India Approves 49% FDI in Insurance Sector

Foreign Direct Investment (FDI) cap in the insurance sector has been raised to 49 per cent from 26 per cent.

In a press note, The Commerce & Industry Ministry said this follows approval given by the Union Cabinet to promulgation of an Ordinance hiking the FDI limit in the insurance sector to 49 per cent in December last year, after the legislation to amend the insurance law could not be passed in the winter session of Parliament.

As per the press note (number 3 of 2015 series) issued by the Department of Industrial Policy & Promotion, FDI up to 26 per cent in the insurance sector will be through the automatic route, while levels above 26 per cent and up to 49 per cent will have to come through the Government route.

Copies of the press note have been forwarded to officials in the Department of Economic Affairs and the Reserve Bank of India for “suitably incorporating the policy changes in the Foreign Exchange Management Regulation 2,000.”

The Insurance Laws Amendment Bill, 2008 could not be taken up for discussion despite being approved by the Select Committee of the Upper House as Opposition parties had vehemently opposed it because of conversion and other issues.

India Factory Output Hits 5 Month Low in Feb

India’s Factory activity expanded at its slowest pace in five months in February as a slowdown in new orders dragged on overall output, according to HSBC Manufacturing Purchasing Managers’ Index (PMI) survey.

The manufacturing activity survey, HSBC Manufacturing Purchasing Managers’ Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January.

A reading above 50 separates growth from contraction.

The new orders sub-index fell to 51.9, the lowest level in five months, from January’s 54.4. The drop underscored softer domestic demand, which also accounted for a slight cut in headcount at firms.

The seasonally-adjusted output index also fell to its lowest since September. Indeed, February marks the 16th straight month of factory activity expansion and if India can grow as strongly in the coming fiscal year as the government said in its newly-released budget – expanding by up to 8.5 percent – that should boost manufacturing.

Output prices, or the inflation on goods for consumers, rose at the weakest rate in five months as manufacturers offered discounts to secure new business, according to a press statement released by Markit.

India Budget Highlights

Following are the highlights of the Union Budget 2015-16 presented by Finance Minister Arun Jaitley in Parliament

* No change in personal Income Tax

* Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000

* Transport allowance exemption hiked to Rs 1,600, from Rs

800 per month

* Additional 2% surcharge on people earning over Rs 1 cr;

to fetch Rs 9,000 cr

* Wealth tax abolished

* Direct Taxes Code (DTC) dropped

* Rs 50,000 deduction for contribution to New Pension

Scheme

* To lower Corporate Tax to 25% over next four years

* GAAR implementation deferred by 2 years to April 2017

* Service Tax rate hiked to 14%, from 12.36%

* Tax free bonds for roads, railways, irrigation projects

* 2015-16 growth between 8-8.5%, double digit growth

feasible

* Retail inflation close to 5% by March, room for monetary

policy easing

* To achieve fiscal deficit of 3% of GDP by 2017-18

* Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17

* Revenue Deficit to be 2.8% in 2015-16

* Current Account Deficit for 2014-15 to be below 1.3% of

GDP

* To introduce comprehensive law to deal with black money

* Benami property transaction bill to tackle black money

transaction in real estate soon

* 100% deduction for contribution to Swachh Bharat, Clean

Ganga projects

* GST to be put in place by April 1, 2016

* Internationally competitive direct tax regime to be put

in place to incentivise saving

* Incentivise use of credit, debit cards; disincentivise

cash transaction to curb black money.

* 7 pc surcharge on firm earning Rs 1 crore to Rs 10 cr

* Disinvestment target pegged at Rs 69,500 cr

* Net borrowings pegged at Rs 4.56 lakh cr

* AIIMS to be set up in J&K, Punjab, Assam, Tamil Nadu and

Himachal Pradesh

* Indian Gold Coin with Ashok Chakra, Gold Bond, gold

monetisation scheme proposed to check gold import

* Forward Markets Commission to be merged with SEBI

* PPP model in infrastructure to be revised and revitalised

* MGNREGA allocation hiked by Rs 5,000 cr

* Nirbhaya Fund allocation hiked by Rs 1,000 crore

* 5 Ultra Mega power projects to be set up at Rs 1 lakh cr

* To create world class IT hub; Rs 150 cr

* States to be equal partners in economic growth:

* To bring a new bankruptcy code in 2015-16

* Committed to subsidy rationalisation by cutting leakages

* National Skill Mission to be launched, to develop

employability of youth

* Rural infra development fund to have Rs 25,000 cr corpus

* Visa on arrival scheme to be expanded to 150 countries

* PSU ports to be encouraged to become companies

* Non Plan expenditure at Rs 13.12 lakh cr, Plan

expenditure at Rs 4.65 lakh cr

* Gross tax mop up at Rs 14.49 lakh cr

* Direct tax proposals will lead to a loss of Rs 8,315 cr;

indirect tax proposal gain will be over Rs 23,000 cr

* Tax payers to get income tax benefit of Rs 4.44 lakh

* To introduce 2 pc Swachh Bharat cess on Service Tax

* Customs duty on OLED TV abolished

* Excise duty on leather shoes costing Rs 1,000 lowered to

6 pc from 12 pc

* New tax proposals to bring revenue gain of Rs 15,068 cr

* 50 lakh toilet built under Swachh Bharat Abhiyan, 6 crore

toilet targeted.

Economic Survey : India Economy to Grow 8.5%

India’s economy will grow at a rate of more than 8 per cent in the 2015-16 fiscal year, while consumer inflation will drop to between 5 and 5.5 per cent, according to the Economic Survey report, tabled at Parliament by Finance Minister Arun Jaitley, a day before Prime Minister Narendra Modi government’s first full Union Budget.

The survey, a report on the state of Indian economy, forecast the economy would grow by 8.1-8.5 per cent under a new calculation method that makes India the world’s top-growing big economy. The report also indicated that India can increase public investments and still hit its borrowing targets, while saying the country needed to adhere to its medium-term fiscal deficit target of 3 percent of gross domestic product.

Noting India had hit an economic sweet spot, the report added the country had room for big bang reforms. This gives an indication that Finance Minister Arun Jaitley will stick to debt targets in his maiden full-year budget .

The Economic Survey prepared by the Finance Ministry’s chief economic adviser Arvind Subramanian on the state of Asia’s third-largest economy was released ahead of Union Budget announcement for 2015/16 that begins on April 1.

* India must meet its medium-term fiscal deficit target of 3 percent of GDP

* Government will adhere to fiscal deficit target of 4.1 percent of GDP in 2014/15

* Govt should ensure expenditure control to reduce fiscal deficit

* Expenditure control and expenditure switching to investment key

* 2015/16 GDP growth seen at over 8 pct y/y

* Double digit economic growth trajectory now a possibility

* Economic growth at market prices seen between 8.1 - 8.5 percent in 2015/16 on new    GDP calculation formula

* Total stalled projects seen at about 7 percent of GDP, mostly in private sector

* There is scope for big bang reforms now

* India can increase public investments and still hit its borrowing targets

* Inflation shows declining trend in 2014/15

* Inflation likely to be below central bank target by 0.5 - 1 percentage point

* Lower inflation opens up space for more monetary policy easing

* Govt and central bank need to conclude monetary framework pact to consolidate      gains in inflation control

* Consumer inflation in 2015/16 likely to range between 5-5.5 percent

* Govt remains committed to fiscal consolidation

* India can balance short-term imperative of boosting public investment to revitalize growth with fiscal discipline

* Outlook for external financing is correspondingly favourable

* Estimated at about 1.3 percent of GDP in 2014/15 and less than 1.0 percent of GDP    in 2015/16

* Overhauling of subsidy regime would pave the way for expenditure rationalisation

* Liquidity conditions expected to remain comfortable in 2015/16

S&P Revises India’s GDP Forecast to 7.9 Per Cent

Global rating agency Standard & Poor's Ratings Services revised India’s GDP forecast upwards at 7.9 per cent for the fiscal year ending March 2016 driven by rising investment and low oil prices.

However, the forecast of real GDP growth in the Asia Pacific region has been lowered.

“India should be the Asia-Pacific region's bright spot. We revised our growth forecasts for the country upward, reflecting new official data based on methodological improvements. Standard & Poor's now forecasts GDP growth at 7.9% in the fiscal year ending March 2016, versus 6.2 per cent earlier, and 8.2 per cent in fiscal 2017, from 6.6 per cent previously. Rising investment and low oil prices have been boosting India's growth,” said Paul Gruenwald, Asia-Pacific Chief Economist at S&P.

S&P has lowered its GDP growth forecasts for China, Japan, and the Asian Tiger economies, as per its report titled ‘Stronger US economy and lower oil prices aren't boosting Asia-Pacific growth’.

The twin factors of strengthening US economy and lower oil prices have yet to lift economic data in much of Asia-Pacific. Central banks have shifted their stance in recent months, with a critical group of monetary policy makers cutting rates or easing financial conditions and the remainder moving to a more neutral stance.

This is contrary to what we observed until the latter part of 2014. Weaker growth in China and Japan may be weighing on overall sentiment, although India's star is rising.

S&P trimmed GDP growth forecasts for China to 6.9 per cent this year and 6.6 per cent in 2016, from 7.1 per cent and 6.7 per cent, respectively. It believes the official growth target will be about 7 per cent.

For Japan, the agency has lowered our growth forecast to 0.7% this year (from 1.3%) and 1.3% in 2016 (2.1% previously).

Railway Budget : No Hike in Fares, No New Trains

India’s Railway Budget for 2015-16 holds no surprises as Railway Minister Suresh Prabhu sparing the passengers of a fare hike. He however announced a record investment plan of over Rs. 1 lakh crore for the sector.

Highlights of Railway budget 2015-16

• ·        No increase in passenger fares
• ·        No new trains announced
• ·        Tickets can be booked 120 days in advance instead of 60 days to tackle tout menace
• ·        Outlay for passenger amenities increased by 67%
• ·        Plan expenditure to go up to a record Rs. 1.1 lakh crore in 2015-16 from an estimated Rs. 61,500 crore in 2014-15.
• ·        Central government to outlay likely to at 41 per cent (Rs.45,100 crore) in 2015-16
• ·        Will introduce train sets saving 20% of journey time, similar to bullet trains in design, and that can run on existing tracks
• ·        The speed passenger trains across nine corridors will be increased to 160-200 km from 110 km
• ·        SMS alert to be introduced for train timings
• ·        To introduce air-conditioned coaches for suburban trains
• ·        Wi-fi to be available at 400 railway stations
• ·        To revamp station redevelopment policy completely
• ·        To have bidding system for redevelopment of stations
• ·        To develop 10 satellite railway stations this year
• ·        800 km of gauge conversion will be commissioned
• ·        E-catering introduced in 108 trains, can order on IRCTC website
• ·        To expand water vending machines on more stations
• ·        On-board entertainment facility could be extended on Shatabdi trains
• ·        Mobile charging stations will be introduced in general class coaches
• ·        More general class coaches will be added to select trains for benefit of the common man
• ·        Railways plans to spend over Rs. 8 lakh crore over five years
• ·        Pension funds, multi-lateral banks have evinced interest in Railways
• ·        Proposed the best operating ratio in nine years, of 88.5 per cent for 2015-16
• ·        Railways to go through transformation in five years; to increase track capacity by 10 per cent to 1.38 lakh km
• ·        Feasibility report of high speed train between Mumbai and Ahmedabad expected by mid-2015
• ·        Wagon-making scheme to be reviewed to make it easier for private investment
• ·        To improve cleanliness & design of bed linen
• ·        All India 24x7 grievances helpline 138 to start soon
• ·        7,000 more toilets to be replaced by Bio-Toilets, New toilets at 650 stations, more  vaccum toilets
• ·        Passenger travelling unreserved can procure a ticket within 5 minutes
• ·        Mobile application to address complaints of people is also being developed
• ·        Introduction of integrated ticketing will be done
• ·        Hand-held devices for ticket checkers for moving towards paperless ticketing
• ·        Centrally managed railway display network in over 2000 stations in next 2 years
• ·        Railways will play a big role in socio-economic development of the country
• ·        Railways carry a big burden of expectations
• ·        Investments in railways will have multiplier effect
• ·        Railways facilities have not improved significantly over last few years
• ·        The cycle of under-investment should end
• ·        Railways has to regain in share in freight traffic
• ·        Railways aims to deliver a sustainable improvement in customer experience and make rail a safer means of travel
• ·        Objective is to make Railways self-sustainable
• ·        Rail-cum-road ticket to be extended to many stations
• ·        We are committed to provide rail connectivity to North Eastern states
• ·        Transport Logistic Corporation of India to be set up to aid expanding freight handling capacity and provide end-to-end logistic solutions
• ·        PPP model will help to augment resources and generate more employment
• ·        6608 kms of track to be electrified
• ·        Projects worth Rs. 96,182 crore to expand capacity of 9,420 km rail lines
• ·        CCTVs to be introduced in select trains and suburban trains for women safety
• ·        Train Protection Warning System, Train Collision Avoidance System
• ·        Projects for rail connectivity to many ports and mines
• ·        To monetize assets rather than sell them
• ·        To set up full-fledged Railway University in FY16
• ·        Rs.2000 crore for Coastal Connectivity Program; Rs.2500 crore through BOT/Annuity route
• ·        Drawing up comprehensive policy to tap latent advertising potential
• ·        Online application for all recruitment process
• ·        To impart soft skills to our staff we intend to impart regular training
• ·        917 safety work projects to eliminate over 3,000 unmanned crossings in all states
• ·        PPP cell to be revamped to make it result oriented
• ·        Railways can't function as business as usual mode
• ·        To set up infra fund, JV with IRFC for long-term funding

ITC acquires Park Hyatt Goa for Rs 515.44 crore

ITC group has won the bid to acquire Park Hyatt Hotel property in Goa for Rs.515.44 crore.

The diversified group has remitted 25 per cent of the bid amount of Rs 128.86 crore for the hotel owned by Blue Coast Hotels and put up for public auction by IFCI.

In a filing to the BSE, IFCI said the Kolkata-based ITC has remitted the advance as per the terms of the tender document.

The bid value is equivalent to the reserve price set by the lender, IFCI Ltd. The auction was initiated under the SARFAESI Act, 2002.

The PL Suri-controlled Blue Coast Hotels Ltd, which owns the Park Hyatt Hotel, had a debt of Rs 228.11 crore as of March 31, 2014. The company has been in the red since March 2011 and had defaulted on loan repayments to IFCI.

As of March 2014, the Suri family had a 43.46 per cent controlling stake in Blue Coast. Of the promoters’ stake, nearly 97 per cent was pledged with the lenders. Apart from Park Hyatt Goa Resort & Spa, it also owns MGM Grand New Delhi, Sheraton Chandigarh and Sheraton Amritsar.

The sale of the hotel in Cansaulim saw Blue Coast’s shares rise 4.93 per cent to Rs 63.90 on the BSE, on Monday. ITC’s shares were down 1.45 per cent at Rs 390.15.

ITC operates hotels under four brands: ITC Hotels (luxury), Welcom Hotel (5-star segment), Fortune (mid-market to upscale) and Welcom Heritage (heritage leisure).