A letter of objection to senior-most executives in the finance ministry and the apex bank, documenting alleged performance failures and ignoring of governmental appointment norms, may queer the pitch for the selection of the central bank’s new DG
While RBI (Reserve Bank of India) Deputy Governor, Usha Thorat, has stepped down on Tuesday, 9th November, the appointment of Mr Anand Sinha as the new Deputy Governor has run into rough weather. We learn that the appointment has not been announced following a letter from Mr Deepak Mehra, who claims to be from the Forum for Financial Fairness in Mumbai. Writing to the Finance Minister, Mr Mehra has made some serious charges against Mr Sinha, which are confirmed by our sources in the RBI. However, the RBI has not responded to our query for its comments.
Mr Mehra alleges that Mr Sinha spent his entire career of three-and-a-half decades at Mumbai, barring short stints at Bhubaneshwar and Guwahati which were controversial.
Specifically, he says, that Mr Sinha was charge-sheeted for certain performance failures during his Guwahati stint, leading to a department inquiry and punishment in the form of reversal of two increments. This is considered a serious punishment at the RBI. Our sources say that the punishment was later reduced to the reversal of just one increment, but that he was indeed found guilty of dereliction at least, in his stint in the estates department. As officer in charge at Bhubaneshwar, he was issued a "letter of displeasure" and shunted out halfway during his tenure. Mr Mehra alleges that this was due to "incompetence and failure to rise to the occasion".
According to Mr Mehra, Mr Sinha was then sidelined by shunting him to the Deposit Insurance and Credit Guarantee Corporation (DICGC), where his tenure was again lacklustre. However, a more serious charge is that in selecting Mr Sinha, the RBI ignored "the government's own well-laid criteria of minimum residual service of one year." Mr Sinha apparently retires in February.
Given the fact that Mr Mehra's letter has been sent to the Finance Minister, Finance Secretary, RBI Governor, Cabinet Secretary and Ms Omita Paul, Advisor to the FM, it is clear that an inquiry is on, since Mr Sinha's appointment has not been announced by the government. With a tenure of only until February, it seems certain that RBI may have to hunt for a new Deputy Governor, since the government is unlikely to court yet another controversy at a time when it has just been forced to sack Maharashtra Chief Minister Ashok Chavan and Mr Suresh Kalmadi, a key figure behind the loot of funds at the Commonwealth Games.
Meanwhile, Deputy Governor KC Chakrabarty remains in the doghouse, because all of Ms Thorat's portfolios have been 'temporarily' handed over to Deputy Governor Ms Shyamala Gopinath.
Indian sugar exports are expected to be the only saviours in easing overheated global prices due to shortage predictions. The future of sugar stocks depends on when the govt allows exports and how much
Just about everything seems to be going right for sugar prices. In New York, raw sugar prices reached a 29-year high. Australia has said that it could produce its smallest sugar crop in 20 years because of heavy rains. Brazil, a key sugar producer, is facing a dry spell in key parts coupled with loading problems in its ports. India on the other hand is going to produce a lot more than it initially expected and is in a position to export some of its surplus.
India is at the centre of it all for some time now. In February, when it was feared that sugar production in India would be a dismal 15 million tonnes (MT), sugar prices the world over soared. Then came the news that it was not going to be so bad (about 19MT) and sugar prices fell drastically. But not for too long. Once again sugar prices are soaring on speculation that there will be a deficit in global sugar supplies against the predictions of a 2.5MT surplus earlier.
India is in a position of power with a good monsoon under its belt. With cane production expected to be around 350MT, experts believe that India can easily produce about 25MT of sugar now. This, coupled with leftover stock from last year will make our end-of-the-year sugar position at around 32MT. Not surprisingly, sugar producers are pushing for opening up exports in a big way. In FY08 (a good production year) India exported around 5MT of sugar.
The speculation is that the Indian government will soon free up sugar exports and permit 2MT under the Open General Licence. Millers believe India will export at least 3MT this year.However, things are not that simple. India is facing a delayed crushing season this year as there is no accord between cane producers and millers over cane prices (although this is not unusual). Crushing is expected to begin in another 10 days if all goes well. In UP, a key sugarcane-producing state, the government has fixed the minimum price of cane at Rs210 per quintal. In general, what the millers pay to cane-growers is above this price anyway.
But this time the growers seem to be demanding Rs280 per quintal, a price which sugar millers claim is not viable. Last year, due to a shortfall, mills did pay these kinds of prices to producers.So far, retail sugar prices (which had touched Rs50 per kilogram this year) have remained at low levels of Rs30. With food inflation just starting to cool down in India, there is a worry that the government may take a call about not permitting too much export to maintain prices. However, so far, the market opinion is that agriculture minister Sharad Pawar will push for aggressive exports.
Meanwhile, it looks like sugar stocks will continue to surge. Shree Renuka is trading at Rs107 levels, still some way off from its year high of Rs124 in January. EID Parry has already touched a new high of Rs567 yesterday. Triveni is at Rs129, still below its high of Rs144 in March. Both Bajaj Hindusthan and Balrampur Chini are way below their highs of Rs243 in January and Rs150 in November 2009.
(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).
The domestic market is likely to see a flat-to-opening today on mixed global cues. The weekly food inflation data will also provide some direction to the market. The US markets closed higher as signs of optimism in the country’s economy spurred investors to make fresh moves. The Asian pack was mixed in early trade ahead of economic data to be announced by China and the meeting of Group of Twenty (G20) leaders, which gets underway in Seoul Korea today. The SGX Nifty was down 24.50 points at 6,285.50 against its previous close of 6,310 on Wednesday.
The market opened lower yesterday, tracking unsupportive global cues. Volatility continued with the indices moving on both sides of the neutral line on quite a few occasions. Every move into the green was followed by a dip into the negative territory. However, the broader indices stood firm trading with good gains. The see-saw continued unabated in the post-noon session with the indices touching the day’s lows towards the close of trade but the market managed to end the session just above that figure.
The Sensex ended 56.77 points (0.27%) down at 20,875, struggling hard to regain the highs seen last week. The Nifty settled at 6,275, down 25.85 points (0.41%).
Wall Street settled higher on Wednesday on positive economic data and as the dollar took a breather after four sessions of gains. Meanwhile, the Federal Reserve will conduct 18 open-market operations from 12th November through 9th December. The central bank is buying an additional $600 billion of Treasuries through June and expects to reinvest $250 billion to $300 billion of proceeds from mortgage-backed debt and agency securities into Treasuries. Besides, the number of workers filing for initial jobless claims fell by a greater-than-expected 24,000 to 435,000, the lowest level in four months.
The Dow added 10.29 points (0.09%) to close at 11,357. The S&P 500 rose 5.31 points (0.44%) to 1,218. The Nasdaq gained 15.80 points (0.62%) to close at 2,578.
Markets in Asia were mixed in early trade ahead of the announcement of economic data by the Chinese government. The two-day G20 meet, which gets underway in Seoul, will also provide cues to the regional bourses, especially in terms of currency and banking regulations.
The Hang Seng gained 0.53%, the Nikkei 225 was up 0.29% and Straits Times rose 0.23%. On the other hand, the Shanghai Composite declined 0.14%, the KLSE Composite shed 0.44%, the Seoul Composite fell by 0.03% and he Taiwan Weighted was down 0.03% in early trade. The SGX Nifty was down 24.50 points at 6,285.50 against its previous close of 6,310 on Wednesday.
Buoyed by robust tax collections so far, the government has exuded optimism that it will surpass tax collection target of Rs7.45 lakh crore this fiscal.
“Revenue target for this year is Rs7.45 lakh crore and I see no reason why we should not achieve it... As a matter of fact if things go as they are, we expect to make a modest increase over the targets,” revenue secretary Sunil Mitra told reporters on Wednesday.
He, however, refused to give any revised figures and said no new numbers have been fixed as of now. Mr Mitra said that during April-October, the government has collected over 50% of the budgeted target.