Fiscal cliff' deal reached between W.House, lawmakers

The White House and congressional lawmakers have reached a deal to avoid the " fiscal cliff" that would delay harsh spending cuts by two months , Obama administration officials said on Monday. 

President Barack Obama called Democratic Senate Majority Leader Harry Reid and House of Representatives Minority Leader Nancy Pelosi, who both signed off on the deal.

The agreement includes a balance of spending cuts and revenue increases to pay for the delay in the automatic spending cuts that would go into effect without a deal by lawmakers.

Of those spending cuts, 50 percent would come from defense and 50 percent from non-defense areas, the sources said. The White House viewed that as a victory, one source said, and sees it as a model for future deficit reduction pacts by $600bln.

Sensex Surges 26% in 2012,Best in 3 Years

Foreign investors kept up their purchases on the last day of the year,investing.826 crore in Indian shares even as domestic institutions net sold.201 crore worth of equities,provisional data on the BSE showed.

The benchmark BSE index fell 0.09%,or 18.13 points,to end at 19,426.71 points on Monday,but surged 25.7% for the year to mark its biggest gain since 2009.The broader Nifty ended down 0.06%,or 3.25 points at 5905.10,but was up 27.70% in 2012. Hindalco, Tata Power and Gail gained between 0.8% and 1.3% while Maruti, L&T and ITC fell more than half a percent each.Seventeen of the Sensex scrips advanced.The rupee closed up 22 paise to 54.99 to the dollar.Gold traded up $9 an ounce at $1664.88 while WTI crude quoted flat at $90.14 a barrel at the time of writing.Though a higher closing was predicted by analysts on buying by domestic mutual funds keen to prop up their NAVs for the quarter,thiswas not to be.It reinforced fears that markets,which have traded flat for the last three weeks ahead of the fiscal cliff deadline,are waiting for clarity before moving either ways.

There is a degree of wait-and-see till a deal on resolving the fiscal cliff is put on the table by US lawmakers, said Nirmal Jain,chairman,IIFL.He expects Indian markets to rise between 15% and 20% in 2013 because of a turn in the interest rate cycle and better corporate profitability.AK Prabhakar,senior vice president (research) Anand Rathi Securities,also attributed the lacklustre market mood to a lack of clarity on the cliff apart from thin particpation in the markets.Like Jain,he too is sanguine about the prospects of Indian shares following a softer interest rate regime and consequently higher profitability for Indian companies.Despite the lower closing,analysts remained optimistic as the key indices have posted returns of more than 25% in 2012.The returns were driven by FII inflows at atime local institutions such as mutual funds cashed out of equities to meet redemption pressures.FIIs have invested $24.4 billion into Indian equities,around $5 billion less than their record investment in 2010.

Markets on Edge as US Fiscal Cliff Talks Down to the Wire

Analysts expect Nifty to touch 6000 if a deal comes through

Fingers across global financial markets remained crossed over the weekend as US lawmakers struggled to arrive at an elevenths spending cuts worth $600 billion,the so-called fiscal cliff,from taking effect at the beginning of 2013.Back home,stock experts did not rule out a volatile session from the week beginning Monday until US lawmakers reached a deal on a tax hike threshold and spending cuts that could affect two million longterm unemployed individualistically make an announcement around 12:30 am IST Monday on whether negotiations and Democrats in the Senate had borne fruit.

A deal,which market experts eventually cobble together,could drive up Indian stocks.However, if negotiations fail and the US does in deed go oversimplification markets could correct up to 4% in the first week of the New Year,they warned.Any reasonable deal over avoiding the cliff could result in a relief rally in the global financial markets till at least the fine print becomes clear, said UR Bhat,MD, Recapitalization, an investment advisory company of the London-based Dalton Group.I think 6000 for the Nifty could be a probable target in that event.If,however, newsworthiness counters of a deal our markets could open weak on Monday and reflect the 150-plus fall in the Dow on Friday.In the event theres no agreement over several days ahead,a 3-4 % hit cannot be ruled out next week.Deal or no deal,the US is terribly over-indebted and needs to urgently rein in spending, Bhat added.

Some experts like G Chokkalingam,chief investment officer, Centrum Wealth Management,believed that a deal,even if deferred by a day or two into the New Year,was inevitable.This,along with some amount of buying by domestic institutional investors like mutual funds to propup their NAV son the markets last day this year,will prevent a steep decline Monday.There are good chances of Nifty gaining 100-odd points and the Sensex around 300 points this week if US talks on the cliff fructify, said Chokkalingam. Bhat feels US lawmakers would eventually compromise on taxing thesalaried. Obama,who has been adamantly insisting on raising taxes for families earning more than $250,000 a year to contain the US fiscal deficit,is likely,according to a few western media reports,to settle on $400,000 as the threshold while Republicans,who are making spending cuts a precondition for any compromise,may agree to hold spending cuts in a few areas,like a dole for the long-term unemployed.

However,some market experts believe that Indian stock markets are in a better position to withstand external pressures,given the fact that though economic growth has slowed from earlier 8% to an expected 5-6 % rate FY13,it still remains higher than that in the developed world.Also,as monetary easing continues in the US,Europe and Japan,foreign money,will continue to find its way into emerging markets like India.These coupled with a softening interest rate cycle,moderating inflation and higher corporate profitability is expected to bode well for Indian stocks.Even if markets were to fall on a crisis of resolving the fiscal cliff,I think it would be a great opportunity for cherry-picking, said Saurabh Mukherjea,head of equitiesat Ambit Capital.

However,he also believes a last-minute deal in the US will avert a fiscal cliff.The Sensex has risen by 26% in 2012,driven by FII inflows of $24.2 billion,the second highest in a year so far since the record flows of $29 billion in 2010.This has made the local stock market the worlds third-best performer after Thailands SET and Germanys Dax. However,till the writing is clear onthewall, some have advised clients not to initiate any fresh positions.Markets are unlikely to find a trend till US lawmakers arrive at a deal over the cliff, said Aseem Dhru,MD & CEO,HDFC Securities.No fresh positions is our advice to clients till we know which way markets are headed.

Weekly Stocks Outlook

Capital Goods Stocks Outlook: 

Bias weak, action stock-specific Shares of most capital goods and engineering companies are seen trading  with a negative bias next week, according to a derivatives analyst. The  segment is likely to witness stock-specific action next week. 

Pharma Stocks Outlook: 

May rise on anticipation of "good result" Shares of major pharmaceutical companies are seen moving positively in the coming week, primarily on anticipation that most of the companies would post "good results" for Oct-Dec, said Deepak Malik, pharmaceutical analyst, Emkay Global Financial Services. 

Steel Stocks Outlook: 

Rangebound; analysts recommend 'sell' Shares of major steel companies are seen rangebound over the next few sessions amid lack of fresh triggers and on weak fundamentals, analysts said. 

Cement Stocks Outlook: 

Firm next week; data on Dec dispatches eyed Shares of domestic cement makers are seen firm next week as companies hiked the prices of the commodity earlier this week. Investors are likely to take cues also from the data on dispatches in December, scheduled to be released Tuesday. 

Auto Stocks Outlook: 

Dec sale figures to provide cues next week Sale figures for December, to be announced early next week, are expected to lend direction to shares of automobile companies in the coming week. Auto companies announce their monthly sales numbers on the first of every month. 

IT Stocks Outlook: 

Positive next week; HCL Tech shares seen down Shares of major information technology companies are expected to trade positive in the week ahead amid hopes the US government will come up with some solution to resolve the impending fiscal cliff, analysts said. 

FMCG Stocks Outlook: 

Seen largely flat next week on high valuations Shares of major fast-moving consumer goods companies may move sideways and largely remain flat in the week ahead, as investors will stay away from these counters due to high valuations, analysts said. 

Oil Stocks Outlook: 

PSU retailers seen in thin band; bias positive Shares of state-owned oil marketing companies are likely to stay firm next week as sentiment will stay positive because the government Thursday said it intends to bring down the revenue loss of these companies by gradually increasing the prices of subsidised fuels. 

Telecom Stocks Outlook:

Bharti, Idea dn next wk; spectrum EGoM eyed Heading into the new year, the overall trend for telecom stocks remains positive, but counters of leading companies could see some profit booking in the coming week, analysts said. 

RBI’s January rate cut under cloud

MUMBAI: A rate cut which looked imminent in January has now been called into question with the Reserve Bank of India (RBI) saying that it is worried that savers are shifting to non-financial assets like gold and real estate because of very low real returns on financial assets. 

The central bank has raised concerns about rising defaults among power companies and that, given the rise in bad loans, banks should look at increasing their provisions for non-performing assets. However, on a more positive note for borrowers, the central bank has strongly countered the International Monetary Fund's observation that expanding credit would heighten asset quality concerns. RBI has said that the flow of credit to productive sectors of the economy needs to be increased and reductions in statutory reserve ratios have augmented resources for lending. 

While RBI has been addressing fund requirements by cutting the cash reserve ratio, it has held back from signalling lower interest rates by reducing the repo rate - the rate at which it lends overnight funds to banks. A cut in the repo rate, which is widely expected in the third quarter review on January 29, would result in banks lowering deposit rate, further discouraging savings.

In its sixth issue of the Financial Stability Report, RBI has said that the economic growth was held back because of structural impediments such as fall in domestic savings, persistently high inflation and regulatory and environmental issues. Explaining the shift from financial assets such as bank deposits, stock markets and insurance, RBI said that both gold and real estate have managed to beat inflation as measured by the wholesale price index while financial assets have not. "Financial savings of the household sector declined to a two decade low of 7.8% of GDP in 2011-12 from 9.3% in 2010-11 and 12.2% in 2009-10," the report said.No to broking 

RBI has shot down a proposal by the finance minister that banks should be allowed to become brokers for insurance companies. The suggestion was made following P Chidambaram's meeting with insurance companies. "Extant regulations do not permit banks to become insurance brokers. Banks assuming the role of insurance brokers may also lead to conflict of interests where the bank is also the promoter of an insurance company," RBI said.

State Proposes 2,75,000-cr Outlay in 12th Five-year Plan

Govt planning special policies to take growth rate from 8.6% to 10.5%,says chief minister Chavan 

Maharashtra plans to accelerate economic growth by implementing specially-designed growth-oriented policies in the 12th Five-Year Plan which will have a proposed plan outlay of.2,75,000 crore to achieve the growth target,Maharashtra chief minister Prithviraj Chavan said on Thursday.Chavan told reporters after returning from the National Development Council meeting in New Delhi on Thursday that Maharashtra has achieved a growth rate of 8.6% during the 11th Five-Year Plan period,despite the impact of economic slowdown and erratic monsoon that adversely impacted farm production.

We now propose a gross state domestic product (GSDP) growth of 10.5% for the 12th Plan.This growth will come from agriculture (4%),industry (11%),services (11%).We have proposed a plan outlay of.275,000 crre in the plan, Chavan said in his speech earlier at the NDC meeting.According to him,integrated watershed development programme in areas with relatively higher average rainfall would be crucial for developing protective irrigation.

The state has set up a Dry Land Farming Mission in the state with a view to focus on these two programmes besides legislating a new Ground Water Act,which seeks to regulate the use of ground water and engage community in aquifer recharge measures.The bill is awaiting Presidential assent.Currently,only 12% of the gross-cropped area of the state is under surface irrigation compared to the national average of 40%.

Maharashtra needs huge investment in this sector to enhance area under assured irrigation and bring sustainability in agriculture growth,he said.On industrial progress in the state,Chavan said that during the 11th Plan period,the state attracted 4,630 projects,with a total investment of over.6.5 lakh crore and employment potential of above 22 lakh.Maharashtra received the highest FDI in the country.Under the Cluster Development Programme,the Centre has approved the state governments proposals to set up 32 clusters of micro-and-small enterprises,which will provide direct employment to nearly one lakh people during the next three years,he said.In order to make more land available for industrial activities in the state,the government has also decided to allow development of de-notified SEZs as integrated industrial areas.

The state,he said,is confident of meeting the industrial growth target of 11% during Twelfth Plan.On the power sector front,Maharashtra has withdrawn load-shedding in 80% area of the state and has added 1,500-MW capacity projects in 2011-12.Thermal projects with a capacity of 3,230 MW are under execution,and further 1,570-MW capacity projects are under planning with total investment of.23,530 crore.Of this,.8,205 crore has already been spent. 

Chavan said the state was facing a gas shortage at the gas-based plants of Mahagenco at Uran near Mumbai and Dhabhol in Ratnagiri and need immediate attention of the Centre. As against the contractual allotment of 4.4 MMSCMD,we are getting only 2.4 MMSCMD.As a result,our Uran plant is operating at 300-MW capacity load against the installed capacity of 670 MW.The RGPPL plant at Dabhol (installed capacity 1,980 MW) is running at 1/6th of its capacity due to short supply of gas from KS- D6. When the Dabhol plant was revived,it was agreed that gas to this plant will be supplied on fertiliser priority;this facility has now been put on hold.As a result,the plant is now running much below its capacity, he said in the speech.

FII-held Blue Chips Surge Ahead of Yearend,Pump Up the Sensex

The BSE benchmark is now the third best-performing index after Thailands SET & Germanys DAX 

Indian stocks ended at a near monthly high on Friday as companies with high foreign shareholding rose ahead of the yearly closing of books by FIIs,who have pumped in over $24 billion in the markets this year,making the Sensex the third best-performing index after Thailands SET and Germanys DAX. Blue-chips such as Bharti Airtel,with a 16.44% FII holding as on September-end,ICICI Bank (36.4% FII holding),L&T (15.4%) were among the top gainers,gaining 2.8%,2.4% and 2.2%,respectively,on Wednesday. 

M&M (30% FII holding) gained 0.77% at.944 apiece. FIIs net invested.743.79 crore in domestic shares on Friday,while domestic institutions such as banks and insurance companies offloaded equities worth.300.85 crore,BSEs provisional data shows. Foreign investors have pumped.1.26 lakh crore ($24.04 billion ) in domestic equities so far this year.

December has traditionally been a good month as its not only the quarterly close for domestic mutual funds,but the annual closing of books for FIIs,who like to maximise their net asset values, said AK Prabhakar,senior VP (research),Anand Rathi Securities.

Accordingly,stocks of companies with substantial FII holdings have done well in what has become a stock pickers market. FII flows contributed in part to an 11-paise jump in the rupee to the dollar at 54.84 on Wednesday.The yield on the 10-year benchmark government bond ended down around 1 basis point at 8.11%.Bond prices move inversely to yields.

The yen hit a 20-month low at 85.39 to the dollar,driving the Nikkei to a nine-month high.Spot gold traded unchanged at $1657.68 an ounce at the time of writing while benchmark WTI crude was up 60 cents at $89.20 a barrel.On the F&O segment the Nifty January contract witnessed a 0.83% rise in value to 5966.This was accompanied with a 30.6% jump in open interest or traders unclosed,buy/sell positions.The premium over spot Nifty widened to as much as 60 points,indicating that people with bullish bets on the index rolled over their positions.This also helped the market close up.

FDI in Services Sector Jump 5% in April-Oct

India's foreign direct investment inflows into the services sector increased by a mere 5% to $3.6 billion during the April-October period of this fiscal,according to the latest data of industry ministry.

The financial and non-financial services sector had attracted FDI worth $3.42 billion during the same period last year. As far as overall FDI inflows are concerned,they declined by about 27% during the first seven months of the current financial year to $14.78 billion,from $20.29 billion in the year-ago period.In 2011-12,foreign investment in the services sector,which contributes over 50% in India's GDP,rose to $5.21 billion from $3.29 billion in 2010-11.

The other sectors which have received high level of FDI during the first seven months of current fiscal include hotel and tourism ($3.11 billion) , metallurgy ($1.21 billion ),construction ($691 million ) and automobile ($743 million ). Country wise,high levels of FDI came during the period from Mauritius ($6.75billion ) , Japan ($1.52billion ) , Singapore ($1.24 billion ) the Netherlands ($1.05 billion ) and the UK ($611 million ),the Department of Industrial Policy & Promotion data showed.

The government is making sustained efforts,including involving stakeholders in policy formation,to make the investment regime more attractive and investor friendly,it said.

Real estate sector likely to revive in 2013: Experts

MUMBAI: After a long lull, the year 2013 is expected to bring back hopes of growth to the real estate sector, mainly due to the government's positive approach towards reforms and moderation of interest rates, experts say. 

Land Acquisition and Real Estate Regulation Bills are expected to be passed during the year, while there is a likelihood of Reserve Bank bringing down the interest rates. 

"The passage of FDI in multi-brand retail by the government shows its seriousness on introducing reforms. RBI can be expected to lower interest rates in the coming months which will benefit developers as well as consumers. This will boost the sentiments,"Knight Frank India chairman Pranab Datta said. 

Residential prices, which have been increasing over the past few years are likely to witness subdued growth in most markets in a short to medium term till the pressures of unsold inventory are eased out, CBRE chairman and managing director Anshuman Magazine said. 

Finance Minister P Chidambaram had recently asked the developers to sell their unsold inventory at a lower price. 

"Besides, infrastructure initiatives such as Greater Noida metro rail network and proposed metro link in north-west Bangalore are likely to have a positive impact on the residential market of these cities," Magazine said. 

FDI in multi-brand retail will also boost the demand for commercial real estate. 

"Apart from the international brands, several domestic brands are also exploring opportunities to increase their foot prints across the country. This anticipated growth in demand is expected to bring some upward movement in retail rentals, particularly along established hubs," DTZ-India chief executive officer Anshul Jain said. 

According to Jones Lang LaSalle, major cities like Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabadand Kolkata will see the addition of close to 9.5 million sqft of mall space in 2013.

Why market worries about the US Fiscal Cliff?

Indian equity markets have corrected almost 2% in last few days ahead of deadline of the US Fiscal Cliff. US Fiscal Cliff is considered to be the biggest road block for the global markets including India because if the Fiscal Cliff deal is not reached that could have a huge impact on the global markets and economies including India.

"Markets are hoping for a solution to the US ‘fiscal cliff’ issue because if a solution is not reached, it can impact sentiments negatively. We expect the issue to be resolved and the same can provide relief in short term," says Dipen Shah, Head of Private Client Group Research, Kotak Securities

Origin of Fiscal Cliff

Ever since the global economic crisis hit in the year 2008-09 the world economy importantly the US economy has taken a severe beating. Globally to avert the crisis the central banks have relied on the deficit spending including the US. However the deficit spending also called as money printing and the quantitative easing by the economists came along with huge burden of debt. Similarly in the year 2011, when the US wanted to borrow more money it had to raise the debt ceiling because there is limit to its borrowing which can only be increased with a vote of congress. In the same year the US passed the bill and extended the debt ceiling to $14.3 trillion.

This would not have been possible without the government’s promise of controlling the spending and restoring the tax cuts and other subsidies in the stipulated time so that the fiscal deficit could be controlled. Thus the Budget Control Act 2011 was passed, which said that if it fails to do so and achieve the desired economic growth than that will automatically trigger the restoration of the tax cuts and subsidies. Spending on different programmes like administrative and the defence spending will be cut automatically. Unfortunately the time has come when all these terms of Budget Control Act will expire by the end of December 2012, which is also known as Fiscal Cliff. So the Fiscal Cliff was created due to the series of such actions including the approval of Bush era tax cuts in 2001 and 2003.

Quantum of worry

Including all the automatic tax increases and spending cuts the estimates suggests that the US economy could take a hit of about $500-600 billion, which is about 4% of its GDP and good enough to take the GDP back to recession. On an average about $2,200 extra in taxes will be paid by the average family.

Link to India

Although India does not have much dependence on the US, but a possible downturn in the US is going to hit the world economy particularly in the backdrop of fragile economic conditions in the Europe and China. This will certainly have its impact on the global markets as that will impact the sentiments and liquidity (foreign money flow), both so far have been supporting the Indian equity markets. Also there is risk averseness among the investors because of which there have been selling in the market. Investors are also seeking for more clarity on this issue before committing any fresh money. In the interim despite all the positive policy announcements, hopes of rate cut and economic news the bigger issue of Fiscal Cliff could keep the markets under pressure. “As of now fiscal cliff issues continue to overshadow any other economic news," says Amar Ambani, Head of Research, IIFL. Good news is that some progress on this front is already made and the economists are saying that there is about 60-75% probability of the deal. So the probability is with the market, and if that actually materialise there is feeling that the Sensex could go back to 20,000 to 21000 levels.

RILs Plea for Consent Order in Insider Trading Case Rejected

Sebi issues supplementary show-cause notice to RIL,will go ahead with inquiry in insider trading 

Capital market regulator Sebi has rejected a third attempt by Reliance Industries (RIL),the countrys largest private sector firm,for an out-of-court settlement of insider trading charges.The regulator has also issued a supplementary show-cause notice,incorporating new findings,to RIL on the same matter,sources told ET.

Sebi has completed its investigation into trades carried out in November 2007 by entities allegedly linked to RIL.It is learnt that the investigation report has been submitted to the Sebi board and the regulator is going ahead with its inquiry proceedings on the matter.An email sent to an RIL spokesman seeking the companys response went unanswered till the time of going to press.Sebi is probing the sale of Reliance Petroleum (RPL) stock futures in the first week of November 2007,days before parent RIL began trimming its stake in the refining arm.

The sellers were not well-known market players,but were allegedly located at the address of some RIL group companies,according to information provided to Sebi by unknown complainants.The regulators investigations revealed that RIL made a profit of.500 crore from the sale of Reliance Petroleum shares.RIL has been trying to settle the case through consent orders but its proposals have been rejected twice by the regulator,which felt the amount put up by the company was inadequate. In the first consent application,RIL offered to pay a penalty of.3 crore while on the second occasion it offered to pay less than.10 crore as penalty,which was unacceptable to the regulator.Consent orders are similar to negotiated settlements between the market regulator and alleged securities law violators.

The settlement terms often involve monetary penalty and voluntary debarment from the capital markets without admitting or denying guilt.In May,the regulator came out with new rules which exclude serious offences such as insider trading,front-running and serious frauds from the consent process. Meanwhile,the office of the Chief Information Commissioner sought details of the case from Sebi after a petition filed by RTI activist and lawyer Arun Agarwal.Sebi has so far refused to share the details.

The court has observed that RIL should be given an opportunity to present its case as the information sought by the RTI applicant relates to them. RIL,in its response,has to state that the information sought is not in public interest.On Thursday,a Bombay HC division bench comprising Justices DY Chandrachud and AA Sayed directed RIL to file its reply by January 14,while the court will hear the case on January 23.Senior counsel Janak Dwarkadas,appearing on behalf of RIL,sought time to file an affidavit before the court.

The case pertains to the ongoing legal tussle between Sebi and Agrawal,who sought information from the regulator about the case and names of individuals, partners,directors and major shareholders involved.Early this month,the HC directed that RIL be made a party to the case.The bench expressed the view that the party should be given an opportunity to be heard before passing any order.

FM for better information system to improve tax collection

Finance minister P Chidambaram on Wednesday made a case for improving tax information system to augment revenue collection while committing to establishing a stable tax regime.

Finance minister P Chidambaram on Wednesday made a case for improving tax information system to augment revenue collection while committing to establishing a stable tax regime. "Our focus is always to have a reasonably stable tax regime which is in the interest of both the tax payers as well as tax collectors," he said at the consultative committee meeting attached to the finance ministry.

He emphasised the need for systematic changes including strengthening of the tax information system for better collection of taxes. The government, he said, is fully committed to provide best possible facilities to the tax payers for better tax compliance and revenue augmentation. At present, there are 3.5 crore people filing income-tax returns.

Only 14.6 lakh people have declared their income of Rs 10 lakh and above for tax purposes which is not realistic, he said. Noting that country has moderate rate of income tax as compared to various developed countries, he said "there is lot of scope for better tax compliance and tax collections." The peak rate of taxation is 30 percent at present.

Highlighting that about 50 percent tax payers are filing their return through e-mode, the finance minister said there is a need for more and more tax payers to electronically file their return as it well help in expediting tax processing and refund process.

The target for collection of direct taxes for the current fiscal is fixed at Rs 5,70,251 crore, he added. The finance minister informed the members that the department had refunded Rs 57,000 crore till this time during the current fiscal against Rs 70,000 crore in the same period of the previous fiscal. The meeting, which was attended by Members of Parliament and secretaries in the ministry of finance, also discussed measures for improving relationship with tax payers.

Some members highlighted the need for keeping the tax rates low for better compliance while some suggested that interest on refund may be paid at least at the bank rate of interest.

LS approves amendments to Companies Bill

New law after 56 years, aims at improving corporate governance

The Lok Sabha today approved the much-awaited amendments to the Companies Bill, 2011, making it mandatory for profit-making companies to spend on activities related to Corporate Social Responsibility (CSR). In case, a company is not doing so, it will have to explain the reasons for shortfall.

The Bill, aimed at improving corporate governance, also contains provisions to strengthen regulations for corporates as well as auditing firms.

Moving the Bill for consideration, Minister of State (Independent Charge) for Corporate Affairs Sachin Pilot said private companies, while maximising their growth, also have responsibility towards society besides equitable and sustainable growth of the country. The changes in the Bill include provisions making it mandatory for companies to spend 2% of their average net profit on CSR activities. However, only companies reporting Rs 5 crore or more profits in the last three years have to make the CSR spend. Companies failing to meet the obligation will have to explain and disclose reasons in their annual books of account. Otherwise, companies would face action, including penalty.

Amendments

* Makes it mandatory for companies to spend 2% of average net profit on CSR

* Mandates payment of two years' salary to employees in companies which wind up operations

* Limits the number of companies an auditor can serve to 20

* More clarity on criminal liability of auditors

* Annual ratification of appointment of auditors for five years

* New clause related to offence of falsely inducing banks for obtaining credit

* Statutory powers to SFIO to tackle corporate fraud

Pilot emphasised that the Bill aims to encourage firms to undertake social welfare voluntarily instead of imposing that through "inspector raj".

Safeguarding workmen in the legislation, the new law mandates payment of two years' salary to employees in companies which wind up operations. This liability would be overriding, Pilot said.

The amended legislation, with 470 clauses, also limits the number of companies an auditor can serve to 20. It has also brought in more clarity on criminal liability of auditors. Besides, the approved amendments also include annual ratification of appointment of auditors for five years and introduction of a new clause related to offence of falsely inducing banks for obtaining credit.

Besides, the changed law allows more statutory powers to the government’s investigative arm Serious Fraud Investigation Office (SFIO) to tackle corporate fraud.

The amendments, to the Bill that has been in force since 1956, were first introduced in August 2008. However, it was withdrawn as the Lok Sabha was dissolved. It was again introduced in Parliament in 2009 and sent to the Standing Committee, which presented its report in August 2010. Notably, unlike most Bills, the Bill was referred to the Standing Committee twice. The revised Bill 2011 was again referred to the committee as certain new provisions were included. The current amendments to the Bill are in line with the suggestions put forward by a Parliamentary Standing Committee on Finance.

RBI doesn't do it again: key rates unchanged

Says monetary policy to shift focus to growth from now on, liquidity will be managed to support growth

In the monetary policy review today, the Reserve Bank of India ( RBI) has announced no changes in the key rates.

While the repo rate will stay at 8% the reverse repo rate will continue to be 7%. The cash reserve ratio (CRR) is also unchanged at 4.25%, which is the lowest since 1974. The MSF and bank rates will continue to be at 9%.

This step by the central bank will leave bankers, traders and the government disappointed as they have been looking forward to a cut in rates .

"In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards," the Reserve Bank of India wrote in its mid-quarter monetary policy review.

The RBI has said that liquidity will be managed to support growth. A rate cut can be expected in January if the WPI comes under control by then.

The RBI will update its forecast for FY13 growth and inflation in the quarter ending December 31, 2012.

RBI's policy rate changes at a glance

Date	Reverse Repo	Repo	SLR	CRR
December 18	7	8	23	4.50 (unchanged)
October 30, 2012	7	8	23	4.25 (-25)
September 22, 2012	7	8	23	4.50 (-25)
August 11, 2012	7	8	23 (-100)	4.75
April 17, 2012	7 (-50)	8 (-50)	24	4.75
March 10, 2012	7.50	8.50	24	4.75 (-75)
January 28, 2012	7.50	8.50	24	5.50 (-50)
October 25, 2011	7.50 (25)	8.50 (25)	24	6
September 16, 2011	7.25 (25)	8.25 (25)	24	6
July 26, 2011	7.00 (50)	8.00 (50)	24	6
June 16, 2011	6.50 (25)	7.50 (25)	24	6
May 03, 2011	6.25 (50)	7.25 (50)	24	6
March 17, 2011	5.75 (25)	6.75 (25)	24	6
January 25, 2011	25  (5.50)	25  (6.50)	24	6

*The bracketed figures show repo, reverse repo and CRR in percentage term.