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Archive for the ‘ECONOMIC BLOGS’ Category
No scope for president’s rule, Chidambaram assures West Bengal
NEW DELHI: A proposed visit to West Bengal by a fact finding team of the union home ministry is intended to assist the state government maintain
law and order and not to invoke Article 356, Home Minister P Chidambaram assured MPs here on Monday. Article 356 is invoked to impose president’s rule in a state.
“There is no scope for invoking Article 356. It (the central teams’ proposed visit to West Bengal) should not e viewed through the prism of Article 356. It is to assist the state government,” Chidambaram said in Lok Sabha as the house discussed the matter briefly during zero hour.
The home minister said many districts in West Bengal had been witnessing violent clashes between political parties since June 18.
Chidambaram, who said that he had a good working relationship with West Bengal Chief Minister Buddhadeb Bhattacharjee, added that he had suggested to the chief minister “a team of officials from centre be sent to the state for discussions with his team of bureaucrats”.
“This step is entirely non-confrontational,” the minister stated and added that this was “for putting an end to the political clashes.”
Participating in the discussion, Leader of Opposition L.K. Advani cautioned the central government on invocation of Article 356.
“Don’t do it lightly. It is a very serious matter,” said Advani who also slammed the Left parties for supporting the then central government in 1992 to invoke Article 356 in the Bharatiya Janata Party (BJP)-ruled states after the Babri Masjid demolition in Ayodhya.
Terming the government’s decision to send a central team to the state as an “unprecedented” and “unconstitutional” move, Communist Party of India (CPI) leader Gurudas Dasgupta said law and order is a state subject and no central team had been sent to any other state so far.
If the central government feels there is a breakdown in West Bengal, “let them promulgate Article 356. We shall face it in the streets,” Dasgupta said.
Communist Party of India-Marxist (CPI-M) leader Basudeb Acharia said the central government should desist from interfering in the state’s affairs.
Without naming Railway Minister and Trinamool Congress leader Mamata Banerjee who is demanding president’s rule in West Bengal, Acharia alleged that the central government’s move was to please a minister.
Trinamool Congress leader Sudip Bandyopadhyay said his party wanted invocation of Article 356 in West Bengal, accusing the Marxist-led government of supporting “terrorism”.
Samajwadi Party leader Mulayam Singh Yadav said an “all party meeting” should be convened to discuss the issue.
“If this happens in West Bengal today, it can happen to any other state. It is very dangerous,” he said.
Earlier, the house witnessed protest by the Left parties over the issue. They advanced towards the speaker’s podium twice.
The home minister made the same assurances in the Rajya Sabha, after protests by the opposition, principally the Left parties, forced two adjournments of the house.
But Chidambaram’s reply didn’t entirely satisfy the opposition, with Sitaram Yechury of the CPI-M apprehending that the central team’s visit was a precursor to the “misuse” of Article 356.
Sensex rises to six-month high, gains 1.74 per cent
The Sensex, which gained 317 points in previous sessions, added another 194.06 points, or 1.74 per cent, to end at 11.329.05, after touching the day’s high of 11,362.88.
In choppy deals, the key index also touched a low of 11,070.33 points during the day.
Similarly, the 50-share National Stock Exchange index Nifty rose by 57.05 points at 3,480.75, after touching the day’s high of 3,491.35 and a low of 3,402.90 points.
The bullish trend was backed by banking shares after the interest rates. The banking index was the biggest gainer, adding 2.77 per cent to 5,591.70, with all the 18 participants of the index closing higher.
As the market changed for the better, major players and speculators rushed to square up their pending positions, which further fuelled the uptrend.
State Bank of India gained 3.33 per cent to Rs 1,307.80, Punjab National Bank 5.28 per cent to Rs 518.35, IDBI Bank 13.08 per cent to Rs 67.45 and ICICI Bank 2.10 per cent to Rs 432.50.
Focus on aam aadmi, Manmohan tells Pranab
NEW DELHI: In an unusual move, Prime Minister Manmohan Singh has opted to make public his advice to Finance Minister Pranab Mukherjee to incorporate in the budget the priorities outlined in President Pratibha Patil’s address to the joint session of Parliament on Thursday.
The President unveiled what has been described and hailed as a pro-poor agenda of the second Manmohan Singh-led government.
Interestingly enough, the Prime Minister’s Office put out in public domain Dr. Singh’s advice.
The Prime Minister has asked the Finance Ministry to ensure that the budget adequately and appropriately reflects the priorities and programmes outlined in the President’s speech.
Mr. Mukherjee is scheduled to present the budget next month.
It is customary that a Prime Minister gets to set the overall direction and broad contours for his Finance Minister before he starts the budget preparation exercise with North Block officials.
However, by going public so early with his advice, according to senior aides, Dr. Singh has locked the Finance Minister on the side of the aam aadmi against widespread expectations and demands from industry.
Jet Airways hikes fuel surcharge by up to Rs 300
The increase in surcharge follows hike in Aviation Turbine Fuel last week. State-run oil companies had on April 15 raised prices of jet fuel for the third time in a month, by about 6.7%.
The surcharge has been increased by Rs 200 for sectors below 750 km and Rs 300 for over 750 km, a Jet Airways spokesperson said.
The Naresh Goyal-owned airline looks likely to close down some of its sales offices in major cities as part of fresh cost-cutting measures. Reports also suggest that about 400 of its employees may lose jobs.
Jet Airways had confirmed that it was carrying out a major restructuring process, including shutting down and merging some of its sales offices in major cities.
“The aviation industry is undergoing a severe crisis worldwide and Jet Airways is taking a proactive approach to improve its viability,” it said in the statement on Thursday.
An Air India spokesperson said it had “no immediate plans” to revise fuel surcharge.
Shikha Sharma, Renuka Ramnath may quit ICICI
MUMBAI: The country’s largest private-sector banking conglomerate, ICICI Bank, is in for a major top- management shake-up with two business heads –
private equity arm’s Renuka Ramnath and life insurance unit’s Shikha Sharma – likely to put in their papers soon.
Ramnath, ICICI Ventures’ managing director and CEO, is believed to have expressed her intention to quit and might submit her resignation to the company’s board at a meeting to be held on Monday, April 20.
These developments come days ahead of Chanda Kochhar taking over as CEO and MD of ICICI Bank on May 1 from K V Kamath, who would then assume the role of an non-executive chairman.
The two officials were reported to be in reckoning to succeed Kamath and ever since Kochhar’s appointment was announced in December 2008, there have been reports that some top executives of the group would quit. Besides, ICICI Prudential Life Insurance’ MD & CEO Shikha Sharma is also said to be looking at resigning from the group and could put in her papers soon, sources said.
The ICICI Bank board is meeting on April 25, where it is expected to look at these resignations and potential replacements for the positions going vacant, they added.
When contacted, an ICICI Bank spokesperson said he would not comment on speculations, while the two top officials could not be reached for comments. Sharma is reportedly looking to join private-sector lender Axis Bank as its chief, while Ramnath could look at starting her own private equity venture.
Ramnath has been at the helm of affairs of ICICI Ventures since 2001. During her career, spanning over 20 years with the ICICI Group, Ramnath has spearheaded various business initiatives.
Sharma has a PG diploma in software technology from the National Centre for Software Technology, Mumbai, and completed her Masters in Business Administration from IIM-A. Sharma, who began her career with ICICI in 1980, has been instrumental in setting up various group businesses for the company, including investment banking and retail finance
Global meltdown: Complete coverage
For its projections of US economic growth in 2009, the IMF swung from plus 0.8 percent in July to minus 0.7 percent in November! And it’s a safe bet that if the IMF were making a fresh set of projections for 2009 today, all these numbers would look even worse.
Nor does the recent “advance release” of the global outlook for 2009 by UNCTAD provide any succour. Like the IMF, the UNCTAD foresees global growth at just over 2 percent in 2009 at PPP weights and at only 1 percent at market exchange rates. The latter number means that global growth in 2009 is expected to be at only about a quarter of the pace enjoyed in 2006 and 2007.
Both institutions forecast severe damage to world trade, which is expected to expand at only 2 percent in 2009 as compared to over 9 percent in 2006 and 7 percent in 2007. For the Asian giant, China, both the IMF and UNCTAD expect growth to slow to about 8.5 percent in 2009 from the scorching 12 percent pace of 2007. Interestingly, several China-based analysts foresee much sharper deceleration.
What about India? How bad will it get for us? The official estimates of GDP growth for the first two quarters of 2008/9 stayed above 7.5 percent. However, industry-wide indications after September are uniformly gloomy.
There are reports of significant declines in output of automobiles, commercial vehicles, steel, textiles, petrochemicals, construction, real estate, finance, retail activity and many other sectors. Exports fell by 12 percent in dollar terms in October and advance information points to a similar decline in November. After September, the economy seems almost to have gone over a cliff.
When available, the official data are likely to record a sharp slowdown in the second half of the year, possibly steep enough to drag full year growth in 2008/9 to below 7 percent. What’s more, given the strongly recessionary conditions expected to prevail in the world economy in 2009, there is no prospect of a quick turnaround in India. Indeed, on a tentative basis, I would suggest that we might be lucky to achieve GDP growth of even 6 percent in 2009/10.
What about economic policy? Can we not deploy monetary, fiscal and exchange rate policies to insulate our growth momentum from adverse external conditions? The short answer is: only to a limited degree. I outlined the main arguments last fortnight (BS, November 27).
Monetary policy had already been aggressively loosened by early November and the RBI provided a further, well-balanced package last Saturday, notably including a 1 percent cut in the repo and reverse repo rates.
Given the continued high rate of CPI inflation through October (latest data) and, perhaps more significantly, recent pressures on the exchange rate, the present scope for further policy rate reductions appears limited. That situation might change if external imbalances improve if a falling oil import bill and slowing non-oil imports outweigh the drop in export earnings and if capital flows stabilize.
On the fiscal front, the government had pretty much exhausted the available fiscal space through its record Rs 237,000 crore (4.5 percent of GDP) supplementary demand in October. Though undertaken for quite different reasons, its timing may turn out to be quite fortunate.
Against this background the government was wise to limit last Sunday’s “fiscal stimulus” to a modest affair, totaling only about Rs 30,000 crore (Rs 300 billion), out of which two-thirds was for “additional plan expenditure”, which may not be fully spent this fiscal year.
It may be far more important to actually spend the already budgeted plan expenditure effectively. If international oil and fertilizer prices stay at present levels, implying low or negligible subsidy rates (looking ahead) on price-controlled domestic sales, then there may be a case for a larger stimulus next year. Much will depend on the trajectory of revenues and other expenditures in a slowing economy.
While such unprecedented monetary loosening and massive supplementary expenditures will definitely help, they will not fully neutralize the negative impact of the severe global financial and economic crisis on India’s exports, investment and consumption.
With over 60 percent of global GDP having toppled into recession, a significant deceleration of India’s economic growth is simply unavoidable. After all, we share the same planet as America, Europe and Japan (and a rapidly slowing China). In this context a 6 percent economic growth in 2009/10 will be pretty good…if we achieve it.
Bush Hails India Nuke Deal
On his first trip to India, President Bush and his Indian counterpart agreed Thursday on a landmark nuclear energy agreement that deepens ties between the world’s oldest and largest democracies.
Mr. Bush acknowledged it will be difficult to persuade Congress to support the agreement, in which the United States would share its nuclear know-how and fuel with India. But he said he’s confident it will be approved so India can power its fast-growing economy without expanding world demand for oil.
Under the terms of the agreement, India will open 14 of its 22 nuclear reactors to international inspection, as well as all future reactors, reports CBS News senior White House correspondent Bill Plante. This deal does nothing to stop the growth of India’s nuclear weapons program, but U.S. officials are betting that India’s growing demand for electric power will mean a lot of nuclear reactors and billions of dollars in business for U.S. companies if Congress is willing to change the laws.
Critics in Congress say the White House is making an exception for India, which has refused to sign the Nuclear Nonproliferation Treaty.
“Proliferation is certainly a concern and a part of our discussions, and we’ve got a good-faith gesture by the Indian government that I’ll be able to take to the Congress,” Mr. Bush said.
“But the other thing that our Congress has got to understand is that it’s in our economic interests that India have a civilian nuclear power industry to help take the pressure off the global demand for energy,” the president said. “To the extent that we can reduce demand for fossil fuels, it will help the American consumer.”
A top U.S. official says the deal’s not perfect, but that India has a powerful incentive to join the international nuclear mainstream: it badly needs more energy for its booming economy. And with coal too dirty and oil too unstable, India thinks American nuclear technology is the answer, CBS News chief White House correspondent Jim Axelrod reports.
The agreement was a political coup, too, for Indian Prime Minister Manmohan Singh. “We made history,” he said, standing alongside Bush in a sunwashed courtyard.
Mr. Bush mourned the loss of life in a suicide bombing Thursday in Karachi, Pakistan, that ripped through the parking lot of the Marriott Hotel and broke windows in the nearby U.S. consulate. At least four people died, including a U.S. foreign service officer. The attack occurred hundreds of miles from Islamabad, where Mr. Bush was headed later this week.
“Terrorists and killers are not going to prevent me from going to Pakistan,” Mr. Bush said.
For a second day, thousands of demonstrators gathered in New Delhi to protest Mr. Bush’s visit. Dozens of politicians, mainly from leftist parties, stood on the steps of the country’s national parliament building chanting “Bush go back!” and “Down with Bush!”
“We’re saying this because he is the biggest killer of humanity in the 21st century. He has killed in Afghanistan, he has killed Iraqis and now he is bent on killing Iranians,” said Hannan Mollah, a lawmaker from the Communist Party of India (Marxist). “The Indian government should not get into any deal with the Americans. Bush has laid a trap for India.”
In private meetings, Mr. Bush and Prime Minister Singh discussed regional and international subjects, including the U.S.-India relationship, terrorism, Pakistan and Nepal.
They announced new bilateral cooperation on an array of issues from investment to trade, health to the environment, agriculture to technology, and even mangoes. Mr. Bush agreed to resume imports of the juicy, large-pitted fruit after a ban of nearly two decades.
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