RBI likely to cut repo rate, first time in nine months

MUMBAI: The Reserve Bank of India (RBI) is expected to reward the government next week for its efforts to reform the economy and bring its finances under control by announcing its first cut in interest rates in nine months.

The RBI has been growing in confidence that the government, gripped by inertia for much of last year, is finally doing its bit to lift an economy that has slumped to its slowest pace of growth in a decade.

“The government has gone ahead with all the promises it had made 3 to 4 months earlier. There have been pretty substantial measures on the fiscal deficit front,” said Samiran Chakrabarty, head of research at Standard Chartered Bank in Mumbai.

“To an extent, that will be comforting for the RBI.”

Inflation is also heading in the right direction as far as the central bank is concerned. Wholesale price inflation, the main price gauge, fell to a three-year low of just over 7 percent in December.

Since mid December, yields on 10-year Indian government bonds have pulled back to 7.865 percent from above 8 percent in anticipation of a rate cut. The slide marked the first time the yield had dropped below 8 percent since early 2011.

However, the RBI remains cautious with inflation around 7 percent. Last week, Governor Duvvuri Subbarao said inflation remained too high, a comment that dashed financial market expectations for a more aggressive rate cut of 50 basis points.

Most economists expect the RBI to cut its policy repo rate by 25 basis points on Tuesday to 7.75 percent and follow it up with a cumulative 75 bps of cuts by the end of September, a Reuters poll showed last week.

“The RBI cannot be very aggressive in rate cuts. Our view is that inflation is unlikely to fall sustainably below 7 percent. There are lot of suppressed inflationary pressures that will add to it,” said Sonal Varma, India economist at Nomura in Mumbai.

The RBI last cut rates in April 2012 by 50 basis points but warned at the time there would be limited scope for further cuts.

Fiscal house

For much of last year, the government was in turmoil as a fractious coalition struggled to push through new policies to arrest an economic slide that analysts forecast will leave growth for the full-year to March 2013 at just 5.5 percent, almost half the pace seen before the global financial crisis.

But in September it announced big bang reforms in a package of measures to revive growth, saying it would open up its supermarket sector to foreign chains and allow more foreign investment in airlines and broadcasters.

More recently, it gave oil companies more room to set regulated diesel prices and in a sign of a fresh measure that could be in the pipeline, Finance Minister P. Chidambaram said in TV comments aired on Thursday that India should consider hiking taxes for the “very rich”.

The moves are intended to bolster investor sentiment, mend battered government finances and stave off a possible credit rating downgrade to junk status.

India’s fiscal deficit touched 4.13 trillion rupees in April-November, or 80.4 percent of the budgeted target for the full fiscal year through March.

The government expects a budget deficit in the current fiscal year of 5.3 percent of GDP. Economists had pencilled in a deficit of at least 6 percent of GDP, although they have narrowed that to 5.5 percent or 5.6 percent of GDP following the various government measures in recent months.

The country’s current account deficit hit a record high of 5.4 percent of GDP in July-September, although Chidambaram said the country can finance the shortfall without cutting into national reserves.

Subbarao, a hawkish outlier in 2012 when many central banks were cutting rates and putting in place other stimulus measures, was due to meet with Chidambaram for a customary pre-policy discussion on Thursday.

In October, the RBI gave uncharacteristically specific guidance, saying there was a “reasonable likelihood” of policy easing in the January-March quarter. It reiterated the same point in December.

“The earlier guidance given by the RBI and the recent steps taken by the government has led to the expectation of a 25 bps rate cut,” said Saugata Bhattacharya, an economist with Axis Bank in Mumbai.

Source Info: http://timesofindia.indiatimes.com/business/india-business/RBI-likely-to-cut-repo-rate-first-time-in-nine-months/articleshow/18220397.cms

Govt mulls treating rape cases on par with murder

MUMBAI: While opposing a blanket death penalty for all rape convicts, the state administration is of the view that the more heinous cases should be treated on par with murder offences. The state’s law and judiciary department is pushing for life sentences or even the death penalty for heinous rape cases. The department wants other rape cases to be treated on par with attempted murder cases.

The department’s views come at a time when the state is planning to amend laws governing sexual crimes against women in such a way that the amended laws act as deterrents. Last week, the state government already decided that it would amend laws governing sexual crimes against women, which includes making sexual harassment and molestation non-bailable.
The Indian Penal Code (IPC) categorizes rape offences in two categories. It advocates a higher punishment for the rapes of minors and pregnant women, gang rapes and for cases in which public servants, police, jail officials and hospital staffers are accused of rape. Such cases are categorized under Section 376(2) of the IPC and invite a sentence of 10 years to life. Due to the ghastly nature of such crimes, and to create a deterrent, a proposal to introduce the death penalty in such cases in now under consideration, senior state officials revealed.

In other rape cases — those that fall under Section 376(1) of the IPC — the law and judiciary department wants the minimum sentence increased from seven years to 10 years. The administration is also pushing for amendments to ensure that anticipatory bail and regular bail are denied in heinous rape cases; they would be given in only exceptional circumstances.

The government is also pushing for new riders in the law that allows commutation or remission of sentences. Current IPC laws permit a prisoner serving a life sentence to be released after 14 years of imprisonment. The department is of the view that a new clause should be introduced to make the judiciary’s assent necessary before such remission is given. It is also of the view that the commutation of a sentence should take into account the previous antecedents of the accused, his/her age and his behaviour as a prisoner.

Russia snubs Google for Android style tablet

The Russian government has built a tablet computer using an Android-style operating system but deliberately avoids Google. The defence ministry unveiled the encrypted prototype at a Berlin electronics show this week according to a report by AFP.

Russia is wary of Google’s operating system, reportedly believing that data collected and stored in Google databases could find its way into the hands of the US government. This could, Russia believes, expose some of their most sensitive communications to the Americans.

The project has been in development for five years and the project’s manager has said that it is completely hack proof. He also said that many Russians have little trust in Google’s security and are afraid that details could very easily be leaked through using it.

It is largely intended for state officials, although it will be on sale to the public by the end of the year at a cost of 15,000 roubles (£291). The military version will be shock-proof and waterproof and will have all the functional capabilities of an Android operating system.

The project has been run out of a military research facility but is privately funded. It was presented in Berlin to Deputy Prime Minister Dmitry Rogozin, who oversees the military’s technological innovation. This is not the first time that Russia has developed technological projects driven out of fears over US systems.

It developed the Global Navigation Satellite System (GLONASS), a rival of the Global Positioning System, devised to help generals train their missiles on targets. The concept initially suffered but the system was eventually included in the software of Apple’s latest iPhone.

Source: http://www.itproportal.com/2012/10/03/samsung-galaxy-s3-beats-iphone-5-in-display-face-off/