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INDIA IS IN GRIP OF INFLATION REALLY ? !!!!!!!
First, India’s stockpile of foodgrains is now around 45 million tonnes, double the buffer stock that is mandated for food security. A bumper harvest is forecast, after which the government will add another 25 million tonnes to this pile. Second, the government and its main procuring and stocking arm, the Food Corporation of India (FCI), have proved that they cannot handle such large food stocks. In many places, grains are piled high under plastic sheets, exposed to the weather and rodents. Even after distributing rice for as low as Rs. 1 or Rs. 2 per kilogramme in states like Tamil Nadu and Andhra Pradesh, stocks stubbornly refuse to run down. It is likely that by the time the government decides to do something about this food mountain, worth around Rs. 40,000 crore, much of it would have become dinner for rats. Three, food inflation is not being driven by Foodgrains, but by the spiralling prices of vegetables, edible oil, pulses and milk. Exports of foodgrains will not add to food price inflation at home; indeed, it might help to increase farmers’ incomes.
Finally, the most compelling argument is about prices. The glut has pushed market prices of wheat to below the minimum support price (MSP) of Rs. 1,170 per quintal. Indeed, in states like Uttar Pradesh, wheat is being sold for Rs. 1,050 per quintal, a substantial discount to the MSP. In global markets, wheat is being traded at around Rs. 1,530 per quintal. So, if India lifts its export curbs on foodgrains, imposed after the food price scare last year, exporters can make a nifty profit, storage costs would come down and farmers’ incomes would go up, yielding some incentive to invest in technologies to boost productivity.
Economic Indicators
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| YoY (In %) | Current | Qtr Ago | Yr Ago |
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| Inflation (31/03) | 8.98 | 9.41 | 10.23 |
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| IIP (28/02) | 3.60 | 12.10 | 15.10 |
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| GDP (31/12) | 8.20 | 8.90 | 7.30 |
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| CPI (28/02) | 8.82 | 9.70 | 14.86 |
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| CRR (23/04) | 6.00 | 5.00 | 5.00 |
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| Bank rate (29/04) | 6.00 | 6.25 | 6.50 |
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India’s Inflation Kool-Aid
India's economic growth is measured in terms of Gross Domestic Product (GDP) as reduced by Inflation. So we grew — according to the recent CSO release — a whopping 20% on GDP last year (2010-11), and because inflation was, well, pretty high, we grew a only a "real" 8.6% in 2011. How can you grow 20% but only really grow 8.6%? Inflation eats up the rest — and in a way "deflates" the GDP.
This year, the GDP deflator is at 11%+. We have had only six higher figures in the past since 1961, and this year is the highest since 1991 (13.73%). But can you really rely on it?
The GDP deflator is calculated in a complex way, but according to Deepak Mohanty, Executive Director at RBI, much of that is based on inflation of the WPI — or the Wholesale Price Index. This is the measure of Wholesale prices of commodities and manufactured goods across the country, released monthly. There are multiple price indexes in India: The WPI and four different indexes of Consumer Price Inflation (CPI). This is confusing, but we're sure it all has a purpose — just one of them, the CPI (Industrial Workers) is used to calculate "dearness" allowance, a cost-of-living increase in wages.
But let me explore the WPI. Remember, the WPI is what is mostly used to determine our GDP growth in real terms; our politicians and economists refer only to 8% or 9%, so real growth is important. Therefore, it should be just as important to understand how the deflator, and therefore the WPI, works. And more interestingly, how it doesn't work.
How it works: First, they have a bunch of items they categorize into a hierarchical list and give a weight to each item depending on how important it is to the overall basket. You have the outer broad categories of "primary articles" (mostly food, but also raw materials like iron and copper), Fuel and Manufacturing goods. These are weighted around 20%, 15% and 65% respectively. Within each of them you have subcategories, all the way till your actual item. For instance, Rice is found like so:
Primary Articles > Food Articles > Food Grains > Cereals > Rice (Wt. 1.79%)
Presumably, prices are collected every month and updated and instead of mentioning a price, they relate it to a base year. Current WPI statistics are linked to prices of 2004-05, which is given a price of 100, and a today's index price of 200 means the item has doubled in price since 04-05.
About 700 item prices are published monthly by the Office of the Economic Adviser. With this granularity some defects become apparent; much of the data seems to not be collected. Take the example of Crude Petroleum. It's 0.9% of the index, which is huge, for a single item — if you add the weights of Onions, Potatoes and Chicken, you get only 0.8%. Crude petroleum prices haven't changed, according to the WPI release, since the last four months. One doesn't need to be an expert to know something's off here — international prices went up nearly 20% in the same time.
Prices of Coke — not the cold drink, the fuel — haven't been updated since April 2008. 36 months of no-change. Even coking coal, which was updated in March 2011, saw 16 months of being at the same level. Raw wool prices show the same since October 2009, and coffee powder since May 2010 (Coffee's been making new highs worldwide, just for the record). This doesn't make sense - either data wasn't being updated or prices really didn't change. I wouldn't bet on the latter.
More than 80 items haven't been updated for over four months, and these add up to 10% of the index. Some of these items don't change regularly — like prices of electricity for instance. But, like we saw above, many items have just been overlooked. If the idea is that they don't update prices for a very long time, and then do a single "bunched" update that will perhaps add up all the intermediate unrecorded price increases, we'll see the inflation index take sudden large jumps. The index is supposed to be for transparency, and we lose all such benefits from "bunched" updates. But the problem goes deeper.
Some items don't even belong in an index. Litchi prices for instance, although a very small weight (0.03% of the index) are available just one month of the year. I'm not sure a product with such a skewed supply should even figure in an index that determines, in the end, economic policy. (For the record, I love litchis and ice-cream.)
Yet others aren't even represented. For a country that's going ga-ga on mobile telephony, the total weight of mobile telephones in the index is… zero. (There is a category called TV Sets and VCD players — but not one for mobiles.) One could say mobile prices have come down and that's a good thing, but all we know is that they're not even in the index.
And then there are revisions. Every few months, the past indexes are revised based on data that is supposedly better. Such revisions are supposed to be minor, small variations from the first number. But not anymore. The January 2011 inflation number was revised from the first reported 8.23% up to 9.35% - a whole percentage point higher. This could just mean our March 2011 number — 8.98% - might actually be revised to double digits.
Finally, the Wholesale Price Index is not really a consumer basket — it contains no references to rent or housing, use of services like internet access or cable TV, or wages, all of which are substantial parts of the consumer's spending. Yet, the WPI doesn't even recognize any of that. In effect, we "guess" the inflation on the service sector by estimating the price increases through WPI — that is like guessing the price of a house through the increase in steel and concrete prices. To anyone who has not been living under a rock, it is obvious real estate prices have no correlation with anything; the equation is like this:
Steel prices go UP + Concrete prices go UP = House prices Go UP.
Steel goes DOWN + Concrete goes UP = House prices Go UP.
Steel goes DOWN + Concrete goes DOWN = House prices Go UP.
Someone dumps tons of steel and concrete for FREE = House prices Go UP.
The inflation in housing prices, captured by the simple formula above, does not reflect in our WPI.
(For the record, house prices can only go up so far. The fact that many of us haven't seen a sustained price fall doesn't negate its possibility)
For services, there is a new index called the CPI (Urban) which will, next year, replace the other CPIs and perhaps the WPI as the indicator of choice. But in its preliminary releases, it has demonstrated that it has similar degrees of blindness by declaring that the last nine months of 2010 saw no increase in housing prices in India. I admire how they can say this with a straight face.
WPI and perhaps even the CPI (Urban) when it comes, will therefore misrepresent inflation, and probably do so quite substantially — how much, we'll never know unless they actually update real data. But one thing is certain — you can pretend only so long by not revealing the real data, but a price rise will eventually flood the entire economy. Even if we don't update crude prices in the WPI, it is only a matter of time before plastics and textiles become expensive, and that spread to everything else. This is not something that I predict will happen — it is already happening today.
Underreporting inflation is a useful thing when you have only that much GDP growth to work with — a lower inflation number creates a higher "real" number to be proud of. The US does it all the time. But to drink our own kool-aid and therefore turn a blind eye to growing inflation is altogether more dangerous — we create a monster that we can't control.
This is the time for the central banker to act — to recognize that inflation, as reported, is probably below actual numbers. It's also time for the good people collecting WPI data to be more aggressive in keeping prices up-to-date so we get a more accurate picture. It would be a shame if we tried to "pretend-and-extend" our overheating economy.
TOTAL SCAM IN INDIA REACHED UP TO 73 LAKH CRORE!!!!!!!!
What India Could Do With Rs 73 Lakh Crore?
Build: 2.4 crore primary healthcare centres. That’s at least 3 for every village, at a cost of Rs 30 lakh each.
Build: 24.1 lakh Kendriya Vidyalayas at a cost of Rs 3.02 crore each, with two sections from Class VI to XII.
Construct: 14.6 crore low-cost houses assuming a cost of Rs 5 lakh a unit.
Set up: 2,703 coal-based power plants of 600 MW each. Each costs Rs 2,700 crore.
Supply: 12 lakh CFL bulbs. That’s enough light for each of India’s 6 lakh villages
Construct: 14.6 lakh km of two-lane highways. That’s a road around India’s perimeter 97 times over.
Clean up: 50 major rivers for the next 121 years, at Rs 1,200 crore a river every year.
Launch: 90 NREGA-style schemes, each worth roughly Rs 81,111 crore.
Announce: 121 more loan waiver schemes. All of them worth Rs 60,000 crore.
Give: Rs 56,000 to every Indian. Even better, give Rs 1.82 lakh to 40 crore Indians living BPL.
Hand out: 60.8 crore Tata Nanos to 60.8 crore people. Or four times as many laptops.
Grow the GDP: The scam money is 27% more than our GDP of Rs 53 lakh crore."
Greed, graft, politics, bribery, dirty money. Just another day in the life of a nation still rated among the most corrupt in the world. Scan the scams that have grabbed headlines, destroyed reputations and left many people poorer.
Action Points :-
1) Don't Delete this email, Circulate as much as you can!!
2) Take a resolution for New Year 2011 that you don’t vote for any Leader!!
Total Scam Money (approx) Since 1992:
Rs. 73000000000000 Cr.
(73 Lakh Crore)
Hard to digest ?
Just check the below given details
1992 -Harshad Mehta securities scam Rs 5,000 cr
1994 -Sugar import scam Rs 650 cr
1995 -Preferential allotment scam Rs 5,000 cr
Yugoslav Dinar scam Rs 400 cr
Meghalaya Forest scam Rs 300 cr
1996: -Fertiliser import scam Rs 1,300 cr
Urea scam Rs 133 cr
Bihar fodder scam Rs 950 cr
1997 -Sukh Ram telecom scam Rs 1,500 cr
SNC Lavalin power project scam Rs 374 cr
Bihar land scandal Rs 400 cr
C.R. Bhansali stock scam Rs 1,200 cr
1998 -Teak plantation swindle Rs 8,000 cr
2001 -UTI scam Rs 4,800 cr
Dinesh Dalmia stock scam Rs 595 cr
Ketan Parekh securities scam Rs 1,250 cr
2002 -Sanjay Agarwal Home Trade scam Rs 600 cr
2003 -Telgi stamp paper scam Rs 172 cr
2005 -IPO-Demat scam Rs 146 cr
Bihar flood relief scam Rs 17 cr
Scorpene submarine scam Rs 18,978 cr
2006 -Punjab's City Centre project scam Rs 1,500 cr,
Taj Corridor scam Rs 175 cr
2008 -Pune billionaire Hassan Ali Khan tax default Rs 50,000 cr
The Satyam scam Rs 10,000 cr
Army ration pilferage scam Rs 5,000 cr
The 2-G spectrum swindle Rs 60,000 cr
State Bank of Saurashtra scam Rs 95 cr
Illegal monies in Swiss banks, as estimated in 2008 Rs 71,00,000 cr
2009: -The Jharkhand medical equipment scam Rs 130 cr
Rice export scam Rs 2,500 cr
Orissa mine scam Rs 7,000 cr
Madhu Koda mining scam Rs 4,000 cr"
SC refuses to quash PIL against Mayawati in Taj corridor scam
Orissa mine scam could be worth more than Rs 14k cr
CORRUPTION, MONEY LAUNDERING SCAM, Koda discharged from hospital, arrest imminent
'A Cover-Up Operation':
"It's a scam involving close to Rs 60,000 crores"
Spectrum scam: How govt lost Rs 60,000 crore
India's biggest scams 1, Ramalinga Raju, Rs. 50.4 billion
India's biggest scams 2, Harshad Mehta, Rs. 40 billion
India's biggest scams 3, Ketan Parekh, Rs. 10 billion
India's biggest scams 4, C R Bhansali, Rs. 12 billion
India's biggest scams 5, Cobbler scam
India's biggest scams 6, IPO Scam
India's biggest scams 7, Dinesh Dalmia, Rs. 5.95 billion
India's biggest scams 8, Abdul Karim Telgi, Rs. 1.71 billion
India's biggest scams 9, Virendra Rastogi, Rs. 430 million
India's biggest scams 10, The UTI Scam, Rs. 320 million
India's biggest scams 11, Uday Goyal, Rs. 2.1 billion
India's biggest scams 12, Sanjay Agarwal, Rs. 6 billion
India's biggest scams 13, Dinesh Singhania, Rs. 1.2 billion
Posted by neelam at 22:37 
Normal 0 false false false false EN-US X-NONE X-NONE
PAC on 2G: Manmohan gets clean chit, PMO A parliamentary panel in its draft report on the 2G spectrum case has given a clean chit to Manmohan Singh but criticised the Prime Minister's Office (PMO) for delaying a letter to A. Raja asking him to consult senior ministers before selling the scarce and expensive telecom radiowaves.
Approving the findings of the Comptroller and Auditor General (CAG), the Public Accounts Committee (PAC) report blames 'systematic failure' in the government and severely indicted Raja, the then IT and communications minister, for allegedly selling second generation telephony spectrum licences to private firms at throwaway prices despite a letter from Manmohan Singh asking him to consult others, according to a panel member.
'Prime Minister's Office's role is under scanner but prime minister (Manmohan Singh) is not,' the member told IANS on condition that he not be named.
The member said the panel in its six-month investigation has found that the prime minister was kept out of the loop on 2G spectrum allocation even as he had advised Raja to consult a group of senior ministers over how to allocate the spectrum and how much to charge for it.
'The committee has brought it to the notice that there was a delay in sending the prime minister's letter to Raja. Raja took advantage of the delay and sold the spectrum at cheap rates,' the member said, adding the delay was from the PMO.
Asked if the report gives clean chit to Manmohan Singh, the members said: 'Yes, to some extent.'
Raja and eight others, including top corporate honchos and bureaucrats, are in jail for conspiring to sell the 2G airwaves to select companies at throwaway prices. Five others, including DMK Rajya Sabha member Kanimozhi, have been named as co-accused in the case.
The report has also criticised the role of P. Chidambaram who was the finance minister in 2008 when the spectrum was sold.
'It was Chidambaram who pleaded with the prime minister to close the matter despite some ministers wanting stringent action against those responsible for the losses,' the member said quoting the report.
The report is likely to be adopted by the 22-member panel Thursday in its last meeting before its term ends April 30.
The report is to be tabled in parliament's next session before being made public officially.
Ironically, the 22-member panel headed by Bharatiya Janata Party's Murli Manohar Joshi has a sharp division within.
'The Congress and the DMK (Raja's party) are opposing the report. Let's see what happens,' said another member.
It is likely that the DMK and the Congress members in the panel will write a note of dissent. However, their views are unlikely to be incorporated in it.
PM should have been named as witness in 2G case:Balwa
Swan Telecom Promoter Shahid Usman Balwa, chargesheeted in the 2G spectrum scam, today told a Delhi court that the CBI should have named
Prime Minister Manmohan Singh as one of the witnesses in the case.
He cited the correspondence between former Telecom Minister A Raja and the Prime Minister relating to the 2G spectrum, which has been annexed with chargesheet, for demanding that
Singh be made a witness.
"CBI is producing letters of Raja and the Prime Minister as evidence. They (CBI) should have made the Prime Minister a witness in the case," Advocate Majid Memon, appearing for Balwa, told Special CBI Judge O P Saini while arguing his bail plea.
Memon along with advocate Vijay Agrawal said that CBI has produced letters written by Raja to Prime Minister Manmohan Singh and his response as a evidence in the case.
Memon said that Raja was in touch with the Prime Minister and he regularly apprised him (PM) about the development in the department (DoT).
They said the agency, in its first chargesheet, has said that Raja misled the Prime Minister but instead of CBI, the PM should tell this.
"CBI is saying Raja misled the PM. If it is so, then it should be the PM who should say this, not the CBI," Agrawal said.
During the arguments, Memon also pointed out to the letters written by Raja to the Prime Minister
on November 2, 2007 and the subsequent letters to Raja from the Prime Minister.
He said when Swan Telecom applied for the licenses, neither Raja was the telecom minister nor his personal secretary R K Chandolia, who has named as accused in the chargesheet, was there.
Pressing for Balwa''s bail, Memon said that the offence under which his client has been charged does not fall under the category of grave offences punishable upto life imprisonment or death penalty.
He alleged that CBI is enjoying that Balwa is behind the bars.
"CBI says that Balwa cannot come out of jail as if they are enjoying my (Balwa''s) sufferings behind the bars," he said.
"CBI may be feeling a sense of shame
if they will not oppose the bail plea in such a high magnitude case and so they are opposing it." .
Syria's Assad under pressure as hundreds of Baathists quit
DAMASCUS: Foreign pressure mounted on Syrian President Bashar al-Assad on Wednesday and hundreds of members resigned from his party, as troops kept their grip on the flashpoint town of Daraa.
Syria's opposition warned Assad that he would be toppled unless he ushered in democratic reforms, although the UN Security Council failed to agree on a condemnation of the violence.
And in a fresh blow to the regime, 233 members of Syria's ruling Baath party announced their resignation in protest at the deadly crackdown on protesters, according to lists seen by AFP.
"The security services have demolished the values with which grew up. We denounce and condemn everything that has taken place and announce with regret our resignation from the party," they said in a signed statement.
Baath party signatories from the Banias region, which covers Daraa, condemned "the house raids and the indiscriminate use of live fire against people, homes, mosques and churches."
On the international scene, influential US Senator John McCain said Assad has "lost his legitimacy" and called for UN sanctions to force him to halt attacks on his people.
"I obviously think he has lost his legitimacy. He has ordered his army to fire on his own people, and yes I think he should leave," the senator told AFP in Paris.
The Security Council, however, failed to agree on a statement condemning the killing of Syrian protesters, diplomats in New York said. After talks ended in deadlock, Western nations called for an immediate open meeting.
Russia and China blocked the statement proposed by Britain, France, Germany and Portugal that would have condemned the violence and backed calls for an independent investigation.
Germany's defence minister earlier demanded that the Council send a "strong signal" to show international alarm over the unrest in Syria.
The European Union, meanwhile, is mulling sanctions and the UN human rights body has called for a special session in the wake of the Syrian regime's bloody crackdown on pro-democracy protesters.
Five EU countries are also summoning Syria's ambassadors over the violent crushing of dissent, France said, adding it was joined by Britain, Germany, Italy and Spain.
According to human rights activists, the military assault on Daraa, 100 kilometres (62 miles) south of Damascus, has left more than 30 people dead since Monday, with at least 453 civilians killed across Syria since protests first erupted in mid-March.
A military source, meanwhile, said soldiers on Wednesday confronted "terrorist armed groups" who had cut off roads and opened fire on passers-by in a Daraa drive-by shooting.
"One member of the armed forces was martyred and five others were wounded," said the source, quoted by the official media, adding that several of the gunmen were also killed.
He denied satellite television reports of a rift in army ranks.
As the assault on Daraa, an agricultural town near the Jordanian border, entered its third day, the newly formed National Initiative for Change (NIC) warned Assad to institute real democratic reforms or risk "violence, chaos and civil war."
"Either the ruling regime leads itself in a peaceful transition towards democracy ... or it will go through a process of popular protests that will evolve into a massive and grassroots revolution," an NIC statement said.
"If the Syrian president does not wish to be recorded in history as a leader of this transition period, there is no alternative left for Syrians except to move forward along the same path as did the Tunisians, Egyptians and Libyans before them," added the NIC, an umbrella group of more than 150 opposition activists in Syria and abroad.
Syrian protesters took to the streets in even greater numbers after Assad scrapped nearly five decades of draconian emergency rule and abolished the repressive state security court a week ago.
Testing his promised reforms, they staged protests across Syria on Friday, demanding the end to the Baath's grip on political power, the release of political prisoners and the right to protest freely.
However, the security forces cleared demonstrations with tear gas and live rounds, with scores reported killed and hundreds arrested.
On Monday, between 3,000 and 5,000 troops backed by tanks and snipers swept into Daraa, the epicentre of the protests killing at least 25 people, according to rights activists. At least another six people died on Tuesday.
The army said troops entered Daraa "in response to calls for help" from citizens to rid them of "extremist terrorist groups" behind a spate of killings and sabotage.
Security forces also deployed in the northern Damascus suburb of Douma on Monday.
Austria said steps were being taken to evacuate its nationals from Syria, while Syrian ally Turkey said it is sending envoys Thursday to Syria to press for reform. US ambassador to India Timothy Roemer to resign
| IDBI to push RBI on 'White-label' ATMs |
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Plans joint venture with private ATM service providers.
IDBI Bank is planning to create a separate entity in partnership with private ATM service providers for running ‘White-label ATMs’ — not tied to any bank — in the country.
“We will soon approach RBI (Reserve Bank of India) with our plan,” R M Malla, chairman and managing director, told Business Standard.
Customers from any bank can deposit or withdraw money from ‘white-label ATMs’. Their banks then pay for the service. Also, such ATMs are invariably owned by a third-party, not a bank.
At present, under RBI guidelines, ATMs can only belong to a particular bank. Transactions of customers from other banks are settled by paying Rs 14 as the charge per transaction by the bank in which the customer has his account. RBI has been reluctant to allow white-label (or no name) ATMs by non-banking entities. Malla said RBI felt only banks should own ATMs so that the flow of funds can be accounted for, regulated and monitored.
“However, with a new entity created jointly and handled by a bank, the situation would be different and RBI’s concerns can be taken care of. If globally this has happened with proper precautions, why should it not work in India with strict due diligence?” asked Malla.
Many services in the banking domain were common, he noted. Obviously, it was difficult for banks to create a common platform for these services. “There could be some entity, however, whose proper due diligence has been done and which specialises in this area. We want to be a major player in this,” he said.
IDBI has started working towards this goal. It has 1,400 self-managed ATMs across the country. “In the next 12 months, we have planned to raise the number to 2,500, with a strong focus on low-cost ATMs,” said Malla. The bank has decided to tie up with ATM service providers for this. Of the 1,100 ATMs to be added during this period, 500-750 ATMs will be outsourced.
“This will save us the cost of setting-up and running ATMs, as we will have to pay the service provider a specified amount per transaction. It will be the service providers’ responsibility to create the infrastructure and run the ATMs,” said Malla.
Adding: “We are evaluating proposals of various ATM service providers. We will set up ATMs with them. Then, at some point of time, we will partner with them for starting the white-label ATMs venture if RBI permits.”
| MFIs need fixed regulations: Fitch |
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A common and consistent set of regulations from a single regulator is necessary to revive Indian microfinance institutions (MFIs). According to a report by rating agency Fitch, different sets of regulations imposed by different regulators may result in an uneven playing field.
The Reserve Bank of India (RBI) and the Andhra Pradesh government seeking to regulate the sector in the state can be seen as an example of multiple regulators vying for control. Such instances would only lead to harmful consequences, the report said
“The experience of cooperative banks in India suggests multiple regulators may not be as effective as a single, strong regulator. MFIs may also find it difficult to comply with different sets of guidelines. A common and consistent set of regulations would add stability to MFIs’ operations and enhance creditor comfort”, said Ananda Bhoumik, senior director (financial institutions), Fitch.
MFI loans in Andhra Pradesh were the worst hit in the country, owing to uncertainty over regulation of the industry in the state. Collection efficiencies dropped from 99 per cent in September 2010 to below 50 per cent in December 2010. Andhra Pradesh accounts for about 29 per cent of the total MFI loans in the country, and the deterioration in portfolio delinquency in the state resulted in many large MFIs seeking to restructure their own borrowings from banks, the report said. Rising delinquencies in Andhra Pradesh could also spill over to the adjacent states of Karnataka and Tamil Nadu, it added.
RBI recommendations on interest rates and margin caps on lending, together with tighter loan-loss provisions and general provisioning norms, may lead to consolidation, since smaller players would be forced to re-examine their business models. Under the new guidelines, debt and equity funding may be constrained, since investors would reassess their risks. “From a creditor’s perspective, the lower pace of growth is good news. While lower margins would somewhat erode the defence against shocks to asset quality, the minimum core Tier 1 ratio of 15 per cent provides comfort,” Bhoumik said
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RBI creates two more ED posts |
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The Reserve Bank of India (RBI) has decided to increase the number of its executive directors from seven to nine. The two additional executive directors would be appointed in May. Since one of the executive directors would replace deputy governor Shyamala Gopinath, who would retire in May, RBI would conduct interviews to select a total of three executive directors. The move follows a review of the various important posts in RBI.
Among the eligible candidates P Vijay Bhaskar, regional director of Bangalore, is the most senior chief general manager, followed by B Mahapatra and G Padmanavan. A candidate requires three years of residual service to be eligible for the post of executive director. The retirement age for RBI employees is 60 years.
Of the seven RBI executive directors, V K Sharma is the most senior, followed by V S Das. G Gopalakrishna, HR Khan, D Mohanty, S Karuppasamy and R Gandhi are the other executive directors.
Posted by neelam at 22:25 - Government to go
ahead with Jaitapur nuclear park
- The Centre will go
ahead with the 9,900 MW Jaitapur nuclear power park in
Maharashtra. A high-level meeting convened by Prime Minister Manmohan
Singh on Tuesday decided to set up an autonomous Nuclear Authority of
India to address people’s safety concerns.
- The proposed Nuclear
Regulatory Authority will be an autonomous body
answerable to Parliament. It will subsume the Atomic Energy Regulatory
Board. The government will introduce a Bill to this effect in the
monsoon session of Parliament.
- The meeting also
decided to provide a higher compensation for displaced people.
- Following the
Fukushima disaster, there have been apprehensions about the safety
of nuclear plants and this added fuel to protests in Jaitapur. The
meeting acknowledged the need for better safety standards and decided to
put each of the six reactors at Jaitapur under their own operations
system. Government leaders said the operational safety review team of
the International Atomic Energy Agency will be invited to conduct safety
reviews and audit of all nuclear plants.
- At present, India
operates 20 small nuclear reactors at six sites with a
capacity of 4,780 MW, or 3% of total power capacity. It hopes to
increase nuclear capacity to 7,280 MW by next year, more than 20,000 MW
by 2020 and 63,000 MW by 2032, adding nearly 30 reactors.
- Justice PD Dinakaran
moves SC to stay probe against him
- Sikkim High Court
Chief Justice PD Dinakaran has asked the Supreme Court to
stay an inquiry against him by a Parliament-appointed panel.
- The panel, appointed
by the Rajya Sabha chairperson Hamid Ansari after the
House initiated impeachment motion against him, had asked Dinakaran to
respond to the 16 charges framed against him. The panel is examining
charges of corruption, land grabbing, abuse of judicial office and
amassing wealth disproportionate to known sources of income against
Dinakaran. The three-member panel headed by Justice Aftab Alam of the
SC, Karnataka High Court Chief Justice JS Khehar and senior advocate PP
Rao had rejected Dinakaran’s plea seeking stay on proceedings till he is
supplied with all documents being looked into.
- Dinakaran sought
quashing of the panel’s order, which rejected his appeal,
seeking recusal of PP Rao alleging that he was biased. Dinakaran had
said he apprehended that there was likelihood of bias in the proceedings
as Rao had earlier campaigned against him when his elevation to the SC
was under consideration.
- Charges against
Justice Dinakaran, who is due to retire on May 9, 2012, were
levelled when he was Chief Justice of the Karnataka HC. He was
subsequently transferred to the Sikkim High Court.
- The only Indian
Prince who has been invited to the Prince William and Kate wedding
- Raghav Raj Singh,
the current maharajsahib of Shivrati, a jagir in the former
princely state of Udaipur, is the only Indian aristocrat to be invited
to the wedding of Prince William and Kate Middleton in London on Friday.
- He is a good friend
of Prince William. Singh, a Sisodia Rajput, has
played with William at the famed Cirencester Park Polo Club and Windsor
Polo Club, both favourites of the Wales brothers.
- Wearing a
resplendent traditional Mewari sherwani and colourful headgear, he
will stand out among the grey morning suit clad men in the congregation.
His wife, Shelja Kumari, from the thikana of Umaidnagar in Jodhpur,
draped in a classic sari favoured by Indian nobility and heirloom family
jewellery is equally likely to stand out.
- An alumnus of Mayo
College, Ajmer and St Stephen’s, Delhi, Singh did a
stint at Cheltenham College in Gloucestershire as an exchange , which
should come in handy for his future foray into healthcare and wellness
segment in Rajasthan and Delhi.
Finance & Economy
- Is it the right time
to allow export of food grains?
- Yes, argues today's
ET editorial. Look at its reasoning:
- First, India’s
stockpile of foodgrains is now around 45 million tonnes, double
the buffer stock that is mandated for food security. A bumper harvest
is forecast, after which the government will add another 25 million
tonnes to this pile.
- Second, the
government and its main procuring and stocking arm, the Food
Corporation of India (FCI), have proved that they cannot handle such
large food stocks. In many places, grains are piled high under plastic
sheets, exposed to the weather and rodents. Even after distributing rice
for as low as Rs. 1 or Rs. 2 per kilogramme in states like Tamil Nadu
and Andhra Pradesh, stocks stubbornly refuse to run down. It is likely
that by the time the government decides to do something about this food
mountain, worth around Rs. 40,000 crore, much of it would have become
dinner for rats.
- Three, food
inflation is not being driven by foodgrains, but by the spiralling
prices of vegetables, edible oil, pulses and milk. Exports of
foodgrains will not add to food price inflation at home; indeed, it
might help to increase farmers’ incomes.
- Finally, the most
compelling argument is about prices. The glut has pushed
market prices of wheat to below the minimum support price (MSP) of Rs.
1,170 per quintal. Indeed, in states like Uttar Pradesh, wheat is being
sold for Rs. 1,050 per quintal, a substantial discount to the MSP. In
global markets, wheat is being traded at around Rs. 1,530 per quintal.
So, if India lifts its export curbs on foodgrains, imposed after the
food price scare last year, exporters can make a nifty profit, storage
costs would come down and farmers’ incomes would go up, yielding some
incentive to invest in technologies to boost productivity.
- RBI fines 19 banks
for selling complex derivatives to corporates
- State Bank of India,
ICICI Bank, Citibank and Axis Bank are among 19 lenders
penalised by the Reserve Bank of India for violating currency
derivatives norms and selling products to companies which did not
understand them. This ends a three-year dispute between banks and small
companies burnt by derivatives.
- The penalty may be small,
ranging from 5 lakh to 15 lakh. But the ruling
was a blow to banks since it vindicated the claims of tiny companies
that claimed banks sold meaningless contracts to earn fees to boost
earnings.
- The RBI has been
scanning the derivative books of banks for more than a
year and had sought information from 22 lenders about these
transactions.
- The RBI order
vindicates the stand of corporates, some of whom had sued
banks on grounds of misselling. Others had claimed that some of the
contracts were contrary to law, particularly the FEMA. Already,
most
matters had been settled out of court with banks picking up 25-50% of
the losses. This order will hasten the settlement of remaining disputes.
- Banks had sold
currency derivatives to allow corporates to either improve the
earnings on their exports, lower the outgo on imports, or cut the
interest and repayment cost on loans. The better exchange rates
that
such swaps and options offered always came with risks that most
corporates either ignored or thought were academic — eventualities that
are unlikely to materialise.
- Several bets
backfired when currencies like euro, swiss franc and yen surged in
2007. By late 2007 and early 2008, when corporates were asked to pay up
after the markets moved against them, there was a hue and cry. Private
lenders, including ICICI Bank, HDFC Bank, ABN Amro (now RBS), Axis and
Kotak were sued by companies. Most cases were settled out of court.
- Amid court feuds
between banks and corporates, the RBI appointed an
inter-departmental group to inspect the trades. The group spotted
transactions where the underlier was inadequate while in some cases
multiple transactions were done against photocopies of the same document
that served as an underlier. In such situations derivative deals are no
longer hedges, but pure currency bets.
- In some cases,
documents on a company’s past export performance that is
used to arrive at a hedging limit was not certified by the auditor. The
RBI decision will be followed by parties in the case pending before the
SC.
International
- Compulsory sectoral
talks not acceptable, says India
- India is examining
the latest draft proposals circulated by the World Trade
Organisation to bring to life the deadlocked Doha round of global trade
talks, but will continue to oppose the US move to make participation in
sectoral talks compulsory.
- Disagreement between
the US and large developing countries, including India, China
and Brazil, over sectoral negotiations to eliminate duties on select
industrial goods has been identified by WTO director general Pascal Lamy
as the biggest issue blocking the progress of the round.
- The US has been
insisting that large developing countries should agree to
eliminate tariffs on some industrial goods through compulsory
participation in sectoral negotiations while the opposing countries
maintain that it is outside the mandate of the Doha round.
