US Secretary of State John Kerry, on his way to India for an official visit, has pressed New Delhi to drop its opposition to global trade reforms, saying it was a test of the country's commitment to advance trade and investment liberalisation.Kerry made the call in a newspaper article, penned along with U.S. Commerce Secretary Penny Pritzker, hours ahead of his arrival for talks aimed at revitalising ties that have been mired in disputes over trade, intellectual property rights and climate change.India has threatened to block a worldwide reform of custom rules, saying it must be accompanied by a parallel agreement allowing developing countries more freedom to subsidise and stockpile foodgrains.The deadline for the deal, which economists say could save members of the World Trade Organisation more than one trillion dollars eventually, is Thursday.Kerry said India stood to gain by setting up a level playing field instead of erecting trade barriers."In this regard, as we work with our trading partners around the world, India must decide where it fits in the global trading system. Its commitment to a rules-based trading order and its willingness to fulfil its obligation will be a key indication," he said in the article in The Economic Times.India and the United States have already clashed at the WTO, with Washington saying Delhi's 11th hour resistance could kill a deal that could create 21 million jobs.Kerry is arriving in New Delhi later on Wednesday for an annual strategic dialogue, the first engagement with the government of Prime Minister Narendra Modi that took power in May promising to put India back on a high growth path.So far, the new administration has moved slowly on reforms and its hardening of stance at the WTO suggests a more nationalist response on key issues than the Congress party's centre-left government.Kerry said India and the United States were on the cusp of an "historic transformation" in their relationship and that Washington stood behind New Delhi's rise as a political and economic power."We are coming to India to deliver a single message: that the U.S. is prepared to be a full partner in this effort. We will work hand in hand with Prime Minister Narendra Modi and his government to promote open and liberal trade and investment, jobs training and closer strategic ties," Kerry and Pritzker wrote.Such rhetoric, including calls to build India as a counterweight to China, have however fallen short of concrete progress in the past.Disputes over protectionism and intellectual property rights have soured the business climate and India has remained cautious about committing to U.S. strategic designs in the region.The relationship took a dive last year after an Indian diplomat was arrested in New York on charges of mistreating her domestic help, an episode that provoked outrage and resentment in New Delhi.Modi himself has yet to make clear how closely he plans to work with Washington.He was banned from visiting the United States after Hindu mobs killed more than 1,000 people, most of the Muslims, in 2002 while he was chief minister of his home state of Gujarat.The Obama administration sought to turn a new page by quickly inviting Modi to Washington after his election, and he is due to travel in September.(Agencies)
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US economic growth likely regained steam in the second quarter as activity picked up broadly, which would bolster expectations for a stronger performance in the last six months of the year.Gross domestic product likely grew at a 3.0 per cent annual rate after shrinking at a 2.9 per cent pace in the first quarter, according to a Reuters survey of economists."I don't think the contraction we saw in the first quarter is reflective of what's truly going on in the economy," said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh. "We are seeing broad-based growth throughout the economy and that's going to be reflected in the GDP report."The anticipated growth pace will, however, leave output in the first half of the year flat. Earlier in the second quarter, growth estimates were as high as 4 per cent, but they were cut as trade, consumer spending and business investment rebounded from the winter slump by less than expected.Growth for 2014 as a whole could average below 2 per cent."Irrespective of the precise GDP number that will print, we see no evidence to challenge our baseline view that the pace of economic growth is shifting higher to a three percent path for the balance of the year," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.Employment growth, which has exceeded 200,000 jobs in each of the last five months, and strong readings on the factory and services sectors from the Institute for Supply Management underpin the bullish expectations for the rest of the year.The Commerce Department will release its first snapshot of second-quarter GDP at 8:30 a.m. (1230 GMT) on Wednesday. It will also publish revisions to prior GDP data going back to 1999.Also on Wednesday, payrolls processor ADP is due to release its private sector employment report for July at 8:15 a.m. (1215 GMT) which is expected to show a gain of 230,000 jobs, according to a Reuters poll, down from a gain of 281,000 in June.Little Policy ImpactEconomists expect upward revisions to output for the last three years, noting that an alternative growth measure, gross domestic income, is running above GDP.The GDP data, which will be released only hours before Federal Reserve officials conclude a two-day policy meeting, is unlikely to have much sway on monetary policy as the U.S. central bank has already dismissed the first-quarter contraction in output as a weather-related anomaly."The Fed will acknowledge the improved economic conditions. However, we still believe the Fed will wait at least until the second quarter of 2015 before starting to slowly raise interest rates," said Maury Harris, chief economist at UBS in New York.Growth in the second quarter is expected to have been driven mainly by consumer spending and a swing in business inventories.Consumer spending growth, which accounts for more than two-thirds of US economic activity, likely accelerated to a pace above 2 per cent after braking to a 1.0 percent pace in the first quarter because of weak healthcare spending.Inventories are expected to have contributed as much as one percentage point to GDP growth after chopping off 1.7 points in the first quarter.Business investment, government spending and home building likely also lent support to growth.Trade, however, was probably a drag for a second consecutive quarter as some of the increase in domestic demand was likely met by imports. Domestic demand is expected to have accelerated after almost stalling in the first quarter, which would underscore the economy's firming fundamentals.(Reuters)
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As mammoth general election approaches, jackhammer drills are quietening down at construction sites and earthmovers and cranes remain parked.Many of the country's real estate and construction companies - their finances already squeezed by a sharp economic slowdown - are diverting funds from housing and other projects to election campaign contributions. Many projects are stalled, at least temporarily.More than other businesses, Indian developers and contractors are particularly reliant on ties with the government to acquire land or win contracts. If they fund a winner's campaign, the payoffs can be huge.Based on past elections, such companies could end up funding a disproportionate amount of the $5 billion that political parties are likely to spend this time to woo the country's 815 million voters."A lot of money will flow from real estate into the elections, much of it unaccounted for," said Santhosh Kumar, Chief Executive Officer of operations at Jones Lang LaSalle India, which advises real estate clients, including developers."They (developers) have to fund political candidates to facilitate future opportunities. Whoever comes into power, they have to maintain a relationship," he told Reuters.The level of cement consumption - a barometer for wider construction activity - falls around 12 per cent during elections, according to a 2011 study.Poll funding in India is highly opaque but political parties are expected to spend around 300 billion rupees ($4.9 billion) for the five-week election starting on April 7, anti-corruption groups have said. That is many times the legally permissible limit of $114,000 for each of the 543 constituencies, and most of the funds will come from the thriving black or underground economy.Narendra Modi, the main opposition candidate for prime minister, has seized on anger at a spate of corruption scandals to galvanise support, although there is plenty of evidence to suggest that most major parties are involved in illicit campaign funding.But declared donations also underline the importance played by specific industries.Almost one-sixth of such donations to national parties between 2004-05 and 2011-12, a period covering two elections, came from real estate, oil and power firms, a report by the Association for Democratic Reforms showed.Boon For RetailWhile the campaign spend for this year's national election will likely prove a boon for many businesses, they are mainly in the consumer and small retail sector.Real estate and construction are not likely to benefit and it's being reflected in the stock market.Indian stocks have hit record highs this month on the perception that Modi will win and bring in a more business-friendly administration. Real estate companies have tracked some of those gains, but in a 12-month period, they have slumped about 20 per cent, according to the CNX Realty index , which includes developers like DLF Ltd. and Oberoi Realty.In the same period, the broader Indian market is up about 17 per cent.Annual profit at India's top developer, DLF, has fallen for five consecutive years and earnings for the first nine months of the current April-March fiscal year are 40 per cent lower from a year ago.The mutual dependence between developer and politician is most acute in areas where land is in high demand, like the fast-growing regions of Gurgaon and Noida near New Delhi.Most developers contacted by Reuters were reluctant to discuss the question of financing of election candidates because of the sensitivity of the topic. No one agreed to speak on the record.But several, as well as investors and analysts, explained that the sector is called upon by politicians to back campaigns either with cash or by paying for services such as hiring cars and airplanes or printing posters."India hasn't found a way to finance elections in a way that's transparent and above board. The under-the-table and opaque nature is stark," said Milan Vaishnav, of the Carnegie Endowment for International Peace, who co-wrote the paper on elections and cement consumption.India's economic growth slowed to the lowest in a decade last fiscal year, while a drop in home sales has squeezed the liquidity that developers can use to fund political parties."What some soft target developers are telling politicians today is that they are not in a position to fund anything," said Lalit Kumar Jain, chairman of the Confederation of Real Estate Developers Association of India.Meanwhile, potential homeowners are seething at the delays in getting possession of properties they have already largely paid for as developers are running out of funds, either because of the slowdown or the election."When we went to the site, it was dead. We could count the labourers sitting and relaxing. There was no machinery working and we saw no raw materials that would be used," said Ashima, a single mother of two who was expecting to move into her new home in Noida earlier this year but has now been told it will take another two and half years."They are giving all sorts of reasons for the delay -- inflation, government issues and other things beyond their control," she said. "It is a very big setback. People say India is booming. Where is it booming?" (Reuters)
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The Reserve Bank of India (RBI) is expected to keep its key interest rate steady at 8 per cent on April 1 as inflation has eased, according to all 53 economists polled by Reuters.In his fight to lower stubbornly high inflation, RBI chief Raghuram Rajan has hiked interest rates thrice since he took over in September, surprising markets on two of those occasions.But the RBI is expected to hold fire next week after February wholesale price inflation slowed to below the central bank's commonly perceived 5 per cent comfort level for the first time in 9 months and retail price rises eased to a 25-month low.The poll showed the RBI will keep the repo rate unchanged at 8.0 per cent until at least October while the cash reserve ratio won't be changed from 4.0 per cent until July 2015 at the earliest - the end of the forecast horizon."A status quo looks likely, given that the RBI is under no immediate pressure to take action given the dip in both CPI and WPI," said Vishnu Varathan, an economist at Mizuho Bank.Wholesale prices rose a slower than expected 4.68 per cent in February as food and fuel prices moderated while consumer price inflation eased for third straight month to a 25-month low of 8.10 per cent.The poll suggested the RBI's next move will be a cut although a few economists chose not to provide forecasts for the rest of the year, saying they were unable to make predictions before the results of national elections due to start in two weeks.Investors' confidence has been revived in recent weeks on the likelihood the elections will usher in a new government led by the opposition Bharatiya Janata Party, which widely perceived to be more business-friendly.Indeed, the rupee has been touching seven-month highs while the stock market has set successive records, with foreign investors particularly heavy buyers of shares.Banking shares have led the gains on optimism about a looming recovery in the economy, which is expected to have grown at its slowest pace in a decade, and bets the RBI would keep interest rates on hold for now.Despite the market euphoria in the run-up to the elections, analysts cautioned that inflation, high borrowing rates, weak industrial output and subdued demand are among the main economic risk facing the next government."We need a government which continues on the path of fiscal consolidation and if it (the new government) does that then there will be space for monetary policy easing," said Ashutosh Datar, an economist at IIFL.(Reuters)
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The rupee is trading at 60.1950 versus its previous close of 60.1250/1350 as month-end dollar demand from importers hurts the Indian unit.The dollar is near six-month peak ahead of the US GDP data and conclusion of the Fed's two-day meeting.The Nifty was trading down 0.2 per cent. The broader index will be watched for clues on foreign fund flows. The USD/INR pair is seen in the range of 59.90 to 60.30.(Reuters)
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A day after being expelled from the DMK, Madurai strongman M. K. Alagiri today said he will not contest the Lok Sabha polls and targeted his younger brother M K Stalin, saying action should be taken against those who commit "mistakes".Sticking to his stand, Alagiri said he had not committed any wrongdoing that warranted his expulsion from DMK.Alagiri, who was sacked by his father and DMK chief M Karunandhi yesterday (25 March), said he would not contest the coming elections and predicted a bad show for DMK in the hustings, saying it may not win more than a couple of seats.Speaking to the press at the airport here, a sulking Alagiri said, "I didn't do any crime. I won't relent till action is taken against those who had committed mistakes," obviously targeting Stalin.The Southern party strongman, who wields considerable influence over DMK cadres and has the capability to derail the party's prospects, also questioned the charges against him for MDMK chief Vaiko's visit to his residence two days ago."I did not invite Vaiko to my house. If someone comes to my house, what can I do?" he asked.Alagiri, who has been denied a ticket, said he would not contest the coming elections.Aggrieved by actions of Alagiri, whom candidates from Congress, BJP, DMK and MDMK had met seeking support for the April 24 Lok Sabha elections and some of his comments on the party's bleak electoral prospects, Karunanidhi had dismissed his son from the party.Asked whether he still enjoyed support from partymen in the aftermath of his expulsion, Alagiri pointed to the crowd that had thronged at the airport to receive him, which included supporters like Ramanathapuram MP J. K. 76Rithieesh, and remarked "this indicates my strong support base".Asked if he would visit the party headquarters 'Anna Arivalayam', he merely said he was going to Arani to meet some supporters.Asked about Stalin possibly leading the party in the future, the former Union Minister said he was not bothered about it.Already having questioned DMK's candidates selection policy for the coming polls, the Madurai MP in a veiled attack on Stalin, also predicted a bad show for DMK in the hustings, saying it may not win more than a couple of seats.Alagiri was suspended in January for alleged indiscipline following his contradicting stand on his father's preference for an alliance with actor-politician Vijayakant's DMDK, even as there was a running feud with Stalin, considered the political heir apparent of the DMK chief.The very issue of leadership has been a bone of contention between the two brothers, with Karunanidhi favouring Stalin to take the mantle, which was questioned by Alagiri, who had once famously asked if the party was a "mutt" where the senior pontiff could anoint a successor.(PTI)
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The Indian rupee continued its rally against the American currency in early trade for the fourth trading day, gaining another 23 paise to 60.25 per dollar on persistent selling of the US unit by banks and exporters on the back of sustained foreign capital inflows.Weakness of dollar in the overseas market also boosted the rupee value, a forex dealer said.The Indian currency resumed higher at 60.28 per dollar as against the last closing level of 60.48 at the Interbank Foreign Exchange (Forex) Market and firmed up further to quote at 60.25 per dollar at 1000hrs.Sustained selling of dollars by banks and exporters in view of good foreign capital inflows into equity market was the main factor behind rise in rupee value.The Indian benchmark sensex rose by 99.58 points or 0.45 per cent to 22,154.79 in the early trade after touching an all-time high of 22,172.10.In New York market, the US dollar cut its rise after a round of mixed US data yesterday (25 March), but held narrowly higher against key rivals.(Reuters)
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US Secretary of State John Kerry travels to India this week as Washington tries to revitalise ties it sees as a counterbalance to China's rising power, but rapid progress is unlikely, despite the reformist reputation of India's new leader.The visit by Kerry and a trip by Defense Secretary Chuck Hagel next month follow the resounding election win of Prime Minister Narendra Modi in May and are meant to create a good climate for Modi's planned visit to Washington in September.Analysts said it would only be once Modi meets President Barack Obama that the United States may have a more realistic hope for progress on big defense projects, on removing obstacles to US firms' participation in India's nuclear power industry, and for firmer statements of shared interests in Asia.In a speech in Washington on Monday (28 July), Kerry said it was "a potentially transformative moment" for the US-India partnership, which had "not yet always fully blossomed."He reiterated Obama's support for India's bid for a permanent seat on the United Nations Security Council and added:"This is the moment to transform our strategic partnership into an historical partnership that honors our places as great powers and great democracies."Four years ago, Obama declared the US-India relationship would be "one of the defining partnerships of the 21st century" and last week the State Department called it one of "enormous strategic importance."But while the two countries are in many ways natural allies, as big democracies with shared concerns about Islamist militancy and the rise of China, the relationship falls far short of Obama's rhetorical billing.Disputes over protectionism and intellectual property rights have soured the business climate and India has remained cautious about committing to US strategic designs, given concerns that US power, eroded by domestic budget battles, may be waning.The relationship took a dive last year after an Indian diplomat was arrested in New York on charges of mistreating her domestic help, an episode that provoked outrage and resentment in New Delhi.Modi, whose Hindu nationalist Bharatiya Janata Party swept to an overwhelming victory after years of shaky Indian coalitions, has yet to make clear how closely he plans to work with Washington.The potential for tension was always high. He was banned from visiting the United States after Hindu mobs killed more than 1,000 people, most of the Muslims, in 2002 while he was chief minister of his home state of Gujarat.The Obama administration sought to turn a new page by quickly inviting Modi to Washington after his election, and was pleased by his prompt positive response.Kerry will be heading the US team at the annual Strategic Dialogue with India on Thursday, and will be accompanied by US Commerce Secretary Penny Pritzker.Modi MysteryThe BJP has a strong streak opposed to Western dominance of world affairs and this meshes with the rise of the BRICS block of five powerful emerging nations, which includes China, that see themselves as a counterbalance to US hegemony.One of Modi's first moves on the world stage since taking office was to sign up to a BRICS development bank intended to wrest control over global financial institutions away from the United States and Europe.On Friday, India threatened to block a worldwide reform of customs rules agreed last December, prompting a US warning that its demands on food stockpiling could kill global trade reform.The deadline for agreeing the trade facilitation deal falls during Kerry's time in New Delhi and a failure to overcome India's objections could overshadow his visit.The Indian stance has fueled doubts about the extent of Modi's commitment to pushing through economic reforms seen as necessary to spur growth and attract investment.US officials say Modi's first budget contained some positive signs. But ownership limits in the defense sector were not relaxed enough to allow US companies the controlling stakes they seek in joint ventures, which will make them reluctant to share technology India craves.Nisha Biswal, US assistant secretary of state for South Asia, spoke this month of the US desire for Indian growth and its greater involvement in Southeast and East Asia, where China's territorial claims have caused increasing alarm.India, which for decades had close military links with the Soviet Union while leading the world non-aligned movement, is cautious about being too closely associated with US strategic policy, not least because of its economic links with China. (Reuters)
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