Govt announces slew of austerity measures to curb fiscal deficit

Struggling to curb the fiscal deficit, the government on unveiled a slew of austerity measures on Wednesday. The finance ministry issued a circular to all government departments banning meetings at five-star hotels and restricting air travel by senior officials to economy class.

The ministry also directed other ministries and departments to not buy new vehicles, create fresh jobs or fill posts lying vacant for over a year.

Restrictions have also been imposed on foreign travel and size of official delegations going abroad has to be kept to an absolute minimum.
"In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources," the finance ministry said. The austerity steps form part of the government's move to restrict non-plan expenditure by 10 per cent. The government had introduced similar austerity measures in 2009, when the economy had slowed down due to the economic meltdown. The finance ministry had asked various ministries and departments to cut non- plan expenditure by 10 per cent. However, past experience shows that officials often tend to ignore these directions.

Senior officials admitted that these austerity measures will not cause any major reduction in the fiscal deficit, which has soared due to the huge subsidy bill. With the food subsidy expected to be in the region of Rs 140,000 crore and the petroleum subsidy bill likely to exceed Rs 160,000 crore, the measures represent a mere drop in the ocean. "The idea is to send a message down the line that everyone has to contribute his bit to cut costs," a senior official remarked.

According to the new circular, only seminars and conferences that are absolutely essential should be organised. Holding of exhibitions, seminars or conferences abroad is strongly discouraged except in case of exhibitions for trade promotions. All officers are to travel in the economy class only for domestic travel except officers in the apex scale, who may travel in executive class. The restriction will not apply for international travel.

The ministry said that the measures would also apply to autonomous bodies such as the All India Institute of Medical Sciences and All India Radio adding that no fresh commitments would be made over and above what was provided in the Budget.

No reappropriation of funds to augment the non- plan heads of expenditure on which cuts have been imposed shall be allowed during the current fiscal.

Etihad fires first salvo after Jet deal, increases flights to India

Abu Dhabi headquartered airline Etihad on Thursday announced a massive increase in the number of flights between India and its Abu Dhabi hub giving the connectivity between India and the UAE a major boost.

Emirates Airline and Air India are the big carriers on India-UAE routes currently.

Etihad is awaiting regulatory approval for picking up a 24 per cent stake in enlarged share capital of Naresh Goyal-promoted airline Jet Airways for $379 million that was announced in April this year.

The deal with Jet was announced soon after the two governments in India and Abu Dhabi signed a controversial pact to nearly treble the number of seats to 36,670 a week to be operated by airlines from both countries.

"Etihad will greatly increase options for travel to and from India, introducing more flights and wide-bodied jets by the end of this year, and further increases and new routes next year, subject to regulatory approval," the airline said in a statement early Thursday.

The airline said it will treble the number of seats it flies on its prime route between Abu Dhabi and major cities of Delhi and Mumbai beginning November.

The airline said this massive increase is being done keeping in mind "the growing importance of the Indian market, and delivering significant economic benefits to the economies of India and Abu Dhabi."

Etihad Airways currently flies to nine Indian destinations including Delhi, Chennai, Mumbai, Kozhikode, Thiruvananthapuram, Hyderabad, Bangalore, Ahmedabad and Kochi, with a total of 59 flights per week.

Etihad said the Indian fliers from Abu Dhabi will be able to connect other destinations on its global network via Abu Dhabi.

"India is one of the world's fastest-growing destinations, and a key market in the growth strategy of Etihad Airways," said James Hogan, President and Chief Executive Officer.

Beginning December, Etihad seeks to deploy bigger aircraft type A340-600 on one of its daily flights from Mumbai to Abu Dhabi in a three-class configuration. Another wide body aircraft type, the A330-200, will be used on the Delhi-Abu Dhabi route with business and economy class.

It will also upgrade its aircraft on the Chennai route with more seats on offer on the A321 jet replacing the smaller A320 allowing 176 seats instead of 136 seats.

Sensex surges over 500 points, Rupee at over 1-month high on US Fed move

The BSE benchmark index Sensex soared over 500 points to touch the 20,000 level in morning trade on Thursday following sustained buying by funds and retail investors, triggered by strengthening rupee and a firming trend overseas after the US Federal Reserve decided to keep its stimulus programme intact.

At 10.01 am, Sensex was up 545.58 points at 20507.74. Similarly, Nifty was up 176.50 points at 6075.95 during the same time.

The 30-share index, which had gained nearly 230 points in the past three sessions, rose further by 574.13 points, or 2.88 per cent, to 20,536.29 points with banking, realty, capital goods and auto sector stocks leading the rally.

The broad-based NSE Nifty also moved up 183.65 points, or 3.11 per cent, to 6,083.10.

Brokers said market sentiment turned extremely bullish on a flurry of buying by funds driven by strengthening rupee and a firming global trend after the US Federal Reserve surprised markets by sticking to its massive bond-buying programme.

The BSE banking index gained the most by surging 6.89 per cent to 12,711.50 as stocks like SBI was up 5.32 per cent, followed by ICICI Bank (8.18 per cent), Axis Bank (7.13 per cent), Yes Bank (16.27 per cent) and HDFC Bank (5.12 per cent).

In other Asian markets, Hong Kong's Hang Seng rose by 1.67 per cent, while Japan's Nikkei by 1.32 per cent in early trade on Thursday.

The US Dow Jones Industrial Average gained 0.95 per cent to hit record high in Wednesday's trade.

Business Today's Mahesh Nayak in his analysis of US Fed move and its impact on Indian financial markets wrote: For India, the news of zero taper is positive and this may also have a positive reaction with the financial market rising on Thursday.

However, overall it doesn't make much difference to India. In the last four years and nine months since QE started in the US on 25 November 2008 till date, the Fed has pumped slightly over $3 trillion to boost its battered economy. In the same period, close to $105 billion foreign institutional investors (FIIs) inflows came into the Indian equity and debt market. Even if one assumes that the entire FII inflows into India came from US, it this will not be over 3.5 per cent of the overall infusion of money by the Fed.

Meanwhile, zero tapering by the Fed will be soothing some nerves at Reserve Bank of India (RBI). On Friday, new RBI governor Raghuram Rajan will come out with his maiden policy and any tapering would have put pressure to further tighten interest rates to protect the rupee. However with the tapering being postponed, RBI can take its chance to cut rates for boosting growth. It will be interesting to see if Rajan bites the bullet.

Gold futures down on global cues; shed 0.87 pc

 
Gold prices fell 0.87 per cent to Rs 29,465 per 10 gm in futures trade on Wednesday, as participants reduced their positions largely in tandem with a weak overseas trend.

At the Multi Commodity Exchange, gold for delivery in October contract eased by Rs 258, or 0.87 per cent, to Rs 29,465 per 10 gm in business turnover of 278 lots.

Likewise, the metal for delivery in far-month December shed Rs 170, or 0.78 per cent, to Rs 29,340 per 10 gm in 22 lots.

Analysts said a weak trend in the overseas markets on speculation the US Federal Reserve will cut its monthly asset purchases at the end of a two-day meeting on Wednesday, mainly weighed on gold prices at futures trade.

Globally, gold lost 1.4 per cent to USD 1,292.95 an ounce, the lowest level since August 8.

Sensex extends gains, up on sustained buying by funds

Extending gains for the third straight session, the benchmark S&P BSE Sensex rose 68 points in early trade on Wednesday on sustained buying by funds in select bluechips, amid a firm trend in the Asian region.

At 10.38 am, Sensex was up 1.29 points at 19805.32. Similarly, Nifty was up 0.10 points at 5850.30 during the same time.

Brokers said sustained buying by funds amid a firm trend in other Asian bourses, as investors await the outcome of the US Federal Reserve meeting, mainly boosted the trading sentiment.

The 30-share index, which had gained 71.28 points in the previous two sessions, rose further by 67.56 points, or 0.34 per cent, to 19,871.59 points on the back of gains in IT, metal, auto and FMCG sector stocks.

Similarly, the National Stock Exchange index Nifty moved up by 18.85 points, or 0.32 per cent, to 5,869.05 points.

IT stocks such as TCS, Wipro and HCL remained in demand as the rupee weakened further against the dollar.

Among other Asian markets, Hong Kong's Hang Seng index rose by 0.14 per cent, while Japan's Nikkei gained 0.70 per cent.

The US Dow Jones Industrial Average ended 0.23 per cent higher in Tuesday's trade.

Rupee down 9 paise to to 63.46 against dollar in early trade

Renewed dollar demand from importers and appreciation of the US currency led the Indian rupee fall by 9 paise to 63.46 against the dollar in early trade on Wednesday at the Interbank Foreign Exchange market.

Besides dollar's gains against other currencies, as investors await the outcome of a US Federal Reserve meeting, increased demand from importers for the American currency mainly put pressure on the rupee.

However, a higher opening in the domestic stock market, capped the losses, forex dealers said.

The local currency fell by 54 paise to close at 63.37 against the US currency in the previous session even as stock markets posted gains.

Meanwhile, the BSE benchmark Sensex rose by 67.56 points, or 0.34 per cent, to 19,871.59 in early trade on Wednesday.

YSRCP leader offers to buy N Chandrababu Naidu's bungalow for Rs 2 cr

ONGOLE: Mocking Telugu Desam chief N Chandrababu Naidu's claims that his bungalow at Jubilee Hills in Hyderabad is worth only Rs 23 lakh, YSRCP senior leader Balineni Srinivasa Reddy on Tuesday said he was ready to purchase the property for Rs 2 crore.

Balineni dared Naidu to get ready to sell his bungalow as he would be getting nearly 800% profit on the original value. Speaking to reporters, Balineni pooh-poohed the Naidu's claims on his assets saying that the TDP leader was never fair despite people rejecting him twice.

He demanded that Naidu come out with an explanation as to why he was shying away from a probe into his wealth if he really owned only such meagre properties as he listed at the media briefing.

He said every contesting candidate would give an affidavit to the election commission with the list of assets and other valuables owned by them at the time of election itself and there was nothing new in Naidu's claims.

He said Naidu was taking time to only divert the attention of people from serious issues like the division of the state.He asked Naidu to explain as to why he cancelled his tour in Samaikyandhra the region and chose to visit Delhi to focus on Jagan's assets.

The YSRCP leader took strong objection to the words used by Naidu with regard to his allegations against Jagan. "While every leader in public life should behave decently, people would expect more decency from a person who ruled the state for over nine years. It is unfortunate that Naidu has stooped to such a level after realizing that people were not with him," he added.