He is 1941 born and quite close to the BJP self imposed age cutoff of 75.RoyG wrote:Luyens' Spice claims that Arun Shourie will take over as FM. Rajdeep and Sagarika are probably the account owners.
If this is true, Modi will do it after the grand budget presentation this month.
It also means that Modi is ready to undertake large scale divestment and structural reform.
RBI may cut interest rate further in policy review this weekTo fast-track industrial activities, the government has granted environmental clearance to 190 projects worth an estimated Rs 6.31 lakh crore across sectors like mining and steel during the June-December 2014.
The focus on faster clearances follows concerns raised by the industry that such approvals were hard to come by during the previous UPA regime at the Centre, thus creating bottlenecks for large industrial projects.
Of the total projects, the Environment Ministry has cleared 37 non-coal mining projects worth Rs 4.49 lakh crore, 48 infrastructure projects worth Rs 95,000 crore and 69 industrial projects worth Rs 40,600 crore in the said period.
That apart, environment clearances have been given to 10 thermal projects worth Rs 38,000 crore and 23 coal mining projects worth Rs 8,900 crore, one river valley project worth Rs 238 crore since the government came to power on May 26.
According to the source, green nods have been given to companies like India Cements and Ultratech Cement for cement projects, ONGC and Cairn India for petroleum drilling projects and Rungta Mines for a steel project.
In case of coal mining projects, all 23 projects approved belong to Coal India and its subsidiaries and are expected to generate 15 million tonnes of coal.
In non-coal mining category, environmental clearances have been given to iron ore projects located in Odisha belonging to companies like Sirajuddin and Rungta.
The RBI may cut its policy rate further by 0.25% this week to boost growth, as inflation remains under control and fiscal situation appears better following a record CIL disinvestment.
RBI, which last month announced a surprise rate cut of 25 basis points after maintaining a hawkish monetary stance for 20 months, is scheduled to undertake its sixth bi-monthly monetary policy review, 2014-15 on Tuesday, February 3.
According to bankers and economists, there is room for further rate cut by RBI as retail and wholesale inflation rates have remained benign.
The concerns on fiscal deficit front have also eased, especially after the government last week garnered a record amount of Rs 22,577 crore through disinvestment of 10% stake in Coal India Ltd.
While lowering the policy repo rate to 7.75% from 8%, RBI had also said on January 15 that further rate cuts would depend upon inflationary expectations and improvement in the fiscal situation.
While the retail inflation slipped to 5% in December, the Wholesale Price Index (WPI) inflation remained near zero level (0.1%).
The government's fiscal situation is expected to improve further with more disinvestments. So far, the government has realised over Rs 24,000 crore with just two disinvestment share sales, including SAIL's Rs 1,719 crore late last year. It targets to raise a total of Rs 43,425 crore from disinvestment in the current fiscal, ending next month.
There is nothing new here. These shenanigans have been going on for many decades now.Uttam wrote:LIC bought almost half the shares offered in the recent CIL disinvestment.
This I see is a big problem. Since LIC is entirely government owned, it is really not a disinvestment. Even in terms of deficit management, this to me seem more like an accounting gimmick than an actual improvement of fiscal situation.
Suraj wrote: I don't see why LIC owning CIL shares is a bad thing. It's not a transfer from one GoI entity to another. LIC is an insurance company and therefore sells policies to the public, which it then invests in the portfolio it holds. Therefore they are simply an institutional investor as opposed to a retail one. Worldwide, big institutional buyers predominate large stake sales, not retail investors. Anywhere between 25-45% of major stocks like Google and Apple are held by institutional investors too. In our less mature equity market, particularly considering the stake sale was implemented on very short notice, the CIL ownership pattern is fairly normal. LIC will probably sell off part of its holdings as the market strengthens, since CIL currently hovers around its stake sale reserve price.
Theo_Fidel wrote:Except LIC is not a bank. If that is what you want to do then use a bank to underwrite the selloff. And this is not just bank deposit funds that are then put towards investment. This is the Insurance companies reserves not just ready capital. There is nothing ideological in pointing out something that in normal circumstances would be highly illegal.
I still don’t think the comment about our equity markets being immature is merited. Our equity market & for that matter our banks know how to price this sell off, they are probably the most mature markets between EU & Japan.. The government does not agree with their valuation and hence the wheeling-dealing.
Pension fund and insurance companies are major institutional investors worldwide. If you follow Bloomberg or some other news source, you'll see references to some distant entity like the Belgian School Teachers Pension Fund or the Norwegian Derrick Operators Pension Fund complaining about governance practices at some valley IT company because they hold a stake in that company.Theo_Fidel wrote:Except LIC is not a bank. If that is what you want to do then use a bank to underwrite the selloff. And this is not just bank deposit funds that are then put towards investment. This is the Insurance companies reserves not just ready capital. There is nothing ideological in pointing out something that in normal circumstances would be highly illegal. And it was questionable even when the UPA or ABV or RG1 or IG did it. IG in particular was known for these maneuvers.
I still don’t think the comment about our equity markets being immature is merited. Our equity market & for that matter our banks know how to price this sell off, they are probably the most mature markets between EU & Japan.. The government does not agree with their valuation and hence the wheeling-dealing.
What capital belonging to GoI does LIC have to spend ? GoI's stake in LIC is a paper value, that is unmonetized as long as an LIC stake is not divested in the open market. Their capital base is the base acquired from the insurance policies they sold, and it's a very substantial capital base: they have ~270 million individual investors, and an investment portfolio worth Rs.14 lakh crore or ~$230 billion (reference). Both those are June 2014 statistics and probably significantly higher due to market movement since, say 280 million individuals and $250 billion. LIC's $2 billion purchase of shares in CIL, the world's biggest coal miner, is still less than 1% of their investment portfolio. Nothing really unusual in all this. There's no money being transferred from one GoI entity to another - if you hold a policy with them ~0.75-0.8% of it is now invested in CIL.Uttam wrote:Ok, here is a counter argument. When LIC bought the shares in CIL they used capital that belonged to the owners of the company.
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance agencies. In the ensuing investigations, one of India's wealthiest businessmen, Sachin Devkekar, owner of the Times of India newspaper, was sent to prison for two years.
Eventually, the Parliament of India passed the Life Insurance of India Act on June 19, 1956 creating the Life Insurance Corporation of India, which started operating in September of that year. It consolidated the life insurance business of 245 private life insurers and other entities offering life insurance services, this consisted of 154 life insurance companies, 16 foreign companies and 75 provident companies. The nationalisation of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including life insurance.
Suraj wrote:Pension fund and insurance companies are major institutional investors worldwide.
You're under the impression I claimed anything like that, yes ?Theo_Fidel wrote:I find it hard to believe a pension fund is the same thing as an insurance company.
They're not 'arm-twisted' to do so. They're wholly owned by the Govt of India, and CIL is majority own by the GoI as well. Both are tasked with following GoI's objectives. There's certainly an arguable moral hazard in one part of government spending an investment portfolio comprising public money to purchase a divestment issue. But on the other hand, any person who purchases a policy with LIC knows this, and still put their money there. Purely in investment terms it's not a bad investment at all, nor or the moral hazard any better or worse than anything we see involving western private banks.Uttam wrote:Question is not whether an insurance firm or a pension fund should invest in a company like CIL. The question is whether the investor in question made this investment by their free will or they were arm-twisted in doing so.
It is not the same but very similar. In fact, an insurance company can own a pension company and vice versa. Both entities must use actuaries for their respective operations and in the US they must obey federal and various state guidelines. CalPers, is a California state employees pension system and is a huge investment entity that is actively managed by the state of California. It is the largest shareholder in many corporations. Conversely *all* insurance companies are highly regulated in the US and must answer to the state(s) insurance commissioners in which they do business. And if they are large enough, they may be declared a systemically important financial institution "SIFI" and must report to the Federal Reserve and be audited. A gift from the 2008 recession.Theo_Fidel wrote:Suraj,
I find it hard to believe a pension fund is the same thing as an insurance company.
What else can this imply saar.Suraj wrote: If you follow Bloomberg or some other news source, you'll see references to some distant entity like the Belgian School Teachers Pension Fund or the Norwegian Derrick Operators Pension Fund complaining about governance practices at some valley IT company because they hold a stake in that company.
That may very well be but it doesn’t pass the smell test does it. Smells like the same old karuvadu…. ..nothing will change at CIL meantime....Suraj wrote:There's no reference to LIC being compelled to utilize any kind of reserve fund for the CIL portfolio addition.
December core output at 3-month low of 2.4%The Government of India is preparing a plan to develop new ports at Dahanu, Vijaydurg and Revas in Maharashtra, in association with the state government and the private sector.
The total investment is estimated to be at least Rs 20,000 crore and each port is expected to handle 40 million tonnes of cargo annually.
Nitin Gadkari, the Union minister in charge of ports, told Business Standard: ''The development of these will be under the Centre's integrated ports development plan, wherein ports, roads and railway network will be simultaneously developed. The ministry has completed the initial study on these ports and held talks with the Maharashtra government for its involvement.''
Gadkari said the aim was to decongest Jawaharlal Nehru Port (JNP, at Navi Mumbai) and Mumbai Port.
Revas was to be earlier developed by Reliance Industries but this could not proceed due to problems on dredging and mangroves.
Gadkari said he hoped the proposed Dedicated Freight Corridor from JNP to Delhi, eight-laning of the Mumbai-Pune Highway and its connectivity with the soon to be widened Mumbai-Goa highway would help JNP move its container traffic more efficiently.
Manufacturing PMI at three-month low in JanCement production rose only 3.8 per cent, against 11.3 per cent in November. This was despite a low base of 1.2 per cent in December 2013. Growth in electricity generation was down to 3.7 per cent from double-digit growth rates in the previous two months. Electricity generation has expanded at double-digit rates in six of the first nine months of this financial year. The slowdown in its growth — if that persists for a few months — will have adverse impact on other industries, too.
Coupled with steel production, which fell 2.4 per cent in December, a marginal rise in cement production signifies a slowdown in construction.
Besides, natural gas production contracted 3.5 per cent, fertilisers 1.6 per cent and crude oil 1.4 per cent. These industries had fallen 2.9 per cent, 0.1 per cent and 2.8 per cent, respectively, in November.
Coal production saw the biggest growth (7.5 per cent), against 14.5 per cent in November. However, that could be because of a low base of 1.1 per cent in December 2013. It was followed by refinery products, which grew 6.1 per cent, against 8.1 per cent in November. Again, the base was too low for this industry — the production had declined 1.9 per cent in December 2013.
In January, India’s manufacturing activities expanded at a three-month-low pace, as orders moderated, showed the widely-tracked HSBC purchasing managers' index (PMI) on Monday. This was after the country’s manufacturing sector clocked a two-year-high rate of growth in December.
Meanwhile, a day before the Reserve Bank of India’s review of its monetary policy, the rate of inflation eased further — according to the PMI survey — raising expectations the central might advance a cut in the policy rate.
PMI declined to 52.9 points in January, compared with 54.5 in December. The index had stood at 53.3 points in November. A reading above 50 points shows expansion while one below that implies contraction.
Markit Economics, which compiles the PMI data, however, down-played the slower rate of growth in manufacturing activities. “Despite falling from December’s two-year-high level, the headline index remained consistent, with a solid improvement in business conditions in January,” it said.
Also, the expansion in India’s manufacturing sector during the month was not as slow as some other emerging-market peers. China’s, for example, saw contraction for a second straight month. Manufacturing PMI for that country stood at 49.7 in January, data showed.
In the official data, consumer goods remained a drag, particularly the durables segment. For instance, consumer durables contracted 14.5 per cent in November last year, against a fall of 21.7 per cent a year ago. The durables also declined 15.9 per cent in the first eight months of 2014-15, against 12.6 per cent a year earlier.
The growth rate for new export business moderated in January, after having accelerated to the highest since April 2011 the previous month. But the overall pace of expansion was, nonetheless, solid and stronger than the historical average, Markit Economics said.
However, official data showed exports contracted in December as well, after a fall in October.
Growth of output and new business continued to have little impact on employment in January, as work force numbers rose only marginally during the month.
“Concurrently, backlogs of work rose at the fastest rate in a year, with some companies commenting on capacity pressures being applied by rising order book volumes,” Markit Economics said.
I don't know what vague allegations you are talking about. My only observations is GOI has raided the reserve fund of LIC to buy the disinvestment of CIL shares. Wyfor you bring in strike and GOI owned and public confidence, etc into this. Not to mention the half dozen other items you have brought in as far I can see quite randomly.Suraj wrote:Instead of making vague allegations, why not say what you'd like them to do ?
What is this 'reserve fund of LIC' in the first place ? And where is your data showing this so called reserve fund was used, as opposed to their general corpus ? They have an investment portfolio valued at more than the GDP of all our neighbors excl PRC. PSU divested holdings are popular among large institutional investors, of which LIC is one of the biggest, if not the biggest. If they hold 5% of that portfolio in cash, that's more than enough to buy the entire CIL stake sale thrice over.Theo_Fidel wrote:I don't know what vague allegations you are talking about. My only observations is GOI has raided the reserve fund of LIC to buy the disinvestment of CIL shares.Suraj wrote:Instead of making vague allegations, why not say what you'd like them to do ?
They're not selling the stake of one PSU to another in the sense of balance sheet manipulation. I can agree with that if say, SAIL and CIL were compelled to implement some kind of cross share holding agreement. That amounts to a zero net gain balance sheet transaction. Here, the CIL shares are being absorbed by LIC's large investment corpus, which comprises mounting inflows from its insurance product sales. LIC is in the business of ensuring they invest that corpus and use it to manage their actuarial operations.Theo_Fidel wrote:I want the GOI influence on these business sectors to reduce. Ideally terminate pronto. Selling the shares of one PSU to another PSU seems a weak way to achieve this. I look forward to the day LIC is privatised. Hopefully not with another PSU buying its shares.
A_Gupta wrote:More on GDP revisions:
http://mospi.nic.in/Mospi_New/upload/na ... 0jan15.pdf
15. Gross Capital Formation (GCF) at current and constant prices is estimated by two
approaches – (i) through flow of funds, derived as Gross Saving plus net capital inflow from
abroad; and (ii) by the commodity flow approach, derived by the type of assets. The estimates of
GCF through the flow of funds approach are treated as the firmer estimates, and the difference
between the two approaches is taken as “errors and omissions”. However, GCF by industry of use
and by institutional sectors does not include “valuables”, and therefore, these estimates are lower
than the estimates available from commodity flow.
16. Gross Capital Formation (GCF) at current prices is estimated as Rs. 33.7 lakh crore for the
year 2011-12, while the estimates for both the years 2012-13 and 2013-14 stand at Rs. 36.6 lakh
crore. Since GCF did not increase during 2013-14, the rate to GDP declined during the year to 32.3
percent as against 36.6 during 2012-13. The rate of GCF to GDP excluding valuables stands at 33.9
percent and 31 percent during 2012-13 and 2013-14 respectively. The rate of capital formation in
the years 2011-12 to 2013-14 has been higher than the rate of saving because of net capital inflow
from Rest of the World (ROW).
17. In terms of the share to the total GCF (at current prices), the highest contributor is Non-
Financial Corporations, with the share rising steadily from 46.6 percent in 2011-12 to 51.5 percent
in 2013-14. Share of household sector in GCF is also significant, which has declined from 42
percent in 2011-12 to 34.2 percent in 2013-14. The share of General Government in GCF has
increased from 10 percent in 2011-12 to 13.2 percent in 2013-14.
18. The rate of Gross Capital Formation at constant (2011-12) prices has decreased from 37.2 in
2012-13 to 33.4 in 2013-14.
19. Within the Gross Capital Formation at current prices, the Gross Fixed Capital Formation
(GFCF) amounted to Rs. 33.7 lakh crore in 2013-14 as against Rs. 31.4 lakh crore and Rs. 29.7
lakh crore in 2012-13 and 2011-12 respectively. The change in stocks of inventories, at current
prices, decreased from Rs. 2.2 lakh crore in 2011-12 to Rs. 1.8 lakh crore in 2013-14, while the
valuables decreased from Rs. 2.5 lakh crore in 2011-12 to Rs. 1.5 lakh crore in 2013-14.
I think there are many many models out there on how to do this. Almost all the successful ones are carefully managed, for the markets full scrutiny and removes conflict of interest as much as possible. Even the USA government stepped in to prevent our Tallel than mountains 'friends' from squeezing in too close but only after the process was complete and only as a surgical strike.Suraj wrote:"how would you do this differently ?" If it's "privatize LIC", then the counter is "how do you privatize it ?" Say you offer 60% of it tomorrow. The largest IPO ever. The winning bidder is the largest bank in the world - Industrial and Commercial Bank of China. No issues with that happening, right ?
The US system eliminates conflict of interest in stake sales and IPOs ?Theo_Fidel wrote:I think there are many many models out there on how to do this. Almost all the successful ones are carefully managed, for the markets full scrutiny and removes conflict of interest as much as possible. Even the USA government stepped in to prevent our Tallel than mountains 'friends' from squeezing in too close but only after the process was complete and only as a surgical strike.
If anything, what GoI is doing here is small potatoes compared to the amount of self-serving behavior that predominates at that level in the US.Sounds like the latest inflation numbers released yesterday was too late to influence the RBI, and they'll wait until the Union Budget later this month before a new look.The Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy review, 2014-15 today kept the key rates unchanged. The repo rate was unchanged at 7.75% and the reverse repo rate at 6.75%. But, RBI has cut SLR by 50 basis points to 21.5%, effective February 7.
On January 16, 2015, RBI governor Raghuram Rajan announced his first rate cut since being appointed RBI governor in August 2013. The move prompted a near-unanimous opinion that this could be the beginning of a new interest rate easing cycle.
Though the Reserve Bank of India (RBI) cut the interest rate on January 15, but market entities had recently told Business Standard that they expected another in the monetary policy review announced today.
While the softening of retail inflation provided RBI Governor Raghuram Rajan with room to cut rates in January, the government's renewed commitment to sticking to the mid-term fiscal roadmap provides room for further easing, said experts. The central bank's medium-term objective was to contain the rise of the Consumer Price Index-based inflation below 6%.
Rajan reiterated the need to see further data confirming disinflationary pressures and “high-quality fiscal consolidation”.
“Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest rate stance,” Rajan said in a statement.