Several Pakistani industries and banks are keen on setting up business in India, which is possible only when a policy decision on allowing cross-border FDI is taken
New Delhi: Improving the economic ties between the two nations, India today said it will allow foreign direct investment (FDI) from Pakistan paving the way for industries from the neighbouring country to set up businesses in the growing Indian market, reports PTI.
"India has taken in-principle decision as part of trade normalisation process to allow foreign direct investment from Pakistan...," Commerce and Industry Minister Anand Sharma said after a meeting with his Pakistani counterpart Makhdoom Amin Fahim.
Mr Sharma said, "Procedural requirements (for FDI from Pakistan) are underway. It will notified soon."
Besides, talks are underway to allow banks from both the countries to open branches in each other's territory, he said, adding, "RBI and State Bank of Pakistan are in favour of opening branches..."
Mr Fahim said, "There has been progress in allowing banking services from both sides. In-principle we have agreed."
At present, India and Pakistan are engaged only in trade of goods, which has recently been liberalised.
Several Pakistani industries and banks are keen on setting up business in India, which is possible only when a policy decision on allowing cross-border FDI is taken.
Mr Sharma also said that India-Pakistan Business Council will be set up soon, to be co-Chaired by both the countries.
On multiple entry business visas, he said, "There will be a formal signing of agreement soon. It will be for one year initially."
The opening six matches saw a TVR of 3.76; compared to 4.63 in the last season. The IPL is in its fifth season now, and over time, its appeal seems to have waned
According to Tam Media Research, Indian Premier League’s (IPL) opening matches are seeing fairly low television ratings. Television Viewer Ratings (TVR) were down 18.7% in the first six games compared with the same period last year.
The opening six matches saw a TVR of 3.76; compared to 4.63 last season. The IPL is in its fifth season now, and over time, its appeal seems to have waned. Last season, the cumulative viewership was 101.77 million. This year, it has fallen to 90.1 million. The lacklustre opening ceremony, which was heavily panned, recorded an all time low in its five-year stint.
The dismal ratings may be due to India’s appalling show in the overseas series in England and Australia. Already, after India won the World Cup, the euphoria appeared subdued. Now, with very shoddy performances—including the shameful loss to Bangladesh—which got Sachin Tendulkar his 100th century, the audience seems to have lost interest.
“There are chances that after people have seen Tendulkar hit his 100th ton, viewers are not curious about anything else. Fatigue has set in,” commented a sector analyst. Another commentator noted that while the IPL has managed to dent viewership of daily soaps, the serials seem to be recovering.
“Earlier, reality shows like Bigg Boss, Emotional Attyachar and others were grabbing eyeballs. Now, there are no such reality shows in the horizon. Now Bade Achhe Lagte Hai, Diya Aur Baati Hum and Yeh Rishta Kya Kehlata Hai are doing pretty well,” said the analyst.
Even film producers can be seen releasing their movies during the current IPL season. Eros International Media released its big ticker, ‘Housefull2’ on 6th April and has collected Rs72 crore during its opening week. The film has grossed Rs57 crore in India (Net collection of Rs40 crore) and Rs15 crore overseas through 3000 screens.
“Despite releasing during the IPL cricket frenzy, Housefull 2 has opened well in theatres across India,” said Nandu Ahuja, senior vice president for India Theatrical at Eros International Media.
The RBI is again facing a chicken and egg situation, as it has the unenviable task of deciding its priority, whether controlling inflation or propelling growth, when it announces its annual monetary policy on 17 April, 2012
The Reserve Bank of India (RBI) is again facing a chicken and egg situation, as it has the unenviable task of deciding its priority, whether controlling inflation or propelling growth, when it announces its annual monetary policy on 17 April, 2012. The central bank has been flooded with suggestions and expectations, bordering on pressure, to cut interest rates and ease liquidity with a view to encourage growth, which has fallen below 7% during 2011-12. The macro-economic indicators, however, are giving contrary signals, indicating on the one hand continued high inflation and on the other, slower growth of industrial production. The index of industrial production (IIP) numbers of February 2012 just released shows a growth rate of 4.1%, which is much below expectations, What will the RBI do under these circumstances is being watched with keen interest.
RBI as the monetary authority has the responsibility of controlling inflation and all its monetary policies in the recent past have been directed towards this goal. Though there were some indications of the inflation getting into moderation, the wholesale price index continues to be just under 7% and the consumer price index is very close to 9%, which do not augur well for any reduction in interest rates, at least for the present. Unless the inflation is bought down to 5% on a continuous basis, the RBI should not risk cutting down interest rates in the name of growth.
However, there is a need to provide liquidity in the system, as the deposit growth has been sluggish during the previous year. As on 23 March 2012, year-on-year non-food credit grew at 16.8% against 21.3% during the corresponding previous year. Deposit growth, on the other hand, has fallen from 15.9% to 13.4% during the same period. This has put pressure on the banks to borrow funds from the RBI under the Liquidity Adjustment Facility through repo transactions and the banks are still borrowing over Rs1 lakh crore daily to meet the shortfall. This has helped the banks to keep the credit deposit ratio at a high level of over 78% against the normal level of around 70%. Besides, RBI has been emphasizing that the genuine demand for credit for productive purposes from the industrial and the priority sectors should not be rejected.
In order to meet this liquidity constraint, banks have been clamoring for reduction in the cash reserve ratio (CRR), which makes sense for two reasons. Banks are in a difficult situation in meeting the provision requirements for NPAs due to the rising defaults, and the fall in profitability due to the high cost of borrowing both from the market and from RBI, affecting their net interest margins. Against this background, release of funds blocked under CRR will not only give them the required leeway to continue to lend for productive enterprises, but also will help them in improving their profitability, as these funds do not earn any interest when kept with RBI.
A few suggestions have also been made to cut statutory liquidity ratio (SLR) instead of CRR to improve liquidity. But this does not bring any real benefit either to the banks or to the borrowers, as the banks are already holding excess SLR securities which are used for borrowing through the repo mechanism by banks. Besides, reduction in SLR does not help, as the govt. has budgeted for huge borrowings in the first half of this year. However, a decrease in CRR may have implications for money supply, which can very well be controlled through open market operations by RBI. By reducing CRR, there are chances that the banks will bring down the lending rates without sacrificing profitability, and this will help in propelling growth as well.
But the question is how the RBI will bring down inflation, if it reduces CRR, which increases money supply and fuel rise in prices. RBI has been stating in its previous policy announcements that the inflation in our country is fuelled more by supply side mis-management rather than the demand side and has been asking the government to take steps to improve the supply of essential commodities and goods to combat inflation. Here the RBI, too, could play its role. The need of the hour is to bring back “selective credit control” into the armoury of RBI to fight inflation.
The RBI should consider reintroducing the tool of “selective credit control” by stipulating quantitative restrictions, higher margin requirements and higher interest rates on lending by banks against essential commodities to discourage hoarding of such commodities, thereby helping to bring down prices of foodgrain to whatever extent possible. Besides, the central bank should encourage lending for movement of essential commodities from the producing centres to consumption markets so as to serve the needs of cities and urban centres. RBI could judiciously use the tool of open market operations either to suck liquidity from the market or to pump in additional funds, whenever required. These steps, coupled with fiscal initiatives, should help in bringing down inflation without upsetting the apple cart of growth, which is no doubt required to generate employment and sustain industrial production.
(The author is a banking analyst and he writes for Moneylife under the pen-name ‘Gurpur’.)