FOCUS ON CURRENCY CHESTS - Finmin Sends Joint Secy to Coordinate RBI Cash Ops

ET-05 JANUARY 2017-pG. 03.

FOCUS ON CURRENCY CHESTS - Finmin Sends Joint Secy to Coordinate RBI Cash Ops

Jan 05 2017 : The Economic Times (Mumbai)

FOCUS ON CURRENCY CHESTS - Finmin Sends Joint Secy to Coordinate RBI Cash Ops

Dheeraj Tiwari

New Delhi

In an unusual move, and in another sign of the government's effort to be on top of demonetisation management, the finance ministry has sent a joint secretary to Reserve Bank of India to coordinate the central bank's currency chest operations.

Currency chests are branches of select banks authorised by Reserve Bank to hold notes and coins. The central bank manages currency chests.

RBI's circular to banks on Tuesday directing them to ensure that at least 40% bank notes are supplied to rural areas is also said to have come after suggestions from the finance ministry.

ET spoke to senior finance ministry officials for this report. They spoke off record. Questions sent to RBI didn't receive any response.

A senior finance ministry official said both the central bank and the government are jointly working on issues related to demonetisation. And that deputing the joint secretary was part of that broader effort. “RBI and the finance ministry are working together on a number of issues as they always do. Our official is there to discuss a host of issues, including credit to micro, small and medium enterprises (MSMEs),“ the finance ministry official said.

Another official said sending a finance ministry bureaucrat to RBI was aimed at maximising the effort to distribute currencies to all groups and areas in an efficient manner. RBI's circular on Tuesday said: “Chests should issue bank notes in denominations of `500 and below. In particular, ATMs may be issued `500s and `100s...Off-site ATMs should be allocated higher proportion of cash as against onsite ATMs as they are more important in last mile currency connectivity.“

Currency supply situation has steadily improved from end-December -over a month after demonetisation of `500 and `1,000 notes was announced on November 8 -and as ET had reported earlier, bankers, finance ministry and central bank officials expect 80% of the value of the currency extinguished to come back into the system by February end.

The government's and RBI's focus on rural areas is to ensure that the weeks till end-February see as little disruption as possible in heavily cash-dependent rural economies.

ET VIEW

Remonetisation Must Be a Joint Effort

Swift remonetisation to get the wheels of the economy moving should be a joint effort of the government and the Reserve Bank of India.Together the two run four presses that print all the legal tender. The appointment of a central government official to coordinate currency chest operations is more about overseeing the logistics to hasten the pace of introducing new notes. So, the perception that this infringes on the regulator's autonomy is entirely misplaced.

Jan 05 2017 : The Economic Times (Mumbai)

Nothing in Black & White to Hold `Men in Black'

Krishna Kumar

Mumbai:

Police can't arrest cash hoarders as there is no legal provision to book people for mere possession of money, say lawyers

Images of police swooping on people with stashes of new currency notes have been a recurrent theme in the wake of demonetisation, conjuring up among many a vision of a succeeding scene filmed behind bars.

But what really happens after the police apprehends somebody with a large amount of new currency notes?

The short answer is that in most cases police lets such people go within hours.

For an illustration, consider the case of the three businessmen apprehended by the Thane police last month for possessing lakhs of new currency notes and trying to exchange these notes for a commission. The police called up the Income Tax Department, “interrogated“ the three men and let them go, with the IT department seizing the money.

No, the three men involved did not pull any strings.

There is simply no legal provision under which the police can book such individuals.

“We just intimated the IT department and handed over the men to their custody. The IT department has to take a call on how to proceed,“ said a senior Thane police officer, who did not wish to be identified.

Mere possession of currency is not an offence, said lawyer Zulfiquar Memon of MZM Legal. “Those detained have been let off by police because there is no clarity under which section (of Indian Penal Code) you can detain them. There are a few police stations which wrongly book people under hoarding or cheating.“

Former IPS officer turned lawyer YP Singh said he was surprised as to how such detentions even take place since not paying income tax is a civil matter and police has no role to play in this matter.

“Under which law did the police detain the people involved? The policemen who were involved in these illegal detentions can actually be booked under IPC 341 and 342 ­ wrongful restraint and wrongful confinement,“ said Singh. Memon said last week he managed to get a UK-based client released from custody after he was arrested for “cheating“ while trying to exchange new notes worth 50 lakh. “My client had a fight with the person with whom the notes were to be exchanged. Based on this person's complaint my client was arrested. I argued his case; not only was he freed, even his money was handed back to him,“ he said.

Singh said that in order to detain or arrest those caught with cash the police needs to show that the money is the proceeds from a criminal case already registered by the police or from a stolen property. “Even the IT department cannot arrest a person; all it can do is seize the money and levy a penalty,“ he said.

Pg. 6.

Jan 05 2017 : The Economic Times (Mumbai)

Unrelenting CBI Chief Asthana Has More Netas in Crosshairs

Aman Sharma

New Delhi

AGUSTA PROBE CBI interim chief has given green signal to probe politicians too, in what could rile Congress as initials of some of its leaders feature in a diary with CBI

The Central Bureau of Investigation (CBI) is on an overdrive under its acting director Rakesh Asthana with big arrests effected under his watch in the last 25 days in long-pending cases, bringing the heat upon the political rivals of the ruling establishment.

Former Air Force Chief SP Tyagi and two other accused have got bail after being arrested by CBI in the AgustaWestland case within a week of Asthana becoming the acting chief. Questions are being raised why such high-profile arrests, including those of Trinamool Congress MPs, are being effected by the agency which usually desists from arrests.“Non-cooperation with probe is not the only ground to arrest someone. An accused is arrested to confront him with the evidence collected ­ when the material turns substantial. This is done under custodial interrogation. That is why Tyagi was arrested at the stage he was. There is strong evidence that he was paid a big bribe,“ a senior CBI official told ET. It has also been questioned why CBI did not act for three years when Tyagi was appearing before them after the FIR was lodged in 2013. “You cannot accuse us of inaction as well as now for action,“ the CBI official said.

Asthana is said to have given the green-signal to expand the probe to the politicians too, in what could rile the Congress party as initials of some of its leaders are said to feature in a diary forwarded to CBI by Italian courts. “We will corroborate the same before summoning politicians for questioning,“ a CBI official said. In an unprecedented step, CBI has also challenged the bail given to Tyagi before the High Court ­ pleading him to be kept in jail and away from other suspects till the CBI files a chargesheet. “The first charge-sheet in Agusta case will be filed next month.The amount of bribe established by us is euros 52 m ­ 30 m through Christian Michel and euros 22 million through Guido Haschke ­ to ben efiaries,“ the CBI official said.

The same grounds are being cited for arrest of Trinamool Congress MPs Sudip Bandopadhyaya and Tapal Pal in the last one week in a chit fund case of `17,000 cr. “The case is pending since 2014. A first chargesheet has been filed and we are investigating the larger conspiracy and the money trail. Hence, the arrests of MPs now after we got evidence against them. More arrests are on cards,“ a CBI official said.

CBI has also received the reference from Haryana government regarding the National Herald case against former Haryana CM Bhupinder Singh Hooda. Seven cases against AAP government in Delhi are under CBI probe too. On December 9, a week after Asthana took over, CBI also filed a chargesheet against former Union ministers from DMK, Dayanidhi Maran and Kalanithi Maran, in the illegal phone exchange case which had been pending since 2013.

Asthana, a Gujarat-cadre IPS officer perceived to be close to the ruling establishment, “has been sandwiched in a political fight“, an official close to him reasoned. “He is not even eligible to become the CBI Director as he is from the 1984 batch of IPS which is not yet empaneled. Ordinarily , CBI director is picked from the four senior-most batches ­ in this case from 1979 to 1983 batches.

Prashant Bhushan has filed a plea before SC challenging Asthana's appointment. The Centre is still to call a meeting of the selection committee to select the next director. The joke in CBI is Asthana may have already set the work agenda for the next director with the probes fast-tracked by him.

TOI-Pg. 05-97% of scrapped notes deposited with banks-Report

Jan 05 2017 : The Times of India (Mumbai)

97% of scrapped notes deposited with banks: Report





Banks received Rs 14.97 lakh crore in deposits of the demonetised Rs 500 and Rs 1,000 notes between November 9 and December 30, reports Bloomberg, adding that the figure was provisional and could be revised. The figure amounts to nearly 97% of the Rs 15.44 lakh crore that was declared void on November 8.The junked notes comprised 86% of all currency.

Pg. 21.

Jan 05 2017 : The Times of India (Mumbai)

97% of scrapped notes deposited with banks as on Dec 30: Report

New Delhi:

TIMES NEWS NETWORK

Nearly 97% of the outlawed Rs 500 and Rs 1,000 notes has been deposited with banks as on December 30, according to Bloomberg news service.

Quoting two people with knowledge of the matter, Bloomberg said banks had received Rs 14.97 lakh crore by the last date for depositing old cash, adding that the figures were provisional and could be revised. Rs 15.44 lakh crore, representing about 86% of all currency , was declared void on November 8.

TOI had reported on December 28 that about Rs 14 lakh crore, or 90%, of the demonetised currency had been deposited with banks. At the time the decision to demonetise was announced, the view within the government was that roughly Rs 3 lakh crore of the scrapped currency would not come back into the system. There was also a view within a section of the government that this money , once legally extinguished, would constitute windfall gain for the RBI and could be transferred to the Centre as special dividend.

Top RBI officials have since said such a transfer would not be possible.

Pg. 13.

Jan 05 2017 : The Times of India (Mumbai)

UAE likely to seize Dawood assets worth Rs 15,000 crore

New Delhi:

TIMES NEWS NETWORK

Unconfirmed reports that the United Arab Emirates (UAE) government may have moved to seize terrorist mastermind and 1993 Mumbai blasts accused Dawood Ibrahim's assets on its soil set off fevered speculation in political and official circles.

Indian intelligence and investigative agencies as well as the ministry of external affairs insisted they were unaware of any such development.However, the assertions failed to quell the speculation about the UAE authorities following through the growing cooperation with India in the field of counter-terrorism by moving against the former boss of Mumbai underworld who has been designated a “ global terrorist“ .

There were indications that the reticence may be partly due to a desire to protect the UAE government's sensitivities and considerations of confidentiality .

Dawood, who is currently said to be based in Pakistan, has been closely tracked by India because of his complicity in the 1993 serial blasts in Mumbai as well as in terror acts masterminded by Pakistan's spy agency , ISI. The pursuit for him has been stepped up after the Modi government took office in 2014.

Dubai used to be the favourite hunting ground for Dawood who acquired huge assets in the Sheikhdom.

One official source said India's caution may have to do with UAE Sheikh Mohamed bin Zayed Al Nahyan, crown prince of Abu Dhabi, due to arrive in India later this month as chief guest for the Republic Day . National security adviser Ajit Doval is said to have pursued the matter with UAE and requested the officials there to act and seize Dawood's property .

According to reports, when PM Modi, accompanied by Doval, visited UAE in 2015, issues pertaining to Dawood's property came up and India provided a confidential list of the underworld don's properties to the UAE government.These properties, according to media reports, are believed to be worth Rs 15,000 crore.

BJP put the media reports on seizure of Dawood's assets on its website, describing it as a major achievement of the Modi government.

Pg. 13.

Jan 05 2017 : The Times of India (Mumbai)

SP neta bodyguard's account sees Rs 100cr deposit

Faiz Siddiqui

Kanpur:

The police gunner of a Samajwadi Party MLA was on Tuesday shocked to find that nearly Rs 100 crore had been deposited in his account in State Bank of India.

Constable Ghulam Jilani had Rs 73,000 in his salary account, but received a ministatement of Rs 99,99,02,724 after withdrawing Rs 4,000 from the ATM of SBI's main branch on Mall Road on Tuesday . Jila ni immediately apprised MLA Irfan Solanki, who informed senior district authorities.

Solanki, MLA from Seesamau constituency , alleged that it's a conspiracy by his rivals against his gunner who has been attached to him for the past four years. “ The SP MLA said that he along with his gunner met district magistrate Kaushal Raj Sharma to apprise him about the issue. “I have requested the district magistrate to investigate the matter thoroughly ,“ said Solanki.

Jilani's wife Noori Khatoon said the money which has not been earned by her husband was `haraam'. “I am least bothered how it all happened. My only worry now is that the money earned by my husband should be safe,“ said Noori. DM Sharma said the district administration has asked the SBI officials to look into the case.

Private Eyes to Probe Black Money

ET-04 JANUARY 2017, WEDENSDAY. Pg. 01 & 14.

January 04 2017 : The Economic Times (Mumbai)

Private Eyes to Probe Black Money

The income tax department has roped in forensic experts from three of the Big Four accounting firms to investigate suspected money laundering by politicians, bureaucrats and businessmen, say sources.



Pg. 14.

January  04 2017 : The Economic Times (Mumbai)

Private Experts to Study Black Money Data

Mohit Bhalla

New Delhi

I-T dept ropes in experts from EY, KPMG and PricewaterhouseCoopers to investigate suspected money laundering after govt's note-ban move

The income tax department has roped in forensic experts from three of the Big Four accounting firms to investigate suspected money laundering by politicians, bureaucrats and businessmen, people directly aware of the matter said.

Experts from EY, KPMG and PricewaterhouseCoopers are working with tax officials to examine evidence collected by the department during raids conducted since November 8, when the government declared war on black money by demonetising 500 and 1,000 currency notes.

Some of the people raided are suspected to have laundered money through accounting manipulations or brought in money parked overseas through the hawala route, a person involved in the investigations said, speaking on condition of anonymity. The department sought help from external investigators with the expertise to unravel such complex transactions.

“Offenders may have used innovative ways to deposit unaccounted money by disguising receipts or transfers of funds as legitimate transactions,“ said Rajiv Singh of Nalanda Law Associates. “But the existence of a money trail significantly increases the prospects of gathering incriminating evidence that could be used to prosecute them.“ Post demonetisation, the high-profile people the I-T department raided included Bahubali producers Shobu Yarla gadda and Prasad Devineni, two Karnataka government engineers alleged to be close to Chief Minister Siddaramaiah and, more recently, the chief secretary of Tamil Nadu.

Spokespersons for EY, ned to comment when contacted by ET. In an emailed response, the commissioner of investigations at the Central Board of Direct Taxes, Ramesh Kumar Yadav, said: “Personally, I am not aware of any of the issues you wish to know.“

People aware of the matter said the investigators were adopting a multi-pronged approach, which included scrutiny of the books of corporate entities linked to these individuals as well as data stored in computers seized during the raids, examination of bank statements and gathering of field intelligence to identify the authenticity of counter-parties with which transactions were recorded.

The IT department has intensified its enforcement operations since demonetisation on November 8, conducting as many as 556 surveys and 245 searches between November 9 and December 29, ET reported on Monday.

More than 5,000 notices have been issued so far for verification and about 228 cases have been referred to the Central Bureau of Investigation. Total currency seizures amount to Rs 467 crore, of which new notes were over Rs 105 crore.

The government has also been urging people to provide information on presumed financial wrongdoing that they are aware of. Authorities were able to conduct raids on hoarders due to the tip offs from common people, it has said.

The government has also announced an amnesty scheme to encourage tax evaders to make disclosures following the deposit of old notes to a level that's almost equivalent to the amount demonetised, contrary to earlier expectations.

Pg. 20.

Jan 04 2017 : The Economic Times (Mumbai)

Many Speedbreakers on Digital Highway



The Indian government seems to be in a hurry to get the entire population of over 125 crore on the digital platform, but the road seems to be bumpier than expected with many twists and turns and 2017 will be the litmus test for the government on that front.

After announcing that the country needs to shift to a digital payments platform, the government realised that a major chunk of administrative payments are still being done in cash. Now from pushing government departments to switch to digital means to offering a host of benefits for digital payments to retail customers, the government seems to be in a mood to go the extra mile to make `Digital India' a reality.

Industry insiders say that at present more than 95% of transactions happen in cash, if this number reduces even by 20 percentage points, that would mean a huge shift and one can declare the gov ernment's efforts a success.

India is a country where 94% of the population is supposed to be in the unorganised sector which draws its payments in cash. As per reports, only 10% of the population has ever used non-cash means of payments. Though India is the fastest growing smartphone market in the world, only 74% of its people have an active mobile subscription.

The biggest hindrance to a digital economy is there being a huge in formation asymmetry between financial services providers and the consumers. This causes consumers ending up compromising the safety of their accounts and not realising their full potential.

Though as part of the JAM trinity (Jan Dhan, Aadhaar, Mobile), the government not only opened accounts for every household, it is also pushing to make them operational by transferring subsidies to such accounts. But many showing no deposits or transactions reveal that the country still has a long way to go to imbibe the idea of banking.

Will 2017 see such shifts happening drastically? Will Aadhaar finally be able to take over from being only a repository of data to actually being used to authenticate transactions? Will the SMEs and merchant outlets look at cash transactions from the angle of convenience rather than tax avoidance? Perhaps yes. 2017 will reveal whether Modi's gamble pays off.

Pg. 21.

Jan 04 2017 : The Economic Times (Mumbai)

Debt Recovery: SC Wants Info on Large Borrowers

Samanwaya Rautray

New Delhi:

Seeks info on cases pending for over 10 years & involving recovery of over Rs 500 cr

The Supreme Court on Tuesday asked the government to explain whether it had placed adequate manpower at the disposal of the debt recovery tribunals (DRT) and their appellate bodies to timely dispose of cases they are dealing with. It also sought information on all cases that were pending for over 10 years and those which involved recovery of more than 500 crore.

The law has fixed quick timelines for DRTs and debt recovery appellate tribunals to follow, a bench led by outgoing Chief Justice TS Thakur observed. It asked whether any scientific study had been done on the manpower required to enable these bodies to stick to the timelines.

The observation is in line with judicial thinking in recent years. The top court has demanded more staff and resources for subordinate courts to deal with burgeoning litigation load and is currently locked in a standoff with the government over filling up vacancies in the high courts.

The bench noted that as of September 1990, there were more than 15 lakh cases filed by public sector banks in courts and another 304 by other financial institutions seeking to recover money owed to them. These were later transferred to 34 DRTs and five appellate courts functioning under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. These bodies also deal with cases filed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. They have disposed of many cases, but 70,000 cases involving 5 lakh crore are still pending before them, some for over 10 years. Though the law puts a 180-day cap for a case to be decided, the court said, cases remained pending for years.

“Legislative changes to provide for expeditious disposal of proceedings before the Debt Recovery Tribunals may not by themselves achieve the intended object so long as the infrastructure provided to the tribunals is not commensurate with the burden of the work and nature of judicial duties,“ the court said.

It directed the government to file an affidavit whether these timelines can be met with the existing infrastructure, including judicial personnel and staffing. The bench also demanded empirical data on pendency of cases and the list of corporate entities where the amount outstanding was in excess of 500 crore.

The government had earlier agreed to hand the information over to the court in a sealed cover. The affidavit has to be filed in four weeks, the court said in an order passed in a case filed by NGO Centre for Public Interest Litigation against Housing and Urban Development Corporation. The court had earlier demanded to know in this case whether the government was doing anything to address the non-performing assets of banks. On Tuesday, it clarified that a committee set up to examine this could go on with its work.

TOI-04 JANUARY 2017, WEDESNDAY.

Jan 04 2017 : The Times of India (Mumbai)

Banks step up reporting of 'suspicious transactions'

Sidhartha & Surojit Gupta

New Delhi

TNN

Alerts By Some Pvt Lenders Go Up 10 Times After Demonetisation

Facing pressure from tax and enforcement authorities, banks are not taking any chances in reporting “suspicious transactions“ with some of the private players reporting an increase of up to 10 times. Sources said that a private bank, which used to report around 275-300 transactions a month, saw the number for Suspicious Transaction Reports (STR) filings with the Financial Intelligence Unit rise to almost 3,000 during December. Another large bank said that it had seen a seven to eight-fold jump in STRs which were typically made for cash deposits of over Rs 1crore.

An executive at one of the largest banks said that the number of filings had increased as there were several more alerts in the wake of increased surveillance from tax authorities. “We are being extra cautious. The number of cases that we used to report in a month, we are now doing in a week,“ said the senior bank official, who did not wish to be named.

The enforcement directorate and the tax department have been closely tracking the deposit of old Rs 500 and Rs 1,000 notes--especially in private banks-and have also arrest five executives on allegations of illegally helping people convert black money .

A series of action, which included ED visiting 50 branches of 10 banks, some of the very prominent that see large transactions. Separately , 547 branches have been identified by tax authorities for heightened scrutiny as they saw abnormal activity compared to the average daily business undertaken by them earlier. The repeated queries and surveys from the agencies prompted the banks to increase the “alerts“. A banker said that various parameters were used for generating the alerts with the non-KYC compliant being one of the key triggers. Similarly , banks looked at the transaction history as one of the other criteria. “If there was a dormant account or one where the volume was very low and suddenly it saw a spurt in the form of large deposits, we decided to play it safe and report it to FIU. We are not taking any chances,“ said an executive.

“Basically , any transaction which we think is suspicious is being reported. We do not want to face the blame,“ said a bank executive. The government is analysing data on bank deposits and tallying it with tax returns in a bid to go after those who may have sought to use demonetisation as an initiative to deposit unexplained cash.

Core Sector Unhurt by Note Ban Drive, But Some Bruises Visible

ET-03 JANUARY 2017-Pg. 01.

Jan 03 2017 : The Economic Times (Mumbai)

Core Sector Unhurt by Note Ban Drive, But Some Bruises Visible

New Delhi:

Our Bureau

Core sector grows 4.9% in Nov; PMI and investment data disappoint

The first official production numbers following the November 8 demonetisation suggest the impact of the measure was not as severe as feared that month, but two other sets of data indicate a turn for the worse from December. One indicates that manufacturing contracted for the first time in a year in December while the other points to greater wariness on the part of investors.

Core sector output rose 4.9% in November on the back of a strong expansion in steel production and electricity generation, though the pace is down from 6.6% in October, data released on Monday showed. Part of the buoyancy was due to the base effect of lower 0.6% growth in November 2015.

The eight industries that make up the core sector -coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -have a 38% weightage in the index of industrial production (IIP), suggesting that overall factory output may not have been tripped up by demonetisation in November.

That's backed up by data released on Friday showing robust direct and indirect tax collections.The government said that showed the economy had not suffered because of demonetisation.

To be sure, there's been a sharp dip in growth in cement (6.2%) and steel (16.9%) output from October. “There is some slowdown impact on construction as both steel and cement have begun taking a hit, which is partly because of demonetisation,“ said Kotak Mahindra Bank economist Upasana Bharadwaj. Aditi Nayar, principal economist at ratings firm ICRA, said, “Construction and real estate are cash-intensive both from the purchase side, with a portion of transactions involving cash, and also because daily wages would to a large extent be paid in currency notes. So, the impact of demonetisation is seen in the performance of key inputs like cement and steel.“

Economists expect the full impact of demonetisation to be visible in the December numbers, which will be announced on January 31. “We expect December core sector growth to be at least 2.5 percentage points lower than the 4.9% seen in November as the impact of demonetisation becomes apparent in various sectors,“ Nayar said. However, coal output bounced back into positive territory in November after three months of contraction to post 6.4% growth.

Electricity generation rose 10.2%, and steel production was up 5.6%. Cement posted a modest 0.5% output growth while refinery products and fertilisers were up 2% and 2.4%, respectively.

Overall, April-November core sector growth was up 4.9% against 2.5% last year. According to government data, November 2016 tax collections added up to Rs 91,157 crore, a sharp increase from Rs 36,061 crore in the yearearlier month.

“Of course there would be areas which would be adversely impacted, but what was predicted by the critics has to have a rationale with revenue collection,“ Finance Minister Arun Jaitley had said on Thursday, citing the tax numbers. “Assessment can be unreal but revenue is real.“

SOMBRE PROSPECT

Two separate data releases on Monday indicated that the effects of demonetisation may take a harsher turn from December.The Nikkei India Manufacturing Purchasing Managers' Index fell to 49.6 in December from November's 52.3, the first contraction in the past 12 months.

It's also the biggest monthly decline in the index since November 2008, the start of the glo bal financial crisis. Both the output index and the new orders index sank to their lowest for the year.

Separately, data compiled by the Centre for Monitoring Indian Economy (CMIE) showed new investment proposals worth Rs 1.25 lakh crore in December quarter.

“This is low compared to the average Rs 2.36 trillion (Rs 2.36 lakh crore) worth of new investments seen per quarter in the preceding nine quarters of the (Narendra) Modi government,“ wrote Mahesh Vyas, CMIE managing director.

“Data suggests that demonetisation has hit the pace of announcement of new investment proposals during the quarter ended December 2016.“

Jan 03 2017 : The Economic Times (Mumbai)

Manufacturing PMI Contracts in Dec

India's manufacturing contracted in December as cash crunch due to demonetisation hurt demand as well as output. The Nikkei India Manufacturing Purchasing Managers' Index fell to 49.6 from November's 52.3, marking the first contraction in 12 months.

Pg. 15.

Jan 03 2017 : The Economic Times (Mumbai)

Manufacturing Takes a Hit Amid Cash Crunch, Dec PMI Below 50

New Delhi:

Our Bureau

At 49.6, Nikkei India Manufacturing Purchasing Managers' Index sees sharpest fall since 2008 financial crisis

India's manufacturing contracted in December 2016 as cash crunch due to demonetisation hurt demand as well as output in the first month of ban on old high denomination notes, a private survey showed on Monday.

The Nikkei India Manufacturing Purchasing Managers' Index fell to 49.6 in December from November's 52.3, marking the first contraction in the last 12 months. A reading above 50 indicates economic expansion, while a reading below 50 shows contraction.

“Having held its ground in November following the unexpected withdrawal of `500 and `1,000 bank notes from circulation, India's manufacturing industry slid into contraction at the end of 2016,“ said Pollyanna De Lima, economist at IHS Markit and author of the report.

The decline in the index is the sharpest since November 2008, the beginning of the global financial melt down. The government on November 8 announced cancellation of Rs 500 and Rs 1,000 notes, withdrawing from circulation over 86% of the currency.

Due to the resultant cash crunch, output and new orders fell for first time in one year, the survey showed.

Economists have slashed their growth estimates for India to less than 7% for the current financial year following demonetisation, well below 7.6% recorded last year.

Blaming the withdrawal of high-value rupee notes November 8 onwards for the downturn, survey participants said cash shortage and lower workplace activity resulted in shedding of jobs and falling buying levels in December 2016.

Operating conditions deteriorated in both consumer and intermediate goods categories, the report said.

Businesses also highlighted challenging conditions in external markets with a fall in new business from abroad ending a six-month sequence of growth.

“With the window for exchanging notes having closed at the end of December, January data will be key in showing whether the sector will see a quick rebound,“ De Lima said.

The Reserve Bank of India has said that the impact of demonetisation will be transient.

It had not cut interest rates in the monetary policy review last month but banks have started slashing interest rates after they raised low cost deposits following demonetisation.

Jan 03 2017 : The Economic Times (Mumbai)

CMIE Reports Big Drop in Investments

Investments have fallen sharply after demonetisation, data released by CMIE showed. In the quarter to December, new investment proposals worth  1.25 lakh crore were observed, against . 2.36 lakh crore in the average  the preceding 9 quarters.

Pg. 15.

Jan 03 2017 : The Economic Times (Mumbai)

Slowdown in New Investments: CMIE

New Delhi:

Our Bureau

Investments have fallen sharply post demonetisation, slipping to their lowest under the current Narendra Modi-led NDA government, data released by the Centre for Monitoring Indian Economy (CMIE) showed.

In the quarter to December, new investment proposals worth `1.25 lakh crore were observed, CMIE said, contrasting it with the average `2.36 lakh crore worth of new investments per quarter in the preceding nine quarters of the Modi government.

“Data suggests that demonetisation has hit the pace of announcement of new investment proposals during the quarter ended December,“ Mahesh Vyas, managing director and CEO of CMIE said.

The data showed 227 new investment proposals worth 81,800 crore were an nounced during this quarter before the demonetisation on November 8.Only 177 investment proposals worth 43,700 crore were made between November 9 and December 31.

The contrast is starker when adjusted for the number of days in each period. “The quarter consisted of 39 days before demonetisation and 53 days after. Evidently, the quarter had more days in the post-demonetisation period and yet, investments during this period were lesser than in the shorter pre-demonetisation period,“ Vyas said.

Only 404 new investment proposals were observed during the quarter ended December, the lowest number of new projects announced in a quarter in over a decade, CMIE analysis showed.

“On an average, 7-8 projects are announced per day. The post-demonetisation fall in this average to just three projects per day reflects a new level of anxiety on the investments front,“ Vyas said, adding that the investment climate is expected to remain weak for some more time.

STALLED PROJECTS

Projects involving investments worth 77,700 crore were stalled during the December quarter, 38% higher than the value of projects stalled during the preceding quarter. “Eighty per cent of the investments that were stalled during the December quarter were stalled because of lack of environmental and non-environmental government clearances. Lack of government clearances was the biggest factor responsible for stalling of projects under implementation,“ Vyas wrote.

Unfavourable market condi tions and lack of promoter interest account for only about 11% of the to tal projects stalled during the quar ter of December, CMIE estimated.

“Six of the 16 projects that gave rea sons for stalling their projects in the December quarter mentioned rea sons that imply an adverse business environment. It is important that such projects are revived and saved from remaining stalled for long,“ Vyas said.

TOI- 03 JANUARY 2017, Pg. 01.

Jan 03 2017 : The Times of India (Mumbai)

Only those abroad from Nov 10-Dec 30 can now exchange scrapped notes

TIMES NEWS NETWORK

RBI Turns Away People Trying To Deposit Old Currency

Those who missed depositing scrapped notes with banks before December 30 are finding out that the Reserve Bank of India too has firmly shut its doors on everybody except those who were abroad from November 10 to December 30, 2016.

Several citizens who we returned away at RBI offices in different cities on Monday recalled that in his November 8 speech, Prime Minister Narendra Modi had said that there may be some who were unable to deposit their old Rs 500 or Rs 1,000 notes by December 30, 2016. “They can go to specified offices of the Reserve Bank of India up to March 31, 2017, and deposit the notes after submitting a declaration form,“ the Prime Minister had said on television.

However, when depositors turned up at the central bank's offices in Kolkata, Ahmed abad and other parts of the country to exchange some notes that were left behind, they were told that there was no grace period.

“This policy is in the government's ordinance and notification. The grace period is only for those who were abroad during November and December and did not have an opportunity to deposit,“ said an RBI official.

The Specified Bank Notes (Cessation of Liabilities) Ordinance did have a provision for allowing deposits but it specified that the grace period was only for those who were overseas at the time of demonetisation.

A senior finance ministry official said enough time had been given to residents to deposit old notes.

The ordinance issued by the government clearly mentioned that only those who were outside the country during the 50-day period could deposit their old notes, but after stating the reason for their absence, a finance ministry official told TOI. Residents of the country who have forgotten to de posit the old notes even after expiry of the December 30 deadline will not be eligible to deposit the scrapped notes in RBI offices, said the official, adding that indefinite time could not be given to people who were present in the country during the 50-day period.

This is in sharp contrast to the RBI press release issued on November 8, which stated that “any person who is unable to exchange or deposit the specified banknotes in their bank accounts on or before December 30, 2016 shall be given an opportunity to do so at specified offices of RBI or such other facility until a later date as may be specified by the RBI“. An RBI spokesperson said the RBI has no advice for citizens who were in the country during the period and, for some reason, were unable to deposit the money in their bank. “The government has issued an ordinance. Holding over Rs 5,000 in old currencies is illegal and a punishable offense. If someone has less than that amount, it is not an offense as of now,“ she said.

There are some in banking circles who believe that the wording of the ordinance still leaves government with enough room to reopen a win dow. But A senior finance ministry official said, “There was never a commitment that all Indians could exchange old notes after December 30. The (Dec 28) ordinance is clear that only those who were outside the country during the 50day period can deposit the old notes in RBI offices after stating the reasons for their absence.“

Pg. 04.

Jan 03 2017 : The Times of India (Mumbai)

66,000kg gold imported in Nov, ED probing traders and banks

Vijay V Singh

Mumbai:

Given the high volume of gold imports in November this year, Enforcement Directorate (ED) officials suspect much of it may have been used to make investments against unaccounted cash.

The ED collected nationwide data on gold imports in November 2016 which reveals total gold imports that month stood at 66,000 kg. Of this, 25,000 kg sold in Delhi, 15,000 kg in Ahmedabad, 7,300 kg in Hyderabad, 7,000kg in Chennai, 6,200 kg Bangalore, 2,550 kg in Kolkata and 1,250 kg in Mumbai. Recently in Delhi, the ED arrested two Axis Bank officials for helping some people convert their demonetised currency into gold. Data shows that of the total gold imported in Delhi, 7,300 kg was brought by Axis Bank alone.Gold can be imported into the country mostly through registered banks and private firms.

Earlier, a Kalbadevi-based bullion trader who was raided told the ED that he sold 600 kg gold in November after demonetisation and produced documents to support his claim. But the ED was not convinced, as it did not match the city's total gold imports in November. He was unable to produce gold purchase receipts, which raised suspicion. Also around Rs 200 crore deposited into his account came from various shell companies. The trader claimed he sold them gold in exchange of money but was unable to provide customers' details. The ED also found he had shifted most of the money out of his account and it had only Rs 8 crore.

Another bullion trader, earlier probed in the money laundering case against former Jharkhand chief minister Madhu Koda, allegedly had ge nerated Rs 70 crore through gold sales after demonetisation. The ED attached his account but again found a very nominal amount in it.

Officials had searched premises of both traders and said they were mainly trying to determine how much gold the traders had bought from institutions and will match it with their sales records.

Officials suspect bullion traders had bought less gold from institutions but forged their records to show increased sales.