According to Rajan Alexander of Dev Consult Group, which tracks international weather forecasts, the El Niño appears to be virtually struggling to establish itself for the last couple of months. Experts say that considering that the large part of country is already in a drought-like situation, the news will severely impact Indian farming community
International climate forecast models are talking about early signs of an emerging El Niño which are manifesting the drought condition. This comes contrary to the forecast of the Indian weather officials which had predicted a normal monsoon and ruled out the impact of an El Niño weather pattern on the monsoon. Experts say that considering that the large part of country is already in a drought-like situation, the news will severely impact Indian farming community.
El Niño refers to the abnormal warming in the tropical eastern Pacific Ocean, creating havoc weather patterns across the Asia-Pacific region. It is linked with poor rains and drought-like situation in Southeast Asia and Australia.
According to Rajan Alexander of Dev Consult Group, which tracks international weather forecasts, the El Niño currently appears to be virtually struggling to establish itself for the last couple of months. The latest forecast by the Australian POAMA model (Predictive Ocean Atmosphere Model for Australia) appears to indicate El Niño threshold values being reached by the latter part of June and strengthen right through September and beyond. However, the expected event is most likely to be a weak one.
The India Meteorological Department (IMD) has forecast average rainfall. LS Rathore, director general, IMD was quoted saying, "Yes there are chances of El Niño phenomenon emerging in the Pacific which may not favour rains in the month of August-September. But overall monsoon is likely to be normal. El Niño is just one of the parameters being considered while forecasting".
Forecast on the Indian Ocean Dipole (IOD) (an irregular oscillation of sea-surface temperatures in which the western Indian Ocean becomes alternately warmer and then colder than the eastern part of the ocean) is also negative says Dev Consult. "The POAMA IOD forecast indicates a negative IOD right through June-September, with the period June-July being expected to be relatively stronger. As in the case with the El Niño, the saving grace is that it is likely to be a weak event. However, when this POAMA IOD forecast is juxtaposed with their El Niño forecast, this could result in a below average monsoon rainfall this season, if these models are right."
In India the monsoon is expected in less than a month over south-west coast. However, it requires a temperature/pressure gradient to propel into the northern India. Such a condition is provided by sustained heating of the north-west and lower pressure but the process has been delayed for almost a month now.
Considering such phenomena, Dev Consult explains that, "This happens to be the other major problem that goes against the expectation of a normal monsoon season. Weather models had indicated a small window for heating to begin this week, but an incoming western disturbance appears to have closed it somewhat. Rain inducing western disturbances (WD) is passing low-pressure waves which set up thunderstorms, thunder squalls, dust storms, rain, thundershowers and even hail. All these serve only to put a cap on the heating process, which normally sets up heat waves to severe heat waves over north-west, central, east and east-central India."
Jai Shankar, an agricultural scientist, was quoted saying, "Farmers will be able to sow crops on time in June-July, which means field crops will be at the maturity stage by the time El Niño makes its impact felt."
Explaining the current status on El Niño, Dev Consult says that climate indicators across the tropical Pacific Ocean remain neutral, ruling out possibility of neither El Niño nor La Niña. It noted that during the past fortnight, the tropical Pacific Ocean reached its warmest state since May 2010. However, all major indicators of El Niño/La Niña-Southern Oscillation (ENSO), including cloudiness, trade winds, the Southern Oscillation Index (SOI) and sea surface temperatures in the tropical Pacific, currently are within the ENSO-neutral range. According to the Australian Met Office, the NIÑO3.4 SST has risen to +0.1 deg C the highest since May 2010. But according to the US-based The National Oceanic and Atmospheric Administration (NOAA), the latest weekly NIÑO3.4 SST is -0.1 deg C. Meanwhile, the Southern Oscillation Index (SOI) has continued rebounding during the past week, after remaining around ?7 during the preceding week. The latest (6 May) 30-day SOI value is +3.7.
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The affected banks downplayed the rating action, saying this is in-line with the sovereign rating and does not in any new way negatively reflect their credit standing
Mumbai: Rating agency Moody's on Monday downgraded the standalone credit ratings of the country's three largest private sector lenders -ICICI Bank, HDFC Bank and Axis Bank -- to D+ from C- to align their individual ratings with that of the sovereign rating. As a result, the hybrid debt ratings of these banks, except HDFC Bank, will be negatively impacted, reports PTI.
The standalone bank financial strength rating (BFSR) of ICICI Bank, HDFC Bank and Axis Bank are revised down to D+ from C-, which now maps to a baseline credit assessment (BCA) of Baa3 from Baa2 on the long-term scale, Moody's Investors Service said in a statement issued in Singapore.
The agency also downgraded the hybrid ratings of Axis Bank and ICICI Bank to Ba3 from Ba2. But it said all the revised ratings carry stable outlooks.
"The rating action follows in the context of the ongoing global review affecting all banks whose standalone ratings are higher than the rating of the government where they are domiciled, and they conclude the review that was initiated on 30 April 2012," Moody's Investors Service vice-president and senior credit officer at financial institutions group, Beatrice Woo, said in the statement.
The affected banks downplayed the rating action, saying this is in-line with the sovereign rating and does not in any new way negatively reflect their credit standing.
Moody's also said the other ratings of these banks are unaffected and have stable outlooks as detailed below.
"Our review indicates that there are little reasons to believe that these banks will be insulated from a government debt crisis. More particularly, we note their significant direct exposure to the government securities, equivalent to 239% of tier 1 at Axis Bank, 226% of tier 1 at HDFC Bank and 143% of tier 1 capital at ICICI Bank (based on latest publicly available data).
"In addition, these banks are primarily domestic institutions with similar macroeconomic exposures as the sovereign government. Therefore, we view the lower standalone ratings -- which are now positioned at the rating of the government - as more appropriate to capture the credit profiles of the banks," Ms Woo said in the statement.
Explaining the rationale for the downgrade, Woo said, "The action reflects that their credit worthiness are highly correlated with that of the government's credit strength taking, into account (a) the extent to which their business depend on the domestic macroeconomic and financial environment, (b) the degree of reliance on market-based, and therefore more confidence-sensitive, funding and (c) their direct or indirect exposures to domestic sovereign debt, compared with their capital bases."
For all the banks, the key drivers for the rating action were (a) relatively low level of cross-border diversification of their operations, (b) high level of balance-sheet exposure to domestic sovereign debt, compared to their capital bases, (c) franchise resilience and intrinsic strength within the operating environment and (d) absence of ongoing support from foreign ownership.
She further said these rating actions derive from Moody's updated assessment of the linkage between the credit profiles of sovereigns and other institutions domiciled within the sovereign.
On the downward revision of Axis Bank and ICICI Bank's hybrid debt, she said, "Their adjusted BCA is in line with their respective BCA as no parental or cooperative support is imputed. Therefore, a lower BCA becomes the starting point for notching hybrid securities and results in lower hybrid ratings in both banks' cases."
The starting point for rating hybrid securities is the adjusted BCA, which reflects a bank's standalone credit strength as expressed through its BCA and includes uplift from parental and/or cooperative support, if applicable, but excludes systemic support, Moody's said.
As of March 2012, ICICI Bank had an asset base of Rs4.74 trillion, HDFC Bank had Rs3.4 trillion and Axis Bank Rs2.85 trillion.
Pricing is not the most important criterion for consumers when purchasing an insurance product. Brand of the provider, customer service and convenience hold greater importance compared to price
Mumbai: Consumers prefer the brand of the service provider, customer service and convenience over price while buying general insurance products, a survey by Ernst & Young (E&Y) said, reports PTI.
"Pricing is not the most important criterion for consumers when purchasing an insurance product. Brand of the provider, customer service and convenience hold greater importance compared to price," the survey said.
The E&Y survey, which covered over 24,000 life and non- life insurance customers across 23 countries about their buying practices with over 1,000 consumers in the country, however, said price sensitivity varies by segments and type of product.
It also pointed out that consumers are increasingly using online mode for research and buying a product.
"Consumers are increasingly moving online, (with) 31% of respondents use a range of online channels for research," it said, adding, however, sales activity lags research with only 11% customers actually making the purchase.
It also said despite higher use of the online channel, personal contact still remains important in purchase of insurance products.
"Customers are willing to purchase additional products from the same insurer as 69 per cent of the respondents saying they will do so, with convenience and better service being the primary drivers," the survey said.
It, however, said with portability provisions, more customers are likely to switch providers in the near future.