The Disinvestment target enlists Most Prifitable Companies on topmost Priority. Sick Oil Companies and BAD LOAN, Loan Growth Restrction may be the APPROPRIATE Home Work for Strategic Sell Out. As LIC has been Victimised with the ENTRY of Private Players, Banking Reforms would DESTROY SBI Lead as well. Banking Sector Trade Unions were Monopolised by LEFT Trade Unions and they did a little to Resist the Forthcoming LPG Aggression. Now the LEFT is wiped out in Bengal as well as in Kerala, what we may EXPECT from the Leftists Trade Unions! In Bengal, Destroyed Economy and Pending Loan and Deficit justify CORPORATE Agenda of reforming the Tax System and Private Investment. Marxists are subjected to UNPRECEDENTED Violence in all Parts of Bengal. Democratic LEFT Undermined and Supporters attacked , it opens all Avenues of MAOIST Resurgence based In Eastren Part of India. Within these circumstances, the LEFT is INCOMPETENT as well as INACTIVE enough to lead whatsoever TRADE UNION Movement.The EXPERIMENT and EXPERIENCE of OUST MARXISTS in Bengal REPLICATED in an attempt to OUST MAYAWATI in UP. But the flagbearers of AMBEDKARITES are quite IGNORANT of the Objective situations in which CORPORATE ZIONIST Imperialism aligned with Brahaminical Hegemony is all set to DESTROY ABORIGIN INDIGENOUS Humanscape and Excluded Communities. Economics is beyond understanding despite AMBEDKARITE Economics available, but the AMBEDKARITES fail to understand the POLITICAL Scenerio in which all tools of Brahaminical System and Corporate Imperialism do work in excellent Coordination with SURGICAL PRECISION.Thus, Brahaminical MEDIA, Brahaminical CIVIL Society, Brahaminical Intelligentsia, Brahaminical NGOs have taken over the DEMOCRATIC System. Democratic Institutions have become IRRELEVANT. CONSTITUTION KILLED. Constitutional Safeguards made meaningless. Human and Civil Rights Violated. UID Project Launched to deprive the Excluded Communities of CITIZENSHIP while Unprecedented Push on Economic Reforms and PRIVATE, FOREIGN Capital Investment!
World Bank criticises India's pro-poor schemes!
Decision on FDI in multi-brand retail soon: Scindia
Time govt ended subsidies in favour of fiscal health: Montek
Indian Holocaust My Father`s Life and Time - SIX HUNDRED FORTY
Palash Biswas
http://indianholocaustmyfatherslifeandtime.blogspot.com/
http://basantipurtimes.blogspot.com/
Decision on diesel price hike next week!
The Disinvestment target enlists Most Prifitable Companies on topmost Priority. Sick Oil Companies and BAD LOAN, Loan Growth Restrction may be the APPROPRIATE Home Work for Strategic Sell Out. As LIC has been Victimised with the ENTRY of Private Players, Banking Reforms would DESTROY SBI Lead as well. Banking Sector Trade Unions were Monopolised by LEFT Trade Unions and they did a little to Resist the Forthcoming LPG Aggression. Now the LEFT is wiped out in Bengal as well as in Kerala, what we may EXPECT from the Leftists Trade Unions! In Bengal, Destroyed Economy and Pending Loan and Deficit justify CORPORATE Agenda of reforming the Tax System and Private Investment. Marxists are subjected to UNPRECEDENTED Violence in all Parts of Bengal. Democratic LEFT Undermined and Supporters attacked , it opens all Avenues of MAOIST Resurgence based In Eastren Part of India. Within these circumstances, the LEFT is INCOMPETENT as well as INACTIVE enough to lead whatsoever TRADE UNION Movement.The EXPERIMENT and EXPERIENCE of OUST MARXISTS in Bengal REPLICATED in an attempt to OUST MAYAWATI in UP. But the flagbearers of AMBEDKARITES are quite IGNORANT of the Objective situations in which CORPORATE ZIONIST Imperialism aligned with Brahaminical Hegemony is all set to DESTROY ABORIGIN INDIGENOUS Humanscape and Excluded Communities. Economics is beyond understanding despite AMBEDKARITE Economics available, but the AMBEDKARITES fail to understand the POLITICAL Scenerio in which all tools of Brahaminical System and Corporate Imperialism do work in excellent Coordination with SURGICAL PRECISION.Thus, Brahaminical MEDIA, Brahaminical CIVIL Society, Brahaminical Intelligentsia, Brahaminical NGOs have taken over the DEMOCRATIC System. Democratic Institutions have become IRRELEVANT. CONSTITUTION KILLED. Constitutional Safeguards made meaningless. Human and Civil Rights Violated. UID Project Launched to deprive the Excluded Communities of CITIZENSHIP while Unprecedented Push on Economic Reforms and PRIVATE, FOREIGN Capital Investment!
I am trying to convince my friends countrywide that we must be Aware of the Emergency created by the Demise of the Marxists. It is a RARE Opportunity to REVIVE Ambedkarite Trade Union Movement. We Must NOT lose the Golden Opportunity. It is good that Mayawati has taken the initiative to launch a campaign against Petro Prices Hike but I doubt her Casteology and Social Engineering as she is guided the smae elements who are the ingredient part of the Ruling Hegemony. Meanwhile, Bharat Mukti Morcha and Mulnivasi Bamcef has declared a Nationwide Publike Awakening Progrramme and JAIL BHARO andolan against the Atrocities of UPA Government. It is welcome. But untill and unless, we do mobilise the Working Class specilly engaged in Organised Sector, it is impossible that Mass Movement would be effective as Basic Democratic set Up for Democratic Movement is DESTROYED. Our People are suffering from supersensitive Personality DISORDER under Excellent Mind Control Anesthesia. They are PROVOKED for joining the Maoist Menace which attracts and justifies REPRESSION and Military Operation and it helps only MNCs and Indi INCs leading to MASSIVE EXODUS and DISPLACEMENT in the aborigin Humanscape which covers ENTIRE Agrarian Rural India! It is HIGHT Time to Launch an AMBEDKARITE National Trade Union!
I have been INSISTING Constantly that Ethnonationalism as well as Blind Nationalism make the METHOFDOLOGY of the Hegemony. Most Antinational and Washington Superslaves do use the TOLLs. I have also been writing and speaking that RECESSION in America is the Deepening Crisis of US Zionsit War Economy and Weapon Industry. Indo US Nuclear deal is the best Ploy to open up Weapon Market in South Asian Geopoltics. Making India partner in War on TERROR and Strategic Realliance in US ISRAEL Lead, complete the Task most refined. ISLAMOPHOBIA and DISTORTED Indo Pak Relations, the Hatred inherited and injected, INVOKE Blind nationalism. Indo Pak War seems always IMMINENT to justify the Nuclear Arms race making the Sub Continent FREE Hunting Ground for the ARMS VENDORS. NO Policy Maker tkaes FUEL Economy and Defence EXPENDITURE in Consideration while pushing for DISINVESTMENT and Economic Reforms. Ten Billion Dollar Arms deal with USA is cleared and ARMY MOBILISATION Across the Border INTENSIFIED.It would EXPEDIATE Ethnic Cleansing. The Left and its TRADE UNION Never had been Honest or serious in Mobilising Resistance against LPG Mafia Rule, MONOPOLISTIC Aggresion, CORPORATE IMPERIALISM, DISINVESTMENT, UID, Finacial and Labour reforms, Economic Reforms and the Killing of Constitution. But they betrayed the EXCLUDED Communities which continued to support the False Brahamin Marxists! The Disilusionment is REALITY but our Peopel have NO OPTION to unite themselves in self DEFENCE!
State Bank of India (SBIN), the nation's largest lender, fell for a second day after Chairman Pratip Chaudhuri said loan growth may be restricted if the lender faces a cash crunch.Bloomberg reports!
The shares declined 1.7 percent to 2,373 rupees at 10:56 a.m. in Mumbai trading, heading for the third straight decline.
State Bank will have to be more selective on lending, Chaudhuri said yesterday after the lender reported lower profit for the fiscal fourth quarter. Loan growth will moderate by up to 3 percent from last year's levels, Chief Financial Officer Diwakar Gupta told media in the eastern Indian city of Kolkata.
Declining capital may hamper attempts by Chaudhuri, who took the helm at the state-owned bank last month, to grow the balance sheet. The bank's capital adequacy ratio under so-called Basel II standards shrank to 11.98 percent during the quarter from 13.39 percent a year earlier.
State Bank's stock rating was downgraded to "in line" from "outperform" by Mahruk Adajania, an analyst at Standard Chartered Plc in Mumbai.
Net income dropped to 208.8 million rupees ($4.6 million) for the three months ended March 31, from 18.7 billion rupees a year earlier, the bank said in a filing to the Bombay Stock Exchange yesterday. Loans climbed 20 percent to 7.72 trillion rupees as of March 31, from 6.4 trillion rupees a year earlier.
http://www.bloomberg.com/news/2011-05-18/state-bank-of-india-falls-for-second-day-on-loan-growth-concern.html
State Bank of India , the country's top lender, posted an unexpected plunge in quarterly net profit on Tuesday and lagged estimates by a massive margin, slammed by higher provisions for bad loans, operating costs and taxes. The bank said it will pay a dividend of Rs 30 per share.
Reacting to the numbers, the stock dropped by 8.26 per cent to touch a one-month low of Rs 2,401 on the Bombay Stock Exchange (BSE) during intra-day trade. It closed down 7.78 per cent at Rs 2413.60.
State Bank said provisions for bad loans in the fiscal fourth quarter rose 49 per cent to Rs 3264 crores from Rs 2187 crores a year ago, while operating costs increased Rs 6794 crores from Rs 6036 crores.
Tax expenses in the quarter also nearly doubled to Rs 1900 crores.
The bank's net non-performing assets rose to Rs 12350 crores at March-end from Rs 10870 crores a year ago.
The state-run bank withdrew a special home loan scheme in May, in response to concerns raised by the RBI.
The scheme, also known as a teaser loan, had come under the RBI's scanner due to worries that they could significantly raise banks' bad loans.
State Bank had launched the special home loan schemes, following the global economic downturn, to boost loan demand in the country. But many anaylsts had expressed concern about it creating more bad loans for the bank.
Credit growth at banks is set to slow in this fiscal year, following a series of interest rate increases by the RBI to tame inflation that rose an annual 8.66 per cent in April, higher than expected.
The RBI raised rates by a hefty 50 basis points earlier this month and its hawkish statement has prompted economists to raise their forecasts for interest rates this year.
Bank loans rose 21.9 per cent on the year as of April 22, the RBI's latest data showed, up from 17.1 per cent in the same period last year, but slowing from a 24.4 per cent rise on year as of Dec. 31 last year.
State Bank Chairman Pratip Chaudhuri told media last week that surging interest rates would crimp loan growth this fiscal year to 17-19 per cent, from a January target of 20-22 per cent.
State Bank and its domestic rivals, including ICICI Bank and Kotak Mahindra Bank , raised their benchmark lending rates earlier this month following the rate hike by the RBI.
State Bank, which along with its associates controls about a quarter of bank loans and deposits, posted a net profit of Rs 20.9 ($4.6 million) in the fourth quarter, versus Rs 1867 crores a year ago.
Net interest income rose nearly 20 per cent to Rs 8058 croress.
Shares of State Bank, valued at $37 billion, have fallen 7 per cent this year as on Monday, compared with a 10 per cent drop in the Mumbai market index .
18 MAY, 2011, 04.05AM IST,ET BUREAU
SBI net slumps 99% on bad loans, pensions
State Bank of India
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KOLKATA: A mountain of bad loans and an army of pensioners played havoc with the net profit of the country's largest lender, State Bank of India , whose numbers foxed analysts and unnerved investors on Tuesday. Traders and shareholders stared at television screens in collective disbelief as SBI announced a 99% drop in net profit to Rs 20.8 crore for the quarter ended 31 March 2011 - a number that is one of the lowest among listed banks.
But the decline in performance could have been less dramatic had the bank not followed a conservative accounting practice and made lumpy, one-off provisions to clean up its books - a familiar syndrome in government banks when a new chief announces the financial results. "These are one-off provisions, which will not appear in subsequent quarters," assured SBI Chairman Pratip Chaudhuri who took charge on April 7. But he warned that loan growth could slip 2-3% and more bad loan could pile up, if the economy grows at a slower pace. Nonetheless, the bank announced a dividend of Rs 30 a share, which did little to liven up the stock. On Tuesday, SBI shares fell 7.8% to close at Rs 2,413.
The profit shock came from extra provisioning of Rs 3,200 crore on sticky loans - some of which had to be written off as losses - and a Rs 2,473 crore blow on account of pension liability.
Of the bad loan provisioning, Rs 500 crore was against teaser loans - an attractive home loan scheme that former SBI chairman OP Bhatt launched to gain market share. Unlike other state-owned banks, SBI knocked off its reserves to provide for the remaining pension liability of more than Rs 7,900 crore. The dip in reserves pulled down SBI's financial parameters like capital adequacy level and book value, which further rattled investors. "This was avoidable. The bank somehow wanted to frontload all expenses," said Parag Jariwala, analyst at brokerage Anand Rathi Securities.
Net Interest Margin May Improve
But Jariwala expects that the bank's net interest margin may improve in the coming quarters as SBI reaps the benefits of higher interest on loans.
While the NIM rose to 3.32% from 2.66% a year ago, it fell from 3.6% clocked in during the quarter ended December 31, 2010.
"A 3.5% NIM is a feasible and possible proposition for the current fiscal," Chaudhuri said.
The bank's advances grew 20.32% in 2010-11 to Rs 7,71,802 crore and operating profit rose 17% at Rs 6,080 crore (Rs 5,194 crore) on account of 20% higher net interest income at Rs 8,058 crore. As per RBI rules, SBI will have to make provision of Rs 1,100 crore as a counter-cyclical buffer and other provisions.
SBI managing director and chief financial officer Diwakar Gupta said, "If there is a slowdown, there will be an impact on asset quality in general. But we don't see the stress increasing further as slippages from sectors other than agriculture is recoverable." On the Rs 7,900 crore pension provisioning, he said, "This was towards pension payment for employees who retired between 2007-12, so we needed to make this provision this year itself. We could not do this out of profit as otherwise the profit would have been negative." Gross non-performing assets of the SBI rose to 3.28% of total loans from 3.05% a year ago, while net NPA ratio fell to 1.63% from 1.72% due to higher provisions.
Analysts are maintaining a buy call on the stock as many of them believe that most of the bad news is out. Vaibhav Agrawal, an analyst with Angel Broking, said, "There were negative surprises even on the margin front and operating performances were not very encouraging too. But we have maintained a "buy" on SBI with a reduced target of Rs 2,800 as we feel the bottomline should benefit as interest rate rises."
http://economictimes.indiatimes.com/news/news-by-company/earnings/earnings-news/sbi-net-slumps-99-on-bad-loans-pensions/articleshow/8404709.cms
Finance minister Pranab Mukherjee on Sunday said the Empowered Group of Ministers headed by him would decide on the price hike of diesel, LPG and kerosene when it meets next week.
"A decision will be taken on raising prices of these items when the EGoM meets next week," Mukherjee told reporters here after meeting Congress MLAs elected in the West Bengal Assembly elections.
He said that the government had no control over petrol prices as it had been deregulated in June 2010. "Decision on petrol prices is taken by oil marketing companies." The state-run oil companies on Saturday hiked petrol prices by Rs 5 a litre. "For other petroleum products like diesel, LPG and kerosene there is the empowered GOM," he said.
The finance minister said that the last time petroleum prices were increased was when it was at $68 per barrel, but now it was at $110 per barrel. Asubsidy of Rs 26 was given on alitre of kerosene, Rs 16 on a litre of diesel and Rs 320 per cylinder of LPG, he said.
The Prime Minister's Economic Advisory Council (PMEAC) has pitched for an early decision on freeing of diesel prices, saying that oil companies are incurring huge losses on account of difference between domestic and international prices.
"At one time I felt that if inflation comes down to 7% it can be done. Since it is taking time for the inflation rate to come down, perhaps an earlier decision (to deregulate diesel prices) may be required," PMEAC chairman C Rangarajan said.
He further said, "We cannot wait (for inflation to come down) because the OMCs are incurring a huge loss. It (deregulation) may happen sooner than later."
Time govt ended subsidies in favour of fiscal health: Montek
It is high time the government went for a major cut in subsidies, which eat up nearly 2 per cent of GDP, to bring down the fiscal deficit, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.
"It is time to correct our fiscal deficit on the subsidy-oriented side so that we can have some qualitative reduction in fiscal deficit," he said while delivering the second foundation day lecture on 'Challenges in the 12th Plan' at the Indira Gandhi Institute of Development Research here.
Referring primarily to the oil and coal prices, he said the country can grow rapidly only if it aligns energy prices to global prices.
While the government heavily subsidizes oil, especially diesel, cooking gas and kerosene, coal price is kept artificially low, to the tune of 50 per cent of the global prices, the noted economist said.
Another worrisome subsidy is on electricity, that eats up to 1 per cent of the state GDPs, Ahluwalia pointed out.
The government is targeting fiscal deficit at 4.6 per cent for this fiscal, encouraged by a 50 basis points higher-than-targeted reduction in the same in the last fiscal.
The revised fiscal deficit target for FY11 was 5.6 per cent, which the Government could bring down to 5.1 per cent, mainly on the back of a heavy haul from the spectrum licences fees .
A higher-than-expected tax mop-up also helped it manage deficit target more effectively.
World Bank criticises India's pro-poor schemes
The World Bank on Wednesday criticised the Indian government's anti-poverty schemes , saying they did not offer value for money and were sometimes undermined by corruption.
The bank said India was not getting "bang for the rupee" due to "leakages" in the funding of national projects such as the Public Distribution System (PDS) which doles out state-subsidised food and fuel to the poor.
"While India devotes over two percent of gross domestic product to her social programmes... the poor are not able to reap the full benefits of such large investments," the World Bank's lead economist John Blomquist said.
Forty-two percent of Indians, or 455 million people, live on less than $1.25 a day, according to the World Bank. India's statistics on health, infant mortality and malnutrition are worse than those of many countries in sub-Saharan Africa.
"Safety nets in India remain primarily 'nets' rather than 'ropes' or 'ladders' which seek to promote sustained movement out of poverty," he said, releasing the World Bank report on social protection programmes.
The PDS scheme, for example, "continues to absorb substantial public resources at almost one percent of GDP (and) while it covers up to a quarter of Indian households, its benefits for the poor have been limited."
Blomquist, who said the study was based on official data from 2004-2005 and other available records, added that "leakage and diversion of grains from the PDS are high."
Citing government findings, the economist in New Delhi said only 41 percent of grains released by the government reached households in 2004-05.
"Some leakage is due to irregularities and corruption but it is mainly due to capacity constraints" of state administrations with poor distribution infrastructure, Blomquist said.
"We are not taking a stand for the abolishment of the PDS but there is a strong case to be made for cash as a pillar of assistance for India's poor," he added.
Decision on FDI in multi-brand retail soon: Scindia
The government is expected to take a decision in the next three months on allowing foreign direct investment in multi-brand retail, a long pending issue,
A new National Manufacturing Policy creating an investor friendly environment is also likely, Minister of State for Commerce and Industry Jyotiraditya Scindia said today.
"We are committed to the issue on FDI in retail...I think over the next quarter you will see a decision and an announcement on both the issues," Scindia said at Export Promotion Council for EOUs and SEZs award function here.
A cabinet note on FDI in multi-brand retail has already been circulated by the Department of Industrial Policy and Promotion (DIPP), which had earlier come out with a discussion paper on the politically sensitive issue.
According to sources, the government would allow the foreign retail giants with riders which include a minimum investment of USD 100 million, half of which must go to the back-end infrastructure like cold storage, soil testing labs and seed farming.
At present, India allows FDI only in single brand retail chains like Nike , Louis Vuitton with a cap of 51 per cent. It also permits 100 per cent overseas investment in wholesale cash-and-carry format.
Several of the big chains like Wal-Mart and Carrefour have set up their joint ventures in India, waiting for their full-scale entry into the multi-brand retailing.
The proposed manufacturing policy aims to help attract overseas investments besides increasing the share of manufacturing in the economy.
India aims at increasing the share of manufacturing sector, which contributes over 80 per cent in the country''s overall industrial production, from 16-17 per cent to 25-26 per cent of the gross domestic product by 2020.
On concerns over imposition of minimum alternative tax on special economic zones, Scindia said: "We are in discussion with the finance ministry. We hope to have a sympathetic hearing, so that we can ensure that there is a stable policy regime going forward".
On the exporters demand for the continuation of tax benefit scheme -DEPB, he said "we will ensure that...exporters are incentivised to be able to reach our target of USD 500 billion by 2013-14".
The Duty Entitlement Pass Book (DEPB) scheme for exporters would end on June 30.
Rangarajan favours separate Debt Management Office
Joining the debate over hiving off the debt management activities of the Reserve Bank, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has favoured setting up a separate Debt Management Office (DMO) under the aegis of the central government.
"There are many countries in the world where the public debt office is managed only by the government. Therefore, even here, the Reserve Bank can continue to play its role as a monetary authority, without having the DMO under it," the PMEAC chief told PTI.
The Reserve Bank has opposed setting up a DMO under the Union government to manage sovereign debt, saying only the central bank has the requisite expertise to manage market volatility.
"Only central banks have the requisite market pulse and instruments to aid in making contextual judgements which an independent debt agency, driven by narrow objectives, will not be able to do," RBI Governor Duvvuri Subbarao said at a meeting of the Central Bank Governance Group in Basel.
However, Rangarajan, a former RBI Governor, said times have changed and the government could take up the job if it is "adequately prepared to undertake that function".
He said that earlier, the government required the helping hand of the RBI to enable it to raise the required amount, because prior to 1991, the borrowing rate of the government was well below the market rate.
"But things have changed since then... According to the Fiscal Responsibility and Budget Management (FRBM) Act, the RBI is not supposed to be in the primary market," he said.
The government has proposed to set up an independent Debt Management Office, aimed at separating the RBI's roles as the decider of the interest rate in the market and being the banker to the government.
At present, both the government's debt and fresh borrowings are managed by the central bank.
In his 2011-12 Budget speech, Finance Minister Pranab Mukherjee had mooted the proposal to introduce the Public Debt Management Agency of India Bill
18 MAY, 2011, 06.00PM IST, ASHISH TRIPATHI,TNN
Petrol price rise: Mayawati's agitation against UPA on May 31
LUCKNOW: BSP supremo and UP chief minister Mayawati on Wednesday morning held a meeting with party office-bearers, MPs, MLAs and ministers.
She issued directions to hold a nationwide agitation against Congress led UPA government's decision to hike petrol price on May 31. She said that petrol price hike will have a cascading effect increasing the inflation rate further.
The May 31 agitation, she said, would mark the start of campaign to make people aware of anti-people policies of the UPA II. Maya's move is being seen as a counter to Congress's campaign against BSP government in UP over farmer unrest due to land acquisition at Bhatta-Parsaul in Gautambudhnagar.
Maya, while addressing party leaders, said that the petrol price hike shows that Congress does not care about people. She said that the hike was announced immediately after elections in five states, which shows that how Congress made people a fool.
"Such a move if taken earlier would have wiped out Congress in the elections," she said. Now, she added, the UPA government is planning to increase prices of diesel, kerosene and LPG.
She said that petrol has 14% share in the price index, hence increase in inflation is inevitable following increase in the petrol prices fuel price hike. It would result in increase prices of essential products an services.
Maya described Centre's explanation that public sector oil companies were suffering a huge loss due to subsidy on petrol price hike following increase in petrol prices at international level as a lame excuse.
She claimed that the Central government gave a Rs 4 lakh crore subsidy relief package to corporate in 2008-09 to fight recession. In 2009-10, when the growth rate was 6.8%, the Centre again gave a subsidy relief package of about Rs 4 lakh crore to the corporate world. Now, when the growth rate of the economy is around 8%, the UPA Government has given relief package of Rs 4.5 lakh crore to the corporate. This, she said, proves that the 'hand' of the Congress is not with the common man but it was 'hand in glove' with the capitalists.
Elaborating the steps taken by the BSP government to provide some relief to the people from the increase in the petrol prices done by Central government, Mayawati said that the cooking gas was made 'tax free' since June 7 2008 in UP. Besides, the VAT rate levied on diesel was decreased from 21% to 17.23 %. She said that the VAT, being charged on kerosene distributed from the government fair price shops, was also decreased to 5%.
18 MAY, 2011, 05.30PM IST,ET BUREAU
Sensex ends below 18100; oil&gas, pharma down
MUMBAI: Benchmarks ended choppy session in the negative territory as investors stayed away due to lack of positive triggers to drive the market. Rate sensitive sectors and oil&gas stocks remained down on profit booking on concerns that any hike in diesel prices would lead to another interest rate hike by the Reserve Bank of India. The Empowered Group of Ministers is scheduled to meet next week to discuss diesel and LPG gas price hike.
Indian markets opened on a positive note in line with peers but failed to hold on to the gains as weakness in index heavy-weights like Reliance Industries, State Bank of India and ONGC continued to put pressure on the indices.
Bombay Stock Exchange's Sensex ended at 18086.20, down 51.15 points or 0.28 per cent. The 30-share index hit a high of 18218.20 and low of 18020.79 intraday.
National Stock Exchange's Nifty ended at 5420.60, down 18.35 points or 0.34 per cent. The broader index touched a high of 5460.50 and low of 5401.25 in trade today.
"The market is likely to remain rangebound for time being with negative bias and the Nifty can slip to 5300-5350 levels. Market is lacking fresh triggers and an early on-set of monsoon can provide some respite in the short-term.
Factors like higher interest rates, inflation and mixed bag of results are keeping the market under pressure. There is a possibility of earnings downgrade in Sensex stocks by 3-5 per cent due to high input costs," said Dharmesh Pancholi, senior manager-advisory (equity), Sharekhan.
BSE Midcap Index was down 0.61 per cent and BSE Smallcap Index moved 0.80 per cent lower.
Amongst the sectoral indices, BSE Oil&gas Index was down 1.88 per cent, BSE Healthcare Index declined 1.40 per cent and BSE Auto Index moved 0.98 per cent lower. BSE IT Index gained 0.24 per cent and BSE FMCG Index was up 0.20 per cent.
Reliance Infrastructure (-4.11%), Tata Motors (-3.36%), Reliance Communications (-3.31%), SBI (-2.40%), Reliance Industries (-2.02%) and ONGC (-1.28%) were the major Sensex losers.
"Selective FMCG and pharmaceutical counters like HUL, ITC and Glenmark Pharmaceuticals are less risky bets in such environment. Major correction is over in SBI and investors can start accumulating the stock around Rs 2250-2300 levels in staggered manner," Pancholi added.
HDFC (2.34%), Hero Honda (1.93%), Maruti (1.75%), Wipro (1.71%) and Tata Power (1.50%) were the major gainers.
Market breadth was negative on the BSE with 1751 losers against 1018 gainers.
Reliance Industries rebuts DGH's KG-D6 report, hopes BP will fix problem
Reliance Industries has countered a report that the oil regulator, the DGH, used to target it for falling gas production from the KG-D6 fields , saying the study was done without visiting the fields and the company was not given an opportunity to present its views.
Reliance was "deeply concerned and surprised" by the reservoir behaviour and "its deviation from what was envisaged in the Field Development Plan (laid out in 2006)", Reliance Senior Vice-President (Commercial) B Ganguly said in an April 30 letter to the DGH.
"Our concern is also evident from the fact that we have moved to bring in a more experienced partner in the form of (UK's) BP, who brings with it the best deep water experience globally," he wrote, adding that Reliance plans to discuss the reservoir performance with BP to find a solution to the problem.
The Directorate General of Hydrocarbon (DGH) had commissioned independent consultant P Gopalkrishnan to give a report on the reasons for gas output from the Dhirubhai-1 and 3 fields in the KG-D6 block falling to 42 million cubic metres per day from 53-54 mmscmd in March, 2010, instead of rising to the projected 61.88 mmscmd.
In his letter, Ganguly gave a point-by-point rebuttal of Gopalkrishnan's finding that the "shortfall of gas production is due to non-drilling of the adequate number of wells".
"While the DGH-appointed consultant has reached certain conclusions on the performance of the D-1 and D-3 fields, we as operators were neither approached nor afforded an opportunity to discuss any of the field issues with the consultant," he wrote.
"The consultant had not even visited the field to apprise himself of the actual conditions and field performance," he said. "The conclusions are further contrary to the facts and information provided by us from time-to-time to the DGH."
The DGH is using this report to make Reliance carry out the impossible task of drilling two wells by next month and another nine by the fiscal-end. This despite the fact that each well takes up to six months to be completed and there was a very small weather window available for drilling in the Bay of Bengal.
The regulator is mulling over the action it can take against Reliance for failing to meet this commitment, sources said. Ganguly stated that Reliance neither had access to the consultant nor was the full report prepared by Gopalkrishnan ever provided to the company.
"From the conclusions that have been conveyed to us, it seems that the consultant either has not been provided or has not considered all reservoir/production data or it would not have been difficult for him to appreciate some very obvious reservoir pressure trends in the field that contradict the conclusions reached by the consultant," he wrote.
Ganguly stated that Reliance, BP and its existing 10 per cent partner Niko Resources of Canada will "discuss the reservoir performance in detail and come up with most optimal solutions." "These solutions would include identification of well locations and interventions in the existing wells," he said.
18 MAY, 2011, 02.55PM IST,REUTERS
India, US start $50 million fund for clean technology
The United States and India announced a joint $50 million fund to promote research in clean energy technologies on Wednesday, a step seen as part of efforts to whittle down their differences over how to fight climate change.
The fund will help establish the Indo-U.S. Joint Clean Energy Research and Development Centre which will finance academia, institutions and industry from both countries to undertake the research.
"This is the first collaborative research effort of its kind, where Indian and U.S. researchers will be jointly selected," U.S. Ambassador to India Timothy J. Roemer said in a statement.
"It elevates the U.S.-India clean energy cooperation to a new level and is a testament to the strength of our continued strategic partnership."
In the global fight against climate change, two of the world's most populous democracies sit on the opposite end of the debate, their differences a major hindrance in achieving an international agreement on curbing global warming.
Under existing rules, only rich countries have to meet binding emissions targets and report actions regularly. But developed nations led by the United States, which never ratified Kyoto, want emerging economies such as China and India to take on a greater share of climate actions.
Developing nations now emit more than half of greenhouse gas emissions and that portion is growing quickly. China has already passed the United States as the world's top carbon polluter.
Emerging nations say they will accept international consultation and analysis (ICA) of their emissions actions, but not anything equal to the standards expected of rich economies. They blame the rich for much of the greenhouse pollution pumped into the atmosphere over the past two centuries.
A huge gap also exists between rich countries reluctant to pay the fiscal and lifestyle costs of deep cuts in their emissions, and developing states which say they must be allowed to increase emissions so their economies can catch up.
The U.S. statement said the awards from the new fund will be made to a consortia with the knowledge and experience to undertake collaborative research programs.
"These consortia will help bring together top talent from both countries and are expected to generate key technological advancement through genuine collaboration between U.S. and Indian researchers," it said.
18 MAY, 2011, 02.50PM IST,REUTERS
Flaws expose free markets to corrective measures
LONDON: Increasing myopia among investors and distorted financial pricing may be exacting a high economic and social toll.
What's been clear to most observers since the credit crisis brought the world's biggest financial firms close to collapse and triggered the deepest global recession in recent history is that free markets don't always deliver optimal outcomes and the self interest of shareholders can't always be relied upon.
In a world where financial market pricing now touches so many lives directly -- from the cost of food and energy, housing finance, retirement savings or even the stability of sovereign finances and national budgets -- growing realisation of market flaws may push the political debate towards taming market power.
What's more, the questions come at a time when the centre of gravity in international economic policymaking has shifted more toward emerging powers such as China and Brazil who are less in thrall to the basic tenets of market fundamentalism.
Examining the extent of equity investors' short-term focus and the damage done to long-term investment and growth, Bank of England economist Andrew Haldane reckons his evidence points to persistent risk of market failure.
This month's paper by Haldane, the BoE's executive director for financial stability, and co-author Richard Davies showed how excessive discounting of future company cashflows had put far greater value on firms' short-term earnings generation.
Haldane found that in both the United States and Britain that investors were now discounting 5-year cashflows at rates more appropriate at 8 years hence, 10-year cashflows as if they were more than 16 years or more away and cashflows of more than 30 years as if they barely had any value at all.
In essence, the further away or more stretched-out the return on investment, the less value is placed on the firm today -- leading in some cases to viable long-term projects such as infrastructure or high-tech being shelved.
"These projects are often felt to yield the highest long-term (private and social) returns and hence offer the biggest boost to future growth. That makes short-termism a public policy issue," said Haldane.
"Investment choice, like other life choices, is being re-tuned to a shorter wave-length. Public policy intervention might be needed to correct this capital market myopia."
NOT SO EFFICIENT
Among measures the paper put forward as possible corrective surgery for this short-sightedness were sliding scales of shareholder voting rights that would depend on the duration of stock holding or ultimately the use of government taxes or subsidies to encourage ivestors to hold equity for longer.
The study builds on prior work by Haldane and others on the lack of patience in finance, where superior annual returns from short term "momentum" investing have led to greater churn and volatility and cut average equity holding periods.
For example, the mean duration of equity holdings on the New York Stock Exchange has fallen from as much as seven years in 1940 to under two years in 1987 and just seven months in 2007.
The net result of this herding, Haldane argues, is that equity prices persist at levels far from fundamental valuations for longer, while higher medium-term volatility acts like a tax on committing long-term capital.
Studies like this were dismissed for many years prior to the credit crisis in favour of the "efficient markets hypothesis" that said more and unfettered trading activity created a superior good of liquidity and price transparency.
World Bank criticises India's pro-poor schemes!
Decision on FDI in multi-brand retail soon: Scindia
Time govt ended subsidies in favour of fiscal health: Montek
Indian Holocaust My Father`s Life and Time - SIX HUNDRED FORTY
Palash Biswas
http://indianholocaustmyfatherslifeandtime.blogspot.com/
http://basantipurtimes.blogspot.com/
Decision on diesel price hike next week!
The Disinvestment target enlists Most Prifitable Companies on topmost Priority. Sick Oil Companies and BAD LOAN, Loan Growth Restrction may be the APPROPRIATE Home Work for Strategic Sell Out. As LIC has been Victimised with the ENTRY of Private Players, Banking Reforms would DESTROY SBI Lead as well. Banking Sector Trade Unions were Monopolised by LEFT Trade Unions and they did a little to Resist the Forthcoming LPG Aggression. Now the LEFT is wiped out in Bengal as well as in Kerala, what we may EXPECT from the Leftists Trade Unions! In Bengal, Destroyed Economy and Pending Loan and Deficit justify CORPORATE Agenda of reforming the Tax System and Private Investment. Marxists are subjected to UNPRECEDENTED Violence in all Parts of Bengal. Democratic LEFT Undermined and Supporters attacked , it opens all Avenues of MAOIST Resurgence based In Eastren Part of India. Within these circumstances, the LEFT is INCOMPETENT as well as INACTIVE enough to lead whatsoever TRADE UNION Movement.The EXPERIMENT and EXPERIENCE of OUST MARXISTS in Bengal REPLICATED in an attempt to OUST MAYAWATI in UP. But the flagbearers of AMBEDKARITES are quite IGNORANT of the Objective situations in which CORPORATE ZIONIST Imperialism aligned with Brahaminical Hegemony is all set to DESTROY ABORIGIN INDIGENOUS Humanscape and Excluded Communities. Economics is beyond understanding despite AMBEDKARITE Economics available, but the AMBEDKARITES fail to understand the POLITICAL Scenerio in which all tools of Brahaminical System and Corporate Imperialism do work in excellent Coordination with SURGICAL PRECISION.Thus, Brahaminical MEDIA, Brahaminical CIVIL Society, Brahaminical Intelligentsia, Brahaminical NGOs have taken over the DEMOCRATIC System. Democratic Institutions have become IRRELEVANT. CONSTITUTION KILLED. Constitutional Safeguards made meaningless. Human and Civil Rights Violated. UID Project Launched to deprive the Excluded Communities of CITIZENSHIP while Unprecedented Push on Economic Reforms and PRIVATE, FOREIGN Capital Investment!
I am trying to convince my friends countrywide that we must be Aware of the Emergency created by the Demise of the Marxists. It is a RARE Opportunity to REVIVE Ambedkarite Trade Union Movement. We Must NOT lose the Golden Opportunity. It is good that Mayawati has taken the initiative to launch a campaign against Petro Prices Hike but I doubt her Casteology and Social Engineering as she is guided the smae elements who are the ingredient part of the Ruling Hegemony. Meanwhile, Bharat Mukti Morcha and Mulnivasi Bamcef has declared a Nationwide Publike Awakening Progrramme and JAIL BHARO andolan against the Atrocities of UPA Government. It is welcome. But untill and unless, we do mobilise the Working Class specilly engaged in Organised Sector, it is impossible that Mass Movement would be effective as Basic Democratic set Up for Democratic Movement is DESTROYED. Our People are suffering from supersensitive Personality DISORDER under Excellent Mind Control Anesthesia. They are PROVOKED for joining the Maoist Menace which attracts and justifies REPRESSION and Military Operation and it helps only MNCs and Indi INCs leading to MASSIVE EXODUS and DISPLACEMENT in the aborigin Humanscape which covers ENTIRE Agrarian Rural India! It is HIGHT Time to Launch an AMBEDKARITE National Trade Union!
I have been INSISTING Constantly that Ethnonationalism as well as Blind Nationalism make the METHOFDOLOGY of the Hegemony. Most Antinational and Washington Superslaves do use the TOLLs. I have also been writing and speaking that RECESSION in America is the Deepening Crisis of US Zionsit War Economy and Weapon Industry. Indo US Nuclear deal is the best Ploy to open up Weapon Market in South Asian Geopoltics. Making India partner in War on TERROR and Strategic Realliance in US ISRAEL Lead, complete the Task most refined. ISLAMOPHOBIA and DISTORTED Indo Pak Relations, the Hatred inherited and injected, INVOKE Blind nationalism. Indo Pak War seems always IMMINENT to justify the Nuclear Arms race making the Sub Continent FREE Hunting Ground for the ARMS VENDORS. NO Policy Maker tkaes FUEL Economy and Defence EXPENDITURE in Consideration while pushing for DISINVESTMENT and Economic Reforms. Ten Billion Dollar Arms deal with USA is cleared and ARMY MOBILISATION Across the Border INTENSIFIED.It would EXPEDIATE Ethnic Cleansing. The Left and its TRADE UNION Never had been Honest or serious in Mobilising Resistance against LPG Mafia Rule, MONOPOLISTIC Aggresion, CORPORATE IMPERIALISM, DISINVESTMENT, UID, Finacial and Labour reforms, Economic Reforms and the Killing of Constitution. But they betrayed the EXCLUDED Communities which continued to support the False Brahamin Marxists! The Disilusionment is REALITY but our Peopel have NO OPTION to unite themselves in self DEFENCE!
State Bank of India (SBIN), the nation's largest lender, fell for a second day after Chairman Pratip Chaudhuri said loan growth may be restricted if the lender faces a cash crunch.Bloomberg reports!
The shares declined 1.7 percent to 2,373 rupees at 10:56 a.m. in Mumbai trading, heading for the third straight decline.
State Bank will have to be more selective on lending, Chaudhuri said yesterday after the lender reported lower profit for the fiscal fourth quarter. Loan growth will moderate by up to 3 percent from last year's levels, Chief Financial Officer Diwakar Gupta told media in the eastern Indian city of Kolkata.
Declining capital may hamper attempts by Chaudhuri, who took the helm at the state-owned bank last month, to grow the balance sheet. The bank's capital adequacy ratio under so-called Basel II standards shrank to 11.98 percent during the quarter from 13.39 percent a year earlier.
State Bank's stock rating was downgraded to "in line" from "outperform" by Mahruk Adajania, an analyst at Standard Chartered Plc in Mumbai.
Net income dropped to 208.8 million rupees ($4.6 million) for the three months ended March 31, from 18.7 billion rupees a year earlier, the bank said in a filing to the Bombay Stock Exchange yesterday. Loans climbed 20 percent to 7.72 trillion rupees as of March 31, from 6.4 trillion rupees a year earlier.
http://www.bloomberg.com/news/2011-05-18/state-bank-of-india-falls-for-second-day-on-loan-growth-concern.html
State Bank of India , the country's top lender, posted an unexpected plunge in quarterly net profit on Tuesday and lagged estimates by a massive margin, slammed by higher provisions for bad loans, operating costs and taxes. The bank said it will pay a dividend of Rs 30 per share.
Reacting to the numbers, the stock dropped by 8.26 per cent to touch a one-month low of Rs 2,401 on the Bombay Stock Exchange (BSE) during intra-day trade. It closed down 7.78 per cent at Rs 2413.60.
State Bank said provisions for bad loans in the fiscal fourth quarter rose 49 per cent to Rs 3264 crores from Rs 2187 crores a year ago, while operating costs increased Rs 6794 crores from Rs 6036 crores.
Tax expenses in the quarter also nearly doubled to Rs 1900 crores.
The bank's net non-performing assets rose to Rs 12350 crores at March-end from Rs 10870 crores a year ago.
The state-run bank withdrew a special home loan scheme in May, in response to concerns raised by the RBI.
The scheme, also known as a teaser loan, had come under the RBI's scanner due to worries that they could significantly raise banks' bad loans.
State Bank had launched the special home loan schemes, following the global economic downturn, to boost loan demand in the country. But many anaylsts had expressed concern about it creating more bad loans for the bank.
Credit growth at banks is set to slow in this fiscal year, following a series of interest rate increases by the RBI to tame inflation that rose an annual 8.66 per cent in April, higher than expected.
The RBI raised rates by a hefty 50 basis points earlier this month and its hawkish statement has prompted economists to raise their forecasts for interest rates this year.
Bank loans rose 21.9 per cent on the year as of April 22, the RBI's latest data showed, up from 17.1 per cent in the same period last year, but slowing from a 24.4 per cent rise on year as of Dec. 31 last year.
State Bank Chairman Pratip Chaudhuri told media last week that surging interest rates would crimp loan growth this fiscal year to 17-19 per cent, from a January target of 20-22 per cent.
State Bank and its domestic rivals, including ICICI Bank and Kotak Mahindra Bank , raised their benchmark lending rates earlier this month following the rate hike by the RBI.
State Bank, which along with its associates controls about a quarter of bank loans and deposits, posted a net profit of Rs 20.9 ($4.6 million) in the fourth quarter, versus Rs 1867 crores a year ago.
Net interest income rose nearly 20 per cent to Rs 8058 croress.
Shares of State Bank, valued at $37 billion, have fallen 7 per cent this year as on Monday, compared with a 10 per cent drop in the Mumbai market index .
18 MAY, 2011, 04.05AM IST,ET BUREAU
SBI net slumps 99% on bad loans, pensions
State Bank of India
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KOLKATA: A mountain of bad loans and an army of pensioners played havoc with the net profit of the country's largest lender, State Bank of India , whose numbers foxed analysts and unnerved investors on Tuesday. Traders and shareholders stared at television screens in collective disbelief as SBI announced a 99% drop in net profit to Rs 20.8 crore for the quarter ended 31 March 2011 - a number that is one of the lowest among listed banks.
But the decline in performance could have been less dramatic had the bank not followed a conservative accounting practice and made lumpy, one-off provisions to clean up its books - a familiar syndrome in government banks when a new chief announces the financial results. "These are one-off provisions, which will not appear in subsequent quarters," assured SBI Chairman Pratip Chaudhuri who took charge on April 7. But he warned that loan growth could slip 2-3% and more bad loan could pile up, if the economy grows at a slower pace. Nonetheless, the bank announced a dividend of Rs 30 a share, which did little to liven up the stock. On Tuesday, SBI shares fell 7.8% to close at Rs 2,413.
The profit shock came from extra provisioning of Rs 3,200 crore on sticky loans - some of which had to be written off as losses - and a Rs 2,473 crore blow on account of pension liability.
Of the bad loan provisioning, Rs 500 crore was against teaser loans - an attractive home loan scheme that former SBI chairman OP Bhatt launched to gain market share. Unlike other state-owned banks, SBI knocked off its reserves to provide for the remaining pension liability of more than Rs 7,900 crore. The dip in reserves pulled down SBI's financial parameters like capital adequacy level and book value, which further rattled investors. "This was avoidable. The bank somehow wanted to frontload all expenses," said Parag Jariwala, analyst at brokerage Anand Rathi Securities.
Net Interest Margin May Improve
But Jariwala expects that the bank's net interest margin may improve in the coming quarters as SBI reaps the benefits of higher interest on loans.
While the NIM rose to 3.32% from 2.66% a year ago, it fell from 3.6% clocked in during the quarter ended December 31, 2010.
"A 3.5% NIM is a feasible and possible proposition for the current fiscal," Chaudhuri said.
The bank's advances grew 20.32% in 2010-11 to Rs 7,71,802 crore and operating profit rose 17% at Rs 6,080 crore (Rs 5,194 crore) on account of 20% higher net interest income at Rs 8,058 crore. As per RBI rules, SBI will have to make provision of Rs 1,100 crore as a counter-cyclical buffer and other provisions.
SBI managing director and chief financial officer Diwakar Gupta said, "If there is a slowdown, there will be an impact on asset quality in general. But we don't see the stress increasing further as slippages from sectors other than agriculture is recoverable." On the Rs 7,900 crore pension provisioning, he said, "This was towards pension payment for employees who retired between 2007-12, so we needed to make this provision this year itself. We could not do this out of profit as otherwise the profit would have been negative." Gross non-performing assets of the SBI rose to 3.28% of total loans from 3.05% a year ago, while net NPA ratio fell to 1.63% from 1.72% due to higher provisions.
Analysts are maintaining a buy call on the stock as many of them believe that most of the bad news is out. Vaibhav Agrawal, an analyst with Angel Broking, said, "There were negative surprises even on the margin front and operating performances were not very encouraging too. But we have maintained a "buy" on SBI with a reduced target of Rs 2,800 as we feel the bottomline should benefit as interest rate rises."
http://economictimes.indiatimes.com/news/news-by-company/earnings/earnings-news/sbi-net-slumps-99-on-bad-loans-pensions/articleshow/8404709.cms
Finance minister Pranab Mukherjee on Sunday said the Empowered Group of Ministers headed by him would decide on the price hike of diesel, LPG and kerosene when it meets next week.
"A decision will be taken on raising prices of these items when the EGoM meets next week," Mukherjee told reporters here after meeting Congress MLAs elected in the West Bengal Assembly elections.
He said that the government had no control over petrol prices as it had been deregulated in June 2010. "Decision on petrol prices is taken by oil marketing companies." The state-run oil companies on Saturday hiked petrol prices by Rs 5 a litre. "For other petroleum products like diesel, LPG and kerosene there is the empowered GOM," he said.
The finance minister said that the last time petroleum prices were increased was when it was at $68 per barrel, but now it was at $110 per barrel. Asubsidy of Rs 26 was given on alitre of kerosene, Rs 16 on a litre of diesel and Rs 320 per cylinder of LPG, he said.
The Prime Minister's Economic Advisory Council (PMEAC) has pitched for an early decision on freeing of diesel prices, saying that oil companies are incurring huge losses on account of difference between domestic and international prices.
"At one time I felt that if inflation comes down to 7% it can be done. Since it is taking time for the inflation rate to come down, perhaps an earlier decision (to deregulate diesel prices) may be required," PMEAC chairman C Rangarajan said.
He further said, "We cannot wait (for inflation to come down) because the OMCs are incurring a huge loss. It (deregulation) may happen sooner than later."
Time govt ended subsidies in favour of fiscal health: Montek
It is high time the government went for a major cut in subsidies, which eat up nearly 2 per cent of GDP, to bring down the fiscal deficit, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.
"It is time to correct our fiscal deficit on the subsidy-oriented side so that we can have some qualitative reduction in fiscal deficit," he said while delivering the second foundation day lecture on 'Challenges in the 12th Plan' at the Indira Gandhi Institute of Development Research here.
Referring primarily to the oil and coal prices, he said the country can grow rapidly only if it aligns energy prices to global prices.
While the government heavily subsidizes oil, especially diesel, cooking gas and kerosene, coal price is kept artificially low, to the tune of 50 per cent of the global prices, the noted economist said.
Another worrisome subsidy is on electricity, that eats up to 1 per cent of the state GDPs, Ahluwalia pointed out.
The government is targeting fiscal deficit at 4.6 per cent for this fiscal, encouraged by a 50 basis points higher-than-targeted reduction in the same in the last fiscal.
The revised fiscal deficit target for FY11 was 5.6 per cent, which the Government could bring down to 5.1 per cent, mainly on the back of a heavy haul from the spectrum licences fees .
A higher-than-expected tax mop-up also helped it manage deficit target more effectively.
World Bank criticises India's pro-poor schemes
The World Bank on Wednesday criticised the Indian government's anti-poverty schemes , saying they did not offer value for money and were sometimes undermined by corruption.
The bank said India was not getting "bang for the rupee" due to "leakages" in the funding of national projects such as the Public Distribution System (PDS) which doles out state-subsidised food and fuel to the poor.
"While India devotes over two percent of gross domestic product to her social programmes... the poor are not able to reap the full benefits of such large investments," the World Bank's lead economist John Blomquist said.
Forty-two percent of Indians, or 455 million people, live on less than $1.25 a day, according to the World Bank. India's statistics on health, infant mortality and malnutrition are worse than those of many countries in sub-Saharan Africa.
"Safety nets in India remain primarily 'nets' rather than 'ropes' or 'ladders' which seek to promote sustained movement out of poverty," he said, releasing the World Bank report on social protection programmes.
The PDS scheme, for example, "continues to absorb substantial public resources at almost one percent of GDP (and) while it covers up to a quarter of Indian households, its benefits for the poor have been limited."
Blomquist, who said the study was based on official data from 2004-2005 and other available records, added that "leakage and diversion of grains from the PDS are high."
Citing government findings, the economist in New Delhi said only 41 percent of grains released by the government reached households in 2004-05.
"Some leakage is due to irregularities and corruption but it is mainly due to capacity constraints" of state administrations with poor distribution infrastructure, Blomquist said.
"We are not taking a stand for the abolishment of the PDS but there is a strong case to be made for cash as a pillar of assistance for India's poor," he added.
Decision on FDI in multi-brand retail soon: Scindia
The government is expected to take a decision in the next three months on allowing foreign direct investment in multi-brand retail, a long pending issue,
A new National Manufacturing Policy creating an investor friendly environment is also likely, Minister of State for Commerce and Industry Jyotiraditya Scindia said today.
"We are committed to the issue on FDI in retail...I think over the next quarter you will see a decision and an announcement on both the issues," Scindia said at Export Promotion Council for EOUs and SEZs award function here.
A cabinet note on FDI in multi-brand retail has already been circulated by the Department of Industrial Policy and Promotion (DIPP), which had earlier come out with a discussion paper on the politically sensitive issue.
According to sources, the government would allow the foreign retail giants with riders which include a minimum investment of USD 100 million, half of which must go to the back-end infrastructure like cold storage, soil testing labs and seed farming.
At present, India allows FDI only in single brand retail chains like Nike , Louis Vuitton with a cap of 51 per cent. It also permits 100 per cent overseas investment in wholesale cash-and-carry format.
Several of the big chains like Wal-Mart and Carrefour have set up their joint ventures in India, waiting for their full-scale entry into the multi-brand retailing.
The proposed manufacturing policy aims to help attract overseas investments besides increasing the share of manufacturing in the economy.
India aims at increasing the share of manufacturing sector, which contributes over 80 per cent in the country''s overall industrial production, from 16-17 per cent to 25-26 per cent of the gross domestic product by 2020.
On concerns over imposition of minimum alternative tax on special economic zones, Scindia said: "We are in discussion with the finance ministry. We hope to have a sympathetic hearing, so that we can ensure that there is a stable policy regime going forward".
On the exporters demand for the continuation of tax benefit scheme -DEPB, he said "we will ensure that...exporters are incentivised to be able to reach our target of USD 500 billion by 2013-14".
The Duty Entitlement Pass Book (DEPB) scheme for exporters would end on June 30.
Rangarajan favours separate Debt Management Office
Joining the debate over hiving off the debt management activities of the Reserve Bank, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has favoured setting up a separate Debt Management Office (DMO) under the aegis of the central government.
"There are many countries in the world where the public debt office is managed only by the government. Therefore, even here, the Reserve Bank can continue to play its role as a monetary authority, without having the DMO under it," the PMEAC chief told PTI.
The Reserve Bank has opposed setting up a DMO under the Union government to manage sovereign debt, saying only the central bank has the requisite expertise to manage market volatility.
"Only central banks have the requisite market pulse and instruments to aid in making contextual judgements which an independent debt agency, driven by narrow objectives, will not be able to do," RBI Governor Duvvuri Subbarao said at a meeting of the Central Bank Governance Group in Basel.
However, Rangarajan, a former RBI Governor, said times have changed and the government could take up the job if it is "adequately prepared to undertake that function".
He said that earlier, the government required the helping hand of the RBI to enable it to raise the required amount, because prior to 1991, the borrowing rate of the government was well below the market rate.
"But things have changed since then... According to the Fiscal Responsibility and Budget Management (FRBM) Act, the RBI is not supposed to be in the primary market," he said.
The government has proposed to set up an independent Debt Management Office, aimed at separating the RBI's roles as the decider of the interest rate in the market and being the banker to the government.
At present, both the government's debt and fresh borrowings are managed by the central bank.
In his 2011-12 Budget speech, Finance Minister Pranab Mukherjee had mooted the proposal to introduce the Public Debt Management Agency of India Bill
18 MAY, 2011, 06.00PM IST, ASHISH TRIPATHI,TNN
Petrol price rise: Mayawati's agitation against UPA on May 31
LUCKNOW: BSP supremo and UP chief minister Mayawati on Wednesday morning held a meeting with party office-bearers, MPs, MLAs and ministers.
She issued directions to hold a nationwide agitation against Congress led UPA government's decision to hike petrol price on May 31. She said that petrol price hike will have a cascading effect increasing the inflation rate further.
The May 31 agitation, she said, would mark the start of campaign to make people aware of anti-people policies of the UPA II. Maya's move is being seen as a counter to Congress's campaign against BSP government in UP over farmer unrest due to land acquisition at Bhatta-Parsaul in Gautambudhnagar.
Maya, while addressing party leaders, said that the petrol price hike shows that Congress does not care about people. She said that the hike was announced immediately after elections in five states, which shows that how Congress made people a fool.
"Such a move if taken earlier would have wiped out Congress in the elections," she said. Now, she added, the UPA government is planning to increase prices of diesel, kerosene and LPG.
She said that petrol has 14% share in the price index, hence increase in inflation is inevitable following increase in the petrol prices fuel price hike. It would result in increase prices of essential products an services.
Maya described Centre's explanation that public sector oil companies were suffering a huge loss due to subsidy on petrol price hike following increase in petrol prices at international level as a lame excuse.
She claimed that the Central government gave a Rs 4 lakh crore subsidy relief package to corporate in 2008-09 to fight recession. In 2009-10, when the growth rate was 6.8%, the Centre again gave a subsidy relief package of about Rs 4 lakh crore to the corporate world. Now, when the growth rate of the economy is around 8%, the UPA Government has given relief package of Rs 4.5 lakh crore to the corporate. This, she said, proves that the 'hand' of the Congress is not with the common man but it was 'hand in glove' with the capitalists.
Elaborating the steps taken by the BSP government to provide some relief to the people from the increase in the petrol prices done by Central government, Mayawati said that the cooking gas was made 'tax free' since June 7 2008 in UP. Besides, the VAT rate levied on diesel was decreased from 21% to 17.23 %. She said that the VAT, being charged on kerosene distributed from the government fair price shops, was also decreased to 5%.
18 MAY, 2011, 05.30PM IST,ET BUREAU
Sensex ends below 18100; oil&gas, pharma down
MUMBAI: Benchmarks ended choppy session in the negative territory as investors stayed away due to lack of positive triggers to drive the market. Rate sensitive sectors and oil&gas stocks remained down on profit booking on concerns that any hike in diesel prices would lead to another interest rate hike by the Reserve Bank of India. The Empowered Group of Ministers is scheduled to meet next week to discuss diesel and LPG gas price hike.
Indian markets opened on a positive note in line with peers but failed to hold on to the gains as weakness in index heavy-weights like Reliance Industries, State Bank of India and ONGC continued to put pressure on the indices.
Bombay Stock Exchange's Sensex ended at 18086.20, down 51.15 points or 0.28 per cent. The 30-share index hit a high of 18218.20 and low of 18020.79 intraday.
National Stock Exchange's Nifty ended at 5420.60, down 18.35 points or 0.34 per cent. The broader index touched a high of 5460.50 and low of 5401.25 in trade today.
"The market is likely to remain rangebound for time being with negative bias and the Nifty can slip to 5300-5350 levels. Market is lacking fresh triggers and an early on-set of monsoon can provide some respite in the short-term.
Factors like higher interest rates, inflation and mixed bag of results are keeping the market under pressure. There is a possibility of earnings downgrade in Sensex stocks by 3-5 per cent due to high input costs," said Dharmesh Pancholi, senior manager-advisory (equity), Sharekhan.
BSE Midcap Index was down 0.61 per cent and BSE Smallcap Index moved 0.80 per cent lower.
Amongst the sectoral indices, BSE Oil&gas Index was down 1.88 per cent, BSE Healthcare Index declined 1.40 per cent and BSE Auto Index moved 0.98 per cent lower. BSE IT Index gained 0.24 per cent and BSE FMCG Index was up 0.20 per cent.
Reliance Infrastructure (-4.11%), Tata Motors (-3.36%), Reliance Communications (-3.31%), SBI (-2.40%), Reliance Industries (-2.02%) and ONGC (-1.28%) were the major Sensex losers.
"Selective FMCG and pharmaceutical counters like HUL, ITC and Glenmark Pharmaceuticals are less risky bets in such environment. Major correction is over in SBI and investors can start accumulating the stock around Rs 2250-2300 levels in staggered manner," Pancholi added.
HDFC (2.34%), Hero Honda (1.93%), Maruti (1.75%), Wipro (1.71%) and Tata Power (1.50%) were the major gainers.
Market breadth was negative on the BSE with 1751 losers against 1018 gainers.
Reliance Industries rebuts DGH's KG-D6 report, hopes BP will fix problem
Reliance Industries has countered a report that the oil regulator, the DGH, used to target it for falling gas production from the KG-D6 fields , saying the study was done without visiting the fields and the company was not given an opportunity to present its views.
Reliance was "deeply concerned and surprised" by the reservoir behaviour and "its deviation from what was envisaged in the Field Development Plan (laid out in 2006)", Reliance Senior Vice-President (Commercial) B Ganguly said in an April 30 letter to the DGH.
"Our concern is also evident from the fact that we have moved to bring in a more experienced partner in the form of (UK's) BP, who brings with it the best deep water experience globally," he wrote, adding that Reliance plans to discuss the reservoir performance with BP to find a solution to the problem.
The Directorate General of Hydrocarbon (DGH) had commissioned independent consultant P Gopalkrishnan to give a report on the reasons for gas output from the Dhirubhai-1 and 3 fields in the KG-D6 block falling to 42 million cubic metres per day from 53-54 mmscmd in March, 2010, instead of rising to the projected 61.88 mmscmd.
In his letter, Ganguly gave a point-by-point rebuttal of Gopalkrishnan's finding that the "shortfall of gas production is due to non-drilling of the adequate number of wells".
"While the DGH-appointed consultant has reached certain conclusions on the performance of the D-1 and D-3 fields, we as operators were neither approached nor afforded an opportunity to discuss any of the field issues with the consultant," he wrote.
"The consultant had not even visited the field to apprise himself of the actual conditions and field performance," he said. "The conclusions are further contrary to the facts and information provided by us from time-to-time to the DGH."
The DGH is using this report to make Reliance carry out the impossible task of drilling two wells by next month and another nine by the fiscal-end. This despite the fact that each well takes up to six months to be completed and there was a very small weather window available for drilling in the Bay of Bengal.
The regulator is mulling over the action it can take against Reliance for failing to meet this commitment, sources said. Ganguly stated that Reliance neither had access to the consultant nor was the full report prepared by Gopalkrishnan ever provided to the company.
"From the conclusions that have been conveyed to us, it seems that the consultant either has not been provided or has not considered all reservoir/production data or it would not have been difficult for him to appreciate some very obvious reservoir pressure trends in the field that contradict the conclusions reached by the consultant," he wrote.
Ganguly stated that Reliance, BP and its existing 10 per cent partner Niko Resources of Canada will "discuss the reservoir performance in detail and come up with most optimal solutions." "These solutions would include identification of well locations and interventions in the existing wells," he said.
18 MAY, 2011, 02.55PM IST,REUTERS
India, US start $50 million fund for clean technology
The United States and India announced a joint $50 million fund to promote research in clean energy technologies on Wednesday, a step seen as part of efforts to whittle down their differences over how to fight climate change.
The fund will help establish the Indo-U.S. Joint Clean Energy Research and Development Centre which will finance academia, institutions and industry from both countries to undertake the research.
"This is the first collaborative research effort of its kind, where Indian and U.S. researchers will be jointly selected," U.S. Ambassador to India Timothy J. Roemer said in a statement.
"It elevates the U.S.-India clean energy cooperation to a new level and is a testament to the strength of our continued strategic partnership."
In the global fight against climate change, two of the world's most populous democracies sit on the opposite end of the debate, their differences a major hindrance in achieving an international agreement on curbing global warming.
Under existing rules, only rich countries have to meet binding emissions targets and report actions regularly. But developed nations led by the United States, which never ratified Kyoto, want emerging economies such as China and India to take on a greater share of climate actions.
Developing nations now emit more than half of greenhouse gas emissions and that portion is growing quickly. China has already passed the United States as the world's top carbon polluter.
Emerging nations say they will accept international consultation and analysis (ICA) of their emissions actions, but not anything equal to the standards expected of rich economies. They blame the rich for much of the greenhouse pollution pumped into the atmosphere over the past two centuries.
A huge gap also exists between rich countries reluctant to pay the fiscal and lifestyle costs of deep cuts in their emissions, and developing states which say they must be allowed to increase emissions so their economies can catch up.
The U.S. statement said the awards from the new fund will be made to a consortia with the knowledge and experience to undertake collaborative research programs.
"These consortia will help bring together top talent from both countries and are expected to generate key technological advancement through genuine collaboration between U.S. and Indian researchers," it said.
18 MAY, 2011, 02.50PM IST,REUTERS
Flaws expose free markets to corrective measures
LONDON: Increasing myopia among investors and distorted financial pricing may be exacting a high economic and social toll.
What's been clear to most observers since the credit crisis brought the world's biggest financial firms close to collapse and triggered the deepest global recession in recent history is that free markets don't always deliver optimal outcomes and the self interest of shareholders can't always be relied upon.
In a world where financial market pricing now touches so many lives directly -- from the cost of food and energy, housing finance, retirement savings or even the stability of sovereign finances and national budgets -- growing realisation of market flaws may push the political debate towards taming market power.
What's more, the questions come at a time when the centre of gravity in international economic policymaking has shifted more toward emerging powers such as China and Brazil who are less in thrall to the basic tenets of market fundamentalism.
Examining the extent of equity investors' short-term focus and the damage done to long-term investment and growth, Bank of England economist Andrew Haldane reckons his evidence points to persistent risk of market failure.
This month's paper by Haldane, the BoE's executive director for financial stability, and co-author Richard Davies showed how excessive discounting of future company cashflows had put far greater value on firms' short-term earnings generation.
Haldane found that in both the United States and Britain that investors were now discounting 5-year cashflows at rates more appropriate at 8 years hence, 10-year cashflows as if they were more than 16 years or more away and cashflows of more than 30 years as if they barely had any value at all.
In essence, the further away or more stretched-out the return on investment, the less value is placed on the firm today -- leading in some cases to viable long-term projects such as infrastructure or high-tech being shelved.
"These projects are often felt to yield the highest long-term (private and social) returns and hence offer the biggest boost to future growth. That makes short-termism a public policy issue," said Haldane.
"Investment choice, like other life choices, is being re-tuned to a shorter wave-length. Public policy intervention might be needed to correct this capital market myopia."
NOT SO EFFICIENT
Among measures the paper put forward as possible corrective surgery for this short-sightedness were sliding scales of shareholder voting rights that would depend on the duration of stock holding or ultimately the use of government taxes or subsidies to encourage ivestors to hold equity for longer.
The study builds on prior work by Haldane and others on the lack of patience in finance, where superior annual returns from short term "momentum" investing have led to greater churn and volatility and cut average equity holding periods.
For example, the mean duration of equity holdings on the New York Stock Exchange has fallen from as much as seven years in 1940 to under two years in 1987 and just seven months in 2007.
The net result of this herding, Haldane argues, is that equity prices persist at levels far from fundamental valuations for longer, while higher medium-term volatility acts like a tax on committing long-term capital.
Studies like this were dismissed for many years prior to the credit crisis in favour of the "efficient markets hypothesis" that said more and unfettered trading activity created a superior good of liquidity and price transparency.
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