Govt seeks CVC nod for new norms for advisors

The Government has sought the opinion of the CVC to change the norms for appointing investment bankers for advising it on divesting its stakes in the companies it runs.

Last year, the Government had identified over 60 Central public sector undertakings for disinvestment over the next few years to bridge the gaping fiscal deficit and fund its social sector and infrastructure programmes.

Under the plan, the Centre would dilute up to ten per cent of its stakes in those CPSUs which are unlisted through IPOs and those already listed would have to dilute up to 15 per cent through follow-on public offers to meet Sebi guidelines.

The proposed regulations would help the Government modify the criteria of choosing investment bankers from cost- basis to quality-cum-cost basis, as the current norms put those advisors who do not have deep-pockets at a disadvantageous position.

The objective is to give more weight to the quality of these advisors and not just cost.

Currently, the investment bankers are selected on the cost-basis under which the technically qualified investment bankers are selected on the basis of the lowest bid.

India can join WTO pact

India is not a member of the WTO agreement on government procurement and has so far resisted the attempts by the developed countries like the US and European Union to subject Indian state purchases to the multilateral bidding rules.

While the observer status will not mean India immediately coming on the board, it could signal that the country would eventually play the ball, a source said.

The WTO agreement on government purchases is an accord among 30 select countries and is voluntary in nature.

The central government alone has an expenditure budget of Rs 10 lakh crore (approx $125 billion) of which at least more than one third is spent on state purchases. The multinational companies see it as a huge opportunity but find the procurement procedures falling short of global guidelines.

Import ban on steel lifted - sigh of relief for Auto sector

The government on Friday removed restriction on imports of hot-rolled steel, which is mainly used in the automobile and consumer durable industries, giving a big relief to these sectors from rising raw material prices.

A notification to this effect has been issued by the Directorate General of Foreign Trade (DGFT).

The government had put the mother steel product in the restricted category in October 2008, which meant that the users required an import licence from the government.

Experts said the government is allowing free imports as the domestic demand is picking up and steel prices have gone up by 10-14 per cent in the last 45 days.

During April-December 2008-09, the imports of this product were worth USD 2.33 billion.

RBI all set to curb inflation

Concerned over the spiralling food prices, the Reserve Bank has indicated at tightening money supply to contain the rising inflation pressures.

The Reserve Bank is slated to come out with the third quarter review of its monetary policy on January 29 amid intense speculations that it may signal an interest hike to tighten money supply to contain the rising inflation.

The food inflation was nearly 19 per cent last week while the overall wholesale price inflation rose massively to 4.78 per cent in November compared to 1.34 per cent in October.

The deputy governor further said the near-term policy challenges are clearly conditioned by the evolving growth-inflation outcome that supports shifting the balance of policy focus on managing the recovery and on containment of inflation.

Foreign Direct Investment down 11 percent

Foreign direct investment (FDI) into India fell 11 percent on year to $15.3 billion in the first six months of fiscal 2009/10, the trade minister said, as the global financial downturn clipped flows. India had received $17.2 billion in FDI in the corresponding period last year

Food price index up 15.58 percent

India's food price index was up 15.58 per cent in the 12 months to November 14, while the fuel index was down 1.51 per cent.

The worst dry spell in nearly four decades and floods in parts of the country have hurt farm output and pushed up food prices.

On Tuesday, C Rangarajan, Chairman of Prime Minister Manmohan Singh's Economic Advisory Council, said that food price inflation was the biggest worry for the economy in near term and a strong rise in food prices could prompt monetary action.

India's annual wholesale inflation rose 1.34 per cent in October from a year earlier, compared with 0.5 per cent in September and 11.06 per cent a year ago.

CII's Survey projects growth of 6-7 % for present fiscal year

(posted under - Indian economy news) - Out of 134 respondents participated in the CII Northern Region Business Outlook Survey, more than half said that India's economic growth is likely to be in the range of 6-7 per cent in the current fiscal.

"Global economic instability followed by slackening consumer demand are the two most important concern areas," it said.

The survey also said that the overall outlook for business is better for the current six months (October-March 2009-10) compared to the previous six months.

Over 50 per cent of the respondents expects an increase in investments during the current six months.

On exports, it said that the outward shipment seems to be much better for October-March. "Fifty-one per cent of the respondents expected an increase in volume of exports," it added.

India's exports are on downslide since October 2008 due to the global slump in demand.

Government of India approves FDI's worth over 1150 crore

(posted under - FDI's in india) - The government of india has approved 17 foreign direct investment (FDI) proposals worth Rs 1,158.78 crore.

Among the major proposals which were approved today are the FDI applications of the world's largest steelmaker ArcelorMittal and ductile iron pipe maker Electrosteel Castings, a government statement said.

ArcelorMittal, with an FDI of Rs 503.37 crore, plans to infuse foreign equity into a company engaged in manufacturing cold-rolled semi-finished iron and steel products.

The Kolkata-based Electrosteel Castings plans to issue and allot eligible securities including equity shares and/ or non-convertible debt instruments along with warrants on a private placement basis bringing in FDI worth Rs 600 crore.

Meanwhile, the government deferred a decision on 12 FDI proposals and rejected five on the recommendations of the Foreign Investment Promotion Board (FIPB).

The proposal to infuse 100 per cent foreign equity by Jaipur IPL Cricket Pvt Ltd (the promoters of the Rajasthan Royals which won the 2008 IPL), has been rejected by the government.

The government referred the proposals of Jet Airways to bring in Rs 2,000 crore FDI and the Mauritius-based investment fund Indium IV to bring in Rs 2,500 crore FDI, to the Cabinet Committee on Economic Affairs (CCEA) as the proposals are of value above Rs 600 crore.

Cheers - Indian economy to be worth $ 2 trillion by fiscal year 2014-15

India will be a $2-trillion economy in the next five years as its GDP growth is likely to average at 12 per cent in nominal terms powered by a huge consumption demand, Enam Securities has said.

"India's GDP is likely to grow at (an) average 12 per cent in nominal terms. Hence, India will be a $2-trillion economy by 2014-15," Enam Securities Head-Research, Nandan Chakraborty, and economist Sachchidanand Shukla said in a report titled 'India Strategy' released today.

This growth will be led by the huge consumption demand in sectors like FMCG, power, auto (small car hub), IT and pharma, it added.

The brokerage firm said insurance companies, financial services and equity markets will flourish as the country's annual savings pool grows to $700 billion from $400 billion at present.

"More than half of this ($700 billion) could flow into financial savings. With favourable demographics and average seven per cent real growth, India can sustain more than 30 per cent savings rate akin to the Asian tigers, or China and Japan. This will transform the domestic financial services space," Enam said.

Life insurance penetration in India, which is already a USD one-trillion economy, is estimated to reach a level of 4.4 per cent over the next two years as insurance companies focus on expanding into rural India, the report said.

source - economictimes

How rising interest rates affect currencies and gold

When a company raises its dividend, its stock becomes more attractive to investors. Its share price rises. When a bank raises interest rates on its savings accounts, people deposit more money in the bank. It's the same way in the currency markets. Rising interest rates make a currency more attractive and it rises against other currencies with stable interest rates. Central banks around the world have been cutting rates for two years, and interest rates are as low now as they've ever been.

The governor of Australia's central bank hinted there would be more interest rate rises on the way. This could be the start of a new trend of rising interest rates around the world. If this is the start of a new trend of rising world interest rates, you can expect big new trends in the currency exchange markets, too. That's because interest rates are the single most important driver of exchange rates in the currency markets.

So how do we make money from a new global trend of rising interest rates?

While other central banks are considering raising rates, the Fed has so far refused to join the party. The dollar is the worst-performing major currency in the world this year as a result.

The recent unemployment report showed that somewhere close to 6 million jobs have vanished from the American economy in the last 18 months. The employment situation hasn't been this bad. With the ongoing unemployment, rate hikes in America are unlikely until next year.

First, this gives us a great opportunity to buy the dollar right now, while it's cheap and no one is anticipating rate hikes from the Fed. By the time Bernanke announces his first rate hike next year, the dollar will have already rallied 10% or more.
Second, a trend of rising interest rates on currencies is great for people looking to buy gold at lower prices. Gold has no interest rate. So when interest rates rise on world currencies, they become more attractive – and they rise – relative to gold. This is especially true with the dollar. It's the world's reserve currency and gold is incredibly sensitive to movements in its interest and exchange rates.

As long as unemployment keeps rising, there's no way the Fed raises interest rates and gold prices will stay high. But next year is a different story. The first hint of rate increases by the Fed will send shockwaves into the gold market.

Trade between India & Malaysia to increase

"Currently the bilateral trade between the two countries is USD 10.5 billion. Around 20 per cent of trade was affected due to recession.We are hoping to see the trade grow by early next year,' Mohamed told on the sidelines of a function.

Earlier, participating as the chief guest at the 10th Anniversary celebration of Marrybrown Family Restaurant here, he said the success of Marrybrown would motivate other companies in Malaysia to venture into the Indian market.

There were around 15 Malaysian companies present in the country while 20 Indian companies were present in Malaysia.

Marrybrown Founder and Malaysian operations Managing Director Nancy Liew said the restaurant was present in 13 countries having more than 300 outlets.As part of increasing their presence, new restaurants were recently opened in Dubai, Qatar, Saudi Arabia, Kuwait, Syria, Tanzania and Iran.

Marrybrown India Managing Director MGM Anand said 12 more outlets would be added to the existing 30 restaurants in South India.

Indian infrastructure output increases by 4 percent

India's infrastructure sector output grew 4 percent in September from a year earlier, slower than upwardly revised annual growth of 7.8 percent in August, government data showed on Wednesday.

During April-September, the first half of the 2009/10 year, output rose 5 percent compared with 3.4 percent in the same period in 2008/09.

The infrastructure sector accounts for 26.7 percent of India's industrial output.

Timeline for duty free sugar import

India has extended tax-free white sugar imports until December 2010 as the world's biggest consumer of the sweetener faces robust demand and shrinking domestic output.

India's sugar season runs from October to September. The country's sugar output in the year that ended on Sep. 30 fell to 15 million tonnes from 26.4 million, forcing it to import 5 million tonnes and lifting raw sugar futures to the highest in nearly three decades.

Problem of black economy in india

Indian economy has crossed the 1 trillion worth mark and per capita income in india has also crossed the $3000 mark THATS a very good news indeed...but indian economy is actually worth more then the 1.13 trillion worth for sure thanks to the black economy which runs in parallel along with the white economy. that is worth $ 1+ trillion worth, still majority of trading in india is done in grey market which government doesn't come to know about or may be they know it but since many of their money earning sources are part of black economy they try to pretend as they are not aware of it.. what a pity on indian economy.

the growth of black economy in india can be controlled if the currency notes and coins come with an renewal date.. yes i know it may sound a little weird or horrible but it might be very effective, one good effect would be that more black money which currently doesnot circulate in market would come in circulation and the MP's MLA's beaurocrats which are indulged heavily in corrupt practices would be most effective.

The currency note which has met with exppiry date cannot be used until they are renewed by some government authorized agencies which should be independent of government and should be controlled directly by Reserve bank of india (RBI).

The other important plus point about this type of renewal based economy is that the Indian money which is deposited in Swiss banks and is unknown to the indian government would also be required for renewal which would be a major instrument in ending the black economy, we all know that the politicians have huge assets in their swiss bank accounts , renewal based economy would also help in improved circulation of economy in market.

RBI should maintain a database for all such renewal activities and it should further distribute such economy date renewal to state levels and then to district levels with a centralised system, thus we would also come to know about the Indian economy status in individual states. but one thing is sure that indian politicians and major business houses including some of the biggest indian businesses would be against such renewal based economy as their black money based assests would become public when they show them for renewal.

the Idea looked very interesting to me as it would really help in bringing money deposited in swiss banks, in unauthorised bank accounts in india, black money belonging to business houses and belonging to individuals too would be brought in notice of RBI.

I was talking to one of my relative about this type of currency which comes with a renewal date, so thought of posting it on my blog to get to know what the other fellow indians think about it.

So what do you think about such move so that the black economy would end

World Bank approves $4.2 billion loan for India

The World Bank approved more loans equalling to $4.2 billion to India for three projects.

The loan amount will be divided in following manner - $2 billion for state-run banks, with IIFC receiving $1.195 billion to fund infrastructure projects, and PowerGrid Corp getting $1 billion to upgrade India's power transmission system. so we'll get less power cuts this time