#Assocham urges Govt.to mobilise resources worth Rs 70 lakh crore by 2030 for city development

Industry body Assocham has laid out a strategy to mobilize the resources to the extent of Rs.70 Lakh Cr by 2030 as an aggregate capital investment mainly for urban roads, affordable housing and transportation, ASSOCHAM has submitted a 10-point strategy to Urban Development Minister M. Venkaiah Naidu today,
Anil K Agarwal Past President of Assocham, said that urban cities are the growth catalysts and likely to create 70% of net new jobs and contribute over 70% to India’s GDP in another 16 years. Mumbai and Delhi, according to the study undertaken by ASSOCHAM, will be among the five largest cities in the world and, in addition, cities with over one million population will increase from 53 to 68.  The urban population is expected to touch 590 million accommodating approximately 40% of total population.  This will create critical gaps in healthcare, education clean drinking water, sanitation, affordable housing and public transportation.
The chamber has suggested development of basic infrastructure like public transport, flyovers, drainage, sanitation and waste management, incentivization of REITs and Urban Development Funds to invest in public utility services like slum rehabilitation, water supply, waste management, sanitation and deepening of e-governance mechanisms for electronic delivery of public services.
It has further proposed to establish regulatory authority to monitor work of Urban Local Bodies (ULBs) – build capacity in research, planning, HRD - facilitated by States,  strengthening of  fiscal standing of ULBs through improved revenue collection, expense management, budgetary allocations and developing Municipal Bond Markets by providing suitable tax incentives to investors
Rehabilitation  of slums and creation of affordable housing inventory with rental housing facilities for various income groups at city outskirts and improvement in quality of life in Tier 1 and Tier 2 cities by maintaining and developing recreation facilities and public parks needs to be prioritized.
Other issues include development of green-field integrated smart cities along industrial corridors such as DMIC, upgradation of civic amenities, health services, urban transport and inter-city connectivity for Tier II cities, innovation in public transport through intelligent transportation systems incorporating vehicle telematics to reduce commuting time and integration of Disaster Management Systems and a comprehensive Risk Management Framework into Urban Planning, with periodic audits.
Mr. Agarwal said development of suitable framework for people public private partnership (PPPP) in urban infrastructure projects to enhance efficiency in delivery of urban services and effective use Indian Railways' urban land banks to set up Central business districts with facilities for holding conventions and exhibitions, transportation hubs, affordable housing and shopping centers are must.

#Modi impact: FII and FDI investment in India to cross $60 billion in FY14, says #Assocham

Riding on huge expectations from the incoming Modi Government , global investors are gung ho on the Indian economy which is expected to ly witness more than 100 increase in foreign investment inflows- both FDI and FIIs-  to above USD 60 billion in the current financial year than about USD 29  billion in the fiscal 2013-14, an ASSOCHAM study has projected.

In a way, the emerging situation will pose a new challenge to the Reserve Bank of India to deal with the problem of plenty on its impact on the Rupee rate and   inflation from the increased amount of cash into the system.

The new Finance Minister and the RBI, thus, will have to be on the same page in dealing with this scenario which will see strengthening of Rupee and a further improvement on the current account balance. However, the ‘problem of plenty’ will force RBI to sterilise the inflows by injecting cash into the system.

“The first immediate remedy to deal with the issue would be to straight away remove import restrictions and customs duty on imports of gold as these measures were taken in an extra-ordinary situation that is behind us. Besides, the curbs on gold imports have hit the gems and jewellery trade and industry badly. The step could be taken in the first Budget of the Modi Government and will be seen as a people-friendly measure,” the paper said.

“The net foreign investment inflows, led by aggressive foreign institutional investors (FIIs) in the Indian equity and debt markets in 2014-15 , are expected to even overtake the figure of USD 46.17 billion during fiscal 2012-13, one of the best years for overseas investment inflows,” according to the ASSOCHAM paper: Global Investors’ Expectations from New Indian Government.   In the FY, 2012-13, the FII inflows had led the table with USD 27.58 billion while the net foreign direct investment (FDI) had aggregated to USD 19.82 billion.

“The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now,” ASSOCHAM President Mr Rana Kapoor said.

In the current fiscal as well, the FII investment would remain more than the FDI inflows. The expectations are that the FII investment in both debt and equity could exceed USD 35 billion while the FDI money could be above USD 25 billion.

“If the Modi Government is able to take some reforms friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. Typically, since the FDIs are long-term commitments, there would be a lag, the paper noted.

Significantly, India will continue to outpace all other emerging economies in terms of FII inflows which would not be affected much by the tapering of the Quantitative Easing by the US Federal Reserve, excepting some minor jerks.

On the other hand, as the new government goes about removing obstacles in new investment and eases the process of investment, the FDI is likely to pick up again in the key infrastructure areas of ports, airports, roads and energy.

Besides, the new Finance Minister is expected to assure the global investors that the government would not resort to retrospective taxes while the policy issues stuck in courts and tribunals are expected to smoothen out.

“The euphoria must be taken advantage of and things will move on from there,” said Mr Kapoor.

Monitor Inflation data like Sensex on real time basis #ASSOCHAM

ASSOCHAM President Mr Rana Kapoor today said that Prime Minister designate Mr Narendra Modi and his team should hit the ground immediately after assuming office and for starters aim at taming decisively inflation by monitoring the CPI-WPI data the way sensex is monitored so that the debate of growth versus inflation is settled once and for all. Interest rates would then surely drop significantly.

Even as there are doubts over regular Monsoon this year, the country is estimated to be harvesting record foodgrain production of 264 million tonnes in 2014 with most of the essential items like rice, wheat, coarse cereals, oilseeds and sugar reaching new highs. “There is no issue of supply constraint, supply is in plenty. It is only a question of supply management which should be done in a control room type of environment, staying in constant touch with the state governments. Aggressive market interventions should be done for wheat, rice etc so that prices remain in check”, said Mr. Kapoor.  Several line ministries under the PMO should be on constant vigil.

Besides, while the industry and financial markets have high expectations from Mr Modi, “We need not always talk in terms of specific and micro issues as to how many subsidised LPG cylinders, should the government give or how frequently the government should raise the diesel prices… We should leave the micro-management to the government. Instead, we in the industry would rather expect the incoming government to focus on financial discipline (how it achieves should be left to it) and first rate governance efficiency in terms of reaching out to both citizens and industry …..There is no conflict of interests between the rights of common citizens and the industry, which unfortunately has been projected to be so,” ASSOCHAM President said.

He said it was time the industry and economists also realised that good economic reforms must also be people friendly so that they command a solid political support. “No amount of debate on reforms will work as long as they are politically not viable and saleable to the common people. He and she understand the language of mouth and we in the Indian industry would like to assure the NDA Government that our objective is common- make life of average Indian far better”.

It is for this objective that we expect Mr Modi to involve all political parties, state chief ministers, industry, farmers, trade unions and civil society so that the projects of national importance like industrial corridor, railway freight corridor and mining rights , coal linkages are resolved in a time –bound manner. “While Mr Modi has a reputation of being decisive, it would be unrealistic to expect him to step aside the genuine concerns from conflicting interests. The key lies in resolving them and moving ahead”.

Mr Kapoor said while the industry has strong reservation on the new Land Acquisition Act, the immediate solution lies in the Centre and states teaming together and creating land banks which should be then allotted to the industry for manufacturing and infrastructure facilities. “As long as the process is transparent and the stakeholders like farmers are taken on board, there is no reason, things should stay muddled”.

The other immediate task which can be done along with the presentation of the full-fledged Budget next month should be to send a strong message that the tax regime would be clear-cut, non-discretionary to different interpretations and under no circumstances would be retrospective. Besides, the regime should assure long –term continuity so that the investors who want to commit billions of dollars should remain certain and assured upfront. “The policy risks which often lead to risks of judicial reviews and scrutinies have to be cut if not totally eliminated,” Mr Kapoor said.

Making projections of GDP growth of over six per cent in the current fiscal, the ASSOCHAM President, who is also a well-respected banker as Yes Bank CEO and Managing Director, said the macro picture today looks better and is likely to improve further. “The concerns both on internal and external sector seem to be abating”, he said. 

Demand for residential & commercial ACs dip by 10% and 20%: #ASSOCHAM

Though the summer has started knocking door and the mercury level has moved up but air-conditioner manufactures have not yet received the benefit as the demand for residential and commercial ACs (air conditioners) are still down by 10% and 20% respectively in first four months (Jan- April), reveals the ASSOCHAM latest study.

The factors for down-swing have been attributed to rise in prices, slowed demand for consumer durable and high interest rates in air conditioners (AC) market, reveal the ASSOCHAM latest paper on “AC makers feel the heat this season- An Analysis”. In the past, the fastest growth had been witnessed from the new commercial as well as residential complexes. AC industry had been facing fall for the last three seasons and were expecting a pick-up this season.

While releasing the ASSOCHAM paper Mr. D S Rawat, Secretary General ASSOCHAM said, the first four months of this season have failed to show any significant uptick. Mr. Rawat further said, this year, the residential sales are dipped by 10% as compared to the last seasons. Similarly, the commercial sales are also down so far (15-20%) because the several projects are stuck and hence subdued demand, adds the paper.

As per the ASSOCHAM findings, the current domestic market size of AC industry estimated to be around Rs 7,500-8,000 crore. The prices of AC’s have increased due to the star rating regime, the market has seen de-growth of 15% in volume in first four months (January-April 2014) as compared to the same period last year, adds the ASSOCHAM paper.

On an average, the AC prices are also increased by 15-20% from January onwards, adds the ASSOCHAM paper. The consumers seem to be more focusing on energy efficient products that have valued proposition and also have a differentiated features. The input costs have increased by over 10-15% in the last four months.

It is creating a significant pressure on the profitability of the industry. Therefore, the additional burden on the consumer is anywhere compared with last season. The demand has been sluggish primarily due to the fact that majority of the players hiked rates by up to 20%.

Major companies are expecting a fall in sales this year, the leading consumer durable companies have already hiked prices of their products by almost 20 per cent since January. Other home appliance makers have also increased their prices by 20 per cent from this month onwards, reveals the ASSOCHAM paper.

The price hike has also hit sales in rural and semi-urban market, which account for about 35 per cent of total sales. The overall room AC market in India is estimated at 4.5 million units last year and is valued at Rs 7,500 – 8,000 crore. It is growing at over 30 per cent annually. Split ACs, at present, dominates the AC industry with more than 69 per cent of all units sold last year.

"There are several factors favouring the Indian air-conditioner market growth are changing lifestyles, rise in disposable incomes and ease of availability will aid this growth. Besides, most people are now using air-conditioned cars, working in air-conditioned environment and becoming conscious about hygiene and pure air, add the ASSOCHAM paper.

The paper further points out that star rates, energy efficient models with superior features will continue to rate high on consumer demand. Gaining from ongoing technological advances they have been transformed into products that can provide health benefits as well.

ASSOCHAM interim budget reacton

Within the limited bandwidth that an interim budget offers, the Finance Minister judiciously steered clear of announcing any big-tickets sops. The focus of the budget has rightly been on resuscitating growth while adhering to fiscal prudence – announcing a 50 bps correction in fiscal deficit target to 4.1% in FY15. ASSOCHAM lauds the decision to cut excise duty by 2% on capital goods and consumer non-durables, along with specific relief to the auto and chemicals sectors among others. This will bring the much-needed comfort to the manufacturing sector, which has been recording poor growth for over 2 successive years now.

On the revenue side, as expected, the interim budget keeping with the conventions, did not announce any changes in tax laws. The government expects to improve the Tax-to-GDP ratio by 70 bps to 10.9% in FY15, owing to a revival in economic growth. In addition, the Government has pegged proceeds from PSU disinvestment at Rs 36,900 cr and non-PSU disinvestment at Rs 15000 cr. As such, it is critical that the government strives to pace its disinvestment program evenly during the course of the year.

On the expenditure side, the Government has pegged subsidy burden at a realistic Rs 2.55 tn – same level as FY14, at 2.0% of GDP in FY15. On the other hand, Plan expenditure after bearing much of the burden of fiscal curtailment in FY14, has been budgeted to grow by a healthy 16% in FY15 (over revised estimates for FY14). We hope that this budgeted plan expenditure is executed as envisaged; eschewing the significant pruning seen over the last few years. In addition, ASSOCHAM believes that perhaps non-plan expenditure could have shared a greater burden of expenditure cut, in a bid to better the quality of fiscal adjustment.

On balance, the announced interim budget appears pragmatic; allowing enough flexibility to next Government for announcement of the full fledged budget post General Elections. In his speech, the Finance Minister appropriately highlighted 10 goals that must continue to be on Government’s radar in the coming years. Among these, continued fiscal consolidation to reduce fiscal deficit to 3.0% of GDP by 2016, investor friendly regime to ensure comfortable financing of CAD, revival in

manufacturing in general and manufacturing exports in particular, along with social sector spending to enhance skill development and create world-class urban cities, are steps in the right direction critical for reviving the Indian economy.

50 new low-cost airports this year within deadlines set by PM:Secretary, Civil Aviation

The government decided to set up 50 new low-cost airports this year and 50 next year, with an aim to give boost to civil aviation sector and increase air connectivity to Tier-II and Tier-III cities and also able to deliver on timeframe given by Prime Minster, said Mr K.N. Srivastava, Secretary, Ministry of Civil Aviation at an ASSOCHAM conference held in New Delhi today.

While inaugurating the ASSOCHAM 6th international conference on Civil Aviation & Tourism here, Mr. Srivastava said, the state-owned airport operator, would set up the low-cost airports in 50 cities in Andhra Pradesh, Jharkhand, Bihar, Punjab, Uttar Pradesh, Arunachal Pradesh, Assam, Madhya Pradesh, Rajasthan and Maharashtra.

“Civil Aviation ministry has called a meeting of ministers and secretaries of states to finalize policy of regional connectivity. The meeting is scheduled for September 10 in New Delhi”, said Mr Srivastava while addressing the media.

Mr. Srivastava also said, “Navi Mumbai, Pune, Goa and Patna airports are facing capacity constraints. On the other hand, Chennai do not suffer from any capacity constraint today but in the next 6-7 years and can also face capacity constraints and that is the only reason that the Government is considering Sriperumbudur”.

In order to stimulate the air connectivity, airlines are expected to add around 370 aircrafts, worth US$ 27.5 billion, to their fleet by the year 2017, said Mr. Srivastava. Moreover, it is estimated that commercial fleet size shall reach 1000 from 400 today by 2020.

“We are committed for the development of the sector and have introduced several policies and regulations to encourage private participation and investments in the sector”, said Mr. Srivastava.

 “To spur the growth of international air travel, the government has taken substantial steps to liberalize and grant traffic rights to Indian carriers to fly to several new destinations across the globe. There are 71 foreign passenger airlines operating in India at 25 airports with 1655 flights per week. In addition, in the year 2012, there were 703 tourist charted flights that carried 1.30 lakhs passengers”, added Mr. Srivastava.

He also mentioned that the Government is planning to invest over US$ 120 billion in the development of airports infrastructure (construction of new airports, expansion and modernization of existing airports) & development of low cost airports all across the country.


“The government has taken significant measures for providing affordable air-connectivity to remote and interior areas of the country- the North Eastern Region and Tier-II & Tier-III cities of India and all these measures will go a long way in providing new avenues to the domestic part of the tourism sector”, said Mr. Srivastava.

Smt Chandresh Kumari Katoch, Minister for Culture said, “Cultures serves as the foundation on which the builing of Tourism can be built. But without good communication and connectivity we will not be able to reach global audiences. Once we have the inflow of international tourists, there will automatically be an increase in trade and commerce”.

During the conference, Mr. Srivastava along with Smt Chandresh Kumari Katoch, Minister for Culture, Mr T.K.A. Nair, Adviser to Prime Minister of India. (PMO), Mr K Narayana Rao, Chairman, ASSOCHAM Civil Aviation Committee (National Civil Aviation Policy) and Mr. D.S. Rawat, Secretary General, ASSOCHAM released an ASSOCHAM-Yes Bank study titled ‘Civil Aviation- Flying into next growth orbit’.

“The civil aviation industry is an important engine for innovation and technological progress in a world of decreasing trade barriers and global footprint. A comprehensive National Civil Aviation Policy for India to address key issues related to infrastructure, cost of operations and high taxation will bring the much needed strategic vision and direction to the sector. The establishment of the Civil Aviation Authority, as a replacement to the DGCA, will be a positive step towards setting up an autonomous regulator for the industry”, said Mr. Rana Kapoor, President ASSOCHAM.

It is undeniable that the next growth in civil aviation will come from tourism and a collaborative approach is needed to achieve common goals and objectives. This is also highly synergetic with Incredible India’s recent campaigns - ‘Find what you seek…’ and ‘Go beyond…’- which aim to take tourism beyond ‘honeypot’ destinations into the lesser known regions of the country, said Mr. Kapoor.

Ligare was given the award for being the most versatile company in aviation, SafeExpress, the best air cargo logistics, ‘Boeing’ the best global aviation company, Indigo, the best Airline (national) and “British airways”, the best Airline(International) and Frankfin, the best training institute.

ASSOCHAM Study On " ACHIEVING HIGHER GROWTH IN KARNATAKA - INVESTMENT PATRON "

D.S. Rawat , Secretary General ASSOCHAM
Ravindra Sannareddy, Chairman , Southern Regional Development Council
 J. Crasta , Co- Chairman  Southern Regional Development Council
 Asad Wasi , Director Southern Region Office

Although, Karnataka has successfully attracted investment proposals worth about Rs 10 lakh crore in about 1,624 live projects, 43 per cent of these remain nonstarter while some initiative has been taken in 57 per cent of the projects, apex industry body ASSOCHAM said today.

According to the ASSOCHAM study, out of 57 per cent projects under implementation, majority are at the MOU stages and a lot more is needs to be done in facilitating the same.

With a share of over Rs 3.84 lakh crore, manufacturing sector accounted for lion’s share of 39 per cent of total live investments followed by services (24.6 per cent), real estate (15.2 per cent) and electricity (14.1 per cent), according to a strategy paper titled ‘Achieving Higher Growth in Karnataka’ released by The Associated Chamber of Commerce and Industry of India (ASSOCHAM).

The study was jointly released by Mr Ravi Sanareddy, Mr J. Crasta, chairman and co-chairman, ASSOCHAM Southern Regional Council and national secretary general, Mr D.S. Rawat.

“Attracting about Rs 9.75 lakh crore out of a total investments worth over Rs 137.7 lakh crore made across the country, Karnataka accounted for 7.1 per cent of total investments made by both government and private sectors in India as on December 2011,” said the study.

Besides, the private sector contributed about 55 per cent of the total investments attracted by the state and government sources accounted for the remaining 45 per cent, according to the ASSOCHAM paper.

Karnataka accounted for about 7.6 per cent of total investments made by all government sources while 6.7 per cent of total investments were made by all private sources across India.

Growing at a compounded annual growth rate (CAGR) of about 8.41 per cent, the state domestic product (SDP) of Karnataka grew from over Rs 166 lakh crore to over Rs 249 lakh crore between 2004-05 and 2009-10, according to the strategy paper prepared by the ASSOCHAM research bureau.

With an economic growth of 8.4 per cent CAGR between 2004-05 and 2009-10, Karnataka is lagging behind its regional peers of Andhara Pradesh (8.7 per cent), Kerala (8.7 per cent) and Tamil Nadu 9.7 per cent.

Services sector accounted for over 55 per cent of SDP of Karnataka in 2009-10 clocking a CAGR of over 10 per cent during the course of five years. Besides, the agriculture and allied activities contributed about 15 per cent of the SGDP thereby, registering a CAGR of about four per cent while industrial sector accounted for over 28 per cent and expanded by over eight per cent CAGR, said ASSOCHAM.

Manufacturing and construction emerged as the most significant industrial activities. Manufacturing output and construction activities each, recorded over 10 per cent growth rate during the five year period.

With a share of about 15 per cent in SDP, real estate, ownership of dwellings and business services emerged as the largest activity in the services sector followed by trade, hotels and restaurant (14.1 per cent), banking and finance (8.6 per cent). These sectors expanded by 11.3 per cent, 8.76 per cent and 16.04 per cent respectively.

Karnataka has been jostling with irregular and erratic power supply evidently as, normal and peak hour deficits were estimated respectively at 7.6 per cent and 7.3 per cent in 2010-11. Besides, demand of power has shot up significantly during the initial 11 months of 2011-12 as normal and peak hour deficits rose to 10.8 per cent and 18.4 per cent respectively.

ASSOCHAM has appealed for an improved power supply to industries, suggesting  the state government to focus on low-cost energy generation and developing non-conventional sources of energy like solar, bio-gas, wind and nuclear to perk up the power supply scenario.

Though energy sector has attracted huge investments in the past, the major hurdle is completion and commissioning of these projects to realise their actual benefits. The state government must fix a definite timeline to achieve financial closure and operationalisation of existing projects.

Besides, ASSOCHAM has also suggested the state leadership to encourage PPP to leverage from the hydro power potential of the state to meet the energy needs. A comprehensive blueprint must be brought out for power sector development.

The state needs to see higher rate of completion of investment projects to live up to its image of a major investment destination in India, more so as the state had attracted investments worth about Rs 3.5 lakh crore with more than 400 MoUs being signed at an ASSOCHAM event ‘Advantage Karnataka: Global Investors’ Meet’ held in Bangalore in June, 2010.

The government needs to put special focus on micro, small and medium enterprises (MSMEs), thereby capitalizing on existing sectoral capacities, promoting industrial estates in backward regions based on a public-private partnership (PPP) model. Besides, the government should lure investors by offering tax exemptions, lucrative incentives, schemes and subsidies to encourage investments.

Long term financial needs of small and medium enterprises (SMEs) are not met by banks as they are risk averse. While Small Industries Development Bank of India (SIDBI) and state finance corporations are lending to small firms (projects involving upto Rs 10 crore outlay on plant and machinery) and large firms are raising money from the bond market.

ASSOCHAM suggests state level development finance institutes like the erstwhile state industrial development corporations be revived to boost MSME sector.

Karnataka should focus on cluster development to bring down costs, increase efficiency and speed up production in small and medium enterprises, said ASSOCHAM

Bureaucratic approvals, tax concessions, land acquisition issues, exit policies and environmental clearances are certain major determinants of corporate performance in the states. Karnataka needs to focus on these issues to realize its growth potential and enable entrepreneurs to set up industrial units across the state.

The state government must extend fiscal relief measures to knowledge based industries in wake of the recent downturn of the global economy. It is imperative to maintain Karnataka as a major hub of software development, consultancy, pharma, banking and financial services and others.

ASSOCHAM has suggested the government to maintain a futuristic view while addressing issues like economic slowdown, poor demand in realty sector, a prevailing sense of uncertainty vis-à-vis continuation of fiscal incentives in Direct Tax Code (DTC) regime and Goods and Services Tax (GST) regulations.

The government should also lay emphasis on maintaining the quality of workforce to propel the knowledge economy.

Karnataka government should also needs to work upon its public finance management to utilise its sources for productive activities and leveraging the same to attract large pool of private resources.

Considering the huge scope for development of commercial agriculture, agro based industries and agri-business in Karnataka, revival and maintenance of healthy agricultural growth is a pre-requisite for comprehensive development of the state, said ASSOCHAM.

There should be a definite roadmap to improve transport infrastructure, storage facilities, logistics, power, communication and marketing on an urgent basis. Besides, a comprehensive package of venture capital, credit, liberalization of controls, technology, training, marketing and management measures is needed to ensure continuous expansion of agri sector.

High quality education must be imparted right from the grass root levels. Besides, there is an urgent need to up-grade physical and social infrastructure throughout the state to create an investor friendly atmosphere. The state bureaucracy has a pivotal role in this regard, said ASSOCHAM.

The state government must roll out a strategy to use public funds exclusively for growth and development of primary sector including agriculture and development of secondary, tertiary sectors must be entirely left to the private sector, while restricting itself to the role of a regulator and facilitator.

ASSOCHAM has further offered the government to prepare a detailed roadmap for investment promotion and conducting invest-marts in the state.

Sourced From: ASSOCHAM Southern Regional Office