The Tribune, Chandigarh, India

	Moody’s maintains stable outlook on India Mumbai, September 26 Moody's Investors Service will retain its 'stable' outlook on India, expecting economic growth to improve on the back of consumer demand, although the country is still constrained by its fiscal deficit, an analyst at the ratings agency said Wednesday. The views stand in contrast with Standard & Poor's and Fitch Ratings, both of which cut their outlook on India to "negative" this year, citing concerns about the pace of reforms and the government's fiscal deficit among some of the key factors. Recent actions by the government to undertake key reforms showed some determination to take unpopular steps, Atsi Sheth, vice-president of the sovereign risk group at Moody's Investors Service, said in a conference call with reporters. The Indian government announced a series of reforms this month, including a rise in diesel prices, the liberalisation of retail trade, and a bailout for the power sector. However, Sheth added Moody's still expected the country to overshoot a fiscal deficit target of 5.1% of gross domestic product for 2012-13 fiscal year ending March. "It (fuel price increase) does show the government is ready to embrace policy changes that may not be politically popular, but in the end move towards raising prices to levels commensurate with what they are globally," she said. Moody's, which has a Baa3 rating on the sovereign, expects growth to turn around in the medium term as private investments pick up, driven mostly by domestic consumption. India's quarterly GDP growth of 5.5% for April-June was its slowest in nearly three years and a far cry from near double digit growth seen before the 2008 global financial crisis. The slowing economy along with India's wide deficits, including in its current account, sparked the downgrade threat from S&P and Fitch. All three agencies currently have India at the lowest investment-grade rating. The proposed government measures sparked a rally in Indian markets, but investors still want to see signs of fiscal discipline by the government. India will likely borrow an additional Rs 500 billion for the year ending in March and post a fiscal deficit of 5.8 percent, a Reuters poll showed. "A credit challenge for India is its fiscal positions," Sheth said, adding Moody's will wait to see more efforts towards ensuring that India's fiscal position is less vulnerable to slowdown in economic growth. — Reuters
	US investors showing renewed interest in India: BankAm ML Sanjeev Sharma/TNS New Delhi, September 26 There has been a perceptible change in interest of foreign investors in India post QE3 and the FDI reforms announced but investors say a lot more needs to be done to revive the economy, says a Bank of America Merrill Lynch report. According to the report, there has been a sea change among US investors in interest in India post QE3 and the FDI reforms announced in India. Investors sensed a change in the political environment in India and some investors who earlier were staying away from India were keen to understand the shape of things to come. However, it said US investors have been relatively more muted in the current market rally relative to Asian investors. Among the reasons was that they thought the markets had run up too fast and preferred to wait for a correction. Also, while everyone appreciated the reforms were a big step, the general feeling was that much more would need to be done before the economy revives. Inflation was a focus for investors, especially with QE3 raising concerns of a possible spike in crude prices. However, according to a Kotak Institutional Equities report, there are still several challenges for the economy. It says the Indian economy faces significant challenges with high and rising inflation in the short term and high fiscal and current fiscal deficits in the medium term. “These problems are of a structural nature and cannot be addressed easily and certainly not with the government’s recent announcements (we hesitate to use the word reforms)”, it adds. The report rules out meaningful reforms in the short term given the high inflation and fiscal and political compulsions. Reform steps a watershed, courageous: US The US has termed as "watershed" and "courageous" the Indian government's decision to allow FDI in multibrand retail, saying that the new reforms will send out the "right message" to global investors.It said the steps will convince investors that India's economic environment is conducive to foreign investments. The announcement by the Indian government that it will open its retail, broadcasting, aviation and power sectors to foreign investment provides a "new optimism" to the country's growth story, Under Secretary for Economic Growth, Energy & Environment Robert Hormats said at the 9th annual Indian Investment Forum in New York City on Monday. — PTI
	Subrata Roy’s Sahara group - massive, splashy...and mysterious Khalilabad, U.P./Mumbai, Sept 26 Like millions of Indians, Jag Ram Chaudhary invested with the Sahara conglomerate — Rs 1,300 a month in his case — to put away money for a rainy day. “My wife had an accident some years back. I don't have much savings, so I thought I'll be able to save some money by putting in a small amount every month," said Chaudhary, an office helper at a construction firm in Uttar Pradesh. On August 31, the Supreme Court ruled that finance schemes run by two Sahara firms were illegal and ordered it to repay as much as $4.5 billion to up to almost 30 million mostly small investors, plus interest. The final figures are still to be determined as some clients have already redeemed their investments, lawyers on both sides of the matter said. The case has shone a rare light on the unlisted giant whose interests range across finance, housing, media and entertainment. Sahara has accumulated a string of trophies in recent years, including a stake in a Formula One motor racing team and ownership of Grosvenor House hotel in London. In July, it agreed to buy a controlling stake in New York's Plaza Hotel. But its core client base is the towns and villages away from the shiny cities of modern India. There, Sahara sells investment products to often poor people in amounts as small as Rs 2 a day. The firm is a household name in India through its lead sponsorship of the national cricket team. "Banks take eight years to pay what I get from Sahara in five years," Chaudhary, 40, said in Khalilabad, a town in in Uttar Pradesh. Like several Sahara customers interviewed nearly two weeks afterwards, he had not heard of the court ruling. SPENDING POWER: Critics, including activist groups, say Sahara's investment products are designed to evade oversight by financial regulators and that it lacks transparency on the source and use of its funds, selling products to investors who do not understand the risks and ploughing the proceeds into real estate projects. Under the scheme rejected by the Supreme Court, two firms owned by Sahara had offered bonds to small investors, promising, in some cases, to return three times the face value after 10 years. The court ruling that it raised money by "dubious" means follows another rebuke in 2008, when the RBI ordered a Sahara company to stop taking deposits from the public. In a country where "black money", or undeclared wealth, is rampant, Sahara's size and spending power have long fuelled speculation over how the company operates. Sahara, headed by Subrata Roy Sahara, its chairman and self-described "managing worker", says it helps small investors outside the banking system and that it has never defaulted on them. "Sahara agents motivate people who would otherwise spend the money on liquor, gambling, etc," said Guddu Pandey, a school teacher and Sahara agent in U.P., echoing an argument made by Sahara after the court verdict. — Reuters
	Kingfisher AGM high on promises, low on substance Shubhadeep Choudhury/TNS Bangalore, September 26 Kingfisher Airlines’ annual general meeting held here on Wednesday was high on assurances and low on substance. Retired IAF officer N. Raghuraman, a shareholder of the debt-ridden company, told this correspondent after the meeting that he had lost all confidence in the future of the company. “I’ll sell my shares as soon as I get an opportunity”, he said. The former air force wing commander said besides being a shareholder he was also a vendor of the company as he was providing ground service for Kingfisher Airlines. “The carrier owes me Rs 45 lakh”, he claimed. The flamboyant Mallya had wrapped up in about 50 minutes the AGM of the United Breweries Group owned by him, which preceded the Kingfisher meeting. However, the AGM took about two hours in the course of which Mallya had to face some queries from several participants. Some of the shareholders wanted the Kingfisher management to be changed but Mallya did not respond to the demand. When some of them objected to the salary hike given to the Kingfisher CEO, Mallya said the hike was only on paper and like other Kingfisher employees, the CEO also had not got his salary for six months. Mallya failed to produce any concrete plan for re-capitalising the company which was under a debt of Rs 8,000 crore. He only said that some foreign as well as some domestic investors were interested in investing in the company. To a question by some shareholders as to why Kingfisher had failed while other private carriers were making profit, Mallya replied no private airline in India was doing well. He dismissed as “untrue” media reports that only seven Kingfisher planes were operational. He said seven big planes and five ATRs of the carrier were operational while another 25 planes were in the pipeline to be put into service. Talking to reporters after the UB Group AGM, Mallya stated he was in talks with some foreign carriers for investing in Kingfisher. Though he had earlier given the impression that foreign carriers were ready to invest in the ailing Kingfisher but were held up because of the government policy capping FDI in aviation sector, today he said that it was “only about ten days” that the union government relaxed the cap on aviation FDI. “It’ll take time”, he said when asked about FDI for Kingfisher. Mallya confirmed that tomorrow he would meet the banking consortium headed by State Bank of India regarding his loan from them. “I shall give them a presentation as requested”, he said. While Mallya did not specify what the presentation was about, presumably it would be about his recapitalization plans, which from what happened at the AGM on Wednesday, seems nonexistent.
	Corporation Bank to take call on lending rate revision soon Tribune News Service Chandigarh, September 26 Corporation Bank will take a decision on revising lending rates next month after its cost of funds comes down. The bank expects the impact of high cost deposits will be over by the end of September or early October, thus paving the way for lowering interest rates. Talking to reporters on Wednesday, chairman & MD Ajai Kumar said the bank will take a final call on revising interest rates only in mid-October after reviewing its position. He said the cost of funds for the bank has now raised to 8%, from 7.5% earlier. He added only after the cost of funds reached a reasonable level of 7.7% would the bank be able to decide on revising interest rates. Bank's base rate is 10.5%, while the benchmark PLR is 15.25%. "Liquidity is still there, but reduction in lending rates has to be in a stable manner," he said, adding the bank has recently cut down the deposit rate by 0.25%. Kumar said the bank was looking at expanding its branch network by adding 300 branches this year, adding most of the new branches would be set up in the western and northern regions. “The bank’s focus of will continue to be on retail and SME loans”, he stated.
	Trade with Malaysia set to top $15 bn Tribune News Service New Delhi, September 26 Commerce & Industry Minister Anand Sharma said today trade with Malaysia is likely to cross the US $15 billion mark by next year, adding bilateral trade stood at nearly $13 billion last year, a growth of 34% over the previous year. Addressing members of India-Malaysia CEO Forum, Sharma said Khazanah Nasional Berhad (the Malaysian government’s strategic investment fund) and IDFC have set up an SPV with an equity base of Rs 830 crore for financing national highway construction projects. Sharma said priority sectors of engagement include roads & highways, railways, airports, infotech and ITES, biotechnology, tourism, health services and joint venture projects in third countries. The two countries entered into a comprehensive economic cooperation agreement in February 2011.
	Bharti Walmart not to wait for all states to allow retail FDI Hyderabad, September 26 Bharti Walmart, a 50:50 JV between Bharti Group and US-based Walmart, will not wait till all states in India allow FDI in multibrand retail to roll out its plans and may start opening its outlets from states like Maharashtra and Andhra, a top official of the retail giant said today. Bharti Walmart MD & CEO Raj Jain said the firm will be able to come out with specific plans with regard to retail business only after 45 days as it is studying the government notification. — PTI