Tuesday, January 5, 2010
Nath invites Malaysian cos to invest in highways sector
Nath invites Malaysian cos to invest in highways sector
The Financial Express, January 5, 2010, Page 11
Press Trust of India, Kuala Lumpur
India has achieved construction of 9 -km roads per day and the target of developing 20-km daily would be accomplished by this April, road transport and highways minister Kamal Nath said here on Monday.
‘‘We have reached 9-km per day of road construction and will hit our target of 20-km a day by April,’’ Nath, who is here to invite the Malaysian companies to enter the highway construction sector in India, said.
As many as 35 Malaysian companies are already involved with various infrastructure projects in India.
To have a 20-km of road construction a day or 7,000 km of roads a year, there has to be 20,000 km of work in progress, he noted.
The minister said between November 2009 and June 2010 contracts worth $20 billion would have been awarded. Referring to land acquisition, he noted that states would also need to address the issue. The transport and highways minister stressed that mega infrastructure projects would not be awarded to small companies.
‘‘Medium-sized companies should take more jobs and aspire to become bigger. If small companies take big projects I may not have the roads,’’ he said, adding such companies may not even be able to get finances.
‘‘We don’t want companies to take on more than they can chew. We also don’t want hoarding of contracts,’’ he added.
The Financial Express, January 5, 2010, Page 11
Press Trust of India, Kuala Lumpur
India has achieved construction of 9 -km roads per day and the target of developing 20-km daily would be accomplished by this April, road transport and highways minister Kamal Nath said here on Monday.
‘‘We have reached 9-km per day of road construction and will hit our target of 20-km a day by April,’’ Nath, who is here to invite the Malaysian companies to enter the highway construction sector in India, said.
As many as 35 Malaysian companies are already involved with various infrastructure projects in India.
To have a 20-km of road construction a day or 7,000 km of roads a year, there has to be 20,000 km of work in progress, he noted.
The minister said between November 2009 and June 2010 contracts worth $20 billion would have been awarded. Referring to land acquisition, he noted that states would also need to address the issue. The transport and highways minister stressed that mega infrastructure projects would not be awarded to small companies.
‘‘Medium-sized companies should take more jobs and aspire to become bigger. If small companies take big projects I may not have the roads,’’ he said, adding such companies may not even be able to get finances.
‘‘We don’t want companies to take on more than they can chew. We also don’t want hoarding of contracts,’’ he added.
Now, green norms mandatory for new government buildings
Now, green norms mandatory for new government buildings
The Financial Express, January 5, 2010, Page 11
Press Trust of India, New Delhi
New government and public sector undertakings (PSUs) buildings will have to mandatorily comply with new green rating norms to tackle climate change threats.
‘‘This decision was taken by the Centre two days ago to ensure that buildings are environment-friendly aiming to achieve high energy utilisation,’’ minister of new and renewable energy Farooq Abdullah said on Monday at a function here.
The minister said all new buildings of government and PSUs will have to comply with the requirement of at least 3 star rating under the Green Rating for Integrated Habitat Assessment (GRIHA).
Efforts will be, however, made for higher rating by such buildings subject to the site condition as western rating systems are not suited for Indian climate and GRIHA has been designed exclusively for Indian buildings, the minister added.
GRIHA is a national rating system under which green buildings will be rated by technical expertise from Teri, The Energy Resources Institute, headed by RK Pachauri.
The aim of a green building design is to minimise the demand of non-renewable sources and maximise its utilisation.
While emphasising on integrating traditional heritage with scientific tools, the minister suggested that even small dwelling units being constructed under the Indira Awas Yojna be brought under the GRIHA ambit to ensure sustainability.
Deepak Gupta, secretary in the renewable ministry, said CPWD has already adopted GRIHA rating and efforts are being made to spread awareness in this direction among the concerned stakeholders including builders, architects.
‘‘A technical group has also been constituted to study the feasibility of GRIHA in larger areas such as townships and campus. The team will submit its report within the next six months,’’ Gupta said.
Buildings will be rated on the basis of design, system design, including ventilation, water and waste management, indoor environmental quality and selection of ecologically sustainable materials.
Pachauri said, ‘‘The country is witnessing rapid boom in construction industry and the primary objective of the rating system is to help design green buildings and in turn help evaluate the greenness of buildings’’.
The Financial Express, January 5, 2010, Page 11
Press Trust of India, New Delhi
New government and public sector undertakings (PSUs) buildings will have to mandatorily comply with new green rating norms to tackle climate change threats.
‘‘This decision was taken by the Centre two days ago to ensure that buildings are environment-friendly aiming to achieve high energy utilisation,’’ minister of new and renewable energy Farooq Abdullah said on Monday at a function here.
The minister said all new buildings of government and PSUs will have to comply with the requirement of at least 3 star rating under the Green Rating for Integrated Habitat Assessment (GRIHA).
Efforts will be, however, made for higher rating by such buildings subject to the site condition as western rating systems are not suited for Indian climate and GRIHA has been designed exclusively for Indian buildings, the minister added.
GRIHA is a national rating system under which green buildings will be rated by technical expertise from Teri, The Energy Resources Institute, headed by RK Pachauri.
The aim of a green building design is to minimise the demand of non-renewable sources and maximise its utilisation.
While emphasising on integrating traditional heritage with scientific tools, the minister suggested that even small dwelling units being constructed under the Indira Awas Yojna be brought under the GRIHA ambit to ensure sustainability.
Deepak Gupta, secretary in the renewable ministry, said CPWD has already adopted GRIHA rating and efforts are being made to spread awareness in this direction among the concerned stakeholders including builders, architects.
‘‘A technical group has also been constituted to study the feasibility of GRIHA in larger areas such as townships and campus. The team will submit its report within the next six months,’’ Gupta said.
Buildings will be rated on the basis of design, system design, including ventilation, water and waste management, indoor environmental quality and selection of ecologically sustainable materials.
Pachauri said, ‘‘The country is witnessing rapid boom in construction industry and the primary objective of the rating system is to help design green buildings and in turn help evaluate the greenness of buildings’’.
Regulation came too late to stop housing bubble, says Bernanke
Regulation came too late to stop housing bubble, says Bernanke
The Financial Express, January 5, 2010, Page 18
Bloomberg
Federal Reserve chairman Ben S Bernanke said low central bank interest rates didn’t cause the housing bubble of the past decade and that better regulation would have been more effective in curbing the boom.
“The best response to the housing bubble would have been regulatory, rather than monetary,” Bernanke said on Sunday in remarks to the American Economic Association’s annual meeting in Atlanta. The Fed’s efforts to constrain the bubble were “too late or were insufficient,” which means that regulatory actions “must be better and smarter,” he said.
Bernanke said the Fed is improving supervision of banks and has strengthened measures to protect consumers of financial products. Senate Banking Committee chairman Christopher Dodd, who backs Bernanke for a second term, has called the Fed’s oversight of bank lending before the crisis an “abysmal failure.” Dodd proposes stripping the Fed and other agencies of bank supervision powers and moving them to a new regulator.
Scholars such as Allan Meltzer, a historian of the central bank, have criticised the Fed for helping fuel the housing boom by keeping interest rates too low for too long. The bursting of the housing bubble led to the worst recession since the Great Depression and the loss of more than 7 million US jobs.
“It sounds a little bit like a mea culpa,” said Randall Wray, an economics professor at the University of Missouri in Kansas City, who was in Atlanta and didn’t attend Bernanke’s speech. “The Fed played a role by promoting the most dangerous financial innovations used by institutions to fuel the housing bubble.”
Senator Richard Shelby of Alabama, the senior Republican on the Banking Committee, has said Bernanke failed to anticipate the crisis that led to Fed-backed bailouts of financial firms including Citigroup Inc. and American International Group Inc and doesn’t deserve a second term as Fed chief.
Shelby, at a Dec 17 committee vote on Bernanke’s nomination to a second four-year term starting next month, said the former Princeton University professor “missed clear signals” when he was a Fed governor from 2002 until 2005. Bernanke still must be approved by the full Senate. Bernanke didn’t discuss the outlook for the US economy or Fed monetary policy in Sunday’s speech.
Bernanke said increased use of variable-rate and interest-only mortgages, and the “associated decline of underwriting standards,” were more responsible for the bubble than low rates.
The Financial Express, January 5, 2010, Page 18
Bloomberg
Federal Reserve chairman Ben S Bernanke said low central bank interest rates didn’t cause the housing bubble of the past decade and that better regulation would have been more effective in curbing the boom.
“The best response to the housing bubble would have been regulatory, rather than monetary,” Bernanke said on Sunday in remarks to the American Economic Association’s annual meeting in Atlanta. The Fed’s efforts to constrain the bubble were “too late or were insufficient,” which means that regulatory actions “must be better and smarter,” he said.
Bernanke said the Fed is improving supervision of banks and has strengthened measures to protect consumers of financial products. Senate Banking Committee chairman Christopher Dodd, who backs Bernanke for a second term, has called the Fed’s oversight of bank lending before the crisis an “abysmal failure.” Dodd proposes stripping the Fed and other agencies of bank supervision powers and moving them to a new regulator.
Scholars such as Allan Meltzer, a historian of the central bank, have criticised the Fed for helping fuel the housing boom by keeping interest rates too low for too long. The bursting of the housing bubble led to the worst recession since the Great Depression and the loss of more than 7 million US jobs.
“It sounds a little bit like a mea culpa,” said Randall Wray, an economics professor at the University of Missouri in Kansas City, who was in Atlanta and didn’t attend Bernanke’s speech. “The Fed played a role by promoting the most dangerous financial innovations used by institutions to fuel the housing bubble.”
Senator Richard Shelby of Alabama, the senior Republican on the Banking Committee, has said Bernanke failed to anticipate the crisis that led to Fed-backed bailouts of financial firms including Citigroup Inc. and American International Group Inc and doesn’t deserve a second term as Fed chief.
Shelby, at a Dec 17 committee vote on Bernanke’s nomination to a second four-year term starting next month, said the former Princeton University professor “missed clear signals” when he was a Fed governor from 2002 until 2005. Bernanke still must be approved by the full Senate. Bernanke didn’t discuss the outlook for the US economy or Fed monetary policy in Sunday’s speech.
Bernanke said increased use of variable-rate and interest-only mortgages, and the “associated decline of underwriting standards,” were more responsible for the bubble than low rates.
UK mortgage approval numbers rise
UK mortgage approval numbers rise
The Financial Express, January 5, 2010, Page 18
Reuters, London
British lenders approved the highest number of mortgages for house purchase since March 2008 in November and the Bank of England’s preferred gauge of money supply showed a marked pick-up, official figures showed on Monday.
The data come hot on the heels of a surprisingly positive manufacturing survey and will likely strengthen expectations that the BoE will not extend its 200 billion pound quantitative easing policy once the remaining funds are spent during the next month. The Bank of England said mortgage approvals numbered 60,518 in November, rising from an upwardly revised 57,718 in October and more than double its record low of 27,162 set in November 2008. Analysts had forecast a reading of 58,000.
They are consistent with our more constructive view on UK housing as well as for overall economic growth this year. The BoE’s preferred money supply gauge—M4 excluding intermediate other financial corporations—rose by 0.9%, its fastest monthly pace since April, and the three month annualised rate picked up to -2.2% from October’s -5.2%.
Dubai makes history in hard times, again
Dubai makes history in hard times, again
The Financial Express, January 5, 2010, Page 20
Reuters, Dubai
Started at the height of the economic boom and built by some 12,000 labourers, the world’s tallest building opened on Monday in Dubai as the glitzy emirate seeks to rekindle optimism after its financial crisis.
Burj Dubai, whose opening has been delayed twice since construction began in 2004, would mark another milestone for the deeply indebted emirate with a penchant for seeking new records.
Dubai, one of seven members of the United Arab Emirates, gained a reputation for excess with the creation of man-made islands shaped like palms and an indoor ski slope in the desert. With investor confidence in Dubai badly bruised by the emirate’s announcement in November that it would seek a debt standstill for one of its largest conglomerates, the Burj Dubai is seen as a positive start to the year after a bleak 2009.
The project has been scrutinised by human rights groups, who have objected to its treatment of laborers, as well as by environmentalists who said the tower would act as a power vacuum, increasing the city’s already massive carbon footprint.
But despite the criticism, many say the edifice, believed to have cost $1.5 billion to build, is an architectural marvel. The tower’s height has been kept a closely guarded secret until now. Developer Emaar Properties PJSC will reveal the height—known to exceed 800 meters (2,625 feet)— on Tuesday and Dubai’s ruler will inaugurate the opening.
Experts believe Dubai’s recent financial troubles have not hurt sales of approximately 1,100 residential units in the Burj —meaning tower in Arabic —saying they were nearly all sold. Dubai’s real estate sector crashed at the end of 2008 when the global financial crisis hit the emirate after a six-year economic boom. Thousands of jobs were slashed and projects worth billions of dollars were canceled or delayed.
With analysts suggesting tax-free Dubai might sell some of its assets to boost revenues and slash $80 billion in debt, many wondered if the tower was on the list for grabs. Dubai, with few natural resources of its own, expects a budget deficit of 2% of GDP this year.
The Financial Express, January 5, 2010, Page 20
Reuters, Dubai
Started at the height of the economic boom and built by some 12,000 labourers, the world’s tallest building opened on Monday in Dubai as the glitzy emirate seeks to rekindle optimism after its financial crisis.
Burj Dubai, whose opening has been delayed twice since construction began in 2004, would mark another milestone for the deeply indebted emirate with a penchant for seeking new records.
Dubai, one of seven members of the United Arab Emirates, gained a reputation for excess with the creation of man-made islands shaped like palms and an indoor ski slope in the desert. With investor confidence in Dubai badly bruised by the emirate’s announcement in November that it would seek a debt standstill for one of its largest conglomerates, the Burj Dubai is seen as a positive start to the year after a bleak 2009.
The project has been scrutinised by human rights groups, who have objected to its treatment of laborers, as well as by environmentalists who said the tower would act as a power vacuum, increasing the city’s already massive carbon footprint.
But despite the criticism, many say the edifice, believed to have cost $1.5 billion to build, is an architectural marvel. The tower’s height has been kept a closely guarded secret until now. Developer Emaar Properties PJSC will reveal the height—known to exceed 800 meters (2,625 feet)— on Tuesday and Dubai’s ruler will inaugurate the opening.
Experts believe Dubai’s recent financial troubles have not hurt sales of approximately 1,100 residential units in the Burj —meaning tower in Arabic —saying they were nearly all sold. Dubai’s real estate sector crashed at the end of 2008 when the global financial crisis hit the emirate after a six-year economic boom. Thousands of jobs were slashed and projects worth billions of dollars were canceled or delayed.
With analysts suggesting tax-free Dubai might sell some of its assets to boost revenues and slash $80 billion in debt, many wondered if the tower was on the list for grabs. Dubai, with few natural resources of its own, expects a budget deficit of 2% of GDP this year.
India to build 20 km roads per day
India to build 20 km roads per day
Business Standard, January 5, 2010, Page 1
Road trade and Highways Minister Kamal Nath said India had increased its per day construction of roads to 9 km and the target of developing 20 km daily would be accomplished by April. Thirty-five Malaysian companies are already involved with various infrastructure projects in India.
No monetary tightening expected: Basu
No monetary tightening expected: Basu
Business Standard, January 05, 2010, Page 1
BS Reporter / New Delhi
Two key functionaries in the government expect no monetary tightening measures soon, despite the rising food inflation. Instead, they see food prices cooling by the next month.
Kaushik Basu, chief economic advisor in the Ministry of Finance, today said there was no need to take steps which could have implications for growth and employment. “Right now, there are no expectations of monetary tightening, nor do I believe there is a reason for it,” Basu said at a Ficci event. He added that food inflation would peter out in few months.
Planning Commission Deputy Chairman Montek Singh Ahluwalia, too, said food prices were expected to moderate by the next month, as the current price rise was not due to excess liquidity in the economy. Food inflation reached an 11-year high of 19.95 per cent in the second week of December.
Commenting on the country’s gross domestic product, Basu further said, “India might grow slightly above 7.5 per cent in the current year (fiscal), and achieve 9 per cent growth in 2010-11…If India’s growth crosses that of China in 4-4 years, it should not be a surprise.”
Business Standard, January 05, 2010, Page 1
BS Reporter / New Delhi
Two key functionaries in the government expect no monetary tightening measures soon, despite the rising food inflation. Instead, they see food prices cooling by the next month.
Kaushik Basu, chief economic advisor in the Ministry of Finance, today said there was no need to take steps which could have implications for growth and employment. “Right now, there are no expectations of monetary tightening, nor do I believe there is a reason for it,” Basu said at a Ficci event. He added that food inflation would peter out in few months.
Planning Commission Deputy Chairman Montek Singh Ahluwalia, too, said food prices were expected to moderate by the next month, as the current price rise was not due to excess liquidity in the economy. Food inflation reached an 11-year high of 19.95 per cent in the second week of December.
Commenting on the country’s gross domestic product, Basu further said, “India might grow slightly above 7.5 per cent in the current year (fiscal), and achieve 9 per cent growth in 2010-11…If India’s growth crosses that of China in 4-4 years, it should not be a surprise.”
Lax Oversight Caused Crisis, Bernanke Says
Lax Oversight Caused Crisis, Bernanke Says
Business Standard, January 05, 2010, Page 11
By CATHERINE RAMPELL, ATLANTA
Regulatory failure, not low interest rates, was responsible for the housing bubble and subsequent financial crisis of the last decade, Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Sunday.
Mr. Bernanke’s remarks, perhaps his strongest language yet assessing the roots of the financial crisis, came as he awaited confirmation for a second term as Fed chairman and as he sought greater regulatory authority from Congress.
“Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates,” Mr. Bernanke said in remarks to the American Economic Association.
Mr. Bernanke, addressing accusations that the Fed contributed to the financial crisis, argued in his speech that the interest rates set by the central bank from 2002 to 2006 were appropriately low. He was a member of the board of governors of the Federal Reserve system for most of that period.
“When historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment,” Mr. Bernanke said.
Some lawmakers and economists have argued that the Fed kept interest rates too low in the aftermath of the 2001 recession, making loans cheap and feeding reckless lending by banks.
“I strongly disapprove of some of the past deeds of the Federal Reserve while Ben Bernanke was a member and its chairman, and I lack confidence in what little planning for the future he has articulated,” Richard Shelby of Alabama, the Senate Banking Committee’s top-ranking Republican, said in December during a committee vote on Mr. Bernanke’s reconfirmation.
The Senate Banking Committee approved Mr. Bernanke’s renomination last month. He is expected to be reconfirmed by the full Senate before his current term expires on Jan. 31, despite some vocal opposition.
Even if confirmed, however, Mr. Bernanke is likely to face further political challenges over financial regulatory reform and the governance of the Fed.
The House passed a provision to audit the Fed as part of a larger financial reform package last month. Representative Ron Paul, Republican of Texas, has been carrying the banner for such an audit for decades.
The debate over what caused the financial crisis comes as the economy shows signs of recovery and as Congress considers a wide-ranging overhaul of financial regulation.
In a separate talk on Sunday at the conference, Donald L. Kohn, the Fed’s vice chairman, listed several measures the central bank was likely to take to shed the problematic assets it took from banks during the financial crisis. He said “the appropriate use and sequencing of these tools is under active discussion” by regulators.
But, as members of the rate-setting Federal Open Market Committee said last month, he noted that the fragile economic recovery and weak job market would “warrant exceptionally low” interest rates “for an extended period.”
Mr. Bernanke, in his talk, echoed his previous calls for Congress to grant the Fed greater oversight powers over the financial system, like the ability to help monitor and regulate against “systemic risk.”
Business Standard, January 05, 2010, Page 11
By CATHERINE RAMPELL, ATLANTA
Regulatory failure, not low interest rates, was responsible for the housing bubble and subsequent financial crisis of the last decade, Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Sunday.
Mr. Bernanke’s remarks, perhaps his strongest language yet assessing the roots of the financial crisis, came as he awaited confirmation for a second term as Fed chairman and as he sought greater regulatory authority from Congress.
“Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates,” Mr. Bernanke said in remarks to the American Economic Association.
Mr. Bernanke, addressing accusations that the Fed contributed to the financial crisis, argued in his speech that the interest rates set by the central bank from 2002 to 2006 were appropriately low. He was a member of the board of governors of the Federal Reserve system for most of that period.
“When historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment,” Mr. Bernanke said.
Some lawmakers and economists have argued that the Fed kept interest rates too low in the aftermath of the 2001 recession, making loans cheap and feeding reckless lending by banks.
“I strongly disapprove of some of the past deeds of the Federal Reserve while Ben Bernanke was a member and its chairman, and I lack confidence in what little planning for the future he has articulated,” Richard Shelby of Alabama, the Senate Banking Committee’s top-ranking Republican, said in December during a committee vote on Mr. Bernanke’s reconfirmation.
The Senate Banking Committee approved Mr. Bernanke’s renomination last month. He is expected to be reconfirmed by the full Senate before his current term expires on Jan. 31, despite some vocal opposition.
Even if confirmed, however, Mr. Bernanke is likely to face further political challenges over financial regulatory reform and the governance of the Fed.
The House passed a provision to audit the Fed as part of a larger financial reform package last month. Representative Ron Paul, Republican of Texas, has been carrying the banner for such an audit for decades.
The debate over what caused the financial crisis comes as the economy shows signs of recovery and as Congress considers a wide-ranging overhaul of financial regulation.
In a separate talk on Sunday at the conference, Donald L. Kohn, the Fed’s vice chairman, listed several measures the central bank was likely to take to shed the problematic assets it took from banks during the financial crisis. He said “the appropriate use and sequencing of these tools is under active discussion” by regulators.
But, as members of the rate-setting Federal Open Market Committee said last month, he noted that the fragile economic recovery and weak job market would “warrant exceptionally low” interest rates “for an extended period.”
Mr. Bernanke, in his talk, echoed his previous calls for Congress to grant the Fed greater oversight powers over the financial system, like the ability to help monitor and regulate against “systemic risk.”
Volatile capital flows could pose problems, says RBI
Volatile capital flows could pose problems, says RBI
Business Standard, January 05, 2010, Section II, Page 2
BS Reporter / Mumbai
Rapid and volatile capital inflows or outflows could pose significant policy challenges, potentially leading to exchange rate overshooting, asset price volatility and financial instability, Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said in Mumbai today.
“In this context, appropriate and pragmatic use of capital account regulations may have to be considered by emerging markets to maintain financial stability,” said Gopinath
However, Gopinath said capital inflows were not a concern at the moment.
“We don't look at the levels (of the rupee), only the volatility. There have been no concerns on inflows,” Gopinath told reporters on the sidelines of a conference.
In 2009, foreigners bought $17.5 billion worth of domestic shares, just $327 million short of the 2007 record of $17.78 billion. The heavy buying helped the rupee rise 12.2 per cent from a record low of 52.2 hit in early March.
Separately, Gopinath said RBI would issue norms on repos in corporate bonds before its third quarter monetary policy review on January 29.
The central bank had in September last year proposed guidelines for repurchase agreements, or repos, in corporate bonds, a move bankers said would add depth to the relatively illiquid market.
However, the markets will have to wait longer for introduction of credit default swaps (CDS).
“We are looking very closely at what is happening in the international markets. This is something which is at a very embryonic stage and there are complex issues to be sorted out,” Gopinath said.
The deputy governor hinted that these instruments would be traded over-the-counter, saying that single-name CDS’ were not easily amenable to an exchange-traded or a central counterparty (CCP) platform. “Even in international markets I have not seen a single-name CDS traded on a CCP platform,” she said.
The deputy governor said public sector banks should improve their ability to lend in the term-money market. “The term-money market continues to remain dormant with low turnover despite several initiatives taken by the Reserve Bank, mainly reflecting the inability of the market participants to take a medium-term view on interest rates and liquidity,” Gopinath said. “However, the CD market is active and reflects the unsecured term-money market rates,” she added.
RBI is not in favour of relaxing the minimum tenor of non-convertible debentures from the current 90-day limit it had imposed in the second-quarter monetary policy review.
“The suggestion… cannot be acceded to as under the law, corporates are prohibited from issuing unsecured debentures with maturity of less than 90 days. Allowing markets to issue very short-term instruments could have systemic implications,” Gopinath said. She added that there were other instruments in the short-end like repo, CBLO (collateralised borrowing and lending mechanism) and CPs that could meet the requirement of investors.
Business Standard, January 05, 2010, Section II, Page 2
BS Reporter / Mumbai
Rapid and volatile capital inflows or outflows could pose significant policy challenges, potentially leading to exchange rate overshooting, asset price volatility and financial instability, Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said in Mumbai today.
“In this context, appropriate and pragmatic use of capital account regulations may have to be considered by emerging markets to maintain financial stability,” said Gopinath
However, Gopinath said capital inflows were not a concern at the moment.
“We don't look at the levels (of the rupee), only the volatility. There have been no concerns on inflows,” Gopinath told reporters on the sidelines of a conference.
In 2009, foreigners bought $17.5 billion worth of domestic shares, just $327 million short of the 2007 record of $17.78 billion. The heavy buying helped the rupee rise 12.2 per cent from a record low of 52.2 hit in early March.
Separately, Gopinath said RBI would issue norms on repos in corporate bonds before its third quarter monetary policy review on January 29.
The central bank had in September last year proposed guidelines for repurchase agreements, or repos, in corporate bonds, a move bankers said would add depth to the relatively illiquid market.
However, the markets will have to wait longer for introduction of credit default swaps (CDS).
“We are looking very closely at what is happening in the international markets. This is something which is at a very embryonic stage and there are complex issues to be sorted out,” Gopinath said.
The deputy governor hinted that these instruments would be traded over-the-counter, saying that single-name CDS’ were not easily amenable to an exchange-traded or a central counterparty (CCP) platform. “Even in international markets I have not seen a single-name CDS traded on a CCP platform,” she said.
The deputy governor said public sector banks should improve their ability to lend in the term-money market. “The term-money market continues to remain dormant with low turnover despite several initiatives taken by the Reserve Bank, mainly reflecting the inability of the market participants to take a medium-term view on interest rates and liquidity,” Gopinath said. “However, the CD market is active and reflects the unsecured term-money market rates,” she added.
RBI is not in favour of relaxing the minimum tenor of non-convertible debentures from the current 90-day limit it had imposed in the second-quarter monetary policy review.
“The suggestion… cannot be acceded to as under the law, corporates are prohibited from issuing unsecured debentures with maturity of less than 90 days. Allowing markets to issue very short-term instruments could have systemic implications,” Gopinath said. She added that there were other instruments in the short-end like repo, CBLO (collateralised borrowing and lending mechanism) and CPs that could meet the requirement of investors.
India GDP growth could touch 9% in next fiscal, says CEA
India GDP growth could touch 9% in next fiscal, says CEA
Hindustan Times, January 05, 2010, Page 25
The country could be looking to return to a 9 per cent annual economic growth as early as April. Kaushik Basu, the government's Chief Economic Advisor, said on Monday that 2010-11 could be the year of a big rebound, suggesting that India had put behind last year's local downturn and the impact of a global meltdown faster than expected.
But double-digit growth would need a snipping of red tape and inefficiencies, he said, indicating room for more reforms ahead.
“The prognosis is very good and the growth rate should be 9 per cent towards the end of the next year,” Basu said at a function organised by the Federation of Indian Chambers of Commerce and Industry.
Basu said India, with its strong economic fundamentals that include high savings and investment rates, was likely to overtake China’s growth rate in the next four to five years. “Double digit growth is entirely within the cards. Crossing
over the growth rate of China in the next four to five years is not impossible,” he said.
However, he underlined that uneven income distribution and poverty continue to haunt the government and could spoil the party. To achieve a double-digit growth rate, the government would need to restructure itself by removing systemic inefficiencies, he said, adding that bureaucratic decision-making must be speeded up.
Basu said that the country’s savings rate that is over 35 per cent has contributed significantly in the recovery process apart from the stimulus packages rolled out by the government. The savings rate could rise to 40 per cent in the coming years and trigger sustained growth, he said.
Hindustan Times, January 05, 2010, Page 25
The country could be looking to return to a 9 per cent annual economic growth as early as April. Kaushik Basu, the government's Chief Economic Advisor, said on Monday that 2010-11 could be the year of a big rebound, suggesting that India had put behind last year's local downturn and the impact of a global meltdown faster than expected.
But double-digit growth would need a snipping of red tape and inefficiencies, he said, indicating room for more reforms ahead.
“The prognosis is very good and the growth rate should be 9 per cent towards the end of the next year,” Basu said at a function organised by the Federation of Indian Chambers of Commerce and Industry.
Basu said India, with its strong economic fundamentals that include high savings and investment rates, was likely to overtake China’s growth rate in the next four to five years. “Double digit growth is entirely within the cards. Crossing
over the growth rate of China in the next four to five years is not impossible,” he said.
However, he underlined that uneven income distribution and poverty continue to haunt the government and could spoil the party. To achieve a double-digit growth rate, the government would need to restructure itself by removing systemic inefficiencies, he said, adding that bureaucratic decision-making must be speeded up.
Basu said that the country’s savings rate that is over 35 per cent has contributed significantly in the recovery process apart from the stimulus packages rolled out by the government. The savings rate could rise to 40 per cent in the coming years and trigger sustained growth, he said.
Fund raising through QIP route brings in Rs 34,100 crore
Fund raising through QIP route brings in Rs 34,100 crore
The Hindu Business Line, January 05, 2010, Page 10
But debt offerings mop up Rs 1,44,700 cr; set five-year record.
BL Research Bureau
With foreign institutional investors taking a fancy to QIPs (qualified institutional placements), 2009 turned out to be a better year for equity fund-raising by Indian companies than the previous year.
However, equity issuances for the year – at Rs 72,000 crore (37 per cent higher than 2008) – were still dwarfed by debt offerings. Debt issuances, which raked in Rs 1,44,700 crore, set a five-year record in 2009.
These are the trends evident from Bloomberg's India Capital Markets League Table 2009, released on Monday.
While a resurgent stock market saw all modes of equity offering – IPOs, rights offers and QIPs – stage a revival, it was the last category that proved most popular in 2009.
A record Rs 34,100 crore were raised by the 51 QIPs made during the year. IPOs, 17 in number, mobilised a much lower Rs 19,300 crore, with the NHPC, Adani Power and Oil India offers garnering the lion's share. The bulk of QIP funds flowed into financial services companies, which took in nearly 45 per cent of the sum raised, followed by consumer products (17 per cent) and industrial companies (15 per cent).
According to Bloomberg, Morgan Stanley took the top slot in underwriting QIP offers, accounting for Rs 6,200 crore in deal value.
Despite the buoyant equity markets, IPOs did not raise much more than 2008, at Rs 19,300 crore compared to Rs 18,500 crore the previous year. Domestic investment bankers occupied the top honours as underwriters of IPOs, with Kotak Mahindra doing a deal value of Rs 4,100 crore followed by Enam Securities at Rs 3,600 crore.
It was, however, the debt market that took care of much of India Inc's appetite for funds in 2009. The Rs 1.44 lakh crore raised by companies through domestic bond offerings in 2009 exceeded the 2008 number by nearly 48 per cent. IIFCL, the largest bond issuer, raised Rs 7,300 crore.
Nearly three-fourths of these funds went to the financial services industry, followed by oil, gas and power majors who took in about 10.7 per cent of the debt funds raised. Axis Bank maintained its top position for the second consecutive year on Bloomberg's 2009 India Domestic Debt Table with a market share of 13.9 per cent.
Apart from bond offers, syndicated loans also grew strongly, raising Rs 4,660 crore in 2009. SBI continued to dominate the syndicated loan market, arranging over 59 per cent of the loans for the year.
Indian economic growth may outstrip China's in 4-5 years
Indian economic growth may outstrip China's in 4-5 years
The Hindu Business Line, January 05, 2010, Page 15
Our Bureau, New Delhi
India's economic growth could touch 10 per cent in the next couple of years and may even beat that of China in the next four years, Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, has said.
The country is likely to return to the 9 per cent growth trajectory by the end of next fiscal, Dr Basu said, at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Monday.
On monetary tightening to tame inflation, Dr Basu later told reporters that there is “no expectation of monetary tightening, nor do I believe there is a reason for this”.
Dr Basu highlighted that India was only seeing a sector-specific inflation.
“You don't want to have an effect across the board which increases unemployment. Right now, we need sector-specific intervention which is in the food sector and that is what the Government is doing. My expectation is, it is going to have an effect. Inflation will peter out in the next few months,” he said.
On how Indian economic growth rate compared with that of China, Dr Basu said the fundamentals of the Indian economy were very strong.
“If India can get back to the 9 per cent growth path and take a couple of complementary policies….. because there is so much slack in the economy. If India follows those, it should not surprise anyone if growth rate crosses the Chinese one in about four-five years”.
On when the fiscal stimulus would be rolled back, Dr Basu said that at some time the fiscal stimulus has to be rolled back but declined to conjecture on when that point would come.
Dr Basu also said that he expected the savings rate to exceed 40 per cent in the coming years and this could give a boost to the economic growth.
The senior Finance Ministry official also said that India's economic growth would be more than 7.5 per cent this fiscal.
The Hindu Business Line, January 05, 2010, Page 15
Our Bureau, New Delhi
India's economic growth could touch 10 per cent in the next couple of years and may even beat that of China in the next four years, Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, has said.
The country is likely to return to the 9 per cent growth trajectory by the end of next fiscal, Dr Basu said, at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Monday.
On monetary tightening to tame inflation, Dr Basu later told reporters that there is “no expectation of monetary tightening, nor do I believe there is a reason for this”.
Dr Basu highlighted that India was only seeing a sector-specific inflation.
“You don't want to have an effect across the board which increases unemployment. Right now, we need sector-specific intervention which is in the food sector and that is what the Government is doing. My expectation is, it is going to have an effect. Inflation will peter out in the next few months,” he said.
On how Indian economic growth rate compared with that of China, Dr Basu said the fundamentals of the Indian economy were very strong.
“If India can get back to the 9 per cent growth path and take a couple of complementary policies….. because there is so much slack in the economy. If India follows those, it should not surprise anyone if growth rate crosses the Chinese one in about four-five years”.
On when the fiscal stimulus would be rolled back, Dr Basu said that at some time the fiscal stimulus has to be rolled back but declined to conjecture on when that point would come.
Dr Basu also said that he expected the savings rate to exceed 40 per cent in the coming years and this could give a boost to the economic growth.
The senior Finance Ministry official also said that India's economic growth would be more than 7.5 per cent this fiscal.
India losing IT to emerging rivals
India losing IT to emerging rivals
The Economic Times, January 05, 2010, Page 1
Top Outsourcers Like GE, Citibank Opting For Nearshore Vendors
Pankaj Mishra BANGALORE
EMERGING nearshore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek, are increasingly becoming attractive for top outsourcers such as General Electric, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India.
At a time when India’s top tech firms such as Tata Consultancy Services, Infosys and Wipro are redefining their positioning as global service providers by growing their presence in emerging markets such as Latin America, Eastern Europe and Asia, they are facing stiff competition from these newer rivals.
“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, research director of outsourcing advisory firm Everest Group. “Some customers having 70-80% of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” he added.
Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for outsourcing contracts being fleshed out by “first-time outsourcers”.
“When it comes to new business from first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals,” added Amneet Singh, vice-president, global sourcing, Everest Group.
The Economic Times, January 05, 2010, Page 1
Top Outsourcers Like GE, Citibank Opting For Nearshore Vendors
Pankaj Mishra BANGALORE
EMERGING nearshore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek, are increasingly becoming attractive for top outsourcers such as General Electric, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India.
At a time when India’s top tech firms such as Tata Consultancy Services, Infosys and Wipro are redefining their positioning as global service providers by growing their presence in emerging markets such as Latin America, Eastern Europe and Asia, they are facing stiff competition from these newer rivals.
“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, research director of outsourcing advisory firm Everest Group. “Some customers having 70-80% of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” he added.
Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for outsourcing contracts being fleshed out by “first-time outsourcers”.
“When it comes to new business from first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals,” added Amneet Singh, vice-president, global sourcing, Everest Group.
GST set to miss Apr 1 deadline
GST set to miss Apr 1 deadline
The Economic Times, January 05, 2010, Page 3
Devesh Kumar NEW DELHI
THE roll-out of the Goods and Services Tax (GST) is certain to be delayed beyond its scheduled launch date of April 1 this year because of administrative and constitutional constraints.
Even though a final call on the issue is expected to be taken only on January 8 at a meeting of states finance ministers convened by Union finance minister Pranab Mukherjee, it’s now certain that its roll-out date will be rescheduled. A task-force set up by the 13th Finance Commission has already come out in favour of deferment of its introduction by six months to October 1 this year
“Neither the Centre nor the states are ready for GST roll-out. The task-force set up by the 13th Finance Commission has already recommended that its launch be delayed by six months. But we feel that no major tax reform measure should go on stream in the middle of the financial year,’’ Bihar deputy chief minister Sushil Kumar Modi told ET on Tuesday.
There are too many outstanding issues yet to be resolved. The Centre, for instance, is yet to compensate the states for the revenue losses suffered by them because of the slashing of rate of central sales tax from 4% to 2%. Moreover, the union finance ministry is yet to circulate the draft of the constitutional amendment bill. The states, too, have to enact similar laws, but they too are not ready. Again, the states do not have the expertise to collect service tax.
Union finance minister Pranab Mukherjee, while participating in a function here on October 31, had dropped enough hints to suggest that the GST roll-out may be delayed by a few months.
I am trying to stick to the time schedule, but I will not be surprised if there is slippage of a few months,’’ Mr Mukherjee had then told newspersons, adding that the government was sincerely trying for convergence on various issues.
In its meeting held on December 17, the empowered committee of state finance ministers on GST had decided to hold a meeting with the union finance minister in early January to thrash out certain constitutional and administrative hitches pertaining to the new indirect taxation regime. Briefing newspersons after the previous round of the empowered panel’s meeting, chairman Asim Dasgupta had then remarked: ``For certain difficulties [which] were reported to us, it would be difficult to introduce the bill for GST in this winter session…He [Pranab Mukherjee] has said he is very willing to discuss with us in January after this Parliament session is over.’’
“After our meeting with him, we would be able to take a decision on constitutional amendment and other preparations,” he added.
The January 8 conclave will be preceded by a meeting of the empowered committee, in which the revenue-neutral rate is is expected to come up for discussion.
The Economic Times, January 05, 2010, Page 3
Devesh Kumar NEW DELHI
THE roll-out of the Goods and Services Tax (GST) is certain to be delayed beyond its scheduled launch date of April 1 this year because of administrative and constitutional constraints.
Even though a final call on the issue is expected to be taken only on January 8 at a meeting of states finance ministers convened by Union finance minister Pranab Mukherjee, it’s now certain that its roll-out date will be rescheduled. A task-force set up by the 13th Finance Commission has already come out in favour of deferment of its introduction by six months to October 1 this year
“Neither the Centre nor the states are ready for GST roll-out. The task-force set up by the 13th Finance Commission has already recommended that its launch be delayed by six months. But we feel that no major tax reform measure should go on stream in the middle of the financial year,’’ Bihar deputy chief minister Sushil Kumar Modi told ET on Tuesday.
There are too many outstanding issues yet to be resolved. The Centre, for instance, is yet to compensate the states for the revenue losses suffered by them because of the slashing of rate of central sales tax from 4% to 2%. Moreover, the union finance ministry is yet to circulate the draft of the constitutional amendment bill. The states, too, have to enact similar laws, but they too are not ready. Again, the states do not have the expertise to collect service tax.
Union finance minister Pranab Mukherjee, while participating in a function here on October 31, had dropped enough hints to suggest that the GST roll-out may be delayed by a few months.
I am trying to stick to the time schedule, but I will not be surprised if there is slippage of a few months,’’ Mr Mukherjee had then told newspersons, adding that the government was sincerely trying for convergence on various issues.
In its meeting held on December 17, the empowered committee of state finance ministers on GST had decided to hold a meeting with the union finance minister in early January to thrash out certain constitutional and administrative hitches pertaining to the new indirect taxation regime. Briefing newspersons after the previous round of the empowered panel’s meeting, chairman Asim Dasgupta had then remarked: ``For certain difficulties [which] were reported to us, it would be difficult to introduce the bill for GST in this winter session…He [Pranab Mukherjee] has said he is very willing to discuss with us in January after this Parliament session is over.’’
“After our meeting with him, we would be able to take a decision on constitutional amendment and other preparations,” he added.
The January 8 conclave will be preceded by a meeting of the empowered committee, in which the revenue-neutral rate is is expected to come up for discussion.
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