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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.

Wheat procurement in Haryana at 81.49 lakh MT, crosses last year's level

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Wheat procured by state agencies in Haryana has touched 81.49 lakh metric tonnes (MT) so far, compared to 74.25 lakh MT last year, an official said today. While state agencies have procured over 81.49 lakh MT, the traders have procured 485 MT of wheat, a spokesman of the Haryana Food, Civil Supplies and Consumer Affairs Department said here.

Giving details of the wheat procured by government agencies, he said over 32.80 lakh MT has been procured by Haryana State Co-operative Supply and Marketing Federation Limited (HAFED), whereas Food, Civil Supplies and Consumer Affairs Department has purchased more than 24.50 lakh MT.

Food Corporation of India has purchased over 9.81 lakh MT while Haryana Warehousing Corporation has procured 14.35 lakh MT.

The spokesman said district Sirsa was leading in wheat arrival with over 10.84 lakh MT of the crop procured, followed by district Karnal at more than 8.77 lakh MT.

Two years of Pradhan Mantri Fasal Bima Yojana: Coverage improves for crops, but some gaps still to be filled

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The central government’s two-year old crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY) has seen 47.5 million hectares of gross cropped area being covered in 2017-18. Even as the Centre plans to increase coverage to 50 per cent of crop area in FY19, some gaps need to be filled to ensure timely release of claims to the end beneficiary, the farmer.

The agriculture ministry’s data showed PMFBY had a sum insured amount of Rs. 1.9 lakh crore and a premium volume of Rs 24,351 crore in FY18. This was lower than 2016-17 when over 57 million hectares of gross cropped area was covered for a sum insured of Rs 2.05 lakh crore and premiums of Rs 21,500 crore.

This made it the third largest line of insurance in the country after motor and health. Incidentally, India also ranks as the third largest crop insurance market globally, behind United States of America and China.

The Scheme

PMFBY compensates farmers if any of the notified crops fail due to natural calamities, pests and diseases. The scheme seeks not just to just to insulate farmers from income shocks, but also encourage then to adopt modern agricultural practices.

Unlike previous schemes, PMFBY is open for both farmers who have taken loans as well as those who have not. It covers food crops (cereals, millets and pulses), oilseeds as well as horticultural crops.

“Earlier, only claims for certain crops were paid and that too limits were imposed. All those have been removed, even though the government bears a heavy subsidy burden,” said the head of crop insurance segment at a large public sector insurer.

It has a uniform premium of two percent to be paid by farmers for all Kharif crops and 1.5 per cent for all Rabi crops. For commercial and horticultural crops, the farmers’ premium is five percent. The rest of the premium is paid equally by the Centre and state government.

The scheme also mandates use of new technology include remote sensing and drones to measure crop yields. A total of 18 insurance companies, private and public sector have been empanelled for the scheme.

PMFBY benefits

The insurance scheme says that each state has to conduct a certain number of crop cutting experiments (CCEs) to get basic estimates about crop yields in each area. This data is then submitted to the insurance company within a time limit. This information is crucial, because it gives the insurance company an idea of how much crop is estimated to be produced in each region for the Kharif and Rabi seasons.

The earlier crop insurance schemes had a limit on the government subsidy that was payable. However, PMFBY has done away with it. In this, even if the balance premium is 90 per cent, it will be borne by the government. So, the farmers will get claim against the full insurance amount that they have taken.

The loss assessment for crop losses due to climatic conditions is done for each area. If there is a situation where majority of crops in one area could not be planted due to bad weather, farmers can claim 25 per cent of sum assured. However losses due to localised perils (like hailstorm, landslide & inundation) and post-harvest losses due to specified perils (cyclone, unseasonal rains) will be assessed at the affected field of the farmer, who had taken the insurance cover.

Challenges

Delay in claims has been one of the key concerns under PMFBY. A committee appointed by the agriculture ministry has said that with substantial claims payable in Chhattisgarh, Haryana, Madhya Pradesh, Maharashtra, Odisha, the Kharif 2017 claim ratio is expected to be upwards of 90 percent.

The report, “Strategy for Doubling Farmers' Income by 2022”, by the  Committee on Doubling of Farmers' Income, Ministry of Agriculture said that states should promote availing of crop insurance facility without waiting for completion of sowing.

The head of underwriting of a mid-size private general insurance company said while drones and GPS were to be used, the usage has been minimal so far. “Since the claims are paid based on crop yield, technology is critical to minimise fraudulent claims,” he added.

On one hand while claims settlement has been growing at healthy pace, the government panel report said that the states have to make sure that the tender process for selection of insurance companies and premiums should be done before the crop season starts. During 2016 and 2017, the last tender for Kharif went into August, depriving the non-loanee farmers an opportunity to enroll.

The report also added that by 2018-19, potentially there could be coverage of over Rs 3.5 lakh crore of sum insured, requiring over Rs 30,000 crore premium subsidy.

“This is best realised if the transparency, reliability and sustainability issues are taken care of in administering the programme. Also, with huge premium subsidy bill, the government needs to sense that there is a value for the funds,” the report released on April 28 said.

Due to heavy claims in the Kharif season, insurers including ICICI Lombard General Insurance have reported an underwriting loss in their crop portfolio. This meant that there was a gap between premiums collected and claims paid out. To ensure that the business is viable, further tweaks in the premiums during the upcoming tender processes may have to be considered.

Way forward

The centre has also allowed states to set up their own specialised insurance companies for the implementation of the PMFBY. A PTI report had said that the agriculture ministry has allowed this, subject to participation in bidding process.

Further, as more players enter this process, not only will the pricing be improved, claims will also be settled in a timely manner.

Also, as the government panel suggested, deployment of technology, that can remove human biases and generate accurate and real time data in an efficient manner will be beneficial. As additional crop area and number of farmers covered is increased this financial year, the emphasis will be on how much time is taken to settle the claims and if there is a need to increase premiums.

Subsidies under various crop insurance schemes by government

YearFarmers PremiumPremium SubsidyGross PremiumTotal Claims Paid
2014-152707.162238.894946.057831.05
2015-163418.202187.305613.3821428.59
2016-174383.3117796.5122180.2812948.98*
2017-18**4013.6820338.0324351.71Not reported
Grand Total       14522.3642560.7257091.4242208.62

Note: All figures in Rs crore * Against approved claims of Rs. 14433.36 crore, an amount of Rs. 12948.98 crore has already been paid **Tentative Source: Government reply to Rajya Sabha question on March 9, 2018

IDBI Federal Life CEO says, 'Focus is improving persistency while controlling costs'

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Private life insurance company IDBI Federal Life Insurance reported a 94 percent growth in net profit for FY18, at Rs 101 crore, at a time when one of its promoter IDBI Bank is looking to sell stake in the venture. In an interaction with Moneycontrol, Vighnesh Shahane, CEO, IDBI Federal Life Insurance spoke of growth in the business and their strategy for the current financial year.

Excerpts:

Q. The company has posted a 94 percent rise in net profit. What led to the jump?

A. IDBI Federal Life posted a 94 percent growth in FY18 net profit at Rs 101 crore. For the last four to give years, we have been focused on the bottom-line, improving persistency as well as controlling costs. This has reflected in our numbers for the last financial year. Due to this, we have been posting profits for five years in a row and this is the sixth consecutive year of profits.

Q. Your persistency (rate of renewals) has improved for the 13th month, but there has been a dip for the 61st month. What is the reason?

A. Yes, the 61st month persistency has dropped slightly. However, about 12-15 months back we have taken a lot of interventions. This includes increasing ticket sizes, withdrawing products with low persistency and making standing instructions mandatory.

The 13th month persistency has gone up to 81 percent in FY18 from 79 percent in the previous year. However, we expect to see further improvement in due course. But, apart from Life Insurance Corporation of India (LIC), we are the only insurance company to retain more than 50 percent business on the book even beyond the sixth year of the policy being in force.

Q. Has there been a rise in the unit-linked insurance (Ulips) share?

A. In the first half of the financial year, traditional products dominated the portfolio. However, in the second half of the year, falling interest rates and booming stock markets led to the mix shifting towards Ulips. In the second half (H2) of FY18, the mix was 40 percent Ulips, 28 percent non-participating insurance products while the rest was participating products.

Q. Although you have IDBI Bank and Federal Bank as your bancassurance partners, is there a plan to add niche banks?

A. Bancassurance will always be a big area for us. However, we are going in a calibrated manner in the agency business. While for us, IDBI Bank and Federal Bank are big banks, we are in talks with newer banks as well for possible partnerships.

Q. While IDBI Bank is a large bank partner, they are planning to sell its stake in the company. Is that a cause of concern?

A. This is a value-discovery process that shareholders are undertaking. The shareholders will do what it right for them and the investors.

Q. What is the quantum of growth that you are targeting for the current financial year? What segments will the focus be on?

A. In terms of segments, protection as a business is profitable and we will continue to look at that business. However, health and pension two areas where non-life/health companies as well as National Pension Scheme (NPS) offer superior products than life insurers.

In FY19, we are hoping to cross Rs 1000 crore in terms of new business collections for the individual segment.

India likely to boycott SAARC summit again: Report

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India may boycott its second SAARC Summit in a row, slated to be held in Islamabad, reiterating its stand that Pakistan is yet to rein in terrorist activities targeting India, according to a report by news agency ANI.

The 19th meeting of the heads of state or government of the member countries of South Asian Association for Regional Cooperation (SAARC) was scheduled to be hosted by Pakistan in November 2016. However, India pulled out of the event in the wake of militant attacks in Pathankot and Uri. Subsequently, all SAARC members boycotted the summit.

The 20th meeting is going to be held this year and Pakistan is aggressively seeking support from smaller South Asian nations to host the event in Islamabad. It has already received the backing of Sri Lanka and Nepal.

The report comes days after the issue of organising the SAARC Summit came up for discussion during a meeting between Prime Minister Narendra Modi and his Nepalese counterpart KP Sharma Oli, who was in India on a three-day visit.

After the talks, India said it would be difficult to proceed with the SAARC meet.

“The prime minister (Modi) mentioned that he very enthusiastically participated in the Kathmandu (SAARC) Summit, but given the current state of play where there is cross-border terrorism - and this is a disruptive force in the region. It is difficult in such circumstances to proceed with such initiatives," foreign secretary Vijay Gokhale had told reporters.

SAARC Summits are usually held biennially, hosted by a member state in alphabetical order. The member state hosting the event assumes the Chair of the Association. The previous edition of the SAARC summit was held in Kathmandu in 2014, which was attended by PM Modi.

'Asian Development Bank to give Rs 1,700 crore aid to Uttarakhand'

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The Asian Development Bank (ADB) has agreed in principle to give an aid of Rs 1,700 crore to Uttarakhand for infrastructure development and creation of sewerage treatment facilities in urban areas.

This was conveyed to Chief Minister Trivendra Singh Rawat by the country director of ADB's India Regiment Mission Kenichi Yokoyama at a meeting between the two here today.

Thanking the ADB for the aid, Chief Minister Rawat said infrastructure development in the urban areas was one of his government's top priorities and 100 per cent of the aid given by the institution will be utilised for the purpose.

Institutional processes in the state are being made more transparent and outcome based, Rawat told the delegation and laid emphasis on forming stronger project management units and better inter-departmental coordination for the implementation of the ADB aided projects.

Yokoyama said the Rs 1,700 crore aid will be given for the creation of infrastructural facilities, sewer treatment plants and water supply facilities in urban areas of Uttarakhand.

He said the ADB can also run a reform programme to economically strengthen municipal corporations of the state and better management of the resources at their disposal.

IT-based billing and tax collection system should be encouraged in municipal corporations, he suggested.

Banks should liquidate stressed power projects to remove deadwood from balance sheet

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The Reserve Bank’s new rules on the resolution of non performing loans (NPLs) is finally getting the attention they deserve from the power ministry. The caustic opposition to it from Power Minister R K Singh was entirely on expected lines.

“RBI circular is not workable. If you follow that circular large number of additional assets will go into the red, they will also become sick. This is like somebody who has just started sneezing, you are driving him sick. This circular needs to be changed,” Singh told CNBC TV18 last week.

He continued: “If somebody’s asset goes into this resolution process then it is expected to be completed in 180 days, it is just impossible. A resolution process will take at least a year for it to be a real resolution process. So, that limit is also unworkable.”

Now first up, someone needs to tell the minister that the RBI would have been delighted if it had to wait only one year for stressed loans to be resolved. The 50,000 megawatts of power assets that look very likely to be taken to the NCLT (the National company law tribunal ) have been stressed for at least three years!

The former power minister tried hard for three years to make the gas-based plants work. They didn’t. Now the ministry itself has given up hope. Why should these projects not be taken to the NCLT. It’s possible the banks will recover something from some stressed asset funds who are prepared to wait it out for say the Reliance–BG alliance to generate gas by 2020. Why should these zombie assets be sitting in the books of banks.

Even if these plants get into liquidation and the banks get only 10% of loan value, there will be some write back of provisions and some lightening of deadwood in their balance sheets.

Secondly, the 19,723 megawatts of thermal capacity languishing for want of PPAs won’t get resolved until discoms sign power purchase agreements or coal India signs FSAs. But, discoms haven’t been doing that for want of money.

From 2012-2017 (the period that would have been the 12th five year plan), discoms signed power purchase agreements (PPAs) for only 7,168 megawatts, where as the private power companies added 53,664 megawatts of capacity.

In fact the RBI’s rule that will require stressed companies to be taken to the NCLT, may actually be a great catalyst for the industry to reset its demand-supply imbalance. The clock for already stressed projects started ticking on March 1 and six months later, i.e on September 1, they will have to be taken to the NCLT.

Already power rates in the overnight market and in the short term(merchant) market have risen sharply ever since the weatherman announced an unusually hot summer. The day-ahead market on the IEX saw rates average between Rs 4 and Rs 5 in April 20% higher than the previous month, while merchant rates for 3- 6 months are even higher.

Recently Gujarat tied up about 2,000-mw supply during April-June at tariffs ranging from Rs 4.79 per unit to Rs 8 per unit. The average price discovered was over Rs 5.5 per unit. Punjab tied up short-term electricity supply during June-September at an average of Rs 4.5 per unit, while Haryana discovered tariff in the range of Rs 4.94 per unit to Rs 8 per unit.

The point is, even as the power companies come to the NCLT, power rates in India may become high enough for stressed asset funds and other deep pocketed investors to consider buying these companies. Banks may get at least 20% of their loans back. If banks don’t find the offers attractive at all and a few plants go into liquidation, even that will be welcome, because as capacity exits, the demand-supply balance will shift in favour of demand and the remaining, less unviable plants may become viable and fetch better rates.

Short point, the RBI’s circular must not be tweaked. It is not only good for banks, it is probably good even for the power sector as it may help the sector get healthier from a price perspective and from the point of view of weaker players giving way to stronger ones.

But perhaps the power minister is working to a different calendar – an election calendar. His refrain has been that not six months, but one year needs to be given to resolve stressed power companies.

As per his demand, the current NPA companies will be brought to the NCLT only in March 2019. By then the nation will be in election mode and the mess will eventually be his successor’s, not his. Strangely all of Mr Singh’s deadlines start only by March 2019. He had earlier announced that he would tweak the electricity act to penalise discoms for any disruption in electricity supplies post March 2019. Likewise discoms, he said won’t be allowed to recoup more than 15% of their losses through any tariff increase post March 2019. Looks like he is drawing up more plans for the next government in New Delhi than for the current one.

The minister may be moved solely by election calendar, but the RBI should be concerned only about the health of the banks. It has waited long enough for these power companies to become viable. It needs to stand firm by its February circular. Incidentally, the government may also benefit. By the time the polls are fought, Indian banks may be much healthier than they are today thanks to the RBI circular. The NDA can justly claim the cleaning up of banks are one of their best successes. They need to back the RBI.

Net neutrality, in-plane cell use in Telecom Commission’s 10-item meet for May 1

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The Telecom Commission’s meeting on May 1, its first since the Budget session of the Parliament closed on April 6, has as many as ten items on the agenda, according to a source familiar with the development.

These include net neutrality, in-flight connectivity, administrative allocation of spectrum bands E and V, ease of doing business, cloud services, machine to machine communication and regulatory framework for internet telephony.

Telecom Commission, headed by the secretary of the department of telecommunications, is the apex decision-making body of the DoT. Not all decisions of the Telecom Commission have to be approved by the Union Cabinet. The Commission usually sets up panels to consider recommendations made by the telecom regulator or even otherwise and then decides whether to give approvals or not to a given panel’s suggestions.

Net neutrality is a sensitive issue world over and not just in India. The Commission will be taking up the suggestions already made by the Telecom Regulatory Authority of India that favoured not allowing Internet service providers to cut deals with content companies that would have otherwise enabled preferential treatment to a content company by providing its content at a faster speed compared to a rival’s.

In-flight connectivity for using data and voice services is a lucrative market being eyed both by telecom as well as airline companies. All stakeholders -- including ministry of civil aviation, home ministry, external affairs ministry, air safety regulator -- have given their approvals to allow in-flight connectivity. Issues of safety, jurisdiction and licensing have so far delayed the process. Companies like Lufthansa, Emirates, Etihad Airways and Qatar Airways already offer these services on their flights.

Allocation of spectrum bands E and V is something the telecom companies are looking forward to. These bands enable transmission of data at very high speeds of 1000 megabit per second. These bands are useful for short distance tower-to-tower data transmission and some industry say these frequencies could be used for 5G services as well once the rest of the ecosystem is ready.

There is a possibility of these bands be allotted to existing telecom companies as ‘administrative spectrum’ and not through an auction. Such an allocation of these bands will save the companies the cost of laying the expensive optic fibre, a tedious process that involves seeking permission from the local authorities.

The Commission will also discuss setting up a regulatory framework for Internet telephony, a service that already has the nod of the regulator. If the DoT accepts TRAI recommendations, Internet calls will be possible to any instrument, be it landline or mobile without the users needing to download any app.

Thus, entities like Whatsapp and Skype will also come under the licensing policy and be made to sign interconnect agreements with telecom service providers. It will also be possible to use an app to call on any mobile or landline, doing away with the need for the other user also to have the same app on her mobile.

It must be noted that once true Internet telephony comes to India, only the calling party will need a data connection while it will not be mandatory for the receiver to have a data connection. The receiving consumer will simply benefit from an interconnection pact between her own service provider and that of the calling party.

The Commission will also deliberate on the concept of ‘machine-to-machine’ communication – an emerging area where one device communicates with another, let’s say your mobile telling your washing machine to shut down or the server of your electricity supplier recording the reading of your meter from a distance. As per DoT’s earlier decision, all such machines will have a 13-digit number.

PM Modi arrives in Sweden: A look at India's ties with the Nordic country

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In a first bi-lateral visit by an Indian premier to a Nordic nation in 30 years, Prime Minister Narendra Modi on Tuesday arrived in Stockholm, where he was received by his Swedish counterpart Stefan Lofven.

PM Modi's visit to the India-Nordic Summit is likely to strengthen ties with Sweden and increase bilateral trades between the two nations countries. He is on the first leg of his five-day tour which will also take him to the UK where he will attend the Commonwealth Heads of Government Meeting (CHOGM).

Here's a look at India-Sweden ties so far: 

The bilateral ties between India and Sweden go back to the 1940s. Several companies have engaged in trade leading to the establishment of bilateral trade of more than USD 2.2 billion as of 2016.

Indian ties with Sweden reached new heights after the then President of India visited Sweden in 2015, followed by the Swedish Prime Minister Stefan Löfven's visit to India in 2016 for the ‘Make in India Week’ in

Mumbai. Former Prime Minister Fredrik Reinfeldt also visited India in November 2009 for the India-EU Summit and bilateral talks.

Political ties

Several inter-governmental Agreements or MOUs in the areas including sustainable development, education, health, space, identified defence, infrastructure, urban development, education, S&T, environment, railways and energy has been signed between the two countries.

During former president Pranab Mukherjee's visit, six MOUs in important areas, including sustainable urban development; micro, small and medium enterprises; visa exemption for diplomatic passports; polar and ocean research; ageing and health; and pharmaceutical products and 15 agreements between educational institutions, were signed.

An India-Sweden Business Leaders Roundtable was created in February 2016 during the visit of the Swedish Prime Minister to India, with CII and Sweden-India Business Council as its coordinating agencies. The first Roundtable took place on 11 November 2016 in New Delhi.

Strategic and Defence Cooperation

Both the countries signed an MoU for defence cooperation in 2009, under which an India-Sweden Joint Working Group was established with a focus to promote ‘Make in India’ programme in defence sector and to identify more areas for cooperation in research and development for coproduction.

After visits of prominent defence heads from either countries, India and Sweden noted the scope for further enhancing bilateral defence cooperation to a higher level. The Swedish side expressed its willingness to work with India under ‘Make in India’ initiative and to pursue defence equipment cooperation.

Economic and Commercial relations

India is Sweden's 19th largest export market and third largest trade partner after China and Japan in Asia.

The main Swedish exports to India are pharmaceuticals, paper and pulp products, chemicals, engineering products and telecom equipment, while the main items of Indian exports are chemical products, food products, and semi manufactured and manufactured goods.

Indian companies such as Aditya Birla Group, Wipro and Bharat Forge are among the other major investors in Sweden. According to rough estimates, the cumulative Indian investment in Sweden is in the range of USD 700-800 million. Similary, Swedish companies including Atlas Copco, Sandvik, Alfa Laval, Volvo, Astra Zeneca, SAAB, have invested in India.

Cultural and Educational Relations

Indian music, dance, art, literature, films and cuisine are promoted in Sweden by local associations and the Embassy with the support of the Indian Council of Cultural Relations.

Several Swedish universities have established links with Indian educational institutions and regularly send students to India for different programmes. The establishment of Chairs on India Studies at major Swedish Universities – Lund (now discontinued), Gothenburg and Uppsala – have given an impetus to the academic interest in India.

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