Economy
Lack of reforms might derail growth: Moody's Analytics
Predicting a 7.6 percent growth rate for India, research firm Moody's Analytics on Thursday warned that the economic expansion might slow down due to lack of reforms.
 
The economic research and analysis firm's India forecast said that "The economy will likely expand 7.6 percent in 2015 thanks to lower interest rates. A lack of reforms could derail medium-to-long term growth prospects." 
 
The report, "India Outlook: Waiting for Reforms to Fuel Growth", said that "Green shoots are slowly emerging,but the government’s failure to deliver promised reforms is the major impediment."
 
Moody's Analytics's associate economist and author of the report Faraz Syed cited key reforms such as the land acquisition bill, flexible labour laws and the goods and services tax (GST) which have the ability to propel India's growth.
 
However, these key reform bills are still in parliament's ambit and the government has till now failed to create a consensus to get them passed. 
 
"Without a majority in the upper house, the ruling Bharatiya Janata Party’s power has 
been nullified and the opposition has blocked proposed reforms," the report said.
 
On the bright side the report predicts another interest rate cut by the Reserve Bank of India (RBI) this year. The decision, it informed, will be on the back of better rains, lower commodity prices and strong external balances. 
 
India Inc. has been demanding a rate cut as it believes that this may be the last time in this calendar year for RBI to ease lending before inflation spirals and the US Fed decides on its own rates in September.
 
The Indian monetary policy review by the RBI is scheduled for August 4.
 
"We expect at least one more benchmark rate reduction in 2015 to complement the 75 basis points already delivered this year," the report predicted.
 
"Accommodative monetary policy will lift GDP to 7.6 percent in 2015, increasing to 8 percent in 2016."
 
The economic research firm pointed out that tampering with the central bank’s independence would make it difficult to anchor inflation expectations and weigh on India's economic prospects, particularly financial market stability.
 
Recently, the government introduced a draft financial code which proposes to clip the RBI's wings.
 
The code, if implemented, will undermine RBI's ability to rein-in inflation. This will also discourage investors from taking risks in the future as the RBI is viewed by many as an anchor for financial stability in the country. 
 
"India’s monetary policy, with Governor Raghuram Rajan at the helm, has been effective. However, a recent draft bill could undo the RBI’s good work," the report elaborated.
 
"Moving to the new model would severely dent the RBI's’competency: credibility would be lower, politics would drive decisions, and transparency would be reduced." 

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Mexico taxi drivers step up pressure against Uber
Mexico City taxi drivers staged a protest against the recent approval to private transport services offered via smartphone apps, while police investigated attacks on Uber drivers in the past few hours.
 
Dozens of taxis gathered in the centrally located Paseo de la Reforma on Wednesday to protest the decision two weeks ago by the federal district to allow ride-sharing services like Uber and Cabify to operate.
 
The new regulations will be overturned because they have "no legal basis", Mexico City Organized Taxi Drivers Association spokesman Ignacio Rodriguez told EFE.
 
"There's not a single article in the mobility law or in the current transport regulations that establish a foundation for such an agreement," Rodriguez said, adding that the association planned to take legal action against the new rules.
 
The protest took place in the wake of attacks on several Uber vehicles on Tuesday.
 
Individuals armed with sticks, pipes and stones damaged the windows, windshields, bodies and tyres of several vehicles parked around the Mexico City International Airport.
 
The victims have filed complaints and "Uber is not saying that the taxi drivers' organisation had anything to do with it", but that it was "an attack by residents" of the area, federal district police chief Patricia Mercado said on Wednesday.
 
About 250 people attacked between seven and 12 vehicles, Mercado said, adding that police had not ruled out the possibility that some taxi drivers were involved.

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BSNL to invest Rs.6,000 crore for 40,000 Wi-Fi hotspots: Chairman
State-run telecom service provider Bharat Sanchar Nigam Ltd (BSNL) will invest Rs.6,000 crore over the next three years to set up some 40,000 Wi-Fi hotspots across the country, its chairman-cum-managing director Anupam Shrivastava has said.
 
"We are now thinking of rolling out wi-fi hotspot through capital expenditure model also. We are in the process of having our tender ready. We will be floating our tender and put our own equipment. We will be doing everything," Shrivastava told IANS in an interview.
 
"We have a targeted to have 40,000 wi-fi hotspots in course of next three years. We will be investing Rs.6,000 crore for that," he said, adding: "For our initiative with the private sector, we have set a target of 250 locations in 2015-16 with 2,500 hotspots."
 
A Wi-Fi hotspot offers clients access to the Internet over a wireless local area network.
 
The company has already rolled out Wi-Fi hotspots in 70-75 locations in the country. But these have not been fully deployed by BSNL. The state-run firm has roped in private players for the majority of the work.
 
"When we did an analysis of BSNL, we found that we neither have 4G licence nor the money to buy spectrum. Yet we knew that 4G will be the in-thing for the future generation. We also realised that our biggest strength is the landline structure that we have," Shrivastava said.
 
"But we have optical fibre network almost to the tune of 700,000 kilometres countrywide. The natural thing that comes to us is to utilise these resources. Then we found wi-fi is the new technology that is coming and taking on 4G area," he added.
 
"So Wi-Fi became our obvious choice."
 
The chairman explained that earlier the company was not investing on wi-fi roll-out and opting, instead, for a revenue sharing model with private players. 
 
"We floated expression of interest through which we asked private parties to install the wi-fi hotspots, maintain it for five years and manage the sales and marketing functions as well. We at BSNL provide the back-haul connectivity through optic fibre -- at 100 Mbps to 1 Gbps," he said.
 
The ballpark investment to construct five wi-fi hotspots in one place is around Rs.10 lakh.
 
Shrivastava also expressed optimism that capital employed on wi-fi operations will be realised soon. "But for that, we have to reach certain threshold. The moment we complete this year's target of 250 locations, the revenue stream will start ploughing the investments back."
 
Talking about BSNL's inherent strengths, notably as a landline service, Shrivastava said in the next two-three years even rural exchanges will become next generation network NGN) exchanges.
 

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