On a day of taking tough decisions, the
Government took the most difficult of all:
Raise diesel prices by Rs 5 a litre
(excluding VAT). The late-evening move
also capped the number of subsidised
LPG cylinder a household can get at six
per year. Earlier in the day, the
Government de-allocated four coal
blocks. Diesel will now cost
approximately INR 47 a litre in Delhi. The
price revision comes after more than a
year. However, PDS kerosene was left
untouched. While not tampering with
the retail price of petrol, the Government
decided to reduce the excise duty on the
fuel by INR 5.30 a litre from INR 14.35
(plus education cess of 3 per cent making
it 14.78 per cent). But this benefit is not
being passed on to the consumer. An
official statement said the Cabinet
Committee on Political Affairs’s (CCPA)
decision would be implemented with
effect from midnight of September 13/14.
The revised diesel price in Delhi will be
approximately INR 47 a litre.
Fed rolls out new bond
buying plan
The Federal Reserve opened a new
chapter on Thursday in its efforts to
accelerate the economic recovery, saying
that it would expand its holdings of
mortgage-backed securities, and
potentially undertake other new policies,
until unemployment drops sufficiently or
inflation rises too fast. The Fed said that it
would add USD 23 billion of mortgage
bonds to its portfolio by the end of
September and then announce its plans
for October as part of a new process that
aims to prioritize the Fed’s economic
objectives. The Fed also said, in a
statement following a meeting of its
policy-making committee, that it now
expects to hold short-term interest rates
near zero until at least mid-2015,
extending the forecast it made in January
by about half a year. That has been true
for months, perhaps years, but implicit in
the statement was the Fed’s conclusion
that the situation was no longer
acceptable. Eleven members of the
committee voted for the action; Jeffrey
Lacker, president of the Federal Reserve
Bank of Richmond, was the lone
dissenter.
Govt likely to approve
stake sale in 5 PSUs, IPO
of RITES
Hard pressed to achieve disinvestment
target of INR 300 bn in the current fiscal,
the government will consider the
proposal of stake sale in five state-owned
companies includingHindustan
Copper , Oil India and Nalco . Besides
stake sale, the Cabinet Committee on
Economic Affairs (CCEA) in its meeting
tomorrow, will also consider initial public
offering (IPO) in the Rail India Technical
and Economical Services (RITES). The
agenda of the CCEA, according to
sources, also include stake sale in Neyveli
Lignite and MMTC. The Department of
Disinvestment (DoD), they said, has
proposed 10% stake sale proposal of Oil
India and another 9.59% disinvestment of
Hindustan Copper. Further, a 5% stake
sale of Neyveli Lignite and 12.15% in
Nalco through Offer for Sale (OFS) route
is being proposed. In case of MMTC, the
DoD has proposed 9.33% stake sale. The
DoD has already invited expression of
interest from merchant bankers for
managing these issues.
Indian petrochemicals make way into
Pakistan
Even though liquid fuels from India are yet to make entry
into Pakistan, Indian companies are increasingly finding the
neighbouring country as an important export destination
for petrochemicals. State-run Indian Oil Corp Ltd plans to sell
around 5,000 tonnes of polypropylene to Pakistan every
month this year, double the last year’s monthly average.
Reliance Industries Ltd (RIL), the largest private sector oil
company in the country, also sells around 6,000 tonnes of
the polymer every month to Pakistan. Besides, the Bhatinda
Refinery, jointly promoted by steel magnate Lakshmi N
Mittal and Hindustan Petroleum Corp Ltd is testing waters in
the neighbouring country and has already appointed an
agent, the official, who did not want to be named, said.
Polypropylene is a thermoplastic polymer used in a wide
variety of applications including packaging and labelling,
textiles, stationery, plastic parts and reusable containers of
various types.
Airtel, RCom, Voda among 7 found
violating radiation norms
Seven telecom operators, including RCom , Tata Teleservices
Maharashtra, Airtel and Vodafone, have been found
violating radiation norms laid down by the government
after a random check conducted by officials at a location in
Mumbai. Director General Rajan S Mathews said the
operators should be given some time to ascertain about
towers which are non-compliant. CDMA industry body
AUSPI offered no immediate comment. The new radiation
norms, applicable from September, have lowered limit of
emission from telecom towers by one-tenth compared to
earlier levels. Under the new guidelines, emissions from
telecom antenna mounted on mobile towers should be
equivalent to frequency range in which the antenna
operates. Like, an antenna operating in the frequency range
of 400 Mhz will be allowed to emit 400 watt of energy per
2,000 square metre of area.
Better sense prevails, government
hikes fuel prices but quantum
suggests room for rollback
In a move that was largely inevitable, the union govt today
raised the diesel prices by INR 5 and capped the no of
subsidized cylinders per household to 6. Every cylinder post
the requisitioned six nos. will be available at market prices.
While it is a bold move indeed in the present macro-political
context, the quantum of hikes suggests that room for
rollback has been created in the first place itself as ruling
Congress expects opposition from allies and opposition
parties alike. The cumulative impact of the hikes will
translate into 135bps first round and 120bps approx second
round on the headline inflation. From the view-point of
central bank, while it certainly prepares a ground for
monetary easing in future, the expectations of a cut in policy
rates as early as Monday may be too much to ask for. We
believe that the government needs to deliver aggressively
on policy making to clear supply side bottlenecks before
central bank can start and justify a meaningful monetary
easing and not repeat a front loaded easing as in April 2012
policy.
New India Assurance wins USD 10.5
bn Air India contract
National flag carrier Air India Ltd has insured more than 120
planes for USD 10.5 billion with a consortium led by staterun
insurer, New India Assurance Co. Ltd. The premium
works out to USD 24 million per annum, making the
insurance deal one of the biggest in South and Southeast
Asia. The contract will come into force on 1 October,
according to two Air India executives who did not want to
be quoted. They added that an announcement of the
insurance deal would be made next week. The consortium
led by New India Assurance beat another grouping led
by ICICI Lombard General Insurance Co. Ltd—a joint venture
between ICICI Bank Ltd and Canada’s Fairfax Financial
Holdings Ltd—to win the Air India mandate, the two Air
India executives said
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