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Shares of Financial Technologies, which owns a series of exchange platforms, gained over 30 per cent on Monday, 5 August, after the senior management proposed an “agreeable” staggered payment schedules for parties who defaulted on payments after punching trades on Financial Technologies’ subsidiary National Spot Exchange Ltd.The exchange brokered peace between parties involved in the trades and hammered out a three-point settlement to meet outstanding payments worth Rs 5,600 crore on due contracts. As per the agreement, eight members, who dishonoured the contract, agreed to pay close to Rs 2,181 crore with immediate effect. Another 13 members have agreed to pay 5 per cent of the total dues every week, which after 20 weeks would add up to Rs 3,107 crore. Three other members have asked for more time to pay the remaining Rs 311 crore, said a Financial Technologies spokesperson.“We’ve received assurances for over 95 per cent of the payment,” the spokesperson said.As a second option, National Spot Exchange Ltd (NSEL) had asked non-payers to issue post-dated cheques amounting to Rs 4,900 crore against their settlement obligation.Read Also: Financial Technologies Crash: Sebi Begins Probe“While PDCs are a commitment, the payout process may not roll out smoothly in a month’s time. Hence, the market participants have proposed the first option (of staggered payments) as a safer alternative,” said a press note issued by NSEL.NSEL, which is an electronic trading platform for buying and selling of metals and agri-commodities, ran aground after it issued a circular that reduced the settlement cycle to less than 11 days (T+10) and barred intra-day square-off facility. Till that time, the exchange had larger settlement cycle often extending upto four weeks in the case of rare agri-commodities traded on the exchange. When the cycle got shortened, the market could not adjust to the new payment schedule. This gave rise to a mammoth payment default situation, triggering a massive drop in the shares of Financial Technologies.The stock fell over 79 per cent in two trading sessions, from Rs 584 on July 30 to Rs 120-levels at close on August 2. Financial Technologies shares ended trading at Rs 197.97 on the BSE on Monday.“FT shares may gain some more in the short-term, but it is going to be a pure trading play. Investors should keep proper stop-loss while trading on the stock. A better buy at this juncture would be MCX shares as there is more value there. Financial Technologies, over a longer term, may have systemic issues,” said Kishor Ostwal, CMD of CNI Research, a stock research firm.alertsmenon@gmail.comTwitter:@alertsmenon
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India has relaxed restrictions on the export of cotton by the state-run Cotton Corporation of India (CCI) in the current season to end-September as the world's second-biggest cotton grower expects a better crop in 2013-2014. Hefty monsoon rains have encouraged farmers to plant more, and the area sown with cotton has risen to 10.85 million hectares as of 1 August from 10.11 million a year earlier. CCI has exported 3,000 bales so far this season, the maximum allowed under current rules. It sought permission to ship more to reduce its stocks ahead of the start of the new-season harvest from 1 October, Chairman B. K. Mishra said. "This season CCI has sold its stocks mostly into the local market, and if they are exporting, it means they are expecting a huge crop next season and want to clear the old stock," Prerana Desai, vice-president of research at Kotak Commodities, said. The government earlier on Friday, 2 August, issued a notification allowing CCI to export cotton under relaxed norms. It did not relax the restrictions for private traders. Mishra said CCI had not received any official confirmation about the quantity to be exported in the current and the coming seasons. "We had in the past sought permission from the government to export 50,000 bales of cotton in the current season with relaxed norms," he said. The Indian government, through the CCI and farmers' cooperative Nafed, has bought 2.5-3.0 million bales of cotton in the current crop year. CCI has a stockpile of around 900,000 bales. India's production is estimated to be 34 million bales in 2012-13. In April, the government allowed the state agencies to sell cotton into the domestic market from state reserves. "We will see the market conditions and the international price and then decide on exports. As of now it does not look viable because domestic prices are higher," Mishra said. CCI is selling cotton into the domestic market at an average price of 43,000 rupees per candy of 356 kg, equivalent to 90.65 US cents per lb. Overseas it will get around 87-89 cents for the same variety, two traders said. In New York, the December cotton contract on the Intercontinental Exchange was at 85.16 cents per lb at 1436 GMT. (Reuters)
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Indian government figures showing that poverty has been cut by a third since 2004 has set off a row between the country's main political parties on whether the data is accurate, and a slanging match between two of the world's best-known economists on the implications for policy. The debate boils down to what path India should take in coming years as slower growth puts further poverty reduction at risk in the world's second-most populous nation. The opposition Bharatiya Janata Party (BJP) backs growth-oriented reforms that would include a curb on public spending, while the ruling Congress party believes subsidies and a range of social welfare projects have lifted millions out of penury. Neither of these parties has a commanding lead in opinion polls ahead of general elections due by next May, so they will be competing fiercely for the votes of the poor. India's Planning Commission said last week that 138 million people - more than the combined population of Britain, Spain and Australia - had climbed out of poverty between fiscal 2004-05 (March-April) and 2011-12. That left the official number of poor among a population of 1.2 billion at 269 million. "The reduction of the poverty level across the country is a clear manifestation and endorsement of the pro-poor policies and the policy of inclusiveness of the UPA regime," said Bhakta Charan Das, a spokesman of Congress and its United Progressive Alliance (UPA) coalition that has been in power since 2004. Critics say the numbers have been massaged to look good and any gains are pitiful compared to countries like China or Indonesia. Congress party policies, which include guaranteed employment for 100 days a year and plans to provide subsidised grain to 800 million people, are also a huge financial drain. India's budget deficit is already around 5 per cent of GDP and is seen as a major contributor in drooping investor sentiment. "It is certainly an achievement," said Nobel laureate Amartya Sen of the reduction in poverty. "Is it a fantastic achievement? No, because the poverty line is low." A Harvard University professor of economics and a confidant of Prime Minister Manmohan Singh, Sen is widely seen as a major influence on the Congress party's jobs and food programmes. Jagdish Bhagwati, professor of economics and law at Columbia University, says Sen is an apologist for Congress and its brand of welfare spending at the cost of reforms. "Sen is not simply wrong; he also poses a serious danger to economic policy in India," Bhagwati wrote in a newspaper column. "The UPA government is now poised to damage the economy, and to harm the poor ... because its near-paralysis on track I reforms has meant that revenue growth has slowed too, making it more difficult to finance the track II reforms on health, education and PDS (public distribution system) expansion for the poor. "At the same time, owing to electoral pressures and with the populist rationales provided by the likes of Sen, the expenditures on such track II policies are set to go up this year." Sen, Bhagwati and Prime Minister Singh all studied economics at Britain's Cambridge University in the 1950s. Empowerment, Not AlleviationMany economists say the Congress party-led government has delayed decisions on opening up the insurance and pension sectors for foreign investment, tax and other reforms and that the inertia has squandered gains of high growth before the 2008 global crisis. The BJP, which pursued high-growth policies when it was in power from 1998 to 2004, says the Planning Commission's figures on poverty are fixed, and aimed at giving Congress a pre-election boost. "The government only wants to showcase their achievements with artificial figures before elections," BJP spokesman Prakash Javedkar said. "So far as the BJP is concerned we want a decent living for the poor. We want their empowerment, not simply alleviation of poverty." According to the World Bank, about one in three Indians were poor, or living on less than $1.25 a day, in 2009-10 compared to 41.6 per cent in 2004-2005. In absolute terms, its estimates show the number of poor dropped to 359 million from 419 million. The government, by contrast, says the number of poor dropped to 269 million in 2012 from 407 million in 2005. However, it uses about 5,000 rupees ($83) per month for a five-member family as its poverty line for urban areas, an amount critics say would barely cover food costs, let alone shelter, clothing and other necessities. Many international economists agree that India has reduced poverty, but it still has a long way to go. "Our analysis shows that while targeted poverty-programmes are important for reducing poverty, a good investment climate is very useful," said Rana Hasan, principal economist at the Asian Development Bank. "Good investment climate is not only good for business, it is also an important means for making growth more pro-poor in India." India's achievements, however, compare poorly with other Asian nations. In China, for instance, poverty levels fell to 12 per cent in 2010 from 60 per cent in 1990, according to the World Bank. Many of India's poor scoff at the idea that they are better off than they were in 2004. "In the past five years, nothing has changed in my life," says Nitai Karmakar, a resident of the eastern city of Kolkata. The 31-year-old, who makes about $84 a month washing cars of residents in a housing colony, says he is not able to marry because he cannot feed another person. Palani, a security guard in the southern city of Chennai, says he takes care of his wife, two children and an 80-year-old mother on an income of $67 a month. "We just about manage our expenses and sometimes borrow to make ends meet," said the 49-year-old. "But we cannot budget for times when kids fall sick and we unexpectedly end up spending on doctors' visits and medicines." ($1=61.10 Indian rupees) (Reuters)
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There are many reasons why students from India (and elsewhere) are flocking to study in Singapore but the opportunity to study courses offered by universities in the UK, US, France and Australia in a Singapore campus is definitely a strong motivator. The Management Development Institute of Singapore (MDIS) is one such international educational destination which is a de facto overseas campus for a number of international universities whose courses are taught here. Shivajee Dewangan currently working with MDIS as a country manager possesses more than 6 years of experience in field of International Education and has counselled more than 1000 international students to study in Singapore during this period. In an interview with BW|Businessworld's Alokita Datta, Dewangan talks about why MDIS steers clear of a recognised university status, the popularity of their management programmes, and what is enabling more Indian students to come to Singapore. Would you consider MDIS a popular destination for (international) students primarily from Suoth Asia?Our international students hail mostly from South Asian countries but India is a very big market for us. I focus on the admission processes of Indian students. MDIS is one of the oldest educational institutes in Singapore which was established in 1956. We run on a not for profit business model; the institute is run by a council whatever profit is earned is invested back for the growth of the company. We have about 12,000 students (8000 local and 4000 international students from 76 countries across the world) in our Singapore campus, across various disciplines. The fact that we have such a large number of local students gives us a lot of confidence that locally we are very strong and well recognised. Our international students come mainly from China, India, Myanmar and Vietnam but we also have a good number of students coming from European countries as well. What according to you are the factors that attract Indian students to MDIS?Just two years ago the exchange rate of Singapore dollar against Indian rupee was SGD 33-34 now it has gone up to 47. Even though we haven't increased our fee but the cost of education for Indian students in Singapore has increased significantly. In order to help students we have come up with new short duration programmes during which students save a lot of time and money (particularly in living expenses). For the MBA programme(awarded by the University of Sunderland) , the effective cost after grants and scholarships comes to Rs 9.25 lakh which is almost as much as the cost of pursuing your MBA in India (if not less). We offer programmes that are accredited by various universities based in the UK, US, France and Australia. From day one, a student studying the Sunderland MBA programme, for instance, will be a student of that university but studying in Singapore in the MDIS campus. Do you feel the one year MBA has more takers, particularly from the point of view of cost effectiveness? We have always offered a one year MBA programme even on campus. It is only for our bachelor's programmes that we have used our advanced diploma into the BA programme. Every year we get more than 200 students from India for our undergraduate programmes. We have many schools within MDIS among which the biggest is the MDIS business school (with 8000 students) then there are schools of engineering, fashion technology, media and communication, life sciences, e-learning, tourism and hospitality as well as psychology. We have 6 intakes in a year for business programmes. We have noticed that the number of Indian students have been increasing since the past 5 years progressively. The reason, in my opinion, is that Singapore is still a new destination for international education, if you compare with the UK and the US especially. The Singapore government started marketing the country's educational institutes only since 2004. Indian students who have studied in Singapore or are settling here, their word of mouth information about educational opportunities in Singapore is also good, and is helping us. A small country but it is the hub of more than 7000 MNCs. Another advantage for us is the geographical location; we are only 5 hours away from Delhi and 3 hours away from Chennai. When Indian students study or live in Singapore, they don't really feel they are away from family. Singapore is also known for its physical and cultural safety which is greatly reassuring to parents. We are seeing an increase in our intake of students from Delhi in particular for our undergraduate programmes. They usually enrol in course during the period of September and October.Which are some of the other post graduate programmes in management you offer? At the post graduate level we offer different programmes: we offer MBA, MIB (Masters in International Business) as well as MSc programmes in business, finance, healthcare management. Typically in any MBA programme, 60-70 per cent of the students are from India but for MSc. Programmes the number would be 10 or 20 per cent. And for the MIB programme, which is offered by the French business school, Grenoble Graduate School of Business (GGSB) 40 to 50 per cent of the students are from India. Every year we also have 8 to 10 French students who come all the way from France to study in MDIS.Has the MIB programme gaining popularity over the years? Since the MIB course is offered by GGSB, which is a Triple Crown university (it has accreditations from AMBA, AACSB and EQUIS) and as part of their quality requirement, 70 per cent of the course is offered by the visiting faculty from France's on campus faculty. The experience of studying in Singapore under the guidance of renowned faculty from GGSB makes a lot of difference to a student in terms of value addition and class room learning. We only have one intake for the course in October and accept only 40 students. Could you elaborate on the eligibility criteria for your MBA programmes?We offer different MBA programmes; we have the fifteen month MBA from The University of Bradford (UK) which is among the top 20 business schools in Europe, for which we require students to have a 3 year full time work experience. However, the University of Sunderland and University of Wales MBA programmes are open to fresh graduates. As an institute, we are not a degree awarding body (since we are not a university) which are given to students by the respective universities. We had the opportunity to change our status to that of a university but our management body decided not to since, being an institute gives us a lot of flexibility to work with renowned universities and offer their programmes in our campus, instead of becoming a small university. Do you offer any programmes in the field of executive education?Very soon we will be starting with an executive education programme for which we have partnered with a university from the UK (name yet to be revealed) either by the end of this year or in early 2014 for students with more than 8 years of corporate experience.Does MDIS have plans to start operations in India?We are looking for educational partners in India and expanding our operations. But at the moment there isn't enough clarity in terms of rules, regulations and policies so we have currently withheld our plans for India. We have an overseas campus in Tashkent (Uzbekistan) which is 5 years old, where many of the programmes offered here (Singapore) are offered, and another campus which is under construction in Malaysia. We will start offering courses in Malaysia this year and the campus will be ready by 2016 where we have invested 130 million Malaysian ringgit in developing that campus. We would want to work with Indian b-schools in the next few years but we are still in the process of exploring possibilities right now.
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India's multi-billion dollar plan to give cheap grain to 67 per cent of its population bypasses some of the needy and does not tackle malnutrition, said Raman Singh, the chief minister of Chhattisgarh, which gives 90 per cent of its people low-cost food. With an eye to elections which are due by May 2014, the Congress-led government last month sidestepped parliament by launching its $22 billion food subsidy plan with an ordinance, which brings it into law immediately. Singh, a member of the main opposition Bharatiya Janata Party (BJP), told Reuters the ordinance should have broadened the range of beneficiaries and distribute protein-based foods as well as rice and wheat. "If you have to end malnutrition, infant and maternal mortality, you have to give proper, balanced and nutritious food as we have been doing (in Chhattisgarh)," said Singh, who was in New Delhi to address a seminar on food security. The National Food Security Ordinance aims to give five kg (11 lb) of cheap rice and wheat every month to 800 million people, more than doubling the reach of the existing subsidised food system. Despite being the world's second-biggest producer of rice and wheat and sitting on huge mountains of grains, India is home to a quarter of the world's hungry poor and every day some 3,000 children die of illness related to malnutrition. "We give iodised salt, pulses and chick pea. We demand the same for the National Food Security Ordinance. We also ask them to broaden the list of beneficiaries," Singh said. A government source involved in food decision making said that rice and wheat were staples for the poor and the government was taking care of those needs. "The ordinance makes subsidised food a legal entitlement for beneficiaries and that shows our commitment. Since India imports pulses, we cannot distribute them," the source said. Singh said his state government's investment in irrigation, free electricity to farmers, interest-free farm loans and better seeds have helped Chhattisgarh raise rice production to 7.1 million tonnes from 1.7 million tonnes in 2005/06. "If we can do it, the government of India has a bigger budget," he said, adding that a debate in parliament would have allowed these issues to be raised. Chhattisgarh's farm sector is growing at about 6 per cent per year, more than double the national average, while the state's total GDP has grown at 8-9 per cent against India's economic growth of about 5 per cent. "You don't get growth by fixing a target. You need to invest in micro irrigation, seed replacement, power to farmers, interest-free loans for agriculture to cut input costs. Slogans do not help," Singh said. (Reuters)
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Indian Oil Corp Ltd (IOC), the country's biggest refiner, said it would raise petrol prices by 1.2 per cent and diesel by 1.1 per cent from Thursday after global prices of the fuels have risen.India's three state-run fuel retailers - IOC, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd - tend to move their prices together. India deregulated fuel prices in June 2010.In January, India allowed fuel retailers to raise the price of subsidised diesel by around 50 paise a litre every month and asked bulk buyers to pay market rates.(Reuters)
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The UPA Government's proposed Food Security Bill carries a slew of "economic consequences", including pressures on fiscal deficit, growth and inflation, Reserve Bank Governor D Subbarao said on 30 July."There are going to be lots of economic consequences of the Food Security Bill (FSB), which at the RBI, we will study further," Subbarao said at the customary post-policy interaction with journalists in Mumbai. "There will be pressure on procurement, there will be pressure of subsidy, there will be pressure of fiscal deficit that will have implications for growth and for inflation, implications for surplus income that beneficiaries of food security might have and how they might spend that and what implications they will have for inflation," he said.However, he added that the central bank is still studying the Bill's proposals and is yet to quantify the implications of the ambitious programme."At the moment, the fiscal consequences and the macroeconomic backdrop that will change on account of the FSB is a bit premature to discuss because the numbers are still being worked out," RBI Deputy Governor Urijit Patel said.Early this month, the Union Cabinet decided to take the Ordinance route to implement the FSB, which aims to give nation's two-thirds population the right to 5 kg of foodgrain every month at highly subsidised rates of Rs 1-3 per kg.India will join a select league of countries in the world that guarantee food security to majority of its population. At Rs 1,25,000 crore of Government support, the food programme will be the largest in the world.Analysts have said the programme will put a strain on Government finances and pointed to the excess investments required in the warehousing space.(PTI)
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The government will sell a 7.64 per cent stake in state-run National Fertilizers on Wednesday through a share auction, disinvestment secretary Ravi Mathur told reporters. The sale is part of the government's efforts to raise Rs 400,00 through stake sales in the current fiscal year. So far this year it has only raised about $140 million. The government currently owns 97.64 per cent in the fertilizer company. At the current market price, the stake sale would raise about $17 million. Ahead of the offer, shares in National Fertilizer were trading 8.4 per cent lower at Rs 27. (Reuters)
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The rupee fell to a two-week low on Tuesday, erasing all gains made since the Reserve Bank of India first announced early this month it would defend the currency by tightening cash, reflecting doubts about how long the central bank can sustain the measures. Falls accelerated in the afternoon session after the RBI left interest rates unchanged and said it will roll back those liquidity tightening measures when stability returns to the currency market. The RBI announced measures to drain cash in the evening of 15 July, and followed up with additional steps on 23 July. The partially convertible rupee was trading at 59.88/90 per dollar at 1:27 pm, after falling to as low as a two-week low of 59.92 to the dollar, below its close of 59.89 on 15 July. The rupee had closed at 59.4150/4250 on Monday, 30 July. (Reuters)
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At first instance, it is difficult to think of the United Nations and economic growth in the same breadth. The era of rapid globalisation that we live in has been shaped and driven by multinational corporations with some support from governments. UN agencies have played a limited role in globalisation, while other multilateral agencies like World Trade Organisation, World Bank and the International Monetary Fund had their moment in the sun. The last two decades saw globalisation peak and then falter. The world saw the best and the worst of globalisation. While the best remains, it is the worst of globalisation that is dominating debates on the future of growth and capitalism. At a time of continuing distrust between civil society, industry and government, an unlikely agency, the UN, is trying to bridge the disruptive divide. Will it work? Exactly a year ago in 2012, Secretary General Ban Ki Moon set up a high level panel (HLP) of eminent personalities to prepare an agenda for growth. This agenda was to be created by the 27 member panel that included members of industry, government and civil society. This effort build on the Global Compact launched in 2000 to urge industry to adopt socially responsible policies. UN is stepping up its presence to bridge the trust gap between these three stakeholders. Since 2008, government and industry have been barely on talking terms worldwide. Political parties and industry leaders blame each other for the growing fiscal crisis across the globe. Civil society and citizens hold the government and business responsible for falling jobs and incomes. In this environment, the UN’s efforts hope to calm frayed nerves. The HLP finalized a report last month that sought five transformative shifts for global growth. These include sustainable development, open & accountable institutions, creating jobs through inclusive growth to ensure no one is left behind. These sound like slogans but gain importance if adopted by business. Industry leaders have been focused rapid increase in profit. For most, social issues were the government’s responsibility. Under the new framework, industry leaders will have to opt for sustained profits that benefit society and not just shareholders. For the government, the new thinking involves closer cooperation with industry to ensure transparent processes that ensure sustainable development. This also means allowing civil society and local communities to have a say in policy making. Some of these ideals may slow the decision making process and reduce the pace of growth. But hopefully, this growth will be more consistent and less disruptive. If the UN can achieve this, it would reclaim its position as the premier body that guides global well-being. In the post world war era, United Nations Industrial Development Organisation, the International Labour Organisation and United Nations Development Programme supported industrialization of many countries. As global growth crawls, the UN’s efforts may again offer a slender chance to rebuild hope and optimism by bridging the trust deficit. (Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)
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