RBI raises forex limit
The central bank on Tuesday doubled the amount of foreign exchange that an individual can remit in a year under a scheme that allows asset purchase outside India.
An individual can now remit up to $250,000 a year under the Liberalised Remittance Scheme, which
was started in 2004 with a view to simplify foreign exchange avenues available to Indians.
was started in 2004 with a view to simplify foreign exchange avenues available to Indians.
This is the second time the limit has been raised since a drastic 62.5 per cent cut in the limit to $75,000 in August 2013, when the RBI was fighting hard to stem the free fall in rupee against the dollar.
The conditions are far different this time. The rupee has strengthened against the dollar in 2015. RBI Governor Raghuram Rajan on Tuesday noted other positives, including on managing inflation, the growth pick-up as well as a low current account deficit.
CARE Ratings said in a report, “This may not be significant but signals that the external account is quite comfortable.” A report by HDFC Bank, however, saw the move, in sync with others, as a measure “to curtail INR [rupee] strength.”
Concession under a scheme that allows asset purchase outside India
RBI cuts SLR by 50 basis points to provide liquidity
The apex bank move will release around Rs.45,000 crore into the banking system
In an attempt to provide more liquidity to the banking system, the Reserve Bank of India (RBI), on Tuesday, reduced the Statutory Liquidity Ratio (SLR) by 50 basis points to 21.50 per cent from 22 per cent with effect from February 7.
This is likely to pump in around Rs.45,000 crore to the system, which is likely to prod banks to cut their lending rates.
The benchmark BSE Sensex on Tuesday reacted and it slipped by 122 points to close at 29,000.14.
However, the RBI kept the short-term policy rate (repo rate) unchanged at 7.75 per cent, which the central bank had reduced by 25 basis points from 8 per cent on January 15. It also maintained status quo in the Cash Reserve Ratio (CRR) at 4 per cent.
The SLR is the portion of deposits banks are required to hold in the form of gold or government securities before providing credit to customers.
The repo rate is the rate at which the central bank lends money to banks. CRR is the portion of total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.
“Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest stance,” said RBI Governor Raghuram Rajan in a statement while announcing the sixth bi-monthly monetary policy, here.
“In order to create space for banks to expand credit, the SLR is being reduced from 22 per cent to 21.5 per cent. Banks should use this headroom to increase their lending to productive sectors on competitive terms so as to support investment and growth,” Dr. Rajan added.
Since RBI cut the repo rate, many banks have been relatively quick to cut their deposit rates, but not so quick to cut the lending rates. The SLR cut by the RBI is likely to give more elbow room for banks to cut rates. “It (rate cut by banks) is not by the intervention of the regulator but the competition and the management decision…will determine the reduction of rate,” said Dr. Rajan
The RBI Governor also said, “the RBI is not the owner or involved in the day-to-day running of the bank. That is a decision that owners and management have to take.”
Dr. Rajan added: “We cannot nudge them. We can only comment on the fact that despite a significant fall in long term interest rates, treasury rates have come down significant amount, over the last year and a half, and corporate bond rates have come down substantially, that bank lending rates have remained more or less flat over this period.”
RBI expects inflation at 6 % by Jan next
The Reserve Bank of India (RBI), on Tuesday, said that inflation is likely to be around the target level of 6 per cent by January 2016.
As regards the path of inflation in 2015-16, the RBI said it will keenly monitor the revision in the Consumer Price Index (CPI), which will rebase the index to 2012 and incorporate a more representative consumption basket along with “methodological improvements.
RBI Governor Ragahuram Rajan said that the forthcoming budget is an important factor for the monetary policy. “There’s the budget coming. That’s a significant change in the fiscal space. It’s going to be an important change.”
“We’ve got new GDP numbers coming on February 9, which will reflect a whole new view of what’s happening in the economy,” he added.
RBI said that the baseline projection for growth using the old GDP base has been retained at 5.5 per cent for 2014-15. For 2015-16, “projections are inherently contingent upon the outlook for the south-west monsoon and the balance of risks around the global outlook.”
Domestically, conditions for growth are slowly improving with easing input cost pressures, supportive monetary conditions and recent measures relating to project approvals, land acquisition, mining, and infrastructure.
The estimate for real GDP growth in 2015-16 is expected to rise to 6.5 per cent with risks broadly balanced at this point, it added.
“The revised GDP statistics (base 2011-12) released on January 30 along with advance estimates for 2014-15 expected on February 9, 2015 will need to be carefully analysed and could result in revisions to the Reserve Bank’s growth projections for 2015-16,” said RBI.
On non-performing assets (NPAs) of banks, Governor said that “We should not attribute stigma to an NPA. This is a misconception both among producers and lenders.
“Producers think if their account has been labeled NPA – it means they are at fault. It just means the account is not paying. It’s an accounting statement, and no a statement of blame or reputation. Even an account that is NPA banks can lend to it. New loans are not considered NPAs. Projects that are stalled can be restarted with new loans that are not NPAs.”
‘Rising population threatens Sunderbans’
The carrying capacity of the Indian Sunderbans has been exceeded, and the increased population is exerting pressure on the fragile and richest ecosystem of the world, a World Bank report has said.
“The population is growing and exerting even greater pressure on fragile and recovering natural systems. As a result of high birth rates and migration inflows, population density is high and growing,” said the report “Building resilience for sustainable development of the Sunderbans.” The Sunderbans has a high population density of about 1,000 persons a sq.km, equivalent to the 1,030 of entire West Bengal.
Referring to a non-lending technical assistance household survey conducted in 2011, the report points out that 27 per cent of the respondents said they migrated from Midnapore, 4.7 per cent from other locations in southern West Bengal, 17.4 per cent from Bangladesh. About 46 per cent reported that they had lived earlier in a different location within the Sunderbans. The report was presented at the end of a three-day workshop organised by WWF- India and EnGIO and the West Bengal government.
Economists dispute govt. claims on PDS leakageJust how leaky is the Public Distribution System and is it getting worse or better? The question is at the centre of a dispute between economists over recent estimates of diversion in the PDS used in an official report.
The Shanta Kumar high-level committee on the restructuring of the Food Corporation of India submitted its report to Prime Minister Narendra Modi last week, recommending a gradual move to cash transfers. The committee used estimates of PDS leakage calculated by one of its members, Ashok Gulati, former chairperson of the Commission for Agricultural Costs, and Shweta Saini of the Indian Council for Research on International Economic Relations.
Economists Jean Dreze and Reetika Khera dispute these numbers in a paper to be published in the Economic and Political Weekly. When contacted by The Hindu, Mr. Gulati said he welcomed criticisms of the methodology and accepted some of them, but contended that his bottom line was that leakages were unacceptably high. While Mr. Dreze and Ms. Khera argued that a decline in diversion shows that the PDS can be reformed, Mr. Gulati said the improved number too was unacceptably high, and the process costly for the State. Cash transfer, he said, was a much better option.
Mr. Dreze and Ms. Khera faulted Mr. Gulati’s methodology in calculating the actual reported levels of PDS grain consumption by households, as well as the total off take by States, the difference between the two being the extent of diversion. As a result, while Mr. Gulati and Ms. Saini’s estimates showed 47 per cent diversion, Ms. Khera’s showed 42 per cent. More crucially, Ms. Khera’s calculations showed a decline in diversion since 2004-05, and rapid improvements in States like Bihar and Chhattisgarh which have undertaken reform.
At least one independent survey, the National Council for Applied Economic Research’s (NCAER) nationwide India Human Development Survey (IHDS), also showed a decline in PDS diversion from 49 per cent in 2004-05 to 32 per cent in 2011-12, Sonalde Desai, Senior Fellow at NCAER, said on Tuesday. Another study, by Himanshu, assistant professor of economics at Jawaharlal Nehru University, showed even lower levels of leakage than those estimated by Ms. Khera for 2011-12.
“The bulk of the leakage now is in the Above Poverty Line quota, into which more and more foodgrain is now being dumped. The best way to reform this would be to phase out the separate APL quota and instead broaden coverage under the Food Security Act,” Mr. Dreze said. States which had expanded their programmes and dropped prices were the ones which had seen big declines in diversion, Ms. Khera said.
Army shifts focus to indigenous softwareWhile several of the Army’s communication systems are built by BEL, some of the larger servers and other basic components are imported. This creates vulnerability of malware or bugging of these critical network systems.
To address this, all imported components are screened before being cleared for installation, Army sources said.
But realising the inherent strategic vulnerability, sources said, the Army has shifted focus to indigenous software and hardware development.
Separate networkThe Army also has a separate network called the Army Wide Areas Network which is presently connected from the Army Headquarters to the battalion level with optic fibre network. This is separate from the Internet which prevents snooping, Army sources said.
Work is on to expand this further to ensure last-mile connectivity to the unit level which is expected to be completed in the next few years.
At the operational level, a unit will be equipped with data radios which are special handsets being built by BEL with indigenous software.
Once equipped they will enable live streaming from the battle field to the operations room enabling battlefield transparency.
SC refuses to transfer 5 cases challenging coal ordinanceNoting that “everybody has a right, including the businessman”, the Supreme Court on Tuesday refused to transfer from various High Courts to itself five cases filed by companies challenging the provisions of the government’s coal ordinance.
In an urgent mentioning before a three-judge Bench led by Chief Justice H.L. Dattu, the Coal Ministry said pendency of the cases in the High Courts would affect auctioning of coal blocks nation-wide.
The apex court had last year quashed allocation of 214 out of a total 218 coal blocks and ordered the government to conduct fresh auctions by March 31, 2015. Attorney General Mukul Rohatgi said the government had no time to lose and the bidding process could not be further delayed. Coal production had to start immediately from April 1, he added.
“The cases involve the same questions of law and are substantial questions of general importance in as much as challenged the constitutional validity of the provisions of Ordinance, Rules and Tender document by means of various Writ Petitions before different High Courts, which require adjudication and authoritative pronouncement,” the government submitted.
On the defence front, sources said the 10-year defence strategic partnership framework has yet to be signed, but that the “language has been frozen” for this. There is no confirmation when the agreement will be inked, but sources say it could wait for the confirmation of the new Defence Secretary Ash Carter, who has been a prime mover on Indo-U.S. defence relations.
Another sticking point between officials came over the selection of co-development, co-production projects to be announced under the DTTI (Defence and Technological Trade Initiative). While the U.S. presented 17 proposals, Indian officials felt they didn’t represent “high-end” technology transfers, and came up with their own list of six proposals. However, the final four agreed to, under DTTU including one for “Raven” drones, didn’t belong to the group requested by India. “We need to walk before we can run,” said sources, pointing out that India is yet to sign three key foundational agreements. “So we chose the agreements that could be easily done, given U.S. requirements on end-use monitoring, etc.”
India and the U.S. also hope to complete the negotiations over finance agreements as well as agreements to cooperate on counter-terror measures that didn’t get cleared during the visit. While the agreement on the Foreign Account Tax Compliance Act (FATCA) could be signed next week when U.S. Treasury Secretary Jack Lew lands in Delhi, other agreements on curtailing terror, financing and counterfeit operations have not yet been finalised.
Eventually, officials on both sides agree that most of the differences were bridged only because of “political commitment” and the final push from both Prime Minister Modi and President Obama to announce the agreements, many of which will still have to be wrapped up in the upcoming weeks, if not months.
Cyber laws not meant to curb free speech: CentreHackers pose a danger to security apparatus, says ASG
Facing a tough time explaining where free speech ends and restrictions start for the social media, the government on Tuesday clarified before the Supreme Court that its laws were meant to fight cyber crime and not curb free expression.
The government was arguing before a Bench of Justices J. Chelameswar and Rohinton Nariman, hearing a batch of petitions challenging the constitutionality of certain legal provisions in the Information Technology Act, especially Section 66 A. This Section prescribes a punishment of up to three years in jail if found guilty of causing “annoyance or inconvenience” on the Internet, including social media.
“[The] Central government has no intention to curb the freedom of speech and expression. Section 66 A pertains to only certain cyber crimes and not freedom of speech,” Additional Solicitor-General (ASG) Tushar Mehta said.
One of the petitions was filed by law student Shreya Singhal which deals with the arrest of two girls, Shaheen Dhada and Rinu Shrinivasan, at Thane district in Maharashtra for allegedly posting a comment against the lockdown in Mumbai following Shiv Sena leader Bal Thackeray’s death. The second girl had allegedly ‘liked’ the comment.
But Justice Chelameswar countered Mr. Mehta, noting that it was the Station House Officer of a local police station who would be the first judge of whether an Internet user had been annoying or not and required to be arrested.
To this, Mr. Mehta said the police had a cyber cell. “What is this cyber cell? You form a group of police officers and name them ‘cyber cell’ and now they are suddenly experts,” Justice Chelameswar responded.
At this, Justice Nariman posed a hypothetical query to Mr. Mehta, highlighting how terms used in Section 66A were undefined and vague. “What happens when a message or text is sent? For example, my community is deadly opposed to conversion. If someone sends a message promoting conversion, can they go to the police station and claim the message to be a gross threat to the community?” Justice Nariman asked.
“But nobody can file a complaint saying something caused me annoyance or inconvenience. The provisions of the Act require a serious obstruction — like planting malware in a bank’s software,” Mr. Mehta said.
The ASG revealed how hackers had targeted the mails of defence brass and an investigation was on. He did not reveal further details, but underlined that cyber attacks posed a clear and present danger to the security apparatus.
‘Walk the talk in waste management’Union Urban Development Minister M. Venkaiah Naidu asked the corporate sector and industrial and trade bodies on Tuesday to “walk the talk” in ensuring cleanliness and waste management in urban areas and pitch in with steps to turn waste into energy.
Speaking at a “waste to energy conference” organised by the Associated Chambers of Commerce of India (Assocham) here, Mr. Naidu called for concerted action to recycle urban solid waste and sewage into energy, fuel, fertilizer and water for irrigation.
He stressed “reduction, recycling and reuse” of solid waste and sewage, and said that the Ministry was in the process of identifying domestic and foreign companies to offer cost-effective solutions for solid waste and sewage management.
Stir against Koteshwar dam intensifiesSeepage from the Koteshwar dam across the Bhagirathi in Tehri district has intensified protests by the local people against the 400-MW project. They allege leak of water through several cracks on the dam wall.
District Magistrate Yugal Kishore Pant, who visited the dam site on Tuesday, said: “There is slight seepage from the dam, but it is under construction. The process of grouting is under way and there is nothing to worry.”
Jyoti Prasad, who lives near the site, said, “The seepage from several places in the dam is evident, but the authorities continue to deny it.”
‘Villages threatened’The villages in the vicinity are already facing land sinking, and seepage poses an additional threat.
“There are several leakages from the main wall of the dam and it has become a threat to the downstream villages and areas such as Devprayag and Rishikesh,” Mr. Prasad said.
However, the dam authorities denied the allegations and made counter-charges against the protesters.
H.L. Arora, General Manager, Tehri Dam, said, “Villagers are diverting attention because they want compensation for collateral damage from the dam construction. They are protesting to get contracts and jobs in the dam, but we can’t appease everyone.” The dam, a project of the Tehri Hydro Development Corporation and part of the Tehri Power Complex, produces electricity and regulates water released from the Tehri reservoir for irrigation. The dam is 22 kilometres downstream of the Tehri dam.
In a first, Britain gives nod to ‘three-parent’ babiesBritain on Tuesday became the first country in the world to allow the creation of babies with DNA from three people after MPs voted for the controversial procedure.
Lawmakers at the House of Commons voted by 382 to 128 in favour of allowing the creation of in-vitro fertilisation (IVF) babies with DNA from three people, a move aimed at preventing serious inherited diseases being passed on from mother to child.
Under the change to the laws on IVF, as well as receiving the usual “nuclear” DNA from its mother and father, the embryo would also include a small amount of healthy so-called mDNA from a woman donor.
“Families who know what it is like to care for a child with a devastating disease are best placed to decide whether mitochondrial donation is the right option for them,” said Jeremy Farrar, director of health charity Wellcome Trust. “We welcome this vote to give them that choice.”
The bill is expected to be rubber-stamped by the House of Lords, the upper chamber of Parliament, later this month, paving way for the procedure to begin next year.
The change could apply to up to 2,500 women of reproductive age in Britain with hereditary mitochondrial diseases but opponents say it opens the way to the possibility of “designer babies” in future.
Mitochondrial DNA (mDNA) is passed through the mother and mitochondrial diseases cause symptoms ranging from poor vision to diabetes and muscle wasting.
Health officials estimate around 125 babies are born with the mutations in Britain every year. The law will allow Britain’s Human Fertilisation and Embryology Authority to authorise the procedure.
Genetic disease charities celebrated the historic vote.
“We have finally reached a milestone in giving women an invaluable choice, the choice to become a mother without fear of passing on a lifetime under the shadow of mitochondrial disease to their child,” said Robert Meadowcroft, Chief Executive of the Muscular Dystrophy Campaign.
But many Britons are still against the proposed change despite years of consultation by health authorities with the public and the scientific community. David King, director of the watchdog group Human Genetics Alert, said: “If we want to avoid the nightmare designer baby future we must draw the line here.” — AFP
Parliament votes in favour of allowing the creation of IVF babies with DNA from three people
Pakistan withdraws official from Dhaka EmbassyMohammad Mazhar Khan was accused by the Bangladesh govt. of financing terrorism
Pakistan has withdrawn an official from its High Commission here after being asked by Dhaka, which alleged that he was financing terrorism.
Mohammad Mazhar Khan, an attaché at the consular section, was also an Inter Services Intelligence (ISI) agent, Bangladesh Foreign Ministry officials said. Mr. Khan, the Ministry has been told, left the country with his family on January 31.
Mr. Khan, intelligence and media reports said, used to route funds to groups such as the Hizb ut-Tahrir, the Ansarullah Bangla Team, the Jamaat-e-Islami and its students wing Islami Chatra Shibir.
He was earlier detained by the police here in January along with one of his accomplices while having a secret meeting in Dhaka. However, he but was released when a Pakistani diplomat intervened.
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