India’s fastest-growing states have seen the wealth of their citizens grow, but still have a long way to go when it comes to social development parametersCompiled by Team BW Graphic by Prashant Chaudhary Click here to view graphic(This story was published in BW | Businessworld Issue Dated 18-11-2013)
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The Reserve Bank of India plans to soon launch a 10-year savings instrument that will offer inflation-linked returns to small investors as an alternative to investing in gold."It is proposed to launch Inflation Indexed National Saving Securities (IINSSs) for retail investors in November/December 2013 in consultation with the government," the RBI said today in its Second Quarter Review of Monetary Policy 2013-14.The inflation-indexed securities for retail investors will be linked to the new (combined) consumer price index (CPI). The interest on these securities would comprise of a fixed rate plus inflation."Interest would be compounded half-yearly and paid cumulatively at redemption. These securities will be distributed through banks to reach out to the masses," the RBI said.Eligible investors would consist of individuals, Hindu undivided families, trusts and charitable institutions.The Union Budget for 2013-14 had proposed introducing instruments that would protect savings from inflation and provide an alternative to gold as an investment avenue for individuals.Both the government and the RBI have imposed a host of restrictions on the import of gold, one of the major reasons for the record high current account deficit in the previous financial year.In another decision, the RBI allowed banks to pay interest on savings and term deposits at shorter-than-quarterly intervals. Banks are currently required to pay interest on such deposits at quarterly or longer intervals. (Reuters)
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Compiled by Joe C. MathewGraphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 18-11-2013)
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The rupee edged down on Monday, 28 October, a day before the Reserve Bank of India (RBI) policy review when it is widely expected to raise interest rates to fight inflationary pressures even as the economy grows at its slowest in a decade.The RBI's macroeconomic report released after the close of markets said upside risks to food inflation remain and that it expects the retail and wholesale price inflation to remain above comfort levels.Expectations for a rate hike have grown after data earlier this month showed that both retail and wholesale inflation accelerated, and markets are likely to scrutinise whether the central bank hints on Tuesday at more rate hikes.Meanwhile, the RBI is also expected to continue cutting short-term interest rates, removing measures put in place to support the rupee."The market will be very cautious until the policy outcome. I expect ranged trading between 61.25 to 61.75 to continue depending on the global situation," said Hari Chandramgethen, head of forex trading at South Indian Bank.Global factors will be a factor ahead of the U.S. Federal Reserve's policy meeting ending on Wednesday.The partially convertible rupee closed at 61.52/53 per dollar compared with 61.46/47 on Friday.Weakness in shares also hurt the rupee. The BSE index marked its lowest close in nearly 1-1/2 weeks, as lenders and other interest rate-sensitive shares declined a day before RBI's policy review.In the offshore non-deliverable forwards, the one-month contract was at 61.97, while the three-month was at 62.95.In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 61.51 with a total traded volume of $1.9 billion.(Reuters)
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US employers added far fewer workers than expected in September, suggesting a loss of momentum in the economy that will likely add to the Federal Reserve’s caution in deciding when to trim its monthly bond purchases. Non-farm payrolls increased by 148,000 workers in September, the Labour Department said. Its report suggested the economy lost steam even before the damaging 16-day partial shutdown of the government. “The numbers indicate that the economy is growing at a modest pace at best,” said an economist. After the shutdown, “tapering (of the Fed’s bond purchases) has been postponed until further notice”. But there was a silver lining too. The unemployment rate fell a tenth of a percentage point to 7.2 per cent, the lowest level since November 2008. Economists had expected the economy to add 180,000 jobs in September and the unemployment rate to hold at 7.3 per cent.Tax NegotiationsJPMorgan Chase’s preliminary $13-billion mortgage settlement with the US government could end up costing the bank closer to $9 billion after taxes, because the majority of the deal is expected to be tax deductible, sources said. The deduction also means the government is getting less than it appears in this deal. Banks can often deduct legal settlements from their taxes, but cannot get tax benefits on penalties for violating laws. The two parties have been negotiating the tax treatment of the settlement, and the deal is expected to include a $2-billion penalty.CredweetTwitter has obtained a $1 billion credit line ahead of its initial public offering (IPO), the company disclosed in an amended investor prospectus. Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America Merrill Lynch and Deutsche Bank were reportedly involved in arranging the deal. The banks are also underwriters of Twitter’s IPO. No amounts have been drawn under the credit facility, Twitter said. The micro-blogging company, the most closely watched social media IPO prospect since Facebook went public last year, is expected to begin trading on the New York Stock Exchange by mid-November. Twitter also disclosed that MoPub, a digital advertising exchange it acquired in September, had lost $2.8 million in the first six months of the year on $6.5 million in revenues. Twitter paid $350 million in stock for MoPub, its largest acquisition to date. The deal is expected to close in November.Tax NegotiationsJPMorgan Chase’s preliminary $13-billion mortgage settlement with the US government could end up costing the bank closer to $9 billion after taxes, because the majority of the deal is expected to be tax deductible, sources said. The deduction also means the government is getting less than it appears in this deal. Banks can often deduct legal settlements from their taxes, but cannot get tax benefits on penalties for violating laws. The two parties have been negotiating the tax treatment of the settlement, and the deal is expected to include a $2-billion penalty.Free FlowStartups looking for backing will be able to solicit small investments over the Internet from the general public under a new proposal unveiled by the Securities and Exchange Commission (SEC). The “crowdfunding” plan is now a requirement in a 2012 law that relaxes regulations to help spur small business growth. Private firms are now only allowed to solicit investors deemed to be ‘accredited’, meaning they have a net worth of $1 million. The rule would let small businesses raise more than $1 million a year by tapping unaccredited investors.Trade TalksThe European Union (EU) finally agreed to start talks with China to remove restrictions on foreign investment and set clearer rules for doing business after months of trade disputes over Chinese solar panels and EU wines. The decision by trade ministers from the bloc’s 28 member states has been made with the aim of sealing an investment agreement in the next few years. The EU wants greater access to China and the removal of restrictions on investment in certain sectors, notably in services such as banking, or the requirement to work with a Chinese joint venture partner.Glass WorksCorning Inc said it would buy out Samsung Display’s stake in their LCD glass joint venture in a deal that could see the Samsung Electronics subsidiary taking a 7.4 per cent share in the Gorilla Glass maker. The deal includes a new 10-year LCD display glass supply agreement that will add about $2 billion to Corning’s sales. Samsung will receive convertible preferred shares with a face value of $1.9 billion and will make an additional $400 million investment in Corning.On HoldHTC Corp has halted at least one of its four main manufacturing lines, accounting for at least a fifth of total capacity, and is outsourcing production as a sales slump puts pressure on its cash flow, according to sources. HTC launched its latest version of the flagship One series this year but has struggled to gain traction in a market dominated by Apple and Samsung. The firm reported its first ever quarterly loss in October.Getting CompetitiveApple recently offered free upgrades for life on its operating system (OS) and business software, and unveiled a 1-pound iPad Air and a MacBook Pro with sharper ‘retina’ display ahead of the holiday shopping season. This repeats a pattern of recent launches with improvements rather than totally new products. Apple said upgrades to its Mac OS and iWork software suite, which compete with Microsoft’s Excel, Word, etc., will now be offered for all MacBooks and Mac computers. That brings Apple’s model of free system software upgrades on phones and tablets to the PC market, where it’s still the underdog to MS’s Windows.LawspeakGermany retained key veto power at carmaker Volkswagen (VW) after the EU Court of Justice (ECJ) turned down the European Commission’s bid to abolish its “VW law”. This leaves the state of Lower Saxony, where Volkswagen is based, with the power to block takeovers and other key decisions such as factory closures. According to a 1960 law, Lower Saxony has a de facto golden share in VW. Under German rules, shareholders need at least 25 per cent to hold a blocking minority, but the VW law gave Lower Saxony, with just 20 per cent in VW, this right. Sports car maker Porsche found the VW law a barrier when it sought to take over VW in 2008. Porsche’s bid floundered and it was soon bought by VW last year.Tough TestThe European Central Bank (ECB) recently vowed to submit the euro zone’s top banks to a comprehensive batch of tests next year, staking its credibility on a review that aims to build confidence in the sector. It wants to unearth potential risks hidden in balance sheets before supervision is centralised under its roof from November 2014. This will form part of a European banking union drawn up in response to a debt crisis exacerbated by massive bad property loans in countries like Ireland and Spain. Setting out its plans to scrutinise the 128 top lenders, ECB said it would use tougher new measures set out by Europe’s top regulator — the European Banking Authority — in the asset quality review it will conduct next year.(This story was published in BW | Businessworld Issue Dated 18-11-2013)
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We’ve really got to up our game”George Osborne, Britain’s chancellor of the exchequer, after his China visit. The country’s progress ‘staggered’ him“If it’s growing like a weed, it’s a good chance that it’s weed”Mark Zandi, chief economist at Moody’s Analytics, on growth in highly leveraged loans“I do not want to comment on statements made by Sheikh Chilli (daydreamer)”Sriprakash Jaiswal, coal minister, responding to P.C. Parakh’s statement“There is K.M. Birla who made the representation, he is one conspirator. I, who examined the case and made a recommendation, I can be another conspirator and the Prime Minister, who as the coal minister, took the final decision, is the third conspirator”P.C. Parakh, former coal secretary, on the coal block allocation controversy Veerappa Moily“Our competition is different... they’re confused”Tim Cook, Apple CEO, taking a dig at Microsoft’s hybrid devices, at an Apple event“India and China’s is the most important bilateral friendship in the world”Li Keqiang, Chinese premier, during the visit by Prime Minister Manmohan Singh“There are more people who go hungry in Madhya Pradesh than in Africa” Rahul Gandhi, Congress vice-president, at a rally“India cannot become just like Russia, where investors are not prepared to go and billionaires are put behind bars”Veerappa Moily, oil minister, on the FIR against industrialist K.M. Birla in the coal scam, just before the Prime Minister’s Russia visit(This story was published in BW | Businessworld Issue Dated 18-11-2013)
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The Supreme Court on Monday, 28 October, refused to entertain a PIL seeking CBI probe into licences granted to several real estate developers, including the one with which Robert Vadra is associated, for developing colonies in Haryana.The apex court pulled up the petitioner for targeting only Vadra while the names of other persons who were also granted licences were not mentioned in the petition, saying it was done for "cheap publicity"."Why you chose only one person? Let us clarify that in the name of PIL we are not going to sully the name of a particular person. Merely because he is related to a political family, you cannot call him a sinner," a bench of justices H L Dattu and Ranjan Gogoi said.The bench also questioned advocate M L Sharma, who filed the petition, on other prayers of his plea in which he pleaded to quash a decision of the state government.The bench while appreciating Sharma's work in recent past on various issues said that he should focus on good work instead of indulging in publicity."Don't spoil the name of a person for cheap publicity.You should channelise you energy for people in need instead of cheap publicity," the bench said.Sharma submitted that the plea was not targeting any person but was only pointing out Vadra's name as one of the cases.The petition had also sought quashing of the reported order for stopping audit inquiry against colony licence issued to Skylight Hospitality Pvt Ltd with which Vadra is said to be associated.The petitioner had claimed that the Department of Town and Country Planning (DTCP) issued hundreds of licences for over 21,000 acres land spread over Gurgaon and other parts of the state during 2005 to 2012.(PTI)
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Making headway in the Patna blasts case, police have arrested two suspected terrorists, including one possibly the mastermind, and detained several others, even as the toll in the serial explosions rose to six.A search operation by NIA and Patna Police is on in Gandhi Maidan, the area which witnessed six of the seven serial bomb blasts on Sunday, 27 October, that left 83 people injured, to locate explosives, if any, a senior police officer said on Monday, 28 October.The suspected terrorists have been identified as Tausim and Imtiyaz, official sources said.SSP Patna Manu Maharaj earlier said that "One of the accused, who is being considered as the mastermind, has been arrested. He has confessed how the planning took place".Three-four suspects have been detained, he said, adding, "We are in the process of interrogation so things will be clear very soon".Maharaj said there were six-seven persons accompanying the alleged mastermind."Based on that information, we conducted raids.Information was given to Ranchi and subsequently our teams have gone there," he said.Six persons were killed in the seven low intensity serial blasts of which six bombs went off in and around the venue of BJP Prime Ministerial nominee Narendra Modi's mega rally at Gandhi Maidan shortly before his address before a huge gathering yesterday.Patna city SP said investigation is going on "so we can't divulge a lot of details. The accused has confessed about the crime, how it happened. He told us that six-seven teams came to Gandhi Maidan and surroundings of Patna and how they planted the bombs".Meanwhile, the toll in the serial blasts rose to six after an injured person died at the Patna Medical College and Hospital (PMCH) last night.Currently, 37 injured persons, many of them in critical condition, are being treated in the hospital. Raids were being conducted in several areas of neighbouring Jharkhand today in connection with the blasts.Three persons detained after the blasts yesterday were released after interrogation last night, a senior police officer said in Ranchi.Police recovered black powder, materials used to make IEDs, pressure cooker and extremist literature during the raids, he said.In the wake of the multiple blasts in Patna, the Centre has asked all states to maintain high alert and tighten security during the festival season.The Home Ministry also asked five poll-bound states to beef up security in election rallies, especially those being attended by top leaders.The Home Ministry asked the states and Union Territories to keep strict vigil on sensitive places, markets, religious sites, railway stations, bus terminus and in other vital installations besides deploying adequate forces for their security.(PTI)
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Riding an unprecedented buying frenzy, precious gold reclaimed the psychological Rs 32,000 per 10/gm mark at the domestic bullion market here amid swelling festive and wedding-related off-take.Demand for the shiny metal has been witnessing a massive surge ever since the festive season began outstripping supply due to shortage of gold following restrictions on consignment imports, leading to a sharp spurt in domestic prices, bullion traders commented.The industrial metal silver rebounded sharply on back of aggressive speculation buying coupled with firm industrial buying support. Standard gold of 99.5 per cent purity rose by Rs 175 to conclude at Rs 32,015 per 10 grams from Friday's closing level of Rs 31,840.Pure gold of 99.9 per cent purity also climbed by a similar margin to end at Rs 32,165 per 10 grams as against Rs 31,990. Silver ready (.999 fineness) jumped by Rs 360 to finish at Rs 50,540 per kilo from Rs 50,180 yesterday.On the global front, gold maintained its upbeat momentum to reclaim one-month high supported by safe haven demand on growing expectations that the Federal Reserve will delay tapering its stimulus program and lacklustre US macro data.Gold December delivery settled high at $1.352.50 an ounce on the Comex division of the NYMEX, while silver December contract closed lower at $22.64 an ounce.(PTI)
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Narendra Modi, BJP's prime ministerial candidate, cannot hope to lead India effectively if he inspires "fear" and "antipathy" among many of its people, the New York Times has commented in an unusual move."Mr Modi has shown no ability to work with opposition parties or tolerate dissent," the Editorial Board of the New York Times said in a stinging editorial on the 63-year-old BJP leader.The editorial said that Modi has already "alienated" BJP's political partners when Janata Dal (United), an important regional party broke off its 17-year alliance with the "party because it found Mr Modi unacceptable."India was a country with multiple religions and "Mr Modi cannot hope to lead it effectively if he inspires fear and antipathy among many of its people," it said while recalling that nearly 1,000 people died in the 2002 riots in Gujarat.The editorial, published yesterday, also questioned Modi's economic track record in Gujarat. The "economic record in Gujarat is not entirely admirable, either," it said."Muslims in Gujarat, for instance, are much more likely to be poor than Muslims in India as a whole, even though the state has a lower poverty rate than the country," the editorial said."His rise to power is deeply troubling to many Indians, especially the country's 138 million Muslims and its many other minorities," said the 19-member Editorial Board, headed by India-born Andrew Rosenthal, the editorial page editor of The New York Times.(PTI)
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