Economic stimulus package for COVID Relief

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At as much as 10% of GDP, the big stimulus package did not appear to leave any major sphere untouched.

Over five consecutive days of interaction with the country’s financial media, FM Nirmala Sitharaman provided the break-up of PM Modi’s Rs 20 lakh crore COVID-19 stimulus for India.

At as much as 10% of GDP, the package did not appear to leave any major sphere untouched as Prime Minister Modi brought out the fiscal artillery to complement RBI’s monetary measures spread over the past few weeks, putting India firmly in the league of biggies that have gone all out against the virus.

In his speech, Mr. Modi said his package would focus on land, labour, liquidity and laws, and would deal with such sectors as cottage industries, MSMEs, the working class, middle class and industry. He also talked of focusing on empowering the poor, labourers and migrant workers, both in the organised and unorganised sectors.

Dubbed Atmanirbhar Bharat Abhiyaan, this Covid relief package puts bold reforms at the heart of Modi’s stated plan to make India self-reliant so that any other crisis that may emerge in future could be efficiently tackled. Below we collate all the details that emerged in five tranches over the past five days.

FIRST TRANCHE

 

MSME measures

  1. Collateral free automatic loans- a move that’ll enable 45 lakh units to restart work and save jobs. 4 year tenor with 12 months moratorium. 100% credit guarantee on principal and interest – Rs. 3 Lakh Crores (60k Cr cover)
  2. Subordinate debt provision of Rs 20,000 crores for 2 lakh stressed MSMEs. Besides, there will be Rs 50,000 crore equity infusion via Mother fund-Daughter fund for MSMEs that are viable but need handholding. A fund of funds with corpus of Rs 10,000 crore will be set up to help these units expand capacity and help them list on markets if they choose.
  3. Definition of MSMEs revised — the move will allow MSMEs to aim for expansion without losing benefits. Differentiation between manufacturing and service units to be removed.

Micro units – Investments upto 1 Cr + Turnover upto 5 Cr

Small units – Investments upto 10 Cr + Turnover upto  50 Cr

Medium units – Investments upto 20 Cr + Turnover upto  100 Cr

  1. Government tenders upto 200 Crores will no longer be on global tender basis. Global tenders will be disallowed for upto 200 Crores. This will make MSMEs eligible to participate in Government purchases.
  2. Post Covid, e-market linkage to be provided for all MSMEs. Receivables by MSMEs from the Central Government and all PSUs will be cleared in next 45 days

For non-bank lenders

  1. Rs 30,000 crore special liquidity scheme for investing in investment grade debt paper of NBFCs, HFCs and MFIs. These NBFCs are those that are also funding MSMEs. These will be fully guaranteed by government of India.
  2. Rs 45,000 crore partial credit guarantee scheme 2.0 for NBFCs. The first 20% loss will be borne by the guarantor that is government of India.
  3. For Discoms, a one-time emergency liquidity injection of Rs 90,000 crore against all their receivables. The states will guarantee it.

For employees

  1. Liquidity relief of Rs 2,500 crore EPF support to all EPF establishments. The EPF contribution will be paid by the govt for another 3 months (till August). It will benefit more than 72 lakh employees.
  2. Statutory EPF contribution for all organisations and their employees covered by EPFO to be reduced to 10% from 12% earlier (This doesn’t apply to govt organisations). This will help infuse Rs 6,750 cr of liquidity into these organisations.

For Power distribution companies

  1. Power distribution companies will get Rs 90,000 crore liquidity against receivables from state-owned Power Finance Corp. and Rural Electrification Corp. This will allow these discoms to pay dues to power producers.

For Contractors & others

  1. An extension of up to 6 months (without costs to contractor) to be provided by all Central Government Agencies like Railways, Ministry of Road Transport & Highways, Central Public Works Dept.
  2. On real estate, urban development ministry will issue advisory to states/UTs so that the regulators can invoke force majeure. The regulators can suo moto extend completion/registration dates for six months for projects expiring on or after March 25, 2020.
  3. A reduction of 25% of existing rates of Tax Deducted at Source (TDS) & Tax Collection at Sources (TCS) from tomorrow till March 31, 2021. This will release Rs 50,000 crores.

Due date of all Income Tax Return filings extended from July 31 to November 30. Vivaad se Vishwas scheme extended till December 31,2020, without any extra payments.

All pending refunds to charitable trusts and non-corporate taxpayers (but including LLP) will be issued immediately

Date of assessments getting barred as on Sep 30, 2020 extended to December 31, 2020. Date of assessments getting barred as on March 31, 2021 extended to September 30, 2021.

SECOND TRANCHE

Focus on migrant workers, small farmers and the poor, in the manner shown below:

Free food for migrants

  1. For those migrants who don’t have NFSA cards or state cards, 5 Kgs of wheat or rice per person and one kg channa per family per month for next two months to be provided and it will reach through the state governments. This will entail Rs 3,500 crore and is likely to benefit around 8 crore migrants.

One Nation, One Ration Card

  1. National Portability Ration Cards can be used in any ration shops that will be applicable across the country. By August 2020, 67 cr beneficiaries in 23 states or 83% of all PDS beneficiaries will get covered. By March 2021, 100 per cent will be covered.

Rental accomodation

  1. Under PM Awas Yojaana, scheme for rental housing for migrant workers. Under the scheme incentives will be offered to private manufacturing units and industrial units to develop affordable housing, converting govt funded houses into affordable renting accommodations for migrant workers. Shall be done on PPP on concessionaire basis. State government agencies will also be incentivised to develop affordable housing.

MUDRA Shishu loan

  1. Those who have availed loans up to Rs 50,000, an interest subvention of 2% for next 12 months after the moratorium period extended by RBI ends. Three crore people will get benefit of Rs 1500 crore.

Street Vendor

  1. Special scheme for street vendors to avail Rs 5,000 crore loan facility. Will be given Rs 10,000 of working capital.

Affordable Housing

  1. Credit-linked subsidy scheme for middle income households in the income group Rs 6-18 Lakh extended to March 2021. The CLSS scheme was operationalised from May 2017 and extended up to March, 2020. Now, it has been extended till March 2021. This will lead to investments  of Rs 70,000 crore in housing and kick-start sectors like steel, cement and create jobs.

For Tribals

  1. Rs 6,000 crore worth of proposals have come from states under CAMPA funds. Tribal people will get employment in forest management, wildlife protection/management and other forest related activities.

For Small/Marginal Farmers

  1. The government is extending Rs 30,000 crore additional capital emergency funds through NABARD for post-harvest Rabi and Kharif related activities for small and marginal farmers.
  2. Under the PM Kisan Credit Card, Rs 2 lakh crore of concessional credit to boost farming activities and it will benefit 2.5 crore farmers. Those in animal husbandry and fisheries will also be included.

THIRD TRANCHE

For framers, and such sectors as food processing and allied activities.

For Upgrading Infrastructure

  1. One lakh crore fund for strengthening the farm gate infrastructure like cold chains, post harvest storage infrastructures etc.
  1. Rs 10,000 crore fund for micro food scheme will be executed with cluster based approach. Will benefit 2 lakh Micro Food Enterprises. For instance, Bihar can have Makhana cluster, Kashmir can have Kesar cluster, Telangana can have Turmeric cluster, Andhra can have chilli cluster.
  1. Govt will launch Pradhan Mantri Matsya Sampada Yojana for development of marine and inland fisheries. Rs 20,000 crore will be spent to fill the gaps in value chains. This will lead to an additional fish production of 70 lakh tons in next five years and provide employment to 55 lakh people.
  1. Rs 13,343 crore for vaccination of livestock in India to eradicate foot and mouth disease.
  1. Rs 15,000 crore will be spent on ramping up the dairy infrastructure. Also, investments will be made in cattle feed.
  1. Rs 4,000 crore for growing of herbal and medicinal plants. Ten lakh hectares of land will be used for growing medicinal and herbal plants and will provide income of nearly Rs 5,000 crore for farmers.
  1. Rs 500 crore have been allocated for beekeeping. This will help 2 lakh beekeepers.
  1. TOP to TOTAL: Rs 500 crore for Operation Greens that will be extended beyond tomatoes, potatoes and onion and will applicable to all vegetables.

Proposes amendment to Essential Commodities Act to enable better price realisation for farmers. Food stuffs including edible oils, oilseeds, pulses, onions and potato will be deregulated. And stock limits will be imposed only under exceptional circumstances like famine and surge in prices.

Agriculture Marketing Reforms

32. A central law will be formulated to provide (a) Adequate choices to sell produce at attractive price, (b) Barrier free inter-state trade, and (c) Framework for e-trading of agriculture produce.

Agriculture Produce Price and Quality Assurance

33. Facilitative legal framework will be created to enable farmers for engaging with processors, aggregators, large retailers, exporters etc. in a fair and transparent manner. Risk mitigation for farmers, assured returns and quality standardisation shall form integral part of the framework.

FOURTH TRANCHE

For Upgrading Infrastructure

Included structural reforms in 8 critical sectors- Coal, Minerals Defence Production, Airspace management, Social Infrastructure Projects, Power distribution companies, Space sectors and Atomic Energy.

Coal Sector

Government is introducing the commercial mining of coal. India needs to reduce import of substitutable cal and increase self-reliance in coal production.

34. The investment of Rs. 50,000 crores is for the evacuation of enhanced CIL’s (Coal India Limited) target of 1 billion tons of coal production by 2023-24 plus coal production from private blocks.

Minerals

35. Enhancing private investment in mineral sector.

 36. FMalso explained the rationalisation of stamp duty payable at the time of award of mining leases.

37. 500 mining blocks would be offered through an open and transparent auction process, a joint auction of Bauxite & Coal mineral blocks will be introduced to enhance Aluminum industry’s competitiveness.

Defence Production

38. Indigenization of imported spares, separate budget provisioning for domestic capital procurement.

39. FDI limit in defence manufacturing under automatic route is being raised from 49% to 74%.

40. Corporatisation of Ordnance factory board was also announced.

Civil Aviation (Airspace Management, World Class Airports Through PPP, MRO HUB)

41. Restrictions on the utilisation of Indian Air Space will be eased so that civilian flying becomes more efficient.

42. Government is working hard to make India a global hub for for aircraft maintenance, repair and overhaul.

43. Airports Authority of India has awarded 3 airports out of 6 bid for operation & maintenance on (PPP) basis. Additional investment by private players in 12 airports in first & second rounds expected around Rs 13,000 crores.

Power Sector Reforms

44. Power Distribution Companies in Union Territories to be privatised in line with the new tariff policies. This will enable to strengthen industries and bring in efficiency in the entire power sector. This will also enable stability in the sector, announced the FM.

Boosting Private Sector investment

45. Boosting private sector investment  in Social Infrastructure through revamped Viability Gap Funding Scheme of Rs 8,100 crores.

Space Sector

46. Boosting private participation in space sectors. Government is working on a liberal geo-spatial policy. Private sector to be co-traveller in India’s space sector journey through launches, satellite services, commented the Finance Minister.

Atomic Energy

47. The government intends to link India’s robust start-up ecosystem to the nuclear sector – Technology Development cum Incubation Centres will be set up for fostering synergy between research facilities and tech entrepreneurs. Establishment of research reactor in PPP mode for production of medical isotopes.

Fifth Tranche

48. MGNREGS: Additional funding of Rs 40,000 crore to the scheme over and above the Budgetary Estimate.

49. Health: All districts will have infectious disease hospitals while at the block-level, public health labs will be set up.

50. Education: PM eVidya programme to be launched immediately. Each Classroom from 1 to 12 will have one TV channel. Special e-content for visually & hearing impaired. Top 100 universities will be permitted to start online courses by May 30, 2020.

51. IBC reforms: Covid-related debt to be excluded from definition of default under the IBC. No fresh insolvency for next one year. Minimum threshold to initiate insolvency raised to Rs one crore from Rs one lakh earlier.

52. Decriminalising Companies Act: Violations under most of the Companies Act to be decriminalised. This will ease the burden on courts and tribunals. Seven compoundable offences under Companies Act being dropped, 5 offences to be dealt under alternative framework.

53. Listing norms: Companies can now list securities directly in foreign jurisdictions

54. New Public Sector Policy: Public sector enterprise policy: All sectors are open to the private sector while public sector enterprises will play an important role in defined areas. Govt will notify strategic areas and in them at least one PSE will remain but private sector will be allowed. In other sectors, PSEs will be privatised.

55. Additional resources to States: Centre has decided to increase borrowing limit of states from 3% to 5% for FY21. This will give extra resources of Rs 4.28 lakh crore to states. This despite, states having borrowed only 14% of the limit authorised to them. 86% remains unutilised. The additional borrowing limit has been linked with initiating reforms.

The finance minister also gave a break up of how the Rs 20 lakh crore was allocated among the five tranches and the previous schemes as well as the RBI measures.

Highlights of Special GOI Package of Rs 20 lakh crores for Atmanirbhar Bharat (COVID-19)

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The package works out to roughly 10 per cent of the GDP, making it among the most substantial in the world.

Key Highlights of the Special economic and comprehensive package of Rs 20 lakh crores Announced by the Govt. of India, for relief and credit support related to businesses, especially MSMEs to support Indian Economy, Atmanirbhar Bharat and to fight against COVID-19.

GOI Presentation on Rs. 20 Lac Crore Special Package: AtmaNirbhar Bharat (COVID-19)

Hon’ble Prime Minister Shri Narendra Modi yesterday announced a Special economic and comprehensive package of Rs 20 lakh crores, equivalent to 10% of India’s GDP. He gave a clarion call for आत्मनिर्भर भारत अभियान or Self-Reliant India Movement. He also outlined five pillars of Aatmanirbhar Bharat– Economy, Infrastructure, System, Vibrant Demography and Demand.

During the press conference here today, Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman said in her opening remarks that Prime Minister Shri Narendra Modi had laid out a comprehensive vision in his address to the Nation yesterday. She further said that after spending considerable time, the Prime Minister has himself ensured that inputs obtained from widespread consultation form a part of economic package in fight against COVID-19.

“Essentially, the goal is to build a self-reliant India that is why the Economic Package is called Aatma Nirbhar Bharat Abhiyaan. Citing the pillars on which we seek to build Aatma Nirbhar Bharat Abhiyaan, Smt. Sitharaman said our focus would be on land, labour, liquidity and law.

The Finance Minister further said that the Government under the leadership of Prime Minister Shri Narendra Modi has been listening and is a responsive Government, hence it is fitting to recall some reforms which have been undertaken since 2014.

“Soon after Budget 2020 came COVID-19 and within hours of the announcement of Lockdown 1.0, Pradhan Mantri Garib Kalyan Yojna (PMGKY) was announced,” Smt. Sitharaman said. She further said that we are going to build on this package.

“Beginning today, for the next few days, I shall be coming here with the entire team of the Ministry of Finance to detail the Prime Minister’s vision for Aatma Nirbhar Bharat laid out by the Prime Minister yesterday,” Smt Sitharaman said.

Smt. Nirmala  Sitharaman today announced measures focused on Getting back to work i.e., enabling employees and employers, businesses, especially Micro Small and Medium Enterprises, to get back to production and workers back to gainful employment. Efforts to strengthen Non-Banking Finance Institutions (NBFCs), Housing Finance Companies (HFCs), Micro Finance Sector and Power Sector were also unfolded. Other than this, the tax relief to business, relief from contractual commitments to contractors in public procurement and compliance relief to real estate sector were also covered.

Over the last five years, the Government has actively taken various measures for the industry and MSME. For the Real Estate sector, the Real Estate (Regulation and Development) Act [RERA] was enacted in 2016 to bring in more transparency into the industry. A special fund for affordable and middle income housing was set up last year to help with the stress in this segment. To help MSMEs with the issue of delayed payment by any Government department or PSUs, Samadhaan Portal was launched in 2017. A Fund of Funds for startups was set up under SIDBI to boost entrepreneurship in the country and various other credit guarantee schemes to help flow of credit to the MSMEs.

Key Highlights of the Special economic and comprehensive package of Rs 20 lakh crores Announced by Govt. of India (COVID-19)

a) Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs

To provide relief to the business, additional working capital finance of 20% of the outstanding credit as on 29 February 2020, in the form of a Term Loan at a concessional rate of interest will be provided. This will be available to units with upto Rs 25 crore outstanding and turnover of up to Rs 100 crore whose accounts are standard. The units will not have to provide any guarantee or collateral of their own. The amount will be 100% guaranteed by the Government of India providing a total liquidity of Rs. 3.0 lakh crores to more than 45 lakh MSMEs.

b) Rs 20,000 crore Subordinate Debt for Stressed MSMEs

Provision made for Rs. 20,000 cr subordinate debt for two lakh MSMEs which are NPA or are stressed. Government will support them with Rs. 4,000 Cr. to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). Banks are expected to provide the subordinate-debt to promoters of such MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs.

c) Rs 50,000 crores equity infusion through MSME Fund of Funds

Govt will set up a Fund of Funds with a corpus of Rs 10,000 crore that will provide equity funding support for MSMEs. The Fund of Funds shall be operated through a Mother and a few Daughter funds. It is expected that with leverage of 1:4 at the level of daughter funds, the Fund of Funds will be able to mobilise equity of about Rs 50,000 crores.

d) New definition of MSME

Definition of MSME will be revised by raising the Investment limit. An additional criteria of turnover also being introduced. The distinction between manufacturing and service sector will also be eliminated.

e) Other Measures for MSME

e-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions. MSME receivables from Government and CPSEs will be released in 45 days.

f) No Global tenders for Government tenders of up to Rs 200 crores

General Financial Rules (GFR) of the Government will be amended to disallow global tender enquiries in procurement of Goods and Services of value of less than Rs 200 crores.

g) Employees Provident Fund Support for business and organised workers

The scheme introduced as part of PMGKP under which Government of India contributes 12% of salary each on behalf of both employer and employee to EPF will be extended by another 3 months for salary months of June, July and August 2020. Total benefits accrued is about Rs 2500 crores to 72.22 lakh employees.

h) EPF Contribution to be reduced for Employers and Employees for 3 months

Statutory PF contribution of both employer and employee reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months. This will provide liquidity of about Rs.2250 Crore per month.

i) Rs 30,000 crores Special Liquidity Scheme for NBFC/HFC/MFIs

Government will launch Rs 30,000 crore Special Liquidity Scheme, liquidity being provided by RBI. Investment will be made in primary and secondary market transactions in investment grade debt paper of NBFCs, HFCs and MFIs. This will be 100 percent guaranteed by the Government of India.

j) Rs 45,000 crores Partial credit guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs

Existing Partial Credit Guarantee scheme is being revamped and now will be extended to cover the borrowings of lower rated NBFCs, HFCs and other Micro Finance Institutions (MFIs). Government of India will provide 20 percent first loss sovereign guarantee to Public Sector Banks.

k) Rs 90,000 crore Liquidity Injection for DISCOMs

Power Finance Corporation and Rural Electrification Corporation will infuse liquidity in the DISCOMS to the extent of Rs 90000 crores in two equal instalments. This amount will be used by DISCOMS to pay their dues to Transmission and Generation companies. Further, CPSE GENCOs will give a rebate to DISCOMS on the condition that the same is passed on to the final consumers as a relief towards their fixed charges.

l) Relief to Contractors

All central agencies like Railways, Ministry of Road Transport and Highways and CPWD will give extension of up to 6 months for completion of contractual obligations, including in respect of EPC and concession agreements.

m) Relief to Real Estate Projects

State Governments are being advised to invoke the Force Majeure clause under RERA. The registration and completion date for all registered projects will be extended up to 6 months and may be further extended by another 3 months based on the State’s situation. Various statutory compliances under RERA will also be extended concurrently.

n) Tax Relief to Business

The pending income tax refunds to charitable trusts and non-corporate businesses and professions including proprietorship, partnership and LLPs and cooperatives shall be issued immediately.

o) Tax related measures

Reduction in Rates of ‘Tax Deduction at Source’ and ‘Tax Collected at Source” – The TDS rates for all non-salaried payment to residents, and tax collected at source rate will be reduced by 25 percent of the specified rates for the remaining period of FY 20-21.This will provided liquidity to the tune of Rs 50,000 Crore.

The due date of all Income Tax Returns for Assessment Year 2020-21 will be extended to 30 November, 2020.  Similarly, tax audit due date will be extended to 31 October 2020.

The date for making payment without additional amount under the “Vivad Se Vishwas” scheme will be extended to 31 December, 2020.

Notification for reduction in rate of TDS & TCS

India is world’s 40th most competitive economy: WEF

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The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

India has been ranked as the 40th most competitive economy — slipping one place from last year’s ranking — on the World Economic Forum’s global competitiveness index, which is topped by Switzerland.

On the list of 137 economies, Switzerland is followed by the US and Singapore in second and third places, respectively.

In the latest Global Competitiveness Report released today, India has slipped from the 39th position to 40th while neighbouring China is ranked at 27th.

“India stabilises this year after its big leap forward of the previous two years,” the report said, adding that the score has improved across most pillars of competitiveness. These include infrastructure (66th rank), higher education and training (75) and technological readiness (107), reflecting recent public investments in these areas, it added.

According to the report, India’s performance also improved in ICT (information and communications technologies) indicators, particularly Internet bandwidth per user, mobile phone and broadband subscriptions, and Internet access in schools.

However, the WEF said the private sector still considers corruption to be the most problematic factor for doing business in India.

“A big concern for India is the disconnect between its innovative strength (29) and its technological readiness (up 3 to 107): as long as this gap remains large, India will not be able to fully leverage its technological strengths across the wider economy,” it noted.

Among the BRICS, China and Russia (38) are placed above India.South Africa and Brazil are placed at 61st and 80th spots, respectively.

In South Asia, India has garnered the highest ranking, followed by Bhutan (85th rank), Sri Lanka (85), Nepal (88), Bangladesh (99) and Pakistan (115).

“Improving ICT infrastructure and use remain among the biggest challenges for the region: in the past decade, technological readiness stagnated the most in South Asia,” WEF said.

Other countries in the top 10 are the Netherlands (4th rank), Germany (5), Hong Kong SAR (6), Sweden (7), United Kingdom (8), Japan (9) and Finland (10).

The Global Competitiveness Index (GCI) is prepared on the basis of country-level data covering 12 categories or pillars of competitiveness.

Institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation are the 12 pillars.

According to WEF’s Executive Opinion Survey 2017, corruption is the most problematic factor for doing business in India.

The second biggest bottleneck is ‘access to financing’, followed by ‘tax rates’, ‘inadequate supply of infrastructure’, ‘poor work ethics in national labour force’ and ‘inadequately educated work force’, among others.

The survey findings are mentioned in the report.

“Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future,” WEF founder and Executive Chairman Klaus Schwab said.

India growing pretty robustly: World Bank President Jim Kim

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Jim Kim said Japan, Europe and the US along with India were growing and there was a levelling-out in developing countries.

India has been growing “pretty robustly”, World Bank President Jim Yong Kim has said as he predicted a strong global growth this year.

Speaking at the Bloomberg Global Business Forum meeting here on Wednesday, Kim also called for more cooperation among the multilateral system, private sector and the governments to take advantage of the current win-win situation.

“That dormant capital will earn a higher return, where developing countries will have access to much more capital for the infrastructure needs, even for investing in health and education, investing in resilience to climate change and other factors,” Kim said.

He said Japan, Europe and the US along with India were growing and there was a levelling-out in developing countries.

“A country like India is growing, has been growing pretty robustly. We think, Japan is growing. Europe is growing in a much more healthy way. The United States continues to grow. There is a levelling-out in developing countries,” he said, adding that the growth will be more robust this year.

In June, the World Bank predicted a 7.2 per cent growth rate for India this year against 6.8 per cent growth in 2016. India remains the fastest growing major economy in the world, the World Bank officials had said.

“It used to be that commodity importers were doing much better than commodity exporters. But that’s levelling out. So the growth is relatively more evenly distributed,” Kim said.

He said in terms of indebtedness, the bank was watching very carefully the debt-to-GDP ratios of every single country.

“In Africa, the debt-to-GDP ratios are still very manageable…We would not be moving toward providing more financing for countries if we thought there was a real problem with over indebtedness in the countries. Because we follow this very closely, along with the IMF,” he said.

“We think that there are tremendous opportunities for investment. But sometimes, purely based on perception, investors in sovereign wealth funds – I’ve heard them say, Africa is risky. Right, as if Africa was a single country.

Africa’s not a single country and the risk profiles from country to country have enormous differences,” he said.

Source: Economic Times

 

Narendra Modi government identifies 5 ports to boost cruise tourism

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Union minister for shipping Nitin Gadkari on Tuesday announced that the government has identified five major ports — Mumbai, Mormugao, Mangalore, Chennai and Cochin — to boost cruise tourism in India.

While the number of Indians who took a cruise in 2016-17 was 2 lakh, the number could go up to 40 lakh, according to a report prepared by consultants Bermelo & Ajamil jointly with Ernst & Young. Of this, 80% or 32 lakh passengers are expected to take cruises from the Mumbai port alone.

However, Gadkari added that the cruise tourism industry is facing challenges on many issues and that he would make a representation to the finance ministry to waive the goods and services tax (GST), levied at 5% currently on all cruise ships, as well as establish a zero income tax regime.

While the largest cruise line operator, Carnival PLC, is looking to increase the number of cruise liners in India, David Dingle, the company’s chairman told FE that the country must create a domestic cruising tax regime competitive with tax regimes elsewhere in the world.

“In principle, the cruise industry will not come to a part of the world where it has to pay GST on the ticket price and on the sales made on board. We will not bring our ships here in any significant numbers all the while that cruising attracts any GST,” he said. Moreover, Dingle added that international cruise companies have to have the right to repatriate their profits through double tax treaties.

Carnival PLC sold 181,000 cruises in India in 2016, registering a compounded annual growth rate of 31%.

Current estimates are that over 120,000 Indians book a cruise each year with over 90% of them travelling to Singapore to board a cruise liner. To cater to this growing market, the Indian government wants to increase the number of cruise liners that come to India, eliminating the need for cruise seekers to fly abroad to board a ship.

The Indian coastline saw 150 cruise ship visits in 2016 and the government is aiming to increase this to about 955 in the next few years.

Source: http://www.financialexpress.com/industry/narendra-modi-government-identifies-5-ports-to-boost-cruise-tourism/799965/

GST impact: Dismantling of check posts save 24-36 hours of trucking time

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The Goods and Services Tax (GST) is saving fleet owners between 24-36 trucking hours, besides around Rs 7,500 per trip at the tax check posts which have since been dismantled.

The Goods and Services Tax (GST) is saving fleet owners between 24-36 trucking hours, besides around Rs 7,500 per trip at the tax check posts which have since been dismantled, an industry association said on Monday.

“Our quick check has shown that on an average a lorry or truck runs for 10-12 hours a day and should cover a distance of about 2,200 km between, say, Delhi-Chennai in three days.” “However, traversing through different states and braving the stoppages at several check posts of VAT, Octroi, other local taxes it was taking five to six days,” Associated Chambers of Commerce and Industry of India (Assocham) said here in a statement. At least 24-36 hours would easily be saved for these trunk routes after dismantling of the check posts, it said after interacting with the fleet owners and transport intermediaries.

“Besides, the bigger nuisance of corruption at each of the check posts and through various states would have meant an additional expenditure of Rs 5,000-7,500 per trip. That has also been done away with.” “For now, it has come as a big relief for the transporters who say, the ultimate advantage is accruing to the customers and to the trade and manufacturing value supply chain,” Assocham said.

The interaction with the fleet owners revealed that before start of a trip, the crew, comprising driver(s) and helpers was given “out of pocket” or “petty cash” of at least Rs 10,000 for the trunk routes of Delhi-Mumbai, Delhi-Kolkata, Mumbai-Jaipur, Ahmedabad-Delhi, Bengaluru- Delhi routes and so on. On completion of the trip, the driver would give his account that would include the expenses at each of the forced halt points.

Assocham hoped that further improvement would be done in this direction in terms of improving other infrastructure. “For instance, the ‘no entry’ traffic restrictions can be done away if high class dedicated bye-passes are constructed around the major cities so that the truckers can ply seamlessly,” Assocham Secretary General D.S. Rawat said.

Improvement in freight movement through road and rail would not only result in a huge cost saving for the trade and industry but would also take India quite high on the global index of Ease of Doing Business, the chamber said.

Source: http://www.financialexpress.com/economy/gst-impact-dismantling-of-check-posts-save-24-36-hours-of-trucking-time/757083/

India Inc’s March M&A deal tally jumps 4-fold to $28 billion

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India Inc’s M&A deal tally in March rose four-fold to $27.82 billion, led by the Vodafone-Idea merger, taking the overall figure to $31.54 billion in the first quarter of 2017, says a report.

Overall deal activity in the January-March quarter witnessed an unprecedented three-fold year-on-year rise in value terms, driven solely by the Vodafone-Idea mega merger, which accounted for 80 per cent of the total values.

“The Indian deal activity was dominated by big-ticket mergers and acquisitions (M&As) this quarter. The quarter witnessed one of the largest deals in the country with Vodafone and Idea’s merger, which is estimated at around $27 billion,” Grant Thornton India LLP Partner Prashant Mehra said.

The January-March quarter recorded $33.7 billion across 300 deals marking a sharp increase in value as compared to $10.9 billion in the same period last year while volumes declined by 27 per cent.Without the Vodafone-Idea mega merger, estimated to be a $27 billion transaction, the deal activity would have recorded 39 per cent decline in values, assurance, tax and advisory firm Grant Thornton said.

M&A market activity has so far been driven solely by the big-ticket deals, while on the other hand number of transactions continued to slip for the third straight quarter.

“Primary driver for M&A growth was consolidation in the domestic market with deal values growing by 10 times on the back of healthy capital markets and easing credit conditions. This enabled companies strike big ticket deals either to slash debt or consolidate market share,” Mehra said.

Meanwhile, the cross-border deal activity is yet to pick up pace in 2017 as compared to previous quarters due to looming uncertainties in the global economy.

Going forward M&A activity this year is expected to stay positive owing to the sustained interest in Indian economy.

Mehra believes consolidation and expansion is set to be the major theme that will drive the deal activity, especially in healthcare, telecom, e-commerce and infrastructure sectors.”In financial services sector, the possibility of new business models emerging post demonetisation, continued fund raising by NBFCs and a consolidation push by micro finance firms will play a big role,” he added.

Source:   http://economictimes.indiatimes.com/articleshow/58160464.cms