Daily Economic News 1 – 2 Dec 2016

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economic-news-1-2Indian Economy News

December 01 – 02, 2016

ND has initiated a new section of daily news, where our news desk compiles the latest news on the Indian economy, to keep our readers abreast and updated on daily economic state of affairs.

The economy news compilations bring business news reports that are relevant today and tomorrow, based on the new pattern of current affairs, and for English awareness. This gives vital inputs on the various sectors of the Indian Industry and trade.

Estimates of Gross Domestic Product for the Second Quarter (July-September) of 2016-17

Press Information Bureau:  December 01, 2016

New Delhi: This Press Release is embargoed against publication, telecast or circulation on internet till 5.30 pm today i.e. 30th November 2016.

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the estimates of Gross Domestic Product (GDP) for the second quarter (July-September) Q2 of 2016-17, both at constant (2011-12) and current prices, alongwith the corresponding quarterly estimates of expenditure components of the GDP.

2. The details of the estimates GDP for Q2 of 2016-17 are presented below.


(a)   At constant(2011-2012)prices

3. GDP at constant (2011-12) prices in Q2 of 2016-17 is estimated at ` 29.63 lakh crore, as against `27.62 lakh crore in Q2 of 2015-16, showing a growth rate of 7.3 percent.  Quarterly GVA at Basic Price at constant (2011-12) prices for Q2 of 2016-17 is estimated at `27.33 lakh crore, as against `25.52 lakh crore in Q2 of 2015-16, showing a growth rate of 7.1 per cent over the corresponding quarter of previous year.

4. The economic activities which registered growth of over 7.0 percent in Q2 of 2016-17 over Q2 of 2015-16 are ‘Public administration, defence & other services’, ‘financial, insurance, real estate and professional services’, ‘manufacturing’ and ‘trade, hotels and transport & communication and services related to broadcasting’. The growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘electricity, gas, water supply & other utility services,  and ‘construction’   is estimated to be 3.3 per cent,  (-)1.5 percent, 3.5 per cent and  3.5 per cent  respectively, during this period.

5. Industry analysis

The second quarter estimates are based on agricultural production during Kharif season of 2016-17 obtained from the Ministry of Agriculture, Department of Agriculture & Cooperation(DAC), abridged financial results  of  listed companies from BSE/NSE, Index of Industrial Production (IIP), monthly accounts of Union Government Expenditure maintained by Controller General of Accounts (CGA) and of State Government expenditure maintained by Comptroller and Auditor General of India (CAG) for the period July-September 2016. Performance of key indicators of sectors like transport including railways, road, air and water transport etc., communication, banking and insurance during the period July-September 2016 have been taken into account while compiling the estimates. Performance of the corporate sector during July-September 2016 based on data received from BSE/NSE have been taken into account.  Estimated growth in the indicator compiled on the basis of employee expenses, Profit before tax and depreciation of listed companies deflated by appropriate price indices has been used to extrapolate the corporate sector estimates of the same quarter of the previous year.

Agriculture, forestry and fishing

5.1 Quarterly GVA at basic prices for Q2 of 2016-17 from ‘agriculture, forestry and fishing’ sector grew by 3.3 percent as compared to growth of 2.0 percent in Q2 2015-16. According  to the information  furnished  by  the  Department  of  Agriculture  and Cooperation  (DAC),  which  has been  used  in  compiling  the  estimate  of  GVA from agriculture in Q2 of  2016-17, the production of  food grains  during  the  Kharif  season of agriculture year 2016-17 was 8.9 percent as compared to decline of 3.2 percent during the same period in 2015-16.  Around 51.0 percent of GVA of this sector is based on the livestock products, forestry and fisheries, which registered a combined growth of around 3.6 percent in Q2 of 2016-17.

Mining and quarrying

5.2. Quarterly GVA at basic prices for Q2 of 2016-17 from ‘mining and quarrying’ sector declined  by (-) 1.5 percent as compared to growth of 5.0 percent in Q2 of 2015-16. As per the available information, private corporate sector growth in the mining sector as estimated for major listed companies at current prices is (-)1.1 percent in Q2 of 2016-17. The key indicators of mining sector, namely, production of coal, crude oil , natural gas and IIP mining registered growth rates of -3.5 per cent, -3.3 percent, -2.8 percent and -2.7 percent respectively during  Q2 of 2016-17 as compared to 0.9 percent, 1.7 percent, 0.03 percent and 3.1 percent respectively in Q2 of 2015-16.


5.3 Quarterly GVA at basic prices for Q2 of 2016-17 from ‘manufacturing’ sector grew by 7.1 percent as compared to growth of 9.2 percent in Q2 of 2015-16. The private corporate sector growth (which has a share of over 70 percent in the manufacturing sector) as estimated from available data of listed companies with BSE and NSE is 11.9 percent at current prices during Q2 of 2016-17. The growth in quasi – corporate and unorganized segment (which includes individual proprietorships and partnerships and khadi & village Industries has a share of around 22 percent in the manufacturing sector) has been estimated using IIP of manufacturing. IIP manufacturing registered growth rate of (-) 0.9 percent during Q2 of 2016-17 as compared to 4.7 percent in Q2 of 2015-16.

Electricity, Gas, water supply and other utility services

5.4 Quarterly GVA at basic prices for  Q2 of 2016-17 from  ‘Electricity, Gas, water supply and other utility services’  sector  grew by 3.5 percent as compared to growth of 7.5 percent in Q2 of 2015-16.   The key indicator of this sector, namely, IIP of Electricity registered growth rate of 1.4 percent during Q2 of 2016-17 as compared to 6.8 percent in Q2 of 2015-16.


5.5 Quarterly GVA at basic prices for Q2 of 2016-17 from ‘Construction’ sector grew by 3.5 percent as compared to growth of 0.8 percent in Q2 of 2015-16. Key indicators of construction sector, namely, production of cement and consumption of finished steel registered growth rates of 3.3 percent and 4.8 percent respectively during Q2 of 2016-17.

Trade, hotels and Transport & communication and services related to broadcasting

5.6. Quarterly GVA at basic prices for Q2 of 2016-17 from this sector grew by 7.1 percent as compared to growth of 6.7 percent in Q2 of 2015-16. Key indicator used for estimating GVA from Trade sector is the sales tax growth.  As per the available monthly data on state accounts available from CAG website, sales tax collection grew by 13.1 percent during Q2 of 2016-17.  Among the other services sectors, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rate of (-) 8.1 per cent and 0.4 percent respectively during Q2 of 2016-17.  In case of other transport sectors, passengers handled by the civil aviation, cargo handled by the civil aviation and cargo handled at major ports registered growth rates of 21.1 percent, 8.1 percent and 4.1 percent, respectively, during Q2 of  2016-17.

Financial, insurance, real estate and professional services

5.7 Quarterly GVA at basic prices for Q2 of 2016-17 from this sector grew 8.2 percent as compared to growth of 11.9 percent in Q2 of 2015-16.  Major component of this industry is the real estate and professional services which has a share of 76 percent. The key indicators of this sector are the quarterly growth of corporate sector for real estate sector and computer related activities which as estimated from available data from listed companies at current prices are (-)2.0 percent and 7.8 percent, respectively, during Q2 of 2016-17. The other indicators of this sector, viz., aggregate bank deposits and bank credits have shown growth rates of 11.3 per cent, and 10.4 per cent, respectively as on September 2016 as against growth of  10.6 percent and 9.1 percent respectively  as on September 2015.

Public administration and defence and other services

5.8 Quarterly GVA at basic prices for Q2 of 2016-17 from this sector grew by 12.5 percent as compared to growth of 6.9 percent in Q2 of 2015-16. The key indicator of this sector namely, Union Government expenditure, net of interest payments and subsidies, grew by 20.8 percent during Q2 of 2016-17 as compared to 1.1 percent in Q2 of 2015-16.

(b)   At current prices

6. GDP is derived by adding taxes on products, net of subsidies on products, to GVA at basic prices. Growth in collection of Union Excise duties, customs duties and service tax was 40.7 percent, (-)5.2 percent and 19.2 percent respectively in  Q2 of 2016-17. GDP at current prices in Q2 of 2016-17 is estimated at `36.43 lakh crore, as against `32.49 lakh crore in Q2 of 2015-16, showing a growth rate of 12.1 percent. GVA at basic price at current prices in Q2 of 2016-17, is estimated at `33.42 lakh crore, as against `30.02 lakh crore in Q2 of 2015-16, showing an increase of 11.3 per cent.

(c)  Price indices used as deflators

  1. The wholesale price index (WPI), in respect of the groups – food articles, minerals, manufactured products and all commodities, has registered a growth of 9.0 per cent, (-)10.2 percent, 2.3 per cent, and 3.7 percent respectively whereas electricity declined by 2.8 percent during Q2 of 2016-17 over Q2 of 2015-16. The consumer price index has shown a rise of 5.2 per cent during Q2 of 2016-17 over Q2 of 2015-16.


  2. The components of expenditure on gross domestic product, namely, consumption expenditure and capital formation, are normally measured at market prices.  The aggregates presented in the following paragraphs, therefore, are in terms of market prices.

Private Final Consumption Expenditure

  1. Private Final Consumption Expenditure (PFCE) at current prices is estimated at `21.78 lakh crore in Q2 of 2016-17 as against `19.37 lakh crore in Q2 of 2015-16.  At constant (2011-12) prices, the PFCE is estimated at `16.26 lakh crore in Q2 of 2016-17 as against `15.11 lakh crore in Q2 of 2015-16. In terms of GDP, the rates of PFCE at current and constant (2011-2012) prices during Q2 of 2016-17 are estimated at 59.8 per cent and 54.9 per cent, respectively, as against the corresponding rates of 59.6 per cent and 54.7 per cent, respectively in Q2 of 2015-16. Growth rates of PFCE at current and constant prices are estimated at 12.4 percent and 7.6 percent during Q2 of 2016-17 as compared to 9.5 percent and 6.3 percent respectively during Q2 of 2015-16.

    Government Final Consumption Expenditure

  2. Government Final Consumption Expenditure (GFCE) at current prices is estimated at `5.15 lakh crore in Q2 of 2016-17 as against `4.27 lakh crore in Q2 of 2015-16. At constant (2011-2012) prices, the GFCE is estimated at `3.84 lakh crore in Q2 of 2016-17 as against `3.33 lakh crore in Q2 of 2015-16. In terms of GDP, the rates of GFCE at current and constant (2011-2012) prices during Q2 of 2016-17 are estimated at 14.1 per cent and 13.0 per cent, respectively, as against the corresponding rate of 13.1 per cent and 12.1 percent each in Q2 of 2015-16. Growth rates of GFCE at current and constant prices are estimated at 20.8 percent and 15.2 percent respectively during Q2 of 2016-17 as compared to 5.8 percent and 3.3 percent respectively during Q2 of 2015-16.

    Gross Fixed Capital Formation

Gross Fixed Capital Formation (GFCF) at current prices is estimated at `9.86 lakh crore in Q2 of 2016-17 as against `10.19 lakh crore in Q2 of 2015-16. At constant (2011-2012) prices, the GFCF is estimated at `8.58 lakh crore in Q2 of 2016-17 as against `9.09 lakh crore in Q2 of 2015-16. In terms of GDP, the rates of GFCF at current and constant (2011-2012) prices during Q2 of 2016-17 are estimated at 27.1 per cent and 29.0 per cent, respectively, as against the corresponding rates of 31.4 per cent and 32.9 per cent respectively in Q2 of 2015-16. Growth rates of GFCF at current and constant prices are estimated at (-) 3.2 percent and (-) 5.6 percent during Q2 of 2016-17 as compared to 7.5 percent and 9.7percent during Q2 of 2015-16.

Index of Eight Core Industries (Base: 2004-05=100) October, 2016 was 6.6 per cent higher on year-on-year basis

Press Information Bureau:  December 01, 2016

New Delhi: The summary of the Index of Eight Core Industries (base: 2004-05) is given at the  Annexure.

The Eight Core Industries comprise nearly 38 % of the weight of items included in the Index of Industrial Production (IIP). The combined Index of Eight Core Industries stands at 188.1 in October, 2016, which was 6.6 % higher compared to the index of October, 2015. Its cumulative growth during April to October, 2016-17 was 4.9 %.


Coal production (weight: 4.38 %) declined by 1.6 % in October, 2016 over October, 2015. Its cumulative index during April to October, 2016-17 increased by 0.7 % over corresponding period of previous year.

Crude Oil

Crude Oil production (weight: 5.22 %) declined by 3.2 % in October, 2016 over October, 2015. Its cumulative index during April to October, 2016-17 declined by 3.3 % over the corresponding period of previous year.

Natural Gas

The Natural Gas production (weight: 1.71 %) declined by 1.4 % in October, 2016 over October, 2015. Its cumulative indexduring April to October, 2016-17 declined by 4.0 % over the corresponding period of previous year.

Refinery Products (93% of Crude Throughput)

Petroleum Refinery production (weight: 5.94%) increased by 15.1 % in October, 2016 over October, 2015. Its cumulative index during April to October, 2016-17 increased by 8.9 % over the corresponding period of previous year.


Fertilizer production (weight: 1.25%) increased by 0.8 % in October, 2016 over October, 2015. Its cumulative index during April to October, 2016-17 increased by 4.8 % over the corresponding period of previous year.

Steel (Alloy + Non-Alloy)

Steel production (weight: 6.68%) increased by 16.9 % in October, 2016 over October, 2015. Its cumulative index during April to October, 2016-17 increased by 8.5 % over the corresponding period of previous year.


Cement production (weight: 2.41%) increased by 6.2 % in October, 2016 over October, 2015. Its cumulative index duringApril to October, 2016-17 increased by 4.8 % over the corresponding period of previous year.


Electricity generation (weight: 10.32%) increased by 2.8 % in October, 2016 over October, 2015. Its cumulative indexduring April to October, 2016-17 increased by 4.7 % over the corresponding period of previous year.

Note 1: Data are provisional. Revision has been made based on revised data received for corresponding month of previous year in respect of Coal, Crude Oil, Natural Gas, Fertilizer, Steel, Cement and Electricity. Accordingly, indices for the month of October, 2015 have been revised.

Note 2: Since October, 2016, Electricity generation data from Renewable sources is also included.

Note 3: Release of the index for November, 2016 will be on Monday, 2nd January, 2017.


Oil minister Pradhan lays roadmap to double the use of gas in five years

Livemint:  December 01, 2016

New Delhi: Oil minister Dharmendra Pradhan on Wednesday promised steps to encourage the use of imported liquified natural gas (LNG), especially in refinery-cum petrochemical complexes and for long-haul road and rail transport, to help double gas use to 240 million cubic metres a day in five years.

The idea is to replace naphtha, a liquid hydrocarbon used in petrochemical production, and furnace oil used for industrial heating with imported LNG and rely more on LNG and compressed natural gas (CNG) for transportation, instead of petrol and diesel.

The government is also planning to source more LNG from world markets at cheaper prices to supply gas-based power stations, many of which now run way below their full capacity for want of fuel.

“As of now, our gas uptake is about 6% of the primary energy basket against a global average of more than 24%…We can substitute liquid fuels with natural gas in several applications; this will help us in our objective of reducing our import dependency for crude oil by 10% from the current levels by 2022,” Pradhan said at an event organized by industry chamber Confederation of Indian Industry.

Coal and crude oil account for the rest of the primary sources of energy. (Primary energy sources include crude oil, gas and coal, from which other forms of energy—petrol and diesel from crude oil and power from gas and coal—are produced.)

Currently, the power and fertilizer sectors consume about three-fifth of the 120 million cubic metres of gas available in the country, while city gas distribution and other commercial and industrial uses account for the rest.

“We are also evaluating the use of LNG in coastal shipping and railways. These LNG highways will be the highways of the future connecting major economic hubs with LNG-fuelled vehicles,” Pradhan said.

The government also wants the southern and eastern parts of the country to be the new growth drivers of gas in the economy. Northern and western regions have been the primary gas consumers so far.

Of the $100 billion investments expected in the oil and gas industry over the next few years, $20 billion will come into two deep-water blocks in the Krishna Godavari basin operated by state-owned Oil and Natural Gas Corp. Ltd and a consortium of Reliance Industries Ltd, BP Plc and Niko Resources, Pradhan said.

ONGC and the Reliance consortium have already invited initial bids for hiring equipment and services to develop their blocks after the government announced a liberal pricing policy on 10 March for gas to be produced from difficult geological areas.

“Lower carbon emissions is not the only advantage of gas over coal and petroleum fuels. Switching to natural gas can dramatically reduce air pollution thanks to much lower nitrogen oxide and zero sulphur oxide emissions,” said Jason Bordoff, founding director, Center on Global Energy Policy, Columbia University said at the same event.

Since imported gas will have the added cost of freight, the government has been pooling the price of domestic and imported gas to ensure that the clean fuel is available to all in the power and fertilizer industry at a uniform price.

Pradhan proposed that the same price pooling experiment could be adopted for other end uses as well as city gas distribution and production of steel and cement. “There is a school of thought to pool all domestic gas with imported LNG for having a transition to comprehensive, across the industry gas pooling mechanism,” Pradhan added.

PE investments in real estate set to touch US$ 7.2 billion in 2016

Livemint:  December 01, 2016

Mumbai: Private equity (PE) investment in real estate is estimated to touch $7.2 billion this year, up 53% from 2015, as both residential and office assets continue to generate interest among domestic and foreign investors, according to a report by global real estate consultancy firm Cushman & Wakefield and the Global Real Estate Institute.

In the first nine months of 2016, private equity funds committed $4.2 billion, an increase of 20% from the same period last year, said the report titled ‘Revitalizing Indian Real Estate: A new era of growth and investment’. While domestic funds have invested around $2.9 billion, cumulative investments from foreign investors stood at around $1.15 billion during the period.

Residential properties continue to remain the preferred asset class, accounting for about 54% at $2.4 billion of total investments, the report released on Wednesday said.

However, it said record high investment is expected in the office sector in 2016 as there is growing interest in leased office assets due to the potential to list under real estate investment trusts (REITs).

During the nine-month period, commercial office properties fetched about $852 million investments. “With a few large deals for office portfolios in closure stages in the fourth quarter, 2016 is expected to record the highest annual investment made in this asset class,” it added.

In terms of location, Mumbai remained the top destination for investment both in the residential and commercial segments. The other two preferred destinations are the Delhi-national capital region (NCR) and Bengaluru, apart from Hyderabad and Pune.

As per the report, REIT-eligible commercial properties both in the office and retail could provide investment opportunities of up to $77 billion by 2020 across the top seven cities. At present, ready commercial office properties that could potentially be listed for REITs amount to around 277 million sq. ft, less than 44% of the total commercial office stock in the country.

Anshul Jain, managing director (India) at Cushman & Wakefield, attributed the growing interest among investors for office assets to the government’s efforts including streamlining of the taxation policy for REITs, easing regulations and investment cap in under-construction assets.

“These steps have infused optimism in investors who are confident not only about the implementation, but also the growth prospects of REITs in India,” he said.

The report also said net office absorption in 2017 is expected to surge by 9% to 32.4 million sq. ft, with Hyderabad and Pune emerging as the new growth markets within the next three years.

Office absorption is likely to close at 30 million sq. ft by the end of this year.

Bengaluru continued to be the top commercial real estate market with net absorption expected to touch around 9.8 million sq. ft by year-end.

“Year 2017 would herald a period of office sector wherein the pecking order changes. While Bengaluru will continue to be the premier market (32% share) in 2017, Hyderabad (18%) is expected to surpass Delhi-NCR for the first time ever to record the second highest absorption levels,” the report said.

On the residential front, total housing demand is estimated at 4.2 million units for the next five years across the top eight cities. However, only around 1 million units by private developers are expected to be delivered during the period, the report said.

While the mid-income group (Rs15-70 lakh) accounts for 63% of the housing units supply across eight cities in 2016-20 at 647,000 units, the demand is estimated to be around 1,457,000 units.

“Despite demand outstripping supply, there is a considerable proportion of unsold inventory in the mid-income group and high-income group categories, which are not absorbed as these properties are unable to demonstrate value for their buyers. Such units fall out of preference either on account of higher than expected prices or due to locations,” Jain said.

Essel Group in JV with Gensource to set up potash project in Canada

Business Standard:  December 01, 2016

Mumbai: Essel Group Middle East Ltd (EGME), Essel Group’s overseas extension based in Dubai (UAE) that focuses on mineral mining, oil explorations and acquisition of natural resource assets globally, has formed a joint venture with Gensource Potash Corporation for the development of one of Gensource’s small scale potash projects in Canada. Essel Group ME already operates a mine in Eritrea (Africa) which has one of the largest deposits of potash in the world.

With the world’s food requirements increasing, demand for potash (a form of potassium and a key component of fertilisers in general) is growing across the world. Through the JV, Gensource and Essel Group aim to create a new and independent supply of potash to the global market.

The JV will be set up as a private corporation into which Gensource will vend a resource from its Vanguard area near Eyebrow and Tugaske, as well as its project execution team including technology and techniques relating to selective solution mining and specialised processing. For its part, Essel Group ME will provide business and logistic expertise to the JV and will provide financing in two stages – first to complete the current feasibility study, and second to finance the construction of the project. Ultimately, when the construction financing has been committed, EGME and Gensource will own 70 percent and 30 percent, respectively, in the JV.

Under the terms of the MoU, a definitive agreement or JV operating agreement will be negotiated to define the detailed aspects of how the JV will operate. Initial terms are for a jointly-appointed board of directors for the company and a jointly appointed management team to lead the development of the new potash facility. Gensource will maintain control of the JV through to the commitment of construction financing.

“This is an exciting milestone for Gensource. Our fundamental business plan has been to create a joint venture with a strategic partner who wants the potash product for its own use and is capable of bringing the required financing to the project. We are so pleased to be working with a strategic and forward thinking group like Essel Group Middle East,” said Mike Ferguson, president & CEO, Gensource, in a press statement.

He added, “With a presence in Europe, Middle East and North Africa, EGME understands the potash business very well and has positioned itself to strategically enter the industry. The global business acumen and financing ability of EGME coupled with Gensource’s experienced potash development team, rich potash resources and novel small scale technologies creates a combined entity that has all the required components to successfully enter the highly controlled potash industry.”

Gensource is currently in the detailed development stage of its Vanguard project. A two-well resource confirmation drilling program is currently drilling on the first well near Tugaske, SK, and the detailed feasibility study is underway and expected to be complete by March or April 2017. Until the completion of the feasibility study, the technical and economic viability of the project remains unconfirmed.

India bags second spot with 27 varsities entering top 300

Economic Times:  December 01, 2016

Mumbai: India is the second mostrepresented country in the newly expanded Times Higher Education BRICS and Emerging Economies University Rankings, with the Indian Institute of Science (IISc) becoming the first Indian institute to break into the top 15.

In the 2017 list, which ranks universities based on teaching, research, international outlook and knowledge transfer, the Indian Institute of Science (IISc) is placed 14th, up two spots from a year ago when it debuted in the top 20.

This time round, India has 27 universities in the top 300. Last year, 16 Indian universities had made it to the top 200. China continues to dominate with 52 places in the top 300 and six in the top 10.

“India is making great strides. Its flagship university, the Indian Institute of Science, breaks into the top 15 for the first time this year, thanks to improved scores for its teaching environment and research influence, while the Indian Institute of Technology Bombay climbs three places to 26th, its highest ever rank, due to improved scores across all of the five pillars underlying the methodology,” said Phil Baty, editor of the Times Higher Education World University Rankings.

Baty said India could soon overtake Taiwan as the second most-represented country in the top 200 of the table. “Overall, India has 19 universities in the top 200, up from 16 last year, while Taiwan has 21, down from 24,” Baty said. This ranking uses the same 13 indicators as the overall World University Rankings.

India has eight institutes in the top 100. Apart from IISc and IIT Bombay, these include IIT Delhi and IIT Kanpur (both ranked 32nd), IIT Madras (35th), IIT Roorkee (joint 62nd), IIT Kharagpur (71st) and Jadavpur University in 99th place.

Indian institutes in the 100-200 bracket include IIT Guwahati, Tata Institute of Fundamental Research, University of Delhi, Punjab University, Tezpur University, Savitribai Phule Pune University, Aligarh Muslim University, University of Calcutta, Sri Venkateswara University, NIT Rourkela and BITS Pilani.

Acharya Nagarjuna University, Amrita University, Osmania University and Andhra University are ranked 201-250, while Amity University, Maharaja Sayajirao University of Baroda, Manipal University and Cochin University of Science and Technology bring up the rear in the 251-300 bracket.

Baring India and China, the other BRICS nations have not fared well, largely due to increased competition as a result of expansion of the list to rank 300 universities from 41 countries, up from 200 institutions in 35 nations last year.

Chief ministers panel to steer India’s cashless push

Livemint:  December 01, 2016

New Delhi: The government has appointed a high-level panel to ready a blueprint for India’s transition to a less-cash economy in the next one year.

The decision seeks to capitalize on the momentum generated towards digital payments in the aftermath of demonetisation of high-value currency notes. At the same time, it reaffirms the government’s decision to steer the country towards a cashless economy.

Andhra Pradesh chief minister (CM) N. Chandrababu Naidu is convenor of the panel, which also includes five other CMs and Niti Aayog chief executive officer Amitabh Kant.

Experts such as Nandan Nilekani, the architect of Aadhaar, are special invitees.

The CMs represent a wide political spectrum, including the Congress, signalling the government’s intent to generate political consensus on the push to a cashless economy.

The other CMs on the panel are Naveen Patnaik of Odisha (Biju Janata Dal), V. Narayanasamy of Puducherry (Congress), Pawan Kumar Chamling of Sikkim (Sikkim Democratic Front) and Shivraj Singh Chouhan of Madhya Pradesh and Devendra Fadnavis of Maharashtra, both of whom belong to the Bharatiya Janata Party (BJP).

Sikkim Democratic Front is an ally of the BJP in the ruling National Democratic Alliance.

The panel will lay down a roadmap for rapid adoption of digital payment systems such as debit, credit and prepaid cards, digital wallets, Internet banking, Unified Payment Interface and banking apps.

It has also been asked to evolve a plan to effectively communicate the benefits of the digital economy to the public. In addition, it will prepare a strategy to facilitate adoption of digital payments by state departments as well.

Transactions through national electronic funds transfer, real-time gross settlement and immediate payment service have grown at a rapid pace in India. In 2015-16, such transactions were more than three times those cleared through cheques.

Besides aligning the Reserve Bank of India, the finance ministry and banks in the digital push, it is also important that states are brought on board, as many payments and reimbursements by state agencies are based on physical cash, said Naveen Surya, managing director of digital payments company ItzCash, and chairman of the Payments Council of India.

“Having different chief ministers in the loop and trying to understand the concerns of the states is a great move. The support from each state government becomes crucial while trying to digitize the payment system,” he added.


India the only bright spot in steel production: Moody’s Investors Service

Economic Times:  December 01, 2016

Kolkata: Moody’s Investors Service has said India is the only area of strength with rising demand and protectionist measures in place even as it predicted a negative outlook for Asian steelmakers in 2017 as earnings will weaken amid declining production and lower profitability.

“We expect EBITDA per tonne to weaken in 2017, given that the robust profitability recorded by steelmakers in mid-2016 is unsustainable against the backdrop of persistent oversupply and the limited ability to pass on rising raw material costs to customers,” says Jiming Zou, a Moody’s Vice President and Senior Analyst.

“For 2017, we see India as the only area of strength — with rising demand and protectionist measures in place,” adds Zou. Moody’s conclusions were contained in its just-released report, “Steel – Asia 2017 Outlook – Weakening Production and Earnings Keep Outlook Negative”.

“In India, growing domestic demand, minimum import prices and anti-dumping duties will support steel producers, but the increase in their steel production will not offset the fall in regional production,” the report said. The country only accounts for only about 8% of Asian steel production.

Moody’s expects Asian steel production volumes to fall in 2017 because demand from China — which accounts for about three quarters of Asian steel production — will contract, while rising trade barriers will constrain exports from Asia.

One of the main drivers for declining demand in China is the forecast that property sales volumes will decline moderately following the tightening of regulatory measures in September and October 2016.

In this context, continued infrastructure investments are insufficient to avert a decline in China’s demand, and its manufacturing activities remain vulnerable to slowing GDP growth and are therefore unlikely to boost steel demand.

With Japan, Korea and Taiwan, which export around 40%-50% of their steel output, increasing trade frictions will curb their steel exports and production, Moody’s said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.


Apple plans to set up a distribution centre in India

Economic Times:  December 02, 2016

Apple will move to a dedicated distribution centre for its products in India for the first time, consolidating its logistics operations to ensure common pricing for offline and online sales and acquiring greater control over the supply chain.

Apple’s global logistics partner DB Schenker will own and operate the centre, which will come up at Bhiwandi near Mumbai, two senior industry officials said. DB Schenker, one of Europe’s largest logistics companies, has signed an agreement to run the Indian centre, which will help to ensure that Apple products are rarely sold out at the retail level, as it happened after the launch of the iPhone 7 and 7 Plus in October.

Currently, iPhones, iPads and Mac computers are brought into India through Chennai, Bengaluru, Mumbai, Chandigarh, New Delhi and Hyderabad – where value-added tax rates vary – and transferred to distributors from the airport itself.

Online sellers often source the devices from low-VAT markets, gaining a price advantage over their offline rivals.

“The distribution centre will allow Apple to stock its products adequately, will ease operations and streamline its logistics and supply chains. It will also help in maintaining uniform price for its products, which will become much easier under the Goods and Services Tax regime,” said one of the executives.

Email queries sent to Apple and DB Schenker seeking comment did not elicit any immediate response.

Apple is expanding in India, widening distribution to the smaller cities and working with application developers. The company was the country’s second-largest smartphone maker by revenue in 2015-16, pipping local rival Micromax Informatics after sales increased 54% to Rs 9,997 crore.

One industry executive said the distribution centre will help Apple provide hardware such as Mac computers tailored to the needs of business customers.

“Earlier, this flexibility was not there. The company is currently reviewing this and any such effort will be for enterprise clients only,” he said. Apple allows customisation only for consumers who place orders through its online store, which would require retail foreign direct investment approval from the government. Its retail and online store plans are still stuck after the government revised its FDI policy this year.


Make in Odisha:

State bags Rs 60k cr investment intentions on Day 1

Business Standard:  December 02, 2016

Bhubaneswar: On the inaugural day of the ‘Make in Odisha’ conclave, its biggest showpiece event, the state government said it got investment intentions in excess of Rs 60,000 crore.

Chief Minister Naveen Patnaik said he’d had a one-on-one interaction with 19 major investors who’d expressed interest to invest. Many existing investors — Tata, Adani, Aditya Birla, ITC, Vedanta — spelt out fresh investments.

Adani Group chairman Gautam Adani committed new investment of Rs 15,000 crore on a slew of projects, promising net employment for 10,000 people. The money would go into expanding the capacity of Dhamra port, with additional terminals for liquefied natural gas (LNG) and liquefied petroleum gas (LPG). An LNG terminal with 5.2 million tonnes per annum (mtpa) capacity is coming up there, for Rs 5,200 crore. The LPG terminal is planned at an investment of Rs 2,300 crore.

Adani Wilmar would be setting up a 2,500 tonne per annum edible oil refinery at Dhamra port, for Rs 2,300 crore. Crude oil for this would be sourced from Indonesia and Malaysia. Adani added: “By March 2017, we would be adding another berth at Dhamra, taking the port capacity to 50 mtpa. We are also setting up a two mtpa barge berth to facilitate coastal movement of coal through National Waterway-5.”

Vedanta group chairman Anil Agarwal says they’ve lined Rs 20,000 crore of investment over the next three years. Of this, Rs 12,000 crore is proposed to be invested on the Lanjigarh alumina refinery, to raise its capacity from two mtpa to five mtpa, and to remove bottlenecks at its smelting unit in Jharsuguda. The capacity of the smelter is to be expanded to two mtpa, from 1.7 mtpa. However, bauxite supplies to the Lanjigarh refinery is a key ingredient to facilitate this investment. The other Rs 8,000 crore investment would be made on a ‘world class university’ at Puri, where Agarwal intends to develop an Education City.

Tata Steel said it proposed to invest Rs 15,000 crore to scale up capacity at its Kalinganagar (Jajpur district) plant to eight mtpa, from three mtpa now.

“We will take the approval of the board (of directors) in six months. Investments worth Rs 3,000 crore are already under various stages of execution,” said T V Narendran, its managing director for India and Southeast Asia.

Terming Odisha a natural selection for industries, Satish Pai, managing director of Aditya Birla Group-owned Hindalco Industries announced Rs 4,000 crore of new investment for the state. These are to go into various companies — capacity addition at Aditya Aluminium’s rolling mill at Hirakud, UltraTech’s cement grinding unit at Jharsuguda, recommencing Essel Mining’s captive mines and expanding the retail footprint of its apparel business.

He said the Group had already invested Rs 30,000 crore in Odisha, of which Rs 27,000 crore had gone into Hindalco’s operations.

S K Poddar’s Adventz Group has committed Rs 9,000 crore on expansion of a urea ammonia unit. He said after taking over of Paradeep Phosphates from the Government of India in 2002, the group had wiped out its previous accumulated loss and turned in a positive net worth of Rs 1,200 crore.

ITC, the foods & hospitality major, said it would invest Rs 800 crore on a five-star hotel under its ‘Welcome’ brand and a food processing plant to be set up on Bhubaneswar’s periphery.

“The hotel would have 110 rooms and give a boost to Odisha’s already dynamic tourism industry. The food processing unit would be a world-class facility. Both are testimony to the enabling business environment and the facilitation Odisha provides,” said Sanjiv Puri, operations head.

Hindustan Coca-Cola Beverages announced an investment of Rs 500 crore for the state in the next three years. JSW Steel expressed intent to set up a large steel plant but was quiet on the investment figure. Essar Group chief Shashi Ruia proposed to expand capacity of its Odisha iron ore pellet plant to 12 mtpa and said it would shortly commence mining from the ore block it bagged via auction.


Realty investment trusts have US$ 77bn opportunity in India

Economic Times:  December 02, 2016

Indian real estate is likely to provide investment opportunity worth up to $77 billion through REIT-eligible commercial office and retail properties across the country’s top seven cities by 2020.

Across these cities, including Mumbai, Delhi-NCR, Bengaluru and Pune, ready commercial space eligible for REIT investments amounts to 277 million sq ft, accounting for less than half (44%) of total office stock in India, showed a Cushman & Wakefield-Global Real Estate Institute report.

In addition to completed stock, around 68 million sq ft of additional REIT-eligible stock is expected to be completed by 2020 across these seven cities.

The commercial office stock, which accounts for the majority at around 70% of the total value of REIT-eligible stock, is estimated to have a total value of $44-$53 billion.

In retail assets, the estimated value of REIT-eligible stock (completed and under-construction malls) is $20-$24 billion, with roughly 112 with 52 million sq ft malls eligible for REITs. About 78% (41msf) of these malls are completed and operational while the remaining 11 million sq ft are under construction and scheduled to be completed by 2018.

“The commercial office market is likely to be on an upward trajectory steered by an improving economic outlook, as well as strong demand from certain sectors such as IT-BPM, BFSI, FMCG and pharmaceutical sectors going ahead. In such a buoyant environment, the Indian market is well-placed to witness the listing of REITs, led by the

government’s steps to ease policies for the investment vehicle,” said Anshul Jain, MD, Cushman & Wakefield India. “Over the last year, the government has not only streamlined the taxation policy of REITs, but also eased regulations that have warmed up investors to REITs in India.”

He highlighted the recent modifications to measures including increasing the number of sponsors to five from three allowed earlier, easing the investment cap in under-construction assets allowing up to 20% of the investment fund in under-construction assets, from 10% earlier and removal of dividend distribution taxes.

In commercial stock, the highest value of REIT-eligible stock including under-construction is seen in Bengaluru at $12.3 billion-$15 billion. Besides steady supply, the city is likely to witness continued momentum in demand from IT-BPM companies. Bengaluru is distantly followed by Mumbai $8.9 billion-$10.9 billion and Delhi-NCR with $8.7 billion- $10.6 billion) in terms of value of REIT-eligible stock.

“In conjunction with the imminent introduction of REITs, investors have already started increasing their exposure to commercial office assets. With a few large deals for office portfolios in the closure stages in the fourth quarter, the year 2016 is expected to record the highest annual investments of $3.6 billion made in this asset class since 2008. REITs have a huge opportunity for developers and investors in India, given the potential in the Indian real estate market,” said Diwakar Rana, MD, Capital Markets, India Cushman & Wakefield.

Pune has the highest under-construction REIT-eligible stock of 19 million sq ft by 2020; hence, the city’s projects would hold weight amongst investors in the near future. Moreover, Pune is likely to emerge as a strong market led by IT-business process management (BPM) companies and entities conducting offshore activities in sectors such as BFSI. These companies prefer Pune due to its competitive rentals, availability of local talent and close proximity to Mumbai.

Hyderabad too is a prominent market that would be on investors’ radar, with the city expected to account for roughly 11% of the total under-construction REIT-eligible projects over the next four years. The city’s commercial market has been on a path of revival since 2014 after the bifurcation of the state, bringing political stability to Hyderabad.

While in completed projects as of 2016, Delhi-NCR has the second highest value of REIT-eligible stock, the city currently has the low under-construction stock that could curtail future investment opportunities for investors.


Government gears up to facilitate Aadhar based financial transactions through mobile phone

Economic Times:  December 02, 2016

The government is gearing up to facilitate Aadhaar number-enabled financial transactions through mobile phones as part of its drive to convert the country into a cashless economy.

“Aadhaar-enabled transactions are card-less and pin-less. This would enable Android phones users to digitally transact using their Aadhaar number and fingerprint/iris authentication,” said Ajay Pandey, director general of Unique Identification Authority of India (UIDAI).

He said the government has already initiated efforts to implement Aadhaar-enabled transactions, which requires a multi-pronged strategy, including talking to mobile manufacturers, merchants and banks. The move, which is part of an allround approach towards enabling digital payments, is being driven by NITI Aayog.

“We are asking mobile manufacturers to see if all mobiles made in India should be inbuilt with iris or thumb identification system to help Aadhaar-enabled transactions,” NITI Aayog CEO Amitabh Kant said.

Kant said the government is simultaneously working on a policy to disincentivise cash transactions and incentivise digital transactions in the country. He refused to share any proposed measure under this plan. Kant is part of a chief ministers’ committee which will lay out a roadmap for implementation of digital payments over the next one year.

The first meeting of the committee was held on Thursday. After its massive demonetisation drive launched on November 8, the government had said that no additional charges will be levied on digital transaction until December 30. But most merchants continue to charge 2 per cent extra on card transactions.

The government now looks to put in place a proper system to discontinue additional charges on a sustainable basis. UIDAI has planned to increase biometric authentication capacity through Aadhaar to 40 crore a day from 10 crore to encourage more use of the platform for realising a cashless society.

The government is concurrently working on developing a common mobile phone app that can be used by shopkeepers and merchants for receiving Aadhaar-enabled payments, bypassing credit and debit cards, pin and password. Through this mobile application, the handset will be used for authenticating biometrics of customers making Aadhaar-enabled payment.

Meanwhile, information technology secretary Aruna Sundarajan said the ministry has kept aside Rs 100 crore to incentivise enrolment of merchants on to the digital platform to help push the drive. “IT department is providing incentive of Rs 100 for every merchant enrolled through over two lakh common service centres across India,” she said.

“The ministry will undertake a major outreach communication campaign starting from Monday to ensure that every segment of population is enables to use one of other mode of digital payment,” Sundarajan said.

The 12-digit Aadhaar number has already been issued to 1.08 crore people in the country and 99per cent of adults have been covered. People can link their Aadhaar with their bank accounts and use Aadhaarenabled payment system (AEPS) for funds transfer, balance enquiry, cash deposits or withdrawals and inter-banking transactions.


Govt aims to up India’s weight on global index

Business Standard:  December 02, 2016

The government is looking at ways to boost India’s weight in the MSCI Emerging Markets Index. It has appointed a team of officials from the finance ministry, the Reserve Bank and the Securities and Exchange Board of India (Sebi) to achieve this, said sources.

India’s weight in the index has risen 180 basis points to 8.1 per cent, from 6.3 per cent only four years earlier. However, in the past month, it slid from an earlier high of 8.7 per cent, after demonetisation and the resulting turmoil, said market players. “A case is being prepared to ensure India gets a higher share in the index,” said a person familiar with the matter.

An increase in weight will lead to a commensurate rise in flow from foreign portfolio investors (FPIs) since most large passive global funds apportion money to emerging markets depending on the index weight of key global indices such as the MSCI EM or the FTSE Emerging Markets Index.

The MSCI EM index consists of 23 countries, representing a tenth of world market capitalisation. It covers about 85 per cent of the free float-adjusted market capitalisation in each of these countries.
In the past, foreign brokerages such as CLSA have said India deserved a higher share of weight in the MSCI EM. It figures below South Korea and Taiwan in the index, although its total market capitalisation is higher than these two.

High promoter holding is the biggest hurdle in raising India’s weight, say experts. “It’s a legacy issue,” said Rakesh Arora, partner, Go India Advisors and former research head of Macquarie Capital Securities (India). “Most of the businesses are driven by individual promoters and they tend to hold majority stake, limiting the free float market capitalisation, a key criterion for assigning the MSCI weight.”

FPIs, one of the largest drivers of Indian equities, had invested about $410 billion in Indian shares, representing 27 per cent ownership, as of September. Controlling stake holders, or promoters, owned 47.4 per cent of the shares.

“Though India is much more important than the MSCI weight suggests, our free-float capitalisation is much lower than other emerging markets,” said U R Bhat, managing director, Dalton Capital Advisors (India). “In several cases, Indian firms have not increased the FII (foreign institutional investor)holding above the threshold of 24 per cent, which needs a special resolution by the shareholders.”

Promoters will dilute their stake only when the next stage of private sector investment picks up, say experts. “They will raise money from the market when they see a growth opportunity, which will result in some dilution,” said Bhat.

The government’s stake sale in state-owned firms, either as strategic divestment or to meet Sebi’s minimum public shareholding (MPS) rule of promoter holding below 75 per cent, can help increase free float market capitalisation. A 10 per cent stake sale in Coal India, for instance, will free $2.5 billion in the free-float market cap. The government and its arms would need to sell shares worth at least Rs 1.26 lakh crore in listed state-owned entities in eight months to comply with the MPS norm.

Year-to-date, FPIs put $4.2 billion in Indian shares, higher than in Indonesia ($1.5 bn), Thailand ($2.2 bn) and Brazil ($4.1 bn).


LED Retail Prices come down to Rs. 65 under UJALA Scheme; 17.90 Crore LED bulbs distributed across the Country

Press Information Bureau:  December 02, 2016

Achieving efficient implementation of the Unnat Jyoti by Affordable LEDs for All (UJALA) Scheme, the aggregation of demand and bulk procurement by Energy Efficiency Services Limited (EESL) has resulted in huge savings for the consumers across the country. This was stated by Shri Piyush Goyal, Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, in a reply to a question in Lok Sabha today.

Giving the details, the Minister informed that the e-procurement of LED bulbs through a transparent and competitive bidding process has resulted in reduction of approximately 88% in procurement prices of LED bulbs from Rs.310 in February, 2014 to Rs.38 in August 2016, the retail price being reduced from Rs.550 to Rs.65, which is passed on to the consumers.

As on 21.11.2016, 17.90 Crore LED bulbs have been distributed to households across the country, that resulted in avoided capacity generation of 4,656 MW and a saving of 23.25 billion KWh per year, Shri Goyal further added.

Prime Minister of India, Shri Narendra Modi, launched the National LED programme on 5th January, 2015, which is being implemented by EESL, a joint venture company of Public Sector Undertakings (PSUs) under Ministry of Power.

The Minister informed about the details of the programme and said that EESL aggregates demand across the country and procures LED bulbs for further distribution to domestic consumers at lower rates compared to retail market. EESL has developed an innovative business model in which the entire investment in these programmes is made by it and is paid back over a time from energy savings. This obviates a need for any government funding for this programme. There is no element of subsidy in the scheme.

In a reply to another question, the Minister said that UJALA Scheme covers Urban as well as backward, rural, semi-urban and remote areas. EESL has initiated nationwide implementation of the programme to replace 77 crore incandescent bulbs with LED bulbs by March, 2019. This will result in an estimated avoided capacity generation of 20,000 MW and save 100 billion KWh per year. Shri Goyal also informed that there is no proposal to revamp the funding and execution pattern of ‘LED distribution scheme’.


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