- October 6, 2016
- Posted by: Vinoba
- Category: All Posts, October 2016
1.India Economic Summit: World Economic Forum
Source: Indian Express
Digital transformation will enable India to achieve a robust farm sector, drive job creation and entrepreneurship, and economically empower more than a billion people.
The 32nd editions of the India Economic Summit is being jointly organised by the World Economic Forum and the Confederation of Indian Industry(CII)
The sessions will throw light on the issues like India’s fourth industrial revolution, the country’s energy potential, building blocks for infrastructure investment and start-ups.
Driving Sustainable and Equitable Growth and Improving the Ease of Doing Business.
What are the needs?
- The government also needs to ensure that whatever investment is coming into the country actually translates into rapid productions, exports and lead to creation of good jobs in the country to help us achiever high growth.
- Outlining what needs to be done, economists and industrialists outlined key efforts on skilling, MSMEs and investment in right things that would help the country to transform.
- India can catch up with the world is through use of digital technology to leapfrog.
- India needs to bring about radical restructuring of its health and education system if it were to grow at a sustainable rate of 8% of next three decades
- Government needs to create enabling environment to help small and medium enterprises to develop.
- India’s missions should be to ensure sustainable and inclusive growth.
- To achieve this, India will have to ensure to invest in right things including creation of basic infrastructure and skilling a million of its workforce every year.
- Farming attractive and aspirational for the youth, ensuring sustainable and safe means of production and leveraging new technology and innovation.
2.Banks may need to review MCLR implementation: RBI
Source: Indian Express
“Stressed balance sheets, sluggish credit growth impeding transfer of rate cuts”
The Reserve Bank of India (RBI) has said banks will need to review the implementation of the Marginal Cost of Funds based Lending Rate (MCLR) to facilitate effective transmission of rate cuts.
Basis of Factors for requirement of MCLR Implement:
Structural and cyclical factors impeding transmission to bank lending rates, particularly stressed balance sheets of banks and sluggish credit growth, may require a review of the MCLR implementation by banks, in the context of significant softening of long-term yields, the RBI has release Monetary Policy Report.
- The Reserve Bank of India has brought a new methodology of setting lending rate by commercial banks under the name Marginal Cost of Funds based Lending Rate (MCLR). It has modified the existing base rate system from April 2016 onwards.
- Under the MCLR system, banks determine their benchmark lending rates linked to marginal cost of funds.
- As per the new guidelines by the RBI, banks have to prepare Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark lending rates.
- Based upon this MCLR, interest rate for different types of customers should be fixed in accordance with their riskiness. The base rate will be now determined on the basis of the MCLR calculation.
- The MCLR should be revised monthly by considering some new factors including the repo rate and other borrowing rates. Specifically the repo rate and other borrowing rates that were not explicitly considered under the base rate system.
- As per the new guidelines, banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.
- The new methodology uses the marginal cost or latest cost conditions reflected in the interest rate given by the banks for obtaining funds (from deposits and while borrowing from RBI) while setting their lending rate. This means that the interest rate given by a bank for deposits and the repo rate (for obtaining funds from the RBI) are the decisive factors in the calculation of MCLR.
Since January 2014 RBI has cut interest rates to the tune of 175 basis points in this fiscal year. But, this has not been effectively transmitted to lending rates offered by the banks. Banks have so far lowered their base rate by only 80 basis points.
The MCLR consists of four components:
- Marginal cost of funds (i.e. marginal cost of borrowings comprising deposits and other borrowings, and return on net worth),
- Negative carry on account of cash reserve ratio (CRR),
- Operating costs and
- Term premium/discount for prescribed maturities.
Difference between base rate system
- Cost of deposits
- Negative carry on CRR and SLR
- Overheads cost and,
- Returns on net worth
What are the problems: – The RBI analysed the reasons hindering transmission of rates
The MCLR plus spread is the actual lending rate for a borrower. The spread comprises two components — business strategy and credit risk premium.
In principle, the role of each component of the MCLR can be monitored and analysed.
- The fixed interest rates offered on savings deposits (though deregulated) which, along with current accounts, constitute around 35 per cent of aggregate deposits, thereby stifling transmission to more than a third of deposits.
- Highlighted by the RBI is that no reduction in interest rates has happened on small savings in Q2 of 2016-17, followed by a marginal reduction of 10 bps in Q3, notwithstanding a notable decline in G-sec yields(Bonds, Stocks or Bond held in Bond Ledeger Account. They may be in the form of Treasury Bills or Dated Government Securities).
- Stressed asset quality of banks and pricing of risk premium reflecting risk aversion- accounts as NPAs.
- Sluggish bank credit demand.
RBI would continue to manage liquidity proactively and consistent with the stance of monetary policy, while taking timely and appropriate measures to insulate the system.
3.Indian banks vulnerable to profit decline amid rising bad loans: IMF
Source: The Hindu
- IMF called for swift and transparent recognition of non-performing assets to ensure good health of banking system
- Banking systems are vulnerable to further declines in growth or profits, particularly in countries at later stages of the credit cycle (such as India), where slowing credit growth and risks from elevated levels of non-performing loans are most acute,” said the International Monetary Fund’s – Global Financial Stability report.
- IMF said bank loan-loss reserves have fallen short of the expected loss on non-performing loans under the current debt-at-risk in India.
- The Reserve Bank has already nudged lenders to set aside more funds for stressed loans and clean up their balance sheet by March 2017.
- To deal with the bad loan problem, IMF has suggested that corporate insolvency frameworks should be upgraded, including by facilitating out-of-court settlement and debt-for-equity swaps, with well-defined and transparent rules. Also contingency plans to manage corporate distress should be put in place.
4.CBDT will use data from Project Insight to widen tax base
Source: Indian Express
Project Insight is an initiative of the finance ministry to widen the tax base by detecting tax evaders using technology.
In its persistent attempts to detect undisclosed income, the tax department, through its Project Insight, has mined “actionable data” on evaders of Securities Transaction Tax and Commodities Transaction Tax by way of pilot initiatives.
5.Cabinet approves Memorandum of Understanding with the African Asian Rural Development Organization in the field of rural development (Min of Rural Development)
The MoU for the triennium 2015 – 2017 is being signed under which capacity building programmes for AARDO member countries will be organized every year during the triennium at various Institutions of Excellence in India such as National Institute of Rural Development & Panchayati Raj (NIRD & PR), institutions governed by the Indian Council of Agricultural Research (ICAR), Indian Institute of Management (IIM) and others.
The AARDO, which has its headquarters in New Delhi, is an autonomous, inter-Governmental organization established in 1962 with the objective of promoting cooperation among the countries of the African – Asian Region in the direction of eradicating thirst, hunger, illiteracy, disease and poverty in the region.
India is one of the Founder Members of the Organization and is the largest contributor providing 70 fully paid training scholarships for Human Resource Development Programme under the Indian Technical & Economic Cooperation Programme (ITEC) to the Organization.
6.Silver Jubilee Seminar and Industry Exhibition at INS Eksila
A seminar with the central theme “Overhaul and Indigenisation of Marine Gas Turbines” and an Industrial Exhibition organised to commemorate the Silver Jubilee Year by INS Eksila.
The primary role and function of INS Eksila is to undertake major overhaul of Marine Gas Turbines (GTs) and Gas Turbine Generators (GTGs) installed onboard Indian Naval Ships, including future acquisitions.
7.Newly Manufactured Solar Powered Guard Van of Goods (Freight) Train
The newly manufactured Guard Van of Goods Train (8 wheeled) has been equipped for the first time with Solar powered Light, Fan, Mobile Charging Point along with the facility of Zero discharge Bio Toilet.
Environment friendly Bio- Toilet system
- Discharge free Environment friendly Bio-Toilet.
- Bacterial decay of solid waste
- Provision of potable Water system.
- Data recording through Data Logger
- Performance monitoring through GPRS system
- Protection against surging
- Auto low voltage cut off and wake up system through Charge Controller
- Anti pilferage measures adopted.
8.Communication satellite GSAT-18 successfully launched
- India’s latest communication satellite, GSAT-18 was inducted into the INSAT/GSAT system from Kourou, French Guiana by Ariane-5 VA-231.
- Weighing 3404 kg at lift-off, GSAT-18 carries 48 communication transponders to provide Services in Normal C-band, Upper Extended C-band and Ku-bands of the frequency spectrum.
- GSAT-18 carries Ku-band beacon as well to help in an accurately pointing ground antennas towards the satellite.
- GSAT-18 is designed to provide continuity of services on operational satellites in C-band, Extended C-band and Ku-bands.
- GSAT-18 was launched into a Geosynchronous Transfer Orbit (GTO) by Ariane-5 VA-231 launch vehicle.
- After its injection into GTO, ISRO’s Master Control Facility (MCF) at Hassan took control of GSAT-18 and performed the initial orbit raising maneuvers using the Liquid Apogee Motor (LAM) of the satellite, placing it in circular Geostationary Orbit.
9.Nobel Prize in Chemistry goes to builders of molecular machines
Source: The Hindu
Royal Swedish Academy of Sciences says molecular machines will most likely be used in the development of things such as new materials, sensors and energy storage systems.
The 2016 Nobel laureates in Chemistry have miniaturised machines and taken chemistry to a new dimension.
The Nobel Prize in Chemistry for 2016 has been awarded to Jean-Pierre Sauvage, Sir J. Fraser Stoddart and Bernard L. Feringa for developing molecular machines.
10.Centre mulls aviation emission offsets
Source: The Hindu
India is examining possible mechanisms to offset higher emissions from rising civil aviation traffic, even as it has firmly opposed a global pact for curbing aviation emissions proposed by the United Nations’ International Civil Aviation Organisation (ICAO) that is currently being negotiated in Montreal.
India has ratified the COP21 accord on climate change this Sunday, but while approving its ratification, the Union Cabinet had last week empowered the civil aviation ministry to flag India’s concerns about the proposed aviation emissions pact, including the move to cap aviation emissions at 2020 levels.
The International Civil Aviation Organization (ICAO) is a UN specialized agency, established by States in 1944 to manage the administration and governance of the Convention on International Civil Aviation (Chicago Convention).
CAO works with the Convention’s 191 Member States and industry groups to reach consensus on international civil aviation Standards and Recommended Practices (SARPs) and policies in support of a safe, efficient, secure, economically sustainable and environmentally responsible civil aviation sector.
11.Navy, ICG ships arrive at Thoothukudi port
Source: The Hindu and PIB
Indian Navy’s cadet training ship ‘INS Tir’ and Indian Coast Guard Ship ‘ICGS Varuna’ of First Training Squadron arrived at V.O. Chidambaranar Port.
INS Tir is the first dedicated Cadet’s Training Ship to be built by Mazagon Dock Limited and commissioned as such by the Indian Navy.
12.Cabinet approves amendments to the HIV and AIDS (Prevention and Control) Bill, 2014
- The HIV and AIDS Bill, 2014 has been drafted to safeguard the rights of people living with HIV and affected by HIV.
- The provisions of the Bill seek to address HIV-related discrimination, strengthen the existing programme by bringing in legal accountability and establish formal mechanisms for inquiring into complaints and redressing grievances.
- The Bill seeks to prevent and control the spread of HIV and AIDS, prohibits discrimination against persons with HIV and AIDS, provides for informed consent and confidentiality with regard to their treatment, places obligations on establishments to safeguard rights of persons living with HIV arid create mechanisms for redressing complaints.
- The Bill also aims to enhance access to health care services by ensuring informed consent and confidentiality for HIV-related testing, treatment and clinical research.
- The Bill lists various grounds on which discrimination against HIV positive persons and those living with them is prohibited.
- The Bill requires that “No person shall be compelled to disclose his HIV status except with his informed consent, and if required by a court order”. Establishments keeping records of information of HIV positive persons shall adopt data protection measures.
- There are approximately 21 lakh persons estimated to be living with HIV in India. Even though the prevalence of HIV is decreasing over the last decade, the Bill would provide essential support to National AIDS Control Programme in arresting new infections and thereby achieving the target of “Ending the epidemic by 2030” according to Sustainable Development Goals.