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India state banks' bailout stumbles as losses mount

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When the government announced a surprise $32 billion bailout plan for the nation's state-controlled banks last October, credit rating firms and the nation's central bank saw it as a huge step to getting the industry back to robust health and lending more to businesses and consumers.

But their optimism may have been majorly misplaced judging by the latest numbers coming out of the banks. And that may in turn crimp economic growth in Asia's third-largest economy.

Thirteen state banks have reported combined losses of $8.6 billion for the year to March - including $6.5 billion in the last quarter - and their non-performing loans have surged nearly a fifth from end-December levels. Two state banks have reported modest profits and six are still to report.

While many of the banks, including top lender State Bank of India, have said the worst is probably over, they still see one or two more quarters of pain. That means more bad loans getting disclosed and loss provisions shooting up as a central bank order will cause more debt defaulters to be dragged into bankruptcy.

"The government capital is only going to just plug the hole, there is definitely no growth capital," said Udit Kariwala, an analyst at Fitch Ratings' India Ratings & Research. He said smaller state lenders with limited ability to raise capital from the market will have to curtail their lending.

The 21 state lenders hold two-thirds of India's banking assets, and accounted for the bulk of the record $150 billion of soured loans in the banking sector last year.

The banks, which have been blamed for indiscriminate lending to sectors such as metals and power that turned sour, can still be held responsible for much of the balance sheet carnage.

A more than $2 billion fraud at India's second-biggest state lender, Punjab National Bank, disclosed less than four months ago, not only left a hole but also underlined how weak the banks' grip on risk is.

Exacerbating the problems is a move in February by the Reserve Bank of India, the nation's central bank, to withdraw half a dozen loan restructuring schemes that banking experts said were helping banks to avoid disclosing dud loans. It also tightened other rules governing bad loan accounting.

In addition, the RBI this month banned Dena Bank, a loss-making smaller state-run lender, from making any new loans. Days later, Allahabad Bank, another smaller state-run lender, said it had been asked by the regulator not to increase the number of risky loans and costly deposits on its books due to its capital and leverage position

Bank analysts say more state banks could come under similar restrictions aimed at conserving limited capital. The RBI already has 11 state lenders under its "prompt corrective action" framework that restricts them from expanding.

That is not all. Capital needs will also be exposed by global banking rules fully kicking in by March 2019. They mandate banks to have a minimum core capital ratio of 8 percent, and at least six banks, including PNB are short of that number.


Under New Delhi's recapitalisation plan - aimed mainly at driving credit growth in an economy where bank loans are the main source of funding for everything from buying a car to building a port - the government has already injected about 880 billion rupees ($13 billion) into 20 banks as of end-March.

It has 650 billion rupees to inject in the current fiscal year, and the banks themselves were supposed to raise 580 billion rupees through share and asset sales.

Some, including SBI and PNB, last year raised funds from share sales, but several others have postponed such plans.

Kariwala at India Ratings estimates the banks now need 800 billion to 1 trillion rupees to fund soured-asset provisions and maintain minimum capital ratios alone, which means there will be little left from the bailout for lending growth.

Some bank analysts say the government may have to increase the size of the bailout.

Certainly, bank lending - and its impact on growth - will be on Prime Minister Narendra Modi's agenda ahead of a general election that has to be held within a year.

"Given how the stocks are doing, the nearly 0.6 trillion rupees banks need to raise looks difficult. So, the government may have to slightly increase the amount they are planning to inject," said Srikanth Vadlamani, vice president of the Financial Institutions Group at Moody's Investors Service.

Moody's said this week that PNB alone would need 120-130 billion rupees of new capital in the year to March to achieve an 8 percent core capital ratio. At the end of the last quarter it was at just 5.95 percent.


Businesses, especially the smaller ones, are already complaining of not getting the loans they want.

In February to March, lending to small businesses dropped 0.2 percent, though overall lending grew 5.9 percent.

For importers, a major channel of funding - overseas credit through letters of undertakings from Indian banks - has been shut after the PNB fraud, forcing those businesses to depend more on domestic rupee loans.

The Indian government will ensure that all state banks including the weaker ones meet the minimum regulatory capital ratio, said Rajeev Kumar, the top bureaucrat overseeing the banking sector at the finance ministry.

He also said with the planned recapitalisation some of the banks will have room to grow, while bad loan recoveries in the bankruptcy process will further aid banks' bottomlines, He said he expects the banks woes to subside in a quarter or two.

"Whenever you do the cleaning part, a bit of dust, a bit of pain, upfront is okay," said Kumar. "It's only one quarter that you have to just wait."

Subsidising petrol, diesel will be at the cost of welfare schemes, says Nitin Gadkari

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Union Minister Nitin Gadkari has said that subsidising petrol and diesel to bring down their retail prices will take money away from government’s social welfare schemes, according to an Indian Express report.

Gadkari said that the increase in oil prices is “unavoidable” as India is now linked to the global economy.

“This is an unavoidable, economic situation. It is directly linked to the global economy. If we have to sell it (petrol/diesel) cheap, it means we will have to buy it at higher prices and subsidise it here,” Gadkari told the newspaper on May 23.

“If we subsidise that, all the money from our social security schemes will vanish,” he added.

The union minister said that money may have to be taken away from irrigation schemes, free LPG for villages scheme, rural electrification project, Mudra scheme and other Central schemes.

“Now there is a health insurance scheme planned for 10 crore families. There is the crop insurance scheme. We have only a limited amount of money. So if we subsidise (petrol/diesel), toh gadbad ho jaayega [that would create issues],” he stressed.

When asked whether taxes levied on petroleum products should be cut to bring prices down, Gadkari explained, “That is the foundation of the economy. If anything has to be decided on that, our finance minister will decide.”

Gadkari stated that the government was working on increasing use of biodiesel, methanol, ethanol and electric vehicles as alternatives.

Meanwhile, petrol and diesel prices continued to soar and touched another peak on May 24. Petrol was hiked by 26 paise to Rs 85.29 per litre in Mumbai.

This is the 11th straight hike in a row. Diesel prices on the other hand, were hiked by 16 paise to Rs 72.96 per litre in Mumbai. Petrol prices in Delhi were increased by 26 paise to Rs 77.47 per litre and diesel by 15 paise to Rs 68.53 per litre.

Brent crude futures, the international benchmark for oil prices, traded above $79.47 a barrel on the ICE.

While a reduction in excise duty is being considered, the Centre is in discussion with states to cut Value Added Tax (VAT) on petrol and diesel.

Govt can reduce petrol price up to Rs 25 but won't do: P Chidambaram

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Amid rising criticism over steep hike in fuel prices, senior Congress leader P Chidambaram today claimed it was possible to cut up to Rs 25 per litre in petrol prices but the government will not do so.

In a series of tweets, the former finance minister said the bonanza to central government is Rs 25 on every litre of petrol and this money rightfully belongs to the average consumer.

"Central government saves Rs 15 on every litre of petrol due to fall in crude oil prices. Central government puts additional tax of Rs 10 on every litre of petrol.

"It is possible to cut up to Rs 25 per litre, but the government will not. They will cheat the people by cutting price by Rs 1 or 2 per litre of petrol," he said on Twitter.

More than a week after state-owned oil firms ended a 19-day pre-Karnataka poll hiatus on revising fuel prices, petrol and diesel rates have touched record highs.

Petrol costs Rs 76.87 per litre in Delhi and diesel costs Rs 68.08 a litre. In the last nine days, petrol price has risen by Rs 2.24 a litre and diesel by Rs 2.15.

Rates vary from state to state depending on the incidence of local sales tax or VAT. The prices in Delhi are the cheapest among all metros and most state capitals.

The central government levies Rs 19.48 a litre of excise duty on petrol and Rs 15.33 per litre on diesel.

State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up.

In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Now, it is Rs 16.34 on petrol and Rs 10.02 a litre on diesel.

Every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 13,000 crore.

The government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.

Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT. Just four of them -- Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh -- reduced rates while others including BJP-ruled ones ignored the call.

In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped governments excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.

BNPM gets green nod to increase bank note paper production

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The government's Bank Note Paper Mill India (BNPM) has received green signal to increase the production of bank note paper at its Mysuru unit in Karnataka from 12,000 tonnes per annum (TPA) to 16,000 TPA. BNPM is a jont venture of Bharatiya Reserve Bank Note Mudran (BRBNMPL) and Security Printing and Minting Corporation of India (SPMCIL).

The company had sought environment clearance (EC) for increasing the bank note paper production from 12,000 TPA to 19,000 TPA without adding any machinery and pollution load.

"The Environment Ministry, however, gave the EC for raising the production up to 16,000 TPA after taking inputs from the expert committee," a senior government official said.

The approval is subject to compliance of certain conditions including developing greenbelt in 33 per cent of the project area.

BNPM presently has developed greenbelt in 8.5 acres out of the total area of 41 acres. The expert panel of the ministry, however, has observed that the plantation being developed was not as per the Central Pollution Control Board (CPCB) norms, the official added.

The BNPM's unit at Note Mudran Nagar in Mysuru has a state-of-art machinery imported from Germany and other European countries. Raw material used for manufacturing of currency paper is 100 per cent cotton sourced from neighbouring countries.

Rise in crude prices poses risk to India's current account deficit: Report

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Crude oil prices may rise further in the coming months, following which India's current account deficit will be around 2.4 percent in 2018-19, says a Goldman Sachs report. According to the global financial services major, the rise in international crude prices poses risks to India's current account deficit.

"Our commodities team expects oil prices to continue to rise over the course of this summer, before moderating slightly at the end of the year. We recently increased our 2018-19 current account deficit (CAD)forecast to 2.4 percent of GDP (from 2.1 percent of GDP earlier)," Goldman Sachs said in a research note.

CAD widened to 2 percent or USD 13.5 billion in the October-December quarter of 2017, up from 1.4 percent, or USD 8 billion, in the corresponding period a year ago.

Globally, brent broke through the USD 80 a barrel mark yesterday for the first time since November 2014.

"The recent spike in oil prices following the withdrawal of the US from the Iran nuclear deal poses additional upside risks to our headline inflation forecast. We estimate that a 10 percent increase in crude oil prices leads headline inflation to rise by 10 basis points," the report noted.

Goldman Sachs forecasts 2018-19 headline CPI inflation to average 5.3 percent.

On RBI's policy stance, the report said, a more hawkish stance by the central bank is likely following a weaker currency (the rupee has depreciated by 6.6 percent against the US dollar year-to-date) and concerns over a rising current account and fiscal deficit.

The Reserve Bank will announce its second bi-monthly monetary policy on June 6.

"We expect RBI to keep policy rates on hold at its meeting on June 4-6, but shift to a hawkish tone," it noted.

The first bi-monthly monetary policy meeting of 2018-19 was held on April 4-5 and the panel had decided to maintain status quo on the interest rate citing inflationary concerns.

Private sectors of India, US and Japan have key role in development of Indo-pacific: Official

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The private sectors from India, the US and Japan have a key role to play in the development of infrastructure in the Indo-Pacific which has "vast opportunities" for the companies of the three countries to be the "pioneers" in the region, a senior American diplomat has said.

Acting Deputy Assistant Secretary for South Asia Thomas Vajda said the private sector played a central role in developing the connectivity and networks that promote prosperity.

Vajda welcomed the recent initiative of US Chambers of Commerce to create Indo-Pacific Infrastructure Trilateral Forum, which brings together private sector companies from India, the US and Japan for building infrastructure in the region.

"In addition to the work of governments, it is essential to remember the central role the private sector plays in developing the connectivity and networks that promote prosperity and bring us closer together," Vajda told PTI.

"There are vast opportunities for our companies to be pioneers in this area," he said after US India Business Council (USIBC) and US Japan Business Council (USJBC) the two international wings of US Chambers of Commerce - launched Indo-Pacific Infrastructure Trilateral Forum early this week.

"We are grateful that USIBC and USJBC are leading the charge by hosting engagements such as the Indo-Pacific Infrastructure Trilateral Forum, which help support quality, best value, and sustainable infrastructure development in the Indo-Pacific region," he said.

As one of the primary architects of the region's security and economic systems, the US has a strong interest in seeing the Indo-Pacific continues to thrive, Vajda said.

"We firmly believe that upholding a free and open Indo-Pacific begins with working alongside our like-minded partners to ensure the freedom of the seas and skies, promote market-based economics, support good governance and liberty and insulate sovereign nations from external coercion," he said.

"We remain committed to this region because its success is, and has always been, collectively, our success," he said.

Recognising the massive and pressing need for infrastructure investment in the Indo-Pacific, the State Department in February hosted delegations from Japan and India in Washington for an inaugural Trilateral Infrastructure Working Group meeting, he added.

Subsequently, the Acting Assistant Secretaries from the South Asian and East Asian Bureaus travelled to New Delhi in April for a successful US-India-Japan Trilateral Dialogue.

First crude oil cargo from Abu Dhabi departs for Mangalore's strategic crude oil reserve

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The first consignment of 2 million barrels of crude oil from the UAE for India's strategic petroleum reserve at Mangalore is en-route to India and will help it deal with supply side disruptions, Minister for Petroleum and Natural Gas Dharmendra Pradhan has said.

The cargo is the first under an agreement between Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd (ISPRL), an Indian government-owned company mandated to store crude oil for strategic needs.

The loading of approximately 2 million barrels of ADNOC crude oil was witnessed by Pradhan and Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, at a ceremony in Abu Dhabi yesterday.

Speaking on the occasion, Pradhan said: "The UAE is the first country to invest in India's Strategic Reserves Programme. This important partnership will further strengthen the close energy cooperation that exists between India and the UAE and builds on the historic acquisition of a stake in the Lower Zakum offshore concession by Indian companies."

In February, ONGC Videsh Ltd and its partners had acquired a 10 percent in the Lower Zakum offshore oilfield in Abu Dhabi for USD 600 million.

"The strategic reserve will provide a boost to India's energy security and help us deal with supply side disruptions. While part of the stored oil will be used for commercial purposes by ADNOC, the major part will be purely for strategic purposes.”

Al Jaber said that the strategic reserve project represents an important new energy partnership with India that leverages the UAE and ADNOC's expertise and oil resources. "With this partnership, new market opportunities will open up for ADNOC, as we not only help to ensure the energy security of the UAE's largest trading partner, but also gain greater access to one of the fastest-growing markets for high-quality crude oil. Our increased presence in India, will also catalyse demand for our own refined and petrochemical products," he said.

Indian energy demand is forecast by the International Energy Agency (IEA) to grow by more than any other country in the period to 2040, propelled by an economy that will grow to more than five-times its current size and by population growth that will make it the world's most populous country.

India's energy consumption is expected to more than double by 2040, accounting for 25 per cent of the rise in global energy, and the largest absolute growth in oil consumption.

India is 82 per cent dependent on imports to meet its crude oil needs, eight per cent of which is supplied by the UAE.

NINL records highest ever pig iron production

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Neelachal Ispat Nigam Limited (NINL) has recorded its highest ever single-day pig iron output since its inception with production of 2,772 ton of pig iron on May 12.

The Kalinga Nagar-based integrated steel plant, with production of 2,965 ton of hot metal on the same day, also recorded its highest ever single-day hot metal production since its inception in 2002, a company release said.

The earlier highest single-day pig iron production of 2,605 ton had been achieved a day before on May 11, 2018, while the previous best hot metal production at 2801 ton was recorded on October 26, 2009, the release said.

Vice-Chairman and MD of NINL S S Mohanty has congratulated the NINL collective for the feat.

The NINL aims to produce more than 3,000 ton hot metal per day and has immediate plans to resume steel billet production with maximum capacity utilization of the steel melting shop.

The NINL has lined up several activities this financial year to strengthen its bottom line which includes steel billet production and operations of its captive mines.

EXCLUSIVE: Would like to continue as transport minister if NDA wins 2019 elections, says Gadkari

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The Modi-government is expected to open two key infrastructure projects this month. On May 26, the much-awaited Eastern Peripheral Expressway (EPE), envisioned to decongest the National Capital, is likely to be inaugurated by the Prime Minister.

The day on which the government completes four years in power will also see the first phase of Delhi-Meerut expressway being opened to the public.

He named Zojila bypass tunnel, costing Rs 6,000 crore, and Indian ports making profits to the tune of Rs 7,000 crore as other infrastructure achievements.

Talking about achieving the target of building 41 km of highways per day, the Union Minister said at present we are doing 28 km per day and before March-end, we will complete 40-45 km per day which will fulfill the target.

In another important highway project that will connect the National Capital, Delhi, to the financial capital, Mumbai, Gadkari said the government is making the highway with a new alignment that will help save Rs 16,000 crore on land acquisition and reduce the Delhi-Mumbai distance by 125 km. The Vadodara to Mumbai phase of the project is expected to start within 15 days costing about Rs 45,000 crore.

“Alignment is now in the final stage, we will start the land acquisition, but for the other package, we will start the work. It is not my commitment, but my target is to complete this project within three years,” he said.

While Gadkari is confident of commencement of commercial operations of seaplanes by December-end, on the Clean Ganga front, he said by March 2019, at least 80 percent of Ganga will be clean.

The minister claims at least 1 crore direct and indirect jobs have been created by his ministry.

Keeping 2019 general elections in mind, he said if the NDA returns to power, he would like to continue as the transport and highways minister, but the decision would rest with the Prime Minister.

Edited excerpts:

Q. What has been the biggest achievement of your ministry and the government, overall?

A. As far as my ministry is concerned, on May 26, the Prime Minister is going to open the two express highways of the country. One part is of Delhi-Meerut, between Delhi and Dasna. That is a 14-lane road, where 2.5 meters on both sides are reserved for a cycle track. At the same time, we are now inaugurating the Delhi Ring Road, which is the eastern peripheral, which is going to reduce 50 percent traffic jam and pollution of Delhi because the people coming from Kashmir, Punjab, Haryana, Himachal, Uttarakhand, Rajasthan, Uttar Pradesh…going from one state to another state, you have to go through Delhi. So now, they do not need to come to Delhi. So, this is going to reduce 50 percent pollution and the traffic jam of Delhi.

Then we have a state-of-the-art project in Arunachal Pradesh, a big bridge, already inaugurated by the Prime Minister. Then a big tunnel between Jammu and Srinagar, 9.5 km. And on May 19, Prime Minister is going to have a big function in Ladakh that is for Zojila bypass tunnel of Rs 6,000 crore. So, these are the achievements of my ministry. But there are a lot of achievements. All our ports are in good profits — this year, our profit will be Rs 7,000 crore; the first year, it was Rs 3,000 crore, the second year it was Rs 4,000 crore, the third year was Rs 5,000 crore and the fourth year, this is Rs 7,000 crore. And we increased the efficiency by two times.

Q. You just said that the Prime Minister is going to inaugurate the first phase of the Delhi-Meerut Highway. By when can we see the completed project? From Delhi to Meerut was the promise.

A. This is the first package we are going to inaugurate, but the other part, it will take at least one year more. Work is going on very fast and presently it takes three-and-half hours from Meerut to Delhi. It will take 40-45 minutes.

Q. When you took over the ministry, you had set a target of building 41 km of highways per day. What has been the record? And what do you intend to achieve in the last year in power?

A. Presently, at the end of March, we are at 28 km per day. Next year, before March-end, we will complete 40-45 km per day. So my 40-km declaration, the target, 101 percent we are going to fulfill that target next year.

Q. What has been the most difficult challenge or constraint in building highways in India?

A. In India, there are all kinds of constraints. But I always have a philosophy that there are some people who convert problems into opportunities and there are some people who convert opportunities into problems. My problems are good opportunities for me. And it is the success of my department. It is not only my success, it is a team success. My secretary, my engineers, my chief engineers, National Highways Authority (NHAI) people, National Highways & Infrastructure Development Corporation Limited (NHIDCL) people, those who are working hard day and night. So, it is a success of collective team spirit that we have fantastic results.

Q. You have talked about building a new Delhi-Mumbai Highway in a new alignment bypassing the current highway that passes through Rajasthan and Gujarat. Can you elaborate on that?

A. The most interesting thing is this is the highway which is going from the backward area of Rajasthan, Haryana, Madhya Pradesh, Gujarat, and Maharashtra. This will start from Delhi. It goes to Jaipur Ring Road; from the Ring Road, it goes to Alwar, from Alwar to Sawai Madhopur. Sawai Madhopur to Vadodara in Gujarat. And Vadodara to Mumbai.

The first time, the land acquisition cost, just for example, from Mumbai to Delhi, the present road is Ahmedabad, Surat, Vadodara. We calculated that cost comes to Rs 7 crore per hectare. But now, because of this new alignment, the cost is coming to Rs 70-80 lakh per hectare. We save Rs 16,000 crore on land acquisition and we are going to reduce the Delhi-Mumbai distance by 125 km. Out of which, Vadodara to Mumbai, all packages, already we tendered and giving appointment dates. So, projects of Rs 45,000 crore within 15 days, we will start. So, alignment is now in the final stage, we will start the land acquisition, but the other package, we will start the work. It is not my commitment, but my target is to complete this project within three years. Let us see what happens.

Q. So effectively, by 2021 if all goes well, we should be able to travel by road from Delhi to Mumbai in 12 hours?

A. Yes.

Q. You had also been pushing for electric mobility but the Niti Aayog had a completely different view. Where are we in the plan?

A. First of all, we do not have any differences with Niti Aayog. Actually, we are on the same line. We have started charging stations. In my own constituency in Nagpur, we have 200 electric cars and we have 20 charging stations. Now, electric bus, electric bike, electric auto rickshaw, everywhere the production is in very fast mode. And I am confident in due course of time, India will have bio-fuel, can be ethanol bike, ethanol auto rickshaw, ethanol buses, electric buses, then methanol biodiesel and bio-CNG. Now in Ganga, we have 100-125 biodigester where we get methane. And from methane, bifurcate methane from CO2, we get bio-CNG. So we are going to sign an agreement with Indian Oil to start making bio-CNG in every project and to run buses on bio-CNG.

Q. I will take you to a different topic now. In December, in Gujarat, the Prime Minister disembarked from a seaplane and it has been one of your pet projects. By when can we expect seaplanes to start commercial operations in India?

A. The airport authorities have to finalise the rules and regulations and they are in the final stages. After their decision, we will immediately call tenders.

Q. Your ministry calls it a seaplane and the Aviation Ministry has given another name for it. Who will be framing the regulations?

A. At present, the Aviation Ministry is preparing the rules and regulations. After that, there will be a joint coordination between the two ministries and we will start this project.

Q. Staying on this topic, an amphibious bus that was brought into Mumbai actually ran into serious opposition from environmentalists.

A. I don’t understand as a committee is there. Actually in Mumbai, due to traffic, a lot of pollution is there. By using the sea route, we can reduce the pollution. All over the world, there are all types of the catamaran, hovercraft, and seaplanes being used. I don’t understand why people are opposing it. Amphibious buses are being used in Vancouver, USA, Stockholm, Sweden, and Singapore.

Q. Can we expect seaplanes top start operations by December?

A. Yes, before December ends, we will start this venture and I am confident about it meeting this deadline.

Q. Which rivers or water bodies are you targeting to start operations?

A. There are a lot of opportunities in Ganga and Brahmaputra. We have 7,500 km of the seafront and 20,000 km of river length. There are also many dams and we can use all these. We can make a river or seaport and I feel there is a lot of untapped potentials there.

Q. You had also said that by March 2019, around 80-90 percent of the Ganga will be cleaned up. But if you travel to various parts of Uttar Pradesh and Bihar, it comes across as a very ambitious target. How confident are you about your goal?

A. For this reason, I decided to call a press conference on Ganga. Out of 189 projects, 47 projects are already completed. Only 5-10 projects may be there facing hurdles but they are in the process. So I am confident that by March 2019, at least 80 percent of Ganga will be clean.

Q. Including stretches like Kanpur?

A. In Kanpur, we are doing nine projects and in Patna, we are doing 11 projects. In Varanasi, we are doing 4-5 projects. Work is going on in all these projects.

Q. After the Dhola-Sadiya bridge, we also hear about a new 1,000 km expressway along the Brahmaputra’s north bank. Is it at DPR (detailed project report) stage. Any recent update on that project?

A. Yes, it is in process. We have already sanctioned projects worth than Rs 1.5 lakh crore for the North East. We have specially established the North East Road Construction Corporation and we are working at a brisk pace on it. There are some problems but we are giving highest priority for development of infrastructure in North East.

Q. You are also piloting the Rs 8 lakh crore Bharatmala project. Any major development on that front?

A. Up to the end of December, more than 50 percent of work will be done. Probably the first phase is of 24,000 km, with an estimated cost of Rs 7.5 lakh crore and I am confident that 50 percent of the project will be completed before the end of December.

Q. And the Sagarmala project?

A. In Sagarmala, we are expecting investment to the tune of Rs 16 lakh crore. Around Rs 4 lakh crore has been earmarked for port-road connectivity, port-rail connectivity, modernisation and mechanisation of port. We have completed a project worth Rs 1.3 lakh crore and are developing industrial clusters where there will be automobile cluster, petroleum cluster, furniture cluster, chemical clusters, five smart cities, etc. We are expecting investment to the tune of Rs 12 lakh crore, out of which we have started work more than Rs 1.5 lakh crore. Things are moving at a fast pace where we are expecting industrial investment in the port sector. It will be a great boost for employment generation in the country.

Q. This government has been battling criticism on the jobs creation front and all kinds of figures are being thrown around. Going by the implementation of infrastructure projects that you have listed out, by the sheer definition of infrastructure projects having strong multiplier effects of creating jobs, enough jobs should have been created in the infrastructure space. Do you have some data to share?

A. The construction equipment manufacturing industry has doubled its production and we have already awarded construction projects worth more than Rs 10 lakh crore. So we are creating jobs and I feel that at least 1 crore direct and indirect jobs have been created by my ministry.

Q. These jobs created over the last four years in various infrastructure projects have not been captured by the jobs data that has been put out by various agencies, isn't it?

A. We have already given all the details to the various agencies and have one report from IIT. When there is an investment of Rs 1,000 crore, it creates temporary jobs for one lakh people directly and indirectly. We are creating jobs for the youth and I am confident that my department will create at least one crore jobs.

Q. Your contribution in building the Mumbai-Pune highway is well known. In this context, which project would you like to be most remembered for?

A. The Delhi-Mumbai Express Highway is a big project and it is the first of the express highways in the country which entailed an investment of Rs 1 lakh crore. This project will benefit 5-6 states and it will be a great achievement for me. I can only give you the assurance that we will start work on this project before December-end.

Q. Assuming the NDA government gets a second term, would you like to continue with the same portfolio?

A. It is the privilege of the Prime Minister. But if he asks me, I will give my priority for this department because I have to fulfill my dreams.

Net profit rose 82% due to reduction in claims, increase in investment income: Shriram General MD

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Private general insurance company Shriram General Insurance posted an 82 percent rise in its net profit at Rs 400 crore for FY18.

What led to the 82 percent jump in profits for FY18?

Our net profit has risen mainly due to increase in the investment income and reduction in the loss ratio. The investment income rose from Rs 580 crore in FY17 to Rs 744 crore in FY18 while the incurred claims came down to 94 percent from 103 percent. Also, we saw a 10 percent increase in the net earned premium to Rs 1855 crore.

Majority of your business continues to be from the motor insurance space. Will there be a shift in strategy this year?

Motor is still majority of the portfolio and even in that, there is a higher share of the commercial vehicle business. We are not focusing on the non-motor business, because of the heavy discounting prevailing in the market. We believe that it is not sustainable in the longer term. It is not possible to play in that space and hence we are not interested.

How will your diversify your portfolio?

Diversification not just means entering newer segments but also expanding within the existing areas. We are diversifying within motor business where losses can be managed.

In the commercial vehicles space, there are heavy commercial vehicles (HCV), intermediate commercial vehicles and light commercial vehicles. We are looking at which segment among these are performing well and will be pushing those products.

Do you believe that the recent third party premium hikes by the insurance regular is adequate?

The heavy commercial vehicles have seen a lot of claims. While the insurance regulator has implemented hikes based on claims, losses are high in some segments. We believe that on the HCV space, there will be further hikes in the future.

You do not have large bank partners to sell products. What will be the distribution strategy in this fiscal?

While we are not aggressive on the bancassurance front, we tied-up with some regional rural banks. These partnerships should start producing results. Also, we are in talks with some large banks and are hopeful of getting a few on board as corporate agents.

Among the other channels, agency is seeing a positive growth and we have seen the number of agents crossing 10,000 in FY18.

You also offer passenger insurance for rail travellers. Have there been large claims?

The IRCTC passenger insurance scheme has seen a positive claims experience. While we are not making huge profits, the losses have been contained. Through this initiative, we have been able to help the brand reach the masses.

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