Here is one way of looking at the Reserve Bank of India's (RBI) monetary policy announcement for 2011-12 (FY12). When you go through a course of treatment for any ailment, doctors use the most potent doses and medicines first. As symptoms fade, and it becomes evident that the illness is waning, doses become smaller and less intense, and once the ailment disappears, the treatment stops. Use that analogy to analyse the credit policy, and one will realise the treatment has only begun. By announcing a half percentage point hike in policy interest rates — mainly the repo rate, at which banks borrow from the RBI for managing liquidity needs almost every day — or 50 basis points (bps), the central bank seems to have signalled that its treatment (policy rate hikes) for persistently high inflation throughout the economy thus far has not worked, so it decided to give the banking system stronger medicine (aggressive rate hikes)."Giving it such a booster shot at what most thought were near the end of the hiking-cycle seems a little out of place," says Indranil Pan, chief economist at Kotak Mahindra Bank. The RBI has also made borrowing terms tougher: it has said that banks can borrow up to 1 per cent of net deposits at 1 per cent higher than the repo rate of 7.25 per cent (at 8.25 per cent). Rajiv Kumar, economist and director general of the Federation of Indian Chambers of Commerce and Industry, is worried that maintaining growth would be difficult. "It will actually slow down growth," says Kumar. "Employment targets cannot be met and that could add to social pressures."In his address to bankers, and in his policy statement, RBI governor Duvvuri Subbarao said as much, that the country would have to forego some growth in the short term to ensure sustainable growth in the longer term. How short? The rest of the year, perhaps. The RBI pegs gross domestic product (GDP) growth at 8 per cent for FY12.It Was Always About InflationBut what makes this policy more interesting are some of the structural changes that accompany the aggressive policy-rate hike, to give it more bite in the battle on inflation. First, rather than use a corridor between the repo and reverse repo (the rates at which the RBI ‘borrows' excess securities from banks), monetary policy will now use a single signalling rate, the repo rate. Second, it will increase the costs for banks to borrow through the newly instituted marginal standing facility (MSF), which banks can use to borrow additional liquidity. The interest rate on MSF borrowing will now be 8.25 per cent, instead of 7.25 per cent.Third, the central bank has raised the cheapest form of bank ‘borrowing' — savings bank deposits — from 3.5 per cent to 4 per cent, after leaving it untouched for almost nine years. Banks make a big spread on this segment of deposits, and their net-interest margins (NIMs, or the difference between interest paid on deposits and interest earned on loans) could come under some pressure. In addition, savings bank interest rates could go up each time the repo rate is increased. Should savings bank interest rates have been raised at this juncture? They constitute roughly 22 per cent of the total deposit base of the banking system. The current hike apart, not everyone is happy with the thought of the eventual deregulation either. "Casa (current and savings account) deposits, which are core deposits, will become volatile," says Mohan Shenoi, treasurer at Kotak Mahindra Bank. "Currently, in liquidity statements, they are included in the 1-3 year range. Now, we will have to put them in the less- than-one-year bucket. And that could change the cost of deposits significantly."break-page-breakOthers think deregulating savings banks rates is necessary. "Savers need to be compensated especially as inflation levels are around 8.5 per cent," says South African FirstRand Bank's treasurer Harihar Krishnamoorthy. "Policy transmissions get muted when a large part of deposits are at low, fixed levels and render lending rates less dynamic."Stimulus Versus ResponseWhat will banks do? "Most banks will try to maintain margins, but a large part would have to be passed on through increase in lending rates, say 50 to 100 bps," said Chanda Kochhar, managing director and chief executive officer, ICICI Bank, at the bankers' conference after the annual policy announcement. "By definition, EMIs should go up," said Aditya Puri, managing director and CEO of HDFC Bank, at the conference. "The RBI has made money dearer. Now, the banks' asset liability committees (ALCO) will make the final decision (on interest rate hikes to borrowers), but there could be a 50-bps hike in lending rates."Puri was right. IDBI Bank announced a rate hike in its base lending rate of 50 bps within hours of the policy announcement on 3 May. Punjab National Bank and Yes Bank followed the next day announcing similar increases. LIC Housing Finance and Bank of Maharashtra were next. In the coming days, the entire banking sector will follow suit.Banks have another problem on the big deposits side, too. The RBI has sought to reduce the interdependence of banks and mutual funds in managing liquidity. Over the past years, banks' investments in liquid funds of debt-oriented mutual funds (DoMF) have grown manifold. DoMFs are huge lenders in overnight money markets, especially in the collateralised borrowing and lending obligation market, where banks are the biggest customers.DoMFs invest heavily in certificates of deposit (CD) of banks. "Such circular flow of funds between banks and DoMFs could lead to systemic risk in times of stress or liquidity crunch," the RBI said. Accordingly, it capped banks' investment in liquid schemes of DoMFs at 10 per cent of their net worth as on 31 March of the previous year and has given them six months time to comply.Bank treasurers say this could result in a reduction in banks' earnings, besides affecting mutual funds. "It will also impact mutual funds' assets under management, although the impact will be differential," says Bekxy Kuriakose, head of fixed income at L&T Mutual Fund.Prudence And The Bitter PillThe forced reduction in reliance on mutual funds is part of the prudential regulatory change announced in this year's monetary policy. There have been changes to provisioning norms, which could have considerable impact on banks' after-tax profits in the coming year or two. Why? Because with long-term increases in interest rates — that is the expected impact of the recently announced measures — non-performing assets could go up dramatically for many banks. The increase in provisioning is preemptive, to make sure balance sheets are not stressed. Provisioning for substandard assets (those that are overdue for 91 days) is now 15 per cent (up from 10 per cent) and that for doubtful assets (overdue for a year) is 25 per cent (from 20 per cent).What will this do to credit growth that has been almost 23 per cent compared to the targeted 17 per cent? "The increase in provisioning, by itself, should not have any impact on credit growth," says FirstRand's Krishnamoorthy. "It may impact profits on a one-time basis for some banks, though."It is not all tightening, though. In another move that could help the government securities (G-Secs) market, the RBI increased the time span for short selling of G-Secs from five days to 30 days. "We have been receiving requests for this," says Shyamala Gopinath, RBI deputy governor. "Till now, it was not possible to take long positions in interest rate futures (IRFs). This will help investors take long positions in IRFs and encourage a term repo market."This policy may have restored the RBI's credibility as inflation fighter in some corners, but it has also worried others; some wonder whether the end of the tightening cycle is far from over. "The RBI has also said that there are clear upside risks to inflation because of oil and commodity prices," says a bank economist.tanushree(dot)pillai(at)abp(dot)in(This story was published in Businessworld Issue Dated 16-05-2011)
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France's Christine Lagarde and Mexico's Agustin Carstens were today shortlisted to lead the International Monetary Fund.The new managing director would be announced by June 30, the IMF said in a statement."The Executive Board will meet with the candidates in Washington and, thereafter, meet to discuss the strengths of the candidates and make a selection," the official IMF statement said.The two were the only ones named when the IMF released the list after nominations closed on Friday. The IMF did not explain why Israel's Stanley Fischer, who only declared himself at the last minute, was not on the list.Two other possibles, a South African minister and Kazakhstan's central bank head, dropped out Friday.While Lagarde, a French national, is Minister of Economy, Industry and Employment of France; Carstens is Governor of the Bank of Mexico.(PTI)
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It's a return to the roots. Minimalist construction and pristine conservation define eco resorts across the country. While they are designed for comfort, these retreats have a calming influence on holidayers as they bask in nature's glory.At Our Native Village, a holistic health eco retreat in Bangalore, nothing is left to chance. The retreat, designed by Chitra Vishwanath, generates electricity through solar panels and a wind mill. It's hard to move around the 4.5-acre property without acknowledging its commitment to nature. The place has been kept open and airy. The construction is minimalist and doesn't go beyond the basic wood-stone-brick concept. The soil excavated from the construction site was used to make hand-pressed, sun-dried bricks. Alternatively and more realistically, these bricks function as room insulators, in the absence of air conditioners. Most of the water is rainwater gathered from the roofs and stored in an 84,000-litre underground tank. The swimming pool operates on the principle of a village pond, with fresh underground water instead of a chlorinated pool.While this is a way of life for C.B. Ramkumar, a former ad professional who envisioned it, it offers a cheerful abandon for its guests. "Our Native Village is the first of its kind in India and I love the concept. In an era of computers and technology, children should know what simple living is. The resort has done a great job in trying to bring out the best in children and adults alike," says Preethi Kini, a tourist from Mumbai. At daybreak, the retreat comes alive with farming activities. As geese gaggle in the background, visitors can try their hand at milking the cows or wait patiently as the hens lay eggs. The agrarian experience also includes a laidback bullock-cart ride. And on weekends, a potter helps people craft a pot, while a kite-flying session and a game of catapult keep children engaged. Among life's other small wonders, hero stones or veeragallus, popular in local history, form part of a rock garden. The restaurant at the Wildernest Nature Resort in Goa All these blend in with the rustic setting. Since it is in Hessarghatta, the last 2.5-km approach to the retreat is a flat land and attracts migratory birds. Apart from birdwatching, nature lovers can soak in the rolling uplands of the Arkavathy river, while the culturally and religiously inclined can head out to an ancient Hanuman temple.The retreat has moved with the times at its own pace. "This year, Bangalore's Foundation for Revitalization of Local Health Traditions planted a few hundred species of medicinal plants that we use for common ailments such as cough and cold. We also have an Ayurvedic treatment centre, where healing programmes integrate ancient and new-age therapies such as Ayurveda, yoga, diet, meditation and acupressure, among others," says Ambika Ramakrishnan, the retreat's executive chef and farm manager.While it's difficult to imagine drinking magic herbal potions to heal oneself at a retreat, the wellness extends to the culinary fare. About 80 per cent of the pulses, grains, vegetables and fruit are from the resort's organic farm. "Our food can be described as ‘compassionate' fare, as we are compassionate towards both the ingredients used for cooking and diners who consume the food. The spread is vegan and we avoid all four whites like sugar, polished rice, maida and milk," says Ramakrishnan. Garnishes include calcium-rich gingili seeds and flak seeds, a source of omega-3 fatty acids.Going beyond the vegan spread, several eco resorts dotting the country's landscape score with their clever use of natural resources, combined with rural flavours, which make these great places to unwind. No doubt, eco initiatives offer regional cuisines, but they rely on organic farm produce because travel-worn produce never tastes the same as veggies from a herb garden. BACK TO BASICS: Our Native Village in Bangalore is a holistic eco health resort (Pic: Our Native Village) break-page-breakWith its sprawling patios and pastoral charm, the Wildernest Nature Resort in Goa offers a compelling sense of seclusion. While many resorts in Goa are packaged as beach destinations, what probably makes Wildernest different is that it is located in the Chorla Ghat. The resort is nestled in the Swapnagandha Valley amidst lush greenery. Sudhir Naik, director of the resort, says: "I chose to set up Wildernest because I felt if the place was not protected, it would probably end up in the hands of the mining and timber lobby sometime. I wanted to create a sustainable venture that would conserve the forest and biodiversity of the region."Wildernest has created the elegance of a rustic getaway through eco-friendly materials such as grass, black mud tiles, bamboo and acacia, a social forestry wood. The huts are styled in the village module and built amidst the forest cover. Besides, the resort has come up with a 100 per cent employment policy for the neighbouring villagers.Naik also has a conservation plan. "The Mahdei Research Centre is dedicated to the conservation of the local natural and cultural heritage. The centre works with individual researchers and organisations, local communities and students to address various issues that concern the ecological and cultural diversity of the region," he says. The Chorla Ghat, where Wildernest is located, lies in the north-eastern side of where the Goa-Karnataka-Maharashtra boundaries meet. Being a part of the Western Ghats and the Sahyadris, Chorla Ghat is home to deciduous forests. Given its location, the resort manages to attract people all round the year. Come May and the south-west monsoon brings forth gushing waterfalls that keep photographers engrossed. As rains cease in September, they leave behind a carpet of greenery and gentle streams. Flowers and fruits are in full bloom in winter, while summer encourages nature lovers to set out on trails and walks. BACK TO BASICS: Pepper Green Village in Kerala boasts 200 trees and flowering bushes (Pic: Pepper Green Village) Open balconies, tree houses with the flora and fauna for company seem like whimsical eccentricity, but eco resorts are making informed choices as they put together these elements in an artistic and sensitive manner. It required a group of nature lovers to create what nature lovers would describe as a utopian village. The concept morphed into Pepper Green Village in Wayanad, Kerala, which brings under its umbrella 200 trees and flowering bushes, vines of pepper and the scent of spices. Here wood and bamboo cottages are built on the concept of a tree house. Besides the rustling of wind and the flow of the Kabini river close by, retreat seekers are treated to the occasional sound of the drum beats from the tribal villages. Cottages are connected through tree-top walkways raised on stilts that offer a full view of the paddy fields and forest canopy on either side. "We try to avoid using plastic in our premises and aim to make our resorts 100 per cent plastic free in the near future. In sync with our philosophy, a sewage treatment plant reuses the water for plantation," says Captain T.S. Saju, director of Pepper Green Village.The silence is surreal and activities at the resort are languid. Life is chalked out here, as nature lovers can walk down to the river bank to fish or swim. At night, a camp-fire and barbecue by the riverside completes the experience. A boat ride takes birdwatchers to the Kuruva Island. This uninhabited, wooded island is home to innumerable varieties of local and migratory birds.A river bank, forest fringe, magical world of birds, spices and a place to relax can send the most reluctant traveller into instant vacation mode. Sanctuary seekers can look forward to a hidden oasis among trees. Even the laptop-wielding, jargon-speaking corporate professionals turn into sanctuary lovers, as these eco resorts take them back to the basics — back to where life began — in a setting that blends greenery with a countryside lifestyle.The author is a freelance feature writer based out of Bangalore(This story was published in Businessworld Issue Dated 20-06-2011)
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At a certain stage of economic development, the Agricultural Produce Marketing (Regulation) Act — which mandates that all agricultural products be sold only in government-regulated markets — may have served a purpose. The establishment of regulated markets may have helped increase rural — especially the small farmer's — access to orderly marketplaces. It was also a time when the private sector had neither the ability nor the inclination to invest in such activities. Over the years, however, things have changed dramatically. Not only is the private sector willing, it is keen to invest in this sector. But regulations such as the APMC Act pose a major hurdle. As a consequence, private investment in agriculture and allied sectors has remained negligible, even as it has grown by leaps and bounds in most other sectors.The infrastructure that the APMC Acts (most states have their own versions) have created leaves a lot to be desired. The network of state-regulated markets, or mandis, have not been able to serve either the interests of small farmers or provide an efficient marketing mechanism. In fact in many states, the regulated markets are non-functional. Actual transactions do not take place in their premises, but the market fee is collected by the APMC at designated check posts.Also, the area served by a regulated market varies dramatically across the states — from 115 sq. km in Punjab to 11,215 sq. km in Meghalaya. On an average, a regulated market serves an area of 435 sq. km, and that means farmers have to transport their produce over long distances to reach a regulated market. Even on reaching a regulated market, the farmer can expect few facilities. Most of these markets do not have basic facilities — only 9 per cent offer cold storage, and only one out of three have grading facilities.So in effect, though these markets impose substantial taxes on buyers — over and above the commissions and fees charged by middlemen — they typically offer little in terms of price discovery, grading or inspection. Instead, they raise entry barriers. The APMC Act of Delhi, for instance, allows only registered traders/commission agents in the markets.Worse is the impact of the APMC Act in disallowing private processors and retailers to integrate their enterprises directly with farmers or other sellers, eliminating middlemen in the process. As per the APMC Act, farmers cannot enter into contracts with buyers. This leaves no incentives for farmers to upgrade, and inhibits private and foreign investments in the food processing sector.It is this bottleneck that has come up for special attention in the report of the inter-ministerial group on inflation headed by Kaushik Basu. It has recommended that all states should do away with or amend the APMC Act to allow farmers to directly access retail outlets and allow retailers to purchase directly from the farmers. The group points out that the difference between the farm gate price and the retail price is unusually high in India, and it is this Act which is chiefly responsible.The group has also sought an end to the systems of taxation that disrupt the flow of farm products from one region to another. Even if octroi cannot be abolished, all such charges should at least be levied at a single point, such as a mandi, it suggests.(This story was published in Businessworld Issue Dated 18-07-2011)
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Glencore said it would raise gross proceeds of approximately $10 billion from the IPO, confirming an earlier Reuters report.Glencore, the world's largest diversified commodities trader, is expected to release its prospectus later on Wednesday. That will provide sought-after details including the cornerstone investors and the size of top management's stakes.The long-awaited listing, which could be London's largest to date, will push Glencore into the public eye after 37 years, and will turn publicity-shy executives including chief executive Ivan Glasenberg, a former coal trader, into paper billionaires.The company has priced its public offering at between 480 and 580 pence per share, valuing the company at $60 billion at the mid-point of the price range.(Reuters)
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Sitting at the edge of fields in the heart of India's grain bowl, Gurdayal Singh Malik shakes his head in resignation about the lack of workers needed for his 60-acre farm, blaming the government's flagship welfare program, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS), for the shortage.Ever since the start of the program, which guarantees 100 days of work a year for rural households, the flow of migrant labour to Punjab and Haryana has dropped to a trickle, forcing farmers such as Malik to hike farm wages massively -- and still he cannot find enough workers."Labourers used to come every year to the large landholders, asking for work. Now they pick and choose and go about saying: Sardar (master), we don't have time," said the 58-year-old farmer in Kurukshetra in Haryana, 170 kilometers north of New Delhi."Four or five years ago, it used to cost 500-800 ($11-$18) rupees to plant an acre of paddy. Last year the labourers took a tenth of the paddy and 3,000-4,000 rupees."This rise in wage levels and farm costs in rural India is worrisome, with evidence it might be feeding into the high inflation that is the government's biggest economic headache and prompting a hawkish stance at the Reserve Bank of India (RBI).Food and headline inflation remain above 8 percent despite nine rate hikes since March 2010, the most in Asia, by the RBI. Few expect a quick decline.That persistence points to the limitations of the central banks' aggressive use of its anti-inflationary measures when confronted with structural problems such as labour shortages and supply-chain bottlenecks created by poor infrastructure."Much of inflation is coming from structural issues and the inability of the supply-side to respond to higher prices," Laveesh Bhandari, director of Indicus Analytics, said."The government is not able to solve these issues, so we have to rely on the RBI to tighten policy ... But everyone, including the RBI, knows this is not going to have an impact in the short term. It'll essentially only slow down growth."In agriculture, labour shortages could reduce output over time. Farm labour shortages have been reported in places as far apart as Bihar and Tamil Nadu.For years, labourers from the poor Bihar would travel to Haryana and Punjab, where a "Green Revolution" beginning in the 1960s boosted farm production and staved off widespread food shortages in the country of 1.2 billion people.Now, as the MNREGS takes root in Bihar, the traditional seasonal migration has declined. Local labour is not adequate and itself is diverted towards MNREGS projects, accentuating the shortage on farms."If there aren't Bihari workers, farmers will soon have to give up farming," Malik said.Rising wages is the latest woe to hit Haryana and Punjab, which produce one-fifth of India's annual rice and wheat output of 170 million tonnes, but which have seen stagnant yields, declining soil fertility and a depletion in ground water levels.The country consumes 76 million tonnes of wheat and 90 million tonnes of rice yearly, and any shortfall in production will force it to import grains, pushing up global prices.Costs Vs WelfareCosting 1 percent of GDP, the MNREGS is the largest of India's welfare schemes designed to protect the country's 500 million poor who live on less than $1.25 a day. The program has been credited for returning the Congress-led coalition to power in 2009.Critics say MNREGS is wasteful and riddled with corruption, and the infrastructure created is of shoddy quality.A recent World Bank study on welfare programmes in India including MNREGS said they did not give the "bang for the rupee" warranted from such huge spending.But mindful of its popularity, MNREGS has been backed by Congress president Sonia Gandhi. Her son Rahul Gandhi, seen as a prime minister in waiting, personally pushed for expanding it from 100 poor districts to all of the country.Given the program's support, the government has no plan to recast the system or take up a suggestion that it be suspended during the harvest season or that farm labour be included in the list of works.Under the program, any villager can go to a nearby government office and enroll for building roads, digging wells or creating other rural infrastructure and be paid the minimum wage for 100 days a year.That income has helped improve food intake and reduce child labour, especially at times when crops fail or prices shoot up. It has raised rural consumption, which has created new markets and shored up growth when investment has faltered.But the run-up in farm costs from MNREGS puts pressure on the government to raise the minimum support prices (MSP), or procurement prices, for wheat and rice, lifting what is effectively a benchmark for food prices.Since MNREGS began in 2004/05, the first year of the Congress-led coalition government, the minimum support prices for wheat and rice have risen 1.7 times. Haryana and Punjab also have seen the highest increases in the consumer price index for farm workers."That is going to lead to a cost plus food inflation. If costs are going up, I am supposed to be protecting the margins of the farmers," Ashok Gulati, chairman of the farm ministry's commission on prices and costs, said.Estimating that labour costs to have gone up 60 percent in the past three years, Gulati said it was a challenge to keep up with the rising expenses."But if I don't take these increasing costs into account, I'm not doing justice to the incentives of the farmers so the growth process is likely to slow down. So it's a very difficult challenge."In Punjab, two weeks before transplanting of paddy starts, P.S. Rangi at the Punjab State Farmers Commission anticipates that labour shortages will persist."After expenses, there's little for a migrant to take back home. So when he gets an opportunity there, why would be come here?" said Rangi, a former head of agricultural economics at the Punjab Agricultural University."But transplanting has to happen. There's no other way, even if it means that school-boys who used to wear shiny clothes and watched from the sides have to shed them and get into the fields."(Reuters)
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There are fast cars, there are supercars, and then there are the hypercars. Here's some perspective. A Rolls-Royce Phantom coupe, the chariot of royalty, comes for around Rs 4 crore. If you think that's a lot, what would you make of the Rs 12-crore Koenigsegg Agera? Or the Rs 16-crore Bugatti Veyron from Volkswagen? These ultra-luxurious hypercars are not the type you would see whizzing by on a regular street. They are special and need special handling by near-fanatical owners.And India, it seems, is the land where these hyper brands are now seeking homes. "With the population of a billion, the 1 per cent who constitute the affluent or the new ‘global Indians' are estimated to be over 10 million. Moreover, good roads have also fuelled the demand for ultra-luxury cars in the country," says Satya Bagla, managing director, Exclusive Motors, the official importer of Bugattis, Bentleys and Lamborghinis in India. Again, the buying considerations of the ultra-wealthy have shifted from price to design, style and sheer pleasure. Ergo, hypercars.Let's take a look at some of the super-luxury cars that now vroom in India and also at a bunch of those you would die to buy, but are yet to hit the Indian roads.Aston Martin One-77If you loved the fully equipped beast that Sean ‘007' Connery drove in Goldfinger or if you were bowled over by the opening scene of GoldenEye, where Pierce Brosnan drove an old but amazing car to race a Ferrari, you would be delighted to read about Aston Martin. Selling through Performance Cars, the British luxury marque has a range of models for Indian customers. With two dealerships, one in Mumbai and one in Delhi, the company imports most of its luxury fleet including the V8 Vantage Coupe, V8 Vantage S, V8 Vantage Roadster, the four-door Rapide and the new Virage. The jewel in its crown, though, is the limited edition One-77, which is available for a whopping Rs 20 crore. Powered by a 7.3-litre V12 engine, this is by far the most expensive car in India. And as the name indicates, only 77 units have been produced. Understandably, the coupe costs millions for registration alone.Bugatti Veyron Grand SportNamed after French racing driver Pierre Veyron, the Bugatti Veyron is arguably the mother of all hypercars. Its skirmishes with the SSC Ultimate Aero for the honour of the "world's fastest car" are legendary. First sold at a charity auction for $3.19 million in August 2008, the Grand Sport possesses the staggering power of 989 bhp and is priced at Rs 16 crore in the Indian market.Manufactured at Bugatti's facilities in Molsheim, France, the Grand Sport is a limited production car that boasts an 8-litre, 16-cylinder engine and can accelerate from 0 to 100 kmph in just 2.5 seconds, while its top speed is measured at 407 kmph.break-page-breakKoenigsegg AgeraDesigned by Swedish sports car enthusiast Christian von Koenigsegg, this is one of the most stunning hypercars ever made. InterGlobe Established Products, which launched the Agera in India, plans to sell only one or two of this Rs 12.5-crore machine this year. Hand-built in Sweden, only 18 of these are made every year. A 4.7-litre V8 engine produces 910 bhp at 6,850 rpm, while the huge torque of 1,100 nm comes in at 5,100 rpm. Weighing just 1,290 kg, the Agera has a specially developed transversal transmission with paddle-shifts. It has a top speed of 435 kmph and takes 2.9 seconds to reach a 100 kmph speed — a wee lower than the Bugatti.And now for the second part — the cars you would wager everything to own but are not available in India yet.Maybach ExeleroThe most interesting fact about the Maybach Exelero — possibly the most expensive car ever made — is that it's the only car in the world customised for tyres and not the other way round! Maybach designed the one-off Exelero for tyre manufacturer Fulda Reifenwerke, which wanted to showcase its next-gen Fulda Carat Exelero tyres. The Exelero is a high-performance sports coupe that comes with a 700-hp (522-kW) bi-turbo V12 engine. Many enthusiasts would die to own even a replica of the car; the 800-hp, V10-engined Maybach Exelero replica is currently priced at $687,335.Estimated price: $4,710,000Likely Indian price: Rs 42 crore (dollar conversion plus taxes) Zenvo ST1If you admire cutting-edge Danish design, as exemplified, for example, by the lifestyle electronics products from Bang & Olufsen, here's another design marvel from this Scandinavian country — the Zenvo ST1 whose unique aerodynamic design makes it look like a car from the future. Powered by an ST1 or supercharger turbo 1, the 7-litre V8 engine boasts both a supercharger and a turbo, and generates 1.104 bhp. The ST1 can accelerate from 0 to 100 kmph in just three seconds and vaunts a top speed of 375 kmph, which makes this Scandinavian beast one of the fastest street-legal sports cars in the world.Estimated price: $3,240,000Likely Indian price: Rs 30 crore Pagani Zonda RMuch like the hot wind in Argentina that gives the Zonda its name, the Zonda R from Italian auto major Pagani is strong, fast and hot, and produces 750 hp of sheer awesomeness. Unveiled at the Geneva Motor Show 2007 — where it stopped heartbeats with its futuristic, almost concept-like, design — this mid-engine monster uses a 6-litre V12 engine, sourced from the race version of the Mercedes-Benz CLK-GTR. While the Zonda can leap from 0 to 100 kmph in less than 2.7 seconds, the Brembo carbon ceramic brakes can be used to bring the car to a quick standstill.Estimated price: $1,720,000Likely Indian price: Rs 16 croreWeber Sportcars Faster OneSwiss precision is no longer limited to the world's most prestigious chronographs. Coming from Tobel, Switzerland, the uniquely designed Weber Sportcars Faster One boasts a top speed of 400 kmph, which makes it one of the world's fastest street-legal cars. Weighing just 1,100 kg, the funky two-seater aims to achieve maximum aerodynamic efficiency and directional stability at high speeds, and is powered by a V8 engine with dual superchargers that produce 900 hp. It can reach 100 kmph in just 2.5 seconds.Estimated price: $1,310,000Likely Indian price: Rs 12 crore (This story was published in Businessworld Issue Dated 18-07-2011)
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The Government on Tuesday set a target of more than doubling India's exports to $500 billion in the next three years, buoyed by an 37.5 per cent surge in overseas shipments in the last fiscal."We must aim for more than a doubling of exports in three years to $500 billion. This is achievable, with a determined effort. More importantly, we cannot afford any less than this," according to a strategy paper released by Commerce and Industry Minister Anand Sharma in New Delhi.For achieving the $500 billion mark, the country's exports should grow annually by 26.7 per cent.Sharma said the strategy hinges on aggressive marketing of 'Brand India' and reducing transaction cost to make exports more competitive.The export drive would be led by sectors like engineering, gems and jewellery, chemicals and textiles.As against the target $200 billion, the merchandise shipments aggregated $246 billion in 2010-11 despite problems in some European markets.The surge in exports came mainly from the US, some western European markets and new destinations like Latin America and Africa.The strategy paper (2011-12 to 2013-14) further said that increased imports are unavoidable for feeding an economy which aspires to grow by 9-10 per cent."We have, therefore, no option but to focus on higher export growth, and devise a strategy for rapidly increasing merchandise exports to ensure that the Balance of Trade (BoT) and Current Account Deficit (CAD) remain within manageable limits," it said. 'The Strategy for Doubling Exports in Next Three Years' was released after extensive discussions on its draft paper released in March.The draft paper was aimed at increasing the exports to at least USD 450 billion, but following an impressive performance in the last fiscal, the target was raised to USD 500 billion.The ministry has evaluated all the comments it received from different stakeholders, including industry and government departments and has come out with the final strategy paper.Sharma said the strategy would help us in achieving the USD 500 billion target.The document mainly focuses on - product strategy, market strategy, technology and research and development and building brand India.The minister said that at product level, the potential sectors which would help in doubling exports include engineering goods, chemicals and electronics.The government expects engineering goods exports to touch $125 billion from the current $60 billion and shipments of pharmaceuticals products to reach $25 billion from $10 billion in 2013-14.Sharma said the target is to increase chemical exports to $12 billion and electronic goods to $17 billion by 2013-14."In addition, we are also looking at labour intensive sectors like gems and jewellery, leather and textiles," Sharma said, adding, for leather sector, the government has set a target of $9 billion and for textiles $42 billion in the next three years.For gems and jewellery exports, the paper aims to take it to $70 billion from the current $33.54 billion.Under marketing strategy, the document said there is need to focus on new markets like Asia, South America, pacific and far east."We are going to incentivise exports to these regions. We will take it forward having preferential trade agreements, free trade pacts in these regions to ensure that our industry and exporters have a better access in these markets," Sharma said.Under the new strategy, the commerce ministry would also promote high technology exports which would cover biotechnology, electronic hardware, automobiles, computer based smart engineering, environmental goods and high-end areas of aerospace engineering.To promote brand India and build global image, Sharma said sectoral strategies have been carved out for this."Our essential trust in promoting the brand will be to ensure a stable policy environment. Continuation of the existing incentive schemes, preferential access to new markets, reduction of the transaction cost," he said.He said the sectoral action plan and policy interventions to be undertaken both by the department of commerce and concerned ministries would help in achieving the $500 billion target.As the export strategy involves different ministries, Commerce Secretary Rahul Khullar will initiate a "coordinated dialogue" for the effective implementation of the action plan.(PTI)
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Inflation accelerated faster than expected in May, with higher manufacturing prices offsetting slower growth in fuel and food costs and adding pressure on the RBI to lift interest rates this week despite signs of economic slowdown.The wholesale price index, India's main inflation gauge, rose an annual 9.06 per cent in May, above the median forecast for an 8.70 per cent rise in a Reuters poll and the April figure of 8.66 per cent."The big surprise is mainly because of the sharp increase in manufacturing prices which implies that core inflation is picking up. This cements the case for a 25 basis points rate hike on Thursday," said Nomura economist Sonal Varma.Headline inflation for March was revised up to 9.68 percent from an earlier reported 9.04 percent, continuing a recent trend of sharp upward revisions.Annual manufacturing inflation in May was 7.27 per cent, up from 6.18 percent in April, while annual fuel price inflation eased to 12.32 per cent from 13.32 per cent in April despite an increase in domestic gasoline prices in mid-May.Sluggish investment, which was essentially flat in the March quarter on rising rates and slow government approvals of big projects after growing an annual 7.8 per cent in the previous three months, has exacerbated tight industrial capacity.Consumer demand, meanwhile, eased more slowly, growing at 8 per cent in the March quarter from 8.6 percent on an annual basis in the previous quarter.Fuel inflation has remained elevated as global hovers around $120 per barrel, which may prompt New Delhi to raise prices of diesel, cooking gas and kerosene, which would be politically unpopular in a country where nagging inflation has prompted protests and put the ruling Congress party on the defensive."The number is much higher than expected and a breach of the 9 percent mark without a diesel price revision and in a month when global commodity prices were softer highlights the underlying inflationary pressure in the economy," said Anubhuti Sahay, Economist with Standard Chartered Bank.The benchmark 7.80 percent 2021 bond yield immediately rose 3 basis points to 8.33 percent after higher than expected inflation data.The 5-year overnight indexed swap rate rose 4 basis points to 7.80 percent and the 1-year was 6 basis points higher at 8.02 percent after the data, dealers said.The BSE Sensex trimmed gains to 0.22 per cent from 0.4 per cent before hand.Rate Hike SeenDespite most indicators showing signs of slowing growth, including worse-than-expected GDP growth of 7.8 percent in the March quarter, the Reserve Bank of India is expected to lift policy rates by 25 basis points on Thursday in what would be its tenth rate increase since March 2010."I think the RBI will probably look at the inflation issue more seriously," C. Rangarajan, the chairman of the Prime Minister's Economic Advisory Council, said on Tuesday.However, weakening conditions globally and in Asia's third-largest economy may temper the RBI's recently hawkish policy stance in coming months.On Tuesday, China reported consumer price inflation of 5.5 percent for May, its highest in nearly three years, and raised reserve requirements for banks in an effort to tame prices.Signs Of SlowdownRecent indicators point to slowing growth in India.The index of industrial output for April grew 6.3 per cent, the slowest in 3 months with growth in the capital goods sector slowing to just over 14 percent in April.Car sales rose 7 percent in May, the slowest in two years, and analysts expect a further decline as higher fuel prices, interest rates and vehicle costs crimp demand in the world's second-fastest growing vehicle market.Credit growth has remained almost flat in the current financial year that started in April, with banks' loans growing only 0.3 percent since March end.Policymakers have scaled back growth projections for the current fiscal year from 9 percent earlier to around 8.5 percent, with many private forecasts predicting growth below 8 percent as rising rates and sluggish investment take a toll.RBI Governor Duvvuri Subbarao said early last month that some near-term growth should be sacrificed to tame high inflation, although global and domestic conditions have deteriorated since then.Government officials have expressed concern that slowing growth will make it hard for India to meet its revenue targets for the year, which will in turn add make it harder to meet its goal of trimming the fiscal deficit.(Reuters)
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With the losses of oil firms mounting with each passing day, Oil Minister S Jaipal today met Prime Minister Manmohan Singh to push for an early decision on raising diesel and domestic LPG prices.An Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee, which decides on revising rates of the sensitive products, has not met since June last year even though crude oil prices have spiralled upward by about 50 per cent.Reddy, who last week met Mukherjee to push for a fuel price hike, today discussed with the Prime Minister the Rs 450 crore per day that state-owned oil firms lose on selling diesel, domestic LPG and kerosene at government-controlled prices, sources in-the-know of the development said.(PTI)
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