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Friday, August 30, 2013

Growth slows to 4-yr low of 4.4% in April-June quarter Manufacturing, Mining Sectors Turn Negative

New Delhi: The country's economy grew at its slowest pace in four years in the April-June quarter, dragged down by contraction in the manufacturing and mining sectors. The dismal data will pile more pressure on an embattled government to unveil fresh steps to reverse the slowdown. 

    Data released by the Central Statistics Office on Friday showed the economy grew 4.4% in April-June, slower than the 5.4% in the year-ago period and 4.8% in the January-March quarter. 
    The 4.4% expansion was 
the slowest since the 3.5% posted in January-March 2009, and the weakest pace of growth since the global financial crisis. 
    The Indian economy, Asia's third largest, has lost steam as policy delays, political uncertainty, high interest rat
es, global slowdown and stubborn inflation hurt expansion. WORST SINCE GLOBAL FINANCIAL CRISIS 
WHAT IT MEANS FOR YOU 
Slowdown in creation of jobs, lower salary hikes expected Business may be hit as growth stalls and interest rates rise; margins to come under pressureWeak demand may prompt companies to offer discounts 
REMEMBER WHAT THEY SAID? 
MANMOHAN SINGH | PM Jan 9, 2012 | The economy is expected to grow about 7% this financial year 
May 22, 2013 | The economic situation is turning around... 
Aug 15, 2013 | This phase of slow growth will not last long... 
P CHIDAMBARAM | FM Nov 5, 2012 | I'm looking forward to this year ending with 5.5- 6% growth.. next year getting back to 7%... 
Feb 8, 2013 | There are indications of green shoots... we can recapture the magic of 2004-08 (8.5% growth) 

WHEN CSO HAD THE LAST LAUGH 
Earlier in the year, the finance ministry had scoffed at CSO estimates, saying, "It is likely that the final estimate will be closer to the govt's estimate of a growth rate of 5.5% or slightly more. The CSO responded, "Perceptions can be different, they will get reconciled... in May when we have the complete IIP data for the year". 
According to data released on May 31, 2013, the economy grew at 5% in 2012-13, matching the CSO's earlier estimates 
Ease norms, reform fast: India IncGDP Growth May Hover Around 5% In FY14 In Absence Of Strong Measures 
New Delhi: The government has been under attack from opposition parties, industry and economists who have repeatedly called for urgent reform measures to boost growth and sentiment. The sharp slide of the rupee against the dollar and some controversial steps to stem its fall have added to the gloom in recent days. 
    But Prime Minister Manmohan Singh on Friday vowed to reverse the trend and expected growth to rebound on the back of a good monsoon, revival in global growth and stability of the rupee. "I believe this year, growth rate will be about 5.5%," Singh told lawmakers in the Rajya Sabha while replying to a debate on the state of the economy. 
    Friday's data showed that the vital manufacturing sector, which has been under stress for several months now, contracted 1.2% in the April-June quarter compared to a fall of 1% in the year-earlier period. The mining sector, which has been hit by policy and environmental delays, fell 2.8% compared to an expansion of 0.4% in the same quarter a year ago. 
    The services sector, which accounts for nearly 60% of the economy, slowed to 6.6% in the 
quarter compared with a 7.7% expansion in the year-earlier period. The farm sector remained robust, growing 2.7% in the June quarter compared with a 2.9% expansion in April-June 2012. 
    Economists said they expect growth to be around 5% in 2013-14. Several economists have already pared down their growth estimates against the backdrop of the sharp slowdown and volatility in the financial markets. 
    "Unlike the sharp recovery from the Lehman crisis (Vshaped) in 2009, this time the growth is following a L-shaped trajectory and is likely to oscillate around the 5% trough in 2013-14," said D K Joshi, chief economist at Crisil. 
    "Government spending was a significant driver of growth as private consumption growth weakened further to 1.6% and investments fell by1.2% compared to a year ago amidst lack of policy reforms, procedural delays and persistent supply-side bottlenecks," Joshi said. 
    Indian Inc called for immediate steps to stem the slowdown, slash regulatory hurdles to growth and stepping up reform measures. 
    "The economy continues to tread in difficult waters as 
many challenges remain on the fore. The precariousness displayed by the rupee has raised concerns afresh on the external front, industrial growth continues to face deceleration, and the investment cycle is yet to kick off," said Naina Lal Kidwai, president of FICCI. "Understandably there is no perfect recipe to steer out of the current state of affairs but what we need is swift action given the volatile situation," she added. 
    The pick-up in exports and the impact of a good monsoon are expected to help in a re
bound in the months ahead but analysts say deep reforms are need to boost growth and revive sentiment which has taken a knock due to policy delays and approval of some industry-unfriendly measures such as the passage of land acquisition bill and food security bills. 
    Hopes of an easing in interest rates have also been dashed by the sharp volatility in the rupee and the steps taken by RBI to arrest the slide. Stubborn retail inflation, which is hovering near double-digit, has also acted as an obstacle to easing tight monetary policy. 

'BRICS to jointly tackle forex volatility' 
ndia is liaising with other emerging-economy countries on a plan to co-ordinate intervention in offshore currency markets blamed for worsening a currency rout over the past three months, a senior Indian finance ministry official said on Friday. 
    The idea of major emerging economies taking action together to offset the impact of a stronger US dollar as the Federal Reserve reins in its stimulus had also been floated in June by Brazilian President Dilma Rousseff in a phone call to her Chinese counterpart. 
    "It is now time to stop," Dipak Dasgupta, the Indian finance ministry's principal economic adviser, said, referring to speculative behaviour in offshore markets he said was damaging the stability of the world economy. "It is going to happen in a matter of days rather than weeks," he said. "Brazil and India can start the move." REUTERS 

Bloc may reach deal on $100bn fund 
Beijing: BRICS countries may reach consensus at next month's G20 summit at St Petersburg on creating a $100 billion currency reserve fund to help ease short-term liquidity pressure and safeguard financial stability of major emerging economies, a senior Chinese central bank official said. Yi Gang, deputy governor of the People's Bank of China, said leaders of the group has agreed on the ratio of contributions, operation mechanisms, governance structure and loan-to-value ratio of a Contingent Reserve Arrangement (CRA). AGENCIES




Tuesday, August 27, 2013

Re’s lost over 20% this year Re Plunges 188 Paise To 66.19/$,

The Sharpest-Ever Fall In Absolute & Percentage Terms. Rattled By 1.3 Lakh Cr Food Bill, Stock Market Loses 2 Lakh Cr In A Day. And Gold Hits All-Time High 

Fear Of US Strike On Syria Roils Emerging Mkts


Mumbai:The rupee on Tuesday hit a record low of 66.30 before closing at 66.19, down 188 paise from Monday's close of 64.31, over concerns that the food security bill would throw government finances into disarray and fears of a US strike against Syria. 
    The rupee is emerging as a front-runner in a race to the bottom among emerging market currencies. In both absolute and percentage terms, Tuesday's drop is the highest ever. The rupee has fallen by around 20% 

since the beginning of the year. The only currency that has done worse is the South African rand which has fallen nearly 23%. Turkey's lira has dropped 14% while Brazil's real has fallen over 17%. The Chinese yuan has been the outlier, having gained nearly 2% in 2013. 
    Given the uncertainty over the rupee, gold, seen as a safe haven investment, soared to a new high of Rs 32,585/10 grams. Silver also rose, to a sixmonth high to retrace the Rs 56,000-per kg level. 
India faces risk of ratings downgrade, warn bankers 
Mumbai: The concerns over the food security bill and a possible US strike on Syria that caused the rupee to fall also dragged the sensex down 590 points to 17,968 on Tuesday. Bankers said with the government living beyond its means, India faced the risk of a downgrade by rating agencies. This would accelerate the outflow of foreign capital. 
    The general slowdown in the economy is also impacting the real estate market. Data released by National Housing Bank showed that property prices in 22 of the 26 cities covered, including Mumbai, Delhi, Bangalore and Chennai, have recorded a decline in prices during the quarter ended June as compared to the preceding quarter. 
    However, finance minister P Chidambaram said that the government would not exceed the fiscal deficit target projected for the year. He also said that the cabinet had approved infrastructure projects amounting to Rs 1,83,000 crore—including power projects. 
    "While the rising dollar is hurting all emerging markets, a lot of our pain is self-inflicted," said Ashish Vaidya, head of fixed income commodities and currency trading at UBS India. "The current crisis clearly threatens corporate balance sheets which usually have a reasonable line of overseas funding, which is going to take a hit," said Vaidya. He added that while depreciation leads to imported inflation, the food security bill will add to demand-led inflation as it will increase disposable income of the beneficiaries. 
    "The food security bill is expected to add to the fiscal burden. We believe crude oil has emerged as a key risk in the nearterm, which is not a good sign for the INR. Thus, the macroeconomic outlook has weakened and risks have clearly strengthened," said Sanjeev Zarbade, vice president, Kotak Securities. 
    "We estimate that the total cost of NFSB in its first full year could be Rs 1,17,000 crore, which amounts to an additional Rs 27,000 crore (0.25% of GDP) over the budgeted amount for FY14," said A Prasanna of ICICI Securities PD.


Monday, August 26, 2013

5 defaulters traded on NSEL without stock


Mumbai: Five of the nine defaulting members on the troubled commodity bourse NSEL did not have adequate commodity stocks in their warehouses even as they traded in hundreds of crores worth of contracts, which led to a crisis worth about Rs 5,600 crore. 
    NSEL said on Monday it is investigating the matter relating to Ark Imports, Lotus Refineries, N K Proteins, Vimladevi Agrotech and Yathuri Associates. 
    Similar investigations are expected to start on the other four defaulters: Loil Overseas Foods, NCS Sugars, Spin Cot Textiles and Tavishi Enterprises. These nine defaulting companies together owe about Rs 83 crore to NSEL investors, which they failed to pay last week. 
    In a related development, FMC chairman Ramesh Abhishek told the NSEL Investors Forum that the regulator was considering declaring the promoter of NSEL, Jignesh Shah, not fit and proper to operate exchanges.

ONE-ON-ONE ‘World isn’t going to wait for elections. We need to act today’

    HSBC India chief Naina Lal Kidwai wears another hat — that of Ficci president. She has spent a major part of this year in the national Capital, making a case for reforms and a more business-friendly environment. Kidwai tells TOI that the government needs to push reforms immediately. Excerpts. 

How is the rupee affecting business? 
Quite significantly of every company that has ECB on its balance sheet. The borrowings were at low interest rates but for those that remained unhedged, the cost of servicing has gone up significantly. Banks are beginning to review with companies how repayments would look in this environment. The second impact is for every company that imports. If you are a net importer then there is a problem. All emerging markets have been hit — some by 8-10%, others like us by 15-18%. We can 
avail of the benefits in terms of improvement in the US and Europe, where we are exporters. The fears I have in mind are infrastructure, processes that enable our exporters to go out, interest rates which are high, domestic input cost and liquidity squeeze. Related to that is the enabling environment for industry — issues related to power supply, land acquisition etc. 
So, are we in a position to 
benefit from the depreciation? 
India's competitiveness in the world lies in some sectors such as IT software and pharma. 
We need to do it across the board. We were never an easy destination to work and we have possibly become tougher. But, at the end of the day Indian business thrived even with that. India will always remain a large domestic market and the rural market will remain a good driver of growth. The big areas that need to be addressed are infrastructure projects that are stuck, GST and skills. The Cabinet Committee on Investment is helping revive a lot of projects. 
Do we have enough time before the elections to address the concerns? 
There are ministers who want to see solutions. If they set the tone, things can work out. The worry is that there is such a high decibel noise around corruption that whenever there is something that goes ahead, there is always someone who is criticizing it. If you reach a situation where there is no one brave enough to find a solution then there is a problem. 

Has the Opposition stalled some reforms? 
GST is a classic case. There are things beyond FDI in the Insurance Bill but the progress of bills in Parliament is abysmal. To me it's a breakdown of the political system. I don't know if the ruling party has reached out to the political system or is there opposition for the sake of opposition. It's important that the political class should get together. The world is not going to wait for elections, which is eight or nine months away. We need to act today. 
Are foreign investors still interested in India? What are your clients saying after the FDI reforms? 
Retail FDI is quite a tough one, nor is the political system united. In telecom, along with FDI other things need to be done. No company can ignore India. It's going to be a timing issue — whether they put in the money now or wait till the elections.

Naina Lal Kidwai PRESIDENT, FICCI


Cos Set To Hike Prices Again In 2 Months Despite Fear Of Slowing Sales, Cite Pressure From Sliding Re

New Delhi: If you have been planning to buy a new smartphone or upgrade to a bigger TV before Diwali, now may not be the best time to go ahead. Prices of mobile phones, laptops, TV sets and printers are set for a second hike in as many months as the sliding rupee has increased costs for companies, forcing them to revise rates just ahead of the crucial festive season. 

    Companies said the pressure from a depreciating rupee refuses to ease and uncertainty persists over the currency's performance against the dollar in the near future. The rupee has slipped 14.5% against the dollar so far this year and fell to a record low of 65.56 last week. 
    Coming in the midst of a slowdown, the hike in electronic goods' prices is expected to further dampen sentiment among buyers already 
shying away from new purchases on account of sluggish growth and high interest rates. 
    Printer and computer major HP will be raising prices by as much as 8%, and this revision comes after a similar hike in July. "We have no other option, and will be increasing prices immediately," HP India 
president (printing and personal systems) Rajiv Srivastava told TOI. 
    Around half the products HP sells in India are imported, while many of the locallymade ones also contain parts procured from overseas. Srivastava said the effect of increased prices is already telling on the market. "There are 
certain companies who are trying to reduce, or delay, purchases," he said. 
    Electronics and mobile phone giant Samsung, which had hiked prices by 2-3% last month to factor in the weaker rupee, is also undertaking a fresh revision in select products. Prices of some of its mobile phones and tablets are up by 3-5% again. "We have been compelled to increase prices of some mobiles and tablets to manage the impact of the sharp rupee depreciation on our input costs," said Vineet Taneja, country head of Samsung's mobile & IT division. 
    Panasonic, Japanese maker of consumer appliances and televisions, is set to raise prices as well. "Panasonic is keenly observing the rupee movement and the quantum of the price hike will depend on the (forex) situation which has created an imbalance in the market. It (rupee fall) might lead to the company increasing prices by 5-7% with
in a few days if the condition remains the same," said Manish Sharma, MD of Panasonic India. The company is looking at increased B2B (business-tobusiness) sales as well as higher local content on products to protect margins. 
    Sony is mulling a hike between 4% and 6% to factor in the higher costs. "The rupee is hitting costs, and we have no option but to increase prices," said Sunil Nayyar, sales head for Sony India. Sony does not manufacture in India and imports all its products here. 
    Nayyar admitted that the timing of the hike was not good as the market was already under pressure. "There is a slowdown in the industry, though Sony continues to grow." 
    Companies fear that the fresh round of price hikes will further slow down demand, which is not good news as most have been banking on the upcoming festive season to revive fortunes.



1.3 LAKH CRORE GAMBLE? LS passes food security bill, Cong, oppn battle for credit

Yeh Karna Hi Hai, Says Cong Chief


New Delhi: The Lok Sabha on Monday passed the food security bill, barely eight months ahead of the 2014 election, amid fierce competition between the Congress and the opposition to daub themselves in populist colours. 
    Termed a "game-changer" by UPA-II, the food security bill went through a protracted passage in the Lok Sabha as opposition parties ranging from the BJP, AIADMK, CPI and BJD to the Akali Dal in
sisted on a vote on amendments such as further reducing the rack rates for cheap foodgrain and making the law's coverage universal. 
    All concerns about a burgeoning current account deficit and falling growth were kept in abeyance as the Manmohan Singh government and the opposition wrestled to walk away with maximum brownie points after the vote on the bill was concluded. 

    What's the food security scheme? 
It provides for 5kg per person, per month, of rice, wheat or coarse grain. Proposes to cover 67% of India's population or 82 crore people, 75% rural & 50% urban. The rates at which it will be given are 3 for rice, 2 for wheat & 1 for bajra, jowar. Cost of scheme approximately 1.3 lakh crore, up from current food subsidy bill of 75,000 crore in 2012-13. States to get one year for rollout 

    What about existing schemes? 
Some schemes subsumed: Antodaya Anna Yojana (for poorest of poor), midday meals, meals for children aged 6 months-2 years with their mothers, ICDS (for kids below 6). As of now, apart from state schemes, Centre provided cheap food to around 32 crore people under BPL. This jumps to 82 crore. Govt will need to procure 62 million tonnes of grain 
    When will the scheme roll out? 
There are some grey areas and missing links. States have to identify beneficiaries. This can be a problem as exclusion criteria not clear. Centre is to share transport and commission costs, which need to be worked out. Also govt admits to 20-35% leakage in PDS, which needs to 
be plugged. Ration cards reduced from 22 crore to 16 crore, but more needs to be done. Storage capacity needs to be augmented 
    What's the impact on the economy? 
There will be a push on govt spending which will increase current account deficit – not desirable in present situation. There are also concerns that India's procurement for the scheme could push up world food prices in case of drought and under-procurement 
    Does it make for great politics? 
So far states have cornered political benefits for cheap food grain. Now central govt will seek to gain the upper hand in this populist game. On election eve, this could help Congress 
Govt wary of oppn amendment in RS 
New Delhi: The Congress and the opposition battled for brownie points while passing the food security bill in the Lok Sabha on Monday. The government said it stopped short of considering universal coverage as it was hemmed in by constraints of production and procurement but justified a long delay in the legislation by arguing that the law has been vastly improved. 
    Congress chief Sonia Gandhi defied the discomfort of a nagging viral fever to set the tone for the ruling party, saying the question whether resources could be mustered for the bill was best answered by stressing, "Ye karna hi hai." She admitted that the bill would provide succour to those who have not benefited from growth and are battling the curse of hunger and malnutrition. 
    Her speech is the first time she has intervened in a debate in the current Lok Sabha apart from a speech during the special session of Parliament held to commemorate its 60 years. She spoke once earlier when proposing Meira Kumar for Speaker. 
    Sonia made it plain that the food bill—seen to have her strong backing—is the Congress's latest rights-based entitlement and a cornerstone of the ruling party's political agenda for the next Lok 
Sabha election. 
    There was considerable skirmishing over the amendments moved by the opposition with the ruling party benches on one occasion voting against a clause in the bill, mistaking it to be a change proposed by leader of opposition Sushma Swaraj. 
    The matter was settled with Swaraj agreeing to a revote, a rare occurrence in the House. The bill will now be considered by the Rajya Sabha where the government needs to be more careful of its numbers although the BJP has indicated that it is not keen to stall the law. 
    The concern for the government in the Rajya Sabha is that an opposition amendment may end up being part of the bill rather than a clause being struck down. 
    The amendments moved by the opposition in Lok Sabha touched minute aspects of the law like inclusion or exclusion of taxpayers as beneficiaries. The government had to go through a testing time before the bill cleared the Lok Sabha after 10pm. 
    BJP leader Murli Manohar Joshi led the opposition arguments, saying the bill is not a significant improvement over existing benefits and has been brought to Parliament with the objective of "luring voters" ahead of the next election. "This is not a food security bill, this is vote securing bill," he said.


Sunday, August 25, 2013

We didn’t call Ambanis: CBI chief

New Delhi: The decision to make Anil and Tina Ambani witnesses in the 2G spectrum scam trial was not taken by the CBI but by special public prosecutor U U Lalit, who was appointed by the Supreme Court, the agency's director Ranjit Sinha told TOI. 

    The CBI chief said Lalit had given an application to make the couple witnesses along with 15 others. "The decision to make Anil and Tina Ambani prosecution witnesses in the 2G case was not taken by us (investigating team). It was taken by the special public prosecutor," Sinha said. The CBI says the evidence is well documented in the 2G case and the statements will have no bearing on the outcome. 
    The CBI had, in fact, never questioned Tina Ambani and its officials had claimed last year that they did not require the couple in the case. Anil Ambani was once exa
mined by the CBI but later, the agency said he was not needed for testimony. The development was first reported by TOI in June when the application was moved in court to make them witnesses. 
    According to sources, the special public prosecutor is within his rights to add somebody as a witness in a particular case and he does not need to consult the investigating team. 
SPECTRUMPED 
Ambani can't recall giving note to CBI 

New Delhi: The CBI didn't want Anil and Tina Ambani as witnesses in the 2G case but it was the decision of special public prosecutor U U Lalit. Appearing before special CBI judge O P Saini who is hearing the case, Anil Ambani had on Thursday resiled from his statement made during the probe in February 2011. In the case of Tina Ambani, the CBI claimed she was "deliberately withholding facts" which the judge found was "adverse" to the prosecution. 

    The 54-year-old corporate baron, during his deposition on August 22, recalled that he had visited the CBI office in February 2011 but did not hand over any note to the CBI officer. "I do not recall," was Ambani's stock reply to most of the questions put up by the prosecution. 
    He also said he did not have knowledge about various firms — AAA Consultancy Services (P) Limited, ADAE Ventures (P) Limited, Parrot Consultants (P) Limited, Tiger Traders (P) Limited, Zebra Consultants (P) Limited, Swan Telecom (P) Limited and Swan Consultants (P) Limited — which were alleged to be associate companies of Reliance ADAG.

Wednesday, August 21, 2013

Re hits record low of 64.54

Mumbai: The rupee closed below the 64-level for the first time on Wednesday with the currency ending the day at 64.04, 81 paise below its previous close of Rs 63.23 against the dollar. The British pound also created a new record closing above the 100 mark at 100.42 as against 99.03 on Tuesday. 

    With most bankers feeling that the 65-level may be taken anytime now, economists are now talking about the rupee touching 70. On Wednesday, Deutsche Bank said that the rupee could fall to 70 in around a month's time. On Tuesday, UBS had forecast the 70 level for the rupee this year. 
    The rupee fell to an intraday low of Rs 64.54 as the dollar strengthened ahead of the release of minutes of the US Federal Reserves July meeting. If the meeting reveals that a US recovery is seen to be underway by Fed committee members the rupee may fall further on expectation that the Fed may start to withdraw its monetary stimulus. 
    Dealers said that markets were confused over RBI measures to bring down
long-term rates through buyback of bonds even as it sought to keep rates high at the shorter end. 
    "The RBI took steps on Tuesday to contain longterm yields and ensure that credit flows were not unduly disrupted by the recent currency stabilization measures. Juggling currency and growth concerns at the same time is not easy and if not done carefully it risks sending mixed messages about policy intentions. That would neither help the currency or growth," said Leif Lybecker Esksen, chief economist for India & ASEAN, HSBC Global Research. 
    The day started on a positive note for the equity markets as bonds staged the best recovery in four years with yields falling by 50 basis points. However, the fall in the rupee spread panic in equity markets with indices closing lower.


NSEL to liquidate defaulters’ assets FMC Asks Exchange To Recover 83Cr Payment Dues From 9 Entities

Mumbai: The Forward Markets Commission (FMC), the regulator for the futures trading in commodities in the country, on Wednesday asked the crisis-ridden National Spot Exchange (NSEL) to take possession of the assets of all those nine defaulters to liquidate and recover the Rs 83 crore that they have jointly failed to pay to the exchange. 

    The nine defaulters now stand to lose some of their assets to auction for meeting their pay-in obligation to NSEL. These nine entities include Ark Imports, Loil Overseas, Lotus Refineries, N K Protiens, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech and Yathuri Associates. 
    In its payout on Tuesday, compared to a total outstanding liability of Rs 174.7 crore, the exchange could pay to its investors only about Rs 92 crore. This was the first of its 30 such weekly payouts scheduled to take place every Tuesday till March 2014, and the total amount involved is close to 
Rs 5,600 crore. However, with the exchange defaulting nearly 50% of the amount in its first payout itself, investors are now skeptical about how much of the total liability the exchange will be able to meet. 
    In a letter to the NSEL board, FMC pointed out that 
under the rules of trading on the commodity bourse, the exchange should ask all the defaulters to hand over their "books, documents, papers, assets, cheque books and other documents, as may be specified by the exchange and the same should vest with the exchange for the benefit of the creditors". It instructed NSEL to move to liquidate all realizable assets of the defaulter members to meet their pay-in obligations, which in turn should be passed on to the investors who are to receive money from the exchange. 
    FMC told NSEL that the proceeds of commodities auctioned and money realized from the defaulter should be done in the shortest possible time. The money received by auctioning the assets of the defaulters should be deposited in the escrow account opened for this purpose. In turn this money should be paid to those who are to receive pay-ins from the exchange, but the same should be done with the approval of the regulator. 
    On Wednesday, NSEL investors who were to receive money from the exchange, received part of their money into their bank accounts. Each investor got about 1.64% of the total receivable after 5% of the net receivable being deducted as value added tax (VAT), one of the investors said. According to the earlier plan published by NSEL, each investor was to receive about 3% of their net receivable every week for the next 20 weeks, and then about 1.5% every week till March 2014. They are also entitled to get interest at the rate of 8% per annum for the delay in payment. 

Govt won't take over NSEL board 
New Delhi:The government is unlikely to take over the board of NSEL, arguing that it does not have the technical wherewithal to deal with the crisis. "Taking over the NSEL board is not a big issue but the problem is managing it since we do not have the expertise," atop source in the ministry of consumer affairs said. Government officials said the move was also not being pursued as the promoters would be able to get away without ensuring pay outs that add up to nearly Rs 5,600 crore. The ministry said it wanted the finance ministry and Sebi to take charge of the commodities market. TNN 
GETTING INTO A SPOT 
May 2005 | NSEL is incorporated as a company 
2006 & 2007 | Signs MoUs with various state governments 
June 2007 | Receives govt exemption to launch contracts that allow delivery of goods after several days 
Oct 2008 | Commences live trading, providing deliverybased spot trading in 52 commodities 
March 2010 | Launches first contract under e-series that uses demat accounts for traders and investors 
Apr-Aug 2012 | FMC seeks data, suspects norm violation 
July 31, 2013 | NSEL suspends trading in most contracts after a ministerial directive to change the structure of contracts; the move affects volumes and leads to a payment crisis 
Aug 14 | NSEL seeks eight months to settle dues 
Aug 19 | NSEL giving wrong info, says FMC as govt mulls stock audit 
Aug 20 | NSEL defaults on dues; top brass, including its chief executive, is sacked 
Aug 21 | FMC tells NSEL to take possession of the assets of nine defaulters who failed to pay the exchange an aggregate amount of Rs 83 crore

Anil Ambani may have to appear in 2G court today


New Delhi: The possibility of Reliance ADAG chairman Anil Ambani having to depose as a witness in the 2G scam on Thursday looked real after neither the Supreme Court nor the trial court on Wednesday agreed to accept separate pleas to postpone his court appearance. 

    The apex court refused to accept Reliance Telecom Ltd's plea seeking deferment of Anil Ambani's appearance as a witness. It merely limited itself to saying that it would pass an order "as early as possible" even as it accepted the plea seeking deferment of the appearance of Bharti TelecomchairmanSunilMittal and Essar promoter Ravi Ruia as accused in the spectrum allocation case during the NDA rule. 
    The day also saw special CBI judge O P Saini, who is trying the 2G case, dismissing a similar plea by RTL seeking postponement of Ambani's deposition. The judge turned 
down the argument that the deposition of Ambani and his wife Tina as witnesses would prejudice the trial. 
    In his four page-order, Saini noted that no such prayer for postponement of examination of witnesses was made by either Anil or Tina Ambani. 
Bench refuses to clarify on Ruia, Mittal appearance 
New Delhi: Special CBI judge O P Saini on Wednesday refused to postpone Anil Ambani's deposition as a witness in the 2G case. "Furthermore, the witness for tomorrow (Anil Ambani) has already been served (summons) and an accommodation was granted to him earlier also when he was summoned for July 26. At that time also, the accused had not stated that the examination of these witnesses would cause prejudice to it. I see no reason as to how any prejudice would be caused to the accused, if these witnesses are examined now," the CBI judge said. 
    "Since no prayer has been made by Anil Ambani, who is to appear as witness tomorrow, and plea of Tina Ambani, who is to appear as witness day after tomorrow, is pending disposal, I do not wish to say anything more, more so when the instant application has been moved by an accused and not by any witness. Accordingly, I find no merit in the application," Saini said. 

    Arguing before an SC bench, RTL's counsel Mukul Rohatgi sought deferment of examination of the Ambanis as new witnesses in the 2G case. Rohagti argued that with the trial court commencing examination of new witnesses from August 19, half of RTL's petition challenging the summoning of witnesses at the fag end of the trial had already become infructuous. 
    But the bench said, "We will pronounce the order on the applications seeking clarification in our earlier orders (which had shut the door for accused to approach the HC against trial court orders) as early as possible." However, the bench deferred appearance of Bharti Telecom chief Sunil Mittal and Essar promoter Ravi Ruia. For Mittal and Ruia, who were summoned as accused by the trial court despite the CBI not naming them in the chargesheet filed in the case of alleged irregular allotment of excess spectrum during the NDA regime, the bench refused to clarify whether the SC had earlier ordered deferment of their appearance.

Monday, August 19, 2013

Economy stares at crisis as rupee suffers worst single-day fall of 142p At 63.13 To $, Worsens Fears About Growth And Inflation

Mumbai: Policymakers may still be in denial but the Indian economy is clearly staring at a crisis, with the rupee on Monday recording its sharpest drop ever in absolute terms to close at 63.13—1.42 paise down from its previous close against the dollar. 

    Economists are now forecasting an exchange rate of 65 in the short-term. The rush of capital out of India, which has triggered the fall, has raised the prospects of inflation, growth falling below 5% and higher interest rates. 
    The rupee fell nearly 2.25% in a day, making all imports that much more expensive. Sto
ck prices too crashed on Monday. The sensex fell 291 points to 18,308. 
    The rupee's fall was the sharpest among all currencies as rising interest rates in the US pushed up the greenback against all emerging currencies. As a result, investment funds from the West are pulling 
money out of emerging markets and back into US treasuries. Besides the rupee, the Indonesian rupiah touched a four-year low, while the South African rand fell below 1%. 
    The RBI's fire-fighting measure of keeping rupee funds in short supply to rein in the dollar have not helped much 
but have caused immense collateral damage. 
    The yield on 10-year government bonds has risen past 9%. This has compelled banks to raise interest rates on deposits and loans. Consumers buy less and businesses pull back on investments as rates rise, dragging down growth. 

10-YR GILT YIELD AT 5-YR HIGH 

Yield on 10-year government security is taken as the best risk-free return possible. Banks and other lenders take this yield as the benchmark 
rate for fixing lending rates. Any major change in this rate impacts all rates, including housing, auto, consumer. It also pushes up FD rates. 
    Since May 24, the benchmark yield has risen by 2.11 percentage points to Monday's close of 9.22%. This is the highest 10-year yield in almost five years 

SENSEX DIVES 291 POINTS 
    
Sensex lost another 291 points on Monday, taking the total loss in last two sessions to 1,060 points 
    Investors were left 3.2 lakh crore poorer with BSE's market cap now at 59.3 lakh crore 
    FIIs were net sellers of 680cr on Monday, adding to their 520cr net selling on Friday


Sunday, August 18, 2013

Diageo to pay CEO Menezes 105cr



London: The world's largest spirits maker Diageo Plc has proposed an annual pay package of up to 10.9-million British pounds (about Rs 105 crore) for its newly appointed Indian-origin CEO Ivan Menezes. 
    Menezes, who has been with UK-headquartered Diageo for about 13 years, was paid total remuneration of 7.8-million pounds (Rs 75 crore) in the last financial year ended June 30, 2013 when he served as chief operating officer. 
    After his promotion as CEO with effect from July 1, he has been given an 8.6% hike in base salary to one-million pounds (about Rs 9.6 crore) and would be entitled to further benefits totalling up to 9.9-million pounds (Rs 95 crore) a year, Di
ageo said in its latest annual regulatory filing. 
    Diageo, which owns brands like Johnnie Walker, Smirnoff, Baileys and Guinness, recently acquired a significant stake in India's leading liquor firm United
Spirits from Vijay Mallya-led UB Group in a deal worth over $2 billion. 
    53-year-old Menezes, who studied at premier Indian educational institutions like St Stephen's College and IIM-Ahmedabad besides Kellogg School of Management in the US, is said to have been instrumental in the United Spirits deal. 
    While Diageo said that "Menezes's salary has been positioned below median to reflect the fact that he is new to the chief executive role", his total package is much higher than the average salary earned by CEOs in India and abroad. 
    As per a latest managerial remuneration report by the Institutional Investors Advisory Services (IIAS) last 
month, the average CEO salary for India's biggest 500 companies in the last fiscal stood at Rs 3.6 crore while the figure for the biggest 500 companies in the US was Rs 28 crore. 
    As Diageo CEO, Menezes would get a base salary of one million pound, and would be eligible for awards under the company's annual incentive plan (AIP), performance share plan (PSP), senior executive share option plan (SESOP) and pension payments. 
    Under the AIP, he can get up to 100% of salary for "ontarget performance" and a maximum of 200% of salary payable for outstanding performance — which could take this component to up to 2 million British pounds. AGENCIES 

FAT PAY CHEQUE 
Ivan Menezes's base salary will be £1m (about 9.6cr) and he will be entitled to benefits totalling up to £9.9m( 95cr) 
The average CEO salary for India's biggest 500 companies in FY13 stood at 3.6cr

The corresponding figure for the biggest 500 companies in the US was 28cr



Govt agencies didn’t act against NSEL Finmin, Consumer Affairs Min Had Informed Parliament About Probes In Dec 2012

New Delhi: The National Spot Exchange (NSEL) fiasco, which has led to a delay in the settlement of payment worth over Rs 5,500 crore, is turning out to be a multi-agency failure with even the finance ministry and the Reserve Bank of India (RBI), apart from the ministry of consumer affairs, failing to act against alleged irregularities. 

    In fact, both the finance and consumer affairs ministries had told Parliament last December that they were probing the issue. 
    In December 2012, Trinamool Congress's Rajya Sabha member Sukhendu Sekhar Roy had raised the issue of contravention of Forward Contracts (Regulation) Act or FCRA and also asked the government if there were "illegal NBFC (nonbanking finance company) 
transactions. In identical replies on December 3 and 6, junior minister for finance Namo Narain Meena and the consumer affairs ministry had said: "After analyzing the trading data submitted by NSEL, Forward Markets Commission (FMC)… had intimated the department regarding the non-compliance of certain stipulated conditions… for one-day duration forward contracts. FMC has found that the exchange allows trading on the exchange platform without verifying whether the seller has the stocks with him or not, thus in effect, allowing short sale by the members. FMC has also found that thecontracts traded on the exchange platform for which settlement period exceed 11 days are Non-Transferable Specific Delivery (NTSD) contracts, which is in violation of the provisions of FCRA." 
    On the issue of NFBCs, both ministers had said "the issue is being examined by FMC in consultation with the ministry of finance". 
    Between the two questions by Roy, consumer affairs minister K V Thomas told his party colleague Sai Prathap Annayyagari in the Lok Sabha on December 4 that NSEL's reply to a show-cause issued by his ministry and a compliance report were "under examination". On August 5, TOI had highlighted how the consumer affairs ministry slept over FMC's report. 
    Both the ministries are yet to publicly disclose the details of the action taken by them. 
Government sources told TOI that even RBI, which deals with the issue of NBFCs, was in the picture but the regulator could not be contacted for comments. In the past, RBI has, however, said it does not regulate all NBFCs but only a handful. Sources, however,said that in this case only a complaint about financing transactions was received and NSEL was not registered as an NBFC. 
    Even Sebi's role has come under the scanner given that the depositories — NSDL and CDSL — are regulated by it and were participating in e-series contracts related to gold and silver, which were suspended after the NSEL fiasco turned into a full-blown crisis. Sebi officials have maintained that they did not have to do anything with NSEL, which was regulated by the ministry of consumer affairs.

REGULATORY LAPSES? 

Consumer Affairs Ministry | Told Parliament it was examining NSEL related reports, did not act on FMC 
report for over 15 months 
Finance Ministry | Told Parliament it was examining issues related to "illegal NBFC transactions" 
Sebi | Depositories such as NSDL and CDSL, which were dealing with NSEL's e-gold and e-silver contracts, regulated by it 
RBI | NBFC issue dealt by the regulator



RIL gives up on showcase gas fields in KG-D6?

New Delhi: Has Reliance Industries Ltd (RIL) given up on Dhirubhai 1 and Dhirubhai 3 — two of its showcase gas fields — in the KG-D6 block? One can infer as much from the company's submission to a House panel, saying drilling more wells would not raise output but would amount to flushing money down the drain. 
    "With new data emerging from four years of production, it is now clear that not much gas can be produced from this field... drilling further wells in the field would not add any incremental production but only lead to infructuous investments," RIL executive director P M S Prasad has said in a letter to chairman of Parliament's standing committee on finance, Yashwant Sinha. 

    Prasad's letter comes in response to the panel's latest report asking the government to rethink its decision on implementing a new pricing formula from April that is expected to double domestic gas price. It also recommended that RIL be asked to 
sell gas at the old rate to make up for the quantity by which it has missed the supply target. 
    The two fields, together with the MA oil field, are producing 14 mcmd (million cubic metres per day) against 80 mcmd envisaged in the $8.8-billion field development plan as water and sand have choked the drilled wells. 
    RIL and DGH — the oil ministry's technical arm — has been at loggerheads over drilling more wells ever since the output started falling in 2010. DGH has been insistent on drilling more wells to boost output.

In a submission to a House panel, RIL has said drilling more wells would mean flushing money down the drain


PM, Subbarao face off over RBI’s policies

New Delhi: Tensions between the government and outgoing RBI governor D Subbarao came out in the open on Saturday as Prime Minister Manmohan Singh called for "fresh thinking" on macroeconomic policy. 

    The PM threw his weight behind FM P Chidambaram who has insisted the RBI not interpret its mandate only in terms of inflation control but be more attentive to the government's growth priorities. "The time has come when we should revisit the possibilities and limitations of monetary policy in a globalized economy, in a fiscally constrained economy," Singh said. Islamic banking gets RBI clearance erala has got the RBI's nod to launch a financial institution that will follow the principles of Islamic finance. To be floated by the Kerala State Industrial Development Corporation as a non-banking finance firm, it will not charge interest on loans or give interest on deposits. Criticism inaccurate and unfair, says Subbarao 
NewDelhi:PMManmohan Singhon Saturday urged the RBI to ensure that it focused on the government's growth priorities too, not just on taming inflation.Singh madethestatement at a function to release the fourth volume of the RBI's history, where the central bank governor D Subbarao was in audience. 
    Interestingly,Subbaraousedtheoccasion to stoutly rebut criticism of being insensitive to growth, saying it is "inaccurate and unfair" to contend the RBI was "obsessed with inflation, oblivious to growth concerns". Subbarao argued that the RBI was focused on taming inflation precisely because it was bothered about growth. "There is any amount of evidence to show an environment of low and stable inflation is a necessary precondition for sustainable growth," he said. 
    While Subbarao called the growth versus inflation debate an "over simplification", Singhdrewon hisown experience asRBI governor to stress that monetary policy needed to evolve, saying a redefinition of policy goals he had initiated in the 80s had proved to be relevant. The prime minister said, "Macro-eco
nomic policy-making,targets andinstruments, I think, is another area where I feel fresh thinking is called for, and I sincerely hope governors of thefuture, particularly Dr Raghuram Rajan, will attemptto revisitsomeof thesedifficult areas." As slipping growth accentuated the government's political problems over the last year, the finance ministry and the RBI have found themselves increasingly at odds as the ruling coalition lookedtothecentralbankto reduceinterest rates to provide a fillip to investment. 
Not a repeat of 1991 crisis: PM 
New Delhi:PM Manmohan Singh on Saturday dismissed the possibility of India witnessing a repeat of the 1991 balance of payments crisis. "There is no question of going back to 1991. At that time foreign exchange in India was a fixed rate. Now it is linked to market. We only correct the volatility of the rupee," he said. In 1991, Singh said, the country had only foreign exchange reserves for 15 days. "Now we have reserves of 6-7 months. So there is no comparison," he said. AGENCIES



Monday, August 12, 2013

This I-Day, Plan For Financial Freedom Take small but definitive steps towards building long-term wealth to ensure better and secured future

 For parents, there was a time when grown-ups and working sons were synonymous with both financial freedom and security. But with changing times and new social structures, that concept of financial security has become almost non-existent, at least in most of urban India. 

    Other than raising their children, parents themselves have to think about their post-retirement financial security. And with the demand and popularity for such approaches increasing, there are financial planners and advisors who are there to help, for a fee of course. 
    In the run up to the Independence Day, we spoke to three investment planning experts about how they would guide their clients towards financial freedom. Here is what they had to say: 

For retired individuals 
1) Don't run out of cash: You should keep cash and cash equivalent that can take care of your household expenses for at least six months. 
2) Match expenses with income: Suppose of the total Rs 1-lakh expenses per month, Rs 75,000 is on food and essentials, while another Rs 25,000 is discretionary spending. Always make sure you have a regular source of monthly post-tax income of Rs 75,000. This can also include a systematic withdrawal plan (SWP) which can save more taxes for you. 
3) Ensure growth: This is for that part of investment that will take care of incremental incomes and help you beat inflation in the years to come, and will insure you against running out of cash. For this, systematic investment plans (SIPs) in good mutual fund schemes are unbeatable options. This can also help you take care of your discretionary spends. 
4) Get into another profession: You have retired from a job, but not from 
your life. Also learn and/or do something that you always wanted to do but never got the time during your working years, like taking up a hobby, etc. Also, learning how investments are done is a good option. But never spend more than 40% of your time in the new profession and keep 60% of your time reserved for all other things like hobbies, new learning, etc. 5) Get a good financial advisor: You have a life partner. Now do a proper due diligence and choose an advisor who will remain a friend for life. 
    — Rajiv Bajaj, 
    VC & MD, Bajaj Capital 

For women 
1) Get on top of numbers: Don't let numbers make you cross-eyed! Investing is about understanding yourself and what you want your money to do for you, understanding concepts and then numbers…and someone else can always crunch the numbers for you. 2) Health cover:Don't count on the health policy of your company alone to take care of any future medical ex
penses. You should also have one of your own. Here, the younger you start, the cheaper it is. 
3) Don't sign anything blindly: Most women do not take their own investment decisions but depend on the men in their lives like fathers, brothers and partners. Love with your heart, but sign with your brain. 

4) Make your CA fall in love with you: Get him to teach you how to save tax. Sometimes you can save more in tax than the stock markets can give you in returns. 
5) Don't be afraid to take risks: 
Studies show that women are generally risk-averse and so tend to save 
rather than invest. However, the only way to build wealth is to invest. Riskaverseness could be due to not understanding how financial investments work, so take small steps and dip your foot in the water! 
    — Sujata Kabraji, financial planner and wealth advisor 

For young and first-time savers 
1) Upgrade your skills: As lifecycles of products and services get shorter, and technology innovations cause disruptive changes, growing income consistently will only be possible by investing in oneself by constantly upgrading skills through training, learning and development workshops. Set a training budget for yourself, just like budgeting for regular and lifestyle expenses. 
2) Manage expenses: You should learn to differentiate between your needs and wants. Once you learn that, you would be in control of your money in a much better way than otherwise. 

3) Get risk cover: You should have adequate risk coverage to protect your whole family from any potential loss of assets and income. So, have a life insurance policy, health covers and also house insurance
4) Set clear financial goals: Not only that, you should also measure the goals and how far have you reached at a pre-determined frequency. Any divergence from the set course should also call for a course correction. 
5) Have a plan B: Learn to have a contingency plan, for everything. Have an investment strategy in place that should take care of your financial needs in case of loss of job, if the rate of interest goes up and your EMIs start shooting up, which in turn may be a stress on your expenses and savings, and various other such situations. 

— Vishal Dhawan, founder, Plan Ahead Wealth Advisors 

NEXT WEEK 
    
With the rate of interest in the economy showing extreme volatility, fixed maturity plans (FMPs) are the flavour of the season. Next week, we will revisit FMPs, the pros and cons of investing in these schemes, how these products stack up against other competing ones and other related issues.


Govt set to hike import duties, clear PSU $ bonds Bids To Bolster , Raise Inflows, Rein In Deficit


New Delhi: In an attempt to shore up the sliding rupee, the government on Monday unveiled a multi-pronged strategy to increase inflow of dollars and check outflows. The measures include a planned increase in import duty on several red-hot imports like gold and silver, allowing three public sector financial institutions to raise dollar funds through bonds, making NRI deposits more attractive and easing foreign loan norms. Taken together, these steps are expected to bridge the forex gap by $18 billion. 
    Through the measures announced on Monday, finance minister P Chidambaram is hoping to pare imports by $7 billion, while increasing doll
ar inflows by around $11 billion. This, he said, would help contain the current account deficit (CAD) at $70 billion or 3.7% of the gross domestic product, lower than last year's 4.8%. CAD has been blamed as the key factor behind the sharp volatility of the rupee against the US dollar. 
    CAD has widened as exports have remained sluggish, while gold and silver imports have spurted. India needs more dollar flows, through foreign investment, to fill the gap. 
BRIDGING FOREX GAP BY $18bn 
Govt hopes to prune annual import bill by $7bn 
MOVE | Compression in import of gold & silver via duty hikes IMPACT | Hopes to tame demand, save $4bn outflow 
M | Compression in oil demand I | Govt looks to cut import bill by $1.5bn 
M | Higher import duty on nonessential imports I | Lower demand expected to pare import bill by another $4bn 

Announces measures expected to increase inflows by $11bn 
M | PFC, IIFCL, IRFC to raise dollars in bonds with implicit govt guarantee I |Expected to mop up $4bn 
M | Easing foreign loan norms I | MNC subsidiaries can tap dollar resources from parent 
M | PSUs to tap dollar window I | $4bn can be raised in over- seas loans, trade finance. Will cut reliance on local currency market, reduce rupee volatility 

Industrial output declined by 2.2% in June 
Exports rose 11.64% to $25.83bn in July; imports down 6.2% CPI inflation eased 
to 9.64% in July from 9.87% in June 
Govt's renewed efforts fail to lift rupee 
    The slew of measures indicates the government's urgency to avert a possible crisis on the balance of payments front if the situation is left unchecked. "While we have a problem, there is no room for panic…I expect the volatility to decrease and also expect the rupee to stabilize (following the measures)," Chidambaram told a press conference. Although he did not elaborate on the products where customs duty is proposed to be increased, sources said some electronic goods top the list with measures expected to cut import of certain varieties of coal, crude palm oil and copper also on the anvil. 

    The urgency can be gauged from the government resorting to a quasi-sovereign bond issue by the Power Finance Corporation, Indian Railway Finance Corporation and India Infrastructure Finance Co Ltd. Such a bond issue was last used in 2001 when State Bank of India raised over $5 billion through the Indian Millennium Deposits in the aftermath of the dotcom bust and the 9/11 attacks. This time, SBI declined to be used as the vehicle to raise dollar debt. 
    The renewed effort from the government failed to lift the rupee. Despite the measures being announced first in Parliament in the afternoon, the rupee slid to 61.30 a dollar, a little short of last week's lifetime low of 61.80. 

    "These measures were in the pipeline. Despite that, the rupee seems to be under pressure. The rupee has been affected by growth worries on the domestic front and the quantitative easing tapering on the external front," said Moses Harding, executive director at Lakshmi Vilas Bank. 
    Most bankers and economists were unusually shy of commenting on the measures after RBI announced a clampdown recently. 
    "Till the structural issues are resolved the currency will behave in a similar pattern. That can be changed if we have more regular flow of FDI, which is the preferred form of foreign capital," said Devendra Kumar Pant, chief economist, India Ratings.

Sunday, August 11, 2013

Bizman gets 1 year jail for not filing I-T returns

New Delhi: Observing that tax evasion is rising and should be curbed with a firm hand, a trial court has sentenced a businessman to one year's rigorous imprisonment for not filing income tax returns for two years. 

    Additional chief metropolitan magistrate Devendra Kumar Sharma handed the jail term to Harish Bhasin, the director of a private company, who had failed to file returns for 2006-07 and 2007-08. The I-T department had submitted that Bhasin was assessed at a taxable income of Rs 11.98 crore for 2006-07 and the tax liability on this amount was somewhere around Rs 4 crore. Bizman claimed I-T owed him refunds 
New Delhi: The income tax department said that for 2006-07, businessman Harish Bhasin's taxable income was assessed atRs11.98 crore andfor 2007-08 at Rs 34.9 crore and the tax liability, Rs 10 crore. Separate cases were filed for both years. The court sentenced Bhasin to six months' jail in one case and one year in the second case for repeating the offence. 
    "Evasion of tax by persons is rising day by day which causes huge loss to the government exchequer and such practice should be curbed with firm hand. In this case, the convict was under an obligation to file return of income within the prescribed period but he failed to do so," the magistrate said. 
    His sentences were, however, suspended till Septem
ber 9 on furnishing a personal bond of Rs 50,000. The prosecution had said Bhasin had failed to file his returns and despite repeated notices, he did not respond. 
    Bhasin in his statement to the court, however, claimed that he has certain refunds due from the IT department. The court, however, noted, "From a bare perusal of statement of accused, it appears that he endeavoured to say that he did not file the return of income as certain refunds are due from the IT department," and added, "In my considered opinion, to avail of benefits under the law, one has to be vigilant and not sleep over one's rights. If the accused has any due/refund from the IT department, he ought to have taken appropriate remedy available as per law. In view of the same, nonfiling of return deems to be admitted by him."

Friday, August 9, 2013

Delinked from WR corridor, Harbour fast line starts to roll CST-Panvel Project On Govt Table Next Wk


    The CST-Panvel high-speed corridor project began rolling with authorities delinking it from the Western Railway elevated corridor and deciding to press ahead with the pre-bidding process. 
    The Mumbai Rail Vikas Corporation plans to submit the draft state support agreement (SSA) to the railway board and the state government next week. 
    The signing of an SSA is an important milestone in the pre-bidding stage of a public-private partnership project. It binds the state government to complete important work like land acquisition or shifting of utilities in a time-bound manner. 

    "We will send the draft SSA by next week," said MRVC chairman and managing director Rakesh Saksena. "As soon as we receive in-principle approval for the SSA, the process to prepare the bid documents will be taken up," added another official. 
    So far, the Harbour line fast corridor had been dormant as its fate was linked to progress on the 60-km Churchgate-Virar elevated rail corridor. "This stand does not make sense as the WR's elevated corridor is getting delayed due lack of convergence on SSA, land acquisition and even FSI. There is no harm if the pre-bidding process for both projects is carried out simultaneously," 
an MRVC official said. 
    Railways officials concede there are fewer hurdles in executing the Harbour line corridor compared to the WR corridor. "Private land does not have to be acquired at all for the entire 49-km corridor. Unlike WR, where some portion of the corridor has to go underground, the Harbour project will be elevated up to Kurla and go at ground level from Mankhurd onwards," said a 
senior MRVC official. The only major problem, he added, will be removal of the slums, mostly along the Mankhurd-Govandi stretch. The government land needed mostly belongs to the Mumbai Port Trust. 
    Bidders, officials believe, will be keen on the project because of its fare earning potential. "The Harbour line is saturated as it operates only on a slow corridor. The growth of Navi Mumbai and 
the proposed international airport and special economic zones will bring in commuters," said an official. "We expect a 30% shift from the suburban line and 20% shift from road traffic once the corridor starts." 
    MRVC has sought a floor space index of 4, which will help the bidder recover 22% of the project cost. "The Central government will provide viability gap funding to the tune of 20% of the project cost."



 

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