Rating blow to three banks, LIC

By Our Special Correspondent | The Telegraph – Tue 15 May, 2012 12:56 AM IST
Mumbai, May 14: Global rating agency Moody's today downgraded the credit ratings of the Life Insurance Corporation and the country's three largest private banks ' ICICI Bank, HDFC Bank and Axis Bank ' even as it red-flagged its concerns over their high exposure to sovereign debt and limited prospects for cross-border diversification.
The ratings agency downgraded the LIC to Baa3 from Baa2 with a stable outlook, in line with its Baa3 sovereign rating for India, which is the lowest investment grade rating. In December, Moody's had issued a stable outlook for India.
The downgrade of the state-owned life insurer came just two weeks after it put the country's largest portfolio investor under review for a downgrade citing the same concerns.
Moody's said LIC's credit worthiness was highly correlated with that of the Indian government's credit strength. Moreover, the LIC generated almost all its premia income in India.
"There is little, if any, reason to believe that LIC would be insulated from any government debt crisis, if it were to occur," Moody's said in a statement on Monday.
The three private banks saw their standalone credit ratings downgraded to D+ from C- to align their individual ratings with that of the sovereign rating.
The standalone bank financial strength rating (BFSR) of ICICI Bank, HDFC Bank and Axis Bank is revised down to D+ from C-, which now maps to a baseline credit assessment (BCA) of Baa3 from Baa2 on the long-term scale, Moody's Investors Service said in a statement issued in Singapore.
The agency also downgraded the hybrid ratings of Axis Bank and ICICI Bank to Ba3 from Ba2, but said all the revised ratings carried stable outlooks.
"The rating action follows in the context of the ongoing global review affecting all banks whose standalone ratings are higher than the rating of the government where they are domiciled, and they conclude the review that was initiated on April 30," Beatrice Wood, Moody's Investors Service vice-president, said.
Moody's also said the other ratings of these banks were unaffected and had stable outlooks.
Rap on Reliance
The rating agency also downgraded Reliance Industries Ltd as credit negative following the downward revision in the company's assessment of natural gas reserve.

State charges 23% VAT on petrol, country's highest

TNN Mar 6, 2012, 03.23AM IST

AHMEDABAD: The state government has been charging 23% Value added tax (VAT) on petrol, 21% on diesel and 15% on compressed natural gas.

Gujarat Pradesh Congress Committee president Arjun Modhwadia said that the VAT on petrol and diesel charged in Gujarat was the highest in the country. Other states have VAT less than 20 per cent. "Despite the high tax rates, the government has levied additional two per cent tax in lieu of the abolition of the Octroi in the state," he added.

The government collects a cess of 2% on petrol and 3% on diesel. The state government in a written reply to Congress MLA from Vagara and chief whip Iqbal Patel on Monday claimed the total VAT on CNG was 15 per cent including cess. Several questions on VAT on CNG were asked by the Congress MLA in the state assembly on Monday.

In reply to another question of Congress MLA Bhavku Unghad, the House was told that since January 1, 2009, to December 31, 2011, the state earned revenue of Rs 8,251.45 crore as VAT on petrol and diesel while the cess collection amounted to Rs 1,695.16 crore.

The Congress has been accusing the state of charging maximum VAT on fuel. In the past, the Congress leader had also demanded that the state government should reduce the VAT.

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Nitin K. Parekh (HYDERABAD) 
06 Mar, 2012 10:31 PM
I wish Times of India had verified the facts before publishing the news with a sensational heading: The rate of sales tax in Andhra Pradesh are as under: Petrol 33% Aviation Motor Spirit and any other Motor Spirit 33% All kinds of Diesel Oils including C9 22.25% I hope Arjun Modhwadia, the Gujarat PCC President, does remember that it is his Congress Party which heads the government in Andhra Pradesh.-------------------------------------------------------------------------------------------------------------------------------------------------------shailu (Ahmedabad) 
06 Mar, 2012 10:42 AM
Here are the rates of VAT charged on petrol and Diesel by our neighboring states as given in Divya Bhaskara of today. Maharashtra: Petrol: 25% , Diesel: 21% Rajasthan: Petrol: 28%, Diesel: 18% MP: Petrol: 28.75%, Diesel: 23% Let Mr Modhwadia clarify or contest these numbers from where they are published.

1051 PPP State projects and 212 Central Projects are running in India now.
Total = 1263

Abolish Central cess of Rs2 per litre of petrol and diesel: Pune NGO

Published: Sunday, May 15, 2011, 12:54 IST 
By DNA Correspondent | Place: Mumbai | Agency: DNA

Even as the state-owned oil companies have hiked prices of petrol from Saturday midnight, the city non-governmental organisations (NGOs) have demanded abolition of cess collected by the Centre on petrol and diesel.

President of Sajag Nagrik Manch (SNM), Vivek Velankar has demanded that the Central government should abolish cess of Rs2 per litre on petrol and diesel as it has become redundant. 
The NGO has sent a letter to prime minister, Manmohan Singh on the issue and has also started an online movement. Citizens can click on http://www.PetitionOnline.com/Sajag821/petition.html and sign a petition for the demand.

Velankar said the Union government is collecting cess of Rs2 per litre on sale of petrol and diesel since 1998-99. The entire collection from the petrol cess is supposed to be shared between the National Highway Authority of India (57.5%), Indian Railways (12.5%) and state road projects (30%).

“The Union government has not published any figures on how much cess has been collected every year so far and what has been the utilisation of the amount collected. One of 
the estimates claimed the total cess collected on petrol and diesel is to the tune of Rs30,000 crore,” Velankar claimed.

He said the NHAI has failed to declare the figures of money they received every year from the Central government and utilisation of 
that money.

According to Velankar, the NHAI does not need any money for road development now as they are awarding all road projects to private agencies on build, operate and transfer (BOT) basis and people are paying toll charges for decades for using the roads so developed. 
“So cess on petrol and diesel and toll on road is double taxation,” he argued.

Education cess: Where is the money going?

March 12, 2008 11:34 IST

The education cess is rapidly outstripping the Budget allocations for primary education with the latter getting smaller and smaller each year with the allocation for this year even less than 2004-05 when there was no cess. 

A comparison with allocations made before the 2 per cent primary education cess was introduced in the Budget of 2004-05 shows how the funds have been falling ever since.

The Budget allocations for primary education last year, according to the revised estimates, was Rs 18,439 crore (Rs 184.39 billion).

Of this, mid-day meal programme and Sarva Siksha Abhiyan account for Rs 11,128 crore (Rs 111.28 billion). The latter amount was fully paid by the primary education cess of Rs 12,998 crore (Rs 129.98 billion).

So, the government's contribution for primary education in 2007-08 was Rs 5,441 crore (Rs 54.41 billion).

In the 2008-09 Budget, the share of cess in the primary education allocation of Rs 19,777 crore (Rs 197.77 billion) is Rs 14,844 crore (Rs 148.44 billion).

If allocations for primary education before the introduction of cess are considered, then the figures are higher.

In 2003-04, the government's revised estimate for primary education was Rs 5,219 crore (Rs 52.19 billion). In the following year when cess was introduced, the government spent just Rs 2,317 crore (Rs 23.17 billlion).

In 2005-06, the amount spent on primary education other than the cess remained low at Rs 4,244 crore (Rs 42.44 billion). In the 2008-09 Budget, the allocation minus the cess is just Rs 4,933 crore (Rs 49.33 billion), much lower than what the government spent five years ago.

"How does it matter? It makes no difference if the government spends more out of cess and less out of other funds also derived from the people as taxes," said S K Ray, finance advisor in the Ministry of Human Resource Development.

Any answers?

Where does the secondary education cess of 1 per cent that has been levied for the last two years go?

The allocations for secondary education in this year's Budget do not reflect the cess anywhere, while the primary education cess of 2 per cent is not reflected in toto.

The total amount of cess collected, according to the government's Budget documents on tax collections during 2007-08, was Rs 2,210 crore (Rs 22.10 billion) and the secondary education cess for 2008-09 is Rs 2,480 crore (Rs 24.80 billion).

The Ministry of Human Resource Development has been allocated Rs 5,139.70 crore (Rs 51.39 billion) for secondary education in 2008-09.

However, ministry officials admit that the Budget allocations do not mention secondary education cess anywhere or specify under what head it is spent either last year or this year.

Finance Advisor S K Ray said, "It may not be shown in the Budget allocations, but it is coming to the ministry and is being spent along with the rest of the money."

The revised Budget allocation for secondary allocation last year was Rs 1,472 crore (Rs 14.72 billion), which the secondary cess collected was more at Rs 2,210 crore (Rs 22.10 billion). This mean that the cess took care of the entire government programme for secondary education, leaving some funds in balance.

There are other discrepancies in the government's collections and expenditure numbers. Revised estimates for last year show allocations of primary education cess of Rs 11,128 crore (Rs 111.28 billion) accruing to education programmes through the Prathmik Shiksha Kosh. But the sum of receipts of all the primary cess collections in various departments reflected in Budget documents show an amount that is far greater -- Rs 12,998 crore (Rs 129.98 billion).

Similarly, this Budget gives a figure of Rs 12,817 crore (Rs 128.17 billion) as money coming from primary education cess. But the total of the collections from all the heads like corporation tax, import duties and excise duties give a figure of Rs 14,844 crore (Rs 148.44 billion) in the Receipts Budget documents. Officials in the ministry have no explanation for this.

Sreelatha Menon in New Delhi

NH land acquisition getting murkier    April 26, 2010               Source: expressbuzz.com

Utter confusion which prevails even among ministers about the NH widening project is likely to cost dearly the development plans of National Highways 17 and 47. Though the PWD had inked a contract with the National Highways Authority of India for developing NH 17 and 47 under the BOT plan, a section of ministers questioned the existence of such an agreement in the cabinet meeting the other day.

Minister C. Divakaran, K.P. Rajendran and N.K. Premachandran who are learnt to have raised the issue in the cabinet meeting alleged that the alignment of new roads will make thousands of poor people homeless. Another major allegation levelled by these Ministers was that the NHAI had diluted acquisition plans for helping some bar hotel owners who own land alon NH-47.

It is reliably learnt that the NHAI authorities are unhappy over the recent controversies about the NH widening work in Kerala. NHAI chairman Brijeswar Singh will arrive here on Tuesday to hold discussions with the Chief Minister and PWD authorities. He may also attend the all-party meeting on land acquisition scheduled on that day.

If a consensus can’t be reached on the acquisition issue, NHAI may drop the project.

“The recent controversy was created by these ministers at the most inappropriate time. We had demanded more compensation for evictees and the NHAI had approved the demand in principle.

A proposal to conduct a socio-economic survey to gauge the difficulties faced by evictees and other locals was also planned,’’ said a top source in the Works department.

The proposal of the department was to demand land price at market rates for evictees and also provide decent rehabilitation plans for them.

“It was the duty of the government to bargain hard and translate these plans into action. Instead, they are challenging the basic agreement which is a common factor for all roads in the country,’’ said the source. In a press note issued here on Saturday, PWD Principal Secretary Tom Jose clarified that there was no substance in the allegation regarding bar hotels.

“Earlier, an allegation was raised that there were efforts to favour some bar-owners by manipulating the alignment plans. This charge was proved baseless in the inquiry. Of the 22 bars which have come up along Kazhakkoottam- Cherthala stretch of NH 47, 16 will be affected by acquisition,’’ he said.

Tom Jose also said that the PWD was committed to complete the NH widening plan with minimum inconvenience to local residents.

NH-47 action council to go ahead with agitation

The Hindu ePaper  Staff Reporter

KOCHI: The collective forum of activists protesting against the move to widen national highway-47 and to develop it on BOT basis decided to launch the second phase of the agitation.

The second phase agitation is organised be to pressurise the government to stick to the all-party decision to have four-lane highways built on 30 metre stretch.

Though former Supreme Court judge and eminent jurist V.R. Krishna Iyer was to inaugurate the public convention held at Town Hall here on Friday, he could not turn up due to ill-health. Instead, his message was read out at the convention.

Freedom of movement

In his message, Mr. Krishna Iyer urged not to create a situation where the freedom of movement of common man is obstructed and common man is made to pay toll to the road mafia.

Inaugurating the convention, Kutty Ahmed Kutty, MLA, said that the all-party meeting held in the State had unanimously decided to develop 30-metre highways in four-lanes without BOT. The present attempt to scuttle that decision by some vested interests, both from the ruling and opposition fronts, was not acceptable, he said.

The move to develop highways on BOT-basis should be seen as an attempt to privatise the national highways and this should be resisted by mass protests, said senior media person B.R.P. Bhaskar in his address.

S. Prakash Menon, chairman of NH-47 Action Forum, presided over the function.

M.K. Premnath, MLA, former MLA Rajan Babu, Hashim Chennampilly, K. Aravindakshan, Mujeeb Rahman, K.P. Raviprakash, V. Venugopal, D. Surendranath, G.S. Padmakumar, E.V. Mohammedali, C.G. Varghese, A. Nazar, T.K. Sudhir Kumar, Geo Jose, Philip M. Thomas, Usman Haji, Shaila K. John, K. Rajikumar, Kuruvila Mathews, Khalid Mundappally, and K.V. Satyan, spoke.

Online edition of India's National Newspaper
Saturday, Jun 12, 2010

wikilikes revealed niraradia's blackmoney n swissbank rs.289990cr,

    Niraradia, smartest lady in Indian politics and God for National Highway.

    recently wikilikes has revealed a sum of money rs 289990cr in UBS bank (swiss),why we can't use a small portion of this fund for our NH construction? National Highway project means a big lobby.

Aug 2011

Delhi MLAs, ministers' salaries doubled due to inflation

Published: Monday, Sep 5, 2011, 19:43 IST   Place: New Delhi | Agency: PTI

Salaries of Delhi MLAs and ministers were Monday hiked by more than double, citing inflation and increased cost of living in the capital.

The Delhi Assembly passed an amendment bill to effect the hike in absence of BJP legislators as they were suspended from the House last week for the rest of the session for creating ruckus.

An MLA who currently gets nearly Rs42,000 per month, including all incentives, will get nearly Rs one lakh while the monthly emolument of a minister will go up to Rs1.30 lakh from the current Rs60,000 a month.

The MLAs who get Rs500 per day when the Assembly is in session will now get a daily allowance of Rs1,000 throughout the year.

The house rent has been increased from current Rs10,000 to Rs20,000 per month for the MLAs while the monthly constituency allowance has been increased to Rs18,000 from Rs8,000.

The bill, which was already approved by Union Home Ministry in July, was presented by Chief Minister Sheila Dikshit.

Several Congress MLAs including Hasan Ahmed, Subhash Chopra and Mukesh Sharma opposed the hike saying it would send a wrong signal to the people who are reeling under high food inflation.

The basic salary of MLAs has been increased from Rs6,000 to Rs12,000 while basic salary of ministers has been hiked to Rs20,000 from Rs10,000 per month. Apart from basic salary, perks and allowances of MLAs and Ministers are almost same.

The legislators will also get Rs12,000 towards phone bill and upto Rs6,000 for water and electricity bills.

The MLAs will also get an annual travel allowance of Rs 50,000 instead of current from Rs35,000.

Medhapadkar Landacqusition Bill 2011
On July 29, the minister put the draft Land Acquisition (Amendment) and Resettlement and Rehabilitation Bill online inviting suggestions and objections
 from the public. While Patkar welcomed the move to combine land acquisition and relief and rehabilitation issues in the same bill, she contended that the
 proposed draft was not comprehensive and failed to addresscertain concerns raised by project affected people (PAP).

While the new bill states that 80% consent of PAPs will be needed for acquisition of land for private purposes, Patkar said the same condition was not
 being extended for government acquisitions. This would mean that proposed projects like Jaitapur nuclear power plant, dams, thermal power plants, airports
 etc will not need people's consent. She further alleged that the definition of public purpose in the draft covered building educational institutions,
 airports andmining, where a large number of private firms are involved.
 -------------------------------------------------------------------------------------------

Court turns down plea on Patkar

Aug 03, 2011 | Age Correspondent | New Delhi    ASIAN AGE
There was relief for Narmada Bachao Andolan (NBA) leader Medha Patkar with a Delhi court on Tuesday declining to entertain a plea by an NGO, which sought
 initiation of an inquiry against the leader for not attending the proceedings in cross-defamation cases between them.

Metropolitan magistrate Munish Markan refused to entertain the plea of National Council for Civil Liberties president V.K. Saxena, who orally submitted to
 the court to take cognisance of the offence of misusing “common man’s money” for individual purposes and initiate an inquiry against the leader.
After hearing the plea of the NGO, Judge Markan said, “In my considered view, no useful purpose will be solved by accepting the plea for initiating an
inquiry. It will only distract the main case (of defamation).”
Mr Saxena and Ms Patkar have been embroiled in several criminal cases of defamation against each other after the former allegedly published advertisements
 against her and the NBA. Mr Saxena sought an inquiry into Ms Patkar’s claim that on one of the previous hearing she was in Indore and had missed a flight
 due to which she could not attend the court proceedings.

Madras High Court strikes down NHAI Land Acquisition Provision

              Shubhojit Ghosh                                                                                     April 27, 2011

T.Chakrapani v. Union of India

Available at http://www.indiankanoon.org/doc/1177053/

Background

The National Highways Laws (Amendment) Act, 1997 (the “Act”) amended the National Highways Act, 1956 and the National Highways Authorities Act, 1958, with the object “to create an environment to promote private investment in national highways, to speed up construction of highways and to remove bottlenecks in their proper management.” Among the various sections inserted by the Act into the National Highways Act, 1956 and the National Highways Authorities Act, 1958, was the insertion of Section 3J to the National Highways Act, 1956, which stated that “Nothing in the Land Acquisition Act, 1894, shall apply to an acquisition under this Act.”

Petitioners Contentions

The Petitioners challenged the Act on the ground that the Parliament has no power to enact a law, diametrically opposite to the Land Acquisition Act, 1894 (the “Land Acquisition Act”) to acquire land.

First Contention: The primary contention of the Petitioners was that while the other sections inserted into the National Highways Act, namely Sections 3A, 3C, 3D, 3E and 3G were similar to the analogous sections of the Land Acquisition Act, the insertion of Section 3J has excluded the application of the Land Acquisition Act, with the sole object to deny solatium and interest payable under the Land Acquisition Act for compulsory acquisition and also to deny the right of appeal against the compensation determined by the competent authority. The challenge was that Section 3J would be hit by Article 14 of the Constitution of India, as it discriminates with regard to payment of compensation, in the case oof ascuisition under two different Acts. In support of this contention, the Petitioners placed reliance on the judgement of the Supreme Court in the case of State of Madhya Pradesh v. G.C. Mandawar, AIR 1954 SC 493, wherein it was held that, “On those provisions, the position is that when a law is impugned under Article 13, what the Court has to decide is whether “that” law contravenes any of the provisions of Part III. If it decides that it does, it has to declare it void, if it decides that it does not, it has to uphold it. It is conceivable that when the same legislature enacts two different laws, but in substance they form one legislation, it might be open to the Court to disregard the form and treat them as one law and strike it down; If in their conjunction they result in discrimination.”

Second Contention: The jurisdiction of the Government under the doctrine of “emenint domain” is based on two Latin maxims. (i) Isulus populi supremaest (The regard for public welfare is the highest law) (ii) Necessitis publica majorest quam private (Public necessity is greater than private necessity). The contention was that in the absence of public purpose, no law can be enacted, to acquire the land of a private person. The contention was based on the ground that public purpose has not been defined in the Act.

Third Contention: The third contention was that the absence of a right to appeal a determination of compensation determined by the competent authority and that the aggrieved party can only approach the Arbitrator appointed by the Central Government was ultra-vires the Constitution of India.

Judgment

Hon’ble Justice Sharma, rejected the Plaintiffs’ contention that in the absence of public purpose, no law can be enacted, to acquire the land of a private person (Second Contention) stating that, as by way of amendment to the National Highways Authority of India Act, 1988, in Section 13, it has been made clear, that any land required by the authority for discharging its function under this Act, shall be deemed to be the land needed for public purpose, and that the land may be acquired by the authorities under the provisions of National Highways Act, 1956 and that it cannot, therefore, be said that there is no public purpose, in acquisition of the land under the Act.

The Plaintiffs’ contention was that the absence of a right to appeal a determination of compensation determined by the competent authority and that the aggrieved party can only approach the Arbitrator appointed by the Central Government was ultra-vires the Constitution of India (Third Contention) was also rejected by Justice Sharma for the reason that it is well settled law, that right of appeal is only a right created under the statute, merely because right of appeal is not provided under a statute, it cannot make a provision to be ultra vires the Constitution of India, specially when the remedy is provided to challenge the determination of the market value.

First Contention: Relying on State of Madhya Pradesh vs. G. C. Mandawar (supra) Hon’ble Justice Sharma stated that, when the proposition that when the same Legislature enacts two different laws, but in substance, they form one legislation, then it is open to the Court to discard the form and treat them as one law, and strike it down if in their conjunction, they result in discrimination, is applied, it leaves no manner of doubt that Section 3-J results in discrimination to the land owners whose land is acquired under this Act with those land owners where land is acquired for public purpose, under the Land Acquisition Act, therefore, Section 3-J on the face of it, is violative of the Constitution, as it does not satisfy the well known test of reasonable classification, permissible for enacting the legislation.

The discrimination is also not based on any intelligible differentia, nor this differential has a rational nexus with the object sought to be achieved, namely, compulsory acquisition of land for a public purpose.

Justice Sharma also rejected the contention of the learned Advocate General that it is open to the State to make laws, to deprive a person of the property by payment of compensation would not include payment of solatium, observing that it is only in cases where in order to achieve the directive principles under the Constitution, that the laws are made for benefit of class of people like Ceiling Act etc., that the courts have upheld the laws, because of their inclusion under Schedule-9 of the Constitution, therefore, it cannot be said that the Act is not open to challenge merely because of Article 31-A of the Constitution of India, when it is not open to same Legislature to frame different laws dealing with same subject.

Decision

It was held that Section 3-J of the National Highways Act does not satisfy the test of reasonable classification permission for the purpose of legislation to acquire land under the Acquisition Act and under the Act, for public purpose, specially when the Act is also framed by the same Legislature, therefore, it is not permissible to discriminate between persons with regard to payment of compensation.

All the writ petitions were allowed, while upholding other provisions of the Act, Section 3-J of the Highways Act was held to be unconstitutional, being hit by Article 14 of the Constitution of India, being in excess of legislative competence

How is IDFC Calculating “Tax Adjusted Yield on Buyback” of 17.85%?

This part is easy to understand. The method used by IDFC to reach the misleading figure of 17.85% is as under.

1. Assume you are investing Rs 20,000 – Principle Amount P = 20,000

2. Since infrastructure bonds investments are exempt from tax the investor will save 30.9% of Rs 20,000. This amount is equal to Rs 6180.

3. IDFC is now incorrectly saying that since the investor invested Rs 20,000 and saved Rs 6180 this is the same as investing Rs 20,000- Rs 6,180 or Rs 13, 820. So principle amount P is not Rs 20,000 as in step 1 but Rs 13,820. This assumption is not only illogical but also misleading and we strongly feel SEBI should look into this matter.

4. Investor will receive Rs 1600 as interest at the end of every year. The duration of investment is assumed to be 5 years. Total number of interest payments will be 5 of Rs 1,600 each at the end of every year. Now IDFC is assuming that each interest can be invested at the rate of 8% per annum compound interest for the remainder time period. This statement is elaborated below

1. First interest of Rs 1,600 invested @ 8% compound interest for 4 years will give Rs 2,177
2. Second interest of Rs 1,600 invested @ 8% compound interest for 3 years will give Rs 2016
3. Third interest of Rs 1,600 invested @ 8% compound interest for 2 years will give Rs 1,866
4. Fourth interest of Rs 1,600 invested @ 8% compound interest for 1 year will give Rs 1,728
5. Fifth interest of Rs 1,600 comes at the end of 5 years at the time when the investor redeems the bond so no interest on this amount

Interest and interest on interest (at rate of 8% per annum) will give the investor Rs 9,387 at the end of 5 years. But there is a major flow with this assumption. No one can predict interest rates 5 years in future like IDFC has done. What if interest rate comes down or goes up?

5. At the end of 5 years the investor gets Rs 20,000 he/she invested. Add to this the wild assumption of interest on interest. Total amount received by the investor at the end of 5 years is Rs  29,387 – as per “fairy tale” assumptions of IDFC.

6. Now IDFC has assumed that the interest amount and interest on interest will not be added to your taxed at 30.9% (Remember we are doing this calculation for investor who is in 30% tax slab). Why? because IDFC assumes that after investing the investor lost his/ her job or business and is below all tax slabs.

7. Now as IDFC has assumed that investor invested Rs 20,000 and got tax exemption of Rs 6,180 on this amount he/ she actually invested Rs 13, 820 only. (See points 2 & 3).

8. Keeping these points 5, 6, and 7 in mind and logic out of mind answer the question -“What is the Internal Rate of Return of this type of cash flow”? To find IRR solve the following equation for x. Where x is the “Tax Adjusted Yield on Buyback”.

-13820 + 1600/(1+x/100)power4 + 1600/(1+x/100)power3 + 1600/(1+x/100)power3 + 1600/(1+x/100)power2 + 1600/(1+x/100)power1 + 1600/(1+x/100) = 0

The answer is 17.85%. IDFC Infrastructure Bond – Jai Ho!

India's RBI to Buy Bonds First Time in 10 Months to Boost Cash                      17 Nov 2011

Bloomberg - ‎14 hours ago‎

Photographer: Brent Lewin/Bloomberg India's central bank will buy government bonds this month for the first time since January to boost cash in the banking system. The Reserve Bank of India will purchase a total of 100 billion rupees ($1.97 billion) of ...

India Central Bank to Buy Bonds

Wall Street Journal - ‎17 hours ago‎

MUMBAI—India's central bank announced its first government bond buyback under its open-market-operations program this year, in a move aimed at easing liquidity in the cash-strapped banking system. ...

Reserve Bank of India to buy bonds worth Rs 10000 crore

Bloomberg UTV - ‎3 hours ago‎

In an attempt to boost liquidity in the cash-strapped banking system, the Reserve Bank of India is looking to buy bonds worth Rs 10, 000 crore. The move comes in after four of the last five debt sales this quarter failed to attract adequate investor ...

RBI to buy Rs 10k crore bonds to ease pressure on rates

Economic Times - ‎13 hours ago‎

At least three bond sales devolved on primary dealers as investors demanded higher yields to buy India government bonds than what the Reserve Bank of India was willing to give. The central bank, which is also the debt manager of the government, ...

Bond yields slide on RBI buyback plan

Economic Times - ‎5 hours ago‎

MUMBAI: Indian federal bond yields dropped 11 basis points early on Thursday following the Reserve Bank of India' plan to conduct a buyback for up to $2 billion to ease a cash crunch in the banking system. After the market had closed on Wednesday, ...

RBI announces bond buyback

Business Standard - ‎14 hours ago‎

The Reserve Bank of India (RBI) on Wednesday said it would buy Rs 10000 crore of government bonds next week. It said the step was being taken because of the current liquidity conditions. However, RBI is yet to announce the securities to be bought back. ...

Views | RBI steps in to ease liquidity crunch

Livemint - ‎1 hour ago‎

The Reserve Bank of India has finally announced its first programme in this fiscal year to buy government bonds in what are known as open market operations. The central bank will thus release liquidity into the money market, a move that many traders ...

Inflation in India - The failure to control black money

Newstrack India - ‎2 hours ago‎

We need to note that it is only common sense to reinvest this money in a market like India, via assets like stocks, bonds, and even real estate rather than let it accrue interest at a paltry one to two percent a year in Switzerland. ...

Bond yields ease on liquidity hopes

Economic Times - ‎Nov 15, 2011‎

MUMBAI: Hopes of the Indian central bank taking measures to ease tight liquidity, following comments from a deputy central banker sent federal bond yields down on Tuesday, with global risk aversion also aiding sentiment. The new 10-year bond yield ...

Govt. totally failed to control our cash flow(black money) our politicians are not aware this.Pls make good report to all medias. Now Indian Bond have Rating like BBB negative in international market (like Greece).

Giri Prasad,     Highway Action Forum

New Delhi, Jan. 27 2011 Business Line
IMF voices concern over weaker fiscal consolidation by emerging economies

The International Monetary Fund (IMF) on Thursday said fiscal balances in several key economies among the G20, most notably Brazil, China and India turned
out “weaker than projected” in November last, even as fiscal consolidation in emerging economies is likely to continue this year.
In the case of India, the general government cyclically adjusted balance which was 10.9 per cent of GDP in 2009 was estimated at 10.3 per cent in 2010
 and is projected to be 9.7 per cent in 2011 and to 8.9 per cent in 2012. India's gross general government debt which topped 77.8 per cent of GDP in 2009
was estimated at 75.7 per cent in 2010 and is projected at 75.2 per cent in 2011 and to 74.8 per cent by 2012.

India ranks low 134 in human development index             by IANS

Topics: Economy and Policy

Indo Asian News Service, On Wednesday 2 November 2011, 3:59 PM

New Delhi, Nov 2 (IANS) India ranks a low 134 among 187 countries in terms of the human development index (HDI), which assesses long-term progress in health, education and income indicators, said a UN report released Wednesday.

Although placed in the 'medium' category, India's standing is way behind scores of economically less developed countries, including war-torn Iraq as well as the Philippines.

India's ranking in 2010 was 119 out of 169 countries.

Sri Lanka has been ranked 97, China 101 and the Maldives 109. Bhutan, otherwise respected for its qulity of life, has been placed at 141, behind India.

Pakistan and Bangladesh are ranked 145 and 146 in the list of countries that is headed by Norway and in which the Democratic Republic of Congo is at the very bottom.

The other two countries in South Asia, Nepal and Afghanistan, occupy ranks 157 and 172.

According to the 'UN Human Development Report 2011: Sustainability and Inequality', India's HDI is 0.5 compared to 0.3 in 2010.

Rural Development Minister Jairam Ramesh said year-on-year comparisons were not practical. 'Any change in development indicators should be measured over a longer period of time,' he said.

UN official Seeta Prabhu said: 'The HDI for 2011 would be the same if the 2010 methodology was adopted and the sample size was the same. As many as 18 new countries were included in the survey this time.'

She said India's gender inequality index was 0.6, the highest in South Asia.

But stating that India had made 'significant progress' on HDI, UNDP Country Director Caitlin Wiesen said: 'This trajectory may be threatened by environmental risks and inequality.'

The UN report said that India had the world's largest number of multidimensionally poor, more than half of the population, at 612 million.

However, the report appreciated India's progress in improving forest cover and protecting biodiversity.

'India is one of the seven developing countries like Bhutan, China, Costa Rica, Chile, El Salvador and Vietnam which have recently transitioned from deforesting to reforesting,' said the report.

India increased its reforestation rate from 0.2 percent a year between 1990 and 2000 to 0.5 percent a year between 2000 and 2010.

'We need to link environmental issues with the livelihoods of deprived sections,' said Ramesh while releasing the report. 

India's Debt Situation

 India's debt situation focuses on the total amount of external debts taken by the nation in a particular year, its repayments as well as the outstanding debt amounts, if any.

India’s External Debt Situation: 2009

India’s external debt, as of March 2009, was US$229.9 billion (22.0 % of GDP), recording an increase of US$5.3 billion or 2.4 % over 2008 mainly due to the increase in trade credits. According to an international comparison of external debt of the twenty most indebted countries, India was the fifth most indebted country in 2007. By way of composition of external debt, the share of commercial borrowings was the highest at 27.3% in March 2009, followed by short-term debt (21.5%), NRI deposits (18.1%t) and multilateral debt (17.%).

The debt service ratio has declined steadily over the years, standing at 4.6% in March 2009. By not taking into account the effects of the appreciation of the US dollar against other major currencies and the Indian rupee, the stock of external debt would have increased by US$18.7 billion, as compared to the stock in March 2008. The share of short-term debt in the total debt increased to 21.5% in March 2009, from 20.9% in March 2008, primarily on account of a rise in short-term trade credits.

Based on residual maturity, the short-term debt accounted for 40.6% of the total external debt on March 2009. The ratio of short-term debt to foreign exchange reserves stood at 19.6% in March 2009, higher than the 15.2% in March 2008. The US dollar continued as the dominant currency, accounting for 57.1% of the total external debt stock in March 2009. India’s foreign exchange reserves provided a cover of 109.6% to the external debt stock at the end of March 2009, as compared to 137.9% at the end of March 2008. 

Indian Debt Rating and 2010 Outlook

 India’s credit rating outlook was raised to ‘stable’ from ‘negative’ by Standard & Poor’s based on optimism that faster growth in Asia’s third-largest economy will help the government cut its budget deficit. The Indian Finance Minister has promised to cut the deficit to 5.5% of the GDP in 2010, from 6.9% of the GDP in 2009. The government also plans to cut its debt to 68% of the GDP by 2015, from its current levels of 80%

Allocation of fuel cess — GoM to lay a new roadmap

P. Manoj     Monday, Oct 04, 2004            Business Line

Following differences, the Government has set up a Group of Ministers to work out a formula for the allocation of additional fuel cess. This would pave the way for an amendment to the existing Central Road Fund Act, 2000.

THE Government has set up a Group of Ministers (GoM) to work out a formula for the allocation of the additional fuel cess of 0.50 paise per litre each on petrol and diesel levied and collected since April 1, 2003, for road development in the country following differences among the Department of Road Transport and Highways, the Railway Ministry and the States on the pattern of distributing the funds.

The GoM's recommendation would pave the way for an amendment to the existing Central Road Fund Act, 2000 which sets out the allocation pattern for the Re 1 per litre cess each on petrol and diesel collected since June 2, 1998 and March 1, 1999 respectively for funding the highway development projects.

As per the formula set out by the CRF Act, 50 per cent of the Re 1 cess collected on diesel would be allocated to the Ministry of Rural Development for the construction of rural roads. The balance and the entire Re 1 cess on petrol would be distributed in the ratio of 57.5 per cent for the development and maintenance of National Highways, 12.5 per cent to the Railway Ministry for the construction of rail over- under-bridges, and 30 per cent to the States for the development of State roads.

With the Centre taking up more National Highway development projects necessitating incremental funds through cess receipts, the Department of Road Transport and Highways has made out a case for adopting a different formula for distributing the additional cess of 0.50 paise per litre each on petrol and diesel other than the one spelt out by the CRF Act for allocating the Re 1 per litre cess each on petrol and diesel.

Accordingly, the Department of Road Transport and Highways has suggested that 50 per cent of the additional cess of 0.50 paise per litre on diesel (that is, 0.25 paise per litre) be allocated exclusively for rural roads. The balance 50 per cent of the diesel cess (0.25 paise per litre) and the entire additional cess of 0.50 paise per litre on petrol is to be given to the Department of Road Transport and Highways to be utilised solely for the development of the National Highways.

A proposal in this regard was recently taken to the Cabinet Committee on Economic Affairs (CCEA). "But with the Railway Ministry and the States opposing the new formula proposed by the Department of Road Transport and Highways, the CCEA has referred the matter to a GoM," a Highways Department official said.

Though the additional cess of 0.50 paise per litre each on petrol and diesel have been levied and collected since April 1, 2003, not a single paise has been released so far from this corpus (estimated to mop up Rs 2,600 crore annually) in the absence of a formula on allocating the funds to the beneficiaries.

In fact, the Department of Road Transport and Highways has identified the non-receipt of additional cess funds as one of the main constraints, among a slew of other factors, in the progress of the National Highways Development Project (NHDP) since this has already been factored into the financing of the ambitious highway development programme.

It has urged the Finance Ministry to immediately release funds from the additional cess receipts, as per the existing formula under the CRF Act for 2003-04 and, subsequently, according to the amended formula worked out by the GoM.

The National Highway Authority of India (NHAI), which is entrusted with the task of implementing the NHDP, has borrowed funds from the market by securitising the cess receipts. This means that the lenders will have the first charge on the cess receipts flowing to the NHAI. Apart from lack of funds to take up more projects, the non-transfer of additional cess funds would hit the repayment plans of the NHAI, the official said.

India   -       

Central Road Fund. The CRF was established in 1930 and revitalized under the Central Road Fund Act, 2000. Together with the increasing number of PPPs, the CRF has been the most significant development in the road sector in India in recent years. It has brought considerable new resources to finance the development and maintenance of the National Highway and State Highway network and the construction of new Rural Roads. These additional resources are generated through an explicit cess on fuel (petrol and high speed diesel), and their allocation to national highways, state highways, and rural roads has been clearly defined in the Act. The Fund currently collects around US$ 1.23 billion annually.

The CRF is at present an accounting mechanism, under the Ministry of Finance, without any capacity of its own to negotiate work programs with road agencies, scrutinize disbursement applications, or commission financial or technical audits of expenditure.

 Kerala

State Road Funds. There has also been experimentation with dedicated road funds at the state level. Assam, Kerela, Maharashtra, and Uttar Pradesh have established road funds while many other states governments are moving towards setting up such funds.

These state road funds are financed by multiple resources: budgetary support from central government and state government, direct road user charges from cess on fuel, motor vehicle taxes, fees and tolls, indirect road user charge/tax such as hotel tax and levy on agriculture products, and other resource such as fines, loans. Similar to CRF, these road funds are used both for development and maintenance of road network, except the one in Uttar Pradesh, which is dedicated for road maintenance.

In addition, some states also established road funds for the development and maintenance of district and rural roads. Madhya Pradesh has the Farmer’s Road Fund, and Karnataka established the Chief Minister’s Grameen Raste Abhivrudhi Nidhi (CMGRAN).

The Hindu         Friday, Jan 23, 2009

        Prepare d by task force headed by Arun Herur   

It includes north-south transport corridor, developing missing links of hill highway

Rs.54,000-crore outlay in the next 12 years

THIRUVANANTHAPURAM: The draft Kerala road development policy, released by Public Works Minister Mons Joseph here on Thursday, proposes introduction of a cess on fuel, levy on utilities and services on road sides and a deterrent fee on luxury vehicles to fund higher levels of road development over the next 12 years.

The draft, prepared by a task force headed by consulting transport planner Arun Herur, emphasises improvement of quality of existing roads, development of a north-south transport corridor and development of missing links of the hill highway and coastal roads. The draft policy estimates an outlay of nearly Rs. 54,000 crore for road development over the next 12 years, which works out to an annual requirement of about Rs. 3,000 crore during the first two years and Rs. 4,700 crore during the next 10 years. Of this, Rs. 550 crore is to be raised as additional revenue into the Road Development Fund through user fee and other levies. The draft proposes that the government amend the Road Development Fund Act to enable the fund to function and operate as an autonomous financial institution.

Revenue potential

There is a potential to mobilise over Rs.100 crore to the fund a year if tolls are introduced on the improved network of State highways.

Currently, 10 per cent of the motor vehicle registration fee amounting to Rs.30 crore goes into the fund every year. This should be increased to 20 per cent. The provisions of the Highway Protection Act could be used to mobilise additional revenues. As development of highways results in enhancement of land values, 10 per cent of revenue earned from land registrations and transfers besides fee for granting changes in land use should be allocated to the fund.

States diverting fuel cess funds to meet revenue expenses

C. Shivkumar        Business Line Thursday, Dec 02, 2004

"Diversion of such dedicated funds to funding revenue expenditure had led to arrears in maintenance in most of the State and national highways."

Bangalore , Dec. 1

STATES have quietly begun transferring funds received from their share in the diesel and fuel cess for meeting their respective revenue expenditures.

States receive close to about Rs 3,000 crore each year as part of their share in the fuel cess. This share of the States is determined under the Central Road Fund (CRF) Act amended in December 2000. These funds are essentially to be used for meeting the maintenance expenditure of the State highways.

Part of the funds released from the CRF was also to be used for meeting the maintenance expenditure of highways that were outside the purview of the National Highways Authority of India. Under Government guidelines, the State public works departments were responsible for maintenance of some of the national highway using Central funds.

Sources said the diversion was possible because few States had earmarked the CRF resources. Under the amended CRF, funds raised through the twin cesses on diesel and petrol amounting to about Rs 1.50 per litre was to be utilised only for highway development in the country. However, none of the States currently have any such statutes in force. Instead, the sources said, funds received from the CRF as part of the States' share was credited to the consolidated fund of the respective States and utilised for meeting the revenue expenditure. States fear that that earmarking the resources would lead to an increase in fiscal deficits. The sources said that most States, strapped for cash were utilising these funds for payment of salaries, debt service obligation and subsidies.

None of the States were willing to either rationalise these components of expenditure or opt for increasing their revenue mobilisation efforts. In fact, it was the absence of both these kinds of efforts that was responsible for the fiscal mess at the State level, the sources said.

Diversion of such dedicated funds to funding revenue expenditure had led to arrears in maintenance in most of the State and national highways, the sources said. Maintenance arrears had accordingly led to severe deterioration of the State highway network and a consequent escalation in costs or rehabilitation. It was this deterioration that had recently provoked protests from the information technology industry in Karnataka.

The deterioration had also triggered concerns in the Planning Commission, the sources said, which favoured earmarking of the CRF share to States only for meeting the arrears in maintenance and for development of new highway projects.

But some of the States like Harayana favoured softer options. States were in fact pushing for conversion of State highways into national highways and at the same time also wanted a greater share in the CRF, linked to the actual collection from the respective States for meeting the maintenance arrears, the sources added.