Economy & Business
The Central Government declared 2016 as the ‘Year of LPG Consumers’ while unveiling plans to make the clean cooking fuel available to all households by end of 2018 and roll out online bill payment facility and transparent gas cylinders.
“The 2016 will be Year of LPG Consumers. We will work to increase accessibility and availability of the cooking in the country. In coming three calendar years 2016, 2017 and 2018, we will set an ambitious target to provide clean cooking fuel to entire population,” Oil Minister Dharmendra Pradhan said.
About the availability of LPG in the country, the minister said that there are 27 crore subscribers in the country, of which 16.5 crore are active subscribers and oil marketing companies cover about 60 per cent of the population. He said: “We want to cover 100 per cent population. But we have to keep in mind their affordability and accessibility issues. We hope that a large proportion of population will avail the facility with the increase in their purchasing power due to economic growth, in next three years.”
The minister said that the pilot experiment on LPG online bill payment service is being carried out while the launch of composite transparent cylinder will be a reality in the financial year 2016-17.
India’s external debt edged up by 1.7 per cent during the first six months of the ongoing fiscal to U.S.$483.2 billion at end-September, the Union Finance Ministry said, attributing the rise in external debt during the period to long-term external debt particularly commercial borrowings and NRI deposits.
However, on a sequential basis, total external debt at September-end declined by U.S.$291 million from end-June. At end-September 2015, India’s external debt stock stood at U.S.$483.2 billion, recording an increase of U.S.$8.0 billion over the level at end-March 2015.
The external debt consist of long-term debt of U.S.$397.1billion (up 1.9 per cent from March) and short-term debt U.S.$86.1 billion (increase of 0.7 per cent). Share of commercial borrowings was highest at 37.7 per cent of total external debt, followed by NRI deposits at 25.2 per cent and multilateral debt at 11 per cent.
“At end-September 2015, long-term external debt accounted for 82.2 per cent of India’s total external debt, while the remaining (17.8 per cent) was short-term external debt,” the ministry said. Sovereign external debt stood at U.S.$88.9 billion in September 2015 while non-government debt amounted to U.S.$394.3 billion, it added.
The ministry noted that the share of dollar denominated debt continued to be the highest in external debt stock at 57.7 per cent at end-September 2015, followed by the rupee (28.3 per cent), SDR (5.8 per cent), Japanese yen (4.0 per cent), and euro (2.4 per cent).
The ratio of short-term external debt to foreign exchange reserves was 24.6 per cent at end-September 2015 as against 25.0 per cent at end-March 2015.
Qatar has agreed to lower the price of gas it sells to India on a long-term contract by about U.S.$6 billion to reflect the slump in global energy rates and also waived the 12,000-crore penalty for ‘short-lifting’ in 2015. Petronet LNG Ltd (PLL), India’s biggest gas importer, signed a revised contract with RasGas of Qatar.
The price as per the revised formula will come to U.S.$6-7 per million British thermal unit (mmBtu) as against U.S.$12-13 per mmBtu currently, oil minister Dharmendra Pradhan said. He said the reworked formula will apply to 7.5 million tonnes a year of LNG India buys from RasGas on a long-term contract ending in April 2028. The revised formula will base the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan, with a rider that PLL buys an additional 1 million tonnes of LNG annually.
The trailing three-month average Brent price is about U.S.$44 a barrel while the average of Japan Crude Cocktail for the five-year period ended September 30 was U.S.$94. Qatar will also not seek 12,000 crore from PLL for ‘under-lifting’ LNG from RasGas by 32 per cent.
The value of the under-lifted cargoes in 2015 is 12,000 crore and if the change-to-price formula was implemented, it would suggest a U.S.$2.5 billion buyer saving over three years.
Bowing down to pressure, the Reserve Bank of India agreed to share relevant extracts of its banks’ inspection reports with a central economic intelligence wing to help it check money laundering and violations of other banking laws.
The central bank is expected to soon sign a Memorandum of Understanding with the Central Economic Intelligence Bureau (CEIB), an apex intelligence agency under the Finance Ministry, in this regard.
The RBI had repeatedly refused to share inspection reports with the bureau citing legal hurdles despite the matter being raised time and again during the meetings of Economic Intelligence Council (EIC) headed by Finance Minister Arun Jaitley. The matter was referred to the Law Ministry, which said provisions of the Banking Regulations Act, 1949 and other banking laws do not restrain RBI from sharing extracts of inspection or scrutiny report with law enforcement agencies or CEIB.
“The RBI has agreed to share relevant extracts of inspection reports of banks with CEIB and has sent a draft of the MoU to CEIB. The draft has been accepted by CEIB and RBI with some minor modifications. The MoU is expected to be signed by RBI and CEIB shortly,” as per the agenda note for the meeting of “working group on intelligence apparatus pertaining to EIC”.
The RBI was required to share relevant extracts of inspection reports with law enforcement agencies and CEIB to check black money and other financial crimes where gross violations of Know Your Customer (KYC) guidelines and Prevention of Money Laundering Act were noticed.
The RBI had objected to sharing the reports with CEIB on the ground that the latter was not a statutory body. The central bank, however, was sharing these reports with Intelligence Bureau (IB), which is also not a statutory body, they said. The matter of misuse of Urban Cooperative Banks, over which there is dual control by central and state governments, for money laundering has been a matter of concern for central intelligence agencies. Violations of banking laws by other banks have also been noticed.
India said the devaluation of the Chinese currency is a ‘worrying’ development which will make Indian exports expensive and widen the trade deficit with the neighbouring nation.
Commerce and Industry Minister Nirmala Sitharaman said the devaluation of the yuan will make imports cheaper from China to India. In 2014-15, the bilateral trade between the countries stood at U.S.$72.3 billion with the trade gap at U.S.$49 billion. The government and the Indian industry have time and again raised concerns about the widening deficit.
India has been pushing China to give greater market access to Indian products such as agri, IT and pharmaceuticals. “It is going to make imports from China even more cheaper (to India). Our products are going to be more expensive. So, that is an immediate black-and-white kind of a situation which is developing,” she said, adding that imports are coming in not just because they are cheaper, but the excess capacity in China. “So, China wants to push goods into different countries, particularly India, and that would become even cheaper with the currency devaluation,” the minister explained.
China’s central bank has devalued its currency by 0.51 per cent to 6.5646 per cent against the dollar, the lowest since March 2011. “But currency volatility all over the world is a matter of worry, it is a cause for concern because your exports in terms of quantity in many sectors are remaining the same... but you are not earning out of it because of the volatility in the currency,” she added.
Ms Sitharaman flagged concerns about currency fluctuations overall and India’s parity with those currencies, which are causing “a lot of concern”. “This is not the first time. In fact, this is the third major devaluation of the Chinese currency,” she said.
The ministry is planning a meeting with Chief Economic Advisor Arvind Subramanian and Niti Vice-Chairman Arvind Panagariya to get the big picture on China in the context of steel imports as well as overall cheap imports coming into India. Asked if India is preparing any kind of action plan to deal with Chinese imports, the minister talked about a case-to-case basis to find out the imported products that are causing injury to the Indian industry. “And if that (injury) is established based on ground facts, then some anti-dumping duty or something can be brought in. We will be assessing it because our trade balance is adversely getting affected,” she said.
Stand Up India Scheme
The Union Cabinet approved the ‘Stand Up India Scheme’ to promote entrepreneurship among SC/ST and Women entrepreneurs. The scheme is intended to facilitate at least two such projects per bank branch, on an average one for each category of entrepreneur. It is expected to benefit at least 2.5 lakh borrowers in 36 months from the launch of the scheme.
The ‘Start up India, Stand up India’ initiatives were announced by Prime Minister Narendra Modi in his Independence Day speech.
Here are the details of the scheme:
The Stand Up India Scheme provides for:
v Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of 10,000 crore.
v Creation of a credit guarantee mechanism through the National Credit Guarantee Trustee Company (NCGTC).
v Handholding support for borrowers both at the pre loan stage and during operations. This would include increasing their familiarity with factoring services,
registration with online platforms and e-market places as well as sessions on best practices and problem solving.
registration with online platforms and e-market places as well as sessions on best practices and problem solving.
The details of the scheme are as follows:
v Focus is on handholding support for both SC/ST and women borrowers.
v The overall intent of the approval is to leverage the institutional credit structure to reach out to these under-served sectors of the population by facilitating bank
loans repayable up to 7 years and between 10 lakh to 100 lakh for greenfield enterprises in the non farm sector set up by such SC, ST and women borrowers.
loans repayable up to 7 years and between 10 lakh to 100 lakh for greenfield enterprises in the non farm sector set up by such SC, ST and women borrowers.
v The loan under the scheme would be appropriately secured and backed by a credit guarantee through a credit guarantee scheme for which Department of
Financial Services would be the settler and National Credit Guarantee Trustee Company Ltd. (NCGTC) would be the operating agency.
Financial Services would be the settler and National Credit Guarantee Trustee Company Ltd. (NCGTC) would be the operating agency.
v Margin money of the composite loan would be up to 25%. Convergence with state schemes is expected to reduce the actual requirement of margin money for a
number of borrowers.
number of borrowers.
v Over a period of time, it is proposed that a credit history of the borrower be built up through Credit Bureaus.