Pakistan sends 20000 troops to Indian frontier

Troops on guard as crowds gather to mark the first anniversary of the assassination of Benazir Bhutto, the former Prime Minister

Pakistan moved thousands of troops away from its border with Afghanistan towards its Indian frontier yesterday, marking a big increase in tensions between the nuclear-armed neighbours after the Mumbai terror attacks.

The move of 20,000 troops – the army’s 14th Division was being redeployed to Kasur and Sialkot, close to the Indian border – struck a blow against attempts to thwart al-Qaeda and Taleban extremists along the Afghan border. All troop leave has also been cancelled.

Manmohan Singh, the Indian Prime Minister, met the chiefs of his army, navy and air force to discuss “the prevailing security situation,” according to an official statement.

India blames Pakistan-based militants for the attacks last month on Mumbai in which 179 people died. Both countries rushed troops to the disputed Kashmir region after the attacks but tensions cooled after intensive international diplomacy.

Pakistan sends 20000 troops to Indian frontier
Times Online

Tensions mount as Pakistan shifts troops to Indian border
New Straits Times
Pakistan cancels army leave as India tensions rise
Reuters

‘Ransom’ frees sailors in Somalia - Talk of million-dollar payout as two-month captivity ends for 18 Indians

Nov. 16: Eighteen Indian sailors were released today after being held hostage for two months by Somali pirates, sparking celebrations among their families who had run from pillar to post for government intervention.

OUR BUREAU AND AGENCIES

Seema Goyal, wife of Captain Prabhat Kumar Goyal, with their daughter in Dehra Dun on Sunday. (PTI)

Sunil Nair, spokesperson for the National Union of Seafarers of India, said in Mumbai tonight that “$1 million to $2.5 million could have been paid” to the pirates, who had demanded $6 million after the vessel, overseen by Ebony Ship Management, was hijacked on September 15.

The Union’s secretary, Abdul Gani, said in Hong Kong this morning that “ransom has definitely been paid” but declined to “go into the amount”. Four sailors from other countries were also freed. “There is no major medical problem (among the crew members),” he added.

The ship, carrying 23,818 tonnes of oil products, will be escorted from the pirate-infested Gulf of Aden off the Somalia coast into safe waters by the Indian Navy, Gani said, adding the crew should reach Mumbai in four to five days.

The release of Stolt Valor’s crew comes five days after commandos from a navy warship foiled a pirate attack on an Indian merchant vessel, with 20 sailors on board, in the region.

“I don’t know what to say. This is the happiest news of my life. They (the crew) will be reaching India in four to five days,” said Seema Goyal, wife of Stolt Valor Captain Prabhat Goyal.

The Goyals’ home in Dehra Dun’s upscale Teg Bahadur Road wore a festive look, with sweets being passed around and phones that wouldn’t stop ringing, after the agonising two-month wait during which Prabhat could speak to the family only once, on October 15. “We hope to travel to Mumbai to receive him,” Seema said.

There were similar scenes in the Mumbai home of Panirayan Lobo, Goyal’s colleague. Sister-in-law Rosary Fernando, who had met several Union ministers including shipping minister T.R. Baalu in Delhi and shipping officials in Mumbai, was overjoyed. She said “a celebration” would be held after Lobo returned. This evening, Baalu expressed happiness at the crew’s release.

P. Unnikrishna and wife Thangam, the Mumbai-based parents of sailor Ullas Krishna, said they had “heard that the money has been paid and the crew released”.

At Dapoli in Maharashtra’s Ratnagiri district, the Burondkars were “relieved” to know their 21-year-old son, Naveed, would finally be back home. Father M. Mohammed Burondkar said: “We were happy and relieved to know our young son would be back safe.” Naveed is a nautical science student training on Stolt Valor.

For the family of Dipak Kumar Tandel in Gujarat’s Valsad, there appeared little time to waste, not to receive him but to get him married. “We are going to find a bride for him when he returns home,” said a family member.

Another hijack

A Japanese vessel registered in Panama was seized last night 155km east of Somalia. Chemstar Venus’s crew consisted of five South Koreans and 18 Filipinos, South Korea’s foreign ministry said in a statement today.

Army helps in India as South Asia reels under floods

Mon Sep 1, 2008 4:14am EDT

* Indian army and navy steps up rescue work in Bihar

* Villagers stuck on rooftops, eating plants and leaves

* Rivers break embankments in Bangladesh

* Dhaka warns of worse to come as major river levels rise

PATNA, India, Sept 1 (Reuters) - The Indian army and navy stepped up efforts on Monday to rescue hundreds of thousands of people marooned by floods, while rising river levels also rang alarm bells in neighbouring Bangladesh.

In India's impoverished eastern state of Bihar, villagers have been living on rooftops for days, while others are eating plants and leaves after exhausting food stocks.

Aid agencies said the Bihar government should have done more to anticipate the disaster and plan relief operations in a region hit by monsoon flooding every year.

"Lessons from the past disasters should be kept in mind while planning response," ActionAid said in a statement. "A long-term comprehensive response is necessary to deal with relief, recovery and disaster preparedness."

Three million people have been displaced from their homes and at least 90 killed by floods in Bihar, officials say, after the Kosi river burst a dam in Nepal, swamping hundreds of villages in Bihar and destroying 100,000 ha (250,000 acres) of farmlands.

Since the monsoon began in South Asia in June, more than 1,000 people have died in floods, with most of the casualties recorded in India's northern state of Uttar Pradesh in July.

In Bihar, hundreds of boats are being used to evacuate people but more are needed, while heavy rains over the past few days have hampered rescue and relief operations, officials said.

"Such is the extent of devastation that the forces deployed are proving too small," Pratyay Amrit, a senior state disaster management official, said on Monday.

The army, which had already deployed five columns of around 120 men, sent in another 14, officials said on Monday, while three naval companies were also asked to help.

The situation on the ground is getting desperate.

"We don't have any more food grain stocks left, and me and my family are all chewing plants and leaves to stay alive," Mohan Sharma said by telephone from Supaul district.

Television pictures showed people fighting to get places in boats, as soldiers in life jackets tried to restore order.

Over 467,000 people have been evacuated so far, but there are thousands still marooned. Activists and local media say the death toll could be many times higher than official estimates.

Some experts have blamed the floods on heavier monsoon rains caused by global warming, while others say authorities have failed to take preventive measures and improve infrastructure.

RISING RIVERS

In India's northeastern state of Assam, rising rivers broke mud embankments and swamped more than 100 villages, forcing 50,000 people from their homes.

Two people drowned overnight, raising the death toll in the northeast region to 34.

Authorities said at least 400,000 people were living in knee-deep water in villages along the border with Bangladesh.

In Bangladesh, about half a million people were marooned after several rivers in the north and central districts broke their banks and swamped villages and farmlands.

The Flood Forecasting Centre warned the flood situation could worsen in the next couple of days as the country's three major rivers were rising alarmingly.

Many schools were closed and turned into relief camps. (Additional reporting by Biswajyoti Das in Guwahati and Ruma Paul in Dhaka; Writing by Bappa Majumdar; Editing by Simon Denyer) (For the latest Reuters news on India see in.reuters.com, for blogs see blogs.reuters.com/in/.)

Inflation breaches 12 per cent barrier

NEW DELHI, Aug. 7: Inflation breached the 12 per cent mark to hit a 13-year high of 12.01 per cent for the week ended 26 July, up from 11.98 per cent the previous week, as prices of food articles and manufactured products rose steeply.

The inflation rate stood at 4.70 per cent in the corresponding week last year. The government, meanwhile, revised the inflation rate for the week ended 31 May to 9.32 per cent as against 8.75 per cent as reported earlier.

Inflation, as measured by the wholesale price index (WPI), continued to stubbornly rise despite monetary and fiscal measures adopted by the government and the Reserve Bank of India.
The RBI had on 29 July hiked its key lending rate for the third time in two months, taking it to its highest in seven years to quell price pressures, dampen demand and keep inflation expectations in check. This move, analysts said, would have its impact two weeks from now.
The apex bank hiked the benchmark short-term rate by 50 basis points, about 25 bps more than what the market had expected, and the cash reserve ratio, the amount of funds banks must keep on deposit with it, by 25 basis points to nine per cent to absorb surplus cash in the banking system.

While some quarters fear the moves by government as well as the RBI would impact the growth figures in the next fiscal, Planning Commision deputy chairman, Mr Montek Singh Ahluwalia, maintained that inflation was a short-term challenge and would be able to slowdown the pace of the economy’s growth to eight per cent or marginally less in the current fiscal.
He said on the sidelines of a Ficci conference today, that the softening of crude prices in the international market was a “welcome development”, and hoped that the domestic price situation would stabilise in due course. He also expected inflation to fall below the 10 per cent mark by the end of this financial year.

click here:
Inflation breaches 12 per cent barrier
The Statesman, India

More Thoughts on Indian Monetary Policy

Ajay Shah in his last post raises the issue of the RBI’s approach to affecting interest rates, and the inexplicable gap between the two policy rates it quotes. Here are some thoughts and some data.

First, some definitions:

The repo rate is the rate at which the RBI lends to banks for the short term, and the reverse repo rate is what it pays on short-term deposits by banks with the RBI. The “repo” here is an abbreviation of “repurchase,” and has nothing to do with the “repo man” who repossesses cars in the US!

These terms can be compared to those used in the US (from FRB web pages):

“The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility – the discount window.”

“The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.”

In the US, the fed funds rate is what matters – discount window borrowing is rarely used. I understand what the Fed does, influencing the fed funds rate through open market operations. I am still trying to figure out

1. what the RBI does,
2. why the repo rate and reverse repo rate are both used, and
3. why the gap between them varies over time.

Here is some data on the history of the two RBI policy rates. I still have to complete the figures on the reverse repo rate, but you can see how the gap varies. One conjecture to explain this variation is that the RBI has varying compulsions with respect to the costs it bears of conducting its “liquidity adjustment” operations. I was also struck in this data by how high the repo rate was in 2000. This time, the preferred method of combating inflation seems to have been increases in the cash reserve ratio. I guess that’s cheaper for the RBI, and it also may be determined by the needs of exchange rate “management.”

Honestly, I have been reading through RBI documents quite a bit, and can’t seem to get very clear or simple answers. I realize I’m not a monetary economics specialist, but the US Fed tries to make things simple for even the non-economist.

More Thoughts on Indian Monetary Policy
RGE Monitor, NY

Equity funds records net outflows in July

MUMBAI: Emerging market equity funds clocked net outflows during the last week of July— the seventh time in eight weeks, according to the latest report by Emerging markets Portfolio Funds Research (EPFR).

Fund flows into Asia (excluding Japan) equity funds were robust, but this was offset by outflows from Europe Middle East Africa (EMEA), Latin America and the diversified Global Emerging Markets (GEM) equity funds.

Appetite for exposure to the bigger individual markets was again the main driver of flows into Asia (ex-Japan) equity funds, with China equity funds absorbing a net $476 mn for the week ending July 30 and India equity funds accounting for another $117 mn.

At the same time, investor sentiment towards Taiwan has cooled, the EPFR report says. Taiwan Country Funds have recorded six straight weeks of outflows as investors are worried about slowing export orders.

Latin America equity funds recorded their eighth successive week of net outflows, and EMEA equity funds their fifth successive week. Investors are fretting about the impact of slowing global growth on the demand for the commodities these regions export, the EPFR report said.

Those concerns also hit fund groups geared to individual markets: outflows from Russia Country Funds hit their highest level, in percentage terms, since early March 2007. US equity funds posted net inflows for the fifth time in seven weeks while Europe equity funds posted their first two week winning streak since April on the back of strong flows into exchange traded funds (ETFs). Japan equity funds, however, suffered net redemptions for the second time in three weeks as Japanese consumer confidence slipped to a 26-year low, the EPFR report said.

Flows into US equity funds, which totalled a net $5.1 bn, were once again driven by Large and Small Cap Blend ETFs. Consumer confidence in Japan is also at odds with the cautious optimism displayed in recent weeks by foreign portfolio investors.

“Energy-driven inflation, while it may drive some of the country’s vast pool of savings out of low yielding bonds, savings accounts and futons into Japan’s equity markets, has banished the last traces of the fragile rebound in domestic consumption we saw last year,” notes EPFR Global senior analyst Cameron Brandt.

A combination of short covering and another bout of anxiety about bank balance sheets hit Financial Sector Funds in late July, with investors removing a net $933 mn from these funds. Investors also pulled $279 mn out of the best performing sector fund group, Energy Sector Funds, after a month that saw the average price of crude oil and natural gas drop 9.6% and 32% respectively.

Fresh doubts about US, Europe and Asian growth prospects kept the pressure on Commodity Sector Funds, although they did post modest inflows, and spurred fresh outflows from Real Estate Sector Funds.

Equity funds records net outflows in July
Economic Times, India

India Inflation is up double digit.

India's headline inflation rate will stay in double digits until December, and soaring prices are expected to lower economic growth slightly this fiscal year, an adviser to the finance minister said on Friday.

"We are trying to cope with the impact of high oil prices and inflation," Shubhashis Gangopadhyay, adviser to Finance Minister Palaniappan Chidambaram, told reporters.
He said the steps already taken by the central bank would help tame inflation.
India's wholesale price index rose 11.89 percent in the 12 months to June 28, above the previous week's annual rise of 11.63 percent, government data showed on Friday.

The rate was also above a median forecast of 11.75 percent in a Reuters poll of analysts, and is the highest since annual numbers in the current series became available in April 1995.

Read here: Reuters India, India