Money & Banking
RBI seeks global pact to curb 'beggar my neighbour' policies
Mumbai : The RBI said on Tuesday called for guidelines to curb central banks globally adopting unconventional monetary policies and seeking exchange rate or financial market interventions to restore growth which may have large adverse spillover effects on others, which then could resort to aggressive policies to gain even small positive domestic effects.
 
"Perhaps instead, countries could agree to guidelines for responsible behavior that would improve collective outcomes," Reserve Bank of India Governor Raghuram Rajan and the bank's specialist advisor Prachi Mishra jointly wrote in a series working paper titled "Rules of the Monetary Game."
 
Otherwise consequently, the world may embark on a sub-optimal collective path, the duo said, ahead of the RBI's first monetary policy for the next fiscal due next Tuesday.
 
"The bottom line is that simply because a policy is called monetary, unconventional or otherwise, it may not be beneficial on net for the world. That all monetary policies have external spillovers does not mean that they are all justified. What matters is the relative magnitude of demand creating versus demand switching effects, and the magnitude of other net financial sector spillovers, that is, the net spillovers," the paper said.
 
"Easy monetary conditions in advanced economies can lead to capital inflows, exchange rate appreciation, rapid credit growth, and asset price bubbles in emerging markets (EMs). On the other hand, monetary normalisation, or a rise in interest rates in advanced economies can cause capital outflows and exchange rate depreciation in the EMs," it added.
 
The paper warns that dangers from applying prevalent global economic models for policy purposes could perhaps be significant.
 
"For example, the choice of scenarios that are played up prominently in policy documents could be tinged by ideology," it said and suggests that towards creating a new global model, countries should engage proceed with eminent academics, there should be international seminars and discussions on the subject, and the International Monetary Fund should be involved.
 
"There can be no more important issue to understand and discuss than the international spillovers of domestic policies. Such a discussion need not take place in an environment of finger pointing and defensiveness, but as an attempt to understand what can be reasonable, and not overly intrusive, rules of conduct," it added.
 
In a commentary posted on the website of Project Syndicate last week, Rajan said that the world needs a new international agreement on the lines of Bretton Woods that created the current multilateral financial system, to prevent central banks from adopting policies that could hurt other economies.
 
He said that central banks in developed countries find various ways to justify their policies, without acknowledging that the exchange rate may be the primary channel of transmission.
 
He said the world is facing an increasingly dangerous situation and both advanced and emerging economies need to grow in order to manage domestic political tensions.
 
"If governments respond by enacting policies that divert growth from other countries, this 'beggar my neighbour' tactic will simply foster instability elsewhere. What we need, therefore, are new rules of the game," he said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Aamby Valley, foreign properties not on auction block: Sahara
Mumbai : The Sahara Group on Tuesday said that its Aamby Valley City project in Pune district, Mumbai's Hotel Sahara Star, its foreign and other properties were not in the list of 86 properties pertaining to the Sahara-SEBI case in the Supreme Court.
 
In a statement issued here, the company said the Supreme Court had directed Securities and Exchange Board of India (SEBI) to take inputs and consult with the Sahara Group while selling its properties.
 
The company said on Tuesday it had completed the payment of Rs.5,000 crore in cash component whereas only Rs.5,000 crore bank guarantee component remained to be complied with.
 
The Supreme Court on Tuesday paved the way for markets regulator SEBI to sell 86 properties of Subrata Roy-led Sahara group, worth an estimated Rs.40,000 crore, giving hope to tens of thousands of investors who put their money in its various schemes.
 
The directions from a bench of Chief Justice T.S. Thakur, Justice Anil R. Dave and Justice A.K. Sikri came after it found that the Sahara group was yet to mobilise Rs.10,000 crore for bail to secure the release of its head Subrata Roy, lodged in the Tihar jail since March 2014.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Sun Pharma acquires 14 drug brands from Novartis in Japan
Chennai : In a $293 million cash deal India's Sun Pharmaceutical Industries Ltd. has agreed to buy 14 established prescription brands from Novartis AG and Novartis Pharma AG in Japan, the Indian company said.
 
In a statement issued late Tuesday the company said that a wholly-owned subsidiary of Sun Pharma will acquire the portfolio consisting of 14 established prescription brands from Novartis for a cash consideration of $293 million.
 
"These brands have combined annualised revenues of approximately $160 million and address medical conditions across several therapeutic areas," the company said.
 
"Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorisations to Sun Pharma's subsidiary."
 
The acquired brands will be marketed by a reliable and established local marketing partner under the Sun Pharma label. The partner will also be responsible for distribution of the brands.
 
"Japan is a market of strategic interest for us. This acquisition marks Sun Pharma's foray into the Japanese prescription market and provides us an opportunity to build a larger product portfolio in the future," Dilip Shanghvi, managing director, Sun Pharma was quoted as saying in the statement.
 
As per the December-2015 IMS Data, the size of the Japanese pharmaceutical market was estimated at $73 billion, accounting for over seven percent of the $1 trillion global pharmaceutical market.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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