Ending months of uncertainty, the Cabinet on Wednesday night (19 December) decided to allow Reliance Industries to double the price of natural gas from April provided the firm furnishes a bank guarantee to cover its liability if gas hoarding charges against it are proved.The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11.The Cabinet Committee on Economic Affairs (CCEA) decided that the "contractor (RIL) will be allowed to sell natural gas from D1&D3 at revised price from April 1, 2014. The sale will be permitted on the basis of a bank guarantee to be furnished by RIL in favour of the Government for the incremental gas rate," Oil Minister M Veerappa Moily told reporters here.The CCEA headed by Prime Minister Manmohan Singh decided there will be no change in the Rangarajan formula of pricing domestically produced gas - both conventional and non-conventional fuels such as coal-bed methane and shale gas - at an average of international gas hub rates and the cost of liquefied natural gas (LNG) imported into India."There will be no cap or floor for the price," Oil Secretary Vivek Rae said.According to the formula, the gas price on April 1, 2014, for all producers including state-owned Oil & Natural Gas Corp (ONGC) and private firms such as RIL will be about USD 8.4 per million British thermal units against USD 4.2 currently.Gas is a crucial input for the power and fertiliser sectors and every dollar increase will raise the cost of production.Rae said the format of the bank guarantee will be vetted by the Law Ministry and a supplementary agreement will be signed with RIL by next month for furnishing and execution of the guarantees. Prodded by the Finance Ministry, the Oil Ministry had initially proposed to deny the new gas price until RIL either made up for the shortfall in output during past three financial years or it was proved that the company was not responsible for failing to meet production targets.The issue had held up notification of the new gas pricing formula.As a way out, it was proposed that RIL and its partners BP plc of UK and Canada's Niko Resources be asked to give bank guarantees for the incremental revenue they would get until the issue is resolved through arbitration and validation by independent international experts.The government approved the Rangarajan formula in June.The Finance Ministry wanted to change the approved formula by excluding the price of spot LNG purchases, which it said was highly volatile. This would have reduced the gas price to USD 8.1.Moily said the CCEA today decided that "no change needs to be made in the early decision of CCEA on including spot prices in computation of gas price. Also, no cap or floor on gas price is required to be stipulated."In the run-up to the Cabinet decision, the Finance Ministry had sought to know if the government's position on the reasons for the fall in gas output at KG-D6 would be diluted by accepting the bank guarantees.Also, it felt the bank guarantees would run into USD 9 billion during the duration of the arbitration, but Rae said the oil ministry believes the bank guarantee, which is to be given on a quarterly basis, would not accumulate to such an amount.(Agencies)
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The arrest in New York of Indian diplomat Devyani Khobragade has provoked anger and outrage, especially because she underwent a strip search that some in her home country have called degrading and unnecessary.But such searches are a common feature of the US criminal justice system, even for defendants from the elite echelons of society.Strip searches for new inmates are routine in jails across the United States. And defendants are strip-searched every time they leave federal detention facilities, such as for court hearings, and when they return.In the case of Khobragade, who was arrested last week over how much she paid her housekeeper, she was strip-searched under what US officials said was standard practice for defendants arrested by federal authorities in New York.While civil liberties advocates have criticized the practice as needlessly invasive and unnecessary in the majority of cases, US courts have largely upheld the searches.Last year, the US Supreme Court ruled 5-4 that jail strip searches for new inmates were constitutional, even when there is no suspicion that an individual is hiding contraband. The decision applied to anyone arrested accused of a crime, including relatively minor infractions such as traffic violations.In 2010, before the Supreme Court ruling, New York City agreed to pay $33 million to thousands of people who underwent strip searches in city jails to settle a class action lawsuit. But a lawyer for the plaintiffs in that case, Richard Emery, said on Thursday that a similar case would likely fail today in light of the Supreme Court ruling."It's one of the travesties of current developments in the Supreme Court of the United States that people can be dehumanized in this way for no reason," Emery said.The US Marshals Service, which handles transport for federal prisoners, has confirmed that Khobragade was strip-searched at a holding cell inside a New York federal courthouse.'Standard Practice'In New York, where security is tighter than in other parts of the country, US Marshals follow that procedure for anyone who is arrested and held in a courthouse cell with other detainees, a spokeswoman for the agency said.In a rare public statement on a pending case involving his office, the chief prosecutor for Manhattan, US Attorney Preet Bharara, said on Wednesday that the search of Khobragade was "standard practice for every defendant, rich or poor, American or not."Lawyers at the Federal Defenders of New York, which provides legal representation to large numbers of defendants in the federal court where Khobragade appeared last week, said many clients have complained about the strip searches, which they said appear to take place automatically.But there are exceptions.In special cases, such as the arrest of juveniles, the arresting agency can ask that the detainee be kept separate from other prisoners, which would not require a strip search, US Marshals spokeswoman Nikki Credic-Barrett said.In the case of Khobragade, Credic-Barrett said the Marshals Service received no such instruction from the State Department's Diplomatic Security Service, which carried out the arrest.Unlike in the federal system, individuals arrested by the New York City Police Department are generally not subjected to strip searches in courthouse holding cells, said Tom Repetto, a police historian and author of several books on policing.However, prisoners are strip-searched upon arrival at the city's Rikers Island jail, as the former International Monetary Fund chief Dominique Strauss-Kahn was in 2011 after being charged with attempted rape.That case prompted its own international outcry over another facet of US criminal justice, the "perp walk," after a disheveled Strauss-Kahn was marched in handcuffs past television cameras. The images shocked observers in France, where such pictures are prohibited from publication before a conviction.Strip searches are not a routine part of felony arrests in India, and Indians were "understandably outraged," said Meenakshi Ganguly, the South Asia Director of Human Rights Watch. But the uproar over Khobragade's treatment has overshadowed questions about the rights of her employee, also an Indian national, Ganguly said.A senior Indian government source has said Khobragade also was subjected to a cavity search. Credic-Barrett denied a cavity search took place.Under Marshals Service regulations, a strip search includes visual inspection of the mouth, genitals and anus. A "digital cavity search," by contrast, can only be performed by medical personnel and in some cases may require a search warrant, according to the regulations, Credic-Barrett said. (Reuters)
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The rupee falls for a fourth session, driven by weak Asian FX a day after US announces stimulus taper. The unit is trading at 62.27/29 versus Thursday's (19 December) close of 62.14/15.The rupee is, however, off 62.40 low on dollar selling by a large state-run as well as a foreign bank.The Thai baht touched a three-year low on 20 December, as the dollar stayed firm in the wake of the US Federal Reserve's decision to start scaling back its bond-buying stimulus from January.The USD/INR pair may hold in 62.20-62.70 range for session, say dealers.(Reuters)
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Gold futures fell more than 1 percent on Thursday to their lowest level in more than two months, tailing overseas leads though a weaker rupee kept the downside limited, while premiums eased in the domestic market.At 5.22 pm , the most-active gold contract for February delivery was 1.36 per cent lower at Rs 28,474 per 10 gram on the Multi Commodity Exchange. It had hit a low of Rs 28,390 earlier in the day, a level last seen on October 15.Silver also dropped to its lowest level in nearly two weeks.Silver for March delivery was 2.95 per cent higher at Rs 45,009 per kg, after hitting a low of Rs 43,629, a level last seen on December 6, 2013.In the overseas market, gold slid more than 1 per cent to its lowest since late June after the US Federal Reserve took its first step away from the ultra-loose monetary policy that had helped drive bullion prices to record highs in recent years.The rupee, which weakened on Thursday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.In the domestic market, premiums eased to $110 an ounce from up to $160 an ounce quoted earlier this month."Small jewellers are hit the most due to policy changes," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata, adding premiums had eased to $110 an ounce due to availability of smuggled yellow metal.Indian gold imports may fall 70 percent in the final quarter of 2013 from 255 tonnes in the year-ago period and are expected to be half the usual levels at 500-550 tonnes next year if new import rules are maintained, a top trade body official said.To curb a rising trade gap, the Indian government slapped a record import duty of 10 per cent, and tied imports for domestic consumption with exports.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.(Reuters)
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India said on Thursday (19 December) the case against its diplomat Devyani Khobragade, arrested in New York on charges of visa fraud, should not be pursued and withdrawn by the US authorities.External Affairs Minister Salman Khurshid said he had received a call from US Secretary of State John Kerry last night but he was not available at that time."I was not available when John Kerry called. We are trying to log a time for a call this evening. Kerry is in the Philippines and there is a huge time difference," he said."I have sought details of what happened in the case of the diplomat," he said, asserting that the matter should not be pursued and be withdrawn."Our relationship has a lot of investment, it is not an irreversible matter and we have to deal with it sensibly," the Minister said.A 1999-batch IFS officer, Khobragade was arrested on December 12 on visa fraud charges as she was dropping her daughter to school and released on a $250,000 bond only after pleading not guilty in court.The ill-treatment of its diplomat evoked a sharp reaction from India which initiated a slew of steps to downgrade the privileges enjoyed by the US diplomats and their families including withdrawing airport passes and stopping import clearances. Prime Minister Manmohan Singh had yesterday described as "deplorable" the way the diplomat was treated in the US.She has now been transferred to the Indian Mission to the UN to give her fuller diplomatic immunity.In his first statement in Parliament on the issue, Khurshid had yesterday said that she was the victim of a "conspiracy" and that some people had "trapped" Khobragade, who was put through both strip and cavity searches, procedures normally used for criminals.He had also said that India will intervene "effectively and specifically" to ensure the return and restoration of dignity of its Deputy Consul General as it a matter of the country's prestige and honour.There is a strong demand that Khobragade should be released unconditionally and all the charges against her should be dropped.(Agencies)
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The rupee is off lows, which dealers attribute to dollar selling from state-run, foreign banks. The rupee is at 62.27/28, down from an intraday low of 62.48. The unit had closed at 62.09/10 on 18 December.Dealers say the impact of $10 billion a month taper by the Federal Reserve largely priced in.Some say selling by state-run banks may be related to the Reserve Bank of India. However, others say it could be bunched-up inflows due to strike on Wednesday when most state-run banks were thinly staffed."There has been some gains in crosses such as euro and also the fixing is over," says a dealer, justifying the rupee recovery.(Reuters)
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Five months before India's next elections are due, there is already an air of victory around Narendra Modi as he strides from one jam-packed rally to the next. And yet, a regional leader from his Hindu nationalist fold is quietly emerging as an alternative to lead the country.The main opposition party's candidate for prime minister, Modi is unquestionably the man to beat as the ruling Congress party, led by the Nehru-Gandhi dynasty, stumbles towards a vote that opinion polls show it will lose.Modi's Bharatiya Janata Party (BJP) is tipped to win the election but it may not get an outright majority, and he may be unacceptable to potential coalition partners.Ever since a 2002 spasm of sectarian bloodshed in the western Indian state he rules, Modi has been unable to shake off allegations that he carries a deep-seated bias against Muslims, a community that makes up 13 per cent of the population.Shivraj Singh Chouhan, a softly spoken and unassuming leader of the centre-right BJP, could be a more acceptable figure for would-be coalition allies.This month, Chouhan notched up a thumping election victory in Madhya Pradesh, a sprawling central state with a population larger than that of France, becoming its chief minister for a third time."Shivraj Chouhan is no threat to Modi, he is not a challenger, but his huge victory raises the stakes," said Girija Shankar, a political consultant with close ties to the Madhya Pradesh administration. "On the scale of electability and performance, the message is - he is not any weaker than Modi."Congress did something similar after elections 10 years ago - after wresting power from the BJP, its leader, Italian-born Sonia Gandhi, declined the prime ministership. By naming unassuming technocrat Manmohan Singh as prime minister, she denied the opposition any chance of using her foreign roots to attack the government.A farmer-turned-politician, Chouhan is similarly far less divisive than Modi.There are other BJP leaders waiting in the wings for the premiership if minor parties that are expected to hold the key to power after the election insist on a prime minister other than Modi as the price for their support.Among them are Lal Krishna Advani, a veteran of the party who is still seen as a contender despite his 86 years, as well as former government ministers Sushma Swaraj and Arun Jaitley. All three are virtually household names across India, and Chouhan - a former parliament backbencher - has a far lower profile.Earning His SpursChouhan has long been an outsider among the political elite of New Delhi. When he was first elected to parliament in 1991 he didn't have a sweater to ward against the capital's winter chill, recalls a former associate Anurag Pateriya, who picked up a cheap one from a street market before they boarded the train.Chouhan declined requests to be interviewed for this report.Swimming below the national radar, he has transformed Madhya Pradesh from a poverty-blighted backwater, unleashing average annual economic growth of 10 per cent over the past five years on the back of an unprecedented agriculture boom.The explosion in farm output - agricultural growth in the state was 18 per cent last year, the country's highest - has been fed by interest-free loans to farmers, a trebling of irrigation cover and a dramatic improvement in electricity supplies.Out on a modern four-lane highway from the state capital Bhopal to the commercial city of Indore, the rural prosperity is hard to miss. Fields upon fields of soybeans, mustard and wheat stretch out, broken only by factories starting to come up on cleared land.Children in uniforms scurry to school on bicycles provided by the state government, pedalling along new roads that are linked to remote villages. They will all be given a free lunch.Nearby, expectant and new mothers collect free packets of soya, a mixture of rice and lentils and sweets, a Chouhan initiative to lift the state's infant and maternal mortality rates up to the national average."As a consequence of our pro-poor policies, we subsidise agriculture," said Manoj Srivastava, principal secretary to Chouhan, pointing out that 80 per cent of the state's population is dependent on farming. "We make no bones about it - WTO or no - we are unabashedly doing it."Chouhan has also introduced tax-friendly policies to attract industry to his state. Along the state highway, Indian firm Deepak Fastners is building Asia's largest plant to manufacture specialised nuts and bolts for car engines and aircraft. The first phase of the project is expected to cost some $38 million.A Numbers GameMadhya Pradesh may still lag behind "vibrant" Gujarat, the neighbouring state run by Modi and a darling of investors.But unlike his more famous colleague, Chouhan has walked a fine line between a secular image and sticking to the BJP's Hindu nationalist roots.As assistants scurried about the chief minister's imposing colonial-era bungalow before his inauguration last week, Chouhan told them that a congregation of Islamic scholars was important for everyone, said a top aide, who asked not to be identified.That inclusive approach has won Chouhan support from a fair sprinkling of Muslims, who have traditionally shunned his party.For now, Modi is on a roll, tapping into public anger with the Congress Party after years of corruption scandals, stubborn inflation and dwindling economic growth.But, privately, party leaders concede that the BJP may not be able to form a government with Modi as prime minister if it wins less than 180 of the 543 elected seats in the lower house of parliament. If it falls short of that number, it might have to ditch him and find another candidate.To rule, a party needs the support of 272 members. Opinion polls so far have forecast the BJP will win around 160 seats, which means it may need to join hands with a cluster of smaller parties to reach the halfway mark.The BJP will need support from regional parties in the south and east that may be reluctant to associate themselves with the polarising Modi, fearing a backlash from Muslims in their states. One ally in the heartland state of Bihar cut ties with the BJP this year after Modi was elevated to a national role, and the party has yet to find a substitute.For the moment, Chouhan's camp is quietly biding its time."We want to stay below the national radar, we don't have extra-territorial ambitions," said the aide. "But people in the party, those who have tensions with Modi, may try to push him forward." (Reuters)
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The rupee was slightly weaker in early trades on 19 December after the Federal Reserve said it would scale down its monthly bond purchases, sending emerging market currencies lower.The partially convertible rupee was at 62.26/27 to the dollar versus its close of 62.09/10 on 18 December.The US central bank said it would reduce its monthly asset purchases by $10 billion, bringing them down to $75 billion. The taper will be equally split between mortgage-backed securities and Treasury bonds.The currency is seen as less vulnerable than in the summer when it sold off on fears of a wide current account deficit.The central bank has since added $34 billion to its reserves after opening two concessional forex swap facilities to draw inflows.(Reuters)
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India is better prepared to deal with any consequences of the US Federal Reserve's move to reduce monetary stimulus, Finance Minister P. Chidambaram said in a statement on 19 December, that has supported inflows of cash to emerging markets.After agonising investors for months, the Fed decided on 18 December to trim its bond buying by $10 billion to $75 billion a month as a modest step and one the US economy could well withstand. Crucially, the US central bank softened the blow by making its forward guidance even more dovish."(The) government is of the view that the markets had already factored in the US Federal Reserve's decision and therefore is not likely to be surprised by these moderate changes," Chidambaram said in a written statement released by his office.Worries over the Fed's possible tapering had triggered massive capital outflows between May and September from emerging markets.Saddled with hefty current account and fiscal deficits, India looked the most vulnerable. The rupee went in a free fall, losing as much as 20 per cent against the dollar before recovering. This prompted India to unleash a slew of measures to bolster its forex reserves and rein in the current account gap.Chidambaram also spoke to Reserve Bank of India Governor Raghuram Rajan on Thursday morning to discuss the Fed tapering, the statement added.(Reuters)
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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)
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