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Reliance Industries may be allowed to hike rates for its gas from April after it offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output, the petroleum minister said.In June, India approved a move to higher, market-related rates for locally-produced gas from April 2014, but the finance ministry later said prices for Reliance should be capped because the company's gas production from the offshore D6 block was far below its supply commitment.Reliance, which operates the D6 block off India's eastern coast, has reported a sharp decline in gas output since 2010. Reliance and partner BP have cited geological complexities for the fall in output, but the oil regulator believes they failed to drill enough wells.Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue."They have come forward with the proposal for bank guarantees. There are some arbitration proceedings pending. Till that is settled, they will submit bank guarantees," Petroleum Minister Veerappa Moily told reporters at an industry event on Tuesday in Mumbai.Gas from D6 was earmarked for strategic domestic industries including fertiliser production, cooking gas and power, but has fallen so much that only some fertiliser plants now get supplies from the offshore block."We will put up a cabinet note in 10-15 days. Our ministry is concerned because we are keen to close the issue," he added.A spokesman for Reliance, controlled by India's richest man, Mukesh Ambani, declined to comment on the matter.The minister did not disclose the amount of guarantees, although media reports have earlier estimated them at $135 million per quarter.India, which imports nearly 80 per cent of its oil and a quarter of its gas requirement, hopes to launch a new round of auctions for oil and gas blocks by mid-January, Moily said.(Reuters)
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Reliance Industries may be allowed to hike rates for its gas from April after it offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output, the petroleum minister said.In June, India approved a move to higher, market-related rates for locally-produced gas from April 2014, but the finance ministry later said prices for Reliance should be capped because the company's gas production from the offshore D6 block was far below its supply commitment.Reliance, which operates the D6 block off India's eastern coast, has reported a sharp decline in gas output since 2010. Reliance and partner BP have cited geological complexities for the fall in output, but the oil regulator believes they failed to drill enough wells.Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue."They have come forward with the proposal for bank guarantees. There are some arbitration proceedings pending. Till that is settled, they will submit bank guarantees," Petroleum Minister Veerappa Moily told reporters at an industry event on Tuesday in Mumbai.Gas from D6 was earmarked for strategic domestic industries including fertiliser production, cooking gas and power, but has fallen so much that only some fertiliser plants now get supplies from the offshore block."We will put up a cabinet note in 10-15 days. Our ministry is concerned because we are keen to close the issue," he added.A spokesman for Reliance, controlled by India's richest man, Mukesh Ambani, declined to comment on the matter.The minister did not disclose the amount of guarantees, although media reports have earlier estimated them at $135 million per quarter.India, which imports nearly 80 per cent of its oil and a quarter of its gas requirement, hopes to launch a new round of auctions for oil and gas blocks by mid-January, Moily said.(Reuters)
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India's economic growth likely picked up slightly in the July-September quarter as improved manufacturing activity steered it from a four-year low in the previous three months, a Reuters poll showed on 26 November.Any improvement would be welcome news for the government as a string of opinion polls forecast a poor performance for the ruling party in general elections which must be held by next May.Economic growth virtually halved in two years to 5 per cent in the last fiscal year - the lowest level in a decade - and most economists surveyed by Reuters last month expect 2013/14 to be worse.The consensus of 40 economists showed gross domestic product expanded 4.6 per cent year-on-year in the last quarter, better than the 4.4 per cent in the previous three months, which was the lowest since the global financial crisis."It is only a marginal improvement with much of the support from a slight recovery in manufacturing sector," said Upasna Bhardwaj, an economist at ING Vysya Bank.A moderate recovery in Indian factories and exports were probably the main drivers for an increase in overall growth in the quarter through September. Annual industrial output picked up 2 per cent in September, driven by an uptick in export and domestic orders.Stronger global demand for India's exports also led to an increase in production, with exports growing 11.15 per cent annually in September.Also, a good monsoon should have boosted rural income and perked up flagging consumer demand.However, a dearth of investment lies at the heart of India's economic malaise.Little improvement is expected ahead of the general election, with investors doubting whether Prime Minister Manmohan Singh's minority government can force through any bold actions between now and then.Radhika Rao, an economist at DBS in Singapore, said euphoria surrounding Singh's earlier reform plans had eased after they failed to materialise."It is not surprising that the private sector keeps expansion plans on ice," Rao added.With wholesale price inflation moving back above the Reserve Bank of India's perceived comfort level of 5 per cent and consumer inflation quickening to more than 10 per cent, there is little expectation the central bank will act to ease policy boost growth.In face, new RBI chief Raghuram Rajan has hiked interest rates twice in as many months since September, tackling rising prices head on.(Reuters)
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Oil prices stabilised on 26 November after the previous session's slide as traders questioned how quickly the Iranian nuclear accord could translate into higher supplies, while Asian shares got off to a cautious start.The yen regained some poise following Monday's steep decline to a six-month low against the dollar and a four-year trough versus the euro.US crude prices added 0.2 per cent to above $94 a barrel, pausing after the previous session's 0.8 per cent decline following a weekend deal between the West and Tehran to halt Iran's most sensitive nuclear activities in exchange for some relief from crippling sanctions."The interim six-month 'freeze' agreement just reached on Iran's nuclear programme should not have any impact on oil prices, aside from short-term sentiment, because core sanctions on oil and banking have not been touched," Societe Generale said in a note."We see a greater than 50 per cent chance that a comprehensive agreement will be successfully reached within six months....If and when that happens, it could take Iran three to nine months to recover the one million barrels per day in production lost since 2011."MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent, adding to a 0.3 per cent rise in the previous session on the back of the Iranian deal.Thai assets looked set to come under further pressure on heightened political uncertainty as anti-government protesters forced their way inside the country's Finance Ministry and burst through the gates of the Foreign Ministry compound, in a bid to oust Prime Minister Yingluck Shinawatra.On Monday, the Thai SET index fell for a fifth straight session to an 11-week closing low and the baht tumbled to a two-week low versus the dollar.Citigroup said the Iranian nuclear deal could be a "get-out-of-jail-free card" for current account deficit countries, such as India, Indonesia and Turkey, which face a liquidity drain when the Federal Reserve eventually tapers in the coming months.Tokyo's Nikkei share average was likely to take a breather, with futures pointing to a weaker open after it climbed 1.5 per cent on Monday to within sight of a 5-1/2 year peak reached in May.The Japanese currency, which typically falls when share price rise, was up 0.2 per cent at 101.52 yen to the dollar and up 0.1 per cent at 137.27 to the euro.The euro was little changed at $1.35195, having fallen 0.3 per cent overnight."We remain bullish on the dollar heading into 2014 but remain tactically cautious on establishing longs, with a number of U.S. dollar pairs already trading at the high end of their ranges and data unlikely to be consistent enough to support expectations for an early tapering," analysts at BNP Paribas wrote in a note.Data showed on Monday that contracts to buy previously owned U.S. homes fell for a fifth straight month in October, hitting a 10-month low and adding to signs of cooling in the housing market.US stocks ended mixed overnight, with the Dow Jones industrial average posting a slim gain to end at another record high, while the S&P 500 eased 0.1 per cent.(Reuters)
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An Indian court on Monday found a dentist couple guilty of murdering their 14-year-old daughter and a servant five years ago, in a dramatic finale to a case that transfixed the country and tapped unease on both sides of the rich-poor divide.Aarushi Talwar was found with her throat slit at the family home in Noida, an affluent town of new shopping malls and offices near Delhi, in 2008. A day later, the body of the family servant, Hemraj, was discovered.Rajesh and Nupur Talwar were convicted in a local court in Ghaziabad, near Noida, and remanded in custody ahead of sentencing on Tuesday, 26 November.Naresh Yadav, a lawyer present in court, told reporters waiting outside that the couple and members of their family broke down in tears when the verdict was read out.Early in the investigation, police alleged Rajesh had murdered his daughter and servant in a rage after finding them in a compromising situation - the kind of crime more often associated with rural, conservative parts of India where "honour killings" are not uncommon.Both parents were later charged, but the Talwars always denied the murder and blamed sensational media coverage for demonising them and damaging their defence.They also described a Kafkaesque trail of botched police operations, arrests, "truth serum" tests and contradictory rulings by different investigative bodies.Much has been made in the media of the fact that the Central Bureau of Investigation (CBI), India's federal detective agency, relied on circumstantial evidence to pursue the Talwars.R.K. Saini, representing the CBI, defended the prosecution."There were so many circumstances that proved that no one could have committed the murder other than the two accused," he said. "The court has convicted them after going through the chain of circumstantial evidence."Rebecca John, one of the lawyers representing the Talwars, said they would appeal the ruling in a higher court."We are deeply disappointed, hurt and anguished for being convicted for a crime that we have not committed," the Talwars said in a statement. "We refuse to feel defeated and will continue to fight for justice."Horrific crime stories are common in India and many involve caste or class.But the Aarushi case, in which police named Hemraj as the murder suspect before his body was found, resonated with the rapidly expanding number of well-off families who fret that their wealth makes them vulnerable to violence.Dipankar Gupta, a sociologist at Shiv Nadar University in Uttar Pradesh - the state where Noida is located - said the case highlighted how domestic staff were frequently abused by employers in India."But at least now there is some progress and people are talking about it," he said.Newspapers this month reported the case of a wife of a member of parliament who allegedly tortured a maid to death at her home in Delhi.Security footage last week of a machete attack on a bank employee withdrawing cash from an ATM in Bangalore to pay for her child's birthday party was played repeatedly on news channels. She was partly paralysed and the attacker is at large. (Reuters)
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Compiled by Joe C. MathewGraphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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US Federal Reserve chairman Ben Bernanke said the Fed would maintain an ultra-easy US monetary policy for as long as needed and would only begin to taper bond buying once it was assured that labour market improvements would continue. Bernanke also said that while the economy had made significant progress, it was still far from where officials wanted it to be. Agreeing with his successor Janet Yellen’s testimony, Bernanke said, “The surest path to a more normal approach to monetary policy is to do all we can today to promote a more robust recovery.” The Fed has held interest rates near zero since late 2008 and quadrupled its balance sheet to $3.9 trillion through bond buying.AtonementJPMorgan finally agreed to a $13-billion settlement with the US government on charges that the bank overstated the quality of mortgages it was selling to investors in the run-up to the financial crisis. The justice department trumpeted its settlement as a big step towards holding banks accountable for their behaviour before the financial crisis. The misdeeds that the largest US bank admitted to, authorities said, are at the heart of what inflated the housing bubble: lenders making bad mortgages and selling them to investors who thought they were relatively safe.Building UpYahoo said it had increased its share repurchase authorisation by $5 billion and that it planned to offer $1 billion in convertible notes. Yahoo has aggressively repurchased its common stock in recent quarters, using cash obtained from selling a portion of its stake in Chinese e-commerce giant Alibaba. In the first nine months of 2013, Yahoo spent $3.1 billion on share buybacks, which helped boost its scrip by around 74 per cent, even as the Web portal’s revenue growth has remained stagnant amid competition from Facebook, Google and Twitter.Emerging WorrySlowing emerging markets are a drag on the world’s economic recovery and advanced countries are struggling to pick up the slack after years of debt crises, the Organisation for Economic Cooperation and Development (OECD) said, trimming its global growth forecast. In its latest snapshot of economic activity, OECD forecast that the world economy would grow 3.6 per cent next year. Though an improvement from the 2.7 per cent expected for 2013, it was not as fast as the 4 per cent estimated for 2014 in its last twice-yearly Economic Outlook in May. The primary reason cited was the downgrade in growth in the emerging countries, hit by capital outflows triggered by the US Fed’s plans to rein in its exceptional monetary stimulus, and the inability of the advanced economies to make up for it.Handle With CareThere is no risk of deflation visible in the euro zone economy but its recovery is fragile with inflation low and credit subdued, said a European Central Bank (ECB) board member during a presentation in Frankfurt. The ECB cut interest rates to a record low in November and said it could take them lower still to prevent the euro zone’s recovery from stalling after inflation tumbled to 0.7 per cent — well below its target of just under 2 per cent. The member, Peter Praet, said inflation in the euro zone is low but inflation expectations solidly anchored. A cyclical upswing in the euro area “is confirmed... Things are improving, but it is still a fragile environment”, he added.Good NewsA surge in car shipments spurred Japanese exports to their biggest annual increase in three years in October, suggesting that a gradual pick-up in global demand will help underwrite a recovery in the world’s third largest economy. The 18.6 per cent increase in exports in the year till October was an acceleration from the 11.5 per cent gain till September, according to finance ministry data. Recovering demand for Japanese goods would also help address another concern — persistent red ink in the trade balance.Clean-Up ActChina will steer local governments away from the pursuit of economic growth at all costs and beef up their powers to punish polluters in order to reverse the damage done by three decades of unchecked expansion. In its recent wide-ranging economic and social reforms, the ruling party said it would put more emphasis on environmental protection, and also hold local authorities responsible for pollution. It also pledged to relax its ‘one-child’ policy.Free Float? With a shift in tone and language, China’s central bank governor has dangled the prospect of speeding up currency reform and giving markets more room to set the yuan’s exchange rate as he underlines broader plans for sweeping economic change. The People’s Bank of China under Zhou Xiaochuan has consistently flagged its intention to liberalise financial markets and allow the yuan to trade more freely, even before the Communist Party’s top brass recently unveiled the boldest set of economic and social reforms in nearly three decades.Smart MarketingSamsung Electronics said its Galaxy Gear has become the world’s most popular smartwatch with sales touching 800,000 units since its debut two months ago, defying market concerns that the accessory will fail due to a lack of compelling features. The South Korean firm said Gear sales have been better than its own expectations and it will expand promotions for the wearable device for the crucial year-end holiday sales. Samsung intends to step up Gear sales by expanding the number of mobile devices that work with it.(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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In the July-September quarter, dubbed by many as the most difficult, currency tailwinds helped exporters while austerity measures came to the rescue of many firmsClick here to view graphicCompiled by Shailesh Menon Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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I think it would also, in many ways, impoverish the European Union”Nick Clegg, deputy prime minister of the UK, on the consequences of the UK leaving the EU“I drank too much, I smoked some crack some time. What can I say? I made a mistake, I’m human”Rob Ford, mayor of Toronto, in a television interview“First, they try to block you; second, they try to infiltrate you; and third, you win. I really think that’s how it works. Because the power has shifted”Eric Schmidt, executive chairman, Google, on Internet censorship, in a lecture at Johns Hopkins University“A tea-seller is a better person than those who sell the country”Narendra Modi, responding to a Samajwadi Party politician who derided him over his past as a tea vendor“I don’t trust them and they don’t trust me”Hamid Karzai, President of Afghanistan, at a political meet, referring to the US Steve Ballmer (Bloomberg)“Thank you for helping try to find me work”Steve Ballmer, the outgoing CEO of Microsoft, to a shareholder who asked him if he would want to become the secretary of information technology“China is doing exascale and petascale computing. I am fighting with the government to invest money in computing”C.N.R. Rao, Bharat Ratna awardee and eminent scientist(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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Oil prices hit the skids on 25 November after Iran and six world powers sealed a deal curbing its nuclear programme, a fillip for global economic growth that found expression in heartier share prices from Tokyo to Seoul.The agreement gives Iran some relief from crippling sanctions and is considered a big step toward a more lasting treaty. While Iran will not be allowed to increase its oil sales for six months, any easing of Middle East tensions tends to lead to lower crude prices.Brent crude oil shed $2.47 to $108.58 a barrel, its biggest daily drop in a month. US oil lost 88 cents to $93.96 a barrel.If sustained, the drop would be a net plus for spending power globally given high petrol prices essentially act like a tax on consumers."Positive growth signals continue to trickle out across the global economy and there is growth convergence between developed and developing economies," said Peter Dragicevich, a strategist at CBA."Our world GDP "nowcasting" estimate points to accelerating global economic growth in the final months of 2013. This is the general trend we expect to occur in early 2014."Attention in Asia was again on Japanese markets as a sliding yen promises to boost exports and profits. The Nikkei sped ahead by 1.3 per cent, having gained almost 11 per cent in little more than two weeks.On Wall Street, the Dow ended Friday with gains of 0.3 per cent, while the S&P 500 added 0.5 per cent for its first ever close above 1,800. Early Monday, S&P 500 futures had added another 0.3 per cent.But with money flooding into developed world assets, emerging markets are getting cold-shouldered. It was notable that MSCI's broadest index of Asia-Pacific shares outside Japan failed to make any headway at all last week, even as Wall Street made new peaks.So far on Monday, the index was up 0.4 per cent, as Seoul shares led the way with an increase of 0.7 percent.Yen Pain Is Euro's GainIn currency markets, the yen remained under pressure as investors use it for carry trades - borrowing the currency at super-low rates to invest in higher-yielding assets elsewhere.The dollar was up at 101.78 yen having cracked the old July top of 101.53. Much of the action was in the euro against the yen, which has had a barnstorming run to reach four-year highs above 137.80 yen.Euro-yen bulls now have their eyes set on a series of peaks from 2009 ranging from 137.43 all the way to 139.18, the top for that year. A break of the 139.18 level would take the euro to territory not visited since October 2008 -- very bullish from a technical point of view.Oddly, the gains have come even as the European Central Bank sounds ever-more dovish on policy.Earlier on Monday, ECB Executive Board member Benoit Coeure reiterated the central bank would take further action should inflation slow further. The single currency was been particularly strong against the Australian dollar, which has been undone by threats of intervention from the Reserve Bank of Australia.The euro leaped almost four full cents last week as the Australian currency crumpled to a three-month trough.Traders said the commodity currency could continue to struggle particularly if tensions between China and Japan grew.China at the weekend suddenly imposed new rules on airspace over islands at the heart of a territorial dispute with Tokyo, prompting Japan and ally the United States to warn of an escalation into the "unexpected".There is no major economic data due in Asia on Monday, while most of the U.S. economic releases will be front-loaded this week ahead of the Thanksgiving holiday on Thursday.The US diary includes figures on housing starts and prices, consumer confidence, durable goods orders and manufacturing in the Chicago area.(Reuters)
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