Dollar-rupee swap, open market operations: RBI plans steps to inject cash

These moves are expected to increase cash in the financial system and help push interest rates down, potentially helping borrowers where an interest rate cut has not.

Business Standard : The Reserve Bank of India (RBI) will probably conduct at least one more swap of rupees for dollars after the general election, said three officials with direct knowledge of the plan, part of an effort to support economic growth.

The central bank also plans to conduct open market operations of up to Rs 500 billion over the next two months, one of the officials said, expanding a quantitative easing programme to spur the slowing economy.

These latest moves are expected to increase cash in the financial system and help push interest rates down, potentially helping borrowers where an interest rate cut has not.

"We want to make sufficient liquidity available, but we cannot open the floodgates of liquidity. It has to be done in a calibrated and measured way," said one official who declined to be named because of the sensitivity of the matter.

The Reserve Bank of India declined to comment.

Prime Minister Narendra Modi is facing a tight re-election race in the staggered poll that began on April 11 and will end on May 19. Votes will be counted on May 23.

Economic growth slowed to 6.6 percent in the October-December quarter, the worst in five quarters, and economists see a further slowdown in January-March largely due to high interest rates and surging oil prices.

Despite cutting its key policy rate by 50 basis points this year to 6 percent, the RBI has struggled to get banks to reduce lending rates due to tight cash conditions and high deposit rates.

The RBI wants the real interest rate - the delta between the inflation rate and rate people pay to borrow - to ease for borrowers, a separate government official said.

In May, the RBI announced a fresh round of open market operations to purchase a total of Rs 250 billion worth of bonds in May, with the first auction for 125 billion rupees held on May 2.

"There could be two to four more open market operations by the RBI in the next two months (June-July) of similar quantum," the second official said.

"We are also in discussions for more forex swaps after the elections," he added.

A third official said the RBI would probably review the amount of rupees in circulation in June and determine the liquidity required by the banking system before finalising details of the rupees for dollars swap auction.

Elections 2019: Will Masood Azhar's tagging as 'global terrorist' help BJP?

The BJP needs to sweep the remaining three phases of voting to be able to get close to its performance in 2014; this tagging has given its workers another talking point.

Nearly 70 per cent of the Lok Sabha polls is over with polling completed in 373 of 542 Lok Sabha seats (Polling for Vellore seat will take place later). However, elections have now entered their most crucial juncture since much of the Hindi heartland will go to polls over the remaining three phases.

If it has to return to power, the Bharatiya Janata Party (BJP) would need to maximize its gains in the remaining 170-seats that will go to polls on May 6, 12 and 19. The BJP had accomplished this in 2014 when it swept the Hindi heartland.

Until now, the BJP’s election campaign has focused on the “decisive” leadership of Prime Minister Narendra Modi and stoking “nationalism” sentiment centred on the Pulwama terror attack and Balakot terror strikes.

Increasingly, however, the BJP’s discourse has shown diminishing returns on the ground with local issues coming back to dominate, including questions being asked about the performances of incumbent BJP MPs.

For example, in Uttar Pradesh, Pulwama and Balakot gave BJP’s core support base a reason to continue to keep their faith with Modi. However, enough people are also asking inconvenient questions on the security failure that had led to Pulawama, and why the BJP leadership contradicted each other in their claims about the numbers killed in the Balakot strike.

It is also common to find voters who believe Modi government announced demonetisation on November 8, 2016, primarily to win the Uttar Pradesh Assembly polls, and view the party’s current discourse around nationalism through the prism of it seeking potential electoral gains in the ongoing Lok Sabha polls.

It is in this context that the BJP will use the tagging of Jaish-e-Mohammed chief Masood Azhar as a UN designated terrorist as an achievement of its policy of “zero tolerance” against terrorism. It will be the BJP’s counter to the opposition’s narrative of the sundry “failures” of the Modi government, particularly in tackling job losses and farm distress, and Congress party’s promise of ‘Nyay’, or minimum income guarantee to the poorest 20 per cent.

In the next three phases, 21-seats of Bihar, 41 of UP, 4 of Himachal Pradesh, 11 of Jharkhand, 23 of Madhya Pradesh, 13 of Punjab, 10 of Haryana, 1 of Chandigarh, 12 of Rajasthan, 24 of West Bengal and 7 of Delhi go to polls. Apart from Bengal and Punjab, the BJP had swept all other states in 2014.

Business Standard

Google ups efforts to check misinformation ahead of Lok Sabha elections

Google is also going to launch its political ad transparency report before Indian elections, scheduled to begin on April 11.

Not just Facebook and Twitter, Google is also making an effort to ensure the authenticity of information on its advertisements and video platform as India heads towards General Elections in less than a month.

On Thursday, the company said it is ensuring authoritative news content gets better play on YouTube, where videos have seen growth in watch time triple for content from authoritative sources in the last two years, said Tim Katz, the video platform’s director of news partnerships.

YouTube, which is owned by Google, is ensuring there is news from credible sources that is put on the platform, with enough context.

With elections less than a month away, the Indian government has been trying to address the issue of misinformation and fake news spreading through social media and messaging platforms such as WhatsApp. Recently, the Parliamentary Committee on information technology met with senior executives of Facebook and Twitter and the Election Commission has also said social media platforms have committed to help check the spread of fake news in the run up to elections.

The video platform has introduced fact checks to its panels in India, just below the search results, which relies on and "open ecosystem of publishers and fact checking experts".It is currently available in Engligh and will shortly be available in Hindi.

The "Top News" and "Breaking News" sections on YouTube highlight videos from credible news sources in search results and during major news events globally.

Google has partnered with an open source community schema.org, which provides news organisations with a tool called ClaimReview markup that helps put "markers" on fact-checked news reports. Google's systems then decide whether the content would be useful to users and should show in search results, based on relevancy and several other factors.

"A publisher writes a fact-checking story on their own website, then they take this tool... (which is) like a developer tool, and can put annotations on to their article. Its like metadata for their articles. And this allows third parties like Google to scan that metadata and understand when was this written, what was the topic, how did they research it, how were they able to verify the veracity of their claim," said Katz.

He added that YouTube was working towards the future of online video by working with news organisations and developing product features for news on its platform.

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Why India's upcoming general election is good news for the oil market

Election campaigning will boost fuel use in a nation where oil demand is already growing at the fastest pace in the world.

The largest democratic exercise on Earth is set to give the oil market a shot in the arm.

About 875 million Indians will go to polls over the next three months to elect their leader, dwarfing the 158 million Americans who registered to vote in the 2016 US residential elections. Before they vote, they’ll be courted by a slew of competing political parties -- a process that will boost fuel use in a nation where oil demand is already growing at the fastest pace in the world.

The lift will be provided by hordes of party faithful, who traverse teeming cities and remote villages across the world’s seventh-largest country in a campaigning frenzy before what’s expected to be a closely fought election. Their use of motorcycles and sports utility vehicles at a time when some refineries are closed for maintenance will support returns from making fuels in Asia over the next few months, according to a Bloomberg survey of traders who participate in the market.

“The election, which coincides with scheduled maintenance, should see India pull imports of gasoil and gasoline and this usually adds to bullish sentiment,” said WengInn Chin, a senior oil market analyst at Facts Global Energy in Singapore. In the lead up to the polls, the increased consumption is expected to increase gasoline and diesel demand by as much as 80,000 barrels a day, he said.

That will be in addition to the nation’s already growing demand for gasoline and diesel, consumption of which grew by about 75,000 barrels a day and 100,000 barrels a day, respectively, in January. Demand for liquefied petroleum gas is also surging, with state refiners seeking to import cargoes of the cooking fuel as the government tries to keep voter morale high by ensuring rural households are well supplied.

The profit from turning crude into diesel reached a two-month high late last month, and has climbed over 25 percent so far this year. Refinery maintenance will keep supplies tight in coming months, while the International Maritime Organization’s new rules on ship fuel next year will drive the fuel’s demand in the longer term. That’s set to keep the so-called crack at an average of $14.50 a barrel this month, according to the Bloomberg survey of traders.

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Replace EVMs with 'tried and tested' ballot papers in Lok Sabha polls: AAP

The party has also exhorted all opposition parties to boycott the polls if their demand was not paid heed to.

The Aam Aadmi Party (AAP) on Wednesday demanded that in view of the latest charges against the electronic voting machines (EVMs) by a hacker in London, the old, tried and tested ballot papers should be used again in the forthcoming Lok Sabha elections.

The party has also exhorted all opposition parties to boycott the polls if their demand was not paid heed to.

Rajya Sabha member of AAP and in-charge of Uttar Pradesh, Sanjay Singh told IANS that this was necessary to "save democracy and install faith of the people once again in the election process".

The national spokesman of the AAP further said that the latest revelations clearly shrouded the neutrality of the EVM's and hence should be replaced with ballot papers.

"These EVM's show the benefit of EVM's going to the ruling Bharatiya Janata Party (BJP) and takes away from the opposition a level playing field" he said further.

Chief spokesman of the party's state unit, Vaibhav Maheshwari while claiming that the Election Commission was not ready to concede that the EVM's were open for tampering demanded that the poll panel ensure a "public audit" of the EVM's.

Raising doubts on the fairies of the EVM's, the party has demanded that all political parties should write to the Election Commission of India, saying that they will boycott the elections for the Lok Sabha if the EVM's were used for the polls.

"There is no other option but to ban the EVM's and conduct the Lok Sabha and all future elections through ballot paper method" Sanjay Singh said.

Samajwadi Party (SP) chief Akhilesh Yadav on Tuesday had spoken on similar lines and had cited the example of a "developed nation like Japan" which still used the traditional ballot paper method for elections in their country.

"In view of the recent revelations, further doubts have been created in the minds of people and the EC should taken them into account" the former UP chief minister has said.

The ruling BJP leaders, both in the state and the centre, have trashed the accusations made by the opposition parties and have claimed that by raising doubts on the EVM's, the opposition was making ground for an almost certain defeat at the hustings in the Lok Sabha 2019 polls.

Business Standard

Lok Sabha elections 2019: BJP may lose 70% seats in Hindi heartland, Congress to gain

The bulk of seats that the BJP may lose is likely to be picked up by the Congress, dramatically altering its leveraging ability.

Business Standard :There is unanimity that the keen contest resulting in a photo finish in Madhya Pradesh and Rajasthan has thrown open the race for 2019. It makes sense therefore, to examine electoral statistics from the past and visualise emerging trends.

Needless to say that in addition to the two states, Chhattisgarh – in which the Bharatiya Janata Party (BJP) lost too – is part of the Hindi heartland of north India. It is one of the two regions that propelled Narendra Modi to power in 2014. When we talk about the Hindi heartland, it refers to ten states – Himachal Pradesh, Haryana, Rajasthan, Uttarakhand, Delhi, Madhya Pradesh, Chhattisgarh, Bihar, Jharkhand, Uttar Pradesh and the Union Territory of Chandigarh.

Although not really a separate region, the two other states in northern India – Punjab and Jammu & Kashmir – have to be treated separately while discussing politics in a general framework. But within the context of the BJP’s performance in 2014, these can also be clubbed with the heartland region for calculations in the run up to 2019 polls.

These dozen states and the lone UT account for a total of 245 Lok Saha seats, of which the BJP won 196 in 2014. In addition, if you add the seats won by its allies in Bihar and UP, the total is a difficult to repeat 211. Essentially, in this block of states – which elects almost 45% of Lok Sabha members – the BJP’s opponents won just 34 seats at the height of the “Narendra Modi wave”.

On the basis of seats won, the vote shares of the BJP and the Congress in the recent assembly polls and most importantly, the swing away from the BJP from the levels of the 2013 assembly elections (7%-9%) and 2014 Lok Sabha elections (14%-17%), it is certain that there would be significant fall in the BJP’s tally in these states.

In 2014, the BJP won 62 of the 65 Lok Sabha seats in the three heartland states that elected new state governments recently. Based on its current performance, the fall will be dramatic. Media analysis shows the number of BJP seats would come down to 18 (10 from Madhya Pradesh, eight from Rajasthan and none from Chhattisgarh).

It has been argued, especially by BJP supporters or those who believe that Modi still has the capacity to personally bolster his party to previous levels, that these elections were fought on local issues. A campaign rooted in the argument of ‘Modi and prime minister’ versus ‘someone at helm of a khichdi’ would gain acceptability among voters and swing the verdict in BJP’s favour, they say.

Yet, these states thrice voted in the same direction in the Lok Sabha elections following assembly polls in 2003-04, 2008-09 and 2013-14. On the basis of the current political narrative, the BJP appears unlikely to alter the narrative that resulted in major losses for the party in rural and urban areas.

It is unlikely that voter sentiment will remain unaltered in the other Hindi speaking states. It’s possible that the BJP will witness nearly a 70% erosion in its seats held. If these calculations turn out to be true in 2019, the BJP’s tally in these states will fall from 196 to 59 – a loss of 137 seats.