Be aware of Japan

Be aware of Japan

Indian open market Bullish economy is managed by the finance ministry,SEBI and RBI,it is supposed.How do they manage,it is another story full of contradictions.

Palash Biswas

Bullish mood Union Finance Minister Arun Jaitley along with Minister of State Nirmala Sitharaman at a press conference at National Media Centre in New Delhi on Saturday. PTI

We are often mistaken while we discuss neoliberal policies and economic reforms in context to the incarnation of the reform God,dethroned Dr Manmohan Singh who so called secular left intellectuals glorify to defy the shafron regime.We treat 1991 as the cut off year as the original neoliberal Indian economy was started up with linking Indian economy with Dollar under socialist model of development.

India economy,meanwhile is reduced to an US periphery, as Indian ruling hegemony consisted of bipolar parliamentary system opted for open market economy.

Whereas,the first phase of economic reforms devastated indian production system and the producers and workers have become Have Nots to feed the Haves.India signed a nuclear deal to delink with nonalignment era and eventually became the partner in the US war against terror,accomplished the agenda to make India a foreign territory deprived of freedom,fraternity,equity,justice,civic and human rights,rule of law and sovereignty,the shafron followers of Mussolini and Hitler seek an alliance with Japan and don`t ask me what does Japanese imperialism means.

The prime minister of India is making Banaras ,perhaps the most ancient city of the human civilization a smart city and inclusive economic empowerment is tagged with Bullet,all to be supported with Japanese capital and technology.

You have not to go far away to feel the japanese influence in the economy as Bangladesh remains the ingredient bleeding part of the Indian geopolitics.Where absence of labor rights and the identity of the greatest donors is quite coincidental.It is also a rare coincidence,that the protagonists of Hinu nation intend to kill labour laws in India just before striking alliance with Japan.

Hence,note the date as the cut off for second generation of reforms.

Indian open market economy is managed by the finance ministry,SEBI and RBI,it is supposed.How do they manage,it is another story full of contradictions.

Bad loan is the basic cause of strategic selling off the PSBs.Now RBI guv suddenly declares that Indian banks` bad loan levels not so scary! The declaration,incidentally,comes just after the much hyped mass inclusion with the Jan Dhan Scheme in which PSBs have to pump in no less than seventy five thousand crores without any chance of recovery whatsoever as the biometric citizens deprived of employment are appeased with a debit card which would only boost the market of consumer goods in the festival season ahead and has not to contribute to the economy either.

Bank unions or employees are not concerned at all as they are not thinking anything about disinvestment,IPO or changed management or unlimited private voting right thanks to Banking Amendment Act,They are least concerned that the finance minister is already implementing Nayak recommendations.Restructuring of the PSBs would not spare either the Reserve Bank of India which have to be led by a coo as soon as RBI amendment act is passed and all its departments have to be injected with private management.

Just because,Bank employees,mostly educated and aware of economic developments,have to wait for Seventh Pay Commision.Meanwhile,

the Government is likely to approve a hike in dearness allowance to 107 per cent from the existing 100 per cent, benefiting around 30 lakh Centre's employees and its 50 lakh pensioners including dependents.

"The average rate of retail inflation for industrial workers from July 1, 2013 to June 30, 2014 works out to be 7.25 per cent. Thus, the Central government will hike dearness allowance for it employees by 7 per cent," an official said.

He said the Finance Ministry will now put a Cabinet proposal for approval of 7 per cent DA hike from July 1 this year as the revised Consumer Price Index—Industrial Workers data for June was released by Labour Ministry yesterday.

With increase in DA, the pensioners will also gain as the benefit provided to them as dearness relief will be hiked to 107 per cent of basic pay.

The previous UPA government had increased DA to 100 per cent from 90 per cent with effect from January 1, 2014, on February 28 on the basis of agreed formula for revision of the allowance.

However, the central government employees' union is not very enthused by the 7 per cent hike in the dearness allowance as their long pending demand of merger of DA with basic pay has not been given heed by 7th Pay Commission and the government.

"The erosion of value of wages is unbearable at 50 per cent dearness allowance. Now it will be 107 per cent. It is high time to merge DA with basic pay to provide relief to employees," Confederation of Central Government Employees' President KKN Kutty told PTI.

"We had submitted our memorandum in this regard to 7th Pay Commission. They forwarded it to Central Government." He added that they have appraised the NDA government on the issue.

"But no decision has been taken so far," he said.

With merger of DA with basic pay, the salary and allowances paid in proportion of basic pay are increased. As per earlier practise DA was merged with basic pay once it breached 50 per cent mark. But 6th Pay Commission has disallowed that.

RBI is nowhere to manage the economy except deciding the interest rates.While SEBI failed to regulate the stock exchange as well as the ponzi networking.Sardha scandal exposed RBI as well as SEBI official red handed by CBI while big exposes of shares and listed companies without any fundamental surfaced to undermine the SEBI myth.

The new Indian Express reports:

A special team of the CBI and Enforcement Directorate (ED), which is probing the multi-crore Saradha chit fund scam, will leave for Mumbai and Goa to quiz some officials of the Securities Exchange Board of India (SEBI) and the RBI. It will also conduct raids at some properties in Goa.

The move comes after the interrogation of  Saradha Group chairman Sudipto Sen and East Bengal Football Club secretary Debabrata Sarkar alias Nitu by the CBI on Friday. Both were grilled jointly and separately for hours.

The agency has also summoned two businessmen -- Sajjan Agarwal and his son Sandhir Agarwal -- whom Sudipto had named in his first letter to it before fleeing the city in April last.

The Saradha chief had said during the questioning that he had paid `40 core to the two through Sarkar for ensuring "protection from the SEBI and RBI investigation" against his companies for mobilising funds from the public without their requisite permission.

It was on the basis of Sudipto's claims that CBI decided to send a team, accompanied by the ED officials, to the SEBI and RBI headquarters in Mumbai. The team would also meet the market regulator's chairman, U K Sinha.

Sarkar had taken `70 lakh from Sudipto  every month for several years ostensibly to bribe the SEBI and RBI officials, and the sleuths wanted to confirm whether he had actually handed over the money to them or invested it in his own businesses.  Since the CBI had found evidence of Sarkar's frequent visits to Goa, the agency and the ED feel that he might have diverted some portion of the funds received from the Saradha chairman to invest in a hotel in Goa. They are also checking out his real estate business in the city and the properties owned by his kin.

In a related development, the ED has summoned TMC Rajya Sabha MP Ahmed Hassan alias Imran for the third time for questioning, while the CBI has received clearance from a local court to interrogate, raid and if need be arrest two more Rajya Sabha MPs.

The ED had summoned Hassan twice in the past, but he was evasive in his responses. In its strongly worded third notice, the ED has asked the MP to appear with details of all the financial transactions he had with Sudipto when he sold his Bengali daily "Dainik Kalam" to the Saradha Group.

Though the MP had received a huge amount from Sudipto, the ownership of the publication was never transferred and he also arranged for the sale of an Urdu daily, Azad Hind, for which Hassan was paid another large amount, said an ED official.  Hassan, who has been summoned before the ED on Monday said, "I will certainly go, cooperate with them and reply to all their questions. I was never involved in any financial dealings with Saradha Group."

On the other hand as the Hindu Business line reports:

With green shoots emerging after first quarter GDP figures showed a pick-up in economic growth at 5.7 per cent against 4.7 per cent in the same quarter last year, Finance Minister Arun Jaitley has some reason to cheer.

Sharing some of his optimism with the media last week-end, Jaitley said the first quarter growth rate was "encouraging" and with the long-term impact of all the new initiatives taken by the Government setting in, he was "sure that the impact in the coming quarter would be much larger."

However, inflation continues to be a cause for concern, despite some moderation, he said adding that more sectors were indicating a positive trend.

Asked about when interest rate cuts can be expected, the Finance Minister said, "Left to myself, I would say, very soon. I hope that those who decide are also listening."

Deficit concern

Jaitley said the fiscal deficit figures in the first quarter (56.1 per cent of the Budget target) do not represent the pattern of the whole year. Tax collection, particularly advance taxes, have not yet started coming in, he said, adding the first quarter was also burdened with the refund of the last quarter of the last fiscal. A combination of these factors does not represent a proper state of the fiscal deficit, he admitted.

"I gave a target of fiscal deficit of 4.1 per cent in the Budget. I, at that stage, said that the figure given by my predecessor in the vote of account appears a daunting task, but I accepted the challenge and it would be my endeavour to meet that. So what was I accepting as a challenge, today I feel with first quarter GDP numbers, as something which is certainly achievable." He said.

Hopeful of a consensus on the Goods and Services Tax, Jaitley said too many items cannot be kept out of it as the larger objective would get defeated. "I have already discussed the issue with the Finance Minister of Gujarat and intend to meet other States that have some issues," he added.

Coal blocks

The Finance Minister said the impact on the recent Supreme Court ruling on coal block allocations already made would depend on how and what shape the litigation further takes.

However, he said the silver lining in the judgment was that it moved the system towards a fairer methodology of allocation of natural resources. "But we can't allow the fate of the coal blocks to hang in mid-air, he said.

He hoped a decision, either way, does not linger.

On another major reform step – the insurance Bill – which is with the Select Committee at present, the Finance Minister said, "I don't think we have to go so far (calling a joint session of Parliament)."

He said he was "reasonably confident because any political party (read Congress) which mooted the idea of this Bill in the past, can't have any serious reservations against it," he said, adding that "I do see positive attitude from the principal Opposition party."

Jaitley said the Select Committee would soon start its work on the Bill, and was hopeful of its passage in the next session.

On the other hand,Power producers managed to generate more electricity and reduce supply deficit in the January-July period. But, whether they will be able to sustain the momentum remains to be seen, as a dip in coal stocks at thermal power plants is threatening to disrupt power supply in parts of North India.

According to the Central Electricity Authority, 19 out of the 27 power plants in the northern region of the country have less than seven days of coal stock. This has resulted in increase of peak shortage to 5,323 MW on August 29 from 4,467 MW on August 26 in the region, according to National Load Dispatch Centre (NLDC).

Within the region, Uttar Pradesh is facing the biggest shortage of electricity according to the NLDC.

On August 29, the State had a peak shortage of 3,210 MW. Increasing the pressure on the State's power plants is the low level of coal stocks. In Uttar Pradesh, 10 out of 11 coal-based plants have critical levels (less than seven days) of fuel.

The level of bad loans at Indian banks is a "concern" but is not "scary", Reserve Bank of India (RBI) Governor Raghuram Rajan said in a newspaper interview published on Sunday.

A prolonged economic slowdown has hit Indian banks' balance sheets, with stressed loans - those categorised as bad and restructured - amounting to about 10 per cent of all loans. Fitch Ratings expects stressed assets to reach 14 per cent of loans by March next year. The bulk of these bad loans are related to infrastructure projects, which have made banks circumspect over lending.

"Is it of concern? Yes. Is it scary? No," Rajan told the Times of India, adding " The point is there are two or three silver linings in the cloud of distressed assets." He said many delayed infrastructure projects were "getting back on stream" as the economy improved, and booming equity markets will also help banks raise the required capital.

He also downplayed concerns that rising bad loans would lead to a liquidity crisis in the Indian banking system similar to the one witnessed globally after the Lehman Brothers went bust in 2008. "Unlike the banking crisis in the West, where the worry was who would pony up the money, here there is no uncertainty," he said. "The government will do it. It has never let any bank it owns go under."

New Delhi has been injecting funds into state lenders to help them meet minimal capital ratios mandated by Basel III norms. This year it will infuse 112 billion rupees. But analysts say more funds will be needed. With its finances in dire straits, the government plans to sell off a part of its holdings in the banks to help bridge their capital shortfall.

While a sluggish economy is the main reason for a rise in distressed assets, a RBI report last week also blamed lending to certain 'excessively leveraged' groups. The launch of a corruption investigation at state-controlled Syndicate Bank has raised broader concerns about weak oversight, graft and politically directed lending at state banks. Rajan said a change in the process of appointments at these banks will help address the issue. "When you are putting someone in charge of 5 trillion rupees of assets, you need an appointment process which is state-of-the-art," he said. "I think you can improve the process tremendously without going through the radical step of privatization."

Then RBI governor Raghuram Rajan says the objective is to limit retail inflation to 6% by 2016, but that doesn't necessarily mean monetary policy has to be tight all the way.

What does it mean?

Mind you,asked about when interest rate cuts can be expected, the Finance Minister said, "Left to myself, I would say, very soon. I hope that those who decide are also listening."

Deficit concern

The decisions and policy making is the responsibility of the finance ministry which relies much on private parties and corporate lobbying which is just focused on free inflow of foreign capital and all round FDI raj.

Meanwhile,the prime minister is doing everything to open the floodgates of Japanese capital as well as technology for Indian economy as Indian Prime Minister Narendra Modi arrived in Japan on Saturday seeking to capitalise on his affinity with Japanese counterpart Shinzo Abe to strengthen security and business ties on his first major foreign visit since his landslide election victory in May.

Modi is one of only three people that Abe follows on Twitter, while the Indian leader admires the Japanese premier's brand of nationalist politics.

"We will explore how Japan can associate itself productively with my vision of inclusive development in India," Modi said before departing on Saturday for the five-day visit.

He listed manufacturing, infrastructure and energy as key areas for cooperation. In his previous role as the chief minister of Gujarat, Modi had actively courted Japanese investment.

Modi, 63, is embarking on an intense month of diplomacy in which he will receive Chinese President Xi Jinping before meeting U.S. President Barack Obama in Washington as he seeks to carve out a stronger role for India as a global player.

In Japan, he will lobby for Abe to back a nuclear energy pact, although hopes of striking a similar accord to one reached with the United States in 2008 had faded in the run-up to the visit.

Japan wants explicit guarantees from India, which has not signed the nuclear non-proliferation treaty, to limit atomic tests and allow closer inspection of its facilities to ensure that spent fuel is not used to make bombs.

Speaking to Japanese reporters, Modi addressed those concerns: "Our track record of non-proliferation is impeccable," he said, adding that India would uphold a "unilateral and voluntary" moratorium on explosive nuclear weapons testing.

Also under discussion will be a proposal to formalise a 'Two Plus Two' format for talks bringing together the foreign and defence ministers of both countries, reflecting shared concerns about an increasingly assertive China.

BUDDHISM AND BULLET TRAINS

Modi was due to attend a dinner with Abe on Saturday evening in Kyoto, a city the Indian leader associates with a Buddhist heritage shared by both Japan and India.

Modi also hopes that Kyoto will serve as a template for his vision of building 100 'smart' cities in India - and to develop the ancient holy city of Varanasi on the river Ganges that he represents in parliament.

At his next stop in Tokyo, Modi will seek to drum up the inward investment he needs to bring to life the appeal to "Come, make in India" he made in a speech this month to mark India's independence day.

India, Asia's third-largest economy after China and Japan, needs faster economic growth to create work for the one million young people who enter the workforce every month.

In early steps, Modi has allowed foreign investors to own 100 percent of railway projects with an eye to drumming up interest in building India's answer to Japan's high-speed 'bullet' trains. He is also courting Japanese investment in an ambitious industrial "corridor" to run between Delhi and Mumbai.

Japan's Honda Motor Co Ltd, Suzuki Co Ltd, Sony Corp and Toyota Motor Corp are household names in India. Yet, India accounts for only 1.2 percent of Japan's total outward foreign direct investment.

"Companies in Japan have been considering India over the last two, three years very actively, but probably the political environment was a little tricky," said Harish H.V., a partner and head of corporate finance at advisory firm Grant Thornton.

"Now that we have a new government which is considered pro-investment, ideally it's a good time."

RBI Governor Raghuram Rajan's comments to the Times of India came on the heels of U.S. jobs data which has heated up speculation over when the Federal Reserve is likely to raise interest rates.

Any decision by the Fed to raise rates, which have been held near zero since December 2008, will have implications for economies like India, as it could lead to capital outflows from emerging markets.

That could put pressure on emerging market currencies, particularly those with economies running high current account deficits, as India was last summer when talk of the Fed trimming its monetary stimulus led to a sharp depreciation in the rupee.

India has since taken action to correct its current account deficit and increase foreign exchange reserves.

"We certainly have done a great deal of preparation and are in a very different position from the summer of 2013," Rajan told the newspaper.

"My sense is that even when the Fed withdraws, people, after an initial bout of withdrawal, may consider India a good place to leave their money."

Rajan, a former chief economist at the International Monetary Fund, took over the reins at the RBI a year ago, when pressure on the rupee had become acute.

Having weathered that storm by taking by taking steps to boost currency reserves and narrow the current account gap, the rupee avoided a re-run of the crisis when the Fed actually began tapering last December.

Curbs on gold imports, such as higher duties, helped dramatically narrow India's current account deficit to $32.4 billion in the fiscal year that ended in March from $87.8 billion a year earlier.

India also built up its foreign exchange reserves, partly through measures that helped banks raise $34 billion in overseas loans and deposits from the Indian diaspora.

"We have plenty of reserves, but I see reserves as a second or third line of defence," Rajan said. "The primary line of defence is we should be attractive."

Gross domestic product data released on Friday showed India's lumbering economy grew at its fastest pace in more than two years in the quarter ending in June, and strengthening global demand should help boost exports.

Adding to the cheer, falling global crude prices have helped improve the health of public finances by drastically slashing the government's fuel subsidy bill.

The central banker, who predicted the global financial crisis in 2005, said his commitment to cool surging prices will also support the rupee when U.S. rates finally do rise.

Rajan wants to reduce retail inflation to 6 percent by 2016 from near 8 percent at present, and left interest rates steady early this month, citing inflationary risks from the weak summer monsoon rains.

Foreign relations of India

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