Moody's also cheers govt reform moves

The economic, fiscal and financial measures undertaken by the government and the Reserve Bank of India (RBI), if successfully implemented, are expected to sustain higher growth and tackle constraints on India's sovereign rating, global ratings agency Moody's has said. The agency said the measures unveiled are incremental, rather than radical.“However, together, the various measures will harness India's economic advantages of size, diversity and a deep pool of labour and savings,“ Moody's said in its latest report. “They will also improve its investment climate and allow the economy to reap the benefits of lower global commodity prices and international financial flows seeking real investment assets.“
Moody's has a Baa3 rating on India with a stable outlook. This is the lowest investment grade rating. Government officials say the rating agencies must acknowledge the efforts undertaken by the them to shore up governance and revive growth. The agency cited the recent measures, which include labour and investment policies, the “Make in India“ campaign, infrastructure development initiatives, improvements to the monetary policy framework offering clarity on inflation targets, banking sector reforms and the Jan Dhan financial inclusion plan, energy sector reforms and the ordinance that will allow commercial mining of coal by private companies.
But the agency cautioned it will take several quarters before the impact of these measures are visible in GDP growth and other macroeconomic parameters.
The NDA government has taken steps to boost growth, which has slowed below 5% for two consecutive years. It has been helped by slowing oil and other commodity prices.This has contributed to a significant cooling in inflation but economists say more is needed to steer the economy out of the choppy waters.
“Furthermore, by mitigating the risk of the macroeconomic volatility witnessed during the last business cycle, lower fiscal deficits, stable inflation rates and a strengthened banking sector will allow higher growth level to be sustained at around 7.5% over the next 5-10 years. Such a result would be significantly higher than the 5%-6% growth we expect for India in 2015,“ the agency said.
It said the effective implementation of all the measures could have further positive sovereign credit implications. “If they demonstrate rising institutional strength or lower vulnerability to even risk, Moody's would revisit its assessment of India's institutional strength if inflation metrics, investment climate, policy predictability and transparency show sustained improvement. Stronger fiscal balance of payments, and banking sector metrics would lower the country's vulnerability to event risk.“


In what will come as a big relief to commuters on national highways (NHs) the government announced it will bring all 350 toll plazas on the national highways under electronic toll collection (ETC) mechanism by the year-end and also scrap tolling in 45 small stretches — mostly structures such as bridges — next year. Road transport minister Nitin Gadkari on Friday kicked off the RFID-based smart tags Fastags for cashless transaction at toll plazas. Vehicles fitted with the interoperable tags don’t need to wait in queue at plazas.
Though the technology was first launched in April 2012 on the 10-km Himalayan Expressway, Gadkari inaugurated the ETC on the Delhi-Mumbai stretch of NH-8 on Friday. This is the longest stretch where ETC is being implemented in a big scale. Gadkari said his ministry has already cancelled toll collection on 27 small stretches. Sources said that government has already recovered the cost of these projects and the present toll collection is even less than the administrative expenses.
Earlier, Gadkari claimed that once all toll plazas come under the ETC mechanism the waiting time will get reduced drastically and this is expected to save Rs.60,000 crore in fuel bills.
Fastag will not only help the government plug revenue leakages from toll collection, it will also help track vehicles in case of criminal incidences. Moreover, the real-time data on traffic movement on highways will help the government in preparing road development plans.
Officials said customers can get Fastags recharged online and can also get instant alerts about usage and balance amount.

Rafale deal update

The geopolitical wrangling and heartburn over India’s mother of all defence deals, the lucrative $20 billion MMRCA (medium multi-role combat aircraft) project, is still not over. First, it was the Americans, then the Europeans and now, the Russians.
Even as India and France inch forward to stitch up the contract for acquisition of 126 Rafale fighters for the IAF, Russian ambassador Alexander Kadakin last week publicly questioned New Delhi’s decision to go in for the French jets. The Rafales can be “swatted like mosquitoes on an August night” by the Russian-origin Sukhoi-27s, now being inducted by China, said Kadakin.
On Wednesday, French ambassador Francois Richier criticized “grumpy competitors”, who had lost out in the MMRCA competition after extensive technical and commercial evaluation, for using “bad language” against Rafale’s combat capabilities.
The jet’s “long-range strike capabilities” stand out from other jets. With the MMRCA contract still to be inked after almost three years of final commercial negotiations between French major Dassault Aviation and the Indian defence establishment, rival fighters still harbor some hopes of flying back into the competition.
There can be “no comebacks” in the ongoing MMRCA project as per the Indian defence procurement policy rules. India can either ink the deal for the Rafales or scrap the entire MMRCA selection process undertaken over the last 7-8 years.
France hopes the final MMRCA negotiations will be concluded by early next year. 

World's smallest kittens spotted in Rajasthan

Two kittens belonging to the Rusty-spotted cat family, one of the smallest of the species, were recently spotted at a soyabean field near Arnod town in Pratapgarh district.
The villagers who discovered the kittens alerted the forest department as they were confused how `panther cubs' could be too small. The officials who were ecstatic to spot the kittens, confirmed they belong to one of smallest variety of cats. The Rusty-spotted cat is found only in India and Sri Lanka and it has been listed as “vulnerable“ by International Union for Conservation of Nature in 2002.

Families of anti-Sikh riot victims to get Rs.5 lakh each

The government has decided to give Rs.5 lakh each to the next of kin of 3,325 victims of the 1984 anti-Sikh riots triggered by the assassination of then Prime Minister Indira Gandhi.
The compensation to families of anti-Sikh riot victims will be given in addition to what they have so far received from the government and other agencies from time to time, sources said. The home ministry's decision comes on the eve of the 30th anniversary of the mass killings of Sikhs in retaliation against the assassination of Indira Gandhi, and is sure to be seen as the Modi government's outreach to the community ahead of November 25 assembly bypolls in Delhi.
Of the 3,325 victims, 2,733 were killed in Delhi alone while the rest were from Uttar Pradesh, Haryana, Madhya Pradesh, Maharashtra and other states. Sources claimed that home minister Rajnath Singh took the decision early last week just before the announcement of bypoll dates by Election Commission when the model code of conduct kicked in.
The code of conduct, which forbids regimes from offering inducements to the electorate after the announcement of polls, is also the reason why government has refrained from announcing the measure.
The Modi government had received several petitions from various Sikh organizations in the past three months. The fresh compensation, which will cost the exchequer Rs.166 crore, will be disbursed “as early as possible“ and hopefully in the next few weeks, an official said.


Mumbai's Eastern Waterfront

Mumbai could get another 1,000 acres of land, including a seafront, once the Mumbai Port Trust lands are opened up, according to a draft report by the land development committee (LDC). The report for the first time estimates how much space could be freed up.
The LDC’s report makes clear how much of the total 1,800 acres occupied by the port would be available. Of this, around 100 acres are available immediately, but in fragments. The rest, sources said, will have to be freed up using various tools. The committee has said freeing up the 1,000 acres will not be very difficult.
According to sources, the committee was able to provide the figure, after considering scenarios such as scrapping existing tenancies, demolishing defunct godowns and shutting down port operations, among others. However, the draft report also makes clear the onus is on MbPT and the shipping ministry to take policy decisions to free up the land. “For instance, decisions on existing tenancies, as well as on how to rehabilitate slums on port land, will dictate how much land is freed up,” said a source from the committee. 

SC gets black money list

The government submitted a list of 627 Indians holding accounts in HSBC Bank, Geneva, to the Supreme Court, which directed its special investigating team (SIT) to examine them and take appropriate action.
Handing over a sealed envelope, attorney general Mukul Rohatgi said it contained three documents — the government’s correspondence with the French government, the list of names and a status report.
A special bench headed by Chief Justice of India HL Dattu refused to open the envelope, saying it would be done by the SIT chairman and vice-chairman. “We don’t want to open these papers and embarrass anyone. That has never been our intention,” it said.
Scheduling the next hearing for December 3, it asked the SIT to submit a status report by November 30 after ascertaining who had black money accounts abroad.
The Centre had on Monday disclosed eight names in an affidavit — including those of Dabur India promoter Pradip Burman, a bullion trader and the directors of a Goa mining company, all facing prosecution. Earlier, it had revealed 18 other names.
On Tuesday, the top court directed the government to submit the full list after the latter said it wasn’t possible to make the names of all foreign bank account holders public as all of them may not be guilty of tax evasion. Rejecting the Centre’s submission that such action would breach the privacy of legal account holders, the CJI said, “If it breaches confidentiality, let it be so.”
But on Wednesday, when Rohatgi asked him to open the sealed envelope, he refused to do so.
It was also not clear why the court insisted on getting the list from the government when the latter had submitted it to the court-appointed SIT in June.
Rohatgi told the court the details of account holders were for the year 2006. The data, stolen from HSBC in Geneva, were supplied to France, which passed it on to India in 2011. He said half the account holders were Indian residents who could be prosecuted under income tax laws and the rest were NRIs. Several have admitted to holding foreign accounts but maintain they have paid taxes, he added.
Rohatgi also told the court that most transactions had taken place during 1999 and 2000 and under law, the last date for completion and assessment of all cases was March 31, 2015. Under the IT Act, prosecution for tax evasion can be initiated up to 16 years after the offence.
According to SIT chairman MB Shah, the report submitted by the government has no new details, and the list was the same as the one given to it earlier this year. “We have to question the people named in it,” he told a TV channel.
“The probe is difficult. There is no eyewash. The report will take time. We have already filed the first report in August. I’m hopeful that we should be able to file the final report by next year,” he added.
The Centre, meanwhile, was allowed by the court to raise its objections against making all the names public before the SIT. 

Mopa Airport snippets

Global infrastructure companies such as Germany's Hochtief Aktiengesellschaft, French firm Vinci Construction, South Korea's Incheon International Airport and Malaysia Airport Holdings have expressed initial interest in the upcoming Rs.3,000-crore airport in Mopa, Goa. The port city's local government floated an initial invitation or a “request for qualification“ on October 3. “The mails have come responding to the RFQ. Other companies which have shown interest include Spain's Ferrovial, apart from Indian infrastructure majors such as the GMR Group, the GVK Group and the Essel Group,“ said a person close to the development who didn't want to be named. A pre-bid meeting will be held in Goa on November 3 and the last date for receiving applications is December 12. None of the companies responded to an emailed query before the story went to print.
Hochtief 's fully-owned AviAlliance specialises in airport construction and owns stakes in the Athens International Airport, the Budapest Ferenc Liszt International Airport, as well as those in Dusseldorf and Hamburg. Vinci Airports operates 23 airports -10 in Portugal, 10 in France and three in Cambodia. Most of them are in the form of public private partnership. Incheon operates one of the busiest, fastest and most efficient airports in the world. Malaysia Airports is GMR's partner at its airports in Delhi and Hyderabad. An airport in Goa can be highly lucrative, thanks to its popularity among local and international tourists as a holiday destination.Goa's current airport at Dabolim caters to both civil and defence aviation. The proposal for a new airport at Goa has been pending for almost a decade and half.
The government had in March 2000 given the in-principal approval for this airport and at the time had recommended closure of the existing airport once operations at the new airport started. In June 2010, the government reviewed its decision and said operations at both airports would continue. The airport's location has been cause for debate with airlines and local businessmen complaining this would take the location away from north Goa, which is the heart of all trade in the city . Mopa is located in southern Goa.
The local businessmen had raised the issue with Narendra Modi when he was campaigning before the recently held general elections Goa's new airport will be built in four phases, with the first phase costing a total of Rs.1,500 crore. The airport will cater to 4.4 million passengers in the first phase and 13.1 million by the end of the fourth phase. The RFQ didn't specify a date on the start of commercial operations.

Of FDI in Construction....

The government eased overseas investment rules in construction to attract money into the funds-starved sector and serve its twin objectives of faster job creation and housing for all.
The Union Cabinet has approved a comprehensive proposal by the Department of Industrial Policy & Promotion (DIPP), dropping the minimum 10-hectare rule for serviced housing plots and slashing the minimum floor area for constructiond evelopment projects to 20,000 sq m from 50,000 sq m to be eligible for overseas investment.
It also halved the minimum foreign direct investment (FDI) amount to $5 million from $10 million and substantially eased the exit norms, raising an across-the-board cheer from an industry that now hopes for bigger foreign fund flows into a sector that desperately needs money . “The government is bang on (target). We are very glad about the trunk infrastructure completion part as it will bring in asset-based FDI. This will ensure that the project developers who have taken FDI are not left with more debt,” said Rajeev Talwar, executive director of DLF, India’s biggest listed developer. Trunk infrastructure refers to essential amenities such as roads, water supply, street lighting, drainage and sewerage. The new rules will also give a boost to the 100 smart cities being planned by the government.
Home buyers will also cheer the relaxation as fresh inflows raise the possibility of projects that are stuck getting completed and cheaper housing becoming available going ahead. Most housing projects are running one to two years or even more behind schedule because of the slowdown and the shortage of funds on account of elevated debt levels.
The norms will come into force after DIPP issues a notification.
The government has promised housing for all by 2022 and toward that end provided an incentive for affordable housing in the revamped policy. The sectoral condition of minimum area and capital will not apply if the developer sets aside 30% of the project for affordable housing, defined as dwelling units of less than 60 sq m. Singh said finding 10 hectares of land in tier-I and tier-II cities was difficult, so scrapping this rule will encourage investors to bring in money.
In its July budget, the new government had said it would relax foreign investment rules for the sector.
The government is also looking to boost construction of hotels, tourist resorts, hospitals, special economic zones (SEZs), educational institutions, old-age homes and investments by non-resident Indians (NRIs), giving free access in these segments. “These measures are expected to result in enhanced inflows into the construction development sector consequent to easing of sectoral conditions and clarification of terms used in the policy,” the government said in a statement.
The sector attracted $1.2 billion in FDI in 2013-14, down 8% from 2012-13.
The most significant incentive to foreign investment is the easier exit compared with the lock-in of three years after the completion of minimum capitalization of $10 million in the existing policy.
Under the new rules, investors will have to bring $5 million within six months of commencement of projects and the balance over 10 years or before the completion of project, whichever is earlier.
The investor can exit on completion of the project or three years after the final investment, subject to the development of trunk infrastructure. FDI can be repatriated or transferred before the completion of the project if approved by the Foreign Investment Promotion Board.

Lucknow - Agra Expressway

Three years from now, you will be able to travel between Lucknow and Agra in three hours. On November 22, UP chief minister Akhilesh Yadav will lay the foundation stone of India’s longest expressway between the two cities. The 302-km greenfield expressway will be nearly twice as long as the Yamuna Expressway (165 km) between Agra and Greater Noida. It is expected to cut the current six hour travel time between Lucknow and Agra by half. So in 2017, if one adds the two eways, it would become possible to cover the distance between Delhi and Lucknow via Agra in six to seven hours.
On Wednesday, the UP government signed an MoU with five developers for the project.
A 36-month deadline has been set for the completion of the expressway.
After the CG City, the Lucknow Metro and the Janeshwar Mishra Park, the construction of the expressway is another of Yadav’s big ticket projects. Each kilometre of the expressway will cost about Rs.30 crore. The total cost of the project, including the compensation paid to farmers after land acquisiton, will be around Rs.15,000 crore.The expressway will pass through Lucknow, Unnao, Kannauj, Mainpuri, Firozabad, Etawah and Kanpur.
Uttar Pradesh Expressway Industrial Authority (UPEIDA) CEO Navneet Shegal said apart from reducing the travel time between Agra and Lucknow to about three hours, the country's longest expressway would also give a huge boost to economic activities since farmers would be able to take their produce to Agra and Delhi to get better prices.
He said the expressway would be designed to facilitate farmers and milk producers. Five farm `mandis' would also be developed by the government along the expressway and the entire expenditure would be realized through toll tax.
Chief secretary Alok Ranjan said the government was confident of completing the project within the 36 month deadline. While the government has announced a 0.4% incentive for the developers if the project is completed before the stipulated period, the latter would have to cough out 0.5% of the project cost in case of a delay. Of the 3,100 hectares of land that has to be acquired for the project, UPEIDA has already secured 2,300 hectares.
The expressway project has been divided into five phases and each phase has been given to a different construction company . Construction work for the first phase (Agra to Firozabad, 56.134 km) has been granted to PNC Infra Tech, for the second (Firozabad to Etawah, 62 km) to Apcon Infrastructure, for the third (Etawah to Kannauj, 57 km) to NCC, for the fourth (Kannauj to Unnao, 64 km) to Apcon Infrastructure and for the fifth (Unnao to Lucknow, 63 km) to L&T.

India tops consumer index

India continues to be on top of the global consumer confidence index but, given the slowdown in discretionary spends, it has dipped by two points in the third quarter (Q3) of 2014, according to a Nielsen survey. India scored an index of 126 in Q3, followed closely by Indonesia (index of 125) in the second position and Philippines (115) in the third. In the online survey, which was conducted between August 13 and September 5, this year, over four in five (82%) urban Indian respondents indicated the highest levels of optimism globally on job prospects in the next 12 months, followed by Indonesia (80%) and China (74%).
Among the world’s biggest economies, consumer confidence increased four points in the US (108), one point in Germany (97), three points in the UK (93) and four points in Japan (77), from the second quarter. Meanwhile, consumer confidence in China held steady at 111 for the fourth consecutive quarter.
The latest results reflect an outlook of cautious optimism, as every region’s consumer confidence score improved compared to the previous quarter.
Specifically on discretionary spending and savings in India in Q3 of 2014, the survey stated that nearly three in five (59%) online respondents polled believe this to be a good time to buy things they want and need, which is a drop of 1% from last quarter (60%).

Cyclone Nilofar weakens

Cyclone Nilofar further has weakened and is expected to cross the Gujarat coast near Naliya between Friday night and early hours of Saturday as a marginal cyclonic storm that will pack winds gusting at 60-70 kmph. “Light to moderate rains will occur in Kutch and Saurashtra on Thursday while heavy and very heavy rains will occur at isolated places in this region on Saturday and Sunday ,“ said additional director of India Meteorological Department, Ahmeda bad, Manorama Mohanty .
Meanwhile, about 100 families living close to the coast in Jafrabad, Amreli district, were shifted to safer locations. Around 15,000 salt pan workers have left the Little Rann of Kutch. Large scale evacuation of people in Kutch is expected to start by Thursday .
State relief commissioner DN Pandey told media persons in Gandhinagar that the cyclone can still have considerable impact in coastal areas. All educational institutes have been asked to keep two days' holiday .
Twelve teams of the National Disaster Response Force have been deployed at vulnerable locations. For the first time, the state has sought help from ISRO for close monitoring of areas near Naliya and Dayapar

Black Money : BofA study snippets

The government can add $30-35 billion to country's foreign exchange reserves if the effort to unearth “black money“ from abroad is successful, a report by Bank of America Merrill Lynch has said. It said the estimate was based on an assumption of $200 billion capital flight based on recent research study . “If even half of this is unearthed and taxed at 30-35%, this could add three to four months of current import cover to foreign exchange reserves, over time, when import cover is running low at 8.3 months,“ the report said.
The government on Wednesday handed over 627 names of Indian account holders in HSBC bank, Ge neva in the black money case to the Supreme Court.A political tussle has erupted over the issue, which was a key theme in the general elections in April-May .
The report said it does not expect any immediate impact of the black money issue on the exchange rate front. “On balance we continue to expect it to hold Rs 58-62 to a dollar assuming that the euro-dollar remains around current levels,“ said the report.
There have been various estimates about the size of black money stashed in overseas banks. The UPA government had asked three think tanks to assess the size of the black money but the reports have not been made public.

Ease of Doing Business List

India has dropped two places to stand at 142 out of 189 countries ranked by the World Bank for ease of doing business, underscoring the tough task that lies ahead of the Narendra Modi government, which has said it wants to make India a business friendly country . In the ten metrics used to measure ease of doing business in the bank's 2015 report, which covers the period from June 2013 to May 2014 (when the UPA was in power), India came close to the bottom in two categories. It stood a wretched 184th in the category “Dealing with Construction Permits“, and 186th in “Enforcing Contracts“.
On the bright side, India stood seventh, an improvement of 14 places, when it came to “Protecting Minority Investors“. It is the only category in which India has shown an improvement from 2013, when it was ranked 21 in this category and 140 in the overall ease of do ing business. Ranking in other eight categories are: Starting A Business (158), Getting Electricity (137), Registering Property (121), Getting Credit (36 — down from 30th place), Paying Taxes (156), Trading Across Borders (126), and Resolving Insolvency (137).
Getting construction permits in India involved an average of 25 procedures that took 186 days, and cost 28% of the warehouse value. Enforcing contracts took 46 procedures and 1,420 days — nearly four years. Getting electricity took 106 days and registering a property took 47 days.
Indicators measured in Mumbai, India’s business epicenter, showed that it required 13 procedures to start a business, and it took 30 days to accomplish this, compared to an average of 4.8 procedures and 9.2 days in advanced economies.
The Modi government, which aggressively made ease of doing business part of its agenda and has already initiated some steps, has plenty to chew on in the report that chronicles how enervating it is to start a business in India. For instance, it takes five days to pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation, and five days to request and obtain Certificate to Commence Operations.
All of India’s neighbours except for Bangladesh (173) and Afghanistan (193) were ranked higher. China topped the neighbourhood at 90, followed by Sri Lanka at 99, Nepal at 108, Bhutan at 125 and Pakistan at 128. Singapore stood first overall for the ninth year in succession, and is followed by New Zealand, Hong Kong, Denmark, and South Korea.