The Supreme Court also turned down plea of the CBI Director's plea for not hearing the case any further in view of the NGO refusing to disclose the name of mole who leaked the documents
The Supreme Court on Monday agreed to consider a plea for hearing allegations levelled against Ranjit Sinha, director of Central Bureau of Investigation (CBI), without knowing the name of the whistleblower in a case relating to controversial entries in the visitors' diary at his residence.
A bench headed by Justice HL Dattu sought the assistance of the special public prosecutor (SPP), appointed by it for trial in 2G cases, saying that any order passed by it may have ramifications on multi-crore scam cases.
The bench agreed to hear the plea of NGO, Centre for Public Interest Litigation (CPIL), which pleaded for recall of the apex court's earlier order.
The court had asked the NGO to reveal the name of the whistleblower in a sealed envelope.
It turned down the plea of the CBI Director's counsel Vikas Singh that the apex court should not hear the case any further in view of the NGO refusing to disclose the name of the "mole" who leaked the documents, including CBI file notings and the register.
Submitting that there has been no interference on his part in any of the cases probed by CBI, Sinha pleaded that continuance of this case even for a single day would cause more public harm and would affect 2G cases.
The bench, however, said, "We don't believe so."
Free money, like anything else that is free in a market system, tends to be wasted. If it is wasted, it doesn’t promote the growth that the markets have anticipated. If the illusion is finally dissipated, then along with it, will perhaps go the central banker’s most effective tool
Central bankers sometime seem like masters of the universe. With a few words Ben Bernanke, former chairman of the Federal Reserve (Fed) sent markets reeling in what has become known as the temper tantrum. Mario Draghi, the present chairman of the European Central Bank (ECB), is credited with saving the euro with his famous promise to do “whatever it takes.” Certainly credibility is one of the most important tools in a central banker’s arsenal. When they speak markets are supposed to listen and react. But what if they don’t?
Janet Yellen spoke last week after the monthly meeting of the Federal Reserve. As usual she made calming noises reassuring investors that interest rates would remain low for a “considerable time”, a now famous phrase. There was much speculation among commentators that it would be taken out, but it wasn’t.
After such reassurance normally interest rates and the dollar drop. With the promise of more stimulus interest rates usually retreat and along with them the dollar weakens. But that didn’t happen. US interest rates have been climbing since they reached a low of 2.33% for the ten year Treasury Bill on 27th August. They now are trading at 2.62% a 12% rise in about two weeks.
With the rise of US interest rates and the strengthening of the dollar, the FTSE Emerging Market index has fallen 5% since 8th September. This could be because of weakness in China, Brazil and Russia, but it could be about something else. According to the Bank for International Settlements (BIS), emerging markets have borrowed $375 billion between 2009 and 2012. The total number for 2013 and 2014 is undoubtedly higher. But even this number is twice what they borrowed between 2004 and 2008. With interest rates rising and currencies falling, there could be some major problems.
Janet Yellen’s soothing words certainly did not affect her own board. The Federal Reserve Act of 1913 determines the Fed’s structure. It was the last of a long line of controversy surrounding a central bank that goes back to the beginning of the republic. The result of the controversy created a rather unique organization. The Fed is made of 12 different banks from all over the US. Each of these regional banks has a president. In addition there are seven governors. The bit that decided interest rates is called the Federal Open Market Committee (FOMC). It is made of up the seven governors plus the president of the New York branch, usually considered the most important. In addition there are four presidents from the region who rotate.
Historically, the presidents have been far more hawkish, in favour of raising interest rates, than lowering them. All members, there are presently 17, participate in the discussions, but only 12 vote. Consistent with history two of the four voting bank presidents dissented from the most recent decision of the committee. They wanted to insert language implying an earlier rate rise.
All 17 also issue forecasts. All of these forecasts are combined to make up the infamous dot chart. The dot chart has one dot for each forecast. Each dot gives a forecast for the individual member for the coming years.
The interesting thing about the forecasts is that they are rising probably much faster than Yellen has communicated. The Fed members now expect the Federal Funds rate, the benchmark interest rate, to reach a median level of 1.375 % by the end of 2015. This forecast is up from 1.125 % at the June meeting. Rates forecasts even further in the future are even higher. The median rate forecast for 2016 is 2.875 % compared to 2.5 % at the June meeting.
In short, the members are forecasting higher interest rates despite Chairperson Yellen’s softer tones. Also if we assume, as many do, that interest rates will not begin to rise until June 2015, then in order to reach the forecast rate, rates will have to rise quickly. The present target rate is 0.25%. If it were to increase to 1.375% by the end of 2015 that would mean a rise of 1.125% over six months or almost 25 basis points a meeting.
Janet Yellen magic may be wearing thin and she isn’t alone. Her colleague Mario Draghi is still trying to do “whatever it takes”, but is not getting very far. This week the ECB held its first auction of cheap loans. A program with the unwieldy acronym of TLTRO (Targeted Longer-Term Refinancing Operations) Of the €400 billion on offer, only €82 were purchased. In short, as a substitute for a European QE the TLTRO fell far short.
Haruhiko Kuroda, Governor of the Bank of Japan, has instituted a massive QE program. But it has one real problem. It hasn’t really worked. Inflation is barely positive thanks only to a weak yen. The economy isn’t growing and the Japanese are getting poorer.
It is rather late in the day for what was once seen as bold experimental programs. Up to this point markets have whole-heartedly supported the torrent of free money. But free money, like anything else that is free in a market system tends to be wasted. If it is wasted it doesn’t promote the growth that the markets have anticipated. If the illusion is finally dissipated, then along with it will go perhaps the central banker’s most effective tool.
(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.)
Are we really prepared for 'Make in India', invite foreigners to come and set up shop here and 'make' all the things that they wish to, and export, where they please?
A lot of importance was attached to the visit of Chinese President Xi Jinping and the revival of trade relations with new political aspirations of both. There was great hope of China investing $100 billion to beat the Japanese planned investment of $35 billion, but in the end, 13 memorandums of understanding (MoUs) were signed, investment proposals amounted to $20 billion and the silver lining was the prospect of Indian export of several items. One of the most important items of import from India was iron ore, which was conspicuous by its absence.
Today, China is not only the largest producer of steel, but also the largest consumer. The world production of steel is around 1.6 billion tonnes, of which 47% output comes from China. Japan, US and India, in that order, are the next three large producers, but India's production of 81 million tonnes is actually a drop in the ocean of steel. In the recent past, China was the biggest consumer of low grade iron ore from Goa, which it had found a way to mix with high grade ore from Brazil and Australia to produce the type of steel needed in their country.
It may remembered that iron ore mining had to be stopped due to illegalities associated with the industry and only last year, the Supreme Court gave conditional permission to restart the mining operations, classifying the mines as category A, B and C. While category "C" was prevented from any mining operations, some units under "A" have began their work.
In the meantime, the steel industry in India has had no alternative but to import its needs of iron ore, and leading players like Jindal Steel are reported to have received shipments of over 6 million tonnes to keep their furnace burning.
Prior to the mining ban, it may be remembered that Indian exporters recklessly adopted the policy of exporting high grade iron ore, leaving the poorer cousins for consumption in domestic market. A number of them could not use the iron ore pellets made from these ores, and some quantity was exported to Iran.
Before the arrival of President Xi Jinping, there was lot of speculation that iron ore would be one of the important items on the agenda. In fact, according to the press, Kai Xue, a corporate lawyer in Beijing and adviser on international mining projects had stated, "it would have been ideal if India had offered to the Chinese President that the country would gladly release 100 million tonnes of iron ore" for export. This would have not only pleased the Chinese President, but would have reduced India's deficit with China, and more than helped their steel industry. This did not figure at all in the discussions!
Now, what has all this to do with the proposed "make in India" launch that Prime Minister Narendra Modi expects to detail this week?
To make this happen, a lot of ground work is necessary. Are we really prepared for such a huge launch, invite the foreigners to come and set up shop here and "make" all things that they wish to, and export, where they please? No, far from it! We must consider the fact that our own steel industry is on a hand to mouth existence and depends upon imported iron ore. Steel production, it must be borne in mind, is the fundamental requirement for any industry to commence its operations. How other countries tackle such a situation?
Indonesia, for instance, introduced the concept of domestic obligation - making it mandatory to meet its "national" needs first - before anything can be exported, particularly natural resources like minerals.
Similarly, in the case of China, it implemented a law to restrict export of coal by abolishing 13% VAT (introduced in 2006,). This made it possible for coal availability for the domestic industry on a priority basis.
These examples would take us back to our own basic need for simplification of procedures, clearances, licensing, lease renewals and other related environmental issues. These need to be tackled first, corrected and an "on line" clearance, as assured by Prakash Javedkar, the Environmental Minister is actually in place.
Also, hypothetically, even if an "all clear signal" is given overnight, production in the form of mining activity cannot commence straightaway. NMDC, a government owned mining corporation, for instance, doing a job well, without blemish, cannot increase its production at the drop of a hat.
In support of the Prime Minister Modi's 'Made in India' launch this week, what the Environmental Ministry and the State Machinery concerned should consider is "ad hoc" clearance of both category A and B mines, who may be allowed, with the Supreme Court's permission, to start the operations, as soon as possible, provided they "undertake" to "comply" with all the required formalities within six months. Such a Court order may also direct the concerned departments to ensure that they "clear" and complete all the "licensing, lease renewals and other related work" within 30/60 days of application of the miner.
If we do not take care about all these fundamental issues that prevent the work, we would be putting the cart before the horse!
(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.)