Hyderabad Dec. 4: The Reserve Bank of India Governor, Mr Duvvuri Subbarao, on Thursday said that banks should take cue from the central bank to cut its interest rates.  “The RBI as a regulator does not issue mandates to the banks on their (interest) rates. However, we signal policy rates and we expect banks to respond to that. I am in constant touch with the banks, we held a meeting last week and we discussed what their outloook is and what our outlook is,” Dr Subbarao said. The RBI governor said the immediate challenge for the central bank is to maintain the balance between growth and inflation.

“You will note that last year when inflation was on the upsurge, the RBI has tightened policies. Now that inflation has been steadily coming down for the past three weeks and there is a moderation in growth, we have reduced rates in the past two months,” Dr Subbarao elaborated. On economic slowdown, Dr Subbarao said, “India is not directly affected by the global financial crisis. It, however, will have an indirect impact, which can turn out to be stronger than expected because of longer and deeper global crisis.

Observing that India’s economic fundamentals continued to remain strong, the RBI governor said: “It is difficult to precisely estimate the duration of the impact. But when common confidence is restored and world economy starts recovering, India will be the first and fastest to recover.” He said that the central bank will maintain a comfortable liquidity position and would ensure conditions conducive for the flow of credit to productive sectors, especially the export, and small and medium sectors. According to Agency sources, the RBI and the government is likely to announce a stimulus package on Saturday that would include cut in policy rates and taxes to ease the liquidity situation and promote economic growth.

Inflation fell to its lowest in nearly seven months to 8.4 per cent. The rate eased for the fourth straight week and was lower by 0.44 percentage points.

Mumbai Dec. 4: The Securities and Exchange Board of India (Sebi) on Thursday said close-ended mutual fund schemes will have to be listed on the stock exc-hanges and the investors would not be allowed to exit before maturity of the scheme. However, investors will be able to sell their securities in the secondary market. These directions will be applicable only for the new launches.

Briefing the media after the Sebi board meeting Mr C.B. Bhave, chairman of Sebi, said: “In the last couple of months, mutual funds faced huge redemption pressure as investors preferred to exit from the close-ended funds before maturity.”

“With the new restrictions mutual funds will not face redemption pressure, at the same time investors interested in redemption will be able take advantage of the secondary market,” he said. Mr Bhave said: “The board has approved the policy measures enabling electronic rights entitlement, it will allow companies to give rights issues in D-Mat forms instead of paper form.” He added: “It will streamline the rights issue process and make it more efficient. While making applications in right issues, namely, Applications Supported by Blocked Amount (ASBA) mode it is mandated that the company will be able to utilise the money only after the allotment is finalised.” The Sebi decisions on mutual funds has been generally welcomed by the industry.

Mumbai Dec. 4: The market surged over 200 points in the late hour of trade boosted by the strong opening in the European markets and some short covering.  The Sensex closed 482.32 points up at 9,229.75 while the Nifty gained 131.55 points at 2,788. It opened on a positive note on the hopes raised by the stimulus package and the possible rate cut by the RBI. “There is some resistance at the 2865 level for the Nifty , and 9327 level for the Sensex,” said Mr V.K. Sharma, director, Anagram Securities Ltd.  Mr Alok Agarwal said that the markets have been fuelled by the stimulus package and the possibility of the interest rate cut. The interest sensitive stocks like banks, realty, capital goods, infrastructure saw a lot of buying. Oil and gas stocks too were up as crude is now below $50 a barrel.

INDIA HAS always had a parallel economy that has been patronised by politicians, a large section of small traders — those who have perfected the art of staying out of the tax net — and big businessmen (mostly of the crony capitalist kind who profited from the closed economy), senior bureaucrats as well as clerks and of course the mafia, who cannot survive without the protection of the administration.  At the grassroots level, each time a corrupt RTO official issues a non-regular driving licence, he is creating a potential terrorist. Ditto for a crooked passport official who colludes with anti-national elements to issue fake passports to traitors on the run (like the Bhopal officials did after the 1993 Mumbai blasts).

It is no different for a municipal councillor who generously signs on ration card applications of illegal Bangladeshi immigrants, who bribe BSF jawans and officers for their ingress.  Then you have the extortion racketeers, notable among them the Mumbai and Delhi underworlds, who terrorise well-heeled professionals, performing artistes and industrialists to pay for their protection.

 Most of these proceeds end up in the narcotics, film production, real estate, flesh and arms trades that cannot flourish without the connivance of the police. Both in Mumbai and in Delhi, some of the most feared policemen were eventually found with their hands in the extortion mafia till. Those who made the supreme sacrifice like Mr Mohan Sharma, Mr Hemant Karkare, Mr Ashoke Kamte and Vijay Salaskar have their dirty colleagues as much to blame as the manic terrorists, who pulled the trigger. Whenever a senior police officer ‘buys’ a coveted post, he compromises India.

It is pertinent to remember that a former police commissioner of Mumbai cooled his heels in jail for a while on corruption charges that centred on printing fake revenue stamps. How is he less of a demon than the mustachioed don, who steers almost all terror strikes on Mumbai from his palatial villa in a port city of our hostile neighbouring country? Over these 61 years, the political class have actively presided over the birth, development and sustained success of a parallel economic system whose core agenda has been to debilitate India.

Till liberalisation kicked in and home loans were showered upon us, most urban Indians dipped into their black money reserves to buy homes from shadowy builders who could not have been in business without the blessings of the political class. In Mumbai, the ratio of black to white money in real estate transactions was as immoral as 40:60 till the late eighties. Have not we also contributed to creating the parallel economy that primarily feeds all illegitimate businesses including the meticulously organised industry of terror?

The founder of one of India’s major media houses was on the run from our economic intelligence units probing his ‘hawala’ operations till he reportedly died in London.  Yes, let’s recognise that terror is an industry. It sustains itself on funds that are squeezed out of the regular economy through the vicious nexus of the politician-bureaucrat-businessman-gang lord foursome, it markets itself to committed human resources, who are willing to do much more for their employers than a normal employee would and finally, the terror industry knows how to leverage the media to grow its franchise far more potently than any other, without paying for it. Or do they?

New Delhi Dec. 3: The Government has decided that Ratnagiri Power Project Limited  (RGPPL), formerly called Dabhol, will get gas from Reliance KG-D6 field on priority basis along with fertiliser units.  Also, the power plants in Andhra Pradesh will be the first to get Reliance gas out of the 18 million metric standard cubic meter per day (mmscmd) earmarked for the power sector, after RGPPL .

The petroleum ministry and the power ministry will together decide on supply of natural gas to various power plants. Earlier, the Centre had said that the gas from KG-D6 will be first given to fertiliser units, then to LPG plants and after that to the existing power plants. The priority list remains the same with the amendment that now RGPPL has been put on same priority as fertiliser units.

It has decided that 2,144-megawatt RGPPL will be supplied 1.4 mmscmd during January to March 2009 and 2.7 mmscmd during April to September  out of the 18 mmscmd quota set for the power sector. Further, 8.5 mmscmd would be supplied to RGPPL after September 2009.

Chennai Dec 4: The slowdown in the Indian economy that has affected the rapid growth rates of various sectors like IT, auto and realty can prove beneficial for the low-profile microfinance industry, which has been witnessing an increased interest from private equity (PE) players in the past few months.  Investors, once wary about the low returns from this sector, are now attracted by the long-term stability of this industry in India.

“Unlike the personal loans, home loans and credit cards, which are witnessing the delinquency rates, have gone up in the past few months, the customers of microfinance are not affected either by the global slowdown and the crisis in the Indian market. We are definitely seeing an increased interest, even from the mainstream investors in this sector now,” said Mr P.N. Vasudevan, MD, Equitas Microfinance Pvt Ltd.

In spite of the slower growth forecast for the Indian micro financial institutions (MFIs) due to the increased difficulty in obtaining credit from banks over the next year, it is the long-term stability and returns that appeal to the PE funds. Mr Anal Jain, MD, MVA Ventures, which has a $50 million fund to invest in Indian MFIs pointed out, “We are still bullish about the Indian micro finance in-dustry. The clients addr-essed by this segment are outside the part of the economy that has slowed down and the demand for microfinance remains buoyant.”

Bengaluru Dec. 4: A combination of the general environment of uncertainty, some instances of individuals and whole project teams being fired, and even the cost-cutting overdrive that most companies are going into with alacrity have put the fear of the pink slip devil in the minds of IT employees.   A young employee from Dell India, for instance, says he did not apply for his annual leave this December because he feared he would be fired if he did. “I am deferring my annual leave to a future date, and may just take a day or two off this December. I am a permanent employee, but I am apprehensive that I will be fired if I go on a long break,” he told this correspondent.

His fear stems from what he has been observing: the company has discontinued quarterly team outings, which used to be generally to locations like Goa, and travel has generally been restricted, he said.  Another young employee from one of the world’s biggest IT companies said on condition of anonymity that her boss and several colleagues were unceremoniously dismissed recently and she has been in constant fear of losing her job as well since then.  “Our team was working on an international project which is nearing completion. The company had the option to reassign my colleagues to other projects, but it chose to fire them, instead. I cannot eat, sleep or think straight. I am panic-stricken that I am going to be next,” she confided.

Employees of most IT companies this correspondent spoke to seem to be living in a state of fear and anxiety. The Wipro episode just a few weeks ago when the company told engineering students that they would have to join its BPO business rather than its IT services business has worsened their fears, one software engineer said.

“When a reputed company like Wipro can do something like that, I dread to think what will happen to people like me who work for much smaller IT services companies,” he said. At a time when global companies such as Yahoo are retrenching hundreds of employees in the US, the question uppermost in most employees’ minds is: Can India be far behind?
One placement consultant downplayed retrenchment fears even as he said that employees would have to be prepared for some hard measures that almost all companies will have to take.

“Employees do not have much to fear since IT companies are neither firing their employees nor hiring afresh,” said Kris Lakshmikanth, CEO-MD of Headhunters India.
But “Salaries of IT employees will be reduced by 15 per cent, either straight away and across the board, or by way of reducing the variable pay component. This slash in salaries will apply not just to freshers but to existing employees as well. This is because IT companies are waiting to finalise fresh contracts from customers in January 2009. Customers are bound to bargain for lower rates which the company will somehow have to rationalise”.

A second trend is already visible and will continue through 2009. Industry sources revealed that companies like Infosys and Satyam have either already sent or are planning to send hundreds of people on paid sabbaticals. “IT companies will send larger numbers of employees on paid sabbaticals for a year or more, during which the employee could get as little as just 25 per cent of his total salary,” Lakshmikant said, adding mischeviously, “And this time, the employees will use the sabbatical to scout around for new jobs.”

If all that’s hardly comforting, then here’s a more upbeat assessment: “No major layoffs are expected in tier 1 IT companies in India because most of them are working on long-term projects which are not under threat. Close to 85 per cent of their manpower work on such projects. Hiring is slow, but tier 1 companies continue to hire as per plans,” Rishi Das, director of CareerNet Technologies, says.

“It is the start-ups and smaller companies that are working on discretionary projects and contracts who will either have to close shop or fire employees,” Das cautioned.
While many global IT companies are laying off thousands of people in the US, they are at the same time hiring large numbers for their captives in India. While these captives largely focused on R&D work earlier, now routine work like managing internal IT infrastructure, customer support, etc., will be moved to India. But overall, hiring will not be impacted much in India, Das assures.