Daily Economic News 16 Dec 2016

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17 Dec, 2016

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Indian Economy News

December 16, 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.


16th December 2016

NITI Aayog announces launch of the schemes – Lucky Grahak Yojana and Digi-Dhan Vyapar Yojana – for incentivising digital payment

Press Information Bureau:  December 16, 2016

New Delhi:  Government of India has initiated numerous steps to combat the scourge of Corruption and Black Money in the last two and a half years. The Union cabinet had approved a slew of initiatives in February 2016 to encourage digital payments and a transition to less-cash economy in a strategic manner. The Prime Minister had highlighted these measures in his Man Ki Baat address in May 2016. He had urged people to adopt cashless transactions. He said “If we learn and adapt ourselves to use cashless transactions, then we will not require notes. Businesses will function automatically, resulting in a certain transparency. Under-hand dealings will stop; the influence of black money will be reduced. So I appeal to my countrymen, that we should at least make a beginning. Once we start, we will move ahead with great ease. Twenty years ago who would have thought that so many mobiles would be in our hands. Slowly we cultivated a habit and now we can’t do without those. Maybe this cashless society assumes a similar form. But the sooner this happens, the better it will be”.

It would be recalled that towards this end, the Government had launched a major drive for financial inclusion in terms of opening Jan Dhan accounts, giving a statutory basis for Aadhar, implementation of Directs Benefits Transfer, introduction of RuPay Cards and Voluntary Disclosure Scheme for unaccounted money. Demonetization of 500 and 1000 Rs. notes was another important milestone in this endeavour. Following demonetization, there has been a spurt in the digital payments across the country and both the volume and amount of money transacted through digital methods has seen manifold increase since November 9th ( see figure below)

Yet, as on date, nearly 95 per cent of India’s personal consumption expenditure transactions are cash-based giving rise to a very large informal economy limiting the ability of State to levy and raise taxes. The Government of India had recently (December 8th) announced a slew of measures to promote digital payments (https://twitter.com/PMOIndia/status/807069075616608256).

To increase overall transparency in the economy and to remove the pernicious influence of cash on the political and economic system, it is essential that we take a longer term view and bring in measures that would influence the behaviour of the consumers as well as merchants to shift to digital payment instruments. It is now possible by leveraging technology to carry out business transactions digitally through mechanisms like UPI, USSD, Ru Pay cards and Aadhar Enabled Payment System (AEPS). In a country like India where 65% of the population is below 35 years of age, whose IT prowess is well recognized and where even poor and illiterate people exercise their franchise through EVMs, this transformation toward digital economy is definitely possible, provided the citizens resolve to do so.

NITI Aayog announces the launch of the schemes Lucky Grahak Yojana and the Digi-धन Vyapar Yojana to give cash awards to consumers and merchants who utilize digital payment instruments for personal consumption expenditures. The scheme specially focuses on bringing the poor, lower middle class and small businesses into the digital payment fold. It has been decided that National Payment Corporation of India (NPCI) shall be the implementing agency for this scheme. It would be useful to reiterate that NPCI is a not for profit company which is charged with a responsibility of guiding India towards being a cashless society.

The primary aim of these schemes is to incentivize digital transactions so that electronic payments are adopted by all sections of the society, especially the poor and the middle class. It has been designed keeping in mind all sections of the society and their usage patterns. For instance, the poorest of poor will be eligible for rewards by using USSD. People in village and rural areas can participate in this scheme through AEPS. The scheme will become operational with the first draw on 25th December, 2016 (as a Christmas gift to the nation) leading up to a Mega Draw on Babasaheb Ambedkar Jayanti on 14th April 2017. It will comprise of two major components, one for the Consumers and the other for the Merchants:

a)    Lucky Grahak Yojana [Consumers]:

 i. Daily reward of Rs 1000 to be given to 15,000 lucky Consumers for a period of 100 days;

 ii. Weekly prizes worth Rs 1 lakh, Rs 10,000 and Rs. 5000 for Consumers who use the alternate modes of digital Payments

This will include all forms of transactions viz. UPI, USSD, AEPS and RuPay Cards but will for the time being exclude transactions through Private Credit Cards and Digital Wallets.

b)  Digi-धन Vyapar Yojana[ Merchants]:

 i. Prizes for Merchants for all digital transactions conducted at Merchant establishments

ii. Weekly prizes worth Rs. 50,000, Rs 5,000 and Rs. 2,500

c)  Mega Draw on 14th of April – Ambedkar Jayanti

a)  3 Mega Prizes for consumers worth Rs 1 cr, 50 lakh, 25 lakh for digital transactions between 8th November, 2016 to 13th April, 2017 to be announced on 14th April, 2017

b)  3 Mega Prizes for merchants worth Rs 50 lakhs, 25 lakh, 12 lakh for digital transactions between 8th November, 2016 to 13th April, 2017 to be announced on 14th

To ensure that the focus of the scheme is on small transactions (entered into by common people), incentives shall be restricted to transactions within the range of Rs 50 and Rs 3000. All transactions between consumers and merchants; consumers and government agencies and all AEPS transactions will be considered for the incentive scheme.

The winners shall be identified through a random draw of the eligible Transaction IDs [which are generated automatically as soon as the transaction is completed] by software to be especially developed by NPCI for this purpose. NPCI has been directed to ensure a technical and security audit of the same to ensure that the technical integrity of the process is maintained.

The estimated expenditure on the first phase of the scheme (up to 14th April 2017) is likely to be 340 Crores . The Government will simultaneously carry out a review for further implementation. India is transitioning at a rapid rate from a cash-user society to a cashless society. This is a historic moment in our nation’s history when our nation is shedding old habits and rapidly adopting new means which shall propel us into a truly modern age.


PPT on ‘INCENTIVIZING DIGITAL PAYMENTS’

Digidhan Mela for Digital Payment Options on 17th- 18th December, 2016

Press Information Bureau:  December 16, 2016

New Delhi: DigiDhan Mela is being organized by the Ministry of Electronics and Information Technology (MeitY) at Major Dhyanchand National Stadium, Delhi to create awareness about the benefits of Digital Payment option. The two day event (17-18 Dec, 2016) aims to handhold. It also aims to handhold users in downloading, installing and using various digital payment systems for carrying out digital transactions. The initiative plans to enable citizens and merchants to undertake real time digital transactions through the DigiDhan Bazaar.

The event will witness participation from banks, telecom companies, mobile wallet operators, transportation network companies, Aadhaar enabled payment system (AEPS) vendors, Department of Post, merchants (through marketing associations), co-operatives like Kendriya Bhandar and organised retail fruits and vegetable chains like Safal, milk booths, agricultural produce marketing committees etc.

The participants will be explaining various options available for digital payments, they will also be assisting visitors in downloading and installing various mobile apps for digital payments and helped them do one digital transaction. During the two-day event, help will also be extended to citizens for opening their bank accounts, to enrol them into Aadhaar and to enable their existing accounts into AEPS accounts.

Citizens who wish to be enrolled in Aadhaar are requested to carry the following:

• A proof of identity with name and photo

• Proof of address

•  Proof of date of birth (PAN card, Passport or Birth Certificate)

Citizens should carry their bank account details to enable the apps.

Merchants are requested to carry the following documents to digitally enable their accounts:

•  Company proof

•  PAN Card (of the proprietor and the company)

•  KYC (Driving License/Passport/Aadhaar Card/Voter ID) – Any one

•  Bank account details and IFSC Code

DigiDhan Mela will be followed up by camps organised at state level and at bank branch levels. This Mela is primarily targeted at urban populace and looks to supplement the rural effort of promoting digital payments being led by the Common Services Centres. The Mela will provide free WiFi to enable citizens to download and install mobile apps for aiding on the spot digital payments.


India Signs Open Skies Agreement With Six Countries During ICAN 2016

Press Information Bureau:  December 16, 2016

New Delhi: International Civil Aviation Negotiations (ICAN) – 2016 were held recently in Nassau from 5th to 9th December, 2016.  In an informal conversation with media persons Shri R.N. Choubey, Secretary, Civil Aviation said that  the Conference was attended by 106 countries out of ICAO membership of 191 countries. India held negotiations with 17 countries and “Memorandum of Understanding” was signed with 12 countries.   The major issues resolved at these negotiations as per the directions in National Civil Aviation Policy (NCAP 2016) are:

1. Increase in traffic rights:- India renegotiated traffic rights with Oman increasing the entitlements with 6,258 seats effective from Summer 2017 as the existing entitlements were nearly exhausted. The points of call remained unchanged.

India agreed with Saudi Arabia to increase the capacity by 8000 seats per week from IATA season when Indian carrier’s utilization reaches 80%. This was in response to the needs of increasing traffic between the two countries where Indian carriers have been utilising open sky in Damman to mount more flights than the Saudi Arabian side.

Indian also agreed with Ghana to increase the present allocation of 2 frequencies to 7 frequencies per week to encourage connectivity between the two countries.

2. Open Skies agreement as per NCAP 2016 :- allows unlimited number of flights to six metro airports namely Delhi, Mumbai, Hyderabad, Kolkata, Bengaluru and Chennai, was signed with six countries namely Jamaica, Guyana, Czech Republic,   Finland, Spain and Sri Lanka. The new arrangement will encourage connectivity and passenger travel between India and these countries.

3.  New Air Service Agreements were signed with Jamaica and Guyana.

4. Code Shares:- In the present scenario code shares provide seamless connectivity to the travelling passengers and make possible connectivity between far off destinations not served by direct flights.  As per NCAP 2016 code shares are to be encouraged and keeping this in view, negotiations were completed with 9 countries to enable the legal framework between the governments of these countries to make possible code shares between the airlines of two sides. The negotiations have  enabled domestic code shares with Czech Republic, Portugal and Malaysia, domestic and international code shares including third country airlines with Guyana, removal of restriction of counting of capacity in case of code share with 3rd country carriers and domestic code  share to additional two points to Mauritius, code share with 3rd country carriers and 4 additional domestic code share points with Saudi Arabia and Spain and code share with 3rd country carriers with Sri Lanka.

5. Resolution of other issues relating to Air Services Agreement was also completed with Ghana, Israel, Japan, Malaysia, Portugal, Hong Kong, Ethiopia and Bangladesh.


Claris to sell Baxter its generic injectables business for US$ 625 million

Livemint:  December 16, 2016

Ahmedabad: Claris Lifesciences Ltd will sell its global generic injectables business to US-based Baxter International Inc. for $625 million (Rs4,238 crore), the Ahmedabad-based company said on Thursday. The company said it intends to share a significant majority of net cash proceeds from the sale (post expenses and taxes) with shareholders.

The deal size is twice Claris’s market capitalization of Rs1,956 crore at Thursday’s closing prices. The transaction is expected to close by the second half of 2017. While the firm hasn’t specified how much it will return to shareholders, even if 50% of the money from the sale is shared, that translates into a one-time cash bonanza of Rs388 per share, higher than the current share price of Rs358.45.

But in return, shareholders are also signing away a good portion of the company’s earning capacity. For the last fiscal year, the global generics injectables business generated revenue of Rs623 crore in the year ended March 2016, contributing 78% to the consolidated sales of Claris. At the end of March, Claris had gross debt of Rs602 crore and net debt of Rs205 crore, according the firm’s investor presentation.

“The plan to return cash to shareholders is likely to boost sentiment. The stock price is expected to get adjusted to the per share amount the shareholders will actually get from the deal and how much earnings the company will give up,” said an analyst with a domestic brokerage, declining to be named.

In the fiscal year ended 31 March, Claris operated the global generic injectables business through several wholly owned subsidiaries. It has a total of 40 abbreviated new drug applications filed with the US Food and Drug Administration (FDA), of which 16 are approved, the firm said in a statement. The company markets its products in more than 75 countries.

The injectables business has also been one of the fastest growing for Claris expanding in double digits annually over the last several years driven by new product launches and geographic expansion. In 2016, Claris Injectables’s revenue is expected to be in excess of $100 million.

Thus, the deal has been valued at 6.25 times sales.

“Globally, the capacity of injectables assets is experiencing a shortage. Therefore, there will be a demand and premium for high-quality and scaled assets like Claris,” said Gautam Kothari, associate director at Equirus Capital.

The demand for injectable generic drugs in the US is likely to surge as injectable drugs worth $16 billion are expected to go off-patent in the US during the 2015-19 period. A July report by rating agency Icra Ltd said that the US generic injectables market will grow at an annual average of 10% over the next five years.

Indeed, Claris has been trying to sell its injectable business for the past two years. Sale talks were held up after the US FDA issued a warning to its Ahmedabad plant in May 2015.

There have been a couple of other big deals in this space. In 2013, Strides sold its injectables unit, Agila Specialties, to US-based Mylan for $1.6 billion. In July, Shanghai Fosun Pharmaceutical (Group) Co. Ltd said it will acquire India’s Gland Pharma Ltd, an injectables specialist, for $1.3 billion (Rs8,700 crore).

In a separate statement, Baxter said that the acquisition will provide it with a robust pipeline, marketed portfolio, research and development expertise and three FDA-registered manufacturing units. Claris Injectables will add proven capabilities in production of essential generic injectable medicines, such as anesthesia and analgesics, renal, anti-infectives and critical care in a variety of presentations including bags, vials and ampoules.

With the addition of Claris’s portfolio, Baxter plans to launch seven to nine new products annually over the next few years and 10-15 per year beyond 2019.

Credit Suisse and Jefferies acted as the financial advisers to Claris; Herbert Smith Freehills LLP, Veritas and AZB were legal advisers.


Carlyle set to acquire stake in vaccine maker Bharat Biotech

Livemint:  December 16, 2016

Mumbai: US-based private equity firm Carlyle Group is set to acquire a minority stake in Hyderabad-based vaccine manufacturer Bharat Biotech International Ltd, according to two people familiar with the development. The investment, which will be made through Carlyle Asia Growth Partners, is around Rs250-300 crore, said one of the two, asking not to be identified. The size of the stake being acquired isn’t known.

Carlyle will buy the stake from existing investors ICICI Venture, International Finance Corp. (IFC) and Subhkam Ventures, which had invested in Bharat Biotech between 2005 and 2007.

“The term sheet between the parties have been signed two weeks ago and the deal is expected to be closed in a month’s time,” said the second person on condition of anonymity.

A Carlyle spokesperson declined to comment. Spokespersons at Bharat Biotech, ICICI Venture, IFC and Subhkam Ventures did not respond to emails.

The deal has been in the making since at least the beginning of the year. At the time, media reports had said that the deal could involve a 30% stake sale.

Bharat Biotech specializes in research and development, manufacturing, marketing and distribution of vaccines and bio-therapeutics.

Set up by Dr Krishna Ella (chairman & managing director), who worked as research faculty at the Medical University of South Carolina, Charleston, Bharat Biotech has 50 global patents to its name, of which five are for new molecules.

Bharat Biotech has received about Rs300 crore funding from various government agencies and NGOs such as the department of science and technology, department of biotechnology, Council of Scientific and Industrial Research and the Bill & Melinda Gates Foundation.

The vaccine maker has been in the news following its work on a vaccine candidate to prevent the Zika virus infection in humans. The company has completed pre-clinical studies and has sought government approval to begin phase 1 trials.

Carlyle, which has been an active investor in the Indian pharmaceuticals and healthcare space, also invested in Naresh Trehan-owned Global Health Pvt. Ltd, which manages and operates the super-specialty hospital Medanta the Medicity in the national capital region of Delhi.

In September 2015, Carlyle Asia Partners IV acquired about a 38% stake in diagnostic chain Metropolis Healthcare.

Carlyle Group was also in talks to acquire the injectable drugs business of Claris Lifesciences Ltd, Mint reported in August.

According to Investec, a global specialist banking group, private equity investors in the Indian healthcare sector will exit close to $3 billion of primary investments in the next two-three years through secondary sales and public market listings.

Between 2011-12 and now, 233 healthcare companies have received a little more than $4 billion in funding from private equity funds and strategic investors, making India’s healthcare sector one of the most sought-after destinations for domestic and global investors.

India’s pharmaceutical market may reach $20 billion this year and about $55 billion by 2020 from about $18 billion in 2014, clocking a compound annual growth rate of over 22%, according to a joint study by the Associated Chambers of Commerce & Industry of India (Assocham) and TechSci Research released in June.

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.

 


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