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Bank on us: FM
Prof Rajan is PM’s economic adviser
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High-level panel to address industry’s woes
Dark American Christmas for diamond exporters
Export growth plunges to 10.4%
ATF prices cut again
IATA: Aviation regulator step in right direction
India’s share in global M&A kitty less than 1%
ICICI Bank to review interest rates soon
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Bank on us: FM
New Delhi, November 3 Heads of three leading industry bodies, CII, Ficci and Assocham, met finance minister P. Chidambaram today to highlight the problems they were facing in the wake of slack domestic demand and a global credit crisis. “The finance minister has assured us that the government will persuade the banks to reduce interest rates,” said Sajjan Jindal, Assocham president and managing director of JSW Steel. On Saturday, the RBI unexpectedly cut its repo rate or main short-term lending rate by 50 basis points to 7.5 per cent and banks' cash reserve ratio (CRR) by 100 basis points to 5.5 per cent. It also cut banks bond reserve requirements (SLR) by 1 percentage point to 24 per cent of their deposits. “There is a global shift towards a softer interest rate and after the fall in oil and commodity prices, focus has shifted from inflation to growth,” said K.V. Kamath, CII president and ICICI Bank chief. “RBI stance is in line with global soft interest rate bias. The finance minister has assured us that enough liquidity will be infused in the system,” Kamath said. Although a senior official of Indian Banks' Association said there was an indication of a downward spiral in interest rates, very few banks have announced cut in lending rates so far. The meeting with industry bodies comes a day ahead of the finance minister's quarterly review meeting with chairmen of state-run banks tomorrow. |
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Prof Rajan is PM’s economic adviser
New Delhi, November 3 Rajan, a former chief economist of the International Monetary Fund (IMF), will hold the rank of secretary, Government of India. He was earlier the chairman of a high-powered committee the prime minister set up on financial reforms, that was tasked to frame a series of recommendations to make India a financial powerhouse over the next five years. Rajan secured a doctorate from the Massachusetts Institute of Technology (MIT) in 1991 after a master's in business administration from the IIM at Ahmedabad and a bachellor's degree in electrical engineering from the IIT in New Delhi. He was also a visiting professor of finance at the Kellogg School, Northwestern University.
— IANS |
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‘Euro zone in technical recession’
The European Commission said the 15-nation euro zone was in a technical recession and economic growth would come to a virtual standstill next year. It called for coordinated action. In Jerusalem, Richmond Federal Reserve Bank president Jeffrey Lacker said the US economy was certainly contracting. French bank Societe Generale reported an 83.7 per cent drop in third-quarter net profit but said it was strong enough to withstand the global financial crisis. Net profit fell to 183 million euros ($234 million) with losses from the collapse of US bank Lehman Brothers and other writedowns costing it 1.208 billion euros in pre-tax income. Germany's second-biggest bank Commerzbank said it would take an 8.2 billion euro capital injection from the state and another 15 billion to secure refinancing. It posted a third quarter net loss of 285 million euros. Britain's biggest home lender HBOS Plc raised its hit from the value of risky assets and bad loans to over £5 billion as its takeover partner Lloyds TSB predicted a sharp fall in profits. The US, Germany, France and Britain have offered to inject capital into their banks to prevent systemic meltdown. Recession prompts stimulus
While trillions of dollars in bank bailouts may have averted financial meltdown, the economic outlook is grim. As a result, governments have put together fiscal stimulus packages to ward off the effects of a recession born of the worst financial crisis in 80 years. South Korea announced plans to pump an extra $11 billion into its economy next year. Rate cuts coming
Central banks will also put their shoulders to the wheel. Following rate cuts from the Fed, China and Japan last week, the European Central Bank, Britain and Australia are expected to cut interest rates by at least 50 basis points this week. The MSCI index of stocks in the Asia-Pacific region outside Japan rose 5.9 per cent, up for a fifth consecutive session, and European shares gained 0.4 per
cent. — Reuters |
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High-level panel to address industry’s woes
New Delhi, November 3 "It (committee) may be headed by either Prime Minister or finance minister," commerce secretary G.K. Pillai told reporters after the industry leaders raised a host of issues in a meeting with Prime Minister Manmohan Singh here. Finance minister P Chidambaram, commerce and industry minister Kamal Nath and deputy chairman of Planning Commission Montek Singh Ahluwalia are likely to be on the committee. Pillai said the government would react "positively" to the suggestions made to revive the housing and construction sectors, which were prime drivers of the economy. Assocham president Sajjan Jindal, who was present in the meeting, said that the Prime Minister is setting up a group to see that "this fear (job cuts) is not there and to see that there is no reduction in job creation." Business leaders are concerned over the plunge in industrial growth to 1.3 per cent in August from a high of 10.9 per cent in the same month a year ago, mainly on account of poor performance by the manufacturing sector which expanded by a mere 1.1 per cent. For the five-month period (April-August 2008-09), the industrial production growth rate stood at 4.9 per cent, down from 10 per cent during the corresponding period last
year. — PTI |
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India Inc welcomes move
Industry association Ficci has welcomed the government’s proposal to set up a high-powered group in the finance ministry to track the developments in the Indian economy and to maintain a constant link with Indian industry.
Rajeev
Chandrasekhar, MP and president, Ficci, felt that the government, RBI and Indian industry had achieved a kind of consensus on the gravity of the evolving situation and the need was to actively respond and bring back growth as the central agenda. Speaking on Prime Minister Manmohan Singh's meeting with leaders of India Inc, CII president
K.V. Kamath said the idea was to share industry’s perspective on the challenges that the country was facing. “We have got an assurance that the government and the industry is on one side and the government will work with the industry to see that any challenge that industry faces will be alleviated,” he said.
— TNS |
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Bharti to launch retail stores in Punjab
New Delhi, November 3 The business group, which also has interests in insurance and retail sector, said it would launch its first medium-sized retail store in Punjab next month. Sunil Bharti Mittal, chairman of Bharti Airtel, addressing a press conference here, said, "There are plans (for foreign acquisitions), but there is no immediate target". He added that valuations of telecom firms had eased around the globe. Earlier this year, Bharti held talks with South Africa's MTN about a possible combination that would have created a global top 10 telecom firm, but no deal was reached as Bharti objected to last minute changes in the deal made by the MTN. The company also said it would launch its operations in Sri Lanka in December. "We will roll out the services next month as all formalities are done and issues relating to inter-connectivity have been sorted out," Bharti Enterprises vice-chairman and managing director Rajan Mittal said. The telecom giant had been facing problems of inter-connection, with local carriers not willing to give inter-connections to the company. As regards opening retail stores in Punjab, Rajan Mittal said, “We will start with Ludhiana as our first destination for the medium-sized format and then move on to other cities next year”. The company currently has 12 convenience stores, christened as Bharti EasyDay, in the country. Mittal said his company was eyeing a turnover of Rs 1,000 crore from its retail operations this fiscal and added that the current economic slowdown would not impact it. |
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Dark American Christmas for diamond exporters
Mumbai, November 3 "Christmas is traditionally the best season for diamond exports to the US. But this year the market is completely dead," says Pravin Jain, a diamond exporter from Mumbai's jewellery hub of Opera House. Many exporters of small cut and polished stones who expanded heavily in the past few years are facing severe losses. "Cutting and polishing units in Mumbai and Surat have downed shutters and thousands of workers are on the streets," Jain said. More than 90 per cent of the world's small diamonds are cut and polished in Surat. However, with the industry facing a severe crisis, diamond exporters in that town declared a long Diwali holiday. "Units in Surat are shut for 45 days this Diwali as against 20-25 days in the past," said Anoopchand Jain, another exporter with operations in Gujarat. The slowdown has hit the small and medium businesses really hard since they don't have the benefit of strong branding to help them in the domestic market. An analysis of the results for the second quarter of the current financial year indicates that small diamond and jewellery units have suffered huge losses while the bigger players like Gitanjali Jewellers, makers of the Gili brand of jewellery, have managed to hold their heads above water. The bigger diamond and jewellery companies are now looking at domestic markets and importers in Asia to offset the fall of the US market. Meanwhile, exporters of diamonds who hold sight-holding rights of De Beers, the main consortium which deals in rough stones, are also feeling the pinch. According to the buzz in the trade, a few sightholders have even returned the roughs they had purchased from the South African monopoly. "This will hit the companies really hard in future as De Beers is known to remove companies from its list of favourites," says the manager of a major diamond player in Mumbai. However, exporters feel that investors in diamonds are expecting prices to crash sharply as the downturn forces buyers to cut back on the precious stones. |
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Export growth plunges to 10.4%
New Delhi, November 3 Commenting on the sharp slowdown, PHD Chambers secretary- general Krishan Kalra said “the sharp deceleration in exports shows that the global meltdown is beginning to make an impact. After all, the USA, which is our largest trading partner, is inching towards recession and hence facing a fall in demand. And our economy, like the rest of Asia is not entirely decoupled from the US. Hence, it is only expected that exports from sectors such as textiles, gems and jewellery, leather, engineering and infrastructure as also information technology, BPO, KPO sector, tourism, financial and other services would be affected.” Imports jumped 43.3 per cent in September to $24.38 billion, more than one-third of which was accounted for by oil imports. With global oil prices soaring, the country paid 57.1 per cent more for oil imports at $9.09 billion. Non-oil imports saw 36.2 per cent growth to $15.28 billion. Trade deficit — surplus of imports over exports — more than doubled to $10.63 billion in September as opposed to $4.55 billion deficit in the same month the previous year. Export expansion in the first six months of the current fiscal was 30.9 per cent to $94.97 billion while imports climbed 38.5 per cent to $154.74 billion. “The impact of the crisis on our exports would not be drastic. Our export basket is diversified and 50 per cent of our exports are to Asian countries, including China. Besides, the export demand also goes up during Christmas and the New Year. The depreciation of the rupee, which has breached the Rs 50 per dollar mark, will make our product cost effective in the international market,” Kalra added. A 60 per cent higher payout for buying oil at $55.06 billion was single-largest reason for the soaring import bill for April-September. Non-oil imports during the period increased 29.3 per cent to $99.68 billion. Trade deficit in April-September was estimated at $59.77 billion as against $39.1 billion in the same period the last fiscal. |
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ATF prices cut again
New Delhi, November 3 With effect from tomorrow, ATF prices for domestic airlines on an average will be further reduced by Rs 2,100 per kl. For international airlines, which do not pay local sales tax or VAT, the reduction would be around $35 per kl. While cash-strapped airlines have a reason to celebrate, they say it is too early to comment when the drop in the ATF prices can be passed on to customers in the form of lower air fares. Air India executive director (corporate communications) Jitendra Bhargava said the industry welcomed the move, but would have to look into various aspects to arrive at a decision. “The industry would have to look into commerce, impacts and losses sustained over a period to time to arrive at the decision,” he said. A Kingfisher Airlines spokesperson said the industry would first want the volatility in international crude oil prices to settle down before deciding on reduction in airfare. According to IndianOil officials, from November 4 the ATF prices for domestic airlines will be Rs 44,965.7 per kl in Delhi, Rs 53,663.53 per kl in Kolkata, Rs 46, 518.85 per kl in Mumbai and Rs 49,673.64 per kl in Chennai. The exemption would result in lowering of the base price of ATF and, consequently, lowering the incidence of excise duty and VAT, giving substantial relief to the aviation sector. |
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IATA: Aviation regulator step in right direction
New Delhi, November 3 IATA’s director-general Giovanni Bisignani said AERA would ensure that India’s aviation infrastructure met cost-efficiency and service-level targets with charging policies in line with ICAO principles. Bisignani also reiterated the need for reasonable taxation in India. “The global crisis in aviation is deepening. India is one of the epicenters with potential losses of $1.5 billion this year. AERA is a step in the right direction, but it is only part of the solution. To help reverse the state of the Indian air transport sector, we need a comprehensive policy approach in addition to establishing AERA. The most urgent is to address taxation, which is crippling the industry,” said
Bisignani. |
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India’s share in global M&A kitty less than 1%
New Delhi, November 3 Till September this year, corporate India has announced merger and acquisition deals worth $26.43 billion, which is around 0.8 per cent of the total global M&A kitty. Commenting on the current market situation, KPMG executive director (corporate finance group) Gaurav Khungar said: "The environment is plagued with conservatism and a wait-and-watch approach with absence of decision making or aggression... and questions on prospective bankruptcy risks are abound." Khungar further said beyond the economic factors that have contributed to lack of credit for M&A or business operations, all economic advise in the media is providing guidance to companies to hold on to their cash positions. Data compiled by deal tracking firm Dealogic shows there has been a slowdown in M&A activity across the world as all regions except Latin America reported decreasing deal volume. Accordingly, though the global M&A volume has reached a whopping $3-trillion mark so far this year, it represented a decline of 22 per cent from the year-ago period.
— PTI |
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ICICI Bank to review interest rates soon
New Delhi, November 3 "We will review interest rates after watching the impact of RBI decision on liquidity. Finance minister P Chidambaram has also said he will talk to PSU banks tomorrow," Kamath, who is also the president of CII, told PTI after meeting Chidambaram along with heads of Ficci and Assocham. Confident that the economy would still grow by 8 per cent this year, he said this would require liquidity, high morale and containment of inflation and "the government is willing to act 24X7 earnestly".
— PTI |
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Union Bank cuts PLR Oil gains in Asian trade MS launches live map search PwC to hire 2,000 in China ICFe, HDFC Bank join hands Rs 850-cr order for Jindal Drilling
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London, November 3
