News in numbers, Oct 28, 2015: Niti Ayog report, India’s ranking in ease of doing business…

25%

What is it? The extent to which states should have flexibility in spending funds received under the Centrally Sponsored Schemes (CSS) according to state chief ministers in a Niti Aayog report.   

Why is it important? That’s up 15 percentage points, to a quarter from a tenth now. Higher share of flexi-fund within CSS, which are largely funded by centre but implemented by the states, can help in meeting the local needs.

Tell me more:  Review of CSS was being done after the fourteenth Finance Commission devolved 42% of net tax collected by centre to the states, as against 32%. Post-this, central government was looking to rationalize its support for CSS by cutting down number of schemes and reduce support to others.     

 

4

What is it? The jump up in India’s global ranking in ease of doing business in last one year till June 2015.    

Why is it important? At 130, India is still at the bottom of the pack. Yet, it might help. This ranking acts as a barometer of doing business in India. An improvement here will positively impact ‘Make in India’ campaign by government that aims to attract large foreign investment to set up factories locally.             

Tell me more: An amendment in Companies Act that did away with the requirement to deposit Rs 100,000 to start a company, along with Delhi power utility doing away inspection of internal wiring contributed to India’s ranking moving up by four places.       

 

Rs 1,200 crore

What is it? The amount Indian Railways will  received as the first installment from Life Insurance Corporation (LIC) as part of the Rs 150,000 crore long term loan from India’s largest insurance company over the next five years to improve infrastructure.

Why is it important? It’s a win-win solution. Railways was not having enough money to invest to improve its infrastructure and was not getting adequate financial support from the central government. Money from LIC at reasonable rate at longer tenure will improve its infrastructure. For LIC, it will help them match their deployment of funds with their promise of securing life over a long period.    

Tell me more: LIC will charge 30 basis points (one basis point is one-hundredth of a percentage point) above 10-year benchmark yield of government securities. The tenure is 30 years, with no repayment for first five years. Then only interest payment from the sixth to tenth year. From the eleventh year, money has to be repaid in yearly installments. Railways has set an investment target of Rs 8.5 trillion by 2019, out of which Rs 1.5 trillion will be met by borrowing from LIC.

 

19%

What is it? The percentage by which External Commercial Borrowings (ECBs) fell in September 2015. It stood at $2.6 billion.

Why is it important? Shows Indian companies are preferring to borrow locally. The shift towards domestic bond market is due to volatile foreign exchange market that has made overseas borrowing costlier by pushing up hedging costs. Domestic borrowing via corporate bonds has increased by two-thirds in the first six months of current fiscal to Rs 2.4 lakh crore. During the same time, ECBs fell to a five-year low of $ 11.8 billion.    

Tell me more: Central bank is now debating a proposal to allow Indian firms to borrow for a longer tenure of 10 years, as against 5 years now under ECBs.  

 

5%

What is it? India’s largest carmaker Maruti Suzuki’s maximum target royalty payment as a percentage of its net sales in four years. It’s 6% now.  

Why is it important? In last fifteen years, the royalty per car sold has increased by 6.5 times, even as sales realization increased by only 1.6 times in the same period. This was questioned by Institutional Investor Advisory Services, a proxy advisory firm, in a recent report as local Research and Development is contributing significantly in new models. Less royalty means more profit margins.   

Tell me more: Maruti, which sells 1.2 million cars a year, account for a third of its parent revenue.

 

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News in Numbers – September 4, 2015

News In Numbers: September 4, 2015

 

Rs 20,000 crore

The one-time impact on profitability of banks in 2016-17 if the Reserve Bank of India’s (RBI) draft guidelines on computation of base rate are implemented in their present form, according to ratings agency Crisil. This would be about 15% of their collective estimated profits in the next fiscal. The central bank on Tuesday invited comments on these guidelines. Currently, banks use different methods to compute their base rate and the one suggested by RBI “should be more sensitive to changes in policy rates”. However, Crisil says this would create an adverse impact as banks would be reluctant to cut deposit rates given its impact on their profitability. Banks are already battling rising bad loans, which is affecting their profitability.

 

$7.94 billion

Mumbai’s economic output at risk in the event of a terrorist attack between 2015 and 2025, according to Lloyd’s, the world’s oldest active insurance marketplace. In the terrorism context, Mumbai ranks number one among 301 cities, with 16.8% of its GDP (gross domestic product) at risk. The Lloyd’s City Rank Index says 10 Indian cities, including Ahmedabad, Bengaluru, Chennai, Delhi and Mumbai, are the top ones in terms of GDP at risk. In terms of overall threats (besides terrorism, volcano, nuclear accident, market crash, etc), the three cities with maximum economic output at risk are Taipei, Tokyo and Seoul, and none of the Indian cities figure in the top 20.

 

721

The number of state quota seats illegally filled between 2009 and 2013 in private medical and dental colleges in Madhya Pradesh, according to the state government. Known as the DMAT scam, it came to light when a whistleblower filed a complaint with the Central Bureau of Investigation (CBI). The DMAT exam is conducted by the Association for Private Medical and Dental Colleges (APDMC) to fill 58% of around 2,800 seats in 15 private dental colleges and six private medical colleges. The rest are filled under the state quota, through Vyapam. The whistleblower alleged that almost all admissions under the management and NRI quota are rigged. The CBI recently told the Supreme Court that the DMAT scam looks bigger than the Vyapam scam “in its scope and depth”.

 

Rs 300 crore

Tata Sons, the holding company of the Tata Group, has moved the Supreme Court challenging the sales tax demand of Rs 300 crore made by the Maharashtra government on the royalty it earns from its subsidiaries for using the ‘Tata’ brand name. In January, the Bombay High Court had ruled in favour of the Maharashtra government. The Tata Group had argued that the right to use the trademark was not exclusive and conditional, and therefore, should not come under the provisions of the ‘Transfer of Right to use any Goods for any Purpose Act, 1985’. Tata Sons earned over Rs 400 crore in royalty in 2014-15. According to Brand Finance, the Tata Group ranked 65 globally in terms of brand value in 2015 and was valued at $15.4 billion.

 

August 28

The air quality in Delhi has been in the ‘poor’ zone since August 28, almost a month earlier than usual. Typically, air quality drops gradually at the onset of winter and reaches its peak in January, when cold air and fog trap more pollutants. This year, due to the receding of rainfall a month earlier, PM2.5 (fine particulate matter) which is an air pollutant causing serious health problems, had started rising since August 26. In 2013, when rainfall was normal, the air quality was better in the corresponding period. The forecast for the next three days in Delhi shows ‘poor’ air quality, while Mumbai and Pune fare better with ‘good’ air quality predictions. Recently, the World Health Organization named Delhi as the worst of 1,600 cities globally in terms of PM2.5 particles.

 

 

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