reductions in the RRR for

selected banks and two big loans to commercial banks -

- are designed to direct cash to where its needed in the

economy, and thwart speculative investment.

Characterising these changes as a "fine-tuning", the

central bank has been adamant that overall monetary

policy has not changed and remains prudent. "We need

to take a holistic view about monetary easing," said Wei

Yao, an economist at Societe Generale in Hong Kong.

"The approach is called 'fine-tuning' because they did it

bit by bit, but the accumulated impact is not small."

China's fine-tuning adds

up to stimulus by stealthC

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Public-Sector

Coal India Limited To EnterFertilizers & Chemicals Business

oal India Limited (CIL) has decided to alter its

memorandum of association to get into the

business of producing fertilizers and chemicals

using coal gas. The amendment will allow CIL to produce,

store, distribute, sell, import and export gas and other by-

products from coal gasification, and use them to produce

ammonium nitrate and fertilizers.

The amendment will also allow it

to install and operate such plants

in India and abroad. The CIL board

recently approved the proposal. It

has decided to seek shareholders'

nod on this issue through a postal

ballot.

The company said that

Rashtriya Chemicals & Fertilisers

had signed a memorandum of understanding with GAIL

(India) for jointly exploring the potential use of gas

produced from the surface coal gas project in the

fertilizer industry. GAIL had approached CIL for co-

operating in the studies required and the project

development for surface coal-gasification in coal-bearing

states in India, including the area in and around Talcher in

Odisha. There would be two joint ventures - one for coal

gasification and gas purification with GAIL and the other

for setting up a downstream fertilizer-cum-ammonium

nitrate unit.

Solar energy in telecom: BSNL,NEDO in talks

tate-run telecom firm BSNL and Japan's NEDO

started discussions for using solar energy in telecom

networks to reduce carbon footprint. "Mr (Iwao)

Miyamoto, Chief of NEDO in India had a meeting today

...with Mr Anupam Shrivastava, Director Consumer

Mobility BSNL and explained the

support of Japan to India. This falls

in line with the directives of the

Prime Minister to reduce the

dependence on energy by

substituting the same with solar

power," BSNL said in a statement.

Both the organisations met in the

backdrop of a proposed visit by

Prime Minister Narendra Modi to Japan. New Energy andIndustrial Technology Development Organization (NEDO)

is a semi-governmental Japan based organization that

was set up in 1980 to promote the development andintroduction of new energy technologies.

NEDO has formed alliance in India with TERI to

promote use of renewal energy in the country.

Government has directed telecom companies to migrate

50 per cent of all rural mobile towers and 20 per cent in

urban area to hybrid power, which is mix of renewable

energy and grid power, by 2015. By 2020, all telecom

companies have been directed to adopt hybrid power for

75 per cent rural towers and 33 per cent of urban towers.

BSNL has about 70,000 mobile towers across country.

Railways Planning FDI Route forHigh-Speed Trains: Gowdahe Modi government

is planning to allow

foreign direct

investment (FDI) into

railways to finance its

ambitious plans to

modernize the sector. At

present, there is a

complete ban on any kind

of FDI in railways except

mass rapid transport

systems. Railways minister DV Sadananda Gowda on

Thursday said the government is short of resources and

some resource mobilization should be taken as a priority.

"I want to have discussion with commerce

minister Nirmala Seethraman, who has asked me to come

up with proposals... I think in 3-4 days we will come to a

conclusion," said Mr Gowda. Modernization and

revamping of railways is the top infrastructure agenda of

the government, which wants to build a Diamond

Quadrilateral project of high-speed trains and a network

of freight corridors over the next few years. These

projects require very large capital investments. According

to Press Trust of India, the Commerce and Industry

Ministry has started the exercise to relax foreign

investment norms in the railways sector by permitting

100 per cent FDI in high-speed train systems and

dedicated freight lines. Besides high-speed train systems

and dedicated freight lines, there is also a proposal to

allow foreign investment in sub-urban corridors and

freight lines connecting ports, mines and power

installations, sources told PTI. However, existing

passenger and freight network operations will not be

opened to foreign investors, the sources said. The move to

liberalize investment in railways comes after a similardecision was taken to allow 100 per cent FDI in the

defence sector.

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Corporate-Sector

sia's top companies reported abullish outlook in the second

quarter of 2014 compared to

the first three months despite

worries over the global economy and

rising costs, the latest Thomson

Reuters Business Sentiment Survey

showed.

Of the 124 companies who

responded to the poll, none reported

a negative outlook for the first time

in the survey's history. The Thomson

Reuters Business Sentiment Index

rose significantly to 74 in the second

quarter compared to a 64 reading in

the first quarter. A reading above 50

indicates an overall positive outlook.

India: Sentiment surges (index at

100 vs 65 in Q1). Despite worries

over the global economy, rising costs

and volatility in exchange rates,

Indian companies were the most

optimistic with all 10 respondents

reporting a positive outlook, a level

last seen in the fourth quarter of

2012. Nine companies said new

orders and sales increased in the

second quarter while employment

levels rose for 60 per cent of the

respondents. Three companies said

delays in payments from customers

had declined. A resounding election

victory last month for pro-business

leader Narendra Modi, with the

mandate to steer the economy out of

its current slump and create more

jobs, has revived consumer

confidence in Asia's third-largest

economy.

Australia: Significantly better (index

at 79 vs 64 in Q1). Business

confidence among companies in

Australia recovered in the second

quarter even as half the participants

continued to worry about the global

economy. Of the 12 respondents,

which included Stockland Corp and

Oil Search, seven companies were

positive while the rest remained

neutral, an improvement over the

last quarter where only two of seven

companies were positive. Five

companies said their new orders

increased while the same number

said they hired more people. Close to

a third of all companies surveyed

have increased employment levels in

the second quarter.

China: Recovery (index at 67 vs 50 in

O1). Sentiment in China rebounded

as a third of companies polled

reported a positive outlook and 50

percent of the participants saw an

increase in new orders and sales in

the second quarter. Last quarter all

eight respondents held a neutral

outlook. Nine of the 15 participants

said global economic uncertainty

was the top risk, a worry shared by

more than 50 per cent of 124

companies surveyed in the second

quarter. A handful of Chinese firms

are concerned about rising costs. The

world's second-largest economy is

struggling to recover from an

economic slowdown, exacerbated by

deterioration in the property market,

despite government stimulus. This

has pulled the sentiment index down

from its peak of 95 in the first quarter

of 2011.

Japan: Slips marginally (index at 56vs 59 in Q1) Business sentiment in

Japan weakened slightly with the

global economic environment

primarily weighing on corporate

outlook. Of the 16 respondents,

which included Daiichi San

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