QBiz: India’s Growth a Result of Good Policy, Says PM and More

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Prime Minister Narendra Modi. (Photo: Reuters)

1. Modi Slams Congress, Promotes Govt Schemes at Bloomberg Summit

Prime Minister Narendra Modi spoke at the Bloomberg Economic Forum and used every opportunity to promote government schemes launched by his government. His much-talked-about claim of doubling farmers’ income in the coming years formed a major part of the speech.

He said that the government has initiated various efforts in the direction:

  • Increase in spend on irrigation
  • Holistic approach towards water conservation
  • Provision of quality seeds
  • Reduction of post-harvest losses
  • Increase in spend on storage
  • Establishment of national agricultural market
  • Pradhan Mantri Fasal Bima Yojna to control risks beyond farmers’ control at an affordable price
Experts are unanimous that India is one of the world economy’s brightest spots. We have low inflation, a low balance of payments current account deficit, and a high rate of growth. This is the result of good policy, not good fortune.
Prime Minister Narendra Modi

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2. ONGC to Fully Fund $1.27-Billion Stake Buy in Russia’s Vankor Field Through Overseas Borrowing: ET

State-run Oil and Natural Gas Corporation (ONGC) will fully fund its $1.27-billion stake buy in Vankor field in Russia through overseas borrowing, chairman Dinesh K Sarraf has said.

The Russian government recently approved ONGC’s agreement to buy 15 percent stake in Rosneft’s Vankor field, the second largest Russian field by output that makes up 4 percent of the country’s oil production.

ONGC plans to access the overseas debt market to pay for the deal. The company also plans to buy another 11 percent stake in Vankor field for which the pricing has yet to be finalised.

Read more here.

3. GVK Sells Stake in Bangalore International Airport to Fairfax: Livemint

GVK Power and Infrastructure has agreed to sell a 33 percent stake in Bangalore International Airport (BIAL) to India-born Canadian billionaire Prem Watsa’s Fairfax India Holdings and Fairfax Financial Holdings for Rs 2,149 crore, seeking to raise money to repay debt.

On completion of the deal, GVK Power and Infrastructure’s debt will decline by Rs 2,000 crore and its interest costs will drop by some Rs 300 crore a year, the Hyderabad-based group said in a statement.

The transaction, which will reduce GVK’s stake in the airport to 10 percent, is subject to customary closing conditions and third-party consent, including the agreement of creditors, and is expected to be completed by the middle of 2016.

Read more here.

4. Raghuram Rajan Warns Against Aggressive Monetary Policies: Livemint

Aggressive monetary policy actions by one country can lead to measurable and significant cross-border spillovers on other economies, especially as countries contend with the zero lower bound, said a Reserve Bank of India working paper authored by Prachi Mishra and governor Raghuram Rajan released on Monday.

If countries do not internalise these spillovers, they may respond by undertaking policies that are collectively suboptimal, said the paper, suggesting that countries should agree to guidelines for responsible behaviour that would improve collective outcomes.

The bottom line is that simply because a policy is called monetary, unconventional or otherwise, it may not be beneficial on net for the world... What matters is the relative magnitude of demand creating vs demand switching effects, and the magnitude of other net financial sector spillovers, that is, the net spillovers.
RBI working paper

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5. EPFO Members May Get 3-Year Insurance After Job Cessation: FE

Retirement fund body EPFO is likely to approve a proposal to provide insurance cover to its subscribers for three years after cessation of employment. The Central Board of Trustees (CBT), which is the main decision making body of Employees’ Provident Fund Organisation, is scheduled to meet on Tuesday.

According to the agenda of the meeting, a proposal to introduce voluntary retention of EDLI membership to subscribers at reduced rate of contribution for three years after cessation of employment would be discussed.

The CBT will consider a proposal for an amendment to Employee’s Deposit Linked Insurance (EDLI) Scheme that presently provides up to Rs 3.6 lakh insurance coverage.

The employers are required to pay 0.5 percent of basic wages of workers as premium for the insurance scheme for their workers. The workers used to lose membership or benefit of scheme after quitting job.

Read more here.

6. Cyrus Mistry Gets Pay Boost With Profit Pie: BS

With a remuneration of Rs 16.25 crore, Tata Sons Chairman Cyrus Mistry is now among the top-paid chief executives in the country.

Mistry got this package from the unlisted holding company of the Tata Group for financial year 2014-15, or FY15. It includes a commission on the profits of Tata Sons. Though Mistry does not make it to the elite club of the top 10 highest paid India Inc leaders, he will be among the next 10.

A Tata Sons spokesperson said compensation of directors was internal to the company.

All we can inform you is that, like in other companies, directors of Tata Sons, including the chairman, get a commission.
Tata Spokesperson
Cyrus Mistry gets pay boost with profit pie Tata Sons, which earned a record profit of Rs 9,062 crore in FY15, paid Rs 11 crore as commission on profits of the company (0.10 per cent of profits) and Rs 5 crore as salary for the year to Mistry, Tata Sons’ annual filings with the government show.

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7. Tatas in AirAsia India Pilot Seat: BS

Tata Sons will soon be in the pilot’s seat of AirAsia India, holding 51 per cent stake in the low-cost airline.

At present, it has 41.06 percent. It will acquire 7.94 percent from Arun Bhatia-controlled Telestra Tradeplace. The remaining 2 percent of Telestra’s stake will be acquired by Tata veterans and AirAsia board members S Ramadorai (0.5 percent) and R Venkataramanan (1.5 percent).

The share sale is expected to be completed next month, resulting in Bhatia’s exit from the airline. With its nominees on the board, Tata Sons will have the controlling stake of 51 percent in AirAsia — and could well be calling the shots, claim experts.

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8. Global Financial Safety Net Fails Many Emerging Markets, Says IMF: ET

The financial safety net erected by central banks, exporters and the International Monetary Fund has grown in recent years, but has left many emerging market countries vulnerable to global economic shocks, the IMF said in a new research paper released on Monday.

The accumulation of foreign currency reserves has risen since the 2007-09 global financial crisis, and there are more bilateral swap arrangements between central banks, but these have mainly benefited advanced economies, it said. In times of crisis, some emerging market economies may still be left with financing gaps, the IMF said.

The paper by IMF staff was aimed at launching debate among the fund’s 188 members over reforms to strengthen the global financial safety net. The first step in the process is to assess the adequacy of current system, which is too fragmented, untested and costly, the IMF paper said.

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9. Inflation Seen at 5 Percent in March; RBI to Cut Rates by 25 bps: BofA ML

India’s retail inflation for March is expected to be around 5 percent and the Reserve Bank is likely to cut its key rate by 25 basis points each at its policy reviews on 5 April as well as in August, says a report.

According to Bank of America Merrill Lynch (BofA-ML), its inflation indicator is tracking March CPI inflation at 5 percent, slightly lower than February’s 5.2 percent.

We continue to expect the RBI to cut rates 25 bps on 5 April and in August.
BofA-ML research note

The declining inflation and negative industrial outlook have strengthened the case for RBI cutting interest rate in its first bi-monthly monetary policy for 2016-17 in its April policy.

Read more here.

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