Thursday, December 13, 2018

Protests over Rafale, Cauvery water stall Parliament on Day 2 - e paper - english news paper today - news headlines today

Protests over Rafale, Cauvery water stall Parliament on Day 2 - e paper - english news paper today - news headlines today
Protests over Rafale, Cauvery water stall Parliament on Day 2
City: 

The two Houses of Parliament were on Wednesday adjourned without transacting much business as the opposition staged protest on a variety of issues, including Rafale jet deal, Ram temple and Cauvery river water. Wednesday was the second day of the Winter session. On the first day on Tuesday, both Houses were adjourned after paying obituary to former prime minister Atal Bihari Vajpayee and union minister Ananth Kumar.

The Lok Sabha was adjourned for the day just after noon following protests by opposition members on various issues including the Rafale deal, construction of Ram Temple and Cauvery river water. Immediately after the House re-convened at noon, Congress, Shiv Sena, TDP and AIADMK members trooped into the well with placards and started shouting slogans in support of their demands.

Similar scenes were earlier witnessed when Question Hour began after obituary references to former MPs. Congress members were demanding a probe by a Joint Parliamentary Committee into the alleged corruption in the Rafale aircraft deal while Shiv Sena MPs staged protests demanding immediate construction of the Ram temple in Ayodhya. AIADMK MPs raised slogans demanding justice for Tamil Nadu farmers living along the Cauvery delta and TDP members demanded a railway zone at Vishkhapatnam. Speaker Sumitra Mahajan tried to pacify members but in vain. As the ruckus continued, the Speaker adjourned the House for the day.

The Rajya Sabha was adjourned twice in the pre-lunch period and for the day around 2.15 pm as the two main political parties of Tamil Nadu — the AIADMK and DMK —staged protests on the Cauvery river issue. The Upper House was first adjourned till noon soon after laying of papers and then again till 2 pm soon after the Question Hour started at 12 pm.

Amid noisy scenes, The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities (Amendment) Bill, 2018 was passed.

The proposed amendments entail fixing the term of the chairperson of the National Trust for Welfare of Persons with Autism and other Disabilities.

Moving the bill for consideration and passage, Social Justice and Empowerment minister Thaawarchand Gehlot said a chairperson could not be appointed even after several attempts since 2012 as a suitable candidate meeting the stringent selection criteria could not be found. Gehlot said the amendments will ease the procedure related to appointment of a chairperson.

As the protests continued, Parliamentary Affairs minister Vijay Goel said: “This Bill is for the disabled and there is a consensus among all parties. I am requesting all parties to pass it.” The Bill was passed in the Upper House shortly before the House adjourned.

Protests over Rafale, Cauvery water stall Parliament on Day 2

Source: EP

‘Disillusioned’ ex-army chief JJ Singh quits SAD - e paper - english news paper today - news headlines today

‘Disillusioned’ ex-army chief JJ Singh quits SAD - e paper - english news paper today - news headlines today
‘Disillusioned’ ex-army chief JJ Singh quits SAD
City: 

In a big blow to the Shiromani Akali Dal (SAD), former Army Chief Gen JJ Singh resigned from the party Wednesday “disillusioned” with the party leadership.

Singh, who also served as the Governor of Arunachal Pradesh, had joined the Akali Dal with much fanfare ahead of the Punjab assembly elections in early 2017 and had unsuccessfully contested against chief minister Amarinder Singh from the Patiala assembly constituency.

“I wish to inform you with a heavy heart that I have resigned from Shiromani Akali Dal and from the position of president of Shiromani Akali Dal, Ex-Servicemen wing with immediate effect due to personal reasons,” Singh wrote in his resignation letter to SAD chief Sukhbir Singh Badal.

However, in an open letter to the people of Punjab the former general wrote, “I have resigned with a heavy heart from the Shiromani Akali Dal on December 11, 2018 and from the position of president of SAD Ex-Servicemen Wing. I am unhappy with actions of the leadership of the SAD in the last few years, such as those raised in the social media and TV channels and various demonstrations, morchas and protest marches.”

The former Army chief, who was the first Sikh to hold the post, said he entered active politics with the aim of serving the people, after “very satisfying tenures” as the Army chief for almost three years and as the Governor of Arunachal Pradesh for 5.5 years, where he claimed was given the sobriquet of a “People’s Governor”.

“Today, I feel disillusioned particularly with what I have seen and experienced in Punjab since 2016. Further, my mission to serve the people will not be affected by this decision,” he wrote.

Asked about his future course, he said he has kept his political options open.

Gen (retd) Singh was the first Sikh officer to become the Army Chief. He fought the 1965 and 1971 wars, apart from being among the architects of defeating Pakistani intruders in Kargil.

‘Disillusioned’ ex-army chief JJ Singh quits SAD

Source: EP

Cong didn’t eat much into BJP’s vote share - e paper - english news paper today - news headlines today

Cong didn’t eat much into BJP’s vote share - e paper - english news paper today - news headlines today
Cong didn’t eat much into BJP’s vote share
City: 

The BJP may have lost three key states to the Congress, but its vote share has not shifted entirely to the grand old party as some other players have reaped the gains.

Another key aspect of the assembly election results is that while comparing the vote share of the recent state polls with 2014 general election, the BJP's loss is bigger, as it had virtually swept all the three states by winning 62 of the 65 Lok Sabha seats.

Interestingly in Madhya Pradesh, the BJP’s vote share is higher than that of Congress, whereas in Rajasthan it is just marginally less. In Telangana and Mizoram, it is the regional parties who have come out with flying colours, a post-2014 trend clearly visible in many states with sizeable presence of non-BJP and non-Congress parties.

Political pundits said this trend indicates that the regional satraps might play key roles in 2019 general elections for which attempts are already underway by non-BJP parties to put a united front against prime minister Narendra Modi’s bid for a second term.

For Chhattisgarh, the latest data showed the Congress got 43 per cent votes in this election, up from 40.3 per cent in the 2013 state polls and 38.37 per cent in the 2014 general elections. In comparison, the BJP's loss has been wider with its vote share dipping from 41 per cent in 2013 to 33 per cent now. In 2014 general elections, the party had got nearly 49 per cent vote and 10 out of the 11 Lok Sabha seats.

The vote share analysis shows that some smaller parties and independents have managed to get more votes.

Similar trend was visible in Rajasthan where BJP's votes have taken a dip from 45.2 per cent in 2013 to 38.8 per cent now. On the other hand, the Congress has improved its vote share from 33.1 per cent in 2013 to 39.3 per cent in 2018. It had managed to get nearly 30 per cent votes despite losing on all seats in last parliamentary elections. Independents have improved their assembly tally from 8.2 per cent to 9.5 per cent, while bagging larger number of seats.

The vote share situation is most interesting in Madhya Pradesh. The Congress’ share has improved from 36.4 per cent in 2013 to 40.9 per cent in 2018 assembly polls, while that of the BJP has come down from 44.9 per cent to 41 per cent, as per the Election Commission data. Congress has a lower vote share here than the BJP, but it beat the saffron party in the number of seats won in a close fight. Congress won 114 seats, whereas the BJP has got 109 seats. This means that seats that the Congress won, its vote share was marginally more than BJP, but BJP won many seats with a very high margin.

Cong didn’t eat much into BJP’s vote share

Source: EP

CRPF jawans suffer poor food supply in Chhattisgarh: Par panel - e paper - english news paper today - news headlines today

CRPF jawans suffer poor food supply in Chhattisgarh: Par panel - e paper - english news paper today - news headlines today
CRPF jawans suffer poor food supply in Chhattisgarh: Par panel
City: 

A parliamentary panel has expressed disappointment over “difficulties” being faced by CRPF jawans fighting Naxals in Chhattisgarh in getting their daily meals and asked the government to ensure a foolproof mechanism for regular supply of nutritious food to them.

The parliamentary standing committee on home affairs, headed by Congress leader P Chidambaram, also expressed anguish over some of the CRPF personnel living in

“sub-human conditions” in different parts of the country. “The committee feels that it is essential that the jawans are provided with good quality food. But the committee is disappointed to note that the CRPF personnel posted in Chhattisgarh, who are serving under extremely hard conditions with enhanced threat to life, have to go through difficulties in even getting their daily meal requirements fulfilled.

“They have to depend on local haats and contractors for supply of raw material for their food. The committee recommends that a foolproof mechanism should be developed for ensuring regular supply of nutritious food, including dishes/raw materials of different cuisines to all CRPF camps particularly those which have no access or difficult access to local market like Bastar in Chhattisgarh,” the panel said in its report submitted to Rajya Sabha on Wednesday.

The committee said the home ministry may explore the feasibility of using refrigerator vans to supply food items periodically in lesser accessible places of deployment like Bastar. “The committee further recommends that the MHA should form a food inspection committee comprising dieticians, experienced food inspectors, and officials of the ministry, tasked with the duty of performing surprise checks of food quality and hygiene, especially at the remote and inaccessible locations,”

it said.

In April 2017, a BSF jawan, who posted a clip on social media complaining of bad quality food being served to the troops, was dismissed from service following an inquiry. Tej Bahadur Yadav was sacked by the border guarding force on the basis of a report of a staff court of inquiry. The inquiry, officials had said, found the jawan guilty of making false charges.

The panel also expressed anguished that the CRPF personnel are “compelled to live in sub-human conditions” which affects their dignity and morale. The committee recommended that an outside agency be hired to conduct surveys every six months among the CRPF personnel deployed in the states regarding their living conditions. “If the state governments are found to be lacking in providing adequate infrastructure and other facilities in accordance with the provisions of the Standard Operating Procedures framed by the MHA, the ministry should consider withdrawing the deployed troops for violation of SOP conditions,” it said.

CRPF jawans suffer poor food supply in Chhattisgarh: Par panel

Source: EP

Rahul asks cadre to name CM choice - e paper - english news paper today - news headlines today

Rahul asks cadre to name CM choice - e paper - english news paper today - news headlines today
Rahul asks cadre to name CM choice
City: 

As the Congress party was looking to identify its chief ministerial candidate in Chhattisgarh, where it won a massive victory, M Kharge, party observer for the state, said, “It has been unanimously decided that the head of the CLP leaders will be decided by Rahul Gandhi. Rahul Gandhi had said that even if a resolution is passed unanimously, every MLA should be talked to & their opinions have to be considered. We'll take the consensus of all MLAs and senior leaders & then the High Command will take a decision (on CM) &we'll go according to that procedure. There's no confusion,our people are united.”

Chhattisgarh Congress chief Bhupesh Baghel and senior leader TS Singh Deo are front-runners for the chief ministership.

Meanwhile, amid hectic lobbying for the post of  chief minister in Chhattisgarh, Rajasthan and Madhya Pradesh, Congress president Rahul Gandhi has asked the party workers to tell their top choice for the chief minister post in each of the three states, party sources said.

Using an internal messaging platform for the party workers, Gandhi sent out to them a pre-recorded audio message seeking their feedback for selection of the chief minister in their respective states, the sources said. Despite repeated attempts, the party spokespersons did not comment on the message and its content. The exact time when the the message was sent could not be ascertained.

Sources, however, said the message has been sent to a large number of party workers in the states that went to polls, a PTI report said.

Cong yet to decide on CM in Rajasthan

After discussions that lasted hours, the Congress on Wednesday failed to arrive at a consensus in its ranks in Rajasthan on who should be the chief minister even as it staked its claim to form the government.

The decision on the chief minister will be taken Thursday by party president Rahul Gandhi, All India Congress Committee general secretary Avinash Pande told reporters after a party delegation met governor Kalyan Singh to seek an invitation to form the government.

Pande said Rahul will be briefed about the deliberations by the Congress Legislature Party in Jaipur over the chief minister’s post. Pradesh Congress Committee president Sachin Pilot and former chief minister Ashok Gehlot, both MLAs, are the frontrunners for the post and were part of the delegation that met Kalyan Singh.

Earlier in the day, the CLP held a scheduled meeting at the party office, where it passed a one-line resolution in which the newly elected MLAs authorised Rahul to decide on the chief minister’s post. After the resolution was passed, K C Venugopal, the AICC observer sent by the party to Jaipur, held discussions with individual MLAs, seeking their opinion. The exercise went on for several hours but there was no consensus and the CLP then left the decision on Rahul.

“We will hand over our report to the party president on Thursday,” Pande said.

Apart from AICC general secretaries Venugopal and Pande, the party had also sent four AICC secretaries to Jaipur. They are all expected to meet Rahul in Delhi. Both Pilot and Gehlot would remain in Jaipur, party leaders said.

Rahul asks cadre to name CM choice

Source: EP

Making a comeback - e paper - english news paper today - news headlines today

Making a comeback - e paper - english news paper today - news headlines today
Making a comeback

After intense poll campaign over the past two months, the assembly election results across five states highlighted the revival of the main opposition party, the Congress in the Hindi heart-land, while weakening in the North-East; potential strengthening of opposition against BJP in the 2019 general elections; issues around rural/agri and unemployment gaining increased attention from policy makers. Despite the apparent loss for BJP in the state elections, it is early to crystal ball gaze on the general elections in 2019 given, historically, that there is no direct co-relation between assembly election results and overall performance in the ensuing general elections (such as in 2004 or 2009) and the difference in vote shares in the larger states (MP, Rajasthan) between the two national parties is small.

Having said that, the focus again shifts to what can be done to revive rural sentiment since the above states were more “rural” in their demographics compared to Gujarat which was the last state won by the BJP. Separately, the appointment of the new RBI governor means that the easy liquidity (OMOs) will continue.

If one is willing to look beyond the immediate, the outlook on capex over FY20/CY19 is better than beginning of CY18 while that on consumption is a tad weaker, definitely not better. This is what the elections indicate.

n Congress gains in Hindi heart-land: Among the states - (a) Rajasthan has seen changes in state government every year since 1998 and this trend continued in 2018 as well. (b) MP witnessed an extremely close contest with Congress leading by only a slender margin. (c) In Chhattisgarh however, BJP recorded a significant loss in vote share (8 per cent) from the last assembly elections and therefore saw its seats decline from 49 in 2013 to 15 in 2018 (out of 90). Among other two states, Telangana Rashtra Samiti (TRS) won the elections in the state of Telangana, while Mizo National Front (MNF) (NDA ally) won the state of Mizoram and this was another loss for Congress in the North-East.

n Rural and employment related schemes to see increased focus from policy makers: The three states (MP, Chhattisgarh, and Rajasthan) have a higher rural population than the national average (75 per cent vs. 69 per cent). The discourse around rural income, unemployment had achieved significant attention in the run up to the elections. The continued significant price discount of agri-commodities, particularly of pulses and oilseeds from MSP, has adversely impacted rural sentiments indicating a lack of adequate procurement so far. Post these assembly results, the governments at the centre and states would pay higher attention to the implementation of various policies for rural/agri segments which would benefit rural demand.

The key challenger, the Congress had (a) promised farm loan waivers in MP and Chhattisgarh, and (b) procurement of paddy at Rs 2,500/qtl in Chhattisgarh as against the MSP of Rs 1,750/qtl during the election campaign. As on December 7, 2018, data on paddy procurement indicates lower procurement in many states, including in Chhattisgarh, where farmers have reportedly delayed to achieve higher realisations from a new government.

n Uncertainty over for RBI: The government, on December 11, 2018, appointed Shaktikanta Das as the 25th Governor of the RBI after the unanticipated resignation of Dr Urjit Patel the day before. With the appointment of the new governor, the uncertainty around the RBI has subsided. Das has worked closely with the Govt. of India (former Revenue and Economic Secretary of India). Going forward, it is expected that liquidity easing through OMOs will continue as has been the case since Sep’18.

Further, since the expert committee, that was formed to examine the economic capital framework (ECF) of the RBI (post RBI’s 9-hour long board meeting on November 19, 2018), is reported to submit its recommendations by the end of February, any decision on the transfer of capital is inconceivable anytime soon. Yet, if a transfer of RBI’s capital reserves takes place without proper evaluation of the same, it would trigger questions on the independence of the RBI. The board meeting on December 14, 2018 is now unlikely to take place as per media.

Source: JM Financial

Making a comeback

Source: EP

TINA goes for a toss - e paper - english news paper today - news headlines today

TINA goes for a toss - e paper - english news paper today - news headlines today
TINA goes for a toss

Not that we did not anticipate the BJP rout but the extent of the defeat has come as a surprise. There is nothing called TINA (There Is No Alternative) now. In a vibrant democracy, I don’t think it works that way. Even before the previous assembly elections in Chhattisgarh, the entire top leadership of the Congress was wiped out in an unfortunate Naxal attack. The only leader who survived was Ajit Jogi.

Even he formed a third front and started eating into the BJP share. In that sense, the Congress was faceless. Even Rahul Gandhi’s name was not good enough as we found. Between Rahul Gandhi and Narendra Modi, it was one-way traffic in favour of the Prime Minister. There was no sentiment for Rahul Gandhi in the state. So it was not Rahul Gandhi, not the Congress leadership or even the Congress organisation.

On top of it, there was an extremely popular chief minister – Raman Singh – in the state. Docile, down to earth and humble Singh had an impeccable image. In fact, he was one of the three leaders who held the BJP’s flag high even when the party was decimated in other parts of the country. The other two leaders were Shivraj Singh Chouhan and Narendra Modi. From that perspective, Raman Singh and Shivraj Singh Chouhan’s stature is at par with Narendra Modi. This tells us that when the people are in the mood for a change, they want to change, they just go ahead and no other factor works. They will even vote for vacuum. In a vibrant democracy this is the message number one from these assembly elections.

Secondly, anticipating that one will win in a vacuum is also not going to work because of the simple reason that the fatigue of 15 years is very different from the fatigue of five years. If the popularity of Raman Singh could carry the BJP for 15 years, or Shiela Dikshit in Delhi, Shivraj Singh Chouhan in MP and Naveen Patnaik in Odisha that does not mean that one term with a popular face can be the game plan for a vacuum driven vote for change. So why Chhattisgarh poll result is important is the fact that it is a red flag for the BJP, an alarm that the party should not get too complacent assuming that there is no alternative to Prime Minister Narendra Modi. It also shows mirror to the Congress that it takes 15 years of fatigue-based incumbency to uproot a popular face. You cannot do that in five years.

The third lesson is that organisation matters. It matters a lot. Had the organisation not been there it would have been a Chhattisgarh-like wipeout in Madhya Pradesh as well for the BJP. The two states are similar and have common history and there is hardly a change in emotion among the people of the two states. In Madhya Pradesh, the RSS network really came out and worked to compensate for the anti-incumbency force. The Congress must understand that it wins by not bringing BJP voters under its fold. The Congress wins when BJP voters sit at home. When core BJP voters get upset they sit at home. This has happened in Malwa where the voter turnout went down in urban pockets or remained static. In rural Malwa, the voting percentage went up just like in other parts of the state. It is the rural belt where the Congress got traction because of farm distress and other factors.

The vote share in Madhya Pradesh shows that even after 15 years in government, the BJP got the same number of votes or even more than the Congress. It tells us that the BJP compensated for the low turnout of its core voters by attracting a large number of first-time voters in the age group of 18-22. In fact, in all the three states – Rajasthan, Madhya Pradesh and Chhattisgarh – first-time voters have gone for the BJP, a phenomenon that was also witnessed in the Karnataka elections. The sole reason for this is Prime Minister Narendra Modi’s popularity. The 18-22 age group voter is fully with Modi and not Rahul Gandhi. In Rajasthan, the Congress got votes from the 25-35 age-group but that is because of Sachin Pilot and not Ashok Gehlot or Rahul Gandhi.

If the Congress thinks that these victories came because of Rahul Gandhi, they are living with a myth. The Congress coterie will try to make it a Rahul Gandhi versus Narendra Modi battle in 2019 but that will be suicidal. “Rahul bhaiya aaye hein, nayi roshni laaye hein (Rahul Gandhi has brought new light)” narrative will not work. If the Congress does that, it will be walking straight into Narendra Modi’s trap. The battle of personalities suits the Prime Minister as he has outright advantage. He wants it to be Modi verus Rahul contest. The Congress on the other hand should make into a localised contest exploiting double incumbency at the centre and the BJP-ruled states.

It must be noted that the BJP converted possible humiliating defeats in Madhya Pradesh and Rajasthan into good fights because of two weeks of intense Modi campaign. Without him, the party would have suffered a similar rout like in Chhattisgarh.

The Congress also made the mistake of not taking smaller parties on board in Madhya Pradesh and Rajasthan to form an alliance. It went for a tie-up in Telangana that boomeranged in the worst possible way, further complicating the alliance scenario. The Telangana experiment has given a message to other parties that a pact with the Congress does not improve their prospects. The CPM learnt the lesson in West Bengal and so did DMK in Tamil Nadu. Taking smaller parties on board would have sent a positive message for the alliance narrative.

Overall, the assembly elections have shown that it will not be plain sailing for the Congress as some interest has been created for 2019. Everybody is up for some entertainment that they had given up.

(The writer is a psephologist and founder of C-Voter)

TINA goes for a toss

Source: EP

Mind synthesis and resonance - e paper - english news paper today - news headlines today

Mind synthesis and resonance - e paper - english news paper today - news headlines today
Mind synthesis and resonance

The brain — the hub of our sentient consciousness and understanding — expresses and unites every activity of our conscious awareness. It shares a horde of thoughts and frames of mind at variable levels, just as much as it is in resonant consonance with a multitude of diverse functions that may not be perceptible. One could, therefore, call the brain our mind’s ‘mindful workstation’ — a living constituent and also biological object that embodies our whole being, while synchronising our physiological repertoire with a surplus of states, right from simple, also subtle, alertness and focus to performing everyday routine and complex tasks, almost on auto-pilot.

While our consciousness animates every process in our mind, which is regulated and controlled by chemical synapses, our mindful state is wedged between natural and spontaneous activities of several neural components, which also epitomise the organic strength of our ‘mind-body connect.’ This, in turn, is regulated by signals that drive our conscious senses and myriad functions both during our wakeful hours and also through a goodnight’s sleep. The whole process is, in more ways than one, formulated and extended by nature and nurture — a composite article channelled through our thoughts, feelings, emotions and actions. It determines our inquisitiveness, or imaginings, into everything. Put simply, it articulates the quintessential basis of ‘who we are,’ what we express, or connote, during our journey through life, and not just existence.

The philosopher Aristotle always thought that there was a distinctive, collaborating and common communication between our body, mind and emotions. This may be interpreted as a grid having the expanse of two signals that emerge in opposite directions. Aristotle, just like Plato, his ‘guru,’ also formulated simple, easy-to-express ideas and observations that truly conformed to common sense thinking. Their contexts explain the fact that emotions not only flow from and relate to one’s perceptive thoughts — they are also just as much interrelated, like the rainbow synthesis.

It is such a prospect that forms the skin of our thought — it also helps us to play the role of the observer, umpire and participant in our own difficulties. It purports to balance and attention, both as eyewitness and partaker in states of distress and also how well one is prepared to prevail over it. To cull a classical example: when anyone revisits a miffed feeling, one will sure feel the pangs, trepidation and indignation of past, unpleasant incidents. This is not a negative aspect — on the contrary, it is this old ‘visiting card’ that could possibly help us to recall unhappy memories and get over them, while looking at the panorama of a better future that is in front of us waiting to happen.

It is agreed that merely thinking of a bright future may not always help. One should recognise certain convictions, not just beliefs, which are entrenched in the emotional context. One should also ascertain inner conflicts that may have caused, or triggered, the past foreboding. It is a given that every emotional, or mental, skirmish is an artefact of two half-finished contradictory pieces of belief. This bids fair to the idea of being attentive to our experiences at the present-moment, as certain schools of psychological medicine advocate – including our relationships, social and environmental contexts towards resolving conflicts that connect the self to a new healthy perspective, or framework, too.

Once this happens, we are more than open to looking at issues that could be disturbing us with a clear, positive frame of mind. It also allows our past feelings to be felt — or, accepted — while helping us ‘emerge’ out of our own ‘self-imposed’ cocoon that may have held us back.

(The writer is a wellness physician, independent researcher and author)

Columnist: 
Rajgopal Nidamboor

Source: EP

In the spotlight - e paper - english news paper today - news headlines today

In the spotlight - e paper - english news paper today - news headlines today
In the spotlight
In quickly appointing Shaktikanta Das as RBI governor a day after Urjit Patel’s resignation indicates he has been sent with an agenda

From the exalted heights of famed economists who have headed Mint Street, after a gap of 28 years a pure play bureaucrat Shaktikanta Das, an IAS officer of Tamil Nadu cadre, was named as the new RBI governor on Tuesday evening. By the following day, he had addressed the media disengaging himself from the reclusive and media shy tenure of his predecessor Urjit Patel. Patel would be the first governor in recent times not to give media interviews as Das became the first non economist since S Venkitaraman to be ensconced on the 18th floor of RBI. It is a marked departure from the past and an abrasive government is deliberately cutting the umbilical cord to paper over the frequent sticking points between the central bank and North Block. One can argue that as DEA secretary Das, an excellent communicator but a student of history, is well versed with the inner workings of the RBI. Inflation targeting and managing the bank's capital reserves are the Governor's key challenges given that interest rates are now part of the Monetary Policy Committee's remit and brief. Das will have to distance himself from the perception of being the government's handmaiden, one who is malleable, ductile and pliant to follow their line. He needs to understand that the primacy of the RBI and its autonomy are paramount.

Reconciliation and consultations with all stakeholders proposed by Das may well be his best strategy for too many feathers have been ruffled due to the intensity of the sustained pressure on Patel. His first statement also addresses in part the central government’s demand to have wider consultations on all wider policy issues relating to monetary sector which is the RBI's domain expertise. Given that the Indian polity has refused to look at supply side interventions over the years, it is the RBI which controls inflation management. Benign and tempered inflation will be his greatest asset. It is clear that Das will have to hit the ground running after the acrimonious and shocking exit of his predecessor, Patel. Mind you, Das was in the hunt for Raghuram Rajan's job when his contract wasn't renewed, but the PM chose then Deputy Governor Urjit Patel instead. Das's dialogue skills are excellent, but the task ahead is gargantuan and perilous.

His commitment to uphold core values, professionalism, credibility and autonomy of RBI would be watched with great care in the days to come. Emphasising on the very need for discussion between RBI and government that runs the economy and pilots major policy decisions is a sure sign of establishing a healthy working relationship. Unlike Patel, the reticent and shy economist, Das has come out as a plain and simple straight talker who means business from day one. Das’s priority to deal with issues hobbling the banking sector is significant for more than one reason. However, any move to deplete the reserves of the RBI to boost public spending will be viewed with trepidation and lead to risk aversion. Any ostensible move to deviate from the Patel path at this precise moment would be suicidal. That the government showed alacrity in naming Das means that he has been sent with an agenda, but by pursuing the shallow process of emasculation of a credible institution would be counter intuitive at this stage. Will Das be his own man or the FinMin's man or retain his independence subsumed by the enormity of the central bank's visage, remains a matter of conjecture?

While consolidating the banks' balance sheets due to NCLT resolution process in progress, Das may take this opportunity to open up a liquidity window for micro, small and medium enterprises. This will not only address the second major issue flagged by government but may also perk up new opportunities for small businesses and expand a somnolent job market. A complete squeeze on lending by banks cannot be a policy option for RBI, a conservative line hitherto pursued by Urjit Patel’s team.

Das’s decision to go ahead with Friday’s meeting of the RBI Board as scheduled earlier also indicates his confidence to tackle issues head on rather than soft-pedalling done by Patel’s team. On key issues like interest rate management and tackling inflation, the new governor will have to go with recommendations of the six-member monetary policy committee.

Taking the RBI top officials and MPC along will perhaps be the biggest challenge for Das, who is known for team building capacities in the finance ministry. Also, his exposure in the finance ministry as economic affairs and revenue secretary will come handy in dealing with banking and RBI issues. D Subba Rao was sent to Mumbai from FinMin by P Chidambaram but as soon as he sat in the Guv's chair, the central banker took over his spirit.

It is imperative that the BJP government give Das enough space and time to settle down and address several of the contentious issues. Treating the RBI top brass with the respect that they deserve and positively taking their recommendations would also augur well for the Narendra Modi government that is facing a serious talent crunch. The government should also effectively negate arguments that it was out to destroy institutions of excellence with autonomy.

Das, on the other hand, may have to quickly set up a panel that will make its recommendations on larger issue of reserves utilisation, deployment and their management hitherto stonewalled by Patel. His vast experience as a bureaucrat will help chart a new course for RBI, though it needs to be mentioned that DeMo took place under his watch. Also, Das will have to take a call on pending issues bogging large institutions like Kotak Bank, Yes Bank, ICICI and IL&FS with clarity. To be North Block's man in the RBI will not help. Given that there’s hardly anytime before presentation of the next budget by finance minister Arun Jaitley on February 1, Das will have to iron out differences with the government early. There is no reason why he cannot successfully pilot RBI banking on his rich experience as an administrator, sherpa at G-20 and various assignments in the government. For starters, he will have to learn the art of RBIpolitik.


Source: EP

India needs good oil hedging policy, says Rajan - e paper - english news paper today - news headlines today

India needs good oil hedging policy, says Rajan - e paper - english news paper today - news headlines today
India needs good oil hedging policy, says Rajan
City: 

With geo-political factors impacting crude prices, India needs to have a good oil hedging policy as the volatility will continue to rise, former Reserve Bank of India (RBI) governor, Raghuram Rajan said on Wednesday.

Rajan said the issue has been discussed in the past and it began with a strategic petroleum reserve, but beyond that there is a need to think about hedging oil prices especially when it comes to levels such as now.

“There is a very strong need for an oil hedging mechanism for a country like ours which is so dependent on oil,” Rajan said in a pre-recorded interview being telecast at Times Network’s India Economic Conclave.

The problem is many who are entrusted with this, fear the chance of oil prices falling even further if you hedge it, but that has to be taken as a national consequence of the hedging programme. “We, as a country, must think about whether we should start this process,” he said.

Rajan said as far the GDP growth number is concerned, there is always a need to do more.

Giving an analogy, he explained, “The proof of the pudding is sometimes in the eating. If 25 million people are applying for 90,000 jobs, it suggests that we are not supplying that many jobs and that means growth is not strong enough at least in the job creating areas,” he said.

According to him at this time one of the biggest areas of concern is state deficits, especially during election time where many states are promised waivers and also dole out goodies to attract votes.

“This, often hampers them later on because ultimately what is suffering is investment,” he said.

Rajan said if we look at agrarian unrest, one of the big concerns is that agrarian productivity has not increased as it should, and the prices have been fluctuating.

“The effect of all this is that people are getting more and more concerned that they don’t have access to a good livelihood,” he added.

On land acquisition for projects, Rajan said there is a need to improve the pace of the process by making land rights much clearer, as there are some states where land rights are opaque, and also having a decent price as well as some kind of long-term incentives.

There is a need to focus on macro stability and distress sectors such  as agriculture, banking and power sector, and try to get them back on track, he noted.

“There is no immediate reason to be overly concerned about India but there is a reason to revisit our growth path to ensure that it is stable, sustainable and equitable. If we do that we are on the right track,” Rajan said.

Rajan also emphasised on having good and reliable data in the country to help decision makers formulate policies.

“As we go forward and become a $5 trillion economy from the over $2.5 trillion we are now, we need to have robust data and rely on data and take economic decisions on that basis,” Rajan said.

India needs good oil hedging policy, says Rajan

Source: EP

Tuesday, December 11, 2018

Next RBI Governor should ensure central bank’s independence - e paper - english news paper today - news headlines today

Next RBI Governor should ensure central bank’s independence - e paper - english news paper today - news headlines today
Next RBI Governor should ensure central bank’s independence
He should be an individual with a good track record of handling macro and micro economic challenges

For the last two months it was been speculated that differences between the RBI governor and policy makers in Delhi on crucial issues like utilisation of excess reserves and use of section (7) would force Dr Urjit Patel to resign. Given the fact that despite many governors having differences with governments of the time, only one governor had taken a similar step. So, Patel’s resignation was seen by many as being of low probability. Besides, the air of civility between the government and the RBI after the board meeting on November 19 gave the impression that the rocky patch was over and going forward the contentious issues would get sorted out.

The resignation has once again bought the spotlight back on the differences between the RBI and government. It can only be speculated whether excessive interference from the government or something else led Patel to quit. The truth will be revealed only when Patel decides to go public with his reasons for quitting office. Given the track record of public servants, the country probably will have to wait for a book by Patel to figure out what actually triggered his resignation at time when country could ill afford it. Given the fact that there will be no going back, there is tough work ahead for policy makers. They should be burning the midnight oil to ensure that the impact of such an event does not last more than what it should – at the most for a couple of hours after financial markets are opened for trade.

The government, for its part, should focus on managing two things. First, short-term sentiment and perception. In financial markets, finally it is the reality of economic numbers that matters. But, before reality come perception and sentiments. Both are fragile in nature. Sometimes in financial markets when perceptions are not countered in a correct manner, they trigger a chain of events which worsen the situation. The recent fiasco at IL&FS is a case in point. Despite the writing on the wall that defaults are happening, no one bothered to take the first step till the dirt hit the roof. In order to manage perception, it ought to ensure that there is no extreme volatility in financial markets. Especially in the currency market, because it is the mother market and other segments of the financial market, be it debt or equity, take big cues from the sentiment of currency markets. This is not to suggest that the government should try to support the rupee to prove the point that the resignation of the RBI governor does not matter. However, speculators should not make merry by pushing the rupee southward taking advantage of the event. Given the fact that oil prices are stable, there is no reason for the rupee to be pushed down in a dramatic manner.

The second aspect – and this is more critical – is to find a credible successor to Patel, sooner rather than later. The fact is that while the resignation has an element of surprise for people outside the system, surely policy makers had counted this as a possibility and must have a list of people whom they would have considered as replacement. What the government should not do is put a retired or a current bureaucrat as a new governor of RBI who is seen as a pliable person and do what the government dictates. Instead, the next occupant of the august office should be an individual with a good track record of handling macro and micro economic challenges. The reason why handling challenges is important at this point of time is that the Indian economy could be facing major challenges against the backdrop of a global economic slowdown and impact of trade wars. Also, along with ability the next incumbent should have a reputation for being independent, one who will protect the independence of RBI as an institution. The reason why credibility of that individual is important is that while the governor is the face of RBI, there are others in RBI whose morale would get impacted if they are forced to work under someone who they don’t think should be in the leadership position.


Source: EP

Tuesday, December 4, 2018

Relaxed norms to help home finance companies - e paper - english news paper today - news headlines today

Relaxed norms to help home finance companies - e paper - english news paper today - news headlines today
Relaxed norms to help home finance companies
City: 

The temporary relaxation of securitisation norms for NBFCs would largely benefit only home loan and loan against property in the book of the companies. The RBI had relaxed the norms temporarily to ease the liquidity among NBFCs.

NBFCs can now securitise loans of more than five-year maturity after holding those for six months on their books. Earlier, they had to hold these assets for at least one year. The relaxation on the minimum holding period will be allowed when the NBFC retains 20 per cent of the book value of these loans.

However, this relaxation will be mostly benefitting the home finance companies. “As this is subject to loans with five-year maturity, it will largely apply to home loans and loan against property. The auto loans and gold loans provided by NBFCs have a shorter tenure,” said Karthik Srinivasan, group head - financial sector rating, ICRA.

Gold loan companies and NBFCs dealing with shorter tenure loans will continue to remain out of the facility. Of the total loan assets held by the NBFCs, around 9 to 10 per cent could be securitised as the current norms.

Home finance companies welcomed the relaxation of norms. “This is the much required step for providing fund raising source for the sector grappling with the liquidity crisis. This relaxation would primarily benefit housing finance companies and NBFCs offering mortgage loans where the loan tenure is typically more than five years. Greater proportion of their loan book would now become eligible for securitisation,” said Ramratthinam S, CEO, Muthoot Homefin.

“This is a positive move for the NBFCs offering mortgage loans especially to MSMEs, where over 90 per cent of their loan book will become eligible for securitisation. I am sure that this move will further spur liquidity in the system,” Rajesh Sharma, managing director, Capri Global Capital. 

Columnist: 
Sangeetha G.
Relaxed norms to help home finance companies

Source: EP

Yes Bank appoints TS Vijayan as additional director - e paper - english news paper today - news headlines today

Yes Bank appoints TS Vijayan as additional director - e paper - english news paper today - news headlines today
Yes Bank appoints TS Vijayan as additional director
City: 

Yes Bank on Monday announced appointment of TS Vijayan, former Irdai chairman, as an additional director for five years with immediate effect.

The private sector lender is grappling with governance as well as non-performing asset issues and has seen resignations of three independent directors, including chairman Ashok Chawla, in the recent past.

“We would like to inform that the board of directors of the bank has approved the appointment of TS Vijayan as an additional director (independent) of the bank with immediate effect and his appointment as independent director for a period of 5 years...,” the bank said in a regulatory filing.

Vijayan was chairman of the insurance regulatory and development authority of India (Irdai). He has also held senior positions in various capacities at the Life Insurance Corporation of India and became its chairman in 2006.

Yes Bank further said the appointment of Vijayan will be subject to approval of shareholders at the next general meeting of the bank.

Yes Bank appoints TS Vijayan as additional director

Source: EP

Singhi new president of CMA - e paper - english news paper today - news headlines today

Singhi new president of CMA - e paper - english news paper today - news headlines today
Singhi new president of CMA
City: 

The Cement Manufacturers Association (CMA) has elected Dalmia Cement (Bharat) managing director and CEO Mahendra Singhi as its new President.

Singhi takes over from the outgoing President Shailendra Chouksey, the CMA said in a statement.

“India is on the cusp of great growth and infrastructure development. The Indian cement industry is at a significant moment of its history and I look forward to leading the association towards a sustainable global future,” Singhi said.

Singhi has earlier served as President of Rajasthan Manufacturers Association.

He also led Shree Cement before joining the Dalmia Bharat group. 

Singhi new president of CMA

Source: EP

Gujarat allows pass-through of coal cost for Tata, Adani plants - e paper - english news paper today - news headlines today

Gujarat allows pass-through of coal cost for Tata, Adani plants - e paper - english news paper today - news headlines today
Gujarat allows pass-through of coal cost for Tata, Adani plants
City: 

Bringing relief to thermal power plants owned by Tata, Adani and Essar groups, the Gujarat government passed an order to allow pass-through of higher cost of coal to end consumers, a source said.

The Supreme Court had earlier ruled against any compensatory tariff for Tata Power Company, Adani Power (4,600 MW Mundra) and Essar Power (1,320 MW Salaya) plants to allow pass-through of higher cost of imported coal.

Confirming the development, Tata Power in a BSE filing on Monday said, “The company welcomes the resolution by the government of Gujarat to accept the recommendations of the high-power committee in giving some relief to Mundra ultra mega power project that meets nearly 15 per cent of Gujarat’s requirement of power at a very reasonable cost.”

“This relief will help Coastal Gujarat Power to continue its operations to meet its obligations to all the five beneficiary states,” it added.

It further said, “Though the coal cost is now a pass-through, the company would continue to make losses due to rebate on financing cost, and coal mines’ profit is being passed on to beneficiaries states.”

The order was passed on Saturday.

According to the statement, Tata Power expects to get the consent of other four procurer states and, thereafter, amendment to the power purchase agreement, based on the recommendations of the High Power Committee, so as to seek necessary approvals from power regulator Central Electricity Regulatory Commission as per the directions of the Supreme Court.

Tata Power said that this positive step is in the interest of all stakeholders, including the end consumers, who get 24X7 reliable electricity supply from the CGPL (Mundra) power plant.

In case these projects were shut down, replacing such huge capacity with alternate sources from the market would not be feasible as the short-term market prices are not only much higher and volatile, but the availability of power is uncertain, it said.

Also, establishing new imported/indigenous coal-based power plants would have significantly higher fixed and variable costs and high gestation period; and hence, would not offer any solution to immediate power requirement, it added.

The earlier letter Tata Power had inadvertently mentioned that the Mundra ultra mega power project meets nearly 23 per cent of Gujarat's requirement of power, which letter may kindly be discarded, the company informed BSE.

Gujarat allows pass-through of coal cost for Tata, Adani plants

Source: EP

Irdai proposes changes in registration norms for insurance firms - e paper - english news paper today - news headlines today

Irdai proposes changes in registration norms for insurance firms - e paper - english news paper today - news headlines today
Irdai proposes changes in registration norms for insurance firms
City: 

The regulator Irdai on Monday proposed to relax norms for registration of insurance marketing firms with an aim to improve penetration of insurance products in the country. Insurance marketing firms (IMFs) are registered by the insurance regulatory and development authority of India (Irdai) to solicit or procure insurance products.

Earlier this year, the regulator had constituted a committee for review of IMF regulations. Based on the recommendations of the panel, Irdai has proposed several changes in the existing framework governing IMFs.

As part of the proposed changes, Irdai is considering to reduce the net worth requirement to Rs 5 lakh for applicants opting for an aspirational district. The Niti Aayog has designated 117 districts in 28 states as aspirational districts.

The current capital requirement for registration as an insurance marketing firm is minimum Rs 10 lakh. Irdai has also proposed expansion of the basket of products which can be solicited or procured by an IMF to include group insurance products for Micro Small and Medium Enterprises (MSMEs), crop insurance for non-loanee farmers and combi products.

Simplification of process of resignation of insurance sales person and expansion of the scope of work of Principal Officer are some of the other key changes proposed in the current regulations.

Irdai has sought comments from stakeholders on the proposed changes by December 15.

Irdai proposes changes in registration norms for insurance firms

Source: EP

Investors hopeful of MPC meet outcome - e paper - english news paper today - news headlines today

Investors hopeful of MPC meet outcome - e paper - english news paper today - news headlines today
Investors hopeful of MPC meet outcome

The market closed flat as rupee weakened by 86 paise against the dollar while crude oil prices surged after the US and China reached to a 90-day trade tariff ceasefire. The

Sensex closed at 3,6,241 up 46.70 points or 0.13 per cent. Meanwhile, the Nifty rose 0.06 per cent or up 7 points to 10,883.75 level. Broader market outperformed the benchmarks as BSE Mid-cap and small cap indices gained 0.46 per cent each.

Among the sectoral indices BSE Utilities, Metal, Power and Realty indices gained more than 2 per cent. BSE Healthcare (-1.21 per cent) and Nifty Pharma (-2.40 per cent) indices were down as Sun Pharma lost over 7 per cent.

Technical view

Mustafa Nadeem, CEO, Epic Research said, “The market shed–off the global cues and closed flat. The Nifty, amid a tepid session, ended the day at 10,883 up by 7 points. It was a flat on Monday session as positive cues from domestic market were awaited. Technically, we see a doji candle formation mainly formed due to indecision amongst traders. The Nifty soared up in early minutes to touch a new high of 10,946 after eight weeks but could not sustain the momentum and closed near the day’s open.

Market view

Vinod Nair, head of research at Geojit Financial Services said, “Market swung between gains & losses as positive sentiment from US China trade truce was offset by rebound in oil prices and weak rupee. The concern on Opec’s production cut and slow growth in Q2 GDP impacted sentiment. While global markets stay positive due to ease in trade tensions. On the other hand, investors are looking ahead to the outcome of RBIs monetary policy this week, which is expected to be status quo but a likely cut in inflation forecast and measures towards improving liquidity, will support the market.”

Columnist: 
Ravi Ranjan Prasad
Investors hopeful of MPC meet outcome

Source: EP

RCom inches to spectrum sale to Jio - e paper - english news paper today - news headlines today

RCom inches to spectrum sale to Jio - e paper - english news paper today - news headlines today
RCom inches to spectrum sale to Jio
City: 
Reliance Realty furnishes Rs 1,400 crore corporate guarantee to Telecom Department

Creditors and vendors of RCom on Monday heaved sigh of relief after the Anil Ambani’s RCom submitted a corporate guarantee of Rs 1,400 crore to the Department of Telecom inching towards closure of the spectrum sale with Reliance Jio and also ensuring their repayments.

The Supreme Court, on November 30, ordered the DoT to grant a no-objection to Reliance Communications for spectrum trading within 7 days. The court had upheld the earlier order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), and said no bank guarantee is now required.

“As per the order dated November 30 of the Supreme Court, Reliance Realty, a 100 per cent subsidiary of RCom has submitted the Corporate Guarantee of Rs 1,400 crore to the Department of Telecommunications (DoT). As per the said Order, DoT is to approve the Spectrum Trading within this week. The Spectrum Trading transaction will now be completed and proceeds will clear the dues of Ericsson and minority investors of Reliance Infratel. RCom’s Asset Monetisation proceeds as per plan,” a RCom statement said.

The statement also said that the proceeds from the spectrum deal will be used to clear the dues of Ericsson and Reliance Infratel minority investors, and added that Reliance Communications’ asset monetisation blueprint is moving as per plan.

Late last week, a bench headed by Justice RF Nariman said that the NoC would be given to RCom, a Anil Ambani group firm, by the Telecom Department, if Reliance Realty furnishes the corporate guarantee within two days.

The order came on a petition filed by the Telecom Department against the order of Telecom Disputes Settlement and Appellate Tribunal which had allowed RCom to sell spectrum to Reliance Jio without providing the bank guarantee of around Rs 2,900 crore to the DoT.

The TDSAT, in its last month order, had rejected DoT’s plea seeking bank guarantee of around Rs 2,900 crore before it permits sale of RCom spectrum to Reliance Jio.

RCom has signed an agreement with Mukesh Ambani-owned Reliance Jio Infocomm to sell its spectrum and other telecom assets for an estimated Rs 25,000 crore and partially clear its debt of about Rs 46,000 crore. The company had shut its wireless business last year, weighed down by Rs 46,000 crore of debt, falling revenue and widening losses. The company has been locked in a legal tussle with DoT over spectrum-related dues worth Rs 2,947.68 crore.

The DoT had refused to clear the spectrum sale until its dues were covered by bank guarantees and it had challenged a pledge of land to cover the amount.

RCom has been banking on sale of assets to repay Ericsson and Reliance Infratel shareholders, besides 39 lenders, including 14 state-run banks led by State Bank of India. The Supreme Court had set a December 15 deadline for RCom to pay Rs 975 crore to Ericsson (Rs 550 crore plus interest) and Reliance Infratel’s minority shareholders, including HSBC Daisy Investments.

RCom inches to spectrum sale to Jio

Source: EP

Opinion: Future of fintech firms - e paper - english news paper today - news headlines today

Opinion: Future of fintech firms - e paper - english news paper today - news headlines today
Opinion: Future of fintech firms

There has been a growing hue and cry out there in the streets with many saying that the verdict handed out by the Supreme Court (SC) bench on the constitutional validity of Aadhaar spells troubles, if not doom, for the fledgling fintech industry. Much before the ink dried on the judgment, some even foresaw the end of the road for these disruptive players who have seen an exponential surge in business growth due to the single-point, digital, Know Your Client (KYC) verification system.

It is a truism that the unique identification number or Aadhaar has been the force multiplier contributing immensely to the growth of fintech platforms in the past. The use-case utility of this unique number was and is central to the business model of most of these firms since it shrinks their operational cost. Instant KYC verification system using Aadhaar cuts the cost of customer acquisition significantly giving a lead for fintech firms over competition in terms of business acquisition and product delivery.

There is no denying that the SC verdict will punch a hole in the fintech firms’ business model going forward. Since the verdict puts the breaks on private businesses seeking the Unique Identification Number for KYC verification, it inter alia clips the ability of firms to pull out client details expressly. This will raise costs for the industry because the firms will no longer enjoy the advantage of verifying the bona fides of a customer digitally.

However, this does not mean the end of the road for the fintech industry as some put it. It is my firm opinion that such views are nothing but much ado about nothing. With conviction, it can be said that market dynamics will sustain the growth momentum in the fintech vertical going forward. This is because Aadhaar, as the honourable Sup-reme Court rightly said, has become more or less a household term and touches the everyday lives of almost everybody. As on end-March 2018, approximately 90 per cent of the population in the country has been covered by the Unique Identification Number, Aadhaar.

Therefore, the only issue left is gaining access to Aadhaar details of individuals by private businesses including fintech firms. Notably, the SC verdict does not preclude any willing citizen from sharing this information with anybody for either executing a commercial transaction or otherwise. This takes us to the heart of fintech firms’ business model set against a dynamic market setting.

It is no secret that the lean and nimble fintech firms managed to disrupt the financial firmament with their agility and ease of doing business. Customers started flock-ing to fintech enterprises since they offer minimum transaction time and lower cost – factors that tipped the scales in their favour. The SC verdict has not changed this situation since it did not say private firms cannot access or use Aadhaar details. Customers who want to avoid the long waiting period and avail financial products in the shortest possible time will therefore continue to turn to fintech firms to meet their needs.

Suffice it to say that as long as Aadhaar continues to be available as a KYC document with the consent of the customers, there is no immediate worry for the fintech firms.

(The writer is founder and managing director of TMW (The Mobile Wallet )

Opinion: Future of fintech firms

Source: EP

Avoid temptation - e paper - english news paper today - news headlines today

Avoid temptation - e paper - english news paper today - news headlines today
Avoid temptation
Using PSU funds to raise resources has a negative impact on government finances in the medium-to-long term

The government is said to be looking to dip into the reserves and surpluses of public sector undertakings (PSUs) to shore up its finances. While alternative routes might have been taken – higher dividend pay out, share buy backs or follow on offering – the fact is that since the time PSUs were listed, governments at various points of time used PSU funds to spruce up their balance sheets. There is nothing wrong in the owner selling a part of his stake to raise resources from the company. The trouble lies in the arbitrary manner in which this is done when it comes to PSUs.

Our policy makers do not seem to realise that milking PSUs for short-term gains like meeting fiscal targets for a particular year have a negative impact on government finances in the medium-to-long term.

The government cannot reduce its stake in these PSUs beyond 51 per cent, not in the near future at least. But a time will come when the government will not have anything to sell to raise resources for fiscal shortfall.

If in a particular sector, one PSU and another a private entity, similar in size and operations are listed it is very likely that the price-to-earning multiple of the private company would be far higher. The best example of this is the financial sector stocks – even a smaller private sector bank has a higher market capitalisation than a PSU bank. The result of the valuation differential is that a private company promoter is able to raise higher resources by diluting his stake by a few percentage points, but for the government to raise the same resources, it is forced to sell much more of its stake.

The government should avoid the temptation of asking a PSU to use its reserves to buy back shares at a time when that money can be used for expansion. A three-way approach is required to make sure there is improvement in the price-to-earning multiple. Firstly, policy makers should stop thinking that the government shareholding in PSUs can be monetised any time it wants.

They need to respect market demand, whether investors are looking forward to invest in the kind of equity paper which the government is offer-ing. Second, PSU boards should be genuinely indepen-dent. They do what the government wants them to do.

Perhaps there is need for a legal provision that gives CMDs of PSUs a fixed tenure. Third, instead of trying to raise resources by drawing on listed PSUs, PSUs from across sectors should be listed. There are many companies in specialty funding, natural resources and defence that have the potential of getting listed. They should be listed so that when, for instance, demand for paper from the defence sector comes up, the government is able to offer that paper and raise resources at higher valuations, rather than selling paper from a sector which street does not want.


Source: EP