✌✌✌✌ THE HINDU ✌✌✌✌
✌✌ Diminishing options before BCCI ✌✌
Equivocation before the Supreme Court can be costly. Anurag Thakur, president of the Board of Control for Cricket in India, may have learnt this bitter lesson after the Chief Justice of India found him prima facie guilty of contempt of court and perjury. The board’s predicament is not only due to its reluctance to accept the reforms suggested by the court-appointed Justice Lodha Committee. It is also because of its president’s ham-handed attempt to explain away his move to get the International Cricket Council to issue a letter to the effect that some judicial orders regarding the BCCI amounted to ‘governmental interference’. Mr. Thakur allegedly approached ICC chairman Shashank Manohar in Dubai in August 2016 in connection with the court’s July 18 order mandating that a nominee of the Comptroller and Auditor General of India should be on the BCCI’s apex council. It is not surprising that the court took a dim view of the BCCI initially denying that such an attempt had been made to get the ICC involved. It was probably just as displeased with Mr. Thakur going on to file an affidavit that he had only wanted Mr. Manohar to give his opinion on the issue as a former BCCI president. Mr. Thakur would have been better off admitting what happened, given that Mr. Manohar has disclosed that the BCCI president had indeed asked him for such a letter.
Mr. Thakur being rendered liable for prosecution for perjury is not the only consequence; the current BCCI office-bearers may lose their control over the board. The Bench headed by the Chief Justice is already in a mood to appoint some observers, based on a suggestion by the Lodha Committee, to oversee the BCCI’s affairs. The BCCI has allowed an impression to gain ground that its attitude towards reforms is one of defiance and obstruction. So far the cricket body has been maintaining that it cannot force its State-level affiliates to accept all the new norms. The BCCI could have avoided a direct confrontation by committing itself more plainly to abide by the court verdict. The BCCI’s reputation as a responsible sports administrator is under strain not because of any shortcoming in its management of the cricketing aspects of the game, but its seeming intransigence in embracing reforms aimed at bringing about transparency in its functioning. Any order convicting the BCCI president for perjury or holding its top functionaries guilty of contempt of court would severely damage the institution. An apology from Mr. Thakur, and the BCCI’s wholehearted acceptance of the Lodha Committee reforms, seem the only way out.
Mr. Thakur being rendered liable for prosecution for perjury is not the only consequence; the current BCCI office-bearers may lose their control over the board. The Bench headed by the Chief Justice is already in a mood to appoint some observers, based on a suggestion by the Lodha Committee, to oversee the BCCI’s affairs. The BCCI has allowed an impression to gain ground that its attitude towards reforms is one of defiance and obstruction. So far the cricket body has been maintaining that it cannot force its State-level affiliates to accept all the new norms. The BCCI could have avoided a direct confrontation by committing itself more plainly to abide by the court verdict. The BCCI’s reputation as a responsible sports administrator is under strain not because of any shortcoming in its management of the cricketing aspects of the game, but its seeming intransigence in embracing reforms aimed at bringing about transparency in its functioning. Any order convicting the BCCI president for perjury or holding its top functionaries guilty of contempt of court would severely damage the institution. An apology from Mr. Thakur, and the BCCI’s wholehearted acceptance of the Lodha Committee reforms, seem the only way out.
✌✌ Decoding the Fed’s signals ✌✌
The U.S. Federal Reserve’s widely anticipated decision to resume its course of normalisation of monetary policy by raising the benchmark Federal Funds rate by one-quarter of a percentage point has unequivocally signalled that the world’s largest economy is well and truly back on track. Fed Chair Janet Yellen has said the U.S. central bank now expects the economy to “continue to perform well”. The median projection of real gross domestic product growth among the Federal Open Market Committee’s participants is for the expansion to accelerate to 2.1 per cent in 2017, from 1.9 per cent this year. This bodes well for the world economy as an improvement in demand for goods and services in one of the biggest markets will potentially spur economic activity all over. That the improvement in momentum has been accompanied by “solid” job gains and moderate increases in household spending is particularly heartening since personal consumption undergirds overall demand in the U.S. The Fed has also stated that it expects future interest rate increases to be gradual. The median projection for the funds rate at the end of 2017 is estimated at 1.4 per cent, indicating at most another 3 to 4 quarter point moves over the next 12 months. Such a calibrated approach to policy normalisation will allow international markets time to reset investment weights and priorities, while ensuring that the domestic momentum doesn’t unravel. And with indications that Donald Trump’s administration may unveil policies to bolster domestic economic activity, the prospects for the U.S. economy appear sanguine as of now.
From an Indian perspective, however, there are attendant risks from the Fed’s policy normalisation. For one, the dollar’s strengthening trend against most major currencies and the rupee have begun to push up India’s bill for imports — a large share of which does not lend itself to substitution — and widen the trade deficit. Latest trade data show India’s import costs in rupee terms climbed 13 per cent in November while the value in dollar terms rose 10.4 per cent, in a clear reflection of the impact of the dollar’s appreciation. Also, the very same improvement in U.S. economic outlook that could lend a glint of anticipation to Indian exporters has already been a factor in spurring an exodus of portfolio investment capital from emerging markets, including India, and inflows back into the home market. And with the U.S. President-elect resorting to protectionist rhetoric, Indian companies, especially exporters of software services, are likely to remain on tenterhooks till clarity emerges on the administration’s policy road map. For the moment, all optimism stemming from the strengthening U.S. economy will need to be tempered with caution.
From an Indian perspective, however, there are attendant risks from the Fed’s policy normalisation. For one, the dollar’s strengthening trend against most major currencies and the rupee have begun to push up India’s bill for imports — a large share of which does not lend itself to substitution — and widen the trade deficit. Latest trade data show India’s import costs in rupee terms climbed 13 per cent in November while the value in dollar terms rose 10.4 per cent, in a clear reflection of the impact of the dollar’s appreciation. Also, the very same improvement in U.S. economic outlook that could lend a glint of anticipation to Indian exporters has already been a factor in spurring an exodus of portfolio investment capital from emerging markets, including India, and inflows back into the home market. And with the U.S. President-elect resorting to protectionist rhetoric, Indian companies, especially exporters of software services, are likely to remain on tenterhooks till clarity emerges on the administration’s policy road map. For the moment, all optimism stemming from the strengthening U.S. economy will need to be tempered with caution.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Complete oil retail reform as prices soar ✌✌
The doubling of global oil prices this year, albeit from a low base, is a matter of macroeconomic concern in the face of weakening growth momentum, a strengthening dollar and rising global interest rates. We import an overwhelming share of our petroleum crude requirement, and it is vital that the global rates promptly show up as dearer retail prices so as to reflect scarcity value and deter domestic demand.
True, retail prices of the main petro-products, diesel and petrol, have — at long last — been decontrolled in the last couple of years, and the subsidy on cooking gas is now rightly capped. The subsidy on kerosene is also to be better targeted using Aadhaar cards, so as to avoid artificial, grossly subsidised rates that merely encourage adulteration of automotive fuel. However, there are clear risks ahead in the ongoing demonetisation drive and with key state elections around the corner, the Centre may well deem it politically prudent to court populism, go slow and decide not to pass on the global price rise on to domestic oil prices.
However, non-revision in oil prices would be wholly anti-reform. A large, increasingly outward-oriented and supposedly fast-reforming economy can no longer assume away global prices. The fiscal deficit (read over-extended government finances) would go for a six. In fact, we now need to fastforward pending oil sector reforms to shore up investor interest. Instead of continuing, in effect, to ring-fence the retail oil segment only for oil majors, we need to open up oil marketing for the larger retail industry. A policy on independent oil retailers can well mean more competitive prices, together with attendant services. In the mature markets, ‘independents’ account for up to half of all retail oil sales.
True, retail prices of the main petro-products, diesel and petrol, have — at long last — been decontrolled in the last couple of years, and the subsidy on cooking gas is now rightly capped. The subsidy on kerosene is also to be better targeted using Aadhaar cards, so as to avoid artificial, grossly subsidised rates that merely encourage adulteration of automotive fuel. However, there are clear risks ahead in the ongoing demonetisation drive and with key state elections around the corner, the Centre may well deem it politically prudent to court populism, go slow and decide not to pass on the global price rise on to domestic oil prices.
However, non-revision in oil prices would be wholly anti-reform. A large, increasingly outward-oriented and supposedly fast-reforming economy can no longer assume away global prices. The fiscal deficit (read over-extended government finances) would go for a six. In fact, we now need to fastforward pending oil sector reforms to shore up investor interest. Instead of continuing, in effect, to ring-fence the retail oil segment only for oil majors, we need to open up oil marketing for the larger retail industry. A policy on independent oil retailers can well mean more competitive prices, together with attendant services. In the mature markets, ‘independents’ account for up to half of all retail oil sales.
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