Bonds, Currencies & Commodities
Intrinsic value of Indian rupee is probably Rs57 against the US dollar

There appears to be no other suitable alternative but accept or introduce a dual exchange rate to be kept operational for a year at least

In the last six months, the rupee has lost 13.83% of its value and after touching a low of Rs68.85 against the US dollar, is slowly recovering. Its movement is still very uncertain though experts predict its return to anything between Rs55 to Rs60 range. The intrinsic value of the rupee is probably Rs57 to a dollar, which remains to be seen.


In the interim, exports in certain areas are picking up while major dollar expenses like oil, gas and coal have remained practically unchanged.


Both importers and exporters who took the defensive hedging mechanism have much less worry than the rest who did not foresee the possibility of this great fall.


Media reports indicate huge stock pipe of coal at the ports with importers unwilling to take delivery due to higher rupee element, as it has become costlier by 14% or so. Non-clearance will additionally impact them with demurrage that is being incurred.


Already, the ports are overburdened with more than 3.5 million tonnes of coal. Domestic production, which has increased, also has resulted in stockpiles at pitheads and elsewhere leading to a deteriorating situation. The international price of coal which was around

$85 a year ago has come down to $77, almost a 19% drop, due to lower Chinese offtake, but fall in rupee value has effectively balanced the advantage.


What should the government do to ensure the removal of coal at port and move them to the stockyards of power generators? If the power generators have to pay higher price, because of the increased rupee burden, surely, they will pass it on to the consumer. This is a vicious circle.


To resolve this issue speedily, all privately imported coal, of high grade thermal variety, be directly consigned to power generators with a specially fixed rate of exchange, to be determined by the Finance Ministry/ Reserve Bank of India, to nullify the devaluation effect. Perhaps, the rate of exchange, as was applicable (or available) at the time of opening of letter of credit for purchase, could be used a guideline. Effectively, we are thinking in terms of having a dual exchange rate to overcome the current impasse and manage the CAD (current account deficit) also.


In a likewise manner, all imports of oil, gas and fertilisers, whose import contracts are valid, be given this special rupee exchange rate, so that the government does not have to go through the usual process of subsidising the costs later. For the fertiliser industry alone, the total amount of subsidy runs to a staggering Rs30,000 crore.


Agriculture, which thanks to the monsoon, can expect a better kharif production has millions of farmers using diesel pumps in their fields and increase in fuel supply costs which is bound to happen due to rupee decline, will impact their livelihood and, ultimately, their production.


This rupee fall effect leads to a vicious circle that can be only slowed down by greater exports and reduced imports, supported by increased production and export of foodgrains and industrial products. Revival of export of iron ore would also help, apart from expeditious clearances relating to increase in production of oil and gas from indigenous sources.


At the moment, there appears to be no other suitable alternative but accept or introduce a dual exchange rate to be kept operational, for a year at least.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


From Russia with PR

Vladimir Putin wrote an op-ed about Syria in the New York Times that was placed by the public-relations giant Ketchum. As ProPublica reported in November, this is not the first time the firm placed pro-Russia op-eds in American publications without discussing the role of the Russian government

On Thursday, Vladimir Putin wrote an op-ed about Syria in the New York Times. The piece was placed by the public-relations giant Ketchum, Buzzfeed reported. On Nov. 16, 2012, we explored how Ketchum placed pro-Russia op-eds in American publications by businesspeople and others without disclosing the role of the Russian government. Ketchum's latest public filing says it was paid $1.9 million by Russia for the six-month period ending May 31, 2013. It received another $3.7 million for its work for Russian energy giant Gazprom over the same period. Here is our original report.

Several opinion columns praising Russia and published in the last two years on CNBC’s web site and the Huffington Post were written by seemingly independent professionals but were placed on behalf of the Russian government by its public-relations firm, Ketchum.

The columns, written by two businessmen, a lawyer, and an academic, heap praise on the Russian government for its “ambitious modernization strategy” and “enforcement of laws designed to better protect business and reduce corruption.” One of the CNBC opinion pieces, authored by an executive at a Moscow-based investment bank, concludes that “Russia may well be the most dynamic place on the continent.”

There’s nothing unusual about Ketchum’s work on behalf of Russia. Public relations firms constantly peddle op-eds on behalf of politicians, corporations, and governments. Rarely if ever do publications disclose the role of a PR firm in placing an op-ed, so it’s unusual to get a glimpse behind the scenes and see how an op-ed was generated.

What readers of the CNBC and Huffington Post pieces did not know — but Justice Department foreign agent registration filings by Ketchum show — is that the columns were placed by the public-relations firm working on a contract with the Russian government to, among other things, promote the country “as a place favorable for foreign investments.”

In at least one case, a Ketchum subcontractor reached out to a writer and offered to place his columns in media outlets. The writer, Adrian Pabst, a lecturer in politics at the University of Kent, said that his views were his own and that he was not influenced or paid by Ketchum.

A spokesman for CNBC, which published the pieces on the Guest Blog section of its website, declined to comment. A Huffington Post spokesman said the column placed by Ketchum did not violate the site’s policy.

Ketchum spokeswoman Jackie Burton told ProPublica that when the firm corresponds with experts or the media on behalf of Russia, “consistent with Ketchum’s policies and industry standards, we clearly state that we represent the Russian Federation.”

Russia, often criticized for human rights abuses and corruption, paid handsomely for the public-relations work. From mid-2006 to mid-2012, Ketchum received almost $23 million in fees and expenses on the Russia account and an additional $17 million on the account of Gazprom, the Russian state-controlled energy giant, according to foreign agent filings.

Op-ed editors interviewed by ProPublica said they work to include full disclosure of relevant financial interests or conflicts — or decline to run pieces that read like advertorial.

“People write op-eds because they have agendas. Separating out what’s an ethical agenda from an unethical agenda is really tough,” says Sue Horton, op-ed editor of the Los Angeles Times.

Horton said the role of the Russian government’s public-relations firm in placing the CNBC and Huffington Post op-eds "absolutely seems like something the reader would want to know.”

The op-eds placed by Ketchum for Russia, according to the filings, are:

A March 2010 CNBC piece by Peter Gerendasi, then managing partner of PricewaterhouseCoopers Russia, that praises the government of then-President Dmitry Medvedev for its “strategic priorities [of] diversification, innovation, promoting small business, supporting families and strengthening the country's financial system so that it can provide the investment capital that will enable business to grow and people to realize their potential.” Gerendasi declined to comment on the piece and PricewaterhouseCoopers said it did not pay Ketchum to place the piece and declined to comment further.

An April 2010 CNBC piece by Kingsmill Bond, then chief strategist at the Moscow investment bank Troika Dialog, that ran under the headline “Russia—Europe's Bright Light of Growth.” It called Russia possibly “the most dynamic place on the continent” for investors. Bond, now at Citigroup, told ProPublica he could not recall Ketchum’s role in the piece.

A September 2010 Huffington Post piece, titled “President Medvedev's Project Of Modernization,” by Pabst, the University of Kent academic. While acknowledging human rights and corruption problems, the thrust of Pabst’s op-ed was praise for Medvedev’s “transformational vision for Russia's domestic politics and foreign policy.” Pabst told ProPublica he was contacted by a Ketchum subcontractor, Portland Communications, and that he was not paid to write the piece. The piece, as well as another he wrote for a web site run by Ketchum, “reflect my own ideas and arguments,” he said in an email.

A January 2012 CNBC piece by Laura Brank, the head of the Russia practice for the international law firm Dechert. Brank praised the Russian government for working to overcome the perception of an inhospitable investment climate “through the implementation and enforcement of laws designed to better protect business and reduce corruption.” Brank did not respond to requests for comment.

While Ketchum maintains it always identifies its client when dealing with the media, the 2010 email sent by Ketchum to Huffington Post pitching the Pabst column did not mention that Russia was the firm’s client. (See the full email.)

“Below is a piece from Adrian Pabst, a leading Russia scholar in Europe,” wrote then-Ketchum Vice President Matt Stearns, who is now at UnitedHealth Group.

Ketchum says that Stearns had in previous correspondence identified Russia as his client to the Huffington Post editor, including to set up "a blog on the editor’s site for a member of the Russian government." The company did not provide that correspondence.

Huffington Post spokesman Rhoades Alderson said the site has a policy requiring bloggers to disclose any financial conflicts of interest related to the issue they are writing about, but Pabst did not violate the policy.

“The job of our blog editors is to make sure all of our posts add value for our readers,” Alderson said in a statement. “Part of that is making judgment calls about the transparency of each blogger's motive, even in cases when there is no technical violation of the disclosure policy. A submission by a PR firm raises flags but is not automatically disqualified if the blog adds value and is in keeping with our guidelines.”

Placement of op-eds is a standard part of the influence game, but it’s rare for readers ever to find out who is behind the curtain.

In 2011, top public-relations firm Burson-Marsteller came under criticism after it asked a blogger to author an op-ed criticizing Google’s privacy standards. Burson was working on a contract for Facebook at the time.

Public-relations firms have also been known to write op-eds and have them placed under the byline of a third party, and even to pay experts to write favorable op-eds. There’s no evidence Ketchum paid any of the authors of the Russia op-eds or that it ghost-wrote them.

Update: This post has been updated with more detail on Ketchum's correspondence with Huffington Post.



Industrial output at a four-month high of 2.6% in July 2013
The IIP data for June 2013 was revised from 1.78% to 2.2% dip in production
The General Index for industrial output for the month of July 2013 stands at 171.5, which is 2.6%  higher  as  compared  to  the  level  in  the  month  of  July  2012.  The cumulative growth for the period April-July 2013-14 over the corresponding period of the previous year stands at (-) 0.2%. This is based on the Quick Estimates of Index of Industrial Production (IIP) with base 2004-05 for the month of July 2013 which have been released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation.
After contracting for two consecutive months, the industrial output grew at a four-month high of 2.6% in July against contraction of 0.1% in same month last year. This will pump some confidence in the economy as the IIP fell 1.1% in the first quarter of 2013-14 against a decline of 0.2% in the corresponding period of 2012-13.
The IIP data for June 2013 was revised from 1.78% to 2.2% dip in production.
In terms of industries, eleven (11) out of the twenty  two (22) industry groups (as per 2-digit NIC-2004) in the manufacturing  sector have shown positive growth during the month of July 2013 ascompared to the corresponding month of the previous year. 
Some of the important items showing high positive growth during the current month over the same month in previous year include ‘Fruit  Pulp’ (50.5%), ‘Cashew Kernels’ (23.2%), ‘Apparels’ (39.8%), ‘Leather  Garments’ (62.6%), ‘Purified Terephthalic Acid’ (29.6%), ‘Vitamins’ (61.8%), ‘Ayurvedic Medicaments’ (44.6%), ‘Cable, Rubber Insulated’ (336.0%) and ‘Ship Building & Repairs’ (58.7%).
Some of the other important items showing high negative growth are: 
‘Grinding Wheels’ [(-) 29.4%], ‘Boilers’ [(-) 36.6%], ‘Air Conditioner (Room)’ [(-)  30.8%], ‘Earth  Moving Machinery’ [(-)  42.6%], ‘Sugar Machinery’ [(-) 27.9%], ‘Plastic Machinery Incl. Moulding  Machinery’ [(-)  40.7%], ‘Transformers (Small)’ [(-) 22.7%], ‘Generator/ Alternator’ [(-)  42.0%], ‘Telephone  Instruments (incl. Mobile Phones & Accessories)’ [(-) 21.5%] and ‘Gems and Jewellery’ [(-) 20.5%].


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