Under flak from various quarters for raising rates, RBI Governor Raghuram Rajan said on Wednesday (26 February) the central bank is committed to the "strongest growth possible" and stressed it is on the same page as the Finance Ministry on this front. "Note that the RBI is committed to getting the strongest growth possible; there is no difference between us and North Block on this," said Rajan, who has hiked rates thrice since taking over as Governor in September. He was speaking at a fixed income industry (Fimmda-PDAI) event here where the media was not allowed and only given a copy of the speech. North Block, which houses the Ministry of Finance, has not been pleased with the Reserve Bank's rate increases, given their impact on investor sentiment and growth in general. Rajan justified his actions, saying the best way to foster sustainable growth in the current circumstances is through monetary stability, which is bringing down inflation over a reasonable period of time. The Governor, who went against the majority view of an internal panel advising on the monetary policy and surprised all by hiking rates in January, also reiterated the central bank's determination to get retail inflation down to 8 per cent by January 2015 and 6 per cent by January 2016. He explained that even though some people may believe that in the short-run, the RBI's rate hikes may impact growth, the best way for a central bank to generate growth is to bring down inflation. "Sooner or later, the public always understands what the central bank is doing, whether for the good or for the bad," he said. (PTI)
Read More
A spate of accidents involving the Naval warships on Wednesday (26 February) claimed the job of Navy Chief Admiral D K Joshi who quit taking moral responsibility and his resignation was promptly accepted by Defence Minister A K Antony. The resignation of 59-year-old Joshi, who had about 15 months more left in service, came hours after submarine INS Sindhuratna had a mishap off the Mumbai coast in which seven sailors were taken seriously ill and two officers were missing. Smoke engulfed the Russian-made submarine and the seven affected sailors had to be airlifted to a hospital in Mumbai. A specialist in anti-submarine warfare, Admiral Joshi had taken over as the Navy Chief on August 31,2012. Vice Chief of Naval Staff Vice Admiral R K Dhowan was named as the Acting Chief till regular Chief is appointed. "Taking moral responsibility for the accidents and incidents which have taken place during the past few months, the Chief of Naval Staff Admiral D K Joshi today resigned from the post of Navy Chief," Defence Ministry said. "The Government has accepted the resignation of Admiral Joshi with immediate effect," it said. After the Navy was hit this morning by the 10th mishap involving its warships in the last seven months, the concerned Defence Ministry sought a detailed report from the force. This would be the first time in the last 15 years that a Naval chief has had to leave office in controversial circumstances after Admiral Vishnu Bhagwat was sacked by the NDA Government in 1998 when George Fernandes was the Defence Minister. Reflecting the gravity of the mishap, Defence Minister A K Antony briefed President Pranab Mukherjee, who is also the Supreme Commander of Armed Forces, and Prime Minister Manmohan Singh on the accident. There have been 10 reported incidents involving naval assets in the last seven months involving the INS Sindhuratna mishap early today in which two officers are missing and seven sailors were affected severly due to smoke inhalation. The biggest mishap occured when the INS Sindhurakshak sank inside the Mumbai harbour killing all 18 personnel on board on August 14. Earlier this month, INS Airavat, an amphibious?warfare vessel, ran aground after which the commanding officer was stripped of his command duties. After the sinking of the INS Sindhurakshak, one of the mishaps involved INS Betwa which was damaged after probably hitting some underwater object. India's leading minesweeper, the INS Konkan that was undergoing repairs in Vizag, also caught fire and suffered major damage to its interiors.?The Pondicherry-class minesweeper was getting a refit at a dry dock when the incident occurred. The naval headquarters is concerned over the spate of mishaps in the Western Command and had even summoned Western Naval Commander Vice Admiral Shekhar Sinha on the issue. The Western Command headquarters was damaged when Naval Armament Depot personnel misfired a heavy-calibre gun at it while checking it.(Agencies)
Read More
The rupee rose to its highest in more than a week on Wednesday (30 April), on heavy dollar selling by exporters and corporates, traders said.The rupee rose to 60.30/31, a level last seen on April 21. At 9:17 am, the rupee was at 60.35/36 versus its close of 60.42/43 on Tuesday (29 April).A higher start for local equities also supporting the rupee, traders said.The market sees the rupee moving in a 60.15 to 60.45 range during the session.(Reuters)
Read More
India's economic growth likely slowed to a near decade-low at the end of last year as high interest rates hit factory activity, according to economists polled by Reuters who don't expect a pickup in investment before May elections.The poll of 36 economists, conducted Feb 19-25, predicted Asia's third-largest economy grew 4.9 per cent over a year ago in the three months to December, similar to the 4.8 per cent rate in the previous quarter.That is a shadow of the close-to-double-digit growth rates in recent years and is a signal of the problems gripping Indian factories, which are weighed down by both high interest rates and diminishing consumer demand.Industrial output contracted in each of the last three months of 2013, led by steep falls in capital and consumer goods production."High borrowing costs necessitated by elevated inflation, coupled with subdued demand, have kept manufacturing and investment interest on the back foot," said Radhika Rao, economist at DBS.A stalled investment cycle due to uncertainty over government policy has also pushed many infrastructure projects onto the back burner in recent years.That situation is unlikely to improve soon and all 22 economists who answered an extra question said they didn't expect any substantial improvement in investment before general elections in May.Elevated borrowing costs have added to manufacturers' woes after the Reserve Bank of India hiked interest rates three times between September and January to curb stubborn inflation which showed no signs of easing even as growth tumbled.While wholesale inflation did slow to an eight-month low in January, the fall was driven by softer food and vegetable prices which are considered volatile and could head higher again.Still, economists have mostly predicted the RBI will pause its rate hike spree, especially after the central bank said it did not foresee further near-term tightening if consumer price inflation eased as projected.India's retail inflation slowed to a two-year low of 8.79 per cent in January.The poll also showed economists were split down the middle on whether Finance Minister P. Chidambaram's estimate of containing the fiscal deficit at 4.6 per cent of gross domestic product was achievable.While 11 of 22 said Chidambaram's estimate is 'about right', an equal number said he was being optimistic.The concern, though, is on the roll-over of subsidies."The deficit of 4.6 per cent will be achieved artificially through pushing the energy subsidy payments into the next fiscal year and through the one-time non-tax revenue from wireless spectrum sale and special dividends from state-owned corporations," said Hanna Luchnikava, economist at IHS Global Insight."Without these measures, the deficit is estimated to have reached around 5.2 per cent of GDP."Economists in the poll predicted the economy would grow 5.1 per cent in the first quarter of 2014.(Reuters)
Read More
The rupee fell, trading at 61.98/99 versus Tuesday's (25 February) close of 61.9350/9450.A large state-run bank is on bid side, said dealers, likely to meet month-end importer requirements.The USD/INR pair is likely to trade sideways in 61.70-62.20 band.The yen was broadly firmer early on Wednesday (26 February), following a generally lacklustre session that saw investors give the dollar a wide berth on the back of a decline in US Treasury yields.Local stocks trading with minor gains, up 0.3 per cent.(Reuters)
Read More
The rupee is trading at 61.98/99 per dollar versus Monday's (24 February) close of 62.07/08. Asian currencies trading with gains.Dealers said the market is likely to be flows driven, 61.85-62.20 band for the session.The pair is expected to trade in a 61.80 to 62.20 band during the session, dealers say.The dollar steadied against its rivals in early Asian trade on Tuesday as traders sought more clarity on the pace of the US economic recovery after a series of soft data releases in the past few weeks.Overseas investors have been net buyers of nearly $450 million over the last nine sessions.Asian share markets regained some altitude on Tuesday (25 February) courtesy of a tailwind from Wall Street which sped to historic highs amid more mergers buzz, while gold extended its recent rally.(Reuters)
Read More
In a blow to Lalu Prasad's RJD ahead of Lok Sabha polls, the party split on Monday (24 February) with 13 of its 22 Bihar legislators pledging support to Nitish Kumar government. The 13, including five belonging to the minority community met at the residence of party MLA Samrat Chaudhary and wrote a letter to Speaker Uday Narayan Chaudhary withdrawing allegiance from the RJD and expressing support to the Nitish Kumar government. RJD MLA Javed Iqbal Ansari confirmed to PTI that 13 party MLAs wrote to the Speaker withdrawing their allegiance from the RJD and expressing support to the JD(U) government of Nitish Kumar. The RJD MLAs who walked out were Samrat Chaudhary, Raghvendra Pratap Singh, Durga Prasad Singh, Lalit Yadav, Anirudh Kumar, Jeetendra Rai, Akhtar-ul-Islam Sahin, Akhtar-ul-Iman, Abdul Gafood, Faiyazz, Javed Iqbal Ansari, Ram Lakhan Ram Raman and Chandrasekhar. Samrat Chaudhary, the son of senior RJD leader Shakuni Chaudhary, alleged that Lalu Prasad had turned his party into the 'B team' of Congress in the last three months. "The party which send him to jail by tearing up an ordinance has become the ideal of Lalu Prasad who is losing no opportunity to pester its leaders," Chaudhary told reporters. Chaudhary who flew with the chief minister in a helicopter to Khagaria yesterday to inaugurate a road bridge said, "It will be better for Lalu Prasad to merge the party with Congress instead of allying with it for the Lok Sabha elections." When pointed out that Lalu Prasad had sided with the Congress earlier also and asked the reason for leaving the party now, Samrat Chaudhary said the situation was different now. Javed Ibbal Ansari, RJD MLA from Banka, praised the chief minister. "By severing ties with BJP, Kumar has shown his commitment to fight a communal leader like Narendra Modi." Asked which party they would join, Ansari said "Obviously JD(U) to strengthen the hands of Nitish Kumar to fight communal forces." With support of the 13 RJD MLAs the strength of Nitish Kumar government will go up to 128 in the 238-member House, surpassing the magic figure of 122. JD(U) has 116 MLAs at present including Speaker Uday Narayan Chaudhary. It had support of four Congress MLAs, four Independents and one CPI MLA in the trust vote the Nitish government faced on June 19 last year after split in the NDA. (PTI)
Read More
Reserve Bank of India (RBI) Governor Raghuram Rajan said the government and the Reserve Bank of India (RBI) shared similar views on inflation management, while reiterating a call for the US Federal Reserve to be more sensitive to emerging economies. Rajan's comments, in an interview with CNBC, come after Finance Minister P. Chidambaram last week chided the central bank over its focus on fighting inflation, saying the RBI needed to abide by government policy to promote economic growth. An RBI panel last month proposed the introduction of inflation targeting into monetary policy, with the specific aim of a consumer price index (CPI) of 4 per cent, with a 2 per cent band on either side. The RBI has raised interest rates by three-quarters of a percentage point since September to bring down consumer inflation, which fell to 8.79 percent last month from double digits in November, even as the government has traditionally preferred to focus on bolstering growth. "It's not as if the government is on a different page on what we've been doing on inflation thus far. They may have different views on what they would like to see done, but there is a process, there is a conversation," Rajan said in an interview with CNBC, broadcast by Indian channel CNBC-TV 18 on Monday. "I think there is fair amount of coordination at the highest level." The government and the central bank have often been at odds in fighting inflation. While the central bank has often blamed the government's expansive fiscal policy and failure to ease infrastructure bottlenecks for high inflation, a growth-obsessed government, at times, has found it hard to digest interest rate increases. "No Disagreement'The RBI is not technically independent - the governor and his deputies are appointed by the government - although it generally enjoys latitude in policymaking. Rajan said the central bank panel report on inflation was consistent with the government's stance. "We have a committee which has suggested a target, which is also by the way, consistent with the process the finance ministry's committee has suggested, so there is no disagreement about the broader need to get a framework in place," he said. "I think in terms of how I see the process, is really that the government sets the objective, and the central bank delivers on that objective," Rajan said. Rajan also reiterated his call for the Federal Reserve to take into account the impact of its withdrawal of monetary stimulus on emerging economies, despite saying he was comfortable with the current pace of tapering. "I actually welcome a measured pace of tapering. The only thing I have been calling for is that in the communication there should be some sensitivity to conditions in emerging markets," Rajan told CNBC. "And this is not from our perspective, this is broadly emerging markets, some of whom have been in trouble in the last few months. But I am fully prepared for a tapering that continues at this measured pace."(Reuters)
Read More
