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FM seeks to reassure foreign investors
Davos leaders uneasy over glut of easy money
Govt targets raw gold in second import duty hike this week
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Hind Unilever Q3 net up 16%, shares fall on royalties
Kingfisher should infuse Rs 2,000 crore for revival: SBI
British Airways in talks with IndiGo for alliance
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FM seeks to reassure foreign investors
Hong Kong, January 22 He made the comments at a media briefing after meeting investors in Hong Kong as part of a four-city tour to try and boost capital flows into Asia's third-largest economy. The minister also sought to allay fears that India was in danger of losing its investment-grade credit rating and being downgraded to "junk" status, as policymakers struggle to revive economic growth, rein in subsidies and hold down the fiscal deficit without triggering a backlash ahead of 2014 elections. "I was not worried when I took over (as finance minister) in August 2012, and after so many steps that we have taken, I think I should be less worried. In fact, all of us should be less worried. There should no case whatsoever for anybody to downgrade India," he said. "The silver lining is we are able to finance the current account deficit without reserves. Thankfully there are enough inflows of FDIs and FIIs (foreign institutional investment) and companies are able to raise money abroad under external commercial borrowing," he said. Fitch and Standard and Poor's last year cut their ratings outlooks for India to "negative", citing its slowing growth and bloated deficit and putting it in danger of being the first of the BRICs grouping of fast-growing economies to be downgraded to subinvestment-grade status. DIESEL PRICES: Changes to diesel prices in India do not need parliamentary support and are viewed as an executive decision because oil companies are owned by the government, Chidambaram said. He said he expected the economy to grow by no more than 5.7% in the current fiscal year ending in March, but predicted it would pick up momentum in the following year beginning in April, expanding by 6-7%. India's economy extended its long slump in the July-September quarter and looked on track for its worst full-year performance in a decade, highlighting the urgency of politically difficult reforms to revive activity. He added there was also room to sell off more state assets to ease fiscal strains. He forecast the government would raise $5 billion from such divestments in the current fiscal year and said he had approval for further sales in the next few years. Chidambaram will also meet investors in Singapore, London and Frankfurt over the next week. — Reuters 'Ghost of gaar has been buried’
India has buried the "ghost" of GAAR, Finance Minister P. Chidambaram said in Hong Kong on Tuesday, asserting there was no threat of a rating downgrade in view of key economic decisions like allowing FDI in multibrand retail and hiking fuel prices. “There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster," he told PTI in an interview. Here on a day's visit for an investor conference, the minister said as expected investors raised issues relating to the controversial provision of GAAR that was introduced in the 2012-13 budget by his predecessor. The General Anti-Avoidance Rules gave unbridled powers to taxmen to check evasion of taxes by foreign investors that created huge apprehensions among investors. There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster," he said. |
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Davos leaders uneasy over glut of easy money
Davos, Switzerland, Jan 22
With developed world government finances constrained by huge debts and deficits, central banks have pumped trillions of dollars into the system to try to revive sluggish economies, combat deflation and prop up weak banks. The Fed, the Bank of England, the Bank of Japan and to a lesser extent the European Central Bank have strayed far from traditional inflation fighting to take into account objectives such as reducing unemployment, raising nominal GDP, and ensuring the smooth functioning of the sovereign bond market. In pursuit of these goals, they have taken unconventional steps such as keeping interest rates well below the inflation rate, buying government bonds and mortgage-backed securities and providing long-term liquidity to banks at near zero rates. Indeed, the Japanese central bank is now actively trying to create more inflation because prices are obstinately stagnant. On Tuesday, the BoJ announced its most radical effort yet to end years of economic stagnation, after weeks of relentless pressure from new Prime Minister Shinzo Abe for a greater push to lift the economy out of recession. In a joint statement with the government, the BoJ said it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent. Central banking purists, especially in Germany, with its history scarred by hyper-inflation, worry that the guardians of sound money are losing their independence to governments and will find it hard to get the genie back into the bottle. The leading hawk on the ECB's governing council, German Bundesbank chief Jens Weidmann, who cancelled his appearance at Davos, warned on Monday that central banks were being bullied by governments and it could lead to currency wars. INFLATION FEARS, ASSET BUBBLES: Within the Federal Reserve, dissident Richmond Fed president Jeffrey Lacker has been warning for months that the US central bank's stimulus actions risk a surge in inflation after this year. — Reuters |
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Govt targets raw gold in second import duty hike this week
Mumbai/New Delhi/Singapore, Jan 22 India's gold imports are set to break through a target ceiling of $38 billion in the year to March 31, 2013, tying up funds in what the government sees as nonproductive investment. Industry experts say the moves are unlikely to have much of a long-term impact on demand, which is driven by tradition and inflation, but for now the government is expected to hold off further measures as it waits to see their effect on buying. "I don't see any further restriction in the immediate future as the government will be waiting to see the impact on the CAD (current account deficit)," said Daman Prakash Rathod, a director with Chennai-based wholesaler MNC Bullion. In the latest move, India hiked the import duty on gold dore bars to 5% from 2%. Dore, an alloy of gold and silver used by refineries, accounts for about 100 tonnes or about 12% of India's annual imports. The move came one day after the government raised the import tax on refined gold to 6% from 4% and instituted incentives for gold savings schemes and to bring more gold into circulation. "The measures should help cut gold imports significantly," said a senior finance ministry official who declined to be named, but he stopped short of quantifying the size of decline. REFINERS, WEDDINGS, SMUGGLING: Tuesday's move helps close an arbitrage between dore and refined gold, which opened up last year when the government hiked the gold import duty to 4 percent. But some industry officials said the cost difference, although narrower, would still attract domestic refiners. "There won't be much impact. Dore imports will increase day by day. The difference of 1 percent will attract refiners," said Harmesh Arora, a director with the Bombay Bullion Association. The roughly 700 tonnes of India's annual imports "can be totally converted into the dore market", he said. India's total annual gold consumption is about 900 to 1,000 tonnes, and the difference is made up mostly from recycling. Finance Minister P. Chidambaram earlier this month appealed to Indians to moderate their demand for gold, but buyers instead gobbled up a month's worth in a few days — about 50 tonnes — as they saw a duty increase coming. Indians see gold, both bars and jewellery, as an investment against high inflation, especially in rural areas where banks are practically non-existent and meagre savings rates add to bullion's lustre. The tax increases had an immediate impact on Tuesday, Rathod said. "No one is asking (to buy) even a gram of gold. But eventually Indian people will get used to it (the new tax levels)." Analysts said the government's moves might have more impact on investment buying, which is about 35% of demand, while the jewellery market is likely to be more resilient, especially in the winter wedding season when brides are weighed down with golden dowries. "Given India's penchant for gold for weddings and other religious ceremonies, a sharp fall in volumes is unlikely," Nomura analysts wrote in a note after Monday's duty hike. The danger also remains that hiking import duties on gold could encourage smuggling, which has tripled since the import duty on gold was last raised in
2012. — Reuters |
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Hind Unilever Q3 net up 16%, shares fall on royalties
Mumbai, January 22 Less discretionary spending among consumers cut sales of products such as packaged foods and personal care items, but higher prices and lower raw material costs aided margins. The domestic consumer business grew at 15% with underlying volume growth of 5%. The company said both home and personal care and foods & beverages registered double digit growth during the quarter. Personal products grew 13%, saw double digit growth in skin, hair and oral products. Skincare growth, too, was broadbased across brands. Oral care, on the other hand, posted volume led double digit growth.While beverages grew 18%, packaged foods reported an 8% growth. The Indian unit of Anglo-Dutch conglomerate Unilever Plc said its net profit rose to Rs 8.7 billion for the fiscal third quarter ending December 31, from Rs 7.5 billion a year earlier. Total income rose 17% to Rs 6,655 crore from Rs 5,672 crore during the period. HUL's shares have fallen over 10% in the December quarter partially on concerns it may have to pay more in royalties, in line with Unilever in Indonesia, a move the company confirmed on Tuesday. The royalty HUL pays to its parent company for use of its trademarks will gradually increase by March 2018 to around 3.15% of turnover, from the current 1.4%, it said in a statement. The Indian company, valued at $19.5 billion, makes popular brands including skin creams Fair and Lovely, Sunsilk shampoo, Lux soap and Kissan ketchup. Analysts had estimated a profit of Rs 8.8 billion on sales of Rs 65.7 billion, Thomson Reuters Starmine Estimates showed. The Hindustan Unilever stock trades at 28.5 times its 12-month forward earnings, compared with peers ITC's 25.5 times, and Godrej Consumer's 26.5 times, according to Thomson Reuters Starmine Smart Estimate.
— Reuters/Agencies |
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Kingfisher should infuse Rs 2,000 crore for revival: SBI
Bhubaneswar, January 22 SBI is the lead banker in the 17-lender consortium that extended Rs 7,000 crore loans to the now grounded Kingfisher Airlines. The state-run bank has an exposure of Rs 1,500 crore to the carrier. The debt has not been serviced since January, 2012. To a question, Chaudhuri also said right now SBI is not contemplating any legal action against the carrier as the door for negotiations is still open. "In order to restart operations, Kingfisher needs to infuse at least Rs 2,000 crore as capital. We’re still holding talks with the company and following up also," he told reporters here. Chaudhuri said the bank was holding talks with the carrier every week. If necessary, some buildings and noncore assets might be disposed, he added. Kingfisher is saddled with mounting losses and debts. It has been grounded since October 1 following strike by pilots over nonpayment of salaries. The airline's licence has also been temporarily suspended and aviation regulator DGCA has told the airline that it will be restored only when it submits a revival plan.
— PTI The government is willing to support the revival plan of grounded Kingfisher Airlines Ltd if the company were to settle its employees' dues, a senior government source told reporters on Tuesday. The statement came after Kingfisher CEO Sanjay Aggarwal met officials at the ministry of civil aviation to discuss the revival plan, which was earlier rejected by the regulator. Kingfisher, which lost its operating licence at the end of 2012 and has not flown since the start of October, is estimated to owe US $2.5 billion in debt to banks, staff, vendors and others and is scrabbling to find new investors.
— Reuters |
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British Airways in talks with IndiGo for alliance
London, January 22 Known as an interline agreement, it allows customers from two airlines to buy connecting flights on one ticket. Such pacts are often precursors to code-share agreements, in which carriers sell tickets on each other's airline. The arrangements increase revenue because airlines can offer more destinations, while keeping a lid on costs, as they don't need to service all the planes themselves.
— Reuters |
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