The rupee depreciated by 30 paise to 61.14 against the US currency in early trade at the Interbank Foreign Exchange market on Wednesday (6 August) due to the dollar's gain against other currencies overseas.Forex dealers said besides the dollar's gain against other currencies, fresh demand for the American unit from importers and a weak opening in the domestic equity market put pressure on the rupee.The domestic currency had gained nine paise to close at 60.84 against the US dollar in yesterday's trade on the back of rising local stock market and sustained dollar selling by exporters.Meanwhile, the benchmark BSE Sensex fell 37.45 points, or 0.14 per cent, to 25,870.56 in early trade today.(PTI)
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India's domestic fuel supplies will not be affected by fallout from the ongoing conflict in Iraq although state-run refiners have been asked to draw up a contingency plan, the oil ministry said in a statement on Thursday.Iraq, the second-biggest crude oil supplier to India after Saudi Arabia, met around 13 percent of the South Asian nation's overall import needs last year, it said.State-refiners are aiming to buy 388,000 barrels per day (bpd) of Iraqi oil this year.Two of the state refiners, Indian Oil Corp and Hindustan Petroleum Corp, together aim to buy 374,000 bpd from Iraq in 2014, it said.Crude supplies from Iraq come from the Basra oilfields which are situated well away from the fighting in north-eastern Iraq.Ship loading from the Basra oil terminal, continued normally, it said.The government has also asked state refiners to diversify resources for the import of crude oil to minimise the impact of any geo-political instability in the Middle East.(Reuters)
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The market is closely monitoring developments in Iraq. Brent crude went above $115 a barrel on Thursday (20 June) as the United States said it would send military advisers to Iraq, raising concerns about the escalating conflict."There is nothing bigger than Iraq at the moment. It’s all safe haven buying," said Ashtosh Raina, head of forex trading at HDFC Bank.The dollar remained under pressure on Friday but managed to win back some lost territory after upbeat US data helped temper the fallout from the Federal Reserve's surprisingly dovish policy outlook.The rupee is seen trading in a 60-60.50 range during the session.Also, foreign institutional investors sold Indian shares worth a net Rs 421 crore ($70.52 million), provisional exchange data shows.(Reuters)
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With the RBI opting for status quo in its monetary policy review on Tuesday (5 August), the Finance Ministry said going forward the central bank should examine the liquidity situation, inflation and growth while fixing the policy rate. "...going forward, the RBI should examine the liquidity situation, inflation and growth in setting policy rates," the Finance Ministry said in a statement hours after the RBI Governor Raghuram Rajan announced the third bi-monthly monetary policy review. Recent data on inflation shows that inflation is moderating. Wholesale inflation for June declined to 5.43 per cent from 6.01 per cent in the previous month. "On its part, the Government remains committed to the path of fiscal consolidation and reviving the investment cycle that will help bring down inflation and pick-up growth further," it said. As expected by markets, the RBI in monetary policy has retained repo rate at 8 per cent, the reverse repo at 7 per cent and the cash reserve ratio at 4 per cent. The bank rate would remain static at 9 per cent. It, however, lowered Statutory Liquidity Ratio (SLR) for banks by 0.50 per cent to 22 per cent with effect from the fortnight beginning August 9. A similar move in June had released an additional Rs 40,000 crore into the system. The reduction in SLR, a portion of bank deposits banks are required to investment in government securities, give banks greater leeway to lend. "The Governor, RBI has already stated that RBI will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates," the statement said. As the economy picks-up and demand grows, this will allow an increase in bank credit, it said. Announcing the credit policy, Rajan, who has for the third time in a row kept the rate unchanged, said there are upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices. RBI has kept repo at 8 per cent since February despite industry demanding a rate cut to boost manufacturing which has remained stagnant in the past two fiscals. (PTI)
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The NDA government has decided to bring broad changes in the rural job guarantee scheme launched by UPA by proposing at least Rs 25,000 crore of investment into agriculture alone.The Rural Development Ministry has proposed to bring amendment to the Schedule I of the MGNREGA Act "to clearly bring forth the focus on agriculture". It has proposed to add provisions after Para 4 (2) of Schedule I of the Act."The works taken up under MNREGA shall enhance productivity in agriculture by creating infrastructure helpful for agriculture," says the ministry in a note sent to all states seeking their suggestions on the matter.The states have been asked to respond before June 23.According to the proposal, the district programme coordinator shall ensure that at least 60 per cent of the works to be taken up in a district in terms of cost shall be for creation of productive assets linked to agriculture and allied activities through development of land, water and trees."This is expected to bring at least Rs 25,000 crore of investment into agriculture," says the ministry note.The government has suggested new solutions to address the issues including poor asset quality, absence of adequate technical staff for planning/supervision and lack of outcome orientation in the works being carried out under the MGNREGA."A special provision of 3 per cent of the value of works done will be created for provision of technical supervision for the works. This amount will be used to deploy required technical manpower to guide in the planning and execution," the note says.In its note, the ministry says the labour material ratio for works taken up by agencies other than gram panchayats will be counted at the district level. For this purpose, the Para 20 of the Schedule I will be amended.According to the proposed amendment, "For all works taken up by the gram panchayats, the cost of the material component including the wages of the skilled and semi-skilled workers shall not exceed 40 per cent at the gram panchayat level."For works taken up by the implementing agencies other than gram panchayats, the overall material component including the wages of the skilled and semi-skilled workers shall not exceed forty per cent at the district level."Government said this will need an approximate Rs 8,000 crore for creating crucial infrastructure like minor irrigation structures.The ministry also emphasised greater focus on convergence with other departments - resulting in greater technical guidance, more professionalism and higher resource availability for works.Noting that there were leakages in implementation of MGNREGA due to inadequate supervision and vigilance, the ministry also suggested strengthening of social audits by establishing suitable mechanism that would identify, train and equip rural youth in overseeing implementation of the programme.Viewing that inadequate banking network and poorly laid out processes leading to long delays in payment of MGNREGA wages, the ministry said delays will be compensated by an effective implementation of the provisions of the delay compensation system."Accountability at all levels will be ensured to perform their obligated task in time, failing which a penalty would be imposed on them by the state government," the ministry said.It has suggested extension of the electronic Fund Management System to all places by providing IT connectivity to cut down the levels of fund flow, optimise fund utilisation and bring in efficiencies.The ministry also proposed depositing of wages directly into the accounts of the wage seekers using electronic platforms and disbursal of the same at the village level through a bank extension network.(PTI)
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India is a country of savers. Despite a significant drop in savings rate — from 38 per cent of GDP in 2008 to 30 per cent currently — Indians manage to save a lot every year. Here’s a lowdown on how Indians save and what rich Indians do with their hoards...Click here to view graphicCompiled by Shailesh Menon; Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 25-08-2014)
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A decision on hiking passenger fares and on allowing foreign direct investment in railways is likely to be taken before the Rail Budget, the government said on Thursday (19 June).A discussion on these matters is already on and a decision regarding them will be taken shortly, Railway Minister Sadananda Gowda said."We are discussing the matter and, within three-four days, will come to a conclusion (regarding the possible fare hike)," Gowda said on the sidelines of a conference of senior railway officials here.He is likely to meet Prime Minister Narendra Modi in a day or two to discuss the fare hike issue.Faced with an acute cash crunch, the railway board has proposed a 14.2 per cent hike in passenger fares along with a 6.5 per cent increase in freight rates.The railway budget is likely to be presented in the second week of July.Meanwhile, asked whether FDI will be allowed in railways, Gowda said, "Practically, we are short of resources, which is well-known to the people of the world. So, some resource mobilisation should be taken as being one of the priorities of railways. I want to have discussions with the commerce ministry."Yesterday, too, I had a small discussion with Commerce Minister Nirmala Sitharaman in this regard."Talking about his meeting with Sitharaman, Gowda said, "She asked me to come up with suggestions and we will discuss the matter and go ahead. In a day or two, I will have a meeting with the commerce ministry and will come up with a clear (stand) as far as FDI is concerned."Railways could benefit from FDI in high-speed trains, station development and last-mile connectivity.Asked what proportion of FDI will be allowed in the rail sector, Gowda said, "It will be clear only after discussions.Certain policy matters and other issues are there which need discussion. FDI cannot be brought in a secret manner or put in cold storage. It has to be done in open." (PTI)
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Confirming the solidifying of the economic outlook for India over the next few months, Conference Board Leading Economic Index (LEI) for India has increased 0.7 per cent in May as seven of the eight components contributing positively, the US-based body said."Financial indicators and exports contributed to May's large increase in the Leading Economic Index for India," said Jing Sima, Economist at The Conference Board."Sentiment and consumption have also rebounded sharply on the back of a positive outcome from the May general election."The acceleration in the six-month growth rate of the LEI suggests a pick up in the pace of economic expansion in the coming months," he said."May's movement in the LEI confirms a solidifying of the economic outlook for India over the next few months," said Bart van Ark, Chief Economist at The Conference Board."The newly elected government will have an opportunity to benefit from improved confidence, although rising food and energy prices remain challenging to a sustained economic recovery," he added.The Conference Board Coincident Economic Index (CEI) for India, which measures current economic activity, increased 0.7 in May to 203.1 (2004 = 100), following a 1.1 per cent increase in April and a 0.7 per cent increase in March.Two of the four components contributed positively to the index in May, a media release said.LEI for India aggregates eight economic indicators that measure economic activity in the country.This includes interest rate spread, Stock Prices, real effective exchange rate index, 36 countries; real money supply, merchandise exports, cargo handled; and PMI.Launched in September 2013, the Conference Board Leading Economic Index for India, conceptualised back to April 1990, has successfully signalled turning points in the economic cycles of India.The Conference Board also produces LEIs for Australia, Brazil, China, the Euro Area, France, Germany, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States.(PTI)
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