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RBI modifies rules yet again on deposit of banned notes

Two days after specifying that deposits exceeding Rs. 5000 in demonetised Rs. 500 and Rs. 1000 bank notes can only be made once before December 30, 2016, the Reserve Bank of India on Wednesday modified the rules once again, saying that the restrictions would not apply to those with KYC-compliant accounts.

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Two days after specifying that deposits exceeding Rs. 5000 in demonetised Rs. 500 and Rs. 1000 bank notes can only be made once before December 30, 2016, the Reserve Bank of India (RBI) today modified the rules once again, rsaying that the restrictions would not apply to those with KYC-compliant accounts.
 
In a notification sent to all banks on December 19, the RBI had said that, on a review of the provisions dealing with credit of the value of specified bank notes (SBNs) into bank accounts, it had been decided to place certain restrictions on deposits of SBNs into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.
 
"Tenders of SBNs in excess of Rs. 5000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed.
 
"Tenders of SBNs up to Rs. 5000 in value received across the counter will allowed to be credited to bank accounts in the normal course until December 30, 2016. Even when tenders smaller than Rs. 5000 are made in an account and such tenders taken together on cumulative basis exceed Rs. 5000 they may be subject to the procedure to be followed in case of tenders above Rs. 5000, with no more tenders being allowed thereafter until December 30, 2016," the earlier notification had said.
 
In the latest notification sent today to all banks, these provisions would not apply to fully KYC compliant accounts.
 
"Please refer to our circular DCM (Plg) No. 1859/10.27.00/2016-17 dated December 19, 2016. On a review of the above, we advise that the provisions of the above circular at sub para (i) and (ii) will not apply to fully KYC compliant accounts," the notification said.
 
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The Ministry of Finance had, explaining the December 19 decision, said on that date that more than five weeks had elapsed since the November 8 announcement on demonetisation. 
 
"It is expected that, by now, most of the people would have deposited such old notes in their possession," it had said.
 
"Further, an opportunity has been given to the public to make the payments towards tax, penalty, cess/surcharge and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 with the old bank notes of Rs.500 and Rs.1000 denomination upto 30th December, 2016," it had said.
 
The decision had attracted a lot of criticism from Opposition parties as well as people at large in view of the fact that Prime Minister Narendra Modi and Finance Minister Arun Jaitley had said that there was no reason for people to rush to the banks to deposit their old notes because they had time till December 30 to do so.
 
The demonetisation has led to a huge shortage of cash in hand for people across the country and has severely affected businesses. There continue to be long queues outside banks and ATM kiosks all over the country, which have been running out of cash every day.
 
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RBI cuts repo rate by 25 bps to 7.25%, keeps CRR unchanged at 4%

The Reserve Bank of India on Tuesday reduced its policy repo rate by 25 basis points from 7.5 per cent to 7.25 per cent with immediate effect and kept the cash reserve ratio of scheduled banks unchanged at 4.0 per cent, saying there was a case for a cut in the rate.

 
RBI cuts repo rate by 25 bps to 7.25%
The Reserve Bank of India (RBI) today reduced its policy repo rate by 25 basis points (bps) from 7.5 per cent to 7.25 per cent with immediate effect and kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent, saying there was a case for a cut in the key rate.
 
"With low domestic capacity utilization, still mixed indicators of recovery, and subdued investment and credit growth, there is a case for a cut in the policy rate today," RBI Governor Raghuram G. Rajan said in his Second Bi-Monthly Monetary Policy Statement 2015-16 here.
 
He also said that banks should pass through the sequence of rate cuts into lending rates.
 
Dr Rajan said the central bank would continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions.
 
It would also continue with overnight/term variable rate repos and reverse repos to smooth liquidity, he said.
 
Consequently, the reverse repo rate under the LAF stood adjusted to 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 8.25 per cent.
 
Dr Rajan noted that banks had started passing through some of the past rate cuts into their lending rates, headline inflation had evolved along the projected path, the impact of unseasonal rains had been moderate so far, administered price increases remained muted, and the timing of normalisation of US monetary policy seemed to have been pushed back. 
 
"With low domestic capacity utilization, still mixed indicators of recovery, and subdued investment and credit growth, there is a case for a cut in the policy rate today," he said.
 
"Yet, of the risks to inflation identified in April, three still cloud the picture. First, some forecasters, notably the IMD, predict a below-normal southwest monsoon. Astute food management is needed to mitigate possible inflationary effects. 
 
"Second, crude prices have been firming amidst considerable volatility, and geo-political risks are ever present. Third, volatility in the external environment could impact inflation. 
 
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"Therefore, a conservative strategy would be to wait, especially for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak. With still weak investment and the need to reduce supply constraints over the medium term to stay on the proposed disinflationary path (to 4 per cent in early 2018), however, a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty," he said.
 
"Assuming reasonable food management, inflation is expected to be pulled down by base effects till August but to start rising thereafter to about 6.0 per cent by January 2016 – slightly higher than the projections in April. Putting more weight on the IMD’s monsoon projections than the more optimistic projections of private forecasters as well as accounting for the possible inflationary effects of the increases in the service tax rate to 14 per cent, the risks to the central trajectory are tilted to the upside," he said.
 
"Reflecting the balance of risks and the downward revision to GVA estimates for 2014-15, the projection for output growth for 2015-16 has been marked down from 7.8 per cent in April to 7.6 per cent with a downward bias to reflect the uncertainties surrounding these various risks," he noted.
 
Dr Rajan said strong food policy and management would be important to help keep inflation and inflationary expectations contained over the near term. 
 
"Furthermore, monetary easing can only create the enabling conditions for a fuller government policy thrust that hinges around a step up in public investment in several areas that can also crowd in private investment. This will be important to relieve supply constraints and aid disinflation over the medium term. A targeted infusion of bank capital into scheduled public sector commercial banks, especially those that implement concerted strategies to clean up stressed assets, is also warranted so that adequate credit flows to the productive sectors as investment picks up," he said.
 
The statement said that, since the first bi-monthly monetary policy statement of 2015-16 issued in April 2015, incoming data suggested that the global recovery was still slow and getting increasingly differentiated across regions. 
 
It said global financial markets had also been volatile, with risk-on risk-off shifts induced by changing perceptions of monetary policies in the advanced economies. Global currency markets continue to be dominated by the strength of the US dollar, with the G3 currencies reflecting the asynchronicity of their monetary policy stances. 
 
The statement noted that, as anticipated, the Central Statistics Office had revised downwards its estimate of India’s gross value added (GVA) at basic prices for 2014-15 by 30 bps from the advance estimates. 
 
"Domestic economic activity remains moderate in Q1 of 2015-16. Agricultural activity was adversely affected by unseasonal rains and hailstorms in north India during March 2015, impinging on an estimated 94 lakh hectares of area sown under the rabi crop. Reflecting this, the third advance estimates of the Ministry of Agriculture indicate a contraction in foodgrains production by more than 5 per cent in relation to the preceding year’s level," it said.
 
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The statement said successive estimates have been pointing to a worsening of the situation, with the damage to crops like pulses and oilseeds – where buffer foodstocks are not available in the central pool – posing an upside risk to food inflation. 
 
It said that, for the kharif season, the outlook is clouded by the first estimates of the India Meteorological Department (IMD), predicting that the southwest monsoon will be 7 per cent below the long period average. This has been exacerbated by the confirmation of the onset of El Nino by the Australian Bureau of Meteorology, it said.
 
"What is clear is that contingency plans for food management, including storage of adequate quantity of seeds and fertilisers for timely supply, crop insurance schemes, credit facilities, timely release of food stocks and the repair of disruptions in food supply chains, including through imports and de-hoarding, need to be in place to manage the impact of low production on inflation. Inflation control will also be helped by limiting the increase in agricultural support prices," it said.
 
The statement said industrial production had been recovering, albeit unevenly. The sustained weakness of consumption spending, especially in rural areas as indicated in the slowdown in sales of two-wheelers and tractors, continued to operate as a drag. Corporate sales have contracted. 
 
"The disappointing earnings performance could have been worse if not for the decline in input costs. Capacity utilisation has been falling in several industries, indicative of the slack in the economy. While an upturn in capital goods production seems underway, clear evidence of a revival in investment demand will need to build on the tentative indications of unclogging of stalled investment projects, stabilising of private new investment intentions and improving sales of commercial vehicles," it said.
 
The statement said that, in April, output from core industries constituting 38 per cent of the index of industrial production declined across the board, barring coal production. 
 
"The sustained revival of coal output augurs well for electricity generation and mining and quarrying, going forward. There is some optimism on gas pricing and availability. The resolution of power purchase processes has to be expedited and power distribution companies’ financial stress has to be addressed on a priority basis. Some public sector banks will need more capital to clean up their balance sheets and support lending as investment revives," it said.
 
The RBI said leading indicators of services sector activity were emitting mixed signals. 
 
"A pick-up in service tax collections, sales of trucks, railway freight, domestic air passenger and air freight traffic could augur well for transport and communication and trade. On the other hand, the slowdown in tourist arrivals, railway traffic and international air passenger and freight traffic could affect hotels, restaurants and some constituents of transportation services adversely. The services PMI declined in April 2015, mainly on account of slowdown in new business orders. Community and personal services are likely to be held back by the ongoing fiscal consolidation," it said.
 
In April, retail inflation measured by the consumer price index (CPI) decelerated for the second month in a row, supported by favourable base effects [of about (-) 0.8 per cent] that moderated the rise in the price index for the fourth successive month. 
 
"Food inflation softened to a contra-seasonal four-month low, with the impact of unseasonal rains yet to show up. Vegetables inflation continued to ease, along with that of other sub-groups such as cereals, oil, sugar and spices. On the other hand, protein items, especially milk and pulses, continued to impart upward inflationary pressures," it said.
 
It also said fuel inflation rose for the fourth successive month to a twelve-month high, driven by prices of electricity and firewood. 
 
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"Inflation in these components was accentuated by base effects – the recent price uptick coming on top of muted increases a year ago. Inflation excluding food and fuel rose marginally. House rent, education, medical and transport expenses were among the major drivers of inflation in this category. Rural wage growth, although still moderate, picked up. Inflation expectations remain in high single digits, although they may adapt further to current low inflation. Yet, both input and output price pressures remain muted as reflected in the Reserve Bank’s industrial outlook survey," it said.
 
The statement said merchandise export growth had weakened steadily since July 2014 and entered into contraction from January 2015 through April, with a recent shrinking of even volumes exported. 
 
"The deterioration in export performance affected economies across Asia as global demand fell and the fall in commodity prices impacted terms of trade for commodity exporters. From December 2014 onwards, merchandise import growth also turned negative, led by a sharp decline in the volume of oil imports as inventory build-up by refineries subsided. 
 
"Gold imports spiked in the month of March and remained elevated in April owing to festival demand and regulatory relaxations. Notably, the volume of imports has been recording increases, despite the value decline. Given these developments, the reduction in the current account deficit resulting from the sharp decline in oil prices has begun to reverse, though the size of the deficit is expected to be contained to about 1.5 per cent of GDP this year. 
 
"Net exports are, therefore, unlikely to contribute as much to growth going forward as they did in the past financial year. Consequently growth will depend more on a strengthening of domestic final demand. While portfolio and direct foreign investment flows were buoyant during 2014-15, with net foreign direct investment to India at US$ 36.6 billion and net portfolio inflows at US$ 41 billion, the year 2015-16 has begun with net portfolio outflows in the wake of a reduction in global portfolio allocations to India. Foreign exchange reserves are around US$ 350 billion, providing a strong second line of defence to good macroeconomic policies if external markets turn significantly volatile," the statement added.
 
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Aruna Shanbaug, in vegetative state for 42 years after being raped in 1973, dies

Aruna Shanbaug, a nurse who remained in a vegetative state for nearly 42 years after being brutally raped in1973, died on Monday morning in Mumbai's KEM Hospital after a bout of pneumonia, hospital sources said.

 
Aruna Shanbaug dies after 42 years in vegetative state
Aruna Shanbaug, a nurse who remained in a vegetative state for nearly 42 years after being brutally raped in1973, died this morning in Mumbai's KEM Hospital after a bout of pneumonia, hospital sources said.
 
Shanbaug, 67, was put on ventilator support in the intensive care unit of the hospital for more than a week, they said.
 
She breathed her last at around 9.30 am today, they said. She would have turned 68 in the first week of June.
 
Shanbaug had been in a semi-comatose condition after the horrific incident of November 23, 1973 in which her assailant, Sohanlal, used a dog chain around her neck to pin her down during the assault, resulting in serious damage to her brain cells.
 
Her colleagues at the KEM Hospital had been caring for her for the past four decades, meeting her every need and ensuring, among other things, that she did not have even a single bedsore during this period.
 
On March 7, 2011, the Supreme Court had, in an important ruling, dismissed a petition filed by Ms Pinki Virani, who claimed to be the next friend of Shanbaug, seeking permission for euthanasia since she was in a vegetative state for more than 37 years at that time.
 
A bench comprising Justices Markendey Katju and Gyansudha Misra  held that active euthanasia is illegal but passive euthanasia is permissible with the permission of the concerned high court in appropriate cases.
 
The bench in its 110-page judgement held that the real next friend of Shanbaug was the staff of the K E M Hospital, Mumbai, who had een looking after her for decades.
 
The apex court while permitting passive euthanasia in appropriate cases with the permission of the concerned high court, however, put a rider that the high court will have to set up a medical court before permitting passive euthanasia and it will be the law of the land till Parliament enacts appropriate law on the issue of mercy killing.
 
The Central Government as well as the KEM Hospital had vehemently opposed the petitioner.
 
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Salman Khan given 5 years in jail in 2002 case, HC extends his bail by two days

Bollywood star Salman Khan was on Wednesday convicted and sentenced to five years in prison by a court in Mumbai for causing the death of a pavement dweller in a 2002 hit-and-run case in which he was accused of driving under the influence of liquor, but got bail for two days from the Bombay High Court a little later.

 
Salman Khan gets five years in jail in 2002 hit-and-run case
 
 
Popular Bollywood actor Salman Khan was today convicted and sentenced to five years in prison by a sessions court here for causing the death of a pavement dweller in a 2002 hit-and-run case in which he was accused of driving under the influence of liquor, but got bail for two days from the Bombay High Court a little later.
 
Sessions judge D W Deshpande held that all the charges against the actor, including culpable homicide not amounting to murder, had been proven.
 
Since the quantum of sentence was more than three years, Khan could not have applied for bail in the sessions court and, therefore, approached the High Court. Khan was already on bail in the case, and the High Court extended it by two more days until Friday, when it will hear his bail application.
 
Khan's lawyers had sought bail on the ground that the detailed order of the sessions judge had not been made available yet.
 
Once the copy of the High Court's order reached the session court, he left for home around 7.15 pm after completing various formalities. Hundreds of his fans and well-wishers had gathered outside his residence in Bandra to greet him on his arrival.
 
The sessions judge accepted the prosecution's case that Khan, 49, was at the wheel at the time of the accident, rejecting the defence plea that it was his driver Ashok Singh who was actually driving the vehicle then.
 
Khan and members of his family present in the court room were visibly upset after hearing the verdict.
 
During the argument on the quantum of sentence, lawyers for the actor pleaded for a lesser term, citing his philanthropic work and the fact that he had paid Rs 19 lakh as compensation to the family of the victim. They also said he was prepared to pay more if ordered to do so. "We are not running away from responsibility," his counsel said.
 
The prosecution, on the other hand, argued for the maximum sentence of 10 years.
 
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The case related to the incident, nearly 13 years ago, on September 28, 2002 when the actor's Land Cruiser went out of control and ran over five persons sleeping on a pavement outside a bakery in the Bandra area of the city. One person died and the four others suffered injuries in the incident.
 
The prosecution said Khan was driving the vehicle when the mishap occurred, that he was driving without a licence and that he was drunk at that time. They also accused him of fleeing from the scene. The actor, on the other hand, said he was not driving, that he was not drunk and that he had not run away from the spot.
 
The prosecution produced eyewitnesses, those who were injured in the accident, employees of the bar where the actor had consumed drinks, doctors who examined his blood samples and forensic experts, among others, as witnesses.
 
In a surprising development, Khan's driver Ashok Singh turned up in court recently, after more than 12 years, and deposed that it was he who was driving the car on that day. He said the front left tyre of the car had burst, leading to the mishap
 
Large crowds of Khan's fans, mediapersons, lawyers and others had gathered outside the court at Kalaghoda to find out about the judgement.
 
The judge pronounced his guilty verdict within minutes after arriving in court and later prounced the quantum of sentence, about two hours later, at 1.10 pm.
 
Khan was charged with culpable homicide not amounting to murder, rash and negligent driving, causing hurt by act endangering life,  causing grievous hurt, causing damage to property, driving vehicle in contravention of rules and driving at great speed after consuming alcohol.
 
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Modi urges RBI to set targets for financial inclusion for banks, FIs

Prime Minister Narendra Modi on Thursday urged the Reserve Bank of India to take the lead in encouraging financial institutions to set concrete targets for financial inclusion over the next 20 years, to help transform the quality of life of the poor.

Prime Minister Narendra Modi addressing the Financial Inclusion Conference organised by the Reserve Bank of India, in Mumbai on April 2, 2015.
Prime Minister Narendra Modi addressing the Financial Inclusion Conference organised by the Reserve Bank of India, in Mumbai on April 2, 2015.
Prime Minister Narendra Modi today urged the Reserve Bank of India (RBI) to take the lead in encouraging financial institutions to set concrete targets for financial inclusion over the next 20 years, to help transform the quality of life of the poor. 
 
"I come as a representative of the poor, underprivileged, marginalized and tribals; I am one among them; I seek on their behalf and trust you will not disappoint me," he said at the RBI Conference on Financial Inclusion here, which also marked the completion of 80 years of the central bank.
 
Mr Modi encouraged RBI to set goals on intermediate targets: of 2019, when the country will celebrate the 150th birth anniversary of Mahatma Gandhi; 2022, 75 years of independence; 2025, 90 years of RBI, and 2035, 100 years of RBI. 
 
He said the success of the Pradhan Mantri Jan Dhan Yojana (PMJDY) and the Direct Benefit Transfer of LPG subsidy (DBTL), had shown the potential of the enormous role that the banking sector can play in ensuring financial inclusion. 
 
Calling for making financial inclusion a "habit", Mr Modi asked banks to take inspiration from the success of women self-help groups. He asked banks to keep in mind the requirement of youth who needed either knowledge or skills. He also gave the example of the soon-to-be-launched Micro Units Development Refinance Agency (MUDRA) Bank in this regard and urged banks to come up with creative financial inclusion instruments to help prevent farmer suicides. 
 
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The Prime Minister said that, along with economic and social parameters, there was need to think of a geographical parameter as well for financial inclusion. He said eastern India had immense economic potential, and the banking sector should recognize and plan for this. 
 
Appreciating the role played by RBI over the last 80 years, the Prime Minister complimented the RBI Governor Raghuram Rajan for his grasp and clarity on economic issues. 
 
As part of the Make in India initiative, the Prime Minister urged RBI to take the lead in ensuring that India starts to manufacture the paper and ink that are used to print currency notes. 
 
Apart from Dr Rajan, Maharashtra Governor C. Vidyasagar Rao, Chief Minister Devendra Fadnavis and Union Finance Minister Arun Jaitley were amongst those present on the occasion.
 
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RBI cuts repo rate by 25 bps to 7.5%, keeps CRR unchanged at 4%

Acting for the second time within two months outside the policy review cycle, the Reserve Bank of India on Wednesday, in a surprise move, reduced the key policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.75 per cent to 7.5 per cent with immediate effect.

 
Acting for the second time within two months outside the policy review cycle, the Reserve Bank of India (RBI) today, in a surprise move, reduced the key policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) from 7.75 per cent to 7.5 per cent with immediate effect.
 
RBI Governor Raghuram Rajan said in a statement on monetary policy that the central bank had also decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).
 
He said the RBI would continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions.
 
He said it would continue with daily variable rate repos and reverse repos to smooth liquidity.
 
Consequently, the reverse repo rate under the LAF stood adjusted to 6.5 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 8.5 per cent with immediate effect, he said.
 
The RBI had, on January 15 this year, reduced the repo rate by 25 basis points to 7.75 per cent, stating then that the momentum of inflation had significantly reduced.
 
However, in its Sixth Bi-Monthly Monetary Policy Statement 2014-15 on February 3, the RBI decided to keep the repo rate unchanged at 7.75 per cent, saying there had been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15.
 
Today's decision has come just four days after Finance Minister Arun Jaitley presented his General Budget for 2015-16 to Parliament on February 28.
 
On February 20, the Central Government and the Reserve Bank of India (RBI) had signed a landmark agreement on Monetary Policy Framework under which the RBI will aim to bring inflation below 6 per cent by January 2016.
 
The target for financial year 2016-17 and all subsequent years shall be 4 per cent, with a band of +/- 2 per cent.
 
The agreement, made public on March 2, is a shift towards inflation targeting that Dr Rajan had been advocating for some time.
 
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Dr Rajan said in his statement today that the need to act outside the policy review cycle was prompted by two factors.
 
"First, while the next bi-monthly policy statement will be issued on April 7, 2015 the still weak state of certain sectors of the economy as well as the global trend towards easing suggests that any policy action should be anticipatory once sufficient data support the policy stance. Second, with the release of the agreement on the monetary policy framework, it is appropriate for the Reserve Bank to offer guidance on how it will implement the mandate," he said.
 
He said that, going forward, the RBI would seek to bring the inflation rate to the mid-point of the band of 4 +/- 2 per cent provided for in the agreement with the Governmnt, that is, to 4 per cent by the end of a two-year period starting fiscal year 2016-17.
 
He said the guidance on policy action given in the fifth-bi-monthly monetary policy statement of December 2014 was largely unchanged. 
 
"Further monetary actions will be conditioned by incoming data, especially on the easing of supply constraints, improved availability of key inputs such as power, land, minerals and infrastructure, continuing progress on high-quality fiscal consolidation, the pass through of past rate cuts into lending rates, the monsoon outturn and developments in the international environment," he said.
 
Dr Rajan recalled that, in its statement on monetary policy of January 15, 2015, the RBI had reduced the policy repo rate by 25 basis points and indicated that “Key to further easing are data that confirm continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation…”.
 
"While maintaining the interest rate stance in its sixth bi-monthly monetary policy statement of February 3 in the absence of new developments on inflation or on the fiscal outlook till then, the Reserve Bank indicated that it will keenly monitor the revision in the consumer price index (CPI) with regard to the path of inflation in 2015-16 as well as the Union Budget for 2015-16," he said.
 
The statement said the new CPI, rebased to 2012, was released on February 12. Inflation in January 2015 at 5.1 per cent as measured by the new index was well within the target of 8 per cent for January 2015. 
 
"Prices of vegetables declined and, hearteningly, inflation excluding food and fuel moderated in a broad-based manner to a new low. Thus, disinflation is evolving along the path set out by the Reserve Bank in January 2014 and, in fact, at a faster pace than earlier envisaged," it said.
 
"The uncertainties surrounding any inflation projection are, however, not insignificant. Oil prices have firmed up in recent weeks, and significant further strengthening, perhaps as a result of unanticipated geo-political events, will alter the inflation outlook. Other international commodity prices are expected to remain benign, given still-sluggish global demand conditions. Food prices will be affected by the seasonal upturn that typically occurs ahead of the south-west monsoon and, therefore, steps the government takes on food management will be critical in determining the inflation outlook. Finally, the possible spill over of volatility from international financial markets through exchange rate and asset prices channels is also still a significant risk," it said.
 
The RBI said that, perhaps, the most significant influences on near-term inflation would be the strength of aggregate demand relative to available capacity. Two recent developments pertaining to the demand-supply balance are the recently-released GDP estimates and the Union Budget for 2015-16.
 
"The Central Statistical Organisation is to be commended on the changes it has made to the methodology of estimating GDP, bringing India up to international best practice. Yet the picture it presents of a robust economy, with growth having picked up significantly over the last three years, is at odds with still-low direct measures of growth of production, credit, imports and capacity utilisation as well as with anecdotal evidence on the state of the economic cycle. Nevertheless, the picture of a steadily recovering economy appears right," Dr Rajan said.
 
"The fiscal impulses in the Union Budget then assume importance. There are many important and valuable structural reforms embedded in this Budget, which will help improve supply over the medium term. In the short run, however, the postponement of fiscal consolidation to the 3 per cent target by one year will add to aggregate demand. At a time of accelerating economic recovery, this is, prima facie, a source for concern from the standpoint of aggregate demand management, especially with large borrowings intended for public sector enterprises," he said.
 
"Some factors mitigate the concern. The government has emphasized its desire to clean up legacy issues which gave a misleading picture of the true extent of fiscal rectitude, and has also moderated the optimism in its projections. To this extent, the true quantum of fiscal consolidation may be higher than in the headline numbers. Also, the government is transferring a significantly larger amount to the states, without entirely devolving responsibility for funding central programmes. To the extent that state budget deficits narrow, the general fiscal deficit will be lower. 
 
"Furthermore, supported by lower international energy prices, there is a welcome intent to shift from spending on subsidies to spending on infrastructure, and to better target and further reduce subsidies through direct transfers. Finally, the central government has signed a memorandum with the Reserve Bank setting out clear inflation objectives for the latter. This makes explicit what was implicit before – that the government and the Reserve Bank have common objectives and that fiscal and monetary policy will work in a complementary way. In sum, then, the government intends to compensate for the delay in fiscal consolidation with a commitment to an improvement in the quality of adjustment," he said.
 
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Dr Rajan noted that all these mitigating factors had a fair component of intent. The realised net fiscal impulse will depend on both central and state government actions going forward, he said.
 
"Finally, the rupee has remained strong relative to peer countries. While an excessively strong rupee is undesirable, it too creates disinflationary impulses. It bears repeating here that the Reserve Bank does not target a level for the exchange rate, nor does it have an overall target for foreign exchange reserves. It does intervene on occasion, in both directions, to reduce avoidable volatility in the exchange rate. Any reserve build-up is a residual consequence of such actions rather than a direct objective," he said.
 
The RBI said that softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6 per cent in the second half. 
 
"The fiscal consolidation programme, while delayed, may compensate in quality, especially if state governments are cooperative. Given low capacity utilisation and still-weak indicators of production and credit off-take, it is appropriate for the Reserve Bank to be pre-emptive in its policy action to utilise available space for monetary accommodation," it added.
 
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Bollywood personalities take a stand, urge people to vote for "secular party"

In an unprecedented move, a group of well-known people from the film and entertainment industry, including filmmakers such as Vishal Bhardwaj, Mahesh Bhatt, Govind Nihalani and Zoya Akhtar, singer Shubha Mudgal and actor Nandita Das, on Wednesday issued an appeal, urging people to vote for the secular party which is most likely to win in their constituency.

Nandita Das
Nandita Das
In an unprecedented move, a group of well-known people from the film and entertainment industry, including filmmakers such as Vishal Bhardwaj, Mahesh Bhatt, Govind Nihalani and Zoya Akhtar, singer Shubha Mudgal and actor Nandita Das, today issued an appeal, urging people to vote for the secular party which is most likely to win in their constituency.
 
"The best thing about our country is its cultural diversity, its pluralism - the co-existence of a number of religions and ethnicities over centuries, and hence the blooming of multiple streams of intellectual and artistic thought," the appeal said.
 
"And, this has been possible only because Indian society has prided itself on being essentially secular in character, rejecting communal hatred, embracing tolerance," it said.
 
The signatories, who also included filmmakers Imtiaz Ali, Kabir Khan and Vijay Krishna Acharya, writer Anjum Rajabali, and actors Swara Bhaskar, Jyoti Dogra and Joy Sengupta, said that the very sense of India was vulnerable today.
 
"The need of the hour is to protect our country's secular foundation. Undoubtedly, corruption and governance are important issues, but we will have to vigilantly work out ways of holding our government accountable to that. However, one thing is clear: India's secular character is not negotiable! Not now, not ever. 
 
"As Indian citizens who love our motherland, we appeal to you to vote for the secular party, which is most likely to win in your constituency," they added.
 
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Other signatories to the appeal include filmmakers Anand Patwardhan, Kundan Shah, Hansal Mehta, , writer-diector Saket Chaudhary, documentary filmmaker Rakesh Sharma, actor Aditi Rao, writer-director Vinay Shukla, writers Sanjay Chhel, Kamlesh Pandey, Robin Bhatt, Rajesh Dubey, Vinod Ranganath, Imteyaz Husain, 
 
Tabla maestro Aneesh Pradhan, lyricists Sameer Anjan, Kauser Munir and Jalees Sherwani, film editors Amitabh Shukla and Nishant Radhakrishnan, art director Sukant Panigrahi, producer Anusha Khan, sound designer Bishwadeep Chatterjee, screen writers Manasee Palshikar, Rukmini Sen, Priyanka Borpujari and Mazahir Rahim, documentary filmmaker Surabhi Sharma and screen writer Sharad Tripathi also signed the appeal.
 
The signatories also included cinematographers Anil Mehta and C K Muraleedharan, producer Preety Ali, filmmaker Sona Jain, theatre activist Sameera Iyengar, playwright Shivani Tibrewala Chand and activists Tushar Gandhi, Teesta Setalvaad and Javed Anand.
 
This is the first time that Bollywood personalities have come out collectively to take a stand during elections in the country, though many of them have been individually associated with political parties. Many have also contested and won elections and also served as Ministers at the Centre.
 
Writer Rajabali, whose brainchild the appeal is, told mediapersons that he was surprised at the readiness with which the younger lot signed the statement and took a stand at a time when they might justifiably be more obsessed with their careers.
 
Actress Nandita Das, who has been involved in a variety of causes, said that she owed whatever she was today to the secular and pluralist upbringing that she had.
 
Without naming any party, she said there was a couple of them which are playing a divisive role. She said that, by laying emphasis on development and governance, these parties were seeking to underplay their divisive record.
 
According to her, there was enough evidence in the public domain about the role these parties had played. She said it was not just about communalism and Muslims, but about all other religious, linguistic and regional groups. In this context, she pointed out the stand taken by various parties on criminalisation of private and consensual sex between adults of the same sex.
 
"I am what I am because of the varied influences that I have experienced. I want my son to grow up with all these many influences," she said. She said the country could not be reduced to a monolith or a homogenous entity. "In our differences lie our unity," she said.
 
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Nine killed in fire on Mumbai-Dehradun Express near Dahanu in Maharashtra

Nine passengers including a woman, were killed when a fire broke out in the speeding 19019 Mumbai-Dehradun Express near Dahanu in Thane district of Maharashtra in the early hours of Wednesday.

Fire kills nine on Mumbai-Dehradun Express
Nine passengers including a woman, were killed when a fire broke out in the speeding 19019 Mumbai-Dehradun Express near Dahanu in Thane district of Maharashtra in the early hours of today.
 
Western Railway sources said the fire broke out in S3 coach of the train and then spread to the adjoining coaches S2 and S4, taking the passengers, most of whom were asleep, unawares.
 
The cause of the fire, which broke out at around 0235 hours today while the train was running between Dahanu Road and Gholwad stations , could not be ascertained immediately, the sources said.
 
According to them, the fire was noticed by a gateman at a level crossing, and he alerted the station master of Gholwad station, who quickly contacted the driver and asked him to stop the train.
 
Fire tenders and ambulances rushed to the spot and the blaze was brought under control soon. The affected coaches were detached and the rest of the train was later brought to Gholwad station, about 145 km north of Mumbai, on the Maharashtra-Gujarat border, around 0530 hours.
 
Accident and medical relief vans were rushed to the spot from Mumbai and Valsad in Gujarat to assist in the relief efforts.
 
Five persons who felt suffocated due to the smoke were given first aid in the acident relief vans and later discharged, te sources said.
 
The Divisional Railway Manager of Mumbai Central Division and other top railway officials rushed to the spot to supervise the relief operations.
 
Five of the deceased have been identified by the Railways as Ms Deepika Shah , 65, Mr Dev Shankar Upadhyay, 48, Mr Surendra Shah, 68, Mr Nasirkhan Ahmedkhan Pathan, 50, and Mr Feroz Khan, 38. 
 
The bodies of the victims were sent to Civil Hospital, Dahanu Road (Telephone No. 02528 222371) by the Government Railway Police.
 
The  Railways have offered free accommodation in the train to the relatives of the deceased up to Dahanu Road.
 
Railways Minister Mallikarjun Kharge has expressed his grief at the loss of lives and announced an ex-gratia payment of Rs 5 lakh to the next-of-kin of those killed in the fire.
 
He has also announced an inquiry by the Commissioner of Railway Safety, Western Circle, into the incident.
 
Meanwhile, services on the up line resumed at 0640 hours, the sources added.
 
About 500 food packets along with tea and drinking water were arranged for the passengers of the train at Valsad where five more coaches were added to the train before dispatching it for its o­nward journey.
 
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The Railways have opened helplines to provide information to relatives of the passengers.
 
The numbers are:
 
Mumbai: 022 23011853 and 022 23007388
Valsaid: 241903- Valsad; 
Dahanu Road: 022 67649632
Bandra Terminus: 022 26435756
Surat: 0261 2423992
New Delhi: 011 23342954
Dehradun: 0135 2624002, 2624003
 
Just 11 days ago, on December 28, 2013, as many as 26 passengers were killed and eight others suffered injuries when a major fire broke out in an air-conditioned coach of the 16594 Bangalore-Nanded Express shortly after it left the Satya Sai Prasanthi Nilayam station in Anantapur district of Andhra Pradesh.
 
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Essar Oil public shareholders to receive Rs 75.48 per share over delisting price

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Essar Energy Holdings Limited (EEHL) and Oil Bidco (Mauritius) Limited (OBML), the promoters of Essar Oil Ltd (EOL), today announced that they would pay to former minority shareholders, who tendered EOL shares in the Delisting Offer, an additional amount of Rs 75.48 per share, based on the current closing numbers, following the closure of the sale transaction with Rosneft and the Trafigura-UCP consortium.
 
The payment of around Rs 880 crore will be in addition to the Rs 3,064 crore that OBML had paid to the minority shareholders following EOL’s delisting in 2015, a press release from Essar said.
 
Essar founder Mr Shashi Ruia said: “We have always believed in creating value for all our shareholders. I am extremely happy with this outcome where we could maximise returns for our shareholders who had invested and believed in us. This transaction has created many records and the additional payout to shareholders over and above the delisting price is another first in the history of corporate India. This resonates with our philosophy of rewarding shareholders handsomely”.
 
EOL was valued at Rs 2,000 crore around the time of its listing in 1995, and has now been valued at about Rs 50,400 crore, a growth of 2420%. This value creation was made possible through continued strategic investments and growth of the businesses since commencement, the release said.
 
Mr Dhanpat Nahata, Director of EEHL said, “Essar Energy has created value not only for itself but also for the minority shareholders. The additional payment to minority shareholders is unprecedented as they got exit and liquidity upon delisting in December 2015, retained the upside from the transaction that has closed 20 months later, without carrying any downside risk.”
 
The promoters will shortly issue a public notice in this regard and as committed in the Delisting Offer of December 2015, the additional payout will be made within two months thereafter, the release said.
 
Of the 14.25 crore shares held by public shareholders, OBML acquired 11.66 crore shares through the delisting offer (including during the one year exit window) made to shareholders, as against the requirement of 9.26 crore shares for delisting. The shareholders tendered their shares through the reverse book building window made available to them under the delisting regulations. While the floor price for the delisting was set at Rs 146.05 per share in accordance with a SEBI-mandated formula, OBML agreed to pay Rs 262.80 per share, which was a premium of 80% over the SEBI mandated formula. Now, with the additional payout, the total price paid represents a premium of about 132%, the release added.
 
Russian oil giant Rosneft and the consortium of commodity and logistics major Trafigura and private investment group UCP have acquired 98.26% in Essar Oil Limited (EOL) for a total of $ 12.9 billion, making it India's largest inbound foreign direct investment (FDI) and Russia's largest ever foreign investment.
 
The transaction includes sale of includes sale of Essar Oil's refinery and retail assets ($10.9bn) together with Vadinar Port and related infrastructure assets ($2.0bn).
 
Rosneft (through its subsidiary, Petrol Complex Pte. Ltd) has acquired 49.13% stake, and Trafigura-UCP consortium (through Kesani Enterprises Company Limited) has acquired an equal stake. The remaining 1.74% stake continues to be held by retail shareholders.
 
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Essar Energy, Oil Bidco conclude sale of Essar Oil to Rosneft, Trafigura-UCP for $12.9 billion

A view of the Essar refinery at Vadinar in Gujarat
A view of the Essar refinery at Vadinar in Gujarat
Russian oil giant Rosneft and the consortium of commodity and logistics major Trafigura and private investment group UCP have acquired 98.26% in Essar Oil Limited (EOL) for a total of $ 12.9 billion, making it India's largest inbound foreign direct investment (FDI) and Russia's largest ever foreign investment.
 
The transaction includes sale of includes sale of Essar Oil's refinery and retail assets ($10.9bn) together with Vadinar Port and related infrastructure assets ($2.0bn), a press release from Essar said.
 
"The controlling shareholders of Essar Oil Limited (EOL)—Essar Energy Holdings Limited and Oil Bidco (Mauritius) Limited, both companies incorporated and managed under the laws of Mauritius—are pleased to announce the successful conclusion of the sale of 98.26% of EOL," the release said.
 
Rosneft (through its subsidiary, Petrol Complex Pte. Ltd) has acquired 49.13% stake, and Trafigura-UCP consortium (through Kesani Enterprises Company Limited) has acquired an equal stake. The remaining 1.74% stake continues to be held by retail shareholders, it said.
 
The release noted that the transaction had been initiated in the presence of Prime Minister Narendra Modi and Russian President Vladimir Putin on the sidelines of the BRICS Summit in Panaji, Goa on October 15, 2016.
 
"This investment, which represents Russia’s single largest foreign investment made anywhere in the world, will open a new chapter for Indo-Russian economic cooperation. The transaction is also the single largest foreign investment in India, and re-establishes the country’s image as an attractive destination for foreign investments," it said.
 
"Essar Energy would like to thank the Government of India and the respective regulatory bodies for their support and guidance," it said.
 
Following this transaction, Essar has now helped attract more than $30 billion of foreign investments into India. Previously, in 2007, Essar Group, together with Hutchison Whampoa, brought Vodafone into India in a $11.1 billion transaction, the release said.
 
"Essar Energy thanks VTB Capital, its investment banking partner on the deal; and its legal and other advisors for their invaluable role in bringing this marquee transaction to closure.
 
"Essar Energy would also like to specially thank EOL’s lenders—State Bank of India, ICICI Bank, IDBI Bank, Axis Bank, Yes Bank, and rest of the consortium—for supporting Essar Oil through its journey of over two decades that has now culminated in this value-accretive transaction," it said.
 
The deal includes EOL’s 20 MTPA Vadinar Refinery (one of the world’s largest, with a complexity index of 11.8), its pan-India network of over 3,500 retail outlets (representing India’s largest private sector retail network), as well as the associated refinery infrastructure. The transaction perimeter also includes the Vadinar Port (capacity of 58 million tonnes with world-class dispatch and storage facilities) and the Vadinar power plant (a 1,010 MW state-of-the art, multi-fuel unit that supplies both power and steam to the Vadinar refinery).
 
Essar founder Shashi Ruia said: “Today is a historic day for Indo-Russian economic ties. This transaction reflects the shared vision of two of the world’s most dynamic leaders. I congratulate Rosneft, Trafigura and UCP for investing in a world-class oil business, which we are proud to have built. For Essar, the closure of this landmark transaction ushers in a new phase of growth across our portfolio of businesses that hold great promise in India’s enduring development story.”
 
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Mr Prashant Ruia, Director, Essar Capital, said: “With this deal, we have completed our monetisation and deleveraging programme, which is the largest undertaken by any corporate in recent years. We have substantially deleveraged our portfolio companies’ balance sheets, reducing debt by over $ 11 billion (Rs 70,000 crore). With the completion of our capex programme, we now look forward to a period of growth in our wider portfolio of businesses.”
 
Mr Dhanpat Nahata, Director, Essar Energy Holdings Limited said: “With the closure of this landmark transaction, Essar Energy has set a stellar example of conceiving, building and nurturing a world-class asset and then monetising it at the right time. I would like to welcome Rosneft, Trafigura and UCP as the new shareholders of EOL, and thank my colleagues, the deal team of Essar Energy and our advisors for this achievement.”
 
Rosneft CEO Igor Sechin stated: “This day marks the beginning of a new chapter for EOL. Together with our partners we intend to support the company to significantly improve its financial performance and, in the medium term, adopt an asset development strategy. The closing of the deal is a remarkable achievement for Rosneft too: the company has entered the high-potential and fast-growing Asia-Pacific market. The acquisition of the stake in the Vadinar refinery creates unique opportunities of synergies with existing Rosneft-owned assets and will help improve efficiency of supply to other countries within the region.”
 
Mr Jeremy Weir, CEO of Trafigura, commented: “Essar Oil will now be able to take advantage of the strengths of its international investors to further develop and enhance value to this world class asset.  Our stake in Essar Oil also complements Trafigura’s growing presence in India at a time when the country’s economic outlook is positive.”
 
Mr Ilya Sherbovich, Managing Partner of UCP Investment Group, commented: "Achieving a successful closing of the deal with a group of strong partners represents an important milestone for Essar Oil. We are confident that together with all the new shareholders - recognised leaders in their industries, we will oversee the growth potential of Essar Oil to increase the long-term value of the company."
 
Mr Yuri Soloviev, First Deputy President and Chairman of VTB Bank, said: “I would like to congratulate the parties on the successful completion of this important milestone transaction.  VTB Capital is pleased to have been able to act as financial adviser to Essar Energy on the sale of world-class assets to a strong consortium of investors.  India has become a core strategic market for the VTB Group and we look forward to working further with Essar and our broader Indian clients to further expand our franchise in the future.”
 
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RBI introduces Rs. 50 banknote in Mahatma Gandhi (New) Series

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The Reserve Bank of India (RBI) has said that it will shortly issue Rs. 50 denomination banknotes in the Mahatma Gandhi (New) Series.
 
The new banknotes, bearing signature of RBI Governor Urjit R. Patel, has motif of Hampi with Chariot on the reverse, depicting the country’s cultural heritage. The base colour of the note is fluorescent blue. The note has other designs, geometric patterns aligning with the overall colour scheme, both at the obverse and reverse, a press release from RBI said.
 
All the banknotes in the denomination of Rs. 50 issued by the Reserve Bank in the earlier series will continue to be legal tender, it said.
 
Some of the salient features of the new Rs. 50 banknote include see through register with denominational numeral 50; denomination number in Devnaari; portrait of Mahatma Gandhi at the centre; micro letters RBI, Bharat (in Hindi), India and 50; windowed demetalised security thread with inscriptions Bharat (in  Hindi) and RBI; Guarantee Clause, Governor’s signature with Promise Clause and RBI emblem towards right of Mahatma Gandhi portrait; Ashoka Pillar emblem on the right; Mahatma Gandhi portrait and electrotype (50) watermarks; and number panel with numerals growing from small to big on the top left side and bottom right side.
 
On the reverse side, the banknote has year of printing of the note on the left; Swachh Bharat logo with slogan; Language panel; Motif of Hampi with Chariot; and denominational numeral 50 in Devnagari.
 
The dimension of the banknote will be 66 mm x 135 mm, the release added.
 
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BSE’s India INX to become first exchange to trade in Gold Options contracts at IFSC

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BSE’s India INX, the country’s first international exchange, today received approval from the Securities and Exchange Board of India (SEBI) to commence trading in Gold Options contracts. 
 
The international exchange will be the first one in India and IFSC to commence trading from Wednesday, August 30, 2017, a press release from the exchange said.
 
INX Managing Director and Chief Executive Officer, V. Balasubramaniam said, “We are extremely delighted to be the first one to launch Gold Options contracts and commence trade within this month. The launch will enhance the overall market participation and also complement the existing futures. It will give participants an opportunity to hedge their risk without worrying about daily volatility. This instrument will give the buyer a right to buy or sell an underlier at a preset price on a future date. Considering the other gold contracts on BSE’s India INX, we are clocking daily average turnover of $ 35 million”.
 
India Inx, a wholly-owned subsidiary of BSE Ltd, commenced its trading activities on January 16, 2017 and is India’s first International Exchange set up at GIFT City, Gandhinagar.
 
The release said that it is one of the world’s most advanced technology platforms with a turn-around time of 4 micro seconds and operates for 22 hours a day to allow international investors and non-resident Indians (NRIs) to trade from anywhere across the globe. The exchange provides a common platform for all asset classes - equities, currencies, commodities. The exchange proposes to commence offerings of depository receipts and bonds once the required infrastructure is in place.
 
"India INX offers a diversified portfolio of products and technology services at a cost which is far more competitive to Indian exchanges as well as other global exchanges like those in Hong Kong Singapore, Dubai, London and New York. The exchange being located in IFSC, GIFT City, provides competitive advantage in terms of tax structure and supportive regulatory framework. These include benefits in security transaction tax, commodity transaction tax, dividend distribution tax and long-term capital gain tax waivers and no income tax," the release  added.
 
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Delhi lad Kshitij Kumar joins Dutch Club NEC Nijmegen U15 squad

Kshitij Kumar (left) and Balaji of Reliance Foundation Young Champs with Reliance Foundation Chairperson Nita Ambani.
Kshitij Kumar (left) and Balaji of Reliance Foundation Young Champs with Reliance Foundation Chairperson Nita Ambani.
Thirteen-year-old Delhi lad Kshitij Kumar Singh, a prodigy of Reliance Foundation Young Champs, has join the Holland based NEC Nijmegen club for its Under-15 youth squad.
 
NEC Nijmegen is a professional football club which competes in the Dutch Eerste Divisie. Its youth teams features at the highest level in Dutch Youth Leagues and competes against top European clubs in international tournaments.
 
Kshitij, a second year batch student of Reliance Foundation Young Champs (RFYC) residential football program, had been to the Netherlands for two rounds of trials with PSV Eindhoven and NEC Nijmegen earlier this year before his selection in the NEC youth team.
 
He started playing football at the age of six initially with Bhaichung Bhutia Academy and then at FCB Escola. The forward was an early talent to be spotted by Piet Hubers, Technical Director of ISL Grassroots at the Delhi Dynamos Scouting Festival for RFYC scholarship in 2016. Since last June with RFYC, Kshitij has participated in 29 competitive and friendly games, scoring 31 goals and provided 25 assists.
 
Mrs. Nita Ambani, Founder Chairperson, Reliance Foundation termed Kshitij’s selection at NEC youth team to be a bench mark for more opportunities for India talents.
 
“We are extremely proud of the progress made by the 48 champions. Children like Kshitij Kumar are the future of Indian football. He is dedicated and disciplined at this young age which makes him a force to reckon with on the ground. We are sure he will pave a way for more scouting from foreign countries in India as well as increase the belief among players here to play in the best leagues in the world," she said.
 
RFYC, started in 2015 has amplified ISL clubs’ grassroots initiatives to spot talented children across the country between the ages of 11 and 14. Through robust talent scouting system, the deserving children are offered full-time residential scholarships by RFYC at Navi Mumbai. Today there are 48 scholars in the RFYC Programme.
 
Speaking on his selection, Kshitij said, “I’m very excited to join NEC Youth team. I want to thank all my coaches and fellow players at RF Young Champs who have motivated me to perform better continuously. I want to thank Mrs. Ambani especially for all her support, and for providing me the opportunity and belief to be the best. I would love to play for the Indian National Team in the future.”
 
Reliance Foundation is actively involved in promoting multiple sports in India through a number of largescale grassroots initiatives, with focus on developing young talent. Its initiatives such as Reliance Foundation Youth Sports (RFYS), Reliance Foundation Young Champs (RFYC) and the Reliance Foundation Junior NBA programme have together impacted the lives of more than 7 million children in India across multiple sports, a press release from the foundation said.
 
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India's forex reserves rise by $ 581.1 million to record $ 393.449 billion

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India's foreign exchange reserves rose by $ 581.1 million to a new high of $ 393.449 billion during the week ended August 4, the Reserve Bank of India (RBI) said here today.
 
The country's forex reserves had gone up by $ 1.536 billion to $ 392.868 billion during the previous week.
 
In its weekly statistical supplement, the central bank said that  foreign currency assets, which constitute a major chunk of the forex reserves, had gone up by $ 964.4 million to $ 369.723 billion during the week.
 
Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, pound and yen held in the reserves.
 
According to the bulletin, the country’s gold reserves dipped by $ 405.7 million to $ 19.943 billion, while its special drawing rights (SDRs) went up by $ 8.9 million to $ 1.5045 billion.
 
India’s reserve position in the International Monetary Fund (IMF) increased by $ 13.5 million to $ 2.2774 billion during the week, the bulletin added.
 
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HCC wins Rs. 810 crore contract from JKSPDCL for hydro power proejct

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Infrastructure major Hindustan Construction Company (HCC) today said it had won a contract worth Rs 810.37 crore from Jammu & Kashmir State Power Development Corporation Limited (JKSPDCL) for construction of the 93 MW (3x31 MW) New Ganderbal Hydro Power Project on Sind river in Central Kashmir on engineering, procurement and construction (EPC) basis. 
 
The work is to be completed in 48 months, a press release from the company said here.
 
The New Ganderbal is a run off the river hydro power project on the Sind, a tributary of River Jhelum. The scope of work includes planning, design, engineering and execution of civil and infrastructure works as well as manufacturing, assembling, inspection, testing and commissioning of electro-mechanical and hydro-mechanical equipments, the release said.
 
Mr. Arun Karambelkar, President & CEO, HCC Ltd. said “This prestigious contract demonstrates our EPC expertise in the hydro power sector. With a wide array of competencies for building various modules of hydroelectric projects, HCC has garnered expertise and distinction through complex project management in every step of engineering, procurement and construction.”
 
The release said that, over the last nine decades, HCC has constructed over 25 per cent of India’s installed hydroelectric power capacity with in-depth knowledge of the nation’s diverse terrain. In last 15 years, the company has completed 13 hydro power projects including two  projects in Bhutan and is currently engaged in construction of nine projects of which two are in Bhutan. 
 
In Jammu & Kashmir, HCC has been operating since over five decades and has built one-third of the hydro power capacity of the state, the release added.
 
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Govt. committed to provide enabling environment to promote cruise tourism: Gadkari

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Saying that the Government was committed to provide an enabling environment to promote cruise tourism, Union Shipping and Road Transport and Highways Minister Nitin Gadkari today unveiled the Standard Operating Procedures (SoPs) and Road Map for Cruise Operations.
 
Addressing an international conference organized by the Shipping Ministry at Mumbai Port, Mr Gadkari said India has a huge potential of hosting nearly 40 lakh cruise tourists. Given the right impetus, the number of tourist ships visiting India can go up from the present 158 to about 955 per year.
 
He expressed confidence that the cruise tourism sector would be a game-changer for domestic as well as international travellers. The sector is estimated to have a revenue potential close to Rs. 35,000 crore, and is expected to create over 2,50,000 jobs.
 
Mr Gadkari also released three reports: “Road Map for Sea Cruise Tourism”, “Mumbai Port SOP for Cruise Operations” and “Cruise Terminals in India.” These are aimed at bringing uniformity in procedural formalities to revolutionize the cruise tourism in India.
 
The Ministry has already embarked upon reforms to boost cruise tourism. Absence of world class infrastructure and lack of defined procedures for various government departments/agencies for dealing with cruise vessels and tourists have been identified as major hurdles in the growth of cruise tourism.
 
To address this, a task force comprising all relevant agencies like port, immigration, customs, port health authorities and security agencies was formed to study the present environment and procedures. A global consultant was hired to bring about a holistic approach and suggest the way forward.
 
The key items that the studies have identified for success of cruise tourism include creating and developing the right market atmosphere, easy immigration process , security procedures that do not impede movement, taxation regime that allows for a platform for growth, customs & duties procedures that do not tie the industry, internationally comparable tariffs, port and tourism infrastructure that meets the needs of the cruise lines and visitors today and tomorrow.
 
The studies have also recommended single window system for all pre cruise requirements for cruise operators to save time, separate dedicated approach road and entrance to the cruise terminals, uniform and consistent security procedures by CISF at all ports, coordination between immigration and CISF, training all departments dealing with cruise tourism with Standard Operating Procedures (SoPs) for better handling of passengers, use of technology in clearances, providing passenger manifest to CISF, implementation of green lane/red lane at existing terminals with random custom checking as is done in the airport, declaration of only limited items of inventory of the cruise ships in place of the existing requirement of having the complete inventory for all the stocks in the ship.
 
Various steps have already been taken for growth of cruise tourism. These include finalization of SoPs for handling cruise vessels and passengers, allowing foreign flag vessels carrying passengers to call at Indian ports without obtaining license from DG (Shipping), constitution of Port-level Committees to address manpower, coordination and logistics issues.
 
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A discount of 40% is being given at Major Ports in port charges. Additional rebate of 25% for home port cruise vessels in addition to 40% rebate for coastal cruise transportation. E-Visa facility and e- Landing card has been extended to five major ports. Uniformity in port charges for cruise vessels at all Major Ports- About Rs. 1,600 per person as against earlier practice of charging per tonnage of ship . The charges are now comparable to Singapore and other global ports for cruise tourism.
 
New infrastructure is being created at Mumbai at a cost of Rs. 300 crore. Tender has been awarded for civil construction of terminal building. There are plans to develop more port destinations other than the five ports of Mumbai, Goa, New Mangalore, Cochin and Chennai.
 
Mr. David Dingle, Chairman, Carnival, UK – the biggest cruise line in the world, which has started home port operations from Mumbai Port, presented Carnival’s plans for India. Mr Ravi Kant, Secretary, Shipping, highlighted India’s development initiatives for Cruise Tourism.
 
Tourism Secretary Rashmi Verma spoke about the growth and future of India as an international tourism hub. Maharashtra Tourism Minister J Rawal, Arvind Sawant, MP, Maharashtra Chief Secretary Sumit Mullick and other senior officials were also present at the event.
 
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Schindler to invest Rs. 170 crore to expand its manufacturing facilities in India

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Schindler India, providers of escalators and elevators, a 100% owned subsidiary of Schindler Group, today said it would invest Rs. 170 crore to expand its manufacturing facilities by setting up India’s first escalator manufacturing line and towards improving its research and development facilities at its plant near Chakan in Pune. 
 
"These investments will give Schindler India a unique edge and propel them to further strengthen the market leadership position in the elevators and escalators industry in India," a press release from the company said. 
 
The release said the company was committed to growing the elevators business in India and planned to expand its elevator line to produce a capacity of around 17,500 units and its escalator line to 1,200 units per annum by 2019. 
 
Under the government’s ‘Make in India’ initiative, Schindler has already made an investment of Rs. 430 crore towards setting up a factory, an R&D centre that boasts a 71 metre tall tower with eight shafts where each and every component of the elevator undergoes strenuous testing. 
 
"Schindler India’s Rs. 170 crore investment is part of the total Rs. 600 crore outlay over a period of six years which employs more than 1000 people at any point of time in Maharashtra," the release said.
 
Mr. Uday Kulkarni, President Schindler India and South East Asia said, “The elevator and escalator market is expected to grow at 8% in the current fiscal and at Schindler India it is our aim to grow faster than market. In the last 10 years our turnover has grown from Rs. 300 crore to Rs. 1,600 crore. With the Rs. 170crore investment we aim to further the quality of our services and work towards becoming a preferred vendor to our customers.”
 
The release said Schindler India is the preferred supplier to several leading builders & developers across the country. They have partnered several prestigious infrastructure projects in India, like the new Mumbai International Airport, Terminal-2, the Chennai International Airport, the Delhi Metro, the Delhi Airport Metro, the Mumbai Monorail, the Kolkata International Airport, as well as the Mumbai,Bengaluru, Greater Noida and Nagpur metros.
 
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HCC wins Rs 763.57 crore contract from IGCAR

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Infrastructure major Hindustan Construction Company (HCC) today said it had won a prestigious contract worth Rs. 763.57 crore from the Indira Gandhi Centre for Atomic Research (IGCAR) for construction of a Fast Reactor Fuel Cycle facility in the coastal city of Kalpakkam in Tamil Nadu.
 
The scope of work includes construction of Nuclear Safety Compliant Structures for fuel processing plant for Fast Breeder Reactors and allied facilities including civil, electrical and mechanical works, a press release from the company said. The project is to be completed in 48 months.
 
Mr. Arun Karambelkar, President & CEO- E&C, HCC Ltd said “We are happy to receive this contract for building Fast Reactor Fuel Cycle facility at Kalpakkam. With our well experience team, we are confident of delivering this job on time with precision in quality, safety and state-of-the-art technology.”
 
When completed, this would serve as fuel processing facility for Fast Breeder Reactors. This is the fourth contract awarded to HCC by IGCAR. Prior to this order, the company has received three contracts from IGCAR to build Administrative Blocks, Township and Metallic Fuel Plant. 
 
Some of the major work HCC is currently executing for Department of Atomic Energy includes the first phase of Integrated Nuclear Recycle Plant of BARC in Tarapur and PWHR Units 7 & 8 (2×700 MW) at Rawatbhata, Kota, Rajasthan for NPCIL, the release added.
 
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Reliance Industries wins DuPont Operational Excellence Award

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Energy and petrochemicals major Reliance Industries Limited (RIL) has been adjudged the Global Winner of ‘The DuPont Operational Excellence Award – 2017’.
 
The bi-annual DuPont Safety and Sustainability Awards recognise the most significant innovative projects delivering concrete results.
 
Mr. Hital Meswani, Executive Director of RIL, said: “This award is a global recognition of RIL’s demonstrated ability of unparalleled efficient operations and excellent project execution. It showcases RIL’s sustainable approach towards Operational Excellence.”
 
Recognising the digital foundation that was built during ‘Business Transformation’, a scalable model was shaped with formalized procedures, policies and practices, capturing and documenting knowledge which hitherto existed in minds. This was further codified and documented with a common language and definitions across the group with the introduction of Reliance Management System and, in particular, the Operating Management System, he said.
 
The DuPont Safety and Sustainability Awards recognise organizations which have found innovative ways of making an enduring difference to the safety and health of workers, to the environment, and to productivity. Since its launch in 2002, the bi-annual event has grown to become a prominent global fixture attracting entries from a wide range of industries and countries. 
 
Currently in its 13th edition, the DuPont Safety and Sustainability Awards comprise ‘The DuPont Safety Award’, ‘The DuPont Sustainability Award’, and ‘The DuPont Operations Excellence Award’, selected by an independent jury. 
 
RIL will be receiving the award on 4th September 2017, at a ceremony during the ‘XXI World Congress of Safety and Health at Work 2017’ in Singapore, a press release from the company added.
 
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India's forex reserves rise by $ 1.536 billion to record $ 392.868 billion

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India's foreign exchange reserves rose by $ 1.536 billion to a new high of $ 392.868 billion during the week ended July 28, the Reserve Bank of India (RBI) said here today.
 
The country's forex reserves had soared by $ 2.272 billion to $ 391.331 billion in the previous week.
 
In its weekly statistical supplement, the central bank said that  foreign currency assets, which constitute a major chunk of the forex reserves, had gone up by $ 1.610 billion to $ 368.759 billion during the week.
 
Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, pound and yen held in the reserves.
 
According to the bulletin, the country’s gold reserves remained unchanged at $ 20.349 billion, while its special drawing rights (SDRs) went up by $ 3.9 million to $ 1.4956 billion.
 
India’s reserve position in the International Monetary Fund (IMF) decreased by $ 77.2 million to $ 2.264 billion during the week, the bulletin added.
 
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Gold demand in India grows 37% to 167.4 tonnes in Q2 of 2017: WGC

 
Demand for gold in India in the second quarter (Q2) of 2017 grew by 37 percent to 167.4 tonnes (t), as compared to overall Q2 demand for 2016 of 122.1t, while global gold demand fell by 10 percent to 953t from 1,056t in the same period.
 
India’s Q2 2017 gold demand value was Rs 43,600 crores, up by 32% in comparison to Rs. 33,090 crore in Q2 2016, according to the World Gold Council's (WGC) latest Gold Demand Trends report.
 
The report said total jewellery demand in India for Q2 2017 was up by 41% at 126.7t as compared to 89.8t in Q2 2016. The value of jewellery demand was Rs 33,000 crores, up by 36% from Rs. 24,350 crore in Q2 2016, it said.
 
Total investment demand for Q2 2017 in India was up by 26% at 40.7t in comparison to 32.3t in Q2 2016. In value terms, gold investment demand was Rs. 10,610 crores, up by 21% from Q2 2016 (Rs. 8,740 crores). Total gold recycled in India in Q2 2017 was 29.6t, as compared to 23.8t in Q2 2016. 
 
The full year market expectations of gold demand in 2017 were 650-750t, the report said.
 
Mr. Somasundaram PR, Managing Director, India, World Gold Council said: "India’s gold demand in Q2 2017 stood at 167.4 tonnes, a robust quarter, as seasonal demand and improved rural sentiment contributed to a 37% YoY increase. Both jewellery and investment demand saw a healthy rise of 41% and 26% respectively, albeit on a low base of Q2 2016."
 
"Though underlying concerns about GST and other transparency measures continue, predictably, positive sentiment returned with continued remonetisation and an expectation of good monsoons. This was evident in the sales momentum during Akshaya Tritiya supported by a relatively higher number of auspicious wedding days during the quarter. Towards the end of quarter, one of the biggest demand drivers was the GST rate on gold, which spurred consumers and traders to advance their gold purchases ahead of the GST rollout. 
 
"Looking ahead, in second half of year, as consumers and trade adapt to the new tax and compliance regime, growth will remain range bound even with good monsoons. Our full year demand estimate remains between 650 and 750 tonnes, the higher end of the range being more likely," he said.
 
On the global gold demand, the report said there was a 14% decline in demand for the first half of 2017, which slowed to 2004t.
 
After record levels of inflows into Exchange Traded Funds (ETFs) in H1 2016, a significant slowdown in the sector was the predominant factor behind the fall in overall demand so far this year, it said.
 
Net central bank purchases of 177t in the first half of 2017 were also slightly lower compared to the same period in 2016, down 3%. By contrast, H1 2017 saw bar and coin investment grow, as did both jewellery and technology demand, each making modest gains compared to 2016.
 
"ETF inflows slowed dramatically from last year’s record pace. Nevertheless holdings in the sector continued to grow, adding 56t in Q2, bringing total inflows in H1 to 168t. European ETFs saw the strongest H1 inflows, with holdings in these funds reaching a record 978t," the report said.
 
According to it, bar and coin investment rebounded from very low levels last year. Q2 demand gained 13% from Q2 2016 to 241t, while H1 demand rose 11% to 532t. India contributed strongly to the recovery, having been particularly weak last year. Turkey also saw a strong jump in demand, due to the country’s economic recovery, double-digit inflation and relative currency stability.
 
Jewellery demand also strengthened from a weak 2016 to 481t, but fell short of the long-term average. India was the main contributor to the 8% gain in Q2.
 
"Central banks continue to buy gold, but at a more modest pace than in recent years, totalling 94t, a 20% increase on the previous year. The most recent quarter saw Turkey’s central bank add to its gold reserves – its first significant purchase since the 1980s.
 
"Technology demand registered its third consecutive quarter of growth, up 2% to 81t. Increasing adoption of wireless charging and the development of features using LEDs has boosted demand. H2’s busy release schedule of new smartphone handsets also supported memory chip production.
 
Alistair Hewitt, Head of Market Intelligence at the World Gold Council, commented: “Demand for H1 2017 was down 14% compared to last year, but in some respects the market was in better shape. Last year’s growth was solely down to record ETF inflows, while consumer demand slumped. So far this year we have seen steady ETF inflows in Europe and the US, jewellery demand has recovered with good growth in India, while retail investment and technology demand is up too."
 
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“There are a few things to watch out for in the rest of the year. Inflation data out of the US looks soft and markets have pushed out their expectations for a rate rise. The monsoon is looking good in India and, providing the market adapts to the new GST, we may see solid demand around Diwali. And as the next generation of smartphones gets rolled out we may see good support for technology demand.”
 
The report said total supply fell 8% to 1,066t this quarter compared with the same period last year. This was largely led by a steep drop in recycling, down 18% to 280t, and a continuation of net de-hedging, albeit by a modest 5t, in the subdued Q2 price environment. Mine production remained virtually flat, falling just 3t to 791t.
 
"The year-on-year comparison for recycling was also affected by the elevated levels seen in the first three quarters of 2016, when the rapidly-increasing global gold price, along with a tax amnesty in Indonesia, enticed consumers to liquidate their assets. The first half of 2017 represents a continued ‘normalisation’ of recycling in most markets," it said.
 
The report said total consumer demand rose by 9% to 722t, from 660t in the same period last year, while total investment demand fell 34% to 297t compared with 450t in Q2 2016. Global jewellery demand grew 8% to 481t, from 447t in the same period last year. Central bank demand climbed 20% to 94t compared with 78t in Q2 2016. Demand in the technology sector increased 2% to 81t compared with 80t in Q2 2016. Total supply was down 8% to 1,066t, from 1,160t in the same period last year, while recycling fell 18% to 280t compared with 343t in Q2 2016, it added.
 
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Mahanagar Gas hikes CNG, domestic PNG prices to offset impact of GST

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Mahanagar Gas Limited (MGL) today increased the prices of compressed natural gas (CNG) and domestic piped natural gas (PNG) by Rs. 0.32 per kg and Rs. 0.19 per SCM, respectively, with effect from midnight tonight to offset the impact of the implementation of Goods and Service Tax (GST) on its overall costs.
 
Accordingly, the revised retail selling price (RSP) of CNG will be Rs. 41.14 per kg and that of domestic PNG Slap-I will be Rs. 24.61 per SCM in Mumbai. An increase of Rs. 0.19/SCM is being effected in price of domestic PNG Slab-II, a press release from the company said.
 
Also, in view of removal of LBT and Octroi due to GST implementation, selling prices of CNG and domestic PNG in municipalities/areas outside Mumbai are rationalized and Mumbai prices of CNG and domestic PNG would be replicated in all the adjoining municipalities, the release said.
 
Accordingly, revised CNG RSP will be Rs. 41.14 per kg and revised domestic PNG Slab-I RSP will be Rs. 24.61 per SCM in Mumbai and in all adjoining municipalities from midnight tonight, the release added.
 
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Full Text: RBI's Third Bi-monthly Monetary Policy Statement, 2017-18

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Following is the text of the Third Bi-monthly Monetary Policy Statement, 2016-17 and Resolution of the Monetary Policy Committee (MPC) issued by the Reserve Bank of India (RBI) here today: 
 
Resolution of the Monetary Policy Committee (MPC), Reserve Bank of India
 
On the basis of an assessment of the current and evolving macroeconomic situation at
its meeting today, the Monetary Policy Committee (MPC) decided to:
 
• reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis
points from 6.25 per cent to 6.0 per cent with immediate effect.
 
Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.
 
The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. The main considerations underlying the decision are set out in the statement below.
 
Assessment
 
2. Since the June 2017 meeting of the MPC, impulses of growth have spread across the
global economy albeit still lacking the strength of a self-sustaining recovery. Among the
advanced economies (AEs), the US has expanded at a faster pace in Q2 after a weak Q1, supported by steadily improving labour market conditions, increasing consumer spending, upbeat consumer confidence helped by softer than expected inflation, and improving industrial production. Policy and political risks, however, continue to cloud the outlook. In the Euro area, the recovery has broadened across constituent economies on the back of falling unemployment and a pickup in private consumption; political uncertainty has receded substantially. In Japan, a modest but steady expansion has been taking hold, underpinned by strengthening exports, accelerating industrial production and wage reflation.
 
3. Among emerging market economies (EMEs), growth has regained some lost ground in China in Q2, with retail sales and industrial production rising at a steady pace. Nonetheless, tightening financial conditions on account of deleveraging financial institutions and slowdown in real estate could weigh negatively. The Russian economy has emerged out of two years of recession, aided by falling unemployment, rising retail sales and strong industrial production. In Brazil, a fragile recovery remains vulnerable to political uncertainty and a still depressed labour market. Economic activity in South Africa continues to be beset by structural and institutional bottlenecks and is in a technical recession.
 
4. The modest firming up of global demand and stable commodity prices have supported
global trade volumes, reflected in rising exports and imports in key economies. In the second half of July, crude prices have risen modestly out of bearish territory on account of inventory drawdown in the US, but the supply overhang persists. Chinese demand has fuelled a recent rally in metal prices, particularly copper. Bullion prices fell to multi-month lows on improved risk appetite but remain vulnerable to shifts in the geopolitical environment. Notwithstanding these developments, inflation is well below target in most AEs and is subdued across most EMEs.
 
5. International financial markets have been resilient to political uncertainties and
volatility has declined, except for sporadic reactions to hints of balance sheet adjustments by systemic central banks. Equity markets in most AEs have registered gains, with indices crossing previous highs in the US, but European markets were weighed down by Brexit talks and the strengthening euro. In EMEs, equities have gained on surging global risk appetite underpinned by improving macroeconomic fundamentals that have been pulling in capital inflows. Bond yields in major AEs have hardened on expectations of monetary policy normalisation, with German bunds reaching an intra-year high. In EMEs, the situation has remained diverse, driven by domestic factors, and fixed-income markets have been generally insulated from the bond sell-off in AEs. In the currency markets, the US dollar weakened further and fell to a multi-month low in July on weak inflation and uncertainty around the policies of the US administration. The euro, which has remained bullish, rallied further on upbeat economic data. The Japanese yen has generally eased, interspersed by bouts of appreciation on safe haven demand. EME currencies largely remained stable and have traded
with an appreciating bias.
 
6. On the domestic front, a normal and well-distributed south-west monsoon for the
second consecutive year has brightened the prospects of agricultural and allied activities and rural demand. By August 1, rainfall was 1 per cent above the long period average (LPA) and 84 per cent of the country’s geographical area received excess to normal precipitation. Kharif sowing has progressed at a pace higher than last year’s, with full-season sowing nearly complete for sugarcane, jute and soyabean. The initial uncertainty surrounding sowing of pulses barring tur and rice in some regions has also largely dissipated. Sowing of cotton and coarse cereals has exceeded last year’s levels but for oilseeds, it is lagging. Overall, these developments should help achieve the crop production targets for 2017-18 set by the Ministry of Agriculture at a higher level than the peak attained in the previous year. Meanwhile, procurement operations in respect of rice and wheat during the rabi marketing season have been stepped up to record levels – 36.1 million tonnes in April-June 2017 – and stocks have risen to 1.5 times the buffer norm for the quarter ending September.
 
7. Industrial performance has weakened in April-May 2017. This mainly reflected a
broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity. For electricity generation, deficiency of demand seems to remain a binding constraint. In terms of uses, the output of consumer non-durables accelerated and underlined the resilience of rural demand. It was overwhelmed, however, by contraction in consumer durables – indicative of still sluggish urban demand – and in capital goods, which points to continuing retrenchment of capital formation in the economy. The weakness in the capex cycle was also evident in the number of new investment announcements falling to a 12-year low in Q1, the lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector. The output of core industries was also
dragged down by contraction in electricity, coal and fertiliser production in June, owing to
excess inventory and tepid demand. On the positive side, natural gas recorded an uptick in production after a prolonged decline and steel output remained strong. The 78th round of the Reserve Bank’s industrial outlook survey (IOS) revealed a waning of optimism in Q2 about demand conditions across parameters, and especially on capacity utilisation, profit margins and employment. The manufacturing purchasing managers’ index (PMI) moderated sequentially to a four-month low in June and the future output index also eased marginally. In July, the PMI declined into the contraction zone with a decrease in new orders and a deterioration in business conditions, reflecting inter alia the roll out of the GST; however, both new export orders and the future output index rose, reflecting optimism in the outlook. 
 
8. In contrast to manufacturing, high frequency real indicators of services sector activity
point to a mixed picture in Q1. In the transportation sub-sector, freight carriage by air
registered a strong performance sequentially and on an annual basis. Commercial vehicle sales rose after two successive months of contraction in response to the Bharat Standard (BS)-IV emission compliance switchover. Sales of passenger cars and two-wheelers suffered temporary dislocation in June even as motorcycle sales continued to grow for the third consecutive month, reflecting the firmness of rural demand. Activity in the communication sub-sector accelerated in May on strong and sustained growth in the subscriber base of voice and data services. The hospitality sub-sector was supported by vigorous growth of foreign tourist arrivals and air passenger traffic. The acceleration in steel consumption in April-May may be a precursor to a pickup in construction activity in Q1, but cement production remains in contraction mode. The PMI for the services sector continued to remain in expansion mode in May-June on expectations of improvement in market conditions.
 
9. In June, retail inflation measured by year-on-year changes in the CPI plunged to its
lowest reading in the series based to 2011-12. This was mainly the outcome of large
favourable base effects which are slated to dissipate and reverse from August. Although
month-on-month increases in the price level have been picking up since April, they were
weak in relation to the typical food-price driven summer uptick. The delay in indirect tax
revisions and anecdotal evidence of clearance sales across commodities could have dampened the momentum.
 
10. Prices of food and beverages, which went into deflation in May 2017 for the first time
in the new CPI series, sank further in June as prices of pulses, vegetables, spices and eggs recorded year-on-year declines and inflation moderated across most other sub-groups. There are now visible signs, however, of the usual seasonal price spikes, even if with a delay and especially in respect of tomatoes, onions and milk.
 
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11. Fuel inflation declined for the second month in succession as international prices of liquefied petroleum gas (LPG) fell and price increases moderated in the case of coke, and firewood and chips. Administered prices of LPG and kerosene are set to rise with the calibrated reduction in subsidy. Households appear to have discounted the recent low inflation prints; their three month ahead and one year ahead inflation expectations polled in the June 2017 round of the Reserve Bank’s survey have somewhat hardened.
 
12. Excluding food and fuel, CPI inflation moderated for the third month in succession in June, falling to 4 per cent as price momentum moderated inter alia in respect of education due to delay in fee revision cycles, and also in respect of health, clothing and footwear. Inflation in transport and communication services was depressed by the pricing war in the telecommunication space. Input costs relating to both industry and farms remain benign tracking international prices. Pricing power polled in the Reserve Bank’s industrial outlook survey and in manufacturing and services PMIs is still subdued.
 
13. Surplus liquidity conditions persisted in the system, exacerbated by front-loading of
budgetary spending by the Government. There was also some moderation in the pace of increase in currency in circulation (CiC) which is typical at this time of the year – as against the increase of Rs. 1.5 trillion in CiC during the first two months of 2017-18, it was Rs. 436 billion and Rs. 95 billon during June and July, respectively. Normally, currency returns to the banking system in these months and is reflected in a decline in CiC; consequently, the increase in CiC recorded this year reflects the sustained pace of remonetisation and the associated absorption of liquidity from the system. Surplus liquidity of Rs. 1 trillion was absorbed through issuance of treasury bills (TBs) under the market stabilisation scheme (MSS) and Rs. 1.3 trillion through cash management bills (CMBs) on a cumulative basis so far this financial year. Enduring surplus conditions warranted outright open market sales of Rs. 100 billion each on two occasions in June and July. Another auction of an equivalent amount has been announced and will be conducted on August 10, 2017. Apart from these operations, net average absorption of liquidity under the LAF was at Rs. 3.1 trillion in June and Rs. 3.0 trillion in July. Reflecting this active liquidity management, the weighted average call rate (WACR)
firmed up and traded about 17 bps below the repo rate on average during June and July – down from 29-32 basis points (bps) in March-April and 21 bps in May – within the LAF
corridor.
 
14. Turning to the external sector, merchandise export growth weakened in May and June from the April peak as the value of shipments across commodity groups either slowed or declined. By contrast, import growth remained in double digits, primarily due to a surge in oil imports and stockpiling of gold imports ahead of the implementation of the GST. Imports of coal, electronic goods, pearls and precious stones, vegetable oils and machinery also accelerated. As import growth continued to outpace export growth, the trade deficit at US$ 40.1 billion in Q1 was more than double its level a year ago. Net foreign direct investment doubled in April-May 2017 over its level a year ago, flowing mainly into manufacturing, retail and wholesale trade and business services. Foreign portfolio investors made net purchases of US$ 15.2 billion in domestic debt and equity markets so far (up to July 31), remaining bullish on the outlook for the Indian economy. The level of foreign exchange reserves was US$ 392.9 billion as on July 28, 2017.
 
Outlook
 
15. The second bi-monthly statement projected quarterly average headline inflation in the range of 2.0-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half. The actual outcome for Q1 has tracked projections. Looking ahead, as base effects fade, the evolving momentum of inflation would be determined by (a) the impact on the CPI of the implementation of house rent allowances (HRA) under the 7th central pay commission (CPC); (b) the impact of the price revisions withheld ahead of the GST; and (c) the disentangling of the structural and transitory factors shaping food inflation. The inflation trajectory has been updated taking into account all these factors and incorporates the first round impact of the implementation of the HRA award by the Centre.
 
16. There are several factors contributing to uncertainty around this baseline inflation
trajectory. Implementation of farm loan waivers by States may result in possible fiscal
slippages and undermine the quality of public spending, entailing inflationary spillovers.
Moreover, the timing of the States’ implementation of the salary and allowances award is
critical – it is not factored into the baseline projection in view of lack of information on their plans. If States choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months. Also, high frequency indicators suggest that price pressures are building up in vegetables and animal proteins in the near months. There are, however, some moderating forces at work. First, the second successive normal monsoon coupled with effective supply management measures may keep food inflation under check. Second, if the general moderation of price increases in CPI excluding food and fuel continues, it will contain upside pressures on headline inflation. Third, the international commodity price outlook is fairly stable at the current juncture.
 
17. Business sentiment polled in the manufacturing sector reflects expectations of
moderation of activity in Q2 of 2017-18 from the preceding quarter. Moreover, high levels of stress in twin balance sheets – banks and corporations – are likely to deter new investment. With the real estate sector coming under the regulatory umbrella, new project launches may involve extended gestations and, along with the anticipated consolidation in the sector, may restrain growth, with spillovers to construction and ancillary activities. Also, given the limits on raising market borrowings and taxes by States, farm loan waivers are likely to compel a cutback on capital expenditure, with adverse implications for the already damped capex cycle. At the same time, upsides to the baseline projections emanate from the rising probability of another good kharif harvest, the boost to rural demand from the higher budgetary allocation to
housing in rural areas, the significant step-up in the budgetary allocation for roads and 
bridges, and the growth-enhancing effects of the GST, viz., the shifting of trade from
unorganised to organised segments; the reduction of tax cascades; cost, efficiency and
competitiveness gains; and synergies in domestic supply chains. In turn, these virtuous forces may spur investment. External demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant. Keeping in view these factors, the projection of real GVA growth for 2017-18 has been retained at the June 2017 projection of 7.3 per cent, with risks evenly balanced. 
 
18. The MPC observed that while inflation has fallen to a historic low, a conclusive
segregation of transitory and structural factors driving the disinflation is still elusive. In
respect of inflation-sensitive vegetables, prices are recording spikes. Excess supply conditions continue to push down prices of pulses and keep those of cereals in check. The MPC will continue monitoring movements in inflation to ascertain if recent soft readings are transient or if a more durable disinflation is underway. In its assessment of real activity, the MPC noted that while the outlook for agriculture appears robust, underlying growth impulses in industry and services are weakening, given corporate deleveraging and the retrenchment of investment demand.
 
19. The MPC noted that some of the upside risks to inflation have either reduced or not
materialised - (i) the baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4 per cent by Q4; (ii) inflation excluding food and fuel has fallen significantly over the past three months; and, (iii) the roll-out of the GST has been smooth and the monsoon normal. Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap. Accordingly, the MPC decided to reduce the policy repo rate by 25 basis points. Noting, however, that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data. The MPC remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis.
 
20. On the state of the economy, the MPC is of the view that there is an urgent need to
reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all. This hinges on speedier clearance of projects by the States. On their part, the Government and the Reserve Bank are working in close coordination to resolve large stressed corporate borrowers and recapitalise public sector banks within the fiscal deficit target. These efforts should help restart credit flows to the productive sectors as demand revives. 
 
21. Dr. Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and Dr. Urjit R. Patel were in
favour of the monetary policy decision, while Dr. Ravindra H. Dholakia voted for a policy
rate reduction of 50 basis points and Dr. Michael Debabrata Patra voted for status quo. The minutes of the MPC’s meeting will be published by August 16, 2017.
 
22. The next meeting of the MPC is scheduled on October 3 and 4, 2017.
 
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RBI cuts repo rate by 25 bps, says space has opened up for monetary policy accommodation

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The Reserve Bank of India (RBI) today decided to reduce its key policy repo rate by under the liquidity adjustment facility (LAF) by 25 basis points (bps) from 6.25% to 6.0% with immediate effect, saying that some space had opened up for monetary policy accommodation.
 
Accordingly, the reverse repo rate under the LAF stands adjusted to 5.75% and the marginal standing facility (MSF) rate and the bank rate to 6.25%, the central bank said.
 
In its Third Bi-monthly Monetary Policy Statement, 2017-18 on the basis of the resolution of its Monetary Policy Committee (MPC), the RBI said that the MPC had noted that some of the upside risks to inflation had either reduced or not materialised.
 
It said the baseline path of headline inflation excluding the HRA impact had fallen below the projection made in June to a little above 4% by Q4;  inflation excluding food and fuel had fallen significantly over the past three months; and, the roll-out of the Goods and Service Tax (GST) from July 1 had been smooth and the monsoon normal.
 
"Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap. Accordingly, the MPC decided to reduce the policy repo rate by 25 basis points. Noting, however, that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data. 
 
"The MPC remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis," the statement said. 
 
According to it, the decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2%, while supporting growth. 
 
On the state of the economy, the MPC was of the view that there was an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all. 
 
"This hinges on speedier clearance of projects by the States. On their part, the Government and the Reserve Bank are working in close coordination to resolve large stressed corporate borrowers and recapitalise public sector banks within the fiscal deficit target. These efforts should help restart credit flows to the productive sectors as demand revives," the statement said.
 
Among the MPC members,  Dr. Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and RBI Governor Urjit R. Patel were in favour of the monetary policy decision, while Dr. Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and Dr. Michael Debabrata Patra voted for status quo. The minutes of the MPC’s meeting will be published by August 16, 2017.
 
Setting out the main considerations underlying the decision, the MPC noted that, since its June 2017 meeting, impulses of growth had spread across the global economy albeit still lacking the strength of a self-sustaining recovery. 
 
It said that the modest firming up of global demand and stable commodity prices had supported global trade volumes, reflected in rising exports and imports in key economies. In the second half of July, crude prices have risen modestly out of bearish territory on account of inventory drawdown in the US, but the supply overhang persists. 
 
On the domestic front, a normal and well-distributed south-west monsoon for the second consecutive year has brightened the prospects of agricultural and allied activities and rural demand, it said.
 
"Industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity. For electricity generation, deficiency of demand seems to remain a binding constraint. In terms of uses, the output of consumer non-durables accelerated and underlined the resilience of rural demand. It was overwhelmed, however, by contraction in consumer durables – indicative of still sluggish urban demand – and in capital goods, which points to continuing retrenchment of capital formation in the economy.
 
"The weakness in the capex cycle was also evident in the number of new investment announcements falling to a 12-year low in Q1, the lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector," it said.
 
The statement referred to the lower output of core industries, and noted that the 78th round of the Reserve Bank’s industrial outlook survey (IOS) revealed a waning of optimism in Q2 about demand conditions across parameters, and especially on capacity utilisation, profit margins and employment. It also mentioned the moderation of manufacturing purchasing managers' index (PMI) in June and its decline into contraction zone in July, following the roll-out of the GST.
 
The statement referred to strong performances by the transportation and hospitality sectors, acceleration in steel consumption in April-May, contraction in cement production and expansion of the PMI for the services sector.
 
It noted that, in June, retail inflation plunged to its lowest reading in the series based to 2011-12.
 
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"Turning to the external sector, merchandise export growth weakened in May and June from the April peak as the value of shipments across commodity groups either slowed or declined. By contrast, import growth remained in double digits, primarily due to a surge in oil imports and stockpiling of gold imports ahead of the implementation of the GST. Imports of coal, electronic goods, pearls and precious stones, vegetable oils and machinery also accelerated. As import growth continued to outpace export growth, the trade deficit at US$ 40.1 billion in Q1 was more than double its level a year ago. Net foreign direct investment doubled in April-May 2017 over its level a year ago, flowing mainly into manufacturing, retail and wholesale trade and business services. Foreign portfolio investors made net purchases of US$ 15.2 billion in domestic debt and equity markets so far (up to July 31), remaining bullish on the outlook for the Indian economy. The level of foreign exchange reserves was US$ 392.9 billion as on July 28, 2017," it said.
 
 
The statement noted that the second bi-monthly statement projected quarterly average headline inflation in the range of 2.0-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half. The actual outcome for Q1 has tracked projections.
 
"Looking ahead, as base effects fade, the evolving momentum of inflation would be determined by (a) the impact on the CPI of the implementation of house rent allowances (HRA) under the 7th central pay commission (CPC); (b) the impact of the price revisions withheld ahead of the GST; and (c) the disentangling of the structural and transitory factors shaping food inflation. 
 
"The inflation trajectory has been updated taking into account all these factors and incorporates the first round impact of the implementation of the HRA award by the Centre.
 
"There are several factors contributing to uncertainty around this baseline inflation trajectory. Implementation of farm loan waivers by States may result in possible fiscal slippages and undermine the quality of public spending, entailing inflationary spillovers. Moreover, the timing of the States’ implementation of the salary and allowances award is critical – it is not factored into the baseline projection in view of lack of information on their plans. If States choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months. Also, high frequency indicators suggest that price pressures are building up in vegetables and animal proteins in the near months. 
 
"There are, however, some moderating forces at work. First, the second successive normal monsoon coupled with effective supply management measures may keep food inflation under check. Second, if the general moderation of price increases in CPI excluding food and fuel continues, it will contain upside pressures on headline inflation. Third, the international commodity price outlook is fairly stable at the current juncture.
 
"Business sentiment polled in the manufacturing sector reflects expectations of moderation of activity in Q2 of 2017-18 from the preceding quarter. Moreover, high levels of stress in twin balance sheets – banks and corporations – are likely to deter new investment. 
 
"With the real estate sector coming under the regulatory umbrella, new project launches may involve extended gestations and, along with the anticipated consolidation in the sector, may restrain growth, with spillovers to construction and ancillary activities. Also, given the limits on raising market borrowings and taxes by States, farm loan waivers are likely to compel a cutback on capital expenditure, with adverse implications for the already damped capex cycle.
 
"At the same time, upsides to the baseline projections emanate from the rising probability of another good kharif harvest, the boost to rural demand from the higher budgetary allocation to housing in rural areas, the significant step-up in the budgetary allocation for roads and bridges, and the growth-enhancing effects of the GST, viz., the shifting of trade from unorganised to organised segments; the reduction of tax cascades; cost, efficiency and competitiveness gains; and synergies in domestic supply chains. In turn, these virtuous forces may spur investment. External demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant," it said.
 
Keeping in view these factors, the RBI retained the projection of real GVA growth for 2017-18 at the June 2017 projection of 7.3 per cent, with risks evenly balanced.
 
The MPC observed that while inflation has fallen to a historic low, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive. In respect of inflation-sensitive vegetables, prices are recording spikes. Excess supply conditions continue to push down prices of pulses and keep those of cereals in check. 
 
"The MPC will continue monitoring movements in inflation to ascertain if recent soft readings are transient or if a more durable disinflation is underway. In its assessment of real activity, the MPC noted that while the outlook for agriculture appears robust, underlying growth impulses in industry and services are weakening, given corporate deleveraging and the retrenchment of investment demand," the statement said.
 
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L&T wins Rs. 3375 crore contract for Light Rail System in Mauritius

An artist's impression of the proposed Light Rail-based Urban Transit System for Mauritius.
An artist's impression of the proposed Light Rail-based Urban Transit System for Mauritius.
Infrastructure major Larsen & Toubro (L&T) today said it had bagged a major Rs. 3375 crore breakthrough order from Metro Express Limited, owned by the Government of Mauritius, to design and build an Integrated Light Rail-based Urban Transit System in the African island nation.
 
The contract was signed on July 31 by Mr. S. Seebaluck, Chairman of Metro Express Limited in Ebene, the cyber city of Mauritius. 
 
The signing ceremony and press conference were attended by the Prime Minister of Mauritius, Mr. Pravind Kumar Jugnauth, the Deputy Prime Minister, Mr. Ivan Collendavelloo, the Minister of Public Infrastructure and Land Transport, Mr. N. Bodha, the High Commissioner of India, Mr. Abhay Thakur, members of the Metro Express Board, project consultants and other dignitaries including senior management from L&T.
 
"The project that has been won against competition, will be fully funded through a Government of India grant and Line of Credit," a press release from L&T said.
 
The 26-km route will connect Curepipe to Immigration Square in Port Louis and will feature 19 stations, two of which will be state-of-the-art elevated stations. The alignment will connect three major bus interchanges enabling a multimodal urban transit solution.
 
Apart from stations, the scope of the project will include the construction of viaducts & bridges, track works (with substantial ballastless tracks including plinth, embedded and grass tracks), DC electric traction systems, ticketing and passenger information systems and integration with road traffic through advanced signaling systems, procurement of rolling stock from world majors in LRT (Light Rail Transit) and construction of depots along with maintenance equipment. 
 
Although the project is scheduled to be completed in 48 months, L&T has committed to complete and deliver a priority section of 13 km in 24 months, it said.
 
“We are delighted that we have been able to carry our credentials as the foremost builders of metro and light rail transport systems in India and the Middle East to Africa too,” said Mr. S.N. Subrahmanyan, CEO & Managing Director, L&T.
 
"We are extremely grateful to the Government of Mauritius for having reposed faith in our expertise and we are confident of meeting their expectations and requirements. The new light rail system will significantly transform the way Mauritius will commute in the future and will also bring in economic benefits along the route," he said.
 
“This order is perfectly in sync with our strategy to expand L&T’s Railways business into markets beyond India and we are extremely happy to have found a foothold in the African continent,” said Mr. Rajeev Jyoti, CEO, Railways Strategic Business Unit that resides within the Transportation Infrastructure business vertical of L&T Construction, the construction arm of L&T. 
 
“We are already building the Riyadh and Doha metros apart from 17 other metros in India and with this project we are looking forward to spreading our influence in Africa too," he said.
 
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