Submitted by: Group 8 Abhishek Jayant

M069/14

Adarsh K A M

M070/14

Ainnie Abbas

M072/14

Akanksha Gupta

M073/14

Bibhas Mishra

M087-14

Chinkal Nagpal

M092-14

November 17 -November 21

Newsletter

17th

Nov 2014

Moderate inflation a passing phase: Economists

A monsoon deficit is likely to affect the agriculture output, which could have an impact

on the food inflation

The sharp fall in inflation over the past few months has raised the

clamour for interest rate cuts. With the Consumer Price Index-

based inflation falling to 5.5 per cent in October from 6.5 per cent a

o th ago, is elo the e t al a k’s ta get of si pe e t January 2016, the pressure on the Reserve Bank of India (RBI) to

loosen monetary policy is mounting. While so far RBI resisted

pressure to reverse its stance, the decision to cut interest rates is

likely to be guided by whether the moderation in inflation is

transitory.

The recent slowing in retail inflation has been driven largely by food inflation, which fell from 7.7 per cent in

September to 5.6 per cent in October, due to lower prices of fruits, vegetables and sugar. According to CRISIL,

The seaso all adjusted o th o o th o e tu i food i flatio as uted at 0.0 pe e t. This suggests the recent decline was largely due to the strong base effect.

http://www.business-standard.com/article/economy-policy/moderate-inflation-is-a-passing-phase-

economists-114111501551_1.html

Banks cut lending on gold as prices fall

Banks have swung into action as gold prices continue to slide.

Reduced loan-to-value ratio (LTV), cautious lending, and a close

monitoring of the gold loan portfolio have prompted them to hedge

their loan books against the reduction in prices.

The yellow metal has lost 14.5 per cent in the past year and fallen to

Rs 26,660 for 10 gm from Rs 31,190 for 10 gm a year ago. In the past

six months, the speed of slide has increased, with gold losing 10 per

cent.

To safeguard themselves, lenders have reduced the LTV (the part that can be given as loan) on gold. For

instance, Federal Bank was earlier financing up to 70-75 per cent of LTV on gold ornaments, and has reduced

it to around 60 per cent for a one-year tenure.

http://www.business-standard.com/article/finance/banks-cut-lending-on-gold-as-prices-fall-

114111700031_1.html

Spotlight on Europe's economy

As large parts of Europe's economy grind almost to a halt,

attention will focus this week on the latest assessments of

business confidence in the euro zone and Germany, which

has just narrowly avoided a recession.

While the United States economy has accelerated and China

holds a slower but steady course, euro zone countries have

remained sluggish, with overall growth in output slowing to

a trickle.

"The euro zone is the best part of 20 per cent of the global

economy," James Knightley, an economist with ING, said.

"The longer the stagnation goes on the more Japan-like it becomes."

The euro zone's problems have raised expectations that the European Central Bank is preparing to loosen its

purse strings further to try to rekindle growth.

Against this backdrop, Germany's Centre for European Economic Research's (ZEW) monthly barometer of

sentiment, due on November 18, will provide more insight into business confidence levels. The Ukraine crisis is

a major drag on business and investor sentiment, especially as there have been new reports of Russian troops

pouring into eastern Ukraine.

http://www.business-standard.com/article/international/spotlight-on-europe-s-economy-

114111700023_1.html

Germany wants to help India in Ganga rejuvenation plan

The European nation has an impressive record in cleaning its rivers and has

expressed readiness to join hands with the issue here

Germany is the latest country to show interest in the Narendra Modi government's Ganga rejuvenation plan.

The European nation has an impressive record in cleaning its rivers and has expressed readiness to join hands

with the issue here.

A team from Germany recently visited India and met finance ministry officials. It showed interest in getting

exposure on public-private partnership (PPP) practices in India, including pilot schemes.

In September, the government of Australia had offered to support the Ganga rejuvenation effort. The two

prime ministers had announced an extension of their agreement on water cooperation. India is also receiving

financial and technical aid from Japan for cleaning the river Earlier, Modi had called for making Ganga

rejuvenation a mass movement. He wanted action plans to unite the strength of various sections of society

dedicated to "Ganga Seva." He said the first priority in this mission should be to stop fresh generation of

pollutants.

http://www.business-standard.com/article/economy-policy/germany-wants-to-help-india-in-ganga-

rejuvenation-plan-114111700028_1.html

18th Nov 2014

Kisan Vikas Patra to be relaunched today; money to double in 100 months

The government will relaunch the Kisan Vikas Patra scheme on Tuesday,

hoping to lure investors away from gold and fraudulent schemes by

offering attractive terms. There won't be any upper limit on investments,

the minimum denomination being Rs 1,000.

Investors will be able to double their money in 100 months but the

government has bundled in a number of features to enhance liquidity of

the instrument as the new regime looks to raise the level of financial

savings that fell to 7.1 per cent of GDP in FY13 from more than 12 per cent in FY10.

http://economictimes.indiatimes.com/articleshow/45179825.cms?utm_source=contentofinterest&

utm_medium=text&utm_campaign=cppst

India readies new steps to curb surge in gold imports – source

India is likely to announce new measures to curb gold imports as early as Tuesday, a senior finance ministry

source said, and they could include restrictions on a group of private trading firms that have been allowed to

bring in the precious metal.

Shipments to the world's second-largest gold buyer jumped fourfold in October from a year earlier to $4.18

billion, raising concern about India's fragile balance of payments.

Officials from the finance ministry and Reserve Bank of India (RBI) were considering whether to reimpose

import restrictions on "star trading houses" that were eased earlier this year.

http://in.reuters.com/article/2014/11/18/india-gold-imports-idINKCN0J20D720141118

Japan in recession as economy contracts 1.6%

Japan's economy unexpectedly slipped into recession in the third quarter,

setting the stage for Prime Minister Shinzo Abe to delay an unpopular

sales tax hike and call a snap election two years before he had to go to

the polls.

The recession comes nearly two years after Abe returned to power

promising to revive the economy with his "Abenomics" mix of massive

monetary stimulus, spending and reforms, and is unwelcome news for an

already shaky global economy.

Gross domestic product (GDP) shrank by an annualised 1.6 per cent in July-September, after plunging 7.3 per

cent in the second quarter following a rise in the national sales tax, which clobbered consumer spending.

The world's third-largest economy had been forecast to rebound by 2.1 per cent, but consumption and exports

remained weak, saddling companies with huge inventories to work off.

http://economictimes.indiatimes.com/articleshow/45172350.cms?utm_source=contentofinterest&

utm_medium=text&utm_campaign=cppst

19th Nov 2014

Japan LNG imports to fall 'a little' in 2015: Government official

Japan's 2014 liquefied natural gas (LNG) imports will drop off "a

little" in 2015 as nuclear power plants resume operations, a

government official said on Wednesday, the first decline since the

Fukushima crisis in 2011. LNG use by the world's largest importer of

the fuel has surged since the crisis led to the shutdown of all the

Japan's nuclear power generation, sending prices up sharply. The first

nuclear plants are expected to come back online next year, but a

Reuters survey of Japanese utilities showed they would cut more

expensive fuel oil and crude generation before gas-fired plants.

Earlier this month regional authorities in Japan approved the restart of the idled Sendai nuclear plant, paving

the way for a revival of some of the 48 offline reactors.

http://economictimes.indiatimes.com/news/international/business/japan-lng-imports-to-fall-a-

little-in-2015-government-official/articleshow/45206694.cms

European Union insurance watchdog warns on "undue" investment incentives

The European Union's (EU) top insurance watchdog on Wednesday

warned against giving insurers strong enticements to invest in

particular asset classes, saying this would run counter to prudent

supervision. "We need to emphasise continually that undue

incentives to buy any asset class should not be part of a risk-based,

prudent regime," Gabriel Bernardino said in the text of a speech to a

financial conference. European politicians want insurers to put more

of their 8.5 trillion euros in assets under management into

investments that will boost the bloc's economy.

http://economictimes.indiatimes.com/news/international/business/european-union-insurance-

watchdog-warns-on-undue-investment-incentives/articleshow/45204472.cms

UK households less worried about finances as inflation fades

British households felt less worried about their finances in November as concerns about inflation eased to

their lowest level in more than five years and earnings continued to recover, a monthly survey showed on

Wednesday. The Markit Household Finance Index rose to 42.7, up from 41.8 in October but still comfortably

below the 50-mark, which separates pessimism from optimism. Income from employment grew for the fourth

month in a row, reflecting a slow pick-up in earnings seen in official data. The BoE said last week that it was in

no hurry to raise borrowing costs as inflation was likely to hit its 2 per cent target only in about three years'

time.

http://uk.reuters.com/article/2014/11/19/uk-britain-employment-markit-idUKKCN0J30R520141119

Government needs to infuse nearly $39 billion in state-run banks by March 2019: SS

Mundra, RBI

The Expenditure Management Commission (EMC), which has been asked to suggest ways to reduce subsidies,

will submit its interim report by early January, the panel's chief Bimal Jalan said today. The subsidy bill on food,

petroleum and fertilisers is estimated at Rs 2,51,397.25 crore for 2014-15, up 2.47 per cent over the previous

fiscal. It was Rs 2,45,451.50 crore in the revised estimates for 2013-14.

http://articles.economictimes.indiatimes.com/2014-11-19/news/56265466_1_state-run-

banks-indian-banks-important-banks

PFRDA seeks bankers help to promote pension in country

Pension fund regulator PFRDA today asked bankers to promote

pension through various schemes and advised them to meet

the target for selling Swavalamban Scheme within the

stipulated time. Only 12 % of the working population are

covered under formal pension system.The target of opening of

70 accounts per branch, amounting to a total target of 56 lakh

Swavalamban accounts for the 2014-15, he said.Speaking at a

conference of aggregators organised by PFRDA, he said, the

objective is to focus on progress of Swavalamban accounts

opened by public sector banks/regional rural banks/MFI's and

NBFCs working as aggregators to old age.

http://economictimes.indiatimes.com/news/economy/finance/pfrda-seeks-bankers-help-to-promote-pension-in-

country/articleshow/45194469.cms

US crude inventories rise unexpectedly on rising imports

US crude stockpiles rose last week, against the consensus expectation for a draw in inventories, as imports

rose, data from the Energy Information Administration showed on Wednesday. Crude inventories rose 2.6

million barrels in the week to Nov. 14 , compared with analysts' expectations for a decrease of 780,000 barrels,

as crude imports rose 761,000 barrels per day, according to the data. Crude stocks at Cushing, Oklahoma, the

delivery hub for the New York Mercantile Exchange USlight sweet crude contract , rose 718,000 barrels, the

EIA said. Crude futures seesawed after the data.

http://www.reuters.com/article/2014/11/19/energy-eia-oil-idUSL2N0T91HL20141119

20th Nov 2014

PE investments up 27% to $3 billion in July-September quarter: Report

Private equity investments in the country rose 27 per cent to $3.01

billion in the July-September period, the fifth consecutive quarter of

upswing, says a PwC report. Compared with the same period last

year, the value of deals rose by 97 per cent despite a 9 per cent

reduction in volume. In Q3 2013, the value of investments stood at

$1.53 billion from 113 deals. "Growth has been driven by

advancements in technology - increasing adoption of devices like

smartphones and tablets, and easy access to Internet has led to rise

in online consumer base," PwC India Technology leader Sandeep

Ladda said.

http://economictimes.indiatimes.com/articleshow/45215770.cms?utm_source=contentofinterest&utm_medi

um=text&utm_campaign=cppst

Hard to hit tax revenue target this fiscal year, credit weak: Arun Jaitley

Finance Minister Arun Jaitley said on Friday it would be hard to hit tax revenue targets in this fiscal year, with

weak credit demand underscoring his concern about the state of the economy. With domestic investment

weak, Jaitley told the Hindustan Times Leadership Summit that foreign investment was all the more important,

pointing to interest in the defence and railways sectors that the government has opened up.

http://economictimes.indiatimes.com/articleshow/45229587.cms?utm_source=contentofinterest&utm_medi

um=text&utm_campaign=cppst

Creaking euro zone, China sound warnings for global growth

Surveys sounded warning bells for the global economy on

Thursday as euro zone businesses grew less quickly than any

forecaster expected and China's factories lost momentum.

The downbeat data, alongside evidence of further price-

cutting, will add to calls for more policy action from the

European Central Bank, while the first drop in Chinese

manufacturing output for six months will heap similar pressure

on authorities in Beijing.

Euro zone prices rose 0.4 percent in October, well below the

ECB's target of just under 2 percent and stuck firmly in what it

terms the inflation danger zone.

To keep the region from slipping into deflation, the ECB has been pumping money into the banking system by

buying covered bonds and offering cheap long-term loans to banks.

China's annual growth slowed to 7.3 percent in the third quarter, leaving 2014 on track to be the slowest in 24

years.

The Markit/JMMA version of Japan's PMI was more mixed. While the headline index edged down to 52.1 in

November, from 52.4 in October, output expanded at its fastest clip in eight months.

Policymakers were taken by surprise earlier this week when data showed the economy fell into recession in

the third quarter, underlining the necessity of the Bank of Japan's super-loose policy and sending the yen to

fresh lows.

http://economictimes.indiatimes.com/articleshow/45218534.cms?utm_source=contentofinterest&utm_medi

um=text&utm_campaign=cppst

Rupee tumbles to nine-month low, tracking broad dollar strength

The rupee dropped to a nine-month low against the US currency in

intraday trade today; slipping below 62 levels.

The Indian currency ended the day at 61.94 as against yesterday's

closing level of 61.96 at Interbank Foreign Exchange market.

Strengthening dollar overseas and higher importers' demand

weighed heavily on the rupee movement, dealers said.

In the New York market, the US dollar was trading strong against its

major rivals and the Japanese yen slid to a seven ..

http://economictimes.indiatimes.com/articleshow/45213263.cms?utm_source=contentofinterest&utm_medi

um=text&utm_campaign=cppst

Government likely to introduce differential export duty for iron ore

Government is likely to introduce differential export duty on iron ore

under which producers of low-grade raw material will pay lower rates, a

move that will help struggling miners, especially in Goa.

The proposal, if implemented, would see government charging different

rates for exports of varied grades of iron ore rather than the present

uniform rate of 30 per cent, a highly placed source said.

http://economictimes.indiatimes.com/articleshow/45220819.cms?utm_source=contentofinterest&utm_medi

um=text&utm_campaign=cppst

Time for monetary easing; RBI rate cut won't reverse inflation downtrend: Arvind Virmani

Stating that cutting interest rates will not reverse inflation

downtrend, RBI Adviser Arvind Virmani on Thursday said,

"Benchmark rate needs to be cut." "The Consumer Price Inflation

(CPI) is firmly on a downtrend. It is time for monetary easing,"

Virmani said.

According to Virmani, there is 51% probability that CPI will be less

than 7% by March. He is also of the opinion that the chances of

meeting 4.1% fiscal deficit target have 'gone up'.

http://economictimes.indiatimes.com/articleshow/45213663.cms?utm_source=contentofinterest&utm_medi

um=text&utm_campaign=cppst

21st

Nov 2014

Forward Markets Commission tightens rules for warehousing service providers

ommodity market regulator Forward

Markets Commission, or FMC, has

strengthened the warehousing

accreditation norms to avert an occurrence of an

NSEL-like scam in the commodity futures market.

The new norms will take effect after March 31,

2015 and the existing warehouse service providers

(WSPs) in their current format will not be allowed

to operate in the exchange space beyond June 30,

2015.

The WSP should be a corporate body with a

professional management and have a minimum

net worth of Rs 25 crore, which may be relaxed to

Rs 10 crore for warehouses providing services for a

single commodity at a particular location. The WSP

shall furnish security deposit, to be monitored

daily visa-vis value of goods, in the prescribed

format by the exchange equal to 3 per cent of

value of goods less than or equal to Rs 250 crore, 4

per cent of value above Rs 250 crore and equal to

Rs 500 crore and 5 per cent of value above. 500

crore of goods stored in warehouse.

http://economictimes.indiatimes.com/articleshow

/45236647.cms?utm_source=contentofinterest&u

tm_medium=text&utm_campaign=cppst

Sensex, Nifty hit record, banks surge on Kotak-ING deal

The BSE Sensex and Nifty soared to record highs

on Friday as lenders surged after Kotak Mahindra

Ba k’s a uisitio of ING V s a spa ked hopes fo further consolidation in the sector, while

expectations of more reforms ahead of the winter

session of parliament also helped. The Bank Nifty

surged 2.4% to hit a record high of its own, helping

the benchmark indexes mark their fifth

consecutive weekly gains.

Markets are also waiting for the Reserve Bank of

I dia’s poli e ie o De e e a id hopes that easing consumer inflation will lead the central

bank to ease monetary policy earlier than

expected.

http://www.livemint.com/Money/LW7reK81E

hPQqGJrmOe4kN/Sensex-trades-flat-Infosys-

Tata-Power-fall.html?utm_source=copy

C

Low-cost cab service UberGO faces challenge on day of launch

Uber Technologies faced teething troubles on Day

1 of its low-cost cab service, which the company

claims is cheaper than taking an auto, with taxis

unavailable across New Delhi throughout the day.

UberGO uses hatchbacks such as Etios Liva and

Maruti Ritz to ferry customers who are charged Rs

40 as base fare plus Rs 11-12 per kilometer and Re

1 per minute. The base fare for the uberX is Rs 50,

Rs 2 per minute and Rs 15 per km, while a

customer has to pay a base fare of Rs 75, Rs 2 per

minute and a per kilometer rate of Rs 18 for using

UberBLACK.

http://economictimes.indiatimes.com/industry/au

to/industry/auto/news/aftermarket/low-cost-cab-

service-ubergo-faces-challenge-on-day-of-

launch/articleshow/45225817.cms?utm_source=R

SS&utm_medium=ETRSS

Govt approves funds for power sector push

Government on Thursday approved an outlay of

Rs.43,033 crore to fund an ambitious initiative to

supply electricity through separate feeders for

agricultural and rural domestic consumption,

aimed at providing round-the-clock power to

village households. In addition, the cabinet also

approved spending Rs.32,612 crore on an

integrated power development initiative, which

involves strengthening sub-transmission and

distribution systems, according to a government

statement.

http://www.livemint.com/Politics/TOj8vyFiYrpoqV

uzxxlU6H/Govt-approves-funds-for-power-sector-

push.html?utm_source=copy

RBI says overseas borrowed funds can be parked with banks in India

Reserve Bank of India (RBI) on Friday allowed

companies borrowing overseas to park the funds

as term deposits with local banks for a maximum

period of six months. Such deposits should be

exclusively in the name of the borrower and they

should be available for liquidation as and when

required, the regulator said.

RBI stated that the amended policy would come

into immediate effect and all other aspects of the

external commercial borrowing (ECB) policy would

remain unchanged. On 3 September, the banking

regulator had eased certain ECB norms by allowing

non-resident lenders to extend rupee loans to

borrowers in India, after following certain norms

regarding currency swaps with local banks. Prior to

that, all eligible borrowers were allowed to raise

ECB funds in rupees only from their foreign equity

holders.

http://www.livemint.com/Money/xxhM4dUIqkgg9

52z8oS1rO/RBI-says-overseas-borrowed-funds-

can-be-parked-with-banks-

in.html?utm_source=copy

Articles

Why Quantitative Easing (QE) May Lead to Deflation

Financial experts have been debating since the start of the 2008 financial crisis whether inflation or deflation is the bigger

risk. That debate is beyond the scope of this essay. However, it might not be either/or. We might instead have

“Mi edFlatio … i flatio is so e asset classes a d deflation in others.

Quantitative easing (QE) was supposed to stimulate the economy and pull us out of deflation.

But the thi d ou d of ua titati e easi g QE ″ i the U.“. failed to raise inflation expectations.

A d QE has ’t o ked i Japa , eithe . The UK engaged in substantial QE. But inflation rates are falling there as well. And

China engaged in massive amounts of QE. But it’s also falling into deflation.

Indeed, despite massive QE by the U.S., Japan and China, there is now a worldwide risk of deflation.

Is QE deflationary? Yes, quite obviously so. Consider:

QE will only help get an economy off the zero lower bound if paired with a commitment to higher future inflation.

If a central bank is deploying QE over a long period of time, that means it has not paired QE with a commitment to

higher future inflation.

Prolonged QE is effectively a signal that the central bank is unwilling commit to higher inflation.

QE therefore reinforces expectations that economic activity will run below potential and demand shocks will not

be completely offset.

QE will be associated with a general disinflationary trend.

Economists also note that QE helps the i h … ut hurts the little guy. QE is one of the main causes

of inequality (and see this and this). And economists now admit that runaway inequality cripples the economy.

So QE indirectly hurts the economy by fuelling runaway inequality.

http://www.globalresearch.ca/why-quantitative-qe-may-lead-to-deflation/5414897

Why India is doing better than most emerging markets

INVESTORS have fallen out of love with emerging markets. Since the start of last year emerging-market stocks have trailed

their rich-world peers. Currencies are falling. Worst-hit is the Russian rouble, which has fallen by 30% against the dollar this

year. The currencies of other biggish emerging markets, such as Brazil, Turkey and South Africa, have also weakened. For

such economies growth is harder to come by. The IMF recently cut its forecasts for emerging markets by more than for rich

countries. But India is a notable exception to the general pessimism. Its stockmarket has touched new highs. The rupee is

stable. And the IMF nudged up its 2014 growth forecast for India to 5.8%. That figure is still quite low: growth rates of 8-9%

have been more typical. But in comparison with others it is almost a boom. Why is India doing better than most emerging

markets?

I pa t opti is a out I dia o es to its e ish go e e t. I Ma Na e d a Modi’s Ba ati a Ja ata Pa t BJP o a thumping victory in elections on a pro-growth platform. Since then the BJP has strengthened its position in some key

states. So far reform has been piecemeal. Procedures for government approvals have been streamlined. The powers of

labour inspectors have been curbed. Civil servants now work harder. That has been enough to sustain hopes of further and

bigger reforms. Yet much of the continued enthusiasm about India is down to luck. The currents that sway the global

economy presently—the dolla ’s st e gth; slo do i Chi a; agg essi e o e -printing in Japan; stagnation in the euro

zone and falling oil prices—are less harmful to India than to most emerging markets.

http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-

11?zid=306&ah=1b164dbd43b0cb27ba0d4c3b12a5e227