VMR Mining Update: India

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Union Budget 2017: Key highlights

Finance minister Arun Jaitley divided his budget proposal into 10 distinct themes: Farmers; rural population; energizing youth; poor and underprivileged; infrastructure; financial sector; digital economy; public service; prudent fiscal management; and tax administration.

Below are the key highlights of finance minister Arun Jaitley’s Union budget speech:

Opening Remarks:

Our government was elected amidst huge expectations; the underlying theme was good governance: Arun Jaitley
Massive war against black money has been launched
Government now seen as a trusted custodian of public money: FM
We will focus on energizing youth to reap benefits of growth
World economy faces considerable uncertainty: FM
Three major challenges for emerging economies: US Federal Reserve’s stance, uncertainty over commodity prices, especially crude prices and signs of increasing retreat from globalization as protectionist fears build up
India stands out as a bright spot
Govt has continued with steady path of fiscal consolidation: FM
We are seen as an engine of global growth: FM
There are two tectonic policy initiatives: GST implementation and demonetization
Demonetization was the continuation of series of measures taken in last two years and was a bold and decisive measure
Demonetization seeks to create a new normal where GDP would be cleaner and bigger
Drop in economic activity due to remonetization is expected to have only a transient effect
Demonetization has strong potential to generate long-term benefits
Demonetization helps to transfer resources from tax evaders to govt
Firmly believe demonetization and GST will have epoch-making impact
Pace of remonetization will soon reach comfortable levels; effect of demonetization not expected to spill over into next year
Surplus liquidity in banking system will raise access to credit, leading to multiplier effect on economic activity: FM
Overall approach in budget to spend more in rural areas
Budget 2017-18 contains 3 major reforms: advancement of date of presentation, merger of railway budget with general budget, abolition of Plan and non-Plan expenditure

Infrastructure:

Total capex and development expenditure of railways pegged at Rs1.31 trillion
Railways: Passenger safety—Safety fund corpus set up; unmanned level crossings to be eliminated by 2020
Railway lines of 3,500km to be commissioned
To launch dedicated tourism/pilgrimage trains
500 stations to be made differently-abled friendly
Cleanliness in railways: To introduce Coach Mitra facility; By 2019, biotoilets for all coaches
Railways to offer competitive ticket-booking facility; service charge withdrawn for tickets booked on IRCTC
New metro rail policy to be announced
Roads sector: Allocation for national highways at Rs. 64,000 crore
Airports Authority of India Act to be amended to enable monetization of land resources
Total allocation to transport sector at Rs. 2 trillion
Telecom sector: Allocation to Bharat Net programme at Rs. 10,000 crore
Digi-gau initiative to be launched
To make India global hub for electronics manufacture
Export infra: New restructured central scheme to be launched
Total allocation for infrastructure: Rs. 3.96 trillion

Financial Sector:

Foreign Investment Promotion Board (FIPB) to be abolished
Commodities market: panel to study legal framework for spot and derivative markets
Resolution mechanism for financial firms
Cyber-security: Computer emergency response team to be set up
Listing of PSEs will foster public accountability; revised mechanism for time-bound listing
To create integrated public sector oil major
New ETF to be launched
Pradhan Mantri Mudra Yojana: Lending target at Rs2.44 trillion
Stand-up India scheme: over 16,000 new enterprises have been set up

Digital Economy:

India at cusp of massive digital revolution
Govt. to launch two new schemes to promote BHIM app, including cashback scheme for merchants
Aadhaar Pay to be launched for people who don’t have mobile phones
Focus on rural and semi-urban areas
To strengthen financial inclusion fund
Panel on digital payments has recommended structural reforms
To create payment regulatory board at RBI

Public Services:

To use head post-office for passport services
Defence: centralized defence travel system developed
Defence: Centralized pension distribution system to be established
Govt. recruitment: To introduce two-tier exam system
Govt. looks to introduce laws to confiscate assets of economic defaulters
High-level panel chaired by PM to commemorate Mahatma Gandhi’s 150th birth anniversary

Fiscal Management:

Total budget expenditure: Rs. 21 trillion
Rs. 3,000 crore to implement various budget announcements
Defence expenditure excluding pensions: Rs. 2.74 trillion
Consolidated outcome budget for all ministries being created
Fiscal deficit for FY18 pegged at 3.2% of GDP
Revenue deficit for FY18 at 1.9%

Tax Administration:

Direct tax collection not commensurate with income/expenditure pattern of India
We are largely a tax non-compliant society; predominance of cash in society enables tax evasion
After demonetization, data received will increase tax net
Black money: No cash transactions above Rs. 3 lakh
Transparency in political funding: Parties continue to receive anonymous donations; propose system of cleaning up
Political funding: Maximum amount of cash donation that can be received is Rs2,000; political parties can receive donations by cheques or digitally; amendment proposed to RBI Act to issue electoral bonds; every party has to file returns within specified time
Personal income tax: Rate reduced to 5% for income bracket of Rs2.5-5 lakh; All other categories to get uniform benefit of Rs12,500 per person; to levy surcharge on income bracket Rs50 lakh-Rs1 crore
Personal income tax: To have simple one-page form for taxable income up to Rs5 lakh
GST: preparedness of IT system on schedule
Not many changes to excise duties since GST will be implemented soon
FPI category 1 and 2 investors exempted from indirect transfer provisions
Time period of revising tax returns reduced to 12 months
Real estate: to make changes in capital gains tax
Concessional withholding rate will be extended to 30 June 2020, rupee-denominated masala bonds to be included
MAT not to be abolished at present; to allow carry-forward for 15 years
Corporate tax rate: MSMEs’ rate (annual turnover less than Rs50crore) reduced to 25%
LNG: Reduce customs duty to 2.5%
Limit of cash donation for charitable trusts cut to Rs. 2,000.

Agriculture:

Farmer credit fixed at record level of Rs10 trillion; will ensure adequate flow to underserved areas
Soil health cards: Govt to set up mini-labs in Krishi Vigyan Kendras
Long-term irrigation fund in NABARD—corpus at Rs40,000 crore
Model law on contract farming to be circulated
Dairy processing infra fund with corpus of Rs8,000 crore
Dedicated micro-irrigation fund with Rs5,000 crore corpus

Rural Population:

Mission Antyodaya to bring 1 crore households of poverty
MGNREGA: Rs48,000 crore has been allocated; participation of women now at 55%; using space technology in a big way
Prime Minister Gram Sadak Yojana: Rs19,000 crore allocated; along with states, Rs27,000 crore will be spent in FY18
Pradhan Mantri Awas Yojana: Rs23,000 crore allocated
100% village electrification by May 2018
Rural livelihood mission: Rs4,500 crore allocated
Mason training to be provided for 5 lakh people
Panchayat Raj: Human resource reform programme to be launched
Rs. 187,223 crore allocated for rural programmes

Education and Others:

Education: System of measuring annual learning outcomes, emphasis on science
Innovation fund for secondary education
Reforms in UGC: Colleges to be identified based on ranking and given more autonomy
Propose to leverage information technology with launch of SWAYAM platform for virtual learning
National testing agency to be established for all entrance exams, freeing up CBSE, AICTE and other bodies
100 Indian international skill centres to be established with courses in foreign languages
Rs. 4,000 crore allocated to launch skill acquisition and knowledge awareness
Special scheme for creating employment in leather/footwear sector
Tourism: Five special zones to be set up
Women: Mahila Shakti Kendras with Rs500 crore corpus
Stepped up allocation to Rs. 1.84 trillion for various schemes for women and children
Affordable housing to be given infrastructure status
Action plan to eliminate leprosy by 2018, TB by 2025, reduce IMR to 29 in 2019
To create additional PG medical seats per annum
Two new AIIMS in Jharkhand and Gujarat
New rules to be introduced for medical devices
Labour rights: Legislative reforms to simplify and amalgamate existing labour laws
Allocation to SCs increased to Rs. 52,393 crore; STs given Rs. 31,920 crore, minority affairs allocated Rs. 4,195 crore
Senior citizens: Aadhaar-based smart cards with health details to be provided

Virginia Mining Resources would be closely tracking the developments on the subject and other events in the mining & resource sector and bringing you the same.
(Source - Assorted with inputs from PTI)

After registering continuous annual growth for nearly a quarter century, the US-India trade decreased in 2015 from the previous year. The two countries traded in goods and services worth $66.271 billion in 2015, which is $581 million lower than the trade volume in 2014.

The US trade deficit with India also slightly declined in 2015 to $23.21 billion, compared to $23.63 billion in 2014, a reduction of $6.18 million.

According to trade data released last week by the United States Census Bureau, total US exports to India in 2015 was $21.529 billion and total imports from India stood at $44.741 billion.

It was the first time in nearly a quarter century the bilateral trade registered a decline. The last year it happened was in 1991, when the trade volume shrank by nearly half a billion dollar from the previous year.

It is to be noted that the reduction in trade was recorded at a time when both the countries are trying to take overall bilateral trade to $500 billion in next five years, which is around $100 billion at present.

In 2014, export and import figures stood at $21.60 billion and $45.24 billion, respectively. The trade defi-cit figures with India are showing a downward movement for the first time since the global financial crisis of 2008 that shattered the US economy. In 2009, the trade deficit with India shrank to $4.72 billion, from $8.02 billion in 2008.

Last year, US exports to India declined to $21.52 billion from $21.60 billion in 2014, and import declined from $44.74 billion from $45.24 billion in 2014.

Meanwhile, the overall goods and service deficit of the United States increased to $531.5 billion in 2015. According to the Census Bureau data, the overall goods and services deficit was $531.5 billion in 2015, up $23.2 billion from $508.3 billion in 2014. Exports were $2,230.3 billion in 2015, down $112.9 billion from 2014. Imports were $2,761.8 billion in 2015, down $89.7 billion from 2014.

Monthly figures for 2015 reveal that the highest trade deficit with India in 2015 was recorded in March with $2.30 billion, followed by May ($2.248 billion) and July ($2.244 billion).

June showed the lowest deficit with $ 1.44 billion fol-lowed by December ($1.47 billion) and February ($1.64).

According to the Embassy of India in Washington, DC, major US imports from India include textiles precious stones and metals, pharmaceuticals, fuel and oil, machinery and organic chemicals, while major American exports include precious stones and metals, aircraft and spacecraft parts, machinery, optical instruments and equipment, and plastic products.

India is the 11th largest trading partner of the United States, and trade with India comprised 1.7 percent of the country’s total foreign trade that raised five folds in the last decade.

President Mr. Barrack Obama had recently said that the country would look at export controls to ensure that Indian companies have the same access to American technologies.

“For our part, the United States continues to look at our export controls to make sure Indian companies have the same access to American technology as our closest allies,” Mr. Obama said.

Meanwhile, India is keen on the Trans-Pacific Partnership agreement signed by the United States with 11 other nations, that helps the small business owners and farmers in the US sell their products in these countries by eliminating more than 18,000 taxes and other trade barriers.

(Source – The American Bazaar, 07-February-2016)

India will be a “star performer” among emerging market economies and is ex-pected to clock 7.7 percent growth in 2016, outshining China for the second consecutive year, a PwC report says.

According to the global consultancy firm, of the emerging economies, only In-dia is expected to grow faster in 2016 than its long-term average growth rate.

Among the seven emerging economies (China, India, Brazil, Mexico, Russia, In-donesia and Turkey), India will be a “star performer”, while the Brazilian and Russian economies will contract and China will slow down, the report said.

“For the second year in a row, we expect India to grow faster than China, ex-panding by around 7.7 percent in real terms,” it said.

While the G7 economies (the US, the UK, Japan, Germany, France, Italy and Canada) are expected to grow at fastest rate since 2010, led by the first two, the E7 emerging economies will grow slower than their trend rate (but still faster than the G7).

“We expect the US recovery to switch into a higher gear in 2016, while the UK will also enjoy continued consumer-led growth. We should also see at least the beginning of the end of the Eurozone crisis. The once-mighty BRICs, however, will have another tough year in 2016, with the notable exception of India,” PwC UK Chief Economist Mr. John Hawksworth said.

According to PwC, the Chinese GDP growth will ease to 6.5 percent in 2016, as growth in manufacturing and exports will continue to slow gradually. The re-port further noted that India will continue to reap the benefits of recent re-forms.

“The cut in the policy rate by the Reserve Bank of India from 8 percent to 6.75 percent last year will help support consumption and investment growth this year,” PwC said, adding that FDI in the country’s “underdeveloped” manufac-turing sector should also pick up as foreign investment caps have mostly been lifted.

Geopolitics, rather than economics, will be at the top of policymakers’ agendas, the report noted.
The migrant crisis in Europe, the response of the in-ternational community to the crisis in the Middle East and the referendum on the fate of the UK’s membership of the European Union, will be the three major geopolitical issues to dominate the news head-lines.

Meanwhile, commodity prices are expected to re-main lower for longer.
“This will be a good news for most businesses, house-holds and policymakers in commodity importing economies, but a challenge for countries that rely heavily on commodity exports,” the PwC report added.

(Source – The Financial Times, 10-January-2016)

India will continue to be the bright spot of the global economy and is projected to grow at a robust 7.8 per cent in fiscal 2016-17, more than a percentage point higher than China's, according to the World Bank.

In its latest Global Economic Prospect report - which is released every six months -- the World Bank marginally reduced India's growth rate - 0.2 per cent in 2015 and 0.1 per cent in both 2016 and 2017.

However, India continues to be the bright spot of the global economy as Chinese growth is projected to slow further. India, the dominant economy in Asia, is projected to grow by a robust 7.8 per cent this year and 7.9 per cent in the next two years.

The World Bank estimates that China grew at an estimated 6.9 per cent in 2015 (0.3 per cent less than its June projection).

According to the report, China is estimated to grow at 6.7 per cent in 2016 and 6.5 per cent each in 2017 and 2018. The growth rate projection is 0.3 per cent in 2016 and 0.4 per cent in 2017. Russia and Brazil are expected to remain in recession in 2016.

"In contrast to other major developing countries, growth in India remained robust, buoyed by strong investor sentiment and the positive effect on real incomes of the recent fall in oil prices," the World Bank said.

India's currency and stock markets were largely resilient over the past year, even during bouts of volatility in global financial markets, the report said.

Reserve Bank of India, it said, has rebuilt reserves while net FDI flows have remained positive. Ongoing fiscal consolidation in India has reduced the central government's fiscal deficit to close to 4 per cent of GDP (on a 12-month rolling basis), down from a peak of 7.6 per cent in 2009.

In the report, South Asia is projected to be a bright spot in the outlook for emerging and developing economies, with growth speeding up to 7.3 per cent in 2016 from 7 per cent in the year just ended.

The region has smaller trade links with China than other regions, and is a net importer of oil and will benefit from lower global energy prices. Pakistan (on a factor cost basis) is expected to accelerate to 4.5 per cent, the report said.

According to the report, weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to a 2.9 per cent pace, from 2.4 per cent growth in 2015, as advanced economies gain speed.

"More than 40 per cent of the world's poor live in the developing countries where growth slowed in 2015," said World Bank Group President Jim Yong Kim.

"Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies," he said.

Global economic growth was less than expected in 2015, when falling commodity prices, flagging trade and capital flows, and episodes of financial volatility sapped economic activity.

Firmer growth ahead will depend on continued momentum in high income countries, the stabilisation of commodity prices, and China's gradual transition towards a more consumption and services-based growth model.

Developing economies are forecast to expand by 4.8 per cent in 2016, less than expected earlier but up from a post-crisis low of 4.3 per cent in the year just ended.

"There is greater divergence in performance among emerging economies. Compared to six months ago, risks have increased, particularly those associated with the possibility of a disorderly slowdown in a major emerging economy," World Bank Group Vice President and Chief Economist Kaushik Basu said without naming any country.

"A combination of fiscal and central bank policies can be helpful in mitigating these risks and supporting growth," he said.

(Source: NDTV Profit, January 7, 2015)

Hailed as "the bright spot" in a gloomier global economy, India outpaced China as the world's fastest growing economy in 2015 and is expected to clock 7 to 7.5 percent growth in the new year provided the reform momentum continues and the business environment improves.

Finance Minister Mr. Arun Jaitley says that subdued global economy and moderate private sector investment will continue to pose challenges, while his top priorities for the new year include rolling out the long-delayed Goods and Services Tax (GST), rationalizing direct taxes, ensuring further ease of doing business and putting more money for social and physical infrastructure.

While the need for further growth remain continued to be underlined by the experts as well as the policymakers as a key requirement for India to maintain its growth momentum, World Bank's Chief Economist Mr. Kaushik Basu is confident that India can continue to top the charts with the fastest growth among all major economies.

Expecting India to grow at 7 to 7.5 percent in 2016, Mr. Basu said, "India will still be the leader among major economies. Not only in 2015, but we expect India to lead that chart in 2016 as well."

It will still remain off the targeted growth rate of 8 to 10 percent in the foreseeable future unless the reforms momentum shifts to a much faster gear.

Going forward, Mr. Jaitley will have a tough time in sticking to the fiscal road-map (3.5 percent of GDP in 2016-17), while taking care of additional outgo towards 7th Pay Commission award and One Rank One Pension (OROP) for retired defense personnel.

For the current financial year ending in March, the latest estimates peg the Gross Domestic Product (GDP) growth rate at 7 to 7.5 percent, which will be significantly lower than 8.1 to 8.5 percent predicted by the government in February 2015.

Although the year began with a lot of promise, the growth rate could not pick up as much as expected, mainly because of faltering global economy, decline in exports, deficient rains, and an inability of the government to push big-ticket reforms like GST and land acquisition law.

India's economic growth still accelerated to 7.4 percent in the July-September quarter, overtaking China as the world's fastest growing major economy, on pick up in manufacturing, mining and services sectors. Multilateral lending agency International Monetary Fund (IMF) termed India as a 'bright spot' in otherwise slowing global economy.

The 1.25 percent reduction in key interest rate by the Reserve Bank of India (RBI) in 2015, coupled with a host of steps taken by the government to improve the ease of doing business, is likely to give a push to the economy.

In 2015, the economy has been a beneficiary of a huge meltdown in crude oil prices, giving a great elbow room to the government to keep its finances in shape in a year, which otherwise witnessed subdued domestic demand and quite a sluggish external market.

While exports were bruised and kept declining for the entire year, private consumption within the domestic market received a cushion from the falling auto fuel bills.

Mr. Jaitley said that rolling out GST regime is "certainly" doable in 2016 and he was in "continuous touch" with the Congress in a bid to persuade them to cooperate in Rajya Sabha for passing the Constitution amendment bill for the new indirect tax regime.

"I hope that in the next session (of Parliament), the GST will make headway," he said.
Looking back at 2015, Mr. Jaitley said India has been the bright spot with growth prospects of 7 to 7.5 percent despite global slowdown and adversities, and expressed optimism that the growth rate which is "quite good" will improve further in the months to come.

Confederation of Indian Industry (CII) Director General Mr. Chandrajit Banerjee said that 2015 is coming to an end with some commendable achievements for the Indian economy. During the year, the growth momentum picked up, inflation climbed down and the twin deficits remained in control, he said.

"India was able to gain from the decline in international prices of oil and other commodities. This helped the turnaround in the economy," he said.

In the mid-year economic analysis tabled in Parliament, the Finance Ministry said the economy has consolidated the gains achieved in resolving macro economic stability from the beginning of the last fis

cal.

"Given the challenges of real GDP measurement, we estimate that real GDP for the year as a whole will lie in the 7 to 7.5 percent range. Consumer Price Index (CPI) also known as retail inflation is likely to be within the RBI's target of about 6 percent," the Mid-Year Economic Analysis 2015-16 tabled in Parliament said.

(Source – Assorted with the inputs from PTI)

The U.S. is expected to retain its status as the world's largest economy for a few years longer than analysts previously anticipated, thanks in large part to China's recent financial slowdown, according to a recent study from the U.K.- based Centre for Economics and Business Research.

But over the course of the next 16 years, the global economic landscape is expected to shift seismically from where it now stands. Though the U.S.

is still expected to hold a spot among the exclusive G-8 collection featuring some of the world's largest economies by the year 2031, a handful of other current mem-bers are likely to be less fortunate.

In 2031, China will be the largest economy in the world with a gross domestic product valued at $35.26 trillion, according to the CEBR. The U.S. will play second fiddle to the Asian behemoth, with GDP clocking in at $33.66 trillion.

The two world powers are expected to swap places in 2029, which gives the U.S. a little more time on top than the economic consultancy previously projected. Last year, the CEBR predicted the switch would take place in 2025. It attributed "slower Chinese GDP growth and a weaker currency" to the timing adjustment.

By some measures, China is already considered the world's largest economy. According to a report released last year by the International Monetary Fund that compared international economies by adjusting for exchange rates and purchasing power, China's economy had already surpassed America's as the world's largest.

But most analysts don't consider that purchasing power metric to be a primary measuring stick. The U.S. is still generally hailed as the world's largest economy and is likely to retain that title for at least the next decade.

"No doubt, [China's] GDP is worse than that 6 or 7 percent that they report," says Mr. John Canally, a senior vice president and chief economic strategist at LPL Financial. "No doubt they'll lower that target next year, but there's also no doubt that they'll pull out all the stops to make sure that the Chinese economy at least stabilizes next year."

China and the U.S. are hardly the only nations whose economic standing is expected to shift by 2031, according to the CEBR. France and Italy are expected to lose their places among the eight largest economies in the world, to be replaced by South Korea and Brazil. And that could mean major shake-ups in trade groups and economic organizations are right around the corner.

"Some of the weaker European economies like France and Italy are slipping way down the table. They face exclusion from bodies like the G-8 and pos-sibly eventually the G-20 as their economies persis-tently underperform," a statement accompanying the report said. "International bodies are likely to have to change their membership to reflect the changing balance of economic power."

The internationally influential G-8 group of major world economies (which has consisted of the U.S., Germany, Russia, France, Italy, Japan, the U.K. and Canada, though Russia was suspended from inclusion last year over its actions in Crimea) already isn't or-ganized based solely on GDP value. China and India, for instance, are absent from the group and countries like Canada and Russia – neither of which cracks the world's top eight in terms of GDP – are or were previ-ously included.

So it is likely that at least some adjustment will take place in the G-8 and organizations similar to it going forward. Adding weight to that projection, the CEBR said the world's slowest-growing region over the next decade and a half will be Western Europe, with its share of the global economy falling by more than 40 percent by 2031.

The 19-country eurozone's collective GDP has expanded by an average of only 0.2 percent per quarter since 2010. For comparison's sake, the U.S. has maintained an average of more than 2.1 percent over the same window.

"Although France continues militarily to punch above its weight, replacing the U.K. as the U.S.'s leading military partner in the Middle East, economically the picture is dire," the report said. "France is forecast to slip from being the fifth-largest world economy in 2013 to the ninth-largest by 2031, leading it no longer to qualify on economic grounds for member-ship of the G-8 largest economies."

The United Arab Emirates, meanwhile, is expected to crack the Top 30 largest economies for the first time by 2031, while Asian nations like Malaysia and the Philippines also are projected to make their way onto the list. Indonesia is expected to jump from the 17th slot to the 11th.

But perhaps the biggest mover is India, an economy that ranked as only the ninth largest in 2014. The country will move up to No. 3 by 2031, according to the CEBR, and has already eclipsed China in terms of annual growth. India is currently the sole bright spot among the emerging market growth engines known as the BRICS nations (which also include Brazil, Russia, China and South Africa), and the World Bank projects the country's expected 7.5 percent GDP growth in 2015 (which will inflate up to 8 percent by 2017) will outpace most other major world economies.

"The world's most populous nation has made a start in 2015 in catching up with China, with faster economic growth than China for the first time in years," the CEBR report said. "But there is still a long way to go, and India is only likely to overtake China at some point in the second half of the 21st century."

Indeed, it's worth noting that India's GDP is expected to be valued at $10.63 trillion in 2031. That's still smaller than the current sizes of both the Chinese and American economies, and it will be less than a third the size of either in 2031. So although the U.S. is expected to fall to No. 2, it's unlikely any nation other than China and maybe India will catch the country in the foreseeable future.

And considering the populations of both China and And considering the populations of both China and India dwarf that of the U.S., that's not entirely surprising.

"The United States remains the most successful of the world's older economies and the world's techno-logical leader," the report said. "Indeed, as software becomes the world's key industry, the U.S.'s position as a technology leader is reinforced."

(Source – U.S. News, 28-December-2015)

The US Federal Reserve has raised its benchmark short-term interest rates by 0.25 percent after keeping it around zero since the start of the 2008 financial crisis.

The hike, announced after a meeting of the Fed’s top policy-making body on Wednesday was broadly along anticipated lines.

The move will have repercussions across the global financial system. Here is what India should watch out for.

Dollar Flight
Higher interest rates will make the US markets more attractive for foreign investors. Funds will likely interpret the rate hike, albeit a small one, as a signal of the US central bank’s willingness to raise rates further in the coming months. This could prompt funds to move funds quickly from emerging markets such as India to the US in expectation of higher returns in the months to follow.

Currency Blues
Currency values, pretty much like other commodities, are determined by demand and supply. The rupee’s value against the dollar will be determined primarily by whether dollars are coming in or going out of India. In case of a US rate hike, the demand for dollars to move away from India will rise weakening the rupee. Some analysts reckon that the rupee could fall to below 70 to a dollar. The rupee, closed at 66.73 to a dollar on Wednesday not very far from its record low of 68.85 it had touched on August 28, 2013.

Shaky Markets?
A copious outflow of foreign funds from India can adversely affect the equity markets as well. A sustained pull out by foreign institutional investors (FIIs) could temporarily bring down the benchmark indices—the 30-share BSE Sensex and the 50-Share NSE Nifty. Retail investors, however, should avoid panic selling and take only well-researched and informed decisions not guided by short-term volatility.

Costlier Imports
A depreciating rupee will make imported goods costlier. So, expect computers, imported mobile phones, imported apples and chocolates among others to become costlier. It could also negate the gains from ultra-cheap crude oil. Cheap crude oil, currently at an 11-year low, has benefitted India that imports more than 75 percent of its oil needs. A weak rupee triggered by a dollar outflow, however, could offset this as it could increase the landed cost of oil shipments in local currency terms.

Costly Education and Travel
A weaker rupee implies students end up paying more to buy dollars to pay for fees, even though the fee in dollar terms remains unchanged. So, study loans might go up. Ditto for foreign travel. A weaker rupee implies vacationers end up paying more to buy dollars to pay for air tickets, hotel tariffs, shopping and other expenses. Even though the tariffs in dollar terms remain unchanged, a lower rupee could force people to buy more foreign exchange before they head out for the vacation.

No More EMI Cuts?
The Reserve Bank of India (RBI) has cut its key lending rate, the repo rate by 1.25 percentage points since January 2015. A weaker currency, however, could dash hopes for more rate cuts. This is because, the RBI may be hesitant to cut interest rates to main-tain India’s attractiveness as favored destination for foreign funds and bring in dollars to stem the rupee’s fall.

No Cheer for Exports Either
If you are exporter, a weaker rupee would mean your earnings in rupee terms will go up. But slowdown in EU, India’s biggest export markets, has forced orders
to dry out. India’s merchandise exports shrank 24 percent in November, the 12th successive month of contraction, amid a global demand slowdown. India has to contend with rising competition from China, which is struggling to claw out of its worst slowdown in more than a decade hit by shrinking exports. China has devalued its currency the yuan to its lowest in nearly three years.

Costly Debt
A dollar outflow and the resultant slide in the rupee’s value could hurt profitability of many companies. Companies that borrowed dollars from overseas banks will be the worst hit as repaying loans will be-come costlier, hurting bottom-lines.

Higher Inflation
India’s retail inflation has crept up to a 14-month high of 5.41 percent in November driven by costlier food items. While retail inflation measured by the consumer price index (CPI) that captures changes in shop-end prices inched up from 5 percent in October, wholesale prices also mirrored a similar rising trend. A weaker rupee could fan inflation further. Imported raw material such a copper, aluminum and machinery will turn costly and squeeze profit margins. This may prompt companies to raise prices of consumer goods such as cars and televisions.

Focus on Reforms
India is competing with other emerging countries to keep the flow of dollars intact. The focus will shift towards foreign direct investment (FDI) given that FIIs or hot money is expected to flow out quickly. India’s ability to remain at an attractive FDI destination will largely depend on the speed of reforms, removing red-tape and eliminating bureaucratic delays.

(Source – Hindustan Times, 17-December-2015)

African heads of state gathered in New Delhi on 26-29 October for the Third India-Africa Forum Summit met with Indian officials to discuss economic and trade cooperation among other issues. At the end of the 4-day event, they adopted the Delhi Declaration dubbed “Partners in progress: Towards a dynamic and trans-formative

"Cooperation in Trade, Technology and Capacity Building form the basis of our relationship," said India Minister of Commerce, Ms. Nirmala Sitharaman.
Building on the legacy of the India-Africa Forum Summits (IAFS) of New Delhi, India in 2008 and Addis Ababa, Ethiopia in 2011, the declaration is intended to develop mutual benefits of closer economic cooperation while integrating the new global development agenda outlining the international Sustainable Development Goals for the next 15 years.

In a declaration, Liberia’s President Ms. Ellen Johnson Sirleaf expressed that such a gathering was effective as it led to the deepening of the relationship between India and Africa with significant expansion in trade, in private sector investment, and in bilateral pro-grams and financing arrangements.

India is Africa’s fourth-largest trading partner, after China, the U.S. and the European Union. Over the past decade, the two-way trade between India and Africa has witnessed an important increase up to US$70 billion currently.

Trade and development

According to the declaration, African heads of states and Indian Prime Minister Mr. Modi agreed to encourage further “direct trade relations through opening of new markets” and “raise the level of trade relations” in order to contribute to sustainable growth and economic development.

The declaration also welcomed the recent signature of the Tripartite Free Trade Agreement linking together 26 African countries and spanning across three main African regional economic communities: Southern African Development Community (SADC), East African Community (EAC) and Common Market for East and Southern Africa (COMESA).

The declaration called the international community to extend benefits from initiatives aimed at alleviating the burden of debt towards African Heavily In-debted Poor Countries.

"Trade and economic exchanges between India and Africa are a vital component of our all-round relationship with this rising continent,” declared India's Minister for External Affairs Ms. Sushma Swaraj while inaugurating the India-Africa Business Forum held in New Delhi as part of the summit.

Ms. Sitharaman said that India and Africa were aligned on WTO issues and both were in favor of multilateral trading system.

Technological cooperation

The outcome document contains several provisions laying particular emphasis on the need to support infrastructure development and technological cooperation in Africa.
development agenda” which focuses on various aspects of economic and development cooperation between the two fast developing markets.

The collaboration in the use of development of appropriate technologies, especially for agriculture and communications, is stressed throughout the declaration, likely with a nod to India’s tech boom and Africa’s need for technological infrastructure, mention some observers.

"Our partnership is not focused on an exploitative or extraction point of view, but is one that focuses on Africa's needs and India's strengths," said Mr. Vikas Swarup, spokesman for the Indian Ministry of External Affairs.

While Africa is rich in natural resources and skilled human resources, India could be a source of technology to add value to Africa’s abundantly available raw material, noted the Minister of Industry and Commerce of Zimbabwe, Mr. Mike Bimha.

"We would like to see added value to what we produce and to trade not just among ourselves but also with the outside world," Mr. Bimha said.

Indian preferential scheme

“We agree […] to fast track the implementation of the Duty Free Tariff Preference scheme offered by India,” reads the declaration.Last year India revised its duty-free market access scheme for least developed countries (LDCs) in order to increase trade with the African region.

India launched the DFTP scheme for LDCs in 2008. This DFTP scheme is open to all 49 LDCs, including 22 African LDCs.Products of direct interest to Africa, which are covered by the scheme include cotton, cocoa, aluminum ores, coppers ores, cashew nuts, cane sugar, ready-made garments, among others.

Some studies show however that the scheme excludes several products in which African LDCs are known to have a comparative advantage such as coffee, tea, fruit and vegetables, spices and iron and steel. Some observers have therefore stressed that “the scheme’s effectiveness is limited by its very design.” According to the declaration the next India-Africa Forum Summit will be held in 2020.

(Source – International Centre for Trade and Sustain-able Development)

India has moved up one position to become the world’s seventh most valued ‘nation brand’, with an increase of 32 percent in its brand value to USD 2.1 billion.

The US remains on the top with a valuation of USD 19.7 billion, followed by China and Germany at the second and the third positions respectively, as per the annual report on world’s most valuable nation brands compiled by Brand Finance.

The UK is ranked 4th, Japan is at fifth position and France is sixth on the list. While India and France have moved up one position each since last year, all the top-five countries have retained their respective places. However, the surge of 32 percent in India’s ‘nation brand value’ is the highest among all the top-20 countries on the list.

China has retained its second position despite a decline of one percent in its brand value to USD 6.3 billion. Brand Finance said it measures the strength and value of the nation brands of 100 leading countries using a method based on the royalty relief mechanism employed to value the world’s largest companies.

The nation brand valuation is based on five year forecasts of sales of all brands in each nation and follows a complex process. The Gross domestic product (GDP) is used as a proxy for total revenues.
The report also said that India’s ‘Incredible India’ slogan has worked well, while Germany suffered due to the Volkswagen crisis. About the US, the report said it remains a powerful brand with an inviting business climate.

“However its value comes in large part from the country’s sheer economic scale… The US’ world-leading higher education system and the soft power arising from its dominance of the music and entertainment industries are significant contributors too. This soft power will help the US to retain the most valuable nation brand for some time after China’s seemingly imminent rise to become the world’s biggest economy,” it added.

The study further said that China’s recent stock market turbulence and slowing growth will also extend the US’ tenure of the top spot. Among the BRICS nations, India is the only country to have witnessed an increase in its brand value with all others – Brazil, Russia, China and South Africa – seeing a dip in their respective brand valuations.

India is the second most valued among these emerging economies after China, followed by Brazil, Russia and South Africa.

(Source – Assorted with the Inputs from PTI)

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Virginia Mining Resources would be closely tracking the developments on the subject and other events in the mining & resource sector and bringing you the same. (Source - Assorted with inputs from PTI)

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Virginia Mining Resources would be closely tracking the developments on the subject and other events in the mining & resource sector and bringing you the same.
(Source - Assorted with inputs from PTI)