Budget 2017 seeks to revive public investments in agriculture: Nabard chief

New Delhi: The budget has tasked the National Bank for Agriculture and Rural Development (Nabard), India’s apex bank for rural finance, with supporting irrigation and dairy schemes totalling Rs35,000 crore. According to Harsh Kumar Bhanwala, chairman of Nabard, these measures will revive public investments in agriculture, and rejuvenate the dairy sector where processing infrastructure is outdated. Edited excerpts from an interview:
How do you perceive this year’s budget announcements for the rural and agriculture sector?
For the rural and agriculture sector, the budget is futuristic. For several years, public investment in agriculture was going down. It used to be very high during the Green Revolution years (in the 1960s), but recent estimates suggest nearly 80% of it is private investment (by farmers or rural entrepreneurs). This year, lots of public investment in irrigation and dairy is a positive sign. While the long-term irrigation fund (Rs 40,000 crore corpus announced in the past two budgets) will make available large volumes of water, the micro-irrigation fund (Rs 5,000 crore) will help in efficient use of that water.
From a farmers’ income point of view, dairy will play a critical role. Our dairy processing infrastructure is outdated and requires rejuvenation. India is the largest producer of milk but only 20% of it goes for organized processing. We require larger processing capacities and whatever exists now is Operation Flood investments from 1970s and 1980s. So, the dairy processing fund announced in the budget (Rs 5,000 crore under Nabard) is a timely move.
For small and marginal farmers, a model law on contract farming (proposed in the budget) will allow for collectivization of cultivation so that scale of operations (farming) can go up and investments are made.
The budget tasked Nabard with schemes totalling Rs 35,000 crore for irrigation, dairy and cooperative banks. How will these take off ? Last year’s budget gave Nabard charge of a Rs 20,000 crore long-term irrigation fund. How much did you borrow and allocate to states?
Most of the funds will be raised from the market and advanced as loans to states and central government agencies. The idea is to make large funds available upfront, than say, allocate Rs 4,000 crore every year, for the next few years. This will help finish pending irrigation projects on time. The centre will service the interest on these market borrowings and repay the principal amount (for its share) to Nabard. States will allocate the funds they borrow from us directly to complete the projects. They will have to repay the borrowed funds within 15 years.
We have raised and disbursed Rs 5,600 crore to state governments for the long-term irrigation fund, and expect it to reach Rs 12,000 crore by year end (March 2017) depending on how projects are progressing.
Will Nabard also monitor progress of these projects?
Nabard does milestone-based funding. This means instalments are made available on satisfactory progress based on previous allocations. We have a monitoring arrangement and that’s why completion rates of projects that we are funding are higher.
That’s a lot of responsibility. Do you think the budget has entrusted Nabard with more tasks, than say, the agriculture ministry?
Nabard cannot do anything on its own. We work with state and central government departments. They need us for fund-raising upfront as there is a limitation on raising resources within one year. We are as much a part of the government as the department of agriculture is.

We should see early revival of pvt investment: Uday Kotak, Kotak Mahindra Bank

New Delhi: India presents probably the best opportunities among global markets, but the risks to those materialising are high because of the changes in the West that are undermining liberal economic and political values, Uday Kotak, executive vice-chairman and managing director of Kotak Mahindra Bank, tells ET. Kotak was speaking at Kotak Institutional Equities, annual global investor conference — Chasing Growth 2017. Edited excerpts.
How are you reading the change in policy stance by the central bank?
I think the most important point, as I see in the monetary policy, is that we are moving to a neutral position. I think that is even more important and reflective than the fact that there has been no decrease in repo rates. A neutral position in my mind has important characteristics, one is the rate itself which can, from here on, go up or down and the second is liquidity. If the total liquidity in the system is about Rs 6.5 lakh crore, some of that will go out by increase in currency in circulation. Now, we have roughly Rs 10 lakh crore; if currency in circulation goes up to Rs 12-13 lakh crore, that reduces surplus liquidity. But what does neutral stance mean for liquidity? Does it mean surplus liquidity of not more than Rs 1,00,000 crore, or Rs 50,000 crore, and what is the implication of that? I think there has been a lot of focus on neutral position from the point of view of ability to move interest rates in either direction, but the thing that we would really watch out for is also what neutral position means from the point of view of system-level liquidity. Because it has equal, if not more, implications on where interest rates in the money markets stabilise. And some of that is having an impact on the yields as well.
What is the impact on growth?
You have to look at growth in a slightly different context. The key issue on growth in my mind is about private investment and that is where our challenge is. As long as interest rates are in reasonable control, private investment in my view will start picking up once you see better capacity utilisation. And, my personal view is that by the end of the calendar year, we should see early revival of private investment, provided interest rates are under reasonable control.
From an equity investor point of view, how should they view India?
India is relatively, from an equity investor point of view, in a sweet spot. Our macro is in good shape, we are less dependent on the world other than IT and pharma. We are much more a domestic economy and investors like that. I believe formal domestic savings plus global savings should be in India’s favour.
With Trump taking charge, do you believe that the established world economic order is changing?
If you see post-World War II, the first mega trend you saw for a period of 35-40 years was the Socialist-Communist model and that model peaked in the 60s. In the early 70s, the world started seeing early trouble with this mega trend. And by the end of 70s, countries began to move away from that model. The second mega trend started in 1985, where marketbased economy, economic liberalism and globalisation became the mega trend — from mid-80s to 2015. People, who saw the second mega trend, know that the Communist-Socialist order doesn’t work in the real world, because as you focus disproportionately on distribution of cake, you’re destroying the growth of the cake. The question now is if 2016 is a turning point for the next mega trend?
What is the next mega trend?
The mega trend is back to protectionism and anti-globalisation. Therefore, whether it’s Brexit, whether it’s Trump or what you see in Europe is that the beginning of a mega trend, which is the mega trend 3. The biggest discussion at Davos (World Economic Forum) was about this mega trend 3. At this stage, the world view is that this is noise and not the mega trend 3. People are saying this is 3-4 years of noise, but ultimately, people will realise that the mega trend 1actually did not lead to prosperity. Now, this is hope. You know when a trend starts gaining momentum, it’s not controllable.
How do you think India should handle US President Donald Trump?
I am sure that India has got a strategy for it … But I have heard that companies like (Chinese ecommerce giant) Alibaba went and met Trump with some of its advisers who had deep relations in the US and who they had hired well before. I believe (Alibaba’s chairman) Jack Ma met Trump on January 9th … India is doing governmentto-government dialogue. India really needs to get the right set of private sector — may be non-resident Indians who may already have linkages and have supported him. That could be a good route.
You spoke about investments returning by the end of the year, but the RBI and even the Economic Survey talked about the twin balance sheet problem (stress on both banks and companies). So, how does it change by the end of the year?
One of the biggest challenges in India continues to be how you manage the issue of stress on bank balance sheet which has been there for a long time. We have talked about it year after year and it has not improved. My view is that as regards to stress, whatever has got into the ditch is remaining in the ditch. It is further complicated by some of the situations which is slowing down decision-making at PSU banks. If decisions don’t get taken and there is always a lot of fear … and if something is in the ditch, how do you get it out?
There have been reports about a possible merger with Axis Bank. Is it on the cards?
First, let me say that as a policy we do not comment on rumours and speculation. The core of any company is to focus on value creation and the ability to say ‘yes’ when there is a value-creating opportunity and ‘no’ when there is not a value-creating opportunity. Our approach to looking at anything is does it make sense for our shareholders, does it add value, is it sustainable and can we deliver superior returns to our stakeholders. That is how we think about any opportunity and obviously it goes without saying that if there is something which makes sense for us we will always keep an open mind and if there is something we need to disclose to the market we will be out there disclosing it at the right time. We are evaluating a variety of options as a bank. At this stage, there is nothing which we have come to a point where we think we should be coming out and telling you, ‘listen here is something really great’. We are looking at various options across financial services and we are looking at various options for creation of value for our stakeholders in whatever shape or form it comes.
How are you viewing the financial services sector in India?
I am very optimistic about financial services in India. I believe there is significant growth. The financial services industry in India is a huge beneficiary of the formal financial sector growth at the cost of real estate and gold. I am optimistic about financial services across the board — banking, asset management, life insurance, securities and investment banking. This is driven for two reasons. First, movement of household savings now into financial savings and second, deepening of Indian markets. For a mutual fund industry, which is growing at 30%, it is a phenomenal growth.

Tesla may enter India this summer: Elon Musk

New Delhi: Electric car maker Tesla Inc. is likely to introduce its products in India sometime in the summer of 2017, its chief executive Elon Musk said on Wednesday.
“Hoping for summer this year,” Musk said about his company’s expected launch in India, responding to a query on Twitter.
Tesla’s much anticipated Model 3, which is positioned as a mass-market, affordable car, will be retailed at $35,000 in the US. Some Indians have also booked it by paying an advance of $1,000. The Economic Times newspaper reported in April that Vijay Shekhar Sharma, founder of mobile wallet company Paytm; venture capitalist Mahesh Murthy; Vishal Gondal, founder and CEO of wearable and fitness technology company GOQii; and Sujayath Ali, CEO of online fashion platform Voonik, were among those who tweeted about booking the Model 3.
Sales of electric vehicles in India rose 37.5% to 22,000 units in the year ended 31 March 2016, according to industry lobby group Society of Manufacturers of Electric Vehicles. Just 2,000 units were electric cars. To put that in perspective, non-electric car sales rose 7.87% from the previous year to 2.025 million units in the year ended 31 March 2016, according to the Society of Indian Automobile Manufacturers (Siam).
At these levels, India has far to go from the six-million by 2020 target set under National Electric Mobility Mission Plan (NEMMP) 2020 and FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles).
An electric vehicle consortium formed by Maruti Suzuki India Ltd, Mahindra & Mahindra Ltd, Tata Motors Ltd and Ford India Pvt. Ltd has collapsed with Maruti and Ford pulling out of it.
The coming of Tesla will not prop up sales of electric vehicles in India, but it will create an aura that will augur well for the electric vehicles industry, said Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers.

AccorHotels plans to add close to 550 rooms in eastern India

Kolkata: AccorHotels plans to add close to 550 rooms in eastern India as the company expands its footprint in Guwahati and Kolkata. The expansion is likely to take place over the next three years.
To start with, Novotel, a sub-brand of the company , will debut with its Guwahati property. Targeting a mid-year launch, it is likely to have 122 rooms. This would be followed by IBIS and Formule1 in Kolkata by 2018.
Talking about the eastern India hospitality scenario, Arif Patel, vice-president of sales, marketing, distribution and loyalty at AccorHotels India, said: "The potential in the east India market remained untapped for years and it has just started getting its share of branded hotels. Accor is attempting to give the east an option to choose from a chain of luxury hotel to branded budget rooms." The company is likely to double its Kolkata portfolio to four hotels.
Accor is likely to launch subbrands IBIS and Formule1 in Kolkata, adding to the 500 rooms in the city from Novotel and Swiss Hotel. The entry of these brands into the eastern market will add another 316 keys to the city. The 129-room Formule1, according to Patel, would be the cording to Patel, would be the first new-generation hotel from the sub-brand in the country.
"Travellers are getting younger and hence new products constantly need to be added to the offerings one has.The new generation Formule1 would be targeting a younger crowd between the 22 years and 35 years age group, and will be having an all new décor as well as food and beverage offerings.Everything will be designed according the tastes and pockets of the age group," said Patel.
Accor is expecting an 8-10% growth in average room rentals and 4-5% growth in occupancy. The company is bullish on the wedding market.
"There is a lot of demand for high budget weddings in the east and due to lack of branded options a lot of them move abroad to locations like Thailand and Singapore. The city can now get back these businesses lost to such locations for weddings," said Patel. Another set of customers for the group would be medical tourists, mostly from Bangladesh.
AccorHotels, that has 46 hotels in India across various categories, is targeting to touch 10,000 keys from its present inventory of 8,000 keys. The group also plans to expand its presence to 25 other cities across India.

Cabinet approves 'Pradhan Mantri Gramin Digital Saksharta Abhiyan' for covering 6 crore rural households

New Delhi: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved 'Pradhan Mantri Gramin Digital Saksharta Abhiyan' (PMGDISHA) to make 6 crore rural households digitally literate. The outlay for this project is Rs.2,351.38 crore to usher in digital literacy in rural India by March,.2019. This is in line with the announcement made by Finance Minister in the Union Budget 2016-17.
PMGDISHA is expected to be one of the largest digital literacy programmes in the world. Under the scheme, 25 lakh candidates will be trained in the FY 2016-17; 275 lakh in the FY 2017-18; and 300 lakh in the FY 2018-19. To ensure equitable geographical reach, each of the 250,000 Gram Panchayats would be expected to register an average of 200-300 candidates.
Digitally literate persons would be able to operate computers/digital access devices (like tablets, smart phones, etc.), send and receive emails, browse internet, access Government Services, search for information, undertaking cashless transactions, etc. and hence use IT to actively participate in the process of nation building.
The implementation of the Scheme would be carried out under the overall supervision of Ministry of Electronics and IT in active collaboration with States/UTs through their designated State Implementing Agencies, District e-Governance Society (DeGS), etc.
Background:
As per the 71st NSSO Survey on Education 2014, only 6% of rural households have a computer. This highlights that more than 15 crore rural households (@ 94% of 16.85 crore households) do not have computers and a significant number of these households are likely to be digitally illiterate. The PMGDISHA being initiated under Digital India Programme would cover 6 crore households in rural areas to make them digitally literate. This would empower the citizens by providing them access to information, knowledge and skills for operating computers / digital access devices.
As the thrust of the Government is on cashless transactions through mobile phones, the course content would also have emphasis on Digital Wallets, Mobile Banking, Unified Payments Interface (UPI), Unstructured Supplementary Service Data (USSD) and Aadhaar Enabled Payment System (AEPS), etc.

Suresh Prabhu launches first phase of station redevelopment project

New Delhi: Railway minister Suresh Prabhu on Wednesday launched the first phase of his ambitious station redevelopment project under which he plans to modernize 400 railway stations across the country by providing several passenger-friendly amenities.
These redeveloped stations would support digital signage, have escalators and elevators, self-ticketing counters, executive lounges, luggage screening machines, walkways and holding areas for passengers, among other facilities.
The 23 stations shortlisted for the first phase include Chennai Central, Ranchi, Udaipur City, Indore, Yesvantpur, Bengaluru Cantt., Visakhapatnam, Howrah, Kamakhya, Faridabad, Jammu Tawi, Secunderabad, Vijayawada, Kozhikode and Bhopal.
The project of re-developing 400 A1 and A category stations in the country is the biggest non-fare revenue generating programme being undertaken by Indian Railways. The projects will be executed in a public-private-partnership (PPP) model through a fair bidding system.
Under the project the entire cost of redeveloping stations will be met by leveraging “commercial development of vacant separable land and air space in and around the station”.
A senior railway ministry official, requesting anonymity, said under the first phase of the project Indian Railways will provide approximately 140 acres of encroachment-free land at these stations to the developers on a 45-year lease. “The phase is expected to be of approximately Rs6,000 to Rs9,000 crore in size,” he said.
Railway ministry, in a statement, said that the program will provide approximately 2,200 acres of prime land to the private developers across top 100 cities of the country. A committee of eminent experts would be formed to provide suggestions to zonal Railways on proposals submitted by bidders in addition to the technical and financial committee recommendations.
Commercial potential of this vacant Railway land at/near stations will be leveraged to develop world-class stations with no additional funding required from the Railways. The program is expected to generate a surplus in excess of Rs10,000 crore for Indian Railways which can be invested in other modernization projects.

India to beat Japan to become third largest domestic aviation market globally

Mumbai: The Indian aviation market is likely to overtake Japan this year to become the world's third largest domestic market after US and China.
"The Indian domestic market is on track to surpass 100 million passengers in 2017," said Kapil Kaul, CEO, Centre for Asia Pacific Aviation (CAPA) in his address at the CAPA aviation meet on Wednesday.
In fact, domestic air traffic could grow by close to 25 percent in 2018 and approach 130 million passengers.
"In reaching this milestone, India will have achieved average domestic traffic growth of over 15 percent per annum since the liberalisation of the sector commenced in 2004," he said.
The reasons for the growth are primarily strong economic fundamentals, although traffic has been over-stimulated by low fares, Kapil Kaul said. The ramifications of the Indian government's demonetisation initiative announced in November last year is unclear but the introduction of the GST in the next fiscal year may possibly have a short term negative impact on economic growth for a couple of years.

At 19 million tonnes|year, India 2nd-largest LPG user in world

New Delhi: India has become the second-largest domestic LPG (liquefied petroleum gas) consumer in the world due to the Central government's rapid rollout of clean fuel plan for poor households and fuel subsidy reforms.
LPG consumption by households has reached 19 million tonnes, registering an annual growth rate of 10%.Consumption is expected to rise 20 million tonnes, backed by expanding consumer base in urban areas and rapid rollout of the `Ujjwala' scheme for providing LPG connections free of cost to five crore poor households by 2019.
The Ujjwala scheme has turned India into an example for energy experts from other emerging economies still struggling to provide clean fuel to their rural folks. No wonder the World LPG Association (WLPGA) -so far focused on developed economies -has chosen to hold its Asia summit in Delhi.
Barely nine months after being launched by the PM in May 2016, the scheme has covered 1.6 crore poor households, topping the target set for the entire 2016-17 financial year on the back of a massive rural outreach push. “It simply beats me how they achieved this,“ WLPGA Yagiz Eyuboglu told a curtain-raiser session on Monday in a compliment to oil minister Dharmendra Pradhan.
“When we assumed office, we had a system of misdirected subsidies, rich and uppermiddle class were entitled to LPG subsidies. There were many duplicate connections and the subsidized LPG was diverted to commercial and industrial segments. As a result poorest of the poor never had access to LPG. In 2014, almost half of Indian households didn't have LPG connections. We decided to change the LPG landscape in India,“ Pradhan said, giving an insight into the government's thinking behind the reforms.
Pradhan said reforms in the subsidy mechanism -elimination of ghost consumers and direct subsidy transfer -saved an estimated Rs 21,000 crore, or $3.2 billion, in the two years of the Modi government. During this time, he said, Rs 40,000 crore, or $6.5 billion, in subsidy has been transferred directly to bank accounts of consumers.

Sebi to overhaul governance norms for stock exchanges

Mumbai: The Securities and Exchange Board of India (Sebi) is looking to increase its oversight of the boards of stock exchanges by having a greater say in the appointment of public interest directors, said three people aware of the matter, including an official with the regulator.
To this end, the Sebi board, when it meets on Saturday, will propose amendments to the Stock Exchange and Clearing Corporation (SECC) regulations pertaining to appointment and remuneration of these directors and also ownership and governance norms, these people said.
“This is in the wake of exchanges getting listed and certain governance lapses that have come to notice,” one of the three said on condition of anonymity.
Currently, SECC rules mandate the boards of exchanges and clearing corporations to appoint public interest directors and fix their fees in line with the Companies Act.
To be sure, the regulator played an active role in appointment of the chairman and public interest directors at the National Stock Exchange of India (NSE) last year.
Bloomberg Quint reported on 4 January that five public interest directors on the board of NSE—Ashok Chawla, former chairman, Competition Commission of India (CCI); Dinesh Kanabar, founder of Dhruva Advisors Llp, former Infosys Ltd director Mohandas Pai; Dharmishta Raval, former executive director, Sebi; and Naved Masood, former secretary at ministry of corporate affairs—were Sebi appointees and entrusted with the task of improving governance standards at India’s largest stock exchange, where some officials allegedly allowed unfair algorithmic trading access to some entities.
Now, the regulator is looking to institutionalize its oversight.
“Sebi has always been on top of vetting independent directors at exchanges though it may not choose them from the start,” said Raval. “The issue currently important for stock exchanges is on governance front to address conflict of interest when they (exchanges) are getting listed.”
Secondly, Sebi is considering setting up a panel to comprehensively review SECC norms, especially those related to ownership and governance, said the regulatory official cited earlier. This person didn’t reveal details of what the review will cover.
“The accountability of exchanges needs a massive overhaul. Currently, the exchanges accountability is limited and that doesn't bode well for governance. Regulator should also consider removing the 5% investor cap to increase competition in exchange space,” said Sandeep Parekh, founder, Finsec Law Advisors.
Sebi’s review comes at a time when the BSE has listed on its rival NSE. The latter filed a share sale prospectus with the regulator.
The Sebi board will also discuss reforms in the commodity derivatives market such as finalizing price settlement for commodity options, guidelines for warehouses and so on.
Separately, the board of the market regulator will meet with finance minister Arun Jaitley to implement announcements in the Union budget such as a proposal to integrate the commodity spot and derivatives markets.
“Sebi will initiate consultation with various stakeholders—spot market participants, commodity derivatives exchanges and electronic national agriculture market (e-NAM) platform,” said the second person cited earlier.
The government will form an expert panel to draft a bill to integrate the two markets and Sebi will offer its comments on the bill, this person added.
Sebi will also create a framework to list security receipts created from the stressed assets. “For selling stressed assets on stock exchanges, Sebi will create a framework where these would be sold as receipts on stock exchange’s debt platform with a high ticket size of Rs25 lakh,” said the first person.
In the Union budget, the government announced that securities receipts issued by asset reconstruction firms would be allowed on exchange platforms to help resolve the bad loans and increase capital flows to this sector.
Indian banks were sitting on a Rs6.7 trillion bad loan pile at the end of September.
Additionally, in its meeting with the finance minister, Sebi is going to clarify its position on the Rs5,548-crore National Spot Exchange Ltd (NSEL) payments crisis and what actions it has taken on NSE giving unfair trading access to some brokers.

Lok Sabha passes Wages Amendment Bill

New Delhi: The Lok Sabha on Tuesday passed the Payment of Wages (Amendment) Bill, 2017 which allows for digital payment of salaries or through cheque. The bill will now go to Rajya Sabha and following its passage in the upper House, the amendments will be notified.
The move will enable employers to pay wages of less than Rs 18,000 a month by cheque or digitally to bank accounts, besides in cash, by doing away with the requirement of employees' written consent for the same.
At present, wages can be given through cheque or transferred to a bank account only after a written authorisation from an employee. The Bill was introduced in the Lok Sabha on December 15, but it could not be taken up for discussion amid din over demonetisation.