TRAFIGURA PICKED UP 24 % EQUITY IN NOCL

Trafigura Pvt. Ltd. picked up 24 percent equity in Nagarjuna Oil Corporation Ltd (NOCL) by investing around 650 crore rupees. Trafigura is a commodity trader in the global sphere. NOCL is carrying out six million tone oil refinery project at Cuddalore in Tamil Nadu. The total estimate of the project is 7610 crore rupees. Trafigura has also planned to invest 600 crore rupees into the construction of storage facilities. This will be done through another joint venture between Trafigura and NOCL called Portoil Ltd.

SWAVALAMBAN SCHEME

The Union Cabinet on 12 April 2012 approved the extension of funding support for implementing the Swavalamban Scheme under the New Pension  System (NPS) from three years to five years for all subscribers enrolled during 2010-11, 2011-12 and 2012-13. The exit norms of the scheme were also relaxed to enable subscribers under Swavalamban to exit at age 50 instead of 60, or a minimum tenure of 20 years, whichever is later.The Cabinet decided to provide an additional funding support of Rs 2065 crore to the scheme till 2016-17. The cabinet’s decision will benefit 70 lakh workers in the unorganised sector.

RESERVE BANK OF INDIA CUT THE REPO RATE BY 50 BASIS POINTS

Reserve Bank of India, the apex Indian Bank, on 17 April 2012, cut the key policy rates for the first time in the past three years. While the repo rate (the rate at which the RBI lends money to banks) was cut down by 50 basis points from 8.50 per cent to 8.00 per cent, the reverse repo rate (normally fixed at a spread of 100 basis points below the repo rate) was reduced to 7.0 per cent. The marginal standing facility rate, which has a spread of 100 basis points above the repo rate, now stands at 9.0 per cent. NBFCs in the space. However, Muthoot, the country’s biggest player in gold loan stated that there would not be much impact.

INTERNATIONAL MONETARY FUND (IMF) LOWERED INDIA’S ECONOMIC GROWTH FORECAST TO 6.9% IN 2012

The International Monetary Fund (IMF) in its World Economic Outlook (WEO), released ahead of the IMF-World Bank Spring Meetings, marginally lowered India’s economic growth forecast to 6.9% in 2012, from 7% projected earlier. The IMF projected world economic growth rate to slump to 3.5% in 2012 from 3.9% in 2011. It pegged India’s growth during the 2013 calendar year at 7.3%. The WEO pointed out that in emerging
Asia, including India, strengthening domestic demand will require improving the conditions for private investment by addressing infrastructure bottlenecks and enhancing governance and public service delivery. The WEO while referring to the declining growth rate stated that domestic factors also contributed to the slowdown, as deterioration in business sentiment weakened investment and policy tightening raised borrowing costs.

UNION GOVERNMENT TO LIBERALISE ECB

The Union government decided to liberalise the external commercial borrowing (ECB) norms for the power sector. The announcement was made in tune with the announcement made in this respect by the Finance Minister, Pranab Mukherjee while presenting the Union budget 2012- 13. Power sector companies will now be able to use up to 40 per cent of ECB loans to refinance their rupee debt, provided the remaining 60% balance is utilised for investments in new projects. So far, power companies were permitted to use only 25 per cent of the ECB to refinance their domestic rupee-debt loan. Besides, the government also opened the ECB route for capital expenditure on maintenance and operations of toll systems in the roadways and highways sector, only if these constitute a part of the original project.

UNION GOVERNMENT DECIDED ON 1 MILLION CAP ON ECB

The Union government on 19 April 2012 permitted companies engaged in the aviation sector to raise working capital resources through the external commercial borrowings (ECBs) route to the tune of $1 billion. The limit for individual airline companies was set at $300 million. This limit can be availed themselves of either in a lump sum or in tranches, depending on the utilisation of the limit during the one year when the facility is available. So far airlines were allowed to raise foreign capital only for import of capital equipment such as aircraft. The policy decision in this respect will provide an additional source of low-cost capital to the airline industry and help them tide over its present financial crunch.

INDIA REGISTERED HIGHEST EVER TRADE DEFICIT

Commerce Secretary on 19 April 2012 announced that India surpassed the export target of $300 billion for 2011-12. India was able to surpass the trade target of $300 billion despite slowdown in demand in its traditional markets of the U.S. and Europe. Exports increased by 21 per cent to $303.7 billion in 2011-12 powered by a strong growth in petroleum, pharmaceuticals and engineering products. However, imports surged by 32.1 per cent to $488.6 billion thereby leaving the highestever trade deficit of $184.9 billion. Engineering exports grew by 16.9 per cent to $58.2 billion. Exports of petroleum and oil products surged by 38.5 per cent to $57.5 billion and gems and jewellery exports increased to $45.9 billion.

INCREASED INTEREST RATE ON LOANS PROVIDED FROM SUGAR DEVELOPMENT FUND TO 7.5%

Following RBI’s decision to hike bank rate, the Food Ministry increased the interest rate on loans provided to sugar factories from the Sugar Development Fund (SDF) to 7.5% from the earlier 4% from 14 February 2012. The Fund is utilised to provide loans at concessional rates to sugar factories for development, modernisation, co-generation of sugar-cane and as well as ethanol projects. The interest rate was increased after Reserve Bank of India announced its decision on 13 February to hike the Bank Rate to 9.5 per cent per annum from 6 per cent per annum. Given that the Food Ministry provides SDF loans at 2 per cent less than the prevailing bank rate, the interest rate was revised to 7.5 per cent per annum (2 per cent less than bank rate of 9.5 per cent).

ADB PROJECTED MODERATE INCREASE IN INDIA’S GDP

The Asian Development Bank (ADB) in its flagship annual publication Asian Development Outlook (ADO) released on 11 April 2012 projected moderate increase in growth rate for India to 7 percent in 2012-13. The ADB stated that strong economic performance would depend on the country’s ability to push reforms agenda and address issues constraining investments. The government however estimated a growth rate of 7.6 per
cent for 2012-13 fiscal. Moderation in the growth of non-oil imports in 2012-13 and improved economic prospects in the advanced countries in 2013-14 is likely to help the current account deficit to improve to 3.3% in 2012- 13 and further to 3% in 2013-14.

SEBI DECIDED TO ENFORCE BROAD GUIDELINES FOR ALGORITHMIC TRADING

The Securities and Exchange Board of India (SEBI) on 31 March 2012 issued broad guidelines on Algorithmic Trading. Based on recommendations of technical advisory committee (TAC) and secondary market advisory
committee (SMAC), SEBI decided to enforce broad guidelines for algorithmic trading in the securities market. The market regulator directed stock exchanges to undertake system upgradation, including periodic upgradation of its surveillance system so as to keep pace with the speed of trade and volume of data that may arise through algorithmic trading. Also, the stock exchanges were asked to put in place monitoring systems
to identify and initiate measures to impede any possible instances of order flooding through this system.

ZEE TV BECAME THE FIRST INDIAN CHANNEL TO GET LANDING RIGHT IN CHINA

Zee TV on 27 March 2012 became the first Indian channel to get a landing right in China. China’s State Administration for Radio, Film and Television (SARFT) granted the landing rights to the Indian channel after
a long six years of wait. Zee TV had already been selling to Chinese television channels its popular Mandarindubbed Indian programmes which had garnered a considerable viewership in the country. Zee TV Asia Pacific inked a landing agreement with the CTV-STVP, only Chinese agent allowed to distribute foreign channels.

INDIA’S FISCAL DEFICIT IN THE APRIL-FEBRUARY PERIOD OF 2011- 12 STOOD AT RS 4.93 LAKH CRORE

As per the Controller General of Accounts’ (CGA) data released on 30 March 2012, union government’s fiscal deficit during the April-February period of 2011- 12 stood at Rs 4.93 lakh crore, or 95% of the revised estimates. At the end of the 11 months ending February, the fiscal deficit was Rs 493571 crore or 94.6% of the target. During the April-February period of 2010-11, the deficit had stood at 68.6% of the budgeted target.
The government in March revised upwards the fiscal deficit target for the 2011-12 fiscal to 5.9% of GDP, from 4.6% projected earlier. Rise in fiscal deficit was attributed to high subsidy bill, increasing crude oil prices, low tax collection and poor realisation from sale of government equity in state-owned companies.

SUB-COMMITTEE SUGGESTED CREATION OF A NATIONAL FUND FOR URBAN TRANSPORT PROJECTS

A government subcommittee set up to look into probable sources of funds for urban transport projects in the 12th Plan recommended creation of a national fund, resource for which can be generated through taxes on vehicles and petrol consumption. The Sub-Committee on Financing Urban Infrastructure in the 12th Plan report suggested investments to the tune of Rs 87000 crore in the Five Year Plan duration. The sub-committee,
constituted by the Urban Development ministry opined that the huge investment needs cannot be met only from traditional budgetary sources alone. A dedicated urban transport fund at the national level as envisaged in (National Urban Transport Policy) or NUTP-2006 was recommended. The subcommittee also identified some sources of revenue for the creation of the National Urban Transport Fund which were based on Polluters pay Principle and aimed to reduce the use of personal vehicles.

RBI TIGHTENED THE REPORTING REQUIREMENTS OF THE BANKS TO MONITOR GOLD IMPORT

The Reserve Bank of India on 3 April 2012 tightened the reporting requirements of the banks. As per the directions issued, banks will have to submit a monthly statement informing the central bank about the quantity of gold imported and mode of payment adopted. The statement is to be filed with the foreign exchange department of the RBI and has to be submitted at the end of March and September. The directive was issued amidst concerns of huge outflow of foreign exchange on import of gold which is believed to be putting pressure on the India’s current account deficit (CAD). Banks were directed to file a half yearly statement on quantity and
value of gold imported by nominated banks, agencies, export-oriented units (EOUs) and special economic zone (SEZs) in gem & jewellery sector, as well as mode of payment. Banks were also directed to file monthly
statement on the quantity and value of gold imports by the nominated agencies (other than the nominated banks), EOUs, SEZs as well as the cumulative position at the end of the reporting month.

RBI DIRECTED BANKS TO PRINT MICR AND IFSE CODE ON THE PASSBOOK

Apex Indian bank, the Reserve Bank of India on 21 April 2012 directed all commercial banks to print the MICR and IFSE code on the passbook and statement of account of the customers. The bank made the printing of MICR and IFSE code compulsory for all the banks. The banks, under their current  practice, provide MICR code on  the cheque leaf along with the IFSC code of the branch. Under the RBI guidelines, MICR code is
mandatory for all electronic clearing services (credit and debit) transactions. IFSC code is a prerequisite for national electronic funds transfer (NEFT) and real time gross settlement (RTGS) transactions. MICR (Magnetic Ink Character Recognition) is the bottom line on all checks. It is printed using a special font. IFSC Code (Indian Financial System Code) is an eleven character code assigned by RBI to identify every bank branches uniquely, that are participating in NEFT system in India. This code is used by electronic payment system applications such as RTGS, National Electronic Fund Transfer and CFMS.

FDI INFLOWS INTO INDIA’S SERVICES SECTOR IN INDIA WENT UP BY 62% DURING APRIL-JANUARY PERIOD 2011-12

Foreign direct investment (FDI) inflows into the services sector in India went up by 62% during April-January period 2011- 12 on account of unfavourable economic conditions of the western markets. The financial
and nonfinancial services sector attracted FDI worth $4.83 billion during the 10-month period of 2011-12 as compared to $2.98 billion in the April-January period of 2010-11. The trend reflected confidence in India’s growth story. It was observed that though the economic growth in India itself declined in 2011-12 to 6.9%, the economy was among the best performing in the world. Despite taxation and policy issues, the country enjoys the investor confidence as is evident from a 53 per cent increase in total FDI inflows to $26.19 billion during the 10-month period (April-January 2011-12). The sectors that attracted sizeable FDI inflows include drugs
and pharmaceutical ($3.20 billion), construction ($2.23 billion), telecommunications ($1.99 billion) and power ($1.56 billion). The highest FDI of $8.91 billion came from the Mauritius, followed by Singapore ($4.30 billion) and Japan ($2.75 million).

DOT’S POWER TO IMPOSE PENALTY ON OPERATORS

The Department of Telcom’s (DoT) power to impose penalty on operators for not dully completing formalities of customer verification for security purposes was upheld by tribunal Telecom Dispute Settlement Appellate Tribunal’s (TDSAT). While delivering its judgement a twomember TDSAT bench stated that the matter related to the security of the nation so far as conduct of telegraph is concerned, can be implemented through conditions of licence. TDSAT’s order followed a petition filed by the GSM lobby group COAI and various operators challenging the penalty imposed by the DoT. Operators had requested that the penalty regime introduced by DoT on 22 November 2006 be quashed as they felt that the penalty imposed by the DoT ‘s TERM Cell in various circles as illegal, arbitrary and suffering from procedural impropriety. Operators claimed that
imposition of the Scheme of Financial Penalty for Violation of Terms and Conditions of the Licence Agreement for Subscriber Verification Failure Cases imposed by DoT was not countenanced under the terms of the licences.

PROPOSAL TO SET UP SPV FOR GOODS AND SERVICES TAX NETWORK APPROVED

The Union Cabinet on 12 April 2012 approved a proposal to set up a Special Purpose Vehicle (SPV) for Goods and Services Tax Network (GSTN) to help facilitate the smooth introduction of the new indirect tax regime. GSTN SPV is to be incorporated as Section 25 not-for-profit private limited company in which strategic control would be held by the Centre. It will provide IT infrastructure and services to various stakeholders including the Centre and states.The SPV will have an equity capital of Rs 10 crore, with both the Centre and  states having stakes of 24.5 per cent each. Non government institutions would hold 51 per cent equity.

STAR GROUP ENDED ITS JOINTVENTURE WITH INDIAN TELEVISION

Rupert Murdoch led Star Group on 16 april 2012 decided to put an end over its joint venture with its Indian television news channel partner. The company cited the split on regulatory headaches as the reason behind
the decision. Star’s logo will stop to be broadcast on the three news channels run under the joint venture within four months. The company held 26 percent stake in the joint venture with local partner the Ananda Bazaar Patrika Group. The JV came into being in 2003. In Media Content & Communications Services the maximum permissible level of investment under Indian regulations is 26 per cent.

PUBLIC PROCUREMENT BILL & ADVALOREM REGIME FOR CALCULATING ROYALTY FOR COAL APPROVED

The Union Cabinet on 12 April 2012 approved Public Procurement Bill, 2012 which aims at regulating public procurement of above Rs 50 lakh and provides fair treatment to bidders. The move is aimed at bringing
transparency in State purchases. Public Procurement Bill, 2012 aims at regulating public procurement by all ministries and departments of the Union government, Central public sector enterprises (CPSEs), autonomous and statutory bodies controlled by the Centre and other procuring entities. The Bill also proposes absence of price negotiations, except in circumstances that are prescribed, and for which reasons are to be recorded.  The Cabinet Committee on Economic Affairs (CCEA) also approved an ad-valorem regime for calculating royalty for coal and lignite. Following the approval the coffers of coal-bearing states will get richer by over Rs 1000  crore. Currently the hybrid formula is in place for charging royalty on coal  and lignite at the rate of 14 per cent and 6 per cent respectively. Royalty rates on coal and lignite have not been revised since 2007.The ad-valorem regime will enable major coal producing states to earn revenue of about Rs 6980 crore in place of Rs 5950 crore being earned at present at existing rates. The new regime is to increase the combined earning by
more than Rs 1050 crore.

Rs.30000 CRORE BAILOUT FOR AIR INDIA

The Union government approved Rs 30000 crore bailout for Air India. It was decided that Rs 6750 crore would be infused immediately to meet the airline’s working capital requirement and the total of bailout amount would be spread out over a period of 9 years. The Rs 30000 crore bailout package was approved in addition to the equity infusion of Rs 3200 crore already in place. The government also decided on other issues with an objective of pulling out ailing Air India from its debt burden and enabling it to turn into a profit making venture. The decisions of the Cabinet Committee on Economic Affairs (CCEA) decided to hive off the engineering services and ground handling business, and go ahead with the induction of 27 new Boeing 787 Dreamliners. The domestic carrier will get the government guarantee for repayment of principal amount and payment of interest on the non-convertible debentures of Rs. 7400 crore proposed to be issued to financial institutions, banks, the Life Insurance of Corporation and used to repay part of working  capital loans. The proposal to make the
airline’s MRO (Maintenance, Repair and Overhaul) business and its Engineering Services as two wholly-owned subsidiaries was also approved. The MRO unit is to get Rs. 375 crore over three years and is projected to be a profit-making company from 2017-18. The MRO unit will aim at tapping the potential of nearly $1.5 billion in the Asia Pacific region. About 7000 employees of Air India will migrate to the subsidiary company.

E-FILING OF RETURNS COMPULSORY FOR INDIVIDUALS WITH INCOME ABOVE RS 10 LAKH

The Union government made it mandatory for individuals with income above Rs 10 lakh to file their tax returns 2011-12 onwards electronically. Efiling was made compulsory for the person who is an individual,
or a Hindu Undivided Family, if his or its total income, or the total income in respect of which he is or it is assessable under the Act during the previous year, exceeds Rs 10 lakh for assessment year 2012-13 onwards. E-filing for such individuals was optional till 2010- 11. Currently business houses with receipts of Rs 60 lakh and professionals with income of Rs 15 lakh are mandatorily required to e-file their return with digital signature.
The department had received a record number of 1.64 crore e-returns in the 2011-12 financial year. As on 31 March 2012, there were 19684,592 tax payers who had registered for e-filing. The efiling measure was adopted to encourage people to go for e-filing of returns so as to fasten the process of filing of taxes. The  digital signature was however not mandatory for them. The new tax returns forms ask assessees to furnish details of donations made for claiming tax deductions. Also the government made it mandatory reporting of assets held by individuals abroad, including financial interest in any entity, overseas.

JAGRAN PRAKASHAN LIMITED ACQUIRED HINDI NATIONAL DAILY NAI DUNIA IN A 150 CRORE RUPEES DEAL

Jagran Prakashan Limited (JPL), the publisher of the India’s largest read daily Dainik Jagran, on 2 April 2012 bought Suvi Info Management (Indore) Private Limited, the company that under its subsidiary Nai Dunia Media Limited publishes Hindi daily Nai Dunia in Madhya Pradesh and Chhattisgarh. Nai Dunia, which has a daily circulation of around 500000 copies, publishes several editions from Indore, Gwalior, Jabalpur and Bhopal in Madhya Pradesh and Raipur and Bilaspur in Chhattisgarh. Jagran Prakashan Limited had acquired English daily Mid Day in 2010 in a 175 crore rupees deal. The new acquisition will enable the company to grow inorganically through mergers and acquisitions.