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If the Nifty stays above 5,820, it will try to head for 5,950. A fall below 5,820 could be disastrous for the bulls
The market settled lower for the fourth week in a row, this time on cautiousness ahead of the Union Budget and negative sentiments from the US. Key events to be watched next week would the Railway Budget (26th February), Economic Survey (27th February) and the Union Budget (28th February).
The Sensex declined 151 points (0.78%) to settle at 19,317 and the Nifty closed the week at 5,850, a cut of 37 points (0.63%). The market is delicately poised in the Budget week. If the Nifty stays above 5,820, it will try to head for 5,950. A fall below 5,820 could be disastrous for the bulls.
The market settled in the positive on Monday on gains in capital intensive sectors and the broader markets. Across-the-board buying helped the benchmarks recover from their lows and close higher on Tuesday. The market managed to settle in the green on Wednesday as cautiousness prevailed ahead of the Union Budget.
The market closed down over 1.5% on Thursday on selling in heavyweights after the release of the January meeting of the US Federal Reserve, which suggested that the central bank might withdraw the bond buying initiative sooner than expected. The indices closed flat with a negative bias amid highly volatile trade on cautiousness ahead of the Union Budget and sluggish global cues.
BSE Realty (up 4%) and BSE IT (up 2%) were the top sectoral gainers in the week while BSE Metal (down 3%) and BSE Fast Moving Consumer Goods (down 2%) emerged as the top losers.
The major gainers on the Sensex were Wipro (up 4%), Sun Pharmaceutical Industries (up 3%), Reliance Industries, Infosys (up 2% each) and GAIL India (up 1%). Jindal Steel & Power (down 7%); Coal India (down 5%), Tata Power (down 4%), Tata Steel and ITC (down 3% each) were the key losers on the index.
The top performers on the Nifty were DLF (up 13%), Wipro (up 4%), ACC, HCL Technologies and Ambuja Cements (up 3% each). The main losers were JSPL (down 7%), Coal India (down 5%), Tata Motors, Siemens (down 4% each) and Tata Steel (down 3%).
President Pranab Mukherjee, addressing a joint sitting of Parliament on the first day of the Budget session, set the tone for an austere Budget 2013-14, saying that the past year had been financially difficult for the country, with the Indian economy experiencing slower growth.
Finance minister P Chidambaram, on his part, is reportedly planning to slash public spending by up to 10% from this year’s original target.
The Reserve Bank of India (RBI) on Friday announced the much-awaited guidelines for new bank licences, allowing corporates and public sector entities with sound credentials and a minimum track record of 10 years to foray into the banking business.
Close on the heels of ordering attachment of bank accounts, investments and all other assets of two Sahara group companies and their promoters, including group chief Subrata Roy, the Securities and Exchange Board of India (SEBI) on Friday cautioned the investors and general public against transacting with these companies and persons. On 13th February, SEBI passed two separate orders, together running into 160 pages, directing attachment of properties and freezing of accounts.
In international news, next week’s 1st March deadline to circumvent automatic US spending cuts marks another fiscal showdown between President Barack Obama and Congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.
Minutes of the January meeting of the Federal Reserve announced earlier this week ignited concerns that the policymakers could withdraw the bond buying programme and US central bank said that it would review the program in March.
Several incidents and controversies in the recent past point to a missing link or a loop which allows miscreants in several fields to circumvent the rule of law and ethics even when they give an impression that everything they do is legally correct. This can be rectified by introducing “service audit”
Presently, there are institutional arrangements for audit of accounts which ensure vouching of items of expenditure in government and both public and private sectors, which responsibility is mainly shared between the Comptroller and Auditor General of India (CAG) and chartered accountants. The CAG, regulators and supervisors do take care of the need for post-expenditure performance audit of end-use of funds by selective performance audit of fund flow to projects and services.
Judiciary, the likely falling in place of the much debated ‘Lokpal’, ombudsmen and arrangements for redressal of customer grievances and a host of other institutional arrangements are also expected to handle their responsibilities in respective areas within their mandates. But, unfortunately, several incidents and controversies in the recent past point to a missing link or a loop which allows miscreants in several fields to circumvent the rule of law and ethics even when they give an impression that everything they do is legally correct.
CAG Vinod Rai recently chaired Moneylife Foundations 3rd Anniversary and spoke on “Government Accountability is the key to a Vibrant Democracy”.
Performance Audit involves assessing whether government policies, programmes and institutions are well managed and are being run economically, efficiently and effectively. This is a task of potentially great significance—at a practical level for citizens and at a more abstract level for the health and vitality of democratic governance.
For performance auditing to focus on citizen trust in government, government audit organizations should be equipped to design their audits to focus on equity as well as efficiency, and effectiveness. They need to provide work that allows citizens and elected officials to exercise accountability for the use of authority as well as the use of funds. When selecting and designing audits, audit organizations should consider at least the following types of equity: costs, services, access and coercion. It is a matter of comfort that in the Indian context, the CAG has evolved a system of Performance Audit which can meet these challenges effectively. But neither the present audit arrangement nor the regulatory and supervisory framework, go beyond ‘compliance’ issues. When lawyers take charge of governance, laws get manipulated to suit the convenience of the masters who put them in charge of governance. It is in this context the concept of ‘Service Audit’ or behaviour audit’ becomes relevant.
Long back, Kiran Bedi told an interviewer that everyday, before going to sleep, she used to ‘audit’ her own interactions and activities during the day and satisfy herself that she was on the right track. This, she said, helped her to make necessary and appropriate corrections, where necessary, quickly. The service audit discussed here is expected to help institutions and through them the society to make online corrections in policy formulation and implementation. Two recent incidents shocked those who took those in authority when they said ‘let law take its course’ seriously. One, the reported revelation that there was an apparent conspiracy between the CBI prosecutor in the 2G scam investigation and one of the accused in the scam. Two, in Kerala, the Director General of Prosecutions advised the state government against reinvestigation of a sex scandal, despite the Supreme Court having recommitted the main case to the high court, rejecting a state government appeal. In both the cases, the public feeling is that individuals who took quasi-judicial/ judicial decisions or gave opinion were guided by the support the accused garnered from the powers that be.
The institution of service audit should be responsible
The above suggestions are illustrative and once accepted “in principle”, the government may have to cause a comprehensive study before considering an appropriate legislative framework to support introduction of service audit.
(M G Warrier is a freelancer based in Thiruvananthapuram.)