New Delhi, August 16
Seeking to calm rattled investors, the government and RBI today said there was no reverting to capital control regime - the fear of which spooked stock market, sent rupee to its lowest level and pushed gold prices up by a record Rs 1,300 per 10 gm.

On a day when Sensex fell nearly 770 points or 4 per cent and rupee breached 62 to a dollar on concerns among large investor of capital curbs, the government and RBI went into fire-fighting mode assuring there was no move to check repatriation of funds by FIIs.

"They are saying that a capital control is coming in... There is no question of us putting any restriction on outflows which are commercial in nature, which means whether it is FII sell...," Economic Affairs Secretary Arvind Mayaram told reporters here.

He further said: "There is no control of outflows of dividends, profits, royalties, or on any kind of commercial outflows which happen in the normal course".

Top sources in RBI blamed ‘unwarranted rumours’ about controls on FII money to the nearly 770 point drop in the benchmark Sensex and rupee dipping to record low of 62.03 intra-day.

India, RBI sources said, had no record of keeping controls on FII money and the capital outflow measures announced on Wednesday were no way bringing back the control regime.

To restrict the outflow of foreign currency, the RBI had on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians.

The central bank reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 per cent. Higher levels of ODI would now need prior approval from RBI.

The measures taken by the RBI cannot be called capital control measures and they had more to do with reducing stress on the balance sheets of corporates, a finance ministry official said.

A Finance Ministry official said if the government is taking measures to increase capital inflows, it is part of the package to take measures to discourage outflows.

"With rising NPAs, corporates are getting more and more into difficulties... So looking into their balance sheet before they are allowed to invest abroad is all that has been proposed. Hence, it is not capital control," he added.

Mayaram said the stock markets in India seem to be operating on sentiments and government is fully cognizant of the situation. "Whenever required, policy initiatives will be taken with a view only to create stable environment for rupee. We will see when it is required, we will take appropriate measures." He said: "We will take all measures to create stable environment for the rupee. We will try and prevent volatility in the rupee. It does not mean we have any intention of defending the rupee at any particular point," he said. — PTI

New Delhi, August 16
Perturbed over the RBI's decision to impose restrictions on outward investments, India Inc today said it would dampen global aspirations of domestic companies.

Reserve Bank's restrictions on outward investments, CII said, "would be a dampener to India’s global aspirations". It hoped that these measures would be revisited soon and status quo would be restored.

"To stabilise the rupee, it would have been more appropriate to initiate policies which prevent influx of non-essential imports such as coal and iron ore and augment forex inflows by encouraging FDI by promising a conducive and stable policy regime," it said.

Sharing similar views, Ficci said the markets today experienced a free fall and has not reacted well to the Central Bank's restrictions on rupees flows offshore with heightened fears that more restrictions may come including for FIIs.

"These fears need to be addressed. After all India has never restricted dividend flows offshore or indeed sales of equity share proceeds even when the situation was more dire . The fall in the rupee essentially underlines weakness in the economic fundamentals," Ficci president Naina Lal Kidwai said.

She hoped that RBI's measures are temporary in nature and would be reversed once situation stabilises.

Consultancy firm Deloitte said capital controls enforced by the RBI seem to have aggravated the rupee slide. It said the rupee may continue to depreciate further till India see a significant and consistent improvement in the trade deficit position.

"Overall pick up in exports of goods and services in coming months, coinciding with recovery in advanced economies like US and Europe, should ease down the pressure in external sector to some extent and will certainly play a crucial role in the recovery of rupee," it added.

"Fall in stock market will dampen the investors' sentiment and cause a slowdown in consumption and employment pattern through its negative wealth effects," PHDCCI said.

PHDCCI president Suman Jyoti Khaitan said the slowing down of India's GDP growth quarter after quarter was a matter of concern. "The industry sector has been exhibiting a disappointing performance mainly driven by the slack in manufacturing and mining activities," she said. — PTI

New Delhi, August 16
As the stock markets tanked and the rupee hit a record low, monsoon and the agriculture sector are proving to be a ray of hope for the gloomy Indian economy. The seasonal rains are continuing with their surprise run with experts now predicting above-average gains for the monsoon this year in its four-month stay in India, which culminates around September-end.

The country has so far received 13 per cent extra rainfall with the northwest contributing a good deal to it. According to the IMD’s latest data, a major part of the country, almost 87 per cent, has so far received excess or normal rains. In fact, no part of the country is falling in the ‘scanty’ or ‘no rains’ category, which is good news for the country’s planners because any adverse report on the monsoon front would have only added to prevailing negative sentiments due to drop in industrial output, fall in exports and higher retail inflation, thus adding to the ruling party’s woes.

Two months of monsoon activity without a break is rare and analysts say it could lead to better-than-expected GDP performance, given the strong connection between agri-GDP and overall GDP. The government is banking on it with Agriculture Minister Sharad Pawar recently saying he was confident of a bumper crop which itself would give a boost to reviving the economy. Industry too is looking at rural markets to make up for losses in the urban demand.

As a result of the good monsoon, sowing of kharif crops has shown a steady increase. Reservoir levels are also good and so is the power situation — all of which will now contribute to the coming rabi season. According to the government data, the total sown area in the kharif season as on August 16 stands at 930.52 lakh hectare as compared to 852.60 hectare at this time last year. Rice has been sown in 304.62 lakh hectare area as compared to the 292.55 lakh hectare of the last year.

Mumbai, August 16
Shares of Axis Bank today plummeted by over 9 per cent after the MSCI said it would exclude the bank from its standard and large cap indices, and the RBI restricting foreign institutional investors from purchasing shares in the bank.

The bank scrip fell 8.69 per cent to Rs 1,050 on the BSE. It closed at Rs 1,055.40, down 8.23 per cent at the BSE.

At the NSE, it tumbled 9.36 per cent to Rs 1,042.05.

Led by the massive sell-off, the market value of the bank slipped Rs 4,426 crore to Rs 49,494 crore. — PTI

New Delhi, August 16
As no solution to the Rs 5,600-crore payment crisis at NSEL has appeared on the horizon so far, the Prime Minister has been asked by a minister in his Cabinet to intervene to protect the interest of investors.

Minister of State for Telecom and Shipping Milind Deora today wrote to Prime Minister Manmohan Singh and sought his intervention to resolve the settlement crisis facing the National Spot Exchange Ltd (NSEL).

Stating that nearly 15,000 investors at NSEL are facing the risk of losing Rs 5,500 crore, Deora said the government should step in and take charge to recover investors’ money.

"It is apparent to me that these losses were caused by a systemic breakdown involving various entities. In the interest of investors and the broader financial markets of our country, I humbly but passionately request your attention to this matter," Deora said in the letter.

"It is imperative that the government steps in to take charge and facilitate a smooth and orderly recovery of investor money, at the earliest," he added. Appreciating the initial efforts of the Forward Market Commission (FMC) in resolving this issue, Deora said: "I am confident that with your intervention, this can be settled amicably".

NSEL has been engulfed in a crisis after it suspended trade on all its contracts, raising concern over the possible defaults of Rs 5,600 crore dues to investors.

According to the exchange, 21 entities owe nearly Rs 5,600 crore to investors, with the maximum liability of Rs 929 crore from NK Proteins.

On August 14, NSEL submitted its seven-month plan with commodity market regulator FMC for settling dues worth Rs 5,600 crore. — PTI

New Delhi, August 16
Telecom operator Tata Docomo today came out with new unique broadband plans, where it will dish out free tablets with annual subscriptions. This, however, would be valid for their high-speed connections.

“Every subscriber to the 100 Mbps annual plan will get a tablet worth Rs 40,000 free whereas subscribers opting for other annual plan of Rs 1,099 or above per month will get a free tablet worth Rs 5,000. This offer will be applicable till September 30,” the operator said.

Announcing the launch, Prateek Pashine, President, SME Business, Tata Docomo, said, “Internet Services are fast becoming the basic necessity of the consumers and we also believe that high-speed Internet is an empowering tool in the hands of consumers. In a multi-device environment, our proposition of high-speed broadband along with an attractive tablet is an exciting proposition for the consumer”

However, these high-speed plans come with 
huge rentals.

The 'Launcher' series plans of Tata Docomo comes with a monthly rental of Rs 6,666, which will offer a speed of 100 mbps. The annual cost of this plan for the subscriber will be as high as Rs 79,992, with the subscriber getting a Rs 40,000 worth tablet free.

The 20 mbps plan will charge Rs 4,444 as monthly rental. The company's 10 mbps plan has a rental of Rs 3,333 per month. Both these plans will get free tablets worth Rs 5,000.

Wired broadband is now a significant focus area, Tata Docomo said. “The target segment here is the rapidly growing high-speed home broadband user,” the company claimed.

Tata Docomo had earlier revolutionised mobile call rates, as they launched their GSM services, with their one-paisa-per-second plan.

Mumbai, August 16
Led by Titan Industries, jewellery stocks today tanked as much as 14 per cent, after the RBI prohibited inward shipment of gold coins and medallions without licence and said importers will be required to make full upfront payment for the shipments. Reacting to this, shares of Titan Industries slumped 14 per cent to Rs 235 on the BSE in morning trade.

Similarly, PC Jeweller tanked 5.83 per cent, while Tribhovandas Bhimji Zaveri tumbled 6 per cent.

Among others, Rajesh Exports was down 3.69 per cent and Thangamayil Jewellery fell 1.15 per cent.

Seeking to reduce the import of gold, the RBI had on Wednesday prohibited inward shipment of gold coins and medallions without licence.

"From now onwards, import of gold in the form of coins and medallions is prohibited and henceforth all import of gold in any form or purity shall be subject to a licence issued by DGFT prescribing 20-80 scheme," Economic Affairs Secretary Arvind Mayaram had said.

The latest steps are part of the series of steps taken to curb gold import, the single biggest contributor to the widening Current Account Deficit (CAD). — PTI