Govt starts final arguments in 3G roaming case

The government on Tuesday started final arguments before the Telecom Dispute Settlement and Appellate Tribunal to justify the Department of Telecom’sdirection to private operators to stop intra/inter circle roaming on third generation networks

New Delhi: The government on Tuesday started final arguments before the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) to justify the Department of Telecom’s (DoT) direction to private operators to stop intra/inter circle roaming on third generation (3G) networks, reports PTI.

The TDSAT refused, however, to entertain the plea of an advocate Yakesh Anand, to allow it to be an intervener in the matter.

The TDSAT bench, headed by its chairman justice SB Sinha, told Mr Anand that the matter was part-heard earlier and it can’t allow him to be a party in the case at this stage.

The Delhi High Court is already hearing a writ petition filed by Mr Anand alleging misuse of 3G spectrum licensing conditions by various operators, including Airtel, Idea Cellular and Vodafone, causing huge loss to the exchequer.

Earlier, TDSAT had allowed the plea of state-owned telecom firm BSNL to be a party in the dispute.

During the proceedings, additional solicitor general AS Chandiok—representing the government—said that DoT has right to pass such directions to the operators.

He opposed the contentions of the operators that they do not need a separate licence from DoT to provide 3G services in the circles where they already have 2G networks.

The government will continue its arguments on Wednesday.

The tribunal was hearing a bunch of petitions filed by the operators—Airtel, Vodafone, Idea, Aircel and Tata Tele—challenging the 23rd December directions of DoT to scrap their roaming pacts within 24 hours.

In an interim order on 24th December, TDSAT had asked DoT not to take any coercive action against the operators till further orders for their 3G roaming pacts.

On 16th February, the tribunal had asked them to explain as to how they would compensate the government if they lose the case.

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Care Ratings warns India of ‘crude’ shock

“The easing of monetary policy will have to be reviewed in case (oil) prices start going up. Our country in particular will be affected by just not higher inflation and trade deficit, but also on subsidies which seems to be a fairly sticky account in the government’s budget,” a report by CARE Ratings said

Mumbai: If crude oil prices continue to rise, India will be impacted by not only higher inflation and trade deficit, but by on subsidies, and any move towards easing monetary policy will have to take this into consideration, reports PTI quoting rating agency Care.

“The easing of monetary policy will have to be reviewed in case (oil) prices start going up. Our country in particular will be affected by just not higher inflation and trade deficit, but also on subsidies which seems to be a fairly sticky account in the government’s budget,” a report by the rating agency said.

Noting that the country consumed about 3.6 million barrels per day in the fourth quarter of the last fiscal, the report said it is increasing every year.

Higher price of crude has dual impacts. First it increases the trade deficit which has foreign exchange rate implications, which by itself will pressurise the price level.

Second, on account of the high oil subsidy, there will be pressure on the government to either raise the subsidy level or increase market prices of controlled products, it said.

“If the government prefers to up subsidy, fiscal deficit is bound to expand, and if it opts for the latter (retail price hike), an inflationary impact is unavoidable.” 

After 13 successive rate hikes beginning March, 2010 through October 2011 to fight inflation, the Reserve Bank of India (RBI) has hinted at a pause to the rate hike cycle and on 24th January, it left all the key rates unchanged and cut the cash reserve requirements of bank to 5.5% from 6%.

Inflation, after hovering at near double-digit mark for nearly 20 months, eased to 6.55% in January and is likely to stay below 7% for the fiscal end in March.

But this consistent anti-inflationary stance had its impact on growth, which has tumbled and is projected to close fiscal under 7%.

The government, early this month, revised downwards the gross domestic product (GDP) forecast to a paltry 6.9% from an initial projection of 9% plus.

Similarly, as tax collections petered off due to a massive slowdown in industrial output, the government had to borrow more from the markets, pushing up fiscal deficit by nearly 100 basis points to over 5.6%.

Similar is the case with current account deficit (CAD) which has gone up following weak exports and robust imports.

The CAD is set to jump over 3.5% this year.

The petroleum subsidy bill was projected to be Rs23,640 crore in FY11-12 and may increase even further.

“Mineral oils have a weight of 9.4% in the wholesale price index of which the controlled products have a weight of 6.4%. Higher inflation will definitely come in the way of the expected interest rates, easing the path of RBI in the next financial year,” the report said.

The oil marketing companies, too, would be under pressure, depending on the extent to which they have to bear the burden of sharing of the overall cost, it said.

The Iranian crisis and the impact on oil prices pose probably the biggest risks to global economic recovery this year. While the link between higher oil prices and global growth has diluted over time, the pressure on prices and hence economic policy, is still significant, the Care report added.

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Forex reserves decline by $10.5 billion in September: RBI

“The forex reserves stood at $304.8 billion as at end-March 2011. It increased to the peak level of $322 billion as at end-August 2011. Thereafter, it came down to $311.5 billion at the end of September 2011”, the RBI said in its report on management of foreign exchange reserves

Mumbai: India’s foreign exchange reserves declined by as much as $10.5 billion in the one month ending September 2011 mainly due to the impact of the central bank’s policy to intervene in the currency market to contain volatility, reports PTI.

“The (forex) reserves stood at $304.8 billion as at end-March 2011. It increased to the peak level of $322 billion as at end-August 2011. Thereafter, it came down to $311.5 billion at the end of September 2011”, the Reserve Bank of India (RBI) said in its report on management of foreign exchange reserves.

The movements in the Foreign Currency Assets (FCA), the report said, “occur mainly on purchases and sales of foreign exchange by the RBI in the foreign exchange market in India, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the central government and the effects of revaluation of assets”.

On the net basis, during the six-month period ending September 2011, foreign exchange reserves went up by $6.7 billion to $311.5 billion.

The decision of the RBI to intervene in the foreign exchange market to arrest the declining value of rupee too led to decline in forex reserves.

The value of the India currency which had declined to over Rs53 to a dollar has now stabilised at below Rs50.

The revaluation refers to the impact of exchange rate movement of international currencies vis-a-vis the US dollar on the country’s foreign exchange reserves.

Although both US dollar and euro are intervention currencies, the Foreign Currency Assets (FCA) are maintained in several major currencies like US dollar, Euro, Pound Sterling, Japanese Yen but expressed in US dollars.

Reflecting deterioration in the adequacy of forex reserves, the report further said that at the end of September 2011, the import cover provided by the reserves, “declined to 8.5 months from 9.6 months at end-March 2011.” 

Also, it added, the ratio of short-term debt to the foreign exchange reserves which was 21.3% at end-March 2011 increased to 23% at end-September 2011.

The ratio of volatile capital flows (defined to include cumulative portfolio inflows and short-term debt) to the reserves increased from 67.3% as at end-March 2011 to 68.3% as at end-September 2011, it added.

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