สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 5 กันยายน 2556

India among 'Fragile Five' facing funding risks as dollar strengthens

India is among five emerging market countries which could face significant funding risks as the dollar strengthens against their home currencies. The others are Indonesia, Brazil, Turkey and South Africa, according to an Asia/Global Emerging Markets Strategy report from international brokerage Morgan Stanley Asia Limited report. The report dated September 4 noted that external funding remains crucial for many countries in the Asian and emerging market pack, and that a strengthening dollar can ‘ can create a significant challenge, which is already weighing on both earnings power and multiples.’ Current equity positions could also have an impact for India.

(Source: Business Standard)

New RBI Governor Rajan launches financial reforms 2.0

Taking over as the 23rd governor of the Reserve Bank of India (RBI), Raghuram Rajan announced a whole host of near-term and medium-term policy changes aimed at sending a message to domestic and international investors, who have long complained of policy inertia in India at a time when the economy continues to struggle. For starters, the RBI will open a special window for banks to swap foreign currency non-resident (FCNR) dollar deposits at a fixed rate of 3.5% per annum for the tenor of the deposits. The facility will be available for deposits of a minimum tenor of three years. The RBI has also eased its stance on permitting exporters and importers to re-book cancelled forward contracts. Exporters can now do this to the extent of 50% of the value of the cancelled contracts compared to 25% earlier while importers can use this facility up to 25% of cancelled contract value. The RBI has also allowed banks to raise 100% of unimpaired Tier 1 capital through overseas borrowings — a measure that could lead to banks raising more funds in the overseas markets to meet capital requirements. While Rajan announced a series of measures and intentions, he remained tight lipped on his stance on monetary policy. He however confirmed that the mid quarter review of monetary policy will now be released on September 20 instead of September 18, perhaps as a way to account for any change in the US Federal Reserve's quantitative easing policies. The US Fed will announce its policy on September 18. Meantime, in a move aimed at cushioning households from inflation, the RBI governor plans to introduce inflation indexed savings certificates linked to consumer price inflation.

(Source: Financial Express)

Gold-rich temples refuse to unlock idle assets to help Government bring down gold import

Some of India's richest temples such as Tirumala Tirupati, Sree Padmanabhaswamy, Shree Krishna temple of Guruvayur, Shree Siddhivinayak and Vaishnodevi are in no mood to part with their treasure to ease the supply crunch and control the outflow of dollars. The gold trade is keen to get a slice of a possible 20,000 tonne of gold stashed away in peoples' homes and temples, which at the current gold price it worth around $980 -$1000 billion. Tirumala Tirupati Devasthanam (TTD) receives 80-100 kg of gold and 100-120 kg of silver as offerings every month. "Tirupati has a treasure trove of Rs 70,000 crore (10664220000 USD) in the form of gold bars, coins and jewellery," said Swamy Kamalananda Bharati, head of Hindu Devalaya Parirakshana Samity. It deposits the gold in banks to earn interest. It submitted 493.702 kg of ornaments to the Indian Overseas Bank (IOB) for purpose of conversion into gold bars last December,which is equivalent to 338 kgs of pure gold after melting and purification at the government mint at Mumbai. The bank would keep it in the form of bars. Besides bearing the entire cost of transportation, melting and minting into gold bars, the IOB will also pay an interest of 1.61% on the total gold value which in aggregate form at the end of five years will be worth 27.5 kgs of gold. The temple deposits the gold in the bank once it reaches a certain level. The gold given by the devotees will be in the ornaments, lamps, idols etc which may have to be converted to gold bars to be deposited in the banks.

(Source: Economic Times)

Gold buyers rush to order as import rules clarified

Gold buyers lined up to restart imports on Wednesday as the customs department clarified new rules, putting the world's biggest bullion buyer back in the market after a six-week gap and threatening government efforts to underpin the rupee. About a quarter of a tonne of gold waiting at Mumbai airport should head to India's biggest gold market, Zaveri Bazaar, where sales are nearly $10 million a day, and jewellers said they would place fresh import orders as early as Thursday. The Reserve Bank of India (RBI), in a bid to help the government stem the tide of gold imports which had pushed the current account deficit to a record high, told importers on July 22 that a fifth of their purchases would have to be turned around for export.But the rule's sketchy details caused buyers to hold off and instead use stocks that had piled up in April and May when record imports of 304 tonnes provoked the government into hiking duty to an all-time high of 10 percent. On Wednesday, the Indian customs department issued its guidelines on how the central bank's call for gold imports to be split 80 per cent for domestic use and 20 percent for export would be monitored.

(Source: Financial Express)

Land Bill a mortal blow to India’s modernization

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 (LARR) is set to become law. Clearly, Indian farmers who pay zero taxes and contribute a mere 12% of the GDP command unquestioned loyalty of the political class. Many believe that LARR, if made a law, will pretty much be the sound of death for industrialisation in India. With LARR in operation, the commerce and industry minister has lost his battle and can just as well officially abandon the new manufacturing policy with its objective of increasing the manufacturing sector’s share in GDP to 18%. LARR will stop in its track the ambitious DMIC (Delhi - Mumbai Industrial Corridor) project and bring to a standstill the process of planned urbanisation in the country. In their populist frenzy, the political class, chasing electoral prospects, could be putting an end to all prospects of generating jobs in the industrial sector and permanently condemning the poor to live in slums.  The most damaging features of LARR are the extremely complicated procedures and provisions for any future land acquisition by the government for its own needs or for infrastructure projects to be undertaken via the PPP route. These procedures include: an open ended and complex social impact analysis for every acquisition; identifying those whose livelihoods will be affected and compensating them; sharing of capital gains with the original owner over the next 10 years; providing 25 different types of infrastructure services as part of the resettlement and rehabilitation (R&R) provisions; prohibiting land acquisition beyond 5% in districts with multi-crop agriculture and beyond 10% in all single-crop districts; requiring the approval of 80% of the land owners before acquisition can be completed; and authorising the district collector to arbitrarily determine the price of land rather than use a more objective basis for doing so. These complex procedures, put in place ostensibly to protect farmers’ interests, will end up hurting them as the Bill will unleash a tsunami of red tape, litigation and administrative discretion rather than diminishing them as should have been its real objective.

(Source: Financial Express)

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