Pages

Walmart foray into India in final lap, says government official

Global retail giant Walmart is expected to soon firm u p its plan to foray into India's multibrand sector, a top government official said on Friday.

Walmart Asia chief Scot Price met top officials of the Department of Industrial Policy and Promotions (DIPP) and sought clarity on the recent changes government had made in the multi- brand retail FDI policy.

" They have indicated to come back to us very soon with a firm proposal. ... The consideration by Walmart is very serious for India and their plan is possibly in the last stage," the official said.

Price declined to comment after an hour- long meeting.

The Walmart chief attended the meeting with two of his team members.

Walmart has been seeking a series of clarifications from the government over the conditions for FDI in the multibrand segment. It had in July expressed inability to the government on meeting an earlier sourcing norm that required 30 per cent procurement from small industries. It had said that it can procure only about 20 per cent.

Earlier this month, the government had diluted the contentious sourcing clause allowing global multi- brand retailers to source 30 per cent of their products from small and medium enterprises only at the time of start of the business.

Besides, they have also been allowed to set up stores in cities with less than ten lakh population.

Experts have warned some of the conditions designed to protect local industries and counter criticism that India is ' selling out' to foreign multinationals, are often too restrictive and will scare off foreign investors.

Last September, the government had allowed 51 per cent FDI in multi-brand retail, 49 per cent investment by foreign airlines in the aviation sector and sale of equity in four PSUs.

Most Powerful women in Indian Business - Vinita Bali

The corporate world happened to me. It was not something I had planned. In fact, as I reflect on where and how I have spent my time in the corporate world, the over-arching theme is one of going with the flow and pursuing a path that was interesting and different, rather than conventional. That has led to my living and working in six countries on five continents, travelling to approximately 45 countries and most importantly, experiencing the richness and diversity of our world - both in its glory and darkness.

Like several of my friends I was keen on joining the Foreign Service after graduating in Economics (Hons) from Lady Shri Ram College, Delhi. But I needed a Master's degree before I could write that exam so I experimented for a week each with both Delhi School of Economics and Jawaharlal Nehru University to do an MA in Economics as I had admission to both. But all of that changed, when, in parallel, I also made it to IIM-Kolkata and the Jamanalal Bajaj Institute of Management Studies, Mumbai. At that point, prompted by a cousin, I thought that living in Mumbai for two years would be fun and that led to JBIMS. The plan still was to write the Foreign Service exam after my MBA.  However, as it happens in all management institutes, I got a job at Voltas even before I completed the course and the rest is history. Voltas gave me a wonderful break - I launched Rasna, the fruit drink concentrate that became an instant success and is still doing well.

After a brief stint with Voltas, I moved to Cadbury where, as a young brand manager, I had the privilege of presenting to the then global Chairman, Sir Adrian Cadbury, on one of his visits to India.  That was a special moment and is forever etched in my memory.  While at Cadbury, I got a fully paid scholarship from the Rotary International in 1982 to study abroad, and jumped at the opportunity. It was a great experience to be a student all over again in the US and I loved the flexibility and eclectic nature of education there. I later did an internship at the United Nations in New York and for the first time perhaps, began to appreciate the vastness of our world as well as the common and uncommon issues countries were trying to address.  I also made friends from around the world and talked to people about their experiences (in Vietnam, South Africa, Cambodia etc.) that I had only read about or seen in films. Soon after, Cadbury offered me a Senior Brand Manager role in the UK, and I launched the first aerated chocolate called "Wispa" which also was an instant success.

At that time (1984/86), it was rare for marketing people to work overseas and I was the first marketing person from Cadbury India to work in the UK. Cadbury was special for another reason in that it gave me the opportunity to work in Nigeria and South Africa where I headed the sales and marketing functions and was also on the boards of those companies in the early nineties. This led to a job with The Coca-Cola Company, where my first role was the World Wide Marketing Director for the most valuable brand in the world - "Coca-Cola".  It was a 'dream come true' for a marketer. My other roles in The Coca-Cola Company were equally exciting and challenging - Vice President, Marketing, for Latin America, Division President of the Andean Division, etc., which meant re-locating to Santiago and learning Spanish. The reason I share my travelogue is because it gave me the unique opportunity to explore different cultures and geographies, to understand diversity, to be adaptable to new environments, people and situations and most of all, to learn to appreciate differences in thought and perspective.

Coming back to India in 2005 for personal reasons brought me to Britannia which has been another unique experience, as the India I came back to, after 16 years of overseas assignments was very different to the India I had left in 1990. The India of 2005 was dynamic and vibrant, confident and full of hope and optimism. All of that has changed considerably in the last eight years too!

The challenges of today are paradoxical. On the one hand the world is more connected in terms of hard ware - through the internet, social media and more people travelling etc., and on the other, there is a great need to connect at an individual level and establish individual identity.  In the midst of economic growth, we have witnessed turbulence and not seen nearly as much human development.   We continue to grapple with problems of increasing income disparity, hunger, poverty, malnutrition, access to education, hygiene and sanitation which are the most basic human needs and rights. The inter-connected world has created high aspirations right across which we are unable to fully harness into positive and thoughtful action so far. Our education in my view will have to deal with these and other aspects.

 I also believe that each of us and especially, the privileged among us is responsible for building a good society where there is equity, where rules are transparent and followed, where people feel understood and respected, where there is clarity in terms of governance and dignity of life for all. And, I strongly believe that good business and good society cannot be divorced.

Back

Govt must take steps to reverse slowdown in economic growth: India Inc

As the economic growth in the June quarter dipped to a four year low of 4.4 per cent, India Inc on Friday sought immediate steps from the government to reverse the slowdown.

Manufacturing sector also posted a contraction of 1.2 per cent in the first quarter of this fiscal as against a decline of one cent in output in the same period of 2012-13.

"The GDP figures for first quarter clearly show that the economy continues to be in the throes of a slowdown. The concern becomes more acute when we see that at the present moment, there are no clear indications that the economy has bottomed out," CII Director General Chandrajit Banerjee said.

There are no visible signs of investment pick up as investor sentiments continue to be very low. A weak rupee, tight liquidity, high cost of funds, procedural delays, etc, are all coming in the way of an investment revival, he added.

Contraction in manufacturing and mining sector pulled down the economic growth in the April-June quarter of this fiscal to 4.4 per cent-- the lowest in past several years.

"The economy continues to tread in difficult waters as many challenges remain on the fore. Understandably, there is no perfect recipe to steer out of the current state of affairs but what we need is swift action given the volatile situation," Ficci President Naina Lal Kidwai said.

"The industry fears that in case urgent steps are not taken to revive the manufacturing sector, jobs will be at stake, Assocham Secretary General D S Rawat said.

We would have to strive harder on the reform front to give a push to the manufacturing sector, Kidwai said.

Hastening disinvestment of public sector units, ensuring coal supplies to the power sector, promoting competition in the mining sector and ensuring speedy implementing of Delhi-Mumbai Industrial Corridor (DMIC) would be seen as positive developments, Banerjee said.

A coordinated effort from the Government and the RBI is required to ensure that this vicious cycle is broken, he said.

Meanwhile, PHD chamber of commerce and industry urged the RBI to cut policy rates to revive the economic growth.

"Since wholesale price inflation (WPI) scenario is stabilizing at around 5 per cent during the last many months, at this juncture rate cut is inevitable to facilitate industrial production," it said.

Besides, the farm sector output expanded by just 2.7 per cent in April-June quarter this year, only marginally down from 2.9 per cent in the corresponding period of last fiscal.

However, India Inc expects a pick up in agricultural growth on the back of good monsoons.

"With monsoons being normal, a good agricultural performance coupled with rise in rural wages would help bolster rural demand," Banerjee said.

Several other sectors including construction, power generation, hotel and transport showed marked deceleration in growth.

HP launches new business class devices - EliteBook Revolve 810 and ProBook 430

With a new convertible and an Ultrabook-like sleek notebook, Hewlett Packard Printing and Personal Systems Group has beefed up its offerings for business consumers in India.

At the top of the range is the EliteBook Revolve 810, a 11.6-inch convertible with touch and a screen that can swivel and fold to become a tablet.

"This device, being a part of the EliteBook range, is highly manageable and stable, but adds the flexibility that the users today are demanding," said Sunish Raghavan, head of commercial PC category.

Priced at Rs 90,000, the Revolve will feature 3rd generation Intel Core processors which can be customised as per the requirement of the user. The convertible can have up to 256GB SSD storage and comes with a backlit keyboard. The HD touchscreen can use any capacitive touch pen as a stylus. Plus, 3G connectivity can be configured into the device.

The device will stand apart for its high-end enterprise features like TPM 1.2 security chip, Secure Erase and compatibility with docking stations. The Revolve has a 6-cell battery which can give up to 10 hours of juice. With an additional slice battery, this can be extended up to 6 hours.

"The device marries what a business user is demanding with the management requirements of the IT department," Raghavan added.

For the price conscious IT departments, HP has introduced the ProBook 430 as a value-for-money proposition. This 13.3-inch notebook is sleek enough to look like an Ultrabook, but still comes with all features that an enterprise device needs.

Featuring the new Intel 4th generation Haswell processors, this device will have starting prices of Rs 39,000. The standard configuration will have a 500GB HDD storage, DTS sound and 720p HD webcam. All ports needed by enterprise users, including HDMI, VGA and RJ-45, have been included while the optical disk drive has been removed for the sake of a lighter weight and slimmer body.

HP Client security, Microsoft Defender and Drive Encryption are standard, while the fingerprint reader and anti-theft features are optional. The units will have a minimum weight of 1.5 kg, differing with the configuration. This one too can have a 3G SIM slot if needed.

Raghavan said the ultrabook form factor is becoming a standard for HP consumer and commercial devices and the ProBook 430 is just the first in a long line with the new design language.

According to IDC, HP is the largest PC vendor in India in Q2 2013 after recording its highest-ever 34.1 per cent quarterly market share.

Sinking equity, currency markets show a braking Indian economy

Why Nations Fail. K.P. Krishnan, the Indian finance ministry's point man for all things capital markets, is re-reading the book by two US economists Daron Acemoglu and James Robinson. Krishnan's second dive into the acclaimed book since its release last summer is to find answers to the deep problems his employer, the government of India, faces with an economy in a tailspin. The answers are simple, really. The Massachusetts Institute of Technology and Harvard economists argue that the economic success - or failure - of a country depends on the strength of its political and economic institutions.

But an anodised steel-like institutional framework is something India sorely misses. Years of political ineptitude have corroded the resilience of the world's thirdlargest economy by buying power. This despite warning lights on the government's dashboard going off regularly for at least two years now. When it rains, it is said, it pours. By the time India's stock markets closed on August 16, trading desks were in shock - the Bombay Stock Exchange's benchmark index, Sensex, had lost nearly four per cent, the sharpest single-day fall in four years.

The gradual decline began in early 2008, after the rupee-dollar rate touched 39. The rupee has been floating down like a feather against international currencies for nearly four months now. Between April 30 and August 23, Indians had to pay nearly one-fifth more for the US dollar, the world's preferred currency. The dollar was worth Rs 63.22 end of trades on Friday, August 23, and Deutsche Bank predicts it could touch Rs 70 in a month. Credit Agricole says it will not recommend buying the dollar at below Rs 75.

Krishnan, the bureaucrat who was part of a crack team that decided on India's response to the 2008/09 global meltdown, was anything but rattled at a recent seminar in Mumbai. At least, he didn't show it. The battered rupee, he said, "is a passing threat… this is a short-term threat." The next day, August 21, the pound sterling breached the Rs100 mark. The Indian currency has depreciated nearly one-fourth vis a vis the pound sterling since mid-March: Rs80.71 on March 12 versus Rs100.32 on August 23.

With its current account deficit (CAD) - the difference between exports and imports of goods, services and transfers - at an all-time high and a currency that had not shed value despite years of high inflation, it was only a matter of time before investors lost their unbridled optimism from the days of a once-robust economy. The trigger for that volte face came from half way across the world. On the back of intermittent signs of a recovery, the US Federal Reserve has hinted the end of low-cost money on tap, which means monetary tightening and consequent rise in the interest rates there. That was the cue for global funds to suck back billions back into the world's biggest economy from emerging markets. India was not spared. Between August 16 and 22, nearly foreign institutional investors were net sellers of Rs2,975 crore worth shares. FIIs are restive in other markets such as Indonesia, Brazil and Mexico.

Vulnerable India
Clearly, the Indian economy is in a much more vulnerable state than it was at the start of the financial crisis in September 2008. Then, India had a credible response to the meltdown set off by the collapse of investment bank Lehman Brothers. In a series of measures, the government infused liquidity into the system, cut duties, and overall boosted demand. The stimulus cost an estimated Rs 1.85 trillion. (One trillion equals 100,000 crore.) Such spending could be afforded only because India was growing at a fast clip: GDP growth was 9.4 per cent in 2006/07 and 9.3 per cent 2007/08, the two years preceding the Wall Street meltdown. And tax revenues had jumped 20 per cent in each of the years. The stimulus worked wonders: after a relatively slower GDP expansion of 6.7 per cent in 2008/09, growth bounced back to 8.6 per cent and 9.3 per cent each in the following two years.

Cut to today: GDP is growing at a much slower rate of five per cent with predictions that it will dip to a sub-five per cent level. Which means, the state treasury is looking less healthy, especially when expenses are rising at an unexpected pace. For instance, India sets aside more than one-third of its import bill for crude oil imports. Oil prices have risen about $12 a barrel in the last three months - a $1 increase in crude prices is a $900 million hole in India's trade balance - but they are expected to stay around $110. That's the good news but the bad news is that some 20 million tonnes per annum (mtpa) new refining capacity coming up in the West Asia region will mean a lower demand for India's fuel exports, which brought in nearly $59 billion in 2012/13.

If that's not all, the impact of the depreciating rupee will blow a hole in India's finances. "In rupee terms, if this slide continues, the effect will be huge," says Vandana Hari, the Singapore-based Editorial Director at energy specialist Platts Asia. Each rupee that the Indian currency depreciates on the US dollar, Rs10,000 crore gets added to the country's import bill (about Rs6.7 trillion in 2012/13). The dollar has become expensive by nearly Rs 11 since May. CAD, at $88 billion was 4.7 per cent of GDP in 2012/13, nearly double the 2.5 per cent level that RBI thinks is sustainable. Finance Minister P. Chidambaram is confident he will keep CAD under $70 billion this fiscal year but not all - the markets, for sure - are convinced.

Much of that scepticism emanates from what some think as policy failure over rising gold imports in recent years. Today, gold is the second largest import item after crude and petroleum products, beating electronics to third place. The surge in gold imports is both a consequence of unabated inflation which gold is used as a hedge against, and a rise in prices of the yellow metal. CAD is usually covered by foreign inflows - both institutional investors and foreign direct investment (FDI) - or by dipping into the country's forex reserves.

With capital flows drying up, India will tread the slightly-risky path of using debt to finance CAD. "We have no option but to rely on debt inflows in the immediate term," says Paresh Sukthankar, Executive Director at HDFC Bank. A recent report by ratings firm CRISIL showed corporate India had a outstanding foreign exchange debt of over $200 billion as of March 2013, of which close to 45 per cent is short term. The short-term foreign debt outstanding in March 2013 is nearly $100 billion, which is to be redeemed by March 2014. Forex reserves stood at $279 billion as of August 13.

In simple terms, this means a 2008-like strategy is not an option before India. "After and in 2008 and 2009, we survived because of the stimulus, which was a consumption stimulus. But we are not in that position anymore," says Devendra Kumar Pant, Chief Economist, India Ratings and Research.

The government's response to the rising CAD and overall sagging economy has proven to be too little, too late. To be fair, Chidambaram saw things early. Soon after he moved ministries to Finance from Home in July 2012, the government took bold decisions on easing rules for business - widely billed as "reforms 2.0". The reference was to the first set of economic reforms that Manmohan Singh, today prime minister, ushered in as finance minister in 1991.

Chidambaram was at the forefront of the changes announced that seemed to shake the government out of the stasis it was in. With an aim to trim subsidies, diesel prices were raised by Rs5 a litre and supply of subsidised cooking gas was capped. Up to 51 per cent overseas ownership was allowed in multi-brand retail and 49 per cent FDI permitted in airlines. Other changes eased FDI in telecom and oil and gas. But save for the Rs2,058-crore deal between Abu Dhabi-based Etihad Airways and India's Jet Airways, little came by way of foreign inflow. Without growth, foreign investors will shun India, says Samiran Chakraborty, Head of Regional Research, South Asia, Standard Chartered Bank. "The message that is going out is that we will push for reducing inflation and financial stability, and that growth is sacrificial." So much so that the government's recent measures of higher import duties on gold and silver, clamping down on foreign investment by companies, easing external commercial borrowings limits, and permitting quasi sovereign bonds have had little effect on the ground.

Caution: Pain Ahead

Partly, it is monetary policy that tripped Chidambaram's efforts over the past year. In much of his five-year term, RBI Governor D. Subbarao, due to retire on September 4, single mindedly waged a war against inflation. Questions are now being raised on the pace of interest rates hikes and whether his stance on inflation, widely seen more due to India's supply constraints and less a function of excess money sloshing around, was the optimal one. In the second week of August, in a debate in the Rajya Sabha on the state of economy, Chidambaram said the RBI must focus on growth and employment.

But that is easier said than done with consumer price inflation running in double digits for over a year. A direct casualty is crimped household consumption and savings. Even wholesale price inflation, indicative of the pace of price rise in the broader economy, which was on a downward spiral for some time, has started to inch up and is hurting business.

Gujarat food processor Kamdhenu Foods is unable to take large orders in recent months. "We couldn't accept an export order for 6.5 tons of bitter gourd slices because its price has jumped up from Rs10 a kilo three months back to Rs25 a kg now," says Bipin Shah, General Manager.

With fuel prices set to rise soon, bankers say resultant inflation will again put pressure on interest rates. The recent monetary tightening is already having a spillover impact: Axis Bank, HDFC Bank and ICICI Bank have hiked lending rates.

The banking sector, already under stress due to higher bad loans, is getting shocks from new industries as the effects of a decelerating economy spread. State Bank of India, the country's largest lender, got a shock in the first quarter of 2013/14 from the rising slippages in the agricultural sector. There is another looming danger in infrastructure loans. "There are issues of asset liability mismatches in the banking industry because of shorter maturity deposits and longer term loan to infrastructure companies," says S. Viswanathan, a managing director at SBI.

Unfortunately for India, then, options that will yield immediate benefits are limited. The economy is unlikely to shake off its sluggishness in the medium term - until 2015/16 or even later, according to some. Sonal Varma has a list of big ifs to see the needle will move on the economy. "If you start making the right moves, if there is change of guard and if there is a clear focus in reviving growth, it will take about 12 to 18 months for things to start turning," says Varma, Executive Director and India Economist at Japanese financial house Nomura. "The rupee is a symptom of the problem, there is a crisis of confidence and the credibility of policymakers has taken a hit."

The Congress Party-led United Progressive Alliance government just does not have enough time or numbers with to kickstart large-scale reform measures with general elections scheduled before the summer of 2014 and key sections of the UPA are already in election mode, as also the principal opposition coalition, the National Democratic Alliance, led by the Bharatiya Janata Party. Result: a polity distracted from the needs of the economy. "We don't have a thought leadership for the society that will emerge tomorrow. We need to do quite a few things to make this [growth] work," says Kishore Biyani, Chairman at retailer Future Group. Pre-election surveys show regional parties gaining strength at the hustings, likely increasing political instability at the Centre - which doesn't portend well for the economy.

Where does the economy go from here? GDP growth is already at a 10-year low of five per cent in 2013/14 against 6.2 per cent the previous year. CRISIL is downright bearish. "All our forecasts - growth, inflation, fiscal deficit and CAD - are under revision and they will be revised unfavourably," insists D.K. Joshi, Chief Economist at the firm. One voice sounds ominous ahead of the release of GDP data for the April-June quarter on August 30. "The way the Indian economy is going, it is testing my optimism," Kaushik Basu, Chief Economist, the World Bank, said recently at a seminar in New Delhi. Basu, who was Chief Economic Adviser to the government of India until a year ago, is predicting a 4.8 per cent growth for April-June.

Still, two factors hold out some hope. The biggest drag on the economy comes from the services sector and industries, which together make for about 85 per cent of India's GDP. But it is agriculture, despite its smaller contribution to the economy, which could stop the economy from stalling. The Indian Meteorological Department has recorded normal to excess rainfall in 30 of the country's 36 meteorological sub-divisions between June 1 and August 14. The area-weighted rainfall has been 13 per cent above normal.

There has been a notable rise in area under cultivation of pulses (25 per cent more), coarse cereals (15 per cent) and oil seeds (15 per cent) this season from 2012/13. Total crop area sown has increased over nine per cent. "If you compare agriculture output, we will achieve the same growth that we did in 2011/12, which will have a deeper impact on inflation," says Himanshu, an agrieconomist who teaches at New Delhi's Jawaharlal Nehru University. (He goes only by his first name.) Farm output in 2011/12 grew 2.5 per cent from the year before - it was 1.9 per cent in 2012/13. Nomura has a four per cent target for agriculture this year. "I expect very strong agriculture growth this year, which should help the rural economy," says Adi Godrej, Chairman of the locks-toshampoos Godrej group. Farming is the primary economic activity for some 70 per cent of Indians.

The second set of strands in the wind that augurs well for the economy is the five state polls and the general elections. Odd as it sounds, elections are good news for the economy, for money - often black, unaccounted for cash that otherwise will not find its way into the system - boosts growth. "Five states are going for election, and with a general election, election spending will provide a stimulus," says Ajit Ranade, Chief Economist at Aditya Birla Group, which runs metals to telecom businesses. Other small gains to be had in the coming quarters include the impact of a falling rupee on exporters.

Then, there is the man being billed as the one with the silver bullet: Raghuram Govind Rajan. The RBI governor-designate has not spoken of his new assignment and little in his academic past indicates his monetary DNA, if any. But the street has already set expectations for him. In the first six months, says Rajesh Mokashi, Deputy Managing Director at ratings agency Care Ltd, Rajan's priority should be to balance inflation and growth dynamics. In the longer term, he should focus on asset quality in banking, fix potential asset-liability mismatches on bank books, and issue new banking licences.

Time will tell if Rajan can deliver growth even while reining in inflation. But, to be sure, India's fundamentals are strong in the medium and long term. Hundreds of thousands, if not millions, are joining the middle class even at a five per cent rate of GDP expansion. Its workforce is adding a million every month, making it the youngest among major economies. Sanjeev Sanyal, global strategist at Deutsche Bank in Singapore, points out that China has reached the end of its demographic boom. "This offers a good opportunity for India to take the place vacated by China," he says. But, he adds, India has to get its act right in terms of governance, property rights and primary education. In other words, building institutions - the biggest takeaway from Why Nations Fail. Sometimes the best fixes are found in truisms.

SBI chairman rules out lending rate hike


A day after steeply hiking bulk deposit rates, SBI chairman Pratip Chaudhuri on Friday ruled out any hike in lending rate, although many private sector banks have done so due to the uptick in the cost of funds following RBI's liquidity squeezing moves.

"Currently no," said the head of the nation's largest lender when asked if a base rate hike is being planned following its up to 150 bps hike in bulk deposit rates.

Top private sector lenders such as ICICI Bank, Axis Bank and HDFC Bank have raised their base rates or the minimum lending rate following the recent tightening by the Reserve Bank to arrest the fall of the rupee since July 15.

The domestic currency has lost more than 21 per cent against the US dollar since April.

Industry insiders say state-run banks may not increase lending rates due to "diktats from the Finance Ministry".

Andhra Bank, whose chairman B A Prabhakar retires tomorrow, is the only PSB which has hiked its rate by 0.25 per cent early this month.

He said Andhra Bank's move is an exception as "the cost of funds is quite modest. Our base rate has always been low, that is our hallmark because deposit collection is efficient.

Our average cost of funds is only 6.7 per cent."

Chaudhuri, who will be retiring by next month-end, said the bank has decided to raise rates -- generally seen as a precursor to a similar action on lending rate -- on deposits of over Rs 1 crore. State Bank of India has the smallest composition of such bulk deposits, the pricing of which the bank raised by up to 1.5 per cent on Thursday.

However, there will not be any deposit rate hike for deposits under Rs 1 crore, the SBI chairman said.

In a series of moves, including capping banks' overnight borrowings, RBI has squeezed the liquidity, sending short-term rates to a high of 300 bps to 10.25 per cent.

Chaudhuri reiterated that banks with a higher reliance on short-term instruments like certificate of deposits and commercial paper are the ones raising their rates.

Meanwhile, he said the bank will announce the name of one associate bank for merger by end of September.

When asked his reaction to the dismal GDP data of 4.4 per cent for the April-June quarter, Chaudhuri said: "As a banker, it does not affect me. Stock market people give a PE multiple base on growth, but as a banker I am only concerned whether they are servicing my debt. I am not too focused on where the stock market is going."

Eurozone jobless rate at record high in July

Brussels: The unemployment rate for the eurozone stood at 12.1 percent in July, the same as the previous month and also the highest since such statistics were first publicised in 1995, European Union (EU) statistics office said Friday.

In the wider 28-member EU, the overall unemployment rate in July was also the same as the previous month at 11 percent, Xinhua reported citing Eurostat figures.

In both zones, jobless rates have risen markedly compared with July 2012 when they were 11.5 percent in the 17-nation eurozone and 10.5 percent in the EU, respectively.

Eurostat estimates that 26.65 million men and women in the EU, of whom 19.23 million were in the eurozone, were unemployed in July 2013. Compared with June 2013, the number of people unemployed decreased by 33,000 in the EU and by 15,000 in the euro area.

The lowest unemployment rates were recorded in Austria at 4.6 percent, Germany at 5.4 percent, and Luxembourg at 5.7 percent, according to Eurostat statistics.

The highest jobless rates were registered in Greece at 27.6 percent and Spain at 26.3 percent.

Youth unemployment remains a challenge for the EU. In July, 5.56 million young people under the age of 25 were unemployed in the EU, of whom 3.5 million were in the eurozone.

In July, the youth unemployment rate was 23.4 percent in the EU and 24 percent in the eurozone, higher than 22.9 percent and 23.3 percent respectively in July 2012, the figures showed.

The lowest youth jobless rates were observed in Germany at 7.7 percent and Austria at 9.2 percent, while the highest were recorded in Greece at 62.9 percent and Spain at 56.1 percent.

HC exempts Mukesh Ambani from personal appearance in case

New Delhi: The Delhi High Court today exempted personal appearance of Mukesh Ambani, MD of erstwhile rpt erstwhile Reliance Communication LTD, in an eight-year-old criminal case.

The case relates to the company allegedly developing a software in its mobile services for planning increased probability of a child of particular gender.

The court's order came on Ambani's plea against June 7 order of the Chief Metropolitan Magistrate summoning him and his erstwhile company Reliance Infocom Ltd as accused in the case despite the fact that his name is not in the chargesheet.

Issuing notice to Delhi Police, Justice Sunil Gaur sought its response by December 5 on Ambani's plea against the trial court's summoning order and also for quashing of the FIR.

The court also granted exemption to Ambani from personal appearance saying, "Any authorised representative of the petitioner can appear before the trial court on September 10. The trial court will not insist his personal appearance till this court's further order."

Similarly, the court said that any authorised representative of the company also can appear before the trial court.

The summons was issued by the magisterial court in a case registered on a criminal complaint by Directorate of Family Welfare, Delhi Government,.

An FIR was registered by the Special Cell of Delhi Police on January 30, 2005 under the provision of Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of sex selection) (PNDT) Act and also attempt to cheat under IPC.

In its charge sheet, police named only nine officials of the company but did not name Ambani and the company.

Land acquisition cost may go up to 3.5 times: India Inc

New Delhi: Land Acquisition Bill, passed by the Lok Sabha on Thursday, may push up cost of acquiring land by up to 3.5 times, making industrial projects unviable and raising overall costs in the economy, India Inc said.

Industry chamber CII said it has always emphasised on the need to streamline the land acquisition process to boost manufacturing and promote job creation in the industry.

"But the industry has serious concerns on some of the provisions of the Bill as it is expected to increase the cost of land acquisition by 3-3.5 times, making industrial projects unviable and raising costs in the overall Indian economy," CII President S Gopalakrishnan said.

At a time when major projects are stalled and India's global competitiveness is eroding, a more facilitative land acquisition process would have helped long-term growth and restore investor sentiments, he said.

Sharing similar views, Assocham Secretary General D S Rawat said: "...The industry feels that the cost of acquiring land for the industrial projects and the realty sector will go sky-high which is something not desirable and the Indian industry is battling a sever slowdown."

The path-breaking Land Acquisition Bill, which seeks to provide just and fair compensation to farmers while ensuring that no land can be acquired forcibly, was passed by the Lok Sabha with overwhelming majority on Thursday.

Further, CII said, the Resettlement & Rehabilitation (R&R) cost is likely to go up by about 3 times compared to the prevailing practice. The Bill compensates different categories of affected families at par not aligned to their losses.

"We have always maintained that land acquisition mechanism in the country should balance the interests of affected families with industry affordability," it said.

The retrospective applicability of the Bill would severely affect the on-going industry projects as re-starting the entire land acquisition process would lead to avoidable delays and consequent cost over-runs, it added.

Another major cause of concern in the Bill is restriction on acquisition of multi-cropped land that would affect projects such as mineral extraction whose location cannot be chosen, the chamber said.

"The provision calling for return of unutilised land after five years would affect the expansion plans of industries that grow in phases. It also provides for leasing of land which, besides introducing inherent uncertainties regarding renewals particularly for short time periods, is also bound to impact mergers and acquisitions," it said.

Facebook proposes changes in user data policy

New Delhi: Facebook has proposed "updates" to its privacy policies that explain how the social networking giant would use personal data of about 1.2 billion users to deliver advertising and other personalised services.

The social network is proposing these updates as part of a settlement in a US court case relating to advertising, it said in a statement.

The website has revised its two key documents -- Data Use Policy and Statement of Rights and Responsibilities -- to explain how a user's name, profile picture and content may be used in connection with ads or commercial content.

The proposed updates say: "You give us permission to use your name, profile picture, content, and information in connection with commercial, sponsored, or related content (such as a brand you like) served or enhanced served or enhanced by us."

The earlier policy line, "you can use your privacy settings to limit how your name and profile picture may be associated with commercial..", has been removed.

On the proposed updates, Facebook Chief Privacy Officer, (Policy) Erin Egan said: "We revised our explanation of how things like your name, profile picture and content may be used in connection with ads or commercial content to make it clear that you are granting Facebook permission for this use when you use our services."

Facebook also said that it may use profile photos of users to help their friends tag them in photos.
The proposed Data Use Policy says that choosing to make information public would allow anyone, including people off Facebook, to be be able to see it.

Also, the website would also have information about the computer, mobile phone, or other devices that are used to install Facebook applications. Other information like IP address, mobile phone number, browser and location of the user would also be accessible to the website.

"We may get your GPS or other location information so we can tell you if any of your friends are nearby, or we could request device information to improve how our apps work on your device," says the new policy.

Facebook said that users can review and comment on the proposed updates in the next seven days and it will "carefully consider feedback" before adopting any changes.

The proposed updates came after a US court early this week granted approval to Facebook's USD 20 million settlement of a lawsuit over its 'Sponsored Story' advertisements.

Economy to grow at 5.5%; no 1991-like crisis: PM

New Delhi: Prime Minister Manmohan Singh Friday said India is not heading back to a 1991-like crisis, when the country was forced to pledge its gold to pay import bills, and the economy would expand by 5.5 percent in the current fiscal.

“There is no reason to believe that we are going down the hill and that 1991 is on the horizon,” the prime minister said in the Rajya Sabha, the upper house of parliament.

Manmohan Singh pointed out that India has around USD 280 billion of foreign exchange reserve, which is sufficient to finance nearly seven months of imports.

In 1991, India's foreign exchange reserve had fallen to USD 3 billion, not enough even to cover three weeks of imports. The country was forced to pledge its gold with the International Monetary Fund (IMF) in order to pay its bills.

Oil companies may hike petrol prices by Rs 3-4 per litre


New Delhi: In the wake of steep depreciation in rupee, Oil Marketing Companies (OMCs) may hike the price of petrol by Rs 3-4 on Saturday, sources told Zee Business.

The rupee is down nearly 19 percent so far this year despite efforts by policymakers to prop it up.

Anticipation of a Western operation against Syria had driven the WTI contract to its highest level since May 2011 this week, while Brent also soared to its highest price in six months.

Indian Oil, BPCL and HPCL are the three companies that are the biggest buyers of dollars in the currency markets, requiring about USD 8.5 billion every month to import an average 7.5 million tonnes of crude oil.

The Reserve Bank on Thursday opened a special window to help meet the foreign-exchange requirements of the state-owned OMCs.

Why India’s gold has outperformed global prices


Gold price hits fresh all-time high of Rs 35,074 per ten grams in futures trade on Wednesday on heavy buying as rupee plunged to its new record low of 68.85 against the US dollar.

Despite recovering about USD 240 an ounce, or more than 20 percent, since hitting a near three-year low of USD 1,180.71 in late June, gold prices are still down 15 percent so far this year in international market. On the contrary, the yellow metal, which plunged to a low of Rs 25,000 in mid-April, is at a record high in India.

Here’s looking at why gold price in India is spiralling:

Rupee depreciation: The depreciation in rupee has cast a huge impact on the escalation of gold prices as it makes imports costlier. Rupee is down nearly 19 percent so far this year. Hence, gold price in India cannot be at parallels with the price in international market. The difference arising out of the depreciation in rupee has pushed the gold prices higher.

Gold import duty:Gold import duty has also added fuel to the rapidly increasing gold price. In order to contain the widening Current Account Deficit (CAD), the government this month hiked the import duty on gold from existing 8 percent to 10 percent, which has led to a straight jump of more than 600 per 10 gram in gold prices. Prior to this hike, the government had twice hiked import duty from 4 percent to 6 percent and 8 percent respectively.

Geo-political tensions: Geopolitical tensions in Syria are one of the reasons that have immediately triggered the hike in gold prices. Analysts believe that the possibility of US military action against Syria is driving demand for safe-haven assets including gold. Speculations are also doing the rounds that Fed might delay tapering of its bond buying programme if US forces attack Syria.

Low-level demand/ETF buying: In the last two weeks, SPDR gold trust, the world's largest gold-backed exchange-traded fund, has reported inflow, signalling renewed interest of market players. Apart from ETF buying, low-level buying also stoked up prices.

Central Bank’s buying: International Monetary Fund (IMF) data has showed that central banks continued to add to their gold reserves. Turkey added the most by buying 22.5 tonnes of gold in July, while Russia's holdings topped 1,000 tonnes. The accumulation of gold by the central banks has underpinned demand for gold, which in turn has strengthened the metal’s price.

Sensex loses 3.75% in action-packed month

 

Mumbai: The BSE Sensex lost 3.75 percent in August, its worst monthly performance since February, as worries over foreign outflows were exacerbated by the rupee that fell to record lows during the month.

India’s current account deficit and a struggling economy still worry market participants. Data showed on Aug. 31 that June quarter GDP grew at 4.4 percent, below analysts’ estimates.

The rupee recovered in the last few trading sessions of August, closing around 65.75 per dollar after falling to a life low below 68. Still, the unit lost 8.1 percent in August, its biggest monthly fall since at least 1995.

Overall, the Sensex lost 726 points during the month to close at 18,620, but hit a month-low of 17,448.71 in trade on Aug. 28. Fears that the United States would soon start rolling back its monetary stimulus also dampened investor confidence as it raised fears of foreign investors selling Indian shares.

PM says rupee sinking due to 'unexpected external developments'

Prime Minister Manmohan Singh on Friday said while the sharp slide in the value of the rupee caused by external developments was a matter of concern, there was no question of capital controls and India would remain an open economy.

"The depreciation in the value of the rupee since end of May is a matter of concern," the prime minister told the Lok Sabha. "What triggered the sharp depreciation in rupee was the market's reaction to unexpected external developments," he added.

"Clearly, we need to reduce our appetite for gold, economise the use of petroleum products and take steps to increase our exports," he said. At the same time, the fall in rupee's value is good to some extent as it makes exports competitive, he added.

The prime minister also assured that the country's growth which has slipped will pick up soon, and everything would be done to contain the fiscal deficit at 4.8 percent of the gross domestic product (GDP).

The Indian rupee has lost almost 20 percent against the US dollar this fiscal, largely due to pull-out by foreign funds from the Indian markets after the US central bank hinted that it would lower fiscal stimulus as the economy shows sign of recovery.

The rupee fell nearly 4 percent to hit a record low of 68.85 per dollar Wednesday, the biggest single-day percentage loss since October 1995. But the currency recovered and surged 3.5 percent to close at 66.55 against a dollar a day later.

The prime minister, who had made a brief statement on the economic situation Thursday as well, also sought to lift market sentiments Friday with assurances on reforms.

"Last two decades have seen India grow as an open economy and benefited from it. There is no question of reversing these policies," he said. "I would like to assure the house and the world the government is not contemplating any measures on capital controls."

The prime minister said the fundamentals of the Indian economy had continued to remain strong and that both the central bank and the government were taking steps to contain inflation. He said efforts were also underway to contain the current account deficit.

"Growth-friendly way to contain the deficit is to spend carefully, especially on subsidies that do not reach the poor. We will take steps," the prime minister said, while also seeking the support of political parties to pursue good policies.

"The easy reforms of the past have been done. For more difficult reforms, we need political consensus. I urge across political parties to work towards and join in the government's efforts to put the economy back on the path of stable growth."

Indian Banks well capitalised to provide for bad loans: PM

Prime Minister Manmohan Singh today said Indian banks are 'well-capitalised' to provide for increased bad loans till they become performing.

"Our banks are fortunately well capitalised much above the Basel norms. They have the capacity to provide for any non-performing assets until those assets have turned around," Singh said while making a statement in Parliament.

"The question that need to be asked is that whether there is liquidity problem or a solvency problem. My belief is that there is liquidity problem," he said.

"Many of the projects are not unviable but are only delayed...as these projects come on stream, we will generate revenue and repay loans," he said.

Indian banking sector has seen some rise in bad loans, he admitted.

Gross non-performing assets (NPA) of public sector banks rose to Rs.1.76 lakh crore at the end of June quarter from Rs.1.55 lakh crore at March 31, 2013.

The stress on the asset quality is a reflection of the stress in the economy of the country.

Public sector banks had recovered Rs.1,905 crore by filing 97,701 suits in 2012-13 and Rs.1,700 crore through 79,117 suits in the earlier fiscal.


Rupee trims initial losses, swings to 66.87 against dollar in early trade

The rupee trimmed its early losses but was still quoted down by 32 paise to 66.87 per dollar in late morning trade Friday on month-end demand for the US currency from banks and importers.

The rupee resumed lower at 67.00 per dollar as against the last closing level of 66.55 at the Interbank Foreign Exchange (Forex) Market and dropped further to a low of 67.43 per dollar.

However, it recovered to 66.61 before quoting 66.87 per dollar at 1050 hours.

Month-end dollar demand from importers mainly affected the rupee value, a forex dealer said.

In the global market, the US dollar swung between gains and losses in the early trade, but the currency was poised to notch a weekly advance after Syria-related tensions weighed on risk appetite and aided the greenback.

Oil prices fell in Asian trade as fears eased of an imminent Western military strike against Syria for its alleged use of chemical weapons, analysts said.

New York's main contract, West Texas Intermediate (WTI) for delivery in October, was down USD 1.41 at USD 107.39 a barrel.

Meanwhile, the BSE-30 share index Sensex firmed up by 145 points, or 0.79 per cent, to 18,545.96 at 1055 hours.

Market today, NSE & BSE Markter

NSE & BSE Market  Market Today 

Huge fund outlay for Food Security Bill to hit fiscal deficit, feels India Inc


The UPA government may be a step closer to offer subsidised foodgrain to the poor after the Food Security Bill was passed by the Lok Sabh on Monday, but India Inc feels the massive outlay of funds required for rolling out the programme is bound to raise the fiscal deficit.

The ambitious food security programme will give the country's two-thirds population the right to five kg foodgrains every month at between Re 1 to Rs 3 per kg.

"As far as the issue of additional burden is concerned, it would add to Rs 25,000 crore annually to the food subsidy, Assocham President Rana Kapoor said, adding, however, that with proper implementation the long term benefits in terms of human capital will far outweigh the costs.

The plan is seen as the biggest in the world with the government expected to spend about Rs 1,25,000 crore annually on supply of 62 million tonnes of rice, wheat and coarse cereals to 67 per cent of the population.

"Such a large outlay at this point in time would definitely have a negative impact on the fiscal deficit. This needs to be managed," CII President Kris Gopalakrishnan said.

Commenting on the passage of Food Security Bill, Gopalakrishnan said: "With a significant section of the population living below the poverty line, government intervention to provide nutritious food is essential".

However, he also raised concerns related to the effective implementation of such a high profile and critical social agenda of the Government.

"The use of PDS (public distribution system) raises questions about the efficacy of the model. Targeting is another area that would need special attention," Gopalakrishnan said.

Raising similar concerns, Rajat Wahi, Partner at KPMG India, said: "The government should ensure that they have the checks and balances in place to ensure there is minimum leakage and wastage and severe penalties for people who abuse it".

The total food subsidy budgeted in the current financial year is Rs 90,000 crore, of which Rs 10,000 crore is towards implementation of the Food Security Bill.

Wipro to re-enter Nifty from Sep 27, Reliance Infra to exit


IT major Wipro will enter the National Stock Exchange's (NSE) 50-share Nifty index with effect from September 27, while Reliance Infrastructure would exit.

The decision regarding these changes were announced on Tuesday by the India Index Services & Products Ltd, a joint venture of NSE and Crisil, which manages the various indices at the exchange.

Earlier, Wipro was dropped from the CNX Nifty index from April 1 as its non-IT businesses were hived off into a separate unit.

As part of periodic review, the new changes would become effective from September 27, 2013.

A host of changes have also been made in various other indices of NSE such as CNX Nifty Junior Index, CNX 100 Index, CNX 200 Index CNX 500 Index, Nifty Midcap 50 Index, CNX Midcap Index and CNX Smallcap Index by its Index Maintenance Sub-Committee during a periodic review, it said.

Besides, sectoral indices for IT, auto, realty, media, PSE and service would also see some changes.

The stocks being excluded from Nifty Junior index are Ashok Leyland, Indian Hotels Company, while Mahindra & Mahindra Financial Services Ltd and Oil India would be included in the index.

In the CNX 100 index, Ashok Leyland, Indian Hotels and Reliance Infrastructure would be replaced by Mahindra & Mahindra Financial Services, Oil India and Wipro.

Those being dropped from CNX 200 Index include GVK Power & Infrastructures, Gujarat Gas Company, IVRCL, Lanco Infratech, Torrent Power, Amtek Auto, City Union Bank, Core Education & Technologies, Dewan Housing Finance Corporation, India Infoline and Jindal Saw.

The stocks that are being added to CNX 200 index include Wipro, Bharti Infratel, Berger Paints, Crisil, MMTC, CMC, Coromandel International, Oberoi Realty, Page Industries, Thermax and Torrent Pharmaceuticals.

Apollo Hospitals ties up with US varsity for patient care, academics

Apollo Hospitals has announced a collaboration with the University of Rochester Medical Centre, New York, US, in both patient care and academics.

On its 25th anniversary in Hyderabad (the group, headquartered in Chennai, has completed 30 years) the group founder and chairman Dr Prathap C Reddy said the University of Rochester Medical Centre (URMC) will work with Apollo Hospitals in areas of clinical care, education and research across multiple specialties which include Gastroenterology, Emergency Medicine and Neurosciences.

Medical education will be the primary focus in the initial phase of collaboration. The two intend to exchange faculty and trainees, engage in joint research studies, and develop shared approaches to patient care.

Reddy also announced the launch of a program called "Healthy Schools" to screen school children. The program includes a health check, maintenance of health records, and health education. A fifty thousand worth treatment will be provided for accidents (students and parents).

The program is being offered at Rs 200 per student per year. Schools that implement it will receive the "healthy schools" branding. If students are unable to afford this program, Apollo Hospitals will arrange donors to support them financially. According to Reddy, the "goal is to have a million school children enrolled in this program in a year."

In Hyderabad, Apollo began with a 150 bed hospital on August 12, 1988. It now offers 650 beds. Overall, Apollo Hospitals today has around 8400 beds and hopes to cross 10,000 by the end of 2014.

Diesel prices may be hiked by Rs 3 a litre next week

New Delhi: Diesel prices may be increased by at least Rs 3 a litre after the monsoon session of Parliament ends next week as the depreciating rupee threatens to widen the government's fuel subsidy bill.

Oil Minister M Veerappa Moily said while there was no proposal with him "just now" to raise diesel prices, the depreciating rupee was a matter of concern.

With the rupee falling past the 66-mark against the dollar and closing at 66.24 today, state-owned oil companies have to pay more to buy crude from abroad. If retail fuel prices are not raised by a commensurate level, the difference has to be borne by the government.

"I have not thought of increasing (diesel) prices as of just now...Future I can't say," Moily told reporters here.

Losses on diesel sales at government-controlled rates have widened to Rs 10.22 per litre from Rs 9.29 a litre at the beginning of the month and less than Rs 3 per litre in May, even as prices are raised by 50 paise a litre every month.

Oil firms have asked the government for a one-time increase in rates, P K Goyal, Director (Finance) of Indian Oil Corp, the nation's largest fuel retailer, said yesterday.

Besides, the oil companies lose Rs 33.54 per litre on kerosene and Rs 412 per 14.2-kg cooking gas (LPG) cylinder.

The revenue loss or under-recovery on diesel and cooking fuel was estimated at Rs 80,000 crore at the beginning of the fiscal and has now widened to Rs 140,000 crore.

Every one-rupee depreciation in the local currency against the dollar adds Rs 8,000 crore to the under-recovery, Moily said.

The government had in January allowed oil companies to raise diesel rates by up to 50 paise per month until losses on the most-consumed fuel in the country are wiped out.

Oil companies feel a 50 paise hike is insufficient and there should be a higher, one-time increase to cover for the fall in the rupee.

The price of diesel was last increased on August 1, when prices in Delhi went up by 56 paise (including local taxes) to Rs 51.40 per litre.

IOC, Bharat Petroleum and Hindustan Petroleum lost Rs 25,579 crore in revenue in the first quarter ended June 30, of which the government made good Rs 8,000 crore by way of cash subsidy.

BSE Sensex tumbles by 600 points to slip below 18,000

The BSE Sensex nosedived over 613 points to slip below the psychological 18,000-level in afternoon trade on Tuesday on increased capital outflow as the rupee hit a new record low against the US dollar, amid concerns of the government's rising subsidy burden.

Brokers said the foreign funds remained net seller which gathered momentum sparked by the rupee hitting new record low levels. They said the passage of the Food Security Bill in Parliament raised fears the government might face more subsidy burden, leading to widening of the current account deficit (CAD).

The 30-share index of the Bombay Stock Exchange plunged 613.99 points, or 3.31 per cent, to 17,944.14 at 2.10 pm, as the rupee breached the 66-mark against the US dollar in afternoon trade. The Indian currency also touched a new low of 102.45 against the British Pound.

On similar lines, 50-share National Stock Exchange index Nifty dropped a whopping 185.15 points, or 3.38 per cent to slip below the 5,300-level to 5,291.35, led by stocks of banking and capital goods sector.