India deserves upgrade in sovereign rating: P Chidambaram.

Ireo Uptown, Gurgaon

Ireo Uptown, Gurgaon

India deserves a rating upgrade in view of improvement in macro-economic situation, the conservative outlook of Standard & Poor’s notwithstanding, Finance Minister P Chidambaram said here today.

“Our case is that we deserve an upgrade both on the outlook and the rating. S&P may not have been convinced about that…,” he told reporters on the sidelines of the Annual Day function of the Competition Commission of India.

On Friday, global credit rating agency S&P had warned that it may downgrade India’s sovereign rating to junk grade if the government fails to pursue reforms and check deterioration in fiscal and current account deficits.

While retaining India’s sovereign rating at ‘BBB-‘ with a negative outlook citing high fiscal and current account deficits, S&P said there is at least a one-in-three likelihood of a downgrade within the next 12 months.

Read more: The Economic Times

More reforms needed for India to return to 10 % growth: US Ambassador

In order for India to return to near 10 per cent growth and eradicate poverty, further reforms are necessary, according to US Ambassador Nancy Powell.

Addressing a meeting hosted by the Bengal Chamber of Commerce and Industry, she said that the road to higher growth would require more economic opening and more foreign investment.

“ Since GDP growth is not an end in its own right, since ultimate growth is to raise standards of living and eradicate poverty, opening the economy and bringing more foreign investment take on a new urgency. You cannot defeat poverty without growth”, she said.

Ms Powell felt that US-India relations would continue to grow, no matter what the respective governments do.

She said that the US-India economic relationship of the coming century would be “built on the phenomenal growth of collaboration between people, public institutions and private companies in both countries.” The relationships will grow but with right policies aimed at striping away barriers of all kinds in order to foster greater trade and exchange, those relationships can “unleash untold potential”.

Read more: The Hindu

Real Estate

Affordable houses, but for whom?

Many builders, including Jaypee, Wave Infratech and Tata Housing, have experimented with affordable housing in recent times. Some have even managed to sell these homes like hot cakes in an otherwise down market. Is that the future of housing in the country? The proverbial pot of gold at the bottom of the pyramid?

Experts point out that whenever the economy hits a downturn, realtors think of affordable homes as a safe bet. However, it is not the buyers who should rejoice.

The category is so loosely defined that developers often stretch the scope of affordable in many ways. Around the world, affordability of a house is arrived at by using the housing affordability index of a country. In Australia, it is referred to as a “…reasonably adequate in standard and location for lower or middle income households which does not cost so much that a household is unlikely to be able to meet other basic needs on a sustainable basis.” In the UK, affordable housing includes “social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market.” In the US and Canada, a commonly accepted guideline for affordability is a house whose monthly carrying cost (rent or EMI) does not exceed 30 per cent of a household’s gross income. In India, the EMI limit is set at 30 to 40 per cent of gross income, but neither the developers nor the buyers follow the norm.

Read more: Business Standard

SBI’s Pratip Chaudhuri wants single regulator for home loans

SBI Chairman Pratip Chaudhuri on Saturday pitched for a single regulator for all housing loans.

Currently, the RBI regulates the housing loans provided by banks, while the National Housing Bank is the regulator for home loans disbursed by housing finance companies such as HDFC Ltd and LIC Housing Finance Co Ltd.

According to Chaudhuri, a single regulator would help remove the “regulatory arbitrage” currently existing between banks and housing finance companies.

“I see no justification for having separate regulators for home loans. Perhaps, the objective would be better served with RBI itself becoming the sole regulator for all loans, including home loans. In no other country do we have different regulators for different verticals such as industrial loans, home loans and vehicle loans,” he told newspersons on the sidelines of a banking summit, organised by the Indian Chamber of Commerce here on Saturday. According to Akeel Master, Head of Financial Services, KPMG in India, bringing all lending activities under the purview of a single regulator seems to be the way forward.

“Having more than one regulator for similar activities sometimes leads to conflict of interest and gives rise to certain regulatory arbitrage,” Master told Business Line.

Read more: Business Line

Infrastructure

China sets sights on India’s big infra pie

China sets sights on India’s big infra pie

China, sitting on $3.2 trillion foreign exchange reserves, has offered to help India in its infrastructure development, particularly in energy, railways, ports and telecommunications, besides manufacturing.

No firm commitment has been made though on any specific projects during the visit of Chinese premier Li Keqiang. But the joint statement issued at the end of his talks with prime minister Manmohan Singh on Monday said “pragmatic cooperation” had been agreed to in these areas.

Cooperation in energy will be in the civilian nuclear energy sector too, but nothing specific was mentioned in the joint statement. Indian power companies, particularly those in the private sector, buy billions of dollars worth Chinese equipment.

It is in the mutual interest of the two countries to strengthen cooperation in infrastructure, diplomatic and economic spheres, analysts say. India plans to spend $1 trillion on infrastructure over the next four years, of this $470 billion has to come from the private sector, mostly in the shape of resources from abroad.

Most of China’s $3.2 trillion reserves are invested in US treasury paper and the dollar is expected to depreciate by 30 per cent in a decade as the US feels the Chinese currency is now undervalued to that extent.

Read more: My Digital FC

Banking

Indian banks enjoy trust of customers: Gallup poll

Despite the global financial crisis and alleged malpractices shaking the confidence of customers in banks, especially in developed countries, Indian banks enjoy the trust and confidence of about 70 per cent of the respondents, according to a poll conducted by Gallup last year.

The proportion of those confident about financial institutions and banks was the highest in southeast Asia, followed by south Asia.

“In sharp contrast to Europe and the US, many Asian countries have weathered the global financial crisis well and emerged with considerable economic momentum. This momentum helps explain why confidence in financial institutions was highest in Asia last year, particularly among emerging markets in southeast and south Asia, where median trust was 77 per cent and 75 per cent, respectively,” Gallup said in a statement.

Read more: Business Standard

Have Uniform Rules for Home Loans

Different tune: Deepak Mohanty, Executive Director, Reserve Bank of India, with Pratip Chaudhuri, Chairman, State Bank of India, during the 5th ICC Banking Summit in Kolkata on Saturday. — Ashoke Chakrabarty

All home loans, drawn either from banks or housing finance companies, should be regulated by a uniform set of rules and governed by a single regulator, preferably the Reserve Bank, State Bank of India chairman Pratip Chaudhuri said on Monday.

At present, home loans issued by banks are regulated by the Reserve Bank of India while loans extended by housing finance companies like LIC Housing Finance or HDFC Ltd are regulated by National Housing Bank.

“I see no justification in having separate regulators for home loans. Perhaps the regulations of objective will be better served if RBI becomes the sole regulator for all loans including home loans,” said Chaudhuri.

“In no other country do we have different regulators for different verticals such as industrial loans, home loans and vehicle loans,” Mr Chaudhuri said at a banking summit organised by KPMG.

Banks currently account for more than two-thirds of the total home loan disbursed in the country, and a “single” regulator will help removing the regulatory arbitrage that exists between banks and housing finance companies. Chaudhuri particularly pointed out at the higher provisions which the banks are required to make for the teaser loans.

Read more: The Times of India

Retail

IKEA to face land acquisition challenge for stores in India: experts

Land acquisition will be a major hurdle for Swedish furniture retailer IKEA to set up its stores in India and it may have to even depend on public auction by government, according to real estate consultants.

The company, which has received nod from the government for its plans to invest Rs. 10,500 crore earlier this month, may also have to tweak their business model for India considering the constraints for right space, consultants added.

“Land acquisition is a difficult and challenging proposition in India… The company may acquire land in two ways – through public auction by the government or directly purchasing it from owners,” said Pankaj Renjhen, managing director of retail services at Jones Lang LaSalle India, told PTI.

IKEA India CEO Juvencio Maeztu is reported to have said that company will acquire land for opening stores, which will be spread across 3 lakh square feet and well-connected by highway and metro train.

Mr Renjhen said acquisition from owners directly may take longer for IKEA “as they don’t know India very well compared to a domestic player who has been in the country for years”.

Read more: NDTV

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