Is an industrial recession staring us in the face
While the FM was hopeful that the provisional figures would improve on revision, M Govinda Rao, director of the National Institute of Public Finance and Policy and a member of the EAC, was less sangui...
2008-10-10 15:03:09Cancer patient wins drug appeal
Patients in south Gloucestershire will now be prescribed the cancer drug Tarceva after the local PCT changes its policy. ...
2008-10-10 11:30:17Union IT minister Raja alleges smear campaign by Dayanidhi Maran
NAT72National/Politics/BusinessUnion IT minister Raja alleges smear campaign by Dayanidhi MaranChennai, Oct 10 IANS Union Minister for Information Technology and Communications A. Raja has charged Dayanidhi Maran, Chief Minister M. Karunanidhi's estranged nephew with masterminding a smear campaign against the centre and the state by levelling baseless allegations in a telecom spectrum deal."Dayanidhi Maran is doing this through newspapers and television channels jointly owned by him to besmirch the name of the chief minister and the central government for purely personal reasons. My decisions have made the telecom industry more competitive and Maran is jealous of this achievement," Raja said during an interaction with reporters here Friday.A section of the media here had charged that Raja's "questionable deals" had resulted in losses worth over Rs.25 billion to the national exchequer through "an improper telecom spectrum deal" that fetched only under Rs.1.75 billion. "Dayanidhi Maran issued 2G spectrum licences to 12 companies and I am following the same policy that has been in existence since 1999. Yet, I am being blamed," Raja claimed.Maran was union minister for information technology and communications till May 2007 and reduced the mobile and landline call rates drastically during his tenure. He brought in investments well in excess of $30bn for the IT sector alone and set the ball rolling for making India a chip manufacturing hub.Raja revealed that Rothschild & Sons had been appointed to conduct global auctions for further spectrum licences but was not sure of the profitability due to the worldwide financial crisis.Prime Minister Manmohan Singh is scheduled to rollout the much-awaited 3G services in December. Karunanidhi would do the same for Tamil Nadu on January 14 - or Pongal, the harvest festival here, Raja added.--Indo-Asian News Servicetsv/dg306 Words10102051
2008-10-10 11:06:12RBI cuts cash reserve ratio by 150 basis points Lead
BUS27Business/EconomyRBI cuts cash reserve ratio by 150 basis points LeadMumbai, Oct 10 IANS India's central bank, the Reserve Bank of India RBI announced Friday that the cash reserve ratio CRR will be reduced by 150 basis points bps to 7.50 percent of net demand and time liabilities NDTL instead of 50 bps announced Oct 6, 2008, to inject Rs.600 billion liquidity into the system.According to RBI regulations, the cash reserve ratio determines the amount of cash that commercial banks must always retain from the deposits made by their customers, technically called net demand and time liabilities NDTL.Banks have to maintain the ratio on a fortnightly basis.It is expressed as a percentage of deposits or NDTL and the RBI announced Friday that this percentage is being brought down to 7.5 percent from the existing 9 percent with effect from the fortnight beginning Saturday, Oct 11, 2008. The cut will result in freeing Rs.600 billion $15 billion of cash in the hands of Indian banks and enable them to use this extra liquidity to service depositors or lend to borrowers.As a result of this higher reduction in the CRR, a higher amount of about Rs.600 billion would be released into the system instead of the injection of Rs.200 billion that would have happened if the CRR cut was only 50 bps announced earlier, the RBI said in a statement Friday. On Oct 6, 2008, the RBI announced a reduction of the CRR for scheduled banks by 50 basis points to 8.5 percent of NDTL with effect from the fortnight beginning Oct 11, 2008. "This measure was undertaken with a view to injecting liquidity into domestic financial markets so as to alleviate the pressures brought on by the deterioration in the global financial environment," the RBI release said. "In the ensuing days, the global situation has worsened further. International stock markets and money markets had been adversely affected in a significant manner," the RBI said. "Central banks across the world have responded to these extraordinary developments by synchronised policy actions including measures for liquidity infusion," the release added. The RBI release said: "In the context of the abrupt changes in the international financial environment, it is important to note that the macroeconomic fundamentals of the Indian economy are strong and resilient and that India's financial system is sound, well-capitalised and well-regulated.""Money and forex markets in India have been operating in a relatively orderly manner. The current domestic market conditions are essentially a reflection of the adverse developments and extreme uncertainty in international financial markets," the release said. "Market participants are assured that the RBI stands ready to respond swiftly to meet any liquidity requirements that may arise in the context of the highly volatile external situation," the statement said. The RBI said it is monitoring developments closely and continuously and would respond swiftly and even pre-emptively to any adverse external developments impinging on domestic financial stability, price stability and inflation expectations and the continuation of the growth momentum of the Indian economy. The statement said that the RBI is committed to maintaining financial stability and active and flexible liquidity management using all policy instruments is an integral part of this objective. --Indo-Asian News Servicearj/vt578 Words*10102013
2008-10-10 11:09:12Indian equities tank seven percent in day-long mayhem Roundup
BUS20Business/EconomyIndian equities tank seven percent in day-long mayhem RoundupMumbai, Oct 10 IANS As fears over the impact of the global financial crisis on the Indian economy escalated Friday, a key Indian equities index closed with one of its steepest losses in recent months, with interventions by the government, the central bank and the markets watchdog having little impact to lift the battered sentiments.The sensitive index Sensex of the Bombay Stock Exchange, which at one point was down 1,088.60 points, made a marginal recovery to end at 10,527.85 points - but still down 800.51 points, or 7.07 percent, over the previous close.The situation was no different at the National Stock Exchange NSE where the broader S&P CNX Nifty index was down 6.65 percent at 3,279.95 points, over the previous close at 3,513.65 points."The fatal fall in the markets today was due to the acceleration of outflows by foreign funds, amid fears of credit crisis in the West," said, Ashok Jainani, head of research with leading brokerage, Khandelwal Securities."This fall was in line with what is happening across the globe. With foreign funds being major players, Indian markets cannot remain insulated from the financial meltdown," added Nagendra Bhatnagar, chief executive of IDBI Capital.Foreign funds have been net sellers of equity to the extent of $10 billion during the current year. Each of the 13 sector-specific indices of the Bombay Stock Exchange BSE ended in the red, while just two out of 30 scrips that make up the Sensex managed to buck the trend.India's largest pharmaceuticals company Ranbaxy Laboratories, with a gain of 4.71 percent, and the country's largest commercial bank, the State Bank of India, up 2.27 percent, were the only two Sensex scrips that ended in the positive territory.Reliance Communications, down as much as 21.02 percent, ICICI Bank, down 19.71 percent and Reliance Infrastructure, down 19.26 percent, led the losers in what analysts termed as a bloodbath in the Indian share markets.Indian's main equities market, which was not too long ago among the best performers within emerging economies, has shed some 28.20 percent in the past month and 43.58 percent over the past year, data with the BSE showed.In the past week alone, the 30-share Sensex, often taken as a barometer of the performance of Indian equities, has shed 15.95 percent.The markets opened very weak Friday and within minutes into trading, the Sensex had fallen by 1,088.6 points to 10,239.76 points, the single largest intra-day fall since Jan 22, 2008, when it had shed 1,111 points.Sensex Snapshots:Friday Open: 10,632.27Friday Close: 10,527.85Friday High: 10,904.13Friday Low: 10,239.76Previous Close: 11,328.36Change in points: -800.51Change in percentage: -7.0752 week fall in percentage: -43.58Change of small-cap percentage: -7.31Change in mid-cap percentage: -8.34Top gainer: RanbaxyTop loser: Reliance Communications Soon after trading commenced Friday, Finance Minister P. Chidambaram announced the formation of a panel under Finance Secretary Arun Ramanathan to study the impact of the global financial turmoil on the Indian economy that will give a report within a year.This was soon followed by a reduction of 100 basis points in the cash reserve ratio CRR for commercial banks to increase liquidity in the markets, which came on the back of a 50 basis points cut that was announced by the central bank Monday. The markets watchdog also said there was no problem of settlements.Even as the markets were responding to these interventions, news came that the country's industrial production had grown by a mere 1.3 percent in August and put paid to all positive observations on the robustness of the Indian economy, especially by the finance minister."It's a bad situation. Fundamentals don't work at such times. It's a cyclical chaos where more liquidity in the market means inflation will go up and less liquidity means money market will be affected," said Bijay Murmuria, director of Kolkata-based Sumedha Fiscal Services and president of the Association of National Exchanges Members of India ANMI.“The CRR cut by the RBI is actually causing more worry because if instead of a one-off measure this is the beginning of a regime of liberal policies in India, then the repercussions will be even more severe,” said analyst Jagannadham Thunuguntla.“That India's banking system is still sound is only because the previous RBI governor Y.V. Reddy refused to adopt liberal policy measures throughout his entire tenure despite repeated requests to do so in face of the bull market,” Thunuguntla, the head of the capital markets arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group, told IANS."Although there is a desperate need for liquidity in the system the RBI should make sure that Indian banks do not go overboard on their loan-deposit ratios like the US and European banks," echoed portfolio strategist and US-trained chartered financial analyst Manoj Krishnan of Delhi-based Price Investment Management and Research Services.--Indo-Asian News Servicearj-ap/jg898 Words*10101725
2008-10-10 08:02:08Greater clarity on meltdown making investors jittery
ECO14Economy/National/InternationalGreater clarity on meltdown making investors jitteryBy Arjun SenNew Delhi, Oct 10 IANS Investors around the world are getting increasingly jittery each passing day as they are gaining greater clarity on the repercussions and side effects of the financial tsunami that began in the US and has now engulfed almost every economy in the world."Each passing day investors are gaining clarity on the side-effects of the financial tsunami and they are getting more and more nervous," analyst Jagannadham Thunuguntla told the IANS.Thunuguntla is the head of the capital markets arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group.The latest development that has left investors shivering is the collapse of what is called the 'yen carry trade'.Owing to deflationary conditions in the Japanese economy, the interest rate there has come down to just 0.5 percent.Taking advantage of this, foreign institutional investors FIIs and hedge funds borrowed yen denominated loans from Japanese banks and reinvested these funds after conversion into other currencies. As the cost of these funds was only 0.5 percent, FIIs and hedge funds often invested in assets where the return was sometimes as low as 2-3 percent as these still enjoyed a spread. Over the last few days, however, the yen has been strengthening against the dollar because of the financial crisis in the US. Just a few days back, the conversion rate was 106 yen to a dollar, but Friday the rate rose to 98 yen to a dollar."This means that now FIIs and hedge funds have to repay a lot more dollars for every yen that they had borrowed and the cost of their yen-denominated loans has actually gone up from 0.5 percent to as much as 5-6 percent," Thunuguntla said."This means, with more and more FIIs and hedge funds now being forced to repay what has become high-cost yen-denominated loans, their losses too are climbing," he added.Consequently, they are getting into fire sale situations in most global markets to raise money to repay these yen-denominated loans, besides being already under redemption pressure, he said.In the Indian markets too, FIIs and hedge funds are selling indiscriminately and that is one of the major reasons why the market is crashing."The ill-effects of over-leveraging are also becoming clearer and clearer," said portfolio strategist and US-trained chartered financial analyst Manoj Krishnan of Delhi-based Price Investment Management and Research Services.Analysts said Iceland is an excellent case study in over-leveraging because the story is the same for all troubled investment banks and financial institutions.Iceland has nationalised all its three banks and the country's entire banking system has collapsed. Yet, in the four years - 2004 to 2008 - their bank assets grew five times through excessive borrowing, analysts said.Now the total debt of these banks at $61 billion is five times the country's GDP and the per capita debt of each Icelander is a whopping $276,000.Their currency krona has also crashed. One month back, the conversion rate was 120 krona to an euro. Now it is 330 krona. "That means the currency value has eroded by three times, and this will lead to runaway inflation because final consumption will not come down, imports will be costlier while GDP growth will be negative," Thunuguntla told IANS."The real problem is that the crises in the financial markets are now creeping into the real economy," Krishnan told IANS.German bank Hypo Real Estate is another example. Hypo has a banking unit called Depsta. It used to stand guarantor to infrastructure projects so that these projects could get financing at rates that made them viable and take a commission in return.Owing to Depsta's guarantee, these projects could get funds at 5-6 percent instead of 10 percent and above. With Hypo Real Estate now getting into trouble, the Depsta guarantees have become meaningless.Now all those projects that were viable due to cheaper funds by courtesy of the Depsta guarantee have suddenly become all unviable and promoters are being forced to stop work on them, the analysts said. "This will inevitably impact the real economy in an adverse way," said Naresh Pachisia, managing director of Kolkata-based SKP Securities, a leading distributor of financial products and services in eastern India.The decision by the Reserve Bank of India RBI to cut the cash reserve ratio is also not cutting much ice with investors mainly because such measures too can lead to repercussions on the real economy, Pachisia told IANS."Moreover, India has so far followed a conservative policy regime with regard to banks and that's why they are better off than US or European banks as they are well capitalised and not over-leveraged," said Thunuguntla."But now if the RBI opts for a more liberalised policy then Indian banks too will go in for over-leveraging and then the repercussions here will be much more severe," he added.These are only some of the side effects that are making investors so nervous and there are many more, the analysts said.--Indo-Asian News Servicearj/ank/vt 909 Words*10101743
2008-10-10 08:00:00Turkey hits rebel targets in Iraq
Turkish jets bomb suspected Kurdish rebels inside Iraq, the army says, days after the policy is extended....
2008-10-10 06:38:07Market mayhem continues despite liquidity injection Second Lead
BUS9Business/BusinessMarket mayhem continues despite liquidity injection Second LeadMumbai, Oct 10 IANS Indian equities markets Friday were witnessing an unprecedented bloodbath following panic selling on extreme nervousness despite announcement of a measure by the country's central bank to inject as much as Rs.600 billion liquidity into the system.Finance Minister P. Chidambaram reiterated Friday that the fundamentals of the Indian economy were strong. He also announced formation of a high-level group to look into the liquidity requirements following the mayhem in the capital market. But two and a half hours after the opening bell, the 30-share benchmark sensitive index Sensex of the Bombay Stock Exchange BSE was ruling at 10,411.69, down 916.67 or 8.09 from its previous close Wednesday at 11,328.36 points.The markets opened very weak and within minutes into trading, the Sensex had fallen by 1,088.6 points to 10.239.76 points, the single largest intra-day fall since Jan 22, 2008, when it had shed 1,111 points, analysts said. Despite staging a minor recovery, the index again began to head downwards.The broader-based 50-share S&P CNX Nifty index of the National Stock Exchange NSE also behaved similarly - opening very weak, recovering somewhat and then again heading southwards.After two and a half hours of trading the Nifty was at 3,261.65, down 252 points or 7.17 percent from its previous close Wednesday at 3,513.65 points.The BSE midcap index was at 3,689.45, down 321.03 points or 8.00 percent from its previous close Wednesday 4,010.48 points.The BSE small cap index was at 4,390.76, down 308.43 points or 6.56 percent from its previous close at 4,699.19. All Sensex component stocks were in the red and bank, capital goods, consumer durables and realty sectoral indices were the hardest hit."The CRR cut by the RBI is actually causing more worry because if instead of a one-off measure this is the beginning of a regime of liberal policies in India then the repercussions will be even more severe," analyst Jagannadham Thunuguntla told IANS.Thunguntla is the head of the capital markets arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group.RBI or Reserve Bank of India is India's central bank.It announced Friday a 150 basis point cut in the cash reserve ratio instead of 50 basis points that it had announced Oct 6, 2008 to inject Rs.600 billion liquidity into the system instead of the Rs.200 billion corresponding to a 50 bps cut."That India's banking system is still sound is only because the previous RBI Governor Y.V. Reddy refused to adopt liberal policy measures throughout his entire tenure despite repeated requests to do so in face of the bull market," Thunuguntla said. "It is now very clear that the liberal policies of US and European central banks leading to extreme over-leveraging by banks and financial institutions is at the root of the present crisis.""It's a bad situation. Fundamentals don't work at such times. It's a cyclical chaos where more liquidity in the market means inflation will go up and less liquidity means money market will be affected," Bijay Murmuria, Director of Kolkata-based Sumedha Fiscal Services and President of the Association of National Exchanges Members of India ANMI, told IANS.Murmuria, however, described the 150 basis points cash reserve ratio cut by the RBI as a "positive move"."It's a nightmare, people are clueless where financial markets are heading," said Murmuria."Investors are frightened due to the global economic turmoil and liquidity crunch, which led to this fall.""What is causing real panic is that investors across the world are no more responding positively to the various steps being taken by governments, central banks and monetary authorities around the world," Thunuguntla told IANS."Investors are panicking and they have simply lost confidence," Murmuria concurred.--Indo-Asian News Servicearj-ag/jg702 Words*10101333
2008-10-10 04:00:00Failed state Pakistan still the most dangerous place in the world, says expert
Washington, Oct.10 ANI: Pakistan is alarmingly teetering towards becoming a failed state and is still the most dangerous place in the world, says an Indian-American expert in an article for the Washington Post.According to Sumit Ganguly, Director of Research at the Center on American and Global Security at Indiana University and an Adjunct Fellow at the Pacific Council on International Policy, Pakistan is in even scarier shape than most of the so-called experts are willing to admit.He believes that this nuclear-armed state of 168 million is no stranger to political upheaval, and the crises that it is facing today such as the rash of suicide bombings, the assassination of former Prime Minister Benazir Bhutto last December, inflation as high as 25 percent and a resurgent Taliban movement, could spell further doom for it."The grim truth is that Pakistan is becoming something alarmingly close to a failed state. And that could have disastrous consequences for the United States, NATO and Afghanistan's struggle to hold back its own Taliban insurgency," Ganguly warns in his article for the Washington Post.He also does not hold out much hope for Pakistan under President Asif Ali Zardari or former Prime Minister Nawaz Sharif."Simply put, Pakistan is facing an existential crisis-on its streets and in its courts, barracks and parliament... I don't see much chance of a happy turnaround," he says.Having studied Pakistan for almost two decades, Ganguly says that the roots of Pakistan's problems run deep, back to the failure of the state's founder, Mohammed Ali Jinnah, to plant deep democratic roots and create a tradition of compromise. He says that the military has dominated the nation ever since, with disastrous results.He also claims that the ISI and Pakistan's generals "have been playing a duplicitous game with the United States for nearly two decades.""Pakistan's tragedy is that, from the beginning, no government, civilian or military, has fixed the underlying fragility of the state's basic institutions. Instead, democrats and dictators alike have subverted political parties, threatened journalists and cowed the civil service in their quest for short-term political gain and personal advantage," Ganguly feels.So can Pakistan be reformed Ganguly doubts it, and warns that the country could once again make a desultory return to military rule as its troubles mount.We need a stern, serious international effort-led by the United States-to put Pakistan back together again, reform its institutions and reorder its priorities. If not, we will face a terrifying prospect: Pakistan's collapse slow or otherwise into a full-blown failed state, armed with nuclear weapons, riven by ethnic tensions, infused with resentment and zealotry, with roving bands of Taliban sympathizers and bin Ladenists in its midst," he concludes. ANI
2008-10-10 02:57:38India, US to ink nuclear deal today
Washington, Oct 10 ANI: India and US will sign the 123 Agreement today, paving the way for nuclear commerce between the two countries.External Affairs Minister Pranab Mukherjee will sign the agreement with US Secretary of State Condoleeza Rice.The Cabinet Committee on Political Affairs CCPA last night approved the landmark accord to implement the civil nuclear deal. Prime Minister Dr. Manmohan Singh at a meeting of his Cabinet colleagues discussed the final shape of the agreement and the accompanying statement by President George W Bush.The meeting which was lasted for two hours was attended by Pranab Mukherjee, Defence Minister A K Antony, Home Minister Shivraj Patil and Railways Minister Lalu Yadav. On Wednesday, US President George W Bush had signed into law the legislation to implement the historic Indo-US civil nuclear deal assuring there are "no changes" in fuel supply commitments as provided in the 123 Agreement. In a statement, he maintained that the legislation is clear that the agreement with India is consistent with Atomic Energy Act and the US law.Bush inked the "H R 7081, United States- India Nuclear Cooperation Approval and Non-proliferation Enhancement Act" finally cleared by the US Congress last week reversing 34 years of US policy to eventually allow American businesses to have a share of India's 100 billion dollar nuclear pie. ANI
2008-10-10 02:52:38
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