The Bench asked Bhushan to name the whistleblower in the sealed envelope and said that it will go into the merits of allegations after knowing the source of information
The Supreme Court on Monday directed advocate Prashant Bhushan, who has levelled allegations against Ranjit Sinha, the director of Central Bureau of Investigation (CBI) of protecting the accused in the 2G case, to reveal the name of the whistleblower from whom he got CBI documents and guest list at Sinha's residence.
A Bench headed by Justice HL Dattu asked Bhushan to name the whistleblower in the sealed envelope on the next date of hearing and said that it will go into the merits of allegations after knowing the source of information, as it may have ramification on the reputation of the director and also affect the ongoing trial in the 2G scam.
It said that the affidavit filed by Bhushan is not in consonance with the Supreme Court rules and asked him to reveal the source from whom he got all the documents.
The CBI director questioned the very existence of the diary before the apex court and said that 90 per cent of the entries were fudged though some entries may be genuine.
Advocate Vikash Singh, appearing for the top cop, submitted that somebody else is controlling the proceedings in the case and raised questions on how a media group published a story in advance that Bhushan will be depositing the original guest list before the apex court.
He alleged that a corporate house is working behind all these controversies and it is intended to benefit the accused in the 2G scam.
The Bench also wanted to know the stand of CBI in the controversy but the senior advocate K K Venugopal, appearing for the agency, refused to get into it, saying that it is a matter between advocate Prashant Bhushan and the director.
It then directed its registry to keep all the documents and affidavits filed by CBI director in a sealed cover and deposit them with the Secretary General for safe custody.
The apex court posted the matter for further hearing on 22nd September.
What is needed is a pricing policy that should be market-driven. Policy on gas pricing should have to be realistic and practical!
It may be recalled that the gas price saga actually began in January this year. The gazetted new price could not be implemented with effect from 1st April, due to the Election Commission's directive, that the same may influence the voters. This was postponed, as reported earlier, and the Bharatiya Janata Party (BJP) government then decided to review the pricing situation and deferred it for 90 days, setting itself a deadline date of 30th September. We are just two weeks from the D-day!
It appears that the high level panel, consisting of senior secretaries of Power, Fertiliser, Petroleum & Gas ministries have made in depth studies and their findings in a report will finally be reviewed with the Finance Minister. A final call on the gas price applicable will be made.
At the moment, gas price continues to be $4.2 per million British thermal unit (mmBtu). As against this, the imported gas price, on a long term supply basis would have been $15, while the spot price hovered around $16 per mmBtu. The Rangarajan Committee had recommended doubling the price to $8.40 per mmBtu.
The Kelkar Committee, it may be remembered, had suggested that the non-renewable resource like gas has to be sold by auction to the highest bidder. The Rangarajan Committee, as mentioned above, came with a price level of $8.40 which, compared to the current international price, is 50% cheaper!
Until such time India is able to source its own gas, from known wells, or from newly to be discovered wells, it will still have to import at least 30% of its needs. But then, the needs are rising by the hour! And the international explorers are literally scared of the (New Exploration Licensing Policy (NELP) because of the uncertainty associated with exploration on one hand and the unknown "price" factor that may come to play on the other!
What is needed is a pricing policy that should be market-driven. Policy on such issue should have to be realistic and practical!
For instance, let us take a hypothetical case. In the Kolar Gold Mines in Karnataka, or in some other state like Rajasthan, our geologists (or some foreign explorer) may discover mammoth strains of gold-bearing rocks. If these are properly mined and processed, let's say, India would be able to produce a few hundred tonnes of gold every year. Would the government then decide and announce a selling price of this gold at 50% or even 15% cheaper than the international market price, because it has been "found" indigenously? Or, will they turn around smugly and say the gold price will fall in line with the international market? Hence, pricing of products of such nature ought to be based on market conditions.
As for the gas, even the government-owned ONGC has been demanding a workable price of $7 per mmBtu to make off-shore operations viable. This does not mean that on shore discovered gas ought to be priced lower! Profit motivation will drive enterprises to work harder and seriously to focus on their sole aim of discovering such valuable products.
Therefore, bearing in mind our growing needs of gas, it is hoped that when the final call is taken on pricing, the following factors may be borne in mind:
a) decide the price of gas in rupees, valid for six months, with effect from 1 October 2014
b) international price of gas has no bearing on the indigenous production; if at all any link is to be established, as a guiding factor, than, any price variation over plus/minus 5% over the current price of $15 will be adjusted for the next six months, starting 1st April 2015. This will be done automatically, without any suspension of supplies.
c) fertiliser units will be given their full needs from available supplies, but in the same pattern as of now. They need to price their final fertiliser products based on their own actual cost of both indigenous and imported gas; government must gradually reduce the subsidy
d) gas producers need to be encouraged to retain 25% of any increased production that they may be able to achieve, from current levels, and be allowed to offer the same at the market price
e) FDIs in NELP - if and when they "discover" oil/gas, they shall be paid in denominated foreign currency, say in dollars; price to be applicable in the same manner as explained for rupee payment to indigenous explorer, like Reliance, ONGC, Cairn or Gujarat Gas or any other
f) in case of foreign partner of the contractor, like in case of Reliance having BP and Niko, they need to be assured that their profits shall be repatriated in the normal way, as per exchange rate ruling on the day of transaction
g) do not mix the imported and indigenous gas prices to arrive at any "pooling price", as this will only create opportunities for lengthy debates
When such an announcement is made, there are bound to be some counter proposals/ requests from the gas producers. These should be considered without prejudice so that work goes on without interruption, and thereby bring trust and confidence in the international market.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
It depends on two crucial questions: the effect of tighter monetary policy in the US and whether the Chinese real estate slowdown reverses or accelerates
Since the end of August, the American 10-year treasury yields have risen 11% to 2.60% from 2.33% last Friday. All of this is based on the strength of the US economy. The US had a difficult start to the year but the last estimate projected a very healthy 4% increase on gross domestic product (GDP). The third quantitative easing program (QE3) is scheduled to end next month. The question is when will the US central bank, the Federal Reserve (Fed), raise interest rates?
The consensus estimate has been next summer, but with the American economy rolling along it might be earlier. Up to now the Fed has indicated that it intends to keep interest rates low for a “considerable time”. Many governors of the Fed, both hawks and doves, have been advocating taking out those words. They feel the US economy is now strong enough to do without life support. So there are no worries about the world’s largest economy, but what about the others? Are they getting stronger as well?
Some analysts think so. The strategists at Black Rock, the world’s largest funds managers, cite the global Purchasing Managers Index (PMI), which has been stable at 52.5 for most of the year. This indicates a modest expansion. The global services PMI has done even better. They also reference two other indicators. Tight credit spreads are an indication of stronger credit conditions that usually coincide with faster growth. Widening credit spreads indicate worsening credit conditions and slower growth. Credit spreads are generally pretty tight which should be encouraging. Third, prices for basic industrial metals have been stable. Falling prices would mean a slowdown. Instead they have rebounded from lows earlier in the year.
But there are others who are not so sure. The International Monetary Fund (IMF) predicted that global growth would average 3.4% this year. Their chief, Christine Legarde, recently stated that the forecast might be slightly lower in the next official forecast due in October.
While the US seems fine, there are other parts of the world that are having real problems that are likely to continue. Italy’s economy, which hasn’t really recovered from the recession, contracted for the first time in 14 months. The French manufacturing sector shrank for a fourth consecutive month and its economy is stagnant. But that is better than Europe’s power house, Germany, whose economy contracted in August and September. Its manufacturing hit an 11-month low.
Price inflation to July in Europe was a mere 0.4%. This was small enough to encourage the European Central Bank (ECB) to start a new stimulus program. The program involves the ECB purchasing Asset Backed Securities or ABS. The problem is that there aren’t enough of them to make a large difference. The ECB also asked the member companies for guarantees for ABSs of lesser quality. The countries refused. So it looks like this program, dubbed QE lite, will basically be going nowhere.
Europe is also weighed down by the sanctions against Russia for its invasion of Ukraine. These sanctions have been especially difficult for Germany since Russia is its 11th largest trading partner after Japan.
Japan has not had similar difficulties with its massive QE program. The Bank of Japan can buy as many Japanese Government Bonds (JGBs) as it wishes. However, the massive stimulus has had about the same effect as the QE lite in Europe.
The Japanese debt is the highest in the world for developed countries at 243%. To bring this down the Japanese increased their national sales tax from 5% to 8%. The reaction was swift. The GDP fell in both August and September. The September contraction was at an annualized rate of -7.1%. A fall was expected, but not a crash.
No doubt the Japanese response will be more “Abenomics”; purchases of more JGBs by the Bank of Japan and a promise of more fiscal stimulus. But the impact of this program on ordinary Japanese citizens has been less than salutary. The debased currency is making imports, mostly fuel, more expensive, which is increasing inflation. Inflation, together with higher taxes, has impacted on real household income. It has fallen by an average of 6% since April. So, the political support for Prime Minister Abe and his program is waning.
Like the developed countries, emerging markets seem to be on two separate paths. Consensus for Brazil’s GDP growth has fallen for the 15th consecutive week. It went negative in August down at a -0.9% annual rate. South Africa is still positive. It grew at an annualized rate of 1.0% in August, but that was down from 1.6% in May. For the emerging markets as a whole, excluding China, the forecast growth is 2.1% far below pre crisis levels and comparable to developed countries.
The economies of both Russia and Argentina are forecast to contract. Issues of both these countries are due to almost unbelievable government mismanagement. Turkey has also been subject to political issues, but it also has nasty neighbours. The upheavals in Russia and Iraq are having a detrimental effect on its economy. Its growth went negative in the most recent quarter. On an annual basis growth has declined from 4% in the spring to 2% by the latest figures.
The two stars of the emerging markets are Indonesia and India. The question concerning Indonesia is, of course, China. China is experiencing a real estate slow down. Like the US subprime crisis a real estate slow down in China could easily metastasize into a full blown recession or worse for three reasons. First, real estate and other industries make up 20% of the Chinese economy, far more than in the US and other countries. Second, real estate received much of its financing from the shadow banking system. The combination of asymmetry of maturities and high interest rates could be ruinous. Finally, real estate or more specifically land sales make up 60% of heavily indebted local government income.
If real estate prices continue to fall in China, it will reverberate to all of its many trading partners. These include many commodities countries like Indonesia, Brazil and even Canada. Perhaps only India with its limited dependence on exports is immune to problems from China.
Will growth in North America and India be sufficient to revitalize the rest of the world? Perhaps. But it depends on two crucial questions. What will be the effect of tighter monetary policy in the US? And whether the Chinese real estate slowdown reverses or accelerates? It may be a bumpy fall.
(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first-hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and speaks four languages.)