ESTD. 1917 - FTAPCCI 2016/FR 2016 07 13.pdf · ESTD. 1917 Weekly Journal of the Federation of...

July 13, 2016 || FAPCCI Review || 3

ESTD. 1917 Weekly Journal of the Federation of Andhra Pradesh Chambers of Commerce & Industry

Vol.XVI - No.28 July 13, 2016 Rs.15

Editor : T. SUJATHA, Dy.Director

Editorial Advisory Board

M. GOPALAKRISHNA, I.A.S. (Retd.)

OMPRAKASH TIBREWALA NITIN K. PAREKHPast President, FAPCCI Member – FAPCCI

Dr. C.V. NARASIMHA REDDYDirector, Dept. of Information & Public Relations, Govt. of AP (Retd.)

The views expressed by the authors in their articles published in this magazine aretheir personal views and do not necessarily reflect the views of FAPCCI.

The Federation of Andhra Pradesh Chambers of Commerce & IndustryFederation House, FAPCCI Marg, Red Hills, Hyderabad - 500 004.

� : 23395515 (8 Lines), 66755021, 66755026 � Fax : 040-23395525E-mail : [email protected] � Website : www.fapcci.in

ContentsPresident

RAVINDRA MODI

Senior Vice-PresidentGOWRA SRINIVAS

Vice-PresidentARUN LUHARUKA

Immediate Past PresidentANIL REDDY VENNAM

Managing Committee

VENKAT JASTIM.S.P. RAMA RAO

MANOJ KUMAR AGARWALARUN KUMAR DUKKIPATI

MEELA JAYADEV ANIL AGARWAL

C.V. ANIRUDH RAOB. P. SINGHAL

K. RAMABRAHMAMA. PRAKASH

ATHUKURI ANJANEYULURAMAKANTH INANI

SHYAM SUNDER AGARWALAVINASH GUPTADr .M. APPAYYA

SURESH KUMAR SINGHALRAJ KUMAR AGRAWAL

PREM CHAND KANKARIAK. BHASKER REDDYGOWRA L. PRASAD

ARVIND KEDIAV.V. SANYASI RAO

PRAKASH CHANDRA GARGSURESH KUMAR JAINABHAY KUMAR JAINARUN LUHARUKA

CHALLA GUNARANJANSHYAM SUNDER PASARIDR. K. NARAYANA REDDYJITENDER KUMAR GUPTA

SHIV KUMAR GUPTAR. RAVI KUMAR

RAJENDRA AGARWALKARUNENDRA S. JASTI

Smt UMA GHURKA

GENERALPOWER NEWS 4ECONOMY Watch 6ARTICLESIts time for MSME’s to Board the e-CommerceShip ! 8RBI Releases June 2016 Financial Stability Report 9Why we Need to worry About Indian Banking 11The Income Declaration Scheme, 2016 13FTAPCCI Program Proceedings 15Forthcoming Events 22Workshop on Leveraging Qualiy Systems forManufacturing Competitiveness 22Seminar on e-Commerce & BusinessOpportunities 23National Summit on MicrofinanceTrending Microfinance 24Half day Seminar on e-Waste Management-Sustainable Development 24National Seminar on Tax Deduction atSource (TDS) 25FTAPCCI Invites Nominations forExcellence Awards 2014-15 26

4 || FAPCCI Review || July 13, 2016

Power output Growth Doubles to 9.5% in 2016

The power generation growth was recorded at 5.65per cent between 2004 to 2014, 5.02 per cent in2012-14, 7.03 per cent in 2014-16 and 9.5 per centin 2016-till date, stated Power Minister PiyushGoyal

The power generation growth was recorded at 5.65per cent between 2004 to 2014, 5.02 per cent in 2012-14, 7.03 per cent in 2014-16 and 9.5 per cent in 2016-till date, Power Minister Piyush Goyal tweeted.

Goyal also said there was 87 per cent reduction inenergy shortage in just two years to 14 million units(mu), from 110 million units earlier.

According to Vidyut Pravah application to monitorpower demand on the basis of data provided by states,the electricity deficit came down to 14 mu in July thisyear from 110 mu in the same month in 2014 and 62mu in 2015.

Goyal also tweeted that power was available at ratesbelow Rs 2 per unit on July 3rd 2016 at exchangesacross the country with no network congestion. “Thisreflects country moving towards One nation, One grid,One price,” he said.

According to the application, power was available atRs 1.8 per unit in most states, including Jammu &Kashmir, Punjab, Delhi, Rajasthan, Uttar Pradesh,Madhya Pradesh, Andhra Pradesh, Telangana andOdisha.

Source: http://energy.economictimes.indiatimes.com/news/power/power-output-growth-doubles-to-9-5-in-

2016/53043339

Domestic Equipment Policy only for Transmissionand Distribution Projects, clarifies CEA

In what would clear the air for coal-based powerdevelopers, the technical arm of the power ministry,Central Electricity Authority (CEA), has clarified thatits advisory for use of domestically manufacturedequipment for government-funded power projects islimited to transmission and distribution equipment anddoes not cover generation machinery.

The ambiguity in the notice had put several powerdevelopers in a bind. They argued that the countrylacked capacity to meet the domestic demand forgeneration equipment. The coal-based capacity in the

country has grown by an annual 20 gigawatt over thepast 4 years. This is not matched by the domestic boiler,turbine, generator (BTG) makers, with the largestcompany, state-run BHEL, has struggled in maintainingdelivery schedules. BHEL has an annual capacity ofabout 20 GW.

The authority issued a correction to its earlier advisoryreleased in May which exhorted state-run agencies,both transmission and distribution utilities, to useequipment from local manufacturers citing under-utilisation of such capacity that had invested heavily inexpanding capacity and developing indigenoustechnology.

“The advisory was always limited to distribution andtransmission equipment but it wasn’t explicitlymentioned in the earlier order. However, we felt itneeded clarification after we received queries frompower developers asking if it included equipment relatedto power generation also,” SK Ray Mohapatra, chiefengineer, CEA, told FE. Mohapatra added that the noticewas meant to be a guideline and it wasn’t yet clear ifstate or central agencies would incorporate thesuggestions.

In the earlier order, CEA had said that Power FinanceCorporation (PFC) and Rural ElectrificationCorporation (REC) should ensure that utilities follow atransparent tendering mechanism in procurementprocess for central government funded schemes suchas Deen Dayal Upadhyay Gram Jyoti Yojana (DDGJY)and Integrated Power Development Scheme (IPDS)for which they are the nodal agencies. The DDGJYand IPDS schemes have been allocated nearly R1.5lakh crore for strengthening and modernisation of ruraland urban distribution infrastructure.

It had also said in absence of domestic manufacturingcapability in respect of specific equipment, foreignmanufacturers may be allowed to participate in thetendering process, provided such an entity formed ajoint venture with an Indian bidder. “Foreignmanufacturers, in such cases, shall have to establishthe manufacturing facility in India within a specific timeframe and shall ensure transfer of technologygovernment by a phased manufacturing program,” CEAhad said in its notice.

Source: Financial Express | New Delhi,Sumit Jha : 8th July 2016


Reverse e-auction for power projects in thepipeline

The government plans to invite bids from private andpublic companies for interstate power transmissionprojects through reverse electronic auction on build-operate-own (BOO) basis for 35 years.

The power ministry and state-run auctioneer MSTCwill soon launch a bidding platform to shift from thepresent manual auction process to determine the lowestbidder. The transparent reverse auction process willenable bidders to revise their bids during the live biddingprocess, a government official said.

The auction process will begin with bid processcoordinators - the transmission wings of state-run RuralElectrification Corporation (REC) and Power FinanceCorporation (PFC) - to float tenders. The coordinatingagencies will call for technical bids and initial priceoffers, and later prune half of the technically qualifiedbidders, subject to a minimum of four, for the finalreverse eauction.

Companies that claim lowest levelised tariffs forelectricity transmission will bag the projects.

REC Transmission Projects has identified two bigtransmission projects - transmission system connectingphase-I power generation projects in Arunachal Pradeshand NER system Strengthening Scheme-II and V forimmediate auction on the proposed bidding platform.

While a committee is likely to soon determine theestimated project cost of the two transmission projects,industry experts said the projects are expected to costabout.‘700 crore each.

The power ministry has approached the Union cabinetfor separation of central transmission utility functionrelated to transmission planning and grant of openaccess in the interstate transmission system from state-run Power Grid Corporation.

The proposal for separation of planning function fromPower Grid was mooted amid rising concerns on conflictof interest and level playing field for private companiesas the state-run company is involved in planning thetransmission system and participates in the bidding aswell.

After the separation, an independent non-profitorganisation will carry out the transmission planning andalso organise bidding process for projects under tariffbased bidding.

Source: Economic Times, New Delhi,Sarita Singh : 8th July 2016

India can achieve 1.65 billion units of electricitynext year:

The country can achieve as high as 50 per cent growthin electricity production up to 1.65 trillion units next year,Power Minister Piyush Goyal said today.

Given the infrastructure and generating capacity wehave today...we have the ability to double our powerproduction. If tomorrow we need to add 50 per centpower to our system I am ready for that. We are makingabout 1.1 trillion units of electricity annually now ...Wecan go up to 1.65 next year,” Power, Coal and MinesMinister Goyal said at INFOCOM 2016 here.

The minister termed power shortages cited by the statesas “technical” arising out of mismanagement.

“Very often states don’t buy and show shortage...thereis a mismatch between availability of power andcapacity of states to purchase and distribute to last mileconnectivity.,” he said.

The minister said there was surplus production of coalnow unlike in the past when two-third of India’s powerplants were left with only critical coal stocks.

As a nation for 55 days if not a single kilo of coal isproduced you will have power,” he said.

The minister said Rs 1.11 lakh crore would be pumpedin for technological up gradation of power infrastructurethrough various schemes for rural and urban India.

He added that the government was trying to ensure24x7 power supply to each household by 2019, threeyears ahead of the target. Prime Minister NarendraModi had announced providing power to the lasthousehold by 2022.

Goyal said renewable energy has receivedunprecedented thrust in India and the target for solarrooftop is set to reach 40,000 MW by 2022 from amere 200 MW in 2015.

Source: The Hindu | New Delhi, PTI:8th July 2016


Core sector growth slows to 2.8% in May

Eight core sectors of the economy posted a 2.8 percent year-on-year growth in May, the slowest pacesince 2.9 per cent in January, due to a decline in outputof refinery and steel products. These eight sectors —comprising almost 38 per cent of the weight of itemsincluded in the Index of Industrial Production (IIP) —had recorded an 8.5 per cent growth in April, whichwas the highest since 8.54 per cent in November2014.The low growth in May was on account of acontraction in output of crude oil (- 3.3 per cent versus0.8 per cent growth in May 2015) and natural gas(- 6.9 per cent, versus - 3 per cent in May 2015) inaddition to a very marginal expansion registered byrefinery products (1.2 per cent versus 7.8 per cent inMay 2015). Besides, the growth in electricity generationwith a weight of 10.3 per cent in the IIP — the maximumweight among the eight core sectors — slowed downto 4.6 per cent as against 6 per cent in May 2015. Thegrowth in coal output at 5.5 per cent in May was slowerthan 7.6 per cent in May 2015, and so was theperformance of cement (2.4 per cent as against 2.7per cent in May 2015). Fertiliser was the lone sector topost double digit growth at 14.8 per cent (versus 1.3per cent in May 2015), while steel sector productiongrew by 3.2 per cent (as against 2 per cent in May2015).

http://www.thehindu.com/tp-business/core-sector-growth-slows-to-28-in-may/article8794143.ece

Tax collections surge to Rs. 3 lakh cr in firstquarter

A sharp rise in tax collections, both direct and indirect,in the first quarter of this fiscal year appeared to givethe Centre, which has some heavy spending lined up, abit of elbow room, although the data set comes withsome caveats.According to the data released by theFinance Ministry on Friday, the tax kitty seems to haveswelled up to over Rs. 3.23-lakh crore during thequarter.While indirect tax collections jumped 30.8 percent between April and June 2016 to Rs. 1,99,790 crore,net direct tax receipts are estimated to have grown by24.79 per cent to Rs. 1.24-lakh crore in the period.Thegross tax collection target is pegged at Rs.16,30,888crore, which marks a 12.5 per cent rise over theBudgeted Rs. 14,49,490 crore last fiscal.

http://www.thehindubusinessline.com/todays-paper/tax-collections-surge-to-rs-3-lakh-cr-in-first-quarter/article8825700.ece

Default risk on pledged shares on the rise, saysIndia Ratings report

Increasing pledges on shares held by promoters is anearly warning sign of companies in trouble. Accordingto data from credit rating agency India Ratings, pledgeson promoter holdings of companies that have defaultedor are close to default rose to 81 per cent in FY15from an average of 30 per cent in FY11.Ind-Ra recentlystudied the refinancing risk faced by the top 500corporate borrowers, of which 384 are publicly listed.Of the 500, Ind-Ra categorised 83 as stressed(defaulted or close to default) while another 157 facean elevated risk of not being able to refinance theirloans.

http://www.thehindubusinessline.com/todays-paper/tp-markets/default-risk-on-pledged-shares-on-the-rise-says-india-ratings-report/article8825708.ece

Anti-dumping duty imposed on PTA imports from5 countries

Domestic producers of purified terephthalic acid (PTA),a key raw material for manufacture of polyester chips,have cause for cheer with the Finance Ministryimposing definitive anti-dumping duty on its importsfrom China, Iran, Taiwan, Indonesia and Malaysia.ThisRevenue Department move – which came less than amonth after the recommendation of the designatedauthority in the Commerce Ministry — is expected tocome as a relief for Reliance Industries and Indian OilCorporation.

http://www.thehindubusinessline.com/todays-paper/tp-news/antidumping-duty-imposed-on-pta-imports-from-5-countries/article8825731.ece

Telangana State Racing Ahead in the IndustrialSector:

TS was racing ahead in industrial development and ispoised to be among the top three industrial States inthe country soon says IT and Industries Minister SriK. T Rama Rao. Rs 30000 crores coming into the Statewithin a year of the launch of its new industrial policywas proof of the confidence and interest that TelanganaState has generated among the investors andentrepreneurs across the globe.


Status of Industrial Sanctions under TS-IPASS:

Total Investments: Rs 30000 croreTotal Units: 2,300Commercial Operations launched: 1030 unitsAt various stages of Operations: 334 unitsYet to start: 42 unitsStarted Construction Works: 393 unitsEmployment Generated: 1.12 lakhIT Exports: Rs 68258 croreIT Jobs created: 80000

Investments pouring into Andhra Pradesh State:

Finance Minister Yanamala Ramakrishnudu has saidthat 417 industrial units, with an outlay of Rs.1,23,973crore, have been set up in the State in the last twoyears and some more projects, with an investment ofRs. 2.09 lakh crore, would take off soon.These areamong 800 project proposals received in the last coupleof years with investment amounting to Rs.5 lakhcrore.Clearances were given to projects withinvestment of nearly Rs.7,330 crore on 8th July 2016at the State Investment Promotion Council (SIPC)

meeting. These projects are in Anantapur, Chittoor,Krishna, Nellore, and Visakhapatnam districts.

http://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/investments-pouring-into-state-yanamala/article8827176.ece

In a first, Kerala imposes 14.5% ‘fat tax’ on junkfood

The Kerala government has proposed a 14.5 per cent‘fat tax’ on burgers, pizzas and other junk food servedin branded restaurants which officials from the quickservice industry termed as ‘detrimental’ to consumptionwhile some indicated the levy may not be passed on tocustomers.

Fat tax on junk food, a reality in European countriessuch as Denmark and Hungary, looks out of place in amarket barely recovering from a six-quarter back-to-back slump in eating out.

http://economictimes.indiatimes.com/articleshow/53113799.cms?utm_source=contentofinterest&utm_medium=text&utmcampaign=cppst


Its Time for MSME’s to board the e-Commerce Ship!

e-Commerce is giving MSMEs access to marketsproducers could not reach or afford to reach hitherto.The IAMA-IMRB (2013) report on digital-commercesuggests that the e-commerce industry in India isexpected to reach approximately 13 billion USD,showing a year-on-year growth of 34% since 2009.Availability of broadband services, increasing internetpenetration and growing purchasing power aresupporting the growth of online retailing in India.

At a time when economic growth in India has struggledin almost every sector, Small and Medium Enterprises(SMEs) have grown at 23% per annum and outstrippedthe 15% growth figures of the industrial sector in India.SMEs in India employ close to 100 million people andaccount for 8% of GDP. Almost half of themanufacturing sector in India is comprised by suchSMEs and close to 40% of India’s exports are creditedto such enterprises. Poised for rapid growth andintegration with major global value chains, MSMEs willmake considerable impact in realizing “Make in India”vision. The sector has the potential to market its ‘Madein India’ brand globally.”

India’s manufacturing activity, especially in apparel andshoes, is carried out by MSMEs in tier 2 and 3 cities.e-Commerce is giving a much needed fillip to localsourcing, where even a small manufacturer oraggregator in a town can sell his wares easily andwithout attending business development and distributioncosts at the click of a few buttons. Research suggeststhat e-commerce is growing at a faster rate in tier-2and tier-3 cities clocking an average of 40% growthyear on year. e-Commerce is pushing warehousing andlogistics to smaller towns for efficiency and generatingemployments for lakhs of youth across the country. Itis freeing manufacturers from agencies and allowingthem to talk and deal directly with sellers & bringingdown costs, improving efficiencies, benefiting bothconsumer and seller.

A study carried out by FICCI-Nathan in 2013 put aperspective on this situation. Analyzing the Internet’srole in the performance of India’s micro, small andmedium enterprises, the report concludes that “In thelast 15 years, the Internet has turned out to be one ofthe most promising tools which MSMEs can leveragefor their growth.” According to the report, a survey of951 small and medium enterprises in various industrialand geographical clusters across India shows that ofthose who do use the Internet, 64% have seen an

increase in sales and 69% an increase in customers.Cross- border e-Commerce is a major revenueopportunity which many MSMEs are eager to explore.

The internet has emerged as a game changer forbusiness across the world. MSMEs in India havetraditionally been dependent upon domestic trade butwith access to internet technologies they have startedto explore opportunities globally.

But, there exist road blocks for the growth of theseonline platforms that are being used by MSMEs suchas costs of technology adoption, lack of awareness,inadequate financing for projects undertaken and noproper training and support . This needs urgentattention. The e-Commerce industry is beset with policyconfusion and obstructionist rules that restrict andcontrol rather than allow unhindered growth. This is inturn directly limiting the growth potential of the MSMEsector in the country. Disallowing foreign investmentinto the sector for direct operations by e-Commercecompanies is not only hobbling their operations but alsostraitjacketing MSMEs.

One needs to only look at our neighbor China to seehow it has fuelled the e-Commerce boom with anenabling policy framework, occupying the global topslots both in the B2B and B2C spaces. Its MSMEs areable to use the power of the Internet to further theirpotential in exports.

Despite the roadblocks that the MSME e-Commerceecosystem is faced with, there is a deliberate andwidespread support that the MSME community hasreceived in India recently. The future of e-Commerceadoption among MSMEs is no longer speculative andwith the spotlight turned on, the ecosystem is changingto pivot the MSME community’s role in India.

In a country that is increasingly going online, assuagingfears of obsolescence will depend on equal opportunitycreation across the board for MSMEs even in the mostremote locations and by enabling them to tackle thechallenges of adoption. A classic success story wasmentioned in all the newspapers regarding local tailorsbeing demanded by online and offline retail companiesto mend the sales gap. Some years back, tailoring hadlost its relevance and now the coverage of e-Commerceis providing profitable opportunities to millions of smallscale industries and entrepreneurs.

Pawani, Research Assistant

FTAPCCI


RBI releases June 2016 Financial Stability Report

The Reserve Bank of India today released the FinancialStability Report (FSR) June 2016, a biannual publicationand the thirteenth in the series.

The FSR reflects the overall assessment on the stabilityof India’s financial system and its resilience to risksemanating from global and domestic factors. Besides,the Report also discusses issues relating to developmentand regulation of the financial sector. Beginning fromJune 2015 issue, a special thematic discussion is includedin the FSRs brought out in June. Accordingly, this issueof FSR brings out a thematic discussion on ‘An optimalconfiguration for the financial system – Banks versusMarket’ in the context of the progress towards makingthe Indian financial system more effective in supportingthe economic growth.

Highlights of FSR- June 2016 are summarisedbelow:

Overall assessment of systemic risks

* India’s financial system remains stable, eventhough the banking sector is facing significantchallenges. As global uncertainties and transitinggeopolitical risks impact India, continuation of sounddomestic policies and structural reforms remain the keyfor macroeconomic stability.

Global and domestic macro-financial risks

* The global recovery remains fragile amidstweak and uneven growth, a slowdown in world tradeand prevailing uncertainties in financial and commoditiesmarkets. The unintended side effects of current ultra-easy monetary policies being pursued in many advancedeconomies - without any clear signs of an exit strategy,are becoming evident.

* Indian economy at this juncture stands out interms of growth and investment potential. With theGovernment’s commitment to continue on the path offiscal discipline, the efforts on containing the revenuedeficit and rationalising subsidies need to be reinforced,even as gross fixed capital formation needs a fillip.

* India’s external sector indicators show arelatively stronger position. However, a faster growthin India’s oil import in terms of volume in recent yearsmakes it imperative to be alert to the risks of commoditycycle reversals.

* The prediction of a normal monsoon augurswell for agriculture sector growth in 2016-17, althoughthe spatial and temporal distribution matter as much as

the total quantum of rainfall. Given its large impact onbroader political economy, the agriculture sector needscoherent policy measures to address sustained foodprice pressures and the overall rural distress.

* While stress in the corporate sector showedsome signs of moderation in 2015-16, the risks of lowerdemand and weaker debt servicing capacity continue.

Financial Institutions: Performance and risks

* The business of scheduled commercial banks(SCBs) slowed significantly during 2015-16. The grossnon-performing advances (GNPAs) ratio increasedsharply to 7.6 per cent from 5.1 per cent betweenSeptember 2015 and March 2016, largely reflectingreclassification of restructured standard advances asnon-performing due to asset quality review (AQR).The restructured standard advances ratio declined butwith a marginal increase in the overall stressedadvances ratio from 11.3 per cent in September 2015to 11.5 per cent in March 2016. The capital to risk-weighted assets ratio (CRAR) of SCBs showed someimprovement across the bank-groups. However, theprofitability of SCBs declined significantly and the publicsector banks (PSBs) recorded losses during 2015-16.

* Asset quality of scheduled urban co-operativebanks (SUCBs) as well as non-banking financialcompanies (NBFCs) improved. The performance ofNBFC sector in general is relatively better than that ofPSBs.

* From the perspective of the larger financialsystem, the flow of funds among various types offinancial institutions assume importance. The assetmanagement companies managing mutual funds(AMC-MFs) followed by insurance companies are thebiggest fund providers in the system, while SCBsfollowed by NBFCs are the biggest receiver of funds.

Financial sector regulation

* Internationally, apart from the focus on themeasures related to improving the capital and liquidityposition of banks, the policies aimed at promoting publicconfidence and upholding the safety and soundness ofthe banking system with emphasis on issues oftransparency and accountability assume a greaterdegree of significance.

* As Indian banks are currently focusing oncleaning their balance sheets in the wake of the AQR,various measures taken by the Government to address


the issues related to distressed industrial sectors areexpected to help the process and improve the creditgrowth. The regulatory steps taken by the ReserveBank are aimed at improving banks’ ability to deal withstressed assets. While the proposed ‘Large Exposures’framework will help in mitigating the risk posed to thebanking system on account of large aggregate lendingto a single corporate entity, the recent guidelines on a‘Scheme for Sustainable Structuring of Stressed Assets(S4A)’ will help in putting real assets back on trackthrough another avenue for reworking the financialstructure of entities facing genuine difficulties, whileproviding upside to the lenders when the borrower turnsaround.

* SEBI’s framework providing an electronic bookmechanism for issuance of debt securities on privateplacement basis is expected to result in improvedefficiency, transparency in price discovery as well asreduction in cost and time taken for such issuances.With the regulatory impetus, the commodity derivativesmarket is poised to evolve with new products and newcategories of participants leading to better liquidity andmore efficient price discovery, further aided by recentinitiative of Government in setting up the NationalAgriculture Market (NAM).

There is a need to assess the resilience of reinsurancecompanies in the face of increasing concentration ofcontingent liabilities in a few reinsurance entities. Themove towards adopting risk based supervision by thepension sector regulator is expected to ensure efficientallocation of supervisory resources.

Alpana KillawalaPrincipal Adviser

(RBI Press Release : 2015-2016/3023)

We are happy to inform youthat FTAPCCI Business Directory2016 has been just released. TheDatabase consists of Name of the

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Business Directory 2016


Recognising and writing off bad assets may not resolvethe banking problem as the new financial order requiresbanks to lend to the default-prone, aggravating the woes

While recognising that risks to India’s banking sectorare rising due to deterioration in asset quality and lowprofitability, the government and RBI spokespersonsperiodically declare that there is no cause for alarm.But there is much evidence (for example in the RBI’sFinancial Stability Report of June 2016) that the problemis serious and the health of banks may deterioratefurther, as changes in the nature of bank exposure havesignificantly increased systemic risk.

The indicator most often cited as reflecting the healthof the banking system is the ratio of non-performingassets (NPAs) to total advances. The restructuring andrecapitalisation process associated with the post-1991‘reforms’ had resulted in a sharp decline in the ratio ofgross NPAs to gross advances from 15.7 per cent atthe end of 1996-97 to 2.3 per cent at the end of 2008-09, the year of the global financial crisis.

However, since then there has been a reversal in trend,with the ratio rising to 3.4 per cent in 2012-13, 4.6 percent in 2014-15 and 7.6 per cent in 2015-16 (Chart 1).The Financial Stability Report of the RBI provides anumber of explanations for this trend.

One is the possibility that “boom period credit disbursalwas associated with less stringent credit appraisal.”The other is accelerated credit growth, resulting fromcompetitive credit disbursal encouraged by the sharpdecline in the statutory liquidity ratio (SLR) from 30.5per cent of total assets at end March 2005 to 22.6 percent at end March 2008 and “the push for infrastructureprojects, many of which later got into a logjam.”

The missing fear

But these do not explain the sharp spike in the NPAratio in 2015-16. Two other developments during thelast decade are important. The first was the creationof a corporate debt restructuring mechanism, whichenabled the revival of large loans that were under threatof default. The mechanism involved measures such asextending the maturity of the loan, reducing the interestrate charged, converting a part of the loan into equity,providing additional financing, or some combination ofthese.

Why we need to worry about Indian bankingCP Chandra Sekhar

Jayati Ghosh

This was clearly intended to mitigate the risk of lendinglarge sums, especially to capital-intensive projects withlong gestation lags, as in infrastructure. If banks hadto make provisions for likely losses on such loans atthe first sign of them turning non-performing, the impactthis would have on their finances would dissuade themfrom undertaking such lending. Restructuring was away of allaying the fears of bankers, who had in thepast avoided lending to capital-intensive projects forfear of being overexposed in long-maturing, illiquid loanassets.

With the decline of development banks post-liberalisation, public commercial banks were requiredto take on this new role, in which they did indeed financecapital intensive projects with greater liquidity risks.

Change in status

Secondly, in keeping with this policy inclination, inJanuary 2009, to counter the adverse impact of theglobal financial crisis on the Indian economy, the RBIissued guidelines that allowed such restructured assetsto be treated as standard assets. It hardly bears statingthat restructuring is no guarantee that the assetconcerned will ‘perform’ in future. Economic conditionsthat affected the repayment of the loan coulddeteriorate further, the project could prove to bestructurally unviable for a host of reasons, or theborrower could just be a “wilful defaulter”.

So keeping these assets out of the NPA basket madethe NPA ratio an inadequate indicator of bank stress.If banks resorted more often to the restructuring option,the volume of stressed assets in the system would risemuch faster than the NPA numbers suggested.

This is exactly what happened in India after 2008.Banks used the opportunity offered by these two policyinitiatives to paper over the problems created by theirnew role as financiers of large projects. As a result,restructured assets as a percentage of gross advancesrose from 3.5 per cent at the end of March 2011 to 6.5per cent at the end of March 2015. This 3 percentagepoints rise was higher than the 2.2 percentage pointsrise in the gross NPA ratio.

Realising that postponing bad debt recognition in thismanner could result in the accumulation of stressedassets in bank balance sheets sufficient to create asystemic problem, the Reserve Bank in 2015 instituted


an asset quality review to reclassify assets and reversethe practice of treating all restructured assets asstandard assets. As a result, many “restructuredstandard assets” were reclassified as non-performing.

Simultaneously, the RBI seems to have put on hold thecorporate debt restructuring process, with approvalsof such restructuring initiatives falling to zero in 2015-16, as compared with 54 cases involving debt totalling ¹72,560 crore in 2014-15 (Chart 2).

In the event, most restructured assets were reclassifiedas non-performing. The spike in the NPA ratio in fromend March 2015 to end March 2016 is largely explainedby the decline in the ratio of restructured assets to grossadvances from 6.5 per cent to 3.9 per cent over thatperiod.

Overall stressed assets (including both NPAs andrestructured assets) had increased from 5.9 per centof gross advances at end March 2011to 11.1 per centat end March 2015; but rose only marginally to 11.5per cent by end March 2016. This is one reason theRBI is satisfied with the current position. In its view,once stressed assets are formally recognised as non-performing, the requisite provisions are set aside at theexpense of short term profitability, and the banks arerecapitalised, credit growth will see a revival, but withina more monitored framework.

The real problem

This, however, sidesteps the problem of managing therole handed over to commercial banks, of providing thelong-term financing earlier undertaken by developmentbanks. They are even required to make up for theshortfall in public capital formation within a low-tax andrestricted fiscal deficit regime.

This has at least two implications. First, two sectorsthat account for high shares in total industrial creditadvance, infrastructure (32.8 per cent) and basic metalsand products (essentially iron and steel) (13.6 per cent),show very high ratios of stressed advances to grossadvances (Chart 3). These are among the new areasinto which neoliberal reform has taken the banks.

Second, as of March 2016, large borrowers (withliabilities of ¹ 5 crore and above) accounted for 58 percent of scheduled commercial bank advances and 86.4per cent of gross NPAs.

Thus, NPAs were concentrated with these largeborrowers. The top 100 borrowers accounted 16 percent of total advances and 22.3 per cent of gross NPAs.

Indeed, the gross NPA ratio of the top 100 borrowersrose from just 3.4 per cent in September 2015 to 22.3

per cent in March 2016, with the reclassification ofrestructured assets.

Thus, the fragility of the banking system is due to thelarge borrowers who have benefited from therestructuring route to concealing NPAs. If this provesto be unviable, growth itself is under threat. Thisprovides the government with new grounds to adopteven more pro-business policies than it has in the past.

CP CHANDRASEKHAR JAYATI GHOSH(originally published in Business Lineon July 4th July 2016)


The Income Declaration Scheme, 2016Who Can Make a Declaration?

All ‘persons’, such as individuals, HUFs, companies,firms, association of persons (AOP) etc.,are eligible to make declaration underthe Scheme

Scope & Coverage of Scheme

Declaration can be made in respect of :

* any undisclosed income ?

* investment in any asset representingundisclosed income relating to anyfinancial year upto 2015-16

Amounts payable by declarant

1. Tax @ 30% of undisclosed income

2. Surcharge @ 7.5% ofundisclosed income

3. Penalty @ 7.5% of undisclosed income

TOTAL: 45% OF UNDISCLOSED INCOMEDECLARED

Benefits of Declaration

1. No Wealth Tax on assets declared

2. No scrutiny or enquiry under Income-tax Act andWealth Tax Act in respect of declaration

3. Immunity from prosecution under Income Tax Actand Wealth Tax Act in respect of declaration

4. Immunity from Benami Transactions (Prohibition)Act, subject to transfer of assets by the benamidarto the real owner before 30.09.2017

Effect of Non-declaration

Undisclosed income and the value of any asset acquiredout of such income in any year upto FY 2015-16 whichis not declared under the Scheme will be brought to taxin the year in which notice is issued bythe DepartmentAnd All consequences including, interest, penalty &prosecution under I-T Act will follow accordingly.

Critical Dates

Scheme is effective from: 1stJune, 2016

Declarations may be filed upto: 30th September, 2016

Tax, surcharge and penalty to be paid by: 30thNovember, 2016

Declaration when is it void ?

• Misrepresentation or suppression of facts

• Non-payment of tax, surcharge and penalty by30.11.2016.

Scheme does not apply if …

* Notice has been issued under section142(1)/143(2)/ 148/153A/153C of I-T Act (debarred only for AYfor which notice is issued)

* Search/Survey have been conducted(debarredfor a f f e c t e dyears only)

* Income sought to be declared ischargeable under t h eBlack MoneyAct, 2015

* COFEPOSA detainees, personsnotified under Special Courts Act (1992), cases ofprosecution under NDPS Act, Prevention of CorruptionAct, and certain offences under Indian Penal Code

Forms

* Form 1 – Declaration form (to be filed by declarantby 30th Sep, 2016)

* Form 2 – Acknowledgment of declaration (to beissued by PCIT/CIT within 15 days from the end ofthe month in which declaration is filed)

* Form 3 – Intimation of payment of tax, surcharge& penalty (to be furnished by declarant to PCIT/CIT by 30th Nov, 2016).

* Form 4 – Certificate of declaration (to be grantedby PCIT/CIT within 15 days from the date ofintimation of payment).

Fair Market Value – How determined?

• Rule 3 of IDS Rules prescribe the method ofdetermining fair market value of assets, including –bullion, jewellery or precious stone – archaeologicalcollections – drawings, paintings, sculptures or anywork of art – shares & securities (quoted &unquoted) – immovable property – interest in apartnership firm – any other asset

• Fair market value of asset as on 01.06.2016(determined as per Rule 3) to be declared

• Report of Registered Valuer to be obtained

IDS, 2016 – Some Clarifications

• Where undisclosed income invested in any asset isdeclared under the Scheme & tax, surcharge and


penalty are duly paid on its fair market value as on01.06.2016 then, any capital gains arising upon its salein future will be computed by adopting such fair marketvalue as on 01.06.2016 as the cost of acquisition andthe period of holding shall alsostart from that date

• A person is only ineligible to declare income for thoseassessment years for which a notice under section142(1)/143(2)/148/153A/153C is issued and theproceeding is pending before the Assessing Officer.He is free to declare undisclosed income for other yearsfor which no notice underthe sectionshas beenissued.

• Where investment in any asset is partly from explainedsources (income already assessed to tax) and partlyfrom undisclosed income, proportionate reduction shallbe allowed in determining the amount to be declaredunder the Scheme Example: In 2013-14, a personinvested Rs.5 lakh in a house out of which Rs.2 lakhwas from income assessed to tax in the preceding yearand Rs.3 lakh was from undisclosed income for 2013-14. Fair market value of the asset as on 01.06.2016 isRs.15 lakh. Undisclosed income to be declaredunderthe schemeshall be: 15,00,000 – (15,00,000 x 2,00,000 )= Rs.9,00,000 5,00,000

• Where assessment has already been completed andcase is pending in appeal before any appellate authority,declaration cannot be filed in respect such income.However, any undisclosed income for that AY whichhasnot been assessedcan be declared.

• If a declaration of undisclosed income is made ingood faith but is found ineligible under the Scheme onaccount of any of the conditions debarring suchdeclaration (see Slide-9), the harsh consequences ofnon-declaration under the Scheme shall not apply, butsuch income may be assessed under the normalprovisions ofthe Income-taxAct.

• After the declaration is made the PCIT/CIT willenquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessmentyear for which declaration has been made. Apart fromthis no other enquiry will be conducted by him at thetimeof declaration.

• Information contained in in the declaration isconfidential as in the case of return of incomefiledbyan assessees.

International Post Graduate Program in Management for Executives ( I-Pex)

from October 3, 2016 to April 13, 2018

Administrative Staff College of India (ASCI) in collaboration with Faculty of Economics, University of Ljubljana(FELU), Slovenia is organizing an International Post Graduate Program in Management for Executives ( I-Pex) from October 3, 2016 to April 13, 2018. This 18-Months program offers an unique opportunity to earnglobally recognized Dual Degree. The course includes a 4-week study at FELU, Slovenia.

The FELU is the national leader and an internationally recognized education and research institution in the fieldof business and economics. Ljubljana is one of Europe’s most exciting cities; Ranked second (2014) onEurope’s 10 best places by one of the most trusted travel guides in the world; Winner of the European GreenCapital Award (2016). The remaining classes will be held in ASCI campus in Hyderabad. The program offeredby FELU offers global accreditations from EQUIS (European Quality Improvement System) and AACSB(Association to Advance Collegiate Schools of Business).

For further details, please contact

Prof. A. Ashita, Program Director, Administrative Staff College of India, Bella Vista, Raj Bhavan Road,Khairatabad, Hyderabad – 500082. Ph: 66534267, 66534346, 66534236, email: [email protected]


Interaction with the Hon’ble Members of CESTATHyderabad Regional Bench on June 21, 2016at Federation House Hyderabad.

Sri Ravindra Modi, President, FTAPCCI in his welcomeaddress stated that the Central Boardof Excise and Customs has takenseveral measures to managelitigation and reduce disputes such asenhancing the threshold limit to fileappeal by the department before theCESTAT to Rs. 10 lakhs and HighCourts to 15 lakhs and withdrawalof all cases in High Court andCESTAT where there is a precedentSupreme Court decision and againstwhich no review is contemplated bythe department.As per the press reports the casesfit for withdrawal amongst the casespending in appeal before CESTATand High Courts have been identified at 2051 and 5261as per the threshold monetary limits prescribed. Already980 and 2174 cases in High Courts and CESTATrespectively have been filed for withdrawal. Out ofthis the High Court has allowed withdrawal in 250 casesand CESTAT in 202 cases.

Wheel of justice starts moving with the listing of casesfor hearing and we would suggest that cases are listedchronologically according to their age. The problemof pendency at the CESTAT is to be solved by thecombined efforts of the Bar and the litigant with theinvolvement of the Hon’ble members of the Bench.

Sri Gowra Srinivas, Sr. Vice President, FTAPCCI inhis introductory remarks said that the efforts ofFTAPCCI to set up CESTAT bench at Hyderabad bymeans of continuous representations to the UnionFinance Minister and the Revenue Secretary Govt. ofIndia besides personal appeal during the interactionswith the dignitaries has ultimately yielded the result inthe setting up of a permanent bench at Hyderabad. Heexpressed his sincere thanks to the Government forsetting up of the Bench at Hyderabad that resulted inhuge savings in transaction cost by way of travel andincidental costs (sometimes futile expenditure in thetrips to Bangalore) to the trade and industry in Telanganaand Andhra Pradesh

Sri S. Thirumalai, Advisor, Indirect Taxes Committee,FTAPCCI in his address said that the present

interaction meeting is to sensitise the trade and industryto this task of dealing with the pendency in whateverway possible as it contributes to diseconomy in runningbusiness in two ways: Firstly there is the uncertainty

issue and secondly the problem of back duties withinterest in case there is no recourse to the end customer.Technology coupled with strong resolve ofimplementation can give a solution to this problem.

Hon’ble Ms. Sulekha Beevi, Member Judicial CESTATHyderabad Regional Bench in her address informedthat the Hyderabad Bench being new was facingteething problems, which they would solve soon. Sheinformed that in Hyderabad bench, all the cases listedare heard and there was no question of any cases notreaching. Orders were issued within a month of hearing.She further informed that listing of old cases inchronological order is taken up by verifying their agemanually as they do not have computerized data.

With regard to insisting of filing impugned ordersattested by central excise superintendents by theregistrar, she in principle agreed to look into the matter.

Hon’ble Sri Madhumohan Damodar- Member-Technical , CESTAT Hyderabad Regional Bench inhis address said that they were working with passion,compassion and dispassion. Passion for law, compassionfor the appellant and dispassion while pronouncingorders.

The meeting ended with vote of thanks to the chair.

*****

Interaction with the Hon’ble Members of CESTATHyderabad Regional Bench

Sri Ravindra Modi, President, FTAPCCI addressing the gathering


Panel Discussion on “Harmony in Environment & Development”(Special Reference to Hyderabad)

FTAPCCI organized a panel discussion on “Harmonyin Environment & Development” at federation House,Hyderabad on 25th June, 2016.

Sri Ravindra Modi, President, FTAPCCI, gave thewelcome address explaining in brief the project takenup by the Govt. of Telangana State and the variouseconomic, social issues related to it. He made animportant point that development is inevitable at thebehest of the technological advancements and thegrowing demographic profile of the cities, yet,environmental protection is also equally important. Hestressed the importance to have a balanced view ofgrowth. He mentioned the objective of the session tobring the parties, government as well as the civic society,onto a single platform, discuss the issues and to comeup with a solution conducive to both the parties.

Mr. MG Gopal, IAS, Special Chief Secretary, MA&UD,Govt. of Telangana State. He has given a detailedpresentation of SRDP opined that traditionally andclassically, there has always been a conflict betweendevelopment and environment. There always exists aresistance between the people who benefit and thosewho lose temporarily from taking up huge projects as apart of development. But he expressed that ultimately,the minor problems associated with the developmentprocess would be settled down, people would reconcileunderstanding that it is a public good and is for the benefitof all.

He, in his address, explained that projects are not alwaysplanned with any whims and fancies and we need tostrike a balance between development andenvironmental sustainability. He highlighted that, whena development project is taken up, it is very crucial toconsider all the social, financial and environmental costsas well as the long lasting benefits and that there arewell regulated norms even for Environmental ImpactAssessment (EIA). He mentioned that there areregulations to see to it that some damage caused to theenvironment through conceiving any projects aremitigated through their benefits.

This was followed by a series of presentations by thecitizens’ representatives. One among them was Sri.Marri Shashidhar Reddy questioned the understandingof the concept of a global city, he said that at any cost,the environmental concerns of the citizens can’t beignored. About the KBR Park, he expressed his opinionthat it is at the ridge of the city, something unique of

several parks in India. The major argument he proposedis that, we require an Eco Sensitive Zone (ESZ) aroundthe national park. He demanded the transparency ofthe SRDP project reports to the public domain on behalfof the citizens of the city. He expressed his strongconviction that Hyderabad city has a great potential togrow and that there are people who can giveconstructive ideas to make this happen. He concludedwith a statement “We are not for simply development,but a sustainable development”.

Another citizens’ representative, Ms. ShilpaSivakumaran from Hyderabad Rising, the umbrellagroup for the protection of KBR, giving the physicalgeography details of the KBR Park, said that it is oneamong the most peculiar national parks spreading toover 390 acres with large number of species of floraand fauna within it. She expressed her concern that,the ESZ is also a part of the park and so, any damageto it means damaging the national park. Claiming thatKBR Park is not affected is hence factually wrong!Appreciating the government’s Harithaharam project,on the other hand, she mentioned that cutting down theexisting trees is not justified. Taking the examples fromthe world cities, she made it a point that any trafficproblems can be solved only by switching towards morepublic transportation system. She threw a question tothe government as to why can’t we wait till the metrorail project is completed and comes into full-fledgedoperation which is supposed to cater 2 lakh people?

Prof. Ramachandraiah, Transport Expert, Professor atCESS, referring to Mr. MG Gopal’s presentation,expressed it as an apt case for the politics of the dayand that it is inevitable too. According to him, MetroRail project is not going to solve the traffic problem.He expressed SRDP as a project without a strategy.He expressed his deep concern that these flyovers haveno space for foot paths and no access for thepedestrians. Hence, the pedestrians and cyclists arehighly marginalized under this project.

Mr. Ravi Chander, Senior Lawyer, High Court, beganhis speech with 2 basic questions; Are we assumingthe meaning of development as super imposing aManhattan at Hyderabad?; And in doing so, do we wishaway the trees, plants reptiles, birds etc? Thus,expressing concern for environment and wild life, hecriticized the government for its ambitious SRDPproject. He expressed his anguish if we would truly beable to achieve it with a project like SRDP and doubt


as to whether or not the plants that have been promisedto be planted would truly be done!

Dr. Vinay Kumar, Gastro surgeon and President ofHyderabad Hamara, made a statement that “We arenot against development. But in fact, we are fordevelopment”. Hyderabad is a hub of opportunities forseveral people which is an incentive for many to migrateto the city. He claimed that, instead of some foreigncommittee to make an assessment and report that theimprovements are to be made with regards to roadsetc; the citizens who are born and brought up knowbetter what they want for their city. So, citizens’involvement is the core in any decision making andplanning of development projects. He mentioned thathe is not against the very idea of growth anddevelopment, but every time, the trees are becoming a

‘scape-goat’. We need to preserve its importance andsustain it.

As a counter argument to all the citizens’representatives, Mr. MG Gopal answered the variousquestions posed by them regarding the SRDP project.That the government had requested the people ofHyderabad to respond either through mails or lettersor personal meeting. Mr. Gopal also contended thatthe response was quite lukewarm.

The session came to an end with Vote of Thanks bythe Sr. Vice President of FTAPCCI, Sri. GowraSrinivas who thanked everyone for their cooperativeand healthy participation in the lively discussion.

*****

FTAPCCI LibraryThe following Latest Books & Journals have been added to the Library of FTAPCCI

1. FICCI Business Digest – June, 20162. Assocham Bulletin – June, 20163. Bullion Bulletin – June, 20164. Gas New – June, 20165. IDMA Bulletin – 15 to 21st June, 20166. Unews – June, 20167. Kassia – June, 20168. Spice India – June, 20169. World SME News – June, 201610. Hyderabad Circuit – June, 201611. Germany Machinery Industry Newletter – April/June, 201612. Chartered Secretary: The Journal for corporate professionals – June, 201613. Indian Engineering Exports – June, 201614. Bharatiya pragna – June, 201615. FIEO News – June, 201616. Economic Digest – June, 201617. Mahesh Bank Hamara prayas – June, 201618. Span – May/June, 201619. Indian Factories and Labour Reports – 1st June, 201620. Bellary Chamber News – May,201621. BCC Bulletin – 31st May, 201622. A Bulletin of Rajasthan chamber of Commerce and Industry – May, 201623. ni-msme Bulletin – May, 201624. Al Tijarah – May, 201625. HKCCI News – April/May, 201626. Hindustan Chamber Review – April, 201627. Indo-German Economy – Issue 2, 201628. Janabalam – June, 2016


Institute of Public Enterprise & The Federation ofTelangana and Andhra Pradesh Chambers ofCommerce and Industry jointly organized

a Lecture on ‘Inclusive Growth’ on June 27, 2016 atFederation House, Hyderabad ByDistinguished Prof SukhadeoThorat Chairman, Indian Councilof Social Science Research,Ministry of HRD, Government ofIndia.

Focus on Inclusiveness in 11thPlan

The 11th Plan Singled out “the typeof growth” rather than growthalone, as an important element ofinclusive growth strategy in the11th plan. The Plan observed:

“The Strategy for inclusivegrowth in the Eleventh Plan is notjust a conventional strategy for growth to which someelements aimed at inclusion have been added. On thecontrary, it is a a strategy which aims at achieving aparticular “type of growth process” which will meetthe objectives of inclusiveness and sustainability”, theplan observed (11th Five Tear Plan, Volume 1, P.5)

The 12th Plan take it further and observed

“Progress towards inclusiveness is more difficult toassess, because inclusiveness is a multi- dimensionalconcept. Inclusive growth should results in lowerincidence of poverty, broad- based and significantimprovement in health outcomes, universal access forchildren to school, increased access to higher educationand improved standard of education, including skilldevelopment. It should also be reflected in betteropportunities for both wage employment and livelihoodsand in improvement in provision of basic amenities likewater, electricity, roads, sanitation and housing.Particular attention needs to be paid to the needs ofthe SC/St and OBC Population, women and childrenas also minorities and other excluded group. To achieveinclusiveness in all these dimensions requires multipleinterventions and success depends not only onintroducing new policies and governments, but oninstitutional and attitudinal changes, which takes times”

The Approach paper further observed

An important consequences of the focus on inclusionduring 11 plan has been the much heighten awareness

about inclusiveness and empowerment amongstpeople.( Faster and sustainable and more inclusivegrowth- An Approach to the 12th five Year Plan,Planning Commission, August 2011)

The 11th and 12th Plan of India (2007-2012 and 2012-2017), thus is different from the preceding plans in thesense that it brought: inclusive growth” at the centrestage of the plan approach and strategy. For Inclusivegrowth, the plan in its own way not only emphasizedon “growth in income” alone but also its “outcomes”for the poor. It recognizes that increase in aggregatein favour of poor is equally important one- but itsdistribution in favour of poor is equally important forinclusive development. With this shit, relevance ofgrowth is measured in terms of its outcome for thepoor.

The inclusive growth strategy is now become a part of12th plan with a focus on faster and inclusive growth.The growth has to be faster but at the same timeinclusive. This also means growth to be inclusive hasto be poor so that growth takes care of the poor andthere is less need for the government targetedintervention for the poor. During few months effortsare being made to develop the growth strategy for eachof the sectors in a manner such that it is inclusive ofpoor. The growth to be poor clarity on two aspects isnecessary, first relates to as what constitute the poorgrowth and second is our experience about the poornature of the growth in the immediate past. This willhelp us to develop an inclusive pro poor growth strategywith what Amartya Sen called, Growth with Clarity.

In this back ground in this paper firstly we bring someclarity on the concept of inclusive growth that is pro

Lecture on ‘Inclusive Growth’

Sri Ravindra Modi, President, FTAPCCI addressing the gathering


poor drawing from the recent literature and in thatcontext also discuss the inter linkage between growth,inequality and Poverty, secondly we discuss the recentexperience of pro poor growth.

What is pro –poor growth?

The concept of pro-poor growth has been a subject ofdiscussion in the literature on growth strategy forpoverty reduction and in the process refers to growthwith equity, equitable growth, redistributive growth, frothfor human development and inclusive growth etc. Therecent discussion about the Pro- poor growth has beeninitiated in the contest of “Inclusive Growth” nicelysummarized by Grinspun (2009).

On growth, inequality and poverty linkages

There is rich literature on the inter-linkages betweengrowth , inequality and poverty. First systematicstatement on growth, inequality and poverty relationshipwas made by Kuznets in the 1950s where he arguedthat the long term secular behaviors of inequality followsan inverted U-shaped pattern with inequality firstincreasing during the early stages of growth indeveloping countries but is likely to fall after sometime(Kuznets, 1995). Empirical studies that followKuznets pioneering wok provide evidence that besidegrowth in per capita income, the income distribution isalso determined by other socio economic factors , suchas population growth rate, income (or worker) share innon –agriculture sectors , urbanization level, education,government interventions and others (Tsakloglou,1988;Ahluwalia, 1976; 1976b; Paukert, 1973; Adelman andMorris, 1973; Papanek, 1978) found that the rate ofpopulation growth was positively related to incomeinequality while the educational level, the extent ofgovernment activity and the rate of growth of GDP percapita income hold negative relationship with inequality.Human capital and human capabilities as factors in theachievement of pro- poor growth is particularlyrecognized.

On Social exclusion and persistence of poverty

Among the bas inequalities, the one that is particularlyimportant is social exclusion and discrimination. Studieshave began to recognize that persistence of chronicpoverty happens to be in social/ ethnic/ religious groups/women and their (social) exclusion and discrimination.Often these groups suffer from multiple disadvantages,including a poor asset base, a remote location, a historyof exclusion and discrimination. The exclusion fromaccess to resources and markets increases theirpropensity to be poor. In the field of economics studiesby Becker(1957), Loury,(1977), manski(1993),

durlauf(1999) and other s show that discriminationassociate with race, region, ethnicity , gender, andreligion reduces the opportunities to access and acquireassets, employment and social needs like education,health and food security schemes and to participate ingovernance and decision making process and createsituation with less chances to come out of poverty trap(Braun et al 2010, Thorat 2010). Such discriminationnot only hurt the groups affected but also reduce overalleconomic growth and this poverty reduction.

Social exclusion aggravates poverty directly by denyingthe fair access to opportunities channelized throughmarkets and non-market transactions and indirectly byadversely affecting economic growth.

Furthermore, in many societies throughout the world,women have a weak “ agency “ or power with fewerland rights under customary or statutory legal systemsthan do men, often lack decision making authority intheir households, are at a disadvantage in labourmarkets and in gaining access to service, have greaterburdens on their time, and face threats of physicalviolence(see Sen, 1990 and 1988, klasen: 2005,Kabeer:2008). Evidence indicates that genderinequalities in access to resources at the farm level,and non – farm employment and in educationundermines pro-poor growth (lkasen:2005; kabeer:2008).

However there is extremely limited empirical workwhich gives insight as to how social exclusion anddiscrimination cause more poverty among the excludeand discriminated groups. We have much less idea aboutthe process of “ exclusion induced poverty”. The socialexclusion in general and economic exclusion inparticular, essentially refers to the processed throughwhich groups are wholly, or partially, excluded fromhaving access to rights – economic and social and fullparticipation in the society. Exclusion could occurthrough direct exclusion, violating fair norms ofexclusion or through inclusion, but under unfavorableterms and conditions, again violating far norms ofinclusion or through deliberate governmentpolicies(active exclusion), and through unintendedattempts and circumstances (passive exclusion), orexclusion caused through inability of some persons torelates to other persons – constitutive relevance (Sen,2000). Addressing “exclusion induced poverty” ofexcluded groups will need policies to provide policysafeguards against market and nonmarket discriminationto excluded groups.


Hon’ble Governor, Shri ESL Narasimhan,flags off FTAPCCI’s Centenary Celebrations

The Federation of Telangana and Andhra PradeshChambers of Commerce and Industry achieveda significant milestone this year: the advent of

its Centenary Year. Established in 1917, Federation wasfirst conceived as a Chamber of Commerce representingthe entire old state of Hyderabad. This included partsof the present Karnataka, Maharashtra as well as allthe Telugu-speaking Districts of the old Nizam’sdominions. The year 1956 saw the formation of theLinguistic State, Andhra Pradesh and its name waschanged to ‘The Federation of Andhra PradeshChambers of Commerce and Industry’ in 1958. Itstarted functioning with representation from the entirestate. The Federation graduallyevolved into an organisationrepresenting large, medium andsmall scale industries. Due tothe bifurcation of the Telugu-speaking States intoTelangana and Andhra PradeshStates in 2014, the name wasaltered to “The Federation ofTelangana and Andhra Pradesh Chambers ofCommerce and Industry (FTAPCCI)” (effectiveJanuary 14, 2015 onwards). The mandate remained thesame: to serve the interests of the Members of theFederation in both the States, A Centenary calls for Celebrations :FTAPCCI held an event on 4th July in Hotel GrandKakatiya to mark 100 illustrious years of incessantempowerment of Industry, Trade and Commerce. Itwas a red-letter day for FTAPCCI when the Hon’bleGovernor Shri ESL Narasimhan flagged off its year-long centenary celebrations. It was befitting that thestart to the Calendar of Events that would be rolled outacross Telangana and Andhra Pradesh was flagged offby the undisputed leader of both the states.Plans are on to make the centenary year meaningful inevery way. On the cards are meaningful interactionswith the industry, big ticket events and hosting of otherknowledge-sharing platforms.

During the course of the event held on 4th July, theHon’ble Governor Shri ESL Narasimhan had sharedlot of insights and expectations with FTAPCCI. Thisevent had noted for itemisation and strategic incorporation.

Shatak Shatak PragatiIn order to commemorate the centenary, FTAPCCIlaunched its new branding look.

A significant inclusion in the logo was the numeric “100”depicted by wheels (in fact, an extension of the wheelused in the FTAPCCI Logo). Other aspects includedthe visualisation of centenary of empoweringindustrialisation in the first zero of the “100”.Interestingly, the rejuvenation and rebirth in FTAPCCIis depicted in the form of two tender leaves inside thesecond zero of the numeric, “100”. The show-stopperin the Flagging-off Ceremony held in grading HotelGrand Kakatiya was the dramatic video launch of theCentenary unit as well as the meaningful baseline thatepitomes the spirit if FTAPCCI; “SHATHAKSHATHAK PRAGATI”.

This branding has beendepicted above.During the course of the eventsthe Hon’ble Governor Shri ESLNarasimhan also launchedFTAPCCI’s new website:www.ftapcci.com

The new website is designedto help FTAPCCI cope with

the new and emerging demands of the progressive,technical driven world.A far cry from this old website, the newly-launchedwebsite brings the convenience of a user interface thatfacilitates transactions at the click of a mouse.

A screen shot the new website is given below.

Speeches that held the audience spellboundThe event began with an illuminating speech by thePresident of FTAPCCI, Shri Ravindra Modi. Hetouched upon the history of FTAPCCI and went on tounveil its plans for the years to come.

The Chairman of the Centenary Committee, Shri AnilReddy Vennam, surprised the audience with anevocative rendition in Telugu.He invited the Governor to flag off the CentenaryCelebrations.

The Vice President of FTAPCCI, Shri Arun Luharukafacilitated the unveiling of FTAPCCI’s new websiteby the Governor.

The Governor held centre-stage and had the audiencespell-bound with a speech that outlined his vision ofwhat the twin States required today.

After launching the new logo and website of FTAPCCI,Hon’ble Governor addressed the participants at theFlagging Off of Centenary Celebrations. The mainpoints of the speech are:


Cautioning that the economy would be sluggish unlessjobs were created, he said: “Economy cannot beconfined to top two percentage. The growth has tofilter down... employment has to be generated”.

The Governor stated that he was personally againstgiving out subsidies and freebies to people. “I ampersonally against giving freebies. We should see to itthat everyone is well-trained and employed so that theycan proudly spend from their own earnings,” he said

“My purpose of stressing on wage earning capability isbecause I am one who feels that the very large dose offree schemes must be abolished,” he said to athunderous applause that drowned his voice. “The wageearning capability, wage earning happiness is entirelydifferent from a free lunch,” he added.

Stating that there is a skill mismatch, between what istaught and what is required by industry, he wondered:

“I cannot understand what you mean by skilldevelopment after five-year engineering course. Sowhat skills have you developed over the five years? Idon’t see any reason for skill development centres toexist.

The educational institutions must be skill developmentcentres...”, he said.

Referring to corporate social responsibility, TheHon’ble Governor Shri Narasimhan said there was aneed to take up long-term projects instead of activitiessuch as planting of trees and distributing freebies. Theindustry should come forward to adopt villages andeducation institutes for holistic development, he added.He also stressed that “industry bodies act like growthengines and help the economies grow at faster rate”.

The Sr Vice President, Shri Gowra Srinivas wrappedup the event with an up-beat Vote of Thanks.


Workshop on“Leveraging Quality Systems for Manufacturing Competitiveness”

15th July, 2016 at 9.30am | Taj Banjara, Hyderabad

A robust quality management system in a manufacturingorganization is essential to sustain manufacturing growthin today’s challenging economic environment. A goodquality system ensures that products meet customer’sdemand and applicable statutory and regulatoryrequirements. It enables the manufacturing organizationto enhance customer satisfaction through effectiveapplication of the system, including processes forcontinual improvement of the system and the assuranceof conformity to customer and applicable statutory andregulatory requirements. This is the need of an hourfor Indian manufacturing. Keeping in view of the abovesubject FICCI in association with FTAPCCI areorganizing a Workshop on “Leveraging Quality Systemsfor Manufacturing Competitiveness” on July 15, 2016at FTAPCCI Hall, Hyderabad. The Workshop bringstogether Quality Managers, Production Managers,Senior leadership, Certification / Accreditation andInspection Bodies, Quality Standard Departments inCentral & State Government, Manufactures of Qualitycheck Equipment / Instruments, Consultants, Regulatoryagencies and other stakeholders in a dialogue designedto address key challenges facing by manufacturingsector.

Objectives :

1. To understand how the quality system can ensurecontinual improvement in delivery of products and/or

services as per the customer and compliancerequirements

2. How to align organisation’s process, people,resources and customers’ needs with help of qualitysystem?

3. To provide a way of engaging and responding tocustomers and other stakeholders through qualitysystems

4. To think strategically in the area of quality systems.

5. To serve as a working tool for planning, training,assessment and other uses

Considering the importance of the event, we are pleasedto invite you to attend the Workshop as a delegate. Incase you are pre-occupied, you may nominate othersenior representatives of your organization to attendthis important event.

Since registration is on a first-come-first-served basis,we request you to register for the seminar at the earliestwith the enclosed registration form and payment details.

Delegate fee is Rs.2500/- per participant. Please feelfree to reach us over phone: Ph : 040-23395275 /040-23395515

email : [email protected];[email protected]; [email protected] ;[email protected]

Forthcoming Events

We are happy to inform that the Jet Airways have agreed to offer Special Discounted Fares toFTAPCCI Members by offering 7.5% discount on their domestic flights bookings made on theirofficial website, www.jetairways.com. This offer would be extended to all members of FTAPCCIwho make only DOMESTIC bookings on their website and avail the special offer.

Kindly note there would be special code which needs to be mentioned on the promotional codecolumn in booking engine to avail the discount.

Promotional code : 9WCCI

Discount : 7.5 %

Members are requested to avail this opportunity

and reap the benefit.

Special Discounted offers to FTAPCCI MEMBERSBy JET AIRWAYS


Seminar on“e-Commerce & Business Opportunities”

On 15th July, 2016 at 9:30 AM | FTAPCCI Auditorium, Federation House | Hyderabad

Objective

To provide an insight into all the aspects of ane-Commerce industry, including aspects like theBusiness Model, Supply Chain, Markets, Products,Operations, Logistics, Warehousing, Customer service,Analytics, Planning and Integration across teams, Taximplications, Policies and Legal aspects; enabling thedelegates to understand the detailed end to end of orderto delivery and the value chain. It would provide a greatopportunity for entrepreneurs and other stakeholders toexplore business opportunities, to be aware ofe-Commerce technologies and undertake initiatives inorder to enhance their business & network for bettersuccess.

Who should attend

Anyone in Business and Anyone who aspire to be inBusiness because e-Commerce is the future ofBusiness; specifically Retailers, App developers,Payment Gateways, e-Commerce

solution providers, companies involved in DigitalMarketing, Web hosting , Insurance, Courier andLogistics, Auditors, , Private equity investors, Venturecapitalists, Bankers, Entrepreneurs, Students andGovernment Agencies.

Topics

* e-Commerce Overview and its implications on theBusiness : Present and Future

* The Future of e-Commerce in India* Going Global being Local and Digital Marketing* m-Commerce: Business Transformation through

Mobile* Expected Technological Advancements in

e-Commerce (IOT, Proximity Tech, Virtual Reality,

Augmented Reality etc)* e-Commerce Infrastructure in India and Delivery

Capabilities* Contribution of Social Media for e-Commerce and

Future Trends* e-Commerce and its implications for MSMEs and

Start-ups* Funding (Private Equity & Venture Capital):

Catalytic Role in e-Commerce

Secretary, IT, Electronics & CommunicationsDepartment, Government of Telangana, Director ofSoftware Technology Parks of India (STPI) andEminent leaders of e-Commerce have consented toaddress the participants.

The Delegate fee isRs. 1000/- for FTAPCCI MemberRs. 1250/- OthersRs. 750/- Students

The fee is to be paid by way of Cash / Cheque / DDin favour of FTAPCCI

For NEFT / RTGS Payments please findbelow the details:.

Bank : SBIBranch : Bazarghat, HyderabadBank Code : 05893A/c. No : 10005356049IFSC Code : SBIN0005893PAN Code : AAATT3962Ee-mail : [email protected]

Participants are requested to avail the opportunity andconfirm their participation to Mrs. Usha BalajiPh : +91 8008700257 | e-mail : [email protected]

Trade enquiry

The Embassy of the Arab Republic of Egypt (Commercial Office) in New Delhi has informed that anEgyptian company, Wadi Misr Compost looking to export Organic Fertilizers to India.

For details, please contact, Wadi Misr Compost, Daakahila State, Belqas City, AI moalmeen club St,Buil. Awad el shirbini, 2nd Floor. Tel & Mob: 00201023326122; 00201007985774;E-Mail: [email protected]; [email protected]; [email protected]


National Summit on MicrofinanceTrending Microfinance: Knocking at the door of aspiring entrepreneurs

19th July 2016, Hotel Taj Krishna, Banjara Hills, Hyderabad

The Microfinance sector has grown up rapidly overthe past few decades due to a Combination ofgovernmental support, implementation of technologicalenhancements and support provided by the bankingsector.

In this backdrop, ASSOCHAM, with the support ofFTAPCCI is organizing National Summit onMicrofinance with association of MicrofinanceInstitutions Network (MFIN) on 19th July 2016 at HotelTAJ Krishna, Hyderabad to strengthen the confidencein financing small business entities and for thediscussions to chalk out a feasible and effective agendafor the overall development of this sector.

Microfinance Institutions Network (MFIN) is preparinga detailed report based on the theme of the summit andvarious case studies, success story of emergingenterprises and global practices. This report would bereleased at the summit by Hon’ble Governor.Focus Areas of discussions :* Role of MFIs in Financial Inclusion* Ensuring Financial Discipline In Administering

Micro Finance Products

* Taking Microfinance To Un-Served/ Under-Served Areas

The deliberations in the Inaugural/Technical sessionswill serve as a game-changer and help authorities inaddressing the issues which may be raised by differentstakeholders.

Chief Guest : Shri E. S. L. Narasimhan,Hon’ble Governor, Government of Telangana &Andhra Pradesh

Guest of HonorShri K. Chandrashekar Rao, Hon’ble Chief Minister,Government of Telangana

Key Note AddressShri Etela Rajender, Hon’ble Minister, Ministry ofFinance, Government of Telangana

We look forward to receive your kind confirmation atyour earliest convenience. Please send yourconfirmation to [email protected] [email protected] Ph:011-46550568 Fax: 23017008/9Mob -9910167130.

In India, 17 lakh tones of E-waste is generated everyyear, with an annual increase of 5 percent of generationof E-waste. The E-waste (Management) Rules 2016notified is in supersession of the e-waste (Management& Handling) Rules, 2011 provide several options tomanufacturers – such as collection of a refundabledeposit and paying for the return of goods – to meetthe requirements of law. The role of State Governmenthas been also introduced to ensure Safety, Health andSkill development of the workers involved in dismantlingand recycling operations.

Hyderabad being the hub of information technology inIndia generates a huge quantity of electronic waste. The e-waste, due to improper disposal, causes endlesspollution, thereby harming the environment and thehealth of the person burning it. Disposal of obsoleteelectrical and electronic equipment is one of the mostrapidly growing segments with environment and healthimpacts.

In order to create more awareness FTAPCCI isorganizing a Half day Seminar on “E-wasteManagement – Sustainable Development” on 20th July,2016 at 3.00 pm at Federation House, FTAPCCI, RedHills, Hyderabad. (Registration is at 2.30.

The objective of the Seminar is to provide an overviewof proper management of e-waste, as per the latestpractices as well as regulatory requirements.

To defray a part of cost of the programme whichincludes background material, folder and Tea and snacksetc. a delegate fee of Rs.500/- per participant (inclusiveof service tax) is charged. The fee is to be paid by wayof Cash or Cheque/DD in favour of ‘FTAPCCI’ payableat Hyderabad.

Members are requested to attend the Seminar and reapthe benefit. For further details, please contact L.Girijapathi, Asst. Director, Mob: 9959822264,8008700258, Mail: [email protected].

Half day Seminar“E-Waste Management – Sustainable Development”

July 20, 2016 at 3.00 pm at Federation House, FTAPCCI, Red Hills, Hyderabad


ASSOCHAMNational Seminar on Tax Deduction at Source (TDS)

Supported by FTAPCCI21st July, 2016 at 9.30am at Hotel Park Hyatt, Hyderabad

Need has been felt to deliberate on key issues on thevarious provisions and new developments relating toTDS. Therefore, ASSOCHAM with the support ofFTAPCCI & Ministry of Finance is organizing a Seriesof National Seminar on Tax Deduction at Source todeliberate on various provisions of Tax Deduction atSource (TDS)

TOPICS TO BE DISCUSSED

TDS provisions related to Royalty and Fees forTechnical Services

* Royalty and fees for technical services - Recenttrends (case studies, key recent judicial precedents)

* Net of Tax arrangements

* Implications of TDS on reimbursements to passthrough entities TDS provisions related to Residents

* Salaries & Interest

* FTS, Royalties, Contractors, Commission, Rent;

* Issues in obtaining lower or NIL withholding orders

* Obligations of Payer & Rights of Recipients

* Application of 206AA in case of NR with DTAAbenefit or no DTAA benefit

* TRACES functionalities

* Issues pertaining to TDS refunds

* E-Filling of TDS returns, issuance of TDS certificates

* Recent notifications & circulars

Chief Guest ; Shri A K Srivastava, Principal ChiefCommissioner of Income Tax (Addl. Charge)Hyderabad

Speakers :

* Shri Ravindra Modi, President, FTAPCCI

* Shri Vikram Doshi, Partner, KPMG (Hyderabad)

* Shri Jayesh Sanghvi, partner, Ernst & Young LLP(Hyderabad)

* Ms. Saloni Khandelwal, Partner, PwC (Hyderabad)

* Shri Ritesh Mittal, Partner, Sanjay Kumar Kothari& Co. (Hyderabad)

* Shri Sistla Venkateswarlu, Director, Deloitte(Hyderabad)

* Ms. Saloni Khandelwal, Partner, PwC (Hyderabad)

* Shri Ritesh Mittal, Partner, Sanjay Kumar Kothari& Co. (Hyderabad)

* Shri Sistla Venkateswarlu, Director, Deloitte(Hyderabad)

Participation fee : The Seminar has immense valuefor the participants and the fee is kept at Rs. 4,000 perparticipant to meet the cost (10% discount for two and20% for three or more persons from the sameorganization). The fee is inclusive of refreshment, lunch& Taxes.

For Registration and further details please contact

Avinash Sharma - ASSOCHAM

Ph : 09811524976 | [email protected]

Smt. N.V.S. Lakshmi - FTAPCCI

Ph : 8008804529 | [email protected]

We are happy to inform you that following have been appointed as the District Coordinators and aredesignated as Chamber Relationship Officer) of FTAPCCI :

Sri G.S. Bhaskara ReddyChamber Relationship Officer

VisakhapatnamMobile : 80996 32229 , 8099856608

e-mail:[email protected]

Sri Ravi Prasad GuptaChamber Relationship Officer

KurnoolMobile : 9052231786

e-mail: [email protected]

Sri B. Raghu KumarChamber Relationship Officer

NalgondaMobile : 8686122866

e-mail:[email protected]

District Coordinators of FTAPCCI

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