Daily Economic News 27 December 2016

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28 Dec, 2016

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Indian Economy News
December 27, 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.

Railways plans highest outlay

Rs 1.35 lakh crore for FY18

Economic Times:  December 27, 2016


Indian Railways is likely to have its highest plan outlay of around Rs 1.35 lakh crore for the next financial year.

The national transporter plans to seek almost Rs 60,000 crore from the finance ministry as gross budgetary support and another Rs 25,000 crore from LIC as loan.

The remaining amount will be raised by the Indian Railways Finance Corporation (IRFC) bonds, internal resources and public private partnerships (PPP).

“We’ll have the highest outlay for next financial year. We have already entered into a memorandum of understanding (MoU) with LIC as per which we can avail of an annual loan of Rs 25,000 crore. Through IRFC bonds we can get anywhere between Rs 20,000 crore and Rs 25,000 crore. Several project will also be taken up on PPP,” a senior railway board official said.

“Even if we don’t get desired funds from the finance ministry, we’ll be able to manage the same annual outlay,” the official added. Railways has also set up various joint ventures with state governments. Funds spent through these JVs are accounted as PPP by railways.

Railways plans to use funds for constructing freight corridors, improving connectivity in Kashmir and North-east, upgrading signalling, redeveloping stations, improving passenger amenities, acquiring rolling stock, expanding critical freight lines near coal fields and ports.

However, despite its largestever capacity expenditure plan, railways is unlikely to announce any new major line projects as the focus will be on completing ongoing projects that have been in the pipeline for years.

Railway minister Suresh Prabhu is likely to meet finance minister Arun Jaitley on Wednesday for pre-budgetary consultations. From next year, rail budget will be part of the Union Budget, which is presented by finance minister.

Railways, however, will still be responsible for its losses and all expenditure including salaries and pensions.

All the burden will have to be met by railways on its own through revenue from freight and passenger earnings.

The rail ministry’s budgeted plan outlay has gone up drastically it the past two years.

It went up to Rs 1,00,011 crore in 2015-16 from Rs 65,000 crore in 2014-15 and Rs 1.21 lakh crore is the outlay for the current financial year, which includes Rs 45,000 crore as gross budgetary support and safety fund.

Railways, till now, has already spent over Rs 65,000 crore from its current budgetary plan on construction of projects. “Till November, we have spent almost 55% of our total capex plan. Our spending capacity has also increased because of decentralisation of financial authority, which was done earlier this year,” the official added.

ET View: Railways Needs Radical Reforms

The railways needs radical reforms to raise earnings and step up investments to modernise and expand capacity. The government should have the political will to implement reforms recommended by the Bibek Debroy panel in order create an organisational structure that will enable large-scale investment. These include, among other things, bifurcating the railways into two independent organisations and letting private players run trains in competition with the railways. An independent regulator to set tariffs is also a must to improve railway finances.


Enforcing Contracts – Government forms task force

Livemint:  December 27, 2016

New Delhi: The government has formed a task force on enforcing business contracts as part of its efforts to improve India’s ease of doing business rankings.

India ranked 130 of 190 countries in the World Bank’s 2017 rankings. Under the head of enforcing contract, India stood 172, up 6 points from 2016. Improving this rank is a priority for the government, which has taken several steps to enable this.

The government on 19 December finalized eight reforms to make it easier to do business. Improving its rank under the ‘enforcing contracts’ parameter was one, with commerce minister Nirmala Sitharaman asking for eCourts to be expedited for electronic filing of complaints, summons and payments, especially in the commercial courts.

The nine-member task force, headed by secretary of the department of justice (DoJ) Snehlata Shrivastava, has a 12-point reform agenda to address concerns on enforcing contracts, as per a 23 December notice on the DoJ website.

The World Bank’s rankings on contract enforcement assess the time taken to resolve a dispute, the cost—court fee and lawyers’ fee, and the quality of the judicial process in the country, including court structure and proceedings, case management, court automation and alternative dispute resolution.

As per the rankings, resolving disputes in India took longer and were more expensive than in other south Asian countries.In comparison to the 553 days taken to resolve disputes in high income countries, it took 1,490 days in India.The cost incurred for resolving a dispute is nearly double.

The reforms are intended to address various aspects which impact the rankings and are accordingly focused on operationalizing commercial courts, introducing pretrial conferences as court management techniques, directing cases to alternative mechanisms of dispute resolution, expediting the e-courts project to enable e-filing of complaints, and generating reports assessing the court’s performance.


Sagarmala Project – Maritime Potential

Shri Nitin Gadkari inaugurates the Sagarmala Development Company


Press Information Bureau:  December 27, 2016

New Delhi: The Minister of Shipping and Road Transport & Highways Shri Nitin Gadkari has said that projects worth Rs. 1 Lakh Crore under Sagarmala programme are at various stages of implementation and development. He was speaking to the press at a ceremony  to inaugurate the Sagarmala Development Company in New Delhi today. The Sagarmala Development Company (SDC) has been incorporated under the Companies Act, 2013. The company has an initial Authorized Share Capital of Rs. 1,000 Crore and a subscribed share capital of Rs. 90 Crore.

The main objective of the company is to identify port-led development projects under the Sagarmala Programme and provide equity support for the project Special Purpose Vehicles (SPVs) set up by the Ports / State / Central Ministries and funding window and /or implement only those residual projects which cannot be funded by any other means / mode.

The Cabinet had approved the formation of the SDC under the administrative control of the Ministry of Shipping in July 2016. The company would help in structuring activities, bidding out projects for private sector participation, identifying suitable risk management measures for strategic projects across multiple States / Regions and obtaining requisite approvals and clearances.

The implementation of the identified projects would be taken up by the relevant Ports, State Governments/Maritime Boards, Central Ministries, through private or PPP mode. The Company would act as the nodal agency for coordination and monitoring of all the currently identified projects under Sagarmala as well as other projects emerging from the master plans or other sources.

It would also undertake the preparation of the detailed master plans for the Coastal Economic Zones (CEZs) identified as part of the National Perspective Plan (NPP) SDC would be raising funds as debt/equity (as long term capital), as per the project requirements, by leveraging resources provided by the Government of India and from multi-lateral and bilateral funding agencies. It would also aim to increase the scope of private sector participation in project development.

The incorporation of SDC is part of the ambitious Sagarmala Programme by the Government of India which aims to harness India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes. The concept of the Sagarmala Programme was approved by the Cabinet in March 2015. The CIN number of the company is U74999DL2016GOI305194.

Speaking on the occasion, Shri Gadkari also informed the press about the status of work done so far under the Sagarmala programme and plan for the future. To see the details of the same please click on the link below.

India is third in green building rankings

HT Business:  December 27, 2016

New Delhi: Despite rampant violations of its housing laws and rules, its slums and unauthorised colonies, India holds promise when it comes to green buildings. The country secured third position this year in the US Green Building Council (USGBC) annual ranking of the top 10 countries for LEED (Leadership in Energy and Environmental Design ), a green building rating system. China, currently battling red-level hazardous smog, led the rankings, followed by Canada.

Buildings account for an estimated one third of global emissions and a green certification provides cost-effective solutions to climate change as such structures generate significant environmental, economic and societal benefits.

India leads in the rankings because it has 15.90 million gross square metres (GSM) of LEED-certified space and an additional 89.28 million cumulative GSM of LEED-certified and -registered space. About 2,386 projects are participating in LEED across the country. India is also among the top 10 countries outside the United States making progress in sustainable building design, construction and operations. According to Dodge Data and Analytics, which provides data, analytics in the North American commercial construction industry, global green buildings are expected to double every three years and India is a part of that trend.

The analytics company’s World Green Building Trends 2016 Smart Market Report, has found that emerging economies will continue to be engines of green growth, with development varying from twofold to sixfold over current green building levels.

Increased consumer demand has also pushed the world’s green building market to a trillion-dollar industry, a surge that has led to a corresponding increase in the scope and size of the green building materials market, which is expected to reach $234 billion by 2019.

Calling India a leader in the international community driving market transformation across the globe, Mahesh Ramanujam, president and chief executive officer of USGBC, said, “With a focus on LEED and green buildings, India is prioritising environmental and human health in the built environment on a holistic scale and helping us get one step closer to a green building for all within this generation.”

LEED-certified buildings save energy and water, helping residents and businesses make savings. Such spaces reduce carbon emissions and create a healthier environment for residents, workers and the larger community. The analysis used to develop the list ranks countries in terms of cumulative commercial LEED-certified GSM space as of December 2016. The full Top 10 Countries for LEED ranking is as follows:

As of now, 82,000 commercial projects have involved LEED, totalling more than 1.4 billion GSM of space worldwide. An additional 112,000 residential units that have been certified under LEED Homes. An estimated 170,000 GSM of space achieves LEED certification every day in more than 162 countries and territories across the globe.

USGBC is striving to achieve Net Zero Carbon designation and spot leaders in the building sector for reduction in carbon footprint across the buildings sector as is necessary for successful implementation of the Paris Agreement, which India signed earlier this year.


PE and VC firms raised US$ 4.9 billion via India-focused funds in 2016

Livemint:  December 27, 2016

New Delhi: Private equity (PE) and venture capital (VC) firms set new fund-raising milestones and raised a combined $4.9 billion in 2016 across 33 India-dedicated funds, according to research and analytics firm Venture Intelligence.

This was 9% more than the corresponding figure in 2015, when a total of $4.5 billion was raised by PE and VC firms across 27 deals.

The top five PE and VC funds in 2016 raised about $3.35 billion, up from $2.4 billion by the top five funds last year, Venture Intelligence data showed.

Here are the top five fund-raisers in 2016:

Brookfield-SBI stressed-asset JV ($1.04 bn)

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, and State Bank of India (SBI), India’s largest lender, started a joint venture wherein the former agreed to invest Rs7,000 crore.

The fund has been launched to acquire distressed assets in India and independently evaluate and invest in various stressed assets. It will rely on the Canadian firm’s operational expertise to manage recapitalized businesses.


Sequoia Capital India Fund V ($920 mn)

Silicon Valley-based VC firm Sequoia Capital raised its new $920 million fund in February to invest in Indian start-ups as well as South-East Asian companies.

The company was initially looking to raise around $800 million for its fifth fund.


Multiples PE Fund II ($690 mn)

Multiples Alternate Asset Management Pvt. Ltd, a PE fund led by Renuka Ramnath, marked the final close of its $690 million second India-focused fund, against an earlier target of $650 million.

The fund is one of the largest sector-agnostic private equity investment corpuses ever raised for India. The fund was raised through two vehicles—a core fund of $550 million and a co-investment pool of $135 million.


Accel India V ($450 mn)

VC firm Accel Partners, which has backed high-profile technology start-ups including Facebook Inc. and Flipkart, raised $450 million for its fifth India fund.

The latest fund is considerably larger than the $325 million Accel raised in its previous fund and will bring its assets under management in India to more than $1 billion.


Oman India Joint Investment Fund ($250 mn)

Oman India Joint Investment Fund (OIJIF), backed by Oman’s sovereign wealth fund State General Reserve Fund (SGRF) and SBI, hit the first close of $250 million for its second fund in May.




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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