RBI governor meets FM ahead of credit policy review

The central bank is scheduled to announce the first quarterly review of credit policy for 2011-12 on 26th July. It is widely believed that the RBI will increase short term lending (repo) and borrowing (reverse repo) rates by another 25 basis points

New Delhi: Amid fears that there would be another round of interest rate hikes to tame inflation, Reserve Bank of India (RBI) governor D Subbarao met finance minister Pranab Mukherjee here on Thursday, ahead of the central bank's monetary policy review on Tuesday, reports PTI.

"I have come to review the macro-economic situation with the finance minister before the policy review, slated for 26th July 26," Mr Subbarao said after meeting Mr Mukherjee. The meeting was also attended by other senior officials of the finance ministry.

The central bank is scheduled to announce the first quarterly review of credit policy for 2011-12 on 26th July. It is widely believed that the RBI will increase short term lending (repo) and borrowing (reverse repo) rates by another 25 basis points.

The RBI has increased these key rates 10 times since March 2010 to tame the rising prices. They have gone up by 250 basis points (2.5%) since then, making loans costlier for both industry as well as consumers.

The headline inflation for June at 9.44% is much above the comfort zone of 5%-6%.

The central bank faces a challenging task of managing the inflationary pressure at a time when the industrial growth has started showing signs of slowing down.

Besides, the resulting moderation of overall economic growth, gross domestic product (GDP) is a major concern before RBI.

The government has already lowered India's GDP projection for 2011-12 to 8.6% from the earlier estimate of about 9% on account of slowdown in industry output.

The factory output growth rate, as measured by the Index of Industrial Production (IIP), dipped to 9-month low of 5.6% in May due to a poor showing by the manufacturing and mining sectors and lower offtake of capital goods.


Enough is enough; we need to hit back at terror

Ordinary rules are not going to help. We need a law similar to POTA. Investing in CCTVs for major cities may be a deterrent. But most of all, the terrorist camps must be knocked out

"Cry havoc, and let slip the dogs of war"

- William Shakespeare

I am not a warmonger. No sensitive human being can possibly be a warmonger. And I am not talking about war with another state, like Pakistan, with its millions of innocent people led clandestinely by a few criminals in the ISI.

I am beating the drums for a war on terror. Any sensitive human being would demand an immediate counterattack on terror. And we have very human reasons for demanding that terrorism be wiped out from the earth.

I recall Shylock's speech in Shakespeare's The Merchant of Venice: "Hath a Jew no eyes? Hath not a Jew hands, organs, dimensions, senses, affections, passions, fed with food, hurt with the same weapons, subject to the same diseases, healed by the same means, warmed and cooled by the same winter and summer, as a Christian is? If you prick us, do we not bleed? If you tickle us, do we not laugh? If you poison us, do we not die? And if you wrong us, shall we not revenge?"

Substitute the word Indian for Jew and the word terrorist for Christian and we have a manifesto for tackling terrorism.

RK Raghavan, former director of the Central Bureau of Investigation, wrote in a blog a few days after the 13/7 Mumbai blasts: "My guess is there are not more than 1,000 of the really dangerous ones who are willing to go to any length to kill and maim. It should not be difficult to defang them with the help of solid intelligence. If we are not clever enough to ferret out these 1,000 men, we do not deserve to be in the business of fighting terror".

Mr Raghavan suggested re-enactment of a law similar to the Prevention of Terrorism Act (POTA). "However much it was abused, POTA was an essential weapon that strengthened the government's hands. Any political party which opposes a similar legislation now does not deserve to rule this country. The ordinary rules of evidence are not going to help the cause. The US decision to call the Guantanamo detenus as 'enemy combatants' may have been harsh. But it seems to have helped."

A facility to "sterilise" terrorists and terror suspects, similar to the one the US has in Guantanamo Bay, is necessary for India, Mr Raghavan said.

It is worth quoting extensively from Mr Raghavan's blog. He suggested a "national intelligence force which would draw from the states as well as the Intelligence Bureau and would concentrate on identifying terrorists as well as their sympathisers. Anything else will not work."

"The terrorist focus is on crowded public places. He invariably strikes at twilight. We know that a large measure of protection is given by CCTV cameras in crowded places. London has greatly benefited from the CCTVs installed on all important roads." A healthy investment in this area in all major cities will be a big deterrent that can help prevent attacks or facilitate investigation, he said.

A few days ago, US secretary of state Hillary Clinton thundered in Delhi: "We cannot tolerate a safe haven for terrorists anywhere…We made it clear (to Pakistan) that there was an absolute international responsibility to co-operate to bring the perpetrators to justice." US president Barack Obama said on the day of the Mumbai blasts that the US would do all it can to help India fight terrorists.

All the world (and its pet cat) knows that the safest havens for terrorists are in Pakistan Occupied Kashmir (PoK) and in Pakistan itself. The locations have been pinpointed by US intelligence and other satellites which can pick a cigarette packet on the ground from a couple of miles up in the sky.

So, Mr Obama and Mrs Clinton, how about redirecting a dozen or so of your drones flying west, to fly north-east? How about using the drones with which you are hammering Afghanistan to wipe out terrorist camps and havens in PoK and Pakistan?

A guerrilla force or terrorist force cannot function without a base from which it gets the fullest backing. The Khalistani and Assam terrorists disappeared into the ground when the people of Punjab and Assam got sick of them and stopped supporting them. Knock out the terrorist camps and all of Osama's mind-bended young men will become headless chickens and we can all go back to earning our living peacefully.

But canny Clinton left herself and the US an escape clause. She said: "Obviously there is a limit to what the US can do, but we intend to continue to press as hard as possible."

No drone attacks then. Looks like the Indian Air Force will have to take out the terrorist camps.

(R Vijayaraghavan has been a professional journalist for more than four decades, specialising in finance, business and politics. He conceived and helped to launch Business Line, the financial daily of The Hindu group. He can be contacted at [email protected].)




5 years ago

Thank you Mr Vijayaraghavan for reflecting my views in " where is the guarantee..". Unless we destroy the POK terrorists camp we would be only cutting a soory figure in the world. Israel China etc have time and again shown that agression against its neighbour as a retaliatory measure is permissable. We need PM of Lalbaghadur Sastri's attitude while dealing with pakistan.

Panoramic Universal, the company that made Moneylife change its stock-picking methodology

The unusual rise in the stock price of Panoramic Universal witnessed some years ago was proof of how Indian stocks can be ramped up brazenly. Now, an investigation has alleged that the company has been involved in money laundering. But the regulators choose to remain silent

In 2007, the sharp rise of Panoramic Universal's stock price automatically short-listed it among Moneylife's list of stocks worth watching.

A look at its website and the assets listed there made us wonder about the very-steep-and-too-fast rise in the price of this tiny Pune-based company. This rang alarm bells about how Indian stocks can be ramped up so brazenly, and over such appreciation within a single year, or even a few months, that can skew the data over a 10-year period.

Moneylife reacted to this by changing our stock picking methodology to exclude tiny companies and those which showed abnormal price rallies. Strangely enough, while we took corrective action, the two national stock exchanges-the first-line regulator-and the Securities and Exchange Board of India (SEBI), which is mandated to protect investors, has remained somnolent.

In fact, Moneylife continues to regularly highlight the many stocks that are ramped up (mainly on the Bombay Stock Exchange, due to legacy issues) in the 'Street Beat' section of the magazine under the headlined 'Unquoted'. But nothing seems to awaken the regulator from its deep slumber or painfully slow investigation.

Panoramic's 'dubious' business claims and involvement in money laundering has been exposed in the latest issue of Tehelka weekly news magazine. The company's chairman, Sudhir Moravekar, is the owner of a Rs1,000 crore empire, spanning hotels, software development, tourism, manufacturing and real estate. The Tehelka special investigation reports that he has hoarded Rs200 crore in US banks between 2005 and 2010.

According to the report, despite being in existence since a long time the company has managed to escape the regulatory scanner. That was till whistleblowers within the company blew the lid off its money-laundering activity, which involved "transferring small amounts of money, almost on a daily basis, against seemingly bogus invoices".

One of the areas that should have raised eyebrows is the company's hotel business which managed to book astonishing profits, when the sector was reeling on account of the global economic recession. The hotel occupancy rates were dismal, but revenues were huge.

Not one, but three employees from the US subsidiary, Panoramic Ace Properties, alleged that the company was involved in massive laundering of money.

The first information about the company's wrongdoings was lodged by Arvind Kumar with the Major Economic Crimes Bureau of Manhattan at New York County District Attorney. After lodging a formal complaint with the US authorities, Mr Kumar resigned from the company. Along with him, two more company employees, Joseph Steele and Carol Brown Surprenant (both US nationals), also put in their papers and set up the Panoramic American Whistle Blowers Protection & Welfare Association.

Suspecting that both Joseph and Carol were conducting enquiries into the company's funds, they were asked to leave, Mr Kumar is quoted as saying by Tehelka.

However, the communication between the whistleblowers and the Manhattan DA suggests that the US authorities weren't keen on detailed investigations, saying that there was no clear US law broken.

In India, Tehelka reports, the company in being investigated by the Central Board of Direct Taxes (CBDT).

A senior income-tax official was quoted in the news report as saying that Rs200 crore might just be a fraction of the total money allegedly laundered by the company over the past 10 years. "It's the whistleblowers from just one subsidiary of the company who have unearthed Rs200 crore laundered against bogus invoices raised in the name of hospitality consultancy. The company runs dozens of such subsidiaries, both in India and abroad. Many subsidiaries had also been shut down and new ones were opened. We are investigating all of them and following the money trail," said the investigator who requested anonymity.

Tehelka also reported that in 1996, Mr Moravekar launched a dubious scheme named the Pancard club, through which he raised a substantial amount of money. This is now also under investigation. The Pancard club scheme promised a stay for seven days in a hotel every year, on the payment of a small subscription fee. But, if a customer chose not to avail of the facility, he would be reimbursed the full annual fee along with some interest.

Surprisingly, the actual source of such huge funds remains to be traced. Whether it is coming from legitimate business or otherwise, has to be ascertained by the investigating authorities.


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