General Affairs
India Confirms Order Of 36 Rafale Jets In Defence Deal With France
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NEW DELHI: The Indian Air Force's quest for a Medium Multi Role Combat Aircraft (MMRCA) is finally over with the Indian government confirming the order for 36 Rafale jets with the French government.
According to sources, documents for the government-to-government deal were delivered by New Delhi to Paris on the New Year's Eve, and the agreement is on the same lines as that for the Mirage 2000 aircraft signed in the early 1980s. IAF will buy all the Rafale aircraft from Dassault, the French aircraft builder and integrator, in a flyaway condition.
As the deal is between governments, the French authorities will ensure that Dassault complies with the terms of reference as it has successfully done in the case of Mirage 2000 - about 60 of which were delivered beginning 1985. The basic agreement was for 49 and 10 more were acquired later.
Significantly, this is the second deal for IAF - and Indian Army - within one week, the other being for Russian Kamov-31 helicopters signed on Christmas Eve with the Russian Government in Moscow during Prime Minister Narendra Modi's visit to the country. That deal involves substantial manufacture of these machines in India as the number is large - more than 200.
It may be noted that originally the Air Force was to acquire 126 aircraft after the Rafale was selected in the MMRCA competition some time back, 18 in flyaway condition and 108 as progressively assembled and made in India by HAL under part Transfer of Technology (ToT). Private industry was to be involved, but HAL's share was negotiated as more than 70 per cent.
There were a lot of hiccups, over costs of the aircraft - over $100 million-plus per aircraft - and offsets from the Indian side and responsibility over the quality of production in India from the French side. Finally, keeping in mind IAF's urgent requirements, the prime minister intervened to order 36 aircraft, or two squadrons, in a direct government-to-government deal during his visit to Paris in April.
This time, the deal involved no production in India but there were still some hiccups over the 50 per cent stipulated offsets although aircraft costs would by and large have been the same as for the French Air Force (Armée de l'Air). Offset obligations would always be additional.
PM Modi, intervening again, spoke directly with French President Francois Hollande on telephone in early September, and expressed difficulty in concluding the deal without the offsets. Hollande graciously agreed, and IAF approved the deal in mid-December. The Ministry of Defence (MoD) delivered a copy of the Inter-Government Agreement in this regard through the established diplomatic channels just as the New Year was set to begin.
Under the deal, Dassault and its main partners -- engine-maker Safran and electronic systems-maker Thales - will share some technology with DRDO (Defence Research and Development Organisation) and maybe some private sector companies and HAL under the offsets clause. Details are not known but as the aircraft have to be flown and maintained in India for at least three-to-four decades, a lot of information and technology upgrades will be needed to keep them operational.
The twin-engine Rafale combat jet is designed from the beginning as a multi-role fighter for air-to-air and air-to-ground attack, is nuclear-capable and, thanks to its onboard Electronic Warfare (EW) systems, can also perform reconnaissance and radar jamming roles.
The deal involves delivery of aircraft to begin within three years of signing the agreement -- 2018-end in this case -- but French industry sources told this writer some time back in Paris that Dassault had started planning for the Indian order from mid-2015 itself, and "maybe the deliveries could be faster, if required".
Last year had been lucky for Dassault as the Rafale has also been selected by Egypt and Qatar, while the UAE is considering it seriously.
There are suddenly too many orders, and the only way to meet them is to divert the French Air Force requirements for the next few years. That is being done.
NEW DELHI: The Indian Air Force's quest for a Medium Multi Role Combat Aircraft (MMRCA) is finally over with the Indian government confirming the order for 36 Rafale jets with the French government.According to sources, documents for the government-to-government deal were delivered by New Delhi to Paris on the New Year's Eve, and the agreement is on the same lines as that for the Mirage 2000 aircraft signed in the early 1980s. IAF will buy all the Rafale aircraft from Dassault, the French aircraft builder and integrator, in a flyaway condition.
As the deal is between governments, the French authorities will ensure that Dassault complies with the terms of reference as it has successfully done in the case of Mirage 2000 - about 60 of which were delivered beginning 1985. The basic agreement was for 49 and 10 more were acquired later.
Significantly, this is the second deal for IAF - and Indian Army - within one week, the other being for Russian Kamov-31 helicopters signed on Christmas Eve with the Russian Government in Moscow during Prime Minister Narendra Modi's visit to the country. That deal involves substantial manufacture of these machines in India as the number is large - more than 200.
It may be noted that originally the Air Force was to acquire 126 aircraft after the Rafale was selected in the MMRCA competition some time back, 18 in flyaway condition and 108 as progressively assembled and made in India by HAL under part Transfer of Technology (ToT). Private industry was to be involved, but HAL's share was negotiated as more than 70 per cent.
There were a lot of hiccups, over costs of the aircraft - over $100 million-plus per aircraft - and offsets from the Indian side and responsibility over the quality of production in India from the French side. Finally, keeping in mind IAF's urgent requirements, the prime minister intervened to order 36 aircraft, or two squadrons, in a direct government-to-government deal during his visit to Paris in April.
This time, the deal involved no production in India but there were still some hiccups over the 50 per cent stipulated offsets although aircraft costs would by and large have been the same as for the French Air Force (Armée de l'Air). Offset obligations would always be additional.
PM Modi, intervening again, spoke directly with French President Francois Hollande on telephone in early September, and expressed difficulty in concluding the deal without the offsets. Hollande graciously agreed, and IAF approved the deal in mid-December. The Ministry of Defence (MoD) delivered a copy of the Inter-Government Agreement in this regard through the established diplomatic channels just as the New Year was set to begin.
Under the deal, Dassault and its main partners -- engine-maker Safran and electronic systems-maker Thales - will share some technology with DRDO (Defence Research and Development Organisation) and maybe some private sector companies and HAL under the offsets clause. Details are not known but as the aircraft have to be flown and maintained in India for at least three-to-four decades, a lot of information and technology upgrades will be needed to keep them operational.
The twin-engine Rafale combat jet is designed from the beginning as a multi-role fighter for air-to-air and air-to-ground attack, is nuclear-capable and, thanks to its onboard Electronic Warfare (EW) systems, can also perform reconnaissance and radar jamming roles.
The deal involves delivery of aircraft to begin within three years of signing the agreement -- 2018-end in this case -- but French industry sources told this writer some time back in Paris that Dassault had started planning for the Indian order from mid-2015 itself, and "maybe the deliveries could be faster, if required".
Last year had been lucky for Dassault as the Rafale has also been selected by Egypt and Qatar, while the UAE is considering it seriously.
There are suddenly too many orders, and the only way to meet them is to divert the French Air Force requirements for the next few years. That is being done.
Karnataka Lokayukta Name To Be Sent To Governor: Chief Minister Siddaramaiah
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BENGALURU: Karnataka Chief Minister Siddaramaiah today said government will send its recommendation for the post of Karnataka Lokayukta to the Governor in the next couple of days.
"Consultation has been done, they have given their opinion....government will take a decision; in two three days, we will send it to the Governor," Siddaramaiah told reporters in Bengaluru.
Asked about pressure from certain sections that a Kannadiga should be made Lokayukta, he said "the list consists of Kannadiga names, also others. We will decide and send to the Governor."
Official sources have said the government was keen on Supreme Court Judge Justice Vikramjit Sen who was to retire on December 31.
The government also evinced interest in the names of NHRC acting Chairperson Justice Cyriac Joseph and former Chairperson of Karnataka State Human Rights Commission Justice SR Nayak to replace Justice Bhaskar Rao who resigned over an alleged extortion racket in the anti-graft ombudsman's office involving his son.
According to the Karnataka Lokayukta act, a person to be appointed as Lokayukta shall be a person who has held the office of a Judge of the Supreme Court or that of the Chief Justice of a High Court.
He or she shall be appointed on the advice tendered by the Chief Minister in consultation with the Chief Justice of the High Court of Karnataka, the Chairman of Karnataka Legislative Council, the Speaker of Karnataka Legislative Assembly and leaders of the opposition in both the houses.
BENGALURU: Karnataka Chief Minister Siddaramaiah today said government will send its recommendation for the post of Karnataka Lokayukta to the Governor in the next couple of days."Consultation has been done, they have given their opinion....government will take a decision; in two three days, we will send it to the Governor," Siddaramaiah told reporters in Bengaluru.
Asked about pressure from certain sections that a Kannadiga should be made Lokayukta, he said "the list consists of Kannadiga names, also others. We will decide and send to the Governor."
The government also evinced interest in the names of NHRC acting Chairperson Justice Cyriac Joseph and former Chairperson of Karnataka State Human Rights Commission Justice SR Nayak to replace Justice Bhaskar Rao who resigned over an alleged extortion racket in the anti-graft ombudsman's office involving his son.
According to the Karnataka Lokayukta act, a person to be appointed as Lokayukta shall be a person who has held the office of a Judge of the Supreme Court or that of the Chief Justice of a High Court.
He or she shall be appointed on the advice tendered by the Chief Minister in consultation with the Chief Justice of the High Court of Karnataka, the Chairman of Karnataka Legislative Council, the Speaker of Karnataka Legislative Assembly and leaders of the opposition in both the houses.
Former Chief Justice Of India, SH Kapadia Dies In Mumbai
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MUMBAI: Former Chief Justice of India Sarosh Homi Kapadia, who delivered some landmark judgements, died last night following a cardiac arrest, Bombay High Court sources said today.
He was 68 and is survived by wife, son, who is a Chartered Accountant, and daughter.
Justice Kapadia's funeral was held as per Parsi tradition this evening at 'Tower of Silence' at Kemps Corner, South Mumbai. The judges and staff of the High Court were among those who attended the last rites.
Born in 1947 in Mumbai (then Bombay), Justice Kapadia graduated from the city-based Government Law College, the oldest law institute in Asia.
Justice Kapadia started his career as a Class IV employee. He later joined Gagrat & Co, a law firm, as a clerk and went on to work with Feroze Damania, a popular 'firebrand' labour lawyer. He became an advocate in the Bombay High Court on September 10, 1974.
Justice Kapadia was appointed as additional judge of the Bombay High Court on October 8, 1991, and on March 23, 1993, he was appointed a permanent judge.
On August 5, 2003, he became the Chief Justice of the Uttarakhand High Court. On December 18, 2003 he was appointed a judge of the Supreme Court. In May 12, 2010, he was sworn in as the 38th Chief Justice of India (CJI) and served at the top post till retirement on September 29, 2012.
Notable among the judgements he delivered were the quashing of appointment of the Chief Vigilance Commissioner PJ Thomas in 2011. He also gave a dissenting judgement in Lalu Prasad Yadav's bail cancellation case.
During his tenure as CJI, he was the Chairman of the General Council of the Gujarat National Law University and Visitor of the National Law School of India University. Justice Kapadia was married to Shernaaz. He held interest in economics, public finance, theoretical physics, and Hindu and Buddhist philosophies.
The High Court staff paid homage to Justice Kapadia, whom they described as a nice and affectionate person.
MUMBAI: Former Chief Justice of India Sarosh Homi Kapadia, who delivered some landmark judgements, died last night following a cardiac arrest, Bombay High Court sources said today.He was 68 and is survived by wife, son, who is a Chartered Accountant, and daughter.
Born in 1947 in Mumbai (then Bombay), Justice Kapadia graduated from the city-based Government Law College, the oldest law institute in Asia.
Justice Kapadia started his career as a Class IV employee. He later joined Gagrat & Co, a law firm, as a clerk and went on to work with Feroze Damania, a popular 'firebrand' labour lawyer. He became an advocate in the Bombay High Court on September 10, 1974.
Justice Kapadia was appointed as additional judge of the Bombay High Court on October 8, 1991, and on March 23, 1993, he was appointed a permanent judge.
On August 5, 2003, he became the Chief Justice of the Uttarakhand High Court. On December 18, 2003 he was appointed a judge of the Supreme Court. In May 12, 2010, he was sworn in as the 38th Chief Justice of India (CJI) and served at the top post till retirement on September 29, 2012.
Notable among the judgements he delivered were the quashing of appointment of the Chief Vigilance Commissioner PJ Thomas in 2011. He also gave a dissenting judgement in Lalu Prasad Yadav's bail cancellation case.
During his tenure as CJI, he was the Chairman of the General Council of the Gujarat National Law University and Visitor of the National Law School of India University. Justice Kapadia was married to Shernaaz. He held interest in economics, public finance, theoretical physics, and Hindu and Buddhist philosophies.
The High Court staff paid homage to Justice Kapadia, whom they described as a nice and affectionate person.
Massive Ice 'Lid' Melting Uncorked CO2 At Ice Age's End
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LONDON: As the Antarctic sea ice melted, massive amounts of carbon dioxide that had been trapped in the ocean were released into the atmosphere, suggests a new study reconstructing conditions at the end of the last Ice Age.
The study includes the first detailed reconstruction of the Southern Ocean density of the period and identified how it changed as the Earth warmed.
It suggests a massive reorganisation of ocean temperature and salinity, but finds that this was not the driver of increased concentration of carbon dioxide in the atmosphere.
"We set out to test the idea that a decrease in ocean density resulted in a rise in CO2 by reconstructing how it changed across time periods when the Earth was warming," said lead author Jenny Roberts, PhD student in University of Cambridge.
"However what we found was not what we were expecting to see," he added.
During the last ice age, it was thought that the deepest part of the ocean was made up of very salty, dense water which was capable of trapping a lot of CO2.
Scientists believed that a decrease in the density of this deep water resulted in the release of CO2 from the deep ocean to the atmosphere.
However, the new findings suggest that although a decrease in the density of the deep ocean did occur, it happened much later than the rise in atmospheric CO2.
It suggests that other mechanisms must be responsible for the release of CO2 from the oceans at the end of the last ice age.
In order to determine how the oceans have changed over time and to identify what might have caused the massive release of CO2, the researchers studied the chemical composition of microscopic shelled animals that have been buried deep in ocean sediment since the end of the ice age.
Through examination of the shells, the researchers found that changes in CO2 and density are not nearly as tightly linked as previously thought, suggesting something else must be causing CO2 to be released from the ocean.
Like a bottle of wine with a cork, sea ice can prevent CO2-rich water from releasing its CO2 to the atmosphere.
The Southern Ocean is a key area of exchange of CO2 between the ocean and atmosphere.
The expansion of sea ice during the last ice age acted as a "lid" on the Southern Ocean, preventing CO2 from escaping.
The researchers suggest that the retreat of this sea ice "lid" at the end of the last ice age uncorked this vintage CO2, resulting in an increase in carbon dioxide in the atmosphere.
The findings were published in the journal Proceedings of the National Academy of Sciences.
The study includes the first detailed reconstruction of the Southern Ocean density of the period and identified how it changed as the Earth warmed.
It suggests a massive reorganisation of ocean temperature and salinity, but finds that this was not the driver of increased concentration of carbon dioxide in the atmosphere.
"However what we found was not what we were expecting to see," he added.
During the last ice age, it was thought that the deepest part of the ocean was made up of very salty, dense water which was capable of trapping a lot of CO2.
Scientists believed that a decrease in the density of this deep water resulted in the release of CO2 from the deep ocean to the atmosphere.
However, the new findings suggest that although a decrease in the density of the deep ocean did occur, it happened much later than the rise in atmospheric CO2.
It suggests that other mechanisms must be responsible for the release of CO2 from the oceans at the end of the last ice age.
In order to determine how the oceans have changed over time and to identify what might have caused the massive release of CO2, the researchers studied the chemical composition of microscopic shelled animals that have been buried deep in ocean sediment since the end of the ice age.
Through examination of the shells, the researchers found that changes in CO2 and density are not nearly as tightly linked as previously thought, suggesting something else must be causing CO2 to be released from the ocean.
Like a bottle of wine with a cork, sea ice can prevent CO2-rich water from releasing its CO2 to the atmosphere.
The Southern Ocean is a key area of exchange of CO2 between the ocean and atmosphere.
The expansion of sea ice during the last ice age acted as a "lid" on the Southern Ocean, preventing CO2 from escaping.
The researchers suggest that the retreat of this sea ice "lid" at the end of the last ice age uncorked this vintage CO2, resulting in an increase in carbon dioxide in the atmosphere.
The findings were published in the journal Proceedings of the National Academy of Sciences.
Gene Thought To Suppress Cancer May Not Work For All Tumours
- A gene that is known to suppress the growth and spread of many types of cancer has the opposite effect in some forms of colorectal cancer, says a study led by an Indian-origin scientist.
The research could lay the foundation for new colorectal cancer treatments.
"The gene known as Sprouty2 has previously been shown to protect against metastasis, or the spreading of cancer to other parts of the body, in breast, prostate and liver cancer," said lead author of the study Sharad Khare, associate professor at University of Missouri School of Medicine in the US.
"However, our recent molecular studies found that this gene may actually help promote metastasis (spread of the disease to other organ) instead of suppressing it," Mr Khare noted.
For more than three years, Mr Khare studied Sprouty2 in cancer cell models, mouse models and human biopsy samples.
Using different molecular methods, the researchers found that the gene functions differently in colorectal cancer than in other types of cancers.
Sprouty2 is known to block molecular circuits to prevent cancer cells from growing and spreading to other parts of the body.
However, the researchers found that in colorectal cancer, Sprouty2 may increase the ability of cancer cells to spread instead of suppressing it.
Mr Khare believes this occurs when the gene is up-regulated, or supercharged.
"This finding is a very significant step in our understanding of metastasis in colorectal cancer, but it's important to note that we believe this phenomenon may occur in only a subset of colorectal cancer patients," Mr Khare said.
The findings appeared in the journal Oncogene.
The research could lay the foundation for new colorectal cancer treatments.
"The gene known as Sprouty2 has previously been shown to protect against metastasis, or the spreading of cancer to other parts of the body, in breast, prostate and liver cancer," said lead author of the study Sharad Khare, associate professor at University of Missouri School of Medicine in the US.
"However, our recent molecular studies found that this gene may actually help promote metastasis (spread of the disease to other organ) instead of suppressing it," Mr Khare noted.
For more than three years, Mr Khare studied Sprouty2 in cancer cell models, mouse models and human biopsy samples.
Using different molecular methods, the researchers found that the gene functions differently in colorectal cancer than in other types of cancers.
Sprouty2 is known to block molecular circuits to prevent cancer cells from growing and spreading to other parts of the body.
However, the researchers found that in colorectal cancer, Sprouty2 may increase the ability of cancer cells to spread instead of suppressing it.
Mr Khare believes this occurs when the gene is up-regulated, or supercharged.
"This finding is a very significant step in our understanding of metastasis in colorectal cancer, but it's important to note that we believe this phenomenon may occur in only a subset of colorectal cancer patients," Mr Khare said.
The findings appeared in the journal Oncogene.
Business Affairs
UBS sees Nifty at 8,200, rupee at 70 versus dollar by year-end
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Global financial services major UBS on Tuesday said it is "overweight" on India but sees limited room for a re-rating and forecast an end-2016 Nifty target of 8,200.
"We see limited room for a re-rating and forecast an end-2016 Nifty target of 8,200 based on a 15x one-year forward PE multiple," it said in a research note adding that "our GEM/APAC strategists remain overweight on India.
According to the Swiss firm there were big earning downgrades in 2015 and more are likely this year.
"Consensus FY16/FY17/FY18 forecasts of 10 per cent/20 per cent/18 per cent earnings growth still appear optimistic," it said adding that cuts in 2016 may remain significant at around 8 per cent.
It also forecast rupee versus US dollar exchange rate of 70 by 2016-end.
On prices, it said the country's disinflationary process is likely to continue largely aided by political commitment, RBI policy, below-trend growth, and balance sheet repair.
It expects CPI inflation in the fiscal year 2016-17 at around 4.6 per cent.
During 2015, the Consumer Price Inflation remained well under control hovering in the range of 3.66-5.4 per cent, while industry chambers and some other experts are hopeful that it would keep below 6 per cent mark in the New Year -- a target set by the Reserve Bank.
It further said the recovery process for the Indian economy would be gradual and growth numbers would be below potential.
"While lower RBI policy rates should boost fixed investment, balance sheet repair and a difficult external environment should keep the recovery gradual and GDP growth below-potential," it added.
It expects fiscal year 2016-17 growth at around 7.6 per cent and financial year 2017-18 at 7.8 per cent.
Meanwhile, the government recently lowered its economic growth forecast for 2015-16 to 7-7.5 per cent from 8.1-8.5 per cent.
UBS's most-favoured sectors are retail private banks, NBFCs, pharmaceuticals, oil & gas petrochemicals, coal, telecom, auto parts, while least-favoured sectors are corporate private banks, IT services, auto two-wheelers, infrastructure and capital goods, small and midcap companies.
Global financial services major UBS on Tuesday said it is "overweight" on India but sees limited room for a re-rating and forecast an end-2016 Nifty target of 8,200.
"We see limited room for a re-rating and forecast an end-2016 Nifty target of 8,200 based on a 15x one-year forward PE multiple," it said in a research note adding that "our GEM/APAC strategists remain overweight on India.
According to the Swiss firm there were big earning downgrades in 2015 and more are likely this year.
"Consensus FY16/FY17/FY18 forecasts of 10 per cent/20 per cent/18 per cent earnings growth still appear optimistic," it said adding that cuts in 2016 may remain significant at around 8 per cent.
It also forecast rupee versus US dollar exchange rate of 70 by 2016-end.
On prices, it said the country's disinflationary process is likely to continue largely aided by political commitment, RBI policy, below-trend growth, and balance sheet repair.
It expects CPI inflation in the fiscal year 2016-17 at around 4.6 per cent.
During 2015, the Consumer Price Inflation remained well under control hovering in the range of 3.66-5.4 per cent, while industry chambers and some other experts are hopeful that it would keep below 6 per cent mark in the New Year -- a target set by the Reserve Bank.
It further said the recovery process for the Indian economy would be gradual and growth numbers would be below potential.
"While lower RBI policy rates should boost fixed investment, balance sheet repair and a difficult external environment should keep the recovery gradual and GDP growth below-potential," it added.
It expects fiscal year 2016-17 growth at around 7.6 per cent and financial year 2017-18 at 7.8 per cent.
Meanwhile, the government recently lowered its economic growth forecast for 2015-16 to 7-7.5 per cent from 8.1-8.5 per cent.
UBS's most-favoured sectors are retail private banks, NBFCs, pharmaceuticals, oil & gas petrochemicals, coal, telecom, auto parts, while least-favoured sectors are corporate private banks, IT services, auto two-wheelers, infrastructure and capital goods, small and midcap companies.
Sensex ends 43 points down; Nifty below 7,800 amid weak global cues
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In a volatile trading day, the S&P BSE Sensex ended 43 points lower on Tuesday, while broader CNX Nifty finished below its key support level of 7,800.
Benchmark indices edged lower amid negative trend seen in Asian markets as Chinese stocks extended previous day's fall and ended lower after briefly ruling higher through the day.
Chinese markets tumbled 7 per cent on Monday on weak factory data which triggered more than 2 per cent fall in domestic markets with the Nifty index posting its biggest single-day percentage fall in over four months.
The 30-share index settled at 25,580.34, down 43.01 points in today's trade, while broad-based 50-share index quoted 7,784.65, down 6.65 points at close.
Market breadth turned negative with 18 of the 30 Sensex components trading in red.
Coal India was the worst performer on Sensex and lost 1.6 per cent on BSE.
The caution over global markets comes at a time when domestic investors are concerned about the weak state of India's corporate earnings.
UBS said corporate earnings consensus for FY16, FY17 and FY18 still looked optimistic, and expected about an 8 per cent cut to earnings forecasts this year.
Tata Consultancy Services will kick start the earning season on January 12.
"After the fall yesterday there is some amount of caution that traders are exercising," said Deven Choksey, managing director at KR Choksey Securities.
Among Asian markets, China's Shanghai Composite edged 0.26 per cent lower. Japan's Nikkei also registered 0.42 per cent losses, while Hong Kong's Hang Seng index ended 0.65 per cent down.
Meanwhile, Dow futures were trading lower by 80 points. Overnight, US markets had closed in the negative territory on renewed fears of global slowdown.
A lowdown on markets today
3:00 pm
Sensex at 25,589, down 34 points
Nifty at 7,786, down 5 points
12:58 pm
Sensex at 25,653.33, up 29.98 points
Nifty at 7,804.60, up 13.30 points
11:00 am
Sensex at 25,586.22, down 37.13 points
Nifty at 7,783.25, down 8.05 points
9:23 am
Sensex at 25,719.41, up 96.06 points
Nifty at 7,824.35, up 33.05 points
In a volatile trading day, the S&P BSE Sensex ended 43 points lower on Tuesday, while broader CNX Nifty finished below its key support level of 7,800.
Benchmark indices edged lower amid negative trend seen in Asian markets as Chinese stocks extended previous day's fall and ended lower after briefly ruling higher through the day.
Chinese markets tumbled 7 per cent on Monday on weak factory data which triggered more than 2 per cent fall in domestic markets with the Nifty index posting its biggest single-day percentage fall in over four months.
The 30-share index settled at 25,580.34, down 43.01 points in today's trade, while broad-based 50-share index quoted 7,784.65, down 6.65 points at close.
Market breadth turned negative with 18 of the 30 Sensex components trading in red.
Coal India was the worst performer on Sensex and lost 1.6 per cent on BSE.
The caution over global markets comes at a time when domestic investors are concerned about the weak state of India's corporate earnings.
UBS said corporate earnings consensus for FY16, FY17 and FY18 still looked optimistic, and expected about an 8 per cent cut to earnings forecasts this year.
Tata Consultancy Services will kick start the earning season on January 12.
"After the fall yesterday there is some amount of caution that traders are exercising," said Deven Choksey, managing director at KR Choksey Securities.
Among Asian markets, China's Shanghai Composite edged 0.26 per cent lower. Japan's Nikkei also registered 0.42 per cent losses, while Hong Kong's Hang Seng index ended 0.65 per cent down.
Meanwhile, Dow futures were trading lower by 80 points. Overnight, US markets had closed in the negative territory on renewed fears of global slowdown.
A lowdown on markets today
3:00 pm
Sensex at 25,589, down 34 points
Nifty at 7,786, down 5 points
12:58 pm
Sensex at 25,653.33, up 29.98 points
Nifty at 7,804.60, up 13.30 points
11:00 am
Sensex at 25,586.22, down 37.13 points
Nifty at 7,783.25, down 8.05 points
9:23 am
Sensex at 25,719.41, up 96.06 points
Nifty at 7,824.35, up 33.05 points
FM Arun Jaitley weighs relaxing fiscal deficit targets in Budget
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The government might break its budget deficit targets to stimulate demand, potentially undermining the central bank's fight against inflation.
Statistically, Asia's third-largest economy is outpacing China with above 7 per cent annual growth. But Prime Minister Narendra Modi's economic advisers are complaining of a sharp slowdown that threatens their budget calculations.
In February, Finance Minister Arun Jaitley will present the budget for the fiscal year starting April 1. A senior official said the minister has been advised to increase its fiscal deficit target to 3.7 or 3.9 per cent of gross domestic product (GDP) from 3.5 per cent.
There is also a proposal to delay, by one year, a goal of lowering the fiscal deficit to 3 per cent in 2017/2018, the official said.
"The economy is still suffering from slack demand," said the finance ministry official. "It needs a conducive fiscal and monetary policy," the officail added.
But Shaktikanta Das, the ministry's economic affairs secretary, said the government has yet to decide on relaxing the deficit targets.
Running a higher deficit could antagonise the RBI, which is counting on Jaitley's pledge of tight fiscal policy to keep inflation to 5 per cent by March 2017.
"A miss on the fiscal targets will narrow scope for additional rate cuts," said economists at DBS in Singapore.
Differences on what the government should do - spend to stimulate and risk high inflation, or cut the fiscal deficit to contain it - stem from a sharp divergence between nominal and real, or inflation-adjusted, growth, as well as in the direction of wholesale and retail prices.
GDP data "is underestimating nominal growth and overestimating real growth," said N.R. Bhanumurthy, a professor at the government-funded National Institute of Public Finance and Policy.
FALLING WHOLESALE PRICES
He and other economists blame an over-representation of the wholesale price index in the GDP "deflator" for the anomaly.
The government uses the deflator to strip out price changes to make quarters comparable. Wholesale prices have a bigger weight in the deflator than retail ones.
Recently, wholesale prices have fallen, due to crashing commodity prices, showing a deflationary trend - hence some officials are pitching for stimulus.
But since September, retail inflation has picked up, hitting 5.41 per cent in November. This has rekindled inflation worries, and argues for reducing the fiscal deficit.
In July-September, the deflator fell an annual 1.3 per cent, sparking a debate on whether India's economy was plunging into deflation. Retail inflation, which the RBI tracks to set interest rates, averaged about 4 per cent in that period. Bhanumurthy says ideally India should use producer prices for calculating the deflator.
But as it has yet to build an index for them, he suggests using only retail prices, in the interim, to translate nominal economic growth figures into real ones.
Since India in January 2015 changed how it measures economic activity, policymakers have struggled to square robust headline growth figures with grim ground reality.
DIFFERING RATES OF GROWTH
Real annual GDP accelerated in July-September to 7.4 per cent from 7 per cent. But growth of nominal GDP, which Jaitley relies on to drive tax revenue, slowed sharply to 6 per cent from 8.8 per cent in April-June, suggesting tepid demand.
It was the first time in recent quarters nominal growth lagged the real figure.
"We know the economy is recovering," the finance ministry official said. "But no one is sure about the recovery's pace and strength," the official said.
A loose fiscal stance taken during the 2008 global financial crisis led to prolonged double-digit inflation, paving the way for ouster of the previous government.
The RBI is already bracing for the inflationary fallout of a salary hike for millions of government employees next fiscal year.
"The mess is being created in Delhi, but the RBI will have to absorb the shock," said Bhanumurthy.
The government might break its budget deficit targets to stimulate demand, potentially undermining the central bank's fight against inflation.
Statistically, Asia's third-largest economy is outpacing China with above 7 per cent annual growth. But Prime Minister Narendra Modi's economic advisers are complaining of a sharp slowdown that threatens their budget calculations.
In February, Finance Minister Arun Jaitley will present the budget for the fiscal year starting April 1. A senior official said the minister has been advised to increase its fiscal deficit target to 3.7 or 3.9 per cent of gross domestic product (GDP) from 3.5 per cent.
There is also a proposal to delay, by one year, a goal of lowering the fiscal deficit to 3 per cent in 2017/2018, the official said.
"The economy is still suffering from slack demand," said the finance ministry official. "It needs a conducive fiscal and monetary policy," the officail added.
But Shaktikanta Das, the ministry's economic affairs secretary, said the government has yet to decide on relaxing the deficit targets.
Running a higher deficit could antagonise the RBI, which is counting on Jaitley's pledge of tight fiscal policy to keep inflation to 5 per cent by March 2017.
"A miss on the fiscal targets will narrow scope for additional rate cuts," said economists at DBS in Singapore.
Differences on what the government should do - spend to stimulate and risk high inflation, or cut the fiscal deficit to contain it - stem from a sharp divergence between nominal and real, or inflation-adjusted, growth, as well as in the direction of wholesale and retail prices.
GDP data "is underestimating nominal growth and overestimating real growth," said N.R. Bhanumurthy, a professor at the government-funded National Institute of Public Finance and Policy.
FALLING WHOLESALE PRICES
He and other economists blame an over-representation of the wholesale price index in the GDP "deflator" for the anomaly.
The government uses the deflator to strip out price changes to make quarters comparable. Wholesale prices have a bigger weight in the deflator than retail ones.
Recently, wholesale prices have fallen, due to crashing commodity prices, showing a deflationary trend - hence some officials are pitching for stimulus.
But since September, retail inflation has picked up, hitting 5.41 per cent in November. This has rekindled inflation worries, and argues for reducing the fiscal deficit.
In July-September, the deflator fell an annual 1.3 per cent, sparking a debate on whether India's economy was plunging into deflation. Retail inflation, which the RBI tracks to set interest rates, averaged about 4 per cent in that period. Bhanumurthy says ideally India should use producer prices for calculating the deflator.
But as it has yet to build an index for them, he suggests using only retail prices, in the interim, to translate nominal economic growth figures into real ones.
Since India in January 2015 changed how it measures economic activity, policymakers have struggled to square robust headline growth figures with grim ground reality.
DIFFERING RATES OF GROWTH
Real annual GDP accelerated in July-September to 7.4 per cent from 7 per cent. But growth of nominal GDP, which Jaitley relies on to drive tax revenue, slowed sharply to 6 per cent from 8.8 per cent in April-June, suggesting tepid demand.
Real annual GDP accelerated in July-September to 7.4 per cent from 7 per cent. But growth of nominal GDP, which Jaitley relies on to drive tax revenue, slowed sharply to 6 per cent from 8.8 per cent in April-June, suggesting tepid demand.
It was the first time in recent quarters nominal growth lagged the real figure.
"We know the economy is recovering," the finance ministry official said. "But no one is sure about the recovery's pace and strength," the official said.
A loose fiscal stance taken during the 2008 global financial crisis led to prolonged double-digit inflation, paving the way for ouster of the previous government.
The RBI is already bracing for the inflationary fallout of a salary hike for millions of government employees next fiscal year.
"The mess is being created in Delhi, but the RBI will have to absorb the shock," said Bhanumurthy.
Govt scraps 5% export duty on iron ore pellets
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The government has scrapped a 5 per cent duty on exports of iron ore pellets to make overseas shipments competitive amid a sharp fall in the world price of the steelmaking raw material, a government order showed on Tuesday.
"This would improve capacity utilization of pellet plants and give necessary boost to (the) sector," Steel and Mines Minister Narendra Singh Tomar tweeted.
The government has scrapped a 5 per cent duty on exports of iron ore pellets to make overseas shipments competitive amid a sharp fall in the world price of the steelmaking raw material, a government order showed on Tuesday.
"This would improve capacity utilization of pellet plants and give necessary boost to (the) sector," Steel and Mines Minister Narendra Singh Tomar tweeted.
BHEL commissions first 600MW thermal unit in Telangana
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State-run power equipment maker BHEL has commissioned a 600 MW unit at Kakatiya Thermal Power Project, Telangana.
"The unit, commissioned at Kakatiya Thermal Power Project (KTPP) at Chelpur in Warangal District of Telangana, is the highest rating unit in the state," BHEL said in a statement.
According to the statement, one coal-based unit of 500 MW commissioned by BHEL in 2010 is already operational at KTPP.
So far, the company has contracted 21 sets of 600 MW each, out of which 14 have already been commissioned.
BHEL has a major contribution in Telangana's Power Sector, with 84 per cent of the coal-based power stations, amounting to 4,580 MW, commissioned by the company.
State-run power equipment maker BHEL has commissioned a 600 MW unit at Kakatiya Thermal Power Project, Telangana.
"The unit, commissioned at Kakatiya Thermal Power Project (KTPP) at Chelpur in Warangal District of Telangana, is the highest rating unit in the state," BHEL said in a statement.
According to the statement, one coal-based unit of 500 MW commissioned by BHEL in 2010 is already operational at KTPP.
So far, the company has contracted 21 sets of 600 MW each, out of which 14 have already been commissioned.
BHEL has a major contribution in Telangana's Power Sector, with 84 per cent of the coal-based power stations, amounting to 4,580 MW, commissioned by the company.
General Awareness
5 key bills assented by Prez Pranab Mukherjee
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As per the provisions of Article 111 of the Constitution of India, President Pranab Mukherjee has given assent to five key bills that were passed by both the houses of Parliament, Lok Sabha and Rajya Sabha in the recently concluded winter session of Parliament.
Here is the list of Bills Consented by President
- Atomic Energy (Amendment) Act: It will allow state-run Nuclear Power Corporation of India Ltd (NPCIL) to have collaboration with other public sector undertakings in the nuclear field.
- Amendment – It will amend Atomic Energy Act 1962 to change the definition of “Government Company” in the Act with a view to expand its scope.
- Payment of Bonus (Amendment) Act, 2015: It provides for enhancing monthly bonus calculation ceiling to Rs. 7,000 per month from the existing Rs. 3,500. It also enhances the eligibility limit for payment of bonus from Rs. 10,000 per month to Rs. 21,000 per month.
- Amendment – It will amend Payment of Bonus Act, 1965.
- Arbitration and Conciliation (Amendment) Act, 2015: As per this act, an arbitrator will have to settle a case within 18 months. After the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger.
- Amendment – It will amend Arbitration and Conciliation Act, 1996.
- Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act, 2015: Under this assaulting or sexually exploiting an SC or ST woman is an offence. The Act states that any intentional touching of an SC or ST woman in a sexual manner without her consent, using words, acts or gestures of a sexual nature, dedicating her as a devadasi to a temple or any similar practice will be considered an offence.
- Amendment – It will amend Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989.
- Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act: It is aimed at creating commercial benches in select high courts.
- Atomic Energy (Amendment) Act: It will allow state-run Nuclear Power Corporation of India Ltd (NPCIL) to have collaboration with other public sector undertakings in the nuclear field.
- Amendment – It will amend Atomic Energy Act 1962 to change the definition of “Government Company” in the Act with a view to expand its scope.
- Payment of Bonus (Amendment) Act, 2015: It provides for enhancing monthly bonus calculation ceiling to Rs. 7,000 per month from the existing Rs. 3,500. It also enhances the eligibility limit for payment of bonus from Rs. 10,000 per month to Rs. 21,000 per month.
- Amendment – It will amend Payment of Bonus Act, 1965.
- Arbitration and Conciliation (Amendment) Act, 2015: As per this act, an arbitrator will have to settle a case within 18 months. After the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger.
- Amendment – It will amend Arbitration and Conciliation Act, 1996.
- Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act, 2015: Under this assaulting or sexually exploiting an SC or ST woman is an offence. The Act states that any intentional touching of an SC or ST woman in a sexual manner without her consent, using words, acts or gestures of a sexual nature, dedicating her as a devadasi to a temple or any similar practice will be considered an offence.
- Amendment – It will amend Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989.
- Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act: It is aimed at creating commercial benches in select high courts.
As per the provisions of Article 111 of the Constitution of India, President Pranab Mukherjee has given assent to five key bills that were passed by both the houses of Parliament, Lok Sabha and Rajya Sabha in the recently concluded winter session of Parliament.
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