Indian Holocaust My Father`s Life and Time, Chapter: Nine Hundred Forty Two

Palash Biswas

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President Obama summoned congressional leaders to a Friday summit at the White House in a last-ditch effort to protect taxpayers, unemployed workers and the fragile U.S.Obama tries his best to avoid taxation against under previleged masses while Indian Hegemony tilts the balance against the excluded excommunicated majority.

"Our coal, petroleum products and natural gas are all priced well below international prices. This also means that electricity is effectively underpriced," the Indian prime minister said.

The difference in attitude is all about the mandate in question!

Domestic gains were in line with Asian shares that gained on Friday as investors continued to eye the US 'fiscal cliff' negotiations amid news lawmakers will meet on Sunday in a final attempt to hammer out a deal.On the other hand,Prime Minister Manmohan Singh  pitched for difficult reform measures at the National Development Council (NDC) meeting, which saw the average 12th Plan gross domestic product (GDP) growth target scaled down to eight per cent from the earlier estimate of 9-9.5 per cent. Singh dubbed even the revised target “ambitious” and warned higher growth would not be delivered with a “business-as-usual” approach.The total gross budgetary support in the 12th Plan document was raised to Rs 35,68,626 crore — a 124.53 per cent rise over that in the 11th Plan.Singh also called for a phased reduction in energy subsidies and an early implementation of the Goods and Services Tax.Meanwhile, as it has been expected during the presidential elections, the President of India voices India Incs and MNCs.

The condition of the 23-year-old Delhi gangrape survivor has worsened. According to a health bulletin from the Mount Elizabeth Hospital in Singapore, the condition of the survivor has taken a turn for the worse.On the other hand,Indian benchmark indices settled the last expiry week of December month higher led by oil & gas, real estate and power stocks. Market wins unilaterally against the social political turmoil.Meanwhile, superpower India flexes its muscles as tests for sending India's first manned mission into space are in "advanced" stages with the Indian Air Force (IAF) developing necessary parameters for selection of suitable candidates.

In Hyderabad,President Pranab Mukherjee has called for immediate political consensus on major economic reforms in the country to avert possible balance of payments (BoP) crisis that could emerge from slowing growth in exports and increasing imports.Addressing captains of the industry in Hyderabad on Friday evening, he said though there was no immediate need to press panic button in view of $300b of forex reserves the BoP crisis could take severe proportion if corrective steps weren't taken right now.He appreciated the Planning Commission and Finance Ministry for pruning down the growth projections for 12th five year plan period at around 8%. However, Pranab said, even to achieve the revised targets, the country needs FIIs and FDI for substantially funding its forex requirements and balancing trade gap.Reports Economic Times.

"There comes the need for making major economic reforms. I am happy that certain measures were already approved by the Parliament including the Banking Law amendment bill. But there are still certain other areas where collective wisdom of country's political establishment will have to reflect. This is because the economic development requires a broad consensus," said Pranab.

Referring to the adverse impacts that the European economic crisis caused to global economy, including emerging economies like India, Pranab sought "innovative solutions to address our problems."

As a part of this, he sought the support of all the political parties to expedite implementation of the goods and services tax ( GST) which would substantially improve the revenues of states and centre. "We shall have to come out of our mindset. The services sector is expanding very fast and therefore the states are bound to have share in services, which will augment their resources," he said, addressing industry representatives at the meeting organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci).

He said the country can achieve the revised economic growth through rapid growth in various sectors, moderate rate of inflation, robust exports and manufacturing. "For the last 10-12 years, the contribution of manufacturing sector is hovering at around 14-16%, which came down sharply during 2010-12 to 2.5%. Therefore, the new manufacturing policy was announced to achieve 25% of GDP from manufacturing, which provides jobs and generates resources."

Pranab stressed on the need for a balanced economic development through fair contribution from agriculture, services and manufacturing, while seeking to ensure that the benefits of growth reached public through appropriate delivery mechanism. "If we cannot provide relief to the people, it could lead to social unrest and that will have serious repercussions."

India's foreign exchange reserves were at $296.54 billion as of Decemeber 21, compared with $296.63 billion in the previous week, the central bank said in its weekly statistical supplement on Friday.Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves, the Reserve Bank of India said.Foreign exchange reserves include India's Reserve Tranche position in the International Monetary Fund (IMF).

President Barack Obama was holding a last-chance meeting with Congressional leaders Friday to discuss how to avoid austerity measures that kick in next week and threaten to spin the country back into recession. Grumbling senators, called back to Washington, found themselves little to do, while the House of Representatives wasn’t convening until Sunday evening.

There was no sign that a deal would be reached in time to avoid the so-called “fiscal cliff” of tax increases for nearly every American and deep spending cuts across the board.

Obama’s meeting with Congressional leaders would be the first since Nov. 16. The president, who had cut short his Hawaiian holiday to return to Washington, called for the meeting as top lawmakers blamed each other while claiming to be open to a reasonable last-minute bargain.

“I don’t know timewise how it can happen now,” a grumpy Senate Democratic Leader Harry Reid said.

Despite early talk of a grand bargain between Obama and the top Republican negotiator, House Speaker John Boehner, that would reduce government deficits by more than $2 trillion, expectations Friday were far less ambitious.

Both the White House and Congress are in this situation because of their inability, or unwillingness, in recent years to come to terms with the country’s chronic deficit spending. A bitterly divided Congress hasn’t helped.

Adding pressure is this week’s warning from Treasury Secretary Timothy Geithner that the government would hit its $16.4 trillion borrowing limit on Monday, the final day of the year. That would make it harder for the U.S. to pay its bills.

Republicans and Democrats said privately that any agreement would likely include an extension of middle-class tax cuts that had been set to expire at the end of the year, with increased tax rates at upper incomes — a priority that was central to Obama’s re-election campaign.

The deal also would likely put off the scheduled spending cuts and extend expiring unemployment benefits, officials said.

Some in Congress say this only delays the tough decisions.

“We’ll do some small deal and we’ll create another fiscal cliff to deal with the fiscal cliff,” Sen. Bob Corker told CBS on Friday. Corker said there has been “a total lack of courage, lack of leadership” in Washington.

Even to reach a lesser deal now, Obama and Reid would have to propose a package that Senate Republican Leader Mitch McConnell would agree not to block.

McConnell on Thursday warned, “Republicans aren’t about to write a blank check for anything the Democrats put forward just because we find ourselves at the edge of the cliff.”

Nevertheless, he said he told Obama in a phone call late Wednesday that “we’re all happy to look at whatever he proposes.”

If a deal were to pass the Democratic-controlled Senate, Boehner would have to agree to take it to the floor in the Republican-controlled House.

Boehner discussed the fiscal cliff with Republican members in a conference call Thursday. Rep. Tom Cole, an ally of the speaker, did not rule out Republican support for some increase in tax rates — which Republicans usually don’t like.

Boehner, McConnell, Reid and House Democratic Leader Nancy Pelosi are all scheduled to attend Friday’s White House meeting.

If a deal is not possible, it should become evident then. If that occurs, Obama and the leaders would leave the resolution to the next Congress to address in January.

Such a delay could unnerve the stock market, which performed erratically Thursday amid the developments in Washington. Economists say that if the tax increases are allowed to hit most Americans and if the spending cuts aren’t scaled back, the recovering but fragile economy could sustain a shock.

But a sentiment is taking hold that Congress could weather the fiscal cliff without significant economic consequences if it acts decisively next month.

The debate over spending cuts, however, would have to start anew.


Finance Minister P Chidambaram said some tough decisions taken by the government recently may have caused "immediate pain" but were necessary to bring down fiscal deficit.

Addressing the National Development Council (NDC) meeting here, the Finance Minister said: "It was imperative to contain the fiscal deficit by augmenting resources and controlling expenditure.

"...some measures may cause immediate pain but this was necessary to ensure that the fiscal deficit came down to 3 per cent in the next three years. Steps were also being taken to contain the Current Account Deficit (CAD)."

The government in the recent past has hiked diesel prices by over Rs 5 per litre and capped the number of subsidised LPG cylinders to six per family in a year.

The Minister also underlined the need to control gold import, which has contributed USD 64 billion to the widening CAD.

Chidambaram, however, expressed optimism that the Indian economy would continue to grow at a healthy rate despite the global economic troubles.

Nothing has to change and the change being no goal at all, but the meeting also became a platform for political shadow-boxing, with Tamil Nadu Chief Minister J Jayalalithaa staging a walkout, citing inadequate time given to her; and her counterpart in Gujarat, Narendra Modi, talking about a credibility crisis.Some CMs questioned the government’s handling of the economy, besides highlighting that a fuel shortage was affecting power plants. In her speech, Jayalalithaa said growth slowdown was a result of the Centre’s poor macroeconomic management.

As he exits India's leading business conglomerate, Tata group Chairman Ratan Tata today said India's difficult economic environment will most likely continue in the next year but its growth will be reestablished after the present 'passing phase'.Ratan Tata in his farewell letter said there will be great pressure on Tata cos to reinvent themselves and to dramatically reduce costs.Ratan Tata, who led the transformation of the Tata group from a conventional corporate house into a $100 billion global conglomerate with high-profile acquisitions abroad, retires today ending a 50-year run in one of India's oldest business empires.

There were quite a few expectations during budget(March 2012), but announcements like GAAR (taxation on FIIs), retrospective change in tax laws on foreign investments and almost no-progress on GST and DTC were major disappointments.

However, post-September 2012 government began making positive announcements and taking positive actions, which revived the spirit of investors, especially foreign investors. Quite a few policy decisions like FDI in multi-brand retail, loan recast for SEBs, diesel-price hike, FDI in aviation and the new Banking Bill have boosted the sentiments for Indian equities and revived hope for Indian economy delivering higher growth in the foreseeable future.


A day after Prime Minister Manmohan Singh called for phased increase in energy prices, Planning Commission Deputy Chairman Montek Singh Ahluwalia said failure to do so would push up fiscal deficit which is too high.

"Any government particularly in democracy would want to avoid increasing the price. What the public doesn't seem to realise is that if you don't increase the price...there would be consequences," he said in an interview to a private TV channel.

The consequences of not raising the prices of petroleum goods, Ahluwalia said, would be rise in subsidy bill, more burden on the budget, lesser resources for social sector schemes and deterioration in health of oil companies.

Yesterday, while addressing the National Development Council meeting, the Prime Minister had made a strong case for phased increase in price of petroleum products, coal and power.

Ahluwalia said, "The total under recovery (on petroleum products) is about Rs 160 thousand crore even after the recent diesel price hike. Some of it will go as a burden on the budget."

Admitting that petrol price is even taxed beyond what pure international pricing would suggest he pointed out that diesel is underpriced and LPG is hugely underpriced.

Justifying the capping of cooking gas cylinders, he said, "We are not getting enough appreciation that these things are necessary."

Pitching for aligning the energy prices in India with global rates he said, "We will need to reduce that burden (of subsidies on energy) if you want all the health expenditure etc."

"You can't load all this (under-recoveries) on the petroleum companies unless you want the oil sector to collapse. We should never have allowed petroleum subsidies to reach the level they have. They are at an unsustainable level," he added.

Risks to India's macro-economic stability have increased on the back of an economic slowdown, high inflation, and ballooning fiscal and current account deficits, the Reserve Bank of India said in a report on Friday.

A slowdown in both domestic savings and investment demand, as well as a moderation in consumption have also emerged as threats to macroeconomic stability, the central bank said in its financial stability report (FSR).

"The overall macro-economic risks in the financial system seem to have increased since the publication of the previous FSR in June 2012," the RBI wrote in the report.

India's economy is expected to grow 5.7-5.9 per cent for the fiscal year ending in March, the slowest since 2002/03. Growth prospects also remain below the recent trend of double-digits, with Prime Minister Manmohan Singh this week calling the five-year government plan for 8 per cent expansion "ambitious."

The current account deficit also remains a concern as Asia's third largest economy has seen exports fall due to weak demand in key markets like the United States and Europe, while imports of gold and oil have remained high.

On the fiscal side, the government could see a shortfall in tax and non-tax revenue because of the economic slowdown, and is at risk of overshooting its expenditure targets, the RBI said.

The RBI added data from banks showed a significant portion of foreign exchange exposures at companies remained unhedged, posing another risk to macro-economic stability.

"This is especially disquieting given that the exchange rate volatility has been higher in India in comparison to other emerging market currencies as well as those of advanced economies," the central bank wrote in the report.

The RBI also said profitability at banks may come under pressure in coming quarters with gross non-performing assets (NPA) continuing to tread above the credit growth and on the back of rising slippages.

State-run banks saw a high degree of deterioration in asset quality compared with its peers. The gross NPA for all banks rose to 3.6 per cent at the end of September versus 2.9 per cent at the end of March, the RBI said.

The RBI said if the adverse macroeconomic conditions persists, the system level gross NPA could rise from 3.6 per cent at end of September to 4 per cent by end of March 2013 and 4.4 per cent by end of March 2014.

Euro doomsayers adjust predictions after 2012 apocalypse averted

Back in May, as the euro zone veered deeper into crisis, Nobel Prize-winning economist Paul Krugman penned one of his gloomiest columns about the single currency, a piece in the New York Times entitled "Apocalypse Fairly Soon".

"Suddenly, it has become easy to see how the euro - that grand, flawed experiment in monetary union without political union - could come apart at the seams," Krugman wrote. "We're not talking about a distant prospect, either. Things could fall apart with stunning speed, in a matter of months, not years."

Krugman was far from being alone in predicting imminent doom for the euro in 2012. Billionaire investor George Soros told a conference in Italy in early June that Germany had a mere three-month window to avert European disaster.

Then in July, Willem Buiter, chief economist at Citigroup and former Bank of England policymaker, raised the probability that Greece would leave the euro to 90 per cent, even going so far as to provide a date on which it might occur.

Buiter's D-Day - Jan. 1, 2013 - falls next week. And yet no one now believes a "Grexit", or catastrophic implosion of the euro zone for that matter, is just around the corner.

Half a year ago the chorus calling an end to the euro reached a crescendo. Among the chief doom-mongers were some of the world's leading economists and investors, many of them based in the United States.

Fast forward six months and their prophesies look ill-judged, or premature at the least. The euro has rebounded against the US dollar. The bond yields of stricken countries like Greece, Spain and Italy - a market gauge of how risky these countries are - have fallen back.

Even the gloomiest of the gloomy are revising their forecasts, although they warn of more trouble ahead.

"Europe has surprised me with its political resilience," Krugman admitted earlier this month in a blog post.

In October, Citi lowered its view on the likelihood of Greece exiting the currency area within 18 months to a still high 60 per cent and there are plenty of economists who think that while a patchwork of measures have drawn some sting out of the crisis they have done little to address its root causes.

Krugman and Buiter did not return mails seeking comment. Soros declined to be interviewed.

POLITICAL WILL

With the benefit of hindsight, it seems clear that many simply underestimated the political will in Europe to keep the euro together, and the impact that a series of policy shifts in the second half of 2012 would have on sentiment.

The most important of these were European Central Bank President Mario Draghi's July promise to do "whatever it takes" to defend the euro - which led to the ECB's commitment to buy euro zone government bonds in sufficient amounts to shore up the currency bloc - and German Chancellor Angela Merkel's late-summer shift on Greece.

After wavering for many months on the costs and benefits of a Greek exit, she finally came around to the view that the risks to Europe and her own political prospects of letting Greece go were far too great.

"There may be a logic to Greece leaving, but the mechanics are too disruptive for both Greece and its neighbours," said Barry Eichengreen, an economist at U.C. Berkeley, who has long argued that the euro is irreversible.

"An appreciation of European politics makes you realise that everything will be done to prevent a breakup of the monetary union. It would be intensely catastrophic, economically and politically."

Capital Economics, a UK-based consultancy that forecast one or more countries would leave the single currency bloc by the end of 2012, now concedes that it underestimated the ECB's determination to save the euro and the market's faith in the bank's promises.