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RUPEE CLOSES ON 67.09 PER DOLLAR ON SUSPECTED RBI INTERVENTION

Since January, rupee has weakened 18.03% and has lost the most among Asian currencies. Indian rupee strengthened against the dollar as state run banks likely sold US currency on behalf of RBI.in the context of current macroeconomic situation of rising rupee against dollar, RBI clarifies that India is not looking at capital controls and the intention is not to restrict overseas direct investment transactions by Indian companies. In comparison the US currency strengthened against other major currencies and traded at 82.238.

In my view, India is underperforming significantly in dollar terms. So where will the rupee settle? The rupee has depreciated and growth outlook is challenged and risks to twin deficits have risen .we cannot blame the RBI entirely for the current situation .Indian stocks have fallen because of rupee weakness and this problem could be addressed by approaching buying range for Indian equities. Should India address the rupee slide by tightening interest rates or focus on growth policies?

PARLIAMENT PASSES THE FOOD SECURITY BILL AFTER 10-Hr DEBATE

Parliament gave its nod to the landmark Food Security Bill which seeks to provide highly subsidised food grains to the countries two third population and providespenalty for non-compliance by public servants. A proposed legislation was approved by Rajyasabha. Food minister, K.V Thomas said that this is the first step towards universalisation of Public Distribution System. There are salient features laid for the bill.one of them is that 35kgsof rice will be given to each BPL family at rate of Rs 3.

In my view, India not only has people who do not get enough food but also an overwhelming number of undernourished children.About 50 per cent of all childhood deaths are attributed to malnutrition as per UNICEF India's website. This can lead to a terrifying upsurge in malnutrition deaths. It will only be effective if there is a proper implementation of this policy. Will this step by government be a success or does it only make politically correct noises?

RAGHURAM RAJAN TAKES OVER AS THE NEW RBI GOVERNOR

Raghuram Rajan, 50, on 2^nd September took over as the new RBI governor and chief defender of nose-diving rupee. He served as a chief economist at IMF and is famously known for predicting the 2008 global financial crisis. Analysts expect Rajan to improve the central banks communication with markets which could help restore confidence among investors. In this situation of storm roiling India’s economy he aims at creating more jobs for the labour force by reviving growth in India and at the same time bringing down inflation and current and fiscal deficit. He also said that primary role of RBI will be monetary stability.

Will the new RBI governor be able to suit action to words?

THE BIG FAT PETROL GUZZLER

The government is considering various proposals including bizarre ones like shutting petrol pumps at night to curb oil consumption as it looks at ways to cut the massive oil import bill. The import bill is being trimmed to bring down current account deficit. Since government officials and ministers are major consumers of oil and the fuel bill for them tots up to 3000 crore a year in Delhi alone. The car convoys are a misuse of staff cars by ministers, officers, their families and drivers and during elections convoys get longer without any thought of fuel being wasted.so they have decided on petrol quota of 700 litres for the Delhi CM and 200 litres for all other officials.

I think fuel is precious and it should not be wasted and it’s a collective responsibility of public and government to conserve fuel rather than government imposing such vague ideas only on public.

So, do u think imposing a night curfew on petrol pumps is a wise step towards cutting India’s consumption of oil?

MICROSOFT TO ACQUIRE NOKIA’S HANDSET BUSINESS FOR $7.2 BILLION

Microsoft announced that it has inked a deal with Nokia to acquire substantially all of Nokia’s devices and services business and license its patents. Microsoft owner Steve Ballmer said that it is a bold step towards the future. Bringing these great teams together will accelerate Microsoft’s share and profits in phones and strengthen overall opportunities for Microsoft and its partners.Microsoft will draw upon its overseas cash resources to fund the transaction. Microsoft eyes Apple like revival with Nokia deal. The deal is expected to close in the first quarter of 2014, subject to approval by Nokia's shareholders, regulatory clearances and other closing conditions.

In my view, purchasing Nokia signals the end of Windows as a standalone business and end of its signature strategy. By integrating the hardware and software sides of the window phone, Microsoft is inverting and thus killing the Windows business model.

Will Microsoft’s acquisition of Nokia further its strategic interest in mobile space? Does it seem like an end of Nokia or a moment of re-invention for them?


Contributed By:
Khushboo Kochchar

Section A, Economics

Batch of 2013-15