Gold fell around 1 per cent on 17 December as investors shed some bullish bets on expectations that the US Federal Reserve may be poised to trim its bullion-friendly economic stimulus.Palladium dropped 2 per cent to a two-month low, underperforming other precious metals, as a slide below a key support level near $700 an ounce triggered technical selling, traders said.Data showing flat US consumer prices in November also pressured gold, but the lack of inflation pressures in the economy will probably not stop the Fed from scaling back its bond-buying program soon, analysts said."While the prospect of an immediate taper seems to be diminishing for now, it seems only inevitable that the Fed will act sooner rather than later, and the longer-term investors are still being seen to reduce their exposure to gold as a result," said a trader at TD Securities' precious metals desk.Spot gold was down 0.9 per cent at $1,228.54 an ounce by 1:52 p.m. EST (1852 GMT).US Comex gold futures for February delivery settled down $14.30 an ounce to $1,230.10, with trading volume about 25 per cent lower than its 30-day average.Most observers expect the US central bank to keep its $85 billion-a-month bond-buying stimulus in place, but recent brisk improvements in the labor market have raised the chances that the Fed, at its December 17-18 meeting, will decide to taper its economic stimulus program as early as this month.A run of well-received US economic data, including November payrolls earlier in the month, has fueled speculation that the Fed may taper stimulus sooner rather than later. Gold prices were down 25 per cent this year mainly on Fed taper fears.Physical, Investment Demand OffConsumers of physical gold in Asia held off fresh purchases in anticipation of lower prices.In India, buying remained low-key due to non-availability of stocks, supporting premiums.Investment demand for physical bullion was lackluster, with the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, posting its biggest daily outflow in nearly two months on Monday.On Monday, the fund's holdings were down 8.7 tonnes, or 1 per cent, to 818.9 tonnes, their lowest in nearly five years.Silver dipped 0.5 per cent to $19.84 an ounce, while platinum fell 1 percent to $1,344.24 an ounce and palladium dropped 2.1 per cent to $698.97 an ounce.(Reuters)
Read More
The rupee is trading higher ahead of the RBI's rate decision at 11 am. Pair at 61.90/91 versus 62.01/02 close on 17 December.RBI likely to hike key policy rate by 25 bps to 8 per cent to tackle inflationary pressures.Regional stocks gain, with the benchmark BSE Sensex up 0.1 pct.The US Federal Reserve decision on taper post-close of local trade will, however, be the key for rupee's fortunes, dealers say.(Reuters)
Read More
India on Tuesday (17 December) retaliated strongly to the arrest of its Deputy Consul General in New York by initiating series of steps to strip US diplomats and their families of privileges including withdrawing all airport passes and stopping import clearances for the embassy.Asking all Consulate personnel and their families to turn in their ID cards immediately, the government has also sought key information such as salaries paid to all Indian staff employed at the consulates and by Consulate officers and families including as domestic helps."The government has asked for all US Consulate personnel's ID cards and that of their families immediately. These will now be downgraded on par with with what the US provides to our Consulates in US," sources said.The government has asked the US to provide it with visa information and other details of all teachers at US schools and pay and bank accounts of Indians in these schools.Apart from these measures, Government has stopped all import clearances for the US embassy including for liquor.Also, the traffic barricades near the US embassy on Nyaya Marg here will be lifted except the picket.India has reacted sharply to the arrest of Deputy Consul General Devyani Khobragade, who was handcuffed in public in New York on visa fraud charges last week. Earlier, Foreign Secretary Sujatha Singh summoned US Ambassador Nancy Powell and issued a demarche in this regard.The displeasure was also evident among leaders and officials of Indian government who cancelled their meetings with visiting US Congressional delegation. Home Minister Sushilkumar Shinde today cancelled his meeting with the US team ostensibly as a mark of protest against the treatment meted out to Khobragade.Yesterday, Lok Sabha Speaker Meira Kumar had cancelled her meeting with a senior US Congressional delegation due to the same reason.National Security Advisor Shiv Shankar Menon, who also had a scheduled meeting with the five-member US team, did not meet them, apparently for the same reason.The delegation comprised Congressmen George Holding (Republican - North Carolina), Pete Olson (Republican - Texas) David Schweikert (Republican - Arizona), Robert Woodall (Republican - Georgia), Madeleine Bordallo (Democrat - Guam).39-year-old Khobragade, a 1999-batch IFS officer, was taken into custody last week on visa fraud charges on a street in New York as she was dropping her daughter to school before being released on a $250,000 bond after pleading not guilty in court.(PTI)
Read More
In an escalating diplomatic row, India has asked the US to return IDs issued to all its consular officers posted in the country, a move which may be a precursor to reviewing immunity and benefits enjoyed by them as a protest to the treatment meted out to India's Deputy Consul General in New York."Government has asked the US to return the ID cards given to their consular officers posted in India," Government sources told PTI.It is understood that the government intends to review the immunity and benefits enjoyed by US diplomats.Significantly, the review comes after India reacted sharply to Deputy Consul General Devyani Khobragade being arrested and handcuffed in public in New York on visa fraud charges last week by summoning US Ambassador Nancy Powell and issuing a demarche in this regard.The displeasure was also evident among leaders and officials of Indian government.Home Minister Sushilkumar Shinde today cancelled his meeting with a senior US Congressional delegation ostensibly as a mark of protest against the treatment meted out to Khobragade.Yesterday, Lok Sabha Speaker Meira Kumar had cancelled her meeting with a senior US Congressional delegation due to the same reason.National Security Advisor Shiv Shankar Menon, who also had a scheduled meeting with the five-member US team, did not meet them, apparently for the same reason.The delegation comprised Congressmen George Holding (Republican - North Carolina), Pete Olson (Republican - Texas) David Schweikert (Republican - Arizona), Robert Woodall (Republican - Georgia), Madeleine Bordallo (Democrat - Guam).39-year-old Khobragade, a 1999-batch IFS officer, was taken into custody last week on a street in New York as she was dropping her daughter to school and handcuffed in public on visa fraud charges before being released on a $250,000 bond after pleading not guilty in court.US Justifies Strip SearchThe US on Tuesday (17 December) virtually justified the reported strip search by New York police of Indian diplomat Devyani Khobragade, saying "standard procedures" have been followed during her arrest."Diplomatic Security, which is under the State Department purview, followed standard procedures during her arrest," State Department Deputy Spokesperson Marie Harf told reporters at her daily news conference.Harf was asked about media reports that 39-year-old Khobragade, the Deputy Consul General at New York, was strip searched and confined with drug addicts after her detention.Media reports also said she was subjected to DNA swabbing.A 1999-batch IFS officer, Khobragade was arrested as she was dropping her daughter to school and handcuffed in public on visa fraud charges before being released on a $250,000 bond after pleading not guilty in court."Our Diplomatic Security folks followed our standard procedures, which I'm assuming are standard for diplomats because that's who our Diplomatic Security deals with," Harf said.However, she referred the allegations regarding inhuman treatment of Khobragade to the US Marshalls, saying the Indian diplomat was handed over to them by the Diplomatic Security.Harf said under the Vienna Convention on Consular Relations, the Indian Deputy Consul General enjoys immunity from the jurisdiction of US courts only with respect to acts performed in the exercise of consular functions."There's different kinds of immunity. This isn't just in the US; it's all around the world. So in this case, she fell under that specific kind of immunity, and would be liable to arrest pending trial pursuant a felony arrest warrant," she said.India has reacted sharply to Khobragade being arrested and handcuffed in public by summoning US Ambassador Nancy Powell and issuing a demarche in this regard.(Agencies)
Read More
India will keep a tight leash on gold imports despite a recent improvement in its trade deficit and lobbying by a bullion industry struggling with high premiums and a supply crunch.The government is worried the trade gap could worsen again and the currency could weaken as the US Federal Reserve looks set to start tapering its economic stimulus soon."There is no proposal to relax restrictions on gold imports as of now," said a top finance ministry official who is part of the team deciding on gold import restrictions. He declined to be named as he is not authorised to speak to the media."The question has not arisen as a US decision on tapering its monetary stimulus could come at any time (and) that could have severe implications for the rupee."The Indian rupee hit a record low in late August on concerns over funding of the record trade gap, and capital outflows prompted by the Fed signalling that it would soon begin rolling back its $85 billion monthly bond purchases.The Indian government and the central bank issued a series of curbs on imports of gold - the second-most expensive item on India's import bill - hoping to ease the pressure on the currency.The import duty on gold was hiked to a record 10 per cent, and import quantity was tied to sagging exports, leaving the market short on supplies.Gold imports dropped to 24 tonnes in October from a record 162 tonnes in May, helping ease the current account deficit (CAD). The rupee has also recovered about 10 per cent from its record lows.That has prompted the gold industry in India to lobby the government on rolling back its tough rules."Now since the CAD is under control, we are asking them to remove the 80/20 rule because any curbs will not help the industry," said Haresh Soni, chairman of the All India Gems and Jewellery Trade Federation, which represents more than 300,000 jewellers.The 80/20 rule dictates that 20 per cent of all gold imports have to be re-exported."We are also asking the government to reduce import duty to 2 per cent as smuggling has increased," Soni said.Stung by the tough rules imposed this year, Indian dealers and individual customers have been fanning out across Asia to buy gold and sneak it back into the country.But some analysts said the rules should remain in place."We should not be going for an easing of restrictions on gold imports at this point in time. I would wait to see if gold imports decline on a sustainable basis," said Madan Sabnavis, chief economist at local ratings agency CARE Ratings.India will hold a general election by May, which has added to speculation that the government may ease the rules to appease some sections of the public."Even from an elections point of view, if the government wants to ease restrictions, they are still three or four months away," said the finance ministry source.Another official involved in making gold policy said the central bank and government should wait longer to see the impact of the restrictions."Indian importers have never been subject to restrictions and that is why they are finding this very painful. We have just seen the impact for one quarter, we should wait till March at least to understand the full impact," said the policymaker.(Reuters)
Read More
Lieutenant Governor Najeeb Jung has recommended imposition of President's rule in Delhi among other options to break the deadlock over formation of a new government in Delhi after a hung verdict with no party ready to assume power.Central rule with the Assembly being kept in suspended animation was one of the options listed by Jang in his report submitted to the President after having wideranging consultations with BJP, the single largest party, followed by the Aam Aadmi Party, official sources said on Monday (16 December).Congress has offered unconditional support to the AAP to form a government.Without disclosing the contents of the report, Union Home Minister Sushilkumar Shinde told reporters that the Lt Governor has given a few options."We are examining the report legally," he said.Sources said the Lt Governor in the report has communicated that none of the party is in a position to form the government and so far there is no clarity on government formation. The reprot also noted that AAP leader Arvind Kerjriwal sought more time for further consultations.Hence, the Lt Governor has said, the President's rule should be imposed in Delhi by keeping the Assembly under suspended animation till any party or a combination of parties is able to form the government, sources said.If no party comes forward to stake claim to form the government, the President's rule can be imposed in the next two days, sources said."The meeting of the Union Cabinet, which will recommend imposition of President's rule by keeping the Assembly under suspended animation, can be convened at a short notice of two hours, a source said.BJP(31) along with its ally Akali Dal got 32 seats in a House of 70 and was followed by AAP with 28 seats.Meanwhile, sources said, the President has notified the constitution of the new Delhi Assembly on December 10. BJP has already declined to form the government in the national capital citing "lack of clear mandate".AAP chief Arvind Kejriwal met the Lt Governor on Saturday and sought time saying they would like to know answers from BJP and Congress before they stake claim for the government-formation.AAP, which was invited by Jung to discuss government formation, set some new conditions for Congress and BJP before it can decide on taking their support to form a government.In his meeting, Kejriwal had given to Jung the copies of the letters he had written to Congress President Sonia Gandhi and BJP President Rajnath Singh, seeking their views on a list of 18 issues that included ending VIP culture in the capital, audit of electricity companies and removal of MLA local funds scheme.The Congress today replied to AAP's letter seeking its views on 18 issues. The party said 16 of the 18 issues need just administrative decisions and can be implemented by Delhi government without coming to Parliament or Assembly.Congress has already extended unconditional support of its eight MLAs to AAP for forming the next government.(PTI)
Read More
Despite carrying pro-farmers image, the Shiromoni Akali Dal-Bharatiya Janata Party government in Punjab managed to woo industry by rolling out red carpet for investors and offering "unprecedented" tax incentives during the year.The state hopes to attract investment proposals worth over Rs 65,000 crore firmed up during the maiden two-day Progressive Punjab Investors Summit towards the end of 2013.Already facing "dismal" financial position, Punjab government's efforts to mobilise additional revenue through higher property tax, introducing anti-tax evasion measure E-Trip and levying advance tax on a host of commodities came under fire from a large section of state industry.The trading community termed such moves as "harsh" and "unjustified".One of election promises of turning state into power surplus came to near realisation as Punjab saw commissioning of two coal-fired thermal power plants?Talwandi Sabo (660 MW) and Rajpura thermal power plant (700MW) towards the end of the year, albeit after failing to meet several deadlines.As far as neighbouring Haryana state is concerned, the Bhupinder Singh Hooda government, sensing slower pace of investments into SEZ projects, came with a new policy in the mid of the year.It decided to allow SEZ developers to convert their projects into industrial colonies or cyber cities with a clear intention to provide relief to them.On the agriculture side, wheat procurement from Punjab and Haryana dipped by a whopping 30 per cent on account of adverse impact on crop output due to inclement weather conditions near the time of harvesting.However, basmati growers saw their income growing because of good export demand.Aiming to bring down area under water-guzzling paddy crop, both Punjab and Haryana laid emphasis on encouraging growers to diversify into less water consuming crops like maize, sugarcane, agro-forestry, oilseeds, vegetables,pulses etc.Armed with a new industrial policy which promises to offer a host of fiscal sops to new investments, the Punjab government presented the state as best investment destination in terms of infrastructure, skilled manpower, energy, among other things.It managed to bring a galaxy of country?s leading corporates including RIL Chairman Mukesh Ambani, steel cazar L N Mittal, Airtel Chief Sunil Bharti Mittal, ITC Chairman Y C Deveshwar at its investors summit in December.Among major investments, Mukesh Ambani and Sunil Mittal, who showered praises on state government?s efforts, promised to invest Rs 2,500 crore and Rs 4,000 crore respectively on digital infrastructure in the state."It is commendable that Punjab government took up an initiative to invite industry to invest in the state for the first time."But what is now important will be for the state government to live up to the expectations (like faster clearances, cheap power) of corporates who committed their big ticket investments in the state," said Ludhiana based industrialist Satish Dhanda.Punjab government inked MoU of more than Rs 65,000 crore with companies in various industrial verticals including textiles, real estate, agro-processing during the investors summit.The beginning of the year saw the SAD-BJP led state government?s first move towards improving the situation of "empty coffers" as the state government levied entry tax on vehicles bought from other states and Union Territories (UT).State officials claimed that the state was losing tax revenue of Rs 125 crore per annum due to lower VAT rates on vehicles prevailing in other states.The precarious fiscal health of Punjab government came to the fore when Punjab Finance Minister Parminder Singh Dhindsa presented the budget in March, wherein state?s debt was projected to cross over Rs 1 lakh crore, drawing ire from various quarters including political opponents.Facing fiscal crisis, the Punjab government even could not spend 100 per cent of its annual plan amounting to Rs 14,000 crore for 2012-13, its second successive miss, though state government blamed Centre for its step-motherly treatment.On the contrary, the neighbouring Haryana state performed well vis-a-vis Punjab in terms of key parameters including fiscal deficit, tax mobilisation and debt.Facing elections next year, the Haryana government proposed to come out with a new housing policy for Economic Weaker Section (EWS), involving capital outlay of over Rs 1,600 crore.This is to provide housing accommodation to about 3.5 lakh economically backward beneficiaries in urban and rural areas in the state.In the month of April, power got costlier in Punjab by over 9 per cent across all categories even as power regulator introduced 'time of day' tariff for the first time in the state whereby a rebate of Rs 1 per unit on normal tariff would be given to the industry for consuming power during off peak hours.(PTI)
Read More
With the Supreme Court order on gay sex creating a major uproar, the government today said it is considering all options to decriminalise homosexuality and filing a curative petition in the apex court could be one of them. "The Government is considering all options to restore the (Delhi) High Court verdict on (Section) 377 (of IPC). We must decriminalise adult consensual relationships," Law Minister Kapil Sibal said. Finance Minister P Chidambaram said the Supreme Court ruling was "wrong" and all options would be looked at to set right the Supreme Court order. Terming the judgement "disappointing", he said the court should have applied "current social and moral values" in the case. He said the government should file a review or curative petition and that the matter should be heard by a five-bench judge. Chidambaram, the former Home Minister, said the Delhi High Court judgement was a "well-researched one" which the Union government accepted and did not challenge in the Supreme Court. He added that the government's decision of not opposing the High Court judgement in the Supreme Court was also his party's view. Chidambaram noted that the bench that gave the order, should have referred the matter to a five-judge bench and that the interpretation of law cannot be static. Chidambaram said the government should ask for a review for a curative petition and the matter should be referred to a five-judge bench. "I think the bench should have referred it to a five-judge bench and they should have looked into all aspects of law. Interpretation of law cannot be static. What you have done is, (you have) gone back in time, in 1860, and I am therefore terribly upset," Chidambaram said. Noting that the current section 377 was made in the year 1860, the Finance Minister said it reflected the social and moral values of that age and the knowledge of psychology, physiology, genetics in that era was extremely poor. "But today in the year 2013, there is so much knowledge about human psychology, human physiology, human genetics to say that something like intercourse against the order of nature (is not right) and that is the social and moral value today, and therefore, it is the legal value of today. That (judgment) is completely outdated, completely retrograde," he said. When asked why did the government not amend section 377 while amending the rape laws in the wake of Delhi gang-rape incident, Chidambaram said the High Court judgment laid down section 377 only in a limited manner. "They decriminalised homosexuality only among consenting adults and in private. Therefore, there was no need to amend section 377," he said. Chidambaram added that legislative option still remains open, because if one looks closely at section 377, that option is not required. "Section 377 can remain, because between two non -consenting adults it still remains a crime. So, there was no occasion to amend the section. And the amendment of the section was necessary only after the final announcement of the judgment. The case was pending in the Supreme Court and there was no occasion to amend it," he said.(PTI)
Read More
Tackling inflation will be a priority, the finance minister and RBI governor said on 11 December, after high prices contributed to painful losses for the ruling Congress Party in state elections.Finance Minister P. Chidambaram also reiterated promises of budget discipline as investors worry the Congress-led minority coalition will boost spending to improve its standing before general elections due in May.Data on 12 December is expected to show consumer prices were up 10 per cent in November from a year earlier, with wholesale prices due out on Monday expected to have risen 7 per cent.Inflation will increase expectations the Reserve Bank of India will raise interest rates for a third time in four months at its policy review next week, despite the slowest economic growth in a decade.Although rate hikes are unpopular with businesses and investors, Chidambaram said: "It is common knowledge that the government of the day will pay a price for high inflation, especially if inflation persists over a long period of time."Speaking an event organised by the Finance Ministry, he called monetary policy a "blunt instrument"."The answer to inflation, therefore, especially inflation in food articles, is to increase supplies and to radically transform the manner in which commodities and food articles are stored, transported, distributed and sold in the various markets, especially urban markets."Chidambaram has repeatedly vowed to honour budget deficit limits, but investors worry that the polls will prompt spending on the lines of the $20 billion plan to provide cheap grain to the poor earlier this year.The government headed by Prime Minister Manmohan Singh has been widely criticised for policy drift and for allowing corruption to spin out of control. Congress lost four key state elections, according to results on Sunday.Inflation has been another thorn, leaving the RBI with a tricky balance between fighting high prices or boosting growth.So far it has tried to squeeze inflation, raising interest rates by a quarter percentage point in September and again in October. Its next policy meeting is on December 18."Our effort is firmly on controlling inflation," RBI governor Raghuram Rajan said at the same conclave."We can spend a long time debating the source of inflation. But, ultimately, inflation comes from demand exceeding supply and can be contained only by bringing both in balance."Although India's current account deficit has narrowed, easing some pressure on the currency and economy, the RBI governor acknowledged in a separate speech in the afternoon that it was too early to be confident."The prospects of growth are a little better. I would say growth is stabilising. It is still too early to say we are in the midst of a strong recovery," Rajan said in a speech at an industry function in the eastern city of Kolkata.Data on Wednesday showed the trade deficit narrowed in November as gold and silver imports slumped 80.5 percent, but the pace of exports of goods slowed from October.Rajan said no single data point would drive the next monetary policy decision.Stagflation"Today the Indian situation is unique. In all developed and developing countries, nobody has as high an inflation rate as India has despite the fact that we have slowed down so acutely," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai."It's a politically sensitive issue and the government is in the election frame of mind," she added.The government also faces the challenge of delivering on its promise to keep the fiscal gap to 4.8 per cent of gross domestic product. The deficit has reached 84 per cent of the fiscal year target in the first seven months.On Wednesday, Chidambaram sought parliament's approval for an extra 131.2 billion rupees to cover costs such as higher fertiliser and fuel subsidies, saying this spending would not have a "significant" impact on the deficit."There can be no compromise, and I speak for the government when I say there will be no compromise, on the decision to walk on the path of fiscal prudence and contain the fiscal deficit, step by step, year by year, until we reach the goal of 3 per cent of GDP in 2016-17," Chidambaram said.(Reuters)
Read More
The rupee fell on Wednesday (11 September), snapping a five-session winning streak, as the pace of exports last month slowed, raising some concerns about the economy despite a trade deficit that narrowed after gold and silver imports slumped.The country's merchandise deficit narrowed to $9.2 billion in November, but exports growth eased to 5.9 per cent from 13.5 per cent in October, government data showed.The exports data came on a day when Reserve Bank of India governor Raghuram Rajan said inflation remained a priority despite noting it was too early to call a bottom in the economy.India is due to post consumer inflation data on Thursday amid worries a high reading could spur the central bank to raise interest rates next week for the third time in four months, denting growth and hitting domestic shares."We expect even better data, and believe that the results are not good enough to support the INR, because the trade gap is still a huge 6.1 pct in monthly terms and 9.0 pct of GDP in 12-month rolling terms. Moreover, the data underestimates the actual deficit," said Dariusz Kowalczyk, a Hong-Kong based strategist at Credit Agricole CIB.The partially convertible rupee closed at 61.245/255 per dollar compared to 61.04/05 on Tuesday.Dealers also cited large dollar buying by a state-run bank, likely for state-run oil refiners.Some concerns were also sparked after Standard & Poor's said India's ratings may be pressured if the next general elections due by May end with a hung parliament or with a government unable to push through reforms.The rupee has gained 2.1 percent over its past five sessions through Tuesday primarily on the back of the strong electoral showing by the key opposition party which is perceived to be business-friendly.In the offshore non-deliverable forwards, the one-month contract was at 61.62 while the three-month was at 62.50.(Reuters)
Read More
