Indian rupee down 37 paise at 62.94 vs US dollar
Economy to grow better in second half of FY14: C Rangarajan
Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has expressed confidence that India will see "distinctly better" economic growth in the second half of the current financial year.
The economy grew by 4.4 per cent in the first (April-June) quarter of current financial year. In 2012-13, the GDP growth fell to a decade low of 5 per cent.
"The impact of the good monsoon will be only seen in the second half. Apart from increasing agricultural production, this will also increase the rural demand," Rangarajan said at a CII seminar on Financial Inclusion for Reviving Growth.
Besides, there has been improvement in the manufacturing sector and in the second half of the current fiscal the growth of this sector could be about 3 per cent, he added.
"Therefore, for the year (2013-14) as a whole, it will be about 1.5 per cent which will be consistent with an aggregate growth rate of the economy of a little over 5 per cent," Rangarajan added.
He also maintained PMEAC's growth projection of about 5.3 per cent which can be achieved with the present trend in the manufacturing.
PMEAC had initially projected growth target of 6.4 per cent for 2013-14 which was lowered to 5.3 per cent in September.
In reply to a question as to whether India is ready to cope with the financial stress that might arise due to the US fiscal tapering, Rangarajan said: "I think we must get ready for it because we don't know when it will happen. The good news is that the current account deficit is coming down. In fact the CAD should be much lower than what one had expected. If the CAD come down below 3 per cent of the GDP, the capital flows should be adequate to control the CAD."
Finance Minister P Chidambaram had in October said India will be able to contain CAD below $60 billion in 2013-14 as against an earlier estimate of $70 billion.
RBI mulling merits of FII limits in govt bonds
New Delhi: The Reserve Bank of India is examining the pros and cons of relaxing limits for foreign institutional investors (FII) in government bonds, a senior finance ministry official said on Wednesday.
The comment by Arvind Mayaram, the economic affairs secretary at the finance ministry, came in response to a question from reporters about whether India was considering lifting FII limits in order to qualify for inclusion into benchmark global bond indices.
India will also consider allowing local companies to issue rupee-denominated bonds abroad, marking a new step in the internationalisation of the rupee. International Finance Corp, the private sector arm of the World Bank, last month launched a $1 billion rupee-linked bond.
RBI Governor Raghuram Rajan had earlier said that Indian official are speaking to the index compilers about potential inclusion of domestic debt.
India's exports to grow by 7.2% in 2014: Morgan Stanley
Singapore: India's exports are expected to grow by 7.2 percent in 2014 fiscal on the back of improvement in growth of developed markets, says a report by Morgan Stanley Research.
"We expect export growth of 7.2 percent in fiscal year 2014 versus minus one percent in fiscal 2013," it said in a report on Asia Pacific Economics.
Morgan Stanley Research expects a gradual sequential recovery in India's exports on the back of improvement in developed markets growth from the third quarter of this year, narrowing the trade gap.
The investment bank's research report expected gold imports to decline due to quantitative controls put in place by the government as well as increase in real rates as inflation expectations moderate.
"We estimate that quantitative control along with increase in real rates will help to reduce gold import demand in this fiscal to around USD 42 billion in fiscal 2014."
Non-oil and non-gold imports would remain very weak as tight monetary and fiscal policy would keep domestic demand weak. However, acceleration in exports can lead to some increase due to import content in exports, it pointed out.
It also noted Reserve Bank of India’s efforts on portfolio equity and debt flows. The recent steps taken by RBI to augment capital flows by providing a swap window facility to allow banks to swap non-resident deposits and overseas borrowing at a lower cost have mitigated the funding pressure to some extent in the near term.
Indeed, we expect these measures to help increase capital flows by about USD 15 billion in fiscal 2014 and thus we estimate only a marginal balance of payment deficit in our base case," said Morgan Stanley Research.
However, the key variable that would influence overall capital flows would be portfolio flows into debt and equity, it said.
But a prolonged growth slowdown could potentially lead to a continued balance of payments stress, implying that RBI would face the impossible trinity of managing the exchange rate and controlling the interest rates when capital flows would be volatile, the report said.
The report also highlighted that India would be impacted by the rise in the US rates and the US dollar.
"India will be significantly exposed to the trend of a rising US dollar and real rates through the current account imbalance, moderate dependence on foreign debt funding and upward pressure in its real rates," it said.
It said the economic growth would remain weaker for longer period. The three key risks arising from longer- duration slowdown would be the sharp rise in non-performing assets in banking system, challenges in managing fiscal deficit and the external funding risks would remain high.
Khan Market is India's costliest retail market
New Delhi: National capital's tony Khan Market is the most expensive retail market in the country even though its ranking worldwide has dropped two places to 28.
Monthly rentals at Khan Market stood at Rs 1,250 per sq ft as of June, 2013, up by just 2 per cent from the year-ago period, according to global property consultant Cushman and Wakefield's (C&W) report 'Main Streets Across the World 2013.
When it comes to rental appreciation, Panjagutta in Hyderabad with 29 per cent growth is placed 8th in the list of global rental movement ranking of 2013.
South Extension in New Delhi is at 17th position with an annual rental growth of 20 per cent. Kutuzovsky Prospekt in Moscow recorded the highest rental growth of 42 per cent.
"In the global ranking of most expensive retail locations, Khan Market in New Delhi emerged as the 28th most expensive in the world, retaining its position as most expensive retail location in India," C&W said.
"India (Khan Market) however, dropped in the global ranking from 26th to 28th position due to the weakening of the Indian rupee against US dollar and largely stable rentals with limited increment in rental values in established retailing sectors," it added.
Hong Kong's Causeway Bay has emerged as the world's most expensive retail location, followed by New York's 5th Avenue, as per the report that ranks the most expensive locations in the top 334 shopping destinations across 64 countries.
Avenue des Champs Elysees in Paris is ranked third, while New Bond Street in London, Ginza in Tokyo are at 4th and 5th places respectively.
Khan Market witnessed high demand from retailers but due to limited availability and transactions, rental values have only seen a marginal increase, it said.
Commenting on the report, C&W Executive Managing Director South Asia Sanjay Dutt said: "While retail rentals globally registered a slower growth of 3.2 per cent as compared to previous year on account of slowdown in economic uncertainties in the leading markets, the Asian markets saw a better average of rental increase at 4.5 per cent in the same period."
The economic risk remains for 2014, but conditions are expected to steadily improve across most markets, he said.
"The retailers' push towards the best and most sought after locations will continue. However, limited supply and higher rental costs will create obstacles for some brands, leading a number of retailers to look at alternative locations in close proximity to the main thoroughfares," he added.
On Indian retail locations, Mumbai's Linking Road (Rs 750/sq ft/month) emerged as the second most expensive retail location in the country despite a correction of 11.8 per cent in rental over last year. Connaught Place and South Extension are third and fourth positions with a rental of Rs 725 per sq ft in a month.
Bangalore's Brigade road and Mumbai's Linking Road stood at 6th and 11th positions respectively in the list of world's top 15 markets to saw the sharpest retail rental decline.
RBI pegs CAD at $56 bn, says no reason for rupee decline
Mumbai: Seeking to reassure investors, RBI Governor Raghuram Rajan Wednesday said there is no fundamental reason for rupee to fall again, and pegged the current account deficit for 2013-14 at USD 56 billion, much lower than the quantum estimated earlier.
He also said the Reserve Bank will not rush to close the special window opened for dollar purchase by oil companies.
The Governor also expressed the optimism that the second half of the current financial year will see better growth numbers on the back of good monsoon and the associated pick-up in consumption and healthy exports.
Referring to the recent decline in the value of rupee, the RBI chief said: "There is no fundamental reason for volatility in the exchange rate."
"At some time, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that," he said in the hurriedly called press meet.
Pegging a much lower CAD for the fiscal, Rajan said: "Our estimate now is that CAD this year will be USD 56 billion, less than 3 percent of GDP and USD 32 billion less than last year. Of course, some of that compression comes of our strong measures to curb gold import."
The current account deficit (CAD), which is the difference between outflow and inflow of foreign exchange, touched an all-time high of USD 88.2 billion or 4.8 percent of the GDP in 2012-13.
Earlier, the government had projected the CAD in the current fiscal at USD 70 billion, which was revised downwards to USD 60 billion by Finance Minister P Chidambaram on back of declining gold imports and recovery in exports.
"It's important that RBI clarifies interpretation of economic events and the likely direction of economic policies at times of uncertainty so that the market worries about the right things and does not get into a tizzy about the wrong ones. That is my quote today," Rajan said.
His remarks seemed to have calmed currency markets as the rupee gained 41 paise against dollar to close at 63.30, after declining in the previous five days in a row.
"We have no intention of rushing this process (of closing the special window for OMCs)," Rajan said.
The Reserve Bank in August had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.
The rupee, it may be mentioned, fell to a record low of 68.85 to the dollar on August 28.
Rajan said since October 14 most of dollar demand from oil marketing companies has been met from the market only.
The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for import of an average 7.5 million tonne crude oil.
Expressing comfort at declining core inflation,narrowing CAD and better growth prospects in the second half on good monsoon, Rajan sought to reassure investors who fear India will be hit again as and when the US ends easy money policy.
Ruling out any major threat from the external front to rupee as well as the economy, Rajan said even if there is no more fresh FII inflows this year, there will not a problem to finance CAD as he country will have USD 32 billion less of CAD to finance this year.
"Last year FII inflows, both debt and equity, accounted for USD 26 billion. Let me assume that we get no inflow this year, and in fact outflows equal the inflows we got last year. In other words, there is a USD 52-billion turnaround in FII flows," the Governor said.
"Remember though that we have USD 32 billion dollars less of CAD to finance this year, and till yesterday, we raised USD 18 billion through new swap channels. So, if other financing remains the same as last year, which it seems on track, even if foreign investors pull out significantly more money this year than they have so far, we still can break even on capital flows," Rajan said.
Noting that OMCs have entered a swap arrangement whereby they will have to repay dollars to the RBI on various dates from February 2014 till April 2014, Rajan said: "One worry expressed by market participants is whether OMCs will add to further downward pressure on the rupee when it comes time for them to repay dollars to the RBI."
"This to my mind is a non-issue because we have three ways of managing the repayment. One is, of course, for the OMCs to buy dollars in the market. If exchange markets are calmer, this additional demand should be absorbed," he added.
Rajan said, "But if they are not calmer, we could roll over some portion of the swaps so they mature at a calmer time. But perhaps the easiest option would be for us to settle the swap with the OMCs by making net payments in rupees, and avoid the need for them to go back to the market for dollars. When the time comes, we will choose the most appropriate combination".
He also announced a bond purchase worth Rs 8,000 crore next Monday to inject liquidity in markets.
He further said the major outflows in the recent past following the tapering talks were debt outflows.
"Though that money has not come back, indeed our FII debt exposure, both corporate and sovereign, has come down from USD 37 billion on May 21 to USD 19 billion today. I presume what is left is more patient money, but given its diminished size, I do not see it is possible exit as a huge risk," the governor said.
Rajan's address came after stronger-than-expected US jobs data last week had sparked concerns about an early end to the Federal Reserve's stimulus, hitting the rupee and sending domestic bonds and shares tumbling. This led to FIIs pulling out more than USD 13 billion from bonds and over USD 2 billion from equities between end May and early September.
Though he termed food inflation "worryingly high", which rose to 10.09 percent in October, Rajan said he was comforted by a downward trend in the core consumer price index, which declined from 8.5 percent to 8.1 percent in the month.
"I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 percent from 8.5 percent in September. The momentum for core inflation is also on the decline," Rajan said.
Philanthropy list: Azim Premji the most generous Indian with donation of Rs 8,000 cr
New Delhi/Mumbai: When it comes to generous donations, Indians are no less than anyone. India’s Azim Hashim Premji has topped 2013 Hurun India Philanthrophy list prepared by China based Hurun Report Inc.
Azim Premji emerged as the most generous Indian with a donation of Rs 8,000 crore in the past year.
HCL group Chairman Shiv Nadar is the second highest contributor in the list with a donation of Rs 3,000 crore.
The Shiv Nadar Foundation, which completed 20 years in philanthropy this year, works towards educational initiatives and expansion programmes, directly benefiting 15,000 students across India.
G M Rao, through GMR Varalakshmi Foundation, donated Rs 740 crore for the education of underprivileged children, becoming the third biggest philanthropist in India's corporate world.
Nandan and Rohini Nilekani stand fourth in the list with a contribution of Rs 530 crore.
Ronnie Screwvala, whose initiatives are housed under the Swadesh Foundation (UTV group), contributed Rs 470 crore for achieving rural empowerment through the best practices and modern technology values.
'Biotech Queen' Kiran Mazumdar Shaw made a donation worth Rs 330 crore, while Ratan Tata donated Rs 310 crore to various charitable organisations for the underprivileged through the JRD Tata Trust and Sir Ratan Tata Trust.
London-based mining major Vedanta Resources Chairman Anil Agarwal donated Rs 290 crore to support the cause of healthcare.
PNC Menon of Sobha Developers and DLF Chairman Kushal Pal Singh contributed Rs 270 crore and Rs 200 crore, respectively for programmes like adoption of villages and skill training of the youth.
Hurun India Philanthropy List is a ranking of 31 Indians who donated more than Rs 10 crore (equivalent to USD 1.6 million) in cash or cash equivalent during April 1, 2012 till March 31, 2013.
Hurun Report included donations made by companies in which an individual had a significant share, by applying the percentage the individual has of the company on the donations.
Education was the most important area for the Indian philanthropists with a total contribution of Rs 12,200 crore.
It was followed by social development (Rs 1,210 crore), healthcare (Rs 1,065 crore), rural development (Rs 565 crore), environmental cause (Rs 170 crore) and agriculture (Rs 40 crore).
"This list demonstrates the responsibility taken by entrepreneurs," Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report said.
The average age of the philanthropists in the list is 62 years while the average age of the top 10 donors is 64 years.
Region-wise, the report said, south Indians showed the way for making contributions with a cumulative donation of Rs 10,000 crore while north Indians pitched in with contributions of Rs 4,865 crore.
The Companies Bill, 2013 mandates companies, with a net worth of more than Rs 500 crore or revenue of more than Rs 1,000 crore or net profit of more than Rs 5 crore, to earmark at least two percent of their average net profits of the preceding three years for CSR activities.
"This amendment to the Companies Bill should provide more transparent reporting of corporate donations," said Anas Rahman Junaid, Publisher-at-Large of Hurun Report India.
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