Author
Congress accepted defeat in Delhi, Madhya Pradesh and Rajasthan, saying it was disappointed with the poll outcome. "The results in Delhi, Madhya Pradesh and Rajasthan are disappointing.... Congress accepts its defeat with great humility.... We concede that we have lost there," party spokesman Randeep Singh Surjewala said when asked about the trends. He, however, dismissed suggestions that the performance of BJP in the Assembly polls was an indication that the party could sweep the Lok Sabha election next year. He recalled that BJP had won 2003 Assembly polls but lost badly in the Lok Sabha elections. "Any celebration ahead of the 2014 Lok Sabha polls will be premature. BJP refuses to learn from history.... There was similar sort of upbeat mood in the BJP in 2004, when the NDA had lost," he said. Surjewala also said that Chhattisgarh "is a ray of hope" and Mizoram "will also bring some cheer". Expressing suprise over the results in Delhi, where the debutant Aam Aadmi Party is competing with BJP for the first place, AICC general secretary in-charge for the state Shakeel Ahmed said, "We were not expecting these results. The reasons for this will be analysed". Congress has been in power in Delhi for 15 years with Shiela Dikshit having the distinction of the longest-serving woman Chief Minister in independent India. In the last Assembly polls, the Congress had won as many as 43 seats in the 70-member legislative Assembly and its fortunes have dwindled sharply this time with the party likely to get less than 10 seats. Congress leader Abhishek Singhvi dismissed suggestions that the trends showed that there was a wave in favour of BJP Prime Ministerial candidate Narendra Modi in the country. Congress leader and Union Minister Shashi Tharoor said his party has very capable and experienced political leaders who are surely going to analyse in detail and find what corrective measures are needed. He said across the the country there were regional parties and areas where the BJP has no presence. "So we should not be too hasty in suddenly seeing a sort of tsunami in favour of party that has done well today," Tharoor said. (PTI)
Read More
Indian gold imports may fall 70 per cent in the final quarter of 2013 from 255 tonnes in the year-ago period and are expected to be half usual levels at 500-550 tonnes next year if new import rules are maintained, a top trade body official said on 6 December.To curb a record trade deficit, India imposed an import duty of 10 per cent on gold, and tied imports for domestic consumption to exports, creating scarce supply of the yellow metal and boosting premiums to a record.As a result, Indians have depended heavily on old heirlooms and smuggled yellow metal to meet wedding demand."Year 2014 seems to be a difficult one for the Indian gem and jewellery industry so far as gold imports are concerned," Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation (GJF), said in an interview at the Reuters Global Gold Forum.India, which may import a lower-than-usual 700-750 tonnes in 2013, is unlikely to ease its import policy or the customs duty until the trade deficit is under control, Bamalwa added."Demand (for) jewellery has not yet picked up, so the industry is not yet in panic, but I am not (very) sure about the future - say, after 30 days," said Bamalwa.The World Gold Council (WGC) cut its forecast for Indian gold demand earlier this month, predicting the country could also lose its crown as the world's biggest consumer of bullion to China.The WGC said Indian demand could be 900 tonnes in 2013, from its previous forecast of 1,000 tonnes.Fourth-quarter demand is expected to be low because consumers brought forward wedding purchases to April and May, when gold prices fell drastically, Bamalwa said.Premiums for gold in India climbed to a record $160 an ounce above spot prices this week. By the end of the quarter, they may have risen as high as $200 an ounce, Bamalwa said.Spotlight On ExportsUnder the government's new rules, gold importers must export 20 per cent of their total imports. Importing agencies such as banks and state-run companies can bring in a maximum of two consignments of metal before having to furnish proof of exports, he said.Jewellers are trying to increase exports but the global economic situation is "not very encouraging", Bamalwa said.Jewellery exports, on which domestic imports are dependent under the new rule, have slid nearly 55 per cent to $3.95 billion so far this fiscal year, from April to October.Falling exports will have a knock-on effect on future imports because of the ties between the two, which in turn will hurt domestic jewellers who should be seeing surging demand as the wedding season gets into full swing.The trade body plans to approach the government to provide low-cost finance to jewellery exporters, against a 12-13 per cent funding cost now. Its global competitors get financing at 2-3 per cent."We will be approaching the government for some incentives, but since the country is going for general elections next year, the incentives may not come before the next government comes to power," Bamalwa said. Elections are due in May in India, the world's second-most populous country.Bamalwa said the government was "in no mood" to relax its new import duty rules, or its gold export requirements, until the current account deficit had been reined in.(Reuters)
Read More
The World Trade Organization reached its first ever trade reform deal on Saturday, 7 December, to the roar of approval from nearly 160 ministers who had gathered on the Indonesian island of Bali to decide on the make-or-break agreement that could add $1 trillion to the global economy The approval came after Cuba dropped a last-gasp threat to veto the package of measures. "For the first time in our history, the WTO has truly delivered," a tearful WTO chief Roberto Azevedo said. "This time the entire membership came together. We have put the 'world' back in World Trade Organization," he said. The talks had dragged into an extra day after Cuba at the last minute refused to accept a deal that would not help pry open the US embargo of the Caribbean island. It later agreed on compromise language with the United States. The agreement marks WTO's first global trade agreement since it was created in 1995 and rescues the WTO from the brink of failure and will rekindle confidence in its ability to lower barriers to trade worldwide, after 12 years of fruitless negotiations. Read: Draft WTO Deal Approved (Reuters)
Read More
Gold prices fell by Rs 465 to Rs 30,785 per ten gram in the national capital Friday on reduced offtake by stockists at existing higher levels amid a weak global trend.Silver remained under selling pressure for the fourth straight day and lost Rs 200 to Rs 43,600 per kg, after losing Rs 1,275 in the previous three sessions.Traders said reduced offtake by stockists and retailers at existing higher levels amid a weak global trend as US economic data reinforced concern that the Fed will begin trimming stimulus measures, curbing demand for precious metals as a haven, mainly pulled down the bullion prices.Gold in New York, which normally sets price trend on the domestic front, fell by 1.46 per cent to USD 1,225.10 an ounce and silver by 1.42 per cent to USD 19.44 an ounce last night.On the domestic front, gold of 99.9 and 99.5 per cent purity tumbled by Rs 465 each to Rs 30,785 and Rs 30,585 per ten gram, respectively. It had shot up by Rs 450 Thursday. Sovereign held steady at Rs 25,200 per piece of eight gram in scattered deals.Similarly, silver ready fell by Rs 200 to Rs 43,600 per kg and weekly-based delivery by Rs 120 to Rs 44,180 per kg, while silver coins remained unchanged at Rs 82,000 for buying and Rs 83,000 for selling of 100 pieces.(PTI)
Read More
A recovery in the rupee is giving Finance Minister P. Chidambaram rare relief in his battle against a threatened credit rating downgrade to junk status by reducing pressure on the government's subsidy bill.Still, the minister can only meet his fiscal deficit target of 4.8 per cent of GDP by rolling over a substantial amount of subsidy spending into next year's budget and by finding big savings elsewhere, two senior finance ministry officials said.But a 10 per cent rise in the rupee - which slumped to a record low late in August - means Chidambaram can at least reduce the amount of subsidy spending that gets pushed into next year's budget to $12 billion from a previous estimate of $15 billion, these officials said.Other budget headaches mean he will have to find about $8 billion in savings from budgeted spending plans to meet the deficit target, they said.The sources, who have direct knowledge of the budget issues or have been briefed on them, declined to be identified because the revised budget numbers are not yet public."Chidambaram wants to put the house in order before the 2014 election campaign kicks off and the US Federal Reserve begins cutting its monetary stimulus," said one of the officials.National elections have to be called by May 2014 and emerging markets are on edge as investors speculate on when the US central bank might reduce its economic stimulus, which could prompt capital to shift into U.S. assets.A finance ministry spokesman declined to comment on the budget estimates other than saying revised figures are still being worked out.Missing TargetsChidambaram has said the fiscal deficit target is a line that will not be crossed as he seeks to fend off the threat from Standard & Poor's to downgrade India's sovereign credit rating, currently clinging to the bottom rung of investment grade.The budget is under pressure on a number of fronts; subsidy spending on fuel, food and fertiliser has blown out, economic growth has slumped to its weakest level in a decade and a programme to sell state assets is in tatters.The government had initially budgeted spending of about $36 billion for subsidies, but that swelled to $52 billion when the rupee hit its record low.Reflecting the economy's weakness, net tax receipts in the first seven months of the fiscal year are about 7 per cent higher than the year-earlier period, the slowest pace in four years and well below the full-year budget target of 19 per cent. This could create a budget hole of some $2.4 billion, said the second official."We will need savings of up to 50,000 crore if the shortfall in tax receipts is between 10-15,000 crore," this official said.Expected income of $8.8 billion from the sale of government stakes in state-run companies looks increasingly out of reach.The government could announce later the results of a sale of a 4 per cent stake in power transmission company Power Grid. Based on the sales price and oversubscription, the sale will raise around $270 million, which would take the total amount raised so far from state asset sales this fiscal year to about $500 million.The government still hopes to bring in nearly $3.5 billion more by selling its remaining stake in Hindustan Zinc and Bharat Aluminium before the end of the fiscal year."The disinvestment numbers are there in the budget. But it appears that we are going to miss them by a wide margin, like every year," said the second senior official.Any Means NeededIn the absence of the share sales, Chidambaram told his cabinet colleagues earlier in the week that money would have to be raised by pressing state firms to buy back government shares or to issue a special dividend, said the first senior official citing a description of the meeting by Chidambaram.Prime Minister Manmohan Singh had called the meeting to discuss the sale of the government's share in state-run coal producer Coal India and power equipment manufacturer BHEL.Chidambaram also hopes to make savings by strictly implementing rules on allocating funds to other ministries, which will slow down how quickly they receive the money, the first official said."We are expecting savings of about 40-50,000 crore, though the numbers still have to be finalised," this official said.Non-spending of allocated funds could help in achieving the budget deficit target, the finance ministry's spokesman said.The revenue position will be clearer by the end of December, by which time Indian companies will have deposited their advance tax payments for the third quarter.The government expects major savings from ministries like drinking water and sanitation, rural development, defence, trade, communications, power and planning. In April to October, the deficit reached about 84 per cent of the full-year target.(Reuters)
Read More
The rupee's new-found strength will likely dissipate soon on concerns the US Federal Reserve will reduce its stimulus programme next year, giving a boost to the dollar, a Reuters poll showed on Thursday.Analysts in the poll were less optimistic about the rupee's prospects than they were in a similar poll last month, but said the currency is unlikely to weaken to the record low levels seen in August due to an improvement in the country's current account deficit.The Chinese yuan, on the other hand, is expected to continue to slowly appreciate over the next year as the economy improves and on expectations that its central bank will widen the currency's trading band.Median expectations from 20 strategists in the poll conducted this week were for the rupee to trade at 63 against the dollar at the end of February next year, weaker than its rate on Thursday.It is then seen weakening further to Rs 64 per dollar by May and Rs 63.43 by November 2014."A tapering in the Fed's stimulus would drive the sentiment in the rupee in the near term along with domestic political clarity and fiscal management," said Shakti Satapathy, analyst at A.K. Capital Services in Mumbai."However, a good show on the current account deficit and other inflow driving measures from the government and Reserve Bank of India would restrict any sharp depreciation henceforth."The US Federal Reserve is expected to begin reducing its $85 billion a month bond purchases by March next year as its economy improves.When that happens, rising bond yields in the US will likely attract investors, boosting the dollar against emerging market currencies, which have been historically reliant on foreign exchange inflows.In mid-May, when the Fed announced similar tapering intentions, most emerging currencies were dumped by investors leading to sharp falls in those currencies. The Indian rupee slumped 20 per cent.But recent data showed India's current account deficit has improved as the government and RBI rushed to put in place measures to stem the outflow of funds from the economy.From increasing foreign direct investment limits on retail, telecom and aviation industries to curtailing gold imports and providing off-the-market swap windows for oil companies to buy dollars, the steps helped stabilise the rupee.India's current account gap narrowed sharply in the September quarter to $5.2 billion or 1.2 per cent of GDP -- the lowest since the June quarter of 2009.Meanwhile, Finance Minister P. Chidambaram has vowed to lower the deficit to $60 billion for the fiscal year ending March 2014, counting on declining gold imports and double-digit export growth.But analysts said risks remain."The only data which has improved is the current account deficit but it still continues to be a deficit and will widen from the current level of $5.2 billion per quarter," said Samir Lodha managing director at QuantArt Market Solutions.Lodha says languishing economic growth, retail inflation of around 10 per cent, an out-of-control fiscal deficit and looming elections were some of the factors that could threaten the stability of the currency.General elections are due to be held in India by May next year and analysts said a hung parliament will adversely affect investor sentiment.Despite its rebound in recent months, the rupee is still down about 11 per cent for the year to date.Yuan StrengthMeanwhile, the poll also showed the Chinese yuan will continue to rise slowly to 6.08 per dollar in three months, 6.05 by May next year and 6.00 by November.It was trading at around 6.09 on Thursday.Those predictions are slightly better than last month and signal expectations that the People's Bank of China will gradually widen its trading band as the economy improves.The yuan has been the best performing currency in Asia so far this year, appreciating 2.3 per cent.The currency overtook the euro in October, becoming the second-most used currency in trade finance, global transaction services organisation SWIFT said on Tuesday (3 Dec).(Reuters)
Read More
Prime Minister Manmohan Singh said a strong domestic manufacturing base in electronics and telecommunications will mitigate burden of growing imports for the sector. "India needs to develop a strong domestic manufacturing base in electronics and telecommunications," Singh said in his inaugural address at the industry event 'India Telecom 2013'.He said by 2020, it is estimated India will be importing electronics products worth about $300 billion, which will be more than the value of the country's imports of petroleum products."We need to act now to avoid a situation where we face difficulties in financing these huge imports. India should have manufacturing facilities which result in a balanced trade in electronics products and are a part of global supply chains," Singh said.Talking about policies in the telecom sector, Singh said National Telecom Policy 2012 has brought clarity on number of issues in the sector."I understand that the Department of Telecommunications has already started issuing Unified Licenses and will also shortly issue the Merger and Acquisition guidelines," he said.The Empowered Group of Ministers early this week firmed up their views on M&A rules and the same has to be placed before cabinet for approval. Elaborating on use of telecom technologies for modernising systems, Singh touched upon Telecom Ministry's plan to provide 3G connectivity with computers for students."Combining a computer with 3G connectivity can revolutionise the delivery of education. Students can learn the subject of their choice from quality teachers without leaving the place of their residence. I am told that the Telecom Commission is working on such possibilities and I wish them all success in this noble endeavour," he said.The Ministry is learnt to be in process of developing a project under which a tablet PC will be given to students with 3G connection. But the proposal is yet to receive nod of inter-ministerial panel Telecom Commission after which it may have to seek approval of Cabinet for final implementation. (PTI)
Read More
In a strongly-worded message to WTO members, India said the food security issue was "non-negotiable" and the country also managed support for its stand from several nations from Africa and Latin America. "Agriculture sustains millions of subsistence farmers. Their interests must be secured. Food security is essential for over four billion people of the world," Commerce and Industry Minister Anand Sharma said addressing the plenary session of the 9th Ministerial Conference of the World Trade Organisation (WTO). "For India, food security is non-negotiable. Need of public stock-holding of foodgrains to ensure food security must be respected. Dated WTO rules need to be corrected." For its tough stand over the food security issue, India got support from several new members from Africa and Latin America, though some G-33 partners like Indonesia and China have shifted their positions. The second day of the WTO Ministerial Conference started with India saying "we have a half-baked agricultural package ... for India food security is non-negotiable".According to sources, the "strong and clear" message given by Sharma during the plenary session of the WTO meeting, "created a flutter" in Bali and a whole lot of enquiries were made.Sharma, on his part trimmed his speech to the allotted three minutes lest it should evoke some adverse remarks from the chair."China has got what it wanted in trade facilitation and Indonesia is a host country which wants a successful conclusion to the long stalled talks," Indian sources said.Earlier both were supporting India's stand.As the day progressed, in a meeting which was convened by WTO Director General Roberto Azevedo, as many as 25 nations including Nigeria, Argentina, Kenya, Jamaica, Brazil, Cuba, South Africa and Bolivia strongly supported India's view that a permanent solution is must for the smooth implementation of the food security programme.During the meeting, which went for about two-and-a-half hours, about 25 out of 55 members, supported India's stand on the food security issue. The DG was taking a close door meeting to assess the state of play of the meeting."About 25 members who made speeches clearly said that there was an imbalance in the overall Bali package and food security is an issue which cannot be compromised and a permanent solution is required for this," they said adding "some of them said there cannot be an interim solution".Sources said that as reported by few media that India has isolated on the matter is "wrong".During his bilateral meeting with Azevedo, Sharma conveyed to him that the current Bali package is not balanced for developing nations."The WTO chief too has clearly recognised that there is a problem," they said.Other WTO members who supported India's stand include Nepal, Egypt, Uganda, Namibia, Argentina, Zimbabwe, Ecuador, Venezuela, Mauritius and Nicaragua.Meanwhile addressing media, WTO Spokesperson Keith Rockwell said that during the long meeting in afternoon some members supported India's stand."Some African and Latin American countries have supported the India's position on peace clause," Rockwell said. Sharma's strong tone in the morning session did not go well with western media as several of them sought views on that from EU Trade Commissioner Karl De Gucht and Rockwell."Minister Sharma has a very strong view on that," Rockwell said. When asked about the tone of Sharma, Gucht said: "What Sharma said was straight forward ... he has to see what tone he has to use. That is his responsibility".Meanwhile a Pakistani diplomat said that India's food security programme has some problem as the foodgrain bought through public procurement may be released in the global market which may distort global prices."Delink social safety programmes from others...and ensure that it does not distort global trade and better shift to cash transfer schemes," the diplomat said.(PTI)
Read More
Emerging economies need to make sure their exchange rates are flexible enough to deal with volatile capital flows, a senior International Monetary Fund official said.Billions of dollars have left emerging markets since May, when the US Federal Reserve first said it may need to begin reducing its $85 billion monthly bond-buying programme, which would deal a blow to emerging economies saddled with large current account deficits.But capital flows switched direction again in November as the Fed delayed its exit plan, IMF deputy managing director Min Zhu told Reuters, giving emerging economies breathing space to prepare defences for when the Fed decides to act."Exchange rate flexibility is really the first front line to go against this capital flow volatility," Zhu said on the sidelines of a financial conference in the Saudi capital."That's the most important line against the cross-border shocks. So make sure that exchange rates are flexible," he said without giving details.The IMF has urged China in the past to adopt a more market-based currency exchange rate with less intervention. Last month, China's central bank governor dangled the prospect of speeding up currency reform and giving markets more room to set the yuan's exchange rate.Developing countries called on the IMF in October to help them deal with heightened market volatility caused by the Fed's taper plan.According to the IMF, emerging economies have been working hard since the Fed's May warning signal to improve fundamentals through tightening fiscal policies and tackling inflation, which is a key issue in India, he said.Some emerging economies have also embarked on policies to encourage trade in order to slash their large current account deficits and raised interest rates to counter depreciation of their currencies, Zhu said without giving specifics.Last month, Indonesia's central bank raised its policy rate by 25 basis points to help reduce its large current account deficit and bolster the rupiah, Asia's weakest currency this year.Zhu also said that China may need several years to switch its economy from investment to consumption-driven growth."China is moving in the right direction but it is not an easy job. Investments account for 47 per cent of GDP (gross domestic product), which is way high, and consumption is way low," he said.The world's second-largest economy will need time to implement reforms such as opening up the services sector to help reduce investment as a proportion of GDP, he said."It will be a medium-term adjustment process. The government set a goal by 2020 that they want to double per capita income, change the growth model. We think it is reasonable," he said in the Fund's first comments on China's reform plans.Beijing's leadership last month unveiled its boldest set of economic and social reforms in nearly three decades to unleash fresh drivers of growth over the next decade.On Tuesday, China's leaders pledged to quicken economic reforms in 2014 while keeping policy stability and continuity at a meeting of the decision-making Politburo.According to the World Bank, China's per capita GDP was just $6,188 last year, compared with $22,590 in South Korea, $36,796 in Hong Kong and $51,709 in Singapore - Asian peers that have succeeded in making such a transition.A Reuters poll showed annual economic growth this year could slow to 7.6 per cent - the weakest in 14 years - but ahead of the government's target of 7.5 per cent.(Reuters)
Read More
Business activity in emerging markets grew at the fastest rate in eight months in November, supported by momentum in Chinese manufacturing activity, a survey showed.The composite HSBC emerging markets index ticked up to 52.1 from 51.7 in October, moving further above the 50 line that divides expansions in activity from contractions even though growth in the services sector stalled at October's seven-month high.Manufacturers picked up the slack, led by China, where stronger domestic demand drove manufacturing growth to its sharpest increase since March, and also helped by India."In India, manufacturing business conditions are turning to positive after a few months of contraction," said Murat Ulgen, an emerging markets economist at HSBC."China is a huge weight, India is a huge country and has returned to (manufacturing) growth."Other emerging markets also saw faster growth in manufacturing, with Central and Eastern Europe and Turkey benefiting from the euro zone's ongoing recovery.But the manufacturers' index was dragged down by slowing growth in Brazil, Russia and South Korea and by a contraction in Indonesia.Overall, the HSBC index showed only modest growth in the services and manufacturing composite, and November's figure remains below the long-term trend level of 54.0.Despite returning to manufacturing growth, India's large but challenged economy weighed on the index, with a fifth month of overall contraction.Its private sector output also contracted for the fifth straight month, but at a slower rate than in previous months."For India, the whole picture including services is still contracting," Ulgen said.Despite a potentially challenging year ahead, manufacturing sentiment strengthened in most of the countries, with business outlooks in Brazil, Indonesia and the Czech Republic reaching record highs.The HSBC survey collects data from purchasing managers at about 8,000 firms in 17 countries. The index is calculated using data produced by Markit.(Reuters)
Read More
