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21 MAY, 2012, 04.35PM IST, PTI 

Government to provide Rs 38,500 crore subsidy to oil companies for Q4 FY12

NEW DELHI: The government will dole out Rs 38,500 crore additional cash subsidy to public sector oil companies as part of compensation for selling diesel,domestic LPG and kerosene below cost in 2011-12 fiscal. 

"Yes, the Finance Ministry has agreed to give Rs 38,500 crore compensation for the January-March quarter," a top oil ministry official said here. 

The cash payout would be on top of Rs 45,000 crore that Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) got for the first nine months of 2011-12 financial year. 

The three firms had lost a record Rs 1,38,541 crore on selling diesel, domestic LPG and kerosene at government- controlled rates that were way lower than market price. Together with the additional payout agreed, the government will make up 60 per cent or Rs 83,500 crore of the total revenue loss. 

Upstream companies Oil and Natural Gas Corp (ONGC), Oil India and GAIL India have been asked to shell out an additional Rs 1,640 crore - over the Rs 53,360 crore indicated earlier -- as their share of the subsidy burden. 

The cash subsidy and assistance from upstream oil companies would bridge almost all of the Rs 138,541 crore of revenue loss, the official said. "Without this, the three companies would have for sure posted huge losses." 

IOC is to declare its fourth and 2011-12 annual financial results on May 28, while HPCL would do so on May 29. BPCL has scheduled a board meeting for the results on May 25. 

ONGC, OIL and GAIL had in April-December 2011 contributed Rs 36,894 crore towards fuel subsidy and they would provide another Rs 18,106 crore in the fourth quarter. 

"The share of upstream companies (in total under recoveries or revenue loss) works out to be 39.7 per cent. In 2010-11, they had borne 36.75 per cent of the under recoveries," he said. 

Besides losses on diesel, domestic LPG and kerosene, state fuel retailers also lost Rs 4,890 crore on sale of petrol, a commodity which was decontrolled in June 2010 but rates of which haven't been raised due to political considerations. 






21 MAY, 2012, 08.21PM IST, REUTERS 

RBI to take more steps to stabilise rupee: Deputy governor Subir Gokarn

MUMBAI: The Reserve Bank of India will continue to take steps to stabilise the rupee, but the currency's direction will ultimately depend on capital flows, Subir Gokarn, a deputy governor at the central bank, said on Monday. 

"We have done a number of things and will continue to do things that we think will have an impact of stabilising the currency," Gokarn said at the sidelines of an industry event. "But ultimately capital flows are going to be the main determinant of how the currency behaves," he added. 

The rupee fell below the key psychological level of 55 against the dollar to hit a new record low earlier in the day, setting up the prospect of further falls unless the central bank takes measures or intervenes more aggressively, traders said. 

The central bank has largely failed to stop the rupee's fall despite selling dollars and taking steps to attract inflows through deposits and exporters foreign currency holdings. 

Gokarn also said the RBI was likely to buy bonds through its open market operations (OMOs) this week. 

"Since we've been working with the benchmark of around one percent of the net demand and time liability (NDTL), we did an OMO last week. We're likely to do one this week as well, just to make sure that the gap is not widening," he said. 

Demand for funds from banks is likely to be high this week because lenders borrow more at the start of the two-week reporting cycle, and a $2.7 billion debt sale on Friday will further add to liquidity pressures. 

Banks borrowed 1.04 trillion rupees from the RBI's repo window on Monday, significantly higher than the RBI's comfort level of around 600 billion rupees, indicating the extent of liquidity strain in the system. However, the weekly capacity for OMOs is limited by market conditions, but the central bank will continue to do them as and when the liquidity situation warrants, Gokarn said.

21 MAY, 2012, 08.39PM IST, PTI 

Global buyers ask exporters for discounts on falling rupee

NEW DELHI: With rupee plunging below the 55-level against dollar, which benefits exporters, global buyers are putting pressure on Indian exporters to offer 10-15 per cent discount on shipments. 

The country's apex exporters body Fieo, however, said the continuous fall in the domestic currency would not help exporters much. 

"Global buyers are putting pressure for more and more discounts. They are asking for about 10-15 per cent. They want to re-negotiate the deals," Director General of Federation of Indian Export Organisations(FIEO) Ajay Sahai said. 

Industry body Assocham said this is a "serious" situation as it will further increase the country's gold and crude oil imports, which in turn would widen the trade deficit. India's trade deficit in 2011-12 has touched an all time high of USD 185 billion. 

Ficci Secretary General Rajiv Kumar said that falling currency beyond a point is not good for economy and there is a need for strong reform measures. 

"To overcome from the problem of fall, the government should immediately take strong economic reform steps to boost foreign direct investment. There is a need to remove the impediments to increase investments," Kumar said. 

To check the sliding rupee, the Reserve Bank had last week asked exporters to convert half of their foreign exchange reserves into rupee to make available dollars in the market.