Govt raises import tariff value of gold

The government on Friday raised the import tariff value of gold to $461 per ten grams and of silver to $803 per kg as prices of the precious metals touched all-time high this week.
Tariff value -- the base price on which the customs duty is determined to prevent under-invoicing -- of gold and silver stood at $432 per 10 gram and $697 per kg, respectively earlier.
The notification, issued by the Central Board of Excise and Customs, has come two days after when gold prices has touched the new peak of Rs 34,500 per 10 grams in the national capital. The prices of yellow metal has increased by 9 per cent so far in the month of August.
Price of gold today fell and closed at Rs 31,700 per ten grams and silver at Rs 54,000 per kg in the national capital on Friday. However, gold in Singapore, which normally sets the price trend on the domestic front, fell by almost one per cent to $1,393.10 an ounce and silver by 1.34 per cent to $23.55 an ounce.
India, the largest gold consumer in the world, imported 860 tonnes of gold in 2012. In the first four months of the current fiscal, the import rose 87 per cent to 383 tonnes.

Financial Technologies' exchanges abroad under lens

Laxity in enforcing KYC and allied norms suspected; money laundering gaps also on probe panel’s mind

The role of global exchanges floated by the Financial Technologies group has also come under the government’s scanner.

Several investors are said to be holding positions on the Multi Commodity Exchange, while the same investors were offered similar positions on international exchanges floated by the Financial Technologies group, to take arbitrage advantage. While these facilities were offered by brokers, the government is looking at whether there was any laxity on the part of these overseas exchanges floated by the FT group regarding Know Your Clients (KYC) or other processes.

If such linkages are found, that would be also considered violation of the foreign exchange and money laundering laws.

“The government is now looking at pare trades in FTIL-controlled exchanges NSEL, MCX and also exchanges owned by it outside India,” said a government official. The FT group had floated Bahrain Financial Exchange, Singapore Mercantile Exchange and Dubai Gold and Commodity Exchange. All these three have been offering gold contracts.

An FT spokesperson said, “We’ve not received any communication from any authorities/regulators on such investigations and, hence, cannot comment.”

A sector official said investors and traders having positions abroad without the knowledge of the Indian authorities had been happening and these also hold positions in other names, with US-based Comex and the London Metal Exchange being common destinations. In those exchanges, Indian authorities have no say but they are investigating this.

Officials in the know said one of the high-powered working groups constituted by the government on the NSEL crisis, headed by the RBI deputy governor, was looking into the possibility of money laundering among firms trading on this exchange, MCX and also exchanges in foreign lands controlled by FTIL. "All these possibilities are within the realm of the committee and working groups constituted by the government on August 26 and we are looking at the matter from every possible issue and involving all sister-concerns of NSEL," a senior official said.

The chain of exchanges, domestic and global, are under the scanner of other regulators as well, following the forward Markets Commission (FMC)’s warning to the NSEL board that their ‘fit and proper’ status was at risk. The warning was given by the regulator last week, after  NSEL defaulted on its commitment to make the first week’s agreed payout.

A former regulator told Business Standard, “Once the promoter loses s status as a fit and proper person to run the exchange, other regulators have to reconsider if promoters of the entities regulated by them have the same promoter that have lost this status. Global regulators  generally follow.” So, if the NSEL promoters lose their fit and proper status there, the commodity, stock and power exchanges set up by the same promoters might face similar action.

A source in FMC said, “The decision to withdraw the fit and proper status on the NSEL board of directors is under consideration and task forces appointed by the government will also look into it, as it has implications for other regulators, too.”

Plan spend may be axed again: Monte

higher subsidy burden and a shortfall in revenue receipts might force the government to lower its Plan expenditure this year, too, as it is determined to restrict its fiscal deficit to 4.8 per cent of GDP. The move may, however, pull down GDP growth, which fell to a four-year low of 4.4 per cent in the quarter ended June 2013.

Planning Commission deputy chairman Montek Singh Ahluwalia said a cut in Plan expenditure could be considered while finalising the Revised Estimates. Asked whether it was proposed that Plan expenditure be cut, he said: “If we are asked to do so, we will cooperate. Discussions usually start around November. The finance ministry has said the 4.8 per cent target for fiscal deficit is sacrosanct.”

A cut in government spending would come at the cost of growth. In the quarter ended June, growth was primarily aided by community, social and personal services, representing largely government spending. The category expanded 9.4 per cent, against 8.9 per cent in the year-ago period and four per cent in the quarter ended March this year.

Finance Minister P Chidambaram had said the target of reining in fiscal deficit at 4.8 per cent of GDP this financial year was a red line that wouldn’t be breached. In the first quarter of this financial year, the government’s fiscal deficit touched 10.49 per cent of GDP, standing at 62.8 per cent of the Budget estimate for 2013-14, against 51.5 per cent in the year-ago period.

In 2012-13, the government was able to rein in its fiscal deficit at 4.9 per cent, against the Budget estimate of 5.2 per cent, owing to a cut of Rs 92,000 crore in Plan expenditure. This year, however, the cut is unlikely to be so steep, as the Budget estimate is only 11.7 per cent higher than that last year.

Owing to the rupee depreciation and a rise in crude oil prices, this year, there would be a higher-than-projected burden for fuel subsidy and, to an extent, fertiliser subsidy. Besides, meeting the disinvestment target of Rs 40,000 crore would be difficult if the market situation doesn’t improve.

So far, receipts from divestment stand at only Rs 1,325 crore. Tax collections also face the risk of a shortfall. Continuing with its austerity measures announced last year, the finance ministry might also issue instructions for a 10 per cent cut in non-Plan expenditure and a ban on creation of new government posts.

25 countries offering best business environment

Most reports on sustainability focus on environmental issues, but a country's sustainability depends on much more than just environmental factors, according to RobecoSAM, a Switzerland-based investment group.
It says that for a nation to safeguard its future it needs to focus on several issues, including social, economy and governance. RobecoSAM has recently released a report that ranks countries based on three factors: Environmental, social and governance. Here's how it explains them:
Environmental dimension: Nations that depend heavily on fossil fuel import are susceptible to price fluctuations and/or shortage. Natural calamities, such as floods, also add to the risk factor.
Social dimension: Strikes or unrest by workers pose a big risk to investment.
Governance dimension: Rate of corruption, internal conflict and regulations are other factors that can have an adverse impact on businesses.
Let's have a look and see where India ranks among countries offering best business and life environment.
NOTE: Each country receives a total score ranging from 1 to 10, with 10 being the highest.
Source: robecosam.com
Click NEXT to see India's rank among 59 nations studied by the Swiss firm...

Image: People enjoy skiing during the first spring day in the southern mountain town of Nowy Targ, some 400km south of Warsaw in Poland.
Photographs: Vasily Fedosenko/Reuters

HSBC cuts FY14 growth forecast to 4%

HSBC on Monday lowered India's GDP forecast for the current financial year to 4 per cent from 5.5 per cent earlier saying economic uncertainty is likely to weigh on the growth forecast in the coming months. According to the global financial services major, growth is likely to slow in the near term due to tighter financial conditions and higher macroeconomic uncertainty.
"In light of this, we revise down our GDP growth forecasts to 4.0 per cent (5.5 per cent) for FY2014 and to 5.5 per cent (from 6.6 per cent) for FY2015," HSBC said in a research note on Monday.
According to official figures, the country's economic growth in the April-June quarter slid to 4.4 per cent, the lowest in past several years, pulled down by drop in mining and manufacturing output.
This prompted the industry to demand co-ordinated action by the government and the RBI to boost the economy.
HSBC, however, believes the slowdown has further to go, saying leading indicators suggest the country's growth momentum could ease further during the July-September quarter in both manufacturing and services sector.
Moreover, factors like RBI's currency stabilisation measures and heightened macroeconomic uncertainty is making consumers and businesses more cautious about spending, HSBC said.
The pressure on growth momentum is likely to pose greater challenges for policy makers as they try to stabilise the falling currency, which had touched an all time low of 68.80 to dollar on August 28 and is currently hovering around the 66/USD mark in a highly volatile trade.
"In terms of the quarterly profile, we expect growth to slow in the July-September quarter of 2013 and dip below 4 per cent," HSBC said adding that growth will show "faint" signs of recovery during the final quarter of the fiscal year as macroeconomic uncertainties recede somewhat and confidence reluctantly recovers.
Moreover, CCI expedited and other investment projects are likely to slowly kick in around that time, the report said.
According to HSBC, "the outlook for India is still tainted with downside risks given the lingering macroeconomic uncertainties and the possibility that politics could get in the way of meaningful progress on structural reform".

Sensex gains 250 points, blue-chips rise

Markets extended gains in the afternoon session this Monday on back of buying witnessed in metal and mining stocks after robust China’s manufacturing data.
At 2 PM, the 30-share Sensex gained 244 points at 18,864 and the 50-share Nifty added 67 points at 5,537 levels.
China’s economy is strengthening after a two-quarter slowdown, with a manufacturing gauge rising to a 16-month high in August
Investors are now anxiously waiting for any fresh measures with Raghuram Rajan taking over the reins of RBI as the new governor on September 5.
The broader markets were firm with mid-caps and small-caps gaining 1 per cent on the BSE.
The market breadth was positive. Out of 2,168 stocks traded, 1,252 stocks advanced while 787 stocks declined on the BSE.
RUPEE
The rupee dropped against the dollar in late trades. At 2PM, the partially convertible rupee was trading at 66.21 per dollar against the Friday’s close of 65.71 against the dollar on the Interbank Foreign Exchange.
GLOBAL MARKETS
Asian stocks rose for a third day, copper gained and the Australian dollar strengthened as Chinese manufacturing expanded. U.S. stock-index futures advanced and crude fell as prospects of an imminent strike on Syria faded.
Japan’s Nikkei rose 1.3% to 13,572, Singapore’s Straits Times gained 0.8% to 3,053, China’s Shanghai Composite index was flat  at 2,098 while Hong Kong’s Hang Seng rose 2 % to 22,175 today.
European markets also opened positive. France’s CAC gained 1.5% to 3,993, Germany’s DAX rose 1.5% to 8,225 while UK’s FTSE was up 1.2% to 6,495.
STOCK MOVERS
Domestically, all the key sectoral indices gained with PSU, FMCG, Capita l Goods, consumer durables, oil and gas and bankex leading the gain on the BSE.
The gainers included counters such as Tata Steel gaining 4%, ITC rose 4.2%, Reliance Industries gained 2.7%, Jindal Steel added 2.6%, Hero MotoCorp gained 2.6%, ICICI Bank gained 2% on the BSE.
The laggards were NTPC falling 0.6%, Dr Reddy’s declined 0.5%, Mahindra & Mahindra and Tata Motors were down 2% and 0.7% on the BSE.
The key notable movers included counters such as Atul Auto has soared 9% to Rs 163 after reporting a 38% year-on-year (yoy) growth at 3,204 units for the month of August 2013. The country's fastest growing manufacturer of three wheeler had sold 2,322 units in the same month year ago.
Mahindra and Mahindra (M&M) Financial Services has rallied 6% to Rs 267, extending its Friday’s over 8% surge on inclusion in the MSCI India Index with effect from today.

These 6 people are responsible for India's economic crisis

T N Ninan

These six people have created a political climate more difficult for business, indeed more hostile to business, than at any time since the mid-1980s, says T N Ninan.
Kapil Sibal said in Parliament the other day that politicians are the most accountable among all categories of people.

So, how accountable do six people, who between them have run the economy these past five years, feel as they survey the mess around them? All but one of them spoke this past week.

Sonia Gandhi told Parliament that if there was no money for the “food security” programme, then money would have to be found - but she did not care to suggest how. She also said that if the public distribution system had its defects, they would have to be fixed - again, the details were beneath her.

If the isolation at 10 Janpath is not like living on Mars, the Congress president must know that the economy faces urgent challenges, and that the last things it needs are irresponsible laws; so she must tell us whether she really thinks that two-thirds of Indians go to bed hungry. Accountability, Mr Sibal?
Click NEXT to read more...

Image: Sonia Gandhi with Prime Minister Manmohan Singh.
Photographs: Reuters

Related News: Mr Sibal , Sonia Gandhi , Kapil Sibal , Congress , Parliament