According to sources the Centre is likely to approach TRAI regarding the steep hike in call rates by some operators
New Delhi: A day after mobile charges were hiked by leading operators, telecom minister Kapil Sibal has said consumers should be offered the lowest call rates. “We want consumers to be offered calls at lowest rates,” Sibal told PTI.
Bharti Airtel, India’s largest mobile phone operator, and Idea Cellular have raised call charges mostly by way of a reduction in free minutes or air-time available on most plans. Others like Vodafone are likely to follow suit soon.
Another mobile services provider Uninor, however, said it has no plans as of now to increase call rates.
“As a young operator focused on the mass market through basic services on a pre-paid only platform, Uninor has made a commitment to remaining “Sabse Sasta” for its customers. This has been our position so far and will continue to be so in all the circles we operate in,” Uninor said in a statement.
Meanwhile, government sources said the Centre is likely to approach the Telecom Regulatory Authority of India (TRAI) regarding yesterday’s hike in call rates.
“We will nudge TRAI to do something,” a source said.
Meanwhile, TRAI chairman Rahul Khullar said, “Forbearance does not mean that we have closed our eyes. Forbearance reposes faith on operators and we realise there is competition in the market.”
TRAI had decided to continue with forbearance in tariff regime that gives freedom to decide on call and other services rates.
The Indian mobile phone industry, known for the lowest telecom services rates, is witnessing a hike in call rates now.
The hike in call charges come as companies face thousands of crore in one-time surcharge on airwaves they hold beyond a threshold.
The panel expressed concerns that primary agricultural credit cooperative societies and central cooperative banks were not performing their role and giving almost 40% of their loans for non-agricultural needs
Mumbai: The central cooperative banks should strive to have at least 70% of their loan portfolio for agriculture, reports PTI quoting a panel appointed by the Reserve Bank of India (RBI).
“The Committee... recommends that central cooperative banks (CCBs) should strive to provide at least 70% of their loan portfolio for agriculture. ...if a CCB or state cooperative bank (StCB) consistently under performs and provides less than 15% share of agricultural credit in the operational area, then that bank should be declared and treated as an urban co-operative bank,” the Expert Committee on Streamlining Short Term Co-operative Credit Structure said.
The panel expressed concerns that primary agricultural credit cooperative societies (PACS) and CCBs were not performing their role and giving almost 40% of their loans for non-agricultural needs.
It also said that “30 September 2013 be set as deadline for all StCBs and CCBs to be fully operational on CBS and providing RTGS, NEFT, ATM and POS device based services.”
Moreover, it recommended 31 March 2013 as a deadline for CCBs and StCBs to mobilise funds internally or externally to achieve 4% capital to risk (weighted) assets ratio (CRAR).
“...a large number of CCBs and some StCBs do not have adequate capital to meet even the relaxed licensing norm of 4% CRAR. The Committee recommends that 31 March 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4% CRAR,” it said.
To mobilise funds it recommended that coopreative banks be allowed to issue fixed interest bearing deposits of 10 years or more with a lock-in period of five years and to treat such deposits as tier I capital.
The panel also said the Banking Regulation Act may be amended to give direct and overriding authority to the RBI for superseding the board or removing any director on the board of StCB or CCB.
It also said the government may consider giving income tax exemption to these entities up to 2016-17 for incentivising to achieve 9% CRAR. There should be graded CRAR norms for different business sizes, it added.
It estimated that about 58 CCBs would not be able to mobilise the required capital, or their business sizes are so small that they would not be sustainable in the long run and would have to be therefore consolidated with other CCBs.
The RBI had formed the committee in July 2012 under NABARD chairman Prakash Bakshi.
The finance minister admits that an unstable government has hurt reforms and is hard-selling to foreign investors to pour money into India. But foreign investors have fallen for the FM’s charms and are chanting the bullish mantra
Palaniappan Chidambaram, India’s Finance Minister (FM), has managed it again. He went on a two-nation tour of Hong Kong and Singapore, to woo investors and bring much-needed capital into the country. And foreign brokerages are falling head over heels for his charms. This isn’t the first time an FM has gone to great lengths to appease and woo the international investment community. Foreign investors have fallen for this before and have made mistakes in 1994, 1998 and 2007. Will this time be different? At least the FM knows the main concerns of foreigners and has managed to address them.
The first is high fiscal deficit. The FM addressed several foreign institutional investors (FIIs), debt investors and corporates in Singapore and Hong Kong, where he promised a magical 0.6% reduction in the fiscal deficit each year to bring the deficit to 3% by 2016-2017 without raising tax rates. This would be achieved by a combination of cost cuts and austerity measures. Is this even plausible as we approach the elections and the Congress, a believer in welfare state, is continuing to drain the coffers to win voters? Foreigners seem to have bought his logic, though. Citi Research’s report said, “The FM was both clear and confident—of what needs to be done, how and when it will be done, and timelines. This is across a spectrum of issues (fiscal, growth, investments, current account deficit, FII taxation/regulations and general sales tax [GST]), and in meeting near-term targets (5.3% fiscal deficit, GDP growth of 5.7% in FY13). Importantly, there was also a lot of openness and willingness to take in audience feedback and suggestions. So he was not just talking, but also listening.”
Indeed, the stiff targets set by the FM is a tall order to achieve but it would seem that so called “smart” and “intelligent” analysts have fallen for his spiel. Apart from Citi Research, brokerages like Credit Suisse (CS), JP Morgan and Nomura, to name a few, have all sung FM’s praises. Cynics who know the FM well may argue that foreign brokerages may have been persuaded to take a pro-FM line but who can prove that?
We had written about the CS report in detail here. CS cites FM’s track record and the possibility that he could pull it off again. We feel that foreign brokers gives too much credit to P Chidambaram for turning around India’s economy in the past, when actually it was the endless quantitative easing by the United States Federal Reserve that found its way into Indian markets exactly at a time when Indian economy faced high demand, low capacities and low interest rates. A combination of these four factors worked like a magic for India in 2004-07. The FM had no major role in any of these factors. Indeed, he was the author of some irritating taxes like Fringe Benefits Tax and Banking Cash Transaction Tax and presided over massive loan waivers.
With the budget coming up, it is unlikely that Chidambaram will take any hard decisions, keeping in mind that it will be United Progressive Alliance’s last full-year budget with the general elections coming up next year. Of course, Chidambaram has sung the right tune. He assured that the GST Bill will be passed by December this year and he will be able to get backing from political parties. Despite admitting that an unstable government was to blame for lack of reforms, he seemed supremely confident of getting lot of things done, mostly through, in Citigroup’s words, “invisible politics”, whatever that means.
According to Citi Research’s report, “India’s politics has been a key swing element in some recent challenges - as also in the turn-around since July 2012. The FM was quite confident of the policy turnaround, going forward. He suggests most political parties are on board; there is the support of ‘invisible politics’ to implement reforms”.
Given the current economic scenario, which isn’t reassuring, only hard decisions would need to be taken and it is unlikely that this will happen. Most analysts and experts are expecting a populist budget. Even the FM admitted that the budget will be geared towards the poor.
The Citi Research report said, “The market has been cautious leading into what is seen as an ‘election/populist’ budget in February 2013; the FM was decidedly more positive. He suggests the fiscal deficit target will be met, taxes will not be raised – the tax regime will be stable, and while policy will and should be biased towards the poor, the budget will offer a lot.” He, of course, did not mention where a cash-strapped government would get the money to pull off this balancing act.
While our FM is exuding optimism, ratings agencies have expressed concerns. Even though Moody’s has retained its ratings (which is probably a relief to the FM), they cited government’s finances as biggest hurdles to India’s economic well being. Their report said, "Large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constrain the sovereign credit profile.” Moody's expect Indian economy to grow by 5.4% in the current fiscal and 6% in 2013-14, less than the FM’s estimates. Fitch, a ratings agency, has already sounded warning bells and a possible ratings downgrade for India.
The Reserve Bank of India (RBI) top brass will be meeting on 29 January to decide on interest rates. The FM is expected to meet the RBI governor before this and then is due to visit United Kingdom and Germany later on to continue to the campaign of selling India long.