The rupee rises to a near one-week high, tracking global dollar weakness. The pair is at 62.13/15, 62.05 intraday low, versus Tuesday's close of 62.46/47."The market is looking at the overall behaviour of the USD and the developments in the US," says a senior dealer with a private bank. Indian markets were closed on Wednesday for a national holiday. A dealer tips dollar in a 61.80-62.60 band for the session with upticks to be sold into.The dollar languished at eight-month lows early in Asia on Thursday, 3 October, as the US government shutdown dragged on, while positive developments in Italian politics and a watchful but patient European Central Bank helped lift the euro.(Reuters)
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India's military is fighting the biggest group of infiltrators in Kashmir to cross from Pakistan in years, a top general said on Wednesday.Some 30 to 40 heavily-armed fighters have crossed the Line of Control dividing Kashmir between the rival nations in the Keran sector and are holed up for the past nine days in thick forests in the area, Lieutenant General Gurmit Singh told a news conference.India says rebel incursions have been rising in Kashmir over the past year, feeding an armed revolt there, but these groups were usually made up of five or six people."The army is fighting the largest group of infiltrators including some special troops on the Line of Control with Pakistan in Indian territory. It's one of the longest operations in Kashmir," said Singh, who leads the Indian army's 15 corps that is responsible for operations in the Kashmir Valley.The army has killed 10 to 12 of them, he said. On Tuesday night, another group of 10 men had tried to cross over to join the militants holed up some 200 to 300 metres on India's side of Kashmir.There was no immediate comment from Pakistan. Islamabad denies it is helping militants cross the largely fenced border with India and has urged India to hold talks to tackle the decades old dispute over the region.The latest fighting was taking place as Prime Minister Manmohan Singh and his Pakistani counterpart Nawaz Sharif pledged in New York last weekend to work towards strengthening a 10-year-old ceasefire that has frayed in recent months.But they failed to announce any concrete measures to advance peace talks that have been slow to recover since 2008 when Pakistan-based militants attacked India's financial centre Mumbai for three days and killed 166 people.Singh denied Indian media reports that the insurgents had taken over a village in the Keran sector and said the military was fully in control of the situation."The operation is being carried out in a calibrated manner ... We are not rushing through as rushing through will mean the risk of (our) own casualties."In 1999 Pakistan-backed irregular troops crossed into the Kargil sector in northern Kashmir and occupied bunkers along a vast swath of the Line of Control, prompting a massive Indian air and ground offensive to repel them.(PTI)
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Inching towards withdrawal of the controversial Ordinance on convicted lawmakers, Congress top brass including Prime Minister Manmohan Singh and party chief Sonia Gandhi today (2 October) grappled to work out a face saver in the wake of a huge political storm over Rahul Gandhi's public outburst against the measure.All pros and cons were discussed and a decision was left to the Union Cabinet which is meeting in the evening (2 October), highly placed party sources said after the hour-long Congress Core Group meeting headed by Sonia Gandhi.The sources said that the government is mulling whether to withdraw the ordinance - which was sent to President Pranab Mukherjee after the Cabinet had cleared it- or ask the President to take a call on it.Soon after the Core Group meeting, which was also attended by Home Minister Sushilkumar Shinde and Gandhi's political aide Ahmed Patel, the Prime Minister met President Pranab Mukherjee at the Rashtrapati Bhavan.Mukherjee is said to have reservations over the Ordinance to provide immunity to MPs and MLAs from immediate disqualification overriding a Supreme Court judgement on the issue.The day of hectic activities in the Congress began on the issue with Rahul Gandhi calling on the Prime Minister in the morning and holding one to one interaction during which the Congress Vice President explained to Singh the context in which he denounced the Ordinance.Though Singh said he does not get "upset easily", he had indicated his unease yesterday when he told reporters that he would try to find out the reason why Rahul made a public statement and "why it had to be done that way"."I am not the master of what people say. It has happened and as I said when I go back I will try to find the reason why it happened that way and how do we handle it," he had said.He was asked about Rahul's remarks that the Ordinance was "complete nonsense" that needs to be "torn up and thrown away".Meanwhile, a senior party leader speaking on the condition of anonymity said that it is not necessary that a decision is taken immediately after the Cabinet meeting today as it could give an impression of the Prime Minister's authority being eroded.The matter may also be deferred for a view by the UPA Coordination Committee after the Cabinet makes up its mind, the leader said. There is a also a view in the party that the "Ordinance is now history" after Gandhi's carping criticism of it.(PTI)
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Congress Vice President Rahul Gandhi, who had made strong comments against the ordinance on convicted lawmakers, met Prime Minister Manmohan Singh on Wednesday (2 October). Sources said Rahul met Singh at his residence here and the meeting between the two lasted 30 minutes. The controversial ordinance was understood to be on the agenda and the two leaders discussed the way ahead on the issue, the sources said. Rahul had earlier this week said at a press conference that the ordinance is "nonsense" and should be "torn up and thrown away". Many saw this as an embarrassment for the Prime Minister and the Opposition vociferously demanded that Singh, who was on a visit to the US at the time, should step down after his return. However, Singh on his return last night ruled out any such possibility. The sources said the government is mulling whether to withdraw the ordinance- which was sent to President Pranab Mukherjee after the Cabinet had cleared it- or ask the President to exercise his pocket veto and sit over it. The Prime Minister will today preside over the Cabinet after meeting the President who is said to have reservations over the move to provide immunity to MPs and MLAs from immediate disqualification overriding a Supreme Court judgement on the issue. The Cabinet meet will be preceded by a meeting of the Congress core group that includes party chief Sonia Gandhi, the Prime Minister and top ministers. Law Minister Kapil Sibal may be called to the meeting. The Cabinet note for today's meeting talks of two options -- await the promulgation of the ordinance by the President or withdraw it. However, all indications from government and party sources are that the Cabinet may have no option but to withdraw it in the wake of strong attack on it by Gandhi. The note to the Cabinet, before which the ordinance is the only agenda for tomorrow as of now, also speaks of deferring to the "sentiments of the public at large" on the issue. BJP Hits Out At PMMeanwhile, Opposition Bharatiya Janata Party (BJP) reacted sharply on 1 October to Prime Minister Manmohan Singh ruling out any possibility of his resignation in the wake of the controversy over the ordinance on convicted lawmakers, saying for him "sticking" to the chair is more important than his self-respect. "Now the conscience of a Foreign Secretary is larger than the conscience of the Prime Minister of India. Then Foreign Secretary A P Venkateshwaran chose to resign within an hour after a public snub by Prime Minister Rajiv Gandhi but the PM of a great country like India chooses to stick to the chair," Deputy Leader of BJP in Rajya Sabha Ravi Shankar Prasad told PTI. He said Singh has chosen to stay on as PM in spite of a public humiliation and snub by Congress Vice President Rahul Gandhi. "What else I can say except that the chair is more important for Prime Minister Singh than self-respect," Prasad said. Rahul had said at an impromptu press appearance that the ordinance on convicted MPs and MLAs is "nonsense" and should be "torn up and thrown out". The Opposition had demanded that after this insult of the Prime Minister, he should step down.(Agencies)
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The economy will grow at more than 5 per cent in the current financial year ending in March 2014, Economic Affairs Secretary Arvind Mayaram said on Tuesday, 1 October. "It will be more than 5 per cent. It cannot be less than 5 per cent," Mayaram told reporters. Mayaram also said as of now, a shutdown of the US government is not likely to have a major impact on the Indian economy. "As of today, I don't see any major impact on the Indian economy on that account." India Will Fully Finance Current Account Deficit India will finance its current account deficit fully in the fiscal year ending March without drawing down on its reserves, and will also contain the fiscal deficit at 4.8 per cent of GDP, said Mayaram. He added the government would not have to go beyond the finance ministry's planned market borrowing for the year, and would be able to meet its budgeted revenue target. Economic growth will pick up in the second half of the fiscal year, he said. India's current account deficit grew less than expected in the June quarter and is tipped to ease in coming months as a pick-up in exports and lower gold imports improve the trade balance, offering relief to the battered rupee. The current account deficit (CAD) for the three months through June was $21.8 billion, or 4.9 per cent of gross domestic product, driven by sluggish exports and high gold imports in April and May before the government hiked tariffs on the metal to a record 10 per cent. (Reuters)
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Consumer goods company Unilever has warned that a slowdown in its emerging markets accelerated in the third quarter and it now expects underlying sales growth of just 3 to 3.5 per cent in the period. That compares with a weaker-than-expected 5 per cent rise in sales the Anglo-Dutch maker of Ben & Jerry's ice cream and Dove skincare products reported in July for the second quarter. Developed markets remained flat to down in the third quarter, it said, and overall Unilever said it was on track to meet its 2013 priorities. It attributed the emerging markets slowdown to a significant currency weakening. "We continue to grow ahead of our markets and expect underlying sales growth to improve in quarter four," Chief Executive Paul Polman said. Unilever generates about 57 per cent of its 51 billion euros of annual sales from developing and emerging markets, a fact that has weighed on its share price as currency routs crimp demand and weigh on profits in several markets including India. Unilever's shares have fallen 7 per cent in the last 3 months. (Reuters)
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Oil Corp (IOC), the country's biggest refiner, said on Monday, 30 September, it would cut petrol prices by 4.8 per cent following an appreciation of the rupee and softening global gasoline prices during the second half of September.IOC, however, will raise diesel prices by 1.1 per cent to reduce its revenue losses as refiners sell the fuel at state-set low prices. The changes will be made from Tuesday (1 October).India deregulated gasoline prices in June 2010.In January, India allowed fuel retailers to raise the price of subsidised diesel in small amounts every month and asked bulk buyers to pay market rates.Three state-run fuel retailers - IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp - tend to move their prices together.Following are prices as charged by IOC in Delhi. Gasoline, diesel and kerosene prices are in rupees per litre, while liquefied petroleum gas (LPG) prices are per 14.2 kg cylinder.(Reuters)
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Factory activity in India shrank for a second month in September, albeit not as sharply as in August, on a dearth of new orders which pushed firms to cut staff, a survey showed on Tuesday, 1 October. Another grim Purchasing Managers' Index (PMI) comes as Asia's third-largest economy grapples with its worst slowdown in a decade and policymakers struggle to put a floor under the battered currency. The HSBC Manufacturing PMI, compiled by Markit, rose to 49.6 in September from 48.5 in August, but remaining below the watershed 50 mark that separates growth from contraction. The index, which gauges business activity in Indian factories but not utilities, has hovered near that 50 mark from May but falling orders dragged it under in August for the first time in more than four years. Eight Core Sectors Grow By 3.7% In August "Manufacturing activity continued to shrink in September. Order flows remain weak, especially export orders, and employment fell," said Leif Eskesen, chief economist for India at survey sponsor HSBC. While orders from abroad shrank at a quicker pace on a capricious global economy, overall new orders contracted at a slower rate, offering hopes that softness in domestic demand may be leveling off. While the new orders sub-index rose to 49.6 last month from 47.5 in August, it spent its fourth month below 50, prompting firms to cut staff for the first time since February 2012. A slew of surveys and data over the past months have stoked fears the economy grew at an even weaker pace in the current quarter than the 4.4 per cent seen in April-June, its slowest quarterly growth rate since early 2009. Compounding policymakers' problems, a yawning current account deficit has driven funds out of the country and further hammered the Indian rupee. The currency lost over 20 per cent of its value between January and late-August, when it sank to a record low of 68.85 to the dollar, but it has since recovered around 10 per cent on central bank measures to attract more capital. Data released on Monday showed India's current account deficit widened to 4.9 per cent of gross domestic product (GDP) in the June quarter from 3.6 per cent in the previous three months, although the gap grew less than expected. The weaker currency has pushed up prices of imported goods and coupled with higher food costs drove wholesale inflation to a six-month high in August. The latest PMI survey showed input costs grew at their fastest pace since June 2012. "Despite the weak growth readings, the build-up in underlying inflation pressures suggests that the RBI has to keep its inflation guards up," Eskesen said. New Reserve Bank of India chief Raghuram Rajan surprised financial markets by raising the key repo rate by 25 basis points to 7.50 per cent last month to ward off rising inflation, but scaled back some of the emergency measures put in place to support the ailing rupee. Economists in a Reuters poll taken last week were split over whether he will hike rates again at the RBI's next policy review on October 29. (Reuters)
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The world’s biggest banks have to boost their capital by €115 billion to comply with tougher rules, and 61 per cent of that shortfall is at European Union (EU) banks, where lenders have been the slowest to comply. The Basel Committee of global regulators said the capital shortfall fell by €83 billion during the second half of last year as banks retained more of their profits and raised capital, although the pace of improvement in Europe was not as quick as it was elsewhere. The shortfall at EU banks was cut by €29 billion in the second half of 2012. Banks have been under pressure to comply with the global Basel III accord to dispel doubts about their ability to thrive and encourage investors to buy their bonds and shares. The most affected are HSBC, JP Morgan, Citigroup and Deutsche Bank.Growth TidingsBusiness activity in the euro zone grew faster than expected in September as new orders came in at their fastest pace in over two years, recent surveys showed, adding to signs that the economy was healing. The surveys suggest the region’s economic recovery was becoming more broad-based, with growth in both Germany and France, the bloc’s two largest economies. Markit’s Flash Composite Purchasing Managers’ Index jumped to 52.1 from August’s 51.5, its highest since June 2011, beating expectations of 51.9. A reading above 50 indicates growth.Buying TimeItaly’s third biggest lender Monte dei Paschi di Siena has delayed approval of a restructuring plan in the hope that the European Commission will give it more time to raise a planned €2.5 billion, according to sources. The issue is crucial in determining the bank’s future because the commission has said that if the bank cannot raise the funds on the market, the government will have to convert its loans to the bank into equity, effectively nationalising it. Monte dei Paschi was brought close to collapse by the euro zone debt crisis and most analysts say it could struggle to lure private investors to its planned cash call. At €2.5 billion, the capital injection requested by Brussels is more than twice the amount originally pencilled in by the bank and roughly equal to the bank’s current stock market value. The fundraising will have to be carried out within 12 months of the plan’s approval by the European Union. Barack ObamaExtra CoverAmericans will pay an average premium of $328 a month for a mid-tier health insurance plan once the Obamacare health exchanges open for enrolment on 1 October, and most will qualify for government subsidies to lower that price, according to the Obama administration. The figure, based on data for approved insurance plans in 48 states, represents the broadest national estimate for how much Americans will pay for health coverage under US President Barack Obama’s healthcare reform law next year. The prices of the new plans are at the heart of a political debate over whether they will be affordable enough to attract millions of uninsured Americans. Prices were lower in states with more competition among insurers and higher in states with fewer players, said a report from the US Department of Health and Human Services.Game OnGrand Theft Auto V (GTA) has crossed the $1-billion sales mark within three days of its launch in stores, a rate faster than any other video game, film or other entertainment product has ever managed, its creator Take Two Interactive Inc. said. The latest instalment of GTA, a cultural phenomenon that has sparked debate on adult content and violence, received strong reviews and racked up a record $800 million in first-day sales alone.Big RapUS and British authorities recently fined ICAP, the world’s biggest interdealer broker, $87 million and slapped criminal charges against three former employees for their role in the London Interbank Offered Rate (Libor) benchmark rate rigging scandal. The scandal, which has laid bare the failings of regulators and bank bosses, has already seen three banks fined $2.6 billion, four individuals charged, scores of institutions and traders grilled and a spate of lawsuits launched.Flying OrientAirbus has landed deals with Chinese companies for almost 70 aircraft worth around $6 billion, as it increases its footprint in what it expects will become the largest domestic aviation market. The European aircraft maker, which is battling rival Boeing in a market it sees surpassing the US (by passenger numbers) within 20 years, has also unveiled a “regional” jet aimed at China. Domestic travel grew almost 10 per cent last year in China, compared with less than 1 per cent in the US, according to the International Air Transport Association.Like! Comment? Share? A small selection of people in China will finally be able to access banned sites, including Facebook, Twitter and other ‘politically sensitive’ links. Access to Facebook and Twitter has been blocked in China since 2009 following riots in the country. The ban will be lifted by the government in the Shanghai Free Trade Zone (FTZ), the South China Morning Post reported — a move that has been popularly dubbed the “Internet Concession”. The idea of unblocking websites in the FTZ was to make foreigners “feel at home”, the report said. Shinzo AbeMore CutsJapan’s government will reportedly include more than $14.1 billion in corporate tax cuts in an economic stimulus package intended to offset the blow from planned sales tax hikes. The tax breaks, worth 1.4 trillion yen, will be part of a 5 trillion yen economic stimulus, as PM Shinzo Abe gears up to approve an increase in the sales tax needed to pay for welfare spending. The sales tax hike is the biggest effort in years by Japan to contain public debt of over $10 trillion.Growth TrackRussia reopened a 54-km railway link with North Korea, holding out the prospect of increased trade for the reclusive nation with its biggest neighbours after years of international sanctions. North Korea has reached out to Moscow and Beijing for help to fill the gap left by the drying up of South Korean and US economic assistance. The track would be used to export coal and import goods from South Korea and other Asian countries.(This story was published in BW | Businessworld Issue Dated 21-10-2013)
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Congress will not fight the next Lok Sabha elections but will field the CBI instead”— Narendra Modi, at a BJP rally“Chidambaram is practising terrorism with facts”— Yashwant Sinha, former finance minister, in response to P. Chidambaram’s assertion of better growth under the UPA“Wonder why Narendra Modi should stage a fake encounter with facts”— P. Chidambaram, finance minister, in reply to Narendra Modi’s comments on high growth during the NDA’s tenure“I haven’t had a cigarette in probably six years. That’s because I’m scared of my wife”— Barack Obama, President of the US, in an admission captured by an open microphone David Cameron, British Prime Minister (AFP)“We had a bit of a falling out. I think we are getting over that. We interfered in your politics two hundred years ago when we sailed up the river and burnt the White House”— David Cameron, British Prime Minister, in an interview to a US TV channel“The Army transfers money to all the ministers in Jammu and Kashmir...”— V.K. Singh, former Army chief“The biggest fear of bankers is the stupidity of bankers”— John W. Allison, chief executive of Home BancShares“There are a variety of possible alternative images that could be utilised such as a cow, a goat, a flower... an aircraft is an entirely inappropriate flight of the imagination”— Alan Shatter, justice minister of Ireland, on Apple’s iOS 6 Maps incorrectly identifying farmland as an airport(This story was published in BW | Businessworld Issue Dated 21-10-2013)
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