Narendra Modi anointed BJP PM candidate, Advani disappointed

 Narendra Modi, a staunch proponent of Hinduvta, was on Friday anointed BJP's prime ministerial candidate for the 2014 Lok Sabha polls, ending months of suspense over his elevation amid stiff opposition by party patriarch L K Advani.

The announcement was made by BJP chief Rajnath Singh after a meeting of the party's parliamentary board which was skipped by Advani who expressed "anguish" over the way the party was functioning.

Except Advani, the meeting of the 12-member board was attended by other leaders like Sushma Swaraj, Murli Manohar Joshi, Arun Jaitley and Nitin Gadkari.

The decision on Modi came on a day of fast-paced developments and back-to-back meetings and last minute efforts to bring around Advani,Joshi and Swaraj.

Making the announcement, Rajnath Singh said the decision had been taken by the parliamentary board as per the party's tradition.

The party had announced its prime ministerial candidate in 2009 elections also, he noted at a press conference here.

Modi, who will turn 63 next Tuesday, said he will work tirelessly to ensure that BJP wins the 2014 elections.

Giving a slogan "nayi sonch, nayi ummeed" (new thinking, new hope), he said the party will work for good governance and development while fighting against corruption and price rise.

Touching a sour note, an upset Advani released a letter written to the party chief almost at the same time when announcement about Modi was made.

"This afternoon when you had come to my residence to inform me about the parliamentary board meeting, I had said something about my anguish as also my disappointment over your style of functioning," the BJP veteran said in the two-para letter.

"I had told you that I will think whether I should share my thoughts with other Board members or not. Now I have decided that it is better that I do not attend today's meeting," he wrote.

Modi, flanked by Rajnath Singh, Joshi, Swaraj, Jaitley, Ananth Kumar among others, said the country is going through a "crisis" and the countrymen should support BJP to emerge from this situation.

The Gujarat strongman sought blessings of crores of people from Kashmir to Kanyakumari to help BJP win.

He thanked party leadership and workers for reposing faith in him. He also expressed gratitude to NDA allies for supporting him through telephone calls.

Soon after the announcement, Modi went to meet Advani to seek his "blessings".

Advani initially appeared willing to attend the board meeting but changed his mind at the last minute, sources close to him said.

The BJP veteran had conveyed his reservations about announcing Modi's name at this juncture. He had suggested that the BJP chief ministers should be consulted on the issue and the party should wait till the forthcoming assembly elections to Madhya Pradesh, Chhattisgarh, Rajasthan and Delhi are over.

Advani was of the view that making Modi the prime ministerial candidate will put issues like price rise and corruption- on which the BJP has attacked the Congress- on the backburner and make the controversial leader the issue.

Rajnath Singh said the decision was taken keeping in view the mood and aspirations of the people. He said the decision was taken "unanimously".

He said Advani is a respected leader and will continue to be respected. "We will keep seeking his guidance," he said.

Joshi and Swaraj, who too were said to be having reservations to Modi's projection at this juncture, changed their stand to join the majority.

Significantly, Swaraj cancelled her plan to visit Haryana on Friday morning to attend the board meeting.

Earlier, Gadkari met Rajnath Singh to discuss the issue. Later, Gadkari met Advani to persuade him on Modi's name. Swaraj and Ananth Kumar also joined the meeting.

Joshi was asked to return to the capital by a special flight from Sagar, Madhya Pradesh where he had gone to attend a party programme.

Modi got a shot in the arm on Friday when NDA allies Shiv Sena and Shiromani Akali Dal extended their support to him for the PM candidate post.

source:Times of India

Why Rajan shouldn't go for monetary tightening

Travelling through Europe and England this week, we have encountered a view from some investors that there is a trade-off between FX stability and economic growth, and the RBI, under the newly appointed governor Rajan, needs to follow up its July tightening measures by even more rate hikes to support the rupee. This would inevitably entail further "sacrifice" of growth, as per the view.

The view has been bolstered by governor Rajan's inaugural statement, where he stressed the importance of low and stable inflation, regardless of its source (FX pass-through, demand pressure, supply shock). But beyond the discussion on price stability, the rest of the governor's statement was geared toward lowering the cost of doing business. Indeed, we think that RBI is done with tightening for now.

Let's examine the inflation question first: with faltering growth and worsening employment and wage outlook, inflation is clearly not being driven by demand, so the case for easing price or wage expectations through tightening is not relevant at this juncture. The risk to inflation is presently coming from INR depreciation and higher global oil prices. We don't think even weaker demand would negate pass-through risk or supply shocks; indeed in recent years demand fluctuations have not correlated well with WPI/CPI price dynamics.

Can higher rates attract bond and stock market flows? There are very few carry opportunities for foreign fixed income investors, so higher rates won't attract inflows the way it tends to be the case in more open economies. Higher rates could bring in NRI flows, but that can be accomplished by deploying narrow instruments like raising the FCNR deposit ceiling as opposed to a broad-based tightening of liquidity and spike of short term rates.

In any case, the authorities are seeking to attract stickier FDI than volatile portfolio flows, which won't be helped by higher rates and associated correction in demand and clouding of the outlook. Higher rates and ensuing slowdown won't surely help foreign equity investors, whose holdings are far larger than bond investors in India.

Finally, higher rates were supposedly aimed at curbing speculation and FX volatility. On the former, we don't know of any major channels through which widespread rupee speculation was taking place right before July 15. Indeed, FX volume had collapsed due to the various restrictions placed on futures and options market activity and curbs on trade-related FX engineering. Additionally, the fact that banks continue to access liquidity at high cost even today means that genuine transaction need, not cheaply financed FX speculation, was behind the persistently large demand seen in the LAF window prior to July 15. On the latter, the evidence shows the measure had the opposite effect. FX volatility has been higher since July 15, and currency's slide accelerated after the liquidity tightening measures were implemented.

Can India afford higher rates? Corporate and banking distress is spreading, consumer sentiment and consumption indicators are waning, and businesses are reeling from a 20% rise in the cost of imports and several hundred basis points of rise in financing costs. With growth heading toward 4%, higher rates could risk severe balance-sheet stress and cause further economic volatility and slowdown.

This is not to say that fiscal adjustment or import compression measures should be withdrawn. Those steps need to continue as current account adjustment is essential. But monetary policy should not inject further negative impulse for the reasons stated above.

As hinted in governor Rajan's inaugural statement, we expect RBI to start looking hard at stabilizing the financial system (securing financing through swaps etc, for example) and communicate that at this juncture inflation will not be assigned exceedingly high weight in its reaction function. In case we are wrong and the RBI comes out with a hawkish guidance on Sept 20, we will revise down India's growth forecast further.

Source:Economic Times

Indian Hockey Team Enters Asia Cup final, Assured World Cup Berth

It was a great week for the Indian Sports. In a row after U-23 Cricket Team won Emerging Nations Cup and a Gold Medal in Archery World Cup, Indian Hockey Team has qualified for the World Cup and enters the Asia Cup Final.

India came up with an inspiring performance to beat Malaysia 2-0 and enter the final of the ninth Asia Cup hockey tournament in Ipoh, Malaysia, on Friday.

Earlier, defending champions South Korea beat Pakistan 2-1 in a hard-fought first semi-final. 

South Korea's goals came from penalty-corner conversions from Jang Jong Hyun, in the 31st minute, and Lee Nam Yong, in the 40th, while Pakistan's lone goal was scored by skipper Muhammad Imran in the 46th minute.

With the Koreans having already qualified for the World Cup, and Pakistan losing in the semis, both India and Malaysia are virtually through to next year's showpiece 12-team event at The Hague, Netherlands, as the first and second reserves, though official confirmation will come only after the conclusion of the Oceania Cup, in November, which either Australia or New Zealand, who have both qualified, is expected to win.

It will also be the first time that Pakistan will not feature in the World Cup since it started in Barcelona in 1971.

With knowledge of a World Cup berth virtually assured, the Indians started the semi-final on a confident note and stunned the packed home crowd at the Azlan Shah stadium with an early goal.

V R Raghunath swelled his goal tally to seven when he converted India's first penalty-corner in the eighth minute.

However, it was the home team that enjoyed the early share of exchanges and had couple of scoring chances. While on the first occasion Faizal Saari missed from close range, an unmarked Mohd Noor shot wide a minute later with only Indian custodian P R Sreejesh to beat.

The Malaysians created lot of scoring opportunities right through the match but the Indian defence, led goalkeeper Sreejesh, held firm.

India could have doubled the lead four minutes from half-time, but Malaysia’s goalkeeper, Kumar Subramaniam, brought off a fine save to deny Rupinderpal Singh from the team’s second penalty-corner.

The Malaysians continued to missed chances despite creating numerous scoring opportunities after the change of ends.

They earned back-to-back penalty-corners ten minutes into the second half but a brilliant Sreejesh denied them with a fine saves.

To the agony of the partisan home crowd, Izwan Firdaus Ahmad Tajuddin missed an open chance in the 58th minute.

The Indians were quick to rub salt into Malaysia's wounds as they doubled the lead in the 60th minute through Mandeep Singh, who scored his fifth goal of the tournament, after a fine one-two with Ramandeep Singh.

The Malaysians pressed hard in the last few minutes but were thwarted by a crowded Indian defence.

India will play South Korea in the summit clash on Sunday. India had earlier defeated the Koreans 2-0 in the pool stage.

Earlier, Japan defeated Bangladesh 3-0, while Oman eked out a narrow win over Chinese Taipei, via penalty the shoot-out, in the classification matches for fifth to eight places.

In the first classification match of the day, Japan proved to be too good for the Bangladeshis.

Japan scored two goals in the first half through Toshiro Tachibana (9th minute) and captain Koji Kayukawa (26th).

Meanwhile, in the second classification match of the day between two debutants, Chines Taipei overcame a two goal deficit to hold Oman 2-2 after the regulation 70 minutes.

Oman took the lead through an own goal in the 24th minute. They doubled their lead in the 31st minute through a field goal from Samir Haliyas Juma'an Al Shibli.

The Taiwanese side made spirited comeback in the last 15 minutes of the match and scored through Liu Ching Kun (57th) and Tseng Hsien-Yi (67th) to take the match into penalty shootout.

Source: Rediff

Q1 GDP grows slower than expected at 4.4%

India's Gross Domestic Product (GDP) grew at a slower than expected rate of 4.4% for the first quarter of the current financial year. This is below an ET Now Poll estimate of 4.6%. The economy grew at the slowest quarterly rate since the global financial crisis. The growth was contracted by a contraction in mining and manufacturing. 

The agricultural sector of the economy grew at 2.7% versus 1.7% QoQ. Manufacturing sector growth contracted at (-)1.2%. While the trade and hotels growth cae in at 3.9% versus 6.2% QoQ, the construction sector grew at 2.8% versus 4.4% QoQ. 

Electricity & gas sector grew at 3.7% versus 2.8% QoQ. Mining sector growth contracted at (-)2.8% versus (-)3.1 QoQ. 

The Indian economy has been steadily losing momentum in recent years. Economic growth virtually halved in two years to 5 percent in the fiscal year that ended in March -- the lowest level in a decade -- and most economists surveyed by Reuters in the past week expect 2013/14 to be worse. 

The industrial sector contracted in the first quarter, the 1.1% fall in the index of industrial production showed. The decline in the purchasing managers' index for services in the first quarter indicates a widening of the slowdown to services sector that expanded 6.5% last year. The HSBC Markit Services Purchasing Managers' Index fell to fell to 47.9 in July from 51.7 in the previous month, falling below the 50 mark that shows contraction. 

Worryingly, apart from the good monsoon that can boost the rural economy, there is not to look ahead either. Even the effect of good monsoon will show up only from the second quarter. The severe liquidity squeeze unleashed by the RBI is unlikely to be a quick relief pill as initially believed, and may soon be replaced with a wider monetary tightening. 

The rise in inflation to above 5% has further cramped RBI. "The situation calls for monetary tightening. The interest rate differential is needed to attract investment," said Devendra Pant, chief economist, India Ratings. 

Higher interest rates will dampen demand and delay investments revival, and more importantly, the central bank will be out of the equation as far as stimulating growth is concerned. 

Higher subsidies may force further reduction in spending, if P Chidambaram stays with his budgeted fiscal deficit target of 4.8% of GDP. The authorities were counting on the higher government spending to keep the economy afloat while the policy makers tried to get stalled investments moving through the cabinet committee on investments. 

Emphasising the need for Parliament to run smoothly for boosting investors' confidence,Prime Minister Manmohan Singh on Friday said, "Its incorrect to say investors have lost confidence; Parliament is the supreme body, it is not being allowed to function." 

Stating that the opposition needs to recognise its responsibility, Singh said that essential legislations need to be passed for future of the country. "Consensus building is the responsibility of government and opposition. It is the responsibility of the members of this house to send out a message," he reiterated. 

"I do recognize there is a problem, it can be solved only if opposition recognizes its role, conduct in Parliament," he said in a reply to Arun Jaitley. 

"We have a responsibility to act collectively to deal with this crisis on confidence," he said. "We need to make sure India perceived as creditworthy, bankable & viable," he added. 

Earlier in the day the PM ruled out reversal of reforms or resorting to capital controls to rescue the sliding rupee, which he said fell on account of domestic as well as global factors. 

Making a statement on the state of theeconomy in Parliament amid concerns over rapid depreciation of rupee, Singh said the country has to be ready for short-term shocks but the government will ensure that the fundamentals of economy remain strong. 

"We are faced with challenges but we have the capacity to deal with them,", he said, while seeking support of all political parties in this situation. 

Breaking his silence on the decline of rupee, he said there "may be short term shocks to our economy and we need to face them. That is the reality of the globalised economy, whose benefits we have reaped". 

There is no question of reversing the policies just because there is some turbulence in capital and currency markets, he said, adding the "sudden decline in exchange rate is certainly a shock, but we will address this through other measures, not through capital controls or by reversing reforms".

source:Economic Times

India's first defence satellite GSAT-7 launched successfully

India's maiden dedicated defence satellite was launched by an European rocket early today, giving a boost to Navy's modernisation push to improve space-based communications and intelligence gathering over a wide oceanic region including the country's landmass. 

Custom-made for the Navy by the Indian Space Research Organisation, the advanced multi-band, state-of-the-art GSAT-7 was successfully lofted into space by European space consortium Arianespace's Ariane 5 rocket at 2 AM from Kourou spaceport, French Guiana, in South America. 

In an impressive launch, telecast live by Doordarshan, Ariane 5 precisely placed the Rs 185-crore home-built communication spacecraft into the intended Geosynchronous Transfer Orbit (GTO) after a flight of 34 minutes 25 seconds duration. 

"As planned, ISRO's Master Control Facility (MCF) at Hassan in Karnataka started acquiring the signals five minutes prior to the separation of GSAT-7 from Ariane-5 launch vehicle. The solar panels of the satellite have been deployed and they are generating power. Initial checks have indicated normal health of the satellite," the Bangalore-headquartered ISRO said. 

Expected to be operational by September-end, the country's first exclusive satellite for military applications, would give a major push to the maritime security. 

According to ISRO, GSAT-7 would provide wide range of service spectrum from low bit rate voice to high bit rate data communication. Its payload is designed to provide communication capabilities to users over a wide oceanic region including the Indian land-mass. 

The 2625-kg satellite, with some new technological elements including the antennae, carries payloads operating in UHF, S, C and Ku bands, helping marine communications with coverage over India landmass as well as surrounding areas, seen as a significant asset from security and surveillance points of view. 

With GSAT-7 which would give it an integrated platform, the Navy would be able to overcome the limitation from line of sight and ionospheric effects, among others, that it currently faced as far as space-based communications were concerned. 

Earlier, satellite communication in ships was through Inmarsat, a major provider of global mobile satellite communications services. 

ISRO said the present orbit of the satellite will be raised to Geostationary Orbit of about 36,000 km altitude through three orbit raising manoeuvres by firing of GSAT-7's Liquid Apogee Motor (LAM). 

Preparations are underway for the first firing, planned in the early hours of tomorrow. The satellite will be placed in the Geostationary Orbit by September four. 

The launch cost for ISRO is around Rs 470 crore, including insurance, as the Indian space agency cannot orbit heavy satellites like GSAT-7 as its home-grown GSLV rocket, with indigenous cryogenic stage, is still at works and needs two successful flights before it is declared operational. 

In addition to GSAT-7, the Ariane 5 orbited another spacecraft EUTELSAT 25B/Es'hail. EUTELSAT 25B/Es'hail 1 -- which rode in the top position of the Ariane 5 payload "stack" -separated first, some 27 minutes after the liftoff at 2 am. 

At approximately 34 minutes into the flight, the lower passenger - GSAT-7 - was deployed, completing the mission. 

Indian Ambassador to France, Arun Singh and Director of Bangalore-based ISRO Satellite Centre, S K Shivakumar, were among those who witnessed the launch. 

Singh said the launch event is also a reflection of strategic partnership between India and France. Shivakumar said GSAT-7 would be operational by next month-end.

Source:Economic Times

Practise swadeshi, save the rupee

The only way to save the rupee and to prevent its free fall is to start practising swadeshi all over again. Yes, you read it correctly. As a nation we are living beyond our means and you can’t continue doing so unless we want India to crash (and not the rupee alone). That is exactly what is happening: the crash of the rupee is a symptom of the problems that ail the economy. Although sarkari economists et al are trying to explain away the problem by changes in the Fed rates in the US and a revival in the US economy this is a very shallow explanation. Just because the Indonesian rupiah, the South African rand and the Brazilian real have been competing with the rupee in depreciating against the US dollar, there is no reason to wish away our problems.

Next time you bite corn produced in Australia, oranges raised in California and apples from god knows where, think deeply whether as a nation we can afford this. Maybe middle class and upper middle class consumers can afford these imported fruits at an individual level, but certainly not as a nation. When India’s foreign exchange earnings are not enough to cover our imports, it is a no-brainer that we cannot. Stopping such imports and also of other edibles like cheese is not going to make any one worse off. The question that we should ask ourselves is: cannot good quality fruits be grown in the country that we have to spend precious foreign exchange to import them?

In the good old days, students used to travel abroad for higher studies after they completed their MA to take admission in PhD and other such programs in top universities. The learning in these top universities would be far superior to what could be had in high institutions in the country. But things have changed in the last two decades: these days you can find  parents sending their children abroad to do their undergraduate degrees. Why? This is possibly because it has become a fad to send children abroad. Parents say that they have the money so they will send their children abroad. While this may be true, the fact of the matter is that as a nation we cannot afford precious foreign exchange to spend on children studying at the undergraduate level and doing basic technical courses. A pertinent question to ask is whether the education infrastructure is so poor that there are no colleges in the country to impart a basic degree. So the issue is why this fad for a foreign education?  

However you would not have seen any economist or politician who waxes eloquent on TV holding forth on the rupee speak anything about all this. Most of their conversation revolves around the tight monetary policy of the RBI and the decline in growth impetus, etc This misses the real issue. The fact of the matter is that the process of liberalization that was kick-started in 1991 is so lopsided that it promoted the culture of consumption without any breaks. True, before liberalization the economy was in shackles and the consumption in the country was artificially restricted. This was by way of import curbs and by the process of licensing. Thus things like washing machines were treated as luxuries although in reality it was a great boon for families especially those with working women. 

Liberalization provided a great opportunity to break the shackles and set up a modern, efficient manufacturing base in India. Well that really did not happen adequately. Had that happened India would have become a major exporter of manufactured goods that would have been enough to take care of India’s import requirements (of which oil imports is a major component). But India continued to be an exporter of raw material. For example till the ban in exports of iron ore, the country was exporting iron ore to China. A country which is focused on its growth (like China is) would have instead tried to manufacture steel from this iron ore which could have been exported instead. This would have resulted in more foreign exchange earnings. But India had no such strategy in place.

Instead of exporting manufactured goods, India has become an importer of raw materials. A good example is coal that is imported into the country for fuelling thermal power stations. This is in spite of the fact that India sits on reserves of billions of tons of coal reserves. India spent $18 billion in coal imports in the last fiscal year 2012-13. This is by no account a small sum.

But while exports did not go up, imports of not only coal and petroleum products (valued at $169.25 billion in the last fiscal year) but other consumer goods also went up.

World class manufacturing facilities did not come up in India due to many reasons. But primarily the culprit is the policy paralysis in the country for many years that resulted in inadequate infrastructural facilities whether it was electricity generation, port facilities or proper roads. Bureaucratic hassles and widespread corruption in granting permissions played a none-too-insignificant role in this process. 

Entrepreneurs finding a bleak scenario soon realized that realty was a booming sector where large profits could be made without much hassles. As a result entrepreneurs of all hues and colors turned to realty. This includes top names in the Indian corporate sector. Even many IT companies started dabbling in real estate. With politicians joining in the game, realty became the name of the game. Thus the high growth evidenced in the country in the period 2000-2009 and especially between the years 2005-2008, is nothing but an indication of the rapid growth in the real estate sector that led to bourgeoning cities (never mind the poor infrastructure). But the increase in the growth of the realty sector is an artificial growth that may add to national income yet doing nothing to increase India’s exports. A huge middle class, which has earned moolah through direct speculation in realty or by working in companies whose profits have soared due to their investments in real estate, started feeling empowered. And this empowerment was reflected through increased consumption. This has led to spiralling imports. It may not be out of place that India’s savings rate has plummeted in the last five years. From 36.9 per cent in fiscal year 2007-08, it tumbled to 30.8 in 2012-13 and is expected to go down to 30 per cent by the end of fiscal year 2013-14.

The rupee may have tumbled in the last two weeks, but the signals were there for anybody to see for the last few months. In the last fiscal year India’s imports of gold soared to $50 billion. This was not due to the proclivity of the Indian consumers to own the yellow metal. Rather it was a signal from the market that the rupee could not be trusted to hold its value. Gold was being imported, because people preferred to hold their savings in the form of the yellow metal than in the form of the Indian rupee in banks or investments.

Whether it is an individual, household or a nation, nobody can live beyond their means. You have to cut the coat according to the cloth that you have. Thus there is no other way for India and as Indians we have to learn to live within our means. The time has come to reduce to zero the imports of inessentials and restrict the imports to the essentials. The control raj came with a lot of ills, but independence also comes with responsibilities. From 1991 to 2013, the pendulum has swung from one extreme to the other. It is time to restore balance in our lives, think in terms of age old concepts like import substitution and check the rampant spread of this consumerist culture. Otherwise doomsday is not far away.

source: Times of India

Cyberspying: Government may ban Gmail for official communication

The government will soon ask all its employees to stop using Google's Gmail for official communication, a move intended to increase security of confidential government information after revelations of widespread cyberspying by the US.

A senior official in the ministry of communications and information technology said the government plans to send a formal notification to nearly 5 lakh employees barring them from email service providers such as Gmail that have their servers in the US, and instead asking them to stick to the official email service provided by India's National Informatics Centre.

"Gmail data of Indian users resides in other countries as the servers are located outside. Currently, we are looking to address this in the government domain, where there are large amounts of critical data," said J Satyanarayana, secretary in the department of electronics and information technology. 

Snowden fallout

The move comes in the wake of revelations by former US National Security Agency contractor Edward Snowden that the US government had direct access to large amounts of personal data on the internet such as emails and chat messages from companies like Google, Facebook and Apple through a programme called PRISM. 

Documents leaked by Snowden showed that NSA may have accessed network infrastructure in many countries, causing concerns of potential security threats and data breaches. Even as the new policy is being formulated, there has been no mention yet of how compliance will be ensured.

Several senior government officials in India, including ministers of state for communications & IT Milind Deora and Kruparani Killi, have their Gmail IDs listed in government portals as their official email. 

A Google India spokeswoman said the company has not been informed about the ban, and hence it cannot comment on speculation. "Nothing is documented so far, so for us, it is still speculation," Google said in an email response. 

A senior official in the IT department admitted on condition of anonymity that employees turn to service providers such as Gmail because of the ease of use compared with official email services, as well as the bureaucratic processes that govern creation of new accounts. 

"You can just go and create an account in Gmail easily, whereas for a government account, you have to go through a process because we have to ensure that he is a genuine government user." 

Last week, IT Minister Kapil Sibal said the new policy would require all government officials living abroad to use NIC servers that are directly linked to a server in India while accessing government email services. Sibal said there has been no evidence of the US accessing Internet data from India.

Sunil Abraham, executive director of Bangalore-based research firm Centre for Internet and Society, said he agrees with the government's decision to ban Gmail for official communication and that any official violating this needs to be punished. 

"After Snowden's revelations, we can never be sure to what extent foreign governments are intercepting government emails," he said. Abraham, however, called the government's decision a "late reaction", as the use of Gmail and other free email services by bureaucrats has increased in the past. 

"Use of official government email would also make it easier to achieve greater transparency and anti-corruption initiatives. Ministers, intelligence and law enforcement officials should not be allowed to use alternate email providers under any circumstance."

source:Times of India