สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 3 มกราคม 2557

Stage set for ports to monetise land

The government on Thursday approved policy guidelines for 265,000 acres of land belonging to the 12 major ports, paving the way for monetising the plots. The licensing and leasing of these lands would be based on the new guidelines. The tariff authority of major ports would do the valuation of the land after consulting the stakeholders. The rates would be revised in line with market rates. Port trusts expect the policy to make way for improving storage facilities for dry cargo and liquid cargo. Also, such activities can now be taken up by stevedores and users. In the absence of such guidelines, port trusts were not able to lease land to private players for any such purpose. Agencies essential for functioning of the port — Customs, health, electricity and government schools and colleges — would get a discount of up to 75 per cent on lease rentals from major port trusts. Major ports would also be required to make proactive disclosures to ensure transparency in land management. Port trusts were expecting the new guidelines would help augment revenue by using the land resources optimally and boost cargo throughput.

(Source: Business Standard)

Guarantees for subsidiary by foreign holding firm will act as security for loans

The government will soon clarify that corporate guarantee by a holding company for its subsidiary would be accepted as a security when the latter needs to raise money in India.  The clarification is needed after banks interpreted Section 185 of the new Companies Act to mean that they could not extend loans to subsidiaries on the strength of a corporate guarantee provided by the holding company. This subsidiary structure is extensively used by the real estate and infrastructure sector to execute specific projects and also by large conglomerates. The objective of this legislation is to control loans to directors and to any other person in whom the directors may be interested, earlier allowable under Section 295 of the Companies Act, 1956. Usually, in large corporate groups, the holding and subsidiary tend to have some common directors, or holding company directors often hold significant shares in the subsidiary. Besides, Section 186 of the new law also states that Indian companies cannot have more than two layers of investments subsidiaries.

 (Source: Economic Times)

Finance Ministry starts interim budget exercise

Gearing up to present an interim budget, the finance ministry has asked different central government departments to come up with their demands by January 10. The third and final batch of Supplementary Demands for Grants for 2013-2014 (excluding Railways) is proposed to be presented to Parliament in the forthcoming Budget session. Since the general elections are scheduled to be held by May 2014, the government would be presenting a vote-on-account, or interim budget, instead of the regular full-fledged Budget ahead of the scheduled date of February 28. The regular Budget is likely to be presented by the new government sometime in July. The finance ministry, in a communication to different ministries, said: “under no circumstances should the RE (revised estimate) ceilings be breached.” While seeking supplementary grants,the ministries have been asked to ensure that the expenditure for 2013-2014 has to be contained within the RE level.

(Source: Financial Express)

2014 may not see interest rate reversal

Year 2014 may not see a reversal in the interest rate cycle with inflation likely to stay at elevated levels. Most experts believe the repo rate will be increased yet again with the next one expected in the first quarter (January-March) of calendar year 2014. The repo rate or the rate at which banks borrow from the RBI currently stands at 7.75 per cent. At the beginning of 2013, this was at eight per cent. During the year, the rate was brought down to 7.25 per cent and then again increased to 7.75 per cent. Consumer price index (CPI)-based inflation rose to 11.24 per cent in November compared with October’s 10.17 per cent. Wholesale price index (WPI)-based inflation data for November also rose to 7.52 per cent from seven per cent the previous month. The CPI and WPI data for December 2013 holds the key for the third-quarter monetary policy review to be announced later this month.

(Source: Business Standard)

Economic Section

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