RBI Governor Raghuram Rajan vows to free markets for $1-trillion core sector investments
MUMBAI: Reserve Bank of India Governor Raghuram Rajan aims to build sophisticated financial infrastructure in three years that will facilitate trillion-dollar core sector investments, leading to sustained economic growth.
Further, now that the currency has stabilised, the dependence on external sources of funding needs to be curbed and domestic savings have to be encouraged, the governor, who took charge on September 4, said.
"We cannot rely too much on the outside world because we do not want to run large current account deficits...moderate CAD with a lot of saving domestically will allow us to still fund a significant amount of investment which we need," Rajan said in an interview to ET. "We have to give savers a good deal, be it outside savers or domestic savers. That match between savings and investment has to come about."
Despite anaemic economic growth, monetary policy should aim at bringing down inflation expectations. Growth with low inflation will strengthen the economy, Rajan said. Many investors expect Rajan to raise the benchmark repo rate by 25 basis points on October 29.
October 29 is the date of RBI's next rate-setting meeting. On September 20, Rajan had raised the repo rate — the rate at which RBI lends to banks — by 25 basis points to 7.5%.
"By focusing on generating growth with low inflation in this country we will do the best thing we can to stabilise the value of the currency to stabilise capital flows," said Rajan. "So, let us focus on that. And the other would take care of itself."
The currency was stabilising, Rajan said, because of the growing expectation that the government would be able to restrict the current account deficit to less than $70 billion, the target set by the Centre.
Both the government and the central bank are on the same wavelength when it comes to what is good for the country, though the tools to achieve them may be debated about, at times even in public, which is a sign of the central bank's autonomy, he said. "Both sides want growth, both sides want low inflation," said Rajan.
"There is always a healthy debate on the pace and the instruments we use to achieve those objectives. Ultimately, I think this is true in every country and the whole issue is to try and convince the other side."
The recent currency and bond market turbulence will not hold back the central bank from moving ahead with the liberalisation of currency and futures trading, since a broader and deeper financial market is essential to fund economic growth.
"There is no intent to clamp down," said Rajan. "And if anything, what we have to see is how to deepen all our markets and that is going to be our focus. As things return to normalcy, we are going to look at our debt markets, look at our currency markets. Ultimately, you have to look at that number of ($)1 trillion, which is what we need for infrastructure investment over the next few years."
Further, now that the currency has stabilised, the dependence on external sources of funding needs to be curbed and domestic savings have to be encouraged, the governor, who took charge on September 4, said.
"We cannot rely too much on the outside world because we do not want to run large current account deficits...moderate CAD with a lot of saving domestically will allow us to still fund a significant amount of investment which we need," Rajan said in an interview to ET. "We have to give savers a good deal, be it outside savers or domestic savers. That match between savings and investment has to come about."
Despite anaemic economic growth, monetary policy should aim at bringing down inflation expectations. Growth with low inflation will strengthen the economy, Rajan said. Many investors expect Rajan to raise the benchmark repo rate by 25 basis points on October 29.
October 29 is the date of RBI's next rate-setting meeting. On September 20, Rajan had raised the repo rate — the rate at which RBI lends to banks — by 25 basis points to 7.5%.
"By focusing on generating growth with low inflation in this country we will do the best thing we can to stabilise the value of the currency to stabilise capital flows," said Rajan. "So, let us focus on that. And the other would take care of itself."
The currency was stabilising, Rajan said, because of the growing expectation that the government would be able to restrict the current account deficit to less than $70 billion, the target set by the Centre.
Both the government and the central bank are on the same wavelength when it comes to what is good for the country, though the tools to achieve them may be debated about, at times even in public, which is a sign of the central bank's autonomy, he said. "Both sides want growth, both sides want low inflation," said Rajan.
"There is always a healthy debate on the pace and the instruments we use to achieve those objectives. Ultimately, I think this is true in every country and the whole issue is to try and convince the other side."
The recent currency and bond market turbulence will not hold back the central bank from moving ahead with the liberalisation of currency and futures trading, since a broader and deeper financial market is essential to fund economic growth.
"There is no intent to clamp down," said Rajan. "And if anything, what we have to see is how to deepen all our markets and that is going to be our focus. As things return to normalcy, we are going to look at our debt markets, look at our currency markets. Ultimately, you have to look at that number of ($)1 trillion, which is what we need for infrastructure investment over the next few years."
Bharti, Walmart call off India JV; to independently pursue retail business
ET SPECIAL:
Subsequently, the US retail major will buy out the Indian partner from their 50:50 wholesale cash and carry joint venture -- Bharti Walmart, for an undisclosed sum.
In a joint statement, the companies said they have reached an agreement to independently own and operate separate business formats in India and discontinue their franchise agreement in the retail business.
The agreement is subject to finalisation of definitive agreements and receipt of the requisite regulatory approvals, it said.
"Upon receipt of required clearances, Walmart would acquire Bharti's stake in Bharti Walmart Pvt Ltd, a joint venture between Bharti and Walmart, giving Walmart 100 per cent ownership of the Best Price Modern Wholesale cash and carry business," it said.
Commenting on the development Bharti Enterprises Vice Chairman and MD Rajan Bharti Mittal said: "Bharti is committed to building a world-class retail venture and will continue to invest in Bharti Retail across all formats. We believe that with our current footprint of 212 stores, we have a strong platform to significantly grow the business and delight customers."
As part of the proposed transactions, Bharti will acquire the USD 100 million worth Compulsory Convertible Debentures (CCDs) held by Walmart in Cedar Support Services, a company owned and controlled by Bharti. Bharti Retail will continue to operate 'easyday' retail stores across all formats and invest in and grow the business.
The investment in Cedar by Walmart is being investigated by the Enforcement Directorate following allegations of violations of norms.
Walmart on the other hand plans to continue to grow this business while working with the government and interested stakeholders to create conditions that enable foreign direct investment in multi-brand retail.
"Given the circumstances, our decision to operate independently will be beneficial to both parties," Walmart Asia President and CEO Scott Price said.
Walmart is committed to businesses that serve members and provide good returns for our shareholders, and will continue to advocate for investment conditions that allow FDI multi-brand retail in India, he added.
"Through Walmart's investment in India, including our cash and carry business, supply chain infrastructure, direct farm programme and supplier development, we want to serve India and its people, and continue to make important social and environmental contributions to the country," Price said.
The two partners had joined hands in 2007 and launched its first B2B Best Price Modern Wholesale cash-and-carry store in Amritsar in May 2009.
At present, there are 20 Best Price Modern Wholesale stores located at various places, including Amritsar, Zirakpur, Jalandhar, Kota, Bhopal Ludhiana, Raipur, Indore, Vijayawada, Agra, Meerut, Lucknow and Jammu.
Congress three-point strategy: Impose President’s rule in AP, isolate rebels & table Telangana Bill
ET SPECIAL:
NEW
DELHI: The Congress national leadership has a three-point strategy to
manage the Telangana controversy: the option of President's rule in
Andhra Pradesh, politically circumventing rebellious Andhra Pradesh
Congress leaders, and getting the Telangana creation Bill in Parliament
by the winter session, where Congress strategists say the Bill will
likely get a majority. With the Seemandhra region in Andhra Pradesh in
turmoil, senior Congress leaders said imposition of President's rule is a
"serious possibility".
Home Minister Sushil Kumar Shinde said on Tuesday President's rule is not being contemplated, but Congress strategists said this option is very much on the table.
A Congress leader said, "the avert-the-gaze policy won't work-...and Hyderabad needs to get back to normalcy". Hyderabad is India's sixth-largest city, home to over 1,300 IT and ITeS businesses. The option of President's rule has become more real, Congress managers said, because the party's chief minister, Kiran Reddy, has turned "a rebel". Reddy was expected by the Congress leadership to calm down sentiments in the Seemandhra region.
But the CM's TV statement that Congress will get a drubbing in Seemandhra and his asking for intervention of the kind that Rahul Gandhi made against the ordinance protecting convicted politicians, are being seen by Congress as proof that Reddy is now part of the problem.
"President's rule will help us get around local Congress politicians who are not following the party line", a Congress national leader said, adding that in case of President's rule, the Telangana Bill that's approved by the Cabinet need not be sent to the state assembly. "This will prevent a high-voltage Andhra assembly denunciation of the Telangana Bill," the leader said.
Reddy's turning 'rebellious' is being seen as a local political response to two AP leaders, Jagan Reddy and N Chandrababu Naidu, starting agitations against splitting the state. "But we will stay the course," a senior Congress strategist said.
The PM, in his meeting with Seemandhra region leaders, is said to have said the government will stick to its plans on Telangana A person familiar with the details of that meeting said the government's determination was firmly communicated. Congress leaders say the four Seemandhra region ministers, Pallam Raju, Chiranjeevi, D Purandeswari and Kotla Surya Prakash Reddy, who want to resign over Telangana, are unlikely to have any impact on the party and government leadership's decision.
"The ministers are in a tough spot," a Congress leader said, "they can't go back on their resignations... but whatever they do won't affect what the government decides...that's a done deal."
This leader also said the party is "reconciled with losing ground in Seemandhra...we are looking at the Telangana region for getting a reasonably good result out of Andhra in 2014". If all goes well procedurally with the Telangana Bill, Congress wants Parliament's winter session to take up the proposed law.
Congress is not expecting any major trouble as BJP has already pledged its support for Telangana. The party's prime ministerial candidate, Narendra Modi, had spoken for the new state in a rally at Hyderabad.
Allies of Congress, particularly NCP and RLD, had backed the decision to split in the state at the Cabinet meeting. Samajwadi Party, which lends support to the government from outside, has opposed the move. But Congress, its leaders say, has BSP's support.
Home Minister Sushil Kumar Shinde said on Tuesday President's rule is not being contemplated, but Congress strategists said this option is very much on the table.
A Congress leader said, "the avert-the-gaze policy won't work-...and Hyderabad needs to get back to normalcy". Hyderabad is India's sixth-largest city, home to over 1,300 IT and ITeS businesses. The option of President's rule has become more real, Congress managers said, because the party's chief minister, Kiran Reddy, has turned "a rebel". Reddy was expected by the Congress leadership to calm down sentiments in the Seemandhra region.
But the CM's TV statement that Congress will get a drubbing in Seemandhra and his asking for intervention of the kind that Rahul Gandhi made against the ordinance protecting convicted politicians, are being seen by Congress as proof that Reddy is now part of the problem.
"President's rule will help us get around local Congress politicians who are not following the party line", a Congress national leader said, adding that in case of President's rule, the Telangana Bill that's approved by the Cabinet need not be sent to the state assembly. "This will prevent a high-voltage Andhra assembly denunciation of the Telangana Bill," the leader said.
Reddy's turning 'rebellious' is being seen as a local political response to two AP leaders, Jagan Reddy and N Chandrababu Naidu, starting agitations against splitting the state. "But we will stay the course," a senior Congress strategist said.
The PM, in his meeting with Seemandhra region leaders, is said to have said the government will stick to its plans on Telangana A person familiar with the details of that meeting said the government's determination was firmly communicated. Congress leaders say the four Seemandhra region ministers, Pallam Raju, Chiranjeevi, D Purandeswari and Kotla Surya Prakash Reddy, who want to resign over Telangana, are unlikely to have any impact on the party and government leadership's decision.
"The ministers are in a tough spot," a Congress leader said, "they can't go back on their resignations... but whatever they do won't affect what the government decides...that's a done deal."
This leader also said the party is "reconciled with losing ground in Seemandhra...we are looking at the Telangana region for getting a reasonably good result out of Andhra in 2014". If all goes well procedurally with the Telangana Bill, Congress wants Parliament's winter session to take up the proposed law.
Congress is not expecting any major trouble as BJP has already pledged its support for Telangana. The party's prime ministerial candidate, Narendra Modi, had spoken for the new state in a rally at Hyderabad.
Allies of Congress, particularly NCP and RLD, had backed the decision to split in the state at the Cabinet meeting. Samajwadi Party, which lends support to the government from outside, has opposed the move. But Congress, its leaders say, has BSP's support.
rahul singh 1
pgdm 1st year
No comments:
Post a Comment