General Affairs
Left is 'Right', Rahul Gandhi Reportedly Told In Meeting On Bengal Alliance
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KOLKATA: A Bihar-style tie-up with the Left to battle Mamata Banerjee in the Bengal assembly election was foremost on the minds of state Congress leaders who met Rahul Gandhi today.
Congress leaders say they told Rahul Gandhi that party workers on the ground mostly want an alliance with the Left, not the state's ruling Trinamool.
"We had a long discussion with Rahul Gandhi. He listened to us with attention. Although we were present there to express independent views, Rahul Gandhi assured us that all the views will be taken into cognizance," said Adhir Ranjan Chowdhury, the state Congress chief.
Speaking to reporters, Mr Chowdhury added: "I cannot say that alliance between Congress and CPM has been done. Rahul Gandhi assured us that in consultation with Sonia Gandhi, he will be able to conclude the chapter of alliance, either yes or no."
Adhir Chowdhury is believed to be among the Congress leaders who view an alliance with the Left as the only way to challenge the ruling party in the polls.
The party is, however, divided on the merits of an alliance with the Left, which is a bitter rival in another state headed for polls - Kerala.
Some leaders are also worried that if they decide to join hands with the Left, Trinamool may never forgive the Congress. In today's meeting, the impact of the party's alliance decision on the 2019 general election was also taken up, say sources.
Senior CPM leaders including former chief minister Buddhadeb Bhattacharjee and Sitaram Yechuri have called for a united front against the Trinamool.
Left leaders have in recent months indicated that they are open to an alliance with the Congress.
Many among them are concerned that the Congress is delaying the announcement of such an understanding.
The Left and Congress have shared an erratic alliance history. Their last alliance ended in 2008 after the Left withdrew support from the Manmohan Singh government over the India-US nuclear deal.
KOLKATA: A Bihar-style tie-up with the Left to battle Mamata Banerjee in the Bengal assembly election was foremost on the minds of state Congress leaders who met Rahul Gandhi today.Congress leaders say they told Rahul Gandhi that party workers on the ground mostly want an alliance with the Left, not the state's ruling Trinamool.
"We had a long discussion with Rahul Gandhi. He listened to us with attention. Although we were present there to express independent views, Rahul Gandhi assured us that all the views will be taken into cognizance," said Adhir Ranjan Chowdhury, the state Congress chief.
Adhir Chowdhury is believed to be among the Congress leaders who view an alliance with the Left as the only way to challenge the ruling party in the polls.
The party is, however, divided on the merits of an alliance with the Left, which is a bitter rival in another state headed for polls - Kerala.
Some leaders are also worried that if they decide to join hands with the Left, Trinamool may never forgive the Congress. In today's meeting, the impact of the party's alliance decision on the 2019 general election was also taken up, say sources.
Senior CPM leaders including former chief minister Buddhadeb Bhattacharjee and Sitaram Yechuri have called for a united front against the Trinamool.
Left leaders have in recent months indicated that they are open to an alliance with the Congress.
Many among them are concerned that the Congress is delaying the announcement of such an understanding.
The Left and Congress have shared an erratic alliance history. Their last alliance ended in 2008 after the Left withdrew support from the Manmohan Singh government over the India-US nuclear deal.
Arunachal Crisis: Supreme Court Changes Mind About Governor's Report
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NEW DELHI: The reports in which he recommended President's rule do not have to be shared by the Arunachal Pradesh Governor, the Supreme Court said today, cancelling its earlier request for a copy of the documents.
The court accepted the Centre's argument that Governor JP Rajkhowa enjoys constitutional immunity.
The Congress, which has been governing Arunachal Pradesh, has taken the Centre to court accusing it of unjustifiably calling for central rule. The Congress says its Chief Minister Nabam Tuki has not lost his majority, and that the BJP has worked to destabilize his government. The centre says that a slew of factors including deteriorating law and order and the fact that the state's legislators had not met for over six months proves that the state is in crisis and needs the centre's intervention.
Last week, the Supreme Court asked for the Governor's report and said its judges would decide if the document could be given to the Congress. The government has said it must be treated as confidential.
For months, Chief Minister Tuki battled rebellion from within his own party till nearly half of the Congress legislators teamed with the BJP to demand his removal, as also that of the Speaker of the House. In December, they met at a hotel and a community centre at a session endorsed by the Governor, who said the assembly building had been locked up to prevent an assembly session.
The Congress says that session cannot be held as valid because the Chief Minister and his cabinet were not consulted by the Governor.
Arunachal Pradesh is one of nine states governed by the Congress.
Chief Minister Tuki was re-elected for a second term in 2014.
NEW DELHI: The reports in which he recommended President's rule do not have to be shared by the Arunachal Pradesh Governor, the Supreme Court said today, cancelling its earlier request for a copy of the documents.The court accepted the Centre's argument that Governor JP Rajkhowa enjoys constitutional immunity.
The Congress, which has been governing Arunachal Pradesh, has taken the Centre to court accusing it of unjustifiably calling for central rule. The Congress says its Chief Minister Nabam Tuki has not lost his majority, and that the BJP has worked to destabilize his government. The centre says that a slew of factors including deteriorating law and order and the fact that the state's legislators had not met for over six months proves that the state is in crisis and needs the centre's intervention.
Last week, the Supreme Court asked for the Governor's report and said its judges would decide if the document could be given to the Congress. The government has said it must be treated as confidential.
For months, Chief Minister Tuki battled rebellion from within his own party till nearly half of the Congress legislators teamed with the BJP to demand his removal, as also that of the Speaker of the House. In December, they met at a hotel and a community centre at a session endorsed by the Governor, who said the assembly building had been locked up to prevent an assembly session.
The Congress says that session cannot be held as valid because the Chief Minister and his cabinet were not consulted by the Governor.
Arunachal Pradesh is one of nine states governed by the Congress.
Chief Minister Tuki was re-elected for a second term in 2014.
Petrol Price Eased by 4 Paise, Diesel Down by 3 Paise
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NEW DELHI: Petrol price was today slashed by a marginal four paise a litre and diesel by three paise a litre as the government raised excise duty to deny consumers full benefit of falling international oil prices.
Now petrol in Delhi would be available for Rs. 59.95 per litre as against Rs. 59.99 earlier. For diesel, one has to shell out Rs. 44.68 for a litre as compared to Rs. 44.71 previously, according to Indian Oil Corp (IOC).
The reduction should have been Rs. 1.04 per litre in petrol and Rs. 1.53 in diesel because of a USD 4 per barrel fall in international rates in the last fortnight. But the government on the eve of the due price revision on Sunday raised excise duty on petrol by Re one per litre and that on diesel by Rs. 1.50.
This is the third increase in excise duty in a month, which will get Rs. 3,200 crore in additional revenue to the government during the remainder of the current fiscal.
Taken together with the two excise duty hikes in November and December 2015, the government is expected to get Rs. 17,000 crore in additional revenue. The five levy hikes total to Rs. 4.02 per litre on petrol and Rs. 6.97 on diesel.
Petrol price should have been Rs. 55.93 a litre and diesel at Rs. 37.71 if the excise duties were not hiked on the five occasions.
The reduction in auto fuel prices today was the fifth cut in two months on back of softening global oil prices.
Rates were last cut by 32 paise a litre for petrol and 85 paise for diesel from January 16. Prior to that, rates were slashed by 63 paise on petrol and Rs. 1.06 on diesel on January 1. In two reductions in December, prices were cut by Rs. 1.08 on petrol and 71 paise on diesel.
State-owned fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) revise rates of the fuel on first and 16th of every month based on average oil price and foreign exchange rate in the preceding fortnight.
NEW DELHI: Petrol price was today slashed by a marginal four paise a litre and diesel by three paise a litre as the government raised excise duty to deny consumers full benefit of falling international oil prices.Now petrol in Delhi would be available for Rs. 59.95 per litre as against Rs. 59.99 earlier. For diesel, one has to shell out Rs. 44.68 for a litre as compared to Rs. 44.71 previously, according to Indian Oil Corp (IOC).
This is the third increase in excise duty in a month, which will get Rs. 3,200 crore in additional revenue to the government during the remainder of the current fiscal.
Taken together with the two excise duty hikes in November and December 2015, the government is expected to get Rs. 17,000 crore in additional revenue. The five levy hikes total to Rs. 4.02 per litre on petrol and Rs. 6.97 on diesel.
Petrol price should have been Rs. 55.93 a litre and diesel at Rs. 37.71 if the excise duties were not hiked on the five occasions.
The reduction in auto fuel prices today was the fifth cut in two months on back of softening global oil prices.
Rates were last cut by 32 paise a litre for petrol and 85 paise for diesel from January 16. Prior to that, rates were slashed by 63 paise on petrol and Rs. 1.06 on diesel on January 1. In two reductions in December, prices were cut by Rs. 1.08 on petrol and 71 paise on diesel.
State-owned fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) revise rates of the fuel on first and 16th of every month based on average oil price and foreign exchange rate in the preceding fortnight.
Saritha Nair Offers New Tapes To Further Imperil Kerala Chief Minister
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THIRUVANANTHAPURAM: Saritha Nair, who has displayed the potential to imperil the Kerala government ahead of elections, today unpacked new allegations of corruption against Chief Minister Oomen Chandy.
Ms Nair, accused of conning an array of industrialists in what has been dubbed "the solar scam", professed that she has "never been offered" a bribe by the opposition Left in exchange for entangling Mr Chandy in accusations of a key role in the alleged swindle that was predicated on cheaply-priced solar panels and clean energy initiatives that were sold but never delivered by Ms Nair and her partner, Biju Radhakrishnan.
Ms Nair, 36, for the past few days has been testifying for a retired high court judge. The Chief Minister, who has pronounced her version of events as "baseless" was questioned by the same judge for 11 hours last week.
In media interviews two years ago, Ms Nair had claimed that the Left had offered her "up to 10 crores" to implicate the Chief Minister. Her revision of that statement is evidence of the fluidity of her allegations, which have wrapped around various political parties before encircling the Chief Minister.
As part of her evidence against the Chief Minister, who she says sought a 1.9 crore bribe through aides, Ms Nair has produced audio tapes of conversations with senior Congress leaders in which they are reportedly heard coaching and urging her to protect Mr Chandy and his aides, including a gunman.
Since the scandal erupted in 2013, Mr Chandy has suspended three close associates in his office whose frequent interactions with Ms Nair and her partner were established. Ms Nair has, however, declared that she has solid evidence of the Chief Minister's own venality, including material that proves he wanted her to go into business with his son.
On Friday, the Kerala High Court over-ruled a lower court order that had called for a police case or FIR against the Chief Minister, offering the politician and his party some relief.
THIRUVANANTHAPURAM: Saritha Nair, who has displayed the potential to imperil the Kerala government ahead of elections, today unpacked new allegations of corruption against Chief Minister Oomen Chandy.Ms Nair, accused of conning an array of industrialists in what has been dubbed "the solar scam", professed that she has "never been offered" a bribe by the opposition Left in exchange for entangling Mr Chandy in accusations of a key role in the alleged swindle that was predicated on cheaply-priced solar panels and clean energy initiatives that were sold but never delivered by Ms Nair and her partner, Biju Radhakrishnan.
Ms Nair, 36, for the past few days has been testifying for a retired high court judge. The Chief Minister, who has pronounced her version of events as "baseless" was questioned by the same judge for 11 hours last week.
As part of her evidence against the Chief Minister, who she says sought a 1.9 crore bribe through aides, Ms Nair has produced audio tapes of conversations with senior Congress leaders in which they are reportedly heard coaching and urging her to protect Mr Chandy and his aides, including a gunman.
Since the scandal erupted in 2013, Mr Chandy has suspended three close associates in his office whose frequent interactions with Ms Nair and her partner were established. Ms Nair has, however, declared that she has solid evidence of the Chief Minister's own venality, including material that proves he wanted her to go into business with his son.
On Friday, the Kerala High Court over-ruled a lower court order that had called for a police case or FIR against the Chief Minister, offering the politician and his party some relief.
Self-Driving Cars May Face Increased Hacking Risk: Study
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LOS ANGELES: The driverless car technology will open up new security problems such as hacks that make it possible to take over the brakes, engine or other components of a car remotely, researchers say.
"We are a long way from securing the non-autonomous vehicles, let alone the autonomous ones. The extra computers, sensors, and improved internet connectivity required to make a car drive itself increase the possible weak points," said Stefan Savage from University of California, San Diego. "The attack surface for these things is even worse," said Savage.
He said it is possible to take control of conventional vehicles in various ways, for example by dialling into a car's built-in cellular connection, or by giving a driver a music CD programmed with a 'song of death' that makes the car connect to an attacker's computer.
The way modern cars are designed, once an attacker can get inside the internet network linking the roughly 30 different computers inside, they can take over just about any component, from the brakes to the radio, according to MIT Technology Review.
Isolating important parts such as the brakes is not possible as everything must be connected to enable many functions people expect of cars, as well as to allow repairs and software upgrades, Savage said.
More computers, sensors, and other components must be added to the tangle already inside our cars so that the vehicle is able to understand its environment and drive itself even part of the time.
That will expand the possible entry points for attackers and the things they can do - for example, self-driving cars rely on laser scanners and other sensors, which could be made to send false data, he said.
"It will also magnify a problem that already exists - carmakers do not know exactly what software is inside the vehicles they sell," said Savage.
This is due to the fact that cars are built using components sourced at the lowest possible cost from third-party suppliers.
Those suppliers carefully guard the details of the software inside things like the brake-control system or central locking components.
LOS ANGELES: The driverless car technology will open up new security problems such as hacks that make it possible to take over the brakes, engine or other components of a car remotely, researchers say."We are a long way from securing the non-autonomous vehicles, let alone the autonomous ones. The extra computers, sensors, and improved internet connectivity required to make a car drive itself increase the possible weak points," said Stefan Savage from University of California, San Diego. "The attack surface for these things is even worse," said Savage.
He said it is possible to take control of conventional vehicles in various ways, for example by dialling into a car's built-in cellular connection, or by giving a driver a music CD programmed with a 'song of death' that makes the car connect to an attacker's computer.
Isolating important parts such as the brakes is not possible as everything must be connected to enable many functions people expect of cars, as well as to allow repairs and software upgrades, Savage said.
More computers, sensors, and other components must be added to the tangle already inside our cars so that the vehicle is able to understand its environment and drive itself even part of the time.
That will expand the possible entry points for attackers and the things they can do - for example, self-driving cars rely on laser scanners and other sensors, which could be made to send false data, he said.
"It will also magnify a problem that already exists - carmakers do not know exactly what software is inside the vehicles they sell," said Savage.
This is due to the fact that cars are built using components sourced at the lowest possible cost from third-party suppliers.
Those suppliers carefully guard the details of the software inside things like the brake-control system or central locking components.
Business Affairs
Sensex ends in red, Nifty holds 7,550 ahead of RBI policy; ICICI Bank top loser
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The S&P BSE Sensex ended in red below its crucial support level of 25,000 in trade on Monday, while broader CNX Nifty managed to hold its key 7,550-mark ahead of Reserve Bank of India (RBI) monetary policy meet due on Tuesday.
The headline indices scuttled between red and green tracking mixed trend seen in Asian markets as weakness in Chinese manufacturing and services PMI data and a fall in oil prices kept investors on guard.
The 30-share index ended the day at 24,824, down 45.86 points, while broad-based 50-share index quoted 7,555, down 7.60 points at close.
Market breadth turned negative with 16 of the 30 Sensex components ending the day in red.
ICICI Bank was the worst performing stock on both the benchmark indices and lost nearly 5.63 per cent. Other banking stocks such as SBI, Bank of Baroda and Axis Bank also shed up to 4 per cent.
Meanwhile, the Nikkei India Manufacturing PMI, a composite monthly indicator of manufacturing performance, expanded to 51.1 in January, a four-month high, up from 49.1 in December. A figure above 50 represents expansion while a reading below this level means contraction.
An official survey in China on Monday showed, China's manufacturing sector contracted more than expected in January to 49.4 from December's reading of 49.7, missing market expectations.
Growth in China's services sector activity also slowed in January to 53.5 compared with the previous month's reading of 54.4.
On Friday, the domestic markets rallied sharply after the Bank of Japan adopted negative interest rates for the first time at the end of its two-day policy review.
Among Asian markets, China's Shanghai Composite shed 1.78 per cent, while Hong Kong's Hang Seng index lost 0.45 per cent. Japan's Nikkei bucked the trend to gain 1.98 per cent.
On Friday, Wall Street surged over 2 per cent after the Bank of Japan unexpectedly cut interest rates and Microsoft led a major rally in technology shares, repairing some of the damage to the S&P 500's worst January since 2009.
The S&P BSE Sensex ended in red below its crucial support level of 25,000 in trade on Monday, while broader CNX Nifty managed to hold its key 7,550-mark ahead of Reserve Bank of India (RBI) monetary policy meet due on Tuesday.
The headline indices scuttled between red and green tracking mixed trend seen in Asian markets as weakness in Chinese manufacturing and services PMI data and a fall in oil prices kept investors on guard.
The 30-share index ended the day at 24,824, down 45.86 points, while broad-based 50-share index quoted 7,555, down 7.60 points at close.
Market breadth turned negative with 16 of the 30 Sensex components ending the day in red.
ICICI Bank was the worst performing stock on both the benchmark indices and lost nearly 5.63 per cent. Other banking stocks such as SBI, Bank of Baroda and Axis Bank also shed up to 4 per cent.
Meanwhile, the Nikkei India Manufacturing PMI, a composite monthly indicator of manufacturing performance, expanded to 51.1 in January, a four-month high, up from 49.1 in December. A figure above 50 represents expansion while a reading below this level means contraction.
An official survey in China on Monday showed, China's manufacturing sector contracted more than expected in January to 49.4 from December's reading of 49.7, missing market expectations.
Growth in China's services sector activity also slowed in January to 53.5 compared with the previous month's reading of 54.4.
On Friday, the domestic markets rallied sharply after the Bank of Japan adopted negative interest rates for the first time at the end of its two-day policy review.
Among Asian markets, China's Shanghai Composite shed 1.78 per cent, while Hong Kong's Hang Seng index lost 0.45 per cent. Japan's Nikkei bucked the trend to gain 1.98 per cent.
On Friday, Wall Street surged over 2 per cent after the Bank of Japan unexpectedly cut interest rates and Microsoft led a major rally in technology shares, repairing some of the damage to the S&P 500's worst January since 2009.
FinMin slashes gross budgetary support of Railways
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Finance Ministry has slashed the gross budgetary support of railways, which is already facing a shortfall in meeting earning target, to Rs 32,000 crore from the Rs 40,000 crore announced in the last rail budget.
Gross Budgetary Support (GBS) of Rs 40,000 crore was announced in the 2015-16 Rail Budget. However, the Finance Ministry slashed it to Rs 28,000 crore, a decrease of Rs 12,000 crore in November last year citing low spending by Railways in the first six months of the current fiscal.
Disagreeing with the expenditure observation, Railways wrote to the Finance Ministry saying the first two quarters always remain low on spending as the period involves planning, sanction and also monsoon season which also slows down work.
"The last two quarters of the fiscal are significant for job execution in railways," a senior railway ministry official said, adding, "We wrote back to the Finance Ministry seeking reconsideration of their decision to reduce GBS."
Finance Ministry, however, agreed to reduce Rs 8000 crore instead of Rs 12,000 crore, thus giving a relief of Rs 4000 crore.
Till October, the railways was around 10 per cent short of its internal target for passenger and freight revenue as earnings were lower by Rs 9,086 crore.
The operating ratio (OR) target of 88.5 per cent for 2015-16 also touched 97 per cent, making it clear that Railway Minister Suresh Prabhu will have to do a lot of balancing act to keep the OR in control.
On top of that, railways need Rs 32,000 crore more on account of the Seventh Pay Commission recommendations.
Though Prabhu had written to Finance Minister Arun Jaitley seeking the exchequer's generous help to bear the burden of the commission recommendations, the request was turned down and railways was told to raise resources on its own.
Finance Ministry has slashed the gross budgetary support of railways, which is already facing a shortfall in meeting earning target, to Rs 32,000 crore from the Rs 40,000 crore announced in the last rail budget.
Gross Budgetary Support (GBS) of Rs 40,000 crore was announced in the 2015-16 Rail Budget. However, the Finance Ministry slashed it to Rs 28,000 crore, a decrease of Rs 12,000 crore in November last year citing low spending by Railways in the first six months of the current fiscal.
Disagreeing with the expenditure observation, Railways wrote to the Finance Ministry saying the first two quarters always remain low on spending as the period involves planning, sanction and also monsoon season which also slows down work.
"The last two quarters of the fiscal are significant for job execution in railways," a senior railway ministry official said, adding, "We wrote back to the Finance Ministry seeking reconsideration of their decision to reduce GBS."
Finance Ministry, however, agreed to reduce Rs 8000 crore instead of Rs 12,000 crore, thus giving a relief of Rs 4000 crore.
Till October, the railways was around 10 per cent short of its internal target for passenger and freight revenue as earnings were lower by Rs 9,086 crore.
The operating ratio (OR) target of 88.5 per cent for 2015-16 also touched 97 per cent, making it clear that Railway Minister Suresh Prabhu will have to do a lot of balancing act to keep the OR in control.
On top of that, railways need Rs 32,000 crore more on account of the Seventh Pay Commission recommendations.
Though Prabhu had written to Finance Minister Arun Jaitley seeking the exchequer's generous help to bear the burden of the commission recommendations, the request was turned down and railways was told to raise resources on its own.
Why Raghuram Rajan faces a tough choice on reducing interest rates
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Though there is a case for further reducing the repo rate from the current level of 6.75 per cent, the Reserve Bank of India (RBI) Governor Raghuram Rajan is widely expected to hold the rates in his sixth bi-monthly monetary policy review on Tuesday.
The growth or the GDP is already on a downswing and the government has admitted that GDP for 2015-16 will be around 7-7.5 per cent, which is lower than the earlier estimates of 8-8.5 per cent. In fact, the government was so optimistic at the start of the year that it even projected a double digit growth in the subsequent years.
Now, with China throwing surprises by the day and commodity prices also falling, there is a case for reducing the rates by 25 basis points to provide a boost to Indian economy. But the RBI Governor is widely expected to wait for a month before taking this call. Here is why?
1. Uncertainty over fiscal deficit numbers
All eyes are now on the Finance Minister Arun Jaitley, who is readying to present his second full year budget 2016-17 on February 29. As per the fiscal consolidation road map, the deficit should settle at 3.9 per cent of GDP or lower in 2015-16. The next year's target is 3.5 per cent of the GDP. These two numbers, actual for current year and next year target, will be keenly watched by the RBI. There are some clues here as Governor Rajan last week commented that any deviation from the fiscal consolidation path will hurt stability of the economy.
2. Retail inflation inching up
The consumer price index (CPI) or retail inflation that RBI tracks for deciding the interest rates, is slowly inching up because of food prices. The CPI has reached 5.61 per cent in December 2015 as against 5.41 per cent in the previous November month. This number is higher than the RBI's target of 5 per cent CPI by March next year. While RBI has achieved the target of keeping the inflation below 6 per cent by January 2016 , there is still a danger of inflation playing a spoil sport in the next 12 months because of currency depreciation (imported inflation), commodity prices moving up at some time this year from the lows and also the food prices which are quite sticky for many-many months.
3. Slow monetary transmission
While the RBI's new marginal cost of funding rate for pricing loans will kick off from April this year, the banks have been quite slow in reducing the interest rates. In the last one year, the RBI has reduced the repo rate by 125 basis points to 6.75 per cent whereas the banks have reduced the rates by 60-70 basis points. This is partly to protect their bottom line and also partly because of the old system of calculating the base rate which is the average cost of funds.
Aligning Postal Savings Rate With Market Interest Rate, the Finance Minister Arun Jaitley also has to address the issue of aligning the postal savings rate with market interest rates to remove any distortion in the financial market. Currently, the bank deposit rates are on a downswing whereas the rates of small savings schemes like NSCs or Kisan Vikas Patra are still ruling at over 8.5 per cent. In the longer run, this would impact the bank's deposit growth as people would gradually move away from the banking system.
4. A weaker rupee would boost exports
Indian exports have been on decline for long. There is also no support from the currency as rupee has been relatively stronger against US dollar, while other countries have seen a massive depreciation in their currency. China too is resorting to devaluation to remain in the competitive in the international market. Any further reduction in the interest rates would discourage foreign institutional investments into India.
Though there is a case for further reducing the repo rate from the current level of 6.75 per cent, the Reserve Bank of India (RBI) Governor Raghuram Rajan is widely expected to hold the rates in his sixth bi-monthly monetary policy review on Tuesday.
The growth or the GDP is already on a downswing and the government has admitted that GDP for 2015-16 will be around 7-7.5 per cent, which is lower than the earlier estimates of 8-8.5 per cent. In fact, the government was so optimistic at the start of the year that it even projected a double digit growth in the subsequent years.
Now, with China throwing surprises by the day and commodity prices also falling, there is a case for reducing the rates by 25 basis points to provide a boost to Indian economy. But the RBI Governor is widely expected to wait for a month before taking this call. Here is why?
1. Uncertainty over fiscal deficit numbers
All eyes are now on the Finance Minister Arun Jaitley, who is readying to present his second full year budget 2016-17 on February 29. As per the fiscal consolidation road map, the deficit should settle at 3.9 per cent of GDP or lower in 2015-16. The next year's target is 3.5 per cent of the GDP. These two numbers, actual for current year and next year target, will be keenly watched by the RBI. There are some clues here as Governor Rajan last week commented that any deviation from the fiscal consolidation path will hurt stability of the economy.
2. Retail inflation inching up
The consumer price index (CPI) or retail inflation that RBI tracks for deciding the interest rates, is slowly inching up because of food prices. The CPI has reached 5.61 per cent in December 2015 as against 5.41 per cent in the previous November month. This number is higher than the RBI's target of 5 per cent CPI by March next year. While RBI has achieved the target of keeping the inflation below 6 per cent by January 2016 , there is still a danger of inflation playing a spoil sport in the next 12 months because of currency depreciation (imported inflation), commodity prices moving up at some time this year from the lows and also the food prices which are quite sticky for many-many months.
3. Slow monetary transmission
While the RBI's new marginal cost of funding rate for pricing loans will kick off from April this year, the banks have been quite slow in reducing the interest rates. In the last one year, the RBI has reduced the repo rate by 125 basis points to 6.75 per cent whereas the banks have reduced the rates by 60-70 basis points. This is partly to protect their bottom line and also partly because of the old system of calculating the base rate which is the average cost of funds.
Aligning Postal Savings Rate With Market Interest Rate, the Finance Minister Arun Jaitley also has to address the issue of aligning the postal savings rate with market interest rates to remove any distortion in the financial market. Currently, the bank deposit rates are on a downswing whereas the rates of small savings schemes like NSCs or Kisan Vikas Patra are still ruling at over 8.5 per cent. In the longer run, this would impact the bank's deposit growth as people would gradually move away from the banking system.
4. A weaker rupee would boost exports
Indian exports have been on decline for long. There is also no support from the currency as rupee has been relatively stronger against US dollar, while other countries have seen a massive depreciation in their currency. China too is resorting to devaluation to remain in the competitive in the international market. Any further reduction in the interest rates would discourage foreign institutional investments into India.
Oil companies slash jet fuel price by 12%
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Aviation Turbine Fuel (ATF) or jet fuel price was on Monday slashed by nearly 12 per cent.
ATF price in Delhi was reduced by Rs 4,765.5 per kilolitre (kl) or 11.94 per cent to Rs 35,126.82 per kilolitre, oil companies announced.
ATF price in Kolkata and Mumbai now stands at Rs 41,482.09 and Rs 34,284.02 per kilolitre, respectively. In Chennai, it stands at Rs 37,594.24.
This is the fifth reduction in a row since October 2015. Prices were cut by 10 per cent on January 1.
Rates vary at different airports because of differential local sales tax or value-added tax (VAT).
Jet fuel constitutes over 40 per cent of an airline's operating costs and the price cut will reduce the financial burden on cash-strapped carriers.
Aviation Turbine Fuel (ATF) or jet fuel price was on Monday slashed by nearly 12 per cent.
ATF price in Delhi was reduced by Rs 4,765.5 per kilolitre (kl) or 11.94 per cent to Rs 35,126.82 per kilolitre, oil companies announced.
ATF price in Kolkata and Mumbai now stands at Rs 41,482.09 and Rs 34,284.02 per kilolitre, respectively. In Chennai, it stands at Rs 37,594.24.
This is the fifth reduction in a row since October 2015. Prices were cut by 10 per cent on January 1.
Rates vary at different airports because of differential local sales tax or value-added tax (VAT).
Jet fuel constitutes over 40 per cent of an airline's operating costs and the price cut will reduce the financial burden on cash-strapped carriers.
India's factory output at 4-mth high in Jan; China's falls at fastest pace since 2012
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Indian manufacturing sector saw an unexpected rebound in the month of January. While the Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, had seen Indian factory output take a hit and slump to a 28-month low of 49.1 in December, it unexpectedly rose to a four-month high in January. Giving a pleasant surprise, India's manufacturing sector Purchasing Managers' Index jumped to 51.1 in January.
The 50-mark demarcates contraction from expansion.
At the same time Chinese economy, which has been on a slowdown, saw its manufacturing sector fall at the fastest pace in almost three-and-a-half years in January. China's official Purchasing Managers' Index contracted to 49.4 in January from the previous month's 49.7. It is the weakest index reading since August 2012.
Interestingly, analysts had predicted both India's and China's manufacturing PMI at 49.6 for the month of January, though it meant an increase for Indian manufacturing and a slight fall for China's when compared to the December figures.
The Indian manufacturing sector saw an unexpected rise in January crossing the 50-mark, at the same time Chinese manufacturing PMI fell even below the analysts' expectations.
Factors supplementing India's strong manufacturing PMI in Jan
The Indian firms raised output in January on stronger demand. The new export orders sub-index rose to 52.5 from 51.5, the highest reading in five months, which coupled with a similar increase in domestic orders suggest renewed demand for Indian goods both home and abroad.
"The opening month of 2016 saw a rebound in new business - from both domestic and external clients - leading manufacturers in India to scale up output following a short-lived downturn recorded in December," said Pollyanna De Lima, economist at Markit.
Factors underlining a weak start in 2016 for China's manufacturing PMI
China's key sectors including steel and energy came under severe pressure on account of falling prices and over-capacity.
"The electricity production remained sluggish and the crude steel output continued the weak trend in January, reflecting an ongoing deleveraging process in the industrial sectors," said Zhou Hao, an economist at Commerzbank.
The manufacturing sector was also hit most by China's faltering construction sector, which drives demand for many industrial products.
China, which has started an aggressive capacity reduction in many sectors, could add to the downward pressure on commodity prices.
India vs China's economy
China's economic growth cooled to 6.9 per cent in 2015, the slowest pace in 25 years, adding pressure to policymakers who are already struggling to restore the confidence of investors after a renewed plunge in stock markets and the yuan currency. India, on the other hand, has outpaced China with above 7 per cent annual growth.
Indian manufacturing sector saw an unexpected rebound in the month of January. While the Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, had seen Indian factory output take a hit and slump to a 28-month low of 49.1 in December, it unexpectedly rose to a four-month high in January. Giving a pleasant surprise, India's manufacturing sector Purchasing Managers' Index jumped to 51.1 in January.
The 50-mark demarcates contraction from expansion.
At the same time Chinese economy, which has been on a slowdown, saw its manufacturing sector fall at the fastest pace in almost three-and-a-half years in January. China's official Purchasing Managers' Index contracted to 49.4 in January from the previous month's 49.7. It is the weakest index reading since August 2012.
Interestingly, analysts had predicted both India's and China's manufacturing PMI at 49.6 for the month of January, though it meant an increase for Indian manufacturing and a slight fall for China's when compared to the December figures.
The Indian manufacturing sector saw an unexpected rise in January crossing the 50-mark, at the same time Chinese manufacturing PMI fell even below the analysts' expectations.
Factors supplementing India's strong manufacturing PMI in Jan
The Indian firms raised output in January on stronger demand. The new export orders sub-index rose to 52.5 from 51.5, the highest reading in five months, which coupled with a similar increase in domestic orders suggest renewed demand for Indian goods both home and abroad.
"The opening month of 2016 saw a rebound in new business - from both domestic and external clients - leading manufacturers in India to scale up output following a short-lived downturn recorded in December," said Pollyanna De Lima, economist at Markit.
Factors underlining a weak start in 2016 for China's manufacturing PMI
China's key sectors including steel and energy came under severe pressure on account of falling prices and over-capacity.
"The electricity production remained sluggish and the crude steel output continued the weak trend in January, reflecting an ongoing deleveraging process in the industrial sectors," said Zhou Hao, an economist at Commerzbank.
The manufacturing sector was also hit most by China's faltering construction sector, which drives demand for many industrial products.
China, which has started an aggressive capacity reduction in many sectors, could add to the downward pressure on commodity prices.
India vs China's economy
China's economic growth cooled to 6.9 per cent in 2015, the slowest pace in 25 years, adding pressure to policymakers who are already struggling to restore the confidence of investors after a renewed plunge in stock markets and the yuan currency. India, on the other hand, has outpaced China with above 7 per cent annual growth.
General Awareness
GOI to create ‘Khadi Gramudyog’ network
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Government of India (GOI) wants to create a network of Khadi Gramudyog across villages in India on the 68th death anniversary of Mahatma Gandhi and a book titled Nathuram Godse – The Story of an Assassin is also released on the occasion.
About Khadi Gramudyog
- Khadi is a term used for hand-woven cloth and handspun from made out of cotton.
- Khadi cloths are mainly made in India, Bangladesh and Pakistan.
- In India Khadi movement encourages Indians to become independent on cotton and to minimize the use of foreign brands which are of high cost and give profit direct to the foreigners.
- The freedom struggle revolved around the use of khadi fabrics and thedumping of foreign-made clothes.
Book titled Nathuram Godse – The Story of an Assassin released
- The book titled Nathuram Godse – The Story of an Assassin authored byAnup Ashok Sardesai was released on 30 January 2016 that is the death Anniversary of MK Gandhi.
- Book was released by Ravindra Bhavan’s Chairman Damodar Naik.
- This book tells the whole story of Vinayakrao Godse life.
Martyrs’ Day
Martyrs’ Day is celebrated in the honor of those who lost their lives defending the sovereignty of the nation.
- The death anniversary of the great leader of the Indian independence movementMohandas Karamchand Gandhi is also celebrated as the Martyrs’ Day in India.
- The president, the vice president, the prime minister, the defense, and the three Service Chiefs all gather at the samadhi of MK Gandhi that is at Raj Ghat on Martyr’s Day.
- In 1918 Mahatma Gandhi started Khadi movement for poor people of India.
- Government of India (GOI) wants to create a network of Khadi Gramudyog across villages in India on the 68th death anniversary of Mahatma Gandhi and a book titled Nathuram Godse – The Story of an Assassin is also released on the occasion.About Khadi Gramudyog
- Khadi is a term used for hand-woven cloth and handspun from made out of cotton.
- Khadi cloths are mainly made in India, Bangladesh and Pakistan.
- In India Khadi movement encourages Indians to become independent on cotton and to minimize the use of foreign brands which are of high cost and give profit direct to the foreigners.
- The freedom struggle revolved around the use of khadi fabrics and thedumping of foreign-made clothes.
Book titled Nathuram Godse – The Story of an Assassin released- The book titled Nathuram Godse – The Story of an Assassin authored byAnup Ashok Sardesai was released on 30 January 2016 that is the death Anniversary of MK Gandhi.
- Book was released by Ravindra Bhavan’s Chairman Damodar Naik.
- This book tells the whole story of Vinayakrao Godse life.
Martyrs’ DayMartyrs’ Day is celebrated in the honor of those who lost their lives defending the sovereignty of the nation.- The death anniversary of the great leader of the Indian independence movementMohandas Karamchand Gandhi is also celebrated as the Martyrs’ Day in India.
- The president, the vice president, the prime minister, the defense, and the three Service Chiefs all gather at the samadhi of MK Gandhi that is at Raj Ghat on Martyr’s Day.
- In 1918 Mahatma Gandhi started Khadi movement for poor people of India.
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