My initial reaction to the Vote on Account that Union Finance Minister P Chidambaram has just presented in Parliament is that the “bad” and the “ugly” far outweighs the “good”. There are things that should have been done long ago, which he has done – or at least made noises about. And then there are things that he has announced that are likely to become a nightmare for his successor, when the new government is formed. And finally, he has played with numbers much the same way that many corporations do to present a better picture than reality. Take the things he has done which needed doing. The excise cuts he has announced should have actually been done four or five years ago. Even if his excuse is that he was not in charge of the finance ministry five years ago, he did present the budget last year – and he could have taken some of these steps then. The excise cuts will help in making things ranging from medium sized and big cars to consumer durables quite a bit cheaper (assuming the manufacturers pass on the benefits). If the sales in these product categories take off because of these excise cuts, fresh investment will start coming into these sectors. Jobs are likely to be created, and over all, a virtuous cycle will start in some of these sectors at least. The statement he has made about the importance of manufacturing is again a no brainer. True, pundits have written reams about how the service economy drives growth in India just as the manufacturing sector drives growth in China, the truth is that you need both. The growth in services does create many new jobs. But ignoring manufacturing also ensures that many people in the job market remain without any real work. The issue that too many politicians and economists seem to miss is that the service economy, no matter how well it is doing, cannot create all the jobs necessary for the number of people coming to the job market in India. Also, a long-term negligence of the manufacturing sector has hurt every country – from the US to Japan. And in the long run, you need both the manufacturing and the service sectors to work in tandem if you plan to grow quickly. The problem is that the UPA has done nothing to spur manufacturing seriously in the past 9 years. Then there are the other things that Chidambaram has done which are hard to fault in terms of principle – but are nevertheless going to create a financial nightmare for his successor. The one rank one pay rule and the moratorium on certain educational loans are two of them. The educational loans repayment will perhaps not have an immense impact – because the quantum of such loans is relatively low. But the one rank one pay decision will certainly create a big liability for his successor, especially because the UPA government is unlikely to really implement it in the short time left to it. If his successor tries to roll back this decision, it will be hugely unpopular. But given the shape of the economy, the decision was again taken more with an eye to gain some votes than what fiscal prudence dictated. Finally, there is the financial finesse that the finance minister has shown. He has carried forward some expenditure to the next year in order to stick to his deficit targets. Corporations do this all the time – they recognise revenue which is not yet accrued while deferring recognition of expenditure – in order to make a bad annual result look good. Chidambaram has done exactly that. The problem is that the expenditure will still take place – and it will mess up the next year’s finances. But then, that is not really this government’s headache, is it... editor@businessworld.inTwitter: @prosenjitdatta
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Snapping the declining trend, the inflation rose to a three month high of 5.7 per cent in March mainly due to spurt in prices of food items like potato, onion and fruits. The inflation in the food items, based on the wholesale price index (WPI), shot up by 9.9 per cent in March as against 8.12 per cent in the previous month. The overall WPI inflation, which was on decline since December, had dropped to a nine-month low of 4.68 per cent in February. As per the data released by the government Tuesday, the January inflation number has been revised upward to 5.17 per cent as against earlier estimate of 5.05 per cent. In March, price rise in potato was 27.83 per cent as against 8.36 per cent in the previous month. Inflation in onion was 1.92 in the last month of 2013-14 fiscal compared to contraction in price of the kitchen staple in the previous month. Overall the inflation in vegetable segment was 8.57 per cent as compared to about 4 per cent in February. Fruits were costlier by 16.15 per cent in March compared to 9.92 per cent. The government further said the build up of inflation rate in the 2013-14 financial year was 5.70 compared to a build up rate of 5.65 per cent in the earlier fiscal. The data further revealed that prices of sugar, pulses, cereals, cement and minerals eased in March compared to the previous month. Inflation in the fuel and power category (LPG, petrol and diesel) rose to 11.22 per cent versus 8.75 per cent in February. Later in the day, government is also scheduled to release data for retail inflation calculated on Consumer Price Index (CPI). In the monetary policy review earlier this month, the Reserve Bank had retained the key interest rate expecting rise in inflationary expectations. (PTI)
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Rejecting arguments of "policy paralysis", Finance Minister P Chidambaram on Monday (17 February) said the economy is more stable than what it was two years ago following several steps taken by the government and that the growth will be higher in the second half of the fiscal."Thanks to the numerous measures, I was confident that the decline will be arrested and growth cycles will turn in the second quarter. I believe, I have been vidicated...second quarter at 4.8 per cent and growth for whole year has been estimated at 4.9 per cent."This means that growth in Q3 and Q4 of 2013-14 will be at least 5.2 per cent," he said in the interim budget.He said the UPA government's record on economic growth front is "unparalleled"."Madam speaker, I reject the argument of policy paralysis. Just as there are business cycles, there is a cycle around the trend growth rate of an economy."I can confidently assert that the economy is more stable today than what it was two years ago," Chidambaram said.India's economic growth slowed to a decade low of 4.5 per cent in 2012-13 due to global as well as domestic factors, like high interest rate.The government took several steps, including setting up of Cabinet Committee on Investment (CCI) under chairmanship of Prime Minister Manmohan Singh to fast track big ticket projects.While industrial growth contracted for three consecutive months through December, good monsoon rains in 2013 were a good news for the agricultural sector, which has about 15 per cent share in the GDP.(PTI)
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Gold hit fresh three-month highs on Monday (17 February), adding to gained after posting its biggest weekly rise in six months, as fears over US economic growth and a weaker dollar sent investors seeking the safe-haven metal.Fundamentals* Spot gold rose 0.3 per cent to $1,322.24 an ounce by 0026 GMT, after hitting $1,323.76 earlier in the session - its highest since November. The metal jumped 4 per cent last week, its biggest weekly gain since August.* US gold futures rose for a ninth session - their longest winning streak since July 2011.* US manufacturing output unexpectedly fell in January, recording its biggest drop in more than 4-1/2 years, as cold weather disrupted production in the latest indication the economy got off to a weak start this year.* Hedge fund Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the fourth quarter, even as others exited when bullion prices posted their biggest annual loss in 32 years.* SPDR Gold Trust's holdings fell 5.10 tonnes to 801.25 tonnes on Friday (14 February).* Hedge funds and money managers raised their bets in gold futures and options to a three-month high on signs that the Federal Reserve will not rush to cut its stimulus, Commodity Futures Trading Commission data showed on Friday.* Gold premiums in India, the world's second-biggest consumer of the metal after China, fell 17 per cent on Friday to their lowest in four months as buyers postponed purchases on speculation over a possible cut in import duty soon.* Anglo American Platinum said it was suing South Africa's AMCU for 591 million rand in damages it said resulted from ongoing strike action by union members.(Reuters)
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The rupee is trading lower at 61.96/97 from its close of 61.9250/9350 on Friday (14 February) ahead of the interim budget presentation due to start at 11 am.Dealers largely expect Finance Minister P. Chidambaram to stick to his fiscal deficit aim of 4.8 pct this FY; will also look at market borrowing numbers for FY15."Big expenditure numbers will be negative for the rupee," says a dealer with a state-run bank.Traders will also watch domestic stock and debt markets for clues on the direction of foreign fund flows.Most Asian share markets edged higher on Monday in a nod to the resilience of Wall Street, but Japanese stocks struggled with both a stronger yen and a surprisingly weak reading on economic growth.Local shares up 0.5 per cent.(Reuters)
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With assets worth Rs 7,710 crore, as declared in his affidavit to the Election Commission, Bangalore South Congress candidate Nandan Nilekani has emerged the richest candidate contesting the 2014 LS polls. The former chairman of the Unique Identification Authority of India and co-founder of IT giant Infosys, Nilekani said almost 80 per cent of his wealth is from Infosys shares. He owns 1.45 per cent and his wife Rohini 1.3 per cent in Infosys.Gold RushGoldman Sachs Group’s chief executive officer Lloyd C. Blankfein got his biggest pay cheque in six years in 2013, receiving $23 million in salary and bonus. The compensation was up $2 million from the year before. He will get a further $6-million cash bonus if the company meets certain targets over the next three years. The long-term bonus was $5 million last year and $3 million in 2012 for the 59-year-old, who is the highest-paid CEO among peers at top US banks for a second straight year.End Of An EraThe old guard of US television is on its way out. First, David Letterman, host of late-night television shows for 34 years and the Late Show with David Letterman on CBS for 21 of those years, announced his retirment in 2015. He has earned 52 Emmy nominations so far and has his name up in neon lights outside the Ed Sullivan Theater in New York. The other television stalwart signing off was Barbara Walters — the woman who broke the glass ceiling of TV news. After 50 years in the business and 12 Emmys, she retires next month at the age of 84 as the host of The View.Strip ShowThe erstwhile ‘king of good times’, Vijay Mallya, now stands to lose his ‘Kingfisher’ brand as lenders have begun the process of selling trademarks associated with the grounded Kingfisher Airlines. The carrier, whose licence has been suspended, owes Rs 8,000 crore and banks are now looking to sell ‘Kingfisher’, ‘Fly The Good Times’ and ‘Flying Models’, among other brands, to make good their losses on account of the airline going belly up.Rich Harvest ajay piramal’s Piramal Enterprises sold its entire 10.97 per cent stake in Vodafone India to Vodafone Group Plc for Rs 8,900 crore. It sold its shares for Rs 1,960 apiece, securing a gain of Rs 3,000 crore, or a 52 per cent return, in just two years. Piramal bought the stake at Rs 1,290 a share. Max Healthcare founder Analjit Singh too sold his 4.65 per cent stake for Rs 1,241 crore.Not So GayMozilla CEO Brendan Eich has stepped down after an online dating service — OkCupid — urged a boycott of the company’s browser because of a donation Eich made to opponents of gay marriage in 2008. He had donated $1,000 in support of California’s Proposition 8 campaign. The controversy over his views on same-sex marriage erupted when Eich, the creator of Javascript, was recently promoted on 24 March.The RisingNoel Naval Tata has been named chairman of Tata Group’s retail arm, Trent. The 57-year-old has succeeded F. K. Kavarana, who retired recently after turning 70. The largest single shareholder of Tata Sons, with 18.5 per cent equity, Noel was the vice-chairman of Trent and instrumental in bringing in British retail giant Tesco as a partner to invest in Indian retailing.Going By The Rules Nestle chairman Peter Brabeck has announced his retirement in 2017, in line with company rules that prevent board members from standing for re-election once they reach the age of 72. He turns 70 in November. Brabeck joined the Swiss food giant in 1968 as a salesman, and later became the CEO and chairman of the company in 1997 and 2005, respectively. He stepped down as CEO in 2008.(This story was published in BW | Businessworld Issue Dated 05-05-2014)
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India's top court on Tuesday recognised the country's long marginalised transgender community as a third gender and, in a landmark judgment lauded by human rights groups, called on the government to ensure their equal treatment. There are hundreds of thousands of transgenders in India, say activists, but because they are not legally recognised, they are ostracised, discriminated against, abused and often forced into prostitution. "Recognition of transgenders as a third gender is not a social or medical issue but a human rights issue," the Supreme Court's two-judge bench said in its ruling. "Transgenders are also citizens of India. The spirit of the constitution is to provide equal opportunity to every citizen to grow and attain their potential, irrespective of caste, religion or gender." A person who is transgender does not identify with the gender stated on their birth certificate. The court ruling - which came after hearing a petition filed by a group of transgenders demanding equal rights - recognised the community as a marginalised group and directed authorities to implement policies to improve their socio-economic status. The petitioners' lawyers said that this would mean that all identity documents, including a birth certificate, passport and driving licence would recognise the third gender, along with male and female. The government will also have to allocate a certain percentage of public sector jobs, seats in schools and colleges to third gender applicants, said lawyer Sanjeev Bhatnagar. Due to their lack of access to jobs and education, many male-to-female transgenders - also known as "hijras" - are forced to work as sex workers or move around in organised groups begging or demanding money. Hate crimes in the conservative country are common, say activists, yet few are reported partly due to a lack of sensitivity by authorities such as the police. Transgender rights activist Laxmi Narayan Tripathi said the verdict was a great step towards ending such discrimination. "Today Justice Radhakrishnan and Justice A.K. Sikri said that any nation can progress only after it grants all the rights and human rights to its citizens. The transgenders have been given the biggest right," said Tripathi. "Today I feel a proud citizen of India." The Supreme Court was slammed by human rights activists in December when it reinstated a ban on gay sex, following a four-year period of decriminalisation that helped bring homosexuality into the open. The court said only parliament could change the law. Human rights groups said they hoped the ruling on transgenders would encourage the new parliament to repeal the anti-homosexuality law as one of its first actions. India is currently holding general elections with the results due on May 16.(Reuters)
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Finance Minister P Chidambaram will visit Australia later this week to attend the G20 meeting of finance ministers and central bank governors and hold roadshows to attract investment.Chidambaram will be accompanied by ministry officials, including Economic Affairs Secretary Arvind Mayaram, on his visit to Sydney. Reserve Bank of India Governor Raghuram Rajan will also attend the meeting.Sources said the minister will highlight the huge potential of India's infrastructure sector to investors.As per the schedule, Chidambaram will attend the G20 meeting on February 22 and 23, followed by investor conferences on February 24 and 25.The G20 meeting will focus on the impact of US Federal Reserve tapering, International Monetary Fund quota reforms and steps to facilitate exchange of information to check tax evasion.Last month, the US Fed started scaling down its bond purchase programme as its economy showed signs of recovery.The IMF quota reform had hit a road block with US lawmakers not agreeing to the new funding mechanism.As far the roadshows are concerned, Chidambaram will interact with the business community and sell the India growth story. He had conducted similar roadshows in major global financial hubs, including Toronto, Japan, Hong Kong, Germany and Singapore.India needs foreign capital to fund its current account gap. The current account deficit (CAD) had touched a record high of $88.2 billion, or 4.8 per cent of GDP, in 2012-13.An estimate of the CAD in this financial year will be made in the interim budget to be presented by Chidambaram in Parliament on Monday.The country needs $1 trillion of investments in the infrastructure sector during the five-year period ending 2017.(PTI)
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A day after Arvind Kejriwal stepped down as Delhi Chief Minister, Aam Aadmi Party on Saturday (15 February) made it clear that it would contest the Lok Sabha polls under his leadership."...It is clear that Aam Aadmi Party will contest general elections under Kejriwal's leadership across the country," senior AAP leader Yogendra Yadav told reporters in New Delhi.Kerjriwal on Friday (14 February) resigned as Delhi Chief Minister shortly after his government was defeated on the issue of tabling of the Jan Lokpal Bill in Delhi Assembly in the face of a united resistance by outside supporter Congress and BJP.Congress and Opposition BJP said Kejriwal was never serious about governing and was looking for an excuse to "run away" to cover up his "failure" to deliver on his commitments.The BJP also made it clear that the party would seek fresh elections in Delhi and was ready for it rather than form an alternative government since it did not have the required numbers in the state Assembly.(PTI)
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A rvind Kejriwal, who pledged to root out corruption after steering AAP to power in Delhi, was a man in a hurry and set a scorching pace to try to fulfil his anti-graft legislative agenda but his tumultous journey as Chief Minister ended in seven weeks. As the controversy over the Jan Lokpal Bill deepened with Lt Governor Najeeb Jung advising the Delhi Assembly Speaker against allowing its tabling and Congress and BJP opposing it, Kejriwal stuck to his word today by carrying out the threat to quit if the proposed legislation did not get through even at the introduction stage. Emerging as a mascot of an alternative brand of politics, the 45-year-old engineer-turned-civil servant changed the political discourse with a stunning showing of his fledgling Aam Aadmi Party(AAP) in the December Assembly polls that brought Congress' 15-year rule to an end. But he courted controversy within weeks by sitting on a dharna in the heart of Delhi near Parliament House during the tense face off with the Centre last month over his demand for suspending three police officers for allegedly not acting against criminals. He had also come under attack on the governance agenda. Leading from the front, Kejriwal had earlier anchored his campaign in an unconventional way to see it emerge as the second largest party in Delhi with 28 seats. AAP formed the government on December 28 with outside support from Congress. With interests of the common man at the core of AAP's agenda, Kejriwal's triumph over three-time Chief Minister Sheila Dikshit earned him the tag of 'giant killer'. Often called the anti-corruption man, the diminutive and bespectacled IITian and a former tax official catapulted himself leading a people's movement to check graft and get wide support. Formed in November 2012, AAP cemented its place in politics, tapping students, farmers, civil rights groups, NGOs, social activists, women?s groups and the urban youth to emerge as a force. Born on August 16, 1968 in Hisar in Haryana to Gobind Ram Kejriwal and Gita Devi, Kejriwal sent the entire political spectrum into a tizzy, attacking both BJP and Congress on the issues of corruption, exorbitant rise in power and water tariff, safety of women and had managed to make a dent in the vote banks of both the parties. He came into prominence during the agitation by 75-year-old activist Anna Hazare in support of Jan Lokpal Bill in 2011. Kejriwal won the Ramon Magsaysay Award for Emergent Leadership in 2006 for his contribution to the enactment of the Right to Information Act. In 2006, after resigning from the IRS, he donated his Magsaysay award money as a corpus fund for an NGO, Public Cause Research Foundation. Shortly after coming to power, the AAP government announced 20 kilolitres of free water to every household per month. In yet another populist measure, it decided that consumers who did not pay their electricity bills as part of AAP's power agitation will have to shell out only half of their total dues, a move that cost the exchequer Rs six crore. Keeping a pre-poll promise, Kejriwal had announced a 50 per cent subsidy on electricity consumption of up to 400 units. The AAP government also ordered the Comptroller and Auditor General to audit the finances of the three private power distribution companies serving Delhi. (PTI)
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