Month: October 2018

RBI head should work with government or quit, says RSS official

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India governor should work in sync with the nation’s government to support economic growth or he should resign, said the head of the economic wing of Hindu nationalist group Rashtriya Swayamsevak Sangh, which is the fountainhead of Prime Minister Narendra Modi’s ruling party.

RBI Governor Urjit Patel should also “restrain his officials from making differences public,” said the RSS official, Ashwani Mahajan, in an interview on Wednesday. “If he doesn’t follow discipline it would be better for him to resign,” he added.

Modi’s Bharatiya Janata Party (BJP) emerged from the RSS and its members work to get BJP candidates elected. Mahajan is chief of the RSS’s Swadeshi Jagran Manch (SJM) economic group.

Earlier in the day, some local TV channels reported that Patel could consider resigning from his post given a breakdown in relations with the government, sparking a sell-off in the rupee and bonds.

Tensions between the RBI and the government have become increasingly public after the bank’s Deputy Governor Viral Acharya said last Friday night that undermining central bank independence could be “potentially catastrophic”.

His comments indicated that the RBI was pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May.

In a statement, the government said on Wednesday the RBI’s independence was “an essential and accepted governance requirement” but it added that it would continue to extensively consult with the central bank to give its assessments on issues and suggest possible solutions.

Government officials on Wednesday declined to say whether it had for the first time ever used, or threatened to use, powers under the RBI Act that allow it to give the bank instructions. The Economic Times newspaper reported the government had sent letters to Patel in recent weeks exercising those powers.

Mahajan said that the government had every right to use the powers of the RBI act.

Foreign Influence Concerns

RSS’s Manch is critical of the central bank’s hawkish monetary stance, and has criticised the influence in recent years of foreign trained economists including former RBI governor Raghuram Rajan and former chief economic adviser at the finance ministry, Arvind Subramanian.

Mahajan said the central bank and the government should work in tandem to achieve a higher economic growth rate along with lower inflation.

While opposing the appointment of any foreign trained economists at the central bank, he said there was no dearth of “talented persons” with nationalist vision on the RBI board, one of whom could replace Patel if he resigned.

He said higher interest rates were hitting small businesses and there was a need to provide relief to save millions of jobs.

“RBI is adamant, ignoring India’s ground realities,” he said.

The Manch chief also said the RBI should agree to allow the government to take much of its surplus of cash reserves, estimated at nearly 3.6 trillion rupees ($48.67 billion), so that they could be invested, bolstering economic growth.

Earlier, a senior finance ministry official said that the government would like the central bank to pay the government a higher dividend considering the size of the reserves.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US Supreme Court mulls pollution dispute over power plant in India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US Supreme Court on Wednesday appeared unlikely to revive a lawsuit by villagers in India seeking to hold a Washington-based international financial institution responsible for environmental damage they blame on a power plant it financed.

The justices heard an hour of arguments in an appeal by the villagers of a lower court ruling that the International Finance Corp was immune from such lawsuits under US law. Based on questions asked by several justices, the court looks likely to rule in favour of the IFC, which is part of the World Bank Group.

IFC provided $450 million in loans in 2008 to help construct the coal-fired Tata Mundra Power Plant in Gujarat. IFC loans include provisions requiring that certain environmental standards are met.

Lead plaintiff Budha Ismail Jam and other fisherman and farmers who live near the plant sued in federal court in Washington in 2015, saying the IFC had failed to meet its obligations.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Airbus says tougher to meet jet delivery goal after snags

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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European planemaker Airbus softened its key target for jet deliveries on Wednesday and warned that reaching it would be a “greater stretch” after a sequence of industrial problems.

The cautious tone on deliveries – which implied a 2 percent cut in the annual target by changing its parameters to include a recently acquired Canadian jet – came despite higher than expected third-quarter core earnings and strong demand from airlines.

The maker of jetliners, satellites and helicopters said it had made an adjusted operating profit of 1.576 billion euros ($1.8 billion) in the quarter on revenues of 15.451 billion.

Analysts on average expected third-quarter adjusted operating profit of 1.441 billion euros on sales of 15.316 billion, according to a Reuters poll.

Airbus shares rose 0.3 percent to 94.21 euros.

The company has been struggling with fresh industrial problems as production of its fast-selling A321 neo passenger jet hit a snag in Hamburg, Germany, even as bottlenecks eased at some engine makers.

The problems with the A321neo, a model central to Airbus’s ambition to dominate the top end of the single-aisle market and

thwart Boeing’s plans for a new mid-sized passenger jet, were first reported by Reuters.

“A lot remains to be done before the end of the year to fulfil commitments,” Airbus said in a statement.

Airbus stuck to its headline target of around 800 commercial deliveries in 2018 but disclosed this now included 18 deliveries of the Bombardier CSeries jet, renamed A220.

Delegates at a Hong Kong gathering this week had warned that Airbus faced a challenge to meet the crucial goal.

Airbus also trimmed its cashflow target for the year.

Industrial  Challenges

Delays in supplies of engines for medium-haul jets from Pratt & Whitney and French-US supplier CFM International are receding but Britain’s Rolls-Royce last week cut the number of engines it plans to deliver for the wide-body Airbus A330neo this year.

“We have engines and we have the airframes but the whole industrial planning had to be reshuffled time and again … next to some industrial challenges on our own operation,” Finance Director Harald Wilhelm told analysts.

Boeing too has suffered industrial problems, but the world’s largest planemaker last week reported stronger-than-expected profits, reflecting continued strong airliner demand.

The commercial aerospace sector is in the eighth year of an extended upcycle but there are some concerns about airline profitability that usually drives jet orders, speakers at the Airline Economics conference in Hong Kong said this week.

Even so, planemakers and their suppliers are pushing production to record levels based on eight years’ worth of new plane orders, and their attention is focused on ironing out flaws in an already stretched global supply chain.

Airbus said talks aimed at overhauling a loss-making contract with European buyer nations for the delayed A400M military airlifter were advancing “a bit slower than planned,” as Airbus focuses on commercial deliveries and securing the ramp-up of the A320neo family, which includes the A321neo.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Will focus on 4 areas to ensure further improvement in India’s ease of doing business ranking: DIPP Secretary

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government will focus on four major areas, including registering properties, insolvency resolution and paying taxes, next year to ensure further improvement in India’s ease of doing business ranking, a top official said on Wednesday. Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek said reform measures taken by the government has helped improve the country’s rank significantly but there is a need to work more on these areas.

According to the World bank’s doing business report 2019 based on 10 parameters, India climbed 23 points to 77th place.

However, India’s position declined on four parameters — protecting minority rights (7), paying taxes (121), registering property (166), and resolving insolvency (108) — compared to the last year.

“We need to work on four areas — registering property, enforcing contracts, insolvency resolution and paying taxes. Commercial courts were set up in Delhi and Mumbai. Now we have to fast track disposal of commercial cases in these courts, so that the time taken for the disposal comes down,” Abhishek told PTI.

Talking about the areas where more work is required, he said a lot of progress is required in registering properties.

Although digitisation of records has taken place but still there are many gaps to work on, he said, adding insolvency resolution and starting a business are the other major areas where more work would be done.

“These are major indicators in which we will do major improvement,” the secretary said.

On the other hand, he said the ranking has clearly reflected the work carried out in parameters including trading across borders, starting a business, dealing with construction permits.

“All major reforms recognised that is why we see this dramatic improvement,” he said adding in the Insolvency and Bankruptcy Code, “this year, we have got some improvement in access to credit, but the recovery rate has to improve for us to get more credit under insolvency resolution”.

Instead of liquidation, if more and more companies would go for reorganisation, then there will be a significant improvement in the parameter of insolvency resolution.

The World bank ranks countries based on 10 parameters, including starting a business, construction permits, getting electricity, getting credit, paying taxes, trade across borders, enforcing contracts, and resolving insolvency.

Commenting on the report, Federation of Indian Export Organisation President Ganesh Gupta said that various initiatives taken by the government are converging to provide an enabling and supportive eco-system for entrepreneurs and exporters.

“The improvement in trading across border by 66 rank in one go shows how trade facilitation has helped in cutting down time and cost. Government should continue with the reform process with further zeal and push,” he said.

Vishwas Udgirkar, Partner, Deloitte India said the improvement in ranking has been on the back of overall reforms such as use of digital and technology.

“The thrust on infrastructure initiatives for trade and business, especially those centred around logistics and supply chain, have shown results,” he said.

According to Richa Gupta, Senior Director and Senior Economist , Deloitte India, this is a big positive for the economy, and indicates the pace of reform measures underway.

“The gains made can be expected to boost the recovery in the growth further,” Gupta said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US Federal Reserve unveils proposal to ease regulations for larger banks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US Federal Reserve unveiled a proposal on Wednesday that would ease regulations for banks with less than $700 billion in assets, as the central bank looks to tailor rules in line with banks’ risk profiles.

PNC Financial Corp, Capital One Financial Corp, Charles Schwab, and US Bancorp would enjoy reduced liquidity and compliance requirements under the proposal, which the Fed board approved on Wednesday. Several smaller banks would see further reduced regulation as the Fed implements changes ordered in a bank deregulation law Congress passed in May.

The proposal establishes four tiers of regulation for banks with over $100 billion in assets, as the central bank seeks to tailor rules for larger firms. The proposal would reserve the strictest rules for US globally systemic banks, and step down requirements for smaller and less complex firms.

The law rewriting portions of the 2010 Dodd-Frank financial reform law directed the Fed to trim regulations for banks with less than $250 billion in assets, and also gave the central bank discretion to further modify rules for larger banks as it saw fit. Wednesday’s proposal goes beyond the $250 billion threshold authorized by Congress, as it aims to provide relief to all but the nation’s nine largest banks.

According to the proposal, banks with between $250 billion and $700 billion in assets could enjoy a reduced “liquidity coverage ratio,” which requires banks to hold high-quality assets that could easily be turned into cash. The Fed estimated the proposal could reduce that ratio by as much as 30 percent for those firms.

Smaller banks would be subjected to less frequent “stress tests” of their capital plans by the Fed, and face even less restrictive liquidity and capital requirements.

Randal Quarles, the Fed’s vice chair for supervision, said the changes should “meaningfully” reduce compliance costs for banks without injecting significant new risk into the banking system.

“These proposals embody an important principle: the character of regulation should match the character of a firm,” he said.

However, Fed Governor Lael Brainard voted against the proposal, arguing it went beyond Congress’s intent and exposed the financial system to unnecessary risk by easing rules on larger banks. She was the only one of the four current Fed board members to oppose the plan, which now goes forward for public comment.

The proposal reserves the strictest rules for the nation’s largest global banks, and also keeps tougher rules for Northern Trust, as the Fed said banks with over $75 billion in cross-border activity should continue to face stricter rules.

The annual requirement that the Fed conduct stress tests and evaluate bank capital plans would drop to every other year for 11 banks with between $100 billion and $250 billion in total assets. Those banks also would be exempted completely from the liquidity coverage ratio and instead would be subjected to “tailored” liquidity risk management.

Quarles said Wednesday he expects the Fed to quickly move to treat the 2019 stress test cycle as the second year of the proposed two-year cycle. If the Fed adopts that change, banks with less than $250 billion would not post public stress test results until the 2020 cycle.

The proposal also gives the Fed flexibility to reimpose stricter rules on banks below $700 billion in assets if they engage in higher levels of riskier activity. Banks with over $75 billion in nonbank assets, weighted short-term wholesale funding or off-balance sheet exposure would face tougher oversight than similarly sized competitors.

The proposal does not address foreign banks or their US operations. The Fed said it intends to propose a separate rule for those firms “in the near future.” The Fed also said it was working with the Federal Deposit Insurance Corporation on a proposal to tailor “living will” requirements for banks, but did not offer a timeframe for when that proposal could be made public.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Adani Power net profit grows 22% to Rs 387 crore in Jul-Sep quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Adani Power Ltd (ADL) said on Wednesday its consolidated net profit rose by 22 percent to Rs 386.89 crore in the quarter ended September 30, 2018. The company had clocked net profit of Rs 316.88 crore during the same period a year ago, country’s largest private thermal power producer said in a regulatory filing.

Its total income rose to Rs 7,657.23 crore in the quarter under review from Rs 6,414.65 crore in July-September of 2017-18 fiscal.

ADL’s total expenses during the said quarter were at Rs 6,955.35 crore, higher from Rs 6,101.27 in the year-ago quarter.

In a separate statement, ADL said the finance cost for second quarter of 2018-19 fiscal was Rs 1,407 crore as compared to Rs 1,389 crore in the year-ago quarter.

“The increase in finance cost was primarily due to higher borrowing during the quarter, which was partially offset by gains on forex hedges”, it said.

It further said that the average Plant Load Factor (PLF) achieved during the second quarter of FY 2018-19 was 65 per cent higher as compared to 63 per cent achieved in the second quarter of FY 2017-18.

This growth was on account of better coal availability and strong demand from DISCOMs, the company said.

Commenting on the results, Gautam Adani, Chairman, Adani Power said, “We are pleased to note the progress in ensuring sustainable operations of the Mundra power plant, with the Hon’ble Supreme Court permitting the Gujarat Government to approach the CERC for implementation of recommendations made by the High Power Committee.

“We have also received other important Regulatory and judicial approvals for compensation claims of our projects at Tiroda and Kawai. With the quick ramp up of coal supplies under SHAKTI, we firmly believe that these developments will help the plants achieve cash flow certainty and improvement in long-term profitability. We remain committed to our goal of catering to India’s growing power demand and contributing significantly to its economic growth.”

Adani Power (APL), a part of the diversified Adani Group, is the largest private thermal power producer in India.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CAIT asks Modi to exempt payment gateways from data localisation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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 The Confederation of All India Traders (CAIT) on Wednesday said it has written to the Prime Minister seeking exemption of payment gateways from mandatory data localisation norms.

Although, the traders’ body appreciated the move to safeguard data privacy it said that the there must be a distinction between the firms which have personal data and the payment firms which have financial data and mostly card numbers.

“The Confederation of All India Traders has sought intervention of the Prime Minister to make distinction between such companies or institutions those who have real time data and others who use primary data for making transactions to happen,” a CAIT statement said.

It further said: “Digital platforms (like Facebook, Amazon, Google) and banks have access to personal consumer data such as name, address, contact details. Such data should necessarily be stored in India to prevent any misuse, including for political purposes.”

On the other hand, it observed that payment technology companies like Visa, Mastercard and RuPay which “only have a 16 digit card number which is stored with them, and as such that is not personally identifiable data should not be forced to be stored in India, as it does not serve any purpose with regards to law enforcement, or misuse”.

The traders’ body also sent copy of the letter to the RBI Governor, Finance Minister Arun Jaitley, IT Minister Ravi Shankar Prasad, BJP President Amit Shah among others.

The deadline for compliance with the Reserve Bank of India’s order ended on October 15 and financial technology companies still expect some exceptions for them.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow