India’s IIP remains negative, declines 0.5% in March 2014
As per the Quick Estimates of Index of Industrial Production (IIP) with base year 2004-05 for the month of March 2014 released by the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation (MoSPI), the industrial production remained negative for the second consecutive month, shrinking 0.5% in March 2014 due to poor performance in manufacturing, especially capital goods.
Output as assessed by the IIP remained almost flat in 2013-14 and slumped 0.1% compared with an expansion of 1.1% in 2012-13.
The General Index for the month of March 2014 stands at 193.2, which is 0.5% less as compared to the level in March 2013. The cumulative growth for the period April-March 2013-14 over the corresponding period of the previous year is at (-) 0.1%.
Compilation Sources for IIP:
IIP is compiled using data gathered from 16 source agencies viz. Department of Industrial Policy & Promotion (DIPP); Indian Bureau of Mines; Central Electricity Authority; Joint Plant Committee; Ministry of Petroleum & Natural Gas; Office of Textile Commissioner; Department of Chemicals & Petrochemicals; Directorate of Sugar; Department of Fertilizers; Directorate of Vanaspati, Vegetable Oils & Fats; Tea Board; Office of Jute Commissioner; Office of Coal Controller; Railway Board; Office of Salt Commissioner and Coffee Board.
As per the Quick Estimates of Index of Industrial Production (IIP) with base year 2004-05 for the month of March 2014 released by the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation (MoSPI), the industrial production remained negative for the second consecutive month, shrinking 0.5% in March 2014 due to poor performance in manufacturing, especially capital goods.
Output as assessed by the IIP remained almost flat in 2013-14 and slumped 0.1% compared with an expansion of 1.1% in 2012-13.
The General Index for the month of March 2014 stands at 193.2, which is 0.5% less as compared to the level in March 2013. The cumulative growth for the period April-March 2013-14 over the corresponding period of the previous year is at (-) 0.1%.
Compilation Sources for IIP:
IIP is compiled using data gathered from 16 source agencies viz. Department of Industrial Policy & Promotion (DIPP); Indian Bureau of Mines; Central Electricity Authority; Joint Plant Committee; Ministry of Petroleum & Natural Gas; Office of Textile Commissioner; Department of Chemicals & Petrochemicals; Directorate of Sugar; Department of Fertilizers; Directorate of Vanaspati, Vegetable Oils & Fats; Tea Board; Office of Jute Commissioner; Office of Coal Controller; Railway Board; Office of Salt Commissioner and Coffee Board.
Bharti Airtel raises about $2 billion in Dual Currency Bond sale
India’s largest telecom company Bharti Airtel raised around $2 billion in a dual currency international bond sale. It is the largest debt issuance by a domestic company till date. Bharti sold dual currency dollar and euro bonds to raise the money which will be used for repayment and refinancing of existing foreign currency debt. It is a first dual currency issuance by an Indian issuer and also largest fund raising exercise at a single time by an Indian issuer.
What are Dual Currency Bonds?
Dual Currency Bonds pay interest coupons in one currency and principal redemption for a fixed sum in a second currency, often the dollar.
A company may prefer issuing a dual currency bond to hedge any foreign exchange flows from its operations, or take a speculative view on currencies in order to get a lower cost of capital. Investors generally get an above-market coupon, but run the risk that, in this example, the dollar could plunge below the exchange rate used when the amount was fixed. Such bonds are enticing to borrowers who operate in the redemption currency because they have no long-term exchange rate risk.
India’s largest telecom company Bharti Airtel raised around $2 billion in a dual currency international bond sale. It is the largest debt issuance by a domestic company till date. Bharti sold dual currency dollar and euro bonds to raise the money which will be used for repayment and refinancing of existing foreign currency debt. It is a first dual currency issuance by an Indian issuer and also largest fund raising exercise at a single time by an Indian issuer.
What are Dual Currency Bonds?
Dual Currency Bonds pay interest coupons in one currency and principal redemption for a fixed sum in a second currency, often the dollar.
A company may prefer issuing a dual currency bond to hedge any foreign exchange flows from its operations, or take a speculative view on currencies in order to get a lower cost of capital. Investors generally get an above-market coupon, but run the risk that, in this example, the dollar could plunge below the exchange rate used when the amount was fixed. Such bonds are enticing to borrowers who operate in the redemption currency because they have no long-term exchange rate risk.
Govt should reduce its shareholding in PSBs to below 50%: RBI Committee
An RBI committee headed by former chairman of Axis Bank PJ Nayak has said in its report that the government should bring down its stake in Public Sector Banks (PSBs) to below 50%.
Key Suggestions proposed by the RBI Panel:-
1) On existing Governance pattern of PSBs:
Criticizing the way in which the 26 PSBs are being currently governed, the panel blamed several “externally imposed constraints” like dual regulation by the RBI and finance ministry and external vigilance by agencies like the CVC and CAG for the distress of banks.
The government should reduce its stake in these banks to less than 50%, along with certain other executive measures for the removal of these constraints.
The Centre should distance itself from the governance of banks and the Bank Nationalization Acts of 1970 and 1980, along with the SBI Act and SBI Subsidiary Banks Act, be repealed as it finds “the selection process for directors is increasingly compromised”.
2) On Government’s powers in relation to the governance of banks
All banks should be incorporated under the Companies Act and a Bank Investment Company (BIC) be set up to which the government transfers its holdings in banks. BIC should be given power of governance of the banks. Until BIC becomes functional, a Bank Boards Bureau comprising former senior bankers should advise all board appointments, including those of chairmen and executive directors.
3) On existing Human Resource Policy in Banks
Change in human resource policy to encourage younger people joining top management. Private sector banks should be provided a more level-playing field with the public sector counterparts.
4) On governance issues in private sector banks
Ownership constraints that could misalign the interests of shareholders with those of top management must be removed. Allowing larger block shareholders generally enhances governance.
5) On distressed banks
Distressed banks, private equity funds, including sovereign wealth funds, should be allowed to take control of stakes of up to 40%.
6) On Evergreening of bad loans
Boards of banks need to be vigilant about the quality of the loans. The policy of private sector banks can be considered which incentivises senior management on the basis of bank profitability, and disburses the compensation through stock options. There is potential incentive to evergreen assets in order that provisions do not make a dent in profitability.
In the case of evergreening, fines can be slapped through cancellations of unvested stock options and claw-back of monetary bonuses on officers concerned and on whole-time directors, and that the chairman of the audit committee be asked to step down from the board.
An RBI committee headed by former chairman of Axis Bank PJ Nayak has said in its report that the government should bring down its stake in Public Sector Banks (PSBs) to below 50%.
Key Suggestions proposed by the RBI Panel:-
1) On existing Governance pattern of PSBs:
Criticizing the way in which the 26 PSBs are being currently governed, the panel blamed several “externally imposed constraints” like dual regulation by the RBI and finance ministry and external vigilance by agencies like the CVC and CAG for the distress of banks.
The government should reduce its stake in these banks to less than 50%, along with certain other executive measures for the removal of these constraints.
The Centre should distance itself from the governance of banks and the Bank Nationalization Acts of 1970 and 1980, along with the SBI Act and SBI Subsidiary Banks Act, be repealed as it finds “the selection process for directors is increasingly compromised”.
2) On Government’s powers in relation to the governance of banks
All banks should be incorporated under the Companies Act and a Bank Investment Company (BIC) be set up to which the government transfers its holdings in banks. BIC should be given power of governance of the banks. Until BIC becomes functional, a Bank Boards Bureau comprising former senior bankers should advise all board appointments, including those of chairmen and executive directors.
3) On existing Human Resource Policy in Banks
Change in human resource policy to encourage younger people joining top management. Private sector banks should be provided a more level-playing field with the public sector counterparts.
4) On governance issues in private sector banks
Ownership constraints that could misalign the interests of shareholders with those of top management must be removed. Allowing larger block shareholders generally enhances governance.
5) On distressed banks
Distressed banks, private equity funds, including sovereign wealth funds, should be allowed to take control of stakes of up to 40%.
6) On Evergreening of bad loans
Boards of banks need to be vigilant about the quality of the loans. The policy of private sector banks can be considered which incentivises senior management on the basis of bank profitability, and disburses the compensation through stock options. There is potential incentive to evergreen assets in order that provisions do not make a dent in profitability.
In the case of evergreening, fines can be slapped through cancellations of unvested stock options and claw-back of monetary bonuses on officers concerned and on whole-time directors, and that the chairman of the audit committee be asked to step down from the board.
Lt Gen Dalbir Singh Suhag appointed as new Army chief
The government appointed Lt Gen Dalbir Singh Suhag as the next Chief of the Indian Army. The Union Cabinet cleared the name of Vice Army Chief Lieutenant General Dalbir Singh Suhag as the successor to Gen Bikram Singh, who will retire on July 3, 2014.
Suhag was the most senior officer in the Indian Army after Bikram Singh. He was recommended by the Ministry of Defence for further consideration by the Appointments Committee of Cabinet (ACC).
The government appointed Lt Gen Dalbir Singh Suhag as the next Chief of the Indian Army. The Union Cabinet cleared the name of Vice Army Chief Lieutenant General Dalbir Singh Suhag as the successor to Gen Bikram Singh, who will retire on July 3, 2014.
Suhag was the most senior officer in the Indian Army after Bikram Singh. He was recommended by the Ministry of Defence for further consideration by the Appointments Committee of Cabinet (ACC).
To know about the candidates contesting elections is a fundamental right of citizens under Article 19(1)(a): Supreme Court
The apex court held that it is mandatory for the candidates contesting elections to disclose information about assets and liabilities of even their spouse and dependent children failing which they can be disqualified. A person fighting elections is also under legal obligation to reveal information on his or her criminal antecedents and educational qualifications.
Article 19(1)(a) of the Constitution makes it a fundamental right of the citizens to know about the candidates contesting the elections and this is the main reason that makes it obligatory to the candidates to furnish details regarding the criminal antecedents, educational qualifications and assets held by the candidate, his spouse and dependent children.
As per the court, at the time of filing the nomination paper, if a candidate leaves blank any column seeking information on criminal antecedents, educational qualifications and assets and liabilities, then it would result in disqualification by the returning officer at the scrutiny stage itself. If it is found that it is a case of improper acceptance, misinformation or suppression of material information, rejection in such a case can only be postponed for a later date.
Google rankings can influence Elections: Study
As per a new study conducted in India during the just concluded Lok SabhaElections 2014, Google rankings can dramatically swing ill-informed voters leading to influence the election outcome.
The study done by Robert Epstein, a former editor of Psychology Today and noted Google critic, found that manipulating the Google search results can significantly influence the candidate preferences of the voters who are not well-informed and are undecided as they tend to sway towards candidates appearing on the top of the search results/ranking.
In the experiment it was found that search rankings biased in favour of a candidate could push the preferences of undecided voters towards that candidate by 15% or more. If there are two candidates and both vying to push their rankings higher then that’s fine. But if Google, which has a monopoly on search in India, were to favour one candidate, it could easily put that candidate in office by manipulating search rankings, and no one could counter that.
These manipulations can pose a serious threat to democracy. To prevent too much influence, election-related search rankings need to be regulated and monitored, as well as subjected to equal-time rules.
By 2025, India to replace Japan as third-largest oil consumer: US
According to the US Energy Information Administration (EIA),India will overtake Japan to become the world’s third largest oil consumer behind the US and Chinaby 2025.
As per EIA’s Annual Energy Outlook:
- India’s oil consumption will increase from 3.68 million barrels per day (bpd), or 173.5 million tonnes, in 2012 to 5.19 million bpd in 2025, catching up with Japan’s 4.38 million bpd consumption. Japan consumed 4.75 million bpd of oil in 2012.
- At present, India is the fourth largest oil consumer in the world behind the US, China and Japan.
- Though the US will remain the world’s biggest oil consumer but its demand growth will be almost negligible.
- With 3% compounded annual growth rate, India’s oil consumption growth rate from 2012 to 2040 will be highest in the world. Its oil consumption will reach 6.11 million bpd in 2030 and 8.33 million bpd in 2040.
- India meets around 80% of India’s oil requirements through imports.
- In 2013, India overtook Japan as the world’s third-biggest importer of crude oil.
- According to International Energy Agency, India will become the world’s largest oil importer by 2020.
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