|
|
|
|
Monetary Policy Withdrawal of economic stimulus essential: RBI Sensex tanks 387 points |
|
||||||||||||||||||||||||||||||||||||||||||||||
New Delhi, October 27 The government today allocated two-third of additional gas output from Reliance Industries' KG D-6 fields to power plants, while for the first time allowing the Mukesh Ambani firm to use the fuel at its petrochemical plants and refineries. No deviation in 2G allotment, says Raja SC to Ambanis: Settle dispute or face arbitration Realty sector worst hit
|
|
Monetary Policy Mumbai, October 27
In a statement here, RBI Governor D Subbarao noted that the Indian economy was awash with liquidity and there was possibility of considerable strain in the future from inflationary pressures. However, to keep growth on track, the apex bank left the Bank Rate untouched at 6 per cent while the repo rate under the liquidity adjustment facility (LAF) stay at 4.75 per cent. The reverse repo rate under the LAF, too, remains the same at 3.25 per cent. The cash reserve ratio (CRR) of scheduled banks also has been retained at 5 per cent of their net demand and time liabilities (NDTL). RBI said the one per cent increase in SLR would not impact the liquidity position of the banking system and credit to the private sector. The apex bank also stated that it had the requisite flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as required. Subbarao in his statement pointed out that the global economy has shown signs of major improvement since the last review in July 2009. "The recovery is underpinned by output expansion in emerging market economies, particularly in Asia. World output improved in the second quarter, manufacturing activity has picked up, trade is recovering, financial market conditions are improving, and risk appetite is returning. A sharp recovery in equity markets has enabled banks to raise capital to repair their balance sheets," he added. However, the RBI Governor pointed out that concerns remained of the recovery being fragile. "Even as output is reviving, unemployment is expected to increase to over 10 per cent. Investment is also expected to remain weak due to ruptured balance sheets, excess capacity and financing constraints. Bank collapses are continuing. World trade still remains below its level a year ago. On balance, while global economic prospects have improved, uncertainties remain about the pace and sustainability of economic recovery," Subbarao said. The Indian economy, he said, was reverting to the growth track. "This is despite the continuing contraction in exports and the worst drought since 1972. The performance of the industrial sector has improved markedly in recent months. Domestic and external financing conditions are on the upturn. Capital inflows have revived. Activity in the primary capital market has picked up and funding from non-bank domestic sources has eased. Liquidity conditions have remained easy and interest rates have softened in the money and credit markets," Subbarao said. However, he added, there were signs of rising inflation stemming largely from the supply side, particularly from food prices. "Private consumption demand is yet to pick up. Agricultural production is expected to decline. Services sector growth remains below trend. Bank credit growth continues to be sluggish," he said. The RBI chief also noted that there were concerns of large government market borrowings. "During 2009-10 so far, the Central Government has already completed over 80 per cent (Rs 3,19,911 crore) of its net market borrowing and state governments have mobilised Rs 58,683 crore (net) through the market borrowing programme," he stated. The RBI also noted that the growth projection for GDP for 2009-10 hxassumes a modest decline in agricultural production, as the South-West monsoon rainfall this year has been the weakest since 1972 affecting both yield and acreage of agricultural crops, but a faster recovery in industrial production," Subbarao said.
|
|||
|
Withdrawal of economic stimulus essential: RBI Mumbai, October 27 Speaking to reporters after unveiling the quarterly review of the monetary policy, Subbarao said withdrawal of the economic stimulus was essential as inflation pressures were building up on the economy. “It may be appropriate to sequence the exit in a calibrated way,” Subbarao said. Apart from tweaking the monetary policy, the RBI was also adopting other measures to reduce money supply in the economy. The apex bank has rolled back the refinance facility for export credit to 15 per cent from 50 per cent, the way it was before the global crisis began. However, with the markets tanking amidst concerns of the country's economic growth slowing down, Finance Minister Pranab Mukerjee told reporters in Delhi that the stimulus was not being rolled back. Analysts are still saying that the battle against inflationary pressures could slow down the Indian economy. Incidentally, Subbarao also felt that real estate prices in the country haven't fallen enough. He told reporters that the RBI was tightening credit to the commercial property sector due to concerns of bubbles being built up in the real estate sector. |
|||
|
Sensex tanks 387 points
Mumbai, October 27 Realty, metal, banking and consumer durables shares were battered and their indices closes sharply lower in the range of 3-6 per cent. The 30-share index closed the day at 16,353.40, a steep fall of 387.10 points or 2.31 per cent from its last close. The wide-based National Stock Exchange index Nifty also fell sharply by 124.20 points to 4,846.70. Realty shares bore the maximum brunt of selling as RBI raised to 1 per cent requirements for banks to keep money aside while lending to commercial real estate to prevent NPAs increasing. Realty index closed down by 6.24 per cent. Experts said this move is to pre-empt any kind of asset bubbling in real estate. However, marketmen termed the move as hawkish and said it would cripple credit flow to the sector. Metal stocks beat a haste retreat after a recent rally. The market breadth was extremely negative with 2,281 losers against 442 gainers on the BSE. The trading volume, however, was relatively high at Rs 5,932.36 crore from Rs 4,978.15 crore on Monday. SBI was the top trade scrip with the day's highest turnover of Rs 377.45 crore.
— PTI |
|||
|
Power units get two-thirds of extra gas from RIL New Delhi, October 27 An Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee met this afternoon to fix users for the 50 million standard cubic meters per day of gas that RIL will State-run NTPC and other power producers will get over 34 mmscmd of more gas. This together with 18 mmscmd already allocated from initial volumes would bridge the fuel deficit at existing plants and those to be commissioned Refineries, including those of RIL, will get 5.384 mmscmd of gas on firm basis and an additional 6 mmscmd when output from KG D-6 stabilises at 90 mmscmd, he said. RIL's petrochemical plants have been allocated 1.918 mmscmd, 0.178 mmscmd would go to non-urea subsidised fertiliser plants and 0.44 mmscmd to steel plants. The EGoM, Pandey said, had allocated 20 mmscmd of gas on firm basis and the balance 30 mmscmd on temporary or fallback basis till such time that RIL is confident of producing 90 mmscmd of gas on a sustained basis.— PTI |
|||
|
No deviation in 2G allotment, says Raja New Delhi, October 27 He maintained that there was no deviation in the procedures while awarding of radio frequency spectrum to telecom firms and all decisions were taken after due consultation on legal and other matter. Talking to reporters here on the sidelines of a conference on information and communication technologies with state ministers, Raja said, “All my predecessors followed the same procedure. So did I…. In terms of legal rules and procedures, there has been no deviation.” The CBI had conducted searches at the DoT offices in Sanchar Bhawan here on Thursday last after registering a case in connection with the issue on Wednesday last. All records pertaining to the allocation of spectrum to new players in January 2008 had been taken to check on any irregularities in the process of allocation. In 2008, eight new players were given licences along with bundled 4.4 MHz spectrum to start mobile services. The telecom ministry had come under fire for allocating 2G spectrum at much cheaper rates compared to its actual market value. There were allegations that the 2G spectrum allocation to the mobile operators resulted in a loss of Rs 60,000 crore to the exchequer and the difference in the valuation of spectrum awarded and the value realised in each case had been minimum of Rs 6,000-7,000 crore. The premier investigative agency said the licences were awarded to companies on a first-come-first-served basis at the rates prevailing in 2001, and without any competitive bidding. Raja said licences were issued and allotments made solely on the basis of the recommendations by TRAI and in consultation with the Prime Minister’s Office and top law officers. He pointed out that he had managed to break the cartel in the telecom sector. He welcomed the investigations into the matter but declined to resign. PM Manmohan Singh too had said on Sunday that allegations about the scam were incorrect. |
|||
|
SC to Ambanis: Settle dispute or face arbitration New Delhi, October 27 A Bench headed by Chief Justice KG Balakrishnan threw up the options even as senior counsel Harish Salve, appearing for Mukesh-led Reliance Industries Ltd (RIL), argued that the MoU agreement reached between the two brothers for demerger was subject to several conditions. “If you are unable to reach a suitable arrangement, we can direct you to go for arbitration,” the Bench, which included Justices RV Raveendran and P Sathasivam, said. Some parameters must be available for arriving at a suitable arrangement, the court felt. This is the second time the court has asked the feuding siblings to explore options other than fighting it out in the court which heard Salve’s arguments for the fourth day today. Salve said the gas price of $2.34 a unit agreed in the MoU and its other proposals were subject to approval by the Board of Directors of either side, besides the government. Senior Counsel Ram Jethmalani, appearing for Anil-headed Reliance Natural Resources Ltd (RNRL), however, contended that the government’s Gas Utilisation Policy (GUP), which fixed the gas price at $4.2 a unit, could not apply to the agreements that already existed. Salve said the brothers had just set the ball rolling by putting their ideas in the MoU, leaving its approval to the directors and shareholders. The promoters “cannot force the directors to accept their decisions without applying their mind”. The directors were bound only by the decisions of the shareholders, not of the promoters, he said, citing several apex court verdicts to this effect. Further, the gas pricing was not the only deviation from the MoU and there were several other “departures” that had gone in favour of the RNRL at the time of demerger. This showed that the agreement between the brothers were not to be implemented in toto, he contended. Salve maintained that selling gas at less than $4.2 a unit would result in loss, but Jethmalani contested it stating that production cost was only 89 cents and even at $ 2.34 a unit, RIL would be making huge profits. |
|||
|
Key indices and equities tumbled registering their biggest single day fall since August 17, 2009 on frenzied selling triggered by the Reserve Bank's quarterly monetary policy review, which investors viewed as hawkish even though key policy rates were kept unchanged. Earlier, markets opened on bearish notes, but it came under intense selling pressure after the unveiling of credit policy, which asked banks to park more money in government securities and raised inflation forecast. Huge shorts build up and weak global cues also weighed on the sentiments on bourses as it recorded the third highest total turnover ever at Rs1.46 lakh crore while it clocked highest F&O turnover ever. Among the 30-components of Sensex, 23 stocks ended in the red and 7 ended in the positive terrain. Hindalco, Tata Steel, Bharti Airtel, Reliance Com, DLF and ICICI Bank were among the major losers. On the other hand, the major gainers included Wipro, Tata Motors, Hindustan Unilever and Grasim. Among the sectoral indices, sell-off was seen across all the sectors; leading the fall realty plunged 6.24%, metals lost 5.82% and banking was down 3.82%. Realty shares bore the maximum brunt of selling as RBI raised to 1 per cent requirements for banks to keep money aside while lending to commercial real estate to prevent NPAs increasing. Among key market movers, Indian miner Sesa Goa, a unit of London-listed Vedanta Resources, slumped 12.4% to Rs276.35 following media reports that a government agency was probing the firm's accounts. Areva T&D closed 9.3% lower at Rs285.80, after the power transmission and distribution equipments maker said its September quarter net profit dropped by 57%. Among key indices, the BSE Sensex plunged 387.10 points, or 2.31% at 16,353.40, whereas the S&P CNX Nifty ended 2.50% lower at 4846.70.(SP)
|
Wipro nets Rs 1,162-cr profit in Q2 Tata Steel net dips 49 pc
|
|||||
|
| HOME PAGE | |
Punjab | Haryana | Jammu & Kashmir |
Himachal Pradesh | Regional Briefs |
Nation | Opinions | | Business | Sports | World | Letters | Chandigarh | Ludhiana | Delhi | | Calendar | Weather | Archive | Subscribe | Suggestion | E-mail | |
As part of its second quarterly review of the monetary policy for 2009-10, the RBI today hiked the Statutory Liquidity Ratio
(SLR) for scheduled commercial banks to 25 per cent from 24 per cent of their net demand and time liabilities
(NDTL) with effect from November 7, 2009, even as other key rates were left untouched.
The Bombay Stock Exchange benchmark Sensex was bearish in opening and came under intense selling pressure after the unveiling of credit policy, which asked banks to park more money in government securities and raised inflation forecast.
