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The government's Rs 15,000-crore soft loan programme for sugar mills to set up ethanol units is moving at a very slow pace as banks have so far disbursed only about Rs 800 crore, industry experts have said.

The Centre had announced this loan package in two tranches -- first in June 2018 amounting to Rs 4,440 crore and the other in March 2019 of Rs 10,540 crore.

The objective was to help millers in clearing cane arrears and divert surplus sugar for ethanol manufacturing.

A soft loan is a loan that is given at a subsidised interest rate.

"About Rs 800 crore soft loan has been disbursed from banks so far to sugar mills for setting up ethanol units," a senior food ministry official told PTI.

The soft loan package is being implemented by the food ministry, which provides a list of eligible loan applicants to the banks for further process.

The ministry had received total 418 applicants, of which 328 applicants have been identified as eligible for availing soft loan from banks, the official said.

"The ministry has cleared 328 applications totalling a loan amount of Rs 16,482 crore so far. Now, banks have to further process these applications and take a call," the official added.

According to industry experts, only 5-6 per cent of the total soft loan amount of Rs 15,000 crore announced under the scheme has been disbursed so far by banks.

Of 418 applications, the ministry has approved 328 proposals after scrutinising various eligibility criteria.

The ministry checked whether mills have cleared loans taken from the government's Sugar Development Fund (SDF) and also whether they supplied their quota of sugar for ration shop sale (called levy sugar) prior to 2013.

A sugar industry official, who did not wish to be identified, said much of the time is being wasted in the first level of screening at the ministry level.

Ideally, the banks should check the eligibility criteria and sanction the loan amount accordingly, the industry official added.

"In this process, the scheme has not been able to take off properly. The scheme was launched in June 2018 and still the ministry is screening the applications. In this pace, mills may not benefit from the scheme. It takes at least 18 months to establish an ethanol unit," an another industry official said.

At present, 3-4 lakh tonnes of sugar gets diverted for ethanol making. With creation of additional capacity under the scheme, 9-10 lakh tonnes of sugar is expected to be diverted for ethanol production, according to the All India Sugar Trade Association.

Sugar mills have supplied 175 crore litres of ethanol to oil marketing companies (OMCs) till October 22 of the 2018-19 season (October-September) and helped them achieve 5.2 per cent blending with petrol, as per industry data.

The soft loan was announced to improve liquidity of mills, reduce sugar inventory and facilitate timely clearance of cane price dues of farmers.

However, cane arrear still remains high at Rs 9,000 crore so far this year based on the sugarcane price fixed by both the Centre and states, as per the ministry data.

There is sugar glut in India, the world's second largest sugar producer after Brazil. The country had produced 32.5 million tonnes and 33.1 million tonnes in 2017-18 and 2018-19 seasons (October-September), respectively, much higher than the domestic consumption of 25 million tonnes.

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In 2013, the UPA government imposed a 10 percent import duty on gold. P Chdambaram, the then finance minister was quite savvy about the way financial markets work.

He knew too well, that any import duty above the 5 percent threshold, would inevitably draw the attention of smugglers. But he hoped that official imports would reduce because of the higher duty, and consequently the current account deficit (CAD) would narrow. In his effort to spruce up the books of accounts, Chidambaram ended up making smuggling very lucrative for traders.

Gold has a special appeal for smugglers because it has a high value despite a low volume. That makes the smuggling in of gold easy -- through airports, through passengers as part of personal gold, or even through carriers. Sometimes, when the contraband is large enough, it comes through dhows as well, and the metal is landed somewhere along the porous coastline of India.

True, the customs seize gold.  But as a reply to the Lok Sabha on February 3, 2017 (in reply to the unstarred question no 387) showed, the government admitted that seizures were scant compared to the volume of gold that was being smuggled into India.  The government admitted that the Income Tax Department conducted more than 1,100 searches, seizures and surveys and issued more than 5,100 notices, between November 2016 and January 2017, for verification of suspicious high value cash deposits in old high denominations.

Collectively, these raids and seizures accounted for valuables worth Rs. 610 crore which includes cash of Rs. 513 crore. Rest of the seized valuables worth Rs.97 crore was mainly in the form of gold, jewellery and silver. Of the 100 tonnes of gold smuggled in each year, the total seizure accounted for just 0.003 percent!.

In another reply to  the Lok Sabha on March 31, 2017 (unstarred question no. 4842), the government stated that “[even though] there are no firm statistics on estimated demand and availability of gold in the country . . . as per rough estimates gold demand in the country is 800-900 tonnes per annum.”.

In yet another Lok Sabha reply (unstarred question No.384 of February 3, 2017), the government stated that the total seizure of gold (and gold ornaments) accounted for just 7.1 tonnes during the latest three-year period (2013-14 to 2015-16). The biggest seizures were in Delhi, followed by Mumbai and Chennai. Remember that the volumes of goldf smuggled in stand at around 80-90 tonnes.

Clearly, smuggled of gold cannot be stopped, and Chidambaram’s 10 percent duty boosted gold smuggling.  Then in successive measures, subsequent budgets increased the duty on imported gold to 12.5 percent and now (along with GST) top around 15.5 percent.  Smuggling of gold is more attractive than ever before.

So how does gold come in?  There are no official documents on this pattern, but common sense suggests that it comes through the porous borders of Nepal, Myasnmar, Bangladesh and by sea and air from Malaysia, Thailand and other neighbouring countries.

The best indicator of how India’s gold policies have made its neighbours richer, and this country itself poorer, can be gleaned from the table alongside. Watch the way gold imports have swelled in countries like Thailand and Sri Lanka which do not have a major domestic market for this yellow market.  China and India are the two markets where huge quantities of gold gets absorbed by the local population. This lure for gold is partly on account of sentiment, and partly because of the tremendous faith people have in gold.

Marketmen point to the way gold sales swelled in Kerala immediately after the floods.  That was when most common folk saw a great deal of their wealth eroded. What they could carry with them was gold. It is becoming attractive now as well, because of the weakening of the rupee and other global currencies.

The irony is that in an attempt to control the current account deficit, the government believes that a higher import duty on gold will prevent gold imports.  What it actually does is dampen official gold imports. Instead, unofficial gold imports swell. That in turn corrodes the value of the Indian rupee and will gradually translate into higher inflation.  So an apparently stronger balance sheet will come at the cost of a weakening currency.

If the government wants to prevent this, it must look at gold once again, more sensibly. Till that happens, expect the rupee to continue becoming weaker.

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Petrol and diesel pumps across Rajasthan will keep their operations shut for 24 hours, starting October 23 to protest against the increased rate of Value Added Taxes (VAT), officials said on Tuesday.

Sunit Bagai, president of the Rajasthan Petrol Diesel Association (RPDA) said fuel pumps located in the border areas are on the verge of shutdown due to increased VAT rate.

"Petrol and diesel pumps located in the border areas of neighbouring districts are on the verge of shutdown due to increased VAT. Demand is continuously decreasing.

"We have apprised the state government about losses incurred by the fuel pump stations," said Bagai.

The shutdown has been called against increased VAT rate, he said, adding the RPDA has also demanded scrapping of road cess.

Bagai said if prices of petrol and diesel are compared with neighbouring states, it was Rs 5-9 higher in Rajasthan.

Terming it a corrective measure, the Congress government in July had reversed the previous government's decision to reduce the VAT on petrol and diesel by 4 per cent. During the previous government, VAT on petrol was 30 per cent, which was brought down to 26 per cent while VAT on diesel was reduced from 22 per cent to 18 per cent.

In the general budget, the Centre had announced Rs 1 per litre in excise duty and Rs 1 as road cess. Following the hike, the state government through a notification on July 6 increased VAT rate on petrol from 26 to 30 per cent and 18 to 22 per cent on diesel.

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The International Monetary Fund said though India has worked on the fundamentals of its economy, there are problems, including the long-term drivers of growth, that need to be addressed.

The IMF on Tuesday trimmed India's growth forecast by 90 basic points to 6.1 per cent. This is second downward revision in seven months and in total 120 basis points reduction. 100 basis points is equal to one percentage point.

"India has worked on the fundamentals (of its economy), but there are problems to be addressed. In the financial sector, especially non-banking institutions, there are steps taken now to consolidate banks. They ought to help resolve some of these issues," IMF Managing Director Kristalina Georgieva told reporters at a news conference here.

"In India, what is critically important is to continue with addressing the long-term drivers of growth. Investment in human capital in India is a top priority. It has to continue bringing women in the labour force. It is very important. India has very talented women, but they stay at home," she said.

Georgieva said there has been "a very strong growth" in India over the last years and the IMF is projecting reasonably strong growth for the country.

However, "like the rest of the world, India is experiencing a slowdown. So slightly over six per cent is what we expect to see in 2019", she said.

"Structural reforms are priority for India. We expect to see those reforms continue," Georgieva said in response to a question.

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The government may consider bringing down its stake in state-owned Bharat Heavy Electricals (BHEL) and National Mineral Development Corporation (NMDC), sources told CNBC Awaaz.

The stake in BHEL may be pared in tranches to 26 percent from 63.17 percent now.

An inter-ministerial group is expected to meet soon to discuss the stake sale.

The government may also look to sell the state-run power player's non-manufacturing units to private players.

Four to five units of BHEL are reportedly marked for sale to private players this fiscal.

Earlier this month, the government cleared disinvestment in five PSUs, a move which is expected to cover nearly 60 percent of its disinvestment target for this financial year.

The government has a divestment target of Rs 1.05 lakh crore for the current financial year. In both FY18 and FY19, the divestment proceeds exceeded the target of Rs 1 lakh crore and Rs 80,000 crore, respectively.

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The Supreme Court has agreed to an urgent hearing on the public interest litigation filed in regards to the Punjab and Maharashtra Cooperative Bank case, as per a CNN-News18 report.

The petitioner, identified as Bijon Mishra, has sought the full protection of over 15 lakh affected bank customers and 100 percent insurance cover over their savings with the institution, the channel added.

The RBI had issued directions to PMC Bank on September 23, restricting basic banking services like cash withdrawals. Initially, the limit was set at Rs 1,000 per depositor. The regulator also appointed an administrator and three-member advisory committee to oversee the bank’s operations after its board was superseded.

The multi-state cooperative bank came under fire for fraud and misreporting of bad loans. The lender was also found to have violated the RBI’s group exposure norms. Its exposure to the realty firm Housing Development & Infrastructure (HDIL) is being investigated by the authorities including the Economic Offences Wing.

Forensic Auditors, appointed by the bank’s administrator, are also looking into the related transactions, the RBI said.

“The Reserve Bank is closely monitoring the developments and shall continue to take necessary steps in the interest of the depositors of the bank,” the regulator said.

Last week, Finance Minister Nirmala Sitharaman met with the bank’s customers on her visit to Mumbai. She said she spoke to the RBI governor, who had assured that customers' concerns would be addressed as the top priority. The central bank's board that met in Chandigarh also discussed the existing regulatory framework of cooperative banks among other issues.

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The Indian market has been witnessing volatility in the last few session as the earnings season kicked off for the Indian Inc. Concerns over US-China trade deal, stressed financial sector and expectation of a further stimulus by the government have also added kept investors on their toes.

Analysts expect the earnings to remain tepid this quarter. Meanwhile, some of the companies have already declared their earnings for the quarter ended September 2019.HUL, Infosys and Avenue Supermarts are the three companies which got a pat on the back from the brokerages after their Q2FY20 results.

Avenue Supermarts

D-Mart operator, Avenue Supermarts posted a 47.54 percent year-on-year jump in its net profit at Rs 322.63 crore, while revenue increased 22.26 percent to Rs 5,998.90 crore. Its EBITDA rose 32.3 percent to Rs 515.4 crore and EBITDA margin was up 8.66 percent.

ICICIdirect reiterated reduce rating on the stock with a revised target price to Rs 1,700 from previous target price of Rs 1,450.

On the back of recent corporate tax rate cut, it revises earnings estimates upwards by 15 percent.

Hindustan Unilever

FMCG major Hindustan Unilever (HUL) registered 21 percent year-on-year jump in its net profit at Rs 1,848 crore. Its EBITDA was at Rs 2,443 crore, up 21 percent. The domestic consumer segment of the company grew by 7 percent with underlying volume growth at 5 percent.

Prabhudas Lilladher retained it accumulate rating but raised the target to Rs 2,083 from Rs 1,967 per share.

It has cut company's FY20 and FY21 EPS by 1.1 percent and 2.6 percent despite 5 percent volume growth and strong margin expansion on account of delayed rural recovery despite good monsoons, limited scope to increase margins from the current level and liquidity issues in trade channels.

ICICIdirect maintained its hold rating on stock with a target price of Rs 2,075.

Broking house feels that the company is best placed within the sector to use this windfall to balance between strengthening its competitive position and improving profitability.

Infosys

The company reported a 5.8 percent sequential growth in Q2FY20 with its net profit at Rs 4,019 crore. Revenue during the quarter rose 3.8 percent QoQ to Rs 22,629 crore, while in dollar terms revenue rose 2.5 percent at $3,210 million.

KR Choksey has reiterated accumulate rating on Infosys and revised target price to Rs 893 per share (previous target Rs 792) with an upside potential of 10 percent.

The brokerage house expects the company to continue this momentum

going forward as it plans to invest heavily in the expansion of digital segment in the areas like Data Analytics, Cloud computing and IoT.

ICICIdirect has maintained its hold rating on the stock with a revised target price of Rs 885.

It expect revenue growth to moderately surpass the upper guided band and margins are likely to see an improving trajectory from here on . They expect margins to expand to 23 percent in FY21E.

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The British pound gave back some gains on Wednesday in Asia after gaining overnight. A Bloomberg reported that the U.K. and European Union are close to agreeing on a legal draft of a Brexit deal.

The GBP/USD pair was down 0.2% to 1.2755 by 12:18 AM ET (04:18 GMT).

The pound spiked yesterday after European Michel Barnier said a draft legal text was being drawn up, and that an agreement “is still possible this week.”

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

The deal however is dependent on Prime Minister Boris Johnson getting support from the Northern Irish Democratic Unionist Party, which is uncertain. The two sides are racing to reach a deal before the Oct. 31 deadline, but remain optimistic that an agreement will be made by the end of Tuesday.

Meanwhile, the U.S. Dollar Index last was little changed at 98.042.

Tensions between the U.S. and China flared up again after the U.S. House passed four measures, including the “Hong Kong Human Rights and Democracy Act”, on Tuesday in unanimous voice votes.

A similar bill is in front of the Senate.Beijing has threatened to retaliate if Congress passes a bill.

The USD/CNY pair gained 0.2% to 7.0964.

On the data front, the U.S. retail sales data are set to be released later in the day and are forecast to increase for a seventh straight month.

China will release third-quarter GDP, September industrial production and retail sales data on Friday.

The AUD/USD pair lost 0.3% to 0.6731. The USD/JPY pair dropped 0.2% to 108.63.

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The newly formed Jal Shakti Ministry will create 3.75 million jobs for women across the country.

Speaking at the Bloomberg Equality Summit, Smriti Irani, Union Minister of Women and Child Development and Textiles, said the government’s mission is to employ five women each across 750,000 villages to be trained to ensure water quality, maintain water hygiene and turn water into an enterprise.

“Under the Jal Shakti Ministry, there will be massive employment generation for women in the districts identified. At present, we have found water-related challenges in 256 districts. We are involved in training women across these districts,” she added.

On female labour-force participation

India has a female labour force participation rate of 27 percent, which is among the lowest in the world. Talking about steps to improve this scenario, Irani said the government is taking a series of initiatives to empower women.

“One of the biggest challenges for women was access to credit. Through the Jan Dhan Yojana, about 199 million women (out of 370 million accounts) have had their bank accounts opened in the last five years. Similarly, there were 200 million loans disbursed as part of the Mudra scheme. Of this, around 70 percent beneficiaries were women,” she added.

The idea, she said, is to empower women at the grass root level. Talking about an older initiative when Prime Minister Narendra Modi was the Chief Minister of Gujarat, Irani said he had encouraged villages to come as one unit and vote for women leaders in local Panchayats. Wherever women were elected as representatives, those villages got additional government funding.

On formal jobs, Irani said the government has increased the maternity leave to 26 weeks, and it was now the responsibility of companies to ensure that these women are not left behind when it comes to promotions.

In male-dominated professions, Irani said the number of women employed is seeing an increase. Citing the example of chartered accounts, Irani said that from the late 1940s (when Institute of Chartered Accountants of India was set up) till 2014, India only had 50,000 female chartered accountants. "However, that number rose to 75,000 between 2014 and 2019, and is estimated to touch 150,000 over the next five years."

When prodded on the government’s future focus areas, Irani said the unorganised sector has been a cause of concern, despite the higher female labour force participation, as they offered lesser medical benefits and pay.

On safety and health

Irani said the primary objective of the government is to ensure the safety of women and children. "The government has funded setting up of 1,023 fast track courts where all the pending cases relating to safety of women and child can be expedited."

Going forward, she said the government's focus will be on dealing with crimes against women in a more stringent manner. “The perception was that an all women police station was an answer to every challenge. However, we are working towards ensuring that every police station in our country has desk exclusively manned only for the safety of women in that district/area.”

On healthcare, the Women and Child Development Minister said the Ayushman Bharat (health insurance) scheme has ensured that women who have otherwise been reluctant to seek medical care do so without any hesitation.

Under this scheme, the government aims to provide health insurance cover of Rs 5 lakh to 50 crore Indians free of cost. This includes families from lower income groups that fall under the socio-economic caste census (SECC) data of 2011.

Citing data, Irani said that within a year of the health insurance scheme’s launch, 530,000 women have been tested for cervical cancer and 300,000 for breast cancer and are being treated.

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 The Chinese yuan traded lower against the U.S. dollar on Tuesday in Asia after a Bloomberg report sparked fresh concerns on the Sino-U.S. trade talk progress.

Risk appetite improved late last week after the U.S. and China announced a “roadmap to a phase 1 agreement” which included the suspension of a tariff increase planned for this week and a commitment from China to buy more U.S. agricultural product.

But the Chinese yuan gave up some of its earlier gains today as Beijing reportedly said it wanted more talks before agreeing to the deal, suggesting that not all the details are nailed down.

China now wants to hold more negotiations this month before agreeing to signing the deal, a Bloomberg report said, citing people familiar with the matter.

The USD/CNY pair gained 0.2% to 7.0726 by 1:00 AM ET (05:00 GMT)

“We will carefully remind you that such a “promise” is worth nothing at all, and currently it looks more likely that running for president on an anti-Chinese agenda is better/smarter (for re-election purposes) than doing the opposite,” Martin Enlund and his analyst team at Nordea Markets wrote in a weekly preview.

On the data front, China reported on Tuesday that its producer price index fell by 1.2% year-on-year. It marked the steepest factory price decline July 2016, but was in line with expectations.

The consumer price index (CPI) increased 3% year-on-year in September, compared with the expectation of a 2.9% gain. Pork prices in China jumped 69.3% from a year ago. It is the major driver in the overall increase in CPI.

The country also reported weaker-than-expected trade data this week, which showed the sharpest drop in imports since 2016.

The U.S. dollar index that tracks the greenback against a basket of other currencies last traded at 98.137, down 0.03%.

The USD/JPY pair inched down 0.1% to 108.32.

The AUD/USD pair and the NZD/USD pair were both little changed.

The GBP/USD pair rose 0.2% to 1.2629. Brexit developments remained in focus after the European Union showed some cool reaction to the U.K.’s proposals on resolving the Irish border-related elements of the Brexit Withdrawal Agreement.

The EU’s top negotiator Michel Barnier reportedly told EU diplomats at the weekend that the proposals represented an “untested” risk that were not acceptable, according to The Guardian.

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