16 Dec, 2016
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Indian Economy News
December 14, 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.
15th December 2016
99% Indian households are covered by a bank account
Livemint: December 15, 2016
Ever since the government announced the scrapping of high value currency notes on 8 November, bank accounts opened over the past couple of years under the Jan Dhan Yojana (JDY) have become the subject of a raging controversy. While the government spokespersons and their supporters have cited the JDY numbers to stress the universalization of banking in the country, critics have questioned the credibility of those numbers, pointing out that many of the accounts may be fictitious, and may not belong to the true and deserving beneficiaries of the scheme.
Fresh data from an independent and large-scale, nationally representative survey may help put that controversy to rest. The ‘Household Survey on India’s Citizen Environment & Consumer Economy’ (ICE 360° survey) conducted this year shows that the JDY scheme has been a roaring success in getting people to open bank accounts. The survey also shows that a significant chunk of households which have access to banking still don’t use banking instruments to save or invest, which is also consistent with what the official data shows.
99% of households in both rural and urban India have at least one member with a bank account, the ICE 360° survey shows. 91% of urban households have their Aadhaar card linked to their bank accounts. The comparative figure is lower for rural India at 78%. The survey, covering 61,000 households, is among the largest consumer economy surveys in the country and captures data till July 2016.
The survey shows a big jump in banking access compared to 2011, when the last census was conducted. The census showed that only 58.7% households had access to banking. It needs to be kept in mind that while the 2011 figures were based on a complete census, the 2016 figures are estimates based on a survey and hence need to be interpreted with greater caution. Nonetheless, estimates such as these based on a nationally representative survey usually provide a fair sense of the direction of change even if they under-state or over-state the pace of change because of sampling errors.
The survey also shows that in 20% of households with access to banking, the breadwinner (or chief wage earner) does not use banking instruments to save. Some of them may not be using the bank account as it belongs to another member of their household and they may not want to deposit their hard-earned money in someone else’s account. Others may be thwarted by the lack of education. A large proportion (75%) of such breadwinners are either illiterate or have just attended primary school, the data shows. This suggests that the lack of education may be a serious impediment to India’s ambitious financial inclusion agenda.
A notable feature of the ICE 360° survey is that it is representative at the level of economic clusters. Urban India has been divided into four clusters: metros (population more than 5 million), boom towns (2.5 to 5 million), niche cities (1 to 2.5 million) and other urban towns (less than 1 million). Based on a district development index, rural India has been subdivided into three different clusters: ‘developed rural’, ‘emerging rural’, and ‘under-developed rural’. The first category includes districts such as Bathinda (Punjab) and Kangra (Himachal Pradesh). The second category includes districts such as Latur (Maharashtra) and Kamrup (Assam) while the last category includes districts such as Kalahandi (Odisha) and Bastar (Chhattisgarh).
The survey shows that 42% of breadwinners who don’t use banks to save despite access to banking in their household belong to under-developed rural areas while only 5% of them belong to metros. Location seems as big a driver of banking usage as education.
The survey also shows that while a greater number of people in under-developed rural areas may save cash at home, a far smaller proportion invest in physical assets (such as gold, jewellery, property etc.,) compared to other regions. Over a quarter of households in metros invest in physical assets but in under-developed rural areas, only a tenth invest in such assets.
The richer income classes save much more than the poorer classes in banks but they also invest more heavily in capital markets (and/or insurance) as well as in physical assets. The survey shows that 65.5% of the bottom quintile had total financial savings (and/or investments) exceeding Rs1,000 during the response period (April 2015-March 2016). Among the top quintile, the proportion was 92.6%.
The median financial savings of the top quintile is 8 times that of the bottom quintile, as per the survey. About 27% of the top quintile reported investing in physical assets but only 5% of the bottom quintile did so, the survey shows. 58% of the top quintile have purchased either capital market products or insurance. The comparative figure for the bottom quintile is just 14%, as per the survey.
The ICE 360° survey was conducted by the independent not-for-profit organization, People Research on India’s Consumer Economy (PRICE), headed by two of India’s best-known consumer economy experts, Rama Bijapurkar and Rajesh Shukla. The urban sample of the survey is comparable to that of the National Sample Survey Office (NSSO) consumer expenditure survey conducted in 2011-12. While the NSSO surveyed 101,651 households, of which 41,968 (41.3%) were urban households, the ICE 360° survey covered 61,000 households, of which 36,000 (59%) are urban households. The rural sample of the ICE 360° survey is less than half of the NSSO sample. Nonetheless, all the estimates of each region have been derived by adjusting for the respective population of those regions.
Tadit Kundu in Mumbai contributed to this story.
This is the eleventh of a 16-part data journalism series on how India lives, thinks, earns and spends, based on the latest results from the ICE 360° survey (www.ice360.in/) conducted by the People Research on India’s Consumer Economy (PRICE) in 2016. The next part will look at indebtedness levels of households.
Digital payment fast gaining currency in towns
Times of India: December 15, 2016
Mumbai: As the government pushes for more digital payments, it is not just the metros that are seeing a substantial pickup in card transactions, even small cities and towns are witnessing a strong uptake.
“The jump in card transaction volume is consistently more pronounced in tier-2 and tier-3 cities,“ said Rajeev Agrawal, chief executive of Innoviti Payments Solutions, which manages point-of-sale ter minals for merchants. He said the increase in digital transactions at these places has been one-and-a-quarter times than in bigger cities. “There has been 150% growth in tier-2 cities and 157% growth in tier-3 cities,“ he said.
Innoviti works with 50,000 merchants, managing PoS terminals for them in collaboration with six major banks, including HDFC Bank, Axis Bank and State Bank of India.
Agrawal said the steep increase in card transactions at small cities and towns suggested that a lot of people there owned debit cards, but used those only at ATMs to withdraw cash. “ After November 8, this section of the population has rapidly tipped over to using their cards for transactions and payments directly at PoS terminals from using them as ATM cards,“ he said.
Pine Labs, another payments service provider, said the highest increase in transactions it witnessed was in Ghaziabad (130%), followed by Lucknow (120%). Transactions increased 117% in Delhi, 82% in Mumbai, 54% in Chennai, 84% in Kolkata and 62% in Bengaluru. Payment companies also pointed out that while typical consumer sectors like supermarkets, movie theatres, restaurants and fuel stations saw a sharp rise in card-based payments, a new consumption point that was gaining ground was liquor.
“We have seen a three-time jump in card-based transactions at liquor shops, which was a sector that never saw much traction on digital payments before,“ said Agrawal. Industry insiders explained these trends as indicative of the fact that the organised retail sector, which has spread across the country even in smaller cities, is majorly driving card transactions. However, while many small retail outlets are shifting to digital modes for payments, the fear is that once there is sufficient cash in the system, there might be a tendency to move away from digital payments.
“Tax avoidance is seen as a major reason for merchants preferring cash over digital. Hence, our main concern is that changing the payment habits of smaller retail stores might prove to be difficult. However, the government’s steps to have PoS machines installed in small villages is positive and we hope that this will help,“ said an industry insider. “Further, (the introduction of) goods and services tax might help in this case.”
Cabinet approves Indian Space Research Organisation (ISRO) and United States Geological Survey (USGS) for cooperation in the Exchange and use of U.S. Land Remote Sensing Satellite Data
Press Information Bureau: December 15, 2016
New Delhi: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has been apprised of the Memorandum of Understanding signed between Indian Space Research Organisation (ISRO) and United States Geological Survey (USGS) for Cooperation in the exchange and use of U.S. Land Remote Sensing Satellite Data. The MoU was signed on 9th July 2016 at Bengaluru.
This MoU will enable ISRO to receive USGS’s Landsat-7 & 8 in India and USGS to receive ISRO’s Resourcesat-2 (AWiFS and LISS III) data of US region.
ISRO of Department of Space is actively pursuing civilian space cooperation with many US organisations including National Aeronautics and Space Administration (NASA), the National Oceanic and Atmospheric Administration (NOAA) and United States Geological Survey (USGS). Data from Landsat series of satellites operated by USGS was used by Indian scientists during the inception of Indian remote sensing programme. ISRO received Landsat data during 1984 to 2001 through its ground station at Shadnagar. USGS has launched Landsat -8 satellite in February 2013. ISRO expressed interest in direct reception of the Landsat-8 data in India, while USGS expressed interest in obtaining data from ISRO’s RESOURCESAT-2 satellite.
ISRO and USGS, considering their mutual interest in data exchange of each other satellites, signed the MoU.
Cabinet approves replacement of ‘Major Port Trusts Act, 1963’ with ‘the Major Port Trust Authorities Bill, 2016’
Press Information Bureau: December 15, 2016
New Delhi: The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved the proposal of Ministry of Shipping to replace the Major Port Trusts Act, 1963 by the Major Port Authorities Bill, 2016. This will empower the Major Ports to perform with greater efficiency on account of full autonomy in decision making and by modernizing the Institutional structure of Major Ports.
With a view to promote the expansion of port infrastructure and facilitate trade and commerce, the proposed bill aims at decentralizing decision making and to infuse professionalism in governance of ports. The new Major Ports Authority Bill, 2016 would help to impart faster and transparent decision making benefiting the stakeholders and better project execution capability. The Bill is aimed at reorienting the governance model in central Ports to landlord port model in line with the successful global practice. This will also help in bringing transparency in operations of Major Ports.
The salient features of the Major Ports Authority Bill are as under:
- The Bill is more compact in comparison to the Major Port Trusts Act, 1963 as the number of sections has been reduced to 65 from 134 by eliminating overlapping and obsolete Sections.
b.The new Bill has proposed a simplified composition of the Board of Port Authority which will comprise of 11 members from the present 17 to 19 Members representing various interests. A compact Board with professional independent members will strengthen decision making and strategic planning. Provision has been made for inclusion of representative of the State Government in which the Major Port is situated, Ministry of Railways, Ministry of Defence and Customs, Department of Revenue as Members in the Board apart from a Government Nominee Member and a Member representing the employees of the Major Ports Authority.
c. The role of Tariff Authority for Major Ports [TAMP] has been redefined. Port Authority has now been given powers to fix tariff which will act as a reference tariff for purposes of bidding for PPP projects. PPP operators will be free to fix tariff based on market conditions. The Board of the Port Authority has been delegated the power to fix the scale of rates for other port services and assets including land.
d. An independent Review Board has been proposed to be created to carry out the residual function of the erstwhile TAMP for Major Ports, to look into disputes between ports and PPP concessionaires, to review stressed PPP projects and suggest measures to review stressed PPP projects and suggest measures to revive such projects and to look into complaints regarding services rendered by the ports/private operators operating within the ports would be constituted.
e. The Boards of the Port Authority have been delegated full powers to enter into contracts, planning and development, fixing of tariff except in national interest, security and emergency arising out of inaction and default. In the present MPT Act, 1963 prior approval of the Central Government was required in 22 cases.
f. Empowers the Board to make its own Master Plan in respect of the area within the port limits and to construct within port limits Pipelines, Telephones, Communication towers, electricity supply or transmission equipment. The Board is empowered to lease land for Port related use for upto 40 years and for any purpose other than the purposes specified in section 22 for upto 20 years beyond which the approval of the Central Government is required.
g. Provisions of CSR & development of infrastructure by Port Authority have been introduced.
Amazon launches Prime Video service in India
Business Standard: December 15, 2016
Mumbai: American e-commerce giant Amazon announced the launch of its Prime Video service in India, after a year of preparation. It will be available at Rs 499 a year as an introductory offer, and includes a month’s free trial.
The content library has a range of Hollywood and other international movies and TV shows. With this, Amazon Prime has announced the launch of nine Indian original shows, making it the largest Indian original line-up on an OTT (over-therop, meaning delivery of media service over the internet without a multi system operator deciding content) platform.
“After the US and Japan, India is a focus market in terms of content creation. While preparing for the launch, we realised that while there is an appetite for international library and original content (already available on Prime), Indian viewers also have an appetite for good local content. So, we went ahead and collaborated with a range of Indian talent to create the original shows,” says James Farrell, head of content, Asia-Pacific, Amazon Prime and Amazon Studios.
With this pricing, it is among the cheapest of OTT services in India, along with Zee’s Ditto TV. American peer and global competitor Netflix, which launched in January this year, offers three tiers of membership for Rs 500, 650 and 800 a month. Indian entities Eros Now (Rs 49 and Rs 99 a month) and Hotstar (Rs 199 a month) offer some content for free; premium content is charged. In the case of Amazon, a prime customer has access to the entire library in the country. One connection can be viewed on three devices simultaneously and accessed from anywhere in the world.
Amazon Prime Video can be watched using the new Prime Video app for Android phones and tablets, on the Prime Video app for iPhones and iPads, on the new www.PrimeVideo.com website, and on popular internet connected TVs and gaming consoles. The Prime membership also includes free shipping all over the country.
Amazon launched its prime (delivery) services in India in July this year. According to sector estimates, it has 700,000 Prime subscribers in India since launch; globally, it has 80 million Prime customers. With the India launch, Amazon Prime Video now reaches 142 countries.
“We customise our offerings according to the market we are in and do the pricing accordingly; Rs 499 a year for Prime services is a competitive price point for India,” says Time Leslie, vice- president, Amazon Instant Video International.
Unlike Amazon, Netflix has a global pricing strategy. Which means the service is available at the local currency equivalent of the US rate. Netflix has global access, too, but simultaneous access on multiple devices depends on the subscription opted for.
Additionally, selected Prime Video international content is available in Indian language dubbing and subtitles, including in Hindi and Tamil. In addition to English and Hindi films, Prime Video will also offer regional movies in Tamil, Telugu, Bengali and Marathi. Many Bollywood and regional blockbusters will premiere exclusively on Amazon Prime Video within a few weeks after their theatrical release, it says. Also, many US TV shows will be available first on Amazon Prime Video the day after US broadcast. It also promises movies and TV shows from top Indian and international studios.
In addition, Amazon announced it had started production of an Indian Amazon Original Series, featuring Indian talent and filmmakers, available exclusively for Prime members. “India has one of the richest and most vibrant entertainment industries in the world…we are excited to be making multiple Indian original shows already, with more to come,” said Roy Price, head of Amazon Studios. “It’s no secret that Amazon is making a big investment in India and is happy to take original content, created by Indian talent, to audiences worldwide.”
The Amazon Original Indian Series will have diverse genres —drama, comedy, psychological thrillers, biopics, period/action, mythological/fantasy, sports drama and political satire. The company announced a series of titles in this regard.
The Swedish newspaper was recently asked it to delete the reference made by President Pranab Mukherjee to the Bofors scam in an interview to it, as a claim protested by the Indian Government on 27 May 2015. India has expressed disappointment over the disrespect shown to the President, the newspaper has defended its right to publish what was said during the interview.
Know, who is Vijay Kelkar and what is PPP !
Vijay Kelkar is a renowned economist and a former Finance Secretary. He was appointed head of newly constituted committee to give recommendations to recast the model of Public-Private-Partnership (PPP) model in India. India is one of the largest PPP market with over 900 projects. The Kelkar committee will review the PPP policy, suggest a better risk-sharing mechanism between private developers and the government after analysing such projects.
Know, who is Yaduveer Krishnadatta Chamaraja Wadiyar !
Yaduveer Krishnadatta Chamaraja Wadiyar was crowned as the new Maharaja of of Mysuru (Mysore) royal family. He is the 23-year old grandson of Princess Gayathri Devi, who was the eldest daughter of the last Maharaja of Mysore, Sri Jayachamarajendra Wadiyar. The coronation was held at Mysuru’s famous Amba Vilas Palace, which was decked up for the occasion.
Know about Sepp Blatter!
Swpp Blatter, was re-elected as FIFA president for a fifth term at the 65th Annual Congress of FIFA held at Zurich for four year term.
Prince Ali bin al-Hussein of Jordan stood against Blatter in this election. It is worth mentioning that FIFA is going through a major controversy regarding corruption in the organisation with two FIFA vice presidents and a recently elected FIFA executive committee member still in custody.