General Affairs
BJP Airs Video of 'Angry' Nitish, Says 'Lalu's DNA Left an Imprint'
-
NEW DELHI: The BJP today prefaced a press conference by airing a video that shows Bihar Chief Minister Nitish Kumar losing his temper at contractual workers protesting at a function he attended recently in his state.
The video shows Mr Kumar, who is making a bid for a third term as chief minister, attempting to calm the protesters, but eventually asking angrily if he should sign an order terminating their services.
"Nitish is displaying arrogance," said the BJP's Rajiv Pratap Rudy attributing the flare-up to Mr Kumar's new friendship with Lalu Yadav, who he has allied with to take on the BJP in Bihar, where elections will be held by November.
"The DNA of Lalu has left an imprint on Nitish," said Mr Rudy, using a term now entrenched in the lexicon of the Bihar elections.
After Prime Minister Narendra Modi made a comment about Nitish Kumar's "DNA" while questioning his political integrity at a rally, Mr Kumar has repeatedly accused the Prime Minister of "insulting the DNA of all Biharis." His friends and allies like Delhi Chief Minister Arvind Kejriwal and Congress president Sonia Gandhi have joining the "DNA" chorus against PM Modi.
Nitish Kumar is the chief ministerial candidate of an alliance in Bihar that includes Lalu Yadav and the Congress; Mulayam Singh Yadav of the Samajwadi Party announced his exit from the anti-BJP grouping today, unhappy at the number of seats his party was given to contest.
The BJP and its three allies in state are not projecting a presumptive Chief Minister and have decided that the PM - who has held four public meetings in Bihar, drawing huge audiences - will ask for votes directly for him.
This has pitched Mr Kumar and Mr Modi into a full-blown confrontation. The two leaders for years, and through a lengthy alliance of their parties, made no secret of their disregard for each other.
When the BJP decided in 2013 to pick Mr Modi as its candidate for PM, Mr Kumar ended their parties' 18-year-long alliance.
NEW DELHI: The BJP today prefaced a press conference by airing a video that shows Bihar Chief Minister Nitish Kumar losing his temper at contractual workers protesting at a function he attended recently in his state.The video shows Mr Kumar, who is making a bid for a third term as chief minister, attempting to calm the protesters, but eventually asking angrily if he should sign an order terminating their services.
"Nitish is displaying arrogance," said the BJP's Rajiv Pratap Rudy attributing the flare-up to Mr Kumar's new friendship with Lalu Yadav, who he has allied with to take on the BJP in Bihar, where elections will be held by November.
"The DNA of Lalu has left an imprint on Nitish," said Mr Rudy, using a term now entrenched in the lexicon of the Bihar elections.
Nitish Kumar is the chief ministerial candidate of an alliance in Bihar that includes Lalu Yadav and the Congress; Mulayam Singh Yadav of the Samajwadi Party announced his exit from the anti-BJP grouping today, unhappy at the number of seats his party was given to contest.
The BJP and its three allies in state are not projecting a presumptive Chief Minister and have decided that the PM - who has held four public meetings in Bihar, drawing huge audiences - will ask for votes directly for him.
This has pitched Mr Kumar and Mr Modi into a full-blown confrontation. The two leaders for years, and through a lengthy alliance of their parties, made no secret of their disregard for each other.
When the BJP decided in 2013 to pick Mr Modi as its candidate for PM, Mr Kumar ended their parties' 18-year-long alliance.
2000 Villages Submerged in Assam Floods, 13 Lakh Affected
-
GUWAHATI: The flood situation in Assam has worsened with flood waters having submerged over 2,000 villages in 19 districts, affecting over 13 lakh people, officials said today.
The meteorological department has predicted more rain in the days to come, indicating further deterioration of the situation.
The Assam State Disaster Management Authority (ASDMA) said three people -- two in Tinsukia and one in Dibrugarh -- died due to floods since Wednesday, taking the number of dead to seven.
Several units of the National Disaster Response Force and the state disaster response force have been deployed in all the districts to assist the civil administration in rescuing marooned people.
Close to 100 motor-boats and hundreds of other boats have been pressed into service to rescue flood-hit people.
"As of now, 13,78,540 people have been hit due to floods in 2,199 villages," an ASDMA official said.
Dhemaji, Dibrugarh, Tinsukia, Jorhat, Lakhimpur, Morigaon, Nalbari, Barpeta, Sonitpur and Darrang districts remained the worst affected.
A total of 2,66,908 people are taking shelter in 385 relief camps in 14 districts, with Dibrugarh district having the highest number of 149 camps housing 91,750 people.
Officials of the state water resources department said the Brahmaputra and its tributaries were in spate at many locations across the state.
The floods have also affected 176,559 hectares of crop land.
GUWAHATI: The flood situation in Assam has worsened with flood waters having submerged over 2,000 villages in 19 districts, affecting over 13 lakh people, officials said today.The meteorological department has predicted more rain in the days to come, indicating further deterioration of the situation.
The Assam State Disaster Management Authority (ASDMA) said three people -- two in Tinsukia and one in Dibrugarh -- died due to floods since Wednesday, taking the number of dead to seven.
Several units of the National Disaster Response Force and the state disaster response force have been deployed in all the districts to assist the civil administration in rescuing marooned people.
Close to 100 motor-boats and hundreds of other boats have been pressed into service to rescue flood-hit people.
"As of now, 13,78,540 people have been hit due to floods in 2,199 villages," an ASDMA official said.
Dhemaji, Dibrugarh, Tinsukia, Jorhat, Lakhimpur, Morigaon, Nalbari, Barpeta, Sonitpur and Darrang districts remained the worst affected.
A total of 2,66,908 people are taking shelter in 385 relief camps in 14 districts, with Dibrugarh district having the highest number of 149 camps housing 91,750 people.
Officials of the state water resources department said the Brahmaputra and its tributaries were in spate at many locations across the state.
The floods have also affected 176,559 hectares of crop land.
Government Making Every Effort to Help Drought-Hit Farmers: Devendra Fadnavis
-
MUMBAI: Maharashtra Chief Minister Devendra Fadnavis today said his government was making every effort to help the distressed farmers, and his tour of drought-hit Marathwada was aimed at understanding their plight and taking appropriate action.
"This tour is to understand the ground situation and take appropriate decisions at the earliest. Let us fight together. We have to convert this crisis into opportunities and transform the present into better future. We are working hard for better future by (carrying out) various development projects. I appeal to the administration to give maximum benefits of schemes to farmers," Mr Fadnavis said while addressing farmers in Parbhani on the last day of his three-day tour.
He visited villages of Beed, Parbhani and Nanded districts today, interacted with farmers, visited fodder camps and inspected various projects including his flagship farm ponds scheme.
In Parbhani, Mr Fadnavis said ponds would be dug at almost every farm to ensure water harvesting.
"State will study in detail the scanty rains and water scarcity... government is taking steps to make farmers eligible for new loans for rabbi season," he said.
In Beed, the Chief Minister said the district collector had planned 100 works which will give employment to one lakh people.
MUMBAI: Maharashtra Chief Minister Devendra Fadnavis today said his government was making every effort to help the distressed farmers, and his tour of drought-hit Marathwada was aimed at understanding their plight and taking appropriate action."This tour is to understand the ground situation and take appropriate decisions at the earliest. Let us fight together. We have to convert this crisis into opportunities and transform the present into better future. We are working hard for better future by (carrying out) various development projects. I appeal to the administration to give maximum benefits of schemes to farmers," Mr Fadnavis said while addressing farmers in Parbhani on the last day of his three-day tour.
He visited villages of Beed, Parbhani and Nanded districts today, interacted with farmers, visited fodder camps and inspected various projects including his flagship farm ponds scheme.
"State will study in detail the scanty rains and water scarcity... government is taking steps to make farmers eligible for new loans for rabbi season," he said.
In Beed, the Chief Minister said the district collector had planned 100 works which will give employment to one lakh people.
Kashmir, China, Bangladesh - RSS Issues Guidelines for Way Ahead
-
NEW DELHI: Focused on course correction for the government to get rid of any negative perception, the three-day conclave between the BJP and the Rashtriya Swayamsevak Sangh witnessed the latter laying down broad guidelines on three issues - economy, education and national security. It was the third subject which occupied most of this afternoon.
The ruling party's ideological mentor offered feedback on the situation in Jammu and Kashmir -ceasefire violations by Pakistan and terror attacks from across the border - the relations with Bangladesh and the border situation with China.
The meeting has already covered the areas of economy and education, during which the key ministers of the Narendra Modi government have made presentations.
The RSS has advised the BJP to tackle terror more aggressively, sources said.
The party was also warned that the people were not too happy with the BJP's entering a partnership with the People's Democratic Party, or PDP, sources said.
The two parties - who were ideologically far apart -- had cobbled together an alliance earlier this year after last year's assembly elections failed to give a clear majority to either. The PDP is in the driving seat of the alliance, winning three more seats than the BJP, 28 to BJP's 25.
The RSS has suggested that the BJP should hold camps along India-Pakistan border to sensitise locals and know their problems. It was suggested that it be done with any help from the party leaders so it does not appear as a political issue.
But the state government, it was also said, should first focus on relief and rehabilitation for the locals, who suffered the firing and shelling from across the border for weeks.
The BJP's ideological mentor has, however, backed the enclave exchange accord with Bangladesh, expressing strong views on illegal immigration from the neighbouring country, sources said.
Regarding the border with China, the RSS has stressed that India should not weaken its stand on the Arunachal border issue. It was suggested that the government should try to get the locals on its side and for this, development in the area was the way ahead.
NEW DELHI: Focused on course correction for the government to get rid of any negative perception, the three-day conclave between the BJP and the Rashtriya Swayamsevak Sangh witnessed the latter laying down broad guidelines on three issues - economy, education and national security. It was the third subject which occupied most of this afternoon.The ruling party's ideological mentor offered feedback on the situation in Jammu and Kashmir -ceasefire violations by Pakistan and terror attacks from across the border - the relations with Bangladesh and the border situation with China.
The RSS has advised the BJP to tackle terror more aggressively, sources said.
The party was also warned that the people were not too happy with the BJP's entering a partnership with the People's Democratic Party, or PDP, sources said.
The two parties - who were ideologically far apart -- had cobbled together an alliance earlier this year after last year's assembly elections failed to give a clear majority to either. The PDP is in the driving seat of the alliance, winning three more seats than the BJP, 28 to BJP's 25.
The RSS has suggested that the BJP should hold camps along India-Pakistan border to sensitise locals and know their problems. It was suggested that it be done with any help from the party leaders so it does not appear as a political issue.
But the state government, it was also said, should first focus on relief and rehabilitation for the locals, who suffered the firing and shelling from across the border for weeks.
The BJP's ideological mentor has, however, backed the enclave exchange accord with Bangladesh, expressing strong views on illegal immigration from the neighbouring country, sources said.
Regarding the border with China, the RSS has stressed that India should not weaken its stand on the Arunachal border issue. It was suggested that the government should try to get the locals on its side and for this, development in the area was the way ahead.
Our Monsoon Forecast Correct, Says Met Department
-
HEENA GAMBHIR: The monsoon may start to retreat from first week of September or may be early next week, Indian Meteorological Department's chief LS Rathore told, even as the countrywide rain deficit grew to 12 per cent for the season.
Mr Rathore said the monsoon is not likely to stage a dramatic recovery as the forecast for September does not look very encouraging.
Though rain deficiency is posing problem for farmers, but the earlier forecast of the Indian met department stands correct.
Before the onset of monsoon the met department had predicted the deficient monsoon. In April, IMD had said, quantitatively this year the monsoon would be 93 per cent of the Long Period Average (LPA), 7 per cent below normal. Then later in June it was revised downwards to 88 per cent of LPA.
The phase one surplus, plus 16 per cent rain in June, became an opportunity for the private player Skymet to take the limelight.
However, the IMD stood by its forecast that Monsoon rain in 2015 will be 88 per cent of the LPA, means total rain between June to September would be 12 per cent deficient.
Markets ignored IMD's forecast, government, economists and experts remained optimistic.
Now as we enter into the last leg of the monsoon season, 80 per cent of the monsoon rain is over, from June 1 till today the rain deficiency stands at 12 per cent -- what the IMD had predicted.
Mr Rathore tells that total rain by the end of September could be 1-2 per cent below the original forecast of 88 per cent of LPA. An early onset probably saved this year's monsoon.
HEENA GAMBHIR: The monsoon may start to retreat from first week of September or may be early next week, Indian Meteorological Department's chief LS Rathore told, even as the countrywide rain deficit grew to 12 per cent for the season.Mr Rathore said the monsoon is not likely to stage a dramatic recovery as the forecast for September does not look very encouraging.
Though rain deficiency is posing problem for farmers, but the earlier forecast of the Indian met department stands correct.
Before the onset of monsoon the met department had predicted the deficient monsoon. In April, IMD had said, quantitatively this year the monsoon would be 93 per cent of the Long Period Average (LPA), 7 per cent below normal. Then later in June it was revised downwards to 88 per cent of LPA.
The phase one surplus, plus 16 per cent rain in June, became an opportunity for the private player Skymet to take the limelight.
However, the IMD stood by its forecast that Monsoon rain in 2015 will be 88 per cent of the LPA, means total rain between June to September would be 12 per cent deficient.
Markets ignored IMD's forecast, government, economists and experts remained optimistic.
Now as we enter into the last leg of the monsoon season, 80 per cent of the monsoon rain is over, from June 1 till today the rain deficiency stands at 12 per cent -- what the IMD had predicted.
Mr Rathore tells that total rain by the end of September could be 1-2 per cent below the original forecast of 88 per cent of LPA. An early onset probably saved this year's monsoon.
Business Affairs
Oil prices fall on surprise US inventory build, equity rally aids
-
Oil price fell on Thursday on a surprise build in US inventory levels and a firm dollar, but a recovery in Asian shares after Wall Street posted a near 2 per cent gain checked losses.
"Asian investors were focused on the increase in US crude inventories last week, but sentiment had been supported by the rally on Wall Street", said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.
"I think any positive news will help. Maybe we'll see not as much volatility," Barratt said.
Brent dropped 31 cents to $50.19 a barrel as of 12:20 pm, having gained 94 cents in the previous session. Brent hit a low of $49.95 earlier in the day.
US crude fell 23 cents to $46.02 a barrel, off the day's low of $45.65, after settling up 84 cents on Wednesday.
"Although oil may have escaped this round of bearishness, it may not escape the next few weeks with declining refinery capacity," Singapore's Phillip Futures said in a note.
"On the flip side, we are seeing drops in US oil production, which is healthy for prices in the longer run. Thus, would again suggest that the oversupply issue is easing," the note added.
US crude has see-sawed, climbing 27.5 per cent over three trading sessions to Monday's close - its biggest such gain since August 1990 - after plunging to a 6-1/2-year low of $37.75 a barrel early last week.
Oil would be well supported at around $42-$44 a barrel, Barrat said, but a fall below that level could put pressure on some OPEC economies.
"(OPEC production cuts) would only come into play if there is a sustained fall in oil prices," he said.
Oil producers are currently banking on increased demand from the coming northern winter with refiners shifting production from gasoline to heating oil.
US crude stocks saw an unexpected gain of 4.7 million barrels to 455.4 million in the week to August 28, the biggest one-week rise since April, data from the US Energy Information Administration showed. Analysts had expected inventories to remain unchanged.
A firmer US dollar also hurt oil prices by making the commodity expensive for holders of other currencies.
Investors are awaiting the outcome of a European Central Bank policy meeting later on Thursday, while US non-farm payroll data is due on Friday. Chinese markets are closed for a holiday on Thursday and Friday.
Oil price fell on Thursday on a surprise build in US inventory levels and a firm dollar, but a recovery in Asian shares after Wall Street posted a near 2 per cent gain checked losses.
"Asian investors were focused on the increase in US crude inventories last week, but sentiment had been supported by the rally on Wall Street", said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.
"I think any positive news will help. Maybe we'll see not as much volatility," Barratt said.
Brent dropped 31 cents to $50.19 a barrel as of 12:20 pm, having gained 94 cents in the previous session. Brent hit a low of $49.95 earlier in the day.
US crude fell 23 cents to $46.02 a barrel, off the day's low of $45.65, after settling up 84 cents on Wednesday.
"Although oil may have escaped this round of bearishness, it may not escape the next few weeks with declining refinery capacity," Singapore's Phillip Futures said in a note.
"On the flip side, we are seeing drops in US oil production, which is healthy for prices in the longer run. Thus, would again suggest that the oversupply issue is easing," the note added.
US crude has see-sawed, climbing 27.5 per cent over three trading sessions to Monday's close - its biggest such gain since August 1990 - after plunging to a 6-1/2-year low of $37.75 a barrel early last week.
Oil would be well supported at around $42-$44 a barrel, Barrat said, but a fall below that level could put pressure on some OPEC economies.
"(OPEC production cuts) would only come into play if there is a sustained fall in oil prices," he said.
Oil producers are currently banking on increased demand from the coming northern winter with refiners shifting production from gasoline to heating oil.
US crude stocks saw an unexpected gain of 4.7 million barrels to 455.4 million in the week to August 28, the biggest one-week rise since April, data from the US Energy Information Administration showed. Analysts had expected inventories to remain unchanged.
A firmer US dollar also hurt oil prices by making the commodity expensive for holders of other currencies.
Investors are awaiting the outcome of a European Central Bank policy meeting later on Thursday, while US non-farm payroll data is due on Friday. Chinese markets are closed for a holiday on Thursday and Friday.
Markets snap three-day losing streak, close over 1% higher
-
The stock markets rose more than 1 per cent on Thursday, snapping three straight sessions of losses, as investors bought beaten-down stocks while upbeat US markets overnight also improved sentiment.
The benchmark BSE Sensex gained 1.22 per cent, while the broader Nifty rose 1.37 per cent.Moreover, notification of the latest reform in the retrospective tax regime buoyed investor sentiments leading to a barometer index closing 311.22 points up on Thursday.
A similar trajectory was witnessed at the wider 50-scrip Nifty of the National Stock Exchange (NSE). The CNX Nifty closed with gains of 106 points or 1.37 per cent at 7,823 points.
The S&P BSE Sensex, which opened at 25,614.69 points, closed at 25,764.78 points - higher by 311.22 points or 1.22 per cent from Wednesday's close at 25,453.56 points.
The Sensex touched a high of 25,835.41 points and a low of 25,555.77 points in the intra-day trade.
Housing Development Finance (HDFC) gained 4.10 per cent, Axis Bank rose 4.19 per cent while HDFC Bank was up 1.49 per cent.
Tata Motors rose 2.46 per cent while Maruti Suzuki gained 2.86 per cent.
Ambuja Cements was up 3.94 per cent after Nomura upgraded the stock to "buy" from "neutral".
Meanwhile IT stocks TCS rose 0.46 per cent while Infosys gained 0.03 per cent.
The stock markets rose more than 1 per cent on Thursday, snapping three straight sessions of losses, as investors bought beaten-down stocks while upbeat US markets overnight also improved sentiment.
The benchmark BSE Sensex gained 1.22 per cent, while the broader Nifty rose 1.37 per cent.Moreover, notification of the latest reform in the retrospective tax regime buoyed investor sentiments leading to a barometer index closing 311.22 points up on Thursday.
A similar trajectory was witnessed at the wider 50-scrip Nifty of the National Stock Exchange (NSE). The CNX Nifty closed with gains of 106 points or 1.37 per cent at 7,823 points.
The S&P BSE Sensex, which opened at 25,614.69 points, closed at 25,764.78 points - higher by 311.22 points or 1.22 per cent from Wednesday's close at 25,453.56 points.
The Sensex touched a high of 25,835.41 points and a low of 25,555.77 points in the intra-day trade.
Housing Development Finance (HDFC) gained 4.10 per cent, Axis Bank rose 4.19 per cent while HDFC Bank was up 1.49 per cent.
Tata Motors rose 2.46 per cent while Maruti Suzuki gained 2.86 per cent.
Ambuja Cements was up 3.94 per cent after Nomura upgraded the stock to "buy" from "neutral".
Meanwhile IT stocks TCS rose 0.46 per cent while Infosys gained 0.03 per cent.
Services sector improves in August on new business orders
-
Services sector improved further in August as new orders received by private firms increased at the fastest rate in five months.
The Nikkei India Services Business Activity Index, which tracks changes in activity at service companies on a monthly basis, rose from 50.8 in July to 51.8 in August, pointing to a faster, although modest, expansion in output.
A reading below 50 means contraction in the sector.Economic growth across India was boosted by improvements in the service sector.
"While increases in activity and new business across the sector accelerated in August, moderations in growth rates were noted at goods producers", Pollyanna De Lima, economist at Markit, which compiles the survey, said.
According to panelists, higher demand coupled with capacity improvements and increased marketing all had contributed to the latest expansion in new business. Improvement was also seen in the seasonally adjusted Nikkei India Composite PMI Output Index, which rose to a five-month high of 52.6 from 52.0 in July.
"The standout feature from the latest PMI data set was the situation of the labour market, as both manufacturers and service providers left payroll numbers unchanged in August, with significant job creation not seen since early 2014", the survey said.
"While the path ahead for the economy looks unclear, firms' reluctance to hire persists", Lima added. Meanwhile, the services companies' business expectations index dipped to a survey low, reflecting firms' concerns around future economic conditions and exchange rate movements.
On the monetary-policy front, Lima said that with growth remaining relatively weak and survey evidence pointing to a lack of inflationary pressures across the country, further rate cuts are on the cards.
The GDP data released on August 31 also showed the growth rate slipping to 7 per cent in the April-June quarter, from 7.5 per cent in the preceding quarter.
Besides, the infrastructure sector output growth also slowed down to a three-month low of 1.1 per cent in July, further making case for a rate cut by RBI.
RBI Governor Raghuram Rajan, in his third bi-monthly policy of the fiscal, left benchmark lending (repo) rate unchanged at 7.25 per cent as also the cash reserve ratio (CRR) at 4 per cent.
Services sector improved further in August as new orders received by private firms increased at the fastest rate in five months.
The Nikkei India Services Business Activity Index, which tracks changes in activity at service companies on a monthly basis, rose from 50.8 in July to 51.8 in August, pointing to a faster, although modest, expansion in output.
A reading below 50 means contraction in the sector.Economic growth across India was boosted by improvements in the service sector.
"While increases in activity and new business across the sector accelerated in August, moderations in growth rates were noted at goods producers", Pollyanna De Lima, economist at Markit, which compiles the survey, said.
According to panelists, higher demand coupled with capacity improvements and increased marketing all had contributed to the latest expansion in new business. Improvement was also seen in the seasonally adjusted Nikkei India Composite PMI Output Index, which rose to a five-month high of 52.6 from 52.0 in July.
"The standout feature from the latest PMI data set was the situation of the labour market, as both manufacturers and service providers left payroll numbers unchanged in August, with significant job creation not seen since early 2014", the survey said.
"While the path ahead for the economy looks unclear, firms' reluctance to hire persists", Lima added. Meanwhile, the services companies' business expectations index dipped to a survey low, reflecting firms' concerns around future economic conditions and exchange rate movements.
On the monetary-policy front, Lima said that with growth remaining relatively weak and survey evidence pointing to a lack of inflationary pressures across the country, further rate cuts are on the cards.
The GDP data released on August 31 also showed the growth rate slipping to 7 per cent in the April-June quarter, from 7.5 per cent in the preceding quarter.
Besides, the infrastructure sector output growth also slowed down to a three-month low of 1.1 per cent in July, further making case for a rate cut by RBI.
RBI Governor Raghuram Rajan, in his third bi-monthly policy of the fiscal, left benchmark lending (repo) rate unchanged at 7.25 per cent as also the cash reserve ratio (CRR) at 4 per cent.
Over Rs 1 lakh crore proposals in electronics manufacturing: Govt
-
The government has received over Rs 1 lakh crore investment proposals for manufacturing in the electronics sector, said communications and IT minister Ravi Shankar Prasad on Thursday.
"We are promoting electronic cluster in a big way since last 14 months. We have received investment proposals of Rs.1.07 lakh crore till now," Prasad said at the event to celebrate the diamond jubilee of EEPC India.The government also plans to give lot of incentives to the investors under Modified Special Incentive Package Scheme.
The minister also noted that electronics manufacturing space has huge potential for employment generation.
He said seven institutes of IT and electronics will be set up so that there is good human resource to supplement need of workforce in electronic manufacturing.
The government has received over Rs 1 lakh crore investment proposals for manufacturing in the electronics sector, said communications and IT minister Ravi Shankar Prasad on Thursday.
"We are promoting electronic cluster in a big way since last 14 months. We have received investment proposals of Rs.1.07 lakh crore till now," Prasad said at the event to celebrate the diamond jubilee of EEPC India.The government also plans to give lot of incentives to the investors under Modified Special Incentive Package Scheme.
The minister also noted that electronics manufacturing space has huge potential for employment generation.
He said seven institutes of IT and electronics will be set up so that there is good human resource to supplement need of workforce in electronic manufacturing.
New base rate norm to hit banks' profit by Rs 20,000 cr: Crisil
-
RBI's new draft guidelines on calculating base rate on marginal cost of funds will significantly impact profitability of banks and could hit them with a one-time Rs 20,000 crore in profit, ratings firm Crisil said on Thursday.
Equating new base rate to Rs 20,000 crore profit hit for banks, Crisil Ratings in a note said under the new calculus, the base rate could be lower by around 50 basis points (0.5 per cent).The Reserve Bank of India's (RBI) draft guidelines on computation of base rate, if implemented in its current form, will significantly impact profitability of banks, it said. The RBI guidelines, released earlier this week, require banks to follow the 'marginal cost of funds' method for base rate computation from April 1, 2016.
Crisil's estimates show the change in methodology can lower banking system base rates by approximately 50 basis points (bps) from current levels, it said. Crucially, it will reduce banking sector profitability because return on assets (RoA) will fall by 20 bps in fiscal 2017, it added.
"Our base-case is that profitability of banks will have one-time impact of around Rs 20,000 crore in fiscal 2017, which would be equal to 15 per cent of the total estimated profit of the banking system for that year. The actual impact will depend on whether the banks will be given a leeway to make this shift over a longer time-frame in the final guidelines," said Pawan Agrawal, Chief Analytical Officer, Crisil Ratings.
Crisil said for every subsequent 25 bps cut in deposit rate, profits will be impacted by Rs 5,000 crore in a year from the rate cut.
Yields of banks that lend mostly on a floating rate basis will be significantly impacted in an environment of falling interest rates, it added.
Banks with low levels of current and saving accounts, and/or relatively longer tenure term deposits, will also be majorly affected, said the agency.
Nevertheless, in an increasing interest rate scenario, banks will tend to benefit as they will be able to immediately pass on any hike in deposit rate to the base rate.
RBI has proposed the changes to ensure faster monetary transmission. The new calculus for base rate will increase the sensitivity of bank lending rates to changes in the RBI's policy rate.
RBI's new draft guidelines on calculating base rate on marginal cost of funds will significantly impact profitability of banks and could hit them with a one-time Rs 20,000 crore in profit, ratings firm Crisil said on Thursday.
Equating new base rate to Rs 20,000 crore profit hit for banks, Crisil Ratings in a note said under the new calculus, the base rate could be lower by around 50 basis points (0.5 per cent).The Reserve Bank of India's (RBI) draft guidelines on computation of base rate, if implemented in its current form, will significantly impact profitability of banks, it said. The RBI guidelines, released earlier this week, require banks to follow the 'marginal cost of funds' method for base rate computation from April 1, 2016.
Crisil's estimates show the change in methodology can lower banking system base rates by approximately 50 basis points (bps) from current levels, it said. Crucially, it will reduce banking sector profitability because return on assets (RoA) will fall by 20 bps in fiscal 2017, it added.
"Our base-case is that profitability of banks will have one-time impact of around Rs 20,000 crore in fiscal 2017, which would be equal to 15 per cent of the total estimated profit of the banking system for that year. The actual impact will depend on whether the banks will be given a leeway to make this shift over a longer time-frame in the final guidelines," said Pawan Agrawal, Chief Analytical Officer, Crisil Ratings.
Crisil said for every subsequent 25 bps cut in deposit rate, profits will be impacted by Rs 5,000 crore in a year from the rate cut.
Yields of banks that lend mostly on a floating rate basis will be significantly impacted in an environment of falling interest rates, it added.
Banks with low levels of current and saving accounts, and/or relatively longer tenure term deposits, will also be majorly affected, said the agency.
Nevertheless, in an increasing interest rate scenario, banks will tend to benefit as they will be able to immediately pass on any hike in deposit rate to the base rate.
RBI has proposed the changes to ensure faster monetary transmission. The new calculus for base rate will increase the sensitivity of bank lending rates to changes in the RBI's policy rate.
General Awareness
RBI proposes formula to calculate Base Rate
-
-
With an attempt to bring about uniformity among banks for calculation of the base rate and for effective transmission of policy rates to the customers, RBI proposed a new formula for calculating the Bank Rate.
The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except in cases allowed by RBI.
The Base Rates differ across banks and there is no uniformity in the calculation.
Methods of calculating the Base Rate
- At present, banks are using various methodologies: marginal cost of funds method, average cost of funds method, blended cost of funds (liabilities) method etc.
- RBI has suggested the banks to consider marginal cost of funds as a parameter to calculate the individual lending rates as the Base Rates based on marginal cost of funds are more sensitive to changes in the policy rates
- The components of Base Rate will include cost of funds, negative carry on CRR/SLR, un-allocable overhead costs and average return on net-worth
RBI will implement this proposal from April 1st 2016 and has asked the banks to submit road maps two months prior to the implementation of the proposals, indicating the time frame within which they will be adopting the framework.
Why are uniform base rates desirable?
It is important in order to improve the efficiency of monetary policy transmission.
What is monetary policy transmission?
RBI takes monetary policy decisions to stabilise the economy and keep the price levels within rational limits. But these decisions will be effective only if the entities such as banks, markets, financial institutions etc modify their working accordingly. This is a very simplistic explanation of monetary policy transmission, though the actual process is very complex, so much so that it is called a ‘black box’ among economists.
- With an attempt to bring about uniformity among banks for calculation of the base rate and for effective transmission of policy rates to the customers, RBI proposed a new formula for calculating the Bank Rate.The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except in cases allowed by RBI.The Base Rates differ across banks and there is no uniformity in the calculation.Methods of calculating the Base Rate
- At present, banks are using various methodologies: marginal cost of funds method, average cost of funds method, blended cost of funds (liabilities) method etc.
- RBI has suggested the banks to consider marginal cost of funds as a parameter to calculate the individual lending rates as the Base Rates based on marginal cost of funds are more sensitive to changes in the policy rates
- The components of Base Rate will include cost of funds, negative carry on CRR/SLR, un-allocable overhead costs and average return on net-worth
RBI will implement this proposal from April 1st 2016 and has asked the banks to submit road maps two months prior to the implementation of the proposals, indicating the time frame within which they will be adopting the framework.Why are uniform base rates desirable?It is important in order to improve the efficiency of monetary policy transmission.What is monetary policy transmission?RBI takes monetary policy decisions to stabilise the economy and keep the price levels within rational limits. But these decisions will be effective only if the entities such as banks, markets, financial institutions etc modify their working accordingly. This is a very simplistic explanation of monetary policy transmission, though the actual process is very complex, so much so that it is called a ‘black box’ among economists.
No comments:
Post a Comment