Mamata triggers early poll debate, BJP backs her
New Delhi: West Bengal Chief Minister and Trinamool Congress chief Mamata Banerjee and triggered a debate on the possibility of early general elections. She claimed she has information that a political party in Delhi had held a meeting to advance the Lok Sabha poll to 2013 and asked her partymen to be ready for it.
The Bharatiya Janata Party has welcomed Mamata's comments on early general elections. Reacting to Mamata's comments, BJP spokesperson Shahnawaz Hussain said, "Mamata Banerjee should get rid of this government. She has hinted at early polls in 2013. The BJP wants the elections to take place in 2012 itself. The sooner this government leaves, the better it will be."
However, the Congress remained firm that the Lok Sabha elections would happen as per the schedule in 2014. Congress spokesperson rashid Alvi said, "Every political party should be ready for elections anytime. UPA II will complete its term. The elections will happen at their scheduled time."
PTI Photo
"There may be a difference of opinion. In a democracy, it's very much possible," Alvi added.
Earlier on Friday, Mamata had said that she'd heard that a party in Delhi had held a meeting to advance the Lok Sabha elections by one year to 2013.
"Anyday, we can face election. We have to remain ready," she said.
"One party has held a meeting to hold the election in advance, though my information may not be correct," Banerjee told a meeting of Trinamool Congress without naming the party.
"I have got the information. I am not going into details as to who were at the meeting. They deliberated on advancing the Lok Sabha election to 2013," she said.
Banerjee turned to her close aide and Railway Minister and said "what Mukul? Wasn't the the meeting held?
Mamata's claim contradicts the UPA's stand that elections won't be advanced.
Manmohan Singh link to two rupee slides
MUMBAI: The Reserve Bank of India's hurried steps on Thursday to arrest a sliding rupee was short-lived as the Indian currency was back on its weakening path in Friday's market, thanks mainly to contraction in industrial production in March. With the IIP data showing a 3.5% drop on a year-onyear basis, the rupee depreciated 21 paise to close at 53.64, its sixth weekly loss - its longest losing streak since the 2008 financial crisis. During the crisis , the rupee had fallen for 11 consecutive weeks.
At Friday's close, the rupee has depreciated 22% since August 2011 - exactly the same number by which it was devalued in July 1991. However, the two situations are diametrically opposite. In 1991, the rupee was depreciated in two tranches , from 21 level to 26 level, when India was faced with a tough foreign exchange situation. And the decision to devalue the currency was one of the factors that put the Indian economy on a growth track that lasted nearly two decades.
This time around, it is policy inaction on the part of the government that has slowed down the economy, leading to the weakness of rupee. However , one common link to these two opposite situations is Manmohan Singh. In 1991, he was the finance minister while now he leads the government as PM.
The economic growth is facing several headwinds, but the most important ones that are pulling the rupee down are high current account deficit, at 4% of the GDP, and slowing foreign inflows, especially through stock markets.
"The stress points are clear -India is running a large trade deficit, primarily owing to its high oil and gold import bill, and the financing of the deficit is under pressure owing to global (general rise in investor risk aversion with continued worries about the Euro area) and domestic (slowing of investment and growth, high inflation , policy slippage, and governance related problems), risk factors," a research note by Deutsche Bank pointed out.
"At a time when capital inflows , direct or portfolio related, are losing steam along with the economic and market outlook, it is hard to see how India can finance the current account comfortably ," the bank's analysts noted. JP Morgan estimated that India needs about Rs 1,825 crore on each trading day of 2012 to bridge its current account deficit.
A TALE OF TWO CRASHES
MID-1991
PROBLEM: India's forex reserves were just about enough to meet imports for 2-3 weeks, and it took a series of steps to bring the economy back on track WHAT GOVT DID: In July 1991, it devalued the rupee by 22%, in two tranches, under the stewardship of Manmohan Singh, then the FM. The measures laid the foundation for liberalization in India, which led economic growth for two decades
AUGUST '11 - MAY '12
PROBLEM: Twenty years after the economy was opened up, the rupee is again sliding, and at Friday's close of 53.64/$, the depreciation is 22% (since last Aug). Ironically, this time the reason for its weakness is policy inaction on the part of PM Manmohan Singh-led government IMPORTS: About 40% is on account of crude oil, gold and silver EXPORTS: Software, gems & jewellery, textiles, pharma OTHER INFLOWS: NRI remittances FOREX RESERVES: At around $300bn
What analysts say
CLSA: An unsustainably high current account deficit (around 4% of GDP), inadequate capital inflows and a government that is doing less of what it should do and more of what it should not do, are behind rupee's current weakness
JP Morgan: India needs $340 million (about Rs 1,825 crore) on each trading day of 2012 to bridge its current account deficit.
Enam Securities: India would need inflows of $800 million (nearly Rs 4,300 crore) every day to bridge its trade deficit.
At Friday's close, the rupee has depreciated 22% since August 2011 - exactly the same number by which it was devalued in July 1991. However, the two situations are diametrically opposite. In 1991, the rupee was depreciated in two tranches , from 21 level to 26 level, when India was faced with a tough foreign exchange situation. And the decision to devalue the currency was one of the factors that put the Indian economy on a growth track that lasted nearly two decades.
This time around, it is policy inaction on the part of the government that has slowed down the economy, leading to the weakness of rupee. However , one common link to these two opposite situations is Manmohan Singh. In 1991, he was the finance minister while now he leads the government as PM.
The economic growth is facing several headwinds, but the most important ones that are pulling the rupee down are high current account deficit, at 4% of the GDP, and slowing foreign inflows, especially through stock markets.
"The stress points are clear -India is running a large trade deficit, primarily owing to its high oil and gold import bill, and the financing of the deficit is under pressure owing to global (general rise in investor risk aversion with continued worries about the Euro area) and domestic (slowing of investment and growth, high inflation , policy slippage, and governance related problems), risk factors," a research note by Deutsche Bank pointed out.
"At a time when capital inflows , direct or portfolio related, are losing steam along with the economic and market outlook, it is hard to see how India can finance the current account comfortably ," the bank's analysts noted. JP Morgan estimated that India needs about Rs 1,825 crore on each trading day of 2012 to bridge its current account deficit.
A TALE OF TWO CRASHES
MID-1991
PROBLEM: India's forex reserves were just about enough to meet imports for 2-3 weeks, and it took a series of steps to bring the economy back on track WHAT GOVT DID: In July 1991, it devalued the rupee by 22%, in two tranches, under the stewardship of Manmohan Singh, then the FM. The measures laid the foundation for liberalization in India, which led economic growth for two decades
AUGUST '11 - MAY '12
PROBLEM: Twenty years after the economy was opened up, the rupee is again sliding, and at Friday's close of 53.64/$, the depreciation is 22% (since last Aug). Ironically, this time the reason for its weakness is policy inaction on the part of PM Manmohan Singh-led government IMPORTS: About 40% is on account of crude oil, gold and silver EXPORTS: Software, gems & jewellery, textiles, pharma OTHER INFLOWS: NRI remittances FOREX RESERVES: At around $300bn
What analysts say
CLSA: An unsustainably high current account deficit (around 4% of GDP), inadequate capital inflows and a government that is doing less of what it should do and more of what it should not do, are behind rupee's current weakness
JP Morgan: India needs $340 million (about Rs 1,825 crore) on each trading day of 2012 to bridge its current account deficit.
Enam Securities: India would need inflows of $800 million (nearly Rs 4,300 crore) every day to bridge its trade deficit.
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