7-year jail sentence for Satyam’s Raju, brother

Newsroom24x7 Desk

Ramalinga Raju
Ramalinga Raju

Hyderabad: A special court here today convicted the multi-crore Satyam fraud mastermind B Ramalinga Raju and his brother B Rama Raju to seven years rigorous imprisonment and also slapped a fine of Rs 5.5 crore in the Rs 7000-crore accounting fraud that jolted the corporate world in 2009.

Beside the Raju brothers, the former Chief Financial Officer of Satyam Vadlamani Srinivas, former Price Waterhouse auditors Subramani Gopalakrishnan and T Srinivas, and five others were also sentenced to seven years rigorous imprisonment and fined varying amounts by the court of Special Judge B V L N Chakravarthi.

The corporate world was rocked when in 2009 Satyam’s founder chairman Ramalinga Raju had confessed that his company’s accounts had been fudged and manipulated by US$ 1.47 billion. The confession coincided with his resignation on January 7 that year.

Modi Government’s reform agenda has brought dynamism back to Indian economy

Newsroom24x7 Desk

dynamic economyHong Kong: Fitch Ratings has affirmed India’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at ‘BBB-‘. The issue ratings on India’s senior unsecured foreign and local currency bonds are also affirmed at ‘BBB-‘. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at ‘BBB-‘ and the Short-Term Foreign Currency IDR at ‘F3’.

Affirmation of India’s IDRs reflects the following key rating drivers:

According to Fitch, the Narendra Modi government’s broad-based structural reform agenda has brought dynamism back to the Indian economy, after a couple of years of limited progress on the structural front. Fitch expects the policy initiatives to bring the investment climate in India closer in line with its peers’. India’s relatively weak business environment and standards of governance, as well as widespread infrastructure bottlenecks, will not change overnight, but there is ample room for improvement. Translation of the reforms into higher real GDP growth depends on the actual implementation.

Following recent revisions to the GDP data, Fitch raised its forecasts for real GDP growth to 8.0% in the financial year ending 31 March 2016 (FY16) and 8.3% in FY17, compared with 7.4% GDP growth in FY15. Fitch’s earlier forecasts for FY16 and FY17 were 6.5% and 6.8%, respectively, based on the old series of data. The significantly higher official real GDP growth numbers after the revision by the Central Statistical Office suggest the data include more economic activity than is actually taking place. While the aim to produce GDP data more in line with international standards is commendable, these new GDP growth levels and the pick-up from as early as mid-2013 are difficult to reconcile with indicators and anecdotal evidence that show low investment levels, weak corporate balance sheets and a rise in banks’ non-performing loans.

While in recent years consumer price inflation has on average been high in India compared with peers, the greater focus by both the Reserve Bank of India (RBI) and the government on lowering inflation since 2014 represents a significant change from the past. The new IDRs based on inflation targeting seems to show the government and RBI’s strong resolve to structurally lower inflation. Both the RBI’s monetary policy and the government’s policies that affect food prices, including the setting of minimum support prices for agricultural products, will strongly influence whether the target will be reached.

Implementation of the government’s structural reform agenda and structurally lower inflation would improve the sovereign credit profile, as both would improve the investment climate and benefit real GDP growth. However, India’s sovereign ratings are constrained by limited improvement in India’s fiscal position, which is a longstanding key weakness.

India’s fiscal Achilles’ heel is evident in both the general budget deficit of 7.2% of GDP for the combined central and state governments, and gross general government debt of 64.7% of GDP, which are much higher than ‘BBB’ category medians of 2.7% of GDP and 41.4% of GDP, respectively. The central government seems to have met its fiscal deficit target of 4.1% of GDP for FY15 despite disappointing revenues. The budget, presented on 28 February 2015, also contained more plausible revenue targets for FY16 than in the previous budget. But the budget lacks initiatives to significantly increase government revenue. The government has chosen to increase capital expenditures, at the expense of fiscal consolidation. Greater tax devolution gives the states more discretionary spending power in areas for which they are responsible and are important for development, although the actual impact will depend on the administrative capacity in the individual states.

The external balances contain some strong elements, including a high level of foreign exchange reserves of USD341bn, or 6.7 months of current account receipts cover (compared with the ‘BBB’ peer median of 5.2 months), low net external debt of 3.3% of GDP (compared with a 7.9% ‘BBB’ peer median), and limited dependence of commodity exports. Moreover, the current account deficit has been contained by gold import curbs and lower international oil prices. These leave India less vulnerable than a number of its peers to renewed emerging market pressures, including from the coming normalisation of monetary policy in the U.S.

The Indian economy is less developed on a number of metrics than a number of its peers. Its ranking on the United Nations Human Development Index indicates relatively low basic human development, while average per capita income remains low at USD1,633 in 2014 compared with the ‘BBB’ range median of USD10,552.

The performance of the banking sector will likely remain weak for some time, although the pace of deterioration in asset quality has eased at a few large banks. State banks remain particularly affected, accounting for around 90% of the system’s stressed assets while suffering from sharply reduced earnings and weak capitalisation. The government’s ability to provide substantial financial support to the banking system in a potential crisis is limited given the already high government debt burden.

Rating sensitivities

The Stable Outlook reflects Fitch’s view that upside and downside risks to the ratings are balanced. The main factors that individually or collectively could lead to positive rating action are:

  • Fiscal consolidation or fiscal reforms that would cause the general government debt burden to fall more rapidly than expected
  • An improved business environment resulting from implemented reforms and structurally lower inflation levels, which would support higher investment and real GDP growth

The main factors that individually or collectively could lead to negative rating action are:

  • Deviation from the fiscal consolidation path, leading to persistence of the high public debt burden, or greater-than-expected deterioration in the banking sector’s asset quality that would prompt large-scale financial support from the sovereign
  • Loose macroeconomic policy settings that cause a return of persistently high inflation levels and a widening current account deficit, which would increase the risk of external funding stress

Key assumptions

  • The global economy evolves broadly in line with the projections in Fitch’s Global Economic Outlook, and the eventual rise in U.S. interest rates does not prompt a general crisis in emerging markets
  • Economic activity will not be seriously disrupted by materialising political risk, for instance related to social unrest, separatist movements, terrorism or insurgent groups like the Naxalites

Meeting of judges on a holy day for a minority sparks a debate

Jamsheed Rizwani 

Chief Justice o India HL Dattu
Chief Justice o India HL Dattu

Prominent Indian newspaper The Hindu today published a news item with the heading “Holidays on holy days?” pointing out “to many the exchange of letters between Justice Kurian Joseph of the Supreme Court and the Chief Justice of India (CJI), H.L. Dattu, might seem a trivial issue. But was it really so? Justice Joseph had recently expressed anguish at the way secularism was being tinkered with, objecting to a meeting of State Chief Justices on Good Friday and Easter Sunday, since these were national holidays and also days of prayer for the Christian community, in a letter addressed to the CJI. Justice Joseph had also gone to Kerala to attend Easter services. Hence, it was inappropriate, he argued, to hold the meeting on these days.”

The Hindu says : In the exchange of letters between CJI & a fellow judge on subject of secularism, several issues of import have been raised which merit a public discussion.”

On this issue Jamsheed Rizwani writes from Paris:

Secularism has a particular sense in Europe, where religion is not evoked in the public sphere. Public holidays are sacred (without necessarily having divine blessings) to the French….. The learned CJI should have diplomatically asked all the Judges for their avaiability for the crucial meeting and tried to fix one where all were available. What blew it out of proportions in the Indian context, was the ruling party leaders’ (and their fellow travellers’) all out attacks verbal for some and violent for many others on minorities… As long as party leaders make irresponsibile comments on the minorities and their rights, there will be some ambiguity for some strange décisions like the one taken by the CJI to maintain the meeting on a public gazetted Holiday – a holy day for a minority……The intention of the CJI with regard to minority rights will now be under constant scrutiny which could have been avoided…..He has invited a cloud of suspicion over the Court which could have well been avoided…..

Australia returns antiquities to Egypt

Newsroom24x7 Desk

Egyptian amulet (Representative photo)
Egyptian amulet (Representative photo)

Canberra: The Australian Government Wednesday returned a number of culturally significant antiquities to Egyptian authorities at an official ceremony at the Embassy of the Arab Republic of Egypt.

The return of antiquities to Egypt is the result of a shared commitment by the governments of Egypt and Australia to protect and preserve cultural objects. The antiquities date back to significant periods in Egyptian history and were exported from Egypt in breach of its national cultural laws.

This collection of antiquities includes many funerary objects such as a wooden hand belonging to an anthropoid coffin, small statuettes known as shabtis to serve the deceased in the afterlife, as well as a number of amulets to protect the deceased. A Coptic textile fragment and large saucer lamp were also among the relics returned to Egyptian authorities.

The items were seized from an auction house and private residence in Australia by the Ministry for the Arts and Australian Federal Police at the request of Egyptian authorities.

Australian and Egyptian authorities have a long and successful history of collaboration in pursuit of the return of items of cultural significance to Egypt. In 2011 a collection of 122 ancient Egyptian and Greco-Roman artefacts, some dating from the fourth millennium BC, found in auction halls in Melbourne were returned to the Arab Republic of Egypt under the Protection of Movable Cultural Heritage Act 1986.

Under that legislation, Australia can return illegally exported cultural heritage property to its country of origin if a foreign government makes a request.