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TOT: Government mulls reducing lease period to 20 years

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The government may reduce the lease period for projects under the toll-operate-transfer model to 20 years from 30.

The TOT model was implemented in 2016 to monetise publicly funded highways.

The move needs the approval of the Union Cabinet and an NHAI official told the paper that it has initiated the process.

The first round of TOT auctions fetched the government more than Rs 9,000 crore. However, the second auction was cancelled due to a lukewarm response.

Industry experts welcome RBI rate-cut, all eyes on Budget 2019

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The RBI's Monetary Policy Committee meeting has been underway since June 4, and the decision has been made. For the third time in a row now, the RBI has cut rates by 25 basis points. This was widely expected, given the slowing economic growth along with rising global uncertainty. The MPC has also decided to change their stance from neutral to accommodative while stating that the RBI expects the government to remain broadly fiscal-prudent.

Amit Gupta, Co-Founder and CEO at TradingBells, says, "The RBI has announced a rate-cut of 25 basis points fuelled by a stable government, sharp decline in crude oil prices and a slowdown in the economy. The RBI changed its stance to accommodative, and a possibility of further rate-cuts this year remains open (we can expect a further rate cut of 50 to 75 basis points in 2019)."

"Real estate, NBFC, Banking, and Auto sectors would be the key beneficiaries of this rate cut where a temporary uptick can be seen in many stocks but quality stocks will continue to outperform," he added.

Shishir Baijal, Chairman & Managing Director – Knight Frank India, stated that the policy rate cut was likely to provide respite to the real estate sector.

"The first rate-cut in the newly-elected government’s regime is certainly a welcome step, especially for the real estate sector. The benefit of lower policy rate in terms of better credit cost as well as higher liquidity will hopefully be transmitted further by banks to NBFCs as well as home buyers," he said.

Baijal goes on to say, "The change in policy stance from neutral to accommodative is a welcome shift as it lays ground for further rate cuts. The cash-crunched NBFCs will definitely benefit from inflow of capital which will in turn benefit developers as well as home-buyers. NBFCs have been facing a liquidity crisis and this has negatively impacted their loans to real estate, including construction finance. Besides capital infusion into this important financier segment, this rate cut will also improve the home-buyers affordability and stimulate housing demand at this critical juncture.”

Romesh Tiwari, Head of Research – CapitalAim says, "25 basis point cut is in line with our minimum expectation and was already discounted in the market. The downward revision of GDP growth reflects concern over slowdown and supports shifting of RBI stance to accommodating policy. We expect banking shares to remain strong in the midterm while NBFCs may further correct before consolidating."

"Largely market will not be driven by this news. Current valuations do not justify Nifty and Sensex and are due for a correction soon. Now all the eyes will be on the budget session which may bring some big measures for revitalizing the economy. Short term target for Nifty is 11,880 and breaking below that may take the Nifty 11,660 levels in the medium term," he said.

Naveen Kulkarni, Head of Research, Reliance Securities says, "While the rate cut of 25 basis points was in line with our expectation, concerns over growth and challenges regarding liquidity continue to linger. The market is not necessarily cheering the rate cut as it had already factored in and something more was expected."

"RBI reduced repo rate by 25 bps as expected. The change in stance to ‘accommodative’ was a bit of a surprise. Debt markets will take this as a significant positive move though most of the rate cut cycle is probably over. The tone of the RBI policy was dovish and highlights the concerns on growth. We maintain our call for another 25 bps rate cut in August factoring in the benign inflation trajectory and the growing concerns on growth. However, transmission of the rate cuts will be key and the RBI should aim to maintain the liquidity, at least, at neutral over the next few months," said Suvodeep Rakshit, Sr. Economist, Kotak Institutional Equities.

Arvind Chari, Head –Fixed Income & Alternatives , Quantum Advisors Pvt Ltd said, "The Repo Rate cut of 25 bps was as expected. That it was unanimous, in a 6-0 decision is noteworthy. What is of most significance through for the bond markets is the change in stance to accommodative. This is a clear indication that the RBI is deeply concerned about growth and is prepared to use interest rates and liquidity to boost demand."

He also says, "Bond yields may have further room to drop as the markets will except further rate cuts especially another 25 bps in August to take the Repo rate to 5.5%. 10 year bond government bond yield at around 6.9%, is still attractively valued as more rate cuts gets priced in. We expect another rate cut in August but will caution against too much exuberance."

The GDP target has been lowered for financial year 2019-20 from 7.2 percent to 7 percent. The RBI also noted in its policy statement that consumer inflation for the first half has been pegged at 3-3.1 percent.

US decision to withdraw GSP benefits violates global trade rules: Experts

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The US' decision to withdraw incentives for Indian exporters violates global trade rules as it discriminates among developing countries, trade experts say. The US has decided to roll back export incentives provided under Generalised System of Preferences (GSP) from June 5. The move is expected to impact India's exports wroth USD 5.6 billion under this programme.

Dhruv Gupta, Partner (International Trade), Lakshmikumaran & Sridharan, said that irrespective of the eventual trade impact, the US' action of withdrawal of benefits against India is at loggerheads with its WTO obligations.

"It goes against the fundamental principle of non-discrimination because it discriminates between developing countries," Gupta said in a statement.

The decision also undermines the objective recognised in the preamble to the World Trade Organization (WTO) agreement that there is a need for 'positive efforts' to ensure that developing countries secure a share in their growth in international trade commensurate with the needs of their economic development, he said.

Industry body CII too has stated that this decision has been taken in "haste" and would hurt domestic exporters.

It has expressed hope that both the US and India would discuss the matter and find an amicable solution to this issue.

Federation of Indian Export Organisations (FIEO) said that in respect of products having GSP benefits of 3 per cent or more, exporters may find it difficult to absorb the GSP loss.

The sectors which would be impacted include most imitation jewellery, leather articles, pharmaceuticals, chemical and plastics, basic and processed agri goods, it said.

"Government should provide some supports to products where GSP loss has been significant so that the market is not lost. Extension of rebate of state and central tax levies scheme on such products on exports to US will be beneficial," FIEO President Ganesh Kumar Gupta said.

As many as 1,900 Indian products from sectors such as chemicals and engineering get duty free access to the US market under the GSP, introduced in 1976.

The US has alleged that India is not providing equitable market access to its companies and has raised serious concerns over capping of prices of certain medical devices. It is also seeking market for its dairy products.

India's May gold imports jump 49% on festive demand: Government source

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India's gold imports in May jumped 49% from a year earlier to 116 tonnes as a correction in local prices during a key festival boosted retail demand, a government source said on June 4.

Higher gold imports by India, the world's second-biggest consumer of the precious metal, could support global prices that are trading near their highest level in three months.

The country's gold imports in value terms rose to $4.78 billion in May from $3.48 billion a year ago, a government official said, who was not allowed to speak to the media.

India had imported 78 tonnes of gold in May 2018.

Ficci hails govt for extending PM-KISAN scheme to all farmers

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Industry body Ficci Saturday hailed the Centre's decision to extend benefits under PM-KISAN scheme to all farmers, saying Indian agriculture is yet to realise its full potential. The government Friday decided to extend the PM-KISAN scheme to all 14.5 crore farmers in the country costing Rs 87,000 crore a year and also announced over Rs 10,000 crore pension scheme for five crore farmers, thereby fulfilling the BJP's poll promise.

The industry body also congratulated Prime Minister Narendra Modi for a new pension scheme for five crore farmers as one of the first decisions of his new administration.

With agriculture as top priority, Ficci has been advocating the extension of PM- KISAN to all farmers in its 100 days agenda to government.

The government had announced Pradhan Mantri Kisan Samman Siddhi (PMKSS) in the interim Budget to provide Rs 6,000 per year to about 12.5 crore small farmers holding land up to 2 hectares.

Sodexo launches multi-benefit pass in India

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Employee benefits firm Sodexo has launched Multi-Benefit Pass, which is a solution that can be used for not just meal-benefits but also for fuel or other purchases. The card will have a pin facility for meal benefits while the chip facility can be used for the other benefits offered in partnership with RuPay (National Payments Corporation of India).

Suvodeep Das, VP-Marketing for Sodexo BRS India, said that the idea of the product is to use one single card for multiple transactions by an employee. RuPay has a 3.6 million network in India.

"There is no such solution at present where one card can be used for multiple types of transactions. We wanted to bring that ease to the employee benefits space," he added.

Das said that the card will have multiple virtual wallets which can be used for meal benefits, fuel or telecom. Further, if companies want to offer digital gifting options to employee, the virtual wallet can be recharged for the particular amount during festivals like Diwali or Christmas.

However, he clarified that clients who want special gift cards can continue to get those from Sodexo as part of the gifting and recognition solutions.

This is the first such 2-in-1 card in India. Das said that their mobile application could be used for using the benefits of the card.

Sodexo offers gift cards and meal cards. At present, while the Sodexo meal card works on a propriety network in compliance with the Reserve Bank of India guidelines, the gift cards are accepted on the RuPay network for 3.6 million retail outlets and 90,000 major online portals.

"More than 75 percent of our consumers use our application frequently. We are hoping that this can be replicated with the new solution as well," he said.

With Sodexo Multi-Benefit Pass, the company aims to cut down the hassle for employees to collate and submit bills.

Nalin Bansal, Head of RuPay, NCMC (National Common Mobility Card) and NFS (National Financial Switch), NPCI said: "Prepaid cards is one of our core business under RuPay portfolio. As part of our strategy, we have increased our focus on the non-bank prepaid issuers and have developed a fast-track, seamless and cost effective onboarding process."

Sodexo Meal Pass is currently accepted across 100,000 plus points in 1,700 locations. The company has more than 11,000 clients in the public and private sector with 3 million daily users.

Ind-Ra expects FY19 GDP growth at 6.9%, lower than CSO estimate

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India's GDP growth during the fiscal 2018-19 is expected at 6.9 percent, marginally lower than CSO's advance estimate of 7 percent, rating agency Ind-Ra Monday said and urged the new government to take short-term measures to arrest slowdown in the economy.

The Central Statistics Office (CSO) will be releasing the quarterly GDP estimate for the quarter January-March (Q4FY19), 2019 and provisional annual estimates for 2018-19 on May 31.

"Ind-Ra expects FY19 GDP growth to be 6.9 percent as against the 2018-19 advance estimate of 7 percent," it said. The GDP growth was 7.2 percent during 2017-18.

In a release, India Ratings and Research (Ind-Ra) said it expects 4QFY19 GDP growth to decelerate to 6.3 percent from 6.6 percent in previous quarter.

Clearly, Ind-Ra said 2018-19 will be the second consecutive year of an economic slowdown in India.

Arresting the slowdown and reviving the economy will be the first challenge for the new government, it said.

Prime Minister Narendra Modi will be taking oath of office on May 30 for a second time after BJP-led NDA secured majority in the just concluded general elections.

"In Ind-Ra's opinion, the new government will have to devise and execute both short-term and medium-to-long-term measures to arrest the slowdown.

"While cyclical challenges can be addressed through short-term measures, the need of the hour is to address the structural challenges plaguing the Indian economy," it said.

It further said that although little can be done with regard to the global trade environment, certainly a more proactive policy intervention could be pursued to aggressively revive investment.

Meanwhile, private sector lender ICICI Bank in a research report said the immediate priorities of the government should be focused on agricultural sector especially improving farm terms of trade, supporting systemic credit growth not just for banking sector but for the Non Banking Financial Company (NBFC) sector as well.

Growth rates to stay weak but a combination of strong government policy support and benign monetary policy environment should lead to recovery in growth prospects towards the second half of this fiscal year, it said.

According to the report, short term policy priorities of the new government should include, agricultural price stability measures, supporting system credit growth especially to small industry, and provision of adequate liquidity and accommodative policy environment among others.

Long term policy priorities should include, land and natural resource related measures, labour related measures, capital related measures, productivity related measures and sector-wise reforms, ICICI Bank's report added.

US-China trade tensions aren't helping FDI in India as expected, says report

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Foreign direct investment (FDI) in India has been declining, even though recent US-China trade tensions and the increasing working population should ideally make the world's fastest-growing economy attractive for investors. This could be because of investors' pre-election nerves and also because of recent protectionist 

Earlier this year, the government announced new rules for e-commerce companies like Amazon and Walmart with respect to FDI to protect the interests of millions of India's small businessmen. Later in February, it was announced that an oil refinery project backed by Saudi Arabia worth $44 billion would be moved from its present place to a new location as farmers opposed the project.

On the other hand, the report noted that the Foxconn Technology Group recently announced that it would start manufacturing Apple's latest models in India. With tension brewing between the US and China, the two largest economies in the world, it may prove to be beneficial for both Apple and Foxconn to move their base to India.

"India definitely needs to attract investments in manufacturing and other sectors. There are huge opportunities for it, with western companies having second thoughts about their Chinese operations. If India could provide an alternative, it would have a great advantage," Vivek Wadhwa, professor at Carnegie Mellon University in Silicon Valley, told the wire agency.

To boost its investment to GDP ratio from 30 percent to 40 percent and see double-digit growth, according to Girija Pande, a former TCS CEO. "We have seen China and East Asian economies grow at such fast rates of growth with that kind of investment levels," he said.

The publication noted that though India's progress is notable as it jumped 23 spots to 77 in the World Bank's ease of doing business ranking in 2019, but old labour laws, long land acquisition processes, red tape and foreign exchange limitations are still in its way. The report said that to grow at over 8 percent, more FDI is crucial.

"It isn't much of a stretch to think that even a partial loosening of restrictions in large sectors like banking or multi-brand retail, could be enough to lift FDI inflows to over 2 percent of GDP from around 1.5 percent currently," Shilan Singh, an economist with Capital Economics (Asia) told the publication.

Centre procures 29 mn tonne of wheat so far this marketing year

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The Centre has purchased 29.26 million tonne of wheat from farmers in the ongoing 2019-20 marketing year so far, according to latest government data.

The Centre has set the wheat procurement target at 35.7 million tonne for the 2019-20 marketing year (April-March) on hopes of a record 100 million tonne production this year.

State-run Food Corporation of India (FCI) along with state government agencies buy wheat at the minimum support price to meet the demand of welfare schemes.

Wheat MSP has been fixed at Rs 1,840 per quintal for this year.

As per the data, the FCI and state agencies have procured 29.26 million tonne of wheat so far this year.

About 12.1 million tonne of wheat has been purchased in Punjab and 9 million tonne in Haryana so far in the current marketing year.

Around 5.3 million tonne of the grain has been procured in Madhya Pradesh, 1.93 million tonne in Uttar Pradesh and 8,59,000 tonne in Rajasthan in the said period.

It may be noted that FCI is facing space crunch to keep the new wheat crop because of huge stock in the godowns. As a result, the agency has decided to offload 10 million tonne wheat to bulk consumers during this fiscal.

Last year, the government had procured 358 lakh tonne, surpassing the target of 320 lakh tonne. Wheat procurement normally starts from April.

Bimal Jalan panel on RBI's capital size to submit report next month

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A high-level panel led by former RBI governor Bimal Jalan, set up to decide the appropriate capital reserves that the central bank should maintain, is likely to submit its report next month.

The six-member Jalan panel was appointed on December 26, 2018 to review the Economic Capital Framework for the RBI.

The broadly finalised report on RBI economic capital framework will be submitted to the apex bank in June, sources said after meeting of the panel on Monday here.

Prior to the submission of its report there will be one more meeting in June, sources said.

The panel has already got extension beyond three months term. The committee was to submit its report in 90 days from the first day of its meeting, which held on January 8.

The other key members of the committee include Rakesh Mohan, former deputy governor of RBI as the vice-chairman, finance secretary Subhash Chandra Garg, RBI deputy governor NS Vishwanathan, and two RBI central board members -- Bharat Doshi and Sudhir Mankad.

The panel has been entrusted with the task of reviewing the best practices followed by central banks worldwide in making assessment and provisions for risks.

The panel, having former economic affairs secretary Rakesh Mohan as its vice chairman, will propose a suitable profit distribution policy, taking into account all the likely situations of the RBI, including the requirement of holding more provisions than required.

The government and the RBI under previous governor Urjit Patel had been at loggerheads over the Rs 9.6 lakh crore surplus capital with the central bank.

The finance ministry was of the view that the buffer of 28 per cent of gross assets maintained by the central bank is well above the global norm of around 14 per cent. Following this, the RBI board in its meeting on November 19, 2018 decided to constitute a panel to examine Economic Capital Framework.

In the past, the issue of the ideal size of the Reserve Bank of India reserves was examined by three committees -- V Subrahmanyam in 1997, Usha Thorat in 2004 and YH Malegam in 2013.

While the Subrahmanyam panel recommended for building a 12 per cent contingency reserve, the Thorat panel suggested it should be maintained at a higher 18 per cent of the total assets of the central bank.

The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam committee.

The Malegam panel said the RBI should transfer an adequate amount of its profit to the contingency reserves annually but did not ascribe any particular number.

According to a report of by Bank of America Merrill Lynch, the Jalan committee is likely to identify an excess buffer of up to Rs 3 lakh crore. This includes the excess capital in contingency reserves and also revaluation of reserves.

Halving of the contingency reserves to a level of 3.25 per cent from the present 6.5 per cent will release Rs 1.282 lakh crore, the report said, pointing out that the level is still 50 per cent higher than what central banks in the BRICS (Brazil, Russia, India, China and South Africa) grouping have.

Similarly, halving the yield cover hike to 4.5 per cent from the present 9 per cent will release another Rs 1.170 lakh crore, it said.

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