The Comptroller and Auditor General (CAG) has criticised the oil ministry and upstream regulator for allowing some explorers to overstate costs of field developments and explore beyond their contracted areas, newspapers reported on Monday.The CAG's report said Reliance Industries had inflated development costs on its D6 block in the Krishna-Godavari basin, according to the reports in the Hindustan Times and the Times of India.The CAG also cited a joint venture of Reliance with BG and ONGC for hiking development costs in the Panna-Mukta and Tapti gas fields, the newspapers added.The CAG report also said Cairn India Ltd had been allowed to explore additional areas not stipulated in its contract for the RJ-ON-90/1 block, the Hindustan Times said.The Times of India and the Hindustan Times both said the CAG report focused on Reliance."The undue benefit granted to the contractor (Reliance) is huge, but cannot be quantified," the report said, according to the Hindustan Times."The (oil ministry and upstream regulator) facilitated the desires of the contractor (Reliance)," the Hindustan Times added, again quoting from the report.The CAG report is a draft which has been sent to the oil ministry for comments, the newspapers said.No immediate comment was available from Reliance and Cairn India on the reports.Reliance is already facing criticism for pumping less gas than it should from the key D6 block, one of the biggest gas producing blocks in India.Cairn Energy is trying to sell a controlling stake in its India unit to Vedanta Resources, but the deal has run into problems over royalty issues.The CAG report comes at a time when the Indian government is struggling to fend off allegations of massive corruption in awarding of telecoms licences that may have resulted in revenue losses worth billions of dollars.(Reuters)
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India's manufacturing growth picked up in April to reinforce expectations the Reserve Bank of India (RBI) will raise interest rates this week, while China's factory sector cooled to suggest monetary tightening was biting into the economy deeper than expected.India's manufacturers expanded in April for the 25th consecutive month and at their strongest pace since November, an HSBC Markit purchasing managers' index showed on Monday.The PMI rose to 58.0 from 57.9 in March. A reading above 50 indicates expansion, while a reading under 50 to contraction.Inflation indicators in the monthly report showed some easing in price pressures, but from elevated levels, to suggest the RBI will raise interest rates on Tuesday for the ninth time since March 2010."The number confirm that growth is not a concern and that the RBI can continue its tightening cycle uninterrupted," said Leif Eskesen, chief economist for India and ASEAN at HSBC.Data on Sunday showed China's official PMI fell to 52.9 in April from 53.4 in March, falling short of market forecasts for a rise to 54 as growth in new orders weakened to an eight-month low.Although the figures marked the 26th straight month that the manufacturing sector had expanded, they flashed worrying signals for the global economy, which has grown reliant on Chinese demand as a source of growth with the United States, Europe and Japan struggling to recovery from the global crisis."Overall, the PMI shows there is still a possibility that the Chinese economy may slow down, especially as falling demand growth leads to adjustments in inventories, increasing the possibility of slowing economic growth," said Zhang Liqun, a government researcher."The fall may show that export growth will continue to slow down," Zhang said in a comment on behalf of the China Federation of Logistics and Purchasing, which compiles the official PMI.China's inflation is running at its fastest in nearly three years even after a series of policy steps to rein in prices, including raising interest rates and banks' reserve requirements several times, as well as ordering banks to lend less and speeding the pace of currency appreciation.Economists polled by Reuters still expect strong economic growth in China this year of around 9.5 percent, so remain on guard for further monetary tightening to bring inflation under control.Like China, the U.S. manufacturing sector is also expected to have slowed down in April. The Institute for Supply Management index of national factor activity is expected to show a fall to 59.9 in April from 61.2 in March and 61.4 in February, which was the highest rate of growth since May 2004.Euro zone figures, due around 0800 GMT, are forecast to show factory activity held steady in April from March.In South Korea, the HSBC Markit manufacturing PMI fell to its lowest level since November last year at 51.69 in April from 52.84 in March.A stronger won currency depressed imported and component prices, said Hana Daetoo Securities economist So Jae-yong.Inflation in South Korea lagged expectations for April on a sharp drop in food prices, data showed on Monday, easing pressure on the central bank to raise interest rates although economists said they still expect a 25 basis point rise this month.The Reserve Bank of India is expected to raise interest rates on Tuesday for the ninth time since March 2010, probably by 25 basis points but possibly by 50 bps after March headline inflation rose to nearly 9 per cent.(Reuters)
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The killing of Al Qaeda leader Osama bin Laden by US forces prompted investors on Monday to strip some of the risk premium underpinning world asset prices, lifting the dollar, boosting stocks and weakening commodities.Oil, gold and silver prices all fell as reaction to the death of the West's most wanted man swept across thinly traded financial markets.But investors warned that this kind of reaction to major news is often only temporary."Markets across the globe received a bit of a boost ... as news broke that US forces had killed Osama bin Laden. However, like many euphoric bounces, they are often short-lived, especially given the possibility for reprisal attacks from extremists," said Ben Potter, market strategist at IG Index.There were holidays in many countries -- including China, Hong Kong, Singapore, Thailand and Britain -- so trading was limited.Nonetheless, the initial reaction was a boost for US assets and a modest fillip for equities.The dollar rebounded from a three-year low against a basket of currencies, where it had languished as a result of perceptions that the US Federal Reserve is in no hurry to tighten monetary policy.The dollar was up a quarter of a percent, off its daily highs. The announcement of bin Laden's death triggered short-covering demand for the dollar after the dollar index had hit its weakest since mid-2008.Longer term, however, analysts said the news would have only a limited impact on the dollar because interest rates, not geopolitical events, are the overriding driver."Risk as a driver of the FX market has been much less than it has been ... The main trend is relative dollar weakness due to monetary policy," said Kasper Kirkegaard, currency strategist at Danske Bank in Copenhagen.Dollar-sensitive oil and gold fell, dipping by as much as two percent at some point. US crude was down close to 1.6 percent, earlier hitting a session low of $112.01, retreating from a 31-month peak of $114.18 set on Friday.Silver tumbled 10 per cent, its steepest fall since late 2008, hit by the dollar, increased margins for futures trading and a technical overhang after a 170 percent rally over the last 12 months to a record high last week.Stocks GainEuropean shares, minus Britain's usual contribution, rose a quarter of a percent, lifting MSCI's all-country world stock index by 0.2 percent.US stock index futures added to gains, Japan's Nikkei average rose 1.4 per cent on the day, while U.S. Treasury prices fell.US Treasury yields pushed higher across the curve with the 10-year rising to 3.308 per cent from a six-week trough of 3.273 per cent."By lowering national security risks overall, this is likely to bolster equity markets and lower U.S. Treasury prices in a reverse flight to quality movement," said Mohamed El-Erian, Chief Executive Officer and Co-Chief Investment Officer at PIMCO, which oversees $1.2 trillion in assets."Oil markets are likely to be the most volatile given their higher sensitivity to the tug of war between lower risk overall and the possibility of isolated disturbances in some parts of the Middle East and central Asia," he said.(Reuters)
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Warren Buffett is no analyst, but he still has a "strong buy" rating on America.Tens of thousands of Berkshire Hathaway shareholders who descended on Omaha this weekend for the conglomerate's annual meeting got one unmistakable message from Buffett -- no matter how bad the economy, or the deficit, or the political divide, the United States is as good a place to live and work as ever."I don't see how anybody can be other than enthused about this country," Buffett told Berkshire shareholders on Saturday.Buffett, often called the "Oracle of Omaha," is one of the world's richest men and leads a conglomerate that owns railroads, insurers and ice cream parlors.The comments echo those Buffett made in February in his annual shareholder letter, but the words still may encourage investors looking sideways at the country, particularly after Standard & Poor's put the US government's critical "AAA" credit rating on a negative credit watch.Buffett told Reuters Insider that S&P's move was premature, given the US government issues debt only in dollars and can simply print more money to pay debt if absolutely needed."The United States is not going to default on any obligation," Buffett told Insider in an interview after the annual meeting. "We are not a credit risk, believe me."Where Buffett's enthusiasm wanes to any degree, it is mostly in conversation on the dollar, which he said is sure to weaken over time, like most other currencies.Buffett, as usual, said he was shying away from fixed-income investments for Berkshire's part, even as he keeps some of his personal wealth in Treasuries for safety's sake.Some worry that safety could be threatened by the debate over the national debt ceiling, an issue that has divided Congress in recent weeks and gotten more tense as the country gets closer to its legal limit on debt issuance.Buffett, asked about the possibility Congress would not raise the ceiling, made one of his most-repeated comments of the whole weekend, saying it would be the legislature's "most asinine act" in its history.(Reuters)
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Silver prices tumbled on Monday, marking their biggest loss since late 2008, and gold fell more than 2 per cent off a record high, extending earlier losses on news that al-Qaeda leader Osama bin Laden was killed in a US-led operation in Pakistan."There was a kneejerk reaction to the news. There is a risk of greater instability. There may be counter protests and al-Qaeda may want to make a show that the figurehead may be dead, but the war goes on," a trader in Sydney said.By 0307 GMT, spot silver stood at $44.62 an ounce, down 6.6 percent on the day, while COMEX silver for July delivery traded at $43.440 an ounce versus $48.599 on Friday. Prices dipped as low as $42.80 for spot and $42.200 in futures markets in holiday-thinned trade.Spot gold prices fell a little over $5 to $1,540.39 an ounce immediately following the reports of bin Laden's death, after earlier touching an all-time high of $1,575.79. Within half an hour, gold had recovered to $1,545.19."First reaction is this would be a bearish factor, if this means al-Qaeda's power is down," said an industry source who declined to be named.Markets across large parts of Asia and much of Europe were closed for May Day and Labour day holidays, reducing the number of market participants and making for volatile trade."Precious metals basically turned around in illiquid markets on snippets of news that suggest that the risk profile will change," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney."Silver was also off the board in terms of technicals and the market decided to just smack it in the head."Speculators scaled back their bullish bets in COMEX silver futures and options to the lowest level since early February, regulator data showed on Friday.Speculators in COMEX silver held a net long position 25,791 lots in the week ending April 26, cutting 5,413 lots, data from the Commodity Futures Trading Commission (CFTC) showed.The CME Group Inc said on Thursday it would raise maintenance margins for COMEX silver futures by 13.2 percent to $10,750 per contract from $9,500 effective Friday, April 29.Some traders put silver's spectacular fall down to an unwind of a short gold-silver ratio position, compounded by automated stop-loss orders."There is nothing from a fundamental perspective to cause a fall this large. Silver has been the most rapidly appreciating of the metals in the past months and if there was one that looked a bit frothy it was silver," said Ben Westmore, commodities economist at National Australia Bank."This is mostly technical. We expect silver to be in relatively close step with gold and while both have risen strongly, silver may have moved a bit too far ahead."But in spite of the falls, traders said it was too soon to close the book on silver's astounding 170 percent rally over the past 12 months."Although that was a brutal wash out of some length, silver is now back into the original bullish trend channel, so while $41 holds, the trend is still intact," one trader said.In other precious metals with large-scale industrial applications, platinum fell 1.7 percent and palladium dropped 2.1 percent.China's manufacturing growth slowed in April, a survey showed on Sunday, suggesting that the government's tightening efforts have weighed on the world's second-largest economy more heavily than expected.The official purchasing managers' index for China fell to 52.9 in April from 53.4 in March, well shy of market forecasts for an increase to 54.0.(Reuters)
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Gold crossed the psychological Rs 22,000-mark on Wednesday on aggressive buying by stockists, amid a rising global trend. It rose by Rs 115 to Rs 22,060 per 10 grams. Silver also climbed to a new high and rose by Rs 1,850 to Rs 66,300 per kg on rising demand from industrial units.Silver coins followed suit and shot up by Rs 1,500 to a record high of Rs 72,000 for buying and Rs 72,500 for selling of 100 pieces.Trading sentiments remained bullish as gold extended its record-making rally to top $1,500 an ounce in global markets as dollar fell on mounting debt in Europe and the US, prompting investors to seek bullion as a store of value.In international markets, gold climbed 0.3 per cent to $1,500.43 an ounce and silver jumped 0.9 per cent to a 31-year peak of $44.35 an ounce.Besides, retail customers and jewellers buying for the coming marriage season further fuelled the uptrend.On the domestic front, gold of 99.9 and 99.5 per cent purity shot up by Rs 115 each to a new high of Rs 22,060 and Rs 21,940 per 10 grams, respectively.Sovereigns also moved up by Rs 100 to fresh peak level of Rs 18,000 per piece of eight grams.Silver continued its record setting spree and spurted by Rs 1,850 to new peak level of Rs 66,300 per kg and weekly-based delivery by Rs 1,530 to Rs 65,055 per kg.(PTI)
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Hardly a week passes these days without some sort of announcement from Google. Last week it was in the realm of mobile payments, and Google took one more step in its attempt to be the dominant force in tomorrow's world. It announced its Mobile Wallet, a payment service that it is developing in the US with service provider Sprint. In simple terms, it lets you make a payment at a participating merchant store using your mobile phone. Others methods of doing this exist already, but Google has a completely different way that would provide an important alternative to operator-controlled methods widely in use in many countries.Here is how it works. Your phone stores all your credit card information. When you check out at a participating store, you can make a payment by simply tapping your phone once on a device at the counter. Google had teamed up with Citibank, MasterCard, Sprint and First Data to test and develop the technology. It hopes to roll out the service later this summer in the US, and expand to other countries — including India — in the near future. Currently, Citibank is the sole participating bank and Sprint the only participating telecom operator. But it has an impressive list of participating merchants: Subway, Bloomingdales, RadioShack, Walgreens and many other stores that are household names in America.To those who follow the mobile payments space, this service has some interesting aspects. First, Google combines the Wallet with Google Offers, a set of electronic coupons also stored on your phone. Availing these offers is easy and near-automatic, thereby increasing the attraction of the service to customers. Google is planning other features such as membership suggestions and digital receipts. But the standout feature, which Google is trying to sell, lies in its security. At least to outsiders, including its potential customers, the feature looks more secure than competing offerings.To begin with, you do not display your cards like you do in a wallet. Your bank verifies your authenticity and details when you first put them on your phone, and you can de-activate them when you lose your device. It uses a technology called near-field communications (NFC), and it ensures that your data do not go out far. In competing technologies, the data goes out into the cloud. The NFC chip in the phone has several security features embedded and it is difficult for hackers to break into it.On the flipside, it can be used now only on the Nexus 4G phones from Sprint, but it is supposed to expand to other Android phones and operators as it goes international. Yet, it would remain as an Android feature, although Google has said that it could be extended to devices such as BlackBerry and iPhone. It would be difficult, but not impossible, to use it on a phone without an NFC chip. But the real significance of the Google service, and its strength and weakness, lies in one fact: the service is controlled from the device rather than by the operator in another location. This has not been the preferred approach so far. In the UK, which is rapidly becoming the centre of mobile payments, telcos are controlling and driving the service.Google Wallet is currently the easiest way to use mobile payments at retail merchants, where a substantial portion of credit card transactions take place. Other methods exist, but they are tied to one or other companies, whereas Wallet will work with all companies. The advent of Google Wallet would be a significant event in India.(This story was published in Businessworld Issue Dated 13-06-2011)
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India should allow exports of wheat and rice as the country has huge grain stocks and global prices are favourable, Farm Minister Sharad Pawar said on Wednesday.Pawar's remarks came a day after India forecast normal monsoon rains which could boost farm output and encourage exports, though concerns over persistently high domestic food prices may weigh on any government decision to sell overseas.And with Prime Minister Manmohan Singh's Congress party facing a slew of state elections, the government is unlikely to take chances with grain stocks."The government will definitely apply its mind whether to enter international markets...International markets are favourable for wheat, rice, sugar and cotton for exports. In all these, we are comfortable," Pawar told reporters.India, the world's second-largest producer of wheat and rice, has kept a tight control over grain exports since 2007 when adverse weather conditions hit production and the Indian government had to turn to costly imports.In 2009, after a bad monsoon, Indian imports of sugar sent global prices to a record high.The country has allowed only limited sales in diplomatic deals while the nation's stocks swelled after three straight years of bumper harvests, leading to some rotting of grain because of storage problems.India's wheat reserves swelled to 17.2 million tonnes by March 1, more than double a government target of 8.2 million tonnes. That, combined with forecasts of a record harvest of 84.3 million tonnes in 2011, has prompted industry and trade to demand that export curbs be lifted.The country's rice production is seen at 102 million tonnes for 2010-11.Pawar also said the country would achieve the targetted 4 per cent growth in farm sector in the current fiscal ending March 2012.(Reuters)
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Describing the rise in inflation to above 9 per cent as "upsetting", the Prime Minister's Economic Advisory Council on Tuesday pitched for further tightening of the monetary policy by the RBI at its next review, which is due on Thursday."I think the inflation numbers are in a sense upsetting ... We need to address the issue of inflation even more strongly. We need to use more monetary and fiscal policy to contain inflation," PMEAC Chairman C Rangarajan told reporters here.His reaction came after the release of the latest data, which showed headline inflation going up to 9.06 per cent in May from 8.66 per cent in April on the back of rising prices of manufactured products and petrol.Asked about the expected hike in policy rates by the Reserve Bank at its mid-quarterly review on June 16, Rangarajan said: "... I think the RBI will probably look at the inflation issue more seriously and will take some action... (it) will probably decide to do in the context of the high level of inflation."He, however, refused to cite any numbers on the quantum of the hike in short-term lending (repo) and borrowing (reverse repo) rates."I do not know what the RBI will do, but I think the concern regarding inflation will be very dominant," he said.The RBI has already hiked key policy rates nine times since March, 2010, to curb demand and tame inflation. With headline inflation remaining high, it is now almost certain that the apex bank will go for another hike at its June 16 mid-quarterly review.Experts have said that such action is inevitable and the RBI has also said in recent times that taming inflation is the biggest challenge before it.The PMEAC chief also favoured deregulating diesel prices."The oil marketing companies are losing in a big way. If the diesel prices are not raised, then the burden on the Budget will also increase... We need to move toward adjusting the diesel prices in line with international crude prices," Rangarajan said.He, however, refused to comment on any timeframe for deregulating diesel prices.The oil marketing companies had in mid-May hiked retail prices of petrol, which was deregulated last year, by over Rs 5 a litre. However, the price of diesel and LPG prices was not increased, as these are still in the controlled list.Oil firms have been saying that the regulated prices have been hurting them as global crude rates continue to hover around USD 100 per barrel, mainly on account of the conflict in the Middle East and North Africa region.Last month's petrol price hike was reflected in the May inflation numbers.Petrol prices went up by 27.31 per cent on an annual basis. Overall inflation in the fuel and power segment stood at 12.32 per cent year-on-year.Prices of manufactured products, which have a weight of around 65 per cent in the WPI basket, went up by 7.27 per cent year-on-year in May.In its monetary policy for 2011-12 released last month, the RBI had said that high prices of global commodities, particularly crude, will continue to drive inflation upward.It had projected inflation to average 9 per cent for the first six months of 2011-12.(PTI)
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Exports registered the highest ever growth of 37.5 per cent at $245.9 billion during 2010-11, demonstrating a robust demand for Indian merchandises not just in the western economies but in new markets like Latin America as well.Exports for March rose by a handsome 43.9 per cent to $29.1 billion compared to the growth in the same month in the previous financial year."This is the highest annual percentage growth (in a financial year)," Commerce and Industry Minister Anand Sharma said after releasing the trade data.The stellar performance in exports has been made possible despite uncertainty in several European economies which are marred by debt crisis.Imports on the other hand grew at a lesser pace of 21.5 per cent despite increasing pressure on crude oil prices.Imports for 2010-11 aggregated $350.3 billion, leaving a trade deficit of $104.4 billion.Imports in March totalled $34.7 billion, up 17.3 per cent year-on-year.The country's total merchandise trade has almost touched $600 billion -- half of India's gross domestic product of $1.2 trillion.Sharma said while the government has not fixed any target for the current fiscal, "... we will continue to strive to increase it".India aims to achieve merchandise exports of $450 billion 2013-14.Commerce Secretary Rahul Khullar said imports figures may be revised upwards leading to a trade gap increasing to $110-115 billion.The good show by exports has lessened worries on the current account deficit, which Khullar said, is likely to be at $25-35 billion.Engineering goods grew 84.7 per cent to $60 billion led the show, followed by Petroleum products at $42.5 billion (up 50.5 per cent).Gems and jewellery grew 15.4 per cent to to $33.5 billion, drugs and pharmaceuticals 15 per cent to $10.3 billion.Khullar said while there has been an improvement in demand in the US an even in EU, "my hunch is that export growth (also) came from new markets, particularly from Latin America."Since the export growth had bottomed out in 2009-10, expansion in the last fiscal looked good under the low base impact.However, "even if this base effect was not there the export growth would have been around 30 per cent," Khullar said.When asked if the growth rate is sustainable, he said it will be a "pipe-dream" given the global economic outlook.(PTI)
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