Today's Hot Stories - March 03, 2014
10 Headlines for Today(1) Court to record statements of 2G accused on April 4
(2) JD(U) rules out tie-up, Lalu starts own campaign, clock ticks down for Congress
(3) Magnitude-6.6 quake hits south-western Japan
(4) Alstom plans to make Chennai its export hub to tap metro-rail market in Sri Lanka, Pakistan
(5) Jet Airways connects Bangalore to Abu Dhabi
(6) ZF appoints Rudi von Meister president for the region of Asia-Pacific
(7) Afridi seals a pulsating win for Pakistan
(8) Ronaldo saves Real in Madrid derby
(9) Kerala women in title round
(10) '12 Years a Slave' wins best picture Oscar; Blanchett, McConaughey win top honours
5 Stories for Today
(1) Lok Sabha polls likely to begin from April 2nd week
(2) Protesters storm Libyan parliament
(3) A Swift fall in Esteem for Maruti Suzuki
(4) Global banks may have been manipulating gold yardstick
(5) GDP growth in India: 5 standout points
(1) Lok Sabha polls likely to begin from April 2nd week
Polling in the upcoming Lok Sabha elections is likely to commence in the second week of April and may be spread over seven phases, the longest so far, highly placed sources said on Sunday.
The probable dates for the commencement of polling are between April 7 and 10, the sources in the Election Commission told PTI while emphasising that the poll schedule was still being “fine tuned”.
As of now, the plan is to have voting, involving over 81 crore voters, in seven phases but efforts are on to reduce that to six phases. The 2009 polls were held in five phases from April 16 to May 13.
The much-expected announcement of the schedule is expected in the middle of this week. The Model Code of Conduct for governments and political parties will come into force from the date of announcement.
However, the Election Commission has ruled out advancing the schedule or compressing it to avoid the summer heat, a demand put forward at the all-party meeting convened by the Commission last month.
The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31.
Along with the Lok Sabha polls, Andhra Pradesh, including the regions comprising the newly-carved out Telangana, Odisha and Sikkim will go to polls to elect new assemblies.
Highly placed sources in the Commission said finishing touches were being given to the schedule. Consultations with the Union Home Ministry, state governments, para-military forces and Chief Electoral Officers of states have already been completed.
There was speculation that the announcement may be slightly delayed for the Centre to promulgate some of the ordinances it plans to bring out against corruption and on some other issues but there is no confirmation of it.
If a six or a seven-phased schedule is finalised, it would be the first time the country would witness elections over such a long period.
The sources said that the attempt is to “maximise” use of forces and the polling days. In the first phase, polling is expected to be held in some of the naxal-hit states and in some North-East states.
For the first time in parliamentary polls, a system of paper trail for electronic voting will be introduced in some constituencies on a trial basis.
There have been demands that a paper trail should be in place so that a fool-proof record is created and controversies avoided in case of a dispute or an election petition filed in courts.
In a bid to create a level—playing field, the Model Code of Conduct bars governments in the Centre and in the states from making any kind of announcements regarding new schemes or promises so as to lure voters.
The Commission has also issued guidelines to political parties asking them to explain the rationale of financing the promises they make in their election manifestos. The guidelines that followed Supreme Court directions in this regard have now been made part of the Model Code.
An estimated 81.4 crore voters will be eligible to vote in the coming elections after 9.71 new voters have been added to the rolls since the last elections.
From the coming elections, candidates in a Parliamentary constituency in bigger states can spend up to Rs 70 lakh on their campaign, up from Rs 40 lakh in 2011. In the 2009 elections it was Rs 25 lakh.
Another first in the Lok Sabha elections will be the introduction of “None of the Above” (NOTA) option in voting, which was put in vogue in the assembly elections a few months ago.
The electoral rolls are ready after being updated with January one this year as the cut-off date.
A total of 1.1 crore poll personnel, half of them being security forces will be deployed for the smooth conduct of polls and to ensure that they are free and fair.
Poll officials said the database of the civilian staff to be deployed for conducting polls has been prepared and at least 5.5 million civilian staff would be deployed.
The list of central government employees to be deployed for poll duty as micro observers in sensitive polling stations has also been prepared.
About 8 lakh polling stations have been set up across the country keeping in view the convenience of both the voters and the poll staff.
Preparations have been made for deployment of around 12 lakh electronic voting machines with the addition of another 2.5 lakh new EVMs which it had ordered with various public-sector companies.
During the 2009 polls, there were 714 million voters against 671 million voters in 2004 Lok Sabha polls.
The Commission favours a multi-phased election for a country of India’s size and electorate because it is better that there is “complete satisfaction” of voters.
Otherwise, it can lead to “discontentment” in case of any shortcomings, they said.
Some states will be accorded special treatment due to their being affected by extremism.
The EC sources said the Commission has not conducted any election in a single go in one phase after 1971 as the size of the electorate in the world’s largest democracy has grown considerably over the years.
The officials also said that the entire poll process takes around three months time. But there is a limit of six weeks time from the announcement of the schedule to the first date of poll in view of the Supreme Court direction that the Model Code of Conduct inhibiting government decisions cannot be an unduly long period.
They said the Commission has to give around two weeks’ time for government formation before the term of the Lok Sabha or a state assembly expires. In the states of Andhra Pradesh, Odisha and Sikkim, which will have assembly polls along with the Lok Sabha polls, the Commission will place two EVMs alongside for voters to vote in both the elections.
Andhra Pradesh has 42 Lok Sabha constituencies and a 294-member Assembly. Out of this, 25 Lok Sabha constituencies and 175 Assembly constituencies will remain with the residuary state of Andhra Pradesh, while Telangana will have 17 Lok Sabha seats and 117 Assembly seats.
Odisha will also elect its 147-member assembly while Sikkim has a 32-member state assembly.
The terms of Andhra Pradesh assembly is till June 2, that of Odisha is till June 7, and of Sikkim till May 21.
Source: The Hindu
(2) Protesters storm Libyan parliament
Dozens of Libyans on Sunday stormed the building of the parliament in the capital Tripoli in protest against the extension of its mandate, the official Libyan News Agency reported, citing an official.
“The demonstrators had set fire in the vicinity of the National Congress (parliament) before storming its hall while members were in session,” the parliament’s spokesman Omar Humaydan said.
He added that some protesters were armed and attacked the members, some of them were later hospitalized.
Earlier in the day, anti-parliament activists had blocked roads to the parliament to protest an attack by Congress’ supporters on protesting campers outside the building, local media reported.
The Congress, Libya’s highest authority, has recently extended by one year its mandate, which was originally due to expire in February.
Libya has in recent weeks seen mass protests against the parliament and the interim government due to a lack of security in the country.
Gunmen Sunday shot dead a French man in the eastern Libyan city of Benghazi, the latest in a series of deadly attacks in the restive city.
“The victim is a 49-year-old technician, who was shot by gunmen in the district of Ras Ebeida in central Benghazi,” an official at the city’s medical centre told dpa by phone. “He died of three shots.” The official added on condition of anonymity that the man had worked for a French company upgrading the city’s medical facility.
No one has claimed responsibility.
Four unidentified bodies were found Sunday in a forest east of Benghazi, reported LANA.
They were shot in the heads in what is believed to be execution—style killings, according to the report.
Last week, seven Egyptian Christians were found dead near Benghazi.
Benghazi, the birthplace of a 2011 uprising that toppled dictator Muamar Qadhafi, has seen frequent attacks by armed groups on security personnel and foreigners.
In 2012, the US ambassador and three Americans were killed in an attack on the US consulate in Benghazi.
The North African country’s post-revolutionary rulers have been struggling to assert their authority, given the proliferation of weapons and militias since the ouster and killing of Qadhafi in October 2011.
Source: The Economic Times
(3) A Swift fall in Esteem for Maruti Suzuki
It has been a downhill ride in the last one month for car industry leader and stock market darling Maruti Suzuki which is embroiled in a controversy of its own making. Investors, analysts and the stock market are up in arms over the proposal by Suzuki Motor Corporation (SMC), which owns 56 per cent of Maruti Suzuki, to set up a new plant in Gujarat as a wholly-owned subsidiary. They sent Maruti’s stock plunging by 8.12 per cent on January 28, the day the decision was announced. On Friday, the company sent a clarification to the stock exchanges but it raises more questions than it answers. Not surprising then that the market voted with its feet again sending Maruti’s shares tumbling down by 4.53 per cent.
If the original announcement was patronising to Maruti’s shareholders and flawed in its financial logic, the clarification put out on Friday raises concerns over transfer pricing strategies. SMC’s wholly-owned Gujarat subsidiary will operate on the basis that it will neither make a loss nor a cash surplus. If you thought this means that the subsidiary will supply to Maruti at cost, you are wrong.
Cars manufactured on contract basis for Maruti by the Gujarat subsidiary of SMC would be priced in a manner that will generate a “surplus” to fund the subsidiary’s capital expenditure, says the clarification. Of course, the company has also very kindly clarified that such price would be lower than what Maruti charges its dealers so that it can build in its margin. But how much lower? And why should the capital expenditure of the SMC subsidiary be funded by Maruti when it has no stake? Investors are agitated over the basic question of why SMC should branch out on its own when Maruti has the financial resources and management bandwidth to implement the project as its third plant. The land for the Gujarat plant has already been paid for by Maruti and it is obvious to assume that its managers, contractors and vendors will play a key role in implementing the project for SMC.
The existence of a fully-owned subsidiary of SMC and a partially-owned one, both dealing in the same business, raises obvious questions of conflict of interests. Will SMC’s new products and technology be channelled through Maruti or the new wholly-owned subsidiary? SMC has defended its decision saying that Maruti will benefit from interest earnings on its huge cash resources of over Rs.7,000 crore by not investing in the project. But where is the money now invested? In unquoted units. And what did it earn? All of Rs.313.40 crore as interest in 2012-13, which is a piffling 4.5 per cent rate.
In comparison, Maruti’s return on capital employed, which is a rough estimate of what the cash might earn if invested in a project, was a little over 15 per cent in the same year. How does SMC then say that Maruti will benefit by not investing? If that was bad logic, this takes the cake: Maruti can apparently “avoid all risk inherent in any investment” by not investing in the new plant, according to the statement. If it is not the karma of a corporate manufacturing enterprise to invest in growth, what is?
The bottomline is this: SMC’s strategy is not favourable to Maruti and it is shocking that the Japanese multinational can do this to its Indian subsidiary which earns more than what the parent earns in Japan. The strategy is hostile to minority shareholders, and institutional investors, who are already miffed, should carry their protests to the logical conclusion. SMC is trying to have the cake and eat it too; it should not be allowed to get away with it.
Source: Hindustan Times
(4) Global banks may have been manipulating gold yardstick
The London gold fix, the benchmark used by miners, jewellers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.
Unusual trading patterns around 3pm in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behaviour and should be investigated, NY University's Stern School of Business professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody's Investors Service, wrote in a draft research paper.
"The structure of the benchmark is certainly conducive to collusion and manipulation , and the empirical data are consistent with price artificiality," they say in the report, which hasn't yet been submitted for publication . "It is likely that co-operation between participants may be occurring."
The paper is the first to raise the possibility that the five banks overseeing the century-old rate — Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA — may have been actively working together to manipulate the benchmark.
It also adds to pressure on the firms to overhaul the way the rate is calculated. Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the $20 trillion gold market for signs of wrongdoing. The paper "is not a Moody's research report," Michael Adler, a spokesman for the firm, said.
Officials at London Gold Market Fixing Ltd, the company owned by the banks that administer the rate, referred requests for comment to Societe Generale, which holds the rotating chairmanship of the group. Officials at Barclays , Deutsche Bank, HSBC and Societe Generale declined to comment on the report and the future of the benchmark. Joe Konecny, a spokesman for Bank of Nova Scotia, didn't respond to requests for comment.
The rate-setting ritual dates back to 1919. Dealers in the early years met in a woodpanelled room in Rothschild's office in London and raised little Union Jacks to indicate interest. Now the fix is calculated twice a day on telephone conferences at 10.30am and 3pm London time. The calls usually last 10 minutes, though they can run more than an hour.
Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kg, of each other, at which point the fix is set.
Traders relay shifts in supply and demand to clients during the call and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, where the results are published. At 3pm on Friday, the price was $1,332.25 an ounce. The process is unregulated and the five banks can trade gold and its derivatives throughout the call.
Bloomberg News reported in November concerns among traders and economists that the fixing banks and their clients had an unfair advantage because information gleaned from the calls provided an insight into the future direction of prices and banks can bet on spot and derivatives markets during the call. Abrantes-Metz and Metz screened intraday trading in the spot gold market from 2001 to 2013 for sudden, unexplained moves that may indicate illegal behaviour. From 2004, they observed frequent spikes in spot gold prices during the afternoon call.
Source: The Times of India
(5) GDP growth in India: 5 standout points
GDP growth in India has been a big concern and has acquired an even more worrying avatar in recent months. Here are some top facts that seek to shed some light on the matter:
GDP growth in India: Moving out of the trough
3QFY14 GDP growth in India at 4.7% signals a likely move out of the trough for India. However, growth is unlikely to see any sharp recovery in the short term as the benefits of the reforms process of the past 12-15 months would take time to feed into the real economy. Investment cycle recovery is yet to come and any sustainable recovery would necessarily be slow. For FY2014 and FY2015, we maintain our GDP growth estimates at 4.8% and 5.1% respectively.
India is likely out of the woods but not out of danger
With the growth continuing to be on our estimated trajectory, we maintain our stance that India has likely seen the trough in growth. It is unlikely that growth would touch sub-4.5% in the next few quarters. With some positive base effects aiding the cause along with stabilization in the industrial sector growth, India’s GDP growth is likely to hover around the 5% mark (Exhibit 1). However, we note that a sharp recovery will depend on the investment cycle revival. While the Government has been on the right path with the reforms, the effect on the real economy would take time considering the gestation period of projects and need for stability in policymaking. For 4QFY14, we expect GDP growth to be at 5.1% with some downside bias depending on the extent of Government expenditure cuts and its effect on the national accounts.
Mining and manufacturing yet to see an upside
In line with weaker IIP growth during the quarter, industrial sector growth contracted by 0.7% in 3QFY14 after a strong print of 2.3% in 2QFY14. A significant 2.8 ppt quarterly downtick in manufacturing (contracting by 1.9% yoy) was not surprising. While mining sector continued to contract for the seventh consecutive quarter by 1.6%, growth in electricity was relatively buoyant at 5% while construction growth remained muted at 0.6%. The weakness in 3QFY14 industrial growth was mimicked by gross fixed capital formation growth contracting 1.1%.
Services sector likely to remain relatively muted
Services sector growth in 3QFY14 saw significant buoyancy as the revised FY2013 GDP releases provided a positive base effect. However, ‘finance, insurance, real estate and business services’ sector continued to see strong growth with 3QFY14 growth at 12.5% compared to 10% in 2QFY14. ‘Social and personal services’ sector growth also picked up to 7% in 3QFY14 from 4.2% in 2QFY14. However, this can be attributed to a low base given that the Government had cut expenditure sharply in 3QFY13. We note that our GDP estimate of 4.8% will depend on the expenditure cuts in 4QFY14 by the Government to meet its fiscal deficit estimates (along with some revenue increase). To this extent, we could see lower growth (to some extent offset by expenditure cuts done in 4QFY13) in this sector in 4QFY14.
Expect no change in RBI stance on April 1
With growth-inflation trajectory panning out broadly in line with our estimate (and likely RBI’s own estimate), we do not expect any change in repo rate on April 1. We note that Dr Rajan in a recent speech highlighted that (1) “… do not believe the policy rate is set at a level where it can affect demand, one way or the other” and (2) “… the RBI prefers to disinflate over time rather than abruptly, while being prepared to do what is necessary if the economy deviates from the projected inflation path”. In fact, he stated that “as of now, we believe the rate is appropriately set”. With headline CPI inflation continuing to stay on the projected trajectory and move down to 8% by end-FY2015, the RBI does not have reason to change rates on either side, especially as growth is unlikely to crumble any further, but maintain at the current levels.
Source: The Indian Express
Disclaimer: All news stories and content sourced from freely available material on the internet. All sources are acknowledged.
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