Nik's Diary
The Indian market opened in the green
today mirroring positive opening trades in the SGX Nifty and most of the Asian
markets. Also, Finance Minister P Chidambaram’s promise to take a relook at a
clutch of proposals pertaining to indirect taxes in the budget is expected to
cheer the markets. US market stocks rebounded from early losses on Monday to
finish the session with modest gains. The weakness came in due to worries about
China and about the ongoing impact of the budget sequester. European shares
fell on Monday, mirroring weakness across Asia as China's service sector data
missed estimates and US budget cuts of about USD85bn kicked in, threatening the
fragile US economic recovery. Meanwhile Indian markets edged lower, mirroring
weakness in Asian and European equities as US budget cuts kicked in and data
out of the euro zone and China underlined concerns over the global economic
outlook.
Sequester, debt ceiling issues to be
eyed
There is a lot
of talk about the sequester this week, but most of it is between
people trying to figure out the big question: What is a sequester?
According to the Huffington Post, the sequester
is a set of automatic spending cuts put into law by the Budget Control Act.
Well, what’s that? It’s a piece of legislation that raised the debt ceiling and
sought to apply pressure on Congress to come up with a longer term plan for deficit reduction. Sort of like a kid calling
a bluff and dad sending him out to the street corner in a shirt that says, “I’m
a brat” while taking money out of everyone’s wallet.
When does it start?
It already has. On 11:59 on March 1, the sequester went into
effect to cut billions from the budget, and will be completely in effect within
30 days.
Who will feel it?
Pretty much everyone in some way will feel this. $550 billion
will be directly from the military, taking away money for national security and
military operations. Other places that are going to see deep cuts are
non-profit organizations, food safety, mental health, small business growth,
STOP Violence against Women program, Nutrition assistance for seniors, Customs
and border patrol, scientific research programs, unemployment benefits, work
study jobs, law enforcement, disaster relief, education, health care, job
search and assistance, vaccines for children, public health, aviation safety,
aviation security, emergency responders, oil and gas permitting, economic
development, national parks, Title I education funds, special education,
veteran’s programs, Social Security, national assistance for women, infants,
and children, child care subsidies, rental assistance, homelessness programs,
substance abuse services, protection for clean air and clean water, AIDS and
HIV treatment and prevention, tribal services, head start, and more.
Who will not feel it?
No one. Everyone will feel it in one way or another. The $1.2
trillion in budget cuts would be spread over nine years and
are equally divided between domestic and defense-related spending. During the
remainder of the 2013 fiscal year, $85 billion worth of cuts are set to go into
effect. The budget cuts would end in 2021.
Why is this happening?
In 2011, the debt ceiling was raised. Republicans demanded
budget cuts to be included. The Congress Joint Select Committee on Deficit
Reduction (otherwise called the super committee in charge of figuring out how
to implement the cuts called for in the Budget Control Act) couldn’t come to an
agreement to cut $1.2 trillion from the budget. The sequester was supposed to
be the worst case scenario to motivate Congress to figure something out. They
failed, so here we are.
Can this be undone?
The Democrats and Republicans have to agree on a plan.
What can we do?
Come together to be heard. Let your state representatives,
congressman, and anyone else who will listen know what programs are the most
important to you and why. Don’t stop making noise. Education is already
struggling to survive, and classrooms can’t afford to be any fuller. Programs
like music and drama may have to find alternate funding through the community.
Start attending your child’s Parent Teacher Student Organization meetings and
become part of the solution. Plan accordingly with your finances. Strive to
become debt free so that you can afford to survive deep cuts. Become an asset
in your workplace. Be proactive in seeking solutions with the cards the
government deals. Be heard. Source:
Examiner
Defence
Ministry clears RIL’s two blocks
The defence
ministry has allowed Reliance Industries (RIL) to carry out exploration in the
gas producing KG-D6 block and the discovery area of NEC-25 in the Bay of
Bengal, subject to certain conditions. These two blocks were among the seven
that were declared as “no-go” zones by the ministry on the grounds that they
overlapped with a proposed naval base and were close to missile launching and
Air Force exercise area. Official sources said the blocks belonging to RIL got
conditional relief, but the ministry did not permit exploration or production
in the blocks owned by Oil and Natural Gas Corporation, BG Group of the UK and
Cairn India. Reliance and its partner BP have announced an investment of $5
billion over the next three to five years to boost gas output from the KG
basin, which has dipped to 19.4 million metric standard cubic metres (mmscmd)
of gas per day because of geological complexities. Oil ministry officials
expressed hope that the differences regarding other blocks would be resolved
soon. In January, the newly formed cabinet committee on investment had asked
the ministries of defence and petroleum to sort out their differences over the
seven blocks within a month and for another 32 areas in three months. Official
sources said 30 per cent of the 7,645-square-kilometre KG-D6 block overlapped
with the Navy’s firing and exercise areas. The defence ministry said
exploration and production near its naval base would hamper surveillance. RIL
agreed to relinquish 495 sq km in the no-go area, following which the Navy
agreed to realign the boundary required for its proposed base and allowed oil
and gas activities in the rest of the block. About 60-70 per cent of the NEC-25
block fell within 50 km of the Chandipur missile launch pad and about 50 per
cent of the block was in the Balasore air-to-air firing range of the Indian Air
Force. The defence ministry cleared the block on the condition that a 100km
radius from the integrated test range at Chandipur will be under the no-go
zone.
Source: TelegraphIndia
Tata Motors
slashes prices of its passenger cars by up to `50,000
Tata Motors on Monday
slashed prices of its Indica and Manza range of passenger cars by up to Rs
50,000 in order to prevent falling sales in recent months. The company,
however, increased the prices of its sports utility vehicle range, comprising
Sumo, Safari and Aria, by up to Rs 35,000 following the excise duty hike in the
Budget. “We have cut prices of Indica and Manza cars as we want to boost the
morale of customers to give them a value proposition and make it more
attractive to improve weak market sentiments,” a Tata Motors spokesperson said.
The company has reduced the rates between Rs 29,000 and Rs 50,000 with
immediate effect, the spokesperson added. Source: DeccanChronicle
Talks between Hero MotoCorp
and workers ends inconclusive
With pay rise talks between management and
workers at Hero MotoCorp’s Gurgaon factory making no progress on Monday, heads
of the staff union hinted at a “hard decision” tomorrow. The state
government’s labour department took an initiative in on Monday’s talks, trying
to broker a settlement, to no avail. Bhim Rao, general secretary, Hero MotoCorp
Workers’ Union (HMCWU), said , “The labour authorities held separate meetings
with the workers and the management on Monday. But the company is refusing to
budge from their stance. We have a meeting with other union leaders of the
Gurgaon belt tomorrow. A hard decision has to be taken.” Sources
indicated calling for a ‘bandh’ (stoppage of work) in the Gurgaon region was a
possibility. The five union representatives at the Gurgaon unit had last
week gone on a four-day hunger strike to press the workers’ demands. The strike
was called off yesterday, after intervention from other trade union leaders in
the region. A demonstration was held on Monday outside Gurgaon’s administrative
centre, the Mini Secretariat, and a fresh charter of demands for government
intervention given to the district’s sub-divisional magistrate. Workers
at the Gurgaon unit have been agitating for about two months, sporting black
armbands and not taking the subsidised tea and snacks offered by the company.
The employees want a pay rise of Rs 15,000 a month, spread over three years.
The management is reluctant to go beyond a rise of Rs 7,500-9,000 a month.
Talks have been on for six months. In January, workers at Gurgaon were
reported to have slowed production operations and showcause notices were issued
to six members of the union, asking why action should not be taken against them
for disrupting output. The workers also held a ‘gate meeting’ on February 12,
where a strike was discussed as a final resort. The meeting was attended by
members of the CITU, INTUC and AITUC worker bodies, beside union members from
the factories of Maruti Suzuki and Honda Motorcycle and Scooter India. Hero
MotoCorp has a factory each at Gurgaon, Dharuhera (both in Haryana) and
Hardwar. The Gurgaon unit rolls out 6,000-7,000 two-wheelers daily. The
company employs around 1,200 permanent workers and 4,000 contract workers at
Gurgaon. The average salary of a permanent worker at Gurgaon is around Rs
32,000 a month. Source: Business
Standard
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