Who will be the new Indian finance minister?

Hunt is on for a new finance minister with the names of SM Krishna, C Rangarajan and Kapil Sibal under consideration in the wake of Chidambaram's shift to the home ministry.

Prime Minister Manmohan Singh, more comfortable with bureaucrats and technocrats, would ideally like Planning Commission Deputy Chairman Montek Singh Ahluwalia to take over finance. But this is something not acceptable to the Congress party, say well placed sources.

For the same reason, the Congress would have reservations about C. Rangarajan, former governor of the Reserve Bank of India, who has headed the prime minister's Economic Advisory Council.

The Congress would like to elevate a politician to the position.

Though Manmohan Singh took over the finance portfolio in the wake of Shivraj Patil's resignation as home minister and Chidambaram's move to home following the terror strike in Mumbai, he would like a full time finance minister, party sources say.

The prime minister already has charge of three weighty ministries - coal, after the exit of Shibu Soren who has taken over as chief minister of Jharkhand, information and broadcasting after the illness of Priya Ranjan Dasmunsi, and environment and forests.

As things stand, the government may go in for vote on account in February, rather than a full budget, on the eve of general elections. But finance entails a very heavy load, the sources say. This is even more urgent now with a full-blown economic crisis the world over with India not being spared either from its fallout.

The name of S.M. Krishna, former chief minister of Karnataka, is doing the rounds for finance. His name was also under consideration for home minister after Shivraj Patil's resignation, but the party decided to plump for Chidambaram instead.

Then there is Kapil Sibal - the prime minister enjoys a sense of comfort with him - but he is being considered too junior by the party.

It is said that 10, Janpath (residence of Congress president Sonia Gandhi) was wary of both External Affairs Minister Pranab Mukherjee and Congress general secretary Digvijay Singh - both names were under consideration - for home minister because they are considered politically astute and "may do a Narasimha Rao on Sonia Gandhi" and outsmart her.

The prime minister has not been enthusiastic about giving finance to Pranab Mukherjee, even though Manmohan Singh has relied heavily on Mukherjee in the last four years to run his government, and made him head of the 50 plus Group of Ministers (GOMs). It has been a government that has ruled through GOMs.

Whenever the question of a cabinet reshuffle has come up for discussion during the last three years, the idea of Mukherjee as either home minister or as finance minister has not found favour.

Mukherje is identified with a left-of-centre image. He was not given finance even in 1991 when P.V. Narasimha Rao became prime minister and opened up the economy, choosing Manmohan Singh as his finance minister to lead the process of reforms.

Left to himself, the "non-political" prime minister is happier working with bureaucrats than with politicians. He has given cabinet and minister of state status to almost as many bureaucrats and technocrats as to the politicians in his government.

These include those heading the Economic Advisory Council, National Knowledge Commission, National Disaster Management Authority, Inter State Council, National Manufacturing Competitiveness Council, to name a few. And of course, the powerful National Security Adviser M.K. Narayanan.

Source: Agencies

India's markets seen relieved; PM to caretake finance

India's markets will likely react positively on Monday when a cabinet reshuffle sees the prime minister take on the finance portfolio, just days after the nation was rattled by the deadly attacks on Mumbai.

India's economy showed its slowest pace of growth in nearly four years in the September quarter, and its rupee and stock markets have been pummelled by the global financial crisis.

Now, after three days of attacks by gunmen in the heart of its financial capital, Mumbai, in which nearly 200 people died, analysts say security and confidence will be the top priority.

With Finance Minister Palaniappan Chidambaram moving to the Home Ministry following the resignation of the home minister, analysts say Prime Minister Manmohan Singh, architect of early 1990s economic reforms, is probably the man for the job.

"There are serious concerns on the economy and the big challenge is going to be rebuilding confidence of investors," said Mahesh Rangarajan, political analyst in New Delhi.

"And there is a greater confidence in Singh because of his midas touch."

India's financial markets stayed shut on Thursday as security forces battled gunmen holed up in three locations in Mumbai's financial district.

The benchmark share index .BSESN gained 0.7 percent to 9,092.72 points when trading resumed on Friday, with expiry of options contracts leading investors to buy back shares.

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The index has plunged 55 percent this year, with foreign investors withdrawing a net $13.7 billion as the global market turmoil widened, and equity analysts criticised Chidambaram, saying he had not managed to keep the economy stable.

"But probably markets should open in the positive," said Deven Choksey, chief executive of brokerage KR Choksey.

Bond yields fell on Friday, as dealers anticipated interest rate cuts to shore up confidence and bolster the economy.

The central bank has slashed its key lending rate by 150 basis points to 7.5 percent since the global crisis swept through India's markets in October and the benchmark 10-year bond yield closed down 2 basis points at 7.07 percent.

"The market continues to anticipate rate changes," said Arvind Sampath, head of bond trading at Standard Chartered in Mumbai. "We are expecting the 10-year bond yield to trade in a 7.07-7.12 range."

Only the rupee came under pressure, shedding 1.2 percent to 50.09/12 per dollar, not far off a record low of 50.60 set earlier in November.

"Whatever has happened over the last few days is pretty serious. The first priority has to be that," A. Prasanna, analyst at ICICI Securities, said.

"I think the market will take a more big picture view and it is a positive development only. Nobody needs to second guess the PM's credentials, in his ability to run the ministry."

With only a few months likely to go before national elections, analysts were sceptical whether much could be done to shore up growth, which slowed to an annual 7.6 percent in the September quarter, a far cry from the 9 percent seen in the whole of the 2007/08 fiscal year.

Some expressed concern with the security issue and whether the prime minister's focus would be distracted, but others said Singh has already been more involved in running the economy as the financial crisis deepened.

Source: Reuters

No more firing, or hiring, at Kingfisher Airlines

Kingfisher Airlines said while it would not lay off employees, it would also not hire new people as long as the current downturn continued.

'There is no question of layoffs. The prime minister has given us the assurance that the government would do whatever it takes to address the problems of the aviation sector,' Kingfisher chairman Vijay Mallya said in an address at the World Economic Forum's India Economic Summit.

Prime Minister Manmohan Singh in his interaction with industry leaders Nov 3 asked them to refrain from large-scale layoffs, and advised them to bear in mind their social obligations.
Soon after, he also intervened to ensure state-run oil firms gave more time to domestic carriers to settle their fuel dues.

But Mallya said the aviation industry was being 'overtaxed'.

'The basic airfares are lower than fuel surcharge for many Indian destinations. Taxes should immediately be rationalised to make flying affordable,' he said.

Mallya, who is also member of parliament, earlier indicated that if the slump in the market continues, the industry would witness more layoffs.

Jet Airways last month sacked 1,900 employees only to reinstate them a day later, reportedly on government pressure. Carriers including Kingfisher Airlines have over the past month retrenched some staff.

Kingfisher has now sought permission from the government to sell a part of its equity to international carriers, saying a change of policy on foreign investment would help the industry that was facing turbulent weather.

3G auction in India on January 09

A one-time fee would be levied on GSM operators holding 2G frequencies beyond 6.2 MHz The Government of India decided on Tuesday to hold the auction of the spectrum for third generation (3G) mobile phone services in January 2009, as scheduled.

The decision was taken at a meeting Prime Minister Manmohan Singh held with Finance Minister P. Chidambaram and Communications and Information Technology Minister A. Raja in New Delhi.

In the closed-door meeting, it was also decided to increase spectrum user charges for all existing telecom operators, both using CDMA and GSM technologies. A one-time fee would be levied on GSM operators who hold second generation (2G) radio frequencies beyond the 6.2 MHz mark.
Vodafone had recently written to the government seeking a delay in auctions to early 2009, whereas Bharti Airtel wanted the 3G auctions to be held in time.

Earlier the government had told that the auction would be held by December 31, 2008. The revenue from the AGR (Adjusted Gross Revenue) route would go up. The meeting decided to hike the AGR by one per cent for those operators who hold up to 8 MHz frequency. For those with more than 8 MHz, the AGR has been hiked by two per cent.

The meeting also discussed the issue of offloading of stocks by Swan and Unitech.