Both the countries would contribute USD 500 million to the fund, Sitharaman said while addressing India-Russia Business Forum at the ongoing International Engineering Sourcing Show (IESS).
India and Russia are setting up a USD 1 billion fund to promote mutual investments in infrastructure and technology projects, Commerce and Industry Minister Nirmala Sitharaman has said.
Both the countries would contribute USD 500 million to the fund, Sitharaman said while addressing India-Russia Business Forum at the ongoing International Engineering Sourcing Show (IESS) here yesterday.
While the Russian funds would be channeled through Russian Direct Investment Fund (RDIF), Indian contribution will be accrued from National Investment and Infrastructure Fund.
Sitharaman elaborated upon other measures being taken by Russia and India to scale up their economic engagement and to boost bilateral trade and investment.
As part of these initiatives, the India Russia CEO Forum will hold its meeting this year at a mutually convenient date. The forum was constituted in St Petersburg in June 2016.
Foreign Direct Investment (FDI) from Russia is estimated at USD 1.2 billion till date while Indian investment in Russia is around USD 4.9 billion.
“There is tremendous potential for enhancing such investments,” the minister said, adding that initiatives like Make-in-India would catalyse Russian investment in several Indian sectors including Defence production.
“The Make-in-India initiative was launched by the government in order to encourage businesses to manufacture products in the country, creating additional jobs for local population. This is a major drive to foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure,” she said.
India and Russia are engaged in robust cooperation in the energy sector, including collaborations in civil nuclear energy, hydrocarbons and renewable energy.
IMF in its note titled ‘Global Prospects and Policy Challenges’ said, “Further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans.”
India’s economic growth is expected to pick up once the effects of cash shortages linked to the currency exchange initiative fade, the International Monetary Fund (IMF) has said. Prime Minister Narendra Modi on November 8 had announced scrapping of old Rs 500 and Rs 1000 notes, pulling out 86 per cent of the total currency in circulation.
Noting that India’s fiscal deficit is expected to continue narrowing in the near-term, the IMF in its note titled ‘Global Prospects and Policy Challenges’ said, “Further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans.”
It further observed that in some emerging economies like China and India reducing excessive corporate leverage and improving bank’s balance sheets or adopting more prudent risk-management practices, including to reduce currency and maturity balance sheet mismatches, will help reduce vulnerabilities to global financial conditions, possible capital outflows, and sharp currency movements.
The government last month pegged GDP growth at 7.1 per cent for 2016-17 despite the note ban. The Central Statistics Office (CSO) had put the figure for October-December at 7 per cent, compared to 7.4 per cent in the second quarter and 7.2 per cent in the first.
India’s growth was higher than China’s 6.8 per cent for October-December of 2016. The growth numbers were better than those projected by RBI (6.9 per cent) and international agencies like IMF (6.6 per cent) and OECD (7 per cent) in view of the cash recall. The Organisation for Economic Cooperation and Development (OECD) in February last year had projected the country’s growth at 7.4 per cent for 2016-17. Buoyed by higher-than-expected growth, Finance Minister Arun Jaitley has also said a 7 per cent expansion in the third quarter belies the exaggerated claims of note ban impact on the rural economy.
– Nifty surpasses March 2015 peak, Sensex gains as much as 2.1%. – Bigger-than-expected victory seen as endorsement of reforms
Indian equities rallied to a record and the rupee climbed the most since 2013 after Prime Minister Narendra Modi’s resounding victory in state elections boosted expectations for a continuation of his reform agenda.
The NSE Nifty 50 Index climbed 1.7 percent to 9,087, crossing its March 2015 record close, as the market reopened after a holiday. The India VIX Index, a gauge of expected stock-price swings, touched an all-time low. The rupee surged 1.2 percent to 65.8175 per dollar, the strongest level since November 2015. The central bank was seen buying dollars in early trade to cap gains but moved away later, Mumbai-based traders said.
“This win will give Modi the confidence to push ahead with more reforms and not pursue populist policies,” Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co., said by phone. The insurer, which oversees 480 billion rupees ($7.3 billion) of assets, is bullish on financial-services companies and metal producers, he said.
Modi’s Bharatiya Janata Party won 312 seats in the 403-member assembly of Uttar Pradesh, according to the Election Commission of India, up from 47 in 2012. The results in India’s largest state were seen as a litmus test of Modi’s popularity and reforms, including opening up the country to more foreign investment and seeking to introduce a goods and services tax, ahead of general elections in 2019.
While exit polls released last week suggested a large BJP victory was possible in Uttar Pradesh, the scale of the win was stark in a state that has long been divided along religious and caste lines. It is also a repudiation of political foes who assumed that Modi’s disruptive Nov. 8 move to junk high-value currency notes would be politically unpopular.
“Uttar Pradesh is a state where mandates have tended to be mostly divisive, so the result is a mandate for development, which has been sorely missing in the state,” Gautam Sinha Roy, a fund manager at Mumbai-based Motilal Oswal Asset Management Co., said by phone. “Markets will now start assigning higher probability to a BJP victory in the 2019 polls.”
India’s economic growth has been 7 percent or more in each of the last four quarters, which has helped lure $3.4 billion of foreign funds into local stocks and bonds this year. Mutual funds bought shares for seven months through February, including a record $2.1 billion in November. The S&P BSE Sensex has risen 11 percent in 2017, and the rupee is up 3.2 percent against the dollar.
“We expect the Reserve Bank of India to more actively cap further rupee gains given the sharp swing higher in the real effective exchange rate in recent months,” Divya Devesh, an Asia FX strategist at Standard Chartered Bank in Singapore, said by e-mail. He forecasts the rupee at 69 rupees to the dollar by year-end.
Pricey Valuations
The Nifty came off an intraday high of 9,122.75 as investor focus turned to a near-certain interest rate hike from the Federal Reserve this week and expected revival in corporate profitability. The Nifty and the Sensex are valued at about 21 times forward earnings, the highest level since April 2010.
“Valuations look stretched and investors are cautious with the Fed meeting round the corner,” said Sushant Kumar, a fund manager at RAAY Global Investments Pvt. in Mumbai. “Stocks have priced in the expected increase in rates. The focus is on Fed’s outlook.” The Nifty may reach 10,000 by March 2018, accompanied by as much as 14 percent expansion in earnings of its 50 members, he said.
Still, the scale of the BJP’s victory paves the way for further reforms and should lead to more inflows, supporting asset prices, according to Vikas Gupta, chief investment strategist at OmniScience Capital Pvt. in Mumbai.
“For international investors, India is one of the few emerging markets that has everything going for it: demographics, economics and politics,” he said. “With elections settled, it is clear that the federal government is now going to be fully in charge of the parliament.”
High margins and volumes are two reasons why banks are exploring the market in thrift credit
From being passive lenders to microfinance institutions (MFIs) till about five years earlier, banks have turned out to be active players in the business of small loans.
As on end-December 2016, banks accounted for 37 per cent (Rs 36,683 crore) of microfinance portfolio of Rs 98,625 crore; five years earlier, a handful of MFIs accounted for more than half.
High margins and volumes are two reasons why banks are exploring the market in thrift credit.
Most of them in MFI lending are private sector ones. A majority of this portfolio is with 11 banks — Axis, Bandhan, DCB, Equitas, HDFC, ICICI, IDFC, Kotak Mahindra, RBL and YES.
This apart, several public sector banks have increased their MFI exposure, through business correspondents (BCs).
“We see a lot of synergies with the microfinance sector. More, it is quite well-regulated and growing at a fast rate, providing a lot of business opportunities,” said an official in charge of a bank’s microfinance operations.
Also, over the past 18 months, banks have also been aggressive in taking equity stakes in MFIs. Last year, Kotak Mahindra Bank acquired Bengaluru-based BSS Microfinance.
RBL acquired 10 per cent in Utkarsh Micro Finance, which recently graduated into a small finance bank (SFB).
In July last year, IDFC Bank acquired Trichy-based Grama Vidiyal Microfinance, its second deal in the MFI space. Earlier, IDFC had taken 10 per cent in east-based ASA International India Microfinance.
In March last year, DCB Bank had acquired a 5.81 per cent stake in Odisha-based Annapurna Microfinance. Earlier, RBL had acquired 30 per cent in Swadhaar FinServe, a company acting as a BC.
Non-banking financial companies (NBFCs) have also shown interest. In 2015, Manappuram Finance had acquired Asirvad Micro Finance, a Chennai-based NBFC-MFI.
With a number of MFIs graduating to SFBs, the number in the MFI space is likely to further increase. And, even after graduating into a bank, they are likely to keep much of their lending to microfinance. Bandhan Bank, earlier an MFI, has even after close to two years into operation as a bank still got over 80 per cent of its lending portfolio concentrated in microfinance.
“Over the past three years, banks have shown a high level of interest in microfinance, part of a diversification strategy. Also, at least for two to three years, the new SFBs are likely to focus on microfinance as they build their deposit base,” says Ratna Vishwanathan, chief executive officer, Microfinance Institutions Network.
Seven of the proposed SFBs, some of which have transformed to a bank, together account for 46 per cent of the MFI portfolio, amounting to Rs 26,228 crore.
Gujarat government has entered into B2B ecommerce space as it allowed UK-based cloudbuy.com to develop B2B marketplace for accelerating its growth in state business by supporting SMEs and larger organisations via digitalisation.
According to a top official from the industry department, the state plans to give a digital push to the SMEs and large organisations from Gujarat via Business to Business (B2B) ecommerce.
However, Dhananjay Dwivedi, secretary, department of science and technology, Government of Gujarat, said the company had entered into a MoU with the state government.
“Any other ecommerce company that can support business in Gujarat can also come” he added.”With B2B trading opportunities being much bigger and faster now, the businesses of Gujarat will immensely benefit both in terms of revenue growth and reaching out to a far wider audience here in India and globally,” said Nilesh Gopali, cloudBuy, Country Head – India.
He also confirmed that cloudBuy.com has not received any exclusivity from the state government for developing state-focused B2B ecommerce platform.
According to the company, the creation of this new emarketplace will create many jobs within Gujarat through the creation of technical centres to help businesses upload and optimise their content.
Each company that registers for the marketplace will be given the opportunity to list their company details along with products and services online, promoting their business to a much wider audience. cloudBuy.com would also provide full access to support system and reporting to maximise their growth through ecommerce sales.
It would also provide fulfillment services like logistics providers and financial institutions through partners on the platform making it easier for businesses to transact. Accessibility for all users through cell phones on a secure platform will enhance the user experience ensuring trades online.
In the past six months, several venture capital (VCs) funds have raised money or are in the process of raising money. These include funds from IDG Ventures, DSG Consumer Partners, Orios Venture Partners, Kae Capital, Blume Ventures, Saama Capital, Fireside Ventures, Stellaris Venture Partners, Endiya Partners and Pravega Ventures.
What’s common between them is Sidbi, the lending institution managing several start-up funds, including the government’s, which plays an anchor investor to many of these funds with a 15-20 per cent stake. This is helping these funds raise money from other domestic investors — family offices and high networth individuals (HNIs).
‘‘Fundraising is not easy, especially for smaller VC firms. They don’t get large institutional investors; they get family offices and HNIs,” says a VC. Having an institution like Sidbi comforts other local investors.
‘‘Sidbi does extensive amount of due-diligence, reporting, appoints board members. They have a proper investment committee. So, you have comfort that there’s institutional due-diligence on the fund,” says Rehan Yar Khan, managing partner, Orios Venture Partners.
In February, Sidbi said its fund of funds operations has sanctioned Rs 1,112 crore to 30 funds in FY17, double of Rs 607 crore for 16 funds it did in FY16. Sidbi manages many fund of funds, including the government’s Rs 10,000-crore fund of funds for start-ups.
The funds, which have received Sidbi’s commitment under this programme, are Orios Venture Partners Fund II (Rs 50 crore), Kae Capital (Rs 45 crore), and two little known funds, Saha Trust (Rs 10 crore) and Kitven Fund III (Rs 5 crore), Sidbi disclosed in response to an RTI query from Business Standard. There are others like Blume Ventures, IDG Ventures, India Quotient, which have received Sidbi’s funding.
Interestingly, several funds — maiden funds and second funds — have hit the market in the past one year, all targeting domestic investors. Yet, all of them are able to raise money and announced their first or final close, which shows the increasing depth of domestic investors.
These include professionals in large firms, like Infosys founders, who have made money through ESOPs, family offices of traditional business families and others which are starting to get organised.
Many wealth management and advisory firms have come up, who are able to reach these family offices in a more effective way. But are we seeing too many funds raising too much capital?
‘‘There’s a big need for early stage capital. In the US, the size of the VC market is $25-26 billion and the seed capital of $22 billion. As opposed to that, we are at a pittance. The game has not even started here,” says another VC. Besides, bigger VC firms like Accel, Sequoia also do seed-stage deals, but mostly do VC.
Government employees can also withdraw the fund for select purposes after completing 10 years of service, as against 15 years of service earlier.
In good news for about 50 lakh central government employees, the norms for withdrawal of General Provident Fund (GPF) have been relaxed which will enable them to receive payments within 15 days.
Employees can also withdraw the fund for select purposes after completing 10 years of service, as against 15 years of service earlier.
The GPF can be taken for education — including primary, secondary and higher education, covering all streams and institutions. Earlier, a subscriber could withdraw GPF for beyond the high school stage.
“Some amendments have been made (in rules) from time to time to address the concerns raised by the subscribers. However, the provisions, largely remain restrictive. There is a felt need to liberalize provisions, raise limits and simplify the procedure,” the ministry said.
The provisions in the rules have been reviewed and it has now been decided to permit withdrawals from the fund by the subscriber for obligatory expenses viz. betrothal (engagement), marriage, funerals, or other ceremonies of self or family members and dependants, besides illness of self, family members or dependants, it said.
“It has been decided to permit withdrawal of up to 12 months pay or three-fourth of the amount standing at credit, whichever is less. For illness, the withdrawal may be allowed up to 90% of the amount standing at credit of the subscriber. A subscriber may seek withdrawal after completion of ten years of service,” the ministry said in an order to all central government departments.
The GPF can be withdrawn for purchase of consumer durables also. Existing rules do not give any time limit or sanction and payment of withdrawal amount.
“Therefore, it has been decided to prescribe a maximum time limit of fifteen days for sanction and payment of withdrawal from the fund. In case of emergencies like illness etc., the time limit maybe restricted to seven days,” the order said.
