IMF growth projections are 80% wrong: EAC-PM member Rathin Roy

Noted economist and member of the Economic Advisory Council to the Prime Minister (EAC-PM) Rathin Roy on Wednesday dismissed lowering of India's growth projections by the IMF and the World Bank, saying they often go 'wrong'.



While the International Monetary Fund (IMF) has lowered India's growth forecast for the current fiscal by 0.5 percentage points to 6.7 percent, the World Bank has pegged economic expansion at 7 percent, down from 7.2 percent projected earlier.



The Asian Development Bank too lowered India's current fiscal growth to 7 per cent from 7.4 per cent, while RBI cut economic growth forecast to 6.7 per cent from earlier projection of 7.3 per cent.



"IMF's growth projections are 80 percent wrong...World Bank's growth projections are 65 percent wrong," he said in a media interaction when asked to comment on lowering of growth projections by international multilateral lending agencies. Roy, who is also director of economic think-tank National Institute of Public Finance and Policy (NIPFP), however, said the council will examine causes of slowdown.



India's economic growth slipped to a three-year low of 5.7 percent in the first quarter of the current fiscal.



Replying queries at the same media interaction, Niti Aayog member and Chairman of the Council Bibek Debroy said: "whether we like it or not we don't have good data on employment".



"In a country like India, you cannot get good data on employment and jobs from enterprise surveys. The labour bureau enterprise surveys cover less than 1.5 percent of total employment," Debroy said.



Noting that we can get data on unemployment and employment in India is through household surveys, he said the last NSSO household survey was out in 2011-12 and the next results of NSSO household surveys will not be available till 2018.
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Exclusive: No respite for Indian banks as bad loans hit record $146 billion

Indian banks’ sour loans hit a record 9.5 trillion rupees ($145.56 billion) at the end of June, unpublished data shows, suggesting Asia’s third-largest economy is no nearer to bringing its bad debt problems under control.


A review of Reserve Bank of India (RBI) data obtained through right-to-information requests shows banks’ total stressed loans - including non-performing and restructured or rolled over loans - rose 4.5 percent in the six months to end-June. In the previous six months they had risen 5.8 percent.

While banks remain the main source of funding for India’s companies, the stubborn bad debt problem has eaten into bank profits and choked off new lending, especially to smaller firms, at a time when an economy that depends on them is stalling.

India grew at its slowest pace in three years in April-June - a concern for the government of Prime Minister Narendra Modi, who faces elections in 2019 and has pledged to create millions of new jobs before then.

Banks are having to take higher provisions to account for more defaulters being pushed into bankruptcy. And margins are likely to be squeezed further by proposed new rules to encourage commercial banks to pass on central bank interest rate cuts.

To be sure, the bulk of India’s sour loans are in the state banks and stem from lending to large conglomerates, especially in steel and infrastructure. But analysts say the rise in bad loans among small firms, and even retail borrowing, is worrying and will do little to encourage new loans to help fuel growth.

Anbarasu forecast weak quarters ahead for banks before profitability picks up, and several senior bankers from public sector lenders - which account for more than two-thirds of Indian banking assets - agreed the months ahead would be strained.

Stressed loans as a percentage of total loans reached 12.6 percent at end-June, according to the RBI data, the highest level in at least 15 years.

“We think capitalization is the biggest challenge for the banks at the moment, given that earnings will remain subdued and will not support any capital generation,” said Moody’s Anbarasu.
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China shares hit 21-month high; Turkish lira takes a dive

SYDNEY (Reuters) - Chinese shares climbed on Monday after a week-long break as a disappointing survey on the country's service sector did little to dent optimism on global growth, while political uncertainty caused turbulence for the Turkish and British currencies.

Liquidity was lacking with Japan and South Korea on holiday and a partial holiday in the United States. where stocks will be open but bonds will be closed.

The Chinese blue-chip CSI300 index rose 1.7 percent to heights not seen since late 2015, partly in a delayed reaction to a targeted easing by the country's central bank announced a week ago.

That helped offset a fall in the Caixin index of service sector activity to a 21-month trough of 50.6 in September, a contrast to healthier numbers in manufacturing.

Spreadbetters also pointed to opening gains for most major European bourses.

"The global economy continues its synchronized recovery, as evidenced by robust data across regions, including upside wage growth surprises in the U.S. and Japan," wrote analysts at Barclays (LON:BARC) in a note.

"At the same time, events in Spain and the UK also confirm a high level of political uncertainty. For now, the constructive economic developments seem to dominate political risks."

Australian stocks still managed to put on 0.5 percent, while Nikkei futures added 0.1 percent even though the cash market was shut.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.02 percent, having rebounded by 1.7 percent last week. E-Mini futures for the S&P 500 were trading 0.11 percent firmer, while futures for the Treasury 10-year note rose 1 tick.

Bond yields had initially spiked on Friday in reaction to firm U.S. wage numbers, only to retreat as fresh jitters over North Korea bolstered safe havens. [US/]

Annual growth in average hourly earnings accelerated to a relatively rapid 2.9 percent in September, outweighing a 33,000 drop in nonfarm payrolls.

The pick-up in wages boosted already high expectations that the U.S. central bank will raise rates at its December meeting, and that further hikes are likely in 2018.

Minutes of the Federal Reserve's last meeting are due on Wednesday and may well show enough support for a move by year-end. A host of Fed speeches are also due this week.

LIRA SLIDES

In currency markets, the dollar was a shade softer at 93.768 against a basket of competitors. It also edged down to 112.57 yen, having been as high as 113.43 on Friday.

The euro was a fraction firmer at $1.1737, aided by TV pictures of hundreds of thousands of people in Catalonia's capital Barcelona demonstrating against moves to declare independence from Spain.

Catalan leader Carles Puigdemont is expected to address the region's parliament on Tuesday, when he could unilaterally declare independence.

Another early mover was the Turkish lira, where the dollar surged 4 percent at one point to the highest in seven months amid a diplomatic spat with Washington.

The U.S. mission in Turkey and subsequently the Turkish mission in Washington mutually reduced visa services after a U.S. mission employee was detained in Turkey last week.

The pound had popped higher on reports British Prime Minister Theresa May could sack Foreign Secretary Boris Johnson as she tries to reassert her authority after a series of political disasters.

Sterling had been undermined by speculation that May herself could be ousted ahead of crucial Brexit talks between Britain and the EU. The initial spike could not be maintained, however, and the pound soon steadied around $1.3090.

The New Zealand dollar hit a four-month low on Monday after a final vote count in the country's tight general election released over the weekend failed to identify a clear winner.

In commodity markets, gold gained 0.5 percent to $1,282.56 an ounce and off a two-month low touched on Friday.

Oil prices regained some ground on expectations that Saudi Arabia would continue to restrain its output in order to support prices, and as the amount of rigs drilling for new oil in the United States dipped. [O/R]

Brent futures gained 13 cents to $55.75 a barrel, while U.S. crude rose 17 cents to $49.46.

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Uday Kotak-led SEBI committee on corporate governance has submitted its report today. The committee has recommended splitting of roles of Chairman and MD-CEO for listed companies.

The rationale to split the post with the chairman as the leader of the board and chief executive or managing director as the leader of the management is to provide a better and a more balanced structure by enabling effective supervision of the management, said the Sebi panel on corporate governance.

“Corporate democracy is built into the interconnected arrangement amongst the board, the shareholders and the management, where the board supervises the management and reports to the shareholders,“ the Kotak committee report said.

“The issue of whether to separate the roles of the chairperson and the CEOMD, while not a recent phenomenon, is a growing concern in corporate governance worldwide,“ it said.

The panel said the separation of posts will be applicable to companies that have at least 40% shares owned by public shareholders.

The proposal can be extended to all listed entities from April 1, 2022, it said.

RC Bhargava, chairman at the county's largest car maker Maruti SuzukiBSE 0.45 %, said splitting the roles of chairman and CEO gives a company “two people who have a strong understanding of the organisation and are independent of each other“.

“So both can share their knowledge and take the best possible decision in the interests of the company ,“ he said. “Having that knowledge centralised in one person may not be the best optimal decision sometimes...that is in a way an extension of independent directors because not always do independent directors have complete knowledge of a company ,“ Bhargava said.

The panel said the new structure will help reduce an excessive concentration of authority to a single individual, clarify respective roles of the chairperson and CEOMD, ensure that the board tasks are not neglected by an individual due to lack of time, and allow to bring in experienced skills for the two positions.

India's richest businessman Mukesh Ambani holds the twin posts at the country's largest company by market value Reliance Industries. So do Pawan Munjal at India's largest motorcycle maker Hero MotoCorp and R D Shroff at the country's largest agrochemicals producer United Phosphorous.

All three will have to make changes if the market regulator Sebi accepts the panel recommendation after receiving public comments.

A Reliance spokesperson declined to comment.

Harsh Mariwala, chairman at consumer products maker Marico, said splitting the role of chairman and CEO is an international trend “so that the chairman focuses on board effectiveness and has an independent view point“.

“Ultimately who is the promoter and how much he or she believes in the spirit of corporate governance is critical," Mariwala said. “One individual can be a good chairman and CEO too and, therefore, it all depends on following the spirit of governance and not mere norms.“
& Also
Finance Minister Arun Jaitley expected to push for big tax rate cuts in the GST Council meeting on Friday as part of a broader strategy to help the economy claw out of a three-year growth slump.

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Sensex rises over 100 pts; Nifty50 reclaims 9,900; Shoppers Stop rallies 7%

NEW DELHI: Benchmark indices opened on a firm note on Friday, tracking positive cues from global markets. Stocks gained as US markets continued to close at record high levels, even as concerns remain over rising crude prices after Saudi Arabia and Russia decided to limit production through next year. 

At 9.23 am, the BSE Sensex was trading 144 points, or 0.45 per cent, higher at 31,736. The Nifty50 was ruling at 9,933, up 44.30 points, or 0.45 per cent.

The BSE midcap and smallcap indices rose up to 0.7 per cent.

"Traders are advised to stay light and avoid taking undue risk as we may see index correcting towards 9,550-9,500 levels in coming months. At current juncture, the immediate support for the Nifty is placed at 9850 and 9830 levels; while resistance can be seen at 9955 – 9992 levels," Jay Purohit, Technical & Derivatives Analyst at Centrum Broking said. 

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General Electric up nearly 3% on order win worth Rs 328 crore

The company has been awarded a contract worth approximately Rs 327.5 crore (USD 49.2 million) by Doosan Power Systems India.

Shares of GE Power India added nearly 3 percent intraday Thursday on the back of order win worth Rs 328 crore.

The company has been awarded a contract worth approximately Rs 327.5 crore (USD 49.2 million) by Doosan Power Systems India.

The order includes supply of 4 units of 660 MW state of art Electrostatic Precipitator (ESP) for the prestigious supercritical power projects of UP Government, Obra C 2x660 MW project of Uttar Pradesh Rajya Vidyut Utpadan Nigam (UPRUVNL) and Jawaharpur 2x660 MW of Jawaharpur Vidyut Utpadan Nigam (JUVNL), as per company release.

These ESP shall be equipped with latest controllers provided by GE to have one of the lowest particulate emission less than 20 mg/Nm3 exceeding the expectation of new compliance norm in the country.

These orders reinforce GE's commitment towards providing clean power solutions to the country.

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INR erases gains, falls to 65.51 against dollar

The rupee resumed higher at 65.35 as against yesterday's closing level of 65.45 at the inter bank foreign exchange (Forex) market here.

The rupee wiped off early gains against the dollar today, slipping 6 paise to 65.51, following fresh spell of month-end dollar demand from importers and banks and a higher greenback overseas.

The rupee resumed higher at 65.35 as against yesterday's closing level of 65.45 at the inter bank foreign exchange (Forex) market here.

Later, it slipped to 65.60 before hitting 65.51 at 1030 hours. Persistent capital outflows and subdued domestic equities hurt rupee sentiment, dealers said.

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