Jul 29, 2009|
India's gas dispute escalates further
There seems to be no respite in the battle between the Ambani brothers over Krishna Godavari basin gas. The latest round comes from the younger brother, Anil. The focus of the annual general meeting of Reliance Natural Resources (RNRL) held yesterday was entirely on the dispute. The comments were especially critical of the petroleum ministry, terming its role in the dispute as 'biased and partisan'. In a related development, Finance Minister Pranab Mukherjee met with the Petroleum and Law ministers to discuss the issue.
It may be noted that besides Reliance Industries (RIL), RNRL and the Government of India, several independent power producers have joined the fray. Given how complicated the dispute has become, the question of who is right will eventually be decided by the Supreme Court. We find it disturbing that there is so much confusion over the contractual rights of the owner (the government), the operator (RIL) and the user (RNRL and others). This sends out a wrong signal to prospective investors into the sector, whom India is desperately trying to woo through the NELP (New Exploration Licensing Policy) auctions.
RBI admits to monetisation
Finance Minister Pranab Mukherjee had recently said that the government borrowing programme cannot be considered monetisation (refers to the printing of banknotes by central banks) and that it occurs only when the RBI lends to the government directly. However, as per a leading business daily, the RBI Governor yesterday admitted that the central bank buying bonds in the secondary market on behalf of the government does amount to monetisation.
It may be noted that the RBI can absorb government bonds in 2 ways. First alternative is the primary market, where the government makes private placement of bonds directly with the RBI and the second is the secondary market, where the RBI buys bonds through open market operations on behalf of the government. The Fiscal Responsibility and Budget Management Act (FRBM) prohibits the first alternative. So the government will resort to the secondary market.
Terminology apart, our opinion on government borrowings remains the same. Good companies use borrowings to tide over temporary difficulties but eventually focus on generating internal accruals, so should good governments. And just as businessmen should focus on building fundamentals, so should governments.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407