Congress subs SP-TMC on President, says no to spare Manmohan as well

Miffed over the disclosure of its candidate for the Presidential race, the Congress has rejected the names suggested by Mamata Banerjee and Mulayam Singh Yadav


New Delhi: The Congress, main party in the United Progressive Alliance (UPA) while rebuffing Samajwadi Party (SP) and Trinamool Congress (TMC), has ruled out sparing Indian Prime Minister Manmohan Singh for the Presidential post. The Congress also rejected three names proposed by its two allies, sending signals that it was not in a mood to bow before them, reports PTI.

"We cannot afford to spare Dr Manmohan Singh as Prime Minister. The other two names, Dr APJ Abdul Kalam and Somnath Chatterjee are not acceptable," Congress General Secretary Janardan Dwivedi told reporters.

"During UPA-II (election of leader), we have already said he (Singh) will remain the Prime Minister till 2014. Congress does not take such a step (of changing its leader) in between," he said.

His forthright assertion came after ruling Congress party President Sonia Gandhi held parleys with senior party leaders Pranab Mukherjee, AK Antony and P Chidambaram at her residence in the wake of TMC and SP stunning the party by proposing the names of Manmohan Singh, Dr Kalam and Chatterjee as a counter to candidature of Mukherjee and Vice President Hamid Ansari.

Virtually disapproving of TMC chief Mamata Banerjee's action of disclosing the names of Mukherjee and Ansari as first and second choices of Congress, Dwivedi said the process of consultation was still on and Sonia Gandhi had not finalised any name. She is in the process of consulting even single-member parties and in the course of it two names have come up. "If Congress had decided on the name, two names would not have come up," he said.

"There is a dignity to the process. When such talks are held, names are not discussed outside," the Congress leader said, apparently referring to Banerjee disclosing the names to the media immediately after meeting Gandhi at her residence yesterday.

The Congress Core Group, headed by Gandhi and including the Prime Minister and senior Cabinet ministers, will meet this evening to devise further strategy on the President's election.

Earlier in the day, Mukherjee drove to the 10, Janpath residence of Gandhi and was with her for about 30 minutes. Senior Congress leaders Antony and Chidambaram also met her.

Gandhi also held discussions with other UPA allies like Dravida Munnettra Kazhagam (DMK) and Nationalist Congress Party (NCP).

DMK Parliamentary leader TR Baalu met her and said Gandhi will be announcing the name of the UPA Presidential candidate anytime later this week.

"Keeping in view the political stature and seniority in public life, my leader Karunanidhi was consulted by Madam last month through Antony. My leader had suggested a name. The name has been communicated by Antony to Madam. Madam at any point of time, will be announcing the decision," Baalu told reporters.

He said the name of the person cannot be divulged as of now and parried questions on whether the candidate is among the five persons whose names have been made public.

"Madam will announce it shortly. Not today... At any point within this week," he said.

When asked if DMK was fine with Mukherjee's candidature, he said, "it is between the two higher ups. My leader has communicated the matter long back. We stand by it."


Inflation rises to 7.55% in May on higher potato, pulses prices

Inflationary pressure, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks


New Delhi: Inflation moved up to 7.55% in May because of spurt in prices of potato, pulses and wheat, although onion and fruits showed a declining trend, reports PTI.

Inflation, as measured by the Wholesale Price Index (WPI), was 7.23% in April. In May last year, however, it was 9.56%.

Overall food inflation rose to 10.7% in May, from 10.5% in the previous month. Food articles have 14.3% share in the WPI basket.

Potatoes turned costlier by 68.1% during May on annual basis. For April, the rate of price rise was 53.4%. Besides, pulses and wheat turned expensive by 16.6% and 6.8% respectively.

However, vegetables inflation was lower at 49.4% in May. In April, the rate of price rise was 61%.

Besides, eggs, meat and fish prices rose 17.89% during the month, slightly higher than 17.54% in April, the official data released today showed.

Inflation in milk was 11.9%, while rice and cereals turned costlier by 5.1% and 5.7% respectively.

Onion prices declined (-)7.23% in May. The rate of decline was (-)12.11% in April.

Non-food manufactured inflation showed some easing and was 5.0% in May. It was 5.1% in April.

The headline inflation number for March was revised upwards to 7.7%, from the provisional estimate of 6.9%.

Inflation in overall primary articles crossed the double digit mark to 10.9% in May, from 9.7% in April.

Also, inflation in non-food primary articles, which include fibres and oilseeds, increased sharply by 8.5% in May. In April, it was 1.6%.

In the 'fuel and power' segment inflation rose by 11.5% on an annual basis. The rate of price rise was 11.0% in the previous month.

As per the official data, oil seed prices shot up by 19.2% in May. The rate of price rise was 16.7% in April.

On year-on-year basis, among manufactured items, iron grew dearer by 14.9%, while edible oil prices rose by 10.5%. Inflation in tobacco products and basic metals was 7.8% and 10.3% respectively.

Experts said the inflationary pressure, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks.

Overall inflation hovered at double digit for most of 2010 and 2011. The Reserve Bank hiked key policy rates 13 times, totalling 350 basis points, between March 2010 and October 2011 to tame inflation.

Since January, RBI has resorted to injecting liquidity into the financial system, by reducing Cash Reserve Ratio for banks. Besides, it has called for fiscal steps by the government to combat inflation.

However, in its annual monetary policy last month, RBI cut key lending rate by 50 basis points to lower borrowing costs amid falling industrial and economic growth.

RBI has projected inflation to be around 6.5% by March 2013, with a caution that it will remain sticky and there is need to arrest the decline in economic growth.


Why is property insurance yet to take-off in India?

Many of the buildings are uninsured despite it being mandatory norm to have fire insurance. What are the reasons?

Despite mandatory norms for every building to have an insurance against fire, many buildings are uninsured. The 2011 tsunami in Japan is a grim reminder of the fact that despite the rapid advances in technology, humans are still vulnerable to nature’s fury. Closer home, in India, there has been no dearth of natural and man-made disasters in the last decade. And yet there are no takers for property insurance. Insurance advisor Kabir Ponnappa says, “Many insurers in Japan and even reinsurers had to bear the brunt of the losses that virtually wiped out their capital. So, the underwriting norms and structuring of premium for property insurance has to be stringent, fit for purpose and relevant. However, in India, property insurance is not something that is as popular as health or motor insurance.”

Naveed Akhthar, a designer in a fire safety firm adds, “Since the building complexes are equipped with fire safety and surveillance systems, developers do not see the need for property insurance after a building is commissioned. The sad part is the tendency to view insurance premiums as a waste of resource if no claim arises”. The real estate sector says it is burdened by increase in service taxes and also rise in the lending rates by banks. Several builders have simply not paid their dues to the vendors and knowing the tenuous legal system in India, they are rest assured that nothing will come out of legal notices. Many builders have contributed to the NPAs (non-performing assets) in banks. Insuring buildings is far from their mind.

Though it is a known fact that there are different kinds of property insurances available in India—pre construction stage, construction stage, post completion and commissioning stage—hardly any real estate firm avails of these insurance schemes or at all.
Privatisation of the insurance sector in India has not resulted in much excitement about selling of property insurance as much as there is on motor insurance and health insurance for the following reasons:
1.   The poor reputation of the real estate sector poses a major risk for the underwriters. Due to an unprofessional set up in the realty sector, a risk that is looking attractive today may be an adverse one due to cyclical changes in the economy.
2.   Ethical behaviour and real estate industry do not go hand-in-hand. So, in such a case, the insurance principle of Uberrima fides (Utmost good faith) falls flat.
3.   The risk of claims being made by real estate players to profit out of it is probably high. Where does this leave the insurance principle of indemnity?
4.   The real estate sector seems to be characterized by avarice. The propensity to demand payments in cash from clients (home buyers), using ingenuous ways to evade taxes, using bribes as a way of getting things done, disrespecting the laws of land, using money power to circumvent municipal byelaws and rules, undervaluing the asset at the time of registration, over dependence on banks to finance their projects, indifference to adopting frugal measures at the time of a down turn—all these factors contribute to a high underwriting risk.
5.   Clearly, it will be a Hobson’s choice for insurers to underwrite property insurance. Even if they write, you can’t blame the underwriters for loading the premium. It is also vital for the insurers to reinsure this risk. In case of private insurers, who are breaking even only recently, it is preposterous to expect them to underwrite property risks and expose their capital to risk.
So, the real estate sector buys property insurance only for the sake of tokenism.

In June 2011, the print media in Bengaluru was full of reports about the fracas a prominent builder got into with the municipal corporators. The corporators alleged that the builder (with roots in Pune) has built a mall by flouting the development norms while the builder maintains that he has all the approvals in place. This happens routinely and scares away insurers.

While the government of India has to lend a patient ear to the problems faced by the real estate industry and work at making corrections, the builder community should be pressured to run development projects by following the fundamental principles of project management, including risk management which includes property insurance. The trick to be employed here is to induce the builders to embrace property insurance by a combination of regulation by the state, penalty for non-compliance as well as concessions they are demanding.


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