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In a pre-budget move, cash-strapped railways on Friday (20 June) effected a steep across-the-board hike of 14.2 per cent in passenger fares in all classes and a 6.5 per cent increase in freight rates to garner Rs 8000 crore a year.The decision, which will come into effect from June 25, marks implementation of an announcement of May 16, the day Lok Sabha election results came, when the hike was announced but put on hold immediately.In a flip-flop, the Ministry first announced that today's hike will be implemented with immediate effect but later changed it to June 25, saying the officials needed time to execute it.Announcing the decision, less than a month after the NDA government took over, Railway Minister Sadanand Gowda said, "I was forced to implement the order that was done by my predecessor. I am only withdrawing the withholding order."He said the interim budget presented by the previous government had assumed certain revenues on the basis of the proposed hike that was announced on May 16."Meeting the annual expenditure would not be possible unless the revised rates as finalised by previous government is implemented, hence order of withdrawing implementation of revised fare and freight has been withdrawn," said the Railway Ministry, which is incurring a loss of about Rs 900 crore per month in passenger segment."Accordingly, the revised passenger fare and freight rates and freight structure rationalization will come into effect from June 25, 2014," it said in a statement.The hike was announced nearly a week after Prime Minister Narendra Modi said the country should be ready for "tough decisions" required to improve the financial health.The Railway Budget will be presented in Parliament in the first week of next month.Two days back, Gowda had said he would meet the Prime Minister before announcing the hike. While a flat 10 per cent has been announced in all classes, an additional 4.2 per cent increase under fuel adjustment component (FAC)-linked revision scheme will be effected on passenger fares, taking the upper revision of fares to 14.2 per cent, an official said.The Railways had earlier issued a notification on May 16 effecting hike in passenger fare by 14.2 per cent across the board and freight charges by 6.5 per cent from May 20. This was followed up with an official press release.The May 16 fare hike decision, which had raised eyebrows as it came in the midst of Lok Sabha election results, led to a scurry of activities in Rail Bhawan on that day and the Railway Board went into a huddle to discuss its fallout.Soon after, the red-faced Railway Ministry had put the decision on hold, saying the matter related to the revision will be left to the next government.The then Railway Minister Mallikarjun Kharge came out with a statement directing the Board to leave the decision on the hike to the new government."It is now informed that under the directions of the Minister of Railways Mallikarjun Kharge, the decision on the proposed hike in the freight charges and passenger fares have been kept pended till further advice for placing this proposal before the new government," the statement said.A fresh notification was issued later, stating that the "revision of fares with effect from May 20 should be pended till further advice." PTI ARU AKKThe Railway Minister had on Wednesday met Finance Minister Arun Jaitley and said that he would discuss the fare issue with the Prime Minister.Seeking a significant increase in gross budgetary support, Gowda, along with Minister of State for Railways Manoj Sinha and senior railway officials, had met Jaitley as part of the pre-budget discussion.About the discussion with Jaitley, the Railway Minister had said "it was a fruitful meeting with the Finance Minister who suggested some measures which will be reflected in the rail budget."Gowda said "we have sought more budgetary support. There is a need for more funds for national projects." (PTI)
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The Indian rupee recovered by 16 paise to trade at 61.33 against the dollar in early trade Thursday (7 August) at the Interbank Foreign Exchange market, tracking positive sentiments after the government approved FDI liberalisation in defence and railways sectors.Forex dealers said besides selling of dollars by exporters, strength in other currencies against the American unit overseas also supported the rupee, but a lower opening in the domestic equity market capped the gains.The Cabinet Wednesday (6 August) cleared the long-delayed proposal for raising FDI limit in defence to 49 per cent and fully opened up the railway infrastructure segment, like high-speed trains, for foreign investment.The rupee had plunged 65 paise in its biggest single-day drop in over six months to end at 61.49 in Wednesday's trade against the greenback, hit by spike in dollar demand and negative cues from local stocks.Meanwhile, the benchmark BSE Sensex fell further by 54.13 points, or 0.21 per cent, to 25,611.14 in early trade Thursday.(PTI)
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The Indian rupee crashed by 65 paise -biggest fall since January 24, 2014- to close at five-month low of 61.49 against the Greenback on weak local equities and dollar demand from importers on fears of rise in global oil prices after escalating Ukraine crisis.Firm dollar in overseas market and slow down in foreign funds in stocks too lay down pressure on the rupee.Russia builded up their troops on Ukraine border despite despite tightening sanctions by US and Europe, showing no signs of backing down over ongoing crisis.As a result, importers and some banks went on dollar buying on hopes of further rise in this safe haven unit, leading to sharp fall in rupee value. Forex dealers also rushed to cover their short dollar positions.At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced weak at 61.06 and immediately touched a high of 61.03.Later, it continued its downslide and touched a low of 61.53 before concluding at 61.49 -level not seen since March 5, 2014 when it had settled at 61.75- revealing a steep fall of 65 paise or 1.07 pct. Previously, it had plunged by 73 paise on January 24, 2014.The benchmark S&P BSE Sensex slumped by 242.74 points or 0.94 pct while FIIs bought Rs 52.85 crore shares yesterday, as per provisional data.The dollar index was up by 0.19 per cent against a basket of six major global rivals.Pramit Brahmbhatt, CEO, Veracity Group said,"Today Rupee depreciated for the first time in this week and broke all the immediate supports and lost over one per cent as corporate dollar demand was seen in the market which forced Rupee to fall near 5 month low. Local equities also ended on a negative note which further dented the movement of Rupee. The trading range for the Spot rupee is expected to be within 61.00 to 62.00."In the forward market, premium fell back on renewed receipts by exporters.The benchmark six-month premium payable in January closed lower at 246.5-248.5 paise from last close of 248-250 paise.Far-forward contracts maturing in July, 2015 also moved down to 491-493 paise from 493-495 paise.The Reserve Bank of India fixed the reference rate for dollar at 61.3360 and for the euro at 81.9630.The rupee dipped further against the pound to 103.49 from 102.59 previously while reacted downwards to 60.07 per 100 Japanese yen from 59.25.It also turned negative to end at 82.02 per euro from 81.45.(PTI)
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The rupee depreciated by 30 paise to 61.14 against the US currency in early trade at the Interbank Foreign Exchange market on Wednesday (6 August) due to the dollar's gain against other currencies overseas.Forex dealers said besides the dollar's gain against other currencies, fresh demand for the American unit from importers and a weak opening in the domestic equity market put pressure on the rupee.The domestic currency had gained nine paise to close at 60.84 against the US dollar in yesterday's trade on the back of rising local stock market and sustained dollar selling by exporters.Meanwhile, the benchmark BSE Sensex fell 37.45 points, or 0.14 per cent, to 25,870.56 in early trade today.(PTI)
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India's domestic fuel supplies will not be affected by fallout from the ongoing conflict in Iraq although state-run refiners have been asked to draw up a contingency plan, the oil ministry said in a statement on Thursday.Iraq, the second-biggest crude oil supplier to India after Saudi Arabia, met around 13 percent of the South Asian nation's overall import needs last year, it said.State-refiners are aiming to buy 388,000 barrels per day (bpd) of Iraqi oil this year.Two of the state refiners, Indian Oil Corp and Hindustan Petroleum Corp, together aim to buy 374,000 bpd from Iraq in 2014, it said.Crude supplies from Iraq come from the Basra oilfields which are situated well away from the fighting in north-eastern Iraq.Ship loading from the Basra oil terminal, continued normally, it said.The government has also asked state refiners to diversify resources for the import of crude oil to minimise the impact of any geo-political instability in the Middle East.(Reuters)
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The market is closely monitoring developments in Iraq. Brent crude went above $115 a barrel on Thursday (20 June) as the United States said it would send military advisers to Iraq, raising concerns about the escalating conflict."There is nothing bigger than Iraq at the moment. It’s all safe haven buying," said Ashtosh Raina, head of forex trading at HDFC Bank.The dollar remained under pressure on Friday but managed to win back some lost territory after upbeat US data helped temper the fallout from the Federal Reserve's surprisingly dovish policy outlook.The rupee is seen trading in a 60-60.50 range during the session.Also, foreign institutional investors sold Indian shares worth a net Rs 421 crore ($70.52 million), provisional exchange data shows.(Reuters)
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With the RBI opting for status quo in its monetary policy review on Tuesday (5 August), the Finance Ministry said going forward the central bank should examine the liquidity situation, inflation and growth while fixing the policy rate. "...going forward, the RBI should examine the liquidity situation, inflation and growth in setting policy rates," the Finance Ministry said in a statement hours after the RBI Governor Raghuram Rajan announced the third bi-monthly monetary policy review. Recent data on inflation shows that inflation is moderating. Wholesale inflation for June declined to 5.43 per cent from 6.01 per cent in the previous month. "On its part, the Government remains committed to the path of fiscal consolidation and reviving the investment cycle that will help bring down inflation and pick-up growth further," it said. As expected by markets, the RBI in monetary policy has retained repo rate at 8 per cent, the reverse repo at 7 per cent and the cash reserve ratio at 4 per cent. The bank rate would remain static at 9 per cent. It, however, lowered Statutory Liquidity Ratio (SLR) for banks by 0.50 per cent to 22 per cent with effect from the fortnight beginning August 9. A similar move in June had released an additional Rs 40,000 crore into the system. The reduction in SLR, a portion of bank deposits banks are required to investment in government securities, give banks greater leeway to lend. "The Governor, RBI has already stated that RBI will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates," the statement said. As the economy picks-up and demand grows, this will allow an increase in bank credit, it said. Announcing the credit policy, Rajan, who has for the third time in a row kept the rate unchanged, said there are upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices. RBI has kept repo at 8 per cent since February despite industry demanding a rate cut to boost manufacturing which has remained stagnant in the past two fiscals. (PTI)
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The NDA government has decided to bring broad changes in the rural job guarantee scheme launched by UPA by proposing at least Rs 25,000 crore of investment into agriculture alone.The Rural Development Ministry has proposed to bring amendment to the Schedule I of the MGNREGA Act "to clearly bring forth the focus on agriculture". It has proposed to add provisions after Para 4 (2) of Schedule I of the Act."The works taken up under MNREGA shall enhance productivity in agriculture by creating infrastructure helpful for agriculture," says the ministry in a note sent to all states seeking their suggestions on the matter.The states have been asked to respond before June 23.According to the proposal, the district programme coordinator shall ensure that at least 60 per cent of the works to be taken up in a district in terms of cost shall be for creation of productive assets linked to agriculture and allied activities through development of land, water and trees."This is expected to bring at least Rs 25,000 crore of investment into agriculture," says the ministry note.The government has suggested new solutions to address the issues including poor asset quality, absence of adequate technical staff for planning/supervision and lack of outcome orientation in the works being carried out under the MGNREGA."A special provision of 3 per cent of the value of works done will be created for provision of technical supervision for the works. This amount will be used to deploy required technical manpower to guide in the planning and execution," the note says.In its note, the ministry says the labour material ratio for works taken up by agencies other than gram panchayats will be counted at the district level. For this purpose, the Para 20 of the Schedule I will be amended.According to the proposed amendment, "For all works taken up by the gram panchayats, the cost of the material component including the wages of the skilled and semi-skilled workers shall not exceed 40 per cent at the gram panchayat level."For works taken up by the implementing agencies other than gram panchayats, the overall material component including the wages of the skilled and semi-skilled workers shall not exceed forty per cent at the district level."Government said this will need an approximate Rs 8,000 crore for creating crucial infrastructure like minor irrigation structures.The ministry also emphasised greater focus on convergence with other departments - resulting in greater technical guidance, more professionalism and higher resource availability for works.Noting that there were leakages in implementation of MGNREGA due to inadequate supervision and vigilance, the ministry also suggested strengthening of social audits by establishing suitable mechanism that would identify, train and equip rural youth in overseeing implementation of the programme.Viewing that inadequate banking network and poorly laid out processes leading to long delays in payment of MGNREGA wages, the ministry said delays will be compensated by an effective implementation of the provisions of the delay compensation system."Accountability at all levels will be ensured to perform their obligated task in time, failing which a penalty would be imposed on them by the state government," the ministry said.It has suggested extension of the electronic Fund Management System to all places by providing IT connectivity to cut down the levels of fund flow, optimise fund utilisation and bring in efficiencies.The ministry also proposed depositing of wages directly into the accounts of the wage seekers using electronic platforms and disbursal of the same at the village level through a bank extension network.(PTI)
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India is a country of savers. Despite a significant drop in savings rate — from 38 per cent of GDP in 2008 to 30 per cent currently — Indians manage to save a lot every year. Here’s a lowdown on how Indians save and what rich Indians do with their hoards...Click here to view graphicCompiled by Shailesh Menon; Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 25-08-2014)
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A decision on hiking passenger fares and on allowing foreign direct investment in railways is likely to be taken before the Rail Budget, the government said on Thursday (19 June).A discussion on these matters is already on and a decision regarding them will be taken shortly, Railway Minister Sadananda Gowda said."We are discussing the matter and, within three-four days, will come to a conclusion (regarding the possible fare hike)," Gowda said on the sidelines of a conference of senior railway officials here.He is likely to meet Prime Minister Narendra Modi in a day or two to discuss the fare hike issue.Faced with an acute cash crunch, the railway board has proposed a 14.2 per cent hike in passenger fares along with a 6.5 per cent increase in freight rates.The railway budget is likely to be presented in the second week of July.Meanwhile, asked whether FDI will be allowed in railways, Gowda said, "Practically, we are short of resources, which is well-known to the people of the world. So, some resource mobilisation should be taken as being one of the priorities of railways. I want to have discussions with the commerce ministry."Yesterday, too, I had a small discussion with Commerce Minister Nirmala Sitharaman in this regard."Talking about his meeting with Sitharaman, Gowda said, "She asked me to come up with suggestions and we will discuss the matter and go ahead. In a day or two, I will have a meeting with the commerce ministry and will come up with a clear (stand) as far as FDI is concerned."Railways could benefit from FDI in high-speed trains, station development and last-mile connectivity.Asked what proportion of FDI will be allowed in the rail sector, Gowda said, "It will be clear only after discussions.Certain policy matters and other issues are there which need discussion. FDI cannot be brought in a secret manner or put in cold storage. It has to be done in open." (PTI)
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