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NEW DELHI â" India's ruling Congress party said Wednesday it will not reverse a controversial decision to allow foreign supermarkets to invest in India and other market-opening measures.
But it may be willing to make some compromises, including partially rolling back recent diesel price increases and limits on subsidized gas, said a cabinet minister from Congress.
Activists from the National Federation of Indian Women shouted slogans during a protest against foreign direct investment, New Delhi, Tuesday.
The measures, part of a package unveiled last week in a gesture to win back investor confidence, caused a government ally, the Trinamool Congress, to threaten Tuesday to pull its support from the coalition by the end of this week.
Trinamool, on whom Congress depends for its majority in Parliament, says allowing foreign retailers like Wal-Mart Stores Inc. and Carrefour SA to open supermarkets here will hurt small-time Indian retailers.
Raising diesel prices and reducing the supply of cheap gas, the party argues, impacts India's poor, who spend a higher percentage of income on fuel.
Investors and businesses, in India and abroad, welcomed the moves as a first step to help foster stronger economic growth and get unsustainable budget and trade deficits under control â" imbalances that have led global ratings agencies to threaten this year to downgrade India's sovereign debt to junk.
The Congress cabinet minister, in an interview, said the government could not go back on the move to open its retail, aviation and broadcasting sectors to greater foreign participation.
"It is a matter related to the country's prestige and ratings. We can't just go on the back foot after giving positive signals to the international market," the minister said.
Instead, the minister said there could be some partial repeal of the measures to raise fuel prices. "People's concern is a concern for the government. We are trying to ease out things," the minister said.
A senior member of Congress, Janardan Dwivedi, said the ruling party was considering increasing the number of subsidized gas cylinders that each family is allowed to nine from six.
Before last week, there was no limit on the availability of subsidized gas. But Congress moved to set a six-bottle ceiling per household, and to raise subsidized diesel prices by 14%, in an attempt to stabilize the government's shaky finances.
For now, a compromise appears far off. Trinamool's head, Mamata Banerjee, who is also chief minister of West Bengal state, vowed Wednesday to continue to oppose letting foreign supermarkets come to India.
"We are not in any way going to accept the decision to allow foreign direct investment in multi-brand retail," Ms. Banerjee said. "We will continue protesting FDI in retail no matter what the consequences."
Saugata Roy, a Trinamool member and junior minister for urban development in the national government, said the government would have to backtrack on retail liberalization, scale back most of its diesel price increase and allow 12 cylinders of subsidized gas per household.
He added, however, that Ms. Banerjee had set Friday as the deadline to pull her ministers from the government to allow "a window for compromise."
A number of opponents to the overhauls, including Trinamool and the main opposition Bharatiya Janata Party, are calling for a nationwide strike Thursday.
Congress can survive for now without Ms. Banerjee's support as Parliament is not in session. But the government could face a no-confidence vote in December, when the legislature reconvenes.
The ruling party believes it can count on the support of independent parties in such an eventuality. We are "not worried about numbers in Parliament," the cabinet minister said.
Most analysts don't expect a major about-turn by Congress, which last year was forced to suspend an earlier decision to allow foreign supermarkets to open in India due to opposition from Ms. Banerjee.
Still, political instability in the months ahead means other reforms that investors want to see are unlikely to gain a toe-hold, observers say. These include permitting foreign investment in insurance, pushing through legislation to make it easier to acquire land and simplifying the country's sales taxation regime.
"Even though any significant rollback of last week's measures is highly unlikely, we believe that the prospects for further reforms - either administrative or through legislation - have diminished as a result of the latest political turmoil," Eurasia Group, a global political risk consultancy, said in a report.
Others said the government has a window to push through more belt-tightening measures now, which will rapidly close as general elections, due by mid-2014, approach.
"I think the window of opportunity for market-friendly reforms is very short, say about another six months," said Robert Prior-Wandesforde, director of Asian Economics Research at Credit Suisse. "As we draw closer to the elections, the focus will shift from market-friendly reforms to people-friendly reforms."
Finance Minister P. Chidambaram, who Monday promised more overhauls, could move in the short term to crack down on tax avoidance, Mr. Prior-Wandesforde said. The government, he added, needs to take other measures than reducing fuel subsidies to keep its budget deficit below 6% of gross domestic product this year.
Mr. Wandesforde said it was important for the government to stick to the reform measures announced last week. If not, there could be some "fairly violent market reactions."â"Anant Vijay Kala and Mukesh Jagota contributed to this article.
Air India flew away its second Boeing 787 Dreamliner from Charleston International Airport on Tuesday afternoon, despite continuing concerns about the General Electric engine that powers such airplanes.
The red, gold and white jet, one of two assembled in Everett, Wash., and flown to North Charleston in early July, was officially delivered to the Indian national carrier earlier in the day, a Boeing spokesman confirmed.
According to the flight-tracking website FlightAware, the plane was expected to land in Frankfurt, Germany, late Tuesday. Like the first 787 delivered from Boeing South Carolina this month, it will continue on to India from there.
Aside from confirming the delivery, Boeing did not publicize or celebrate it, and neither did Air India.
The Chicago-based airframer and the troubled government-owned airline had negotiated for months over what compensation Air India was owed for Boeing's years of delays. Air India ordered 27 787s almost seven years ago but only took delivery of its first Dreamliner on Sept. 6. There are now three 787s on the Boeing South Carolina flight line, all assembled locally; the lone painted jet would be next in line for delivery.
Tuesday's fly-away was somewhat unexpected given that history, but also because of the ongoing probe into the GEnx engines that power many 787s, including all made so far by Boeing South Carolina, and 747-8s.
The engine trouble began July 28 when one of the GEnx-1B power plants on the second S.C.-built 787 failed during a pre-flight taxi test, igniting a small fire by the runway and briefly closing Charleston International Airport. After a preliminary investigation, the National Transportation Safety Board determined the engine's fan midshaft had fractured, causing it to shift backward and break both turbine blades and the stator vanes they hit.
Then, on Sept. 11, a Boeing 747-8 freighter operated by Air Bridge Cargo experienced a similar engine failure while preparing to take off from Shanghai, China. The larger 747-8s are powered by four GEnx-2B engines, which are similar to each 787's pair of GEnx-1B engines.
The NTSB did not weigh in until Friday when it issued a four-page report that revealed it had found cracks in a third engine's drive shaft and included two urgent safety recommendations.
The agency called on the Federal Aviation Administration to check all in-service GEnx engines not already inspected before further flight and to require repetitive inspections of the fan midshafts of all GEnx engines.
In the meantime, GE said it had "introduced changes in the production process that address environmentally assisted cracking, including changes to the dry-film coating applied to the mid-shaft, as well as changes to the coating lubricant used when the retaining nut is clamped to the mid-shaft."
The FAA said in a statement Friday it would "soon issue an emergency airworthiness directive and ... take appropriate action." But as of Tuesday evening, the agency had taken no action.
The series of events has puzzled analysts, such as Carter Leake, who covers the aerospace and defense industries for BB&T Capital Markets.
On Thursday, Leake had written a note advising investors to "brace for the possibility of an FAA directive that significantly impairs -- or even grounds -- the 787 and 747-8 fleets in the next few days." The same note went on to say, "given Air India's past behavior, we would not be surprised if Air India opted not to close on aircraft due for immediate delivery this month."
But on Tuesday, a day which brought another Dreamliner delivery but no word from the FAA, Leake wondered whether GE is negotiating terms with the FAA and whether the engine manufacturer's coating fix would be sufficient.
"What I struggle with is ... do you get to just apply the new coating and that's fine?" he asked. "But what about all the in-service engines? I've got to believe that you've got to swap out the whole turbine shaft with a correctly coated one."
"If the FAA thought this was a safety-of-flight issue, they would act," Leake continued. "But if they really had the root cause, and everything was fine, you would've had something by now."
As for Air India, Leake said the government-owned airline must be comfortable that Boeing and General Electric have their arms around the problem and will pay to fix it expeditiously -- or is simply showing good faith.
"You can't hold up a $200 million asset over a hypothetical problem," he said. ___
(c)2012 The Post and Courier (Charleston, S.C.)
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With India losing to Pakistan in a warm-up match as a precursor to the World T20, we couldnât help but wonder why they would want to play such a big match before the tournament.
We spoke to Ayaz Memon who feels that when you see the rankings, it isnât quite the âmarqueeâ match, and India shouldnât really be worried about psychological damage from the loss.
âI donât think the loss matters too much, but I think you want to enter a tournament winning a gameâ" so India messed up a good chance to do so especially after scoring 185 runs and losing.â
But he believes there are a few positives which also emerge from it: âMS Dhoni has now got his mind ticking. Some guys just didnât clickâ" Harbhajan Singh didnât, Laxmi Balaji didnât and Irfan struggled. So the bowling is looking thin, the fielding ragged and the batting damn good and thatâs been the story since the last few months India have played.â
With Dhoni toying with the idea of whether to play four or five bowlers, Ayaz feels playing four will be a better idea: âI would go with four bowlers, hoping that Virat Kohli or Virender Sehwag bowl four over between them. But Dhoniâs got one other problem and thatâs the opening pairâ" Sehwag and Gautam Gambhir may have fantastic records on paper but not scoring runs lately. So I sense a threat to India in that area.â
To listen to the full conversation between Ayaz Memon and Sports Reporter Pulasta Dhar, check out the video.
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NEW DELHI â" The turmoil surrounding Indiaâs national government intensified on Wednesday, with a growing number of regional partners threatening to withdraw their support from the government and a former ally calling for the prime minister to seek a fresh electoral mandate.
Following the announcement by Mamata Banerjee, the populist chief minister of the state of West Bengal, that her party would formally leave the government on Friday, another member of the government, Muthuvel Karunanidhi, said his party would support a nationwide strike on Thursday called by opposition parties to protest policy changes announced last week by the governing coalition, the United Progressive Alliance. Mr. Karunanidhi controls 18 votes in Parliament, just one fewer than the total controlled by Ms. Banerjee.
Meanwhile, Ram Gopal Yadav, a major leader of the Samajwadi Party, which controls 22 votes in Parliament, said that his continued support of the governing coalition was no longer assured. âThis government has lost credibility and canât take our support for granted,â he said, according to media reports.
Ms. Banerjee has given the government until Friday to reverse new economic measures, including ones that would allow multinational giants like Walmart and Ikea to build major retail outlets in India, or face the withdrawal of her 19 lawmakers from the coalition. Since Parliament is not in session, there is little risk of the government collapsing immediately. But if Ms. Banerjee follows through on her threat, the governing coalition must rely on Mr. Karunanidhi, Mr. Yadav and others to avoid early elections.
Meanwhile, the rhetorical battle between the national government and Ms. Banerjee intensified Wednesday as Kunal Ghosh, a member of Parliament from Ms. Banerjeeâs party, demanded that Prime Minister Manmohan Singh seek a fresh electoral mandate, suggesting he should resign. Both sides in the dispute between Ms. Banerjee and the government insisted in interviews that the other had rejected overtures for discussions in recent days.
Ms. Banerjee, in a fiery address Tuesday night, accused the government of âselling the countryâ as a result of the policy changes last week, which raised the price of diesel fuel and allowed greater foreign investment in retailing and aviation. Ms. Banerjee has characterized the moves as against the poor, though many economists and business leaders say they are critical measures that will attract investment and help address the countryâs fiscal deficit.
Sandeep Dikshit, a spokesman for the Indian National Congress Party, which leads the coalition government, said, âIt saddens us losing an important ally,â even as he defended the governmentâs economic moves last week.
âI think this is the beginning of the reform process,â Mr. Dikshit said in a televised interview. âI think it has been kick-started. I think weâll surprise everyone by the decisions we take, the actions we take and the stability of the government.â
Opposition leaders, on the other hand, pounced on Ms. Banerjeeâs decision to portray the government as floundering and facing its final days.
âThis whole U.P.A. alliance is full of instability and contradictions,â said Ravi Shankar Prasad, chief spokesman for the opposition Bharatiya Janata Party. âThe government has become inherently unstable.â
Whatever happens in the next few days, Ms. Banerjee has once again ensured that she is the focus of much of the nationâs attention. Last year, Ms. Banerjee blocked an earlier attempt by Mr. Singh to push through measures allowing foreign retailers to enter India in a big way when she threatened to bring down the government. This time, Mr. Singh and other leaders, trying to recover from corruption scandals and other mistakes, decided to push ahead, vowing not to roll back the policy changes.
In recent days, analysts predicted that Ms. Banerjee would probably have a tactical response, by withdrawing her partyâs ministers from the government as a gesture of protest, while maintaining her partyâs presence in the governing coalition. Her West Bengal State government is facing a huge budget shortfall, and political experts say Ms. Banerjee is trying to negotiate terms for money from the central government.
Several days ago, she set the Tuesday deadline for her decision, and then, after a closed three-hour meeting with leaders of her party, she held her announcement until around 8 p.m. â" the heart of prime-time television viewing.
Indiaâs next national elections are scheduled for 2014, but many analysts are predicting earlier elections. Regional leaders like Ms. Banerjee and Mulayam Singh Yadav, leader of the Samajwadi Party, have told their supporters that early elections could offer an opportunity to pick up additional seats in Parliament, increasing their national clout. Yet Indian politics are notoriously volatile, and most analysts say regional leaders are likely to wait until next year before forcing elections.
For the moment, the question is whether Congress Party leaders can reach a deal with Ms. Banerjee. Some political analysts have speculated that the government might be able to win her support by lowering the price of diesel or by allowing a few more subsidized purchases of cooking gas canisters. Her allies, though, said she was taking a principled stand to protect poor people and would never accept the widespread entrance of foreign retailers, a move she sees as a threat to small shop owners.
âI think she has taken a moral position,â said Amit Mitra, who serves as Ms. Banerjeeâs finance minister in West Bengal. Mr. Mitra said her decision was also rooted in her disgust with the corruption scandals rocking the United Progressive Alliance government, including the recent controversy over allocations of coal fields to political cronies.
But others suggested that Ms. Banerjee might still strike a deal, despite her tough tone on Tuesday.
âIâm not sure that weâve heard the last word, but weâve certainly heard a very strong word,â Mani Shankar Aiyar, a Congress Party stalwart and a member of the upper house of Parliament, said on CNN-IBN, a news channel. âThe ball now has been put firmly in the court of the U.P.A. government. Letâs see what the U.P.A. government is going to do.â
Hari Kumar contributed reporting.
Wed Sep 19, 2012 4:49am EDT
* India's Essar Oil sells two diesel cargoes -sources
* Sold at premiums $4.60-$4.70/barrel above Middle East quotes
* One cargo awarded to Saudi Aramco Products Trading Company
NEW DELHI/SINGAPORE, Sept 19 (Reuters) - India's privately owned Essar Oil has sold two diesel cargoes in what would be its first exports in nearly two years, as domestic demand slowed due to heavy rainfall this month, industry sources said on Wednesday.
Below-average rains had last month curbed hydropower generation, boosting agricultural demand for diesel to power irrigation systems, and prompting imports into the country.
But a recent pickup in monsoon rains has curbed domestic demand for diesel, prompting Essar's rare sale, traders said.
Essar Oil had initially offered one cargo of up to 70,000 tonnes of diesel with 500 parts-per-million (ppm) sulphur for Sept. 22-Oct. 6 loading from Vadinar through a tender last week, but later sold two cargoes instead, the sources said.
The cargoes were sold at premiums of $4.60-$4.70 a barrel above Middle East quotes, the sources added. One of the cargoes was awarded to Saudi Aramco Products Trading Company while the other could have gone to Hess Energy, traders said.
This was also the first time that Essar Oil has sold a diesel cargo to the newly set up Saudi Aramco Products Trading Company, they added.
The sale to Hess Energy could not be confirmed.
Essar Oil supplies diesel mainly to Indian public sector refiners and the last time it is known to have exported diesel was in October 2010.
Essar Oil upgraded its refinery to process 405,000 barrels of oil a day, or about 9 percent of India's refining capacity, and raised complexity to handle cheaper heavy grades in June.
The refinery produces about 9-10 million tonnes of diesel a year and is able to produce Euro-V compliant fuel, sources said.
Most of this is sold to Indian state-owned refiners and the rest to Essar's retail network of 1,600 fuel pumps in India.
Essar Oil has no immediate plans to export diesel regularly, India-based sources said. (Reporting by Nidhi Verma in New Delhi and Jessica Jaganathan in Singapore; Editing by Himani Sarkar) (Jessica.Jaganathan@thomsonreuters.com; +65 6870 3822; Reuters Messaging: email@example.com)
Wed Sep 19, 2012 4:11am EDT
* PM Singh now has minority government, but seen surviving for now
* Ally demanded backtrack on fuel price increase and retail sector reform
* Singh considers partial rollback of hike in diesel prices
* Opposition pushes for confidence vote
By Satarupa Bhattacharjya and Nigam Prusty
NEW DELHI, Sept 19 (Reuters) - India's crisis-torn government looked set to offer a limited rollback of its hike in diesel prices on Wednesday after a key ally withdrew from the coalition, reducing it to a minority administration and raising the risk of an early election.
Prime Minister Manmohan Singh's government is widely expected to survive the blow to its parliamentary strength, but its new dependence on regional parties averse to reform will reduce its room for further steps to revive economic growth.
Mamata Banerjee, the firebrand chief minister of West Bengal state, announced on Tuesday that she was pulling her party out of the coalition after Singh stood firm on a slew of economic reforms, including the opening of India's retail sector to global supermarket chains.
But a concession to pull her back from the brink before a Friday deadline appeared to be on the cards after an emergency meeting at Singh's residence.
A senior source in his Congress party said the government was considering a partial reduction in last week's 12 percent increase in diesel prices, which economists had long called for to rein in subsidies that have blown out the budget deficit.
A government official said the hike of 5 rupees per litre could be pegged down to 3 or 4 rupees, and a new limit on the consumption of subsidised cooking gas cylinders may also be raised.
However, Congress party leaders said there would be no U-turn on allowing investment from foreign retail chains such as Wal-Mart Stores into the retail sector.
"The government is not in a mood to relent (but) ... there could be some cosmetic rollback," one party leader told Reuters.
If Banerjee does pull her 19 lawmakers out of the ruling United Progressive Alliance (UPA), the Congress-led coalition will be left with 254 seats in parliament, 18 short of a simple majority.
"The beginning of the downfall of the UPA government has started," said Ravi Shankar Prasad, spokesman of the main opposition Bharatiya Janata Party (BJP), amid speculation that the government may fall before its mandate runs out in mid-2014.
GOVERNMENT WILL SURVIVE, BUT FOR HOW LONG?
While Singh can count on two other regional parties outside the coalition to prop it up with a combined seat tally of 43, both are also opposed to retail liberalisation, which could once again endanger a policy that stalled last year amid street protests.
The move on retail was among a series of "big bang" reforms launched last week. They are seen as crucial to reviving India's flagging economic growth, reining in a bloated fiscal deficit and warding off the spectre of a credit rating downgrade.
Singh's renewed drive for reform had cheered investors as a sign that the government was finally shaking off months of policy inertia. However, the measures sparked a furious backlash from Banerjee and other political leaders, who condemned them as a needless attack on hundreds of millions of poor people.
The BJP said it would try to push for a special sitting of parliament to be convened to hold a confidence vote, which could potentially bring the government down. However, lawmakers are not due to meet for their next session until late November.
Growth in Asia's third-largest economy has languished near its slowest in three years amid an avalanche of criticism for Singh's government, which has grappled with a spate of political scandals since his second term began in 2009.
"The government is in a critical situation but they will somehow survive for now," said political analyst Amulya Ganguli.
"A minority government cannot, however, last that long. We may look at elections being brought forward," he said. National elections are due by 2014, when Singh is expected to stand down.
Several party and government officials had earlier told Reuters that Congress leader Sonia Gandhi had assessed the risks of losing coalition allies over the measures and concluded the government was safe.
Banerjee came to power in West Bengal in 2011, ending more than three decades of Communist rule in the state. Colloquially known as "Didi", or "elder sister", Banerjee's supporters hail her as a champion of India's poor and dispossessed.
But her politics have been a thorn in the side of the government. Her protests were instrumental in blocking a slew of economic measures, from retail reform to allowing foreign direct investment into India's aviation and insurance sectors.