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Union Cabinet approves the exclusion of States from National Small Savings Fund

The Union Cabinet on 18 January 2017 excluded States and Union Territories except Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh from National Small Savings Fund (NSSF) investments with effect from 1 April 2016.
●    On the occasion, the cabinet also approved one-time loan of Rs 45000 crore from NSSF to Food Corporation of India (FCI) to meet its food subsidy requirements. 
●    Arunachal Pradesh will be given loans to the tune of 100 per cent of NSSF collections within its territory, while Delhi, Kerala and Madhya Pradesh will be provided with 50 percent of collections.
●    Servicing of interest and principal of debt will be extended to Food Corporation of India through the budget line of Department of Food and Public Distribution. 
●    The repayment obligation of the FCI in respect of NSSF Loans will be treated as the first charge on the food subsidy released to the Food Corporation of India. 
●    Moreover, FCI will be required to reduce the amount of its current Cash Credit Limit with the banking consortium to the extent of the NSSF loan amount.
●    An agreement will also be signed between FCI, Department of Food and NSSF on the modalities for repayment of interest rate and the restructuring of FCI debt will be made possible within 2-5 years.
 

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Motherson Sumi makes a Rs 4,100 crore bid for Finland’s PKC Group

Homegrown component major Motherson Sumi (MSSL) has made a 571 million (over Rs 4,150 crore) acquisition offer for Finland's PKC Group Plc (PKC), a maker of wiring harness. 
●    If closed, the deal will be one of the biggest cross-border acquisition in the auto components space.
●    MSSL's board on Thursday approved a proposal to launch a voluntary, recommended public tender offer for the acquisition of the outstanding share capital and voting rights of PKC Group Plc, Finland.
●    The shares of PKC are currently listed on the Nasdaq Helsinki stock exchange.
●    MSSL and PKC entered into a combination agreement for the proposed transaction, the statement further said.
●    The acquisition, which will be made through a 100% subsidiary of MSSL to be set up for the purpose, is expected to be completed by the end of March this year.
 

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BSE to launch country’s first IPO by a stock exchange

India's second largest domestic stock exchange BSE on Friday said it would hit the market with its initial public offering (IPO) on January 23. 
●    The IPO is expected to be sold in the price band of Rs 800-850 apiece, with existing investors offloading shares worth nearly Rs 1,350 crore through the offer. 
●    BSE has 302 shareholders, including Singapore Exchange and a Citi group unit, who will sell up to 15.4 million shares with a face value of Rs 2 each, the red herring prospectus filed with the market regulator. 
●    The issue will close on January 25. 
●    The Singapore Stock Exchange (4.67 per cent), George Soros-promoted Quantum fund (3.68 lakh shares) and Atticus Mauritius (3.68 per cent) would be among the shareholders who would sell their entire holdings in the exchange. 
●    Deutsche Borse, which holds 4.7 per cent stake in the stock exchange, is not among the selling shareholders. 
●    The Singapore Exchange and Deutsche Borse had acquired 5 per cent stake each in the exchange for a consideration of Rs 200.78 crore each in 2007. 
 

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SpiceJet strikes Rs 1.5 lakh crore deal with Boeing for 205 planes

Placing its largest ever aircraft order, SpiceJet on Friday announced it will buy up to 205 Boeing planes worth $22 billion or Rs 1.5 lakh crore at list price. 
●    The low-cost carrier (LCC) increased its existing order of 55 single aisle B 737-8 by 100 to 155 planes. 
●    An additional 50 planes — mix of wide body and B 737s — have been placed as optional order, taking the total to 205.
●    The 155 planes on firm order will be delivered between 2018 and 2024. The list price of firm order of 100 additional planes placed now is $11billion
●    Asked how the airline will fund this aircraft acquisition, Singh said: "There are several options like sale-and-lease-back and Exim Bank open to us. We will opt for the most economic funding route. There will be no dilution of equity and no debt will be raised in coming years for this order."
●    SpiceJet currently has 32 B-737s and 17 regional jets in its fleet. Singh re-acquired the LCC two years back when it was on the brink of closure.
 

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Union Cabinet approves listing of General Insurance Companies at the stock exchanges

The Cabinet Committee on Economic Affairs (CCEA) on 18 January 2017 gave its in-principle approval for listing five government-owned General Insurance Companies in stock exchanges. 
●    The approval was given at a cabinet meet chaired by Prime Minister Narendra Modi.
●    The companies are National Insurance Company, New India Assurance Company, Oriental Insurance Company, United India Insurance Company and General Insurance Corporation of India.
●    The listing will open a way for the companies to raise resources from the capital market to meet their fund requirements. 
●    Shareholding of these PSGICs (Public Sector General Insurance Companies) will be divested from 100 per cent to 75 per cent.
●    This disinvestment process will be carried on as per the existing rules and regulations of Insurance Regulatory and Development Authority of India (IRDA) and Securities and Exchange Board of India (SEBI) will be followed.

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IMF downgrades India’s GDP growth forecast to 6.6%

The International Monetary Fund (IMF) on 16 January 2017 released the World Economic Outlook Update 2016 in Washington DC, the USA.
●    The update estimated the global growth at 3.1 percent in 2016. The growth forecast is in line with the October 2016 forecast.
●    With regard to India, the update projected India’s Gross Domestic Product (GDP) growth rate at 6.6% in 2016-17 against its earlier estimate of 7.6%. For 2017-18, the growth rate is trimmed by 0.4 percentage points.
●    After a lackluster growth in 2016, economic activity is projected to pick up pace in 2017.
●    This forecast is based on the assumption of a changing policy mix under a new administration in the United States and its global spill overs.
●    This projection is consistent with the rise in equity prices and the sizable appreciation of the U.S. dollar since the November 2016 presidential election.

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Reserve Bank Increases ATM Cash Withdrawal Limit To Rs.10,000 A Day

Reserve Bank of India (RBI) on Monday decided to increase the cash withdrawal limit from ATMs to Rs 10,000 per day from the present Rs 4,500 with immediate effect.
●    However, there is no change in the weekly withdrawal limits, which stays at Rs 24,000. 
●    The limit on withdrawal from current accounts has been enhanced from the current limit of Rs 50,000 per week to Rs 1,00,000 per week. 
●    This also extends to overdraft and cash credit accounts.
●    From current accounts, the amount that can be collected each week has been doubled to a lakh.
●    Finance Minister Arun Jaitley has pointed to improved tax collections to dismiss reports of economic disruption after the notes ban.
●    The RBI has been criticised for following the government's lead on a landmark decision on currency and for taking a backseat in the days that followed, with Mr Patel missing from briefings that made important announcements on issues like cash limits.
 

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Central government employees to get Rs.9000 minimum pension

The minimum pension has been increased to Rs9,000 per person besides a two-fold hike in ex-gratia amount for central government employees, union minister Jitendra Singh said on Thursday.
●    Addressing the 29th meeting of the Standing Committee of Voluntary Agencies (Scova) in the city, he said almost 88% of pension accounts have been seeded to Aadhaar. 
●    There are about 50-55 lakh pensioners in the country, said Singh, minister of state in Prime Minister’s office.
●    He further said that minimum pension has been increased to Rs9,000 per person and ex-gratia amount has been increased from Rs10-15 lakh to Rs25-35 lakh, as per a release issued by personnel ministry.
●    He said the retired employees are a healthy and productive workforce for India and we need to streamline and channelise their energies in a productive direction. 
●    DoP&PW should be reoriented in such a way that pensioners become a part of nation building process.
 

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Bilateral Advance Pricing Agreement signed by CBDT

The Central Board of Direct Taxes (CBDT) entered into a Bilateral Advance Pricing Agreement (BAPA) on the 13th of January, 2017 with Indian subsidiary of a Japanese trading company. 
●    Recently, the CBDT has also modified an existing Bilateral APA with another Indian subsidiary of a Japanese company to include rollback provisions. 
●    Thus, total three Bilateral APAs are now signed with Indian subsidiaries of Japanese companies all including rollbacks. The total number of bilateral APAs entered into by the CBDT is now eight.
●    The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. 
●    Signing of bilateral APA is an important step towards ascertaining certainty in transfer pricing matters of multinational company cases and dispute resolution. 
●    Under BAPA, certainty in tax treatment is provided for the next 5 years while rollback provides dispute redressal for a maximum of four past years preceding APA years.
●    A BAPA may be preferred by multinational companies since finalisation of the same involves reaching an understanding between the tax administrations of the two countries and for the transfer pricing adjustment done in the hands of the Indian entity, corresponding adjustment is available in the hands of related foreign entity, thereby relieving economic double taxation. 
●    The progress of the APA Scheme strengthens the Government’s mission of fostering a non-adversarial tax regime.  The CBDT expects more BAPAs to be concluded and signed in the near future.
 

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World Bank cuts India's growth forecast to 7%

The World Bank has lowered its growth forecast for India to 7 per cent from 7.6 per cent in 2016-17.
●    The World Bank’s Global Economic Prospects January 2017 report added that the Indian economy is subsequently set to recover its growth momentum, with growth rising to 7.6 per cent in FY18 and further strengthening to 7.8 per cent in FY20.
●    Weak industrial production and manufacturing and services purchasing managers’ indexes (PMI), further suggest a set back to activity in the fourth quarter of FY2017.
●    This was further accentuated by other economic factors, the report added, leading to a slump in the entire year’s growth rate.
●    The report, however, noted that four key reforms in India in 2016 could help growth rebound.

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