GoldenDuck Solutions

04/04/2017

Government exceeds FY17 tax collection target at Rs 17.10 lakh crore

The government has exceeded the tax collection estimates for 2016-17 fiscal at Rs 17.10 lakh crore.
The revised estimates (RE) provided in Budget on February 1 had projected tax collections of Rs 16.97 lakh crore.

The Finance Ministry in a statement said that tax collection of Rs 17.10 lakh crore is a growth of around 18 per cent compared to last year.

Revenue Secretary Hasmukh Adhia said, "Total net tax revenue grows at 18 per cent to Rs 17.10 lakh crore, highest in last 6 years."

While direct tax mop up during the April-March period grew 14.2 per cent at Rs 8.47 lakh crore, indirect tax kitty swelled by 22 per cent over last year to Rs 8.63 lakh crore.

Net direct tax collections at Rs 8.47 lakh crore shows 100 per cent achievement for RE of 2016-17.

The Finance Ministry in a statement said that tax collection of Rs 17.10 lakh crore is a growth of around 18 per cent compared to last year.

While direct tax mop up during the April-March period grew 14.2 per cent at Rs 8.47 lakh crore, indirect tax kitty swelled by 22 per cent over last year to Rs 8.63 lakh crore.

Net direct tax collections at Rs 8.47 lakh crore shows 100 per cent achievement for RE of 2016-17.

Indirect tax collection till March 2017 is 101.35 per cent of the RE for 2016-17 fiscal. The RE was pegged at Rs 8.5 lakh crore.

In terms of gross revenue collections, the growth rate in corporate tax was 13.1 per cent while that of personal income tax was 18.4 per cent.

However, after adjusting for refunds, the net growth in corporate tax collections is 6.7 per cent while that of personal I-T collections is 21 per cent.

Refunds amounting to Rs 1.62 lakh cr have been issued during April 2016-March 2017, which is 32.6 per cent higher than the refunds issued during FY 2015-16, the statement added.

As regard indirect taxes, Central Excise collections grew 33.9 per cent to Rs 3.83 lakh crore during 2016-17.

Service tax mop up rose 20.2 per cent to Rs 2.54 lakh crore, while customs collections grew 7.4 per cent to Rs 2.26 lakh crore.

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04/04/2017

Rise in property, crude prices could ease pressure on state govt finances: HSBC Research

A rise in crude and property prices in FY'18 could rein in state government deficits, which is already adding pressure on general government deficit notes, an analysis of state government finances by HSBC said.

An expected 5% rise in the housing sector's growth, will result in an increase in stamp duty revenue collections by about 0.04% of GDP, said HSBC in a report on state government finances. It expects the sector to show some stabilization in FY'18, led partly by the government's incentives for affordable housing over the last few months.

As oil prices begin to rise gradually, these revenues are likely to rise in tandem. An expected 10% rise in oil prices is likely to raise state oil tax revenues by 0.11% of GDP. States levy a value-added sales tax on petroleum products. At 1.1% of GDP, these taxes account for 15% of the states' self-collected tax revenues, according to HSBC estimates.

Even as the central government has been working hard on fiscal consolidation and managed to rein in fiscal deficit, state governments continue to be profligate causing higher general (combined state and central) deficit. This in turn is perceived to be an important negative in India's sovereign rating upgrade.

India's general government deficit is estimated to touch 6.7% of GDP if one excludes asset sales or disinvestment and recapitalization of state owned banks.

States' FY'18 budget estimates (BEs) suggest that they have not fully accounted for the many pressures on the horizon. HSBC expects that the Seventh Pay Commission wage hikes, UDAY interest bill and election-related spending could add to fiscal pressures.

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04/04/2017

Why is Amazon Prime focusing on paid subscriptions ?

It’s the prefix of the season—super. Add it to any word you can think of. And Nitesh Kripalani, country head of Amazon Prime Video, applies it with the felicity of any youthful startup chief executive out there: the customer segment for online video is ‘super-small’ in India. But Amazon’s local customers are ‘super-interested’ in video. Data charges are ‘super-important’ for them. So Amazon, he says, is making sure data consumption for video is ‘super low’ while ensuring visual quality is ‘super-high.

It’s hard to miss when Kripalani, in his late 30s, can go super six times in a five-minute span. But what’s behind etailer Amazon’s interest in online video—that too, a paid-subscription service— when its old nemesis Google’s YouTube pretty much built the advertising-supported market in India click by click?

The answer calls for a perspective of over-the-top (OTT) video on connected devices (laptop, smartphones, tablets, and smart televisions) in the past 15 months, against the incumbent cable and satellite television (TV) market in India.

The latter was a formidable Rs 47,500-crore market in fiscal year 2015, according to the Telecom Regulatory Authority of India (Trai). In contrast, OTT video is less than 20% of the Rs 7,300-crore digital advertising spends in 2016 (an estimate by adv ..

The Indian Viewer
Internet-video services like Hotstar, Netflix or Amazon Prime are called ‘over-the top’ because they don’t ride on traditional broadcasting or single-telecom networks. Thanks to net neutrality, OTT video doesn’t require any affiliation with any operator.

In 2011, the Cable Television Networks (Regulation) Amendment Act pushed local cable operators to digitize networks—basically organised the market (see ‘TV Market Gets Organised’). Call this traditional TV, where a single cable or satellite TV subscription is consumed by a household whose industry average is five viewers. Even with a conservative estimate of four persons per household, this is more than 700 million viewers.

In comparison, OTT video growth has been tangential to traditional TV market, thanks to price competition among smartphone brands, as well as between telecom operators after Reliance Jio’s large sse to unveil 4G networks. In 15 months, the online segment for video rose from 66 million unique users in 2015 to more than 80 million in end 2016.

It’s not the 21% growth that is exciting broadcasting networks (Star Networks, Tata Sky), content owners (Yash Raj Films, Balaji Telefilms) and telcos (Vodafone, Airtel) to push for OTT. It is the behavioural or habit shift that caught their eye.

“When distribution becomes free because of the internet to directly access consumers, then competition keeps the market honest,” says a digital media entrepreneur. “The distribution (cable) guy is not king—consumer is actually king.” “In absolute terms, the 80-million number is significant,” says Vidya S Nath, director, digital media, Frost & Sullivan, adding that it is the population of European nations like France or Germany, where traditional cable networks are under threat. “We have got to this scale without adequate broadband infrastructure support,” she adds. The icing on the cake: “These are unique viewers, each of whom is present on one or more platforms.” Services led by data analytics of unique viewer habits make for more sharply-targeted advertisements – the raison d’etre of Google or even Hotstar, the OTT brand of Star Networks which has more than 70 million mobile-device installations

Of the 80 million online viewers in India, the paid-subscriber base was at a minuscule 2 million last year. There is a 40% drop expected after promotional offers expire on services like Netflix and Amazon Prime. Currently, Frost & Sullivan pegs industry revenue from paid subscriptions at $8.5 million. That’s why it raises the intriguing question: What’s Amazon Prime thinking by bringing video as a paid-service when everybody else is fighting for the ad rupee?

A digital-media industry source, who has worked with content owners and telecom operators for more than a decade, notes this has to do with Amazon’s global strategy of high engagement on its platform. Just like in the US, Amazon is giving a lot more value for Prime than just providing video. “Video is clubbed with instant e-commerce delivery (for Rs 499 per year). You don’t pay extra for faster deliveries,” he says. Further, video helps Amazon because consumers keep returning to the platform, even when they are not shopping online for products. “For Amazon, investing in Prime Video is like investing in customer retention.”

Amazon founder Jeff Bezos no less spelt it out in the 2015 shareholder letter, justifying large spends on creating original video content a la Netflix. “(Video) shows are great for customers and they feed the Prime flywheel – members who watch Prime Video are more likely to convert from free trial to a paid membership and to renew annual subscriptions. .Prime has become an all-you-can eat, physical-digital hybrid that members love.” Amazon’s video play, which is less than four months old, cannot be seen in isolation of its overall digital ambitions, even in India.

Hunger Games
The first users of internet in the US were for paid-utilities like shopping (eBay, Amazon) and internet-enabled home services, apart from email. But in India’s next wave of growth, online users will consume video before buying products online. That’s the bet. “The top three app growth categories in India are music, media and entertainment,” says Pratik Poddar, vice-president at Nexus Venture Partners, a venture-capital (VC) firm in Mumbai. “People are hungry for content and we are seeing significant behaviour change where many users are spending more than 15 minutes a day on new content destination companies.”

If Amazon can ensure customer stickiness after getting new users from its OTT service, it can enhance their ecommerce business in the next wave of growth. For this, Prime Video has tied up with mobile operator Vodafone (and is exploring other such partnerships) to tap into new prepaid mobile customers. Until then, Amazon is focusing on increasing customer engagement on Prime, and converting Amazon.in in users to Prime subscribers.

Google and Facebook have done this naturally beyond core search and social network businesses, respectively. Until 2015-end, a lion’s share of the OTT market belonged to YouTube, part of the Google arsenal. And WhatsApp, a Facebook company, is emerging as a dominant channel for videos to go viral apart from the parent company’s video ambitions.

Customers here are watching digital content for free, either via an advertising-supported video service, or because pirated video services are still high,” Kripalani explains. “But Amazon customers are super-interested in video. They are engaging with the service, our content selection, which is making Prime a high-growth product. It is reflecting in our consumption and sign-up figures.”

In the US, the $136-billion online retail giant has added Reading (Kindle-based), Twitch (gaming), Audible Channels (audio content), and Photo Family Vault as new Prime exclusive digital benefits last year. Stratecherry, a subscription-based newsletter featuring analysis of tech and media news, quoted a Consumer Intelligent Research Partners estimate in March 2016 that Amazon has 54 million Prime members, “which at $99/member would generate $5.3 billion in revenue” globally. Like in India, Prime Video is available at no extra cost to Amazon Prime members in Belgium, Canada, France, Italy and Spain.

The OTT fight between YouTube, Netflix and Amazon has been more than a wake-up call for broadcasters, telecom operators and content creators who are rejigging plans for the OTT consumer.

“They have to move,” says Brian Morris, general manager of global media and entertainment services at Tata Communications. “If they want to stay competitive, and provide reach to mobile consumers, OTT is not an option. It is a requirement.”

Launched in February 2015, Hotstar has stood out for its timing and heavy investment in marketing the brand whose live sports events usher in masses of users. “The biggest gain in OTT is from Indian Premier League T20 Cricket, which is why Hotstar is what it is,” Nath says. A sports series guarantees mobile-video platforms of 5-10 million users depending on the targeted geography.

Content Wins
OTT video means customers increase their data consumption, and mobile operators will see average revenue per user go up. Content owners too can choose from a range of platforms. They are in the spotlight. Only Much Louder (OML), which manages shows for comedy and live events for brands like All India Bakchod (AIB), are working with two OTT companies, Hotstar and Amazon Prime.

“The marketing heavy-lifting by these guys like what Hotstar is doing for On Air With AIB and what Amazon has been doing with comedy specials (14 stand-up comedy episodes of an hour each) has definitely got us new fans,” says Ajay Nair, director of OML. “With Amazon Prime or Hotstar, I know the subscriber is going to spend time there.”

The battle is on for content, as Netflix alone added 600 hours of original programming – apart from licensed TV shows and movies – to its year-old service here. In absolute numbers, online video advertising dominates subscription figures, but that is not sustainable as Vice Media, a digital media company headquartered in New York discovered in North America. (Times Group which publishes The Economic Times has a partnership with Vice.)
CEO Shane Smith says advertising cannot be a long-term solution with Google and Facebook having four-fifths of that pie. “We have an entire generation which has not seen advertisement because of ad-blocking, iTunes and Netflix,” he noted. Morris of Tata Communications says the revenue model has not been discovered yet anywhere around the world. On that front, Amazon Prime knows there is no such thing as a free lunch. It is a risky gambit for OTT in India, but smart for its consolidated plans.

04/04/2017

Digital transactions go down with more cash coming into the system

Digital payments, which saw a huge jump post demonetization, is seeing some form of correction in transaction numbers and value of payments for the third month in a row in 2017.

All major forms of digital payments, Immediate Payment Service (IMPS) along with mobile wallets and plastic cards, have seen a reduction in transaction numbers.

IMPS which had shown almost 6 crore transactions worth Rs 48.2 lakh crore for the month of February showed only 5.6 crore transactions worth Rs 45.8 lakh crore.

Prepaid issuers or mobile wallet based transactions also suffered a slight fall to 7.4 crore transactions worth Rs 1800 crore from Rs 1870 crore worth of payments through 7.8 crore transactions.

Plastic cards including both debit and credit products have slumped to 190.1 million from 212.3 million transactions.

Amidst the fall the only mode of payment that has been consistently picking up is Unified Payments Interface, the Prime Minister's pet project, which jumped to 49 lakh in March from 42 lakh transactions in February. The transaction value has jumped to Rs 1970 crore from Rs 1900 crore last month.

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03/04/2017

Demonetisation to permanently erode cash worth Rs 1.7 lakh crore: SBI research

Demonetisation exercise by the government may permanently erode about Rs 1.7 lakh crore worth cash from the system translating into liquidity, according to a report by SBI Research. This would be equivalent to about 1.1% of GDP.

It may be difficult to ascribe a reason. “ Our estimates indicate that there would be a permanent liquidity injection of least Rs 1.7 lakh crore or about 1.1% of GDP post demonetization” said S K Ghosh , group chief economic advisor at SBI “ This data is a reflection of the extent of formalization of the economy post demonetization.“

After the December 30, 2016 deadline of depositing banned Rs 500 and Rs 1000 notes with the banks, cash withdrawal has been declining rapidly from a peak of Rs 52800 crore for the week ended January 13,’17 to Rs 32500 crore during the week ended March 24’17. Even in the span of one week between March 7 and March24, cash withdrawal has declined by Rs 2000 crore, the SBI report said.

The decline in cash withdrawals is intriguing even as limits on withdrawals have been removed completely from March 13, according to SBI’s research team.

Historically average withdrawals are generally higher in the first fortnight of a month because people tend to spend more in first fortnight. However, even that peak has been declining since January (a decline of Rs 54 billion as on March 24). It may be noted that the average withdrawal in the pre-demonetisation levels period in FY17 in the first fortnight was only around Rs 21000 crore.

The report does not attribute any firm reason for the trend. “Are people now averse to cash withdrawals because of strict monitoring? Or, there is indeed a shift to digital transactions? We are indeed not sure.” The report said. “ It may be also noted that with the implementation of ban on cash transactions of over Rs 2 lakh from April 1, further decline in cash withdrawals may be a possibility.

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24/01/2017

GOLDEN DUCK SOLUTIONS

Government raises Rs 30,000 crore via disinvestment proceeds

The government has raised around Rs 30,000 crore from disinvestment proceeds, said department of investment and public asset management (DIPAM) secretary, Neeraj Gupta. This is the highest amount grossed through the stake sale programme.

In this fiscal, the government has budgeted around Rs 56,500 crore from disinvestment proceeds, of which Rs 20,500 crore was to come through strategic sales. The government will also divest its 10% stake in Moil Ltd. on Tuesday where currently holds 75.58% stake.

“We will do our best to achieve the disinvestment target,” said Gupta adding that he is hopeful of getting a good response from Moil Ltd. stake sale. Moil’s scrip closed at Shares of MOIL closed at Rs 382.70, up by 0.90% on a day when Sensex gained 0.31%.

The government expects to raise around Rs 480 crore from the stake sale at a floor price of Rs 365 per share. The floor price is at a discount of 4.63% and retail investors will get a further discount of 5.20% in the offer for sale(OFS)

Gupta said that the second tranche of CPSE exchange traded fund got bids worth Rs 13, 802 crore. The issue was oversubscribed two times and the government is expected to raise around Rs 6,000 crore through this route.

The CPSE ETF comprises shares of Oil & Natural Gas Corporation, GAIL India, Coal India, Rural Electrification Corporation, Container Corporation, Bharat Electronics and Engineers India, among others. It had raised Rs 3,000 crore through the first offer in 2014.

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24/01/2017

GOLDEN DUCK SOLUTIONS:FDI
FDI outflows matches FPIs’ in volatility

While foreign direct investment (FDI) flowing into India hit a high of $43 billion in the April-November period, a record $16.4 billion went the other way amid private equity exits and other divestments.

In fact, $6 billion rushed out in a mere two months — October and November — according to the Reserve Bank of India’s latest monthly bulletin. That almost matches foreign portfolio investment in terms of volatility — FPIs pulled out a net $7.3 billion during those two months.

While this could be partly attributed to PE investors exiting through initial public offers (IPOs) and other avenues, some of it could be due to repatriation of profits. Divestments and strategic sales too could have contributed to a one-time spike in outflows, experts said.

The FDI outflow of $16.4 billion is the highest-ever in a year, even though the fiscal close is four months away from November. Outflows in the same period last year amounted to $6.5 billion.

“The very large outflow of dividends and royalties from FDI invested is due to many reasons, (among them) being the larger returns on large gross inflows in previous years,” said Saugata Bhattacharya, chief economist Axis BankBSE 0.67 %. “However, one major source (of outflows) is likely to have been PE, VC (private equity, venture capital) exits following IPOs of many startups due to rich valuations this year.”

In the April-November period, PE exits were valued at $4.8 billion, according to industry data tracking firm Venture Intelligence. “Often there is a lag between actual exists and repatriation from the country by the investor which may result in a discrepancy between the RBI and industry numbers,” said Arun Natarajan, CEO of the firm.

One of the largest private equity exits of the decade was concluded in the April-November period when Japan’s Yokohama completed its buyout of KKR-backed tyre manufacturer Alliance Tire Group (ATG), according to a report by consulting firm KPMG. The $1.2 billion deal is said to have been sealed in July last year.
Besides, strategic sales too could have contributed to sales and investment pullouts. According to PwC, there were PE exits alone worth $1.4 billion during the July-September quarter. It is likely that actual outflows have happened in the subsequent months. The year saw a number of multilateral and bilateral treaties to streamline trade and economic relations.

Certain clauses are likely to have impacted inflows. “For instance, the amendment of tax treaties with some countries like Mauritius which ended tax benefits on certain investments could have resulted in outflows,” said an economist requesting anonymity.

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24/01/2017

GOLDEN DUCK SOLUTIONS:E-portal for govt purchases will save Rs 40,000 crore annually: Commerce Ministry :

The online portal launched for government purchases of goods and services would result in savings of Rs 40,000 crore annually for the exchequer, the Commerce Ministry said today.

"Demand aggregation for most of the common use goods and services is estimated to result in annual savings to the tune of Rs 40,000 crore per annum," the ministry said in a statement.

The ministry has launched a 'Government e-Marketplace' (GeM) with the aim to transform the way in which procurement of goods and services is done by government ministries/ departments, PSUs and autonomous bodies.

It said that if pursued to its logical conclusion, GeM would eventually emerge as the national public procurement portal, keeping in tune with the global best practices.

Enlisting benefits of GeM for the government, sellers and the industry, the ministry said the portal eliminates human interface in vendor registration, order placement and payment processing to a greater extent

For procurements of higher value, it said the bidding facility on GeM is transparent and efficient, in comparison to e-procurement systems in vogue within the government sector.

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14/01/2017

FOREX RESERVES: India's foreign exchange reserves slipped $1.1bn to stand at $359bn as on January 6 of this year said the Reserve Bank of India on Friday.

The major reason for the dip in reserves is because of revaluation of the gold reserves with the central bank which is done every month end. According to RBI, the climb in foreign currency assets was around $241.8mn but the fall in the value of gold reserves was almost $1.4bn

Further foreign investors have continued their exit from India with around Rs 3809 crore having left Indian equities market over the first few weeks of January according to data from NSDL

The major reason for the dip in reserves is because of revaluation of the gold reserves with the central bank which is done every month end.

06/01/2017

AUGMENT IN FOREX RESERVES:Foreign exchange reserves rose by $ 625.5 million to $ 360.296 billion in the week to December 30, helped by an increase in foreign currency assets, the Reserve Bank said today.

In the previous week, the reserves had declined by $ 935.2 million to $ 359.671 billion.

The reserves had touched a life-time high of $ 371.99 billion in the week to September 30, 2016.

Foreign currency assets (FCAs), a major component of the overall reserves, increased by $ 612.4 million to $ 336.582 billion in the reporting week.

FCAs, expressed in US dollar terms, include the effects of appreciation/depreciation of non-US currencies, such as the euro, pound and the yen held in the reserves.

Gold reserves remained steady at $ 19.982 billion in the reporting week, the RBI said.

The special drawing rights with the International Monetary Fund rose by $ 4.9 million to $ 1.432 billion, while India's reserve position with the Fund, too, increased by $ 8.2 million to $ 2.299 billion, RBI said.

In the previous week, the reserves had declined by $ 935.2 million to $ 359.671 billion.

06/01/2017

AADHAAR MADE MANDATORY FOR RECEIVING BENEFITS OF EPS: The Ministry of Labour and Employment, in its notification dated January 5, 2017, has made it mandatory to furnish the proof of Aadhaar number to avail pension and other benefits for its the existing members and pensioners under the Employees Pension Scheme (EPS), 1995. Those who have enrolled for an Aadhaar number, but are yet to receive the same, can provide the Aadhaar enrolment ID.

A member or a pensioner who has not enrolled for the Aadhaar number yet is required to enrol for for the same by January 31, 2017 at their nearest enrollment centres. In case of non-availability of enrollment centres, the EPFO is required to create enrollment facilities at convenient locations.

Any member or an individual who has not received the Aadhaar number or is yet to enrol for it can provide the following documents to continue to receive the benefits under the scheme:
1. Identity certificate issued by the employer or the Employees' Provident Fund Organization with the UAN(universal account number)
2. Aadhaar enrolment ID of the member/pensioner or a copy of the request made for the Aadhaar enrolment.
3. A copy of any of the following:
(i) Voter ID card
(ii) PAN card
(iii) Passport
(iv) Driving License
(v) Certificate of the identity proof having photo of the member issued by a gazetted officer or a tehsildar on an official letterhead
(vi) Any other document specified by the Employees' Provident fund

The above documents will be checked by an officer specifically designated by the EPFO through its field offices and their networks.

The ministry, while issuing the notification, said that Aadhaar as an identity document brings in transparency and efficiency for the delivery of services and benefits by the Central Government. Also, it obviates the need for producing multiple documents to prove one's identity.

The ministry will undertake some arrangements to help provide convenient and hassle-free benefits to its members. It will advise its members, through media publicity, about the mandatory requirement of Aadhaar for the purpose of availing benefits under the EPS, 1995.

To avail pension and other benefits under the Employees Pension Scheme, 1995, one has to furnish the proof of Aadhaar number.

06/01/2017

INDIA ON ROAD TO NORMALCY:The Reserve Bank of India replaced as much as 44% of the currency extinguished by demonetization with new notes by December 30, according to a State Bank of India BSE 0.22 % report. India's currency supply is likely to return to near normal by February end and growth, which has been hit by the withdrawal of Rs 500 and Rs 1,000 notes, is likely to bounce back faster than earlier expected, said the analysis by India's largest commercial bank.

December 30 was the last day on which the public could deposit old notes with banks following the November 8 demonetisation announcement. The level of replenishment is perhaps not rising faster because the central bank,having initially focussed on pumping new Rs 2,000 notes into the system, is now concentrating on currency of lower denominations,

CASH CONFUSION

There has been some confusion regarding the exact amount of cash that ceased to be legal tender starting November 9.

According to the weekly data that RBI puts out, between November 4 and December 30, total currency in circulation contracted from Rs 17.97 lakh crore to Rs 9.38 lakh crore. In its reply to a Right to Information (RTI) query, the central bank said total cash amounted to Rs 24 lakh crore on November 8 and of this, Rs 500 and Rs 1,000 no ..