economic affairs

Rollout of Direct Benefits Transfers started on 1 January 2013

National Committee on Direct Cash Transfers in its meet with the Prime Minister of India Dr. Manmohan Singh decided to roll-out, the Direct Cash Benefits from 1 January 2013 in 43 identified districts of the country. The decision was taken to ensure that the benefits could be transferred electronically into the bank accounts of the individuals, without making delays and diversions of any type.

A high level meet was conducted on 13 December 2012 with the District Collectors of thee identified areas and fine tuned information related to steps that need to be taken in case of Direct Benefits Transfer.

Direct Benefits Transfer and it covers:

•    Transfer of cash benefits like pensions, scholarships, NREGA wages and others directly through the Government in the Bank or Post Office Accounts of identified beneficiaries under the Direct Benefits Transfer (DBT) programme. The program would also device necessary system so that the transfers can be done in a phased, time-bound manner for Direct Benefits Transfer. •    Direct Benefits Transfer would not act as a substitute for delivery of public services and it would continue to be in place via normal delivery channels.•    The Direct Benefits Transfer would not allow replacement of food through cash managed under Public Distribution System. The Government will be committed towards legislation of the National Food Security Act.

Rollout on 1.1.2013 mean in practice

The Rollout that would began on 1.1.2013 in 43 districts of 16 different states under 26 different schemes, which have been identified for first round of Direct Benefits Transfer. All these districts were selected on the basis of its coverage of bank accounts and Aadhaar.

Domestic Automobile Sales Decreased in December 2012 despite Heavy Discounts

The domestic automobile sales finished at the lower end in December 2012, just like the remaining year, despite all the discounts.

The homegrown auto manufacturer Tata Motors recorded a surprising drop of 51 percent in its sales in the month of December 2012. Apart from this, other car manufacturers such as General Motors, Toyota and Korean Hyundai Motor also witnessed decline in the sales in December 2012. However, Honda Motor Co, Mahindra & Mahindra (M&M) and Ford India registered a fair rise in their sale.

The scenario of dropping-sales has continued throughout the year 2012 despite heavy discounts and offers. The automobile market however remained depressed throughout 2012

on the grounds of negative factors such as worsening economic conditions as well as higher rates of interest.

The automobile market remained low even in terms of sales of two-wheelers. While the market leader Hero MotoCorp recorded flat sales, TVS on the other hand witnessed a 10 percent decrease.

Manufacturing Sector Displayed Six-Month Highest Growth in December 2012: Survey

The Purchasing Managers' Index (PMI) from HSBC survey revealed on 2 January 2013 that the manufacturing activity of India increased in December 2012 to maximum in six months. This happened because of an increase in the new orders as well as strengthened factory output.

The survey provides a peep into the sector of manufacturing ranging from jobs to output. The survey showed that the manufacturing activity increased from 53.7 in November 2012 to 54.7 in December 2012.

The parameter for measuring is a figure of 50 points. The sector showing figure more than 50 points displays growth while that below 50 points indicates contraction. The chief economist of HSBC described that the manufacturing sector gained pace because of upstick in the new orders as well as faster growth of output.

An increase in the manufacturing activity of India indicated a positive sign for the economy as well.

RBI set up Working Group to review Banking Ombudsman Scheme

The Reserve Bank of India in the month of January 2013 had set up a working group to evaluate and make improvements in the grievance redressal mechanism for bank customers.

The working group constituted in the Reserve Bank of India is going to review, update, and revise the Banking Ombudsman Scheme, 2006.

As per the RBI annual report of the Banking Ombudsman Scheme 2011-12, In Financial Year 2011-12, the banking ombudsman’s office of the RBI received around 72889 complaints. It disposed off 94 per cent of the customer complaints, About one-fourth of the total customer complaints were about banks’ failure to meet commitments and non-observance of fair practices code.

Also, it was seen that the Banking Ombudsman received 14492 card-related complaints in the reporting year. Unsolicited cards and charging of annual fee in spite of being offered ‘free’ card formed the basis of some of the complaints against the banks.

Presently, we have 15 Banking Ombudsmen with unambiguous jurisdiction covering the 29 States and seven Union Territories in India.

Union Government approved Ten Percent Stake Sale in Engineers India Ltd (EIL)

The Union Government on 10 January 2013 approved 10 per cent stake sale in Engineers India Ltd (EIL), which is supposed to bring back a sum of around 800 crore Rupees to the government.

The stake is going to take place this fiscal, April 2012 to March 2013 and is approved by Cabinet Committee on Economic Affairs (CCEA).

At present 80.40 Percent of Stake in EIL is held by the Government. Earlier in 2010 Government divested 10 per cent stake through an FPO in EIL, a leader in engineering consultancy.

For the July-September quarter of the current fiscal, April 2012 to March 2013, EIL reported net profit of 161.24 crore of rupees up 10 per cent over the same period in 2011-12.

The government has proposed to raise 3000 crore rupees. by way of disinvestment in 2012-13.

So far this fiscal, the government has been able to realise just over 6900 crore rupees through stake sale in PSUs. Further stake sale in Oil India and NTPC is lined up for January and February 2013.

RBI: Private Sector of India registered a Net Profit of 4.3 percent in First Half of 2012-13

The data released from the Reserve Bank of India on 9 January 2013 reported that the Private Corporate Sector of India registered a net profit of 91800 crore rupees in the first half of 2012-13 (April to September), which is 4.3 percent higher than the one reported in the first half of the 2011-2012.

In terms of growth in Sales on the basis of the financial results of 2832 listed non-financial and non-government companies in the first half of the current fiscal the companies grew by 12.3 percent, which is equivalent to 14.34 lakh crore. The details of the report states that the operating profit (EBITDA) of these companies has gone up by 4.9 percent to 1.88 lakh crore rupees.

The report states that with a net profit margin of 17 percent, the performance of the Information Technology (IT) sector was better, when compared with the manufacturing and non-IT service sectors. The net profit margin of the non-IT service sector and manufacturing sector were 4.9 percent and 5.7 percent respectively. The manufacturing companies show a rise in its net profit by 2.4 percent, which is equivalent to 61200 crore rupees and the non-IT companies dropped down by 3.9 percent, from the one recorded previous year.

The companies involved in computer and activities related to it show a rise in net profit of 18.6 percent that is equivalent to 18200 crore rupees. The financial companies registered a net profit of 27.3 percent that was equivalent to 8500 crore rupees, when compared to previous year profit.

Union Cabinet approved 12517 crore Rupees of Capital Infusion in 10 PSU Banks

The Union Cabinet on10 January 2013 approved a proposal of infusing 12517 crores rupees in public sector banks so that bank could enhance the lending activity and meet the capital adequacy norms.

As per the Finance Minister P Chidambaram about 9-10 public sector banks are going to be benefitted from the capital infusion programme. Also, the name of the banks, the amount for each bank and terms of the conditions will be decided in consultation with them at the time of infusion.

The government is supposed to Provide capital funds to PSBs during the year 2012-13 to the tune of 12517 crore to maintain their Tier-l CRAR   (capital to risk-weighted assets ratio) at comfortable level.

The need for that is to make the PSU remain obedient with the stricter capital adequacy norms under BASEL-III as well as to support internationally active PSBs for their national and international banking operations undertaken through their subsidiaries and associates.

In principle approval of the Cabinet is accorded for need based additional capital infusion in PSBs from the year 2013-14 to 2018-19 for ensuring compliance to Capital Adequacy norms under Basel- III.

Benefits of the Capital Infusion in Banks

• The capital investment will ensure fulfillment to the regulatory norms on capital adequacy and will cater to the credit needs of productive sectors of the economy as well as to withstand the impact of stress in the economy.

• It will support national and international banking operations of PSBs and will boost the confidence of investors and market sentiments.

• The infusion of. 12517 crore rupees in the equity capital of PSBs would enable them to expand their credit growth.

• This additional availability of credit will cater to the credit needs of our economy and will also benefit employment oriented sectors, especially agriculture, micro and small enterprises, export, entrepreneurs etc. in promotion of their economic activities which would, in turn, contribute substantially to the growth of the economy.

The Government is committed in making all the PSBs financially sound and healthy so as to ensure that the growing credit needs of our economy are adequately met. To meet the credit requirement of the economy, banks would require capital funds commensurate to the increase

in their Risk Weighted Assets (RWAs).

The government earlier had infused about 20117 crore rupees in public sector banks during 2010-11, and 12000 crore rupees in 2011-12.

Sensex Crossed Crucial 20000 Mark after Two Years

The Bombay Stock Exchange Sensex for second time in a row on 15 January 2013 touched 2-years high. The shares remained supported inspite of government’s delayed implementation of the controversial rules related to tax avoidance.

However, till the time the RBI reviews the policy on 29 January 2013, analysts are expecting that the earnings would remain crucial catalysts for the Indian shares, as the investors would look for the signs of profit improvement in 2013. Analysts predicted that in the fiscal year 2013-14, the Sensex EPS would grow by 13-14 percent.

The BSE Sensex closed at 0.4 percent or 80.41 points at 19986.82 on 15 January 2013, which is the highest since 6 January 2011. Earlier it had touched the crucial 20000 level as well.

The Nifty, on the other hand, increased to 0.54 percent or 32.55 points, ending at 6056.60, closing more than 6000 for the second consecutive day.

Shares of the important companies such as ITC, Axis Bank, TCS and Bharti Airtel also increased.

Krishi Karman Awards for the year 2011-2012 presented by the President of India

The President of India, Pranab Mukherjee on 15 January 2013 presented the Krishi Karman Awards for the year 2011-2012 at an award ceremony at the Rashtrapati Bhavan. The awards were presented to the State Governments for their excellent performance in increasing the production of food grains in their respective states.

Awards in different segments

Awards Sates The Awards for Special Contribution to Total Food Grains Production

Madhya Pradesh, Tamil Nadu, Manipur and Nagaland

Award for Contribution to Production and Productivity of Rice

Bihar

Award for Contribution to Production and Productivity of Wheat

Haryana

Award for Contribution to Production and Productivity of Pulses

Jharkhand

Award for Contribution to Production and Productivity of Coarse Cereals

Uttar Pradesh

Ten states namely Punjab, Uttarakhand, Assam, West Bengal, Tripura, Rajasthan, Gujarat, Arunachal Pradesh, Mizoram and Himachal Pradesh were presented commendation awards. From the eight awards winning states, for the first time one male and one female farmer were also awarded for their outstanding performance.

Total Food grains Category-I (production over 10MT)

State

Production

(Lakh Tonnes)

Productivity

(Kg/ha)

Previous

Highest

in last

Five

years

2011-12

%

increase

Previous

Highest

In last

Five

years

2011-12

%

increase

1. Madhya Pradesh

160.16

(2009-10)

190.46

18.91 1285

(2009-10)

1411

9.81

2. Punjab 278.66

(2010-11)

283.52

1.74 4280

(2010-11)

4339

1.37

3. Rajasthan

188.32

(2010-11)

189.63

0.70 1263

(2008-09)

1316

4.19

Total Food grains Category-II (production between 1 and 10 MT)

State

Production

(Lakh Tonnes)

Productivity

(Kg/ha)

Previous

Highest

in last

Five

years

2011-12

%

increase

Previous

Highest

In last

Five

years

2011-12

%

increase

1. Tamil Nadu

82.63

(2006-07)

96.41

16.67 2610

(2006-07)

2687

2.96

2. Gujarat 83.42

(2010-11)

90.66

8.68 1843

(2010-11)

1961

6.38

3. Uttarakhand

18.16

(2010-11)

18.53

2.06 1841

(2010-11)

1942

Total Food grains Category-III (production below 1 MT)

State

Production

(Lakh Tonnes)

Productivity

(Kg/ha)

Previous

Highest

in last

Five

years

2011-12

%

increase

Previous

Highest

In last

Five

years

2011-12

%

increase

1. Manipur 4.22

(2007-08)

5.93

40.52 2297

(2007-08)

2244

(-) 2.31

2. Nagaland

5.14

(2008-

5.68

10.52 1811

(2008-

1902

5.02

09) 09)3. Arunach

al Pradesh

3.09

(2009-10)

3.34

8.02 1555

(2009-10)

1663

6.95

4. Tripura 6.479

(2009-10)

7.124

9.96 2563

(2007-08)

2587

0.94

5. Mizoram 

0.624

(2009-10)

0.668

7.05 1047

(2009-10)

1246

19.01

Rice

  State

Production (Lakh Tonnes)

Productivity

(Kg/ha)

Previous

Highest

in last

Five

years

2011-12

%

increase

Previous

Highest

In last

Five

years

2011-12

%

increase

1.

Bihar

55.9

(2008-09)

72.01 28.81 1599

(2008-09)

2158

34.95

Wheat

  State Production

(Lakh Tonnes)

Productivity

(Kg/ha)

    Previous

Highest

2011-12

%

increase

Previous

Highe

2011-12

%

increase

in last

Five

years

st

In last

Five

years1.

Haryana

116.30

(2010-11)

126.84 9.07 4624

(2010-11)

5030

8.77

2.

Himachal Pradesh

5.473

(2008-09)

5.958 8.86 1530

(2010-11)

1671

9.23

Pulses

  State Production

(Lakh Tonnes)

Productivity

(Kg/ha)

Previous

Highest

in last

Five

years

2011-12

%

increase

Previous

Highest

In last

Five

years

2011-12

%

increase

1.

Jharkhand

3.296

(2010-11)

4.923 49.34 773

(2010-11)

914 18.17

2.

Assam 0.701

(2010-11)

1.08 54.06 567

(2008-09)

574 1.18

3.

West Bengal

1.761

(2010-11)

1.878 6.63 898

(2010-11)

911 1.50

Coarse Cereals

  State Production

(Lakh Tonnes)

Productivity

(Kg/ha)

Previous

Highest

in last

Five

years

2011-12

%

increase

Previous

Highest

In last

Five

years

2011-12

%

increase

1.

Uttar Pradesh

32.18

(2010-11)

35.49 10.30 1561

(2010-11)

1747

11.90

Krishi Karman Awards

The award was instituted in the year 2010-11 for recognizing the meritorious efforts made by the states in production of food grains. The Awards include a trophy, a citation and a cash reward of 2 crore rupees for total food grain production and 1 crore rupees for each of the four individual crops. For commendation award winner the cash prize declared is of 25 lakh rupees and for individual farmers the prize amount is 1 lakh rupees, with a citation and a trophy.

The awards are presented in two different sets and they are one for the total food grain production and second for the production of individual food grains that includes rice, wheat, pulses and coarse cereals.

The awards were finalized and the states were selected by a selection committee that was headed by the secretary of agriculture and cooperation that accessed the performance of states following certain fixed criteria, which took into account the outcomes of production, implementation of programmes for crop production as well as the innovative approach adopted for delivery of effective services.

The Implementation of GAAR deferred by 2 Years, to Come into Force from 1April 2016

The implementation of General Anti Avoidance Rules (GAAR) was deferred by two years by the government of India. It will now come into force from 1 April 2016. Earlier, the provisions of GAAR were to be implemented from 1 April 2014. GAAR will not apply to those Foreign Institutions Investors, FIIs who are not taking any benefit under an agreement under the Income Tax Act. Besides, it will also not apply to non-resident investors in FIIs.

The Parthasarathi Shome Committee in its final report submitted to Finance ministry on 30 September 2012 had suggested that GAAR should be deferred by three years. The report was made public on 14 January 2013. Union Government accepted major recommendations of the Shome Committee with some modifications. Shome Committee was set up by Prime Minister Manmohan Singh in July 2012 to address the issue of GAAR.

World Bank slashed the Global Growth Forecast to 2.4 Percent

The World Bank on 15 January 2013 projected that the world economy would expand 2.4 percent in 2013, little higher than the 2.3 percent achieved in 2012. In June 2012, the Bank forecasted the growth up to 3 percent, but due to the slow growth rate, high unemployment rate and less confidence in businesses across the developing nations it managed to revise the forecast earlier made.

The World Bank has reduced the projected growth rate of different countries. It has slashed the growth rate of Japan to its half from the one projected earlier and in case of US the growth rate has been slashed by 0.5 percent points. The bank also projected narrowing in the growth rate of the Euro Region. For emerging markets of Mexico, Brazil and India also the projection was lowered.

The report from the lead author of the Bank’s Global Economic Prospects Andrew Burns describes that the predicted recoveries of the bank in 2012 would be carried forward towards the end of the first quarter and second quarter of 2013.

The bank report also has claimed that the ongoing political battle in United States for raising the borrowing limit and spending cuts by the Government would bring loss of confidence in the rate of dollar creating an alarming situation for the world financial market and effect the growth rate. It also pointed out the diplomatic tensions between China and Japan would also have an impact on the growth rate.

Union Government Imposed 2.5 Percent Import Duty on Crude Edible Oil

Union government on 17 January 2013 imposed a 2.5 per cent import duty on crude edible oil with keeping the duties unchanged on refined cooking oil fearing a hike in retail prices.

The decision was taken at the meeting of Cabinet Committee on Economic Affairs (CCEA) in New Delhi with a view to protect domestic farmers. The Agriculture Ministry had proposed an increase in the duty on crude edible oil to protect the interest of palm growers, particularly from Andhra Pradesh.

Presently there is no import duty for crude edible oil but refined edible oil attracts an import duty of 7.5 per cent India imports about half of the total domestic requirement of cooking oil.

In 2011-12 oil years (November-October), the total import of vegetable oils (edible and non-edible oil) was at an all-time high of 10.19 million tonnes. In the first two months of the

current oil year, imports were up 5 per cent.

The Agriculture Ministry sought for 7.5 per cent import duty on crude edible oil and 15 per cent on refined oil. But during the inter-ministerial meeting, the finance ministry felt such a sharp rise would lead to rise in inflation.

There is zero duty on crude edible oil and 7.5 per cent on refined edible oils. India imports over 50 per cent of its domestic demand. In 2011-12 oil years, the country imported a record 10.19 million tonnes of vegetable oils.

Supreme Court of India ended the Tax Exemption of Cookie Man under SSI Notification

The Supreme Court of India on 14 January 2013 ended the tax benefit from the Australian Foods India Private Limited, makers of Cookie Man cookies with a claim that branded goods cannot claim excise exemption that is designed for small-scale industry, even in case those are sold loose and without packaging.

The Australian cookie making company claimed the benefits of excise duty on the cookies sold by its retail stores across the nation without any brand name or packaging.

The two judge bench of the Supreme Court comprising Justices DK Jain and JS Khehar heard the appeal from the revenue department against the decision of the tax-tribunal for granting the Australian company the excise exemption. The two judge bench in its decision of review stated that Physical Branding of any product is not necessary to prove that it was a branded product, as the product in itself shows its association with the brand name and thus it can’t take the benefits of the SSI (small scale industry) notification.

The Revenue Department went to the Supreme Court to challenge the orders of the CEGAT (Customs, Excise and Service Tax Appellate Tribunal) against the excise exemption offered to the Australian Cookie making company.

Union Government raised LPG Cap to Nine Subsidised Cylinders per Year

The Union government on 17 January 2013 hiked the cap on subsidised LPG cylinders from 6 to 9. The move will be effective from April 2013. The Government had also allowed oil companies to hike diesel prices by a small quantum periodically.

With the implication of raised cap the Consumers will be getting a quota of five subsidised cylinders between September 2012 and March 2013 and from 1 April 2013, they will be entitled to get nine cylinders per annum.

It was also decided in the meeting on Cabinet Committee on Political Affairs (CCPA) that there will be no change in LPG and kerosene rates. With this, the Election Commission has granted no objection to government's proposal for raising cap on LPG gas quota.

Subsidised LPG costs 410.50 rupees per 14.2-kg cylinder and any household requirement beyond current cap of 6 cylinders is to be bought at a price of 895.50 rupees per cylinder.

The finance ministry is keen to reduce the subsidy burden. Oil companies have estimated that if they had sold fuel at international rates they would have gained additional revenue of 1.63 lakh crore rupees in the current fiscal year.The oil ministry has projected a subsidy loss of 37411 crore rupees on cooking gas in 2012-13 at 520.50 rupees per cylinder.

The Government is committed to ensure smooth supply of cooking gas to consumers. To ensure this, the government is planning to launch a system of rating gas dealers on the basis of time taken to deliver cylinders, which will allow customers to switch dealers.

Union Government Approved Open Policy and lifted ban on Export of Processed Food

Union Government on 17 January 2013 lifted ban on exports of processed foods and value added agricultural products in order to facilitate uninterrupted supply.

The uninterrupted export of such processed food products is projected to be regulated by duty. The list of exportable goods includes processed foods from agricultural commodities, such as wheat, rice, onion and milk.

Benefits of Lifting of Ban

• The lifting of Ban is supposed to give a push to India’s weak merchandise exports and is estimated to add 5 billion dollar to exports over the next two year with West Asia identified as a key market for processed food from India.

• It will help Indian exporters to move up the value chain as well as create additional employment in the country.

• An always open policy of this sector will not only help reduce wastage of perishable products but also encourage value addition.

• Exports of processed or value-added products constitute a very small  portion of overall exports and hence, their continuation would not affect the availability in the domestic market owing to very marginal processing capacity in the country.

It was seen that Exports of agricultural and processed foods have almost doubled to around 86018 crore rupees in 2012-13 from 43727 crore rupees in 2011-12.

Presently the major agricultural exports of India are that of raw or primary produce and unprocessed or semi processed agriculture commodities, which are vulnerable to restrictions attributing to various reasons such as bad weather conditions, deficient or delayed rainfall and food security issue.

The Government opened up export of rice and wheat since September 2011 and has emerged a large exporter of these commodities since then.

MTNL launched its Video Telephony Service in Delhi and Mumbai

Government Telecom Service Provider MTNL on 17 January 2013 launched its video telephony service in Delhi and Mumbai, the first by any service provider in these two cities. This service will change the way people communicate with each other without travelling and will improve their quality of life in many ways.

The service is ideal for communication and applications like tele-medicine, tele-education and e-governance adding that the service would save time, and cost and improve productivity. Our correspondent reports that using this service, calls can be made within India on MTNL/BSNL HD-Voice and video telephony network and the video call charges would be 2.50 rupees per minute.

CCEA approved Defreeze in the Tariff Value of Edible Oils as per International Market

The Cabinet Committee of Economic Affairs on 17 January 2013 approved the de-freezing of the tariff values of the all types of edible oils and notified that the tariffs of these oils would be decided on the basis of the existing international prices in the market.

Oils that would suffer the effect of this decision are Soyabean Oil – Crude Palm Oil - RBD (Refined Bleached Deoderized), Palm Oil – Crude, Palmolein – Crude, Palm Oil – others and Palmolein – others.

The decision would bring an advantage to the domestic refining industry because of the impact that the imports of the edible oils will do on the collected duty.

Background

Under Section 14 (2) of the Customs Act – 1962 – the tariff value is fixed on the edible oils mentioned would be notified fortnightly. The tariff value of the edible oils remained unchanged since 31 July 2006 as a result of fiscal measures to control inflation. This halt in increase in the tariff value have created a great difference between the notified tariff and the computed landed prices following the price of edible oils in the international market. This halt had an adverse impact on the domestic refining industry as well as the revenue collection.

Union Cabinet Approved 50 Percent Reduction in the Reserve Prices for CDMA Spectrum

The Union Government on 17 January 2013 approved a 50 per cent reduction in the reserve price of spectrum used by CDMA mobile operators.

Spectrum auction, for both GSM and CDMA, is supposed to be completed by 31 March 2013 and thereafter the markets will decide how much revenue the government will get.

With the reduction of reserve price to 50 percent pan-India 5MHz of 800 MHz spectrum (CDMA radio waves) will now cost 9100 crore rupees.

It was witnessed that auction of CDMA spectrum that took place in November 2012 did not attract bidders due to high reserve price. The reserve price set was 11 times higher than what operators paid in 2008.

Earlier CDMA spectrum price fixed by government was priced at 1.3 times more than the GSM spectrum in 1800 Mhz band.

The Cabinet has already approved a 30 per cent cut in the reserve price of 1,800 MHz band spectrum used for offering GSM services.

The Supreme Court has recently allowed the companies whose licences were cancelled to continue operations till 4 February 2013 when the government is supposed to inform it of the final reserve or minimum price for the spectrum sale.

Union Government of India increased Import Duty on Gold and Platinum by 2 Percent

The Union Government of India on 21 January 2013 hiked the import duty on Gold and Platinum from 4 percent to 6 percent. The step of the Government came in effect to control the import of the precious metals leading a widening gap in the Current Account Deficit of the country as the import of gold has shown tumbling effects on different economic fronts and has also played a major role in distortion of the balance of trade.

The Government has also linked the Gold ETFs (Exchange Traded Funds) along with the Gold Deposit Schemes, so that the supply of the physical gold in the market can be increased. These regulations and increased in the import duty would also show changes on the customs duty as well as the excise duty of gold ores, refined gold, gold dore bars and more.

Within a year, the import duty on gold has been hiked for third time. Before this, the government increased the duty on import of gold from 1 percent to 2 percent in January 2012 and it doubled the import duty on standard gold from 2 percent to 4 percent in March 2012.

Railways decided to undertake a Cleanliness Drive across the Country

The Railways on 22 January 2013 decided to undertake a cleanliness drive at about 100 important stations across the country and equip maximum number of coaches with bio-toilets. Such stations will be having more than 10 lakh population and of religious and tourists importance. The decision was taken during the Consultative Committee meeting in New Delhi.  The stations have been identified for taking up cleanliness drive in the first phase.

The agenda of the meeting was Railways ongoing projects.

IMF forecasted Indian Economic Growth Rate to be 5.9 percent in 2013

The International Monetary Fund (IMF) on 23 January 2013 projected that the economic growth rate of India in 2013 would be 5.9 percent. The IMF also projected an increased growth rate of 6.4

percent for 2014 looking forward towards the gradual strengthening of the global expansion in India’s context.

In its update at the World Economic Forum (WEO), the IMF also forecasted that the global economic growth rate would be 3.5 percent, little higher than the 3.2 percent estimated earlier. As per the report of IMF, uncertainty in policy making and supply bottlenecks were one of the most visible causes that hampered the growth aspects of the economies like India and Brazil. It also stated that the scopes of easing the policy to any further extent have also gone down in these countries.

About International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an organization of 188 countries that works for fostering the global monetary cooperation, promote high employment and sustainable economic growth, facilitate international trade, secure financial stability and reduce poverty around the world. Since the end of World War II, the IMF had been playing a major role in shaping the global economy. The IMF has played a part in shaping the global economy.

FDI Inflow Decreased to Two-Year Low in November 2012

The inflow of foreign direct investment (FDI) in India decreased to around 2-year low at 1.05 billion US dollar in November 2012 because of uncertainties of the global economies. Back in November 2011, the FDI was worth 2.53 billion US dollar. The Department of Industrial Policy and Promotion (DIPP) announced that from April-November period 2012-13, inflows of FDI decreased by around 31 percent to 15.84 billion US dollar from 22.83 billion US dollar in 2011-12.

The reason why inflow of FDI decreased was because of the issues arising in the global economic scenario. Economic slowdown as well as absence of political consensus on FDI-associated issues are the main causes of decline in FDI inflow.

During 2012-2013, the sectors which remained on the positive side of the FDI inflows included services, hotel and tourism, metallurgical, construction and automobile.

In India, maximum FDI inflow came from Mauritius (USD 7.2 billion), Japan (USD 1.56 billion), Singapore (USD 1.5 billion) the Netherlands (USD 1.09 billion) and the UK (USD 615 million).

The FDI declined to a low level earlier in January 2011 when the inflow was recorded to be 1.04 billion dollar.

Foreign direct investments play a very crucial role in India’s economy. India has a requirement of FDI inflow of around 1 trillion US dollar in next 5 years time so that it can refurbish infrastructure sectors like highways, airports and ports. Decrease in the FDI inflow will pressurise the balance of payment of the country, while also impacting the Rupee.

Union Commerce Ministry claimed that India has crossed One Billion Mark in Tea Production

The Union Commerce Ministry of India in the third week of January 2013 released figures and it mentioned that tea-industry in India had passed the one billion kilogram mark production. This target has been crossed by the participation of the small tea-growers.

To bring into net and check out the production of tea in the nation the industry regulator, Tea Board of India launched a major exercise in which it tried to rope producers from both organised and unorganized sectors of India, these producers also included those who never reported the crop statistics at their end.

The exercise was taken up in 2012 and it helped in bringing up the fact that India was able to produce 75 million kilogram more tea than the 988 million kilogram, estimated earlier in a year from January 2011 to December 2011. By November 2012, it was reported that 1023.9 million kilogram of tea crop was crossed following the figures of the field level data.

Securities and Exchange Board of India revised the Mechanism of Offer for Sale

The Securities and Exchange Board of India (SEBI) on 25 January 2013 revised the mechanism of the Offer for Sale (OFS). The board took the decision of revising the norms because the deadline for the promoters of the listed companies to offload their stake for meeting the minimum public shareholding norm of 25 percent by June 2013 is approaching.

These revisions would make the norms much more efficient, transparent and economical. The quantity for cumulative bidding would be made available online for the market across the trading session at different intervals to take care of the orders that carries 100 percent upfront margin and also of the orders which have been placed without the upfront margin. The indicative price of the market would be disclosed for the market across the trading session and is calculated on the basis of bids and orders.

Mode of Payments

For institutional investors their exists an option of paying the upfront margin in cash or without margin is available The non-institutional investors it is mandatory to pay in cash the 100 percent of upfront margin

Facilities available

The upfront margin paid by both the institutional and non-institutional investors can be cancelled or modified up to 100 percent even during the trading hoursInstitutional investors would not be able to modify or cancel their orders until they pay their upfront margin but they can make upward revision of the price or quantity

Provisions available for Institutional Investors

•    The investors who have placed their bids or orders with 100 percent upfront margin, they can take the custodian confirmation within trading hours, with provisions of settlements within T+1 (trading plus one day) and in case of trading without upfront margin it can be done on T+1 and settlement can be on T+2 as it would be followed by the secondary market transactions.

The facility of extended half-an-hour after trading hours that was given to the custodians previously has been omitted.

Reserve Bank of India slashed Repo Rate to 7.75 Percent and CRR to 4 Percent

The Reserve Bank of India on 29 January 2013 slashed its key interest rates by 0.25 per cent and released 18000 crore rupees additional liquidity into the system to perk up growth through reduced cost of borrowing. RBI in its third quarter monetary policy review surprised the market by cutting short-term lending rate called repo, by 0.25 per cent to 7.75 per cent and Cash Reserve Ratio (CRR) by similar margin to 4 per cent.

The repo rate cut will reduce the cost of borrowing for individuals and corporates, whereas the reduction in CRR, which is the portion of deposits that banks have to park with RBI, would improve the availability of funds. Unveiling the policy review in Mumbai, RBI stated that the stance of monetary policy in this review is intended to provide an appropriate interest rate environment to support growth as inflation risks moderate. CRR cut will have impact on long term interest rates.

The RBI, however, has reduced the growth projections for the current financial year to 5.5 per cent from its earlier estimate of 5.8 per cent.

On inflation, it moderated the rate to 6.8 per cent for March-end from earlier projection of 7.5 per cent. The repo rate, which was cut last in April 2012, stands revised at 7.75 per cent with immediate effect, while the liquidity infusing CRR stands at 4 per cent effective 9 February 2013.

Inflation has been the prime inhibiting factor that has prevented the RBI from cutting repo rate in the last nine months, which have seen a host of liquidity infusing measures like a cut of 1.75 per cent in CRR, government bond buybacks and a one percentage point cut in SLR.

RBI however, added the caveat stating that the stance will depend on how the government manages the risk from the twin deficits on the fiscal and current account side, and the evolving growth-inflation dynamics.

Stating that the widening current account deficit, which represents the differential between the foreign exchange earned and expended through trade and services, is a big concern, RBI

said the number is expected to widen in third quarter,beyond the 5.4 percent in the preceding quarter.

RBI praised government's recent reform measures including liberalisation of FDI in retail, deferment of GAAR and progressive deregulation of fuel prices saying these actions will help engender stable macroeconomic conditions and return the economy to its high growth trajectory.

The RBI will come out with mid-quarter review on 19 March 2013 and the annual policy on 3 May 2013.

Union Ministry for Commerce launched eBiz Portal to Provide one Stop Shop for all Investment

The Union Minister for Commerce on 28 January 2013 launched an eBiz portal at the CII Partnership Summit in Agra . The portal is India’s Government-to-Business (G2B) portal developed by Infosys in a Public Private Partnership (PPP) Model. This Mission Mode Project will mark a paradigm shift in the Government’s approach to providing Government-to-Business (G2B) services for India’s investor and business communities.

In order to enable businesses and investors to save time and costs and in order to improve the business environment in the country, an online single window was conceptualised in the form of the eBiz Mission Mode Project under the National e-Governance Plan. The project aims to create a business and investor friendly ecosystem in India by making all business and investment related regulatory services across Central, State and local governments available on a single portal, thereby obviating the need for an investor or a business to visit multiple offices or a plethora of websites.

The core value of the transformational project lies in a shift in the Governments’ service delivery approach from being department-centric to customer-centric. E-Biz will create a 24x7 facility for information and services and will also offer joined-up services where a single application submitted by a customer, for a number of permissions, clearances, approvals and registrations, will be routed automatically across multiple governmental agencies in a logical manner. An inbuilt payment gateway will also add value by allowing all payments to be collected at one point and then apportioned, split and routed to the respective heads of account of Central and State agencies along with generation of challans and MIS reports. This payment gateway is the first of its kind designed in India and can become a universal payment gateway for all e-Governance applications.

The Department of Industrial Promotion & Policy, Ministry of Commerce & Industry, Government of India, is the Nodal Government Agency responsible for the implementation of the eBiz Project. Infosys Technologies Ltd. has been selected as the Concessionaire/ Project Implementation Partner and is responsible for the design, development, implementation and maintenance of the eBiz Solution.

The Indian government is firmly committed to wide-ranging initiatives aimed at fostering the business environment in the country in a holistic manner. Its approach includes leveraging technology to bring transparency, improve efficiency and promote convenience. eBiz is an important

step in this direction and working in partnership with Infosys on this project will become a benchmark for successful Public Private Partnerships (PPPs) in the country.

The eBiz Project is the first of its kind ever implemented in the country. It marks the highest level of maturity in web-based eGovernance applications as it strives to achieve horizontal integration across various verticals of Central government, State governments and Para-statal agencies.

The first phase of the project, which was being launched provides an interactive tool that helps investors assess the Licenses and Permits requirements while setting up and operating a business in India. The License & Permit Information wizard will provide authentic information 24X7 to investors and businesses by providing answers to questions in an interview style format.

BHEL and GAIL Granted Maharatna Status by the Union Government of India

The Union Government of India gave the Maharatna status to two PSUs- BHEL and GAIL on 1 February 2013. Granting Maharatna status to BHEL and GAIL will provide them with better functional and financial freedom and will also guarantee them with better valuation of the shares.

Ideally any Maharatna firm has a capacity to take investment decision of around 5000 crore Rupees without taking assistance from the government. On the other hand, forms with Navratna status have the capability of 1000 crore Rupees. However, both BHEL and GAIL do not have enough non-official directors on the board, which is why they cannot exercise their Maharatna powers. Even though all other conditions of Maharatna status were met by both these PSUs but their boards do not have requisite number of board members. While GAIL is short of 4 independent directors, BHEL, on the other hand is short of 6 non-official directors.

In terms of turnover, networth as well as net profit, both these companies meet all the eligibility criterions.

Eligibility of a company to get a Maharatna status

•For any company to qualify for Maharatna status, the annual turnover should be over 25000 crore Rupees in past three years, as per the guidelines issued by Department of Public Enterprises.•The net worth of the PSU should be more than 15000 crore Rupees in past three years.•The net profit should be over 5000 crore Rupees during past three years.

At present, there are seven Maharatna companies, after inclusion of BHEL and GAIL and these companies are - ONGC, Indian Oil, SAIL, NTPC and CIL. Also, there are 14 Navratna companies, including Rashtriya Ispat Nigam Limited and NMDC.

ED Slapped 98.5 Crore Rupees Penalty Notice on Rajasthan Royals

The Enforcement Directorate (ED) slapped the IPL team Rajasthan Royals with a penalty notice of around 100 crore Rupees for violating the Forex laws. ED issued this penalty notice after investigating the matter for 2 years under the Foreign Exchange Management Act (FEMA). Three

notices in all were sent across to the IPL franchise which totaled to 98.5 crore Rupees.

The Jaipur IPL Cricket Private Limited (JIPL) as well as its directors was sent a penalty notice of 50 crore Rupees. Apart from this, 34 crore Rupees penalty notice was issued against EM Sporting Holding, Mauritius and its directors for evading the Forex duties. A notice of 14.5 crore Rupees was also issued additionally against the Ms ND Investments, United Kingdom and its directors.

All these three parties are free to appeal against the penalty order in appellate authority of FEMA. According to the order, IPL team needs to make the payment in 45 days.

This is said to be the first biggest order against any team issued by the ED. According to the penalty order, it was found that the foreign investment in JIPL was conducted in flagrant contravention of FEMA.

The first penalty order was issued by ED against the Rajasthan Royals in mid-2011. Now, it issued the final orders after it moved to FEMA Adjudicating Authority in Delhi in order to examine investigations in the case.

CCEA gave its nod to Price Pooling Mechanism on Coal to Control Prices of Coal

The Cabinet Committee on Economic Affairs (CCEA) on 5 February 2013 gave its principle approval for the price pooling mechanism of coal. The mechanism includes cost blending of the domestic coal with the imported one to counterbalance price hike. Basic principles and parameters of the price pooling mechanism have been identified and a specific data on the same would be created by the Power and Coal Ministries.

The mechanism has been created before government decided to put on sale the 9.5 percent stake of the National Thermal Power Corporation (NTPC) from its present holding of 84.50 percent. The sale of the stake was approved by the Empowered Group of Ministers on disinvestment chaired by Finance Minister P Chidambaram on 5 February 2013. This disinvestment of NTPC would fetch about 12000 crore rupees for the exchequer.

Net Direct Tax Collection Grew 12 Percent in April-January in FY 2012-2013

Gross Direct Tax collection from the period of April to January in fiscal year 2012-2013 increased by 7.02 percent at 455125 crore Rupees against 425274 crore Rupees in same period in 2011-2012 fiscal year.

Gross collection of the corporate taxes increased 3.71 percent, i.e., 296451 crore Rupees in 2012-2013 fiscal year against 285837 crore Rupees in 2011-2012. Gross collection of personal income tax increased by 13.81 percent, i.e., 157913 crore Rupees in 2012-2013 fiscal year against 138746 crore in 2011-2012 fiscal year.

Net Direct Tax collections registered a growth of 12.49 percent, i.e., 390310 crore Rupees in 2012-2013 fiscal year against 346959 crore Rupees in 2011-2012 fiscal year.

2.85 percent growth was recorded in wealth tax. It increased to 685 crore Rupees in 2012-2013 financial year in comparison to 666 crore Rupees in 2011-2012 financial year. Growth in Securities Transaction Tax was on negative side. It recorded a fall of 9.99 percent. It decreased to 3731 crore in 2012-2013 in comparison to 4145 crore Rupees from 2011-2012.

Authorized Capital of NABARD raised from 5000 crore rupees to 20000 crore rupees

The Union Cabinet of India on 7 February 2013 approved raise in the authorized capital of National Bank for Agriculture and Rural Development, Nabard to 20000 crore rupees from 5000 crore rupees.

The authorized capital was increased with the aim to enlarge the operations and broadening the activities of NABARD.

The Central Statistics Office (CSO) on 7 February 2013 revealed that the economic growth of India is estimated to fall to 5 percent in 2012-2013 financial year, which is a lowest figure in 10 years. A fall in the economic growth is because of the poor performance of the services, agriculture and manufacturing sectors.

The Central Statistics Office (CSO) in its advance forecast of the national income chopped off the gross domestic product (GDP) growth estimate to 5 percent for financial year which will end on 31 March 2013. This is much less than the GDP of 6.2 percent in 2011-2012 financial year. This is said to be the worst performance of economy of India since 2002-2003 when the economic growth was 4 percent.

The major share of India’s GDP comes from the services sector. The services sector is estimated to record a growth of 5.2 percent in 2012-2013 fiscal year against 7 percent of 2011-2012 fiscal year.

As far as the industry sector is concerned, it is expected that the growth would decrease to 1.9 percent in 2012-2013 FY. The farm sector growth will fall down to 1.8 percent.

It is important to note that the official projection of the economic growth of India is much lower than budgetary estimate as well as projections of the central bank of India and other organisations. In the union budget for financial year 2012-2013 which was presented in March 2012, the government pegged India’s economic growth at 7.6 percent.

Also in the quarterly monetary policy review which took place in the first week of February 2013, the Reserve Bank of India projected the growth of 5.5 percent for 2012-2013 financial year. In the meanwhile, Finance Minister P. Chidambaram had projected the economic growth of 5.7 percent.

In first half of 2012-2013 FY, the economy of India grew by 5.4 percent. However, as per the latest estimate, the growth would be around 4.6 percent in second half of 2012-2013.

Industry bodies in the meanwhile asked the government to press for the reform process in order to revive the economic growth.

CCEA approved increase of MSP of Copra for 2013 season by 150 Rupees per Quintal

The Cabinet Committee on Economic Affairs on 6 February 2013 approved increase in the Minimum Support Price (MSP) for 2013 season of both Milling and Ball Copra by 150 rupees per quintal over the MSP that was regulated in 2012.

The MSP for the Fair Average Quality (FAQ) of Milling Copra is fixed at 5250 rupees per quintal, and for the Ball Copra it is 5500 rupees per quintal. The decision from government of India may ignite the interests of the farmers to invest in cultivation of coconut to increase its productivity.

Government also cleared that National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) is the body that will act as the nodal agency for undertaking the price support operation at the minimum support prices in the coconut growing states.

TRAI:Teledensity declined by 25.97 Million to 895.51 Million in December 2012As cellphone operators continued disconnecting inactive SIM cards, India's total telecom subscriber base declined by 25.97 million to 895.51 million in December. In November, the country had 921.47 million telecom subscribers.

Telecom Regulatory Authority of India(TRAI) stated that total wireless subscriber base decreased from 890.60 million in November 2012 to 864.72 million at the end of December 2012. TRAI reasoned that this decline is majorly due to large scale disconnections of inactive SIMs by some of the service providers. With this, the overall teledensity in India decreased to 73.34 per cent at the end of December, 2012 from 75.55 per cent in the previous month.

Railway Revenue Earnings increased by 20.38 Per Cent During April 2012-January 2013

The total approximate earnings of Indian Railways on originating basis during 1 April 2012 to 31 January 2013 were 101223.95 crore rupees compared to 84083.74 crore rupees during the same period last year, registering an increase of 20.38 per cent, as per the data released by Ministry of Railways.

The total goods earnings have gone up from 56163.30 crore rupees during 1 April 2011 – 31st January 2012 to 70067.36 crore rupees during 1 April 2012 – 31 January 2013, registering an increase of 24.76 per cent.

The total passenger revenue earnings during 1 April 2012 – 31 January 2013 were 25924.29 crore rupees compared to 23344.42 crore rupees during the same period last year, registering an increase of 11.05 per cent.

The revenue earnings from other coaching amounted to 2617.19 crore rupees during April 2012 - January 2013 compared to 2353.54 crore rupees during the same period last year, an increase of 11.20 per cent.

The total approximate numbers of passengers booked during 1st April 2012 – 31st January 2013 were 7150.60 million compared to 6910.00 million during the same period last year, showing an increase of 3.48 per cent. In the suburban and non-suburban sectors, the numbers of passengers booked during April 2012 -January 2013 were 3753.32 million and 3397.28 million compared to 3651.70 million and 3258.30 million during the same period last year, showing an increase of 2.78 per cent 3.48 per cent respectively.

Comfort Letter issued by Finance Ministry for sanction of 25000 crore Subsidy

The Union Finance Ministry in second week of February 2013 decided to pay an additional cash subsidy of 25000 crore rupees for the state owned fuel retailers. The subsidy package is being given to help the retailers in making up of the revenue that they lost while selling cooking and auto fuel below cost in the current fiscal year of April to December 2012. A comfort letter was issued on 7 February 2013 by the Union Finance Ministry to the Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) that sanctioned sanctioning 25,000 crore rupees as the part of the revenue lost by them on selling diesel, domestic LPG and kerosene below cost or at subsidized cost. The sanctioned subsidy meets about 44 percent of the revenue lost by the three firms of 124854 crore rupees together on the Sale of cooking and auto fuels in a period of April to December in 2012.

As per the latest sanctions reveled IOC, BPCL and HPCL would get 13474.56 crore rupees, 5987.25 crore rupees and 5538.19 crore rupees respectively.

India's Trade Deficit for April - January, 2012-13 was estimated at 167168.12 Million US Dollars

As per the data released by Union Ministry of Commerce and Industry on 13 February 2013, India’s performance in export and import are as following:

EXPORTS Exports during January, 2013 were valued at 25587.24 million US dollars. (138981.70 crore rupees) which was 0.82 per cent higher in Dollar terms (6.67 per cent higher in Rupee terms) than the level of 25379.05 million US dollars (130294.02 crore rupees) during January 2012. Cumulative value of exports for the period April-January 2012 -13 was 239687.01 million US dollars (1305420.39 rupees) as against  251930.14 million US dollars (1196962.33 crore rupees) registering a  negative growth of 4.86 per cent in Dollar terms and growth of 9.06 per cent in Rupee terms over the same period 2011-12.    

IMPORTSImports during January, 2013 were valued at 45583.25 million US dollars (247593.63 crore rupees) representing a growth of 6.12 per cent in Dollar terms and 12.28 per cent in Rupee terms  over the level of imports valued at 42952.47 million US Dollars ( 220514.54 crore rupees) in January 2012. Cumulative value of imports for the period April-January 2012-13 was 406855.13 million US dollars (2215115.46 crore rupees) as against 406820.28 million US dollars (1934946.96 crore rupees) registering a positive growth of 0.01 per cent in Dollar terms and growth of 14.48 per cent in Rupee terms over the same period 2011-12. CRUDE OIL AND NON-OIL IMPORTS:                  Oil imports during January, 2013 were valued at 15899.3 million US dollars which was 6.91  per cent higher than oil imports valued at 14871.2 million US Dollars in the corresponding period last year.  Oil imports during April-January, 2012-13 were valued at 140420.1 million US dollars which was 11.56 per cent higher than the oil imports of 125874.2 million US dollars in the corresponding period last year.Non-oil imports during January 2013 were estimated at 29684.0 million US dollars which was 5.71 per cent higher than non-oil imports of US 28081.3 million in January 2012. Non-oil imports during April – January 2012-13 were valued at 266435.0 million US dollars which was 5.17 per cent lower than the level of

such imports valued at 280946.1 million US dollars in April - January 2011-12.                                                                                                                                                                                                                                                                                                                                                   TRADE BALANCEThe trade deficit for April - January 2012-13 was estimated at 167168.12 million US dollars which was higher than the deficit of 154890.14 million US dollars during April -January 2011-12.

Exports of India Increased By 0.8 Per Cent in January 2013

The exports of India increased by 0.8 percent in the month of January 2013 to 25.58 billion US dollars. Comparatively, exports in January 2012 were 25.37 billion US dollars.

Imports on the other hand, increased by 6.12 percent to 45.5 billion US dollars. During April to January 2012-2013, the overseas shipments of India dropped by 4.86 percent to 239.6 billion US dollars. The main concern for the country is however to widen the trade deficit.

As a cumulative result, the exports depicted an arrest in decreasing exports. Now, the result is -4.9 percent. Import of crude oil was growing at a faster pace. Oil imports in January 2013 increased by 6.91 percent to 15.89 billion US dollars in comparison to 14.87 billion US dollars in January 2012.

SEBI ordered freezing of accounts and attachment of properties of two companies of Sahara

Securities Exchange Board of India (SEBI) the stock market regulator of India on 13 February 2013 ordered freezing of bank accounts and attachment of properties of two Sahara group firms Sahara India Real Estate Corporation Ltd., and Sahara Housing Investment Corporation Ltd. and its Chairman Subrata Roy as well as top executives Vandana Bhargava, Ravi Shanker Dubey and Ashok Roy Choudhary after it failed to refund more than 24,000 crore rupees to investors.

The decision from the market regulator came after the Supreme Court of India granted it the freedom to freeze the accounts of the two companies and attach the properties of the defaulting groups.  

The market regulator gave 21 days time to Sahara Firms to submit the details of the investments done and not listed in an order. SEBI’s orders restricts the Sahara India Estate Corporation from operating its demat accounts and redeeming the mutual fund units held by it as well as from transferring the shares controlled by it to any other body or company.  

Sahara Housing was asked to furnish details related to the development rights along with the special puprpose vehicles as well as stakes. The orders to submit the details of movable and immovable properties to Subrata Roy and the three executives have restrained them from alienating, disposing or encumbering the properties on their names.

Inflation goes Down to Three Years Low to 6.62 percent in January 2013

The inflation rate of India dropped down to the three year low in the chart to 6.62 percent in January 2013 from the 7.18 percent, measured in December 2012. The inflation was measured based upon monthly Wholesale Price Index.

The official Wholesale Price Index for All Commodities (Base: 2004-05 = 100) in January, 2013 rose by 0.4 percent to 169.2 (Provisional) from 168.6 (Provisional) for the previous month.

Slowing exports and decline in investments and low demand in the domestic market have been a major factor in slipping down the growth rate of India. The two factors have affected the manufatruing as well as service sectors of India.

The growth forecast for the running fiscal year that would end on 31 March 2013 was lowered by the India’s Statistical Office to 5 percent. The Reserve Bank of India also changed its forecast from 5.8 percent to 5.5 percent. To revive a fresh air in the slowing down economic conditions of India, the Reserve Bank took a major step of lowering the key interest rate from 8 percent to 7.75 percent; this was the first step in nine months. The Policy makers have also taken afresh steps to revive the slowing economic conditions of the nation.

The Union Government Cancelled Bond Auction Worth 12000 Crore Rupees

The Union Government of India on 18 February 2013 cancelled the bond auctions worth 12000 crore Rupees, thereby bringing down the market borrowing programme for 2012-2013 fiscal year in order to contain fiscal deficit at 5.3 percent. With this decision, the overall market borrowing of government in 2012-2013 fiscal year came down to 5.58 lakh crore Rupees from 5.70 lakh crore Rupees as imagined in 2012-2013 budget. The Finance Ministry announced that after reviewing the cash position as well as the funding requirement of the government, it was decided that market borrowing of the Government through dated securities by 12000 crore Rupees would be reduced.

Also, the auction for these dated securities which was scheduled to be held on 22 February 2013 was cancelled. As of now, the government borrowed 3.7 lakh crore Rupees in first half of the fiscal year which ended on 30 September 2012. This is 65 percent of the overall planned borrowing.

The Government also gave directions to the ministries to control the non-plan expenditure from January to March quarter.

The Reserve Bank of India on 22 February 2013 released the Guidelines for Licensing of New Banks in the Private Sector.

The guidelines issued by the Apex Bank have opened gates for private players as well as the finance firms to enter into the strictly regulated banking sector of India.

Key Features of the issued Guidelines:

(i) Eligible Promoters: Entities / groups in the private sector, entities in public sector and Non-Banking Financial Companies (NBFCs) shall be eligible to set up a bank through a wholly-owned Non-Operative Financial Holding Company (NOFHC).

(ii) Fit and Proper criteria: Entities / groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years. For this purpose, RBI may seek feedback from other regulators and enforcement and investigative agencies.

(iii) Corporate structure of the NOFHC: The NOFHC shall be wholly owned by the Promoter / Promoter Group. The NOFHC shall hold the bank as well as all the other financial services entities of the group.

(iv) Minimum voting equity capital requirements for banks and shareholding by NOFHC: The initial minimum paid-up voting equity capital for a bank shall be `5 billion. The NOFHC shall initially hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall be locked in for a period of five years and which shall be brought down to 15 per cent within 12 years. The bank shall get its shares listed on the stock exchanges within three years of the commencement of business by the bank.

(v) Regulatory framework: The bank will be governed by the provisions of the relevant Acts, relevant Statutes and the Directives, Prudential regulations and other Guidelines/Instructions issued by RBI and other regulators. The NOFHC shall be registered as a non-banking finance company (NBFC) with the RBI and will be governed by a separate set of directions issued by RBI.

(vi) Foreign shareholding in the bank: The aggregate non-resident shareholding in the new bank shall not exceed 49% for the first 5 years after which it will be as per the extant policy.

(vii) Corporate governance of NOFHC: At least 50% of the Directors of the NOFHC should be independent directors. The corporate structure should not impede effective supervision of the bank and the NOFHC on a consolidated basis by RBI.

(viii) Prudential norms for the NOFHC: The prudential norms will be applied to NOFHC both on stand-alone as well as on a consolidated basis and the norms would be on similar lines as that of the bank.

(ix) Exposure norms: The NOFHC and the bank shall not have any exposure to the Promoter Group. The bank shall not invest in the equity / debt capital instruments of any financial entities held by the NOFHC.

(x) Business Plan for the bank: The business plan should be realistic and viable and should address how the bank proposes to achieve financial inclusion.

(xi) Other conditions for the bank: The Board of the bank should have a majority of independent Directors.• The bank shall open at least 25 per cent of its branches in unbanked rural centres (population up to 9,999 as per the latest census)• The bank shall comply with the priority sector lending targets and sub-targets as applicable to the existing domestic banks.• Banks promoted by groups having 40 per cent or more assets/income from non-financial business will require RBI’s prior approval for raising paid-up voting equity capital beyond `10 billion for every block of `5 billion.• Any non-compliance of terms and conditions will attract penal measures including cancellation of licence of the bank.

(xii) Additional conditions for NBFCs promoting / converting into a bank: Existing NBFCs, if considered eligible, may be permitted to promote a new bank or convert themselves into banks.

Background

The guidelines for the Licensing of New Banks in the Private Sector were finalized after amending the Banking Regulation Act, 1949 in December 2012.

Railway Budget 2013-14 Presented in Lok Sabha : Highlights

Union Railway Minister Pawan Kumar Bansal presented the Union Railway Budget for 2013-14 in Lok Sabha on 26 February 2013.

The major highlights of the budget are the introduction 106 new trains with no fare hikes. The present year railway budget laid emphasis on host of proposals for travel safety and comfort, such as escalators at key stations, a new e-ticketing system and a high-class coach in select trains.

Railway Budget 2013-14 at a Glance:

The Thrust of this year Railway Budget was on Safety, Consolidation, Passenger Amenities and Fiscal Discipline.

• Deployment of new generation energy efficient electric locomotives and EMUs.• Five Percent Increase in freight to push Inflation.• Elimination of 10797 level crossings during the 12th Plan and no addition of new LCs to the IR system henceforth.• Introduction of Train Protection Warning System on Automatic Signalling Systems.• Rigorous trials of the indigenously developed Train Collision Avoidance System.• Four companies of women RPF personnel set up and another 8 to be set up to strengthen the security of rail passengers, especially women passengers• Recruitment to RPF with 10% vacancies reserved for women.• No increase in passenger fares • 500-km new lines to be completed in 2013-14• Diesel price hike added 3300 crore rupees to fuel bill of Railways• Railways hopes to end 2013-14 with a balance of 12506 crore rupees• Concessional fare for sportspersons• Five fellowships to be announced to motivate students• Seek to fill 1.52 lakh vacancies in railways this year. 47000 vacancies for weaker sections and physically challenged to be filled up soon• Target of 4000 crore rupees for railway production units in 2014• Induction of e-ticketing through mobile phones, SMS alerts to passengers• Free wi-fi facilities in select trains. 60 more 'adarsh' stations • The number of passenger trains has increased from 8000 in 2001 to over 12000 in 2012 - yet losses continue to mount. It is estimated to be Rs. 24000 crore in 2012-13 • Proposal for setting up of Railway Tariff Regulatory Authority formulated and at inter-ministerial consultation stage.• Supplementary charges for super fast trains, reservation fee, clerkage charge, cancellation charge and tatkal charge marginally increased.• Complimentary card passes to Olympic medalist and Dronacharya Awardees for Rajdhani Shatabdi Trains.• Announcement Facility and Electronic display boards in train.

Railway Minister Pawan Kumar Bansal on 27 February 2013 proposed the introduction of 67 new express trains and 26 new passenger trains. He also asserted the introduction of 22 new lines in 2013-14.

Highlights of the new Trains announced

• 67 new Express trains to be introduced.• 26 new passenger services, 8 DEMU (Diesel Electric Multiple Unit) services and 5 MEMU services to be introduced.• Run of 57 trains to be extended.• Frequency of 24 trains to be increased.

Metropolitan Projects/Sub-urban Services

• Introduction of first AC EMU rake on Mumbai suburban network in2013-14.• Introduction of 72 additional services in Mumbai and 18 in Kolkata.• Rake length increased from 9 cars to 12 cars for 80 services in Kolkata  and 30 services in Chennai.

State wise break up of new Trains announced

• Karnataka gets 3 new lines, 8 express trains• Goa gets 3 New Express trains• Andhra Pradesh got 8 New Trains• 13 New Trains for UP, 7 out of which went to Lucknow Only

Region Wise Break up of New Train Announced

• Eight new express trains, 11 originating trains and eight pass-through trains, six extension trains apart from 20 new lines and doubling projects fell in South Central Rail-way’s kitty in the Railway Budget announced.• As per the budget, Central Railway (CR) and Western Railway (WR) will get a total of 17 new mail/express trains, of which 14 trains will serve either the city or state passengers.• Further, 72 additional services of local trains, augmentation of AC local trains at WR, have also been announced.

Union Railway Minister Pawan Kumar Bansal presented the Union Railway Budget for 2013-14 in Lok Sabha on 26 February 2013. Some of the major Initiative proposed in Railway Budget 2013-14 are as under:

Anubhuti

• Indian Railways will introduce one coach in select trains which will provide an excellent ambience and latest modern facilities and services responding to the Increased Popularity of Shatabdi and Rajdhani Trains. Such coaches will be named Anubhuti with commensurate fare structures.

Amenities for Differently-abled Passengers

• To facilitate the boarding of trains and exit from the stations for the differently-abled and the elderly, there is a proposed provision of 179 escalators and 400 lifts at A- 1 and other major stations, affixing Braille stickers indicating the layout of coaches including toilets, provision of wheel chairs and battery operated vehicles at more stations and making coaches wheel-chair friendly.• In order to provide an employment avenue to the disabled people, there is proposal to reserve a specified number of Jan Sadharan Ticket Booking Sewak (JTBS) for them, keeping in view the fact that the PCOs at stations have become largely redundant after the mobile revolution in India.

IT Initiatives for passenger benefits

• There will be now Use of Aadhar scheme by Indian Railways. The database generated, can be extensively and efficiently used by railways not only to render more user friendly services such as booking of tickets, validation of genuine passengers with GPS enabled handheld gadgets in trains, but also to provide a better interface with its employees in regard to their salaries, pension, allowances etc.

Some of the other measures proposed under IT Initiative of Railways are:

• Extending availability of the facility of internet ticketing from 0030 hours to 2330 hours• Making e-ticketing possible through mobile phones as a follow up to overwhelming response to IR website and Integrated Train Enquiry Service under 139, a project of SMS Alerts to passengers providing updates on reservation status is being rolled out shortly.• Covering larger number of trains under Real Time Information System (RTIS), whereby rail-users will be able to access information through nominated websites and mobile phones.

Some measures taken to curb malpractices in reserved tickets including Tatkal are:

• Mandatory carrying of ID cards by passengers with reserved tickets• Rigorous drive leading to prosecution of more than 1800 touts in the current year•  In case of tatkal, reduction of advance reservation period to one day, issue of tickets only on production of ID proof at PRS counters, issue of only one tatkal ticket per train per day to web service agents;• Denial of access to agents to internet booking between 0800 to 1000 hrs.

Other Major Initiatives

• A Centralised Catering Services Monitoring Cell with a Toll free number – 1800 111 321 has started functioning w.e.f. 18th January, 2013 to facilitate redressal of complaints/suggestions on real-time basis.• For effective quality control, arrangements are being tied up with food testing laboratories in addition to third party audit. State-of the- art base kitchens are proposed to be set up in railway premises for better monitoring of quality of meals. • ISO certification will now be insisted upon for all base-kitchens.

Green Energy Initiatives

 Some of the new steps that have been taken or are proposed to be taken include:-• Setting up of Railway Energy Management Company (REMC) to harness potential of solar

and wind energy• Setting up of 75 MW windmill plants and energizing 1000 level crossings with solar power• Deployment of new generation energy efficient electric locomotives and electrical multiple units (EMUs) saving about 60 crore units in 2011-12. Railways have also won the National Energy Conservation Award• Encourage more usage of agro-based and recycled paper and ban use of plastic in catering.

Union Railway Minister Pawan Kumar Bansal presented the Union Railway Budget for 2013-14 in Lok Sabha on 26 February 2013. Some of the New Plans and Schemes proposed in Railway Budget 2013-14 are as under:

• Proposal for setting up of Railway Tariff Regulatory Authority formulated and at inter-ministerial consultation stage.• To provide a memorable experience to the visitors especially the children, a revamp plan will be rolled out for National Railway Museum in 2013-14.• To create a corpus for meeting IR’s committed liabilities for debt servicing of JICA and World Bank loans taken for the DFC Project, it is proposed to set up a new Debt Service Fund.• In order to meet the growing demand, 72 additional services in Mumbai and 18 in Kolkata are being introduced. Besides, rake length is being increased from 9 cars to 12 cars for 80 services in Kolkata and 30 services in Chennai.• A target to complete 500 km of new lines has been set for 2013-14.• There is target to convert 450 km of MG/NG lines to broad gauge during 2013-14. • Announcement of resumption of work on new line projects of Chickmagalur - Sakleshpur and Bengaluru - Satyamangalam, which were pending for want of resources and other mandatory clearances, after State Government of Karnataka agreed to give land free of cost and bear 50% of the cost.

Union Budget 2013-14 presented by P. Chidambaram in Lok Sabha: Highlights

Union Finance Minister P Chidambaram on 28 February 2013 tabled the Union budget in the Parliament for the financial year 2013-14.

P. Chidambaram was presenting his 8th Union Budget. The union Budget of 2013-14 emphasized fast track economic growth with due importance on infrastructure development, skill development, employment generation and funding for social schemes.

Three factors of Economic Concern discussed in the Union Budget 2013-14 were high fiscal deficit, slow growth and high inflation.

Expressing his confidence on India returning back to the higher growth path Chidambaram advocated for support from all quarters to navigate through economic crisis. The Union Budget of year 2013-14 stressed on achieving a growth of 8 per cent on an immediate effect.

The finance minister expressed his worry on Current Account deficit (CAD). CAD which required 75 billion Dollars to finance was high because of high import in Oil, coal and gold imports.

The Highlights of the Union Budget 2013-14 are as Follows:

• Total budget expenditure was Estimated at 16.65 trillion rupees in 2013-14• India's 2013-14 plan expenditure seen at 5.55 trillion rupees• To allocate 801.94 billion rupees to rural development in 2013-14

• Plan to allocate 270.49 billion rupees for agriculture in 2013-14• RBI expected GDP growth of 5.5% for Financial Year 2013-14• 80194 crore rupees allocation have been made for rural development schemes including MGNAREGA, PMGSY, INDIRA AWAS YOYANA. The Jawaharlal Nehru National Urban Renewal Mission will to continue during the 12th plan period. • 3511 crore allocation to minorities which is 12 per cent hike over budget estimates, 110 crore rupees allotted for welfare of disabled. • 65867 crore rupees have been allocated to the Ministry of Human resources development which is 17 per cent hike over the revised estimates.• 500 Crore rupees have been earmarked for high tech crop diversification program. • Allocations also include 13215 crore rupees for mid day meal programme. 27,049 crore rupees for agricultural ministry and additional 200 crore to women and child Welfare Ministry.

• 14000 crore Rupees will be provided for PSB recapitalization. He will constitute a panel on transaction costs, and financial policies.

• Education gets 65867 crore rupees, an increase of 17 percent over RE for 2012-13.• ICDS gets 17700 crore rupees. This is 11.7 percent more than the current year.• Drinking water and sanitation will receive 15260 crore rupees. 1,400 crore was provided for setting up water purification plants to cover arsenic and fluoride affected rural areas.• Health and Family Welfare Ministry had been allotted 37330 crore rupees. • Small Industries Development Bank of India (SIDBI) Refinance Fund doubled to an amount of 10000 crore rupees.• Plans of Government are to encourage PPP projects along with Coal India. • P Chidambaram announced setting up of a new all-women's bank.• 1000 crore Rupees initial capital for a new women's bank which will be another public sector bank. The Bank will be set up by October 2013.• An amount of additional 10000 crore rupees allotted for Food Security Bill in FY14.• 3000 km of road projects will be awarded in first six months of FY14.

• Finance ministry approved 50000 crore Rupees tax-free bonds in FY14. The government expects to raise 25000 crore rupees via tax-free bonds in FY13.• Refinancing capacity of SIDBI raised to Rs. 10,000 crore.• Technology Upgradation Fund Scheme (TUFS) for textile to continue in 12th Plan with an investment target of 151000 crore Rupees.• 14000 crore Rupees will be provided to public sector banks for capital infusion in 2013-14.• A grant of 100 crore each has been made to 4 institutions of excellence including Aligarh Muslim University, Banaras Hindu University, Tata Institute of Social Sciences, Guwahati and Indian National Trust for Art and CulturalHeritage (INTACH).• New taxes to yield 18000 crore Rupees.• A surcharge of 10 percent on persons (other than companies) whose taxable income exceeds Rs.1 crore have been levied.• Tobacco products, SUVs and Mobile Phones to cost more.• Relief of Rs. 2000 for the tax payers in the first bracket of 2 to 5 lakhs.• Voluntary Compliance Encouragement Scheme launched for recovering service tax dues.• 9000 crore Rupees earmarked as the first installment of balance of CST compensations to different States/UTs.

Budget in Indian Constitution

Budget in Indian Constitution is an annual financial statement. It is included in part V, Chapter 2 of PARLIAMENT Procedure in Financial Matters of Constitution of India.

As per the article 112 of Indian Constitution

The President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year, in this Part referred to as the annual financial statement. (2) The estimates of expenditure embodied in the annual financial statement shall show separately- (a) The sums required to meet expenditure described by this Constitution as expenditure charged upon the Consolidated Fund of India; and (b) The sums required to meet other expenditure proposed to be made from the Consolidated Fund of India, and shall distinguish expenditure on revenue account from other expenditure.

Union Finance Minister P Chidambaram on 28 February 2013 tabled the Union budget in the Lok Sabha of Parliament for the financial year 2013-14.

P. Chidambaram presented his 8th Union Budget. The union Budget of 2013-14 emphasized fast track economic growth with due importance on infrastructure development, skill development, employment generation and funding for social schemes.

In the Union Budget 2013-14, the prices of various commodities and products dwindled. While some of the products witnessed a rise in the price because of an increase in the customs duty, others saw a decline. Prices of some other products, on the other hand remained unaltered because of no change in the customs duty.

An increase in the Customs Duty was announced on following products:

Set-Top Boxes: In order to encourage domestic production of Set Top Boxes, as well as for value addition, the Finance Minister announced the doubling of customs duty on them. Now the duty will be increased from 5% to 10%.

High-End Luxury Cars, Motorcycles, Yachts: The customs duty on imported luxury goods such as high-end motor vehicles, motorcycles, yachts and similar vehicles was increased. In the case of such motor vehicles, the duty was increased from 75% to 100%; on motorcycles with engine capacity of 800 cc or more the duty now will be 75% instead of 60%. Similarly, the duty on yachts and similar vessels was increased from 10% to 25%.

SUVs: The Finance Minister also proposed a 3% increase in the excise duty on SUVs so that the duty on them will go up from 27% to 30%. However, such an increase will not apply to SUVs registered as taxis.

Tobacco-Products: The Finance Minister has proposed to increase the specific excise duty on cigarettes by about 18%. Similar increases are also proposed on cigars, cheroots and cigarillos.

Raw Silk: The duty on raw silk has also been increased from 5% to 15% so as to give a measure of protection to domestic sericulture.

Mobile phones: Expensive mobile phones i.e. mobile phones which are priced at more than Rs. 2000 will also have to bear higher excise duty of 6%. However, mobile phones which are not more than Rs. 2000 will continue to be levied a concessional excise duty of only 1%.

Air-Conditioned Restaurants: All air conditioned restaurants will be brought under the service tax net. At present service tax does not apply to those air conditioned restaurants which do not serve liquor. But now the Finance Minister proposed the uniformity of service tax for the two.

Concessions in customs duty announced:

Duty on certain machinery for manufacture of leather and leather goods reduced: The Union Finance Minister proposed to reduce the duty on specified machinery for manufacture of leather and leather goods, including footwear, by 2.5%. Now the duty on such machinery will be 5% instead of 7.5%.

Duty on pre-forms of precious and semi-precious stones drastically cut: To encourage exports, P. Chidambaram also announced in the Budget 2013-14, a drastic reduction in the duty on pre-forms of precious and semi-precious stones from 10% to a mere 2%.

De-oiled rice bran oil cake: He also announced a total withdrawal of export duty on de-oiled rice bran oil cake. Handmade carpets and textile floor coverings of coir or jute: The Finance Minister proposed to totally withdraw excise duty from handmade carpets and textile floor coverings of coir or jute.

Other products and services made cheaper are: Handmade carpets, electric and hybrid vehicles, leather and leather goods including footwear, precious and semi-precious stones, rice bran oil cake, readymade garments, textile floor coverings of coir or jute, duty free gold limit increased to 50000 in case of male passenger and 100000 in case of a female passenger, imported cheaper hazel nuts and dehulled oat grain, sabudana (tapioca sago) and truck chasis.

Union Finance Minister P Chidambaram on 28 February 2013 tabled the Union budget in the Lok Sabha for the financial year 2013-14. In the Union Budget 2013-14, the Union Finance Minister focused on three main sections of the society- women, the youth and the poor. Various new plans and schemes were introduced for these three strata of the society as well as for various sectors. These plans and schemes are as follows:

New Plans and Schemes rolled out in the Union Budget 2013-14:

• Nirbhaya Fund: The Finance Minister announced the setting up of a fund called the Nirbhaya Fund - with the Government contributing 1000 crore Rupees for safety and security of the women in India. The Finance Minister announced that various initiatives were underway as well as a lot more were undertaken by Government and NGOs for empowering women and providing them safety and security. • 1000 crore Rupees scheme for training youth: A 1000 crore Rupees scheme for training youth for boosting up their employability and productivity was rolled out in the budget. The National Skill Development Corporation would be required to set up curriculum and standards for training different skills. The trained youth who will pass the test by the end of the training would get monetary reward of 10000 Rupees on an average. This initiative would motivate 10 lakh youth. • Proposal to set up India’s first Women’s Bank as a public sector bank with 1000 crore Rupees as initial capital.• Direct Benefit Transfer (DBT) Scheme to be rolled out throughout the country during the term of UPA Government. This scheme will help the poor. Under the scheme, a bank account will be opened for each beneficiary; and the bank account will be seeded with Aadhaar in due course. • 10000 crore Rupees earmarked for National Food Security towards the incremental cost.

• Drinking water and sanitation will receive 15260 crore Rupees. 1400 crore Rupees is being provided for setting up water purification plants to cover arsenic and fluoride affected rural areas.• Proposal to launch Inflation Indexed Bonds or Inflation Indexed National Security Certificates to protect savings from inflation.• Voluntary Compliance Encouragement Scheme launched for recovering service tax dues.• 9000 crore Rupees earmarked as the first installment of balance of CST compensations to different States/UTs.• The Interest Subvention Scheme: This scheme for short-term crop loans is proposed to be continued for loans by public sector banks, RRBs and Cooperative banks, and expanded to private scheduled commercial banks. Under the scheme, a farmer who repays the loan on time is able to get credit at 4 cent per year.• National Livestock Mission: 307 crore Rupees have been provided for setting up of the National Livestock Mission. This will attract investment and enhance livestock productivity. A sub-mission of this Mission seeks to increase the availability of feed and fodder.• Assistance of the World Bank and Asian Development Bank will be sought to build roads in the North Eastern States and connect them to Myanmar.• The body of Rural Infrastructure Development Funds (RIDF) is proposed to be raised to 20000 crore Rupees.• Plans for seven new cities were finalized for industrial corridors and work on two new smart industrial cities at Dholera (Gujarat) and Shendra Bidkin (Maharashtra) will start during 2013-14.• Two new ports will be established in Sagar (West Bengal) and in Andhra Pradesh.• A power transmission system will be constructed from Srinagar to Leh and for this 226 crore Rupees were provided in 2013-14.• Apparel Parks are proposed to be set up within the Integrated Textile Parks, to house apparel manufacturing units. • Standing Council of Experts: Standing Council of Experts is proposed to be constituted in the Ministry of Finance to analyse the international competitiveness of the Indian financial sector.• A number of proposals relating to capital market have been finalized in consultation with SEBI. These include simplification of procedure and uniforms norms for foreign portfolio investors, clarity relating to FDI investment, allowing FIIs to participate in new areas, etc.

The Union Budget 2013-14 which was tabled by the Union Finance Minister P. Chidambaram on 28 February 2013 aimed at higher growth leading to inclusive and sustainable development. The allocation of the funds to the rural development, agriculture and food security is described as follows:

Allocation to Rural Development, Agriculture and Food Security

A total of 80194 crore Rupees was allocated for Rural Development Ministry, an increase by 46 percent in 2013-14 fiscal year.

Pradhan Mantri Gram Sadak Yojana

Pradhan Mantri Gram Sadak Yojana (PMGSY)-II was proposed for the benefit of those states which have substantially fulfilled the objectives of PMGSY. The beneficiary states will be Rajasthan, Punjab, Maharashtra, Karnataka, Haryana and Andhra Pradesh.

Allocation of funds to Ministry of Agriculture

The Ministry of Agriculture got an increase of 22 percent over revised estimates for 2012-2013. The budget allocation to the Ministry of Agriculture was 27049 crore Rupees. 500 crore Rupees was

allocated for initiating the programme on crop diversification.

Pilot Programme on Nutri-Farms

Apart from this, the pilot programme on Nutri-Farms will be started for the purpose of introduction of new crop varieties which are rich in micro-nutrients like iron-rich bajra. A total of 200 crore Rupees would be facilitated for starting this pilot programme.

Support to Farmer Producer Organizations

The Budget will also support the Farmer Producer Organizations (FPO), which also includes Farmer Producer Companies (FPC) that have emerged as the aggregators of farm produce. This will link the farmers directly to the markets.

Agricultural Credit

Agricultural credit for 2012-13, which was 575000 crore Rupees was increased. A target of 700000 crore farm credit was fixed for 2013-14 fiscal year.

Interest Subvention Scheme

The Interest Subvention Scheme for short-term crop loans would be continued for loans by the Cooperative Banks, RRBs, public sector banks and will also be expanded to private scheduled commercial banks. Under this scheme, any farmer who pays back the loan on time would get credit at 4 percent annually.

National Livestock Mission

Apart from this, 307 crore Rupees was set aside for National Livestock Mission in order to attract investment and enhance livestock productivity. A sub-mission of this National Livestock Mission was also started for increasing the availability of feed and fodder.

The Union Finance Minister announced the possibility of National Food Security Bill to be passed by the Parliament and 10000 crore Rupees was set aside for incremental cost which would occur under the Act.

In the Union Budget 2013-14, the Union Finance minister P. Chidambaram assigned new proposals and plans. The plans and proposals as announced by the Finance Minister are as follows:

Plans for seven new cities

Plans for seven new cities were finalized for industrial corridors and work on two new smart industrial cities at Dholera (Gujarat) and Shendra Bidkin (Maharashtra) will begin during 2013-14 financial year. Also, an all-inclusive plan was under preparation for Chennai Bengaluru industrial corridor. Preparatory work for next corridor - Bengaluru Mumbai industrial corridor was started.

Two new ports to be established in West Bengal and Andhra Pradesh

The plan for establishing two new ports in Sagar (West Bengal) and in Andhra Pradesh was under

way. Apart from this, a new outer harbour will be developed in the VOC port at Thoothukkudi (Tamil Nadu) through PPP at an estimated cost of 7500 crore Rupees.

Power transmission system

A power transmission system was also planned to be constructed from Srinagar to Leh. An amount of 226 crore Rupees was provided in 2013-14 financial year for this.

The oil and gas exploration policy

It was decided in the Union Budget 2013-14 that the oil and gas exploration policy shall be reviewed to move from profit sharing to revenue sharing contracts. The Finance Minister announced that the policy for encouraging the exploration as well as production of shale gas will be announced. The natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed.

Support to Micro, Small and Medium Enterprises (MSMEs)

In order to facilitate assistance to the Micro, Small and Medium Enterprises (MSMEs), the refinancing capability of SIDBI was proposed to be enhanced from 5000 crore Rupees to 10000 crore Rupees. Additionally, it was proposed that SIDBI would be provided an amount of 500 crore Rupees for setting up the Credit Guarantee Fund for factoring.

Apparel Parks to be set up

It was also proposed that apparel parks shall be set up within the Integrated Textile Parks. These apparel parks will house the apparel manufacturing units. A scheme called Integrated Processing Developing Scheme was initiated to address to environmental concerns of the textile industry. Term loans as well as the working capital to handloom sector will be made available at the concessional interest of 6 percent. This in turn will forward the benefit to 1.5 lakh weavers as well as 1800 primary co-operative societies.

n the Union Budget 2013-14, which was tabled in the Lok Sabha on 28 February 2013 by the Union Finance Minister P. Chidambaram, announcements were made for the social sector, with focus primarily on women, poor and youth. The Finance Minister laid emphasis on the safety and security of the women and declared that various initiatives were underway as well as many more were taken by the government along with the non-governmental organisations.

Various Schemes and Proposals Announced for the Social Sector are as follows:

Eligibility conditions of life insurance policies for persons suffering from disabilities and certain ailments relaxed

The Union Budget 2013-14 proposed relaxation in the eligibility conditions of Life Insurance Policies for persons suffering from disability or certain ailment. The Finance Minister proposed an increase in the permissible premium rate from 10 percent to 15 percent. The relaxation will be made available on or after 1 April 2013.

Government planned to evolve new criteria for determining backwardness

The Union Government declared that human development indicators should be considered for determining backwardness. The Finance Minister proposed to evolve new criteria such as per capita

income and other HDIs and reflect them in future planning and devolution of funds. The Finance Minister termed the Backward Regions Grant Fund as a vital source of gap funding and therefore proposed to allocate 11500 crores Rupees in 2013-14 along with another sum of 1000 crore Rupees for Wing Extremism (LWE) affected districts.

Youth to be targeted and motivated

The Union Finance Minister announced that the Union Government will release funds through National Rural Livelihood Mission and the National Urban Livelihood Mission to achieve the target of skilling 50 million people in the Twelfth Plan period including 9 million in 2013-14. P. Chidambaram announced that 5 percent of the Border Area Development Programme Fund, 10 percent of the Special Central Assistance to the Scheduled Castes sub-plan and the Tribal sub-plan and some other funds will also be used for skill development.

Empowerment, safety and security of women; Nirbhaya Fund of 1000 crore Rupees announced

The Finance Minister proposed setting-up of Nirbhaya Fund of 1000 crore Rupees. The minister announced that Ministry of Women and Child Development along with other concerned ministries will work upon the structure, scope and the application of the Fund.

Direct benefit transfer scheme to be rolled out throughout the country

The Union Government announced rolling out Direct Benefit Transfer Scheme throughout the country. The Finance Minister announced that around 11 lakh beneficiaries received the benefits directly into their bank accounts. The Finance Minister also announced that the Government would make sure that digitised beneficiaries lists are available and that bank account is opened for each beneficiary.

Scholarships announced for students belonging to SC/ST/OBC/ minorities and girl children

The Union Finance Minister allocated 37330 crore Rupees to the Ministry of Health and Family Welfare in the Union Budget 2013-14. Out of this allocation, new National Health Mission which is a combination of the rural mission and the proposed urban mission, will be allocated 21239 crore Rupees, an increase of 24.3 percent over the Revised Estimate.

For the purpose of medical education, training and research, the Union Finance Minister proposed to allocate 4727 crore Rupees. The National Programme for the Health Care of Elderly was implemented in 100 selected districts of 21 States. Eight regional geriatric centres were funded for development of dedicated geriatric departments with a fund of 150 crore Rupees.

The Union Finance Minister also proposed to allocate 5284 crore Rupees to the scholarships planned for students belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes and Minorities, and girl children, in 2013-14. The Mid-day Meal Scheme will be allocated 13215 crore Rupees.

Maternal and child malnutrition to be tackled in mission mode

The Finance Minister also announced 17700 crore Rupees in 2013-14 for the Integrated Child Development Scheme (ICDS). P. Chidambaram underlined that the main focus would remain on early childhood care and education. For the purpose of maternal and child malnutrition, the Finance Minister announced that the multi-sectoral proramme that was announced in 2012-13 would be

implemented in 100 districts during 2013-14 with an allocation of 300 crore Rupees.

New measures for welfare of SC/ST, women and minorities

The Finance Minister allocated 41561 crore Rupees to the scheduled castes sub plan and 24598 crore Rupees to tribal sub plan. The gender budget had 97134 crore Rupees and the child budget was given 77236 crore Rupees in 2013-14.

Apart from this, the Ministry of Women and Child Development was asked to prepare schemes for addressing concerns of women, especially single women and widows and for this an amount of 200 crore Rupees was allocated. 3511 crore Rupees was allocated to the Ministry of Minority Affairs.

The Union Finance Minister announced tax proposals while tabling the Union Budget 2013-14 in the Lok Sabha on 28 February 2013. The tax proposals as announced by the Union Finance Minister are as follows:

Relief for taxpayers in the bracket of 2 lakh Rupees to 5 lakh Rupees tax credit of 2000 Rupees to every person with total income up to 5 lakh Rupees

The Union Budget 2013-14 proposed a relief of 2000 Rupees to every person with a total income up to 5 lakh Rupees in the financial year. He announced that the income slabs which were introduced in 2012-13 financial year were same and that there was no provision of revising the slabs or the rates, apart from some relief to the taxpayers in the first bracket of 2 lakh Rupees to 5 lakh Rupees.

INCOME In RUPEES WORKING MEN WORKING WOMEN SENIOR CITIZENSOld Tax New Tax Old Tax New Tax Old Tax New Tax

2 Lakh 0 0 0 0 0 05 Lakh 30900 28840 30900 28840 25750 236908 Lakh 92700 92700 92700 92700 87550 8755010 Lakh 133900 133900 133900 133900 128750 12875025 Lakh 597400 597400 597400 597400 592250 59225050 Lakh 1369900 1369900 1369900 1369900 1364750 1364750100 Lakh 2914900 2914900 2914900 2914900 2909750 2909750110 Lakh 3223900 3546290 3223900 3546290 3218750 3540625

Surcharge of 10 percent on persons with taxable income exceeding 1 crore rupees

The Union Budget 2013-14 proposed a surcharge of 10 percent on persons whose taxable income exceeded 1 crore Rupees every year. This tax proposal would be applicable to individuals, HUFs (Hindu Undivided Families), firms and entities with the same tax status. The Finance Minister also proposed to increase the surcharge from 5 percent to 10 percent on the domestic companies whose taxable income exceeded 10 crore Rupees every year. In case of the foreign companies, there would be an increase of surcharge from 2 percent to 5 percent.

In other cases like tax on distributed income or dividend distribution tax, the present surcharge of 5 percent was increased to 10 percent. This additional surcharge would be imposed only for 2013-14 fiscal year.

Additional deduction of interest up to 1 lakh rupees on home loan for first home buyer

In the Union Budget 2013-14, it was proposed that the additional tax benefit would be facilitated to first- home buyers who would take the loan for an amount that does not exceed 25 lakh Rupees. There would be an additional deduction interest of 1 lakh Rupees.

TDS at the rate of 1 percent applied on the value of transfer of immovable property exceeding 50 lakh Rupees The Union Budget 2013-14 proposed levying TDS at the rate of 1 percent on the value of the transfer of immovable property where the consideration exceeded 50 lakh Rupees. Agricultural land was exempted.

Securities Transaction Tax (STT) reduced

The Union Budget 2013-14 proposed reducing rates of Securities Transaction Tax (STT) in respect of certain transactions. P. Chidambaram proposed the following reductions in the rates of STT:

• Equity futures: From 0.017 to 0.01 per cent• MF/ETF redemptions at fund counters: From 0.25 to 0.001 percent• MF/ETF purchase/sale on exchanges: From 0.1 to 0.001 percent, only on the seller

Commodities Transaction Tax (CTT) introduced in a limited way; agricultural commodities will be exempted

In the Union Budget 2013-14, Commodities Transaction Tax (CTT) was introduced in a limited way. The Finance Minister announced levying CTT on non-agricultural commodities future contracts at the same rate as on equity futures that is at 0.01 percent of the price of the trade. Agricultural commodities were exempted.

Tax administration reforms commission to be set up

In the Union Finance 2013-14, setting up Tax Administration Reforms Commission (TARC) was proposed. The proposed commission shall be responsible for reviewing the application of tax policies and tax laws. Periodic reports will be submitted by TARC and the suggestions will be implemented for strengthening the capacity of the tax system.

Clarity in tax laws, stable tax regime, non-adversarial tax administration, dispute resolution and independent judiciary – the theme of tax proposals

The major theme of the tax proposals was based on following parameters:

• Clarity in tax laws• Stable tax regime• Non-Adversarial tax administration• Fair mechanism for dispute resolution• An independent judiciary

Securitisation trust to be exempted from income tax

The Union Budget 2013-14 proposed to exempt the Securitisation Trust from Income Tax. This will help the financial institutions to securitise their assets through a special purpose vehicle. The tax will be levied at the time of distribution of income by the Securitisation Trust at the rate of 30 percent in

case of companies and 25 percent in the case of an individual or HUF. No tax shall be levied on the income received by the investors from the Securitisation Trust.

In the Union Budget 2013-14, which was tabled in the Lok Sabha on 28 February 2013 by the Union Finance Minister P. Chidambaram, there is a hike of 14% on Defence Budget over the last year 2012-13, thus promising more funds required for national security.

Some of the prominent features of the defence budget 2013-14 are as under:

• The Revenue expenditure budget increase for defence is relatively less than the overall Non-Plan Revenue expenditure budget growth between RE 2012-13 and BE 2013-14;• Gross Revenue budget for Navy declined from 12748 crore rupees in BE 2012-13 to 12394 crore rupees in BE 2013-14 (there are reductions under salaries, transportation and miscellaneous heads while there are negligible increases for repairs & re-fitment works and in respect of Coast Guard); • Capital budget support for the Indian Coast Guard will be less in 2013-14 –740 crore rupees in BE 2013-14 vis-à-vis. 899 crore rupees in BE 2012-13;• The value of supplies of stores (not classified as Capital assets) from Ordnance factories to the Services will only marginally increase from 11213 crore rupees as per BE 2012-13 to 12141crore rupees provided in BE 2013-14;• Ex-Servicemen Contributory Health Scheme (ECHS) – a welfare oriented organisation for ex-Servicemen and their dependants in the defence set-up – has been allocated less budget (Capital and Revenue taken together) for the next year as compared to the actual expenditure of 2011-12 and RE of 2012-13; and • Virtually no funds have been earmarked for development of prototype stores in association with indigenous trade sources (a token provision of Rs. one crore has been made for the next year as against 29 crore rupees actually spent in 2011-12 and a BE 2012-13 of 89 crore rupees)

Consider the below given table for a Comparative study of last year and present year Budget

Source: IDSA

  2012-13 2013-14Defence Budget (Rs. in Crore) 193407.29 203672.12Growth of Defence Budget (%) 17.63 5.31Revenue Expenditure (Rs. in Crore) 113828.66 116931.41Growth of Revenue Expenditure (%) 19.55 2.73Share of Revenue Expenditure in Defence Budget (%) 58.85 57.41Capital Expenditure (Rs. in Crore) 79578.63 86740.71Growth of Capital Expenditure (%) 15.00 9.00Share of Capital Expenditure in Defence Budget (%) 41.15 42.59Share of Defence Budget in GDP (%) 1.90 1.79Share of Defence Budget in Central Government Expenditure (%)

12.97 12.23

The Union Finance Minister announced different proposals for Infrastructure and Energy Sector in India while tabling the Union Budget 2013-14 in the Lok Sabha on 28 February 2013. The proposals as announced by the Union Finance Minister are as follows:

Power

• Investment allowance of 15% for investment in plant & machinery• 30% increase in plan expense• CCI to take up decisions on more Power projects• Power transmission system from Srinagar to Leh at an expense of INR 228 Crore in 2013-14

Oil and Gas • Natural gas pricing policy to be reviewed• Move to revenue-sharing from profit-sharing policy in oil and gas sector• The oil and gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts• NELP blocks that were awarded but are stalled will be cleared

Coal

• Proposal for Public-private partnership (PPP) policy framework, with CIL as one of the partners, in order to increase the production of coal for supply to power producers and other consumers.• More focus on coal import, coal blending and price pooling of coal in short to medium term.

Infrastructure • Road Regulator to be introduced• Over 3000 km road projects across Maharashtra, Gujarat, MP to be awarded in 6 months time in 2013-2014• 2 new major ports announced in AP and WB.• Infrastructure Debt funding - 4 of these to be in place to extend funding at lesser rate• Tax-free infrastructure bonds of Rs 50,000 crore to be issued

Renewable Energy• GBI re-introduced in Wind Sector with allocation of 800 cr.• Low interest bearing funds from the National Clean Energy Fund (NCEF) to IREDA to on-lend to viable renewable energy projects. The scheme will have a life span of 5 years.

The Union Government of India on 7 March 2013 approved export of extra five million tonnes of Wheat from its Godowns. The group of ministers in its meeting also decided that the added quantity of 5 million tonnes of wheat shall be exported by the private traders. It also cleared that the public sector trading firms will not be a participant in export of the additional quantity of wheat.

The GoM (Group of Ministers) have also decided that bidding process would be used by the Private

traders to export the 2011-12 crop and the floor price decided for per quintal is 1480 rupees.

For the present fiscal, the permitted export of wheat from the godowns of the Food Corporation of India now stands at 9.5 million tonnes.

Economic Survey of India 2012-13: Highlights

Union Finance Minister P. Chidambaram on 27 February presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament.

India's Economic Survey for 2012-13 pegs the country's growth at 6.1-6.7% and inflation at 6.2-6.6% for the next fiscal 2013-14 and made a strong call for cutting subsidies.

Economic Survey is presented every year, just before the Union Budget. It is a flagship annual document of the Ministry of Finance, Government of India. Economic Survey reviews the developments in the Indian economy over the previous 12 months. It summarizes the performance on major development programmes, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.

The economic survey 2012-13 was prepared by a team of economists led by Chief Economic Advisor Raghuram Rajan, and pitches for speeding up economic reforms to activate a sluggish economy. It serves as an indicator of what is likely to be contained in the General Budget proposals.

Following are the major Higlhlights of the Economic Survey 2012-13

• GDP growth seen at 6.1-6.7 percent in 2013/14• Government target for fiscal deficit is 4.8 pct of GDP in 2013/14• Government target for fiscal deficit is 3 pct of GDP in 2016/17• Headline WPI inflation may decline to 6.2-6.6 pct by March2013• Focus on curbing imports, making oil prices more market determined to reign in current account deficit• Foreign Institutional Investors (FIIs) flows need to be targeted towards long-term rupee instruments• Prioritisation of expenditure seen as key ingredient of credible medium-term fiscal consolidation plan• Raising tax to GDP ratio to more than 11 percent seen as critical for sustaining fiscal consolidation•  Room for accommodative monetary policy with expected fiscal consolidation• India likely to meet fiscal deficit target of 5.3 pct of GDP in 2012/13, despite significant shortfall in revenues• Recommends curbing gold imports to reign in current account deficit• Room to increase exports in the short run limited• Industrial output seen growing around 3 pct in 2012/13• Govt priority to fight inflation by reducing fiscal impetus to demand as well as by focusing on incentivizing food production.• More jobs in low productivity construction sector• Balance of Payments under pressure with net exports decline• Service sector has shown more resilience despite global slowdown

• Pitches for hike in price of diesel and LPG to cut subsidy burden• Railway freight grows by 5.1 per cent in 2012-13• Foreign Exchange reserves remains steady at USD 295.6 Billion at December 2012 end.

Economic Survey of India 2012-13: Agriculture and Food, Sustainable Development and Climate

Union Finance Minister P. Chidambaram on 27 February 2013 presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament.

India's Economic Survey for 2012-13 pegs the country's growth at 6.1-6.7% and inflation at 6.2-6.6% for the next fiscal 2013-14 and made a strong call for cutting subsidies.

The Economic Survey for 2012-13 depicted about the sectors like Agriculture and Food, Sustainable Development as well as Climate Change, the major points of which are described here:

Agriculture and Food

Growth in this sector was reasonably stable despite large weather shocks during 2009 (deficient south west monsoon), 2010-11 (drought/deficient rainfall in some states), and 2012-13 (delayed and deficient monsoon). The reason for this was an increase in gross capital formation (GCF) in this sector relative to GDP of this sector, which has consistently been improving from 16.1 per cent in 2007-8 to 19.8 per cent in 2011-12 (at constant 2004-5 prices).

Rate of growth of GCF accelerated to 9.7 per cent in the Eleventh Plan (2007-12) compared to a growth of 2.7 per cent during the Tenth Plan (2002-07).

During 2011-12, total foodgrains production reached an all-time high of 259.32 million tonnes. The production of 2012-13 kharif crops would be affected by deficiency in the south-west monsoon and the resultant acreage losses.

• Rashtriya Krishi Vikas Yojana: Allocation under the RKVY for 2012-13 is 9217 crore Rupees.

• National Mission for Sustainable Agriculture: During the Twelfth Five year Plan, climate change adaptation and mitigation strategies will be operationalised by restructuring the existing programmes.

• Green Revolution for Eastern India: Eastern India comprises of seven states, Assam, Bihar, Chhattisgarh, Jharkhand, Odisha, Eastern Uttar Pradesh, and West Bengal. 400 crore Rupees each was allocated for the programme during 2010-11 and 2011-12 and of 1000 crore Rupees during 2012-13.

• Rainfed Area Development Programme: During 2012-13, the RADP is being implemented in 22 states. Macro Management of Agriculture: Of an outlay of 900 crore Rupees approved for 2012-13, 680.51 crore Rupees had been released as of now. • The Integrated Scheme of Oilseeds, Pulses, Oil Palm, and Maize (ISOPOM): Under the

Scheme, assistance is provided for purchase of breeder seed, production of foundation seed, production and distribution of certified seed, distribution of seed minikits, distribution of plant protection chemicals, plant protection equipments and weedicides, supply of rhizobium culture/phosphate solubilizing bacteria, supply of improved farm implements, distribution of gypsum/pyrite/liming/dolomite, distribution of sprinkler sets and water-carrying pipes, and publicity for encouraging farmers to grow oilseeds and maize.

• The National Food Security Bill: In order to address the issue of food security in a comprehensive manner, the Government introduced National Food Security Bill in the Lok Sabha on 22 December, 2011. Early enactment of this bill is under process.

Sustainable Development and Climate Change

The State of the Environment Report by the MoEF clubs the issues under five key challenges faced by India, which are climate change, food security, water security, energy security, and managing urbanization.

As per the Second National Communication submitted by India to the UNFCCC, it is projected that the annual mean surface air temperature rise by the end of the century ranges from 3.5°C to 4.3°C whereas the sea level along the Indian coast has been rising at the rate of about 1.3 mm/year on an average. These climate change projections are likely to impact human health, agriculture, water resources, natural ecosystems, and biodiversity.

In this context to the rural areas, schemes for rural development and livelihood programmes under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) are linked to land, soil, and water.

World leaders in 2012 continued to engage and deliberate in international forums dedicated to climate and environment and also in forums like the G20 where sustainable development and climate change were an integral part of the discussions.

The United Nations Conference on Sustainable Development (UNCSD), was held in June 2012 at Rio de Janeiro, Brazil, (also known as Rio+20) and was attended at the heads of states level. The objective of the Rio+20 Conference was to secure renewed political commitment for sustainable development, review progress made and identify implementation gaps, and assess new and emerging challenges since the UNCSD held 20 years ago in Rio de Janeiro in 1992.

The 18th session of the COP to the UNFCCC, that started on 26 November and concluded on 8 December 2012 in Doha, Qatar has resulted in a set of decisions (clubbed together as Doha Climate Gateway) aimed at advancing the implementation of the UNFCCC and its Kyoto Protocol (KP). The key issues for the Doha conference were: amending the KP to implement the second commitment period under the Protocol; successfully concluding the work of the Bali Action Plan (BAP) within which there was urgent need for a clear path to climate finance; and planning the work under the Durban Platform (DP) for enhanced action.

In the Twelfth Five Year Plan, the PAT (Perform Achieve and Trade) scheme is likely to achieve about 15 million tonnes oil equivalent of annual savings in coal, oil, gas, and electricity (including 6.686 million ton of oil-equivalent energy savings of first phase).

Similarly, the RPO is creating domestic markets for renewable energy through regulatory interventions at state level. The RPO (Renewable Purchase Obligation) is the minimum level of renewable energy (out of total consumption) the obligated entities (DISCOMs, Captive Power Plants, and Open Access Consumers) are entitled to purchase in the area of a distribution licensee.

Union Finance Minister P. Chidambaram on 27 February presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament. Economic Survey is presented every year, just before the Union Budget. It is a flagship annual document of the Ministry of Finance, Government of India.

In the economic survey 2012-13, the government's targeted policies for the poor, with the prospect of fewer leakages, can help better translate outlays into outcomes.

Fifteenth Quarterly Survey Report on Effect of Economic Slowdown on Employment in India April to June 2012

Overall employment in June 2012 over June 2011 increased by 6.94 lakh, with the highest increase recorded in IT/BPO (4.44 lakh) sector followed by 1.70 lakh in Textiles including Apparels, 0.45 lakh in Transport, 0.26 lakh in Metals, 0.19 lakh in Gems and Jewellery and 0.11 lakh in Automobiles sectors during the period. On the other hand, employment in handloom/powerloom and leather sectors marginally declined during this period.

In export oriented units, employment at the overall level increased by 5.81 lakh whereas in the non-exporting units, it increased by 1.10 lakh during the period June 2012 over June 2011.

The results of the15th quarterly survey revealed that there was a sustained and consecutive increase in employment in the sectors covered at overall level during the last eleven quarters with a total addition of 30.73 lakh employment during this recovery period.

Socio-Economic Profile of States and Inter-State Comparisons

• Bihar has the highest decadal (2001-11) growth rate of population (25.07 percent), while Kerala has the lowest rate (4.86 percent).• In 2011, Kerala has the highest sex ratio with 1084 females per 1000 males, followed by Tamil Nadu (995), while Haryana is at the bottom (877).• The best performers in terms of growth during 2011-12 are Bihar (16.71 per cent) followed by Madhya Pradesh and Maharashtra.• In terms of growth in per capita income, the best performer is Bihar (15.44 per cent) followed by Madhya Pradesh and Maharashtra due to high growth in gross state domestic product (GSDP) in 2011 12.• The poverty estimates indicate that the highest poverty headcount ratio (HCR) exists in Bihar at 53.5 per cent as against the national average of 29.8 per cent.• Bihar has the lowest MPCE both in rural and urban areas at 780 Rupees (with 65 percent food share) and 1238 Rupees (with 53 percent food share) respectively. In comparison, Kerala has the highest in both rural and urban areas at 1835 Rupees (with 46 percent food share) and 2413 Rupees (with 40 percent food share) respectively.• The unemployment rate (per 1000) among the major states is the lowest in Gujarat (18) and highest in Kerala (73) and Bihar (73) in urban areas and the lowest in Rajasthan (4) and again highest in Kerala (75) in rural areas.• Infant mortality rate (IMR) in 2011 is the lowest in Kerala (12) and highest in Madhya Pradesh (59) against the national average of 44.

• Birth rate is lowest in Kerala (15.2) and highest in Uttar Pradesh (27.8) against the national average of 21.8.• Death rate is lowest in West Bengal (6.2) and highest in Odisha (8.5) against the national average of 7.1.• In terms of decadal growth rate in bank branches, Haryana (59.5 percent) has the highest growth and Bihar the lowest (14.4 percent). Even a north-eastern state like Assam (16.5 percent) is better placed than Bihar.

Some important poverty alleviation and employment generation programmes

Mahatma Gandhi NREGA: This flagship programme of the government aims at enhancing livelihood security of households in rural areas by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work with the stipulation of one-third participation of women.

Swarna Jayanti Shahari Rozgar Yojana (SJSRY): The annual budgetary provision for the SJSRY for the year 2012- 13 was 838 crore Rupees and of this 516.77 crore Rupees had been released up to 7 February 2013. A total of 406947 people benefited from this scheme during 2012-13.

Rashtriya Swasthya Bima Yojana (RSBY): The scheme provides smart card-based cashless health insurance cover of ` 30,000 per family per annum on a family floater basis to BPL families in the unorganized sector with the premium shared on 75:25 basis by central and state governments.

The Unorganized Workers Social Security Act 2008 and National Social Security Fund: A National Social Security Fund with initial allocation of 1000 crore Rupees to support schemes for weavers, toddy tappers, rickshaw pullers, beedi workers, etc. has been established.

Aam Admi Bima Yojana (AABY): The Janashree Bima Yojana (JBY) has now been merged with the AABY to provide better administration of life insurance cover to the economically backward sections of society.

Status of certain Health Indicators is as follows:

• Crude Birth Rate (CBR) (per 1000 population): 21.8 (2011)• Crude Death Rate (CDR) (per 1000 population): 7.1 (2011)• Total Fertility Rate (TFR) (per woman): 2.5 (2010)• Maternal Mortality Rate (MMR) (per 100000 live births): 212 (2007-09)• IMR (per 1000 live births) - Rural: 48 (2011)• IMR (per 1000 live births) - Urban: 29 (2011)• Child (0-4 years) Mortality Rate (per 1000 children): 13.3 (2010)• Life Expectancy at Birth (Total): 66.1 (2006-10)

Welfare and Development of SCs, STs, OBCs, and Other Weaker Sections

• The amount of subsidy admissible is 50 per cent of the project cost, subject to a maximum of 10000 Rupees per beneficiary. During 2012-13, the physical target is to cover over 12 lakh beneficiaries.• For the welfare and development of STs, an outlay of 4090 crore Rupees has been made in the Annual Plan for 2012-13.• For economic empowerment of STs, financial support is extended through the National Scheduled Tribes Finance and Development Corporation (NSTFDC) in the form of loans and micro-credit at

concessional rates of interest for income-generating activities.• The corpus of the Maulana Azad Education Foundation (MAEF) had been enhanced from 100 crore Rupees in 2005-6 to 750 crore Rupees till March 2012.• The five communities--Muslims, Christians, Sikhs, Buddhists, and Parsis- notified as minority communities, constitute 18.42 percent of the total population of the country. The plan outlay for the development of minorities was raised from 2850 crore Rupees in 2011-12 to 3135 crore Rupees in 2012-13.• Central assistance is provided to states for educational development of OBCs. Under the Pre- Matric Scholarship for OBCs Scheme, against an allocation of 50 crore Rupees during 2012-13, 35.45 crore Rupees was released to states up to December 2012.• Some important schemes for the welfare of disabled persons include: Scheme of Assistance to Disabled Persons for Purchase/Fitting of Aids/ Appliances (ADIP) and Deendayal Disabled Rehabilitation Scheme (DDRS).• The Integrated Programme for Older Persons (IPOP), aimed at covering 64000 beneficiaries during 2012-13. During 2012-13 (up to December 2012), 8.06 crore Rupees had been released against a revised allocation of 17 crore Rupees.

Union Finance Minister P. Chidambaram on 27 February presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament. Economic Survey is presented every year, just before the Union Budget. It is a flagship annual document of the Ministry of Finance, Government of India.

Industrial Sector

After recovering to a growth of 9.2 percent in 2009-10 and 2010-11, growth of value added in industrial sector, comprising manufacturing, mining, electricity and construction sectors, slowed to 3.5 percent in 2011-12 and to 3.1 percent in 2012-13.

The manufacturing sector, the most dominant sector within industry, also witnessed a decline in growth to 2.7 percent in 2011-12 and 1.9 percent in 2012-13 compared to 11.3 percent and 9.7 percent in 2009-10 and 2010-11, respectively.

The growth in electricity sector in 2012-13 has also moderated. The growth of the mining sector in 2012-13 is estimated at 0.4 percent, though it showed an improvement over a negative growth of 0.63 percent recorded in 2011-12.

India is one of the top ten manufacturing countries though its share in total manufacturing value added (MVA) is only about 1.8 percent. The growth rate of world MVA had declined from 5.4 percent in First quarter of 2011-12 to 2.2 percent in second quarter of 2012-13. The latest competitive industrial performance index (CIP) compiled by the United Nations Industrial Development Organization (UNIDO), ranks India 42nd out of 118 countries the same as in 2005.

The initiatives taken for boosting the manufacturing sector included National Manufacturing Policy (NMP), DMIC Project, FDI Policy initiatives and setting up of the e-Biz Project to promote ease of doing business.

Services Sector

The Centre for Monitoring Indian Economy’s (CMIE) analysis of the sector-wise performance of services activities based on firm-level data show that the performance of sectors such as transport logistics, aviation and construction in the year 2012-13 is subdued in comparison to with the previous year.

High negative PAT (profit after tax) in hotel sector continued. The health services and telecom sectors were projected to have rebounded in the year 2012-13. Overall the year 2013-14 is projected to be better for most of the sectors, except retail trading, which is projected to have negative growth in profitability.

FDI in multibrand retail trading has been permitted subject to specified conditions.

The IT and ITeS sector has started facing competition from many developing countries. While the EU has the highest share in computer and information services exports, followed by India and the USA, many new competitors like China, Israel and the Philippines have emerged in recent years.

Between 2005 and 2011, the annual average growth of computer services was 69 percent in the Philippines, 28 percent in Sri Lanka, 59 percent in Ukraine, 27 percent in the Russian Federation, 37 percent in Argentina and 35 percent in Costa Rica. One major issue in services is the domestic barriers and regulations. Domestic regulations in strict WTO terms include licensing requirements, licensing procedures, qualification requirements, qualification procedures, and technical standards but here other restrictions and barriers are also considered.

An indicative list of some important domestic regulations in India which need to be examined for suitable policy reforms in the services sector include Trade and Transport services, Construction, Accountancy services, Legal services and Education Services. Union Finance Minister P. Chidambaram on 27 February presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament. World trade in both goods and services reached and surpassed pre-crisis levels in 2011. However, the deceleration in world growth and trade in 2012 and forecast of only a gradual upturn in global growth by international institutions reflected a weak and slow recovery for world trade.

India's exports, which had surpassed pre-crisis levels within a year in 2010-11 with a record 40.5 percent growth, continued growing even in 2011-12, but were finally affected by the global slowdown in 2012-13 with exports declining even more at - 4.9 percent in the first ten months than the -3.5 per cent recorded during 2009-10.

Based on GDP data from the expenditure side, the year-to-year growth for real exports of goods and services decreased from a peak of 36 percent in the first quarter of 2011 to 4 percent in the third quarter of 2012. Merchandise exports have slowed down more; from 34 percent year to year in the first quarter of 2011 to -6 percent year to year in the third quarter of 2012.

Two reasons for the decline in export growth were found out: (i) external factors or partner country incomes, (ii) changes in exchange rate. GDP growth of partner countries slowed down significantly (from more than 6 percent year to year in the first quarter of 2010 to less than 1 percent in the third quarter of 2012).

Gold Imports and Policy Measures: India is one of the largest consumers of gold in the world with consumption increasing from 721.9 tonnes in 2006 to 933.4 tonnes in 2011 and 612 tonnes in the first three quarters of 2012, accounting for around 27 per cent of world gold consumption in 2011, and 26.4 per cent in 2012 (total of first three quarters). In the case of export of gold jewellery, the major export destinations include the UAE (57.9 percent), Hong Kong (14.1 percent), and the USA (12.0 percent).

Imports of equipment for initial setting up or substantial expansion of fertilizer projects fully

exempted from basic customs duty of 5 percent for a period of three years up to 31 March 2015; and basic customs duty on some watersoluble fertilizers and liquid fertilizers other than urea reduced from 7.5 percent to 5 per cent and from 5 per cent to 2.5 percent.

Concessional import duty available for installation of mechanized Handling Systems and Pallet Racking Systems in mandis or warehouses extended for horticultural produce.

Basic customs duty on plant and machinery imported for setting up or substantial expansion of iron ore pellet plants or iron ore beneficiation plants reduced from 7.5 percent to 2.5 percent.

Basic customs duty increased on standard gold bars; gold coins of purity exceeding 99.5 percent and platinum from 2 percent to 4 percent and on non-standard gold from 5 percent to 10 percent.

New e-BRC Initiative: A major EDI initiative the e-BRC launched which would herald electronic transmission of foreign exchange realization from the respective banks to the Directorate General of Foreign Trade (DGFT) server on a daily basis. The exporter will not be required to make any request to the bank for issuance of a bank export and realization certificate (BRC).

As per the schedule of Tariff Liberalisation Programme (TLP) under SAFTA (South Asia Free Trade Area), India has brought down its peak tariff rates to 5 percent w.e.f. 1 January 2013.

India - EU Broad Based Trade and Investment Agreement (BTIA): The 15th round was held during 4-7 December 2012 in New Delhi. Chief negotiator level meeting was held on 29-30 January, 2013 in New Delhi.

Union Finance Minister P. Chidambaram on 27 February presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament.

The Twelfth Five Year Plan laid special emphasis on development of the infrastructure sector including energy. The total investment in the infrastructure sector during the Twelfth Five Year Plan, estimated at 56.3 lakh crore Rupees which is nearly double that made during the Eleventh Five Year Plan. Unbundling of infrastructure projects, public private partnerships (PPP), and more transparent regulatory mechanisms have induced private investors to increase their participation in infrastructure sectors.

Their share in infrastructure investment increased from 22 per cent in the Tenth Five Year Plan to 38 per cent in the Eleventh Plan and is expected to be about 48 per cent during the Twelfth Five Year Plan.

Production of coal, cement, petroleum refinery was marginally higher during the 2012-2013 fiscal year as compared to the corresponding period of the 2011-2012 fiscal year while steel and power-sector production was comparatively lower. Fertilizer, crude oil, and natural gas production also declined during the first nine months of 2012-2013 financial year. Among the infrastructure services, growth in freight traffic by railways has been comparatively higher so far, while the civil aviation sector and cargo handled at major ports have witnessed negative growth.

In the road sector the National Highways Authority of India (NHAI) achieved 17.3 percent growth during the 2012-2013 financial year upto November 2012.

Major sector-wise performance of core industries and infrastructure services displayed a mixed yet there continued to be an overall energy deficit of 8.7 percent and peak shortage of 9.0 percent.

The government took several initiatives for rationalizing the energy prices in different sectors. The Integrated Energy Policy has outlined the broad contours of the pricing system for coal. The pricing of coal is done now on gross calorific value (GCV) basis with effect from 31 January 2012, replacing the earlier system of pricing on the basis of useful heat value (UHV) which takes into account the heat trapped in ash content also, besides the heat value of carbon content.

In context with the petroleum products pricing, in January 2013, the government announced the new roadmap providing for a gradual price increase for reducing diesel under-recoveries.

Dedicated Freight Corridor Project: The Eastern and Western Dedicated Freight Corridors (DFC) are a mega rail transport project being undertaken to increase transportation capacity, reduce unit costs of transportation, and improve service quality. A special purpose vehicle, the Dedicated Freight Corridor Corporation of India Limited has been set up to implement the project.

The NHAI Board gave approval for formation of a High Level Expert Settlement Advisory Committee for one-time settlement of old cases pending in courts.

As a new initiative for promoting highway development, the mode of engineering procurement and construction (EPC) contracts were brought in.

In order to remove the bottlenecks and ensure seamless movement of traffic and collection of toll as per the notified rates, the government decided to introduce passive radio frequency identification (RFID) based on electronic toll collection.

The Government approved National Telecom Policy (NTP) 2012, which addresses the vision, strategic direction, and the various medium- and long-term issues related to the telecom sector, on 31 May 2012. NTP-2012 is aimed at maximizing public good by making affordable, reliable, and secure telecommunication and broadband services available across the country.

By end December 2012 there were over 900 PPP projects (Pubic-Private Partnership projects) in the infrastructure sector with total project cost (TPC) of 543045 crore Rupees as compared to over 600 projects with TPC of 333083 crore Rupees on 31 March 2010.

The government in September 2012 approved the scheme for Financial Restructuring of State Distribution Companies (Discoms).

MOU signed for Setting up of Memu Coaches Manufacturing Facility at Bhilwara

Memorandum of Understanding (MoU) was signed on 25 February 2013 between Indian Railways and Bharat Heavy Electricals Ltd (BHEL) for setting up of Greenfield MEMU coaches manufacturing facility by BHEL at Bhilwara in Rajasthan.

Main Line Electric Multiple Unit Trains, popularly known as MEMU trains were first introduced in Indian Railways in the Year 1994-95, as a mode of rapid transit system, to cater to non-suburban passengers, residing in small towns and villages surrounding urban and industrial centres. MEMU trains have higher passenger carrying capacity and higher average speed as compared to conventional loco hauled passenger trains due to faster acceleration and braking characteristics. These rakes are now being manufactured with toilet facilities to take care of passenger needs.

MEMU trains increase the line capacity utilisation, and therefore are more suitable for running on high traffic density routes.

These MEMU trains have gained rapid popularity over the years. Currently, there are about 160 MEMU services running. There are demands coming from all over the country for running more and more MEMU trains. The demand for these coaches will further increase as Indian Railways have plans to Electrify approximately 15000 route kilometre during the next 10 years, in addition to the existing 22000 route kilometre of electrified track. There was a shortfall in acquisition of 800 MEMU coaches during XIth Plan Period due to capacity constraints at Rail Coach Factory, Kapurthala, where these MEMU coaches are produced. Overall it is expected that the requirement of MEMU coaches will grow to nearly 9000 coaches during the next 10 year period. Setting up of factory for conventional MEMU coaches will go a long way in meeting this demand.

Bharat Heavy Electricals Limited (BHEL) is a Maharatna Central Public Sector Unit (CPSU) company, which is a partner of Indian Railways for a period spanning more than 40 years. It has been manufacturing and supplying electric rolling stock including EMUs and MEMUs; as well as sub-assembly and equipment for rolling stock being manufactured at IR’s own production units.

The proposed facility for production of MEMU coaches will be set up by Bharat Heavy Electricals Limited (BHEL) at Bhilwara in the State of Rajasthan. The entire cost will be borne by BHEL. Government of Rajasthan will provide land to Railways, for setting up the project. In order to make the project viable, Ministry of Railways will give Assured Off- Take orders to BHEL.

Indian Financial Regulators signed pact to Monitor Conglomerates

The country's top four financial regulators on 8 March 2013 signed an agreement among each other for co-operation on consolidated supervision and monitoring of financial groups identified as financial conglomerates- large banks and other key players.

The decisivenesses were taken at a sub-committee meeting of the Financial Stability and Development Council (FSDC) held in the Reserve Bank.

The regulators who signed the pact were the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority.

The FSDC(Financial Stability and Development Council) meeting, chaired by RBI Governor D Subbarao also approved formulating a national strategy for financial education by incorporating the feedback received from public consultations and from a global peer review, RBI said without providing details.

RBI had on 22 February 2013 released rules on allowing companies to start banks in India and such coordination among regulators is needed for effective supervision.

Union Government to launch 10 Rupees Plastic Notes in 5 Cities

The Union Government and RBI on 12 March 2013 decided to introduce one billion pieces of 10 Rupees bank notes made of plastic on a field trial basis in five cities.

A 10 Rupees note in polymer/plastic on a field trial basis will be introduced first; Minister of State for Finance Namo Narain Meena said it in a written reply to the Rajya Sabha.

The field trail is supposed to be conducted in five cities of Kochi, Mysore, Jaipur, Bhubhaneswar and Shimla with varied geographical locations and climatic conditions.

As per the RBI, the primary objective of introduction of polymer notes is to increase its life, it could also help in combating counterfeiting.

Various agencies such as the RBI, Ministry of Finance, Ministry of Home Affairs, Security and Intelligence Agencies of the Centre and States, Central Bureau of Investigation are already working in tandem to thwart the illegal activities related to Fake Indian Currency Notes (FICN).

The work of these agencies is periodically reviewed by a nodal group set up for this purpose.

World Bank estimated a growth of over 6 percent for the Indian Economy during 2013-14

The World Bank in the month of March 2013 forecasted that the Indian economy is estimated to grow over 6 per cent during 2013-14.

World Bank Chief Jim Young Kim, who is on a three-day visit to India asserted that India is estimated to have grown 5 percent in the current fiscal and the growth rate is likely to improve to 6.1-6.7 percent in 2013-14.

The Indian economy, like any other economy, is subject to global slowdown. It has effect here and at the same time, the export market has started doing better.

On the positive node, it also had be seen that share of India in global economy almost doubled in five years between 2005 and 2010.

Kim is on his first visit to India after taking over as President of World Bank Group in July 2012.

Coal India signed Fuel Supply Pacts with 56 Power Plants

The Union government on 12 March 2013 informed that state-run Coal India Ltd. (CIL) signed fuel supply pacts with 56 power plants so far.

Minister of state for coal, Pratik Prakashbapu Patil in his written reply to Lok Sabha mentioned that, Coal India Ltd has signed 56 fuel supply agreements (FSAs) with the power plants as on 2 March 2013.

It is important to note that the deadline set by the Prime Minister’s Office (PMO) for signing of FSAs between CIL and power producers expired in January 2013.

Chief vigilance officer replying to a question regarding CIL’s highlighted irregularities in awarding of FSAs. CIL observed certain inadequacies in the documents of 11 cases, during verification of the documents in respect of milestone achievement of LoAs (letter of assurance). It was also affirmed by the minister that appropriate action would be taken in this regard by CIL’s subsidiaries to ensure that all due procedures are observed.

Minister of state for coal stated that there is a proposal to engage an independent third party sampling agency by CIL for consumers having FSAs.

Union Government granted an aid of 41 Crore Rupees to protect Pashmina Goats

The Union Government on 12 March 2013 decided to provide a financial assistance of 41.21 crore rupees to protect Pashmina goat which produces world-famous fine luxury fibre.

The idea of providing assistance came in light of concern over the recent deaths of thousands of Pashmina goats in the Ladakh region.

As per the assistance, there is plan which ideates a new Pashmina Wool Development Scheme with a special package and a financial allocation of 41.21 crore rupees.

Main Components of the Scheme

• It includes assistance for foundation stock in new areas for Pashmina rearing activities.• Inclusion of Health coverage and feed supplement.• Strengthening of existing fodder bank and pashmina goat breeding farm. • It will also include establishment of multipurpose extension centre and pasture farm on migratory routes.• Development of Breeder orientation training camp for research and development.

HPCL and Government of Rajasthan Signed a MoU for Setting up Refinery

Hindustan Petroleum Corporation Limited (HPCL) and the Government of Rajasthan on 14 March 2013 signed a Memorandum of Understanding (MOU) at Jaipur for setting up a refinery-cum-petrochemical complex in Barmer, Rajasthan. The project will be a joint venture between HPCL and Rajasthan State Refinery Limited, apart from other equity partners.

The MoU was signed by Subhash Pant, Secretary Mines and Petroleum, Government of Rajasthan and K.Murli, Director (Refineries) of HPCL.

About the refinery-cum-petrochemical complex project in Barmer, Rajasthan

• The refinery-cum-petrochemical complex in Barmer will be set up at an estimated capital investment of 37230 crore Rupees. • The project will be completed in 4 years time duration. • 9 MMTPA refinery-cum—petrochemicals will be a state-of-the-art complex and will bring benefit to the state of Rajasthan and its people.• The purpose of the refinery will be to process the locally available crude apart from other crudes. • The refinery-cum-petrochemical complex is designed for production of motor fuels with latest environmental specifications as well as wide range of petrochemicals. • The proposed complex will be the first of its kind to be specifically designed to produce petrochemicals from the indigenous crude oil.

RBI Cuts Repo Rate by 25 Base Points while keeping CRR Unchanged

The Reserve Bank of India (RBI) on 19 March 2013 cut the repo rate by 25 basis points to 7.5 per cent from 7.75 percent in its mid-quarter review of the monetary policy.

The change of the Repo rate is aimed to prompt growth and revive investment.

Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent from the earlier

6.75 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 8.5 per cent with immediate effect. The Cash Reserve Ratio (CRR) has been retained at 4 per cent.

It is for the second time since the start of the year RBI has cut down the repo rate in a bid to help revive flagging growth in Asia's third-largest economy. RBI has also warned that its scope for further policy easing is limited.

The RBI will continue to actively manage liquidity through various instruments, including open market operations, so as to ensure adequate flow of credit to productive sectors of the economy.

With the change in Repo rate, the Reserve Bank of India also announced infusion of 10000 crore rupees into the financial system by purchasing government securities as part of its liquidity injection measure.

The Indian economy expanded at a 25-quarter low of 4.5% in October-December 2012 quarter, and the 2.4% rise in industrial production in January 2013 after two months of contraction suggests the recovery is still weak.The current account deficit hit a record-high 5.4 per cent in the September quarter and is expected to end the 2012/13 fiscal year at its highest level ever.

What is Repo Rate?The rate at which the RBI lends money to commercial banks is called repo rate. It is an instrument of monetary policy. Whenever banks have any shortage of funds they can borrow from the RBI. A reduction in the repo rate helps banks get money at a cheaper rate and vice versa.

What is Reverse Repo rate?Reverse Repo rate is the rate at which the RBI borrows money from commercial banks.An increase in reverse repo rate can prompt banks to park more funds with the RBI to earn higher returns on idle cash. It is also a tool which can be used by the RBI to drain excess money out of the banking system.

What is cash Reserve Ratio?Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system.

Highlights of the RBI Quarterly Monetary Policy Review:

• Repo rate changed to 7.5 Percent from 7.75 Percent • CRR Remain Unchanged at 4 Percent• Reverse repo rate changed to 6.75 percent from earlier 6.5 Percent• Marginal standing facility (MSF) rate – 8.5 Percent • Bank Rate to 8.5 per cent

Cabinet Committee on Investment (CCI) approves Five Oil, Gas Blocks Operations

The Cabinet Committee on Investment (CCI) on 21 March 2013 cleared Reliance Industries' (RIL) KG-D6 and NEC-25 blocks for oil and gas exploration along with three other areas.

The work on these blocks, which has an investment close to 10.7 billion has dollars, was having difficulties because of inter-ministerial differences, particularly relating to Defence issues.

Eight blocks, including RIL's Krishna Godavari basin KG-D6 block and gas discovery area of NEC-25 in the North East Coast (NEC) region, were declared No-Go zones for reasons relating to defence issues raised by the Indian Navy, and the Indian Air Force.

An approval for eight blocks, was Sought by the Petroleum and Natural Gas Ministry of which one was already renounced by the contractor, Reliance Industries Ltd. Out of the remaining seven, conditional clearance for four blocks – two of Reliance Industries, one each of ONGC consortium and Cairn India – were sought.

The Ministry had also sought CCI approval to declare three blocks as ‘no go’ areas. Two blocks belonged to the ONGC-led consortium and one to the Oil India Ltd-led consortium.

The CCI, headed by Prime Minister Manmohan Singh, was set up to fast-track clearances to infrastructure projects involving investments of over 1000 crore rupees.

Commercial Production of Aishwarya Oil Field in Rajasthan Started

Commercial production of Aishwarya Oil Field at Barmer in Rajasthan has started on 23 March 2013. The commercial production of natural gas will take place from the Rageshwari Well of Barmer region. It’s expected that every day production of the oil field shall be 25000 barrels of Crude Oil and 50000 lakh cubic feet of natural gas. The gas field was dedicated to the nation by Petroleum Minister Veerappa Moily and Chief Minister of Rajasthan Ashok Gehlot.

After the operations of the Barmer Oil field will reduce the import bills of the country for petroleum that is about 6.5 lakh crore rupees at present. Creation of a national gas grid is in plans of the government for better distribution of natural gas.

Growth-Oriented MoU Signed Between SPMCIL and Department of Economic Affairs

Security Printing and Minting Corporation of India Limited (SPMCIL) signed the Memorandum of Understanding (MoU) with the Department of Economic Affairs (DEA), Ministry of Finance on 25 March 2013. This is the growth-oriented MoU which sets the ambitious Sales target of 3407 crore Rupees as well as the Gross Operating Margin target of 511 crore Rupees for 2013-14 fiscal year. Key features of the MoU

• The MoU was exchanged between Additional Secretary, Department of Economic Affairs, Ministry of Finance and CMD, SPMCIL. • The MoU was signed based on the targets as well as parameters negotiated by a Department of Public Enterprises (DPE). • The MoU focuses on growth charter in the globally competitive environment. It incorporates different parameters for evaluation of the performance. • As per the signed MoU, SPMCIL committed for increasing its manpower efficiency for producing Security Paper, Bank Notes as well as coins. • Also, SPMCIL will be committed towards modernisation of the plant and machinery as well as indigenisation of the security products.• According to the MoU, SPMCIL committed to facilitate training to the employees on parameters such as risk management, leadership development, SAP handholding, new/advanced technology and preventive maintenance.

About SPMCIL

• SPMCIL is the Miniratna Category-I CPSE Company of the Government of India. • The main purpose of the company is minting of coins, printing of passport, travel documents, Bank Notes, non-judicial stamp papers as well as postal stationary. • SPMCIL has four Mints, four Presses as well as one Paper Mill in order to meet the coins and currency notes requirements of RBI. • SPMCIL also meets the requirements of the State Governments for Non-Judicial Stamp Papers, apart from fulfilling the requirements of Postal Departments for postal stationery and stamps. • Ministry of External Affairs also meets its requirements of passports, visa stickers and other travel documents through SPMCIL.

India’s International Financial Liabilities increased by 10.5 billion DollarIndia’s international financial liabilities increased by 10.5 billion Dollars to 723.9 billion Dollars as at end- of December 2012 as per the India’s International Investment Position (IIP) Report Published by RBI in March 2013.

In the October-December 2012 period, international financial assets of Indian citizens remained unchanged at 441.9 billion Dollars.

Net claims of non-residents on India (as reflected by the Net IIP, i.e. International financial assets abroad less International financial liabilities) increased by 10.4 billion US dollars over the previous quarter to 282.0 billion US Dollar as at end-December 2012, mainly on account of 10.5 billion US Dollar increase in liabilities The changes in IIP also reflect the valuation changes emanating from exchange rate movements.

Due to rupee depreciation during end-September 2012 to end-December 2012 equity liabilities in US Dollars  term revised downwards by US Dollars 13.2 billion (8.4 billion US Dollars  in direct investment and 4.8 billion US Dollars  in portfolio investment).

The ratio of India’s international financial assets to international financial liabilities decreased to 61.0 per cent in December 2012 (61.9 per cent in September 2012).

What is International investment position (IIP)?

International investment position is a statistical statement that shows the value and the composition of financial assets of residents of an economy and liabilities of residents of an economy to non-residents.

Such balance sheet analysis of international accounts helps in understanding sustainability and vulnerability of the economy.

The changes in international investment position of a country also reflect the valuation changes emanating from exchange rate movements.

IRDA Introduced Credit Rating Norm for Selecting Foreign Reinsurers The Insurance Regulatory and Development Authority (IRDA) in the month of March 2013 have made the norms stricter for reinsurers. As per IRDA (General Insurance – Reinsurance) Regulations 2013, the tough norms have been put in place for selecting reinsurers outside India.

It is Evident that in the reinsurance trade, multiple insurance companies share the risk by purchasing insurance policies from other insurers to limit the total loss the original insurer would face in the case of a disaster.

So, As per the new IRDA norms, insurers is supposed to place their reinsurance business outside India with only those insurers who have a credit rating of at least BBB with Standard & Poor’s, or an equivalent rating by any other international agency for the past five years.

The past claims performance of the reinsurers should also be considered while accepting their participation in the reinsurance programme.

The IRDA also asserted that the domestic pool for reinsurance surpluses in fire, marine hull and other classes should be organised in consultation with all insurers on fair ground for retention of business with India in prescribed ratios. According to the regulator, the Prime objectives of reinsurance programme, is to maximise retention (the portion of risk which an insurer assumes for its own account). The net preservation of non-life insurers increased to 91.84 per cent in 2011-12 from 88.24 per cent in the preceding year.

Core Sector Growth Slumped by 2.5 Percent in February 2013The production of eight core sector industries decreased by 2.5 percent in the month of February 2013, for the first time in 2012-13 financial year. This happened because of a decrease in the output of natural gas.

The biggest decline happened in the natural gas sector with more than 20 percent in February. This was followed by coal (-8 percent), electricity generation (-4.1 percent) and crude oil (-4 percent). The overall output growth of the core sector industries was witnessed at 7.7 percent in February 2012.

Negative performance in February 2013 diminished cumulative growth in 11 months of 2012-13 FY ending February to 2.6 percent in comparison to 5.2 percent during same period in 2011-12 FY. Eight core industries include electricity, cement, crude oil, finished steel, petroleum refinery products, fertiliser, coal and electricity. These industries have weight of 37.9 percent in Index of Industrial Production (IIP).

During February 2013, fertiliser output decreased by 4 percent in comparison to 4.1 percent growth in February 2012. Cement output increased by 3.9 percent in comparison to 9.8 percent in February 2012. Petroleum refinery output increased by 4.3 percent in comparison to 6 percent in February 2012. Steel production increased by 0.5 percent in comparison to 8.7 percent in February 2012. In January 2013, these core industries increased by 3.1 percent.

CCEA approved Special Infrastructure Scheme in LWE affected StatesThe Cabinet Committee on Economic Affairs(CCEA) on 2 April 2013 approved the proposal of the Ministry of Home Affairs for continuation of the Scheme for Special Infrastructure (SIS) in Left Wing Extremism (LWE) affected states during the 12th Plan period. The proposal includes an added objective of upgradation and critical gap filling of training infrastructure, residential infrastructure, weaponry, vehicles and any other related items pertaining to Special Forces of LWE affected states. The total cost would be 373 crore rupees comprising 280 crore rupees as central government share and 93 crore rupees as state government share on a 75 (central): 25 (state) funding pattern.The scheme will enhance the security in the region which would provide an enabling environment for development.

The scheme was being implemented from the year 2008-09 with the broad objective to adequately provide for critical infrastructure requirements that are critical to the policing and security needs in the field, but are not adequately or otherwise provided for in any other scheme. During the 11th Plan period 100 percent funding was provided by the Central Government to the 9 LWE affected states for implementing various projects under the scheme. The total funds were released under the scheme by the central government to the 9 LWE affected states during the 11th Plan period is 445.82 crore rupees.

CCEA approved Four Laning of Jorhat to Demow section of NH-37 in Assam The Cabinet Committee on Economic Affairs gave its approval for the four laning of the Jorhat-Demow section of National Highway-37 in the state of Assam under the Special Accelerated Road Development Programme in North Eastern Region (SARDP-NE) Phase ‘A’ on Design, Build, Finance, Operate and Transfer (DBFOT) basis in Build-Operate-Transfer (BOT) (Annuity) mode of delivery. The cost is estimated to be 874.69 crore rupees excluding land acquisition and other pre-construction activities. The total length of road will be 80 kilometres approximately.

The project will expedite the improvement of infrastructure in the state of Assam and also reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Guwahati to Dibrugarh and Nagaon to Dibrugarh. It will also increase employment potential for local labourers for project activities. The project is covered in the districts of Golaghat, Jorhat, Sivsagar and Dibrugarh and passes through the towns of Numaligarh, Dergaon, Jorhat, Jhanji, Gorisagar, Sivsagar, Demow, Sapan, Maran and Dibrugarh.

Cabinet Committee on Economic Affairs approved de-control of SugarThe Cabinet Committee on Economic Affairs (CCEA) on 4 April 2013 decided to de-control sugar and did away the levy on sugar mills and regulated release mechanism. This de-control will raise the subsidy burden to 5300 crore rupees from previous 2700 crore rupees.

De-control on sugar will not have an impact on the sugar made available in the Public Distribution System.

The de-control of sugar will abolish the rule for sugar mills that makes it mandatory for sugar millers to sell sugar to the Government at a discounted price as well as the limitation on the amount they choose to sell in the open market .