Cabinet approves Rs.20,000 crore infrastructure fund

Its initial authorised capital would be Rs.20,000 crore, which will be raised from time as decided by the finance ministry


The union cabinet on Wednesday gave its approval to create a Rs.20,000 crore National Investment and Infrastructure Fund (NIIF) to give boost to infrastructure projects, including those which are stalled, sources said.
The cabinet also gave its approval to foreign investment in the Alternative Investment Funds (AIFs) for facilitating domestic investment, they said.
The NIIF is being established to maximise economic impact through infrastructure development in commercially viable projects, both green field and brown field including stalled projects, the sources said.
Its initial authorised capital would be Rs.20,000 crore, which will be raised from time as decided by the finance ministry.
Finance Minister Arun Jaitley had proposed creation of infrastructure fund in his budget 2015-16.
The sources said that the government would contribute 49 percent of the subscribed capital of NIIF, adding the contribution of the government to NIIF would attract investment from overseas sovereign/quasi-sovereign/multilateral/bilateral investors.
Approval to foreign investment in the AIFs for facilitating domestic investment was follow up of announcement made in the this year's budget, they said, adding the decision will lead to availability of more funds to start-ups, early stage venture, social venture, small and medium enterprises, infrastructure and sectors considered as socially desirable but regarded as having uncertain returns.


Australia's richest person may give half fortune away

Currently valued at $10.22 bn, Rinehart is back on speaking terms with her son and daughter who she has been battling in court over the family's trust fund for several years, Xinhua news agency reported


After a protracted and bitter family financial feud, Australian iron ore magnate Gina Rinehart is preparing to give away half her fortune to charity, media reports said on Thursday.
Currently valued at $10.22 bn, Rinehart is back on speaking terms with her son and daughter who she has been battling in court over the family's trust fund for several years, Xinhua news agency reported. 
Last month, her daughter Bianca Rinehart and son John Hancock reached a settlement in the case and gained control of the $2.92 bn trust fund.
As part of the settlement, News Corp reported on Thursday that Gina Rinehart was considering giving away 50 percent of her fortune, either before or after her death.
Hancock wants his mother to follow the example of generous fellow Western Australia iron miner Andrew Forrest as an example.
News Corp reported cancer research, olympic sports and Australia's Royal Flying Doctor Service, which treats patients in the vast Australian outback, would be the lucky recipients.
"We have had discussions and we are aligned that the charity should only be Australian with a focus on northern Australia," Hancock said, adding, "I have endeavoured for years to come to a global settlement, including succession issues and how things including a charitable foundation will look in the future."
Gina Rinehart has been criticized in the past for not being charitable enough. 



Jyoti Dua

2 years ago

Our rich industrialists and businessman must learn from it. Why Govt should ask and watch private sector to contribute to Society. It should be spontenous by them. All major business houses must adopt a village.

Greek Tragedy: Every pothole is an opportunity, says Prof Vaidyanathan
The current crisis will take more than 80 quarters for recovery of the West. In this scenario, it is better for India to be more de-coupled and evolve its own strategy, which protects our interest, says Prof Vaidyanathan at a seminar organised by Moneylife Foundation
"India story is just starting and we need to look at every pothole as an opportunity, says Dr R Vaidyanathan, Professor of Finance, IIM-Bangalore and Dean, Centre of Economic Studies at Vivekananda International Foundation (VIF). He was speaking on "Coming Global Economic Crisis: Will India Go Down?" at a seminar organised by Moneylife Foundation in Mumbai. 
Addressing a packed hall, Prof Vaidyanathan, rated one of the most popular teachers among all IIMs, brought alive a host of complex economic issues by punctuating his talk with innumerable asides which had the audience in splits. He said, "With global economic power increasingly shifting to the east, India is well poised to emerge as the most favoured destination of private equity and overseas pension funds. For this to happen, we need reforms, not in share market, retrospective taxes or taxes on foreign institutional investment (FII), but at state level taxes, in providing more credit to unorganised sector. Education should be more focussed on trade-based needs and skills. We also need to leverage on caste as social capital. Last, but not the least, we need to close down duplications in central ministries, like education, agriculture and information and broadcasting and have not more than eight to 10 ministries at central level." 

Busting several myths about Indian economy, the 'teacher who is interested in learning' said growth of our economy is domestic demand driven and powered by domestic household savings and not due to FII or foreign direct investment (FDI) inflows. "Non-corporate sectors, which are community oriented and family driven, are the engines of growth in India. However, blind adoption of foreign methodology and definitions has led to the government ignoring the real engine of growth, which is the unincorporated sector. Consequently, this sector survives, despite lack of access to formal funding, extortion and harassment from multiple government agencies as well as the police and without access to any form of social security. Yet, they toil and put away retirement funds, giving India's economy the security of a high savings rate," Prof Vaidyanathan added. 
Talking about the Greek crisis, Prof Vaidyanathan, an expert on the Indian model of economics, said, "The European countries are calling their economic problems as global crisis since past several decades. At the most, we can call Greek crisis as Anglo-Saxon Crisis. The current crisis will take more than 80 quarters for recovery of the West. In this scenario, it is better for India to be more de-coupled."
"Crisis occurs when borrowing goes beyond a point. In European countries, people are not worried about savings. They care only for consumption. This reflects in their pathetic domestic household saving and higher debt percentage to gross domestic product (GDP) ratio. Overall debt percentage to GDP in Spain, France and Italy is over 300%, while for Britain, it is around 500%. While Japan tops the chart at 511%, the same for US and China is 289% and 184%, respectively. India's overall debt percentage to GDP is 122%."
"When we talk about household debt percentage to GDP, Britain and Canada top the chart with over 90%, followed by US, South Korea and Spain at over 80%. Only three countries, India, Russia and Brazil have household debt percentage to GDP of less than 15%," Prof Vaidyanathan added.  

Explaining the Greek tragedy, he said, the country has to pay $8.5 billion to European commercial bank by August and it has total debt of $352 billion with a national income of $242 billion last year. Greece's debt is slowly reaching 200%. The Professor of Finance at IIM-Bangalore, said, "Greece has significant structural problems of Government playing the role of father and mother. The government's 75% spending is on pension and wages. Since cutting pension can hit old age and poor segments, it is not feasible. Add to this the number of employed younger population (age group 16-24), which is nearly 50% with an overall unemployment rate of 25% in Greece mainly due to lack of skillset."
"The same problem exists in a large number of European countries. In most of Europe, families have been nationalised and this model may not work in the long run with longer life expectancy and single parent (single mother) families on the rise. For example, according to official figures, by 2016 most children in the UK will be born out of wedlock because of decline in marriages," he added.
Prof Vaidyanathan also explained the recent crash in Chinese stock markets.
Busting the myth that corporate sector is major factor in our economy, Prof Vaidyanathan said, the share of unincorporated or partnership and proprietorship firms in India is 50%. While agriculture contributes 17%, government and private corporate sector contribution is 19% and 14%, respectively. Therefore, the India Unincorporated (non-corporate sector) contributes more towards the economy and not corporate sector, which still occupies the maximum mindshare.
According to the professor, using share market as barometer of Indian economy is completely wrong. He said, "Out of about 8,000 shares listed, half of them were not even quoted last year. Just 200-250 scrips are regularly traded on bourses, while shares of only 10 companies constitute nearly 30% of trading. Out of this nearly 50% to 60% are day trading. In addition, the share of all listed companies is just 5%-6% of the national domestic product (NDP). Therefore, it is wrong to assume the stock market as the real barometer of India's economy."
Same goes in services sector as well. Most of us assume that biggest contributor in services sector is ITES, however, it contributes just 5% to 6%. At the same time, the share of construction, wholesale and retail trading, transport, hotels, restaurants, realty dwellings and business services have larger share in services sector.
Prof Vaidyanathan also explained that it is the incredible savings rate of Indian households, which is another engine that drives the Indian economy by supplying the capital businesses need. He said India's gross domestic savings (GDS) to GDP is about 32% to 35%. Out of this, government's share is just 1% to 2%, while private corporate's contribution is just 7% to 8%. However, household savings have 23% to 25% share in the total GDS, which in percentage terms comes to over 75%. Homemakers are the primary reason for our economic growth. "India ought to put up statues of the anonymous 'Indian Woman' whose natural thrift and savings habits have contributed hugely to the growth of the Indian economy," he added.
There is a myth that government and corporate sector provide employment to maximum number of people. However, this again is wrong, Prof Vaidyanathan said. "In India, 85% people are either self-employed or work as contract labour, while just 12% to 15% have government or corporate jobs. In the US, over 90% people are employed in government or corporate sector, while merely 6% to 8% are self-employed," he added. 
Prof Vaidyanathan's talk on economy covered a broad range of issues - the nature of domestic economy, the role of foreign funding, structure of domestic savings, role of gold, the need to fund non-corporate sector, market access and political linkages, among other issues. 

India must evolve its own strategy, which protects its interest, Prof Vaidyanathan said, adding we also need to focus on tax heavens in search of the lost and last dollar. It is estimated nearly $18 trillion is in tax heavens the G-20 is trying to regulate or get back this money. Indian money in tax heavens is estimated to be between $500 billion to $1.5 trillion.
In the long run, funds - particularly, pension funds that are worth about $18 trillion, have to come to India and it should be on our terms, Prof Vaidyanathan concluded.




2 years ago

Random thoughts: Undoubtedly, prima facie, a very impressive statistical data doled out. Equally impressive are the suggestions offered as to what India should or not do in order to remain insulated / save itself from, or take on and be prepared to ward off, the prospects of a similar tragedy happening at home.Of course, if were to ignore or forget for the moment the inescapable fact of, just not one but, more of it being faced with, with an alarming regularity.

All said,but one thing not said or left to be sanely questioned is THIS: Could not the pothole (s) been possibly prevented through timely or time-bound remedial steps by identifying and plugging in the correctives effectively; rather than leaving it to loom large enough to a scaring 'pothole' (or a multiple of it)?!

Perforce, that reminds one of sagely cautions repeatedly given by great thinkers- humanitarians par excellence- of our own times; but perennially and unwisely chosen to be wantonly ignored.
Any like thoughts to share by the rest!

Anand Vaidya

2 years ago

Eagerly awaiting the full video recording on youtube.

I am sure Prof. Vaidyanathan's talk is enlightening with a dash of humour as usual...

Ralph Rau

2 years ago

Indian business man has a new definition of corruption under today's popular government.

Corruption = Inefficiency

Corruption is when ministers and babus do not deliver promptly i.e. take "commission" and delay the "delivery" or do not deliver at all.

In that sense we apparently have a more efficient government now.

Instead of eating a small cake, create a bigger pie so that "everyone" can eat a bigger slice.



In Reply to Ralph Rau 2 years ago

TO supplement;
If delay,the root cause, traceable/attributable mainly to basic inefficiency,-that is,in performance by anyone, particularly by a 'public servant'(in its most comprehensive meaning / connotation),- of his duties and responsibilities,in turn resulting in 'corruption' of all types, at the grass root of it is the vested or assumed power of 'discretion', invariably unbridled or left uncontrolled.

For a dilation of the specific area, may look up, -; rtw the comment thereon.

If interested in quickly knowing more,care to and browse through the related Blogs @swamilook 2015.

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