New Delhi/Mumbai: The Indian government is considering a proposal to raise the ceiling on foreign investments in government and corporate

bonds by $5 billion each, a senior finance ministry official said, as the country looks to increase vital capital flows. The official did not specify which debt categories would be affected, and whether the proposal involved raising the overall debt limits for foreign investors or entail reshuffling limits between the different debt categories. The official declined to be identified as they are not authorised to speak to media. India caps the amount that foreign institutional investors (FIIs) can buy into domestic debt at $66.5 billion, which is distributed through a number of categories across government, corporate and infrastructure debt, some of which impose tenor or lock-in restrictions. Easing Indias complicated rules on debt investments for foreign institutional investors (FIIs) has been one of the measures expected by markets, as the country looks to boost capital inflows to fund a wide current account deficit (CAD) that poses a key vulnerability. An increase in FII debt limit will help finance CAD somewhat, said Shubhada Rao, chief economist at Yes Bank said, adding that markets would need to see details about which tenors and sectors are affected. As a result of the different rules, foreign investors have traditionally steered towards the unrestricted categories of government and corporate debts. Debt limits in government bond and corporate bonds without any investment restrictions, called the old category bond limits, have seen strong demand from FIIs. However, some other categories attract little demand, including the $25 billion limit allocated for infrastructure corporate bonds which impose an unpopular lock-in restriction. The Reserve Bank of India has previously opposed raising the debt limits, given its reluctance to have foreign investors hold excessive domestic debt as it looks to maintain macro economic stability. The government has already started the process of simplifying the process of buying into Indian debt, including earlier this month allowing foreign investors to re-invest up to 50 percent of their debt holdings from the previous calendar year. India needs to increase its capital flows to plug a current account deficit that widened to a record high of $21.76 billion in the January-March quarter, and was cited as key reason behind the rupee currencys fall to a record low in mid-June. Although the gap narrowed to $16.55 billion in the June quarter, allowing the country to run a small balance of payments surplus, it still remains above analysts comfort levels. The government has also sought to attract sturdier foreign direct investments, opening up the multi-brand retail and aviation sectors earlier this year. Reuters Mumbai: International airport operators have sought regulatory certainty and the ability to own as much as 26% in Indian airports as conditions for investing in such projects. We know that with a minority shareholding, we cannot push things forward. India is a great market, but it should have a master plan for airports with lot more stability and better framework, said Kai Zobel, vice-president (global investments and management) at Germanys Fraport AG. We need a clear picture about the policy and clear government support. Fraport owns 10% in Delhi International Airport Ltd and is currently in negotiations with its promoter GMR Group to sell its stake. We are currently in discussions with GMR Group for selling the stake. We have not fixed any price levels. But definitely we will be bidding for future projects, Zobel said.

Christian Sigg, vice-president (international business development) at Flughafen Zurich AG, which runs Zurich Airport, said his company would not mind bringing in more funds as long as there is policy certainty and clear regulations. We can invest more money if we are comfortable about the project, Sigg said. Zurich Airport holds 5% in Bangalore International Airport Ltd, now controlled by GVK group. Earlier, Zurich Airport sold a 12% stake in Bangalore International Airport to GVK Group. He said Flughafen Zurich would be looking at the proposed airport projects in Navi Mumbai and Goa. The US-based airport operator ADC and HAS Airports Worldwide have also said that they would be interested in these two airport projects. Jorge S. Roberts, director (project development) at ADC and HAS, said India should have a clear cut regulatory framework for airport projects. ADC and HAS have tied up with Essel Infraprojects Ltd of Mumbai to bid for Indian projects. Sumeet Dhawan, senior vice-president (corporate affairs and special projects) at Essel Infraprojects, said his company would be keen to participate in the bidding of Navi Mumbai and Goa projects. We will decide about the stake position when the bids are out for these projects, Dhawan said. International airport operators have become apprehensive about regulations after the ministry of civil aviation asked airport companies of Mumbai, Delhi, Chennai and Kolkata to abolish airport development fee (ADF) starting 1 January. ADF is the levy imposed on passengers by airport operators to fund the construction of airport infrastructure. ADF was originally approved by the airport tariff regulator Airport Economic Regulatory Authority (Aera). Also, Aera was not formed when the bidding for Mumbai and Delhi airports took place in 2005. The government auditor had criticised the ADF levy. Amitabh Malhotra, managing director of investment banking firm Rothschild India, said the confidence of Indian industries has been shaken because of macro issues. Malhotra said foreign airport operators would stay out of India because of the lack of stability in the Indian regulatory framework. He said there are several country-specific issues where foreign investors were not treated well. Malhotra was instrumental in getting foreign airport operators to India when modernization of Mumbai and Delhi airports happened in 2005. Forget about Aera, there are several differences between Airports Authority of India and ministry of civil aviation, Malhotra said. Manikkan Sangameswaran, president (infrastructure) at ICICI Venture Funds Management Co. Ltd, said foreign airports operators were not in a position to pick up majority stakes when airports were modernized in 2005. Sangameswaran had then advised government and airport companies. Sangameswaran said the confidence of airport operators were affected to an extent, but the bidding documents have contained the risk of a future airport tariff regulator. However, V.P. Agrawal, chairman of Airports Authority of India, said that these foreign airport operators brought in money but not expertise as promised. New Delhi: Prime Minister Manmohan Singh said on Tuesday that the Congress party-led United Progressive Alliance (UPA) government plans to provide round-the-clock and affordable electricity to all households in the country in the next five years. Under the ongoing Rajiv Gandhi rural electrification scheme, our goal is to electrify all the 600,000 villages of India. As a result of our efforts, more than 100,000 villages have been

provided with electricity connections in recent years, Singh said at a seminar organized by the ministry of new and renewable energy and the Confederation of Indian Industry lobby group. However, this comes in the backdrop of the UPA governments inability to achieve Bharat Nirman targets to develop rural infrastructure at an initial project cost of Rs.1.76 trillion. It was to provide electricity connections to 23 million poor households in 118,000 villages by 2009. The deadline was subsequently extended to March 2012 and the target amended to 100,000 villages and 17.5 million households. The scheme will be further extended to the 12th plan period (2012-17). Now, only a few thousand villages in the country remain un-electrified, Singh said. Singhs statement follows protests by anti-corruption activist Arvind Kejriwal against a rise in the price of diesel and electricity and a cap on subsidised cooking gas cylinders. These are ambitions definitely, said Shubhranshu Patnaik, senior director, consulting (energy and resources) at Deloitte Touche Tohmatsu India Pvt. Ltd. While village electrification has moved forward, the remaining numbers will be a tricky proposition. Singhs comments come at a time when Indias power shortage during peak consumption hoursbetween 8am and 11am and 5pm and 8pmwill surge from 124,995 MW now to 199,540 MW in 2016-17 and 283,470 MW in 2021-22. The Prime Minister also said that his government aims to provide every individual household with clean cooking fuel. The countrys is facing a cooking gas shortage and there is resistance to the UPA governments decision to limit the supply of subsidized cooking gas cylinders to households to six a year. There are 140 million LPG (liquified petroleum gas) connections in the country, of which 99.57% are for domestic use, according to official data. There are a total of 9,422 LPG distributors in the country and the LPG customer population covers around 56% of the countrys total. At the economic editors conference elsewhere in the capital, petroleum minister S. Jaipal Reddy said, There are huge problems in marketing (of LPG cylinders) and we are looking how to streamline these operations. In the next six months, everyone will get three cylinders. For more than three cylinders, one will gave to pay the non-subsidized price, he added. As of today, non-subsidized gas is priced at Rs.883 a cylinder Bangalore: Tariffs at Union government-controlled ports should be deregulated, the highlevel committee on financing infrastructure headed by banker Deepak Parekh has recommended. This is the strongest endorsement yet to allow market forces to determine tariffs at Union government ports and bring them on par with those owned by coastal state governments that already enjoy such freedom. The panel submitted its interim report to the government last week. The existing method of fixing tariffs by TAMP (Tariff Authority for Major Ports) is contrary to international best practice and leads to various anomalies. This has also led to excessive tariff differentiation between berths in the same port. The committee recommends that since sufficient competition already exists in this sector, port tariffs may be deregulated, the panel wrote in its interim report. The Parekh panel recommendation may strengthen the case for deregulating tariffs at Union government ports as demands from private firms for market-based pricing of port services grows louder. Its prescription comes after an inter-ministerial task force headed by B.K. Chaturvedi, member (transport), Planning Commission, made a similar case in July.

A shipping ministry spokesman said it was examining the recommendation. The Chaturvedi panel was set up to examine the draft Port Regulatory Authority Bill prepared by the Union shipping ministry. The Bill seeks to create a national regulatory authority (known as the Major Ports Regulatory Authority) at the Centre, and state-level regulatory authorities in the maritime states (state port regulatory authorities) to determine rates for facilities and services provided at the ports and to monitor performance standards. The draft Bill was opposed by the maritime states and other stake-holders. Given the international movement towards privatization and the establishment of independent authorities managing ports professionally, the proposed draft Bill seeks to establish excessive regulation, the inter-ministerial task force headed by Chaturvedi said in its report finalized in July. Since the state governments do not regulate port tariffs, it appears to be an unnecessary intervention on their operations that are otherwise working smoothly. The draft Port Regulatory Authority Bill is no longer being pursued, the shipping ministry spokesman added. If the shipping ministry wants to establish a regulatory structure, it should do away with the fixation of tariffs and intervene only in the case of predatory pricing by major ports, the task force report said. Cargo volume at major ports or those controlled by the Union government has grown at a compounded annual growth rate (CAGR) of 4% over the last five years while those at nonmajor ports has grown at a CAGR of 14.6%. The low growth at major ports continued in 2011-12 and was slower by 1.7% over the previous year. This trend has resulted in the share of traffic at major ports sliding from 90% in 1995 to 61% in 2012. In comparison, non-major ports increased their share of traffic from 10% in 1995 to 39% in 2012. The Chaturvedi task force was of the view that tariff fixation based on return on capital employed (ROCE) has proved to be inefficient compared to the determination of tariff by market forces in the non-major ports sector. Hence, tariff regulation by TAMP needs to be discontinued. The shipping ministry may take steps for amending the Major Port Trusts Act, 1963 so that tariffs at major ports are determined by competitive market forces. While amending the Act, TAMP may be empowered to regulate performance standards and quality of service at major ports including prevention of predatory pricing, the task force had recommended. Indias port and related logistics development remains bedevilled by an inappropriate regulatory structure, said Jonathan Beard, executive director at London-based consultancy firm ICF GHK, a unit of ICF Consulting Ltd. Where ports fall under TAMP, the regulatory uncertainty pushes up transactional risk whilst also providing little incentive for improvements in terminal productivity. A better way to regulate ports is via competition, but this still requires the public sector to take an appropriate role in tendering new projects, ensure appropriate allocation of risk and reward to the private sector, and, as much as possible, to preserve a level-playing field, Beard added. New Delhi: India looks set to begin dismantling a complex web of regulatory requirements that throttle its infrastructure growth, with plans to set up a special body this week to speed up projects in a sector seen as vital to reviving economic momentum. The move is the latest in a slew of big-ticket reforms by Prime Minister Manmohan Singhs government, from raising diesel prices to opening supermarkets to foreign competition, to spur growth which is at its slowest pace in nearly three years. Finance Minister P. Chidambaram said the cabinet was expected to establish a National Investment Board (NIB) this week, to speed up clearances for projects that are now bounced from one ministry to another in a process that can stretch for years and frustrates investors.

Government officials say regulatory delays have held up projects worth nearly Rs.2 trillion in the road, power, coal and mining sectors alone. However, this latest reform initiative may not be the panacea for a sector hobbled by layers of bureaucracy because, despite the single-window in New Delhi, approvals could still be held up by mandarins in the states where projects are proposed. In what is seen as a hangover from the days of Indias Licence Raj economy of quotas and permitswhich Singh helped abolish as finance minister more than two decades agoa typical infrastructure project requires clearances from 19 ministries ranging from environment to defence. The idea is nothing should be held up beyond a reasonable timeframe, a senior finance ministry official said, when asked about the board. You cannot just sit over it. You cannot just sit over a file. The governments investment reforms of recent weeks are expected to help turn around bearish investor sentiment, but they may not perk up growth without a rapid upgrade to the nations pot-holed roads and stretched power networks. Indias investment rate has fallen to 32% from 38% in 2007-08. Analysts say investment needs to pick up before the economy returns to the 9% growth it was clocking before the 2008 global financial crisis. Poor infrastructure is a blight on the economy. Frequent power cuts, poor roads and an antiquated railway network sap the competitiveness of Indian businesses and leave hundreds of millions of people without basic utilities. In July, a collapse in three of Indias five transmission grids cut power to 670 million people. Six-year wait U. Kumar, an adviser to Essel Mining in the Aditya Birla group, said the groups Hindalco Industries Ltd was awarded permission to mine a coal field six years ago, but was still awaiting environmental clearance to start. Even though the number of desks a mining application has to pass through in the forest department has been reduced by 10 to 26, there are about 28 Acts and rules under which clearances are required, he said. To start an infrastructure project, it requires on average 56 permissions from different Union, state and local agencies. The whole process takes about up to 24 months. The proposed investment board, headed by Singh, will focus on fast-tracking the execution of approved projects by getting all regulatory clearances. Singh has already set up panels and instituted an investment tracking system to speed up stalled projects. However, those measures have done little to cut the bureaucratic tape. Chidambaram recently said the experiment had failed. Regulatory hurdles forced firms to shelve Rs.1.8 trillion worth of projects between April and August 2012. Similar issues resulted in the deferment of Rs.4.5 trillion of projects in 201112. Investors have welcomed plans to create the board, but analysts warn that it is unlikely to be a perfect solution. While it will cut the amount of time needed for federal approvals, it has no power over individual states in which projects are located, leaving construction at the mercy of state-level permissions. Different ministries, at times, work in isolation, which further delays projects. A board, chaired by the Prime Minister, will certainly help in expediting projects, said Vishwas Udgirkar, a senior director at Deloitte. But it will not solve all the problems facing the sector. Reuters

New Delhi: The land acquisition Bill that seeks to replace a century-old legislation has been finalized, rural development minister Jairam Ramesh said on Monday. The cabinet will soon clear the draft legislation, he said. The proposed law, which was introduced in Parliament last year, was sent to a parliamentary committee for scrutiny. A revised draft, including some recommendations of the panel, was presented to the cabinet in August but it was then referred to a group of ministers headed by agriculture minister Sharad Pawar, given objections from key ministers. The proposed law, renamed the Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill, 2011, seeks to replace a 1894 law. New Delhi: Amendments to General anti -avoidance rules (GAAR), the controversial law against tax avoidance through foreign investments, have been finalized, finance minister P. Chidambaram said on Sunday. I have finalized the amendments to the Chapter 10A of the Income Tax Act. Now, it will go to the Prime Ministers Office (PMO) and then we should be ready with the amendments and then the GAAR rules will reflect the amended Chapter 10A. That is under preparation and I think the work is almost complete. The drafting work is complete. So, GAAR is under control. I have taken the decisions, subject to Prime Ministers approval and then cabinet, he said in an interview. On the issue relating to retrospective tax amendment on which the Shome committee had submitted its report, he said: The Central Board of Direct Taxes (CBDT) has given its views. I have taken decisions at my level. The drafting is going on. Again it will go to the Prime Ministers Office (PMO) and then to the cabinet. Referring to the Direct taxes code (DTC), he said, We have now started work. This morning I spent two hours on that. Earlier I had spent several hours. We are looking at it. We have tabulated it...we will take a final decision. Chidambaram also indicated that the proposal to form the National Investment Board for expediting clearance to large projects will soon come up for approval before the cabinet. The cabinet note is with the cabinet secretariat and the PMO. It will be listed before the cabinet at a time when the PM decides it should be listed. But I saw in some newspapers ... that it is likely to be listed, he said. Concerned over delays in implementation of several mega projects, Chidambaram had recently proposed setting up of NIB under the Prime Minister to clear large projects. However, environment minister Jayanthi Natarajan had raised objections to the proposal. When asked about the environment ministrys views, he said, They have some reservation which I think the officers have explained at a meeting...with the PMO. He said like the cabinet committee on economic affairs, NIB is a cabinet committee under the PM. And all decisions taken by any cabinet committee are the decisions of the government. NIB is no different except that the name is NIB. We can call it a cabinet committee on investment, he added. PTI Mumbai: A day after finance minister P. Chidambaram prodded the Reserve Bank of India (RBI) to speed up the process of licensing new banks, governor D. Subbarao said on Friday that the central bank would do so only after making sure that the groundwork is in place and all enabling conditions are met.

The RBI chiefs remarks seemed to indicate a widening divide on policy between the finance ministry and the central bank, which have also differed over the timing of interest rate cuts to prop up sagging economic growth. We have been preparing for launching this process (of issuing new bank licences), but all the groundwork, all the enabling conditions for launching this work have to be fulfilled, Subbarao told reporters in Pune. RBI hasnt licensed any new banks since 2002. On Thursday, Chidambaram said he had asked RBI to finalize the guidelines for new bank licences and start accepting applications from potential new banks without waiting for an amendment of banking rules. The central bank has been holding out for amendments that will give it the powers to supersede boards of banks that could behave in a rogue fashion. Unless Parliament passes the amendment, RBI is unwilling to allow a new set of banks run by industrial houses that could lead to potential conflicts of interest between their banking arms and other affiliates. We have written to RBI recently urging them to proceed to finalize the guidelines and proceed to receive applications for new banking licences in anticipation of the amendment in the Banking Regulation Act, the finance minister said on Thursday. We hope that RBI will pick up the thread and finalize the guidelines and start receiving the applications, he added. Chidambaram also said that the power or the authority that RBI wants is already available under other provisions of the law and the central banks own regulations and guidelines for handing out new banking licences. Subbaraos reluctance to toe the line of the finance ministry is the second instance in recent times of the central bank and the government diverging on critical policy issues. In the second quarterly monetary policy review in October, Subbarao kept policy rates unchanged, citing high inflation, although Chidambaram had been keen that the central bank pare its policy rate to prop up economic growth. In a bid to convince RBI about the governments serious intent to rein in the fiscal deficit, the finance minister laid down a five-year fiscal consolidation road map a day ahead of the monetary policy review. But the RBI governor was unmoved. While leaving interest rates unchanged, he cut the banks cash reserve ratio, or the portion of deposits that commercial banks need to keep with the central bank, and hinted at a rate cut only in January. Growth is as much a concern as inflation, a visibly upset Chidambaram said then. The government has to walk alone to face the challenge of growth. On Friday, Subbarao said inflation remains high, although the central bank is conscious about the economic slowdown. At 7.45%, inflation is certainly quite high, Subbarao told reporters, adding that the central bank is always on high alert on the inflation front. The passage of the amendments to the banking law has been one of the main preconditions of the central bank for handing out new bank licences to private sector companies. To push for early bank licences, the finance ministry is exploring if RBI can be empowered to supersede the boards through executive actions instead of amending the law. ...The shape and the form of the final policy on new bank licences calls for alignment of multiple stakeholders, regulators as well as economic interests, said Monish Shah, senior director at consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd. RBI is painfully aware of the pitfalls in allowing industrial houses to open commercial banks, but the regulator will ensure that these entities conform with the rules, deputy governor Anand Sinha had said at an event organized by Mint in Pune in early October. Does that mean that we also should not allow big houses to float banks? We will certainly take a chance, he had said. We are painfully aware of the pitfalls, but we will make sure that regulations are not subverted.

RBI will ensure that banks floated by big business houses will be at an arms length from their subsidiaries through amendments in the Banking Regulation Act, Sinha had said at the seminar. RBI licensed Kotak Mahindra Bank Ltd and Yes Bank Ltd in 2002. In 1994, it opened the door for the first set of 10 new private banks, seeking to introduce greater competition in the sector. This time around, the objective is the expansion of banking services, or so-called financial inclusion. About 40% of Indias adult population does not have access to banking services as yet. New Delhi/Chennai: Tamil Nadu Arasu Cable TV Corp. Ltd, a government-owned cable television distribution network and part of chief minister J. Jayalalithaas effort to curb the media power of the Maran family-owned Sumangali Cable Vision, may not receive a licence from the Union ministry of information and broadcasting (I&B) to run the network. The ministry, a top functionary said on condition of anonymity, is veering towards not giving licences to state-owned firms to run cable television networks, as recommended in 2008 by the Telecom Regulatory Authority of India (Trai), because doing so would be tantamount to giving the state some control over what people watch and also over the media. The ministry is yet to take a final decision on the matter, the person said, but, interestingly, added that other states too had asked for similar licences, an indication that the Arasu model is being closely watched by politicians outside Tamil Nadu. The Cable Television Networks (Regulation) Amendment Bill, 2011, that made digitization mandatory also made it compulsory for all cable companies to get a digital asdressable system (DAS) licence from the government to operate their distribution networks. In the absence of the licence, the operator will not be allowed to operate. Arasu applied for a DAS licence on 5 July 2012, the companys managing director D. Vivekananda said. The application is still being processed and only the Union government would be aware of its status, he said. Vivekananda noted that currently there is no provision or rule that prevents any state government to own cable operations, and the 2008 Trai recommendation that state governments should not get licences to run cable networks hadnt been implemented. The government has given 11 DAS licences to multi-system operators (large cable operators) in Tamil Nadu until now, but Arasu is not one of them. Arasu started operations in 2011 after it was taken off the shelves and dusted by Jayalalithaa when her All India Anna Dravida Munnetra Kazhagam came to power. It was founded in October 2007 by the Dravida Munnetra Kazhagam (DMK) headed by M. Karunanidhi at the peak of a fight between his family and the Marans, his grandnephews who control Sun TV and Sumangali Cable Vision. However, plans to project Arasu as a rival of Sumangali were shelved after the Marans made up with Karunanidhi. Since its re-launch in September 2011, Arasu has built a network that covers 31 districts in the state (but not Chennai) and reaches 4.9 million households. The number of households serviced by cable companies in the state is estimated at 12 million, according to M.R Srinivasan, general secretary of Chennai Metro Cable TV Operators Association. India has 120 million cable households. Before making its 2008 recommendation, Trai floated a consultation paper to explore if it would be in the interest of the broadcasting sector and in the interest of the public at large to permit the Union government and its organs, the state governments and their organs, urban and rural local bodies, political bodies, etc. to enter into broadcasting and distribution activities.

After meetings stakeholders in the media business and assessing their feedback, Trai, in its report, had said the government and local authorities should be disqualified from holding any television distribution licence. The ministry of information and broadcasting official cited above said the ministry was discussing the issue all over again as licensing such entities would bring television distribution under state control. We have several such requests. If we agree to one, then all the states will ask for such licences. Also, the broadcasters may be hostage to state governments for distribution of their signals to viewer homes, he said. The chief executive officer of an entertainment channel agreed. There is a conflict of interest. If a state government rules the cable business, it can switch off a broadcasters signals at will, something which may be handy in case of news channels telecasting reports that may not be favourable to the ruling party, he said, asking not to be identified. Other than exercising control over the media, government entities keen on DAS licences may also be tempted by the potential revenue in the business once Indias 120 million cable and satellite homes shift from analogue to digital. Digitization will expand the Rs.20,000 crore cable television business into a Rs.50,000 crore market in a few years, according to a study by Hong Kong research firm Media Partners Asia released earlier this year. A cable TV industry veteran who is now an executive at a large cable network said that although the state should stay out of any kind of television distribution, the government should keep an eye on the emergence of distribution monopolies involving private companies. He added that during the DMK regime, Sumangali often made it difficult for even national cable companies to operate in Tamil Nadu. If theres anything the Sumangali example highlights, it is that merely denying licences to state-owned cable companies will not ensure choice for viewers, independence for television broadcasters, and fair competition. Often private companies that are fronts for political parties or state governments run cable networks. The government, the Competition Commission of India or an independent, autonomous body must ensure fair and effective competition and consumer choice, said the cable industry executive cited above, who asked not to be identified Pune: Indias inflation rate is still high, the governor of the central bank said on Friday, suggesting that the bank is unlikely to loosen monetary conditions anytime soon to support faltering growth, despite a slight easing in prices last month. D. Subbaraos comments come after data on Wednesday showed Indias headline inflation rose 7.45% in October, unexpectedly dropping to its slowest pace in eight months. Subbarao has previously said he expects price pressures to ease only in the first part of 2013, and has strongly indicated any cut in interest rates would likely come in January at the earliest. The inflation data had raised hopes the Reserve Bank of India (RBI) would consider a December rate cut, but the 10-year bond yield rose 1 basis point to 8.2% following Subbaraos comments as investors pared back some of that optimism. Were always on high alert, high alert about growth, about inflation certainly, Subbarao told reporters at the sidelines of a conference. He added inflation at 7.5% still quite high. The central bank has faced pressure from the government and industry to bring down the main policy rate from 8%, one of the highest in Asia, as the continents third-largest economy expands at its slowest pace in nearly a decade.

Subbarao also said the central bank is prepared to issue new bank licences, but only if all the appropriate conditions are put in place, reiterating RBIs stance on allowing private companies to enter the sector. RBI has faced pressure from the government to start laying the groundwork towards issuing new banking licences, but the central bank has stated it prefers to wait until the banking regulation Act is amended. The amendment would give the central bank supervisory powers over the private companies that would enter the banking sector, but would need to be approved by parliament. Weve been prepared in the Reserve Bank for launching this process but all the ground work, all the enabling conditions for launching this work have to be fulfilled, Subbarao said. Finance Minister P. Chidambaram had called on RBI on Thursday to start finalizing guidelines and proceed to receive applications, saying the banking Act would be amended. I have assured RBI that the banking regulation act will indeed be amended, hopefully in the winter session or in the budget session, Chidambaram said in New Delhi on Thursday New Delhi: In the wake of rising global prices of precious metals, the government on Thursday increased the import tariff value of gold and silver marginally to $561 per 10g and $1,058 per kg, respectively. The tariff value, which is released every fortnight, is the base price on which the customs duty is determined to prevent under-invoicing. During October, tariff value of gold stood at $556 per 10g and that of silver at $1,039 a kg. The Central Board of Excise and Customs (CBEC) on Thursday issued a notification in this regard. Besides, the government has reduced the import tariff value of RBD palmolein and brass scrap to $887 per tonne and $4029 per tonnes, respectively. In last month, tariff value of RBD palmolein stood at $889 per tonne, while brass scrap stood at $4,096 per tonne. The government hiked import tariff value of precious metals following firm price trend in the global market. At present, gold prices are ruling at $1724.8 per ounce in London, while silver at $32.64 per ounce in London. In the 2011 calendar year, about 1,037 tonnes of gold was available in India, the worlds biggest consumer, of which 967 tonnes was imported and the rest was from other sources, according to the World Gold Council. New Delhi: Indias wholesale inflation rate slowed to an eight-month low of 7.45% in October mainly because of the declining prices of food and manufactured products. There will now be increased pressure on the central bank to cut its policy rates to support growth, which has been tepid, as seen in the consistent fall in industrial production and merchandize exports. Growth in Asias third largest economy hit a nine-year low of 5.3% in the quarter ended March before rising slightly to 5.5% in the following quarter. But high inflation has forced the Reserve Bank of India (RBI) to keep interest rates up, crimping investment and consumer spending. Indias Wholesale Price Index, or WPI, was 7.81% in September, above RBIs comfort level of 5%.India remains an outlier so far as inflationary pressure is concerned, as lacklustre growth and high unemployment have eased price rise in most advanced and emerging economies. RBI, in its mid-year monetary policy review released in October, warned that inflation remains sticky and warranted more caution in monetary policy for some more time. It hoped inflation will start moderating from the March quarter, as the late revival of the monsoon could have a salutary impact on food inflation. The so-called core inflation, or price rise in non-food manufacturing products, which is closely tracked by RBI, declined to 5.2% in October from 5.6% a month ago.

The industry department, which releases the data, however, revised the August inflation data to 8.01% from the provisional figure of 7.55%. Although the inflation data for October were considerably below consensus expectations, the revision in inflation rates for all major sub-indices for August was worrying, said Aditi Nayar, senior economist at credit rating agency Icra Ltd. The central bank in its monetary policy indicated a rate cut in its January policy review. If macro-risks from inflation and twin deficits recede further, that could yield space down the line for monetary policy to respond to growth concerns, it said. It was too early to become comfortable with the inflation rate as it was likely to rise again in November, said D.K. Joshi, chief economist at ratings firm Crisil Ltd. Despite the drop in wholesale inflation, retail prices have been rising. Retail inflation based on the Consumer Price Index (CPI) accelerated to 9.75% in October from 9.73% in September, data released by the statistics department showed on Monday. Joshi said it will be difficult for RBI to overlook the divergent trend in retail and wholesale price inflation as rising retail prices highlighted the underlying demand pressure in the economy. RBI said that from the supply side, high inflation in India reflected the lagged adjustments in the prices of fuel as well as the role of structural factors. From the demand side, growth of real wages in excess of increase in productivity and a high fiscal deficit have added to inflationary pressures. A sustained moderation in ination, therefore, can be achieved through policy initiatives to address the structural constraints, it said in its policy review. Finance minister P. Chidambaram revised the fiscal deficit target to 5.3% from 5.1% while releasing a fiscal consolidation road map on 29 October. But lower accrual than expected from the auction of second generation radio spectrum is likely to make it more difficult to achieve this revised target. Another source of non-tax revenuesales of stakes in state-run firmshas also failed to make much headway so far this year, although the government has targeted raising Rs.30,000 crore through this process. Though the cabinet has cleared the divestment of stake in some public enterprises for this fiscal, the government has failed to move ahead with any, barring a public sale of shares of National Buildings Construction Corp. Ltd for just Rs.124.97 crore Mumbai: Telecom minister Kapil Sibal on Saturday blamed the erudition of CAG, the media and the court for the perceived policy paralysis and asserted that the government continues to take decisions. The paralysis has occurred because of three factorsthe erudition of CAG, the media and the court. It is the symbiotic relationship between these three institutions that has resulted in a situation where we find it difficult to deal with on a daily basis. Yet this government continues to take decisions, Sibal said, while answering a particular question at Economic Times Awards function. The government has been battling the perception of policy paralysis for the past few months, with leaders like Infosys N.R. Narayana Murthy and Wipros Azim Premji criticizing the government on economic affairs amid threats of downgrading from global rating agencies. Where is the paralysis. I think if there is any paralysis, it is because Parliament is not functioning. Is the government responsible for it. May be partly, but there is an equal responsibility for those who sit on the other side because Parliament is forum for debate, he said. If laws cannot be passed, then the perception is there is paralysis, he said. But the source of paralysis is not the government, either in executive decision making or in the context of our participation in Parliament, he added.

It (paralysis) started in 2010 not because of the government but because what happened in court of law. 122 licences were cancelled ... a paralysis did not emerge from us. The moment that happened, we started to set things right. he said. The government has taken quick and firm decisions in the the telecom sector, he said and cited the proposed 12 November auction as as example of government decision. Responding to query on CDMA spectrum auction, which is a non-starter now, Sibal said: The Supreme Court said in its judgement that (for) CDMA pursuant to the 3G auction price must be taken as the base. If the 3G auction price is taken as base, obviously we cant do anything about it because there is a decision of the court. In 2010, the auction determined price for 5 Mhz of pan-India airwaves for 3G services stood at Rs 16,750. Tata Teleservices and Videocon had opted out of CDMA spectrum auction, reportedly citing high base price as the reason. Sibal said the government had to take this price as base. If the the base is so high, then it is difficult for corporate sector to participate, he said, adding that the market changes on a daily basis. What was there in 2007 was not there in 2010. What was there in 2010 is not there in 2012. So how can you have a decision of a court which tells you this is how you have to price your spectrum, when its the market which must determine the price of spectrum, Sibal said. PTI

dian Prime Minister Manmohan Singh faces an opposition onslaught when parliament resumes this week, with rivals vowing to block the biggest opening to foreign investment in 10 years as the government bids to stoke growth.

3:44

Nov. 20 (Bloomberg) -- Reserve Bank of India Governor Duvvari Subbarao speaks in Mumbai about the dollar as the global reserve currency and possible alternatives. (This is an excerpt. Source: Bloomberg TV India) The Trinamool Congress party, a former Singh ally, said it will push for a vote of no confidence in the government when parliament meets Nov. 22 over its move to allow foreign supermarket chains to hold a majority stake in retail outlets. The main opposition Bharatiya Janata Party is planning a nationwide protest tomorrow, targeting Singhs administration over rising prices, graft and the retail plan. Singhs Congress party needs to rally its 10-member ruling coalition and win support from parties outside of the minority government to push through steps that will also enable foreign companies to hold bigger stakes in insurance firms and invest in the pension sector. Failure to

win lawmakers support could extend 24 months of policy paralysis that have contributed to growth slowing to near a three-year low and threaten to undermine the government ahead of elections due by May 2014. If these important bills get through, the market will cheer as they have been waiting for this for a long time, said Mumbai-based U.R. Bhat, managing director of Dalton Capital Advisors India, a unit of Dalton Strategic Partnership LLP in London which manages $2 billion in assets globally. If they dont, the governments credibility will be lost. They will be perceived as a lame duck.

Rupee Bets
Overseas funds boosted holdings of rupee debt to a record $32.9 billion last week, following Singhs proposals to open up the economy and improve public finances. Indias economic expansion will accelerate to 6 percent next year from 4.9 percent in 2012, helped by a boost to confidence from the policy revamp, the International Monetary Fund said last month. The government is reaching out to political parties to win backing for its legislative agenda, Finance Minister Palaniappan Chidambaram said Nov. 16. Chidambaram, whose appointment for a third term in charge of the finance ministry in July helped Singh, 80, convince party colleagues to back the reform agenda, said he hoped the parliaments winter session would be a productive one. Trinamool, headed by West Bengal Chief Minister Mamata Banerjee, quit in September as Singhs largest coalition ally to protest the retail opening, saying the move would force small shopkeepers out of business and drive down prices paid to farmers for their produce.

Chasing Friends
While the BJP-led National Democratic Alliance wants a debate on the retail plan in parliament followed by a vote, it hasnt decided on backing a no-confidence vote, BJP spokesman Ravi Shankar Prasad said after a meeting with allies. The BJP is yet to decide who will lead it into the next election. Gujarat Chief Minister Narendra Modi hopes to boost his chances with a third successive victory in state assembly polls next month. The party is also being convulsed by allegations of corruption leveled against its president by an anti-graft group. Singh has met with leaders of two parties whose backing could help him head off defeat in a no-confidence ballot. Mayawati, the leader of the fourth-largest party in parliament, was routed in polls in her Uttar Pradesh state bastion in May and may not want to face another election soon. The Samajwadi Party, the third-biggest group and Mayawatis archrival, has given mixed messages, signaling it will continue outside support to the government while opposing the arrival of foreign retailers.

Government Confident

Congress said it was confident of defeating a no-confidence motion. The government will prove its majority on the floor of the house and win the vote, said party spokesman Sandeep Dikshit. Congress is open to discussion on FDI in retail, he said. Ahead of the reopening of parliament, Singh Oct. 28 replaced a third of his ministers, drafting in younger lawmakers in an attempt to restore the reputation of an administration tainted by corruption scandals. At a rally in New Delhi on Nov. 4, the prime minister, flanked by Sonia Gandhi and her son Rahul Gandhi, the top two leaders of Congress, defended the changes to investment rules as the only way to generate revenues needed to lift millions out of poverty.

Legislation Backlog
The economy expanded 5.5 percent in the three months through June from a year earlier, close to the 5.3 percent pace of the previous quarter that was a three-year low. Headline inflation has exceeded 7 percent for most of this year, the fastest among BRIC nations, which also include China, Brazil and Russia, and a rate that Reserve Bank of India Governor Duvvuri Subbarao has said exceeds acceptable levels. Unlike the retail proposals, the pension and insurance sector changes need parliamentary approval before becoming law. Political wrangling over the retail plan is likely to add to concerns among companies looking to invest in India, said Kishor P. Ostwal, chairman and managing director of CNI Research Ltd. (CNIR) Potential investors will not enter India in a big way till the 2014 elections are done, he said, in a reflection of the policy uncertainty. India wants to attract global retailers such as Wal-Mart Stores Inc. (WMT) and Carrefour SA. (CA) The Foreign Investment Promotion Board approved Ikeas proposal to open stores in India, Economic Affairs Secretary Arvind Mayaram said today in New Delhi. The Cabinet Committee on Economic Affairs will now need to consider Ikeas plan. The last session of parliament was the least productive in 17 months, amid clashes between the government and opposition parties over alleged revenue losses linked to the award of coal mining contracts. About 102 bills are pending in parliament, according to New Delhi-based PRS Legislative Research, a monitoring group. The BJP and the communists will try to create hurdles to prevent the government from getting the reform bills passed for their own political objectives, said Satish Misra, a political analyst at the Observer Research Foundation in New Delhi. Passage of the insurance and pension bills seems difficult.