there is a Risk of Winter session being washed out too: Nomura

The winter session of Parliament, beginning Thursday, will be a key gauge of the way some recently announced economic reforms are to be implemented and would decide the direction of future reform process, global investment banking Nomura said Wednesday. "Our worry is that even a discussion on FDI in multibrand retail will lead to heated debates and could lead to disruption in parliamentary proceedings," Nomura said in a research note ahead of the winter session. "However, the monsoon session does not inspire much confidence as the standoff between the government and the opposition parties on issues of graft and corruption led to a complete washout of the parliamentary session. There is a risk that the winter session could go down the same road”, it added. — PTI

Washington, D.C., Nov 21
India will receive record US $70 billion remittances in the year 2012, topping the list of developing countries which are expected to receive a total of $406 billion this year, the World Bank has said.

After India, China will stand second with $66 billion, followed by Mexico and the Philippines with $24 billion each, a latest report by the bank said yesterday.

In all, worldwide remittances — including those to high-income countries — will reach $534 billion in 2012, according to a newly updated World Bank brief on global migration and remittances.

Other large recipients are Nigeria ($21 billion), Egypt ($18 billion), $14 billion each for Pakistan and Bangladesh, followed by Vietnam ($9 billion) and Lebanon ($7 billion).

Officially recorded remittance flows to developing countries are estimated to grow by 6.5% over $351 billion in 2011, with India again topping the chart with $58 billion, followed by China ($57 billion), Mexico ($24 billion) and the Philippines ($23 billion).

Worldwide remittances, including those to high-income countries, are projected to grow to $685 billion in 2015. According to the World Bank, remittances to developing countries are expected to rise 8% in 2013 and 10% in 2014 to reach $534 billion in 2015.

In its report, the World Bank notes the true size of remittance flows, including unrecorded flows through formal and informal channels, is believed to be significantly larger. "Compared to private capital flows, remittance flows have shown remarkable resilience since the global financial crisis, registering only a modest fall in 2009, followed by a rapid recovery. — PTI

Mumbai, November 21
Reserve Bank of India governor Duvvuri Subbarao went against the suggestion of most external members of an advisory panel to keep the key repo rate steady on October 30, minutes of the quarterly meeting released on Wednesday showed.

Of the six external members of the RBI's Technical Advisory Committee (TAC) on monetary policy who attended the meeting, five suggested a repo rate cut in the second quarter review of the monetary policy.

The committee consists of seven external members, apart from the governor and the deputy governors. The panel's role is purely advisory, with the governor having the final say in deciding rates.

The RBI left interest rates on hold, but cut the cash reserve ratio for banks, defying pressure from the government to lower rates for the first time since April. However, it indicated it may ease the policy rate in early 2013.

Of the five members who suggested a repo rate cut, three recommended a reduction by 25 basis points, while the other two suggested a sharper 50 basis points cut.

One of the members who recommended a repo rate cut of 25 basis points also suggested a 25 basis points cut in banks' cash reserve ratio, or the share of deposits they have to maintain with the central bank.

One external member felt no change in the monetary policy stance was necessary, and one could not attend the meeting. "They felt that even though inflation is sticky, there are no demand pressures and there is a need to revive investments," the minutes said, referring to the external members.

Since February 2011, the RBI has been placing the main points of discussions of the TAC meetings in the public domain with a lag of roughly four weeks after the meeting.

The governor has however acted against the advice of the majority of the panel on most occasions, minutes showed. — Reuters

New Delhi, November 21
Shares in budget airline SpiceJet rallied Wednesday after a report that Kalanithi Maran and his wife, Kavery Kalanithi, had resigned from the board of Kal Airways, the holding company of SpiceJet, sparked talk of a possible sale of the company. At 3 p.m., the stock was at a day’s high of Rs 37.80, up 8.15%.

In an interview to a TV channel this morning, S.L. Narayanan, the group CFO of Sun, downplayed reports that a sale of the airline was in the offing. Maran quit Kal Airways to only reduce the number of directorships he holds, Narayanan said, adding potential stake sale talks are not even at an exploratory stage. The media-to-aviation Sun group is headed by Maran.

Kal Airways along with Marans (in their personal capacity) hold over a 48 stake in the listed airline.

SpiceJet, India's no. 2 budget airline by market share, narrowed losses by 31.7% in the July-Sept quarter, benefiting from massive cuts in capacity by troubled rival Kingfisher Airlines. It still lost Rs 164 cr in the quarter ended Sept 30, compared with a loss of Rs 240 cr a year ago. The firm's auditors, however, said accumulated losses at the airline had fully eroded the net worth of the company as on Sept 30. — Reuters

Mumbai, November 21
Ulwe, a village of dusty, uneven streets on the outskirts of Mumbai, lacks basic amenities like water supply and electricity, but a two-bedroom, 1,000 sq ft house costs about Rs 5 million, beyond the reach of many middle-class Indians.

According to prospective buyers, many developers will demand up to 30% of that price in cash, a small slice of the ubiquitous, unaccounted "black money" that costs India's straitened exchequer billions of dollars in lost taxable income.

Legislation that would bring more transparency to the industry will be considered during the winter session of Parliament, which starts on Thursday.

However, investors, tax officials and bankers Reuters spoke with were sceptical the law would stamp out illegal practices they say are closely entwined with politics.

"Four out of 10 developers were ready to do it in full white and six were asking for a black component," said 35-year-old Umesh Kolhapure, who was looking for a three-bedroom house around Ulwe, near the proposed site of a new international airport serving the country's financial capital.

Recent high-profile scandals in the coal and telecoms sectors involving large corporate houses and politicians have rattled investors in Asia's third-largest economy, where undeclared wealth has long been rampant.

Real estate accounts for a large share of illicit transactions, thanks to lax regulation and the numerous approvals needed for projects, making many ordinary people party to corruption and pricing some of the emerging middle class out of the market.

That has prompted the newly-appointed housing minister, Ajay Maken, to push a real estate regulation bill.

Designed to bring greater accountability, transparency and prevent fraud and delay, the bill proposes appointing the sector's first national regulator. However, it will not have control over land deals, which is where illicit activity is widely believed to be rampant.

TAX AVOIDANCE: In the year upto June 2012, about $6 billion, or 30% of total transactions in the property sector, were executed using black money, according to Liases Foras, a consultancy. Real estate accounts for over 10% of India's $1.85 trillion economy.

The government says “black money”, a term widely used in India to describe undeclared funds, often meant to avoid taxes, can be present in every stage of a project from land acquisition to home sales. — Reuters

Paris, November 21
Credit rating agency Fitch said on Wednesday it will review its triple-A rating on France next year, as Paris hailed a muted market reaction to a Moody's downgrade this week as a sign of investor confidence in its policies.

French-owned Fitch is the only agency to retain a triple-A rating on the euro zone's second largest economy, though it has a negative outlook.

Moody's decision to cut France by one notch to Aa1 on Monday followed a similar downgrade by Standard & Poor's in January.

"France will be re-examined, as Fitch has said, in the course of 2013," Fitch chairman Marc Ladreit de Lacharriere told France Inter radio.

French bonds largely shrugged off the Moody's downgrade, which had been widely expected after the agency put France on a negative outlook in February.

The yield spread of French 10-year bonds to benchmark German Bunds stood around 75 basis points on Wednesday, only slightly changed from 72 before the downgrade.

Finance Minister Pierre Moscovici said the market response to the news was a vote of support for government efforts to trim France's deficit, boost competitiveness and make labour markets more flexible. — Reuters