Indian Economy - News & Updates - Archive

[Contrarian]

Sensex@all-time high, crosses 14,300 mark

Sensex and Nifty struck a new all-time high in afternoon trade with Sensex crossing 14,300. Oil pack led the rally, tracking recovery in US crude futures. Oil futures rebounded to end more than a dollar higher, off a 20-month low on Wednesday.

At 1:40 pm, the Sensex was up 176.03 points or 1.25 per cent, at 14,307.37 and the Nifty was up 59.15 points or 1.45 per cent at 4,135.60.

Positive third quarter results also aided the intra-day rally. Several stocks in the mid-cap segment were also in bullish form, lifting the segment indice to record high. Market was buoyant tracking green Asian markets, bullish overnight closing of Indian ADRs and data showing resumption of FII-buying.

Ranbaxy Laboratories Ltd Q3 results met market expectations. The company posted consolidated profit after tax & minority interests of Rs 183.30 crore for the quarter ended December 31, 2006 as compared to Rs 68.60 crore for the quarter ended December 31, 2005. Total income (net of excise) increased from Rs 1450.30 crore for the quarter ended December 31, 2005 to Rs 1779.30 crore for the quarter ended December 31, 2006.

Among the 30-Sensex pack, 28 advanced while the rest declined. In NSE, there were 738 advances and 262 declines.
Among the sectoral indices, almost all were trading in the positive territory. Oil and gas stocks surged 2.39%, PSU stocks jumped 2.05%, capital good stocks advanced 1.25% and telecom stocks rose 1.09% while consumer durable stocks declined 0.49%.

The major market movers on Sensex were ONGC which gained 4.19% to Rs 932; L&T rose 2.37% to Rs 1,590; Bharti Airtel rose 2.24% to Rs 681.65 ; HDFC jumped up 2.14% to Rs 1,581 and Reliance rose 1.83% to 1,374.50. Dabur, ONGC, Jet Airways, HCL Tech and VSNL were the major gainers in the NSE.

There were just two major losers in the BSE pack. Tata Motors which declined 0.58% to Rs 959 and Hindalco which fell 0.12% to Rs 168. Engineering & construction major L&T rose 2.3% to Rs 1,588.25. The stock today hit an all-time high.

Cellular service providers were in demand expecting strong Q3 results. Bharti Airtel rose 2.5% to Rs 683.50. The stock today struck an all-time high of Rs 683.70. Reliance Communications rose 1% to Rs 446.80.

Exide Industries Ltd climbed 1.7% to Rs 43.65 after posting unaudited net profit after tax of Rs 34.85 crore for the quarter ended December 31, 2006 as compared to Rs 21.54 crore for the quarter ended December 31, 2005. Total income increased from Rs 339.26 crore to Rs 459.58 crore in the same period.

Chambal Fertilisers & Chemicals Ltd fell 2.5% to Rs 38.40 on posting unaudited net profit of Rs 70.13 crore for the quarter ended December 31, 2006 as compared to Rs 77.89 crore for the quarter ended December 31, 2005. Total income deceased from Rs 1056.89 crore to Rs 798.14 crore in the same period.

NDTV rose 0.8% to Rs 314.75 after reporting 92% surge in net profit for the quarter ended December 2006, to Rs 4.82 crore, compared to a net profit of Rs 2.51 crore for the quarter ended December 2005. Total income increased to Rs 79.38 crore from Rs 68.90 crore in the same period.

Cement pivotals inched ahead on expectations of strong Q3 numbers. ACC rose 1% Rs 1,105.40 and Gujarat Ambuja Cements gained 1% to Rs 145.50. UltraTech Cement rose 0.5% to Rs 1170, ahead of its Q3 results today.
The Nikkei average finished up 0.48% or 82.45 points at 17,343.80, after earlier hitting its highest since April at 17,408.62. The Topix index rose 0.38% to 1,713.24.

The Dow Jones industrial average slipped 5.44 points or 0.04%, to end at 12,577.15. The Standard & Poor's 500 Index dipped 1.28 points or 0.09%, to close at 1,430.62. The Nasdaq Composite Index fell 18.36 points or 0.74%, to finish at 2,479.42.

Nymex crude was up 26 cents, at $52.50 a barrel, on Thursday. It had rebounded on Wednesday from a 20-month low.

 

[Contrarian]

Satyam Q3 dips 30% at Rs 343 cr

MUMBAI: Software major Satyam Computer Services on Friday posted a 30.37 per cent decline in profit after tax at Rs 343.30 crore for the quarter ended December 31, as compared to Rs 493.08 crore for the same quarter last year.

Total income increased 5.67 per cent to Rs 1,604.60 crore during October-December 2006-07 from Rs 1,518.49 crore for the corresponding quarter a year ago, Satyam informed the Bombay Stock Exchange.

The Group posted a profit after tax and share of loss in associate company and minority interest at Rs 337.23 crore for the third quarter this fiscal, as compared to Rs 429.54 crore for the same quarter previous year.

Total income of the Group increased to Rs 1,671.29 crore for the quarter ended December 31, from Rs 1514.69 crore for the corresponding quarter in the year ago period.

The shares of the company were trading under pressure at Rs 492.50, down 4.41 per cent on the BSE.

 

[Contrarian]

Sensex up 82 points, touches 14,300 points

MUMBAI: The benchmark BSE Sensex shot up by 82 points in early trade on Friday and touched the 14,300 points level due to sustained buying by funds on the back of good third quarter results of Reliance Industries Ltd.

The BSE-30 share index, which had gained 86.41 points on Thursday, was up by another 82.36 points at 14,300.11 in the first five minutes of trading.

Similarly, the Nifty index on the wide-based National Stock Exchange rose by 28.10 points at 4,137.15.

Stock brokers said Reliance Industries stocks continued to remain centre of brisk activity after company posted strong earnings for the third quarter.

Shares of RIL, which reported a 58 per cent jump in net profit to Rs 2,799 crore in the quarter ended December 31, zoomed to record high of Rs 1,428 on aggressive buying.

Other index-related stocks stocks too were in positive zone with sizeable gains.

 

[Contrarian]

Rupee seen lower as dollar up against yen

MUMBAI: The rupee may ease on Friday as the dollar climbed to near a four-year high against the yen, and on expectations for dollar demand from oil refiners.

The Japanese yen slid against the US unit after the Bank of Japan decided to leave interest rates unchanged at the end of its two-day policy meeting on Thursday.

Traders expect oil refiners to buy dollars to stock up crude as US oil traded above $50 per barrel. Oil is India's biggest import.

The partially convertible rupee ended weaker at 44.335/345 per dollar on Thursday, off an early high of 44.14 and compared with 44.18/20 in the previous session.

 

[Contrarian]

Subex buys Canadian firm for $164 million

BANGALORE: In what is said to be the single largest global acquisition by an Indian software company, telecom software firm Subex Azure, has announced acquisition of Canadian telecom solutions provider Syndesis for $164.5 million (Rs 728 crore) in an all cash deal.

The transaction is expected to be completed by March-end, Subex CMD Subash Menon said. Subex believes the acquisition strengthens the company's leadership in the telecom OSS (operations, support, software) space.

"The acquisition of Syndesis — a recognised player in the fulfilment and assurance solution segment — will enable Subex Azure to extend its product portfolio and provide solutions that empower operational dexterity," Menon said. Post the deal, Subex Azure will have 32 of the top 50 telcos in the world as its key clients, company officials said.

The fulfilment and assurance segment (service activation software that will enable telcos to get their new value added services activated) is worth $2 billion globally, while the fraud management market, where Subex operates, is currently about $500 million. Hence, this acquisition is expected to broaden Subex's product portfolio.

 

[Contrarian]

Modi bros talk settlement

NEW DELHI: The warring Modi brothers seem to be working towards narrowing down their differences.

B K Modi and V K Modi have smoked the peace pipe, at least on Modi Rubber Ltd, a bone of contention for many years, where differences have meant that operations have remained suspended for nearly five years, culminating into a reference to the Board of Industrial & Financial Reconstruction setting the stage for a revival of the company.

B K Modi, sources said, has agreed to let his younger brother V K acquire the 44% stake held by banks and financial institutions at Rs 91 per share in a deal estimated to be worth Rs 101 crore.

Sources said V K will have a 64% stake in Modi Rubber, through his holdings in the company through other entities. The FIs had invited bids from both the brothers on the basis of an "upfront all-cash basis".

B K Modi, who is now into film-making, had offerred to buy the stake at Rs 70 per share. V K Modi, on the other hand, offered a price of Rs 91 per share but sought permission to make the payment in one month.

ICICI Securities, the merchant banker acting on behalf of FIs, accepted V K Modi's bid, and permitted him to deposit 20% upfront and the rest by August 18.

But B K Modi opposed the decision and later decided to revise his offer to Rs 95 per share, provided he was also given time to pay up.

With FIs not agreeing to the proposal, B K Modi challenged the move in BIFT and later in AAIFR, which did not intervene. The brothers reached an amicable solution after weeks of negotiations.

 

[Contrarian]

Ballarpur to toe Lalit Thapar's global vision

NEW DELHI: When Lalit Mohan Thapar decided to don the mantle of chairman emeritus of Ballarpur Industries Ltd (BILT) on June 30, 2006, he wanted to be around to advise the chairman and the companys board whenever needed.

But now, the group which he steered for over 40 years, will have to live without his vision, acumen and entrepreneurial skills.

This came at a time when the flagship company of the group, Ballarpur Industries has decided to transform from being the country's largest paper manufacturer to become a significant global paper.

LMT decided to step down as chairman after he passed 75 year, which he thought was a significant milestone to take this important decision.

This fundamental change (of becoming a global player) in the DNA of BILT requires new strategic leadership at the highest level, he had said.

Gautam Thapar, his nephew who had been involved with running the company, he felt had the energy and drive to ensure the successful execution of the global vision of BILT.

LMT, as he was fondly called by his friends and employees, had a difficult 2006 and was not regularly at work, specially after his illness. He had handed over the day-to- day responsibilities of his empire, including the flagship Ballarpur Industries to Gautam Thapar, the vice-chairman and MD of the company.

LMTs father late Karam Chand Thapar was the founder of the Thapar empire. The group was among the top corporate houses in the country till the late 1990s.

During the late 90s, the slowdown in the economy and the paper industry impacted Ballarpur and the company went through a rough patch.

Slowly, Bilt bounced back, partly because of LMT virtually forced the Indonesia paper giant Sinar Mas to fold up and sell out to Thapars.

After a bitter corporate battle, Sinar Mas threw up its hands, and sold its Indian operations to Bilt. Many say, it was because of LMT's influence in the corridors of power.

LMT was a well-networked industrialist, and also had influence beyond the national boundaries. This was evident, when Polaris boss Arun Jain was put behind bars in Indonesia and the situation seemed to be getting out of control, it was LMT who helped him to get out.

With the liberalisation wave hitting the country, Ballarpur diversified into a host of unrelated businesses like leather, light weight concrete blocks and reinforced slabs, prawn culture, compressed straw board, nylon, newspaper publication etc.

But the group failed to make success of most of these businesses, lost financially and then decided to hive off some of these businesses. The major among them was edible oil and glass.

Then came the family settlement in 2000, following which the entire empire was divided among LMTs brothers - IM Thapar, BM Thapar, MM Thapar, who have since given greater responsibility to their children to run the various companies in the group.

According to the original family asset and management division, Bilt and AP Rayon went to LM Thapar; JCT, JCT Electronics and Greaves to MM Thapar; Bilt Chemicals, Bharat Starch and Crompton Greaves was vested with BM Thapar; and KCT Coal Sales, Water Base and India City Properties to IM Thapar.

After the split in the group, it decided to focus on paper, and several initiatives such as a new product-mix and re-organisation of marketing and distribution, were taken in tune with the emerging trends in the industry, locally and globally.

Recently, under LMTs guidance, the company decided to focus on retail market with a new portfolio of branded products —well-manufactured stationery and tissues.

 

[Contrarian]

Identification No. to invest in MFs may be scrapped

NEW DELHI: Taking up the cause of investors, the finance ministry is asking Sebi to withdraw the newly-launched MINs — the identification number for investment in mutual funds.

It is instead proposing that the permanent account number (PAN) card issued by the tax department should be used so that individuals who already have a score of cards to deal with are spared of the burden of one more identification number.

North Block, sources said, is of the opinion that PAN should be amended in a way that it provides the details of the city where the investor resides and also gives the bank branch through which he transacts business.

The ministry has also suggested a safety net for those who have multiple accounts in one branch so that confusion can be avoided.

Investors have been complaining of hardship since MINs became mandatory for fresh investment of Rs 50,000 or more in mutual funds from January 1.

When the scheme became mandatory only around 2,000had MINs, while there are a large number of investors who have taken fancy to mutual funds in the recent past.

A part of the problem is due to delay in issuing the guidelines, which were released barely a week before the deadline.

The problems being faced by investors has already been discussed with the market regulator and the Association of Mutual Funds of India, which was the driver for the change to comply with the Know-Your-Customer (KYC) norms.

But AMFI is learnt to have resisted any changes to the present scheme, prompting the finance ministry to dash off a letter to Sebi.

AMFI is now trying to increase the number of players including some banks and ICICI Brokerage to authorize them to issue MINs.

The issue is expected to be clearer in the next few weeks though a retreat by AMFI will be difficult given the fact that a number of investors have queued up over the last fortnight to get the new numbers, sources said.

 

[Contrarian]

Sharp rise in banks' foreign liabilities

MUMBAI: Foreign liabilities of Indian banks rose sharply between April and June 2006 as NRIs deposited large sums to take advantage of buoyant interest rates in the country and companies borrowed abroad to buy capital goods for capacity expansions.

RBI has released data which shows that banks' international liabilities at the end of June 2006 stood at Rs 59,636 crore, or nearly 23%, above the previous year's level.

Liabilities rose by Rs 14,153 crore, or 4.6%, during the first quarter of fiscal 2007 compared to the previous quarter.

Egged on by a surging equity market, NRIs and portfolio investors bought more Indian shares and deposited large funds in banks.

NRE rupee deposits (33%), foreign currency borrowings (22%) and FCNR(B) deposits (20%) accounted for three-fourths of total liabilities.

Much of the NRE and FCNR(B) deposits have come from US, UK and United Arab Emirates as migrant Indian workers and professionals sent money home.

"NRE rupee deposits are highly interest rate-sensitive. Indian banks have been offering attractive rates on such deposits. Banks, on an average, offer over 6% return on an annual basis. Additionally, interest on NRE and FCNR is free from Indian taxes, whether an NRI operates the account directly from his host country or from India. This has also enabled banks to mobilise funds through these products," said an official at a private sector bank.

The economy has grown at an average rate of over 8% in the past three years and demand for loans has increased at more than 30% every year, sending banks scrambling for money.

High returns from MFs and other avenues have driven away a large number of domestic depositors, forcing them to offer better interest rates to mobilise money.

Strong imports have also stoked demand for foreign currency, much of which comes from expatriates and foreign investors.

RBI data showed that nearly 69% of borrowers took loans in four countries — US (37.1%), UK (13.3%), Singapore (12.1%) and Germany (6.1%).

They borrowed in rupees (47.9%), followed by dollars (41.4%) and pound (5.8%).

"Dollar-denominated debt would be a cause of concern if we expect any depreciation of rupee against dollar. At present the market is of view that easing oil prices would help strengthen rupee against greenback. However, one is not aware of any major shocks in the future," said Abheek Barua, chief economist, ABN Amro Bank.

 

[Contrarian]

Left to fight insurance cap rise

NEW DELHI: The need to counter the ever-growing perception that government is not moving forward on big-ticket reforms may be a major motivation for the fresh effort at getting some progress on easing the FDI cap in Insurance sector.

Left's resistance has been the chief stumbling block for a government eager to expand the field by letting in big global names in the insurance sector.

Karat's reaction showed that Left remains unrelenting. Indeed, a senior Left leader appeared to mock Chidambaram's assurance to Brown.

"From time to time, the finance minister keeps making this promise," he said. "We will oppose it tooth and nail."

During the meeting, opening of the banking sector also came up and India sought greater freedom for its banks to operate in UK.

"We hope UK will give more licences to Indian banks," Chidambaram said. He pointed out that Standard Chartered Bank of UK was the largest foreign bank in India. "I am sure they will continue to grow organically in India," he said.

At the launch of the financial dialogue, both sides discussed ways to stem flow of finances to terrorists. The need to cut funds to terror groups was part of comprehensive discussions on security.

Chidambaram also assured Brown that Vodafone, a leading British telecom player which is bidding for India's fourth largest cellular service provider Hutch-Essar, would not be discriminated against.

 

[Contrarian]

Govt aims to cut Internet tariffs

NEW DELHI: After beating down tariffs in the voice market, telecom & IT minister Dayanidhi Maran is set to replicate the trend in Internet services.

To do this, Maran intends to work with MTNL, BSNL and STPI to launch server hosting centres in India.

"We want traffic generated in India to terminate in India rather than be routed through a server located overseas. The costs will go down and data flow will be faster," he said.

Speaking at The India Digital Summit 2007, the minister said his vision for a digital India was to see an India connected with a network of communication technologies spanning optic fibre and wireless, interacting in all 22 languages using language to language machine translation and cross lingual information access facilities.

Maran pointed out that despite India being one of the top six nations to use the Internet, with high double digit annual growth, the top 10 hosts of wesites indicte that the top three websites are all .com websites with servers based in European countries.

"With a projected 0.62% growth rate of the website hosting market, I set a target to see. in websites with servers basedin India take the position in the top 10 webhosting sites.

To mark 2007 as the Year of Broadband, the government is setting a target o broadband coverage for all secondary and higher secondary schools, public health care centres and grampanchayats.

 

[Contrarian]

Discussion:

I think its wrong for Indian companies to buy out foreign companies or invest on foreign shores just yet. I think they should invest heavily in their own country, thereby increasing the countries infrastructure and making the atmosphere more and more condusive for investment. I think it kind of gives the wrong signals to other foreign investors as well as the fact that money goes out of the country.

This should be happening, but not now. I think now is not the time for this, probably after 5-10 years, this should happen. The companies should invest abroad after this period.

 

[Contrarian]

ETA Ascon to invest $600 mn in India

CHENNAI: Dubai-based ETA Ascon business conglomerate views India as a land of multiple opportunities and has chalked out big plans for pumping in huge investment in infrastructure, manufacturing and service secctors.

Syed M Salahuddin, managing director, ETA Ascon group of companies told ET in Chennai, " We are definitely looking at India as a big opportunity to grow our businesses. We have envisaged a capital investment of $ 500 to 600 Million in the next two years of which our equity investment will be $ 100 to 150 Million".

Founded in 1973, ETA group employs over 40,000 people and has revenues of over $ 3 Billion. It has operations mainly in UAE and India with interests in areas like construction, manufacturing, trading, shipping, retail, leisure, facilities management, automobiles, insurance and IT

He said the group has identified certain areas for investment. These building port facilities including private ports, special economic zones, independepent power plants based on coal and industrial goods like lifts and elevators.

It is also interested in building container terminals and handling cargo containers. Now, containers are transported by public sector Container corporation of India. ETA is among the 14 new players approved by the Government for moving containers from inland container depots. It will operate the service from Mumbai to Delhi with its own ICDs.

Mr Salahuddin said it proposes to build IPPs mainly on the East coast by entering into power purchase agreement with power trading corporation. In view of the construction boom, there is a huge market for lifts and elevators and the group represented Mitsubishi for marketing them in India.

He said the group has built a culture of growing in a organic way without taking the M & A route. It also plans to enter the property market in a big way by constructing houses in Bangalore and Chennai and major tier II cities like Coimbatore, Chandigarh and Nagpur.

In financial services, the group is looking at setting up call centres and BPOs in India for servicing clients in Middle East and the US. Recently, it floated a JV with Sundaram Business services of Sundaram Finance group for tapping the BPO markets in UAE and other countries.

The MD also expected Star Health and allied insurance ( India’s first stand alone health insurance company) to do well in the next two years with growing awareness for medical insurance. Asked about its foray into the banking sector, he said, " We are definitely watching that opportunity also".

Mr Salahuddin, who recently received pravasi Bharathiya Samman ( best achiever non resident indian) award from President of India , Dr A P J Abdul Kalam said there is a wealth of capital available in Gulf countries generated out of big margin on crude products.

About 30% of Gulf companies have long connection with India. They are keen on teaming up with NRI entrepreneurs and managers for investment in India. If their proposals with ETA group is considered, total capital investment in India will exceed $ One Billion, he pointed out.

In order to quickly attract their investment, Indian Government has to conduct road shows and create an awareness in the Gulf Region. Being a democracy, India has its owns problems. But, if it has to grow fast like China, it has to overcome infrastructure constraints.

Mr Salahuddin said , " India is endowed with natural resources like mining materials and water as well as vast human resources. Besides the skilled labour, over the years, it has developed a large managerial and entrepreneurial class. It also has a big market. So, naturally, India has to grow. No one can stop its growth".

" Our knowledge power is our unique strength. We are definitely better than others. No other country has chosen a scientist ( Dr Kalam) as its President", he noted.
http://economictimes.indiatimes.com/ETA_Ascon_to_invest_600_mn_in_India/articleshow/1226642.cms

 

[Neo]

Indian inflation hits highest in two years

NEW DELHI: India’s inflation jumped half a percentage point to top six per cent, its highest level in two years, as prices of food soared, data showed, stoking expectations of an interest rate rise.

Inflation measured by the wholesale price index — the most closely watched price monitor — hit 6.12 per cent for the week ended January 6 from 5.58 per cent the previous week and 3.86 per cent for the same week a year earlier.

The rate was the highest since late 2004.

Prices of such staples as fruits, vegetables, maize and wheat all climbed as did costs of aviation turbine fuel and other energy sources, according to the official data released on Friday.

The rate was far above the 5.5 per cent ceiling set by India’s Reserve Bank of India, leading to speculation that the central bank would tighten monetary policy at its next meeting on January 31.

“I think you will see some kind of change in the repo rate or the bank rate,” said TK Bhaumik, chief economist at India’s largest private company Reliance Industries in Mumbai.

Finance Minister P Chidambaram said the inflation rate was “a matter of concern” and that his ministry was in touch with Reserve Bank of India and the Ministry of Agriculture.

“Inflation is a highly sensitive issue for the government,” Bhaumik said.

The government has said infrastructure bottlenecks in Asia’s fourth-largest economy are fuelling inflation but it is keen to avoid stifling growth.

The economy grew by 9.1 per cent in the first half of the financial year.

At the same time, the ruling Congress government — mindful that rising costs can be political dynamite among India’s poor masses which helped propel it to power in 2004 — has said “price stability is one of the highest priorities.”

The central bank has been using a variety of monetary tools to try to tame inflation.

In December the Reserve Bank boosted the amount of money that banks must keep with the central bank, sucking out liquidity in a bid to fight inflation and stop the economy from overheating.

It raised the cash reserve ratio by 50 basis points to 5.5 per cent in a bid to drain Rs135 billion, or three billion dollars, from the banking system, citing rapid economic growth, 30 per cent credit growth, rising inflation and “strains on domestic capacity utilisation”.

It had also in stages hiked its reverse repurchase rate by 125 basis points to a four-year high of six per cent and raised its short-term lending rate by 150 basis points to 7.25 per cent with the most recent 25-point rise in October.

However, earlier this week global investment services Moody’s said it did not expect any tightening moves by the central that would provoke a “hard landing” for the Indian economy.

http://www.thenews.com.pk/daily_detail.asp?id=39506

 

[Contrarian]

Govt mulls options to use forex for core sector

NEW DELHI: The use of foreign exchange reserves for financing infrastructure projects seems to be on top of the government's agenda for the Budget, with the finance ministry exploring four options to step up investment in core sectors like roads, ports, airports and power.

While it has reopened the suggestion to set up a special purpose vehicle (SPV) which will draw on the $177 billion reserves, the government, sources said, was contemplating a currency swap arrangement with a multilateral financing agency like the Asian Development Bank.

While ADB is borrowing through bonds in India, the government could pass on some of the reserves and the Manila-headquartered body could reinvest it in the country through sectoral assistance, sources indicated.

The third option was to invest the forex reserve in instruments that generated high returns and the earnings on the corpus could be ploughed back into the rickety infrastructure sector.

Another alternative was to allow import of machinery and equipment used by developers at zero or 5% customs duty. But this option, officials said, appeared remote since companies are permitted to import these equipment on payment of nominal or zero tariff.

While going back to the proposal to set up an SPV, like India Infrastructure Finance Company, to use forex reserves, sources said the option to set up the company overseas, which will invest in infrastructure projects, was also being explored.

Officials, however, said that a final decision on one of the instruments will be taken after an expert committee under HDFC chairman Deepak Parekh submitted its report.

Besides, it was not necessary that the government will use foreign exchange reserves to finance core sector projects, which Planning Commission estimates suggested required $320 billion over the next five years.

It is quite possible that like last time, government will junk the idea if RBI did not see merit in it or had reservations against the use of forex reserves.

While the proposal, first mooted by Plan panel deputy chairman Montek Singh Ahluwalia, appeared to be on the backburner, finance minister P Chidambaram decided to go back to it recently.

He had asked officials to prepare a note and consequently announced the setting up of the expert committee under Parekh, which is expected to submit its report shortly.
http://timesofindia.indiatimes.com/...forex_for_core_sector/articleshow/1322744.cms