Foreign Direct Investment (FDI) into India declined to 8-month low of $1.4 billion in August, down 38 per cent year-on-year.FDI had touched a low of $1.10 billion in December last year.In August 2012, the country had attracted foreign investment worth $2.26 billion.During the April-August period of 2013-14 fiscal, FDI has grown by a meagre 4 per cent to $8.46 billion, from $8.16 billion in the first five months of 2012-13, a senior official in the Department of Industrial Policy and Promotion (DIPP) told PTI.According to industry experts there is a need to improve business environment in the country."There is a need to further improve the business environment. Reforms in the recent past are welcome, but more needs to be done in order to build foreign investors confidence," Head of Tax and expert on FDI with corporate law firm Amarchand & Mangaldas Krishan Malhotra said.The sectors that helped in registering the hike during the five months include services ($1.19 billion), pharma ($1.07 billion), automobile ($661 million) and construction ($592 million).The maximum FDI during the period came from Singapore ($2.37 billion), followed by Mauritius ($2.13 billion), the Netherlands ($980 million), Germany ($529 million), and the US ($475 million).FDI inflows in 2012-13 aggregated $22.42 billion, a decline from $36.50 billion in 2011-12.India is projected to require around $1 trillion between 2012-13 and 2016-17, the 12th Five Year Plan period, to fund infrastructure growth covering sectors such as ports, airports and highways.A decline in FDI would hurt the rupee, which had depreciated to a record low of 68.85 against the US dollar on August 28. It has strengthened since then to about 61 level.The DIPP official said the recent steps announced by the government will help improve the investment climate in the country and push up FDI inflows."The government has also started exercise in allowing FDI in railways sector besides liberalising FDI norms for construction and housing sector. The aim is to boost FDI inflows," the official added.It has already relaxed FDI policy in 12 sectors, including telecom, tea and petroleum & natural gas.(PTI)
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Onion prices continued to reign at as much as Rs 100 a kg in major cities, with the government indicating that rates may start falling after Diwali and some states taking their own initiatives to ease the situation.Blaming hoarding for the price rise, Food and Consumer Affairs Minister K.V. Thomas asked traders not to "loot" consumers. He also said there was no need to be "alarmed" about the crisis as prices would cool down in the next 10 days with improved arrivals from the domestic and overseas markets."Onion prices will come down in next 10 days. Traders should take legitimate margin and not loot consumers. Farmers should get reasonable price and consumers should also get onions at affordable rates," Thomas said at an event here.The Cabinet Secretary reviewed the onion price situation, but sources said no major decisions were taken. The Agriculture Ministry took stock of the crop situation in producing states via video conferencing.A team from poll-bound Delhi reached Maharashtra to procure cheaper onions, while the West Bengal government has made arrangements to sell onions at lower rates.As per reports from centres, retail prices continued at Rs 60-90 per kg in major cities, depending on location and quality. In Delhi, prices were at Rs 80-100 per kg.However, official data showed the average retail price in 57 major cities stood at Rs 75 per kg on 25 October.State governments have been asked to take strong action against hoarders and a few states have already acted, he said.Prithviraj Chavan, Chief Minister of Maharashtra, the country's largest onion producer, ruled out any hoarding in the state and said the situation would improve from next month with higher arrivals of fresh crops.Thomas said he discussed the supply situation with the Maharashtra, Rajasthan and Karnataka governments and onion arrivals are improving."Nafed has floated a tender (to import onion) and the decision will be taken on Oct 29. After the decision, onions will arrive in 3-4 days," the minister said."Our analysis is that production is as good and even better than last year but the prices have remained higher," he said.Chavan informed Delhi Chief Minister Sheila Dikshit about the availability of onions in the state. The visiting Delhi government team will purchase onions from Nashik."I have suggested to Dikshit to directly involve the government machinery to make the purchases. After accounting for the transport cost, the Delhi administration may be able to sell onions to people at a price of Rs 50/55 per kg."If a truck carrying onions travels non-stop from here to Delhi, it will take only 24 hours to land the consignment in the national capital," said Chavan, who spoke to reporters on the sidelines of a function.Concerned over high prices, the West Bengal government has made arrangements to sell onions at Rs 36 per kg through 40 stores.In Punjab, traders have imported onions via the Attari Wagah land route, although the quality is inferior and the vegetable is being consumed in the state itself."There is not much onion crop available in Afghanistan.Therefore the arrivals into India are as low as 60-80 tonnes per day," Amritsar-based vegetable trader Anil Mehra told PTI.The Union Food Minister emphasised the need to balance the supply situation in the case of onions, potatoes and tomatoes with the help of cold storage facilities."In vegetables like onion, tomato and potato, there is period of plenty and there is situation of scarcity. We need to balance with more use of cold storage and warehousing facilities," Thomas said.The Warehousing Development Regulatory Authority (WDRA) has been asked to explore the possibility of storing onions grown in the rabi (winter crop) season to avert any such crisis next year.Nafed is prepared to procure onions during the season of plenty and supply to states during the lean season, the minister said."Unfortunately, that has not worked. Nafed has very good cold-storage facilities," he said.(PTI)
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India's biggest gas pipeline operator GAIL (India) has delayed construction of new pipelines as an economic slowdown has crimped demand for costly imports and domestic supplies are shrinking.The delay will mean GAIL cuts capital expenditure nearly by 30 per cent in 2014/15 to Rs 3,600 crorefrom the current fiscal year ending on March 31, 2014 and will also impact revenue."Overall economic sentiments are down, their (user industries') margins must be under pressure ... when the economy is down everybody feels the heat," Chairman B. C. Tripathi said.Economic growth in India, the world's fourth-largest energy consumer, languished near its slowest in three years at 5.5 per cent in the quarter that ended in June and industrial output in August slowed to 0.6 per cent.GAIL now cannot find clients for gas even at about $15 mmBtu, down from previous sales at $20 per mmBtu, because of the economic slowdown, Tripathi told a news conference.That, combined with shrinking domestic supplies, has forced the state-run company to delay by one to two years plans to lay 4,000 kilometres of pipeline, Tripathi said."We are saying that we will build pipelines in synchronisation of supply of gas," he said, adding GAIL will still build branches to main pipelines to help transmit gas to user industries where required.India's local gas output declined by an annual 14.1 per cent in April-September, as production from a block operated by Reliance Industries fell to 14 million cubic metres from 60 mmcmd in 2010.At the same time, liquefied natural gas (LNG) is expensive in Asia, costing about $17 per million British thermal units (mmBtu). In the United States, a boom in shale oil and gas has pushed down prices to below $4 mmBtu.GAIL, which own 11,000 kilometres of pipeline network, is currently transmitting gas at a rate 100 million cubic metres a day (mmscmd) compared to a capacity of 210 mmscmd as supplies from Reliance's D6 block have almost dried up, Tripathi said.A lack of pipelines has already forced Petronet LNG, India's biggest LNG importer, to cut capacity use at a 5 million tonne a year terminal in southern India.(Reuters)
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Finance Minister P. Chidambaram is finding it harder and harder to meet the government's budget promises and may sweep as much as $15 billion in subsidy costs into next year's accounts to ensure he hits fiscal targets ahead of national elections, ministry officials say.Chidambaram insists that the fiscal deficit target of 4.8 per cent of GDP for the year to 31 March 2014, is a red line that will not be breached. The worst economic downturn since 1991 and a fall in the rupee to a record low have undermined budget assumptions for some months.But finance ministry officials said the window to raise domestic fuel prices sharply, which would cut subsidies, is closing with state and national elections drawing closer, so shifting some costs into the 2014/15 budget is inevitable. "It's a given," said one official, who declined to be identified.The worst-case scenario as of now is that $15 billion in costs will have to be rolled over into next year's budget, the ministry officials said. This assumes that there will be no substantial increase in domestic fuel prices to offset the ballooning subsidies.By rolling over some costs, Chidambaram can tell voters in the run up to the elections, which must be held by May, that the government met its deficit target. But equally, he will be shackling the next government with costs that could blunt its ability to stimulate an economic recovery."Whatever we need to do, we will do. But the fiscal deficit target will be met," said a finance ministry official. "No one should be in doubt about that."Meeting the target is important also to stave off the ire of ratings agencies as India's credit status sits just one notch above junk. A loss of its investment grade rating would probably increase the government's borrowing costs.Last year, Chidambaram narrowed the budget deficit by 1 percentage point to 4.9 per cent of GDP by pushing nearly $15 billion in subsidy costs into this year's budget and cutting more than $16 billion in planned spending, two ministry officials said.This year, he could rollover a similar amount in subsidies, the officials said. This will be in addition to spending cuts of $3.2 billion or more that officials are already predicting for the year.The amount will be partly determined by the success of an auction of telecom spectrum, expected in January. The budget had pencilled in $2 billion for the sale.But the most critical factor will be whether Chidambaram can gather government support to raise domestic fuel prices to offset ballooning subsidy costs. Some policymakers see that as politically unpalatable ahead of state elections in December, leaving a small window after those votes before the country moves into national elections.A finance ministry spokesman, D.S. Malik, said it was "too early to say anything at this stage" on how much the rollover would be.Chidambaram had planned to cap the subsidies for the likes of fuel and food at 2 per cent of GDP, or about $38 billion. But finance ministry officials said it could cost as much as 2.9 per cent of GDP, or $55 billion, this fiscal year.Chidambaram had said earlier this month that the jump in subsidy spending must be tackled sooner rather than later to help stabilise an economy shaken this year by the rupee's slump and a record current account deficit. India imports nearly 80 per cent of its oil needs and the rupee drop made government fuel subsidies more costly.Soaring Subsidy Bill Finance ministry officials in September called for an increase in diesel prices of close to 10 per cent to offset the pressure on the subsidy bill.But Prime Minister Manmohan Singh has shied away from raising fuel prices for fear it could upset voters and cost his Congress party the elections.At the same time, international oil prices have remained stubbornly high and although the rupee has climbed up from its record low, it remains historically weak.A new law to provide cheap grains to millions of people has increased procurement and storage costs, inflating food subsidies by around 10 per cent. Adding to Chidambaram's headache, the fertiliser ministry has asked for a 50 per cent hike in its budgeted subsidy."The budget will simply collapse, if we continue to provide subsidies on this scale," said a finance ministry official. "There is no alternative to a 3-5 rupees increase in diesel prices."AssumptionsIt is not unusual for the government to rollover some costs into the following year's budget, although they are not publicly revealed. However, subsidy spending has massively overshot budgeted estimates for the last three fiscal years forcing up the amount of cost that the government rolls over.If the economy was booming, Chidambaram would have easily absorbed higher subsidy costs. But GDP rose 5 per cent in 2012-13, the weakest pace in a decade. Most analysts expect growth to weaken further this fiscal year, although the budget assumed a rebound to around 6.5 per cent.Ministry officials say the rollover is the result of India's cash-basis accounting, in which income is recorded when cash is received and expenses are recorded when cash is paid out. Many advanced economies follow accrual accounting, in which income and expenses are recorded as they occur regardless of whether cash has actually changed hands.India's accounting method "never gives you the real picture of your finances," said Devendra Kumar Pant, chief economist at India Ratings & Research. "You start the year on the back foot as you have so much backlog to clear." (Reuters)
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Efforts to launch prosecution against officials of a Swiss bank for allegedly abetting Pune businessman Hassan Ali Khan in filing false tax returns have been shot down by the Attorney General on grounds that authorities have failed to provide enough evidence.Khan, accused in cases of money laundering, was arrested by the Enforcement Directorate in March, 2011 and has been asked to pay thousands of crores of rupees as unpaid taxes. He is accused of holding $8 billion in the Union Bank of Switzerland (UBS).The Central Board of Direct Taxes (CBDT) had sought the opinion of the Attorney General as to whether prosecution under various sections of the Income Tax Act can be launched in the case of the bank based on evidence gathered on its role in abetting Khan in filing false tax returns and for falsification of his books.Khan's links with Swiss banks first came to the fore in 2007 when certain documents were recovered.After repeated reminders, the country's top law officer G.E. Vahanvati opined that he did not find any material in the file referred to him suggesting such abetment or inducement on part of the officials of UBS.He also cautioned that any decision to launch prosecution must only be taken after enough material is gathered that prima facie suggests abatement or inducement by officials of the bank.Vahanvati also pointed out that UBS officials have maintained that Khan did not hold any account with it except three accounts opened in July 2001 and closed in October, 2011.He said that to prove that bank officials were not telling the truth and is intended to help Khan evade tax, the tax authorities here should have enough evidence to proceed.Last year, the Finance Ministry had informed Parliament's Public Accounts Committee (PAC) that recovery of tax arrears from Khan is not possible despite attaching his known movable and immovable assets.The Department of Revenue had said that as per existing guidelines, recovery through sale of attached properties can be made only after the decision of appeal filed before the Income Tax Appellate Tribunal.(PTI)
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Finance Minister P Chidambaram on Thursday (24 October) asked financial sector regulators, including RBI and Sebi, to take preventive steps to neutralise the impact of US Federal Reserve's monetary stimulus tapering that is likely early next year.Chidambaram, according to sources, asked regulators at FSDC meeting to work out preventive measures. The Financial Stability and Development Council (FSDC) members include heads of regulatory bodies like RBI, Sebi and IRDA.The meeting was attended by RBI Governor Raghuram Rajan, Sebi chief U K Sinha, among others. Former Reserve Bank of India (RBI) head D Subbarao was a special invitee. The Forward Markets Commission (FMC) was included in the FSDC and its Chairman Ramesh Abhishek was also present.The Minister, sources said, "asked different regulators to work on preventive measures to counter the impact of tapering which is likely to take place early next year".Tapering, which refers to gradual withdrawal of the USD 85 billion a month bond purchase programme, was deferred by the US Federal Reserve in September.The tapering, whenever it takes place, will have a bearing on global economy. It will impact fund flows to emerging economies, including India.Chidambaram also expressed the confidence that current account deficit (CAD), the difference between outflow and inflow of foreign exchange, will remain within the earlier estimate of USD 70 billion of 3.7 per cent of the GDP in the current fiscal.It had touched an all time high of USD 88.2 billion, or 4.8 per cent, in 2012-13. .Chidambaram said all efforts would be made to bring down the fiscal deficit to 4.8 per cent of the GDP in the current fiscal from 4.9 per cent in the previous fiscal.Earlier this month, the Finance Minister at an IMF committee meeting in Washington had said the government was committed to the path of fiscal consolidation and had drawn red lines for fiscal and current account deficits."We shall not allow the red lines to be breached under any circumstances and we shall remain within the red lines. We are prepared to take difficult decisions in this regard, should the need arise," he had said.Elaborating on the tapering at the FSDC meeting here, Chidambaram said it was likely to take place sooner or later and as such regulators "must take all possible action to avoid any adverse impact on the Indian economy".Among other things, the FSDC also discussed the possibility of implementation of the Financial Sector Legislative Reforms Commission (FSLRC).It was decided in the meeting that all regulators, including FMC, would finalise the principles relating to regulatory governance, transparency and operational efficiency for implementation of the FSLRC recommendations.The Commission, headed by former Justice B N Srikrishna, had presented its report to the government in March suggested merging of financial sector regulators such as Sebi and Irda into a Unified Financial Agency (UFA) and the role of RBI be restricted to regulating banks and managing monetary policy.Under the regulatory architecture proposed by the Commission, Sebi, FMC, Insurance Regulatory and Development Authority (Irda) and Pension Fund Regulatory and Development Authority (PFRDA) should be merged into a UFA.The Commission had proposed setting up of seven agencies -- RBI, UFA, Financial Sector Appellate Tribunal (FSAT), FSDC, Resolution Corporation, Financial Redressal Agency and Public Debt Management Agency --- for managing the financial sector.(PTI)
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The Enforcement Directorate (ED) on 23 October got custody of Sudipto Sen, chairman of Saradha Group and the main accused in a multi-crore chitfund scam, in connection with a money laundering case filed by it. The vacation Judge of City Sessions Court in Kolkata granted custody of Sen to the ED till 1 November.This is the first time that a central agency has taken custody of Sen, who had been arrested by Bidhannagar Police of West Bengal in April from Sonmarg in Jammu and Kashmir.A case of money laundering was registered before the court and a production warrant had been sought of Sen and his close associate Debjani Mukherjee in September.While the ED interrogated Mukherjee earlier, it could not get the custody of Sen so far owing to investigations by other agencies in connection with several cases lodged against him.The city sessions court, known as the Bankshall Court, granted the custody of Sen to ED for interrogation.A special money laundering court in New Delhi had on 21 October ordered freezing of bank accounts of Sen, to allow probe agencies complete investigations against the firm.Two banks' accounts were placed under attachment by the ED sometime back. The accounts, under Sen's name in a private bank in Odisha's Balasore, hold a total amount of Rs 27,752.80.The ED, which is investigating the case for alleged money laundering criminalities in the alleged chit fund scheme, suspects this to be "proceeds of crime" and wants these accounts to be kept frozen till the probe is complete.(PTI)
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Onion prices touched Rs 100 per kg in some major cities as supplies remained tight and there appears to be little respite, with Agriculture Minister Sharad Pawar saying that rates will remain high for 2-3 weeks.Refusing to ban onion exports, the Centre asked states to invoke Essential Commodities Act to crackdown on hoarders.It, however, started the process of importing onion -- via co-operative NAFED -- from Pakistan, Iran, Egypt and China to cool rates. It also relaxed the conditions for imports to augment domestic supply.According to the data compiled by the Consumer Affairs Ministry, the average price in the major 57 cities stood at Rs 70 per kg with Jammu recording highest at Rs 90 per kg.However, as per the data available from centres, onion is being sold at Rs 100/kg in north Indian cities of Patna and Jammu in retail markets.In the national capital, Jaipur, Chandigarh and south Indian city Bangalore, retail prices are ruling at Rs 80-90 per kg. Onions are available in the range of Rs 60-80 in Mumbai, Bhopal, Lucknow, Chennai, Guwahati, Srinagar, Imphal and eastern Indian city of Kolkata."...next two to three weeks will be tough and ultimately we have to find a solution," Pawar said in south Indian city of Bangalore replying to a query on onion prices that reached all-time high.Asked whether he meant that the prices would come down in the next 2-3 weeks, he said: "No, no. I am not an astrologer.But I know something about crops. On my own assessment, this situation will continue for the next two to three weeks."Pawar asked the chief ministers of all states to invoke the Essential Commodities Act against hoarders. He said the NAFED is ready to import some quantity of the kitchen staple.Stating that extensive rainfall has hit supply, Pawar said: "We have to import as early as possible. I have instructed the Managing Director of National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) that if there is a request from any state, we should be ready." "Fortunately, there is ample onion (stock) available in China, Egypt and neighbouring countries and (I) have collected figures and prices yesterday. The prices in these countries are cheaper compared to India," Pawar added.(PTI)
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Precious gold spiked to near one-and -a half months high and reclaimed the key psychological Rs 31,000 per 10/gm mark at the bullion market here today owing to heavy jewellery stockists demand supported by robust seasonal offtake. Silver also surged on the back of aggressive speculative as well as industrial buying. Standard gold of 99.5 per cent purity climbed by Rs 165 to finish at Rs 31,130 per 10 grams from Saturday's closing level of Rs 30,965. Pure gold of 99.9 per cent purity also spurted by a similar margin to end at Rs 31,280 per 10 grams from Rs 31,115 previously. Silver ready (.999 fineness) jumped by Rs 700 to conclude at Rs 49,750 per kg as compared to Rs 49,050 last weekend. Globally, the shiny metal continued its momentum on easing concerns over an imminent withdrawal of the Fed's bullion friendly quantitative-easing measures amid sliding dollar value. Spot gold was bid higher at $1,320 an ounce in early European trade and silver was up at USD 22.18 an ounce. (PTI)
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Prime Minister Manmohan Singh and Russian President Vladimir Putin on Monday, 21 October, showered accolades on each other for pushing the bilateral relationship as they held talks on ways to bolster the strategic ties further. "India is our strategic partner. Most of our mutual achievements have been achieved under your leadership and I am grateful to you," Putin said in his opening remarks at his meeting with Singh. He noted that the two countries have cooperation in different areas, including military and technological areas and are diversifying the economic relationship. "Even at present we are having joint counter terrorism exercises going on in India," the Russian President said. The two countries also have cooperation in political areas and are working together in the UN and BRICS, he pointed out. In his opening remarks, Singh credited Putin with being instrumental in promoting and strengthening the bilateral partnership. "We are grateful to you for your sustained personal interest and commitment." He told Putin that India's relationship with the Russian Federation occupies a very privileged place in its foreign policy. "We cherish our true and time-tested friendship with Russia, which has remained strong and relevant despite changes in the world at large," Singh said. "The level of trust and confidence that we have in our relations with Russia is unmatched by any of our other relationship. I would like to reaffirm that our relations with Russia remain a strategic priority for us and will continue to grow, not only bilaterally but also on the global and regional issues," he said. Singh expressed happiness over the fact that good progress is taking place in bilateral cooperation in the fields of defence, energy, science and high technology as well as in tourism, trade and investment. He observed that coordination between India and Russia in multilateral fora, such as BRICS (comprising of Brazil, Russia, India, China and South Africa), G-20 and the East Asia Summit, has also deepened. "Ours is truly a special and privileged strategic partnership to which Mr President you have contributed a lot during past years," Singh said. The Prime Minister also lauded Putin's role in seeking a political settlement in Syria and welcomed the framework agreement worked out by Russia and the US for a time-bound elimination of chemical weapons in Syria.(PTI)
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