Gold edged between gains and losses on Wednesday as investors fretted over the timing of the US Federal Reserve's stimulus tapering. The choppy trade followed a 1 per cent fall on Tuesday, 13 August, which ended a four-day winning streak. The drop was caused by strong US economic data and further import curbs in top buyer India.Uncertainty over when the Fed would begin scaling back its massive bond purchases has pushed gold down more than 20 per cent this year after 12 annual gains."What would be extremely welcome is some clarity," said analyst Dominic Schnider of UBS Wealth Management in Singapore. "And I think September would be the ideal time to provide clarity. Some market expectations are shifting towards a December tapering."The US economic performance remains too mixed for Fed policymakers to lay out a detailed path for reducing and eventually halting their asset-purchasing next month, Atlanta Fed President Dennis Lockhart said on Tuesday.But he appeared open to at least a modest pullback in monetary stimulus from its current pace of $85 billion per month."Once the taper is out, it will hit gold once more," said Schnider, though likely not to the same extent as drops earlier this year.Spot gold inched up 0.06 per cent to $1,321.42 an ounce by 0304 GMT.The next Fed meeting is scheduled for September 17-18. Until then, markets will scrutinise data to gauge the strength of economic recovery.US retail sales rose in July, data showed on Tuesday, pointing to an acceleration in consumer spending that could bolster the case for a Fed tapering.India CurbsIndia hiked the import duty on gold yet again on Tuesday to a record 10 per cent and also raised excise duty on the metal, after imports jumped in July despite attempts to strangle supply and curb demand as the government tries to rein in dollar spending.Gold prices in India are likely to rise this week, extending gains past their highest level in four months, due to the import duty hike and dollar weakness.Read Also: Import Duty Hiked On Gold, Silver To 10 Per Cent"Despite the expectations that gold imports may fall, India's appetite for bullion is anticipated to pick-up later in the year due to seasonal demand," HSBC analysts wrote in a note.Analysts say this could increase further illegal gold supply into India.(Reuters)
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GVK Power and Infrastructure posted a net loss in its June quarter, weighed down by sluggish investments on infrastructure in a slowing economy and higher interest payments on outstanding debt.The company posted a net loss of Rs 30.59 crore in the quarter, compared with a loss of Rs 64.30 crore a year earlier. Net sales fell 14.5 per cent to roughly Rs 700 crore.The company had been expected to post a loss of Rs 110 crore, according to an estimate of two analysts tracking the company.Like its peers in the power sector, GVK has grappled with fuel shortages for its power plants, while its highway construction business has been hit by environmental clearance hurdles.Overseas, GVK's $10 billion coal mining project, which is a joint venture with Australian mining magnate Gina Rinehart's Hancock Coal, has been delayed to 2016.(Reuters)
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Stepped up efforts by Indian Finance Ministry to check revenue leakage have resulted in a detection of evasion of over Rs 2,158 crore in direct and indirect taxes in the last quarter of 2012-13.The detection came through a unique initiative of online monitoring system of suspicious transactions, named 'Virtual Office', which was set up by the ministry earlier this year for real-time coordination among revenue intelligence agencies and dissemination of various inputs pertaining to movement of illegal funds.The Central Board of Direct Taxes (CBDT) has detected unaccounted income and assets of Rs 1,408 crore using this platform.The Directorate General of Central Excise Intelligence (DGCEI) and Directorate General of Revenue Intelligence (DGRI)--two leading agencies under the Central Board of Excise and Custom (CBEC)--have together detected indirect tax evasion of at least Rs 750 crore, according to an official document.These agencies, which are part of the Virtual Office programme, detected the evasion after following up the leads in form of Suspicious Transaction Reports (STRs) passed on to them by Financial Intelligence Unit (FIU)--an agency tasked with analysing and disseminating information relating to dubious financial exchanges.Both DGCEI and DGRI have also effected a recovery of Rs 46.71 crore, on the basis of the STRs generated by the FIU, through Virtual Office. The CBDT has seized assets worth Rs 21 crore, the document said.An STR is a transaction of Rs 10 lakh and above believed to be proceeds of crimes including drug trafficking and black money.The Virtual Office was set up in January to monitor the feedback on the STRs disseminated by FIU-Ind, which is also providing administrative support to it.(PTI)
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The rupee gained modestly on Monday, 12 August after another salvo from the Reserve Bank of India (RBI) to support it by tightening the money supply, but it is seen stuck near record lows unless there are genuine efforts to cut the current account deficit. The RBI will auction Rs 11,000 crore in cash management bills on Monday, part of its new plan to auction a total of Rs 22,000 crore of bills every week to drain funds from money markets. The idea is if the supply of rupees tightens it will create demand for the currency, which fell to a record low of 61.80 per dollar last week. That would also buy some time for the government to try to address some long-term pressures. Expectations are high that Finance Minister P. Chidambaram will announce measures to draw in foreign inflows as early as Monday, geared towards narrowing a record current account deficit that is the key source of pressure on the rupee. The steps could include raising money from Indians abroad, easing overseas borrowing rules for companies, or spurring state-run companies and lenders to raise money overseas. "It takes two to tango," said Jyotheesh Kumar, an executive vice president at HDFC Securities in a note to clients. "Both the Reserve Bank of India and the government of India are likely to act in tandem this week to shore up the ailing rupee," he added. Trade, industrial output and consumer prices data are due on 12 August as well, and are expected to reinforce concerns about growth running at its weakest in a decade at a time of high inflation. Bond Yields RiseThe partially convertible rupee rose to as much as 60.45 per dollar on Monday, 12 August compared to its close of 60.88/89 on Thursday, although it was last trading at 60.72. Financial markets were closed on Friday, 9 August for a holiday. The modest gains follow the RBI's announcement of the sales of cash management bills after the market close on Thursday (8 August) -- its third set of measures over the past month which have also included raising short-term interest rates. But investors want India to tackle longer-term fiscal and economic reforms, such as raising fuel prices, and are yet to be convinced that the central bank's strategy is sustainable, raising the prospect of higher borrowing costs in the near term. The benchmark 10-year bond yield was up 8 basis points to 8.20 per cent on Monday, and is up about 70 basis points since the RBI's first round of action on 15 July. Bringing in foreign flows will be key to stabilising market confidence in the near term, analysts said. India has traditionally restricted foreign-currency borrowings to prevent a build-up in foreign-exchange liabilities, and a more relaxed approach may trigger a dramatic spike in overseas bond offerings. (Reuters)
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Ireland's CRH, one of the world's largest building materials providers, is set to buy a controlling stake in India's Sree Jayajothi Cements Ltd for about $250-$300 million, two sources with direct knowledge of the matter told Reuters.Sree Jayajothi Cements, a unit of the Shriram Group, has a 3.2 million-tonne cement plant in Andhra Pradesh. The deal could be announced as early as on Monday, 12 August, said the sources, who declined to be named.CRH will buy Sree Jayajothi Cements through its Indian unit, My Home Industries, the sources said.Shriram Group, which has interests in the financial, power, infrastructure, construction and real estate sectors, did not have an immediate comment, while officials at My Home Industries were not available.Indian boutique investment bank Mape Advisory advised Shriram Group on the transaction, one of the sources said.Shriram Group was said to have had talks earlier with investors including Blackstone Group and KKR for selling its stake in the cement business.(Reuters)
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Mexico is pushing to double crude oil exports to China next year and boost India-bound shipments, the next stage of a long-term plan to diversify oil sales away from an increasingly energy-independent United States.Mexico is also open to importing light crude supplies from the United States, the country's top oil trade executive said in an interview, a sign that the world's No. 10 oil producer may be ready to give up decades of total crude oil self-sufficiency in order to take advantage of a growing glut of U.S. shale oil."We expect to market increasing volumes of our crudes" to both China and India, said Luis Felipe Luna, CEO of P.M.I. Comercio Internacional, the international oil trading arm of Mexico's state oil monopoly Pemex.Crude oil shipments to China, which have risen from zero in 2010 to more than 20,000 bpd so far this year, will reach a yearly average of 30,000 barrels per day (bpd) but could more than double in 2014, said Luna.Exports to India already stand at nearly 100,000 bpd but are likely to increase in the short and medium term, he said in a rare interview this week. In total, Asia could be taking as much as a fifth of Mexico's 1.1 million bpd of exports.The United States is still by far Mexico's largest oil export partner, but shipments have halved since 2006 to less than 850,000 bpd this year, according to US government data, the lowest rate in two decades due to both declining Mexican production and rising US output.(Reuters)
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Essentially, in my mind, there are three parameters around which the dilemma to ‘serve the chicken or throw it’ revolves. Evaluation partly fuelled by education, evolution triggered by the milieu in which one lives and economic impact.Let’s begin with education. Broadly speaking, anyone who spends two decades of his life ‘learning’, is expected to be more discerning between ‘right’ from ‘wrong’. It can also be concluded that an educated individual will likely do more ‘right’ than an uneducated person. Right? Not exactly.The basic problem here is that there is no fixed parameter to define ‘right’. So, while the current education system certainly helps develop lenses through which one can tell ‘right’ from ‘not so right’, the problem is that what one person considers ‘right’ may not be so for another person. Ironically, the barometers for defining ‘right’ vary from society to society, by time, and indeed by social strata. Besides, there are extraneous factors overriding the inputs delivered or expected to be delivered by the education system. Every child in the country is encouraged by his elders to be the best in his class, and since success is based on a comparative scale, the general tendency among most educated Indians is to benchmark themselves against fellow mates. Ironically, the elders giving advice to these children are being coached to be good team players in their workplaces. No wonder one often hears in global corporate circles that Indians are excellent individual contributors but poor team players. Therefore, to just blame the education system for the ‘dilemma’ may be fashionable but not comprehensive. Societies evolve over time. More importantly, governance mechanisms mature with time. The critical thing to note here is that human behaviour is dynamic and generally improves over a period of time as the benefits of mutualism become visible.And finally, it is all about the economics of the choices to be made. For most situations, sheer common sense and some basic education is enough to differentiate ‘right’ from ‘wrong’. However, in most cases, the decision is more around the economic impact of the choice. Vatsa, with his high ethical standards, may have compromised on the quality of the bigger lot to achieve the economies of scale but he might have satisfied his ethical ego by rejecting a smaller unfit lot.The jury is still out on drawing a correlation between standard of ethics and degree of fulfilment of physiological needs. So, while being coached to maintain high ethical standards in life, many of us have seen our role models stutter, stammer and falter in high-impact situations.I think that as every child grows up to take on the world, besides the education system, which within its own limitations is expected to convey the acceptable ethical and moral standards, there are several external situations and interventions that exposes the child to the dilemmas of the real world and, in some sense, sets their value systems. It is the same education system and society that created both, a Kundu senior and a Vatsa.The concept Raman brings out on inculcation of dealing with ‘grey zone’ is an interesting one! I think it is time that our pedagogy evolves to the next level of teaching through experimentation and explorations. So, while the young citizens are taught the societal extent of acceptability through textbooks, they are also made aware that life is all about making the choices and living with them.I do agree with Raman on his theory of evolution. I think as our democratic system of governance matures, ‘realism’ would tend to get closer to ‘idealism’ as the community gets exposed to the benefits of honesty, trust and faith in each other.I believe a lot of it is also linked with our economic situation. As the country prospers with better schools and improved literacy standards, there will come a day very soon when our college students would throw the dropped chicken in the garbage bin because at that point everybody would be doing the same. Inshalla! The author is a CFO for global applications business for CSC . He has over 20 years of experience, including at GE and HUL(This story was published in BW | Businessworld Issue Dated 26-08-2013)
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The idealism of education is not about having one’s head in the clouds but about being fully mindful of the goings-on in the larger society. Not supporting them, but just being aware.The search for the truth, or the search for precision in whichever domain of study we undertake, ensures that we continue to evolve and reach higher rather than lower levels. If people become cynical about learning, then who will provide the engine for the future? The belief that education must be moderated by a large dose of reality means only that our students need to be better informed about the legacies that are constantly in the making by opportunists and the short-sighted, and the price they are likely to pay in future.There is a fundamental ‘sleight of hand’ involved in this story. Organisations can play around with their standard ‘tolerance ranges’. The idea that “schools should bring in reality” puts the entire blame on the so-called idealism of schools. The issue is not the school but the people in organisations who want to take short cuts to maximise their gains. If schools do not have ideals, how can the future be an advancement of the present?We are all aware of how progressively standards can get eroded. Pieces of chicken falling on the floor to be picked up and used without a care or tweaking quality standards to pass sub-optimal products, or whatever else, over time results in a very different product with less defined standards than was perhaps envisaged at the start of the operation. The insinuation that the youth have their heads in the clouds or that those responsible for education are being unrealistic is getting the facts all wrong. Perhaps, the kids need to ‘tour’ the reality of the adult ‘sleight of hand’, the so-called grey zones, or rampant opportunism, as evidence of what is actually happening, and then perhaps reflect about what is appropriate and right. Education, like the judiciary, needs to maintain its impartiality for the truth. A corrupted judiciary will result in the absence of safety and a degeneration that will go uncontrolled. Over time there will be anarchy or the absence or disregard of the law. A corrupted education system will result in people who will have no standard for the truth at the heart of all disciplines. Anything will be considered right and acceptable. Where will we stand in the world stage?It is not just about providing more and more mindless people as part of the workforce. This case study makes it appear as if those with falling standards in the world of work are trying to co-opt students to turn a blind eye to what is happening and appreciate the ‘grey’ as a necessity and not as a form of corrupt or unethical practices. Take an instance from our not too distant past: Are we saying that the standards broken for the disastrous Commonwealth Games are really acceptable? That’s the reality of the world and we have to accept it? To hope for something aspirational, better, more vibrant, more inspiring is idealistic? Do we want our children to become cynical and taking short-cuts at every step of the way? What will this do for us as a nation?Old Mr Kundu, Punya’s father (of Part 1), seems to think that his own helplessness as a professional should translate as moderating the idealism of students. Granted that he had a lot of reasons why he was helpless but to think that his constraints should be a lesson for education makes it sound as though he is displacing his anger away from where it really belongs. Idealism is about aspiration, growth and evolution. One cannot grow by not looking at the facts. Our leaders, with their failings or virtues, have to be seen as they are. The objective has to be of going beyond them, and not fitting into their definition of the game. Those in education who are truly promoting excellence through enquiry and reflection are the real heroes — they have the courage to do so inspite of a large group that treats the process like a factory for cogs in the proverbial wheel. The author is a consultant at the Centre For Creative Leadership, Asia-Pac(This story was published in BW | Businessworld Issue Dated 26-08-2013)
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An inter-ministerial panel has suggested higher taxes for non-essential imports with a view to curbing inward shipments and containing the current account deficit (CAD).The Committee has also suggested a list of non-essential items the import of which could be compressed, with a view to bridge the trade gap.These suggestions form part of the recommendations made by the Committee set up by Finance Minister P Chidambaram under the chairmanship of Rajat Bhargava, Joint Secretary (Budget Division) to suggest steps to contain the rising CAD, which had touched a record high of 4.8 per cent of GDP in the last fiscal.The committee has already submitted its report to Chidambaram and according to sources some steps are likely to be announced soon."The panel has suggested higher taxes on those non- essential items which do not add to inflationary pressures," sources said.Chidambaram had earlier said that government would be looking at "some compression in non-oil and non-gold imports, especially of non-essential goods", citing the example of coal and electronic hardware.For the April-June period this fiscal, exports were down by 1.41 per cent at $72.45 billion over the same period last year. However, imports during the period were up by 5.99 per cent at $122.6 billion.Trade gap in the first quarter stood at over $50 billion.India's exports during 2012-13 was at $300.3 billion, while imports aggregated $491.9 billion. Trade deficit stood at $191.6 billion during the period.Current Account Deficit (CAD) occurs when total imports of goods, services and transfers are higher than exports, reflecting outgo of foreign exchange.(Reuters)
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Why does it seem that the states have stopped competing for investment? Remember the 90s when Andhra Pradesh and Karnataka fought tooth and nail to upstage Maharashtra and Gujarat? How the Chennai region managed to get all the auto sector investment even though Pune region had a legacy advantage. The continuing sense of gloom among investors has been fed largely by the increasing lethargy of state governments to push growth. State governments and chief ministers make half hearted attempts to hold investor conferences. More effort is spent on organizing a summit than in clearing hurdles for projects. Chief ministers hold the occasional photo-op meeting with business leaders to show their commitment for growth. But soon after the flash bulbs move away, the chief minister and the government turns its face away from pending problems. Frustrated by such behaviour business groups are getting specific about project clearances. The Confederation of Indian Industry recently sent a list of 62 large projects to central government that are waiting to start operations. The total investment in these projects is over $13 billion. Of these most are in power and petroleum sector while the rest are in transport and township. The clearances they are waiting for are mostly from the state governments. While the central Ministry of Environment has held up a few, the local approvals are proving to be more frustrating. A project management group set up at the central government is trying to push states into getting the clearance done. Read More articles by Pranjal SharmaIn another time and era, state governments would have fallen over each to provide the clearances. Today, investors have to struggle. Part of the reason for this is the sheer increase in number of proposals. States are running out of land but they are also severely short of innovative ideas to resolve issues. Generous compensation, structured employment in projects and removal of archaic rules will automatically speed up the approvals. But the local political leadership is loath to take the effort or to give appropriate direction to the bureaucracy. Not surprising then that an increase number of investors are planning life without India. Even as the central government relaxes foreign direct investment rules, domestic investors are flying away. Much hope is being placed in Raghuram Rajan, the governor designate of Reserve Bank of India. Low growth, falling rupee and high inflation can’t be controlled by the central bank alone. Nor can the central government alone shoulder the responsibility. States will have to pull their weight to ensure that job creation and fund generation for welfare schemes is enabled. Where the central government has failed is to creating a positive sentiment of growth and action. Even if the central ministries don’t control state level issues, they can be proactive in chasing clearances. Political parties must push their Chief Ministers to focus on improving growth. States have to be able to convince citizens that if land and other resources are being allotted for projects, the returns will be better jobs and wealth for all. India needs a fresh batch of chief ministers in states who are eager and hungry for growth and development. Tough to say when this batch will graduate and take charge. (Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)
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