สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 20 กุมภาพันธ์ 2557

Foreign investors bond with India, close in on $5.5-billion T-bill quota

Indian bonds are once again a favourite with foreign institutional investors (FIIs). The first 11 sessions of February have seen FIIs buy $1.6 billion worth of bonds, a strong run rate, data from the Securities and Exchange Board of India (Sebi) show. The purchases come on the back of a net $2 billion in January. FIIs are, however, betting almost exclusively at the short end of the curve, snapping up high-yielding treasury bills; as on February 17, FIIs had exhausted 99% of the $5.5-billion investment limit in T-bills. The yield on treasury bills has been ruling at around 9% since January, while the yield on the most liquid benchmark 10-year 8.83%, 2023 government bond has been around 8.75% levels. At the weekly auction on Tuesday, the cut-off yield on the 91-day Treasury bill was even higher at 9.11%. Equally important, the one-month offshore non-deliverable forward (NDF) dollar/rupee premium has dropped to levels of 20-30 paise over the last 45 days. “It’s a low-risk arbitrage trade and, therefore, it may continue as long as offshore hedging is conducive,” said Hitendra Dave, head, global markets, HSBC. In the government bonds category, 76% of the $14.5-billion investment has been exhausted while in corporate bonds, FIIs hold a mere $14 billion out of the total available $51-billion limit. The Reserve Bank of India (RBI) has been making efforts to encourage more long-term money into the bond market. In January, the central bank had increased the investment limit for long-term foreign investors in government bonds by $5 billion to $10 billion, effectively reduced the limit available for short-term investments by the same margin. Last week, the RBI reduced the sub-limit of FII investment into short-term commercial paper by $1.5 billion.

(Source: Financial Express)

India to allow vehicles coming from neighbouring countries

India will soon start issuing international permits for vehicles entering the country from some of its neighbours, in sync with the plan to build a dedicated international highway. According to sources, such permits would be issued to both commercial and passenger vehicles from Bangladesh and the facility will later be extended to other nations like Nepal, Bhutan and Mayanmar. "An international permit would mean that both passenger and commercial vehicles from another country can enter India despite their being registered in their native country," said a senior road ministry official. The proposed international highway is expected to help increase intra-SAARC trade, which is now much below its potential.Since such a system will have to be implemented with greater security, these permits would come with an IT tracker showing the movement of vehicles. "This plan has got an approval from the ministries of home, finance, defence and external affairs, and it is for the ministry of roads and transport to implement the same," the official added. For this, the finance ministry will have to improve customs check-post facilities.The move comes after India committed at the SAARC summit that it would encourage road connectivity and allow vehicles from some SAARC nations to enter the country, to boost the exchange of culture and trade. Increasing rail, port and air connectivity among SAARC countries is also on the cards. "There is huge infrastructural constraint in the region, and we need to address that though greater land and air connectivity and creating port linkages. We need to have freight corridors that will be able to bring down transit costs and road is the first phase of this step," the official said. The official said the first permit can be issued as early as 2016.Experts say such a step would have a multiplier effect on the revenues of India, be it in terms of increase in collections of excise and customs duties, or in terms of imports, exports, and the revenues earned by transport division for these permits. "A decision is already in place by the Trade & Economic Relations Committee for a calibrated approach to improve trade between SAARC countries, and India is working towards first increasing the connectivity within the region," the official said. SAARC is an eight-nation group that includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Sri Lanka, Pakistan and Nepal. The SAFTA agreement on goods came into force on January 1, 2006, which required the developing countries — India, Pakistan and Sri Lanka — to bring down their customs duties to 20% in the first phase of the two-year period ending in 2007, and to zero by 2016 in phases. Also, the negotiations for the Agreement on Promotion and Protection of Investment are also on.

(Source: Financial Express)

Government to set the terms of 7th Pay Panel today

The union cabinet will on Thursday freeze the terms of reference of the seventh pay commission, allowing the government to take credit for recalibrataion of salaries of central government employees that could take up to two years. The cabinet will also consider a proposal to set up a non-statutory coal regulator and also another one to convert 7,200 kms of state roads to national highways, which could come handy when the UPA seeks votes. The seventh pay commission will be headed by retired Supreme Court judge Ashok Kumar Mathur. It will submit its report in 19 months and the award will be effective January 2016, the government had said earlier this month. The award will benefit nearly 3,500,000 central government employees and also cover defence personnel.  The commission will have Petroleum and Natural Gas Secretary Vivek Rae as full time member while Rathin Roy, Director, National Institute of Public Finance and Policy will be a part time member. The terms of reference will spell out the categories of employees covered by the review that seeks to adjusts salaries usually after a decade. In the interim, central government employees get two installments of dearness allowance every year to compensate for price rise. The government can also task the commission with any other issue tied to employee compensation.

(Source: Economic Times)

IMG on FDI policy to meet today

The PMO has set up an inter-ministerial group (IMG) headed by the industry secretary to simplify the language of the policy on FDI. The group, headed by Department of Industrial Policy and Promotion (DIPP) secretary Saurabh Chandra, will hold its first meeting tomorrow (Thursday), an official said. "Last month, the PMO constituted the IMG to further simplify the language or structure in the text of the FDI policy. It will help investors in understanding our policies," the official added. Besides the DIPP, officials from the finance and other ministries would be part of the IMG.

(Source: Financial Express)

Economic Section

Royal Thai Embassy