The Cabinet Committee on Economic Affairs (CCEA) on 2 July 2015 gave its approval for a new scheme called Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).
The Yojana was approved with an outlay of 50000 crore rupees over a period of five years, that is, from 2015-16 to 2019-20 and the allocation for the financial year 2015-16 has been kept at 5300 crore rupees.
Aim of PMKSY
Bringing concerned Ministries/Departments/Agencies/Research and Financial Institutions engaged in creation/use/recycling/potential recycling of water under a common platform so that a comprehensive and holistic view of the entire water cycle is taken into account and proper water budgeting is done for all sectors namely, household, agriculture and industries.
Objectives of PMKSY
To provide convergence to existing schemes of water management, thus bringing efficiency to the use of water
Expand cultivable area under assured irrigation (Har Khet ko pani)
Improve on-farm water use efficiency to reduce wastage of water
Enhance the adoption of precision-irrigation and other water saving technologies (More crop per drop)
Enhance recharge of aquifers and introduce sustainable water conservation practices by exploring the feasibility of reusing treated municipal based water for peri-urban agriculture
Attract greater private investment in precision irrigation system
Architecture of PMKSY
PMKSY envisages a decentralized State level planning and execution structure. As part of it States will be allowed to draw up a District Irrigation Plan (DIP) and a State Irrigation Plan (SIP).
DIP will have holistic developmental perspective of the district outlining medium to long term developmental plans integrating three components namely, water sources, distribution network and water use application of the district to be prepared at two levels - the block and the district.
All structures created under the schemes will be geo-tagged.
Monitoring and Implementation of PMKSY
National level: The programme will be supervised and monitored by an Inter-Ministerial National Steering Committee (NSC) under the Chairmanship of the Prime Minister with Union Ministers of all concerned Ministries.
The implementation of the yojana will be through a National Executive Committee (NEC) to be constituted under the Chairmanship of the Vice Chairman, NITI Aayog.
Besides, NEC will also oversee allocation of resources, inter ministerial coordination, monitoring and performance assessment, addressing administrative issues etc.
State Level: A State Level Sanctioning Committee (SLSC) to be chaired by the Chief Secretary of respective state will be administering the programme at state level. The committee will have all authority to sanction the project and also monitor the progress of the scheme.
District Level: At the district level their shall be a district level implementation committee for ensuring last mile coordination at the field level.
The Yojana is in addition to existing farmer friendly initiatives taken by the NDA government in the last one year. These include issuing of Soil Health Card to farmers, setting up soil and fertilizer laboratories for Soil Health Management, launch of Pramparagat Krishi Vikas Yojana to promote organic farming, and starting of dedicated Kisan Channel by Doordarshan.
Literacy rate 71 percent in rural areas, 86 percent in urban areas: NSSO survey
National Sample Survey Office (NSSO) on 30 June 2015 released the 71st Round of its survey on Social Consumption: Education. The survey was conducted for the period of January to June 2014 and portrays the salient features relating to prime indicators on education as on 31 March 2014.
The survey covered entire country with samples taken from 36479 households in rural areas and 29447 in urban areas from 4577 villages and 3720 urban blocks. It was conducted on the basis of having any student aged between 5 and 29 years receiving technical/professional or general education.
Major findings of the Survey
• Adult literacy (age 15 years and above) rate in India was around 70.5 percent in 2014
• Among the age group 7 years and above, the male literacy rate was registered at 83.2 percent vis-a-vis the female literacy rate of 67.1 percent.
• Literacy rate (age 5 and above) in the rural areas was pegged at 71.4 percent in 2014, compared to 86.1 percent in the urban areas.
• The rural population in India for the age-group 5-29 years was estimated to be a little over 36 crores (47 percent) and the same for urban was approximately 14.5 crores (44 percent).
• For the country as a whole, 84 percent male and 83 percent female children in the age-group 6-10, the official age-group for Classes I-V, were reported to be attending primary classes. This symbolized no major rural-urban or male-female disparity in the country.
• Meghalaya, Mizoram, Nagaland, Kerala, Goa, Delhi, Chandigarh and Lakshadweep had more than 90 percent of literates in 7+ age groups.
• Rural female literacy rates (for 7+ age) in Andhra Pradesh, Telangana, Bihar, Jharkhand, Rajasthan, Madhya Pradesh and Uttar Pradesh were still low in comparison to all-India average.
• In terms of physical access to primary schooling within less than 1 km, more than 12 percent of rural households in India did not have any secondary schools within 5 kilometers whereas in urban areas such cases are insignificant (less than 1 percent).
• No major differences were observed between male and female persons in urban areas up to the level of higher secondary but such differences are noticeable in rural areas. The rural-urban and male-female disparities accentuate at higher education levels of graduation and above.
• In the rural areas nearly 4.5 percent of males and 2.2 percent of females completed education level of graduation and above, while in urban areas 17 percent of males and 13 percent of females completed this level of education.
• The adult literate females of the country was about 61 percent compared to 80 percent males and about 25 percent of adult females among the female literates had completed at least higher secondary (excluding diploma). For males it was about 27 percent.
• There was no noticeable rural-urban disparity observed among the persons currently attending educational institutions, but gender disparity can be observed in rural areas with 58.7 percent of males and 53 percent of females in the 5-29 age- group reported to be attending education.
National Sample Survey Office (NSSO) functions under the Ministry of Statistics and Programme Implementation.
UNCTAD released World Investment Report 2015
United Nations Conference on Trade and Development (UNCTAD) on 24 June 2015 released the World Investment Report 2015 (WIR15) titled Reforming International Investment Governance.
The WIR15 delineated the investment trends at the global, regional and country level during 2014 and offered a comparative perspective across the space and time.
Highlights of World Investment Report 2015
• In 2014, Global Foreign Direct Investment (FDI) inflows fell by 16 per cent to 1.23 trillion US dollars mostly because of the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks. However, they are projected to grow by 11 per cent to 1.4 trillion US dollars in 2015.
• Inward FDI flows to developing economies reached their highest level at 681 billion US dollars with a 2 per cent rise. China became the world’s largest recipient of FDI and among the top 10 FDI recipients in the world, 5 are developing economies.
• Despite a revival in cross-border mergers and acquisitions (M&As), 399 billion US dollars during 2014, overall FDI flows to developed countries declined by 28 per cent to 499 billion US dollars. They were significantly affected by a single large scale divestment from the USA.
• Investments by developing-country multinational enterprises (MNEs) also reached a record level. They now invest abroad more than any other MNEs.
• Nine of the 20 largest investor countries were from developing or transition economies. MNEs of developing countries continued to acquire developed country foreign affiliates in the developing world.
• The groups of countries negotiating the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) saw their combined share of global FDI inflows decline. However, ASEAN (up 5 per cent to 133 billion US dollars) and the Regional Comprehensive Economic Partnership (RCEP) (up 4 per cent to 363 billion US dollars) bucked the trend.
• In 2012, services accounted for 63 per cent of global FDI stock, more than twice the share of manufacturing. The primary sector represented less than 10 per cent of the total.
• In 2014, announced Greenfield investment declined by 2 per cent to 696 billion US dollars. Developing countries continued to attract two thirds of announced Greenfield investment.
• International production, production by MNEs, rose in 2014 generating value added of approximately 7.9 trillion US dollars.
• Developing Asia (up 9 per cent) saw FDI inflows grow to historically high levels. They reached nearly half a trillion dollars in 2014, further consolidating the region’s position as the largest recipient in the world.
• In South Asia (up 16 per cent to 41 billion US dollars), FDI has increased in manufacturing, including in the automotive industry.
Investment scenario in India during 2014
FDI flows: While inward FDI was pegged at 34.4 billion US dollars, outward FDI was 9.8 billion US dollars. There was an increase of 6.3 billion US dollars and 10.3 billion US dollars in inward inflows when compared to that of 2013 and 2014 respectively.
As a percentage of gross fixed capital formation, inward flows and outward flows stood at 5.9 percent and 1.7 percent respectively.
Though India attracted around 80 percent of total inward FDI inflows of South Asia (41.1 billion US dollars), it was way behind 128.5 billion US dollars attracted by China.
FDI stock: While total inward FDI stock was 252.3 billion US dollars (12.3 percent of GDP), outward FDI stock was 129.5 billion US dollars (6.3 percent of GDP) during 2014.
Cross border M&As: While, net sales were pegged at 5.8 billion US dollars, net purchases were 1 billion US dollars during 2014.
Greenfield investment: While India attracted 24.9 billion US dollars, out of 26.3 billion US dollars in South Asia, as a source it invested 13.2 billion dollars abroad in Greenfield projects during 2014. However, India was way behind China that attracted 77.4 billion US dollars during the same period.
Union Cabinet revised target of solar power under JNNSM to 100000 MW by 2022
The Union Cabinet on 17 June 2015 gave its approval for stepping up of solar power capacity target under the Jawaharlal Nehru National Solar Mission (JNNSM) by five times to 100000 MW (100 GW).The target to be achieved by 2022.
The earlier target was producing solar power of 20000 MW by 2022.
With this target, India will become one of the largest green energy producers in the world, surpassing several developed countries.
The target will principally comprise of 40 GW rooftop and 60 GW through large and medium scale grid connected solar power projects.
The total investment in setting up 100 GW will be around 6 lakh crore rupees.
In the first phase, the Union Government will be providing 15050 crore rupees as capital subsidy to promote solar capacity addition in the country. This capital subsidy will be provided for rooftop solar projects in various cities and towns, for Viability Gap Funding (VGF) based projects to be developed through the Solar Energy Corporation of India (SECI) and for decentralized generation through small solar projects.
Apart from this, solar power projects with investment of about 90000 crore rupees would be developed using Bundling mechanism with thermal power.
Significance of the revised target to 100000 MW
• It will contribute to the long term energy security of India, and reduce dependence on fossil fuels that put a strain on foreign reserves and the ecology as well.
• The solar manufacturing sector will get a boost as the revised target will help in creation of technology hubs for manufacturing.
• The increased manufacturing capacity and installation are expected to pave way for direct and indirect employment opportunities in both the skilled and unskilled sector.
• It is expected to abate over 170 million tonnes of CO2 over its life cycle.
Bibek Debroy committee on railway restructuring submitted report to Union Ministry of Railways
The High Level Committee (HLC) on railway restructuring headed by Dr Bibek Debroy on 12 June 2015 submitted its final report to the Union Ministry of Railways.
The HLC known as the Committee for Mobilization of Resources for Major Railway Projects
and Restructuring of Railway Ministry and Railway Board was formed in September 2014.
Immediate–Liberalization, or the allowing of private entry; changes in the composition of the Railway Board.
0-2 years–Decentralization to zones/divisions; cleaning up finances between Union government and IR.
2 years–Reform of RPF, schools and medical services; transition to commercial accounting, reform of production and construction units.
3 years–Changes in the Railways Act and the Railway Board Act, setting up a Regulator; unified entry into the Railway services; resolution of social costs.
5 years–Bifurcation between Railway Infrastructure Corporation and rest of IR as train operators; end of the Railway Budget.
7 years–Transition of the IR that operates trains to a government-owned SPV.
Major recommendations of the HLC
• It is imperative to split the roles of policy-making, regulation, and operations. There should be clear division of responsibility between the Government of India and railway organizations. The Ministry will only be responsible for policy for the Railway sector and Parliamentary accountability and will give autonomy to the IR.
• Unbundling of Indian Railways (IR) into two independent organizations: one, responsible for the track and infrastructure and another that will operate trains.
• To enable proper decision –making, the IR needs to adopt a commercial accrual-based double entry accounting system. This will help determine the precise extent of subsidization.
• The Railway Board should become like a corporate board for IR. The Chairman of the Railway Board should thus be like a CEO. He/She is not first among equals and should therefore have the powers of final decision-making and veto (in the case of a divided view).
• A Railway Infrastructure Company should be created as a government SPV (with a possibility of disinvesting in the future) that owns the railway infrastructure, delinked from IR.
• A provision needs to be made for open access for any new operator who wishes to enter the market for operating trains with non-discriminatory access to the railway infrastructure and a level playing field.
• Amendment in the Indian Railways Act will be required to allow the levy of tariffs by private operators without administered tariff-determination and fares being left to the market, with a qualification about passenger fares with guaranteed standard of services to a particular passenger class, such as ordinary sitting class and sleeper class.
• Set up a Railway Regulatory Authority of India (RRAI) statutorily, with an independent budget, so that it is truly independent of the Ministry of Railways. It will have the powers and objectives of economic regulation, including, tariff regulation; safety regulation, service standard regulation, etc.
• RRAI should possess quasi judicial powers, with appointment and removal of members distanced from the Union Ministry of Railways.
• There should be an Appellate Tribunal which will hear appeals against the orders of RRAI and further appeals against the orders of the Appellate Tribunal can be directed to the Supreme Court.
• Separation of rail track from rolling stock and unbundling the former and separation and unbundling of non-core as well as peripheral activities.
• Delink of RPF from the IR system and bring in private security for protection of Railway property.
• Immediate integration of the existing Railway schools into the Kendriya Vidyalaya Sangathana set-up.
• All the existing production units should be placed under a government SPV known as the Indian Railway Manufacturing Company (IRMC) under the administrative control of the Ministry of Railways. No privatization need be contemplated, at least initially.
• An ex-cadre post of a Chief Technology Officer (CTO) needs to be created, reporting directly to the Chairman of the Board and all IT initiatives should be integrated and brought under the umbrella of this directorate exclusive of any departmental handling in Board.
• There are too many Zones and Divisions and thus a rationalization exercise is required.
• The head of the Zone (GM) must be fully empowered to take all necessary decisions without reference to Railway Board within the framework of policies.
• There is a need to shift focus to business/customer units like freight business, passenger business, suburban business, parcel business etc. which is essential for IR to be competitive, for its long term-economic viability, customer satisfaction and for being an adaptive/flexible organization.
• IR should consolidate and merge the existing eight organized Group ‘A’ services into two services i.e. the Indian Railway Technical Service (IRTechS) and the Indian Railway Logistics Service (IRLogS), comprising the three non-technical services (IRAS, IRPS and IRTS).
• Subsidies should be targeted towards those who need them. Link Aadhaar numbers for passenger when tickets are purchased. Subsidies on passenger fares to be reimbursed directly into bank accounts, for those who are targeted BPL. Such subsidies must be borne by the Union government.
• IR must encourage on-board catering through large food chains and local restaurants on the payment of a modest license fee. This can be enabled simply through web booking and thus offer customers a wide choice of local cuisine, delivered at his/her choice of station by the restaurant.
• For raising resources for investments, an Investment Advisory Committee may be set up, consisting of experts, investment bankers and representatives of SEBI, RBI, IDFC and other institutions.
RBI announced Strategic Debt Restructuring Scheme
The Reserve Bank of India (RBI) on 8 June 2015 announced Strategic Debt Restructuring (SDR) Scheme which allows banks and non-banking lending institutions to convert their loans into equity stake.
The scheme will benefit all Scheduled Commercial Banks, excluding Regional Rural Banks (RRBs), all-India term-lending and Refinancing Institutions including Export-Import (EXIM) Bank and National Housing Bank (NHB) and National Bank for Agriculture and Rural Development (NABARD).
Key Features of Strategic Debt Restructuring (SDR) Scheme
• Lenders will have the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package.
• Lenders must stipulate in the debt restructuring deal itself that if the borrower fails to meet certain milestones in terms of performance, they would have the option to convert part or whole of the debt into equity.
• A decision on invoking the SDR should be taken within 30 days after a review of the account of borrowers. It should be approved by 75 percent of the creditors by value and 60 percent of creditors by number.
• The lenders must approve the SDR conversion package within 90 days after taking such a decision.
• Post conversion, all lenders should together own 51 percent or more of the company's equity.
• A joint lenders forum (JLF) should closely monitor a company's performance and appoint a suitable professional management.
• Lenders should divest equity holdings of the company to new promoters as soon as possible.
• New promoter should not be a person/entity/subsidiary/associate, etc (domestic as well as overseas), from the existing promoter/promoter group.
• The new promoter has to acquire the entire 51 percent. However, if foreign investment is limited to less than 51 percent, the new promoter should own at least 26 percent of the paid-up equity capital or up to the applicable foreign investment limit.
• On divestment of banks' holding in favour of a new promoter, the asset classification of the account may be upgraded to standard.
• The formula for conversion of debt into equity will be different from existing norms laid down by the Securities & Exchange Board of India (SEBI) for banks.
• The price of debt to equity conversion will be capped either at the market value of the borrowing company (if it is listed) or the book value as per the latest balance sheet (for unlisted firms). Share conversion cannot happen at below par that is less than the face value of 10 rupees.
• Conversion of debt into equity will also be exempted from regulatory ceilings on capital market exposures, investment in para-banking activities and intra-group exposure.
RBI announced the scheme against the backdrop of huge surge in bad loans or Non Performing Assets (NPAs) in the banking system. As per an estimate, the Gross NPAs may rise to 5.9 percent of total advances during 2015-16 against 4.4 percent during 2014-15.
NPAs are those assets, where Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan.
IREDA awarded Miniratna (Category-1) status by Department of Public Enterprises
Indian Renewable Energy Development Agency Limited (IREDA) was on 2 June 2015 awarded the Miniratna (Cateogry -1) statusby the Department of Public Enterprises under the Union Ministry of Heavy Industry and Public Enterprises.
The proposal for conferring Miniratna status for IREDA was recommended by the Union Ministry of New and Renewable Energy (MNRE).
Grant of status allows IREDA to make capital expenditure on new projects, modernization, purchase of equipment, etc. without Government approval up to 500 crores rupees, or equal to their net worth, whichever is lower.
For IREDA, now the ceiling on equity investment to establish joint ventures and subsidiaries in India will be 15% of its net worth in one project limited to 500 crore rupees. The overall ceiling on such investment in all projects put together shall be 30% of the net worth IREDA.
The Scheme of Maharatna/Navratna/Miniratna
The scheme of awarding Navratna, Miniratna (Category-1 and 2) status to public sector undertakings (PSUs) was started by the Union Government vide a notification dated 22 July 1997 so as to grant greater autonomy to PSUs to become global giants.
Later on 4 February 2010, the scheme of Maharatna for PSUs was started.
At present, there are 55 Public Limited Companies in Mini Ratna (Cateogry -1) and 17 are in Mini Ratna (Cateogry-2). Besides, there are 7 Maharatna Companies and 17 Navratnas companies.
Eligibility for Miniratna Category-I PSEs
They should have made profit in the last three years continuously, the pre-tax profit should have been 30 crores rupees or more in at least one of the three years and should have a positive net worth.