Framework for the National Investment and Infrastructure Fund released

Framework for the National Investment and Infrastructure Fund released
 The Ministry of Finance released the framework for the National Investment and Infrastructure Fund (NIIF) on August 20, 2015.5 Key features of the framework include:
 Objective: Maximize economic impact through infrastructure development in commercially viable projects, including stalled projects.
 Structure:
The NIIF will be established as one or more Alternative Investment Funds (AIFs) under SEBI regulations.
The initial corpus of NIIF will be Rs 20,000 crore, which may be raised from time to time, as decided by the Ministry of Finance. Government‟s share in the corpus will be 49% in each entity set up as an AIF.
 Functions: Functions of the NIIF will include: (i) fund-raising, which will include attracting investors to participate as partners in NIIF, (ii) investing and periodic monitoring of investments, and (iii) preparing a shelf of infrastructure projects and providing advisory services.
 Governance: The NIIF will be established as a Trust. It will have a governing council which will oversee the activities of the Trust. The council will consist of government representatives and experts in international finance, economists, and infrastructure professionals. The term and period of appointment of the council will be determined by the government.
 Funding sources:
Government‟s fund share of 49% would be provided as required. Central public sector enterprises could also contribute to the Fund which would be over and above the government‟s share. Domestic pension and provident funds and National Small Savings Fund may also provide funds to the NIIF.
NIIF would solicit equity participation from strategic partners.

Spectrum Trading: Another game-changing reform in Telecom Sector

Spectrum Trading: Another game-changing reform in Telecom Sector

Close on heals of the decision on spectrum sharing, the Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today approved a proposal of the Department of Telecommunications on guidelines for spectrum trading arising from the recommendations of the Telecom Regulatory Authority of India (TRAI). Together with the earlier decision, this is expected to transform the spectrum usage in the telecom sector.

The salient features of the norms for spectrum trading shall include:-

1. Spectrum trading will be allowed only between two access service providers only outright transfer of right to use the spectrum from the seller to the buyer shall be permitted.

2. Spectrum trading will not alter the original validity period of spectrum assignment as applicable to the traded block of spectrum.

3. The seller shall clear all his dues prior to entering into any agreement for spectrum trading. Thereafter, any dues recoverable up to the effective date of transfer shall be the liability of the buyer. The Government shall, at its discretion, be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the transfer, which was not known to the parties at the time of the effective date of transfer, from the buyer or seller, jointly or severally.

4. A licensee shall not be allowed to trade in spectrum if it has been established that the licensee had breached the terms and conditions of the licence and the Licensor has ordered for revocation/termination of its licence.

5. Spectrum Trading shall be permitted only on a pan-LSA (Licensed Service Area) basis. In case the spectrum assigned to the seller is restricted to part of the LSA by the Licensor, then, after trading, the rights and obligations of the seller for the remaining part of the LSA with regard to assignment of that spectrum shall also stand transferred to the buyer. Further, relevant provisions of NIA with respect to spectrum assignment in part of the LSA, which were applicable to seller before the spectrum trade, will apply to buyer subsequent to the spectrum trade.

6. All access spectrum bands earmarked for Access Services by the Licensor will be treated as tradable spectrum bands.

7. Only that spectrum in the specified bands is permissible to be traded which has either been assigned through an auction in the year 2010 or afterwards, or on which the Telecom Service Provider (TSP) has already paid the prescribed market value (as decided by the Government from time to time) to the Government. In respect of spectrum in 800 MHz band acquired in the auction held in March 2013, trading of spectrum shall be permitted only if the differential of the latest auction price and the March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid.

8. Buyer will be allowed to use the spectrum acquired in 800 MHz/1800 MHz band through trading to deploy any technology by combining it with their existing spectrum holding in the same band after converting their entire existing spectrum holding into liberalized spectrum in that band as per the prevalent terms and conditions.

9. The terms and conditions attached to the spectrum under the provisions specified in the relevant NIA document or otherwise shall continue to apply after the transfer of spectrum unless specifically mentioned in the guidelines.

10. If any TSP sells only a part of its spectrum holding in a band, both, buyer as well as seller, will be required to pay the remaining instalments of payment (in case seller had acquired the spectrum through auction and opted for deferred payment), prorated for the quantum of spectrum held by each of them subsequent to the spectrum trade.

11. The buyer should be in compliance of the prescribed spectrum caps from time to time. The spectrum acquired through trading shall be counted towards the spectrum cap by adding to the spectrum holding of the buyer.

12. The seller should clear its Spectrum Usage Charges (SUC) and its instalment of payment (in case seller had acquired the spectrum through auction and opted for deferred payment) till the effective date of trade.

13. Where an issue, pertaining to the spectrum proposed to be transferred is pending adjudication before any court of law, the seller shall ensure that its rights and liabilities are transferred to the buyer as per the procedure prescribed under the law and any such transfer of spectrum will be permitted only after the interest of the Licensor has been secured.

14. A Telecom Service Provider will be allowed to sell the spectrum through trading only after two years from the date of its acquisition through auction or spectrum trading or administratively assigned spectrum converted to tradable spectrum. It is clarified that in case of administratively assigned spectrum converted to tradable spectrum after paying the prescribed market value, period of two years will be counted from the effective date of assignment of spectrum.

15. A non-refundable transfer fee of one percent of the transactional amount or one percent of the prescribed market price, whichever is higher shall be imposed on all spectrum trade transactions, to cover the administrative charges incurred by Government in servicing the trade. The transfer fee shall be paid by the buyer (transferee) to the Government. The amount received from trading shall be part of Adjusted Gross Revenue (AGR) for the purpose of levy of License fee and Spectrum Usage Charges (SUC).

16. Frequency swapping/reconfiguration from within the assignments made to the licensees will not be treated as trading of spectrum. The conditions in the NIA shall govern frequency swapping/reconfiguration.

17. Existing rates as prescribed by the Government from time to time for Spectrum Usage Charge (SUC) shall continue to apply on spectrum held by the buyer which inter alia includes the spectrum acquired through trading. Spectrum acquired through spectrum trading will be treated akin to spectrum acquired through auction.

18. Both the licensees trading the spectrum shall jointly give a prior intimation for trading the right to use the spectrum at least 45 days before the proposed effective date of the trading. Both the licensees shall also give an undertaking that they are in compliance with all the terms and conditions of guidelines for spectrum trading and the licence conditions. In the event, it is established that any of the licensee was not in conformance with the terms and conditions of the guidelines for spectrum trading as well as the licence at the time of giving intimation for trading of right to use the spectrum, the Government is entitled to take appropriate action which inter-alia may include annulment of trading agreement.

In December, 2013, the then Government had approved in-principle the spectrum trading but the detailed guidelines were not issued and therefore this policy could not be implemented.

The issue was under active consideration of the present Government as this arrangement leads to greater competition; provides incentives for innovation; better data services, utilising state of art technologies, being available to consumers at cheaper tariffs; better choice to consumer etc. This also facilitates ease of doing business in India by allowing free play in the commercial decisions and leads to optimisation of resources. This will fulfil the present Government’s commitment of ease of doing business apart from improving the spectral efficiency and quality of service which is very essential to fulfil the dream of digital India.

Background:

Historically, in most countries, the Telecom sector was a highly regulated sector where the Government used to decide the procedure for allocation of spectrum. Recognising the benefits of telecommunication facilities, over the past two decades, there has been growing consensus that because of significant increase in the demand for spectrum, the prevalent regulatory paradigm would prove inadequate to deal with the situation on hand. Licensed Service Providers need flexibility to respond quickly to changes in the market demand and technology. In India also, attention has been drawn to new ways of spectrum regulation, with increasing emphasis on evolving more flexible and market oriented approach to increase opportunities for efficient spectrum usage, for better services to consumers.

In India the spectrum assignment is made for a period of 20 years. During this period, some operators are able to acquire subscribers and grow at a faster rate as compared to other operators. This results in the spectrum lying unutilised with some of the players while other operators face spectrum crunch as spectrum is a scare resource. In India, unlike other countries, the availability of the Spectrum is relatively small. Therefore, Spectrum Sharing and Spectrum Trading are necessary to make up the inadequacy. It will not only improve the quality of service and but also help address the issue of call drops.

Spectrum trading allows parties to transfer their spectrum rights and obligations to another party. This allows better spectrum usages as the idle spectrum from the hands of one service provider gets transferred to the other service provider who is facing spectrum crunch. This also improves customer satisfaction and services of the service provider acquiring spectrum

Constitution of 21st Law Commission of India for a period of three years

Constitution of 21st Law Commission of India for a period of three years

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has given its approval on the Constitution of the 21st Law Commission of India, for a period of three years w.e.f. 1st September. 2015 to 31st August, 2018.

The 21st Law Commission will consist of:-

(i) a full-time Chairperson;

(ii) four full-time Members (including a Member-Secretary);

(iii) Secretary, Department of Legal Affairs as ex off do Member;

(iv) Secretary, Legislative Department as ex offcio Member; and

(v) not more than five part-time Members.

The Law Commission shall, on a reference made to it by the Central Government or suo-motu, undertake research in law and review of existing laws in India for making reforms therein and enacting new legislations. It shall also undertake studies and research for bringing reforms in the justice delivery systems for elimination of delay in procedures, speedy disposal of cases, reduction in cost of litigation etc.

The other functions of the Law Commission shall, inter-alia, include:-

a) identification of laws which are no longer relevant and recommending for the repeal of obsolete and unnecessary enactments;

b) suggesting enactment of new legislations as may be necessary to implement the Directive Principles and to attain the objectives set out in the Preamble of the Constitution;

c) considering and conveying to the Government its views on any subject relating to law and judicial administration that may be specifically referred to it by the Government through Ministry of Law and Justice (Department of Legal Affairs);

d) considering the requests for providing research to any foreign countries as may be referred to it by the Government through Ministry of Law & Justice (Department of Legal Affairs);

e) preparing and submitting to the Central Government, from time to time, reports on all issues, matters, studies and research undertaken by it and recommending in such reports for effective measures to be taken by the Union or any State; and

f) performing such other functions as may be assigned to it by the Central Government from time to time.

Before concretizing its recommendations, the Commission will consult the nodal Ministry/Departments and such, other stakeholders as the Commission may deem necessary for the purpose.

Background

The Law Commission of India is a non-statutory body constituted by the Government of lndia from time to time. The Commission was originally constituted in 1955 and is re-constituted every three years. The tenure of the 20th Law Commission was upto 31st August, 2015.

The various Law Commissions have been able to make important contribution towards the progressive development and codification of laws of the country. Law Commissions have so far submitted 262 reports. 

Introduction of Gold Monetization Schemes

Introduction of Gold Monetization Schemes

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for introduction of Gold Monetization Schemes (GMS), as announced in the Union Budget 2015-16.

The objective of introducing the modifications in the schemes is to make the existing schemes more effective and to broaden the ambit of the existing schemes from merely mobilizing gold held by households and institutions in the country to putting this gold into productive use. The long-term objective which is sought through this arrangement is to reduce the country's reliance on the import of gold to meet domestic demand.

GMS would benefit the Indian gems and jewellery sector which is a major contributor to India's exports. In fiscal year 2014-15, gems and jewellery constituted 12 per cent of India's total exports and the value of gold items alone was more than $13 billion (provisional figures).

The mobilized gold will also supplement RBI’s gold reserves and will help in reducing the government's borrowing cost.

The revamped Gold Deposit Scheme (GDS) and the Gold Metal Loan (GML) Scheme involves changes in the scheme guidelines only. The risk of gold price changes will be borne by the Gold Reserve Fund that is being created. The benefit to the Government is in terms of reduction in the cost of borrowing, which will be transferred to the Gold Reserve Fund.

The scheme will help in mobilizing the large amount of gold lying as an idle asset with households, trusts and various institutions in India and will provide a fillip to the gems and jewellery sector. Over the course of time this is also expected to reduce the country's dependence on the import of gold. The new scheme consists of the revamped GDS and a revamped GML Scheme.

Revamped Gold Deposit Scheme

Collection, Purity Verification and Deposit of Gold under the revamped GDS:

Out of the 331 Assaying and Hallmarking Centres spread across various parts of the country, those which will meet criteria as specified by Bureau of Indian Standards (BIS) will be allowed to act as Collection and Purity Testing 1 Centres for purity of gold for the purpose of this scheme. The minimum quantity of gold that a customer can bring is proposed to be set at 30 grains. Gold can be in any form (bullion or jewellery). The number of these centres is expected to increase with time.

Gold Savings Account:

In the revamped scheme, a Gold Savings Account will be opened by customers at any time, with KYC norms, as applicable. This account would be denominated in grams of gold.

Transfer of Gold to Refiners:

Collection and purity testing centres will send the gold to the refiners. The refiners will keep the gold in their ware-houses, unless banks prefer to hold it themselves. For the services provided by the refiners, they will be paid a fee by the banks, as decided by them, mutually. The customer will not be charged.

The banks will enter into a tripartite Legal Agreement with refiners and Collection and Purity Testing Centres that are selected by them to be their partners in the scheme.

Tenure:

The deposits under the revamped scheme can be made for a short-term period of 1-3 years (with a roll out in multiples of one year); a medium-term period of 5-7 years and a long-term period, of 12-15 years (as decided from time to time). Like a fixed deposit, breaking of lock-in period will be allowed in either of the options and there would be a penalty on premature redemption (including part withdrawal).

Interest rate:

The amount of interest rate payable for deposits made for the short-term period would be decided by banks on basis of prevailing international lease rates, other costs, market conditions etc. and will be denominated in grams of gold. For the medium and long-term deposits, the rate of interest (and fees to be paid to the bank for their services) will be decided by the government, in consultation with the RBI from time to time. The interest rate for the medium and long-term deposits will be denominated and payable in rupees, based on the value of gold deposited.

Redemption:

For short-term deposits, the customer will have the option of redemption, for the principal deposit and interest earned, either in cash (in equivalent rupees of the weight of deposited gold at the prices prevailing at the time of redemption) or in gold (of the same weight of gold as deposited), which will have to be exercised at the time of making the deposit. In case the customer will like to change the option, it will be allowed at the bank's discretion. Redemption of fractional quantity (for which a standard gold bar/coin is not available) would be paid in cash. For medium and long-term deposits, redemption will be only in cash, in equivalent rupees of the weight of the deposited gold at the prices prevailing at the time of redemption. The interest earned will however be based on the value of gold at the deposit on the interest rate as decided.

Utilization:

The deposited gold will be utilized in the following ways:

·        Under medium and long-term deposit

•    Auctioning

•    Replenishment of RBIs Gold Reserves

•    Coins

•    Lending to jewelers

·        Under short-term deposit

•    Coins

• Lending to jewelers

·        Tax Exemption: Tax exemptions, same as those available under GDS would be made available to customers, in the revamped GDS, as applicable.

·        Gold Reserve Fund: The difference between the current borrowing cost for the Government and the interest rate paid by the Government under the medium/long term deposit will be credited to the Gold Reserve Fund.

·        Revamped Gold Metal Loan Scheme

·        Gold Metal Loan Account: A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan, on the basis of the terms and conditions set-out by banks, under the guidance of RBI.

·        Delivery of gold to jewelers: When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from refiners. The banks will, in turn, make the requisite entry in the jewelers’ Gold Loan Account. Interest received by banks: The interest rate charged on the GML will be decided by banks, with guidance from the RBI.

Tenor: The tenor of the GML at present is 180 days. Given that the minimum lock-in period for gold deposits will be one year, based on experience gained, this tenor of GML may be re-examined in future and appropriate modifications made, if required.

Review of Foreign Direct Investment (FDI) Policy - to permit FDI, up to 100 percent, under the automatic route, in White Label ATM Operations

Review of Foreign Direct Investment (FDI) Policy - to permit FDI, up to 100 percent, under the automatic route, in White Label ATM Operations

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has given its approval to permit Foreign Direct Investment (FDI), up to 100 percent, under the automatic route, in the activity of White Label ATM (WLA) Operations subject  to the following conditions:

i.        Any non-bank entity intending to set up WLAs should have a minimum net worth of Rs. 100 crore as per the latest financial year's audited balance sheet, which is to be maintained at all times. 

ii.      In case the entity is also engaged in any other 18 Non-Banking Finance Companies (NBFC) activities, then the foreign investment in the company setting up WLA, shall also have to comply with minimum capitalization norms for foreign investments in NBFC activities, as provided in Para 6.2.18.8.2 of the Consolidated FDI Policy Circular 2015.

iii.    FDI in the WLAO will be subject to specific criteria and guidelines issued by RBI vide Circular No. DPSS.CO.PD. No. 2298/02.10.002/2011-2012, as amended from time to time.

This decision, will ease and expedite foreign investment inflows in the activity and thus give a fillip to the Government's effort to promote financial inclusion in the country, including the Pradhan  Mantri Jan  Dhan  Yojana.   It is expected that consequent to ease of investing in India, adequate investments would be available in WLA Operations. This would help in the government's objective of enhancing ATM networks in semi-urban and rural areas (mainly in Tier III to VI areas).

Participation of foreign investors in the sector will contribute to furthering financial inclusion.

Background:

One of the main objectives of the Government is to achieve financial inclusion in the country. In this regard, ATMs have been leveraged for delivery of a wide variety of banking services to customers such as the facility of accessing their accounts for dispensing cash and to carry out other financial and non-financial transactions without the need for actually visiting their bank branch. While, there has been year-on-year growth in the number of ATMs, yet their deployment has been predominantly in Tier I & II centres. To expand the reach of ATMs in Tier III to VI centres, non-banks entities were also allowed to set up ATMs, and such ATMs are known as White Label ATMs.

 Till date foreign investment in White Label ATM Operations (WLAO), was being allowed only through government approval route. This required some processing time and projects were consequently delayed, dissuading investors from investing in such critical areas.

Introduction of Sovereign Gold Bonds Scheme

Introduction of Sovereign Gold Bonds Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for introduction of the Sovereign Gold Bonds Scheme, as announced in the Union Budget 2015-16.

The scheme will help in reducing the demand for physical gold by shifting a part of the estimated 300 tons of physical bars and coins purchased every year for Investment into gold bonds. Since most of the demand for gold in India is met through imports, this scheme will, ultimately help in maintaining the country's Current Account Deficit within sustainable limits.

The issuance of the Sovereign Gold Bonds will be within the government's market borrowing programme for 2015-16 and onwards. The actual amount of issuance will be determined by RBI, in consultation with the Ministry of Finance. The risk of gold price changes will be borne by the Gold Reserve Fund that is being created. The benefit to the Government is in terms of reduction in the cost of borrowing, which will be transferred to the Gold Reserve Fund.

The salient features of the scheme are:-

i. Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold.

ii. Bonds will be issued on behalf of the Government of India by the RBI. Thus, the Bonds will have a sovereign guarantee.

iii. The issuing agency will need to pay distribution costs and a sales commission to the intermediate channels, to be reimbursed by Government.

iv. The bond would be restricted for sale to resident Indian entities. The cap on bonds that may be bought by an entity would be at a suitable level, not more than 500 grams per person per year.

v. The Government will issue bonds with a rate of interest to be decided by the Government. The rate of interest will take into account the domestic and international market conditions and may vary from one tranche to another. This rate of interest will be calculated on the value of the gold at the time of investment. The rate could be a floating or a fixed rate, as decided.

vi. The bonds will be available both in demat and paper form.

vii. The bonds will be issued in denominations of 5,10,50,100 grams of gold or other denominations.

viii. The price of gold may be taken from the reference rate, as decided, and the Rupee equivalent amount may be converted at the RBI Reference rate on issue and redemption. This rate will be used for issuance, redemption and LTV purpose and disbursement of loans.

ix. Banks/NBFCs/Post Offices/ National Saving Certificate (NSC) agents and others, as specified, may collect money / redeem bonds on behalf of the government (for a fee, the amount would be as decided).

x. The tenor of the bond could be for a minimum of 5 to 7 years, so that it would protect investors from medium term volatility in gold prices. Since the bond, will be a part of the sovereign borrowing, these would need to be within the fiscal deficit target for 2015-16 and onwards.

xi. Bonds can be used as collateral for loans. The Loan to Value ratio is to be set equal to ordinary gold loan mandated by the RBI from time to time.

xii. Bonds to be easily sold and traded on exchanges to allow early exits for investors who may so desire.

xiii. KYC norms will be the same as that for gold.

xiv. Capital gains tax treatment will be the same as for physical gold for an 'individual' investor. The Department of Revenue has agreed that amendments to the existing provisions of the Income Tax Act, for providing 'indexation benefits to long term capital gains arising on transfer of bond'; and for 'exemption for capital gains arising on redemption of SGB' will be considered in the next budget (Budget 2016-17).This will ensure that an investor is indifferent in terms of investing in these bonds and in physical gold- as far as tax treatment is concerned.

xv. The amount received from the bonds will be used by Gol in lieu of government borrowing and the notional interest saved on this amount would be credited in an account "Gold Reserve Fund" which will be created. Savings in the costs of borrowing compared with the existing rate on government borrowings, will be deposited in the Gold Reserve Fund to take care of the risk of increase in gold price that will be borne by the government. Further, the Gold Reserve Fund will be continuously monitored for sustainability.

xvi. On maturity, the redemption will be in rupee amount only. The rate of interest on the bonds will be calculated on the value of the gold at the time of investment. The principal amount of investment, which is denominated in grams of gold, will be redeemed at the price of gold at that time. If the price of gold has fallen from the time that the investment was made, or for any other reason, the depositor will be given an option to roll over the bond for three or more years.

xvii. The deposit will not be hedged and all risks associated with gold price and currency will be borne by Gol through the Gold Reserve Fund. The position may be reviewed in case 'Gold Reserve Fund' becomes unsustainable.

xviii. Upside gains and downside risks will be with the investor and the investors will need to be aware of the volatility in gold prices.

xix. In order to ensure wide availability, the bond will be marketed through post offices/banks/NBFCs and by various brokers/agents (including NSC agents) who will be paid a commission. 

World Health Organization and UN children's agency Unicef says Child mortality has fallen by more than 50% since 1990

विश्‍व स्‍वास्‍थ्‍य संगठन और यूनिसेफ की रिपोर्ट में बताया गया है कि 1990 से बाल मृत्‍यु दर में 50% से ज्‍यादा की कमी आई है।

इसमें कहा गया है कि 25 वर्ष पहले पांच साल तक के 12 करोड़ 7 लाख बच्‍चों की मौत हो जाती थी इस वर्ष पहली बार यह संख्‍या घटकर 6 करोड़ हो गई है।

A report by the World Health Organization and UN children's agency Unicef says Child mortality has fallen by more than 50% since 1990

It says that 25 years ago 12.7 million children under five died, but this year the figure is projected to drop below six million for the first time.

But aid agencies warn that huge challenges remain.

They point out that the UN target of reducing child mortality by two-thirds between 1990 and 2015 will not be met.

The rate fell by 53% over this period, the report says.

Stark inequality

"We have to acknowledge tremendous global progress," said Unicef's deputy executive director Geeta Rao Gupta.

"But the far too large number of children still dying from preventable causes before their fifth birthday... should impel us to redouble our efforts to do what we know needs to be done".

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Lowest and highest rates of child deaths

• Luxemburg and Nordic countries including as Iceland, Finland and Norway are among those with the lowest deaths among under fives with less than three per 1,000 births
• Oil-rich Angola has the highest rate of child deaths up to 254 per 1,000 births, followed by Somalia, Chad and Central African Republic

* Figures from World Health Organization Child Mortality Report based on the upper bound figure for deaths of children under five per 1,000 live births in 2015

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The report says that 16,000 children under the age of five still die every day. Many become victims of preventable illnesses such as pneumonia, diarrhoea or malaria.

And almost half the deaths are linked to malnutrition, the document says.

The greatest risk is during the first few days after birth - 45% of all deaths occur before the child is a month old.

The report also highlights the stark inequality of life chances for the world's children.

It says that those born in sub-Saharan Africa have a 1-in-12 chance of dying before their fifth birthday. In wealthy nations the risk is 1-in-147.